Canapes and Compromise

When the Boston fire of 1872 threatened to destroy the First National Bank, its cash was removed for several days and worried bankers set up a day & night watch over it. Meanwhile they were fed by Boston's famed Parker House. One day last week the Parker House again went to the First National's assistance. Ten minutes after closing, workmen set about removing grills, glass desk tops, accounting machines and money from the bank's vaulted granite lobby and into their place went 12,000 glasses, 700 trays, 2,000 qt. of liquor, 3,000 qt. of soda and ginger ale.

Next day there arrived 50 Ib. of caviar, 200 Ib. of lobster, 10,000 fish balls, 12,000 tea sandwiches, 100 boxes of cigars, 6.000 packages of cigarets. That afternoon none other than Sergei Koussevitzky and his Boston Symphony Orchestra mounted a temporary dais, tuned up while into the clattery room for cocktails and canapes crammed some 4,000 men & women attending the 63rd annual convention of the American Bankers Association. In a din so constant that Maestro Koussevitzky once threw up his hands and stamped off the stage, the orchestra proceeded to play.

New Deal. General disapproval by bankers of President Roosevelt's financial policies is old and enduring. But last week there was little expression of it in Boston. Guest Speaker Glenn Frank, erstwhile president of the University of Wisconsin, rapped at the Administration, as did President Henning Webb Prentis of Armstrong Cork Co., and both were resoundingly clapped, but the vast majority of topics discussed in the four-day conclave dwelt upon problems more pertinent to bankers than to the nation.

Significant was the fact that the week's outstanding banking blast against Washington came from Rochester instead of from Boston. Apparently to avoid implicating the A. B. A., Banker Winthrop W. Aid-rich, chairman of New York's Chase National Bank, chose a luncheon meeting of the Rochester Chamber of Commerce as a rostrum for the most outspoken if not the most original attack upon the New Deal since the current market crash began. In a concise analysis of the situation which warmed the hearts of Wall Street, Banker Aldrich repeated and amplified the assertions made by President Gay of the New York Stock Exchange two months ago (TIME, Aug. 30). Said Banker Aldrich:

". . . The recent drastic decline in stocks, on a very moderate volume of selling, reveals an impairment of the efficiency of the stockmarket that calls for prompt correction. This impairment is to be explained as the cumulative effect of a variety of recent governmental policies, many of which can and should be modified without abandoning the underlying policy of eliminating abuses from the securities market. The tax on capital gains at high bracket income tax rates can be changed to a low rate flat tax with positive gain in revenue to the Treasury. The rule regarding trading by insiders can be modified so as to restore protective action by insiders on breaks, and still prevent unfair use of inside information. The margin requirements can be made a flexible instrument of control, rising promptly on stockmarket booms and dropping promptly on breaks. The great range of uncertainty regarding what is allowable in the activity of specialists and other dealers can be greatly reduced by prompt and clear definitions by the Securities and Exchange Commission. and, above all, the unfortunate requirement of an 'affirmative proof of justification' can be withdrawn. Changed policy can bring back into the market the activity of men who have knowledge, buying power and courage. . . ."

Unit v. Branch. The A. B. A.'s avoidance of New Deal criticism goes back three years to its convention in Washington when the rank & file were hot for fu mination against liberal finance, but the big banks forced through a policy of passing the peace pipe to President Roosevelt (TIME, Nov. 5, 1934). Next year in convention at New Orleans this same issue boiled over in an action almost unprecedented in A. B. A. history--a hot contest for election of officers. By A. B. A. procedure each year's president is actually selected two years ahead when he is chosen for the job of second vice president, thence moving up according to custom to vice president and president. At the New Orleans convention two years ago outspoken Orval Webster Adams, executive vice president of Utah State National Bank of Salt Lake City and thus a representative of small unit bankers, jumped to his feet on the floor and offered the bitter and impractical suggestion that bankers boycott U. S. bonds. Supported by a surge of other independent bankers, Orval Adams became second vice president. Last week he succeeded to the presidency, thus marking the end of a line of officers conciliatory to the New Deal. More immediately important to bankers, he represents the rise to supremacy in the A. B. A. of the unit banker as distinguished from the branch banker.

In the A. B. A., unit bankers are numerically tops, but financially they yield to the big city banking chains. In convention at San Francisco last year some unit bankers talked about withdrawing from the A.B.A. unless given more say in its management and announced they would demand a change in the A. B. A. constitution supporting the established dual (state and national) banking system. Last week a few of them took the step of hiring separate headquarters but further separation was unnecessary, for the big branch banks yielded without a struggle. Instead of a constitutional change, however, they deftly compromised on a resolution to the same effect. This was accepted by unit bankers as a complete victory for their views, but few observers believed the hatchet was thus buried forever.

Temporarily, however, grim, Orval Adams was free to return to his opposition to the New Deal. In his brief acceptance speech last week, President Adams announced as his prime objective: "We Must Do Our Part Toward Making All of the People Deficit Conscious."

In line to follow President Adams is 55-year-old Philip Adolphus Benson, president of Brooklyn's Dime Savings Bank and therefore on the unit banker side. Elected second vice president last week was Robert March Hanes, president of Wachovia Bank & Trust Co., Winston-Salem, N. C. A 47-year-old graduate of the University of North Carolina, he comes of a socially prominent family, is a Democrat and a Methodist, saw active service in the War. He was chosen for his important heirship-apparent largely because he is a fine example of the important, but independent, banker.

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