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Congress provided that the term of office of the Comptroller should be for 5 years and, therefore, it would not be concurrent with the tenure of office of the Secretary of the Treasury.

Formerly, his appointment was made by the President on the recommendation of the Secretary of the Treasury, to be confirmed by the Senate. In the Banking Act of 1935, this was changed to provide for the appointment of the Comptroller solely by the President, without the recommendation of the Secretary of the Treasury, but with the advice and consent of the Senate.

Apparently, these provisions were made for the purpose of protecting the national banks with a leadership independent of undue influence from other governmental authority. The Comptroller is responsible for momentous decisions which would insure sound operations for the national banking system. These decisions should be unbiased and final.

Senator ROBERTSON. I thank the committee for giving me this opportunity to appear.

The CHAIRMAN. Senator Robertson, apparently there is considerable alarm among the bankers of the Nation with reference to this plan. You spoke of a number of letters you have received from your State and from this area, from bankers in opposition to it. As chairman of this committee, of course, I have received them and the committee has received them from probably every State in the Nation. I do not recall any that have come to my attention that favored the plan, but it is usually contended that, of course, when almost any group either sponsors or opposes legislation or reorganization plans, they have a selfish interest in doing so. We usually refer to that opposition-it has become the common practice to refer to that opposition—as special interests being motivated by special interests. I wonder if you can tell the committee just what the fear is on the part of the bankers with reference to the effect of this plan, what impact it will have upon the banking system and upon the Comptroller of the Currency with reference to destroying the independent authority that he has exercised in the past.

Senator ROBERTSON. It will be recalled that when the Congress decided to give a certain measure of independence to the Comptroller of the Currency he was given a 5-year term so that he did not come in and go out with any given President. He overlapped the presidential term for the specific purpose of giving him some independence in the discharge of his duties. Our bankers know that a Comptroller of the Currency through his periodic examination of their banks can very vitally affect their credit policies. He can say: "You are too liberal. You are not liquid enough. This loan is too slow. Crack down on your borrowers. Buy more Government bonds.".

Or he might wish to follow a policy of easy money: "You are not serving your patrons like you ought to serve them. You are not liberal enough in your loans. Too large a percentage of your money is invested in Government securities.

Of course, the State banks are directly affected by the loan policies which the Government compels, directly or indirectly, the national banks to follow. They are very much interested in preserving the dual system of banking, and they are fearful that someday we might not have as good a Secretary of the Treasury as John Snyder. I can even recall one that I think never reached higher than mediocrity in that office. I have great regard for Mr. Snyder. Then we do not know who will be President someday. We do know that we face a prospective deficit of over $5,000,000,000. We do know that the Federal Reserve Board may someday be called upon in its open-market operations to absorb a large quantity of Government bonds. We do know that after World War I Government bonds fell 20 percent, and they were 4-percent tax-exempt bonds. We have outstanding now about $256,000,000,000 of national debt, and if the bookkeeping was a little different we would have over $260,000,000,000 of national debt. There are direct obligations that are not carried on the Treasury's books as a part of the national debt.

At my request in a recent hearing in the Appropriations Committee on the supply, bill for the Department of the Treasury, I asked a Treasury official to give me an estimate of the direct and indirect obligations of the Government. He said there were some indirect obligations that he could not even enumerate because he could not tell what they would be, they were so vague and indefinite. He did give us direct and indirect obligations in excess of $300,000,000,000.

Economists-how they arrived at it, I do not know, but they are mighty smart people say we are worth $600,000,000,000. In the depression of 1932–33 they said we were worth between $300,000,000,000 and $400,000,000,000. Just how long they will say we are worth $600,000,000,000 I do not know; but, if we should have another depression and values slide down as they did commencing in 1930 and extending up through 1935, we may go back to the $300,000,000,000 or $400,000,000,000 level.

The CHAIRMAN. Values may go down, but the debt will not.

Senator ROBERTSON. That is the point I am making. There may come a time when there will be a flight away from Government securities just as it is all over Europe today. There is a flight away from British securities, and the sterling-area bloc, which holds hundreds of millions of dollars of pounds sterling, are accepting British goods at any price that they may put on them. That is giving false prosperity to Great Britain because the manufacturer can have inefficient methods and price his goods beyond the world market and sell them to the sterling area and they pay for it with an existing debt. That is one of the very unsound things in the British economic system that we are trying to do something about in a plan to set aside about $600,000,000 in the new ECA fund to establish a currency union in western Europe to facilitate the convertibility of the various currencies of those countries and thereby stimulate freer trade among 270,000,000 people.

But, to come back to this situation, it is conceivable that the Government may reach a period of difficulty in its financing if we cannot curtail expenditures and are unwilling to tax the people as the British are being taxed. We are being taxed now about 25 percent, and plenty of people are saying that is enough. The British are being taxed 40 percent, and we think that is too much. Last Saturday I went down to see my mother, who will be 92 years old today. During the 17 or more years that I have been in Congress I have sent her the Congressional Record, and she reads it and keeps up with what is going on. She thinks I ought to be President, and I appreciate that [laughter], but I do not have enough who agree with her, so I am not a candidate.

I said to her, "Mama, the fiscal affairs of the Government are in bad shape.”

She said, "You are spending too much money." “Well,” I said, "I know we are."

She says, "But we are paying enough taxes. You don't plan to raise the taxes, do you?

I said, "I hope not."

Ninety-two years old, but that is her summary of our situation, and I do not need to tell you that I think her mind is still active.

So the banks do not want to see a situation develop where the Treasury Department can control the credit policies of the Federal Reserve System, which has only the national banks and those State banks that are member banks of the System; and none of the banks want to come directly under what they fear may someday be an improper political pressure to control their credit policies. They are trustees of their depositors' money. You read of a bank that has a hundred million dollars of resources or a billion dollars of resources or $4,000,000,000 plus, like the Chase, or $6,000,000,000 plus, like the Bank of America, out in San Francisco. That is not their money. That is their depositors' money, and they are trustees for it. They try to operate in a way to make that money safe for their depositors, and we are trying to help them. We have set up the FDIC to help them; but, after all, the total resources of the FDIC at the present time are not quite one and a half billion dollars, and that would not be a drop in the bucket if the Chase National went broke, and we have guaranteed under this new bill deposits up to $10,000.

The CHAIRMAN. Senator, do you see any relation between this plan and the general policy of peacetime deficit spending that we seem to have entered into? At least, I can see little prospect of our getting back to a balanced budget anytime soon. In fact, no one seems to be able to predict when, if ever, we will be able to have a balanced budget again. Do you see any relation between that and this plan so as to give more authority, more centralized power and control over banks to compel the purchase of Government securities in order to carry on this deficit financing?

Senator ROBERTSON. I prefer to accept at face value the statement made on page 1 of the President's message in sending up this plan, where he said:

After investigation I have found and hereby declare that each reorganization included in Reorganization Plan No. 1 of 1950 is necessary to accomplish one or more of the purposes set forth in section 2 (a) of the Reorganization Act of 1949.

I am willing to concede that the President is very sincere in thinking that he has sent us a recommendation that conforms to the direction of the Congress in passing a general reorganization act, but you asked me what the bankers were afraid of that could possibly result if we make this change, and I have told you, and I prefer to let it stand right on what the bankers said.

The CHAIRMAN. I thought you made reference to it.

Senator ROBERTSON. I introduced my bill because I said this plan could facilitate deficit financing if somebody tried to use it for that purpose, but that was not the kind of efficiency I was interested in.

The CHAIRMAN. That is what prompted the chairman's question.

Senator ROBERTSON. It was a fair question, and I just side-stepped it partly

The CHAIRMAN. I see, Senator, you wrote the clerk of the committee requesting two letters

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Senator ROBERTSON. They were just samples. I could have brought you hundreds of letters, but I did not want to burden the record because the American Bankers Association, representing the national banks, will be here Wednesday to testify; and you have Mr. Brumbaugh, of Pennsylvania, who speaks for the State bankers association. You will also have a representative from Virginia who speaks for our State bankers association. The members of the committee and the Members of Congress, I am sure, have been getting the same kind of mail that I did. In order to promote economy and efficiency in public printing, I did not ask for all those communications to be put in. But the tenor of them all is the same. They are against it.

The CHAIRMAN. The chairman only wished to inquire if you wished to have these two that you have submitted printed in the record.

Senator ROBERTSON. I thought they were pretty good and they were fair samples of the rest.

The CHAIRMAN. They may be included in the record. Senator ROBERTSON. I would like to have them included. (The letters referred to follow:)

UNITED STATES SENATE,

April 7, 1950. Mr. WALTER L. REYNOLDS, Chief Clerk, Senate Committee on Expenditures in the Executive Depart ments,

Senate Office Building, Washington, D. C. DEAR MR. REYNOLDS: I enclose two letters from State banking departments endorsing my bill to disapprove Reorganization Plan No. 1. I would like for these letters to be incorporated in the hearings. Sincerely yours,

A. WILLIS ROBERTSON.

MARYLAND STATE BANKING DEPARTMENT,

Baltimore, Md., April 6, 1950. Hon. A. WILLIS ROBERTSON, United States Senator, Senate Office Building,

Washington, D. C. DEAR SENATOR ROBERTSON: It was indeed pleasing to note the introduction of your resolution opposing Reorganization Plan No. 1, which would seriously and unfavorably affect the independence and administration of the Office of the Comptroller of the Currency.

We feel impelled to write you in support of your resolution, as we believe that the functions and authority of the Comptroller of the Currency will be vitally affected should the provisions of the Reorganization Plan No. 1 of the President be allowed to become law. We believe that, should this plan become operative, it would more adversely affect the banking functions of this Nation than any other single development since the establishment of the Office of the Comptroller of the Currency some 80 years ago.

As administrator of the State banking system of Maryland, and vitally interested in the continuance of the dual banking system throughout the Nation, we certainly do not desire to see the present effectiveness or efficiency of the Office of the Comptroller disturbed. Certainly this plan would weaken his Office, and any such weakening of the over-all supervisory picture would necessarily tend to weaken the soundness of the whole banking structure. We therefore sincerely hope that you will be succes in your efforts to have your resolution prevail, and that the application of Reorganization Plan No. 1 will be deleted insofar as it pertains to the Office of the Comptroller. We are deeply appreciative of your efforts in this connection on behalf of the dual banking system of the country. Yours very sincerely,

J. MILLARD TAWES,

Bank Commissioner. John D. HOSPELHORN,

Deputy Bank Commissioner. P. S.—We are forwarding a copy of this communication to Senator Maybank.

STATE OF CONNECTICUT BANKING DEPARTMENT,

Hartford, April 5, 1950. Hon. A. WILLIS ROBERTSON, United States Senator, Senate Office Building,

Washington, D. C. DEAR SENATOR ROBERTSON: My sincere congratulations to you for your introduction of the resolution opposing Reorganization Plan No. 1, which would seriously and unfavorably affect the independence of the Office of the Comptroller of the Currency.

The reasons you give for advocating your resolution, as reported in the press, are inclusive and conclusive and need no further argument by me. As a State bank commissioner and a firm believer in our dual system of banking, I certainly do not want to see the present effectiveness of the Comptroller's office disturbed, The proposed plan would, in my opinion, weaken his office and therefore weaken his supervision over national banks and inevitably weaken the dual banking system.

I hope that you will be successful in your effort to stop Reorganization Plan No. 1.

With repeated appreciation for what you are doing in behalf of the dual banking system, I am, Most sincerely yours,

RICHARD RAPPORT, Commissioner. P. S.-I am taking the liberty of sending a copy of this letter to Senator Maybank.

The CHAIRMAN. Senator O'Conor, do you have any questions?

Senator O’CONOR. Senator Robertson, in the very persuasive statement you have made, I am sure you have covered this, but I would like, if you could, to amplify somewhat on it. In our State there has been quite much criticism voiced of this proposed reorganization plan because, it is contended, it would adversely affect the prestige and the authority of this particular official. What would your opinion be with respect to that?

Senator ROBERTSON. Undoubtedly it would relegate him to a messenger-boy status.

Senator O'CONOR. Undoubtedly they have felt that the Office of Comptroller of the Currency is of the very highest

Senator ROBERTSON. He is now their operating head, and they will lose that operating head. He then would go down to some minor administrative function to be delegated to him in greater or less degree by the Secretary of the Treasury. When Mr. Snyder wrote you that if this thing goes through, Mr. Delano would have all the powers he would have now, that he would not change one of them, that indicates how he feels about Mr. Delano. That is the way the banks feel about it. He should have them, but they want him to have them by law and not at the election of some superior officer.

Senator O'CONOR. That is just the point I was coming to. I just wonder, if he is to retain all the powers and authority, what would be gained by the reorganization plan if at the same time the prestige and authority of the Comptroller of the Currency is to be adversely affected.

Senator ROBERTSON. According to the letter that has been filed with you by the Secretary of the Treasury he does not think we would gain anything in the way of efficiency or economy, and the banks feel that they would have a very definite loss in the prestige of their operating head and that there might be some other consequences, on which I have already touched.

Senator O'CONOR. Reference was made also to the experience of the past where there was a merger of the legal functions of the Treas

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