Paper Convention

In spite of the wartime ban on conventions the venerable 67-year-old American Bankers Association last week held its annual conclave almost as usual. No transportation was wasted, however. The meeting was by mail and through the industry's magazine, Banking.

Conspicuously missing were cut-throat card games, tomfoolery, cocktail parties, hangovers. Even so, A.B.A.'s "Convention in Print" had nearly everything else: a long program, scores of speakers, round-table confabs, introductions to important delegates.

President Roosevelt opened the convention, praised the bankers for their "distinguished role" in the fight against inflation and in financing war production. Secretary Morgenthau thanked members for their crackerjack job of war-bond selling: "[You] have given the equivalent of 25,000 full-time employes and have made 85% of all sales. . . ."

Most important speech-by-mail came from smart, hard-hitting National City Bank Vice Chairman W. Randolph Burgess. Banker Burgess said that the Government's unprecedented need for cash would force the banks to buy at least $24 billion in Government bonds before June 30, 1943. This would boost bank investments in Government bonds to a titanic $49 billion ($17 billion, 1929), far & away the highest ever and almost 70% of all loans and investments.

This means that the bulk of bank earnings must henceforth come from investments in Government bonds. This is not a happy prospect. Government bonds yield around 2% annually v. 3 to 4% on choice industrial loans, up to 12% on real-estate operations. To offset this revenue drop the banks want to reduce interest rates they pay, are already considering a flock of special service charges. They may even have to close some of their small, low-earning branch banks..

Said Banker Burgess: "Earnings are between the upper millstone of low money rates and the nether millstone of high taxes . . . banks need to husband their capital. ... It is no bed of roses."

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