Business: Without Disgrace

The best banking walls of Wall Street did not fall down last week before the long trumpet-blasts of Jesse Jones. But most of them opened their postern gates and let Mr. Jones come in with the money he was determined to inject into them.

The National City was the only big bank last week to surrender completely. If the stockholders approve it will let the RFC buy $50,000,000 of its preferred stock. Mr. Jones radiated assurance that the government would not make itself a nuisance at stockholders' meetings. But the fact remained that the U. S. will become National City's biggest stockholder—and if ever two preferred stock dividends should be omitted, the Government will have complete control.

Eight other New York banks were able to resist the RFC's passion to become a stockholder because they were state institutions. They compromised by selling the RFC "capital notes." Thus supersolvent Guaranty Trust, already vexed by having more money than it can profitably use, planned to let the Government lend it $20,000,000.

Having removed the curse of taking government aid, Mr. Jones could now proceed to make the Government a large, if not the largest stockholder, with full voting rights, in perhaps one-quarter of all the country's banks without disgracing them. He announced completed arrangements to go into 1,293 banks with $425,000,000.

National City planned to use its huge piece of government money to write down its common stock from $124,000,000 to $77,500,000 and to write down surplus from $40,000,000 to $30,000,000. "With the adoption of the plan,'' Chairman Perkins informed his stockholders, "the assets of the bank will be carried at conservative values. . . ." Wall Street agreed. When this operation is completed, National City's Depression write-offs will total $146,000,000.