Unified Control of Banking

April 4, 1933

Report Outline
Bank Crisis and the Movement for Unified Control
The Existing Banking Structure
Historical Development of Existing Structure
Possible Forms of Unified Control
Banking Functions and Division of Control

Bank Crisis and the Movement for Unified Control

Supervision of all banking in the United States was unified by the presidential proclamation of March 6, 1933, when control was assumed for the federal government and all the banks were closed. Unification was only temporary however, for as fast as banks were licensed to reopen they returned to their original jurisdictions. If permanent unification is to be effected, it must be achieved by the more deliberate process of congressional legislation. Legislation to this end is, in effect, recommended in a written opinion by Walter Wyatt, chief counsel of the Federal Reserve Board, holding that Congress has full constitutional power to do away with the state banking systems and compel the establishment of a unified system under federal control. The opinion, prepared last December upon the order of the Federal Reserve Board, but not made public, until March 30, 1933, was transmitted by the Board to the Senate Committee on Banking and Currency, which for more than two years has been struggling with the problem of banking reform.

Movement for Unified Control of Banking

In testimony before a sub-committee of the Senate Committee on Banking and Currency, March 29. 1932, Eugene Meyer, governor of the Federal Reserve Board, said:

It should be realized that effective supervision of banking in this country has been seriously hampered by the competition between [Federal reserve] member and non-member banks and that the establishment of a unified system of banking under national supervision is essential to fundamental banking reforms.

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