South Bend news-times. (South Bend, Ind.) 1913-1938, 1913-09-09
Democratic Members Claim
Measure Establishing Re-
serve Banks and Substitution
of More Flexible Medium
viii Solve finance Problem.
FOES DECLARE PLAN
WILL DISRUPT SYSTEM
Republican Minority ASSaiIS
Provision Requiring National
Banks to Subscribe to Fed
eral Reserve Stocks as In
expedient.

WASHINGTON. Sept 9.-The Glass
currency reform bill was formally re-
ported TO the house today. Chairman
Glass presenting a report signed by
all the democratic members OF the
house banking and currency commit
tee in which it was claimed that the
Fundamental features of the bill are:
Creation Of "a joint mechanism for
the extension OF credit TO banks which
possess sound assets and which de-
sire TO Hquidate them to meet legiti-
mate Industrial, commercial and agri-
cultural demands; ultimate realize
ment Of the present bond secured cur
Tency with the substitution therefor
OF a more flexible medium of exchange
and provision for the extension of
American banking facilities for for
eign countries.
Coincident with the presentation of
this report, a report was presented
on behalf OF the republican members
of the committee condemning three
of the leading features of the bill.
Minority Attacks Bill.
The minority members claimed that
the powers conferred by the bill upon
the federal reserve board were too
great and this was one danger the
board thought would be used for par
tisan purpose.
The majority report predicts that
the twelve federal reserve banks pro-
vided for by the bill will have joint
resources of about $3.50, 100000 with
which 10 begin business. OF this
amount compulsory subscriptions of
stock from the capital stock of over
1000 national banks will be 100000
600. Transfer of government depOs-
its in. feres.sl depository to the federal
banks Will be $135. .00O.0 600. From
this statement il is deduced that the
~ n xrrOu
with cash resources Of about $780,
600. 600. The remaining $3.50, 100000
would be made up of reserves which
under the terms Of the bill would be
transferred To the vaults of the re
serve banks. The majority members
admit that ''it cannot be predicted
confidently how many state banks
would apply for or be granted admls-
sion 10 the new system"
The majority report discusses the
3nadequacy Of the present disposition
of bank reserves to provide liquid re-
sources for the business of the cOun-
Try and declares the only way of sOlv-
ing the problem is by placing the re-
serves in duly qualified institutions
(which shall act primarily in the pub
JIG interest"
Good Business Policy"
The provision in the bill providing
FOR the retire of the govern
Aent two-percent bonds which have
glEGulaNfOn
= for three-percent bonds without
he circulation privilege is declared TO
fe IAN excellent business policy Tor
Lhe government
The circulation privilege the report
declares. is worth at least one percent
and "the banks get no undue consid-
Grafton from the government.
The cost TO the C2Xernment of the
conversation of these bonds, IL is esti-
mated. will be S1.50O,OO0, or about
one percent of the value of all the
bonds concerned.
The report asserts that the COM
pulsion" features of the bill that is
the feature requiring national BANKS
10 subscribe 10 the stock OF the reserve
banks, IS not unfair 10 the banks. IN
der the present law. II is pointed out,
the national banks are compelled 20
carry an investment OF 500. 100000 in
bonds bearing the circulation privi-
1ege, while under the reserve system
they would be compelled 20 invest only
$3.50. 900. 600 in the federal reserve
banks Even IL the earnings from this
hank stock were only I'VE percent the
report continues. the banks would be
better of than IL receiving only the
earnings of bank note issues plus the
two percent interest
Republicans Claim 'F'reeZeOut'.
Pointed criticism Of the features OF
the Glass currency bill dealing with
stock purchases, note issues and the
movers OF the federal reserve board
we're made in minority report on the
hill presented TO the house today by
1ne republican members OF the house
banking and currency committee. The
republicans complained that after the
democratic members OF the committee
called them in conference they refus-
ed &c permit amendments 20 the bill.
The republicans object 10 the provision
in the bin which compels national
hanks 10 subscribe 20 the stock OF fed
eral reserve banks on pain OF Ior-
feiting their charters
I'VE believe this provision is OF
doubtful constitutionality and ineNpe-
Gient BY compelling national banks
60 forfeit their charters, all business
will be disorganized. our national
| banking system destroyed. and our
kFhole financial structure disrupted.
May Involve Credit OF L. :.
The report SAYS that the bill, by 4
iding that notes issued by the J
raj reserve banks shall be recog- /
- as obligations OF the T.. s. prac- /
l. creates a central bank, and this 4
Inment obligation In times of 7
Is. might lead 90 serious complica-
hs involving the credit OF the gov
kment.
nplalnt 81 made that the pewers
federal reserve board arc too
and u urged that the board
u be given supervision but not