Evening star., 1920-03-20
BY WILL p. KENNEDY.

most important pieces of financial
legislation during the readjustment
period is to be called up in the House
for vote early next week by Chair
man Platt of the House committee on
banking and currency. And now that
the Senate has disposed of the peace
treaty, Senator Mclean. chairman OF
the Senate banking and currency COM
mittee, will urge immediate action by
the upper house upon the legislation.
This proposes to amend the federal
reserve act to allow the Federal Re
serve Bank to give each member
bank rediscount line based on capi-
ital and surplus or on legal reserve.
Chairman Platt points out that the
Federal Reserve Board has under
taken to check the expansion of
credit which has occurred during
and since the war by raising the DIS
count rates. But it has been found
that this uniform increase of rates
does not control the situation. He
explains that high discount rate
has a restraining influence on the
member banks and on their custom
erS. but that, as a matter or 1acI, the
rediscounting is done by only very
few banks in each district. lie re-
calls that before the federal reserve
system was put to work no national
bank could incur indebtedness pc
yond the amount of it's capital stock
for rediscounts; but the federal re.
serve act contains an amendment
CURED under the provisions of the
federal reserve act.
Removes the Limit.
This has removed the limit, he
noints out. and rediscounts to any
amount may be lawfully made with
the federal reserve banks. some
banks have rediscounted several
times their capital and surplus anu ,t
il is obvious, Mr.. Platt points out:
that there should be a method OF
ohecking them short of actually re,
fusing them further extensions ana
without increasing too much the rate
applicable to all member banks:
through Congress next week, would
give each federal reserve bank author-
;ty to make uniform rules determlh,
ing for each member bank norma
maximum rediscount line baseo on
some such standard as its legal re-
serve, or possibly upon capital ana
surplus, with graduated rates on an
ascending scale to apply equally ana
ratably to all of its member banks re-
discounting amounts in excess OF tne
normal line.
Still further emphasizing the fact
that the republican majority IN Con.
sress proposes to remove the federa!
reserve system from any politics ano
TO strengthen 1t, Chairman Platt
points out that in ordering the aboli-
ton of the nine subtreasuries the re-
publican majority in the House has
cut Off at least $4,000 of very desir-
able patronage.
amendment to the legislative appro-
priation bill in the House to abolish
these subtreasuries, and he has been
in conference with the Senate aDpro-
priations committee on the same sub
ject He has sussssted s,S, 70 .banss sae senate in
which the Treasury officials concur.
These include necessary appropr1a-
tions for removal Of gold and silver
from these subtreasurtes to the mints
or assay office or the Treasury In
Washington.
The abolition Of these nine subtreas-
uries and the distribution OF their
functions to the federal reserve banks
puts another strong prop under tnat
system, and guarantees Its perma-
nency. The assistant treasurers at
these subtreasuries have not been
under civil service. but are political
appointees, and have been getting
salaries aggregating $4,000.
Early consideration by the ways
and means committee has been prom
ised on the bill introduced by Rep
resentative W. r. Green of Iowa,
ranking republican on the committee,
which proposes to impose an excise
dividends. 1t directs that each cor
poration making a distribution during
the year 1920 of it's capital stock to its
stockholders without receiving pay
lent to Is per centum Of the face value
of the shares go issued"
Congress has just received the first
formal proposal to finance trade with
Germany. Representative Smith. dem
ocrat, of New York has introduced
bill which is to be considered by the
ways and means committee. 1t would
authorize establishment of a credit
in favor Of Germany, with the War
to the extent of $1,000 900, but
not more than $300.000,000 to be adj
vanced in any one year.
Under this legislation, II passed. /
the War Finance Corporation would
be authorized to pay to any person,
gagged in business in the United
States. the contract price of supplies
of food and raw materials hereafter
purchased, or agreed to be purchased,
such person. firm. corporation or as
sociation. and to accept In full pay
ment of the moneys so advapced the
bonds. obligations, or other evidence
of Indebtedness to be issued by Ger
many for the payment Of the moneys
so advanced, to bear interest at the
rate of 6 per centum per annum from
the date Of such advance: Provided.
that the said contract shall be ap-
proved by the corporation as to price,
quantity. and subject matter; that
the said contract shall be for such
supplies of food and raw materials
as may be judged by the governments
of the principal allied and associated
powers. parties to the treaty of peace
between the said powers and Ger
many, to be essential to enable Ger
many to meet her obligation for rep
aration under the said treaty: and
that the said bonds. obligations or
undertakings by Germany shall be
first charge on all the assets and
revenue of the German empire and
its constituent states. and shall be
paid in priority to all other bonds.
obligations and undertakings of Ger
many. except such as may be issued
for the payment of the costs and
EXPENSES of the armies Of occupa-
n