The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1925-03-03
Would Change Reserve Act.

A bill to repeal war amendments
to the Federal Reserve act, for the
uurpose of restoring the Federal he
serve system to it's original form
and thus remove the menace in
VoIved in continuing in operation
: the authority given under these
amendments, was introduced in The
House Yesterday by Congressman
McFadden, chairman of the Commit
tee on Banking and Currency.
This bill provides for lessening OF
legal reserve requirements with the
Federal Reserve banks, ana the
placing of these requirements prac
ficaIly where they were prior To
1917. It also forbids the issuance
of Federal Reserve notes in ex-
change for gold, and forbids also the
purchasing in the open market OF
the paper to be used as security for
the issuance of Federal Reserve
notes. which under the war amend
uents is now permitted when sup
ulemented by 40 per cent deposit OF
gold with the Federal Reserve
agents.
Mr.. McFadden pointed out his OBJ
section to the permitting of the Is
suance of notes in exchange Tor
gold in that it tends to confusion
As to the precise extent to which
Federal reserve notes are OutStand'
ing in aid of commercial require
ments. He contended that this was
the only way such notes should De
issued, and pointed out how impossi-
BILE ii was to know to what extent
these notes were outstanding IN
other ways and for other purposes.
He said further that the amount OF
notes outstanding ought always TO
be a full and accurate measure OF
the degree to which the currency
system of the country is being sat
urated with new currency through
the issuance of these notes, and
that it ought not to be necessary
to make involved computations in
determining the exact amount OF
notes outstanding.
Mr.. McFadden called attention also
to the fact that Notwithstanding the
easy money conditions prevailing
at the present time and the low
interest rates incident thereto there
are outstanding $1,750, ZOO, 900 Fed
eral reserve notes, which, he said,
should not be the case If the fun
damental principles of the Federal
reserve act as originally created are
correct.
1.-The outstanding Federal Re-
serve notes were to reflect the cur
rency needs of the country and
were to be elastic" said Mr.. Nc
F'adden. eff in times like the
present it is necessary billion
and three quarters Of Federal Re-
serve notes be frozen in the sys-
TEN, one naturally wonders if
that is not the same kind OF cir
cElating medium that was afforded
through the issuance of government
bond secured national bank curren-
cy, which, for its inelasticity. long
recognized, the Federal Reserve
note was created to cure. The re-
peal of these war amendments will
take out of our currency system,
as now operated a 81 ,000, 200, 900 of
Initiation, the continuance of which
u a strong factor in maintaining
present high prices on commodi-
ties"
Mr.. McFadden, Of course. does
not expect action on this bill al
this session of Congress. and his
purpose in now introducing it is
that there may be advance notice of
such action to enable a full consid-
Grafton Of the subject before the
converting of the next session OF
Congress. when he will press for
action the repeal Of these wer
amendments to the Federal Re-
GarYe act