The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1928-06-07
KEEPING UP
With
THE NE WIS
BY LUDWELL DENNY

- gressive Republicans in attack
ing the Administration Federal
Reserve Board policy, which has
permitted brokers' loans for stock
g gambling" to reach the record fig
Ire of five billion dollars.
Senator Carter Glass of Virginia,
Secretary of the Treasury under
President Wilson and his party's
financial expert, condemned the
present reserve board policy in an
article in the United States Banker
today
This attack follows the La Fol-
lette resolution and hearings, and
the Senate committee report, de-
handing curb on loans for specu-
lative purposes.
While many Senators have urged
legislative remedies, Glass asserts
that "thiS situation should be cor
rected administratively, without
forcing the dangerous eXpedient Of
statutory readjustment."
Despite the desire Of some Demo-
cratic leaders to stress as a cam
paign issue the alleged prevail
Street policy of the Federal Reserve
Board, which especially is unpopu-
lar In the Middle West farm sec
tiot1s where many small banks have
failed, it is not clear that AL Smith.
the anticipated presidential candi-
l
tack on Wall Street and the board.
n II
CMITH'S friend and political adj
~ wiser, Senator Wagner of New
York, voted against the modified
Senate resolution in committee,
which was supported by Glass and
the southern Democrats and by the
progressive Republicans from west
ern farm States. Senator Barley,
Kentucky favorite son candidate,
and possible choice for second
place on the Smith ticket, voted
with Wagner.
Glass argued today that.
/. Action of the Reserve board in
forcing a uniform rediscount rate
for all Reserve banks is producing
precisely the kind of banking CEN
tralization in Washington which
Congress rejected in establishing the
Federal Reserve system.
2. 1.-THE rapid and alarming climb
of the volume of money loaned for
speculation has sucked into its
center whatever money values were
lying around loose, and tended to
draw upon distant reservoirs for
funds" Steps should be taken to
prevent such use of the country's
resources in stock gambling as is
now encouraged by the boards
policy, according to Glass.
To guard against such use, he
points out, the law specifically for
baoe the Reserve banks to redis-
count paper drawn for the purpose
of carrying or trading in stocks,
bonds, or other investment secur-
tiles except bonds ard notes of the
! Government.
Brokers loans, which amounted
to less than $8O0,00O,000 seven years
ago, rose to almost $4,000,000,000
this winter and now are reported
in excess of $5,000,0O0, 900.
A N increase in New York last
IA Tuesday of the call money rate
to z per cent, the highest in seven
years, and a Federal Reserve state
ment caused a severe drop in the
stock market with 100000 shares
changing hands during the day.
Evidence that the Reserve Board is
concerned was seen in its unusual
advance statement that credit ex-
tensions by member banks had in
creased $1,000,0O0,OO0 since Feb
ruary, and that
UNLESS a change occurs in the
direction of gold movements, or in
the open market policy of the Fed
eral Reserve system, the only means
by which member banks will be able
to reduce their debt at the reserve
banks is sale of investments or a
gradual contraction of their loan
account"
Gustav Cassel, Swedish econo-
mist. testified in the recent House
hearing on the subject that the
Federal Reserve system by trying to
check Wall Street speculation by
raising interest rates for loans from
its banks would run the risk Of
disturbing the credit situation for
industry.
TN recessing to look after their own
Il political fences and attend the
political conventions members of the
Senate committee investigation
committee announced to date the
amount of total expenses spent by
presidential candidates.
Hoover, leading Republican can
didate, spent $380,822, compared
with $121,4 All for the Democrat,
Smith. Hoover's chief opponent,
Lowden, is credited with $60,922, and
Watson, who campaigned only in
Indiana, with $36,472. The deceased
Willis, who fought Hoover only in
Ohio, spent $66,769. Vice President
Dawes, dark horse associate of
Lowden, spent $579.
Smiths opponent, Senator Jim
Reed, of Missouri, is listed with
$38, 752; Hull $845 and George $115.
n
After failing to mediate the
Guatemalan- Honduran boundary
dispute, as the State Department
earlier failed to settle the Peruvian
Chilean argument over Tacna-Arica,
Secretary Kellogg now proposes that
Guatemala and Honduras take their
quarrel to the Central American
tribunal.