Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-15
GLASS CREDIT CURB
MOVE HELD Strong
Virqinian Is Pictured as Most
Formidable Opponent of
Speculation.

Senator Nye of North Dakota has
added himself to Senators Glass OF
Virginia and King of Utah as authors
of proposals to take account of present
conditions of credit as affected by
operations on the New York Stock EX-
change. OF the three moves, the one
by Senator Glass of Virginia Is likely
to be the most formidable. He comes
nearer to being the author of the Fed
eral Reserve System than any other one
man. In that work, it was his constant
preoccupation to make credit reservoir
which should operate to the advantage
of business as contraSted with stocE
speculation.
Senator Glass now sees what in his
opinion amounts Depreciation absorb
ing an excessive proportion OF the
country's credit, to the disadvantage OF
business. Whatever Senator Glass de-
vises to check this condition will be
carefully thought out and will command
respect In Washington. 1t cannot, how
ever, be considered at this special ses-
sion of Congress, because the remainder
of the session is too short and too
crowded with other matters. 1t would
be six to nine months, at least, before
Senator Glass proposal could come be-
fore both houses of Congress for ultl-
mate action.
Associated with Banks Action.
All these proposals for congressional
action are, of course, associated with
last weeks action of the Federal Reserve
Bank about credit That action was
widely misunderstood especially by the
New York Stock Exchange, which wen:
into a mild temporary panic on receipt
of the news. The purpose OF the Fed
eral Reserve Board was to provide a
large amount of credit for business as
DISTINGUISHED from speculation in stocks
Speaking very roughly, the Federal Re-
serve Board, for some six months, mas
desired to have larger proportion OF
the country's active credit available 1or
business. To state the same thing an
other way, the board has been con-
tinuously concerned about what 1t re-
CARDS as the absorption OF an excessive
share of the country's active credit by
speculation on the New York Stock
Exchange.
In February and subsequently, the
board tried to change this condition by
bringing about less use OF credit 1oI
stock speculation through warning to
and pressure on various interests in
yolyed. This method was not success
full except for temporary period.
More credit is in use today for stock
speculation than at any time in the
east. In this condition. the Federal
Reserve Board took its action OF last
week.
Board Wants Business Credit.
Whatever is said about either the
motives or the effects of that action
necessarily is largely matter OF In
ference and can be stated only roughly
1t is at least tenable inference to
say that the Federal Reserve Board
concluded to go about providing more
credit for business by a new and
different means 1t announced step
which meant, in effect, to state 1t loose
~, that Federal Reserve banks would,
so to speak, make available con-
siderable amount of new and additional
credit. This new credit is, in effect,
being made available to business di-
rectly in large amounts, at a rate
which is reduced from 5l2 per cent to
51s per cent.
1t would be incorrect to say that the
Federal Reserve Board abandoned its
effort to provide more credit for bust
ness through the former means OF
bringing about release of credit from
its present use in speculation. 1t
would not be incorrect, however, to say
that the boards six months effort in
this direction has been unsuccessful
Neither would it be incorrect to say
that the boards action last week is
likely to cause less Use of credit in
speculation, and was not primarily de-
signed to.
1t is true that as part of last weeks
action, the New York Federal Reserve
Bank raised the discount rate on credit
of the sort used in speculation from 5
per cent to per cent. Under many
conditions that would cause less use Of
credit IN speculation. 1t is not ex-
pected to have that effect to any ma
terial degree now, when spectators for