Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-21
M'FAODEN TOSTUDY
BANKING SITUATION
Pennsylvania to Prepare for
Possible Legislation Over
Reserve System.
Representative Louis r. McFadden Of

Representative Louis r. McFadden Of
Pennsylvania, chairman Of the House
committee ON banking and currency,
who was in Washington yesterday, Is
making plans for q comprehensive
uation in preparation for possible leg
islation at the coming regular session.
His study will include the workings OF
the Federal Reserve system, loans Oh
speculation. the conditions Of credit
for general business asa, in fact, the
whole range Of subjects connected with
these problems.
Branch banking or chain banking In
the States and the question of what
the Reserve system must do to meet
this development will be one phase Of
will 90. The relations Of the Reserve
system to international finance and the
possibilities Of q proposed international
bank, which has been planned by the
experts who recently acted on German
reparations. also are to be given at
tention.
Capitol Investigation Is Seen.
Inasmuch as it is expected the Senate
banking and currency committee Will
make an investigation Of wide scope into
Federal Reserve matters, brokers loans
and many other matters relating to
banking and finance, IL now looks as II
there would be started thsi Fall an i'm
portant financial inquiry at each end OF
the Capitol.
These Investigations. 1t is expected,
ultimately will result In Congress CIV
ing serious consideration to further
Federal Reserve legislation, including
the question of the attitude of the Re-
serve system toward speculation and
speculative loans.
Senator w. II. King yesterday said
he had been assured the banking and
currency committee of the Senate would
act favorably on his resolution Of in
vestigation after the recess. This reso-
luton covers q score of points and
propositions connected with banking,
speculation and credit which the Utah
Senator believes should be studied.
Senator King declares the concentration
Of large share of the country's money
and credit in the speculative centers
Is an evil, which Is hurting general
business and industry.
Chairman McFadden pointed out that
the House banking and currency COM
mittee is not yet organized. Hence it
Is not yet possible for the subject of an
inquiry by that committee to be taken
up. However, he Is going ahead to
make study of broad scope individ-
ually He expects to devote practically
all the time between now and the reg
ular session to the inquiry.
Il expect to study the situation care
fully" said Chairman McFadden. II
recognize the importance Of this situa-
ton and desire to be ready In case
there seems to be need for construc-
tive legislative action"
MT. McFadden has been q sharp
critic Of the Federal Reserve Board
because OF its warnings and efforts di.
rected at speculation and speculative
loans. He has made 1t clear that he
believes the board has been getting into
field where IL did not belong. In
speeches In and out Of the House, Mr..
McFadden has made plain his position.
He does not think the board should at
tempt to regulate speculation. In the
House early last February he declared
ne did not see that the gold reserve
was in danger nor any indication of
general rise in the commodity price
level and, because Of these facts, he did
not think that the Federal Reserve
system should concern itself about the
condition Of the stock market or Of the
security loan market"
MeFadden's Viewpoint.
IT do not think" said Mr.. McFad-
den. that the assumption Is warranted
that brokers loans are depriving busi-
ness Of funds. nor that all Of the Sc
cur1ty loans are unproductive. In my
judgment, there Is too little known
about the ultimate disposition of stock
market loans to warrant any action
designed to depress those loans by the
Federal Reserve system"
Mr.. McFadden has not changed the
views which he expressed then. He
still believes the situation as to specu-
lation and stock market loans should
have been allowed to rectify itself and
that the effects Of the intervention by
the reserve board have been unfor-
tunate.
Mr.. McFadden is not prepared to
say what further legislation pertain
ing to the reserve system and banking
matters in general Is necessary. In
some quarters there will be demand
for restricting the scope Of the reserve
boards powers, while in others there
will be insiStence that the use Of Fed
eral Reserve money for speculation be
prohibited by law. Senator Smith w.
Brookhart Of Iowa already has pro-
posed such prohibition.