Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-27
New Book Suggests Methods
of Strengthening Structure
of U. S. Agency.
PREVENTION OF CREDIT
CRISIS DECLARED VITAL
Conflict of Authority Between
Banks and Board Held Draw
back to System.
BY JOHN F. SINCLAIR.
Special Dispatch to The Star.

- SOAAAN 6A1NN44AA1s
Special Dispatch to The Star.
NEW YORK, April 26.-Paul War
burg'S new book on THE Federal Re
serve System" raises three serious Ques-
lions.
1. How can the boards authority be
preserved intact for future credit
of authority between the Federal Re
serve Banks and the board at Washing
ton be clarified? 3. How can bootleg"
loans be better controlled?
To meet question No. Mr.. Warburg
suggests (a) having the governor chosen
by the board members; (b) having the
Craftsmanship of the board filled by the
governor and not by the Secretary of
the Treasury, as at present, and (c) al
member of the board without having
his name confirmed by the Senate. This,
he contends, will eliminate political in
huence.
Mr.. Warburg would solve question
No. 2 by having four delegates, chosen
by the Federal Reserve banks, sit and
vote with the Reserve Board at its
monthly meetings.
For the better control Of bootleg
loans-question No. She proposes that
every member bank, lending ION CALL"
should "Set aside an amount equal to
a given PROPORTION of the fund so en-
ployed, and invest the amount so with
held in eligible acceptances or loans
thereon
AS an original member Of the Federal
Reserve Board for four years, the father
Of the rediscount system incorporated
into the Reserve system, as q recognized
student Of central banking policy
throughout the world, Mr.. Warburg's
statement deserves the widest reading.
Does 1t not seem absurd" asks this
New York banker, "that paternalistic
guidance should be gratefully accepted
in the face of the actual occurrence Of
a grave calamity, but should be re-
sented when connected with an effort
to forestall it? Is it not childish that
We should be willing to fight an cpl
demic after 1t has spread, but should
be unwilling to localize the disease be-
fore it has got beyond our control?"
Mr.: Warburgs latest work win be
read by all thoughtful students Of Fed
eral Reserve procedure.
. The Gold Basis.
What business man 20 years ago
would have talked about adjusting the
gold base of the world so that there
Will be no injurious effects on come
modify price levels which might infiict
loss by undue fiuctuation?"
Yet this is what julius II. Barnes dis
cussed with the American publishers in
New York.
Gold is very basic factor In busi-
ness prosperity, but few OF us give any
thought to 1t at all.
It was when this business leader said
that today one-fifteenth part Of the
worlds population Chat Is, the population
of the United StateS) performs one-half
of the annual labor Of the world that
he struck responsive cord. Put sim
liar methods into practice in other
parts of the world and see what hap
pens! Surely then a vast expansion of
the worlds wealth and improved stand
ards of living in backward nations
would result.
ITO say that in this world of limit
less aspirations, with recorded knowl-
edge and practice increasing day by
day, that business recession can he
other than temporary interlude In
the march OF natural progress surely
fails to grasp the vista of the future"
concluded Mr.. Barnes.
It's hard to comprehend such devel-
opment when the business sky Is a
little overcast.
Milk Prices Stabilized.
That great center of population. New
York and its vicinity, win continue to
get wholesome, clean milk cheaply
and rapidly.
In approving the $4,000 loan of
the Dairymen's League Cooperative
Board paved the way for the associa-
ton to carry out its three-year pro-
gram Of expanding its merchandising
ana handling facilities for the sale Of
its products.
Before approving the application for
the loan the Farm Board investigated
the business management of the asso-
citation and found that the 10000 dairy
farmers Of New York, Pennsylvania,
New. Jersey, Vermont, Massachusetts
and Connecticut were running their
business on a sound basis and that the
associations financial structure and the
service it is rendering in this section of
the country Is excellent
The Farm Boards policy Of helping
those who help themselves (by cooper
ative methods) continues. It's one of
their major policies-maybe the best Of
them.
"Talkies" Are Expanding.
The "talkies'' are spreading. Chile
has heard its first "talkie," a musical
review, and is pleased. italy, Greece
receive sound pictures, according to a
Department of Commerce report, as
81 motion picture theaters In Italy have
been wired for sound, seven theaters in
Greece and four in Turkey.
American equipment is being favored
slightly more than European equipment.
New problems raised by the "talkies''
are not easy to solve. The production
in the various native tongues Is not ex-
trernely difficult, but extremely costly.
and as the majority Of the people In the
foreign countries cannot pay more to
hear and see the "talkie' the added cost
of the film to the exhibitor Is making
the problem still greater one.
Jorge Delano, Chile's great artist and
leading director Of the largest pro-
ducing company there. the Andes Films,
is in the United States at the present
time studying the "talkie."
Native players with native directors
are the only solution" says Senior
Delano.
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