Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-14
FEDERAL RESERVE
TO Be UNCHANGED
Treasury and Administration
Oppose Absorption of
Frozen Assets.

II the Federal Reserve act Is ever
broadened 1t will not include the redis-
counting of slow or frozen assets. This
explanation was made yesterday to off,
set a misconception of the Presidents
plan to mobilize the credit resources of
the country. Letters exchanged between
Senator Glass of Virginia, ranking
Democrat on the Banking and Currency
Committee, and Senator Robinson,
Democratic leader, are concurred in alb
solutely by officials of the Treasury and
by the administration generally.
The plan of the bankers pool, now
known as the National Credit Corpora
ton, to rediscount certain notes backed
up by local banks and clearing house
committees, has nothing whatsoever to
do with the proposal made by the Pres
ident to recommend to Congress a
study Of the eligibility requirements of
the Federal Reserve act on the rediS-
counting Of credit obligations.
Set Up by Private Banks.
The bankers pool Is private agency
Get up the banks themselves to use their
collective credit to care for emergency
situations. to prevent bank runs and 10y
their overwhelming strength maintain
public confidence. But even the
bankers pool is not going to rediscount
really frozen or worthless assets and
will insist on sound paper, backed by
the notes of borrowing banks them
selves as we'll as by the local clearing
house committees
II any clearing up Of slow assets and
any other aid is needed for real estate
securities and railroad bonds, it will
come through the means of tempo
rary organization patterned after the
War Finance Corporation, with capt.
tai granted by Congress and with the
slerNak g. ~, I~ a.
ture after the liquidation of such
frozen assets is accomplished
But nobody in the Government has
ever dreamed of making either the cred
its made under the proposed War FL
nance Corporation or the credits grant
ed by the National Credit Corporation
eligible, for rediscounting at the Fed
eral Reserve banks.
Confusion Is Explained.
The confusion probably arose from
the fact all the different proposals were
given out simultaneously in one COM
prehensive plan for national reconstruc-
ton when the President conferred last
week with leaders of both parties in
Congress.
The controversy over eligibility for re-
discount at the Federal Reserve has
been going on for 18 years or more and
there are different schools of thought.
Senator Glass of Virginia, author of
the Federal Reserve law. has been max
ing a special study of the subject and
there Is little doubt that President Hoo
yer will be found agreeing with Mr..
GLASS;. recommendations.
Indeed big New York bankers have
Informally indicated they think there
should be no tampering with the eligi-
bility requirements, because of ths pos
sibility of abuse in normal times and
that the present emergency measures
should be treated as something separate
and distinct from the Federal reserve
machinery.
Legislation to BE Delayed.
When the depression is over there
probably will be some legislation based
on experience, but if any attempt were
to be made in the December session to
alter the eligibility requirements in any
radical manner. the debate would ex-
tend throughout the session and the
chances of action would be remote.
The cry Of imitation would be raised
and the same old political issues arising
therefrom would come into the picture
to delay legislation.
So. while there some day may be a
broadening of eligibility requirements,
1t will be only after almost unanimous
agreement has been obtained. Mean
Willie, ~ ID oil VI
the plans of the bankers pool and the
proposed Government Finance Corpora
ton and discussion of eligibility re-
quirements of the Federal Reserve which
undoubtedly has given rise to the belief
in some quarters, including Europe, that
an imitation is planned through the I'M
loading on the Federal Reserve system
Of frozen assets.
The banking credit of the Nation Is
considered ample to take care of slow
and frozen assets, irrespective of the
Federal Reserve machinery. This is
what is happening at the moment, with
every sign that the measures already
announced are having wholesome eff
feet in restoring confidence in the abil-
ity Of the country to weather any crisis
without even touching the sound per-
manent structure reared under the
Federal Reserve act. D. L.
(Copyright, 1919
Corn fed into new machine in
vented by an Italian is ground into