Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-08
Banks of Nation
tOBe Invited to
Take Part.
HOOVER SURE OF
AMPLE SUPPORT
White House Will
Await Congress
i'm December.
b. the Associated Press.

b. the Associated Press.
President Hoovers plan to ease
the financial strain on the Ma
tons banks moved swiftly today
toward actual operation.
He was informed by Governor
Harrison of the New York Federal
Reserve Bank that the proposed
s5G00O0,000 credit corporation was
expected to be incorporated with
in 46 hours and that details of
the completed proposal would be
laid before every clearing house
and banking group in the coun-
try at once.
The plans contemplate a direc-
tor for the institution from each
OF the IL Federal Reserve districts.
It's operations will be national and
not regional in scope.
Meantime, it was disclosed the
plan had been discussed by the
President with a group of NeJv
York bankers last Sunday night
at Secretary Melons apartment
and that they agreed upon it
then.
May Need More Time.
Oficials declined to say what bankers
attended the conference.
While the bankers expect to have
their organization completSi soon 1t
was described as hardly possible to put
the plan in operation in tHat time.
The plan presented Wy President
Hoover to amend the Federal reserve
act to permit broader glasses of paper
to be eligible for rediscGunt at Federal
Reserve Banks was said to be designed
to replace and take over the work to be
carried on by the, bankers organization
which was regarded as only q tenn
porary affair
Some of the fund.- of the organiZa-
ton, it was said. probably would be used
to advance to depQsitors of suspended
banks part of the money due them and
thus relieve acute situations.
Matter Up to Congress.
= The Federal reserve act it was said,
has been outgrown by business and
needs to be revised to meet new condi-
tons. The broadening of the eligible
paper section of the law it was said,
would meet the situation. g.
The form the changes in the Federal
Reserve act will take was described as a
question to be determined by Congress.
The Government is considering, how
i ever, recommendation TO Congress
that the profit of Federal Reserve banks
he turned into a revolving fund through
: which money could be advanced on
1 good assets of suspended banks and paid
J to depositors to enable them TO carry on
their usual business.
Under the Federal Reserve act the
banks pay portion of their prof1tS 10
The Government as an excise tax ana
this money, it was said, could De placed
in a revolving fund which could be useo
to make money quickly available 20 de-
positors of suspended institutions.
McFadden Begins Study.
Anv money advanced to closed inSti-
buttons on the good securities would be
returned to the Government when the
banks affairs were hquidateo;
The Governments share OF the pronts
of the Federal Reserve System from
1914 to the end of 1880 was $147. 1882
AS study of the Presidents plan went
forward on Capitol Hill, Representative
McFadden of Pennsylvania, who was
chairman of the House Banking Com
mittee in the last Congress, advocated
thorough study Oh al feueIhl Jain
ing laws with view to making funda-
mental reviSions.
McFadden said he believed q new
base in banking laws should be found
He said anything that did not go to
the fundamentals would be futile.
With convocation of Congress less
than two months away, legislation that
may be necessary to make operative the
administration program for business
rejuvenation has the almost undivided
attention of officials.
Concurrently, in its survey OF the
business situation, the administration Is
reaching toward its decision whether
tax increase will be asked of Congress
to meet the mounting Treasury deficit.
Special Session Asked.
The Governments part in the Hoover
credit proposals must largely go before
Congress for formal approval. In the
. chambers of the Senate and House Of
fee buildings cautious consideration Is
being given already of legislative plans
for carrying it into effect.
While Democratic and Republican
Continued on Page 4, Column ID