Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-17
FEDERAL RESERVE
LOAN PLAN SOUND
Senator Glass Declares Sys.
tenn Has No Right to Enter
Foreign Panic.
BY the Associated Press.

BY the Associated Press.
LYNCHBURG. Va. July 17.-United
States Senator Carter Glass. a member
of the Senate Banking and Currency
Committee and chairman of the Senate
subcommittee charged with recon-
mending changes in the Federal Re-
serve act. yesterday severely criticized
banks grant large financial credits to
foreign banks.
Commenting on statement by
UndersecretaIy Mills in which the latter
asserted that 1T is well known that IN,
Government has no control over the
foreign credit policies of the Federal
Reserve banks and. under we'll estab-
liched and sound public nolicy. they
have been kept free from Executive in
fluence or interference" Senator Glass
said:
Mr.. Mills is both technically and
fundamentally right, except that the
State Department at Washington, with
out any sanction of law, has sought to
control private credits and to interfere
with the Federal Reserve System. l
am glad to note. as l inferred anyhow.
that Undersecretarv Mills has more
sense and greater discretion.
will Dishonor officials.
'NeNerfneleSS, continued SSndIJl
Glass. 1T is announced in the press
dispatches that the Federal Reserve
banks are to be drawn into the Euro
psan financial debacle. and, without
one semblance of statutory warrant,
will Join other central banks in guar
anteeing tremendous credits to foreign
governments. In short, it stated, the
trust funds and credits Of the Federal
Reserve Banking System are to be
hazarded in the maelStrom OF this Eu-
ropean financial panic. Should this
utterly lawless thing be done. it will
dishonor every responsible official oil the
system and give color and credence 10
the increasingly violent attacks Of igno-
rant demagogues who have alreadv
wickedlv preiudiced this banking sys-
tenn with the volatile and emotional
agrarians of the South and West.
Senator Glass commented that II
had been suggested in some quarters
that the President Of the United
States. in conjunction with the dom
mating figures of the New York Fed
eral Reserve Bank. should coerce the
Federal Reserve Board at Washington
to engage in this financial venture :,
The President of the United states,
said has not and never was intendeo
tn have any authority whatsoever over
fPQeTdl fIeSeI We udlIhliIS P-hSh'
are definitely fixed BY statute, ooth
affirmatively and negatively.
Will Lose Supporters.
THE proposal to have the Federal
Reserve sYstem thrust into the vortex
of European financial operations IN the
guise of buying prime commercial
short-time bills is diScreditable prop
csition. These would be purely hnan-
cial bills. without one particle OF rel
erence to any commercial transaction
of any description. 1t is no answer TO
this criticism to say that the 'doml-
mating figures of the New York Fed
eral Reserve Bank once did the same
thing for England. Because the law
was cnce violated outrageouSly Is no
excuse that it should now be even
more outrageously violated in highly
dangerous degree. which may be. and
very likely will. eventuate in incalcula-
BILE disaster to the commercial credit
system of the United States. With
such maladministration as has already
occurred and as that now proposed, 1t
will not be long before the Stoutest de-
tenders of the Federal Reserve system
in Congress will be driven at least to
elaborate the bitterest criticism OF its
enemies
Senator Glass was among those first
consulted by the President about the
latter's proposed foreign debt suspen-
sion plan and is understood to have
agreed with the President finally. eX-
cept that Mr. Glass would go further
and readjust the debts.