Evening star., 1931-12-20
MILLS DESCRIBES
RELIEF PROPOSAL.
Tells Senate Committee Re-
construction Measure Is
Emergency Insurance.

The Senate Banking Committee delved
yesterday into the needs for President
Hoover's $500oO 10000 Reconstruction
Corporation in response to the Chief
Executives plea for speedy action.
UnderSecretary Mills of the Treasury
described the titanic Federal relief pro-
posal as "a very useful instrumentality
in meeting any emergency that might
arise"
Meanwhile, at the opposite end of the
Capitol, the House approved and sent to
the Senate another economic restoration
proposal of President Hoover involving
an addition of Sl00,OOOCOO to the
capitalization of the II Federal land
banks
Congressional leaders of both parties
had agreed Friday night to give the
half billion corporation prompt con-
sideration after the Christmas recess.
Mr.. Hoover made it known that he
wanted the pool to help in meeting the
railroad problem. but he was Informed
that action before Christmas was i'm
possible.
Insurance Measure.
ut will put the Government in DO
sitlon TO close almost immediately any
gaps which may appear in our credit
structure Mills said. 1T is an in
slrance measure more than anything
else. It's very existence will have a
most beneficial effect"
The proposal, Incorporated in Senate
bill No. l, sponsored by Senator,
Walcott Republican, Connecticut. was
advocated also by Gov. George Harri-
son of the New York Federal Reserve
Bank, in hearings befora banking
subcommittee. Senator Glass. Demo-
crat, OF Virginia, directed occasional
criticism at some of its details.
The National Credit Corporation-a
moolllzat1on OF private capital under
taken at President Hoover's instance
last October to strengthen the coun-
tryS credit Structure-alSo proved a
target for particular inquiry by Senator
Buckley. Democrat, of Ohio
What can this proposed corporation
accomplish" Bulkley asked. that can
not be done by the voluntary $50O,OO
coo National Credit Corporation now
IN eXiStenCe?"
System Cumbersome.
MY conception OF the National
Credit Corporation is that it functions
ESSENTIALLY through local CLEARING
houses, Mills replied Loans have got
to be approved in the first instance Nv
the local clearing house associations.
AS the banks Of the locality have to, in
erect, guarantee the loans, this sys-
TEN Is somewhat cumbersome"
Isn't it so cumbersome that it hard
ly functions at alp" asked Bulkley.
Mills answered emphatically in the
negative, saving it had "a very great
influence if not a predominant influence
IN restoring the situation in October"
He SAID that in his official capacity
ne knew of a case, which he was not at
liberty to reveal. in which results would
have been most serious but for the
credit pool.
The Ohio Senator sought to show
that the Credit Corporation had made
only small amount of loans.
Mills said he was unable to give the
figures but Senator Watson, Republi-
can, Indiana, who was present said
the amount leaned was $4,000, ,0OO
Later Gov Harrison testified it was
Sl0000000, adding that S40O, 900 900 of
the S50O,000,000 capital had been sub
scrlbed. with more coming in.
Bulkley also questioned Mills as to
why organization of an emergency cor
poratlon is necessary, suggesting that
the loans to strengthen the credit str71c
ture be made directly from the Treasury.
Mills replied the formation of cor
poratlon would be more effective and
would avoid Treasury Department book
keeping complications.
Senator Glass attacked provisions of
the bill which have been interpreted by
Gov. Eugene Meyer of the Federal Re-
serve Board as permitting acceptance
OF the corporations paper by the Fed
eral Reserve banks on the same basis
as Government obligations.
Glass expressed the view that the
effect of the bill would be to have the
paper Of non-member banks discounted
through the Federal Reserve system.
GOV. Meyer. who was present, was
askeu by Chairman Walcott to COM
ment on this point and said that un-
DER the present law the paper of nom
member banks may be accepted on ap-
proVal OF the Federal Reserve Board
Glass Opposes Plan.
Glass, a co-auttor of the Federal
Reserve act, asserted its loan provi-
sions had been widely perverted" by
C-~OWings for investment on the Stock
Exchange. The Virginia Senator is
strongly opposed to broadening the
Federal Reserve discount base as sug-
gested by President Hoover.
Daniel Willard, president of the Bal
timore & Ohio Railroad, has been ask
ed to appear before the Senate Banking
Subcommittee tomorrow in hearings on
the finance corporation
Other witnesses called for tomorrow
are Henry Bruere, an officer of the
BoWery Savings Bank. New York:
Harry E. Ward, Irving Trust Co., New
York, and DR.. H. Parker Willis, New
York, economist
On Tuesday tie committee plans to
hear two representatives of the insur-
ance industry, aid for which also is
sought through the proposed corpora
ton. They are Frederick c. Ecker,
president of the Metropolitan Life In
surance Co., New York, and Morgan
Brainard, president of the Aetna Life