Evening star., 1932-01-10

W IEpldGG IIlOlltJ llAdJ lldo
~ been Withdrawn from cir circula. l
boarding will operate to bring
d speedy end to the present depres-
sion, is the opinion of Robert L. owen
of Oklahoma, longtime chairman of
the United States Senate Committee
on Banking and Currency and one Of
the chief promoters of the Federal Re-
serve System.
Mr.. owen, a we'll known authority
on banking and the Federal Reserve
Banking System, made public his views
in discussion of bill now pending
before Congress, which would author
lie any bank, corporation or citizen of
the United States to deposit United
States bonds with the Secretary of the
Treasury, and borrow in emergency
money 80 per cent Of the value Of the
bonds so deposited. With the loosen
ing of credit and the stimulation of
business that would result, the former
Senator believes, would come a rapid
restoration Of public confidence and
consequent upturn in conditions gen.
orally.
Proposal Not a New One.
Pointing out that the proposal is not
q new one, but, on the contrary, is a
measure that has been resorted to sue
ceSsfully in the past both in the United
States and Great Britain, Mr.. owen
cites its psychological effect in times
past as the strongest argument that
can be made in its favor. This effect,
IN Mr.. Owens opinion, will be sufi-
Gent to preclude any possibility of
currency tnhation," an argument that
may be expected to be brought into
play against the proposed measure.
Figures quoted by Representative
Kent E. Keller Of Illinois, sponsor of
the measure, in the House of Represent
attyes, point to the fact that while, le-
gally, there is $4,000, 100000 in circu-
Jatton, there is every evidence that not
half that amount is in actual circula-
ton at the present moment. And, in
the opinion of Mr.. Owen, only a COM
paratively small amount of the pro-
posed emergency money would need be
put in circulation until it would have
accomplished its purpose of restoring
confidence and the need for it would
automatically disappear.
Another effect of the bill, In the
opinion of Representative Keller, would
be to end the wave of bank failures
that have been general throughout the
country since the onset of the depres-
sion period. The depositor's demand for
ready cash would cease with his knowl-
edge that an abundance of 1t awaited
his call.
Looming in the background of the
entire situation, Mr.. owen believes, is
the choice the Government must event.
ually make between providing employ
ment for the jobless or resorting to the
dole or its equivalent. The Keller
Walsh bill, he believes, will do the
former and automatically remove the
possible necessity of the latter.
Discusses the Measure.
Discussing the bill, Mr. owen said:
THE dollar, in the wholesale COM
modify market, will now buy As per
cent more than before the depression.
1t has increased in purchasing power
IS per cent in commodities.
Its purchasing power in terms of
factory labor has increased equally as
much.
Dollars will now buy six times as
much stock of United States Steel as
they did In 1929; they will buy on an
average four times as much stock on
the average stock listed on the ex-
changes. Something terrifying has
happened to the purchasing power
of the dollar, breaking down the ordi-
nary value of commodities, of stocks,
of real estate, of rents, of human
cannot sell their labor.
Holds Real Problem Frozen Money.
We have the dangerous problem of
frozen assets
The real problem is frozen credit
and frozen money.
Money reported as in circulation is
not circulating.
During the last year the people have
withdrawn from the banks in Federal
Reserve notes over 81 900 00o, 900 for
boarding. They have put it in lock
boxes. What is worse, the people are
boarding the other currency in their
possession, and are refusing to spend
it except for the most absolute neces-
sites.
They are refusing to use their de-
posts in bank or their savings accounts
in the same way. They are refusing
to use their credit as well as their
money, except where compelled to. The
banks owe the people $2l, ,000,0 100000 in
demand deposits; $29 900 100000 in
time deposits; they have $40,000,O0 o.
900 in reserves with the Reserve Banks.
with Reserve agents, in Government
bonds, other merchantable bonds in
quick assets. They have a total Of
$4,000 100000 in resources. They are
strong.
Nevertheless, the banks, Influenced
by the pessimism Of the people and Of
their own depositors and of their own
directors, are unwisely contracting
credit, freezing credit, refusing to make
loans against property and personal
security which normally they would
freely recognize.
Would Remove Anxiety.
"If the banks could, against their
United States bonds, obtain currency
under a fair interest charge with a
penalty sufficient to insure the auto
matte return of this currency to the
Treasury, every anxiety, both Of the
banks and the people, could be re-