Evening star., 1932-02-18
URGES
BANKING MEASURE
Democratic Leader Denies
Credit Expansion Bill
Is Hoover's.
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which are in need of the service OF this
bill but 1t cannot be said with any
degree of soundness or fairness that the
suspension of business, the failure OF
banks to make loans, Is primarily due
to a lack of paper which the law per-
mits to be discounted at the Federal
Reserve Banks.
ginia (Glass), 1t Is due to the fact
that the spirit OF fear has possessed
the soul of both depositors and
sankerS."
Because Of divergence between terms
Of the Senate hill and the companion
measure passed by the House, the Sen
ate vote probably will be followed by
adjustment in conference. Final action
and signature of the bill by President
Hoover still are possible within the week.
It was just week ago today that the
measure was introduced formally in the
two branches Of Congress.
Senator Glass, who once was Sec
retary of the Treasury, carried the
brunt of yesterdays talk with de-
tailed explanation Of the plans pur-
poses.
"Ten minutes" was the length Of time
he set for the bill to show Its benefits
in restoration of confidence, and in
checking the "hoarding" Of "timid and
frightened bankers"
Circled by an intent and attentive
Senate, Senator Glass expounded the
measure for two hours.
He pointed to France as the most
notable of nations threatening raids on
the American gold supply. He said the
conjecture was that France was threat
ening withdrawal Of gold held here for
that country in an effort to influence
America on the reparations and war
debts problem.
The Virginian agreed with Chairman
Borah Of the Foreign Relations Com
mittee and Senator Reed, Republican,
Pennsylvania, that the United States
could meet all the demands for gold
that might be made. but he believed it
a contingency by making the Nations S
supplies Of free gold" available to the
banks.
France. he said, is in a position now
apparently to withdraw about $780,
c00,000. Other nations and foreign in
dividuals have another $250,000 900 i'm
pounded In this country, he estimated.
The bill is intended to supply many
banks with cash by easing the restric-
tions of the Federal Reserve system SO
that they can obtain money on paper
not now eligible for rediscount. In ad-
dition, the measure proposes that about
S750.000 900 In free gold" held by the
Treasury be used to bulwark the Fed
eral Reserve system.
Assails Bank "Covardice.,
Asserting that the Federal Reserve
system had not fallen down in the eco
nomic crisis, Glass produced statistics
to rediscount more than $4,000. 900
600 of eligible securities in their
banks today because of "cowardice" and
desire to keep liquid" for emergen-
cieS.
The trouble Is" he asserted, pound
ing the desk. the banks have ceased to
function. The bankers have become
t1mid and frightened. The chief psy-
Geological advantage of this bill is that
1t gives assurance to these timid bank
ers."
In bringing up the foreign situation,
hitherto spoken Of very guardedly, Sen
ator Glass said:
i suppose may say, without exceed
Ing the caution which ought to be OBJ
served. that the Reserve system has
been threatened with raids upon its gold
supply by foreign nations, notably by
France. I would not have said that
here, but it has been publicly said else
where, SO repeat it here. There has
been that threatening situation, the
conJecture-and it is a conjecture-that
that country wanted to affect our sit
uatlon with respect to reparations and
with respect to her Indebtedness to the
United States. I do not make that as
Sertlon, say that 1t is a conjecture.
Outwitted, He Says.
The officials of the Bank of France
have simply outwitted the officials of
the Federal Reserve System of this
country, and they have them In that
position. The real purpose of this sec
tion Of the bill is to put foreign nations
upon notice that if they, in conjunction
with their business men, want to raid
the gold supply over here, this is a
method of replenishing it."
Responding to the direct question OF
Senator Shipstead, Farmer-Labor, Min
nesota, Glass said technically the bill
would permit an expansion of the cur
rency by about $1,500, 100000.
through the release of free gold" and
its use to back new note issues.
While Secretary Mills and the Federal
Reserve have estimated the free gold at
$3.50, 100000, Senator Glass put the fig
ure at s465 100000. He said the banks
had reserve Of rs per cent in gold
now, whereas they are required only to
have 40 per cent reserve.
Senator Morrison, Democrat, North
Carolina, objected to the Reserve mem
Der banks being called "hoarders," In
| the absence of statistics showing their
condition.
Before calling them hoarders," he
said, I'VE ought to know their deposits
and what loans already have been made
to find out If they are in a position to
make further loans. It might possibly
be very reckless If they had less paper
than they hold now"
Walcott replied he was not "impugn-
ing any ulterior motive" to these banks
but it was generally known they had
much eligible paper on hand.
Amendment Proposed.
Senator Thomas, Democrat, Okla
homa, proposed an amendment to the
bill which would eliminate the one
year limitation on operation Of the
measure.
Senator Blaine, Republican. Wiscon-
sin, introduced an amendment to pre-
vent loans for stock speculation.
It provided that advances made by q
Federal Reserve bank to member banl
which loaned for speculation would be-
come Immediately payable and the bank
would be ineligible as borrower for q
period Of 30 days.
Senator Brookhart, Republican, Iowa
offered an amendment to eliminate the
feature requiring banks to form groups
of five to obtain the new rediscountine
privileges under tho permanent pro-
vision of the bill.
Glass read statistics showing thai
fewer than 100 banks of the 1900 be.
longing to the Federal Reserve System
have actually exhausted their paper
eligible for rediscount, while more thar