Evening star., 1932-05-08
The Geldsborough Bill.

Ahe VoiusVUIUuku Dill.
The Goldsborough bill "for restoring
and maintaining the purchasing price
of the dollar" is an Excellent measure as
far as 1t goes. But its inherent weak
ness is its failure to 60 far enough. It
does not provide, for instance, for the
appointment Of Joshua to the Federal
Reserve Board. And without q. Joshua,
capable not only of commanding but
OF making the sun stand still, the Fed
eral Reserve Beard will be obviously
embarrassed in not being able to carry
out the formally enunciated policy OF
the United States" That policy, as out
lined in the bill in the form of an
amendment to the Federal Reserve act,
is hereby declared to be that
the average purchasing price of the
dollar as ascertained by the Department
OF Labor In the wholesale commodity
markets for the period covering the
years 1891 to 1929, inclusive, shall be
restored and maintained by the control
OF the volume of credit and currency.
The Federal Reserve Board.
the Federal Reserve Banks and the Sec
retary Of the Treasury are hereby
charged with the duty of making effec-
tive this policy"
In his testimony before the House
Banking and Currency Committee. Gov
Eugene Meyer Of the Federal Reserve
Board succinctly suggested. and in
manner that aptly describes the task
assigned through this bill, that he would
hate to be ordered to run hundred yards
IN ten seconds nat. He might be told to
cover q hundred yards in the quickest
possible time and make q noble effort
But II carrying out the policy of the
United States depended upon his abil-
lty to comply with an order to make
the distance in ten seconds, he would
have bleak failure staring him in the
face before the bark of the starting gun.
Generally speaking, the Federal Re-
serve Beard has been seeking to do
what the Goldsborough bill commands
1t to do. 1t has followed a policy of
lowering the rediscount rate to meet
falling prices and of buying Govern
ment securities in the open market.
Its holdings Of these securities now are
double what they were year ago. But
1t must be admitted that, even with
the aid Of the Glass-SteagaIl bill and
the more liberal policy of the Federal
Reserve Board in increasing its pur-
chase Of Government securities, there
have been few signs Of recovery. The
question is how can the Federal Re-
serve Board be expected TO accomplish
the restoration of the dollar by act
Of Congress? MS t~@f
One idea behind the doldsboroush
bill Is that the Federal Reserve could
put into circulation q vast amount of
eurreney-s4. 900, 100000 perhaps-and
still remain within the legal require
ments for gold reserve of forty per cent.
But how are the Federal Reserve hanks
10 put this great amount of currency
into circulation? Even the most enthu-
siastie proponents Of currency and
credit imitation and relation agree that
1t would be unseund to put new money
into circulation by giving 1t away And
the Federal Reserve banks do not issue
currency unless it Is backed by securities
In the form OF collateral for loans, and
banks do not borrow of the Federal Re-
serve System unless they satisfy them
selves as to the merits Of the loan. the
soundness of the security, etc, The
loosening of requirements concerning
collateral. as provided In the Glass
Steagall bill, have not by any means
exhausted the credit resources available
If only they would be used.
The Goldsborough bill may be another
one of the psychological" measures,
designed to restore confidence by telling
the banks of the Nation that the pres
ent policy of the Federal Reserve will
be continued indefinitely. But with
congressional gyrations over revenue
raising and budget-cutting freshly in
mind. the fact that the House of Rep
resentatives within few hours and un-
der suspension of the rules blanketing
mature deliberation will dispose of bill
that practically takes the lid of Federal
Reserve practice and gives it the sky as
o limit might have psychological et-
feet exactly the opposite of what Is
desired.