Evening star., 1932-07-24

no time should be lost in his new effort.
The informal conversations between
emissaries of the White House and Of
the business world are being carried on
in the light of the experience to date
with the new legislation.
The recent stiffening Of commodity
prices is being watched as likely to do
what the Glass-Steagall bill failed to
do-nameiy, loosen credit both for the
lender and the borrower.
The Glass-Steagall bill is regarded in
administration quarters as having
served a good purpose even though 1t
did not bring about the price imitation
that was expected when it was enacted
and when the Federal Reserve Board
went into open bond market to stimu-
late business recovery.
Act Much Criticized.
This act, in operation now for nearly
Ave months. has been much criticized.
Congress repeatedly heard the charge it
had failed, and the Senate'S insistence
on the Borah-Glass currency imitation
rider on the home loan bank bill i;
traceable to this sentiment in Congress.
An additional currency issue of ap-
proximately a billion dollars may be
made under thi; enactment which be-
came law Friday. but admin stration
leaders doubt it will initiate commodity
prices. Commodity prices were show
ing a gradual increase. Reserve Board
offCi iais say, at the time Senator Borah
was pleading that currency imitation
would bring about an increase in COM
modify prices.
The credit expansion resulting from
the Glass -Steagall bill. which enables
the Federal Reserve System to supple
ment commercial paper for currency
coverage with government securities,
has been little used The new cur
rency issue it made possible has never
been used. treasury officials say. In the
absence of demand for it. They main
tain that. since banks and business
generally has available all the currency
they can use, there is no need for the
new currency issue contemplated by
the Borah-Glass amendment.
Meantime the slight upturn in COM
modify prices. whether temporary or
not, is reported to have moved retailers
IN the East to give notice Of an ad-
vance in the prices for meats.
Government economists are studying
this curve in the commodity prices In
the light of the operations of the
Glass-Steagall bill. Since February
"a, when the act became effective. the
Federal Reserve System has placed
government securities back of reserve
notes to the extent of about $500, ,O0O,-
000
Hoped to Loosen Credit.
BY broadening the rediscount base,
the administration hoped to loosen up
credit all along the line, enable banks
to maintain a liquid position at all
times and advance credit to their GUS
toners But the credit was not ad-
vanced, and the upturn IN business, 50
confidently expected, did not materi-
alize. The banks were charged with
hoardirg. refusing credit. and other
wise failing to 90 their upmost to
break the jam. The lack of confidence,
which, in the view of government Off
ciaIs, Is the one thing preventing a
noticeable upturn extends into the
manufacturing and selling as well as
into the strictly banking field.
It is asserted that the banks have
been helped by the Glass-Steagall bill.
The additional funds made available
by the open market operations were
absorbed, it is explained. in paying off
the banks Indebtedness to the Reserve
banks, in meeting a loss of $500 600, 900
in gold and in providing an increase of
circulation of about 100000, coo against
hcarding
When the bill was under considera-
tion, the Federal Reserve system was
covering Federal Reserve notes to the
extent of about 80 per cent gold, nearly
double the minimum gold requirement,
which is 40 per cent. Out ttanding notes