Evening star., 1932-02-14
HOUSE TO SPEED
CREDIT MEASURE
Rainey Predicts Rules Will
Be Suspended to Gain
Quick Action.
BY the Associated Press.

BY the Associated PreSS.
Legislative channels of the House
have been cleared for consideration to-
morrow Of the Glass-Steagall bill to
loosen the credit machinery Of the
Federal Reserve system.
Representative Rainey Of Illinois, the
Democratic leader, forecast the ad-
ministration- sponsored bill would be
expedited under the seldom resorted
to proceedings of suspending the House
rules if unanimous consent for its con-
sideration cannot be secured.
A twothirds majority vote is re-
quired to approve the procedure.
Chairman steagan of the House Bank
ing Committee said if passage In this
manner could not be obtained, legis-
lative rule giving the bill right-of way
would be secured and the measure
passed Tuesday. Speaker Garner indi-
Gated he favored quick action.
Approved BY Scnators
The Senate Banking Committee also
has approved the bill and action in
that branch this week Is probable.
A formal report of the House Bank
ing Committee was tiled late yesJer-
DAY by Chairman Steagall, In which
ne SAID.
1T Is believed that this bill without
undue expansion, Will result IN easier
creolt winch VIII AID in ending Dank
failures and in improvement OF business
conditions generaiy."
The bills purpose, the report said,
is 10 afford means OF relIei TO banks
tnat tmd themselves IN urgent neeu OF
accommodations. Referring TO the pro-
vision that permits government seeurl-
ties to be accepted ny reueral reserve
banks for re-oIscount purposes, 1t SAID
The substitution OF government OBJ
legations Tor commercial paper Slmpiy
carries OUT the policy expressed IN me
original Federal Reserve acr.'
Steagan Explains Bill.
Explaining the bill SteasalI said:
The purpose of the measure IS to
broaden the credit facilities OF the
Federal Reserve system TO AFFORD relleI
from the distressing conditions that
now exist. provision is made Tor loans
to q group OF member banks not less
than i've IN number who nnd rnem-
selves without collateral now eligible at
at Federal Reserve Banks.
The loans may be made up on time
or demand promissory notes. Groups
Of banks applying for loans are re-
uuired to put up with trustee selected
by them such collateral as they may
agree upon. No such loans may be
fr
a longer period than one year, and
must bear a rate Of interest not less
than l per centum in excess Of the
prevailing rate. 1t is thought that this
will afford a practical method by which
banks may merge their collateral and
their credit resources and obtain relief
for temporary emergencies"
Release S75O,e0e, ,000 in Gold.
Steagall said the bill would release
$75O, 600, 600 in gold by permitting the
use of Government bonds as bass
for currency. At present, he said. the
81, ,90O, ,0O0, 600 in Federal Reserve notes
was backed by $4,000 100000 in gold
and 100000, 900 in eligible rediscount
paper.
1t was never contemplated. he said,
nor was it considered desirable, that
more than 40 per cent Of gold should
be carried as protection for currency.
Steagall said situation has devel-
oped In which I'VE find that 1t is neces-
sary to maintain about 80 per cent OF
gold against notes issued by the banks. .
He added:
This results from . shrinkage in
eligible collateral brought about by the
depression. There are outstanding
nearly $4,000, 100000 in currency Sc
cured by 100000 900 Of eligible paper
and 81, 900 ,00O, 600 Of gold. BY permit
ting the use Of Government bonds as a
basis for the issue of currency as pfo-
vided in the bill, We release about $780,
0OO, 900 in gold This will strengthen
our financial position for all purposes
by increasing the amount Of free gold
available.
1.-THE bill meets widespread demand
for liberalization of our credit and cur
rency. This demand has grown day by
day among members of Congress. The
members Of the Banking and Currency
Committee have been giving 1t much
thought and consideration with a pur-
pose of passing some such legislation
during the present session of Congress
The administration has found it desir-
able as supplementary to the Recon-
etr,,rtiop Finance CORPORATION act