Evening star., 1932-05-24

Congress Senator Costigan Of Colorado
introduced bill calling for an appro-
priation of S375,000,000 to be expended
/ by the Federal Government in aid OF
the destitute throughout the United
States The bill was subsequently known
as the 'Costigan-La Toilette bill Some
of the friends of the proposed legiSla-
ton objected to it being administered
by Federal bureau. Without the sup
port of these friends there were not
sufficient votes to pass the bill. A sub
stltute was. therefore. offered by Sena
tors Bulkley, Walsh and Wagner. carry
ing all of the original provisions OF the
Costigan-La Toilette bill, but trans
ferring the administration of the act 10
the States and local charity institu-
tionS. While majority of the Senate
favored the purpose of the act, their
forces were divided and the opposition
Senators defeated both the substitute
and the Costigan-La Toilette bill.
"A compromise bill was then drafted,
which received the approval of the
Committee on Manufactures, of which
Senator LaFollette is chairman. and
was reported to the Senate. This bill
carries an appropriation of $375, ,0OO.-
600 for the relief OF the destitute and
$375 900 900 for Federal aid road work
1t also provides that part Of such money
may be used in cities. towns and other
municipalities in the construction of
streets, alleys. bridges and aqueducts
No action has been taken on this bill
because Congress has had all Of its
time taken up with revenue. banking
and appropriation bills.
The Reconstruction Finance Corpora
ton act was proposed by the President
70 tNa r1iz z.AA
and function along the lines of the old
War Finance Corporation. but with
larger and broader authority. This was
in no sense partisan measure. 1t was
passed practically unanimously by Con-
greSs. By reason of its limited authority
and its administration 1t has been used
Chiefly to aid In sustaining the credit
OF banks and railroad corporations It's
authority must be greatly enlarged If
it is to serve the purpose of stimulating
industry generally and employment
throughout the country.
The Glass-Steagall banking act was
largely the conception of its sponsors.
1t was intended to increase the securi-
ties in banks that might be utilized
through rediscount with the Federal
Reserve banks for the issuance of ad-
ditional currency. The banks, at the
time of the passage of the act, accord
ing to Senator Glass. even then had
approximately $4,000, 100000 in securi-
ties eligible for such rediscount The
banks seemed to fear to use these
securities and so Senator Glass proposed
that certain bonds held by the banks
might also be added to the eligible
securities and so they were. The act
has not served the high purpose in
tended by it's authors and by Congress
The banks have failed and refused to
avail themselves of the opportunity Of
obtaining and circulating the additional
currency. This is due to fear. They
fear to borrow additional currency from
the Federal Reserve banks and lend it
to industry because most industry is
suffering a deficit rather than earning
profit. Industry will not borrow money
when it cannot make a profit on such
money above the interest that it pays
for it.
Confidence Apparently Lacking.
The President, in his public state
ment on May l3. said that There is no
dearth of capital. and on the other
hand there is a real demand for capital
for productive purposes that have been
held in abeyance.'
"Our citizens wonder why, in such
case, do the banks require Government
aid why the banks do not lend money
to such industries? The country was
told that the passage of the Recon-
struction Finance Corporation act and
the Glass-Steagall banking act would