Evening star., 1932-02-11
BANKING FINANCE
BILL IS ASSA|LED
Busby Calls Measure to Aid
in Meeting Cash Demands
"Mere Palliative"
Continued From First Page }

today by Senator Glass, Democrat, of
Virginia. and Chairman Steagali OF the
House Banking Committee, with the
assistance of Republican colleagues.
Meanwhile, the expectation that bank
coming legislation. which will broaden
the base on which paper can be re-
discounted. was expressed today IN high
Treasury quarters
1t was pointed out. that if the Fed
eral Reserve banks were able to advance
funds on the intrinsic value of securi-
ties held in the portfolios of banks.
this would aid banks finding their cash
exhausted through unnecessary runs. to
raise additional money and prevent
their having to suspend.
II was said that while the kind of
paper which would be eligible for re-
discount under the proposed temporary
law had not been determined. it would
operate much as personal loans and
would be based upon the actual value
Of the banks security.
Many banks have been forced to sus-
pend because eligible paper ard cash
had been depleted. while at the same
time they held large amount of VAL
liable securities in their portfolios which
could not be rediscounted.
1t was said that the Federal Reserve
Board would be able to determine in
each case the value of the security and
would rate any loan upon exactly what
those securities were worth.
Among securities which it was sug-
gested might be made eligible were
mortgages on real estate, which have
intrinsic value but frequently cannot
be realized upon quickly
Ogden l. Mills new Secretary 0f the
Treasury, described the non-partisan
move to broaden the base o. redis-
count eligibility as "a movement to ar
rest the surge of credit defation''
He contended the legislation would
not be imitation" but merely revers-
ing of what he called a tremendous
credit deflation."
The new Treasury head is optimistic
over the results to be expected He
feels that In easing the strain on mem
Der banks of the Federal Reserve
System they, in turn, can deal more
leniently with neighboring banks, and
that loan making and normal bank
functioning will be restored.
Has Huge Gold Deposit.
What the Glass-Steagall measure will
do Is to make all the assets acquired
by the Reserve banks under present
law available, for one year only, as COL
lateral for Federal Reserve notes, up
to so per cent Of the latter. At present,
for lack Of other eligible collateral, the
Reserve System has in the Treasury
almost double the 40 per cent gold re-
quired to be deposited against its
notes: This change will release. it is
gold, available for all credit purposes.
1t is not proposed at this time to
issue new currency against this gold,
however. 1t is to be used rather for
handling the paper which the new
bill will make discountable.
The measure will supplement the
efforts Of the Reconstruction Finance
Corporation, as both are designed for
relieving the frozen condition of the
Nations credit system, but the admin
istration is hopeful the present plan
will get even faster results than are
In sight for the corporations loans.
Following extended conferences at
the White House yesterday the banking
experts in Congress set to work on the
measure, pushing their labors far into
the night, suspending only to resume at
the first opportunity this morning. A
statement explaining the plan was is
sued last evening over the signatures of
Glass, Steagall and Senator Walcott.
Republican, of Connecticut, chairman Of
Representative Strong Of Kansas, rank
ing administration Republican on the
House Banking Committee
Right Of way was promised the meas
ure from its introduction, in a cooper
ative drive unsurpassed in Congress
since the emergency conditions Of the
World War ended.