Evening star., 1932-03-13

reconstruction program is the organiza-
tion of the Reconstruction Finance
Corporation. This institution, with au-
thoriZed resources of S2,000.000 900, was
created to provide for such emergency
advances as may be needed by variety
Of institutions, including banks build
ing and loan associations, various agri-
cultural credit organizations and rail-
roads, as we'll as to provide funds with
which to make advances on the assets
of closed banks. This corporation
makes available a large fund Of re-
sources with which it should be pos
sible to close up practically any breach
in the Nations economic front.
A third important item in the Gov
ernment's reconstruction program which
1 wish to mention is the recently en-
acted Glass-Steagall bill, which lib
eraliZeS certain provisions of the Fed
eral Reserve act. An important result
of this act is that banks which have
exhausted their supply of eligible paper,
as now very strictly defined in the Fed
eral Reserve act, can under certain
specified conditions and limitations OBJ
tain accommodation from their Reserve
bank on the basis of good assets not
now eligible for rediscount This should
greatly fortify the banking system.
Moreover, by liberalizing the pro-
visions of the Federal Reserve act per-
tanning to the collateral required for
Federal Reserve notes, the bill, without
altering the existing reserve require
mentS, adds some S750,000.000 to the
free gold available to Federal Reserve
banks and so strengthens their position
in the event of increased demands upon
their resources.
1t is not enough just to take care of
the weak spots and the purely emer-
gency situations A most important
factor in the provisions for reconstruc-
tion and recovery on a broad basis is
the restoration of the normal functions
OF credit machinery. The Glass-Stea-
gall act should go far toward accom-
plishing this very objective. BY put
ting the banking system in a stronger
position, it should enable the system
to arrest the def1ationary movement and
more adequately to meet the needs of
agriculture, industry and commerce.
-Hoarding Drive Aids.
The ACKNOWLEDGEMENTS campaign
OF the Citizens Reconstruction Corpora
ton to put idle money to work con-
tributes toward this same purpose.
When an individual boards currency it
means that returns for his labor are
permitted to lie idle, and instead of IA
cilitating and stimulating industry and
commerce are tucked away in hiding.
Money used in meeting individual cur
rent needs enters the channels of COM
merce and has the power to create
markets for services and products.
Money saved in banking institutions or
otherwise invested represents purchas-
ing power placed at the disposal OF
those engaged in business, and benefits
both the borrower and the lender.
Money in hiding, on the other hand. is
so much paper or metal. It is inactive.
1t brings no return. 1t does not grow.
Further, the withdrawal of cash from
banks for boarding has, it is fair
to. say, greatly hampered the banking
system in the performance of its func-
tions which are so important to the
economy of the Nation. The lurking
possibility that he may be subject to
the insistent demand that he provide
his depositors with cash on a large
scale be locked up in private boards is a
threat which cannot but prevent a re-
sponsible banker from extending credit
freely even for legitimate business uses
when that threat becomes really immi-
nent. Hoarding has undoubtedly been
major factor in the inability of the
banking system to function freely in
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