The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-02-25
PATMAN MAPS
NEW PLAN FOR
PAYING BONUS
Expands Currency and at
Same Time Cuts u. S.
Expenses, Is Claim.
BY MARSHALL MCNEIL
Times staff Writer


WASHINGTON, Feb. 25.-Repre-
sentative Wright Patman Dem,
Tex has a new bin for prepay
ment Of the bonus, which he believes
will result not only in an expansion
of the currency under complete con-
troll, but also reduce federal ex-
penditures by $112, 100000 annually.
Under his proposal, the treasury
would issue currency in the sum of
S2,200000,000 to pay the bonus to
more than three and one-half mil
lion eX-soldiers.
Patman will insist" he said, on
the passage of his bill at the i'm
pending special session of congress.
THE money issued" the Texan
said, will not be fiat money, as it
will have sufficient gold coverage.
The plan will not violate the cur
rency planks of either the Demo-
cratic or Republican platforms.
Saving Method Described
The saving in federal expendi-
lures involved would be accom-
plished, Representative Patman ex-
planned, by liquidating the sinking
fund set up in the adjusted COM
pensation act, and by eliminating
the annual appropriation made to
it, This yearly payment is $112,-
100000.
Five ways are set out in the new
Patman bill to contract the cur
rency lin the event of danger of in
f1ation." These are:
Il. National banks under the
Glass Borah amendment to the
home loan bank ACT are permitted
to deposit United States bonds with
the secretary of the treasury and
have issued to them currency-new
money-in return. This privilege is
permitted to the extent of about
one billion dollars and the rate of
interest on the bonds may be 39s
per cent. A possible bonus to the
bankers of $33,750,000 annually, the
banks using the money and getting
interest on the bonds deposited. If
contraction is necessary, a portion
or all of these bonds may be re-
turned and that amount of money
cancelled.
How to Contract Currency
30. National banks, under the old
law, have placed with the Secretary
of the treasury about $7OO,OOO,000 in
United States government bonds
and have had issued to them $780,
100000 in currency. They are
getting the use Of the currency and
receiving 2 per cent interest from
the government on the bonds. A
$14,000,000 annual bonus to bankers
If further contraction of the
currency is desired, the secretary of
the treasury may return these
bonds, and receive the money issued
on them and cancel it.
80. Under the Glass Steagall act,
the banks are permitted to deposit
United States government bonds
with the federal reserve agent and
receive in return therefor federal
reserve notes-new money-isSued
upon the credit of the nation. These
bonds may be returned and the
money cancelled if further con-
traction is desired.
Justified BY Need, Is Claim
a. Federal reserve notes are is
sued on gold only. Further contrac-
ton may be had by limiting the use
of this privilege.
50. If further contraction is de-
sired, all federal reserve notes that |
are not issued in benefit of COM
merce, industry and farming may be
retired"
Patman, however, believes that it |
will not be necessary to invoke any
of his suggested plans for contract
ing the currency, for he is convinced
that the increase in our population,
national wealth, national income
and monetary gold stock during the
last fifty years juStifieS the Sug-
gested increase in circulating me-
dunn"
Peasants of Japan and China, who
fermented their rice cakes in the
sun centuries ago, used an indus
trial alcohol process which now is