Evening star., 1933-03-06

house certificates, otherwise known as
scrip This scrip will be based on bank
deposits and will serve rs money for all
practical purposes.
The precise conditions under which
1t will be issued have not been dis
closed. but is is expected that safe
guards against an inflationary reaction
Will be provided. 1t Is expected that
the Federal Reserve system will serve
scrip to eliminate the difficulties of
transactions between persons in differ
ent cities.
The scrip probably will be issued In
denominations ranging from 81 up. 1t
Is expected that 81 of scrip will have
the same purchasing power rs q dollar
bill and that it will be accepted in pay
ment Of all debts. AS soon as possible
after the banks are reopened. following
the special session Of Congress acts the
scrip will be taken up and replaced by
currency
In all probability the banks will be
permitted to convert limited amounts of
scrip into small change so that the needs
OF the public In this respect can be
served
In some quarters it was believed the
volume Of scrip would be restricted to
the total Of the liquid assets under the
! control Of the clearing house issuing
the substitute money There has been
no announcement from the Treasury on
this point. however
Steps Taken Toward Scrip.
In New York and other States, ac-
cording to Associated Press dispatches
steps already have been taken toward
the issuing Of scrip. In some cities 1t
i hoc honr fnr In, ftvncr
pay rolls.
Scrip was widely circulated In this
country during the panic OF 1907. At
! that time. however 1t was issued inde-
pendently by the different clearing
| houses and its value varied in different
| communities. With the Federal Re-
serve system in charge at this time. 1t
Is not believed such conditions will de-
velop now
! 1t Is expected that the Secretary Of
the Treasury will authorize banks to
cash checks in scrip and accept de-
! posits in scrip. giving this temporary
medium OF exchange virtually all the
characteristics of the currency 1t re-
places. The important difference is
/ that 1t will not be redeemable in gold
and cannot be used to destroy the
country's gold reserves
Another interesting phase Of the
proclamation is the clause empowering
the Secretary of the Treasury to permit
banks to open special trust accounts for
receipt OF new deposits which shall be
subject to withdrawal on demand dur
ing the holiday. This is essentially
the plan advanced by William S. More
head. Pittsburgh banker, and printed in
: The Star yesterday.
The proclamation provides that such
new deposits must be kept separately
IN cash or on deposit in Federal Reserve
banks. or invested in United States
bonds.
F0rbids Credit Transfer.
Another section OF the proclamation
specifically forbids the transfer of
credits from here to any place abroad
and Is designed to prevent the export
OF gold and speculation in the dollar
on the foreign exchange.
The banking holiday and the pro-
posed issuance OF scrip are nothing
more than temporary expedients. They
are designed to keep the business OF
the country functioning until President
Roosevelt and the new Congress can
overhaul the entire banking structure.
1t Is OF utmost Importance that the
public maintain its confidence in the
President, for without the confidence
and support Of the people as a whole
any action that he and Congress may
take can have but little effect.