The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-03-09
ROOSEVELT TO
ORDER BILLIONS
IN NEW MONEY
Controlled Initiation viii Be
GiSt of Presidents
Relief Plan.
Continued From Page One)

The gold embargo stays on and
the federal reserve board is re-
doubling its efforts to force gold
back into the hands of the federal
reserve banks, to increase the re-
serves for new currency.
The board, in an apparent cam
paign against gold hoarders, asked
reserve banks to report next week
the names of all persons who have
withdraw gold since Feb. l.
The treasury department has de
cided not to authorize general issue
Of scrip. 1t was feared that a mot
ley collection of local printing press
currencies would spring up to create
confusion. Some localities, however.
are going ahead with their own scrip
issues.
No bank guarantee will be at
tempted now. Proposals to open
postal savings banks to checking de-
posts also were abandoned.
If successful, the new federal re-
serve money should start a wave of
nationwide buying. Rising prices
and a quick pickup in business are
anticipated.
If this develops, officials foresee a
prompt passing of the crisis, with a
rapid turnover, which, once under
way, would permit contraction of
the emergency currency back to nor
NAL proportions.
| 0PIood TraOSfus;o,,,, uJ..J
In effect, President Roosevelt is
attempting blood TRANSMISSION.
With fresh supply of circulating
medium, the restoration is expected
to follow naturally.
1t is daring program, but in line
with President Roosevelt's inaugural
pledge Of immediate action to pro-
vide adequate but sound currency.
So far as is now known, no new
kind of money is contemplated.
There merely would be more Of the
familiar federal reserve notes.-the
usual green-backed paper money
which forms the bulk of everyday
currency.
Dozens Of technical questions are
involved in this process of overnight
expanding Of the nations supply of
money. Bankers find them COM
plicated enough. To the layman they
are even more difficult to under
stand.
Will Expand Currency
Roughly, the Presidents plan
would expand currency mainly I'M
der present federal reserve restric-
lions.
Currency would be issued against
liuid assets of sound banks. State
banks could join in circulation of
this currency upon certification by
state examining boards.
Fundamentally, the additional
money would be issued under the
elastic provisions of the federal re-
serve system. These were planned
to meet such stringencies. They per-
NIT currency to be AIDED to or con-
tracted as needed by business.
Banks take ShOrt-term CONNER
cial paper on which they have made
loans to business men-it must ma
ture within ninety days-to their
federal reserve bank and get paper
money for it. But many banks have
long since put up all such short
time paper they have.
For them provisions of the Glass
Steagall act are available. They can
take long-term paper, such as real
estate mortgages, bonds, promissory
notes, and the like, which normally
a federal reserve bank would not
look at, and get ppaer money for it.
Helps Weak Banks
AS the law now stands, city
banks can do this only when at
least five of them group together
to pool such long-term paper. Ap-
proval of the federal reserve board
is required in each case. Banks in
isolated communities may act alone.
Now it is proposed to amend the
law so that any individual bank
may apply alone, because a weak
bank, the very one that needs such
help, can not persuade stronger
neighbor bank to pool with it.
Also, the law may be changed to
require that such paper be accepted
by federal reserve banks without
obtaining approval of the board at
Washington.
Such changes would open up ave-
nues for passing out possibly an
other S1,0OO,0OOO00 of currency.
Nearly another 81 900, 600. 900 could
be issued against government bonds,
under the home loan act.
Ample Means Available
Thus there is ample margin in the
federal currency system to permit
rapid lance of a vast stream of
additional money.
The problem is to get it into cir
culation, and to prevent it from fol-
lowing the path of several billion
dollars into the hiding places Of the
hoarders.
Here is where the controlled in
f1ation psychology may serve a use
ful purpose. Imitation normally
means riting prices. Wholesalers.
| jObbers, and canny householderS all
rush to buy as much as they can
when imitation is anticipated.
That is simply good business.
They skim off profits on the turn
over. Trade volume increases.
Money es hands with increas-