Evening star., 1933-04-28

these bonds without any use 1t can
not dispose Of them without utterly de-
mOralizing the entire bond market OF
the United States. And yet here We
have q proposition to accentuate that
disastrous condition and further to i'm
peril the Reserve system by adding So
900 coo OOJ more OF United States bonds
to its portfolios.
What does tn t mean TO the business
interests OF tht country? II means that
Just III that measure the Federal Re
serve banks OF the United States will
be unable to accommodate their member
banks. and just in that measure their
member banks will be unable to accom-
modate trade. That Is what it means.
1t does not mean imitation: it means
def ton: and all that was accomplished
i'll that trGnsaction. l may say. to the
limited credit Of the Federal Reserve
B[Slrd and banks, WAS to release nearly
So 600 900 OO0 Of reserve Indebtedness Of
the member banks TO the Federal Re-
:erNe b. nks with the idea that the Fed
Cral Reserve banks theTeupon would re-
leaSt credits to business. which they did
not do and they are not doing, and
there is nothing in this bill that CONF
pelS them to do 1t. and there Is nothing
i'll any law that can compel member
banks to loan the deposits CT their de-
positors to anybody for any purpose.
Defends Greenbacks Feature.
I think the first section of the bill is
vicious. The authors and proponents Of
1t thought 1t was ineffective. They did
not dare make it imperative because it
would have beSn cOnfiscation and un-
| constitutional. They made it pcrmiS
sive; and the distinguished Senator
from ld..ho MIR. Borahl thinks that
that does not mean impairment. II lie
could know. as ! know. the influences at
work that have applied themselves to
the activities Of the Federal Reserve
Board and banks. he would know that
it means $4,000, ,OO0,0 600 more of United
States securities i'll the portfolios of the
Federal Reserve banks and an almost
literal wiping ont of the facilities Of
those institutions to accommodate trade.
Very likely l shall surprise some of
my cole gueS by the statement that the
| least Objectionable feature of the bill Is
the SO-called greenback feature. 1t IS
the most defensible feature OF the bill.
1t is perhaps the only feature Of the
bill that will get any so-called money
i'll circulation above thAt now i'll Circu
latlon.
1t means simply to transfer time OBJ
legations of the United States. bearing
u
United States: and those who hold to
the gold standard have said to you that
it would wipe out every dollar of the re-
serve gold III the United States Treasury
over night-and it would. II people
would demand red, mptiOn. But expert
ence over a long period of years has de-
termined that even less than 4 per cent
is required to meet the redemption de-
mands in ordinary times. lest people
should be unpltriotic enough to raid
their own Treasury; and this feature of
the bill provides u 4 per cent redemp-
tlO!i fund for the retirement of the
greenbackS.
While l do not advocate that section
OF the bill l again say it is the mos:
defenSible provision of the bill l do
not advocate it primarily because the
Federal Reserve System is now with its
gold reserve, prepared to expand to the
extent Of 81 900 900, 600 more than the
proposed $4,000 00000 600 of greenbacks,
and because business is not being trans
acted they do not expand. and because
confidence has not yet been restored
they do not expand; and are We here
doing anything to restore confidence2
Mortgage Bond Market.
Why. We have literally destroyed the
mortgage bond market of this country
The Federal land banks. with all the
millions of assistance the government
has given them. can not sell their tax
exempt bonds today-not to save their
lives. There is no ma.ket for them. We
have destroyed the mortgage bond
market.
We are proceeding Upon the assump-
tion that nobody hereafter will desire
credit: that farmers hereafter will not
want credit or need it. because we are
destroying credit, and largely have
done So
No man outside of luna.c asylum
will loan his money today on farm mort