Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-03-08
EXTENDED HOLIDAY
EXPECTED FRIDAY
Roosevelt May Continue
Limited Banking Pend.
ing Legislation.
Continued From First Page.)

under which currency would be used, but
made it clear that q formal plan for
scrip or other medium Of exchange
issue was being abandoned.
The he; Secretary i; eta y,,t appeared highly op-
I'VE can see the light here" he said
with a smile. on addressing newspaper
men who surrounded him at his office
In the Treasury.
This thing isn't going to pieces"
It appeared that announcement as to
what form Of money was to be adopted
and its backing must be made by mid
night tomorrow, because conditional
regulation issued earlier in the week by
Woodin permits issuance Of scrip Friday
moning.
The Secretary had apparently fore
seen the possibilities Of the present
plan. for In issuing the clearing house
certificate issuance permission he made
it conditional that it might be revoked.
Could Be Expanded.
Federal reserve currency could be
expanded $4,000, 900, 900. If the banks
took full advantage Of the Glass
Steagall law and have sufficient Gov
eminent bonds to put up as security
above the 40 per cent gold require
ment.
The law permits Federal reserve
banks to put up Government securities
to the face value Of go per cent CT the
currency they issue, and requires that
the other 40 per cent collateral be gold.
The old law required a 40 per cent
gold backing and a so per cent back
ing Of eligible commercially paper.
On March 8. Federal reserve banks
had issued $3.S65. 100000 Of Federal
reserve notes.
Backing this they had $3.50 .00o, 900
Of gold, $l.032, 0o0, 900 Of commercial
paper. and 1862 ,000. 900 Of Government
bonds.
Reports to the Treasury show that
the banks actually hold about S22O,-
600 00G more gold than they have I'D
as security for currency or a total OF
approximately $4,000 100000.
Using the entire $2,4OO,OO 900 gold
as 40 per cent security, the banks may,
ii they hold sufficient Government
bonds to make up the remainder OF
the collateral. issue roughly a total of
approximately $4,000, 0O0, 900 in cur
rency.
May Reach Maximum.
Since the banks in the last Ia
months have been investing their funds
chiefly in Government securities, and
there are something like $4,000, 0O0. 900
OF long-term bonds outstanding, Treas
ury officials believe they would have
no difficulty whatever in expanding the
circulation to the full maximum per-
mitted under the law.
At the same time national banks
could expand their currency by about
s84o 600, 900 under the provisions of the
Borah-Glass amendment attached to
the home loan bank law
The banks under this amendment are
permitted to issue currency up to a
maximum equal to their capital stock,
and back 1t with Government securities
bearing not more than 3% per cent in
terest. Though there were 50 500 ,000. 900
such securities outstanding. the capital
stock Of the national banks at the time
the amendment was adopted amounted
to 81, 900, 000, 900.
The banks at that time had out
standing 1866 000, 900 Of currency and
since that time they have taken advan-
tage Of the amendment to the extent
Of $l56.000, 900. The figures were given
in round numbers and officials said
that there still remained an expansion
Of approximately $3.50 600 900 Of which
the national banks could avail them
selves
Combining the possibilities of the
two acts Federal Reserve and national
banks of the Nation could expand near
ly $4,000, 900, 900 in currency as rapidly
as the details could be rushed through
the Treasury
Meanwhile, an invitation to trade