Evening star., 1934-12-24
Federal Reserve Board Head
Answers Glass by Dis
claiming Move.
INSURANCE DEPOSIT UNIT
is HELD RESPONSIBLE
Virginia Senator Charges Federal
Bank "Usurped" Congress Power
In Extending Jurisdiction.
By the Associated Press.

oy tne ASSOCIATED FreSS.
A denial of Senator Carter Glass,s
charge that the Federal Reserve
Board "usurped" the power of Con-
gress in connection with a recent cut
in interest rates came today from
Mariner S. Eccles, new chairman of
the board and prominent New Dealer.
THE Federal Reserve Board acted
strictly in accordance with its legal
rights" he said
In letter that also was acrid with
criticism Of some New Deal brain
trusterS" whom he called "sub-pro-
fessors" and "supremely wise men,"
Virg1nia's Democratic Senator had
said the board and the Federal De-
posit Insurance Corp. had exceeded
authority by including non-member
State banks in an order cutting max
imum interest rates on the deposits
from 3 to 212 per cent.
Glass, writing to Charles s. Ham
lin, member of the Reserve Board, said
Leo T. Crowley, F. D. I. c. chair
man, had disclaimed responsibility for
the interest slash. The Reserve Board,
Glass declared, thus may be held to
account for a proceeding which may
keep out of the system hundreds Of
desirable State banks which will not
relish having an untried corporation
assume unlawful authority over their
business practices"
Cut Only q. S. Rates.
Eccles emphasized that the Reserve
Board cut only the rates on member
honE larHOcifc rl
in regard to non-member State banks.
The F. D. I. c. advised him, he added,
that it had acted to cut the maximum
interest in the latter institution, and
the Federal Reserve Board merely
called attention to the F. D. I. C.'s
move in press release announcing
its cut.
IF Mr.. Crowley said the F. D. I. G.
took no action, which cannot be-
lieve, then no action was taken with
reference to non-member State
banks" Eccles said. For certainly
the Reserve Board took no action In
regard to them"
To some observers Class state
ment seemed to foreshadow q possi-
BILE fight IN the next Senate on con-
frmation Of Eccles' appointment. Ec-
cles is widely known as liberal"
while Glass is regarded as an exponent
Of more conservative" banking
thought in the Senate.
Denounces Adviser.
His denunciation of certain academic
advisers, couched in English peppered
with Latin phrases, was aimed at a
recent report by DR.. Jacob Viner, for
mer economic counselor to Secretary
Morgenthau The Viner report rec
commended that the Reserve Banks get
out of the field of direct loans to in
dustry, and that eligibility rules for
rediscount of commercial paper be
relaxed.
Glass said, every little sub-pro-
fessor brought to Washington, how
ever destitute Of practical business
acumen, is supposed to know more in
a fortnight about banking and flnan-
cial problems than the President OF
the United States, the seasoned OH
cials of the reserve system and mem
bers Of Congress who for many years
have been keen observers of banking
practices or intimately identified with
financial measures"
He said, THE sooner Washington is
rid of impatient academicians whose
threatening manifestoes and DEGREES
keep business and banks alike in sus-
pense, if not in CONSERVATION, the
sooner and more certain will we have
complete restoration of confidence
and resumption of business in every
line of endeavor."
Declaring the Federal Reserve Board
had ample authority to cut interest
rates in member banks, Eccles re-
called that it took similar action over
year ago, cutting the maximum from
4 to 8 per cent.
''It was felt the board had an obi
cation or duty 70 adjust the maximum
in line with the Market" he said.