The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-03-11
U. 5. TO TAKE
CONTROL OVER
ALL CURRENCY
National Banks Will Lose
Their Power to Issue
Money.
FEDERAL DEBT SLASHE0
Gold DeyaIuatiOn Profits
viii Be Used to Re-
tire Boz dS.

b. fHifrl Prrrs
WASHINGTON. March lin
one OF the most important monetary
acts since devaluation Of the dollar
the Treasury revealed plans today
TO concentrate control Of currency
in the Feaers- government.
A plan % strip national banks
Of their power "a issue money and
call IN national bank notes to be
replaced by Federal Reserve notes
was announced by Thomas Jeffer-
son Coolidge, acting Secretary OF
the Treasury.
The Federal government as a part
OF the program will draw on its
gold devaluation profits to retire
1914 625. $50 OF the national debt
The maneuver will save the govern
ment SI3.OOOOOO annually in IN
terest.
SimpIifies Financial System
The bonds to be retired bear cir
culati0n~ privileges and are pledged
BY national banks with the Treasury
10 back most Of the S657 $4,000 Of
outstanding national bank notes.
The new Federal Reserve notes
will be backed BY gold Of not less
than 40 per cent Of their face value.
The national bank note 10 be called
m this summer are bs ked 100 per
cent By government b nds pledged
with the Treasury BY the issuing
banks.
The immediate effect will be
simpliication Of the nations cur
rency system and vesting in the
Treasury and the Federal Reserve
Banks all authority to issue money
in the United States.
Initiation Hint Touched On
BY calling the circulation" priv
ilege bonds and allowing this priv
ilege on other bonds to expire IN
JULY. national banks will be deprived
Of the right to issue money. prac-
tice they have engaged IN prof1tably
since Civil War days.
The plan was said to carry def
mite monetary imitation implications
in that it represents spending OF
the governments gold profit and
widens the gold base to support
potential currency expansion.
officials avoided reference to in
fiation possibilities. but conceded 1t
would put gold to work which can
be expanded" They pointed out
complete control over issuance of
money is placed in the hands of the
Federal government for the first
time as a controlling safeguard over
possible expansion.
The money plan will be conSum-
mated as follows:
Three Points in Plan
I. The Treasury called for re-
demption July / outstanding S599,
724.O50 OF , per cent cOnsols and on
Aug. 1 outstanding S4S.954. $50 of :
per cent Panama Canal bonds OF
1862 and SIS. 947. 400 Of Panama
Canal bonds Of 1888.
2 The Treasury will give the Fed
eraI Reserve banks about S6T5 .000.-
600 in gold certificates. issued
against gold seized in devaluation OF
the dollar. The reserve banks then
will issue Federal RServe notes
against the gold certificates and
pay them out 10 the public in ex-
change for the national bank notes
now in circulation
3. The circulation" bonds called
for redemption will then be turned
over to the Treasury and cancelled
reducing the national debt by that
amount.
Little Effect on Citizenry
There will be little effect on the
average citizen from this three
Cornered transaction. For the
present the new money will buy
the same as the old.
Under this plan S657 937 $50 of
national bank notes. or more than
a tenth Of the COuntry'S circulat-
ing medium. will be replaced with
Federal Reserve bank money. Only
three classes Of paper money will
then be outstanding Re
serve notes. silver certificates and
United States notes.
Government officials said the
move was another step in the
SimplifCation Of the monetary SyS-
tenn and a veSting OF complete pow
er in the hands OF the Federal
government. Previously. Rational
banks have been permit TO issue
their money independent of
whether or not II was needed in
circulation and sometimes in con-
flict with other monetary steps Of
the government
First Substantial Use
The money plan involved the first
substantial use OF the devaluation
profits taken by the government on
Feb. l. 1884. when 1t wrote up the
value Of its gold holdings from
S2O67 to SIS an ounce. BY this
writeup the Treasury received a
book profit OF S2.Sl2OO0.0OO.
A total Of S2.O00OOO.O00 was set
aside 70 establish the exchange
sterilization fund which has guided
the dollar in foreign markets; $780,
100000 was appropriated for loans
TO industry through the Federal Re-
serve banks: S23.OOO,O00 for the
Philippine currency fund and
$4,000 600 for melting losses This
leaves about s642. 100000 OF free
gold" which is 10 be used for the
national bank note retirement.
= 80 NJ n~Ts~h n,r0r