The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-20
Liberal Viewpoint
by DIR. HARRY ELMER BARNES.

TT is common knowledge among most informed
Il observers of our economic system that its
major evil lies in the dominion of finance over
productive industry and the distribution of the
social income. Capitalism in its latest phase,
has become mainly gigantic instrument for
looting and exploitation. Business and the for
gotten man alike are sacrificed in the interests
of immediate and predatory financial profits.
Mr.. Roosevelt had an opportunity to strike
one decisive blow at this system by taking over
the banks and the credit functions of the coun-
try when these were PROSTATE early in March,
1888. He failed to do SO, and unregenerate
finance is bitterly contesting all crucial phases
of the New Deal. just now bitter struggle is
going on over the Eccles bill, which is at the
most, only feeble effort at incomplete control
by the government of certain phases of American
banking.
So far as it goes, the Eccles bill is all to the
good, but it does not go far. The present fight
is mainly over the effort to subject the open
market operations of the Federal Reserve Sys-
tenn to government control.
THESE open market operations are of real
Il significance to the country and to our none
tary system. Those who control these operations
decide when the government will purchase or
sell United States bonds. When these bonds are
purchased there is a tendency to increase the
bank reserves and currency of the country,
whereas when they are sold there is a trend to-
WdrQ contraction OF DdQk reserves ana CURRENCY
The Eccles bill proposes that the open market
operations shall be controlled By a committee
of five. The government will have a majority
through having on the committee three Federal
Reserve Board members, while private banking
will have as its representatives two Federal Re-
serve Board Governors.
The bankers suggest that, instead they be
given four representa- ives out of nine. AS John
T. Flynn remarks in the New Republic: Their
hon mis- he in they
would stand better chance of capturing one of
the governments five members and thus turn
ing the minority into majority"
Strangely enough the bankers have as their
main champion in Congress Senator Carter
Glass, whom they bitterly criticised a generation
ago when he was fathering the creation of the
Federal Reserve System Senator Glass assumes
to be very much worried about the possible
political control Of monetary and credit opera
tons.
DUT, as Mr.. Flynn makes clear, it is hardly
I'D conceivable that politicians would make
worse mess OF money and banking than the
bankers have already done:
Glass is against the proposal because he in
sisted that no bunch of politicians should have
the right to manipulate our money supplies to
conform to political policies. Why he should
suppose that it is all right for bunch of bust
ness men TO manipulate our money for their own
purposes it is difficult to say
1T is hard to see how any group Of politicians
could have made worse job of it than the
bankers and the business men have done up to
now. And if our money supplies are to be
manipulated is it not better to trust the job
TO the government, which represents the public,
than to the bankers who represent themselves"
The main criticism which can be sensibly
lodged against the Eccles bill is that it makes
no real effort to bring the important monetary
and credit functions of the country under
resolute governmental control:
No attempt has been made by this Admins
tration to deal with that vast mess which is our
banking system. Il remains with all its pre-
Rooseveltian infirmites-the same bankers the
same methods the same dual system, the same
bad ethics, even holding-company banking is
recognized and encouraged by being legalized-
and it is all supported by the crutch Of deposit
/ insurance"