The Washington times., 1935-05-01

Lewis Hanev meaning Gov.
eminent spend.
ing to "relieve" the unemployed,
instead Of removing the cause Of
unemployment by clearing the way
for business to expand.
The big point is spending, and
the creation of funds for the Gov.
eminent to spend, by manipulating
the banking system.
Whatever you may have liked
in the chat" is many times out
weighed by the frightful mis-
understanding of banking which
underlies the sentence quoted
above. 1t has a direct bearing
on Title II of the banking act
and the carrying out of the I'M
| sound notions of that modern
John Law, Mariner S. Eccles,
whom he has made governor of
the Federal Reserve System.
Let me explain.
The President does not state
what he considers to be the re
sources" of the banks, but there
is plenty of evidence from his
actions and the known ideas Of
his accepted advisers. He means
by resources" the deposits in the
banks, and especially their lex.
cess reserves"
Here is the first great error.
A banks deposits are in no
sense resources" Deposits are
liabilities. They represent what
the banks owe to their de-
pOSitOrS.
A bank cannot lend deposits,
except cash, and then subject
to reserve requirements. De-
pOsitS do not belong to banks,
but to depOSitOrS.
AS to excess reserves" the
present 1900 million dollars
largely represents Government
debt. BY borrowing at the
Reserve banks and spending
the proceeds, the Government
has forced its debt into the
banks.
Similarly, the paper profit"
made by selling gold and taking
part of the gold content out of
the dollar, has been partly spent
and gone into excess reserves"
So, you see these resources"
are not real.
This is why they are not being
utilized" But the New Dealers
care nothing about the QUALITY
of our currency. They want to
have billions of dollars to spend,
no matter what sort Of dollars.
They want to force these unreal
resources" into use-to make you
and me take their debts in lieu of
real money.
So the President wants the al
legged resources to be most fully
utilized"
This means larger Government
spending.
AS Eccles has often said. if bust
ness men can't spend, and banks
can't find sound loans, the Gov
eminent will spend, and take over
the banks.
AS things are now, business
men find such great uncertain
ties as to the value of money
and as to Government control.
that they cannot go ahead with
business plans. They can neither
borrow nor spend as they other"
wise would, which of course re"
stricts employment.
So the President adds that
the utilization" of banking re
sources" which he wants is to be
lin the economic life of the coun-
try"
This means substituting govern
ment for business. 1t means
subordinating economic life to
political life.
Certainly it does not mean
economy. 1t does not mean
utilizing good resources in &C.
cord with economic values, and
counting the cost of things.
In my opinion, what Mr..
Roosevelt said whether con-
SciOuSly or mott was as follows:
The banks should be safe, BUT
must load them up with my
Administrations debts, and
call these resources" Then i
must control the banks so that
they can be made to issue
notes to the full amount of my
debts. This will enable me to
spend So much that l can sub
stitute my political control for
business initiative. 1t will de-
preciate the currency, but that
will bring inflated prices, and
VIA will oil fnnl sn nnnd fnr a