Evening star., 1935-05-14
SENATE'S DEBATES
HERALD Sc DR|VE|
Central Bank Bill Seen
Forcing Issue Similar
to 1896.
BY DAVID LAWRENCE.

Prolonged debates are ahead in the
United States Senate in which will be
made the principal issues OF the 1886
campaign.
Every important piece of legislation
now pending has in it principles Of
far-reaching consequence. None. how
ever, compares in historic importance
with the proposed central bank bill.
Out of it will come an issue similar
to that which brought the sound
money agitation of 1896, following the
1893 depression.
The public generally has as yet
taken little interest in the banking
bill, believing it to be merely q meas
ure to curb the greed" Of private
bankers or their alleged mismanage-
ment prior to the bank holiday.
What is not generally realized Is
that the proposed bill is a measure to
introduce forced loans" by the Gov
ernment, something that when tried
In Germany brought the imitation
panic of 1923 and the Generalization
Of prices.
Would Force Bonds on Banks.
The power to force the banks to
take Government bonds against their
own best Judgment is contained In
the proposed legislation; indeed, ad-
miniStration sponsors Of the bill
openly coucede that they want legal
powers that will prevent banks from
refusing to buy Government loans.
Private bankers insist that no such
&c hPraOSR
the banks already have so many Gov
ernment bonds that they would De
foolish to refuse to buy any more ana
thus jeopardize the value OF those
they already have.
But the fact remains that II the
new banking bill becomes law such
will be the control over all banks by
the Government that depositors no
longer will really have the opportunity
TO assure themselves that the money
they place in banks at the end OF a
given period will be worth as much IN
purchasing power as when they placed
their funds on deposit.
On the surface the issue is whether
the Government or the bankers snail
control the banks and. because OF the
preiudices engendered by the depres-
sion, perhaps, many persons will &C
cept that version. But the truth Is
the issue IS whether the Government.
comprising officials who are bound to
be influenced more or less by politics,
will have authority over depositors'
money or whether the people Will re-
tain control over the disposition OF
their money when placed In banks Tor
safekeeping.
Shall the people or the politicians
rule? This question doubtless will be
asked again and again by the speakers
in the forthcoming debate IN the Sem
ate. The fundamental changes being
proposed are strikingly similar to the
functions Of centralized banking or
distribution of Federal deposits which
on previous occasions have caused
financial crises in American history.
There is a curious psychology grow
ing up about the banking bill. Some
members of Congress who feel that
the administration cannot possibly
avoid imitation are going to vote for
the proposed bill because they say
that If imitation comes 1t will be es-
sential for the Government to have
complete and comprehensive power.
Critical Future Feared.
To put it another way, it is feared
that such critical moments are ahead
because of the heavy borrowings and
huge deficits that only by the pos
session of sweeping powers could
Federal administration cope with all
possible contingencies
The amazing thing Is that 50 many
legislators are simply taking for grant
ed the serious times that are ahead.
while others are going to exert them
selves to the utmost to keep the
banking bill from being adopted.
There are reports current that sew
eral bankers throughout the country
are unwilling to take the RESPONSE
bility of permitting the banking bill
to pass without notifying all their
depositors of the many things that
are involved in the pending legisla-
ton. II the millions of persons who
have deposits in the banks are re-
sponsive to the appeals that are made
to them 1t is undoubtedly within their
power to prevent the bill from being
passed by the Senate, even though 1t
has already passed the House.
Copyright. 1880