Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-05-10
ECCLESSEESE EVIL
NBONUS PASSAGE
Declares Issuance of New
Currency Would Create
"Fear Psychology"

BY the Associated Press.
The opinion that issuance of So
900 100000 in new currency to pay of
the soldiers bonus would constitute
imitation to the extent that it created
a fear psychology that would cause
a rapid velocity of funds" vas eX-
pressed today by Mariner S. Eccles
governor of the Federal Reserve Board
II such means were used over and
over again to pay Government debts
the value of currency would depreciate
in proportion TO the fear created, he
added
He testified to a Senate banking
subcommittee on the omnibus bank.
ing bill while a deluge of telegram:
arrived at the White House urging
either approval or veto of the Patmar
bill for paying the bonus by issuing
new currency.
Would Not Increase Money.
Questioned by Senator Couzens, Re.
publican, of Michigan, the former
Utah banker said the $4,000, 000, 00C
new currency that would be issued
under the Patman bill would mot in.
crease the amount of money outstand-
ing" because it would displace existing
currency.
In itself. he said, the bill would pro-
vide no more imitation than if you
put out that much Of Government
bonds"
Senator Glass, Democrat, of Vir-
ginia, who opposes the Patman meas
ure, said it. if enacted, would make
it so easy" to pay Government indebt-
edness with new money that the Gov
eminent printing presses would be
running indefinitely.
Earlier Eccles said that public con-
troll of national credit and monetary
policy was essential to promote re-
covery.
He denied the measure would make
the reserve system a foot ball OF
party politics or an engine of in
f1ation"
The proposals made in this bill are
definite and limited in scope and arise
out Of the experience of the past &c
years. They are not revolutionary
they do not alter the fundamental
character of the Federal Reserve Sys-
tenn. or the regional nature of its
organization" he said.
No Increase Of Powers.
There is nothing in this bill that
would increase the powers of a politi-
cal administration over the reserve
board" he added.
Reading from a long. prepared state
ment, the youthful-looking former
Utah banker asserted the need for
public control of the function of sup
plying the medium of exchange to the
people of the United States, both by
issuing currency and by regulating the
volume of banks deposits, seems to
me to be almost non-controversial
matter.
1T is In direct recognition OF the
constitutional requirement that Con-
gress shall coin money and regulate
the value thereof"
Declaring Apprehension can only
be expressed agains. the dominance
in the Reserve System of political. and
particularly of partisan. control as
distinguished from public control,
Eccles said:
"On this point I wish to emphasize
that the bill. far from proposing ar
increase in the powers of political
administration over the Reserve SyS-
tenn, contains provisions intended tc
increase the dignity and independence
of the Reserve Board
nnp0Sinn House oE ;r,o ~ q
provision requiring all deposit insured
banks to be members of the reserve
system by July 1. 1887, Eccles pro-
posed restoring this, but modified to
require all banks with deposits of
100000 or more to join the system
within a year after entering the de-
posit insurance fund.
This, he said. would bring about as
rapidly as possible a unification of the
banking system, and at the same time
relieve small banks from joining the
Federal reserve.
The House passed the bill yester-
day, 27l to ITO. Senate leaders pre-
dicted there would be no action on the
bill on the Senate floor for several
weeks. but they foresaw a bitter con-
troversy Immediately before the Glass
subcommittee.
Glass and his colleagues planned to
hear Winthrop w. Aldrich. president
of the Chase National Bank, and
Francis M. Law. former president of
the American Bankers Association,
next Tuesday.
Aldrich was among the signers of
statement issued by the bankers as
ISOLATION recently, approving sections
Of the bill dealing with deposit in
surance and some technical changes
in the banking laws. but suggesting
changes to minimize the possibility
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