Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-07-02
REVISED BANKING
BILL IS APPROVED
BY COMMITTEE
Morgenthau and EccIes
Hint Administration May
Desire Further Changes.
MEASURE MAY REACH
FLOOR TOMORROW
Little Disagreement in Senate
Seen in Speedy Action on
Credit Control.
BY the Associated Press.

Without a record vote. the Senate
Banking Committee today gave speedy
approval to the revised administration
banking bill placing control OF credit
in committee of seven Reserve Beard
members and five representatives OF
the IL Reserve banks.
This action came soon after Secre-
tary Morgenthau and Gov. Eccles OF
the Federal Reserve Board. leaving
conference at the White House. had
told newsmen they would have some
suggestions to make to the committee
regarding the legislation if they were
given an opportunity to DO so. TnS
indicated to observers that the admin
ist-ation desires changes in the re-
vised bill.
Chairman Glass. Democrat, of Vir-
ginia of the Senate subcommittee
which changed the banking bill ma
terially from the form In which 1t
passed the House, was authorized to
report the bill to the Senate floor dur
ing the day. Chairman Fletcher.
Democrat. OF Florida of the full COM
mittee said it might be taken up on
the floor tomorrow.
Little Disagreement Seen.
The speed with which the full COM
mittee acted-after less than two full
days consideration-was regarded as
an indication there would be little dis
agreement among committeeman in
the Senate debate. A hot contest had
been predicted several weeks ago.
The full committee made only a
few slight changes in the subcom
mittee draft, the most important pro-
viding for regional selection of the five
Reserve bank representatives on the
Open Market Committee Under the
amendment one representative would
be chosen annually from the follow
ing four bank regions:
l. Boston, New York and Phila-
delphia.
2. Cleveland, Chicago and st. Louis.
3. Richmond, Atlanta and Dallas.
T. Minneapolis, Kansas City and
San Francisco.
Chairman Fletcher of the full COM
mittee termed the bill quite reason
able and a fair compromise. He
said it was better than I expected
Glass Is Happy.
The veteran Senator Glass was hap
py over his handiwork.
1T is a darn sight better bill than
the House passed" he remarked to
newspaper men as he sat atop a COM
mittee table.
Its all right with me IL that's
what they want" observed Secretary
Morgenthau. who would 60 oil the
Reserve Board In three months under
the new bill.
Glass denied the bill would eliminate
existing prohibition against banks en-
gaging in both security and deposit
business. He said it would relax the
bars slightly without subjecting banks
In the capital market to the blanket
drastic prohibition" of the banking
act of 1888. The new measure would:
Reorganize the Reserve Board. As
against the existing eight-man board.
AASAaoAAS WV CA-Ol4lNiO
would consist of seven members, all
appointed to 14-year terms. Not more
than four members could be from anv
one political party.
The Open Market Committee
which would determine policies with
regard to buying or selling of Gov
eminent securities, would consist Of
the Seven-man board and five repre-
sentatives of the Reserve banks. the
latter to be selected by the Reserve
bank directors Under the House
bill, the Reserve Board would have
the entire say as to open market
operations.
Open Market Policies.
The committee policies on open
market operations would be manda-
tory on the IL Reserve banks, but the
committee could exempt some of the
banks from certain operations If it
chose. Buying of Government bonds
by the Reserve banks would be lin
tied to strictly open market trans
actions. with purchases direct from
the Treasury barred.
Further slashing broad powers in
the House bill, the Senate measure re-
moves the provisions allowing men,
Der banks to make loans on sound
assets" rather than certain specified
commercial paper, the question of
soundness being left to the board.
The present law was retained in this
respect.
As for rediscount rates.. they would
still be initiated by the Reserve banks
subject to board approval as under
present law. But the banks would be
required to initiate rates at least
every two weeks, though not neces-
Sarily to change them.
BY a vote of not less than five Of
the seven board members, the board
could act to prevent injurious expan-
sion or contraction" of credit by
doubling the existing Reserve require
ments against deposits.