The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-08-24
ROOSEVELT IS
REAL VICTOR OF
new BANK BILL
Administration Stamped All
Over Capitalization
Measure.
BY LYLE c. WILSON
United Press staff Correspondent

misleading OF the stories circulating
in and out of Washington is that
Senator Carter Glass, Virginia S
fiery favorite son, kicked the New
Deal central bank bill out The win
dow and caused Congress to SEND
to President Roosevelt a mysterious
~ conservative measure perpetual
ing the Federal Reserve Act OF 1914
The fact is that the bank bill
passed by Congress Monday and
signed by Mr.. Roosevelt yester-
day has New Deal stamped all over
it. The bill establishes an unprece-
dented political and centralized au-
thority over banking.
New Dealers are content. They
believe credit expansion and better
business will flow from the bank
bill, and soon enough to check and
finally demolish most of the cur
rency imitation blocs maneuvering
now in Congress to jam printing
press money bills through the next
session.
Two Points Cited
AS against the inf1ationist theory
of cheapening the dollar by creating
more dollars, the New Deal expects
the bank bill to cheaper the dollar
by expanding the use of credit. That
credit expansion is an effective and
sometimes uncomfortable business
boomer has been demonstrated
often enough, most recently in the
episode ended in the debacle OF
1929.
AS a stimulant of credit eXpan-
sion and an alternative to currency
expansion, the bank bill is pri-
marily important in two particu-
lars:
l. 1t eliminates the Federal Re-
serve Act requirement that COL
lateral discounted by Federal Re-
serve banks must be of strictly
limited character maturing in go
days.
2. 1t permits and encourages Fed
eral Reserve member banks to loan
on real estate security.
Opens Credit Channels
New Dealers believe 100000 900
of Federal Reserve member bank
time deposits will be shot into the
home construction industry under
the liberalized loan provisions of the
new bank bill. Bankers probably will
be advised that they ultimately must
choose between loaning those time
deposits on long-term real estate
collateral or permitting building
and loan and other real estate
credit agencies to absorb custody of
the depositors' money.
The New Deal theory is that If
the banks won't use those funds
where they are needed, some other
agency will supplant the banks as
depositaries of time accounts.
BY abandoning eligibility restric-
tons on loans by Federal Reserve
banks to member banks, the new
bill opens the channels of credit
expansion, and by its provisions re-
organizing the Federal Reserve
Board, the bill gives President
Roosevelt reasonably certain, if in
direct, control over banking and
credit.
Removal Merely a Gesture
At the outset of the six months
dispute which accompanied this bill
through Congress Senator Glass
complained that the Administration
sought by subterfuge to establish a
politically controlled central bank.
Administration officials conceded
the bank bill proposed to establish
a banking system which would have
the substance if not the actual form
of a central bank.
In concession to Senator Glass
and others who opposed political
tinkering with the nations bank
system, Congress voted to remove
the Secretary of Treasury and Con-
troller of Currency from the Fed
eral Reserve Board Those Off
cis nave been eX-off1cio members.
1T their removal is no more
+ n a gesture. The bill not only
removes that pair but scraps the
entire Reserve Board. President
Roosevelt is authorized to name an
entire new board on Feb. /, 1886.
There will be seven members and
it is logical to assume that all Of
next February's appointees will be
New Deal-minded and wholly SYM
pathetic with Mr.. Roosevelt'S bank
ing theories.
ROosevelt's Control Established
AS a further limitation on poll
teal control of the Reserve Sys-
tenn. the Senate stipulated that five
representatives of Reserve banks
should sit with the governors of
the Reserve system in deciding how
and when funds shall be invested
in government bonds. But of these
the Roosevelt-appointed governors
will have a majority Of two on that
committee under any circumstances.
And there is the further factor
that the Reserve bank presidents
who become members of the open
market committee are dependent on
the governors for their jobs. The
governors sit for IA years; the Re-
serve presidents for five and the
latter may take Office only subject
to approval of the board.