The Washington times., 1935-07-05

| ~ severe defeat
-A 2s@@* for the Admin.
Lewis Haney istration's at.
tempt to seize financial control
of the nation, but is also a step
toward important banking re-
forms.
If adopted, as seems likely, it
may well become an important
milestone in our slow progress
toward a good banking system.
The following are the most i'm.
portant points:
1. The Senate bill marks great
progress toward taking the con-
troll over banking out of politics.
It provides that the seven mem.
bers of "the board of governors of
the Federal Reserve System" shall
be appointed for terms Of IA
years and be eligible for only one
| term. The term of one member is
to expire every two years. Thus
no presidential dictator can con-
troll majority.
The United States Treasurer
and the Controller of the Cur
rency are no longer to be members.
This would do much to END the
DANGEROUS ENHANCEMENT of Gov
eminent fiscal policies with the
banking business.
Decisions are to be made pubic,
together with the reasons there
for.
2. The Senate bill provides
against the great Capitalization
and concentration of power
which Eccles with Mr.. ROOse-
velt's apprOvaD was seeking.
The board is to consist OF
seven members, all equal IN
standing. They are to elect
chairman" (not "governorp
every four years.
There is to be no such conce1-
tration Of control as EccleS
sought. (a) Open market opera
tions (the buying and selling OF
securities) are to be conducted
by a committee of the seven
board members plus five heads
of Reserve banks. CD A majority
of the board is to determine
changes in thu reserve require
ments of member banks land
the maximum reserve is limited,
thus preventing the wild 100
per cent" Scheme). Co Reds
count rates are left much as at
present, changes to be initiated
by the Reserve banks.
The heads of the Reserve
banks are to be presidents"
elected for five years Gnstead of
governors" with three-y ear
terms), thus being less subject
| to Washington domination.
3. The Senate bill takes steps
to prevent the prostitution of
the nations banking system for
the purpose of making it a mere
agency to underwrite the Gov
eminent deficit. 1t provides
that United States Government
paper is to be bought and sold
only in the open market. This
. is intended to prevent the direct
dumping of Government securi.
ties on the banks.
4. The Senate bill preserves
the principles of commercial
banking. (a) The management
of the several Reserve Banks is
less tied to the Government.
(b) The Eccles-Roosevelt notion
of borrowing on any "SOund
assets is dropped. (c) A pen
atty rate of l per cent is i'm.
posed on rediScOunting ineligible
assets. (dD Real estate loans
are greatly limited-tO five-year
paper on so per cent of the
value Of improved property
located in the banks own terri
tory. (e) Collateral require
ments for notes remain as at
present.
s. The Senate bill kicks out
the Eccles- Roosevelt statement
Vi VCuCAd al AGCSCAEC pUASSs AHO
New Dealers were trying to COM
init our banking system to a
policy Of managing" the cur
rency in a futile attempt to con-
troll price levels. That goes out.
This bill may not be perfect.
But it is so vast an improvement
over the Eccles- Roosevelt bill
passed by the House that it war
rants great hope-hope that the
nation may yet be saved from
monetary socialism and political
banking.
The banking problem is a tech
nical one. You may find it diff
ficult to understand. But try. DO
not lose interest. 1t is as vital to
our freedom and prosperity as any
issue now before the public.
My sincere advice as an econ
omiSt and an American citizen is
to get behind this Senate banking
bill and Carter Glass, and push.