The Waterbury Democrat., 1936-12-15
INITIATION FOR
UNITED STATES
Stage Set for Boom Also
Is Prediction of Profess
sOr Fisher of Yale
BY JACK EAIMAN
Copyright 1886, by United Press)

NOOpyFlSnB 1900, ny OHlte0 EEebSD
New Haven, Conn.,, Dec. 15.-(UP)
Prof. Irving Fisher Of Yale uni
versity, one of President Roosevelt's
closest financial advisors during the
early days Of the New Deal, adj
mitted today THE stage Is now set
fof q boom and imitation" In the
United States and urged greater
power for the federal reserve board
to control 1t.
Fisher told the United Press the
law creating the federal reserve
board should be altered to permit
the raising Of reserve requirements
for banks to an unlimited extent.
Blames Carter Glass
The Yale professor emeritus OF
political economy, instrumental in
creation Of the U. s. Sterilization
fund three years ago, blamed U. s.
Sen. Carter Glass, Virginia, for abb
sence of this provision in the fed
'eral reserve act.
But" Fisher said, las Senator
Glass has always avowedly wanted
to avoid initiation, he could not con-
sistently continue to oppose the pro-
posed power.
with such added power granted,
the federal reserve board could
certainly control the situation COM
pletely."
He admitted imitation as possible
in the United States. but added the
stage lis also set for control Of such
tendencies.
Not One Bit Alarmed
For that reason, I am not alarm
ed, as some people are; nor have !
been alarmed through the last three
years during which the words boom
and imitation have been so often
used as direful forebodings.
But were 1t not for the posi-
bility Of control by the federal re-
serve board, the president and, II
need be, congress, would be very
greatly alarmed.
For, then, our vast gold reserve,
the raising Of the price Of gold from
$20.67 to $35 per ounce and the ex-
cess reserves Of the banks, would be
not only menacing but almost GER
tain to bring terrific inbation.
But the president has the power
to bring back the price Of gold to-
ward or even to the old price, and
the federal reserve board has been
expressly set up, under the banking
act of 1885, to perform the open
market operations which Governor
strong used TO head of imitation.
To Control Imitation
Prof. Fisher enumerated avenue
the federal reserve board could fol-
low to control boom or injationary
tendencies. They are:
l. by selling bonds, or other as
sets, the federal reserve board can
withdraw money, or credit, from
circulation.
2. ut also. or the banks under 1t,
can raise rediscount rates which will
have the same tendency to curb in
flation.
3. Moreover, it can raise the re-
serve requirements Of the member
banks so as to reduce the excess
reserves. Such action has already
been taken once, the reserves hav-
ing been increased from Z, 10 and
13 per cent In the three classes OF
cities, to 10 1-2, IS and 10 1A2 per
cent respectively. These can still be
raised, under the present law, to IA.
20, and 20 per cent.
And II that Is not enough, the
law should be and II Mr.. Roosevelt
wishes, could easily be changed to
permit a still further raising Of re-
serves.
II believe the law should be
changed SO as to make possible any
degree of reserve-raising which
may be required.
THE original law was so drawn,
but was changed because Of the OPP
position Of Senator Glass. But, as
Senator Glass has always avowedly
wanted to avoid imitation. he could
not consistently continue to oppose
the proposed power, II this is re-
quired for fully controlling the i'm
pending imitation, and II he should
oppose. he would certainly be over
ruled II President Roosevelt would
so WISH"