Evening star., 1939-03-20
EccIes' Silver Theory
Is Disputed by White
Congressman Says Cost Of
Federal Reserve Notes
Burdens Business
To the Editor Of The Star:

To the Editor Of The Star:
With reference to the use OF silver In
the national currency, the subject Of
my letter. published in your issue Of
March 3, and Senator Townsend's re-
ply appearing in The Washington Eve
ming Star of March 16, it is interesting
to note that the interest item as the
cost for the circulation of money is
disposed" of so handily by Senator
Townsend in quoting from letter from
Gov. Eccles, Of the Federal Reserve
Bank.
Now with the bulk Of the currency
(money) in circulation being Federal
Reserve notes, which on Tuesday, Febru-
ary %, was $4,635, ,848 $50, and business
burdened with taxes, it is comforting to
be told by the governor Of the great Fed
eral Reserve banking system and Sena-
tor Townsend that there is no interest
charge for the circulation of our money
(Federal Reserve currency. Unhappily,
we find that the interest charge is
there, nevertheless, paid by some one on
every dollar of Federal Reserve currency
in circulation.
Gov. Eccles says "a person who has
bank deposit can withdraw 1t in cur
rency and does not have to pay inter-
est'-certainly-every one knows that,
but under Gov. Eccles' banking system
~, tox Of "a y>,,h1ic Io
| not create money. The Federal Reserve
Bank is a bank for banks and has power
to create and issue currency Federal
Reserve notes. and lend this currency to
member banks secured by short-time
business notes or Government bonds
eligible papeD on which interest must
be paid until the currency is repaid to
the lending bank. Let Gov. Eccles ex-
plain how any Federal Reserve currency
Is issued and placed in circulation with
out some one borrowing the money and
paying interest on it while it Is in cir
culation. When this kind of money
(Federal: Reserve notes. is displaced by
silver certificates, the interest burden on
the general public is certainly diminished
to the extent that silver certificates take
the place of Federal Reserve notes.
I am glad it is admitted there is no
interest charge attached to the circula-
ton Of silver certificates. and that in
stead of "the issuance of silver certif-
Gates having no bearing whatever on
the interest burden silver certificates
issued against silver stored in the Treas
on6 void hu hn 10,
buying silver and paying current ex-
penses most emphatically relieves busi-
ness of an interest charge which 1t
would pay if this currency (silver Ger
tiflcates was replaced by Federal Re-
serve notes.
If there is no connection between
the issuance of silver and the interest
earning capacity of the banking sys-
tenn let Gov. Eccles prove that $4,635,-
848 $50. Federal Reserve currency in cir
culation, was created and put out by the
issuing banks in the regular course of
business with no interest charge at
tached as the cost of placing and keep
ing this money in circulation. Now let
me bring to the attention of Gov Eccles
(ToWnsend that the difference of ST.
632 ,0l0 in silver certificates placed in
circulation by the United States Treas
ury interest free and 1852, ,498,OlO in
Federal Reserve notes loaned into circu-
lation at per cent is $4S,s74,940 80 in
interest every year.
If the Senator and Gov. Eccles de-
sire to assist business and promote the
general welfare, may suggest that the
governor of the Federal Reserve bank
and the Senator from Delaware give
careful consideration to the benefits bus
iness receives in being relieved of this
part of the interest load as cost for
the circulation of the national currency
by the creation and circulation of the
outstanding issue of silver certificates
and, If the head of the Federal Reserve
system will use his influence to keep the
sound, redeemable silver currency in
circulation, Gov. Eccles besides dispos-
ing of the argument" will also prevent
laying an additional interest load on
American business.
COMPTON I. WHITE, NJ
March IT,