Evening star., 1941-01-01

Briefly, the plan called for
technical measures to prevent
use of most of the $7,000,000,000
idle money now in banks for
excessive loans; a reversal of
administration policy in some
monetary fields, and, finally. the
eventual balancing of the Fed
eral budget through higher
taxes.
Report Sets Precedent.
The report-frst Of its kind ever
made-eXplained that vast eX-
penditures Of the military program
and their financing create additional
problems in the monetary field
which make it necessary 10 review
our existing monetary machinery
and to place ourselves in a position
to take measures. when necessary,
TO forestall the development Of in
fationary tendencies attributable %
defects in the machinery Of credit
control.
These tendencies. if unchecked
would produce rise of prices;
would retard the national effort for
defense and greatly increase its cost.
and would aggravate the situation
which may result when the needs Of
defense. now a stimulus, later absorb
less Of our economic productivity"
Five-POint Plan.
The plan was listed in five points,
as follows:
!. Immediate increase by con-
gressional action of deposit reserve
requirements on all member banks;
authorization for the Federal Re
serve Board tc dCuoie these rec - -
ments if necessary in the fl
make all banks, whether char -rei
I by the Federal Governmer -
States, subject to these rec re
mentS.
2. Remove Presidents povar ..
change gold value of the cola
repeal Treasury authority to Issue
$4,000 100000 OF 'greenback" none,
and repeal Treasury authorit 10
issue money against the foreign
silver it buys.
3. Neutralize money Expansion
effect resulting from United State
/ purchases of foreign gold.
4. Sell future Government securI-
ties to individuals and corpcrs lions
and not to the banks.
5. Gradually increase taxes un,.. q
balanced budget is reached, not later
than some future time when the
country will have reached its full
utilization Of its economic capacity,
with appropriate considerations of
both employment and production"
Has Responsibility, Lacks Powers.
The statement complained that
the Federal Reserve System has the
responsibility of credit control but
has insufficient powers to "effec-
lively discharge those duties.
Mr.. Eccles submitted the report 10
Secretary Morgenthau before max
ing it public, saying:
1T is vital to the success of these
measures that there be unity of pol
| icy and full coordination of action
/ by the various governmental bodies. ="
No one at Federal Reserve head
quarters would say whether the pro-
posal had administration approval
However, Lauchlin Currie, President
Roosevelt'S personal economic ad-
wiser, attended a Tuesday meeting
with Mr.. Eccles and Mr. Morgenthau
on the subject.
In the summer of 1899 the ad-
ministratiOn mustered all its con-
/ greSSional strength TO win a bitter
fight to renew the Presidents dollar
devaluation powers, which the Fed
| eral Reserve group now urges be
/ abandoned. Under the 1899 act. this
/ power will lapse June 80, I94l, If
not renewed again.
/ Federal Reserve Spokesmen, how
ever, said the business boom created
by the defense program had RADICAL
/ ly altered coditionS so that. regard
| less of their former merit. this and
the greenback and silver money
| powers were no longer either neces-
sary or desirable.
To Prevent Excessive Loans.
The silver proposal specifically
provided for no change in the pur-
| chase and monetization of domesti-
/ C.. ,x@A-rraDxy