Show BILL WOULD ADD 2 BILLION TO CURRENCY Proposes Looser Restrictions on Loans Made by Federal Federal Federal Fed Fed- eral Reserve By RA RAYMOND Y CLAPPER United Pre Press Staff Correspondent WASHINGTON Jan 27 27 Efforts Efforts to I further expand credit facilities and provide the basis for additional currency currency currency cur cur- rency are to be pressed In congress They will vill center around a proposal by Senator Republican Michigan for permitting federal re reserve reserve re re- serve banks to e e. e expand loan facilities by accepting promissory notes of banks based on collateral not now eligible for rediscount such as bonds warrants notes and other securities of the federal gove government ment states counties municipalities and other po units The plan is said to be receiving sympathetic consideration in administration quarters though no DO public indorsement has been given The White House Houe has bas made known its unqualified opposition to any currency cur cur cur- rency inflation in the European sense of issuing money backed by no re reserves reserves reserves re- re serves of gold or securities European European European Euro Euro- assertions tha that this country was embarking on such inflation through the administrations administration's financial relief program were de declared lared to be entirely unfounded PROVIDES TWO BILLION says that under his plan new currency could be obtained i if needed without in any way impairing the soundness of or the federal reserve system It would merely permit federal reserve banks now restricted to making loans on day 90 paper to also loan on good public bonds will offer his bill as asan asan asan an amendment to the Glass banking reform measure soon to come up The plan is urged to help small banks which have in many cases exhausted exhausted ex ex- hausted their borrowing capacity on short term paper Would that constitute inflation was asked I OIl would call it he re re- plied It would not interfere with the he liquidity o of the s system stem All I propose to do is to say that federal reserve banks need not be restricted to day 90 paper in making loans but Continued on Page Two 5 I BOLL BilL WOULD ADD 2 BILLION TO CURRENCY Continued From r Pare rille jc One could loan on long term securities of ot sound value and ancl good marketability It would eliminate short maturity as IS the test of liquidity proposal appeals to the growing element in congress and andin andin in m the administration which believes more aggressive counter deflation measures are necessary CLAUSE STRICKEN The reconstruction finance corporation corporation corpor corpor- I bill contained a provision that its Us securities should be eligible for rediscount at federal re reserve reserve re re- serve banks but this was stricken due to o opposition of oC Senators Glass class Democrat Virginia and Bulkley Democrat Ohio Sponsors of oC the provision provision provision pro pro- vision believed it would have carried ultimately but debate would have prevented the prompt Jass passage te of th the act which was regarded as mc prime necessity We have normally In circulation and only now said The re remaining remaining re- re is in hiding We need to do something that will replace this hidden currency If It the federal reserve system has In m free gold as I believe it has now currency currency cur cur- rency could be issued on the strength of or collateral which I propose to make eligible up tip to two and one half times the total amount of oC free tree gold That would be if iC that much I were needed Congress is echoing with many proposals proposals pro pro- for increasing currency Senator Sen Senator ator Wheeler Democrat spoke this week in favor of going on a bimetal basis using silver along with gold Such proposals only a few months ago regarded as visionary r arc are now being turned over thoughtfully NEED MORE l DOLLARS We need more dollars in circulation circulation tion Senator Capper Republican Kansas sa says s More dollars in 10 circulation circulation circulation cir cir- cir cir- mean cheaper money that means higher values for commodities for labor for evidences of wealth More dollars in circulation will give lve jobs will enable debtors to pay in interest interest in in- terest on their debts Congress Congress' next job is to insure an expansion that will be the equivalent of a moderate inflation of or the currency The administration dislikes the word inflation because of the different dif dif dif- ferent meaning put on it abroad When Europe sa says s 's inflation it means printing of money b by governments to pay their expenses The United States contemplates nothing in the remotest way approaching that On the contrary it is pointed out the government expects to balance i its budget by increased taxes next year |