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S Will Remove Banks' Banks Power for Issuing Money Federal Reserve Note Not to Be Used in Concen Concentration Concentration Con Con- ConI I cen tra tion Plan By Br United Press W WASHINGTON ASHINGTON M March 11 In 11 In one of the most important monetary acts since devaluation of the dollar the treasury revealed plans today to concentrate concentrate con control of 01 currency in the federal government A plan to strip national banks o of their p power ver to issue money and call callin callin callin in national b bank notes to be replaced by federal reserve notes was announced an noun ed ed today b by Acting Secretary of the Treasury Treasur Thomas Jefferson Coolidge The federal government as a part o of the the- program will draw on its gold devaluation profits to retire of the national debt The maneuver maneuver maneu maneu- ver vcr will save ave the government 13 annually in n interest Clr Circulation Bonds The bonds to be retired bear circulation circulation cir privileges and arc pledged by national banks with the treasury to back most of the of outstanding national bank notes The new federal reserve not notes s willbe will willbe willbe be backed by gold of or not l less s than 40 per cent of their face value The national bank baik notes to be called in inthis inthis this tIlls summer r arc rc backed per cent by government bonds pledged with the treas treasury ry by the issuing banks The immediate effect will be bc simplification simplification sim sim- n of or the nations nation's currency cur system and vesting in the treasury and the federal reserve c banks all authority au au- au to i. i issue ue money in the United States Spend Gold Profits Proms was said to to carry definite monetary inflation implications in that it represents a spending of ot the governments government's gold profit and widens the gold base to support the potential potential potential poten poten- currency expansion ion Offic Officials ais avoided reference e to inflation inflation in in- Elation possibilities but conceded it would put gold to work which can out be expanded They pointed complete control control over o issuance of oC money is placed in m the hands of the federal government for the first time as a controlling ng safeguard over possible pos pea paso sible expansion on The mone money plan will wili be consummated consummated mated as follows i y 1 The tre treasury sury called for redemption tion July 1 outstanding of 2 P per I cent and on August 1 ii I. outstanding of ot 2 per percent percent percent cent Panama canal anal bonds of 32 1916 and of ot Panama canal bonds of 01 1918 Issue Notes I 2 The treasury will give ive the federal federal fed fed- eral reserve banks about lin in gold certificates i. i issued against Continued on Pace Pate Two I I U. U S. S TO EXTEND MONEY CONTROL from rue Pare One gold seized in in devaluation of ot the dol del lar Jar The reserve banks bank then will L Issue federal reserve notes against and them the t gold ld certificates pay out ut to the pub public on exchange for tor the thc national bank mk notes now in tion 3 The circulation bonds bonds' called for tor redemption will then be turned over oer to the treasury and canceled cancel d reducing the national debt by that amount There will be little effect on the average citizen from this three cor tran transaction ct on For the present the new m money e will buy the same ame as the old Only three classes of oC paper money will then b be bC outstanding standing out ng federal reserve re reo re- re serve serve cerve notes silver certificates cates and United States notes C Conflicting S Steps Stepi pl National banks heretofore have been permitted to issue their mone money independent of or wether or not it was needed in circulation and sometimes in conflict with other monetary steps of ot the government The money plan involved the first substantial use of oC the devaluation profits taken by the government on February 1 1934 when it wrote up the value of oC its gold holdings from 2067 to 35 per ounce By this the treasury received a book profit of ot A total of oC was vas set aside to establish the exchange stabilization stabilization sta sta- fund which has guided the dollar in foreign markets was' was appropriated for tor loans to industry in in- through the federal reserve banks for the Philippine currency fund and for melting lo losses cs This leaves about of oC free Cree gold which is isto isto isto to be used for the national bank note retirement V WASHINGTON ASHINGTON March 11 UP Marriner S S. Eccles governor of the federal reserve board testified before the house banking and currency currency currency cur cur- rency committee today that in his opinion currency inflation would have little effect on the national In Income in- in come corn C. C Eccles was asked b by Representative Represents tive live Clyde CIde Williams D. D Mo at a haring on the omnibus banking bill if there was any relation between between between be be- tween the amount of or money and business conditions E Eccles Ecles cles said there was no direct relation and cited the money supply supply supply sup sup- ply of the country and the national income during comparable recent years These figures indicate that simply sim aim ply an increase in tho the volume ol of money docs does not increase the national nation nation- al 31 income to an any real extent Eccles Eccles Ec Ec- Ec- Ec cles des replied In 1928 he said the income was and the money supply supply sup sup- ply was In 1933 in income income income in- in come and mone money supply supply supply sup sup- ply and in 1934 in income income inome in- in come ome was to and arid money supply |
