Show in ECCLES FENDS DEFENDS BANK ANK BILL ILL V 1 1 11 Issue of Currency to Pay V Bonus Not Real Inflation Reserve Governor Says V V Utahn Faces Glass V V Committee on Omnibus Omnibus Om Om- Measure V By Associated Press Frees V 7 WASHINGTON May 10 The opinion ion that issuance of in V new currency to pay off oft the soldiers soldiers' bonus would constitute inflation to V the extent that it created a lear fear psychology that would cause a rapid velocity of funds was expressed today to to- day by Marriner S. S governor V of the federal reserve board V If It such means were used over and andover andover over again to to pay government deb debts the value of currency would depreciate depreciate depre depre- in proportion to the fear created cre cre- h he added jn in testifying in-testifying before a senate banking subcommittee on the omnibus banking bill Questioned by Senator Couzens R. R Mich the former Utah banker banker- said raid the new currency that would be issued under the Patman bill would not increase the amo amount nt V V of money outstanding because it would displace currency 1 In itself he said the bill would V provide no more inflation than uthan if you OU put out that much o of government government govern govern- ment bonds V Senator Glass Glss D D. Wa Ma t who o opposes op opposes j poses the Patman Fatman measure said raid it it jt enacted would make it so ro easy to pay government indebtedness with new money that the government printing presses would be running inde indefinitely Eccles denied the bank bill would make the reserve system a ball of party politics or an engine of inflation V Testifying to the senate senate- banking subcommittee headed by Senator Glass D. D V Va one of ot tho the framers of ot the reserve act and a vigorous opponent of ot the sections giving the reserve board greater powers Eccles Ec Ec- cles des said aid V j The proposals made in this bill V Vare are definite and limited in scope and arise out of the experience of oJ the past 20 years They are not rev revolutionary they do not alter the V V fundamental character of the federal fed led V J Jeral V Veral eral the V reserve system or regional nature of its organization There is nothing in this bill that would increase the powers of ot a p po- po r administration over th the reserve re- re V Q serve board he added 1 Reading from from froma a long prepared statement Eccles asserted the need for public control of ot the function of ot supplying the medium i of ot exchange to the people of ot tho the 1 United States both by issuing c cur cur- r. r rency and by regulating the volume V of ot banks banks' deposits seems to me to tobe toie be ie almost a mat mat- matI I ter V It UIt Is in dire direct recognition of the V l i constitutional requirement that V 1 congress shall coin money and reg regulate K the value thereof V VV V V Declaring that apprehension V can only be expressed against the dominance dam dom V V Vinance in the tho reserve system of of- V V political and particularly of par partisan parti parti- i. i san control as distinguished from front public control Eccles said V On fOn this point I wish to emphasize V that the bill far from proposing an Increase in the powers of ot z a political p V V administration over the reserve system V tern tem contains provisions Intended to to Continued on Pate Pare Two O 1 f F 1 BANK MEASURE 1 DRAWS DEFENSE I Continued d from Pasc Pue One Increase the dignity and of the tho reserve board Opposing house home ho el elimination of at a 3 provision requiring all deposit insured inured in ln banks to be merr members rs of or the reserve system slem by Jul July I J 1937 Eccles ECcles Eccles EC Ec- cles prop proposed sed restoring this but modi modi- tied Sled to require all banks with deposits deposits deposits de de- posits of or more to join the system within a year after e entering the deposit insurance fund This be he said would bring about is as rapidly as possible a unification I I of ot the banking system and at the same MIne time relieve small smaIl banks from I Joining the federal reserve 1 For one thing he said id many ef of these there small banks derive e a consid crable erable portion of or th their lr income from exchange charges which they would have we to abandon if it the they joined the federal reserve system He said there cre were insured tate state banks now no outside the reserve e system whose deposits are under and 2038 with deposits over that figure so ro that roughly three- three fourths of at the insured nonmember banks would n nut not t be obliged to join the reserve e system and only one one- fourth representing the larger banks would be required to join The house passed the bill yesterday yesterday yester ester esterday day to Senate leaders predicted predicted pre pre- dieted there would be no action on the bill on the senate floor for or several several several sev sev- eral weeks but they foresaw a bitter controversy immediately before beCore the Glass subcommittee Glass Glas and his colleagues planned to hear Winthrop W. W Aldrich president president president dent of the Chase National bank And 1 rancis 1 M. M Law former president president president dent of the American Bankers' Bankers association as as- next Tuesday v vAldrich Political Control Aldrich was among tho signers oCA of oC ofA A ll statement Issued by the bankers' bankers association recently approving sections sections sections sec sec- of oC the bill dealing with deposit insurance and s so some o m e technical i changes in tho banking banking- laws but suggesting changes to minimize the possibility of what critics have envisioned envisioned en en- as political control over o the federal reserve s system stem Generally Generall bankers already heard by the Glass group have expressed opposition to the federal reserve provisions of ot the bull bUli Opponents apparently reserved their strongest attacks on these sections until hearIngs hearIngs hear hear- ings began on tho the senate side of the Capitol House passage of or the bill came after that body had smashed down a proposal by Representative Cross D. D Texas to make the federal re re- re serve system a central government owned bank Cross proposed that the secretary of or the treasury be authorized to buy worth of or stock In the 12 central reserve banks now held by bythe bythe bythe the reserve member banks Representative Williams D. D Mo contended such a a. move would be bean bean bean an unconstitutional seizure of property and the tho proposal was re rejected rejected rejected re- re to 61 Governor Eccles of oC the federal re reserve reserve reserve re- re serve board previously had told toM a ahouse ahouse ahouse house committee that the control provided by the omnibus banking bill jill should be just as effective in operating the system in the public interest as if the government owned the stock Follow Follows App Appeal al alThe The house vote against making malting the he federal reserve system a a. central cen- cen ral b bank closely followed an appeal appeal appeal ap ap- ap- ap peal by the Rev Charles E. E Coughlin Cough- Cough in lin Detroit priest for Cor establishment establishment establish establish- ment of ot a a. central bank owned by bythe bytho the ho people and controlled by the people directly through the congress congress con- con gress of oC the United States House Republicans tried unsuccessfully unsuccessfully to eliminate sections of or orthe the bill which would extend presidential presidential presidential control over the federal re reserve reserve reserve re- re serve board extend reserve board control over reserve banks allow the he reserve board to tell teU the 12 federal reserve resene banks when to buy or sell government o securities and permit the reserve board to vary the he reserves member banks must maintain against deposits to prevent prevent pre I vent injurious credit expansion or Of contraction II |