"National Defense Measure"

THE PRESIDENCY

"National Defense Measure"

An unceremonious squiggle of President Hoover's pen last week made the Glass-Steagall bill law. Its enactment sent a strong new quiver of hope and confidence through the nation's banking nerves. Now the Federal Reserve System could lend money to its members (in groups of five) on assets which before were ineligible for rediscount. Now it could substitute U. S. securities for gold and commercial paper as coverage for its currency. With the gold thus released, it could withstand foreign raids on the dollar or print more paper money.

One string was tied by Congress to this measure for credit and currency expansion: no bank with a capital of more than $5,000,000 (of which there are 62 in the land) could individually, under the "exceptional and exigent" clause of the law, rediscount at the Federal Reserve Bank assets not now eligible for such borrowing. For that limitation in behalf of "small" banks, Senator Glass of Virginia had battled successfully.

After he signed the bill, President Hoover issued a public statement in which he took off his hat and made a low bow to Democrats as well as Republicans in Congress. Said he: "The fine spirit of patriotic nonpartisanship is, I know, appreciated by the whole country." Then he continued:

"In a sense this bill is a national defense measure. By freeing vast amounts of gold it [enables] the Federal Reserve Banks to meet any conceivable demand on them at home or from abroad. . . . The gradual credit contraction during the last eight months, arising indirectly from causes originating in foreign countries and continued domestic deflation, but more directly from hoarding, has been unquestionably the major factor in depressing prices and delaying business recovery. ... I trust that our banks now will reach out to aid business and industry in such fashion as to increase employment."

P:President Hoover vetoed his first bill from the 72nd Congress--a pension measure for 76-year-old Alexander M. Proctor of Washington who enlisted in the Army while under age and was discharged "with-out honor."

P:In a special message to Congress based in part upon the findings of the defunct Wickersham Commission, President Hoover urged reforms in U. S. criminal court procedure and the Federal Bankruptcy Act. He also repeated his recommendation for a District of Columbia Prohibition enforcement law. Recommended was authority for the Supreme Court to prescribe uniform rules of practice and procedure for inferior courts to speed up appeals and reduce congestion. The President would permit a defendant to waive indictment by a Federal Grand Jury, bring a corporation to trial in any State where it does business and turn all possible juvenile cases over to State Courts. Reporting that the number of bankrupts rose from 23,000 to 65,000, the losses to creditors from $144,000,000 to $911,000,000 in a decade, the President called the bankruptcy law "defective," urged changes to relieve honest but unfortunate debtors, to discourage fraud and needless waste of assets.

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