Statement on Signing the Federal Reserve Act, Amendments

THE PRESIDENT said:

"In signing this bill which comprises an essential part of the reconstruction program, I desire to express my appreciation to the leaders and Members of both Senate and House of both parties, who have cooperated in its enactment. The fine spirit of patriotic nonpartisanship shown in carrying out the emergency program is, I know, appreciated by the whole country.

"The bill should accomplish two major purposes.

"First. In a sense this bill is a national defense measure. By freeing the vast amounts of gold in our Federal Reserve System (in excess of the gold reserve required by law), it so increases the already large available resources of the Federal Reserve banks as to enable them beyond question to meet any conceivable demands that might be made on them at home or from abroad.

"Second. It liberalizes existing provisions with regard to eligibility of collateral and thereby enables the Federal Reserve banks to furnish accommodations to many banks on sound assets heretofore unavailable for rediscount purposes.

"The gradual credit contraction during the past 8 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.

"This measure I am signing today, together with the additional capital provided for the Federal land banks and the creation of the Reconstruction Finance Corporation, will so strengthen our whole credit structure and open the channels of credit as now to permit our banks more adequately to serve the needs of agriculture, industry, and commerce.

"I trust that our banks with the assurances and facilities now provided will reach out to aid business and industry in such fashion as to increase employment and aid agriculture.

"I am confident that the further nonpartisan measures of reconstruction to assist the earlier payment of depositors in closed banks, to apply rigid economy in Government expenditures, to balance the budget, to reform railway regulation, etc., will be dealt with by the Congress in the same spirit of cooperation that these great questions have already received."