The President's News Conference

APPOINTMENTS THE PRESIDENT.

I Was much gratified to hear that the Senate has unanimously confirmed Mr. [Andrew W.] Mellon's appointment to London. This is a real tribute to Mr. Mellon.

I have already sent to the Senate Mr. [Ogden L.] Mills' name for Secretary of the Treasury and Mr. [Arthur A.] Ballantine's for Under Secretary.

HOARDING OF CURRENCY

I want to devote a few minutes, purely background, to this hoarding matter. I first want to express the appreciation I have for the way the press have helped out in trying to get the problem before the country. It is a real educational problem and lies largely with the press. It is indeed a problem difficult to get over to the man on the street as to what the relationship of hoarding currency is to his own daily necessities and his own good. Anything more you can do to get this down to terms of "A-B-C" of economics will be extremely helpful. This is not a bankers relief business; it is a matter of total indifference from the public point of view, whether people return their money to the banks, invest it in Government, State, or municipal bonds, or in other conservative security. What we need is to get it back into circulation.

One point I did not touch on and perhaps you could get it clear. There seems to be an assumption on the part of some that all we have to do is print currency and hand it out. As a matter of fact the Federal Reserve Act and our whole currency basis is the basis of reserves of gold. The law requires that we have 40 percent gold in the Federal Reserve as against the currency issued. As a matter of fact due to the decrease in eligible paper, which is presumed to make up the difference between 40 percent and 100 percent of the securities behind the currency, the Federal Reserve banks necessarily have to make up the difference with gold reserves; so the reserves are running 75 percent or 80 percent of gold as against the currency. So, you can see we have a large sum of gold unmobilized and held entirely from public use by the hoarding of currency. The gold comes out of the credit structure. If that currency were returned into circulation that amount of gold would go into the credit structure of the country and under that structure the reserves are about 10 to 1. Gold multiplies itself into credit at the ratio of 10 to 1. So it is a difficult problem to get people to understand. We have to get it clear to the man in the street that anyone who is hoarding currency is actually depriving the community of employment, and the return of this money is an aid to employment and an addition of credit which can be extended to the farmers with which to produce their crops and hold their cattle and hogs.

In our system--and it is a good system--we are totally dependent on keeping the whole currency mobile and in action at all times. This building up of a large amount of hoarded currency by people, who have no understanding of what it means to a volume of $1,400 million, makes for serious deflation of the country. Our total credit volume has been deflated in the last 6 months by nearly $10 billion, and that deflation has been brought about by taking credit away from small business and from commerce and industry which is the necessary basis upon which they function. The net result has been to increase unemployment steadily with every dollar taken out and put into hoarding. We can have exactly the reverse action if we can bring that back into circulation.

AMERICAN LEGION EMPLOYMENT DRIVE

The American Legion and associated organizations have organized an intensive drive for placing of temporary employment beginning February 15. Commander [Henry L.] Stevens and John Thomas Taylor called to see me this morning and placed the entire organization at our disposal as an adjunct to the hoarding question, and I am confident that they are going to perform a considerable service in this direction as well as the major objective they started to work.

COLONEL FRANK KNOX

And finally, I have persuaded Colonel Knox, publisher of the Chicago Daily News, to head up this organization drive against hoarding. He will be down in a day or two to set up an organization, the headquarters of which may be in Chicago.

That is all I have today.