by strengthening the weak spots to thus liberate the full strength of the Nation’s resources.  It should be in position to facilitate exports by American agencies; make advances to agricultural credit agencies where necessary to protect and aid the agricultural industry; to make temporary advances upon proper securities to established industries, railways, and financial institutions which can not otherwise secure credit, and where such advances will protect the credit structure and stimulate employment.  Its functions would not overlap those of the National Credit Corporation.

FEDERAL RESERVE ELIGIBILITY

On October 6th I issued a statement that I should recommend to the Congress an extension during emergencies of the eligibility provisions in the Federal reserve act.  This statement was approved by a representative gathering of the Members of both Houses of the Congress, including members of the appropriate committees.  It was approved by the officials of the Treasury Department, and I understand such an extension has been approved by a majority of the governors of the Federal reserve banks.  Nothing should be done which would lower the safeguards of the system.

The establishment of the mortgage-discount banks herein referred to will also contribute to further reserve strength in the banks without inflation.

BANKING LAWS

Our people have a right to a banking system in which their deposits shall be safeguarded and the flow of credit less subject to storms.  The need of a sounder system is plainly shown by the extent of bank failures.  I recommend the prompt improvement of the banking laws.  Changed financial conditions and commercial practices must be met.  The Congress should investigate the need for separation between different kinds of banking; an enlargement of branch banking under proper restrictions; and the methods by which enlarged membership in the Federal reserve system may be brought about.

POSTAL SAVINGS BANKS

The Postal Savings deposits have increased from about $200,000,000 to about $550,000,000 during the past year.  This experience has raised important practical questions in relation to deposits and investments which should receive the attention of the Congress.

RAILWAYS

The railways present one of our immediate and pressing problems.  They are and must remain the backbone of our transportation system.  Their prosperity is interrelated with the prosperity of all industries.  Their fundamental service in transportation, the volume of their employment, their buying power for supplies from other industries, the enormous investment in their securities, particularly their bonds, by insurance companies, savings banks, benevolent and other trusts, all reflect their partnership in the whole economic