Martin Sees Peril In Interest Curbs
The Chairman of the Federal Reserve Board yesterday said that Democratic proposals for holding down interest rates by-creating more money would turn the Federal Reserve System into -an engine of infla lion "</br></br>William Mi-Chesney Martin told the ilou-e Ways and Means Committee the propos als actually would force an increase in intere-t rates and could lead to a severe collapse of the economic system.</br></br>Martin urged approval of President K i s e n bower's requests for authority to raise the public debt ceiling, eliminate the ceiling on savings bond interc-t and wipe out the 4Ûª4-per-eent limit on big long term (ioveriiment bonds.</br></br>The President offered the plan to open up the market for Government bonds, which have found few buyers recently. 11c said the Government financing maneuver was reeded to help Federal securities compete witii those now-paying rnrire interest.</br></br>| Some Democrats contend :that interest rates in the open -market have climbed because the Federal Reserve Board ha-.followed a lightmoney policy They maintain the rates could lie belli steady if the Federal Reserve pumped more money into the economy, j Martin testified that thi-could not be done without promoting more inflation. Hr said the Government's expen ence during and after World War II showed that ÛÏinflation follows any effort to keep interest rates low through money creation as night follows the day.Û