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Left with President 12/21/40
R ecoiamendati on
!• Advisory Coimrdttee to the President on Economic Policy
should be established to coordinate the policies of the various
monetary and fiscal agencies of the GoverDiaent and to worfc; out plans
for dealing with monetary, fiscal and price problems relating to the
defense program and to the ultimate transition to a peace-time basis.
This coaeaittee, under the chairmanship of the Yice President, sight
be composed of the Secretary of the Treasury, the Federal Loan Administrator, the Chairman of the Board of Governors of th© Federal "Reserve System, and the member of the Defense Commission in charge of
prices. One of the Administrative Assistants to the President could
act as the cosimit tee's secretary. The Director of the Budget could,
if it MHPt thought desirable, sit in as an observer.
Reasons for Recommendation
1. The Broad Heed for a^Coismittee. ScWMl progress has been
made in coordinating the physical side of the defense [MOgjiUi Bo
progress, hovever, has been made in coordinating its financial counterpart. Consequently, there are now a amber of different department a
and agencies all concerned with one or &ore aspects of what is in
essence a single large problem. As th© defense program i^ains momentum
there is increasing danger a&d likeliiiood of conflicting or duplicating
policies being adopted. There are almost bound to arise individual disagreements as to rhether or to what extent recourse should be had to the
use of monetary controls, fiscal controls, direct credit or rationing
controls. Some differences, of courc-e, will always exist. Many others,
however, could be resolved round a table. As a means of relieving
pressure on the President and in the interests of developing consistent
and comprehensive pro-.irsas, there is urgent need of ts administrative
device to insure that conflicting" or duplicating policies be avoided,
that the areas of controversy that rrast be settled by the President be
reduced aad that alternative courses of actioa to be placed before the
President be clearly and sharply defined, A frequent cause of disagree*
seats on policy matters is traceable to differences in the factual and
analytical studies on which policies are bii^ed. The M g g M t t i committee
would facilitate an interchange of views and a narrowing of differences
at the technical level.
Finally, the suggested committee, under the chairmanship of
the Vice President, would afford a means of coordinating policies of the
Executive aad Legislative Branches of the Cknrermsent and of lessening
misunderstanding between these branches. In so doin.;, it v?ould enhance
the influence and usefulness of the office of Tice President.





Terms of Reference and Nature of Problems,

The terms of reference of the proposed eossrdttee may be indicated by- the nature of the problems that are ir^rdnent or prospective.
These include questions of direct or indirect Methods of preventing
price distortions; precautions HgnlMt possibilities of future credit
inflation; budgetary requirements of defence and post-defense activities and their financing; related questions of interest rates and. the
type and timing of taxation integrated witti the basic objective of sustained production and employment; ••tntrmntH of economic balance,
particularly as it affects agriculture and consumers. These ana many
other related matters require analysis and coordination through a
representative corsmittee that can act in an advisory capacity under
the President's direction.

Compo-sitioa of Co-omittee.

(a) The Vice President: Various adT&Atagei would flow from
the destination of the Vice President as Chalraan of the Cosnlttee.
It would provide the most satisfactory way of keeping him in touch
with the policies of the Administration and the rttgf of considerations
that entered into their making. Being comparatively free from administrative duties and having the interests that he has, It is to b©
expected that he would t^ke an active part in the vesfc of the committee.
(b) The Secretary of the Treasury: Because of his direct
responsibilities in the field of taxation and Government financing and
the Treasury*s monetary and banking powers.
(c) The Federal Loan Administrator should probably be a
member because of the magnitude of the domestic and foreign loans made
by his agencies and the influence on interest rafeM bit can exert.
(d) The Chairman of the Board of Governors: Because of the
responsibilities of the Federal Reserve System in the aonet&ry and
general credit field.
(e) The Coaaissjloner on Prices of the Defense Commission:
It is obviously desirable that a liaison be established between the
Finance Committee ana the Defense Cowaission* The responsibilities
of the Commissioner on Prices relate moat closely to the work of the
proposed eossiittee and it so happens that he is also a member of the
Priorities Board*

As it appears to be established as a general principle that
no member of the President's staff should serve on a policy-forming
committee reporting to the President through someone else, the Director
of the Budget is not suggested as a member. On matters pertaining to
the budget, however, he could sit is as as observer, if it were thought
It is MMt desirable that the committee have a secretary to
keep records, prepare an agenda and reports, and insure that the technical studies required by the m i l I Him are forthcoming. The selection of
a secretary from any one of the agencies represented raises obvious
difficulties. It is recommended, therefore, that the Administrative
Assistant to the President in the general field of fiscal and monetary
matters be imde secretary.