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ADVISORY CQMI1ITTEE TO THE PRESIDENT OK ECONOMIC POLICY
Recommendation
An Advisory Committee to the President on Economic Policy
should be established to coordinate the policies of the various
monetary and fiscal agencies of the Government and to work 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 committee, under the chairmanship of the Vice President, might
be composed of the Secretary of the Treasury, the Federal Loan Administrator, the Chairman of the Board of Governors of the 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 committee's secretary. The Director of the Budget could,
if it were thought desirable, sit in as an observer.
Reasons for Recommendation
!• The Broad Need for a Committee. Some progress has been
made in coordinating the physical side of the defense program. No
progress, however, has been made in coordinating its financial counterpart. Consequently, there are now a number of different departments
and agencies all concerned with one or more aspects of what is in
essence a single large problem. As the defense program gains momentum
there ^s increasing danger and likelihood of conflicting or duplicating
policies being adopted. There are almost bound to ari.se individual disagreements as to whether or to what extent recourse should be had to the
use of monetary controls, fiscal controls, direct credit or rationing
controls. Sone differences, of course, 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 programs, there is urgent need of an administrative
device to insure that conflicting or duplicating policies be avoided,
that the areas of controversy that must be settled by the President be
reduced and that alternative courses of action to be placed before the
President be clearly and sharply defined. A frequent cause of disagreements on policy matters is traceable to differences in the factual and
analytical studies on which policies are based. The suggested 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 and Legislative Branches of the Government and of lessening
misunderstandins between these branches. In so doing, it would enhance
the influence and usefulness of the office of Vice President.




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Terms of Reference and Nature of Problems,

The terms of reference of the proposed committee may be indicated by the nature of the problems that are imminent or prospective.
These include questions of direct or indirect methods of preventing
price distortions; precautions against possibilities of future credit
inflation; budgetary requirements of defense and post-defense activities and their financing; related questions of interest rates and the
type and timing of taxation integrated with the basic objective of sustained production and employment: maintenance of economic balance,
particularly as it affects agriculture and consumers. These and many
other related matters require analysis and coordination through a
representative committee that can act in an advisory capacity \in ler
the President's direction,
3. Composition of Committee.
(a) The Vice President: Various advantages would flow from
the designation of the Vice P res id ent as Chairman of the Committee.
It would provide the most satisfactory way of keeping him in touch
with the policies of the Administration and the range of considerations
that entered into their making. 3eing comparatively free from administrative duties and having the interests that he has, it is to be
expected that he would, take an active part in the work 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 rates he can exert.
(d) The Chairman of the Board of Governors: Because of the
responsibilities of the Federal Reserve System in the monetary and
general credit field.
(e) The Commissioner on Prices of the Defense Commission:
It is obviously desirable that a liaison be established between the
Finance Committee and the Defense Commission. The responsibilities
of the Commissioner on Prices relate most closely to the work of the
proposed committee and it so happens that he ^s also a member of the
Priorities Board.




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As it appears to be established as a general princiDle that
no member of the President's staff should serve on a uolicy-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 in as an observer, if it v.rere thought
desirable.
It is most desirable that the committee have a secretary to
keep, records, prepare an agenda and reports, and insure that the technical studies required by the committee 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 n&.de secretary.