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ort from t i p fact tb*£t rejections for func~. Wilson's. For Mr. McCabe has duties under
^onaV'illiteracy dropped grVatly* between iho/ the law which direct the Federal Reserve
vvo^/orhyWars, /evertl^eaa it^i clear,(hat f to prevent Injurious credit expansion or
ne/taatonf educating our people to bVeffctf- .contraction. It 1b, X believe, the fact that
the members of the Federal Reserve Board
j ve citizens ^ well f% good/soldieri isyfar
torn completed and/bas become a trntjonul ^ , h n t j 0 f the Federal Open Market Commit-'
•sp^hBiblUty. ^
; te*
iigreed—includlng in hU privato
> \r: -;
vleitg even Govenj^f.YpJXJaman—that the
on-ttrtk *igid support ( j
of ; a 1fixed*ln^rjpt naubn\is' causing in- »
jurlous credit expanaidii thaf la highly lnfla- ^
- '
V V.
Mr. McCabe>»d his colleagjies of the Fed-.
eral Reserve^
tmdpr the law an lndepend-^
ent Oovernrfeat establishment. They are;
to take orders from or to be.
HON'. CURErfCE ^RllBURN V not supposedthe pressure of/the admlnlstra- '
subjected to
tlon. Pr^'sid^nt Wilson* who "was responsiW KEVr TOftJtl % * T
ble for the creation of the Federal Reserve
System., treated the members-of the Board
with the saifce scrup^Jlout respect for their
Independent? that he ^ gave -to Ithe Judges
Mr.m K I L B U H N , ,
of the Federal courts;',,There can be no doubt^
inanlQious * consent, to extend ray r e - ' th$t it* has been the intention of Congrcsa
narks, I include .fcercin\aj* article , by
that the federal Rescw*-. System should be
independents-To. emphasize'this view CqnWalter Lfppmann,-.which X.Jiopo everygress in^the -Banking Act of 1935 removed
one will read. T h e Federal Reserve
the Secretary of the Treasury and the CompSystem should be above' any pressure
troller of the Currency from the Federal Rerom outside and I , h o p e they follow
serve Board. • Congress acted then upon the
hrough on their position regardless of
advice o t Senator Carter Glass, of Virginia, pressures;^ TJie articlcf follows:
who had been Secretary of the Treasury under President Wilson. Senator Glass told
; Prom the wiUrhingtOn^ Pcifc of March 1,
the Senate'that all Secretaries of the Treasury including, himself have exercised unduo
Influence ova*Athe board and have treated
(By Walter Llppmann)
It rather as a bureau of the Treasury ln«t(jad of as a board independent of the GovA SECOND T Y *
ernment * *
riot to be used to finance
The,President *has now intervened for the
the Federal Oprerpment, which was assumed
»coud time in -the controversy between the
always to be.4ble to finance itself.
Treasury and the Federal Reserve. This
Mr. Truman does not, It appears, recog•nccting differed from the first onet which
nize that the' Federal Reserve Is an Indevas held on January 31, In that the.^ Presipendent establishment with duties wl^ch
dent has now come to see that the Issue
are laid upon'Jt by the law, duties which
is not one that can be scttl'eef- by calling
it cannot, or at least should not, abandon
t n the Federal Open Maifc^^mndttee and
because he asks the Board to do that. /-Ir.
.sklng them to be good
and "to da what
McCabe and h'ls colleagues are in the awkJohn Snyder wants to have done.;
ward predicament of being asfeed, indeed,
At the w « t t n g v t h i s ' WfteJf ..the .President
heavily, pressed, by the President of the
recognized—ai .least ln: thooryw-thai there la
United States to do what under the law
. problem still to be solved,
there are
. i ivergen^ policies * whi6h Jinve AfctUI to be and their own unanimous Judgment under
reconciled. This • time ' thc-Trwwury, the - that law'they ought not to do.
The President's memorandum comes close
Office of Defense Mobilteatloiir/'ttte Council
to saying that if they do not obey the Treas.)f Economic Advisers were atyb^resent, and
ury, they will be interfering with the dehe President instead of tftlltfcdtr off the cuff
fense effort.. This Is duress employed to
cad a*memorandum, appo/nted a commltoverride their independence of judgment.
. ee to makp a report, andfcxptesiitydid "not
It is not fair. Indeed, it is highly improper,,
13 those*present for any commitments on
for th$ president to placc them In a dilemma
he subjects under discussion.'"
where '11, they do their duty und^r^he law,
This Is a decidedly better: way to come
they are mado to appear as obstructor* of
it a great question of.this abrt. But it Is
the national defense. If the president belot nearly good enough, \jrtie report which
lieves the emergency Is such that tli# Fedthe President asked, for-Is, to be made by
eral Reserve System should cease to be Invcessrs. finyder. Kcyeerllngt'McCftbo,-and Wilon. What two out members of . dependent and should become, as Senator
h© committee—namely, Mr. Snyder and Mr., Glass put It, a bureau of the Treasury, then
•Ceyserllng—ore going to report we already' he should* accomplish that by asking Conrinow; "they "have put out- a preview of d t . gress to amend the law and not by pressure
from the White House. ' .
in the memorandum ti^ot the President road
In what was surely one of^tj^e^hlest 1
ind that they—or thelr^stafls—must have >
written. Thu^ half of ,tne committee to* speeches delivered in the SQnate<tfa?,£rmfty a .
tudy the problem
written lta own views* ;«' long day, Senator Douglas said at tbtf
i bout the-conclusions of the committee Into
conclude with the plea that the*Ze&wury
• ho directive which the 'committee la to folabate Its policies and yield on thft • fcsue.
- ~
May I also enter a plea that thcr federal
Mr. Wilson, the third member. h a T a ' t n *
Reserve Board gird its le£ai loins and fulfill
nendouatoteresUin any measure whichwill;,.* 1 1 0 responsibilities which. I believe Confess
: educe t b e ^ M l a n a r y pressure on th$ p r i ^ . intended it to have?"
ind wage ^ftUiagi for which he la J r e s p I t is asking.a good deal of a n y l w r d —
ible. ButjMr^ Wilson has been subject<k|^ especially la,;a,tlme of national emergency,
• o prcssutfi l a fact to unfair pressure;**-liw/especially l i t a field which so few under- <
offect he/uis been put in a position whwflfj *} efattul,well enough to have strong viow*H-tt*at
ho cannotside with the federal Rean^a T V i t should gird ( iti legal loins 4tnd daly,Hhe
without owning into open disagreement with,-,. President and his administration/,/Bluce
me President of the United States, who^ia^- Mr. Truman, aeems determined to mako t&e
:iIb immediate.superior.,
issue one where the Federal-Jteaerve.roust
The fourth,member of the committee
choose between following its own judgment.
Mr, McCabe, -tha Xlhalrman of the Board - and obeying-his Instructions, ther^'is m is^.
of Go vera ors olttfe^'e&gna Reserve System.^ suowhich Congress alone can decide/Sena*..'
His position"lA.'evj^in££*tilXQcultthan Mr. . tor Douolab has"a resoiullon w^ich -wp^iid


• fit
decide it, and It should be brought forwardiar enough forward at least to.offset the
heavy pressure which is being exercised upon
the President's committee by the White