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May 29, 1940,

You can offer the President the services of the Board
and System "for the duration". They rendered important services
in the banking, financial field in the first World War. The
President is heavily burdened; his leadership is commanding universal admiration, as the one hope of the democracies; if there
is any way the Board and System can help with the load, they
stand ready.

The Board is composed entirely of the President's
appointees; they are loyal and, without regard for partisanship,
anxious to see his leadership the greatest possible success. The
System is of nation-wide scope, with 12 Federal Reserve Banks and
£5 branches in the leading cities throughout the country. The
Board and the System have an expert, experienced staff* Neither
the Board nor banks have enough to do, and want to be more than a
mere stand-by service.

Overconcentration of responsibilities
Government departments, such as the Treasury, the Reconstruction Finance Corporation, and others are taking on more
and more responsibilities and may be trying to carry too much of
a load, while the Board and System not only lack adequate powers
in the monetary-credit field to function as a central banking
organization is expected to function, but services to the public
that the organization is capable of rendering are being taken on
by other governmental agencies that are already overloaded with
responsibility and obliged to expand their organizations to do
work that the System could do. An example is in the field of
lending to small business.

Coordinated ijacjbion
In the natural desire to expedite action, there is a
danger that factors of great future importance may be overlooked
or nob sufficiently taken into account, as, for example, in the
drafting of revenue legislation and development of fiscal policy
that vitally affects the credit structure and the banking system

as a whole* For instance, the tentatively projected program contemplates adding several more billions to bank deposits that are
already ten billions above 1929 levels. Would it not be advisable
to revive the fiscal, monetary committee in the interest of proper
coordination? There has been no call for the committee to meet
since the outbreak of the war. The Reserve Board finds itself in
the unhappy position of reading in the papers that action is proposed vitally affecting it on which it has not been consulted.
This is not said in a spirit of criticism because the responsible
officials are so overworked that they cannot keep up with normal
responsibilities and have time to deal with new ones taken on.

Creditmanagement important in national defense
The President is aware of the importance of the whole
field of credit and proper credit management in any defense program;
German efficiency has included safeguards against the ruinous inflation that orthodox economists predicted would be inevitable;
fifth columns are bred out of economic distress at home, and while
pressing for the utmost in defense measures, the morale of the
domestic front is of primary importance. Properly coordinated
fiscal-monetary action would look to preparation against future
inflationary dangers, to avoidance of idle man power and idle money.
Francis Bacon pointed an analogy between money and manure. "To be
useful it cannot be piled up but must be scattered around the fields.
The desirability of coordinating the credit-banking
mechanism, tying it in with the rest of the defense program, is
apparent. The Board and staff, as well as the System, would welcome
any opportunity to be of help, to make studies, etc., that may be of
assistance to the Administration.