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July 28, 19U7- Dear Clark: It would be most helpful, in the Board's opinion, if as promptly as possible the President could sign the Joint Resolution extending until Hovember 1 existing consumer credit controls. X am taking the liberty of enclosing a suggested statement which he might wish to issue at the same time expressing regret that the Congress did not see fit to follow the recommendation of the Board and of the Council of Economic Advisers, in which the President concurred fully, to provide permanent legislation on this subject. If the President failed to sign the Resolution or vetoed it, the public would no doubt be misled into thinking that he had taken the responsibility for killing these controls. By signing it and issuing a statement, he can put the responsibility clearly where it belongs, that is, on Congress. At the same time there is a good deal of confusion in the field about the status of the controls since it had been widely as* sumed that Congress either would abolish them outright or do nothing, in which case the President, in accordance with his letter to me of June 5f would have vacated the Executive Order on which they are based. A clarifying statement by him will not only fix responsibility but will make it clear that the present controls remain in full force and effect until Hovember 1. You are, I know, swamped with, so many decisions to be made on accumulated legislation that I would not trouble you with this matter but for the fact that it is of some importance to make sure that the record is kept straight. So far as the President and the Administration are concerned, the record is excellent and consistent with the President's stand against inflationary forces. Sincerely yours. The Honorable Clark M. Clifford, Special Counsel to the President, The "White House* Enclosure :b I have today approved the Joint Resolution of Congress authorising continuation of regulation of consumer instalment credit until November 1, 19itf. I regret that the Congress did not see fit to follow the recommendation of the Federal Reserve Board and of the Council of Economic Adviers, in which I fully concurred, by enacting legislation to provide for continuing as long as necessary regulation of consumer credit as a means of helping to promote economic stability* It is unfortunate that the Congress did not provide for restraints on overexpansion of instalment credit in order to diminish inflationary pressures arising from this source* Continuation for the next three months of present controls, as now provided under Regulation W of the Federal Reserve Board, has, however, been specifically sanctioned by the Congress and this is preferable to immediate abandonment of these restraints. For that reason I have signed the Joint Resolution* Not only during the next three months while the controls remain in full force and effect but for an indefinite period thereafter, it will be in the public interest for every merchant and financial agency extending instalment credit to avoid undue relaxation of terms* It will be far better to reduce prices rather than to relax terms in seeking new customers. Self-restraint on the part of those who use credit as well as upon the part of those who extend it will reduce the danger of an orerexpansion of instalment oredit which would inevitably be followed by severe contraction, thereby contributing to unemployment and to reduced production*
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