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UNITED STATES SENATE
Committee on Banking and Currency
March %

1945

Honorable Marriner S. Boole*
Chairman, Board of Governors
Federal Reserve System
Washington, D. C#

Dear Mr. Chairman:
X am herewith transmitting a copy of a bill
"To establish a national policy and program for
assuring continuing full employment in a free competitive econon^r, through the concerted efforts of
industry, agriculture, labor, State and local governments, and the Federal Government,w which has been
referred to the Committee on Banking and Currency.
As you can readily understand, the issues
posed by this bill are of far reaching magnitude and
your cooperation in exploring the various problems
involved in maintaining full employment after the war
will be very helpful. In this connection, I should like
to have your agency's preliminary comments on the following questions:
19

If we were assured of continuing full
employment after the war, what might the
effect be on the sectors of our economy
with which your agency is concerned?

2.

If S. 380 were enacted by the Congress,
what might be the role of your agency in
helping achieve continuing full employment?

J.

In the present planning of your agency's
post-war activities, what assumptions, if
any, have you made with regard to the postwar level of the gross national product,
the national income, and employment?

ll, What specific improvements in S, JQO might
be considered by the Banking and Currency
Committee?

- 2 -

Since the Committee is planning to roviow these
questions before the inauguration of its public hearings
on S. 380* I should appreciate hearing from you byMarch 31st, 19U5•




Sincerely yours,
(sgd) Robert p, Wagner
Chairman

7&TH C O N G R E S S
1ST SESSION

S. 380

IN THE HOUSE OF REPBESENTATIVES
OCTOBER 1,1945

Referred to the Committee on Expenditures in the Executive Departments

AN ACT
To establish a national policy and program for assuring continuing
full employment and full production in a free competitive
economy, through the concerted efforts of industry, agriculture, laTbor, State and local governments, and the Federal
Government.
1

Be it enacted by the Senate and House of Representa-

2

tives of the United States of America in Congress assembled,

3

SHORT TITLE

4
5

SECTION 1. This Act may be cited as the "Full Employment Act of 1945".

6

7




FREE ENTERPRISE AND FULL EMPLOYMENT

SEC. 2. (a) It is the responsibility of the Federal Gov-

2
1

ernment to foster free competitive private enterprise and the

2

investment of private capital.

3

(b) All Americans able to work and seeking work are

4

entitled to an opportunity for useful, remunerative, regular,

5

and full-time employment, including self-emplojmient in agri-

6

culture, commerce, industry or thé professions.

7

(c) In order to assure the free exercise of the oppor-

8

tunit}r for employment set forth above and in order to (1)

9

foster free competitive private enterprise and the investment

10

of private capital;

(2) promote the general health and

11

welfare of the Nation; (3) foster the American home and

12

American education as the foundation of the American way

13

of life; (4) raise the standard of living of the American

14 people; (5) provide adequate employment opportunities for
15

returning veterans; (6) develop trade and commerce among

16

the several States and with foreign nations; .(7) maintain

17

expanding markets, for agricultural products and assure

18

expanding income for agricultural enterprises ; (8) contribute

19

to the economic development of underdeveloped areas of the

20

country; (9) encourage and strengthen competitive small

21 business enterprises; (10) strengthen the national defense
22

and security; and (11) contribute to the establishment and

23 maintenance of lasting peace among nations, the Federal
2^ Government has the responsibility, with the assistance and
concerted efforts of -industry, agriculture, and labor and



3
1

State, and local governments and consistent with the needs

2

and obligations of the Federal Government and other essen-

3

tial considerations of national policy, to assure continuing full

4

employment, that is, the existence at all times of sufficient

5

employment opportunities for all Americans able to work

6

and seeking work.

7

(d) To that end the Federal Government shall, in coop-

8

eration with industry, agriculture, labor, State and local

9

governments, and others, develop and pursue a consistent and

10

carefully planned economic program with respect to, but not

11

limited to, taxation; banking, credit, and currency; monopoly

12

and monopolistic practices; wages, hours, and working conditions; foreign trade and investment; agriculture; education;

14 housing; social security; natural resources; the provision of
15 public services, works, and research; and other revenue, in16

vestment, expenditure, service, or regulatory activities of

17 the Federal Government. Such program shall, among other
18

things—

19

(1) stimulate, encourage, and assist private enter-

20

prises to provide, through an expanding production and

21

distribution of goods and services, the largest feasible

22

volume of employment opportunities;

23

(2) stimulate, encourage, and assist State and local

24

governments, through the exercise of their respective




4
1

functions, to make their most effective contribution to

2

assuring continuing full employment;

3

(3) provide for an income for the aged sufficient

4

to enable them to maintain a decent and healthful

5

standard of living, and promote the retirement from

6

the labor force of the older citizens ; and

7

(4) to the extent that continuing full employment

8

cannot otherwise be attained, provide, consistent with

9

the needs and obligations of the Federal Government

10

and other essential considerations of national policy,

11

such volume of Federal investment and expenditure as

12

may be needed, in addition to the investment and ex-

13

penditure by private enterprises, consumers, and State

14

and local governments, to achieve the objective of con-

15

tinuing full employment.

16

expenditure,, whether direct or indirect, or whether for

17

public works, for public services, for assistance to busi-

18

ness, agriculture, home owners, veterans, or consumers,

19

or for other purposes, shall be designed to contribute

20

to the national wealth and well-being and to stimulate

21

increased employment opportunities by private enter-

22

prises.

23

calling for the construction of public works by the Fed-

24

eral Government shall provide for the performance of

25

the necessary construction work by private enterprises




Federal investment

and

Any such Federal investment and expenditure

5
1

under contract, except where the performance of such

2

work by some other method is necessary by reason of

3

special circumstances or is authorized by other provisions

4

of law; and all such work shall be performed in accord-

5

ance with all applicable laws, including laws relating

6

to labor standards: Provided, That any program of

7

Federal investment and expenditure for the fiscal year

8

1948 or any subsequent fiscal year when the nation is

9

at peace shall be accompanied by a program of taxation

10

over a period comprising the year in question and a

11

reasonable number of years thereafter designed and

12

calculated to prevent during that period any net in-

13

crease in the national debt (other than debt incurred

14

for self-liquidating projects

15

expenditures), without interfering with the goal of full

16

employment*

17

(e) It is the policy of the United States to discharge

18

the responsibilities herein set forth in such a manner as will

19

contribute to an expanding exchange of goods and services

20

among nations and without resort to measures or programs

21

that would contribute to economic warfare among nations.

22

THE NATIONAL PEODTICTION AND EMPLOYMENT BUDGET

23

SEC. 3. (a) The President shall transmit to; Congress

24

at the beginning of each regular session the National ProS/380—2




and other reimbursable

6
1

duction and Employment Budget (hereinafter referred to

2

as the "National Budget"), which shall set forth—

3

(1) for the ensuing fiscal year and such longer

4

period as the President may deem appropriate, an esti-

5

mate of the number of employment opportunities needed

6

for full employment, the production of goods and services

7

at full employment, and the volume of investment and

8

expenditure needed for the purchase of such goods and

9

services;

10

(2) current and foreseeable trends in the number

11

of employment opportunities, the production of goods

12

and services, and the volume of investment and expendi-

13

ture for the purchase of goods and services, not taking

14

into account the effects of the general program provided

15

for in paragraph (3) hereof ; and

16

(3) a general program, pursuant to section 2, for

17

assuring continuing full employment, together with such

18

recommendations for legislation as he may deem neces-

19

sary or desirable.

20

measures he may deem necessary to prevent inflationary

21

or deflationary dislocations or monopolistic practices

22

f r om interfering with the assurance of continuing full

23

employment.

24

(b) The National Budget shall include a review of

25

the economic program of the Federal Government during the




Such program shall include whatever

7
1

preceding year and a report on its effect upon the amount

2

of the national income and upon the distribution of the

3

national income among agriculture, industry, labor, and

4

others.

5

(c) The President shall transmit quarterly to Congress

6

a report on economic developments, together with such modi-

7

fications in the National Budget and such legislative recom-

8

mendations as he may deem necessary or desirable.

9

(d) When the National Budget and the quarterly re-

1°

ports thereon are transmitted to the Congress, they shall

11 be referred to the Joint Committee on the National Budget
12

hereinafter established.

13

14

PREPARATION OF NATIONAL BUDGET

SEC. 4. (a) The National Budget shall be prepared

15 under the general direction and supervision of the President,
16

and in consultation with heads of departments and estab-

17 lishments.
18

(b) The President shall consult with industry, agricul-

19 ture, labor, consumers, State and local governments, and
20

others, with regard to the preparation of the National

21 Budget, and for this purpose shall establish such advisory
22

boards, committees, or commissions as he may deem desirable.

23

JOINT COMMITTEE ON THE NATIONAL BUDGET

24

SEC. 5. (a) There is hereby established a Joint Committee on the National Budget, to be composed of fifteen




8
1

Members of the Senate, to be appointed by the President of

2

the Senate; and fifteen Members of the House of Representa-

3

tives to be appointed by the Speaker of the House of Repre-

4

sentatives.

5

shall as nearly as may be feasible reflect the relative mem-

The party representation of the Joint .Committee

6 bership of the majority and minority parties in the Senate
7

and the House of Representatives.

8

(b) It shall be the function of the Joint Committee—

9

(1) to make a continuing study of matters relating

10

to the National'Budget and to consult with the President

11

with respect thereto;

12

(2) to make a study of th^National Budget trans-

13

mitted to Congress by the President in accordance with

14

section 8 of this Act; and

15

(8) as a guide to the several committees of Con-

16

gress dealing with legislation relating to the National

17

Budget, not later than April 1 of each year to file

18

a report with the Senate and the House of Representá-

is

tives containing its findings and recommendations with

20

respect to each of the main recommendations made by

21

the President in the National Budget.

22

(c) Vacancies in the membership of the Joint Com-

23 mittee shall not affect the power of the remaining members
24 to execute the functions of the committee, and shall be filled
25

in the. same manner as in the case of the original selection.




9
1 The committee shall select a chairman and a vice chairman
2 from among its members.
3

(d) The Joint Committee, or any duly authorized sub-

4

committee thereof, is authorized to sit and act at such places

5

and times, to require by subpena or otherwise the attendance

6 of such witnesses and the production of such books, papers,
7 and documents, to administer such oaths, to take such testi-

8 mony, to procure such printing and binding, and to make
9 such expenditures as it deems advisable.

The cost of steno-

10 graphic services to report such hearings shall not be in excess
11

of 25 cents per hundred words.

The provisions, of sections

12 102 to 104, inclusive, of the Revised Statutes shall apply in
13 case of any failure of any witness to comply with any sub14 pena, or'to testify when summoned, under authority of this
15 section.

16

(e) The Joint Committee is empowered to appoint and

17 fix the compensation of such experts, consultants, technicians,

18 and clerical and stenographic assistants as it deems neces19 sary and advisable, but the compensation so fixed shall not

20 exceed the compensation prescribed under the Classification

21 Act of 1923, as amended, for comparable duties. The com22 mittee is authorized to utilize the services, information,
23

facilities, and personnel of the departments and establish-

24

ments.

25




(f) The expenses of the Joint Committee shall be paid

10
1

one-half from the contingent fund of the Senate and one-half

2 from the contingent fund of the House of Representatives
3

upon vouchers signed by the chairman or vice chairman.

4

INTERPRETATION"

5
6

SEC. 6. Nothing contained herein shall be construed
as directing or authorizing—

7

(a) the operation of plants, factories, or other pro-

8

ductive facilities by the Federal Government;

9

(b) the use of compulsory measures of any type

10

whatsoever in determining the allocation or distribution

11

of manpower;

12

(c) any change in the existing procedures on

13

appropriations; or

14

(d) the carrying out of, or any appropriation for,

15

any program set forth in the National Budget, unless

16

such program shall have been authorized by provisions

17

of law other than this Act.
Passed the Senate September 28 (legislative day, September 10), 1945.




Attest:

LESLIE L. BEETLE,
Secretary.




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May 9t I9h5
To:

Board of Governors

From: Y/oodlief Thomas

Subject: Letter on Full
Employment Bill

Attached is a draft of a proposed reply to Senator Wagnerfs
letter of March 3# I9b5> requesting the Board1s views regarding
Bill, S, $80 — the Full Employment Act of 19i£. This draft has been
prepared in this Division and is being submitted to you as a basis
for discussion of the sort of reply that the Board will want to
submit •
The Senate Committee is anxious to receive the Boardfs
reply as soon as possible, as the staff is preparing for the Committee
en analysis of all comments received from Government agencies and
others *




PROPOSED DRAFT OF REPLY TO LETTER FROM
SENA TOR W AGITER OF MARCH 3, 19U5

May 9, 19U5

Honorable Robert Wagner
United States Senate
Washington, D. C.
Dear Senator Wagner :

-

'•

In response to your letter, of ' March 3 requesting:preliminary
comments of the Board of Governors on the issues involved, in and the
possible effects of the passage of the Full Employment Act of 19^5 »
the Board submits the following reply:
The Board is wholeheartedly in agreement With the objectives
and general approach outlined in S ? $80, and favors legislation more
definitely incorporating these objectives among the guiding principles
of governmental policy. With respect, to particular aspects of the
proposed bill, the Board has some reservations. We- question the .advisa
bility of establishing by law the rather precise stati-'stieal procedures
and measurements set forth. The Bill seems to us to place uridue ,. ,
reliance on what is called "public investment"; vie believe :greater .
emphasis should be given to the interrelationship of all sectors of the
economy -- public and private- -- and particularly to those policies
and actions that bring private activity, into play. Thé Bill is not
clear as to how. the proposed program to be submitted by the President
would relate to or affect the powers and duties of various government
agencies. These points are discussed more fully later in this letter.
In general, the Board believes that passage of the proposed
Bill would be helpful in directing and coordinating the>activities of
all agencies of.the Government toward the b^ord goal to which.the
Federal Reserve System has long directed its efforts. The System was
established and has been operated for the purpose of facilitating,
through monetary and credit policies,' the effective functioning of the
economy. We have considered the general national economic objectives
to be attainment and maintenance of full employment and active business
We also realize that controls over "banking and credit are, only one of
the many instruments ' of economic policy necessary in'order.; to assure
continuing full production, A Congressional' directive focusing the
attention of all agencies on the overall problem of,national economic
policy woul'd, help 'the Federal Reserve System to play its, part in the
general endeavor arid • would make monetary ..policy more effective,




It is the Board*s view that the most desirable and efficient
form of economic system is that in which the initiative is taken byindividual persons and businesses, with government exercising general
controls, providing a favorable environment for private enterprise,
and operating directly in those activities which private enterprise
is not in position to handle effectively. Governmental operations and
policies, however, have an inevitable and important effect on the
decisions and actions of individuals and, therefore, influence the:,
attainment and maintenance of high levels of employment and consumption.
The adoption of policies that work toward this end should be recognized
as one of the purposes and objectives of government, along with those
that are more commonly accepted and established -by.law and tradition.
When severe depression or uncontrolled inflation exist or threaten,
an appropriate change in the direction of economic trends may become the
major responsibility of government.
Assurance of continuing full employment would minimize needless and wasteful business and fin&ncial risks associated with wide
cyclical fluctuations in general activity. Private enterprise can be
expected to meet the risks of competition in which survival and success
accrue ,to the efficient firms and sanctions are automatically applied
to the inefficient. This type of risk,is essential to the functioning
of a competitive system in a free society. The risks and v/astes of
widely fluctuating general economic conditions, on the other hand, are
not necessary or desirable.
.
••
Such risks strike.the efficient along with the inefficient,
penalizing both with little discrimination, and place rewards not on the
basis of merit but largely of chance. They distort the economy; they
place a premium on outguessing economic trends rather than on developing
competent business managementj they, therefore, cause wide variations
in business investment and accentuate the fluctuations in employment.
Wide fluctuations in business activity make costs of operation difficult
to calculate; they force accumulation of unnecessary, and at times,
redundant business reserves to meet unknown contingencies; .they encourage
self-defensive restrictionist policies by business, labor*, banking,
and other groups; they stifle small business and reduce the flow of
funds into small enterprises; and they lead to price policies designed
to yield profits at low levels of operation. When violent fluctuations
in employment and income occur periodically, consumers can have little
confidence in their ability to meet long-term commitments for the
purchase of housing and other durable goods and, therefore, tend to
accumulate reserves for emergencies; these accumulations may. vary in
such a way as to accentuate instability in economic conditions. These
developments create serious difficulties for the effective operation of
the banking system and handicap that system in providing proper aid
and guidance to business and the community.




- 3Moreover, wide fluctuations in American economic conditions
contribute to international difficulties, A continued high level of
employment here would facilitate the attainment*of'greater stability
and prosperity throughout the world. Our foreign trade is so large
a proportion of world trade that curtailment of our' purchases from other
nations has serious economic and financial effects throughout the world.
Other nations, in order to protect their gold and monetary reserves
and to prevent our unemployment from spreading to their countries, are
under pressure to adopt restrictive policies of the kind so"common
during the 1930*s. The use of instruments- of economic warfare during
that period helped to spread the international economic dislocations
of the time.
Following are more detailed comments on the specific questions
set forth in your letter: ' 1.

If we were assured of continuing full employment
after the war, what might- the effect be on the
sectors of, our economy with which your agency is
concerned?
-

Assurance of continuing full employment would affect the
banking and.credit system in various respects. Such assurance should,
on the one hand, through the influences already mentioned, improve greatly
the operation of the banking system and help it to contribute positively
to a vigorous and dynamic functioning of the whole'economic system.
A-t the same time, such a condition would be more conducive to excessive
or unsound uses of credit and might, therefore, necessitate more
stringent credit controls and monetary policies than would otheiwise
be required.
*
By reducing, the wastefulness and the risks of sharp ups and
downs of national income, assurance of continuing full employment would
go far to increase the effectiveness of indirect methods of economic
guidance that traditionally are exercised by a banking system. It
should expand opportunities for productive commercial loans and help,
to re-establish in banking and in business the spirit of enterprise and
the willingness to accept competitive risks in return for a chance to
earn competitive profits,
.
The credit system is particularly sensitive to fluctuations
in employment and in business prospects. In times of increasing activity
banks are willing to expand credit, and often overexpand it, while in
periods of recession they are likely to be overzealous in contracting ,
credit. Adoption-of various governmental policies for the promotion
of stability will lend support to monetary arid credit policies which
may be followed,, but which alone are likely to be inadequate, In'per.iods
of substantial unemployment,.monetary and credit policies cannot provide




the stimulus required -for the expansion; they can. only, help to maintain conditions-favorable .to. business expansion.' In such a situation
•reliance for bringing.about the high level of activity required must
be placed'in large measure on o.ther policies, . including .fiscal policies
and direct measures,
.
• ,'; . - ;

2. If S. 380 were enacted by .the Congress,' what, might
• be the role of your agency in helping achieve continuing
full employment?
....
The primary role of the Federal Reserve System is, and. in
case of enactment of S. 380 would continue to be, the provision of
adequate monetary media for the functioning of the eoonomy and the
maintenance of sound credit conditions. These are the principal objectives governing the use of the well-known instruments of Federal
Reserve policy —control over the supply of b-ank reseryes and over the
level of interest rates, supervision of banking, and certain direct
controls over particular types of credit. As.previously indicated, the
Board does not believe that the exercise of these powers can by itself
accomplish the System's broad objectives and would welcomo the utilization of other powers- and policies of government toward these ends.
« In times of full employment, Federal Reserve controls over the
supply and cost of funds can exercise an important' influence in maintaining an economic environment' in which full employment, can.be continued.
Pressures toward inflation, in specific areas and in general, are
much greater at times of high activity, particularly if there is government assurance of the maintenance of full employment. ...In such a
situation, the control of money and credit, with the assistance oif
other policies, can go a long way toward preventing unsound speculation
and the development of inflation.
The dangers of specific or general inflation may be unusually
great after the war in view of the large volume of liquid assets in
the hands of the public and business and the accumulated demand for
goods. It may be necessary not only to strengthen .the general credit
controls but also to extend the areas of selective;credit.controls.
By supporting general credit policies through the use.of selective
mechanisms, more accurate and more specifically directed adjustments of
the use "of credit; can be encouraged. •
<
Under conditions of substantial unemployment, monetary and
credit policies can be directed toward removing any pressures toward
further contraction and can help to establish a favorable climate for
recovery, but' they .'can ; do little to create the impetus necessary for
increased employment. The1 Federal Reserve System can, hoy/ever, contribute
in various ways to a.-program for achieving full employment and for




- 5maintaining employment once achieved. For example,, under authority
provided in Section I'-jb of the Federal Reserve Act,' particularly if
amended as proposed in the T/agner-Spence Bill now "being considered "by
Congress, the System could help to provide medium-term credit to business
enterprises whose financial needs represent 'degrees of credit risk that
commercial banks are usually unable to accept. As one of the agencies
of bank supervision, the System may also'adopt standards, for bank
examination that will reflect longer run appraisals of bank assets
rather than fluctuating market values and thus remove•a restrictive
force over operations of those banks that come under its/supervision,•
Because of the division of bank supervision among various agencies,
however, the System's powers in this respect are limited, Y/hile the
Federal Reserve System cannot create the demand for funds or the
expansion of markets necessary for general business expansion and high
employment, it can help to minimize financial and credit- obstacles to
the expansion of business activity and the attainment of full employment,
During the past decade and more strikingly during the war
period, an increasingly important aspect of banking has been the growth
of the public debt and the expanding proportion of Government securities
in the total of bank assets. In the management of the public debt —
the flotation of new issues, the refunding of maturing ones, the
establishment and maintenance of interest rates, the maintenance of a
proper degree of stability in the market — the Federal Reserve System
has had an important role. The Bo'ard of Governors, the Federal Open
Market Committee, and the Federal Reserve Bank officials have cooperated
with and counseled the Treasury in these matters; they have purchased
large amounts of securities in order to supply member banks with
reserves needed to obtain currency and purchase securities for their
own accounts; and they have operated directly and continuously to
stabilize trie market for Government securities. With the large debt
outstanding and the large amounts held by banks, the problems of debt
management will continue to have an important bearing upon economic
developments in the postwar period, The monetary aspects of these
problems, which fall within the special province of the Federal Reserve
System, will be increasingly significant,

3.

In the present planning of your agency's post-war
activities, what assumptions, if any, have you made
with regard to the post-war level of the gross national
product, the national income, and employment"?

The Board of Governors has made no official assumptions with
regard to the postwar level of gross national product, national income,
and employment. The Board's view is that it must be prepared for any
possible patterns of development in the transition period. The future
is. still too uncertain to rely upon any single analysis. .Much depends
upon changes in the military situation and on governmental policies




and programs yet to be adopted as well as up .on the decisions of
businesses and individuals in a situation for which there is no precedent
.
In order to have some idea of the'possible magnitude and
nature of postwar problems, members of the research staff of the Board
hove prepared and are in the process of revising various tentative
models on the basis of certain basic assumptions regarding levels of
demand, employment, and prices. These models include projected figures
for the next few years for national product,- national income, employment,
unemployment,•Government receipts and expenditures,'private capital
expenditures, and consumption. Most of these, estimates' are being worked
out .in cooperation with other Government agencies. Our figures also
cover estimates for the distribution of the public debt by groups of
owners, for various other elements of business and individual finance,
inoluding holdings of bank deposits and currency, and for the principal
bank assets and liabilities. Those figures are not intended to be
•forecasts but are compiled for the purpose of indicating the types of
developments in various parts of the economy that .will -be mutually
consistent on the "basis of the stated assumptions, .
When these compute.tions ¿.re completed, the results may be
made available -to your committee, if you "v-ish. The Board wishes to
emphasize, however, that neither the stated assumptions nor the results
should be considered as an indication of the Board's views as to what
will happen or should happen.
I4.. VJhat specific improvements in S, 38O might
be considered by the Banking and Currency
Committee?

*.

-,..

While the Board is in sympathy with the objectives and general
approach of S. 380» it has some reservations about the Bill as now
stated. The more important of these aré as follows: .
(a) The Bill sets forth a particular set of statistical
measurements which are to be used as rather precise indicators of the
policies to be adopted. While statistics of this nature are essential
as background information, the Board believes that the establishment
of such precise guides by legislation may prove to be undesirable.
Changing conditions might completely change the types of basic information and analysis required. The President and other, executive agencies
and the Congress should have freedom to use such information and guides
as may best suit the occasion,
• •
There may be some question, moreover, as to the advisability .
of making and publishing definite official forecasts of the levels of
employment and income :far in advance. Such official forecasts may in
themselves substantially influence the trend of events, or, in view of




- 7the difficulties of economic analysis, the actual course of events may
vary so widely from the forecasts as to discredit the whole procedure.
Various possibilities should be envisioned and policies and procedures
should be flexible enough to be readily adjustable to changing situations,
(b) With respect both to the specific statistics mentioned
and to the policy guides set forth, the Bill places great emphasis upon
"public investment", which presumably refers not only to expenditures
on public works but also to various other types of governmental expenditures. Since the Bill is a full employment bill the needs and goals
might be stated more effectively in terms of employment requirements
than in terms of required investment, "investment" in the sense used
in the Bill has a technical economic meaning that differs from its
popular usage. "Employment", difficult as it is to measure accurately,
is more readily understood by all groups.
The emphasis on public investment and also other aspects of
the Bill carry an implication that, if private enterprise and State
and local expenditures are expected to bo insufficient for full employment,
the Federal Government will add another layer of expenditures to bring
total expenditures up to the required level. The Federal Government
should have the residual responsibility to maintain total expenditures
and employment when other expenditures and measures are inadequate, but
it is the Board's view that the Bill might be more effective if less
stress were placed on this residual power and greater emphasis were
placed on the mutual interrelationships of all sectors of the economy
and on the responsibility of all groups to work out desirable longrange and counter-cyclical programs in many fields. This change in
emphasis should be directed toward maximizing the role of private
activity and minimizing the use of the Federal Government's residual
power to undertake large expenditures,
(c) It is not clear from the present wording of the Bill as
to how the powers and responsibilities of the President in preparing
and presenting the proposed program and recommendations affect the
existing statutory duties of various Government departments and agencies.
To what extent would these agencies be responsible for determining the
program or be limited in their future policies by the program? These
questions apply particularly to those policies not involving expenditure
of appropriated funds, taxation, and other actions currently established
by legislation. Changes in the Bill are needed to clarify the lines of
authority and responsibilities and duties of various Government officials
and agencies in carrying out its purposes.
The Board wishes to express its appreciation for this opportunity
to present its views. If the Board can be of any assistance to the
Committee, it would welcome an opportunity to be of service.




Very truly yours,

M, S, Eccles,
Chairman,