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FocmI,R.Ui

BOARD OF GOVERNORS
or THE
FEDERAL RESERVE SYSTEM

Office Correspondence
Xo

Board of Governors

Tfrtm

Date

February 26,1941

Subject:

Mr. Goldenweiser

In connection with the projects in which Alvin Hansen is interested, there is attached a brief account of the luncheon conference
held with him on February 20. Today further discussion was had on this
project. It was agreed that Mr. Hansen needs a full-time assistant who
would stay here and keep in touch with the work of persons in the various
sections in the field of Mr. Hansen1s interests and would also handle
some of the assignments himself. It is essential that the person occupying that position represent Mr. Hansen1s own selection, and no decision
has yet been made whether the place is to be filled from within or without the Division.
On the problem of combating inflation, it was understood that
much of the work in the Division was concerned with that subject. Mr.
Hansen1 s particular interest at this time is experimenting with adaptations of the Keynes blocked income proposals. It was agreed that this
work could be done within the Division.
In the field of Federal, State, and municipal tax reform, it
was agreed that the work will continue to be done under Martin Krostfs
supervision, but that he would need an assistant. The particular person
to fill this place has not been selected, but there are possibilities of
filling it from within the Division. Mr. Hansen also had the idea that
there was an Assistant Professor in Michigan who might come and help in
this field during the summer.
In the field of housing and public works, the person in our
Division who has charge of this work in general is Ray Foster. In view
of the magnitude of the project, Mr. Hansen will probably need an additional person. It is probable that we will have to go outside of the
Division to find one, and Mr. Hansen will give the matter consideration.
In the field of post-war international trade, it was agreed
that the section of international finance is doing the work that needs
to be done and that Mr. Hansen will find means of having his ideas
analyzed and elaborated by using the existing personnel.
Attachment
Copy of memorandum and attachment sent to
each Board Member, Messrs. Clayton, Thurston,
Bethea, and Carpenter, on March 1, 1941.




February 20, 1941
Luncheon with Mr, Hansen
At the luncheon with Mr* Hansen there vrere present all
Board members, except Mr. McKee, as well as Messrs. Morrill, Clayton, Thurston, Goldenweiser, and Hansen of the staff*
Mr. Hansen outlined the five problems on which he thinks
work should be done somewhere in the Government. These problems are:
1)

Immediate problems of financing with a view to avoiding inflation.

2)

Consideration of reform in Federal, State, and municipal tasiation with a view to closer coordination between
the three.

3)

Housing as an immediate problem and as a post-war reconstruction feature.

4)

Public works as a post-war reconstruction factor.

5)

International trade after the war.
Mr. Hansen felt that these constitute the main core of our

economic problems for the present and the immediate future; that they
all have a bearing on the maintenance of economic stability and consequently on the responsibilities of the Federal Reserve System. He
recognizes that all of the work cannot be done here and that many
other agencies will have a hand in it. On public works, for example,
both the 1PA and the National Resources Committee propose to undertake extensive investigations. Hansen feels, however, that the Board
ought to have one or two people working in each of these fields so as
to be in touch with developments and capable of formulating ideas.




- 2 This would enable the Board to exert an.influence in the councils of
the Government, particularly if a committee on monetary and fiscal
problems were organized• Mr. Hansen said that he got a good deal of
help from the existing members of the staff, but that he has gotten
to the point now where he feels the need of some people whose entire
time will be devoted to these subjects*
Mr. Goldenweiser said that on the first and fifth points
there are enough people working in the Division now and that it will
be merely a matter of clarification of assignments; that we have only
one person devoting full time to the entire subject of construction,
including both housing and public work. Little work is being done
on subject 2.
It was agreed that Mr. Hansen and Mr. Goldenweiser would
present a more detailed statement of the projects and of the personnel to be assigned to them. This memorandum w i U indicate to what
extent the work can be done with existing staff and to what extent
additions may be necessary.