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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To Governor Sftymftgak A. Gerschenkron Date September 22,194.7 Subject: MAT»«hAn Plan Machinery U With reference to my telephone conversation with you on Friday afternoon, I should like to submit to you some data concerning the interdepartmental coordinating mechanism which is being set up under the "Program for European Recovery11 (Marshall Plan). The Under Secretary of State will carry out the State Departments responsibility for the Plan. His special assistant in this field will be Mr* Bonesteel. The central position in the machinery to be established will be held by the Advisory Steering .JBjgjjj^ttee to be composed of representatives of the following agencies: State (Chairman) Treasury Defense Interior Agriculture Commerce Bureau of the Budget (observer) A representative from the White House. The Committee will be consulted by the Under Secretary on questions of strategy and all major developments concerning the Program. The Executive Committee on Economic Foreign Policy will be responsible for making recommendations on the economic questions involved in the Program. It will inter alia consider the reports irfiich will be forthcoming from the Krug, Harriman, and Nourse Committees. We are represented on this Committee (Mr. Knapp as a member, and Dayself as an Alternate). It is, therefore, a little curious that the document on "Coordinated Mechanism11 contains the sentence: "The Federal Reserve Board and the Council of Economic Advisers will be invited by the Chairman to send representatives to participate in these discussions with voting privileges*w However, I did not think it necessary to raise any question on this point which might be clarified later on. The HAG will automatically receive for decision and recommendation all questions of financial and monetary nature involved in the Program. The State-War-Navy Coordinating Committee will consider matters concerning "certain occupied area problems and questions having security implications. * I asked whether this meant that agencies other than State- To: Governor Szymczak - 2- SECRET War-Navy will not be concerned with German problems* It was replied that this was not the intention* It seems to me, therefore, that the main problem as far as the Board is concerned is the membership on the Advisory Steering Committee. I feel that this is particularly important in view of the uncertainty of the actual role of the NAC in the Program* Our membership on the Advisory Steering Committee may help to strengthen the position of the NAC. If our membership is not secured we might easily become the least informed member of the HAC as far as the Program is concerned. It may be argued that this is not desirable from the point of view of the Program. As I mentioned over the phone, I have raised the question of our membership, and it has been promised to me that Mr. Bonesteel will get in touch with you as soon as possible in order to discuss this question. I might add a few words on the schedule of action as contemplated at present. While the question of a special session of Congress to take action on U.S. aid to a European recovery program is still not finally decided, it is agreed that the executive branch of the Government should be ready with draft legislation and testimony to permit hearings of House and Senate Foreign Affairs and Appropriations Committees by November 15, 1947* It may be possible to move this schedule up by two weeks if hearings on the master authorization bill take place before hearings on the appropriations covering the first 18 months of the recovery program. On this account the reports of the Harriman, Krug, and Nourse Committees are to be completed and published fty October 15* The Departments of Interior, Agriculture, Commerce, Labor, and Treasury are being urged to complete materials for testimony on the prospective drain on United States resources and the prospective strain on the United States economy of aid to Europe of the scale projected. The Department of State, the Department of Commerce and the War Department (in re Germany), plus possibly thg Office of Foreign Agricultural Relations of the Department of Agriculture is preparing testimony on the economic needs of the countries participating in the plan. Work of preparing draft agreements, both the multilateral agreement with the 16 countries (plus Germany) as a group and bilateral agreements with each of them (including special bilateral agreements with Britain and France covering their zones of occupation in Germany), should begin at an early date. These drafts, however, are likely to require alteration after the Congress has passed the master authorization bill covering the terms and conditions on which the United States extends aid to Europe.
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