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The Federal Advisor;/- Council is of the opinion that the
Special Report submitted to the Congress on December 31, 194-0, by
the Board of Governors of the Federal Reserve System, the Presidents
of the Federal Reserve Banks, and the Federal Advisory Council, was
an important statement dealing with the risks of a possible inflationary development which might arise out of the present situation.
While the Council does not fear that such an inflation is imminent
and is likewise aware of the fact that "inflation can not be controlled by monetary measures alone," nevertheless, the Council does
believe that monetary action may be an important factor if it should
become necessary at some future time to control an inflationary movement .
The Council believes that the System as a whole should be
prepared to support fully the recoaimondations and statements made in
the Report, since it does not consider there is any reason at this
time for a change in the position taken in the Report. If the System,
or the Board ox Governors, should be requested by the Congress to implement the Report, or more specifically, if either should be asked
to draft a bill designed to translate the recommendations made in the
Report into law, the bill, as the Council believes at this time,
should seek only to put into legal form those recommendations in the
Report which relate specifically to the problem of
excess reserves.
The Council is fYtrtherraore of the opinion that if later on it appears
that those recommendations should be modified or supplemented it

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would be helpful before a bill is proposed if there were a prior
conference with those groups subscribing to the original report.
The Council takes it for granted that the other protective steps
discussed in the Report "equally or more important" than the monetary aspects of control will be dealt with by those authorities or
departments of the Government within whose jurisdiction they belong.