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May 19, 1936 SPECIAL CCRiilSRCf COMMITTEE'S REPORT OS PEBSUHEN? a o N E T m polios ItM S M »i>y It Bhoald not be I w d A special committee of aeabers of the Business Advisory Council of the Department of Commerce has just prepared a report on & perma nent monetary policy for the United States, this report has been given to all the members of the council, &om $0 in number* end a copy has been submitted to the President by Secretary Koper, who dee®6 it desir able to give the report the earliest possible release* because of the danger that *as usual there may be leaks which would destroy the ef fectiveness of a general national release*• This is an extraordinary proceeding to say the least* Without going into the merits of the proposal, reasons for not issuing the report at this time 1« be briefly stated as followsi A report on monetary policy is about to be issued by an official committee of the Department of Commerce on a subject in which responsibility is vested in the Secretary of the Treasury, the Federal Keserve System, and the President, Neither the Secre tary nor the Chairman of the Board of Governors of the Federal Reserve System has had an opportunity to examine the report, and the President is asked to •peruse* it promptly so as not to delay its publication and spoil the effect* It is an attempt to involve the President in a position on monetary policy without consulting with those of his advisers who have responsibility in the matter* • 2* 2 * The report, which is supposed to represeat the product of a yearfa intensive atudy, consist® of repeating proposals end argu ments made two and three years ago by the Committee for the Nation# The bill recommended is substantially the same as that proposed fcy the Committee for the Nation sad introduced la the House by Mr# Goldsborough on January 29, 1934# The House Banking and Currency Committee held and published hearings on this bill* In substance it proposes the creation of a Monetary Authority nhich shall have power to fix the official price of monetary metals and also have control over the rediscount rate, open-market opera tions, and member bank reserves* 3* The proposal amounts to a reversal of the Administration1* position established by the Gold Reserve Act of 1934 and the Banking Act of 1935* It would create a Monetary Authority to perform the functions, which fey the former act were entrusted to the President and the Secretary of the Treasury, and also the functions which by the latter act were made the responsibility of the Board of Governors and the Federal Open Market Committee of the Federal Eeserve System* 4* This Monetary Authority would supersede the Board of Gov ernors who have recently been appointed to the reorganised Board with the understanding that the duties and responsibilities placed cm the Board by the Banking Act of 1935 would be theirs* ~ 5* 3 - Publication at this time of & proposal under official auspice© to chmge the idministration1s policy in monetary matters and the agencies for carrying out ibis policy would be embarrassing to the Administration and offer opportunities for partisan attacks* It would not contribute to the progress of recovery* 6* Such publication sight complicate any negotiations with foreign countries in regard to monetary matters* 7* the report consists largely of a collection of ex parte quotations, taken out of context, mostly fro® British writers and the reports of British Investigations, with little reference to present conditions in this country. 3* Although the report is much, impressed by British prece dents, the committee*s propose! would depart not only fro® British precedent but frost the precedent of all other countries by taking the right to determine the value of the nation *s money from the legislature and giving it permanently to a monetary authority.
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