Full text of Papers of Allan Sproul : [FOMC Meeting Comments]
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Cl*Jfi-ut. 7/7/52 - AS In t erms of the preceding statements of Patman, and the k n o w n views of Murphy, this report might be taken as a m o d e l of reasonableness. In fact i is pretty reasonable, and I would say the m a k e u p of the Committee, and t the fact which b e c a m e quickly apparent that the P a t m a n line w a s a minority one and an unpopular one, wa s effective particularly in an election year. M a y be suspicious, but despite this appearance of reason there is also a subtle attempt to play d o w n the effectiveness of m o n e t a r y policy, and to attribute to restrictive m o n e t a r y policy incompatibility with the E m p l o y m e n t Act of 1946, even while seeming to concede - in generalities - that m o n e t a r y policy should be one of the principal m e a n s of achieving economic stability. That I think is what bothers Senator Douglas0 There is also a defense of Presidential intervention in credit policy matters, in t e r m s of consultation and persuasion* In the hands of the White House group that too easily b e c o m e s an attempt to direct and dictate. In its treatment of the Treasury w h e n i discusses the pre- and post-Korea t situation, the report s e e m s to m e to be soft to the point of bias. (a) It talks about maintaining confidence in G o v e r n m e n t securities as if that were the s a m e thing as maintaining fixed prices and yields« (b) I says during m o s t of the period the differences between the t Treasury and the System w e r e very small as seen from the outside and were concerned primarily with short term rates of interest* That reduces the differences to absurdity - w h e n the real point at issue wa s whether w e would have a monetary policy or not - whether the Federal Reserve System wa s to do its real job or peg prices for G o v e r n m e n t securities. :'^w (c) It glosses over the actions of the Secretary of the Treasury, and the misleading statements he m a d e concerning t h e m in his answer to question 17 of his questionnaire. I c o m m e n t e d on this in m y testimony but it got lost in the shuffle and has never had m u c h attention0 M o n e t a r y council without a mandate from Congress such as Douglas C o m m i t t e e advocated, dangerous for Federal Reserve System; wholly undesirable to have i set up by Executive Order and under chairmanship of C h a i r m a n of Council t of E c o n o m i c Advisers, a discredited body in t erms of objectivity. Budget and Audit sound reasonable but look like getting c a m e l ’ head under s the tent. In absence of any evidence of failure of present budgeting and audit procedures, look at these proposals askance. Labor m e m b e r s - what w e d o n ’ want is m e m b e r s of B oard of Governors or t Board of Directors of banks representing and acting as a pressure point for one segment of the c o m m u n i t y „ Have no objection, in principle, to labor on boards, but their record as militant class interest advocates is bad* Perhaps in t e r m s of our adversaries thing they accomplished is to get this report on the record as the latest word, superseding Douglas Commi t t e e