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interview or article.
Part of the statement was published in the Times in
the form of an interview on the first page of its Financial Section in its
issue of Sunday, January 21.)
I have thought for many months that the most serious problem with
which the United States Government is confronted is the preservation of a
sound American dollar.
Vre can even accept defeat in military engagements
and still survive as a nation so long as our economy and our money are
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sound.
But without a sound dollar with a strong purchasing value in
domestic and world markets we cannot survive as a nation with our present
form of Government, even though we may win ail of our military engagements.
For some months it has appeared to me that the nation should have
at the earliest possible moment a complete pattern of strict direct controls embracing allocations of strategic materials, rationing, price conI
trols and wage controls.
These controls should be "across the board",
total in effect, and cover all classes of our personal and corporate population.
In addition to these direct controls there should, of course, be
an adequate program of taxation, including a general sales tax; and there
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should be other fiscal, monetary and credit controls sufficiently powerful
to siphon off the backlog of surplus money to be automatically created by
the direct controls.
I
It strikes me that we are simply deluding ourselves as public
officials, and not being entirely fair with the American people, when we
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convince ourselves and lead the people to believe that voluntary agreements,
as desirable as they may be in peace time, and selective credit controls,
over-all credit controls y and the highest practical tax assessment, will be
sufficient to restore and preserve the purchasing value of the dollar and
thereby protect and perpetuate our present form of Government.
We must have organization and discipline in our civil population
as veil as the military, or else our whole structure is apt to collapse.
The necessity for this discipline is emphasized by the probability of
attack on the United States proper.
In our present state of mind, panic
would probably result from such an attack; whereas, if we begin immediately
to accustom ourselves to discipline in thought as well as in action we will
be much more likely to survive.
On the fundamental question of selective credit controls I feel
now as 1 have always felt, that such controls are unwise.
Actually they
have little or no material effect percentagewise on the total national
credit structure; but they do have a disastrous effect on the social attitude of the people, primarily because they do not affect equally all income
classes and corporate groups.
Factional opposition to these controls, some
sound and some selfish, handicaps the over-all monetary and credit control
function of the Federal Reserve System because when the Board acts in these
limited areas the populace and the Congressional opposition become vocal and
strong enough to prevent the Board being granted necessary additional selective and general control authority to meet its contemplated statutory
responsibility in the monetary and credit field.
In other words, distrust
and loss of confidence in the Board's objectivity brought about by these
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pinpoint, annoying and ineffective selective controls potentially weaken
the entire structure of Board authority.
I have always thought that the
Board's contribution to our Nation would be much more constructive if the
Board were more exclusively in the position of a High Court and less in the
position of a police judge and policeman.
Right or wrong, good or bad, the fact remains that Regulations V ,
T and X have not in the past, nor have they at present, stopped the inflationary trend and the flight from the dollar.
They may be very, good
regulations concomitant to fiscal, monetary and direct controls, but by
themselves they appear to me to do more harm than good.
And I speak from
wore than twenty years successful experience which I enjoyed as a lawyer,
banker and businessman before becoming a member of the Board.
I believe that the people of this country have confidence in
President Truman personally and will whole-heartedly obey and support a
Program of over-all direct controls.
Enforcement machinery can well follow
the imposition of the controls, and their imposition should not be delayed
the months required to set up such machinery.
Of course there will always
be an appreciable percentage of chiselers and cheaters, black marketeers
and other scum; but a vast majority of the American people are honest and
law abiding and in this critical period when our very existence depends on
our behavior I firmly believe that the population will largely police itself
in these vital matters.
Having served more than five years in combat service with the Army
and amphibious Navy in our last two wars I am convinced that the armed forces
also have faith in the Presidency and in the American people.
If they
didn't have they couldn't do a good job in the field, and nobody realizes
that better than the mothars and fathers and friends of armed service
personnel, and those people will obey and help police any pattern of controls that may be necessary.
@FedFRASER