MONETARY POLICY AND THE MANAGEMENT OF THE PUBLIC DEВТ MONDAY, MARCH 10, 1952 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON GENERAL CREDIT CONTROL AND DEBT MANAGEMENT OF THE JOINT COMMITTEE ON THE ECONOMIC REPORT, Washington, D. C. The subcommittee met, pursuant to notice, at 10:05 a. m., in room 318 Senate Office Building, Representative Wright Patman (chairman of the subcommittee) presiding. Present: Representative Patman, Senators Douglas, Flanders; Representatives Bolling and Wolcott. Also present: Grover W. Ensley, staff director; Henry C. Murphy, economist for the subcommittee; and John W. Lehman, clerk to the full committee. Representative PATMAN. The committee will please come to order. The Joint Committee on the Economic Report was created by the Employment Act of 1946. Its primary purpose, and the one which has given it its name, is to study the Economic Report of the President, and report to the Congress on its implications and its significance in terms of desirable congressional action. The committee also has authority directly or through subcommittees to make such inquiries into economic matters and to prepare such reports as it believes will be helpful to the Congress and to the public, generally. It is not a legislative committee and has no authority to bring in bills in either House. The Subcommittee on General Credit Control and Debt Management was appointed by Senator Joseph C. O'Mahoney, of Wyoming, chairman of the full committee, last spring, for the purpose of conducting a general inquiry into monetary policy and debt management. The members of the committee, in addition to the chairman, are Senators Paul H. Douglas, of Illinois, and Ralph E. Flanders, of Vermont, and Representatives Richard Bolling, of Missouri, and Jesse P. Wolcott, of Michigan. As most of you are aware, a similar subcommittee was appointed by Senator O'Mahoney in the spring of 1949 under the chairmanship of Senator Douglas. The membership of that committee was identical with the membership of the present subcommittee except that Representative Buchanan, who has since passed away, has been replaced by Representative Bolling. The subcommittee, under the chairmanship of Senator Douglas, divided its attention about equally between fiscal policy, meaning 1 primarily bugetary policy, and monetary policy. The present subcommittee, on the other hand, will devote its attention entirely to monetary and debt management policy. The more than 2 years which have elapsed since the hearings and the report of the earlier subcommittee have been packed with significant events. At that time the country was just emerging from a business recession, and Korea was merely an unfamiliar name on a map. Since that time, the international situation has greatly worsened, and Federal expenditures have been greatly increased by the necessity for strengthening our defenses. In the meantime, the country has passed through a serious period of inflation, spurred by the buying wave which followed the outbreak of hostilities in Korea. For about a year now we have had a precarious lull in inflationary price rises. National production is at a high level, and the same is true, with a few notable exceptions, of the level of employment. Despite the high level of defense expenditures the people as a whole are enjoying as high a standard of living as they have had at any time in the history of our country, but we cannot be complacent. On the one hand, there are serious indications of continuing inflationary dangers while, on the other, some people see signs of a coming recession. Clearly, it is time to give the situation another look, both with respect to the proper steps which should be taken in the field of monetary and debt management policy under present and possible future conditions and with respect to the extent to which our agencies are properly set up to handle the task which the Congress has delegated to them. It is in this spirit and with an open mind as to the right answers to all of the questions before us that the subcommittee has approached its task. As the first step in its investigation the subcommittee addressed a series of questions to the top Government officials concerned with these tasks, and to a large number of persons in the private economy. The answers to these questions have been published in a document entitled "Monetary Policy and the Management of the Public Debt; Their Role in Achieving Price Stability and High-Level Employment," which was released to the press a week ago last Friday. I should like again to express my thanks and those of the other members of the subcommittee to the large number of persons whose labors have made this document possible. It has placed before us in a much clearer manner than ever before a statement of the areas of agreement and disagreement among the Treasury Department, the Federal Reserve System, and the Council of Economic Advisers, with carefully reasoned statements supporting their respective views. In arriving at these statements, the agencies have, in my opinion, tended to move somewhat closer together. This is all to the good. The subcommittee has always emphasized in its dealings with each of the agencies that it sought as a first choice to obtain an agreed statement of their views, but to the extent that this was not compatible with the sincerely held convictions of the responsible agency heads, it desired to obtain reasoned statements of the nature and extent of their disagreements. The subcommittee has never sought and does not now seek to reopen old wounds. A week ago I furnished to the press a tentative schedule covering 3 weeks of hearings. This schedule, which I shall insert in the record at the close of these remarks, was arranged with a view to permitting the presentation of all important points of view on the principal issues before the subcommittee. I recognize, however, that setting up any schedule of this kind involves many questions of judgment and, as I said, in my press release a week ago I have have i invited the other members of the subcommittee to suggest any additional witnesses whom they may desire, and have said that I would be glad to make arrangements for their appearance, extending the duration of the hearings, if necessary, for this purpose. In addition, I should like to invite any other person who desires to be heard to make application to the subcommittee, and we will arrange, if possible, a personal presentation of views or for the submission of briefs. The hearings which we are starting today ought to be exceptionally fruitful because the preliminary spade work which has already been accomplished. Each of the official witnesses and many of the private ones have prepared or participated in the preparation of the answers included in our compendium. Their carefully thought out points of view have already been presented at length and they have had an opportunity to read and study the points of view of others. This will make it possible for each witness not only to greatly shorten his statement but it will permit him to direct it to the important points on which he finds himself in disagreement with other witnesses who have contributed to the symposium. It will also be of great assistance to the members of the subcommittee in directing their questions to significant points of difference in the various views which have been set before them. The first chapter of the symposium, which we released last week, is devoted to the replies of the Secretary of the Treasury, Mr. Snyder. These replies state the position of the Treasury Department on the principal issues of interest to the subcommittee in a clear and incisive manner, and provide a most appropriate background for the testimony of our first witness, Mr. John W. Snyder, Secretary of the Treasury. (The schedule previously referred to is as follows:) CONGRESS OF THE UNITED STATES JOINT COMMITTEE ON THE ECONOMIC REPORT CHAIRMAN WRIGHT PATMAN OF THE SUBCOMMITTEE ON GENERAL CREDIT CONTROL AND DEBT MANAGEMENT ANNOUNCES TENTATIVE SCHEDULE OF HEARINGS Representative Wright Patman, of Texas, chairman of the Subcommittee on General Credit Control and Debt Management of the Joint Committee on the Economic Report, today announced a tentative schedule of witnesses for the hearings of the subcommittee which will begin on Monday, March 10, and are expected to run for about 3 weeks. Chairman Patman said that he had asked the other members of the subcommittee-Senators Paul H. Douglas, of Illinois, and Ralph E. Flanders, of Vermont, and Representatives Richard Bolling, of Missouri, and Jesse P. Wolcott, of Michigan-to suggest any additional witnesses whom they might desire and that he would be glad to make arrangements for their appearance, extending the duration of the hearings if necessary for this purpose. The schedule announced by Chairman Patman, together with suggested topics of discussion for each of the round tables to be held in connection with the hearings, follow: First week Monday, March 10: John W. Snyder, Secretary of the Treasury. Wednesday, March 12: Leon Keyserling, Chairman, Council of Economic Advisers. Friday, March 14: A. L. M. Wiggins, chairman, board of directors, Atlantic Coast Line Rail road Co. (formerly Under Secretary of the Treasury). Preston Delano: Comptroller of the Currency. Maple T. Harl, Chairman, Board of Directors, Federal Deposit Insurance Corporation. Second week Monday, March 17: Marion B. Folsom and J. Cameron Thomson, Committee for Economic Development. W. L. Hemingway, American Bankers Association. John F. Fennelly, Investment Bankers Association. Tuesday, March 18: Seymour Harris, Harvard University. Aubrey G. Lanston, Aubrey G. Lanston & Co., United States Government security dealers. Wednesday, March 19: Malcolm Bryan, President, Federal Reserve Bank, Atlanta. Oliver S. Powell, Member, Board of Governors, Federal Reserve System. Carrol M. Shanks, Life Insurance Association of America and American Life Convention. Thursday, March 20: Beardsley Ruml, New York City. Allan Sproul, President, Federal Reserve Bank, New York. E. E. Brown, chairman, board of directors, First National Bank of Chicago. Friday, March 21: Paul Appleby, Syracuse University. Third week Monday, March 24: Panel discussion, The Role of the Banking System in a Dynamic Economy: Robert Fleming, Riggs National Bank, Washington, D. C. Wesley Lindow, Irving Trust Co., New York. Roy Reierson, Bankers Trust Co., New York. Jesse W. Tapp, Bank of America, San Francisco. Tuesday, March 25: Panel discussion, What Should Our Monetary and Debt Management Policy Be?: Milton Friedman, University of Chicago. Raymond Mikesell, University of Virginia. Paul Samuelson, Massachusetts Institute of Technology. C. R. Whittlesey, University of Pennsylvania. Wednesday, March 26: Panel discussion, How should our monetary and debtmanagement policy be determined?: G. L. Bach, Carnegie Institute of Technology, Pittsburgh. E. A. Goldenweiser, Institute for Advanced Study, Princeton. James K. Pollock, University of Michigan. Jacob Viner, Princeton University. Thursday, March 27: Panel discussion, The role of business, labor, and agriculture in the determination of monetary and debt-management policy: (Representatives of American Farm Bureau Federation, American Federation of Labor, Congress of Industrial Organizations, National Association of Manufacturers, The National Farmers Union, The National Grange, United States Chamber of Commerce). |