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REORGANIZATION PLAN NO. 9 OF 1953
(Council of Economic Advisers)

FRIDAY, JULY 17, 1953

HOUSE OF REPRESENTATIVES,
SPECIAL SUBCOMMITTEE ON REORGANIZATION,
COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D. C.

The special subcommittee met at 9:30 a. m., pursuant to recess, in room 1501, Old House Office Building, Hon. Marguerite Stitt Church (chairman of the special subcommittee) presiding.

Mrs. CHURCH. I would like to return to plan No. 9. Mr. Hoffman assigned to us Mr. Smith, and Mr. Smith is working on a report. The report has not been completed because, as you know, at 9:45 Mr. Wolcott is to testify, but I wonder whether the subcommittee would state how long a report they think it should be; or whether or not the full committee should simply receive a brief statement from us of our action taken.

Mr. McCormack, how long a report do you think it should be? Mr. MCCORMACK. The shorter the better. I never believe in long reports if we get unanimous action.

Mrs. CHURCH. In other words, you would favor including just a list of the witnesses heard or not even go that far?

Mr. SMITH. Pardon me, but I understand they intend to print the record of the hearings.

Mrs. ST. GEORGE. They just brought in a copy to me to go over. Mr. SMITH. On 9?

Mrs. ST. GEORGE. Yes.

Mr. SMITH. Then they have not as yet printed them.

Mrs. CHURCH. Then I wondered whether the committee might set a time to meet on Tuesday, just to consider the two brief reports.

Mr. MCCORMACK. As far as I am concerned, I will give you my proxy for whatever report you want.

Mrs. CHURCH. You are certainly taking it on faith.

Have you any expression of opinion on whether or not consideration of this should be brought to the floor?

Mr. MCCORMACK. In other words, I approve of your having the meeting for the report purpose; that is very wise, and I am participating-I will be here if I can, but, if I am not, you have my proxy so you have a subcommittee meeting.

Mrs. CHURCH. Would it be possible for you to meet at 10 o'clock Tuesday?

Mr. MCCORMACK. Better still, Mr. Smith can give us each a copy of the report and let us sign it.

Mrs. CHURCH. Then notify me.

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Mrs. ST. GEORGE. I have a subcommittee hearing here on Tuesday, so that is the only reason I could not do it.

Mr. MCCORMACK. We can meet over on the floor anyway.
Mrs. ST. GEORGE. We coula. Just bring the report.

Mrs. CHURCH. It was my hope that we would not even have to take the resolution to the filcor, and I think the full committee would go along on that, and I had rather hoped that Mr. Hoffman would call a brief meeting of the committee on Wednesday to take action on the report if necessary.

Off the rec record.

(Discussion off the record.)

Mrs. CHURCH. I think, if there is no objection, we will put our attention once more on plan No. 9 and give Mr. Wolcott, who is the chairman of the House Committee on Banking and Currency, an opportunity.

Mr. Wolcott, we are delighted to have you with us.

STATEMENT OF HON. JESSE P. WOLCOTT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. WOLCOTTт. I am honored to be here. I understand that you agreed on what you should do, even if you have not already taken action on plan No. 9.

Briefly, there was a meeting some 3 or 4 months ago to reorganize the Council of Economic Advisers. I am here more in the capacity of Chairman of the Joint Committee on the Economic Report than Banking and Currency, because the Joint Committee on the Economic Report works very closely with the Council of Economic Advisers, both of which were set up under the Employment Act of 1946. It is the Council which advises the President on economic matters. The primary purpose is to make studies and continue studies to prevent the ups and downs in our economic line.

There has been a great deal of confusion due to the fact that they had under the original act a 3-man Board with a Chairman and a Vice Chairman, and I presume when you get 3 economists together it is similar to getting 3 lawyers or perhaps 3 doctors togetherthey do not always agree-and so the President has had before him repeatedly 3 different opinions. There has not been any effective opportunity apparently for the reconciling of the views of members of the Board.

Now, this new plan contemplates that the Chairman will be given a little more dignity in at least one respect. He is the coordinating influence between the members of the Board. There will be a Board of 3. Under the reorganization plan, I believe they have done away with the office of Vice Chairman, so that from now on when the President gets the report of the Council of Economic Advisers upon which is predicated the annual report to Congress on which the Joint Committee on the Economic Report works, there will be some unanimity of opinion, and the President will not have to reconcile the 3 different opinions himself.

That, I guess, is the substance of what the plan is about as worked out between Mr. Burns the only one who has been appointed to

REORGANIZATION PLAN NO. 9 OF 1953

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the Council and who presumably will be the Chairman--and Senator Taft and myself.

As I understand the reorganization plan, it follows substantially-if not to the letter-the recommendations which were made in that meeting. I believe that is all that I have to say about it, unless you have some questions.

Mrs. CHURCH. I would like to ask one question, if I may take the right of speaking first, and apologize to the other members. Is it your understanding that the Chairman would report the difference of opinion within the Council to the President if it is not reconciled?

Mr. WOLCOTT. Well, he has assured us that the opinions can be reconciled. Any chairman who is, like you, operating in committees-we come out with a unanimous report sometimes. Perhaps we do not wholly agree with it, all the details of it, but in principle we agree, and so we report a unanimous report.

I think Dr. Burns or anyone else in that capacity can reconcile most the differences. There are no differences of opinion, even in the field of economics, that cannot be reconciled. It would be his duty under the reorganization plan as chairman of the Council to reconcile all the differences. They are mostly minor.

Frankly, I think that in years gone the problems have been more political than economic. There were questions as to whether the Council of Economic Advisers should testify before the Joint Committee on the Economic Report. Those questions, of course, have nothing to do with economics; they have more to do with the machinery under which the Council functions.

Mrs. CHURCH. Mrs. St. George.

Mrs. ST. GEORGE. Mr. Wolcott, will the Chairman-who is apparently already appointed-have any voice at all in the appointment of the other members?

Mr. WOLCOTT. Presumably so.

Mrs. ST. GEORGE. In that way it would be easier to have a board that would be harmonious if he had a voice in it.

Mr. WOLCOTT. I believe there can be no question about the fact that whoever is appointed-the other two members of the board will be on his recommendation undoubtedly because it is faulty to set up a plan like this and then tie the chairman's hands to a point where it would be impossible to reconcile the different opinions. His recommendations in respect to the appointees will be followed with that in mind, I am sure.

Mrs. ST. GEORGE. In other words, the chairman has very consider-. able power ower under this new reorganization plan, far more than he had in the past?

Mr. WOLCOTT. That is right.

Mrs. ST. GEORGE. And really the effective working of the whole plan is very dependent on the chairman; is that correct?

Mr. WOLCOTT. Yes; and is bound to result in a smoother operation. Mrs. CHURCH. Mr. McCormack?

Mr. MCCORMACK. No questions.

Mrs. CHURCH. Mr. Wolcott, the other day when Dr. Burns was here I raised the question as to whether there might ever be a value in having a continuing advisory board.

Mr. WOLCOTT. Well, this is presumably a continuing advisory board, although economics not being an exact science, the recommendations of the economists are presumed to be predicated upon fact, and let the chips fall where they may.

Of course we do know that economists come to different conclusions on the same set of facts as lawyers might, but I think it is our purpose that the Council of Economic Advisers will become a highly specialized department so that if it operates as we desire it to operate, it will be a continuing agency because they will be highly specialized in that particular line of work, and a member of the Council working for the Government in that particular is put in a little different position than just a free lance economist because he has to reconcile his opinions for the benefit of all of the people, and if that is done, then we presume that the Council of Economic Advisers will become a perpetuating body.

We have had some trouble in years gone by because of the dogmatic approach to economic thinking, making it almost impossible to reconcile differences. A man sometimes has been appointed as an economist without any regard to his ability to reconcile his opinions with those of others, and that has, to what you and I would consider, not been conducive for the greatest good of the country.

He was opinionated, that is all, and regardless of what might happen, his opinion was firm. What we desire to do is to get economists who are good economists and yet who can reconcile their economic opinions with what is for the common good.

Mrs. CHURCH. Thank you.

Mr. WOLCOTT. I think that can be done; we hope so, anyway.
Mrs. CHURCH. Thank you very much for coming in.

Before we leave plan 9, I would like to report that I had a letter from Dr. Byrnes asking me if he might insert one sentence in his testimony. I presume that that is permissible, and in fact I told him that I thought it was.

He was given the right to correct the transcript, and he wished to add one sentence. It was a sentence which proclaimed himself as a professional economist free of politics.

Is there any objection?

Mr. McCormack?

Mr. MCCORMACK. No.

Mrs. CHURCH. If you will make sure that the insertion is included in the hearing.

I think, having taken action on plan 9, we will consider the consideration completed and go back to plan 10.

(Whereupon, at 10 a. m., the hearing adjourned.)

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