The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1934-11-02
1Q|tlJ|'j'ia9'gllS5j :
National Topics Interpreted "a fTfTNTY1a
by William Bruckart ASn<1I1fN
by William Bruckart


rift has developed
Is Politics between the federal
Creeping In? reserve board and the
federal advisory
council, that group of business leaders
which Is supposed to act as inter
mediary between the reserve board and
the public. The line of cleavage has
developed over gold. How far 1t may
60 in disturbing faith in the federal
reserve system as a banking structure
| 1t is yet too early to tell, but | find in
many quarters frequent questions as
to the indication that politics may be
| creeping into government supervision
of the country's largest banking unit,
the federal reserve system
The controversy had it's origin in a
statement of views delivered to the
reserve board by the advisory council
last month. Of course. the advisory
council has no power and can only
| function In accordance with its name
and give suggestions to the reserve
board. Its influence nevertheless here
tofore always has been an important
factor in federal supervision of bank
policies and any wide difference of
opinion between the advisory council
and the reserve board naturally is an
influential factor In financial condi
| lions.
The reserve board did not enjoy the
| statement of views from the advisory
council, which was to the effect that
mo real or permanent recovery" can
| be hoped for until the federal govern
ment returns to the gold standard for
| our currency. 1t said unequivocally
| that the currency and credit supply
now existing Is ample for all needs
and that business cannot be expected
| to go forward until it has some assur-
ance of permanency in our currency.
| In other words. the advisory council
| takes no stock in the "baloney dollar"
which has been so strongly advocated
by Prof. George F. Warren, one of the
important brain trust advisors to the
President.
In addition to the councils criticism
Of the currency policy of the admins
tration, 1t did not pull its punches with
respect to the countless governmental
experiments in business. I quote that
| paragraph of It's statement:
"a serious factor Of rapidly increas-
ing Importance is the tendency of bust
ness enterprises directly conducted
by government agencies to reach out
further and further into fields hereto
fore occupied by private capital, there
by destroying taxable values. The use
! Of government money in competition
| with private business is not only
paralyzing to private initiative but ex-
perience has amply demonstrated that
| 1t is costly, generally inefficient, and
that its disastrous effects reach far be-
yond the limitation of the particular
industry Immediately affected"
|
The council had much more to say
respecting other policies of the pres
ent administration,
Fear Savings including what it de-
Threatened scribed as a con-
! slant threat of in
| flation," condition that the council
felt was sitting personal thrift. 1t
asked directly whether there was any
or to buy life insurance and preserve
earnings against the time when age
will prevent continued production of
income If there was an overhanging
threat that all these savings may be
wiped out by uncontrolled imitation of
the currency.
| Obviously, the federal reserve board
was wrought up when the advisory
council did the unusual thing of MAX
ing public it's views. Although the
council withheld its statement until
three weeks after the meeting at which
it was drafted and given the reserve
board, that lapse of time did not salve
the feeling Of the board.
To show how 1t felt about the action
of the advisory council, the board very
promptly met and adopted resolution
by unanimous vote returning the coun.
| ellis statement to its secretary. This
spanking" has aroused great many
business leaders who have expressed
fears that politics now is permeating
| the two federal agencies, for the ad-
visory council is a body created by
statute just as much as the federal re-
serve board. No one can tell what the
outcropping of this situation may be.
There are number of men in the ad.
visory council membership who have
been outspoken in their support of
President Roosevelt Likewise, the
President has named two members of
the present reserve board, and one or
| two others of that group of seven are
entirely in harmony with his economic
policies. Consequently. there is much
talk in Washington that the two schools
of economic thought are engaged in a
clash that may be serious In its effect
on the supervision of the country's
banking structure.
| Whatever may be the attitude of
the reserve board, have found a con-
$780,. siderable body of
VuHtH opinion holding that
Its Rights the advisory council
was functioning with.
In its own sphere when it made the
| statement to the board. AS explained
above, the board was under no com.
| junction to abide by the expressions
from the advisory council. and If II
elected to do so it could allow the
councils views to be pigeon-holed and
forgottea. But the point is that the
council Is representative of business
and financial interests and therefore.
when it considered federal policies it
was speaking for that segment of our
national life which otherwise had no