The midland journal. (Rising Sun, Md.) 1885-1947, 1934-11-02

National Topics Interpreted Il 9TTTTTF&
by William Bruckatt AslMIl5TF
by William Bruckatt


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 it may
go in disturbing faith in the federal
reserve system as banking structure
it 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 its origin in
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. It's 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 a 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, it did not pull it's punches with
respect to the countless governmental
experiments in business. l 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
it 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 con-
slant threat of in
flation," a condition that the council
felt was sitting personal thrift. 1t
asked directly whether there was any
inducement for an individual to save
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 its views Although the
council withheld its statement until
three weeks after the meeting at which
1t was drafted and given the reserve
board, that lapse of time did not salve
the feeling of the board.
To show how it 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 it's secretary. This
spanking" has aroused a great many
business leaders who have expressed
fears that politics now is permeating
the two federal agencies, for the adj
visory council. is 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
clash that may be serious in it's effect
on the supervision of the country's
banking structure.
Whatever may be the attitude of
the reserve board, have found a con-
800. siderable body Of
Within opinion holding that