Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-01-29
EecIes Demotion Held
OF Little Significance
To Economic Program
Truman Merely Used
Prerosative in Naming
Own Man Chairman
By David Laurence

It Is possible to read too much
significance in the demotion of Mar
riner Eccles from chairman to vice
chairman of the Federal Reserve
Board. Actually, 1t is a case Of ro-
alton of the Craftsmanship as per-
nitted by law.
Experience with the Federal Re-
erve Act since its inception shows
hat other Presidents, too, have felt
hat the chairman of the Federal
Reserve Beard should be designated
oy the Chief Executive irrespective
If the view of a preceding admin
,stration.
Mr.. Eccles was chosen by the late
President Roosevelt. President Tru-
man no doubt has felt that he should
Dick his own man. There have, of
course, been evidences of a differ
ence of opinion inside the board
and between the Treasury and the
Reserve Board, but this situation is
by no means novel. 1t has hap
.oened before.
1t Is natural that at time Of
economic crisis the President should
want some one in charge of the
Federal Reserve Board who is per-
laps a little more flexible than Mr..
Eccles might be. This is no rehec-
ton on the outgoing chairman, be-
cause 1t is to the best interests Of
the board that there be the fullest
kind of discussion and that the
board represent variety of view
points.
Open Mind Needed.
To say, as some reports do, that
Mr.. Eccles was forced out of the
Craftsmanship because he disagreed
recently with Treasury Secretary
Snyder is to exaggerate these diff
ferences. They have always ex-
listed inside the board and with the
Treasury, and probably always will
exist.
What is important, however, is
that some one who has no precon-
ceived position to support or to vim
dictate and some one who can ap-
proach every new situation with an
open mind shall preside over the
board as the differences are aired.
Mr.. Eccles, as chairman, it will
be recalled, was able to propagate
a view with respect to bank re-
serves, for instance, which caused
much uneasiness throughout the
country. This same viewpoint ex-
pressed by Mr.. Eccles as an indi-
vidual board member probably
would not have produced the crisis
that arose in recent weeks.
Nothing is so delicate as the credit
system of the country. While de-
f1ation in the midst of imitation may
be desirable, it is question whether
the job should be done with a sur
geon's knife or with battle ak.
1t would appear that, while some
restriction on bank credit is neces-
sary, such restraints as are needed
can be imposed under the voluntary
program begun by the American
Bankers Association in cooperation
with the Treasury.
Steady Helm Wanted.
Mr.. Truman is up for reelection.
An unsteady hand at the helm could
precipitate a credit panic and start
a chain reaction of business failures
and unemployment. 1t Is to the in
terest of the administration to hold
steady the economic and credit sit
uation and not let psychological fac
tors of def1ation run away with an
otherwise high level of productive
operations and cause them to be
halted while some one experiments
with theory.
This is not a reflection on any in
dividual's views but an explanation
of the need for teamwork and har-
mony as between the Federal Re-
serve Board chairman, the Treasury
secretary and the White House.
The change in Mr.. Eccles' position
merely comedies with the Presidents
desire to have his own set-up at a
time of crisis when public debt Is
being retired and an effort is under
way to curtail bank credit where
it is being used for speculation or
infationary purposes. The off1cial
figures show that bank loans in ratio
to deposits are actually at lower
per cent than they were in 1889.
While the quantities of deposits and
loans are both larger, this is inevi-
table in an economy which is run
ming in excess of 5000, 00O,O00,000 a
year. The credit situation is sound
but checks on undue expansion are
in contemplation. It's task Of
great delicacy, and Mr.. Truman has
moved to reaSsure business and
finance and labor that there will not
be a Government-made panic if he
can prevent it.
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