Evening star., 1948-12-10
Private Economic Unit
Urges StabiIization
And Policy Agency

An important segment of Ameri-
can business has placed before the
public q program for . more stable
economy and o recommendation for
the establishment Of q Commission
On National Monetary and Fiscal
Policy.
The program was announced yes
tsrday by the Committee for Eco
nomic Development, q privately
financed organization with no Gov
ernment connection.
It's stabilization program is in two
parts. One series of measures
would be employed in time of infla-
ton: the other, practically the re-
verse of the first, would come into
play in periods of depression.
The program was made public by
W. Walter Williams Of Seattle,
WASH, president of Continental,
Inc, and CED chairman, and ].
Cameron Thompson of Minneapolis,
president of the Northwest Ban
corporation and head Of the CED
subcommittee of businessmen which
spent many months on a study
and formulation Of the program.
Expenditures Noted.
Frankly, I cannot tell you which
program applies right now" Mr..
Thompson said In reply to O ques-
tton. To-day some fundamentally
defationary tendencies are at
work" He mentioned on the other
side Of the picture, however, pros
pective expenditures for military re-
lief, military expenditures and the
refund of about $4,000, 900, 900 to
veterans on their insurance.
The programs for stabilization to
be called out in imitation and de-
preston periods both start OF with
the basic proposition that tax rates
should be held stable. Revenue,
therefore, would rise and fall with
national income.
In time Of imitation. the organiza-
aon proposes the employment Of
these measures:
Tighten the reserve position Of
the banks by the Federal Reserve
sale OF Government securities In
the open market and by either in
creasing the rediscount rates Of in
ereasing the bank reserve require
ments. or both.
Retire Debt With Surplus.
Use the Government surplus to
retire debt held by the commercial
banking system, including the Fed
eral Reserve Banks.
Refund the maturing Government
debt in q way that will reduce the
holdings Of the banking system.
Reduce the volume of Govern
n7ent loans and guaranteed loans.
The reverse program for de-
preston is this:
In extreme conditions O tenn
porary reduction Of tax rates may
be desirable to stimulate private ex-
penditure.
Expand the money supply and
increase bank reserves by open
market purchases Of Government
securities and further ease the re-
serve position Of the banks either
by reducing the rediscount rates or
the reserve requirements. or both.
Finance q deficit by borrowing in
q way that will induce the CONNER
cial banking system to acquire Gov
ernment securities with such Fed
eral Reserve action as necessary to |
provide additional bank reserves for
this purpose.
Expand Loans.
Refinance maturing Federal debt
IN part by borrowing from the COM
mercial banking system. including
the Federal Reserve Banks.
Expand the volume of Federal
loans and guarantees of loans with
In the scope Of q loan program ac-
oepted as appropriate in the long
run.
In either imitation or depression,
and consistent with the general
stabilization program, the Govern
ment should use such authority as
It may have to control particular
kinds Of credit, such as margin
requirements.
The three methods available to
the Federal Reserve for restricting
or expanding the money supply or
tightening or easing the reserve
positions Of the banks are believed
by the CED to be sufficent "for the
execution Of highly beneficial
stabilizing monetary policy"
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