The people's voice., 1959-10-30

the national debt wherever feasible
in order to provide for more eff
Cheney and economy in fiscal affairs
lof the federal government. Then
specifically the amendment provided
that wherever possible the Federal
Reserve should abandon it's policy of
buying bills only, that is 80 day
notes, and go into the open market
and purchase long-term bonds in
order to give some flexibility to that
phase of federal financing.
In addition the amendment pro-
vided that wherever possible. the
Federal Reserve should increase
the money supply by purchase of
| government securities instead of
reducing reserve requirements of
the banks. Secretary Anderson
agreed to this and | was directed
by the chairman of the committee
| to su bmit the amendment.
Let me repeat, the Treasury by
this compromise got all the authority
it sought, increase in interest rates
on savings bonds, removal of the
Az % ceiling on long term bonds
and various technical amendments
that were recommended. If the Fed
eral Reserve System would heed the
admonition in my amendment and
change their policy of increasing the
money supply by lowering reserve
requirements to policy of purchas-
ing long term bonds the interest rates
could be lowered and Treasury reve-
nues could be increased because Fed
eral Reserve earnings from the bonds
are deposited in the Treasury.
FIRST EARTHMAN TO
GO INTO ORBIT
When the bill was called up in
executive session I offered my
amendment and Sec. Anderson testi-
fled that it was satisfactory to the
Treasury. Then Mr.. William McChes-
ney Martin, chairman of the Board
of Governors of the Federal Reserve
System, literally went into orbit. He
raved about printing press money
and talked about the independence of
the Federal Reserve System. When |
the vote occurred, IA Democrats |
voted for my amendment and ten
and one Democrat voted |
against it. Then the bill as amended |
was voted on and twenty-one men,
bers voted to report the bill and four
Democrats remained adamant against |
any increase in interest rates even
under the compromise worked out.
Apparently MIR. Martin went to
the White House and complained,
for two days later President Eisen-
hover pulled the rug out from
under his Secretary of the Treas
ury and in his weekly press con-
ference announced that he would
rather have no bill at all than the
bill containing my amendment.
My response to this was that it was
evident that the Federal Reserve Sys-
5em was independent of the Execu-
i've Department but the White House
was not Independent of the Federal
Reserve.
Speaker Rayburn commented that
t was obvious that the emergency
vas not as great as had been pictured
'y the Treasury because if it had
'een the Treasury Department and
he President would have accepted
he legislation which was offered. !
subsequently the Ways and Means
Committee reported a bill taking
he ceiling off savings bonds, the Re-
'ublicans attempted to amend the /
ill on the floor by removing the {
eiling on long-term bonds and were S
efeated about two to one. c
'EWARE, BALLYHOO BARRAGE! =
Since Congress adjourned the
'reasury has issued So billion in A.
ear, 8-month notes at rate of $50.
his has been overwhelmingly over =
lbscribed. The success of this issue 2
as inspired financial writers to a I.
Propaganda campaign in every finan-
al column of the newspapers. in
eriodicals such as the u. S. NEWS y
ND WORLD REPORT, TIME and /
EWSWEEK, in financial newslet- U
ole IL |