Evening star., 1961-01-15
BY HERBERT BRATTER
Contributing writer

coming months.
Q How to change tax policy so
that it will contribute to the fas-
ter rate Of economic growth on
which the President-elect and his
Treasury Secretary are agreed.
During the campaign Senator
Kennedy hammered away at the
thesis that interest rates have
been too high for adequate ma
tional growth. He expressed the
view that the Federal Reserve
Board, which has great power to
affect the volume Of money and
credit and thus. indirectly, in
terest rates, under q Democratic
President would be compelled to
coordinate its policies more close
" with the aims Of the White
House. It Is not q fourth branch
Of the Government, he warned.
Reserve Relationship
Another thing the financial
world and business community
will be watching, therefore, is the
Treasury-Federal Reserve rela-
tionship in the new administra-
ton.
The very heavy acquisition Of
American gold by foreigners dur
ing the last few years has been
O matter Of deep concern In ON
cial and private quarters. Not q
few were alarmed last summer by
the tenor Of the Democratic can
didate's remarks on his interest
rate intentions. Even before the
campaign ended, therefore, Mr..
Kennedy, alerted to this public
concern, made o reassuring speech
on the subject.
That the President-elect has Sc
lected as his Treasury Secretary
a member of the Eisenhower ad-
ministration with a Wall Street
background has had a major ef-
feet In Quieting concern during
the transition period. That the
Treasury Undersecretary in charge
of debt management and none
tary affairs, Robert v. RooSa. is
drawn from the Federal Reserve
System augurs well for an under
standing relationship between
Treasury and Federal Reserve
Board.
President Eisenhower's first
Secretary Of the Treasury, George
w. Humphrey, was an able man:
but he had to learn all about
Treasury problems after he took
the portfolio. This time Is differ
ent. Mr.. Dillon's financial back
ground gives him head start on
Treasury debt problems. And, as
Undersecretary of State. he has
had ample first-hand opportunity
to learn about the balance Of pay
ments and gold problem. He ac-
companied Secretary Of the Treas
ury Anderson to Bonn some weeks
ago in the quest for German aid
in solving that problem.
BoIonee Of Payments
Naturally. from his Treasury
office, Mr.. Dillon viii see the bal
ance Of payments question in a
somewhat different light. The
Secretary Of the Treasury ex Of
ficio Is chairman Of the National
Advisory Council on international
Monetary and Financial Prob
lens. In his desk at all times Is
the latest Treasury Daily State
ment, giving the receipts, expendi-
lures and public debt. An Under
secretary Of State has less concern
with such matters.
In the State Department Mr..
Dillon made every effort to ex-
pand the flow Of private Ameri-
can investment to the less de-
veloped countries" He strongly
advocated financial aid by the
United States and other advanced
free nations, q persistent effort
over the next 40. 80 or perhaps
even so years" Senator Kennedy,
too, has favored foreign aid. II
aid contributes to the gold out
now, it will now be for the Treas
ury to suggest adjustments.
New York is our chief interna-
tional trade and finance center.
From there Mr.. Roosa brings to
the Treasury much familiarity
with gold and balance of payments
matters. At the Federal Reserve
Bank he was the No. 2 man in the
big research department. He has
had many contacts with interna-
tional finance. But chiefly 1t is
his intimate knowledge Of the
Government securities markets
which qualities him for his Treas
ury post.
The New York Fed" conducts
the large operations in Govern
ment securities for the Federal
Reserve System. BY buying such
securities on the open market
with freshly created credit the
System helps make money easier
and interest rates lower. At other
times, when it sells securities to
the open market. the System tends
to tighten money and interest
rates. Mr.. Roosa for three years
was the Feds" chief securities
trader. With this experience he
should have good feeling for the
task at hand when. as he ffe-
quently must in his new job, he
tackles the delicate task of decid-
ing upon a new Treasury financ-
ing operation: its nature, matu-
rity and coupon. This is a job
calling for great skill.
Life Of the Debt
With each passing day. the life
Of the outstanding Treasury debt
grows shorter. AS debt natures,
the Treasury must pay out cash.
But its cash is limited. Whenever
the Treasury has to borrow new
money it seeks to sell the longest
term securities the market win
take. In this way. lengthening the
debt, 1t gains a breathing spell.
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