Chronoscope, Marriner S. Eccles | Alexander Street, a ProQuest Company
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It's time for the Longines Chronoscope. Journal of the important issues of the hour brought to you every Monday, Wednesday, and Friday. A presentation of the Longines-Wittnauer Watch Company maker of Longines, the world's most honored watch and Wittnauer, distinguished companion to the world honored Longines.
00:50 Frank Knight Good evening, this is Frank Knight . May I introduce our co-editors for this edition of the Longines Chronoscope. Mr. Henry Hazlitt , editor of the Freeman and contributing editor of Newsweek Magazine and Mr. Donald I. Rogers , an editor of the New York Herald Tribune. Our distinguished guest for this evening is Mr. Marriner S. Eccles , formerly of the Federal Reserve System. The opinions expressed are necessarily are those of the speakers.
01:20 Henry Hazlitt Well, Mr. Eccles I think you have been either a governor or a chairman of the Federal Reserves System uh, for 17 years now altogether, haven't you up to last July?
01:30 Marriner S. Eccles Well, I quit. I had been uh, governor or a chairman for sixteen and a half years.
01:40 Henry Hazlitt Were the, well, with that phases of authority and background, I'd like to know what you think about this new investigation by the Patman Congressional Committee of the Federal Reserves System. Do you think the investigation is necessary?
01:55 Marriner S. Eccles I think it's quiet a waste of time in view of the Douglass uh, Committee's investigation a year ago.
02:05 Henry Hazlitt What, what did you think of the Douglas Committee's report uh, (inaudible )? (crosstalk)
02:12 Marriner S. Eccles Well, I was uh, I, thought it was an, an excellent report. Uh, yet uh. (crosstalk)
02:15 Say it.
Marriner S. Eccles It seemed to me to be very objective... (crosstalk)
02:20 Yeah. Yeah.
Marriner S. Eccles ...and uh, uh, very uh, intelligent report made after an extensive hearing and after sending out uh, questionnaires to uh, uh, uh, wide variety of uh, uh, people who were confident to answer questionnaires.
02:40 Henry Hazlitt Well, they concluded didn't they that the freedom of the Federal Reserve uh, System from the Treasury ought to be, uh, ought to be restored to its previous situation. Wasn't that their main conclusion?
02:50 Marriner S. Eccles Oh yes. They, they. (crosstalk)
02:55 Henry Hazlitt To raise interest rates and to restrict credit and so on.
Marriner S. Eccles They uh, they concluded that the uh, Federal Reserve should have a greater degree of freedom in carrying out its statutory function. That it should be a co-equal with the Treasury rather than be an organization that should take its direction and uh, uh, domination uh, from the Treasury.
03:20 Donald I. Rogers Well, that more or less leads us up Mr. Eccles to the uhm, point of inflation. Now, I guess just about everyone agrees that we have inflation. Uh, could you tell us uh,(crosstalk)
03:35 Henry Hazlitt The reason.
Donald I. Rogers ...do you think the Federal Reserve Board or the Treasury is responsible for uh, uh, bringing this about? Uh, uh, there was an issue in which you were very violently involved at one time.
03:45 Marriner S. Eccles Inflation of course is a, is a relative uh, thing we are dealing when we talk about inflation where people think in terms of what their uh, their money will buy. Uh, and uh, when the, when the purchasing power of the dollar changes uh, rapidly uh, either on the upside or the downside, it influences adversely uh, uhm, a great uh, many people. Uh, since uh, the war uh, we have had in this country some, a serious inflationary development. That is a depreciation in the purchasing power uh, of the dollar. And that it is due to uh, too much money in the hands of those that would spend that money in relationship to the supply of goods and services available to the market.
04:45 Donald I. Rogers Well, who would you feel would be responsible for creating this supply, Federal Reserve or Treasury?
04:50 Marriner S. Eccles The, the uh, the money was uh, was brought about uh, almost entirely as a result of war financing.
05:00 Donald I. Rogers By? (crosstalk)
Marriner S. Eccles There has been practically no increase in the supply of money since the war that we only, we paid for a very small, too little of the war out of taxes and, and we paid for too much of it out of bank uh, uh, credit. And.
05:20 Donald I. Rogers Do you feel our taxes are too low?
05:25 Marriner S. Eccles Uh, there are taxes during the war were entirely uh, too low uh, in relationship to the uh, the need. We've only, we only paid for 44 percent of the war uh, out of uh, uh, taxes and we increased the, the, the supply of money that is the Government by its borrowing to make up the deficiency uh, uh, they increased this supply of money about 300 percent and we, we, we uh, we prevented the inflation during the war period to some extent uh, by, by ha, direct harness of controls. When those controls were taken off uh, of course we got the effect of this large backlog of the purchasing power that had been created as a result of war financing.
06:15 Henry Hazlitt Well, Mr. Eccles your feeling now is that the only way then that we can stop further inflation is to stop creating more money.
06:25 Marriner S. Eccles That is right. To, to, to, uh, to uh, try to stop inflation uh, by uh, direct controls is dealing with the facts rather than basic causes. And its, its, its uh, sort of uh, sugar coating uh, uh, an unpleasant pill and uh, uh, but, but it is only delaying, only delaying the ultimate effects uh, of uh, of inflation. Even if uh, if, if direct controls were, were possible of enforcement which of course during the peacetime economy I, I for one uh, don't uh, believe they are and I(ph).
07:05 Henry Hazlitt Well, what would the Federal Reserve have to do and what would the Treasury have to do to prevent the money supply from going up now?
07:10 Marriner S. Eccles Well, the first thing would, uh, the Congress would have to uh, be willing uh, to hold down their appropriations uh, to an amount that they were willing to levy taxes to pay for it. That's the first thing that would be necessary because if Congress appropriates more money than, than, than they're willing to levy taxes uh, to pay for it then of necessity the difference uh, must be borrowed.
07:45 Donald I. Rogers Do you mean that if next year when the Russians or if the Russians get tougher then we have to appropriate uh, 20 billion dollars additional? That we have to raise our taxes at, that much more?
08:00 Marriner S. Eccles In the first place I don't believe that uh, we strengthen our case at all uh, by, by appropriating more money for defense than we are willing to pay for currently because we are in a defense program that has no uh, terminal point and we might just as well recognize that it should be paid for uh, uh, currently... (crosstalk)
08:25 Yeah.
Marriner S. Eccles ... uh, at this time. Otherwise it is impossible to defend the dollar and there is no point and it seems to me in defending our, the country uh, if we are going to destroy the very system that out defense program is designed to protect.
08:40 Donald I. Rogers Long cold war and let's be prepared for them(ph).
08:45 Marriner S. Eccles I, I think that, that we should recognize the limitations of our manpower and our material and we should con, we should confine our, our program, our military, our defense program, our civilian expenditures to what we can pay for.
09:05 Donald I. Rogers To your knowledge has anyone, any agency of government, any individual in government ever though of it that way? Have they thought we should reach a certain point in our spending and stop?
09:15 Marriner S. Eccles Well, yes. I, I think there's a good many uh, uh, people uh, in the public service who recognize this problem. Uh, I, I don't, I don't feel that uh, that there are enough of the political leaders who have been wiling to face the problem.
09:35 Henry Hazlitt Well, let's say it has reached (inaudible ) (crosstalk)
09:37 Donald I. Rogers (inaudible ) has the (inaudible ) even Senator O'Malley uh, uh, said that the military would have to uh, cut its suit to uh, fit its cloth which is a remarkable statement coming from him after his attack on Senator Douglas not long ago for making the same statement. So don't you think that's a rather a cheerful turn of uh, events?
09:55 Marriner S. Eccles Well, uh, I, I, I th, I think that just making a statement uh, uh, recognizes that fact. And then, and then uh, uh, voting the, the, a program that would conform to the, to these political statements maybe uh, uh, quiet another thing. I, I, I know that uh, uh, that there have been uh, possibly too many of our political leaders who have talked about uh, uh, pay as you go about defending the dollar and yet they vote for appropriations on the one hand and refused to vote for the necessary amount of taxes on the other and its essential.
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