Letter to Frank Pace - FRASER · Presidents reply, dated March 16, 194&, and a copy of & letter which I sent to Harold Smith, the then Director of the Budget, on February 15, 194b,

/•ch 15, 1950.

Dear Frank:

1 am enclosing herewith copies of some letters andI Maor&ndtsi covering the setting up of the Council of EconomicAdvisers, which I thin*c you will find very interesting. Theyare as follows;

1. Letter to the President, clawed March 15, 194-6;

2. Copy of the memorandum enclosed in that letter• titled "Implementation of the Employment

Act of 194.6" > "W: ich outlines H*y su: Loiure I . . up of the Council ofBconoaie Advisers and gives the reasons whytrie Director of the Budget fthould be theChairman of that Council;

3- Copy of the President1s reply, dated March 16,1946;

4< Copy of s letter to Barold Saith, the thea Direc-tor of tne Budget, dated Tmbrwry 1$, 194-6.

:-Diso of Lne vacancy of the Cheiimnehip in the Councilof £cor;o;nic Advisers as . criticise which hfti developed with

erence to the functioning of the Council, 1 thought it an ap-propriate tirne to send to you, Use now Director of the Budget, theabove referred to enclosures. It say not be loo late to correctthe situation by tppol M C/iairman of that organization.One of your assistants, as your designee, could carry most of thework for you. It Is my viev with you the official Chairmanthere would be much better coordination within the Executive Officewith reference to t; 'ling of the economic and financial prob-lems of the Government.

Sincerely yours,

M. S. Kocles,Honorable Frank Pace,Director,bureau of t:ie Budget,Washington, D. C.

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Form F. R. 131BOARD OF GOVERNORS

FEDERAL RESERVE SYSTEM

Office Correspondence Date ^^ ic, 1950.To Chairman McG;.he Subject: Council of Economic Adviasra

Prom Governor Eccles

I am unclosing herewith a. copy of a letter to %bm President on March 15,194-6, and a. copy of the memorandum entitled BImplementation of theSaployasnt let of 1946" enclosed in that letter; also a copy of thePresidents reply, dated March 16, 194&, and a copy of & letter whichI sent to Harold Smith, the then Director of the Budget, on February15, 194b, in Which X enclosed a copy of the memorandum.

Trie memorandum la the one about wl icb I spoke of ax, lunch yesterdayreference to sotting up o£ the Council of Economic Advisers and ofwhich you said yon would like to have • copy.


GG

PY

THE KUTI H0BS1

,rch 16, 1946

Dei.r Mr. keeles:

I appreciated very much jaar taoughtfulness in tw>4Lug g& your note of fcl&rch f if teenth and th© mort f t -dtjja on the £iaploym«at ^c t . I cm pleased t o know oi"your in te res t ftnd to h^ve

N art goii'ift., to hove a rea l progTMl if t h i s l e g i s l a -t ion can be iiiipieRkeiited at th l l end of t a s avenue aid ,of course, that depends eatii-ely on the individualswho &re on that Caa«i»«ico.

Sincerely yours,

Harry

Honorable K, 6. Eccles

X heserve SystemWashington, 0. C.


G0

Py

March 15, 1946.

Uy dear Mr. President:

Because the objectives of the ^taployaient Act of 1946 areso Interwoven with credi t and Boaotary r«#pcoslblliti«fl of the r e -serve System »nd M *lJfc« of course, to do an/in ing we cui to Euikethat ffleuaure a success, I am taking trie l iber ty of enclosing amemor Judum I prep^rsd to emphasize wry i t M^H of prlaarj importancetha t trie d i rec tor of the Budget b« •*&• ^ru-irmun of the Council ofIconomic advisers If the act i s to be- effect ively ^dsdniwti:?reci. Ifi t i s pre&uffiptuouii to MIM ttilt orgialftatlofiAX nifyttinrij l e t mesay in extenuution Ul*t a f ter tvv?Ive yMtn in iartilnfton of 1nt1—tti*Ki1r>| *i.tk c r ed i t , r.tonot^ry, f i sca l ^nd otii^r lat«rtviii«d problemsof govviriaît, I tnin.K I h.-.ve learned the luurd WJ iOM valuablelessons ^bout orguiiiiation, c.nd e.lao that I ccji approach tnese

object ively.

;.w, . 1 Long vtM in t a l s iftgis.U,,t.ion inreco*iiiizing th*t the OmnrtMiiiMlt b;.s d#flnlte •conoslc responsi-b i l i t i e s and in statiii^r b.t a —ndltn the objectives tovftrd Milchpublic policy LTIG action fhould be directed* Utet i s • tr—ttdouistep in It6«lf|i as you are well aw^re. ^^tur i i l ly , 1 would hate toS':je t h i s nruch l i b e r a l Dx*ogress di&creaited tarough caiy administra-t ive or orraniztiti onal imposse. Hence my effort to put dcMM inmeiaoranduai form soiae soggestioiUl that I feel 1 ntied not apologisefor forwarding to you for wi&tevor aid, i f c:jay, they mi^ht be toyou in dealing vdth what i rec.liz,6 L« ft relatlT«ly subordiiititeproLleaa coap^red vdtn tb« UAJ tremendous ones «i ta Miicn you areburaened,

nespeetfully yours,

i. S« Eccles,Ch&lrtuA.

The President,The fehite House,

Enclosure


OF TH1L EilPLOY-d^T ;XT vF I 9 4 6

1. According to trie Act th« Council of leonoailc -advisers i s

created in the Executive u i f ice of the President . I t Li tiie duty

•ad function of the Council to ft**l*t tttd cdvise the President in

the preparation 01 tne Economic Report, to gather tlmeiy ^nd

dUthoritai ive informal, ion concerning economic developments cold

t rends , to apprals* baa v^ricms [iiii^l i i and <.-ctivitie& of th«

Federal QIHIIIHBWIII vltfa r#^p«et to tba declared policy 01 the Efa-

ployment *i.ctf and to develop and i-ecomaend to the Preoiient nat ional

economic pol icies designed to mtk\nt din eaipioyment, production, tnd

puichasiag pammr* The Council, kMllB| created in Ul« l:x culive

Office of ttie Pre&ident, la designed <*s an ui.d t o the President in

meeting fcila raapcOAibilitjf in tha foramlation of isii overall i n t e -

grated econoadc profraa M required under the *c t .

2* isince the Sooooaie Council la set up in the i'x- cutiye Offlo

of the President for trie norpotM euumeiatvd c»bove, i t i s important

tru.t tne chief coordin^/icu, aâacj of the uov; ;-;incnt, tne ftm »«u of

the Budget, snouid be intimately inte^rat '-d feitn the Council. To

achieve thin end i t BOoXd seea to ba expedient aod indeed neces^ci.ry

that tne Director of the Burtw ol tne uu.dget siiould serve aa the

Chalimaai of the Council of Economic AdrlMHNU There i s nothing in

tne XMttyfBAgt of tne a\et th^t, Mould prevent tns President freai ap-

Birinting th« J : rector of tha Budget to BMa barahlp in the oouncil

of SOQOCMBlc advisers , subject to co&flnMitloD bj the Saa*t*« Under


t h i s trro&gWMttt the Director of the liureau of the Budget aould, of

cours*, draw a e&l*ry in one o f f i c ia l e*p*cltj only, • •rr iaj in the

other without pay.

Unites thi Director oi t.ae Bureau of the budget I s Îso ft lie-saber

of oiid flu 1 lain of the Council of Iconoalc advisers , thoro •ould in

effect be t*vo coordinating . Les in tfei ix- eutive of. ice of the

President — t:ie iiureau oi* the Badgtt tad the Council. 6uch a con-

di t ion **'.)uld v io i - t e the prineiplea ox ûo-i goT^nuMnt iMftrln1 fftration

and vomld L«*d to continued coafllct althia Ui« A4i1nlntnitlfMi i t

would render i t d i f f i cu l t , If not lflpo*albl«| for the President to

prefe^nt ft coordinated program witn respect to the Federal budget und

trie various overal l DaiiODAl OOODOSlc po l ic ies , a c t i v i t i e s , tmA

programs ox UM Federal uovernoiGnt,

3. Tbe jict provides th*t the Council th*U to tao fu.ilest

possible ext-nt tttillM the services ifid l ^ c i i i t i e s of exist ing

Govern Kkt agaciclts. In order to accoapll^l t h i s eifectlvfiiy i t

would app«*r desir^Dio for the FrosldiBi to 1MU« M Executive order

est«bii&ain.p an Inter ' dopart—atAl Economic St&ff consisting of a

technical ly qoftliflod repreêntativv^ of bi^b jtandlng from e^ch of

the nnTnnwiint dtp*rta»toti (exceot i*r , ivuv^, and Post Office) uid

from the bureau of trie Bu;;g?^t, tho Federal ueserve Board, tae

V&tioa&l Housing A, ;-ncy, the Federal hor&s kgmicj$ the Federbl

âcurity AgtBOJi Midi for thl pi-c5eut, tae j f i i c e of i*o-r Hohl 11 Mfc-

t ion, iddd tae i f f i c o of Kconomic Stabilia&tion. Ko.cn of these


represent stives shouia bo rt0; oneible to th« head of his *f«B$y«

Such rt-prefcentotivee should devote full t iat to the work of the

Inter-departs.ental Fcononlc $t*ff« They vottld thus oe in •

position to serve ts liaison officers b»twm their respective

tgaasl** tad the Council of Economic /-.dvis^rs *titn respect to

rese&i en ittd policy I'ormui, tion. îth rttfmrd to sp^did

problems — uic-net i-y lad ilsc^.1 BftttarVj for example — i»ub-

c mmittoefci of tae Intcr-depî>t:A?vnto.l St&ff isiight Kell be es-

tablished.

ii.. Mecessarily In tttt Booooaio Keport of the Pr«sldiBt to

t'ne Con r€Bi> recownendations will oe nk;de on y&rlottl nuittors of

policy fth; ch concern trie reaoonsibiiities of various af«Diei«t of

the Gov^rnaont. In th« prcparAtlan oi this &«port ta& Prfîênt

will, of coure -, consult Cabinet feeaibers sod heads of agencies

r—pon<lbl« for policy i'oxvnul-vtion. these hi^^raAklng oificials

will, iuoreov-r, htfiH bftd an opportunity cotitinuoiatiy to assist in

the wurlf fon«ilatioo of policy r>ciIMW\t\11,loni through their

representatives In the lni'-r~depcrtri\ental Economic 6tc.ff, M Mil

as through Jirect contact vith t-ie Preîdenl Had the Council.


February 15> 1946

Honorable Harold D. SslDirector, Bureau of theState rtipiTtiiBiinti Building;iaghington (25) D. C.

Dear HftroXdl

Together with ifl^xiri of the staff , I a^veglv«B 1 great deal of thought to the stt&tt^r of stakingeffective th« ftqplojMMBt net of 19A6. Uur coaciu&ions«re contained in the accoap&nyiii^ aiesior«i'idura. Ibe ho.ppy to hkve you use mg EIMMI in connftutionsuppoit for • profTMl of the type outlined in the l

&h:>\iid yon cas • to do &o.

Our view la that Bill ft 11 the Director of thebiiJget is made Chtlnuua pi the CotinciX of IconosicAdvisers the Act will not be effectively <idrrziaistered.To esWoiibh ail îtir.dy n«l o ;ency in the KxocutiveOffle« of the President to coordin^ta economic policiesand progrwu without Integrating i t »ith t:ie bureau ofthe Budget . I 1 to -us to go counter to tae ^-nerî needfor greater c©ntrailiati011 of u.uthority and r*«poii«lbility•lth rilfict to Federal •coooaic -olicy.

i i i y yours,

It. S. Eccles,

...oiiU.re


Documents

Letter to Frank Pace - FRASER · Presidents reply, dated March 16, 194&, and a copy of & letter which I sent to Harold Smith, the then Director of the Budget, on February 15, 194b,