“ COMMITTEE REPORT 
he " The position: of Governor of the Board should be enhanced. 
The Board cannot possibly be expected to meet the anticipations of 
the framers of the Reserve Act while it continues to include the 
Secretary of the Treasury as its Chairman, overshadowing the Gov- 
srnor. Indeed, we are convinced of the inadvisability of including 
the Secretary of the Treasury as a member of the Board. 
On general principles, the exclusion of Treasury representation 
on the Reserve Board would seem to be desirable because the Treas- 
ury is a frequent borrower and is consequently prone to attach major 
importance in the determination of credit policies to the maintenance 
>f easy conditions in the money market that will facilitate the placing 
»f loans at minimum rates. This consideration, as is well known, was 
riven undue weight for a year and more after the Armistice and, ap- 
parently, though with less serious consequences, on some subsequent 
yccasions. 
Reasons for 
Independence 
Chairmanship 
of Board 
This proposal—to free the Reserve Board from Treasury influ- 
ance—it should be clearly understood, is not urged on the ground 
that influence has commonly been exerted in support of unwise 
policies. By no means! Treasury influence at times undoubtedly has 
yeen a factor in securing effective action without unreasonable delay. 
Even so, it is evident that representation of the Treasury on the 
Board has not been conducive to realization of that personal re- 
sponsibility, independence of action, and freedom from administra- 
tion influence, which the country has the right to expect. 
It is hardly going too far to say that since the establishment of 
the reserve system the Treasury Department to a considerable extent 
has overshadowed the Board and has tended, consciously or uncon- 
sciously, to reduce the Board to the status of a departmental bureau. 
As members of the Cabinet, holding an historic office of great re- 
sponsibility, it is to be presumed that Secretaries of the Treasury 
will be in the future, as they have- been in the past, men of wide 
experience and strong character, enjoying widespread public con- 
fidence. It is precisely for this reason that, if a strong Board as a 
whole is to be secured, the Secretary of the Treasury should not be 
ane of its members. 
More particularly, the Chairmanship of the Secretary must obvi- 
ously render the post of Governor of the Board less attractive to a 
man of executive capacity and energetic temperament. In the judg- 
ment of your Committee, the dominant personality on the Board 
should be the Governor and he, not the Secretary of the Treasury, 
should be its Chairman. The elimination of the Secretary of the 
Treasury from membership, or at least from the Chairmanship, will 
surely assist in making the position of Governor of the Board more 
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