“ 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 Govsrnor.
 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 Treasury
 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, apparently,
 though with less serious consequences, on some subsequent
yccasions.

Reasons for
Independence

Chairmanship
of Board

This proposal—to free the Reserve Board from Treasury influance—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 responsibility,
 independence of action, and freedom from administration
 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 unconsciously,
 to reduce the Board to the status of a departmental bureau.
As members of the Cabinet, holding an historic office of great responsibility,
 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 confidence.
 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 obviously
 render the post of Governor of the Board less attractive to a
man of executive capacity and energetic temperament. In the judgment
 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
(Continued on page 46)