Black Out

Last week President Roosevelt had to consider the appointment of a new head to a great Democratic institution. When Carter Glass and the new dealers of 20 years ago created the Federal Reserve System they meant it to be a pillar of sound finance which could not be shaken by the hand of politics or business, which should stand even if the economic sky should fall. What they did not foresee was that, after the economic sky had fallen, a new generation of New Dealers would want not a pillar of stone but a handy wand with which to reconstruct the sky. Last week Secretary of the Treasury Morgenthau had

14 professors hard at work on plans for a central bank, completely controlled by the Government, which might supersede the Reserve system. And many a social in novator, including Father Coughlin and Wisconsin's young La Follettes, openly hoped that when Franklin Roosevelt named a new Governor for the Federal Reserve Board he would be the last.

What made the appointment necessary was the resignation of Governor Eugene Robert ("Gene") Black, who took the post a year ago last May, hoping that it would be for no more than a three-months' leave of absence from his regular job, Governor of the Atlanta Reserve Bank. One significance of his coming -- besides the fact that he was by all odds the funniest-looking man in the Administration -- was that by his personal popularity he softened the New Deal's animus towards bankers and vice versa. A second greater significance was that he acted as a shock absorber be tween the banking system and the Administration, pressing for sound finance, yielding to the extraordinary fiscal demands of a powerful President. One by one, Governor Black saw the important functions of the Reserve System taken away -- its control of the currency, its control of credit. Future financiers will know whether his yielding saved the System from com plete destruction or paved the way for its complete downfall.

When the President finally allowed him to go home last week, Governor Black was still kept in New Deal harness under a new title--a favorite Roosevelt gesture when letting an important subordinate go. He was made "liaison officer" between bankers and the Administration. Asked if the continuous traveling involved in his new task was not too big an order. Governor Black, now 60, drawled: "Well, I am healthy, young and optimistic."

In this mood, tall, gangling Governor Black went back to his beloved Atlanta, back to his $25,000 job, to his rambling house on a five-acre plot on fashionable Peachtree Street, to his place as the city's favorite after-dinner speaker. There with solemn face he will tell innumerable stories, never repeating himself, about how he is held down by his wife "Gussie,"--daughter of the late great Editor Henry Woodfin Grady of the Atlanta Constitution, burier of the bloody shirt, prophet of the "New South." There his friends will again remind him that he looks like Andy Gump; there he will play golf (very creditably) with Bobby Jones. There he will again make quips like the one made in the showers after a disastrous round: "Well, there is one thing certain: I can take as good a bath as any member of this club."

In Washington another man will sit at the Reserve Governor's desk, a man of whom last week only two things were predictable: That he would be less humorous than Mr. Black but certainly no less willing to bend the Federal Reserve to Administration policy.

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