Reserve Shift

Amid the cheers of bankers and brokers, Harry Truman abruptly demoted Marriner Eccles from the chairmanship of the Federal Reserve Board last week. In the place of old New Dealer Eccles, the President put Thomas McCabe, chairman of the Philadelphia Federal Reserve Bank, president of Scott Paper Co. (tissues). In politics, McCabe is a Republican.

Why did Harry Truman do it? His motives were not too obscure. Eccles' term on the board ran to 1958, but his chairmanship was about to expire (Feb. 1). The small, greying boss of FRB had become increasingly irritating to Mr. Truman. Eccles had disagreed with Treasury Secretary Snyder on how to handle inflation. With his recommendations for tighter Government controls of banks and financing, he had stirred up the bankers and brokers. He was always treading on toes. He had also been spotted paying occasional visits to Senator Bob Taft. The ax fell.

Eccles' head did not roll, although his neck was bruised. Magnanimously the President offered him the vice chairmanship of the seven-man board. After wrestling with his pride, Eccles took it. He could still get in plenty of licks at his enemies. While McCabe was learning the tortuous ins & outs of the job, Eccles, the old hand, would continue to be the most influential member of FRB. Independently wealthy and doggedly independent, 57-year-old Marriner Eccles would go on working at his ideas of "capitalistic democracy." A Washington career had been punctuated but by no means ended.

Money as a Tool. The career started 14 years ago. Eccles, a staunch Mormon, was also a staunch advocate of the theory that money is a tool to be used, not hoarded. As a young man in Mormon frock coat and silk hat, he had proselytized for the Latter-Day Saints along Glasgow's Clydeside. As a Utah enterpriser, he had used the sizable fortune inherited from his pioneer father to build a small empire of sugar, lumber and construction companies, and 28 banks throughout Utah and Idaho.

Still Consistent. But whereas he advocated Government spending in depressed times, Eccles has fought easy-money policies during the postwar inflation. He tried to keep the clamps on installment buying, favored high margin trading on the stockmarket, recommended the virtual doubling of reserve requirements in commercial banks. From Robert Taft, last week, he received this left-handed accolade: "Mr. Eccles may be a New Dealer but he is at least consistent."

The man who took Eccles' place was somewhere to the right of Eccles' "unorthodox" doctrines, though perhaps not as far as some loudly applauding bankers thought. Thomas McCabe went to progressive Swarthmore College. He began his career at Scott Paper Co., became a supersalesman and finally president. He has held various Washington jobs, including that of deputy lend-lease administrator. McCabe, like Eccles, is concerned about ways & means to curtail credit. He also believes that great efforts should be made to control inflation. The difference between the two may be largely one of method. Amiable, smiling Tom McCabe gets along with people.

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