A Prophet's Charges

None of those who came to Washington with Franklin D. Roosevelt's New Deal held on to his job longer than Marriner S. Eccles, the onetime Mormon missionary who became the Administration's financial prophet. At a time when even F.D.R. was talking about a balanced budget, Eccles, a successful banker and a Republican, dumfounded his colleagues by proposing that the U.S. "spend" its way out of depression. Before a Senate committee in 1933, he described the need for many of the alphabet agencies which later came into being. But Eccles never considered himself a New Dealer; he thought in fiscal, not social, terms.

As chairman of the Federal Reserve Board, Eccles reorganized the System through the Banking Act of 1935, took the Government securities market out of the control of private bankers. Even after President Truman demoted him in 1948, Eccles stayed on as an FRB governor, crying for Government economy amid inflation as loudly as he had cried for spending in deflation. It was largely Eccles' opposition to Treasury Secretary Snyder's easy-money policies last winter that forced the rise in Government interest rates and tightening of credit (TIME, March 19).

Parting Shot. This week, after 17 years on the FRB, Marriner Eccles was ready to hand in his resignation. He wanted to go back to run his family's Utah banks, sugar factories and lumber mills. As befits a departing prophet, Marriner Eccles left behind a book of revelations--his autobiography (Beckoning Frontiers; Alfred A. Knopf, New York, $5), published this week. His most interesting revelation concerned his own demotion. Never able to get Truman to tell him why he was moved out of the FRB chair, Eccles thinks it was because he (Eccles) wanted to clip the power of California's Giannini banking family, whose influence Truman wanted on his side in the 1948 election.

As early as 1942, says Eccles, the Federal Reserve System, the Comptroller of the Currency and the Federal Deposit Insurance Corp. became alarmed at the mushrooming growth of Transamerica Corp., the Giannini holding company which was buying up banks and making them branches of Bank of America (some of them in competition with Eccles' family banks). Accordingly, the three agencies notified Transamerica that they would not permit it to "branch" any more banks. But this united front, said Eccles, ended when John Snyder took over the Treasury. In 1946, Snyder's Comptroller of the Currency let Transamerica spread the empire, and Snyder's friend, Sam Husbands, left RFC to run Transamerica.

No Answer. Eccles asked the then Attorney General, Tom Clark, to prosecute Transamerica as a monopoly, but got no where. So Eccles decided that FRB should do so. In November 1947 FRB ordered an anti-trust investigation. The President declined to reappoint Eccles as FRB chairman two months later. Writes Eccles: "The principal pressure that shaped the President's decision came . .. from within the inner citadel of the Giannini banking interests . . . Those who were responsible ... no doubt expected that I would resign . . . and the way would be cleared thereafter for continuous expansion . . ."

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