Amateur's Triumph

Texas' Wright Patman is sometimes slyly called "the leading economist of Texarkana" (pop. 25,000), his home town. No professional economist, Lawyer Patman, a champion of small business, nevertheless makes a gallant effort to fight his way through the jungles of Treasury short-term "paper" and Federal Reserve re-discount rates. Last week, Patman's critics adopted a more respectful attitude. Patman had just published the results (in two volumes totaling 1,302 pages) of a broad poll of experts on U.S. fiscal and monetary policy.

When Patman, as a member of the Joint Committee on the Economic Report, began his own special subcommittee inquiry last year, he was primarily concerned about the Treasury's partial surrender to the Federal Reserve Board's drive for higher interest rates. Patman, who thought that the increase would be bad for small business, believed it was high time the President got power to make the independent FRB march in step with the Fair Deal. With the help of plenty of genuine economists, he fired off one of the biggest questionnaires Washington had ever seen (34 pages, 245 questions) to everybody from the Treasury and the FRB to 1,200 bankers, insurance executives and private economists. The questionnaire asked, in effect: 1) What is U.S. fiscal policy? 2) Is it good?

Pulling the Peg. The result was so exhaustive that it will take even professional economists weeks to wade through all of its essays, graphs, appendixes and guesses. One thing, at least, was clear: out of the thousand experts consulted, scarcely any two were in agreement. As might have been expected, FRB Chairman William McChesney Martin insisted that the FRB had been right in pulling the peg on Government bonds (i.e., stopping rigid support), and that the FRB's whole program of credit restrictions had helped check inflation. There was one surprise: Secretary of the Treasury John W. Snyder, at least on paper, was far closer to the FRB's own position than his previous remarks had indicated.

Instead of insisting that the FRB support Government bonds at par or above, Secretary Snyder claimed to seek only "a market in which prices and yields fluctuate within a moderate range over a considerable period . . . not ... a 'pegged market' in which fluctuations are prevented." In short, he agreed with the way the FRB is now supporting the government bond market.

No Sale. The biggest surprise came for Patman; not one of the experts would buy his theory that the President ought to have control over the FRB. Even John Snyder rejected it. Wrote he: "I do not suggest that the President should be given any [such] powers."

But if Patman had done nothing else, he had got all of the arguments--and justifications--out in the open, where his committee can shoot at them next week when it opens hearings to try to bring the Treasury and FRB together in a coherent monetary and credit policy.

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