The Gold Warriors

British Prime Minister Harold Wilson went to Washington last week not to ask for money but to talk about it--and the talk focused attention on the small band of Americans who are the nation's front-line strategists in the gold war. In one hectic day, Wilson managed to share Scotch and headaches with the Secretaries of Treasury and Commerce, the chairman of the Federal Reserve, the chief presidential economist and a score of their erudite underlings. These puissant men, almost all of them newcomers to the first team, are increasingly called upon by the rising pressures of international finance to negotiate with foreign dignitaries, to defend the dollar and preserve gold, while simultaneously helping to lighten the U.S. taxpayer's burden and spur the nation's economic growth. How do they operate and how are they doing?

> Henry Hamill Fowler, 56, the Treasury Secretary, is the financial man who carries the greatest weight at the White House right now. A favorite of Lyndon Johnson's, he almost daily uses his close contacts with Wall Street's bankers and Capitol Hill, cultivated during three years as Under Secretary. "Joe" Fowler's aides moan about his hard pace (usually 9 a.m. to 9 p.m.), which has them working on a dozen different projects, including planning this year's excise-tax reductions and cracking down on abuses of tax-exempt foundations. The first man Wilson sought out in Washington, Fowler agreed with the Prime Minister on the urgent need for world monetary reform to expand the international supply of capital and protect the U.S. gold hoard, which last week dropped another $150 million to a 27-year low of $14.4 billion.

> Frederick Deming, 52, Treasury Under Secretary for Monetary Affairs, directs a secret Treasury study of ways to reform the monetary system, has become the nation's chief tactician in the day-to-day gold maneuverings and the most widely traveled member of the top team, jetting once a month to monetary meetings in Europe. A domestic money expert who headed Minneapolis' Federal Reserve Bank, Deming hardly knew Europe's clubby central bankers when he moved into his job last January. Deming was hand-picked for the job by his predecessor, Robert Roosa, who gave him two pieces of advice: For the first year, make no public statements and do not bring your wife to Washington--you will have too much homework to do. (Deming will hit the lecture trail this month, and Mrs. Deming will move in from Minneapolis this fall.)

> William McChesney Martin Jr., 58, veteran (since 1951) chairman of the Federal Reserve, is second only to Fowler in influence at the White House. President Johnson knows that Martin is a force to be reckoned with: he heads a proudly independent agency and is the U.S. economic official most closely heeded by Europe's central bankers, who consider him the staunchest guardian of U.S. fiscal responsibility. Last week it became clear that Martin is helping to fight the payments deficit and gold outflow by slowly raising short-term interest rates--a move that pleases the foreign bankers more than it pleases Johnson, an easy-money man. The Federal Reserve reported that its member banks' cash reserves are at a five-year low.

> John Connor, the Commerce Secretary, left the presidency of Merck & Co. to find himself suddenly doctoring the nation's money ailments. He uses his chummy ties with the nation's top businessmen to persuade them to restrict foreign investing, last week received the first reports from 623 corporate chiefs on what they are doing to retrench. White House aides grumble that he has stolen too much of the spotlight in the payments-balancing act, and that he too vigorously defends the business establishment. Unlike the last several Commerce Secretaries, Connor has become a major adviser to the President, so far has helped to beat down Martin's pressures for tougher, direct controls on capital exports. -- Gardner Ackley, 49, the President's chief economist, has yet to achieve the influence that Walter Heller had, but he is a quiet technician with a penchant for anonymity that pleases Johnson. Ackley is a potent force because he has the President's ear, confers with him daily. In a report last week, he told the President that the U.S. economy is expanding faster than at any time in peacetime history, but that growth may slow after the steel settlement relieves buying pressure. All of this is likely to make Johnson less eager to use tighter credit and higher interest rates as weapons in the world money campaign.

The money team has its weaknesses, of course, but it is versatile and well balanced. Johnson will rely on Joe Fowler and Jack Connor to sell his policies to the nation's businessmen, Bill Martin and Fred Deming to deal with the international moneymen, and Ackley to pick the brains of the nation's economists. In the coming skirmishes over money policy, these few men are destined to wield more and more power.

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