Galbraith Seeks Limits on FRB, Criticizes Martin

John Kenneth Galbraith, Paul M. Warurg Professor of Economics, yesterday called on Congress to give the President ultimate authority" over bank interest rates.

In a speech before the Joint Congressional Economic Committee, Galbraith strongly criticized William McChenney Martin, the Federal Reserve Board Chairman. He said that Martin had acted in and under pressure when he raised bank interest rates from four to four and be-half per cent. The professor called the move "improper and unwise."

Galbraith suggested legislation to limit the power of the FRB, which presently by raise bank rates without presidential approval. "The Federal Reserve should, course, remain fully in charge of day-to-day operations," he explained, but the president should make the final decisions.

He criticized the FRB for:

Rejecting a coordinated economic policy;

Acting before all the relevant statistical annual spending were available;

Compensating for tax reduction for the both with a rise in the interest rates which will hurt the poor;

Fielding to bank and big business pressure by raising interest rates and not corporate taxes.

Galbraith suggested legislation to limit the power of the FRB, which presently by raise bank rates without presidential approval. "The Federal Reserve should, course, remain fully in charge of day-to-day operations," he explained, but the president should make the final decisions.

He criticized the FRB for:

Rejecting a coordinated economic policy;

Acting before all the relevant statistical annual spending were available;

Compensating for tax reduction for the both with a rise in the interest rates which will hurt the poor;

Fielding to bank and big business pressure by raising interest rates and not corporate taxes.