Defense, Controls, and Inflation.pdf - The Ludwig von Mises Institute

38 Defense, Cont1~ols, and Inflationmayors together and agreeing on some sensible standards.The building program, if it has not been reached by RegulationX-and I doubt if it has-I believe has got to be cut back.Control is now in the government's hands, because most of it isdone under government guaranties.CHAIRMAN LEVI: Turning back to the outline, then, againlooking at Item I, A, assuming that the first question, "Arechanges in the rate of use of money likely to occur with mobilization?"has been answered in the affirmative so far, I call yourattention to the next question, "With mobilization and an announcednoninflationary policy?" I ask if anyone wishes to speakto that? If not, I suppose that it should be assumed that thisis also answered in the affirmative.MR. RosTow: I should like to invoke Mr. Arnold's precedentof not speaking altogether to the.point. I should like to put aquestion equally to Mr. Harrod and to Mr. Burgess. Is it theirfeeling that direct cuts in the rate of private nonwar investmentexpenditure, imposed through one or another of the availabledirect techniques, are so necessary that they would be opposedto the most vigorous possible use of banking policy as: an instrumentfor reducing the supply of money and its private expenditure?After all, in the last six or eight months, we have seen an extraordinaryexpansion of bank loans, while the national budgetwas in balance, or rather at a considerable surplus. As Mr.Burgess points out, and I fully agree with him, at the presenttime the banking system is pretty well loaned up. Many otherfactors should make the banks markedly sensitive to centralbank controls. Now, is it their feeling about the inherent weaknessof monetary policy that leads them to oppose the mostvigorous possible use of Federal Reserve powers at this time?MR. HARROD: I would only say that I do not think of myproposition as an alternative but as complementary to the useof a restrictive monetary policy. Mr. Burgess knows much moreabout that. I should not go so far, however, as to support "themost vigorous pOSSible use" of monetary policy. If we mayimagine, say, a 5 per cent short-term rate; that would not bedesirable.