Monetary Guidelines pg. A14  
In 1913 Congress delegated its constitutional authority to regulate the supply of money to an independent authority, the Federal Reserve System. The System was radically transformed after the most devastating depression in the NationÛªs history. But Congress in its concern with immediate issues never articulated the economic objectives and criteria that should guide Federal Reserve policies. Conscious of this glaring deficiency, the majority members of the House Banking subcommittee have formulated a series of proposals designed to achieve a closer coordination between monetary policy and Hie other economic policies of the Federal Government,</br></br>Central to the .subcommittees program is a proposal that would provide a firm statutory basis for the determination of monetary policy. The President would be required to set forth in his Economic Report monetary guidelines ÛÏincluding the growth of the money supply . . . necessary to attain the goals of maximum employment, production and purchasing power . . .Û Clear directives to the Federal Reserve Board would preclude a repetition of the episode in the summer of 19(12 when the Chairman threatened to nullify the effects of a tax cut with restrictive monetary measures.</br></br>Most of the other proposed reforms follow from this central proposition, and the most important is that relating to the Federal Open Market Committee. The FOMC is a powerful body that regulates the reserves of the commercial banks through its decisions to buy and sell Treasury securities. (Purchases of securities raise member-bank reserves; sales diminish them.) As presently constituted there are 12 members of the FOMC, the seven Governors of the Federal Reserve System and five representatives of the regional Federal Reserve Banks. In the past, great harm was done by giving the regional Reserve Banks, which often represent narrow banking industry interests, a potential veto over crucial open market decisions. Open market operations are the most effective means of controlling the money supply, and power to conduct them should be vested ill the Board of Governors, a body which is directly responsible to the Congress.</br></br>'IÛªhe term of the Chairman of the Board of Governors should he coterminous with that of the President. If the President of the United States can appoint a chief fiscal officer in the Secretary of the Treasury, lie should also be able to appoint the Nation's chief monetary officer, the Chairman of the Board of Governors. And if the Federal Reserve System is to be responsive to the wishes of the Executive Branch. Hie inordinately long, 14-year terms of the Governor should be reduced to five.</br></br>The other reform proposals arc of subsidiary importance. It is desirable but hardly essential that the outstanding stock of the Federal Reserve Banks he retired or that the accounts of the System be publicly audited. Bui it is essential that the salaries of the Governors and their staff be raised, especially in view of the disparity between remuneration in Washington and the regional Reserve Banks.