The Atlantic Report on the World Today: Washington

THE President’s boiling point is becoming a problem of national significance; no President should speak so freely, especially a man of Mr. Truman’s impetuosity. At the press conference, of course, replies have to be made extemporaneously. Here the President’s irritation is a constant revelation. Though he has been persuaded to say “No comment" to a delicate query, he cannot bo restrained when a loaded question involves one of his associates. The jest now is that if a crony wants to insure his job, the tiling to do is to get into a jam and then spill it to the papers; Mr. Truman will back him up through thick and tbin.

This belligerent, defense of cronies under fire is a constant bar to better relations between Congress and the Executive. Take, for instance, the President’s reaction to the Congressional subcommittee report on the Reconstruction Finance Corporation. The President has never forgiven the chairman of that committee, Senator J. William Fulbright, for his precipitate suggestion after the mid-term election in 1946 that the President should take the lead in setting up a coalition government.

Senator Fulbright and his associates had done a conscientious job in ferreting out deficiencies and running down instances of pressure tactics by persons close to the Administration. They took their findings to the White House. It was their hope that Mr. Truman would dispense with the need to publish the material by agreeing to reorganization. However, they were rebuffed, and the Senatorial group had no option but to make the report of the investigation public. Not only did ihe President dub the record “asinine"; he submitted to Congress for renomination the names of the very PFC directors who had been criticized.

The following week, however, the President changed his mind and sent to Congress a plan for the reorganization of the RFC under a single administrator, much as the Fulbright committee had asked for.

The RFC is an octopus of a corporation which lends, buys, produces, and sells. Its assets are expected to exceed a billion dollars by the end of 1952. Government in business, indeed! It grew like Topsy out of the emergency of the depression, and there never seemed an opportunity to wind it up. There was such a movement a while ago; then the cold war started to grow hotter, and it seemed wiser to keep the institution in being pending other emergence needs. Nobody would advocate liquidation now. But there should be a thorough going over of RFC operations at public hearings.

The RFC is important enough to be maintained as an independent agency, for the pressure for political loans would be spurred, not lessened, if the HFC were related intimately to the Administration. The consensus is that protection of the public interest requires a nonpolitician at the head of the institution, and its divorcement from nondefense lending. There is, of course, no ideal solution. Direct government lending, as the Hoover Commission reported, “opens up dangerous possibilities of waste and favoritism to individuals or enterprises,”inviting “political and private pressure, even corruption.”

Lovett’s special job

Everybody is agreed that the control of inflation requires that nondefense expenditure be cut to the bone as long as the emergency lasts. But the possibilities of saving money on defense itself are important and pressing.

Naturally the military heads of the three services will ask for all that the traffic will bear so long as Congress regards the sky as the limit for military appropriations. They leave it to the civilian secretaries to do the cutting.

For the most part this responsibility is passed on to Secretary Marshall and Deputy Secretary Lovett. The means Mr. Lovett, the most burdened official in the Capital, and a man with a truly civilian mind. He knows, as few men do, that t he Pentagon itself has a pari to play in the fight against inflation, and he has recruited expert accountants to act as watchdogs of the military purse.

It was mentioned some time ago in these notes that the three civilian secretaries had formed a sort of joint committee of their own. The idea was to have an opposite group to the Joint Chiefs of Staff. But the innovation seems in danger of perishing of inaction.

This is not the secretaries’ fault. The trouble seems to be that the military chiefs have become more important in the life of the Pentagon as a result of the advent of Secretary Marshall. Marshall, contrary to some reports, “runs” the department, but he is more at home with military men than with civilians. Thus he is more apt to lean on the Joint Chiefs than on the civilian secretaries. This is what vests Mr. Lovett’s job with special significance,. He is a tower of strength in a situation which could easily become top-heavy with military influence.

Civilian supremacy is the cornerstone of American institutions which many Americans are apt to overlook. It is especially in the custody—on the Executive side — of the President and his Secretary of State. But the stock of both has been going down. And that makes members of Congress and the public at large look more and more to the military.

Eisenhower and Taft

Only one man in the present experience has taken advantage of the situation, and that is General MacArthur, who has dabbled in politics, high and low. This cannot be said of the other military men. General Eisenhower is innocent of any political shenanigans, though he must know that no man in American life even approaches him in influence in present-day America. There is not a person in the Capital who thinks that he will use his lofty standing in any manner unbecoming to his uniform and rank in democratic America.

Taft’s tilts at Eisenhower failed to shake that standing, and even recoiled on the Ohioan. There has been no strengthening of the Taft leadership in the 82nd Congress. Taft talks too much, is insensitive to the feelings of the back-bench Republicans. One discerns an undercurrent of resentment against him in GOP ranks. The plain fact is that no clear line of leadership is discoverable in his utterances. The men to whom the Republicans are increasingly turning arc Warren, Duff, and Driscoll.

The VA fires Dr. Magnuson

Marquis W. Childs, no unfriendly critic of the Administration, recently itemized the agencies which had shown marked deterioration of administration. He said that a blight similar to the one which has come over the RFC has likewise affected the Civil Aeronautics Board, the Federal Power Commission, the Securities and Exchange Commission, and t he foreign service. This, he says, is by no means a complete list. It isn’t. He could have added another agency: the Veterans Administration.

Congress is now inquiring into the firing of the medical director, Dr. Paul B. Magnuson. Dr. Magnuson refused to resign in deference to the request of the Administrator, Maj. Gen. Carl II. Gray, Jr. He wanted an investigation of the intrusion of political meddlers into the Veterans Administration which step by step has whittled away the independence of the medical department. The last straw for Dr. Magnuson, who is one of the most highly respected men in the Capital, was the appointment of a three-man board for the selection of hospital managers. Dr. Magnuson wasn’t even consulted.

Of course, political interference in this agency is not limited to the Executive. Congressmen are guilty, especially in the location of hospital sites; but there is no hope for a publicminded administrator if he is assailed by both branches of government. What is basically wrong with the Truman administration, Mr. Childs concludes, is exemplified in this falling off in operating standards.

Treasury vs. Federal Resorve

The Treasury-Federal Reserve conflict has created a furor throughout the country. Credit control is an art beyond general comprehension. So it is no wonder that more heat than light has been shed on the squabble. For instance, an alarm has been sounded that the Federal Reserve has had all its powers of control subverted. That, is plain nonsense. Within a week of the explosion, the Federal Reserve was putting further restraints on building credit. A lot of maneuver would be left to the Federal Reserve even if it failed to get the upper hand in the controversy with the Treasury.

The controversy has to do only with the long-term bonds of the government. These are pegged at par, yielding a 2½ per cent rate. The pegging is done by automatic purchasing of the bonds by the Federal Reserve system when they are offered for sale on the market. If the Federal Reserve refused to buy, then the bonds would fall, and this is what the Federal Reserve wants to bring about. It would re-enter the market when the fall had been sufficient to make the yield 3 per cent instead of 2½ per cent. This would govern the long-term interest rate for all bonds, thus adding more restraint to borrowing, and so restricting credit inflation.

The Treasury thinks there are enough brakes to apply without applying this particular brake. It says the helpful anti-inflationary effect of a rise in the interest rate would be more than offset by the increased carrying charge of the public debt. This would add to the tax burden. Not only would the taxpayer suffer; the bondholder, seeing his existing securities devalued, would be hesitant about buying more bonds, thereby endangering future selling campaigns. So an imponderable is matched against a ponderable, with both sides making a good case, and the objective observer left in a state of bewilderment.

By far the majority opinion, even in Congress, is on the side of the Federal Reserve. Inflation is enemy No. 2, after Russia. And the business of credit creation and its impact upon the deflation-inflation complex is now more understood. Those who think the argument is even Stephen make the suggestion that Charles E. Wilson ought to settle it. It seems foolish for the two agencies to be at loggerheads over a matter of one-half of one per cent.

Nimitz and security

Admiral Chester W. Nimitz, as head of the newly created Commission on Internal Security and Individual Rights, has an assignment which has long been overdue. If the Commission had been set up a year ago, we might have been spared both the excesses of McCarthyism and the frightened invasion of our civil liberties. The task is to show the country a safe path between the Scylla of security and the Charybdis of freedom.

One of the first considerations which await the Internal Security Commission is the metamorphosis of the loyalty program for government employees. Seth Richardson, first chairman of the Loyalty Review Board, has been criticized for giving employees the benefit of the doubt. This was in conformity with the original mandate from the White House. Mr. Richardson let Remington through — not only because of the existence of this doubt, but also because the Board passes only on its view of “present loyalty.”

After the conviction of Remington there was such a howl in Congress that Mr. Richardson’s successor, former Senator Hiram Bingham, has laid down the rule that any doubt must be resolved in favor of the government. This doctrine flies in the face of legal standards but, beyond that, it must be viewed in the framework of existing practice. Employees can be fired out of hand in all sensitive agencies. This is a safeguard, and is cited by those who feel that Mr. Bingham’s rule is a peril to freedom.

Mood of the Capital

The mood of the Capital is becoming increasingly sanguine over our situation in the world struggle. This is thanks to the expository work of Charles E. Wilson and Robert Lovett to members of Congress as well as visiting groups of the citizenry. Our present situation is so much better in terms of industrial capacity, contrasted with the onset of the last emergency, that those who were saying “All’s lost” three months ago are beginning to be shamefaced.

With this recognition of the facts, faith is more evident, though the uncertainty about Korea is troublesome. Everybody except the extreme China-firsters wants to avoid any bogging down in the quicksand of China. Yet every move in Korea seems to increase the involvement. The military appear to be aiming at winding up the adventure one way or another before the end of summer, for, aside from the danger of a permanent embroilment, they need the veterans back home to train the new army.

Secretary Marshall’s appearance on the Hill sufficed to deliver the coup de grâce to those oppositionists who wanted to establish ratios of American strength in Europe against the counsel of General Eisenhower. His frankness is in refreshing contrast to the Administration’s disingenuousness of eighteen months when the Atlantic Pact was under debate.

This is what rankled with the Senate. The Administration, mainly through Senator Connally, led the Senate to believe that no arms or manpower obligation was involved in ratifying a pact which pledged the signatories to develop a collective defense ahead of attack.

Senator Taft at the time protested against the Administration’s misrepresentation, and his stand proves to have been well taken. At any rate, Secretary Marshall was not inveigled this time into making any pledges; he even refused to say that the four new divisions would be the limit of American assistance.

Another reason for the flop of the Republican campaign to establish quotas is the division in the Republican Party. Governor Dewey has ranged himself against Senator Taft. His support of the position of Eisenhower, whom he still sees as the Republican standard-bearer in 1952, had its influence upon Congress.