Congressional Hearings and the Federal Reserve

Abstract

AcHARACTERISTIC feature of the conduct of economic policy in a democracy is the practice of holding public hearings before legislative committees. Such hearings perform an important function in eliciting information and in guiding legislators and those charged with the formulation and administration of economic policy. The usefulness of the device, however, is impaired by tendencies which appear to be growing more aggravated and which clearly call for correction.' Perhaps the most serious of these tendencies is diffuseness, that is, the failure to hold the questioning to significant issues and the inclusion of endless irrelevancies. The very ponderousness of the published record often restricts its usefulness as a device for guiding and improving future policy. A second unfortunate tendency is for the hearings to degenerate into an ugly spectacle of bullying and badgering of witnesses. Such tactics, reminiscent of the McCarthy investigations, serve no conceivably useful purpose. The inevitable consequence of proceedings like those described below is to impair the attractiveness of civil service as a career, weaken the effectiveness as well as the morale of public servants, and lower respect for senators and representatives. In the calendar year 1957 the chairman of the Board of Governors of the Federal Reserve System, William McChesney Martin, Jr., appeared one or more times before the Banking and Currency Committee and a subcommittee thereof, the Committee on