President Carter's candidate to head the Federal Reserve Board said yesterday that the central bank should conduct monetary policy in a way that supports economic goals set by Congress and the President.
But Textron Corp. Chairman G. William Miller avoided answering questions from Senate Banking Committee members on whether Miller approved current Federal Reserve policy or how he would conduct monetary policy if he is approved as chairman of the independent central bank.
An exasperated chairman William Proxmire (D-Wis.) told Miller, "You are unable to tell us whether you'll follow (policies adopted by outgoing chairman Arthur F.) Burns or whether you'll change them . . . You're asking us to confirm you on blind faith."
The committee delayed for a week a vote on whether to recommend Miller's nomination to the full Senate. But committee sources expect Miller to be confirmed easily with only Proxmire and perhaps one or two others voting against him.
Proxmire said he is concerned by Miller's lack of economic training and lack of familiarity with the conduct of monetary policy - something Burns possessed when he took the job eight years ago.
"I'm not sure you're the man for the job," the Wisconsin Democrat told Miller. Proxmire said he does not think the country can affored the months of "on-the-job training" Miller would require.
Miller conceded that he was not a monetary expert, but said that his business experience should add to the technical expertise of the other members of the board of governors of the Federal Reserve.
Most of the committee members said they did not share Proxmire's concern about Miller's lack of technical training in economics.
Miller also seemed to defuse an inquiry by Proxmire and ranking Republican Sen. Edward Brooke (R-Mass.) into whether Textron's Bell Helicopter division bribed the late commander of Iran's air force to get a half-billion-dollar helicopter contract in 1973.
Miller confirmed that Bell paid $2.9 million to cancel a sales representative contract it had had for 14 years with Air Taxi Co. in Teheran. Miller said that in 1973 Bell was negotiating a sale of 480 helicopters to the government of Iran for about $500 million. Under the terms of the contract, Air Taxi would have collected 7.5 percent commission - far in excess of the company's contribution to the sale, which was made through the U.S. government.
Between 1969 and 1973 Bell paid $19,000 in commissions to Air Taxi.
Proxmire said committee investigators had learned from an unnamed U.S. government agency that Air Taxi - which still represents Bell for commercial sales in Iran - was secretly owned by Mohammed Khatemi, then head of Iran's air force. Khatemi died in 1975.
Miller told Proxmire that he assumed A.H. Yanganeh, manager of the company, also was the owner and said Textron did not know that Khatemi owned the company and told reporters during a recess that he would be "amazed" if Khatemi actually did.
Proxmire directed the staff of the committee to investigate the Air Taxi contract cancellation. Miller said Textron would cooperate.
Miller told the committee that at the end of his four-year term as chairman (his term as governor is 14 years), he hoped to see lower inflation, lower unemployment and a stable dollar. He said that while at any particular moment one migh take precedence over the other, all three were equally important.
He said that recent Federal Reserve policy has been correct in general and refused to be drawn into criticizing a recent Federal Reserve move to boost interest rates in order to attract funds from overseas and help keep the dollar from sinking.
He called the move a "close call," and conceded that "I might have made a different decision had I been there." But said he did not have the benefit of all the information the Federal Reserve had when it boosted the interest it charges members banks to borrow from it.
"I would hope that conditions can be brought about that would take pressure off interest rates," Miller said.
He said he had not had time to examine President Carter's budget nor had he examined the latest full-employment. Humphrey-Hawkins legislation which will be debated in Congrouse and the Congress.
But he said that it is "absolutely proper that Congress should decide on national priorities" such as the full employment goals contained in the Humphrew-Hawkins legislation which will be debated in Congress this year.
He said the Fed's independence does not mean that the central bank can disapprove of actions taken by the goverment. The Federal Reserve's independence extends to how policies should be carried out not to "what policies should be carried out."
The 52-year-old Textron chairman seemed to concur with recent Federal Reserve and Treasury decisions to take actions to support the price of the dollar, although he said floating exchange rates that have been in effect for several years are generally correct.
Miller also said the nation needs to increase business investment in plant and equipment. He said he had hoped the President's tax package might have done more to encourage business investment.
He also assured the committee that he would put his substantial holdings of Textron stock into a blind trust if he is confirmed as chairman of the Fed.