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April 15, 19U7-

Dear Matt:
Enclosed for your information is a
copy of the letter I have sent to Mr. Patrick
J. McDonough in response to your note of April
11 enclosing his letter to you.
As you request, I am returning his
letter for your files.
Sincerely yours,

Mr. Matthew J. Connelly,
Secretary to the President,
The White House,

Enclosures 2



April 15, 19U7.
Councilor Patrick J. McDonough,
State House,
Boston, Massachusetts.
Dear Mr. McDonough:
In a note of April 11 Mr. Connelly, Secretary to the
President, referred to me your letter to him inquiring about Regulation W.
The Reserve Board has taken the position that if regulation of this type is to be continued, it should rest on permanent
legislation and not on a wartime executive order as at present.
Accordingly, the Board has advised Chairman Wolcott of the House
Banking and Currency Committee that, while we favor continuance of
regulation and believe Congress should enact the enabling legislation, if this session of Congress adjourns without favorable action
we shall recommend that the executive order be vacated. That, of
course, would terminate the regulation automatically.
the issue as to whether the regulation of instalment credit
should continue is a highly controversial one, as you know. The
banks generally, the small loan companies and other powerful groups
oppose it. Opinion among dealers in the durable goods covered by
the regulation at present appears to bo sharply divided, although the
majority no doubt oppose it. On the other hand, we have not had protests against the regulation from consumer groups, and an impressive
array of informed, impartial economic opinion agrees with the view
that restraints upon excessive expansion of consumer credit would be
in the interest of the country from a long-range standpoint.
It is not feasible in a letter to deal adequately with the
broad problem, but it may perhaps be summed up by pointing out two
aspects of it. One is that overextension of this sort of credit has
always ended in serious economic trouble, resulting in curtailed production and unemployment. Another is that, without any restraint, it
is likely that sellers of durable goods will seek to expand their
sales by easing terms instead of by reducing prices.
The absence of all regulation will tend to maintain high
prices and get more and more of the public into debt at high prices.

Councilor Patrick J. McDonough

- 2 -

April 15, 19U7

We do not believe that this would be in the public interest or in the
long-run interest of individual lenders and dealers affected by the

Sincerely yours.

m S. Eoclos,
Chai m a n .


April 11, 1947

Dear Marriner:
The enclosed correspondence I
have had with Councilor Patrick J. McDonough
of Boston is self-explanatory.
I would appreciate your returning
Mr. McDonoughfs letter to me together with
copy of your reply.
Sincerely yours,

Secretary to the President
Honorable Marriner Eccles
Federal Reserve Board
Washington, D. C.


April 11, 1947

Dear Sonny:
I regret this delay in replying to your
recent letter about the status of Regulation W of
the Federal Reserve Board.
It is my understanding that the Board has
been giving considerable study to this regulation,
and I am asking Chairman Eccles to advise you of its
current status•

Secretary to the President

Councilor Patrick J. McDonough
State House
Boston, Massachusetts

Dear MattjI came down looking for information relative to Regulation
of the Federal Reserve Board. The group with whom I have contact
are interested in the removal of the Regulation,
Could you give me any information as to the chances of the
President abolishing this regulation by executive order, I understand that Congress may act to remove it later.
I would appreciate a note from you on this matter as soon as
Please send to Governor's Councilor, Patrick J. McDonough,
State House, Boston, Mass.

Many thanks.
(Signed) Sonny.