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c 0 P Y THE WHITE HOUSE WASHINGTON September 14, 1936 MEMORANDUM i-DR GOVERNOR ECGLES FOR COMMIT F . D. R. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASH INGTON OFFICE OF THE CHAIRMAN September 22, 1936 Mr. M. S. Eccles Eccles Investment Company Ogden, Utah Dear Marriner: The attached letter together with the memorandum from the White House was referred to Ronald who handed it to me a day or two later for my suggestion. It then went to Dr. Goldenweiser for the comments which are attached, the file coming back to me today. I called the White House to see whether the matter was urgent but Mac was in Hyde Park and Early had left for the day, but his assistant, Mr. Hazard, thought that in view of the President's absence for another week, there was no reason why the file should not be sent on to you. Will you advise whether the proposed comments are satisfactory. My feeling is that they are adequate except the last sentence which should be developed so as to show wherein the quotation from Keynes is misleading. General Wood of Chicago was here last week and Ronald included me in the luncheon group. We had a stimulating discussion. Incidentally the General asked Ronald for the low-down on what he ?;as supposed to do in his ne?; job, stating that he had taken it because he"liked Eccles so darn much", that he would have taken any job you offered him and would have asked questions later. I think there are several points in connection with the Chicago situation that the General should hear directly from you and for that reason I believe it would be a fine thing if you could spend an hour or two with him when you come through Chicago. This would not necessarily require your visiting the bank. So far as I can see there is no reason for you to hurry back here. Hope you had a pleasant time in California and that you tried out some of the golf courses. Sincerely, September 28, 1936 Mi-. Lawrence Clayton Federal Baser** Board -. .ing ton, D, arryi I u returning herewith the file in regara to letter fn B O M of Chicago. I hare gone over tiJU correspondence toleat prepay Dr. Goldero/eisr-.i'. Leawelser1 replj is satisfactory fcciequaoeiy meets the situation unless aoe v.ants to go into aii exhaustive dissertation on. i. whole money question* I suggest that Br« Goldent^eisk •.. in a BeaaraiKliiiB of •. it g L nature a I retui'n naxt iooday. She correspondence shou-uc also be retumea irith bbe reply. R O U I Q . at you. a*so haTS the reply« I think it also *exl to consider la iraftin your suggestion that the last sentence of 0r« QoldeapSJ oe developed so as to ah bhe quotati is •lsleadiag* fill iooK: forvrtia to tst1 ng you on Monaay. However, I expect to get in Sunaay morning on the 8 o'clock train and If it * M ther wouia like to have & goii* ^aiae. I vould not uz able to make it as early as our usual 3und&y Aoml&g fourscaw but shouia be able to leave the Shorehaa around 9 o'clock. Vill give you a ring as soon &;> 1 get in. H&ct L fine time in California &.na v.i. it when I get back. Sincerely yours, ElVH £nc. you e-bout October 5, 1936. The Honorable The President of the United States The Ihite House Washington, D« C. Dear Mr. President: I return herewith the correspondence between Mr. Walter 1. Ross and Secretary Ickes, «hich was referred to me for Mr. Boss1 statement reflects the common error of ascribing an exaggerated importance to a single factor in our complex economic system. He is right in his claim that the present Administration has accomplished a great deal by helping to restore the supply of money* Fie is in error, however, in stating that this supply is still $5,500,000,000 below the desirable level. Total bank deposits plus currency in the hands of the public are approximately as high as they were before the depression, and checking deposits are considerably higher. The supply of money is clearly sufficient to finance a much larger volume of business than prevails at present. Further recovery, therefore, hinges not on an increase in the supuiy of saoney bat on a fuller utilization of the existing supply, which depends on many complex factors, including a better distribution between consumers and investors of Incoae currently produced. Incidentally, Mr. Ross1 quotation froa J. M. Keynes is out of its context and aisrepresents his position. The statement from Mr. Ke/nes represents his summary of the quantity theory of money, which occurs on p&ge 296 of his most recent book (The General Theory of Employment, Interest and Money). After stating this theory Mr. Keynes on subsequent pages proceeds to criticis&e it, so that it is clearly incorrect to quote this statement as representing Mr. leynes1 own position. Very respectfully, Chairman
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