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Draft - Press Release to
accompany Executive Order
on Speculative Controls

The President today issued an Executive Order authorizing the
Board of Governors of the Federal Reserve System to carry out a program
for regulating credit used in farm and urban real estate transactions,
under the general policy directives of the Economic Stabilization Director.
The action is intended to put the government in a position to
check speculative inflation in the farm and urban real estate markets,
lest the rise of prices in this previously uncontrolled field should defeat the successful stabilization of prices which has been achieved elsewhere in the economy*

The Executive Order was the result of a recommenda-

tion by the Economic Stabilization Director, based upon studies made by
various government agencies, and was made with the unanimous support of
the Economic Stabilization Board.
The program authorizes the Board of Governors of the Federal Reserve System to prescribe such regulations as it deems necessary governing
the use of credit extended in purchasing farm and urban real estate subject
to policy directives of the Economic Stabilization Director.

The Economic

Stabilization Director, William H. Davis, has informed the President that
he intends to direct the Board of Governors to exempt from control guaranteed
loans under the G. I# bill of rights, tenant purchase loans by the Farm
Security Administration, loans in connection with the first sale of priorityassisted new construction for which maximum prices are established, and
housing in the process of construction at the time the present Executive
Order is issued.

The exemption of priority-assisted new construction re-

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fleets the Economic Stabilization Director's desire to avoid any impediment
to new construction•
A statement from the Economic Stabilization Director declared*
"A steady and rapid development of housing construction in the
reconversion period so far as the supplies of material and labor will permit
is a basic element of economic stabilization.

The control of credit in the

real estate field should be so developed as to put a damper on speculative
resales and should not interfere with new construction undertaken with
priority assistance.w
The Executive Order was issued under the Trading with the Eneiny
Act of 1917* as amended by the First War Powers Act of 19Ul, which is the
statutory basis of the Board of Governors1 Regulation W controlling consumer credit*