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Form No.

131

Office Correspondence
Governor Eccles
From

FEDERAL RESERVE
BOARD

Date

March 4£,

Subject:

Mr. Currie

Attached is a draft of a letter to the President of the
Yo-ang Men1 s Board of Trade of New York. I have had so much
work on hand of a more important nature that I had my assistant
prepare some co'mnents on their report. I think they are all
right. The report, by the way, is so atrociously bad that it
is difficult to treat it reasonably and rationally.

LC.em




March 16, 1335,

Urm Harrison D. Blair,
President, loimg Men1;.? Board of Trade,
41 Park Row*
Tork, Hew Xork.
My jkmat Mr, Blairt
;
I h&ve read the rep
your Banking and l a t i i i t i
Cosaaittee on the Banking Bill of 1955 with i n t e r e s t aad care,
I regret that the pressure of a&ny duties doea not allow me
tins to m&ka a detailed eoneat on the mt^ funda®ent&l
issues Til nit by ths report. I am, bu»Mi»H| eticlosin,
O M M S prep£Te^ Igr £ •cmtiiir of tbe Research Division, which
C M K
l
I have re^d snr- in whicn I

I MI BXBO eaclo&irir
I on the b i l l
before the Ohio Stets Bankersf i
rein I tli.1
I bfi.ve aniWiiii'^i sosm of the objections to the b i l l raiaed bj
your committee,
la my testimony be:-,
t IBWH
iittee I suggested, certain dft*£M
nj i
ary l i s t of fetich
v.ry sincerely,

liarriner S. Eccles
CSoveraor

LCem



and Ciirreacy
b i l l . I am

ferch 14, 19

oammss m i
MAI;-

.

The m
* Qi

^

p a l * t l o n £ turtwmn C
k

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et 3
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politic-';.
.ctivi*

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to ^oliiic-

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Hfftt%ti ao-:-.

Ittaic credit

10 discussion of

:

• tg a©oi«loqi oja

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i^- la

VO3MM

«X«S4 oC g«ttt*ft3 b- n-;: i t t i i t

I s nc-Cv

i n « > or oal
be i n a dlrctttifi I

to 1

i aot o«ati*l
|k l i a b i l i t i e s l a tin
I

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,,it but omtr
^ ';5.ala..aeeS>

K > : 1 »^",3* •-

s OHS, . wBhoald th« VO1MI« of •aeJi h

th«? voS^ia« nf luMinti
-u.

- ivcHiai in -

activit:/ ead

• | f f t j q t i j thu;-

-

lad

U» 1

itriotlv« IHM

.-: vtolimni

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ft*

oilo- att&n K^diti

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aejitr, .

-:old arxic?;

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la

-elical I

M M I t aat-y bl
h N

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yv-rity of thw ln&iA*aa QJ^IP 1I ec
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group

p,n ©xplicli
in




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M . •

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i

• • -,v^;nt to t
|

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ff«#% 11

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; aiR -

ia l l o o (

St
'

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fish to pursue tfela objective t h e / Mttftt try to I

bM volume
l

of spending in perlfttfi Q: j—lining

Th. l r only

-:0 07;pli, h: •

few

i • l i t h r u %m

-

ectivity*
.

Kttd l o w e r i n g t a t « r « t f t m t & f l & n u th..i-.- o d y

tfcw VOIUBK of M
M
re

•

dlr«Ctly or i>ia.ir-ctl/ f is by ^c^uirlng ftfttttfl of

a I

pv:-M.Dds of dsclialici^ totl&MM a c t i v i t y , the kin^:
VL.VLCII?

flffwpg for
in

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held b
M

i r f i !> :-

•

f

••- .'

ftMl

In

ISKM4

Mor.-

la « U inuication
A
In Hi • elrQti
<

i , if

t o do ^ u y t h i n ^ %% &11 t o sto-5 t h ; paragjNMM of

«A| I t auao Incre&sa: l t « hoi ••
aac

.<x-t.

t o ; he Injiniotn WHMgr •*rk*fc| MI UMNPMI

of tighter, r«ther than e&si^r, aon-iy*
tral bj.

;

.hort-tcra

central btnfci arc l i k e l y to

p»owlt i r

.."-... •,

#1 Hi11 nn iMIll

securities

. ^pply Q;" i^uch short^Nit«d s « « a r i t l * s Htf IM t o o MMkll t o

ene.blc i t t o ftoocmptlish i t s $wrgn

. tlthout a ^ v i r i a g

i

volume ol lo-ny--- T-tftrm obli,n,tioiie«
Ifor^oTi-r, tlM holding o.i {-..uch o b i

.

o be-

l i e v e , flo*£ a c t •prer-ent t h a con t r a c t i o n of c e n t r a l l>3.ji-c. c r e d i t
:-9Cl* Ml

ROt W£'k^ t o U\'i t l

wuch s e c u r i t i e s Mfgr be io3
teak

fk«t whciiev

i

a d a i n i s t r f t t i o a con>-lder; : i t a d v i s a b l e t o do BO. I t Might e

"be ©ai I kt Biull s e c u r i t i e s a r e m

Mtily diapoeod oi' t a a n b i l l s

discounted, »laa« the l*tt«r Met suture before they c^a leave the
•portfolio of the central bank, while a to»>mHiat MW0M
-^t




•

.a. The ¥?rit I

c: -o:-

|

•

t'iat

a central bank, -whether hl choice or necessity, k^eps outstanding &
ff
voltusw of mimmij e^ual X,J i t s NUT&I •

tfca currtaey

net or OttHftot contr&et u n t i l tilt MSttlAJ
Under mot-..

tloa*, nothin:
•

otis error;', of tafcerprtt&tloxt*

Hows,

|

It

r#qulTMMKAti ol

fcliOal

itiiid a

ffeti siajor peurt o.?'' ile

ftt

obi

f^Un prop

3

n

|
ml

. • mu»yat secur
.

1 1 IMfct
4
I

•• I

jrobably prevent &ny ttttQtiv*

•

M
i

-

-G t h s aecli'-

-he

>s# The 0
. ,-d or iuc-

Its hol

bills; €iseot?.itvd. Ml




Mm of

The f t t i i n i l a boX4lA{ I oi B i l l s Bought tad B i l l s Diec

by the; F t d e r ^ l E i^TV
^ry1 .

i

>ital r:-d%r fsc[:..r*.:l

» I t i f carajtent -:•& oa l a d e t a i l
|«

.•••r-

l i y tWW
•.

fluni MMWli ; ccurii ;.n.i.te ratio t<

raTumie.

•

wr% f l O X
OK
.

. i d n 90 days»

tills

T
V

MJ t •

.lowing s u : m r

ities*

:-

• »#

A revlfesf of r.:;c^nt dvv-lopffi:

1*1

truth.

-ublic prefers la IKSM

kttar than the OMk i t hue in t t i

nnd ftMTor f o r smy 01

^raet#

--thar fro

Money i« cireulKtion d#o2J
bt-i

'

ure on ;..h?- m^
-

rit*t«

i

I

of

:..

-en for a long period so -small |

bfe*t yi«Xd

j

the varnishing p o i n t ,

Urr* •tmsni by th
ably hp

dir.tarb-'

ened ItM f»tttr

S*
or •
•

•

Extond

t»»«t woul
.

i

. •• L^t-tice c : tKe t€C«pt&nc«
•

flit-? R«»«j

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i

Eftluaiv

lacy

• ; • -. Unit<^"

4,

T,

>«XXle

stock of lu

wvm bf

b-i ®j%ce t h f t i I

b«tVo«a

I

• i

i a an ftxtoaislvt network of r^X&tiofiehipfl

N

•
i--

These rel

"••ibli.c tike oapit&l

alt« uiillk-, U

.:

I fciipi MWti

jomatriilal

|

the. collv:ctio I

*cyf •

I 9*1*100 of bu . . .

i

;a-

la

faeillt:-

of c^rtal'i technical function.;• anofe I
r^viftioD of coin i

b&o

•

•,.•!..•

.^a^nce
.

tlon n
n

&»*
. rvli-io>-f

I ii Till l U O j
H

I t v?o^ild probably be dirficiilt to oowdfict tto

R«
a»

©ITiciaritly through Iwitlttttionfi tB tlM •MKf^^Mtt oi: ^falch Mtfctt1
ikfl hna no di^^ct -voice or- I)
In i




,:

tot o'' 1955

t«

If W Hwtgfi p^ooo^od
u

•- M4«f the '-jie/fition of stock

iot be of priiatr/ iaport^nee in the ^electioii of the

.

9

• ttaHj

.

mi #jr:

alaiori;

!

Act 9f 1981 l i i*, v -r r.
f-bli' H

- I t ••;.:; !

;

••irtl^r iMimgnf th© liquidity
• 1 1

p
I

i •

t h . politic- .
» Gv
^

• l

i

..

•

.

^

llQfttlOl

•

*••'(£ A - •




1

.

I t i s Ittrd

i
. frlti *

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In

ic0

wntify

Xt i

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f 1

I

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C if
%

dm: a * o f

.

t

M A If e l i , n i ' ; I :
Mt

* aom-y«* The
- • : t.

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" t o

M
l

f ftiws •:;.'

>-o;

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9VJU1M

. v e t t

wtiM if t .

y.

i kit 1

i p t i a t « i t th»t dM ft .'

i;

U

•

i

t o eh&&;;e l i

; nd~

:•

KO l o i :

1

.

ll-iildily l i
uma tU» •

-t-

into gold.
in t1

But t j p Bulking Act U

Mttt

ituition

ip»ot+
O ".
n •

:

Mttpfeten trwt UM pfeii

•;iificaat m i l l g i

I I lutllflilt to convey

i t If mo.: I probable thftt i t M int
M

94 fur **tlu« o-:' si-^v:./ in %fmB of.
not n^C8^c;ar>? to dlMOM UM fiVtV

\

ptl

§•*

t .• nn.ei.mt t&XU
li

tei«lMl

bisliiftci i t .

\

. \

ie

in p

t v iat the vrlt«rii of

t& • - iaciic- ••''.•'•

It

itloa or wh-th^r the Banking

Act of 1325 |ifife>fil the danger of an inf 1" vion-.:
ei-ice H w i i;
M r

to
>

U

oi: sent'/ (tlM f «

• f HM iKtVn aad ouantitr cf tfe r»*f»»l
The vsil :& i f acmey i r d=^i. rmi .

I

-

r&l

. ;:.h©

• f i t s quaiititv

•iAl of i t in r e l a t i o n to the YOIUBB© ianu j>til i oC the IfWMN*
.
eictionis 1 B which raoncg/ i s us&cU
soney IroflHiiiTOi i t f v . '

T * coll; t
hv

4

I -r"

termirting the aaxiiangi Maomt of money

which crai bi outstanding aaa in no otkez1 way,
soil&tsr*;! sad l i j i i ' t t i
amsn.
6#

Ni^UMl

ft

i itntlwr

• ! • ! of golc, <MNn«rel«l gap r^

t«# or pebl^»««

A stiic/ ^ho'ulc. IM Kioe of tlM a d v i s a b i l i t y oi ere&tiag ft

i of aos-;.
7*

tli

ram propo

an o:.: uri^mploysi
a l l circin




-.

:

• i M EUliittftt *'i'
l

lief, I

AC> t » few»»»»i th« HqtiidH

.
•
i

cmnr«*e

Ml

l a t a l l eot-.t*
to e

I t Wf

;.."

| ft»«ilty for msintfcin.ixi

lev•• •

^ '. '

fy: c

. -,:tion of the qn

l

"•
•

.

i k i fllCtlon tO Pe»tOr«
t.;
work*

W
-

tfeftt ftta g t M W
WlffiUplfT]

felstence

.

I
Ml

•tie
'

b

further

nfiHftt »1*>*3

- :;:- :

people to pttTVMMlt j^b«|

v ~A i rrttra or U M eentiitiaaf which thr«w tb.
they iblj tit •

• 11

Gortstii^to an imported
they IK a r^aoft
I to *

I ftwq^iif rjr *rt 6f snoh s

11 L point In
«
/

I .itikingt

1%
0
m.

?;h^n
I to

,vt taportA&6« of m?Aintalaing I normal levol of

&aploym':.:at aad pref<Mrf4af the oorr«AC7 ag<
i t s l i q u i d i t y | wfc&t*:Y-.r th/ t Mty raean.




of

; >ot^titlal

duutfo to