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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,
OCMMMKS
l prep£Te^ Igr £ •cmtiiir of tbe Research Division, which
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 Ck
•
•
• CtWal
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a-%t'
...
i o! , ova
.
'or lot,-
et 3
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a n ftf t f M H W U l i
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•T e o e y .
rtleaXi
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•. ftC^Ti t i ;. • .
politic-';.
.ctivi*
be
if SMI
to ^oliiic-
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~
*« i;: tfOQMpi nit
-
1 • •
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•otic
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;• fem&d
Hfftt%ti ao-:-.
Ittaic credit
10 discussion of
:
• tg a©oi«loqi oja
•
•
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
:
•
te-,
.
.
• •
,,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
•
iH
ft*
oilo- att&n K^diti
i i
aejitr, .
-:old arxic?;
-
la
-elical I
MhMN I t aat-y bl
••*
yv-rity of thw ln&iA*aa QJ^IP 1I ec
%•
(
group
p,n ©xplicli
in
|
M . •
• I
i
• • -,v^;nt to t
|
.
ff«#% 11
•
•
•• •
; aiR -
ia l l o o (
St
'
. U;v •
fish to pursue tfela objective t h e / Mttftt try to I
blM volume
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 MM
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
•
held b
M
i r f i !> :-
•
f
••- .'
ftMl
In
ISKM4
Mor.-
la «AU inuication
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 hflf choice or necessity, k^eps outstanding &
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
.
141 IMfct
I
•• I
jrobably prevent &ny ttttQtiv*
•
Mi
-
-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 OOXK
.
. i d n 90 days»
tills
TV
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*
o r ••
•
Extond
t»»«t woul
.
i
. ••• L^t-tice c : tKe t€C«pt&nc«
flit-? R«»«j
'
•
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 nn
&»*
. rvli-io>-f
I ii Till l U OH j
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 Wu Hwtgfi p^ooo^od
•- 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- .
» G^v
• l
i
..
•
.
^
llQfttlOl
•
*••'(£ A - •
1
.
I t i s Ittrd
i
. frlti *
•
In
ic0
wntify
Xt i
•". -.
. •
i
• • 1/
f 1
I
.
C% i f
dm: a * o f
.
t
MMAt If e l i , n i ' ; I :
* aom-y«* The
- • : t.
•
• :
.
" t o
Ml
f ftiws •:;.'
>-o;
•-•
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+
On "-.•
:
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 MM int
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 HMwri i;
t>o
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 o.C the IfWMN*
eictionis 1 B which raoncg/ i s us&cU
soney IroflHiiiTOi i t f v . '
Th*v coll; t
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 Ml EUliittftt *'i'
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
•' t i e
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
10%
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
@FedFRASER