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R A N D O L P H

2 D DIST T W .

VA.

CIVIL. S E R V I C E
DISTRICT O F COLUMBIA

ASSISTANT MAJORITY WHIP




COMMITTEES:

(CHAIRMAN)
EXPENDITURES IN T H E

C o n g r e s s of tfjc Πm t e b S t a t e s ;
Hottie of 3Repreôentatibeô
«Hatfjington,

EXECUTIVE

DEPARTMENTS

LABOR
MINES AND
ROADS

C.

March 20, 1945

Mr. Carl E. Parry
Director, Division of Security Loans
Federal Eeserve System
Federal Eeserve Building
Washington, D. C.
Dear Mr. Parry:
I am deeply interested in reports, through
the press and radio, which state that the Federal
Reserve Board is giving consideration to the elimination
of a l l margin trading in stocks. I t i s indicated, also,
that the Board is impressed with the advisability of
imposing a capital gains tax ranging up to ninety per cent
on a l l profits derived from transactions in stocks.
A number of my constituents have written me
their concern over the far reaching implications of both
proposals. I t occurs to me that this is not a progressive
regulation, but one which could be used to retard sound
business. My chief concern, and I believe the concern
of every citizen of the country, i s the likelihood that
i f margin trading were prohibited the banks would be
prohibited from taaking loans on listed securities^ That
would work a decided hardship on many persons who never
speculated in stocks and who otherwise make no contribution towards inflation.
There are many occasions when most of us, in
order to meet unforeseen expenditures, find i t necessary
to negotiate bank loans. If our only collateral happened
to be listed securities, we would be unable to obtain
such loans and consequently would be compelled to dispose
of the securities regardless of the loss which might be
entailed.

MINING




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2

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In thinking through this matter, I am wondering
what e f f e c t the confiscatory capital gains tax on stock
transactions would have on the program to provide post-war
jobs. This program, I believe, will be the most gigantic
task before the country. These jobs can be provided only
through the investment of risk capital in equities. I
cannot conceive that such capital is going to be invested
i f gains accruing from the investment are confiscated.
I shall appreciate i t i f you will l e t me have
a forthright statement of what is contemplated.
Sincerely yours

P