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March 2k, 191+7*

Dear C h e s t e r :
Enclosed i s a c o n f i d e n t i a l r e p o r t , tsrhich speaks
f o r i t s e l f a l l too e l o q u e n t l y . I thought you would be
interested in seeing i t and possibly in getting together
a similar one covering Jake's activities in your district.
I an particularly interested as to whether he took about
the same line and in anything supplemental that you may
I have quit© a lot more to t e l l you on this subject when I see you. I think i t i s pretty well under control at the moment.
With best regards,
Sincerely yours,

Mr. Chester C. Davis, President,
Federal Reserve Bank of St. Louis,
St. Louis, Missouri.





MarCh 2 6 ,




Dear Marrinert
I have read the memorandum covering Mr.
Vardaman's visit to the Atlanta bank in January with
greatest interest. The only formal meeting Mr. Yardaman
has had an opportunity to attend in St. Louis was the
joint meeting of our branch directors with the head
office directors last spring. On that occasion he said
nothing that tended to reflect discredit on the Board
of Governors or the Federal Reserve System*
I will give you a memorandum setting forth
his activities in relation to this district which, as
you know, constitute the first instance of direct interference by a member of the Board of Governors with the
internal affairs of a Federal Reserve Bank of which I
have had knowledge during my 11-year association with
the System. This memorandum will repeat the information
given the Board on December 6 by Chairman Dearmont and
In addition I will check in Memphis,
Mississippi and Arkansas to see whether there is any
record of Mr. Vardaman^ remarks at the State Bankers1
Association meetings last spring.
With personal regardst I am
Sincerely yours,

Chester C« Davis,

Honorable Marrines S. Eccles, Chairman,
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.



March 28, 1947

Honorable Marriner S. Eocles, Chairman,
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.
Dear Marriner:
In going over my notes of the meeting which Chairman
Dearmont and I held with the Board of Governors on December 6,
1946, I find reference to your request that I write you a
report of the experiences Vice Presidents Peterson and Stead
had with Governor Vardaman on separate occasions, and of my
conversation with Governor Vardaman concerning them. I am
sorry that I have waited so long before complying with your
James E. Vardaman, Jr. , Member of the Board of
Governors of the Federal Reserve System, came to my office
in the Federal Reserve Bank of St. Louis on November 29,
1946. He told me he was stopping in St. Louis on his way
back from a trip through the West on which he had visited
the Federal Reserve Banks of Minneapolis, San Francisco and
Kansas City and some of their branches.
He told me he felt he had been given a fine reception everywhere he went. I assumed that he had talked
elsewhere along the same line he talked to me, which was
critical of the Board, and particularly of Chairman Eccles.
One statement impressed me a3 so unjustifiable that I made
a note of it # He said that, some time before he left
Washington for this Western trip, Chairman Eccles called him
in and told him to "pull in his horns"; that if he did not,
he (Mr. Eccles) wouldftsee that Drew Pearson turned loose on
him a campaign of vilification". He then modified this
statement by adding that Marriner had not used exactly those
words, which nevertheless conveyed the meaning of what had
been said. Mr. Vardaman said that, later on, Elliott Thurston
had told him (Vardaman) that unless he took a different course
in the Board, he (Thurston) would 3ee to it that a press
campaign against Vardaman was carried on by Ernest Lindley,
Drew Pearson and Reuben Lewis (Finance Magazine).

- 2 -

Governor Vardaman told me in this interview that
he had been telling the Federal Reserve Bank officers and
directors that he was opposed to the domination of the Reserve
Banks by the Board of Governors through bureaucratic action
from Washington, and personally advocated leaving the operation
of the Reserve Banks to their officers and directors. I told
him that from what I had been told, it seemed to me that he
was the one Board member who was directly interfering in the
case of St. Louis. He asked what I meant and I told him of
the reports Vice President Peterson and Vice President Stead
had brought back to me following their meetings, on different
occasions, with Governor Vardaman in Washington. Governor
Vardaman heard what I had to say, and then said that anyone
who made such a report was n a damn liar". I replied that it
wasn't necessary for us to get into an argument over the
question, 3ince we were to have an opportunity to bring it
into the open when Chairman Dearmont and I appeared before
the Board December 6, on its summons. He told me he knew
nothing of such a meeting} that if one were called it was
not at his request, but rather, he said, "it is the Chairman^
The reports made to me by Vice Presidents Peterson
and Stead were given to the Board of Governors, in Mr. Vardaman1 s
presence, at the meeting on December 6.
Vice President Peterson had called on Governor
Vardaman while in Washington at the Examiners* Conference
September 12-13. Before going, he had asked me what I thought
correct procedure would be, and I had advised that, by all
means he should call on Governor Vardaman and pay his respects.
On his return to St. Louis Mr. Peterson came to see me at once,
considerably disturbed over what had happened when he did make
his call. He quoted Governor Vardaman as saying that if he
had been a member of the Board of Governors when Mr. Hittfs
election au first vice president came up, he would have voted
against confirmation and would have blooked approval. He added
that he had not given up, but would keep fighting until he got
"the son-of-a-bitch out of the Bank"; that if Hitt made a
single false move he would "get him". Finally, he had asked
Mr. Peterson to watch and report to him anything on whioh
action could be based*
Vice President Stead's report was along the same line.
We had arranged for him to spend some time in Washington with
the Board's research staff, and in the Federal Reserve Banks
of New York, Philadelphia and Riohmond, to familiarize himself

- 3 -

with their research work. I had suggested that he call on
the members of the Board of Governors, most of whom he had
met, and that I thought it particularly important that he
call on Governor Vardaman, whom he had not met.
On his return Mr, Stead told me that Governor Vardaman
had opened up on him without preliminaries, saying that he had
"told Davis he intended to stay out of St. Louis bank matters,
but that certain things there needed to be cleaned up". He
said he was going to have Vice President Attebery removed
inside of six months, and Mr* Hitt as soon as he could; that
Guy Hitt was shoved in there, and isn't doing the job - he
will have to go M j that "the other one (Attebery) represents
long-standing incompetence that has to be dealt with by getting
him out". He said that "if Davis won't act, someone else will".
These reports were considered when Chairman Dearmont
and I met with the Board on December 6, and the Board has the
record of that meeting.

yours very truly,

Chester C. Davis

April 1, 19U7-

Dear Cheaters
This is to acknowledge and to thank
you for sending no the informtian with regard
to Jake** visit in your district.
Sincerely yours*

Mr* Chester C. Davis, President,
Federal Bsserve Bank at St» Louis,
St* Louis, Missouri.