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FEDERAL RESERVE BOA.O FEDERAL RESERVE BANK OF RICHMOND March 2, 1955, r" Dear Governor Eccles: relating to the policies and operations of the Federal Reserve Sys- j ) tern in three critical periods. I certainly do not expect you to read these documents at the present time, but I should like for you to have them in your files in case you ever have occasion to review what was done at these critical times. Although you have access to all the sources from which the information was compiled, nevertheless it would give considerable trouble to assemble it, for I know that it gave me considerable trouble at the time. The two pamphlets, one written in 1920 and the other in 1922, were in defense of the credit policies of the Federal reserve banks. The paper written in 1928 was prepared for our directors and in a way was an indictment of the Federal Reserve System for its policies in 1925-28. The compilation relating to the adjustments at the time of the stock market crash in 1929 is merely a statistical record, and I believe shows very plainly what was done by the Federal Reserve System to prevent complete collapse. In 1920, Mr. Richard H. Edmonds, Editor of the MANUFACTURERS RECORD, published in Baltimore, made many vitriolic attacks against the Federal Reserve System for what was then called its policy of deflation and restriction of credit. The pamphlet was prepared to refute the notion, and I believe it did so. This pamphlet was published in the ^L/HiUFACTURERS RECORD, where all the attacks on the System had been made, but the other matter enclosed was never circulated except within the System. To this day the deflationary policies Of the Federal Reserve System (1920-21) are still referred to as a crime, and the point made by me was that the Federal reserve banks were expanding credit during a period in which they were accused of contracting it, as to which the facts speak for themselves. The inflation which occurred after the war, of course, led to the subsequent necessitous credit deflation throughout the country; the inflation from 1925 to 1929 ied to the subsequent inflation. What goes up is bound to come down. I am sending you these not with any particular idea in view but simply, as I have stated, that you may have them in your files whenever you have any occasion to rttfitf* the activities of the Federal Resenr© System. It is from the operations of the past that we ought to be able to form our most eoHtprthmislve view of wtimt the Astern should be in the future, in which you art destined to play Stien a prominent part. And I am not doing this ittti am &&** **** **»& * Bm& i s ^titled to receive any particular eom&cleratelon at this time, feut that it may, -2- perchance, be interesting and of some value to you as a history or record of past events. I have been in the Federal Reserve Bank since the organization of Jbhe System, as you probably know, and even now the stupendous labors involved in the formative stages are vividly in ray raind. Sincerely yours, GJS-CCP 4 Enclosures The Honorable Marriner S, Eceles, Governor, Federal Reserve Board, Washington, D. C.
@FedFRASER