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ALDEN

A. P O T T E R

R. F. D. 3, BETHBSDA, MARYLAND

Governor Marriner S. Eccles,
Federal Reserve Board,
Washington, D.C.
My Dear Governor, You have contributed, despite what seem to me serious mistakes at times, more to public understanding of our
financial system than any previous Governor of the Board.
I write this to express my most earnest approval of
the procedure in bringing about a publicized discussion of
present exigent problems in finance between yourself and
Congressman Patman.

I hope you will press the matter, with

full publicity, to a fairly and reasonably developed conclusion as rapidly as possible.

Nothing is more sorely needed

for national unity and economic efficiency in time of need.
Specifically I trust you will preserve the spirit
of open-minded fairness with which you entered the discussion
rather than the spirit of prejudice elicited in the enclosed
editorial in the Washington Post, and v/ill urge the press,
specifically the Post, to present the whole discussion as it
develops, to the public and not just your side of the argument
euphemized by interpolations.

Specifically I feel that it is

significant that Mr. Patman did not propose to dispense with any
taxatio n.

While X agree that the matter of ownership of the

Reserve System and payment of interest is relatively unimportant,
still I do not think interest should be paid b£ government and I
venture that Mr. Patman would propose specifically that a large
part of the present borrowing program be displaced by taxation,
specifically that part which, if borrowed, should not be borrowed



2

Bccles

from the banks nor be permitted to serve

as a part of banking

portfolios either directly or indirectly, but which should be
drawn continually from private cash balances to restrain private
spending*
I venture that such a set-up would eliminate inflation
whereas retention of fractional reserves will render its control infeasible*

Stolper has shown convincingly that the

German inflation was caused, not by government deficits and
printing of currency, but by private extensions of bank credit#

Hopefully yours,
O i i w a^^fcA l a e n A# Potter.
P.S.
despite

—

Nor is Germany out of the inflation woods today,
or rather because of

-- the orthodox procedure

which you allege has been her unregarded objective




April 7, 1941.

Mr* ^lden A. Potter,
R. F. D. 3,
Bethesda, Maryland*
Dear Mr* Potter:
Chairman Eccles is temporarily absent on a visit to the West and I wish to
acknowledge receipt of your letter to him of
April U in connection with his recent letter
to Mr* Patman.
as you may not have had the full
text of this letter, I am enclosing a copy.
Sincerely yours,
(Signed) Elliott Thurston
Elliott Thurston,
Special Assistant
to the Chairman*
enclosure

ET:b




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