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December 9, 1947.
Dear John:
Because of the meeting of the Federal Open Market
Committee, I am unable to attend the meeting this morning
to discuss measures to combat the inflationary effects of
mortgage credit• I have three suggestions which I think
should be considered:
1. There should be no further authorization
of mortgage insurance under Title VI of the National
Housing Act except for multiple-unit rental projects.
For such rental projects the maximum insured mortgage
should be 90 per cent of long-term stablized value.
2. Government insurance of mortgages for the
purchase of old houses, except by veterns, should
be suspended. Appraisals for insured or guaranteed
loans on both old and new houses should be made by
FHA, using the standards established for insurance
under Title II of the National Housing.Act.
Mortgages should not be eligible for insurance or
guarantee if the total borrowing of the mortgagor
exceeds #9,000.
As far as possible, these changes should be made
by administrative regulation^ but to the extent necessary, Congress should be asked to authorize changes in
present programs to apply for a temporary period.
3. The so-called "warehousing plan" for GI loans
made by members of the Federal Home Loan Bank System
should not be adopted, and no other Government-financed
secondary markets for mortgages should be allowed to
Adoption of these three points would, I think, go far
toward restraining further inflation in the market,
thereby helping to reduce inflationary pressures generally.
Sincerely yours,

(M. S. Eccles A / )
The Honorable John ¥. Snyder,
Secretary of the Treasury,
Washington, D. C.