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W E R N E R E. M O H L ¡-^ainting and ^Òecorating 45 Rockledge Ave. .White Plains, N. Y. Glad. 1156 evenings March 9,1945# Mr* M« ISccles, f e d e r a l Reserve Bank:, New York,N.Y. Dear S i r : i s a small,very small business and working man one oannot help to express ones disgust at reading your opinions and i d e a s a s reported by the p r e s s regarding a so c a l l e d tax on r e a l e s t a t e and stock p r o f i t s . My dear S i r i t may be a l l big and t e r r i f i c f o r men s i t t i n g at the desks, by Government pay( who i s the government ? perhaps the people i n back of i t ? ) to worry that p r i c e s are g e t t i n g out of hand, but in p r a c t i c e I hardly b e l i e v e such worries are j u s t i f i e d * At l e a s t they are not f o r a small business man who perhaps i s s t r u g g l i n g along t o meet h i s taxes on r e a l e s t a t e property such as they are l e v i e d at r a t e s from t h i r t y to f o r t y Dollass per thousand. And I am not speaking f o r anyone who perhaps purchased property as f a r hack as 1929. And what about the high c o s t s of r e p a i r , i n c r e a s e d f u e l costs etc* And s t o c k s - ' ^ snmL almost seems laughable.Why take U . S . S t e e l which in 1937 a more or l e s s p e a c e f u l year sold at around 125 Dollars per share against about 62 or so at present* What about those suckers that are s t i l l stuck with investments such as C i t i e s Service a t | 67* of 1929 v i n t a g e . But l e t u s not dwell on the year of 1929. Lets u s take more recent d a t e s , t h e y are e a s i e r to remember. What about Anaconda which was p r i c e « about $ 37. in 1939 and has now reached the£ f a n t a s t i c heigth of # 33« We could r e a l l y p i c k out stocks of almost any type and r e a l l y worry over i t . Let us take Douglas a i r c r a f t which used to s e l l at $ 90.00 per share before the war and has now reached the phenomenal p r i c e of $ 67.00 per s h a r e ; Oulrtiss Wright which sold a t $ 14*00 i n 1939 and has now gone to $ 6*00 per share*Perhaps you could think up some tax law whereby the poor i n v e s t o r might get something back from somebody* If you worry about something maybe you may have to worry soon t h a t stocks are going to h e l l ? Or how about i n f l a t i o n in the food line.We used to buy boiled ham out t h i 3 way f o r ninteen cents a pound; today you could not get any f o r eighty cents* How i s t h a t ; perhaps you can devise a law whereby p i g p r o f i t could be taxed. Why not wreck o p p o r t u n i t i e s in t h i s country a l t o g e t h e r and take care of a l l tha r i s k s any one i n c u r r s by i n v e s t i n g in a n y t h i n g , u n l i m i t e d . ,a r « iVv v LI s & 4i ^ V I over PleaaelA/ 1 , / I, 7 tW^ f> ° Very t r Si/ Being on the subject of pigs and hogs perhaps another 96 $ p r o f i t tax could bo placed on p r o f i t s made in b r i s t l e s . I and a l l of us other p a i n t e r s have to pay $ 35.00 f o r a f i v e inch p a i n t i n g brush but inasmuch as we cannot get them at that p r i c e we pay $ 16.00 f o r one with 75 $ horsehair mixed in with domestic hog. Or you could place s t i l l another tax on p r o f i t s made in 3hellac f o r which we pay $ 3.50 per gallon instead of ninety cent3 f i v e or six years ago.Or how about a pasofit tax on l i n s e e d o i l . I am sure you d i d n ' t even know about these things or you might have said here too: 9 May be we w i l l l do i t . ' J"Bear" , _ 'ftngithe¿r ? EccS f S to • ^shes t n T sav ttuh a t h nk stent UpaH • . . Wh °Jv boni"^ M.S0O our M Cover THE NEW YORK SUN, J MARGIN RULE HOLDS^DANGER Cash Market Basis Would Hit War Loans. Lending officers of some of the larger banks today said they hoped the Federal Reserve Board would go slowly in further changing margin rules. They explained that tinkering with margins beyond a certain point would be a two-edged sword that might affect the Treasury's war financing. It was assumed that, If the Board raised margin requirements to 100 per cent, thereby placing the stock market on a cash basis, it would make similar requirements covering bank loans on securities. It was agreed generally that it was contrary to precedent for any proposed change to be retroactive, and it also was agreed that many exceptions would have to be made for any higher margin rule — for example loans on Government securities would have to be exempt as would loans made to underwriters to carry new issues of securities pending their distribution. If the securities market is placed upon a cash basis, there would be at once an effort by the public to obtain the cash to replace the credit it had been accustomed to using. Next to cash, holdings of Treasury War Savings Bonds are the largest asset on the average family's bal ance sheet. It requires no stretch of the imagination, bankers said, to visualize a vast increase in cash redemptions of savings bonds to obtain money for other Investment. Probably many investors would convert savings bonds into coupon bonds of other issues of a marketable character so as to have security that would be exempt from collateral restrictions. As of February 28 New York city weekly reporting member banks were lending only $730,000,000 on securities other than Treasury bonds, both to brokers and to others. They were lending $1,163,000,000 on Governmentforissues. Digitized FRASER 25 llarch 1U, 19U5Mr. Werner E. Mohl, U5 Bockledge Avenue, White Plains, New York. Dear Mr. Mohl: Prom your letter of March 9 I am obliged to conclude that what you have read in the press regarding my proposal was highly misleading and I am, therefore, venturing to enclose a copy of a statement which will give you the reasons why I think it necessary at this time to take effective action that will protect the now unprotected sectors of the economy that are represented in such capital values as farms, homes and stocks. As you know, price controls and ceilings cover all civilian goods. There are no such controls on capital assets. Possibly you are correct in believing that it is not justifiable to worry over the danger of prices getting out of hand, but all those who have some share of responsibility in this connection and who are, I think, familiar with the facts would disagree with you. In any case, it is better to protect the economy against the dangers, even if they do not materialise, than to be complacent about it and let the situation get out of hand. The level of stock market prices is hig|h or low relative to other things, of course. However, I am not undertaking to pass judgment on whether that level is too high or too low. The fact is that the Standard and Poorfs index compiled on the broad base of I4O2 stocks — 35U of them being industrials, 20 rails, and 28 public utilities — rose 88.8 per cent between the low point of 60.8 on April 29, 19U2 and February 28, 19U5I can't imagine anything that would do more to destroy small business enterprise, such as yours, than to let an inflation get out of hand, followed as it would certainly be by a ruinous deflation. I am confident that you do not want that. Sincerely yours. M. S. Ecoles, Chairman. closure
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