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UNIVERSITY OF W ASHINGTON COLLEGE OF ECONOMICS AND BUSINESS SEA TTLE July 22, 191+1 Honorable Marriner Eccles Chairman, Board of Governors Federal Reserve System Washington, D. C. Dear Mr. Eccles: A few days ago I suggested to Professor Blakey of the Univer sity of Minnesota, -who is chairaan of the program committee of the National Tax Association, that he invite you to address that outfit at its annual convention in St. Paul on the subject of defense financing. I truly hope that you can see your way clear to do this. The Associa tion will hold its convention October 13 to 16. I am not sure as to the exact time Blakey will ask you to speak but I am quite sure that if one day is not convenient he would be happy to rearrange the pro gram to suit your needs. In order that you may be in a position to appraise this invitation let me say a few words about the National Tax Association. It is a professional group composed of state and local tax officials, tax attorneys, college professors, and students of taxation. It has been running for over thirty years and has one of the most successful conventions in the country. Meetings range from six hundred to a thousand people. It provides the best forum for the discussion of tax problems anywhere in the country and enables one to reach the key financial officers of most of the states. I think this latter point is particularly important because too little consideration has been given in the past by Federal offi cers to the effects of state and local finances. At no time during the period from 1933 to date has a conference of state and local officers with Federal officials been held. The result is quite clear. State and local officers during the depression balanced their budgets, and if you will look at the figures for public construction you will see that all the Federal spending during the period from 1933*38 did little more than offset the shrinkage in the state, local sphere. It is true, of course, that many of the states could not with safety unbalance their budgets, but certainly the extent of the liquidation which took place here could have been minimized. Similarly, in the defense period competition between the states and the Federal government can be re duced, and I am sure that many of the states will be glad to do what they oan to implement or at least keep out of the way of the Federal program. What you have been saying about defense finances is just what these tax officials and others ought to hear. I know it is asking a Marriner Ecoles -2 - July 22, I9I4I lo t o f you to go out to St. Paul to say i t , but t h is w i l l provide a new case and a new focus f o r the d iscu ssio n , and the problem w i l l be quite as important in October as i t is now in view o f the way the Ways and Means Committee seems to be shaping the present tax b i l l * I can think o f a l o t more arguments on the p o in t, but i f I w rite too much I know you w i l l not have time to read th is l e t t e r and i t is alread y too long. I can only add th at I would not have made th is suggestion o r t r ie d to get you into th is had I not thought that from your own point o f view , th at o f the Federal Reserve System, and the country as a whole i t was important. With h ighest esteem and personal regard, I am Yours sin c e re ly « Süneon E. Leland SEL/ml July 29, 1941. Dr. Simeon E. Leland, College of Economics and Business, University of iNashington, Seattle, Washington. Dear Dr. Leland: This is to thank you for your letter of July 22 with regard to the convention of the National Tax Association to be held in St. Paul from October 13 to 1 6 . Dr. Blakey, who, as you know,, is Chairman of the Program Committee, .wrote me on July 18 inviting me to address the session on October 14 which is to be held at the University of Minnesota and is to be devoted to a discussion of national defense financing. I replied to him that if it would not in convenience him in any way, I would accept tentatively subject to confirmation a little later on when I can be more certain than 1 am now of being able to attend. John Peyton also wrote me about the meeting and I advised him similarly. Your thoughtful and informative letter predisposes . me still further to be present if I can possibly arrange it. I recognize the importance of this meeting and the fact that it brings together a representative group who should be in fluential in the various states in helping to form policies that are economically sound and integrated with Government policy and action. I appreciate your interest and courtesy in giving me the benefit of your views as well a& your perti nent observations on the importance of coordinating State and Federal policy. with kindest personal regards, Sincerely yours, M. S. Eccles, Chairman. ST:b UNIVERSITY OF W ASHINGTON COLLEGE OF ECONOMICS AND BUSINESS SEA TTLE August 6, 19ijl Mr. M. S. E ccles, Chairman Board o f Governors Federal Reserve System Washington, D. C. Dear Mr. E c c le s : I am c e r ta in ly g r a t i f i e d to le a rn th at there is a chance that you w i l l address the meeting o f the N ational Tax A sso ciatio n in S t. Paul in October. I do hope that nothing w i l l c o n flic t w ith your a b i l i t y to do t h is . I r e a ll y b e lie v e that i t i s important to get the c h ie f f i s c a l o f f i c e r s o f the states informed as to sound economic and f i s c a l p o lic ie s and knowing what your views are as to these I think you are ju s t the person to do i t . If you can come we s h a ll make every e f f o r t to make th is an out standing a f f a i r and to provide as la rg e an audience by radio and otherwise as is p o s s ib le fo r the occasion. I am going to w rite both Blakey and Peyton about t h i s . B elieve me, I g r e a t ly appreciate your l e t t e r o f the 29th . With kindest personal re gard s, I am S in cerely yours, SEL/ml September 9* 19U1* Dr* Simeon E. Leland, Professor of Boonomics, University of Chicago, Chicago, Illinois* Dear Dr. Leland: Just before leaving for Utah on a belated vaca tion, the Chairman asked me if I would write you a line to impose upon your good nature sufficiently to induce you to outline what you thought would be appropriate for the ad dress he has agreed to make at the national Tax Association Convention on October lU. This is something of a task, I know, but he felt you could just note down topically some of the major points that you feel should be dealt with and perhaps amplify it a little with your own viewpoint* He will have to begin very shortly preparation of this address, and I need not tell you he would greatly appreciate any suggestions that you can make* Sincerely yours. Blliott Thurston, Special Assistant to the Chairman. ET:b Ube Xttniversitç of Cbicago Department of Economics Air Mail September 12, 1941 Mr. Elliott i'hurston Special Assistant to the Chairman Board of Governors Federal Reserve System Washington, D. C. Dear Mr. Thurstons Your letter of September 9th has been received in Professor Leland's absence. He is at this time in California and on the chance that I could reach him I made a copy of your letter and forwarded it to him at the following address: c/o V. H. Matthews, P.O. Box 593, R.F.D. No. 3, San Jose, California. He is driving back to Chicago and expects to arrive here about September 20th. Sincerely yours, M. Finnamore Secretary MFsFB T E L E G R A M Board of Governors of the federal Reserve System L e a s e d W irt. Received a t W J.;i n » « , 0 . C, W93WASH G223 CGO 1 8 - 1 2 3 9 ECCLES LETTER OF SEPTEMBER NINTH RECEIVED T H IS MORNING AFTER SEVERAL FORWARDINGS. W ILL PREPARE OUTLINE W IT H IN NEXT FEW DAYS OR SOONER IF P O S S IB LE . REGARDS LELAND. ^ jo/,1 SEP 18 PM 12 48 l""1 Zhc {University of Cbicago Department ofEconomice September 25, 1941 Hr* Marriner S. Eccles Chairman, Board of Governors of the Federal Reserve System Washington, D. C. Dear Mr* Eccles: I am enclosing herewith some suggestions for your St* Paul address. I trust that they are in time to be of some service to you in connection with its preparation. In making the outline, I have attempted to keep it as brief as possible and to refer as frequently as I could to your own writings. You will see throughout numerous references to them. This was quite easy be cause your own views and mine coincide so much that citation was an easy matter. In my own writings, I have frequently referred, too, to what you have said. Perhaps it may strike you that I have not indicated much that is strict ly new. At the moment I find it quite difficult to say anything new about the fundamental philosophy of financing the defense program. There are some matters of detail that are continually changing, but these seem to fit within the general framework. If I have not made my notions clear, I will be glad to expand them as far as I can. One point in the memorandum may be worth emphasizing here. It has to do with the use of excise taxes. It seems to me that too many of these present excises were devised with a view to raising revenue, whereas they should be used primarily to help control consumption and to make more ef fective the system of priorities and even price controls. Of oourse this does not apply to some of the well-known excises, such as liquor, tobacco and gasoline, which are substantial revenue producers. They have been adjuncts of the Federal revenue system for years and should be excepted. Many other commodities singled out for taxation will not pro duce much revenue, will only irritate the citizens and will contribute nothing to consumption control. The list of excises should be purged. Negligible revenue producers should be dropped unless they supplement the price-priority mechanism. Others should be added with this in view. As certain commodities become scarce profit possibilities fraa trade in them increases. Such aleatory gains should be heavily penalized, per haps through excess profits taxes specially devised to recapture such profits, or by the use of trading licenses or special ineome taxes with similar objective. These tools would help make effective the pricepriority controls. This use of the taxing power becomes more important 1891 • THE UNIVERSITY OF CHICAGO • FIFTIETH ANNIVERSARY • 1941 Mr* Marriner S. Ecoles, September 25, 1941 Page 2* as certain cosmiodities become scarce and as the priority system af fects an increasing number of goods* I hope that say comments are not too long or too laborious or too late* It was really a pleasure to do this« I am glad you have given me an opportunity to be of some service» Sincerely, SEL-W Enel* October 3, 1941* Mr. Simeon E. Leland, Department of Economics, The University of Chicago, Chicago, Illinois. Dear Mr. Leland: I have your letter of September 25, and I am very grateful to you for taking so much time and trouble to give me the outline for my St. Paul address. You have very comprehensively sketched in the whole picture in a most orderly sequence. It will be a real help to me, and I can only say that I did not mean to impose such a task upon you, but I deeply appreciate your help. Sincerely yours, M. S. Sccles, Chairman. ET cm Ube \Hniversity of Chicago Department ot Economics September 25, 1941 Mr. Marriner S. Eccles Chairman Board of Governors of the Federal Reserve System Washington, D. C. Dear Mr* Eccles: Under separate cover, I am sending you a couple of things I have written on defense financing in the hope that they may "be of interest to you. Sincerely, SEL-W Simeon E. Leland September ¿7, 1941» Dear Dr. Leland: On behalf of the Chairman, I want to thank you for sending your articles, which ar rived under separate cover and will, I know, be most useful to him in connection with the speech which he is preparing. Sincerely yours, (Signed) Elliott ^hurston Dr. Simeon E. Leland, Department of Economics, The University of Chicago, Chicago, Illinois. ET:b