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/V.
February 8, 1946,
Mr. Safford ^dams,
27 ¿abriskie Street,
Jersey City, New Jersey.
Dear Mr. Adams:
This is to acknowledge your letter of January 19 enclosing the clipping of Edson tf. Smith's column from the Boston
Herald. He has made before and makes again the typical stock
market argument against any capital gains tax, even on a temporary basis for the purpose of curbing speculation not only in
stocks but, more particularly, in homes and farms.
He concedes, however, that 11 a high tax on capital
gains would certainly discourage some speculative buying.11 His
argument that it would discourage selling by those who had profits will not stand up under analysis. I would not make the
tax retroactive beyond the date of introduction, -accordingly,
it would not affect holders of capital assets who have profits
and there would be no reason why they would not sell to realize
those profits. It would, of course, deter buying for the
speculative rise and that is exactly what it is intended to do.
In fact, by stimulating selling and deterring speculative buying,
it should have a most desirable deterrent effect on prices.
With regard to interest rate policy that, of course,
is a matter that is primarily within the province of the Treasury
and is a matter of current discussion, so that I would not feel
that it would be appropriate for me to attempt to comment on it
at this stage.
Sincerely yours,
M. 5. Sccles,
Chairman.
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