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SIEBKBT & ftlLLIS, INC. c P Kansas' leading Appliance d i s t r i b u t o r since 1933 »• 149 N. ttock Island, Y wichita <., <. Kansas Phone 4-7394 January 12, 1949* Honorable liarriner £>. Eccies doard of Governors federal neserve bank Washington, D. C, Dear 5ir: I read, with a great deal of interest, your interview in United states wews and world Keport of January 7» Of Particular interest to me /*as your remarks concerning credit controls, particularly as they relate to consumer credit. Very honestly, I was one who was in favor of the re-establishment of Regulation "ft11 and unquestionaoly, it appeared last rail tnat there was a need for same. However, things nave been happening rapidly in trie housenold appliance business, as you can see from the attached list of factories who have radically curtailed production. I am now firmly of tne opinion that tne entire situation should oe carefully reviewed with a view of a relaxation of controls, particularly on certain appliances. The average working man can take #3^0 and use it as a down-payment on a five room nome, however when he goes to buy a refrigerator, range and w&sning machine and some furniture, the down-payment would have to oe considerably more than $3^0. Yet, he can buy a piano, clothing, furs or jewelry with practically no down-payment • it has been the custom of man to eat regularly and usually to eat food that has oeen cooKed. Therefore it seems to me tnat on items tnat have to do with food preservation and preparation, such as a range and refrigerator, the terms should be even more favorable than on such items as fur coats ana jewelry, it is my honest oelief that until Regulation "W* is relaxed, there will be an increasingly serious unemployment problem, tne first straws in the wind of which are outlined in the attached sheets which are merely excerpts from recent trade publications. Very sincerely yours, db attacns. Carroll *-u €+**&« 9 ; 1949 Mr. Carroll Willie, giebert It Willis, Inc., l!# forth Rook Island, Wichita 2, Kansas. Dear Mr. Willis? Thank j«a for your l e t t e r ©f January 12 oosic^raing the a cop* of regulation *' and i t s possible eff&ot on the Ton %**@«ticned the policy of r«g«lsting instalment credit arising i» eoimeotiots with the sale of "listed" artiel«s while credit extended in connection ueith "unlisted11 artiolea, stsoh *s fwr coats and j#w©lry# is not «o re^ul&t«d« ^us l i s t of a r t i cle*, the instalment ml® of ofetflfei is swt?j©ot to ^gulfttlon W, re* suited fro& study of the various sources of instalment credit and selection of certain taajor areas which generated 1h« bulk of stich credit and. which, through expansion and contraction of sales and production, exerted oonsiderabl© pressure on the upward and downward isoveaents of Hie eoonoaiy. In congressional committee hearings preoeding the pas* sage of Public LAW 903, i^ie Board representative stated that, in general, the contemplated regulation probably would have about the same scope m» the regulation which was terminated in November of I9hl* "She it«E8 you mentioned were not included in that regulation* Ton expressed the opinion that regulation 1 should be reviewed with the view of relaxation of permissible t#ras« Although the Board has received a masher of requests for relaxation of t«e regulation froes people engaged in the production and marketing of consumers' durable goods, there is also evidence of a different point of view in those quarters* Bio attached sheets contain excerpts from unsolicited l e t t e r s we have received escpresslng views that the regulation should not be relaxed a t this time* Regulation B is a flexible nsaeure and the ^mrd i s particularly conotniei t i n t I t be properly adapted to current economic and credit conditions* ftith this in mind, th© Board ie corsstantly studying conditions in the economy generally its well as conditions to those bu'sinoases which are affected directly tow the provision* Mr. Carroll Willla of the regulation, i n c i t i n g trends in the production and Ing of appliances and other ©onsaiaer*1 durable goods* On samred occasion* since the end of the war i t has appeared that inflationary pressures weru waning and that there was a prospect of general price weakness and rising une&ploy»©Kt. Faeh of these oec&nions m s ©Tided, howewr, lay a r*n«wt*l of the Inflationary spiral* While currently there t r t seme renewed signs of weakness, in th$ buste#ss »itt)aticai, other factor* oonti.fi\«i to e3t«rt inflationary It. is clear that ffeotort other than ii©g«lati«m also inflwenoing «al«» of constasert1 durable goods aueli as appliano«s« radios* furniture* e t c . A sales decline i s normal a t this tils© of th# year tor some of these products ozi a p\?r«ly seasonal basis* In view of the ourr@xit high oost of living, many people ha*® l©s« buying power available for such purehases. relaxation of Begul&tion if i s being suggested by p«opl© in tfee businesses ^ffeoted, in ord«r to stimulate sales* Dui amounts involired in doma £>*&ym#»tw and instalnsntt r®fleet, in addition to ito« provisions of th« reg«l&tion, the prlees of th« articles involved* Suoh relajcation, i f i t r«swlt«d in demand, would tend to support th« eurrant priees for radios, ptasogrmphs, Jfumiturv, «to» In this. oomittottoR th© is£ at*tenant VftMl appears in th© report of th» Scmate Copasitt©© on Sanking and GnrvmiG$ r«oomD«iidinc •«aot»«Rt of tfada l«gi*lation i s of interastt **Ctaly hftret ooi^ld result ffesji inducing Riilions of Ar^erican fatal lies to f;o heavily into debt on too easy terns for goods a t the present high level of prices* Hie ®3ee«s«iiw> or edit built up i s that way would not only lxiore*8* preeent Inflationary proasuresi i t would Imim to be liquidated later out of eurr«nt inease should a down swing occur, thus aeeossarily diverting tiiat ine<a»e frcma th« ehannele of oonttuMi* expenditure* in tiie ©tssuing period* . . . n m • • excesses in the field • « • (of consumer credit) can foe harmful not only to th© people direotly inYolwd, ibut also to Billions of others who are penalised by the inflationary effects of suoh excesses* * Carroll The p©ra<m of ana 11 inacmm i« the one h i t hardest «>h*n inflation pushes prices beyoad his reach arad the tSM who smffer* most whan the resulting deflation throws hiss out of a Job* Its® legislation should tend to remjlt in directing eti&pe-titioa &l<mg ths line of decreasing pri«&#» rtkifoGtr -thmifs «xt^s<iing exeesaiv© <?r#<lit terns* % raaking »OEie eontrilxitlosi toward preirantixig further inTlaticm »t 1M« time, sod thtis toward saderstiit^; any ensuing deflation, oonstsmer instalment oredit cfjr*trol« Msl sspseially serve the interests of the person of low iscotae in addition to serving tih© interest© of a l l other o©nsu»t©r© affected by our national Iher© i s *OB« ae&ttcred «yid©no© of inoreaning price outs t aiid other sales concessions in ocnncotion with eeriaiin artielea, mo.h a« appliances and radios* These detelopients are being wat0h#d ©losely, m& the Board i t pr#par«<i to take prompt aetiou to relax regulation 1 when oondltions call for «woh aotior*. Sincerely yours# It* «• «>oelcs* GMRiam