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POST OFFICE DRAWER Q
OREE NS50R0 • N. C.
2? , 194-5
Mr. Marriner Socles
Chairman of the Board
Federal Reserve Bank
Washington, D. C.
Dear S i r :
I may be out of place in writing you t h i s l e t t e r ,
as I know that you have your pulse at a l l times on the
economic condition of this country.
Being the sales manager of two manufacturing firms
in Atlanta, I have just finished a t r i p that has carried
me from North Carolina to Southern Texas, and I have come
in contact "with a number of merchandise managers, presidents
of large department s t o r e s , and the expression has gone around
on how long the Federal Reserve Banks are going to stand f o r
the present wild speculation of common stocks to continue
on the New York Stock Exchange and other exchanges of this
country.
I f same continues, at the present rate of advance,
we w i l l be on our way to the happy days of 1928-19 29 with
the i n e v i t a b l e collapse which w i l l be brought on by « p e c u l a t i o n .
During my t r i p , I v i s i t e d a number of brokers'
o f f i c e s and I found people running hot dog stands, scrap
dealers and a l l types of people buying common stocks on
margins. The "sharpsters" of t h i s country have had t h e i r
p e n c i l s sharpened f o r sometime to again share the new crop
of lamb that has been made in t h i s country by War P r o f i t s .
There are great numbers of people who have made some money
and who have riot been accustomed to very much money in the
past. The conservative business man who went through the
l a s t war period and the depression {1929 to 1934] i s not
p a r t i c i p a t i n g . I t i s the new crop of "new r i c h " that are
bidding against each other f o r these common stocks that are
now within s t r i k i n g distance of the 1937 l e v e l when Roosevelt
had t o c a l l gtop to s p e c u l a t i o n .
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THE ANÖREW J A C K S O N
NASHVILLE. TENN.
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HENRY
GREENSBORO. M. C.
NEW ORLEANS.
W.HT. BLACK. MGR.
POST OFFICE DRAWER Q
- 2 -
The time t o stop a horse i s before he breaks
his neck, and we sse c e r t a i n l y not in a condition, a f t e r
the most c o s t l y war, and i t not f i n i s h e d , t o go through
another c o l l a p s e .
Land values have been soaring in p r i c e .
Old houses s e l l i n g f o r twice what they would bring three
years ago, and i n f e r i o r merchandise up from 100 to 200%.
An examination of the papers of t h i s country w i l l show
every t i p s t e r service advertising and advising the Public
which stocks to buy now for a new advance.
I hope, and many conservative business men a l l
over t h i s country hope, that the powers that control
the Federal Reserve banks of this country w i l l take steps
to correct t h i s s i t u a t i o n .
Thanking you f o r your time that I am taking
and my i n t e r e s t i s only that of a business man who went
through the l a s t war and the l a s t depression and who
i s endeavoring to try to keep us on an even keel and not
a new c o l l a p s e that may bring t h i s great country of ours
t o the point of socialism.
Yours most r e s p e c t f u l l y ,
JfaJu^-r^f
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David Farmer Wachtel
Dixie Dress Mfg. Co.
Atlanta, Georgia
o
June 4, 1945.
Mr. David Farmer Wachtel,
Dixie Dress Manufacturing Company,
Atlanta, Georgia.
Dear Mr. M c h t e l :
This i s t o thank you f o r your l e t t e r of May 29 in r e gard t o stock market and real estate speculation. I am interested
in "hairing thè viewpbint of abìisiness man-on the importance of i n f l a t i o n controls, and your l e t t e r i s by no means out of order.
I want t o emphasize, however, that the Federal Reserve
System i s wholly powerless t o deal e f f e c t i v e l y either with the
stock market or rising real estate values. The traditional monetary controls which would tighten credit and increase interest
rates are, of course, wholly out of the question under war conditions o r , f o r that matter, in the postwar, particularly in view
of the national debt, which i s already close t o §250 b i l l i o n s .
To tighten credit and raise interest rates would serve only t o
make the debt management problem even more d i f f i c u l t to deal with
and would not be consistent with reconversion and f u l l production
a f t e r the war.
The Reserve Board, i t i s true, has certain limited powers
over margin requirements f o r l i s t e d s e c u r i t i e s , but even i f these
powers were completely exhausted, there would be nothing t o halt
speculative a c t i v i t i e s on a cash basis, and much of the a c t i v i t y t o day i s on that basis. It was with these factors in mind that I r e cently suggested, as a f i r s t step in checking speculation, that the
Congress adopt a s t i f f wartime capital gains tax. I enclose a
statement on t h i s subject which you may be interested in seeing.
Sincerely yours,
M. S. Eccles,
Chairman.
Enclosure
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