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c FEDERAL HOUSING ADMINISTRATION WASHINGTON, D. C. OFFICE OF THE FINANCIAL ADVISOR March 23, 1938 Dear Marriner: Enclosed is a copy of a memorandum that I had occasion to prepare a few days ago, outlining the accelerated-depreciation idea that I discussed with you over the telephone a day or two before you started on your recent trip to Ogden. I have talked with two or three persons about this idea, and the reaction has been such that I am more strongly inclined to believe that the matter is worth pursuing. I wish that you would give it early consideration after you return and give it some active support wherever you think that support would be most useful. With appreciation and kind regards, I am lours sincerely, Honorable Marriner S. Eccles Board of Governors of the Federal Reserve System Washington, D. C. Enclosure Suggested Internal Revenue Ruling to stimulate Industrial and 'ub tic-Utility Con&tructloa The volume of mortgage-insurance applications coming into the FHA field officer since the recent amtadftint of the Rational Housing Act triages it evident that residential construction this ./ear will have a vigorous, even though belated, start. But housing accounts for only one-thiri the ordinary T O I U M of construction, arid a means of Stlsolajbixig other major clasees of construction thli Spring and ranter still regains to be found. On the other hand, a rabflta&tial volume of industrial public-utility construction, vhieh there vottld have been a ctical need for carrying forward this year despite tax and utility controversies, has been deferred because of the business recession, and uncertainty. As to.railroad construction, it still wilts| as it has waited for the past several years, mainly on a revival of the heavy tonnage that results from activity in residential, industrial, and public-utility construction. One practicable m y to get a substantial part of this deferred industrial and public-utility cons traction started in the early part of thlf year, rather than later this year or some time next year or the year after, is to permit corporations to accelerate the rate of depreciation on additions to plant and equipment made between. giv«B dates—say, from whatever date Ihii year's Revenue Bill is enactfec to July 1 9 1959. The following schedule of charge-offs is suggested as one that ^ouid be effectives 40 per cent in incoae-tax returns for L988 so • * • " • • * un 20 » • • • • « « 1340 IQ n « m m m n n X341 In other worda9 on capital improveaientfl '^de in 19^8, the total aepreciation would b« charged off in four ye^.ro on the sharply diminishing teal* aoove, iactaad of over a period of fifteen yeari at appx-oxiisately 6 per cent a year. March 18, 13S8
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