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TEL. • PE
(N. Y )











De ,r S i r ,
I'm home sick'and please excuse my typing.
Since w are faced with the evil of i n f l a t i o n a r y psychology, why could
we not fight i t with DEFLATIONARY pshchology? Why could w not reduce t a r i f f s say
5/o per month. This is mildly deflationary and not suddenly harmful, i f at a l l .
There are dozens of other wqys of deflating, bureaus could be cut right and l e f t ,
ana cannot people i n government cut and talk about more cutting.
On September 14th 1928 I wrote to a half dozen economists to say that
the crash was i n the makingo A l l told m I was wrong. Moody said that a "defaulted
foreign bond would be as rare as a white robins egg"•
I r v i n g Fisher said that
realty was only inflated " i n a few urban areas". We then had i n f l a t i o n ( o f securities) for a year and four days, and then the security crash followed by the busbusiness crash. Can w not expect now c i n f l a t i o n followed by a deflation. Everyone
really expects t h i s , but thinks(in Wall>5t especially), that i t can't happen now*
Eut i f w taik about the inevitable i t sometimes hastens events, and i n this case
the i n f l a t i o n might be leveled o f f . Might i t not?
I'm a stock broker, and manage trusts largely, and that is a beautiful
nightmare, but things are not helped by the Washington talk about more and more
committees. I t s rather dreadful to ask a great s a i l o r , on of the greatest, such a3
Admiral Mimitz, i t s awful to ask him to aay and define the encroahments of government
on the rights of the English speaking i n d i v i d u a l , and due process of law. I s n ' t i t
clear, abundantly clear (as Mr Tugwell would say) that the area of free action i s
gradually disappearing, but, or rather "and" with a painful regularity?
I t seems to m that i f the dreamers talk about bigger government, i t s up to
sane people to talk aDout "smaller" government. And i f people like Mr Keyserling talk
about prosperity, i s n ' t i t just to talk abotet the consequences of this a r t i f i c i a l
boom, t h i s synthetic prosperity and consequent deflation, or worthless money.
I naturally assume that our currency w i l l be devalued, but from m reading
I'm convinced that devaluation w i l l not be enough to set things r i g h t , when once the
confidence i n government sincerity and securities has gone. And can i t help going?
This adds up to the thesis that i f w talk of the glaringly obvious results
of t h i s i n f l a t i o n a r y nonsense, i f w talk about the nonsense, w i l l w not lessen i t ?
I fear that i f Mr Truman had been through the German i n f l a t i o n , he would
s t i l l be sure that i t could not happen here, and certainly not i n Missouri.
Yet he
must know that i t s no fun to get a good kick from a mule, and when phony money gets
strong i t can kick like a mule.
Yours sincerely,
Hon. Marriner Eccles.

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