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June 29, 1949

Dear Marrinert
At our directors' meeting yesterday I
referred to a statement I recall you made to the
effect that| in the early 40's (1940 or 1941),
banks had substantial excess reserves, and that
some bankers at that time had suggested the
Board might well give consideration to increasing
reserve requirements to syphon off some of the
None of those present at our meeting
had any recollection of such a situation, so I
wonder if, at your convenience, you would let me
know if I correctly recalled what you said, and,
if so, whether you would give me a few more
details respecting the situation as it existed
Thanks, and with warm regards,
Cordially yourst

Brayton^ Wilbur.

Mr. Marriner S. Eccles,
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.

July 6, 1949.

Mr, Prayton V'ilbur, Ch&iraaan,
Federal Reserve Bank of San Francisco,
Fan iraacisco ^ 0 , California.
Dear Brwyton:
The situation e I the end of 1940 to 'which you
refer in you?;- letter of June ky is set forth in aetaii in
the enclosed copy of the Federal heserve Bulletin of J&Buary
1941. The very first thing is a copy of the Special Keport to
the Congress in which the 8o«rd, sll Reserve Bank Presidents,
and even the Advisory Council joined in recommending that
Congress give the System authority to double the statutoryreserve requirements and make them applicable to ail coMaerci&l
banks whether members of the System or not. In other words,
even the Advisory Council recommended authority which, if used
in the maximum, would have made reserve requirements on deiaand
deposits 52%, 40^, and 28^ respectively for federal Reserve
cities, reserve cities, and country banics. If you will note,
the excess reserves amounted to seven billion dollars «t the
There is a further discussion in the Review of
the Month beginning on pHTe 10 end then on page 12 there is a
text of n t*lk I gave at about this tiT!\e on the excess reserve
picture, among other things.


I think this will give you all the acts
If not, please let me Knov.
Always with best regards,
Sincerely yours,

M. S. Eccles.