The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BAXK OF SAX FRAXCISCO June 29, 1949 OFFICE OF CHAIRMAN OF THE BOARD FEDERAL RESERVE AGENT 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 excess. 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 then. 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 time. 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. Involved. I think this will give you all the acts If not, please let me Knov. Always with best regards, Sincerely yours, M. S. Eccles. UBiiclosure.
