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February 23, 19^5 •
llr. David A* Curry,
I4UU East li|2d Street,
Hew York 5k, Hew York.
Dear Mr* Curry:
This is to acknowledge your letter of February 20 in regard to the measure for reducing Hie gold reserve ratio to 25 per
cent* I enclose a copy of a statement I made to the Committee which
gives all the relevant facts.
It should be borne in mind that this is merely a permissible minimum* We may never reach it* At various times in the past
we have had 100 per cent gold cover, though the permissible gold
minimum was only 1*0 per cent in regard to Federal Reserve notes*
Whatever gold or gold certificates there are will continue to be
pledged as collateral, but, of course, nothing could be more ridiculous than to let some arbitrary and no longer important collateral
requirement stand in the way of financing the war.
This move would not affect one way or the other the stabilising influence on our currency and would not add one particle
to inflation* Inflation is not prevented by any arbitrary gold reserve ratio behind the currency* We have had the I4Q per cent ratio
for more than a quarter of a century and in that period we have had
about as inflationary and deflationary swings as it would be possible
to have* What causes the inflationary danger now is the way in which
the Congress has proceeded in financing the war* The presence or absence of a reserve ratio does not have the remotest bearing on the
Sincerely yours.

M. S* Eooles,