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February 1U,
Dear Marriner:
While the Secretary is away during the next two weeks, I would
like to get complete agreement between the Treasury, the Board and
the Executive Committee on the refunding of the securities maturing
or callable up to and including June 15, 19hh» We have, as you
know, Treasury notes, Treasury bonds, Federal Farm Mortgage Corporation bonds, Home Owners Loan Corporation bonds and a Reconstruction
Finance Corporation note maturing or callable up to June 15th in
the aggregate amount of $ij.,73O million. We also have two certificates, one in the amount of |5»25O million maturing on April 1st
and one in the amount of $1,655 million maturing on May 1st. It is
contemplated, of course, that these last two issues will be rolled
over and, if necessary, we might increase the one maturing May 1st
to $3 billion in order to secure some additional cash to help us
through the summer.
As to the other maturities aggregating fl4.,73O million, our
thinking here in the Treasury is running along this line* that we
offer on or about March 2nd a 1-1/2$ note with a maturity of about
September 19U8 and reopen (assuming prices are right) the 2-1/1$
and the 2-1/2/C currently being offered in the Fourth War Loan Drive
in exchange for all of these maturing or callable securities, with
the optinn in the holder of getting interest at the rate borne by
the maturing or callable security or of accepting interest from
March 15th at the rate borne by the security accepted in exchange
for the maturing or callable security. This provision to allow the
holder a choice of interest rates up to the date of maturity would
be new in Treasury refunding operations, but in view of the spread
between the coupons on the various maturing securities and also the
further fact that some of them are tax exempt, we believe it advisable to provide this option.
We think it advisable to get this large volume of securities out
of the way before the Fifth War Loan Drive. I am suggesting the date
of the offering around March 2nd in order that we can give more time
for the refunding than we have heretofore given. As you know, the
3-1/1$ Treasury bonds were put out in 193U i - exchange for the old
Fourth I . I I . and the HOLC and FFMC bonds were given in exchange for
mortgages. According to our last tabulation, large volumes of these
securities were still outside of the banking system* There may have
been some shifts during the Fourth War Loan Drive, but I do think it
is advisable to give the individual holders plenty of time in which
to exchange their holdings.

- 2 Please consider this in the nature of a preliminary memorandum just to l e t you know how we are thinking at this time. I
would like to get together at the end of this week or f i r s t part of
Sincerely yours,

Honorable Marriner S» Eccles
Chai man
Board of Governors
Federal Reserve System
Washington, D. C.