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G. W . J A C K S O N . T R U S T E E
6 1 8


April 21, 1942.
M. C* E c c l e s , Chairman
Board of Governors
Federal Reserve System,
Washington, D. C.
Dear S i r :
I have been advised you are to apoear before the
S i l v e r Committee in the Senate in Washington on May 5, 1942,
o b j e c t i n g to the present p r i c e on s i l v e r which you claim is a
The present p r i c e on s i l v e r i s the only thing that makes
i t p o s s i b l e f o r the miners of Colorado and other western states
who produce l e a d , zinc and copper to continue operations o f t h e i r
The United States mints are working day and night to
supply the demands f o r s i l v e r * A man in your p o s i t i o n should be
w e l l aware of t h i s f a c t .
Recently while making a deposit in a l o c a l bank I s aw a
l a d y , whom I would- judge - to b e i n the neighborhood of seventy
years of age, withdrawing from her bank account $3,000.00 and
asking that i t be paid in s i l v e r • The t e l l e r t r i e d to persuade
her to take currency, advising her he b e l i e v e d she would not be
able to carry that amount of money in s i l v e r . She i n s i s t e d on
having the s i l v e r . Evidently t h i s p a r t i c u l a r party looked upon
s i l v e r as a medium of exchange and did not have confidence i n
the paper money• In my mind there i s no question but what t h i s
lady was taking t h i s money home to bury i t or put i t in some
p l a c e she f e l t was a safe p l a c e t o keep the s i l v e r and that she
considers the s i l v e r d o l l a r legal tender*
Vftien you r e f e r to a "subsidy" I waider i f you have
considered that there is no industry in the United States today
that i s not enjoying the b e n e f i t of a subsidy, p a r t i c u l a r l y the

G. W. J A C K S O N . T R U S T E E


I have no p a r t i c u l a r quarrel with the farmers r e c e i v i n g
the subsidy when he i s a farmer but the p a r t i e s who are receiving
the real subsidy are men owning or leasing large t r a c t s of land,
maintaining an o f f i c e in some large c i t y and very seldom, i f ever,
v i s i t i n g t h e i r farming p r o p e r t y . They r e c e i v e large amounts in
subsidy every year from farming land which could be p r o f i t a b l y
farmed by the small farmer who would be glad to farm the o r o p e r t y .
Farmers in the State of Colorado r e c e i v e more subsidy
on farm land than i s paid in the form of subsidy to a l l the s i l v e r
mines in the western s t a t e s .
I a l s o wish to c a l l your a t t e n t i o n to the p r o f i t made by
the United States Government on the s i l v e r bought by Great Britaim
a f t e r the l a s t war.
I am informed that, you, as the head o f the banking;
i n s t i t u t i o n s in the United S t a t e s , are r esponsible f o r the subsidy
the banks r e c e i v e on a l l checks written on banks of the United
States .
As Chairman of the Board of Governors of the Federal
Reserve System i t would seem to me your duty is t o administer
the law not t o oppose it*
I f you want to make laws why not resign your present
p o s i t i o n as Chairman of the Board o f Governors of the Federal
Reserve System and run f o r the Senate or House of Representatives
where you w i l l be e n t i t l e d to your individual views but as Chairman
of the'Board o f Governors of the Federal deserve
System i t is
your duty to f o l l o w the law and not t o obstruct i t .

Ver^^fcruly y o u r s ,

April 28, 19l£.
Hr« G* W* Jackson, Trustee,
618 Symes Building,
Denver, Colorado*
Dear Mr* Jacksonx
This 1s to acknowledge your letter of April 21 in regard to
silver. You have the advantage of me, for so far as I am aware, I
have not been requested to appear before the so-called Silver Committee
in the Senate on May 5 or any other date, though I have been sumoned
to testify from time to time in the past* Members of the committee
have requested my opinion and I have expressed it as sincerely and
honestly as I knew how* Hence, your conclusion that I have been
volunteering ay individual views as Chairman of this Board is groundless , as is your implication that I am undertaking to obstruct the law*
I had supposed that it was the right of all citizens and that it was
the duty of those in public office, when asked by members of Congress,
to express their honest convictions*
The Federal Reserve System has nothing to do with administering the law, though its effects upon the banking system are and have
been highly adverse for the simple reason that the buying particularly
of foreign silver at an artificial price has added to bank deposits and
excess reserves needlessly* The silver has been burled at West Point*
It has served no useful purpose either commercially or from a monetary
standpoint* About its only justification is that it has been a device
for giving good dollars to foreigners with which to purchase our goods*
I have said before when questioned by committees of Congress
that I thought the silver legislation was well calculated to destroy
the domestic silver industry* I have contended and I still feel that
if we are to pay a subsidy for silver, then letfs frankly reoognise it
as a subsidy* I have never seen any real justification for the legislation that is on the statute books, but there is even less justification
today in maintaining this inflationary and superfluous purchasing program*
If it is necessary to pay a subsidy to procure copper* lead, eto*# then
I favor paying it* I do not see any sense in paying a subsidy on the
silver, which we do not need, in order to procure the metals that we do
need for war purposes*
These are my honest convictions* I can do no other than ex*
press them when toy opinion is requested by responsible committees of
Congress or by responsible members of the Congress who have a right to
ask a man in my position for his views* Z am just as much opposed as

Xr« 6* W. Jackson, Trustee



April 28, 19l£

you are to the abuse of the subsidy principle in the ease of farmers*
I cannot imagine what you are talking about when you refer to
ay being responsible "for the subsidy the banks receive on all checks
written on banks of the United States" • I have fought for years for
the par clearance system established throughout the Federal Reserve System and do not know of anything that could possibly be construed as a
subsidy on checks.

Very truly yours,

M. S. Eceles,