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FIRST AND AMERICAN NATIONAL B A N K
•f
GEORGE
;HAIRMAN

BANKING
WILLIS
J.

A.

R O B E R T
E M M O N S
H U B E R T

W,
U.

W.

W I L L A R O
RAY

W.

VICE

COLLINS.
MOORE,

T.

ARIO.

PRESIDENT

VICE

VICE

VICE

STRAfN,

GOOCH,
F.

THE

WILLIS

1873

PRESIDENT

PRESIDENT

CASHIER
CASHIER

ASST.

CASHIER

ASST.

CASHIER

D.

WVARD,

PRESIDENT

BOARD

CAPITAL

FUNDS

OVER

$5,000,000.00

AFFILIATED

WITH

NORTHWEST

BANCORPORATION

PRESIDE

ASST.

C A M P B E L L ,

Duluth

ESTABLISHED

PRESIDENT

HOTCHKISS,

SYLVESTER
H A R R Y

VICE

M A H O N E Y .

W.

OF

TWEED,

DEPARTMENT

PUTMAN,

D A N I E L

P.

TRUST
E D W A R D
S T A N L E Y
J O H N

C.

V E R N O N

K.

PLATT,

D W A N ,
K.

DEPARTMENT

P A L M E R ,

VICE

ASST.

ASST.

PRESIDENT
VICE

TRUST

F A L G R E N .

PRESIDENT

OFFICER

ASST.

TRUST

OFFICER

MORTGAGE AND INSTALLMENT
LOAN D E P A R T M E N T

DULUTH 1, MINNESOTA
L.

R E X

H A T T E N ,

W A L T E R

February 28, 1946

L.

JOHN

L.

ASST.

L. G R A N D Y ,

EVANS,

VICE

ASST.

PRESIDENT

CASHIER

AUDITOR

Mr» Marriner S. Eccles, Chairman
Board of Governors of the Federal Reserve System
Washington, D. G»
Dear Mr, Scales:
Your continued advocacy of mA substantial increase in the capital
gains tax to put the brakes on speculative buying, especially in the stock
marketw (as your proposal is described in the Chicago Journal of Commerce)
is both amazing and disturbing, inasmuch as experience and reason both prove
that the proposed cure is neither sound nor equitable»
Experience and reason both tell us that capital gains taxes tend
to retard sales as prices rise because owners of capital try to avoid the
resultant tax on principal value and thus on capital itself» If an increased
capital gains tax were to apply only to new purchases, the effect would be
the same» It would not discourage purchases but would discourage sales»
When sellers are penalized by capital gains taxes or in any other way, the
effect is bound to produce an accentuation of the rise which would otherwise
have been moderated by sales»
Also, from the viewpoint of sound Business-Government relationships
your proposal to increase capital gains taxes is regrettable» A capital gains
tax is a tax on capital* A tax on capital discourages private enterprise and
fosters conditions inducive to further extensions of Government ownership and
management of business. Instead -of increasing the capital gains tax, the
present tax should be eliminated»
Admittedly, the solvency of the Government requires adequate revenues,
but those revenues should be derived from taxes on income not taxes on capital»
If adequate private income is to be available from which to derive the taxes,
it is essential that private enterprise should be encouraged to produce goods,
jobs and profits» If the price level of consumer goods is to be held within
bounds, it is essential that quantity production of goods should be encouraged.
There are only two ways in which the Government can prevent or retard
inflation» One way is to maintain a rigid control over the quantity of money.
The other is to direct the flow of money into the production of goods. Administration policies, even before the War, and the needs produced by the War
resulted in a loss of control over the quantity of money. This is not the proper
time to discard the other means of controlling inflation. Production of goods
must be encouraged through every possible channel. It is not so significant




FIRST AND A M E R I C A N N A T I O N A L B A N K OF D U L U T H

TO

Mr* Marriner S. EccleS

date
SHEET

2 - 2 8 NO.

2

whether someone makes a profit, but it is highly essential that production
of consumer goods should increase sharply and soon. Paper profits in
productive goods will disappear fast enough once the big initial demand for
consumer goods has been satisfied. It would be much better for the Country
if the Government would encourage people to put money into productive goods,
which will help prevent inflation in consumer goods, than it would be for
all existing money in the hands of individuals to clamor after consumer
goods, made more scarce by short-sighted Government policies aimed at
eliminating profits rather than at encouraging production.
It is self evident that if Government revenues are to meet essential
budgetary needs, all income should be subject to taxation and no income should
escape, whether it be the direct income of individuals or the indirect income
of individuals through the ownership of corporation securities. To reach
individual income obtained through ownership of stocks of corporations operating at a profit it is not necessary or desirable to attempt to do so through
a capital gains tax but it is important that this income be reached in some
other way, - yet without imposing double taxation. Various proposals have
been made for eliminating double taxation of income paid to individuals in the
form of dividends. The best of these proposals should be determined and
adopted.
The potentials of inflation exist. Let us avoid aggravating errors
on a national scale - such as an increase rather than an elimination of the
capital gains tax. Let us aim our efforts at increasing production and retarding inflation in the prices of consumer goods. Only by facing the facts in a
realistic manner and by taking appropriate actions in line with the facts can
we avoid an aggravation of existing inflationary threats. For these reasons
I respectfully request that you reconsider the position which you ha#e taken
regarding taxation of capital gains and instead work for a constructive change
in our system of Federal taxation.
lours sincerely.9

SKPsEC
Copies to:
Senator Joseph H. Ball
Senator Walter George
Mr. Erie 1. Johnston
The Honorable Harold Knutson
The Honorable William Pittenger
Mr. Imil Schram
Mr. Sugene W. Stetson
Mr. J. Cameron Thomson
Mr. Fred L. Vinson



March 7, 19U6.
Mr. Willis D. Ifyard, President,
First and American National Bank,
Duluth 1, Minnesota.
Hy dear Mr. Wyard:
I am taking the liberty of sending you a copy of a letter
dated February 28 which I received from Mr. Stanley K. Piatt,
assistant -vice president in your Trust Department. The letter is
written on the stationery of your bank and Mr. Piatt states that he
has sent copies to nine influential citizens, including Senator Ball,
Senator George, who is Chairman of the Senate Finance Committee, two
of your Congressmen, and the Secretary of the Treasury.
I would appreciate your courtesy in advising me whether
this letter expresses the viewpoint of the bank. 1 would suppose
that the recipients, seeing it, would so conclude and that it might,
therefore, have some influence with them. If that is the case, I
would feel that in justice to myself I ought to write possibly to
the Senators or the Congressmen so that silenoe on my part would not
be construed as assent.
I would disagree with a number of things contained in this
letter. For example, I think it of real importance, as a step in
protecting the country against inflation, that some further step
which would be effective should be taken to protect capital assets
from inflationary pressures. These pressures are particularly acute,
as I am sure you are aware, in the case of homes, farms and business
properties as well as stocks. I would wish to take issue very
strongly with such assertions, for instance, as his statement that a
special capital gains tax, such as I have long suggested, applicable
to future but not to past transactions "would not discourage purchases
but would discourage sales." I think it is easily demonstrable that
this is the exact reverse of «hat would occur if the tax were enacted.
Some of the other assertions in the letter are, in xay opinion, equally
untenable.
If Mr. Piatt is merely circulating his individual views, it
is another matter. Accordingly, it would be helpful to me to know
what the facts are in regard to it.

sb



Sincerely yours,

M. S. Ecoles,
Chairman.

J

TERN
UNION47"

CLASS OF SERVICE

/"his is a full-rate
Telegram or Cablegram unless its deterred character is indicated by a suitable
symbol above or pre~-ding the address.

1201

SYMBOLS
DL=Day Letter
NL=Night Letter
LC=Deferred Cable
NLT=Cable Night Letter

A. N. WILLIAMS
PRESIDENT

Ship Radiogram

^lic filing time shown in the date line on telegrams and day letters is S T A N D A R D T I M E at point of origin. Time of receipt is S T A N D A R D T I M E at point of destination

WP140^50 1 EXTRA = DULUTH M ! M M 11 218P
MARRI MER S ECCLES*
: B0ARD

LETTER

CHAIRMAN

OF GOVERNORS FEDERAL 'RESERVE

DATED FEBRUARY

SYSTEM

28TH W R I T T E N YOU BY STANLEY

K PLATT

DOES MOT EXPRESS V I Et.'PO ! NT OF T H I S B A N K . L E T T E R AND
CONTENTS WERE UNKNOWN
AND JANUARY
EFFECTIVE
LETTER

TO U S - P L A T T

TENDERED

RESIGNATION

10TH WHICH WAS ACCEPTED BY OUR D I R E C T O R S

MARCH 1 S T . O P I N I O N S

AND REASONING C O N T A I N E D

REPRESENT H I S I N D I V I D U A L
W D VIYARD,

PRESIDENT

THINKING=
F I R S T . AND AMERICAN

BANKv
1 S T . 28TH




IN

COMPANY WILL APPRECIATE SUGGESTIONS FROM ITS PATRONS CONCERNING ITS SERVICE

NATIONAL

March Ik, 194-6.
Dear Mr» Wyard:
Thank you very much for the courtesy of your telegram
in response to my letter of February 28 with reference to Mr.
Stanley K. Piatt1 s letter.
In view of the circumstances which you mention and the
fact that he was not reflecting the viewpoint of your institution, I will disregard his letter.
Sincerely yours,

Mr. W. B. Wyard, President,
First and American National Bank,
Duluth, Minnesota.

5T:b



March 7, 19ij6,
Mr. Stanley K. Platt,
Assistant Vice President,
Trust Department,
First and American Hational Bank,
Duluth 1, Minnesota.
Dear Mr. Platt:
Your letter to me of February 28 contains a number
of opinions in regard to a special capital gains tax among
other things to which I would take most emphatic exception.
Inasmuch as you sent copies of it to a number of prominent
people, including two Senators and two of your Congressmen,
and since they might be influenced by these opinions if they
in fact represent the viewpoint of your bank, I hare written
to the president of the bank to inquire whether you were
speaking only ror yourself or for the institution. If the
latter is the case, I would wish to advise the Senators and
Congressmen of my very strong dissent so that silence cm my
part could not be taken as agreement with your views.




Sincerely yours »

M. S. Ecoles 9
Chairman




2002 W. Lake of the Isles Blvd
Minneapolis, Minnesota
March 12, 1946
Mr. Marriner S. Iccles, Chairman
Board of Governors of the federal Heserve System
Washington, D. C.
Dear Mr* Eccles:
With surprise and regret I have
read your letter of March 7. I had not expected
that a man in your responsible position would
side-step important principles by questioning
whether or not the views contained in my letter of
February 28 were personal or represented the Bank
with which I was then associated« The other men
to whom I sent copies of the letter showed an interest
in the reasoning presented and did not dodge the
issues raised by questioning the political weight
of the letter presenting those issues. In days such
as these it seems to me that it is important that all
of us should face the issues before us squarely,and
cooperatively seek those solutions best suited to
provide far the general welfare of our Country and
the individual citizens who compose it.
You will observe that the letter
which I sent to you on Febrmary 28 was signed by me
personally and not as Assistant Vice President and
that in the concluding paragraph I used the personal
pronoun in requesting that you reconsider the position
you have taken regarding taxation of capital gains.
I wrote you a personal letter with the specific reason
of focusing attention upon the issues raised and because,
while I had in mind the interests of the various accounts
for which the Blink aots as Trustee, I felt that the
letter I w&s sending you was essentially the opinion
of an individual financial observer. It is my hope that
you
nmt Attempt to didge the reasoning presented
but will give 4t your most careful consideration, since
what we both seek is the general welfare rather than
personal vindication.
Yours sincerelyj

\ s- I resigned my position with First and Auférican
National Bank of Duluth, effective March 1, 1946 but
with notice of intention as of October 29, 1945.
J

Vf

J ^

March 18, 1946.

Mr^ Stanley K. Piatt,
¿002 ifi. Lake of the Isles Boulevard,
Minneapolis, Minnesota,
Dear Mi'. Piatt:
This is to acknowledge your letter of March 12, I
venture to enclose copies of a number of statements 1 have
made in the last year. Tnese should answer your statement about
avoiding important principles.
Manifestly, if you were undertaking to speak for the
bank with which you were formerly connected, your letter would
have carried more weight with those public officials to whom
you addressed it than otherwise would be the case and might call
for an answer, copies of which could be sent t£> the Senators and
Congressmen to whom you sent copies of your letter to me.
It should be evident that it is not possible to enter
into debate by letter with all oiVthe individuals who write into
this office on a great variety of highly controversial subjects.
I do, however, make a point of finding time to reply to those
letters which come to me that are sincere and objective. Letters
which are vituperative and impugn good fait If and motives are
another matter.
Sincerely yours,

M. S* Iccles,
^ had man.
Enclosures

Statement on capital gai&s tax pf 3/*/45i OPk
of 6/15/45} OPa of ¿/¿5/46; statement on margins

of I/17/46.

ET:b