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THIRD N A T I O N A L B A N K
IN N A S H V I L L E

NASHVILLE, TENNE SSEE
FARRIS,
RESIDENT

June 18, 1938

Hon, Marriner S. Eccles, Chairman
Federal Reserve Board
Washington, D. C.
Dear Mr. Eccles:
I have read with a great deal of interest several articles
in financial journals and local newspapers regarding your position
with reference to present government restrictions on bank loans
and investments, and I wish to commend you for the sensible
policy advocated.
I can readily appreciate the fact that some bankers, especially after having been harassed during the years of the depression
of 1930-33, in many instances declined to make sound loans for
fear of the examiner*s criticism. 1 can recall many accounts
now regarded as excellent credit which, had we followed the
recommendation of the examiner, would have been eliminated from
business during those depression years. In times like this, the
wrong attitude can so easily influence bankers in such a way
as to work great hardship upon the borrower.
I think, too, the new regulations, when finally approved,
should permit banks to invest a reasonable per cent of total
investments in bonds of a local character which have not in the
last few years been classified as eligible on account of marketability. No doubt, in every locality there are some corporations
which are in need of machinery replacement or expansion, which
would be glad to enter the program by issuing short to medium
term bonds in amounts of $50,000 to $250,000. Such bonds, to
a reasonable extent, should be eligible for bank investment,
because, on the whole, they are usually more amply secured,
better protected by current earnings, and more likely to be repaid at maturity without refunding. And such bonds, as a rule,
do not fluctuate in price as widely as the general market.


http://fraser.stlouisfed.org/ FMF:C
Federal Reserve Bank of St. Louis

Very truly yours,
s

President.

June 23, 1938

Mr. F. M. Farris, President
Third National Bank
Nashville, Tennessee
Dear Mr* Farris:
This is to thank you for your letter of June 18 with
reference to restrictions on bank loans and investments* Needless to say, it is reassuring to hear from practical bankers like
yourself who understand our problem and are sympathetic with what
the Board has sought to accomplish in revising restrictive practices, Your own experience is typical of that of other bank executives who have written in here*
I think that when the President announces what has been
agreed upon, the points that you mention will have been met, and
that you will feel as I do that some definite progress has been
made*
I very much appreciate your courtesy in writing.
Very truly yours,

M. S*-Eccles,
Chairman.

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