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June 17, 1938

Honorable Marriner S. Eccles
Federal Keserye Board
Washington, D. C.
My dear Governor Eccles:
I want to congratulate you on the decidedly forward
step you have taken, in my opinion, as disclosed in your recent
letter to Senator Vandenburg, which is published to-day in the
leading papers across the country.
For the past two or three years* time I have constantly
felt that the restrictions imposed upon the commercial banks of
the country under the various types of reform bank legislation
have proven to be too severe in order to enable the banks to
properly function and assist industry in doing its part towards
the restoration of business to a level sufficiently high to absorb the millions of unemployed throughout the nation*
There is one more idea I have in mind, and I have no
doubt it is not new to you, and that is along the lines of removing marginal requirements on small loans, say up to $10,000.
In my opinion, if loans up to this amount were left to the
judgment of officers of banks as to the collateral taken and
the margin required, it would possibly open a market for a large
number of small borrowers who I believe up to the present time
do not come to banks on account largely of the excessive margin
requirements under the present day ruling. Kindly give this
last thought of mine some consideration.
Your friend, George Ladd, happens to be coming to my
desk just as I am dictating this note to you, and he tells me
to give you his love*
With kind regards, I am
Very truly yours



June 24, 1938

Mr. Frank F. Brooks, President
First National Bank
Pittsburgh, Pennsylvania
My dear Mr. Brooks:
This is to thank you for your letter of June 17 in regard to my recent letter to Senator Vandenberg. it is reassuring
to have your approval, expecially since the publicity attendant
upon this subject has frequently beclouded the real objectives
sought by the Board here and made it appear as if our only purpose
were to substitute lax for sound banking practices. As is evident
from your letter, you have a clear understanding of what the situation has been and of the necessity for lifting these restrictions
which, in my judgment, havs done much to accentuate contraction of
bank credit and add to deflationary forces.
I am aware of the pros and cons of the proposal to remove
margin requirements on small losns. I shall not undertake in the
limited space of a letter to give you all the reasons why I feel
that this would not be advisable from the standpoint of public
policy. In general, so far as I am concerned, I do not think this
Board should take a position which would inevitably be construed as
inviting the little fellow into the stock market.
If you see George Ladd, I would appreciate it if you would
reciprocate his affectionate greetings,
With kindest regards, I am
Very truly yours,

M. S, Eccles,