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S o m e r v i l l e Na t i o n a l B a n k

S o m e r v il l e , M a s s a c h u s e t t s

5. M^D a v it t , J r .

May 23, 1938

Honorable Iviarriner S. Eccles,Chairman
Federal Reserve Board
Washington, D. C.
Dear Sirs
I have just had the pleasure of reading the
complete address which you delivered to the New Jersey
Bankers Convention. As previously stated, I have always
been in almost complete accord with your program.
It must be quite discouraging to have the program
so frequently condemned as unsound because it apparently
did not work in its initial trial. Your explanation seems
to me very excellent although not complete as you omitted,
for obvious reasons, to direct attention to certain illtimed and possibly 3tupid congressional action.
I have endeavored to develop sorre specific suggestion
which might be of help, and I beg to submit the following:
Education-a very broad program of education among
legislators, bankers, business men, and workers showing
how the plan will work, particularly emphasizing how easy
it should be to determine what the Federal Reserve Board
may be expected to do at almost any future date under
given conditions. It seems impossible to legislate out
over-production, speculative buying of commodities and so
forth, thus it would seem best to endeavor to demonstrate
the futility of these actions because of what the Federal
Reserve 3oard may be expected to do.

S o m e r v i l l e Na t i o n a l B a n k
xnsi i c m


S o is d t E R V ix L E , M a s s a c h u s e t t s
Clar ence

5. MSD a v it t , J r .




May 23, 1938

Honorable Marriner S. Eccles,Chairman




Change In Method of Appointment of Oovernors-in
a program such'as you advocate, it seems essential to
eliminate,even more than as present provided, any political
control of the Board of Governors. The point is, that
it must be possible for the Board of Governors to "apply
breaks" when economically necessary and absolutely in­
dependent of whether or not this timing coincided with
either congressional or presidential election years.



May 26, 1938

Mr. Clarence Ci. McDavitt, Jr.,
Executive Vic« t'resiaent,
Somerville Natiaaal Bank,
Somerville, Massachusetts.
Dear Mr. McDavitt:
This is to thank you for your letter of May 23d
and for your suggestions. I agree that we need a very
broad program of education among banking, business, labor
and political leaders not merely with regard to the Fed­
eral Reserve System, but also with respect to some first
principles of economic law and the workings of our economic
system. Only then can we hope for less misunderstanding
and frustration of constructive efforts to deal with the
complex problems confronting all of us today.
As for political control of the banking system,
I have always advocated its independence and freedom alike
from private or partisan domination in order that it may be
operated in the public interest. As these questions lay
outside the field which I was endeavoring to cover when I
addressed the New Jersey Bankers, I did not undertake to
include them.
Your sympathetic approach and your suggestions
are very much appreciated.
Sincerely yours,

M. S. ^ccles,