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ALEXANDER W I L E Y , WIS., CHAIRMAN

#V1LLIAM LANGER, N . D A K .
H O M E R FERGUSON, M I C H .
C H A P M A N R E V E R C O M B , W . VA.
MOpi
E . H . MOORE, O K L A .
F O R R E•ST < . D O N N E L L , M O .
ST C
J O H N S H E R M A N COOPER, KY.

PAT M C C A R R A N , N E V .
HARLEY M . K1LGORE, W . VA.
JAMES O. EASTLAND, M I S S .
WARREN G . MAGNUSON, WASH.
J . W . FULBR1GHT, A R K .
J. HOWARD M C G R A T H , R . I .

IAROLD R . W I L D E , C L E R K




^ I C r r i i c b U b i e t i e s -2>ertct{e
C O M M I T T E E ON T H E JUDICIARY

J u l y 3> 1947

Honorable M a r r i n e r S. E c c l e s
Chairman, Board o f Governors
F e d e r a l Reserve System
Washington, D. C*
Dear M a r r i n e r :
I enclose a l e t t e r f o r y o u r i n f o r m a t i o n . You
need n o t b o t h e r t o r e t u r n i t .
They sent i t t o wa b e cause I r a i s e d t h e q u e s t i o n i n t h e m e e t i n g y e s t e r d a y
t h a t t h e p o s i t i o n o f t h e F e d e r a l Reserve Board was
f o r one y e a r f s e x t e n s i o n and t h a t t h e y were n o t supp o r t i n g permanent enactment o f R e g u l a t i o n W*
W i t h k i n d e s t r e g a r d s , I am
Sincerely yours,

JlFsdw




ornrirmcn,
917 F i f t e e n t h St. N . W . , Washington 5, D . C .

J u l y 2, 1947

W i l l i a m

J .

C h e y n

Executive Director
Executive 4238

Honorable J, W. Fulbright
S e n a t e of t h e U n i t e d S t a t e s
Washington, D. C.
D e a r Senator F u l b r i g h t :
Y o u asked t h i s m o r n i n g whether t h e r e was any p r o o f or e v i dence that the R e s e r v e Governors are r e a l l y fighting to m a k e
Regulation W permanent whereas they have only asked your
C o m m i t t e e for a one-year extension. M r , Behrens who was
t e s t i f y i n g d i d not have enough data t o be p r e c i s e i n his r e p l y ,
b u t he a s k e d m e t o s e n d y o u t h e f o l l o w i n g a d d i t i o n a l i n f o r m a tion.
W e f e e l s u r e t h a t t h e r e a r e a l m o s t c o u n t l e s s o t h e r p r o o f s of
M r . EcclesVintent i n existence if you r e a l l y would like a detailed survey made.
1. O n p a g e 23 of M r . E c c l e s * t e s t i m o n y t o y o u r C o m m i t t e e o n J u n e 25, he a d v o c a t e d p e r m a n e n t c o n t r o l .
2. Y o u w i l l f i n d by e x a m i n i n g M r . E c c l e s ' t e s t i m o n y b e f o r e the House C o m m i t t e e i n June that on his f i r s t appearance
b e f o r e t h e C o m m i t t e e he s p o k e i n g e n e r a l t e r m s of p e r m a n e n t
control, r e f e r r i n g to a recommendation made to Congress last
August to this effect.
On his second appearance, apparently sensing that the
C o m m i t t e e w a s l e a n i n g u n f a v o r a b l y , he i n t r o d u c e d t w o a l t e r n a t i v e s u g g e s t i o n s ; one w a s f o r a j o i n t r e s o l u t i o n t o c o n t i n u e
t h e a u t h o r i t y f o r t w o y e a r s , and t h e o t h e r w a s f o r a b i l l l i k e w i s e t o c o n t i n u e t h e a u t h o r i t y f o r t w o o r t h r e e y e a r s , a n d he
m e n t i o n e d that this would give the Congress an opportunity to
study permanent controls.

- 2 Hon. J. W. F u l b r i g h t

J u l y 2, 1947

T h e n t o y o u r C o m m i t t e e h i s r e q u e s t i s f o r one y e a r ' s e x tension. A definite pattern is clearly distinguishable in this stepd o w n p r o c e s s , a n d i t c o i n c i d e s w i t h t h e r e c e p t i o n t h e i d e a got i n
C o n g r e s s . ( I p r e s u m e y o u r C o m m i t t e e k n o w s t h a t t h e o p i n i o n of
F e d e r a l R e s e r v e G o v e r n o r s t h e m s e l v e s i s not u n a n i m o u s , that t h e r e
i s some definite opposition to the R e g u l a t i o n t h e r e and also that the
B o a r d ' s A d v i s o r y C o m m i t t e e coming f r o m the twelve F e d e r a l Reserve
D i s t r i c t s is said to have s t r o n g l y urged i t s discontinuance.)
3. M r . E c c l e s - - t o the B A N K M A N A G E M E N T C O N F E R E N C E
O F T H E N E W E N G L A N D C O U N C I L , O c t o b e r 25, 1946, ( s e e p a r t i c u l a r
r e f e r e n c e o n p a g e 1234, N o v e m b e r i s s u e , R e d e r a l R e s e r v e B U L L E T I N . )
4. T h e A n n u a l R e p o r t of the F e d e r a l R e s e r v e G o v e r n o r s
t o t h e C o n g r e s s , June o r J u l y , 1946. I t h i n k i t w a s the p e r m a n e n t
c o n t r o l r e c o m m e n d a t i o n i n t h i s r e p o r t that occasioned speeches i n
C o n g r e s s by M r . W o l c o t t i n the H o u s e and M r . B r i d g e s i n the Senate
opposing the suggestion.
5. A l i t t l e o v e r a y e a r ago R o n a l d W . R a n s o m , V i c e C h a i r m a n of t h e B o a r d of G o v e r n o r s , a s k e d t h e D i r e c t o r s of t h e N a t i o n a l
R e t a i l F u r n i t u r e A s s o c i a t i o n whether they would sponsor legislation
i n C o n g r e s s p r o v i d i n g p e r m a n e n t c o n t r o l s , i n d i c a t i n g that i t w o u l d be
a l i t t l e e m b a r r a s s i n g f o r t h e R e s e r v e G o v e r n o r s t h e m s e l v e s t o d o so
at that t i m e , but that they d e s i r e d i t .
6. N o v e m b e r 27, 2 8 , o r 29 i n 1941 D r . C a r l E . P a r r y of t h e
R e s e r v e B o a r d ( i n c h a r g e of R e g u l a t i o n W o p e r a t i o n ) , t o l d a c o n f e r e n c e
a t t h e U n i v e r s i t y of M i n n e s o t a : 4 4 . . .1 w a s a s k e d b y t h e s t a f f of t h e B o a r d
t o d i r e c t studies i n t h i s g e n e r a l f i e l d of c o n s u m e r c r e d i t - - d i r e c t t h e m
p a r t i c u l a r l y as t o h o w i t c o u l d b e r e g u l a t e d n o t o n l y i n t i m e of w a r , b u t
i n t i m e of p e a c e ; i n f a c t , p r i m a r i l y i n t i m e of p e a c e . "
T h i s p r o b a b l y t a k e s t h e a n s w e r s t o y o u r q u e s t i o n as f a r b a c k i n t h e p a s t
as y o u c a r e go g o .
We i n the business f i e l d who have been i n touch w i t h the R e s e r v e S y s t e m
a l l d u r i n g t h e l i f e of R e g u l a t i o n W w e r e o f t e n t o l d p e r s o n a l l y t h a t as s o o n
as t h e w a r w a s o v e r t h e R e g u l a t i o n w o u l d be t h r o w n o u t t h e w i n d o w b e cause it was a w a r m e a s u r e only. We w e r e also told that the R e s e r v e
S y s t e m was not i n t e r e s t e d i n getting into i n d u s t r y squabbles s m a c k i n g
of " r e f o r m " - - t h a t i t w a s n o t s e t up t o r e g u l a t e c o m p e t i t i o n i n b u s i n e s s .




- 3 Hon. J. W. F u l b r i g h t

J u l y 2, 1947

T h e n a f t e r t h e w a r ended, t h e r e w a s a s u d d e n r e v e r s a l of s u c h s t a t e m e n t s f r o m t h e R e s e r v e o f f i c e s and a v e r y o b v i o u s r e t u r n t o t h e o r i g i n a l
e a r l i e r " p e r m a n e n t c o n t r o l " philosophy culminating i n the Reserve System's
o f f i c i a l r e q u e s t of C o n g r e s s f o r p e r m a n e n t c o n t r o l l a s t s u m m e r (see
a b o v e ) , and t h e s t e p - d o w n p r o c e s s e v i d e n c e d i n M r . E c c l e s * r e c e n t
a p p e a r a n c e s b e f o r e t h e H o u s e and Senate C o m m i t t e e s , but a l w a y s w i t h
t h e r e s e r v a t i o n t h a t he s e e k s a t e m p o r a r y e x t e n s i o n d u r i n g w h i c h t o
argue further for permanent authority.
It is noteworthy that the business organizations which w e r e asked by
R e s e r v e G o v e r n o r s to sponsor l e g i s l a t i o n f o r p e r m a n e n t a u t h o r i t y have
n o t done so - - e v e n t h o s e w h i c h , l i k e t h e N a t i o n a l R e t a i l F u r n i t u r e A s s o c i a t i o n , h a v e t a k e n n o p o s i t i o n one w a y o r t h e o t h e r i n t h e r e c e n t
d i s c u s s i o n s b e c a u s e of t h e m a n y v a r i e d t y p e s of b u s i n e s s i n w h i c h their
m e m b e r s a r e i n v o l v e d , m a n y of t h e m n o t d o i n g a c o n s u m e r c r e d i t b u s i ness .
A s I s a i d b e f o r e , t h i s i s n o t a c o m p l e t e s t u d y of y o u r q u e s t i o n , b u t I
b e l i e v e y o u w i l l f i n d i t s u b s t a n t i a l l y c o r r e c t and m a y give you the i n f o r m a t i o n you wish.
Sincerely yours,

WJC:mj