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THE WHITE HOUSE WASHINGTON June 5, 1947 Dear Mr* Chairman: The Council of Economic Advisers has transmitted t o me a memorandum in regard t o the l e g i s l a t i o n which the Board of Governors has recommended for consideration by Congress t o continue instalment credit regulations now in effect under an Executive Order based on the Trading with the Enemy Act. In their memorandum the Council states: "There now e x i s t s the power t o limit the growth of instalment credit which, even under the present restraints, has been expanding at a disturbing rate. This power now rests on wartime Executive Order, which may have t o be rescinded i n the absence of l e g i s l a t i v e authority for i t s continuation. I f the curbs on the extension of instalment credit now being exercised under Regulation W were to be removed at t h i s time, there would be a tendency of producers and distributors to try to sustain the absorptive power of the market by accepting lower down-payments and a longer time period rather than adjusting prices to the purchasing power of current incomes. This would postpone rather than promote the kind of stable adjustment that our economy requires. w I wish to advise you that I am i n f u l l accord with the Council's recommendations and hope that the Congress will enact the necessary legislation t o retain restraints upon excessive expansion which results in excessive contraction of consumer credit thereby making for economic i n s t a b i l i t y , reduced production, and unemployment. I f the Congress does not see f i t to provide the necessary l e g i s l a t i v e authority, i t i s my intention to vacate the Executive Order because I do not believe that such regulations should rest indefinitely in peacetime on emergency or war powers after the Congress has had ample opportunity t o consider the subject Very sincerel Honorable Marriner S. Eccles, Chairman, Board of Governors of the Federal Reserve System, Washington, D. C.
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