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NATIONAL ASSOCIATION
OF REAL ESTATE BOARDS
HERBERT
u. NELSON
December 13, 1947
EXECUTIVE VICE-PRESIDENT
1737 "K" STREET, N. W.
WASHINGTON 6, D. C.
EXECUTIVE 6 2 5 0
Mr. Marriner S. I c c l e s
Chairman, Board of Governors
Federal Reserve System
Washington, D. C.
Dear Mr. Eccles:
Some leaders in government today are saying that home
buying, especially when the down payment is small or non-existent,
is one of the inflationary factors that must be dealt with. I
can't for the life of me see how this could be true.
o
It seems to me that when a man makes principal payments
on a home and socks away his savings for 20 or 30 years to come
in this way, it is decidedly deflationary. That money is immobilized. It cannot be used to bid up consumption goods. This
would be true whether the price of houses were high or low.
I really want to see you about this because I think that
the effort of government should be to shift public purchasing
power into capital assets and durable goods and thus lessen the
competition for the purchase of consumption goods and luxuries.
Building new homes at any price level does add to the
more or less permanent wealth of the nation.
Moreover, if efforts are made now to discourage buying and
the building of homes in any way, how in the world can we meet a
housing shortage. We will simply aggravate it and this will certainly
not result in any reduction of real estate prices. It seems to me
the only cure for the housing shortage is to build as many houses as
fast as we can by every means that ve can. When the public demand
is satisfied, we don't need to worry about prices. Ther° is nothing
that the government can do in this particular situation in which
the cure is not worse than the disease.
Haven't seen you anywhere for a long time. Would like to
run over and chat with you about this because I feel strongly that
some of the leaders of Congress are off on the wrong foot in this
matter.
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Sincerely yours,
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Executive Vice President
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December 18, 1947,
Mr. Herbert U. Nelson,
Executive Vice President,
National Association of
Real Estate Boards,
1737 K Street, Northwest,
Washington 6, D. C.
Dear Mr. Nelson:
I hu.d intended to acknowledge your letter of
December 13 before nov« but, as you know, these are days
of exceptionally heavy pressures and 1 have been trying
to put my desk in order so that I can leave to spend the
holidays in Utah, if after the first of the year when 1
return you feel that it would be ^orth while to discuss
housing matters, 1 will try to arrange a convenient time,
In the meantime, I will not undertake to go
into the points you make in your letter, except to say
what you already know, that 1 would be in complete disagreement, not for any theoretical reasons but based on
my long familiarity and identification with large construction and lumber concerns as well as the credit side
of the picture.
Sincerely yours,
[. S. Eccles,
Chairman.
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DEC 1 5 1947
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