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THE COUNCIL OF STATE GOVERNMENTS 1313 EAST SIXTIETH STREET, CHICAGO 37. ILLINOIS October 30, 1943 Honorable Marriner S. Eccles Chairman Board of Governors of the Federal Reserve System Washington, D. C. Dear Mr* Eccles: Would you kindly oblige us by sending me a copy of your suggestions for Federal Fiscal Policy which I note in the morning papers you presented to the Ways and Means Committee yesterday? V/ith kindest* personal regards Sincerely yours, RGB:s Consultant November 1943* Mr. itoy G. Blakey, Consultant, The Council of State Governments, 1313 £ast Sixtieth Street, Chicago 37> ULinois. Dear Mr. Blakey: In response to your letter of October 30* I' && enclosing a copy of a brief summary "*hich I prepared after appearing before the k\iays and Means Committee, and I am also enclosing a copy of a rather long memorandum I prepared last A u g u s t in response to a request from the Joint Committee on Internal Revenue Taxation. I am also adding a memorandum emphasizing tne inflationary dangers in the budgetary picture. The* first of these three statements was prepared merely in order, to have a simple statement for such use as th'e press or others might have for it, inasmuch as the newspaper accounts were in some cases inadequate or misleading. AS^I appeared before the ways and Means Committee in executive session, I had not expected that anything would be made public* Let me take this occasion to say again that I think the work that The Council of State Governments is doing is of the utmost importance and value, particularly from the standpoint of developing better reasoned and coordinated fiscal policy by the Federal Government, and the State governments. fiith kindest personal regards Sincerely yours M. S. Eccles Chairman Enclosures 3 ET:b tteceived in Chairman's u m e e no*I 1943 aoaru QJ Uvvaraock* Of Utfc *aeerv* a y o ^ JOHN CURTIS HAMM MEMBER STATE BAR OF CALIFORNIA T E M P L E CITY, C A L I F O R N I A 655 Korth Sultana Avenue, November lf 1943• Honorable Mariner S. Eccles, Chairman, federal Reserve Board, ¥/ashington, D. C* Dear Mr* Eccles: It is a long while since I troubled you with a letter, and you may have thought I had fallen along with the old oaks of long ago. But I am still here and if I remain until the 2ist instant, will pass the eighty-fifth milepost. And I still take a lively interest in the many vital affairs that are affecting our social and economic li£§, as you will observe from the enclosed copy of letter sent this day to Judge Vinson, It is unlikely that what I have to say in calling attention to what I consider vital will have more consideration than did your suggestion for Q, tax program which I considered sensible, but which was summarily dismissed by those who have the r^ight to speak with authority* The only thing any of us can do v/hether in position of authority or only as plain oldfashioned progreswive citizens is to go on plugging for what v/e in all good conscience believe to "b^ right, and let the verdict of history be the record of v/hat ever good we may do* November 9, 1943• My dear Judge Hamm: It is always heartening and reassuring to hear from you> and I was glad to have your letter of -iMovember 1 with Its enclosure, both betokening your unflagging interest in problems of the hour, And the philosophy in your letter is what I would eXpedt from a sound and sturdy oak. Vatn kindest personal regards, Sincerely yours, M. S• Eccles, Chairman. Judge John °urtis Hamm, 6^5 iMorth Sultana ^venue, Temple City, California. ST:b Beoewedm C h a i r m a n ' s Oflic© NOV o 1943 Board of Governors of the Federal aeeerroSysSam 655 Borth Sultana Avenue Hovember 1, 1943. Honorable Pred M. Vinson, federal.Reserve Building, Washington, D« C. Dear Judgu Vinson: The enclosed analysis of Report Ko. 19 of the Federal deposit Insurance corporation, under the title of Where Inflation Begins, may toe of interest as bearing upon the question with ??iiich you are so much concerned. It will notea th&t the amount of deposits (bank-book currency issued by the banks) increased in two years by about 19 billions, of dollars - just about the amount this morning1 s radio reports say you recommend as a reduction of the circulation, \?hile the reports show that in the same two years, tfcu amount of actual money (currency and coi&) in th- banks increased only a little over 2C0 millions ~ a a rate of increase in "deposits*- of about 30 per cent, to only about 16 per cent increase for currency and coin* It vmuld seem that you would not need look farther for the reason of the rapid increase of the dreaded inflation, Yery respectfully yours, Judge Sanaa, tore arexATioy maim. By John Cur tie Hamm Member State ^ar of California A war worker earning $40 a week managed to get and unfurnished house • He needed furniture hut had not enough saved to buy the #150 worth of second hand goods« He went to the bank where he had hsl small deposit and had bought his war bond and had thus established a ^credit* which the bank considered good* He asked for and received a loan of $150*oo The bank t 0 ok his note for that amount and entered #150 in his bank book* By that act it increased the bank1s deposit© by $150*oo without having received any money deposit at all* Multiply thos by te* millions - people doing the same thing and the banks of the country have increased their deposits one billion five hundred million dollars without having taken in a single dollar of what we commonly understand as money,that is ourrency and coin* That is* tfaejr have issued one and one-half billion© check-book money* Sow the semi-annual Report Ho* 19 of the federal Deposit Insure a nee Corporation for the six months ending June 30,1943 i£ just out* This Beport shows in one table the assets and liabilities of the insured banks of the country, and in successive tables the assets and liabilities of the several state© separately* Por the country at large the Report shows that the demand deposits in the banks on that date were upwards of billions of dollars, and that the demand and time deposits were upwards of 94£ billions of dollars* it also ahows that on the same date the total amount currency and coin in those banks was slightly less than one and one half billion dollars* The ratio then of the coin and currency (money) in the banks was OHE D01LAR with which to pay $46*oo of demand deposits, or QBE D O J J L A R in coin and currency to pay #65*OO of all deposit** Some of the states have a larger ratio .than the generca average and a few* smaller* Our state of California sh&ows with aratlon of |50*oo demand deposits for eaoh dollar of coin and currency on hand and $86«oo for all deposits to be paid for by one dollar in money* Hew York as usual in the country* a finances is the worst sinner. Demand deposits at $112*co for each dollar in currency and coin on hsau and $146*oo total deposits to be paid by one dollar currency and coin* The total deposits in all*banks rose from 65^ billions in 1941 to 94| billions in 1943 -just about 19billions of bai^oreated deposit money m two years- an increase of about thirty percent* While Congress and public officials are hunting out the sources of inflation, would it not be well for them to take their eyes off the few dollars increase in wages of laboring men for an instant and look, at the billions of inflation created by the money changers who are granted the privilege of coining money-a prerogative given to Congress by the Constitution, but which they have surrendered and continue to surrender to the privately owned banks? Temple City* California* October 34* 1943, 25 Hovember 2, 19U5- Mr. Barron E. Grier, Clerk, Ways and Means Committee, 1102 Heir House Office Building, Washington, D. C* Dear Mr. Grierj In accordance with our telephone conversation, 1 am sending to you herewith for distribution to members of the Committee several statements which Chairman Ecoles was requested to submit. There are thirty copies of the following statements: Suusaary of his tax suggestions* 2* A memorandum entitled, "Inflationary Dangers and the Budgetary Situation*. 5* A table showing the interest~bearing Government debt* A more detailed memorandum on his revenue program* Sincerely yours , (Signed) Elliott Thursiort Elliott Thurston, Speoial Assistant to the Chairman* ET:b D A V I D M. FIGART L U U N G , TEXAS November 2 f 1943 Mr. Marriner S* Eccles Chairman Federal Reserve Board Washington, D. C # Dear Mr. Booles: Without knowing the details of your proposed measure for raising revenue, I believe the program of increased taxation and enforced savings is absolutely sound. .The people of this country are away ahead of Congress and the Administration in their willingness to carry larger burdens at this time. Our leaders are holding us back* Yours faithfully November 8, 1943. Mr, David U. Figart, Luling, Texas, Dear Mr. Figart: In response to--your-letter of November 2, I am enclosing a summary of tax suggestions which I prepared afte^ appearing, ostensibly in executive session, before the Ways and Means Committee. These suggestions summarize proposals which I furnished last A u g u s t at the request of the Joint Committee on Internal Revenue Taxation. I was glad to have your affirmation of what I believe to be a fact, namely, that the public is ahead of Congress and the Administration in its willingness to,have higher taxes and submit to such additional restraints as are necessary to safeguard the economy. Because of your interest and encouragement I felt you might care to see the enclosed memorandum since it gives more accurately my views that were only briefly and not very accurately referred to in the press. Sincerely yours, M. S. Eccles, Chairman. Enclosure iieoetvedm ahairmoa's Offlce NOV 5 1943 tfoaxaoteovomera of the VMsau &a6erv»8y«tett OFFICERS COUNCIL FRANCIS J. MCCONNELL, O S C A R AMERINGER HARRY E . B A R N E S LEROY E. BOWMAN STUART CHASE GEORGE S. COUNTS J E R O M E DAVIS H E N R Y P R A T T FAIRCH1LD KATE C R A N E GARTZ J A M E S P . GRAHAM FLORENCE C. HANSON RALPH INGERSON E. C . LINDEMAN KIRTLEY F . MATHER B R O A D U S MITCHELL J . H. McGILL J A C K S O N H . RALSTON EMIL RIEVE E. A . R O S S PRESIDENT COLSTON E . WARNE, THE PEOPLE'S LOBBY VICE-PRESIDENT H. GRAY, F^ Incorporated TO FIGHT FOR THE PEOPLE—WE GET AND GIVE THE FACTS ^ R EAS U R ER BT_NJAMIN C . MARSH. ROOMS 3 0 7 - 8 MARYLAND BUILDING, 1 4 1 0 H STREET, N. W . E X E C U T I V E SECRETARY TELEPHONE DISTRICT 0272 BOARD OF DIRECTORS W A S H I N G T O N , D. C. ETHEL CLYDE JOHN H. GRAY COLSTON E. WARNE HARRY W. LAIDLER BENJAMIN C. MARSH FRANCIS J. MCCONNELL November 3, 1943* >30 Hon, Marriner 5 . E c c l e s , Governor - F e d e r a l Reserve Board, Washington, D. C. Dear Mr. Eccles* I understand t h a t you have r e c e n t l y i s s u e d a s t a t e m e n t on your testimony r e g a r d i n g t a x e s and i n f l a t i o n b e f o r e a c l o s e d s e s s i o n of Y/ays and Means Committee* I f you have a p r i n t e d or mimeo copy a v a i l a b l e , I would a p p r e c i a t e i t i f you would send i t t o me. Yours s i n c e r e l y , B CM/EH STB&AU 11773 Executive Secretary. Ex e cut \ "NEW DEAL" DECADE INCREASES PROPERTY INCOME FOURFOLD LABOR'S INCREASE IN INCOME Despite the claims of "New Dealers" to be wages thereof could not have much exceeded 4 "labor government," the increase in income $500 million in 1932, or $8.5 billion in 1942., from ownership or control of property, was Even geniuses in our armed forces, and there four times greater than increase in salaries and are many, would have to get a huge increase wages, in private industry, in the "New Deal" in salary, before they would be affected by a decade ending in 1942* $25,000 limit on salaries! The "New Deal" decade was a kilting for,— Salaries and wages in civil government agennotof, economic royalists. probably increased about three-quarters in The Department of Commerce (Survey of this decade. .. Current Business, March, 1943) inalysfc of . T h e , J* 1 ®" 1 "National Incom4 by Distributive Shares," jumped from $141.5 miillionin September 1939, shows who have been the real beneficiaries of &JJ 7 ®' 8 mil L I ?? 0 1 ? D ? * ? m b e r 1 9 4 2 - I n M a r c h non-productive employment at public expense, 1943, it was $552.7 million, of parity and conservation payments to farmers during this decade, supplements to salaries of relief, of subsidies, and of taxes upon con' and wages increased from $634 million to $3,375 sumption instead of upon property income. $ 2 - 7 4 1 million or 432%. T 1090 . • * „„A Of this increase, a new item, "social security t A JL f n 7<ft hnnnn ^ fn' contributions of employers" accounted for $39.9 billion; in 1942, $119.8 billion,—an in- ?2 ,039 million,-almost three-quarters. crease of 200 yb. In 1932 wages and salaries in private inPRODUCERS' SHARE FALLS dustry were $26.1 billion; in 1942, $66.7 bilIn 1932 salaries and wages in private industry lion,—an increase of 156%. were about,66% of national income; in 1942 or PROPERTY INCOME SOARS % total compensation of employees was In 1932, income from ownership or control almost 80% of national income; in 1U2 only of property,—net income of incorporated busi- 70%. ness and of proprietors, and from interest and These Department of Commerce figures of and royalties,—was $4.3 billion; in "National Income by Distributive Shares,1" do 1942, $32.7 billion,—an increase of $28.4 bil- n o t indicate the maldistribution of such income, 410T1 or 661%—which was over four times the by classes. ncrease;in income from salaries and wages in That is shown by the reports of the Commis-private industry. sioner of Internal Revenue in giving the number The increase in income from net rents and 0 f persons in income brackets above the miniroyalties was, in the decade, $1,600* million, or mum health standard, and even those figures more than six times greater than the $250 mil- a r e n o t satisfactory, since the family income is lion decrease in interest payments, on govern- n o t reported, ment and non-government debt. The increase in net incoane of all proprietors HOW PENSIONERS FARE (not corporations), was $15.2 billion, or 319%. The Office of Price Administration reports The increase in net income of agricultural the average monthly income in the second half proprietors was $8.2 billion-or 555%, this of 1942, of various classes on fixed incomes:— increase gave strength to the "Farm Bloc" of 2,230,000 with old age assistance $22.80 speculators in farm lands, seeking to serfize 460,000 on general relief 27.40 producers on farms, and to create a Wall Street 62;000 getting old age imrarance, etc 20.40 for Agriculture. 860,000 getting veterans' pensions (Dec. '42) .. 42.90 IQJV^"™^ Afootnote states-'-Excluding interest, rente, ragged^ unemployed were hungry and m A m i l i t a r y p a y » b u t this would not materi i n i M l ^ ^ ^ f f i ^ S ^ ^ O M T t a f n t e t e f i r t h e national income,-of ™ i ^ n S - ^ i m ^ n n nti Z ti nZn S E ' 2 2 t uwhich total compensation of employees constited a ? ^nnn^n ^ waller proportion most years from 1932 i l l TfJi S i - JJ™ ° r to 1942, was in large measure due to "deflciteer^ ^ / n ^ f f n ^ ^ l l / Z ^ H ^ I ? ^ _j„|T ing,"—that is increasing the national debt The increase m salaries and wages m civil *' idly a n d f n t e r e a t charges gradually, as nar government agencies, is carefully concealed by 101 n eenCiea the eDtire armfid tfonal ^bt nilM un J? 'Z £Z!!n* 'This record has an important bearing on our forces or tne nation. foreign policy, starting in Spain, and can be CIVIL PAYROLL RISES more candidly discussed after we defeat the In 1932, salaries and wages in all govern- tl0n Fasdst Axis abroad and can turn major attento the nental agencies were $4,971 million, in 1942 Fascist Axis—at home. 413,536 million, an increase of $8,565 million, The United Nations know that unless Ameror 173%. ica practices the "Four Freedoms" at home, In neither year do the figures include sub- during the war, it won't export any of them sistence of the armed forces, and salaries and after the war. (over) THREE GREAT LABOR UNIONS URGE PUBLIC OWNERSHIP Three large labor unions—Electrical Workers and Operators (AFL), and the Textile Workers Union L of America, and United Automobile Workers,—the largest labor union,—both CIO, —have within the past few months denounced the profit system, and asked public ownership of basic industries* This is the most encouraging fact on the home front,—with deep significance for the maintenance of post-war peace. "The Textile Workers Union of America demands that this huge government-owned industrial empire be put to work for the comma! man, so that the welfare of all the people may be served. This can be accomplished, and should be accomplished, through a federal authority such as the TVA." They advocated popular control of big public utilities, and of natural resources, and specifically:— "Outside of the fields of transportation, comELECTRICAL WORKERS munications, light and power and natural reAdvocating public ownership of the Ameri- sources there are numerous industries in which can Telegraph and Telephone Co., early this monopolistic practices exist and which, in year, the Electrical Workers state:— private hands, lead to irresponsible concentra"Only the uninformed and the right-wing tion of power, to high and rigid prices, to low extremists, the 'materialists/ believe that the purchasing power on the part of workers, and profit motive is^ or should be, the exclusive to unemployment and hard times. standard of social ethics. "The Textile Workers Union of America be"These are the unrealistic theorists who will- lieves in the extension of community control fully or otherwise play into the hands of eco- over these and other industries whenever the safety, the security, the health, the general welnomic and political dictatorship." "The public ownership of the A. T. & T. fare and the freedom of the nation demand such monopoly, so out of accord with democratic extension." ideals, would add insurance to the continued The basic land problem is recognized in the public ownership of government itself." recommendation:— "Nor is there any merit in the objection that "In the cities, unimproved and underimproved tjiis remedy would 'inject politics into busi- lands should be taxed more heavily than imness/ Politics has long and inevitably been an proved lands" important element in the business of A. T. & T." AUTO WORKERS TEXTILE WORKERS The Automobile Workers, through their The Textile Workers Union, at its Annual Executive Board, recently demanded national or municipal ownership of "monopolistic inConvention, late this spring, warned:— "After the war, an attempt will be made to dustries, strategically necessary to the national throw off all social controls on the theory that safety." it is un-American for the people, through their In addition to such government ownership, own government, to plan for a successful prose- in order to give every able bodied person in cution of the peace." America the opportunity for useful work, the auto workers ask government control and opera"We dissent. tion of other industries,—"to prevent the abuses "The members of our Union are of the firm of monopoly, and to assure production in the belief that, after the war, such public controls public interest." over industry should be continued as may be On the farm angle the auto workers recomnecessary to prevent inflation and assure the full use of our human, technical and mechanical mended :— resources for the common good. If it is neces"Governmental control of distribution of sary for us as a nation to plan for the effective farm produce to avoid 'surpluses' and 'shortconduct of the War, it is no less needful for us ages' with participation by farmer cooperatives, as a nation to plan democratically for the effec- both in policy making and distribution." tive prosecution of the peace." The very progressive President of the Auto Citing the Reconstruction Finance Corporation loans, etc., of "more than 18% billions of Workers, R. J. Thomas, is also National Vicedollars" for war plants and war purposes, the President of the Congress of Industrial Organ!* zations. Textile Workers declare:— It is highly significant that labor unions with "These plants are our plants. They must be made to serve the purposes of the people of about one fourth of the total membership of America, despite the hue and cry already being organized labor in the United States, have deraised by private interests that they must-be clared for major socialization. turned over to private industry, which is now The Brotherhood of Railroad Trainmen, also, operating many of them on a lease~or manage- have repeatedly urged government ownership ment contract plan, immediately after the war. of the Railroads. Reprinted from People's Lobby Bulletin, August, 1943—Maryland Bldg., Washington, D. C. (over) L E X G R E E N CONGRESSMAN AT LARGE FLORIDA HOME ADDRESS: STANCE. Fix Congr SECRETARIES: IE O . COLEMAN X R L I N E MANN JLA L A U R S E N COMMITTEES: RIVERS AND HARBORS TERRITORIES, CHAIRMAN FLDOO CONTROL IMMIGRATION AND NATURALIZATION WAR CLAIMS INVALID PENSION* INDIAN AFFAIRS of tfte 3 U i u t e b M u t t s Umiste o! &epre*entatfteg i, 3B. c. ASSISTANT November 3, 194-3 Honorable Ltarriner S. Eccles Chairman, Federal Reserve System Washington, D. C. Dear Mr. Eccles: Mr. Charles H. Ross, Attorney, 60S Tampa Street, Tampa, Florida, has requested a copy of recommendations which v;ere submitted to the House on October 29, 1943* I shall appreciate it if you can send him such copy. Sincerely yours, Lex Member of Congress DEMOCRATIC WHIP November U> 1943* Honorable Lex Green, House of Representatives, Washington 25, D* C. Dear Mr. Green: In accordance with the request in your letter to me of November 3> I ani mailing to Mr. Charles H. Ross, 608 Tampa Street, Tampa, Florida, copies of memoranda which I furnished to members of the mays and Means Committee of the House at the suggestion of the Committee following my appearance on October I have advised Mr. Ross that I am sending these documents to him at your suggestion. I am returning Mr. Ross1 postal of October 30 in case you wish to keep it in your files. Sincerely yours, M. S. Eccles Chairman • Enclosure Beoeivecim Ob8BEDW»#B Otoe* ET:b NOV 4 1943 goaxa oi auv«rn»» Ottt* 25 November U, 19U3* Mr, Charles H* Hoss, 608 Tampa S t r e e t , Tampa* Florida* Sear Mr. Boss: At the request of Congressman Lex Green, I am sending to you herewith copies of memoranda which I furnished to the members of the Ways and Keans Committee at the suggestion of the Committee following rsy appearance before it in executive session on October 29* Because the tax memorandum which was prepared last August, at the request of the Joint Committee on Internal Hevenue Taxation, is long and possibly difficult to analyse, 1 prepared a summary of its principal points and this is also enclosed* I trust this material is what you wished to have. Sincerely y<mrB^ Um S. Eccles, Chairman. Baclosures U IT:b THE COUNCIL OF STATE GOVERNMENTS 1313 EAST SIXTIETH STREET. CHICAGO 37. ILLINOIS November 8, 1943 Honorable M. S. Eccles, Chairman Board of Governors of the Federal Reserve System Washington 25, D. C. Dear Mr, Eccles: Thank you very much for your letter of November 2nd and for the inclosures relative to federal finance. I am certain I shall profit from them. Thank you especially for your very kind comments relative to the Council of State Governments. With personal regards 9 Sincerely yours, Roy Blake; Consultant RGB:s Form F. ft. 521 BOARD OF GOVERNORS • F THE FEDERAL RESERVE SYSTEM Chairman Eccles: Attached is a letter to Mr. Ostrander which 1 have prepared for your signature. His discussion contains repeated relerence to your program and follows it rather closely, with the exception that more emphasis is placed upon the general sales tax, and refund arrangements under the personal income tax are rejected. I have kept the memorandum for my files. R.A.M.^ P I T T S B U KG H PLATE GLASS GENERAL OFFICES COMPANY — GRANT BUILDING F. TAYLOR OSTRANDER PITTSBURGH, PA. ECONOMIC CONSULTANT December 4, 1945 Marriner S. Eccles, Esq,, Chairman, Board of Governors of the Federal Reserve System, Washington, D.C. Dear Sir: There is enclosed a copy of a memorandum which I recently prepared on the subject of "Inflationary Potentials and Taxation". The recommendations which I make were heavily influenced by those which you made to the' House Ways and Means Committee last Augusts I should like to express my appreciation of your outstanding and courageous position on the tax policy. I hope you will have an opportunity to place your programme before the Senate Finance Committee, and that it will receive wide publicity and open discuss ion• The recommendations contained in the memorandum represent my own personal views only, and are in no way to be considered an expression of the views of this Company» I am sending the memorandum to a few economists and others who are interested in the subject* Very truly yours, Washington Address ; Barr Building 910 17th St * NW December 15, 1943• Mr, F. Taylor Ostrander, Economic Consultant, Barr building, 910 17th Street, N. Kn., Washington, D. C. Dear Mr, Ostrander: I appreciate receiving your interesting memorandum on the Revenue Prografii. I have passed it on to some members of my staff who >re working in that field and am sure that they will find it very useful. Very truly yours M. S, Eccles Chairman. RkM:vmr 8V61 floaa
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