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1920 Lake liar oh 30, Street« 1945. Honorable M.SmEcclss, Chairman, Federal Reserve System, Washington,D Dear i/r. Ecoles : I am very grateful for the ideas in your letter of the 21st instant and also in the Press Release enclosed with it• The imperative necessity for legislation to prevent inflation, and the superficial nature of existing legislation is scmmcely debatable. Your proposal would operate, in my opinion, only to inspire speculative holders of land-titles to hold on to their titles with a more dogged determination than ever$ and thus decrease the supply of land available for industrial and heme seekers» This would create one effect, and only one, which would be to enable those speculators who might have to sell their title deeds,to demand a higher price for them, than otherwise. But, there is no federal tax on land-title*, and as long as the law allows land-holders to deduct state and local taxes from the top income tax return bracket0, there mist be found some other technique for attacking the present inflationary trends, if the tragic consequences of inflation are to be escaped in the UJSJL. The principles of taxation embodied tn 12, US St at L 3SB(lQ6l) were adopted and approved by the Congress before I was born. That statute, therefore, is not my "proposal ", and as for its being a matter ofttlong.-t*rmtaxation", what has that to do with the question of curbing the inflationary balloon,about to go upS Tou say you want to "prevent further inflation in prices of capital assets". May I ask if yeu classify land, as "capital*? Also,if you would be willing to favor me with your definition of "interest" and "rent". Many universities teach that land (natural resource9, which are gifts of nature) is capital in the same sense as are those things which are the fruit of man's work* Lincoln said that capital is the fruit of labor. But, I find few capitalists who seem at all sure what distinguishes capitalism from feudalism. Economic wishing and guessing wont prevent inflation, and whether "the citations in my letter of Feb.BB are labelled *longterm* mr *mhort~term" is beside the point0 Until you have read that 1861 law and the court decisions cited, you can not be sure that you know the economic principles involved, and the effect their application would create as a preventative of inflation• Possibly Ur.Goldenwetser will study and report to you, on this, arid also on my letter of the 3rd instant, addressed to him» 25 April 5, 19U5- Mr. J. Rupert Mason, 1920 Lake Street, San Francisco, California. Dear Mr. Mason: This is to acknowledge your letter of March 30, which I am taking the liberty of passing along to our economic division in the temporary absence of Chairman Eccles. Sincerely yours. Blliott Thurston, Assistant to the Chairman. ET :b
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