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February 5, 1951 Mr. John Evans, President, The First National Bank of Denver, Denver, Colorado. Dear John: Tnanks for sending on your Report to the 36th Annuel Meeting of the First National Bank of Denver. I was very much pleased with and encouraged by some of the observations in the Report. We can win in this fight against inflation and retain our essential freedoms only if responsible people like yourself assume a vigorous and intelligent leadership. As you know, I have for some time maintained that if the Opom Market Committee is not to be permitted to act in tines like these that the Federal Reserve System should be given authority to require banks to hold temporarily a special reserve consisting of short-tem Government securities. I have favored short-term Governments aa a special reserve rather than Government securities of ell maturities principally because of the large amounts of banks* holdings of all maturities. In these circumstances a special reserve consisting of all maturities would have to be very high in order to be effective. Again let me thank you, John, for sending on the Report and again let me express my appreciation for your interest and concern in our common problems. With kindest regards, Sincerely yours. M. S. Secies. VXsdXs February B, 1951 Governor £ccles > Mr. Anderson sad Mr* "he&dle Wt* iivm*9 Prssldoat of tkm first S&tioaal Eoafc of Denver sees the profelea as folios**: *Through the erltloel period ahead, tbo aalatenaaoe at highest level of the credit of the Salted Stabee Is of traasceadaat &^>ert»a«e* the awsdateaaaee of the purchasing power of lie dot »r a« assured ia food, olotfcin?; and shelter is aa aa&e&tial &lwmit of such credit* Qm®r*hLp by 6 # 38$ member baake, in ae cor too® with iholr respective itee^i of opoa-mrfeot eligible QoveroJ&eat obligations, as the raost desire tie fora la *hiah to hold seooadsry reserves, should be of greatest assistance to the Treasury in sustaining that credit am! to the Reserve System itself lis furnishing * broader jmrket for such securities, th&« If they bad to boar that harden «&oso«* la these oireusst* -aces Mr* Evaae eu&jeets that* *lt therefore appears Shut the interests of the treasury, the Federal Seeerve Syete®, and all ftsader bmte* weald bo batter m-mmd and tli&t the inflationary spiral could bo more affectively restrained if, la lieu of la«m$lii| cash reserves, banks wore re<iuireS to hold aay opea-o&rket eligible thai ted States Oovemiaattt eoooritios of their individual ehoosi&g ia a secoadiMT' reserve of sufficient proportions to enforce auoh restriction ia baak leading power the Board of Ooeer* nors f r ^ tisse to tliee should determine* Such a secondary ra» servo could bo fised at onoe at such a pereaatage of deposits as would stop the excessive lendta?: practices of certain beaks, overly-ambitious for growth end for earnings, vhioh have contributed far sore than others to the inflationary spirsU1* However, Br* Evans foe IS thats *Moaetary controls if applied la tins are prsventive la nature but cannot alone stop a v*ge"*prie« spiral nor protoot the public fros the cruel h&HteMps f inflation* direct ooatrols applied to one phase of eeoaosiie activity can accomplish little unless all aspects of the eecftosqr are similarly ooa» trolled* la the face of the 3atlastal eaerfroncy, direct control of prices and w&^ee as mil as allocations mm inevitable. .«fo# Oovoraor 2oolo» 2 • Etosi aoro drastic taxation than i* ao» la oifoot t^wtl O03«stl&l to %h» Go'mrm&nt to waet «xp«adltttr»s for tho dofo&aa of tha aouatry, a* fur m ia possible, upon a pay-asyou-go b*iit. Sum* ad4iti.*ns*l iaaaM, *« an a»ti~i»flationafjr saoaaur®, should ho doaifttad to * Itffir portion of tb» tpeodLog of o&oh aod «rrary « i t U M U * Vttfe rog*r6 to ltr« ftnai* propoaal that tfco aooondaiy or apooial raaorvo ba in th* form of any apm-vmrkQt mligihl* i M t » 4 Sftttfe eoourity of thoir (baafea) individual ahooftlug it should W that * w k a r « t « m would fcav* to bo w r y high to bo offoetivo* laafear talk hold lags offtovorsaantaaotirltios ©qmlod 70 par aoat of thair riawttttf clapoaita m a 50 par eaut of total dapoaita m t>o oatobor o*ll £*t*» though tha raq«i rowKlt would mt ham to feo thit high, it ooold &ot bo w i y naK k lowar and ratals affootiinmaaa* 1 do not think that letting tha ©oo&osy into tha imraaa* that Mr* m m m a**gga«ta in ro«|uiroa or daair&felo for ra«i©fc# that olosaly * m m r paAy your owa» ' \
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