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ALSO M F R . OF MORTISE CHAINS BARS & SPROCKETS SOUTH BOSTON II I I B O STOK 323-9 A V E N UE 27 February 23 1945 Mr. Marriner 0. Eccles Chairman Federal Reserve Board Washington, D. C. Dear Mr. Eccles: Don!t you think your suggestion of taxing speculative profits is suggestive of the dangers of large increases in prices both of stocks and real estate coming as it does on the increase of margin requirements? Both such moves immediately carried these implications in my mind. If there is such a thing as practicability these days might I suggest that the soundest means of price control would be the reverse of these movements? In 1929 I think that the collapse was largely caused by holders of securities who were reluctant to pay the then existing taxes on gains--that a larger supply of stocks which would occur with lower taxes or no taxes at all is the surest way to restrict price advances. The higher the tax the fewer the sales and, consequently, that old fundamental law of supply and demand will come into operation,and to undesired operation. I am positive that as you remove existing freedoms of movement you are tinkering with fundamentals disastrously—that these fundamentals are as positive as the tides, that they are natural and man hasnft the brains nor the power to safely redirect them. Theories are attractive but dangerous and often unworkable. Furthermore the power to tax is the power to destroy--and could it be that your idea is to do this? You are a powerful man in this country and it is my sincere hope that you use that power with wisdom and conservatism. Yours very truly, whf/n GÛÔO MACHIN€RY . ( ^ William H. Field IS A N I N V e S T M S N T - N Ô T AN €XP€NS€ , February ¿7, 1945. Mr. William H. Field, i/villiara H. Held uo., 3*3-9 Dorchester avenue, Boston ¿79 Massachusetts. Dear Mr. Field: It is a curious fact that in the same mail that brought your letter of February ¿3> I received one from an outstandingly able manufacturer and investment banker of national reputation who remarked that the opposition to my proposal with respect to the capital gains tax would come not merely from Wall Street sources, but from communists who want to destroy our system. I am, therefore, puzzled when I read your letter, which reaches precisely the opposite conclusion, namely, that this and other steps to control inflation would destroy our economic sysfcep. Certainly I have every reason to favor only such measures as would preserve this system and I am not consciously proposing anything that would have the contrary result. I am fortified in my views by consultation with a great many well informed people for whose judgment I have a high regard* I could hardly agree that the 19*9 collapse was largely caused by the then existing capital gains: tax, or that a larger supply of stocks induced by lower taxes or no taxes at all would have been the solution then. The difficulty in 19^9 was not price advances, but the fact that funds accumulating for investment did not find outlet in new enterprise but spilled over instead into stock market and real éstate speculation, among other things. While my power is very slight, such as it is I hope to use with all the wisdom I can gather. Sincerely yours, M. S. Eccles, Chairman. ET:b
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