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B U R N E T R . MAYBANK. S. C - , C H A I R M A N
G L E N H. T A Y L O R . IDAHO
J. W . F U L B R I G H T , A R K .
A . W I L L I S ROBERTSON, VA.
JOHN SPARK M A N , ALA.
J. A L L E N F R E A R . JR.. D E L .
P A U L H. DOUGLAS. I L L .
R U S S E L L B. L O N G , L A .
CHARLES W . TOBEY. N. H .
H O M E R E. CAPEHART. INO.
R A L P H E. F L A N D E R S , VT.
JOHN W . BRICKER. OHIO
IRVING M . IVES, N. Y.
QlCmteb
A. L E E PARSONS, CLERK
ale* ferrate
COMMITTEE ON BANKING AND CURRENCY
January 30, 1951a
Honorable Marriner S. Eccles
Member, Board of Governors
Federal Reserve System
Washington 25, D. C.
Dear Governor:
That was a fine statement you made before the
Joint Committee on the Economic Report on the 25th
and I appreciate your kindness In sending me a copy
of It. Walter Llppmann will have an article In the
February Issue of Atlantic Monthly recommending that
Germany be a neutral nation. I think that an unarmed
neutral nation would be the last thing that Germany
would want to be but I can well believe that Germany
would like to be treated as a nation and not as a
subjugated area and she would like to take adequate
steps for self-defense.
I endorse your proposal for a balanced budget
but one way to balance the budget is to cut out a
lot of unnecessary domestic spending. Therefore,
I could not endorse a program of sixteen billion
dollars of new taxes or an addition of eight billion
dollars to personal Income taxes. I have heard that
the President proposes to Increase Income taxes by
seven and a half billion dollars but that would put
the rates far above the top of the last war and, in
my opinion, be entirely too burdensome. And I think
you are very optimistic to think that there are three
billion dollars worth of loopholes in the corporate
field. I am inclined to believe that in your youth
you read Thoreau(s statement "To him whose vigorous
and elastic mind keeps pace with the sun the day Is a
perpetual morning".
Sincerely yours »
A. Willis Robertson
• U N M E T It. M A Y B A N K . S. C - . C H A I R M A N
J. W . n J U H W H T , A R K .
H O M E R E . CAPEHART, INO.
A. W I U J « NOSEirraON. VA.
JOHN S T A R K M A N , A L A .
J. A U C N F R C A R . JR., D E L .
PAUL M. D O W L A S , I U .
RUSSELL a . LONG. LA.
JOHN W . M O C K E R , OHIO
IRVING M . IVES, N. Y.
A N D R E W F . SCHOEPPEL. KANS.
E V E R E T T M C K I N L E Y DIRKSEN. I L L .
W A L L A C E P . B E N N E T T , UTAH
A. LEE PARSONS, CLERK
"3ICntieb JS>{<xlc& J&enctlc
C O M M I T T E E O N BANK INO A N D C U R R E N C Y
February 9, 1951©
Honorable M. S. Eccles,
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.
Dear Governor:
I was pleased to receive your letter of
the 5th and have read the statement you enclosed
from the Chicago economists. While there is no
doubt about the fact that when the Open Market
Committee buys securities in excess of sales
such transactions set up bank credit with an
inflationary effect. However, I am not at the
moment prepared to accept without question the
dogmatic statement of the Chicago economists
that all of the inflation that we have had during
the past six months was solely attributable to
the purchase by the Federal Reserve Board of
securities some three and a half billion in excess
of sales. In my opinion there might well be other
factors.
However, I am personally in full accord
with your position over the fundamental issue,
namely, that Congress did not intend for the
central bank to be used by any President as a
rubber stamp in plans for management of the national
debt and irrespective of the views of the Federal
Reserve Board of the inflationary effect of a given
proposal. Congress intended for the Federal Reserve
Board not only to control the operation of national
banks and to assist them when they needed money but
likewise to exercise a measure of control over the
supply of money and credit. It necessarily follows
that if the Federal Reserve Board is forced to buy
an unlimited amount of Government securities which
were purchased by banks and other institutions on
the basis of a yield which later proves to be less
profitable than commercial loans the Federal Reserve
Board loses all control over credit.
My earnest hope, however, is that an area
2
of agreement can be worked out between the Federal
Reserve Board and the Treasury Department through
conferences and mutual concessions by means of
which the current conflict can be resolved on the
basis of general welfare and without the necessity
of Congressional hearings on the issue.
With kind regards, I am
Sincerely yours,
A. Willis Robertson
February 20, 1951*
Honorable A* Willis Rohartsoa,
l&ited States Senate*
Ivashiraston 2$$ D*
i|r d e w Senator fio&erfesoat
Please excuse «gr deLs^ is answering your thoughtful letters
of January 30 And February
As you e m understand, we have been
rather fully occupied on matters requiring iiansediato attention curing
the past two sreeks* I appreciate your egression of agraament with
our position, particularly because X Im&sr that it reflects years of
study of Federal Resort matters and especially careful consideration
of tho present situation. With your background and your basic
pMXosopiy, as I understand it* p i wouM he
mmr& of
Congressional intent
the feder&l B w m should souduet it®
oj^arsfcions with a vier t© th$
of ms^r
credit ueeded by
tha economy and not for the primary purpose of financing the
treaBuiy at *atee of interest helw normal market ra&ss*
I would
with you that tke Chicago eeoae&isie over**
statsd so&arhat the possible influauca of sonet ary policy, "Shils it
it possible that restrictive credit mmmreu s&gfet have entirely
prevented %he prim rim that has occurred la recent mon&he* irtr
the circumstances they sight hare had to bo excessively drastic* I
am coOTineea, bmmwfr, that a
part of the rise
been prevented by appropriate credit policies* Mary of the foree®
tending to bring about price increases, m you indicated, could not
have been offset by credit policies, for example, the sore active use
of exisiii%s
tofeu^ygeeds* Oft the <*ther hand, there were
important factors working against a price rise, tha effects of which
were offset tgr credit expansion,. Among thasa ware the promptly
enacted increase in taxes and tha Govem»Bt*s surplus. jteofcher w m
the outflosr of geld*
The bank loan expansion appears to b© continuing even though
this would normally be a period of loan contraction. In addition,
i&smrance companies and savings banks are selling substantial anounts
of long-term bonds to tha Federal Reserve to obtain funds to xtake
loans on inert gages and to corporations. Eestrictive policies continue to be essenfcial»
Honorable* A* WiUls Eobertson ~ p. 2
For this reason, I em mmry that there is daisy In enacting
til© new tax bill* 1 agree with you that ©Vtary effort should be made
to roduc© e^poodlturea and until that is to© it is difficult to
total sssumat of
a l&rgs smosmfc will be
ite tefi boiler* ihst
thai i^fiag j>osm*
b© c^rtailod
promptly*ffli®excise taxes neod inasediate enactment because their
iminaaca is atisulatiag anticipatory btiyi&s.
Fioally, I should liko to say, in reapoxiae to your suggestion,
that us are exceedingly aaxious to work out cooperative arraagw©nts
with the Treasujy Trhirety through conferences and mutual agreoasents
conflicting policies can
avoided. Wo havo been endeavoring fear
yeara to avoid conflicts and to doing so haw oftea, against our
better Jud^aeut, adopted policios that havo proved not to bo in the
besttoterostsof
coiiistry*
tb&t it
mot but
mcassary to bring sack matters before tfa© President or Congress*
I as eur« you wiH agree, hosrevor, that w© w m M tot be true to our
oaths of office if we should adopt policies irtiich wo are ccaviGOsd
would bo to violation of our statutory responsibilities and aariously
detrimental to tha general wolfaro*
Stocoroly yours,
H» S* goelsm*
• U N M E T R . M A Y B A N K , S . C.. C H A I R M A N
J. W . FULB R I G H T , A R K .
A. W I L L I S R O B E R T S O N . VA.
JOHN S P A R K M A N , A L A .
J. A L L E N F R E A R , JR., D E L .
PAUL H . DOUGLAS. ILL.
R U S S E L L B. LONG. LA-
H O M E R E. CAPEHART, INO.
JOHN W . B R I C K E R . OHIO
IRVING M . IVES, N. Y.
A N D R E W F. S C H O E P F E L , KANS.
E V E R E T T M C K I N L E Y DIRKSEN. ILL.
W A L L A C E F . B E N N E T T , UTAH
A . L E E P A R S O N S , CLERK
'21Cmieb s$>lctle&
Senate
COMMITTEE ON BANKING AND CURRENCY
February 21, 1951a.
Honorable Marriner S. Eccles
Board of Governors of the
Federal Reserve System
Washington 25, D. C.
Dear Governor Eccles:
Thank you so much for your nice letter
of the 20th.
I am still hopeful that an area
of agreement can be reached between your Board
and the Treasury Department.
With kindest regards, I am
Sincerely yours,
-v
V QzI-KjULmJIA-ZS
A\ Willis Robertson
.
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