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Herevdth a draft of & letter
to the xresident. riser has checked
the statements and says they are
correct. He says the long bonds
are aoim just under S points.



May 17, 1940.
My dear.Mr. Presi dent:
It occurred to me that you would be
interested to know tew well the bond market has
withstood the ahoeic of the past week's events and
tfeat you would find it re&sswrSj&g from the standpoint of sucli additional financing as may b©
necessary becautae of increased defense needs.
At no tin© lias there been any disorder in
tiie market. The Open Market Coma!ttee has found
it necessary to purchase only $9*5 Billions of
Government securities, whereas in the comparable
period after last September 1, some $300 millions
i%ere purchased to steady the market. The decline
in long term Qniii IIBWIII n has arerag«d slightly less
thaa 3 points, while short term issues h&Ye declined much less, Buyera ha^e 'been in the market
rl^it aloEg, so that at E S tlmo hac there been a
sitiiatioii la which there was any snbstentlal Tolisne
of offerings witii E O takers.
I think the oatparatlf* stability of the
market haB beoa due not only to the fteserre System's
taivae«i that it stood ready to exert its influence
towards steadying the market and to the experience of
those investors wbo sold out last September only to
discover that they were tumble to buy back at lower
prices, as they had hoped, but mairJLy to the fact that
the YQlum© of uninvested funds and of excess reserves
of the banking system is so vast that the market can
be depended upon to absorb ¥irtually any conceivable
amotmt of Government securities that it may be necessary
to offer in the future.
Respectfully yours,

U S« Beelee,
The Honorable
the President of the United States,
White House*