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Chairman Federal Reserve Board,
Mr* Marriner S. Secies,
"Dear Sir,
In your letter to Senator Byrd, may I
ask if you mean to say, "studies made " y a distinguished group of
scholars, under the auspices of the Twentieth Century fund, indicat
-jng that the total of all domestic debts, both public and private,
is no greater today than it was in 1929% and*We have never^had
prosperous conditions without an accompanying expansion of deox,
either public or private or both*"
It seems to me these two quotations taken together deny that
wefve had prosperous conditions under the Hew Deal. That is exactly what I have contended, and as from the earliest indication of
its economic theory predicted it would be.But, at each election
period Few Dealers point with pride to accomplished prosperous
condition^, and now, without expanding debts.
That wDebts and obligations of various kinds are but the other
side of investment, and if we try to liquidate the whole amount of
them, or even any substantial fraction, we would precipitate a crisis so severe that klmA* general economic paralysis would result11
precludes all hope for any endeaver on the part of the Few Deal
to balance our budget; such action might be a contradiction of
its economic theory that debts must be kept equal to capital investment, and is, I believe, the first time the charge has been
made that the Republican administrations, by reducing the national
debt by ten billion dollars, brought on the depression of T928,
AM,to a layman,if "Vhen there Is a contraction of totql
debt public qnd private, we have deflation11 and the accompanying
distress you picture, and I dont doubt it in the least, the future
for labor, industry and government,which is us, looks pretty dark.






January 3, 1939•

Mr* Charles liakinson,
27 Linden Avenue,
YoungStown, Ohio*
Dear Mr* Makinson:
Chairman Eecles requested me to acknowledge
receipt of your letter commenting on his recent
reply to Senator Byrd.
hs Mr. Eccles is not in politics and v«as
discussing economic* not political, matters. I
shall not attei&pt to discuss the questions you
raise as to rival claims either of so-called New
Dealers or of Republican administrations. However,
I am enclosing a copy of the full text of Mr. Eccles1
letter and of his preceding address in iiew York
which was the subject of Senator £yrdfs criticism,
f eling that if you whouid care to look these over,
they might shed some light on the matters which you
Sincerely yours.

Elliott Thurston,
Special Assistant
to the Chairman.