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Telephone Beacon 2776 FREDERICK H. SCHMALZ Advertising Suite 411-415 Alderway Building Portland, Oregon RADIO Prosrams Auditions Production Live Talent Transcriptions Merchandising Radio Counsel Commercial Copy Announcement Service Exclusive Representatives America's Finest Transcription Producing Companies OUR Program for Y O U Awaits Auditioning in Your Own Offices Portable Public Address Equipment Available for Every Requirement, Sold or Rented January 24t1939 Hon Marriner S.Bccles, Chairman Board of Governors Federal Reserve Systemt Washington^D.C* Dear Sir: listened to your address over I#B#C« last night and understood you-as a private citizen- to say that "deflation is just as bad as inflation",Is that correct? So my way of thinking I would say that it is# Will you advise me why on Aug 16t1936 the reserve requirements of ell member banks of the Ffeder8l Reserve System were increased 50$ by order of the Federal Reserve Board of Governors! Why werfc reserve requirements increased 75$ on Mar lf1937 and on May 1*1937 100% of the legal requirements as of from June 21f1917 to Aug 15f1936? Soon after the Federal Reserve Board1s order of Aug 16t1936 the people of the country learned that we were in a "recession". The actions of the Board on Mar 1 and M8y l t 1937 in increasing reserve requirements first 75$ and then 100$ threw us into a "depression".Is that not true? The order of the Board on April 16f1938 in reducing reserve requirements of member banks to 75$ above the lega 1 requirements as of from June El,1917 to Aug 15f1936 had the effect of raising stock and bond prices on the lew York Stock Exchange and also feed the effect of causing prominent men in business end banking circles to give out interviews freely in the press that business conditions would be get*ting better.Such interviews were absent from newspapers throughout the country from August 15f1936 until Apr 15 f 1938.To my way of thinking the orders of the Federal Reserve Board in increasing reserve requirements as above stated is the direct cause of our present depression#It is inflation of the ?/orst sort# If prices are to be brought to the 19E6 level as was advocated some months ago by the administration-hate not heard any fireside chats along those lines lately-can that not be brought about by reducing reserve requirements instead of persisting in a policy of deflation by the requirement of a 75$ increase in legal requirements as of from June 21f1917 to Aug t 15 f 1936? I am leaving tomnorrow night for lew York and would appreciate having you answer this letter to me care of Iiino&ln HotelfHew York Oity f I«Y # I await your reply with interest* FREDERICK H. SCHMALZ MAKES YOUR January 27, 1939 Mr. Frederick H. ^chmalz 411 Alderway Building Portland, Oregon Dear Mr. kclmalz: Mr. Iccles has asked me to acknowledge and thank you for your letter of January 2^th in which you comment *on his recent radio address and in which you express the opinion that the raising of reserve requirements by the Board of Governors of the Federal Reserve System was deflationary in its effect. Jin_this. particujb&r question, I*think you will be interested to read a copy of the press release in connection with that action. I am also enclosing a copy of Chairman Eccles' speech before the New Jersey £>amcers Association on May 13, 1938, which includes a discussion of this question. Yours very truly, Lawrence Clayton Assistant to the Chairman enclosures LC/fgr