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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

Correspondence
Xo

Chairman Eccles
Richard A* iiasgrave V H ^ M

Date January 29,
Subject:

Treasury meeting with

American Bankerys Association

On Thursday of last week, I attended a Treasury meeting
called by Secretary Snyder to discuss financing needs with representatives of the American Banker1 s Association* Mr* Rouse was also
present*
The meeting was brief and limited to a presentation of
recommendations by the banking group* Recommendations regarding
budget policy were for reduction of expenditures first, some debt
redemptions second and tax reduction third* Cf questioning it appeared
fi
that tax reductions seemed permissabl© after debt retirement of, say,
2 billion m s assured*
The group also recommended that the Treasury issue additional
2 1/2*s, in an amount of at least 1 and 1*5 billion this year* The
argument was that without such policy, prices would be pushed up and
the rate pattern be upset* On questioning, it appeared that the new
issue should not be bank eligible, but otherwise unrestricted* lo
thought had been given to a restricted issue of the G Bond type*
It was stated at the end of the meeting that formal recommendations would be made to the Treasury on this and other points later
in the week* I understand that the Treasury will meet with other investor groups during February*

Copies to:
Governor Draper
Governor Evans