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BOARD DF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
Chairman Eccles
Richard A* Mis grave v\iv^

Date
Subject!

¥r« Rouse reports on

Treasury Discussion

Mr* Rouse called and said that he had some discussion with
Mr* Wiggins after last weekfs Treasury meeting "with the savings bank
people* Mr* Wiggins was interested in his current reactions to the
issuance of a long-term bond*
Mr* Rouse reports that Mr* Wiggins seemed to favor issuance
of a restricted long-term bond along the lines which we have proposed.
The matter had been discussed with the Secretary and apparently some
objections arose the last minute—it being argued that a special issue
tt
would point in the direction of compartmentalizing0and that this
might be bad* Thus, the decision was postponed*
The discussion also covered the bill matter* Mr* Rouse1s
impression was that the Secretary was more favorably inclined towards
the Committee1 s proposal than was Mr* Wiggins*
Mr* Rouse also reports that he has another appointment with
Mr* Wiggins tomorrow morning to continue the discussion*




Table I
FUNDS AVAILABLE FDR DEBT EBTIEEMENT IN FISCAL YEAR 1 1 - - Ifi*
947
(in billions of dollars)

iiscal
- year

I
.9I4S
Assumptions
3rd quarter i|.th quarter 1st quarter 2nd quarter

No tax reduction l/
(a) Ho expenditure cut^/
(b) ?Jith expend, cut *5j
With tax reduction hJ
(c) No expenditure cut
(d) With expenditure cut
*

1.2

1*7

.6
1.1

- .7
—

5.1

-1.1

5.7

- .It

7.0

-1.6

3.8

-1.8
-1.1

3.5

- .
9

1.0

The Treasury balance for June 30, 1947 is assumed at 2.5 billion dollars. Thereafter, the balance at the end of each quarter is held at 1.8 billion, including
free gold of 1 billion*

l/ In estimating tax receipts the following annual rates of income payments are
assumed; I76 billion dollars for first half of calendar year 1947> 165 for second
half of calendar year 19^71 152 billion dollars for first half of calendar year

1948.
Assumes that 750 million dollars of foreign aid expenditures not provided for in
budget are offset by reductions somewhere else.
3/Assumes net reduction of recommended budget total by 2.5 billion dollars.
hj Assumes Conference Committee bill, providing for income tax reductions effective
July 1, 19^7* resulting in yield loss of 3*5 billion dollars on fiscal year
basis.