View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STRICTLY CONFIDENTIAL

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
Tft

Chairman Eccles

M. Piser




Date January 18,

Subjects Relations of Mr* Rouse with
the Treasury

The following is my understanding of your views regarding
the relations of Mr. Rouse with the Treasury about which you spoke
to me on the phone on January 16 and which you asked me to put in
writing!
Mr, Rouse told me over the phone last week that he had
discussed with Mr. Bartelt the present high level of the Treasury
cash balance and had suggested that the Treasury might redeem in
cash a portion, perhaps one-fourth, of the certificates that mature
on February 1 and all of the bond issues that are callable within
the next few months. In the open market report for the week ending January 9, Mr. Rouse reported that despite the telephone
strike the dealers felt that the Government security market should
remain open, that the Hew York Reserve Bank concurred in this
opinion, and that the Secretary of the Treasury on being informed
of these opinions also concurred. In both cases Mr, Rouse reported
afterward his conversations with the Treasury in which he had made
policy suggestions.
As a matter of organization and not of prerogative, all
policy suggestions should be made to the Secretary by the Chairman
of the Executive Committee. The personal opinions of advisors to
the Executive Committee should not be made available to the SecretaryThis should be made clear to Mr. Rouse by Mr. Sproul.
An alternative to the present arrangement would be for the
Manager of the System Account to be made an officer solely of the
Open Market Committee and not an officer of both the Committee and
the New York Bank, where he also acts as fiscal agent. Question
also may be raised as to whether or not open market operations
should be reported in detail to the directors of the Reserve Banks.