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August IS, 1955*
Governor Eccles
Lauchlin Currie

Memorandum on requiring checking
accounts to be reported on personal in~
co&e tax returns«

The object of requiring checking accounts to be reported on
personal income tax returns would be to throw some liuht upon the
distribution of deposits on the d&te selected (presuaably December Slat)* and to throw s z e light upon the distribution of
deposits according to different income groups* Together with the
data on the cash holdings of corporations as of the same date* it
1 8 probable that a substantial part of the checking accounts of
the country would be accounted for*
Annual information on the cash holdings by income groups
v;ould beftvaluable aid in determining how far the sise of deposits
is a function of income* It would also indicate the extent to
which the deposits of different income groups fluctuated with
business fluctuations* Thus, the information would aid in research
in the problem of the deposit or monetary requirements of individualst
There would be several weaknesses in such a series In the
first place, it would probably be impracticable to secure the
information for a date other than December 51st, This date, from
the point of vi$w of deposit holdings of individuals, is probably
the worst in the year* Secondly, the series would cover the deposits of only the comparatively few people who file income tax #
returns* It is, of course, possible tha- this group holds the
bulk of the deposits owned by individuals* Thirdly, the information
would not be available for at least a year after the date to which
it applies (Statistics of Income for 19S5 is not as yet published)*
This would effectively debar the series from use for operating
The Treasury would probably be reluctant to *£d this question
to its schedules* It would, in the first place, be of no use to
the Treasury, ana its tabulation would put it to soae extra expense* In the second place, such a question would cause wide com~
ment and surmise, and probably an official explanation would have
to be offered* The Secretary might feel that to explain that it
was inserted at the request of the Federal Reserve Board would
offer a precedent for requests by other agencies for information*

C i the i&ele* X should favor deferring this roqueat for the
time being. One of tho objects of the WPA project on which i e
have been working is to relate deposits to incosjea (as ascertained
by regular credits) for a substantial group of personal accounts
over a period of year a • If the project is approved and carried
out* wo will b© in a bottsr position to dccicio whathor Information
on the deposit holdings of the middle and up?or income groups is
significant for operating purposest If v e decide that it ir.f m
will bo in a stronger position in approaching the Trs&frory* On
the other hand, we may regard the information as of sufficient
importance to inaugurate a monthly series obtained directly from
member banks*
Finally, I never like to ask for anything unless there is a
protty good chance of getting itt and in this case I feel very
dubious whether tho Treasury sill accede to our request on the case
we can siake at present* If, however, you feel differently* I shall
ba very pleased to rnko out aa strong & ease aa I can in a letter
under your signature to Mr» Haas*
One request I should like to mako in any cab© is to have tho
flcaah* itm on the corporation balance sheet returns that are filed
s?lth the Bureau of Interns 1 Revenue broken dow& into Currency*
Demand Deposits9 and Time Deposits* Moreoverf I should like to
have banks* bailee sheets reported separately from the finance
group* From our point of viev* tho usefulness of the tabulations
of tho
S* Statistic© of Incoae will be greatly increased by these
two changes*