View original document

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

F o r m N o . 131

Office Correspondence
Chairman Eccles
rom

Lauchlin Currie

FEDERAL RESERVE

BA D
0R

n^ October a, 1955.

Subject: Suggestion for the ultimate
___

disposal of the Stabilization Fund*
tpo

16—852

One of the most serious problems with which we will be faced in
the future will arise in connection with the disposal of the Stabilization Fund* It is not necessary for use in stabilizing the dollar now,
and it will probably not be necessary in the future. It is questionable how long it can be held for this purpose* Gongress will probably
want to utilize it in some manner. If it is spent or used in reducing
debt it will result in the creation of two billion dollars more excess
reserves without giving us any additional power to wipe out the excess.
It would be desirable for the Administration to get the jump on Congress
by suggesting the use of the Fund in such a manner as not to give rise
to excess reserves during the upswing.
Mr. Gardner in our Division suggested segregating it and holding
it as a Depression Fund. This is a good idea, but is probably not
politically feasible* My suggestion is that it should be the Governments contribution to the Social Security Fund and should remain in the
form of §old. It will then be used only at a time when unemployment
im 1«#|§ *T increasing. Its use at such a time would be constructive•
i this proposal could be made attractive as a political proposition.