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BOARD OF GOVERNORS DF THE FEDERAL RESERVE SYSTEM Office Correspondence To "Fram Mr* Ecdes Date_ November 2, Subject: Mr> Carpenter You will recall that a few days ago following the meeting of a committee of life insurance representatives with the Secretary of the Treasury, there was reference in the press to a letter sent by Mr. Harrison to the Life Insurance Association and the American Life Convention. In a telephone conversation with Mr. Bouse, he told me that he had obtained a copy in New York and would send one down to me. It arrived this morning and a copy of the letter is attached for your information. Attachment COPY HEW IOEK LIFE IISDB&HOE COMPANY 51 Madiaon Avenue New York 10, Mew York October 21 f 1948 GEORGE L* HABRISOtf Chairman of the Board Mr* Leroy A* Lincoln, President Life Insurance Association of America 165 Broadway, lew York* N* X* and Mr* W» !• Bixby, President American Life Convention 230 £• Michigan Avenue Ghicagof 111* Gentlemeni As you knowf the Joint Coimittee on Monetary Affairs of the Life Insurance Association of America and the American Life Convention urns invited by Secretary Snyder to hold one of its periodic meetings with him in his office at the Treasury Department last Monday, October 13* The committee spent two hours at the Treasury Department going over various charts and figures and in an exchange of views vlth the Secretary about the poaiibility of our cooperation jta the struggle against inflation whichf at he painted out, is of such great concern to the country as a whole and to our policyholder© i& particular* He emphasised at the outset that he would not under any circus Btances ask us for or expect BXIJ ^agreement11 about restricting our loaning operations• He understood that it in quite impossible for us to make any such agreement or coaroLtment* either as a eomlttee or as a group of insure anee companies* He did say* however$ that he hoped that the coMittee might in its owa m y take ®oa@ steps to inform the insurance tmsinessf as a whole* of his v i e w of the existing dangers to our ecomoay and thms serve to create an atmosphere of caution on the part of lending insurance companies just as the American Bankers Association haa endeavored to do with the banks of the country* lour committee pointed out to the Secretary that the life imsur-* anee businees as a Khole is equally concerned about the rapid spiral of rising prices! that we have individually and aa a group, ev#r siBce the b©*~ ginning of the m r f endeavored to do our part to restrain inflation} that we have participated in a countrywide cooperative advertising campaign against inflation} that many companies have circulated brochures among their pollcyholdera indicating ¥hat individuals might properly do to restrain inflation} and that the coraAttee itself had written to him when he flrat aesuaed office as Secretary of the Treasury reiterating its views of we in the insurance field, the public and the government might do to help combat inflationary pressures* The purport of the Secretary10 discussion H E B that we might tryto fojwtlate same program alaed toward restricting unnecessary inflationary loans* He pointed out that he m a aware that m n y loans were needed by industry &®d co^terce to increase production and to facilitate distribution and that these loans Bay well be isade within any reasonable program of roltant&ry credit control* Ve stated that while moat # if not all f construction loansp ^wheth^r for housing or for new industrial facilities^ might be considered inflationary * certainly in the first instance9 judgment a might well.differ as to ^fa&t ie a necessary or an tmnecessary loaa# Ijasad on its social 01* tccm^^Lc : mkie* The Saeret^ry agreed with ua that this is eo and that each company mist- be left free to make itsc o m decision of this difficult question* Bat ve..all felt timt it ^^ould be helpful if each company would make this decision in tae present period of rising prices in an atmosphere of caution and restraint* The committee manured the Secretary of its desire to cooperate with hia efforts to restrain unnecessary inflationary pres^urea and atatad that we would, advise you of our meeting and our discussion BO timt, tliromgii you, yomr membership might be informed and be In a position to n&e its own judgment aa to the actual social or economic need for &ny particular loan in the light of present conditions* Sincerely yours$ (Signed) George !*• Harrison GEORGE L. HARRZSOK Chairman of the Cosnlttee*
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