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"While this was never sent to the Secretary, the Chairman wanted the material filed. ~ ^ . /? BOARD DF GOVERNORS OF THE FEDERAL RESERVE SYSTEM February 13, Mr* Thomas: I believe these excerpts cover the proposals to increase the b i l l rate* If the Chairman wants to send t h i s to the Secretary, I would surgest a l e t t e r similar to the attached draft • I know t h a t the Treasury and members of the committee a r e i n t e r e s t e d in the record, but I don f t think much good w i l l be accomplished by arguing the record ftfc^the Treasury. Secretary Yinson might be i n t e r e s t e d , hov/ever, in studying the reasons underlying our proposals for an increase in the b i l l r a t e . For t h i s reason, I think the l e t t e r sending over the excerpts should be a rather personal and friendly one from the Chairman. February Ij5, I9I4.6 DRAFT Honorable Fred M. Yinson, Secretary of the Treasury, Washington 25, D# 0. Dear Freds Following our recent discussions at the Treasury, I had a review made of our files to obtain the record on our recommendations for changes in the bill rate. After going over the files, I am more than ever convinced that our recommendations were well considered and if adopted would have gone a long way to overcome some of the difficulties encountered in maintaining the pattern of rates, would have reduced the playing of the pattern of rates, and would have obtained a wider distribution of short-term Government securities • In looking again at the complete record, I am convinced that these proposals would have resulted in an interest saving to the Treasury, rather thanAincrease in costs* Particularly is this true of the proposal to sub- stitute 3/lj- P e r cent, 9-month, bills for 3-month bills and j/8 per cent certificates • Since these proposals were not adopted, however, it is of little value to argue that they would reduce or that they would increase Treasury costs. My only interest in reviewing this matter at this time is to assure you again that the Federal Reserve is not interested in higher rates as such, and on the contrary, in view of the size of the debt, is interested in holding down the interest cost. Tfe feel, however, that this can and should be done without further monetizing the debt. - 2Since you have expressed interest in our recommendations during the war for increases in the bill rate, you might like to read the attached copies of memoranda which pretty well cover our proposals* Best of wishes Sincerely, M. S. Eccles, Chairman. Enclosures.
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