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PRINCIPAL MATTERS OF DISCUSSION 1ITH TREASURY
DURING WAR

Matters of general agreement
Maintenance of rate structure at approximately same level
Endeavor to sell securities to nonbank investors

Matters of difference
Bill rate - Federal Reserve wished higher rate (at least 1/2 per
cent) and more flexibility• Treasury wanted l/k or less*
3/8 adopted* but Federal Reserve at various times during
war recommended higher rate (accompanied by means for reducing Federal Reserve earnings).
Excess reserves - Treasury wanted large excess reserves maintained*
as much as 2 l/2 billion dollars or more in New York. Federal
Reserve indicated that was unnecessary as long as interest
rates were fixed.
Nonmarketable issues - Federal Reserve proposed more use of nonmarketable issues for selling securities to nonbank investors*
and fewer bank eligible marketable issues. Proposals only
partially adopted by Treasury, (memo of January 23* 19i*2* to
Secretary of Treasury.)
War loan drives - Federal Reserve proposed more stringent measures
for policing drives to avoid tffree riding" and "playing the
pattern of rates". Opposed by selling organization for drives.

Attachments
Memo of 2/13/U6* Kennedy to Eccles* reviewing Open Market Committee
recommendations to Treasury regarding interest rates during war*
together with excerpts from records.
Memo of 12/22/1*1* Piser to Board of Governors, reporting various
points of view expressed at a conference at the Treasury 12/18/Ul.
Chart - pattern of interest rates.