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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.