The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
TELEGBAM Marriner S. Eccles, Chairman Board of Governors Federal Reserve System. Win, lose, or draw, X admire your courage. W. Randolph Burgess. W. RANDOLPH BUEGESS 55 Wall Street Hew York 15, H. Y. December 5* 19^7 Dear Marriner: Shanks for yours of December 3- Sony I missed you a t lunch, but I was working on our memorandum* Ho one can object to your driving hard for your proposal, but I did think that your attack on the motives of ihe people who oppose you was quite uncalled f or* TShat I hope i s that after the shooting dies down on this we can a l l keep hammering on some of the other things that must be done i f we really are to make a dent on this inflation. I n the meantime I am not sure you realize how great a change has taken place i n the money situation. By even relatively modest action a great deal has already been done to change the trend* i f i t i s yet enough, but i t a t least is a good s t a r t . Sincerely yours, (Signed) Honorable Marriner S. Eccles Chai man, Board of Governors of the Federal Beserve System Washington, D. C. Randolph. I doubt PERSONAL AND CONFIDENTIAL December 17, 19U7- Dear Handy: As I have been very busy these days, I have n o t had an opp o r t u n i t y u n t i l now t o acknowledge your l e t t e r o f December 5* A c t u a l l y , I thought I was most r e s t r a i n e d i n commenting on t h e a t t i tude o f some of t h e bankers, f o r t u n a t e l y n o t a l l o f them. They a l l have t o s u f f e r , however, f o r t h e mistakes o f bad l e a d e r s h i p . I d i d n o t a t t a c k t h e i r motives b u t went out o f my way t o i n d i c a t e t h a t they were n o t t o be blamed f o r t h e i n f l a t i o n which has t a k e n p l a c e so f a r . They were w i l l i n g v i c t i m s , however, o f the expansion o f bank c r e d i t b u t I r e f r a i n e d f r o m saying s o . There i s p l e n t y o f room f o r honest d i f f e r e n c e s o f o p i n i o n over t h e Board f s p r o p o s a l . To s t i g m a t i z e i t as s o c i a l i s a t i o n o f banking comes about as close t o demagoguery as a n y t h i n g I can t h i n k o f . X was s o r r y t o see t h a t s o r t o f t h i n g i n t h e C o u n c i l ' s s t a t e ment. I t was a l l t h e more r i d i c u l o u s i n view o f t h e f a c t t h a t t h e Council had unanimously j o i n e d i n t h e S p e c i a l Heport t o Congress a t t h e end o f 19h0 which recommended d o u b l i n g what were t h e n t h e maximum reserve requirements p e r m i t t e d by l a w ; t h a t i s , 26, 20 and l i * p e r c e n t on demand deposits o f the r e s p e c t i v e classes o f banks. That was f a r s t r o n g e r medicine t h a n t h e Board's p r o p o s a l , as I t h i n k would be c l e a r t o anyone who examined i t unemotionally and w i t h o u t t h e innuendoes which were i n t r o d u c e d i n t o the d i s c u s s i o n . ยป The weasel words i n t h e C o u n c i l ' s statement h a r d l y dispose me t o f e e l very k i n d l y . For i n s t a n c e , t h e statement suggested n t h a t t h e System and t h e Treasury a l r e a d y have l a r g e powers w i t h o u t new l e g i s l a t i o n t o place c r e d i t tinder broad r e s t r a i n t s , 1 1 and then l i s t e d t h e r e l a t i v e l y innocuous d i s c o u n t r a t e , reserve requirements a t c e n t r a l reserve c i t i e s , coupled w i t h t h e statement t h a t "by open market operations t h e System can c o n t r o l t h e reserves o f the member banks and l i m i t t h e i r l e n d i n g power. w I f t h a t means a n y t h i n g , i t means t h a t the Open Market Committee should abandon market s u p p o r t . When he t e s t i f i e d , Hed Brown was c a r e f u l t o say t h a t he d i d n o t f a v o r any such course. That s o r t o f d o u b l e - t a l k i n t h e statement goes a g a i n s t my g r a i n . I t i s a l l a p i e c e w i t h t h e increased g o l d reserve requirements which somebody s o l d t o Mr. W o l o o t t . I f i t had s u r v i v e d i n Congress i t might have embarrassed t h e Reserve Banks somewhat i n t h e i r day t o day o p e r a t i o n s . Otherwise i t was meaningless o r , as C o l l i n s o f t h e Hew York Times p u t i t , hoax, pure and s i m p l e . " I t d i d h e l p t o muddy t h e waters and add t o t h e c o n f u s i o n . - 2 - I t had a l l the earmarks o f aa attempt t o do by i n d i r e c t i o n what i t s proponents were a f r a i d t o oome out openly and advocate, t h e more so because i t was put forward i n t h e House i n such an e x t r a ordinary manner, w i t h o u t any p r i o r n o t i c e t o the System or any opport u n i t y t o be heard. I disagree one hundred per cent w i t h Stewart Baker, b u t a t l e a s t he was f r a n k enough t o say he wanted the Reserve System t o stop support of the market. There i s nothing devious about t h a t . I am n o t so naive as t o expect t h a t the opposition w i l l always be open and aboveboard, and I am not so simple as t o be e n t i r e l y tinaware as t o what i s going on behind the scenes. M i i l e 1 am on t h i s s u b j e c t , I want t o say t h a t I was s o r r y t h a t your bank descended from i t s usual high l e v e l of discussion t o a paragraph i n the December L e t t e r t h a t appears under the sub-heading, n A Dangerous P r i n c i p l e , 1 ' and t r i e s t o make i t appear t h a t the Board*s proposal would place "the c i t i z e n s of the country under l e g a l comp u l s i o n t o buy i t s ( t h e Governments) bonds." t h a t k i n d of t h i n g i s h a r d l y worthy o f comment. You have known me long enough t o know t h a t I do not bear grudges, but I would not be e n t i r e l y f r a n k i f I d i d n o t say t h a t t h r e e members of the Board, a f t e r the discussion w i t h the Council, spoke w i t h a g r e a t deal of resentment about your s u p e r c i l i o u s a t t i tude, p a r t i c u l a r l y towards me. I n view of your a l l too apparent contempt f o r t h e Board's proposal and what I had t o say about i t a t the meeting, and i n view of some of t h e testimony by Council members, i t i s g r a t u i t o u s , t o say t h e l e a s t , f o r you t o w r i t e t h a t you t h i n k iny " a t t a c k on t h e motives o f the people who oppose (me) was q u i t e unc a l l e d f o r . " Considering the provocation, my prepared statements and icy testimony under questioning have been very r e s t r a i n e d indeed. Having gotten t h i s o f f xqy chest, I f e e l b e t t e r . Perhaps i t f s t h e approaching Christmas s p i r i t . I n any case, I am l o o k i n g ahead, not backwards, t o a new and b e t t e r year f o r a l l o f us* Sincerely yours 9 (Signed) Mr. W. Randolph Burgess, 55 Wall Street, Hew York 15, Hew York. Marriner.