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t fie ld


p r o u l
alifo r n ia

M a r c h 14, 1,961
z h o jo t

Dear .


k you for your letter of M a rch 3» sncl n ow for your
. I am gled to k n ow that one of the brethren
supported y o u Hmost of the w a y ” in the Federal Open Market, but the vote was always eleven to one, as I recall.


The problem of imaginary history, one-sided explanations,
either/or presentations, and dubious allies, in th battle of
"bills only" has bothered me over the years, as it has you. I
still think that you were right, as an individual and in setting
policy for the Eank, not to engage in a nublic debate on the
matter, after m y abortive attempt to stir up public interest in
what was being done. I think I was right not to take up the
argument, again, after leaving the System. I had two reasons.
One, I did not wis#. to be an embarrassment to the New York bank,
which had to make up its mind and then press its views within
the Committee, un der your direction. Two, I have observed that,
usually, he who continues the attack after he has left the fight­
ing forces is likely to lose his audience pretty quickly. That
has not meant that I did not feel free to make m y views known,
■and thus to keep them alive, whenever they were sought by indi­
viduals, publications, committees and commissions.


As “one resuljs of the partial blackout of conflicting
views during the past few years, the present reversal of policy,
as you point out, has been the .subject of new distortions by
the uninformed (e.g. Arthur Krock) and violent attacks by the
informed partisans of “bills o n l y ” , and it has encouraged em­
barrassing allies. There were some monetary analysts who opposed
"bills only" in the past, however, and I would expect them and
others to be more vocal in opposing a return to that doctrine
if it is attempted. I would also expect that jrou and others
would have a chance to oppose it within the System, and before
Congressional committees with a much better chance of success
than in the past. I shall certainly now feel free to say and
write what I think, about the past and about the future for
whatever that may be worth. I have a lot of material which I
have been collecting during the period of silenceJ
Quite apart from the technical merits or demerits of
"bills o n l y ” , I think it was a great mistake for the Federal
Open Market Committee to let itself become enamoured of socalledMrules of the game", which were to be the ten commandment


2 -

of central 'banking: - carved in stone. These rules made a pious
fraud of protestations of flexibility and contributed to in­
tellectual dishonesty in pretending to study and discuss the
ouestion of "bills only". I am disturbed, therefore, that some
" defenders.of the Federal Reserve"are saying that the abandon­
ment of "bills only" is a temporary expedient and an experiment,
and that the System will return to "bills only" as soon as we are
rid of a domestic recession and a balance of payments deficit.
I would hate to see the System get back into the strait jacket.
My travel plans have been "nudged" up a day, and I will
now arrive in New York on Sunday, April 9, and leave Thursday
evening, April 13. If it turns out that you (and Charlie) are
there at that’ time, I shall count it a blessing. Tr any case,'
I shall t ) U t down Wednesday, April 12, for lunch a t
and I shall try to come to the Executive Committee luncheon’on
April 13. On Tuesday, April 11, I will dash down to Washington
to check in with Bob Roosa and, maybe, one or two others.
With best regards.

► I ’ll send along my flight number and arrival time in
. .
few days* Thanks«
A ./Z ^ f

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102