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FEDERAL RESERVE BANK
OF NEW YORK

M I S C . . 3 6 2-100M -2-53

OFFICE CORRESPONDENCE
d

To

FpriM

a t f

September 29f 195A

g.m.FOT Rtefler Memorandtnn on "Volume of

Sproul

▼a. Profitability of Borrowing."

H. V. Roelae

Dazing my absence earlier this month, Biefler's memorandum with your
attached note went to Mr. Booaa. He has sent me a hand-written note which reads
as follows:

(
(

"I think Biefler cuts it too fine his way. The
balance is on his side, pretty definitely, bat there* s
still roam for profitability as an independent influence
at times. And the aim of the whole complex is, pre­
sumably, to make the discount rate effective by having
it in close touch with other money market rates, and then
being able to move the galaacy of other money market rates
when the discount rate is moved.
•Therefore, I think the last sentence on page 9 is
much too categorical. The main point is that we're all
getting back to rates as key parts of our thinking on what
policy can do, and should do."
I also received a copy of Riefler’s memorandum from Governor Mills

and sent the attached letter to Win.

It seemed to me at the time that Win

had made a real effort to think through the logic of the problem, and that when
I found one instance where his efforts seemed to deserve commendation, I Blight
gracious enough to say so (especially in view of the fact that I so rarely
1 that way about his products).

I must admit, however, that the fact that

he and I happened to be on the same side of the argument had something to do
with my decision. I have argued the question with Karl Bopp in the past,
I think it was fairly obvious that my introductory remarks at the June meeting
were in conflict with &arl's paper.
What I did not realize was that there was so large an element of emotion
involved; if I had, I might have been a bit more cautious in my remarks.

Karl

Bopp told me on our way back from the meetings last week that on a previous
trip to Washington he had encountered a rather tense atnosphere, especially as



FEDERAL RESERVE BANK
O F NEW YORK

M I S C . 3B.2-100M-2-53

OFFICE CORRESPONDENCE
D ate

To___ Mr. Sproul
F

rom

___

H. V. Roelae

S
-

u b je c t

September 29. 1954

.

2-

regards Vin Riefler, and bad taken the initiative in going to Win’s office
after the meeting to talk the thing out with him. It is too bad that such
r

/

questions,which should have dispassionate and open-minded consideration by all
concerned, should have to get so fouled up by emotional reactions.
I think I shall have a chart prepared to illustrate the points made
in ay letter to Biefler.




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