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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.