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May 6, 1966

Dear Alt
This is to say goodbye for this trip, and to thank
you again for all of your courtesies as well as to give you a
final report on lay conversations.
In Heir York, since I saw you last Monday, I have seen
\ Doug Dillon, David Rockefeller, Bob Roosa and Walter Heller.
\ la contrast with people I had previously seen around the town,
1 all of these men are for an increase in taxes, now. Dillon,
I Rockefeller and Eoosa had;:all been to Washington t© see Secretary
Fowler as members of his blue ribbon committee on the balance of
‘ payments. They strongly recommended an increase, with particular
reference to the contribution It could make to the improvement
of our international financial position. Walter Heller, as you
nay have read* has finally Joined the ranks of those not under
of fie lit! wraps : come to the same conclusion with respect to
the needs of the domestic sitution.
In Washington the Treasury is repeating its performance
with respect to monetary policy in its attitude toward a tax
increase. I did get;an intimation, however, that the Secretary
nay f e sore Bourbon than the "king" on this score'. Ackley is
reported to be sort of neutral against a tax increase. The
President and Wilbur Mills are said to be the keys to the
situation« and both just sight be moved to embrace the idea.
There is some support in the X*abor-Management adfcsory committee
Thieh has been reactivated to advise the President on how to
combat inflation. If this is not Just another delaying action
something might eoae out of the next meeting of the committee on
Hay 13* 1111 Martin, of course, is on the side of the angels,
publicly now as well as privately and within the councils of
the administration.
Unfortunately, the temporary cutback in production
at General Motors and the .flop in the stock m a r k e t will be seized
on by those opposed to « tax increase as signs that the economy
is levelling off. I place little stock in such opinions in the
light of the broat base of oar economic activity and the increasing
demands of the war in Vietnam. In fact, I am more firmly of the
view than I was when I came east that this is one of those
economic situations which can make or break intelligent economic
management and that, unless a tan increase is brought forward
soon# it will be '"break".

With all the best*
/#/ Allan
Allan Sproul

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