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MI S C. 1 4 0 A
(M IS C .

140 A. f —36 M—2 -5 4 )

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ederal

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York
NEW YORK 45 . NEW YO RK

A lt. Kauri E , Bopp, V ic e P re s id e n t.
F e d e ra l R eserve B ank o£ P h ila d e lp h ia ,
P h ila d elp h ia 1, F a .
D e a r K a rl:

M ay 16* 1955

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l h air* m l Dm d ra ft of y o « r paper e t M o M ^
w hich yon >«b I semi la s t v ic k , and 1 haven’t enough s p e c ific com m ents to
w » ffw rt sending b tc k
e x tra copy w ith n a rg b tftl a a to tiw u . la g e n e ra

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M y s p e c ific com m ents v t r f i w tte p icayu ae. r i r i t , th a r«
la aa ©14 phobia o f »Im d w hich re la te s to tha i nfla tio n a lte r W orld W ar I I

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th« p a p tr e x c e lle n t, the vox* o f balanced y e t p ro vo cative « m « y
o f the fie ld w hich w t have com e to expect fro m yon.

Y iltt l e m i?
it l& i
A# tk#
took
lk »
b a r bet was concealed o r suppressed, aad th a t the ra w ty a v a ila b ility of
«v «4tt la Dm p riv a te econom y a lta r tha w a r «ii wot so ta rg e a cause aa m ost
people b elieve o r m ih s m . Y ou r seco n I parag rap h on page 2 awakened th is
re a c tio n .

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I d id gat throw n o ff tha tra c k a little wham yea s ta rte d w ith
W M v ttU B ty aa a a * o f tha ah jaettvae o f c e n tra l bank p o licy * aa to w het
yoa w ere ta lk in g about c e n tra l banking in g en eral o r la tha W aited S tates
You picked me up la te r when yott pointed oat th a t we have been able la rg e ly
I to d ia re g a rd o u r balance o f paym ents ia pursuing m onetary p o lic y . Yon
I m igh t w ant to th row la a parag rap h cm the closeness - day to day * w ith w hich
\ \
1 c e n tra l banks la m ost fo reig n co u n tries have to follow the fo re ig n exchanges
(j \ \
j \ and the balance o f paym ents. In c id e n ta lly , in tha sam e a ra a yon changa
\ f fro m c o n v e rtib ility to re d e e m a b ility a t tha bottom o f page 5 , b «t d o n 't aay
Y w hat yon m ean by re d e e m a b ility . &o yon want to get la ta dom estic
I
conve r tib lilty ?
1 lik e d w hat yon had to say about guides and judgm ent, aad
about the su pp ly, a v a ila b ility aad cost o f c re d it. P erhap s 1 lik e d p a rtic u la rly
yo ur statem ent th a t no d ire c tiv e o r sp ecific gnide w ill te ll the p ra c titio n e r
w hat to do a t 11:00 a .m . oa T h u rsd ay. It is a fa ilu re to understand th at
.
sim p le fa c t, w hich u n d e rlie s som e o f the p r e s e t d e s ire to m ake the
\^ * *
 M anager o f tha System Open M a rk e t Account m ore d ira c tly resp onsible to
http://fraser.stlouisfed.org/
the F e d e ra l Open M a rk e t C o m m ittee. I can th in k o f nothing m uch w o rse
Federal Reserve Bank of St. Louis

*

M r . K a rl R . Bopp

5 /1 6 /5 5

Thursday. U w n M 1m 11:00 » , » , «m FfW ty before t&ft d lN t t iv i om arged.
Becauae I b«li*v* a© ti» iW |U y la what yon aay ab«at the Federal Opan
Markat Comsnt&§«• n l t»tha quotatioayou
o t page U, la m alarmad
ly
tfcud&tt&ir to trv to
tifcii C ^ sia ilte i m&iS
body, ft kaa anough to do coaklag policy, It It | « i H i capacity to 4$ that
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SiaeiMlf,

A lla n Sproul

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