View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

MSHQfiAXBSi J C THE HOSXMMT
P®
Subject:

Follow-sg? oa Federal Reaerve "criala"

Ob the basis of a friendly but searching two-hour talk
with Chalraaa Jtertia os Monday, May 29# Tobin and I~cbacittdSd
that (X) your announced policy oa interest rates is la Jeopardy? I
(2) this la agt because tf aa iaaiaeat tmmreal dTpolicy t r t c
o fa
Federal finmi, whieh would have raised the luu< of lanediate
Kbits Boum aetioaj (3) rather, it Is a loss of conviction aad
heart la qoftrtaC
pwwsot policy; and {k) the aitustioa calls
for aa early seating with Martin oa your return.
1.

1he aonetsry aituation, as w feared, Is very shaky.
Martin argues that he can’ stea the tide of rising
t
interest rates.

2. He la not yet abandoning tlw afttaapt. Se assured os
that (•) ha will eoatiaue to try, I.e., he will con­
tinue to bap i f e a d a f s aoA long-tera toads, and
acralrc
(b) at the Aaa 6 aaatfng of Ids opea-Market Coeadttee, there «U1 be m rwtm
tsal of this basic policy,
l*a«, the red will aot return to “
billa only."
3*

Bat, he is vary peaeiaistic, has bo hope «f lowering
Interest rates, and, indeed, doubts that the Fed ean
or should atep up its purchases enough to prevent
rates fna rising.

f#
c

fa prevent the wirtmiag of aa l^ortant prop mader
tho Ateialstrctlcn's recovery prograa requires — as
aoea aa eonrealee&y feasible after your return fraa
Sorape — the cooreaiag of tte Tacmetsry policy group"
la your office to urge oa Martin the iaportanea of
vigorous action and to sttffaa his bat* against the
banking cnawnnity (both inside sad oatadda the Fed),
which is pressing h±a to abaatoa your policy of holdlag ioaa iatarest rates uatil the recovery la consider­
ably further along.

Valter V. Seller
WWH/mtf

cc: wWH Black Book
Messrs. Tobin
Memos for President
Gordon
(follow-up on p/27 memo)
v.y?—^ ■
c:'

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