R.E.WoodPresident

Sears,Roebuck and Co.Executive Offices

Chicago

February 18, 1958,

Hon. M. S. Eccles, Chairman,Board of Governors of the

Federal Reserve System,Washington, D. C.

My dear Governor Eccles:

I have been on a ten-day tourof inspection through the state of Texas; so have justhad a chance to read your letter of February 7th.

I quote the following from yourletter: "From your testimony before the Byrnes Committee,I assume that you favor complete desterilization andspending all impounded gold, and that you also favordrastic reduction of reserve requirements." I told, theCommittee that I was in favor of complete desterilizationof the gold and spending all the impounded gold. I saidI had thought the second raise in reserve requirementswas a mistake but that I did not believe it advisable tochange the reserve requirements now.

I think we are writing and talkinga little at cross purposes. I agree with your view thatthere is a disproportion between some prices and I agreewith you that as far as we can do so that unbalanced re-lationship should be corrected. But I also believe thatwe should try to get the price level back to approximatelywhat it was in 1926. It stands now at about 2.0% less thanthat level. I believe the price level itself is more im-portant than the disproportions in it, though those shouldbe corrected as far as possible.

As I wrote you, I am certainly not100^ in accord with Mr. Harriss1 letter, possibly not even50$, but I think what he says about the price level, atleast in so far as it affects getting it back to the 1926level, is sound.

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I have avoided making any publicstatement of my views beyond the testimony beforethe Byrnes Committee, which was forced upon me.I have carefully avoided any discussion of themonetary problem or anything that pertains to theFederal Reserve Board.

One thing more, even though we maydisagree, please be assured that I have never waveredin my belief in your sincerity, integrity and ability.We were discussing matters yesterday at the meeting ofthe Executive Committee of the Federal Reserve Boardof Chicago, and we unanimously agreed that you are theone man in the country fitted for the job and that thecountry is exceedingly fortunate to have you there.Do not get disillusioned or discouraged.

Sincerely yours,

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February 28, 1958,

Mr* R. B. 9ood9 President,Sears, Roebuck and Co,,Chicago, Illinois.

My clear General food:

Tour letter of February 18th is heartening and I, ofcourse, appreciate your generous personal references.

X had not seen the actual text of your testimony be-fore the Barnes Committee. The newspaper reports conveyed, asthey so often do, an incorrect impression. I am glad to knowthat you do not think it advisable to change reserve requirementsnow.

With regard to & higher general price level, it maybe desirable, as you believe, though I agree with what the Presi-dent had to say in the course of his press conference the otherday to the effect that we must consider the possibility of doingan injustice in connection with the great volume of contractualobligations entered into in the last few years. I would not agreethat the price level itself is more important than the dispro-portions within the structure. However, we are not so far apart,and I know that we are both seeking the sane broad objectives,even though we say not always see exactly alike about the varioussteps ahead.

Let me say again what you already know, that I am al-ways glad to have your views fully and frankly, especially be-cause I know how few men there are in the country who have eitheryour grasp of affairs or your public spirited viewpoint.

With kind regards,

Sincerely yours,

if-1 M. S. Eccles,Chairman,

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