Description:

Ronald Reagan
[Washington, DC], ca. July 23, 1981
Ronald Reagan ANS After G7 Summit Wondering "w[h]ether the Fed. is really necessary"
ANS on TLS

An autograph note signed by sitting 40th U.S. President Ronald Reagan (1911-2004) as "Ron" at the bottom of a 1p typed letter signed from Gordon C. Luce as "Gordon." Both the typed letter and autograph note are on a single sheet of watermarked stationery with "San Diego Federal / Savings and Loan Association" letterhead. Ca. July 23, 1981. [Washington, D.C.] The bottom of Luce's letter is inscribed with approximately 67 words in Reagan's hand, including one cross-out. Expected light wear including flattened transmittal folds, else near fine. 7.25" x 10.5." Impeccable provenance as this item comes from the files of Helene von Damm (b. 1938), Reagan's longtime personal secretary and later Ambassador to Austria, and gifted to our consignor, her White House assistant.

President Reagan wrote this note to Gordon C. Luce (ca. 1925-2006), the President and later Chairman and CEO of the San Diego Federal Savings & Loan Association. Luce, who was a leader in the California Republican Party, had served in Reagan's gubernatorial cabinet as the Secretary of Business & Transportation, and would serve on Reagan's President's Foreign Intelligence Advisory Board (PFIAB) in the late 1980s. In the letter Luce sent to Reagan, he assured him that "you are doing a superb job on the many vital subjects facing our nation." However, Luce fretted that "The facts are that with the amazing reduction in our inflation rate and GNP of the second quarter, the Federal Reserve has not been able to respond…"

Reagan replied to Luce in full, with original usage:

"Dear Gordon

Thanks very much for your letter and for the observations about the Fed. I did spend my time in Ottawa telling the others, the Fed & high interest rates were not part of our ec. package.

I've passed your essay on to our ec. types to see if they have an answer to wether the Fed. is really necessary. Again Thanks -

Best Regards

Ron."

Luce's statement that there had been an "amazing reduction in our inflation rate" by mid-1981 was true; inflation dipped to an annual rate of around 8.9% in 1981, the lowest since 1977. Moreover, Luce's assertion that Gross National Product estimates from the second quarter of 1981 were reassuring was also true; preliminary reports showed a GNP of over $2.881 billion.

Reagan wrote his reply to Luce after he had returned from the 7th G7 Summit in and around Ottawa, Canada from July 20-21, 1981. Reagan had convened with leaders from the European Union, United Kingdom, France, Italy, West Germany, Canada, and Japan to discuss the economic situation facing the world's most industrialized countries. In their Declaration of the Ottawa Summit, issued on July 21, 1981, the summit leaders wrote that, with four of the seven nations still suffering from double-digit inflation, their commitment to aggressively reducing inflation and unemployment at the same time was a top priority, along with reducing public borrowing and budget deficits.

Chairman of the Federal Reserve Paul A. Volcker (1927-2019) oversaw the Fed from 1979-1987, and President Reagan renominated him in 1983 during his first presidential term. In the beginning of his presidency, however - and as this letter demonstrates - Reagan was struggling to accept Volcker's polices. Volcker implemented a series of measures that economists later termed "Volcker shock." He zeroed in on tightening the money supply, which caused significant short-term economic pain and led to numerous symbolic protests. Recession was officially reached in the third quarter of 1981. In July 1981, the federal funds rate reached approximately 22%. The average 30-year mortgage interest rate in 1981 was 16.6%. Unemployment peaked at nearly 11%, mostly among construction, auto, and manufacturing jobs.

As we know, President Reagan did not pursue the hypothetical question posed to Luce as to whether or not "the Fed. was really necessary." Chairman Volcker successfully steered the nation through the worst of the Recession of 1981-1982 and is credited with righting the ship after the rampant inflation of the 1970s.

This item comes with a Certificate from John Reznikoff, a premier authenticator for both major 3rd party authentication services, PSA and JSA (James Spence Authentications), as well as numerous auction houses.

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  • Dimensions: 7.25" x 10.5"
  • Medium: ANS on TLS

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