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CORRESP
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SEC Correspondence Letter

 1585 Broadway

 New York, NY
10036

 July 10, 2006

 By U.S. Mail & Facsimile to 1-202-772-9208

 Ms. Angela Connell

 Senior Accountant

 Division of Corporation Finance

 Securities and Exchange Commission

 100 F Street, N.E.

 Mail Stop 4561

 Washington, D.C. 20549

Re:
Form 10-K for the Fiscal Year Ended November 30, 2005
File No. 001-11758

 Dear Ms. Connell:

 Morgan Stanley (the
“Company”) is pleased to respond to your letter of June 6, 2006, concerning its Form 10-K for the fiscal year ended November 30, 2005 (the “filing”). For your convenience, we have restated your comments below.

 Comment: Consolidated Statements of Income, page 109

1.
We note that you do not separately present your costs and expenses applicable to services on your Statements of Income. We also note that you report revenues inclusive of interest
and dividend income, interest expense and the provision for loan losses and that you do not separately present operating and non-operating income and expenses. Please tell us:

•

Whether you track costs related to each of your separately presented revenue line items;

•

Your basis for characterizing interest and dividend income, interest expense and provision for loan losses as “Revenues”; and

•

Your basis for not separately presenting operating and non-operating income and expenses.

 Refer to Rule 5-01 and 5-03 of Regulation S-X.

 Response:

 In
formulating our income statement presentation, we noted that the purpose of Rule 5-03 is to indicate the various line items which, if applicable, should appear on the face of the income statement. In our business, interest and dividend income and
interest expense arise primarily from our trading and market making activities; customer margin lending and other consumer and commercial lending activities; and in connection with our securities borrowing and lending and repurchase and reverse
repurchase activities, which are entered into to facilitate our sales, trading, and brokerage operations. Therefore, unlike commercial and industrial companies, the generation of interest and dividend income and incurrence of interest expense is
integral to the Company’s core operations, and we believe it would not be meaningful to present such items as non-operating activities.

 Additionally,
in formulating our income statement presentation, we have looked to the income statement format provided within the AICPA Audit and Accounting Guide: Brokers and Dealers in Securities (“Broker-Dealer Guide”). We believe that this
approach provides the most transparent presentation for our business given the significance of our broker and dealer activities.

 Although we consider
ourselves to be predominantly a broker-dealer, certain aspects of the Company’s business, such as the consumer loan activities of our Discover segment, are analogous to that of a banking institution. Therefore, in preparing our financial
statements, we also considered the income statement presentation requirements set forth in Article 9 - Bank Holding Companies. Similar to the Broker-Dealer Guide, Article 9 does not require the reporting of operating and non-operating income and
expenses. In addition, it indicates that interest expense and the provision for loan losses should be included in net revenues. We have adopted this approach by analogy.

 Our income statement presentation is also consistent with how we manage our business as well as how investors and the analysts that actively follow our Company evaluate our performance. The nature of broker-dealer
operations is such that management views principal transactions revenues along with related interest and dividend income and expense as one interrelated activity. This view is consistent with our internal management reporting whereby
management’s assessment of the profitability of our sales and trading activities is based on looking at principal trading, interest and dividends in the aggregate and is consistent with how we present our operating results in the Management
Discussion and Analysis as included in our periodic filings. Our income statement presentation for interest and dividend income and interest expense is also consistent with how our peers present the results of their operations. Therefore, given the

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nature of our operations, we do not focus on, nor are our accounting and trading systems designed to, track the costs associated with separately presented
revenue line items.

 While we believe our current presentation is appropriate, we continually reevaluate our income statement presentation as changes to
our business lines occur.

 Comment: Consolidated Statements of Cash Flows, page 111

2.
We note that you have classified cash flows from sales of consumer loans as investing cash flows. Please tell us how you considered the guidance in paragraph 9 of SFAS 102 in
determining the appropriate classification of cash flows related to the origination and sale of loans held for sale.

 Response:

 Paragraph 9 of Statement of Financial Accounting Standards No. 102, Statement of Cash Flows - Exemption of Certain Enterprises and
Classification of Cash Flows from Certain Securities Acquired for Resale, an amendment of FASB Statement No. 95 (“SFAS No. 102”), states, in part, that:

 Cash receipts and cash payments resulting from acquisitions and sales of loans also shall be classified as operating cash flows if those loans are
acquired specifically for resale and are carried at market value or at the lower of cost or market value. Cash receipts resulting from sales of loans that were not specifically acquired for resale shall be classified as investing cash
inflows. That is, if loans were acquired as investments, cash receipts from sales of those loans shall be classified as investing cash inflows regardless of a change in the purpose for holding those loans. [Footnote omitted and
emphasis added.]

 Therefore, in determining the appropriate classification for cash receipts and payments on sales of consumer loans, we first consider
whether the loans were acquired or originated specifically for resale or whether they were acquired or originated with the intent to hold them for investment purposes.

 The balance of Consumer Loans reported in the Company’s Consolidated Statement of Financial Condition for the fiscal year ended November 30, 2005 and in prior periods consists almost entirely of credit card
accounts receivables. To determine the appropriate balance sheet classification of newly originated or acquired credit card receivables, the Company applies AICPA Statement of Position 01-6, Accounting by Certain Entities (Including Entities With
Trade Receivables) That Lend to or Finance the Activities of Others (“SOP 01-6”). In accordance with this guidance, credit card receivables that

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management has the intent and ability to hold for the foreseeable future or until payoff are reported in the balance sheet at outstanding principal adjusted
for any charge-offs, any deferred credit card receivable origination fees or costs, and an allowance for loan losses (i.e., not as held for sale).

 The Company opens credit card accounts with the intent to establish and maintain long-term lending relationships with its cardholders. Similarly, the credit card receivables arising from these account relationships are originated with the
intent to hold them for the foreseeable future. As part of its liquidity and funding practices, periodically management decides whether or not it has the ability to and should sell or securitize some of the existing credit card receivables to
support additional origination activity. If a sale of receivables is deemed practical and desirable, the Company transfers a portion of the credit card receivables, on a revolving basis, to trusts, which issue asset-backed securities
(“ABS”) that are registered with the Securities and Exchange Commission or are privately placed. Thus, the frequency and volume of the Company’s credit card securitization activity varies with the liquidity and funding needs of the
Company. The level of credit card securitization activity can also vary based upon changes in management’s overall funding strategy, trends in cardholder borrowing and repayment behavior and in response to changes in the market’s demand
for credit card receivable-backed securities.

 Upon determining that additional sales of credit card receivables should occur, management then reclassifies
a portion of its credit card receivables as held for sale. These receivables held for sale are carried at the lower of aggregate cost or fair value. As of November 30, 2005, approximately 51% of credit card receivables originated and managed by
the Company were securitized and supporting ABS held by third-party investors. Over the last six fiscal quarters as of May 31, 2006, the percentage of credit card receivables securitized and supporting ABS held by third-party investors has
ranged from 51% to 60%.

 Because these receivables are originated as investments, the net proceeds from sales of credit card receivables are classified as
cash flows from investing activities without regard to the change in the purpose for holding these receivables subsequent to their origination, pursuant to paragraph 9 of SFAS No. 102.

 The Company designates certain other loans (non-credit card receivables), which are originated specifically with the intent for resale, as held for sale upon
origination. The cash flows related to these loans are classified as operating activities pursuant to paragraph 9 of SFAS No. 102.

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 Comment: Note 2. Summary of Significant Accounting Policies - Revenue Recognition – Merchant, Cardmember and
Other Fees, page 114

3.
Please tell us the basis for recording Merchant, Cardmember and Other Fees net of the cost of your cardmember reward programs. Refer to EITF 99-19.

 Response:

 The
Company’s cardmember reward programs constitute point and other loyalty programs, which are excluded from the scope of EITF Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, within paragraph 5 of the
guidance. Paragraph 5 states, in part:

 Also excluded from the scope of this Issue are those display issues that will be addressed in future
issues on accounting for vendor promotional activities, multiple-element revenue arrangements, and “point” and other loyalty programs. [Emphasis added.]

 The Company’s basis for recording Merchant, Cardmember and Other Fees net of the cost of these reward programs is the guidance in Emerging Issues Task Force (“EITF”) Issue No. 00-22, Accounting for
“Points” and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to Be Delivered in the Future (“EITF 00-22”), as codified in EITF Issue No. 01-9, Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products) (“EITF 01-9”), which the Company adopted in fiscal 2001. Paragraph 30 of EITF 01-9 states, in part:

 The Task Force reached a consensus that the vendor should recognize the rebate or refund obligation as a reduction of revenue based on a systematic and
rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate or refund.

 For the year ended November 30, 2005, almost all of the costs associated with the Company’s credit card loyalty programs relate to programs that offer a reward
to the cardholder in the form of cash. This relationship between credit card cash reward programs as compared to credit card non-cash reward programs is consistent across all periods.

 For the year ended November 30, 2005, the total expense incurred by the Company for its non-cash credit card reward programs was de minimis. Although authoritative guidance

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has not been finalized with respect to accounting for non-cash rewards under point and other loyalty programs, the Company has consistently analogized to
EITF 00-22’s guidance for cash rewards to support netting the cost of its non-cash rewards against related revenue. This approach is consistent with one of the views contemplated in the EITF’s discussions regarding EITF 00-22. The Company
believes that the substance of these two types of programs is the same and it is only the form of the reward that is different. The Company also believes its view is appropriate and it has consistently applied this accounting presentation.

 The Company disclosed its adoption of EITF 00-22 in its Form 10-K for the fiscal year ended November 30, 2001. The relevant portions of such
disclosures are excerpted below:

 Note 2. Summary of Significant Accounting Policies (Page 73)

 Cardmember Rewards. Cardmember rewards, primarily the Cashback Bonus® award, pursuant to which the Company pays Discover Classic Card, Discover Platinum Card and Morgan Stanley Card
cardmembers electing this feature a percentage of their purchase amounts ranging up to 1%, are based upon a cardmember’s annual level and type of purchases. The liability for cardmember rewards, included in other liabilities and accrued
expenses, is accrued at the time that qualified cardmember transactions occur and is calculated on an individual cardmember basis.

 In
fiscal 2001, the Company adopted Emerging Issues Task Force (“EITF”) Issue No. 00-22, “Accounting for ‘Points’ and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to
Be Delivered in the Future.” Prior to the adoption of EITF Issue No. 00-22, the Company recorded its Cashback Bonus award program as a marketing and business development expense. In accordance with EITF Issue No. 00-22, such incentives are to
be considered a reduction in revenues and are recorded in merchant and cardmember fees. The Company’s consolidated statements of income for all periods presented have been restated to reflect this change.

 MD&A – Credit Services (Pages 39 and 40)

 Credit Services financial data reflect the Company’s fiscal 2001 adoption of Emerging Issues Task Force (“EITF”) Issue No. 00-22, “Accounting for ‘Points’ and Certain Other Time-Based or
Volume-Based Sales Incentive Offers, and Offers for

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Free Products or Services to Be Delivered in the Future.” Prior to the adoption of EITF Issue No. 00-22, the Company recorded its Cashback Bonus® award program as a marketing and business development
expense. In accordance with EITF Issue No. 00-22, such incentives are to be considered a reduction in revenues and are recorded in merchant and cardmember fees. Credit Services data for all periods presented have been restated to reflect this
change.

 Beginning in fiscal 2004, the Company modified its Form 10-K and Form 10-Q disclosures by removing the specific references to EITF 00-22. The
Company continued to disclose, however, that its cardmember rewards are recorded as a reduction of Merchant and cardmember fees. The referenced disclosures are as follows:

 Note 2. Summary of Significant Accounting Policies (Page 105)

 Merchant and Cardmember Fees. Merchant and cardmember fees include revenues…, net of cardmember rewards… The Company records its Cashback Bonus award program as a reduction of Merchant and cardmember
fees.

 MD&A – Credit Services (Page 47)

 Merchant and Cardmember Fees. Merchant and cardmember fees include revenues… net of cardmember rewards.

 Comment: Financial Instruments Used for Trading and Investments, page 115

4.
We note your supplemental response dated February 1, 2006 regarding your application of the AICPA Broker Dealer Audit Guide and your fair value accounting policy. In light of
the EITF deliberations on this matter we will defer further consideration of this issue at this time. We may have comments at a future date.

 Response:

 We appreciate the update on this matter.

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 Comment: Financial Instruments