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The Papers of Charles Hamlin (mss24661) Hamlin, Charles S., Scrap Book — Volume 202, FRBoard Members 205.001 - Hamlin Charles S Scrap Book - Volume 202 FRBoard Members BOARD OF GOVERNORS OF THE • FEDERAL RESERVE SYSTEM Office Correspondence To The Files From Mr. Coe Mae August 1, 1941 Subject: After correspondence with Mrs. Hamlin (see letters of May 25 and June 4, 1941) the items attached hereto and listed below, because of their possible confidential character, were taken from Volume 202 of Mr. Hamlin's scrap book and placed in the Board's files: VOLUME 202 Pages 11 & 12 Draft of memo on "Direct Pressure". Page 26 Memo to Mr. Hamlin from Mr. Smead re Hedging by millers and cotton manufacturers. Page 29 (X-6555) Conversion of Canadian Currency. Page 31 (X-6556) Revision of Open Market Procedure. Page 45 Letter to Board on establishment of Branch at Wichita. Page 92 Letter to Governor Young from Governor Harrison re Bank for International Settlements. Page 108 Request for Opinion of Attorney General re B. I. S. Statutes. Pages 110 & 111; 112 & 113 Memoranda and correspondence re Bank for International Settlements. Includes cablegram from Mr. McGarrah to Mr. Harrison in Paris, letter from Mr. Mills to Gov. Young, analysis of Mr. Mills' memorandum, etc. Page 114 Memo re trust agreement between the signatory creditor Governments and Bank forInternational Settlements. - (Draft) Pages 115; 116 & 117 Resolution re B. I. S. Statutes. Page 119 Letter to Governor Young from Governor Harrison re Bank for International Settlements. Page 156 Total Bills & Securities, by Classes, Members' Reserve Deposits, Monetary Gold Stock. )7 , 4440; 7404,0$444-All At-e..4.44. '4440 )4-6 >, /14. 04 The year 1929 opened with brokers loans and security loans of member banks in record volume and total Reserve batik credit in larger volume than in any year since the post-war crisi s. Collateral indications uerived from the intense activity of the securities markets and the unorecedented rise of security price s gave unmistakable evidence of an absorption of the country's credit ia specu lative security operations to an alarming extent. There was nothing in the position of commercial credit to cause concern. The dangerous ele- ment in the whole credit situation was the continued growth of the volume of speculative security credit in the year 1928. The measures taken by the federal reserve banks in the year 198 to firm money conditions by sales of open market investments and by Successive increases of discount rates from 3-1/2 per cent at the opening of the year 1928 to 5 per cent in mid-year 1928 had not proved adeauately effective. The second half of the year 1928 witnessed an aggravation of the conditions that had called forth the firm money policy of the Federal reserve banks in the first half Of the year. The credit situation confronting the Federal Reser ve System at the opening of the year 1929 still stood in need of correction; the problem was to find suitable means by which the growing volume of speculative security credit could be brought under restraint without occasioning avoidable pressure on comme rcial credit. -:;ith the System's portfolio of Government secur ities depleted by the sales made in the first half of the year 1928, the main or VOLUME 202 PAGE 11 TnTfITOI:ra crOLTAGCT, T.LOTX rosLaem, AoTrIme .p7ol1 O. 13;empr;;. p7T: T7 .rjo Tr.ceneo g(IcTAT.r.'LJ 7.7,A OL cpmG fT0 ;0:7Y LI/OOL(F AOTTJ7JG y7, 59?GLAG Pm17 7 ("0(IT 7 77i7BTCi .r.T!=7 PL07!01.$3 /0731? r.7 .Jr.i tTJYr exclusive reliance in a further firming of money conditions must be by marking up of discount rates and bill rates unless some other expedient could be brought to bear in the situation. Advances of buying rates on bills were approved by the Federal Reserve Board in the early part of the year 1929, which carried them above the prevailing 5 per cant discount rate. These ad- vances resulted in a rapid and great reduction of the System's holding of bills and sustained pressure on the banks through rediscount- ing, and in a further firming of conditions in the open money market particularly the market for call loans. The Board was not, however, disposed to regard favorably further increases of the discount rate as the appropriate method of correcting the untoward features of the existing credit situat ion as it involved the Federal Reserve ystem. It set forth its views of how the Federal reserve banks should deal with the matter in a letter to them under date of February 2nd, in which it stated that "A member bank is not within its reasonable claims for rediscount facilities at its Federal reserve bank when it borrows either for the purpose of making speculative loans or for the purpose of maintaining speculative loans." A further elaboration of its position was contained in a statement issued to the public February 7th,reading as follow s: 14.404,t4 • 44.4444k4.i. 444444,04 24 ri do -1(44.4 1444-14. P-6 4t.,A,4; - ONO to estimate the It is not for the Federal Reserve Board uences of its intergeneral expediency and the larger public conseq vention by "direct pressure" in the comple situation existing at the time the above statement was callea forth. 2 (5 °' It may be remarked, Board resulted however, that the course of action adopted by the ntial conservation witnin four months of its application in a substa 000 f the country, and of the credit resources of the banking 4e essential needs particularly of tne Federal reserve banks, for which arose later in the year. It may be remarked further that pressure" ark-a-4road-this experience with the application of "direct s as a method fti-e demonstrated its practicability and effectivenes , &61 firmness and its reasonof Reserve banking control when applied with in certain cirablenes4s a method of Federal Reserve intervention Its potentialities an 4t anizadisorg credit of types n certai its availability in dealing with cumstances)when applied with discretion. tion can no loner be seriously doubted. , .0 1 1,44 40 /444,..2.k -d-i-4-- )11r,t44(„A ,;(4444 tittudia 11.) ++/DO e.4.,•.•••• Au. i ott,.... 1 1-0e . 1 - 12 11-11V146f. a, - Id % - 4 ‘1. - 4441 /0, a. 02,AW, 2., 2. DS*/e 1t /a/ ya , 2.42- , - 2.0 c,6 bãc 4 mA. C, A-6.4, / -(44 y L LI2t co /73 j-cA4e 14A . i -4— 4- 7_9 ,L4rat.4,&.1 4e.e-dr--)24.4. 0.-•-•.‘ v-0 ks,--4-01 1....4.--r.4.40-1-4 • 4-...-4.4.4•4•14 *21 Y- -24 at-L-c-t VOLUME 202 PAGE 12 0.3 "1-••'"'L orna No. 131 Office Correspontence To Mr. Hamlin From Mr. Smead FEDERAL RESERVE BOARD Date_ April 2, 1930 Subject: He4aing by millers and cotton manufacturers. •PCI 2-8496 In accordance with your request of yesterday I an giving you herewith illustrations of the use of hedging by flour mills and manufacturers of cotton goods. A considerable interval must necessarily elapse between the time Wheat is purchased by a flour mill and the grain is milled and the flour ready for market. Since the price of flour at any time is based largely upon the price of Wheat at that particular time, the manufacturer protects himself against fluctuations in the price of wheat by the sale of an equal amount of wheat for future delivery. For example, if wheat is purchased in say January he may sell July wheat and cover his short sales by the purchase of July Wheat from time to time as the flour is actually sold. If wheat should be selling at a substantially lower level at the time the mill sells its flour, the miller will be in a position to cover his Short sales by nurchasing July wheat at a reduced price, utilizing the profit thereby realized to make up the loss on his flour. On the other hand if,at the time of the sale of the flour, wheat is at a substantially higher level the miller will be obliged to cover his short sales at a loss but will offset such loss by the higher price which he will be able to realize on the sale of his flour. In other words a flour miller may protect himself against a loss occasioned by a decline in the market price of flour after he has purchased his Wheat by means of short sales of wheat. In adopting this practice, however, the miller loses any opportunity he might otherwibe have of making a profit by reason of an increase in the market price of flour between the time he purchases the wheat and the time the flour is marketed. The sale of futures, therefore, transfers the speculative risk from the miller to the wheat speculator. In the case of cotton the situation is somewhat different, inasmuch as. the manufacturers of cotton goods frequently sell their product considerably in advance of manufacture. Accordingly with a known price for the manufactured product the mills can only be protected against fluctuations in the price of cotton either by buying at once for actual delivery the cotton they will need or by buying cotton futures with a view to the subsequent sale thereof from time to time as cotton is actually purchased in the market. This practice is known as "buying hedging" and is emrloyed when the product of the mill has been sold before the raw material to be used has been purchased. Selling hedging is em— ployed, just as it is by flour millers, when the mill accumulates a stock of raw material for use in producing goods for sale at some subsequent date. In this case the Short sales are covered by the purchase of corresponding futures as soon as orders for the goods are received. VOLUME 202 PAGE 26 • 5.44, /144 FEDERAL RESERVE BOARD WASH!NGTON X-6555 ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD March 31, 1930. SUBJECT: Conversion of Canadian Currency. Dear Sir: Under date of November 7 the Board advised you that it had approved the report of the Committee on Canadian Currency, and enclosed vith its letter, X-6413, a copy of the Committee's re)ort, also a co:py of the letter to be addressed to member banks and of the statement to be released to the press. On November 15 the Board sent you a telegram modifying somewhat the press statement and the letter to be sent to member banks and on November 13 it advised you that it had voted to postpone the effective date of the plan for the conversion of Canadian currency into U. S. funds. This matter has again been reviewed and the Board has decided to make the effective date of the plan Tuesday, Aril 15, 1930. The press statement will be released by the Board at 2 o'clock on that date and it will be appreciated if you will release the statement at the same time at your bank and, if you think advisable, at each of your branches, if any. You may find it advisable to amplify somewhat the letter to 'Le sent to member banks but the Board would suggest that no changes be made in the statement to be riven to the press. Co-lies of the revised press statement and of the letter to be sent to member banks are attached hereto. Vex.; truly yours, E. M. McClelland, Assistant Secretary. Enclosures. GOVERNORS OF ALL F. R. BASKS. VOLUME 202 PAGE 29 • X-6555—a , 1930. SUBJECT: Canadian Currency. To Member Bank Addressed: Enclosed herewith is a statement which the Federal Reserve Board and the Federal reserve banks and branches have given to the press, relating to the conversion into U. S. funds of Canadian paper currency spent in this country. In accordance with this statement, you may include Canadian paper currency in your shipments of United States currency -provided the two kinds of currency are properly segregated within the package. Credit for such currency will be ,, - iven for its face value and when the cost of conversion into U. S. funds is determined it will be charged to your reserve account. As brought out in the accompanying press statement, the average cost during the past three years of converting Canadian paper currency into U. S. funds, including both exchange and shipping charges, has averaged less than 1 per cent. X-6555-b FEDERAL RESERVE BOARD STATEMENT FOR THE PRESS For release Tuesday, April 15, 1930. SUBJECT: Canadian Currency. The Federal Reserve Board announces that a plan has been worked out and will be put in operation for handling Canadian currency deposited with Federal reserve banks, at a minimum of the actual collection charges incurred by them. The discount on Canadian currency brought into the United States by travelers has frequently ranged as high as 10 and sometimes even as high as 20 per cent, at places remote from the border line. This is regarded as excessive and has given rise to some feeling in Canada, especially as United States currency is generally accepted at par in Canada. The Federal Reserve Board has taken the subject up with the Federal reserve banks and they have agreed to offer their facilities to member banks for the collection and conversion of Canadian paper currency into United States currency at the curre_I_L.L.g/L21_flc_change. The Federal reserve banks will absorb -the cost of shipping Canadian paper currency from the member banks to their-FMective Federal reserve banks but will deduct an allowance to cover the actual exchange charges, gri7-177717737=Shipping charges, if any, from the Federal reserve banks to the points of conversion into United States currency. The average cost during Yne -past three years of converting Canadian paper currency into U. S. funds, includinF.r both exchange and ship-Ding charges, has averaged less than 1 ner cent. This method of handling Canadian currency by the Federal reserve banks, will it is hoped, result in substantial reductions in the cost of collecting this currency. The Board feels that if member banks cooperate in this matter by extending a similar service to their customers, Canadian tourists traveling in this country will find American merchants willing to accept Canadian currency at or near -oar. • Loo. FEDERAL RESERVE BOARD X-6556 WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD SUBJECT: .7 March 31, 1930.•j Revision of Open Market Procedure. Dear Sir: Under date of January 23, 1930, a letter was addressed to each Federal reserve bank advising of adoption by the Board of a revision of the open market procedure made effective in April, 1923. This letter expressed the belief of the Board that the procedure adopted contained the essentials of a workable plan designed to give expression to the common interests of the Federal reserve banks in matters of open market policy and to provide a reasonable and practicable method for joint action. It requested that after each bank had had time to consider the plan its views • thereon be forwarded toBoard. On March 24th and 25th, a meeting was held for the consideration of open market Policy attended by representatives of the twelve Federal reserve banks. At the conclusion of the rear business, a thorough discussion was had regarding cnen market procedure in the light of letters which had been received by the Board from the directors of eleven of the Federal reserve banks. Following this liscussion the representatives of the Federal reserve banks, with the Governor of the Federal Reserve Board, were appointed a committee to -pre-)are a further revision of the Plan acceptable to them. This revision was then thoroughly discussed by the Board and the representatives of the Federal reserve banks, with the result that some further changes were made. The revised procedure in its final form, copy of which is attached, was unanimously agreed to by the representatives of the Federal reserve banks. It has since been considered by the Federal Reserve Board and was a...12pted by the Board without change, to become effegliya_ltaz_Eatoards2f_clit,eziaLaeof the twelve Federal.. reserve banks. Please, therefore, submit the matter to the Board of Directors of your bank at its next meeting and advise the Board whether your directors accept participation in the Open Market Policy Conference under the plan as revised. In the Board's letter of January 23, 1930, it was pointed out that certain working arrangements which might be necessary would best be determined by the conference itself when organized. In this connection, the representatives of the Federal reserve banks at the meeting on March 24th and 25th voted it to be the sense of those present at the meeting that the representative of the Federal Reserve Bank of New York on the Open Market Policy Conference should be elected chairman for one year; VOLUME 202 PAGE 31 -2- X-6556 that the Executive Co,umittee, provided for in the procedure, Should consist of the chairman and the representatives of the Federal Reserve Banks of Boston, Cleveland, Philadelphia and Chicago for one year; and that the conference adopt a principle of reasonable rotation in the membership of the Executive Committee after the first year. By order of the Federal Reserve Board. Very truly yours, E. M. McClelland, Assistant Secretary. TO THE CHAIRMEN OF ALL FEDERAL RESERVE BANKS. (Enclosure) • X-6556-a f/ (Draft of open market procedure as revised at the meeting of the Federal Reserve Board with representatives of the Federal reserve banks on March 25, 1930, and adopted by the Federal Reserve Board.) "(1) The Open Market Investment Committee, as at present constituted, is hereby discontinued and a new committee, voluntary in character, to be known as the apen Market Policy Conference, is set up in its place. (2) The Open Market Policy Conference shall consist of a representative from each Federal Reserve Bank, designated by the Board of Directors of the bank. (3) The Conference shall meet with the Federal Reserve Board upon the call of the Governor of the Federal Reserve Board or the Chairman of the Executive Committee, after consultation with the Governor of the Federal Reserve Board. (4) 'The function of the Open Market Policy Conference shall be to consider, develop and recommend policies and plans with regard to open market OiI. (5) The time, character and volume of purchases and sales shall be governed with the view of accommodating commerce and business and with regard to their bearing upon the credit situation. (6) The conclusions and/or recommendations of the Open Maricet Policy Conference, when ap,proved by the Federal Reserve Board, shall be submitted to each Federal reserve bank for determination as to whether it will participate in any purchases or sales recommended; any Federal reserve bank dissenting from the -pronosed policy shall be expected to acquaint the Federal Reserve Board and the Chairman of the Executive Committee with the reasons for its dissent. (7) An Executive Committee of five shall be selected from and by the members of the Conference for a term of one year, with full power to act in the execution of the policies adopted by the Open Marl,cet Policy Conference and approved by the Federal Reserve Board, and to hold meetings with the Board as frequently as may be desirable. (8) Each Federal Reserve Bank participating in the Open Market Policy Conference dhall be considered as waiving none of its rights under the Federal Reserve Act; each Federal Reserve Bank shall have the right at its option to retire as a member of the Open Market Policy Conference, but each bank while a member of the Conference shall respect its Conference obligations." FEDERAL RESERVE BRANCH BANK JOINT-COMMITTEE REPRESENTING BANKS IN COLORADO, OKLAHOMA, TEXAS AND KANSAS WICHITA, KANSAS Geo. H. Hamilton Chairman To the Federal Reserve Board: This Joint Committee has received notice of your disapproval of its Petition to require the Federal Reserve Bank of Kansas City to establish a Branch at Wichita, Kansas. On September 14th and again on December 20, 1923, a similar Petition was denied for the reason, as we understand, that the Board had decided not to establish any more Branches. After the denials in 1923 of a Branch at Wichita, this Board in February, 1927, established two Branch Banks, one at San Antonio, Texas, the other at Charlotte, N. C. The action as to San Antonio and Charlotte caused this Joint Committee to renew its Petition for a Branch at Wichita. This was done because the Committee assumed that its Petition would be considered on its merits and would be granted if as good a showing was made for Wichita as had been for Cherlotte or an Antonio. At the close of the first Hearing on December 16, 1929, and since the second Hearing on January 20, 1930, the Committee has been assured by members of the Board that the showing made by this Committee was the best made by any group of Banks that had petitioned for a Branch. The 507 Banks situated in the 71 counties that authorized this Committee to 15resent its Petition are disappointed, but not uiscouraged. This territory in Southwest Kansas, Eastern Colorado, Northwestern Oklahoma, and the Panhandle of Texas constitutes a ccmmunity whose banking business is principally conducted within such territory. This Committee, as part of its evidence, made a count of all transit items mailed out for collection by twenty representative Banks during fifteen days in December, 1929, on points within and without the territory represented by this Committee. The result showed that about seventy-five per cent (75%) of the items in amount and number were on banks in this territory and only about twenty-five per cent (25%) on points without this territory. A question was raised as to the reliability of this survey inasmuch as it did not include a large number of banks. To meet this criticism, another survey was made of one hundred other representative Banks in this territory for thirty days in January and February of this year. The result of that survey was not known until after our Petition was disapproved. The result, however, is now available and shows that the survey made last December was substantially correct. The survey of the one hundred other banks shows: VOL. 202 PAGE 45 Items on Points In Petitioning Territory Out-of-Territory Items on points West of K. C. Mo. Out-of-Territory Items on K. C. Mo. and points East of K. C. Mo. Per Cent of Amt. Per Cent of Amt. Per Cent of Amt. 70.4% Per Cent of Number 74.9% 16.1% Per Cent of Number 13.1% 13.5% Per Cent of Number 12.% This last survey proves that the territory in which the 507 Banks are situated constitutes a community whose principal banking business is done within and not without that territory. The Committee must have failed to present all the facts to the Board or the Petition would have been granted. The development and progress in the territory in which the 507 Banks are located is not temporary, but permanent. This territory produces more wheat than any other equal area in the United States. Kansas produces on an average more wheat than any other State. The wheat production of this territory equals that of Kansas. The flour mills in the Wichita trade territory together with the mills located in Wichita represent a milling capacity of 54,690 barrels of flour per day. A Federal Reserve Branch established in Wichita would, because of its location, render a much needed financial service to the farmers, grain dealers and millers of this very important agricul-airal area. This Branch Bank is not asked to help build up Wichita, but because the 507 petitioning Banks can be better served by a Branch in that city rather than by the parent Bank. There is a community around each existing Branch that is better served by such Branch. If that were not so, such Branch would be discontinued. Wichita is the banking center of such a community. The Banks and the people that they serve are entitled to as good service as those who live in the territory surrounding existing Branch Banks. The Branch at Charlotte serves 65 counties; at Helena 56; at San Antonio 55; at Houston 40; at El Paso 37; at Spokane 28; a Branch at Wichita if this Petition is granted, would serve 71 counties. A Branch Bank should not be located in a city because of its size or importance, but to serve the Banks in the surrounding territory. Under such a rule, is not Wichita and the 507 petitioning Banks as much entitled to a Branch as the Banks surrounding the existing Branches above referred to? This Committee recognizes an obligation imposed upon it by the 507 Banks and the business and agricultural interests that have so loyally supported it. This obligation will not be discharged until its Petition is finally granted. For that reason it is its purpose to continue its organization and renew its Petition at an opportune time in the future. It has an abiding confidence that when the entire situation is made plain to the Board, it will grant its Petition. Respectfully submitted, THE JOINT COMMITTEE Representing 507 Banks in Southwestern Kansas, Eastern Colorado, Northwestern Oklahoma, and the Panhandle of Texas. March 15, 1930. COPY FEDERAL RNSERIM BArx NEW YORK A pril 17, 1930. Dear Gawernor Young: Referring to my discussion yesterday eith the Federal Reserve Board concerning a cable from Mr. McGarr/419 dated April 11, a copy of which I left with the Board our board of directors have today voted "sUbject to the approval of the Aderal Reserve Board, to authorize the officers to open and maintain a bankinc acconnt on our books for the Bank for International Settlerents and to carry out operations in this market for the Bank for International Settlmments along the WWW3 general lines and subject to the eame terms and conditions as we do for foreign central banks having accounts ritbvs." I shall very mneh aleerecieto your advising we whether the foregoing action of our direetora moeto with the approval of the Federal Reserve Board. You will no doubt recall that the first three paragraphs of Mr. McGareehle cable ask whether Vie Federal Reserve Bank of New York wishes to object to certain propored acts of the Ban7e for Inteeeationel ettlements in this mareot, relnttn1 pr'eentenlly te the Nale and voting of its stock, I understood from ey conversation with the Doard that the trensactions referred to ie .teen three 2araara-ehs eere not of el character concerning which the Board would care to have an opportunity formally to express its objection and that this bank should feel ':'ee, eithoet ferther reference to the Federal Reserve Board, not to voice any dissent in our reply to these paragraphs of Mr. McGarrahls cable. I mention this now merely to be sure that there is no question concerning my understanding of our conversations yesterday. In this conneetiun our directors at their meeting to day were of the opinion that there is no reason for this leullc to erprese any dissent to the qetions mentioned in these three paragraphs. I am planning, as agreed with the .Twara, to go to ' ,Oehington Monday further to discuss the procedure to be followed by this bank vis-a-vis the ?lidera' neserve Board, if and when we are given at. opportunity to express our dissent to a reparation bond issue in this market and hope that in view of the discuseion which I have today had with our directors, following my meeting with the Federal Reserve Board yesterday, we Shall be able to agree upon some mutually matisfactory formula. PaithiUly yours, (Signed) George L. Harrison, Governor. Honorable R. Ale Young, Governor, Federal Reserve noard, Washington, D. C. VOLUME 202 PAGE 92 O 411ril 23, 1930. Reauest for Opinion of Attorney General. B. I. S. Statutes. C.S.H. does not deem it necessary to ask an opinion, but if an opinion is asked for, in his opinion it should assume a form somewhat as follows: VOLUME 202 PAGE 138 1. Has the Federal Reserve Bank of New York authority to answer affirmatively or negatively any questions which have been, or may be, submitted to it by the B. I. S. under Section 20 of the B. I. S. Statutes with relation to the offering of securities in the United States, except after securing the consent or approval of the Federal Reserve Board under its power of regulation and general supervision of the Federal reserve banks? 2. Has the Federal Reserve Bank of New York, acting under authority of the Federal Reserve Board, or the Federal Reserve Board itself, any power under the Federal Reserve Act to pass upon by way of dissent or approval any issue of securities, domestic or foreign, as a condition precedent to their offering in the United States? 4.44 folk (co) fpril lls 1930 Federal Reserve Bank of !ew York ,Ce-s, York First Lloetin-, of loard definitely set for 4ril 22. Believe it would be helpful if boforo that date you could adviso no formlloridurther: You haw) any abjoetion to the selection of the First / National Tim% New York as the financial institution to exercise votiag ri,;hts a-iplioable to the In for International 5ettlaments 'Mares placed in Amorioas this selootion to be effeative for one year or until a successor is amointedo T.0 4hother undor Artiolu 20 you objoet to the private dis- trtbrttrn in your market by the bmting group haft* .orran ^, 1141,, Co. of 16000DISsbares. ..hether you hove ar4y objoeti4 to Bank tor International :iettlemants instruo%11c, Eergan goo to employ in the Anwiean rosIest the proceeds af the silo of shares uhioh will anolot to a.7:)roximately 04000,07k about lig of *Leh in early mcturing long torts investments to be selected by them and delivered toyo. for nur ea Ain't the rot:Abider to be raid in cash to yln for cu? ;Mother you ITS williag to tteeept the mistraty r4f these secoxitie s and to invest this cash in priLe billto FIV- • .hother ym are agreeable to the Bank for International ,ettlo- Notts open1n4 SIX 0 general aocount with you an the t.sual central bn41. term. It sos would this exttind to your eating as scent and clorros- pendent for the Bank for In4ornational 3ett1emonts under rerfTr41i L of rtiole 22 status should oeeasian 'Jake it desirable or do yuu prefor that question of agfinaY be dotOrred? VOLUME 202 PAGE 110 Vigkirrah 4--44441/,a444-44• 4. OZAA / adJi 1140.444,1 144-44g4i .24.44 ,3 44 of ov. 14. Z C., 2,•34" 6--ci THE UNDERSAICRETARY OF THE TREASURY WASHIAGTON April 14, 1930. dear Roy: I enclose herewith aemorandum which I have 7)reDared on the question of operations to e undertaken by the Bank for Internatiobal Settlements on the limerican market. It may serve to clarify the issues and to furnish a basis for acreeMmat among all concerned. Sincerely yours, (Signed) Ogden L. Mills, Undersecrotary of the Treasury. Hon. Roy A. Young, Governor, Federal eserve Board, Washington, D. C. Enclosure. VOLUME 202 PAGE 111 COPY The proposed onerations of the 13/kn, ' . for International Settlements in the United States market may fall within the jurisdictions of (I) the State and Treasury Jsepartments in so far as auestions of international -nolicy are concerned: (0 the New York Federal Reserve Bank as the Federal Reserve Bank located in the principal financial center of the country and as such designated in the statutes of the B.I.S. and in the so-called Deed of Trust as the agency to be consulted; and (3) the Federal Reserve Board by virtue of the general supervision and direction which it exercises over the credit policies of the Federal Reserve System. The ultimate responsibility for making a decision on questions of important international or financial policies should be definitely fixed and, if possible, a conflict of authority should be avoided. It seems to me that the questions likely to arise naturally fall into three main groups, and that the character of the questions indicates rather definitely which of the three agencies should assume the responsibility as a matter of principle for making final decisions in each case. The offering of reparation bonds in the United States market. (a) Subsection (c) of Article XII of the Trust kzreemsnt between the creditor governments and the Bank for International Settlements provides t-at no issue of an international character may be made in the market of any of the countries the government of which has signed the Trust Agreement without the apnroval of that government both as regards the amount of the issue and as regards the conditions on which it shall be authorized. This is in addition to the provision requiring the B. I. S. to ascertain Whether the central banks concerned, have any objection. If the governments of the other principal countries affected are to have the right to veto, the United States Government should likewise have such a right. Indeed, it already exists and is recognized by virtue of the practice of consultation with the Secretary of State on the part of bankers before foreign governments are permitted to offer their obligations in our market. Given the existing practice and the above mentioned provision in the Trust Agreement, the New York Batik might well take the position, and so inform the B.I.S., that it 'mild not exercise its prerogative as provided for in the Deed of Trust and the statutes of the Bank in so far as it applies to reparation bonds without consultation with the United States Government. The question then arises as to whether the New York Bank should consult with the State or Treasury Departments and the Federal Reserve Board as well. The reference of this question to the New York Bank, to the Secretary of State, and to the Federal Reserve Board is altogether too camnlicated a procedure, particularly in view of the fact that if the Secretary of I State and the Federal Reserve Board disagree, the decision of the Federal Reserve Board would probably be controlling in so far as the New York Bank is concerned and the Board is not in a position to give due weight 3- to the international policy involved. It can fairly be argued that the State Department is primarily responsible for the foreign policies of the country and in view of the existing practice should he the one to have the final decision. On the other hand, the Federal Reserve Board may contend that a bond issue is necessarily a credit operation, and this being so, that it should have the right to exercise jurisdiction over the decision of the New York Bank, on the ground that such a loan is bound to affect the credit situation in the United States. Under these circumstances, might it not be well to have the New York Bank refer the matter to the Secretary of the Treasury, representing the Administration, who is also Chairman of the Federal Reserve Board? H. could then advise the New York Bank, after consulting with the Secretary of State and with his colleagues on the Federal Reserve Board. (b) Under exceptional circumstances it is conceivable that a short-term credit operation undertaken by the B. I. S. in the American market might be of equal importance to the United States from the standpoint of international pOlicy as a reparation bond issue. I do not an- ticipate the likirlihood of this question arising, but I think provision should be made that in the event it Should arise it Should be treated under the procedure above outlined applicable to reparation bonds. AS to both of these classes of oases I think the umdirstanding could be covered by an exchange of letters between the Secretary of the Treasury and Chairman of the Federal Reserve Board and the Governor of the New York Federal Reserve Bank. -4- The other classes of questions which may arise do not appear to concern the State and Treasury Departments, but refer to the degree of supervision and control to be exercised by the Federal Reserve Board over the New York Federal aeserva Bank in its dealings with the B.I.S. In order to understand what questions are likely to arise, it is necessary to consider the nature of the operations to be undertaken by the B.I.S. The Bank may: (a) buy and sell gold coin or bullion for its own account or for the account of central banks; (b) hold gold for its own account under earmark in central banks; (c) accept the custody of gold for account of central banks; (d) make advances to or borrow from central banks against gold, bills of :exchange and other short-term obligations of prime liquidity or other approved securities; (e) discount, rediscount, purchase or sell with or without its endorsement bills of exchange, cheques and other shortterm obligations of prime liquidity, including Treasury Bills and such other Government short-term securities as are currently marketable; (f) buy and sell exchange for its own account or for the account of central banks; (g) buy and sell negotiable securities other than shares for its own account or for the account of central banks; (h) discount for central banks bills taken from their portfolio and rediscount with central banks bills taken from its own portfolio; (i) open and maintain current or deposit accounts with central banks; (j) accept: (I) deposits from central banks on current or deposit account; (II) deposits in connection with trustee agreements that may be made between the Bank and governments in connection with international settlements; (III) such other deposits as in the opinion of the Board come within the scope of the Bank's functions. The Bank may also: (k) adt as agent or correspondent of any central bank; (1) arrange with any central bank for the latter to act as its agent or correspondent. If a central bank is unable or unwilling to act in this capacity, the Bank may make other arrangements, provided that the central bank concerned does not object. (m) If in such circumstances it should be deemed advisable that the Bank should establish its awn agency, the sanction of a two—thirds majority of the Board will be required; enter into agreements to act as trustee or agent in connection with international settlements, provided that such agree— ments shall not encroach on the obligations of the Bank towards third parties; and carry out the various operations laid down therein. In carrying oat these functions in the American:market the 13.I.3. may act through the New York Federal Reserve Bank as its agent or correspondent, or through private bankers. Moreover, it appears that the 13.I.3. may act as agent or correspondent of the New York Bank. Thus our second main problem may be subdivided into two classes: The first covering the operations of the B.I.S. with the New York Federal Reserve Bank acting as its correspondent or agent; the second, covering operations of the M.S. tlirctigh private bankers, but where the New York Bank is to be consulted as to Whether it has any ob— jections under the terms of the B.I.S. statute. As to class one, I see no reason why the B.I.S. should not be treated as any other central bank of issue, or any other foreign correspondent, and, therefore, the New York Bank in its direct re— lationships with the B.I.S. should conform to existing practice and the terms of Section 14 of the Federal Reserve Act in so far as supervision and direction by the Federal Reserve Board are concerned. If, in its direct relationships with the New York Federal Reserve Bank, the B.I.S. is in exactly the sane position as any central bank of issue, this situation seems to be fully covered by existing law, and I should think that the T:ederal leserve Board w)uA be satisfied to have the rules governing relations} pa with other central banks apply in this case. The second class, namely, that covering operations undertaken through private ban'7ors, but requiring the consent of the Lew York Bank, is obviously not covered by either law or practice. a new situation. This is The statute of theB.I.S., by definitions names the New York Bank as the institution whose consent must be obtained before any financial operation is carried out by or on behalf of the B. I. S. an the United States market or in United States currency. The New York Bank is under no legal obligation to consult the Federal Reserve Board before dissenting or before withholding a dissent. But inasmuch as the rederal Reserve Board represents the Federal Reserve :ystem as a whole and is charged with the supervision of credit conditions in the country as a whole, and inasmuch as the operations of the B. T. S. might under certain circumstances affect credit conditions, it is clear that in some eases at least the Lew York Bank should not dissent or withhold dissent except with the approval of the Board. It seenls equally clear that it should not be required to do so in. the case of ro.ttine transactions, particularly when consultation with the New York Bank would largely be in the nature of a formality.. For instances in looking over the powers of the B.I.S. we find that it may buy or soli gold coin or bullion; may buy or sell bills. It doss -7not seem to me that the Pederal Reserve Board should. be given the right to veto transactions of this character any more than it would in the case, let us say, of the Bank of France or of the Bank of England, or for that matteri any other foreign institution that cares to invest its funds in the American market. And. in so far as the purchase and sale of gold are concerned, clearly, as long as we have a free gold market, we cannot impose restrictions on the B. I. S. or any other institution or individual. Indeed., in so far as transactions of this character are concerned I assume that the assent of the New York Bank would be largely a formality. On the other hand, it is apparent that some of the c?erations that might be undertaken by the B. I. S. in our market might be in the nature of credit operations. In these cases the attitude of the New York Bank would be an inportant one, and. I feel that the federal Reserve Board. should be consulted. After considering in detail the various operations that might be undertaken by the B. I. S. in the American market, I have reached the conclusion that the principle to be applied in determining whether as to a particular operation the New York Bank may act independently, or whether its position should conform to the wishes of the Board, is whether the operation in question, by its nature, is a credit operation. If this test be applied to the various questions that can fairly be expected to arise, I think it will be found that it will furnish a satisfactory dividing line and that no difficulty will be experienced in adopting a working rule based on this principle. To summarIzz, I believe (1) that proposed reparation bond. tomes, of short—term credit operations directly or indirectly governmental in character, arhould not receive clearance by the New York Nderal Reserve Bank without the approiml of the Secretary of the Treasury, the latter to consult the Secretary of State and his colleagieu on the Federal Reserve,Boardr(2) that the New "York Bank in its direct relationships with the B. I. S, as agent or correspondent should conform to existing law and established practice affecting its relationships with central baillrs of issue; and (3) that in so far as operations undertaken by the B. I. Si in the New York market are concerned, if those operations can fairly be described. as credit operations, the New 'York Bank should not dissent or withhold dissent without the aporoval of the redere.1 Reserve Board. • 441116, 1930• • dr al-wft.ty.t4;4. .4,4,414 /“.44•44,4•44A4.40. 1. Trust agreement All signatory Governments to approve every issue of an international character, ,4 06.41, 4,, 4,444.04,644,,,,A4 44.4.4.444,4444A 0600114. 2. United States not a signatory but should have same right. 3. Administration has long exercised similar rights as to foreign loans. 4. Federal Reserve Bank, New York, also given right to approve or reject uI der Statutes of B.I.S. 6.400 40.444.064•44.44,47 IN dd.+ Cipt• 4"-# 19.4 5. Federal Biserve Bank, New York, Should not approve or disapprove without consultation with the Government. 6. Too compliulted to consult with Secretary of State, Treasury, and Federal Reserve Board. 7. If Board disagreed, e.g. with State Department, Board would control by virtue of its general control over Feieral Reserve Bank, New York. 8. Board not in position to gtve decisive weight on question of internationll policy involved. 9. State Department is primarily responsible.for foreign policy, and, in view of its existing practice, should have final decision. 10. Federal Reserve Board, however, may feel that proposed loan might have serious effect on credit situation in United States. 11. Proposed procedure: Federal Reserve Bank of New York to refer question to Secretary of Treasury. Secretary of Treasury to decide after consulting, — (a) Secretary of State (b) Federal Reserve Board 12. Any short tenn credit operation involving international poliw. Treated same as 11 above. 13. Suggests exchange of letters to cover this. 14. VOLUME 202 PAGE 112 Agency or correspondent relation. Same as any other central bank. Federal Reserve Board to govern. 2. . qr. 15. Only exception — routine transactions such as dealing in gold or bills, not involving credit operations. (C..H. su,44ests Board give general authority to Federal Reserve Bank of New York to act, just as it does now.) 41-A-i_z:".." 1' .&-- (-_, ...u-.E ,,-g-L --t. 2,-L-,.......4-4( -,,-44.-=.. „i -. ,L.L.:24 4, .i... S, 4us. 11- --f..-4,4-t i ---A4 3 7. 'td-1•L•t-t•A 2.2.. )41tA0Z.A' 64. C.ft.A4L/Z '" 1( 44.;;,iS A4 ;.‘r . i. 2J 6 j'4A7 •t+.1(LA e4/LkL4. a °1 •41>A1 2, 2. ( 1 6"7P14& 6- 6 j_, s, Lyt, I. Aa4hE 4-4-I.7.t. 4' La s c4-A4Z, e—C4-4-A-4-4.0t •A-.--/ 23. . 'It. 23 6 -X- 4-6 C.,44.e..1 6,. 7.-‘, 2- -3 /6 i. L44 LA-1---L-1-4--t, "C 4. •1(...kr4., 44. -e&z. . - '&4 Jrz:4-1 .1-6 . 1?, C cb SZ itJAAA.e.4, Acec-pt-a_ 4t,t,tt S i&o-sc4- 6-e•.- ide 44._ g,6 " k t 4A-4 " 4112-mireh-4.4.0.4.3147 CArler...4.14144 (,6 Apri169, 1930. 4.4.. • MaIORANDUM moommesimoN. E 7.4...4.01 4444.44444•4 4,441- i04064,644 1. Article 12, Sub-section C of the trust agreenent between the signatory creditor Governments and the Bank:of International Settlements, provides that no issue of an international character may be made in the markets of any of the signatory Governments, unless the Bank of International Settlements considers, on examination, that conditions on these markets pennit such an operation, after making sure that the central banks concerned have no objection. No issue of an international character to be made in any of the signatory countries without the approval of that Government, both as regards the amount of the issue and as regards the conditions on which it shall be authorized. Chapter 3, Article 20 of the Statutes governing the bank, provides as follows: The operations of the bank shall be in conformity with the monetary policy of the central banks of the countries concerned. Before anyfinancialoperation is aarried out by or on behalf of the bank on a given market, or in a given currency, the Board shall afford to the central bank,or central banks, directly concerned, an opportunity to dissent. VOLUME 202 PAGE 114 In the event of disapproval being expressed within such reasonable go• • 2. • such reasonable time as the Board shall specify, the proposed operation shall mit take place. A central bank may make its concurrence subject to conditions, and may limit its assent to a specific operation, or enter into a general arrangement permitting the bank to carry on its operations within such limits as to time, character, and amount as may be specified. This Article shall not be read as requiring the assent of any central bank to the withdrawal from its market of funds, to the introduction of Which no objection had been raised by it, in the absence of stipulations to the contrary by the central bank concerned at the time the original operation was carried out. Article 58 of the Statutes provides as follows: Por the purposes of these statutes: 1. Central bank means the bank in any country to which has been intrusted the duty of regulating the volume of currency and credit in that country; or Where a banking system has been so intrusted, the bank forming part of such system which is situated and operating in the principal financial market of that country. 2. The governor of a central bank: means the person who, subject to the control of his board or other competent authority, has the direction of the policy and administration of the bank. 3. A two-thirds majority of the board means not less than two-thirds of the votes (whether given in person or by proxy) of the whole directorate. Apriir 19130. i40 RESOLUTIOU. 1. The Congress of the United States, in enacting the Federal Reserve Act, granted to the Federal Reserve System, whether acting through the Federal Reserve Board or through the individual Federal reserve banks, no specific power to determine the propriety of proposed offerings of either foreign or domestic securities in the markets of the United States as a condition precedent to such offerings, whether on grounds of international policy or strictly domestic considerations. 2. Since the dissolution of the Capital Issues Committee, - on August 30, 1919, - the markets of the Uniued States have, in fact, been open, at least so far as the Federal Reserve System is concerned, to offerings of all security issues, whether domestic or foreign. 3. The fact that the Statutes governing the B. I. S. provide, - Article 20,- that before any financial operation is carried out by, or in behalf of, the B. I. S. in a given market, or in a given currency, its Board shall afford to the central bank or central banks dinectly concerned an opportunity to approve, conditionally or otherwise such an operation, or to dissent therefrom within such reasonable time as the Board of the B. I. S. shall specify, still leaves undertenmined the right of the Federal Reserve System to take any such action under the terms, express or implied, of the Federal Reserve Act as amended. 4. VOLUME 202 PAGE 115 The Board deems it unnecessary at this time to consider the 2. • question of power., for it is of opinion that, assuming it to have the power, the approval, conditionally or otherwise of such an operation might hamper the Federal Reserve Systen in its future credit policy. b, NOW, TKEREF0113, Bit IT RESOLVTD: That the Federal Reserve Board hereby =proves the proposed reply of the Federal Reserve Bank of New York to the B. I. S. as follows: Tnat while it will not avail itself of the opportunity afforded under said Statutes to express dissent to the proposed operation, it is on the express understanding that such failure to dissent shall not be construed as a determination or approval of the merits, amount, terms, or conditions of any such offering or offerings, nor shall it in any way affect the power of the Federal Reserve Sys ten under the Federal Reserve Act as amended, to take appropriate action at any time to protect and. stabilize credit conditions in the United States. • April", 1930. APO RESOLUTION. WHEREAS, the Federal Reserve Badk of New York has consulted the Federal Reserve Board in the matter of the proposed offering or offerings by the B. I. S. of reparation bonds in the markets of the United States; AND WHEREAS, Article 20 of the Statutes governing the B. I. S. provide that, before any final operation is carried out by, or in behalf of the B. I. S. in a given market, or in a given currency, its Board dhall afford to the central bank or central banks direct4 concerned, an opportunity to ariprove, conditionally or otherwise, such operation, or to dissent therefrom within suCh reasonable time as the Board of the B. I. S. shall specify; NOW,THER1FORE, BE IT RE-SOLVED: That the Federal Reserve Board hereby approves the proposed reply of the Federal Reserve Bank of New York to the B. I. S. as follows: That while it 511 not avail itself of the opportunity afforded under said Statutes to express dissent to the proposed operation, it is on the exoress understanding that such failure to dissent dhall not be construed as a determination or sporoval of the merits, anount, terms, or conditions of any au& offering or offerings, nor dhall it in any way affect the power of the Federal Reserve System under the Federal Reserve Act as amended, to take appropriate action at any time to protect and stabilize credit conditions in the United States. VOLUME 202 PAGE 116 110 COPY 14.4. / 3o Gu4 s4v,-04- % Alt McGarrah Replying your cable April 11th. One. P.R. Bank of N. Y. will, be pleased to open an account for B. I. S. and to carry out operations for it along same general lines and subject to same terms and conditions as it does for foreign central banks having accounts with it. Two. We shall forward letter defining these terms and conditions in detail but in meantime you are advised that they would include transactions referred to in your paragraph four, as well as acce:ting cash balance mentioned latter part your paragraph three. Three. Rega_ding specific inquiries in first three paragraphs of your cable you are advised that inasmuch as the P.R. Bank of N.Y. is not in a position itself to accept say responsibility concerning the issue or voting of 16,000 shares of the B. I. S. in this market it can of course interpose no objection to the selection of some other institution or institutions in this country to exercise the voting rights an such shares, and the private issue of such shares and the investment of their proceeds in this market are transactions of a character Ic concerning which the F.R. Bank of ri.Y. can have no grounds upon which to express any dissent. (1 Harrison. C41e.4,".404:;%:44.44 A-44,4411 ,t_L VOLUME 202 PAGE 117 44044. 044040444., • COPY FIDEIAL RESIVE BANK OF NEW YORK April 17, 1930. Dear Governor Young: Referring to my discussion yesterday with the Federal Reserve Board concerning a cable from Mr. McGarrah, dated April 11, a copy of Which I left with the Board, our board of directors have today voted "subject to the approval of the Federal Reserve Board, to authorize the officers to open and maintain a banking account on our books for the Bank of International Settlements and to carry out operations in this market for the Bank for International Settlements along the same general lines and subject to the same terms and conditions as we do for foreign central banks having accounts with us." I shall very much appreciate your advising me whether the foregoing action of our directors meets with the approval of the Federal Reserve Board. You will no doubt recall that the first three paragraphs of McGarrahls cable ask whether the Federal Reserve Bank of New York wishes to objcoct to certain proposed acts of the Bank for International Settlements in this market, relating principally to the sale and voting of its stock. I understood from my conversation with the Board that the transactions referred to in these three paragraphs were not of a character concerning which the Board would care to have an opportunity formally to express its objection and that this bank should feel free, without further reference to the Federal Reserve Board, not to voice any dissent in our reply to VOLUME 202 PAGE 119 2. • • / these paragraphs of Mr. McGarrahls cable. I mention this now merely to be sure that there is no question concerning my understanding of our conversations yesterday. In this connection our directors at their meeting today were of the opinion that there is no reason for this bank to express any dissent to the actions mentioned in these three paragraihs. I am planning, as agreed with the Board, to go to Washington Monday further to discuss the procedure to be followed by this bank vis-a-vis the Federal Reserve Board, if and When we are given an opportunity to express our dissent to a reparation bond issue in this market and hope that in view of the discussion which I have today had with our directors, following my meeting with the Federal Reserve Board yesterday, we shall be able to agree upon some mutually satisfactory formula. Faithfully yours, (S) George L. Harrison, Governor. Hon. R. A. Young, Governor, Federal Reserve Boar4, Washington, D. 0. • TOTAL BILLS AND SECURITIES, BY CLASSES, MEMBERS RESERVE DEPOSITS, MONETARY GOLD STOCK, AND AMOUNT OF MONEY IN CIRCULATION, OCTOBER 31, 1923 TO APRIL 30, 1930 Pills discounted Bills bought in open market U. S. Government securities III Total bills and securities Member bank-reserve account Monetary gold stock Money in circulation (In millions of dollars). Oct.31 Oct. 31 Oct. 3110ct. 31 Oct. 31 Oct. 31 Oct. 31 Apr. 30 1924 192 1925 i 1926 L 1 27 1P28 192 0 884 264 616 412 912 1,000 233 690 205 347 200 323 342 44o 210 355 5g4 92 327 301 522 227 321 530 1,181 1,052 1,296 1,316 1,276 1,603 1,701 982 1,895 2,138 2,214 2,223 4,167 4,925 2,324 4,509 4,942 2,371 4,4o7 4,969 4,473 5,021 4,541 4,946 4,143 4,g07 2,666* 2,385 4,386 4,491 4,838 4,477 INCREASE OR DECREASE Bills discounted Bills bought in open market U. S. Government securities Total bills and oecurities Member bank-reserve account Aft Monetary gold stock Money in circulation -620 +352 +74 -278 +520 - 5 +492 +147 -257 -24 + 19 + 98 +68 -85 -767 -145 -26 +221 -295 +94 +209 -129 +244 +20 - 4o +327 +98 -719 +243 +342 + 17 + 76 -102 + 27 + 9 +66 +101 + 6g - 75 + 47 -398 -139 +295* +243 + 31 +105 -361 +52 -281 *Reserve balances on October 31 were approximately $300,000,000 above normal due to abnormal conditions in New York money market. DIVISION OF BANK OPERATIONS MAX 10, 1930 r morvi No. 133 OffiCe Correspontence . To From Mr. Hamlin Ur. Smead FEDERAL RESERVE BOARD Date April 4, 1930 oeculative activity Subject:_Recent s, in New York •P o In response to your memorandum et' April 3, Ae have prepared and are transmitting herewith four statements which it is hoped will serve your purpose in discussing the recent increase in speculative activity in New York. The statements are as follows: 1. Weekly figures from October 1523 to date of loans to brokers and dealers made by weekly reporting member banks in New York City -- for own account, for out-of-town banks and for others. This statement also shows the net dhange from the high point of total brokers' loans on October 2 to the low point on December 24, and the net change since December 24. 2. A classification of loans and investments of all reporting member ban%s, of reporting member . banks in New York City, and of reporting member banks outside New York City, as of October 2, 1923 -- the peak date of total brokers' loans, December 24, 1329 -- the low point of total brokers' loans, and at the end of January, February and Mardh of 1930. This statement also Shows the net.change between October 2 and December 24, and the net change that has taken place .since December 24. 3. A daily index of stock prices (the Standard Statistics Compeny index caverinc,;1 90 common stocks) from the teginning of October 1929 to date. 4. A statement showing the number of shares of stock sold on the New York Stock Exchange daily from the beginning of October 1929 to date. 2-8495 LOANS TO BROKKRS RDEALERS MADE BY WEEKLY MPORTING MEMBER BANKS IN NEW YORK CITY On milli ns of dollars) For account of banks Total Own Total account 1 Date 2,810 1,077 3o 6,5o4 6,713 6,5o1 6,634 5,538 3,074 2,069 Nov. 6 13 4,882 4,172 2,483 1,968 27 3,587 3,45o 1 1,520 1,156 .557 1,469 853 4 la 3,392 3,425 1,472 1,516 792 so6 18 24 (low) 31 3,386 3,328 3,424 1,582 1,561 1,876 832 845 1,167 3,352 3,365 1,710 1,73o ss6 853 1929 - Oct. 2 (peak) 9 16 23 20 Dec. 1930 - Jan. 8 22 15 2,597 2,772 2,926 Out-oftown banks i 1071 973 1,095 831 3,341 1,688 814 29 3,345 1,695 s23 Feb. 5 12 19 26 3,4o2 1,555 S. 3,450 39h94 3,489 1,913 1,949 924 962 1,933 953 For others 3,907 3,941 3,875 3,823 2,464 963 2,399 812 704 638 2,204 2,031 1,982 6so 710 75o 716 709 1,921 1,9°9 1,804 1,767 1,54s 524 877 574 875 1,642 1,636 1,653 1,64s 927 989 S. 9so 1,547 1,536 1,545 1,556 5 3,583 2,o3s 1,006 12 19 26 3,720 3,841 3,820 2,225 2,437 2,542 1,146 1,266 1,424 1032 1079 1,171 1,118 1,545 1,494 1,404 1,27s Apr. 2 3,968 2,651 1,547 1,104 1,316 -3,476-22b -1,110 -2,140 +7o2 +355 -451 Mar. Net change Oct. 2 to Dec. 24 (low) Dec. 24(low) to Apr. 2 +64o +1,090 • LOANS AND INVESTMENTS OF WEEKLY REPORTING MEMBER BArKS, OCTOBER 1929 - MARCH 1930 Date (In millions of dollars) Loans on securities Total 7-To brokers loans • Total and. dealers and To investr_utside others In ments 1 NY e. All other loans Investments cL ALL REPORTING MEMBERS 1929 1930 Oct. 2* Dec. 24** 22,329 7,828 1,455 363 5,509 ' 9,600 22,390 7,931 5,401 1,091 700 6,140 9,374 5,5E55 Jan. 29 Feb. 2 6 Mar. 26 22,205 22,003 22,563 7,681 7,641 8,14 1,202 632 5,847 8,995 1,40 2,076 583 593 5,649 5,5114 3,736 3,702 5,529 5,575 5,678 + 61 -327 +103 +253 -364 +985 -163 -107 +631 -626 -226 -672 +1g4 4- 93 211.1r2E2 Oct. 2 to Dec. 24 Dec. 24 to Mar. 26 REPORTING MEMBERS IN NEW YORK CITY 1929 Oct. 2* Dec. 24** 7,563 7,892 2,947 3,045 1,025 794 40 51 1,376 2,929 1,687 2,200 2,861 1,986 1930 Jan. 29 Feb. 26 Mar. 26 7,567 7,412 7,756 2,866 2,890 3,280 773 906 1,367 49 47 57 2,043 1,937 1,856 2,775 2,609 2,530 1,927 1,914 1,946 +329 -136 + 98 ...91 +235 +573 + 5 +6 -63 -371 - 40 Change Oct. 2 to Dec. 24 Dec. 24 to Mar. 26 +324 -344 +7q0 REPORTING MEMBERS OUTSIDE NEW YORK CITY 1929 Oct. 2* Dec.24** 15,266 14,998 4,881 430 817 3,633 6,671 4,336 3,714 297 649 3,940 6,513 7,599 1930 Jan. 29 Feb. 26 Mar. 26 14,633 14,591 14,807 4,815 4,751 4,904 429 503 709 583 3,804 6,220 536 536 3,712 3,658 6,177 6,172 3,60?_ 3,61 -268 -191 + 5 + l -133 -163 +307 -158 +412 -112 -282 -341 Change Oct. 2 to Dec. 24 Dec. 24 to Mar. 26 3,732 4 -115 +133 *High point date of total loans to brokers and dealers by retorting member banks in New York City **Low point date of total loans to brokers end dealers by reporting member banks in New York City. DIVISION OF BANK OPERATIONS • • IN11.1 OF STOCK PRICES STANDARD STATISTICS COMPANY DAILY INDEX OF 90 COMMON STOCKS October 1 9 29 November 1 2 238.1 239.8 - 3 L. 229.9 227.5 182.1 175.1 173.7 178.3 180.5 _ _ December - 166.4 171.9 5 238.1 6 7 8 9 241.7 240.9 240.4 164.1 170.1 168.6 _ 10 11 12 13 14 244.7 244.3 242.6 158.0 148.8 140.3 . 152.9 15 16 240.6 161.3 174.4 _ 17 18 19 232.2 236.0 229.2 222.6 159.6 169.4 171.2 170.1 2o _ 164.4 168.9 165.6 3.60.1 21 22 23 24 25 26 27 28 29 30 31 220.4 224.7 211.3 204.7 207.5 206.1 180.7 162.2 182.7 192.2 171.6 171.0 169.0 164.1 166.1 _ _ _ 163.2 160.9 161.9 165.5 160.1 164.1 165.9 170.3 L_ 177.9 179.2 177.7 168.1 172.3 1 9 30 January I February I March 168.2 168.6 170.6 170.7 169.2 169.1 171.7 171.7 170.3 _ 170.9 171.2 171.9 170.4 169.2 169.7 170.0 171.6 171.8 173.4 175.0 176.5 - 182.1 180.6 182.7 185.1 183.1 182.4 183.9 183.6 185.2 185.5 185.4 183.7 184.7 184.9 183.2 179.8 182.0 180.1 180.2 183.5 176.4 175.5 177.5 178.4 181.0 183.3 184.8 _ - 186.2 185.5 186.9 185.5 187.3 187.3 187.4 188.0 188.4 180.3 187.4 186.2 185.2 188.0 189.8 190.8 191.7 192.8 190.9 192.8 192.6 195.5 195.1 197.3 198.7 199.6 April 201.5 199.4 199.8 202.8 NUMER OF SHARES OF STOCK SOLD ON NEW YORK STOCK EXCHANGE (In thousands, i.e., 0001 s omitted) October 19 29 November _ 19 3o December January riebru.ary 1 2 4,525 3,368 - 3 4 5 6 7 g 9 lo 11 4,747 5,624 2,452 4,262 3,758 3,157 4,000 3,964 _ 6,233 5,915 7,184 3,215 3,367 3,309 4,437 4,377 4,715 3,003 12 - 6,43 4,505 874 - 13 14 15 16 17 19 2,756 3,107 4,oss 3,864 3,508 3,488 7,701 5,569 4,340 2,747 2,718 4,387 1,654 2,592 2,285 3,412 I 1,453 2,630 3,1411. 2,679 1,331 - 20 21 22 6,098 4,130 2,829 5,546 3,139 1,735 1,693 2,233 2,306 18 2 25 26 27 2,513 5,018 3,647 3,897 2,929 6,375 12,895 5,923 3,020 2,088 2,634 _ 2,432 3,492 1,996 2,577 3,354 28 29 30 9,213 16,410 10,727 _ - 1,635 4,160 31 7,149 - 2,678 ,933 2 2,073 1,315 _ 2,172 2,029 1,639 2,397 2,386 3,229 3,481 1,526 3,458 2,913 3,246 3,646 3,739 March 1,925 1,807 3,798 3,225 4,362 3,709 3,391 1,925 3,456 3,715 3,350 3,635 1,691 3,166 3,322 3,669 3,514 1,697 3,994 2,636 4,470 3,854 3,951 1,531 3,289 3,795 3,485 3,661 2,567 3,640 4,241 4,336 4,263 4,629 2,320 2,633 4,126 4,526 3,310 3,210 5,029 4,707 5,065 2,791 •••• 5,151 April 5,384 5,304 4,627 5,932