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MII\ The Papers of Charles Hamlin (mss24661) 368_09_001- Hamlin, Charles S., Scrap Book — Volume 251, FRBoard Members 205.001 - Hamlin Charles S Scrap Book - Volume 251 FRBoard Members 0 Form F. R.131 BOARD OF .I1I.II • OF THE FEDERAL RESERVE SYSTEM Office Correspondence The Files To From Date August 12, 1941 Subject: Mr. Coe lwec 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 251 of Mr. Hamlin's scrap book and placed in the Board's files: VOLUME 2,51 Page 77 Memorandum on the Gold Bullion Standard. Page 115 Earnings and Expenses of Federal Reserve Banks, February 1934. Page 133 Letter to employees of Board on Retirement System. Page 135 U.S. Securities Pledged with Agents and Related Items, Wednesday, March 14, 1934. (Marked Confidential) 744444,44+ 1", M44,. 3A MEMORANDUM ON TIE GOLD BULLION STANDARD. On January 31, by Presidential Proclpmfltion, the weight of the gold dollar was fixed at 15 5/21 grains nine-tenths fine, and simultaneously the Secretary of the Treasury announced that, beginning February 1, he would buy all gold offered in this country (except illegally hoarded gold) at the rate of $35 per fine troy ounce, less the usual mint charges and less 1/4 of 1 per cent handling charges. It was announced at the same time that he would sell gold in certain circumstances at the rate of $35 per fine troy ounce plus 1/4 of 1 Per cent handling charges. The immediate effect of these acts, with the coincident provisions that monetary gold would be limited to bar gold and would be used "for the purpose of settling international balances," was to place this country unon a form of gold bullion standard. The type of standard we now have, how-7ver, differs in several important respects from the gold bullion standard as heretofore known. First, the official buying price of gold is legally independent of the declared gold content of the dollar. Second, both the buying price for gold and the -gold content of the dollar are subject to change, the latter within fixed limits, by executive proclamation. Third, the unlimited purchase or sale of gold by the Treasury to prevent an ap_reciatiancf the dollar above its theoretical gold imnort point or depreciaton below its theoretical gold extort point is not mandatory. Finally, the gold bullion standard hitherto was designed to make inconvenient the private holding of monetary gold; the United States form imposes a definite Prohibition VOLUME 251 PAGE 77 -2,.- on such holdings. The special characteristic of the gold bullion standard heretofore has been that the notes of teaan of issue, on that standard, are convertible only in minimum amounts safficient to pay for an export bar containing roughly 400 fine ounces of gold, sadh bars being freely delivered by the central bilnlr. Frendh monetaryalthough allowing for the eventual use of gold coin in circulation, establishes the gold bullion standard, in fact, by Providing that the Bank of France Shall convert its notes in minimum amounts of 215,000 francs, this being the approximate value of a 400-ounce bar.* Since last March the Bank of France has been the only central bank in the world Which has delivered gold bars to all camers. Of the other central banks, in countries still thought of as remaining on te•sld standard, only the Netherlands Bank rill deliver gold to private parties, and there uuch delivery is subject to the requirement that the gold be taken for export to a country whose central bank itself delivers gold and, moreover, that it be sold to that central bank and not to private parties in the country of detination. are, The other central banlm in so-called gold-bloc countries the Swiss National Bank, on the gold exchan--e standard, i.e., conversion of their notes into gold or foreign exchange is optional with the central bank and the central bank effects redemption only in foreign exchange, ship_ing gold on special occasions exclusively for its own account. Thus, in effect, the Bank of France and the London gold market, where newly-mined and other gold is brought for sale, have in the past ;rear been the two great centers of imlediate gold uupply. The London market price for gold, which is fixed by public bidding, could not go below the Bank of France buying price during this period since the bank stood ready to buy all gold offered to it at that price. Omitting transportation and incidental charges, and leaving out of account the special demand created by hoarders, the London price could not exceed the Bank of France selling price either, since that bank stood ready to convert into gold, at a fixed rate, all francs offered to it. Therefore, until Febr-uary 1, the London market price for gold was based on the statutory French price, divided by the ruling rate of French franc exchange in London, and adjusted for incidental charges and the premium created in London by the special demmd from hoarders. The United States buying price, as established at different times during the past six months by the Reconstruction Finance Corporation and later by the Treasury, remain,3d without appreciable effect upon the world price so long as our authorities were not prepared to buy all gold offered them from outside the United States at the price fixed. When we agreed, however, to nay apProthmately $35 a fine ounce for practically all cold delivered to our Mints end Assay Offices, that figure became effective as a determinant of the world price. Accompanying the offer to purchase Imported gold freely, the fixing of the new weight of the gold dollar automatically established a new parity between the dollar and the French franc, this parity being 6.6335 cents 1 franc. It became possible to calculate that approximately 6.59 cents represented the theoretical gold import point from Paris to New York, i.e., the point at or below which it is more advantageous to ship gold than to buy dollars in the fot:eign exchange market for the settlement of balances outstanding in favor of this country. A shipment • -4- of gold has of course a firming effect upon the exdhange of the goldexporting country since it reduces the offer of that coumtryls own currency Ln the foreign exchange market and, at the same time, reduces the market demand for the currency of the country to whichtba gold is shipped. Thus, whereas on February 5, before the present gold movement got well under way, the dollar premium on the French franc was 7.25 per cent (the exzhange rate being then 6.18i cents) the dollar premium at the moment of writinc is down to 1.35 per cent and the rate is 6.54i cents. From the point of view of France, the gold has tended to flow where it would exchange for the greatest nudber of francs, and the effect of the gold flow on the foreign exdhange market has been to tend to ecualize the number of francs obtainable here (in equivalent dollars) and in Paris for the same auantity of gold. When franc exchange moves above 6.59 cents, that result will have been achieved, and in normal circumstances the outflow of gold from France would slow 11-3 and stop. For the time being, it is the relations between the dollar and the franc which indicate whether or not our form of gold bullion standard is effectively at wprk. reder_11 Reserve Badk of New York, February 15, 1934. *This is the approximate weight prescribed or implied in British, Princh, and other monetary legislation, but smaller quantities are allowed for in some gold-bullion countries. Lau. 144 C ONFIDENTIAL Not for publication B-811 EATTINGS MID EXPENSES OF FEDERAL RESERVE BANKS, FEBRUARY 1934 Federal Reserve Bank Other sources $225,2.5 2,805 1,240,4r8 244,556 1,865 3n3,401 3,588 $858 $237,738 30,107 652 6,791 7.8 16)1 7.9 8.8 6,995 6,547 293,031 1.8 1.9 29.8 30,657 10.2 6.0 207,162 13,177 3,212 13,646 46,929 2,425,564 2,495,346 2,2 4,170 14,920,910 4,406,231 1,394,143 1,784,334 021,753 3,178,477 2,164,771 12.5 14.5 8.8 1,332,136 297,322 324,212 4,336 3,874 19,395 6,032 137,587 120,832 607,678 143,664 126,679 107,448 294,271 '06,155 130,592 114,285 16 34,47 113,007 103,546 120,648 104,376 236,899 2,068 17,110 935 7,033 110,015 96,838 140,988 110,232 254,091 91,526 135,424 92,837 198,998 3,521,233 99,191 104,582 137,989 203,773 260,670 3,819,707 4,279,6m 3,255,923 8,099,387 6,571,002 2,280,728 2,328,210 2,047,466 4,608,938 4,126,869 Richmond Atlanta Chicago St. Louis 6,645 13,653 3,088 2,692 1,050 1,264 4,323 1,292 125,556 102,041 580,872 133,648 3,566 5,290 338 6,130 835 1,152 4,583 4,029 35,070 49,106 3,859,307 266,685 2,216,9)5 137,256 763,683 7,380,540 84,176 430,898 1933 1,486,857 255.996 4,567,479 FEDERAL RESERVE BOARD DIVISION OF BANK OPERATIONS MARCH 13, 1934. 144,200 1111.6.4 Current net earnings Ratio to paidTotal in capital Per cent $64,008 736,280 94,738 84,923 $173,730 $8,284 Total $160,449 553,130 186,885 226,926 $3,01 58,816 50,219 10,432 San Francisco TOTAL Feb. 1934 Joi. 1934 Feb. 1933 Jan. -Feb. 1934 Exclusive of cost of F.R. currency Total U.S.Govt. securities Purchased bills Boston New York Philadelphia Cleveland Minneapolis Kansas City Current expenses Earnings from Discounted bills 193)4 February Month 595,856 202,584 239,289 96,586 1.0 4.6 5.7 13.5 8.9 January - February 193 Current net earnings Less accrued Ratio dividends and to Total net charges paidin cap- (current) to profit and loss ital Per cent $47,059 9.0 $154,083 1,053,472 17.2 1,631,950 73,016 237,380 9.3 76,268 10.7 216,971 9,887 21,091 637,956 66,277 1,2 2.9 30.7 10.4 -44,513 -29,884 505,974 24,775 36,389 4,512 48,191 113,790 7.8 .7 7.8 6.6 5,684 -37,571 8,283 1,702 3,178,477 2,164,771 13.5 8.9 ,684,265 664,703 VOLUME 251 PAGE 115 FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD Yiarch 8, 1934. To the Employees of the Federal Reserve Board: The Federal Reserve Banks have established, effective March 1, 1934. a retiremcent system, the benefits of which are available also to all Federal Reserve Board employees, except that no one may be a merter of the Civil Service Retirement and Disability Fund and of this system at the same time. The inclosed pamphlet describes the plan, which includes service retirement allowances, retirement allowances in the event of disability, and death benefits. These allowances are to be supported by the joint contributions of the member employees and the Federal Reserve Board. You will receive herewith in duplicate an enrollment blank on which you may enter the necessary information concerning yourself and the beneficiary or beneficiaries whom you may desire to designate. One completed copy should be returned to the person from whom the blanks werc received by you and the other should be kept as your copy. Every employee, who is not a member of the Civil Service RAirement and Disability Fund, automatically becomes a member of the new system unless he files a waiver of benefits, and if you desire to do this you should secure a form for the purpose fram the Secretary's office. In addition to other benefits the plan provides, for any employees who do not now contemplate long employment, an automatic savings fund and VOLUME 251 PAGE 133 • • ,fr To the employees of the Federal R - eserve Board - death and disability benefits during the period of employment. It is important to note that under this plan every member employee will receive the full benefit of his own contributions, and in addition will receive valuable benefits from the contributions of the Board. If the employee leaves the service of the Board before retirement, all his contributions will be returned with interest. aile membership in this plan will be required of all future employees, unless they are members et the Civil Service Retirement and Disability Fund, it is optional T.-1th those now in the service. Contributions will begin as of March 1 and it is important that your enrollment blank be completed and filed promptly. Under the rules and regulations governing the operation of the retirement system, member employees of the Federal Reserve Board are entitled to elect a member of the Board of Trustees of the retirement systeln. The first meeting of the Board of Trustees has been called for March 14 at Chicago and accordingly, in order that the trustee to be elected by the Board's employees may be chosen in time to attend this meeting, there is also ilclosed a ballot for your use in indicating your choice of a person to serve in this capacity. It is requested that you return this ballot with the completed copy of your enrollment blank. All ballots thus returned by 10 A. E., Lionday, March 12, will be counted at that time and if any person has received a majority of the ballots so cast such person will be deemed to be the choice of the member employees. If the first ballot does not result in a choice the employees will be advised of that fact and will be furnished new ballots with the request that they vote for one of the three persons, named in the ballot, who received the highest number of votes on the first ballot. All such ballots To the Employees of the Federal Reserve Board - received up to 5 P. M., Monday, March 12, will be counted at that time and the person receiving the largest number of votes will be declared elected. Very truly yours, E. R. Black, Governor. Inclosures Election by Employees of a Member of Board of Trustees of the Retirement System of the Federal Reserve Banks. A. 1. INSTRUCTIONS TO EMPLOYEES Indicate on ballot inclosed with copy of Governor Black's letter your choice of a person to serve as a member of the board of trustees. 2. Insert ballot in a plain envelope and seal it. 3. Insert sealed envelope in a second envelope. Seal and place your name thereon. 4. Deliver envelope with your completed enrollment blank to the person from wham the enrollment blank was received. (To be counted ballots should be returned not later than 10 A. LI., Monday, March 12). 5. If advised that the first ballot did not result in the choice of a trustee, fill out the second ballot to be furnished you for the purpose in the same manner as described above. (You are requested to vote for one of the three persons receiving the hlzhest number of votes on the first ballot, the names of wham will appear on the ballot furnished you. This ballot should be returned not later than 5 P. M., Monday, March 12). B. 1. II:STRUCTIONS TO THOSE HANDLING EMPLOYEES' BALLOTS All ballots received up to 10 A. M., Monday, March 12, should be delivered to the Secretary's office to be counted. 2. On delivery at the Secretary's office the signed envelopes must be compared with the list of employees who have filed completed enrollment applications. 3. Remove the outer envelope deposited by each employee entitled to a vote by reason of having filed a complete enrollment application in the presence of three persons. • —2 4. Deposit the inclosed unmarked envelopes (containing the ballots) in a suitable container in such a way that the identity of the person by wham each was submitted will be lost. 5. Open the unmarked envelopes and count the ballots. 6. If any person has received a majority of the votes cast such per- son shall be declared elected as a member of the board of trustees. 7. If no person shall have received a majority of the votes cast furnish each employee with a new ballot bearing the names in alphabetical order of the three persons receiving the largest number of votes on the first ballot. 8. All ballots received up to 5 P. M., Monday, March 12, should be delivered to the Secretary's office to be counted. 9. Follow the procedure in opening and countinE; ballots prescribed under paragraphs two and five inclusive. (The person receiving the largest number of votes on this ballot will be declared elected as a member of the board of trustees). .1440 00" UNITED STATES SECURITIES PL7DGED WITH AGEITTS AFD RELATED ITEMS W7DYESDAY, MARCH 14, 1534 (In thousands of dollars) Federal 2eserv. , Bank U.S. I securities pledged I with agents I Operatin Margin fixed by Board uar in* Actual Own F. R. notes held by baks Excess reserves Boston New York Phi1ade1:phia Cleveland --15,000 55,000 37,500 150,000 37,500 52,500 39,s49 227,776 28,160 43,126 14,346 73,542 13,992 17,744 165,252 577,060 147,269 159,930 Richmond Atlanta Chicago St. Louis 32,000 45,000 82,000 11,000 22,500 45,000 97,500 22,500 15,55g 34,781 g3,545 ls,062 s,157 19,894 41,765 4,s6o 70,013 63,729 460,297 s7,4s6 Minneapolis Kansas City Dallas San Francisco 16,400. 5,000 -65,000 15,000 30,000 15,000 75,000 13,193 27,145 34,790 73,240 4,957 6,652 5,056 44,263 53,310 86,308 50,179 122,392 TOTAL 326,400 500,000 639,225 255,22g 2,043,225 *The margin covers: (a) Federal Reserve notes held by banks; (b) deposit reserves above 35%; (c) excess collateral with agents; (d) gold redemption fund. See Board's letter of May 2, 1932, DIVISION OF BANK OPERATIONS MARCH 15, 1934, VOLUME 251 PAGE 135 • O NFIDENTIAL MEMORANDA Ila I. ADVANCES* TO MEMBER BANKS UNDER SECTION 10 (b) OF THE F. R. ACT Federal Reserve Bank Advanced Feb. 27,1932 to Mar, 14,1934 Outstanding on Mar, 14, 1934 Boston New York Philadelphia Cleveland $4,062,000 146,231,000 13,756,000 37,104,000 $5,841,000 1,537,000 1,029,000 Richmond Atlanta Chicago St. Louis 4,938,000 22,938,000 13,334,000 1,458,000 247,000 631,000 781,000 9,000 Minneapolis Kansas City Dallas San Francisco 544,000 9,143,000 1,003,000 146,369,000 2,000 Total 300,910,000 13,077,000 Week ending Mar. 14, 1934 Paid Advanced week during during week $675,000 $380,000 127,000 69,000 43,000 _ 1,000 620,000 675,000 II. ADVANCES* TO NONMEMBER BANKS UNDER SECTION 404 OF ACT OF MARCH 24, 1933 Federal Reserve Bahk 11017 Yark Chicago Minneapolis Total Advanced parch 24, 1933 td March 14, 1934 Secured Eligible collateral Ineligible colAll U. S. Govt. lateral obligaother tions $200,000 $300,000 10,000 50,000 200,000 360,000 Outstanding 0gl Mar. 14 1934 Week ending March 14, 1934 Advanced during week Paid during week III. BILLS DISCOUNTED* BY F. R. BANKS FOR INDIVIDUALS, PARTNERSHIPS JD COR7ORATIONS Federal Reserve Bank Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Outstanding AdvancalJuly 21, 1934 Mar. 14, 1934 Mar.14, to 1932 All by Secured by All Secured Govt. U.S. U.S.Govt. other obligations obligations other $25,000 807,000 108,000 $1,000,000 95,000 153,000 $22,000 41,000 440,00o 270,000 76,000 1,215,000 Total +3,341,000 _ 9,000 113,000 200,000 OM* 22,000 1,371,000 DIVISION OF BANK OPERATIONS :aRCH 16, 1934 $339,000 118,000 36,000 Minneapolis Kansas City Dallas San Francisco _ Week ending Mar. 14, 1934 Paid Discounted during during week week 53,000 339,000 *Exclusive of renewals. #Includes $57,550 to building and loan associations $300,000 to a Federal land bank and $2,319,210 to nonmember banks (including $1,000,000 to a Mutual Savings bank).
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