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Tile Papers of Eugene Nleyer(mss52019) 117_07_001- Subject File, Federal Reserve Board, General Correspondence, 1933 January 16, 1933. Mr. 4. S. Griffin, Greenville, South Carolina Dear Mr. Griffin: I have been out of the city for a few days, and this is the first opportunity I have had to acknowledge the receipt of your letter of January 9, 1033. I have read with interest the memorandum which accompanied your letter and appreciate your thought in sending it to me. .Ls you indicate, the plan you present would require legislation by the States, and I do not feel that I could underta.e to express any opinion concerning it. 7nder. Section 14 of the Federal Peserve ict, the Federal reserve banks are authorized to purchase warrants issued "in anticipation of the collection of taxes, or in anticipation of the receipt of assured revenues, by any State, county, political subdivision, or municipality in the continental United States", but it does not appear from your statement that the warrants Which you propose would come within the terms of this authorization. I enclose for your 1nfor7lation in this connection a copy of 2egu1ation I of the Federal Reserve Eoard regarding the purchase of warrants. So far as the econstruction Finance Corporation is concerned, I assume that Mr. Couch has already advised you as to whether there is any provision in the Act under '4nich that Corporation is operating which wpuld enable it to make advances against warrants of the kind you propose. Very truly yours, W_ S_ GRIFFIN GREENVILLE,SOUTH CAROLINA Xanuary (J, Mr. Eugene Meyer, Chairman, Federal neserve Board, Washington, D. C. Dear Mr. :Teyer: While in Washington recently I discussed briefly with Mr. Harvey Couch plan for the issuance of "Warrants" or "Certificates" against cotton stored in this State alon(r, the lines of the enclosed memorandum. Mr. Couch appeared to think the idea good and asked if I had discussed the matter with you. Finding I had not he called you on the phone and found that you were absent. I waited over a day hoping to see you but you were still away. I will appreciate your criticism of this plun and if favorable would like to know if these "Uurrunts" could find loacinc with the Federal - eserve or the ieconstruction Finance Corporation in the event any Bunk accepting them should desire to so use them, assuming, of course, that the legality of the "Wurrants" is established to the satisfaction of the Federal Reserve and or the Reconstruction Finance Corporation. With kind regards, Very truly yours, V S GI b wrilaliumm OF PLAN FOR ASSISTING COTTON FiiRLIERS OF STATE AND FOR THE WELP OF GENERAL BUSINESS IN THE STATE. The farmers of this State are now holding an the furm several hundred thousanu bales of cotton, some of it carried over from previous crops and a good deal of it The major portion of this cotton from this year's crop. is uninsured and a good deal of it is exposed to weather, At present it is just so much dead capital. Due to the fact that we have lost about seventy five per cent0 of our bunks in the past four years a great many sections are without banidng facilities. During the past fifteen months in many cases the farmers could not borrow from any of the bans against their cotton and now where loans are obtainable they are having to pay seven to eight per cent, interest and from twenty five to fifty cents per bale for storage and insurance per month* By the passage of an act of the Legislature authorizing the State of South Carolina to accept cotton in approved warehouses and the appointment or a commission of say three men experienced in the handling of cotton and in wham the people have confidence, cotton to be received on the basis of five cents per pound for middling and storage and insurance arranged for at fifteen to twenty cents per month, these warehouse receipts to be lodged vdith the State s either in the hands of the commission or in the hands of the State Treasurer, the State to issue therefor "Warrants" or "Certificates" in denominations like money from .A3.00 up, these "Warrants" or "Certificates" to bear 4;; interest, retirable at the option of the State within two years, u charge of fifty cents per bale to be paid by the owner of cotton at time it is placed in store to cover costs to State of handlin It could be arranged and supervising operation of plan. so that they would DUSS current in trade with merchants, with state 6i:inks and with National Banks; an outlet, where it is needed, to be arranged either with the iZeconstruction Finance Corporation or the 7ederal deserve Bank for South Carolina Bans to secure credit against their 'Warrants." my opinion that investors would take them since practically cull money at 4;; with the State behind are they ay middling cotton at five cents per pound* secured and them stronger than any State, County or much be They would The extreme liability to the State of Municipal Bonds, South Carolina would be cotton basis middling at five cents Jotton per pound plus carrying charges above mentioned. one in times four /pound per cents has only sold at five 1898 in once 1850, and 1840 hundred years; twice between and one in 1931. It is This plan would enable the farmer to secure the handling of his cotton at about one-half the cost of present facilities. #2. This plan is not confined to farmers. lierchunts or or any owner of cotton would have access to the plan. ri7he farmer would now be feceiving in the equivalent of money a sum equal to within one cent per pound of what he could now sell his cotton for and permit him to discharge any obligations he may now have on which he is paying a higher rate of interest and at the same time leave him in control of the time in which to sell, whether it be three months, six months, twelve months or two years. If the holders of cotton in the State only took advantage of this plan to the extent of two hundred tAousand bales it would mean the equivalent of five million dollars or fifty million dollars of credit and should be very helpful to the owners of cotton since all oi them are desirous of holding their cotton at the present low price lemel, in when they are fully warranted, and at the same time would greatly stimulate business within the state and it is my opinion that if this plan is put through in this State it will be followed by similar action in other cotton states. While there is not the same stringeney of currency that existed in 1907 at WhiCA time Cbearing House certificates were generally issued, which were not so good as the issuance of "Warrants" by the State against middling Cotton at five cents per pound, there exists today Et great stringency of credit and an absolute need for a more flexible currency. In this case the State of South Carolina would be icsuing "Warrants" which would pass as money against cotton at five cents per pound whereat the Federal 3-overnment issues currency against gold bullion and 2 - ederal Reserve notes through trade acceptances for commodities and other eligibles. This plan is favorably looked upon by some of the best minds and bunks in this state as well us in Washington. This memorandum is u rough draft of the salient features,details to be worked out carefully in framing the bill. Very respectfully, ,• OA L 14--6-/tAx _ tsrlkie L:.,r/tA-vf. ( 1, -L W_ S_ GRIFFIN GREENVILLE,SOUTH CAROLINA January 16, 1933. Mr. Eugene Meyer, Chairman, Federal Reserve Board, Washington, D.C. Dear Mr. Meyer: Referring to my letter of the 9th. inst. Being desirous of discussing this plan with the State Legislature I would appreciate a reply to this letter from you as soon as you can conveniently favor me with it. Yours very truly, WSG/b JAN 17 19s3 PETER NORBECK, S. DAK., CHAIRMAN SMITH W.BROOKHART,IOWA PHILLIPS LEE GOLDSBOROUGH, MD. JOHN G.TOWNSEND,JR., DEL. FREDERIC C. WALCOTT,CONN. JOHN J. BLAINE, WIS. ROBERT D. CAREY, WYO. JAMES E. WATSON,IND. JAMES COUZENS, MICH. FREDERICK STEIWER, OREG. DUNCAN U. FLETCHER, FLA. CARTER GLAS S, VA. ROBERT F. WAGNER, N. Y. ALBEN W.BARKLEY, KY. ROBERT J. BULKLEY, OHIO THOMAS P.GORE. OKLA. EDWARD P. COS1 IGAN, COLO. CORDELL HULL,TENN. ROBERT R. REYNOLDS, N. C. '11Cniteti Ztctie „Senate COM M ITTEE ON BANK ING AND CURRENCY JULIAN W. BLOUNT, CLERK January le, 1933. Hon. Eugene Meyer, Governor, Federal Reserve Board, Treasury Department, Washington, D.C. ke,rA My dear Governor: A sub-committee of the Senate Committee on Banking and Currency will give a hearing on Senate 4550, "A bill to amend section 13 of the Federal Reserve Act by making notes of finance and credit companies subject to discount," introduced by Senator Sheppard of Texas, on Wednesday,January 18th.at eleven o'clock A.M., in the Banking and Currency Committee room, Senate Office Building. This hearing is being given at the request of Senator Sheppard. I have before me a letter which you addressed to Senator Norbeck, Chairman of the Committee on Banking and Currency, under date of June 28, 1932, making an adverse report on Senate 4550. I assume there will be present at this hearing witnesses favoring the passage of this proposed legislation, and it is thought that possibly you might wish to have the Department represented in order that its views on the bill might also be presented. Very truly yours, P. L. Chairman of OROUGH, ub-committee. G-M/g 1/17/33 Phoned Sen. G's secretary that Gov. Meyer, and one or two men from the Board's staff would attend the hearing. JAM 17 1933 0-_ :D january 27, 1933. Henry Green, Esq., 1350 bmadway, New York, N. Y. Dear Mr. Green: Thank you for your letter of Yanuary 26 enclosing a copy of e letter to you dated ,Tanu.ary 13 from the Honorable Henry T. Rainey. The matter referred to in the rorrespondence is one that is not within the province of the Federal reserve system, and, in the circumtences, 1 do not feel that I can undertake to comment on or express any opinion concerning it. Very truly yours, over. or Perso7a1 CorrePondence Phone CHickering 4-0916-0817 HENRY GREEN 1350 BROADWAY NEW YORK January 26th, 133. Hon. Eugene Meyer U. S. Treasury Washington, D. C. My dear Mr. Meyer: I am herewith enclosing a copy of from my distinguished friend, the the Majority leader of the House, oe the next speaKer, which seas letter received Hon. Henry T. Rainey, and no douot wao will for itseif. I would greatly appreciate your wisdom and weil. dvice as Hoping to hear from you and with Lindest personal regards, I 4Lia HG:AR ENCL. JAN 2' 1933 Personal Correspondence' Phone CHickering 4-0816-0817 HENRY GREEN 1350 BROADWAY NEW YORK January 13th, lv33. 0 Mr. Henry Green 25 Broad St. New Yurk City My dear Lix. Green:Than, you for your letter. I will ue very giad indeed to cooperate with you in every possible way in the matter of recognizing Russia and trading with her. What we need is just SUCh an organization a8 you suggest. I know of no one who can handle the proposition as weil as you in this matter and I will be glad to cooperate and I hope I may have the pleasure of personally meeting you the next time you come to Washington to discuss the matter. Whenever you come please let me KhOW you are in town and I will look you up. Very truly yours, Henry T4 Rainey, The Majority leader of the House of Congress. Mr. P. 7. Oroorne, 60 Beaver Street, New York, N. Y. Dear Mr. Croome: Upon my return to the office after a few dayst absence, your letter and the accompenyine rnemorand.um were brought to my attention. I appreciate your thought in sendine ze the memorandum, and I have read it with interert. Is you indicate, however, the !ratter is one thpt does not f'all within the province of the Federal Reserve Board, and I. (lo not feel, in tie cireuniBtsicers, that I can undertcle to comment on or express any opinion concernirc it. Vex", truly yours, Governor Fri P. F. GROOME 60 BEAVER STREET NEW YORK CITY TELEPHONE CABLE ADDRESS: BOWLING GREEN 8847 GROOME- NEW YORK PRRSO7AL Honorable Ethzene Yeyer, Federal Reserve '3ank, Washington, D. C. Re: 17.P.7,7 717LIEF I take the liberty of addressing you on a subject of mutual end national interest. Recalling very vividly a conference we had some years ago on this subject in the office of Yr. Griscom, 7ankers Trust company 7uilding, rew York, when you were Chairman of the War Trade Finance Corporation, at which time our minds were working along the same line. I have studied very carefully all the soed Farm Relief schemes set forth by prolific econonic ws and farmer politicians end my reason for being skepticalhat, ronot one of these schemes so far proposed contains a ts new or moting distribution, consumption, new usages for cotton and/or wheat. Every one of these proposens III will actually decrease consumption and add to our pr unwieldy surpluses. Furthermore, in order to put action they require a huge administretion staff. I an enclosing a synopsis of a plan I have worked I have with"-held owing to the activities of the which out, (and Farm Board). If your reection is fevorable I would appreciate an interview so that I might explain it more fully. I realize that farm relief is foreign to your present office, but the farmers buying power is so closely interwoven with our national financial structure that they must be considered together. Yours very truly, EMERGENCY FARM RELIEF The theory underlying my proposed plan, boiled down, is simply this: In 1929, the cotton and wheat marketing machinery was stopped on deed -center causing stoppage of all traffic while carrying huge unliquidated surplus stocks. This stoppage on dead-center was caused by artificial government interference (Federal Farm Boards' noble experiment of price-fixing and stabilization). In order to get this delicate tiece of marketing machinery off dead-center and moving again in a normal way, it will be necessary to restore trade confidence without graft or setting up governmental machinery. Leverage in the way of Federal credit must be applied technically at the critical points to pry loose these two major commodities, cotton and wheat, move them right through the usual chain into consumption wherever there is a potential consumer by extending long-term commodity credits to the domestic and foreign processor. This plan is not in any sense an experiment. It is simply e credit resk which will be safeguarded with the usual trade conditions. As soon as the pressure has been removed from surplus stocks and wheat by pesFing same into consumption, frozen cotton of commodity capital will be released, people will be put to gainful \,ork, and other farm products as well as the security markets will quickly reflect. This plan purposely does not suggest any control of acreage or products to be produced, because no business can succeed on a constantly shrinking and entrenching policy. Progress means growth and growth means expansion. January 31, 1933. Mr. P. P. Groome, 60 heaver Stret, New York, N. Y. Dear Mr. Groome: In the absence of Governor Meyer, pernit to acknoivledge the receipt of your letter of January 30, which I shall bring to the Governor's attentIon upon his return to the office. -,lery truly yours, secretary to the Governor C FEDERAL RESERVE BANK OF NEWYORK March 15, 1933. Dear Governor Meyer: We take pleasure in enclosing herewith for your information copy of a wire which we have sent to the Governors of the other Federal reserve banks today regarding steps which we have taken to carry out the control of foreign exchange transactions in this district as contemplated by the Executive Order of March 10, 1933. Very truly yours, E. Crane, puty Governor. Honorable Eugene Meyer, Governor, Federal Reserve Board, Washington, D. C. Copy to: Mr. Miller, Mr. Hamlin, Mr. James Mr. Morrill, Mr. Wyatt, Mr. Smead Enc. Mr. Goldenweiser MAR 16 1933 Ekrelt 15, 19:v4'. TO GOVESNORS OF THE OTHER FEDERAL RESERVE BANKS Referring to our wire of March 12 regarding the control of foreign exchange transactions we are now receiving daily reports from the banks and bankers, stock exchange house end exporters in this district who carry their own accounts abroad or who carry accounts here on their books for foreigners. These reports when received Ere divided into three main grou?s: (I) benkb eid banxers, (2) stock exchange houses, and (Z) exporters. Thb figures on the individual reports in each group are being consolidated deily upon the same five forms uhlen ere used for indivitival reports end or which we have sent you copies. The figures from the three 4ain Froups tre in turn consolidated upon the same five forTe. to show eggregates of all reports received. Vie shall send 4elly to the Secretary of the ireasury and the Federel Reserve Lord copies of consolldated reports both for groups and totels of groupa. 60 are sending you by mail samples of the loose leaf ledger slleets which we use to consolidate the figures, s procedure similar to the on If IOU decide to follow outlined in this wire we should ap- preciate it if you would send us copies of the reports which you send to Washington. In addition to the cons•olidtion of the fig- ures from individual reports as described above we are arranging to have the individual reports examined sr they come in by men experienced in foreign exchange with a view to checking up the operations described in the reports. That is one of the steps which we are taking to keep currently informed of transactions in foreign exchange in this district in order that we may report to the Secretery of the Troaeury and the iederal Reserve Board any r trtnsaetions in foreign exchange which Lre prohibited. Another step *Lich we have taken to carry out the instructioati in ae Executive Order of rarth 10, 19a is the formation of a caamittec roprerentinE the principal bank znd biinkers in Neu York, thi's; e'orxittee totinc au ts poiLL of contact with tat; 1.41d a cloaring houao ror the exchznge of infortfition between thl.s hank and the princii4.1 dealers in fcrein exchtInge. CRANE i)Aolf13 AIX. 15 Broad atreet Mew York L.!Irch 17, 1933. UrragAlLe *leiter Ayatt, Log., iieneral ,;Pouneel, Federal :r.enerve Lioard, Washineton$ -)* j• agar *alter: The iederal eserve Bank has advised tie that there are a number of foreiGn obltgations shortly fallinc due in New York (;ht and fineness. ibreign payable in :.;old dollars of the uaual wei necobligors are preareti to import or release from earmark the / gnated essary cold, but under the present liegulktions any ban .desi While a foreign as payilk, agent is unuble to pGy out such any fliejlt ex.e“ii..ue;e tranaaction, nevertheless, it ic the reveres of could be readily of capital. 4o I replied, saying that the situation r. losionated bank handled by the ri'reasury liCer1rt oat such cold as payint; a6ent. ..*ut the question raises a much more fundamental problem and one waich will become acute silortly. in There are about to mature of aomestic 71 York and elsewhere throuchaut tile country a umber usual u:old obli ations, individual and corporate, watch contain the clause. rf: oblima from the requireNent of r 1.0r1q. tl 7 'ad. • 1111 rolieve the , deral n here that any Ve io in op ed er id It id the cons ich unry :iegulation, wh su ea Tr y an gW d certai legislation, so e obligation by to discharge th r go li ob an it rm dertakes to pe omve, uld present very wo ld go of eu ul money in li parment of lawf , and I feel al difficulties on ti to ti ne 3o tabib, if not insur.ekin ch is from this approa m le ob pr e th e t to solv that an atLamp dpoint ed from the stan er id ns co is m the proble futile. But if the ght, we believe ri e th om fr d as distinguishe of the remedy t. successfully me problem can be ced in drawaury is now enea ea Tr e th at th rou tell me my herenow poseessea or ho le ne yo er ev s requiring ing Legulation serve to the Federal Re ld go ch su in gold to turn after receive an equiv. ul currency in wf la or ef er th e ive in echang Banks and rece thorised under oulitedly are au ri nn c on ti la gu such Ac which alent amount. th tae problem wi n aw dr If ation. ergency legisl the present em s will, I being Regulation rd oa -h ti an e in mind, thes I have raised e problem. h J5th. lieve, solve th s due on garc ll fa ld go in e ligation payabl 'Suppose an ob , in which gee nay accept li ob e Th y. ne nders lawful mo The obligor te ing in ject as not be re ,/ DA he or , the gold clans. event he imives his remedy hitter occurs, e th If . ct the contra conformity with such °imam.. eve that under li be t no to action. te lies in Court account performance on ic if ec sp r fo suein .quit, stances he may sort to ha must have re e, or ef er Tu . of the contract the of the =Au:0 if any, will be s, ge ma da s hi as and law for damae: en action at I difference between the current value of the gold called for and the currency tanaered. Let us assume that the currency is at a discount abroad in terms of gold. We do not believe that the defense of impossibility of performance will necessarily stand, for it is still possible to obtain gold, such as, for instance, thxoujh a legitimate export transaction followed by tae iLiportation of the proceeds in gold. But on the score of damages, with the Treasury hegulations in contempla. tion in effect. If the obligor had tendered gold in full compliance with the contract, the obligee on the receipt of such gold would unuer the Regulations be required immediately to turn it into the Federal heserve Bank and would under such Regulations have received in payment therefor precisely that which the obligor tendered on maturity. Under these circumstances, the obligee has sustained no damage and the infraction of the contract is damnum absaue inSuria. The ‘;ourta, we believe, will be very friendly under the emergency existing. Given any opportunity, they will strive to reach a result obviously in accord with national needs. On'. der the plan suggested we Believe that there is little or no doubt that the aurts would find no damages sustained. I have discussed the matter with Kr. vavis and 47 other partners and all concur. But the Treasury fly with a view of t)- -1.1ations *haul. Mr. Crane tells ms that nssiber of foreiga banks legitimattety carry on deposit here in New To* sisals amounts of gold which wen-e not earmarked prior to Malik $tk, sad that some provision met be made in the Regulations for the retention of gad for legitimate :mods under Iniessry lissmss• Thaa, of course, there is the question of gold needed in the arts, wkt, presamably, will be covered by license. int if a vistas et UMW,is 40:110d, the tegt.tlations, it seems to.., must sestets a satessrisal provision that no license will be issued whore the jam imptinment for the gold & maturing obligation. ornet r, current Otherwise$ a "'localcitrnnt obligee bring- Lag suit might asseat that if tendered the gold he might comtinme to hold it under lice%se or even ex2ort it under license. thee undermining the obligor's defense dt no dnrAge. The success f the plans turns directly uponimposing an unquaifiod and unquall.fietble obligation upon the creditor forthwith to deliver any gold on receipt 10 the Federal as:serve Banks. The details are, of course, a mi:tter for you and the Treasury to week out. I only raise the point in oyder to urge you to consider the pendincT*7.0JAlons from the stAldpoint of our problem as yell as from the stanct:,oint of the ant.i-hoarding needs. The problem id nationwide, fal. obligtiona of all kinds and varieties payable in gold will come due dw.ing the pericAi of the energency. Unless a plra is devised to meet the ',usable= before it becomes acute, grent confus,on Is boun Gow,rnor Harri15021 to result. hns considered uad approves the plan. Very truly yours, (signed) Montgomery B. Angell, • ( 3'3 0-•2,1 • 1,. 7/6(1 7144 -e • t „p llaebtegton, D. C., Iamb ., 1933. :TAIL ' 1015 GOTXMIMID =SW ZAMA= TRA11140.10311; hverceut:aority contrined brake 3110elaistien of the President dated 'larch r:3 extended Vey ft* Proximate* dated Om* V, 1933, and the authority contnine6 in the Ilincutive Order of March 10, 1933. the Seeretere at the Tressury, with the approvri of the i'roriidont, issues the following regoistiens coverall/It tralluestims La foreign *xichance. 1. All traumatism la foreign sixibence, trnnefors of credit tem (other than eredits relating seta, to transLctions. to be ta eneontallimay ratan the United. Steles) end titansfers of evidences of inaebteiMese beta** the United States any foreign country tire hereby prohibited, eneept en* trnnecctions or trnIer a/soy be undertaken (a) or lecitissate ond. normal business requirements: or reasonable traveling mnd nersonal requirements: and (0) For the fulfillment of contracts entere. into .2rior to NerCh 6, 1933. 2. ",;olsilltierel reserve bank is hereby cuthorized to roculNLe, supervise and control all foreim exchnik:e transactions Athin its district. In carrying out such regU11.144on and supervision. each Yederal reeerve bolt ahall telpnmaTmd by tOIC rfx;u1ration3 rm0, tha rurlym, of 3,lattatiene Irgommelt shoo, upon Co...01011 (Me-W.113CM trn.nsctions. t- 3. The several Fed ral Reserve Banks shall establish an a7_0ro. 7riate procedure for the 7yurpose of accomplishing subst ntial uniformity in carrying out these regulations. 4. Mach Federal reserve bank may require regular or special reports from any or all dealers in foreign exChrzge carrying un foreign exchange transactions within its district, which reports shall show the position of each dealer at any given time. 5. 2- ,adh Federal reserve bank ahn31 assemble all such reports received from dealers in foreign exchange within its district and shall tr:Insmit such reports to the Federcl Reserve Bank of New YoVic„ which bank shall tabulate such reports and submit such tabulaiions to the Zocretary of the Trensury. 6. If any violation of the requirements of the executive order of larch 10, 1933, in respect of foreign exchange transactions, or of these regulations, Shall came to the attention of any Federal reserve bank, such Federal reoerve bank may notify the dealer involved of the alleged violation and shall immediately make a report of such violation to the Secretary of the Treasury, forwarding each information and suggestions as it may deem advisable, and Shall in addition make a formal recommendation .3.. to whether or not such dealer in foreign exchange shall be permitted to engage in any further foreign exchange transactions. Upon the re- ceipt of such report, the Secretary of the Iseasury shall consider the alleged violation, and, depending upon the nature of the violation, the 5ecretary of the Treasury may, within his discretion, (1) prohibit the dealer from engaging is any further foreign exchange transactions, (2) require that the dea.ler shall not thereafter engage in any foreign exchange transaction unless in each instance he shall have first informed the Peiteral reserve bank of the nature of the transaction and shall him received the approval of such Yolawel reserve bank, or (3) otherwise limit transactions in foreign exdleftle by such dealer. 7. The loederal Reserve Bank of New York shall transmit to the Federal Reserve Board for its information copies of all tabulations of reports submitted to the secretary of the Treasury pursuant to the requirements of paragraph 5 of these regulations: and each Federal reserve bank shall transmit to the Federal Reserve hoard for its information copies of all reports made by such bank to the Secretary of the Treasury pursuant to the requirements of paragraph 6 of these regulations. R. The word "person" in these regulations means any individual, purtnershipli association or corporation; a 'dealer in foreign exchange" means any person engaged primarily or indidentally in the business (1) of buying, selling or dealing in foreign exchange, or (2) or buying, selling or dealing in securities fa or throu4a foreign correspondents, 011411111, or (3) any person who carries accounts or securities Ata or L'a foreign correspondents; and the term "foreign excha nge" means cheeks, drafts, bills of exchange, cable transfers, or any form of negotiable or assignable instrument, or order used (a) to transfer credit or to order the payment of funds in any foreign country, or (b) to transfer credit or to order the payment of funds within the Unite d States for foreign account. 9. Whoever willfully violate* any provision of these reguhltions is subject, upon conviction, to a fine of not uore than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both; and any officer, director or agent of any corporation who knowingly participates in such violation meg be punished by a like fine, imprisonment, or both. W. H. Woodin Secretary of the Treasury Approved: President of the United States. it /€333 ')( **Wary Department lisehineton, D.C., marea ILATI S GOViatil nal , 1933. YOtt,"*Igil ihro.CHANG`t, TRANSAJTI01,4. Uader authority uontained in the Woelamation ef the ?resident dated *wok 6, 1934, as extended by the ivoolamation dated March 9, 193i, and the authority contained in the Xneentive Order of Nurch 10, 1963, the 4eoretGri of the TreLordry, vith the approval of tne President, issues the followirm% regulations overaia( transactions in foreign ex- ebesoo. 1. All transactions in foreign exchange, transfers of credit Is oar fere (otaur taken credits relatimg solely to transaction to be emeeuted "holly eituin the United States) and transfers of evidences WI indebtedness oetwoen the United Amite* and any forei&n country are hereby prohibited, except such transactions er transfers as nay be vmdertaimis (a) 04 or legitimate and normal business requirements; iliar reasonable traveling and personal requirements; and (8) Per the fulfillment of contracts entered into prior harca 6, 1933. a. "soh Federal reserve %sok is bartiby authorised to rogoloto, supervise ant control all foreign exehmego lireasestiess within its district. In oarryiu6 out such regulation and supervision, sash Yederal Ift$4rY0 bank *hall be governed by these regelotisms Mk the purpose of te limitp.tions imposed above upon foreign exchaues treasestitese. • 3.'he ssweral Podaral Reserve banks *ball ostabllift am appropriate prosody's tor the purpose et ascompliakiag elbstaatial uniformity in tarrying set these Wommlationa. 44 11461 Mond reserve bank aor require 'solar or special reports fro* turit Fa all dealers in tort endonse airrsai en foreign umbasigs transastisso within its district, whisk "sport Shall show the position of each dealer at mar OMSK UMW. 5, Amit Void/Ara reserve bulk Shall asemAblo all wadi reports "sdeived from dialers in foreign =Ow. within its 4istriot sed Shell reports to the Federal Meson* Monk of Mew Tooke Alla Usk timmit shall tiboilate ma 'Oporto and eibMit nu& tabulations to the Mora Isom, Beard is Ihkahindtea. (10 It any viia&tion of the requirements of the emsoutivo order of Varak 10, 1933, is raspiest of rondos exanamge tronosoottons„ of ompriUdesal or of these 14040AtIons, shall cone to the attontion reserve hook, 'sift radoral reserve hank motif, the dealer involved of the allowed violation, wed uhall immediatal, make • report in wftehimelano of eadk violation to the reitifirallatitarve Mord ferarrilas walk information ant smossatioaa as it Mr Um formal rseemmemdation advisable, mad Shall in addition asks 6, be ler in foreign exehanre shall mis to whether or net soda ins ons. *Iran' foreign exchange transacti remitted to freelto,in shall the Federal Reserve Board Upen the receipt of such reports ure s and, tepeating upon the nat consider ths alleged violation roval in Its dissretisa, wiA the app ith any it , ion lat vio the of prohibit the dealer froa enof the Searetery of the TreasurY• may homgm temmometions, Jr it issay farther foreign ems eign not thereafter taws in any for require that the dealer shall st e each instance he shall hav fir exchanee transaction odess in transaction e bank of the nftture of the informed the 7ederkl reserv erve bank. rowsa of such Poderal res and shall have received the app the$e regulations means any P. The word °person ea es in ion or corporation *Ideat ght sei ase ip, rsh tne par l1 dua indivi ntally engaged primarily or incide s.s per any ns mea ge" han foreign exc ge, dealing in foreign exchan or t* li ** . ing buy of ) in the business (1 or Amnia. fa or dealing insecurities or (2) or buries, selAng &cclounts or any pima Ato sorties ) (3 or ts. den pon res cor foreign tern "foreign serrempesimatal mai the n eig for la or l securities ga transfer*, or of milhanese able ls bil , ft* dra , cks **ohmage* means che d (a) trurnent, or order use ins e abl ign ass er dor femm of aejetieble eign of Aulde in any for t men pay the isr *Sd or to to transfer Siedit payment of funds t or to order the al =s er nsf tra *Gentry, or (1b) to t. States for foreign &accen within the Viited 8. ihoevor to mull*bet, ivialMos emy provision of this regulation amidation, to a fine of not NW* them $10,000„ or, if a esissral puma, say be imprisoned for not more than ten years, or both; end sq director or agent of we eerporation Mho bifirdagly partinipateS in such iiolatie s nay be piimidied by a like gime, lovasommont, or both. I. N. boa* ileePotarr of the Treasury Appremods President of the United, SWIM TitANSAOT IONS. ent in the proclamation of the Presid Under autnority contained March 9, ded by the proclamation dated anted :arch 6, 1933, as edcten er of Marca tained in the executive ord 1963, and the autnority con roval of the of tne Treasur„ with the app 10. 1933, the ,;ecretari nsactions ing regulations governing tra President, issues tae follkw in foreign exchange. of eign exchange, the transfers 1. All transactions in for to transactions n cedits relating solely tha 4er (ot m for any in dit cre transfers hin the United :states) and to be executed wholly wit and any between the United Jtates of evidences of indebtedness ctions in transfers prohibited, except transa eby her are y ntr cou n eig for with tl'lese regulations. conducted in conformity be in foreign excaange may The following transactions legitimate with and undertaken for n tio nec con in n Whe ) euaged in: (2 able traveling and uirements; (b) for reason req ss ine bus mal nor or ment of contracts , and (c) for the fulfil nts eme uir req al son other per 141rch 6, 1933. entered into prior to d to regulate, k is hereby authorize ban e erv res l era Fed 3. Lach ctions within its reforeign exclitukm transa all l tro con and ise superv n and supervision, ng out such regulatio ryi car In ct. tri dis spective itations imposed be governed by the lim ll sha k ban e erv res each eederal above transactions. upon foreign e,change 4. In case any Federal reserve bank shall be in doubt as to whether a particular transaction comas within the rules so prescribed by the Secretary of the Treasury, such Federal reserve bank shall advise am consult with the Federal Reserve Bank of New York with a view of accomplishing substantial uniformity in carrying out these regulations. 5. Each Federal reserve bank shall obtain daily (or weekly) written reports from all dealers in foreign exchange carrying on foreign exchange transactions within its district, which report shall show the condition of such dealer at any given time.. 6. Each Federal reserve bank shall assemble all such reports received from dealers in foreign exchange within its district and shall transmit such reports to the Federal Reserve Bank of New 'York, which bank Shall tabulate tbeh reports and submit such tabulation to the Federal Reserve Board in Washington. 7. If any violation of the executive order of March 10. 1933 or of these regulations Shall come to the attention of any Federal reserve bank, such Federal reserve bank shall immediately notify the dealer involved of the alleged violation and shall immediate4 make a report of such violation to the Federal Reserve Board in lashington, together with such information and suggestions as it may dam advisable and shall in adaitien, mike a formal recommendation as to whetner or Lot such dealer in foreign exchange shall be permitted to engage in any further foreign exchange transactions. Upon the re,- ueipt of such report, the iederal iteserve 3oard siall consider the alleged violation, and, depending upon the nature of the violation, it may *Man its discretion, with the approval of the secretary of the Treasury, pronibit the dealers from engaging in any further foreign excaange transactions or it may require tnat the dealer shall, before enj,cin6 in any foreign exchange transactions, first obtain from the federal lieserve -Joard a license so to do, or it may require that the dealer shall not taereafter engage in any foreign ex.. &Lange transaction unless he shall Jnave first submitted the nature of the transaction to the federal reserve bank and shall have received the oi such i:ederal reserve bank. 8. ;i4ere, followin a violation a license is refused, the dealer involved shall not thereafter en4age in any foreign exchange transactions. Where a license is issued the Federal ,:eserve Board, with the approval of the Secretar/ of the Treasury, may make it a condition of the license that the dealer involved may engage in foreicx excnan4e only on the condition that in each instance as shall Dave first submitted the nature of the transaction to the apl'ederal reserve bank in his district and shall have received tne proval of such bank. 9. The word "persona in these regulations means any inaividual, partnership, association or corporatio n; I °dealer in foreign exchange" means any person engaged prima rily or incidentally in the business (1) of buying, selli ng or dealing in foreign exchange, or (2) of buying, selling or dealing in securities for or throw41 foreign correspondents, or (3) any person who carries accounts or securities with or for foreign corres;,ondents; and the term Voreign exchange" 1.-eanzi check s, drafts, bills of exchange, cable trannfers, or any form of negotiable or assignable instruLent, or order used (a) to transfer credi t or to order t.le payment of funas in any foreign country, or (b) to transfer credit or to order the payment of funds within the Unite d States for foreign account, r (Centpientlea.sk listatiwe draft as virvised by Treasury Department, Mora 17. . tremor, Departmort %Whine**. 14 Ca cam itif401440 itatiR1 OF' GOLD Penitent to the power sonterrsd upon Iseby saboestion (a) et Sootiest 11 of ths Amhara iloserwo hat, as sasondodby &motion 3 at lite Act 'lie pramide relief in NW misting aatiesal otorlionoy tn Making, and tor ether purpeonsw,approved Maroh 0, 1933, ead finding this motion neoesosty to protest the *errancy gusted of bk. tistited .Aates, ;Ittedist, Sserotesy at the Irsassry, do hwroby require all iadtvta.1a0 portnovoldtpoo oottoolations and oorporations craning stay gild soils* old hallo* or gold aortitleates, hold within the ihtited States at i!".terioa, inelnding it. territories sad insular poitteso.olons, tortiositit to pay and dolloor to the Treasarsr of the 1:7nited Stntlii, Or to * roderol roloorve bank as fitted agent at the uatioe /Wyss. $11, such Isld omin, gold bullion and gold oortltioates• Upon read$ or suith eid bola. 3pld Wilton or geld sertifisatos, the $oorotsirs or the Treseut7, or such Fedora resent hank, will. pay therefor on ',dottiest etwunt of any other torn at *Pia or surreally waned sr loosed mew the lose Or the United States. The payment ant delivery at and' opld ooln, git44 bullion oat gold oortifloates any offeeted cothor than by ninher beaks of tira 7edoral iiseorve ikysten) by delivery thereof to a. bank uhieh is a srahor at the federal Rssorwo ;.;ystoms Sul/A bank shall PINY therlstor an equivalent mount of any ether tors at eoin or Gamow seined or ,rilift cif Arch 17. 1X3 "2 is lueued unxier thn leve of thP iitod,Aateci nnd ohall tiv:Teuon deliver 'Imola ,..;old coins -:ole bullion nnd o1i oerttfiontos Zreaeurer or the nttet states or to the Federal reoerro ban:: in ito dixtriot and reonive credit. or payment thc.raror. uny ?ass vhere the location or eneh ,vld coin, -eld bullion or tole, cortifloatec le eucii thtt delivery thoreof to the nrcazurer of the 7::nited ic a tatoc or to ioi.loral reserve baLit or to n of thri ilodorni :oserve ;;;ster, cannot reawntblw be rime. - ithin the tine opocificd helm, delivery tvw be node to a 7nitee 4 :Autos Wcto-1 tTlae or /lot -leioe. ,uoh riffles urtovl rilee or 'inrt .ray thvrefor.sn equivalent um:runt nny otiv-r fort of aoin or currerok colnee or teuudd under tlle Inwei of the t:nited . 4„ntori, ane bLall tewroupm. Coliver euo:i gold coin, co10 bnllton and oertificatet to the ,J.eavurer of thy, Lnited ilittec or tc a :Ettlern1 beck end reoolve ;Ja,riez-tt tliorolor. ':.enber &loll deliver all Jp10 ooln, Told ;x1111,r-A nnd oortificatou oonod t7:,- them to the "irennuror of the liited .J.atee or to the ipderel resorve *Donk in their respective eietriote and noosive credit or foment tteretor. The Seereltery of the Treasury will .1o,y 011 reacrinable vests et 4 trenerorteti-m ot euel aold vd., o1u buUlen or vari oortifloPteso Inaludl ;vete the ()op% ov tnenrance, proteeti:Aa, zknd fuel; other incidental. t7iay „ic reco(nlably neoecfArs up- n productim evidence of o: ;o. orms or vcriohor for this wrpose riny be proourod tror. edera) rr,;..3crve benkes eatienotory 1• tratt of Marsh 1To 19SS I P. 44 Any individual* p*rtnorship* essoolation or serperatiam motes cueh jold °min* ;104 bullion or i:old eertitlembse pri;a. to Marlb 147,, ond tell 3 $e. to empty with the above requirements before .4), tester* Standard Amos :Aare'. 31* MIN shall be subjeot is a penalty equal to lei= the value of the gold twin* 'ell, bullion and 4ele /ortiriostes is realest of *deli sash tailor* oemurred. Amy tedividnals partmershipp assoolation or earperatlin booming the sumer at wq, snob geld seta. g bullism'or geld sortitleates de or otter Marsh OS. 11611, shell be =Wet to a like malty it delivery ttierset is mob aide as above provided wet later them three dire actor seek individuals pasitmership, asseolattas or sorperation booms the —Sr thereat* Is sae= vier, the delivery of geld (mime geld bullion or sold oertitleates by the mows thereat *Uhl* the time set forth above will involve extraordinary hardehtp, the Seerelsrly of the Treasury may, is his dioeroties, extemd the time wiWds Aloft smOh delivery met ho made. Appiimatiams tor =eh estemaleas mast be made in roritiag =dor =Mho addressed to the Leorstory of the Treasury and 13.140 with sitWorsil Reserve Bank within the time set forth above. :Asnit applisatissis emit state the date to whisk the =tension is ..dssirede the ammat sod leoation or the geld coin. jold bullias amd geld ~Wiest= Is. reepeet of yid& =eh applioctiAn is mmde emd the taste shamtmg extension to be assessor, to avoid extraerdimary hftrdship6 the pomaltles above :;trovided shall net applr to emy smear of gold wino old bullion or zold sortifieatoo between the ttme 4 Pratt at Marsh 17, 19$5 It P. M. sr at filing such an applieati= sue. three days atter sash comer is notified at the denial thereof, unless the Seeretary of the Treasury shall find that such applieation was net filed in geed faith. The prevision. at Ude order shall net apply to (1) gold prior to renal.g eel steels at gold in ireeeons,61• oneunts tar the usual trade requirements at wears mining and refining such olds (2) geld twins having a reeognised special value to eolloetere at rare sod unusual mans; (I) mob asmost at geld as may be reasonably required for legitimate sod quaternary use in trade, profeseion or arts (4) gold eplas and ma eertifieates in an amount met exeeeding in the aggregate 0.0040 hamagift to air one persons ($) gold authorised by the Seeretary of the TressurY be be exported from the Visited States; (6) geld between mush time as applioation for expert theme tram the United .tates is filed with the Seeretary of the ?Pessary and three days after the applisant is notified of the *OW st assilimpllestio as (7) gold imported late the United Stabile ter the paroles at being retinal, providad suah gold is exported or used in trade, profe ssioa or art within R rensNlabie time after the rennin there at; or (4) geld mans geld bullion or sold fortifies**s whiqk were owned by reeecnised foreign levernmemt er tondo eontral book prior to tareh 4, 101114 Thls esti*, shall soutinso tn ettoot until further after by the georetary of the Treasurys Seeretary at the Treasnry• March al, 1933. MIMORANDUM Governor Clyde Herring of Iowa rang up from Des Moines about six o'clock this evening and wanted to talk with Governor Meyer. As Covernor Meyer had just left the office, Governor herring, Whom I have known for many years, talked with me. The Governor said the people in Des Moines would like to have a branch of the Federal Reserve Bank of Chicago established there. I told the Governor that I would tell Governor Meyer and the Board about his call. „ 4 • • ..... ••• ••• . Ilene note aid realm io GOYEaNOR. L meeting of the Executive Committee of the Federal Reserve Board was held in Washington on Thursday, March 30, 1933, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Meyer, Governor Hamlin Miller James Ur. Mr. Er. Mr. Mr. ALSO PRESENT: Morrill, Secretary McClelland, Assistant Secretary Harrison, Assistant to the Governor Wyatt, General Counsel Paulger, Chief, Division of Examinations Mr. C. R. McKay, Deputy Governor, Federal Reserve Bank of Chicago Governor Meyer stated that the Chairman of the Board had been advised of this meeting, but that he was not expected to return to his office until after 12:30 p.m. He then referred to the investigation made by one of the Board's examiners in connection with certain irregularities in the Fiscal Agency Department of the Federal Reserve Bank of Chicago. He requested Yr. McKay to review, for the information of the members present, the history of his association with the Federal Reserve Bank of Chicago and his present duties at the bank, and to make a statement to the committee with regard to the subscriptions through the fiscal agency department to issues of Government securities by officers, employees, and directors of the bank, the classification of such subscriptions and th allotment of securities thereunder. L sempleto-yer- lwatim stenographic reeertg-L McKay's statement, and the replies made by him to questions asked by members of the Board and its staff, with regard to various matters covered in the report of the investigation above referred to, will be found in the Board's files. At the conclusion of Mr. McKay's testimony, it was stated that the transcript tkilitswe will be in the hands of , r"te--inAA,r, the Board tomorrow morning, and he-wais-moviusa444-4e remain in Washington for ( .-.0„,2 A• cs: ‘,.." A ic.e.v-2,...tA„ 0,...t ! „ 0 L, Aft .• y•c 1.4. 2 r, -•(t. 2u 3/30/33 tit& Purpose,of r..ck-uite!, ,a141 Before leaving the meeting, Yr. McKay stated that Mt. McDougal, Governor of the Federal Reserve Bank of Chicago, is showing some improvement but is still too ill to be at the bank. The Committee then considered and acted upon the following matters: Letter to Er. Stevens, Federal Reserve itgent at Chicago, referring to the Board's letter of January 13, 1933, in which the agent was advised that the Board had no objection to his waiting an additional period of 60 days before submitting a recommendation for the appointnent of a receiver for the City National Bank, Lansing, Michigan, which was absorbed by the Capital National Bank of Lansing on December 26, 1931, and stating that as It now appears that the Capital National Bank was placed in charge of a conservator on March 23, 1933, and as the period of 60 days referred to above has expired, it is suggested that the agent submit a further report with respect to the probability of the City National Bank going into voluntary liquidation in the near future, together with such recommendation as he may desire to make as to the appointment of a receiver for the institution. 4proved. Telegram to Mr. Stevens, Federal Reserve ;:gent at Chicago, replying to Lssistant Federal Reserve Agent Young's letter of March 23, 1933, with regard to the application of the St. Joseph Loan and Trust Company, South Bend, Indiana, for permission to withdraw immediately from membership in the Federal Reserve System. The reply stated that the Board waives the usual requirement of six months' notice and that, accordingly, upon surrender of the Federal reserve bank stock issued to the trust company the Federal Reserve Bank of Chicago is authorized to cancel such stock and make a refund thereon. Approved. -8- 3/30/33 other provisions of the Federal Reserve .ct, and to the Act of March 24, 1933, providing for loans by Federal reserve banks to nonmember State banks and trust companies on the security of eligible or ineligible The reply further stated that the security accepted by the Re- paper. construction Finance Corporation for loans which it has made both to member and nonnember banks has not been confined to paper which would be eligible for discount by Federal reserve banks, and that the question whether the Federal Reserve ;,ct should be amended so that paper eligible for discount may include finance company and other similar paper is a matter of legislative policy for Congress to decide. Approved. Telegraphic reply to a telegram dated March 30, 1933, from Deputy Governor Rounds of the Federal Reserve Bank of New York, requesting authority to purchase from the First National Bank, Elmsford, New York, $15,000 of tax notes of the Village of Elmsford. The reply stated that the Board authorizes the purchase with the understanding that the notes meet all requirements of Regulation E except that the population of the Issuing municipality is less than 10,000, the amount of the notes offered exceeds 25% of the total outstanding warrants of the municipality, and one of the potes offered, in the amount of 0,000, becomes due and payable 5 before t tat-a. date on which taxes can be paid without penalty. A Approved. Mr. Morrill stated that Under Secretary of the Treasury Ballantine had advised him that he is very anxious to learn of the Board's views with regard to the change submdtted by him at the meeting yesterday in the proposed executive order prohibiting the hoarding of gold, and it was 3/30/33 -9- suggested that a meeting be held this afternoon for the purpose of giving further consideration to the order. :ccordingly, the meeting recessed and reconvened at 3:00 p.m., there being present the appointive members of the Board, Messrs. Morrill, McClelland, Harrison, Wyatt, 3mead and Goldenweiser of the Board's staff, and Under Secretary of the Treasury Ballantine. There was a resumption of the discussion with regard to the effect of the substitution for paragraphs (c), (d), and (e) in Section 2 of the form of executive order recommended by the Board on March 25, 1933 of the paragraph suggested by the Attorney General and presented by Yr. Ballantine at the meeting yesterday. It was pointed out that the substi- tute would require the issuance by the Secretary of the Treasury of licenses for all transactions referred to therein, including the holding under earmark of cold which was earmarked or held in trust prior to March 6, 1933, the date on which the Proclamation of the President of the United States, declaring a bank holiday, was issued, whereas-theHform-ef 4,rwil4I-a4.t—requtzta-such licenses. During the ord-dr---approve&course of the discussion, Er. Miller suggested that the purposes sought to be acccmplished by the chance proposed by the .Lttorney General might be achieved in a more satisfactory manner by eliminating paragraph 2(e) from the form of order as recommended by the Board; by transposing paragraphs 2(d) and 2(c); and at the same time changing the latter to read as follows: "Gold coin and bullion licensed for other legitimate transactions (not involving hoarding) including gold coin and bullion imported for reexport or held pending action on applications for export licenses" 3/30/33 -10- with a corresponding change in section 8 of the order, so as to contain a reference to paragraphs (a), (c) and (d) of Section 2. It was pointed out by Mt. Miller that this change would make available gold coin and bullion for legitimate transactions, both foreign and domestic, and would exempt from the requirement of a license earmarked gold coin and bullion held in this country on March 6, 1933, for recognized foreign governments, foreign central banks, or the Bank for International Settlements. During the discussion Mt. Ballantine left the room to talk over the telephone with Deputy Governor Burgess of the Federal Reserve Bank of New York and upon his return stated that Mr. Burgess had advised him that while the New York bank prefers the form of order as approved by the Board, it feels that the change suggested by the ,ttorney General is workable and would permit the delivery of gold to meet obligations payable in gold; also, that there is no strong objection to requiring a license covering gold now held under earmark in this country. Mt. Ballantine also stated that the Attorney General feels that /- s,-, -..)AW ' 41-0 4-,---4. "e"...,..- 4 ,N In* woulepermIt -r•. a form of order which t -4r-ellIrj iinetperrpft would be acceptable to him; that the Secretary of the easury is of the opinion that the President would accept the order in such form, end he agreed that while Mr. Miller's suggestion perhaps meets these requirements in a better way than the change suggested by em' the Lttorney General, the former nskes no change in substance except that it does not require the licensing of gold held under earmark at the 0A1A # present time, and that in view of the expression of opinion from the Federal Reserve Bank of New York that this does not appear to be an important factor, he would like to follow the Attorney General's suggestion. t-if ` 3/30/33 -li- lt was expressed as the opinion of the members of the Board present that the exception from the requirement of licenses of gold now held under earmark is a very important consideration as it clearly demonstrates that it is the intention of the order to preserve the sanctity of obligations entered into before the holiday and leaves no doubt as to the validity and status of earmark transactions entered into before that date. It was the concensus that the form of order suggested by Mr. Miller should be submitted to the Attorney General for his consideration. Attention was called to the assurance that was given privately, by the Federal Reserve Bank of New "York under authority of the Secretary of the Treasury, shortly after the bank holiday was declared, to foreign central banks having earmarked gold in this market, and the Bank for International Settlensate, that the export of such gold would be freely licensed, and it was siombei that the executive order in the form suggested by LI.. Miller would amount to a public statement of that assurance, which would not be the case should the order be approved in the form suggested by the Lttorney General. In a discussion as to the licensing of gold earmarked in the future, Er. Ballantine stated that he thought the President feels that such transactions should be licensed, but that after the license is once issued and the gold earmarked, it should be at the unlimited disposal of the institution for whose account earmarked. Mr. Ballantine also stated that Er. Burgess had suggested that in the light of the proposed changes in section 2, section 3 does not make clear that the licensing of gold in the hands of the payor does not permit the retention of the gold in the hands of the payee. The matter was 3/30/33 -12- discussed briefly and Mr. Wyatt was requested to prepare a revision of section 3 to cover the point. At this point Mr. Ballantine left the meeting. At the request of Mt. James, Ur. Goldenweiser stated for the record that during conversations (previously reported to the members of the Board by Mr. Morrill) in which he had participated with Deputy Governor Burgess of the Federal Reserve Bank ar New York and Under Secretary of the Treasury Ballantine, at one time, and Assistant Secretary of the Treasury Douglas, at another, Er. Burgess had stated that he and Governor Harrison feel strongly that no licenses should be granted for the export of gold until some arrangement has been made with the Bank of England as to the course of action which England will pursue regarding the stabilization of the pound and that such an arrangement might possibly be made some time this week. Mt. Goldenweiser made it clear that the statement by Mr. Burgess was intended to apply only to gold earmarked in the future and not to gold now held under earmark. He stated that he had disagreed with Mr. Burgess' statement, and he suggested that the Board consider the advisability of recommending to the Secretary of the Treasury that licenses for the export of gold in legitimate transactions be granted very freely. Mr. James stated that, in his opinion, the injection of an international question, as suggested by Mr. Burgess, into an endeavor to stDp the hoarding of gold in the United States, at least entitles the Board to an explanation as to why the officers of the New York bank should assure a.„./ a:MX.44e the responsibility for such sobilea, especially before consulting the P Board with regard to the matter. -13- 3/30/33 Mt. Goldenweiser stated that he feels strongly that the issuance of the proposed order is an emergency matter, which has nothing to do *with the international gold standard, and that this situation cannot properly be used as a lever in connection with the international situation. The members of the Board appeared to agree with Mr. Goldenweiser's statement, and there was further discussion of the matter, but no action was taken. Mt. Morrill stated that Mt. Stevens, Federal Reserve Agent at Chicago, had called him on the telephone today and advised that the conservators and attorneys of two Michigan banks, together with the Superintendent of Banks of Michigan, had presented to Moll plan for reorganizing the two banks which apparently involves what appears to Vser-eitevena to be an important question of future policy as to whether banks in Michigan reorganized in accordance with the plan will be permitted to continue as members of the Federal Reserve System; that the representatives of the banks are considering coming to Washington to present the situation to the Board; and that Mt. Stevens is writing the Board about the matter. Mt. Morrill also stated that he had advised Mr. Stevens that he would present the matter to the Board but that he did not think the Board raf.„1-, would want to commit itself in any way until ) As „..A.--i 0 ,„„.„....."--t-.. . . . 1-,...s.,-- -t ,0 e -- ct. a a.41„,.41.., t ,-, if ...,, ,..- 1, $....i /tem-git, ,........_ " e4.0....... t AA*? if discussion, it was decided that if the representatives of the banks come to Washington, they should be received by Mr. Paulger, Chief of the Division of Examinations, for a thorough discussion of the .matter, followlmAwhiab. Mr. Paulger would iimemant=lee=tite-Beeod-rer-494iesepEgiewv.-4- , ,, t%. ,....e,ve -,.„....„, i Jvelr-ii,A,e,,, I / ,Ammeared47 - 3/30/33 -14- Mt. Snead referred to the action taken at the meeting of the Board on Uarch 21, 1933, with regard to the printing program for Federal reserve bank notes, stated that upon taking the matter up with the Bureau of Engraving and Printing it was found that the completion of work in process will bring the total printings of such notes up to approximately600,000,000 and suggested that in view of the situation the Board authorize the completion of the notes now in process. He also suggested that as the Federal Reserve Park of Atlanta is in a position where, in the event it is called upon to make a substantial additional amount of 10(b) loans, it may be forced to issue Federal reserve bank notes, the Board approve the printing of $19,200,000 additional of such notes for the /tlanta 4 30,000,000 and the total for bank bringing the total for that bank up to 4 the System up to approximately $620,000,000. After discussion, Mt. Smead's suggestions were approved. Mr. Smead then referred to telephone advice which has been received from the Federal Reserve Bank of San Francisco that it might be called upon at an early date to assist a large member bank in that district through the extension of 10(b) loans, which are not eligible collateral for Federal reserve notes. He stated that the member bank in question may require this assistance because of transfers of funds which are being made to other Federal reserve districts resulting in a loss of gold by the Federal reserve bank through the gold settlement fund; that the Federal reserve bank is not able at the present time to substantially improve its position by rediscounting with other Federal reserve banks or YY the sale of Government securities; and that it may be fereel4wp lsue Federal reserve bank notes and, also, request other Federal reserve banks to rediscount notes representing advances to member banks under the V -15- 3/30/33 provisions of section 10(b). The c_uestion of the policy to be adopted 3 1 40.40,..t.(f. in connection with the mime of Federal reserve bank notes, particularly under circumstances such as those existing at the Federal reserve banks of Atlanta and San Francisco, and the-fur4iwr-queo44sa efopeiwireAersii.me4Pr"g- -serve• bnrk rediscounting See-amother. Federal reserve lank,notes representing 10(b) advances, were discussed but no action was taken. Ur. Morrill then presented a letter dated March 28, 1933, from Governor Black of the Federal Reserve Bank of Atlanta stating that because of the limited banking facilities in Knoxville, Tennessee, the Federal reserve bank is working on a plan whereby some of the larger notes pledged as security for advances by the Federal reserve bank to the East Tennessee National Bank at Knoxville, which closed owing the Federal reserve bank approximately a,700,000, may be converted into direct loans under the provisions of the last paragraph of section 13 of the Federal Reserve ;ct as amended by the Act of March 9, 1933; that this action is being contemplated for the purpose of aiding people in Knoxville who need help now and for the purpose of keeping the notes alive instead of allowing them to become dormant; and that as the regulations of the Board do not permit the use of the proceeds of such direct advances te pay off indebtedness to other banking institutions without the approval of the Board, it is requested that the Board permit the application of the plan referred to to the Knoxville banks. In this connection Mr. James stated that he had discussed Governor Black's suggestion with representatives of the Knoxville bank, that they are contributing substantial sums in order to effect a reorganization of the bank, and that he feels approval by the Board of Governor Black's request would be of assistance in working out a solution of the problems in Knoxville. After discussion, the matter was referred to Paulger for consideration and report to the Board. Mr. Posto.War Dekressions Mr. Griswold: 02/33 Attached are charts showing business activity during Post-Napoleonic War and Post-World 'iar periois. The War of 1812 apparently terminated early in 1815# the Napoleonic *;:tri: before mid-year* Aecordingly 1818 is used in this chart as the beginning of the Post-Napoleonic period. The World War terminated in November,1918, and 1919 io used as the beginning of the :ost--Torld ::11r period. The curves are thereforc appsrently not over uround 6 luonths from being strictly chronoloiically comparable. You will note that when the depression began to lift in 1929,business activity increased very rapidly aud was folloxed by a long poriod prosperity. Precizely tho swno thing happened in 1879. 1 t/ Wafri 3!fetaiir lEttot arithirtti 7ativ Vorit April 13, 19F3. Mr. 7ugene Meyer, Federal Reserve Bank of N.Y. 33 Liberty Street, New York Cit,. Dear Mr. Meyer: I hope you will not consider it an imposition for me to write you at this time, especially in view of the fact that several years have passed since I have been connected with your organization in Tall Street. If some time in the near future you should have an opportunity to place an office assistant, may I ask that you keep me in mind? Since the death of my husband I have been the sole support of my two children, and I am desirous of securing a position that will be sufficiently remunerative for three persons. I should be glad to come see you, if I may, to discuss the type of work which my qualifications would cover. Gratefully yours, alL&74- 1 '• APR 15 1933 mxtof COTEBNOP '.;EYYPIPS PPSIGNiTION l Feserve Act It was not the intention of the framers of the Federa each new Adminthat a new Covernor of the Reserve Board be appointed by believed that istration. On the contrary, it is hoped and, at the time, on to the Federal the Covernor should and could stand in much the sure relati court. in theory, he Covernment as does the Chief Justice of the Fupreme ples as the Chief Justice princi ic was to lead in the interpretation of econom ples. Lest his princi legal Is presumed to lead in the interpretatior of of the politiranks the from office beoore just another "job" to be filled -appointed other the of that cally elifible every tbur years, his term, like ted permit l remova with members of the eaerve Board, was set at ten years, only for cause. set up the Nevertheless, despite the intention of the ConEress that d out his duties with 'eserve :Istem and despite the fact that he has carrie lugene 'Aeyer to resign no thoueht of partisan politics, the decision of -r. his policies have gh -1theu wise. seems as Governor of the .eserve Neard outspoken advocates most the of one been been far-sighted --tr. eyer has ith his vative. a conser ially essent of a single banking system -- he is inevitlmost would on fricti backrreund and with his natural sympallass, on. strati Admini new ably have developed between ,r. Meyer and the ics as Had the ideal of a Federel eserve Eoard actinf toward econom vative conser a cal, the Ouprene Court acts toward the law proved practi progressive AdCovernor would perhaps have been a desirable balance to z. Covernor bee :i.nistration. But as the .eserve 'ystem bra developed, the =2:or duties become more and more of an administrative officer, one of whose on. Thus to Is to put into effect policies determined by the Administrati the various rer. Meyer is due a considerable :le-azure of the credit for devise them, helped He n. tratio dLinis flationary measures of tne hoover was responsiblc he , ertent large a t.) he fought for them before ConfresF, and, for the way they operated. or of the eserve In the circunstarces, for him to /rave remained as Covern whose financial lt, Koard would have been unwise and unjust to . resident ooseva ersor. iietTillf helped poli-ies are martedly different from those of his predec to the Ld- inistrato place the Federal reserve foerd in a aceer relationship duty of ,r. 'eyer tion tn the sponsors of the yeti intended, it was the in using that desire may he as hand a free to pernit President .00sevelt as ized and recogn 'eyer r. .,-hat Sslationship to further his own policies. sness that entiou consci the of e acted upon the situatlon is further evionc . public the has Parked his lonf end devoted service to (From Hartford (coin.) mrant, April 14, 1933) Ur. t;rsne reoorts that two statmlante Nov clomp over the tioker la the nature of unofficial statortents resulting apparently frog press oonferenees filth the resicionto Me New York Vows Ivreau states that the Pissid ein limo state that any attempts to vtabilise the 'aeries* dollar have teat etaMieMed. Until other nations with donotod ourrosoloo retura to the laid standout, the dollar will have to taloo ogre of Itself. No sore gold will be exported abroad *loop, that me oommorkod flir remiss govor omato. /1.7friy. 44rze 4k..4vh*d. dsam 4/...t.„41-0,40644A. Qt %k4 444144.4.44. 4h44,444 tP 1*41 ik444n. FEDERAL RESERVE BOARD WASH I NGTON Itat-e--7A C#22-ea,t4A)64fr-• Cc/b1,1_ 3/ /733 it/07,c, wt. Ec_014. e ke_ i-ecLeAL.i. ci &-cc_ca_ 1 1 1 ) a,t.t, / anAik a. Jt.Ltic (IIp_-0 ot,t4&_ cA.Ay ) - LtArtA-c-difdi, kc-‘-u-e- 1442-c-a- tr-L- tA,t LAcrvt-L4LjO ia-&)Uth.0-1/4.Z II itd• u ) -0,cA cdo-t-L' c14--ie.t,7 -LX4A;) cAta_ Le) 14A,u`-44x- c9-4-c -"L L;lilI VLD APR 28 1933 •.Rrlofit • - --)JARD •
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