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. 131

BDARD OF GOVERNORS
DF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To

Chaiiman Eccles

From

Lauchlin Currie

DafP
Subject:

June 5,1957.

Further thoughts on reserves
against foreign deposits

1. It would be possible to apply the suggestion either to foreign
deposits in all banks or to foreign deposits in member banks alone, while
providing that only a member bank could hold foreign deposits. I did not
mention the latter possibility in my memorandum as it appeared too difficult
of attainment• It has since occurred to me that it would be an effective
argument to use in securing the first alternative• We could either first
propose that only member banks could receive foreign deposits and then
compromise on the original suggestion, or we could propose that the power
apply to foreign deposits in all banks and, if we met with much opposition,
suggest that it apply only to member banks, provided non-member banks could
not hold foreign deposits.
2# In connection with the timing of action, it would be possible for
us to raise requirements at any early date without such action having a
restrictive effect, if at the same time the Treasury de-sterilized some of
its inactive gold account* This, however, should only be done under the
understanding that the excess reserves released by a subsequent utilization
of these deposits should be absorbed by Treasury action*




GOLD AND CAPITAL INFLOW TO DOTTED STATES

Strictly Confidential

(In millions of dollars)
Capital inflow
In securities
Gold
inflow Total

In
Be turn of
Increase in
brokerage
American
Foreign
American
securities securities foreign balances balances from balances
here
abroad

1,1^9
1,708 1,381

1935
1936
1937 to Hay 26

- 25

2U9

86

106

320
601
155

131
215

56U

360

6

186

356

106
29

6
—

5,678 1,051

781

1,255

601

12

1,131 1,195
65S
Total

4,645

In banking funds

686

267

—

Period of international currency arrangement
Sept. 30, 193° - May 26 2/
6 weeks ending Nov. 11
21
•
•
Apr. 7
7
•
"
May 26
Week ending Apr. 14
21
28
May 5
12
19 2/
26 2/
Days May 27
28
29
June 1
2
5



1,105

1,012

419

287

- 10

512

3l6

23U 225

29

- 36

32

428
561

446
225
552 - 51

220
58

86
262

79

97
57
44
52
41
25
67
.8
4.7
5.2
JB/12.1

75
54
58
57
48
59
61

9
12
25
9
5
9
Stocks (SEC)
- .5
.8

1
4
18
2
4
5

45
58
55
15
55
25
55

- 16
- 6

51

12

18
5
11
21
9

8
- 1

14
5

2
6
- 5

5
- 1

Mote; Figures of gold inflow represent all gold
acquired from foreigners. Figures for capital
inflow have been adjusted on the assumption that
foreign funds set aside for redemption of foreign
securities have already been applied to redemption,

2/- .4
jg/ Preliminary