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August 3, 1936. Memorandum to Mr> Eccles: A few days ago you asked me to get you some information regarding the replacement prior to June 50, 1936, of United States bonds held in individual investment accounts of the Federal reserve banks by short term United States Government securities* The Division of Bank Operations has prepared for me some tabulations and memoranda which are attached on this subject* On January 1, 1934, the total holdings in the individual investment accounts of both long and short maturities aggregated, in round figures, $212,000,000, which was reduced slightly to an aggregate of $207,000,000 on June 30, 1936* Of the holdings on January 1, 1934, approximately onehalf, or $105,500,000, were in bonds of nhich $72,813,050 were Liberties which were called for redemption. The total holdings of bonds in the individual accounts were reduced through replacements by short term securities to $21,000,000 on June 30, 1956. All the shifts £rom bonds to short term securities took place at various times in 1934 and 1935. There were eight banks that held bonds in some amount on January 1, 1934, the ones not holding any bonds being Cleveland, Richmond, Atlanta and San Francisco. On January 1, 1954, New York held $62,887,950 of bonds, which were reduced to $1,695,050 through replacements by short term securities to the extent of $8,000,000 in April, 1934; $8,000,000 in September, 1934j $10,750,000 in April, 1955; $5,000,000 in May, 1955; $7,765,000 in September, 1935, $19,000,000 in November, 1935, and $4,800,000 in December, 1955. Philadelphia on January 1, 1954, held $3,352,100 of bonds, which were reduced by one-half to $1,652,000 on June 30, 1936, the reduction being accomplished through substitution of short term securities in April and September, 1934. On January 1, 1954, Chicago held $20,400,000 of bonds, all of which were replaced by short term securities in April and September, 1954, March, 1935, and Septeiber, 1935. - 2 - Minneapolis held $7,511,650 of bonds on January 1, 1954, and substituted shorter term securities to the extent of only $511,000, which was done in September, 1934, so that on June 30, 1936, Minneapolis still had #7,000,650 in bonds. St. Louis on January 1, 1934, had $500,000 of bonds, which were replaced by short term securities in April, 1955* Boston, Kansas City and Dallas did not replace any of their bonds by short term securities. In view of the fact that all these shifts took place before this year and at varying times, a large part involving the replacement of called Liberties, it would seem that the prospect of transfer of individual holdings to the system account did not influence the action. r, Secretary, Attachments. CM yd Vorni F. R. 131 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To Mr, Morrill From Mr. Van Fossen Date jj*iy-^u i9i$_ Subject: (PO In accordance with your request we have prepared the attached table showing the amount of United States Government bonds held by the Federal Reserve banks in their own investment accounts which were replaced by short term securities by months from January 1934 to June 1936, inclusive* It will be noted that the amount of United States Government bonds so replaced during this period by each of the various banks was as follows: Boston none New York $61,321,050 Philadelphia 1,700,000 Cleveland none Richmond none Atlanta none Chicago $20,400,000 St.Louis 500,000 Minneapolis 511,000 Kansas City none Dallas none San Francisco none TOTAL 84,432,050 Of the total amount of United States bonds so replaced, $53,626,850 were called Liberty Bonds, of which #23,003,000 were exchanged for new short term issues and $30,623,850 were sold in the open market and replaced by short term securities purchased in the open market. Attached is a tabulation showing the amount of Liberty Bond holdings of the Federal Reserve banks in their own investment accounts on January 1, 1934, and the securities with which they were replaced. Attachments. 16—852 Form V. B. 131 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To Mr» Morrill From Mr» Van Fossen Date August 1^1936 Subject: c ro 16—852 In accordance with your telephone request we have prepared the attached table showing the amount of United States Government bonds and all other United States Government securities held by each Federal Reserve bank in its own investment account on January 1, 1934 and on June 30, 1936, prior to the transfer of all Government securities to the System Open Market Account* Attachment. U. S. GOVERNMENT SECURITIES HELD BY FEDERAL RESERVE BANKS IN OWN INVESTMENT ACCOUNT ON JANUARY 1, 1934, AND ON JUNE 30, 1936* (EXCLUSIVE OF SECURITIES HELD UNDER RESALE AGREEMENT OR PURCHASED FOR ACCOUNT OF MEMBER BANKS) Federal xte serve Bank Boston New York Philadelphia On January 1, 1934 Bonds All other $689,000 62,887,950 3,352,100 $64,049,500 33,400 On June 30, 1936 Total #689,000 126,937,450 3,385,500 $689,000 1,695,050 1,652,000 — — — 62,741,700 500,000 7,511,650 7,000,650 62,741,000 500,000 511,000 62,741,000 500,000 7,511,650 — 20,400,000 500,000 7,511,650 Kansas City Dallas San Francisco 182,200 10,000,000 — 182,200 10,000,000 185,200 10,000,000 105,522,900 106,424,600 211,947,500 21,221,900 Total Total 1689,000 122,065,600 3,385,400 Chicago StJLouis Minneapolis 42,341,700 All other $120,370,550 1,733,400 —— Cleveland Richmond Atlanta Bonds 185,200 10,000,000 185,855,950 *Prior to transfer of securities to the System Open Market Account• 207,077,850 LIBERTY BONDS*BELD IN OWN INVESTMENT ACCOUNT OF THE FEDERAL RESERVE B A M S ON JANUARY 1» 1934, AND SECURITIES BY WHECH THEY WERE REPLACED. New York Held January 1, 1934 Phila. Chicago St.Louis Minn. Dallas #47,292,050 #2,800,000 $20,400,000 #500,000 #1,696,000 #125,000 Total #72,813,050 Replacements Exchanged for new short term issues 14,792,000 Replaced by short term issues bought in open market 15,723,850 1,700,000 Exchanged for new bond issues 16,776,000 600,000 1,145,000 200 500,000 40,000 125,000 665,200 47,292,050 2,800,000 1,696,000 125,000 72,813,050 Replaced by bonds bought in open market Total sales and exchanges of called Liberties to September 1935 7,200,000 500,000 511,000 23,003,000 13,200,000 20,400,000 30,623,850 500,000 18,521,000 *A11 Liberty bonds outstanding on January 1, 1934* were called for redemption by October 15, 1935. REPMCEBIENTS OF UNITED STATES BONDS HELD IN INDIVIDUAL INVESTMENT ACCOUNTS OF THE FEDERAL RESERVE B A M S WITH SHORT-TERM UNITED STATES GOVERNMENT SECURITIES. JANUARY. 193A. TO JUNE. 1936 New York April - 1934 Sold or exchanged Replaced by Treasury notes Replaced by Treasury bills September - 1934 Sold or exchanged Replaced by Treasury notes March - 1935 Sold or exchanged Replaced by Treasury notes Replaced by Treasury bills $7,958,800* 6,958,800 1,000,000 8,042,000** 8,042,000 May - 1935 Treasury bonds sold Replaced by Treasury bills 3,000,000(a) 3,000,000 September - 1935 Sold or exchanged Replaced by Treasury notes 7,765,050* 7,765,050 18,984,000 16,664,000 2,320,000 Chicago $6,100,000* St#Louis Minneapolis 700,000* 700,000 — 4,6oo,ooo** 4,600,000 7,100,000* 3,500,000 3,600,000 — — — $500,000** 500,000 Total $15,058,800 7,958,800 7,100,000 — 6,100,000 — 6,750,000** 6,750,000 4,000,000 4,000,000 1935 bonds sold by Treasury notes by Treasury bills $1,000,000* 1,000,000 — April - 1935 Liberty bonds sold or exchanged Replaced by Treasury notes Treasury bonds sold Replaced by Treasury bills November Treasury Replaced Replaced Philadelphia $511,000** 511,000 13,853,000 13,853,000 7,100,000 3,500,000 3,600,000 7,250,000 7,250,000 4,000,000 4,000,000 3,000,000 3,000,000 2,600,000** 2,600,000 10,365,000 10,365,000 18,984,000 16,664,000 2,320,000 - 2 REPLACEMENTS OF UNITED STATES BONDS HELD IN INDIVIDUAL INVESTMENT ACCOUNTS OF THE FEDERAL RESERVE B A M S WITH SB3RT-TERM UNITED STATES GOVERNMENT SECURITIES. JANUARY. 1934. TO JUNE. 1936 (CONT'D.I New York December - 1935 Treasury bonds sold Replaced by Treasury notes U , 821, 200 4,821,200 Totals: Called Liberty for Treasury Called Liberty Replaced by Replaced by 14,792,000 15,723,850 U , 723,850 1,000,000 bonds exchanged notes bonds sold Treasury notes Treasury bills Treasury bonds sold Replaced by Treasury notes Replaced by Treasury bills 30,805,200 21,^85,200 9,320,000 Total bonds sold or exchanged 61,321,050 Philadelphia St. £ouis Minneapolis Total $4,821,200 4,821,200 $1,700,000 1,700,000 #7,200,000 13,200,000 3,500,000 9,700,000 $500,000 1511,000 23,003,000 30,623,850 19,923,850 10,700,000 30,805,200 21,485,200 9,320,000 1,700,000 *Called Liberty bonds #*Treasury exchange of called Liberty bonds (a)Sold to Postal Savings System Chicago 20,400,000 500,000 511,000 84,432,050