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W. P. G. HARDING, GOYIRNOR PAUL M. WARBURG, YIC:I GOYlRNOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN EX·OP'PICIO MEMBERS WILLIAM G. McADOO SECRETARY OF THE TREASURY CHAIRMAN JOHN SK£LTON WILLIAMS COMPTROLLER OF THE CURRENCY FEDERAL RESERVE BOARD WASHINGTON H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN, ASST. SECRETARY. AND fiSCAL AGENT AQDRESS REPLY TO FEDERAL RESERVII: BOARD Ji-966 May 24~ 1913. Dear Sir: For yo-ur infonnation there is enclosed a copy of a statement issued by the Division of Lows and Currency of the Treasury~ showing silver certificates vvithdrawn from c~rcula tion and ca.ne-elled, and silver dollars meillted or brolten up dur:lng the week end.ed. N.ay 17th. You ·will notice that as a result ot: these oper::~.tj,or..s 7hG circulating meclium lms been decreased by $37,881~374. In order to avoid arry shortage in small bills, the Board is of the opinion that Federal Reserve banlts s:Could, acting together as a system, replace vdthdrawals of silver dDllars and silver certificates by the issue of Federal Reserve bank notes. It is the intention of the Board to ltee:p the Federal Rese:t'11-e banks info111.1ed each -..veelt of the amount of silver and silve~ certificates \nthdravv.n and to allot to each Federal Reserve banlc j.t3 proper proportion of Federal Reserve ballk. notes as nearly as possible on tile basis of distribution outlined in its letter of April 29th, 1::~917. It is desirable that Federal Reserve banks should get their Federal Reserve baruc notes as received, into circulation, before issuing additional Federe.l Reserve notes. For the present, it will not be :possible, however, to adb.e.1.·0 str~ ctly to the basis of distribution outline in the letter of April 29th becro1se the amount of Federal Reserve banJ.c notes available in the '~"tari0us distr>.ctl'i is not tmiform, and three of the Federal neserve banks 112.lre 110 banlc notes :g,vailable at all. A statement is enclosed Showing the amount of Federal Reserve banlc notes available for each bank on May 20th. · It has been deemed advisable that Federal Reser'7e banks should first deposit their one year 3% notes as seour5.ty fo::- their Federal Reserve banlc notes and that they give power of attcr:1ey to the Federal Reserve Board to request thP. Secretary of the 'rrec;;.sU.l'Y from time to time to deposit with th'3 Treasurer of the United Statas, through the Comptroller of the C!u:L":rency for accou.nt of the resiJactive banlcs, such amounts of Unitec. States cer~if:i cateci of ino.ebtedness as rray be necessary to secure, after all the on'= year 3% notes have been deposited, the Federal Reserve ba:ulc notes '.7hlch v;ill be issued in substitution for silver ~ertif:i.cates withdravv.n. Tr..e Treasurer of the United States can thereupon. charge the ac~ount of each Federal Reserve banlc, as a deposit in his gen~ral account, v1i th the amount, of the purchase price of the certificates. In order to carry out this plan the Board requests the Federal Ji-966 Reserve banks to call for Federal Reserve banlc notes in the amounts indicated below and to deposit as security with the Comptroller of the Currency an equivalent amount in one year 3% Treasury notes: Philadelphia Cleveland Richmond Atlanta Chicago Minneapolis Kansas City Dallas San Francisco $1,000,000 2,660,000 1,000,000 1,~.411000 2.,962,000 880,000 1,374,000 1,307,000 1,500,000 As soon as Federal Reserve banlt notes for all of the banlts are available the Board will mrute the proper adjustment between the · banlcs. Very truly ;yours, Governor.
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