The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
R ep rod uced from the U nclassified
I D ecla ssified H o ldings o f the N ational A rchives
Form P. R. 567
END
SHEET
K IN D OF M A T E R IA L OR NUMBER
333.3-a-l
NAME OR SUBJECT
Federal Open Market Committee
Meetings
Open Market Operations
DATES ( I n c l u s i v e )
Jan - May 1935
PART NUMBER
Part 3
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Reproduced from the Unclassified I Declassified Holdings of the National Archives
"■7
Fe d e r a l R e s e r v e B a
n k
3
of N e w Y o r k
f
FOR C’ RC
June 21, 19 ?5.
'y '\
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Dear Governor Eccles:
Mr. Hamlin
A
I \v » J h '
S
Mr. M ille r.
Please find enclosed herewith tentative draft of
Mr. James
Mr. Thomas — r : * .........................
Mf. Szymczak
..........
Mr.
Mr.
... ........
j r . . ....
fvlr. Merriii.
f
the minutes of the e^cutive committee meeting held at Wash/
ington on June 19V
I should be glad to receive as early as
................... ..
Mr. Bethea.........
Mr. CarperUor............................v . .
Mr.
v 1,
^
Mr........................................................
Mr.
possible any suggestions as to changes,
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I am also enclosing a revised and final copf^ of
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the meeting of the full committee on May 27.
The tentative
Mr.
Mr......................................
minutes of the joint meeting of the Federal Open Market Com
Please note — check
and return to
mittee and the Federal Reserve Board on May 28, previously
MUiafpenter N.
■r-
sent you, may be considered as final since no suggestions for
changes have been received.
Very truly yours,
^\W. Randolph Burgess
Secretary, Federal Open
Market Coinmittee
Hon. Marriner S. Eccles,
Governor, Federal Reserve Board,
Washington, D. C.
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Fe d e r a l R
eserve
Ba
n k
of N e w Y o r k
June 6, 1955.
Dear Mr* Morrill:
Let me acknowledge and thank you for your
letter of June 5 enclosing transcript of notes of the
joint meeting of the Federal Open Market Committee and
the Federal Reserve Board on May 28 «j
Very truly yours,
^0—
Mr. Chester Morrill,
Secretary, Federal Reserve Board,
Washington, D.C.
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Fe d e r a l R
eserve
Ba
<3
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n k
of N e w Y o r k
June 6, 1955.
Dear Governor Eccles;
^
t ^
^ s
Please find enclosed herewith the minutes|of the
meeting of the Federal Open Market Committee in W a s h i n g t o n " ? ^
on May 27, together with the minute?? of a joint meeting of
the Federal Reserve Board and the Federal Open Market Com
mittee on May 28.
I should be glad to receive at your early conven
ience any suggestions for revisions of the minutes of the
joint session.
Very truly yours,
W. Randolph Burgess
Secretary, Federal
Open B3arket Committee.
Honorable Marriner S* Eccles,
Governor, Federal Reserve Board,
Washington, D. C.
WRB.H
encl.
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3m m 6, 19S5.
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Hr* #* &» i f « < ® * t & r y .
Open JVfcffkttt Coamittea,
Car*
Reaar*© Bunk of. lim XorJt,
Her fork, few fork*
Dear Sr> Burgesc:
In ft tfttaffeoxte conweation ib i» »oraing you
requested, for the .psirpos# of taoorporatloa in. t&» F«d«P%1 Open Market Conralttee nlxmtm of the swwtlug Kith
the Board om May 28, 10SS,. a copy of the l#ti«r recel'ved
by the Board gad*r dftt* of fty | from Governor fic&olXMr
of the .Federml ®ae«rf» B«ak of ®»le*g9t ua4 a oofy of
the Board** replj «*t$
memorondvm und«r
date of lay f£, 1955, with regard t* a i^»d«©tio*i by
th# Fedatral rmsmrm %mks in their total feoMlat# of
'United State*
m tm x i& iM * *
A copy of th# correapotideoce refarred to 1*
CKs'* 11 — ^
i_ -
,
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.............
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June 6, 1955*
MEMORANDUM TO GOVERNOR ECCLESi
You will recall that at the meeting of the Board
with the Federal Open Market Committee on May 28, 1935, there
was read the Board's reply, end accompanying memorandum, to
the letter received under date of May 4, 195£, from Governor
Schaller of the TederaT"W
Bsaik of Chicago with regard to
the propriety of effecting a reduction In wie total holdings
by the Federal reserve banks of Government securities.
2 u * r - ± s
Dr. Burgess called me on the telephone this morning
and requested a copy of the letter from Governor Schaller,
together with copies of the Board's reply and accompanying
memorandum. He has prepared minutes of the meeting cm May
28 for the records of the Federal Open Market Committee,
which he proposes to send to the governors of the various
Federal reserve banks, and he desires to send a copy of the
correspondence referred to above to each of the governors
as a part of the minutes. Inasmuch as the correspondence
was read at the meeting, I see no objection to sending Dr.
Burgess a copy for the purpose stated. Dr, Goldenweiser
concurs in this view. If you approve the attached letter
to Dr, Burgess, please initial the file copy and it will
be presented to the other members of the Board for their
approval.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
#une 5, 1355.
CONHS3HTIAL
Hr* Wf Randolph Burgess* Secretary*
Federal Open Market Committee,
Federal Reserve Bank of Hew Xork,
M m York, M m Xork.
Bear Mr. Burge»ii
Reference 1# aade to your telephone conversation this after*
noon with Mr. Carpenter* Assistant Secretary* In which you stated
that you desired to prepare Federal Open Market Committee minutes
for the meeting of the Committee with the Federal Reserve Board on
the morning of Tuesday* May £8* 1956* and requested a transcript of
notes taken during the meeting for that purpose.
In accordance with your request there are set forth below
notes on the meeting from whieh the Board's minutes have been
written!
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LHt-l U Q V 6 'liiO T
lcoi.es* Vice uovernor Snornas* Messrs* nmmlirty
Jtmm# *«**
Ssymossk of the Federal Reserve Bomrd) Messrs. Clayton, Morrill*
Carpenter and Goldenweiser of the Board's staffj Messrs. Xoung*
Harrison* Morris* Fleming* Seay* Hewton* Schaller, Martin* Geery*
Hamilton* McKinney and Day, Members of the Federal Open Market
Coaaittee | and Mr. Strater, Secretary of the Governors1 Conference.
Governor Harrison stated that the Federal Open Market
Committee* a t s meeting on May £?* 1985* reviewed the general open
market situation and a preliminary memorandum prepared by the chairman
on money market and credit conditions and that* as a Governors* Con
ference* the governors had discussed the topics contained in the
conference program. He said that the Federal Open Market Committee
had concluded that the most desirable procedure would be for the
Committee to terminate a ll authorities previously given to the
executive committee and adopt resolutions giving such new authority
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as was felt desirable* He referred to the resolution adopter! at the
February meeting of the Federal Open Market Committee and. the circum*
stances in which the resolution was considered and stated that at this
Meeting the Committee was not confronted with the possible emergency
situation that was in contemplation in February and that there was no
need for a resolution 'in the form adopted at that time. He said that
instead the Committee had adopted two resolutions, the first super
seding previous authorizations and authorizing the executive committee
to make shifts between maturities in the opan market investment account
up to 1250,000,000, the thought being that such authority should be a
continuing one in order that replacements night be a&de by the executive
committee of maturing issues# The second resolution, Governor
Harrison said, authorized the executive committee to buy or sell up to
1250,000,000 of Government securities subject to telegraphic approval
of a majority of the Federal Open Market Committee and the approval of
the Federal Keserve Board#
Governor Harrison pointed out that, while under the previous
authority given to the executive committee to make shifts up to
#250,000,000 changes In maturities had bean made in the total net
amount of 1214,000,000 including the replacement of maturing issues,
the percentage of securities held in the account maturing within one
year m s not substantially changed# He stated that in February
of the system account consisted of maturities within 8 months, 45$
of maturities within one year, and 65# of maturities within 2 years,
as comprred with 26$ of maturities within 6 months, 44$ of maturities
within one year, end 64$ of maturities within 2 years on May 22,
1955. lie stated that it should be borne in :aind that the raaintenence
of the same general proportions of different maturities in the
account *?es due not only to shifts but also to the fact that longer
maturities were steadily falling into the short maturity groups#
Another matter considered by the Federal Open Market Committee,
Governor Harrison stated, was the distribution among the Federal re
serve bank© of securities held in the system account. He said that
the Federal Reserve Banks of Mew York and Chicago hold a substantial
amount of securities in excess of their prorata share on the basis of
expenses, dividends and charge-offs at the respective Federal reserve
banks and that the Federal Reserve Bank of Chicago had suggested the
consideration of a transfer of some of its excess holdings to other
federal reserve banks which at the present time do not hold their pro
rata share of the system account* J'Tfie point was brought out, Governor
Harrison said, that with possibly one or t*o exceptions, depending
upon the policy adopted by the banks with regard to setting up re
serves, no Federal reserve bank needs any additional amount of securi
ties to.cover its expenses, but that, in view of the desire of the
Chicago bank to reduce its excess holdings, the matter had been dis
cussed and the decision reached that the Secretary of the Federal Open
Market Committee should pursue the matter with certain Federal reserve
banks to see how far the directors of the banks would be Killing to
go in taking over a portion of Chicago*s participation in the system
Reproduced from the Unclassified I Declassified Holdings of the National Archives
account| and thet it was hoped that a shift of between 140*000*000
and $45*00Gf000 could be made* He added that some of the Federal
reserve banks had offered to buy at cost to the Federal Reserve Bank
of Chicago some of the securities held by the hank In Its own account
but that the bank was not willing to sell the securities on that
basis* Se stated further that some of the Federal reserve banks cannot
take a portion of the excess securities held by the Federal Beserve
Bank of Chicago for the reason that their reserve ratios are low aad
further purchases toy such banks would necessitate their pledging add
itional Government securities as collateral for Federal reserve notes
and that it wr.a not suggested that these banks take additional amounts*
During Governor Harrison1s statement Mr* 0#Connor Joined the
meeting.
Governor Harrison expressed, as the view of the Committee* the
opinion that it would be unfortunate if the Federal Reserve Bank of
Chicago should undertake to sell in the market securities froa its
o m portfolio* thereby reducing the total amount of Government securi
ties held by the system, and he stated thet the resolution authorising
the executive committee of the Federal Open Market Comraittee to buy
or sell up to $250,000,000 of securities was adopted with the under
standing that the Coian&ttee did not favor any change at the present
time in the system1s total holdings of securities*
Governor Harrison also said that* in connection with the con
version of called bonds and maturing Issues* It had been the general
policy of the executive committee to take shorter maturities where an
option was given and that hen only longer ten* securities were
offered by the Treasury Department in exchange for maturing issues it
had been the policy for the last year and a half to anticipate the
offering by selling the long term securities in the market and taking
shorter maturities in exchange* He said this procedure vith regard to
ih« Iwumr tar* securities was followed only when there was a market
st.i'ong enough to pftxnit It and the procedure wes agreeable to the
Treasury ihspartasat*
Governor Eccles inquired whether the Committee contemplated
that the Board would tske any action in connection with the two
resolutions adopted by the Committee and Governor Harrison stated that
it was not felt thet the resolutions required cny action by the Board
at this time*
Governor Harrison referred to the Inquiry made of the Federal
Beserve Board by the Federal Reserve Bank of Chicago with regard to
the propriety of a reduction in the systea* s holdings of securities
end he suggested that the Federal Open Market Committee be furnished
with a copy of the Board* s reply for its Information in connection with
the consideration of open market policy* the letter received by the
Board froa Governor Sohaller of the Federal Reserve Bank of Chicago
under date of May 4, 1955, and the Boardfs reply and accompanying
memorandum under date of May 25, 1955* were read for the Information of
the members of the Federal Open Market Commltt®®#
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-4ir* OiCo«nor Inquired whether, in th# opinion of th© Federal
Open Market Committee, it would be desirable to atleapt to piece a
larger portion of the total amount of outstanding Government securi
ties in the hands of private investors. In that connection he pointed
out that the condition reports of national banks submitted at the tiae
of the last call shoved a slight increase in the total aaount of coaaercial loans held by the banks and he said that he would like to know
what the effect would be on the banks1 attitude toward the Government
securities held in their portfolios of an acceleration of this trend to
any marked degree in the next twelve months or more*
Governor Harrison stated that, In his opinion, the large hold*
ings of Government securities by the banks would not of necessity act
as a restraint on the making of commercial loans, because of the large
excess reserves held by the banks, but that he fe lt that i t would be a
sounder position to have sore Government securities in the hands of
private Investors.
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. In response to a statement by Mr. O’ Connor that the banks in the
United States hold more Government securities than banks in Ingland or
France, Governor Iccles said that the banks in this country hold more
securities in proportion to the total Government debt but slightly less
in proportion to the total assets of the banks* this point was dis*
cussed and i t was suggested that the important question in this eonnection is not what percentage of securities Is held by the banks, but
whether, when the banks resume lending and making other investments to
cover their expenses, they w ill, in spite of their excess reserves, begin
to liquidate their holdings of Government securities to make the proceeds
available for other purposes*
Governor Harrison pointed out that In Sogland the British
Treasury is authorised to pay a commission for the sale of securities to
th© public wh©rmB th« tfetted States Treasury M s no such authority* He
said that ibis matter had been considered by th© Treasury Department end
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that some o* ine treasury representatives feel tnat i t wouia oe wise to
ask for this authority, and that, i f the time came when i t was found
desirable to reduce holdings of Government securities by selling them to
the public, he fe lt that he would be willing to pay a commission for the
sale of securities from the system account even though it should be found
necessary for the Federal reserve banks to ta^e over a corresponding
amount of the commercial banks* holdings* He added that he realised
that this would result in the Federal reserve banks bearing an expense
which should be borne by the Treasury but which the Treasury does not
have authority to assume*
At this point Mr. 0*Connor left the meeting.
After some further discussion, Governor Eccles stated that the
question for consideration at this meeting was whether the present easy
money policy of the system should be continued until such tiae as there
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R g firo fu c e 'd lro rfi the UnclcissiTtec)
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1# an Indication of substantial l*pror««»nt In buainaaa and in the uaa
Of existing fund* and that in hi* mind there was no Juatlfication for a
ohange In. that policy until It* effeot in inducing rooovory la fa it.
J
Govamor 5ohall«r inquired wh*th«r the Federal iUftrvt Board
approved tho requeat -of tho Federal Beeerwe Bank of Chioago that same
of tha othar bonks tako ©vor a portico of Its holding* o f Qovernaont
aaouritiaa. OoTarnor Koola* stated that tha Board waa not in position
to foroo,-the. 'bank* to taka any jairt of %loofo*o .holding* but would have
no objection to tholr doing m*j
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inquiry froa Hr. HUlor aa to why Chicago doair ad to ro~
duoo Ito-hO&iifigf* Governor Schaller ■**!$ that tho bank 1* holding a
a&iton1il*I ;.«iio«t of securities In anno** of It* prorata share.
1i ar roforrad to tho *tatowB*nt con^Ainai In. Govornor
Schallar* a lattar that paat oatporliiioo hod not *hO*#* that the sale of
Gov«im <iit 'aooorltlo* for tho purpooo of ©hooking inflation had boon
successful, and to tha ototanont oootalnad in tho memorandum accompanyInf 'tho Board* a ropier that excess reeerve* should not bo raducad until
thara la eviJtaoe of exoeoeive borrowlag or *peculative expansion, and
#tatod' that# la hi# opinion# tho roaocn why 'tho sale of aeouritio* had
not had tho doair ad effect in tha past m § b^cauaa action vas not takon
until tha movomont had gotten' out of Control* Ba al«0 auggartad that
HOOting* of tho Federal Opan Market Committee with tho Board should bo
hold
cron though no dafinlta action 1* contaaplatad, in
ordar that tho Board and tho ©ounittoe might bo alart to any situation
that might develop. Ha.oald that ho fo lt tho praaont problem oa*
dtfforoiit froa anything that had confronted'tho todorol Reserve Byatcm
proviouoly and that while wo' aro s t ill moving In an ataoophore of do*
prosslonf bofora we roallso It wo nay bo daallng with a no* condition
which,.If It Is to bo kept in proper bound*, ahould bo daalt with
prh*i$iyf and action should not bo dalayod until an exoeaalve earpanalon
is ^ptmr-mt*
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Governor Harrtlon statod that tho oonoldemtion of tho Federal........
Opan ierket CowtittoO at it * meeting yesterday of tho rooolution* which
WOTO fln illy adopted v»a* on tho basis -te t tho Committee did not' favor
0 change at this tlao In tho total iyatom holding a of Government oooao#*;'
ties, largely for tho roaoom* aot ffertl* in tho praliala*ry aamorandum
prepared by tho ohairman. Ha -Bald that 'ho did not think 'that tha foroo*
of recovery had reaohed a point whore tho systaa would bo Justified in
making a » a j o r ohange In open market policy and that tho position taken
In Governor Sehaller*s lattar above referred to oa* a surprise to hla,
that it had not boon mentioned In tha Committee discussion, and that he
assumed that, in his opacity a* a «i«*aber of the Federal Open Market
Committee, Govornor Schaller waa not In favor of the ouggeatlon containod
in the loiter that th# open market m o & m t be reduced.
G o w n o r Schaller stated that ho **** willing to fo along with
tho policy determined upon by tho Gonmltteo-*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Governor Harrison said that he was i n accord with Mr* Miller1e
position that whm the time comes for a change in open market policy the
ayatam cannot afford to m d t for statistical evidences that tho upward
movanant is getting out of control but must seas© the condition in tho
lii.’ht of ell circuastances existing: at the t i m e ,
Jlr, Miller auggostad that tho eal® of a mall amount of Governraent securities whan the proper point in recovery is reached would pro
vide a strong psychological contribution to the aoveraont*
Governor Eccles suggested that the ayatan might find at that
tiae that it would be bettor to m&ke a change in tha reserve requirements
of member banks rather than to sell securities, this point was discussed
briefly*
Th© meeting recessed and reconvened at 2»00 p. ;n* as a meeting
of tho Fodoral Reserve Board with th© Governors1' Conforonce.
Very truly your8,
Chester lorrill,
Secretary*
SKC/rkt
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CONFIDENTIAL
TJSfi!ATiy}i! llliiffT SUBJECT TO CHANGE
MINUTES OF THE JOINT MEETING OF THE
FEDERAL OPEN MARKET COMMITTEE WITH THE
FEDERAL RESERVE BOARD
HELD AT WASHINGTON, D. C.
MkY 28, 1935
The meeting was called to order at 11:00 a. m., there being present the
following:
From the Federal Reserve Board
Governor Eccles, Chairman, Vice Governor Thomas,and
Messrs. Hamlin, Miller, James, Szymczak, O ’Connor, Clayton,
Morrill, Carpenter, and Goldenweiser.
From the Committee
Governors Young* Harrison, Norris, Fleming, Seay, Newton,
Schaller, Martin, Geery, Hamilton, McKinney, and
Deputy Governor Day.
Mr. Strater was also present.
Governor Harrison reported to the meeting the action of the committee at
its meeting the previous day, and explained that in connection with the motion
authorizing purchases or sales after telegraphic approval of the committee and
approval of the Federal Reserve Board, it was the unanimous opinion of the commit
tee that no purchases or sales should be undertaken at the present time.
There ensued a general discussion of open market policy, in the course
of which question was raised concerning the position of the Federal Reserve Bank
of Chicago., and the correspondence between that bank and the Federal Reserve Board
was read.
Copies of this correspondence are attached to these minutes.
With respect to the distribution of government securities between
Federal reserve banks, Governor Harrison reported the discussions of the committee
on the preceding day and indicated that the various Federal reserve banks now
holding less than their pro rata share were to explore the question of increasing
their holdings, and that some shift in securities would probably result.
In the
course of this discussion Governor Schaller asked Governor Eccles whether the'
Federal Reserve Board approved the request of the Federal Reserve Bank of Chicago
that some of the other banks take over a portion of its holdings of government
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securities.
Governor Eccles stated that the Board was not in a position to
force the banks to take any of Chicago’s holdings, but would have no objection
to their doing so.
There ensued further discussion of the policy to be pursued, at the
conclusion of which there was unanimous agreement on the part of all those present
that no sales of government securities should be made at this time, but there was
agreement that the System should be prepared to act promptly when the time cams
for a change in open market policy.
The meeting adjourned at one p. m,
George L. Harrison,
Chairman, Federal Open
Market Committee,
mm
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RESOLUTIONS ADOPTED BY THE FEDERAL OPEN MARKET
__________ COMMITTEE ON MAY 27. 1955.________
1.
Voted that, superseding previous authorizations, the Executive
Committee be authorized to make shifts between maturities of
Government securities up to $250,000,000.
2,
Voted that the Executive Committee be authorized to buy or
sell up to 1250,000,000 of Government securities subject to
telegraphic approval of a majority of the Federal Open Market
Committee and the approval of the Federal Reserve Board.
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MDJOTBS OF THE MEETING Of THE
FEDERAL OPEN MABKET OOliCXTTEE
HELD AT WASHINGTON, D. C.
M M 27, 1935.
The meeting was Galled to order at 10:30 a. m., there being present
the following:
Governor Harrison, chairman, Governors Young, Norris, Fleming,
Seay, Newton, Schaller, Biart in, Geery, Hamilton, McKinney,
Deputy Governors Day and Burgess, secretary*
Mr. Strater was
also present.
It was
VOTED that the secretary’s report of operations and the
preliminary memorandum which had been mailed previously to
all members of the committee be accepted and filed*
It was
VOTED that the actions of the executive c admit tee since the
meeting of the full committee on February 5 be ratified.
There ensued a discussion of policy for the future.
It was agreed in
the first place that there should be continuing authority to effect shifts be
tween maturities in order to deal with maturing issues and take care of any
situation which might arise in the market.
It was further agreed that is fixing
a figure for such shifts that a net figure should be used, that is, a figure for
the net change in the maturities in the portfolio, and the replacement of matur
ing bills, for example, with other bills should not be included in any authoriza
tion*
Under this method of calculation it was reported that net shifts in the
portfolio amounting to $214,OCX),000 had been made since the meeting on February 5.
Accordingly, it was
'
VOTED that, superseding previous authorizations, the executive
ccmmittee be authorized to make shifts between maturities of
Government securities up to $250,000,000.
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Author,
nty^ - Q c c k r j Q ^
2
T h e re ensued a discussion of what if any authority should be given to
the executive committee with respect to purchases or sales of securities to
place the conmittee in a position to act promptly if any occasion arose, and it
was
VOTED that the executive committee be authorized to, buy or
sell up to 1 250,000,000 of Government securities subject to
telegraphic approval of a majority of the Federal Open Market
Committee and the approval of the Federal Reserve Board,
Governor Schaller of Chicago then reported that the board of directors
of the Chicago bank was desirous of reducing its holdings of government securi
ties by the amount which that bank holds in excess of its pro rata share on the
basis of the present method of distribution of securities between Federal reserve
banks.
Governor Schaller reported that his bank had written to the Federal
Reserve Board suggesting that they desire either to transfer securities to other
Reserve banks or to sell securities in the open market in order to reduce their
holdings*
Governor Schaller read a letter received from the Federal Reserve
Board in reply to this letter.
There then ensued a general discussion whether other Reserve banks now
holding less than their pro rata share of government securities might not absorb
some part of the holdings of the Federal Reserve Bank of Chicago.
In the course
of this discussion question was raised as to the possible sale by the New York
and Chicago banks to the System portfolio of their present outright holdings of
government securities*
It was agreed that for the present this matter should be
held in abeyance#
After further discussion it was
VOTED;, that in view of the overage shown by the holdings of
the Federal Reserve Bank of Chicago and its desire to effect
some redistribution of these holdings, that each Reserve bank'
should undertake to consider such an adjustment in its own
position as would effect an equalization of holdings among the
Reserve banks, and that the executive conmittee should explore
this question further.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
3
There was some general discussion of open market policy, and it was
unanimously agreed that no purchase or sale of securities should be undertaken at
the present time.
In the course of this discussion there was reference to the
memorandum on excess reserves prepared for the directors of the Federal Reserve
Bank of New York and circulated to all members of the committee with the minutes
of the meeting of the executive committee on April 17, 1935.
At 12:25 Under Secretary Coolidge and Governor Eccles entered the meet
ing, and there was a general discussion of Treasury financing problems including:
the distribution of baby bonds, the mechanism for handling relief checks, the
question of reimbursement of Federal reserve banks for fiscal agency operations,
and the new method of Treasury financing being tried in the form of asking for
bids on bonds.
Governor Harrison raised the question whether announcement should
be made that thr Federal reserve banks would not be authorized to bid on these
offerings as is the case with Treasury hill offerings, and it was generally agreed
that the Treasury in some appropriate fashion should advise the Reserve banks to
that effect in order that there may be no difference in this respect between bill
and bond offerings.
At one p. m.
the meeting adjourned as an open market committee to re
convene in the afternoon as a governors conference.
W. Randolph Burgess,
Secretary.
Reproduced from the Unclassified I Declassified Holdings of the NationaljArchives
CONFIDENTIAL
TEICTATIVE DRAFT SUBJECT TO CHANGE
MINUTES OF THE MEETING OF THE
FEDERAL OPEN MARKET COMMITTEE
HELD AT WASHINGTON, D. C.
i m 27, 1935.
The meeting was called to order at 10:30 a* m*, there being present
the following:
Governor Harrison, chairman, Governors Young, Norris, Fleming,
Seay, Newton, Sehaller, Martin, Geery, Hamilton, McKinney,
Deputy Governors Day and Burgess, secretary.
Mr. Strater was
also present.
It was
VOTED that the secretary’s report of operations and the
preliminary memorandum which had been mailed previously to
all members of the committee be accepted and filed.
It was
VOTED that the actions of the executive committee since the
meeting of the full committee on February 5 be ratified.
There ensued a discussion of policy for the future4
It was agreed in
the first place that there should be continuing authority to effect shifts be
tween maturities in order to deal with maturing issues and take care of any
situation which might arise in the market.
It was further agreed that in fixing
a figure for such shifts that a net figure should be used, that is, a figure for
the net change in the maturities in the portfolio, and the replacement of matur
ing bills, for example, with other bills should not be included in any authoriza
tion.
Under this method of calculation it was reported that net shifts in the
portfolio amounting to #214,000,000 had been made since the meeting on February 5.
Accordingly, it was
http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
I
VOTED that, superseding previous authorizations, the executive
committee be authorized to make shifts between maturities of
Government securities up to $250,000,000.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
2
There ensued a discussion of what if any authority should he given to
the executive committee with respect to purchases or sales of securities to
place the conmittee in a position to act promptly if any occasion arose, and it
was
VOTED that the executive committee be authorized to buy or
sell up to $250,000,000 of Government securities subject to
telegraphic approval of a majority of the Federal Open Market
Committee and the approval of the Federal Reserve Board*
Governor Schaller of Chicago then reported that the board of directors
of the Chicago bank was desirous of reducing its holdings of government securi
ties by the amount which that bank holds in excess of its pro rata share on the
basis of the present method of distribution of securities between Federal reserve
banks.
Governor Schaller reported that his bank had written to the Federal
Reserve Board suggesting that they desire either to transfer securities to other
Reserve banks or to sell securities in the open market in order to reduce their
holdings.
Governor Schaller read a letter received from the Federal Reserve
Board in reply to this letter.
There then ensued a general discussion whether other Reserve banks now
holding less than their pro rata share of government securities might not absorb
some part of the holdings of the Federal Reserve Bank of Chicago.
In the course
of this discussion question was raised as to the possible sale by the New York
and Chicago banks to the System portfolio of their present outright holdings of
government securities.
It was agreed that for the present this matter should be
held in abeyance.
After further discussion it was
VOTED;, that in view of the overage shown by the holdings of
the Federal Reserve Bank of Chicago and its desire to effect
some redistribution of these holdings, that each Reserve bank*
should undertake to consider such an adjustment in its own
position as vrould effect an equalization of holdings among the
Reserve banks, and that the executive committee should explore
this question further.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
3
There was some general discussion of open market policy, and it was
unanimously agreed that no purchase or sale of securities should be undertaken at
the present time.
In the course of this discussion there was reference to the
memorandum on excess reserves prepared for the directors of the Federal Reserve
Bank of New York and circulated to all members of the committee with the minutes
of the meeting of the executive committee on April 17, 1935.
At 12:25 Under Secretary Coolidge and Governor Eccles entered the meet
ing, and there was a general discussion of Treasury financing problems including:
the distribution of baby bonds, the mechanism for handling relief checks, the
question of reimbursement of Federal reserve banks for fiscal agency operations,
and the new method of Treasury financing being tried in the form of asking for
bids on bonds.
Governor Harrison raised the question whether announcement should
be made that the Federal reserve banks would not be authorized to bid on these
offerings as is the case with Treasury bill offerings, and it was generally agreed
that the Treasury in some appropriate fashion should advise the Reserve banks to
that effect in order that there may be no difference in this respect between bill
and bond offerings.
At one p, m.
the meeting adjourned as an open market committee to re**
convene in the afternoon as a governors conference.
W. Randolph Burgess,
Secretary.
teem
Reproduced from the Unclassified / Declassified Holdings of the NationaljAichives
tw
m
awawa
x.
W
I
J,
CONFIDENTIAL
REPORT OF O P M MARKET OPERATIONS TO METING OF THE
FEDERAL O P M MARKET COMMITTEE AT
WASHINGTON, D. C., MAY 27, 1955
The present holdings of United States Government securities in
the System Spscisl Investment Account sxoount to
#0*223,149,510.
There has been practically /no) change in this amount since November 8, 1933*
Transactions in government securities in the System Account sine©
February 5, 1955, the date of the last meeting of the Federal Open Market
Committee, were as follows:
(1)
Redemption at maturity of #312,374,000 Treasury bills and
sales in the market of #8, 700,OCX) short Treasury bill mat
urities which were replaced by purchases in the market as
follows;
$285,953,000
19.856.000
11.900.000
3,365,000
-
Miscellaneous Treasury bills
3-4 year
w
notes
Intermediate-term Treasury bonds
Long-term
w
”
MTTOTBS OS
The #3,365,000 long-term bonds noted above
were purchased in accordance with the agree
ment of the Executive Canmittee to employ up
to #25*000,000 if necessary in order to
assist in maintaining an orderly aarket at
the time of the March 15 quarterly T& m m r y
financing. A total of#S,915,00© of Treasury
fecwi* and GftlM Fourtfc J&tomrty Loan bonds was
purofe&sai* #5,560*000 4Mt ifeifcb sdhseqpently were
resold to th© market*
MAY S f 1335.
•4t
(2)
Exchanges in the market in anticipation of ataturity as
follows4
$ §0,400,000 - 3
$ Treasury notes 4^© June 15, 1935
15,800,000 - 4 1 /4$ 4tit l/l bds. cailed Oct. 15, 1935
6,000,000 - 2 l/ 2 % Treasury notes due Dec. 15, 1935
for
# 55,400,000 - Miscellaneous Treasury bills
7,000,000 - 5-4 ye«tr Treasury notes
17,800,000 - Intejad&iate-term Treasury bonds
Reproduced from the Unclassified I Declassified Holdings of the National^rghives
(3)
Exchanges in the market for the purpose of improving the
maturity distribution in th© Account as follows:
$20,500,000 - 2 7/8$ Treasury notes due April 15, 1936
500.000 - 2 3/4#
"
"
tt Doc, 15, 1936
for
20,500,000 - Miscellaneous Treasury bills
500.000 - 3-year Treasury notes
(4)
Conversions under Treasury offerings dated March 4 and April
22 as follows:
#74,350,000 •* 2 l / 2 % Treasury notes due March 15, 1935
for 1 5/8^
"
"
*
"
15, 1940
84,667,700 - Third called Fourth 4 l/4«s
for 2 7/8$ Treasury bonds of 1955-60
25,025,000 - First 3 112% Liberty Loan bonds
called June 15, 1935, and
2 9 , 0 0 0 , 0 0 0 First 4 l/4$ Liberty Loan bonds
called June 15, 1935
(5)
The above conversion of #84i667,7g€Ttbjj;« called Fourth
4 1 /4 ’s into 2 i j &f o per cent bonds of 1955-60 was made
with the understanding that part of than would be ex
changed into shorter maturities when such became possible.
To date $31,633,400 of these bonds have been exchanged, in
the market and with the Treasury, for
$ 5,000,000 - Miscellaneous Treasury bills
24,645,450 - 2% Consols called July
1, 1935
1,987,960 - 2$ Panamas
*
August 1, 1935
A further sale of $22,000,000 of the 2 ?/s per cent bonds,
along with $3,000,000 from the New York Investment Account,
has been arranged with th© Treasury for account of the
Postal Savings System for delivery May 27* Offsetting
purchases in anticipation of this sale have been completed
as follows:
$ 1,500,000
2,000*000
2.250.000
7.500.000
250.000
6.500.000
400.000
1.600.000
2«000,000
$22 ,000,000
- 3
— 3
- 3
*. 2
- 2
- 2
- 3
- 3
- 3
% Treasury notes due Feb* 15, 1937
$
"
"
* Apr, 15., 1937
%
*
«
" March 15., 1938
7/8%
*
"
" June 15, 1938
l/2$
"
"
* Sept, 15, 1938
l/8$
*
tt
w j ^ e x5# 1939
3/8$ Treasury bofids of 1940-43
l/4$
"
ft
« 1941
3/8#
*
*
” 1941-43
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N a tio n a l A rch ive s
(6)
Transfers of participations within the Account totaling
$83,000,000 as follows:
Transferred
To_____
Richmond
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Amount
$10,000,000
15,000,000
5,000,000
15,000,000
5,000,000
33,000,000
Transferred
From
New York
Chicago
38,500,000
44,500,000
These transfers were made for the purpose of improving the
earning position of banks increasing their participation.
Not reflected above is a $5,000,000 transfer of partici
pation from Dallas to New York on April 30 following a
decline in the reserve ratio of the former bank.
Under the general authority to make shifts between maturities in the
Account up to $250,000,000, voted at the meeting of the Federal Open Market
Committee on February 5, 1935, net operations to date amount to $214,474,300.
This amount does not take into consideration the sale to the Treasury of
$22,000,000 - 2 7/8 per cent bonds of 19*55-60 for delivery May 27, 1935, as
is noted in item (5) above.
Attached to this report are the following exhibits:
Exhibit "AM Maturity distribution of government securities
in System Account at the end of each month 1932,
1933, 1934 and 1935 to May 22.
Exhibit "B" Classification of issues held in the System
Account on February 5 and May 22, 1935 and
net changes by issues during this period.
Exhibit "C" (1) Participations by Federal reserve banks in
System Special Investment Account and (2) total
holdings of government securities by Federal
reserve banks close of business May 22, 1935,
and the amount of (1) and (2) over or short of
pro rata share based on ratio of oach bank’s
expenses, dividends and charge-off requirements
for 1934 to total for the System.
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N a tional A rch ive s
O.
/-aSSe:
jflJO
4
Exhibit "D" Ch^rt shoeing average earning rate on holdings
of United States Government securities in
System Special Investment Account and average
yield on outstanding Treasury bonds and Treas
ury notes,- 1934 and 1935 to May 22.
Exhibit ”E1t Earnings of all Federal reserve banks for the
four months ended April 30, 1935.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
' " ri,> c k o
kr
EXHIBIT "A”
MATURITY DISwIBUTION OF HOLDINGS IN SYSVfiM AMOUNT
________ END OF EACH MONTH - 1952-55-54-35_________
(In millions of dollars)
Within
Within
Per One
Six
1932 Months cent Year
Jan,
29 I 355
|165
Feb.
375
191
32
Mar.
299
44
475
57
778
Apr.
583
51 1*058
May
716
June
48 1,106
744
733
45 1,098
July
Aug.
38 1,029
622
37
Sept.
998
606
40 1,051
Oct.
651
47 1,046
Nov.
765
Dec.
779
48 1,021
1953
Jan.
644
41
903
577
Feb.
36
856
Mar.
709
44
856
Apr.
570
35
725
32
May
543
823
June
37
656
879
659
36
July
903
Aug.
32 1,025
621
Sept.
34 1,102
706
860(A) 39 1,257
Oct.
Nov.
845(A) 43 1,235
Dec.
887(A) 40 1,216
1934
Jan.
887(A) 40 1,216
Feb.
987(A) 44 1,190
799(A) 36 1,034
Mar.
730(A) 33 1,008
Apr.
May
717(A) 32
991
June
765(A) 34
972
July
732(A) 33
939
705(A) 32 1,018
Aug.
Sept.
654
29
868
Oct.
749(A) 34
964
752(A) 34
Nov.
968
Dec.
794(A) 36
953
1935
Jan.
790(A) 35 / 950
Feb.
863(A) 39''
950
Mar.
747(C) 33
889
Apr.
727(D) 33 1,087
May 15
597(E) 27
987
” 22
578
26«/ 976
1h \
5 rv-r*4“A
A « T?/%ii■
h4iV% T *
Within
Per Two
cent Years
63 $ 355
375
64
69
475
779
76
75
1,115
71
1,173
1,167
67
1,194
63
1,170
61
1,229
64
1,227
64
1,203
62
3-5
PerYears
cent Inc.
63 1 64
69
76
79
64
75
71 132
73 , 110
71 134
75
75
77
75
73 101
Call
Per- able
cent Bonds
- $212
212
212
239
290
4
322
8 356
6
536
8
336
4
336
4
336
6
336
Per )ther
cent 3onds
37 i 36
31
24
21
21
21
21
21
21
21
21
58
53
53
45
49
49
50
53
53
57
56
55
1,107
1,090
1,090
958
962
1,117
1,143
1,191
1,278
1,443
1,435
1,426
71
67
67
59
57
62
63
62
62
66
65
64
116
203
203
335
384
335
341
394
452
498(B
511 (B
520 (B
7
12
12
20
23
19
19
21
22
23
23
24
336
356
536
356
336
336
336
336
336
252
252
252
22
21
21
21
20
19
18
17
16
11
11
11
25
25
1
1
1
1
1
1
1
1
1
1
2
2
2
2
559
629
629
629
682
788
820
921
066
193
223
223
55
54
47
45
44
44
42
46
39
43
43
43
1,426
1,415
1,287
1,476
1,475
1,354
1,321
1,365
1,258
1,342
1,349
1,405
64
64
58
67
66
61
59
61
56
60
60
63
520 (B
531 (B
659(B
488 (B
489 (B
550 (B
583 (B
539 (B
646 (B
647 (B
640 (B
584 (B
24
24
30
21
22
24
26
24
29
29
29
26
252
252
252
195
195
195
195
195
195
110
110
110
11
11
11
9
9
9
9
9
9
5
5
5
25
25
25
64
64
124
124
124
124
124
124
124
1
1
1
3
3
6
6
6
6
6
6
6
2
2
2
2
2
2
2
2
2
2
2
2
223
223
223
223
223
223
223
223
223
223
223
223
43 , 1,394
43 ^ 1,460
1,379
40
1,524
49
44
1,424
44 ✓ ' 1,413
62
65
62
69
64
64
595 (B
529 (B
603 (B
519
596
600-
27
24
27
23
27
27
110
110
56
0
0
0
5
5
3
0
0
0
124
124
185
180
203
210
6
6
8
8
9
9
2
2
2
2
2
2
223
223
223
223
223
223
.
(B) Does not include Fourth Liberties "uncalled” maturing October 1938.
(C) Includes First Liberties, Panama’s and Consols "called”
(D) Includes First and Fourth Liberties, Panama's and Consols "called”
(l)
Includes Fourth Liberties, Panama's and Consols "called”
Per
cent Totals
- $ 567
587
687
■1 018
1 405
1 559
1 635
1 640
1 640
1 640
1 640
1 640
Reproduced from the Unclassified / Declassified Holdings of the M
Autho
maasms
EXHIBIT ■*•
classification
or issues
hkls is tbe s w tw Aooanrr
^ ^
Feby
II
11
II
Mtreh
*
«,
15,
20,
27,
#»
15,
ii
20,
W
27,
A p ril 5*
II
10,
"
17.
V
24,
m j
1#
fl
8,
M
15,
• II
22,
n
29,
June
5,
*
1?,
n
19,
it
*5,
July
5,
«»
10,
it■
17,
m
?4,
"
31,
M *.
7,
II
14.
"
?1,
II
2R,
f,ept. 4,
"
11,
"
W»
*
*° »
Oct.
#1
No t . 27,
n^c.
4,
"
n,
■
IB,
"
'4 ,
■
11,
R,
J»n.
"
"
*' »
29,
Teb.
5,
"
n,
19,
"
* n
n r
ft n
II N
ft II
fl ft
n n
mii
n it
im s
IB fflf^
8
S l , 555
17,952
16,650
19,040
22,650
17,880
24,800
27,700
15,250
14,552
20,240
18,705
22,250
19,440
24,287
16,875
20,700
25,205
19,250
20,000
27,599
18,750
25,200
21,200
10,010
_
-
golfliags
m rtx
1
20,700
20,205
20,900
19,250
20,000
25,099
18,750
25,200
21,200
15,010
25,525
25,862
18,720
14,540
12,950
8,500
6,063
15,000
7,219
15,700
14,700
15,355
19,197
<4,450
13,96?
15,820
18,?50
25,300
9,000
4,355
13,675
7,800
♦501,456
*525,255
Holdings
w.Asmgntf
o* m m m s aid max »,
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1955
1985
1955
1955
1955
1955
1955
1955
1955
1955
1355
1955
1955
1935
1935
1935
1935
1935
1915
1356
1956
1336
1956
19?*
1936
1956
i
Increase
f Z
_ .
20,900
5,000
25,525
25,M2
15,720
14,540
12,950
8,500
6,065
15,000
7,219
15,700
14,700
15,555
19,197
24,450
15,962
13,820
18,250
25,500
9,000
4,355
15,675
7,800
D*ereas*
17,952
16,650
19*040
22,650
17*960
24,800
27,700
15,250
14,552
20,?40
18,705
22,250
19,440
24,287
16,875
5,000
4,500
_
•
_
_
_
_
_
_
_
_
_
_
_
_
_
£23,779 Het
-
n t p. ' tjcy voTr "
'\
*
' ' r>-H« .
*
1r/ir
"X/'<*
’
i i./.f*
* i tf*
i!!r.*
: ?,/*.*
l/*
? /«
i
1/9*?
«
"
>■
"
»
March
.Tune
Aujr.
P«c.
April
June
eup.
^ot.
r>c.
F*>b.
*r>r.
c**Dt.
*>b.
”" r .
Jim**
■>pt
Tun*
M»r.
IP ,
IS,
1,
15,
15,
15,
1.
u ,
1-S
u,
IS
If".
,
1;-.
If,
15,
IS,
IS ,
1
IT/-
1955
1935
1935
1355
1956
1936
1936
1936
1936
1937
1937
1937
193H
193H
1956
1938
1939
1940
74,350
130,395
85,723
73,6?1
157,385
50, ~tOO
79,04'
5‘»,967
93,368
65,685
84,175
84,750
58,8?0
9?,099
53,500
B0,4R1
69,438
-
93,995
85,723
67,621
136,886
50,000
79,042
58,967
98,860
66,685
84,175
84,750
60,205
97,099
65,924
81,981
81,485
128,375
f l , 4 0 r ,799
?1,4*0,781
f5,o:^5
29,000
84,668
56,201
20,000
_
25,000
59,000
40,000
_
40,401
42,700
r>,ooo
2,000
25,000
59,000
3,000
40,000
2,015
1,550
55,054
24,645
1,469
519
-
74*550
36,400
6,000
_
_
_
_
_
?0,499
_
500
_
_
1,*R5
_
1?,4P4
1,500
1^,047
1?8,575
_
_
_
_
♦17,98r net
>!f r i v f - m y poiffjc
»
4
4
4
u T C / T %1« cf.lled 6 A V S S
iM
h
"
"
6/lS/?5
1/4* m
•*
»*
10/15/35
1/ a* 4th H
«
».
1/t.4
" riur 10/15.A8
!/4rf ?re*surv Pond - of 1941
n
* V™
** 1940-43
r*
* 3/8<
" 1941-43
"
1943-45
l/4y
* \ /l*
*
1944-46
* ?/ » *
m ■ « 1943-47
•t
M
"
1946-48
%
5
•» 1949-5P
**
1/8<
*
r
*»
#
1951-55
•t
w
*»
V 7/«<
1955-60
4 Con^ol^ 1950 e a ll«d 7A/55
p
8/1/35
r*
1 Panaaas 1956 «
«
r
<
8/1/55
1958
HOTr.:
_
-
_
22,700
2,000
2,000
_
5,000
2,015
1,550
55,054
24,645
1,469
819
25,025
29,000
44,267
56,201
_
_
_
_
_
_
_
_
_
_
_
_
_
TOTAT.S
1518,894
*277,188
-
♦41,761
OTUm TOTALS
*2,225,149
12,225,149
-
-
Tills l U t w w t atom tfe« holding in (In Aooount as of Mgr t t , a^d ooaaeqoently
doe* not reflect any of Um obanga* stalefe will result of Um sale of $22,000,000
2 7/8% Treasury Bood* of 196fr-fQ «rraaged elth Um Treasury for delivery Haqr tt.
EXHI3IT "C"
(1) PARTICIPATION BY FEDE&JL RESERVE BANKS IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT AND (2) TOTAL HOLDI ■;GS OF GOVERl«NT
SECURITIES BY FEDERAL RESERVE BANKS CLOSE OF BUSINESS MAY 22, 1935 AND THE AMOUNT OF (1) ,::T) (2) OVSR OR SHORT OF PRO
RATA SHARE BASED ON RATIO OF EACH BANK’S EXPENSES, DIVIDENDS AND CHARGE-OFFS FOR 1934 TO THE TOTAL FOR THE SYSTEM
(000 Omitted)
Part icipations in
System
Account
(A)
Ratio of
Holdings
in
System
Account
(B)
Ratio of
Expenses,
Dividends &
Charge-offs
Year 1934
(C)
156,982
7.06%
NEW YORK
622,318
27*99%
28
%
PHILADELPHIA
163,734
7.36%
9
CLEVELAND
213,025
RICHMOND
Participations
(+ ) Over or
(-) Short of
Pro Rata
Share Based
on Ratios
in Col. C.
(D)
6.49%
164-
742,615
30.59%
62,769+
’%
36,349-
167,12.0
6.88%
51,402-
9.58%
9 3/4%
3,732-
213,024
8,77%
23,708-
113,562
5.11#
5 1/4%
3,153-
113,563
4.68%
13,908-
ATLANTA
94,209
4.24%
4
%
5,283+
94,221
3.88%
2,900-
oHICAGO
321,101
14.44%
11 1/2%
65,439+
383,843
15,81%
104,621+
JT. LOUIS
107,7C0
4.84%
4 3/4%
2,100+
108,200
4.46%
7,131-
MINNEAPOLIS
63,054
2.84%
3 3/4%
20,314-
70,210
2.89%
20,841-
KANSAS CITY
106,659
4.80%
5 1/4%
10,056-
106,741
4.40%
20 ,730-
61,475
2.77%
3 3/4%
21,893-
71,475
2.94%
19,576-
199,330
8.97%
8 1/4%
15,920+
199,331
8.21%
981-
DALLAS
SAN FRANCISCO
TOTALS
"VIE:
#2,223,149
ICO
%
6 3/4%
ICO
%
$95,661 Adj.
|
Ratio
of
Total
Holdings
(F)
157,678
#
BOSTON
# 6,919+
Total Holdings
(Portfolio and
Participat ion
in System Account)
(E)
Total Holdings
(+) Over or
(-) Short
of Pro Rata
Share Based on
Ratios in Col. C.
(G)
#2,428,021
100
%
#
6,213-
#167,390 Adj.
Charge-offs do not include reserves for possible losses, Self Insurance or abnormal real estate depreciation.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fe a * r a l Reserve B ani
Of Key York
Report* Department
re0
j ,
1336.
23 Z 6
E x h i b i t HD"
Y IE L D
PER C E N T
1934
1935
Average Earning Rate on Holdings of U. S. Government Securities in fystem Special Investment
Account and Average Held on Outstanding U. S. Treasury Bonds and Treasury Notes
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
EXHIBIT "E"
STATEMENT SHOTTING EARNINGS OF ALL FEDERAL RESERVE RANKS
_________ FOR THE FOUR MONTHS ENDED APRIL 5 0 , 1955________
E a rn in g s do n o t in c lu d e $ 1 ,9 8 2 ,7 2 2 .8 7 p r o f i t s
now h e ld i n S u sp en se A cco u n t.
G ross
E a rn in g s
#
B oston
9 5 4 ,1 5 0
(a s o f May 22, 1935) on s e c u r i t y s a l e s ,
C u rre n t E x p en ses
and N et D e d u c tio n s
From C u rre n t
N et E a rn in g s
$
8 6 7 ,9 5 6
A v a ila b le f o r
D e p r e c ia tio n
A llo w a n c e s,
R e s e rv e s and
S u r p lu s
$
8 6 ,1 9 4
1 ,0 3 5 ,3 4 4
New York
4 ,7 3 0 ,2 1 2
3 ,6 9 4 ,8 6 8
P h ila d e lp h ia
1 ,0 5 1 ,1 3 8
1 ,1 0 4 ,8 5 6
53-,718 (a!
C le v e la n d
1 ,2 7 8 ,3 7 1
1 ,2 2 6 ,1 0 4
52,267
Richmond
7 0 0 ,2 7 6
6 6 7 ,1 6 2
5 3 ,1 1 4
A tla n ta
6 0 8 ,3 7 4
5 4 1 ,2 9 2
6 7 ,0 8 2
Chicago
2 ,3 6 6 ,9 4 4
1 ,5 7 5 ,4 9 4
991,450
S t . Loui s
651,365
5 4 6 ,0 5 2
8 5 ,3 1 3
M in n eap o li s
47 2 ,0 0 0
4 6 8 ,8 1 0
3 ,1 9 0
K ansas C ity
652,127
62 5 ,8 8 8
26,239
D a lla s
5 0 4 ,9 7 9
4 3 1 ,4 5 2
7 3 ,5 2 7
1 ,0 6 0 ,4 8 6
1 ,0 7 9 ,1 4 6
$ 1 5 ,0 1 0 ,4 2 2
$ 1 2 ,6 2 9 ,0 8 0
San F r a n c is c o
T o ta ls
(a) D e f i c i t
1 8 ,6 6 0 (a
# 2 ,3 8 1 ,3 4 2
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
s s y 2 4 , 1935.
3 33.
PRELIMINARY MU40R4NDUM ON MONEY M A M E T AND CREDIT
CONDITIONS FOR THE FEDERAL OUST MARKET COMMITTEE,
MAY 2 7 , 1 9 3 5
S in c e t h e l a s t m e e tin g o f th e f e d e r a l Open M arket Comm ittee t h e r e h a s
b een a c o n s id e r a b le f u r t h e r e x p a n s io n i n t h e s u p p ly o f fu n d s a v a i l a b l e f o r em ploy
m en t.
E x cess' r e s e r v e s o f a l l member b a n k s hav e r i s e n a p p ro x im a te ly $ 1 5 0 ,0 0 0 ,0 0 0
f u r t h e r t o a sew h ig h l e v e l a ro u n d # 2 t 3S0«.000p000, R e s p ite an i n c r e a s e o f ab o u t
# 100, 000,000 in th e amount o f c u r r e n c y o u ts ta n d in g and an in c r e a s e o f a p p ro x im a te ly
#120 , 000,000 in th e r e s e r v e r e q u ir e m e n ts o f member b a n k s .
T h is in c r e a s e i n member
bank e x c e s s r e s e r v e s h a s b e e n due c h i e f l y t o a f u r t h e r in c r e a s e o f m ore th a n
# 3 5 0 ,0 0 0 ,0 0 0 in t h e m o n e ta ry g o ld s to c k o f t h e U n ite d S t a t e s -
As i n p r e v io u s
m o n th s, th e p ro c e e d s o f t h e i n c r e a s e i n t h e g o ld s to c k have b een d i s t r i b u t e d
th ro u g h o u t th e c o u n try th ro u g h G overnm ent f in a n c in g o p e r a t i o n s and d is b u r s e m e n ts .
The t o t a l lo a n s and in v e s tm e n ts - o f w eek ly r e p o r t i n g member b a n k s have
shown a f u r t h e r n e t i n c r e a s e o f a p p ro x im a te ly # 200, 000,000 d u r in g th e p a s t t h r e e
m o n th s, due c h i e f l y to an in c r e a s e i n in v e s tm e n ts * in c lu d in g l a r g e r h o ld in g s n o t
onlly o f d i r e c t o b l i g a t i o n s o f t h e G overnm ent, b u t a l s o o f Government g u a r a n te e d
s e c u r i t i e s an d o f o t h e r s e c u r i t i e s .
iO
ICC
N et demand d e p o s i t s o f th e r e p o r t i n g b a n k s 1
. h a v e in c r e a s e d a p p r o x im a te ly # 8 0 0 ,0 0 0 ,0 0 0 f u r t h e r t o new h ig h l e v e l s * and tim e d e c>
* 2j j p » i t i have in c r e a s e d a b o u t # 100, 000, 000,
W ith d e p o s i t s in th e r e p o r t i n g b an k s a t r e c o r d l e v e l s and t h e a v e ra g e
P i r a t e o f tu r n o v e r o f d e p o s i t s s t i l l a t v e r y low l e v e l s , th e p ro b lem o f f in a n c in g
b u s in e s s re c o v e ry a p p e a r s t o be more th a n e v e r one o f m ore a c t i v e u t i l i z a t i o n o f
a v a i l a b l e fu n d s f o r b u s in e s s p u r p o s e s , r a t h e r th a n a f u r t h e r i n c r e a s e i n t h e money
r
supply*
Some i n d i c a t i o n o f a te n d e n c y to w ard m ore a c t i v e employment o f fu n d s h a s
a p p e a re d r e c e n t l y , h o w ev er.
W hile s e v e r a l l a r g e c o r p o r a t io n s hav e u s e d p a r t o f
t h e i r a v a i l a b l e fu n d s t o r e t i r e o u ts ta n d in g bonded in d e b te d n e s s r a t h e r th a n f o r
e x p a n s io n o r im provem ent o f p l a n t f a c i l i t i e s , t h e r e h a s b e e n e v id e n c e o f a te n d e n c y
on a m o d e ra te s c a l e f o r b u s in e s s c o n c e rn s t o em ploy w o rk in g c a p i t a l m ore l a r g e l y
http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
r-
/
R ep rod uced from the U ncla ssified / D ecla ssified H o ldings o f the N a tional A rchives
2
f o r t h e p u rc h a s e o f new e a u ip m e n t.
M achine t o o l s a l e s , f o r i n s t a n c e , have b een
in f a i r l y good volum e th ro u g h o u t th e f i r s t f o u r m onths o f t h i s y e a r , and l a s t
m onth were 40 p e r c e n t l a r g e r th a n a y e a r p r e v io u s , and w ere th e l a r g e s t f o r t h e
m onth o f A p r il s in c e 1930,
U n f i l l e d o r d e r s f o r e l e c t r i c a l ecjuipment a l s o a r e r e
p o r te d to have in c r e a s e d m o d e ra te ly compared w ith a y e a r ag o .
E v id en ce o f a te n d e n c y to w ard in c r e a s e d p r i v a t e employment o f fu n d s h a s
ap p e a re d a ls o in th e s u b s t a n t i a l in c r e a s e i n c o n t r a c t s f o r r e s i d e n t i a l b u i l d i n g
d u rin g th e p a s t few m o n th s.
In A p r il th e volum e o f r e s i d e n t i a l c o n t r a c t s was
n e a r l y d o u b le t h a t o f a y e a r p r e v io u s , and o n ly a s m a ll p a r t o f th e i n c r e a s e r e p r e
s e n te d p u b l i c l y f in a n c e d h o u s in g d e v e lo p m e n ts.
The volum e o f su ch e x p e n d itu r e s i s
s t i l l f a r from a p p ro a c h in g what m ig h t be c o n s id e r e d "n o rm al” l e v e l s , b u t r e c e n t
d ev elo p m en ts have b e e n f a v o r a b l e t o f u r t h e r e x p a n s io n .
r e n t s h a s become more p ro n o u n ced ;
ch eck ed ;
An upw ard te n d e n c y in
th e r i s e in b u i l d i n g c o s t s a t l e a s t h a s been
and m o rtg ag e money i s becom ing m ore r e a d i l y a v a i la b l e *
Thus f a r , how ever, th e l a r g e s t f a c t o r in b u s in e s s im provem ent h a s been
th e a u to m o b ile in d u s tr y * w hich h a s b een o p e r a tin g t h i s y e a r a t th e h ig h e s t l e v e l in
fiv e y e a rs .
W ithout t h e a c t i v i t y o f t h i s in d u s t r y and s u p p l i e r s o f i t s raw m a te r
i a l s , i n d u s t r i a l a c t i v i t y would p ro b a b ly show some d e c lin e fro m a y e a r a g o .
The
m arg in o v e r a ye&r ago in employment and p a y r o l l s h a s n arro w ed c o n s id e r a b ly in th e
p a s t few m o n th s, and e x te n s iv e unemployment c o n tin u e s , e s p e c i a l l y i n th e i n d u s t r i e s
t h a t a r e h e a v i ly d ep en d e n t upon th e employment o f new c a p i t a l .
M eanw hile, a lth o u g h th e amount o f new c a p i t a l s u p p lie d t o b u s in e s s e n t e r
p r i s e s th ro u g h new s e c u r i t y is s u e s h a s rem ain ed v e r y s m a ll, p r o g r e s s to w ard th e r e
o p en in g o f th e c a p i t a l m a rk e t h a s b een made d u rin g th e p a s t few m onths th ro u g h a
s u b s t a n t i a l e x p a n s io n in f l o t a t i o n s o f r e f u n d in g i s s u e s .
As th e accom panying t a b l e
show s, th e amount o f new s e c u r i t i e s p u b l i c l y o f f e r e d d u rin g th e p a s t f o u r m onths
h a s b e e n t h e l a r g e s t f o r th e c o rre s p o n d in g p e r io d o f any y e a r s in c e 19 3 1 .
An
im p o rta n t p a r t o f th e new f in a n c in g r e p r e s e n t e d b o rro w in g by S t a t e s , m u n i c i p a l i t i e s ,
R ep rod uced from the U ncla ssified / D ecla ssified H o ld in g s o f the N a tional A rch ive s
3
and fa rm lo a n o r g a n i z a t i o n s , b u t t h e volum e o f c o r p o r a t io n r e f u n d in g is s u e s a l s o
r o s e t o th e h ig h e s t l e v e l s in c e 1 9 3 1 .
D om estic C a p i ta l I s s u e s in f i r s t f o u r m onths o f 1925 t o 1935
(In m illio n s of d o lla r s )
Hew C a p ita l________
S ta te ,
M u n ic ip a l,
and
Farm Loan
C o rp o ra te *
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1 ,3 5 0
1 ,4 6 2
1 ,5 5 8
1 ,4 0 0
2 ,0 4 8
1,888
874
149
44
61
42
471
505
540
483
338
482
578
342
83
311
299
_________ R efu n d in g
C o rp o ra te *
272
225
580
1,021
455
145
511
49
98
75
272
S ta te ,
M u n ic ip a l,
and
Farm lo a n
T o ta l
Issu e s
22
2 ,1 1 5
2 ,1 9 9
2 ,7 8 4
2 ,9 2 1
2 ,8 4 7
2 ,5 2 4
1 ,9 8 1
628
231
565
1 ,0 3 1
7
106
17
6
9
18
88
6
118
418
* E x c lu s iv e o f in v e stm e n t t r u s t i s s u e s , e t c .
W hile c o n d itio n s th u s f a r hav e b een e s p e c i a l l y f a v o r a b le t o th e s a l e o f
s e c u r i t i e s o f b o rro w e rs w ith h ig h c r e d i t r a t i n g s f o r t h e p u rp o se o f e f f e c t i n g a
s a v in g o f i n t e r e s t , money m ark et and s e c u r i t y m ark et c o n d itio n s have become more
f a v o r a b le a l s o t o th e s a l e o f s e c u r i t y is s u e s by com panies in n eed o f a d d i t i o n a l
c a p ita l.
T h is i s e s p e c i a l l y t r u e o f i n d u s t r i a l co m p an ies, whose e a r n i n g s i n g en
e r a l showed f u r t h e r im provem ent d u r in g th e f i r s t q u a r t e r o f 1935 f o llo w in g some de
c l i n e in th e l a t t e r h a l f o f 1934, and o f o p e r a t in g p u b lic u t i l i t y
co m p an ies, whose
s e c u r i t i e s have h ad a v e r y s u b s t a n t i a l r e c o v e r y d u r in g th e p a s t few m o n th s.
On
th e o t h e r h an d , p r i c e s o f medium g ra d e r a i l r o a d bonds and o f p u b lic u t i l i t y h o ld
in g company bonds in g e n e r a l have rem ain ed a t low l e v e l s , and c o n d i tio n s have r e
m ained u n f a v o r a b le to a re s u m p tio n o f th e f l o t a t i o n o f such s e c u r i t i e s , w hich i n th e
p a s t have f in a n c e d l a r g e e x p e n d itu r e s on c o n s tr u c t io n and eq u ip m en t.
M arket c o n d itio n s f o r th e h ig h e s t g ra d e s e c u r i t i e s do n o t v a r y g r e a t l y
f o r th e d i f f e r e n t ty p e s o f co m p an ies, y i e l d s on Aaa bonds r e p o r te d by Moody1s
I n v e s to r s S e r v ic e a v e r a g in g b etw ee n 3 ,6 0 and 3 .8 5 p e r c e n t f o r i n d u s t r i a l , r a i l r o a d ,
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
and p u b li c u t i l i t y b o n d s , and y i e l d s on Aa bonds a v e ra g in g aro u n d 4 .1 0 t o 4 .2 5 p e r
c e n t.
F o r th e medium g ra d e b o n d s , h o w ev er, c o n s id e r a b le d i s c r e p a n c i e s a p p e a r ;
a v e ra g e y i e l d s on Baa bonds a r e r e p o r t e d a t a ro u n d 4 .7 0 p e r c e n t f o r i n d u s t r i a l s ,
about 5 .5 0 to 5 .6 0 p e r c e n t f o r p u b li c u t i l i t i e s , and ab o u t 7 .6 0 t o 7 .9 0 p e r c e n t
f o r r a i l r o a d b o n d s.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
J1
nJ)
copy
May 2 5 , 1 9 3 5 .
G overnor G eorge
S c h a l le r
F e d e r a l R e s e rv e Bank o f C hicago
C h ic ag o , I l l i n o i s *
D ear G overnor S c h a l l e r :
The Board h a s g iv e n c o n s i d e r a t i o n to y o u r l e t t e r o f May 4 t r a n s
m i t t i n g th e o p in io n
o f y o u r d i r e c t o r s t h a t th e p a r t i c i p a t i o n o f th e
C hicago R e s e rv e bank i n th e S ystem In v e s tm e n t A ccount sh o u ld b e a d j u s te d
t o th e p r o p e r p e r c e n ta g e .
I t i s s u g g e s te d t h a t th e m a tte r o f a change
i n th e d i s t r i b u t i o n o f t h e In v e s tm e n t A ccount among th e i n d i v i d u a l Re
s e r v e banks be c o n s id e r e d a t th e n e x t m e e tin g o f th e F e d e r a l Open M ark et
C om m ittee, w hich h a s b e e n c a l l e d f o r May 2 7 .
The B oard d o es n o t f a v o r a t t h i s tim e r e d u c t io n i n th e t o t a l h o ld
in g s o f U n ite d S t a t e s Governm ent s e c u r i t i e s b y a l l F e d e r a l R e se rv e b a n k s .
The r e a s o n s f o r th e B o ard ’ s o p in io n on t h i s m a tte r a r e g iv e n i n th e a t ta c h e d
memorandum, w hich d i s c u s s e s i n some d e t a i l th e a rg u m e n ts p r e s e n te d i n y o u r
l e t t e r i n f a v o r o f a r e d u c t i o n i n y o u r b a n k ’s h o ld in g s o f G overnm ents.
V ery t r u l y y o u r s ,
(S ig n ed )
C h e s te r M o r r i l l
C h e s te r M o r r i l l
S e c re ta ry
E n c lo su re
/
R ep rod uced from th e U ncla ssified
I D e cla ssified H o ld in g s o f th e N a tio n a l A rchives
CONFIDENTIAL
May 1 7 , 1935
PROPOSAL FOR REDUCTION IN SYSTEM’S
SECURITY HOLDINGS
I n a l e t t e r d a te d May 4 a d d re s s e d to G overnor E c c le s , th e G overnor
o f th e F e d e r a l R e se rv e Bank o f C hicago i n d i c a t e d th e d e s i r e on th e p a r t o f th e
d i r e c t o r s o f h i s bank t o re d u c e t h a t b a n k ’ s h o ld in g s o f Government s e c u r i t i e s
i n th e S y ste m ’s a c c o u n t to th e p r o p e r p e r c e n ta g e .
The r e a s o n s g iv e n a s a b a s i s
f o r t h i s d e s i r e a r e p r a c t i c a l l y a l l r e a s o n s in f a v o r o f a g e n e r a l r e d u c t io n i n
th e S y stem ’ s h o ld in g s o f Government s e c u r i t i e s .
Such a c t i o n w ould mean a
d e f i n i t e change i n th e S y stem ’ s o p en -m a rk et p o l i c y , w hich d u r in g r e c e n t y e a r s
h a s been c o n s i s t e n t l y i n t h e d i r e c t i o n o f p ro m o tin g e a s i e r m oney-m arket c o n d itio a s .
The C hicago b a n k ’ s p a r t i c i p a t i o n i n th e S y ste m ’ s a c c o u n t i s s u b s t a n t i a l
l y i n e x c e s s o f t h e s ta n d a r d r a t i o .
I n c lu d in g h o ld in g s in i t s own p o r t f o l i o ,
a s w e ll a s p a r t i c i p a t i o n i n th e S y stem ’s o p en -m a rk et a c c o u n t, th e C hicago bank
h o ld s s l i g h t l y o v e r 16 p e r c e n t o f th e t o t a l Government s e c u r i t i e s h e ld by a l l
o f th e F e d e r a l R e se rv e b a n k s , w h ereas th e r a t i o of e x p e n s e s , d iv i d e n d s , and
c h a r g e - o f f s in th e y e a r 1934 f o r th e C hicago bank was 11 l/2 p e r c e n t o f th e
S ystem t o t a l .
I n d o l l a r am ounts th e h o ld in g s o f th e C hicago bank a r e
|1 1 0 ,6 0 9 ,0 0 0 in e x c e s s o f i t s p ro r a t a s h a r e ; i n t h e S ystem a c c o u n t a lo n e th e
e x c e s s am ounts to $ 7 1 ,4 3 9 ,0 0 0 ,
I t w ould no d o u b t be p o s s i b l e to t r a n s f e r some o f t h e e x c e s s h o ld in g s
o f th e C hicago bank to o th e r R e se rv e banks w hich h o ld l e s s th a n t h e i r p ro r a t a
s h a re *
Some o f th e o th e r b an k s c o u ld a d v a n ta g e o u s ly im prove t h e i r e a r n in g s
by in c r e a s i n g t h e i r h o ld in g s o f G overnm ents and t h i s c o u ld be done i n m ost c a s e s
w ith o u t im p airm en t o f t h e i r r e s e r v e p o s i t i o n s .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rchives
Page 2
The m ore fu n d a m e n ta l and im p o r ta n t q u e s tio n s r a i s e d by th e r o a s o n s
advanced by th e C hicago bank: a r e in e f f e c t arg u m e n ts in f a v o r o f r e d u c tio n in
th e S y ste m ’ s h o ld in g s o f Governm ent s e c u r i t i e s .
These r e a s o n s a r e b r i e f l y
a s f o llo w s :
1,
I t h a s b een th e S y stem ’ s p o l i c y in th e
p a s t to o f f s e t g o ld im p o rts and t h i s was n o t done i n th e
c a s e o f th e im p o rts o f th e l a s t f i f t e e n m o n th s,
2* The l a r g e volum e o f e x c e ss r e s e r v e s h a s
b ro u g h t a b o u t a r t i f i c i a l l y low r a t e s on T re a s u ry b i l l s
and o th e r s h o r t- te r m o p en -m a rk et money, and t h i s s i t u a t i o n
sh o u ld be c o r r e c te d *
3* I t i s an o p p o rtu n e tim e to r e d u c e h o ld in g s
b e c a u se o f th e u n u s u a lly s tr o n g m a rk e t f o r Government
s e c u ritie s .
The R e se rv e b an k s c o u ld l a t e r i n c r e a s e t h e i r
p u r c h a s e s i n c a s e h e lp i s n eed ed to s u p p o r t th e m a rk e t.
Any i n j u r i o u s e f f e c t to th e m a rk e t t h a t m ig h t r e s u l t from
a d e c l in e i n th e R e se rv e bank h o ld in g s o f G overnm ents co u ld
be p r e v e n te d by a s ta te m e n t i n d i c a t i n g t h a t th e p u rp o se was
to re d u c e c o m p e titio n w ith member b an k s f o r s h o r t- te r m
Government s e c u r i t i e s .
4 . I t i s th e d u ty o f th e S ystem to w ith d raw
c r e d i t when th e r e i s a s u b s t a n t i a l excess o f c r e d i t .
5 . I t i s n o t n e c e s s a r y to h o ld a l a r g e volum e
o f G overnm ents to ch eck f u t u r e e x p a n s io n , b e c a u se p a s t
e x p e rie n c e i n d i c a t e s t h a t t h i s m ethod i s n o t s u c c e s s f u l
a g a i n s t s p e c u la tiv e m ovem ents. I t would o n ly r e s u l t in
h eavy l o s s e s t o h o ld e r s o f Government s e c u r i t i e s and would
n o t a f f e c t p r i c e s o f s to c k s and r e a l e s t a t e .
I n c o n s id e r in g th e s e r e a s o n s in fa v o r o f a r e d u c t io n in h o ld in g s o f
G overnm ents by th e R e se rv e b a n k s , i t i s d e s i r a b l e f i r s t to re v ie w th e p u rp o s e s
f o r w hich th e p r e s e n t l a r g e h o ld in g s have b een a c q u i r e d .
The p rim a ry p u rp o se
was to c r e a t e e x c e s s r e s e r v e s i n member banks and th e r e b y to en co u ra g e th e s e
b anks to f i n d u s e s f o r t h e i r a v a i l a b l e fu n d s .
I h i s te n d s to re d u c e i n t e r e s t
r a t e s , f i r s t in th e open m a rk e t, and l a t e r a l s o to co m m ercial b o r r o w e r s .
Lower
i n t e r e s t r a t e s r e d u c e th e c o sts, o f d o in g b u s in e s s b o th to b o rro w e rs a t sh o rt-term
and to c o r p o r a t io n s i s s u i n g new s e c u r i t i e s a n d , t h e r e f o r e , te n d to en co u ra g e
b o rro w in g f o r b u s in e s s p u rp o s e s and th e f l o t a t i o n o f s e c u r i t i e s f o r r e f u n d in g
R ep rod uced from the U ncla ssified / D ecla ssified H o ld in g s o f the N a tional A rchives
Page 3
o r f o r new c a p i t a l .
A n o th er e f f e c t i s to lo w er th e c o s t o f Governm ent borrov?-
in g and th u s to a i d i n th e G overnm ent’ s r e c o v e r y p ro g ram , w hich i s d e s ig n e d to
re d u c e unem ploym ent and to s t i m u l a t e a c t i v i t y u n t i l p r i v a t e b u s in e s s b e g in s to
p r o v id e a d e q u a te em ploym ent.
E x cess r e s e r v e s sh o u ld n o t be re d u c e d u n t i l t h e r e
i s e v id e n c e o f e x c e s s iv e b o rro w in g o r o f s p e c u l a t i v e ex p an sio n #
The p o l i c y o f o f f s e t t i n g g o ld im p o rts was f o llo w e d o n l 3^ a t tim e s when
th e in c r e a s e d g o ld s to c k was le a d in g to o r was l i k e l y to le a d to e x c e s s iv e ex
p a n s io n o f c r e d i t .
The g o ld im p o rts o f th e l a s t f i f t e e n m onths hav e s e rv e d to
f u r t h e r th e e a sy money p o l i c y p u rs u e d by th e F e d e r a l R e se rv e S ystem in 1932 and
1933 w ith o u t th e n e c e s s i t y o f f u r t h e r a c t i o n by th e R e se rv e b an k s.
A lth o u g h i t
i s im p o s s ib le to s a y d e f i n i t e l y , i t i s e n t i r e l y l i k e l y t h a t w ith o u t l a r g e g o ld
im p o rts in 1934 th e F e d e r a l R e se rv e b an k s would have had to i n c r e a s e t h e i r h o ld
in g s o f Government s e c u r i t i e s in th e i n t e r e s t s o f re c o v e ry *
The e x i s t i n g low l e v e l o f o p e n -m a rk e t r a t e s on s h o r t- te r m money i s th e
r e s u l t n o t o n ly o f th e l a r g e s u p p ly o f e x c e s s r e s e r v e s b u t a l s o o f t h e s m a ll d e f
j mand f o r c r e d i t i n th e open m a rk e t.
More p a r t i c u l a r l y th e low r a t e s r e f l e c t
th e p r e f e r e n c e o f banks and o th e r le n d e r s f o r o p en -m a rk et u s e s o f t h e i r fu n d s
o v er o th e r u s e s .
R a te s on cu sto m ers* lo a n s , f o r ex am p le, h av e n o t shown a de
c l i n e com m ensurate w ith th e d e c l in e in o p en -m a rk et r a t e s , a lth o u g h in New York
C i t y , w hich i s more c l o s e l y a f f e c t e d by d ev elo p m en ts in th e open m a rk e t t h i s
d e c l in e h a s b e e n s u b s t a n t i a l .
T here i s no r e a s o n f o r ta k i n g a c t i o n to r a i s e
r a t e s so lo n g a s t h e r e i s no e v id e n c e o r p r o s p e c t o f an e x c e s s iv e u s e o f fu n d s
by b o rr o w e r s .
I t i s th e d u ty o f t h e F e d e r a l R e se rv e S ystem to w ith d raw fu n d s from
th e m a rk e t when c r e d i t i s e x c e s s iv e , b u t e x c e s s iv e c r e d i t i s d e te rm in e d by th e
volum e o f member bank c r e d i t t h a t i s i n a c t i v e u s e r a t h e r th a n by e x c e s s r e
se rv e s,
T here i s a s y e t no e v id e n c e o f an e x c e s s iv e u s e o f bank c r e d i t .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N ational A rchives
Page 4
I t i s s t a t e d t h a t t h i s i s an o p p o rtu n e tim e to d e c r e a s e th e R eserv e
banks* h o ld in g s o f Government s e c u r i t i e s b e c a u se o f th e h ig h p r i c e p r e v a i l i n g
f o r th e s e s e c u r i t i e s .
S t a b i l i z a t i o n o f th e p r i c e o f Government s e c u r i t i e s
sh o u ld n o t be a p rim a ry o b j e c t i v e o f R eserv e bank o p e n -m a rk e t o p e r a t i o n s .
The
t r a d i t i o n t h a t ch an g es i n th e S y ste m ’ s s e c u r i t y h o ld in g s s i g n i f y c h an g e s in
m o n e tary p o l i c y i s a v a lu a b le a id to th e s u c c e s s f u l p r o s e c u ti o n o f su ch a p o l i c y .
T his t r a d i t i o n i s w e ll e s t a b l i s h e d , so t h a t r e d u c t io n in th e S y ste m ’ s p o r t f o l i o
a t t h i s tim e w ould be l i k e l y to le a d to g e n e r a l s e l l i n g o f Government s e c u r i t i e s
by o th e r h o l d e r s , r e g a r d l e s s o f any e x p la n a tio n t h a t th e S ystem may make o f i t s
p o lic y .
I t s h o u ld be k e p t i n m ind t h a t th e m a rk e t f o r Government s e c u r i t i e s i s
p a r t i c u l a r l y s e n s i t i v e a t p r e s e n t b e c a u se a l a r g e volum e o f fu n d s a w a itin g em
p loym ent in p r i v a t e e n t e r p r i s e i s now te m p o r a r ily in v e s te d in G overnm ents by
b a n k s , i n v e s t o r s , s p e c u l a t o r s , i n d u s t r i a l and co m m ercial c o n c e r n s , and o t h e r s .
Any developm ent which i s l i k e l y to le a d to lo w er p r i c e s f o r th e s e s e c u r i t i e s
would in d u c e w id e s p re a d l i q u i d a t i o n o f h o ld in g s .
One re a s o n in f n v o r o f a r e
d u c tio n in h o ld in g s advanced by th e C hicago bank i s th e d e s i r a b i l i t y o f r a i s i n g
s h o r t- te r m money r a t e s .
I f th e h o ld in g s o f th e System a r e re d u c e d s u f f i c i e n t l y
to c a u s e an a p p r e c ia b le r i s e i n r a t e s on T re a su ry b i l l s , p r i c e s o f a l l G overn
m ents a r e l i k e l y to be a f f e c t e d . )
j
—
F in a lly , i t
sh o u ld be em p h asized t h a t i t i s d e s i r a b l e f o r th e F e d e r a l
R e se rv e banks to r e t a i n t h e i r governm ent s e c u r i t y h o ld in g s i n t a c t to be a v a i l
a b le as an in s tr u m e n t o f r e s t r a i n t i f any i n f l a t i o n a r y s i t u a t i o n sh o u ld d e v e lo p .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
(Copy)
FEDERAL RESERVE BANK OF CHICAGO
230 S o u th L a S a lle S t r e e t
May 4 , 1935*
H o n o rab le M. S . E c c le s , G o v ern o r,
F e d e r a l R e s e rv e B o ard ,
W ash in g to n , D. C*
My d e a r G o v ern o r:
At a r e c e n t m e e tin g o f th e d i r e c t o r s o f t h i s bank d i s c u s
s io n o f o u r p a r t i c i p a t i o n i n th e S y stem In v e s tm e n t A ccount and th e
h o ld in g s in o u r own p o r t f o l i o d e v e lo p e d th e o p in io n t h a t s t e p s s h o u ld
be ta k e n t o a d j u s t o u r h o ld in g s o f Governm ent s e c u r i t i e s i n th e S y stem
a c c o u n t to th e p r o p e r p e r c e n ta g e and f o r r e a s o n s , i n p a r t , o u t l i n e d a s
f o llo w s :
From J a n u a ry 3 , 1 9 3 4 , to F e b ru a ry 6 , 1 9 3 5 , t h e r e h as been
an i n c r e a s e i n t h e g o ld s to c k o f # 1 ,5 1 5 ,0 0 0 ,0 0 0 and th e n e t a d d i t i o n to
e x c e s s r e s e r v e s d u r in g t h a t p e r io d was $ 1 ,3 4 2 ,0 0 0 ,0 0 0 . S in c e F e b ru a ry
6, 193 5 , g o ld im p o rts have c o n tin u e d i n l a r g e volum e an d th e m o n e tary
g o ld s to c k in c r e a s e d to $ 8 ,7 2 1 ,0 0 0 ,0 0 0 . I h e r e have been no a d d i t i o n a l
p u r c h a s e s o f Government s e c u r i t i e s f o r th e S y stem a c c o u n t d u r in g 1934
o r i n 1935 and th e e x c e s s r e s e r v e s o f member b an k s h av e in c r e a s e d t o
$ 2 ,2 7 2 ,0 0 0 ,0 0 0 , c a u s e d p r i n c i p a l l y by im p o rts o f g o ld and a l s o by i n
c r e a s e s by t h e T re a s u ry i n e x p e n d itu r e s o f f r e e g o ld and i n s i l v e r c u r
r e n c y . I t was f o r m e r ly th e custom to o f f s e t im p o rts o f g o ld b y th e
s a l e o f Governm ent s e c u r i t i e s from th e S ystem a c c o u n t, b u t no o f f s e t t i n g
s a l e s have b een made d u r in g th e p e r io d above m e n tio n e d .
The trem en d o u s amount o f e x c e s s bank r e s e r v e s h a s so a f f e c
te d open m a rk e t money r a t e s t h a t t h e r e t u r n on T re a s u ry b i l l s h a s l a r g e
l y d is a p p e a r e d . T h is h ig h l y a r t i f i c i a l money m a rk e t i s n o t c o n s id e r e d
a sound b a s i s upon w hich to co n d u ct T re a s u ry f in a n c in g o r com m ercial
b o rro w in g and i t would seem a d v i s a b l e to a t l e a s t p a r t l y c o r r e c t t h i s
u n n a t u r a l s i t u a t i o n , p a r t i c u l a r l y on th e s h o r t e r m a t u r i t i e s * I t i s
t h e r e f o r e s u g g e s te d t h a t m a tu r in g T re a s u ry b i l l s h e ld in th e System
a c c o u n t, and in o u r own p o r t f o l i o , b e p e r m itte d to r u n o f f u n t i l th e
r a t e fo r n in e -m o n th s m a t u r i t i e s i s a t l e a s t l /2 o f 1 %
As o f A p r i l 1 7 , th e t o t a l am ount o f T re a su ry b i l l s h e ld in
th e S ystem account- a i :_- a p p ro x im a te ly $ 5 3 0 ,0 0 0 ,0 0 0 , and th e m a t u r i t i e s
a r e a b o u t $ 2 0 ,0 0 0 X 0 0 weekly*
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
The q u e s tio n o f r e d u c in g th e S y stem ’s h o ld in g s o f Government
s e c u r i t i e s h a s been d is c u s s e d from tim e to tim e in th e .p a s t, but o b j e c t i o n s
have alw ay s been r a i s e d b e c a u se o f th e f e a r t h a t a r e d u c t io n in th e
System h o ld in g s w ould c a u s e banks to s e l l t h e i r Government s e c a a r itie s
and th u s i n j u r e th e G overnm ent m a rk e t. I t i s s u g g e s te d t h a t any un
f a v o r a b le r e a c t i o n c o u ld be a v o id e d i f a p u b li c s ta te m e n t w ere made
t h a t th e F e d e r a l R e se rv e b an k s w ere n o t s e l l i n g s e c u r i t i e s b u t on a c
c o u n t o f th e s tr o n g demand from th e m ark et w ere a llo w in g T re a su ry b i l l s
to m a tu re , a s i t was n o t t h e i r p o l i c y to com pete w ith t h e i r member
b anks f o r s e c u r i t i e s o f th e s h o r t e r m a t u r i t i e s . I f th e m a rk e t was un
d u ly a f f e c t e d , th e p o l i c y c o u ld be p ro m p tly r e v e r s e d .
I t would a p p e a r t h a t t h e r e c o u ld b e no more o p p o rtu n e tim e
th a n t h e p r e s e n t to th u s re d u c e a t l e a s t th e h o ld in g s i n th e System
a c c o u n t b e c a u se o f th e a b n o rm a lly lev/ r a t e s and t h e s tr o n g demand f o r
n o t o n ly T re a s u ry b i l l s b u t a l l m a t u r i t i e s up to f i v e y e a r s , and a l s o
f o r th e f u r t h e r r e a s o n t h a t th e l a r g e e x c e s s r e s e r v e s now c a r r i e d by
p r a c t i c a l l y a l l member b an k s would p ro m p tly a b s o rb any r e d u c t io n in
th e S ystem a c c o u n t. By a r e d u c t io n in th e p o r t f o l i o o f th e F e d e r a l Re
s e rv e System th e F e d e r a l R e se rv e b an k s w ould th e n be i n a s tr o n g e r po
s i t i o n to a s s i s t th e T re a s u ry l a t e r on sh o u ld su ch h e lp be n ece ssary ,*
I f i t b e th e d u ty o f t h e System to f u r n i s h c r e d i t to th e m a rk e t
when t h e r e i s a s c a r c i t y t h e r e o f , i t v;ould seem e q u a l ly i t s r e s p o n s i b i l i t y
to w ith d raw c r e d i t w here t h e r e i s such a s u b s t a n t i a l e x c e s s .
The argum ent a t tim e s h a s been advanced t h a t th e S ystem sh o u ld
n o t re d u c e i t s p r e s e n t in v e s tm e n t in Government s e c u r i t i e s b u t be p r e p a r e d
t o s e l l o n ly f o r th e p u rp o s e o f c h e c k in g i n f l a t i o n . P a s t e x p e r ie n c e h a s
n o t shown t h i s m ethod a s b e in g s u c c e s s f u l a s th e s a le o f U n ite d S t a t e s
Government s e c u r i t i e s d o es n o t a f f e c t th e p r i c e o f s to c k s and r e a l e s t a t e .
Eleavy s a l e s o f Government s e c u r i t i e s f o r th e p u rp o s e o f c h e c k in g i n f l a t i o n
would o n ly r e s u l t i n h eav y l o s s e s to th e p r e s e n t h o ld e r s o f th e s e s e c u r
i t i e s and would u n d o u b te d ly g r e a t l y i n j u r e th e G overnm ent’s c r e d i t *
In any e v e n t, w h eth er th e t o t a l h o ld in g s o f th e S ystem b e re d u c e d
o r r e t a i n e d , i t i s our o p in io n t h a t th e h o ld in g s in th e System s h o u ld be
a d j u s t e d p ro r a t a to th e ag re e d p e r c e n ta g e among th e s e v e r a l f e d e r a l Re
s e rv e b an k s and we r e q u e s t th e c o o p e r a tio n o f th e F e d e r a l R e se rv e Board
to t h i s en d .
The f o r e g o in g i s s u b m itte d f o r th e c o n s id e r a tio n o f th e F e d e r a l
R e se rv e B o ard , and we in t u r n s h a l l be p le a s e d to h av e y o u r v ie w s .
Y ery t r u l y y o u r s ,
(S ig n ed ) Geo. J . S c h a l le r
G o v ern o r.
cc-H on. M. S . Szym czak,
Member, F e d e r a l Res->'*ve B o ard ,
W ash in g to n , D. C»
R ep rod uced from th e U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tio n a la te M te s .
^ASSmED
(
*y 21 , 1935*,
o nJ ✓»
c o n fid en tia l
REPORT OF OPEN MARKET OPERATIONS SINCE MEETING OF THE
EXBCUTOT COJMTTEE OF THE FEDERAL OPEN MARKET 00MMITT1E
________HELD IN WASHINGTON, D, C ., ON APRIL 1 7 1 1935
^
~
The p r e s e n t h o ld in g s o f U n ite d S t a t e s Government s e c u r i t i e s i n th e
System S p e c ia l In v e stm e n t A ccount amount t o - - - - - - - - -
$ 2 ,2 2 3 ,1 4 9 ,5 1 0 .
T h ere h a s b e e n p r a c t i c a l l y no change i n t h i s f i g u r e s in c e November
8, 1933.
T r a n s a c tio n s i n governm ent s e c u r i t i e s i n th e System A ccount sine®
A p r il 1 7 , 1 9 35, th e d a te o f th e l a s t m e e tin g o f th e E x e c u tiv e O ra s a itte e , w ere
a s f o ll o w s :
(1 )
R edem ption a t m a t u r i t y o f #102*,930,000 T r e a s u ry
b i l l s w hich w ere r e p la c e d by p u rc h a s e s i n th e
m a rk e t a s f o llo w s :
# 7 1 ,0 3 0 ,0 0 0 T re a s u ry b i l l s due 1935 and 1936
1 9 ,0 0 0 ,0 0 0
*
n o te s " 1938 " 1939
1 1 .9 0 0 .0 0 0
"
b o n d s o f 1941, 1 9 4 0 -4 3 ,
19 4 1 -4 3 and 1943-47
(%)
S x changes in t h e m a rk e t in a n t i c i p a t i o n o f m a t u r i t y
a s f o ll o w s ;
# 2 9 ,0 0 0 ,000 — 3$ IV e a s u ry n o te s due June 1 5 , 1935
f o r # 2 4 ,0 0 0 ,0 0 0 T re a s u ry b i l l s due 1935
1 .0 0 0 .0 0 0
w
n o te s « 1938
2 . 000.000
w
«
« 1939
2 .0 0 0 .0 0 0
w
b o n d s o f 1943-47
1 4 .8 0 0 .0 0 0 - 4 1 /4 $ F o u r th L i b e r t y Loan bonds
c a l l e d O c to b e r 1 5 , 1935
f o r #14 ,8 0 0 ,0 0 0 T re a s u ry b o n d s o f 1941,
1 940-43 and 1941-43
6, 000,000 - 2 1 /2 $ T re a s u r y n o te s due
December 1 5 , 1935
f o r $ 2 , 000,000 T r e a s u r y b i l l s due 1935
4 .0 0 0 .0 0 0
M
n o t e s * 1938
and 1939
(3 )
Exchange in t h e m a rk e t f o r t h e p u rp o s e o f im p ro v in g th e
m a t u r i t y d i s t r i b u t i o n i n th e a c c o u n t a s f o ll o w s :
#
5 0 0 ,0 0 0 * 2 3 /4 $ T r e a s u r y n o te s due Decem ber 1 5 , 1936
f o r T re a s u ry n o te s due 1938
2./- 2 S '
Author-
(4)
C o n v e rsio n s u n d e r T re a s u ry o f f e r i n g d a te d A p r il 2 2,
1935 a s f o llo w s :
$ 2 5 ,0 2 5 ,0 0 0 F i r s t 3 l/Zfo L i b e r ty Loan b o n d s
c a l l e d June 1 5 , 1935, and
2 9 ,0 0 0 ,0 0 0 F i r s t 4 1 /4 $ L i b e r ty Loan b o n d s
c a l l e d June 1 5 , 1935
f o r # 5 4 ,0 2 5 ,0 0 0 - 1 5 /8 fo T re a s u ry n o te s
due M arch 1 5 , 1940,
(5 )
T r a n s f e r s o f p a r t i c i p a t i o n s w ith in th e A ccount t o t a l i n g
# 1 1 , 000,000 a s f o llo w s :
.Amount
$ 5 ,0 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
From
D a lla s
C hicago
To
New York
San F r a n c is c o
T hese t r a n s f e r s w ere made f o r th e p u rp o se o f im p ro v in g th e
r e s e r v e r a t i o o f th e F e d e r a l R e serv e Bank o f D a lla s and
th e e a r n in g p o s i t i o n o f th e F e d e r a l R eserv e Bank o f
San F r a n c is c o .
U nder th e g e n e r a l a u t h o r i t y t o make s h i f t s b etw een m a t u r i t i e s i n th e
Account up t o # 2 5 0 ,0 0 0 ,0 0 0 , v o te d a t th e m e e tin g o f th e Open M arket Comm ittee
F e b ru a ry 5 , 1935, n e t o p e r a t io n s am ounted to $ 1 3 0 ,7 4 9 ,3 0 0 a t th e tim e o f th e l a s t
m e e tin g o f th e E x e c u tiv e Comm ittee on A p r il 1 7 .
F u r th e r n e t s h i f t s r e p r e s e n t i n g
a m a t e r i a l change i n m a tu r it y d i s t r i b u t i o n in c r e a s e d t h i s f i g u r e o f n e t o p e ra
t i o n s to # 2 1 3 ,4 7 4 ,3 0 0 on May 2 1 , 1935.
A tta c h e d to t h i s r e p o r t a r e th e f o llo w in g e x h i b i t s :
E x h ib it "A” M a tu r ity d i s t r i b u t i o n o f governm ent s e c u r i t i e s
in System A ccount a t th e end o f each month 1932,
1933, 1934 and 1935 to May 2 1 .
E x h ib it ’’B” C l a s s i f i c a t i o n o f i s s u e s h e ld in t h e System
A ccount on A p r il 15 and May 2 1 , 1935 and n e t
ch an g es by i s s u e s d u rin g t h i s p e r io d .
E x h ib it MCW (1) P a r t i c i p a t i o n s by F e d e r a l r e s e r v e b an k s in
System S p e c ia l In v estm en t A ccount and (2) t o t a l
h o ld in g s o f governm ent s e c u r i t i e s by F e d e r a l
r e s e r v e b an k s c lo s e o f b u s in e s s May 16, 1935, and
th e amount o f ( l ) and ( 2 ) o v e r o r s h o r t o f p ro
r a t a s h a re b a s e d on r a t i o o f each b a n k ’ s e x p e n s e s ,
d iv id e n d s and c h a r g e - o f f r e q u ir e m e n ts f o r 1934 to
t o t a l f o r th e S ystem .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
^ ' y C K O r & r ! ^
3
E x h ib it nD" C hart show ing a v e ra g e e a r n in g r a t e on h o ld in g s
o f U n ite d S t a t e s Government s e c u r i t i e s in
S ystem S p e c i a l In v estm en t A ccount and a v e ra g e
y i e l d on o u ts ta n d in g T re a s u ry bonds and T re a s
u r y n o t e s , 1934 and 1935 to May 1 7 .
E x h ib it "E” E a rn in g s o f a l l F e d e r a l r e s e r v e ban k s f o r th e
f o u r m onths ended A p r il 3 0 , 1935.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
DECLASSl^j
Author^ °
EXHIBIT ”A”
MATURITY bxSTR* ,TION OF HOLDINGS IN SYSTE^ ACC
T
___________ END OF EACH MONTH - 1 9 3 2 -5 3 -5 4 -3 5 ____________
(Ih m illio n s o f d o lla r s )
1932
Jan.
F eb .
Mar.
A pr.
May
June
J u ly
Aug.
S e p t.
O c t.
Nov.
Dec.
W ith in
S ix
P erM onths c e n t
29
$165
191
52
299
44
57
583
51
716
48
744
733
45
622
58
57
606
40
651
47
765
779
48
1953
Jan .
Feb.
M ar.
A pr.
May
June
J u ly
Aug.
S e p t.
O c t.
Nov.
Dec.
644
577
709
570
543
656
659
621
706
860(A)
845(A)
887(A)
1934
J a ii.
Feb.,
M ar.
A pr.
May
June
J u ly
Aug*
S e n t.
O ct.
$ov.
Dec,
887(A)
987(A)
799(A)
750(A)
717(A)
765(A)
752(A)
705(A)
654
749(A)
752(A)
794(A)
36
33
32
34
35
32
29
54
34
36
1935
Jan.
Feb
Mar..
Apr..
May 21
790(A)
865(A)
747(C)
727(D)
588(E)
35
39
33
33
26
(B) Does n o t
(C) I n c lu d e s
(D) I n c lu d e s
(E) In c lu d e s
41
56
44
35
52
57
36
32
34
39
43
40
40
44
W ith in
W ith in
One
P e r Two
c en t Y e a rs
Y ear
355
|
355 65 |
375
575 64
475
475 69
779
778 76
1 ,1 1 5
1 ,0 5 8 75
1 ,1 7 3
1,1 0 6 71
1 ,1 6 7
1 ,0 9 8 67
1 ,1 9 4
1 ,0 2 9 63
1 ,1 7 0
998 61
1 ,2 2 9
1 ,0 5 1 64
1 ,2 2 7
1 ,0 4 6 64
1 ,2 0 3
1,021 62
58
53
55
45
49
49
50
53
53
57
56
55
1 ,1 0 7
1 ,0 9 0
1 ,0 9 0
958
962
1 ,1 1 7
1 ,1 4 3
1 ,1 9 1
1 ,2 7 8
1 ,4 4 3
1 ,4 3 5
1 ,4 2 6
964
968
953
55
54
47
45
44
44
42
46
39
43
43
43
1 ,4 2 6
1 ,4 1 5
1 ,2 8 7
1 ,4 7 6
1 ,4 7 5
1 ,3 5 4
1*321
1 ,3 6 5
1 ,2 5 8
1 ,5 4 2
1 ,3 4 9
1 ,4 0 5
950
950
889
1 ,0 8 7
978
43
43
40
49
44
1 ,3 9 4
1 ,4 6 0
1 ,3 7 9
1 ,5 2 4
1 ,4 1 5
905
856
856
725
825
879
903
1 ,0 2 5
1,102
1 ,2 5 7
1 ,2 3 5
1 ,2 1 6
1 ,2 1 6
1 ,1 9 0
1 ,0 3 4
1 ,0 0 8
991
972
939
1 ,0 1 8
868
3 -5
P e r Y ears
cent In c .
63 1 64
69
76
79
75
64
71 132
73 110
71 134
75
75
77
75
73 101
71
67
67
59
57
62
63
62
62
66
65
64
64
64
58
67
116
203
203
335
384
335
341
394
452
498(B)
511(B)
520(B)
C a ll
P e r a b le
c e n t Bonds
- #212
212
212
239
290
4
322
8 336
6 336
8 336
4
336
4
336
6 336
7
23
19
19
21
22
23
23
24
61
59
61
56
60
60
63
5 2 0 (B)
531(B)
659(B)
488(B)
489(B)
550(B)
583(B)
539(B)
646(B)
647(B)
6 4 0 (B)
584(B)
24
26
24
29
29
29
26
62
65
62
69
64
595(B)
529(B)
603(B)
519
599
27
24
27
23
27
66
336
336
336
336
336
336
336
336
336
252
252
252
12
12
20
252
252
252
195
195
195
195
195
195
24
24
30
21
22
110
110
110
110
110
56
0
0
Pep- O th e r P e r cent Bonds c e n t T o t a ls
37 # - $ 567
587
36
687
31
1
,0
18
24
1
,4
0
5
21
1
,5
5
9
21
1 ,6 3 5
21
1 ,6 4 0
21
21
1 ,6 4 0
1 ,640
21
1 ,6 4 0
21
1 ,6 4 0
21
22
21
21
21
20
19
18
17
16
11
11
11
11
11
11
9
9
9
9
9
9
5
5
5
-
-
-
-
-
-
25
25
1
1
25
25
25
64
64
124
124
124
124
124
124
124
1
1
1
5
5
3
124
124
185
0 180
0 209
■
.
in c lu d e F o u rth L i b e r t i e s " u n c a ll e d ” m a tu rin g O cto b er 1938.
F i r s t L i b e r t i e s , P an am a's and C o n so ls " c a l l e d ”
F i r s t and F o u rth L i b e r t i e s , Panam a’ s and C o n so ls " c a l l e d ”
F o u r th L i b e r t i e s , Panam a’s and C o n so ls " c a l l e d ”
-
1 ,559
1 ,6 2 9
1,629
1 ,629
1 ,6 8 2
1 ,7 8 8
1 ,8 2 0
1 ,9 2 1
2 ,0 6 6
2 s193
2 ,3 2 3
2 ,2 2 3
6
6
6
6
6
6
6
2 ,2 2 3
2 ,8 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 r223
2 ,2 2 3
2 ,2 2 3
6
6
8
8
2 ,2 2 3
2 , 323
2,22.Z
2,223
9
O
O 0 17
C. y Cj
3
3
R ep rod uced from the U ncla ssified / D ecla ssified H o ldings o f the N ational A rchives
DECLASS
""
/FlEo
,
i
-
EXHIBIT
CLASSIFICATION OF ISSUES HELD IN THE SYSTEM ACCOUNT ON APRIL 15 AND MAY 21, 1955
___________________AND NET CHANGES BY ISSUES DURING THIS PERIOD_________________
(000 Omitted)
H oldings
TREASURY BILLS
Apr. 15/35
U .S . Treasury B i l l s due A p ril 17 , 1935 |
18,250
tt it
ft
tt
ft
tt 24, 1955
18,703
n it
ft
tt
tf May
22,250
1 , 1935
tt tt
n
tt
n tt
19,440
8, 1935
n tt
tt
tt
ft tt
15, 1955
23,287
ft ti
tt
tt
tt tt
22, 1935
16,875
ii tt
ft
tt
n tt
20,700
29, 1935
tf
tt June
ft n
ft
20,203
5 , 1935
Tt ft
tt n
tt
tt
12, 1935
6 ,4 0 0
tt
tt
n tt
tt tt
19,230
19, 1935
tt tt
tt
it
tt tt
20,000
26, 1935
tt t!
ft
tt
tt Ju ly
23,099
3 , 1935
tt tf
ft
tt
tt ft
10, 1935
18,750
tt tt
tf
n tt
23,200
17, 1935
tt
ft
tt n
rt ft
21,200
24, 1935
ft
n
tt tt
tt ft
15,010
31, 1935
tt tt
ft Aug.
tt
»
25,525
7, 1935
tt n
tt
ti ft
23,86"
14, 1955
it
tt
ti tf
11 11
15,720
21, 1935
tt tt
tt
ft
tt tt
14,540
28, 1935
tt
tt Sep t.
tt tt
10,950
4, 1935
tt ti
ft
tt ft
"
7,500
11» 1935
M
ti
ft tt
tt ft
18, 1935
6,065
tt
n it
tt
tt 11
25, 1935
15,000
It
tt tt
tt Nov.
13,700
27, 1935
tt
n tt
tt
tt Dec.
11,700
4, 1975
tt
tt
tt tt
tt 11
8,855
1 1 » 1935
It
it tt
tt
n It
18,897
18, 1935
tt
»t ft
It
tt It
° 4 , 1935
24,300
tt ft
l»
1!
tt tt
13,962
31, 1935
ft
tt M
tt
tt Jan.
13,820
8, 1936
It
tt it
ft tt
tt
15, 1936
ft It
11
tt
ft it
2 2 , 1936
ft
ft
It II
» n
29, 1936
tt ft
n Feb.
T*
5 , 1936
tt n
ft
tt "
»
11, 1936
#530,991
TOTALS
T R 'F A ^ rRY VO'?"7'
3
* T re ^ •
1 S/R^
»
it
r i / r)«
«
r 7 / 3"*
Notes
tt
ft
ft
l i ,/ V
S l/4 *
i i / ? ”'
tt
r 3/ 4 *
3
^
3
*
3 1 /4 *
n
t»
it
11
11
r 5/3"'
7
?
O y /g *
2 1 /2 ?
2 i/S'*'
1 5 /3 ?
n
M
•?
t»
"
it
tt
it
it
ft
tt
ft
IT
It
tt
tt
It
f!
n June
tt Aug.
ti Dec.
tt Apr.
June
" Au^.
tt Sen t.
tt Hec.
tt Feb.
n ADr.
it Sent.
tt Feb.
tt
it
"
w
»
Melt.
June
^ent.
June
Mar.
15, 1935
1, 1935
!•% 1 9 3 5
1 5 , 1936
1 5 , 1936
1, 1936
1 5 , 1936
!•% 1 936
1 5 , 1937
1 5 , 1937
1 5 , 1 937
1 , 1938
i s , 1938
1 5 , 1938
1 5 , 1938
1 5 , 1939
1 5 , 1940
TOTALS
ft
H oldings
May 21/35
_
In crease
$
-
-
-
-
-
-
-
-
16,875
20,700
2.0,203
20,900
19,230
20,000
23,099
18,750
23,200
21,200
15,010
25,525
23,862
15,720
- 14,540
12,950
7,500
6,063
15,000
13,700
14,700
15,355
19,197
24,450
13,962
13,820
18,250
2 5 ,3 0 0
9,000
4,355
13,675
*526,091
14,500
-
-
2,000
-
-
3,000
6,500
300
150
-
18,250
25,300
9,009
4,355
13,675
Decrease
518,250
18,703
22,250
19,440
23,287
-
-
-
-
* 4,900
122,995
8 5 ,7°3
93,995
85,725
-
29,000
7 5 ,6 2 1
1 3 6 ,8 8 5
5 0 ,0 0 0
7 9 ,0 4 2
5 8 ,9 6 7
9 9 ,3 6 3
6 7 ,6 2 1
1 3 6 ,8 8 5
5 0 ,0 0 0
-
6,000
65.685
8 4 ,1 7 5
8 4 ,7 5 0
5 3 ,8 2 0
9 7 ,0 9 9
5 5 ,5 0 0
8 0 ,4 8 1
6 9 ,4 3 8
7 4 ,5 5 0
* 1 , 3 7 4 ,8 9 9
79,042
5 8 ,9 * 7
9 8 ,8 6 8
6 5 ,6 8 5
8 4 ,1 7 5
8 4 ,7 5 0
6 0 ,2 0 5
9 7 ,0 9 3
6 5 ,0 6 8
8 1 ,9 8 1
8 1 ,4 8 5
1 2 8 ,3 7 5
* 1 ,4 1 9 ,9 2 4
-
-
-
-
500
-
-
-
-
1 ,3 8 5
-
1 1 ,5 6 8
1 ,5 0 0
1 2 ,0 4 7
5 4 ,0 2 5
* 4 5 ,0 2 5 N e t
Tjpvt^Y loam amp Tp^^rrpv POND'3,
3 1 / 2V
4 \/i*
4 1 / 4*
•7^ 1 / 4*
3 1/4'*'
3 1/4?
ct
3
3 1 / 8?
Ct
3
'"''"N-2 7/8?
T 3/3*
3 3/8*
3 3/8*
2
*
<f
r>
p
1 s t T,/l, gdrs cn'Lied ~6/1^735
tt
ft
tt
ft
6 /1 5 /3 5
n
Tt
4 th
"
10/1 .S/3 5
Tre?.surv BoncH o f 1941
tt
tt
ft
1943-45
tt
tt
W
1944-46
tt
n
It
1946-48
ft
ti
tt
1949-52
ft
tt
tt
1951-55
tt
11
tt
1955-60
ti
ft
"
1940-43
ti
ft
11
1941-43
tt
tt
ft
194”-47
Consol^ (1930) c a lle d 7 /1 /3 5
ft
8 / 1 /35
Pan^rrr ’f 1936)
tt
8 / 1/35
'1938) »1
%
TOTALS
G R W D TOTALS
25,025
29,000
56,201
20,000
25,000
39,000
40,000
2,015
1 ,350
53,034
24,646
1,469
519
41,401
41,700
25,000
39,000
40,000
2,015
1 ,350
53,034
2,000
2,000
3,000
24,646
1,469
519
f.317,259
*277,134
*2,223,149
*2,2^3,149
_
21,700
-
_
_
2,000
2 ,000
3,000
_
25,025
29,000
14,800
_
_
-
-
-
-
-
-
-
-
* 4 0 ,1 2 5
EXHIBIT "C"
(1) PARTICIPATION BY FEDERAL RESERVE BAMS IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT AND (2]i TOTAL HOLDINGS OF GOVERNMENT
SECURITIES BY FEDERAL RESERVE BANKS CLOSE OF BUSINESS MAY 1 5 , 1935 AND THE MOUNT OF (1) AND (2) OVER OR SHORT OF PRO
RATA SHARE BASED ON RATIO OF EACH BANK’S EXPENSES, DIVIDENDS AND CHARGE-OFFS FOR 1934 TO THE TOTAL FOR THE SYSTEM
(COO O m itted )
P a rtic ip a
t i o n s in
S ystem
A ccount
(A)
R a tio o f
H o ld in g s
in
System
A ccount
(B)
P a r t i c ip a t io n s
(+) O ver o r
R a tio o f
(*) S h o rt o f
E xpenses,
P ro R a ta
D iv id e n d s &
S h are Based
C h a rg e -o ffs
on R a tio s
in C o l. C.
Y ear 1934
(c)
(D)
6 3 /4 $
T o t a l H o ld in g s
( P o r t f o l i o and
P a rtic ip a tio n
in System A ccount)
(E)
(G)
1 57 ,6 7 8
6 .4 9 $
164-
742,615
3 0 .5 9 $
62,762+
$
3 6 ,3 4 9 -
167,120
6. 88$
5 1 ,4 0 4 -
9 .5 8 $
9 3 /4 $
3 ,7 3 2 -
2 1 3 ,0 2 4
8 .7 7 $
2 3 ,7 1 1 -
1 1 3 ,5 6 2
5 .1 1 $
5 1 /4 $
3 ,1 5 3 -
1 1 3 ,5 6 3
4 .6 8 $
1 3 ,9 1 0 -
ATLANTA
9 4 ,2 0 9
4 .2 4 $
4
$
5 ,2 8 3 +
9 4,247
3 -8 8 $
2 ,8 7 5 -
CHICAGO
3 2 1 ,1 0 1
1 4 .4 4 $
11 1/ 2$
65,439+
3 83,843
1 5 .8 1 $
104,618+
ST. LOUIS
1C7,700
4 . 84$
4 3 /4 $
2 , 100+
108,200
4 .4 6 $
7 ,1 3 2 -
MINNEAPOLIS
6 3 ,0 5 4
2- 84$
3 3 /4 $
2 0 ,3 1 4 -
7 0 ,2 1 1
2 .8 9 $
2 0 ,8 4 1 -
KANSAS CITY
106,659
4 ,8 0 $
5 1 /4 $
1 0 ,0 5 6 -
106,741
4 .4 0 $
2 0 ,7 3 2 -
6 1 ,4 7 5
2 .7 7 $
3 3 /4 $
2 1 ,8 9 3 -
71,475
2 .9 4 $
1 9 ,5 7 7 -
1 9 9 ,33C
8 .9 7 $
8 1 /4 $
1 5,920+
199,331
8, 21$
983-
156 ,9 8 2
7 -0 6 $
NEW YORK
6 2 2 ,3 1 8
2 7 .9 9 $
28
$
PHILADELPHIA
1 6 3 ,7 3 4
7 .3 6 $
9
CLEVELAND
2 1 3 ,0 2 5
RICHMOND
#
BOSTON
DALLAS
SAN FRANCISCO
TOTALS
NOTE:
# 2 ,2 2 3 ,1 4 9
ICC
$
100
$
# 6,919+
# 9 5 ,6 6 1 A d j.
#
R a tio
of
T o ta l
H o ld in g s
(F)
T o t a l H o ld in g s
( + ) O ver o r
( - ) S h o rt
of* P ro R a ta
S h are B ased on
R a tio s in C o l. C
# 2 ,4 2 8 ,0 4 8
100
$
#
6 ,2 1 5 -
#167,380 A d j.
C h a r g e - o f f s do n o t in c lu d e r e s e r v e s f o r p o s s i b l e l o s s e s , S e l f In s u ra n c e o r ab n o rm al r e a l e s t a t e d e p r e c i a t i o n .
R ep rod uced from the U ncla ssified / D ecla ssified H o ld in g s o f the N ational A rchives
^ classified
,
AuAori* £ m i k r j a ^ j
:
r e s
Z
i
-rr.
$ ■
Z8 z 6
Yi ELD
PER C E N T
19 34
1935
Average learning Rate on Holdings of U. S. Government Securities in System Special Investment
Account
Average Yield on Outstanding U. S. Treasury Bonds and Treasury Notes
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
DEc u s S m i B
Authorit
EXHIBIT nE"
STATEMENT SHOWING EARNINGS OF ALL FEDERAL RESERVE BANKS
_________ FOR THE FOUR MONTHS ENDED APRIL 5 0 1 1935________
E a rn in g s do n o t in c lu d e # 1 ,8 1 8 ,9 0 4 * 4 4 p r o f i t s
now h e ld in S u sp en se A ccount*
G ro ss
E a rn in g s „
iSoston
$
954 ,1 5 0
(a s o f May 1 6 , 1935} on s e c u r i t y s a l e s ,
C u rre n t E x p en ses
and Net D e d u c tio n s
From C u rre n t
N et E a rn in g s
#
8 6 7 ,9 5 6
A v a ila b le f o r
D e p r e c ia tio n
A llo w an ce s,
R e s e rv e s and
S u rp lu s
#
8 6 ,1 9 4
iJew Y ork
4 ,7 3 0 ,2 1 2
3 ,6 9 4 ,8 6 8
P h ila d e lp h ia
1 ,0 5 1 ,1 3 8
1,104*856
5 3 ,7 1 8 (a )
C le v e la n d
1 ,2 7 8 ,3 7 1
1 ,2 2 6 ,1 0 4
5 2 ,2 6 7
Richmond
7 00,276
6 67,162
3 3 ,114
A tla n ta
6 08,374
5 4 1 ,2 9 2
6 7 ,0 8 2
Chicago
2 ,3 6 6 ,9 4 4
1 ,3 7 5 ,4 9 4
991,450
St* L o u is
6 3 1 ,3 6 5
5 4 6 ,0 5 2
8 5 ,3 1 3
M in n e a p o lis
4 7 2 ,0 0 0
4 6 8 ,8 1 0
3 ,1 9 0
K ansas C ity
6 5 2 ,1 2 7
6 2 5 ,8 8 8
2 6 ,2 3 9
D a lla s
5 04 ,9 7 9
4 3 1 ,4 5 2
73,527
1 ,0 6 0 ,4 8 6
1 ,0 7 9 ,1 4 6
$ 1 5 ,0 1 0 ,4 2 2
$ 1 2 ,6 2 9 ,0 8 0
San F ra n c is c o
T o t a ls
(a) D e f ic i t
1 ,0 3 5 ,3 4 4
1 8 ,6 6 0 (a )
# 2 ,3 8 1 ,3 4 2
Th. vapllc< t^mt'nd to vmr %«Xasrm of May IS, ISIS,
■calling a mmktihtg of the Federal ‘
Open Kark.t Cosndttae in *»•
lnpton aa Monday, Hay 27, at IO18O a. *,, following which a a*«tia* of tli# Governors1 Conf*rence v l l l b« held, Lniicate tfe&i
following w ill b« pr©u«nt at the ae*ting»i
Qovawuir Young
Boston
Governor H&rrli&i
Sew tttsHte
Q o i t W Norri#
G o v sn w Fleiiing
Governor §#*y
11 $ h m m &
d a m a e ? R«wton
Atlant*
ChlGftgo
Governor Stertln
s t . fcmt*
Mlnn^apoli*
( fa m m m r Hamilton
K m m s Cl%
§ @ 'W fm -r M c K in n e y
Dalla#
D©pttty
San f r m m l g m
1
............. .- .. .
R ep rod uced from th e U ncla ssified / D ecla ssified H o ld in g s o f th e N a tio n a l A rch ive s
Ckprfar rj'ii^
TE LE G R A M
FEDERAL RESERVE SYSTEM
'
? °3 3
° ' ^
°
(L E A S E D W I R E S E R V IC E )
R E C E IV E D A T W A S H IN G T O N , D . C .
44 c s
P h ila d e lp h ia 254PM May 21
035 MAY 21 PM I
56
Socles
Washington
B egret th a t I overlooked re q u e st to a dvise as to attendance in
,
f W
s '- j r '
w ir e / c a llin g m eeting o f Open M arket Committee* F u lly expect to
a tte n d .
N o rris
156PM
18—794
R ep rod uced from the U ncla ssified / D ecla ssified H o ld in g s o f the N a tional A rch ive s
Authorityf?i
TE L E G R A M
3
FEDERAL RESERVE SYSTEM
3
3
,
3
-
(U E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
D a lla s May 21
S c c le s
,
21
W ashington
R e f e r r in g to G i l b e r t ’ s
AM 11 fg
i G t h / l now f i n d t h a t I w i l l be a b le to a t t e n d open
m a rk e t com m ittee m e e tin g and c o n fe re n c e n e x t w eek.
McKinney
l l l 6sm
IT, 8. GOVERNMENT PRINTIN5 OFFIOH: 1833
16—794
*
'
'
J
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rchives
Authority R ]f
, )f
T ELE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
R E C E IV E D A T W A S H IN G T O N , D . C .
34©nr
K ansas C ity May l 8 929a
® « L L 8
E c c le s
*
10 39
W ashington
I s h a l l a t t e n d m e e tin g o f open m a rk e t co m m ittee on Monday May tw e n ty s e v e n th
H am ilto n
1039am
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f th e N a tio n a l A rch ive s
K
T EL.EGRAM
ERAL RESERVE SYSTEM
'j "3 3 -
(L E A S E D W I R E S E R V IC E )
R E C E IV E D A T W A S H IN G T O N , D . C .
lOObfa
B o sto n 1218p May lG
>935 MAY 16
AM i I
37
E c c le s
W ashington
^fa {
I n reply t o Trans 226^ J l advise that I w ill attend conference of Federal
Open M arket Com m ittee and G o v ern o rs b e g in n in g Monday, May tw e n ty s e v e n th
a t te n t h i r t y AM.
Young
1136am
V. ft. eeyiBMKSNTPRQnnNQ omcx IMS
16— 794
R e p rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N atio n a l A rch ive s
OSSIFIED
,thori'-' W c k r / j * * ,
,
ELE G R A M
FEDERAL RESERVE SYSTEM
, _
* 3
(L E A S E D W I R E S E R V IC E )
-7 -<5
J
,
V
R E C E IV E D A T W A S H IN G T O N , D . C .
l^ b s
New York IOI3AM May lG
d /l+S
Eecles
^ * 5 ' { '* /"
|935
16
___ -— —
^
In reply your telegram/l shall attend meetings of Federal Open Market
Committee and Governors1 conference beginning May 27
Garrison
915A
W- «, eOYBBHVBNT PROTONS OFFICE. 1M9
16— 794
_ /
*v W
/
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
cja^5t'o\
T ELEG RA M
$
FEDERAL RESERVE SYSTEM
33,
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
!^ 5 MAY 16 m 10 57
13rh m
Richmond Ya 1053a may 16
Governor socles
^
Referring trona
Washn
Will attend neetlng of open anrlcet
committee ant governors conference as scheduled
Seay
1055A
16—7«
\—
/
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rch ive s
Authority P i
T ELE G R A M
/
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
3 sf a
C hicago I l l s 906a May l 6
E cclea
1935 MAY 16
AM 9
I)
W ashington
W ill be in a tte n d a n c e a t m e e tin g F e d e r a l Open M arket C om m ittee May tw e n ty s e v e n th
Digitized
FRASER
ft. •» for
eOVBBMMINT
PRINTXNQ OFJ1CB: 1033
S c h a lle r
910am
16—704
Reproduced from the Unclassified I Declassified Holdings of the National Archives
AuthorityPi
-■ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WA!
« W
l 8 6i
^ ........ nun.. j ,
II 25
m m m yJ
95bs
S t L o u is 95^AM May l 6
Ic c le s
W ashington
Am a r r a n g in g t o a t t e n d m e e tin g of F e d e r a l Open M arket Com m ittee in
W ashington on Monday, May 2 7 , and w i l l be p r e p a r e d t o s t a y o v e r f o r
G o v e rn o rs ’ c o n fe re n c e t o f o llo w
xs. a . eovnunuB M T n o n o i o o m c s ; u s s
http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
I
M a rtin
1124AM
16—794
Reproduced from the Unclassified I Declassified Holdings of the National Archives
>SIFIED
Au'hori'y C K O r ^ r rJ^
T E LEG R A M
’a**
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
105grar38
D a lla s May l6 /ll3 4 ® a
E celea
1935 MAY |6
W a s h in g to n ./
^
Cf
jg
^
^
/&
Tw i l l 2263 9Qv e r n o r McKinney o u t o f c i t y , e x p e c te d home May 2 0 , He w i l l
a t t e n d m e e tin g s i f i l l n e s s in f a m ily d o es n o t p r e v e n t i n an y e v e n t t h i s
bank w i l l be r e p r e s e n t e d .
Digitized
FRASER
V. 8 for
GOVERNMENT
PRINTING OFFICE: IM S
W ill a d v is e you l a t e r who w i l l a t t e n d .
G ilb e rt
1253pn
16—794
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
DE^ U s s / f (£ Ij
^ycKOrcUrju-^
TE LE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
''j )
1
RECEIVED AT WASHINGTON, D. C.
74 D T
^5M
AY*w
C leveland 432p May 15
%
Socles
Washington
Clnli*
T w ill 2 8 6 3 /W ill a tte n d m eeting Washington May 27
http://fraser.stlouisfed.org/
B. «. M Y 1U Q K O T PR3NWNQ OFFICE; 1938
Federal Reserve Bank of St. Louis
Flem ing
439p
16—794
4
40
1
,
1
/
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
T E LEG R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
*
lOlfta
Atlanta
15 441pm
RECEIVED AT WASHINGTON, D. C.
Eceles,
1935 m 15 . .PM S 01
1935 MAYJ 5 PM *> 03
Washington
Twill Your number gg6j(Governor Newton out of city on business your message
transmitted to him by wire
Martin
5pm
/
Reproduced from the Unclassified Declassified Holdings of the National Archives
Amh°*> C K p r f o r j i f y
i
^E LE G R A M
_/
FEDERAL RESERVE SYSTEM
3 3 5' "
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
s g j w r )5 pm s
M in n e a p o lis 408pm May 15
E c c le s
W ashington
I w i l l a t t e n d th e m e e tin g on May tw e n ty s e v e n th .
* « . m m n n a m n onto* u n
Geesry
527pm
~
16—794 ■
m
A ft
mm-
J) f
/
f
£
/
(
9
35
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rch ive s
"TELEG R A M
FEDERAL RESERVE SYSTEM
°
J
"
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
3o 6ghb
SanFranclsoo 341pm May 15
1935 MAY |5
PM 6
52
Eccles
Washington
In governor Galkins absence will attend meeting of Federal Open Market Committee
Monday,May 27*to be followed by Governors conference
Day
6513a
i
a
m
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d| cla ss5
^
I e5
‘y & Q a k r j a f ^ i
_
B a t,,
FOE ANSWERS SEEs
i.
2-
{)n\\^
3.
4.
y / z s '/ s r
s-
f/zt/jr
e.
* /ir ln r - r / * h ^
7.
ZftcjziT
8.
r / z f e / a i '*
9.
^I
10.
if/si/sf
11.
12 .
~ rfai/tr'
/* *
fiJUL
j
I
R ep rod uced from the U nclassified
I D ecla ssified H o ld in g s o f the N ational A rch ive s
Author
F o r m
DECLASSlFiEb
1 18 b
TELEGRAM
EDERAL RESERVE BOARD
WASHINGTON
r / 1 5 1935
fmm$ - Barton
Bwttimm * B m twdk
m. ------ »
4n _ j _ t
j
fi« y
_
yieslog - Cl«T»l«nd
thahe.
Benrtoa — itlaat*
tee*y -* Htnaa&jjoliii
M l t m ^ &mm* city
ttartin i* ft#, Louie
«cft.inney
*i&Ju.at.a
* &m Francisco
A Meeting of the Fad^rtl Opoti li&rfcet Ibsiia&tte# la
hereby called to fee h«ld la Waehingtfflii *t th© office® $f the federal
Reeerro Board begijming an
Matkd&y, Itoy 27* 19S£t at 1 0 t£ 0 m« *♦
by wire ** to your utteod&aee.
flees#
Board will deeir* to-
certain other *&%tecr# *itfc *tH* governor# while they are ia Washington*
and imdoBfeted^y there will fee topic* which the governor# w ill, * ie h to
eaneidbar*
Therefore, it
i» e j e c t e d that at the eoncluaioo ®f the
Open Market Co«ittee meeting a aweting of the f&wttoa*#* Conference
be
orf tbet the
-gaweemm earn pp®$mm4 t& stay at leaet two clftye.
(Siennd') "/iarfiner S. Eccles
E#cle&*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
OOP*
FEBER4L W
E
BAfflt
OF S E t I3KK
June 14, 1955.
Bear Governor Eccleai
Encloaed I» a tentative draft of the minutes of
the »e®ting of the executive comdttee held In Washington
on Friday, June 7.
Since so chafes have been suggested in the tenta-
3 33 33 .. 33 - a - (f
(Signed)
W* Randolph Burgess
V* Randolph Burgess
F e d e ra l
Open Market Conc*itte«
Honorable ttarriner S* Eccles,
Governor, Federal HaMorve Board,
Washington, D* C.
arm
n
RS0#lt
end*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
7
COPY
Imm 7, 1956
Siri
Ricloeed $ U # » e find the minutea, etc*,
**•*
misting £r«» jwtr files.
Will
you pleaae
Subject to Change"
27,
frill
rmaovn the word# *¥«»Ltftiivt draft
the minute* «f Ftkruary S and February
St changes were made ia these minutec, so they stand
final copies*
j V/ /
3 $ '^ £ * 4. 3 3 *£ , 3 *
m
** /
I am Hating below the records you i h « m M havei
Frelii^jMKry
»—■
—
Ifa# ^ ■
WttOrazKlUE
Eejsort
Operatioac
Final draft
y»«
ye#
Minutes
Feb, 1
------ -
-u-->-
«
20
Final draft
no
yec
*
Wf Final irmft
no
no
Her*. 15 Tautetii**
me
no
Apr* 17 fi&t*itip*
no
yes
lay £7
ye#
yes
Vo
Very truly yours,
(Signed)
I* 1* Holmes
(Secretary
to Hr#
Ir* S* R*
A#»iSta»t Secretary, Federal Reserve Board,
f * s h la g t # % D. 0#
Burgess)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
■J 3 3 . 3
Fe d e r a l R e s e r v e B a n k
of
Ne
w
Yo
rk
A p ril 20, 1955.
Dear Governor Eccles:
, c
Ihclosed herewith are the minutes (of a meeting
of the executive committee of the Federal Open Market
Committee held in Washington cm A p ril 17, together with
the secretary* s report of operations and a memorandum on
excess reserves which is referred to in the minutes.
J
Vei7 tru ly your??,
'W. Randolph Burgess
Secretary, Federal
Open Market Committee
Honorable Marriner S. Eccles,
Governor, Federal Reserve Board,
Washington, D. C.
WEB.H
encl.
^
, a -» -a *
Repioduced from the Unclassified / Declassified Holdings of the National A rriv e s
-\
Auth -
o
u
CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
EXECUTIVE COMMITTEE OF THE FEDERAL OPEN MARKET COMMITTEE
HELD IN WASHINGTON, D. C. ON APRIX 17. 1955________
The p r e s e n t h o ld in g s o f U n ite d S t a t e s Government s e c u r i t i e s in th e
S ystem S p e c ia l In v e s tm e n t A ccount amount t o
T h e re h a s b e e n p r a c t i c a l l y
1933*
T r a n s a c tio n s i n governm ent s e c u r i t i e s in t h e S ystem A ccount s in c e
F e b ru a ry 2 0 , 1 9 3 5 , t h e d a t e o f t h e l a s t f u l l r e p o r t o n o p e r a t io n s by th e S e c r e t a r y ,
w ere a s f o ll o w s :
(1 )
R edem ption a t m a t u r i t y o f # 1 5 0 ,7 3 7 ,0 0 0 T r e a s u r y
b i l l s w hich w ere r e p la c e d by p u rc h a s e s in
m a rk e t o f o t h e r T r e a s u r y b i l l s and e x ch a n g es in
t h e m a rk e t o f $ 8 ,7 0 0 ,0 0 0 s h o r t T r e a s u r y b i l l
m a t u r i t i e s f o r new i s s u e s o f T re a s u r y b i l l s .
(2 )
U nder t h e g e n e r a l a u t h o r i t y t o make s h i f t s in
m a t u r i t i e s in t h e A ccount u p t o $ 2 5 0 ,0 0 0 ,0 0 0
v o te d a t t h e m e e tin g o f t h e F e d e r a l Open M arket
Comm ittee on
5 , 1935, o p e ra tio n s t o t a l i n g
$ 2 2 1 ,9 1 6 * 1 0 0 w ere c a r r i e d o u t a s f o ll o w s ;
(a )
C o n v e rsio n s M arch 15 a s f o ll o w s ;
# 7 4 ,3 5 0 ,0 0 0 - 2 1 /2 p e r c e n t
due M arch
f o r 1 5 / 8 p er cent
due M arch
T re a s u r y N o tes
1 5 , 1935
T re a s u ry N o tes
1 5 , 1940
8 4 ,6 6 7 ,7 0 0 - t h i r d c a l l e d F o u r th 4 1 /4 * 8
f o r 2 7 /8 p e r c e n t T r e a s u r y Bonds
o f 1955-60
The c o n v e rs io n i n t o th e lo n g b o n d s was made
w ith t h e u n d e r s ta n d in g t h a t when i t became
p o s s i b l e h a l f o f them w ould be exchanged i n t o
s h o r t e r m a t u r i t i e s . To d a t e $ 3 1 ,6 3 3 ,4 0 0 o f
th e s e bo n d s h av e b een ex ch an g ed - # 5 ,0 0 0 ,0 0 0
in t h e m a rk e t f o r T r e a s u r y b i l l s and
#26 ,6 3 3 ,4 0 0 w ith T r e a s u r y ag en cy f o r 2 p e r c e n t
C b n so ls and Panam as c a l l e d f o r payment on
J u l y 1 and A ugust 1 r e s p e c t i v e l y ♦
R ep rod uced from the U ncla ssified
I D e cla ssified H o ld in g s o f the N a tional A rch ive s
2
(3 )
(b)
S a le s in t h e m ark et o f $ 7 ,4 0 0 ,0 0 0
3 p e r c e n t T re a s u r y n o te s due Ju n e
15, 1935 and $ 2 0 ,5 0 0 ,0 0 0 - 2 7 /8
p e r c e n t T re a s u ry n o te s due A p r il
1 5 , 1936 w hich w ere r e p la c e d by
p u r c h a s e s in t h e m ark et o f T re a s u ry
b ills .
(c)
U nder t h e agreem ent o f th e e x e c u tiv e
c o n m itte e t o em ploy up t o $ 2 5 ,0 0 0 ,0 0 0
i f n e c e s s a r y in o r d e r t o a s s i s t in
m a in ta in in g an o r d e r l y m ark et a t th e
tim e o f th e T re a s u r y r e f u n d in g o p e ra
t i o n s , a t o t a l o f $ 8 ,9 1 5 ,0 0 0 T re a s u ry
bonds and c a l l e d F o u r th L i b e r t y Loan
b o n d s w ere p u rc h a s e d i n t h e m a rk e t.
$ 5 ,5 5 0 ,0 0 0 o f th e s e b o n d s were in t u r n
r e s o l d to th e m ark et and t h e b a la n c e
c o n s i s t i n g o f $ 1 ,3 5 0 ,0 0 0 - 3 p e r c e n t
b o n d s o f 1951-55 and $ 2 ,0 1 5 ,0 0 0 - 3 1 /8
p e r c e n t bo n d s o f 1949-52 w ere l a t e r o f f '
s e t by a llo w in g T r e a s u ry b i l l s t o ru n
o ff.
T r a n s f e r s o f p a r t i c i p a t i o n w ith i n th e A ccount t o t a l i n g
$ 6 2 ,0 0 0 ,0 0 0 . The i n c r e a s e s i n p a r t i c i p a t i o n a r e shown
b e lo w , in each c a s e th e New Y ork and th e Chicago b an k s
g iv in g up h a l f o f t h e am ounts t r a n s f e r r e d :
Richmond
K ansas C ity
D a lla s
M in n e a p o lis
San F r a n c is c o
$10 ,000,000
1 5 .0 0 0 .0 0 0
5 .0 0 0 .0 0 0
5 .0 0 0 .0 0 0
2 7 .0 0 0 .0 0 0
A tta c h e d t o t h i s r e p o r t a r e t h e f o llo w in g e x h i b i t s :
E x h ib it ”AM M a tu r ity d i s t r i b u t i o n o f governm ent s e c u r i t i e s
in t h e S ystem A ccount a t t h e end o f e a c h m onth
1932, 1 9 33, 1934 and J a n u a r y , F e b ru a ry , March
and A p r i l 1 5 , 1935.
E x h ib it "B"
C l a s s i f i c a t i o n o f i s s u e s h e ld i n th e System
A ccount on A p r i l 1 5 , 1 9 3 5 , and th e p e r c e n ta g e
o f e a c h is s u e h e ld in t h e A ccount t o th e amount
o f t h e r e s p e c t i v e is s u e o u ts ta n d in g .
E x h ib it nCw
(1 ) P a r t i c i p a t i o n s b y F e d e r a l r e s e r v e b an k s in
System S p e c i a l In v estm en t A ccount and (2 ) t o t a l
h o ld in g s o f governm ent s e c u r i t i e s by F e d e r a l
r e s e r v e b a n k s c lo s e o f b u s in e s s A p r il 1 0 , 1935,
and th e amount o f ( 1 ) and ( 2 ) o v e r o r s h o r t o f
p ro r a t a s h a r e b a se d on r a t i o o f each b a n k ’ s
e x p e n s e s , d iv id e n d s and c h a r g e - o f f r e q u ir e m e n ts
f o r 1934 t o t o t a l f o r t h e S y stem .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
Authwi‘y & o Sf ' io
E x h ib it "D”
C l a s s i f i c a t i o n o f o u t r i g h t h o ld in g s o f
governm ent s e c u r i t i e s o f a l l F e d e r a l
r e s e r v e b an k s a s r e p o r te d t o th e e x e c u tiv e
com m ittee o f F e d e r a l Open M arket Committee
c lo s e o f b u s in e s s A p r il 1 0 , 1935.
E x h ib it "E"
C h art showing a v e ra g e e a r n in g r a t e on
h o ld in g s o f U n ite d S t a t e s Government s e c u r i
t i e s in S ystem S p e c i a l In v e stm e n t Account
and a v e ra g e y i e l d on o u ts ta n d in g T re a s u ry
bonds and T r e a s u r y n o t e s , 1934 and 1935 to
A p r il 1 5 .
E x h ib it flF"
E a rn in g s o f a l l F e d e r a l r e s e r v e b a n k s f o r
t h e t h r e e m onths ended March 3 1 , 1935.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rch ive s
Auth
EXHIBIT WAW
MTORIfi . DI£- D3UTION OF HOLDINGS IN SYL,^\d &
___________ END OF EACH MONTH - 1 9 3 2 -3 3 -5 4 -3 5
)TJNT
(In m illio n s o f d o lla r s )
W ithin
S ix
1952 ifonths
Jan,
$165
191
F eb.
299
M ar.
A pr.
583
May
716
Ju n e
744
J u ly
733
Aug.
622
S e p t,
606
O c t.
651
Nov.
765
Dec.
779
W ith in
P er One
cent Y ear
W ith in
P e r Two
c e n t Y ears
29 |
355
32
375
475
44
57
778
51 1 ,0 5 8
48 1,1 0 6
45 1 ,0 9 8
38 1 ,0 2 9
37
998
40 1 ,0 5 1
47 1,0 4 6
48 1,021
63 $ 355
64
375
69
475
779
76
75
1 ,1 1 5
71
1 ,1 7 3
67
1,167
63
1 ,1 9 4
1 ,1 7 0
61
64
1 ,2 2 9
1 ,2 2 7
64
1 ,2 0 3
62
58
53
53
45
49
49
50
53
53
57
56
55
1933
Jan.
F eb.
M ar.
A pr.
May
June
J u ly
Aug.
S e p t.
O c t.
Mov.
D ec.
644
577
709
570
543
656
659
621
706
860(A)
845(A)
887(A)
41
36
44
35
32
37
36
32
34
39
43
40
1934
Jan.
F eb.
M ar.
A pr.
May
June
J u ly
Aug.
S e p t.
O ct.
Nov.
Dec.
887(A)
987(A)
799(A)
730(A)
717(A)
765(A)
732(A)
705(A)
654
749(A)
752(A)
794(A)
40
44
36
33
32
34
33
32
29
34
34
36
1,216
1 ,1 9 0
1 ,0 3 4
1 ,0 0 8
991
972
939
1 ,0 1 8
964
968
953
55
54
47
45
44
44
42
46
39
43
43
43
1935
Jan .
F eb.
M ar.
A p r .10
" 15
790(A)
863(A)
747(C)
715(C)
771(D)
35
39
33
32
34
950
950
889
893
1 ,0 8 7
43
43
40
40
49
(A \
Tv, rkln/^AC5
T2VM l 1^1+
903
856
856
725
823
879
903
1 ,0 2 5
1,102
1 ,2 5 7
1 ,2 3 5
1 ,2 1 6
868
3-5
P e r Y ears
cent In c .
C a ll
P er a b le
cen t Bonds
63 # 64
69
76
79
64
75
71 132
73 110
71 134
75
75
77
75
73 101
-
1 ,1 0 7
1 ,0 9 0
1 ,0 9 0
958
962
1 ,1 1 7
1 ,1 4 3
1 ,1 9 1
1 ,2 7 8
1 ,4 4 3
1 ,4 3 5
1 ,4 2 6
71
67
67
59
57
62
63
62
62
7
1 ,4 2 6
1 ,4 1 5
1 ,2 8 7
1 ,4 7 6
1 ,4 7 5
1 ,3 5 4
1 ,3 2 1
1 ,3 6 5
1 ,2 5 8
1 ,3 4 2
1 ,3 4 9
1 ,4 0 5
64
64
58
67
1 ,3 9 4
1 ,4 6 0
1 ,2 7 9
1 ,3 8 3
1 ,5 2 4
ft « «
^
66
65
64
116
203
203
335
384
335
341
394
452
498(B )
511(B)
520(B)
•
*
4
8
6
8
4
4
6
12
12
20
23
19
19
21
22
23
23
24
24
24
30
61
59
61
56
60
60
63
520(B)
531(B)
659(B)
488(B )
489(B )
550(B)
583(B)
539(B)
646(B)
647(B)
640(B)
584(B)
24
26
24
29
29
29
26
62
65
62
62
69
595(B)
529(B)
603(B)
603(B)
519
27
24
27
27
23
66
21
22
$212
212
212
239
290
322
336
336
336
336
336
336
P e r O th e r
cen t Bonds
37
36
31
24
21
21
21
21
21
21
21
21
336
336
336
336
336
336
336
336
336
252
252
252
22
21
21
21
20
252
252
252
195
195
195
195
195
195
11
11
11
110
110
110
110
110
19
18
17
16
11
11
11
9
9
9
9
9
9
5
5
5
56
56
5
5
3
3
0
0
$
•
-
•
-
•
25
25
-
-
•
-
•
-
1
1
1
1
1
567
587
687
1 ,0 1 8
1 ,4 0 5
1 ,5 5 9
1 ,6 5 5
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
1 ,5 5 9
1 ,6 2 9
1,629
1 ,6 2 9
1 ,6 8 2
1 ,7 8 8
1 ,8 2 0
1 ,9 2 1
2 ,0 6 6
2 ,1 9 3
2 ,2 2 3
2 ,2 2 3
25
25
25
64
64
124
124
124
124
124
124
124
6
6
6
6
6
6
6
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
124
124
185
181
180
6
6
8
8
8
2,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
*M
(B) Does n o t in c lu d e F o u r th L i b e r t i e s " u n c a lle d " m a tu rin g O c to b e r 1 9 38.
(C) In c lu d e s F i r s t L i b e r t i e s , P an am a's and C o n so ls •'called**
(D) I n c lu d e s F i r s t and F o u r th L i b e r t i e s , Panam a’s and C o n so ls " c a l l e d 11
P e r
cent T o t a ls
3
3
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
CLASSIFICATION OF I^ S l
Ilu_L
TIil L'YSTC, ACCOUNT ON APRIL 1 5 ,
4,55 t
OF EACH ISSUL IN THS ACCOUNT ; . f X . ivIPARED V.ITH THE iUaOU^T UE TuE KESVrCTIV.
(OOO O m itted)
System
Amount Re
A ccount
s p e c t iv e I s s u e
H o ld in g s
TREASURY BILLS
O u tsta n d in g
U. S . T reasu ry B i l l s due Apr. 1 7 , 1935
1 8 ,2 5 0
$
7 5 ,2 4 8
$
ii
tt n
n
n
11
2 4 , 1935
1 8 ,7 0 3
7 5 ,1 0 2
ti
If May
W If
1 , 1955
2 2 ,2 5 0
7 5 ,0 1 5
ii
n
n ii
It
n
1 9 ,4 4 0
1935
7 5 ,0 7 5
n
11
ii
ti ti
tt
1 5 , 1935
7 5 ,0 4 5
2 3 ,2 8 7
ii
ii
It
» «
n
22, 1935
1 6 ,8 7 5
7 5 ,1 6 8
ii
ii
it
ii
It
u
2 2 , 1935
2 0 ,7 0 0
7 5 ,2 8 7
ti it
ii
ii
11 June
7 5 ,1 3 9
2 0 ,2 0 3
5 , 1935
ti n
n
it
II
ii
1 2 , 1935
6 ,4 0 0
7 5 ,0 7 9
it it
ti
n
11
tt
1 9 ,2 5 0
1 9 , 1935
7 5 ,0 2 0
it n
u
ii
11
ct
2 6 , 1935
2 0 ,0 0 0
7 5 ,3 0 0
ii
II u
n
11 J u ly
2 3 ,0 9 9
7 5 ,1 5 0
3 , 1935
n if
ti
11
It
ii
1 8 ,7 5 0
1 0 , 1935
7 5 ,1 8 5
n ti
ii
n
It
11
2 5 ,2 0 0
7 5 ,0 7 9
1 7 , 1935
ti ti
n
ii
11
11
2 4 , IV 35
2 1 ,2 0 0
7 5 ,1 2 9
ii it
n
n
11
11
7 5 ,1 0 6
1 5 ,0 1 0
3 1 , 1935
n ii
n
n
11 Aug.
7, 1935
2 5 ,5 2 5
7 5 ,1 8 5
n n
n
11
n
n
2 3 ,8 6 2
7 5 ,1 1 2
1 4 , 1935
n n
n
ii
It
it
2 1 , 1935
1 5 ,7 2 0
7 5 ,0 2 4
it ti
n
ti
n
ti
2 8 , 1935
1 4 ,5 4 0
5 0 ,0 5 4
ii ti
ii
n
ti S ep t • 4 , 1935
1 0 ,9 5 0
5 0 ,1 1 4
it ii
0
tt
tl
it
5 0 ,0 5 2
7 ,5 0 0
H > 1955
it
it
11
ii n
ii
1 8 , 1935
6 ,0 6 3
5 0 ,1 2 5
n ii
it
tt
11
n
1 5 ,0 0 0
5 0 ,0 7 9
2 5 , 1935
ti
u N ov, 2 7 , 1935
ii
n
it
1 3 ,7 0 0
5 0 ,1 8 5
ti ti
ii
tt D ec.
ii
5 0 ,0 7 2
1 1 ,7 0 0
4 , 1935
ii it
ti
ii
it
ii
8 ,8 5 5
5 0 ,1 4 9
11» 1935
ti
it
n ti
ii
ti
5 0 ,0 0 6
1 8 , 1935
1 8 ,8 9 7
ti
ii
it
11 n
ii
2 4 ,3 0 0
2 4 , 1955
5 0 ,0 7 1
rt
rr
if ii
n
r?
1 3 ,9 6 2
3 1 , 1935
5 0 ,0 1 8
ti ii
ti
ii J a n .
ii
—5CL.062
8 , 1936
....
TOTALS
5 3 0 ,9 9 1
v 2 ,0 2 8 ,4 3 5
t
TREASURY NOTES
3
% T reasury N o tes
n
n
1 5/8%
n
ii
2 i/sr
n
it
2 7/8%
ii
•
*
1 1/8%
ii
ft
5 l/4 *
n
ti
1 1 /2 *
ti
II
2 5/4%
n
11
3
%
ii
11
3
*
u
If
3 1/455
11
ta
2 5/BH
u
it
3
%
»
Ii
2 7/8*
li
it
2 1 /2 *
I
I
2 1 /8 *
ti
11
1 5 /8 *
ti
it
it
n
n
n
it
n
n
tt
if
it
tt
ii
tt
ti
n
June
Aug.
D ec.
Apr.
June
Aug.
Sept .
Dec.
15,
1,
15,
15,
15,
1,
15,
15,
Feb. 1 5 ,
Apr. 1 5 ,
SeDt . 1 5 ,
Feb.
1,
Mar. 1 5 ,
June 1 5 ,
S ep t . 1 5 ,
June 1 5 ,
Mar. 1 5 ,
TOTALS
1935
1935
1935
1936
1936
1936
1936
1936
1937
1937
1937
1938
1938
1938
1938
1P39
1940
1 2 2 ,9 9 5
8 5 ,7 2 3
7 3 ,6 2 1
1 3 6 ,8 8 5
5 0 ,0 0 0
7 9 ,0 4 2
5 8 ,9 6 7
9 9 ,3 6 8
6 5 ,6 8 5
8 4 ,1 7 5
8 4 ,7 5 0
5 8 ,8 2 0
9 7 ,0 9 9
5 3 ,5 0 0
8 0 ,4 8 1
6 9 ,4 3 8
, ,74,550
$ 1 ,3 7 4 ,8 9 9
%
LIBERTX LOAN AND TREASURY BONDS
3 1 /2 * 1 s t L/L Bds c a ll e d 6 /1 5 /3 5
V
11
n
6 /1 5 /3 5
4 1 /4 * 1 s t "
4 1 /4 * 4 th "
" o f 1833—38 c a l l e d 1 0 /1 5 /3 5
3 1 /4 * T re a su iy Bonds o f 1941
ti
n 194 3 -4 5
11
3 1 /4 *
H
" 1S44 -46
11
3 1 /4 *
II
n 1946—48
3
%
n
11
ti 1949 -52
3 1/8%
II
u
ii 1951 -5 5
3
%
It
tt 195 5 -6 0
it
2 7/8%
2
jb C o n so ls (1 9 3 0 ) c a ll e d 7 /1 /3 5
tt
8 /1 /3 5
% Panam&s (1 9 3 6 )
2
n
tt
(1 938)
8 /1 /3 5
2
%
TOTALS
V
GRANi. TOTALS
2 5 ,0 2 5
2 9 ,0 0 0
5 6 ,2 0 1
2 0 ,0 0 0
2 5 ,0 0 0
3 9 ,0 0 0
4 0 ,0 0 0
2 ,0 1 5
1 ,3 5 0
5 3 ,0 3 4
24,646
1 ,4 6 9
519
3 1 7 ,2 5 9
v2 ,2 2 3 ,1 4 9
TilE PERCENTAGE
„bbUE OUTSTANDING
x
h
P e r c e n ta g e
I s s u e s Held
Amount O utstar
24.25%
2 4 .9 0 *
$
4 1 6 ,6 0 3
3 5 3 ,8 6 5
4 1 8 ,2 9 1
5 5 8 ,8 1 9
6 8 6 ,6 7 5
3 6 4 ,1 3 8
5 1 4 ,0 6 6
3 5 7 ,9 2 1
4 2 8 ,7 5 0
5 0 2 ,3 6 2
8 1 7 ,4 8 3
2 7 6 ,6 80
4 5 5 ,1 7 5
6 1 8 ,0 5 7
5 9 6 ,4 0 5
1 ,2 9 4 ,0 0 0
-&.1£,£S4
$ 9 ,1 7 3 ,1 5 2
22.66%
25.89%
31.03%
22.45/°
27.49%
26.89%
8*52/1
25.63%
26.56%
3 0 .7 4 *
24.94/°
30.90%
28.22%
19,99%
33.95%
31.77%
2 0 .9 5 3
29.05%
21.85%
14.98%
12.10%
29.95/b
27.30%
23.37%
17,66%
37.79%
48,53%
27.91%
^ 6.17^
£9*52*
24.22%
17.60%
24.50%
7.28%
21,71%
11.47%
27.76%
15.32%
16.76%
10.37%
21.26%
21.33%
8.66%
13.49%
5.57%
14.47%
15,00%
i 1 ,3 9 8 ,2 2 8
5 5 5 ,9 8 2
1 ,2 .4 5 ,5 7 8
8 3 4 ,4 7 4
1 ,4 0 0 ,5 7 0
1 ,5 1 8 ,8 5 8
8 2 4 ,5 0 8
4 9 1 ,3 7 7
7 5 5 ,4 7 9
1 ,5 6 0 ,0 0 0 (a )
5 9 9 ,7 2 4
4 8 ,9 5 4
2 5 .9 4 7
♦ 1 1 ,2 3 9 ,6 79
1.79%
5.41%
4.51%
2.40%
1.78%
2.57%
4.85%
0.41%
0.18%
3.40?.
4.31%
3.00?:
2.00*
2,82%
* 2 2 ,4 4 1 ,2 .6 6
9.91%
T o ta l o f a l l if su es o f T reasury B i l l s , N o te s , L ib e r ty Loan pjid
T reasu ry Bonus and th e c a ll e d C o n so ls and Panamas o u tst^ n c.in g unrnelured.
P e rcen ta g e h e la in System A cco u n t. . . .....................................................................................
(a ) a o p ro x in .a tely
F
.£ 2 6 ,8 5 6 ,8 5 9
8.27s
EXHIBIT "C"
(1) PARTICIPATION BY FEDERAL RESERVE BANKS IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT AND (2) TOTAL HOLDINGS OF GOVERNMENT
SECURITIES BY FEDERAL RESERVE BANKS CLOSE OF BUSINESS APRIL 1 0 , 1935 AND THE AMOUNT OF ( l ) MD (2) OVER OR &IORT OF PRO
RATA SHARE BASED ON RATIO OF EACH BANK1S EXPENSES, DIVIDENDS AND CHARGE-OFFS FOR 1954 TO THE TOTAL FOR THE SYSTEM
.
(OOO O m itted )
P a rtic ip a
tio n s in
System
A ccount
(A)
#
R a tio o f
H o ld in g s
in
System
A ccount
(B)
R a tio o f
E x penses,
D iv id e n d s L
C h a rg e -o ffs
Y ear 1954
(C)
6 5/4%
1 5 6 ,9 8 2
7.06%
NEW YORK
6 1 7 ,5 1 8
27.76%
28
%
PHILADELPHIA
1 6 3 ,7 5 4
7.56%
9
CLEVELAND
21 5 ,0 2 5
RICHMOND
P a rtic ip a tio n s
( + ) Over o r
( - ) S h o rt o f
P ro R ata
S h are B ased
on R a tio s
in C o l. C.
(D)
T o t a l H o ld in g s
( P o r t f o l i o and
P a rtic ip a tio n
in S ystem A ccount)
(E)
157,679
6.49%
5 ,1 6 4 -
73 7 ,6 1 5
30.38%
%
5 6 ,5 4 9 -
167,120
6 . 88%
5 1 ,4 1 1 -
9.58%
9 5/4%
5 ,7 5 2 -
2 1 3 ,0 2 4
8.77%
2 3 ,7 1 8 -
1 1 5 ,5 6 2
5.11%
5 1/4%
5 ,1 5 5 -
1 1 3 ,5 6 3
4.68%
1 3 ,9 1 4 -
ATLANTA
94,2 0 9
4.24%
4
%
5,285+
9 4 ,2 2 4
3.88%
2 , 901-
CHICAGO
3 2 7 ,1 0 1
14.72%
11 1/ 2%
71,459+
3 8 9 ,8 4 3
16.06%
n o , 609+
ST* LOUIS
1C7,700
4.85%
4 5/4%
2 , 100+
108 ,2 0 0
4.46%
7 ,1 3 6 -
6 5 ,0 5 4
2.85%
5 5/4%
2 0 ,3 1 4 -
70 ,3 1 0
2.90%
2 0 ,7 4 5 -
106 ,6 5 9
4.80%
5 1/4%
1 0 ,0 5 6 -
106 ,7 4 1
4.39%
2 0 ,7 3 6 -
6 6 ,4 7 5
2.99%
5 5/4%
1 6 ,8 9 3 -
76,475
3.15%
1 4 ,5 8 0 -
1 9 5 ,5 5 0
8.70%
9,920+
193 ,3 3 1
7.96%
6 ,9 8 9 -
BOSTON
MINNEAPOLIS
KANSAS CITY '
DALLAS
SAN FRANCISCO
TOTALS
^E:
# 2 ,2 2 5 ,1 4 9
100
%
8 1 /4 %
100
%
# 6 ,919+
$ 9 5 ,6 6 1 A d j.
#
R a tio
of
T o ta l
H old in g s
(F)
T o t a l H o ld in g s
( + ) Over o r
( - ) S h o rt
o f P ro R ata
S h are Based 0]
R a tio s in C o l.
(G)
|2 ,4 2 8 ,1 2 5
100
%
#
6 ,2 1 9 57,740+
#168,549 Adj,
C h a rg e -o f f s do n o t in c lu d e r e s e r v e s f o r p o s s i b le l o s s e s , self In s u ra n c e o r abnorm al r e a l e s t a t e d e p r e c i a t i o n .
9
GOVBRHMBNT SECURITY HOLDINGS OF ALL FEDERAL RESERVE RANKS AS REPORTED TO THE EXECUTIVE COMMITTEE OF THE
__
_____
_______
CLOSE OF BTJSISESS A PR IL 1 0 , 1 9 3 5
S h o r t-te rw
B oston
T reas. B i l l s due i/ 2 i / 8 E
" 5 /1 8 /3 5
5 /2 2 /3 5
7 /1 0 /3 5
7 /2 4 /3 5
8 / 7 /3 5
8 /1 4 /3 5
8 /2 1 /3 5
8 /2 8 /3 5
11 /27/35
1 2 /4 /3 6
12/11/35
18/W /36
* June 15. 1035
5 /0 * Aug. 1 , 1935
2 1 /2 * “D ec. 15 1935
2 7 /8 * Apr. 15 1936
1 1/8% June 15 1836
3 1 /4 * Aue. 1 1938
1 1/2% S ep t 15 1936
3
* Feb. 16 1937
3
* Apr. 15 1937
3 1 /4% Sept 15 1937
2 5 /8 *
3 *
2
27/e*
1/8*
2 1/ 8*
M 5/8*
Feb.
Mar.
June
Sept
June
Mar.
l
15
15
15
15
15
-o -o -o -o -o -o -o -o -o -0 -o -0 -0 -o -0 -0 -0 -o -o -0 -o -0 -0 -
$
-o -0 —
-0 -o -0 -o —
1938
1938
1938
1938
1939
1940
TOTALS
-0 -
Uarrtici
$
P n ll& d e lp h la
125,000 $
8 ,0 3 8 ,0 0 0
2 ,6 8 1 ,0 0 0
-o -0 —
-0 532,000
500,000
1 ,5 0 0 ,0 0 0
-©-o 1 ,5 2 5 ,0 0 0
2 ,4 6 8 .0 0 0
13 ,2 1 0 ,6 0 0
2 .6 5 9 ,7 0 0
2,5 6 1 ,5 0 0
1 1 ,267,000
-o 7 ,9 0 0 ,0 0 0
938,500
2 ,4 9 7 ,0 0 0
1,2 5 0 ,0 0 0
74,000*
6 ,5 0 0 ,0 0 0
1 ,2 5 0 ,0 0 0
250,000
1 ,3 19,000
8 ,0 4 ?,0 0 0
2 ,8 1 2 ,0 0 0
1 ,1 5 0 ,0 0 0
$ 79 ,0 6 0 ,3 0 0
S
-o -0 -0 -0 -o -0 -0 -0 -0 -0 -o -o -o -0 33.400
500,0 0 0
-0 -o -0 -o -o -o 5 0 0 ,0 0 0
Sleveiajjfl
$
Ric&noad
$
“ 0-0 -o -o -o -o -o -o -o -o -o -0 -o -0 -o -0 -o -o -o -o -o •PO-o -
-o -o -0 -o -0 -o -o -o -o -0 -0 -o —o -o -o -0 -0 -o -o “0“
-o -o -o -
-o -
-0 -
♦ 6 0 ,1 4 1 ,7 0 0
-o -
-0 -0 -0 160,000
-0 -o -
524,600*
210,600*
831,700*
4 ,2 6 7 ,0 0 0
9 ,7 6 2 ,0 0 0
-0 -
—0 2 ,0 0 0
-0 5 5 0,000
-0 -e-
-0 -0 -o -o -o -
-o -0 -o -0 -0 -o -
•
•
3 1/4S
3 1/43
1941
1944-46
-0 —0—
-0 4 ,4 2 1 ,8 0 0
—0 -o -
-o -0 -
-0 -o -
•
3
s
1961-55
-0 -
3 1/4*
1943-45
-0 -
•
S 1948-48
8 7/8S 1965-60
-0 -0 -
•
3 i/e s
•
3
■
3 1/88
Pansaas
W
•
9* Conversion*
P a r t. S y s t e . Acct
AGGREGATE
-0 *
-o -
-o -0 -
-0 -
-0 -
300
-0 -
—0“
-0 -
-o -
1 ,0 5 0
-o -
-o -
-0 600,000
-o -o -
-0 -o -
-o -0 “
-o -o -
-0 -
-0 -
-o -
-o -
-o -
-o -
-0 -
-0 -o -0 -Q -o -
-0 -o -0 -o -o *
-o -
-0 -0 589.000
806,500
$ 4 2 ,9 4 9 ,6 5 0
$
_15flx2S2xQQQ
$ 1 5 7 ,8 7 8 ,5 0 0
_fil2x31fixQ lQ
$739,317,960
IfiS x Z S ix M Q
$16 7 ,1 8 0 ,0 0 0 $ 2 1 3 ,0 2 4 ,5 0 0
100
-0 -0 1 ,6 6 2 ,1 0 0
.....
,
200
FsSO
__
$
-0 .
15,^0 0
S
-o -0 “
-o -0 -.
2 ,6 0 0 ,0 0 0
-0 -0 -o -0 %
600,000
_ -W A^ #QOO_ 3 ^7,101*000 1 0 7 ,7 0 0 ^0 0 0 .
$ 113t 5QS ,600 * 9 4 ,2 2 4 , XX) $ 3 8 9 ,8 4 .° , 7 0 0 1 0 8 ,3 0 0 ,0 0 0
A
100
400
-0 -
• S e lf In * . R eserve
\
-o -0 -o -o -
400
3 ,4 0 0
-0 -0 -o -o -o -o -
200
-o -
-0 -
$
-o -o -
<o
$
500,000
-o -
-0 -
-0 -o -0 -o -
1949-62
1098
1961
1048-7
—o 2 ,6 0 0 ,0 0 0
“ 0—
7,5 0 0
1948-49
TOTALS
-O8 .3 5 5 ,0 0 0
-o -o -o -o -o -o -o -o -o -0 -o -0 -o —
o—
-0 -o -o -o -o -o -o -o -
-o -
4 ,1 6 0
4,950
M in n eap o lis
-0
-o -o “0-o -o -0 -0 -0 -o -0 -0 -o -0 -o -0 -0 -o -o -o -0 “
-o -o -
1 ,7 3 3 ,4 0 0
4 1/4* 1952
• 1954
3 3/49 1966
3 3/8S 1943-47
3 3 /8 * 1940-43
3 3/8S 1041-43
•
S S.L oujs
J
-o -o -o -o •0 -o -
-o -o -
62,500*
-o -0 -o 3 ,6 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
5 0 0,000
-0 -o -o 2 ,0 0 0 ,0 0 0
1 ,6 0 0 ,0 0 0
-o -o -o 7 ,8 4 0 ,7 0 0
9 ,3 6 0 ,0 0 0
6 ,2 5 9 ,0 0 0
8 ,8 9 2 ,0 0 0
-0 -o -o -0 -o -o -o “ 04 ,6 0 0 ,0 0 0
-o 9 ,5 0 0 000
-0 -o -
-o -
$
-o -o -0 -o -0 -o -
-0 500,000
4
Chicago
—0 -o -0 -0 -o -o -o -0 -o -0 -o -o -o -o -o -0 -o -o -0 -0 —
-o -o -o -
-o -o -o -o -o -o -
6 ,7 5 0 ,0 0 0
7 ,7 6 5 ,0 5 0
Treasury
•
•
•
•
•
A tla g ^ a
$
-o -0 “
-o —
-0 -o -o -
-0 -o -0 700,000
-0 -0 -
-0 —
-0 -
F i r s t L/L c a lle d 6 /1 5 /3 6
Fourth ■ 1938
m
Nm» T o rt
♦
FEDERAL O PE S \ I K V K V * r n i l M T T T B t r
K b upa,N
COMMITTEE
K an sas C ity
^
D * l |8
-0 -o -0 -o -o -
-o -o -o -o -
—0-*
-o -o -o -o -
-o -
-o -
-o -0 “
-o -0 -o -0 -o -o -0 •0 "
-0 -c -o -
-o -o -o 511,000
-o —
-o -
-o -o -o -0 -o -0 -
-0 -o -0 -o -0 -0 -
-o -
511,000
-0 -
-o -
-o -
7 ,3 0 0
80,000*
407,850
“0166,900
42,500
4 7,050
29,450
2 00,000*
2 ,4 6 6 ,7 0 0
-0 4 0 ,000*
2 0 ,2 0 0
140,000*
416,300
3 0 ,000*
5 6 1 ,0 0 0
5 ,0 0 0
10,000*
7 1 3 ,5 0 0
60,000*
1 ,7 3 1 ,0 0 0
-0 -0 500
-o —0*
-0“
-o -
-o -O-
-o -o -0 -o -o 1 4,000
-o -0 -0 “ 0—
-o -o -o -o -o -o -o -
1 ,2 5 0 ,0 0 0
2 5 0 ,0 0 0
1 .3 1 9 ,0 0 0
1 3 ,8 5 3 ,0 0 0
2 ,8 1 2 ,0 0 0
1 0 ,8 6 0 ,0 0 0
-0 -0 -0 $
1 4 1 ,4 3 6 ,4 0 0
7 ,2 6 1 ,4 5 0
li^w^.eno
5 2 4 ,8 0 0
4 .3 7 8 .5 0 0
6 ,0 7 9 ,4 0 0
5 ,0 8 4 ,0 6 0
9 ,7 9 1 ,8 5 0
2 ,6 8 4 ,1 0 0
-o -o -
1 0 ,7 0 0
4 ,4 8 1 ,8 0 0
5 7 ,600
-o -
6 1 4 ,2 0 0
-o -
6 5 4 ,5 5 0
ia ^ ,o o o *
-o •o -0 —.
185,200
_
_
-o -0 -
5 ,2 0 0
9 ,6 7 9 ,0 5 0
-0 -
1 .9 0 1 .5 0 0
796,000
-o —0 -
79 6 ,0 0 0
100
500
_ 643.8 0 0
$ 1 0 ,0 0 0 ,0 0 0
_
ft70,fil0 550
-o -o -
-0 -
126,000
6 ,0 3 8 ,0 0 0
2 ,6 8 1 ,0 0 0
3 ,6 0 0 .0 0 0
6 ,0 0 0 ,0 0 0
5 0 0 ,0 0 0
5 3 2 ,0 0 0
5 0 0 ,0 0 0
1 ,5 0 0 ,0 0 0
2 ,0 0 0 ,0 0 0
1 ,6 0 0 ,0 0 0
1 ,5 2 5 ,0 0 0
2 ,4 6 8 ,0 0 0
1 3 ,2 1 0 ,6 0 0
1 0 ,5 3 3 ,8 0 0
1 2 ,4 1 1 ,5 0 0
1 7 ,5 2 6 ,0 0 0
8 ,8 9 2 ,0 0 0
7 ,9 0 0 ,0 0 0
938,6 0 0
2 ,4 9 7 ,0 0 0
1 ,2 5 0 ,0 0 0
7 ,0 7 4 ,0 0 0
10,600
-o -
-o -
%
-0 -0 -
4 ,0 0 0 ,0 0 0
5 ,2 0 5 ,0 0 0
-o -o -o -
-0 -
__
$
-0 -
-o -o -0 -0 -o -o -o -o -o -o -o -0 -o “ 0“
-0 -0 -
7 ,2 2 9 ,0 6 0
-o -o -
T0TAL3
San F ra n ,
$
_106X66?J 000 .
$1 0 6 ,8 4 4 ,2 0 0
$ 7 6 ,4 7 6 ,0 0 0
$ ' 6 5 ,8 2 8 ,2 0 0
_______
17.000*
.125x30x502
2 .2 2 3 .1 4 9 .5 10
$ 2 ,4 3 0 ,4 3 1 ,1 1 0
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Bxhib i t
wbiiwipwpiwmp
...
»■'
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.Federal Reserve BanJ
Of Hew York
Reports Department
fe e
Zt
193£<
Zez6
Exhibit " V
Y IE LD
PER C E N T
1934
1935
A?«rage
Rata on Holdings of 0. S. Government Securities in SyBtaa Special Investment
Aooount and Average Ziald on Outstanding 0. 8. Traaauiy Bonds and Treasury Notas
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
si
EXHIBIT "F"
I-
STATEMENT SHOWING EARNINGS OF ALL FEDERAL RESERVE BANKS
________FOR THE THREE MONTHS ENDED MARCH 5 1 , 1935________
E a rn in g s do n o t in c lu d e p r o f i t s on s e c u r i t y s a l e s , now h e ld in S u sp en se A cco u n t.
G ro ss
E a rn in g s
$
B oston
New York
7 20,609
C u rren t E x p en ses
and Net D e d u c tio n s
From C u rren t
l e t E a rn in g s
|
661 ,0 1 9
A v a ila b le f o r
D e p r e c ia tio n
A llo w an ce s,
R e s e rv e s and
S u rp lu s
$
5 9 ,5 9 0
3 ,6 0 8 ,7 0 0
2 ,8 1 6 ,7 8 6
P h ila d e lp h i a
7 9 6 ,3 0 3
8 2 8 ,4 2 2
3 2 ,1 1 9 (a)
C le v e la n d
968,178
92 3 ,8 8 6
4 4 ,2 9 2 .
Richmond
518,702
5 0 0 ,8 2 5
1 7,877
A tla n ta
4 6 6 ,2 4 2
4 0 7 ,0 2 1
5 9 ,2 2 1
Chicago
1 ,8 2 1 ,5 6 2
1 ,0 3 1 ,0 1 7
7 9 0,545
S t . L o u is
4 7 1 ,9 0 8
4 2 6 ,6 8 7
4 5 ,2 2 1
M in n e a p o lis
3 5 3 ,8 9 6
3 5 4 ,5 3 9
K ansas C ity
4 7 6 ,5 3 9
4 7 1 ,8 8 7
4 ,6 5 2
D a lla s
3 74,996
3 16,597
5 8 ,3 9 9
San F r a n c is c o
7 8 1 ,3 4 4
8 0 2 ,7 0 0
2 1 ,3 5 6 (ii)
1 1 1 ,3 5 8 ,9 7 9
# 9 ,5 4 1 ,3 8 6
T o t a ls
(a ) D e f i c i t
7 9 1 ,9 1 4
643 (a)
|1 ,8 1 7 ,5 9 3
w -m m m m m m m m m m m — m m — m m m m m m rn m m m m m
Reproduced from the Unclassified I Declassified Holdings of the National Archives
COIu- l^ i- itT IA L
EXCESS RESERVES AND FEDERAL RBSEHVE POLICY
In d is c u s s in g e x c e s s r e s e r v e s a t th e l a s t m e e tin g , t h e d i r e c t o r s a s k e d
t h i s q u e s tio n :
l i k e th e p r e s e n t?
What i s th e d u ty o f a c e n t r a l b an k o r b a n k in g sy ste m in a s i t u a t i o n
Can we b y a n a l y s i s o f t h e s i t u a t i o n a s c e r t a i n t h e p r i n c i p l e s
aihieh sh o u ld be a p p lie d ?
H aving done t h a t , we w ould be in a b e t t e r p o s i t i o n t o
c o n s id e r q u e s tio n s o f e x p e d ie n c y and m ethods o f p r o c e d u r e .
B e fo re a tte m p tin g t o an sw er t h i s q u e s ti o n , i t may b e w e ll t o re v ie w
b r i e f l y t h e g e n e s is and g ro w th o f t h e p r e s e n t e x c e s s r e s e r v e s o f t h e member b an k s
o f t h e c o u n tr y .
The pro g ram o f o p en m a rk e t p u r c h a s e s o f governm ent s e c u r i t i e s ,
w hich b eg an a t t h e o u t s e t o f th e d e p r e s s io n i n 1 9 2 9 , h a s gone th ro u g h a num ber o f
p h ases*
In th e e a r l i e r y e a r s i t s m ain p u rp o s e was t o e n a b le t h e member b a n k s t o
re d u c e t h e i r r e d i s c o u n t s a t t h e R e se rv e b a n k s , in th e h o p e , b a se d on p r e v io u s ex
p e r i e n c e , t h a t t h i s r e d u c t i o n o f member b an k in d e b te d n e s s would c h e c k d e f l a t i o n and
m ig h t s t im u la t e c r e d i t e x p a n s i o n . T h e c r e a t i o n o f e x c e s s r e s e r v e s , w hich r e p r e
s e n te d an e n t i r e l y new p h a se o f o p en m ark et p o l i c y , may b e s a i d t o h av e begun a f t e r
th e p a s s a g e o f t h e G l a s s - S t e a g a l l Act in F e b r u a r y , 1932.
By t h e summer o f 1932 o u r
open m ark et p u r c h a s e s had l e d t o t h e a c c u m u la tio n o f f a i r l y s u b s t a n t i a l e x c e s s
r e s e r v e s ,, p r i n c i p a l l y i n New York and C hicago b a n k s .
The n e x t p h a se o f th e program
was t h e re s u m p tio n o f open m ark et p u r c h a s e s a f t e r th e b a n k in g c r i s i s o f M arch, 1933,
a s one o f v a r io u s em ergency m e a s u re s , w hich in c lu d e d a l s o d e p o s it in s u r a n c e and t h e
R e c o n s tru c tio n F in a n c e C o rp o ra tio n program o f b an k c a p i t a l r e h a b i l i t a t i o n .
By
J a n u a r y , 1934, e x c e s s r e s e r v e s am ounted t o ab o u t # 8 0 0 ,0 0 0 ,0 0 0 , w hich w ere now f a i r l y
r e l l d i s t r i b u t e d th ro u g h o u t t h e c o u n tr y .
I t i s im p o rta n t t o p o in t o u t t h a t t h e
R e s e rv e S y ste m ’ s a c t i v e program o f in c r e a s i n g bank r e s e r v e s came t o a n end a t t h i s
ti m e ,* and t h a t t h e g r e a t i n c r e a s e in e x c e s s r e s e r v e s w hich h a s o c c u r r e d s in c e
* Our p u r c h a s e s o f governm ent s e c u r i t i e s a c t u a l l y c e a s e d in November, 1933, b u t th e
f u l l e f f e c t upon e x c e s s r e s e r v e s was n o t a p p a re n t u n t i l a f t e r s e a s o n a l r e t u r n
flo w o f c u rre n c y t o t h e R e serv e b a n k s i n J a n u a r y , 1934.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
/
2
J a n u a ry , 1934, h a s b een due m a in ly t o t h e d e v a lu a tio n p o l i c y o f th e A d m in is tr a tio n
and th e r e s u l t i n g in flo w o f g o ld .
Our f i r s t c o n c lu s io n t h e r e f o r e i s t h a t th e
A d m in i s t r a ti o n ’ s p o l i c y and n o t th e R e se rv e System h a s b een r e s p o n s i b l e f o r th e
r e c e n t grow th and t h e p r e s e n t l a r g e amount o f e x c e s s r e s e r v e s , and t h a t a s m a t t e r s
now s ta n d b o th th e r e s p o n s i b i l i t y f o r and th e pow er o v e r p r e s e n t e x c e s s r e s e r v e s
l i e p r i n c i p a l l y w ith th e A d m in is tra t io n .j 1
N e v e r th e le s s , we m ust a s k o u r s e l v e s '• What i s o u r d u ty w ith i n t h e l i m i t s
o f o u r pow er?
$ 2 ,2 5 0 ,0 0 0 ,0 0 0 ;
We a r e f a c e d w ith t h i s s i t u a t i o n :
E x cess r e s e r v e s a r e now about
th e p u b lic d eb t i s s t e a d i l y m o u n tin g ;
th e governm ent s e c u r i t i e s
is s u e d t o f in a n c e th e d e f i c i t s a r e b e in g bought m a in ly by t h e b a n k s , and l a r g e l y
by re a s o n o f th e p r e s s u r e o f e x c e s s r e s e r v e s upon th e b a n k s . [~The th e o r y o f c r e a t
ing e x c e ss r e s e r v e s was t h a t in a d e p r e s s io n , when th e c a p a c ity and w i l l i n g n e s s o f
banks t o le n d and o f p r i v a t e e n t e r p r i s e t o b orrow have b e e n im p a ire d , e x c e s s r e
s e r v e s w ould p ut p r e s s u r e on t h e b an k s th u s f o r c in g down th e y i e l d on governm ent
s e c u r i t i e s to th e p o in t w here bank and o t h e r in v e stm e n t f u n d s w ould flo w o v e r in to
p r i v a t e c a p i t a l in v e s tm e n t.
w ork;
T h ere i s some e v id e n c e t h a t t h i s p r e s s u r e h a s begun t o
th e y i e l d on governm ent s e c u r i t i e s h a s b een r e d u c e d ;
m o rtg ag e money i s becom ing m ore p l e n t i f u l ;
t h e r e a r e s ig n s t h a t
and t h e r e a r e some s ig n s t h a t t h e lo n g -
a w a ite d movement to w a rd r e f u n d in g o f o u ts ta n d in g p r i v a t e c a p i t a l i s s u e s i s g e t t i n g
u n d e r way.
But t h e r e w i l l be no p ro o f t h a t th e p r o c e s s h a s su cceed ed u n t i l th e s e
s ig n s a r e fo llo w e d by th e a p p e a ra n c e o f new c o r p o r a te is s u e s w hich 3*111 s e rv e t o
r e l i e v e p r e s e n t p r e s s u r e on th e T r e a s u r y d i r e c t l y , o r th ro u g h o t h e r g o v e rn m e n ta l
a g e n c ie s , to s a t i s f y th e c o u n t r y 's c u r r e n t c a p i t a l re q u ire m e n t
M eanw hile, t h e r e a r e c e r t a i n d e f i n i t e o b s t a c l e s and d a n g e r s .
The o p en in g
o f th e p r i v a t e c a p i t a l m ark et a p p e a r s t o ^e b lo c k e d by o b s t a c l e s m e c h a n ic a l,
p s y c h o lo g i c a l, and econom ic and bank fu n d s c o n tin u e t o flo w alm o st e x c l u s i v e l y in to
governm ent s e c u r i t i e s .
T h ere i s th u s a g ra v e d a n g e r t h a t so lo n g a s th e av en u es
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Autfi
3
i n t o p r i v a t e c a p i t a l in v e stm e n t rem a in b lo c k e d and so lo n g a s t h e p r e s s u r e o f
e x c e ss r e s e r v e s i s e x e r t e d n o t a g a i n s t a f ix e d t o t a l o f governm ent d eb t b u t a g a in s t
a c o n tin u o u s ly ex p a n d in g volum e o f su ch d e b t, t h e o v e rflo w o f b an k f u n d s i n t o
p r i v a t e c h a n n e ls may n o t o c c u r , th e b an k s w i l l become more and m ore h e a v i ly lo a d e d
w ith governm ent s e c u r i t i e s , t h e governm ent w i l l do a l a r g e r and l a r g e r p a r t o f th e
n a t i o n ’ s b o rro w in g and s p e n d in g .
I f t h i s p r o c e s s sh o u ld c o n tin u e , sh o u ld we n o t
e x p e c t on t h e b a s i s o f th e e x p e r ie n c e o f o t h e r n a t i o n s t h a t e v e n t u a l l y a p o in t
w i l l be re a c h e d w here th e b an k s w i l l be u n a b le o r u n w illin g t o a b so rb th e g o v e rn
ment d e b t, so t h a t th e governm ent w i l l f i n d i t s e l f f o r c e d e i t h e r t o expend i t s
s t a b i l i z a t i o n fu n d , s t i l l f u r t h e r in c r e a s in g e x c e s s r e s e r v e s , o r t o r e q u e s t t h e
R eserv e b an k s t o p u rc h a se m ore governm ent s e c u r i t i e s in th e open m a rk e t, o r t o
borrow d i r e c t l y fro m th e R e se rv e b a n k s , o r t o i s s u e some fo rm o f in c o n v e r t i b l e
p a p e r money?
W ith some 1 0 ,0 0 0 ,0 0 0 w o rk ers s t i l l unem ployed, some 2 2 ,0 0 0 ,0 0 0 o f t h e
p o p u la tio n on r e l i e f r o l l s , th e c a p i t a l goods i n d u s t r i e s s t i l l in a s t a t e o f s e v e re
d e p r e s s io n , w ith governm ent d e f i c i t s m o u n tin g a t a r a t e o f p e rh a p s $ 3 ,5 0 0 ,0 0 0 ,0 0 0
a y e a r , and w ith th e p r i v a t e c a p i t a l m ark et s t i l l p r a c t i c a l l y dorm ant a f t e r f i v e
y e a r s o f d e p r e s s io n , no one can say w ith c e r t a i n t y t h a t t h i s i s n o t a l i k e l y
p r o s p e c t.
n th e e x p e r ie n c e o f o t h e r n a t i o n s a lo n g - c o n tin u e d p r o c e s s o f g o v e rn
m e n ta l d e f i c i t f in a n c in g th ro u g h th e b a n k in g sy ste m h a s alw ay s le d a t some p o in t
to r a p i d l y r i s i n g p r i c e s , e i t h e r th ro u g h a c t u a l m o n e ta ry e x p a n sio n o r th r o u g h f e a r
o f p o t e n t i a l e x p a n s io n , and a t t h i s p o in t t h e p r o c e s s h a s alw ay s become c u m u la tiv e
l y u n c o n t r o l l a b l e , governm ent d e f i c i t s r i s i n g by r e a s o n o f th e r i s e o f p r i c e s and
th e l a g o f re v e n u e b e h in d e x p e n d i tu r e s , th e w hole p r o c e s s b e in g a tte n d e d by g ra v e
econom ic and p o l i t i c a l d i s r u p t i o n and d i s o r d e r te r m in a t in g in c o l l a p s e ^
T h is i s in d e e d a b la c k p i c t u r e , and we have t o f a c e i t a s one o f th e
m a jo r p o s s i b i l i t i e s o f o u r p r e s e n t s i t u a t i o n .
I t h a s o f t e n b een s a id t h a t th e s ig n s
o f an a p p ro a c h in g i n f l a t i o n a r e alw ay s ig n o re d o r m in im ized u n t i l i t i s to o l a t e t o
ta k e d e c i s i v e a c t i o n .
What th e n i s th e d u ty o f a c e n t r a l b an k o r b an k in g sy stem ,
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
4
ch arg e d w ith some r e s p o n s i b i l i t y f o r m o n e ta ry c o n t r o l in th e p u b lic i n t e r e s t ?
a f i r s t ap p ro ac h t o t h i s q u e s tio n , i t
As
i s n a t u r a l t o a sk o u r s e lv e s w h e th e r t h e r e i s
n o t some o rth o d o x an sw er w hich can be drawn from th e a c c e p te d th e o r y and th e
h i s t o r i c a l e x p e rie n c e o f c e n t r a l b a n k in g .
I f t h e r e w ere such an a n sw e r, i t m ight
g r e a t l y le s s e n t h e d i f f i c u l t y , a t l e a s t o f d e c id in g what we ought t o d o , even i f
i t d id n o t d is p o s e o f th e q u e s tio n s o f e x p e d ie n c y .
to be no su ch a n sw e r.
U n f o r tu n a te ly , t h e r e a p p e a rs
Modern c e n t r a l b a n k in g i s to o young and h a s d e v e lo p e d u n d e r
c irc u m s ta n c e s to o r a p i d l y ch an g in g and ab n o rm al t o p ro v id e u s w ith any c l e a r and
s u r e l i g h t t o g u id e o u r s te p s in tim e s l i k e t h e s e .
B e fo re th e w a r, f o r ex am p le,
p e rh a p s th e o n ly c l e a r and g e n e r a l l y a c c e p te d r u l e o f c e n t r a l b a n k in g was t h a t th e
d is c o u n t r a t e s h o u ld be r a i s e d upon th e o c c a s io n o f g o ld o u tf lo w ;
and y e t i t now
seem s, a s we re v ie w t h a t p e r io d in r e t r o s p e c t , t h a t when we a p p l ie d t h i s r u l e , when
E ngland went o f f g o ld in S e p te m b e r, 1931, and g o ld b eg an t o le a v e t h e U n ite d S t a t e s
in huge am ounts, t h e r a t e in c r e a s e p r o b a b ly se rv e d more to add t o th e d e f l a t i o n a r y
movement o f s u c c e e d in g m onths th a n t o check t h e g o ld o u t f l o w . J "As to a p ro p e r
c e n t r a l b an k in g p o l i c y w ith r e s p e c t t o e x c e s s r e s e r v e s , th e h i s t o r i c a l r e c o r d t e l l s
u s n o th in g .
But i t may have b een r e g a r d e d a s o rth o d o x , o r a t l e a s t p r u d e n t, in
J a n u a ry , 1933, when e x c e s s r e s e r v e s w ere ab o u t $ 6 0 0 ,0 0 0 ,0 0 0 , t o s e l l s e c u r i t i e s in
o r d e r to p r e v e n t any f u r t h e r in c r e a s e o f e x c e s s r e s e r v e s , even th o u g h a s e v e n ts
p ro v ed we were on th e eve o f th e b an k in g c r i s i s , w hich was to f o r c e u s in to renew ed
open m ark et p u r c h a s e s .
T h ese d e c i s i o n s , f o r w hich th e R e se rv e System h a s b een
c r i t i c i z e d , do n o t o f c o u rs e th ro w any l i g h t on o u r p r e s e n t p ro b le m , b u t th e y do
show p e rh a p s t h a t in such e x t r a o r d i n a r y t i m e -
^ ---
l-
and d e f i n i t e r u l e s o f p ro c e d u re f o r c e n t r a l
I t m ig h t, n e v e r t h e l e s s , seem w o rth w h ile t o a tte m p t t o d e r iv e an answ er
t o o u r p r e s e n t pro b lem from th e p r e v io u s e x p e r ie n c e s and p r a c t i c e s o f f o r e ig n
c e n t r a l ban k s w hich have b een f a c e d w ith th e d u ty o f c o n t r o l l i n g an i n f l a t i o n .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
rr% r
But o u r pro b lem i s q u i t e d i f f e r e n t from t h e i r s .
I n f l a t i o n ab ro ad was accom panied
by a h ig h d e g re e o f b u s in e s s a c t i v i t y and u s u a l l y a l s o by d i r e c t governm ent b o rro w
in g from c e n t r a l b a n k s .
U nder su ch c irc u m s ta n c e s i t i s n o t d i f f i c u l t t o d e c id e
what a c e n t r a l b an k o u g h t to d o .
The F e d e r a l R e se rv e System h a s th e much more
d i f f i c u l t p ro b lem o f e n d e a v o rin g t o f o r e s e e when and how th e s e c o n d i tio n s may a r i s e .
Our dilem m a i s t h a t i f we ta k e a c t i o n now b a s e d upon th e a ssu m p tio n t h a t th e y w i l l
a r i s e , o u r a c t io n may be p re m a tu re and may choke o f f an i n c i p i e n t r e c o v e r y such a s
o u r p r e s e n t p o li c y i s d e sig n e d t o f a c i l i t a t e .
We have a l s o to b e a r i n m ind t h a t
th e p r e s e n t e x t r a o r d i n a r y g o v e rn m e n ta l e x p e n d itu r e s a r e o f q u i t e d i f f e r e n t c h a r a c t e r
from th o s e w hich h av e in p r e v io u s c a s e s b een t h e s o u r c e s o f u n c o n t r o l l a b l e i n f l a t i o n ,
such a s w ar tim e e x p e n d itu re s * o r t h e German r e p a r a t i o n p ay m en ts, o r th e F re n c h
r e c o n s t r u c t i o n o f in v ad ed t e r r i t o r y .
A ll th e s e e x p e n d itu r e s w ere o f a c o m p e llin g
n a t u r e fro m w hich t h e r e was no e s c a p e b u t w hich n e c e s s a r i l y became g r e a t e r a s th e
i n f l a t i o n p ro c e e d e d ;
o u r e x t r a o r d i n a r y e x p e n d itu r e s a r e a phenomenon o f d e p r e s s io n .
W hile t h e r e i s o f c o u rs e no c e r t a i n t y , t h e r e i s a t l e a s t a f a i r p o s s i b i l i t y t h a t i f
and when we a c h ie v e r e c o v e r y , e x t r a o r d i n a r y e x p e n d itu r e s w i l l be re d u c e d th ro u g h
th e re-em ploym ent o f th e f a c t o r s o f p r o d u c tio n .
M o reo v er, we a r e f a c e d w ith t h e
f a c t t h a t in a p e r io d o f d e p r e s s io n , a s c o n t r a s t e d w ith a p e r io d o f boom, some ex
p a n s io n o f c r e d i t i s e s s e n t i a l and i t i s th e d u ty o f a c e n t r a l bank o r b an k in g
sy stem t o do what i t can t o f a c i l i t a t e t h a t e x p a n s io n .
We m ust n o t a llo w o u r v e r y
n a t u r a l f e a r s a s t o how we a r e t o c o n t r o l t h i s e x p a n sio n i n th e f u t u r e t o o b s c u re
o u r r e a l i z a t i o n t h a t in some fo rm and t o some e x te n t i t i s n o t o n ly i n e v i t a b l e b u t
d e s i r a b l e , i f we a r e t o have any r e a l r e c o v e r y . ^ I t th u s becom es a n ic e q u e s ti o n ,
i f c r e d i t e x p a n s io n d o es n o t , a s p ro m p tly a s we d e s i r e , ta k e th e fo rm we w ish i t
t o t a k e , nam ely an e x p a n s io n o f t h e p r i v a t e u s e o f c r e d i t , a t what p o in t and on
what g ro u n d s we a r e j u s t i f i e d in ta k in g m e a su re s w hich m ig h t i n t e r f e r e w ith i t s
t a k in g t h e fo rm o f a p u b lic u s e o f c r e d i t .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rch ive s
rn"C
6
The q u e s tio n o f p o li c y m ust t h e r e f o r e t u r n i n th e f i n a l a n a l y s i s upon a
c a r e f u l l y c o n s id e re d v ie w o f th e e x i s t i n g econom ic s i t u a t i o n and i t s p r o s p e c ts .
I t becom es a q u e s tio n o f w eig h in g th e d a n g e rs in h e r e n t in o u r p r e s e n t c o u rs e a g a i n s t
th e p o s s i b i l i t y o f a s u c c e s s f u l o u tco m e.
R eview ing th e e v e n ts o f t h e p a s t two
y e a r s , we do n o t f i n d t h e p i c t u r e w h o lly b la c k .
b een m ade.
A c e r t a i n amount o f p r o g r e s s h a s
F o r t h e w o rld a s a w h o le, th e d e p r e s s io n re a c h e d i t s b o tto m in th e
summer o f 1932, an d even f o r t h i s c o u n try th e b a n k in g c r i s i s in e a r l y 1933 d id n o t
p ush p ro d u c tio n any lo w er th a n i t had b een th e p re c e d in g summer.
S in c e M arch, 1933,
we have p u rs u e d a h ig h l y e r r a t i c c o u rs e o f u ps and downs, b u t eac h s u c c e e d in g r e
c e s s io n h a s b een somewhat l e s s th a n t h e p r e c e d in g .
S in c e l a s t summer th e c o u rs e o f
b u s in e s s h a s b een upw ard.
P e rh a p s th e g r e a t e s t s i n g l e change i n th e l a s t two y e a r s h a s b een th e im
provem ent in t h e econom ic p o s i t i o n o f a g r i c u l t u r e .
A g r i c u l t u r a l p r i c e s have r i s e n
m a rk e d ly , and th e 19 0 9 -1 3 r e l a t i o n o f a g r i c u l t u r a l p r i c e s t o i n d u s t r i a l p r i c e s ,
w hich a p p e a re d d u r in g th e f i r s t y e a r o f t h i s A d m in is tr a tio n t o be th e p r i n c i p a l
g o a l o f p o l i c y , h a s b een a c h ie v e d .
Though some o f t h e m eans em ployed have b e e n
a r t i f i c i a l and t h e r e i s no c e r t a i n t y o f th e c o n tin u a n c e o f t h i s b a la n c e o f a g r i c u l
t u r a l and i n d u s t r i a l p r i c e s , we have r e a s o n t o f e e l t h a t i t s ach iev em en t may have
in tr o d u c e d a new elem en t o f p o l i t i c a l s t a b i l i t y and t o some e x te n t have f r e e d t h e
han d s o f th e A d m in is tr a tio n t o d e a l w ith t h e i n d u s t r i a l p ro b lem .
A n o th er m a jo r change h a s a b e a r in g on th e o u tlo o k f o r th e c a p i t a l goods
i n d u s t r i e s , w hich a r e t h e r e a l s e a t o f th e d e p r e s s io n .
I t i s becom ing a p p a re n t
t h a t th e lo n g la p s e o f tim e i s t a k i n g i t s t o l l i n c r e a s i n g l y o f equipm ent i n u s e
th ro u g h th e p r o c e s s o f w earo u t and o b s o le s c e n c e , ev en th o u g h many o b s t a c l e s re m a in
t o be rem oved.
R e p o rts f o r r e c e n t m onths from th e m achine t o o l i n d u s t r y , o f t e n an
im p o rta n t f o r e r u n n e r o f i n d u s t r i a l r e c o v e r y , i n d i c a t e t h e m ost a c t i v e y e a r s in c e
1930.
B oth t h e r a i l r o a d s and th e u t i l i t i e s a p p e a r t o have r e a c h e d t h e p o in t o f
Reproduced from the Unclassified / Declassified Holdings of the National Archives
dIc
LASSIFIEI)..
AuthorityE)COfd^J9^5(p I
7
b e in g in need o f equipm ent i f t h e i r p o l i t i c a l o r f i n a n c i a l d i f f i c u l t i e s can be
r e s o lv e d ,
T h ere a r e s c a t t e r e d e v id e n c e s o f a ch an g in g s i t u a t i o n i n r e a l e s t a t e .
In v a r io u s p a r t s o f t h e c o u n try p r e s s u r e f o r r e n t r e d u c t i o n s h a s r e l a x e d , f a m i l i e s
w hich had d o u b le d up a r e s e e k in g s e p a r a t e h o u s in g , v a c a n c ie s hav e le s s e n e d .
On t h e w h o le, and r e c o g n iz in g f r a n k l y th e ex trem e d i f f i c u l t y o f a n a ly z in g
so ta n g le d a s i t u a t i o n a s t h i s , we f e e l t h a t we w ould do b e t t e r , i n th e a b sen ce o f
any im p o rta n t change i n t h e s i t u a t i o n , *to c o n tin u e upon o u r p r e s e n t c o u rs e o f m ain
t a i n i n g e x i s t i n g a g g r e g a te h o ld in g s o f governm ent s e c u r i t i e s r a t h e r th a n t o ta k e
/
th e a l t e r n a t i v e c o u r s e , w hich c a r r i e s w ith i t t h e im p lic a tio n o f a d e f i n i t e ju d g
ment t h a t o u r p r e s e n t p o l i c y can n o t s u c c e e d .
We o u g h t, how ever, t o r e c o g n iz e t h a t
i n o r d e r t o su c c e e d o u r p o l i c y , w ith r e s p e c t t o e x c e s s r e s e r v e s , s h o u ld be p a r t .o f
a b r o a d e r m o n e ta ry p o l i c y , w hich in o u r v ie w s h o u ld b e on some su ch l i n e s a s th e
f o llo w in g ;
1.
The c o n tin u a n c e o f o u r p r e s e n t open m a rk e t p o s i t i o n .
2.
The rem o v a l o f m e c h a n ic a l o b s t a c l e s t o th e o p e n in g o f t h e
p r i v a t e c a p i t a l m a rk e t, su ch a s t h e p r o h i b i t i o n o f u n d e r
w r i t i n g by b an k s and t h e undue s e v e r i t i e s o f t h e
S e c u r i t i e s A c t.
3.
The en co u rag em en t o f a l l sound s t e p s w hich w i l l i n c r e a s e
th e a v a i l a b i l i t y and re d u c e th e c o s t o f m o rtg ag e money.
4.
The r e v i v a l o f c o n f id e n c e , w hich a lo n e w i l l f r e e p r i v a t e
c a p i t a l , by s t e p s lo o k in g to w ard (a ) i n t e r n a t i o n a l
m o n e ta ry s t a b i l i z a t i o n , and (b ) a b u d g e t p o l i c y aim ed
n o t a t an im m ediate b a la n c e b u t a t some f a i r l y d e f i n i t e
sc h e d u le f o r t a p e r i n g o f f e x t r a o r d i n a r y e x p e n d i tu r e s .
I f t h i s program c o u ld be a d o p te d , we a r e s a t i s f i e d t h a t i t would go f a r
to w ard h a s te n i n g a g e n e r a l econom ic r e c o v e r y .
t o be d o n e.
T h ere w o u ld , o f c o u r s e , re m a in much
I t i s p r o b a b le t h a t in t h e s p h e re o f th e N a tio n a l R eco v ery A d m in is tra
t i o n many h e l p f u l ch an g es a r e now g o in g on u n d e rn e a th th e s u r f a c e ;
b u t in th e
f i e l d o f b u i l d i n g c o n s t r u c t i o n t h e r e i s a d i f f i c u l t p ro b lem o f c o s t - p r i c e a d j u s t
m e n ts , i n th e f i e l d o f r a i l r o a d s t h e r e a p p e a r s t o be much n eed f o r f i n a n c i a l r e
c o n s tr u c t io n a s t h e n e c e s s a r y p r e lim in a r y t o r a i l r o a d b u y in g o f e q u ip m e n t, and in
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rch ive s
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8 X 0 f dLzP 1 Q £ l5 (p \
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th e p u b lic u t i l i t i e s t h e r e i s c l e a r l y need f o r some c l a r i f i c a t i o n o f t h e p r e s e n t
c o n f l i c t w h ic h , w h ile rem oving p r e v io u s m a lp r a c t ic e s w h e re v e r th e y may he fo u n d ,
would make i t p o s s i b le f o r t h i s i n d u s t r y , and f o r i n v e s t o r s i n i t , t o c o n t r i b u t e
t h e i r v e r y im p o rta n t s h a re t o th e n a t i o n a l spending#
T h is memorandum h a s b een a d d re s s e d m a in ly t o t h e q u e s tio n o f what th e
F e d e r a l R e se rv e S y stem , a s a c e n t r a l b a n k in g s y s te m ^ o u g h t to do i n th e p r e s e n t
s i t u a t i o n , and a pro g ram o f a c t i o n h a s b een s u g g e s te d .
such a program ?
What i s t h e a l t e r n a t i v e t o
I f , f o r ex am p le, we s h o u ld d e c id e t h a t we o u g h t t o r e v e r s e o u r
p r e s e n t c o u rs e and re d u c e o u r h o ld in g s o f governm ent s e c u r i t i e s , what p r o s p e c t i s
t h e r e t h a t o u r r e v e r s a l o f p o l i c y w ould a c c o m p lish o u r p u r p o s e , o r t h a t t h e r e
v e r s a l m ight n o t o f i t s e l f become d e s t r u c t i v e ?
T hrough i t s s t a b i l i z a t i o n fu n d t h e
governm ent c o u ld e x e r c is e a dom inant in f l u e n c e o v e r member bank r e s e r v e s .
a ls o r e s o r t , i f i t c h o s e , t o p a p e r money i n f l a t i o n .
I t co u ld
M o reo v er, w ith t h e w hole
q u e s tio n o f c e n t r a l b a n k in g now v e r y much in t h e a i r , th e governm ent c o u ld r e a d i l y
a l t e r fu n d a m e n ta lly th e e n t i r e c e n t r a l b a n k in g , and a l s o t h e com m ercial b a n k in g ,
m a c h in e ry o f th e c o u n tr y .
I t seems c l e a r t h a t we c o u ld a c t e f f e c t i v e l y o n ly w ith
th e c o n s e n t and c o o p e r a tio n o f th e A d m in is tr a tio n .
And t h e r e i s th e f u r t h e r
q u e s tio n w h e th e r t h e A d m in is tr a tio n , even i f we sh o u ld p ro p o se and i t s h o u ld c o n se n t
to such a r e v e r s a l o f p o l i c y , would be w e ll a d v is e d t o do s o .
I f as a r e s u lt th e re
w ere any m arked d e c l in e in governm ent s e c u r i t i e s o r commodity p r i c e s o r p r o d u c tio n ,
th e A d m in is tr a tio n would p ro b a b ly have t o f a c e renew ed a g i t a t i o n e i t h e r f o r i n f l a
t i o n th ro u g h g re e n b a c k s , f u r t h e r d e v a l u a ti o n , more s i l v e r c e r t i f i c a t e s , and t h e l i k e ,
o r f o r in c r e a s e d g o v e rn m e n ta l i n t e r v e n t i o n in t h e r e g im e n ta tio n o r management o f
in d u s try .
P e rh a p s a t th e moment t h e s e d a n g e rs a p p e a r t o be l e s s im m inent th a n a
y e a r a g o , b u t t h a t f a c t d o es n o t l e s s e n t h e d a n g e r t h a t a r e v e r s a l o f o u r p o l i c y
would s tr e n g t h e n t h e h an d s o f one o r t h e o t h e r o f th e s e g ro u p s who do n o t t h i n k a s
we d o , and m ight w e ll r e s u l t in s e r i o u s and dam aging l o s s e s t o t h e b an k in g sy ste m .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
x
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1
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9
A seco n d q u e s tio n r e q u i r i n g c a r e f u l c o n s id e r a tio n w ould be a s t o th e tim e
and th e n a tu r e o f o u r a c t i o n .
I f we sh o u ld d e c id e upon a r e v e r s a l o f o u r p o l i c y ,
we ought t o choose o u r g ro u n d c a r e f u l l y so t h a t o u r m o tiv e s co u ld be e a s i l y u n d e r
s to o d a n d , in so f a r a s i s p r a c t i c a b l e , p u b l i c l y j u s t i f i e d .
The a c t i o n sh o u ld be
ta k e n a t a tim e and in a m anner w hich would i n d i c a t e a s c l e a r l y a s p o s s i b l e t h a t
th e d a n g e rs o f t h e p r e s e n t c o u rs e a r e becom ing g r e a t e r , w h ile t h e p r o s p e c ts f o r a
f a v o r a b le outcom e hav e b e e n le s s e n e d .
I t w ould seem much more j u s t i f i a b l e u n d e r
p r e s e n t c o n d i tio n s t o r e f u s e a r e q u e s t t o buy more governm ent s e c u r i t i e s th a n t o
b e g in a p o li c y o f s e l l i n g .
S t i l l more c l e a r l y , i f th e governm ent s h o u ld a t some
f u t u r e s ta g e e n d e a v o r to borrow d i r e c t l y from t h e R e se rv e b a n k s , t h e r e m ight th e n
be e v e ry re a s o n f o r r e s i s t i n g .
W ithout w a itin g f o r e i t h e r o f t h e s e e v e n t s , i f we
c o u ld be s u re t h a t th e p r e s e n t s i t u a t i o n can have no o th e r outcom e th a n a d e s t r u c
t i v e i n f l a t i o n , i t m ig h t th e n b e o u r d u ty t o r e v e r s e o u r p o l i c y .
But i s i t p o s s i b le
t o be s u re o f t h i s a t t h e p r e s e n t ti m e , when t h e r e i s y e t no a c t u a l e v id e n c e o f
i n f l a t i o n b u t on th e c o n t r a r y a g e n e r a l agreem ent t h a t we need m ore a c t i v i t y b o th
o f c r e d i t and o f b u s in e s s ?
A r e v e r s a l o f o u r p o li c y a t t h e p r e s e n t tim e w ould
a p p e a r t o r e s t upon more c e r t a i n t y o f th e f u t u r e d a n g e rs in o u r s i t u a t i o n th a n i s
y e t w a rra n te d and to u n d e r-e m p h a s iz e i t s m ore c o n s t r u c t i v e and e n c o u ra g in g a s p e c t s .
A ssum ing, t h e r e f o r e , t h a t i t i s t h e c a r e f u l l y c o n s id e re d view o f t h i s
I B o ard , on th e b a s i s o f i t s a n a l y s i s o f th e s i t u a t i o n a s s e t f o r t h in t h i s memoran1
dum, t h a t th e F e d e r a l R e se rv e System ought n o t , a t p r e s e n t , t o make any m a jo r
j
change in i t s c r e d i t p o l i c y , we may a sk o u r s e lv e s w h e th e r t n e r e i s any l e s s e r , i n
te r m e d ia te a c t i o n w hich sh o u ld be ta k e n w ith r e s p e c t t o i t s governm ent s e c u r i t y
a c c o u n t.
In o u r r e c e n t d i s c u s s i o n s , i t h a s b e e n f r e q u e n tly p o in te d o u t t h a t i t i s
d e s i r a b l e t o in tr o d u c e some m easu re o f f l e x i b i l i t y
i n t o t h i s s e c u r i t y a c c o u n t.
In
R ep rod uced from the U ncla ssified
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a l a r g e complex money m ark et w hich i s s u b je c t t o many in f l u e n c e s o f a s e a s o n a l o r
t r a n s i t o r y n a t u r e , t h e r e i s i n e v i t a b l y a c e r t a i n amount o f v a r i a t i o n in t h e m agni
tu d e o f r e s e r v e s .
S i m i l a r l y , t h e r e may be f a i r l y w ide s h o r t- ti m e v a r i a t i o n s in
th e c o n d itio n o f th e governm ent s e c u r i t y m ark et and t h i s m a rk e t, in c irc u m s ta n c e s ,
l i k e th e p r e s e n t , i s a dom inant f e a t u r e o f th e money m a rk e t.
I t i s g e n e ra lly
a g re e d t h a t one im p o rta n t f u n c ti o n o f a c e n t r a l bank o r b an k in g sy stem i s t o smooth
o u t such s e a s o n a l o r a c c i d e n t a l v a r i a t i o n s a f f e c t i n g th e money m a rk e t, a t l e a s t so
f a r a s th e y t h r e a t e n t o assum e d i s t u r b i n g p r o p o r ti o n s ;
and t o t h i s end i t oug h t
t o be f r e e t o a c t ev en th o u g h such a c t i o n in v o lv e s c h an g e s in t h e amount o r
c h a r a c te r o f i t s governm ent s e c u r i t y h o ld i n g s .
To m a in ta in a c o m p le te ly r i g i d open
m ark et p o s i t i o n n o t o n ly le s s e n s th e power o f th e F e d e r a l R e serv e S ystem t o smooth
o u t m in o r i r r e g u l a r i t i e s in th e m ark et b u t c a u s e s t h e p u b li c t o a t t a c h an undue
im p o rtan ce t o th e s i z e o f i t s s e c u r i t y a c c o u n t, and to s m a ll ch a n g e s in t h e a c c o u n t
when th e y do o c c u r .
Owing to th e p r e s e n t g r e a t s i z e o f e x c e s s r e s e r v e s and t h e e x t r a o r d i n a r y
ease o f t h e money m a rk e t, t h e r e h a s b een l e s s o c c a s io n th a n in n o rm al tim e s f o r
sm oothing o u t s e a s o n a l i r r e g u l a r i t i e s o r f o r m aking ch an g e s in th a System s e c u r i t y
p o r t f o l i o w hich w ere n o t c o n n e c te d w ith m a jo r p o l i c y .
At t h e same tim e , by r e a s o n
o f t h e tm p re c e d e n te d m a g n itu d e o f t h e e x c e s s r e s e r v e s , w hich h a s b e e n a f a c t o r in
th e h ig h p r i c e s o f governm ent s e c u r i t i e s , and in t h e l a r g e p u r c h a s e s o f su ch s e c u r i
t i e s by th e b a n k s , b a n k e rs and t h e g e n e r a l p u b li c a r e more th a n o r d i n a r i l y a l e r t
and s e n s i t i v e t o e v e ry c irc u m s ta n c e w hich m ight a f f e c t th e m a rk e t f o r governm ent
s e c u ritie s .
We m u s t, t h e r e f o r e , r e c o g n iz e t h a t t h e r e i s much m ore d a n g e r th a n would
o r d i n a r i l y be th e c a se t h a t ev en m in o r v a r i a t i o n s in th e System *s s e c u r i t y a c c o u n t
m ight s e t in m o tio n f o r c e s o f an im p o rta n c e n o t in te n d e d and
c o n tro l.
v e ry d i f f i c u l t to
A d im in u tio n in o u r p o r t f o l i o , a f t e r so lo n g a p e r io d o f i n a c t i v i t y ,
m ight a t th e p r e s e n t tim e p r e c i p i t a t e a s e r i o u s s e l l i n g movement among t h e b a n k s ,
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
DECLASSIFIED
Authority
1
p jCDfdLzP I Q '^ lp :
11
w hich q u it e a p a r t fro m i t s e f f e c t upon th e p r i c e o f governm ent s e c u r i t i e s and t h e
g o v e rn m e n t’ s f i s c a l p o li c y , would d e f e a t th e v e r y p u rp o s e s w hich t h e p o l i c y o f ex
c e s s r e s e r v e s h a s so u g h t t o a c c o m p lis h .
I t t h e r e f o r e seems t h a t f l e x i b i l i t y ,
d e s i r a b l e a s i t w ould be u n d e r m ore norm al c o n d i tio n s , f o r th e tim e b e in g , sh o u ld
g iv e way t o l a r g e r c o n s i d e r a t i o n s .
When th e tim e d o e s come t o r e v e r s e o u r p o l i c y ,
o u r p r e s e n t h o ld in g s o f governm ent s e c u r i t i e s w i l l p ro b a b ly be in a d e q u a te ( a p a r t
from changes i n r e s e r v e r e q u ir e m e n ts ) f o r th e t a s k o f c o n t r o l l i n g t h e enorm ous
p o t e n t i a l e x p a n s io n o f c r e d i t w hich p r e s e n t e x c e s s r e s e r v e s make p o s s i b l e , and we
s h a l l n eed t o r e l y , so f a r a s we c a n , upon th e p s y c h o lo g ic a l e f f e c t s o f o u r a c t io n .
The v e r y c o n s p ic u o u s n e s s o f o u r p r e s e n t r i g i d p o s i t i o n may th e n become a p o w e rfu l
a id in em p h a siz in g t o th e p u b lic th e s i g n i f i c a n c e o f a r e v e r s a l o f o u r p o l i c y .
3 /2 1 /3 5 .
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rch ive s
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DECLASSIFIED
Authority
Q tD f d ip I
\
FACTORS Off INCREASE IN MEIB1R BANK RESERVES
( M illio n s o f d o l l a r s )
F eb . 2 4 , 1932
to
Aug* 1 0 . 1938
S o u rc e s o f a d d i t i o n a l r e s e r v e f u n d s :
U. S . S e c u r i t i e s p u rc h a s e d by F e d e r a l r e s e r v e b a n k s
D e c re a se in r e s e r v e r e q u ir e m e n ts
A ll o t h e r
T o ta l
1 ,1 1 0
36
30
1 ,1 7 6
U ses o f r e s e r v e f u n d s :
D ecrease in g o ld s to c k
To r e t i r e d is c o u n t s a t F e d e r a l r e s e r v e b an k s
To r e t i r e b i l l s h e ld by F e d e r a l r e s e r v e b an k s
Demand f o r c u rre n c y
To m eet T re a s u r y w ith d ra w a ls
T o ta l
Net a d d i t i o n to e x c e s s r e s e r v e s
345
383
94
115
19
956
220
R ep rod uced from the U ncla ssified
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1
Authority 8X 0 fd £ P IQ'Z&fa;
FACTORS OF INCREASE IN MEMBER BANK RESERVES
( M illio n s o f d o l l a r s )
Aug. 1 0 , 1932
to
J a n , 3 , 1934
S o u rc e s o f a d d i t i o n a l r e s e r v e f u n d s :
U. S . S e c u r i t i e s p u rc h a s e d by F e d e r a l r e s e r v e b an k s
I n c r e a s e in g o ld s to c k
B i l l s p u rc h a s e d by F e d e r a l r e s e r v e b a n k s
I n c r e a s e i n T r e a s u r y c u r r e n c y o u ts ta n d in g
T o ta l
581
318
82
239
1 ,2 2 0
U ses o f r e s e r v e f u n d s :
To r e t i r e d is c o u n t s a t F e d e r a l r e s e r v e b an k s
To m eet T r e a s u r y w ith d ra w a ls
To m eet in c r e a s e d r e s e r v e r e q u ir e m e n ts
Demand f o r c u r r e n c y
A ll o t h e r
T o ta l
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346
46
61
84
96
633
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FACTORS OF INCREASE IN MEMBER BANK RESERVES
( M illio n s o f d o l l a r s )
Jan* 3* 1934
to
M ar. 6 , 1935
S o u rc e s o f a d d i t i o n a l r e s e r v e f u n d s :
In c r e a s e in
R e tu rn flo w
E x p e n d itu re
in s i l v e r
g o ld s to c k
o f c u rre n c y
o f T re a s u ry f r e e g o ld and i n c r e a s e
c u rre n c y
T o ta l
1 ,5 1 5
34
520
2 ,0 6 9
U ses o f r e s e r v e fu n d s :
To r e t i r e d i s c o u n t s a t F e d e r a l r e s e r v e b an k s
To r e t i r e b i l l s h e ld by F e d e r a l r e s e r v e b an k s
To m eet in c r e a s e d r e s e r v e r e q u ir e m e n ts
A ll o t h e r
T o ta l
N et a d d i t i o n t o e x c e s s r e s e r v e s
100
115
503
9
727
1 ,3 4 2
Reproduced from the Unclassified I Declassified Holdings of the National Archives-
/
I
d e c l a s s if ie d
Authority Q COfdnT I
!
32
w
3 .3 -*'
CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
FEDERAL OPEN MARKET COMMITTEE HELD AT
WASHINGTON, D. C . » FEBRUARY 5 , 1935________
The p r e s e n t h o ld in g s o f U n ite d S t a t e s G overnm ent s e c u r i t i e s i n t h e
S ystem S p e c i a l In v e s tm e n t A ccount amount t o - - - - - - - T here h a s been
jac|
change i n t h i s am ount s in c e November
- - - - - $ 2 ,2 2 3 ,1 4 9 ,5 0 0 .
8, 1955»
T r a n s a c tio n s i n governm ent s e c u r i t i e s i n th e S y stem A ccount s in c e th e
m e e tin g o f th e E x e c u tiv e C om m ittee on J a n u a ry 25 w ere a s f o llo w s :
(1)
R edem ption on J a n u a ry 30 o f # 1 7 ,6 8 8 ,0 0 0 t r e a s u r y
b i l l s and r e p la c e m e n t p u r c h a s e s i n th e m a rk e t
c o n s i s t i n g o f $ 1 4 ,0 0 0 ,0 0 0 m is c e lla n e o u s T re a s u ry
b i l l s and $ 3 ,6 8 8 ,0 0 0 T re a s u ry n o t e s ,
(2 )
S a le and r e p la c e m e n t p u rc h a s e i n th e m a rk e t o f
$ 1 ,0 0 0 ,0 0 0 T re a su ry n o t e s .
At th e m e e tin g o f th e F e d e r a l Open M arket C om m ittee on December 1 7 ,
1 9 5 4 , and a s ap p ro v ed by th e F e d e r a l R e s e rv e B o ard , i t was v o te d
" t h a t th e E x e c u tiv e Com m ittee be g iv e n
a u t h o r i t y to make ex ch an g es b etw een
m a t u r i t i e s i n th e S y stem A ccount up
to a t o t a l o f $ 1 0 0 ,0 0 0 ,0 0 0 ,”
U nder th e above a u t h o r i t y th e o n ly s h i f t s i n m a t u r i t i e s have been a s
f o llo w s :
2 ,5 5 0 ,0 0 0 - T r . b i l l s due 2 /1 3 /3 5 exchanged f o r #
n
*
5 ,0 0 0 ,0 0 0 - 2 7 /8 $ T/N n
"
"
"
ft
ft
2 ,0 0 0 ,0 0 0 - 2 3 /4 $
"
»
If
II
"
«
I * 0 0 0 , 000 - 3
1 1 0 ,5 5 0 ,0 0 0
%
»
n
4 /1 5 /3 6
,
,
" 1 2 /1 5 /3 6
, ,
” 3 /1 5 /3 8
w
w
*»
7 5 0 ,0 0 0 -3
$ t / n due 3 /1 5 /3 8
6 0 0 ,0 0 0 -2 7 /8 $ w
n 6 /1 5 /3 8
200*000-2 l / 2 $ w
w 9 /1 5 /3 8
1 ,0 0 0 ,0 0 0 -2 1 /8 # "
M 6 /1 5 /3 9
2 ,0 0 0 ,0 0 0 - Tr . b i l l s
« 5/ 1 /3 5
3 ,0 0 0 ,0 0 0 - 2 7/ 8fo t / n " 6 /1 5 /3 8
1 ,0 0 0 ,0 0 0 - 3
% "
» 8 /1 5 /3 7
1 ,0 0 0 ,0 0 0 -2 i/Q% "
" 6 /1 5 /3 8
1 ,0 0 0 ,0 0 0 - T r . b i l l s
w 7/ 10/35
# 1 0 ,5 5 0 ,0 0 0
W ith th e e x c e p tio n o f t h e T re a s u ry b i l l s , p r a c t i c a l l y a l l o f th e s e t r a n s a c t i o n s re p re s e n t th e exchange o f i s s u e s c a r r y i n g th e g o ld cl& use f o r i s s u e s w ith o u t th e g o ld
c la u s e .
R ep rod uced from the U nclassified
I D ecla ssified H o ld in g s o f the N ational A rch ive s
x
DECLASSIFIED
Authority SjCPfdilT iQ t& b j
2
On J a n u a ry 2 5 , 1 9 35, a t a m e e tin g o f th e E x e c u tiv e C om m ittee, i t was
v o te d
" t h a t a w ire b e s e n t to a l l members o f th e
F e d e r a l Open M arket Com m ittee to r e q u e s t
them s u b je c t to th e a p p r o v a l o f th e F e d e r a l
R e se rv e Board to a u t h o r i z e th e e x e c u tiv e
c o m m itte e , p e n d in g a m e e tin g o f th e f u l l
co m m ittee in th e n e a r f u t u r e , to make p u r
c h a s e s o r s a l e s o r s h i f t s b etw een m a t u r i t i e s
i n th e S ystem A ccount up to a t o t a l o f
$ 2 5 0 ,0 0 0 ,0 0 0 . T h is a u t h o r i z a t i o n i s in
a d d i t i o n to th e a u t h o r i z a t i o n t o make s h i f t s
b etw een m a t u r i t i e s up to $ 1 0 0 ,0 0 0 ,0 0 0 v o te d
a t t h e December 17 m eetin g * T h is a u t h o r i
z a t i o n i s d e s i r e d p r i m a r i l y to p la c e th e
System i n p o s i t i o n t o u s e i t s in f l u e n c e
to w a rd s p r e v e n tin g any p o s s i b l e d is tu r b a n c e s
i n th e m a rk e t p e n d in g a m e e tin g o f th e f u l l
co m m ittee* ”
The r e s o l u t i o n was ap p ro v ed by te le g r a p h by th e F e d e r a l R e s e rv e Board and a l l
members o f th e F e d e r a l Open M arket Comm ittee*
The f o llo w in g t a b l e shows by c l a s s e s th e h o ld in g s o f governm ent s e c u r i
t i e s i n th e S ystem A ccount c a r r y i n g th e g o ld c la u s e and th e s e n o t c a r r y i n g th e
g o ld c l a u s e :
(000 O m itted )
C la s s ific a tio n
of S e c u ritie s
W ith
Gold C la u se
T re a su ry B i l l s
$
0
"
N o te s
6 9 3 ,9 3 5
"
Bonds
0
L i b e r ty Loan Bonds 1 9 4 ,8 9 4
T o ta ls
$83 8 ,8 2 9
W ithout
Gold C lau se
#5 0 1 ,4 5 6
7 0 8 ,8 6 4
1 2 4 ,0 0 0
__________ 0
$1,3 3 4 ,3 2 0
T o ta ls
$
5 0 1 ,4 5 6
1 ,4 0 2 ,7 9 9
1 24,000
1 9 4 ,8 9 4
^ 2 ,2 2 3 ,1 4 9
A tta c h e d to t h i s r e p o r t a r e th e f o llo w in g e x h i b i t s :
"A" - S ta te m e n t show ing th e m a t u r i t y d i s t r i b u t i o n o f governm ent
s e c u r i t i e s in th e S ystem S p e c i a l . In v e s tm e n t .account a t th e
end o f each m onth 1 9 3 2 , 1933, 1 9 3 4 , J a n u a ry and F e b ru a ry 1 ,
1935.
"Bn - S ta te m e n t show ing th e c l a s s i f i c a t i o n o f i s s u e s h e ld in
th e System A ccount on J a n u a ry 3 0 , 1 9 35, and th e p e r c e n t
age o f eac h is s u e h e ld in th e A ccount a s compared w ith
th e am ount o f th e r e s p e c t i v e i s s u e o u ts ta n d in g #
Reproduced from the Unclassified I Declassified Holdings of the National Archives
%
I d e c l a s s if ie d
Authority
1
£)C D fd U f I Q'Z&fa \
"C" • S ta te m e n t show ing ( l ) p a r t i c i p a t i o n by F e d e r a l R e se rv e
Banks in th e S ystem S p e c i a l In v e s tm e n t A ccount and (2)
t o t a l h o ld in g s o f governm ent s e c u r i t i e s by F e d e r a l
R eserv e Banks J a n u a ry 3 0 , 1 9 3 5 i and th e amount o f ( l )
and (2) o v e r o r s h o r t o f p ro r a t a s h a r e b a se d on r a t i o
o f ea c h b a n k ’ s e x p e n s e s , d iv id e n d s and c h a r g e - o f f s f o r
1934 to th e t o t a l f o r th e System*
nD" - C h a rt show ing w eekly a v e ra g e e a r n in g r a t e on h o ld in g s o f
U n ite d S t a t e s Government s e c u r i t i e s i n System S p e c i a l
In v e s tm e n t A ccount and a v e ra g e y i e l d on o u ts ta n d in g
U n ite d S t a t e s T re a s u ry bonds and T re a s u ry n o t e s , 1 9 34,
and 1935 to F e b ru a ry 2*
**E» - C h a rt show ing a v e ra g e h o u r ly s a l e p r i c e s on New York S to c k
Exchange o f 3 and 3 l / 8 p e r c e n t U n ite d S t a t e s T re a s u ry
b o n d s, J a n u a ry 7 to F e b ru a ry 2 , 19 3 5 ,
*»Fn - C h a rt show ing d a i l y a v e ra g e c l o s i n g p r i c e s o f U n ite d S t a t e s
T re a s u ry n o te s c a r r y i n g th e g o ld c l a u s e and T re a s u ry n o te s
w ith o u t th e g o ld c l a u s e , and d a i l y change i n s p re a d betw een
a v e ra g e p r i c e s o f U n ite d S t a t e s T re a s u ry n o te s c a r r y i n g th e
g o ld c l a u s e and T re a s u ry n o te s w ith o u t th e g o ld c l a u s e ,
J a n u a ry 2 to F e b ru a ry 2 , 1935,
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N a tio n a l A rch ive s
DECLASSIFIED
Authority SjCOfcisiT / Qt&ii)
E x h ib it "B"
Jy
CLASSIFICATION OF ISSUES HELD IN THE SYSTEM ACCOUNT ON JANUARY 5 0 , 1955 AND THE PIBCEHTAGB
TREASURY BILLS
U. S . T re a su ry B i l l s due F eb .
•1
ft
n
n
w
tt
If
n
ft
n
n
n
If
tt
n
it
tt
n
ti
n
II
n
n
n
M ar.
n
ft
n
ft
tt
Vf
if
ft
if
it
ft
It
n
ti
tt
n
ti
ti
it
tt
ti
tt
tt
n
tt
it
tt
A p r.
tt
tt
n
tt
n
tt
It
n
it
it
it
n
it
tt
ti
ft
tt
tt
tt
n
tt
it
tt
tt
Tt
tt
n
ti
fl
it
11
tt
tt
tt
tt
it
tt
it
tt
tt
n
ft
tt
tt
n
tt
It
tt
tt
tt
tt
tt
II
It
H
tt
n
tt
n
t?
ft
it
ti
tt
tt
it
?
Z/4%
n
May
If
June
n
ft
tt
»i
it
J u ly
It
tl
ft
it
it
ft
tt
it
It
tt
tt
ft
n
TREASURY NOTES
£ 1/?-% T re asu ry N otes
tt
tt
t/
%
n
tt
1 5/8%
tt
tt
1/2*
tt
tt
z 7/82
it
tt
1 1/8, i
tt
it
7
1 /&
it
ti
1 1 /#
3
>
3
%
3 1/4%
? 5/3%
3
%
o 7 /8 %
2 1/2%
2 1/8%
it
tt
tt
m
«
tt
it
ti
it
n
tt
tt
tt
tt
ti
ti
tt
ft
tt
tt
tt
tt
ti
tt
n
tt
tt
tt
tt
tt
tt
n
tt
n
H
tt
n
Mar.
June
Aug.
Dec.
A pr.
June
Aug.
S e p t.
Dec.
F eb.
A pr.
S e n t.
F eb.
M ar.
June
S e p t.
June
6,
13,
20,
27,
6,
13,
20,
27,
5,
10,
17,
24,
1.
8,
15,
22,
29,
5,
19,
26,
3,
10,
17,
24,
31,
15,
15,
1,
15,
15,
15,
1,
15,
15,
15 ,
15,
15,
1,
15,
15,
15,
15,
(000 O m itted)
System
Amount ReA ccount
s p e c tiv e I s s u e
H oldings
O u tsta n d in g
21,555
$
75,527
1935
$
1 7 ,932
75,320
1935
1 6 ,650
7 5 ,090
1935
19 ,0 4 0
75,065
1935
2 2 ,650 (a )
75,290
1935
17 ,8 8 0
75,565
1935
24 ,8 0 0
75,041
1935
27,700
75,025
1935
13 ,250
75,058
1935
1 4 ,5 5 2
7 5 ,560
1935
20 ,2 4 0 (b)
75,248
1935
75,102
18,703
1935
22,250
75,015
1935
1 9 ,440
75,075
1955
2 4 ,287
75,045
1935
75,168
16,875
1935
20,700
7 5 ,287
1935
23,203
75,159
1935
75,020
19,250
1935
75,500
20,000
1935
75,150
27,599
1935
75,185
18,750
1935
75,079
23,200
1935
75,129
21,200
1935
10 .010
1935
- ,7 § .W
TOTALS
$ 1 ,8 7 8 ,9 6 7
$ 501,456
1935
1935 (g)
1935
1935
1936 (g)
1936
1936 (g)
1936
1936 (g)
1937
1937 (g)
1937 (g)
1938 (g)
1938
1938
1938
1939
TOTALS
LIBERTY LOxJi AND TREASURY BONDS
3 1/2% 1 s t L/L Bds o f 1932-47
4 1/4% 1 s t "
" " 1S22-47
" c a lle d 4 /1 5 /3 5
4 1/4% 4 th "
/ 1/4* 4 th "
" o f 18^5-38
5 1/45! T re a s . Bones o f 1941
"
n
" 1943-45
1/4%
■
«
n 1944-I6
c 1/4%
'Z
"
"
" 1946-48
%
74,350
130,395
85,723
73,621
157,385
50,000
79,042
58,967
99,368
6 5 ,6 8 5
84,175
8 4 ,750
58,820
97,099
53,500
8 0 ,481
69*132
$ 1 ,4 0 2 ,7 9 9
528,102
416,603
355,865
418,291
558,819
6 8 6,673
364,138
514,066
357,921
42 8 ,7 5 0
502,562
817,485
276,680
455,175
6 1 8 ,0 5 7
596,405
14.08%
51.50%
24.22%
17.60%
28.16%
7.28%
21.71%
11.47%
27.76%
15.32%
16.76%
10.57%
21.26%
21.55%
8.66%
15.49%
$ 9 ,1 8 7 ,3 7 0
15.27%
25,025
29,000
84,668
56,201
20,000
25,000
39,000
40.000
318,894
$ 1 ,3 9 8 ,2 2 8
555,982
1 ,8 7 0 ,0 0 0
1 ,2 4 5 ,5 7 8
83 4,474
1 ,4 0 0 ,5 7 0
1 ,5 1 8 ,8 5 8
- .J J 2 4 ,W
$ 9 ,6 2 8 ,1 9 8
1.79%
5.41%
4.55%
4.51%
2.40%
1,78%
2.57%
$ 2 ,2 2 5 ,1 4 9
$ 2 0 ,6 9 4 ,5 5 5
10 .7 4 $
$
(g)
(g)
(g)
(g)
$
TOTALS
*
GRANE TOTALS
$
P e rc e n ta g e of
I s s u e s H eld to
Amount O u tsta n d in g
28.59%
25.81%
22.17%
25.56%
50.08%
25.72%
55.05%
56.92%
17.66%
19.28%
26.90%
24.90%
29.66%
25.89%
52.56%
22.45%
27.49%
50.88%
'25.65%
26.56%
56.46%
24.94%
50.90%
28,22%
15,55%
26.69%
3.51%
T o ta l o f a l l is s u e s o f T re asu ry B i l l s , N o te s, L ib e rty Loan and
T re a su ry Bonds o u ts ta n d in g u n m atu red . ............................................................... $ 2 6 ,4 7 2 ,5 2 6
P e rc e n ta g e h eld in System A ccount. ....................... . . . . . . . . . . . . . . .
8*40%
(a) in c lu d e s £ 2 ,0 0 0 ,0 0 0 p u rch ased te m p o ra rily
(b)
"
1 ,9 9 0 ,COO
"
"
(g) c o n ta in s g o ld c la u s e
R a tio o f
E x penses,
D iv id e n d s &
C h a rg e -o ffs
Y ear 1934
P a r t i c ip a t i o n s in
S ystem
A ccount
R a tio o f
H o ld in g s
in
S y s t em
A ccount
(A)
1 5 6 ,9 8 2
(B)
7 .0 6 $
NEW YORK
6 5 5 ,8 1 8
2 9 .5 0 $
28
$
PHILADELPHIA
1 6 3 ,7 3 4
7 • 37$
9
CLEVELAND
2 1 3 ,0 2 5
RICHMOND
ATLANTA
#
BOSTON
p a rtic ip a tio n s
(+) O ver o r
(-} S hort o f
P ro R ata
S h a re B ased
on R a tio s
in C o l. C
T o t a l h o ld in g s
( P o r t f o l i o and
Pa r t ic ip a t i o n
i n System A ccount)
R a tio
of
T o ta l
H o ld in g s
T o t a l h o ld in g s
(+) Over o r
( - ) S h o rt
of p ro r a t a
S h a re b a s e d on
R a tio s in C o l. C
(E)
1 5 7 ,6 7 1
(F)
6 .5 0 $
33,336+
7 7 6 ,1 1 5
3 1 .9 7 $
96,285+
>
!•
$
3 6 ,3 4 9 -
1 6 7 ,1 2 0
6 .8 8 $
5 1 ,3 9 7 -
i'
S
9 .5 8 $
9 3 /4 $
3 ,7 3 2 -
2 1 3 ,0 2 4
8 .7 7 $
2 3 ,7 0 2 -
1 0 3 ,5 6 2
4 .6 6 $
5 1 /4 $
1 3 ,1 5 3 -
105,56?.
4 .2 7 $
2 3 ,9 0 6 -
^
5/3 r
9 4 ,2 0 9
4 .2 4 $
4
5 ,2 8 3 +
9 4 ,2 2 8
3 .8 8 $
2 ,8 9 1 -
(C)
6 3 /4 $
%
(D)
6,9 1 9 +
#
#
(a)
6 ,2 1 6 -
C/5
$
365,601
1 6 .4 4 $
11 1 /2 $
1 0 9 ,939+
4 2 8 ,3 4 3
1 7 .6 4 $
149,127+
ST. LOUIS
9 2 ,7 0 0
4 .1 7 $
4 3 /4 $
1 2 ,g o o -
9 3 ,2 0 0
3 .8 4 $
2 2 ,1 2 8 -
MINNEAPOLIS
5 8 ,0 5 4
2 .6 1 $
3 3 /4 $
2 5 , 31 4 -
6 5 ,1 5 4
2 .6 8 $
2 5 ,8 9 5 -
KANSAS CITY
9 1 ,6 5 9
4 .1 2 $
5 1 /4 $
2 5 ,0 5 6 -
9 1 ,7 4 1
3 .7 8 $
35 , 727-
DAIIAS
6 1 ,4 7 5
2 .7 7 $
3 3 /4 $
2 1 ,8 9 3 -
71,475
2 .9 4 $
1 9 ,5 7 4 -
1 6 6 ,3 3 0
7 .4 8 $
8 1 /4 #
1 7 ,0 8 0 -
166,331
6 .8 5 $
3 3 ,9 7 6 -
CHICAGO
SAN FRANCISCCi
TOTAL S
NOTE:
# 2 ,2 2 3 ,1 4 9
100
$
100
$
#15 5 ,4 7 7 A d j.
C h a rg e -o f f s do n o t in c lu d e r e s e r v e s f o r p o s s ib le l o s s e s ,
S e l f I n s u r a n c e R e se rv e o r abnorm al r e a l e s t a t e d e p r e c ia tio n *
# 2 ,4 2 7 ,9 6 4
100
$
#245 ,4 1 2 A d j.
g -3
2
SD
gl
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT "C"
(1) PARTICIPATION BY FEDERAL RESERVE BAMS IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT AND (2) TOTAL HOLDINGS OF
GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS JANUARY 30, 1935 AND THE AMOUNT OF (1 ) AND (2) OVER OR SHORT OF PRO
RATA SHARE BASED ON RATIO OF EACH BANK’S EXPENSES, DIVIDENDS AND CHARGE-OFFS FOR 19 34 TO THE TOTAL FOR THE SYSTEM
(000 O m itted )
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N a tional A rchives
DECLASSIFIED
Autho
Authority
-........
Q C O fd s T I Q t& W
!
- .. -.... -..... -
i e d i r a l R eserve Bant
o f Nctf York
Reports Department
fee
Z t 1 93 6 *
Z& Z 6
E x h ib it HD'
YIELD
PER C E N T
1934
1935
A verage E a rn in g R ate on H o ld in g s o f U. S , Governm ent S e c u r i t i e s
in by stem S p e c i a l In v e s tm e n t A ccount and A verage £ i e l d on O u ts ta n d in g
U. S , T re a s u ry Bonds ana T re a s u ry M otes
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:Gf*:
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r.
>
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105
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o
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103
T R E A S U R Y BO NDS 1 9 4 6 - 4 9
W ITH G O LD C L A U S E
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3 1 /8 % TREASU RY BONDS 1 9 4 9 - 5 2
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102
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January
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».• ruiu o 1/ r
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JANUARY
D a lly A verage C lo s in g P r ic e s o f U. S . T re a su ry N o te s C a rry in g Gold
C lc u se and T re a su ry i«otes W ithout G old C la u se
C a rry in g Gold C la u se and T re a su ry Aiotes W ithout Gold C la u se
FEB
■......■ 11T■ —
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—
— —
%
DECLASSIFIED
Authority SXQfdsiC Ic&5(P 1
i.L *
0*%
i \ ?jv%
f
L?-
$ * Q * ■J t l a
I'iz&JT t h a
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tt
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C-CjuA-aJoo*---*
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IX
7^ <T <f5 f o ' *
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/
ehlfte M wmb afcturltl** of swrawict toetirltle* up to
/ 41£S0fW)fOOOand Is further nuthorlMdl to bqyf «eUf or
;*
mk* shlfte betveea m&turitie* of ea addltlori&l $£S0v0C%&00 * ..
'/ ^
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neetlag of the full eo«aittee could be turrcagedU
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on ielegȣhie epprwit of e mjority of tho open aarket
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Authority CX D f d&P /
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C ^V u>U x
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''■ ■
%
5 i H I islFIED
-
Authority QCOfckr / Qt&fa I
i
Fe d e r a l R e s e r v e B a n k
of N e w Y o r k
F e b ru a ry 7 , 1955.
D ear G overnor E c c le s :
E n c lo se d h e r e w ith i s a t e n t a t i v e d r a ftf o f
th e m in u te s o f th e m e e tin g o f th e F e d e r a l Open M arket
Com m ittee h e ld a t V feshington on F e b ru a ry 5 .
V ery t r u l y y o u r s ,
Mr.
Mr.
W. R andolph B urgesi
S e c re ta ry , F e d e ra l
Open M arket Com m ittee
Hon. M a r r in e r S. E c c le s ,
G o v ern o r, F e d e r a l R e se rv e B o ard ,
W ash in g to n , D. C.
WRB.H
n
wm
Reproduced from the Unclassified I Declassified Holdings of the National Archives-
DECLASSIFIED
'
Authority QCOfcitZT !
F e b ru a ry 1 1 , 1955
Dr* iff# Randolph Bargees,
Secretary, Federal Open Market Cowaittee,
Care Federal Reserve Bank,
Sew York, New York*
Pear Dr* Burgess*
Governor Eccles hag asked ae to acknow
ledge receipt o f jo u r le tte r of February n&ad ^ ^ *
. ■
X f c t e ----^S^-'fetXA 3 33.3 - a - /
tho te n ta tiv e jira ft\in c l 08ed therewith Of th« f
minutes o f the meeting of the Federal Open Market
Comittee held a t Washington on February 5*
Very truly yours,
(Signed') Chester MorritI
Chester Morrill,
Secretary*
■B?
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
DECLASSIFIED
'
Authority S X -P fd siT jQ'Z&fa i
I
COPY
FEDERAL RESERVE BANK
OF NEW YORK
June 7, 1955,
f l s / n t M 3 5 3 - 3 - -I.
Enclosed please fin d the m in u te s e tc ., which a r e ^ * ^
missing from your file s .
W ill you please remove the words "Tentative d ra ft
Subject to Change® from the minutes o f February 5 and February27. No changes were made in these minutes, so they stand as
fin a l copies.
I am lis tin g below the records you should haves
Preliminary
Memorandum
Report
Operations
Feb,. 5 Final d ra ft
yes
yes
w 20 F inal d ra ft
no
yes
N 27 Final d ra ft
no
no
Mar,. 15 Tentative
no
no
Apr,. 17 Tentative
no
yes
May 27 No
yes
yes
Minutes
Very tru ly yours,
(Signed)
E. A. Holmes
(Secretary to Dr. Burgess)
Ur. S. R. Carpenter,
Assistant Secretary, Federal Reserve Board,
Washington, D. C.
-
/
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
TELEGRAM
3
FEDERAL RESERVE SYSTEM
5
(L E A S E D W I R E S E R V IC E )
RECEIVED AT
13bfa
JQ
||£
*
Boston 950a Jan 28
B ecles
Washn
In re p ly to Trans 8209/ l^ a d v is e th a t I w i l l a tte n d open m arket
m eeting in W ashington on F ebruary fifth a t te n t h i r t y AM,
0. SFRASER
GOTBRHMBNTPRINTDJOd m . 1KH
Digitized for
Young
1012am
16—794
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
TE LE G R A M
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
RECEIVED AT WASHINGTON, D. C.
139 bmr
York 130p Jan 28
& B M I || f f f
i
jg
lo d e s
W a s h in g to n
^
lo u r te le g ra m Janu a ry 26 11 s h a ll be g la d to a tte n d m e e ting o f
F e d e ra l Open m arket oomm ittee to be h e ld in W ashington tuesday
February 5
H a rris o n
135pm
[.
--------- ;-----------
!•
p
Digitized
for
|
tr. aFRASER
oovHRMMfWp pRiyrma oiticb u n
http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
I
16—704
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
TE LE G R A M
3
RECEIVED AT WASHINGTON, D. C.
9 SB
B om
m to
955ft Jam
m
Socles
FRB Washn
Will expeot to attend meeting of ©pea market oommittee oa
F e b ru a ry 5 th
Norris
958a
R ep rod uced from the U ncla ssified
I D e cla ssified H o ld in g s o f the N atio n a l A rchives
TE LE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
3
- 3 3 3
^
*
14iea
RECEIVED AT WASHINGTON, D. C.
C leveland
955a jam 28
E e e le s
WBJW) j g
* | 10 Qq
Washington*
/W
T w ill 2209/
I
ja"
'
w i l l attend meeting open market committee tuesday
F ebruary 5th*
Flem ing
10am
16—704
_ /
/
Reproduced from the Unclassified Declassified Holdings of the National Archives
TE LE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
3 33- 3
RECEIVED AT WASHINGTON^ D. C
m
H
30
-
ISrhhh
Blcbmond 1184a Jan 28
Governor Socles
u ^
Washington
^
Responding to your wiry'will attend open siarket conference fifth
February
Digitized for
& S.FRASER
GOVERNMENT PRINTING QFFIC* »3 S
Seay
1128a®
4
16—704
i
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rchives
TE LE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
18fu
3 3
2
. 3
RECEIVED AT WASHINGTON, D. C.
it la n t a
928a Jan 28
» o l..
^
_—
*» H
. »
»
Washn
T w ill y our number 3209[ w i l l a tte n d m eeting F e d e ra l Open M arket
Committee on F ebruary f i f t h
Newton
1029a
- ^ - /
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
TE LE G R A M
FEDERAL RESERVE SYSTEM
^ 3 3,
(L E A S E D W I R E S E R V IC E )
llS g b
RECEIVED AT WASHINGTON, D.
Chicago Jan 28
t8sa 1052am
C.
1935JAN 28 AH II 57
Socles
Washn
W ill a tte n d m eeting o f F e d e ra l Open M arket Committee to be h e ld
tuesday fe b ru a ry f i f t h
in W ashington
S c h a lle r
1158am
*
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rch ive s
TE LE G R A M
FEDERAL RESERVE SYSTEM
(L E A S E D W I R E S E R V IC E )
lQ lgb
RECEIVED AT WASHINGTON, D. C,
s tlo u is Jan 28 1229p
®0 0 l e s
.
„
1935 JAN 28 PM 1 37
Washn
-------- —
Will be p re se n t a t m eeting o f F ederal Open M arket Committee on
Tuesday February 5
M a rtin
137p
R ep rod uced from the U ncla ssified
I D e cla ssified H o ld in g s o f the N atio n a l A rchives
TE L E G R A M
FEDERAL RESERVE SYSTEM
*3 3 %
(L E A S E D W I R E S E R V IC E )
^
n r I r .____
M in n e a p o lis Jan
28 930am
RECEIVED AT WASHINGTON, D. C.
Ic o le s
W ashington.
^
^
W ill be p re se n t a t m eeting F ebruary f i f t h
G e e ry
1047am
/
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
TE LE G R A M
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. G.
I45gm rl6
*** M
H# 12.. 58
Kansas C ity Jan 28-1117a
S ocles
W ashington,
T w ill 2209
'/ i i / l S '
S h a ll a tte n d m eeting o f F ederal Open M arket Committee
Tuesday, February 5*
V. fl. QOVBRXHBNT PRI?mN& om O Bi 1993
H am ilton
1238p
16—794
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
TELEGRAM
.. " ."...1.......
"..
3
(L E A S E D W I R E S E R V IC E )
44gb 16
RECEIVED AT WASHINGTON, D. C.
D a lla s 923am Jan 28
- ^ * 5
" i o * ,
Washn
Tw iX I 2209/Y w i l l be p re se n t a t Open M arket Committee m eeting
on February 5
B. S. OOV1HNHBNT PRBffllHB OFFICB: 1B33
McKinney
1048am
16—794
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
TE LE G R A M
FEDERAL RESERVE SYSTEM
3
33,3-*^'
(L E A S E D W I R E S E R V IC E )
RECEIVED AT WASHINGTON, D. C.
B 8
0 T
Sanfranciaoo Jan 38
S ecies
lashn
Will attend meeting Federal Open Market Committee Tuesday
February fifth though Friday eighth would suit better
Calkins
54Bp
'"'"'g
.
iwsa
PRINTINGwruw;
OFFICE: IMS
v>a. wTKKflAinr rwniuw
16—
'704
—w —
•
6UJL~
» © 9 — ft'L /yS>
ES
Repioduced from the Unclassified I Declassified Holdings of the National Archives
CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
EXECUTIVE COMMITTEE OF THE FEDERAL OPEN MARKET COMMITTEE
_______ HELD IN WASHINGTON ON FEBRUARY 3 0 , 1955__________
The p r e s e n t h o ld in g s o f U n ite d S t a t e s Government s e c u r i t i e s i n th e
S ystem S p e c i a l In v e s tm e n t A ccount amount t o - - - - - - -
— $ 2 ,2 2 3 ,1 4 9 ,5 0 0 .
T here h a s b e e n nol change i n t h i s amount s in c e November Rr 1935>
T r a n s a c tio n s i n G overnm ent s e c u r i t i e s i n th e S y stem A ccount s in c e
th e l a s t m e e tin g o f th e F e d e r a l Open M arket Com m ittee on F e b ru a ry 5 , 1935,
w ere a s f o llo w s ;
(1)
R edem ption a t m a t u r i t y o f $ 3 9 ,4 6 7 ,0 0 0 T re a s u ry b i l l s
w hich w ere r e p la c e d by p u r c h a s e s i n th e m a rk e t o f
o th e r T re a s u ry b i l l s ,
(2)
T r a n s f e r o f th e f o llo w in g p a r t i c i p a t i o n s w ith i n th e
a c c o u n t:
$ 7 ,5 0 0 ,0 0 0 to S t . L o u is from New Y o rk f s p a r t i c i p a t i o n
7 ,5 0 0 ,0 0 0 " "
"
»
C h icag o * s
"
T h is i n c r e a s e i n p a r t i c i p a t i o n by th e F e d e r a l R e s e rv e
Bank o f St* L o u is was e f f e c t e d a t i t s r e q u e s t f o r th e
p u rp o s e of im p ro v in g i t s e a r n in g p o s i t i o n .
T here w e re ' no p u r c h a s e s o f b a n k e rs a c c e p ta n c e s d u r in g th e p e r io d
F e b ru a ry 5 , 1935 ~ F e b ru a ry 1 3 , 1935#
M a t u r i t i e s o f $ 3 5 ,0 0 0 d u rin g t h i s
p e r io d l e f t th e System w ith o u t any h o ld in g s o f b a n k e rs a c c e p ta n c e s *
R ep rod uced from the U ncla ssified
V
I D ecla ssified H o ld in g s o f the N a tional A rchives
2
A tta c h e d a r e e x h i b i t s show ing th e f o llo w in g :
E x h ib it "A” - M a tu r ity D i s t r i b u t i o n o f H o ld in g s o f Government
S e c u r i t i e s in th e S ystem A ccount At The End o f
Each Month 1 9 32, 1 9 3 3 , 1934 and on F e b ru a ry 1 9 ,
1935.
E x h ib it "B" - C l a s s i f i c a t i o n o f I s s u e s H eld in th e System
A ccount on F e b ru a ry 1 9 , 1 9 3 5 , and th e P e r c e n t
age o f Each I s s u e H eld in th e A ccount a s
Compared W ith th e Amount o f t h e R e s p e c tiv e
I s s u e O u tsta n d in g *
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
E x h i b i t "A"
MATURITY DISTRIBUTION OF HOLDINGS IN SYSTEM ACCOUNT
END OF EACH MONTH » 1 9 3 2 - 3 3 - 3 4 - 3 5 __ _
(In m i l l i o n s o f d o l l a r s )
i7 ith in
Within
S ix
Ifer- One
1932 Months cent Y ear
29 $ 355
$165
Jan.
375
32
191
F eb.
475
44
299
M ar.
57
778
583
A p r.
51 1 ,0 5 8
May
716
744
June
48 1 ,1 0 6
733
45 1 ,0 9 8
J u ly
622
38 1 ,0 2 9
Aug.
37
998
S e p t.
606
O c t.
651
40 1 ,0 5 1
765
47 1 ,0 4 6
Nov.
779
Dec.
48 1,021
1933
Jan.
F eb.
M ar.
A p r.
May
June
J u ly
Aug.
S e p t.
O c t.
Nov#
Dec.
644
577
709
570
543
656
659
621
706
860*
845*
887*
41
36
44
35
32
37
36
32
34
39
43
40
1934
Jan.
Feb.
M ar,
A pr.
May
June
J u ly
Aug.
S e p t.
Octe
Nov.
Dec.
887*
987*
799*
730*
717*
765*
732*
705*
654
749*
752*
794*
40
44
36
33
32
34
33
32
29
34
34
36
903
856
856
725
823
879
903
1 ,0 2 5
1,102
1 ,2 5 7
1 ,2 3 5
1 ,2 1 6
1 ,2 1 6
1 ,1 9 0
1 ,0 3 4
1 ,0 0 8
991
972
939
1 , 0X8
868
964
968
953
ffit h i n
P e r Two
c e n t Y ears
I
3 -5
Y
P e r ears
cen t In c *
C a ll
P e r a b le
c e n t Bonds
$ 64
132
— $212
212
63 | 355
64
375
69
475
76
779
75 1 ,1 1 5
71 1 ,1 7 3
67 1 ,1 6 7
63 1 ,1 9 4
61 1 ,1 7 0
64 1 ,2 2 9
64 1 ,2 2 7
62 1 ,2 0 3
63
64
69
76
79
75
71
73
71
75
75
73
58
53
53
45
49
49
50
53
53
57
- 56
55
1 ,1 0 7
1 ,0 9 0
1 ,0 9 0
958
962
1 ,1 1 7
1 ,1 4 3
1 ,1 9 1
1 ,2 7 8
1 ,4 4 3
1 ,4 3 5
1 ,4 2 6
71
67
67
59
57
62
63
62
62
55
54
47
45
44
44
42
46
39
43
43
43
1 ,4 2 6
1 ,4 1 5
1 ,287
1 ,4 7 6
1 ,4 7 5
1 ,3 5 4
1 ,3 2 1
1 *365
1 ,2 5 8
1 ,3 4 2
1 ,3 4 9
1 ,4 0 5
64
64
58
67
66
65
64
110
212
4
8
6
8
134
75
77
4
4
101
6
116
203
203
335
384
335
341
394
452
498**
511**
520**
520**
531**
659**
488**
66 489**
550**
61
583**
59
61
539**
56
646**
60 j 647**
60
640**
63
584**
P e r O th er
c e n t Bonds
7
12
12
20
23
19
19
21
22
23
23
24
24
24
30
21
22
24
26
24
29
29
29
26
239
290
322
336
336
336
336
336
336
336
336
336
336
336
336
336
336
336
252
252
252
252
252
252
195
195
195
195
195
195
110
110
110
37
36
31
24
21
21
21
21
21
21
21
21
$ -
22
21
21
21
20
—
-
19
18
17
16
—
25
25
11
11
11
11
11
11
9
9
9
9
9
9
5
5
5
25
25
25
64
64
124
124
124
124
124
124
124
Pe]>|
cent T o ta ls
!
$ 567
587
687
1 ,0 1 8
1,4 0 5
1 ,5 5 9
1 ,6 3 5
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
1 ,6 4 0
—
—
—
-
1
1
1
1
1
3
3
6
6
6
6
6
6
6
1935
Jan.
950
J790*
35
43 1 ,3 9 4
62 ! 595** 27 ! 110
F e b . 8 876*
950
39
62 ! 595** 27
43 1 ,3 9 4
110
39
" 19 1876*
950
43 1 ,4 6 0
65 1 529** 24 Lhq™
.
^ I n c lu d e s F o u rth L i b e r t i e s " c a l l e d "
**Does n o t in c lu d e F o u r th L i b e r t i e s " u n c a lle d " m a tu rin g O cto b er
1 ,5 5 9
1 ,6 2 9
1 ,6 2 9
1 ,6 2 9
1 ,6 8 2
1 ,7 8 8
1 ,8 2 0
1 ,9 2 1
2 ,0 6 6
2 ,1 9 3
2 ,2 2 3
2 ,2 2 3
|
!
j
!
^
2,223
2 ,223
2 ,2 2 3
2 ,223
2 ,2 2 3
2 ,2 2 3
2 ,2 2 3
2,223
2,223
2,223
2 ,2 2 3
2 ,2 2 3
i
124
5
6
5
124
6
5_ .,-12.4..... .._
1938,
1 2 ,2 2 3
■! 2 ,2 2 3
1* 2.2S 3
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N atio n a l A rchives
Exhibit "B"
/
c u s s ific iiio h or issues mmi in t h e s rsra i accodhi cm febroahx 19, isss mis th e percoitage
at eich ISSCE n th e mtxmn >s nmn»«iai JLiXI
with THE maart o r th e i b p b c t i v e isare a a s m n p io
(OOO Omitted]
fytte*
TREASURY BILLS
S . T re a s u ry B i l l s due F e b .
a
a
h
II
N
a
II
a
a M ar.
ft*
a
n
M
N
n
a
a
a
a
a
n
n
a
n
a
a
a
it
a
it
n
a
a
a
B
■
a
a
a
n
n
11
n
«
tt
a
a
a
a
n
a
n
it
n
n
a
a
a
a
a
a
a
t*
n
a
a
a
a
VI
w
a
■
a
a
a
11
a
n
N
«
«
n
N
H
n
n
a
a
a
a
a
tt
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
If
»
n
n
n
n
ti
tt
11
«
a
a
a
A nr.
a
a
a
May
a
a
a
a
June
a
a
J u ly
a
a
a
a
Aug.
a
2 1 /#
2 7 /3 %
1 1/8%
3 l/ 4 £
1 1 /2 2
2 3 /4 $
3
%
3
%
3 l/4 >
2 5 /8 $
3
%
11
N
a
«
II
11
n
a
a
a
n
a
n
■
u
n
n
tt
it
n
a
■
n
11
n
11
n
n
2 7 /8 $
2 1/2%
2 1 /8 $
M ar.
June
Aug.
a Dec.
a A pr.
a June
a Aug.
a S e p t.
a D ec.
n F eb .
it A pr.
a S e p t.
a F eb .
a M ar.
" June
n S e p t.
a June
1935
1955
1955
1955
1935
1935
1955
1955
1955
1955
1935
1935
1955
1935
1935
1935
1935
1935
1955
1935
1935
1935
1935
1935
1955
$
15,
15,
1.
15,
15,
15,
1,
15,
15,
15,
15,
15,
1,
15,
15,
15,
15,
1955
1935
1935
1935
1956
1956
19 3 6
1936
1936
1937
1937
1937
1938
19 3 8
1938
1958
1939
$
$
(g)
(g)
(g )
(g)
(g)
(g j
(g )
LIBERTY LOAN AND TREASURY BONDS
3 1 /2 * 1 s t L/L Bds o f 1932-47
1/4%
1 /4S
1 /4 $
1 /4 $
1 /4 $
l/4 $
3
$
■ 0 1932-47
1 st "
4 th "
■ B a lle d 4 / 1 5 / 3 5
" o f 1933-38
4 th "
T r e a s . Jonds o f 1 9 4 1
a
■
■ 1944-46
a
a
"
"
*
"
GRAND TOTALS
$
7 5 ,0 9 0
7 5 ,0 6 5
7 5 ,2 9 0
7 5 ,5 6 5
7 5 ,0 4 1
7 5 ,0 2 5
7 5 ,0 5 8
7 5 ,5 6 0
7 5 ,2 4 8
7 5 ,1 0 2
7 5 ,0 1 5
7 5 ,0 7 5
7 5 ,0 4 5
7 5 ,1 6 8
7 5 ,2 8 7
7 5 ,1 5 9
7 5 ,0 2 0
7 5 ,5 0 0
7 5 ,1 5 0
7 5 ,1 8 5
7 5 ,0 7 9
7 5 ,1 2 9
7 5 ,1 0 6
7 5 ,1 8 5
7 5 .1 1 2
$ 1 ,8 7 8 ,6 1 7
7 4 ,5 5 0
1 3 0 ,5 9 5
8 5 ,7 2 5
7 5 ,6 2 1
1 5 7 ,3 8 5
5 0 ,0 0 0
7 9 ,0 4 2
5 8 ,9 6 7
9 9 ,5 6 8
6 5 ,6 8 5
8 4 ,1 7 5
8 4 ,7 5 0
5 8 ,8 2 0
9 7 ,0 9 9
5 5 ,5 0 0
8 0 ,4 8 1
$
5 2 8 ,1 0 2
4 1 6 ,6 0 5
5 5 3 ,8 6 5
4 1 8 ,2 9 1
5 5 8 ,8 1 9
6 8 6 ,6 7 5
5 6 4 ,1 5 8
5 1 4 ,0 6 6
3 5 7 ,9 2 1
4 2 8 ,7 5 0
5 0 2 ,5 6 2
8 1 7 ,4 8 5
2 7 6 ,6 8 0
4 5 5 ,1 7 5
6 1 8 ,0 5 7
5 9 6 ,4 0 5
(g)
(g)
(g)
(g )
* 1 ,4 0 2 ,7 9 9
$ 9 , 1 8 7 ,3 7 0
2 5 ,0 2 5
2 9 ,0 0 0
8 4 ,6 6 8
5 6 ,2 0 1
2 0 ,0 0 0
5 9 ,0 0 0
2 5 ,0 0 0
$ 1 , 3 9 8 ,2 2 8
5 5 5 ,9 8 2
.1 ,8 7 0 , 0 0 0
1 , 2 4 5 ,5 7 8
8 3 4 ,4 7 4
1 , 5 1 8 ,8 5 8
1 , 4 0 0 ,5 7 0
1
1 9 4 3 -4 5
1 9 4 6 -4 8
TOTALS
1 6 ,6 5 0
1 9 ,0 4 0
2 0 ,6 5 0
1 7 ,8 8 0
2 4 ,8 0 0
2 7 ,7 0 0
1 3 ,2 5 0
1 4 ,5 5 2
1 8 ,2 5 0
1 8 ,7 0 5
2 2 ,2 5 0
1 9 .4 4 0
2 4 ,2 8 7
1 6 ,8 7 5
2 0 .7 0 0
2 5 ,2 0 5
1 9 ,2 5 0
2 0 ,3 0 0
2 7 ,5 9 9
1 8 ,7 5 0
2 5 ,2 0 0
2 1 ,2 0 0
1 0 ,0 1 0
2 5 ,5 2 5
17*922
5 0 1 ,4 5 6
u a i> M
TOTALS
4
4
4
3
3
3
Percentage of
H o ld in g s
20,
27,
6,
15,
20,
27,
3,
10,
17,
24,
1,
8,
15,
22,
29,
5,
19,
26,
3,
10,
17,
24,
31,
7,
14,
TOTALS
TREASURY NOTES
2 1/256 T re a s u ry N otes "
a
a
II
3
$
a
a
11
1 5/8%
Aaount Re-
2 2 .1 7 $
2 5 .5 6 $
2 7 .4 5 $
2 5 .7 2 $
5 5 .0 5 $
5 6 .9 2 $
. 1 7 .6 6 $
1 9 .2 8 $
2 4 .2 5 $
2 4 .9 0 $
2 9 .6 6 $
2 5 .8 9 $
5 2 .5 6 $
2 2 .4 5 $
2 7 .4 9 $
3 0 .8 8 $
2 5 .6 5 $
2 6 .5 6 $
5 6 .4 6 $
2 4 .9 4 $
5 0 .9 0 $
2 8 .2 2 $
1 5 .5 3 $
5 5 .9 5 $
2 6 .6 9 $
1 4 .0 8 $
5 1 .5 0 $
2 4 .2 2 $
1 7 .6 0 $
2 8 .1 6 $
7 .2 8 $
2 1 .7 1 $
1 1 .4 7 $
2 7 .7 6 $
1 5 .5 2 $
1 6 .7 6 $
1 0 .5 7 $
2 1 .2 6 $
21.3356
8 .6 6 $
1 5 .4 9 $
£*£21
1 5 .2 7 $
1 .7 9 $
5 .4 1 $
4 .5 5 $
4 .5 1 $
2 .4 0 $
2 .5 7 $
1 .7 8 $
JkQ*QM
5 1 8 ,8 9 4
# 9 , 6 2 8 ,1 9 8
5 .5 1 $
1 2 ,2 2 5 ,1 4 9
$ 2 0 * 6 9 4 ,1 8 6
1 0 .7 4 $
$
Total of all issues of Treasuiy Bills, Votes, Liberty Loan and
T re a s u ry Bonds o u ts ta n d in g u n m a tu r e d ............................................................................. $ 2 6 ,4 7 2 ,1 7 6
P e rc e n ta g e h e ld In Sljrstem A c c o u n t . ..............................................................................
8 .40$
(g )
c o n ta in s g o ld c la u s e
......................................
Reproduced from the Unclassified I Declassified Holdini
3 3 3.
CONFIDENTIAL
TENTATIVE DRAFT «• SUBJECT TO CHANGE
MINUTES OF THE MEETING OF THE EXECUTIVE COMMITTEE
OF THE FEDERAL OPEN MARKET COMMITTEE
HELD AT WASHINGTON, D. C.
FEBRUARY20, 1935.
The m e e tin g was c a l l e d t o o r d e r a t 1 0 :1 5 a , m ., t h e r e b e in g p r e s e n t
G o v ern o rs H a r r is o n , c h a irm a n , F le m in g , Seay, and S c h a l l e r
D eputy G o v ern o rs Paddock and B u rg e s s , s e c r e t a r y .
The s e c r e t a r y ’ s r e p o r t on open m a rk e t o p e r a t io n s was d i s t r i b u t e d and
o r d e r e d a c c e p te d and p la c e d on f i l e .
T h ere en su e d an in f o r m a l d is c u s s io n o f
b a n k in g l e g i s l a t i o n and o f T re a s u r y f i n a n c i n g .
At e le v e n o ’c lo c k t h e m e e tin g a d jo u rn e d t o t h e o f f i c e o f t h e S e c r e t a r y
o f t h e T re a s u r y , th ^ r e b e in g p r e s e n t in a d d i t i o n t o t h e members o f t h e co m m ittee
S e c r e t a r y M o rg en th au , G overnor E c c le s , U nder S e c r e t a r y C o o lid g e
M e s s rs . B e l l , H a a s, Upham, o f th e T r e a s u r y .
The S e c r e t a r y d is c u s s e d w ith th e com m ittee p r o p o s a ls f o r T re a s u ry
f i n a n c in g , in c lu d in g th e s u g g e s tio n t h a t th e T r e a s u r y m ig h t i s s u e n in e m onths
d is c o u n t b i l l s in a d d i t i o n t o s i x m onths b i l l s and g r a d u a l l y i n c r e a s e th e t o t a l
amount o f b i l l s o u ts ta n d in g and in c lu d in g a l s o p ro b lem s o f f in a n c in g o p e r a t io n s
on M arch 15*
The co m m ittee was ask ed t o m eet a g a in w ith th e S e c r e t a r y on W ednesday,
F e b ru a ry 2 7 , f o r f u r t h e r d is c u s s io n o f M arch f i n a n c i n g .
At 1 1 :5 0 a . m. th e com m ittee a d jo u rn e d t o t h e o f f i c e s o f th e F e d e r a l
R e s e rv e B o a rd , and a f t e r g e n e r a l in f o r m a l d is c u s s io n a d jo u rn e d a t 1 :3 0 p . m.
W. R andolph B u rg e ss
S e c re ta ry
J--C -/
■ . . . . . ...■...
Reproduced from the Unclassified I Declassified Holdings of the N ationJ^jghjves'
y ^ej- ft*** •
““CLASSIFIED
i
Aua" > " 'y £ K Q r & r I M &
Fe d e r a l R e s e r v e B a n k
or N e w Y o r k
February 26, 1935.
Dear Governor Eccles I
_
Z -
_ /n
0 ■
—4 4
Baclooed herewith is a ten tative dra f t Io f tha
minutes of the meeting o f tho executive committee o f the
\
Federal Open Market Committee held at Washington on
February 20, 1955, together with the report of open
market operations.
W ill you please le t me know i f you have any
suggestions as to changes in the minutes.
Very tru ly yours,
W. Randolph Burgess
Secretary, Federal
Open Market Committee
Hon. Marriner S. Eccles,
Governor, Federal Reserve Board,
Washington, D. C.
WRB.H
encl.
Reproduced from the Unclassified I Declassified Holdinc
^ classified
Auihorh
-V.
Cw
.
1 1(Y*5
Mr* 1* Randolph Burgess, Secretary,
Federal 0pm 1arket Committee,
c/o Federal Reserve Bazik o f leu Xork,
lew Tork, Mew Tork.
Dear Hr. Burgeses
Governor Secies has asked me to acknowledge
receipt o f your le tte r o f February
' -
and the tenta~
... ....... „r“—
tiv e d ra ft inclosed therewith o f the minutes o f the
meeting o f the executive committee o f the Federal
Open Market Committee held a t Washington cm February
20f 1955, together w ith the report o f open market
operations*
Governor Eccles has no suggestions to
o ffe r as to changes in the minutes*
Very tru ly yours,
Secretary.
\w
lrJ
)i
7
Reproduced from the Unclassified I Declassified Holdings of the Nation§J^jghives
d ®c i - a s s I H e 5
Author,-,v CKDfdxrjQtiSfc
i
i
con
3
FEDEFJLL RESERVE BANK
o f nm m m
June 7* 1SSS«
Dear S ir*
Inclosed please fin d the minutest! e tc .# which are / -'.
missing froa your file s #
WiH you please remove the words •Tentative d ra ft
Subject to Change” from the minutes o f February I and February
27* Mo changes were made in these minutes, so they stand as
fin a l copies*
1 am lis tin g below the records you should havet
Preliminary
Memorandum
Report
Operations
Feb* S Final d ra ft
yes
yes
* 10 F inal d ra ft
no
yes
* 27 F inal d ra ft
no
no
Mar, 11 Tentative
m
no
Apr* 17 Tentative
no
yes
Hsy 27 Mo
yes
yes
Minutes
Very tru ly yours,
(Signed)
R. A. Holmes
(Secretary to Dr. Burgess)
Mr. @« F»« Carpenter,
Assistant Secretary, Federal Keservs Board,
Washington, £» C*
ch^ j
d, 3 3 5 , 3 ^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3 3 J, >
SSBEL
imiSML RESERYE BANK
OF NSW I0HK
June 7, 1985,
Bear Sirs
Inclosed please fin d tha minutes;
8^ etc*, irliicto are
missing from your file s *
W ill you please remove th© words “Tentative d ra ft
Subject to Change11 froa the minutes of February 5 and February
27. Ho changes were made in those minutes, a® they stand aa
fin a l copies*
I aa lis tin g below the records you should havet
Preliminary
Memorandum
Report
Operations
ye#
yes
Final d ra ft
no
yes
* 27 F inal d ra ft
no
no
War* 18 Tentative
no
no
Apr* 17 Tentative
no
yes
Hay 27 Ho
yes
yes
Minutes
Feb* 5 Final d ra ft
« m
Very tru ly yours,
(Signed)
R* A* Holmes
(Secretary to Dr* Burgess)
Mr* i# R* Carpenter,
Assistant Secretary, Federal Reserve Board,
Washington* D* C.
ft
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 33.
M /V71
,')%
■ * * ’
J„V
Hr* W, Randolph Burgess, Secretaiy,
Federal Open Market Comdttee*
c/o Federal Reserve Bank o f lew Tork,
lew York, Sew Turk*
Beer Kr* Burgeses
Oovernor Eccles has asked ae to acknow
ledge receipt o f your le tte r o f March $^aad the
tentative d ra ft inclosed therewith o f the minutes
o f the executive com lttee meeting held on Wed
nesday, February 27*
Governor Eccles offers no
suggestions as to any changes in the minutes*
Very tru ly yours,
Secretary,
CM-yd
3 '" ^
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
323Fe d e r a l R e s e r v e B a n k
of N e w Y o r k
M arch 2 , 1 9 35,
l'r.
fb ;
y
i,l. ic:
Ml I':,,
k/
Mr.
D ear G o v ern o r E c c le s :
Mr.
E n c lo se d h e r e w ith i s a t e n t a t i v e d r a f t ^ o f
fifr.
Mr.
t h e m in u te s o f th e e x e c u tiv e co m m ittee m e e tin g h e l d
on W ednesday, F e b ru a ry 27*
W ill you p le a s® l e t me know an y s u g g e s tio n s
you may h a v e a s to changes*
V ery t r u l y y o u r s ,
R andolph B u rg e s s
S e c r e t a r y , F e d e r a l Open
M ark et C om m ittee
Hon, M a r r in e r S . E c c le s ,
G o v ern o r, F e d e r a l R e s e rv e B o ard ,
W ash in g to n , D. C.
WRB.H
e n c l.
333?
"9"
3 '**
^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
5 3 .
Fe d e r a l R e s e r v e B a n k
of
Ne
w York
M arch 1 5 , 1955.
D ear G o v ern o r E c c le s ;
Eh c lo s e d h e r e w ith i s a t e n t a t i v e d r a f t o f th e
» 2 -y 3 - 3 ^
min u t e s ] o f th e m e e tin g o f t h e E x e c u tiv e Com m ittee h e l d i n
W ashington on W ednesday, M arch 1 5 .
T h ere a r e a l s o e n c lo s e d r e v i s e d f i n a l d r a f t s o f
th e m in u te s o f th e . E x e c u tiv e Com m ittee m e e tin g s o f J a n u a r y
25j and Fjahrmary po A S in c e no ch an g e s h a v e b een s u g g e s te d
i n t h e t e n t a t i v e d r a f t s o f t h e m in u te s o f F e b ru a r y g j and
F e b ru a ry 27
th e s e d r a f t s w hich you now h av e may b e c o n s ta
e r e d a s f i n a l .1
ts* .J-*- ^
33,3
*“
V ery t r u l y y o u r s ,
Vl\ R andolph B u rg e ss
S e c re ta iy , F e d e ra l
Open M ark et C om m ittee
Hon. M a r r in e r S . E c c le s ,
G o v ern o r, F e d e r a l R e s e rv e B o a rd ,
W ash in g to n , D, C.
WRB.H
e n c l.
‘3
- ^
- 7
(sins
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.
•t
CONFIDENTIAL
3 3 3 ' *3
TENTATIVE DRAFT - SUBJECT TO CHANGE
MINUTES OF THE: MUTING OF THE EXECUTIVE COMMITTEE
OF THE FEDERAL OPEN MARKET COMMITTEE
HELD AT WASHINGTON, D. C.
MARCH 1 3 , 1935.
The m e e tin g was convened a t 1 0 :4 0 a . m. a t t h e o f f i c e s o f t h e F e d e r a l
R e s e rv e B o ard , t h e r e b e in g p r e s e n t
G o v ern o rs Young, F le m in g , S eay , and S c h a l l e r , and
D eputy G o v ern o r B u rg e s s , s e c r e t a r y .
In t h e a b se n c e o f G overnor H a r r is o n , G o v ern o r Young was e l e c t e d ch airm an
p ro tern .
Mr. B u rg e ss r e p o r te d t h a t in a c c o rd a n c e w ith t h e ag reem en t o f th e
members o f th e co m m ittee b y te le p h o n e , and u n d e r a u t h o r i t y o f th e r e s o l u t i o n
a d o p te d by t h e F e d e r a l Open M arket Com m ittee o n F e b ru a ry 4 t o b u y , s e l l , o r s h i f t
up t o # 2 5 0 ,0 0 0 ,0 0 0 o f governm ent s e c u r i t i e s , one h a l f o f t h e c a l l e d F o u r th 4 i / 4
p e r c e n t L i b e r ty bonds h e ld in th e System open m a rk e t a c c o u n t had b een d e l i v e r e d
t o th e T re a s u ry f o r c o n v e rs io n i n t o t h e new 2 7 /8 p e r c e n t b o n d s , and t h a t t h e r e
was s t i l l h e ld in S ystem a c c o u n t #42 ,3 6 7 ,7 0 0 o f th e s e b o n d s .
W hile t h e com m ittee
had a u t h o r i z e d th e s a l e o f th e s e bonds in t h e m ark et when p o s s i b l e , {w ith
c o rre s p o n d in g p u r c h a s e s o f o t h e r m a t u r i t i e s ) t h e m ark et f o r F o u r th s had n o t b een
s tr o n g enough t o c a r r y o u t th e o p e r a t io n w ith o u t i n t e r f e r i n g w ith t h e c o n v e rsio n *
Mr. B u rg e ss r e p o r te d t h a t th e F e d e r a l R e s e rv e Bank o f New Y ork had fo llo w e d th e
same p ro c e d u re a s t h e co m m ittee w ith r e s p e c t to i t s h o ld in g s o f # 1 2 ,0 0 0 * 0 0 0 o f
F o u rth 4 l / 4 p e r c e n t L i b e r ty b o n d s .
A f t e r d i s c u s s io n i t was a g r e e d t h a t th e re m a in d e r o f t h e s e b o n d s i n t h e
S ystem ac c o u n t sh o u ld b e s o ld in t h e m ark et i f i t c o u ld b e done w ith o u t d e p r e s s in g
t h e m a rk e t and th u s i n t e r f e r i n g w ith t h e c o n v e r s io n .
I f t h i s was n o t p o s s i b le i t
was a g re e d t h a t th e y s h o u ld b e c o n v e rte d i n t o t h e new 2 7 /8 p e r c e n t bonds w ith
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2
I
th e u n d e r s ta n d in g t h a t an a tte m p t w ould be made l a t e r t o s h i f t i n t o o t h e r m a tu r i
t i e s a s u f f i c i e n t amount t o a v o id r e l a t i v e l y e x c e s s iv e h o ld in g s o f a s i n g l e bond
is s u e *
M r. B u rg e ss a l s o r e p o r te d t h a t u n d e r th e ag reem en t o f th e co m m ittee t o
buy up t o $ 2 5 ,0 0 0 ,0 0 0 o f bonds in o r d e r t o m a in ta in an o r d e r l y m a rk e t, th e f o llo w
ing p u rc h a s e s had been made:
F o r System A ccount
$
75 0 ,0 0 0 - 3
$ T re a s u ry b o n d s 1951-55
775,000 - 3 l / 2 $ T re a s u ry b o n d s 1949-52
4 .0 5 0 .0 0 0 - F o u rth L i b e r t y s , f o r l a t e r d e l i v e r y
1 .1 0 0 .0 0 0 - 3
$ T re a s u r y bo n d s o f 1951-55 f o r l a t e r d e l i v e r y
2 .2 4 0 .0 0 0 - 3 1 /8 $ T re a s u ry bo n d s 1949-52 f o r l a t e r d e l iv e r y
System h o ld in g s o f T re a s u r y b i l l s had b een re d u c e d by an
amount c o r
re s p o n d in g t o t h e am ounts o f t h e above p u r c h a s e s a c t u a l l y d e l i v e r e d .
As th e
m arket im proved i t m ight be p o s s i b l e to r e s e l l t o th e m ark et some o f th e bonds
d e l i v e r y o f w hich had n o t y e t b een ta k e n .
He a l s o r e p o r te d t h a t th e T re a s u ry had
now u n d e rta k e n t o make p u rc h a s e s o f c a l l e d F o u r th s f o r i t s own acc o u n t in o r d e r
t h a t th e System m ight n o t be lo a d e d up w ith to o l a r g e an amount o f t h i s m a t u r i t y
in view o f i t s a l r e a d y l a r g e h o ld in g s .
T h ere was th e n a b r i e f d is c u s s io n o f t h e q u e s tio n w h e th e r th e T re a s u ry
s h o u ld c a l l f o r re d e m p tio n on June 15 any o r a l l o f th e F i r s t L ib e r ty Loan Bonds
now o u t s ta n d in g .
At 1 1 :0 0 a . m. th e co m m ittee a d jo u rn e d to th e o f f i c e o f th e S e c r e t a r y o f
th e T r e a s u r y , t h e r e b e in g p r e s e n t in a d d i t i o n t o th e co m m ittee,
S e c r e t a r y M o rg en th au , U nder S e c r e t a r y C o o lid g e , and M e s s rs ,
B e l l , H aas, and Upham,
G overnor Young r e p o r te d t h e a c t i o n o f t h e com m ittee w ith r e s p e c t t o i t s
h o ld in g s o f c a l l e d F o u rth 4 l / 4 p e r c e n t L i b e r ty B onds, and w ith r e s p e c t to
R ep rod uced from the U ncla ssified / D e cla ssified H o ld in g s o f the N a tional A rchives
3
p u rc h a s e s o f b o n d s in th e m a rk e t t o m a in ta in an o r d e r l y m a rk e t.
T h ere en sued a
d is c u s s io n o f t h e p r o p e r f u n c ti o n o f th e F e d e r a l R e se rv e System w ith r e s p e c t t o
th e governm ent s e c u r i t y m a rk e t, in t h e c o u rs e o f w hich t h e r e was p o in te d o u t th e
n e c e s s i t y f o r a b an k o f is s u e t o m a in ta in a l a r g e p r o p o r tio n o f i t s a s s e t s in s h o r t
te rm s e c u r i t i e s w hich can be l i q u i d a t e d r a p i d l y a t a tim e when i t becom es t h e d u ty
o f th e bank t o e x e r c is e r e s t r a i n t .
T h ere f o llo w e d an e x te n d e d in fo rm a l d is c u s s io n on th e q u e s tio n o f w h eth er
th e T re a s u ry sh o u ld c a l l f o r re d e m p tio n on Ju n e 15 th e f i r s t L i b e r ty Loan b o n d s.
A ll th e members o f th e e x e c u tiv e com m ittee w ith t h e e x c e p tio n o f G overnor S eay
recommended t h a t th e F i r s t 4 1 /4 p e r c e n t bo n d s be c a l l e d , but. t h a t t h e F i r s t
3 l / 2 p e r c e n t bonds s h o u ld n o t be c a l l e d a t t h i s ti m e .
G overnor Seay recommended
t h a t b o th is s u e s sh o u ld be c a l l e d .
At ab o u t tw e lv e o ’c lo c k t h e m e e tin g a d jo u rn e d b r i e f l y t o U nder S e c r e ta r y
C o o lid g e ’ s o f f i c e w here th e d i s c u s s io n was c o n tin u e d .
At 12 :2 0 p . m, t h e com m ittee r e tu r n e d t o th e F e d e r a l R eserv e B oard
o ffic e s .
A f t e r a b r i e f f u r t h e r in fo rm a l d is c u s s io n o f g e n e r a l m a t t e r s , th e
m e e tin g a d jo u rn e d a t 1 2 :4 5 p , m,
W, R andolph B u rg e s s ,
S e c re ta ry .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
**/
March 27, 195S.
Dr. W* l&ndolph Burgessf
Secretary, Federal Open Market Committee,
c/o Federal Beaerve Bank of Sew fo rk .
Hew lo rk* Uqw lork*
Dear Dr* Burgessi
I
have read over the tentative drafts o f
the minutes o f the Executive Coaaalttee of the Open
Market Coswittee held February 5th » February 27th
and March 15thf ana also the revised fin a l drafts
o f the «inutes o f the meetings of the referred to
cosadttee held on January 25th and February 20th.
AH o f these minutes .see* to ne to be ocor
re ct reports o f the meetings and neet w ith ay ap
proval.
Sincerely yours,
M. S. &ccles#
Governor,
M i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
com
FEDERAL BSSEKV! IMflfK
of u m t o m
June 7, 1885.
D#ar Sir*
,•
,
Enclosed please find t & e j d n ^ y l etfe#s which ar#
missing fron your file*.
W ill you pl»t*t raaove the words ’•Tentative draft
Subject to Chong** tr m tb# itlm it#* o f Fobruary S m i February
27* Ho changes wer# nad# In those mlnutos, bo they stand as
fin a l copies,
1 aa listing below
■aBhM S
•»-,
tb #
records you should
Fr*liiainary
BMGuVSillaUi
b a w l
Report
uper& vions
Feb. 5 Final draft
yes
y**
» SO Final draft
no
yw#
n9
no
■
—
»^
no
jui*-•>,*«.'i a..^^ At
27 -«
Final
draft
jwp
o ^---------V ’
—t- 1*
»>-JWp I V I I U H I I i V V
M
A
HO
Apr* 17 fantatlw#
no
y#»
Hay 27 Ho
yes
ye*
T
nAUw '----
V#ry truly yours*
(Signed)
!U A* Kolaos
(S#er#tary to Dr« Burg#ss>
Hr* 8* R« Carpenter,
Assistant S##ratary. F#dsr&l Res r w# Board#
Washington, 1* @ft
3 3 3 . 3 ^ U ^ ^
Lh / \ r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
COPY
•p
-------
J
.3?
O
$ *o
^
FEDERAL RESERVE BANK,
OF NEW YORK
June 14, 1955.
Dear Governor Eccles:
Enclosed is a tentative d ra ft of the minutes of
the meeting of the executive committee held in Washington
on Friday, June 7.
Since no changes have been suggested in the tenta
tiv e drafts o f the minutes o f March 15 and A p ril 17, these
drafts which you now have may be considered as^ f in a l ,\ 3 //* /? ,., JO*
Sincerely yours,
(Signed)
W. Randolph Burgess
W. Randolph Burgess
Secretary, Federal
Open Market Committee
Honorable Marriner S. Eccles,
Governor, Federal Reserve Board,
Washington, D* C.
WRB.H
encl.
.
/
*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e b ru a ry 4 , 1935.
PRELIMINARY MEMORANDUM ON MONEY MARKET AND CREDIT CONDITIONS
FOR THE FEDERAL OPEN MARKET COMMITTEE,
FEBRUARY 5 , 1 9 3 5 .
S in c e th e S eptem ber m e e tin g o f th e C om m ittee, t o t a l r e s e r v e s o f a l l
member b an k s have in c r e a s e d a p p ro x im a te ly $ 6 0 0 ,0 0 0 ,0 0 0 f u r t h e r to a new h ig h
l e v e l w h ich , a s th e d ia g ra m a t th e end o f t h i s memorandum i n d i c a t e s , i s n e a r l y
d o u b le th e a v e ra g e l e v e l in 1929*
D e s p ite a s u b s t a n t i a l i n c r e a s e in r e s e r v e
r e q u ire m e n ts d u r in g t h i s p e r i o d , e x c e s s r e s e r v e s have in c r e a s e d a p p ro x im a te ly
|5 0 0 ,0 0 0 ,0 0 0 , and f o r a l l member b an k s a r e now a ro u n d ^ 2 ,2 0 0 ,0 0 0 ,0 0 0 .
Of t h i s
am ount, a t l e a s t $ 8 5 0 ,0 0 0 ,0 0 0 i s i n New York C i t y , r e f l e c t i n g i n p a r t d e p o s i t s o f
i d l e fu n d s o f b an k s i n v a r io u s p a r t s of th e c o u n try w ith t h e i r New York C ity c o r
r e s p o n d e n ts .
In a d d i t i o n to l a r g e New York b a la n c e s , member b an k s i n o th e r p a r t *
o f th e c o u n try now h o ld r e s e r v e s w hich on th e a v e ra g e a r e d o u b le t h e i r r e s e r v e
re q u ire m e n ts # •
The p r i n c i p a l f a c t o r i n th e i n c r e a s e in e x c e s s r e s e r v e s f o r member b an k s
i n g e n e r a l h a s been th e f u r t h e r l a r g e in c r e a s e i n th e m o n e tary g o ld s to c k o f th e
U n ite d S t a t e s , due to th e h eav y g o ld im p o rt movements o f N ovem ber, D ecem ber, and
Ja n u a ry ,
The i n c r e a s e i n th e g o ld s to c k s in c e th e m id d le o f l a s t S ep tem ber h a s
b een more th a n $ 4 0 0 ,0 0 0 ,0 0 0 , and d u rin g th e p a s t y e a r h a s am ounted to aD p ro x im a te ly
$ l #500f 000#0 0 0 | e x c lu s iv e o f th e i n c r e a s e due to r e v a l u a t i o n o f p r e v io u s h o ld in g s
of m o n etary g o ld .
In a d d i t i o n t h e r e h a s b een an i n c r e a s e o f m ore th a n $ 1 0 0 ,0 0 0 ,0 0 0
i n th e amount o f s i l v e r c u r r e n c y o u ts ta n d in g , and s u b s t a n t i a l n e t d is b u rs e m e n ts by
th e T re a s u ry o f o th e r fun d s*
The c o n tin u e d in c r e a s e i n e x c e s s bank r e s e r v e s h a s b een r e f l e c t e d to
some e x t e n t i n a f u r t h e r d e c l in e i n s h o r t te rm money r a t e s to new low l e v e l s ,
b u t even m ore i n a f u r t h e r r e d u c t i o n i n y i e l d s on lo n g te rm s e c u r i t i e s , e s p e c i a l l y
th o s e o f th e h i g h e s t g rad e*
C hanges s in c e l a s t S ep tem b er and d u rin g th e p a s t
y e a r i n s h o r t te rm money r a t e s and bond y i e l d s a r e shown i n t h e f o llo w in g t a b l e :
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ja n . 3 1 ,
1934
S e p t. 2 9 ,
1934
1
S to c k Exchange c a l l lo a n s
1 l/4 - l l/2
Open m a rk e t co m m ercial p a p e r
1 /2
90 day a c c e p ta n c e s
Jan. 31,
1935
1
1
3 /4 - 1
3 /4
3 /l6
l/8
D ir e c t com m ercial lo a n s (New York C ity a v e ra g e )
2 .4 6
2 .0 8
1 .7 5
T re a s u ry s e c u r i t i e s
B i l l s (a v e ra g e r a t e on l a t e s t s a l e )
91 day
182 day
C e r t i f i c a t e s o r n o te s m a tu rin g i n 11 m onths
Long te rm bonds (a v e ra g e y i e l d )
1 .7 2
1 .6 7
3 .3 5
0 .2 9
0 .2 7
3 .1 8
0 .1 4
no y i e l d
2 .6 7
4 .5 9
3 .8 1
3 .4 3
4 .2 5
6 .4 7
3 ,9 6
6 .4 8
3 .7 6
5 .9 9
O th er bonds
M u n ic ip a ls (a v e ra g e y i e l d on 15 h ig h g ra d e )
C o r p o r a tio n bonds
Aaa (a v e ra g e y i e l d on 30 bonds)
Baa (
"
"
* 30
" )
The r a p i d a c c u m u la tio n o f e x c e s s r e s e r v e s i n member banks h a s te n d e d to
o b s c u re _jbhe f a c t t h a t bank fu n d s h av e been em ployed in v e r y l a r g e v o lu m e.
R e se rv e
r e q u ir e m e n ts o f a l l member b an k s h av e in c r e a s e d a p p ro x im a te ly $ 1 3 0 ,0 0 0 ,0 0 0 s in c e
l a s t S eptem ber and a t l e a s t ^ 5 0 0 ,0 0 0 ,0 0 0 s in c e th e m id d le o f 1 9 33, r e f l e c t i n g th e
m ost r a p i d e x p a n s io n o f bank d e p o s i t s s in c e 1924«
In th e p r i n c i p a l New Y ork C ity
b a n k s , n e t demand d e p o s i t s a r e now h ig h e r th a n a t any p r e v io u s tim e w ith th e ex
c e p tio n o f one week a t th e tim e o f th e b re a k in th e s e c u r i t y m a rk e ts i n th e autumn
o f 1 9 2 9 , and f o r r e p o r t i n g member b an k s i n o th e r p r i n c i p a l c i t i e s , n e t demand de
p o s i t s now a r e p r o b a b ly c l o s e to th e h i g h e s t l e v e l s e v e r r e a c h e d .
I n th e s m a lle r
l o c a l i t i e s d e p o s i t s rem a in s u b s t a n t i a l l y below th e l e v e l s o f 1930 and a few y e a r s
p r e c e d in g , r e f l e c t i n g a d e c r e a s e in th e number o f b an k s th ro u g h bank f a i l u r e s .
The w hole g ro u p c l a s s i f i e d a s " c o u n tr y " ban k s show s, h o w ev er, a v e ry l a r g e i n
c r e a s e i n d e p o s i t s s in c e th e m id d le o f 1933,
P a r t o f th e i n c r e a s e in d e p o s i t s h a s b een due to th e same f a c t o r a s
th e i n c r e a s e i n bank r e s e r v e s , nam ely th e l a r g e i n c r e a s e in g o ld s t o c k , b u t a
l a r g e r p a r t h a s been due t o c r e d i t e x p a n s io n .
Thus f a r t h e r e h a s n o t been much
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
e v id e n c e o f an e x p a n s io n i n o r d in a r y co m m ercial l o a n s , e x c e p t f o r a s u b s t a n t i a l
s e a s o n a l i n c r e a s e l a s t autum n, b u t t h i s i s in k e e p in g w ith th e d ev elo p m en ts f o llo w
in g o th e r p e r io d s o f d e p r e s s io n , when a r i s e i n co m m ercial lo a n s h a s u s u a l l y la g g e d
c o n s id e r a b ly b e h in d th e u p tu r n in b u s i n e s s .
L iq u id a tio n o f s e c u r i t y lo a n s h a s
p ro c e e d e d f u r t h e r , accom panying e r r a t i c f l u c t u a t i o n s in th e m a rk e t f o r th e more
s p e c u la tiv e s e c u r i t i e s .
The g r e a t e x p a n s io n th u s f a r h a s been in Government s e c u r i t y h o ld i n g s .
The in c r e a s e i n h o ld in g s o f such s e c u r i t i e s , in c lu d in g Government g u a ra n te e d
s e c u r i t i e s , d u r in g th e p a s t few y e a r s i s re v ie w e d in th e f o llo w in g t a b l e :
U. S . Government S e c u r i t y H o ld in g s o f Member Banks
Amount in m i l l i o n s o f d o l l a r s
Per. c e n t o f t o t a l lo a n s & in v e stm e n t!
End o f
Y ear
New
Y ork
C ity
O th er
R e se rv e
C itie s
"C o u n try ”
b an k s
A ll
Members
New
York
C ity
1930
1 ,2 3 9
1 ,7 2 6
1 ,1 5 9
4 ,1 2 5
14
1931
1 ,7 6 8
2 ,1 3 2
1 ,4 1 8
5 ,3 1 9
1932
2 ,6 0 3
2 ,4 6 2
1 ,4 7 4
1933
2 ,3 6 2
3 ,2 0 9
1934
3 ,5 2 4
4 ,9 0 4
O th er
R e se rv e
C itie s
"C o u n try "
b an k s
A ll
Members
13
9
12
24
18
13
17
6 ,5 4 0
35
23
15
24
1 ,6 8 3
7 ,2 5 4
34
32
21
29
2 ,4 5 6
1 0 ,8 8 5
45
42
28
39
U. S.. Government S e c u r i t y H o ld in g s o f F e d e r a l R e se rv e Banks
End o f
Y ear
Amount :Ln
M illio n s o f <l o l l a r s
P e r ic e n t of t o t a l
lo a n s & in v e s tm e n ts
1930
729
5 3 .9
1931
817
4 4 .8
1932
1 ,8 5 5
8 7 .2
1933
2,437
9 1 .3
1934
2 ,4 3 0
9 8 .9
As t h i s t a b l e i n d i c a t e s , t h e Government s e c u r i t y h o ld in g s o f member b an k s
i n New York C ity and i n o th e r R e s e rv e c i t i e s in c lu d in g C hicago hav e n e a r l y t r i p l e d ,
R ep rod uced from th e U ncla ssified
I D e cla ssified H o ld in g s o f th e N a tio n a l A rch ive s
4
and in "country" banks Government security holdings have more than doubled, during
the past four years.
For all member banks the Government security holdings have
increased from 12 per cent of total loans and investments to 39 per cent.
Comparable data on the Government security holdings of non-member banks
are not available, but it is clear that their participation in financing the nation
al debt is nothing like proportionate to the participation of member banks.
Mutual
savings banks in New York State, for instance, had about 8 per cent of their funds
invested in Government securities on June 30, 1934, as compared with more than 33
per cent for all member banks on that date, and non-member banks that are insured
in the Federal Deposit Insurance Corporation had less than 15 per cent of their
funds in Government securities on the same date.
Forty-nine of the principal life insurance companies increased their
holdings of Government securities from $421,000,000 at the end of 1932 to
$1,468,000,000 at the end of 1934.
Such holdings increased from about 2 per cent
of the . total assets of these companies to somewhat over 7 per cent.
Despite this
large increase, however, their holdings of Government securities remain small
relative to those of member banks.
Other holders of Government securities evidently
have not increased their holdings in anything like the same proportion as have
member banks and life insurance companies.
End of
Year
Interest
Bearing
G o v U Debt
U. S. Securities
Held by Member
and F.R,Banks*
U. S. Securities
Held by Others
Percentage o f
Gov’t Debt Held ByMember and
F» R. Banks
Others
(In millions of dollars}
1930
15,774
4,854
10,920
31
69
1931
17,528
6,136
11,392
35 ;
65
1932
20,448
8,395
12,053
41
59
1933
23,450
9,691
13,759
41
59
1934
27,944
12,326
15,618
44
56
^Exclusive
of Government guaranteed bonds,
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
5
In England the holdings of Government securities by the London clearing
banks at the end of 1934 amounted to 11 per cent of the national debt, and their
holdings together with those of the Bank of England accounted for only about
15 l/s per cent of the national debt, as compared with 44 per cent for member and
Federal Reserve Banks in the United States*
It
____
seems clear that the great accumulation of excess reserves in member
banks has been a very large factor, if not the principal factor, in the strong
market for Government securities which has been reflected in the reduction in
yields on long term Government bonds to the lowest levels in many years, despite
an increase of approximately $4,500,000,000 in the gross debt of the Government
during the past year.
It should be noted at the same time, however, than even if there were
no further increase in excess bank reserves, the basis has been provided for a
tremendous expansion in bank credit and bank deposits far in excess of any amounts
that are likely to be needed to finance business recovery.
Assuming the same
ratio to total deposits to total reserves as at present, the present volume of
reserves held by the banks would support an expansion of bank credit which would
raise deposits to something like $81,000,000,000, as compared with an average
of approximately $55,000,000,000 of deposits in 1929 and about $42,000,000,000
at present, exclusive of inter-bank deposits.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rchives
..r I a
- e i : T*tr o n t
J*N 3.1 , - '•*'
BILLIONS
OF DOLLARS
R ep rod uced from the U nclassified
I D ecla ssified H o ld in g s o f the N ational A rchives
\
V
F o a p tn
1 4 8 1>
ELEGRAM
FEDERAL RESERVE BOARD
WASHINGTON
J J 7,
January 50,
Calkins - Bm Francisco
Xour wire t wantyelghth STG? Wire© have bean
received flra* a ll the other Governors indicating th e ir in tention to he preeant
00
f if t h and in view o f other engage
ments previously aad* fo r eighth Governor EccXee feels
th a t i t is better not to change the date from February
1
f if t h
to n - ill
(Slgmd) Ch#ster M9ff®
4
~ /
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspoiiuei.je
To
Governor Eccles_____________
F ro m
Mr. Carpenter______________
FEDERAL RESERVE
BOARD
Date
.... M.
Vu>'
Subject:.
_jLe=*86l2
The replies received to your telegram of January
/
26| 1985»f a llin g a meeting o f the Federal Open Market
Committee in Washington on Tuesday, February 5f a t
10I 50 a* m.f indicate that the follow ing w ill be present
a t the meetingt
Governor Young
Boston
Governor Harrison
New York
Governor Norris
Philadelphia
Governor Fleming
Cleveland
Governor Seay
Richmond
Governor Newton
Atlanta
Governor SchaUer
Chicago
Governor Martin
St. Louis
Governor Geery
Minneapolis
Governor Hamilton
Kansas C ity
Governor McKinney
Balias
Governor Galkins
San Francisco
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 3
-
D a te :
FOR ANSWERS SEE:
1.
2.
> /w /* T
54 .
'/ > * / « '
5.
'/ > * / > /
6.
7
'Irtlt?
. '/>s/*r
8-
'/ > » / * ^
9-
i^jvT
10.
/> i/jr
.
11
i2 .
/Ult, --W vX ^vt^O
Z>i h s
3. 3
f
Reproduced from the Unclassified I Declassified Holdings of the National Archives
TELEGRAM
FEDERAL RESERVE BOARD
WASHINGTON
J a n u a ry £ 6 f 1955#
Young - Bosteal
£challer - Ciiic©go
H a r r is o n — !few Y ork
N o r r is - P h ila d e lp h ia .
F lam in g - C le v e la n d
fce&y - Kiciuaond
Kisn't on - A tla n ta
M a rtin — &-t* uoui©
G eer;/ — M in n e a p o lis
H am ilto n - K an sas C ity
McKinney - U & llas
C a lk in s - £&n F r a n c is c o
Trane *7 ?' .^ ^ .... -.
k m e e tin g o f th e F e d e r a l Open M ark et C o su aittee i &
he re b y e& H ed t o b e h e ld a t W ash in g to n a t th e o f f ic e ® o f
t h e F e d e r a l R e s e rv e Board b e g in n in g m T u esd ay F e b ru a ry f i f t h
a t te n t h i r t y a . s ,
STOP
I t w i l l fee a p p r e c ia te d i f you.
w i l l s:d v ise me hy # i r e M t o y o u r a tte n d a n c e
M. 8 . E c c le s
Reproduced from the Unclassified / Declassified Holdings of the National Archives
lr« f • Randolph Burgeaa, Soorotary,
Fodoral 0p*a Harkot Conitttoo*
Oaro FodoraX ftoaor*o Bank of How fork,
sow loric* how zone#
Boar Hr* Burgoooi
Boootpt ia acknowledged of your lottor of
)'111,1
w—nnmnwim'ffni'ipn
January SB. 1 9 W J addroaaed to Govornor Eecioa* and
ineloaing * copy o f tho tontatiw draft o f tto iJ tm ito ft
of tho aootlng of tho oxocutlvo oonalttoo o f tho Fad**
oral Qpon Siarkot Coawlttoo hold in Washington on
January SSf 1955.
Governor Boelo* has requaatod no to advlso
you that ho haa no changoa to suggoat In tho draft
o f tho ninutoa.
fo ry tru ly your*,
i m M i CMtS* fc '> !
Choat«r Morrill,
Soorotary*
RC/acw
^
%%*>. 3 -^ *1
' ^ v#Mr
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
Fe d e r a l R e s e r v e B a n k
of N e w Y o r k
J a n u a ry 2 6 , 1955
D ear G overnor E c c le s :
E n c lo s e d h e r e w ith
m in u te s o f th e e x e c u tiv e co m m ittee h e ld y e s te r d a y in
W ashington and m e n tio n ed in ray te le g ra m o f t o - d a y , a ls o
a copy o f th e s e c r e t a r y ’ s r e p o r t o f o p e r a t i o n s .
V ery t r u l y y o u rs
W. R andolph B u rg e ss
S e c re ta ry , F e d e ra l
Open M ark et Com m ittee
Hon. M a r r in e r S . E c c le s ,
G o v ern o r, F e d e r a l R e se rv e B o a rd ,
W ash in g to n , D. C.
WRB.H
e n c l.
t
M
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3 1 3 .3 -*^
'
wm
tJh*t
m vism fc* mnt
to A ll
A
y
of th* F«d«r*l
0|mni Ifeutet CoMdtt** to «N;i'ii#«rt th*« atibj*et to th* approml
of th*
'R&mrm Bo*M tm Authorl**
ending mmmtim
th*
tho *x*eutlv*
comltt#* in
m*r
futusr** t® mk* pturehft*** or ^JL*& or *hl>ft« hmtmm m tw rit i* * Ia the % *t*» Aeoouot up t * * to ts ! o f $&&OfOQO»9CX)«
This authorisation 1# In «d4ltta* to th* *uthorl*&tlaa to mk*
shift* fe*t**«a a*turltlM up t* 100 alUlon -Jollar*
at
tli* D9*Mfe*r 17 a**ttng» fhl* £ut&arU&tl<ra 1* d**lr*d
primarily t* pi*** th* %*t*» la position to «*© it* luflu^n**
tonmrd* nr*v*atiag any poenlhl* dlttnrfeaac** in th* mrlc*t
gwndliif * s*N*tls& of th* full eoMRitt***
r
i
"
IfMS
Reproduced from the Unclassified I Declassified Holdings of the National Archives
S3
3,
TENTATIVE DRAFT - SUBJECT TO CHANGE
MINUTES Of THE MEETING OF THE EXECUTIVE COMMITTEE
OF THE FEDERAL OPEN MABKET COMMITTEE
HELD AT WASHINGTON, D* C ., JAN. 8 5 , 1935
The m e e tin g was c a l l e d t o o r d e r a t 1 0 :4 5 a . m* in t h e o f f i c e s o f th e
F e d e r a l B e se rv e B o a rd , t h e r e b e in g p r e s e n t
G o v ern o r E c c l e s ,
G o v ern o rs Young, F lem in g and S c h a l l e r , and
D eputy G o v ern o rs B u rg e ss and H u tt.
In t h e a b se n c e o f G overnor H a r r is o n , G overnor Young was e l e c t e d c h a i r
man p ro tern.
G o v ern o r E c c le s s t a t e d t h a t t h e T r e a s u r y had b een co n cern ed o v e r th e
e x tre m e ly r a p i d r i s e i n governm ent bond p r i c e s , and r a i s e d th e a u e s ti o n w h e th e r
th e B e s e rv e b an k s co u ld n o t o p e r a te in t h e m ark et t o e x e r c i s e some r e s t r a i n i n g
in f lu e n c e on e i t h e r e x c e s s i v e l y r a p i d r i s e s o r d e c l in e s in p r i c e s o f governm ent
s e c u r i t i e s in o r d e r t h a t t h e m ark et m ig h t be m a in ta in e d in sound c o n d itio n i n
a n t i c i p a t i o n o f governm ent f in a n c in g in M arch .
I t was th e v ie w o f t h e T re a s u ry t h a t t h i s was more l o g i c a l l y t h e
b u s in e s s o f t h e B e se rv e b an k s t h a n o f t h e T r e a s u r y , in v o lv in g a s i t d o es t h e
r e g u l a t i o n o f t h e money m a rk e t.
W hile a c e r t a i n amount o f i n f l u e n c e o v e r th e "
m a rk e t c o u ld be e x e r te d b y m aking s h i f t s b etw ee n m a t u r i t i e s in t h e System
A ccount t h e q u e s tio n had b een r a i s e d w h e th e r t h e p u rp o se c o u ld n o t be
a c c o m p lish e d b e t t e r by some ch an g es in t h e t o t a l p o r t f o l i o o f s e c u r i t i e s h e ld
by t h e B e se rv e b a n k s .
On o t h e r g ro u n d s t h e r e was* m o re o v e r, a c o n s id e r a b le
argum ent f o r g r e a t e r f l e x i b i l i t y i n th e p o r t f o l i o ^
T h ere ensued g e n e r a l d i s c u s s io n o f t h e i m p lic a tio n s o f t h i s c o u rs e
in c lu d in g t h e q u e s tio n o f t h e p o s s i b l e a d v e rs e r e a c t i o n o f t h e p u b li c and t h e
m a rk e t t o any s a l e o f governm ent s e c u r i t i e s by t h e B e se rv e banks*
T h e re was
R e p rod uced from th e U ncla ssified / D ecla ssified H o ld in g s o f th e N ational A rch ive s
2
also discussion of the recent effect on the market of anticipation of action
by the Supreme Court.
At 11 o^clock the meeting adjourned to reconvene in a few minutes in
the office of the Secretary of the Treasury.
The Secretary and the Under
Secretary were present in addition to those listed above.
The Secretary raised the question of flexibility in the System
Account as had previously been outlined by Governor Eccles.
Governor Eccles pointed out that if the System Account were to show
any reduction it would be necessary to issue a carefully prepared statement
giving the reasons for the change.
After further discussion of recent and possible market conditions it
was
VOTED that a wire be sent to all members of the Federal
Open Market Committee to request them subject to the approval
of the Federal Reserve Board to authorize the executive
committee, pending a meeting of the full committee in the near
future, to make purchases or sales or shifts between maturi
ties in the System Account up to a total of $250,000,000.
This authorization is in addition to the authorization to make
shifts between maturities up to 100 million dollars voted at
the December 17 meeting. This authorization is desired
primarily to place the System in position to use its influence
towards preventing any possible disturbances in the market
pending a meeting of the full committee. -
A
After some informal discussion of Treasury financing the meeting ad
journed at twelve o'clock and returned to the Federal Reserve Board offices
where it reconvened.
After discussion the motion given above was put in its final form
and there was an informal discussion of possible operations under this motion
in which the dangers of adverse public reaction which might arise from
fluctuations in the portfolio were emphasized and a number of those present
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
3
e x p re s s e d th e hope t h a t i t m ig h t n o t be n e c e s s a r y t o show any change i n th e
t o t a l o f th e a c c o u n t in t h e n e a r f u t u r e .
The m e e tin g a d jo u rn e d a t 1 2 :2 5 p . m#
The m e e tin g reco n v en ed a t 3 :3 0 p . m.
T here was an in f o r m a l g e n e r a l
d is c u s s io n o f T re a s u ry and F e d e r a l r e s e r v e p ro b le m s .
The m e e tin g a d jo u rn e d a t 4 :2 5 p* m*
W. R. B u rg e s s ,
S e c re ta ry .
R e p ro d u ce d from the U ncla ssified / D e cla ssified H o ld in g s o f the I
d e c l a s s if ie d
Authority 0 ^ 0 ,
^ /atebj
7
33
3-
3~^'
CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
EXECUTIVE COMMITTEE OF THE FEDERAL OPEN MARKET COMMITTEE
___________ HELD IN WASHINGTON ON JANUARY 2 5 , 1935_________
The p r e s e n t h o ld in g s o f U n ite d S t a t e s Government s e c u r i t i e s in th e
System S p e c i a l In v e stm e n t A ccount amount t o - - - - - - - - -
# 2 ,2 2 3 ,1 4 9 ,5 0 0 .
T h ere h a s been jn cj change in t h i s amount s in c e Movember 8 , 1953,
T r a n s a c tio n s i n Government s e c u r i t i e s in th e S ystem A ccount s in c e th e
l a s t m e e tin g o f th e F e d e r a l Open M arket Com m ittee on December 1 7 , 1934, w ere a s
fo llo w s s
(1)
R edem ption a t m a tu r it y o f $ 1 0 3 ,7 7 9 ,0 0 0 T re a s u ry b i l l s w hich
w ere r e p la c e d b y p u rc h a s e s in t h e m a rk e t o f o t h e r T re a s u ry
b ills .
(2)
S a le s in th e m a rk e t o f # 5 6 ,0 0 0 ,0 0 0 m is c e lla n e o u s s h o r t - t e r m
is s u e s and re p la c e m e n t p u r c h a s e s in t h e m ark et o f l i k e amount
of
o t h e r s h o r t- te r m i s s u e s c o n s i s t i n g l a r g e l y o f b i l l s .
These s a l e s in c lu d e d $ 4 ,2 0 0 ,0 0 0 T re a s u ry b i l l s t o t h e F e d e r a l
R e se rv e Bank o f K ansas C ity f o r t h e a c c o u n t o f t h e S t a t e
T r e a s u r e r o f Oklahoma and $ 1 0 ,0 0 0 ,0 0 0 T r e a s u r y b i l l s t o th e
F e d e r a l R e se rv e Bank o f C hicago f o r t h e a c c o u n t o f a member
bank.
The p r o f i t r e a l i z e d on s a l e s o f Government s e c u r i t i e s in t h e S ystem
A ccount d u r in g 1934 am ounted t o $ 7 ,3 8 7 ,6 6 5 .8 4 .
T h is p r o f i t was d i s t r i b u t e d to
th e v a r io u s b an k s on December 3 1 , 1934 a s f o ll o w s :
B o sto n
le w York
P h ila d e lp h ia
C le v e la n d
Richmond
A tla n ta
|
5 2 1 ,6 5 7 .8 6
2 ,2 1 5 ,3 0 9 .8 0
5 4 4 ,1 0 1 .5 9
7 0 7 ,8 9 3 .5 3
3 2 7 ,2 0 7 .1 1
2 9 1 ,9 0 8 .8 4
Chicago
S t. L o u is
M in n e a p o lis
K ansas C ity
D a lla s
San F r s n c is c o
$ 1 ,2 2 6 ,8 9 9 .2 2
3 0 8 ,0 5 0 .8 9
1 9 2 ,9 1 4 .1 2
2 9 7 ,3 0 1 .8 4
2 0 1 ,6 9 0 .6 6
5 5 2 ,7 3 0 .3 8
R ep rod uced from the U ncla ssified
I D ecla ssified H o ldings o f the N a tional A rchives
Autho^
Q
-A
^ k r j a ^ e '
i
The table below gives a comparison of the amount and the distribution
according to groups of the appreciation on United States Government securities
as held in the System Account on December 12, 1934 and January 23, 1935 as repre
sented by the difference between market bid prices and book values:
Dec. 12, 1934
Certificates of Indebtedness
Liberty Loan and Treasury Bonds
Treasury Notes
Treasury Bills
Totals
$
0
7,905,876.22
23,594,201.92
0______
$31,500*078*14
Jan. 23, 1935
$
0
9,861,736.21
31,299,314.91
_______ 0______
$41,161*051.12
The following table shows, by classification, the holdings in the System
Account of United States Government securities with and without the gold clause:
(000 Omitted)
Classification
of Securities
Treasury Bills
"
Notes
"
Bonds
Liberty Loan Bonds
Totals
With
Gold Clause
Without
Gold Clause
Totals
0
694,935
0
194,894
£■
505,144
704,176
124,000
______ 0 .
$
|889,829
$1,333,320
$2,223,149
$
505,144
1,399,111
124,000
194,894
There were no purchases of bankers acceptances during the period
17, 1934 - January 23, 1935.
December
Maturities of $148,000 during this period reduced the
System’s holdings of bankers acceptances to $35,000 on January 23.
Attached are statements showing the following:
Exhibit "Aw - Maturity Distribution of Holdings of Government
Securities in the System Account at The End of
Each Month 1932, 1933, 1934, and on January 23, 1935.
Exhibit ,rB" * Classification of Issues Held in the System Account
on January 23, 1935,and the Percentage of Each Issue
Held in the Account as Compared With the Anrnunt of
the Respective Issue Outstanding.
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N ational A rchives
-
D E C L A S S IF IE D
i
Authority CKOf^
3
E x h ib it "CH - C hart Showing C om parison o f A verage H o u rly S a le
P r i c e s on t h e New York S to c k Exchange o f U n ite d
S t a t e s Government 3 P e r Cent and 3 l / 8 P e r Cent
T r e a s u r y Bonds J a n u a ry 7 to 2 4 , 1935.
E x h ib it WD" - C h art Showing C om parison o f D a ily A verage C lo s
in g P r i c e s o f U n ite d S t a t e s T re a s u ry N o tes W ith
G old C lau se and T re a s u ry N o tes W ithout Gold
C la u se , and D a ily Change in S p read B etw een th e
A verage P r ic e o f G old C lau se T re a s u ry N o tes and
T re a s u ry N o te s W ithout Gold C la u se ,
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f the N a tional A rchives
-A
EXHIBIT "A"
MATURITY DISTRIBUTION OF HOLDINGS IN SYSTEM ACCOUNT
END OF EACH MONTH - 1932-33-34-35
(In millions of dollars)
1932
Within
Within
Six Per One
Mcnths cent Year
v/ithin
Per Two
cent Years
3-5
Years
Per
cent Inc.
63 $ 64
•>*
69
76
79
64
75
71 132
73 110
71 134
75
75
75
77
73 101
!
»
1Call
Per able
cent Bonds
Per Other
cent Bonds
37 $ 36
31
24
21
21
21
21
21
21
21
21
—
—
336
336
336
336
336
336
336
336
336
252
252
252
22
21
21
21
20
19
18
17
16
11
11
11
25
25
1
1
1,559
1,629
1,629
1,629
1,682
1,788
1,820
1,921
2,066
2,193
2,223
2,223
24
24
30
21
22
24
26
24
29
29
29
26
252
252
252
195
195
195
195
195
195
no
110
110
11
11
11
9
9
9
9
9
9
5
5
5
25
25
25
64
64
124
124
124
124
124
124
124
1
1
1
3
3
6
6
6
6
6
6
6
2,223
2,223
2,223
2,223
2,223
2,223
2,223
2,223
2,223
2,223
2,223
2,223
26
26
no
110
5
5
124
124
6
6
2,223
2,223
- $212
- 212
- 212
- 239
- 290
4 322
8 336
6 336
8 336
4 336
4 336
6 336
Jan. $165
Feb* 191
Mar. 299
Apr. 583
716
May
June 744
July 733
622
Aug.
Sept. 606
Oct. 651
Nov. 765
Dec. 779
29 | 355
375
32
475
44
57
778
51 1,058
48 1,106
45 1,098
38 1,029
998
37
40 1,051
47 1,046
48 1,021
63 $ 355
64
375
69
475
779
76
75 1,115
71 1,173
67 1,167
63 1,194
61 1,170
64 1,229
64 1,227
62 1,203
1933
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
644
577
709
570
543
656
659
621
706
860*
845*
887*
41
36
44
35
32
37
36
32
34
39
43
40
903
856
856
725
823
879
903
1,025
1,102
1,257
1,235
1,216
58
53
53
45
49
49
50
53
53
57
56
55
1,107
1,090
1,090
958
962
1,117
1,143
1,191
1,278
1,443
1,435
1,426
71
67
67
59
57
62
63
62
62
66
65
64
116
203
203
335
384
335
341
394
452
498**
511**
520**
7
12
12
20
23
19
19
21
22
23
23
24
1934
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
887*
987*
799*
730*
717*
765*
752*
705*
654
749*
752*
794*
40
44
36
33
32
34
33
32
29
34
34
36
1,216
1,190
1,034
1,008
991
972
939
1,018
868
964
968
953
55
54
47
45
44
44
42
46
39
43
43
43
1,426
1,415
1,287
1,476
1,475
1,354
1,321
1,365
1,258
1,342
1,349
1,405
64
64
58
67
66
6.1
59
61
56
60
60
63
520**
531**
659**
488**
489**
550**
583**
539**
646**
647**
640**
584**
1935
Jan .16 792*
" 22 794*
36
36
951
953
43
43
1,403
1,399
63
63
586**
590**
*Includes Fourth Liberties "called"
**Does not include Fourth Liberties "uncalled" maturing October 1938,
Pers^ent Totals
$
567
587
687
1,018
1,405
1,559
1,635
1,640
1,640
1,640
1,640
1,640
R ep rod uced from the U ncla ssified
I D ecla ssified H o ld in g s o f th e N a tional A rchives
-A
DECLASSIFIED
Authori* ' & Q s i e c l a e & p 1
]
EXHIBIT nB"
CLASSIFICATION OF ISSUES' LD T THE SYSTEM ACCOUNT ON JANUARY ' 19?' 'ND THE PERCENTAGE
OF EACH ISSUE IN THE ACCCX,>.i AS
jPARSD WITH THE AMOUNT OF THE h^PECl , ISSUE OUTSTANDING
(000 Quitted)
System
Account
TREASURY BILLS
Holdings
U. S. Treasury Bills due Jan. 30, 1935
$ 17,688
fl
« n
■
■ Feb. 6 , 1935
21,535
n
n
R
R
«
«
17,932
13, 1935
*
tt
n
tt
fl
R
16,650
20, 1935
n n
n
It
fl
fl
27, 1935
19,040
tt
II
n
it
R
Mar. 6 , 1935
20,650
n
n
ii
tt
H
R
13, 1935
17,880
It
R
fl
n
it
R
24,800
20, 1935
II
n
n
tt
M
R
27, 1935
27,700
n
n
tt
II
n
Apr.
18,250
3 , 1935
H
R
tt
tt
N
R
10, 1935
19,532
n
tt
tt
N
fl
It
18,250
17, 1935
n
tt
It
H
R
tt
24, 1955
18,703
tt
tt
R
tt
It
22,250
1, 1935
May
It
It
R
it
it
w
8, 1935
19,440
fl
tt
it
it
II
R
15, 1935
24,287
R
R
tt
tt
N
R
22, 1935
16.875
n
tt
R
tt
II
R
20,700
29, 1935
II
It
R
n
tt
June
5, 1935
23,203
tt
tt
H
R
R
h
19, 1935
19,230
tt
n
n
n
n
II
26, 1935
20,000
n
tt
tt
tt
II July
3, 1935
27,399
H
n
R
n
ti
R
10, 1935
18,750
R
ti
It
R
ii
it
13,200
17, 1935
n
tt
R
R
R
It
24, 1935
TOTALS $ 505,144
TREASURY NOTES
2 l/2$ Treasury Notes R Mar.
«
H
fl June
3
$
II
II
tt
1 5/8*
Aug.
R
R
It
2 1/2$
Dec.
■
fl
fl Apr.
2 7/8$
fl
R
R
1 1/8%
June
fl Aug.
It
tt
3 1/4$
n It
R
1 1/2$
Sept.
tt
R
It
2 3/4$
Dec.
II
R
II
Feb.
3
$
n
II
n
3
$
Apr.
H
R
H
3 1/4%
Sept.
H
R
n
2 5/8$
Feb.
R
fl
it
Mar.
3
$
H June.
R
«
2 7/8$
« It Sept.
It
2 1/2$
R
H
R
2 1/8%
June
15,
15,
1,
15,
15,
15,
1,
15,
15,
15,
15,
IE,
1,
15,
15,
15,
15,
Amount Re
Percentage of
Issue Issues Held to
Outstanding
Amount Outstanding
23.58%
$
75,025
75,327
28.59$
23.81%
75,320
22.17$
75.090
25.36%
75,065
27.43%
75,290
23.72*
75,365
33.05%
75,041
36.92a
75,023
24.32%
75,038
25.92%
75,360
24.25*
75,248
24.90%
75,102
29.66$
75,015
25.89$.
75.075
32.36$
75.045
22.45%
75,168
27.49*
75,287
30.88%
75,139
25.63%
75,020
26.56$
75,300
36.46%
75,150
24.94$
75,185
17.58%
75,079
spective
$ 74,350
1935
130,395
1935
85,723
1935
73,621
1935
1936
157,385
1936
50,000
79,042
1936
1936
58,967
100,568
1936
64,185
1937
84,175
1957
84,750
1937
58,820
1938
96,099
1938
53,000
1938
80,481
1938
1939
67,750
TOTALS $ 1,399,111
LIBERTY LOAN AND TREASURY BONDS
3 1/2$ 1st L/L Bds of 1932-47
4 M 4? lst " ” " 1®52-47
4 1/4* 4th "
c&lled 4/15/35
4 1/4% 4th ■ ■ of 1933-38
3 1/4$ Treas. Bonds of 1941
3 1/4% ■
■ » 1943-45
3 1/4% ■
■ « 1944-46
3
%
"
■ - 1946-48
TOTALS
GRAND TOTALS
26.89$
$
528,102
416,603
353,865
418,291
558,819
686,673
364,138
514,066
357,921
428,730
502,362
817,483
276,680
455,175
618,057
596,405
14.08$
31.30$
24.22$
17.60$
28.16$
7.28%
21.71%
11.47%
28.04%
14.97%
16.76%
10.37%
21.26*
21.31%
8.58%
13.49$
$9,187,370
IE.ZSt
%
25,025
$ 1,398,228
29,000________ 535,982
84,668______ 1,870,000
56,201______ 1,246,578
20,000________ 834,474
25,000______ 1,400,570
39,000______ 1,518,858
4Q.00Q
_______ ItS&l
$ 318,894
% 9,628,198
% 2,223,149
Total of all issues of Treasury Bills, Rotes, l*iberty Loan and
Treasury Bonds outstanding unnatured. . . . . . . . .
Percentage held in $jrstea Account.........................
$ 1,878,886
$20,694,454
1.79$
5.41$
4.53%
4.51%
2.40$
1.78%
2.57%
3.52*
10.74&
.$26,472,445
8.40%
Reproduced from the Unclassified I Declassified Holdings of the National Archives
E x h ib it " C *
Ja n u a ry
Comparison of Average Hourly Sale Prices on New lork Stock Exchange
of United States Government 3 and 3 1/8 per cent Treasury Bonds
J e d e r a l R eserv e B?:
o f New York
1QO
R ep rod uced from the U nclassified
I D ecla ssified H o ld in g s o f the N ational A rch ive s
oAural R eserve BariV
o f No* York
E x h ib it
Reports Department
•**" **, 193**.
ZSK7
PRICE AVERAGE
105
TREASURY ISSUES
W ITH GOLD C LA U S E ]
104
103.22 scrr
102 ifi
32
REASURY ISS UES
W ITH O U T GOLD C LAUSE
102
101
2
3
4
5
7
6
9
10 11 12 44 15 16 17 16 19 21 22 23 24 25 26 28 29 30 31
JANUARY
Conparison of Daily Average Closing Prices (Mid Point Between Bid and
Ask Quotations) of Treasury Note Issues with Gold Clause and those Without Gold Clause
32 N05 OF A POJNT
+ 15
+10
2
3
4
5
7
6
9
10
11 12 14 15 16 17 16 19 21 22 23 24 25 26 26 29 30 31
JANUARY
Daily Change in Spread Between Average Price of Gold Clause Treasury Note
Issues and Treasury Not* Issues Without Gold Clause
,
@FedFRASER