The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235fe
■*,j i'
CONFIIENTIAL
7^U i
MIMUTES OF THS MEETING OF HIE
MARKET INVESmNT C0M5ITTES
HELD AT THE OFFICES tiiF
FEDERAL RESERVE BOARD
WASHINGTON, D. C ., March 24 and 2 5 , 1930
D j
, j
3 / 7 / 3
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 0 a , m ., th e r e b e in g p r e s e n t Frcta th e F e d e r a l R e se rv e B oard,
G o v e rn o r Young and M e s s r s . Cunningham, H am lin, James,
M i l l e r and P l a t t ;
F fo n the B o a rd ’ s s t a f f ,
Dr* G o ld e n w e is e r and M e ssr s. Sraead, M c C le lla n d , N o e ll
and C a r t e r ;
Frcoi th e F e d e r a l R e s e rv e Banks,
G ov ern ors N o r r i s , S ea y , B la c k , Fane h e r , M cDougal, G e rry ,
M a rtin , T a l l e y , and C a lk in s , Mr. C ase, Chairman o f th e
B oa rd , and D eputy G overn ors P addock and W o r th in g to n , and
Mr. B u r g e s s , a c t i n g s e c r e t a r y .
The p r e lim in a r y memorandum on th e c r e d i t s i t u a t i o n and th e S e c r e t a r y ’ s
r e p o r t w6re p r e s e n te d t o th e m e e tin g .
Dr. G o ld e n w e is e r th en d is c u s s e d th e c r e d i t
s i t u a t i o n i n c o n n e c t io n w ith a s e r i e s o f c h a r t s .
G overn or Young and Mr. Case th en re v ie w e d th e o c c a s i o n f o r th e p u rch a se
o f $ 5 0 ,0 0 0 ,0 0 0 o f Government s e c u r i t i e s o r i g i n a l l y a c q u ir e d f o r th e a c c o u n t o f
th e F e d e r a l R e s e rv e Bank o f New Y ork , betw een March 6 and 1 4, and s u b s e q u e n tly
p a r t i c i p a t e d among e ig h t o f th e R eserv e banks thus becom ing a p a r t o f the Open
MarksV In vestm en t A c c o u n t.
T here ensued a g e n e r a l d i s c u s s i o n o f t h i s t r a n s a c t i o n and o f th e g e n e r a l
b u s in e s s and c r e d i t s i t u a t i o n , i n c l u d i n g a d i s c u s s i o n o f th e r e l a t i o n s h i p betw een
t h i£ t r a n s a c t io n and th e f i n d i n g s o f th e m e e tin g o f January 2 8 th and 2 9 th .
In
th e c o u r s e o f t h i s d i s c u s s i o n i t was b ro u g h t o u t t h a t the p rim a ry pu rp ose o f th e
t r a n s a c t io n was t o a ttem p t t o a id b u s in e s s w i i c h had d e v e lo p e d a m ore s e r io u s
d e p r e s s io n than had b een a n t i c i p a t e d a t th e tim e o f th e p r e v io u s m e e tin g .
A
number o f th e g o v e r n o r s i n d i c a t e d th a t th e y had n o t been i n sym pathy w ith t h i s
p u rch a se o f G overnm ents and f e l t t h a t money r a t e s had been e a sed more r a p i d l y
than was d e s i r a b l e .
A number o f th e o t h e r g o v e r n o r s i n d i c a t e d th a t th e y w ere i n
a c c o r d w it h th e p ro c e d u re w h ich had b een f o llo w e d *
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . i^SSo
2
The meeting adjourned a t li3 0 to reconvene at 2:45 with on ly the
rep resen ta tives o f the Reserve banks p resen t.
A fte r some fu rth e r d iscu ssion the
fo llo w in g minute was adopted as rep resen tin g the views o f the meeting:
The Open Market Committee, in clu d in g in form a lly
rep resen ta tiv es o f a l l the reserve banks, has considered
the inform ation submitted in the Chairman’ s prelim inary
memorandum, by the Federal Reserve Board, and by represen
ta tiv e s o f the severa l banks.
While Treasury tax period operation s have d isto rte d
the near-tim e view of the money s itu a tio n , i t is c le a r that
since the meeting o f the Committee on January 28 and 29 money
con d ition s have eased su b sta n tia lly and money has become more
f r e e ly a v a ila b le and the ease has been extended from the short
time to the long time money market.
The Committee b e lie v e s the steps already taken by
the Federal Reserve System in easing the money market through
open market operations have gone as fa r in providing the stimu
lus o f easy money f o r business use as seems d esira b le at th is
time.
The Committee b e lie v e s that at present there is no
occa sion f o r fu rth e r purchases o f Government s e c u r it ie s .
In the in te r e s t o f f l e x i b i l i t y and preparedness f o r
the unexpected, the Committee favors a redu ction in the minimum
buying rate on b i l l s , fix e d by the Reserve Board, to 2 1 /2 $ .
I t is the sense o f the meeting, however, that in the absence o f
some developments that cannot now be a n ticip a te d , b i l l s should
not be bought below 3$.
At 3:50 the fo llo w in g members o f the Federal Reserve Board join ed the
m eeting!
Governor Young and Messrs. Cunningham, Hamlin, James,
M iller, and P la tt.
The minute adopted by the rep resen ta tiv es o f the banks was read and d is
cussed in form a lly without any a ctio n being taken.
Governor Young ra ised the question as to the extent i t was d e sira b le to
c a l l f u l l meetings o f rep resen ta tiv es o f the Reserve banks to consider questions
o f th is s o rt as compared with the p o lic y of handling these questions by co rr e s
pondence.
Messrs C alkins, T a lle y , and Seay in d ica ted that they favored co n fe r
ences as the most s a t is fa c t o r y method o f accom plishing the purpose.
The question was then ra ise d as to the procedure to be fo llo w e d in the
fu tu re by Open Market meetings in view o f the f a c t that the procedure suggested by
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
3
the Federal Reserve Board in i t s le t t e ? o f Jahuary 23 had never been put in to
e f f e c t , but that each Reserve bank had made comments upoaa that l e t t e r , including
various suggestions f o r m o d ifica tio n .
Mr. Hamlin presented a d ig e st o f the r e p lie s made by the s e v e ra l Reserve
banks to the Board’ s l e t t e r .
A fte r some fu rth e r d iscu ssio n Mr. James moved that
the Governor o f the Federal Reserve Board and the rep resen ta tiv es o f the Federal
reserve banks there present should co n stitu te a committee to con sid er amendments
to the open market procedure ou tlin ed in the Board’ s l e t t e r o f January 23.
This
motion was ca rrie d .
The meeting adjourned a t 6 :0 5 .
At 8:30 p. m. Governor Young^and the rep resen ta tiv es o f the twelve
Federal reserve banks, with the ex cep tion o f Mr. Case, who had found i t necessary
to return to New York, reconvened a t the H otel Carlton to con sider the open market
\
procedure suggested in the Federal Reserve Board’ s le t t e r o f January 83, Governor
Young a c tin g as chairman c f the m eeting.
The sev era l p ro v isio n s o f the l e t t e r
were taken up in order, and a s e r ie s o f proposals m odifying to some extent the
Board’ s suggestions was adopted.
These proposals are included in the minutes o f
the meeting o f the fo llo w in g morning, with a few minor changes made at that time.
At the con clu sion o f th is meeting the rep resen ta tiv es o f the Reserve
banks present e le cte d Governor Calkins chairman pro tempore and discussed the
question o f the chairmanship o f the conference and the com position o f the ex ecu tiv e
committee.
Thereupon i t was
Voted to be the sense o f the rep resen ta tiv es o f the Federal reserve
banks present at the meeting that the rep resen ta tiv e o f the Federal Reserve Bank
o f New York be e le cte d Chairman o f the Conference f o r one year;
that the Execu
tiv e Committee provided f o r in the proposed procedure should co n s is t o f the
Chairman and the rep resen ta tives c f the Federal Reserve Banks o f Boston, Cleveland,
P h ilad elp h ia , and Chicago f o r one year;
a ls o , that the Conference adopt the
p r in c ip le o f reasonable ro ta tio n in the membership o f the E xecutive Committee
•w
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
4
a ft e r the f i r s t year
The meeting adjourned a t 11:45 p* m.
The meeting reconvened with the Federal Reserve Board a t 10:30 on
March 25 in the Federal Reserve Board rooms, there being present
From the Federal Reserve Board,
V ice Governor P la t t , p re sid in g , and
Messrs. Cunningham, Hamlin, James, and H ille r ;
From the Board’ s s t a f f ,
M essrs. Goldenweiser, Smead, and McClelland,
Representing the Federal reserve banks,
Governors N orris, Seay, Fancher, McDougal, Martin,
Geery, T a lle y , and C alkins, and Deputy Governors
Paddock and Worthington. Mr. Burgess, a ctin g
se cre ta ry .
The conclusion s reached by the committee the preceding evening were pre
sented to the meeting and discussed in order#
One or two minor changes were
agreed to by the rep resen ta tiv es o f the Reserve banks p resen t.
The proposals
unanimously adopted by the rep resen ta tiv es o f the Reserve banks present a t the
evening and morning m eeting were as fo llo w s :
(1) The Open Market Investment Committee, as at present
co n s titu te d , to be discontinued and a new committee, voluntary
in ch a ra cter, to be known as the Open Market P o lic y Conference,
to be set up in i t s p la ce .
(2 ) The Open Market P o lic y Conference to co n s ist o f a
rep resen ta tive from each Federal Reserve Bank, designated by
the Board o f D irectors o f the bank.
(3) The Conference to meet with the Federal Reserve Board
upon the c a l l o f the Governor o f the Federal Reserve Board or
the Chairman o f the Executive Committee a ft e r con su lta tion with
the Governor o f the Federal Reserve Board.
(4) The fu n ctio n o f the Open Market P o lic y Conference to
be to con sid er, develop, and recommend p o lic i e s and plans with
regard to open market o p era tion s.
(5 ) The tim e, ch a ra cter, and volume of purchases and sa les
to be governed with the view o f accommodating commerce and b u s i
ness and with regard to th e ir bearing upon the c r e d it s itu a tio n .
(6 ) The con clu sion s and/or recommendations of the Open
Market P o lic y Conference, when approved by the Federal Reserve
Board, to be submitted to each Federal reserve bank f o r determina
tio n as to whether i t w i l l p a r tic ip a te in any purchases or sa les
recommended; any Federal reserve bank d issen tin g from the p ro
posed p o lic y t o be expected to acquaint the Federal Reserve Board
and the Chairman o f the E xecutive Committee with the reasons f o r
i t s d isse n t.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
5
(7) An executive committee o f f i v e to be se le c te d
from and by the members o f the Conference f o r a term o f
one year, with f u l l power to a ct in the execution o f the
p o l i c i e s adopted by the Open Market P o lic y Conference and
approved by the Federal Reserve Board, and to hold meetings
with the Board as freq u en tly as may be d e s ira b le .
(8 ) Each Federal Reserve Bank p a r tic ip a tin g in the
Open Market P o lic y Conference to be considered as waiving
none o f i t s rig h ts under the Federal Reserve A ct; each
Federal Reserve Bank t o have the rig h t at i t s op tion to
r e t ir e as a member o f the Open Market P o lic y Conference,
but each bank w hile a member o f the Conference to re sp e ct
i t s Conference o b lig a tio n s .
I t was understood that in agreeing to these proposals the representa
tiv e s o f the Reserve banks there present were in no sense committing th e ir i n s t i
tu tio n s , and i t was understood that the proposals would be submitted by the Federal
Reserve Board to the Boards o f the severa l Reserve banks a ft e r the Federal Reserve
Board has i t s e l f discussed them.
The meeting adjourned at 11:50 a. m.
W. Randolph Burgess,
A cting S ecreta ry.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.
DECLASSIFIED
Authority E.G. 1235k
j
CONFIDENTIAL
Minutes o f Meeting o f Governors o f Federal Reserve Banks
C alled by Federal Reserve Board as a Meeting o f the Open
Market Investment Committee, Washington, D. C.
__________
January 28 and 29, 1950 ,___________________
A m e e tin g 'o f Governors o f Federal, reserve banks ca lle d by the
t j )'? / ? > 0
Federal' Reserve Board as a meeting o f the Open Market Committee convened
a t 10:45 a . m. on Tuesday, January 28, with the Federal Reserve Board,
There were present from the Federal Reserve Board
Governor Young and
Messrs* Cunningham, Hamlin*.James,
M ille r , and t o l e j
M essrs. Goldenw eiser» M cClelland,
Smead, and Carpenter, o f the
Federal Reserve Board s t a ff*
Representing the banks there were present
Deputy Governor paddock
Governors H arrison, N o rris, Fancher,. Seayr
B lackj McDougal, M artin, Geery,
T a lle y , and Calkins*-.
Mr, Burgess, a ctin g se cre ta ry .
The meeting proceeded at once to a d iscu ssion o f the c r e d it
situ a tio n and Federal reserve p o l ic y , Governor Young sta tin g that the
committee was operating under the o ld procedure and not under„,the pro
cedure suggested in the Federal Reserve Board*s l e t t e r X-6484 o f Novcmbo®
S ■
23, which has been sent to each Board o f D ire cto rs fo r th e ir comments*.
Dr,' Goldenweiser reviewed variou s aspects o f the c r e d it situ a
tion^ making re feren ce to a number o f charts*
Governor Young then c a lle d on the governors in turn to express
th e ir opinion on a p roposal which the Board had b efore i t f o r a reduction
In b i l l ra te s and on the general question as to whether the Reserve System
should adopt a program fo r easing the c r e d it situ a tio n fu rth er or not*
Governor McDougal in d ica ted that an easing p o lic y would be worth
con siderin g i f i t would b e n e fit business but he f e l t the present ra tes
were not r e s t r i c t i v e and that there should be a furth er liq u id a tio n o f
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.6.1235k
2
c o lla t e r a l loans*
Governor N orris b elie v e d that open market purchases had "been ca rried
fa r enough, that the o b je c t s o f the November p o lic y had been achieved, and
he would rather see lower money ra te s come o f th e ir own accord than as a re
s u lt o f Federal reserve in terferen ce*
He saw no harm in the lower b i l l ra te
i f f o r the purpose o f preventing b i l l holdings in the System from decreasin g.
Mr. Paddock said he b elie v e d there was more cle a rin g up to be done,
that they favored a p o lic y o f marking time and would not favor carryin g the
easing process any fu rth er now..
At th is p oin t Secretary Mellon join ed the m eeting.
At Governor H arrison’ s suggestion the rep ort o f the Secretary o f
the Open Market Committee was d is trib u te d and the prelim inary memorandum tc.
the committee was d istrib u te d and read aloud.
Governor Harrison stated that
the proposal fo r a red u ction in the buying ra te f o r b i l l s was made by the
Federal Reserve Bank o f New York in order to prevent a decrease in the b i l l
p c r t f o l i o and an increase in rediscou nts such as might lead to a firm ing o f
money ra tes or at le a s t an in terru p tion to the natural downward trend o f
in te re s t r a t e s .
It was not suggested as a program which would a r t i f i c i a l l y
fo r c e a more rapid easing o f c r e d it co n d itio n s although i t seemed l i k e l y that
the d ir e c to r s o f the New York bank might a lso wish soon to reduce the discount
r a te .
Governor Fincher b eliev ed the November program had been p re tty w ell
ca rrie d ou t, that fu rth er easing might be d e sira b le in due course with per
haps a reduction in th e ir discount ra te in February.
J discount ra te was encouraging needed liq u id a t io n .
s lig h t red u ction in the b i l l rate*.
He b e lie v e d the present
He saw no o b je c tio n to a
■w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority B.C. IBSfe
3
Governor T alley stated that he was very w ell s a t is fie d with the
program as i t had been ca rrie d out and with the present discount ra te in
h is d i s t r i c t , that he was opposed to fu rth er s p e c if ic steps toward ease at
p resen t, that he could see the p o s s ib le d e s ir a b ilit y o f an adjustment o f
b i l l ra tes to take care o f a temporary congestion in the market.
Governor Martin said he would lik e to continue h is discount rate
at the present le v e l as several groups o f banks were t ie d up with loans
a ft e r droughts and a ls o other groups with secu rity loa n s, and high ra tes
would a s s is t in liq u id a tin g th is s itu a tio n .
He b eliev ed the r e s u lts o f the
program had been atta in ed and would not now favor changes in discount ra tes
or in b i l l ra te s.
The meeting adjourned a t 1:05 to meet again a t 2 :3 0 .
The meeting reconvened at 2:30 p. m*
P resent:
Governor Young
Secretary Mellon
Messrs. Cunningham, Hamlin, James,
M ille r , and P o le r
Messrs. Goldenw eiser, M cClelland,
Smead, and Carpenter o f the
Federal Reserve Board s t a f f .
Deputy Governor Paddock
Governors H arrison, N orris, Faneher,
Seay, B lack, McDougal,
M artin, Geery, T a lle y , and
C alkins,
Dr. Burgess, a ctin g se cre ta ry .
Governor Black stated that h is bank s t i l l d esired a contin uation
o f c r e d it ease.
He would p re fe r easing through b i l l s but, i f p o s s ib le ,
would reduce the red iscou n t ra te a ls o .
Business was not good in the Atlanta
D is t r ic t , e s p e c ia lly with the sm aller bu sin esses, nor was the mental a ttitu d e
in business good and he b elie v e d that business and th is mental a ttitu d e would
be improved by e a sie r money*
Governor Geery said that h is ra te was s t i l l w ell below the com
m ercial rate fo r money, that the banks s t i l l have loans they want to liq u id a te
Reproduced from the Unclassified I Declassified Holdings of the National Archives
____
DECLASSIFIED
Authority E.G. U3S4,
4
and fo r that reason wish high ra tes continued.
He favored a redu ction in
the h i l l ra te i f not to the poin t o f in te rfe rin g with the d is tr ib u tio n o f
b ills .
Governor Seay said that h is d ir e c t o r s were in sympathy with the open
market program but the m ajority had favored a con tin u ation o f th e ir ra te at
5 per ce n t.
He b elie v e d System p o lic y should be d ire cte d to continuing the
present trend o f ease rather than p o s it iv e a ctio n in e ith er d ir e c t io n .
He
thought pressure on se cu rity loans would continue rega rd less o f the r a t e .
He
shou±d lik e to see to i t that no hardening o f ra te s took p la ce toward the
spring season and thought th is could be done best through b i l l s though it was
p o s s ib le that i t might be desirable to buy fu rth e r s e c u r it ie s , although he
would be very relu cta n t to see i t .
Governoi* Calkins stated there had been a more than usual liq u id a tio n
in h is d i s t r i c t .
He saw 110 occa sion in the d i s t r i c t fo r fu rth er rate change.
, The open market p o lic y appeared to have been accom plished.
necessary i t could best be done .through the b i l l r a t e .
I f more ease was
There was, however, no
occa sion f o r any acute move.
There ensued an extended d iscu ssion on general p o lic y in the course
o f which Governor McDougal stated that he wished to am plify his previous s ta te
ment to in d ica te that he b elie v e d the banks should have f l e x i b i l i t y in th e ir
^ b i l l ra tes and he had not p rev iou sly understood that the suggestion f o r a
reduction in tho b i l l ra te was simply fo r & change in the minimum fix e d by the
Federal Reserve Board.
He b eliev ed that the Board should give the banks an
operating la titu d e in the b i l l r a te .
This meeting adjourned at 4 p. m. and was sh o rtly resumed with only
tiie representatives o f the reservo banks p resent.
The committee was requested
by Governor Young, among other th in g s, to re p o rt to the Board
(a) The advantages o f the change in the re g u la tio n s r e la t iv e
to reserve c a lc u la tio n s suggested by the governors
at the la s t con feren ce.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
(b)
What should be the complexion o f the commlutees
recommended on reserves and chain banking?
The meeting f i r s t discu ssed the Board1s l e t t e r o f January 23 re la tin g to
open market procedure, the telegram which had been sent c a llin g the m eeting,
and what should be the understanding as to the ch aracter o f the m eeting.
At
5 o ’ c lo c k Governor Young attended the meeting by request to d iscu ss with i t
the statu s o f the committee and h is understanding o f the Board’ s l e t t e r .
As
a consequence o f th is d iscu ssion i t was agreed to go forward with the d is
cussion o f c r e d it co n d ition s and p o lic y with the understanding that those
present were not operatin g in any way under the procedure suggested by the
Board’ s le t t e r o f January 23, but that the meeting was informal and under the
old procedure o f the Open Market Committee with the a d d ition
Governors as members.
o f the other
The meeting adjourned at 6 p. m.
In the evening rep resen ta tiv es o f seven o f the banks met at the
Hotel Carlton and drafted a p ro v isio n a l memorandum o f co n clu sio n s.
The meeting was again c a lle d to order a t 10 a , m. January 29,
Present:
j
Deputy Governor Paddock
Governors N o rris, Faneher, Seay,
B lack, McDougal, Martin,
T a lle y , and Calkins
Mr. Burgess, a ctin g se cre ta ry .
In the absence c f Governor H arrison, Governor N orris was e le cte d
chairman o f the meeting and the meeting proceeded to discuss the te n ta tiv e
r e s o lu tio n s which had been drafted the night b e fo r e .
At 10:20 Governor Geery entered the meeting and at 10*35, Governor
H a rriso n .The fo llo w in g fin d in g s were then adopted, a l l those present v otin g
Yes except Governor Martin.
’’ The Open Market Committee, including inform ally the
Governors or Deputy Governors from eleven o f the Federal
reserve banks, has considered the rep ort o f the secreta ry
o f. the Open Market Committee, the prelim inary memorandum,
and the data submitted by the Federal Reserve Board and
by rep resen ta tiv es o f the sev era l reserve banks, and has
reached the fo llo w in g con clu sion s upon the matters th ere-
•m
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
6
in referred to and'upon the s p e c if ic questions asked by the
Federal Reserve Board,
"The fa c t s appear to bei
1. The panicky fe e lin g h a s ' su b s id e d .‘
2. A business re ce s sio n h?s taken p la ce, the extent
or duration of which i s not yet p o ssib le to
determine.
3. Money has been made a v a ila b le to commerce and
industry a t more reasonable r a te s .
4. L iqu idation is progressing in an ord e rly fa sh io n .
5. Rediscounts have been reduced to under
$450,000,000.
6. However, there is a large volume o f s e c u r it y loans
in member banks which they are anxious to get
reduced.
7. L iquidation has been slow er in country banks than
in the c i t y banks.
"Under these circum stances i t is the judgment o f the Committee that
no open market op eration s in Government s e c u r it ie s are necessary
at
th is tine e ith e r t o h a lt or to expedite the present trend o f c r e d it s
"The Committee b e lie v e s , however, that it would have an unfortun
ate e f f e c t upon business i f the demand f o r a d d itio n a l spring b u sin ess,
con cu rren tly with the running o f f o f the present b i l l p o r t f o l io o f the
System should re s u lt in a hardening o f r a te s .
" I t th erefore reconmehds that the minimum buying r o t e .f o r b i l l s ,
fix e d by the Federal Reserve Board, be reduced so that the Federal r e
serve banks may have such f l e x i b i l i t y in th e ir b i l l operation s that
tho present p o r t f o l io may be not only maintained but may i f necessary
be increased to such extent as to avoid the hardening of rates which
might re s u lt from a seasonal demand f o r a d d itio n a l reserve c r e d i t .”
On the question asked by Governor Young, concerning the b e n e fits from
a change in procedure in computing re se rv e s , it was agreed that the severa l
governors would w rite to Governor Young on th e ir return to th e ir banks.
The
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U3S£>
7
meeting adjourned at 12 o ’ clo c k and reconvened at 12;10 o ’ clo ck with the
Federal Reserve Board, there being present in a d d ition to those named above
Governor Young and Messrs. Cunningham, Hamlin, James, and M ille r o f the
Federal Reserve Board, and Messrs. Goldenweiser, M cClelland, smead, and
Carpenter.
The secretary read the fin d in g s adopted by the governors and the
meeting proceeded to an inform al d iscu ssion o f the in te rp re ta tio n o f th is re
p o rt.
The meeting adjourned at 1 p. m. to reconvene in the a ftern oon .
The meeting reconvened a t 3 p. m. with the same persons present
except that Governor N orris and Governor H arrison were absent and Messrs.
Wyatt and N oell attended.
There ensued an extended inform al d iscu ssio n ,
f i r s t , as to the extent o f leeway which the Federal Reserve Board should
g ive the Federal reserve banks in a dju stin g b i l l ra tes without the n e ce s s ity
J fo r Federal Reserve Board approval and, second, as to the probable p r a c t ic a l
e f f e c t s o f a reduction in the Federal Reserve Board*s minimum buying rate fo r
b ills .
A fu rth er d iscu ssion re la te d to the complexion o f the s p e cia l com
m ittee to study bank re se rv e s.
I t was agreed that Mr. Smead should be asked
to p a r tic ip a te in, the study and i t was a lso suggested that Pr. Goldenweiser
p a r tic ip a te and that two or three others be added from in d ivid u a l reserve
banks.
It was agreed that the study should be trea ted as a study undertaken
by the Federal reserve banks and that the expenses o f the study should be pro
rated among the banks.
I t was agreed that Governor Calkins should take
charge o f arrangements necessary to carry forward the study.
The meeting adjourned at 4:45 p. m.
W. Randolph Burgess,
A cting S ecreta ry.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .G . 1235^
CONFIDENTIAL
y
M inutes o f M eetin g o f Open M arket Investm ent Committee
/L
? 7 3 .
^
.^w
___________ W ashington, D. C ., November I S , 1929___________
" / 'V *
f
The m e e tin g was c a l l e d to o r d e r a t 10r50 a . m. th e r e b e in g p r e s e n t
G overnor H a r r is o n , chairm an, and G overn ors H a rd in g , N o r r is , Faneher and M cDougal,
and Mr. B u rg e ss, a c t i n g s e c r e t a r y .
The p r e lim in a r y memorandum and th e s e c r e t a r y 's r e p o r t ,
c o p ie s o f w hich
a re a t t a c h e d , w ere p r e s e n te d and c o n s id e r e d .
G overn or H a r r is o n then re v ie w e d the e v e n ts o f r e c e n t w eeks in th e New
Y ork m ark et, w ith s p e c i a l r e f e r e n c e to th e v a r io u s s t e p s w hich had been taken in
t h a t tim e t o p r e v e n t any s h o r ta g e o f money o r advan ce in money r a t e s i n f a c e o f
th e trem endous s h i f t in lo a n s t o New Y ork C it y banks from o u t - o f - t o w n banks and
o t h e r le n d e r s *
In t h i s c o n n e c t io n G overn or H a rr is o n d is c u s s e d p a r t i c u l a r l y the p u rch a se
o f la r g e amounts o f governm ent s e c u r i t i e s by the F e d e r a l r e s e r v e banks d u rin g t h i s
p e r io d .
He r e p o r t e d th a t as s h o r t term is s u e s had been d i f f i c u l t t o o b t a in in
la r g e b lo c k s ,
i t was n e c e s s a r y to a c q u ir e some o f th e lo n g e r term is s u e s and i n
d i c a t e d th a t t h i s was a f a c t o r w hich w ould have t o be k ep t in mind in any e x t e n s iv e
program o f p u r c h a s e s .
A f t e r f u r t h e r exten d ed d i s c u s s i o n the f o l l o w i n g r e s o l u t i o n was unanim ous
l y a d o p te d \
"S in c e the m eetin g o f the Committee on Septem ber 2 4,
the c r e d i t s i t u a t i o n has changed a b r u p t ly .
There has been a
s e v e r e l i q u i d a t i o n o f c r e d i t a g a in s t s e c u r i t i e s under c ir cu m s ta n c e s
w hich c o n s t i t u t e a s e r i o u s t h r e a t t o b u s in e s s s t a b i l i t y a t a tim e
when th e re w ere a lr e a d y i n d i c a t i o n s o f a b u s in e s s r e c e s s i o n .
T h is
seems c l e a r l y to i n d i c a t e th e need o f h a v in g th e F e d e r a l R eserv e
System do a l l w it h in i t s pow er tow ard a s s u r in g th e re a d y a v a i l a b i l
i t y o f money f o r b u s in e s s , a t r e a s o n a b le r a t e s .
" I n view o f th e s e cir c u m s ta n c e s and f o r the p u rp ose o f
a v o id in g any in c r e a s e , and i f p o s s i b l e f a c i l i t a t i n g some r e d u c t i o n ,
in the t o t a l volum e o f member bank d i s c o u n t s , th e Committee b e l i e v e s
th a t the System sh ou ld be p rep a red t o in c r e a s e the open m arket h o ld
in g s o f th e F e d e r a l r e s e r v e banks th rou gh the p u rch a se o f b i l l s i f
th e y can bo a c q u ir e d in s u f f i c i e n t amounts w ith o u t i n t e r f e r i n g w ith
t h e i r p r e s e n t d e s i r a b l e d i s t r i b u t i o n , and i f n o t , th rou gh th e p u r
chase o f Government s e c u r i t i e s .
m*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . 1235(5
" I t is b eliev ed by the Committee that th is may bo
done with sa fe ty in the in te re s t o f business r/lthout the
r is k that funds so put out by the Federal reserve banks would
be used to stim ulate any abnormal or unnecessary expansion o f
member bank c r e d it .
"The Committee a lso has in mind the f a c t that present
con d ition s may p o s s ib ly develop to the p oin t where, as an
emergency measure, in the in te re s t o f m aintaining banking and
business s t a b i l i t y , i t may be necessary q u ick ly to purchase
large amounts o f Government s e c u r it ie s in order to avoid any un
due stringency in c r e d it .
"The Committee th erefore recommends that the present
lim it o f $25,000,000 per week on the purchase o f government s e c
u r i t ie s be removed and that the Committee be authorized in lie u
th ereof to purchase not to exceed $200,000,000 o f government
s e c u r it ie s f o r account o f such banks as care to p a r tic ip a te , in
order that i t might be empowered and prepared to make purchases
o f government s e c u r it ie s as and when i t may seem to be necessary
fo r the purposes, or in the con tin gen cies outlin ed above, but f
only with the understanding that there be a ca re fu l current r e
view by the Federal Reserve Board and the Committee o f the
consequences o f any such purchases that may be made, and that >
another meeting with the Board be held at any time i t may seem
d e sira b le to the Board or the Committee, and that in any event
there be another such meeting not la t e r than the f i r s t week in
January."
At 1:00 p* m. Governor Harding l e f t the meeting a;;d the meeting adjourned
at 2:05 p. m.
At 2:40 the members o f the Open Market Investment Committee met with
the Federal Reserve Board.
In a d d ition to those mentioned above there were
present Governor Young and Messrs. Hamlin, M ille r , James, Cunningham, Gold&nweiser,
M cClelland, "Sinead and N o e ll.
The S ecretary o f the Board read to the meeting the re s o lu tio n adopted
by the Open Market Investment Committee.
There ensued d iscu ssio n o f the general
p o lic y o f purchasing s e c u r it ie s f o r the purpose o f reducing red iscou n ts, w ith a
view of f a c i l i t a t i n g or paving the way f o r e a sie r money co n d itio n s ;
it y o f emergencies a risin g which would have to be met ra p id ly ;
the p o s s ib il
and a ls o the
extent to which the committee should be authorized to adm inister any p o lic y
adopted.
The meeting adjourned at 4:50 p. m.
W. Randolph Burgess,
A cting S ecretary.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 3 3 . - 4r -X .
M in u tes o f M eetin g o f Open M arket In vestm en t Committee
W ash in gton , D. C . t S eptem ber 2 4 t 1929
The m eetin g was c a l l e d t o o r d e r at 1 0 ;3 0 o ’ c l o c k , th e r e b e in g p r e s e n t
G ov ern ors H a r r is o n , H a rd in g , M cDougal, and N o r r is , and Mr* B u r g e s s , a c t in g
secreta ry .
G overn or F an ch er was n o t a b le t o a tte n d on a cco u n t o f i l l n e s s .
A p r e lim in a r y memorandum r e v ie w in g th e c r e d i t s i t u a t i o n was p r e s e n t e d
by th e chairm an and f u l l y d is c u s s e d .
A b r i e f r e p o r t b y th e s e c r e t a r y r e v ie w in g
t r a n s a c t io n s s in c e th e l a s t m eetin g was a l s o p r e s e n t e d .
A f u l l d i s c u s s i o n o f th e c r e d i t s i t u a t i o n en su ed , a s a r e s u l t o f
w h ich a t e n t a t iv e m in u te c o n t a in in g recom m endations o f th e Committee was d r a f t e d .
At 1 2 :0 0 o ’ c l o c k G overn or Young jo i n e d th e m eetin g and d is c u s s e d w ith
th e Com m ittee p r o p o s a ls made i n th e t e n t a t i v e d r a f t
At 1 2 :3 0 o ’ c l o c k D r. G o ld e n w e ise r jo i n e d th e m e e tin g .
V a r io u s amendments t o th e d r a f t recom m endation w ere c o n s id e r e d .
At 1 :1 5 th e C onsoittee a d jo u rn e d f o r lu n ch and l a t e r , p r i o r t o m e e tin g
w ith th e F e d e r a l R eserv e B o a rd , th e f o l l o w i n g r e p o r t o f th e C oranittee was
u nanim ously a d o p te d by a l l members o f th e Comm ittee p r e s e n t .
h "The Com m ittee has re v ie w e d a p r e lim in a r y memorandum
and c u r r e n t c r e d i t c o n d i t i o n s .
&
"D u rin g th e p a s t e ig h t e e n months i n t e r e s t r a t e s in
t h i s c o u n tr y have g r a d u a lly r i s e n and m oney, e s p e c i a l l y f o r
new u n d e r ta k in g s , has becom e m ore d i f f i c u l t t o o b t a i n .
W hile
b u s in e s s c o n tin u e s a t a h ig h l e v e l , t h e r e a r e sone i n d i c a
t i o n s o f a p o s s i b l e im pending r e c e s s i o n .
"R a te s i n many f o r e i g n c e n t e r s have r i s e n even m ore
m ark edly and th e l o s s o f r e s e r v e s o f c e n t r a l banks t h r e a t e n s
f u r t h e r i n c r e a s e s i n r a t e s and p r o b a b le c u r ta ilm e n t o f E u ro p e ’ s
c a p a c i t y t o buy t h i s c o u n t r y ’ s p r o d u c t s .
’’ In a c c o r d a n c e w ith th e System p o l i c y a d op ted on August
8 t h s e a s o n a l re q u ire m e n ts f o r F e d e r a l r e s e r v e c r e d i t have b een
met by b i l l p u r c h a s e s , and i n f a c t such p u rch a se s have been
s u f f i c i e n t t o r e d u c e r e d is c o u n t s t o some e x t e n t .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
2
"For tho purpose o f avoiding any increase and, i f p o s s ib le ,
fa cilita te"^ son e fu rth er red u ction in the t o t a l volume o f member
bank d iscoun ts during the f a l l season, i f t h is can be done
without stim ulating unnecessary or abnormal expansion o f member
bank c r e d it , the Committee fa v ors a fu rth er increase o f the open
market holdings o f the Federal reserve banks. I t fa v ors an
in crease o f theso holdings by the continued purchase o f b i l l s
i f they can bo obtained in s u ffic ie n t amounts to accom plish
th is purpose. I f b i l l s cannot be obtained in s u ffic ie n t amounts
without in te r fe r in g with the present d e sira b le d is t r ib u t io n ,
i t fa v ors the purchase o f Government c e r t i f i c a t e s o f the short
m a tu ritie s.
’’The Committee th e re fo re recommends that i t be author
ized to purchase not to exceed $ 2 5 , 0 0 0 , 000ja^W9ek o f such
c e r t i f i c a t e s f o r account o f such banks as m k p a r tic ip a t e ,
with the understanding that such purchases be made only under
the con d ition s above sta te d , and with the fu rth e r understanding
that there be c a r e fu l current review o f the consequences o f
such purchases, in order that there may be another meeting
with the Board at any time that that may seem advisable e ith e r
to the Board or t o the Committee. In any event, the Commit
tee f e e l s that there should be another such meeting not la t e r
than November 1 s t ."
'/
The meeting re-convened at 2:30 o 1clo c k w ith the Federal Reserve Board,
there being present in a d d ition to the members o f the Committee, Secretary
M ellon, ana Messrs. F o ie , James, Cunningham, Snead, M cClelland, and N o e ll.
K
A
S ecretary M ellon p resid ed .
The prelim inary memorandum was f i r s t read to the meeting and was
fo llow ed by d iscu ssion o f various aspects o f the c r e d it s itu a tio n .
Governor H arrison then presented the rep ort o f the Committee and i t s
recommendations to the Board.
In presenting these recommendations Governor
Harrison in d ica ted that the proposal fo r a p o s s ib le purchase o f Government
s e c u r it ie s was made on ly to provide fo r the contingency o f not being able to
secure a s u ffic ie n t amount o f bankers acceptances t o meet the seasonal expansion
in Federal reserve c r e d it and make some a d d itio n a l p ro v isio n fo r red u ction in
the t o t a l o f member bank borrow ings.
The proposal to bring about some redu ction
in these borrowings was not made with the thought that i t would be p o s s ib le
to Tiring about any su b sta n tia l ease in the money market under present co n d itio n s ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6.1235k
3
but rather with the thought that son© red u ction in t h is indebtedness would be
a necessary p r e -r e q u is ite to any fu tu re easing o f in te re s t ra te s generally^ as
soon as that became p o s s ib le without the r is k o f unnecessary or abnormal ex
pansion o f member bank c r e d it .
He emphasized the fa c t that money ra te s both
in th is and in oth er cou n tries appeared to have ris e n continuously toward
higher l e v e l s , and that the proposed purchase o f Government s e c u r it ie s , i f
necessary as a supplcnent to purchases o f b i l l s , night be a h e lp fu l in flu en ce
toward preventing fu rth er strin gen cy o f money and paving the way in the future
f o r a re s to r a tio n o f more nornal monetary con d ition s throughout the w orld.
There ensued a d iscu ssion o f the proposals made.
In p a r tic u la r ,
Mr. Cunningham ra ised a question whether a fu rth er red u ction o f b i l l
might be p o s s ib le .
ra te s
Upon th is point i t was the general fe e lin g o f the members
o f the Open Market Committee that a fu rth e r red u ction o f those ra te s at th is
time would be undesirable as an a r t i f i c i a l l y low ra te and would tend to impede
/
or even undo the d is t r ib u t io n o f b i l l s .
A fter fu rth er d iscu ssio n the meeting was adjourned at 3 :3 5 . P ^
W. Randolph Burgess,
A cting S ecretary.
— ------------------------------------------------------- w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .1 2 3 5 k
A
3 3 3.
-Jr - X
CONFHENltAL
H /i I
A meeting of the Open Market Investment Committee was h eld
in the Federal Reserve Board room in Washington, D* C„, a t 5 p» m, on
Monday, A p ril 1, 1929.
P resent:
Governors Harding, N orris,
Fancher and McDougal,
Governor H arrison, Chairman,
The chairman d istrib u te d to each member of the committee a
copy of the formal rep ort of the secretary to the committee dated
A p ril 1, reviewing the tra n sa ction s in the Open Market Investment
Account sin ce the la s t Conference of Governors.
He a lso d istrib u te d
a copy o f a memorandum dated A p ril 1, reviewing g o ld movements, money
ra tes, c r e d it, and business c o n d itio n s .
0
A fte r con sid eration of th is
memorandum and the development of c r e d it con d ition s g en era lly , the
committee in form ally agreed th a t, as there appears to be no need Just
now to con sider the purchase of government s e c u r itie s and as the com
m ittee already has au th ority to s e ll government s e c u r itie s , there is
no occa sion f o r any fu rth er recommendation a t th is tim e.
I t was
understood by the committee that the chairman would make a rep ort of
t h is con clu sion to the Conference of Governors and to the Federal
Reserve Board.
The meeting adjourned a t 6 o * c lo c k .
George L . Harrison,
Chairman,
— —— ——-—
^
— X—1———
Reproduced from the Unclassified I Declassified Holdings of the National Archives
_____
d e c l a s s if ie d
Authority E .G . U35fc,
/ £.
3 33, ~~€
V--^ /
/
CONFinSHTIAL
yO11-
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITOE
HELD AT THE OFFICES <2? THE FE2ERAL RESERVE BOARD
_____________
WASHINGTON, D. C ,. JANUARY 7....1929__________________
The m eetin g was c a l l e d t o o r d e r a t 1 0 :4 5 A , M.
}
fCA
.
#f
^ /
The f o l l o w i n g w ere
p resen t:
G overn ors H a rriso n (C hairm an), F an ch er, H arding,
McDougal, N o r r is and Seay
Mr* B u rgess, A c tin g S e c r e ta r y #
^
I t was v o t e d t o i n v i t e G overn or Seay and G overn or C a lk in s, who were in
W ashington on o th e r m a tte r s ,
t o a t t e n d th e m eetin g o f th e com m ittee and t o i n v i t e
G overnor Young t o a t te n d a f t e r a p r e lim in a r y d is c u s s io n *
The p r e lim in a r y memorandum on c r e d i t c o n d i t i o n s and th e r e p o r t o f th o
s e c r e t a r y w ere read,
and on m otion ,
a c c e p te d *
•/
G overn or H a rriso n made a sta tem en t co n c e rn in g th e p o s i t i o n o f th e a cco u n ts
o f fo r e ig n
c o r r e s p o n d e n ts and th e e f f e c t s upon th e s e a c c o u n ts and upon b u s in e s s
g e n e r a l l y of a c o n tin u e d p e r io d o f h ig h money r a t e s in th e U n ited S t a t e s ,
He i n d i
c a te d th a t th e p r i n c i p a l im p orta n t banks o f i s s u e a b roa d , w ith th e e x c e p t io n o f
Germany, have used la r g e amounts of t h e i r f o r e ig n b a la n c e s in s u s t a in in g t h e i r exi»
ch an ges, and th a t the Bank of E ngland had l o s t l a r g e amounts o f g o l d a l s o ,
H oreover,
in most of th e c o u n t r ie s of Europe th e re tu r n o f p r o d u c tio n and tr a d e t o
more norm al volum e has c r e a t e d a demand f o r a d d i t io n a l c r e d i t and bank r e s e r v e s *
Un$er t h e s e c o n d i t i o n s th e r e has a lr e a d y been some s t i f f e n i n g in money r a t e s a b ro a d
and some i n c r e a s e s in th e d is c o u n t r a t e s o f banks of i s s u e .
T h is movement i s l i k e
l y t o go f u r t h e r i f money r a t e s c o n tin u e h ig h in t h i s c o u n t r y .
m oreover,
I t seems l i k e l y ,
t h a t Europe may r e q u ir e f u r t h e r amounts o f g o l d .
A t t h i s p o in t G overn or C a lk in s e n t e r e d th e m eetin g (1 1 :0 7 A . M .)
G overn or McDougal r a i s e d th e q u e s t io n w hether i t was d e s i r a b le f o r th e
F e d e ra l r e s e r v e banks to make th e p r e s e n t ch a rge o f one e ig h th f o r t h e i r g u a ra n ty
on b i l l s b ou g h t f o r th e a c c o u n t o f f o r e i g n c o r r e s p o n d e n t banks*
G overn or H a rr is o n
i n d i c a t e d th a t t h i s was a cu stom ary ch a rg e by banks i n t h i s c o u n tr y f o r t h i s s e r v ic e .
"■"V*VO
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
*
\
r
2
and that i f fo r no other reason i t was d esira b le f o r the Federal reserve banks to
conform to the p ra ctice in th is country so as not to compete u n fa ir ly with member
banks.
There ensued an inform al d iscu ssion of the general c r e d it situ a tio n and
the methods which might be employed by the reserve banks to prevent fu rth er ex
ce ss iv e increases in the volume of c r e d it, including a discu ssion of the year-end
situ a tio n and the probable return flow of funds to p rin cip a l centers during
January and February.
The d iscu ssion included a lso a review of the methods em
ployed by the reserve banks represented in dealing with member banks who were large
or continuous borrow ers.
I t appeared to be the general view of those present that
interview s with member bankers, to secure th e ir cooperation in preventing excessive
use of Federal reserve funds, were of great value,
p a r tic u la r ly at th is time, as a
means of making sure that the seasonal return flow of funds is employed in the re
duction of b i l l s and s e c u r it ie s of the Federal Reserve System*
The committee a ls o discussed the p o ssib le d e s ir a b ilit y of a sale of secur
i t i e s as a means of preventing the stim ulation of fu rth er in creases in the volume
of c r e d it in the f i r s t two months of the year.
The committee then discussed the p o sitio n of the present Open Market Com
m ittee in view,
( l ) of the f a c t that at the jo in t conference the represen tatives
of a l l the banks in d ica te d a d esire f or the reorga n isation of the committee, and
(Z ) of the form of the Federal Reserve Board1s disapproval of the recommendation
adopted by the meeting of the committee in November.
At 12:35 Governor Young was in v ite d to jo in -the m eeting.
Governor
Harrison summarized f o r Governor Young the discu ssion which had taken p la ce .
Thereupon the members of the Committee discussed with Governor Young the status of
the committee in d ica tin g some p o s s ib le embarrassment in acting when not con stitu ted
in accordance with the wishes expressed by the jo in t con feren ce.
Governor Young in d ica te d that the Board was s t i l l considering the recom
mendations of the conference and that he hoped f o r a ctio n in the near fu tu re .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U3Sfc
3
Concerning the question of the r e la tio n of the committee to the Federal
Reserve Board, the question was ra ised whether as a matter of procedure the Board
was prepared as in the past to approve in advance a p o lic y recommended by the corn-*
m ittee, which would then be executed by the committee,
or whether, as im plied in
the Board’ s l e t t e r of November 27, 1928, the Board would only approve any purchase
or sale of Government s e c u r itie s at the time i t was to be made*
Governor Young
considered various asp ects of th is question with the committee.
There ensued a d iscu ssion of p o lic y as to the discount rates,
a ction ,
d ire ct
or the purchase or sale of Government s e c u r it ie s .
Ihe meeting adj ourned a t 2 P* M,
The committee re-convened at 3 P. M., there being present
Governors Harrison, Fancher, Harding, McDougal,
N orris, Calkins and Seay
Mr. Burgess, Acting S ecretary.
The d iscu ssion of general c r e d it p o lic y and p o ssib le open market opera
tio n s was resumed.
In view of the recen t continued tendency toward an increase
in the volume of cre d it,
the committee was of the opinion that the System should be
prepared to s e ll up to §50,000,000 of Government s e c u r it ie s during January or
February, i f the amount of member bank indebtedness in p rin cip a l c i t i e s should
diminish to an amount where money rates become so easy as to stim ulate fu rth er in
creases in the to ta l volume of c r e d it beyond that required f o r business purposes.
I t was the sense of the committee, however, that there i s no occasion now to make
a recommendation, e ith er as to the purchase or sale of Government s e c u r it ie s fo r
System accoun t.
A fte r fu rth er con sid eration of the matters discussed a t the morning
session the committee expressed the view that i t would be h e lp fu l and d esirable to
have some more d e fin it e understanding or d e fin itio n of i t s fu n c tio n s .
In the past
the Committee has f e l t , and has understood that the Board concurred in the view
that i t was a reasonable and proper d iv is io n of au th ority and r e s p o n s ib ilit y that
the committee should recommend p o lic ie s ,
that these p o li c i e s should then be approv
ed or disapproved by the Federal Reserve Board and the p a rticip a tin g Federal reserve
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6. l£J54>
4
banks, and that i f approved by the Board the committee should than have au thority,
w ithin s p e c ifie d lim its ,
to take such a ction as may be appropriate to carry out
the p o lic ie s so approved f o r account of a l l banks d esirin g to p a r tic ip a t e .
I t was the opinion of the committee that a continuance of th is procedure
would be d esira b le and would f a c i l i t a t e the committee’ s serving i t s most useful
purpose,
e s p e c ia lly i f the membership of the committee is enlarged to twelve as
( recommended by the jo in t conference la s t November,
At 4:05 the committee met with the Federal Reserve Board, there being
present in add ition to those noted above Governor Young,
Messrs* P la tt, Hamlin, James, Cunningham, and Pole,
Messrs. Goldenweiser, Eddy and McClelland.
Copies of the prelim inary memorandum on c r e d it con d ition s were d i s t r i
buted to those p resen t.
Governor Harrison then made a statement reviewing the general cre d it
situ a tio n and the p o sitio n of fo re ig n banks of issue, and summarizing the commit
t e e 's d iscu ssion a t the morning se ss io n .
He read to the meeting the prelim inary
d ra ft of the minute which had been prepared to cover the com m ittee's views with
regard to the p o ssib le sa le of s e c u r it ie s and the scope of the fu n ction s of the
committee.
There ensued a d iscu ssion concerning the general c r e d it situ a tio n , and
p a r tic u la r ly the p rosp ective movement of funds during January and February.
There was a lso an informal discu ssion concerning the p o s s i b i l i t i e s of
broadening the b i l l market.
Some members of the Board ra ised the question whether
the sale of b i l l s from reserve bank p o r t fo lio s would a id in the d is tr ib u tio n of
b ills .
Representatives of the reserve banks present reported that in th e ir opinion
there is an ample supply of b i l l s a v a ila b le a t a l l times f or in v estors without the
n e ce s sity of s e llin g b i l l s from reserve bank p o r t f o l i o s .^
The meeting adjourned at 5:15 P, M*
W. Randolph Burgess,
A cting Secretary.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U3S£>
A ..
m m m m
A m eeting o f the Open Market Investment Committee was h e ld at the Hotel
C a rlto n , Washington, a t 8 i3 0 p* is. on T uesday, November 1 3, I 9 2 8 i
PRESENT:
Mr. McGarrah, A c tin g Chairmanf
G o v e rn o rs H a rd in g, N o r r is and
F an eh er,
Mr, H a r r is o n , A c tin g S e c r e t a r y ,
It
The s e c r e t a r y d i s t r i b u t e d t o each member o f th e com m ittee p re s e n t a co p y
o f th e form a l r e p o r t o f th e s e c r e t a r y t o th e com m ittee dated November 12* t o g e t h e r
a c o Py o f th e p r e lim in a r y memorandum dated November 14*
A f t e r rea d in g and
d is c u s s in g t h e s e docum ents and re v ie w in g c r e d i t c o n d it io n s g e n e r a l l y , th e com m ittee
d e cid e d in f o r m a l l y t h a t i t w ould be a d v is a b le t o renew th e recom m endation con-*
t a in e d in th e l a s t r e p o r t o f th e com m ittee on A ugust 1 3, 1 928, t h a t i t s h o u ld be
a u t h o r is e d t o p u rch a se governm ent s e c u r i t i e s i f
and when t h a t m ight become n e c e s s a r y
in o r d e r t o a v o id an a c u te c r e d i t s t r i n g e n c y .
I t was u n d e r s to o d b y th e com m ittee*
how ever, t h a t i t w ould d e f e r p r e p a r a t io n o f a form al r e p o r t and recom m endation
u n t i l a * t e r a n o th e r o p p o r t u n it y f o r a m eeting a t w hich G o v e rn o r McDougal c o u ld b «
p resen t.
&©fo**e adjournm ent* th e com m ittee d is c u s s e d th e m a tte r o f a p o s s i b l e
a d ju stm en t o f buying r a t e s f o r ban k ers
a ccep ta n ces.
W hile i t was r e a l i z e d b y th e
com m ittee t h a t i t has no form al j u r i s d i c t i o n o v e r t h e m a tter o f b i l l r a t e s , w hich
a re s u b je c t t o a d ju stm en t b y in d iv id u a l r e s e r v e banks as p r o v id e d i n th e law , n e v e r*
t h e l e s s ea ch g o v e r n o r p r e s e n t e x p r e s s e d th e o p in io n t h a t i t m igh t be a d v is a b le f o r
th e F e d e ra l R eserv e Bank o f New York t o in c r e a s e i t s buying r a t e s f o r b i l l s o f a ^ l
m a t u r it ie s b y 1 / 0 o f if * i n th e n e a r f u t u r e . ^
M tu ,
The m eeting a d jo u r n e d a t 11 a . m. t o m eet on c a l l o f th e a c t in g chairman*
3 3 3 . - £ -A
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U2Sfe
2
The Open Market Investment Committee reconvened at the M etropolitan
Club, Washington, at 1 :1 5 p„rru on Thursday, November 15f 1928*
PRESENT:
Mr* McGarrah, Acting Chairman,
Governors Harding, N orris,
Fancher and McDougal.
Mr, Harrison, Acting S ecretary.
A fte r fu rth er con sideration o f the memoranda submitted to the committee
at i t s meeting on November 13 , and a fte r d iscu ssion o f the development o f cre d it
conditions during the past year, e s p e c ia lly sin ce the la s t meeting o f the committee,
the committee unanimously
VOTED
to adopt the follow in g rep ort, which i t was understood would be
submitted to the Conference o f Governors b e fo re formal presentation to the fed era l
Reserve Board fo r i t s a ction :
"The committee has reviewed the prelim inary memorandum
submitted by the chairman in re la tio n to cre d it and money market
conditions o f the past year.
I t has given sp e cia l consideration
to the development o f con d ition s sin ce the la s t report o f the
committee on August 13th and to the e f f e c t o f Federal Reserve
p o lic ie s on the volume o f cre d it and the rates fo r money during
the period o f crop movement whose peak has probably now passed.
The committee fe e ls that the p o lic y o f the System has been substan
t i a l l y e f f e c t iv e in providing cre d it fo r seasonal a g ricu ltu ra l and
commercial purposes at r e la t iv e ly low ra tes and without any ab
normal in crease in the t o t a l volume o f member bank loans and
investments fo r th is period o f the year.
’’The committee is o f the op in ion , however, that i t should
s t i l l be the p o lic y o f the System, i f p o ssib le , to prevent any un
duly rapid or unnecessary further increase in the t o t a l volume o f
bank c re d it, although in fa ct the t o t a l loans and investments o f
a l l reporting member banks are now s lig h t ly below the high point o f
May in s p ite o f the usual F all in crease in the demand fo r cre d it
fo r crop movement purposes.
But we are approaching the usual
seasonal demand for currency fo r h olid a y purposes*
This w il l re
su lt in increased borrowings from the Federal Reserve Banks except
to the extent that further g old imports o f f s e t the demand for
Federal Reserve accommodation.
I t is not p o ssib le to estimate the
extent o f the present g o ld movement o r i t s ultim ate e f f e c t upon
cre d it con d ition s and money ra te s.
Already there is some evidence
o f e a s ie r money rates contributed to p a r tly by the in flow o f gold
and p a r tly by the la rg e increase in the b i l l p o r t fo l io o f the
Federal Reserve banks, each o f which has caused a reduction o f
member bank discounts in the New York d is t r ic t *
Some o f th is in
crease in the b i l l p o r t f o l io is due to the sa le o f b i l l s by foreign
banks to support th e ir exchanges, which have f e l t the pressure o f
hj&h rates in th is country.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U35fc
3
“But while these conditions appear to have an e a sie r
tendency at the moment, neverth eless the u n certain ty o f the
g o ld raovemnet, the approaching demand for currency, and the
usual demand fo r Federal Reserve cre d it during December suggest
t o the committee that the System'should s t i l l be prepared in
the event o f an emergency to prevent any undue strin gen cy o f
c r e d it during th is period*
"With a l l these fa cts in mind, the committee renews
the recommendation contained in i t s rep ort o f August 13th that
i t should be the p o lic y o f the System to purchase government
s e c u r it ie s i f and when i t might become necessary to avoid an
ac\3tte strin gen cy.
"The committee would expect to take such steps as may
be needed to carry out th is p o lic y , i f approved, with the under**
standing, .however, that i t would be advisable to have another
meeting o f the committee in the event that any su b sta n tia l
change in con d ition s makes that n ecessa ry ."
The meeting adjourned at 2:25 p* m#
G eorg e I** H a r r is o n ,
A c tin g S e cre ta ry *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U25fc
V
CONFIDENTIAL
A m eeting o f th e Open Market in vestm en t Committee w ith th e C on feren ce
o f G o v e rn ors was h e ld in W ashington at 4 p , nu on Thursday, November 15, 1928#
PRESENT:
Mr. McGarrah, A c tin g Chairman.
G ov ern ors H ardin g, N o r r is , Fancher,
Seay, B la ck , McDougal, B iggs,
G eery, T a l l e y anc^ C a lk in s .
Mr. H a rr is o n , A c tin g S e c r e t a r y .
A t th e r e q u e s t o f th e a c tin g
chairman, th e s e c r e t a r y read t o th e con
fe r e n c e th e r e p o r t o f th e Open Market In vestm en t Committee,
m eeting t o d a y .
as approved a t i t s
A f t e r d i s c u s s i o n o f th e r e p o r t and th e memoranda, p r e v i o u s l y sub
m itte d t o each member o f th e c o n f e r e n c e , on w hich th e r e p o r t was based ,
VOTED
i t was du ly
t o a p p rove and a c c e p t th e r e p o r t as th e recom m endation o f th e
c o n fe r e n c e t o th e F e d e ra l R eserv e Board*
a
In c o n n e c tio n w ith th e c o n s id e r a t io n o f th e r e p o r t ,
t h e r e was an inform a?,
d is c u s s io n o f th e m a tter o f buying r a t e s f o r b a n k e r s 1 a c c e p t a n c e s ,
form al a c t i o n was ta k en ,
©
*V
and w h ile no
i t appeared t o be th e g e n e r a l sen tim en t o f th e c o n fe r e n c e
that i t might be advantageous soon to increase the buying rates fo r b i l l s ,
es
p e c ia lly in view o f the expansion o f the b i l l p o r t f o l io sin ce September in r e la tio n
//
t o th e n e t in c r e a s e in th e t o t a l volum e o f F ed era l r e s e r v e c r e d i t o u ts ta n d in g .
The m eeting a d jo u rn e d t o recon v en e in j o i n t s e s s io n w ith th e Fe <3e r a l
R e se rv e B oard.
G eorge
H a rriso n ,
A c tin g S e c r e t a r y .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U35fc
v
CONFIDENTIAL
A m eetin g o f th e Open Market Investm ent Committee and th e
G overn ors C on feren ce w ith th e F ed era l R eserv e Board was h e ld in
W ashington at 9 :3 0 a . ra* on F rid a y , November 1 6 , 1 9 2 8 ,
PRESENT:
G overn or Young, M e s sr s, Hamlin, M i l l e r
M cIn tosh , James, Cunningham, P l a t t and
Eddy
G overn ors H arding, N o r r is , F aneher,
S eay, B la ck , McDougal* B ig g s , G eery,
T a l l e y and C a lk in s
Mr. McGarrah, A c tin g Chairman'
Mr. H a r r is o n , A c tin g S e c r e t a r y .
The s e c r e t a r y d i s t r i b u t e d t o ea ch member o f th e F e d e ra l
R eserv e B oa rd , a cop y o f th e r e p o r t o f th e Open M arket Investm ent
Committee as approved b y th e C on feren ce o f G overn ors t o g e t h e r w ith
c o p ie s o f t h e p r e lim in a r y memorandum d a te d November 14 and th e form a l
r e p o r t o f th e s e c r e t a r y o f th e com m ittee d a ted November 12*
Upon th e
re q u e s t o f th e a c t in g chairm an, th e s e c r e t a r y rea d th e r e p o r t o f
com m ittee*
In th e en su in g
th e
d is c u s s io n i t was p o in te d out t h a t in
su b sta n ce th e r e p o r t in v o lv e d a co n tin u a n ce o f th e p re se n t p o l i c y o f
t h e System , e x c e p t th a t in th e even t o f a p o s s i b l e em ergency th e System
s h o u ld be prep a red t o pu rch ase governm ent s e c u r i t i e s in o r d e r t o a v o id
an a c u t e c r e d i t s t r in g e n c y .
T h is p r o p o s a l in v o lv e d no more than a
ren ew al o f th e recom m endation co n ta in e d in th e l a s t r e p o r t o f th e
com m ittee d a ted August 13 and approved b y t h e F ed era l R eserv e Board*
I t was th e o p in io n o f th e com m ittee t h a t w h ile th e r e had b een no
o c c a s io n t o e x e r c i s e th e em ergency a u t h o r i t y g ra n te d in A ugust, and
w h ile a t th e moment t h e r e appeared t o b e a tem porary p e r io d o f ea se in
money r a t e s , n e v e r t h e le s s in view o f th e a p p roa ch in g demands f o r cu r r e n c y
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 6 . U3Slo
2
/
f
f o r h o lid a y p u r p o s e s , w h ich n o r m a lly r e s u l t in an e q u iv a le n t easp a n sio a o f F e d e ra l R e se rv e c r e d i t ,
and th e u n c e r t a in t y o f th o
p r e s e n t c r e d i t s i t u a t i o n , th e com m ittee sh ou ld have t h e same emer
g e n c y a u t h o r it y t h a t was g ra n te d t o
i t in August when we were
a p p ro a ch in g t h e u s u a l s e a s o n a l demand f o r c r o p m oving pu rp oses*
The m eetin g a d jou rn ed a t I 0 i3 0 a* m0
G eorge L, H a r r is o n ,
A c tin g S e c r e ta r y *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U35k
'•>
Q
c Q ttn n m M L
A meeting o f the Open Market Investment Com®i t tee was held
Washington, D* C. t at 10 a* m«, Monday, August X3t 1928*
S /> 3 I J - V
A memorandum on credit conditions together with the report o f the
secretary covering the operations in the System Account since the last meeting
o f the committee were submitted and made the basis of an extended discussion of
credit conditions and market rates generally*
Reference was made to the report o f the committee submitted at it s
la st meeting, in which the committee expressed the opinion that the present
amount of member bank borrowings at the Reserve banks end present money rates
would not be wholesome i f continued over an extended period and that the committee
should^ therefore, be prepared, yrhen conditions warrant, to exercise its in
fluence to modify these conditions*
It was pointed out that we are now approach
ing a period o f seasonal demand for crop movement and other purposes that make
i t important, that the committee should be prepared tilth authority, to act, i f
necessary, in order to avoid any undue credit stringency*
There was a long
discussion of various means which might be employed in case of need*
generally agreed that
It was
while i t might become necessary to put funds ia the market
through the purchase of Government securities nevertheless it would be preferable
not to use that means any sooner than might be r e t i r e d or u n til i t became evi
dent that other means were not adequate to avoid an undue or unwholesome s tria gency.
In discussing these various factors it was pointed out that the
present level o f rates in this country has depressed some of the principal
foreign exchanges to very near our gold import point, and that there are three
possible courses which might be followed by the banks of issue of those countries
in meeting the situation:
(a ) to permit gold to move out, (b) to increase the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
*
2
discount ra te , ( c ) to use some o f th e ir American balances in order to support
th e ir exchange, thus p o ssib ly avoiding the lo s s o f g o ld or the need fo r an
increase in rates*
I t was stated th at some o f these foreign banks, with th is
in view, have already liq u id a te d commercial b i l l s which the Reserve banks have
held fo r th e ir account, and that i t has been necessary to take over those b i l l s
into the Reserve banks1 p o r t fo lio s , thus putting funds into the market*
I t was
also in d ica ted that i f the pressure on these exchanges contin ues, we might be
requested by some o f the fo re ig n banks o f issue to liq u id a te government secu ri
t ie s from th e ir accounts, and that in view o f the e x istin g sta te o f the govern
ment se cu rity market i t might be necessary fo r the Reserve banks, at le a st
tem p orarily, to take these s e c u r it ie s into th e ir own p o r t fo lio s *
The committee also reviewed the con d ition o f the b i l l market, c a llin g
a tten tion t o the fa c t that we are now approaching a season when there is a normal
increase in the t o t a l volume o f bankers’ acceptances outstanding and in the amount
o f o ffe r in g s o f th ose b i l l s to the Reserve banks.
Purchase o f such b i l l s by the
Reserve System would also put funds in the market*
The committee f e l t , however,
that in s p ite o f a ll these in flu en ces i t might s t i l l be necessary fo r the Reserve
banks t o purchase government s e c u r it ie s in order to prevent any unwholesome re
s t r ic t io n o f c r e d it , and with th is in view, in order that the committee might be
prepared to act immediately in the event o f a n e c e s s ity , the fo llo w in g report was
prepared and adopted as the recommendation o f the committee in regard to the
System’ s open market p o lic y :
’’The p o lic y recommended by the committee in most o f it s
meetings sin ce January, has been to check or prevent unduly
rapid or unnecessary in crease in the volume o f bank cre d it*
While the t o t a l volume o f loans and investments o f reporting
member banks is now con siderab ly above what i t was at the low
point in February, n e v e rth e le ss, i t is approximately
0300,000,000 below the high point o f May, and there is ev i
dence that member banks are making continued e f f o r t s to reduce
th e ir borrowings at Federal Reserve Banks*
"The committee does not b e lie v e that con d ition s n e ce s sita te
an immediate purchase o f s e c u r it ie s by the System, I t is o f the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U354,
w#
3
op in ion ! however, that as pointed out at i t s la s t meeting,
an extended period o f high money ra tes and heavy pressure
re su ltin g from la rg e borrowings by member banks would not
be wholesome and th a t there are some in d ica tio n s that with
the approaching f a l l demands fo r c r e d it i t may soon be
p o ssib le or necessary to take steps looking toward the
red u ction , or at le a s t the avoidance o f the n e c e s s ity a f
any su bstan tial in crea se, in the volume o f member bank d is
counts* With these fa cts in view and r e a liz in g that i f and
when the time arrives undue delay may be h u rtfu l to the
s itu a tio n , the committee recommends that i t should be the
p o lic y o f the System to purchase s e c u r it ie s whenever that
should become necessary to avoid undue c r e d it stringency*
"The Committee would expect to take such steps as may
be needed to carry out th is p o lic y , i f approved, b e lie v in g ,
however, that i t might be advisable to have another meeting
o f the Committee to review the e f f e c t o f any steps that
may be taken in pursuance o f t h is p o lic y * ”
B efore adjournment, Governor Young join ed the meeting and presented
to the committee fo r i t s con sideration and recommendation the follow in g two
p rop osa ls:
(A)
That the Federal Reserve Board should w rite a le t t e r to each
Federal Reserve bank in d ica tin g i t s w illin g n e ss to approve a s p e cia l preferen
t i a l discount ra te for a g ricu ltu ra l paper drawn fo r the purpose o f crop market*
in g ; and
(B)
That i t would be d esira b le fo r the Federal Reserve System to
make a p r e fe r e n tia l buying ra te fo r bankers’ acceptances to be ap p lica b le to
new acceptances drawn fo r the purpose o f seasonal crop movement*
A fter Governor Young l e f t the meeting, each o f these proposals was
considered by the committee and w hile no formal action was taken in the short
time a v ailab le fo r d iscu ssio n , i t was the opinion o f the m a jority o f the com
m ittee with regard to suggestion (A) that the p re fe re n tia l rate on a g ricu ltu ra l
paper drawn fo r season crop marketing would be undesirable because i t was
u n lik e ly such a p r e fe r e n tia l ra te would in fa c t reduce the co st o f cre d it to
the farm er, who would pay to his member bank the same rate no matter at what
ra te his bank might be able to rediscount his p a rticu la r n ote, and because i t
was f e l t that the whole problem o f crop movement can be dealt with only as a
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 12354,
part o f the whole cre d it problem in volvin g a l l ra te s in th e ir a p p lica tion to
the t o t a l volume o f cre d it*
In the opinion o f the committee t h is was emphasized
by the fa ct that much o f the borrowing fo r seasonal requirements takes the form
o f borrowings from c it y correspondents on notes c o lla t e r a le d by s e c u r it ie s , and
that i t is p r a c t ic a lly im possible to earmark cre d it once i t has l e f t the Federal
Reserve banks.
Funds loaned by the Federal Reserve banks, even at p re fe re n tia l
ra tes, fin d th e ir way in to the general c r e d it pool in the same way as other
funds put in to the market.
With regard to suggestion (B ), that i s , that the System should make a
p r e fe r e n tia l rate fo r new bankers* acceptances drawn for the purpose o f seasonal
crop movement, it was the opinion o f the m ajority o f the committee that any
d ra stic change in the general p ra ctice o f buying b i l l s , such as a p re fe re n tia l
rate on a p a rticu la r cla s s o f a g ricu ltu ra l acceptances, might have unfortunate
resu lts in d isorganizin g the b i l l market as a whole without at the same time
accomplishing the purposes desired*
It is also f e l t that buying rates for
bankers* b i l l s are n e c e s s a r ily re la te d to the e n tire ra te structu re and that
very d e lib e ra te con sideration should be given to the question b e fo re adopting
a p r e fe r e n tia l ra te out o f lin e with general market rates*
I t was f e l t by a
m a jority o f the committee that advantages that might re su lt from such an action
might be more than o f f s e t by the disadvantages*
The meeting adjourned at l s l 5 p* m# to reconvene at 2:30 p , m*
The meeting reconvened at 2i3Q p . m*. in jo in t session with the Federal
Reserve Board#
PRESENT;
Governor Young, Messrs* James,
McIntosh, M ille r and P latt*
Messrs* Goldenweiser, Eddy and
McClelland*
Governors Fancher, Harding and Norris*
Deputy Governors Harrison and McKay*
Mr, Burgess, Acting Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
The memorandum on cre d it con d ition s and the report to the Open Market
Investment Committee were submitted to and read by the Federal Reserve Board#
Before d iscu ssion o f the re p o rt, Governor Young asked the committee for it s
views on the two questions submitted by him at the morning m eeting.
reported o r a lly the conclusion s o f the committee as given above.
there ensued a
Mr. Harrison
A fter
th is
f u ll d iscu ssion o f the two proposals, e s p e c ia lly that respecting
the p r e fe r e n tia l ra te on bankers* b i l l s *
The committee reviewed to the Board
much o f the d iscu ssion which too.k place at i t s morning meeting, emphasizing
e s p e c ia lly the fa ct that while the committee b e lie v e s i t might be necessary to
purchase Government s e c u r it ie s in order to avoid any undue strin gen cy during
the seasonal f a l l demand, neverth eless i t was f e lt by the committee that th is
action should not be taken unless the various other means o f in flu en cin g the
s itu a tio n , which were discussed and reviewed, should be inadequate.
In response to an inquiry from Governor Young, the members o f the com
m ittee expressed the informal op in ion that as they see the situ a tio n at the
present time there is not now any occasion fo r a change in the discount rates
o f the banks which they represented*
B efore adjournment o f the meeting, i t was pointed ou t, as discussed
at the morning m eeting, that the e f f o r t o f certa in foreign banks o f issue to
s t a b iliz e th e ir exchanges through the sa le o f d o lla rs might p o ssib ly re su lt
in t h e ir s a le o f Government s e c u r itie s now held for t h e ir account and that i t
might be necessary, because o f the sta te o f the Government s e c u r itie s market,
fo r the Reserve banks to take over those s e c u r it ie s ,
at le a s t tem porarily,
pending an opportunity to s e l l them to the market.
The meeting adjourned at 5:00 p. m*., with the understanding that the
Federal Reserve Board would act upon the recommendation contained in the report
o f the committee at the Board meeting the follow in g morning* ^
W# Randolph Burgess,
Acting S ecreta ry ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
,— _______ _______
d e c l a s s if ie d
Authority E .6 . IBSfe
C O P Y
FEDERAL RESERVE BOARD
WASHINGTON
August 16, 1928*
Dear Mr* H arrison:
The Board has reviewed c a r e fu lly the rep ort o f the
Open Market Investment Committee and i t s recommendations o f
August 13, and has also considered the verbal d iscu ssion which
took place during the meeting, and i t is in agreement with the
Committee that the seasonal requirements o f c r e d it w ill probably
develop a s tra in upon the future c r e d it situ a tio n which may rea ct
unfavorably upon commerce and industry, and that i f such a situ a
t io n should develop, the System should take some action to r e lie v e
the strain*
The Board would not care to agree to the purchase o f
Government s e c u r it ie s , except as a la s t r e s o r t. We understand
from the d iscu ssion had with your committee that you favor eas
ing through the b i l l market, i f p o s s ib le , and through the Govern
ment se cu rity market on ly i f unavoidable. With t h is understanding,
the Board approves the purchase o f Government s e c u r itie s by the
committee but lim its the amount to 0100,000,000. I f a situ a tio n
should develop which w il l require re co n sid e ra tio n , the Board w ill
be glad to meet the committee at any time fo r that purpose.
Very tr u ly yours,
(Signed) R. A. Young,
Governor*
Mr. George L, H arrison, Acting Chairman,
Open Market Investment Committee,
c /o Federal Reserve Bank,
Hew York, N„ Y#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 6 . 1235fe
33 3 .
-
W
Confidential
Ibly 10+ i W ,
Minutes o f the Meeting o f the
7 11 % l ± $
'
•
Open Market Investment Committee
Held in Washington, Wednesday, July 18, 1928*
The meeting was called to order in the o ffic e s o f the
Federal Reserve Board at 10:10.
and
There were present *•
Deputy Governor Case, Acting Chairman
Governor McDougal
Governor Fancher
Deputy Governor Hutt
Mr» Burgess, Acting Secretary
The meeting considered the memorandum presented by the
chairman concerning the method o f distributing purchases o f b ills
and securities during the second half year*
In view o f the fact
that the estimates indicated that a ll o f the banks would have
su fficien t earnings to take care o f expenses, dividends, and charge*
of f s , the question was raised in the memorandum whether it was
desirable to make allowance for earnings from other sources before
determining the ratios o f distribution o f assets purchased by the
Open Market Committee*
It was moved and carried that earnings should
be distributed to each bank, in accordance with the ratio o f its
estimated expenses, dividends end charge-offs, without regard to its
probable earnings from other sources*
The meeting then considered the preliminary memorandum on
th e c r e d i t s i t u a t i o n , su b m itte d b y th e chairm an*
A f t e r a d is c u s s io n
o f this memorandum aid related matters the following resolution was
a d o p te d :
7
N
/
j
333.-A-JL.
IP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35fe
Z
The committee has considered the prelim inary
memorandum submitted by the chairman and other features o f
the current cre d it situ a tio n *
The committee recommends that no open market
action be taken at present, or u n til the moderately high
le v e l o f money rates has continued long enough to provide
a te s tin g o f the c r e d it s itu a tio n , which may have the e f f e c t
o f checking unsound uses o f c r e d it .
The committee b e lie v e s , however, that the present
amount o f member bank borrowing at the Reserve Banks and
present money rates would not be wholesome i f continued over
an extended period and b e lie v e s the Reserve System should be
prepared, i f and when con d ition s warrant, to e x e rcise it s
in flu en ce to modify these con d ition s*
The committee b e lie v e s
t h is situ a tio n should have c a r e fu l, continuous study, and
would expect to meet again fo r i t s con sid eration within a
few weeks.
At 11;30 the committee met with the Federal Reserve Board and
there were present, in addition to the committee, Vice Governor P la tt
• Mr. M ille r
Mr. Hamlin
M r . James
and
Messrs* Goldenweiser, Eddy, and Carpenter
The members o f the board present were given cop ies o f the chair
man* s memorandum on the c r e d it s itu a tio n , which was then read aloud*
ensued an extended d iscu ssion based upon the questions ra ise d by the
There
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
3
memorandum.
S in c e th e com m itteef s r e s o l u t i o n d id n o t c a l l f o r any
a c t i o n , no v o t e was ta k en as t o th e m a tter o f p o l i c y , b u t as su g g e ste d
b y members o f th e F e d e ra l R e se rv e B oard i t was agreed by t h o s e p re se n t
t h a t i t would b e d e s i r a b le t o have an oth er m eetin g on August 1 3 , o r
t h e r e a b o u ts *
The m eetin g a d jou rn ed at 1 :3 0 p« m*
W# R andolph B u rg e ss,
A ctin g S e c r e ta r y *
W
IP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
CONFIDENTIAL
Minutes of Meeting of the Open Market Investment Committee
*
S' j x
Friday, May 25, 1928, Washington, D. C.
The meeting was ca lle d to order at 10:20 a. m* by Acting Chairman
Case.
There were present Governors Fancher and Harding
Deputy Governors Case and McKay
Mr* Burgess, acting se cre ta ry .
The report of the secreta ry was submitted and reviewed.
The
chairmanf s prelim inary memorandum, dealing with the c r e d it situ a tio n , was
then reviewed,
Mr* Case reported an o ffe r which he had received from a p riv a te
banker to buy 25 to 27 m illio n d o lla rs of s e c u r it ie s , and he proposed that
th is o ff er should be accepted and the s e c u r it ie s d elivered from the open
market account during the coming week.
Governor N orris join ed the meeting at th is p o in t.
A fte r a fujLl review of the c r e d it situ a tio n the follow in g te n ta tiv e
draft of a re so lu tio n was approved, but with Governor Harding dissenting*
"The Committee has considered the memorandum
by the Chairman reviewing the c r e d it s itu a tio n .
"While there has been some pause in the expansion
of c r e d it , i t is not yet c le a r that the expansion is
d e fin it e ly checked.
"The Committee b e lie v e s that
estim ate the exact e f f e c t of the sa les
have been made t o date, and f e e ls that
a cumulative e f f e c t , not y e t apparent,
in the near fu tu re .
i t is d i f f i c u l t to
of s e c u r it ie s that
i t i s p o s s ib le that
may make i t s e l f m anifest
"The Committee b e lie v e s that sa les of s e c u r itie s
should be continued at le a s t during the next week*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
2
"To take care of any acute situ a tio n which may
develop suddenly, the Committee b e lie v e s furthermore
that i t should have authority to make purchases of
s e c u r it ie s to an amount not exceeding ^10 0 , 00 0 , 000, as
may be necessary, to take care of such a s itu a tio n i f i t
should a ris e * ”
At 11:30 a . m» the committee met with the Federal Reserve Board
and there join ed the meeting Governor Y0ung
Messrs* P la t t , Hamlin, M ille r , James
Dr, Goldenweiser
Messrs* Eddy and McClelland
The prelim inary memorandum on “the c r e d it situ a tio n was read aloud
by Mr. McClelland, and there ensued a d iscussion of the general cre d it situ a tio n
and of the te n ta tiv e d ra ft of the re so lu tio n prepared by the committee*
The
opinion was expressed by a number of those present that i t was undesirable,
in the re so lu tio n to be adopted by the committee and the Federal Reserve Board,
to deal with p o s s ib le emergencies but that the committee’ s re so lu tio n should
deal with tho major fea tu res of the open market program without attempting to
a n ticip a te emergencies, each of which would have to be d ea lt with as i t
occurred*
On the proposal of Acting Chairman Case i t was agreed that the
committee would reconvene a fte r lunch f o r furth er consideration of i t s
resolu tion *
The meeting adjourned at 1:10 p . m*
The open market committee reconvened at 2:15 p . nu, with the follow in g
present *
Governors Fancher and N orris
Deputy Governors Case and McKay
Mr. Burgess, acting secreta ry
Reproduced from the Unclassified I Declassified Holdings of the National Archives
___
d e c la s s ifie d
f
Authority E .6 . U35fc
A fter fu rth e r con sid era tion the follow in g re so lu tio n was adopted
to rep la ce th a t considered at the morning meeting *•
”At the time of the l a s t meeting of the Open
Market Committee on A p ril 30, i t appeared that the ex
pansion in the t o t a l volume of bank cre d it was continu
ing at what appeared to be an unduly rapid rate* Since
then, sales of s e c u r it ie s by the reserve banks have
continued, several of the reserve banks have increased
t h e ir rediscou nt ra tes, and there have been fu rth er
exports and earmarking of gold*
"fth ile there has been some pause in the ex
pansion of bank c r e d it , i t is not yet c le a r that the
expansion is d e fin it e ly checked* This meeting of the
committee was, th e re fo re , ca lled to review and consider
the present c r e d it situ a tio n with the aim of determining
whether any d iffe r e n t p o lic y than that adopted at the
la s t meeting should be recommended*
"A fte r considering the memorandum submitted
by the Chairman and reviewing the various fa c to r s in
the c r e d it situ a tio n , the committee sees no reason to
change the p o lic y adopted at the la s t meeting and
concurred in by the Federal Reserve Board. The com
m ittee b e lie v e s that i t may s t i l l be necessary to
exert fu rth er pressure on the c r e d it situ a tio n and,
to th is end, that i t may be advisable to make fu rth er
sa les of se cu ritie s*
’’The committee would expect to meet again
w ithin the next month*"
At 3 o*clock the committee met again with the Federal Reserve Board
and discussed the re so lu tio n in i t s new form#
The fo llo w in g were presen t,
in addition to the committee:
Governor Young
Messrs* P la t t , Hamlin, M ille r, James
Dr. Goldenweiser
Messrs* Eddy and McClelland
The meeting adjourned at 3:30 p* m.
W. Randolph Burgess,
Acting Secretary.
May 28, 1928.
------------------------------------------------------ w
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 12354,
3 3 V ^ -V '
COWppENmL
^
y / lt/ x g
A jo in t meeting of the Open Market Investment Committee with
the Federal Reserve Board and the Governors Conference was held in
Washington a t 3x15 p , m. on Monday, A pril 30, 1928#
PRESENT;
Governor Young, Messrs, Hamlin, M ille r,
McIntosh, Eddy and Parry, Governors Harding,
N orris, Fancher, Seay, Black, McDougal, Biggs,
Geery, B ailey, T alley and Calkins, and Deputy
Governor Case#
Mr* Harrison, A cting Secretary#
^A copy of the report of the Open Market Investment Committee
dated A p ril 29 was presented to each member of the F e d e r a l R e s e r v e Boardf
together with a copy of the formal rep ort of the secreta ry of the committee
and a prelim inary memorandum prepared f o r the committee on money market and
c r e d it con d ition s generally*
Mr* Case reviewed the con d ition s re fe rre d to
in the prelim inary memorandum and the reasons which prompted the committee’ s
report, which ho explained had been submitted to and accepted by the
Governors Conference th is morning#
In d iscu ssin g the rep ort the question
was raised as to whether the recommendation of the committee was intended
to pave the way f o r fu rth e r rate increases*
I t was•explained that while the
a ctio n taken by the committee was not designed to cause a uniform discount
rate of 4 l / 2 per cent throughout the Federal Reserve System, n evertheless
i t might be necessary in any eVent f o r some of the other reserve banks to
ra ise th e ir rates to that fig u r e la t e r on,**
B efore the meeting adjourned Governor Young re fe rre d to the hear**
ings b e fo re the Senate Committee on Banking and Currency r e la t iv e to the
re so lu tio n concerning brokers* loans.and asked whether there i s any evidence
in any of the d is t r i c t s that any member banks which are continuous borrowers
from, the Federal reserve bank are lending money sim ultaneously on c a ll in
New York#
Each governor reported on con d ition s in h is d i s t r i c t and i t was
the consensus of opinion that there is no such evidence a t the present time
.....■— ——
.........
_
_..
.................................................................... m 1uji 1
■1lip
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
2
although there have been cases, of course, where a bank which had Surplus
funds out on c a ll had to re s o r t to the Federal reserve bank f o r temporary
loans or discounts to make good temporary or unexpected d e f i c i t s in reserves#
I t a lso seemed to be the sense of the conference that i f a t any time i t
should appear that a member bank is borrowing continuously from the Federal
reserve bank in order to lend on c a ll,
the reserve bank might properly take
the matter up with the member bank with a view to co rre ctin g the p ra ctice*
A fte r fu rth er d iscu ssion of the purposes and e f f e c t s of the open
market p o lic ie s of the past year and th e ir re la tio n to the general cre d it
situ a tio n , the meeting adjourned a t 5:45 p. m, with the understanding that
the Federal Reserve Board would la t e r a ct in executive session upon the
p o lic y recommended by the committee*
George L* Harrison,
A cting Secretary*
HP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
3 3 3
CONFIDENTIAL
A meeting o f the Open Market Investment Committee was helcl at the
Hotel Mayflower, Washington, at 3:30 p* m* on Sunday, A p ril 29, 1928.
PRESENT:
Deputy Governor Case, A cting Chairman*
Governors Harding, N orris, Faneher and
McDougal#
Mr, H arrison, A cting S ecreta ry *
Mr* Case d istrib u te d cop ies o f the formal rep ort o f the secretary
to the committee dated A p ril 30*
The committee thereupon discussed the
p rin cip a l tra n sa ction s in the open market account since la s t November, as
reviewed in the rep ort o f the se cre ta ry , and a fte r d iscu ssio n , i t was duly
VOTED
to approve and accept the r e p o r t.
Mr* Case then d istrib u te d to the committee a prelim inary memorandum
dated A p ril 27 reviewing the operation s in the account sin ce the la s t meeting
o f the committee in th e ir r e la t io n to the money market and cre d it con d ition s
g en era lly .
A fter a d iscu ssio n o f the memorandum, togeth er with past and pros
p ectiv e gold movements, the memorandum and i t s con clu sion s were agreed to by
the committee, with a few minor amendments which were incorporated in the mem
orandum*
A fte r further con sideration the fo llo w in g rep ort was adopted, as the
rep ort o f the committee:
"The committee has considered the memorandum sub
m itted by the chairman, and has c a r e fu lly reviewed the open
market op eration s o f the system sin ce the la s t meeting o f the
committee, in the lig h t o f the general c r e d it situ a tio n re
ferred to in the memorandum.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6.1235jo
2
” In view o f th e f a c t t h a t i t now appears t h a t tho
e x p a n sion in th e t o t a l volume o f bank c r e d i t , r e f e r r e d t o in
i t s l a s t r e p o r t , has co n tin u e d a t what seen s t o be an unduly
r a p id r a t e s in c e t h a t t im e , n o tw ith s ta n d in g th e s a le s o f
s e c u r i t i e s made by th e com m ittee and th e r e c e n t in c r e a s e in
th e d is c o u n t r a t e s o f some o f th e r e s e r v e b an k s, th e com m ittee
now recommends th a t th e g e n e r a l p o l i c y a dopted a t i t s
la s t
m eetin g be co n tin u e d u n t i l i t s n e x t m e e tin g , w hich i t would
e x p e c t t o h o ld s h o r t l y a f t e r th e m id d le o f June, u n le s s con
d i t i o n s make an e a r l i e r m eetin g a d v is a b le *
"The com m ittee would e x p e c t t o make such ohanges
in th e open market a cco u n t as m ight be n e c e s s a r y t o c a r r y ou t
th e p o l i c y recommended
The m eeting a d jou rn ed at 6 p* n*
G eorge L . H a r r is o n ,
A c tin g S e c r e t a r y ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . iXiSlo
'—
y *
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
____________ HELD IN WASHINGTON. D . C .» JANUARY 1 2 . 1928
n .
j
•
j
The m eeting o f th e Open Market Investm ent Com m ittee was c a l l e d t o o r d e r
a t 10 a . in., w ith D eputy G overnor Case o f th e F e d e ra l R eserv e Bank o f New York
p r e s id in g .
T here were p r e s e n t G overn ors H arding, F ancher and M cDougal, Deputy
G overn ors Case and H u tt, and Mr. B u rg e ss, who a cte d as' s e c r e ta r y #
p re s e n te d a memorandum r e v ie w in g th e c r e d i t s i t u a t i o n ,
rep ort*
The chairm an
and a ls o th e s e c r e t a r y ^
A f t e r d i s c u s s i o n th e f o llo w in g m otion was a d o p te d :
The Committee has c o n s id e r e d th e memorandum su b m itted by th e chairman
and has re v ie w e d th e program adopted by th e Committee on November 1 , 1927 and
approved by th e F e d e ra l R e se rv e Board*
T h ereu p on , th e fo l lo w in g c o n c lu s io n s were
a d o p te d ;
1,
The o b j e c t o f th e p o l i c y adopted on November 1 has been accom
p lis h e d .
2.
The Com mittee program sh ou ld now worfc tow a rd s somewhat firm e r
money c o n d i t i o n s
a s fa r as n e c e s s a r y t o ch eck unduly
r a p id fu r t h e r ir lc r e a s e s in th e volume o f c r e d i t .
3«
In o r d e r t o a cco m p lis h t h i s program th e Committee would e x
p ect to
s e l l fu r t h e r amounts o f Government s e c u r i t i e s
and i f n e c e s s a r y , t o d e a l w ith g o ld movements in such
manner as n e c e s s a r y t o Carry ou t th e program .
As o u t l i n e d in th e program o f November 1* th e Com mittee would e x p e c t t o
be ch arged w ith th e e x e c u t io n o f t h i s program f o r th e a ccou n t o f t h o s e R e s e rv e
Banks w hich approve and p a r t i c i p a t e and w ould hope t h i s program m ight g u id e th e
Committee f o r th e p r e s e n t , u n le s s a change o f c o n d it i o n s makes fu r t h e r r e v ie w d e
s ir a b le .
I I I L>
3 3 jf.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U3S4,
2
At 11 a. m. the Committee met with members o f the Federal Reserve
Board and there were present, in. a dd ition to the foreg oin g , Governor Young
and M essrs. M ille r , Hamlin, P la t t, Cunningham, Goldenweiser, Eddy, Smead and
McClelland*
Secretary Mellon joined the meeting at 11:20 and Mr. McIntosh
at 11;55 a . m*
Mr. Case reviewed the a ction o f the Committee and presented the fo r e
going motion adopted by the Committee*
There follow ed an extended d iscu ssion
o f open market and discount p o lic y in r e la t io n to current c r e d it co n d itio n s .
The meeting adjourned at 1 p* a*
The meeting reconvened at 2:15 p# m., and there were present Governors
McDougal and Faneher, Deputy Governors Case and Hutt, and Mr# Burgess*
Mr, Case
brought up fo r d iscu ssion and subsequently requested authority to exchange
^100,000,000 o f Third 4 l / 4 per cent L iberty Bonds, now in the open market account,
into the new 3-5 year notes o ffe r e d by the Treasury Department*
I t was moved
and ca rried that t h is authority be granted.
The chairman re fe rre d to a l e t t e r from Governor Calkins o f the San
Francisco bank saying that th at bank had been asked by the Hongkong & Shanghai
Banking C orporation to earmark gold in San Francisco fo r that in s t it u t io n , and re
questing the views o f the Open Market Committee.
The members o f the Committee
present in d icated that they saw no o b je c tio h to t h is tra n sa ction being undertaken
by the Sail Francisco bank*
The meeting adjourned at 2:35 p . m.
W* Randolph Burgess,
Secretary pro tern
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U3S&>
Room 1 7 1 , T rea su ry B u i l d i n g , W ashington, D . C . , a t 1 0 :4 5 a.m . on T u esd a y, |^||
November 1 , 19 27.
PRESENT:
G overnor S t r o n g , Chairman
G overn ors H a rd in g, N o r r i s , F aneh er,
M cDougal, and M e s srs. H a rriso n and
B u r g e ss.
The Chairman d i s t r i b u t e d t o th e members o f th e com m ittee a b r i e f
supplem entary r e p o r t da ted O c to b e r 28, 1 927, e n t i t l e d "S upplem entary N ote
on G old E a rm a rk in g ," in a d d it io n t o th r e e r e p o r t s w hich had p r e v io u s ly
b een n a i le d t o th e members o f th e com m ittee as f o l l o w s :
(a )
P r e lim in a r y Memorandum f o r Open Market In vestm en t
Committee d a te d O cto b e r 1 8 , 19 27.
(b )
D r . B u r g e s s f Memorandum on th e S to ck Market d a ted
O c to b e r 1 8 , 1 9 2 7 .
(c )
R e p o r t o f S e c r e t a r y o f Open Market Investm ent
Committee d a ted November 2 , 1927*
Upon m otion d u ly s e co n d e d , i t was
VOTED
t o send c o p ie s o f th e above m entioned memoranda t o th e
F e d e r a l R eserv e B o a rd ,
A c c o r d i n g l y , th e s e c r e t a r y im m ediately d e l i v e r e d t o th e F e d e ra l
R e s e rv e Board seven com p lete s e t s o f th e memoranda in q u e s t io n .
The Chairman r e p o r t e d t h a t s in c e th e p r e p a r a t io n o f th e su p p le
m entary n o te on g o ld ea rm a rk in g , t h e r e had been an i n d i c a t i o n o f fu r t h e r
movements o f g o l d .
I t was th ou g h t p r o b a b le t h a t a p p ro x im a te ly
&36,000 ,000 o f g o ld would b e e x p o rte d t o B r a z il u t i l i z i n g th e p r o c e e d s
o f a lo a n t o t h a t c o u n t r y ;
t h a t som ething betw een $ 1 7 ,0 0 0 ,0 0 0 and
0 2 5 ,0 0 0 ,0 0 0 o f g o ld w ould b e e x p o r te d t o P ola n d in c o n n e c t io n w it h th a t
c o u n t r y ’ s program f o r s t a b i l i z a t i o n ;
and t h a t in a d d it io n t o th e s e
shipm ents t h e r e w ould p ro b a b ly b e some g o l d movement t o Canada in a cco r d
ance w ith th e u s u a l s e a s o n a l t e n d e n c y .
•-----------------------------------------------------------------------------------«
11
IMP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
2
A f t e r a d i s c u s s i o n o f th e memorandum and th e supplem entary rex
p o r t s nade by t h e Chairman, upon m otion i t was
VOTED
t h a t th e p r e lim in a r y memorandum f o r th e Open Market In «
v estm en t Committee d a ted O c to b e r 18,, 1 9 2 7 , t o g e t h e r w ith th e supplem entary
n o te o r g o ld earm arking b e a dopted as a b a s i s f o r th e c o m m itte e 's program
f o r th e n e x t few months*
There ensued a d i s c u s s io n o f th e v a r io u s q u e s t io n s r a is e d by
th e memorandum and th e o t h e r r e p o r t s *
At one o ’ c l o c k p.m . th e com m ittee a d jou rn ed f o r lu n ch and re-*
convened at two o ’ c l o c k p.m .
A f t e r a fu r th e r
d i s c u s s i o n th e fo ll o w i n g r e p o r t was a d o p te d ;
"The com m ittee has c o n s id e r e d th e c o n f i d e n t i a l pre
lim in a r y memoranda su bm itted by th e Chairm an, and upon th e
b a s i s o f th e memoranda p r o p o s e s t h a t th e open m arket p o l i c y :
o f th e System u n t i l March 1 s t n e x t , u n le s s develop m en ts n o t
now a n t ic ip a t e d r e q u ir e a fu r t h e r r e v ie w , s h a l l b e :
t o m aint a i n s t a b le r a t e s f o r money at about p r e s e n t l e v e l s and
p re v e n t fu r t h e r im p orts o f g o l d .
In o r d e r t o c a r r y ou t th e above p o l i c y , th e com m ittee
would a d op t th e fo llo w in g program and p r o c e d u r e :
( 1 ) The p la n o f o f f s e t t i n g g o l d movements b y pur
ch a s e s and s a le s o f s e c u r i t i e s would b e co n tin u e d as h e r e t o f o r e .
(2 )
Any c o n s id e r a b le advance in r a t e s f o r money t o
w ards th e end o f th e y e a r w ould b e d e a l t w ith o n ly i f n e c e s s a r y
b y tem pora ry p u rch a ses o f s e c u r i t i e s *
( 3 ) D uring th e r e tu r n fl o w o f c u r re n cy w hich u s u a lly
o c c u r s in Jan u ary, s a le s o f s e c u r i t i e s would be made in amounts
s u f f i c i e n t t o in s u re r e tir e m e n t o f th e s e a s o n a l is s u e and pre
v e n t i t s b e in g added t o member bank r e s e r v e s .
(4 )
In ev en t o f th e ren ew a l o f a g o ld movement t o
th e U n ited S t a t e s , g o ld may be pu rch ased abroad in L ondon, and
p o s s i b ly in H olla n d and S w itz e r la n d , i f n e c e s s a r y , a t a p p r o x i
m ately t h e i r g o ld e x p o r t p o i n t s , o r exchange on t h o s e c o u n t r ie s
may b e p u rc h a se d , so as t o a r r e s t , i f p o s s i b l e , a fu r t h e r ix>*
p o r t a t i o n o f g o l d . The l i m i t upon such p u rch a ses t o be
s?10Q ,000 ,000*
Such p u rch a ses w ould a ls o b e o f f s e t th e same
as th e g o ld movement.
G old or exchange purchased may b e in
v e s t e d in b i l l s o r em ployed at i n t e r e s t , as in th e c a s e o f th e
'’ I T
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfc
t
3
bank o f England a ccou n t*
(5 )
The c o n s id e r a t i o n s w hich w i l l gu id e th e com m ittee
as t o when and f o r what amounts such t r a n s a c t i o n s s h a l l b e made,
a re:
( a ) The amount o f b o rro w in g s by member banks
from th e R e se rv e b a n k s;
(b )
The g e n e r a l l e v e l o f i n t e r e s t r a t e s ;
( c ) The movement o f f o r e i g n exch an ge r a t e s
as an i n d i c a t i o n o f p o s s i b l e g o ld im p o r ts .
The com m ittee would e x p e c t t o be ch a rged w ith th e execu
t i o n o f th e program f o r a ccou n t o f t h o s e R eserv e banks w hich approve
and p a r t i c i p a t e * ”
The m eetin g a d jou rn ed at 5 p*nu
G eorge L » H a rrison *
A c tin g S e c r e ta r y *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
A j o i n t m eetin g o f th e Open Market In vestm en t Committee w ith
th e F e d e r a l R eserv e Board was h eld in W ashington at 1 1 :1 0 a.m . on
Wednesday, November 2 , 1927*
PRESENT:
S e c r e t a r y M ellon
G overnor Y oung, M e s s r s . P l a t t , M i l l e r ,
Jam es, Hamlin, Cunningham, Eddy and
G o ld e n w e is e r .
G overn ors S tr o n g , H a rd in g, N o r r is ,
Fancher and M cDougal, and M e ssrs.
H a rriso n and B urgess*
The r e p o r t o f th e com m ittee as fo rm u la te d on th e p r e v io u s
day was p re s e n te d and fo llo w e d b y an e x p la n a to r y comment by G overnor
S t r o n g , p a r t i c u l a r l y w ith r e g a r d t o th e g o ld movement s in c e 1924
and i t s r e l a t i o n t o th e volume o f F e d e ra l R e se rv e c r e d i t and c r e d i t .■
con d ition s*
T here ensued an e x ten d ed d i s c u s s i o n o f th e v a r io u s p o in t s
c o v e r e d in th e r e p o r t o f th e com m ittee and th e p r e lim in a r y memoranda
on w h ich i t was based*
The m eetin g a d jou rn ed at 1 2 :5 0 p .m . in o r d e r t h a t th e
F e d e r a l R eserv e Board m ight a c t in e x e c u t iv e s e s s io n upon th e p o l i c y
recommended by th e Com m ittee.
G eorge L*. H a r r is o n ,
A c tin g S e c r e t a r y .
TP
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
2
o m n n m rrttt
W tm % m o f
^ _
*< *
j r r o S /o I o k
mnwwrt
o f t b o Opaa Market J a * o * ta « a t OommlliiHi f a r |b* M i f f t l
la fa t& l a f l o a *» ^ q ly
193? a t l i t 00
'"'0-
j -?
ifoisia* Ciiasla^or, f l a i l , ttNftia* *T'«tw8 soft Potato#&*
Mowffeoro o f I b o fod osra l io o o F t o Bom NU
§ o * o * * o r » s tr o n g * H a r d in g « o i * r l » t ? n a « h o r and M tB ougai,
Miaflwif** o f tba Open Mo*fcot tmmtmmt Oorofsilloo*
® & w *rm r tm s m 9 ?odo*o3t 1 m # * m
Bank o f ->*i&&aapolta«
3av**a<jr Mggg* sad Cbalrmna M arita* Pa&oral J lo s o r to %m ik
o f ft* to o ls
Kr« torrtooa*
atenroraor, f i M i Hoaotfo s-nfc of s«r*r Yoifc.
Hr# H ill* * ^ o r o o o r o t a r y o f I b a Trm m txy*
Mr# B a rg o o t* A i t U g B o o r o ta r y , 0 $ « * Marital la w s t t o o n t C o m t t t o o *
B o o l l m I ^ C l ^ l l a a d , & * s i « t a » l S o e r a t a r t o o , ?*&«*ral
nrnm rtm B o a td .
f b o *n*«%ij*§ wm* « * l l * d aa a.
o f I&# % o » Hanteo! T irre »t»* n t
Q m i l t t s o * l t b ilia P o i t r a l f o i a r t o S o a r ! and ra p ra o a n l » l l¥ # » o f %vo o f t lio * !& *
y t l i t r s fcaaka w oro $ r o « * iit *
fb ® O h a lr M i jrro o a a to d M o r e p o r t tw r tm im
mmrkmt o p * f a i t # » s aad o r e t . l t fo a a il i i m o #
opo»
¥ha c r e d i t p o l i c y o f I b o % ® l«*s m s
t ^ w n i p o a fu lly d l t o u M o d .
y ^ 1* O o a a id e r a t lo a * * « # ! * • * t o l b # oontlflKied f o i l l a oootsodilgr ^ v U w e , t o th e
f o o t I b a t |b«r«* m * 11 d t a t w a lia a o f b o rv o w la g fro«jjlh© r#*s#rro Iuwik* i a a ysfpaiv
• a lly to ooao
i * b a o ia a e e # awid e a p e e i& lly t o th a r o l a t l o a o f money
r ^ t o e t ii t b o T*attad S t a l e s t o tfoiuqr r a t e # l a
I t * a s r v p o r im i ife a t b s »
eanoe o f lia&fy fo ro ifa j * « p « i s *M cb am lilroly to laerfc&t# with the f a l l
« » tam est o f ©oiw ao& iiio* t o
I b a r e wmi a o o a t la a e d d r a t * o a m m p w m o c m t n i
than
H sooro ^ltScoly tb A t cpoatral
^ aton t a
l n ^ i wmald aood to bo f«B rtb»r a tfo a a o i tlilo f a ll*
vato a hiwn a liro a iy
onoo adimacod
flw <!>««■« and A a a lrta a
tb tro I t aoswi p fo b a b tlity o f a oao
fo r ooat ^ m m m ia U lo m l# o f I k i Baak o f ^ag liw d *
A l l f r o o o a t a t t b o m t l i a f n t o o ^ s i s a i tb ^ t lH ooo g o v t l o p o o s t o m tiX a a « e o o »
a a K l y hm % a
o f f o o t a ^ oa ^ p l* s o a o afeT^ad aad stli^tel lo a d t o r o o t r l e l
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
tto* tvm&m * f pm & m m tit
ala*
in thlt «<raatry *t tli# wraal !§»««»,
<mt that it t$ %\m duty af ti*
m |*« #1 a* ltv * M
if
to k««p «nmqt
*« «tny Ini alining *tl)i **f«tyt «wS tlml *1 this
%im n l« « <wroH %• r*dn*«d aat oaly without h$am >m% *i%% tw m m M * m$m%~
«tlo»t &t W »«ft9 i4
II *#* f*lt tint tilt 9*ly 9 §i«llU t& m ii
r * »* it ia f
* f»a«ymX Iftiw liig
diwowat r*%m *#*»X4 %# in
tis« •p+fttlattv* tM irily wx%«i«t M l tinl thl* r**»ifellity M i l m !
*tw*d in the iwyr of tk*
«*f *a otSwarwite d^rira&U pelJtajr*
ffewrv imt no «wwwtl*» t# Uni fl#ir tlust tfca %im Itad &ryi?*&c 9T wm
a&ptomh&m* *&•* tfc* dl*<awnit » l « In INw Yorfc &«ul4 fe# r*4a©*d# and *ith
•ft* me *m
tiwrt m* at dUaiiw^ from tha ri**r t&at & Syataopoii*/
SMbpwer d&«o9«l rata* idu>uld 1% ^aaarai pyjpWh&X» ft wan pitiitaA imt* hew*
<Wff tfcst loaal aonditiosa in m m of tha listcrl«r m c m di*tri*t*&td pit
iM taali aay da^sM H*r rat* radaotitm* in ti»** Ustrict* md tfc&t fcha M i l
i»F IP #W lli5» rZflflB- %mm r***U rP a «MWHC9 *«KIMl®VP mm Im 9 | iB | 9 mwyfymf
a r * Q l% * * *
»**
•toaada *t. 11m fnmnft ¥*&#*« ©ff|«**iMif *«a* of tfe* ta***r mabm# %mk* wmm
f»ot«di a* &ppo**d to rata »*#«*ti<m*# 0» tiwi otter ltaa&f. It «§* jMrtataft wit
that radnatiaiia ***, i^ lii t««14 ramalt 1% ao tom aad $*xi»idarafel* ^oaelbla
banaflt, waulA f&Mt tin. r***rr* took* la p**xtlm H mt&rn
iM«^ «lii:)it *«rv* m wumimg* wl%b*m% p m & l*im
latar
wttli hiKb r«t«».
ft m i a!*# «t^f««t«d t M ia meter t» ag^ir# * ilar»t ^nd wa^-kulf
41tt«is»ft rut#
mneii furtter imrthx*** #f
««aat
aliM %• dt«lralil« up
«• M r *5 0 , 000, 000. 'V
fli* wm%
«t IIm a ction mm «adUmVt«lly Hw fiu»t
timt t)M dlff«r«tttial k lt«itt tlu» rat#» in Wm f#xti sMi Dm rat** in l ^ a a «e#
c it MUijr im ffioi«it I*
« » » i4
aokA that tfe*
w & m m m t in
«k3M
&tli^r»f»r* tli« r«*t &t nvmp*t t«
m lm
t i l l s « n t iM i w & m * r A t f * l i m .wisni
#f «nH 'lll#i « ilf« •• we^U iWRlt iA tetp * wpuU tw
»
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- wjp'
■
d e c l a s s if ie d
Authority E . 6 . U35£,
TV
»&«*«& in 4 *»u !4 !«*▼• .
vatfKwrafelt %* Hi# *^ylc*tla« # f o w
4*
«a
IriA i*
aj*wrwwart #f thm
Hi
$#*%!*» j f tlm #
wdm%m mm rmA to H* setting «o& &a*pUri wlttout ofejeetl**, 1 ^ 4 ^ ^
q»«a a»UM il* wmtomm * f Hi* IM m tl Mmmm t§m* pnmmmMi 9»t«A tls t tii*
mth&ritjr « f tfe# 0*#m K*rfte*t Twr*it**»t Cofvnltti* fc* «xt«n&«& f#* tti# pn&iM i
** *»d
«ron4lU3J» 9mrr*m, « f w t to
as *A&tUott*l $WtOOOvOOO*
•f
V* t «
0$MNI H&vI h MI
M ti« $
06W 9dl%Sss»
W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
MrmorftnrtTiiTi of meeting of the Open Market Investment Committee
fo r the Federal Reserve System in Washington on July 27, 1927iOt tf A“Ai ,
The meeting was called as a meeting of the Open Market Investment
Committee with the.Federal Reserve Boax^and representatives of two of
the mid-western banks were ‘MriT'* ** n* i
The credit
1M*S*
policy of the System was fu lly discussed.
A,
Consideration was given to the continued f a l l in commodity prices,
to the fa ct that there was a diminution of borrowing from the reserve
banks at ft b
b
m
t
to ^
some slackening in business,
and e s p e c i a l l y to the relation of money rates in the United States to
^
^
>
money rates in Europe.
I t was reported that because of heavy foreign
LulZ L
A**+1M jaaua.X f y
paymentsAthere was a continued drain on European central bank gold
reserves, which made i t more than lik ely that central bank rates in
Europe would need to be further advanced this f a l l .
The German and
Austrian rates have already been once advanced and there is some
probability of a one per cent advance in the rate of the Bank o f
England•
A ll present at the meeting recognized that these developments
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U^Sfe
-2 -
w ou ld n e c e s s a r i l y have a d e p r e s s in g e f f e c t upon b u s in e s s a b roa d and
m ight ten d t o r e s t r i c t th e fre e d o m o f p u rch a ses o f vo/3 mb.Wpfcattfe-c in
t h i s c o u n tr y a t th e u s u a l s e a s o n .
I t was a l s o b ro u g h t o u t t h a t i t i s
th e d u ty o f th e c e n t r a l banks t o keep money r a t e s a t as low a l e v e l
as may b e a t t a i n e d w ith s a f e t y , and th a t a t t h i s tim e r a t e s c o u ld
be red u ced n o t o n ly w it h o u t h a m b u t w it h r e a s o n a b le e x p e c t a t io n s o f
b e n e fic ia l r e s u lts .
I t was f e l t t h a t th e o n ly p o s s i b l e a d v e r s e
d evelopm en t r e s u l t i n g from a g e n e r a l lo w e rin g o f d is c o u n t r a t e s w ould
be in th e s p e c u la t iv e s e c u r i t y m a rk e ts, but th a t t h i s p o s s i b i l i t y
sh ou ld n o t sta n d in t h e way o f t h e e x e c u t io n o f an o t h e r w is e d e s i r a b le
p o lic y .
There was no e x c e p t io n t o t h e v ie w th a t t h e tim e had a r r i v e d , o r
was a p p r o a c h in g , when th e d is c o u n t r a t e in New Y ork sh ou ld b e r e d u c e d ,
and w ith one o r two e x c e p t io n s t h e r e was no d i s s e n t from th e v ie w t h a t
a System p o l i c y o f low er d is c o u n t r a t e s sh ou ld in g e n e r a l p r e v a i l .
It
was p o in t e d o u t , h ow ev er, th a t l o c a l c o n d it io n s i n some o f th e i n t e r i o r
eLfrr\cir>\cIL
r e s e r v e d i s t r i c t s d id n o t in d i c a t e any -Heed f o r r a t e red u ction s^ i n t h o s e
t
.
M
JtorajUL
d i s t r i c t s and th a t
Aw
m*
/>
an
fL
su p p ly o f c r e d i t f o r a l l needs a t
-w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . UZSIo
-3 -
th© p r e s e n t r a te s *
O f f i c e r s o f some o f t h e l a r g e r member banks w ere
q u o ted a s op p osed t o r a t e r e d u c tio n s *
On th e o t h e r hand, i t was
p o in t e d o u t t h a t r e d u c t io n s now , w hich w ould r e s u l t in no harm and
c o n s id e r a b le p o s s i b l e b e n e f i t , w ou ld p la c e th e r e s e r v e banks in
p o s i t i o n t o make i n c r e a s e s l a t e r w h ich m ight s e r v e as w arn in gs w ith o u t
p e n a l i z i n g b u s in e s s w ith h ig h r a te s #
I t was a l s o s u g g e s te d th a t in
d is c o u n t r a t e
a t h r e e and o n e - h a l f p e r c e n t
A.
w>o nofr e f f e c t i v e kti l>ringing, "aUuut - gw y T gttirpt i w l a r *
LhC'-g un u m 1 l e tTBl "q#< iwho>i at»
some f u r t h e r p u rch a ses o f s e c u r i
t i e s m ight be d e s i r a b le up t o sa y $ 5 0 ,0 0 0 ,0 0 0 *
The m ost im p orta n t c o n s i d e r a t i o n a t th e m eetin g was u n d o u b te d ly
th e f a c t th a t th e d i f f e r e n t i a l betw een th e r a t e s i n New Y ork and th e
r a t e s i n London i£#*e n o t to d a y s u f f i c i e n t t o e n a b le L ondon, and
?
.
t h e r e f o r e th e r e s t o f E u rope, t o e^ w rpe g e n e r a l a dvan ces in r a t e s
u n le s s r a t e s h ere w ere lo w e r e d , and th a t th e con seq u en ce o f such h ig h
r a t e s as w ould r e s u l t in Europe w ould b e u n fa v o r a b le t o th e m a rk etin g
o f our e x p o r t p rod u ce a broad and w ou ld have an a d v e r s e e f f e c t g e n e r a lly
on w o r ld tra d e *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . tf35(=
A
I
"ft
'I !’ L )J "
vf V
CONFIDENTIAL
July 27, 1927.
^ PRELIMINARY MEMORANDUM RELATIVE TO 0PM MARKET POLICY
1I
' The gold, movements o f the past two months have illu s t r a t e d the need fo r
preparedness on the p a rt o f the Federal Reserve System to deal w ith e ith e r gold
exports or im ports, which was emphasized in the Chairman’ s memorandum discussed
at the la s t Governors1 Conference.
This y e a r 's gold movements have included the
import o f 130 m illio n d o lla r s o f g old from abroad, the purchase o f 62 m illio n d o l
la r s abroad, the sa le o f 100 m illio n d o lla rs fo r earmarking h ero, and the re s a le
o f 60 m illio n abroad.
There has thus been an import movement, or i t s equivalent,
o f 190 m illio n d o lla r s and an export movement, or i t s equivalent, o f 160 m illio n
d o lla r s . Fortunately these two movements have la r g e ly o f f s e t each other in th eir
in flu en ce on the domestic c r e d it situ a tio n .
embarrassment.
Otherwise they might have occasioned
These movements were la rg e ly unforeseen and u n foreseea b le, a l
though at any time p o s s ib le under present co n d itio n s .
Recent tran saction s in the sp e cia l investment account have been la rg e ly
fo r the purpose o f d ealing with these changes in g old .
At one time, in May, the
account was as low as 136 m illio n d o lla r s , and i t has now been re sto re d to 265
m illio n d o lla r s .
The in crease represents la r g e ly purchases to o f f s e t the ear
marking o f 100 m illio n d o lla r s o f gold here, but includes in a d d ition the purchase
o f about 30 m illio n d o lla r s o f s e c u r it ie s under the a u th ority arranged at the time
o f the Governors’ Conference.
The fo llo w in g fig u r e s show the changes from week '
to week in the sp e cia l investment account.
I t would appear that th is p o r t fo l io
should be increased from time to time when fa v ora b le opportunity o f f e r s , i f the
System i s to be in a p o s it io n to meet future extraordinary gold movements.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
2
A p ril
May
tt
u
tt
June
tt
t!
tt
tt
July
tt
t!
..V - -1 4 - 1 1 -------1 8 --------------2 5 --------------X
- . 8 --------------1 5 --------------2 2 --------------2 9 --------------5 - - - - 1 3 --------------2 0 ---------------
$2 01
200
13 6
152
188
222
316
246
250
250
250
250
265
A temporary increase in the account in ordinary course may be involved
in re p la cin g 56 m illio n o f m a tu rities in September which includes 30 m illio n
taken over from a fo re ig n account in exchange fo r March c e r t i f i c a t e s .
I t may be
necessary to take over fu rth er amounts o f s e c u r it ie s from fo re ig n correspondents,
The Credit S ituation
A number o f important changes have taken p la ce in the domestic and fo re ig n
c r e d it s itu a tio n sin ce the Governors1 Conference.
These may be summarized as
fo llo w s :
1. Money ra tes abroad have rise n v ig o ro u sly ; open market money ra tes in
London, B e rlin , Zurich, and a number o f other centers are markedly higher than
they were three months ago.
th e ir discount r a te s .
The Reichsbank and the Bank o f A ustria have ra ised
Open market money ra tes are c lo s e to or above the bank rate
in London, B e rlin , Zurich, Amsterdam, and Milan, as shown in an attached ta b le.
These firm er money con d ition s are undoubtedly exertin g continuing pressure upon
world trade and w orld p r ic e s , which is l i a b l e to rea ct unfavorably upon our own
trade and p r ic e s .
2 . There has been some red u ction in business a c t iv it y in th is country,
not se rio u s, but in d ica tin g a s p ir it o f great caution in bu sin ess.
3. There has been some congestion o f the bond market, due la r g e ly to
undigested new iss u e s.
This situ a tio n has been p a r t ia lly co rr e cte d .
4 . Due la r g e ly to reduced in d u stria l p a y r o lls there has been
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfc
3
a s lig h t redu ction in the past few weeks in the c r e d it and currency demand, and
t o t a l h i l l s and s e c u r it ie s o f the Reserve System have dipped helow one b i l l i o n
d o lla r s . The New York Reserve Bank gained 50 m illio n la s t week in tra n sfe rs from
the in t e r io r and New York City member bank borrowing was correspon din gly reduced.
5.
There is growing ease in money co n d itio n s, although some ra te s are
s t i l l s lig h t ly higher than a year ago, due probably to a higher discount ra te at
the New York Reserve Bank.
Current quotations fo r money are as fo llo w s compared
with la s t year.
A Year Ago
Call money
9 0 -day time money
Commercial paper
90-day b i l l s
Treasury Issues
Dec.m aturity (n otes)
Mar.
"
(C o f I)
Discount Rate N.Y. F.R.B
July 23, 1S27
4
4 1/2
4
3 3/8
3
4
4
3
3.03
3.31
3 1/2
2.87
3.19
4
3 /4
3/8
1 /4
1/2
The P rospect fo r Autumn
Normally the approaching seasonal demand fo r funds might be expected to
tighten money co n d itio n s somewhat.
I f th is takes p la ce i t would have the r e s u lt
(1) o f in crea sin g the pressure on w orld money markets and perhaps fo r c in g up the
Bank o f England discount ra te , and ce rta in o f the Continental discount ra te s, with
consequent unfavorable re a ctio n upon world trade and p r ic e s ;
(2) o f accentuating the
e x is tin g tendency towards some red u ction in business a c t iv i t y .
I f on the other hand steps should be taken which would prevent any seasonal
in crease in money r a te s , and tend rather towards somewhat e a sie r money co n d itio n s,
the fo llo w in g r e s u lts might be a n ticip a te d .
1.
An easing o f the pressure upon world money marketd, which would rea ct f a
vorably upon w orld trade. The r e s u lt s would be f e l t p a r tly through the tendency f o r
balances to move in the d ir e c tio n o f the highest ra te , and p a r tly as lower b i l l ra tes
here wpuld a t tr a c t fin a n cin g to our b i l l market which might otherw ise go to
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
4
London and r e q u i r e fu n ds t h e r e .
2.
to f a c i l i t a t e
3.
Coming a t th e cro p m oving se a so n e a s ie r money c o n d i t i o n s w ou ld te n d
th e m a rk etin g o f th e c r o p s a t f a v o r a b le p r i c e s .
I t w ou ld te n d t o rem ove any c r e d i t p r e s s u r e w hich may now b e e x e r t e d
u pon "b u sin ess, and w ou ld en cou ra g e b u s in e s s e n t e r p r i s e .
4.
T here w ou ld on th e o t h e r hand be danger th a t e a s i e r money m ight en
co u r a g e s p e c u l a t io n .
The s p i r i t o f b u s in e s s i s so c a u t io u s th a t i t
seems d o u b t fu l
w hether s p e c u l a t i v e t e n d e n c ie s i n b u s in e s s w ould e a s i l y a r i s e , bu t i t i s p r o b a b le
th a t e a s ie r money w ou ld s t im u la t e s p e c u la t io n i n s e c u r i t i e s .
I f u n der th e s e cir cu m s ta n c e s i t
s h o u ld seem w is e to f o l l o w a p o l i c y
fa v o r i n g e a s ie r money c o n d i t i o n s , th e im m ediate p rob lem s w ou ld b e ( l )
to l o c a l i z e
th e e f f e c t s o f e a s i e r money c o n d i t i o n s , where th ey w ould b e m ost b e n e f i c i a l ; and
( 2 ) t o p r e v e n t e x c e s s i v e s p e c u l a t i o n o r e x c e s s i v e grow th in th e volume o f c r e d i t .
In t h i s c o n n e c t io n th e a t t a c h e d t a b le shows th e t o t a l b i l l s d is c o u n t e d
a t F e d e ra l R e s e rv e Banks i n th e 12 d i s t r i c t s .
The t o t a l i s n e a r ly 100 m i l l i o n
s m a lle r than i t was a y e a r ago and th e d e c r e a s e s i n b i l l s
d is c o u n t e d e x c e e d 25 p e r
c e n t i n th e New Y ork , Richm ond, M in n e a p o lis , Kansas C it y , and D a lla s d i s t r i c t s .
T o ta l B i l l s D is c o u n te d by F e d e ra l R eserv e Banks
( i n m illio n s o f d o lla r s )
Week Ended
J u ly 2 0 .
J u ly 2 1 , 1926
B oston
24
32
New York
87
126
44
42
P h ila d e lp h ia
C le v e la n d
28
35
19
Richm ond
43
44
37
A t la n t a
C hicago
55
56
33
S t . L o u is
35
6
M in n e a p o lis
8
11
17
Kansas C it y
8
D a lla s
18
45
San F r a n c is c o
45
T o ta l
495
403
(/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
5
Money Rates in World Markets
July 1926
May 1927
July 1927
London
Market Rate
Discount Rate
4.25
5
3.69
4.5
4.31
4.5
Berlin
Market Rate
Discount Sate
4.5
6
4.83
5
5.:
6
Paris
Market Rate
Discount Rate
2.25
5
2.13
5
Amsterdam - Market Rate
Discount Rate
2.76
3.5
3.5
3.5
3.5
3.5
Brussels
Market Rate
Discount Rate
6.70
7
4.25
5.5
3.75
5
Zurich
Market Rate
Discount Rate
2.31
3.5
3.13
3.5
3.81
3.5
Milan
Market Rate
Discount Rate
8.5
7
9.25
7
Vienna
Market Rate
Discount Rate
6
7.5
5.38
6
5.75
7
3 3/8
3 1/2
3 5/8
4
3 1/2
4
New York
- B ill Rate
Discount Rate
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.C. U35(d
MINUTES OF MEETINGS OF OPEN MARKET INVESTMENT COMMITTEE
HELD IN WASHINGTON, D* C., DURING WEEK OF GOVERNORS*
____________ CONFERENCE. COMMENCING MAY 9. 1927_________ __
^
^ i
•
7
The Open Market Investment Committee held a meeting in Washington* D* C,f
at the o f f i c e o f the Federal Reserve Board, Monday, May 9, 1927, at 9 o ’ clo ck .
Present:
Governor Strongf Chairman
Governors Harding, N orris, McDougal
and Fancher
Mr, Harrison, Acting Secretary
The secreta ry read the prelim inary draft o f the memorandum o f matters
to be considered by the Open Market Investment Committee p rio r to the preparation
and submission o f a report and recommendations.
A fte r discussing the prelim inary
memorandum i t was the opinion o f the committee that cop ies o f i t with suggested
amendments should be submitted by the chairman o f the committee to the Federal
Reserve Board fo r it s con sideration in order t o fa m ilia riz e the Board with the
fa cto rs which would be in the minds o f the committee la t e r in preparing i t s re p o rt.
The Open Market Investment Committee adjourned at 10 o*clock*
* * * * * * *
The Open Market Investment Committee reconvened on Monday, May 9, 1927,.
at 12:30 o 'c lo c k .
Present:
Governor Strong, Chairman
Governors Harding, N orris, McDougal
and Fancher
Mr. Harrison, Acting Secretary
The committee considered a red ra ft o f the prelim inary memorandum con
tain in g the amendments agreed to at the e a r lie r meeting.
With these amendments,
the chairman was requested to transm it seven copies o f the memorandum to
Governor C rissin ger fo r the members o f the Board, with the advice o f the committee
that the committee would be glad to meet with the Board to discuss the memorandum
at any time su ita b le to i t s convenience*
These co p ie s o f the report were
,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.6.1235&
I
2
transm itted to Governor C rissin ger at 1:15 o'O lock , when the Open Market Invest
ment Committee adjourned.
* * * * * * *
The Open Market Investment Committee met with the Federal Reserve
Board on Monday, May 9, 1927, at 4:10 o ’ clock*
P resen t:
Governor C rissin ger
Messrs. P la tt, M ille r, James, Hamlin,
Cunningham o f the Federal Reserve Board
Governors Strong, Harding, N orris, McDougal
and Fancher
Dr* Goldenweiser
Mr, H arrison, Acting Secretary
There was a long discu ssion by' various members o f the committee and
the Federal Reserve Board o f the prelim inary memorandum p rev iou sly d istrib u ted
among the members o f the committee and the Federal Reserve Board#
Governor
Strong explained that th is prelim inary memorandum did not embody any recommends*
tio n s but m erely raised points fo r d iscu ssion with the Reserve Foard which would
enable the committee la t e r t o f i l e a report with d e fin it e recommendations.
In
connection with the con side rat ion o f the memorandum and problems before the cors*
m ittee, Dr. Goldenweiser gave h is statement o f the present business situ a tion with
p a rticu la r referen ce to the p rice l e v e l .
The meeting adjourned at 5:45 o ’ clock , with the understanding that the
Open Market Investment Committee would submit it s fin a l report to the Federal
Reserve Board la t e r on in the week*
* * * * * * *
The Open Market Investment Committee reconvened on Wednesday afternoon,
May 11, 1927, at 12: 30 o ’ clo c k .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . [BSIo
3
Present:
Governor Strong, Chairman
Governors Harding, N orris, McDougal
and Foncher
Mr. Harrison, Acting Secretary
The committee considered a draft o f report prepared by the committee
at lunch on Tuesday, May 10, as m odified by the chairman on Wednesday morning
b efore the meeting.
Upon con sideration ,
it was
VOTED t o approve the rep ort as amended, and the secreta ry was request*
ed to have it retyped, with the understanding that the prelim inary memorandum
as f i n a l l y revised should be mimeographed to be su b stitu ted fo r the f i r s t draft
d istrib u ted among the committee and the members o f the Federal Reserve Board on
May 9„
The prelim inary memorandum as revised May 11 is attached hereto*
The
report o f the committee as f i n a ll y approved by the committee and the Governors*
Conference is as fo llo w s;
"The Open Market Committee, a ft e r considering the attached
memorandum, and a fte r discu ssion with the Federal Reserve Board, sub
mits the follow in g recommendations o f p o lic y fo r the period ending
August 1 next:
" ( l ) That no fu rth er sales o f System s e c u r it ie s be made in
order to o f f s e t a rriv a ls o f gold from abr6ad now known o r anticipated*
” (2 ) That it sh a ll be the p o lic y o f the committee between now
and August 1 next, g ra d u ally to acquire,
i f p ossib le to do so without
undue e f f e c t upon the money market, s u ffic ie n t a d d ition a l short-tim e
government o b lig a tio n s to bring the t o t a l o f the committee’ s invest*ment account up to $250,000,000.
In in terp retin g the expression
'undue e f f e c t upon the money market,* the committee would expect to
keep in mind any changes which might occu r in the general le v e l o f money
rates, as w e ll as the extent t o which these purchases might e f f e c t a re**
duct ion in the amount o f borrowings by member banks*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
4
"While t h is p o lic y is not d irected towards bringing about a
reduction in discount rates by any Federal reserve bank, nor is that
immediately a n ticip a te d , i t is recognized that some lowering o f market
ra tes fo r money might n everth eless ju s t i f y such a reduction la t e r in
the year, e s p e c ia lly at the p rin cip a l fin a n c ia l cen ters.
The recora*
mendation In paragraph two is also made a fte r con sideration o f the
fa ct that somewhat lower in te re s t rates o r d in a r ily operate t o check
g old imports;
±n fa c t, that was one o f the e f f e c t s o f purchases o f
s e c u r it ie s made in 1924*
"The committee fu rth er expects to continue stu d ies o f those
methods set out in the prelim inary memorandum by which increases in
the System's p o r t f o l io might be brought about without increasing the
amotont o f Federal reserve cre d it in the market.
I t expects t o dia-
cuss with the Treasury Department those methods with which the Treasury
is concerned, and requests that the Federal Reserve Board g iv e consider**
ation t o those p a rticu la r items, such as reserves on time d e p o sits,
which re la te to the regu lation s o f the Federal Reserve Board*M
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . l£J5k
5
Meeting o f the Open Market Investment Committee
with the Federal Reserve Board
10; 30 Thursday morning, May 12
P resent;
Honorable A, W, Mellon, Chairman
Governor C rissin ger, and Messrs, P la tt,
Hamlin, M ille r, James, Cunningham,
McIntosh o f the Federal Reserve Board
Governors Strong, Harding, N orris, McDougal#
Fancher
Mr, H arrison, Acting Secretary
Dr, Goldenweiser and Mr* Eddy
The Acting Secretary d istrib u te d copies o f the report o f the Open
Market Investment Committee dated May 11, to g e th e r with mimeograph copy o f the
prelim inary memorandum r e la tiv e to open market p o li c i e s dated May 9, 1927, and
revised May 11.
A fter each member o f the Board had had opportunity to read the report.
Governor Strong explained that the rep ort had been prepared by the committee*
a fte r thorough con sideration o f a l l the fa cto rs re fe rre d to in the prelim inary
memorandum, with a view t o ou tlin in g a p o lic y fo r the next few months fo r ap**
proval by the Board and the committee, with the underst an ding that the respon**
s i b i l i t y fo r the execution o f the recommendations would rest with the committee#
He also explained that the report had been studied by the Governors1 Conference
and that it was unanimously approved by that conference*
A fter a thorough dis~
cuss ion o f the report concerning which various views were expressed by the differ**
ent members o f the Board, Mr* Hamlin made a motion that the report be approved.
Before a ction was taken on t h is motion, Dr. M ille r moved as a su b stitu te that
the report be received and made a s p e c ia l order fo r some la t e r time to be fixed
by Secretary Mellon and Governor C rissin g er,
A fte r discu ssion th is su bstitu te
motion was passed and the meeting adjourned at 12:10 o * clo ck p* m#
George L* Harrison,
Act ing Se c ret ary«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
V
Minutes o f the Meeting o f the
&
Open Market Investment Committee, Washington, D* C.
Monday, March 21, 1927*
i
The meeting was ca lle d to order at 10;30, A cting Chairman Case
o f the Federal Reserve Bank o f New York presiding#
There were also present
Governors N orris, Harding, McDougal and Fancher, Mr. Goldem reiser, and Mr*
Burgess*
The chairman presented his own and the s e c r e ta r y 's report*
A fter
con sid eration and d iscu ssio n , these rep orts were adopted*
A fter extended d iscu ssion o f the p o lic y to be pursued as to the re
placement o f the 25 m illio n d o lla r s o f United States Government s e c u r itie s
which had matured from the sp e cia l investment account, and the 50 m illio n
d o lla rs which had matured from foreig n accounts on March 15, the committee
agreed that i t would be d esira b le to rep la ce the 25 m illio n immediately*
I t was further agreed th at, in vie?/ o f the reduction o f system holdings o f
bankers acceptances, due to th e ir sale to a foreign correspondent in re
placement o f s e c u r it ie s matured March 15, the committee should be prepared
to make a d d itio n a l purchases o f government s e c u r it ie s up to an amount o f
about 50 m illio n d o lla r s , i f necessary, to avoid a d ra s tic tigh ten in g o f
the money market*
—'
At 11540 the committee met with the Federal Reserve Board, with
Governor C rissin ger in the chair*
The members o f the board p resent, in
add ition to Governor C rissin g er, were:
Mr. James, and Mr. McIntosh.
Mr. M ille r , Mr. P la t t , Mr* Hamlin,
Mr. Case presented to the board the rep ort
o f the A cting Chairman* and the action o f the committee, upon which there
was general d iscu ssion u n til 1 o Tclo c k , when the meeting adjourned to re
convene at 2 p. m*
At 2 p. m. the meeting reconvened and d iscu ssion o f
the a ction proposed by the committee was resumed*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6.1235k
2
At 2:45 the committee l e f t the meeting o f the Federal Reserve Board
and reconvened as a committee, those present bein g Deputy Governor Case, and
Governors N orris, Harding, McDougal and Fancher, and Mr, Burgess.
Mr* Case read a l e t t e r from Governor Biggs o f St. L ouis, c a llin g
a tten tion to the fa c t that the seasonal movement o f trade in the St. Louis
d i s t r i c t was such th at the earning assets o f the S t. Louis bank in the
spring o f the year were le s s than s u ffic ie n t to earn expenses and dividen ds,
whereas in the autumn o f the year the lo c a l demands fo r red iscou n ts were so
la rg e that the bank could not accept i t s pro ra ta share o f open market
purchases without unduly d ep letin g i t s reserves*
In considering the question
ra ised by t h is le t t e r , there was extended d iscu ssion o f the p r in c ip le s and
p ra ctice governing the d is trib u tio n o f system purchases o f b i l l s and s e c u r it ie s .
As a re s u lt o f th is d iscu ssion i t was agreed that the general method which had
been follow ed , o f making allotm ents with regard to requirements fo r expenses,
dividends and ch a rg e o ffs, was the most s a tis fa c t o r y plan which had been
suggested and came the nearest to providin g each bank with the necessary earn
ing assets which the in d iv id u a l banks would have themselves found i t necessary
to acquire i f they had been operating as separate units*
With regard to
Governor B igg’ s request, i t was agreed th a t, in view o f the seasonal movement
o f earning assets in S t. Louis, the S t. Louis bank should be a llo t t e d a some
what la rg e r proportion o f system purchases in the spring o f the year, and that
th is should be compensated fo r by a corresponding reduction in i t s proportion
in the autumn*
At t h is point Governor C rissinger joined the meeting and presented
the follow in g l e t t e r conveying the action o f the Federal Reserve Board on
the recommendations o f the committee;
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 6 . 1235k
"FEDERAL RESERVE BOARD
WASHINGTON
O ffic e o f Governor
March 21, 19 27*
Mr. J. H. Case, A cting Chairman,
Open Market Investment Committee,
C/o Federal Reserve Bank,
New York, N. Y*
Dear Mr. Case:
Following the meeting today with the Open Market Investment
Committee, the Federal Reserve Board considered the Committee’ s recommenda
tio n s , which you made v e rb a lly , to the e f f e c t that the Open Market Investment
Committee be authorized to replace the amount ($25,000,000) o f government
s e c u r itie s which were held in the Special Investment .account and matured on
March 15th, and that the Committee be authorized to purchase an a d d ition a l
§50,000,000 o f short-term government s e c u r it ie s should a situ a tion develop
that would seem to ju s t i f y such action*
The Board voted to authorize the Committee to rep la ce the
$25,000,000 o f government s e c u r it ie s which matured from the Special Invest
ment Account on March 15th, and w il l hold i t s e l f ready, upon advice from the
Open Market Investment Committee, as a committee, or from the Federal Reserve
Bank o f New York, i f the Committee p re fe rs to leave the matter in the hands
o f the Federal Reserve Bank, to act upona recommendation fo r the purchase
o f an a d d ition a l $50,000,000 o f short-term government s e c u r it ie s , at any
time such a course should appear to be d e s ira b le .
Very tru ly yours,
(Signed)
D. R# C riesin ger,
Governor."
With re feren ce to the procedure in d ealin g with the p o ssib le
a d d ition a l purchase o f 50 m illio n d o lla r s o f s e c u r it ie s , i t was agreed that
Mr. Case would fo llo w the money situ a tio n c lo s e ly in the New York market^
and would communicate with the other members o f the committee i f and when
such a purchase appeared to be n ecessary.
The meeting adjourned at 3:45*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
HOTEL MAYFLOWER, WASHINGTON , 4 p . m . o’ clock
NOVEMBER 7, 1926
u / l/ z -C
PRESENT:
Mr. N orris
Mr . McDougal
Mr. Paddock
Mr • Case
Mr * Harrison
The committee met for the purpose o f review ing in advance o f the
Governors Conference the proposed r e p o r t , prepared by th e a ctin g chairman, to
be submitted to the con feren ce.
A fte r the rep ort was read and discussed i t
was
VOTED that as amended i t should be approved and submitted to the
conference as the rep ort of the Open Market Investment Committee.
Mr. Harrison then reviewed in some d e ta il the procedure now follow ed
by the Federal Reserve Bank of New York r e la t iv e to i t s foreign b u sin ess, with
p a r tic u la r re fe re n ce to the opening of accoun ts, the n e g o tia tio n of c r e d it s and
the subsequent o ffe r in g o f p a r tic ip a tio n in those accounts and c r e d it s when
arranged to a l l Federal reserve banks.
The committee expressed i t s approval of
th e present procedure in handling a l l these m atters.
Mr . Harrison then re fe rre d to the number and d e ta il of the schedules
and re p o rts now submitted by the Federal Reserve Bank of New York to a l l Federal
reserve banks p a r tic ip a tin g in foreign tr a n s a c tio n s .
A fter con sideration of
these schedules and re p o rts i t was
VOTED
as recommended by Mr. Harrison that the present procedure
of sending to each Federal reserve bank com plete schedules of a l l b i l l s purchased,
and d u p lica te t ic k e t s of a l l secu rity tra n sa ctio n s , for foreign accounts in which
other Federal reserve banks p a r tic ip a t e , should be abolished and that in lie u
th e re o f the Federal Reserve Bank o f New York should submit
HP
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
2
(a)
A monthly acceptance l i a b i l i t y schedule showing a ccep tors
and endorsers l i a b i l i t i e s on account a l l b i l l s purchased
for foreig n account fo r which other Federal reserve banks
are jo in t ly l i a b l e as guarantors.
(b )
A c o n fid e n tia l monthly statement to each governor (as at
present) showing fre e b a la n ces, investments in b i l l s and
in Treasury s e c u r it ie s , and the amounts of gold held under
earmark for each foreign account in which Federal reserve
banks p a r t ic ip a t e .
(c)
A statement sim ilar to (b) whenever p a r tic ip a tio n s are made
during the course of the month.
I t was also understood that Mr. Harrison would furnish to each governor
a form of tho summary o f foreign accounts # iic h the Federal Reserve Bank Of New York
now submits weekly to i t s d ir e c t o r s , i t being suggested that t h is form of statement
might be su ita b le as a guide to other Federal reserve banks in furn ishin g necessary
inform ation to th e ir d ir e c to r s without the d e ta ile d inform ation as to in d ivid u a l
a ccou n ts, which i t was understood should be regarded as s t r ic t ly co n fid e n tia l by
each governor.
Mr. Harrison reported that the Bank o f France has re ce n tly opened
an
a ctiv e account with the Federal Reserve Bank o f New York, m aintaining a working
balance and req u irin g the investment o f funds in Government s e c u r it ie s under the
usual terms and con d ition s*
Mr. Harrison in d ica ted that in lin e with i t s previous
p o lic y , the Federal Reserve Bank o f New York would lik e to o ffe r a p a r tic ip a tio n
in th is account to each other Federal reserve bank.
A fter some d iscu s sio n , in which
i t was pointed out that the Federal Reserve Bank of New York does not wish now to
o ffe r any p a r tic ip a tio n in the balance which i t c a r r ie s with the Bank of France, in
which there i s a lo s s due to the d ep recia tion in the fra n c, i t was
v
VOTED that the committee approve o f the suggestion to o ffe r to other
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
%
3
Federal reserve banks a p a r tic ip a tio n in the account which the Bank o f France
maintains with the Federal Reserve Bank o f New York*
On m otion, the meeting adjourned*
(Signed) J, H. CASE,
,
Acting Chairman#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
3 ^>3
MINUTES OF JOINT MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
AND THE FEDERAL RESERVE BOARD HELD IN WASHINGTON, FRIDAY. SEPTEMBER 10f 1926
l/ to jx L
Present:
Governor C rissin ger
V ice Governor P la tt
Mr* Hamlin
Mr* James
Dr* M ille r
Mr* Cunningham
Mr* McIntosh s
Members of the Board
A cting Chairman Case
Governor Harding
Governor McDougal
Governor N orris
Mr* F . J* Zurlinden, Deputy Governor of the
Federal Reserve Bank of Cleveland,
representing Governor Fancher
Members of the Committee
Under Secretary of the Treasury Winston
Mr* Matteson, Secretary
Mr. Noel
Mr* Goldenweiser
Mr. McClelland
The meeting was c a lle d to order a t 11:00 o ’ clock a# m* by
Governor C rissinger*
On motion, i t was
VOTED to dispense with the reading of the minutes of
the la s t meeting of the Committee held on August 17, 1926.
The report of the Secretary with accompanying e x h ib its was presented*
The report of the Chairman of the Committee was presented and read
and there follow ed a f u l l d iscu ssion of the contents of the report and of the
c r e d it situ a tio n generally*
I t was the sense of the meeting that the recent
sale to the Treasury from the System Account of about ^40,000,000 Third L iberty
Loan bonds had served a usefu l purpose in making e f f e c t iv e the recent change in
the New York discount rate*
Mr* Goldenweiser pointed out that a sale of th is
character with i t s attendant c a lls by the Treasury on a l l depositary banks
tended to spread more evenly the discounts throughout the Federal Reserve System.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
____
' ■
DECLASSIFIED
r-
Authority E . 6 . U3SJt
2
I t was the sense of the meeting that the open market account should
be maintained, f o r the present, at about the present le v e l, and upon motion,
duly seconded, the Committee
VOTED that the open market account should be maintained
fo r the present at $200,000,000 or thereabouts, with the understand
ing that the Committee could, in i t s d is c r e tio n , increase or decrease
the account by not more than $50,000,000*
I t was a lso understood that in the event of further gold imports fo r the ac
count of fo re ig n correspondents, we should continue to furnish them with secur
i t i e s from the Special Account as h e re to fo re , thus o ffs e t t in g the e f f e c t of
the g old imports*
Mr* Winston re fe rre d b r i e f l y to the Treasury fin an cin g and stated
that there probably would be a temporary overdraft of approximately $200,000,000
on September 15 to be ca rried by the reserve banks, which would run f our or fiv e
days only*
In the same connection Mr, Case stated, that owing to the f a i r l y
heavy discounts at the New York bank i t would probably be unnecessary to s e ll
any considerable amount of Government s e c u r itie s to New York member banks over
the tax period*
Mr* Case reported on the co n d itio n of the fo re ig n accounts statin g
the changes which had occurred since the la s t meeting of the Committee*
On motion, the meeting adjourned at 1 p* m*
(Signed)
W, B* Matteson
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
HELD AT THE FEDERAL RESERVE BANK OF NEW YORK
______________________ TUESDAY. AUGUST 17. 1926______________
Present:
M essrs. C rissin ger, Janies and McIntosh o f the Federal
Reserve Board
Governors Harding o f Boston and Fancher o f Cleveland
Mr. Hutt, Deputy Governor, Federal Reserve Bank o f P hiladelphia
Mr. McKay, Deputy Governor, Federal Reserve Bank o f Chicago
M essrs. S a ile r , Harrison and Kenzel, Deputy Governors,
Federal Reserve Bank o f New York
Dr. Burgess, A ssista n t Federal Reserve Agent*
Federal Reserve Bank o f New York
Mr. (xoldenweiser, A cting D ir e cto r, D ivision o f Research
and S t a t is t i c s , Federal Reserve Board
Mr. Matteson, Secretary
The meeting was ca lle d to order at 11:00 o ’ clock a. m.
In the absence o f the Chairman Mr. S a ile r was, on motion, chosen to act
as Chairman o f the meeting.
On motion, i t was
VOTED to dispense with the reading o f the minutes o f the
la s t meeting o f the Committee held on June 21, 1926.
v
v
The report o f the Secretary was presented and read and, on motion, duly
accepted
The report o f the Chairman o f the Committee was presented and there f o l io^-cd a f u l l d iscu ssion o f the con ten ts, with s p e c ia l referen ce to a request by
the Treasury to purchase $40,000,000 Third L ib erty Loan 4 l/4/£ bonds, o f which
about $25,000,000 are held in the S p ecial Investment Account and about $15,000,000
by the Federal Reserve Banks o f P h ilad elp h ia , Cleveland and S t. L ouis.
I t was the
sense o f the meeting that the T reasu ry's request be complied with and that these
s e c u r it ie s should not be replaced fo r the present.
I t was understood that the
Third L ib erty Loan bonds held in the investment accounts o f Reserve Banks t*e e x
changed fo r other Government s e c u r it ie s in the S p ecia l Investment Account.
On motion o f Governor Harding, duly seconded, i t was
VOTED th a t the sale o f approximately $40,000,000 Third L iberty
Loan bonds be made to the Treasury, without replacem ent, and th at a meeting
be c a lle d the e a rly part o f September t o consider con d ition s at that time.
w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
m
d e c l a s s if ie d
Authority E .6 .
2
On motion, i t was also
VOTED to approve the sa le, without replacement, to a
foreig n correspondent made on August 16, 1926 o f $2,337,000 United
States 4 1/4^ Treasury Notes due September 15, 1926, and the sale
o f $5,000,000 a d d ition a l notes o f the same issue from the Special
Investment Account to a foreign correspondent some time th is week;
also the sale to a foreign correspondent during the next few weeks
o f approximately $15,000,000 Treasury Notes due September 15, 19 26
and/or Treasury c e r t i f i c a t e s o f indebtedness due December 15, 1926.
Mr. Harrison reported on the con d ition o f the foreign accounts,
c a llin g p a rticu la r a tten tion to the changes which had occurred since the la s t
meeting o f the Committee and re fe rr in g b r i e f l y to general con d ition s abroad.
Mr. Kenzel joined the meeting at th is point and made a b r i e f report
on the present con d ition o f the b i l l market
On motion, the meeting adjourned at 1:00 o 'c lo c k p. m
W. B. Matte son
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSis
COPY
MINUTES OF JOSH MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
AN&fHE FEDERAL RESERVE BOARD HELD IN WASHINGTON. MONDAY. JUNE 21f 1926 ^
________ ________
-V
.
“A
Present:
/ -
Vice Governor Platt
Mr* Hamlin
Mr* James
Members of the Board
Acting Chairman Case
Governor Harding
Governor Fancher
Governor McDougal
Governor Norri®
Members of the Committee
Under Secretary of the Treasury Winston
Mr* Matteson, Secretary
Mr, Eddy
Mr. Goldenweiser
The meeting was called to order at 11 a» m. by Vice Governor Platt#
Messrs. Norris and Case entered at 11:15 a* m*
Mr. Case reviewed b rie fly the operations of the Committee sine© the
last meeting on March 20, 1926, the changes in the holdings of Government se
curities in the Special Account and the a c tiv ities over the June 15 tax period*
He stated that the principal occasion fo r calling the meeting was the problem
of dealing with the money market situation over the end of June, when holiday
currency requirements would coincide with the accumulation of a Treasury balance
in the Reserve Banks and "window dressing** by member banks for their June 30
reports*
It was also desired to discuss open market policy generally in the
light of recent changes in the credit situation*
The Secretary submitted and read his report, also the report of the
Chairman and the report on foreign accounts, with accompanying statements and
data, a l l of which were duly accepted and ordered placed on f i l e .
Under Secretary Winston joined the meeting at this point*
Mr* Winston stated that the Treasury would have surplus funds in the
Federal Reserve Banks this month amounting to about $75#0QG,OOO, a substantial
part of which it was proposed to use in the purchase and redanption of Third
(oj otfjX 4
^SLui 3 3?.
-x
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-CLASSIFIED
Authority E .6 . [£S5 fe
2
Liberty Loan Bonds and that he a n ticip a te d buying a d d itio n a l bonds fo r d e liv e ry
the f i r s t of July when the Treasury would re ce iv e $40,000,000 from the proceeds
of the recent sale of $60,000,000 Farm Loan Bonds*
There follow ed an extended d iscu ssion of the various r e p o r ts , with
p a rticu la r referen ce to the d e s ir a b ilit y of a temporary purchase of Government
s e c u r itie s by the Committee to prevent any serious disturbance to the money
market over the end of the month, whereupon:
On motion of Mr. Hamlin, duly seconded and c a r r ie d , i t was.
VOTED that i t is expedient that the System holdings of
Government s e c u r it ie s should be maintained fo r the present a t the
ex istin g amount - approxim ately §27 5,000,000 - but with a u th ority to
make temporary purchases or vs a le s , w ithin a range of ^50,000,000, as
may be deemed a dvisable by the Committee; any such purchases to be
liq u id a te d w ithin a reasonable time as market con d ition s warrant#
In conn ection with the report on fo re ig n a ccou n ts, a recommendation
was made by the Federal Reserve Bank o f New York that the rep orts to the Com
m ittee be made as h e re to fo re at each meeting but that the b r ie f rep orts to the
Committee at the end of each month be discontinued fo r the reason that a l l of
the inform ation contained in these la t t e r rep orts is included in the regular
monthly statements of fr e e balan ces, investments and ear-marked g o ld made to
the governor of each bank*
I t was voted that th is change be approved*
On motion the meeting adjourned at 1 p» m,
(Signed)
\’h B* Matte so nt
Secretary#
Subsequent to the adjournment of the meeting the members
of the Open Market Investment Committee con ferred with regard to a
suggestion made by Governor McDougal of the Federal Reserve Bank of
Chicago that Federal Reserve Banks be perm itted to extend the re
purchase agreement p r a c tic e with recognized d ealers in Government
s e c u r it ie s so as to include Third L iberty Loan Bonds, which bonds
are now in the short-term area#
This recommendation was unanimously agreed to by the
members o f the Committee with the understanding that i t was to be
submitted by Mr* Case to the Federal Reserve Board fo r the la tte r * s
approval*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
r->
MINUTES OF JOINT MEETING OF OPEN MARKET INVESTMENT COMMITTEE
^ x
J
AND FEDERAL RESERVE BOARD HELD IN WASHINGTON,
Z> O J, & +
SATURDAY MARCH 20, 1926*
^2 1
v ' _/
^
/ a*i - -cx_
L
3j
Present:
1 ^
Governor Strong, Chairman
Governors Harding, Norris,
Fancher and McDougal*
Governor Crissinger and Messrs*
P latt, Hamlin, M iller, James,
Cunningham, Wyatt, Eddy,
McClelland and Goldenweiser*
Mr* Harrison, Secretary pro tem*
The meeting was called to order by
Governor Strong
at 12:00 o’ clock noon*
Governor Strong reported to the Federal Reserve Board the action of
the Open Market Investment Committee with respect to the Board1s letter of
March 9, 1926,Jadvising the Chairman of the committee that in future its regular
meeting place would be in Washington, except when the committee is authorized by
the Board to meet elsewhere*^
Individual members of the Board expressed their
opinion regarding the procedure outlined in the le tte r, and Governor Strong
then stated to the Board that no meeting of the Open Market Investment Committee
had ever been held without previous advice to and conference with the Federal
Reserve Board about the meeting, that the Open Market Investment Committee would
always be glad to meet in Washington when asked to do so, but that they did not
want to be denied the right to meet elsewhere when conditions make it advisable.
At this point Mr. James and Mr* M iller le ft the meeting, and after
further informal discussion the meeting adjourned at 1:00 o*clock p. m* to re
convene at 2:30 o*clock p* m.
The joint meeting of the Open Market Investment Committee with the
Federal Reserve Board reconvened at 2:30 o’ clock p* m* on Saturday, March 20,
1926.
The secretary of the Open Market Investment Committee read to the
conference the report which the Open Market Investment Committee had adopted
fo r Submission to the Governors Conference on Monday, March 22, 1926,
http://fraser.stlouisfed.org/
O w .
V
Federal Reserve Bank of St. Louis
/ 5
-3 2 1 , - I
■w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
a
After a discussion of business conditions, particularly in their
relation to the committee’ s statement about reports of business hesitation and
the possible need for further purchases of securities in the event that the very
near future might show further evidence of a business recession, Governor Strong
asked for a discussion of the question of future procedure, pointing jut that
the situation would be much clearer in a short time - possibly a matter of days
only.
Individual members of the Federal Reserve Board expressed their agree
ment with the recommendation of the committee relative to the replacement of
March 15 m aturities, but no formal action was taken with respect either to that
or to the suggestion as to possible future purchases.
The committee adjourned at 4:00 o*clock p. m. in order to permit
Professor Sprague to address the Federal Reserve Board and those members of the
Governors Conference who were present at that time.
George L. Harrison
Secretary pro tan
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
HEID IN WASHINGTON, SATURDAY, MARCH 20, 1926
Present:
/ '■ / * c
'
Governor Strong, Chairman.
Governors Harding, Norris,
Fancher and Me Dougal.
Mr* Harrison, Secretary pro tern.
The meeting was called to order by Governor Strong at
11:00 o'clock a* ra.
APPOINTMENT OF A SECRETARY PRO TEM.
Upon request of Governor Strong, Mr* Harrison was appointed secretary
pro tem.
REPORT OF CHAIRMAN.
The Chairman submitted his report dated March 19 to the committee for
their consideration.
Before acting upon the report, business conditions through
out the several districts were discussed in some d etail.
The opinion was ex
pressed that while production seems s t i l l active, nevertheless there are some
evidences of a recession in sales to the ultimate consumer, certainly evidences
of caution and hesitation, which might result in accumulating inventories, lower
ing of prices, and some unemployment, unless sentiment is changed before the
process continues too long.
I t was the unanimous opinion of the committee that
other than to replace March 15 maturities, no action should be taken, at least
un til after March 23, when the Treasury pays off $121,000,000 of Third Liberty
bonds, and when readjustments after the usual quarter day movement w i ll have
been completed.
It was f e lt that u n til that time it w i ll be d iffic u lt to judge
the normal trend of the money market.
With a slight verbal amendment, the report of the Chairman was approved
by the committee and adopted as their report to the Governors Conference.
PUCE OF FUTURE MEETINGS OF COMMITTEE.
The Chairman reported to the committee the Federal Reserve Board’ s
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . l&Sto
2
le tte r of March 9, 1926, a copy of which had previously been mailed to each
member, advising of the action taken by the Federal Reserve Board on March 9,
to the effect “that Washington be designated as the future regular meeting
place of the Open Market Investment Committee, except when the committee is
authorized by the Board to meet elsewhere."
After f u l l discussion, it was
VOTED
to be the sense of the committee, who were serving at the re-
quest of the Federal Reserve Board in order to cooperate voluntarily in an
orderly System policy respecting the purchase and sale of b i lls and securities,
that they are anxious now, as in the past, to arrange meetings of the committee
to suit the convenience of a l l concerned and at such places as might be most
consistent with the purposes to be accomplished by each meeting, and that, there
fore, a resolution of the Board fixing Washington as the regular meeting place
of the committee, except when the committee is authorized by the Board to meet
elsewhere, is in the opinion of the committee
unnecessary in a l l the circum
stances and an inadvisable restriction upon the freedom of the committee, after
consultation with the Federal Reserve Board, to hold meetings at such places as
might best suit conditions
The meeting adjo'
at 12:00 o’ clock noon to meet with the Federal
Reserve Board*
George L. Harrison
Secretary pro tem.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
C O P Y
MINUTES OF THE MEETING OF 'T’HE OPEN MARKUP INVESTMENT COMMITTEE FOR
THE FEDERAL RESERVE SYSTEM HELD AT THE FEDERAL RESERVE BANK
OF NEff YORK. JANUARY 18. 1926
II'tf/lie
The following were present
Governors Strong, Harding, Norris, Fancher and McDougal
Deputy Governor Case
Mr. W* n. Matteson, Secretary of the Committee
Honorable D* R. Crissinger, Governor of the Federal Reserve Board,
was also present*
The meeting was called to order by Governor Strong, Chairman, at
10;30 a. m*
Copies of the minutes of the last meeting of the Committee held
on December 1, 1925 were distributed whereupon it was duly
VOTED that they be approved*
Mr* Case submitted a report on foreign accounts which are p a rtic i*
pated in by a l l Federal reserve banks and after discussion it was duly
VOTED that the report be received, placed on f i l e , and distributed
to the Governors of a ll Federal reserve banks fo r their confidential use*
Reports were submitted by the Chairman concerning credit condi
tions and future program, and by the Secretary of the Committee giving data
with respect to details of operation; a ll of which were ordered file d and
copies sent to the other Federal reserve banks not represented at the
meeting*
Full discussion was had with respect to the disposition of the
$50,000,000 short-term Government securities which were acquired the la tte r
part of December 1925, for resale possibly in January 1926.
In view of
the existing conditions in the market and the fact that there are $65,000,000
of March maturities in the account it was agreed (Governor Crissinger con
curring) that while it is not advisable to se ll the $50,000,000 Governments
http://fraser.stlouisfed.org/
J U x t^
Federal Reserve Bank of St. Louis
33 3 ,-4 -i..
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBS to
- 2
immediately the situation should be carefully watched in order that action
might be taken at any time that developments disclose the desirability of
selling*
The exhibits accompanying the Secretary's report, showing in
detail the present distribution of System purchases under the plan agreed
upon by the Committee, were studied carefully and there followed an extended
discussion with respect thereto*
It was the sense of the meeting that a ll
purchases of b i l l s made by Federal Reserve Banks in c itie s outside of
New York in excess of the prorata share of such purchasing bank should in
future be allotted proportionately to a l l participating banks.
Governor
Harding stated that he would acquaint his directors with the views of the
Committee and advise Mr, Case at an early date of the Boston bank’ s
decision*
The question of the practice of purchasing b i l l s in the several
b i l l markets was discussed at some length and in order to c la rify the
situation the Chairman was requested to ask Mr. Kenzel to prepare a memo«randum to be sent to the members of the Committee outlining the practice of
the New York bank in this regard*
The meeting duly adjourned at 1:00 p% m*
(Signed)
W. B* MATTESON
Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
'V*
V'
The meeting of the Open Market Investment Committee with t
Federal Reserve Board, called by the Board fo r December 1, 1925, was
held in the 0£fioe
I *u *
^he Governor at HiOQ a* m.
PRESENT:
Governor Crissinger,
Mr. P la tt,
Mr. Hamlin,
Mr. M ille r,
Mr. James,
Members of the Board.
Governor Strong,
Governor Harding,
Governor Fancher,
Mr. Hutt,
Mr. McKay,
Members of the Committee*
Dr. Stewart,
Mr. Noell*
The subject submitted to the meeting for discussion was the follow
ing resolutions of the Federal Reserve Board:
uThat the Federal Reserve Board approves in general the
report of the Open Market Committee dated November 2nd, but
desires an immediate meeting of the committee to oonsider
whether changed conditions do not make a change in the open
market policy of the Federal Reserve System desirable.14
“That one of the matters to be referred to the
Market Committee be the question of allowing December 15th
maturities of Government securities to run o ff without re
placement.’1
After thorough canvass of the System’ s open market policy, as w ell
as the subject of rates of discount and b i l l rates, it was the consensus
of opinion that the Treasury certificates held in the System account.,
amounting to about #38,000,000, maturing on December 15th, should be
replaced by other maturities to be. purchased by the Committee*
The meeting adjourned at 1:00 o’ clock to reconvene at 2:30.
There
were present at that time in the Board room the same members present at
the morning session.
r
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
2
The meeting formally approved the action taken informally at the
morning conference*
The balance of the session was devoted to a discussion of conditions
bearing upon the discount rates of the System and especially of the
Federal Reserve Bank of New York*
It m s the consensus of opinion that
it would be better to await the turn of the year before the Federal Reserve
Bank of New York made any rate advance, as at that time there was likely
to be considerable liquidation and a large return flow of currency, with
some easing of the money market, which might prove to be the appropriate
time for sellin g some of the System’ s holdings of Government securities
and for an increase in the New York discount rate*
Dr. M iller expressed the view that the rate should be advanced to
4 per cent at once and Mr. Platt expressed the view that he would prefer
to see it advanced to 4 l/2 per cent*
The meeting adjourned at 4:30 p. m*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 .
The meeting of the Open Market Investment Committee'with the Federal
Reserve Board, called by the Board for December 1, 1925, was held in the office
o f the Governor at 11:00 a*m*
PRESENT:
Governor Crissinger,
jyir. Platt,
Mr* Hamlin,
Mr* M iller,
Mr* James,
Members of the Board,
Governor Strong,
Governor Harding,
Governor Fancher,
Mr. Hutt,
Mr* McKay
Members of the Committee
Dr. Stewart,
Mr* Noell*
The subject submitted to the meeting for discussion was the following
resolutions of the Federal Reserve Board:
"That the Federal Reserve Board approves in general
the report of the Open Market Committee dated November 2nd, but
desires an immediate meeting o f the committee to consider whether
changed conditions do not make a change in the open market policy
of the Federal Reserve System desirable*”
"That one of the matters to be referred to the Open
Market Committee be the question of allowing December 15th
maturities of Government securities to run o ff without replacement*”
After thorough canvass of the System’ s open market policy, as well as
the subject of rates of discount and b i l l rates, i t was the consensus of opinion
that the Treasury certificates held in the System account, amounting to about
^38,000,000,maturing on December 15th, should be replaced by other maturities
to be purchased by the Committee*
The meeting adjourned at 1:00 o'clock to reconvene at 2:30#
There
were present at that time in the Board room the same members present at the
morning session.
The meeting formally approved the action taken informally at the
morning conference*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfe
The balance of the session was devoted to a discussion of conditions bear
/
j/
f/
ing upon the discount rates of the System and especially of the Federal Reserve Bank
of New York,
I t was the consensus of opinion that i t would be better to await the
turn of the year before the Federal Reserve Bank of New York made any rate advance,
as at that time there was lik ely to be considerable liquidation and a large return
flow of currency, with some easing of the money market,
which might prove to be the
appropriate time for sellin g some of the System’ s holdings of Government securities
and for an increase in the New York discount rate.
Dr. M iller expressed the view that the rate should
be advanced to 4 per
cent at once and Mr* P latt expressed the view that he would prefer to see i t ad
vanced to 4^l/2 per cent.
.JL) The meeting adjourned at 4:30 p.m.
»
(Signed) Benj. Strong,
Chairman.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 6 . 12354,
MINUTES OF THE MEETING OF THE OPEN Ma RKET INVESTMENT COMMITTEE
FOR THE FEEERAL RESERVE SYSTEM HELD IN THE OFFICES OF
THE FEEERAL RESERVE BOARD, SEPTEMBER 22, 1925
The following were present:
Governors Strong, Harding, Fancher and McDougal
Mr* Hutt, representing Governor Norris, and
W. R. Burgess, Secretary pro tem
The meeting was called to order by Governor Strong at 11 a. m.
Reports were submitted by the chairman concerning' credit conditions
and future program, by the secretary of the committee giving the data as to
the detail o f operations, and by Mr, Case concerning operations with foreign
banks of issue*
After discussion i t was
VOTED that these reports be adopted as submitted, including the
recommendation in the secretary’ s report that during the balance o f the year
additional purchases o f b i lls or securities be distributed among the banks in
such manner as, firs t, to provide for the expenses and dividends o f each bank;
and, second, to provide thereafter for estimated chargeoffs as completely as
possible.
There following a general discussion concerning credit conditions*
At 11:45 the committee met with the Federal Reserve Board*
The chairman presented the Committee reports to the Board and the
action which had been taken, calling attention to that part o f the report which
suggested that the present situation appeared to c a ll not for open market
operations but careful consideration of the position o f the discount rate, which
was outside o f the.province of the committee.
jMFhere then ensued a discussion of credit conditions and discount policy*
No action was taken and the only definite recommendation was made by Dr. M iller
to the effect that it would be desirable to make sales from the special
Reproduced from the Unclassified / Declassified Holdings of the National Archives
w
DECLASSIFIED
Authority E . 6 . U35fe
2
i n v e s t me nt account and to
New York discount r a t e .
fo llo w these sa les s h o r tly by an increase in the
Most o f those present a t the meeting were not in
agreement with th is v ie w«““j
The meeting adjourned at 1 :1 5 .
W„ R. Burgess
Secretary pro tem
t-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 .
3 3 3 .-6 MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM HELD AT THE FEDERAL RESERVE
BANK OF NEW YORK, JUNE 24. 1925
.
4 (*
The following members of the Committee were present:
Governors Strong, Harding* Fancher and McDougal
Mr* W. B. Matteson, Secretary of the Committee
There were also present:
Honorable D* R. Crissinger, Governor of the Federal Reserve Board
Mr. John R. Mitchell, Chairman of the Board, Federal Reserve Bank
of Minneapolis
Mr, Pierre Jay, Chairman of the Board, Federal Reserve Bank of
New York
Mr* J* H. Case, Deputy Governor, Federal Reserve Bank of New York
Mr. E. R. Kenfcel, Deputy Governor, Federal Reserve Bank of New York
Mr* W. R. Burgess, Assistant Federal Reserve Agent, Federal Reserve
Ban* * f » • # York*
The meeting was called to order by Governor Strong, Chairman, at
10:30
m*
Jn view of the probable absence of Governor Strong for some weeks during
the sunmer i t was
VOTED that Mr. Case be appointed to serve on the Committee and be
acting chairman of the Committee pro tea during the absence of Governor Strong.
The report of the Chairman was presented and a fte r f u ll discussion i t
was
/
VOTED to accept the report with minor revisions (revised report with
accompanying exhibits herewith).
The Chairman reported that the Bank of England had recently acquired a
small balance her© by purchase from a foreign bank of earmarked gold, and
desired to employ i t by the purchase of $2,000,000 short term certificates of
indebtedness; and that a farther balance mi$it be b u ilt up for which similar
employment would be desired.
In order that additional Federal reserve fund©
might not be put in the market at this time i t was
VOTED
that $2,000,000 Treasury certific ate s, due September 15, 1925,
(ojX^ x S
3 33 .-*& -I ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
’
^
DECLASSIFIED
Authority E .6 . UHSIo
2
be sold to the Bank of England from the holding© in the Special Investment Ac
count, and that the Committee authorizes further such sales up to the total
holdings of this maturity amounting to $5,000,000.
Mr* Case reported that the Treasury in order to employ a part of its
unusually large balance in the Federal reserve banks, had requested the purchase
of $10,000,000 Third Liberty Loan 4 l/4 per cent bonds and &10,000,000 3 per cent
Treasury certificates, due June 15, 1926*
In order that these purchases might,
likewise be made without introducing further Federal reserve funds into the
market at this time i t was
VOTED that a sale of $10,000,000 Third Liberty Loan bonds be made to
the Treasury from the Special Investment Account, and that as far as possible the
$10,000,000 3 per cent Treasury certificates, due June 15, 1926, (since the
Committee holds none of this issue) be purchased in other districts than New York.
There followed a discussion with regard to further sales from the
Special Investment Account and the Consnittee was in agreement that further sales
might be necessary, under existing authority, for an amount which might bring
the account down to §200,000,000, i f there appeared to be a large flow of outof-town funds to New York during the summer dull period.
No vote was taken,
however, ajid i t was agreed that the members of the Committee would be consulted
before any sales were made*
Consideration was also given to the suggestions in the Chairman*s
report trlth regard to the purchase or sale of securities at the September tax
period, purchases during the autumn, and the seasonal movement at the end of
the year and after the fir s t of next year*
The tentative proposals contained in
the report were approved and i t was agreed that definite action should be deter
mined later as occasion arose.
With regard to making allotments of purchases of b i lls after July 1,
the Secretary explained that figures had been requested from a l l the banks as
tst
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35fe
3
of June 30, 1925, showing earnings, expenses, dividends, etc. for the fir s t
h a lf year*
I t was, thereupon,
VOTED that future allotments of b i l l s be based upon earnings required
to meet expenses and dividends, (exclusive of charge-offs) as shown by the new
figures.
Andt i f necessary, that such allotments be made to the Federal
reserve banks of Minneapolis, Kansas City, Dallas, and Atlanta, (which are
either short of earning assets or unable to take their fu ll share of securities
because of shortage of collateral for note issues) so as to enable them to
maintain continuously their needed proportion of open market investments*
The usual report on foreign accounts was submittedOn action the meeting adjourned*
(Signed) W* B. Matteson,
Secretary*
^ipupp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.G.
'w
...
-
i± £ J L
M SffFES OF SHE MEETING OF THE OFEN MARKET INVESTMEifT COMiXTTEt
______
FOR ft® FEDERAL RESERVE SYSTEM, HELD AT THE flEDB&AL
RESERVE BANK OF NEW YORK. APRIL 30. 1»2S
1
f
j / 3 o hfx h
PRESENT: .
Governors Strong, Fancher, McDougal, Harding and Norris
Mr#
B. Matte son, Secretary of the Committee
There w e also present by invitation:
Honorable D. R. Crissinger, Governor of the Federal Reserve
Board
Mr. Walter W. Stewart, Director, Division of Research and
S tatistics, Federal Reserve Board
Mr. J. H* Case, Deputy Governor, Federal Reserve Bazik ef
New York
The meeting was called to order at 10:30 a„ m* by Governor Strong,
ChaJmaft.
On motien, duly seconded, the minutes of the last meeting of the
Comnittee held ill Washington on April 6, 1925, were formally approved.
The Secretary presented for consideration a report with accompanylag data Sttppertifcg several different plans for the redistribution o f existing*
holdings o f Government securities as recommended by the Committee at it s meet
ing 6n April 6 «
The Committee carefully considered and discussed at length
various proposed methods of redistribution of the present holdings of secur
it ie s and/or b illg in order to carry out the directions of the C6nf«rettc© of
Governors.
It was, on motion, duly seconded
VOTED that Flan "A" be adopted and that pursuant thereto Hie five
banks showing an estimated excess of earnings s e ll from th e ir holdings ap
proximately |83,000,000 of Government securities to the six banks (other
than Minneapolis) which showed an estimated deficiency in eerAings*
The
Federal Reserve Bank of Minneapolis is to be furnished with additional b i lls
instead of Government securities for the reasons explained at the la st
Governors' Conference.
JLdfcfcjWo $ /£ ,/> ^ /UJL.J 3 1 3 .
-I t
-
x.
Reproduced from the Unclassified /
General discussion ensued in respect of the apportionment to be
followed in the event that the Committee should exercise its authority to pur
chase an additional $50,000,000 of Government securities, in accordance with
the action taken at the last Governors* Conference; and on motion of Governor
Faneher, it was
VOTED that such purchases as may be made from time to time on this
$50,000,000 authorization be allotted on a pro rata basis to those five banks
that are now giving up the $83,000,000 of Government securities from their
participation in the System open market account.
There followed a discussion with respect to the method of allottin g
System purchases of b ills *
Under the present method the gross earnings for
the balance of the yea* are determined from the actual earning asset holdings
of each bank at the close of business the last day of the previous month.
In order to provide a more accurate estimate as to the future earnings of the
banks, it was decided to estimate such earnings on the basis of the average
earning asset holdings of each bank from the fir s t of the year*
It was also
understood that allotments of System purchases of b ille w ill be made on the
basis of estimated expenses including dividends but excluding charge-offs.
The Chairman announced that he now had an opportunity to s e ll a singles
block of $20,000,000 of 4 3/8$ Treasury notes maturing December 15, 1925 at
100 27/32 (about a 3$ basis) and to replace them by the purchase of $15,000,000
of Treasury notes maturing March 15, 1926, on a 3 1/4$ basis, and $5,000,000
of Treasury notes maturing March 15, 1927, on a 3*54$ basis*
tt m s, thereupon,
VOTED that the Chairman be authorized to effect such sale and pur
chase*
On motion the meeting adjourned*
(SIGNED)
W# B, MATTESONf
Secretary,
SCHEDULE "A"
STATEMENT SHOWING REDISTRIBUTION OF 183,149,500 OF GOVERNMENT SECURITIES IN SYSTEiW ACCOUNT IN ORDER
THAT ESTIMATED EARNINGS WILL BE ON SAlvE BASIS AS ESTIMATED EXPENSES (EXCLUDING CHARGE-OFFS)
Total
Estimated
Earnings
192S
Total
Estimated
Expenses &
Dividends
1925
(Excluding
Charge-of is)
4 2,908,694
¥ 1,912,300
New York
7,490,192
Philadelphia
$ton
Estimated
Overage
or Shortage
of
Earnings
Tot al
Estimated
Earnings
After Ad~
iustment 192^
996.,394
¥ 2,449,040
6,519,000
971,192
2,482,309
2,077,000
Cleveland
3,071,300
Richmond
Estimated
Excess of
Earnings
After
Ad iustment
Present
Participation
Government Secur
itie s Special.
Account
AMOUNT
OR
PURCHASED
by each
Bank
Farticipatioi
After
Ad iustment
4
536,740
# 17,579,500
#17,241,000
6 , 641,157
122,157
92,363,500
31,846,000
60,517,500
405,309
2,301,738
224,738
6,773,000
4351000
2,647,000
424,300
2,743,652
96,652
25,209,500
12,289,500
12 , 920,000
1,399,000
1,422,000
23,000
1,474,713
52,713
2,044,500
2,040,000
4 , 884,500
Atlant a
860,906
1,161,976
301,070
1,204,920
42,944
1 , 022,500
12,903,500
13,926,000
Chicago
4,223,498
3,567,134
656,364
3,823,588
256,454
3 5 , 064,000
15,000,000
20,064,000
Louis
831,610
1,465,000
633,390
1,518,154
53,154
8 , 626,500
25,751,500
34,378,000
neapolis
818 ,631
1,074,100
255,469
818,631
Kansas City
1,299,401
1,632,577
333,176
1,694,205
61,628
1 2 ,343,500
14 , 808,500
27 ,152,000
848,633
1,138,400
289,767
1,182,057
43,657
13 , 265,000
12 , 506,000
25,771,000
2*m .000
.. 2.489.000
290,000
2.S81.U?
92.^19
2^.^27.000
14,340,0.00
19...afrL.QQft
#28,433,174
#27,105,487
#3,453,559
*28 ,433,174
$1,327,687
#250 , 041,500
#83 ,149,500
*>250,041,500
I
Dallas
3an Francisco
#
*
255,469 z
7 , 208,000 •
9 , 788,000
0
338,500
9, 788,000
2,125,872
#1,327,687
x Federal Keserve bank of kinneapolis has received additional allotment of Dills-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
— p jpjp • *.
mrn-
d e c la s s ifie d
Authority E.6. U35(j •
.A..
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMM:
FOR THE FEDERAL RESERVE SYTSSmT HELD IN THE FEDERAL RESERVE
~ T 6m ~ R o F
APRIL fT."l92S.
Present:
Governors Strong, Fancher, McDougal, Harding
and Norris
There were also present:
Governors Bailey and McKinney
Mr. George L. Harrison, Deputy Governor,
Federal Reserve Bank of New York, \$io acted
as secretary of the meeting.
The Chairman called the meeting to order at 2:00 p. m.
1*
The proposed report of the Chairman of the Open
Market Investment Committee to the Conference of Governors,
which had been distributed informally among the Governors in
advance of the conference, was considered by the Committee,
and, upon motion of Governor McDougal, it ms
VOTED to approve the report as drafted, with the
understanding, however, that the paragraph entitled "Future
Program" on page 2 be eliminated.
2.
Upon motion of Governor Harding, it was then
VOTED to be the sense of the Committee that under
authority now vested in i t , the Committee should increase its
holdings up to approximately $300,000,000 as and when market
conditions warrant, it being the b e lie f of the Committee that
present and prospective gold movements make this increase ad
v isable.
*
3.
The Chairman referred to the fact that some of
the Federal reserve banks at the present time are not earning
\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority £ . 6 .
2
enough to cover th e ir expenses, and i t was accordingly
VOTED that the Chairman be authorized to submit to
the in d iv id u a l members of the Committee a plan fo r the immediate
reapportionment o f the present holdings of the Committee, together
with a plan fo r apportioning new purchases by the Committee*
4*
The Chairman made a b rie f rep ort to the Committee
concerning ce rta in foreig n accounts of the Federal Reserve Lank of
New York, and sta ted thst he would la t e r submit proposals fo r the
re apportionment of some of these accounts among the several Federal
reserve banks,
5.
The Chairman reported the proposed action of the
d ir e c to r s of the Federal Reserve Lank of Loston to request p a r t ic i
pation in the fo re ig n accounts now apportioned among the other
Federal reserve bonks,
Upon motion of Governor McDougal, i t was
VOTED that the p a r tic ip a tio n of the Federal Reserve
Bank of Loston should be approved and the accounts reapportioned
accordingly*
(Signed)
George L. Harrison
Acting Secretary
.<
Reproduced from the Unclassified / Declassified Holdings of the National Archives
11 1j
" ^ P MHPVP9PRI
'^
d e c l a s s if ie d
Authority E.6.
EXTRACT OF MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT _>/ '4 't
>,
►/
-t ,r *'"* '4 1t ■{ •
COMMITTEE WITH THE FEDERAL RESERVE BOARD, HELD IN WASHINGTON
' ...
* - •WEDNESDAY, FEBRUARY 25, 1925., PERTAINING TO THE ACTIVITIES OF
X i 7 -r A
THE OPEN MARKET INVESTMENT COMMITTEE
‘f
PRESENT:
M essrs, C rissin g er, P ia t t, Hamlin, James, Cunningham,
Members o f the Federal Reserve Board
Mr* W alter W. Stewart, D irector, D iv ision o f Research
and S t a t is t ic s , Federal Reserve Board
Mr. Walter L. Eddy, Secretary, Federal Reserve Board
Honorable J. W. McIntosh, Com ptroller o f the Currency
Honorable Charles S, Dewey, A ssistant Secretary o f
the Treasury
Governors Strong, Harding, Fancher, N orris and McDougal,
Members o f the Open Market Investment Committee
Mr. W. B, Matteson, Secretary o f the Committee
Governor C rissin ger c a lle d the meeting to order at 10:30 a . m*
Governor Strong presented h is w ritten report as Chairman o f
the Committee which reviewed cr e d it con d ition s and the changes in the
money market sin ce the la s t meeting January 9, 1925, accompanied by ex
h ib it s prepared by the S ecretary r e fle c t in g in d e ta il recent Committee
a c t i v i t i e s and data re la tin g to System operation s*
Governor Strong
stated that th is report had been submitted to the members o f th e Com
m ittee and approved by them and was now being presented fo r suggestions
or comments from the Board,
He a lso stated that the members o f the Committee had approved
the suggestions contained in the report with referen ce to the further
p o s s ib le sa le o f s e c u r itie s from time to time as con d ition s warranted,
such s a le s , however, to be lim ite d to an amount that would not reduce
the Special Account below $200,000,000,.
proved.
This recommendation m s ap
z’ «
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.6.123Sfe
•» 2 —
Governor Strong reported that i t had been decided to
postpone the se ttin g up o f new r a tio s o f d is tr ib u tio n o f purchases
for the System Account under the plan which was put in e f f e c t la s t
year u n til about A pril 1, 1925 in ord er that we may have a real
basis fo r reviewing the estimated earnings as w ell as estimated
expenses, including c h a r g e -o ffs , fo r the e n tire calendar year*
(Signed)
W«. B. MATTESON
Secretary, Open Market
Investment Committee
m jpjp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
3
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL
___________ RESERVE BANK OF NEW YORK. JANUARY 9. 1925_____________
,
11"f f 1 b
PRESENT:
Governors Strong, McDougal, Fancher, Norris and Harding
Mr. J . H, Case, Deputy Governor, Federal Reserve Bank of
New York
Mr. ’ W, B. Matte son, Secretary of the Com it tee
There were also present
Honorable D. R. Crissinger, Governor of the Federal Reserve Board
Honorable Edmund Platt, Vice Governor of the Federal Reserve Board
Mr* Walter W. Stewart, Director, Division of Research and Statistics,
Federal Reserve Board
Mr. W. R* Burgess, Assistant Federal Reserve Agent, Federal Reserve
Bank of New York
The meeting was called to order at 10:45 a. m. by Governor Strong,
Chairman*
A report was submitted by the Secretary of the Committee reviewing
the operations of the Open Market Investment Committee since the last meeting,
with accompanying statements and data.
There was also submitted a report on foreign accounts which the
Federal Reserve Bank of New York had just transmitted to the tanks participat
ing in these accounts.
The Chairman discussed b rie fly the activities of the Committee since
the last meeting, as set forth in the Secretary's report, and the movements of
money coincident with the fir s t of the year transactions.
A discussion followed which was participated in by a ll present with
respect to further changes in the Special Account.
It was on motion, duly
made and seconded,
VOTED that the Committee stand ready to make such further sales of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfc
"i *
2 s e c u r it ie s as seemed necessary from time to time in view of changing money
co n d itio n s to prevent undue ease in the money market.
This was also concurred in by a l l the members of the Federal Reserve Board
presen t.
Mr. Case re fe rre d t o the acquirement by the Treasury, in connection
with the recent fin a n cin g, of $35,000,000 new 4% bonds of 1944-54 fo r account
of the Alien Property Custodian and which the Treasury was d esirous of re p la c
ing by March 15, 1925 or September 15, 1925 c e r t i f ic a t e s of indebtedness*
Sales of these new 4s to the market have re su lte d in the Treasury being in the
market fo r short-term c e r t i f ic a t e s of indebtedness and the Committee has con
sequently sold i t d ir e c t $17,709,500 - 4$ c e r t i f i c a t e s due next March, being
a l l that were held in the S p ecial Account,
I t was agreed that tra n sa ction s
of th is nature had p r a c t ic a lly the same e f f e c t as sa les made d ir e c t to the
market, and the Committee thereupon unanimously voted in favor of Treasury
tra n sa ction s of th is ch a ra cter, with re sp e ct to our September 15 c e r t i f i c a t e s .
Mr. Case brought to the a tten tion of the Committee an opportunity
which had been o ffe re d through one of the dealers fo r the sale of some
Government s e c u r it ie s maturing in 1925, the amount involved being $40,000,000,
025, 000, 000 in Junes and $15,000, 000 in Septembers.
He stated that recen t
sa les amounting to $27,000,000 of September 1925 c e r t i f i c a t e s had been made
with the understanding that a l l or any part could be repurchased i f d e sired ;
th e re fo re , i f $15,000,000 of the la t t e r amount were made a permanent sa le , the
fu rth er sale of $25,000,000 June 1925 notes at 2#60$ b a sis le s s l/3 2 com
m ission (a very good market p rice and one which would represent a f a ir p r o f i t ) ,
would only r e s u lt in a net reduction in the account of $13,000,000.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6. U35fc
<* 3 -
On motion, duly made and seconded, i t was
VOTED
that the sale be made with the understanding that d e liv ery
would be made at our option between now and January 22, in lo t s of § 5, 00 0 ,0 0 0
or 110,000,000, such d e liv e r ie s to be made with due regard to the e f f e c t on
the market, and that s im ila rly the $12, 000, 000 now in dealers* hands might
be returned t o us at our op tion .
I t was the consensus of opinion that the operations of the Committee
having to do with the sale of Government s e c u r it ie s could be handled more ad
vantageously and with le s s d isorg a n iza tion to the market i f sa les were cen
tr a liz e d in New York, except in unusual cases where there might be an oppor
tu n ity to dispose of s e c u r itie s to advantage in other markets.
There follow ed a short d iscu ssion with regard to the e f f e c t on the
market of the recent change in ra te on b i l l s purchased which had re su lted in
a resa le to the market of a l l b i l l s held under repurchase agreement and a
considerable reduction in the p o r t fo l io of the New York bank.
On motion the meeting adjourned at 1 p. m.
(Signed)
W. B. MATTESON
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
EXTRACT Of HIKOTES Of THE KL&TIffG OF THE OFES MARXSt IHVESTME8T COBBIITTEE HITS
THE FEDERAL RESERVE BOARD HELD III WASHIIGTO*, FRIDATf DECEMBER 19, 1384^ 2 *
PERTAI8IKG TO THE ACTIVITIES Of THE 0PS8 MARKET IHVESTMEST COMMITTEE / ^ < i ^
PRESEHTi
Xeasrs* C ria e ln g e r, P l a t t , H a a lin , i i l l a r , «Taaee, Cunninghaa l >
(le a b c rs o f th e Federal Reeerve Board)
Honorable G . B. K inston, Qndar S ecretary o f th e Treasury
Honorable
V. t t c l n t o * , C om ptroller o f the Currency
le a a r i. S tro ng, H arding, Pancher, IcDougal and R o rrla
(Keabere o f th e Op«a Market Xnveataent C o a aittee )
H r. Mmtteson (S e c re ta ry o f th e C o a a itte e ).
Governor C rls a ln g e r c a lle d the s e a tin g to o tile r a t 10s SO a . a .
Governor Strong thee presented w r itte n rep o rta by h ia e e lf as Qtairman o f
tlie C o a aittee and by the S ecretary e f th e C o a a itte e « M reviewed recant a o t iv it le a
w ith r e la tio n to the C o a a itte e ' a account aa follow er
(1 ) S e llin g March 15, 1025 o e r tifio a te a o f indebtedneaa
and Treasury Hotea in o rd er to provide an a p p o rtu n lty fo r
subscribers to the new Treaaury 4# loan to obtain s e c u ritie s
to be need in exohange f o r th e nee bonda.
Aa the a a rk e t waa
bar# o f theee s e c u ritie s th e C oaaittee supplied f r e e ly , fro a a
t par e e n t. b aaia down to one tran sa ctio n on a 1 per o ent.
b a a la , o e r t if io a t e a to th e e x te n t th a t about $35,000,000 o f
the Systea holding# o f Maroh e a tu r itie s were liq u id a te d .
(2 ) Purchase o f o th e r U nited S tatea Govemaent a e o n rltle a
fo r the C o a aittee account In o rd er to to rn bade in to the a a rk e t
the funds taken c o t th ro n g the aale o f the $85,000,000 IIarch
a a tn r itie e re fe rre d t o , thereby avoiding the a a rk e t lo s in g th is
e n tir e aaount o f ftends.
th e r e s u lt was to replace a l l o f theee
a a le a , except about $17,000,000.
Reference vae aleo aade to the $65,000,000 o f December 15, 1924 a a t u r lt ia e
which were p a r t ia lly replaced by the purohaee o f $15,000,000 o f o th e r lastaee o f sh o rtto ra s e c u r itie s , thus reducing the S ystea'e account by $50 ,£00,000 w ith o u t any appre
c ia b le e f f e c t on the aoney a a rk e t.
Digitized
for
JL
a FRASER
*, jfcw-vuc
i I / 7/ 2- S '
5 3 3, - / - L .
~
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
- 2 -
I f was the fe e lin g o f th e C o a alttae th a t f r o * now on the account should
l probably n o t be increased above th e present aaount and th a t fro® t in e to t ia e «e should
liq u id a te soae o f our h o ld in g s .
I t was also f e l t th a t i f aeaber bank: borrowing
should be necessary, i t would b est be ia th e fo ra o f discounts and when th e seasonal
re ta in o f funds takes p lace a f t e r January 1 th e discounts would aot as a b u ffe r
along w ith a a tu rin g b i l l s and sales o f s e c u ritie s to absorb the re tu rn flow o f
h o lid a y cu rrency.
I f thea th e re is any excess o f fands I t a ig h t be ad visable to
a a rk e t soae o f the In ve stae n t account.
I t was considered th a t the w ithdraw ing o f soae 170,000,000 by the Treasury
fro a d ep o sitin g banks to aake i t s payaents d uring the Deeeaber 15 ta x period a ig h t
Induce soae fu rth e r borrowing and in a n tic ip a tio n the Seserve Bank o f lew Tork
expects I t w i l l be necessary to advance th e b i l l r a te to&5 per cen t.
That would
l ik e l y be th e la s t advance to aake |tt present and would r e s u lt In having the saaa
r a t e , 5 per c e n t., on both b i l l s and discoun ts.
A fte r considerable discussion as
to what th e reserve banks* buying ra te fo r acceptances should be and as to the
probable e ffe o t o f a change to $ p er c e n t ., I t was the opinion th a t th e ra te on
b i l l s a a tu rin g over 50 days should be 5 p e r cent* snd th a t f o r the present the
t 5 /4 per ce n t, r a te on sh ort b i l l s should co n tin u e, w ith a gradual change la t e r on
to 5 p er c e n t, as and when condition s w arranted.
I t was, howevert considered
th a t in view o f the p o s s ib ility o f a change la th e s itu a tio n a f t e r January 1 th e
C o a aittee should arrange to a e e t s h o rtly th e r e a fte r to review the e ffe c ts o f th is
ra te change on the aoney aiarket and the e f f e c t o f m y sales b e fo re any fu rth e r
actio n Is take n .
i r . B a a lin then aoved th a t the Board note with approval the re p o rt o f the
C o a a itte e , in c lu d in g I t s proposed fu tu re ac tio n as oontained in the statements o f the
The meeting adjourned a t 12*40 p. a
(Signed) >• B. la tte s o n
Secretary
vypjp.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
mb
3
: /
s a w iu M s t is w a w w ?
IO0XIKKI fflM W f t ®
^
Fa HSS-& I t i M E M WW
'
tbb
jw
wW
w it H f...... y
£-<c,x4t<
flBEKXRnt 1 1 . 1934
-j. - ... ..... .. v
« * « « » * « « * -* » -•
HMMMU dVittifAMiftk. Vkn&tkm
- 7 .x .,. , t v i u , , , ^ ; ^
W ill ait- JNflMU
QlKSSgSjhApli,,
pN
QPRBnp
I y I i f / i- ^
’ShfcWttltit*%
wipp *sW
H
i
pW
PPP^I
of
h m . j l Hm *********-.
^p“
thtt CuowMar
4WMIhk
SfeHKKttfNi
Hjftt
{3«er& ’S&jy $1* H ii # M if| p ii«
H
^^
M
M
U
IIM
lIP
P1f*iHIilpfttiihMBIIMIfr
<|
PM
^^M
BH
W
m
W
w|
fik££ IjWHBftHhWlfr 4^fco
H
i »feisppf
Wp I^PftiPP jlA
^>fW'JjBfjlSfii
wwfi'IWp ^
frp
j^ftsiM
jPilM
iJiiJifc-M
%aP|^^F^|ppMMpMP ^P^PPr^K^P^Ef ^pWpPpjp w
,JiflW
^FlPH
^i^tt^’
^’*W
WpW^il'P ttHNt&lkiW
*^^P,<W‘ ft. P
*^P^-r^
^rpfc )'^m^P0 "Wtnttt4hX/4^ "ftfll
^W^P
pP
^P!W
awwMt w m w * I «uafi*» |» Mk «b» ■wftiw of «m a»a«taK to m *
wAJL flwF ^WPiWi WplpWPWBpP wmfm J#^pW^W WW
w*^:
wupw
a» ttw lart abHta. «rt«flar. « a l tea H W « la INIs • «• teft «M mMmm m
daml Hitt
la
mmmUm vtm
tlw O a en lttM 'c m m o H .
*# *a* • » * ta tm ftX
w*aa>Hw»w ttr Vm mm # tmaaaqr ta n 4w »l«h to Mr »*** «•*«•» ow tlftwM
>i^Hp
iSBjBi jWSVB® *^B|rw ^jyEiWwft flRt
^^Bil
^ lw
a!, a.. w
.^.^a. 1Pi i^ pI,l>*#i>
r■%A■•^■■:A I M WKUmm%
M
a na iPPISijf XIMBI S
m md§ m*.m.*uMm Jk&Mtib
M
iyHi 4
i.4ni^iulHiylkA'ftdlii
VMM
mp WmmM mtmI w M
®W»
wfQMHmmmm
,IH
Mb tk
W i t t 11fTTrHIrlitiitflfiff *m —*w*M
»ai^ f&JffiSNM Iti^fHPfc
OOOaClCilO #jf MUf iHlJy&bUHl
«T ttM M M k i i » l a r t u w » t o w rtar t o « H A i« a M i l i a i t o M » *»• #
n•ilt'-^ihi +mmu w^tfkfkt #-^ ii
t iiH
9pNnRRK
^w
ja.
U t lO r vaod f w aobM V l^U aaa.
^^
M to.
MifeJi J^iHiHi 4|%^| 4talM
M
^IM
IM
l(iliM
P' liiiyii
A » a f f a r t o f that m o U h am %•«** I m A « • !• •
jwarfkul
*4
*|pp«iPP
aIIil- W*pWw|||
m^t'Jii.. |a
H
pil9iP«iN|PWI* l^iNUft
VHHIPWw iPV .W
HWF %tSim
WWWw n
fll*1W'liH
ip-^w^pijf^ tiirinwi
1W^NP<f^^r uMimiaiit mf
“uW mmmmm» gwA A# i|U|
Miiaiflu
mPIr
i -Bifcafc y
taw
i'w
»■%
m
u
1 ittk p^^^^pPM
IPPRNPW
M
llf^Kp «1
J^PtP
-'W
PPW
PfPW
P^
W
* #W#ii
W
1w
M tV lltM
«M T *• «• TCsO»en& <’.'lttl VfiMF M fttortltO *.
n p u a a u v <41 t a t ^ o M m , 000, 0 0 0,
-
i“ s“ itt
w«*» o<wi»awL fen
jijpim
if. M|
w'-^r »ftia Hh»
•m
rnm
*- Kaurall
-^~--’-^•
’^t^—
* * w H tm Um t»: 1*95.
« • a m * * ! b a » a » twra o f U d a « i « • aaa&A
« o te& a m a s a a « t h « i a t t m aw y t » M U o ijw t o
ii^SQCLOOGl
a#ir- A
t naMNHdbip imai.j*i*M»ii
^P^PPiPjp^lFW
^PpiW^r ilB
tPHiF
P»WPiPwPw^^P|^
X c -T t w
J jM
B* M i l MMOOOfBl ta.
cu .'/1 7/i. i*
|^|p^mp|p Pw^P
^ b fl|»: t^ELOO&aOOO
I N I #wfl*
p
i J 3 . ' Jtr ~X-
w w -«f
^--» . - «
—
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . \21Sto
Zon 3>QC9raber l 5t 2i*
tChQ n e t r e s u l t
b e e n t o r e js la c e
o f t h e t r a n s a G t i o n s w h i o h we h a v e h ad h a s
thO:-$6 8 , 0 0 0 , 0Q0 o h ic h a&otured on Decem ber 15t h f
t& o o t h e r | S ^ W f OO§
* U o m 4 t o -ran o f f ,
^ o
»rra n g e m ^
f^om d a y to
d a y w a 3 g o v e r a e d b y w h at w as g o in g on in t h e raoney i^ r fe e t and i n c on n ect io n
w it h s u b s c r ip t t o n s , an d th e n e t r e e a l t h a s b e e n t o re d u c e cmr governm ent ho i d l
in g * W
#K>*OOD*OG©» w i f K m i «*g r
4af tto m io mm $$ m&
I I «a i
«*&
&»
m %$m tmw® bm «
** a
fooliaf o
u
ttH
offc»os*A
fc
tw
il M
W
M
Q
r*
iM f c o t *
u
pIt #
«*** iadUBttaof tiio
iwo&
mh
aa
m% mrnm$ m m
U
kA*• tee#a»t rtglaM
iftasmm * mm m&m$m
ism mfettitr lie #* Dmaftt oiMMI bom o o «wr.
uror for timfM
M
M
rgr In
Hm mM * m y langoturn
w
itnd
sooo
foolofeet fvontw
tm
jjilm 0<
w
i3ittoo
mtmmI rffcn
&
an
ot fe
aiM
BW
M
Aaiw *•*%U U Ml
Mbt »• «feot&d li*pliteio M U onmi&» of otaamMu
At & » ’%*& In Mm totfc
Hiort in s fooUflg tfcsA it w ild be 4 wsy /soo$ fhUic if th*
*!$**• M 4 W
jo
oo a**tl-
iw o
*m
l oInft» mm of diocoa«li «*&
tu ts o f f m ; i to&M $Um&» o jfto r
t it # ^
« r i « r jm m g y
*
ft
f% & ' *> & **& *
«S» ft-
w i n l»t o feoffor*
along « * * MXlt »H& MOuvltUft* to obooi* @*st «!# * *
j8n«l
(M
te l «* t&iste tfeosno fcs *„
Itjr of ii littio t*#torm
ts®
rtoo***** U
rn
for io«wm
iwn«e *» ^
$ *»
m% m
I f gm * to «*jr
W i ft* our iiw # * l-
m o m m tJj
Oo?44Mt1'
fool fUf/
f ill
SfcfOM&g t e f itM # 1
Ife i tsoiCLooft mm^lng %mm$milM flteottl 3v^ 3« « tho tfont of
oaar WL4ii®t 4» th» mental mm®t%ito td ^0 t e i r t *
H
it vvmm% II» w
ftg
rH
m
wolw
d*. ^
alttoo* INmtmsjUr# *
l.^'l
^ fa*
S.i>« WIT
SBil£OS fi-HS i%0 O^^l
S io ao% 00$ .oajp
I# te«
^
aolHritf
a «i
^0 ^04l fO**
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 .
me liaiiiaip of mmmitloo to $M>9ogo»oqo osr iTO»TOt00i f o*
M od
« m 3^300#000*000# W8
ilill
M tt a
I* M i tisifo o»oa#i I#
wmmmmr ftm tin* it %lm* it ham mm f&*
Mkt uctaoaoo
■mmgU mm togmtmmim
n
mmmt m iM
riUtor#O
ft
mX & notMWte m Mr# M i mm£I
mwrtm
lMp« Hit mmUmm «£ M $ooattl
r#t* I
Umi *a * ym at of «U
mi MoltM* wm mmim «>att« ** iH
stytM
o#
la Ml tw
>
*a
tM
srJi M(f
>w*
«&
»
tM
u&tfeqf
lo«*
Wsmm #f M$»
oraqr^rwiip in
T
o** V tbofftaw
piiif** itti M*o MvotlM U
^altiftM
fc
a
ra
c
*will fiadaM
M
tlciR*
ter* fi**teai * ftm tam«HQr M i r ^ id «U nf M m M pow «* aMat**#
SoniR
orft*$ap * I M
tafeHat toM
?amr lamMttt mcmrn mmmd
$
50*000,000 m i m r««M& Ummafim mmrnms* in M Mft cn
id
on
oou H
i®nrll
M
M'
of I M
ti^ftaaftttoas M i M a JMwat&e to met t*U«gr la .
opit* of M fuel tM M « mm w itty hmv? tsomwla£» Is ftilM p M l Clawa*
1®
Mjr»«M»r ®
s&Mi M
0rM
to*o«
O
C
W
K
F
a
O
l*
•' ®
&
3P
W
W
UO
O
^
W
A
iat iS
M
S
P
tK
M
N
K
i i5**&f O
K
^iO
tai
mm yt*to*a»ytaftteroa* ft#»a* ffe
o
t*#it n
ot ««chloo**mm& in mtmm
mm Mi I iIn^Mth
tafe»
hwk» mmM first
toMr Me M»®so M
grM
oaa
Imv%& mmm% of m
m
?M
oreat M jw
**«w
t tM«
O^vwfaor ■^%p0O(Ht
I do not think you e u UU m ill
tdwt tea *»-
«d « is becaua.- t»e Sro- jnay *1X1 %^m 190,000,000 «m #f «N* ?«Amd SMmnw
tnwiNi istifcfi
%n wilss its
HbS aaar
tS
h
o
u
riioyw
w
$
sK
« 1#r-^t*cJpats th
c
^
tr v ^ r m& w
t
aooo#«^r to
m » M il mM to
mikm* m w ill
Mro a fla t mto « f
eiiio iiap*
<
3a
c
rK
j«tifig
rtoftai It
1MI «tll im M loot »ii«Mi «omm
0
m W$k M ils ?*&■ tfioooaaM
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfe
MlP.* I
S
M
i
y
imm Iwtra mm in imtmw ifei* mmM%aM
*
jffiWlflfl mm ,tfwim^fifayj
Wrmmwf #111 tmm miit t l* mm
lltMMnfe' te$Eta*
&&&%» in
ir . **l&i%» • 'fmm*t Wm iwmmmd m m m tmm
ts tfe* %%wk
Mr* %lmUm mf i t t s # to ^ MLt# Ste wsvdMrt urn
wm''
$1409OOQ»OOO| &» ftMtept |Witooo#cTO| da s»^ m ^ r9 $40*000,0001 m& m Wmx*~ .
in ? * f c * l 110,000,000.
Up# ifoDou&eli * Ht§ cMrMreii& $wfw* ?at# t o ®mmm& &i lm&% mm %&mIt?*
I I i i ajfel |# # » v .
Er« H M ti * 1 H w* WaMk i$m ?*&i eamt m%* dfco«3U fe# a m tisaafc «a»hslt p®mm% i«sio,. tiw mmmmi^k p^m *»!*•
immmmt $tPoigt * H
r« fl&
tt#
m
jn
anth
lriteH
mI«#rH
w
c
k
mlA psf 8fC
toda§ri
ttr* ? U H i - H #
0ra*x»* itfuftgi * Urn nisf tifaN&d timgr pf* n# ®| «n i|MNM§« t&Kfe It tto
• m t thing?
xav* flyaift - $Mgr «t* inl&t it mm* litu Mmm&m of p t l^ p IMN i ntg*
& fifipy 1&i ^&
q£
0oTn*rmr
ytisBf p#8$0Nto l# ft#itogii*.
** mm wmm& -m:& h-v-
«r f^»TOtC»t H»' 1km
II li* mSf tti #ff ^ Mmito
«ilf
iryttmNi ttet tti^r mm~ m i
Hi«f m
i. fli« t0ti;4
«tlii to mm®
m
wm m m m& ttw? i® it W ^ lin r otoc£fe «w
:;^ aot vr^t I# %i
B®&Kp nl»fg tip
£««* :»3t M l thi‘t it m&y
f:l s l
W
S> $$$• THay f'lipES Hit t&st df 0SOf
:IM#
MM&f
t# tlM a1i<ax%40*9 .uni
fm m It li^ i tli^r iw
itii mimitt
inm il*tfi$%am t^mk, |^,ooo#ooo. s#iw'
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
m
m
w
m
r-‘T w
*******
■
M
lia r *&t ajtfwflB** laamiNi II# M l sStm'Vrn ftmt #f in# p^r I **tfi «*•**
c a t* $ i p fv tty t t im t fp *
I I *m m %© m Utoi i f
Mmm
«■ » $ * t dU w t v ilk a
4$ ffttft* Sfc» Tori ehmil4 f*®| sloa^ ith Up. 1 an lacliasHl to fettfte aasr W
Hm* « tlf M&* itovdu suri %mm tvm
H M
M in t' ta li M l sikhhM Ǥi
mm§>%mmm* WmmHm mi# <®mM M fix «t witfe ratet!**
a tM iN iili^
tommm Stomp • I
tigm H it§ ttet
jre* t w i t u m m m
wm Mm
.
|f *# mM» mmmbm tttfc ral tiro I# Mr c oaitry luyfc* w;-*UUt
t« # i f
m W<ml« fe&v* ft §$ fss§§ Jll H*# ttM « rn M l 4Hi Hmwms M i l I f pNWNMft
co»t<wrt. Hhk *« itM Wtw& mm *!m i*c
of mm taflt w#«
m% in its mmmtikfy ml
w®
ftfMr Him*
© imm& tital
«p im ®ri«r $s&l it w i t p&& mm warn#
'« gut «fM r
®&§ *fc»g$®d it*
Hr* U s tii * 1 tfctaft ®£%m imamtf I t ! I «ariU iaertat© tt» «at* to 4jt»
asvtm r B rdla^i -* M iw urily oamBy **
tti&K In
rnm m m # n m u m
ia
m$wm flm ®i%m QmUlImm*
of
m
Me, wm&m?® 1*
d lM M t w M -
m
m im m
#4110*000*000 iif I m l M l f i ttm tyriMtf
Up# HaH» * I «waiU m «mo» of ttm » f f
Itrn gi * ffeot is «te i
Kr* 91*111 ♦ fte fiim l
iKrr^riwit M Nffft •
wvvwiNf vr*»S«MpW^tw•
909^1i
|# wrtkto'1
Hn «o te t »ol*
lMtv» In fllttAf «d Hisl I* hum m «&»
%* && U
ir©l
M il mtm itp m ffi*
m il pm%mW® m m $ m first <tf mm% iwwk* «t
^TOTwPWpjr
iPfw y*3i* Secy WmSmWrnf IsHSMi |W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
1 tfetafctfck
t
(temtmt
tiiiffi itmkm n
!*e
m
i&hum m
hmH »t a ll item* mm tUin wmm.I ef fiMMtti
to car*
t m mt
s?%in3f4. fuvtp# ft
jm t rttet mount
*9»» « m l *• haw ML la %m hifft* b»t *•
^is$uxiit o f flim «o as i t b t & $!• t o w r n t N U te t
%I<nm Htiiettl
«i*& *•!•** M ta|* e«:?*ri*m©^ *&t«# util t*U «•
«9ial tha tvsemt It* m
3s@afc» a*®
tli<a mt®, it mmm to m tlwt a* tm *S &»*$•
titan M il Y*t# is Urn bapertc&t factor* ML* It «ad# fft*
M Fily In Iho 9pm m&n&tt tost tite e^Uoii t f t*» J«fe*ral are#nTO
in twgr-
Ing H ili 1m h&d a £*mt a«s4 to 4$ «tt& Hi® tts&illftlfift i f tbc HS1 »tn *
A m i M ila mm
t® tfc* n n n l
'tm&m M b I f l i M
ml I f
IM tat H f —j j i tlMNNi car H am it tut# In f ^ i m 'Hum yacMi tiriM i mtk
tmmml a ctivltf «c ** ymm tetd wMbmt
Alx&tl fommtm **»
P®*t
/■Y
oqr U * » wNtot feato** M r total 1mm « f t d M i Ht#@G0*TO# r o tife r
otwtv? M
l
tb® ItfHft Mtal 4s tiMf Writ MMNgr &p» *«fi«f d«a*i*g i i mm
ttmdM* 9mm mmrnrm itt Boats® M l. in th m fmM»
I t #*$«*» to
clri&»iiig Imsu®# AoM» n t « m t o t * l § »
Kh&M il **tc.
if to*
It m 'imfa ha* a M i l
iiatCKwii m%%
3P»««m M in
«•» MUt
#it Dm SSw» M il fiftd»tf in *r #pi«i«» it wtlA mAf 'tm m tm 4^»
tmtem *m B U * t t m
I U 1 « n t 3^ m m t « * • » f a i t » t
»»eoadyst«7 osmtffci ®f
I ihiaic m l u m & ^m 4
£Km(gr tiaitot III fee t»t« at wblA w*
far m w« iwjf ftt the ®mm% m&m* m %m& to k&r^ «3aw» m teit
9§>3*§i! f f t f i iwate tfwAi- «JLKfi b » $m
MU
O&VQitm* wmt&mn *
ft*
I think
« l ft **%*• 4 w qr m llw
I ih ls k t h w
it pm'htM#r m
t « » l f f «H»
wfibateatUl wlsw# « f t>IU«
ta )fc»
w
«3i u
pto ti» Itwit, l»tli»ti»t * wMwMift vata» #f Hill* -
At
In Boatdn im tli-5 lant »l*tgr tof**
him
i» tl»
bill#*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . U3 S 4,
* Om
O o m vm r
teaSte i n
in tbo i — i.ft ssss of tes***tio m i l
soploioss ,
o il#
c*m l® X m A of
m i 4 Ifcst % U f m m fH lg s i U W fjk* m<»
«wwn: m m m u
m 1mA % m $m I m % lm & m m m m m ~
i qpis * tgr tfcu *o#r tsiyieu
ii M M r assosftsit * i m te I m&4 $§«fc s*t ttat
it «&i w s p s is t
to m thst m should %» m * ¥ s&rsfsl* tat 1 tola that m m tost tlie r * s p « i m ~
it y **s His <a*l tost m tfoioftdsd vpsft t o l « s ® 6 IHfti lit# w starlylse t n s w it t w s
w «ft la t M
with «)m s p ir it «mi lo tto r o f tli® last*
a^raor roiufesrt - $» tew fe&* soartftlft eorrsr*»tt»Aotteo with $so
in*
Mnrv» Basfc of Chioofp &ta*t ssvtslft Mil# of ttat taste,
aoforssor 8&roij*gi • a m Mttifsi Booonrs
ds&osUs MMplMMMM.
foist jM N
oiiidtetUjr fWWitS for
a elmas* ms put iai that i&oooptaiioos
m $S *t ^ «w»t si^lnst goods In trsmsit #*& tit*
ro«plaU®as tuaiootsd ttet
tli© motwA tiro in ta& sit t^ioml.4 !># fctJesft Into m ssk I,
k l » rofwlotloas ixsiro
opoasa tfcw ioor a H u lo so tSstt now eorastittlss ® m $mt In ifiwfeoswos» tsssiyis
IssiM «*4 asssptis*!* mm m lm& m nim%$
iiM K if iiis ig i • &&» m I M h 1ms * M
m its haoAs*
f t sbmmI ts* tei»
la So» tom* m * m 9 W ths sitasttion s*i oar sgMVfttUNS* top»tSior* I felsfc ths
oonmiitoo kMss *31 about It ttat I do «&& tbs nst rssott is s.
to bar* rodnowi w
somm!
G0t000*000
SOt liw»0«u8©d# ttas qttSAtloa l i tftM poH^r to
»*s$l# thfcsc*
^ w ln e ssssts of «ho Sfston taps
iRtmoa f* « i w t oisu
Oowisoor Crlssiu^n * isos osgr tu m h ^ r of tlwi Boars «U h to « ^ k t
^r* ttUlsn • 1 1m m nr ladMOttol nioos imt I «w s s s Oovomor
to team «hat His Ss^rd as &
tia^ko*
QotdSMT t^ rlt»i^ sri - I b silso o dovoSKtfr a tfoS f
xaoftts of Urn A lffer«it fagots^
mats
Uko to h m * %h* c m *
...................... " 1............ .......... .
...... .... .................................................... ..................................w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
I
r
Qmmmw fctwtsi -
t*
i lilw n - I M e « i It *11
of f*&m3L
rmtm® m$m to &a traed 4f
f t p f r MU* t o
4# ^
Id & » tasr&t U
iii
ittttB ptom m l# * m m ssX im to IMtti
to 3 l / i ^ t
s«is$
o « 3Um*g
Qmmm st*Rns» - Ito i I* ilM M m
M ils a* tmgr mr»
%tom the eatM«9ttt«il
&t tte
lid ft#
bUls. tut
mm m%& %%at t e l
«*♦ MtHUsti * 11*1 ftotiU n^to ttte
i«m »
mm 3- f/ l to
**» M M li vmmm mm Wm fmt hm bom § #tj(§ $i t e t m mm mm*
©sytoi mm «Mk 1t&# j*£r*a»«Mi tta i $mm %&tm pl«di ia
W ife*.
H w » «drt«4t tn i # is&ai 4
l* t o 9to SMPf | W wttflmi *
to 1w* tm
i t i s £#•& •& * to m
H ni$ IK « $ » * to '*0 a w t o ! ©? « U . a #
* » f*& m & m m m m tm&m* m m u u r n m m m
9M »«
l&vt to# a*
D n» ^
fiii jpm * toftfe i f tto i M m t t t o k « ia
•t la w
w
Hms awtart pito* mm
It that m ill
ia t i» ywwr
4
Wm togttug « $ * • »
9 ia m m $m % i»
' fin* t e l n i t M U *
m wm*iw&mh I foal
m mm %hm
m to tm tmm ** ^*#^1 to ^
Utmmm lUmm w
Hr# felU<r» *
if m
$300,900,<K>0 #t ftao^toaMu J» fur at «nr iwtot &>»
tfc§ « « lr ^MrtoKl m u u
Is * wtea
^
m
pmm^rn to mtmma* Wmmlm it
«ss^ t atyr ip
©fe^i of l i %hm. ^ HkniAI
4 t&mwmt bmi§ m mid* to p ig ii«ilit> »i 4 oIwmp
m i.ll m hmm
tm htslimlsm m mm m% ffibm to tovt
to M d q r i If l» tokl^. fa n
to nKimtoim 4 v^to
Urt fliftofeliy Mir.lif.ito mmtfmmn wi&ft* t '^wlt t^L mm mH&mtetoik# If m
ixmmmi Hi® m l* to 4 ^ la i dbmm mmm% mm mtt%& m% mm to
Cm
1$ n iill ^mtoor I f i** hini
wmmm
%h&mmpb*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . U35 k
bum rate to an erfclfieinl lavol la oiMar to m id toa naaaaaltr « f fotdag « V
UlltlWIWl Tllll
1* am M tflr fMtdttlMK «H to tffltM f i M M ft*
Oownor steonm «e«U jw i to il a* tbrt area wold to I f jw»
la toat
T«*feT
Mr. HlUori X would advance too iwyinc » t a for acoojtaneoc to a point
tost wnU kMp MMptoMM fMB wataf lift* tM Mrnrto torte. X wtoU aiM H*
It w U l It MB aawBBrtwtaa, V untoa* eppiteatloaa f«r rediaoouato, ttat to*
nutart vw twatfM * ft * m m m rnM m wm « * w m & w m m m w m * * * *
to* ntoto* t o t a fa it tola iapOntaoO to etroncJy toat toay
aotoaUjr <***
la and rodlsaauafc.
(M s iw stroaei toay am tononatrattae **»* deswadaaia * » '* * * IN r ***
• aaUlac ***!• H to toafa- anfemaaaat at a mts a f i | par aaat.
me. nillort
■ a t o l l It l i M
■
toa eoortamoa rato, tor nraoUoai w o e w , la a rodlaooont
f i f l X t o — to
H» toa altoatiaa tai m m tn w m * t o t * la
subject to dlffewani ooBaWmtlon * It « r to aa «M 0*tae to tosw a way taw
pomto im a m * of toateaaa, najrto a w r « < * * » aaa - X *Mife It la set float*aXOa to paodtoato our pollagr «
a lt o r oxtvam flaw tot It la <w*y OaalmWa to
faol gat tha oalaot* and I Jfogwd. too aoo«s>taBoa swartoaaoa end ealoa aa a matted
a f flMHat Via am p*
to tout aa toa luaar ia ayrtaa iila»itlna a toftot »ato toat
attoaato a*ototonaaa, It mAm toa aaaaptaaaa aata. M i to * toa aafta w ttt top*
to to atoaawod to Itoaa toa aflaeoaptton a f aao^toaww V toe naffeat, I to not
kaaai a f t a * mm M l aft tola Haft.
X Aa MMc I I wmSA Ini a
aodomtaly oonaerraMvo, Juat to ttoa admetaga a f toa e«aa«al todanwtaK * »
JoBB&*y to ad«n la Hr adwaalnK oar wto on aoooptanooa.
I tobfc *a o*dd tail
t r H*a ■iMMHUa a f O a aaato toatoaa a> aat aa aw <rt— i t to— a attoall w toal
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . 1235k
'■%, -v.'
* ^^
7\.
&
wsttU wmmM m atom * to to* a w m t M l tor
f:,r
® to« **»*»■ *# »» i^toSy
I f n mat late feStamoy toto to lf <»Rditi«w, J thlrtc tSte
proper jteller ton **<#»* to te saw* to* aoeeptaaa* rsto M B **** tot I f *»t.
ffcal w lacmA tote pratty haoty pm wm In ’’otiraary, I thin.: *r« ohaala thon t»
pnpund t« a m the dtwwrart rete upt * » m ?t* relation to too trand of to*
nfc to* n tojtoan toto* A IM l| M llM IM lX to M A lM *ito lV lR i
rate
east? I f * got « « ? t a w at 5 par «w t, t mttft
te 8 and 1/0 per iseat. t f tost w »4 W to ft gwwto of «lw w «S « J thliSt w
mA&to** to m * ntonlaB** ton Sagr MtoAto* ton** to***stnnto*« tf
SUM Jn§ MMMMApiwmmmI to ll art to pestiy tototo.
M
M n*e» to to.1 « * » toKtot to t f ^ t a e t o
* «■ * » * « •
U<ptdntlea after to* ftoat * f to* *w *. *• « « * • n *U 1 tan » tot* jn r ,
a ito n * vftfav* m l n ton* •
m
MU
Onnmnr Stow#*** stto toe t*wtoc mte on Wlto adwwsad, jw r rate « i »
proteM y « * te 1 1 « * # « M « ■ * .
Oovomor streams 8 par eant f « eroiythlBc anapt 30 daps* lacwiiy: tl*
S i tor « tor ton art tow • t e w to I t te 3.
' Hr* ttH m
to n i » to* to«to to toM • it t o » O n , * tolto tort to J n t
to n tto art* a n to art* «M n *n »
0o7omor ftatoari I tolto tort trm tt» lOto m tfc«w<#i tom ay w * t »
te «M» te tort tote to ll rrt*.
w . to im t s toMe to in n
to m * to n v »7 A m ir toto w p to to
te* discount rrt*. to tto pnaart ttoa w an ganawHjr trying te opatrta totoout dloooaat rate toancaa. «w t aaaraa te *rt* It n r* Isssortert toftt n Oml&
HMM n m
tolter I n l y w lrtrt to tto ton * t f to* ntowft* i n n *
V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfe
afKiift to fewa
* 1* 0 1 1 1 * * toak *Mf at anr ****** t o « toto a pjatoMiitr*
«w aisewnft n o * riwtiA to aa«sssoaa. to tetu t o m «p a totfwitfaa m iar
* » fern a a w ferCUrtat s**s I « * * to® toplas mto o» WMH» tM— l«s fee
InottwwMt olto «M.«h aa tooaM awiSs fiw t .
? aw #* l» w to mm feet wwa
eloooly aajwtod to toe fw w w st of fee we*»B0r wstot.
I os Aspttoei a f o*sr
too loo so a rtificia l mta and « a H got naagr f » » toe lanweeiea ffiat, Jnwaw
taoaama It isgr to la too m s A el*WMteneo., aa w
Iritis* * earioa. ohanoo
Is aolntaitdng mar mto riiara it tana* to toep to« wsftset isto « a m V s fio »
of fadeaal i M i w credit Into too goal.
* aatiefeato that i f aa jgat a* active
a n w A a f ladsatoy aaxt yeas ea » U i m m a Jw*> is »t o e that a lii d m m
a ll the ahlvorej oa& • p*eaa«*a ft * r a w ir t a k fund. toot aa s i l l aoator * w
it ia
f*aa.
■* towa as wwnasaa wtano of a»o4it s*n*e& iato toe w t o t ,
asa saator tarta am a r t w t o 1 * p * t i it t o sat* ia a «to .
fee re so w tarise to sot it .
awy w ill eo to
to s i l l to OS toe ri*le Is ft totter position i f aa
Sfiwmoo fee wtenoa, laatoe& of tawiae « * *Wa*nl *»eor»e torioi m m » j*attjr
of « te > , ftoa t o aaeas maths, e ife w a r law *at*a4 aai than togia
lone
to —
wan u l l l r ftoirfti tm i f pm •* sat aaas A sm * T » «MU to tridsc
tha raeno w ttU ity of adair*; to credit to too watot of too ooaatey eife too
peeeihUitr of m a im * ladJ^ootiou.
f aoSU not taka • feanea of aaSstog a aia-
tri*, toaa to. I t o H -t lw I . to. » t o « r ^
t
oao a f aokla. too aoo^toao.
rate * * a iy offootlw V im g to m
soft of too w o r n tori* aai lotting
tho soifeat trioo ooro a f ito o*a, n4to tlw pooBimitT tout aftor * a » * y tot a*
w ill discover fes*TO*S«| triSs* s>toao toat lafiloatao rool proosuro on toa rooawo
tori* aril a*w—
too i m m l usto.
I ■ » sot oa umAi m m m m t aito riwt w t U
♦
Reproduced from the Unclassified I Declassified Holdings of the National Archives
" ”
d e c l a s s if ie d
Authority E .6 . |£J5fe
n
hss^m thm, as wiiit
Hr. Ctamintfaaa* tm
!£Ss4QT^
i f m rite stem
«UX
& ctMMgo*
roallar ftol 14ml- to* mto ahtaila n? to ^ pw <mt¥
d ^r«£ la d* toftit tet* |W caa*t (p w r too roci£»eaur&
'A m y
ar* &k\* to rotoit thd «ite,ikai« tot the iMstaKHoi gu abo^d itiHfe & is ?fcta£»
A# imar m X esa Ucsra, tbey ore $o*&a to <2o lib® w/y tiling ^
%®*»
a&* ead I **wad let Hwbs aX«a»* fs «en to»>
Hi* sitmtlsn I thlifc: «IU <&a***6 sllfir #MM»y h l«
mm tsyfcsg tc
t& » a&srt itaw
I &m*% msat e*
to w ia * to* dl8NK9iml *at«* tax* I m ready to ««t * » It *!**&
II,
fc i flawAtto* is £t*ln& to&* fttr&mn naitilftHmtf wi
t£*nf Swf# wwrtod
aw , I m
to do and. X war* to lt M t l M
0 im r m
*is»
1* «asr i*i?«**itir
t
lm
simt
to sftmt t N f ***
to g» «m *®id
toalr M I m til MNOfdmMI
n» i*4i£?e t* 30* * * *
flth M i |adeyMBl* Xf Hm4# tom’teor ** *&*&&&% to
tf» totm 1 p | t o
#nr
oouf1dtiKsci aad «• i^icm3Ul *<at to* csoc^ittoa daeX tllh toe Mntol ftw day to day.
X ^Vm'% nm S t o
aiMf
%a aayfy mife. X
IftVto
tjugy &£%$ teryl^g
*$»«» aisafc^ismitt** fato should no ki 3 twar oojifc* ’bat 1
£>00 vfh&m ycwi fnwilil
1*0
0
csseil.
X
hei?s& £jo% t o l i t
fm ftituatiosx m ah ito <
ffrr,f**ir ^ l imil
Ur« t iiU o r i
Oa i ^ t w D p o s lU ca t2u4» a 3 p o » a «
m t o t o ttU at o ia wl wvl
aoo» >toao00 i l l U m m into isi» m i m toiAai* wwid 3m lot tom 01m In easy
mlttiiBt I^r $ico#(xx>,000 in y i© 0(fam |T tlaroa car if««ar wwdaiV
Mfu ou
f jm >*W lb.'r
J:;H3II$ floT M i
*
du
^
. ., ft ibx
jtL. ,w
x die 1
^itoir toA X wtt4l tattl Cto lade**
_j,fc i-ii •"in i*^- jvt A
• ■»'t •»]•»»-’#•■ 4- * M;
«J|» tom* ^uwt^wXwv- «-3J/ “ yQr#
iaretmtr t-t*»ac.i *h» «!ssl.» UtCMikn mkm to to te»«<sw «h» tfc*»*T, rtlh
A U k I t t « f « , to«k m ton* •* *rlUS«taai anMr «w**l. M to tMOA tomaar
f r r - v . SWW * t *BT m tc «n'l I f j w wteli to M9 « U *ato* f » vr>, <01 w» to m 0 >l
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .G . U3Sfe
to do is to k m p t& v & J ic tn c
IftisMMi Ihe SKtxfsot wilX koen «hoti& of us so
1^5 3# tflfco so**m*a t e l l Is «%
^1
0
SjMMril
V* m i #w i*s ofljr rnio f ir this sossnvXMIs* •
tflMIX
ttW i
Hr* ??UX#ri fk m w & 4 y m osoarfcilf* * & * & * » may m%& at a m e m
is
iit t lM h t t f
Sawaor
fm
m *t artificial mto at tho m o ra l xvswvo tastes 1#
m m & i stesw tbs flssfest I«v 4 thst Cbojp <toB*t $tso us &% *1*^ leftist Ifls «&*2t 1®
a f&tt ftt <hi<*i M v i>i» Hoi too h m v lla r p m lissd usA
a oot^mcfsIon of fcosfaooo#
n iU not sitoot
I f mi |n*t Has rotos n$ Ib tbs foos of f*NaffiT^4
vm K ill as « » f »i*ft ism then s!nplr re la te * tartOTiaes*
#• #UX
edftmtW1& '■‘T xrS .'ttf* of « fihaan&otser titat is ioIim! to do
Cifly Ijnsin^s tsszi ia jftsr Tafte. sfas ^
Is
the
I taMS*t I M l
^von no tb# slifjhitsst
in tho %nslnsss stfft^ tf **ft that jbisiioBts*
HmS thsrs
sp'OtdjU&tios or
ililrtfi'*r-*-i 4K feSMfc JM
kldr
SM
PiSSSSI up O*
||PwiSS*
Hr* Itill&rs
sns tho nost dwdRUaito *" iinswlrffi tfat X £$■%i^twos 1 less Is
Hew titaflc last mtik*
Hr. HftHt
What do irou ss&oot to soo t**o 4 m ltm do
jmu #si*6 tbs
rsto to 3 'oow oont*
Oo¥©wio** SlMMI HHH thQQTwill IMjlHl a jtMttttl <fti NMMlMiSS f i l l Ml
j!t ^Gtl
iriM
'tt.S' A
%
4,jte i9
4Mj««M<Mi4 1VIv9
«te*4kjsfc 1tfa.filunilu
w
kH
QlSOOtSt
ttifM
OfeiQ
SM
Si tfJUUl wJT 10
41,.ittdflfc3L.it WMiW
jS*v,^-.-t ^dUL^S
*^1*1*$dft IM| mnML m
4^
Jtt
%
T
m
Utogr cv b and us liopo st tlkit iovoX of srssss tH^y t;ili yHifff^itil issi ^istl^D^Slix t t!vs
M Us*
W* sacosst that after 3 M m ry ^
V41
M
M
UMftt
U U%«i ISQSI*
Hr* riatti
iM
t: 4k
a'•. ■
jb
vbtfk tl■■■
.itilk■i*! A4«a
:
tc^s ft apep, Uto
i« H m|
¥|fc-« ,■
-t>it*..;
M
k.v ••'i.dU.
u4 S\ SS VTW**
.v\*.
V...'..-.
dopposix^ ths mto m i snissd
ckrr^rnst tti^nci
now s&rxTinc
tatos s i l l
!2ho tescs nooXti o©^*vw fypu
& m diccioiai mtst
fil l ^
o «‘^
ieotoou#ooo or $vofcoo»ooa of oiJU. t# wkm
Dsslcm a#s
^ o ir
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . U35 fe
«• III •
v
-
portfolio* iOm*t mMxtiky
i&tOTOOtif^ thllljf I* i n
^
'
mm they haw p*mtimX3& paid m off* A rerjr
1* fM A m that M mtomU* H M
M M
quotod holow tho MU fifcft cm MU* <p r t# i omit 1# ter* had M
ini* imp*
i l r***rf*
fund* gnotod Voatow our mto la tho stroet for tbo last two or t-’uroo dap* and tho
mmlt I* our earning o**ot* h m not foao m* t tar* roport* mod* «p w y
hour
Mr* Cu$u
X too? on cur de*o. On tho lm rooorto tmm ooro
euoteJ at 3 - 3 $ par 0*«t. a® nlmto this condition c * m , «• laws that
V iio Khldh hows credit wtttt wo ooll those ftjnde Mr tiw day « * « * Madia* for
thoeo fund* t i % *»*•» or hwfeora yfba oao tta money. ttot 1« Ufa* inotmwmt V
whleSi thqjr dlstcitnxto asrplaa m m M . I f *ot«#ilae
roiotlon o f 4nt jmto
cad tho other fates u MB to ll *het l i colag to laepoa to tt* mxt$m aoaay.
(At this polat Or. Stooort ooterod the nootlne)
Hr. M lileri X weald Mae to haw Hr. r,to®-.rt»a esjAaaatloa to to the
ncaoari* oiaAftowoo o f tho crowth of $386,OOObOTO ia amber M l * r»oer*e
% M tto tat In o h m < ( t o | «r . t t»t do 70* *»ta* * * t io * » to cad * o *
iiojMt tit ittdiOBkta as. oemofft* tho ioeiibsr ta*lv*£ oroCLlt botoot3U&XItloof
sr. StOMTti Tract ttw ni*dlo o f tt* yesr os there «aa a growth la aoor^tmooo
end ttm JWy cat ok Uwroooo of $100,000,000 la securities js^ioaed. Moot o f
the looraooo oooowed &rinc « * islddle o f tho ye«r.
Hr. KUXori M l thle la vwy largely nceoaated for !gr the jwrdssm of
m m jlm tm tm •».*■■§ tm r m iivfeaM ie* »o pot n v into the m an* mA
tho MHteot Km» pot 1% Into tho aarfho/ honks.
nr. Steesrti I thlste I t hoo boms pretty sell eimorbed nlrae* ia tho nrotth
. jk * .... f*Hiiwiw-'
tsr. K tlU n
1iiiiwjiiLij^iiiriiii 1m
1
i%¥i
Sho Tte*» hem hoan laraottag ordteiy otrrosit M a t aopoalt
amor, ant la liquid ooocaorelal leawi tat ia tetg tom toeotnaato. 5h^r haoo
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfe
US -
tooa Im&mg mmrnxoiaX
m m
I# th*
iMftavt sad
coosms,
it * ta t i® ^
Gevmor Hosflu Bmi m l $m%
la lw w t o » l» tarn war la W iy
MM&ft « t «*> 0 M*t gwMfe la «fa » fi«p«*lt* w «d*w *4 Mttt Ca» a »U swMfe
ill
tariM & lH I
» . stowrti flan <S*|*«A»» tew t »t laBMntM fcarlac Ike l»*t « i « swatha.
How, 4M I tmdowtoM tho Ooerdttoo** wfj*wt, tho Qo«a&tto« wa&xea I I fc •''•••?~ilw
eUo to lot w*?l*w <M * «90BW!tet« la Sw Task, (MUM to n il* « » MU Mto
t i i f i r oeat, msd that tt» * « io * « * « « r *w *U *»ti«ia I* %otswm nwmCSe* IMS*
and fmmxy lOIH*
I t — nr W W t*
*
ospoct that «(M r fe M iy Jot «M I M U
M
UqttltoMon, mA ttet thftft W *W t aot tot WtMV ft* « » * Ift t*» * * •
aaftrt fM to* lia *
III
ft wtwra flow M fttfe aM
I «w iA Mta to •*• MaMMa wa Mff to mm *rtoat*
Him i l l mu i t
Tlt~Tt
I# ttftt gM* or ladMIMtoljr sa& w* | M « v
— y a l — § a w t» to < M i— i i f M t K i aw w ai. I aaa* to g a to U p§»
teta mm 9t m* ManHr h»im m too. nr * «* * ■ * i* th»t « » %m* m u w t
mtore foot «b b # to tofca ap thft wHMsm ftcwr aad «k»t «• M U ham to o o » oobo
McnritiM too. I thUk afto* m P * tfaa MU mto ap *R *p r* t a a i to ««w»
vnm vb.HU ho la * * ttm tit rwUsoooata oad thooo hoawoMago MU fta a l* tho
M Car tor «te Mart aatow* » Mai Maa art M i ytaa tort « ■ * aa M U
ham to to ll nm
OoTonor Hoiriai Oanrwaor Mxraosl, fm Mtafe, art<!» tnm oar aooaooinr*
that it la doolrablo that m «*M 4 w fll mm mwsiUmlt
Otmrmr teSJcmpal* Tfcft. Shoa th* ^toatioa mm ap tM Mgm « » «• to B »
dMimhUltr «* lottlae m
m taritlM *w» « f f . «sr tfew w
la fa »w « t It .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . U35 k
in «*
ty tiO Q O fio o
* 1 1 ns&i-i I
I$w w a fa A t o M
tc # » thm *
ijd # ia
I
ifete m
p ' J tea? <s&r*:ii ts>
timl mtvM mtm't
^•'»00tnry>#<W Sr* tfe i
im
m
t&at
for ttolfe II
mmm-i t o t It* t«&ttag mu In i&nlMm to
tmvmm on
tho rnmw M to i*
Hr, ilixl«r« !tbt a- iHNMlltlm: !i^*©aa*i I wartU «a * It *
taflwM o on a
that f i mming
dtlfe* with tool and i@$r t* *»* not
U& mildly* ««d I tw&A* fharo!b*9 y
I® Hgniftat* i f tfet erlAsac# &>*e
tot ImUoM* to * l it tUNhtlfl* mil® for that* Tmi mat to #*02
4m* 1il»
tat U ottlj6«& til %$&
m16m immm Ifee noon* t e M
m itat &»*• m i wtsut
lb# tttftat mmSi mtadtetlngr* I f w I W g*t In. 4
ifim* m mmiA
$5O0 #DOO,OODf ttt aaditimi to tho *^>talEiaftt« I Ifebfe It p rw itte t tt*r
AM raally stMdod,
Mp
*fco q m rn U m In m
oon^ras % % m lt la a e t& k r vlth itat *•
to faoo Is m late Wlttldr. I t«®» It that &mm>r mmm* t* Im^UMI
to th »
tfeich J m m * 1» ft ^ w y m t le m l tint?* tli&i wo sip £ lft m l ftm up'
too m t of ored&t tmtU tw tea* td* taU l *• fhisfe mm
w ill raM ll fr o
€fes@®(p Bt&XWQTf nnd in && interim im t t a ttebiHiiinr oHc^r* I a* m ^ r dlsto *s@%© in this «»*tar» woWM# *mmm t m not mmmrnd *M i
«ax»d thill «h&% Wlil
o i t r gift
jffttt OR « 4 fWtitti'l» 0 U3f w l«* Bor m t dlfttiartbod
**&«rw& %esbI»
ri'ftlaaXotte t y hsvtnrt i i a i r ^
m tt rJbow tttft a i$ «w ! nM* M
.m tm m t o C«atit«M>#e
em nsid, thart |«
t!^t 1 fcsf* to t ^ f toHi turn to.
ioinr tm im m m m wlula? M d jiter* »
€tm tml mmatom at t o t ttm*
neatest
p«Npw I*
I
&*wem mm of tM » t t M^ttaitflA atMkttMi that wt )»m mm tot.
too* iti^tHtr « t
«o*
« te f*
<b *rt
w ill
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IB S k
• I**
Ctovomor » » wh«»c« i f tbs ottfM of hsrtar to M M M ooeurltlM la too
m oral rooorto taHai* portfolio I# I* oawoioo * roottoialac InftaMTO, a*
M ill mi irfTI MliriTy inrfl
i tob& » *Maid abmr« **** «*«“
mm
« * i®*3*
oKhorrtue to cob wily tmmJloc a n aM aS w iafbMHoe la mo airootloa • W M
only togr, to ta n nothin to M il.
Mr. W b n
vrold not
mU
to* M il otxr m ina MM I* h U la M M to rwtooto
X
for «sgr o te » roMoa.
MWMM toMfcM
oold n M M ? M l la Mato o f 1MB M i MWMM*
toying « 0 da la xmmbAot. »>»f*o#©r Sproe** o f too Sarwrd School of Buslaoos
neooU? -f *"-1 TO to earn twforo ow of hU claaooa. « w » mo oetw fM t r
tot# * yw cM B i M t M l m Mm m M M * M l* m m
im
MM » m M* to M M *
I toUM a 1 awld odtow — t o too p i U t i ar owdo toM. M M » M H
I f tho M r A aoowoo to*fc* did nol torw §000,000,000 or $fiGO»OOG,OOQ or
mM oooirlUoo ia too m *m of » » *ad oold too* tow too M M froom
to M MU M to MM too m * M m m la* toto JmI MUM. M M i d M M
ototoil* I M M M a M t o M M M M t o M M
MW
and
to toad W M I to M toM *
-
ooTOrttiM to awMwk MM a t to to» M to* M a n . M M Moo.odD.ooo,
I f to* aotisn M to* todowl rooosm to*» la oolUne » * la 1923
MUM to ta M * Mft M i to i MMMi M M to SMI M M • toM.
M M tM M
I M l MM to M M iitoit l iM f M M M IlilliM I
toot owworiae «r oiad,ng too giosttoa.
M T O M T C r lw t a e o n
t o t to tobM I f c o t o h o w » . stooarfc rafco * * k «**•
a n t e to « o d w l f c * o t t o * * « r a t o t o o p roooat K M W M i
Or. *«•«*• 1 toil* oa too W o M fa*to tor a«wwta»r t o w i a air.^oiWoa
to m tes»to too M M of too t o w w t 1* M tootoooo oltoalloa. too w w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfc
'-0 *
wltti t o atom* m
■ a t la t o t o t o w oltotlaa t o t o a « t o * la
Um> »to<&.
baatnuai
t o t t o * »»«» aa* «•* t o l l t o to atalalM t o 1bctom«4
t o proawtloa In fim t o w i m ob t o t o r laeraaM awl there
bm to a m atinam ta Ito «.t«y t o * to o 1* p to «»* tool* t o t o ywa» oea-
fto d t» Mrl003to*2t p tou to t o t o t o o t o i la I f a t o «* t o **■ mtortelo.
t o » It * w*r eotoSotol* w * to la t o pirta* * t o «*•£ auaHfcerttotoiS.
rwSret*. Iw aw to t o t t o r ia troi t o eta* t o \*«*fct prtoto **w w U «a
qp to r to t SO ?«• e to « f eoj»Bitjr t o to w It •#*« Oiq^ottlea to o tto la
atoaoo «T current atoo. It ftMM t j » W a w »
Uiag t o
immmmi w » * » * p a t o a an !§ * m M * * » t o o t to * » ■ « • a t o p * * * #
t o * t o topM to t o t o t o t l» wwiioto..
amraer etwsg* la yea to lw s t o ttm t o eK tto to take mj etsfclea
iU * tolsoea latorto* twdd w * tn * «• * m tttofc an aetwittt
or, Stosrtt It eatea to * » to t to w U a
of
4bl«b
rtoate* assasoeto, flfel<fe t* t o totnM SttP of tllja r tu * f fiW toas'.l »*wr4U n la t o w jr ta to e * t« «H i a <Stt*wto owsptotioa to oar oatoag « t o .
t «xb * to r * am eortto aoaanJ. s *rt*4 »l« ta to to , t o Huwatl
at
■ to * la * i t o l t o oca W *fee4 t o ao w»ttjr, I «MMt **> t o 3«ja « » «M to
inwtirwiirm iff m r
-------*— * m m m m
eeraaer tim et — » I — f 013. p t o l aa MJI1» H r *" W t t f * t »
im.i gMgr— im u r n a u n r
W r it m - '- - * * ir ------------
n • * — a wax « t o »>— m u t o m »
t m o t m t o * * a n * * * * t o t mqdsm
totow® t o a stor mm t o * It tosnr to a m so*. t o t I * t o to t o r t o l»
to U to t o t o r W ltw w , toto i m h A tiorrtom as M !•* t o w ta ■* * t o « t
a y « t o t o t o l t o awr o x t o t t o t o I t o t o aa atmwn «a t o jttii — t mta.
fKMMUr. 1 40 t o tttoe t o t la a t o twVIo toag.
.. ....................—- ----------
■
—--------------------------------- ------- ---------------—--------------------------------
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
W *
ar. Steaurti It eearn that a policy «h l* does not oontusnlato a dbeagt
Is the discount mto, «ha» tho fedaml n e m tea* to tho largost factor la tto
Mntset, dM § yo« w stanilnr to operate on.
tomonm stion®i J tow way wall that wo am going to admaw our discount
rate an t ymr.
I as aot eomrlnead yet. tho aay things taro eotoe. that it wuld
to tost to adnaw our discount mto. I this*. tho tom o f tto ytwr w ill dlselose
that hut yon asst raaocfljor that we oaa M U hualnsos la tills country vory oaally.
ar. stosaart i So you tWtote aa Increase to 3 i per coat would h ill business?
Governor B t»a » I thlak at the assaok It would t o M a way ehliliag offoot.
Mr. M atti t?0tiUte*t gaaolao business take aa aOmsm la tho t«iy low fates
m
tom tosa haring m a men tofiUatioa o f good tosiaoaa?
Bwwmi Itta n i I w d l M t a r t o l .
X 1Mb* it la «sta« te to map
wtfh aaaier to aAaaws tta mto fna 3 to 3 i par eaat tiaa it saa to aAmew it
last yoor trm 4 to 4 | par oont.
a9* mmm* *—
noy to got the mto admmed is Juat ea
immMlai ~ *r “ Ifffrr
Trr nimiMii inf
■l l f y
wateot mto sad pwnare the alaco of tt» people ftor aa ImreaM la «to dieeeant
■Mto tow m a4waaad «to mto toftoa, aaaaaMial yepar aea at a per eaat.
Oowjmor torrist I ShM: a ll our diaeaasloa haa toaa Interesting tot X thito
it a l# t to aapaaatod. a little .
at
2hts Oawdttoo ahidh ana appointed hy the Board,
laat eaafwaaw adadttod oartada maasMatetlam toatac to it ImmMp
*lth tho Becaabor lRth transactions. It has nos wtolttad a report to too Board
la tolch the etoty la told o f »hst has tooa dom to taJcs c&ro of tho toaatoer 13«»
aatoritloo and ehlle the Animas o f tto Corrilttw haa oonaultod constantly with
tho Caaaittm, the ialttotlm la wwrythlag toa ooa» titm hin and a ll the
axooutloa toa toaa la Mar To*fe, aad I think it toa toon aataaai&y soli done and
that largo aad difficu lt transactions hewo tooa toadied without any trouble itav>
..."•---- ----------------------------
— --- --------------------------------------------------------- ------------
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . UlSfe
mJ P m
m m . to
to»t too wport o f «m* to* tooa dew to* ywr w a w sl. this
n p r t roitM w ram aradrtig*. 9 m m to w r ttM l toot to* toa»i toooid atopl
osar watoMm *r
«* **r Mtoo*Hr»
*m *m»
«ntod
^v
t o stotonwt i f to* to im n tort 1* U w o o o d to frtoo t o H U w t t t o !
!« r owl and toot too rotem fi*r of ftado to A m o r «*ld to tofem aoro of *ir
* to to r
Mtootioa
eton t? «
too w m t w s * » * « * too offoo* of a i r oatoo too*U t o wtod t o t e *
to
osar ooouritgr toUiaes oad that too offooto of tolo mto
sagrtotoe tortoor I* tow. Bat to too goaotai attltod* of too Qorsalttoo ead too
«sr || pwpoaot to ooorato wOooo yoa otsjoet. I tofefe wo at/*>t uatowtond that
oo fter o* wo e* »o tos»o j w oppwoal aai tost
too iOto or ISto of Jtamaxr
«o otU yovtoo too aitaoltoB with p m l t l l *t»t tortoe* otopo tooeid to W jb
rttota too fto wrt* or wato afto* « » * . ■ » » » * « « of too dlooooat Mto to
-o t o t o toM * * p»o« M tor toto I K H t o , totopl toooto* oo m
to«w*toto
o&&%% taotoa or retard too ttao toon toat rat* tooold to ralood.
(to. Swit* to** wood that tJM> toord wto wito
iw iw l t o * M M « i t o * ft— I t in . t o h t o e t o
ywjioo*.'. tototo notion a« eoatolaod la too t o t o M
of too Onlxnat. J M o a ^ w » t o w * l j a i « i « 4 . )
tolMMT fTWMH »WM I* jM t OM W * yw ettttllr is to* elWMl** toii
too » » toon dloouoood and ooawt to owopt turn dor to dojr. t o w or* too t-Hingo
taJdnc plaoo la to* To*k uhlefc jsooofMy aro a little ww^xwtod. tharo lv..
a Wtotop to #* too llw wwgr *«to to 4 jwr o o *. tolto to *r atad 1* m Iatt
ention of too tol^oj flro t, toot tooteoro aro ottta g a Uttto nomao «bw* too
otoM aotoot o*i to*
WtoMM* w
*m
to to
o f tortow it o * w
Aftor o trtoor ooo*
d*r aftor Coy, 1» otorta to cot a Uttlo ttao MMP.
aowtou toow toa» i l # >1 - f
to* .iiiiiii i "m in i * * * » H I
mm r tW
'm
Imodiatal? oftortoo tnmwctlwo of too ®rw*«nfy. *« laanod toe- .JraaiMrjr
* *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfc
/
«*>
$140,000,000 ahlah n A iftr*.->ed Into the atitot and we hem liquidated $30^000,000
of oar invootaonta, hut e t ill there hoe teen no ta m m m Ia «« r eiamins eeeote
end. aowy yostorde - eoe a*
8 | par ©ont. I f that eltoatioa eantimea I nay
wish to reeacoand to the Cocc&tteo to «e U aone aeearltiee before Asaaary 1st,
Xf Ifonday X (lad a good Mg aurpluo la the Mar Talk hasSaI and m & w
the
Saturday etataraant with a aorplna reeom , 1 m gains to e»t in teeth with aoaa
o f the banka am? the tole?hojia. *hore any he borrowing la othar distriota that
«e«hAi*
pttw®
itftl Miua. .:ijl
■'r
Sn M&W
$m w m * f m f a m
M *m y m m r * v t im f c * t h m lm & m im m m m ifim m
w& tmm in IsrctoiW*
lit |3bs I&at itm or Hdp##
Governor Strangi fcnodUtoly after the elaettml there wn* a aoall inoreaee,
thaa they wank o ff again cad thay mat oft heaanae the oouutry oaraa to »*w Toifc
to hoy sto&a largoi? for Oaah. In six honaee ahiah X nmoQlted, thaw was
only one vhltfi had aot aaparienood a r*iuotion ia Ha looa aooouat elnca the
election aad that taa haeaiae o f sMrehaeea ty too wealthy aaa A© twutfit aoauritlaa
tsai aia m t bsfe
Mr.
c^rcyii to twey £&f tfafyt at ttan
!!iUori I hare aotload that ttwr* ia a upirit of eoatloa among hoeiaeaa
aa*, ■aafaefcaraae aad
y im
m t I— iaaa
xih$A l§ th**
H M M m , X aatteed that Bua ia hia last «e*tly rr-
teat pate* aad It watata a tpeattaa fcaay atod — %a i l y i t ia.
<#f thi*
ffcfcW that Is wall
t&Z'Jhui
X thiifc it ie a
wooth eaaaidaKtagi tiaftaiMr the a ( t e ( t i i a v l * >
* f li
he dm to the nativity of tho atooij» j * » t or ia it that" V.wlnaaa a n ere w A e h lnr the gyeirth
ia the w lw *> a f areditt IheetWy (M Pedamil aeaasm :.*3taa
aay he a faatar *a it .
spirit
it w r
rate twaa are tae thlap -» aaat aa haw <Mt»
of oistloa O olite imUoatioaa that so
m m going
into a real fw rn t Hove*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 1235k
3& *
w i <f W
i l l « * t M | * » * l « g « w w « ■ * m w m m m ally torw tiw to
In& nm utvlcui
In
tarl J w w i
t t ihiisms to a s t t » t ths t o s l a e w M t o f t t a ooa a try watch m V h or
w r a & U y « t o t m t o f ja fcllft o la lo n cad p cfcilo a a t i f i t y , a t M l w i t .
MM yiBHW lIt tool to* to w i d * «■» ton l*r*»ty •» to*
liilw t filj «# • »
r m l t e t . towwi mxmu* Is towtae * « * y toslrod sttw l n » a fiu a^MKiOlt-orw
of tadivtawOa.
Jharo Is a spirt* s f eooawy « » * » U y &tmtos ttoW£**ut « *
M B lr f and ts* poults is not
w i M bc
la to toy to ths tactoat ttal
im
mtlaU/V ^
'yam* — I to wflilal to irtotototoi toft to* wtofl H W IW II1 # >
M m m mOm wm p tfiw rtlra w art gto *a m m to*aid.ao of am tm . tt*
rotation an ftaSfc^ thoaoeiwo sritorwsssl ty too fact that tho **bUa Is sot
taylwj. Salw of cmsII m inaoato Chat »«» pooplo an as* > T * ttto i to to*
■Wtort IMT W ** WW tort iMftb t l •*■ • to ■* to ll to# jMflMM WttJasA to ft*
Frootuont for Ooagms* Is hartac Its offftol on toft ©aswal psMls, sad to m
atal toat mmmm Mr. M U »*s ^anUoa. t tolafc too Aaortaoa srfbUe la atea^oolaj
to Ito fo lly
Awtoa* factor to tort too tasiases am tfureo^wa* toft Soato ars
scrutinising toolr w^aito wry aaoh m»<* aaraftdJy tom tocy aUsaJar aarteaQT
condition*. m l aw art wttoaMag Iw g to o aslw af s»*awi4tw. too ffcaww
la ast fiaftilac torso*! oa& siloing «a to» dottoS lino as f m lf *• ***
*a»s*. i l to mi—iwHig to ll to lls * s t o p f i l I T M * toftto. tort is w fio rtrt
la lacaMftoA to.'osits. toss* to* toaa agao4 wttoa om> sa4 *way toM* tore*
tow UtfrfWfttod oat of toot amp. Bn* aw aot wokiae assaitpsate to* m 3 tow
firwly just now.
* « ia ^ W to j ^ t o ^ «B l/3 po» #w l totos «S »I I t *w
m ifm'tjfr [iw §
Or. Stoaart* fifasl toaroftosA toytoe po««r «tow too tow Is twry l«?d»lar * »
to too coatimad foroifin loans.
------- ----------- '*pqSPR
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . IBSfs
7%
,
,
39 •
9 m m * townsst
I v<raU V J » to i± w ja a ccao Ib£cxbkU«d, I te w jatloa
D m am Z te w totted alto, 1C*. « r , 3w*>, of to* M M M W k Jto* to*to*»M«a*
Mr.
terplqr. A8w ItjBa, tMMe, toottagr, WMtonrto oat flflM *. torn *
ufe><3 Mr. M vAr atoal to* Chrtrtw* trod* te add * »Xt I* jt » « steo* aa «* » « * *
tnd», ftoM r eood, M m c m tetowad Ifiw Ite dwrii teamto atoadr w «ld
owter la aAwaw aad as* wa aw crtttsy; M ie m « Iter iaaodtato totoaaato. « * T
w u ldtat Mai to* rtto of taylar
teesaao «ter flat atww *o to l§ao.a
Mr. Owe* wftd tte tannual to «to toatoaw ttf to* tetolatea Stool Qortwwtloa
«M distrtte«*& « w «wrjr dapavtooat of tholr tealaaoa, alto joteew tertoc
» * » a im t » atoa* to tom — » a f mrnmm te to* t— fttoto totom. mm *i »
« V to** toa wristo « r profit &• » t i a w a * !* * .
ton t . u * «a»t <*a*««ia la toto
oouatiy to toa ano& * f toe jioopJ* a n d lt «a a t e etencod Ufa* & flufe.
I toa»t am i to — tot dlaaaato aoto toaagad m m to t o a w l M
to* w ow a
lllli W
ta too m »* to ll to toa*. M i t o M t i M M t i M m U l i p d t o B
; v « M la to* Nman&t net* ta am omtw wM*l to asod. W » i te oaroftjl m &
p im
to* tow* Mr. Atewntar natd tout to* only C a s t ta too oitooiisa was toa*
to* Vatoaad m m m Mntow «to&d to aaaatoia* fW&tfe atom dtaaaaak aatw* Mi
a-dd *w ty otodaan* la Ma teto aa* tola may cbbMU* alto todtfc tealamt i *
9 M*oa0iag.
*
t t im
tome* tola aw Uaa Into M g i i , I I %UX to tem tstoer torn
56&S- in -SEP lw8hi%
Mr. immt c w s f t o as*t UaWbii* toetow la toa HteJe of %wJa«* m t
\
ta Ito namtliHna i f trr Tmtmn ~ r — • ■ * - ** r * “ * «■■■— - - « - m tm S m
to a iwtoi t o n to* pooottd* wae^a o f paafiMt la rodaood to & afetoma.
«*to»
® *m
af* way <tor waeona w i l t o i a i r t w a r aotteaO^ ated^tnc asd w atoteg (tea*
wtottltom toftto aatai a i toa m a i tom.
thosr aw ta t i » ?*>tttoa of teatoe
U t o r i l t o H to mtowi tolm itoi
ootvlaoa af toabaMLa a*fi aad todaoto«
.
1 HP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . I B S t
th« a,3«L0 of
I don't tMsfc «MH MM ear
of
l*e*ija Bwsferota Sv* nr# aoatldMriRnt at ISj* jawt'oat Stem e seflw tii» t>i t&ut jwa
*risM oall ttndkWlM* M&orttt' fttaeo lft a t'atllw itat • »
M ist 1-we lu* ft»
» « * « *hMOt %•
of tfnaboHd la this «s*;jwst of batea* i» on* 'Aistk i»
Cwxnv,* T*a*t« Sitft n t cnilatpoie* a ( f i f t l a£ ® 3* » ««ft » hi* **»•*»
tlon, to tc ottsh a m iisp»(f«d to mSUx&a Mn \m&nxm> tlx* oo * 8 or s p*» wait
to. IN hm
CMAMOSr MftMMtat w te ie * m& mmtmi tMS «4«m* taan&t ;w
to ft r-s*Rt Mw** «•» iBi’SSto o f fW ttl fett %a#i idfefti o»t.
to. MtSUn flsli mrt$& %x Hhs jttftM M I fotoum th» fc»yia<5•»* ftftUSae
Taw i«:r.f» t f ^ e ill £*NN*ftW J* • * JS*P* 2fe» MdA »M, ■« » *!**»
Hm» W iw u H t wntfiOr ttw mm* of *0»*»ata«» «w *Syi e
Mr. a w
10 fa r WMfc M T#a iM » * M r JMit a? rotam OB *w r ayitat inm treot, 1*1
totiny it IS y « o«ut a»c5-tt ■3a»j*a’ t.
»w4saat.» of
wmfcsy fts*®»s®*33y
a c 9 « « 9 t o t l c c t » n > o « a » - » ? * *h o M f l t f C U l r o f « w « i S * l g « w i * ’ t w » ln w » « w t a •
tetmlUlc SmSm* » « ft * M 0flUm *sjr. la w cm * » 1b«»3s Ml i*ss«*o tMifc Sal
s le w * M e e ftfiw « w e ie e .
oa It
«m w > w
)m
« M
* * * » « r w
«Sx Mma* a f i f t
iM i t
t# b » UwA ^
m to B
t
JMb f l U l «t
H *» w n a w I M
M
I ^
fwa »p» ImBe* «» !w « M flltii
•
* f «•
§aU im w U m & M k m • * » ^
'I m t f m
iiiM
f& » w f t v t a w l * M a t i » t t a t w »
mmm
fti
llr t l« » iW
H&r m htm a
it t iM
tsr. m u * r t
» M
mm* Oanr^i^mmS
*•
l i t iwte^*
Sh* t m M M f * »•
to U»ft
VMMMPMB Mi ni iwilil
Up i—wltif «| 111# PM*
lf
---- ------------- -------------------- I. "
. _
_ J
P
Ilip
Reproduced from the Unclassified I Declassified Holdings of the National Archives
____
d e c l a s s if ie d
Authority E .6 .
;
v*
333
A meeting of the Federal Reserve Board was held in the Office of the
Governor at 11? 00 a#m* on Wednesday, HovemberlS, 1924.
PRESENT:
PRESEOT ALSO:
!{/( > b V
(
Governor Crissinger
Er* Platt
Mr* Hamlin
Mr. M iller
Mr. Jamea
Mr. Ooiminglham
Mr, Eddy, Secretary.
Mr.
Er.
Mr.
Hr*
Mr.
Harding )
_
^
Strong }Members of Open Market Investment
Horris jOommittee for the Federal Reserve
Fanoher ) System*
KeDougal)
fhe Governor stated that the propose ©f the meeting was to consider the
following recommendations made by the Open Market Investment Committee for
Reserve System?
"1 .
fh a t th e com m ittee c o n t in u e t o make such tem p ora ry
s a le s and p u rc h a s e s from the s p e c i a l a cco u n t a s a re n e c e s s a r y
t o s t a b i l i ze money c o n d i t i o n s a t t a x p e r io d s *
2 # f h a t "iny p u r c h a s e s o f governm ent s e c u r i t i e s o r
a c c e p t a n c e s he d i s t r i b u t e d as r e c e n t l y on th e "b asis o f e s t i
m ates o f d e f i c i e n c i e s o f e a r n in g s o f th e tw e lv e r e s e r v e b a n k s.
3* 5That t h e com m ittee be a u th o r is e d b y th e G overn ors
C o n fe re n ce t o commence as soon a s p r a c t i c a b l e t o exchange
c e r t i f i c a t e s m a tu rin g a f t e r Decem ber 3 1 , 1925 f o r s h o r t e r
term c e r t i f i c a t e s .
4 * That a c t i o n on th e recom m endation o f th e A d v is o r y
C o u n c il r e l a t i v e t o th e p u rch a se o f f o r e i g n b i l l s be d e fe r r e d
u n t i l su ch tim e a s we may b e in a p o s i t i o n t o know more a bou t
th e developm en t o f c o n d it i o n s r e l a t i n g t o f o r e i g n e x ch a n g e s ;
and th a t th e System make no p u rc h a s e s o f such b i l l s u n t i l th a t
t im e.
.
#
5.
'fhat th e com m ittee b e g iv e n a u t h o r it y
(a )
t o r e p la c e th e ^65#000,0QQ o f Decem ber
m a t u r it ie s t o such e x te n t as may b e a d v is a b le in c o n s id e r a
t i o n o f m arket c o n d i t i o n s a t th a t t im e ; and
J b x £ k .~ " / / 5-/3-^
? 2
-X ~
^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
-
2-
n (b) to o f f s e t the export o r earmarking o f gold
fo r fo re I'm account to such extent as may be advisable
in co n sid e ra tio n o f market co n d itio n s, but not to exceed
fL00f 000,000.
6 * ‘.That the committee be authorized to s e l l in v est
ments in the sp e cia l account in order to reduce that
account to the amount o f $500,000*000, as ra p id ly as money
con d itio n s make i t p r a c tic a b le * ”
!B iq fore g o in g recommendations o f the Open Ivarket Oommittee were
considered sep a ra tely and a l l o f them unanimously approved by the members
o f the Federal Reserve Board p re se n t.
I/r. Cunningham stated that he voted
in the a ffirm a tiv e on the recommendations, with the understanding that he
would not stand committed to approving o f the continuance o f the a u th o ritie s
granted the committee a ft e r Jam ary 1, 1925.
An tinder standing was reached between the Board and the members o f
the committee that a meeting o f the committee w il l be held some time during
December, 1924, on a date to be fix e d by the Governor and the Ghainnan o f
the Oommittee.
f he meeting adjourned at 1:05 p . m
fS) W alter L. Eddy
Secretary*
Approved:
(S) D. R. C rissin g er
Governor.
*i m\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.
ip
d e c l a s s if ie d
Authority E .6 .
1
L
P'P'G!
MINUTES CF IKE MEETING CF THE CPEN MARKET INVESTMENT CJ
FOft THE FEDERAL RESERITB SYSTEM, HELD AS1 THE IHIERA
-------- -------(F. CBICAgQ,_
............................
OFFICE O F
THIS GrO ViiljbtMOB
Aufy
fo
PRESENT:
Governors Strong, McDougal, Fancher and Harding
Mr* William H. Hutt, Deputy Governor, Federal Reserve Bank of
Philadelphia, representing Governor Norris
to** W. B* Matteson, Secretary of the Committee
Itoere were also present
Honorable D* R. Crissinger, Governor of the Federal Reserve Board
Mr* William A* Heath, Chairman, Federal Reserve Bank of Chicago
Mr. C. R. McKay, Deputy Governor, Federal Reserve Bank of Chicago
Mr. Walter W* Stewart, Director, Division of Research and Statistics,
Federal Reserve Board
Mr. W. R* Burgess, Assistant Federal Reserve Agent, Federal Reserve
Bank of New York
The meeting was called to order at 10:45 a* a* by Governor Strong,
Chairman,
On motion, duly seconded, the minutes of the la st isieeting of the Coo*
mittee held on July 16, 1924, were formally approved without reading*
A report was submitted by the Secretary reviewing the work of the
Open Market Investment Committee, with accompanying statement* and data.
There was also submitted a report on foreign accounts which the
Federal Reserve Bank of New York had just transmitted to the banks participating
in these accounts*
The Chairman commented b rie fly on the work of the. Ceesaittee since
the la st meeting and the changes in the credit situation*
He also discussed
. the recommendation of the Advisory Council for the purchase of sterlin g b i lls .
The chairman expressed the opinion that any program of extensive buying of
these b i l l s was not wise at this time because i t would put additional funds
into the money market, was d iffic u lt because of the limited market in futures,
and would be fu tile taless undertaken in connection with a larger program for
bringing sterlin g to par
t 'f 'j
x y
(~ JU jl.
3 3 3 ,- ^ 'L
o
TT
Reproduced from the Unclassified I Declassified Holdings of the National Archives
11 W
'J '
d eclassified
Authority E .6 . IBSfe
- 2 A resolution was passed authorizing the Chairman to continue the usual
arrangements, i f necessary and desirable, for the temporary sales of Government
securities from the Special Account during the December 1924 tax period in the
same manner as sales were made during the two previous tax periods*
A discussion followed with regard to further purchases and sales of
ii
Government securities for the Special Account, and a resolution was passed
recommending that the Chairman should be given authority to buy or s e ll, after
conferring with the other members of the Committee, up to $100,000,000 of
Government securities in order to meet any situation in the money market which
might develop,"
There followed a discussion with regard to the replacement of the
$65,000, 0Q0 of Government securities maturing December 15, 1924, held in the
Special Account,
I t was the consensus of opinion that this was a matter that
could well be postponed until a later meeting of the Committee.
The Chairman brought to the attention of the members of the Committee
a statement showing that purchases of acceptances by various reserve banks had
resulted in some of the banks securing b i l l holdings in excess of their res
pective quotas based on earning requirements.
He explained that the Secretary
of the Committee in prorating future purchases would take into consideration
these overages.
-
--
The Chairman brought before the meeting a request from the Dallas
bank for special consideration in securing additional investments to enable
them to somewhat increase their earnings.
I t was the consensus of opinion
that no special allotments could be made in fairness to other reserve banks
whose earnings are also deficient.
At 12:30 p. m. the Committee adjourned to meet with the Directors of
the Federal Reserve Bank of Chicago.
A ll nine members of that Board were
present and, at their request, the Chairman of the Committee reviewed at some
length the objects of the Committee, ufoat i t had accomplished, and the policy
which is being pursued.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U3Sfe
- 3 There followed a general discussion which was continued at luncheon
at miiich Mr* John J. Mitchell, President of the I llin o is Merchants Trust
Company, Chicago, Illin o is , was also present.
Adjournment was at 3:00 p* m*
(Signed)
W. B. MATTESGN,
Secretary.
IP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .G . IBSfc
DRAFT
33 3
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT <£!“ (ITTEf
Stm THE FEDERAL RESERVE SYSTEM, HELD AT THE FEEERAL' RESERF
___ ________________ BANK OF BOSTON, JULY 16. 1924________________ PRESENT!
Governors Strong, McDougal and Harding*
Mr* W ills, Chairman, Federal Reserve 3atok o f Cleveland,
representing Governor Faneher*
Mr, Matteson, Secretary o f the Committee*
There were a lso present;
Dr, A* C. M iller o f the Federal Reserve Board.
Mr, F. H, C urtiss, Chairman, Federal Reserve Bank o f
Boston*
The meeting was c a lle d to order at 2;15 p„ m, by Governor
Strong* Chairman*
The minutes o f the meeting held on May 29, 1924, which had
been p reviously submitted to the members o f the Committee, were
f ormal ly appr o ved,
The r a tio s o f p a r tic ip a tio n o f Federal Reserve 3anks in
System purchases, computed upon the b a sis o f the regular monthly re p orts o f earnings and expenses, p reviou sly submitted to the members
o f the Committee, were form ally approved.
The Chairmans memorandum p ertain ing to the work o f the
Committee with e sp e cia l referen ce to a program fo r the future, to*
get her with the report o f the Secretary o f the Committee, with ac
companying statements and data, were submitted,,
On motion, duly made and seconded, i t was
VOTED to au th oriie the Chairman to take the necessary
steps to e f f e c t the exchange o f Treasury notes maturing September
15, 1924, for any short-term Government s e c u r it ie s that might be
issu ed at that tim e, i f such exchange is p o s s ib le , witft the usual
j j f (Jfyjf.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35k
advices to the d iffe r e n t banks*
On motion, duly made and seconded, i t was
VOTED to authorize the Chairman to s e l l andj^epurchas^
/
/'!
s e c u r it ie s held in the S p ecial Investment Account on the next quarter
ly tax p eriod , in September 1924, in the same manner as such sa les and
repurchases were made through the New York and Chicago banks during
the June 1924 ta x period*
The question o f a temporary change in the p o lic y o f the
Committee with resp ect to the d is t r ib u t io n^of bankers^acceptances 'purchased by the reserve banks
was discussed at some length and i t was
ttie opinion o f a l l present that the very lim ited volume o f such purchases
at the present time did jriotj ju s t if y the c le r ic a l work and expense o f
apportioning the purchases among the p a rticip a tin g banks.
I t was,
th e r e fo r e , on m otion, duly made and seconded,
. * "1
VOTED that the apportionment o f b i l l s be tem porarily d is - \
continued u n til such time as the volume is s u f f ic ie n t to warrant a
j
resumption o f such d is tr ib u tio n .
The purchasing o f b i l l s by the New York bank fo r other re
serve banks was brought up in connection with the temporary discont
in u a n c e o f the d is tr ib u tio n o f bankers acceptances.
Governor Strong,
on b eh a lf o f the New York bank, explained that the Federal Reserve Bank
o f New York would do the best i t cou ld , as h e re to fo re , to execute orders
fo r other Reserve Banks, when p o s s ib le , but ju s t now the rates and volume
o f b i l l s made purchases d i f f i c u l t , i f not im possible.
There follow ed a d iscu ssion o f the future p o licy o f the
Committee with respect to increasing the volume o f short-term Govern
ment s e c u r it ie s in the S p ecia l Investment Account and th e ir
V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . 1235k
—3 apportionment,
The chairman’ s view, which was concurred in “by those
present, was that the situ a tio n in the New York money market was now such
that i t would be more advantageous to have purchases made as la rg e ly as
p o ssib le in Federal reserve c i t i e s other than New York fo r the reason
that the New York banks are discounting p r a c t ic a lly nothing and pur
chases at th is time in New York would have a tendency to in crease the
volume o f loanable funds in New York, whereas purchases made in other
d is t r ic t s would have a tendency to increase the volume o f loanable funds
in other se ctio n s o f the country.
I t was, th e r e fo r e , on m otion, duly
made and seconded,
^VOTED
t o ra ise the lim it on the holdings o f Government se
c u r it ie s fo r the S p ecia l Account from <^400,000,000 to a maximum of
$500,000,000, such purchases t o be made at the d is c r e t io n o f the Chairman,
as to p r ic e s , and to be so conducted as to avoid or minimize changes in
the Credit situ a tio n or the market quotations fo r the s e c u r it ie s .
The
Chairman was lik ew ise authorized t o carry out the suggested plan o f hav
ing purchases in so far as p o s s ib le made in other d is t r ic t s than New York;
and i t was d ire cte d that the apportionment o f such purchases be on the b a sis
o f estim ated d e fic ie n c ie s o f earnings as shown by the monthly fig u res to be
furnished to the Secretary; such apportionment to be approved by the members
o f the Committee, and the p a r tic ip a tin g banks.
A fter a further d iscu ssio n with resp ect to the Comnitteef s a t
titu d e toward p o ssib le purchases o f Government s e c u r it ie s beyond the
$500,000,000 lim it , i t was, on motion, duly made and seconded,
VOTED th at the Committee now expresses the view that i t would
be in favor o f in crea sin g s t i l l further the lim it o f $500,000,000,
con d ition s remain su b sta n tia lly as they now a re, and that the Federal
If
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
** 4 ta*
•
Reserve Board be asked to give t h is proposal i t s con sideration and
furnish tb e Committee with an expression of i t s views.
Dr* M iller presented a memorandum from Mr. Smead, o f the
Federal Reserve Board, comparing tb e B oard's estimate o f earning a ssets
required to cover 1924 expenses and dividends, taken from rep orts made
to the Board by reserve banks, with a sim ilar schedule prepared by the
Committee which was based on estim ated requirements fo r the year as re
ported by the various banks to the Committee,
The comparison d isclo se d
that the Board*s fig u res covered operating expenses and dividends o n ly ,
whereas the Committee's statement included these items plus estimated
reserves and ch a rg e -o ffs at the end o f the year; also the Committee's
statement o f earnings was based on a ssets held aa o f June 30, while the
Board’ s fig u res o f earninga were on the b a sis o f average
during June,
d aily holdings
I t was understood th at before preparing new p a r tic ip a tio n
ra tio s fo r August the Secretary would confer with Mr. Smead and that these
r a tio s would then be submitted to the Committee b e fo re new apportionments
were decided upon.
In t h is connection i t was agreed to by those present
that investments in Government s e c u r itie s made under the new a u th orization
between now and August 1 , 1924, should be adjusted on the b a sis o f the new
r a t io s .
The exchange o f nearby m atu rities o f Government s e c u r itie s held
in the S p ecia l Account fo r those having a longer time to run, by s e llin g
tbe former and buying the la t te r in the market, was brought up fo r d is»
cussion.
No a ction was taken, the general view being that such tran sac
tion s might in t e r fe r e with the program o f obtain ing the amount o f se
c u r it ie s authorized by the Committee, and that such a change be considered
when the Committee has completed a l l authorized purchases.
mm
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 . U35 to
** 5
The Chairman reported that the suggestion had been made that
the Committee buy some c ir c u la t io n bonds and that a large block o f 4s
o f 1925 had been o ffe re d on a 1% b a s is .
I t was the consensus o f op in ion
that there would be no o b je ct in the Committee’ s buying them*
In t h is
same connection Dr. M iller sta ted that the Board had been advised by the
Reserve Bank o f Dallas o f t h e ir d esire to s e l l in the neighborhood o f
$550,000
» Zj* Consols o f 1930 owned by them and i t was suggested that
the New York bank might undertake to s e l l them in the market.
Governor
Strong, on b e h a lf o f the New York bank, agreed to take the matter up
with Governor McKinney,
The question o f the time and place fo r the next meeting o f
the Committee was discussed.
Y/taile no d e fin ite date was fix e d i t
was the general opinion that i t would be desirable to hold i t in Chicago
as early
in September as p o s s ib le , unless con d ition s should a rise in
the meantime making an e a r lie r meeting necessary*
On motion the meeting adjourned at 4:30 p . m.
W. 3 . MATTESON
Secretary*
RSVIoSD PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BANKS IN THE SYSTEM PURCHASES OF
GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON THE EARNING
------ -----------Net Earning Less
Current Expenses
Paid and Accrued
and Dividends
Jan*l/24-June 30/24
Boston
New York
4 71,312
Estimated Gross Earn
ings July l/24-D eC .31/24
Based on learning Assets
Held June 30 Remaining
Unchanged
T ota l Net Earnings
Jan*l/24-June 30/24
and Gross Earnings
July l/24-D ec* 31/24
Estimated Expenses
July l/2 4 -D e c.3 1 /2 4
Including Dividends
Estimated Chargeo f f s , Etc-
944,672
$1,015,984
$1,441,621
4
Amount o f Earnings
Over o r Short o f
Estimated Require
ments fo r Year
1924
i
425,637-
Revised of
P articipj
MONTH
^ UL j57-
x50 0 ,8 9 1
3 , 5 i 8,ooo.
3,017,109
6,125,000
3,1 0 7 ,8 9 1 -
Philadelphia
266,022
1 , 026,000
1 , 292,022
1,495,000
202,976-
2>
Cleveland
261,400
1,258,500
1,519,900
2,507,000
987,100-
12%
368,530
1,152,500
1,521,030
1,180,000
341,030*
0
463,200
692,960
1,156,160
1,185,807
29,647-
195,115
1,956,087
2, 151,2 02
3,175,215
1 ,024,013-
12%
73,072
636,179
709,251
1 , 18 8 ,0 00
478,749-
6/0
10 8 ,0 0 0
828,000
936,000
1,153,000
217,000-
3*
84,300
1,067,000
1,151,300
1,538,000
386,700-
5/c
430,178
875,148
1,305,326
1,817,220
511,894-
6/0
85,000
1*504,000
1,589,000
2,544.000
955.000-
11%
11,905,238
#15,459,046
#17,364,284
#25,349,863
$8,326,609-
100%
Richmond
At la rrt a
Chicago
o t . Louis
Minneapolis
Kansas City
Dallas
San Francisco
x£xpenses Exceed Earnings
'm
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U35&>
MINUTES OF THE MEETING- OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE
__________________ BOARD IN ¥/ASHINGTON, MAY 29, 1924___________ ___
PRESENT;
Governors Strong, Fancier, McDougal, Harding and Norris
Mr* Matteson, Secretary o f tbe Committee*
There were a lso p resent:
Honorable D. R. C rissin g er, Governor o f tbe Federal
Reserve Board*
Mr. Edmund P la tt, Vice Governor o f the Federal Reserve
Board,
Dr. A* C. M iller o f the Federal Reserve Board.
Mr, Charles S. Hamlin o f the Federal Reserve Board,
Dr. Walter W. Stewart, D irector, Bureau o f Research
and S t a t is t ic s , Federal Reserve Board*
Mr* Walter L. Eddy, Secretary, Federal Reserve Board.
The meeting was c a lle d to order at 10:45 a* nu by Governor
Strong, Chairman.
The report o f the Secretary o f the Committee, w ith accompany
ing statements and data, was submitted.
There was also submitted t o the rep resen ta tiv es o f tbe p a r t ic i
pating banks a rep ort from the Federal Reserve Bank o f New York on
fo re ig n acc&unts togeth er with a statement o f tra n sa ction s since the
la s t meeting o f the Committee on A p ril 22, 1924*
The Chairman reviewed b r i e f l y the a c t i v i t i e s o f the Committee
and tbe changes in the cved it situ a tio n sin ce the la s t m eeting-
He stated
that in view o f present and p roop ective c r e d it con d ition s in New York,
the d ire cto rs o f the Federal Reserve Bank o f New York f e l t strongly tbe
n ece ssity fo r being in a p o s it io n , e ith e r by the a c q u is itio n o f a p ort
f o l i o co n sistin g o f a ssets under th e ir so le co n tro l or by the use through
the Committee o f the s e c u r it ie s in the S p ecia l Investment Account, to ex-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
-
2
-
e r c is e a s t a b iliz in g in flu en ce on the money market during period s o f heavy
Treasury tra n sa ction s and t o counteract by the sale o f s e c u r it ie s , i f —and
when such a ctio n should be warranted, any undesirable e f f e c t s caused by
abnormal ease o f money, growing out o f Treasury op era tion s, when the
market was already under th e -in flu e n ce o f heavy gold im ports.
An extended d iscu ssion follow ed dealing with (a^/ incregging tfae>
amount o f s e c u r itie s in the Special Investment Account;
a change in
the method o f apportionment o f b i l l s and Government s e c u r it ie s based more
nearly upon the earning requirements o f the re sp e ctiv e reserve banks;
(c )
the use o f the investments held in the System S p ecial Isrestment Account to
n eu tra lize abnormal money con d ition s in New York on quarterly ta x periods
and (d ) the creation o f separate p o r t fo lio s by in d iv id u a l reserve banks fo r
use in cre d it emergencies*
Whereupon, on motion, duly made and seconded, i t was
VOTED ( l ) that the Committee approve and recommend to the partici**
pating banks an in crease in holdings o f Government s e c u r it ie s fo r the Special
JO
Investment Account by another $150,000,000, such purchases t o be made at the
d is c r e tio n o f the Committee at current market p r ic e s ;
(2 )
th at the Secretary be in stru cte d to prepare a new p
o f apportionment o f Government s e c u r it ie s based on earning requirements o f
the resp e ctiv e banks as shown by fig u re s furnished t o the Committee on
May 21, 1924, with adjustments from time to time as con d ition s warrant and
new estim ates are made;
such plan t o be submitted to the members o f the
Committee and the p a r tic ip a tin g banks fo r th e ir approval;
(3 )
same manner as Government s e c u r it ie s ;
that b i l l s purchased by the System be apportioned
mm
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 . U35fe
- 3.
(4 )
that the Chairman be authorized to make tempor
sa les o f Government s e c u r itie s from tfca S p ecia l Account during quarterly
ta x periods in such amounts as may be deemed d e sira b le , under a su itable
plan fo r th e ir repurchase fo r the Special Account.
In connection with the discussion o f purchases by reserve banks
fo r th e ir own account, Governor McDougal asked to go on re co rd as in favcr
o f such purchases in order t o provide holdings o f Government s e c u r itie s
fo r the reserve banks, p refera b ly long-term , in s u ffic ie n t amount to en
able the banks to meet expenses*
Tbe Chairman withdrew his suggestion with regard to a separate
p o r t f o l io fo r the Federal Reserve Baflk o f New York in view o f the a ction
taken in resp ect t5o money con d ition s on the quartet* days.
The meeting adjourned at 1:30 p . m,
(Signed)
W. 3 . Matteson
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
NEW PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BANKS IN THE SYSTEM PURCHASES OF
GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON ^HE EARNING
__________ REQUIREMENTS AS REPORTED TO COMMITTEE ON JUNE 6 , 1924________________
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
Jan, l/24-Mav 3 l/2 4
Estimated Gross Earn
ings June l/2 4 -D e c * 3 l/2 4
Based on Earning Assets
Held May 31 Remaining
_________ Unchang ed
T otal Net Earnings
Jan* l / 2 4-May 3 l/2 4
and Gross Earnings
June l/24-D ec* 3 l/2 4
Boston
$ 87,500
$1,188,900
$1,276,400
|1,672,000
New York
x 3 8 0 ,150
3.896.000
3 .516.000
7.004.000
P hiladelphia
270,245
1.624.000
1,894,245
1.697.000
197,245+
0
Cleveland
255,500
2 . 090.000
2,345,500
2,820,150
474,650-
n
Richmond
315,790
1.455.000
1,770,790
1.360.000
410,790 +
0
Atlanta
444,370
1 , 267,600
1,711,970
1,315,410
396,560+
0
Chicago
153,130
2,776,650
2,929,780
3,624,580
694,800-
10^
96,100
1 . 065.0 0 0
1 , 161,100
1,241,600
80 , 500-
1#
Minneapolis
64,390
1 , 020,000
1,084,390
1 , 268,260
183,870-
3/°
Kansas City
53,080
1,355,150
1,408,230
1,755,400
347,170-
%
341,000
1.044.000
1.385.000
1/970,000
5 8 5 , 000-
8/®
at* Louis
Dallas
San Francisco
93,000
2.077.000
Estimated Expenses
June l/2 4 -D e c,3 1 /2 4
In clu d in g Dividends
Estimated Chargeo f f s , E tc,
Amount o f Earnings
Over or Short
o f Estimated Re
quirements fo r
Year 1924
$
New Ratio
of
P a rticip a tio n
395,600-
3,488,000-
51%
IS '
2 . 1 7 0 .0 0 0
2.777.000
607 , 000$6,856,590-
^Expenses in Excess o f Earnings Jan, l/24~May 31/24
e>
o&
£ ®!
100%
m oi
o fi
* CGI
8" is;
O'
■W ^ppp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.G. U35fe
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR THE fEEER;*L RESERVE SYSTEM, HELD AT THE FEiERAL RESERVE BOARD
in Washington, a p r il 22, 1 9 2 4 .
PRESENT;
Governors N orris and McDougal
Deputy Governor B ullen, representing Governor Harding
Deputy Governor Case, representing Governor Strong
Mf , D. C. W ills , Chairman, Federal Reserve Bank o f
C leveland, representing Governor Pancher
Mr. Matteson, Secretary o f the Committee
There were a lso p resen t:
Honorable D, R. C rissin g e r, Governor o f the Federal
Reserve lioard
Dr. A, C. M ille r o f the Federal Reserve Board
Honorable G, B* Winston, Under Secretary o f the Treasury
Mr. Walter W. Stewart, D ire cto r, Bureau o f Research and
S ta tis tics ^ Federal Reserve Board
Mr. W. R, Burgess, A ssistant Federal Reserve Agent,
Federal Reserve Bank o f New York
The meeting was c a lle d to order at 11 a . m. and in the absence
o f Governor Strong, Chairman, Mr. Case was, on m otion, made Chairman
o f the m eeting.
The rep ort o f the Secretary reviewing the a c t i v i t i e s o f the
Committee sin ce the la s t m eeting t with accompanying statem ents, was
thereupon subm itted, (copy h erew ith ).
The Chairman sta ted that in accordance with au th oriza tion at
Purchases
fo r Special the meeting on February 28 purchases fo r the sp e cia l investment account
---------------- ----------------------------- ;____ ;____ -Investment
—
Account
had almost reached the $200,000,000 mark and asked the views o f jfche
Committee and others present with regard to further purchases„
general d iscu ssion fo llo w e d .
A
Whereupoh on motion duly made a**d
seconded, i t was
V^TED that a d d ition a l purchases fo r the s p e c ia l investment,
account o f the Federal Reserve system be authorized up to an amount
|no^j exceeding in the aggregate $250,000,000
■ PI-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
,fC
-
2
E.6. IBSfe
-
Mr. Winston stated that the Treasury Department, while in t e r
posing no o b je c t io n t o the above plan, f e l t that i t would a s s is t the
Treasury in i t s program o f financing i f the Committee should place a
d e fin it e lim it on the amount to be acquired fo r the System Special
Account.
A fter some d iscu ssion i t was agreed that th is question should
be placed on the calendar fo r the next m eeting.
P o licy
Regarding
Price
Limits
The question o f the p rice lim its on purchases o f Government
s e c u r it ie s was discussed and i t was the consensus o f opinion th a t, due
to the rapid changes in the Government se cu rity market, purchases could
be made t o b e tte r advantage i f the Committee was allowed more d is c r e tio n
as to p r ic e s .
Whereupon, on motion duly made and seconded, i t was
VOTED that up t o the $250,000,000 lim it the Committee be
authorized to make purchases at i t s d is c r e tio n at current market p r ic e s .
Change in
B i l l Rates
The Chairman read a memorandum (copy attached) from
Mr, E. R» Kenzel o f the New York bank, p oin tin g out that authorized
buying rates fo r b i l l s were out o f lin e with current market quotations
and suggesting a m od ifica tion in buying r a t e s .
A fter d iscu ssio n , i t
was, on motion
VOTED that the Coifmittee authorize a reduction in the minimum
buying rates o f the Federal Reserve Banks from 4 l / 8 per ce n t, to 4 per
c e n t, fo r long b i l l s , and from 4 per cen t, to 3 7/8 per ce n t, and 3 3/4
per cent, on short b i l l s , the short rates not to be put in to e f f e c t
immediately but in the d is c r e tio n o f the Federal Reserve Banks.
P o licy
Regarding
Requests
fo r Special
Inve stment s
The Chairman read a telegram from the Federal Reserve Bank o f
Dallas sta tin g that in view o f large m a tu rities they were in need o f
a d d itio n a l earni:
■s.
This was ca re fu lly considered and i t was
the sense o f the meeting that under e x is tin g con d ition s there was no
sp e cia l a ctio n which the Committee could take at t h is tim e, as the
"W*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
«p
d e c l a s s if ie d
Authority E .6 .
- 3 -
situ a tio n in the Dallas d is t r ic t was no d iffe r e n t than that e x istin g
in many of the other d is t r ic t s *
A report on Foreign Accounts, with accompanying statement
submitted by the New York bank, was presented to- the Committee*
'S ffect of
Treasury
Operations
On Money
Market
•Mr* Winston brought up fo r d iscu ssion the problems raised
by Treasury operation s on March 15, 1924, and t h e ir e f f e c t on the money
market.
Various means were discussed fo r
a v o id in g
disturbance to the
money market as a re su lt of Treasury operations at times when discounts
at reserve banks are small and the suggestion was advanced that
Federal reserve banks might at such times tem porarily s e l l short Govern
ments to member banks to an amount that would equalize t h e ir excess
reserves during the few days pending the c o lle c t io n o f ta x checks*
No d e fin it e d ecision , however, was reached.
In connection with tempurary
accommodations to the Treasury.Mr, Winston stated th a t, in -lin e with
a suggestion made by the New York bank, the Treasury favored placing
the rate on sp e cia l c e r t i f ic a t e s issued to cover the Treasury overdrafts
at one point under the rate on Treasury c e r t i f i c a t e s or notes con
cu rren tly issued.
On motion the meeting adjourned at 4;00 p, m*
(Signed)
W* B. MATTSSON
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
r
~
i
MEMORANDUM BY E« R, KENZEL.
DEPUTY GOVERNOR, FEDERAL RESERVE BANK OF NEW YORK
RE OPEN MARKET RATES FOR BILLS PURCHASED
The minimum rate o f 4 l/Q% esta b lish ed fo r purchase by Federal reserve
banks o f 90-day b i l l s has been in e f f e c t fo r about one yej.r*
I t was advanced from
4^ in A p ril, 1923*^ At that time and sin ce, u n til within about one month, i t was
also the p re v a ilin g rate fo r prime unindorsed b i l l s a v a ila b le t o in v estors in the
market*
While these rates seem high as compared with a 4 l/2% rediscount rate fo r promissory notes, the fa te was sustained in the market by reason o f the
su bstan tial volume o f short Treasury paper a v a ila b le at or s lig h t ly under 4 1/3%.
Figuring the ta x exemption on short Treasury paper, the y ie ld on them was equal
to or h igher than the market rate fo r b i l l s *
Under these circumstances the
Federal reserve banks n a tu ra lly acquired a substantial proportion o f the t o t a l
volume o f b i l l s current from time to tim e.
With the changed money con d ition s since March 15, 1924, the flo a tin g
supply o f Treasury paper has been m a teria lly reduced, with the re su lt that the
demand by banks and other in v estors fo r b i l l s caused the rate fo r 9 0 -day un
indorsed b i l l s to recede to 3 7/8^*
The rate has since recovered to 4J and i t
seems inprobable that i t w il l advance further in the near fu tu re; the contrary
may be the fa c t.
Since January 1 , 1924, the b i l l h old in gs o f Federal reserve banks have
declined from $347,000,000 to $176,000,000 on A pril 16,
033,000,000 was held by New York under sa les contract*
Of the la t t e r amount
During the past month
the market has been e n tir e ly out o f the Federal Reserve Bank o f New York as t o
sales con tra cts on two occa sion s.
The volume o f b i l l s outstanding at the present time is probably a
l i t t l e le s s than it was at the f i r s t o f the year, when cotton shipping was heavy,
but is not im portantly reduced*
The discount market now holds about $67,000,000
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . 12354,
- 2 o f unsold b i l l s , an increase o f 06, 00 0,000 over a week ago; th e ir sales during
la s t week were $25,000,000 as compared with $40,000,000 the week previous.
The d is trib u tio n during the past several weeks has been p r in c ip a lly
through ou t-of-tow n banks, savings banks and foreig n banks, the l a t t e r have been
the most important buyers in the past few days, and there are in q u irie s fo r
su b sta n tia lly a d d ition a l amounts fo r account o f foreign c lie n t s to be f i l l e d
during the balance o f t h is month*
\7hile t h is represents a f a ir ly s a t is fa c t o r y
con d ition in the market, there n everth eless is a lack o f temporary employment o f
id le funds by the la rg e c it y banks in the b i l l market because of the certa in
lo s s that would re su lt from t h e ir resa le t o Federal reserve banks o f b i l l s bought
at 3 7/8 and 4J at the present minimum rates maintained by Federal reserve bankg,
A spread of l / 8 to l/4/£ has always had the e f f e c t o f deterring the lo c a l employ
ment o f id le funds in the b i l l market.
In view o f t h is con d ition and the p rosp ective fu rth er ease in money,
I
would recommend a reduction in the minimum ra tes o f Federal reserve banks at th is
time t o 4/C fo r three months* b i l l s and a corresponding reduction o f from l / 8 to
l/4 ^ fo r short b i l l s , the short ra tes, however, not to be put into e f f e c t imme
d ia te ly but in the d iscre tio n of the Federal reserve banks as conditions might
a rise in which the lower short rate would best serve t h e ir operations in the
market, e ith e r as a stimulant t o d is trib u tio n or fo r the purpose o f acquiring
reasonable volume o f short paper.
The sa le s contract ra te, I b e lie v e , might w e ll be l e f t at
at the
present time but with lib e r t y , without formal a ctio n , t o reduce it to rates
current fo r the purchase o f short paper in the d iscre tio n o f the banks*
A pril 18, 1924
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . 1235k
1
3 3 '* .
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM, tlfit.n aX THE FEDERAL RESERVE BOARD
— -_____________ in Washington . February 25. X924___________________
PRESENT:
Governor Strong, Chairman
Governors Harding, Fane her and McDougal
Mr* J» F. Herson, Secretary pro tem
The following motions were made and carried;
(1 ) That the Committee recommends the ex«*
tension of the purchases of Treasury notes and
certificates to include a ll maturities up to and
including the issues maturing in the year 1927*
(2 ) That a new schedule of prices be sub*
mitted to the Committee by the Chairman for
approval by the Committee.
(3 ) That the Chairman be authorized to cub**
mit to a ll participating banks the Committee's
recommendation that further purchases, not ex«*
ceeding $100,000,000 be made at the schedule
submitted, after the fir s t $100,000,000 purchase
has been completed*
(Signed)
J. F* Herson,
Secretary pro tem.
JL.
j- 1} ^
f ^
b ~^
jp*pp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.6 .1235fe
J
~2 ?p> - ~ b - ~ " V
|
;■
y ....
' C OP Y
MINUTES OF THE MEETING OF THU OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM* HELD AT THE FEDERAL RESERVE
BOARD IN WASHINGTON* FEBRUARY 8» 1924_____________
ZU
./
/
1
P resent;
Governors Strong, MeDougal and N orris
Mr«f Matte son. Secretary o f the Committee*
There w #realso present by in v it a t io n ;
Honorable D* R* C rissin ger, Governor o f ^ e
Federal Reserve Board
Dr* Adolph C. M ille r o f the Federal Reserve Board
Dr* W. R. Burgess, A ssistant Federal Reserve Agent,
Federal Reserve Bank o f New York
The meeting was c a lle d t o order at 10:45 a* m* by Governor Strong,
Chairman,
The minutes o f the meeting o f the Committee hold January 14, 1924 were
presented and on motion approved.
The Secretary a lso presented rep orts covering the a c t i v i t i e s o f the
Committee sin ce the la s t meeting accompanied by e x h ib its showing loans and invest
ment holdings o f the Federal reserve banks, and a memorandum on the busin ess and
c re d it situ ation *
Hie question was ra ised as to what a ction should be taken by the Committee
with reference t o sp e cia l orders fo r the purchase o f b i l l s and Government s e c u r itie s
in addition to regular allotments*,
I t was agreed by those present that such pur
chases in te rfe re d with a u n ifie d program o f purchases f o r the System and the opinion
was expressed that the p ra ctice should be discontinued or some method adopted which
would preserve the percentage plan o f allotm ent*
In order, th e re fo re , t o meet the
needs o f certa in o f the banks, which at tim es d esire la r g e r h old in gs o f Government
s e c u r it ie s and b i l l s than they would norm ally obtain through the regular allotm ents,
J U x tU '
S p ¥ Id L j
3 3 3 .- y - X
Reproduced from the Unclassified I Declassified Holdings of the National Archives
P -------------------------_
DECLASSIFIED
Authority E .6 .
-
2
-
i t was suggested that b i l l s and s e c u r itie s be re d istrib u te d , so far as p o ssib le ,
from the allotm ents o f banks whose earning assets are more ample ond who w ill
consent to such red istrib u tion *
With t h is exception it was the opinion o f the
Committee that the p rin cip le o f a llo t t in g a ll purchases in accordance wrtn the
approved formula should be s t r i c t l y adhered t o .
In the statement showing purchases and allotm ents of bankers accept**
ances during the period from December 12,. 1923 to January 30, 1924, it was noted
that certa in o f the banks had received la rg er amounts o f b i l l s than th e ir pro
rata share, dna tr> dlrer.t purchases by th ose banks.
I t was understood that the
Secretary would endeavor to arrange adjustments which would re su lt in tne re
d istrib u tio n o f these excess amounts.
In view o f higher current p rice s fo r bankers acceptances and Government
s e c u r it ie s , i t was suggested that a p ossib le avenue fo r investment might be found
in short-term municipal se cu ritie s*
I t was agreed by those present, however, that
it was not d esira ble to make such purchases.
At t h is point Governor C rissinger and Dr* M illar join ed the meeting and
a fte r a general d iscu ssion o f present c r e d it and banking con d ition s throughout
the country, the Committee discussed proposals fo r extending i t s purchases of
Government securities and raisin g somewhat the authorized buying prices*
A fter considering the probable e f f e c t ,
it was the sense of the meeting
that some further purchases could be made at s lig h tly higher p rices without
any la rge immediate e f f s c t on the cred it s itu a tio n , the probable resu lt being
simply a decrease in the loan account of the Federal Reserve Bank o f hew York
corresponding to the amount o f s e c u r itie s purchased*
The question was raised as to whether the program o f the Committee
should be determined s o le ly with regard to cre d it p o lic y or whether i t snould
be influenced by the d e s ir e / o f some o f the banks to increase t h e ir investments
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . 1235k
-
3 -
in order that th e ir earnings might at a l l times be la rg e enough to pay t h e ir
expenses and dividends without going into surplus*
The Committee recognized
that there was a d iv isio n o f opinion among the banks on th is question and i t
was suggested that it would be d esira b le for members o f the Committee togeth er
with rep resen tatives o f the Federal Reserve Board t o meet p e r io d ic a lly with the
Boards o f D irectors o f the d iffe r e n t Federal reserve banks represented on the
Committee in order to create a b e tte r understanding by discussing with the
d iffe r e n t Boards o f D irectors the various tra n sa ction s o f the Committee*
The follow in g motions were thereupon made and ca rrie d :
(1 )
That the Secretary be instructed to estim ate from
the reports o f earnings and expenses made to the Committee on Economy
and E ffic ie n c y the amounts o f earning assets required by the various
Federal reserve banks to earn t h e ir expenses and dividends,
in order
that the Committee may be informed as to banks which request sp ecial
reallotm entSj and banks which might be in a p o s itio n to tra n s fe r
a p ortion o f t h e ir allotm ents o f b i l l s and
(2 )
Government se cu ritie s*
That sp e cia l orders fo r purchases of b i l l s or
Government s e c u r it ie s be|notyexecuted in the market without Committee
a ction but that the Committee endeavor t o
arrange when necessary
fo r tra n sfe rs from those banks which are w illin g t o surrender them*
(3 )
That the authorized p r ic e s fo r purchase o f Government
s e c u r itie s be revised to an extent that w il l permit o f increased
purchases in moderate volume, say up to the amount of $100, 000,000
as p reviou sly agreed upon, and that a new schedule o f p rice s be sent
to the members o f the Committee fo r t h e ir approval*
(4 )
That the Committee recommend t o the Federal Reserve
Board that one or more members o f the Board jo in the Committee in
mm
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 .
•t
4 ■*
meetings t o be held by the .Committee with the Board of
D irectors o f the Federal Reserve Banks o f Boston, New York|
Philadelphia* Cleveland and Chicago, those being the banks
whoso Governors at present co n stitu te the Committee*
On motion the meeting adjourned#
(Signed),
w* B, MATTESON
Secretary,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E.6. U3Sfe
r
C
a
:
'
v. v*- v
MINUTES OF THE MEETING OF THE OPEN MARKET INVESTMENT COMMITTEE
FOR tHE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE
- - BANK OF NEW YORK (GOV. STRONG*S ROOM) JANUARY 14, 1924
present:
/ u/
/ / ' Tj X f
/
Governors Fancher, Harding, Norris
and Deputy Governor Case representing Governor Strong
Mr, Matteson, Secretary of the Committee
Thera were also present by invitation:
Honorable D. R. Cr is singer, Governor of the Federal Reserve Board
Dir* A&olph C. M iller of the Federal Reserve Board
Mr* Pierre Jay, Chairman, Federal Reserve Bank of New York
Mr* F. H. Curtiss, Chairman, Federal Reserve Bank of Boston
Mr* D* C* W ills, Chairman, Federal Reserve Bank of Cleveland
Dr. W. R* Burgess, Assistant Federal Reserve Agent, Federal Reserve
Bank of New York
The meeting was called to order at 10:45 a» m* by Mr. Case,
who expressed for Governor Strong his regret at being unable to be
present*
Dank Situation
On motion Mr* Case was nominated and elected Chairman of the
Minneapolis
Chicago
meeting. Mr* Case thereupon reported a telephone message from Govern
Districts
nor McDougal of the Federal Reserve Dank of Chicago, stating that at
the la st minute he found that he could not attend the mooting because
at the request of Comptroller Dawes he was going to Minneapolis with
his examiner to confer with Governor Young with regard to d iffic u ltie s
in some of the South Dakota banks which seemed lik e ly to involve a
small number of banks in his Iowa territory.
This statement was fol
lowed by an informal discussion of the active effo rts being made to
s e ll 4jyi Treasury Savings Certificates in districts where public confidenes was shaken in the banks by reason of the loss of deposits and the
large number of failures that have occurred. While it was not considered
within the sphere of this Committee to take any formal action in this
matter, Governor Crissinger volunteered to bring the situation to the
attention of [Secretary Mellon/with the idea of suggesting that it might
r
l/i 7 /i Y f-J U i 3 3 3
l /
"HP
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
be advisable to slow up the present e f f o r t s t o push the sale o f
the Savings C e r t ific a t e s in the se ctio n s re fe rr e d t o .
I t was
a lso understood that Mr. Case would mention the matter to
Under Secretary o f the Treasury Winston.
Committee'
Activities
Complete data and statements were presented by the
Chairman showing the present investment holdings o f the System,
the status o f the sp e cia l investment account fo r the System, and
inform ation as to the present state o f the short-term Government
se cu rity market.
The data and ‘ statements were then read by the Secretary,
including a memorandum from Dr. W. R. Burgess o f the New York
bank with regard to b a s ic con d ition s in the money market.
This
was follow ed by a general d iscu ssion as to the e x is tin g temporary
ease in money and as to the importance o f gradually moving fo r
ward in acquiring a moderate p o r t fo lio o f short-term Government
s e c u r it ie s .
In th is connection the Chairman read a telegram from
Governor McDougal in which he stated that in his opinion the
Committee should not at present make purchases, except o f very
short m a tu ritie s.
P olicy Respecting
A ll present were in agreement that in view o f e x istin g
Purchase o f Govern
ment S ecu ritie s
con d ition s in the money market t h is was a time fo r extreme caution
and that fo r the moment we should adopt a w aiting p o lic y rather
than to change our buying p rice s (thereby a ffe c t in g y id d s) and
fo llo w the market downward.
On motion o f Governor Harding i t was
thereupon voted:
"That for the purchase o f short Governments we do
not advance buying p rice s above those already authorized,
and that the Committee be authorized to purchase between
now and the next meeting for the Special Investment Ac
count not exceeding 015,000,000 o f Treasury Notes due
December 15, 1925, at a p rice tp y ie ld not le s s than 4.30^,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
- 3 -
The m a tu rities and p rice lim it s , as authorized, now stand as fo llo w s :
Maturity
March
June
Sept*
Dec.
March
June
1924
1924
1924
1924
1925
1925
P rice Limit
3*85%
3*95%
4.05%
4.10%
4*25%
4.30%
.jh r
'
The Committee adjourned fo r luncheon at 1:00 o ’ clock and re
convened at 2:30 p. m*
Bankers
Acceptances
Dr, Burgess1 memorandum with referen ce to the p o s s ib ilit y
o f the Committee e x e rcis in g the same ju r is d ic t io n over the purchase
and sale o f bankers acceptances as it does over Government s e c u r itie s
was discussed, but no a ction taken.
In connection with a teleg ra p h ic order for b i l l s from the
D allas bank for resa le to a member bank referred to the Committee fo r
con sideration , there was a discu ssion of the p o lic y which should be
follow ed in purchasing b i l l s fo r member banks.
I t was agreed that
\
when the open market rate is lower than the Federal Reserve System's 1,
buying rate the d esira b le procedure was to buy b i l l s at the market
fo r member banks (o r in cases where the reserve bank concerned in
dicated s p e c i f i c a l l y that the b i l l s were purchased for resale t o mem
ber banks), but that jno^ b i l l s should be purchased under the bank buy
ing rate fo r the p o r t fo l io s o f reserve banks*.
Execution o f
Treasury Orders
A memorandum from the Secretary of the Committee showing
the manner in which United States Treasury orders fo r Government
bonds had been executed during the year 1923 by the Now York bank
was submitted fo r the information of the Committee*
P o licy o f
Paving Gold
A d iscussion follow ed regarding our present p o lic y o f pay
ing out gold and the representatives o f a ll the banks, as w ell as
Reproduced from the Unclassified I Declassified Holdings of the National Archives
,— ---------------------------
d e c la s s if ie d
Authority E.6. IBSfe
- 4 ~
tbe members o f the Federal Reserve Board, were in complete agreement
that it was desira b le to continue paying out g old to an amount s u f f i
cie n t to maintain the g o ld reserves at. sub at anti a lly the 1923 l e v e l .
Governor Harding at th is point l e f t the m eeting.
P a rticip a tio n
In Foreign
Accounts
The Chairman reported th a t, pursuant to a ction taken at the
la a t Governors* Conference, he was now rep ortin g monthly to those mem*
bers of the Open Market Investment Committee whose banks p a rticip a te d
in the fo re ig n business undertaken by the New York bank fo r account o f
the System, the important developments and changes o f each month.
He
further sta ted that when the 3oston Federal reserve bank withdrew la s t
year from p a r tic ip a tin g in the fo re ig n bank account the New York bank
assumed t he 3oston bank1s share »
A d iscu ssion follow ed on t h is p o in t.
Whereupon* on motion, i t was voted
"That, whereas, these fo re ig n tra n sa ction s were under
taken as a matter o f System po l i c y , Bo st o n *s s har e s hould be
d ivided among the other Federal reserve banks p rov id ed, o f
course", thaff~the other banks d esired to increase t h e ir par
t i c ip a t io n by the small amount involved.'*
Japanese
Situation
The Chairman presented a b r ie f summary o f our r e la t io n s with
the 3ank o f Japan and fo r the inform ation o f the Committee and the
members o f the Federal Reserve Board p resent, reviewed the change
that had occurred in the Japanese p o s itio n owing to the f a l l o f the
Yen, which was rep orted to have been due to the heavy exports o f
American foods to Japan follow in g the earth<fuake and the present
a b o lit io n o f Japanese import duties expiring March 31, 1924.
The meeting adjourned at 4:45 p . m„
w. 3.
matte son
Secretary
t
Reproduced from the Unclassified I Declassified Holdings of the National Archives
___
d e c l a s s if ie d
Authority E .6 . iBSfc
MINUTES OF MEETING OF OPEN MARKET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL
RESERVE BOARD. WASHINGTON. D. C .. DECEMBER 3. 1923
PRESENT:
Governor Strong, Chairman
Governors Harding, Faneher, McDougal and Norris
Mr* W* B* Matteson, Secretary of the Committee
ALSO PRESENT;
Governor Crissinger, Vice Governor Platt
Dr. M iller, Messrs* Hamlin, James and Cunningham
Honorable Garrard B* Winston, Under Secretary of the Treasury
Mr* W* L* Eddy, Secretary of the Federal Reserve Board
Mr* Walter W. Stewart, Director of Research and Statistics
At the request of Governor Crissinger, Governor Strong as Chairman of
the Open Market Investment Committee reviewed b rie fly the situation which existed
prior to the organization on May 16, 1922 of the Committee of Governors on Cen
tralized Execution of Purchases and Sales of Government Securities, and the manner in which purchases and sales of Government securities were conducted; also,
‘
the manner in which such transactions had been handled since the formation of the
original committee and it s successor*
Governor Strong also stated b rie fly the present status of open market
transactions of the System and the position of the banks at this time, with re
ference to their investment holdings of various classes*
He further stated that
the Committee fe lt i t to be expedient at the present time that the Federal reserve.
banks should consider a change in policy, leading possibly to the purchase (through
the Open Market Investment Committee) of a suitable volume of Government securities
of short maturities, such purchases to be made with due regard to money market con
ditions, to the position of the Treasury, and to the market for Government secur
it ie s , so as to be in a position to exert an influence from time to time by the
purchase and sale of such securities in the open market*
I t was understood that for
the present such purchases should (hot) be of such volume as to cause a net increase
^
------ ---------------------------------------------------------- W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35fc
jl.ii the System1 s earning assets*
An extended d iscu ssion follow ed , which was p a rticip a te d in by Governor
C rissin g er and other members o f the Federal Reserve Board, Under Secretary of the
Treasury Winston and the members of the Open Market Investment Committee.
The meeting adjourned at 1:00 p . m* fo r lunchwon.
The members o f the Open Market Investment Committee reconvened at
2;30 p . m*, a l l th e members of the Committee being present except Governor Norris*
Governor Strong presented the fo llo w in g communication which he received from the
Federal Reserve Board:
HYou are advised that the Federal Reserve Board at i t s meeting
to-day considered the rep ort o f your Committee and adopted the fo llo w
ing re s o lu tio n s ;
1WKEHEAS, The Open Market Investment Committee of the
Federal Reserve System (Governors Strong, Harding, McDougal
Fancher and N orris) has reported t o the Board that i t i s
expedient at the present time that the Federal reserve banks
be given perm ission t o assume a p o s itio n toward the money
market by the purchase of a su ita b le volume o f Government
s e c u r it ie s o f short time m a tu ritie s, provided such purchases
can be made without disturbing the con d ition s o f the money
market or of the market fo r Government s e c u r it ie s ,
’ NOW, THEREFORE, BE IT RESOLVED, That the Federal Reserve
Board declares i t s e l f in favor o f the purchase of a lim ite d
volume of short-term Government s e c u r it ie s at t h is tim e, i t
being understood that the Board reserves the righ t t o discon
tinue purchases and t o require the sa le of any of the secur
i t i e s purchased in pursuance of t h is re so lu tio n at any time
i t may deem expedient, and
’ BE IT FURTHER RESOLVED, That cop ies of these r e s o ltio n s
be transm itted t o the Chairman o f the Open Market Investment
Committee o f the Federal Reserve System and t o the Governors
of a l l Federal reserve banks*1
"By d ir e c tio n of the Federal Reserve Board.
R e sp e ctfu lly ,
(Signed)
Walter L* Eddy
Secretary”
The Chairman was d ire cte d t o acknowledge the Board’ s le t t e r , which was
done at once*
The Committee a ls o d ire cte d the Chairman t o send a l e t t e r t o each
reserve bank, rep ortin g the r e s u lts of the Conference and ou tlin in g the procedure
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
- 3 to be followed, after f ir s t informing Under Secretary of the Treasury Winston
of the proposed action.
I t was understood that the Chairman would ask for the views of the
Federal Reserve Board and participating reserve banks, as to further purchases
a fte r a total of $100,000,000 had been acquired*
The Committee agreed that only
early maturing obligations of the Treasury should be purchased and that the pro
cedure heretofore followed in executing orders would continue*
It,was thereupon voted that the Committee should proceed with the pur
chases of Government securities along the lines set forth in the Federal Reserve
Board resolution, such purchases to be made as and when conditions should permit.
The meeting thereupon adjourned*
(Signed)
W* B* MATTESON
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . IBSfe
mnmm m mmm or wm immr vm&twst mmnrm
wm rm m b u l rbhrik mmm, mm At Tm mmm*
pm m m t
Governor Strong,
G be& em m
doveraore Harding, teacher, mftou&l and Horrie
mr* f* B. *tuison, Soorotary of the Cae*aitte«
iuuso m m m tt
Oovornor O riialttpr, fie# Governor Platt
Of # i&Hor, iSiesra •
ead
Hoaorablo Garrard B* Wiastoa, iltdor Sooretary of th« Treasury
Hr* W* U Eddy, Secretary of the FeAowu Roeerve Board
Hr. Baiter W« Staoart, Bireotor of Baeearoh end Statietioe
At tin raqiieot of Governor Crieeiager, governor Strong c* Cheiraaa of
the Ojh» Hwrfcet kvw itaiiit Gomittee reviewed briefly the oituatioa efaiefc existed
prior to the orgeais&tioa on Itey 26, 1982 of tho Coaaittea of S w w w i on Ce»*
tralioed Sjcooution of i*ttroh&*oti and Sales of Oovarnaeat Soaaritioa, and the tmm*
nor ia ahioli purahaoes oad aw1on of Goveraaoat seeurltles aero eoadueted; also,
tho mmmr ia whieh eaoh traae&otioas ted booa headled eiaoa the foroatioa of the
OOISSittOO aad it* sueoeeoor*
Gowreor Stroag also stated brief1} the present statue af open aurket
transactions of tho System aad tho poeitioa of tha baako at thie tiiee, aith refereaee to their iaveei^etxt holdlage of various clasees.
Us further stated tte t
tho Oowsittse fa it i t to bo oxpodioet at the praooat tiao that the Foderai reserve
beake should eeaslder a ofcange la polioy, loading possibly to the purchase (through
the Open iferket Xnvast*aeat Consaittee) of a suitabio valutas of Govenuaeat sscuritiss
of eiiort eaturitlo*, each parohaees to be sode atth duo regard to tao&ey laarkat « « •
ditioae, to tho position of the Treasury, aad to the taarhat for Gevoratieat oecuritio s , so &e to be ia a position to oaort an iafltseaoe froa tiao to tine by tho
purchase
eaia of aneli eaeuritiee ia tho open market*
St aas oodorstood that far
tha a®Mwat tush wt**>MiaftB ehoitld! aotlbe af enoh voliae an to
ia tho Sy*toate wroiag aooote*
a ttet iaoraaoo
Reproduced from the Unclassified I Declassified Holdings of the National Archives
---------------------------------
---
DECLASSIFIED
_-
Authority E.6. U35fe
***£*•'
An extended discussion fo lio s**, ahlah m s participated in fey Governor
Cri&siziger aad other maters of the Federal Reserve Board, Aider Secretary of the
Treasury H m toi and the aedbere of the apen iferket Xavestjoeat CmedMtm*
the aeetiag adjourned at 1:00 p» n. for luncheon*
the aoafcero of the Open ^hrket Investment Coaaittee reconvened at
2530 p. a ., a ll the aethers of the Cotsaittee feeing present except Governor Horris *
Governor Strong presented the following coammicatiGn which he received froo the
Federal Reserve Board:
**T o a a re advised th a t tlw F e d e ra l R eserve Board a t It s £ *e tia g
to -d a y considered th e re p o rt o f your C o a u itte e sad adopted th e fo l
low ing re s o lu tio n :
•OTSRBAS, the Open H&rltat Inveetaent Oataaittee of the
Federal Reserve Syaten {Governors Strong, Harding, «tenougalt
Fancier and Morris) has reported to the Board that i t is
expedient at the present tiiae that the Federal reserve banks
be given perai&aien to assuzis a position toward the am Vf
mrket fey tha purchase of a suitable m l mm of Qovoraeant
securities of short-tiae saturitiee, provided such purchases
oan be aado without disturbing the conditions of tha aoney
aarket or of the sarket for Oovermaent securities,
*S 0 f, YWHEVURB, ns IT b eso tted , th a t th e F ed eral E aserve Board d e alarae it s e lf ia fa v o r o f th a purchase o f a
H a lte d voluoe o f s h o rt-te rm G averrcnm t s e c u ritie s a t th in
tin e , i t b ein g understood th a t th a Board reserves th e
r ig h t to d isc o n tin u e purchases and to re q u ire th e s a le o f
any of tha s e c u ritis e purchased in pursuance o f th is re s o lu tio a a t any tiia e i t eay daesa e x p e d ie n t, and
IT m n RESOLD, that copies of these resolu
tions be transmitted to the Chairean of the Open iferJiet
Investment Comittee of the Federal Easarve Systea and to
the Ooveraors of a ll Federal reserve banks,*
*By direction of the Federal Reserve Hoard.
Respectfully,
{Signed) m iter L. Eddy,
S a « r*ia ry *
tha Chairman « s directed to acknowledge the Board's lette r, which
aaa done at ones.
Itoa Coaaittee also directed the Chfcirafta to send a latter
to aach reee rv e hank, re p o rtin g th e re s u lts o f th e Conference and o u tlin g th e
j
|
■----- ;------------
Reproduced from the Unclassified I Declassified Holdings of the National Archives
1
--------------------------------------------------- a
■
-
----------------------------------
- ■&>'
declassified
Authority
!
E.6. IBSfc
* 3 *
,
proeedure to be followed, after fir st informing ifctder Seoret&ry of the treasury
Winston of the proposed action*
St was understood tfcat the Chairxma irould asfc fo r the wirnm o f the
Federal Reserve Board and participating reserve banks, as to further purchases
after a total of 1 1 00 ,000 ,00 0 had been acquired.
th o Coositte* agreed that only
early Baturins obligation® o f tho tre a s u ry should be ptirobased and that the prooedtire heretofore followed In executing ordors would continue.
It sae thereupon vot«d that tbe Coisaittee should proceed with the pur*
ehaae of Sovesmsnt securities along the linos set forth in the Federal Resenre
Soard resolution, such purchases to be aade m and when conditions should penait.
the seating thereupon adjourned*
i
<5lgn«d) * . B. aumsoii
5*er*ttiry
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
■
MINUTES OF THE MEETING OF THE OPEN MAMET INVESTMENT COMMITTEE
FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE
___________ BOARD, WASHINGTON D« C.« NOVEMBER 10. 1923._________
*—**
33
,
P resen t:
Governor Strong, Chairman
Governors Fancher, McDougal and Norris
Mr, W* B. Matteson, Secretary of the Committee
Also present:
Dr* Adolph C* M iller of the Federal Reserve Board
Mr. George L* Harrison, Deputy Governor of the Federal
Reserve Bank of New York
Governor Strong presented his report as Chairman of the committee
j SuJ*» 11~ * ^
to the joint corference - November I923j (copy attached).
The report which
contained a review of the performances of the present committee and its
predecessor covering the period from January 1, 1922, to the present time,
was discussed at length by the members of the committee and Dr* Miller, and
its contents met with the approval of a ll present; WHEREUPON, on motion,
duly made and carried, it was voted that the report be accepted.
The report of the secretary was also presented and, on motion,
was accepted.
o
The chairman reported that the Federal Reserve Board had advised
the committee of the request of the Federal Reserve Bank of Boston to the
Board for its approval of the purchase of $15,000,000 or §20,000,000 of
government securities; the chairman stated that the New York bank had turned
over $10,000,000 of acceptances to the Federal Reserve Bank of Boston, and
no action was thought necessary with regard to the application.
The meeting thereupon adjourned until Tuesday morning, November 11
at 10 a. m. when it reconvened in Governor Crissinger1* office at which
a ll members of the committee were present, also Governor Crissinger and
.
II11ojz 3
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . [R SIc
- 2 *
f
Messrs. Hamlin, P la tt, James and Cunningham o f the Federal Reserve Board#
The chairman’ s report was f u lly discussed and i t was decided to report to
the jo in t conference that the committee’ s report contained important sug
gestion s regarding p o lic y which the Board desired to study, and at the re
quest o f the la t t e r it was decided that another meeting o f the committse
would be held in about a fo rtn ig h t; a ll o f which was reported to the confer
ence by the chairman# ,
The meeting then adjourned*
(Signed)
7/. B* Matteson
Secretary#
-w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
OPEN MAP.KET INVESTMENT m?lvlTTTm
Chairman* s Report
Joint Conference - November ^923
*1316 S e cre ta ry 1s report o f the operations o f the Open Market In vest
ment Committee has been d istrib u te d to tfofe members o f the Federal Reserve
Board and o f the Conference,
I t give s'/a. d eta iled account o f the proceed
ings o f the Committee and th.3 usual /ch ed u les o f tra n sa ctio n s, and w ill be
submitted f o r comment and a ctio n b / the Governors at th e ir separate meeting*
As the Committee and i t s predecessor i$ the agency through which
transactions in furtherance p f ifoe System’ s open market cre d it p o lic y axe
executed, in p a rt, a b r i e f t m e w o f wha.t has been done should cover the
period from January 1, 1022, to the present time, a.s a. r a d ica l change took
p la ce in the p o lic y o f n ea rly a l l of the Reserve Banks, commencing at about
the f i r s t named da.te-
I t was then
that, fo llo w in g a. grea.tly reduced
volume o f d isco u n ts, many o f the banks made la rge purchases o f Government
s e c u r itie s *
These were on such a
scale as to arouse o b je c tio n by the
Secretary o f the Treasury on the grounds that an a r t i f i c i a l market was
being created - that Reserve Bank purchases and sa les
at times mig^it con
f l i c t with the execution o f Treasury Department orders - and with new issues
being made - and that investments merely f o r earnings were not j u s t i f i e d ,
e s p e c ia lly i f lia b le to cause any in fla t io n o f bank c r e d it .
The appointment o f the Committee, o f which the present one is su cce ssor,
promptly resu lted in u n iform ity o f op eration s by Reserve Banks, in a l l the
markets; elim inated c o n f l ic t s o f orders between the Treasury and the banks
and between the banks themselves; - and by cen terin g the d is t r ib u t io n o f
orders in the hands o f the
Committee, enabled i t to d is tr ib u te purchases
and sa les between Reserve D is t r ic t s so as tc promote an a.ctive market in
many c i t i e s , ,ra.ther than con centrate the market p r in c ip a lly in New York C ity .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
- 2 Since the summer o f 1922 there has been gradual and continuous
liqu.ida.tion o f Government s e c u r it ie s owned by the System, the t o t a l held
on October 31* 1923 > being but $92,000,000 against a maximum o f $6l S , 000,000
on June 7> 1922.
The important re su lts o f th is most s ig n ific a n t development in the
c r e d it p o lic y o f the System, other than those already mentioned , can now
p o ssib ly be summarized a.s fo llo w s :
At the end o f the yea.r 1921, fo llo w in g a period o f extreme nervousness
as to the solvency o f many la rg e in d u stria l and commercial concerns, and
even o f la rg e banking in s tit u t io n s which had made them heavy advances,
there s t i l l continued to be pressure by banks to liq u id a te lo a n s, and get
out o f debt to the Reserve System in sp ite o f the con siderable reductions
in Reserve Bank discount rates which had already been made in a l l D is t r i c t s .
This pressure was widespread but e s p e c ia lly n o tice a b le in New York and
with the type o f bank loan described as "fro z e n 11 *
Reserve Banks s te a d ily supplied new c r e d it t o
The purchases made by
the market and the surplus
was at once applied to reducing discounts a t the Reserve Banks, e s p e c ia lly
the la rg er Eastern ones.
As the large member banks got out o f d ebt, sur
plus funds were a v a ila b le f o r new loa n s, pressure upon borrowers ceased,
money ra tes eased a p p re cia b ly , nervousness s h o r tly disappeared, and a
general s p i r i t o f e n te rp rise and hopefulness succeeded the depression o f
.
1921
But i t must be re ca lle d that as a general r u le , the market w ill always
borrow the minimum o f c r e d it from the bank o f issue vshich is required to
finance a given volume o f business a.t the e x is t in g p r ic e le v e l*
o f t o t a l reserve c r e d it was, however,
No surplus
created by the purchases o f the
t Reserve Banks and no in f la t io n o f bank c r e d it re su lte d
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
_ 3 b ecau.se the discounts by members were reduced as the investment account
in cre a se d » Banks m longer had to pa.y as heavy a. ta x, by way o f d isco u n t,
to the System and the d e sire to get out o f debt was la x g e ly s a t is fie d *
As a. r e s u lt , whatever may have inspired the purchases by some Reserve Banks **
whether f o r earnings (a.s in most cases) or otherw ise - neverth eless the
r e s u lt wa.s fu rth er to moderate the course o f liq u id a t io n , reduce in te r e s t
rates and firm ly e s ta b lis h the foundation f o r economic re co v e ry .
Throughout the la t t e r pa.rt o f 1922 and e a t ly in 1 9 2 3 , the impetus o f
the r e v iv a l, spreading into a ll b u sin ess, ex cep tin g some departments o f
a.gricu ltu re, and a ffe c t in g in marked degree b u ild in g op era tion s, wages o f a l l
the b u ild in g trades, the automobile in d u stry , and stock sp e cu la tio n , th rea t
ened to develop in to an unhealty expansion, unwarranted p r ic e advances, and
in th e ir tra in bank loan i n f la t io n .
The loans on the New York Stock Exchange
reached the la rg e st t o t a l ever recorded.
A moderation o f th is movement was
in part suggested to the p u b lic by the advance in discoun t rates by three
Reserve Banks from Ufo to
i t was. undoubtedly fu rth e r assisted by the
sa le o f Reserve Bank investm ents, which had been continuous throughout the
period o f advancing p r ic e s , and which drove our members to increase th e ir
borrowings; but probably was more than anything e ls e due to the s e n s itiv e
state o f mind o f the p u b lic g e n e ra lly , and to the freq u en tly discussed d e sire
among business men to avoid the events o f 1919» 1920 and 1921.
But l i t t l e
was needed to re sto re conservatism .
The System has s t i l l a lso been confronted with a. problem o f major
importance, sin ce January, 1 9 22 , in the la^ge net imports o f g o ld , the t o t a l
fo r the period down to the la t e s t rep orts a v a ila b le bein g $^3 2 , 9 3 8 ,8 2 2 Had the ea.rning assets o f the Reserve Banks remained unchanged at the
January, 1922 fig u re $1,1+71 m illio n s th is a d d itio n t o our gold stock
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority E .6 .1 2 3 5 k
- Ij. -
in e v ita b ly woulo have caused a. grea.ter expansion o f bank loans and currency
than has taken pla.ce - with a l l the d isord ers in p r ic e s a r is in g therefrom*
The redu ction o f ea.rning a.ssets by the Reserve Banks, p a x tly through reduced
d iscou n ts, at tim es, and la.rgely by the sa le o f investm ents, has probably
aided to hold in check any such development.
Down to about August, 1923
th is reduction in earning a ssets had more than o f f s e t net gold imports and
net domestic production o f the mines, and i t is only since the usual seasonal
demands o f the la te summer and f a l l have caused an in crease in members1
borrow ings, togeth er with a d d itio n a l gold im ports, that th is net reduction
has not been ma.inta.ined*
Since the new Committee was appointed about s ix months a.go, tran saction s
in acceptances h~'?e become one o f i t s p r in c ip a l d u tie s, and the importance o f
th is a.ccount has increased with the gradual reduction in holdings o f Government
s e c u r it ie s .
Much the same coimrjents as apply to our Government investment
accoun t, apply to th is a.ccount - with the a d d itio n a l fea tu re that the rates
f o r purchases o f b i l l s have a. clo se and important bearing upon out* general
discount rate*
Transactions in b i l l s conducted unde^ the Committee^ super
v is io n a.re included in the S ecreta ry’ s report*
The Committee is now, or sh o rtly w ill be confronted with some d i f f i c u l t i e s
in i t s b i l l purchases, u n less there is easing o f money r a te s , which in f a c t
does u su a lly a ris e a ft e r the f i r s t o f th e yeax.
The market ra.te fo r prime
b i l l s , now about k-l/gfo - should normally be about 1$ o r more below the market
ra te fo r prime commercial paper*
The d iffe r e n c e in market ra te represents
roughly the value o f the bank o b lig a tio n , f o r v\foich the acceptance commission
is charged, plus b rok er’ s margins o f p r o f i t .
"While that d iffe r e n c e is main
tained in the money market a.t the present time and u su a lly w i l l be, the
d iffe re n ce between the rates at which we buy b i l l s and our discount ra.te is
le s s than l/ z fo *
I f money ra tes ease, the spread between Reserve Bank discount
~W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . 12354?
-
5
_
ra tes and Reserve Bank buying rates w ill in c re a .se as the ra tes fo r b i l l s are
reduced.
I f , however, money rates advance, we mast a.dvance our buying ra.tes
f o r b i l l s - and an increase o f only 3 /gj& would brin g the b i l l rate to the
le v e l o f ,our discount rate - a wholly anomalous and rather unfortuna.te
s itu a tio n .
I f we did not advance our buying rate with market r a te s , a l l b i l l s
would be dumped on the Reserve Banks, causing too large an accumulation, de
stroy in g the broad market f o r b i l l s which we have struggled to crea te and
p o s s ib ly d efea tin g other purposes o f p o lic y la t e r mentioned,
To in crease discount r a te s , and so re sto re the d i f f e r e n t i a l , is ju s t at
th is time probably not j u s t i f i e d , and ha.s the p o s s i b i l i t y o f ha.rm when business
is h e s ita tin g and seeking an in d ica tio n o f the a ttitu d e o f the Reserve System
toward the c r e d it s itu a tio n .
On the whole the Committee1 s view is that we can a fford to d ela y any con
sid era b le change in buying r a t e s , u n t il the New Y ear's developments d is c lo s e
whether we sh a ll experience some reduction im members1 borrowings and lower
ma.rket rates*
This w i l l , however, leave the gold problem unsolved.
I f the
System
hopes to o f f s e t fu rth er gold imports by reducing investments* i t w ill n eces
s it a t e s e llin g some or a l l o f the small balance o f $9^ m illio n o f Government
s e c u r itie s s t i l l held by a few o f the Reserve Banks, and then reducing i t s
holdings o f b i l l s , p rovided , o f course, fu rth e r large amounts o f gold a r r iv e .
The re s u lt to the eaxnings o f some o f the banks would be such as to n e ce s sita te
the tra n sfe r to them o f other earning a sse ts by those banks h old in g an excess
over ea.ming needs, as f o r example, New Y ork.
I t would a lso make i t d i f f i c u l t
to avoid an advance in the rate f o r b i l l purchases, in case money rates do not
ease.
For th is reason a lso a delay in any change o f p o lic y seems d e s ir a b le .
'W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . IBSfe
-
6
-
F in a lly , quite another view is presented when we con sider ju s t what our
p o lic y should be in ca.se the h e s ita tio n and u n certainty which seems to have
a risen in some se ctio n s , n ota b ly New England, should threaten a real setback
to b u sin ess.
While the country is now on the whole prosperous, labor q u ite
f u l l y employed, most m ills busy and with a. few exceptions no excess stocks
o f goods on hand - there axe a lso some in d ica tio n s o f a growth o f d is tr u s t
le s t business is fa.cing a slung?.
Steel orders are low er, produ ction o f
New England co tto n m ills has re ce n tly been reduced , automobile t ir e business
has slowed down, and we have ha.d a long and rather sha.:q3 liq u id a t io n in the
sto ck maxket re s u ltin g in a. red u ction o f Stock Exchange lo a n s , estimated
at $5 3 2 ,0 0 0 ,0 0 0 .
I t is the view o f the Committee that the Reserve System should not
h e s ita te to resume open market purchases, thereby again reducing bank borrow
ings and ea sin g money r a te s , rather than permit an unwarranted s ta te o f mind
alone to d istu rb the even course o f the coun tryTs p rodu ction and consumption*
There need T&e l i t t l e fe a r o f in fla t io n from such a p o lic y i f t o t a l earning
a ssets are not allowed to increa.se; nor are they l i k e l y to do so in the
abs ence o f sp e cu la tio n , in crea sin g p r ic e s and inc.rea.sing stocks o f g o o d s..
The attached schedules o f fig u re s are funished in d e t a il so as to
ob via te the need o f quoting them e x te n siv e ly in the body o f th is re p o rt.
Beyond the con clu sion s so fa r expressed, a study o f the schedules
annexed w i l l d is c lo s e in general the growing importance to the banking
open
system as a vtfiole, o f the p o l ic ie s adopted in/market tra n sa ctio n s.
The record o f the pa.st two years is convin cing evidence o f the need fo r a
ha.rmonious program.
The Committee has a g reed , at the request o f the
New York Bank, and su b ject t o the approval o f the Federal Reserve Board
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35fe
- 7and of the interested Federal Reserve Banks, to supervise a l l foreign
transactions, i f such course seems to thfc conference as lik ely to promote
a ’uniform system policy.
Respectfully submitted,
(Signed)
BENJ. STRONG
Chairman*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
:°TAL NET DEMAND AND TIME DEPOSITS
NEW YORK CITY CLEARING HOUSE BANKS
(in m illio n s )
Date
Amount
Date
Amount
1923
6
4,410
13
January
February
March
A pril
May
June
2
4,255
4,485
9
4,21?
20
4, 391
16
4,248
27
4,355
23
4, 231
3
4, 361
30
4,296
10
4, 316
7
4,228
17
4, 339
14
4,235
24
4,351
21
4,190
3
4,361
28
4,129
10
4,281
4,
4,138
17
4, 298
11
4, 065
24
4, 220
18
4, 007
31
4,266
25
4, 025
7
4, 218
1
4, 096
14
4, 214
8
4, 073
21
4, 264
15
4,133
28
4, 222
22
4,123
5
4,220
29
4,165
12
4,231
6
4,131
19
4, 224
13
4,119
26
4, 219
20
4,178
27
4,174
3
4,194
July
August
September
October
November
TP"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . I235fe
-.OTAL EARNING ASSETS
federal reserve bank of new york
(In m illio n s )
Date
Discounts
S e cu ritie s
Qv/ned
Acceptances
3 ought
T otal
1922
January
4
199
98
58
355
F ebruary
1
119
108
37
264
March
90
162
32
285
A pril
88
132
38
258
May
68
211
46
325
June
39
192
38
269
July
108
171
47
326
August
39
158
33
230
September 6
48
161
59
269
October
4
58
163
81
302
November
1
161
67
80
308
December
6
208
65
59
332
January
3
186
121
52
359
F ebruary
7
221
52
27
301
March
200
26
29
256
A pril
211
19
27
257
May
212
4
54
270
June
194
21
74
290
July
260
5
40
305
August
209
12
40
262
September 5
210
18
41
269
October
3
204
14
22
240
31
202
11
52
265
1923
October
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 . U35fe
i 'OTAL
EARNING ASSETS
FEDERAL RESERVE SYSTEM
(In m illio n s )
Date
Discounts
S e cu ritie s
Owned*
Acceptances
Bought
Tot al
1922
J anuary
4
1,113
231
127
1,471
F cbruary
1
838
305
90
1,233
March
1
708
413
96
1,216
A p ril
5
625
463
98
1,186
May
3
509
609
107
1,226
June
7
420
618
136
1,174
July
5
499
551
155
1,204
August
2
400
497
150
1,048
September 6
405
508
188
1,102
October
4
434
483
235
1,153
November
1
588
360
261
1,209
December
6
705
312
267
1,284
January
3
628
457
255
F ebruary
7
569
353
185
1,107
March
7
571
345
219
1,135
A pril
4
695
239
260
1,194
May
2
730
185
275
1,191
June
6
183
248
1,166
July
3
95
199
1,223
August
1
806
94
183
1,083
September 5
850
99
175
1,123
October
882
95
173
1,150
884
92
205
1,181
1923
October
3
31
735
1923 High)
930)
* Municipal warrants included
1923 High )
1,339)
"W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E.6.1235k
\
STREET LOANS
AND
BALANCES OF 0UT-0F-T0tyN
CORRESPONDENTS
(OOO Omitted)
Street Loans
fo r account o f
1923 Correspondents
.3
10
17
24
31
February
7
14
21
28
March
7
14
21
28
A pril
4
11
18
25
2
May
9
16
23
29
June
6
13
20
27
July
3
11
18
25
August
1
8
15
22
29
September 5
12
19
26
October
3
10
17
24
31
January
651, 623
736,791
79 5,426
792,018
750,285
804, 407
801* 228
801r 606
792,532
811^739
843, 564
813,445
810,137
804, 358
841,150
847, 288
837,487
831, 029
821, 490
814, 377
767, 612
756,070
756,165
742, 084
731, 014
681,219
615,146
643, 095
660,136
669,199
6 53, 733
684, 905
664, 984
661,937
639, 759
649, 841
654,246
'667,962
637,821
6 33,671
666,309
653,018
6 32, 380
611,156
* High fo r a l l times*
Street Lo
fo r own A
count
Total
Street
Loans
937, 851
815,280
818,045
763,883
798,917
774,389
807,873
818,457
864, 710
813,182
799,856
837,699
812,901
862, 623
776,453
767,795
805, 785
864, 538
809,624
787, 4-50
784,701
779,419
754, 569
750,120
745,606
758,955
768, 818
710,360
658, 830
636,635
619,371
557,887
560,36 3
534,020
555, 228
552, 438
563, 457
569, 766
557, 856
574,667
531, 951
535, 832
537, 343
552, 506
1, 589, 474
1, 552, 071
1,613,471
1, 555,901
1, 549, 202
1 , 578, 796
1,609,101
1,620,063
1,657,242
1,624,921
1,643,420
1,651,144
1,623,038
1 , 666, 981
1,617,603
1,615,083
1,643,272
*1 ,6 9 5 , 567
1,631,114
1,601,827
1, 552, 313
1,535,489
1,510,734
1,492,204
1,476,620
1, 440,174
1,383*964
1 , 353,455
1, 318,966
1, 305, 834
1, 273,104
1, 242,792
1, 225,347
1,195,957
1,194,987
1,202, 279
1, 217, 703
1,237,728
1,195,677
1,208, 338
1,198, 260
1,188,850
1,169,723
1,163, 662
Total Street Loans
fo r account o f
Correspondents
Balance
and balances
of
fo r account o f
Out-of-Town
Out-o f-Town
Correspondents Correspondent
714,454
760,567
735, 530
673,109
651, 859
667,879
662, 790
659,827
712,477
708,966
707,29 5
682,075
658,173
715, 291
690,167
673,385
640, 486
647,687
611,557
616,932
597,726
583,541
600,156
59 5, 934
587,346
572,858
636,682
617, 004
606,309
573,394
587, 914
586,174
583,535
563,893
559, 831
576, 337
582,419
594,151
57 5,680
621,406
595,759
621,507
581,314
594,783
1, 366,077
1, 497, 358
1, 530,9 56
1,465,127
1,402,144
1, 472,286
1, 464, Cl 8
1 , 461,433
1, 505,009
1,520,705
1, 550,859
1, 495, 520
1, 468, 310
1, 519, 649
1, 531, 317
1,520,673
1, 477,973
1, 478, 716
1,433,047
1, 431,309
1, 365,338
1,339, 611
1 , 356, 321
1 , 338, 018
1, 318, 360
1, 254,077
1,251,828
1,260,099
1,266,445
1,242, 593
1, 241,647
1,271,079
1,248,519
1, 225, 830
1,199,590
1, 226,178
1, 236, 66 5
1,262,113
1, 213, 501
1,255,077
1 , 262,068
1, 274, 525
1, 213, 694
1,205,9 39
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority
E.6. iilSlo
Washington, D. C., June 26, 1923•
A meeting of the Advisory Committee of the Federal Reserve Bank Governors
was held at the o ffic e of the Federal Reserve Board at 10 o*clock a, m. this day.
j HEC'D I-HFILES SECTIOH
Present:
\fhM
I '
O O 4r>j,0t •!(rt'/
'<3
Mr. Case, Chairman,
u } 3 3 3 > - V"
j
__________ J
Messrs. Harding, Norris, Fancher, Seay, and McDougal,' Giwomnrfl,
Messrs. W ills and Martin, Federal Reserve Agents,
n.
The following members of the Federal Reserve Board were <
present at the afternoon session:
i
/
Governor Crissinger, Honorable H. M. Dawes, Comptroller
of the Currency, and the Honorables Cunningham, M iller,
(
Hamlin and P la tt.
Honorable S. P. G ilbert, J r ., Under-Secretary of the Treasury
attended the meeting part of the time.
Mr. M. B. Angell also attended the meeting part of the time.
|
I
y
The report of the open market investment committee was received and
accepted.
Governor McDougal called attention to the fact that a l l of the Federal
reserve banks are practically out of Treasury certificates of indebtedness.
The chairman submitted a suggested le tte r to be sent to the governors of
a l l Federal reserve banks concerning the distribution of b i l l s purchased by Federal
reserve banks.
The le tte r is as follows:
The Open Market Investment Committee for the Federal
Reserve System, appointed by the la s t Governors* Conference,
has given careful consideration to the matter of effecting an
equitable distribution among a l l Federal reserve banks o f b i l l s
purchased in the open market by the Federal Reserve System.
The Committee has adopted the suggestion submitted
by Mr. O’Hara of the New York bank that such distribution be
made upon the basis of the reserve percentages of the several
banks.
Under this plan i t is proposed \ry means of a simple
method to distribute each week the aggregate of b i l l s purchased
by the Federal Reserve System among a l l reserve banks in such
manner that the amount retained by and/or allotted to each bank
w ill affect it s reserve position to exactly the same extent as
those of a l l other reserve banks.
^ jf
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U35fe
- 2/
As several of the banks may in the ordinary course
be purchasing in their lo c a l markets an amount of b i l l s greater
than their proportion of the aggregate purehasea of a l l banks,
i t is obvious that in order to make this plan effective these
several banks w ill give o ff their excess to other banka "hose
local purchases of b i lls are less than their proportion of the
aggregate purchases of the System,
I t therefore seems necessary and desirable that the
distribution be arranged through one point and i t would appear
lo gical that i t should be handled by Mr. Matteson, the secretary
of the committee in New York.
Once a week each bank* s proportion of the aggregate
purchases of the {System would be figured on the basis o f it s
reserve percentage at the close of the preceding week and
y\
distribution would be effected accordingly. Such banks as may /
have purchased more than their proportion, would be requested to
make sales from their portfolios to such other bank or banks as
the secretary might indicate, subject, o f course, in this respect
to the convenience or any special wishes of the particular banks
between which such transactions would pass.
I t is recognized that at the present time most of the
reserve banks are in a comfortable reserve position. I f and
when -the time arrives that the reserve percentage of any of the
banks are substantially reduced and they should consider i t de
sirable that they cease participation for the time being, the
same plan can be readily continued with the remaining banks.
The Committee proposes to put this procedure into effect
commencing with the business of the week ending July 11 next.
Whereupon, after consideration and on motion of Governor Fancher, seconded by
Governor McDougal, i t was
VOTED to adopt for the present the plan as set out in the above
le tte r.
The open market rate for purchases of b i l l s was then discussed.
Each
one present made a report of the conditions in his d istric t and i t was the unanimous
opinion that there should be no change in present rates for purchases of b i l l s in
the open market nor any change in discount rates.
At this point, 1 p. m., the committee adjourned for luncheon.
The committee reconvened at 2:30 o’ clock p. m.
*
......
— ------------------------- -------------------------- m "«'«■ >
'ifp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 . IBSfe
- 3 The chairman in d ica ted to the Federal Reserve Board the view o f the com
m ittee that b e fo re making the recommendation o f the committee e f f e c t iv e in the par
clearance m atter, the proposed amendment o f R egulation J should re ce iv e the approval
o f the Honorable John W. Davis, counsel fo r the System in the par c o lle c t io n l i t i g a
t io n , and that there should be sent out by the Board a uniform c ir c u la r le t t e r in
the form suggested by the committee in a separate memorandum, lik e w ise a fte r approval
by Mr. Davis,
I t was unanimously aggreed that the c ir c u la r should be e f f e c t iv e on
August 15, 1923.
At th is p oin t Mr, M. B. A ngell, a sso cia te d with Mr. John W. Davis, entered
the conference and the rep ort o f the committee on par clearance was submitted to him.
He expressed the view that i t was con stru ctiv e and should be h e lp fu l and sta ted that
he could see no o b je ctio n s to i t from a le g a l standpoint but that he would submit i t
to Mr. Davis tomorrow and advise the Board by telephone i f Mr. Davis had any other
view s.
Governor C rissin ger c a lle d fo r a re p o rt from those present as to e x is tin g
c r e d it con d ition s in th e ir r e s p e ctiv e d i s t r ic t s and as to whether or not i t was de
s ir a b le that any change o f ra te s be made in the open market or otherw ise.
Each one
o f the governors responded and sta ted that in h i s judgment there should be no change
in eith e r open market o r d iscoun t ra te s at the present time.
At t h is p oin t the members o f the Board other than Governor C rissin ger and
Mr. M ille r withdrew.
In response to a request f o r an expression o f the views o f the Board as
to the d e s ir a b ilit y o f continuing the p o licy o f esta b lish in g r e la tio n s with fo r e ig n
cen tra l banks, Governor C rissin g er stated that i t was the view o f the Board that
these r e la tio n s were d e sira b le and in the p u b lic in t e r e s t .
Ten o f the Federal re
serve banks having Expressed the view that these arrangements were d e s ira b le , the
chairman was requested to have the Federal Reserve Bank o f New York send each month
to a l l p a r tic ip a tin g banks a complete schedule o f investments held f o r the account
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority E .6 . IBSfe
- 4o f fo re ig n correspondents.
General d iscu ssion fo llo w e d in regard to the d e s ir a b ilit y o f the Federal
reserve banks paying out more g old c e r t i f i c a t e s .
Mr. Case rep orted that New York
was paying out an amount s u f f ic ie n t to approximate the net gold im ports.
Governors
McDougal, Faneher and N orris sta ted that th e ir r e s p e ctiv e banks were paying out but
moderate amounts.
Governors Harding and Seay and Mr. Martin sta ted that they f e l t
the p r in c ip le was wrong.
No a ctio n was had thereon. .
Mr. S. P. G ilb e r t, J r . , U nder-secretary o f the Treasury, then appeared
b e fo re the committee and d iscussed the question o f reimbursement o f Federal reserve
banks f o r f i s c a l agency expenses, sta tin g that the Treasury was in p o s itio n to deal
lib e r a lly with the Federal reserve banks on s a le s operations but that Congress had
made no p ro v isio n s f o r assuming a l l f i s c a l agency expenses.
Mr* G ilb e rt a lso
sta ted that there were to be some changes in the Government Savings organization
and that he would presently communicate with the sev era l reserve banks asking th e ir
cooperation in e ffe c t in g wider d is tr ib u tio n o f savings c e r t i f i c a t e s .
The meeting adjourned a t 6:15 o’ clock p . m.
J . H. Case,
Chairman.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 .
■r.-i ,
C 0 r X
WAShxi'iGTL , D. C
. SECTIO
M
A meeting o f the Advisory Committee o f the Federal
J'JL 23 1343r
was held a t the o f f i c e o f the F ederal Reserve Board at 11 o ’ clo c k a , m. th is day.
Present:
t
■
/ 1
Messrs. Harding, N o rris, Faneher, Seay
and McDougal, Governors, and Mr. Case, Deputy Governor,
M essrs. W ills and M artin, F ederal Reserve Agents.
/ **
The fo llo w in g members o f the Federal Reserve Board were
present a t the morning se ss io n :
Governor C rissin g e r, Honorable H. M. Dawes, Com ptroller
o f the Currency, and the Honorables Cunningham, M ille r ,
Hamlin and James.
Mr. Case was appointed chairman and Mr, Martin acted as se cre ta ry .
The members o f the Federal Reserve Board join ed the meeting at th is p oin t
and the situ a tio n presented by the recen t d e cis io n s o f the United States Supreme
Court in the North Carolina and A tlanta par c o lle c t io n ca se s, was discussed at
len g th .
Governor C rissin g er on b eh a lf o f the F ederal Reserve Board reauested the
committee to form ulate recommendations suggesting appropriate a ctio n to be taken in
view o f these d e cisio n s and to arrange f o r the sending out o f a uniform c ir c u la r
l e t t e r by a l l the twelve Federal reserve banks.
Honorables C rissin g e r, Dawes, M ille r , Hamlin, Cunningham and James l e f t
the meeting a t th is poin t and sh o r tly th e re a fte r a recess was taken f o r lunch.
Upon reconvening the committee c a r e fu lly considered the par c o lle c t io n
m atter, and on motion duly made and seconded, the fo llo w in g re p o rt to the Federal
Reserve Board was adopted:
The p ro v isio n s in the F ed eral Reserve Act which
a uthorize the establishm ent o f a F ederal reserve c o lle c t io n
system were designed w holly f o r the b e n e fit o f the banking and
commercial in te r e s ts o f the coun try. The System i s now in
op eration between banks which in number are about 92 per cen t,
o f a l l banking in s tit u t io n s and which have more than 98 per ce n t,
o f the t o t a l banking resources o f the country. I t i s the
opinion o f the Committee that the System has become a necessaiy
instru m en tality in e ffe c t in g domestic exchanges o f the country;
that i t s op era tion , including f i n a l payments through the Gold
Settlem ent Fund, has been o f inestim able b e n e fit and has resu lted
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . U
X
(o■
in enormous saving to those a c t iv e ly engaged in carrying on the
commerce o f the country; and that there are no other f a c i l i t i e s
f o r operating a c o lle c t io n system which could approximate i t in
economy o f o p era tion . I t has elim inated a very la rge p ortion o f
the time form erly consumed in the c o lle c t io n o f checks and has
cut down the co s t o f making the cou n try's exchanges to the minimum.
The Committee th e re fo re b e lie v e s that the System even though not
imposed upon the F ederal reserve banks by the A ct, as in terp reted
by the Supreme Court of the United States in i t s recen t d e c is io n ,
has f u l l y ju s t i f i e d i t s operation and is o f such value to the bank
ing and commercial in te re s ts o f the country that i t s continuance i s
o f v i t a l im portance. Certain changes, however, in the basis o f
the par clearance system appear to the Committee to be advisable
in view o f the recen t d e cisio n o f the Supreme Court.
The Committee b e lie v e s that p a r tic ip a tio n in the par
clearance system should be based upon the p r in c ip le o f r e c ip r o c it y
and th at h erea fter the F ederal re se rv e banks should not re ce iv e
f o r c o lle c t i o n checks on any non-member bank which w i l l not agree
to rem it in a ccep ta b le funds without deduction. The recen t opinion
o f the Supreme Court makes i t ce rta in that the F ederal reserve banks
are not perm itted by law to pay exchange. I t must be c le a r that
the more in c lu s iv e a c o lle c t io n system i s , the more e f f i c i e n t i t w i l l
be, and the grea ter w i l l be the s e r v ic e i t can render a lik e to the
business and banking community. T h erefore, sin ce i t is the o b je c t
o f the Federal reserve banks to maintain an e f f i c i e n t system o f par
c o l l e c t i o n , which must at the same time be a voluntary system as fa r
as non-member banks are concerned, the concession s involved and the
r e s u ltin g b e n e fits should be made and received by a l l p a r tic ip a tin g
banks. I t is c le a r that those non-member banks which are un w illing
to rem it without deduction f o r checks drawn on themselves have no
r ig h t to share in the .advantages o f the par c o lle c t io n system.
I t is th e re fo re recommended by the Committee (1) that the
F ederal Reserve Board p ro h ib it the c o lle c t io n o f checks drawn on
non-member banks which w i l l not v o lu n ta r ily rem it in acceptable
funds without dedu ction , and (2) that the F ederal Reserve Board, in
the e x e rcis e o f i t s le g a l a u th o rity , f i x a charge that Federal re
serve banks s h a ll make f o r th e ir se rv ic e s in c o lle c t in g checks which
bear the endorsement o f or o rig in a te with those non-member banks
which d e clin e to rem it to the Federal reserve banks w ithout deduc
t io n , and i t i s suggested that such charge be made equal to that
which said non-member banks make when paying or rem itting f o r checks
upon them selves.
In order t o give e f f e c t to the foreg oin g recommendation,
the Committee submits f o r the con sid eration o f the Board the f o l
lowing amendment to Regulation J:
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
A fte r Condition No, 5 o f Regularion J
in s e rt two new con d ition s reading as f o llo w s :
(6)
No Federal re se rv e bank
s h a ll r e ce iv e on d e p o sit or f o r c o l
le c t io n any checK drawn on a non-member
bank which refu ses t o rem it a t par in
acceptable funds.
(7)
Whenever a F ederal reserve bank
re ce iv e s on d ep osit or f o r c o lle c t io n a
chec.lc drawn by, endorsed by or emanating
from any non-member bank which refu ses to
remit a t par, i t s h a ll charge f o r the se r
v ic e o f c o lle c t in g such check a c o lle c t io n
charge equal to the exchange charged by such
non-member bank f o r rem itting f o r checks
drawn on i t .
I t was the consensus o f opinion that b e fo re making the recommendations o f the com
m ittee e f f e c t i v e , the proposed amendment o f R egulation J should r e ce iv e the approval
o f Honorable John W. D avis, counsel fo r the System in the par c o lle c t io n l i t i g a t i o n ,
and that the Board should send out a uniform c ir c u la r l e t t e r in the form suggested
by the committee in a separate memorandum, lik ew ise a ft e r approval by Mr. D avis.
The committee then took under con sid era tion Board l e t t e r X-3750, dated
June 20, 1923, on the su b je ct o f the permission granted to member banks to apply fo r
discoun ts o f e l i g i b l e paper acquired from non-member banks.
On motion duly made
and seconded, i t was
VOTED to recommend to the Federal Reserve Board that the permission here
to fo r e given t o member banks to a c t as agents or media in red iscou n tin g f o r non
member banks, be immediately rescinded in t o t o .
A l e t t e r from Mr* Charles deB. C laibourne, dated June 20, 1923, addressed
to Governor C rissin g e r, requesting a hearing on the par c o lle c t i o n m atter, was sub
m itted .
A fte r con sid eration i t was decided to recommend to the Federal Reserve
Board that in the opinion o f th is committee i t i s inadvisable to comply with
Mr. C la ib o u m e 's req u est.
The meeting adjourned at 6 o ’ clo ck p. m. to meet a t 10 o ’ clo ck a . m. the
next day.
J . H. Case,
Chairman.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E . 6 . 1235k
MINUSES OF THE MEETING OF THE OPM MARKET INVESTMENT COMMITTEE FDR THE FEDERAL
RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE BOARD, WASHINGTON* D« C *,
— __________ -.............................
MAY 23. 1923______________________________________
PRESENT;
w
Messrs* Harding, Case, Faneher and McDougal
Mr* W*. B . Matteson, Secretary of the Committee
There were also present by invitation:
Vice Governor Platt of the Federal Reserve Board
Mr* J- F* Herson o f the Federal Reserve Board
Mr. B * A• McKinney, Governor o f the Federal Reserve Bank of Dallas
The Chairman stated that an informal discussion had taken place at
the Federal Reserve Bank of New York on May 22, 1923, ( a l l the members of the
Committee except Governor Harding being present) at which time the Secretary* s
report of the activ ities of the Committee, since its organization on April 1#
1923, were reviewed#
The Chairman also stated that at the informal meeting
there had been some talk of the current credit situation * the present invest
ment holdings of the Federal reserve banks and of open market policy*
An extended discussion on these subjects followed *
In the course
©f the discussion i t was brought out that/the understanding arrived at at th#
la st meeting of the Committee on April 13, 1923, with respect to confining b i l l
purchases at the minimum rate (4$) to short b i l l s only, had not been fu lly
carried out some longer b i l l s having since been purchased by the New York bank
at the minimum mte •
The Chairman stated that at present New York was not mak
ing purchases at 4^ fo r a longer maturity than 30 days and that i t was the
intention of the o ffic e rs to gradually Cut this down until only 15 day b i l l s
are bought at the minimum rate.
As a result o f the discussion, and the general feeling that an ease
in money had recently occurred due partly to a lessened demand for security
leans and partly to an increase in the imports of gold, i t was fe lt that the
present was an opportune time to dispose o f some of the open market investments
o f the System*
The following resolution was thereupon offered by Governor
Faneher, seconded by Governor McDougal and unanimously adopted:
.ihxtr.x, Sj3!/> 3
' U for FRASER
Digitized
3 3 3 • - A -X
J
"
------------------------- ------------------------- m- ■'M 1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
^
- HP-
declassified
Authority
-
2
E.6.
-
MV\THEREAS, a review o f current c r e d it con d ition s c le a r ly
in d ica tes that we are passing through a period o f temporary ease
in the money market;
WHEREAS, the representative o f the New York bank reports
that there has recen tly been a substantial reduction in the stock
exchange loan account;
WHEREAS , i t develops that there is now and. has recen tly
been a considerable amount of foreig n gold imported into th is
country;
WHEREAS, the b e l i e f e x is ts that there may be substantial
demands fo r add ition al c r e d it th is autumn accompanied by p ossib le
gold exports;
WHEREAS, the System as a whole now has a surplus o f such
Open Market Investments;
THEREFORE BE IT RESOLVED, that the present o f f e r s a favor
able opportunity fo r the Federal reserve banks to dispose o f an
additional amount o f th e ir Government secu rity holdings and the
Chairman i s hereby authorized and d irected to undertake to arrange
with the twelve Federal reserve banks fo r the sale o f $5 0 ,000,000
of. such s e c u r itie s on a pro rata b a sis at as early a date as is
p r a c t ic a b le .”
—7
\
A fu rther d iscussion follow ed with regard to economic con d ition s gen
e r a lly and Mr- P la tt suggested that the present was in his opinion an opportune
time fo r the Federal reserve banks to pay out gold notes in cases where such
a ction is p r a c tic a b le .
The Chairman ca lle d a tten tion to the minutes o f the f i r s t meeting o f the
Open Market Investment Committee held in Philadelphia la s t month which provide
that the Committee should make an equitable d is trib u tio n among a l l twelve banks
o f b i l l s purchased by the Federal Reserve System and in th is connection presented
a memorandum from Mr* O’ Hara recommending that p a r tic ip a tio n should be made upon
the b a sis o f the ra tio s o f the reserve percentages o f the d iffe r e n t banks.
was understood without formal a ction that th is course would be follow ed .
The meeting thereupon adjoi
/ _
SECRETARY
It
----- p 4>gF.,' -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E .6 .U35fc
r i l 13, 1923*
3 3 3 , “ “^
^
*»'v
The fir s t meeting o f the Open Market Investment Committee for the
^^ ^jp ^
Federal Reserve System was held at the office of the Federal Reserve Bank of
""""’
......................in !■■■.. i
...... ....
Philadelphia on Friday, April 13, 1923, at 10:00 o'clock A. M.
There were present:
Mr.
Mr*
Mr.
Mr.
Mr.
W. P. G. Harding, Governor of
J. H. Case* Deputy
w
w
George W. Norrisr,
"
"
S* R. Fancher,
n
J. B. McDougal,
"
w
the
"
"
M
”
Federal Reserve Bank of Boston,
"
M
”
" New York,
"
"
"
” Philadelphia,
M
"
n
" Cleveland,
"
”
”
** Chicago.
Mr. Edmund P latt, Acting Governor of the Federal Reserve Board, was
also in attendance and called the meeting to order.
Mr. Case was chosen Chairman of the meeting.
Mr. W. A. Dyer o f the Federal Reserve Bank o f Philadelphia acted as
Secretary.
Consideration wa& then given to the matter of a permanent chairman of
the Committee and it was Voiod that the Governor of the New York Federal Reserve
Bank, or, in his absence the Acting Governor, should serve in that capacity.
It was voted that Mr. W. B. Matteson of the New York bank should serve
as Secretary of the Committee, i t being understood that in that capacity he vd ll
continue to keep a l l Federal reserve banks fu lly advised of a ll the open market
operations o f the entire System in the same manner as has been done by him as
Secretary of the Committee of Governors on Centralized Execution of Purchases
and Sales o f Government Securities by Federal reserve banks.
The Chairman, referring to the Federal Reserve Board*s le tte r (X3689)
dated April 7, 1923, on the subject "Policy Governing Open Market Purchases by
Federal Reserve Banks and the A&ninistration Thereof,” stated that this program
had also been approved at the recent joint conference o f the Governors of the
Federal reserve banks with the Federal Reserve Board and pointed out that,
under this program, i t ms "the duty o f this Committee to devise and recommend
plans for the purchase, sale and distribution of the open market purchases of
,<W w
“W
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 .
-
2
-
the Federal reserve banks in accordance w ith the above p rin cip le s and such regu
la t io n s as may from time to time be la id down by th e Federal Reserve Board."
After ca refu l con sideration and a f u l l d iscussion of a l l the d iffe re n t
phases of open market operations by Federal reserve banks, the fo llo w in g program
was unanimously agreed upon.
I t was d ire cte d that cop ies of the program (SEE
iCXHIBIT "A” ATTACHED) be sent to the Governor of th e Federal Reserve Board and
t o a l l Federal reserve banks.
Follow ing a d iscu ssion of the ra te s now obtaining in the open market,
i t was voted to suggest to a l l Federal reserve banks that _a minimum buying rate
of 4# on b i l l s should be e sta b lish e d at t h is tim e.
I t was further suggested that
__________ _ ___ _____ —
...........—-------*
in order to bring about a gradual d is tr ib u tio n of F ederal reserve bank holdings of
/
/
/
/
b i l l s in the open market, without disturbance t o the market, i t would be h elp fu l
i f a ll Federal reserve banks, in making fu tu re purchases, arrange that the volume
of b i l l s purchased be somewhat smaller than current m a tu ritie s.
Careful con sideration was given to the Treasury Department's d esire to |
liq u id a te gradually the Federal reserve bank holdings of Government s e c u r itie s arid
in t h is regard i t was unanimously agreed that th e members of the Committee would
recommend to the D irectors of th e ir own bahks that i f and when the Treasury wishes
to take up the 36 m illio n , or thereabouts, of September c e r t i f ic a t e s of indebted- ;
ness now held by the Federal frteserve banks that they be o ffe r e d to the Treasury
at par and in t e r e s t .
I t was understood that th is suggestion would a lso be con
veyed to the other Governors,
A discussion follow ed as t o what co n stitu te s the ’’goin g” ra te fo r money
and i t was unanimously agreed by the Committee that the average ra te charged by
member banks in fin a n c ia l centers fo r customers* loans together w ith th e current
r a te at which commercial paper i s s e llin g in th e open market is the actual "going
ra te fo r money, and that at the present time such ra te i s 5 l/4 /° to 5 l/2 /o .
In t h is connection i t was observed that ra tes in the rural d i s t r ic t s do not
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 . 12354,
- 3 -
flu c tu a te with changes occurring in the open market, or with changes in Federal
#
reserve bank discount ra te s, but that these ra te s are q u ite uniform at 6% or
high er .
A memorandum prepared by Mr. Kenzel (EXHIBIT "B" ATTACHED) explaining
the customs of ce n tra l banks of issu e was read and d ire cte d to be sent to a l l
Federal reserve banks.
There being no further business th e meeting adjourned at 4:45 p. m.
W. A. DYER
Secretary of the M eeting.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
m v J J 'V
declassified
Authority E .G . U35(s
( EXHIBIT "A” )
POLICY GOVERNING OPEN MARKET PURCHASES BY FEDERAL RESERVE BANKS
AND THE ADMINISTRATION THEREOF AS APPROVED BY THE OPEN MARKET
______________ INVESTMENT COMMITTEE. APRIL 13, 1923_________________
At the recent conference between the Federal Reserve Board and the
Governors of the Federal reserve banks, the follow in g p rin cip le s with resp ect to
open market investment operation s of the Federal reserv e banks were agreed upon:
"That the tim e, manner, character and volume of open
market investments purchased by Federal reserve banks be
governed with primary regard to the accommodation of commerce
and busin ess, and to the e f f e c t of such purchases or sa le s on
th e general cred it s itu a tio n ,
"That in making the s e le c tio n of open market pur
chases, ca refu l regard be always given t o th e bearing of pur
chases of U n ited 'S tates Government s e c u r it ie s , e s p e c ia lly the
short-d ated iss u e s, upon the market fo r such s e c u r it ie s , and
that open market purchases be prim arily commercial investments,
except that Treasury c e r t if ic a t e s be dealt in , as at present,
under so ca lle d "Repurchase" agreement,
"In order to provide f or the proper admin i s t r a t i on
of the p o lic y defined above, the Board ru le s that on and a fte r
A p ril 1, 1923, the present Committee of Governors on C entralized
Execution of Purchases and Sales of Government S e cu ritie s be
discontin ued, and be superseded by a new committee known as the
Open Market Investment Committee fo r the Federal Reserve System,
sa id committee to co n sist of f i v e rep resen ta tiv es from the
F ederal reserve banks and to be under th e general supervision
of the Federal Reserve Board; and that i t be the duty of t h is
committee t o devise and recommend plans fo r the purchase, sale
and d istrib u tio n of the open market purchases of the F ederal
reserve banks in accordance w ith the above p rin cip le s and such
re g u la tio n s as may from time to time be la i d down by the
Federal Reserve Board."
The foregoin g memorandum with resp ect to Open Market Operations of the
Federal reserve banks was re fe rre d by the Conference t o the Open Market Investment
Committee and the Committee submits the follow in g as a b a sis fo r the carrying out
of the p o lic ie s agreed upon.
A-Af* The Committee b e lie v e s i t important that the twelve F ederal reserve
banks should be in agreement on the su b ject of a System p o lic y and in t h is con
n ection c a l l s atten tion to the minute adopted by the Governors’ Conference in
October 1922, t o w it:
—
m
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . U lS t
- 2 "That for the present the credit policy of the Federal
Reserve System should aim to furnish credit and currency to
member banks for their seasonal and emergency requirements, but
such policy, as well as open market operations, should be administered in each district in such manner as to assist the system in d is
charging, as far as it may be able, ite national responsibility
to prevent credit expansion from developing into credit in fla tio n .”
Hie view therein expressed ie sound and, supplemented by the policy
outlined at the recent Conference^preeente a safe and sane program
for Federal
reserve banks to follow.
A policy as drastic as that of the Bank of England, for instance, which
always aims to make the market pay a penalty rate upon recourse to the bank, ie
not always suited to the American b i l l market, and i f applied might have an ad
verse effect upon the establishment of dollar credit and dollar b i lls in overseas
trade and world markets, and it seems reasonably certain that the sterling credit
would quickly drive the dollar credit from those markets.
It ie probable therefore
that we must continue for some time a somewhat paternalistic attitude toward the
market for dollar b i lls in this country.
Therefore, i t may be assumed with respect to rate policy as applied in
open market purchases o f bankers* b i lls and prime trade paper, bearing suitable
banking endorsement, that the rates made effective from time to time should be
established with regard to the general credit situation, the state of the open
I /> market, and the rates therein obtaining, but with a primary regard' for the
I U accommodation of commerce and business*
The secondary regard must be for the
n I effect of reserve banke* open market rate on the development of dollar acceptance
[ |
credit in domestic and foreign markets and dollar exchange in world markets.
The Open Market Investment Committee for the Federal Reserve System ie
charged with the duty of devising and recommending plans 11for the purchase, sale
and distribution o f the open market purchases of the Federal reserve banks" in
accordance with the principles outlined therein.
The reference to sales is in
tended to relate to sales which may be made from time to time by and between
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E .6 . [RSio
- 3 -
Federal reserve banks, of bankers' and trade b illr? , but that with re sp e ct to
Government s e c u r itie s i t is intended t o r e fe r also to re sa le of them to the
market or elsewhere upon occa sion .
The referen ce to purchase is understood to r e la t e to the •cnllactive
or in d ivid u al purchase by reserve banks of both b i l l s and s e c u r itie s and th«
d is trib u tio n re fe rr e d to is understood as intended lik e w ise t o apply t o both
b i l l s and s e c u r it ie s ,
In re sp e ct to the System’ s a ttitu d e toward open market operations in
\
|| b i l l s , i t has been recogn ized repeatedly at conferences of Governors that the
\ | s t a b iliz a t io n and support of the b i l l market at ra te s clo s e ly r e la te d to the
i | ra te s esta b lish ed by the market i t s e l f i s a r e s p o n s ib ilit y of the System and
;5
'
i |
1 \ not of in d iv id u a l Federal reserve banks, and i t i s to be hoped that the operatio n s ca rried on under the auspices of the new Committee w ill provide fo r a
more uniform p ra ctice in that regard,
When occasion req u ires that support be rendered t o the b i l l market,
i t may be im practicable fo r every bank under a l l circumstances to be a con tin
uous p a r tic ip a to r in the purchase of b i l l s , and th e re fo re a way must be devised
th at w ill permit some of the banks to p a r tic ip a te re g u la rly in purchases when
th e ir loanable funds ire not seasonably employed in serving the requirements
of th eir member banks, but w ill r e lie v e them from such p a r tic ip a tio n when th eir
lo c a l demands are heavy; at such times th e ir proportion ate p a r tic ip a tio n should
be assumed,by the other banks and appropriate adjustments made.
I t is sug
gested that to accomplish th is r a t io s of p a r tic ip a tio n in general purchases in
the p rin cip a l markets be worked out so as to make an eq u ita b le d is trib u tio n
among a l l tw elve banks at times when the reserv es of a l l perm it, and that ap
propria te r a t io s be worked out- that would be ap p lica b le t o the purchases at
such times as there are a smaller number o f p a r tic ip a n t s .
The base fo r these
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E.6.
- 4 -
r a t io s is a matter fo r con sideration and mutual agreement.
Inasmuch as the
development of lo c a l markets by the re g io n a l bank is incumbent upon each bank,
i t s lo c a l purchases should not be discontinued byt should operate to reduce i t s
allotm ent from the general purchases made elsewhere, and i t is suggested that
t h is might be accomplished by each bank reg u la rly advising the Committee of i t s
lo c a l purchases, as has re ce n tly been the p ra ctice in tra n sa ction s in Govern
ment s e c u r it ie s .
With resp ect to the shorter Government issues which fr e e ly c ir c u la te
in the discount market, the p o sitio n may be somewhat d iffe r e n t .
They are in
essence short-term investment s e c u r itie s which, in the case of tax c e r t i f ic a t e s
and n otes, are equally s e lf - liq u id a t i n g .
Their market value perhaps flu ctu a te s
more in accordance with the p rice of money and when th e ir y ie ld , plus tax ex
emption , is considered, it is found that th e ir r e la t iv e y ie ld more clo s e ly
approximates the p rice of time money than c a ll money.
Therefore the ra te s at
which such issu es should be bought for investment by Federal reserve banks
should r e f l e c t ( l ) the general cre d it s itu a tio n , (2 ) the present and p rosp ective
p rice fo r money and (3 ) th e ir current status in the market.
The ra te at which
temporary advances should be made to dealers on such s e c u r it ie s should be more
c lo s e ly r e la te d to th eir y ie ld ahd money ra te s than would be the case in ad
vances on b i l l s .
The e f f e c t of c o lle c t i v e purchases and sa les of s e c u r it ie s by the
reserve banks i s of great importance in i t s bearing on the general cred it s itu a
t io n ,
It should be remembered that the in je c t io n of reserve bank funds into
the money market acts as a stimulant to i t and the r e s a le of such s e c u r it ie s
has the reverse e f f e c t ,
Advances to dealers under sa les co n tra cts, of course, are not a llo ca te d
but the volume of such advances held at each reg ion a l bank may w ell be taken into
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . 12354,
- 5 -
con sid eration in
e ffe c t in g the eq u ita b le d is trib u tio n of a l l b i l l s purchased and
rep orted in the same way as lo c a l purchases..
Adjustments in the allotm ent of
general purchases can then be made ju st as i f they had been l o c a l l y purchased
ou trig h t.
I t is b e lie v e d that when r a t io s are once esta b lish ed the a d ju stA* /
ments w il l be neither d if f iculjt nor cumbersome.
C -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .6 .
(EXHIBIT ” Bn )
MEMORANDUM ON OPEN MARKET PURCHASES
The jo in t a ctio n taken by the Board and Governors recognizes and
conforms to the w ell understood p r in c ip le s o f central banking in England and
Prance (a s w ell as Germany
p r io r to the war) and lays p a r tic u la r emphasis
on ex ercisin g a primary regard fo r the accommodation o f commerce and business
as indicated in the Federal Reserve Act*
The ends desired o f cen tra l bank operation s are p r in c ip a lly to re
lie v e untimely s tr in g e n c ie s ,to prevent undue expansion and, within lim it s , to
p ro te ct the gold reserves*
AH o f these functions are d e lic a t e ly in t e r
related and the desired ends are achieved c h ie fly through the a p p lica tio n o f
rates*
Every European Central bank has two ra te s , one the published discount
r a te , which is the minimum rate a p p lica b le to the rediscount o f short-tim e
standardized commercial paper bearing at le a s t three names, one or more o f
which are banking names*
The corresponding paper in th is country is known as
bankers’ and trade acceptances*
Their other rate which, in most countries
is not published but is quite w ell understood, is the loan rate a p p lica b le to
advances against c o lla t e r a l s e c u r ity , including Government and m iscellaneous
s e c u r itie s *
The minimum loan rate is o rd in a rily 1% higher than the published
discount rate and the private bank rate fo r advances to customers corresponds
o r d in a rily to the loan rate o f the central bank, advancing and fa llin p with that
rate which changes autom atically with the discount ra te .
In open market o p e ra tio n s, European Central banks o rd in a rily r e s t r ic t
th eir rediscounts to shorter periods than the r e la tiv e maximum time fo r which
they make loans*
Thus, in the Bank o f England they w ill loan up to 95 days
but do not o rd in a rily rediscount b i l l s having a maturity in excess o f 63 days,
but, o f cou rse, they reserve e n tire lib e r t y o f a c t io n .
They do not now lend
c a ll money although formerly they did make c a ll loans on m iscellaneous s e c u r it ie s ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 6 . U35fe
(stro n g o b je c tio n developed to th is com petition with p riva te banks and the prac
t ic e was abandoned) •
They now require that money advanced to the market sh a ll
be taken fo r d e fin it e p e r io d s , not le s s than seven days*
In the present state o f development o f our b i l l market th is would hardly
work, as money con d ition s and p ra ctice s o f banks here would not permit dealers to
carry extensive p o r t fo l io s and to serve s u c c e s s fu lly the demand o f buyers.
It
would be im practicable fo r them to have th e ir small p o r t fo lio s immobilized in
seven day
loans*
The analogy between the re la tiv e rates o f the cen tral banks o f Europe
and the rates at Federal reserve banks l i e s in the d is tin c tio n between the
open market rates at reserve banks and th e ir rediscou nt r a te s , the former apply
ing to the same c la s s o f paper to which the discount rates o f cen tral banks apply
and the rediscount rate applying more c lo s e ly to the same cla sse s o f paper to
which the European loan rates apply, i . e . , secured and unsecured loans made by
member banks to th e ir customers and to one name commercial paper bought by member
banks and to the member bank’ s own note secured by such paper or by Government
s e c u r itie s *
They are a l l lo a n s, the c h ie f d is t in c t io n being that the loans at
the cen tral banks o f Europe are a l l secured by c o lla t e r a l o f one sort or another,
ranging from b i l l s o f exchange to ca p ita l investments o f the borrow er, including
real e s ta te , plant and m iscellaneous s e c u r itie s *
@FedFRASER