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
Form P. R. 567
END SHEET
KINO OF MATERIAL OR NUMBER
333*-b-l
name o r s u b je c t
Open Market Investment Committee
Open Market Operations
DATES ( I n c l u s i v e )
192i* - 1925
PART NUMBER
Part 2
Reproduced from the Unclassified I Declassified Holdings of the National Archives
1*B
V
FILES SEC9I0I
r £ B -11944
Botes oa Beooameadations of tbe 0. M. iITfT
BCte
Is
1/5/25
Deoiaion to aell secur It lei to prevent undue eaae In money
conditions aa far aa coaid be dona without disorganising the market by commuiloatlon with member* of tha Ooraslttee.
(p.27)
Hote
Is
1/9/25 Coamlttee voted to atand ready to aate further aalea aa
aenned neoeaaary to prevent andosTease iiTthe market. (p.27)
Sote
2*
Z/Zb/ZB
Eote
3$
4/6/26
Committee voted, "under authority now vested la It",* to
Inoreaae It a holdlnra m? to gpTymrlmately §300,000,000 aa aad when
the maricet conditions warrant la view of gold movement a.
lote
4s
5/21/25
the minute a of the April 30th meeting of the 0. M* I* 0.
(at which ««ly readjusting apportionments is the account waa conaidered) ware submitted to
Board, who voted that tte Committee
be advised that (1) it waa noted that (ggZlmrchaees had been made
aa propoaed oa 4/6/25, aad (2) that l*Wre making parohaaea to
increase tha aggregate of tha aeoonat the proposal be submitted
for Board oonaider*t ion.
Bote
5s
lote
0* M* 1* 0* in Joint meeting with Board aaggested aelllng
aecuritiea to bring tba S. I. aooount down to .^OO ,000,000 in or
der to prevent undue eaae la oaae of continued flow of funda to
H* T*
Anticipated heavy spring demand a for foads aad probable
large gold exports seemed to Indicate the neoeaaity of an early
review of tha aitu&tlon.
fha Board todc no aotloa oa the proposed program but the ex*
pressed views of individual members wave not contrary•
5/29/25
Tha Board voted to approve request of 0. H. I* c. to
mtika parohaaea replacing 115,000,000 of §31*000,000 held ia the
account maturing Jane 15, 1925, the remalaiag £16,000,000 to be
porohaaed after that date.
6s
6/24/25
fha 0. M. I* C. voted to (1) authorize aale to Bank of
England of Treasury oertifloatea maturing Sept* 15, 1925 in amount
of $2,000,000, aad further aalea up to the total holdiaga of this
maturity amounting to $5,000,000, the porpoae being to prevent
employment la tha I* T. maitot of a balance obtained by tie Bank
of England through purohaae of gold from another foreign bank,
and to prevent employment of any farther balance that the bank
might aoqairej (2} to aell #10,000,000 of fhlrd Liberty Loan
--- ---- bond a to tha Treasury.________________________ ____ _____________
* >e Bote 8, 11/12/24 (2J.
V
L-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2-
Hote
7s
9/22/25
The Couiaittoe report, which made reoomnendations regarding
the distribution of acceptance and security holdings, suggested
that tho situation called for a careful consideration of t e dis
t)
count rate position rather than open market operations*
At a meeting of tho Board, Sept* 29, 1929, the desirability
of unking* sales from the 3* I* aooount to be followed by an inorease in the U* T* discount rate n a discussed*
It appeared
that most of those present were not in agreement with this proposed
aetion*
Kote
8s
II/2 /2 6
The Coranitteefs report to the Governors Confersnoe re 00 mmended that the aooount bo maintained at its present size In or
der to be prepared to deal with any emergency situation, and sue**
gested that the next step should consist of changes in discount
rates rather than open-uiartoet holdings*
II/2 3 /2 5
fhe Board approved in general the report of 11/2/25
but advised that it desired an immediate meeting "to consider
whether changed conditions did not moke a change in the open
xnaifeet policy *** desirable”*
It also voted that the question
of allowing Dec* 15 maturities of Government securities to run
off without replacement be referred to the Comaittee*
l f t 9t
ite
12/1/25
At a Joint Meeting of the Board and 0* M* I* C* it was de
cided that the $36*000,000 of Treasury certificates maturing Dec*
15 should be replaced by other maturities*
A discussion of the
credit situation followed at which it was the concensus of opinion
that the turn of the year should be awaited before advancing the
1* T* discount rate, and which inirht prove the appropriate time
for sale of some of the 0* H« 1* 3* holdings*
This reooraaend&tlon was approved by the Board 12/2/25*
Bote 10s
12/21/25
The Governor of the Federal Reserve Bank of Hew York
(Chairman of the 0* B* I* C*} advised that he was authorised by
the directors of his baafe to purchase *50,000,000 of securities,
and that when the purchases were made they would be for the S* 1*
account, the approval of Ooe<tee members having been obtained*
On 1 2 /2 2 /2 5 Chairman of the Comittee advised the Board that
£16,000,000 had been contracted for which would be carried in
the Hew YoUc Bank portfolio if the Board disapproved the Canmittee9s
recommendation*
After a discussion of the matter the Board ap
proved the Coesnlttee*8 purchase of from' -25,000,000 to $50,000,000
of securities*
r-”
■
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*/
■—
1 $ 3
Resolved, That the B o a M approve* in its general f e a t u t e a r e p o r t
of the Open Market Investment Cammittee as a report in relation to
conditions on November 2nd,) Since that time, however, the B oargjaaf
ft
approved increases in the discount rates of four of the Federal
Reserve bank® and now believes that the time has come for a further
meeting in the near future of the Open Market, Investment Committee to
consider whether government securities maturing on December 15th should
not be allowed to run off without being replaced or their maturity
anticipated by the saj^e of <small amounts frcm ..eek to week so far as
possible*
V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
"3
*5
It
R ep ort o f th e Chairman o f th e Open Market Investm ent Committee
t o the Governors Conference^ November 2, 1 9 2 5 .
S in ce the l a s t governors c o n fe re n c e the S p e c i a l Investm ent
A ccou n t
of
the system has been reduced by 35 m i l l i o n d o l l a r s , from 245 m i l l i o n to 210
m illio n .
T h is re d u c tio n has ta k e n p la c e g r a d u a lly i n co n n e ctio n w ith th e r e
demption o f m aturing i s s u e s a t q u a r t e r l y t a x days, o c c a s i o n a l s a l e s to th e
T re a s u ry fo r t h e i r accommodation, and a s a l e to the Bank o f England amounting
to 4 m illio n d o lla r s .
The gradu al r e d u c t io n in th e p o r t f o l i o has been in keep
in g with th e p o l i c y o f m a in ta in in g th e e f f e c t i v e n e s s o f th e d is c o u n t r a t e s o f
^
th e R eserve Banks by i n s u r in g a round amount o f borrowing by member banks in
/
p rin cip a l c i t i e s .
C r e d it C ond ition s
The changes in b u s in e s s and c r e d i t c o n d it io n s s in c e l a s t s p rin g have
c re a te d a s i t u a t i o n which i s most unusual and most p e r p le x in g fo r th e d e te rm in a
t i o n o f Feder a l Reserve p o l i c y .
When we met in A p r il dom estic b u s in e s s was e x p e r ie n c in g some s l i g h t r e
c e s s io n from the g r e a t a c t i v i t y o f th e e a r l y s p r in g .
T h is was more t r u e in c e r
t a i n ty p e s o f i n d u s t r i a l a c t i v i t y than in the g e n e r a l d i s t r i b u t i o n o f goods.
The
r e c e s s i o n did n o t prove to be s e r io u s and in the p a s t two months t h e r e have been
i n d i c a t i o n s o f an i n c r e a s e in a c t i v i t y and g r e a t e r b u s in e s s optim ism .
V ario u s
in d exes o f the t o t a l volume o f b u s in e s s i n d i c a t e t h a t b u s in e s s has been above
what we may c a l l norm al, o r average,
c o n d itio n s fo r th e e n t i r e year*
The con
s t r u c t i o n i n d u s tr y and the autom obile i n d u s tr y have been p a r t i c u l a r l y a c t i v e .
B u s in e s s appears g e n e r a l l y to be in h e a l t h y c o n d it io n .
buying has in c r e a s e d somewhat l a t e l y i t
While
forward
c o n tin u e s to be g e n e r a l l y c o n s e r v a t i v e .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Commodity prices are firm but there are as yet no considerable price
increases*
Looking into the future the features in the business situation which offer
possibility of later disturbance appear to be:
1*
The automobile industry evidently now has a
capacity and annual rate of production which
is greater than the growth in the population
or the increase in the domestic demand for
cars can support for any extended period*
We are approaching a ^saturation _point in that
industry, unless exportfs"ihcrease with great
rapidity.
2.
The building industry is now operating at a
pace which cannot be continued indefinitely*
The war years left us with a shortage in
homesIt is clear that most of that short
age has now been made up and that sometime,
perhaps within the next year or two, there
will of necessity be a diminution in new
building construction and in the activity of
the industries which are concerned with new
building. This will naturally be accompanied
by a slowing up in real estate speculation,
which is now active in many places.
3.
There has been for some years past a steady
increase in installmea;L_buying. involving the
•nledge of future income and the building up of
what we may call, consumer inventories.
It is
clear that this has created a situation in which
any extended period of unemployment or any change
in psychology might lead to a considerable
diminution of activity in those industries serv
ing the consumer directly.
In none of these three directions is there any evidence of an immediate
change in the situation.
The prospect is for sound substantial business at a
high level for some months to come, but it is equally clear that the presence of
these uncertain factors makes the continuance of a conservative temper in busi
ness most desirable.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
Stock Market
The stock market appears to offer a fourth element of possible inP*'—
—
stability in the b u s i n e s s .situation . for stock market movements have a wide
spread psychological influence.
The most serious element about the recent stock
market movement is the possibility of a later recession in prices which might add
impetus toward business reaction.
There are a number of indications that a part
of the recent increase in stock market prices is due to fundamental changes in
values, but it is also possible that the swing of prices may now have gone
beyond a level which can be maintained permanently.
Credit Requirements
Hie growth in business activity has been accompanied by an increase of
currency circulation of 100 million dollars since the end of April and by an in
crease of about 300 million dollars in commercial loans of banks-
This is larger
than the usual seasonal increase and has come somewhat earlier in the year than
usual . In addition, loans on stocks and bonds show an increase of 300 million,
which represents largely the placing of additional
money market.
funds into the stock exchange
The net result is an increase of 600 million dollars in total bank
credit advanced by weekly reporting member banks, outside of an increase which may
have occurred in other banks.
This increase has been made possible by an increase
of about 250 million dollars in borrowings from the Federal Reserve Banks.
At
the same time the non-reporting banks in smaller cities have decreased their
b orrowings slightly.
Accompanying this additional borrowing at the Federal Reserve Banks
there has been an increase since April of about l/2 of 1 per cent or more in the
various open market mo»ey rates •
The figures are shown in the accompanying table and in the two diagrams
in the appendix:
Reproduced from the Unclassified / Declassified Holdings of the National Archives
4
Credit Changes Since knril , 192 5
(dollar figures in millions)
Apr *29
Bills (90 day)
Commercial Paper ( 4 - 6 mos.)
C/I’s (3 moe.)
(6 mos •
)
Oct >14
Chan ge
♦ 3/8
+ 1/2
+ .84
+ .79
3 l/8
4
2.71
2 .73
3 l/2
4 1/4-4 l/2
3.55
3 «52
$
400
243
24
345
4
$
644
255
32
314
22
♦ 8
- 31
+ 18
1.028
1.376
+248
8 *354
4.878
5.484
8.673
5.192
5.462
+ 319
+ 314
22
Total Loans and Investments 18.716
19.327
+611
47
2
„ 162,
155
22
...291-
+108
211
468
+257
189
176
- 13
Earning Assets Federal Reserve Ban kji
Discounts and Advances
"Bills Owned
Bills Sales Contract
U. S. Securities Owned
U . S . Securities Sales Contract
Total Bills and Securities
Loans and Investments Weakly. RftB.er.ting.
M.qmfrjar ffanfca
Commercial Loans
Loans on Stocks and Bonds
Investments
Hes$r,ve, Banka,
By weekly reporting member banks in:
New Vork City
Chicago
Other principal cities
Total principal cities
By non-reporting banks outside
principal cities
(March l)
Money in circulation
4.725
+244
+ 12
+
20
+129
(O c t . l)
4.827
+102
Reproduced from the Unclassified / Declassified Holdings of the National Archives
5
Gold Movement
While money rates have been moving upward l/2 of
1 per cent or more in
this country, they have moved lower in London by about 1 per cent and the Bank
of England has reduced its rate one per cent from 5 to 4 per cent.
weeks rsttres in London have become slightly firmer.
In recent
The result of higher rates
here and lower rates in London has been that considerable American balances which
had been placed in London have returned to this country, and there has been a
gold movement from London to New York of about 40 million dollars, partially off
set by a movement of 21 million dollars from this country to Canada*
The movement
from London is slightly larger in amount than was customary in the fall in the
years before the establishment of the Federal Reserve System.
It is clear that the relative level of interest rates in this and in
foreign countries is an important influence on gold movements.
If our interest
rates reach higher levels without a corresponding increase in London, a larger
gold movement to this country may be stimulated.
European Situation
' ' e general recovery in European business and credit conditions is, under
fh
present circumstances,
facilitated by low money rates in this country.
V/ith
industry abroad below normal activity and struggling against high taxes and the
necessity for many readjustments, the actual cost of money is an important factor
in England and the European countries.
In many of these countries, moreover, the
s u n p ly of working capital is insufficient.
As long as our extension of credit
abroad either in the form of short-term or long-term credit is for productive pur
poses a considerable flow will be beneficial to the recovery of Europe and will re
act favorably upon our own trade.
This flow is encouraged by low money rates. '.Tith
Reproduced from the Unclassified I Declassified Holdings of the National Archives
6
the finances of Europe in unstable condition email changes in credit conditions
may have large results one way or another, and it is clear that this country has
a definite responsibility to determine its monetary policy with some regard * o
b
the effects of such policy outside of our own borders.
Recommendati ons
these are the outstanding facts in the broad credit situation*
doCgcrfo seem to indicate the need for any change in our open market policy«
They
Mith
the member banks in principal cities substantially in debt at the Reserve Banks
there is little to be gained in the sale of securities for the purpose of making
discount rates more effective.
The influence of our rates is now felt on a
considerable body of borrowing and if it appears desirable the next step should
possibly consist in changes in discount rates, rather than changes in open market
holdings..
It also seems desirable to maintain the present account at at least
its present size that we may be prepared to deal with any emergency situation*
The committee, therefore, is not prepared to recommend at present any change in
our holdings of securities*
Quarterly Tax Day Operations
The June and September tax days furnished additional opportunity for
studying the need for special operations with the investment account to prevent
any unusual and temporary ease in money,
nt the June tax date sales of 51 mil
lion dollars were made early in the tax day period, with the very satisfactory re
suit that money rates remained at a constant level throughout the entire period,
the September period sales to the market did not appear to be necessary because
of unusually large receipts
relative %o disbursements by the government and a
considerable volume of rediscounts*
No sales were therefore made and there was
At
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
7
some easing in money rates for a few days.
The experience of these two tax days
would appear to indicate* that it is usually desirable to make temporary sales to
the market early in the tax day period.
Turn of the Year
Last January it was.found desirable to make sales of about 150 million
dollars of securities to take up the seasonal slack in credit resulting from tne
return of Christmas currency-and the usual seasonal flow of funds to money centers
This coming yearend it appears likely that city banks will be so largely in debt
at the Reserve Banks that slack will be mostly taken up by the liquidation of dis~
counts.
Such liquidation is frequently a little slow, however, and if credit con
ditions remain as at present it would be undesirable to have the banks out of debt.
It will, therefore, be well to consider some temporary purchase of securities at
the time of the Christmas currency demand to be sold in January.
The wisdom of
such a policy cannot be determined far in advance.
Method of Apportionment
During the past few months further study has been made of the methods of
apportioning purchases of bankers acceptances in the light of current earnings and
expenses.
banks,
The principle has been adopted of apportioning acceptances among the
on
basis of estimated expens®s and dividends of the banks; and
second, after these have- been provided for, to apportion the remainder on the basis
^
'
of required earnings to meet losses and ordinary chargeoffs as far as possible.
The present estimate appears to indicate that.the earnings of the banks for the
year will be sufficient to cover all expenses and dividends and to cover the major
part of chargeoffs as well.
Included in exhibits attached are tables reflecting
Government security and bill transactions and distributions by the Committee
during the year.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
8
INDEX OF EXHIBITS
A.
Statement Showing Transactions in the System Special Investment Account Since
Last Governors Conference in April 1925.
B.
Statement Showing System Purchase! of Bankers Acceptances from January 2, 1925,
to October 21# 1925, and their Allotment to Participating Banks.
C.
Chart of Earning Assets of All Federal Reserve Banks Showing Discounts for
Banks in Principal Cities and Outside of Principal Cities.
D.
Chart of Money Hates in New York.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT "A*
STATEMENT SHOWING TRANSACTIONS IN THE SYSTEM SPECIAL INVEST!-!ENT ACCOUNT
SINCE LAST GOVERNORS’ CONFERENCE IN APRIL 1925
Holdings March 31, 1925
Purchases:
April 14
Tl
15
n
May
11
June
11
H
21
4
4
10
12
12
Market
Portfolio
)
F.R.B,Chicago)
Market
$245,203,500
3/8$ T/N duo Doc, 15/25
4
4
4
4
4
i«
ti
it
11
11
15
15
Forei gn Ace*t
26
Market
Sept, 10 I 15
b
'
»
July
Aug,
n
4
4
4
4
4
2
2
4
3/8$ T/N
3/4$ T/N
1/2$ T/N
3/4/o T/N
3/4$ T/N
3/4$ T/N
1/4/c T/N
3/4/o T/N
3/4$ T/N
3/4$ C/I
C/I
3/ < ”
3 /4 % c/i
"
$ 4 ,000,000
"
"
Mar* 15/26
June 15/25
Mar, 15/26
Mar. 15/27
Mar, 15/26
Sepi,15/26
Mar, 15/26
Mar, 15/26
Sept,15/25
693,100
1,063,400
5,200,000
15,000,000
5 ,000,000
5.000.000
3,500,000
1.000.000
2,000,000
350,000
375,500
11,965,700
Mar, 15/26
Total purchases - - - - - - - -
60.147,700
;305,351,200
S 3I!
April 15
«
21
May
June
i
f
4
15
24
" 24 & 29
July 15
Aug, 11
Sept* 10
1 15
1
Market
C/I
C/I
n
TAJ
Treas«~Redemp*
T/N
Foreign Acc't
C/I
Treas, a/c APC 4 1 /4 ; 3rd
Market
T/N
c/x
Foreign Acc*t
Treas,-Redemp.
C/I
Treas*-Sink,Fd* 4 1/4*5? 3rd
1
1
$
Dec. 15/25
Sept,.15/25
Dec. 15/25
June 15/25
Sept.15/25
L,L •
due Dec. 15/25
t Sept ,15/25
i
i
t
1 15/25
1
L.L #
due
»
*
«
i
f
»
918,500
5,200,000
20,000,000
31,132,700
2,000,000
15,000,000
2,000,000
2,000,000
2,000,000
1 5 „100TQ00
95,351,200
Total Sales ■
!
Balance Holdings October 21, 1 9 2 5 - - - - -
_
_
- - - - - - - - - -
5210,000,000
(Net Profit on sales amounted to $128,117,25)
PARTICIPATION AND MATURITIES OF SYSTEM HOLDINGS CLOSE OF BUSINESS OCTOBER 21,1925
Participation
Boston
$ 1,985,000
51,427,000
Nev/ York
Philadelphia
1,565,000
Cleveland
11,651,500
Ri chmond
4,102,500
12,097,000
Atlanta
Chicago
22,010,500
St, Louis
13,872,500
Minneapolis
9,020,000
Kansas City
20,844,000
Dallas
22,143,500
San Francisco
34.281.500
1210 ,
000,000
Maturities
Ratio
0,9$
24,5$
0,$
8
5.5$
2 . 0$
Dec,
March
Sept,
March
Dec,
15,
15,
15,
15,
15,
1925
1926
1926
1927
1927
4
4
4
4
4
3/ 8$ T/N
3/4$
1/4$
3/4^
1/2$
T/N
T/N
T/N
T/N
$ 38,160,100
75,266,700
40,401,000
23,875,900
32,296,300
5.8$
10,5$
9.0$
4.3$
9.9$
10.5^
16.3?,
100$
$210 ,000,0 00
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXHIBIT ”B!
f
S'TWT'FKW1 SHOEING S Y S T M PURCHASES OF BANKERS ACCEPTANCES FROM JANUARY 2, 1925
’
. _____ TO OCTOBER 21, 1925 AND THEIR ALLOTMENT TO PARTICIPATING BANKS________ _
_
Purchases
0
Boston
157,089,000
Participations
0
173,804,000
New York
866.314.000
173.320.000
Philadelphia
107.778.000
107.778.000
Cleveland
28.697.000
108,924, COO
Richmond
14.588.000
44.593.000
68.868.000 *
Atlanta
9.219.000
Chicago
54.739.000
166.482.000
111,000
76.220.000
St. Louis
Minneapolis
0
81.807.000 *
Kansas City
0
91, 557,000 *
1.278.000
Dallas
San Francisco
Totals
* Does not include sales from
i
t
»
»
»
»
m
»
♦
m
»
•
«
h
m
«
M
«
»
M
u
»
«
«
«
»
63.730.000 *
41.886.000
124.596.000
01,281,699,000
( 1 281, 699,000
;,
New York portfolio to Atlanta
«
»
*
»
«
» jKansas City
»
»
«
*
»
Dallas
St. Louis
"
” Minneapolis
»
t
*
♦
»
*
» Dallas
«
of 013,183,000
”
5.021.000
5,000,000
H
3.271.000
1
1
’
*
3.192.000
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT "C M
MILLIONS
19 2.4
•
19R.5
,
Total ISurnint; ^sset.-*; Bills Discounted ior Bunks in Principal Citioo ana
Outside Principal Cities by tho Foderal Reserve Bunks •
rfrStn the U n e llW c l / D lW ifie d Holdings of m
EXHIBIT W
D"
19£2,
192-3
Money Butea in the Hew
19 2.4
Y o r k ik la r k e t
1925
T
«vb
rn
An*
QF PISTRIBUTIQN OF BILLS AND INVESTMENTS TO FEDERAL RESERVE BANKS SINGE LAST GOVERNORS1 CONFERENCE. APRIL 1925
t
X
(1)
March 3 1 , 1925
Estimated Expenses & Dividends
1925 ■
Boston
New York Philadelphia Cleveland
$2 , 5 0 , 0 0 0
5
Estimated Earnings for Year "Over
or Shofrt" of Estimated Expenses
i Dividends
996,394
NOTE:
(2)
October 31, 1925
Estimated Expenses & Dividends
1925
Estimated Earnings for year in
Excess of Estimated Expenses
and Dividends
$8 ,6 9 2 , 0 0 0
$2 ,7 6 9, 000
$3,529,000
971,192
405,309
424,300
Richmond
.
Atlanta
Chicago
St, Louis Minneapolis Kansas City
$1,896,000 $1,549,000 $4,756,000 $1,953,000 $1 , 3 2 , 0 0 0
4
23*000
301,070
656,364
633,390
Dallas
San Francisco
$2 , 7 , 0 0 0
17
$1 , 1 8 , 0 0 0
5
$3 ,
319,000
* 36,137,000
333,176
289,767
290,000
1 ,327,687
Net
255,469
Total
This estimate shows but 5 banks meeting all estimated expenses and dividends (excluding charge-offs) while 7 banks are deficient.
2,578,000
8 , 00,000
6
2,856,000
3 , 6 4 ,0 00
5
1,920,000
531,550
1 ,684,883
3 19, 12 0
488,813
338,581
1,247,000
404,567
4 , 9 2 ,0 00
6
1,884,000
1 , 68,000
3
2,240,000
1,466,000
3 , 9 2 ,0 00
1
35,607,000
49 9, 56 5
252,494
174,166
179,197
23 3, 55 6
544,986
5,
651,478
184,986
1,361,993
1^.289^481
NOTE: This estimate shows all twelve banks meeting all estimated expenses and dividends (excluding charge-offs).
(3)
72,572
246^48
120,6 13
Total
$ 531,550 *1,684,883
-2.J..
17,M7
404,503
Estimated Charge-offs 1925
Estimated Earnings "Over or
Short” of Estimated Charge-offs$
28,666
145,500
128.960
96,522
137.034
— 160^000
* 252,494 * 174,166
* 179,197
t 233,556
* 54 4, 9 86
* 5,
651,478
123,300
139,972
542,520
714,000
5.850.272
# 169,014
* 1,817,991
Charge-offs not covered
246,826
197,794
333.756 ._1JZ&*SBL
of Year
Net Earnings October 31, 1925
2,016,785
368.200
24,581
314.000
184,294
- 220JJ X
401.616
| 319,120
* 488,813
* 338,581
$ 404,567
* 499,565
853.000
2 8. 00 0
192.000
235.000
885.236
600.197
1,210,000
$ 831,883
* 291,120
96,813
* 103,581
*100,632
**957,506
*
$480,669
97,949
56,953
195.541
*
50,866
50,237
*
39,225
**308,964
x Due to reserve position Dallas is not at present participating in bills and St. Louis ia only participating to the extent of 5%.
Reproduced fro th Unclassified / Declassified Holdings of th National Archives
m e
e
^
U
Reproduced from the Unclassified I Declassified Holdings of the National Archives
7 ^
fcxeetrtive f o hter
Date,;
■■ “ r
%..
f w w ^ iu.Jnfw»»
c a s w i hU b
m i
'j
Qotober 9f 1926.
My dear Mr, Mftttesoa*
Wxl* will Aoknovladgft reoeipt of yoar
of
statement •ho»lag tht yiUoi of distribution
of System open market parohases.
Viijr traly yoars,^
( « * » • * ) D.
D« &• Crissla^ir ,
aavwaojr.
Mar* W. B« Mattesoaf Secretary,
Opan Market Investment Ooamittee,
federal fieterve Bunk,
lew York, I , I ,
If
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL
OF
RESERVE
NEW
OCT 9 ,1925
BANK
J V
VORK
October
5 OJrFiGM O .
X'
* jLjJW O B
? 1925
,
S i r :
For your inform ation. I am en closin g aj copyii^jI |y
— ’ ■I» l< . iI i
I llW W iof h
W
¥
leiter\ w h ich i s being sent to-day to the governors o f a l l the
Federal re se rv e banks, to g e th e r with statem ent re fe rre d to
th e re in showing the r a t i o s of d is trib u tio n of System open
market purchases based on figures rep o rted to th e Comaittee
as of September 3 0 , 1925*
S e c re ta ry , Open Iferket
Investment Committee
Honorable D* H« C rissin g e r,
Governor, Federal Reserve Board,
Washington, D. C.
E n c l. (2 )
STATEW T SH W G DISTRIBUTION O SYSTEk O
SN
O IN
F
PEN kARKET PURCHASES (AFTER PROVIDING FOR EXPENSE A D DIVIDEND REQ
N
UIREi>nEN
T3)
_______________ PRO-RATED A RD G TO CHARGE-OFF REQUIREM
CCO IN
ENTS. BASED O FIGURES REPORTED SEPTEM
N
BER 30, 1925 ........................
(2)
(3)
Average
Earning
Assets Held
Four V«eeks
Ending
Seot. 30/25
D istribution of
Earning Assets
Held i f Amount
in Excess of Re
quirements for
Expenses and
Dividends Were
Pro-rated to
Charge-of fs
(I)
Estimated
Charge-offs
1925
Boston
N York
ew
Philadelphia
Cleveland
Richmond
A tlanta
Chicago
St. Louis
Minneapo3.is
Kansas City
Dallas
San Francisco
Totals
127,047
853,000
28,000
392,000
235,000
885,236
600,197
1 ,210,000
123,300
326,772
542,520
708,000
$6,031,072
$
76,679.000
296,761,000
89,442,000
111 , 916,000
6 4,1 0 3 ,0 0 0
5 9,682,000
123,917,000
64,675,000
47,209,000
6 1,322,000
50 , 251,000
119.643.000
# 1,165,600,000
$
60, 802,000
187.971.000
64.410.000
94.031.000
44.693.000
93 . 803.000
152.753.000
1 44.798.000
M
Proportionate
Excess of
Average Earn
ing Assets
(Column 2 Less
Column 3)
* 15,877,000
108,790,000
25 ,
032,0 00
17,885,000
19.410.000
84*637,000
78,936,000
122.878.000
0
0
0
11.321.000
0
0
__________0
^1,165,600,000
#198 , 315,000
35,888,000
(6)
(5)
Proportionate
Deficiency of
Average Earn
ing Assets
(Column 3 Less
Column 2)___
4
Ratios for^
Current
D istribution
to Banks
Showing
Deficiencies.
0
0
0
0
0
34 . 121.000
28. 836.000
17/o
80.123.000
41$
14$
0
23 . 315.000
12$
28.685.000
14$
3.23«^0Qft
_______ 2 2 s
#198,315,000
100$
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ooj>y of this letter tent to the Governor of each book
'......, -
A
October 6 , 19SJ5
Hr. W P. a. Harding,
.
Governor, Federal Reeerve Bonk of Boston,
Boston, &fcse.
Door Governor Hording:
la 11*0 with tho notion taken at tho l*st tatoting of tho O
pon &rket
Inveetaent Cocusittoo to oftke distribution of opon o&rket purchases to «oW ,
firs t, expenees and dividends, and second, to provide thereafterfor ostltaatod
chargo-offs ae ootaplately a« possible, tho aocotspanying itntooost hoc boon pre
pared for tho purpose of 0hawing in principle how tho distribution will bo
offootod.
Kernings of e ll reserve bonks to September 30, 19^5, have exceeded the
aootntt required to cover ourrent oxponooo and dividends to that dr.to .
According
to present indications, inootse for this year for the twelve banks will be approx
imately 13,000,000 nore than tho amount required for expenses and dividends, or
an anount sufficient to oover approxlnately one-half of the estiaated charge-offs.
It is proposed, therefore, to distribute future pttrohaoee of bills in such a w
ay
as to reeult is a pro rota dietrlbation of tho oxoooo earnings as nearly ao pos
sible in aooord with tho ootlwtod oharge-offs.
It will bo noted that the present
schedule provides for tho allotment of billo to but six banks.
Inasauch, however,
as tho oix banks that will be currently participating will have O taring b ills, i t
b
is expected the eituetlon will quite rapidly correct itse lf, 00 that i t will be
neooosary to ooke ebongee froo tine to tine in tho ratio of distribution.
A heretofore, you will be advised daily of such allotments as are c*de
o
to you.
j- ,
J o .. / - 2 4
l
gn0X_ (x)
Very truly youre,
W B. ihttoMB
.
Secretary. 0p«* ifrrket
Investaeni Cot-utities
Reproduced from the Unclassified / Declassified Holdings of the National Archives
VE
NEW
BANK
OFFICE OF
THE 0-OVEENOR
VORK
".
k
September 1 0 , 1925.
Dea^ Governor C rissin g er:
For your inform ation, 1 m
i s being sent
enclosing copy of l e t t e r which
to-day to the governors of a ll the Federal reserve banks
together with statement referred to therein showing the earning position
o f the d iffe re n t banks a t th e d o s e of business August 51, 1925, as r e •i nf i i --m - n -r-iiU
i mi ~
f
n nr T nr|TT
ported to th e Open Market Investment Committee.
yours,
T
J . H. Case
Acting Chairman, Open
Market Investment Committee
Ends. (2)
Honorable D. R. C ris singer,
Governor, Federal Reserve Board,
Washington, D. C.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
September 10, 1926 •
Dear G o v e r n o r ----------- :
fijel©©ed y m will find statement showing the condition of the Federal rwserve
beaks as regards
at the end of August and estim ates of e<*r&iria 6 and expenses
for the b&leuoe o f the year, from which you *111 note th et the estimated darning8 over
sad above c o rre c t expeaaee (exclusive of ch arge-offs) show a net excess of over
♦* ,800,000.
You w ill aloe not© th at the to ta l of the estia&ted charge-offs is approx
imately $5,800,000, salting en estimated net shortage, taking the ch arge-offs into con
sideration, of about 5 B illio n doll ere.
The federal Reserve sank of St. Louie - due
to its r e la tiv e ly low reserve position - ig ]5 o^ a t present particip a tin g in the System
prAifes.
Fro* the statement you will observe that the regular expenses and dividends
appear to be amply provided for and with the alaoet assured prospects of increased
earnings for the balance of the year it seesis aot unreasonable to believe that System
earnings will be adequate to provide for all expenses including the estiaated charge-offs.
In line with the established procedure of the Ooaalttee it is proposed, be-
ginning October first, to revise the percentage ratios for the distribution of open
market investments during the last three aonthe of the year in such a Banner as to
provide for the estimated charge-offs.
Very truly yours,
J. S. Case
Acting Chaim an, Open
■arket Investment Committee
STATEfiuENT SHOVING ESTIMATED EARNINGS, EXPENSES AND CHARGE-OFFS OF ALL FEDERAL RESERVE BANKS AT THE CLOSE '(& BUSINESS AUGUST 31, 1925
___________________________________________ AS REPORTED TO THE OPEN kARKET INVESTMENT C Q i U v - I T T E E _________ _______________
(1)
N«t Earnings in
Excess of Ex
penses and
Dividends
Jan..l-A up,.il/22
Boston
New York
Philadelphia
Cleveland
Richmond
A tlan ta
Chicago
Minneapolis
Kansas City
B ellas
Sa^ Francisco
S
v 193,043
1 ,060,412
134,333
279*000
186,000
49,877
262,213
73.163
7,003
49,911
(2 )
Estimated Expenses
and Dividends
Sept.1-D ec. 31/25
(Excluding
Charee-offs)
v
876,437
3 ,0 3 8 ,0 0 0
946,000
1 ,1 1 7 ,0 0 0
640,000
486,215
1*572,335
474,000
704,773
488,361
(3)
Net Requirements
Balance of Year
(Excluding
Charge-offs
(C o l.2 Less C o l.l)
» 683,394
1 ,9 7 7 .5 8 8
811,667
838,000
454,000
436,338
1 ,3 1 0 ,1 2 2
400,837
697,770
4 3 8 ,450
___ 9,01,000
*
166*000
.. „ i . m . o p p
T otals
Louis
^ 2,460,955
vl1,416,121
-,J4 J64.
684.000
<#8.955,166
..... M M k
Grand T otal
*>2,535*319
*12,100,121
v9 , 564,802
NOTE:
(4)
Estimated Earn
ings a l l Sources
Sept. 1-D ec.31/25
(Based on F i r s t
8 l&os. Average)
819,591
2 ,8 8 9 ,2 5 5
918,468
1 ,1 7 5 ,0 9 0
697.373
613,685
1*528,596
432,860
684,101
611,552
(5)
Estimated Net
Earnings
Over and Above
Expenses
(C o l.4 Less Col. 3)
v
136,197
911,667
106,801
337,090
243,373
177,347
218,474
32,023
(Short 13,669)
(6)
Estimated
Charge-Offs
...-,..-1121___
v
173,102
127,047
853,000
28,000
392,000
235*000
685,287
600,197
123,300
326,772
542,520
J&Looo
..... .168*682
.
^1 1 , 646,258
756.052
*2 ,6 9 1 ,0 9 2 (Net)
146.416
* 4 , 616,123
>
1 . 210.000
^12,402,310
*2,837,508 (Net)
*5 ,8 2 6 ,1 2 3
2 m2 L 5 M I
L
Figures for St- Louis are shown separately as they are not at present participating in open market purchases.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
C
0
p
Copy of letter sent to the uovernor of each. Federal reserve bank
Y
July 13, 1925
My dear G o v e r n o r - -- We have received the estimates of all of the banks made up as of
June 30 and covering their earnings and expenses for the balance of this year.
With this data we have prepared a statement, copy of which is enclosed, with a
view to carrying out the
views of the Open Market Committee as expressed at its
last meeting when the vote was taken as follows:
"Future allotments of bills will be based upon
earnings required to meet expenses and dividends (exclu
sive of charge-offs) as shown by the new figures and if
necessary such allotments will be made to the Federal
Reserve Banks of Minneapolis, Kansas City, Dallas and
Atlanta, so as to enable them to maintain continuously
their needed portion of open market investments.”
The attached statement shows in the first three columns the earning
requirements for each of the banks for the balance of this year.
The result
in column 3 is arrived at by deducting from the estimated total of expenses and
dividends for the second six months, the excess of earnings in the first six
months, or adding the deficiency in earnings for the first six months, as the
case may be.
Column 4 shows the estimated earnings from all sources for each
of the banks for the second half of the year.
Column 5 shows a redistribution
of these earnings in the ratio that the earning requirements of the relative
banks, as shown in column 3, bear to the total of column 3.
Column 6 shows the
estimated earnings of each bank for the second half of this year from all sources
other than earnings on bill purchases in order to determine the amount of earnings
necessary to be made up from bill purchases, the distribution of which is con
trollable by the Committee.
Column 7 then shows the difference between column 5
and column 6, or the amount of earnings that each bank would have to receive from
bills during the second half of the year in order to give it its proper proportion
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
2
-
of the total eetimated system - earnings.
Column 8 is the ratio that the figure for
each bank in column 7 bears to the total of column 7 and, therefore, indicates the
proportion of the total bill purchases that each bank should receive in order that
it may have its proper proportion of the total system earnings.
This plan has received the approval of all the members of the Open Market
Investment Committee and will be put into effect immediately (with appropriate
adjustment) as of July 1.
Very truly yours,
(Signed)
W. B. Matteson
Secretary, Open Market
Investment Committee
Encl.
STATEM T SH W G PAkTICIPATION O FEDERAL RESERVE 8 ki\K3 IN SYSTEM O
EN
O IN
F
PEN kAKKET PURCHASES
........
.............. TO PROVIDE FOR EXPENSES A D DIVIDENDS (EXCLUDING CHARGE-OFFS}
,
N
________
<D
Excess or D eficit
in Earnings
F ir s t Six Months
(2)
(3)
Estimated Expenses
and”Dividends
Second' Six Months
Earning require
ments Balance of
Year (Excluding
Charge-offs)
fC ol.2 Less Col«,l)
(4)
Estimated Earnings
D istribution
A ll Sources
of Estimated
Second Six Months
Earnings Pro~
(Based on F i ‘ £ t
r
rated to EarftSix Months* Average) ing Requirements
165,868
v 1,31 5 ,0 0 0
♦ 1 ,1 4 9 ,1 3 2
£ 1 ,2 1 2 ,6 4 9
« 1,282,475
892,968
4 ,33 6 ,0 0 0
3 ,4 4 3 ,0 3 2
4 ,3 5 1 ,0 0 6
90,335
1,4 1 0 ,0 0 0
1 ,3 1 9 ,6 6 5
Cleveland
240,000
1 ,6 3 9 ,0 0 0
Richmond
40,000
A 1 ant a
-fc
Chicago
Bo
n
$
(6)
(5)
Estimated Earnings
Exclusive of B ills
Second Six Months
($*ased on F i r s t
Six toonth a* Average)
( 8)
(7)
D istribution
Ka|io
Eafnings from
B ills
Distri*
bution
0 jf. Eatimat ed
»
(Co I . T U fsj Cal,6)
597,993
$ 684,482
3,841,920
3,529,943
311,977
1 ,53 4 ,3 4 1
1,473,286
1,003,153
470,133
1 ,3 9 9 ,0 0 0
1,753,021
1,559,518
1 ,288,990
270, 528
973,000
933,000
989,060
1,040,291
862,732
177,559
77,938
742,248
a^O,186
888,587
915,529
657,290
258,239
215,763
2,362,713
2 ,146,950
2 267,756
,
2,396,155
1,710,772
685,383
15%
S t•_ ju is
65,519
1 ,0 2 0 ,0 0 0
1 ,0 8 5 ,5 1 9
1,125,293
1, 210,920
904,277
306,643
1%
&i-
^apolis
13,733
751,700
737,967
618, 626
823,793
459,720
364,073
8i
Kansas City
24,167
1,0 6 3 ,8 5 9
1,088,026
1,057,490
1,214,590
805,912
408,678
9#
Dallas
14,241
732,355
746,596
931,598
834,801
654,770
180,031
San Francisco
a . 000
1,6.23.000
1 .5 7 2 .0 0 0
1.817.851
, m ; 0,20
..JtJ&.’U M
429.852
#1 , 527,802
#17,968,875
$16,441,073
#18,347,278
*18,347,278
*13,799,700
4,547 ,578
New Y0 rk
Philadelphia
Tot als
«
\
^
^
107.
4S
/
101
.
100£
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131.
FEDERAL RESERVE
BOARD
Office Cor
S u b je c ts
’
At the meeting of the Board this morning, there was ordered circulated
among the members of the Board for their
in format ion t h e .
attached letter j 6 .¥"
from the Governor of the Federal Reserve Ban!:
Tew York with regard to
the credit situation, in which he also reports on the progress being made
in the reorganisation of the hank resulting from its recent removal to the
new building
Digitized•forN Nror a ri a
Ol FRASERoro
TKM srm
f i T
Governor Or 1 3 singer
I r. Platt v'
I'r. H a m l i n —
J/r. I'illevL^'
Ir. James
Hr. Ouominghaic - *
r
I r. L clntosh
&JUI
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Job * •, 1926.
\
M doar Governor Strong*
y
I bog to aokaovlodgo roooipt of yoar lottor of Juno 4 /
firing yoar Tlom on tho orodlt situation and also i&at yoa
aro doing in tho way of oooaanioa la tho administration of
your bank, a ll of ^iofe is rsry interesting.
Tory traly yours,
D B* Orlssingorf
«
Governor.
Mr* BenJ. Strong* Sotomor#
fodoral Boserre Bank«
Von Tort, I# I#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
\
Fe d e r a l R e s e r v e
Ba n k
o r N e w Yo r k
June 4 , 1925*
Federal Reserve Board,
Washington, D. C.
Attention - Honorable D. R. G rissinger
Dear Governor C ris s i% e r :
There has been so l i t t l e d&velopir*g in connection with the money
market th a t I have had no occasion to write you p a rticu la rly on th is su b ject, nor
to suggest a meeting of the Open Market Investment Committee.
The only pending
m atter requiring action is the maturity of some $31,000,000 of our Government
holdings on June 15.
While i t is understood th a t we w ill an ticip a te th is
m aturity by purchasii^ about h alf of th a t amount of some other issu e, I do not
y e t fe e l ce rta in th at the en tire amount should be repurchased, nor, in f a c t ,
whether i t may not l a t e r be necessary fo r us to consider the wisdom of slig h tly
reducit\g the to ta l of the account.
I t depends larg ely upon the way our money
market develops.
At the present time our member banks are owing us in New York City
an average something under or something above $100,000,000 accordir^g to whether
th ere i s a flow of funds to N York or away from New York;
ew
but, roughly speak
in g, I should say th at about $100,000,000 i s the average amount of our c re d it
now required by the New York market.
Under these conditions, ana with a 3 - 1 /2$
discount r a te , i t i s reasonably to be expected th at there will be(
5jo':m
a.torlaX
decline in the general le v e l of N York r a te s , and th a t we w ill continue a
ew
f a ir ly la rg e p o rtfo lio of b i l l s so long as our buying ra te s are continued a t the
present le v e l.
It w
ould probably be to our advantage i f we were now t o lo.se
gold, as th e increased borrowing by our members resulting from such lo ss would
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK
OF
NEW YORK..
.........
„
GoV6I*nQr C ri SSlf
F
6 .4 * 2 5
o ffse t the liquidation of our discounts which w an ticip ate will occur th is
e
summer.
On the whole, I am inclined to think th at while jno\change i s necessary
(oi^desirable in our discount ra te , i t may, a l i t t l e l a t e r , be desirable fo r us to
make some aligh t advance in the ra te s a t which we buy b i l l s , especially i f there
are evidences of any considerable speculative a c tiv ity on the stock exchange.
For the immediate fu tu re , I should say th at w are in a waiting period but th at
e
within the next few weeks i t may be desirable to have a meeting of the Open
Market Investment Committee and have another review of the money market situ ation
as a whole.
^
I also want to send you something in regard to the progress of the
reorganization of the bank resulting from moving into our new building.
Our
problem, as you know, was to work out a plan of economy of operation, which has
been in course of development ever since 1921, lookir^ to the completion of our
building, in such a way as to absorb the added co st of operating the building,
including taxes.
While the work i s s t i l l some v/ays from completion, the resu lts
of i t we regard as s a tis fa c to ry .
The salary li a b i l i t y of the bank on January 31, 1924 (a f t e r making the
salary in creases in th at month) was $ 4 ,6 3 2 ,0 0 0 .
O M 31, 1925 i t was $ 4 ,2 2 1 ,0 0 0 .,
n ay
a reduction of $411,000, of which $244,000 represents a reduction in the f i r s t fiv e
months of th is year and does not include a further reduction of $95,000 which i s
e ffe c tiv e within the next sixty days.
The to ta l cost of operating the bank fo r the f i r s t fiv e months of th is
year was $ 2 ,7 2 8 ,2 9 3 .3 1 ;
fo r the f i r s t fiv e months of l a s t year $ 2 ,7 5 3 ,9 8 9 .3 1 .
The budget fo r the f i r s t fiv e months of th is year was $ 2 ,8 1 1 ,5 4 9 .6 0 .
In other
words, the cost of operation for th e f i r s t fiv e months of 1925 was $25,696 le s s
than the f i r s t fiv e months of l a s t y ear, and $83,256.29 le s s than th is y e a r's
budget.
But in order to get an accu rate p ictu re of operation, i t would be f a ir to
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK
OF
u
NEW YORK........................
Governor C rissi
ir
6 .4 .2 5
o ffs e t th is year*s operating costs by the amount of rents to be co lle cte d , which
amounts to $ 4 7 ,5 8 5 .6 2 fo r the f i r s t fiv e months, and fo r th e f u ll year will be
$140,700.
The to ta l rental to be received from the Annex Building beginning M 1,
ay
1926 w ill be $195,000 per annum, which may be fu rth er increased by perhaps as much
as $25,000 per annum in 1929, when one of the present le a se s exp ires.
The expenses
of operating the Annex Building, including taxes and dep reciation , will amount to
about $95,000 per annum, thus leaving a net p r o f it of about $100,000 per annum
beginning in 1926.
This represents a return of about 4 -2 /3 $ on the to ta l o rig in al
cost of the property, and about 6 .2 $ upon i t s present book value.
W have fin a lly succeeded in effectin g an adjustment of a ll questions
e
covering le a s e s in the Equitable Building, which will assure us a minimum net
p r o f it of a l i t t l e more than $10,000 per annum fo r the next nine y ears, with a
p o ssib ility th a t the p r o f its may be a l i t t l e more than $24,000 per annum.
In
other words, the leases will n o t, in any event, be an expense to the bank, and they
may produce a considerable revenue.
I t i s d i f f ic u lt to estim ate what fu rth er savings can be effected follow
ing the completion of the various plans fo r economies which are now in prospect.
But the introduction of the paper money counting machines may re su lt in savings
of anywhere from $100,000 to $200,000 a fte r the force of money counters i s fu lly
train ed in th e ir use.
Various other economies of operation are gradually being
introduced which have the prospect of reducir^; our expenses by a fu rther $100,000
or $200,000.
Considering th at the volume of business being handled by the bank for
the f i r s t fiv e months of th is year i s roughly 8% g re a te r than the amount handled
fo r the f i r s t fiv e months of l a s t y ear, and th a t the volume i s lik ely to continue
gradually to in crease, I think i t i s safe to say th at by the end of th is year
the operations of the bank will be reduced to a minimum p ossib le cost and th a t w
e
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK OF
NEW YORK..
Governor Grissinge
6.4.85
w ill then be enjoying th e fu ll benefit of the b e tte r f a c i l i t i e s of the new building.
At th at time we are planning to reorganize the c a fe te ria serv ice so th at
the e n tire s ta f f will get lunches fre e of c o s t;
th e ir lunches in the building.
but they will be required to have
In the end, we believe th is will be an economy
fo r the bank and a very g re a t b en efit to the employes.
I beg to remain,
Very truly yours,
AT BO
A
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Deer Mr. Out!
thin will confirm m telearsa to you of this
date, advising that ths Federal Reserve Board has
approved the program of the to m Itortoy
Cogsalttf* to replsoe the fSIf000T
f
000 of June 15th
iRtSiHwaito tEeSyaiSiU'apeoialacaount,, by the
purohaae at the present time of $15,000,000 of
securities and the purchase of the remaining
$16,000,000 efter Jime 15th.
Very truly yours,
(
O- R*
D. H. Grlssinger,
Governor.
Hr. J. H. Oase, Deputy Governor,
Federal Reserve Bank,
Hew York, ». I.
---Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m 148 A
F E D E .^ A k
R E S E R V E
J
B O A r*D
LEASED WIRE SERVICE
*7 ,
W A S H IN G T O N
The telegram given below is hereby confirmed.
___
May 29, 1925*
Case - New York
Board approre. Op«n Market Committea r«pl*oing»Il,000,000
®hioh will run off Jun* 15th by purohaM no* of *16,000,000
end puroh&se of |4»j0eO any tiaa aftor June 18.
/ /p
'
o oo.;
'
CBI3SXH0KR
^
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l K e s e r v e
Ba n k
CEIVED
of
N e w Yo r k
6 1925
' ceafFicE o f
TH E GOVERN OR
M 25, 1925
ay
Federal Reserve Board,
Washington, D. C.
A ttention: Honorable D. R. C rissin ger.
Dear Governor C rissin ger:
I am th is morning in receip t of your favor of May 21,
in regard to the authorization to increase the Open Market In v estment Account in Government s e c u ritie s by a possible fu rth er purchase
of approximately $ 5 0 ,0 0 0 ,0 0 0 .
I t has seemed to me th a t the recent red istrib u tio n of
investments, togeth er with the situ a tio n in the money market, make
i t unnecessary a t the present time to consider exercisin g the authori
zation, and I c e rta in ly would not fe e l w illing to do so now without
fu rth er consultation with the Committee and the Board.
I t may possibly be desirable to have a Committee meeting
early next month, and I hope th at you w ill be able to attend, and we
may then have a f u ll exchange of views.
I beg to remain,
Very tru ly yours,
____
Reproduced from the Unclassified / Declassified Holdings of the National Archives
May 22* 1926*
Vf'-
Dear l f Case:
it
I acknowledge receipt of and shall bring
to th# attention of the other members of the
Board ygiir Xetteg. of_t 21st Iinstant. concern
_ he
ing thi flnal adjustment effected May 21, 1925
of the amount of Ocrrensaent securities in the
System aooount*
Very truly yours.
(Signed) D. R„ C rta tfn * *
Owen s o r *
1 r 4* H. Case, Deputy Governor,
6*
Federal Reaerve Bank,
Hew Y0rk, H*Y#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
R E C EIV ED
MAY 2
Fe d e r a l R e s e r v e
o f
2 1925
OFFICE OF
i
THE GOVER N O R
Ba n k
Ne w Y o rk
Open market Investment Committee
for the Federal Reserve System
May 21, 1925,
Dear Governor Crissinger:
Referring t
l 6 l i a v e mac*e the final ad
%
o
justment to-day of $23,149,500 Government securities in the System
Account, the details of
which are shown on the statement attached hereto.
This together v»ith the two previous adjustments of $28,000,000 each
brings the total to $79,149,500*
The Federal Reserve Bank of Kansas City advised the Committee
that the taking of their full ailolikent of Government securities v^ould
leave them insufficient collateral to secure their note issue and requested that $4,000,000 of their adjustment be in bills rather than
Government securities.
Therefore they have received additional bills
amounting to $4,000,000 with a corresponding reduction in their partic
ipation of Government securities, Which lias been offset in the allotment
by the Federal Reserve Bank of Chicago.
This caange reduces the total
System readjustment from $83,149,500 to *79,149,500*
Very truly yours,
. Case
.
Deputy Governor
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
Enel.
'h 'vjv s '
t/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m J N o . 131
FEDERAL RESERVE
OARD
Office Cor
\
■
___ia_9jj^2;5.
Subject:.
T ny^ll
Edd;
'At the meeting of the 3oard this morning, there was ordered circulated
among the members of the Board for their information t h e .attached letter ) &
from the Governor of the Federal Reserve Bank of Hew York with regard to
the credit situation, in which he also reports on the progress "being made
in the reorganisation of the "bank resulting from its recent retnoval to the
------------------^ --------------new buildinr
Governor Oripsinger tS'
IT. Platt n /
I - # Hamlin—
.r
I‘ T U l e v t ^ ^
.r.
T ' , J arises
.r
Hr. Ommingharc -h
I'r# lieInto sh yj
••▼•bmmkt r t r a oo r c
forr n i t
A
/
•
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Juna ®* &9B6,
M door aorornor Strongs
y
I tog to aaknoslodgo rooolpt of your lotto? of Juno 4 j
giving yoar vlovs on tho orodit situation «nd also *hat yon
are doing in tho way of oooncnlos In tho administration of
your bask, all of ifeloh lo w y l&torostlng*
Tory truly yours*
& R Qrlsslngor*
• #
0ovomer.
Hr* BenJ. Strong* dovoraor*
Fodoral Bosorvo Bank,
V lark, ft* I*
ow
Reproduced from the Unclassified / Declassified Holdings of the National Archives
\
\
Fe d e r a l R e s e r v e
Ba n k
o r N e w Yo r k
June 4 , 1925,
Federal Reserve Board,
Washington, D. G.
Attention - Honorable D. R. C rissinger
Dear Governor Crissii\7er:
There has been so l i t t l e d&velopir\g in connection with the money
market th a t I have had no occasion to w rite you p a rticu la rly on th is su b ject, nor
to suggest a meeting of the Open Market Investment Committee,
The only pending
m atter requiring action is the maturity of some $31,000,000 of our Government
holdings on June 15.
While i t i s understood th at we will an ticip a te th is
maturity by purchasir^ about h alf of th a t amount of some other issu e, I do not
y et fe e l ce rta in that the en tire amount should be repurchased, nor, in f a c t ,
whether i t may not l a t e r be necessary fo r us to consider the wisdom of slig h tly
reducit^ the to ta l of the account.
I t depends larg ely upon the way our money
market develops.
At the present time our member banks are owing us in New York City
an average something under or something above $100,000,000 according to whether
th ere i s a flow of funds to N York or away from New York;
ew
but, roughly speak
in g, I should say th at about $100,000,000 i s the average amount of our cre d it
now required by the New York market.
Under these conditions, and with a 3-1/<#
discount r a te , i t i s reasonably to be expected th at there will be(jjiojmateriaX
decline in the general le v e l of N York r a te s , and th a t we w ill continue a
ew
f a ir ly la rg e p o rtfo lio of b i l l s so long as our buying ra te s are continued a t the
present le v e l.
It w
ould probably be to our advantage i f we were now to lo se
gold, as the increased borrowing by our members resulting from such lo ss would
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK OF
Governor Crissir
NEW YORK..
6 .4 .2 5
r
o ffs e t the liquidation of our discounts which w a n ticip a te will occur th is
e
summer.
On the whole, I am inclined to thinlc th at while
qge i s necessary
d esirab le in our discount ra te , i t may, a l i t t l e l a t e r , be desirable fo r ue to
make some slig h t advance in the ra te s a t which we buy b i l l s , especially i f there
are evidences of any considerable speculative a c tiv ity on the stock exchange.
For the immediate fu tu re , I should say th a t we are in a w aitii^ period but th at
within the next few weeks i t may be desirable to have a meeting of the Open
Market Investment Committee and have another review of the money market situ ation
as a whole.
I also want to send you something in regard to the progress of the
reorganization of the bank resu ltin g from moving into our new building.
Our
problem, as you know, was to work out a plan of economy of operation, which has
been in course of development ever since 1921, lookir^ to the completion of our
building, in such a way as to absorb the added co st of operating the building,
including ta x e s.
While the work i s s t i l l some ways from completion, the re su lts
of i t we regard as s a tis fa c to ry .
The salary l i a b i l i t y of the bank on January 31, 1924 ( a f t e r making the
salary in creases in th a t month) was $ 4 ,6 5 2 ,0 0 0 .
O M 31, 1925 i t was $ 4 ,2 2 1 ,0 0 0 .
n ay
a reduction of $ 4 1 1,000, of which $244,000 represents a reduction in the f i r s t fiv e
months of th is year and does not include a fu rth er reduction of $95,000 which i s
e f fe c tiv e within the next sixty days.
The to ta l cost of operating the bank fo r the f i r s t fiv e months of th is
year was $ 2 ,7 2 8 ,2 9 3 .3 1 ;
fo r the f i r s t fiv e months of l a s t year $ 2 ,7 5 3 ,9 8 9 .3 1 .
The budget fo r the f i r s t fiv e months of th is year was $ 2 ,8 1 1 ,5 4 9 .6 0 .
In other
words, the cost of operation fo r th e f i r s t fiv e months of 1925 was $25,696 le s s
than the f i r s t fiv e months of l a s t y e a r, and $83,2.56.29 le s s than th is y e a r's
budget.
But in order to get an accu rate p ictu re of operation, i t would be f a i r to
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK
OF
NEW YO RK.......................
Governor Griasi
rr
6*4.215
o ffs e t th is year*s operating costs by the amount of rents to be co lle cte d , which
amounts to $ 4 7 ,5 2 5 .6 2 fo r the f i r s t fiv e months, and fo r th e f u ll year will be
$140,700.
The to ta l rental to be received from the Annex Building beginning M 1,
ay
1926 w ill be $195,000 per annum, which may be fu rth er increased by perhaps as much
as $25,000 per annum in 1929, when one of the present le a se s exp ires.
The expenses
of operating the Annex Building, including taxes and dep reciation , will amount to
about $95,000 per annum, thus leaving a net p r o f it of about $100,000 per annum
beginning in 1926.
This represents a return of about 4 -2 /3 $ on the to ta l o rig in al
cost of the property, and about 6 .2 $ upon i t s present book value.
W have fin a lly succeeded in effectin g an adjustment of a ll questions
e
covering le a s e s in the Equitable Building, which m il assure us a minimum net
p r o f it of a l i t t l e more than $10,000 per annum fo r the next nine y ears, with a
p o ssib ility th a t the p r o f its may be a l i t t l e more than $24,000 per annum.
In
other words, the leases id.ll n o t, in any event, be an expense to the bank, and they
may produce a considerable revenue.
I t i s d i f f ic u lt to estim ate what fu rth er savings can be effected follow
ing the completion of the various plans fo r economies which are now in prospect.
But the introduction of the paper money counting machines may re su lt in savings
of anywhere from $100,000 to $200,000 a fte r the force of money counters i s fu lly
train ed in th e ir use.
Various other economies of operation are gradually being
introduced which have the prospect of reducing our expenses by a fu rther $100,000
or $200,000.
Considering th at the volume of business being handled by the bank fo r
the f i r s t fiv e months of th is year i s roughly 8% g re a te r than the amount handled
fo r the f i r s t fiv e months of l a s t year, and th a t the volume i s lik ely to continue
gradually to in crease, I think i t i s safe to say th at by the end of th is year
the operations of the bank will be reduced to a minimum possib le cost and th a t w
e
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK OF
NEW YORK..
Governor Crissinge
6.4.25
w ill then be enjoying the fu ll benefit of the b e tte r f a c i l i t i e s of the new building.
At th at time we are planning to reorganize the c a fe te ria serv ice so th at
the e n tire s ta f f will get lunches fre e of c o s t;
th e ir lunches in the building.
but they will be required to have
In the end, we believe th is will be an economy
fo r the bank and a very g re a t b en efit to the employes.
I beg to remain,
Very truly yours,
AT BO ar t
Reproduced from the Unclassified
Declassified
Holdings of the National Archives
0 ^
my 29, 1925
v
Dear Mr. Oeeei
this will oonfim m te leg rsato you of thie
d«te# advising tkmt the Federal Reierve Board fees
approved
of the O
pen Ifcrtot Xrvvtitaint
CoiWittejU^^
the Systei's Ipeoisl account, by tho
puroheee * t the present tine of $15,000,000 of
securities and the purchase of the remaining
fl0,000*000 Sfber June 15th.
Very truly youre,
D R Crt*in*er.
- *
D. R. Crissinger,
Governor.
Ik*. J . H. Case, Deputy Oovernor*
Federal Reeerve Bank,
H York, IV Y.
ew
*
ir"
------ ---
1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m 148 A
f e d e r a l
r e s e r v e
: b o a ^ d
LEASED WIRE SERVICE
W A S H IN G TO N
The telegram given below is hereby confirmed.
29* 1926*
C«a« - Hew Tork
Beard appror*i Opm
Coanittro r«pl»olne »S1.000.000
ihloh will run off Jun. 18th by purefcM. now of ♦16,000,000
and puroh*». of IWjeeO M y tia. «ft»r Jun. IB.
/ /& Ooo o V0&
'
'
08I83XHOH®
4
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
of
Ba n k
N e w Yo r k
6 1925
pICE OF
THE feoVEBNOR
"ar
M ^5, 1925.
ay
Federal Reserve Board,
Washington, D. C.
A ttention: Honorable D. R. C rissin ger.
Dear Governor C rissin ger:
I am th is morning in receip t of your favor of May 2 1 ,(
in regard to the authorization to increase the Open Market In v estment Account in Government s e c u ritie s by a possible fu rth er jw rch §^ .
of approximately $ 5 0 ,0 0 0 ,0 0 0 .
__________
I t has seemed to me th a t the recent red istrib u tio n of
investments, togeth er with the situ a tio n in the money market, make
i t unnecessary a t the present time to consider exercisin g the authori
zation , and I ce rta in ly would not fe e l w illin g to do so now without
fu rth er consultation with the Committee and the Board.
I t may possibly be desirable to have a Committee meeting
early next month, and I hope th a t you w ill be able to atten d , and we
may then have a f u ll exchange of views.
v
I beg to remain,
Very tru ly yours,
BENJ. STRO G*
N
Governor.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
May 22, 1926*
Dear lif t Case:
I acknowledge reoeipt of and sh&ll bring
to the attention of the other members of the
Bo«rd ymir letter of the 21etfln*tant. coneem
the final adjuatiaent effected May 21, 1928
of the Amount of Government eeeuritie® in the
Syatea account.
Very truly yours,
(Signed) D. R. Cris« ng«,
Ctavernor*
W * J* H* Case, Deputy Governor,
De
Federal Seeorro Bank,
e
Hew T|Tim 1 *
ptt 7 Y«
Reproduced from the Unclassified / Declassified Holdings of the National Archives
R E C EIV ED
MAY
Fe d e r a l R e s e r v e
of
2 2 1925
OFFICE OF
THE G O V E R N O R
Ba n k
N ew York
Open market Investment Committee
fbr tLe Federal Reserve System
May 21, 1925-
Dear Governor Grissinger:
Referring t
o
v e ~ av’ i
" n
e nac*e the final ad -
justment to-day of $23,149,500 Government securities in the System
Account, the details of which are shown on the statement attached hereto.
This together with the two previous adjustments of $28,000,000 each
brings the total to $79,149,£00.
The Federal Reserve Bank of Kansas City advised the Committee
that the taking of their full ailota*ent of Governme
:;urities v«/ould
leave them insufficient collateral to secure their note issue and requested that $4,000,000 of their adjustment be in bills rather' than
Government securities.
Therefore they' have received additional- bills
amounting to &4,000,000 with a corresponding reduction in their partic
ipation of Government securities, which has been offset in the allotment
by the Federal Reserve Bank of Chicago.
This caange reduces the total
System readjustment from $83,149,500 to $79,149,500*
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
Enel.
t/
T
Reproduced fro th Unclassified
m e
3TATEW
1NT SH W G FINAL INSTALkENT (^ 23,149,500) IN READJUSTM
O IN
ENT O G V N EN SECURITIES IN THE
K O ER M T
SYSJEh A U T EFfECTED faA 21 U D PLAN OUTLINED IN LETTER D TED kAY 6 , 1925 .
CCO N
Y
N ER
A
Issue
1925
1925
1925
1926
1926
1927
1927
1928
4 \/lf T/N
2 3/4^ C/I
4 3/8/° T/N
4 3 /4 /, T/N
4 \/\% T/N
4 3 / 4/ T/N
4 X/2% T/N
4 1/45? 3rd L/L
$
2,8 8 2 ,0 0 0
488,000
3 .7 1 8 .5 0 0
5 . 120.000
2 .9 5 3 .0 0 0
2 . 210.500
2 . 990.500
2.7 8 7 .0 0 0
IOO.O8969
99*99806
100.56655
101 . 02735
Selling
Value
Cost
Value
Selling
P rice
100,08969
99.99806
100.6875
101,15625
101.03125
102.000
101.96875
101.90625
101.63795
101.84294
101.42965
4 2,884*584.99
487,990,58
3 ,7 4 4 ,0 6 4 .6 9
5 .1 7 9 .2 0 0 .0 0
2 ,9 8 3 ,4 5 2 .8 1
2 .2 5 4 .7 1 0 .0 0
3 ,0 4 9 3 7 5 -4 7
2 . 84Q a 21 . 1i
4,4 9 7 .4 9
6 ,5 9 9 .6 8
4 ,1 4 8 .2 2
8 ,0 0 3 .0 9
3 , 762.11
1 3 .2 8 2 ,6 1
$ 2 3 ,3 8 3 , 212-12
100.89077
4 2 ,8 8 4 ,5 8 4 .9 9
487,990.58
3 ,7 3 9 ,5 6 7 -2 0
5 ,1 7 2 ,6 0 0 .3 2
2 ,9 7 9 ,3 0 4 .5 9
2 ,2 4 6 ,7 0 6 .9 1
3 ,0 4 5 ,6 1 3 .3 6
2 ,826 ,'844*51
123,149.500
*23 ,422*505.02.
* 4 0 .2 9 3 .2 0
PARTICIPATION IN READJUSTM
ENT
F in a l Instalment ($2 3 ,1 4 9 .5 0 0 )
P a rticip a tio n
in P ro fit
Purchase
Sale
Boston
New York
Philadelphia
Cleveland
Hi chmond
A tlanta
Chicago
S t. Louis
xklnneapoiis
xxKansas City
Dallas
San Francisco
11,000,000
2 ,8 4 0 ,0 0 0
1 2.90 3 .5 0 0
927 ,000
4 .2 1 3 .5 0 0
898,000
|
$>17,241,000
3 1 ,8 4 6 ,0 0 0
6 ,7 7 3 ,0 0 0
12,28 9 ,5 0 0
1 ,5 6 3 -0 2
4 ,0 1 2 ,5 0 0
;
R ecapitulation T otal Readjustment i^79»149J_5CK)I
P a rticip a tio n
in P ro fit
Purchase
Sale
4 9 ,7 9 7 -6 4
1 8 ,098.39
3 ,8 5 0 .1 3
6 ,9 8 4 .0 2
5,629,000
10,398,000
2,212,000
P ro fit
$ 32,066*65
59 , 231.65
12 , 598.34
22, 857.55
20 , 937.47
8 .4 0 8 .5 0 0
2 5.751.500
835,500
4 .0 8 3 .0 0 0
4 .6 8 2 .0 0 0
10.808.500
12,506,000
to *. 149. T O 4 2 3 ,149.500
O
1 4 .3 4 0 ,0 0 0
j.40,293-20
#79.149,500 <879.149.500
^147.691.66
XJt©deral Beserve Bank of Minneapolis has received additional allotment of b i l l s .
xxFederal Reserve Bank of Kansas City has received additional allotment of b i lls amounting to #4,000,000 in lieu of lik e am#unt of Government s e cu ritie s ,
Holdings of th National Archives
e
June 15,
Sept .1 5 ,
Dec. 15,
Mar. 15,
Sept .1 5 ,
Mar. 15,
Dec. 15,
Sept .1 5 ,
Book Value
(P rice)
I Declassified
Amount
Sold
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Dear downer Strong*
At the noting of the Board thia morning,
Attention was called to the feet that<@jLB*£~
abases have been made by the Open Sferlcg£ Invest
ment C
1*sti on f£L_lnorg*ec
c
the~Ioeount bypuraftaeing 150^000,000 of (torero*
ment securities firoa time tcTMme. She Board,
upon review of existing conditions, feels that
before any purchases to increase the aggregate
of the Special Barestraent Account are made, they
should be submitted to the Board for considerstlQn*
Very truly yours,
^
Crissing^
dovernor
Hr. Benjamin Strong, Governor,
Federal Reserve Bank,
Hew York, 9*1.
.
1/
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Ite&r Mr* Oasts
1*
latfr of M«r l£^Wel*«ing
"
t*
#f m m .
It JUMP*
..“ “ to
|BO,Q O O , o d « th« pla* ttrtllatd *7
O .O O
tha <*•» «K k*t tar—tmmX CtaatttM a t lt«
Mating o» iprll »tfc.
Itew Uttosr ha» town
fcwraght to «*• »tt«ntl*n of th« M t m •*
th« tMltf*
f«7 truly jw i i
r\
'Walter D. I d d y
Wml%*T Zm SAdyg
3«®retaiy,
H
r#
S» Oilf«
M o r a 1 Bt«er?* tafc*
Tor*, V. T*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
RECEIVED
Fe d e r a l R e s e r v e
of
Ba n k
New York
333
M AY 1 G 1925 |
■ 1o f f :
THE G
-C
Open Market Investment Committee
for the Federal Reserve System
Federal Reserve Board,
Washington, D C»
*
A ttention;
Honorable D R. C rissinger
«
Dear Governor C rissin g er:
For your information, we are making a further read ju st
ment to-day amounting to # 28,000,000 of Government s e c u ritie s in
the System Account under the plan outlined by the Committee at
i t s meeting held April 30 an.d we are attach in g hereto a statement
showing complete d e ta ils .
This, togeth er with the red istrib u tio n
of # 28,000,000 on M 13, brings the to t a l to date to $56,000,000,
ay
The to ta l red istrib u tio n w ill be completed through the
fin a l installm ent to be made on M 21, 1925,
ay
Very tru ly yours,
.
I***
*" '
E n cl. ( l )
, / s -
'
flM..
Asm
V’t '/V
^
-7V / / ^
I
j
OR I
Amount
Sold
Issue
Book Value
(Price)
Selling
Price
Cost
V alue
Selling
V alue
3,490,377.69
Profit
June 15, 1925
4 1/2/ T/N
£ 3,486,500
100.11122
100.11122
v 3,490,377.69
Sept.15, 1925
2 3/4/c C/I
591,000
99,99796
99.99796
590^988.00
590,988.00
^ec. 15, 1925
4 3/8/o T/N
4,497,000
100*58289
100.75
4,523,212.74
4,530,727.50
7*514.76
Mar. 15, 1926
4 3/4/ T/N
6,192,500
101.04803
101.21875
6,257,399.51
6 ,267,971.09
10,571*56
Sept.15, 1926
4 1/4/ T/N
3,572,500
100.90186
101.0625
3,604,719-09
3,610,457.81
5,738.72
Mar. 15, 1927
4 3/4/ T/N
2,673,500
101.65277
102.0625
2,717,686.91
2,728,640.94
io,954*c3
Dec. 15, 1927
4 l/2/o T/N
3,616,500
101.85473
102.000
3,683,576.56
3 ,688,830.00
5,253.44
Sept. 15, 1928
4 I/ 4 0 3rd L/L
/
3*370,500
101.43673
101.84375
3*418,924.98
3.432,643.59
13,718.61
*=28,286,885*48
428,340,636.62
*53,751*14
^ 28,000,000
>
PARTICIPATION IN READJUSTMENT
Sale
Boston
New York
Philadelphia
Cleveland
Richmond
At 1 ant a
Chi cago
St. Louis
x Minneapolis
.Kansas City
Dallas
San Francisco
4 5,806,000
10,724,000
2,280,500
4,138,500
5 ,051,000
-
#28 , 000,000
Purch ase
—
-
956,500
4,345,000
8,671,500
-
4,986,500
4,211,500
4.829.000
* 28 , 000,000
Participation
in Profit
*11,145-27
20,586.51
4,378.33
7 , 944.44
9,696.59
-
*53,751-14
x Federal Reserve Bank of Minneapolis has received additional allotment of bills.
*
-
-
Reproduced fro th Unclassified / Declassified Holdings of th National Archives
m e
e
STATEMENT SHOWING SECOND INSTALLMENT ($28,OOO,OOO) IN READJUSTMENT OF GOVERNMENT SECURITIES IN THE SYSTEM ACCOUNT
________________________ EFFECTED MAY 15 UNDER PLAN OUT-LINED IN j
UETTER DATED MAY 6, 1925___________________________
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3 3 3A
Sfejr 14, 192S.
I
Ur*
i
?
In aooordanoo wltk
oaoloolag l«r«vitli * copy of
oaralag* aaA M9 »»M of tbo
baaka for tbo month of April
jour roqaott I aa
our »tat<M»at of
Fodornl m i m
%$M«
I uadorstoad i l i l oort»ia diatribatloa
of Ualtod 3taton *o<reri*gr*fcoldlago w illoliortljr
bo *ado MNttg tho wioma f ta***l i w w i bwa*
airi if ;jour baak baa *»y aafcodalo proporod
• to ilai tho diatribaUoa mi i t w ill tako plaao,
1 should bo n r y glad to roooiTo * oopy thoroof.
It w ill »U e bo apgroolatod If you will bo kind
oaoagfe to aond a» oopioo of any faturo atato»oat*
ootcrlas rodiatribaiioa of oooarlty or aoooptaaoo
holding* botwooa tlkt books*
Tory truly y w s *
(gitmed} B. L. Sraead
S* X* Snood* Cblof§
aivtsloa of Saak Operatic**.
Hr. L. 1* Bound**
Controller of Aoooaats*
Fodorml Bosorvo Bonk*
Sow York* I* Y*
Saoloouro.
^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
M 7» i r a »
ay
M doar ttovaraort
y
2bi« will aGtaiowladg® your lottor or M 6 onay
closing alnute* of tho mooting of t e Open Market Inregtf*
®«nt Committee* copy of let U r to i*ove«Mir jfeaaher and
a t at anant siiowiac rediatrltoutioa of government aaooritlea.
Tory truly youra 9
I). H. Oriesinger*
Governor.
Mr. BenJ* Strong, tioreraor,
MMeral Heaenre SaaJc9
York, H Y,
«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
of
Ba n k
N ew York
May 6, 1925
Dear Governor Crissinger:
liith this I am enclos
^
of the minutes
of the meeting of the Open Market Investment Committee
held at the Federal Reserve Bank of New York on April
50, 1925.
For your information I am also enclosing
copy of letter,.with accompanying data, which is being
sent to-day to the governors of all the Federal reserve
banks.
Very truly yours,
BENJ. STROKOT
Chairman, Open Market
Investment Committee
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
Ends.
(4)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
^ _____..... ....... ....
Ift,,
l.r*:
OV
f
Copy of this letter e f t to -governor of oach Federal reserve b s s
sc
ai;
j
f
\.
—
. ..' ... -.. ...... ~.....
la y et 192S.
Dear Governor teacheri
Pursuant to the direction of the conference held in f&eMagton in April,
I submitted to the mambers of ths Opsn »&rket Investment Committee alternative fro*
posals for & redistribution of tho short-term Qoveiment securities now hsld in tho
Syetem Account, bat found that motion by the Cossmitte® could not be had without a
meeting, which was accordingly held at this office on April 30. . A l . t e meabers
.l..h
of the Committee were present, as well a* Qovernor Crissinger *®d Dr* Stewart,
the
minutes of the meeting of the Coesmittee are enclosed herewith*
Yarioue plane for effecting the re&dju stment were aubmit' ed end discussed,
end it wee finally unanimously agreed by the Committee*
1. that the distribution could[not]be satisfactorily effected ufon the
basis of earning requirements which woulcTISclud© estimated amounts to be charged
off against hulldings or losses.
fhat some of the other reserve banks had, during
the past year, made heavy charges against surplus on account of those itsms and the
estimate of earning requirements should therefore e*clud# the* from the calculation.
2* that the estimated #81.000,000 of securities to be sold by those r»~
smrve banka, to wit, Boston, Jiew Torki Philadelphia, Cleveland lyrnTlihicago, ahould
be transferred to those reserve banks shioh wake the purchases at the a&rket values
at which transactions can actually be wade on the day the transfer is effected*
5* thatjnOj allotment ahould be made to the Federal Reserve Bank of
Minneapolis for the reasons explained at the laahington Conference, hut that bills
purchased for the Coa*itteets account by the Federal Reserve Bank of Hew fork
ahould be allotted to the Federal Reserve Bank of Minneapolis until the equivalent
of their allotment of Oovernment securities was made up in their portfolio of bille*
The plan of distribution finally adopted is described in the enclosed
schedule % • ^lioh a so shows the results to each reserve bank of such redistribu
tion*
The figures vary slightly from the schedule preeented at the meeting of the
•samittem as the la tte r was msde up on the basis of total holdings of $£45,205,600
ce
rom
e Unclassified / Declassified Holdings of the National Archives
-
I -
ahlot wore later lnoreaeed to $280,041,600.
There ie alto aneloeed * et&teaent marked *B* showing the to td oaount of
eeourltiee to bo eold, tho book value, A an approxloation of tho •oiling value,
nd
with tho reeulting profit to tho eelling bank* which figure, however, lo not final
oo pricea soy change boforo tho aotual tranafer la offeoted.
Ifcore la alao ehoan on etatettect *C* enoloeed tho dot all a of eatiaated
earninge and expeneee and of the ratio of dletrlbutlon reeulting froai tho plan
adopted by tho Oomlttoo.
9111 you not, *9 aoon ao poeelble aftor tha receipt of thla latter* tele
graph *e another the plan la approved or not, and If for an/ reason I t la not ap
proved, will you bo good enough to at&te tho reoeone In the telegrao, eo that tho
Oomlttoo say give prompt eonaideratlon to any ojbjeotlona.
tho plan herewith eubaitted, t&loh oalla for * aale of pproxinately
$85,000,000 of Qovesimant eeourltiee by five banka to eix of the other reoorro
banka lo propoaod upon thla boala with the thought that thoae banka whose partloore to bo lnoroaood will got the benefit of the lnoreaeed earn Inge In*
sedlattly and without awaiting the poaalble purohaeo of the additional $60,0)0,000
or thereabout a aa w e authorised by the conference in Vaehtngton,
&
there lo eooo
uncertainty aa to whether theee purohaaea will bo Bade, and i f eo, how toonf eo
that the Gowaittee undertook to tike the distribution at thla ti»e with tho undei^etandlng that If additional purchasea are made under the exletlng authority, the
allotweate will bo aade eo aa to reetore to the banka now celling the equivalent
ratio of what they hare eold.
In Making thle distribution of Govern*cut aeourl-
tieo i t haa been de«aed deair able to extend the time over a period of e& from
y
two to three w
eefee*
f i l l you be good enough to bear In wind that thla account la an ex
ceedingly coaplloated one to conduot, and that the project now aubait ted aeeaa
Reproduced from the Unclassified I Declassified Holdings of the National Archives
~ 8 -
to tho Ooaalttoo to bo oquitnblo and to »«ot tho oltu&tion m noarly f e e«a be doao,
e
•ad to obrlftto trwioaotiono io the »urk«t which oight
not to b« in oocforolty
®ith tho Board* • rooolutlon doflaing tho pur^oaoo for s&loh tho a* operation* wro
conduotod.
I bog to reuadn,
Vary tr u ly your a,
3m .
STH0BG
Ch&iniDi O
pon N&xtot
XHT08t»«Q t COKlIlittOO
Ends. (4)
Hr. I. R faoohar,
»
O o raro o r, Fadaral ftooorvo
OLereluid, Ohio
B^alc o f C levelan d ,
Federal Heserve Board,
Washington, D. 0.
r
Gentlemen:
At Mr. Talley’s suggestion I am addressing the Board with refer
ence to its telegram to M m under date of March 261 in which attention is
called to the resolution adopted hy our "board at it's last meeting author
izing our officers to purchase for our own account government securities
up.to <$10,000,000, and directing us to suspend further purchases until
otherwise advised by the Federal Reserve Board.
I assume that Mr. Talley has given ample assurance, to which I
need not add, that neither our officers nor directors in talcing the
action referred to had the remotest thought of overstepping their authority or in any way disregarding the regulations and wishes of the Federal
Heserve 3oard. TTot only have the exigencies of "our situation required
that we seek every proper outlet for our funds consistent with system
policies, hut numerous events had transpired in connection wl th our own
investment program to give what seemed to us every reasonable assurance
that the policy embodied in our recent independent purchases of Govern
ment securities was not only one quite familiar to both the Federal Beserve Board and the Open Market Committee, but one which met with their
approval.
As is well known to the Board we have been confronted with no
more serious problem in the operation of this bank; than the provision of
sufficient earnings with which to absorb losses growing out of the unusual
number of failed member barites in this district. In the Fall of 1925 these
losses^began to develop in more or less determinable amounts, and with
the steadily decreasing demands from our member banks we faced a situation
which, in the absence of sufficient earning assets, promised a substantial
encroachment upon our surplus and the decidedly unwholesome effect in this
district, as well as elsewhere, that this circumstance would undoubtedly
create.
With an idea of precluding this possibility I took occasion when
in Washington the latter part; of September of that year to request per
mission of the Boar<T to buy independent of the Open jwarket Committee’s
operations $10,000,000 of Government securities, having previously ob
tained the acquiescence of the Open Market Committee in that proposed
.
action. TJoon mv return to Dallas Mr. Platt wired the Board’s approval.
/A
of my request and w e promptly initiated apurchasing program in keeping
with that authority. These purchases continued through the Spring of
1924 and by the first of June we had acquired, aside from approximately
§1,200,000 of three per cent Gold Conversion Bonds (which we had held for
several years) about $6,500,000 of these securities. During the latter
part of June, as our advances to member banks were increasing and we
were able to make satisfactory exchanges for bankers acceptances, we
made disposition of all the government securities acquired under the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
r
Federal Reserve Board,
-n
authority mentioned above,
T
,7itli the running off of our rediscounts in the Fall of 1924, however,
we were confronted with somewhat the identical situation which occasioned
our original request for permission to make individual purchases of govern
ments for our own account.
In discussing the matter with Mr. James of the
Federal Reserve Board on the occasion of my visit to Washington in October,
,
1924, I told him that we estimated it woulTTnTnecessary for us to" set up'
reserves of about $1,000,000 with which to absorb fairly well determined
losses growing out of indebtedness to us of failed banks*
Mr. James ex
pressed considerable interest in our situation and advi sed me that at least
twn rf fnp Federal Reserve Banks were buying long time government securities
independent of the ope^ yiarket committee7" a c t i v i t i e s . W h i l e I cannot say
that Mr. James definitely recommended that we follow the same course, it was
my impression that he felt there would be no impropriety in our doing so,
particularly as the authority previously granted us had^yfeve^been revoked.
CM October 24 the State Treasurer of Texas offered us $1,000,000 of
Treasury notes maturing in March, 1926.
It was our disposition to buy these
securities for our own account, but we were so anxious to take no step at
variance with the policies of the Open Market Committee that notwithstanding
our previous activities on our own account and the conversation I had with
Mr. James,
I wired Mr. Matteson under date of October 24 of our contemplated
action.
Mr. Case replied with a recommendation that we consult with the
committee before embarking on an independent program.
I thereupon advised
him of my conversation with Mr. James, as well as our understanding of the
activities of other reserve banks along the line of independent purchases,
assuring him at the same time of our desire to thoroughly conform our own
operations to those of the Open Market Committee. Mr. Case* reply confirmed
our understanding with reference to the individual purchases of some of the
other reserve banks and stated in that connection that we would have to ex
ercise our own judgment. He rather urged us, however, in the interest of
preserving the unity of the system policy to hold up any contemplated pur
chases until that phase of the matter could be discussed at the Governors’
Conference in November.
I replied by assuring Mr. Case that we were entirely
amenable to and would abide by his suggestion.
On the occasion of the Governors’ Conference referred to I had a
discussion of the matter with Governor Strong.
I explained to him our ur
gent need for earning assets and advised him of the conversation I had had
with Mr. James in October. He indicated that there would be no objection
on the part of the committee to our purchasing for our own account a rea
sonable amount of long time government securities. A little later, Mr. Talley
and I had a talk with Governor McDougal, and, I think, Governor Young of the
Minneapolis bank was present. Governor McDougal stated that the Open Market
Committee was confining its operations to short term governments and ex
pressed the opinion that the Committee would not look with disfavor upon
the carrying out of our plan to acquire a reasonable amount of long term
government obligations.
Subsequent to the adjournment of the Governors’
and Agents’ Conference Mr. Talley and I also had a discussion of our in
vestment needs with several members of the Federal Reserve Board.
Federal Reserve Boahr^
#3
O
With a background of these more or le ss re la te d circum stances, includ
ing the various conversations and exchange of telegrams re fe rre d to , there
was nothing to disturb my b e lie f th at reasonable purchases of long term govern
ment s e cu ritie s f o r our own account were not only fu lly warranted by our urgent
need f o r additional earning a s s e ts , but were not objected to by the Federal
"Reserve Board or the Open Market Committee. M believe in th is connection was
y
sustained by the f a c t th at the Committee’ s weekly rep orts indicated that
other JPgderal Reserve Banks, notably Chicago, purchased over a period of time
fallowing the November Conference of Govern orsT substan tial amounts of govemmMT"^ecurrties_T o r th e ir own account— obviously, to me, with no objection on
the p a rt of the Committee or the Federal Reserve Board.
i f t e r my retu rn from
Washington, we began to buy a t in terv als long time government ob ligation s,
reporting weekly, of course, to the Open Market Committee the aggregate amount
of such purchases. At the close of business February 28 we held to ta l govern
ments, other than our p a rticip a tio n in the special system investment account,
of § 3 ,6 0 9 ,3 5 0 ; about $1 ,2 5 0 ,0 0 0 of th is amount, however, represented Liberty
bonds purchased in exchange f o r the three per cent G
k>Id Conversion Bonds re
ferred to above.
Although I had abprevious meetings of the board informally discussed
these purchases of government s e c u r itie s , i t occurred to me proper to give
some d efin ite shape to our p o licy in that connection, both by recording
our board* s acquiescence to the purchases heretofore made up to that time
and having them estab lish some reasonable lim it beyond v/hich i t would be un
wise to go.
At any ra te the board based i t s actions upon my representations
to them with resp ect to the p rop riety of these purchases in re la tio n to the
system p o licy , and c e rta in ly they should be absolved from blame, i f any
a tta ch e s, fo r th eir conclusions.
Since re ce ip t of the board’ s telegram of March 26, we have made no fu r
ther purchases of government s e c u ritie s , and of course w ill in everyway re
spect and adhere to the Board’ s wishes and in stru ction s in th at connection.
I f , however, the Board fe e ls th at i t could co n sisten tly give consideration
to approving the resolu tion adopted a t the la s t meeting of our Board, i t is
my feelin g that such action would not only be w ell warranted, but the amount
of s e c u ritie s thus acquired would not have any appreciable e f fe c t upon the
p o lic ie s of the Open Market Committee or upon-the money market gen erally.
Our daily statements r e f le c t loans to member banks of only about &1.500.000
a t th is time, and there seems to be l i t t l e indication that our banks w ill
c a l l upon us f o r much c r e d it accommodation during the present season, a l
though of course la te r on there w ill be some l i t t l e a c t i v i t y . Our best
judgment a t the present time, however, is th at our to ta l member bank red is
counts w ill be r e la tiv e ly small a t the peak of the season,
I fe e l th at the Open Market Committee w ill te s tif y to our hearty co
operation with i t in times p a s t. W believe they have our in te re s ts a t h eart,
e
and yet i t should be remembered that we are quite removed from them and f r e
quently i t is impossible f o r them to get an accu rate appraisal of our r e a l
situ atio n h ere. Besides, the la rg e r reserve banks of the system enjoy in
d ire ct ben efits from open market operations, sh iftin g of funds, such as the
acq u isition o f paper and s e c u ritie s under re-purchase agreement, and like
tran sactio n s, which are not availab le to u s. The f a c t th at i t was recen tly
determined to disregard estim ated lo sses in making allotment of system pur
chases affords an indication of the possible lack of thorough appreciation
of the d if f ic u ltie s under whicM we labor in th is d i s t r i c t . W are very c e re
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Federal Heserve Board
H
tain that not the s lig h te s t discrim ination was intended against th is "bank and
in fa irn e ss to the Committee I c a l l a tte n tio n to the f a c t th at i t s actio n in
th is connection has "been rescinded. Nevertheless i t affords very s a tis f a c
tory evidence th a t in.some measure a t le a s t we are compelled to s h ift fo r
ourselves and take at le a s t some independent actio n ---- in so f a r as we properly
can without doing violence to system p o lic ie s o r disregarding the authority
of the Federal Reserve Board---- looking to the proper operation of th is tank
as one of the u n its of the Federal "Reserve System*
BAM m e
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE BANK
O F DALLAS
R E C E IV E D
March 31, 1925.
v/ \j ■
L Y N N P. TALLEY
C H A IRM A N O F T H E B O A R D
4
^
192 5
OF
THE G O V E R N O R
O F F IC E
Mr. D* R. Gris sin g er, Governor,
Federal Reserve Board,
Washington, D. C.
My dear Governor C rissinger:
7 c
This l e t t e r follows ray te le g raphic acknowledgment^ of your
telegram under date of Inarch 26,) in which you have ca lle d a tten tio n to what
appears to the Board to have been negligence on my part in fa ilin g to sp ecif
ic a lly c a l l atten tio n to the actio n of our Board of D irectors a t i t s meeting
on March 10, authorizing the purchase of U. 3 . Government Bonds up to Ten
Million D ollars.
There was no intention on ray part to put the Federal Reserve
Board in the position of being l e f t to obtain th is information from a perusal
of a copy of the minutes of our Board meeting to ■which reference has been made,
or to minimize in any way the importance of th is s te p . Without intending to
offer any excuses in connection with the matter or in any way in dicate that I
am not w illin g to take the fu ll re sp o n sib ility , even in the Board’ s view a t
th is tin © , I may sta te in cid en tally th at I was ca lle d out of the Board meetirg
before it s adjournment, by a message announcing the death of m w ife’ s step
y
mother, ani l e f t with her on the lj0 5 tra in fo r her fa th e r’ s home. I was unable
to return u n til Friday morning following the Board meeting on Tuesday.
The ju s tif ic a tio n for our actio n in the matter does not seem to
m to l i e so much in the authorization of our Board of D irectors per se as i t
e
does in the view of Governor McKinney, the other senior o ffice rs of the bank and
myself, feelin g th at our actio n in purchasing any Governments a t th is time was a
cont inuin^~poIlc.v""'s'ince O
ctob er.
a t periods in~ihich the same attendant
"
circumstances whicTTsurrounded the Federal Reserve Board’ s original au thority
e x iste d . W can very well appreciate of course th at the Board would not expect
e
us to a c t in d efin itely upon some s p e cific authorization merely from any lack
of revocation.
Governor McKinney and I have trie d to avoid making the matter
of earning asse ts one of paramount consideration without due regard for the
broader e ffe c ts of any action on our part in making open market purchases.
I have always been of the opinion and s t i l l clin g to th at conviction th at
Federal Reserve banks should not bid for investments in the open market. You
w ill observe th at we had already up to March 10 acquired some Three and threequarters Million Dollars of U. S. Government Bonds, mainly the Third 4-J’ s .
This p a rticu la r acq u isition in the aggregate was based upon the conversation
that Governor McKinney and I had with Mr. James when we were in Washington
la s t November, at which time we forecasted , for the purpose of discussion, our
probable position at th is time. I f I am not mistaken we also discussed the same
situ atio n with Vice Governor P la tt and M Hamlin. Mr. James was rath er free
ir.
to commend our thought in the matter and s p e c if ic a lly called to our atte n tio n
what was being done by the Minneapolis Bank and_the Chicago Bank in f illi n g up
Reproduced from the Unclassified / Declassified Holdings of the National Archives
their earning assets by the purchase of Governments*
In the case of one of the
banks mentioned we got some impression that the Open ilarket Committee felt it
was not altogether receiving the cooperation that it felt should be extended,
and moreover essential*
I o purchases have been made by the Federal Reserve Bank of
T
Dallas without consulting the Open Market Committee in the matter of policy
and as a matter of fact all purchases have been made either by the Open Market
Committee for our account or the Open Market Committee has been promptly ad
vised of any purchases which we made through any other channel. We were care
ful to preserve this contact because we are so conscious of the effect of open
market purchases by the individual banks upon the Open Market Committee’s
policy* We certainly wanted to be careful that we were not making purchases
in any way out of line with the Open Market Committee’s application of its own
policy at the time. Ample opportunity, therefore, has been given in connection
with these purchases for the Open L&rket Committee to take them into considera
tion in connection with its own sales or purchases as a part of its policy.
Governor McKinney and I did not regard the action of our Board
of Directors at its last meeting as being so much in the light of an authori
zation, following our recommendation, but more as setting a limit for our
aggregate pirahasfts. The thought has occurred to me that you rnay or may not
have read Governor McKinney’s monthly report to our Board of Directors, which
was incorporated in the copy of our minutes which you received.
I think that
Governor McKinney covered the situation very fully in that rer)ort* He sent a
copy of his report to the Board immediately after the meeting and showed me a
copy of Vice Governor Platt’s letter of March 18, which you will observe ante
dated the receipt of a copy of our minutes*
It did not occur to me, therefore,
to write the Board specifically, and in view of all the prior circumstances,
Governor McKinney and I feel that we were not doing anything out of harmony
with the views and policies of the Federal Reserve Board or the Open Market
Committee in having authorized the purchase of an aggregate amount of $2,800,000
of Liberty and Treasury Bonds in the interim between March 10 and the present da
I
am inclined to agree with you that I should have made t
Governor’s recommendation and the action of our Board a subject of specific
correspondence if for no other reason than we ought to appreciate here that
the Board, and particularly its different members, cannot always have in mind
the details of our situation here.
On the other hand, we have consulted so
freely with the Open Market Committee and different members of the Board and
have had such frequent occasion to shift our investments, that I saw no neces
sity for writing the Board specially in this particular case, for which I am
extremely sorry.
I
am enclosing herewith a letter from Governor McKinney i
which he sets out more fully than I have in this letter, what underlies our
conclusion that it is desirable to make the purchases under discussion and I
want to join him in the recommendation that the Board permit us to proceed with
the matter, but not beyond the point indicated.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I
am also enclosing herewith a list of our purchases, which
includes special purchases since December 1, and wish to reiterate that vie
felt perfectly comfortable in executing these orders in view of our having
observed that the Chicago, Kansas City and Cleveland banks were following from
week to week an almost identical policy in connection with which no other thought
occurred to us but that the whole matter was well understood by both the Federal
Reserve Board and the Open Llarket Committee.
Awaiting the further expression of your wishes in the matter,
I am
Yours very truly,
-------------- -------- -— — --------------------------------------------Reproduced from the Unclassified / Declassified Holdings of the National Archives
LT ?T OP U .S . SSCUEI TIES■ HELI
C
.. TI
JE33EBAL KESHRVE BANK OF T
^A3
JLUSI7E OF SPECIAL
PARTICIPATION ACCOUNT AT THE CLOSE OP BUSINESS ilARCH 26 f 1925 ..................................
P ate
Purciiased
D e sc rip tio n
Amount
B a s is
Premium
2 0 0 ,0 0 0 .0 0 *
@ 102 3 /8
4 ,7 5 0 .0 0
2 2 ,8 1 2 .5 0
@ 102 9 /3 2
1 ,0 0 0 ,0 0 0 .0 0 *
2 5 ,0 0 0 .0 0 *
§
101 2 9 /3 2
4 7 6 .5 6
i>
it
«
tt
tt
8 ,6 0 0 .0 0 *
1 5 8 .5 6
§
101 2 7 /3 2
it
it
tt
tt
1 101 13 /3 2
2 3 0 .6 4
16 ,4 0 0 .0 0
tt
*♦
tt
ti
«
1 ,9 9 2 .1 9
1 2 5 ,0 0 0 .0 0
m 101 1 9 /3 2
ti
tt
M
n
it
1 ,9 9 2 .1 9
125 ,0 0 0 .0 0
$ 101 19/32
----& Par
4% T reasu ry Bonds 1 9 4 4 -5 4
5 5 ,0 0 0 .0 0
5 ,6 2 5 .0 0
5 0 0 ,0 0 0 .0 0
3 101 4 /3 2
3 rd 4
Li be r t y Loan Bonds
w
tt
n
tt
n
$ 101 1 2 /3 2
3 ,4 3 7 .5 0
2 5 0 ,0 0 0 .0 0
tt
tt
tt
& 100 2 9 /3 2
2 5 0 ,0 0 0 .0 0
2 ,2 6 5 .6 3
2nd tt
1 ,7 6 7 .1 9
1 9 5 ,0 0 0 .0 0
3 100 2 9 /3 2
4 % T reasury Bonds 1 9 4 4 -5 4
8 .7 5
1 ,0 0 0 .0 0
3 100 2 8 /3 2
2nd 4
Li be r t y Loan Bonds
tt
«
tt
n
tt
@ 100 3 0 /3 2
2 3 .4 4
2 ,5 0 0 .0 0
tt
tt
tt
9 .2 2
5 0 0 .0 0
® 101 2 7 /3 2
1 s t ii
tt
H
tt
tt
6 .8 7
<§ 101 12/32
5 0 0 .0 0
3 rd
tt
tt
tt
tt
1 8 .7 5
1 ,0 0 0 .0 0
& 101 2 8 /3 2
4 th
tt
tt
n
2 ,4 2 1 .8 8
S 100 3 1 /3 2
250 ,0 0 0 .0 0
2nd M
tt
tt
ri
II
«
6 .5 6
@ 100 3 0 /3 2
7 0 0 .0 0
tt
it
n
tt
2 .7 5
@ 101 12/32
2 0 0 .0 0
3 rd
w
tt
n
it
tt
1 3 .7 5
@ 101 12/32
1 ,0 0 0 .0 0
tt
tt
tt
it
1 2 .1 9
@ 101. 2 8 /3 2
6 5 0 .0 0
4 th
«
tt
it
it
VI
1 2 .1 9
@ 101 2 8 /3 2
6 5 0 .0 0
9 0 6 .2 5
& 100 2 9 /3 2
1 0 0 ,0 0 0 .0 0
4$ T reasury Bonds 1 9 44-54
2 .0 6
§ 101 12/32
1 5 0 .0 0
3 rd 4M> L ib e rty Loan 3onds
tt
tt
tt
it
tt
101 11/32
6 ,7 1 8 .7 5
5 0 0 ,0 0 0 .0 0
tt
it
tt
2 ,1 0 9 .3 8
9 100 2 7 /3 2
2 5 0 ,0 0 0 .0 0
2nd tt
tt
tt
tt
3 0 4 .6 9
2 5 ,0 0 0 .0 0
• 101 7 /3 2
i
3rd tt
tt
tt
tt
»
it
2 ,8 1 2 .5 0
Q 101 8 /3 2
2 2 5 ,0 0 0 .0 0
tt
tt
tt
7 .8 1
# 100 2 5 /3 2
1 ,0 0 0 .0 0
2nd t t
it
«i
»i
8 .9 4
a 101 1 2 /3 2
6 5 0 .0 0
3rd tt
»t
tt
t!
6 ,0 9 3 .7 5
@ 100 2 6 /3 2
7 5 0 ,0 0 0 .0 0
2nd t»
7 9 6 .8 8
3 100 1 7 /3 2
1 5 0 ,0 0 0 .0 0
4 $ T reasury Bonds 1 9 4 4 -5 4
8 .4 4
@ 101 22/32
5 0 0 .0 0
4 t h 4-M L ib e rty Loan Bonds
it
tt
tt
tt
8 ,9 0 6 .2 7
@ 101 2 5 /3 2
500 ,0 0 0 .0 0
m
tt
11
tt
ii
3 ,7 1 7 .1 9
8 101 2 9 /3 2
1 9 5 ,0 0 0 .0 0
w
tt
t»
it
3 ,2 5 0 .0 0
@ 101 20/32
2 0 0 ,0 0 0 .0 0
1st
tt
tt
tt
it
**
1 6 8 .4 4
3 101 1 7 /3 2
1 1 ,0 0 0 .0 0
tt
tt
tt
tt
w
1 5 6 .2 5
J 101 1 8 /3 2
1 0 ,0 0 0 .0 0
«
tt
It
tt
»
»
3 5 0 .6 3
S 101 1 9 /3 2
2 2 ,0 0 0 .0 0
tt
tt
tt
«
7 3 1 .2 5
<§ 101 20/32
4 5 ,0 0 0 .0 0
tt
it
tt
it
»*
1 0 9 .3 7
& 101 1 8 /3 2
7 ,0 0 0 .0 0
*t
tt
tt
tt
M
1 6 2 .5 0
3 101 2 0 /3 2
1 0 ,0 0 0 .0 0
tt
tt
tt
tt
1 5 .9 4
@ 1 0 1 1 9 /3 2
1 ,0 0 0 .0 0
3 rd
tt
tt
tt
tt
1 ,1 3 7 .5 0
0 101 20/32
7 0 ,0 0 0 .0 0
1st
it
ft
II
4 ,6 8 7 .5 0
0 101 3 0 /3 2
500 ,0 0 0 .0 0
2nd It
«t
tt
It
9 5 .6 3
tt
@ 1 0 1 1 9 /3 2
6 ,0 0 0 .0 0
3 rd
n
Ml
2 ,0 3 1 .2 5
It
it
It
$
101 20/32
1 2 5 ,0 0 0 .0 0
»
7 ,1 4 9 .3 7
tt
tt
101 3 0 /3 2
3 6 9 ,0 0 0 .0 0
4 th tt
9 .5 3
tl
tt
tt
tt
£
101 2 9 /3 2
5 0 0 .0 0
*3',0 8 2 ,5 0 0 .0 0
T o ta l Premium p aid 1 0 0 ,4 9 2 .3 8
Totial - — - - — - _ ----------------6 6 9 .4 4
Brokerage p aid
♦Purchased in
1 0 1 ,1 6 1 .8 2
bonds
replacement like amount Conversion
Premium A ccount t in clu d in g B rok erage) a t c lo s e o f 3 - 2 6 -2 5
,.Sfl,«gll»50
http://fraser.stlouisfed.org/
A m ortized
2 ,8 5 0 .3 2
Federal Reserve Bank of St. Louis
1 0 -2 9 -2 4
1 1 -6 -2 4
1 1 -1 2 -2 4
1 1 -1 4 -2 4
1 1 -2 1 -2 4
1 2 - 2 -2 4
1 2 -4 -2 4
1 2 -1 7 -2 4
1 -2 -2 5
2 - 2 1 -2 5
2 - 2 1 -2 5
2 -2 4 -2 5
2 - 2 5 -2 5
2 -2 6 -2 5
2 -2 6 -2 5
2 -2 6 -2 5
2 - 2 6 -2 5
2 -2 7 -2 5
2 -2 7 -2 5
2 -2 7 -2 5
2 - 2 7 -2 5
2 -2 7 -2 5
2 -2 7 -2 5
2 -2 7 -2 5
2 - 2 8 -2 5
2 -2 8 -2 5
3 -3 -2 5
3 -3 -2 5
3 -3 -2 5
3 -9 -2 5
3 -1 2 -2 5
3 - 1 3 -2 5
3 -1 6 -2 5
3 - 1 4 -2 5
3 - 1 9 -2 5
3 - 2 0 -2 5
3 -2 0 -2 5
3 - 2 0 -2 5
3 -2 0 -2 5
3 - 2 0 -2 5
3 - 2 0 -2 5
3 - 2 1 -2 5
S, 3 - 2 1 -2 5
^ 3 ^ 2 3 -2 5
3 -2 5 -2 5
3 - 2 5 -2 5
3 -2 5 -2 5
3 - 2 5 -2 5
3 - 2 5 -2 5
3 - 2 6 -2 5
3 r d 44^ L ib e rty Loan Bonds
«
tt
tt
«
"
n
m
tt
*t
n
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE SYSTEM
3
(LEASED WIRE SERVICE)
3
R E C E IV E D A T W A S H IN G T O N , D . C .,
2 3 8 f je
/f^ S
D a l l a s 354pm M ar a t
C r is s in g e r
Washn
A c k n o w le d g in g t e l e g r a m d a t e
B o a rd , p r o v is io n s
J
th e re
was no i n t e n t i o n
o f p arag rap h B s e c tio n
to
ig n o r e
1 4 fe d e r a l R eserv e M t
r*
or
In s tr u c tio n s l e t t e r
m a t t e r w h ic h y o u c a l l e d
d e s ir e
th a n
o th e r w is e .
http://fraser.stlouisfed.org/ 2 10
—181
MTV D M fW
O T KMWO K1
W5
Federal Reserve Bank of St. Louis
X -3 6 8 9 A p r il 7 th 1 9 S 3
t o my a t t e n t i o n .
in
c o n n e c t i o n w it h
We h a v e no o t h e r
to r e s p e c t B o a r d ’ s w is h e s a s p r e s e n t l y
L e tte r
g iv in g f u l l
d e t a i l s fo llo w s .
ii‘a l l « y
444p
/uut
ex p ressed or
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3
throb 2 6 , 19251’
Dear 16*. T alley:
This w ill oonfi
you today:
m
th s follow ing telegram saent t o
• I t appeara from th e minutes o f th e meeting of
your Board o f D ire cto rs held on Maroh 10 th a t
th e Board o f th# D allas Bank au th o rised the o f f i o a rs to purchase up to $ 1 0 ,0 0 0 ,0 0 0 o f
bonds. Board here l a su rp rised t h a t Im portant
e a t ion o f th i s kind should n o t h aw been sp e ci
f i c s l l y o a lle d t o I t a a t te n tio n . Beard f u r th e r more n otes th a t o f f i c e r s o f th a bonk have aoted
upon t h i s a u th o risa tio n w ithout f i r s t r e fe r r in g
m atter t o F ed eral Reserve Board, notw ithstanding
p ro v ision s o f Paragraph (b ) of S ectio n 14 o f the
A ct and the open market p rin cip le adopted by the
Board pursuant th e re to ( L e tte r X~5689t A p ril ?*
192 3 } • You a re th e re fo re d ire c te d to suspend
fu rth e r purchases under th is a u th o risa tio n u n til
otherw ise a d v ised .*
gvrmn
oenet
Very tr u ly y o u rs.
D. R. C ris s in g e r,
Governor.
Mr. Igrnn P . T s lle y , Chairmen,
Pederal Reserve Bank,
D a lle s, Texes*
w
»
Reproduced from the Unclassified I Declassified Holdings of the National Archives
«n 4A
18
federal
RE SERVE BOm RD
LEASED WIRE SERVICE
W A SH IN G TO N
The telegram given below is hereby confirmed.
W
March 26* 1925
T a l l .y - D a lla .
/
j
.
, 7/
j
,
^
I t apnear* from th a minutes o f tha jaeeting\of your Board o f D ire cto rs held
on Mareh 10 t h a t th a Board of th e D allas Bank a u th o rised th e o f f i c e r s t o
purohase tip to # 1 0 ,0 0 0 ,0 0 0 o f government bonds. Board here i s su rp rised t h a t
im portant a c tio n o f t h i s jlcind should not have bean s p e c i f i c a l l y c a lle d to
i t s a tte n tio n * Board furtherm ore n otes th a t o f f i c e r s o f th e bank have
aoted uoon t h i s a u th o risa tio n w ithout f i r s t r e f e r r in g m atter to Federal
le s e rv e Board, notw ithstanding p rovision s o f Paragraph (b) o f s e c tio n 14
o f th a Act and th e open Market p rin cip le adopted by th e Board pursuant
th e r e to ( L e t t e r X -S689, A p ril 7 , 1 9 2 5 ). You a re th e re fo re d ire c te d to
suspend fu r th e r purchases under t h i s a u th o risa tio n u n til otherw ise ad vised .
*
Crissinger
ii Li
/ut£ iui/a
V S// > i
-
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BOARD
WASHINGTON
O F F IC E O F G O V E R N O R
I t ap p ears from th e m inutes o f th e m eeting o f you r Board o f D ir e c to r s held
IaK bt
fCJ i
J
t
o n -------- -------th a t th e Board o f t h e D a lla s hank a u th o ris e d th e o f f i c e r s to
p u rch ase up to $ 1 0 ,0 0 0 ,0 0 0 o f government feonds.
B o a rd if^ sa u rp rise d th a t
" i ----------- - ----------- -------- im portant a c ti o n o f th | s kind should not have been s p e c i f i c a l l y c a l l e d to
i t s a tte n tio n *
Board furth erm ore n o te s t h a t o f f i c e r s o f th e hank have a c te d
upon t h i s a u t h o r i z a ti o n w ithout f i r s t
Board :fo i— t ..
t
r e f e r r i n g m a tte r t o F e d e ra l R eserve
1 , n o tw ith stan d in g p ro v is io n s o f S ara graph (> ) o f
S e c tio n 14, and ^ h e ffiogulatjfaag adopted by th e Board pursuant t h e r e to
( b e t t e r X -3 6 8 9 , A p ril 7 # 1 9 2 3 )*
You a r e th e r e f o r e directed
f u r t h e r p u rch ases under t h i s a u th o r iz a tio n uni 13^ ^
^
to
suspend
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131.
ice Correspor
j& r
'e
FEDERAL RESERVE
T BOARD
ate__L
Gov e rn o r
a
Id d y .
E a r l i e r in th e d sy I c a l l e d your a t te n t i o n t o th e
a c tio n o f th e d i r e c t o r s o f th e D allas bank in a u th o riz in g
th e o f f i c e r s o f th e bank to i n v e s t up t o $ 1 0 ,OCX), QOCLin
Government s e c u r i t i e s *
I am a tta c h in g h e re to r e p o r t f o f
th e B o ard ’ s com m ittee which co n sid ered th e a c t i o n tak en
by th e Governors and Agents w ith r e s p e c t t o th e a d v i s a b i li ty
o f r e s e r v e banks in v e s tin g in Government bonds f o r earn in g
p u rp o ses.
1
^
. ,
,
.
...
Reproduced from the Unclassified I Declassified Holdings of the National Archives
LYNN P. TALLEY
C H A IRM A N O F T H E B O A R D
Federal He serve Board
^ s h i n g t o n , D. C.
Gentlemen:
There is enclosed for the information and
files of the Board a copy of the minutes of an adjourned
meeting of the Board of Directors of this bank, held
on larch 10, 1925.
Tours v e r y truly,
2nd.
Ma J
i
QjUL
Reproduced from the Unclassified I Declassified Holdings of the National Archives
J&EUTS3 OF ADJOUfflrSD M T IB G , BC&
RD O DIESGfOHS*
F
M H H 1 0 t 1925
AC
PafiPSWPi
fD8&W c m
& £ U £‘
W
BAM 0? DALLAS
Lynn ?* SaU ey* Chairman
J * J * Culbertson
J* H* F ro st
Frank iie ll
W H* P a tr ia e
*
3# B« Perkins
Howell £* Bsdth
I r * W 1«* McGregort Member of the Fed eral Advisory Counoil, Governor MoKlzmoy,
*
iteputy Governor G ilb e rtf C ashier Coleman, A ssistan t C ashier Freemen, and General Auditor
Foulks, were a l s o p resen t*
The m lm tes of the re g u la r meetings o f February 7th and March 7 th were read and
approved•
The Chairman re fe rre d to th e a c tio n on m atters considered a t the February meet
ing# mentioning th a t the Federal H serve Board had approved the s a l a r i e s of o ffio e rs of
e
th e bank: In the anounts p rev io u sly Indicated would be approver, i f reconmen&ed by the
Beard of D ire cto rs} the re o rg a n isa tio n of the Insolvent Banks Department* and in creases
of #300 each In the s a l a r i e s of Messrs* VMte and A lexander, re p re s e n ta tiv e s o f th a t De
partments a ls o
In cre a se o f #300 p e r annum In tha s a l a r y o f C* L . C h ild e rs, re p re se n ta
tiv e of the Member Bank d elatio n s Department*
m
She Chairman presented th e jfederal Reserve Board *s l e t t e r e f J^broary 5 th
(X -4263) su b je ct "iSsabershlp in th e American Acoeptanoe Council and Amerioan Bankers As*
s e d a tio n * A fte r some d iscu ssio n i t was the unanimous judgment o f th e d ir e c to r s th a t the
bank should continue i t s member ship in both o rg a n isa tio n s, and th a t the expense was ftelly
j u s tif ie d * Upon motion of Mr* Culbertson i t was so voted*
The Chairman presented the re p o rt of th e General Auditor covering a u d its o f
departm ents and an alyses of g en eral ledger accounts during the month o f February, fhe
rep o rt was noted with i n t e r e s t and ordered spread upon the minutes*
w
m m
D esoription of Aooounts
CASH jaBABOMST
Month o f
February - 1925
Date of
H ff fflTlgtW - A»*ortiag T*llw
flM
4
££ezJ^usjsdl£
1/ 6/20
F ed eral as serve Bank B otes Outstanding
F* H* Kotes Fomurded f o r Hedea^tion
F* B* B otes In t r a n s i t from Other F* 3* Banks
Geld C e r t i f i c a t e s in T ran sit (Account Closed 2 /2 1 /2 5 )
4
4
4
1/6/25
1/6/25
1/6/25
Aooount Closed
Reproduced from the Unclassified I Declassified Holdings of the National Archives
•2 a
»£»
Gold i a
(Aooount
T«»tor l o t * * In Traaslt
2/Z k/zB }
(Aaooimt Cloadd
Kmth of
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4
1/6/26
1/6/26
1/6/26
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1/6/25
1/6/26
1/6/25
24
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8 «t I
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101 'm&»
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U* 3* ^ rtagarerH i Otsaavai Aooount
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rurr
Ifepoftltary B*Xa&o»« IH *»*» D w ia ita iy BaaJc#
i»
fe«alpta Outatsadii^
aws&rlti#* £*U*«r«& SMbao*itwra
3 eau rlti« s forwarded ? * o * « r y bqpartwmt
£
Soou rltlas in ?au lt
3oou riti*o on Haaft w ith
S eo u rltlo * Boooired from Sufcoorifcors
3«ouritio» aM0ir«A ftfoa f*«a«u*7 Xupartnaat
Sufcaoriptlan Boceipto M tttaa& ij^
iM3(SUfWf aamS:':SBFA2 aiB»f
CX&iiBO AatM PBt :%f f,*B < Saspoa&od flfttfC
N
ff xr
fll
OoXXatoraX H#id fr o a Suspaadod BaaSe®
1/6/26
1 /6 /6 6
?#H«r
Postage * Oaah I&fp&tMmt
.flUtf !*• I
itoo®iviag $*B «r B*« £
Sllv&jr Coin in fm atifc
of
1/8/26
»t
4»
*
'I*
i
t
I*
It
m
n
It
t
l
H
«
«
i
f
I
f
ft
If
»t
«
I*
*»
w
n
. w
10/23/2*
If
Crodito • Aootost duapandod Baste
ft
Soferrod Gbnrg9a < F ir s t Hationai Bans, M m m
*
ia^on»« of C oll dating Papo* H#x& j r m Oaspoadod Basics
«
\yp6BM XZ/%/£%I
M T S M Ji*fai**od rado* FomoXouttre
Xntorost CoXl*<stod oa iodieoounts from ttaiXad Baaa*
BXrldaod Aooouat, 0 i t 3 r I a t # fiaifc9 H Paso
X
X
If
(Jjjsnea 2 /2 / e j
fB
(C^tlMd 2 /XS/2 5 }
(OptBtd 2/2?/s§)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Date o f
Month of
f r t m r a - 1986
LOyi ABB DI3C0UH? HSPASTMHHT
Mvaaoe Headttanoes Held - L, 4 D,
Approve* O fferingsf C o lla tera l notes and Bsnfcorsf Aooeptanoes HeM fo r Aooount of lumber Santas
B i l l s Bought in Qjpen Marfcet
B i l l a Discounted fo r Sfeaber Banks ~
Secured by U* 8* Oovewussnt Obligations
Other B i l l s Discounted
C o lla tera l Held as S ecu rity ig aln et Timber Bancs Xnd«
Documentary Stamps - L. & £•
Offerings Held by Credit Department
Paper Pledged with Federal Reserve Agmt
Payneats Received on M d itlon al C o lla tera l
S e c u ritie s m Haid and In Transit
Unearned Discount - B i l l s Bought in Open MarJmt
Unearned Disocunt - B ills Discounted
Foreign Loans on Gold
Pmilm
Hot Made 1 / 28/25
«
"
1/28/25
"
**
"
*
1
1
”
"
»
*
«
*
1 / 19/25
24
w
1/19/2B
1/19/28
lB T «»ta»n t t l T l a i o a
Discount on U* s« S e c u r itie s
Other tf* s# Bonds
P a r tic ip a tio n i n S p e c ia l Jx re s ta e n ts U* 3« S e c u r itie s
Pronina
U* S* S e c u r itie s
Treasury C e r t i f i c a t e s of Indebtedness
Treasury B otes
m
U* 2* Bonds to Secure C irculation
Unmatured Cottons
S a o a ritiee Sold under Repurahaae Agreement from Special
Investment Account
"
*
*
*
"
*
*
"
"
*
24
Aooount Closed
l/l9/25
24
1/19/2S
26
12/si/24
aSRVICE DBPAHfMSSf
Oolsine D ivision
Cuisine Accounts Payable
Quislne Colons Outstanding
Oalslne serv ice
Oalslne Stores
t w r s i f DEPAHTCTTf
Check* sod Other Gash I t sms
P allas Clearing Boose
Doe to Other fed era l Reserve B&nies - Collected Binds
aacqjhange fo r Clearing House
Xnoome and Excess P ro fit fax - Unadjusted Items
tr a n s it Items Credit • fed eral Reserve Bunks
Transit Items Credit * Member Basics
tr a n s it Items Debit - Federal Reserve Banlcs
Transit Items Debit - Due from Other
R* Banics
"
"
"
Hot l&de
*
"
n
"
*
*
w
H
*
*
»
*
l/ls/25
*
«
"
"
"
"
*
»
f
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Month o f
Date of
.Steanr - , 3-ggS
.
Transit Stasis Debit - Mwnbor and fton~l?ember Ban&e
Vilt OB
tLnl
B ills and D raft* forwarded fo r C ollection
VIS PXS&JJGS DKPAHTM*
lo t Made
Hot J&de
£artH»» M 1 / 1 3 / 2 5
l/2ZlZb
fta w a l L ed gf A aaw af
Documentary 3tai^>s « W* F# Of
■
liaml igjasar fonaral lidlnffJUKHwaftji
Additional C o lla te ra l
B i l l s Rsoeivable « Form S
C o lla te ra l to B ills Heooivable
C o lla tera l to 3edisoounts
funds Hold Fending Approval aefund Applioation
t a n s Beoeived frow Treasurer U* 5#
M soellsneous Items Held in Abeyance
negotiable S ecu ritie s Held as Collateral
Botes Itorwarded fo r C ollection
Beoeipts Deposited with Treasurer U* 8*
Bedisoounts
MI 3CEXLAJ3EOU3 ACCOUNTS
Abrasion • Ligfct Wei gilt Gold
idvanoa Traveling ifispenses
Appropriation fo r Mmoatioasl Purposes
Bank Premises - Including Yaults
Capital Paid in by Applicants fo r Membership
cap ital Btoofc la id 1st
Cashier’s CheoJcs C**tstanding
Claims Recoverable
D ifference Account
^qployees Suspense Account
Expense Checks Outstanding
.tixpense Current
^sponaes Paid in Mvanoe
Expense ileooverable
Fedezal Beservo ^ohange D rafts
federal B c & e m Transfer Drafts
Pivo Per Cent Fva& - Against P* B* Baltic Sotes
F i? l Per Cent Jtaa& - Member Basics
Hxed l&ahinery and Equipment
Foreign Basics
m rn itu re and Kquiposnt
Gold Bede^tion t a d - fed eral tie serve flotes
Mail Insurance Suspense Account
timber Banks * Reserve Account
*£lsoellaaeoua Eam is^s
Eon-iiefiiber Clearing Aoocmnt
Account Closed
11
t
*
H
n
n
12 /5 /2 4
ft
»
n
n
ft
1/15/25
1/10/26
14
10
14
14
28
23
26
28
28
14
12 /3 1 /2 4
12 /3 1 /2 4
12 /3 1 /2 4
12 /3 1 /2 4
1 /2 6 /2 5
l/ r a /26
1/31/25
1/15/25
14
x/z&
fzn
1/31/25
1/15/25
28
l/3 l/2 E
2 6
26
26
26
l/26^5
Account Closed
12 /1 7 /2 4 j
(Account Closed
14
14
14
AS Of l/31
12 /1 5 /2 4
12 /3 1 /2 4
,1* of 12/"l/24
Account Clossd
28
23
28
1/31/26
1/31/25
l/Kl/25
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-6 -
Month o f
t a t s of
iferuary - 1926 Prevl ou J
M
1 /3 1 /2 5
O verdrafts Barniw
29
1/26/25
Pay S o il OJaeoks Outstanding
2i
l / l to l / 3 l 1 2 /1 /2 4 to I S /3 1 /2 4
P e n a ltie s on D efloien t Reserves
l /3 l /S S
P r o f it and Loss
23
1 /3 1 /2 5
Heal S s ta te Mortgage
28
1 2 /3 1 /2 4
R serve fo r D epreciation on Baaic Premises# Including Vault s«fllet i&d®
«
serve f o r D ep reciatio n o® fix e d
and Ssiiipiaent
1
1
*
»
Reserve fo r Depr e o la tio n on 0# 3# S e c u ritie s
"
1 / 15/25
Reserve f o r Losses 1*1<|»idating Basuc Loan*
14
12 / 31/24
Surplus itand
Kot i&ide
1 / 15/25
M iscellaneous Suspense Aooount
14
Opassd 12/17/24
Unadjusted L if e I s s o m M
14
I&quity o f P* A M S ta te Benle* Hearae* f@ xasf in Beal
. i
1/31/25
Sstafce llortgage (50, )
28
AOCOIHP3 O S-JK D OS
H K
DAllf
Aoorued Dividends Unpaid
Accrued 3aadry Expenses Unpaid
Aoorued 'Taxes Unpaid
M ju stsu n t - f ran s i t Items
Cash Depart®en* * Suspense
Discount Wanted on B i l l s Bough* in Open M rk e t
DiBoount Earned
B ill# Discounted
Dividends Aoorued
Gold Settlement fand (Daily wire)
mb?
mw
lutm
.ln
m
Interest
Interest
interest
Interest
Aoorued on Beal Estate l&rtgage
Aoorued o . 0* 3* Securities
n
lamed but lot Oolleoted
JSamed on Sp ecial Investment s § 0* St S e c u ritie s
iSamings on U* 3* S e c u ritie s -
Transit Item* Defcit • i# 0* 0# S# laiics
i
fellers Account
T ran sit Suspense
Interest Aoorued on Foreign Loans
Interest iiaraed on foreign Loans
iHSmOiAKMaUS AUDI' 3 AID JJUXX9S3
2
n w m ® M ® m » L^DasH ucsraaoL
Insurance Policies and Bonds
notary fwd
Pay Off i£a$leyeee
Postage - Hailing Deprtomt
transit Hold-Orer Item®
Vault Confcinations and Controls
Inventory 3toofc loom
BBAHCH1S3
11 Paso
Houston
lot Bade
2®
lot lade
6
13-2$
S@t IM®
IT
Hot Hide
*
l /3 l/2 6
l /? l /2 6
12/31/24
I/I/2 5
1/ I2 /25 -I/2 9 /2 6
12/31/24
4 /8 /2 4
1 1 / 4/24
1 0 / 4 /;;4 »
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Governor MoKlnney submitted & report co v erin g the o p e ra tio n s of the bank during
the wmth of February, irtsdoh was noted with in te r © e t and ordered spread upon the minutest
"JJa ra h 1 0 , 1 9 2 6
Board of B i r e o t o r s
F ed eral a®serve Bank o f D allas
Balias* ferns
Gentlemen;
Business conditions l a the d i s t r i c t , on th e w hole, continued d u rin g th e
month o f February to r e f le c t a v e r y s a t i s f a c t o r y s i t u a t i o n and o u tlo o k , alth o u gh
th e e ffe c ts of th e continued w in te r drouth were th e s u b je c t of w idespread c o m p la in ts ,
p a r t i c u l a r l y in the g r a in b e l t and ran g e oou ntry where laok o f seaso n al m o istu re has
oaused oonsider& blo d e t e r i o r a t i o n in w in te r g r a in c r o p s , ran ges and l i v e s t o c k ,
from
a l l seotions of th e d is t r ic t eon® r e p o r ts th a t th e farm ers a r e w ell up w ith th e work
of preparing th e s o i l f o r the new orop s, and th a t w ith n on sal weather oowiltions dur**
in g the growing season the outlook; is- fa v o ra b le f o r a n o th e r s u c c e s s f u l y e a r from .the
stan d p o in t o f produoti on* Our in f o n aatio n i s th a t th e re w il l be no s u b s ta n tia l change
in th e d i s t r i o t *s ootton aorea^e. m i l e t h e r e s a y be a s l i g h t in c re a s e in est Texas
a s th a r e s u l t of a s m a lle r sioreage devoted to sm all g r a i n s , i t ap p ears t o be o f f s e t by
th e p ro s p e o tiv e reduction in the o o tto n ao reag e of l a s t Texas, wtier* an e f f o r t w il l
be nade to overcome the ao u te s h o rta g e in the feed supply o f th a t s e o tio n by d ev o tin g
a l a r g e r aoreage t h i s year to feed s t u f f s .
Oar d a ily statements oontinue to re fle o t a v e r y lim ite d demand f o r rediscount
aoooiaaodation* In faot during the f i r s t few days of February oar loans to member banks
showed farth er declines f re a c h in g on th e 10th of th e month a new low point since 1917
o f $1,809,000. ftoat date marked th e turning p o in t, however, and w hile th e applications
are s t i l l ooapiratively lig h t oar loans to maaber banks on the l a s t day of February,
leaving out of consideration the borrowii*** o f the same two large o ity baaOts r e f e r r e d
t o in s*y la s t report* show as e x c e s s over the la s t day of Jam ary* In other w ords,
although your report of our operations fo r the month J u s t ended indioates a r e d u c tio n
in these leans of a l i t t l e s w 1100,000, an an aly sis of the acoount shows that out of
a to ta l of 54 borrowing banks m th e 28th day of F e b ru a ry , 52 o f them were owing us
^1,116,817, a sum s lig h tly over a h a lf m illio n d o llars in exo ess o f our advances t o
only 36 meafeer banits on Ja n u a ry 31* She demand fo r new advances during F eb ru ary oarae
o h iefly from banks looatsd in the sheep sad goat r a i s i n g s e o tio n s o f the d is t r ic t in
an ticip atio n o f shearing o p e r a tio n s , which w i l l be w ell under way th is month. Fur
th er evidence of the slig h tly in cre a se d demand fo r aeaonBiodation is found in th e f a o t
that we served 47 member bonks during February a s ooi^ared with 38 d u rin g the p reced in g
month* i s aa in d icatio n , however, of the comparatively s a l l volume of loan trans
actions we are now b e t m o a lle d upon t o handle, i t is i n t e r e s t i n g to observe tfcit on
February 2 $ , 1924, 141 banks were owing us in exoass of $10,000, while cm the sar* day
two years ago 246 baa’ts were owing us aliaost 117,000,000* i n even more s i g n i f i c a n t
oon*>arison i s found in the f ig u r e s I have fcad oorapiled with respeot to the nun&e of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-7-
oarrgr-over lin o s f o r tho past two y ea rs* ( t o rooor#* in d icate th a t a t o ta l of 01
)Mlf!P0Vi8( battci fa ile d a t any tia o d u ring tho y en r 1923 to liq u id ate la fall th o ir
lnaobtodnosii to tho M o r a l itosorro Bank. lu ring tho your 1924, oxoluting banka wiiioh
havo subsoquontly fallo w , only 14 » s l * o r In s titu tio n s w ro unablo t o liqu id ate in fall
th o ir fodoral iotjorvo Baaic borrow ing, and of m m b m m nino have auboo^entl;/ retired
th e ir indobtodness hero la f a l l *
I
I h l l o tho above a lrm m tB n m * ooKfcine, of a-ourto* to plaoo u® l a a v a ry fa v o rI ablo p o s itio n with r e l a t i o n to our raosibor b a iia aad tho d t s t r i o t ao & liio lo * thoy
j navertholosss oporato to a d i s t i n c t disaAvaatago w ith roapoot to our ©&rnlnrs* P o ssib ly
I ao ph&so o f our prosont iiita& tion p rosonts & laoro soriou s probloo thou th a t of provid*
I
lag out of limited, earning a ss e ts suffioloat funds with whlJh t© «®t our dlvidond and
$um tiao* without onoroaahlair upon our r iiplus, oilminat® looses,
j la oonseotian with, fa U o i banscs* as a ro so lt of tho o©en rmr^t oosndttoe*® roooaat
[| poller or feoding tha ays ton iavostiaoats to tho a n s tho total oystom holdings ware
u o t*
f very su b sta n tia lly induced daring febmary* aad of course this bamc sharod a proportionats lo t s of those earning assets* Inuring February our banters bills ran off s n *
o*
$ ? f0OO# O not, while air participation la system purchases of govox'nxa&ut cfelig&tloa*
OO
m s reduced over a M illo a and half dollars* Tim Systoa holdlacr® of government eeoori t i o s have doollned from H5OO*0O0tO O la ffm ribo* to ;|S70*000*000 cm February M * ao*
O
incident therewith thoro has booa a baldening of in te re st ratos as outlined in tho %»ea
Mantel aoMalttee** last rep o rt, which 1 will rood ia ooaaeotioa fdtii th is report* fho
aai^BSt oo baafesrs aooeptaaoee a t tho proseat tlmo i s substantially m m per coat hirher
thaa tho low poiat roaohod last loll#
I o p a o sad a t the
xes*
Although m m m ablo to aogulro f a ir l y su b sta n tia l amounts of long U m Goveralasnt boaiis* our t o t a l earaiag aesots hsd dwindled by tho la s t day of febmftfy to a
l l t t l o over "36*000*000, a not decrease over Jaaaary 31 of edia§ 17,600,000* m is * of
course* accounts fo r tin mr&od doorcase ia tho aaount of our gross earnings fo r
fobru a^ * wldofci, you w ill aoto f r o * your statement* totalod m §l 9 T M 9 or almost
360*000 loos than gross earnings fo r Jaaoary* m # m oaxmiags laokod |£8*340.6d o f moot**
lag tho m m th** oaqpoasos sad ao^ruod dividoad* th is ^ o flaiitio y aot oaly absorbs our
previously aooosulatod aot oaralag® of ^20*178* but loaves a not d o flo lt oa fobruary 2©
o f v?Q
*161*21* I t should bo added th st p a n of th is d o flo lt m s oooasionod by tho
tra n sfe r frost aet aaraiago * t 8«ao # if000 ri^resonting past duo !* t * * o s t oollootod la
oonnootloa with paper m em tm b fro* failod banks* is havo dotorsdaod that ths moro
satlefaotosy aooouatlag proooduro woold bo to plaos this past duo intoro t in a sas*
ponoo aooount p^odiag final sottlssioat of tho various trusts ooaooraod* at tUtioh tiiao*
of oourso, thoso ait9»nts will find thoir way baok Into our oafalngs* or u®#d in ro^
duaing tho aaouats a i r o t off ia aonnootion with paper of failod bani«*
lagf
is roforrod to aboro* m purohasod during fobruary for our m m aooount liberty
bc^® la tho agftrogats asooat of rl*386t*5KlO* fho aoquisltion of tmso long t o m bonds ( 1
,
Isdo^oodsat o f tho oojamittoo I s not gut f M.rmxmy w ith tho proson t p o llo y and w i^bes VF
o f th o oow aitto'e* liiia h i s now co n fin in g I t s o p eratio n s to sh o rt
Governiiwitfts.
I dig^u®sod tho |?robabllity of our doing this with mmb&rn of tho U'oasa&ttoo when l a s t
la Washington and tHoy volood ao Objootlon# I should bo glad to dlsaeos w ith th e
Reproduced from the Unclassified I Declassified Holdings of the National Archives
members of th® board the qatstion of m
sacing further investments of this simmolw, an it
is the axApumt of Hr# fall©? ana . e that m t need for earnings warrants farther sub*
m
stantial purchases*
Although tba % e s Mar&et uow altte® i s a l l o t t i n g it® jairohar.es at tho p re s e n t
''
tins* on ly on th o b a s is of eagp+ns* ami dividend rocgulrsnenta of th e tw elve basics, i t was
determ ined at th * l a s t m eeting o f th# M im L ttm t h a t th e p lan 1b e f f e c t l a s t year — vMdh
a l s o included estln & tad ehaarge«*effB in a r r iv i n g a t th * b a s is of a llo tm e n t —* m u th a iaore
e q u ita b le on* aa& would b© r e - i n s t a t e d «s* o r about A p ril l v by ^hioh t i n * Htfre or l e s s
a c c u r a te estim ate® could be sabsaitted by a l l banks# f h i s a o tio n o f th® o t t t t d t t e * , of course^
a f f o r d s us g r e a t c o m fo rt, a s w* f e e l th a t th * m a tte r o f e lim in a tin g lo s s e s should corae in
f o r a s mi oh c o n s id e r a tio n i n detera& ning th * p ro p er b a s is f o r th© apportionm ent of system
in vestm en ts a s th * n a t t e r of p ayin g exp oases arid d ivid en d s — p a r t i c u l a r l y dividends#
The Qpea M t
uo&x&ittee has never failed to give full consideration to the po&iliar Beads
of our situation here and i * feel very grateful for their continued aoqperation. merely
s
as a contrast *tth our present situation it is interesting to note that on February 28
last year we had acoumlated $104*965 net earnings over and above expenses and accrued
dividend*
v‘
X
un th * l a s t day of t h * south $m% ended our ea rn in g a s s e t s c o n s is te d o f thb fo llo w -
I
lags
B i l l * dlsoountsd tar nwOwr b a n ica ................................. ..* 1 2 ,5 9 9 ,0 9 3 .3 0 \ j
U i n H M V t i M M ........................... 1B^2 W » 88 * W I..
fo r e ig n lo an s on gold * ............ ............................................... **
399 ,0< 0 . oo I
L ib e r ty Bonds (a s mentioned a b o v e)............ ................* * * * 3 ,2 5 9 ,3 6 0 .0 0
P a r tic ip a tio n in system pu rchases of
I
U# S* aovem n»nt securities*************• *• ****1 4 ,3 4 2 *5 0 0 *0 0 I
Other U* 3* beads* **#•*•#••*#•***•**••*♦*••*••*#***„......3^0*000*00 V
T o t a l............ .....................* ............... ...................... * * . . * ................ $36 #154,251 *97 |
In oozm ection w ith th * item o f $ 3 9 9 ,0 0 0 re p re se n tin g fo re ig n le a n s on g o ld , I imy
add th a t th * ifeddral % s© rv * Bai& o f lew Tone r e c e n tly renewed $ 6 ,0 0 0 ,0 0 0 o f th* advance
to th e Banicovnl c f Pragu* a t $| p e r cen t in s te a d o f 3 p e r oent* Our p a r t i c i p a t i o n cen
t i m e s a t |22IJ*000«
For th * f i r s t tim e in m ay months our Loan & d iscou n t Departmant held on February 28
no p a st due paper In i t s file ® * A ll ea rn in g assets, e x clu siv e o f government o b lig a tio n s ,
were d is tr ib u te d by m a tu ritie s on t h * l a s t day o f F eb ra a ry a s fo llo w s*
Du* w ith in I S d a y s * * * * * * * * * * * * * * * * * * * 7 ,7 2 5 ,2 1 4 .4 2
Due betw **n 1& and 30 d a y s * * * * * * * * * . 3 ,4 4 9 ,3 0 7 * 3 9
Du* between 3© and 60 d a y s * * * * * * * ** * 4*480*670*12
Du* between 60 and 90 d a y s * * * * * * * * * * 1*779 ,$ 2 6 * 93
Due betw **n 90 days and s i x months.*
3 2 0 ,0 7 7 .1 6
Due a f t e r s i x m onths*** # * * * * * * * * * * * *
7 8 ,5 0 8 *9 6
Reproduced from the Unclassified I Declassified Holdings of the National Archives
O vxptmm* fo r th s raemth of FQbra&ry, aaouutine to $104,344*51, woro
utr
a la o st $3*000 le s s th m fo r Joiiia*^* ths dooroaao being ©aipl&iiiod in tho an aly sis
Of iaar<s& 0 and deor«&i*o i n # jo u s t s whlah you w il l find m on g tbs data boforo you.
©
Goqparod with 1924 you. w ill oboorvo that wo offootod a rsduotlon n ils y®ar fo r tho
aanth of JObrttary of -111*000, v itllo fur tho f i r s t tv s months; ®r 19:35 our o*p«&sos wore
v14,636*23 lo ss than fo r tho oorrospaadlaft poriod of 1 9 2 4 .
Oar Pod«?r&l assorro cotas ooatimod to ran o ff darts® tho mctnth, <i«ar$a*liag
f r « #47*709*000 oa Jaaaary 31 to *46*274*000 oa tho l a s t day of fobrimry* fit#
proeo»t circu la tio n * Jtowov*§r* i s s t i l l sorao s& U lm m& * h a lf groator than on
fobmary 2 i a your ogo*
®m t o t a l dopoaits or fobraary 12 rtmc&ad tho blghoat point la tho hi at or ,y
»
of tho ban* — #71*608*000* Ap$»oa±ia&toly 13*600*000 of th is m m m t* hmmmr# i s aooouatod f o r by uasottlod iml&noes ilno to tho fhot that till# b8»jte I'omainod opoa on
February 12* m whioh ia t o * boiag Idnoola’ s birtb&ay* tbs- Updoral Boaorro Board and
most of tho othor fodors4 Bosarvo Banks w«ro alosed* Bosovor* On tho tu tlm itm day
our deposits rooodod only to #69*004*840* mhiah s t i l l |9ftv»8 a poak sine* the beginning
of tbs bassic** operations* Our member banks r«®or?o deposits oa ffcbmary $$ araountod
to 166,164*077 ms aonpirud with 164,372,660 on January S i aa& 156,437,50? on Ifcbraary 28
a year ago* S t a t is t ic s eoiqpilod fro a tho ooaditlttt imports of mmb9* hm$m a s o f
i«asi&ber 3 1 , 19 4 , ®ho* that < that dato tho to ta l d ep osits o f ms&m b&xfco In th is
m
d is t r io t f o r tho f i r s t tin s in t h e ir h isto ry poosod tho or** b illio n d o lla r nark, the
to ta l boix& : i ,004 ,225,0 0 0 , whioh o&giaros with tho previous high point of 960,000,000
on Dooonbo* 31f 1919*
Boo to oattstsntly door®asiu^ earning a sse ts oar rosorro position wont up to ad
high os 76*0 per oont dmiiut tho month* ( e tho la s t day I t stood at 73*6 per oont, as
f
ooog&roci with 67*2 por mm% m January 31 and 41*9 por oont or Fofcvaary 28* 1934*
Although wo iuodo bo o d w o o s for aooomxt of' tho Wor fim itoo Corporation dur»
lag fobwuwry roprosontiag primary o b lig atio n s, tho.ro w^ro traasfsrred to m f r m
o
1 m m * Oity Iobxls aggrogatlag $ ^ 5 t119*27* ito ids# odvonood oagpoirvao moxioy to ta lin g
| a it 5£7«02* Out of to ta l loans of tho »ar i i m t m Q w pom tim of 1 3 ,8 0 S ,4 4 6 *3 1
hosdlod by th is baisc, ^3,620,640*52 i s o t prosost oatstsndiue*
4 not rodaotlon of four during 'M m m rf I o o t o s our prosont iai4#orship at
033» th is ooapyroo with 869 at* tho la s t day of Fobnm y a yoar
fho fallow ing
oiioagos oootitrod during tlio monthi
i2XUS3BX(S3i
f i r s t S a tio n a l 3sntlct //oslaoo, fo m s9 a p rim ry organiaatioa*
I t r s t 3 ta to Ssiic.f ^stimolav 1« M*, foiw erly tho 3to<tooa *s
3tato Bamc o f Qorona, a tasiE^or bax^c, whioh morod to
B stm o ia and. o^on^od i t s nano*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-10-
Withdrawal® by form al s u rre n d e r of s to c k in t h i s bank*
C e n tra l E a t io n a l BaiSc* V?aoo* f @ » s * c o n so lid a te d w ith th©
f i r s t Hat io n al Bank of '^aoo*
Oitisens O aaranty State Bank of L u fk in , fexas# p re v io u s ly
re p o rte d c lo se d *
Stockm en1* S t a te Bank o f Coronat I# H»* a s mentioned above*
f i r s t Hat io n a l t a l c * £eog> C ity * Q kla*f absorbed by F* & II#
N atio n al Bank o f A o h llle*
Anerioaa Bat io n a l Bank* Durant)
F i r s t Hat io n a l Bank* Bokohito } *
y ^ r a n t Sati0Ba2, fe345c
Ofcr p re s e n t msnfcership i s d iv id ed between S t a t e and n a tio n a l Panics assd among
Head O ffice and Branches a s f& le w e i
D a lla s
SI Paso
Houston
T o ta l
E a tio n a l
500
42
- J U £ ......
652
S ta te
146
4
... jR ...
101
itM
645
41
..142..
853
Am i s known t o th e m&mbers o f th e hoard* th e bankiBg' laws of f e x a s have r e c e n t l y
; ; been so amended a s to p e n a lt S t a t e hanks t o withdraw from th e g u aran ty fund system by
; I e x e c u tin g * under c e r t a i n r e s t r i c t i o n s * a s a t i s f a c t o r y bond o o re rin g th© amount o f th e
I | bank*s c a p i ta l s to c k in p r o t e c t i o n - o f i t s d e p o s its * or by p led g in g f o r t h a t purpose a c I | e e p ta b le s e c u r i t i e s which a r e n o t a p a r t of th e bank*s a s s e ts # i h i l e i t i s im p ossib le* o f
- I co u rse* t o determine j u s t ifeat r e s u l t s t h i s l e g i s l a t i o n w i l l u lti m a te l y produce* we a r e
■
> | d eep ly in te r e s t e d h ere in th e f i n a l out cans* I t i s apparent th a t th e l a r g e r S t a t e banks
7 I and even many o f the s m a lle r ones which have lon g been c h a fin g under th e assessm en ts o f
.
th e g u aran ty fund w ill l o s e no tim e in ©rabr&clng, i f th ey c a n , t h i s o p p o rtu n ity to w ith ; draw* I t i s n et improbable t h a t th# g u aran ty fund system# thus weakened by th e s e w ith
draw als* w i l l beooms so burdens cos a s t o m m I t d o u b tfu l w hether a r& e n te r p r is in g s t a t e
banks w il l be eontent t o remain* fh e s e unable o r u n w illin g t o meet th e req u irem en ts o f
th e new law w ill d o u b tle s s se e k th e only o th e r avenue of escap e «*- th a t o f n a tio n a lis in g *
A lready we have r e c e iv e d sin ce th e enactm ent o f the law a s many a s tw en ty-seven a p p lic a
tio n s to co n v ert in to n a tio n a l banks* f i f t e e n of th e s e coming 'from banks which a r e n o t now
members of th e F e d e ra l R eserve System* Uaoh of th e tim e o f our o f f i c e r s I s taken up by
r e p r e s e n ta tiv e s o f s t a t e banks seek in g n a tio n a l charters. C c I n t e r e s t .in the g e n e ra l
fr
banking situation o f th e s t a t e cau ses us to view w ith some con cern a s i t u a t i o n , which
\ seems probable i f n ot in e v ita b le * w herein th e e n t i r e burden o f th e g u a ra n ty fund w i l l be
: s h ifte d t o th e siu aller* w eaker S ta te banks* many o f which are unable t o b e a r assessments
even equal t o , notch l e s s g r e a t e r than* th o se th ey have a lre a d y been c a lle d upon to pay*
The new bank O eaw tesloner o f f e x a s seems to be making no e f f o r t to p rolon g th e e s d s te n c e
o f banks tfioee c o n d itio n seems h o p e le ss* and* Judging by th e naafeer which have clo se d
t h e i r d oo rs s in c e he assumed o f f i c e t a s w e ll as o th e r circu m stan ces coming under our ob-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-1 1 -
11 sorv& tlon# he may f e e l th a t those whloh in M s opinion mast © v en tu ally fail should
1 1 be perm itted to suspend w h ile the nusfcer o f banks su b jeo t to assessinent re m ln
1 1 p r a c t i c a l l y u»la$»aired*
b e lie v e th e developm ents w il l be w e ll w orth w atohing
1 1 and the m»Bi>ers of the board w i l l be kept l » toaoh w ith th e s itu a tio n frora time
tO tlfflS*
J
As a a a t t e r of p o s s ib le I n t e r e s t t o th e Board# I ussy a d v is e th a t e f f e o t i v e
Feb ru ary 27 th e f e d e r a l Reserve Banic of Sew fo rk in c re a s e d i t s re d isco u n t r a t e i r m
3 p e r oent # whid* had been in e f f e o t sln o e August 8# 1924# t o 3§- p e r cent# whiah i s
aow th e e f f e o t i v e r a t e of the f e d e r a l He serv e banim of Boston# lew fork# P h ilad elp h ia#
O levelaad and San F ra n o iso o . The r a t e o f th e reim iain g seven r e s e r v e banka i s s t i l l
4 p e r ce n t*
You will note from your 00Bg>aratlve statem en t that on Itobruary 2 8 , 33 f a i l e d
banks were indebted to us in the n e t sum o f | 1,4 2 3 ,7 8 3 * ^ 1 # exclu d in g th e amount
oharged on December 8# 19E4# t o B oserve f o r lo s se s # Our In s o lv e n t Sanies Department
e f f e c t e d collections d u rin g th e month t o t a l i n g $ 8 4 # $ 0 3 * 9 1 , In c u rrin g an expanse in
that o o n n eetlan o f 3 ,4 8 5 * 8 9 * t h i s compares w ith t o t a l c o l l e c t i o n s o f 108# 280*04
effeoted durii^ Jamary at & cost of ,)3#375*55* !§ hold against th e above Indebtedness
o f $ 1 ,4 2 3 # 7 3 3 * 21# t o t a l p a p e r of # 4 f3 £ 8 #
.X68«dXt and Irnve reserv ed on our booto# a s
you w il l rsoaXX# a total of # 6 1 9 ,6 3 0 * 6 3 against lo s s e s in oosneotion w ith f a i l e d banks*
Uille the personnel o f ou r Insolvent Banks D epart iaent i s g iv in g every possible at
tention to t h e paper we hold, it Is only n a tu r a l t h a t the v o X u e o o f our c o l l e c t i o n s
from h e re ou t t o the beginning o f the o r op moving .season w i l l not be v e ry heavy*
Eleven bank® clo sed in the E lev en th D i s t r i c t du rin g t h e month o f f'ebruaasr f
four mender banks and seven non-member* 4 1 1 of th o se eleven banks# excep t th ree#
were .S tate batiks In 5?exas* fhe four naember banks suspend in g b u sin ess were th e Bogata
n a t i o n a l Basic o f Bogata# t o s s th e C ity B a tlo n a l B x e of C la rlc s v llle # fe x a s* th e
af:
I*oo3K&ey 3 t a t e Bank of Lodfcney# Texas# and the F& rm rs R a tio n a l Bazfe o f Heiqpstead#
fex&s*
The Bogata B a tio n a l Bank was not Indebted to u s a t the time o f c lo s i n g , a l
though it had red isco u n ted h e a v ily w ith u s in p rev io u s years# owing u . a m xlm rn
s
amount in 1922 of # 9 3 ,0 0 0 * I s had many conferences w ith i t s o f f i c e r s d u rin g the l a s t
three years# b e sid e s being req u ired t o g iv e i t s a f f a i r s raaoh a t t e n t i o n in jaany o th e r
ways* L a s t y e a r we advanced the bank $43#OO0# whioh m s f u l l y rep aid in Bcnrembor*
There i s not s u f f i c i e n t b u sin ess In t h e Bogata oosn u n lty to s t^ p o rt two banks# and
t h a t circu m stan ce no doubt in flu en ced th e d i r e c t o r s t o cloue th e bank’s d oo rs* I am
p le a se d to say t h a t the H r s t n a t io n a l Baffle o f Bogata w ith in th e l a s t few days h as
in c re a s e d i t s o a p ita l and tak en o v e r th e B ogata la t l o n a l Bank*3 a s s e t s find assumed i t s
l i a b i l i t i e s # thus b rin g in g about a v e r y s a t i s f a c t o r y s i t u a t io n in th e ooronmity* ■
I f e e l th a t the me n ears of th e board have been kept v e ry w ell Informed a s to
th e a f f a i r s o f th e u i ty l a t l o n a l Bank of u l& rk s v ille d u rin g th e p a s t two o r th r e e
y e a rs * "'M le I t perhaps cannot be said t h a t th a t I n s t i t u t i o n has given, us more
tro u b le than &np member bank in th e d i s t r i c t # i t i s n e v e r th e le s s q u ite t r u e th a t in
Reproduced from the Unclassified I Declassified Holdings of the National Archives
**12**
ean aeotiea w ith none have w* bad more co n feren ces, sad w have had re p re se n ta tiv e s visit
e
the baalc more perhaps than axqr o th er on© of our members* In February, 1922, the baafe
owed u s $275, 000* l i l « til© amount of the line has steadily decreased from th a t data t o
tha p oint *fe#re on the date of olosing1 it ow us - 72, 137*51, this has been acaoraplished
ed
3
only by th® basic c o lle c tin g its H»st liq u id paper* For s e v e ra l m
onth®
have re a lis e d
the u t t e r hopelessness of the banic’e situation, but m desiring to do anything th a t
ot
would p r e c ip ita te i t s c l o s lag we have been very patient m forbearing, even permitting
id
the baalc *s indebtedness, which was in the form of a f ifteen-day note, to run p ast due*
W were fu rth e r enocuraged to exercise t h i s leaienoy because of the h e that the
e
€£>
Sxamination Department had of inducing one of
other banics in the tow t o talce over
the C ity B a tlo a a l. Although the Managing off* oera of the banic who have had its affairs
i a oharge during the last tw or th ree years have beta, in our Judgment,
o
o f good moral
C h aracter, i t was n e v e rth e le ss tru e th a t the baait had lost its prestige in the oosKiuaity
and i t s a c tu a l local deposit® had diminished to aa amount no greater than half of its
capital stoak o f # 2 0 0 ,0 0 0 * W felt that m did everything m oould to prevent the clo sin g
e
of the baalc and such, I understand, is the feeling of its own officers and directors* w
e
hela a margin of f i f t y p er oent c o l l a t e r a l in connection with th e baaie's indebtedness to
u s , b esid es having the eadorseswnt of th e d ire c to r s * $e apprehend no lo s s w hatever, sM
i t i s pwatbable th a t th e d e p o sito rs will receive a s u b s ta n tia l dividend,
m
to
h
mm
As w ill be re c a lle d by members of the board, I*. B* ,u a sle r, Vice P resid en t aad
Gaahier of the Earners N ational Banc, a d m itte d su icid e i a the l a t t e r p a rt o f December*
baalc was not indebted to us a t that time ant was i a a p r e tty fair oash posit ion*
T circu m sta n ce o f Ir# Aiasler*# s u i o id e , however, im m ediately produced a c r i s i s l a th e
im
banfc’ js a f f a i r s aad Manager H a rr is o f th e Houston B reach , i a whose t e r r i t o r y th e ban* was
l o c a t e d , went to B e d s t e a d and c o n fe rre d w ith the d i r e a t or® o f the b&ale in m e f f o r t t o
b rin g about a oos^osed s l t u a t i o a f a t th e same tim e advan cing # 1 0 ,0 0 0 a g a in s t a f i f t e e n day a o t e and c o l l a t e r a l t o p ro vid e a d d itio n a l oash f o r aa emergency* M iiasler ms also
r*
Ocuaty M e a s u r e r o f th e oouaty i n w b i& Hemps te a d i s lo c a te d * I t was d is co v e re d a f t e r
h i s d e a th th a t he was short in h i s acco u n ts a s t r e a s u r e r a a araooat i a exo ess of # 4 0 ,0 0 0 ,
However, t h is amount was taade good, we u n d e rsta n d , by r e p r e s e n ta tiv e s of h is e s t a t e out
o f th e p roceed s of l i f e in su ran ce policies c a r r i e d by Mr* Amsler* fhe loan of 1 1 0 ,0 0 0
was rep aid a t m t u r i t y and th e bank: owed u s nothing a t th e tim e o f closing* M exaiidnat i o a o f th e b&m i a th e l a t t e r i?art o f J a m a r y d is c lo s e d l o s s e s of $8A#@O0, whicli rendered
the baaic ia s o lv e n t*
ubsequent to t h i s th e County Juug® o f W aller uounty n o t i f i e d the
baalc th a t a t nine o ’ c lo c k th e fo llo w in g morning th e cou n ty f a a d s , which were ia cneoess of
1 4 0 ,0 0 0 , would be withdrawn. As a result of t h i s th e bank: d id not open the n ext d ay ,
though o f co u rse i t could n o t have been leapt open axyway u n le ss th e n e c e s s a ry s te p s oould
have beea tafesa t o r e s t o r e th e c a p i t a l *
Tm
k
Tim Lcckaey S ta te JBaaSc waa a c t indebted to us a t the tim e i t suspendedbbusiness,
although l a 1922 aad 1923 i t had f a i r l y heavy lin e s here* within our knowledge th e bonk »s
c a p i t a l had beea la^alred, i f not totally wiped oat, fo r a year or s o r e , and l a s t year we
declin ed to grant it any credit until i t i capital had beea properly restored,* It ms laept
going by s u b sta n tia l d e p o s its , e i t h e r m
ade or brought about by the Banfc Conrad ssitm er of
fexas#
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*12*
0& Decernfcer 3 th e to n e was examined fey th e S t a te banking a u th o r it ie s and lo s s e s ag
g re g a tin g #62,^00 were found, a g a in s t & oom>lnsd c a p i t a l and re serv e o f # 62,500* fhi®
rendered th e i n s t i t u t i o n t o t a l l y In s o lv e n t* $he p re sid e n t of the bank made strenuous
but u nsuooes.jful e f f o r t s to r a i s e a new c a p ita l f visiti-Ufc, j» is t r lllo f ?ort /orth and
A ustin* He d id succeed I s se cu rin g on® p ro p o s itio n from In d iv id u a ls capable o f re fin o n o b a ^ # t h is p ro p o s itio n b e in g p red icated on th e Banking Department a t t r i b u t i n g
$25 *000 out of tli# guaranty fund to take out lo s s e s * fh e new Bank Commissioner, howwrer,
a o tin g perhaps somewhat alon g the lin e s lo d io a ted in a previou s paragraph o f t h i s r e p o r t,
d e clin e d to do t h i s and th e r e s u l t was t in t the exam iners olosed the baiie* m had a r e *
p resen t a t I t s on th e ground f o r about te n days b e fo re th e bank clo se d * to render mdh a s
sistan ce as he could to prevent the dittoing of the bank*
The non-msmber banks closing fir in g the month were:
a t i L M ftqfi
Peoples S ta te Bank of Hanger, Texas
Lometa S ta te Bank o f Loiaeta, Tema
Guaranty S ta te Bank & fru st Germany, Sulphur Springs, ftx a s
Soofc Island State Bank, m m Isla n d , fem e
Hardin bounty S tate Bank, Xountze, Texas
Aaerioan S ta te lank, Harrisburg, Texas
f i r s t S ta te Bank, Bio Hondo, ferns
Sanies were reported olosed in other d i s t r ic t s during February ae follow sj
S<m~faoraber
Ohloago
2
9
Kansas C ity
0
4
5
iHnneapolis
6
P h ilad elphia
0
Richmond
I
S % &ouis
%
0
1
San /r a n c la c o — -2..... r..... „ ...... —........ 1 ................
.
to ta l
11
23
%
Z
fe ta ]
10
4
11
2
3
1
..3
34
Slnoe th e l a s t meeting o f the Board General Auditor fo a lk s v i s i t e d th e llupo
l a t l o n a l Baafc, a«oon|>anied by an a s s i s t a n t , ana oheoked up th e a f f a i r s of th a t i n s t i t u
tio n a s th e y r e l a t e to th e ta k in g o w i o f th e f i r s t l a t l o n a l Bank o f Hugo In th e early
p a rt o f Septem ber, 1923* As has been exp lain ed to th e b o a rd , th e o f f i c e r s o f the a tg o
l a t l o n a l Baiflc have oontended th a t th e re a r e heavy lo s s e s in th e paper tai® n ov©r frees
the f i r s t l a t l o n a l Bank not provided f o r a t th e tim e o f th e m erger, and th a t u n le ss some
r e l i e f i s affo rd ed them in oojm eotlon w ith th e s e Id s s e s th e r e s u lt imy be o f se rio u s con
sequence to th e Hugo R a tio n a l Bank. Mr* Foulks has submitted h is r e p o r t , from whioh i t
appears th a t a g re a t many item s have been included in the l i s t o f lo s s e s which Should
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-14-
properly be horn* by the Hugo Hational Bank l i m i t .
In addition to this it appears
th a t the capital stook of the Hugo Ifett onsl $*ufc, which Is f2OO,OO0, is lirgalred in
the amount of about #00,000 by losses in tk,« assets of tho lego National Bank which
boar no rslaticn to thoss acquired from ths first national Banlc. lir* ehall* President
of ths Hugo Bational Back, la anxious to have a conference with our ixecmtive Comaitts© at which ths whole situation laay bo oarefully reviewed, It may bs that our
executive oonaaittee will find it naoessary to make some further concessions in this
case. Ths faota in relati on to this situation 'Bill bs further discussed in connection
with this r«$>ort, with a view of having ths members of tha board give the executive
oonmit tss ths bsnsfit of their advice sad suggestions*
1 spent practically a ll of last waek in uarlsbad with Counsel 3troud and
Deputy Governor Grund in connection with the Idvingston Oattle matter, «hloh has been
brought to the attention of t h s 'board, at different meetings* Reoit ing ths natter
briefly, 1 may say that m hold as additional collateral to the indebtedness of ths
national Bank of Uarlsbad a nots of ths Livingston Oattie Company for approximately
$1X3,000, aeoired by a mortgage on m s oattle of that concern, whloh at ths tins we
tootle ths mortgage were estimated to bs about 9*000 in nuober. C o account of the con
t
tinued dapy ssather and ths inability of ths oongpany itaslf to provids fonds with ifeiOh
to imy feed, this matter reaoihed a critical stags about two weeks ago and 1 sent Counsel
St road to Jarlabad with instraatians to endeavor to make sons settlement of ths trans
action m e r s b y us would aoguirs full title to the oattls on whloh m tools a H a n ,
Mr* Grand and I Joining M m a few days later at his request* 3oma days previous m
had placed a representative of our own at ths Xdvingston randh ana had providsd some
feed for ths oattls* fhers were many angles to this matter# Involving the rights of
junior lisn holders, unsecured creditors and an individual tfeo had a mortgage on ths
ranch on i&ioh the oattls were located, as well as a ssootsd lien on the oattls them
selves. As a result of several days * negotiations m arrivsd at a tentative agreement
whereby ths Livingston battle Ocqpa&jr would execute to us a bill of sale covering all of
the oattle mortgaged to us upon the oonsideratlon of a sash payment of $10,000, for ap
proximately one-half of which sum we expect to be reimbursed by other interested parties,
ths amount to bs paid us either in cash or in oattls at their present worth*
man
^ a m ws had plaoed on ths ranch estimated that here were about 5,000 cattle m ths
ranches at ths present time m whloh we had a lien* Several hundred heed of the oattls
apparently have disd during ths last fsw weeks*
Ss have supplied faeS, however, and t s
/
hope to arrest this loss at least in some measure*
our representative also stated
that the calf crop, notwithstandli^ ths drouth and other unfavorable conditions, will
bs fairly good* If we acquire title to ths oattls* m expect to provide the® with
sufficient fesd for ths next sixty days, after which m expeot to mans such disposition
of them as the circumstances and conditions will at that time warrant, hoping of course
to males sals of them on ths ranches*
{©cognizing ths difficulties attending our efforts to hasdle this oattls
situation from Dallas* just before leaving Oarlsbad I called up Manager Heordan sf the
1 1 Paso Brandi and askad him to mset m at Pesos last Saturday* This hs did and I ar
5
ranged for him to spend as much time as necessary during ths next few weeks in Carlsbad
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-1 5 *
end vicinity, g i n m special attention to the handling of these cattle* It Is felt
that not only by reason of his familiarity with that section of the distriot ani his
acquaintance with ths people in that vicinity, hat also through the faot that he has had
considerable eiperleaoe lately with oattle la which m had an interestt he la qualified
to handle this situation to the very best advantage. The wortc at the . 1 Faso Branch is
8
very light at this time aat it waa felt that he could be spared without any serious
inoonvenienoe to the operation of the Branch* The Executive Qomaittee has designated
Mr# Vmwp as Acting Ssanager to serve during the several absences of Mr* aeordrn*
The regular spring conference of the Governors of the twelve federal Heserve
Banks bas been oalled to meet in Washington beginning April 6t and I au niaklng wp plans
to attend*
Respectfully subndtted,
(Signed) B* A* McKinney
Governor*”
She Governor#s reference to the position of the bank with respect to earnings,
and its investnent policy for the imedlate future, developed a free discussion* It was
the oonsemrai of pinion that In view of the baritef present earning position it was quite
s
desirable that purchases of Govenuaent securities be continued, and tipon motion by
lar# Frost, duly carried, an investment; up to #10,000,000 in U* 3. Goverarasnt bonds was
authorised*
At this juncture Chairman Galley received a sassage of the death of a member
of Mrs* Talley *s fandly, and stated that it would be necessary for him to leave the moot
ing*
In the absenoe of Deputy Chairman U n s , Class 0 Director Perieias took the chair*
The Board went into executive session, with only the directors, ths Secretary of
the Board, and Advisory Councilman McGregor, present*
Hr* aoGregor subedited a ocxqprehaasive report covering ths topics considered at
the recent meeting of the Advisory Council, and the reoomaendations thereon. The report
m s supplemented by a verbal statement and sn interesting discussion of the toplos developed,
Bo further business being presented, a motion to adjourn prevailed#
APPSCTODi
ATTEST i
Chairman
Secretary
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Itbnaaiy It, IMS
E x e c u tiv e
Mr* Mattegon:
iS«o«ipt It aoknowXodgod of
IQth W tant, •noloftlng it
oentSiges of partlolpation of FoAoraX
in 3 y %
nw
t ^ r r W W p S i i S i r ^
February*
q£
wmi
mE
four l#tt#r suad *»oloiur* w ill b t brought to
th# a tt* n ti m of th# mmbern of th» Board*
?*ry truly your#*
( S i g n e d ) W a l Ue r
t
**lt*r l* Eddy,
S«or«t&ry*
Mr* W 1# Mfcttoaon, S#orotary»
*
Op#n Mayrlost Xnv*«t»ettt OoBssltt##,
«/o Ffcdoral Rotor** Bask,
ItnrTorlc* v« Y
*
F o!d<
r — ---------- : ------------------------------------------------ : -------—
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d
eral
of
Re
ser v e
Ban k
RECEIVED
New Yo rk
I
FEB 1 1 1 9 2 5
Ox'-rXCB O j:
‘
T H E GOV3HBHOB
February 10, 1925.
PERSONAL
Dear Governor Crissingers
Enclosed is a statement showing the revised percent>ages of participation of Federal reserve banks in System pur
chases of Government securities and bankers acceptances based
on reports received by the Committee as of the close of
January SI, 1925, which ratios are to apply on System purchases
made during the month of February.
I am also enclosing for your information a copy of
letter which is being sent to-day to the governors of all the
Federal reserve banks.
Secretary, Open Market
Investment Committee
Honorable D. E. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
Ends. (2)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
„
FEDERAL. RESERVE BANK
February 10, 1925
f
OF n W IO K
" t
Dear Governor
:
\ i ?v
/ f
j
j } 192^-
\
.....
-,
r
1'he Committee has received estimates of expenses of all Federal reserve
banks for the current year to be used as a basis for allotting System purchases
£2Hi V
•
of Government securities and bills.
Some o f the banks included estimates of the probable amounts that they
Would charge off at the end of the year, principally for buildings and estimated
losses.
While it is expected that it may be possible to distribute during the
course of the year purchases which may b© made in such a manner as to take care
of all or part of the estimated charge-offs, the Committee has deemed it more
practical and equitable to make allotments of purchases, for the present, on the
basis of estimated current expenses and dividends only, the theory of such a dis
tribution being that some of the banks, even on this basis, have shown a defic
iency in their earnings since January 1, 1925 and it is felt that estimates
should fully cover expenses and dividends before providing for charge-offs.
There is enclosed, in tabulated form, a statement showing estimated
current expenses from February 1 to December SI, 1925 (including dividends) and
the percentage ratios based thereon*
You will note from this that your allot
ment for the current month will be ______ % of total purchases of Government se
curities and bills*
Very truly yours,
W. B. Matteson
Secretary, Open Market
Investment Committee
REVISED PERCENTAGES OF PARTICIPATION OF FEDERAL RESERVE BANKS IN SYSTEM PURCHASES OF
GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON EARNING REQUIREMENTS
AS REPORTED TO COMMITTEE AS OF THE CLOSE OF JANUARY 31, 1925
-
Boston
Net Earnings Less Current
Expenses Paid and Accrued
and Dividends
Jan, 1 - Jan* 31. 1925
Estimated Expenses
Feb. 1 - Dec* 3l/25
Including Dividends
Estimated Expenses
(Net) from
Feb. 1 - Dec. 3l/25
Including Dividends
Revised
Ratio of
Participation
$ 64,790
v 2,284,600
* 2,219,810
143,148
7*887,000
7,743,852
3,717
2,480,000
2,476,283
67,600
3,236,000
3*168,400
10 1
New York
Philadelphia
Cleveland
\
x 42,000
1 ,702,000 ■
1,744,000
%
Atlanta
x
1,383,819
1,427,091
5%
51,573
4,411,092
4,359,519
l3/o
3t# Loui3
x 15,200
1,714,000
1,729,200
%
Minneapolis
x
8,330
1*304,400
1,312,730
41
3,339
1,958,298
1,954,959
6%
Dallas
20,178
1,388,169
1,367,991
4i
San Francisco
33,000
. 2,957,000
2,924.000
%
2 , 7 0 6 ,3 7 8
J32 ,4 2 7 ,8 3 5
Chicago
Kansas City
43,272
^>278,543
«
X
Expenses exceed earnings*
O
O
r—
t
Richmond
w'--------------------------------------------------------—
—
1 ' ----
Reproduced from the Unclassified / Declassified Holdings of the National Archives
'ile Ocmv
F o r m N o . 131.
Office
e ^ O L .u e
ze
the Board
FEDERAL RESERVE
BOARD
Subject:
/
A% V m ■*•*!»* of tho F iit n l Hooerro *o«y* cm Joaaory «th, tho
follovtag *oo»fc<ti*ft wut oat&toooftly
tho D ilato r of tho Jourt** Viviiltm of s f t r f «mi
ttoac
Qhtxa* * m * * v
tfco too** as tfewn4«7 *f
000? « * :
) **
r ! o Q wport to tb» B o d ml ftmlogarofttt on
«r
ovt
tho tasi2
*s9 and orodlt •ltaotlon, ls*l*Ung tho opoyotlM
of tho (3pm r»rkot XwrootMnt Ctewaittoo**--- — — -
/\J L X
\h/^
^Declassified Holdings of the National Archives
o . 181.
Office CorreL .ou
To _
-Ga?xemor. Cr± asing.er
From.
IFEl
RESERVE
ARD
Date_
Subject:
-Mr. &
Several days ago you stated that you thought it might be
desirable to have Dr. Stewart come before the Board crior to the
next meeting of the Open Market Committee of Governors to report
upon recent developments in the business and credit situation and
review the operations of the Open Market Committee of Governors.
You also stated that you thought it might be desirable to have him
appear before the full Board more or less regularly for such a
discussion and report. I have rather hurriedly drafted the attached
resolution for such use as you may care to make of it. Dr. Stewart
has been consulted.
/Declassified Holdings of the National Archives
In order that each member of the Board may have the
benefit of the views of the other members of the Board on
current economic and financial trends, and also on the
policies and operations of the Open Market Committee,
BE IT RESOLVED, That a full discussion of these sub
jects be had at a meeting of the Board at least once each
^ ________
_
■
■
■
week hereafter, and that the Director of the Board’s Divi_
__ _______
sion of Research and Statistics, who is also Secretary of
the Board*s Committee on Discount and Open Market Policy,
be directed to attend the meetings of the Board at which
such discussions may ensue, and report upon recent devel
opments in the business and credit situation, and review
the operations of the Open Market Committee of Governors. -
iV 'i
H. f
IIC ’D XI MM© SECflOB
Botoa
en . Ifeo*-adat ions of the 0 * M* I *
04
. £B * * 1 1 9 4 4 r
? t- i J
’) _____________■/
Vote It
U /s /ta fha O. K. I . 0 . moaraended the purohMo « f aaourlUaa provMo* •'
tkfct auoh parohaMi « n u to aodo wlthemt a? «*"«*?<■£ * y mr-nay - o r n . s
• * » » « * 3»«urtty a o rto ta , with tbe u a d e ra ttsd l^ t l a t tho
of
the iM rt and p articip atin g tanka u to farth er purehaaei »oald *• aa*«d
for a f te r ■ to ta l of $100,000,000 hod too* M qulro*.
Xte Boord favond tho jrarohaae of a lim ited rolvm of w o n rltlsa ,
Moarrtap tka rig h t to dlaoontlnae parsteooa and m a i l * oolo a t may
tlno* |p* 5 )
Vole 2t
1/14/24 Holloa adopted that the Oowalttee be author!zed to purchase not
more than tl5,O00gOOO freasury notes (due IZ/li/M} prior to it* next
*»etia*r - baying fa to i ■ fee ho advanced* T{p» # )
^ot)
^
■Ho 3:
2/l/24 Price it-al which Coawltteewas authorised to purchase securities
wse revissd so as toperairpurohaaes up to tho aaount of $100, 000,000 t /
previously agreed upon# (p. 6
b}
r
lot® 4s 2/25/24 Jtoved that Chairmen submit to a ll banks reoonroendation* that
farther purchases not exoeediae $ 100, 000,000 be m after fir s t
ade
$ 100, 000,000 purchase had been convicted. (p. §b)
(*o record of formal authorisation by the Board of thla
c
action.)
7N ^
Bote 5t 4/22/24 Toted that additional purchases he authorised up to and sot ex
ceeding In tho aggregate #250,000,000* (p* 71
(So roaord of formal approval or discussion by the Board
^ c
,
of this proposal* J
^ ^
Bote 6$ 5/29/24 Secoranended aa increase la 0. V* 1* 0. holding's of 1150,000,000
tho purchases to b m at tbe disoretion of the Conmittee at current
© ade
market prloes, sad also that tho Chairman be authorized to m tem
afce
porary sales during quarterly tax periods of amounts deened advisable
under suitable repurehase arranges* at*
fhe Board on Juno 4, 1924 voted authorisation and asked to he
advised when purchases were oaqpleted* (p* 10)
Bote Tt 7/14/24 Toted that tho maximm lln lt on purchases ho ralsod from
u
l^
.
$400,000,000 to $500,000,000, prloos to he at Ghalwn&nU discretion, ^
the operations to bo conducted 'I5~sach a my as to minimi so ohaages In
either the credit situation or aarteet quotations for securities* Au
thority was given to make porohaaos in other districts than B# Y.
Expressed tbs view (by fwnaal vote) that la event of substantially x*m
changed conditions a further increase of the 1500,000,000 limit would
bo favored aad requested an Indication of the views of the Board oa
this point*
fho Board oa July 29, 1924, approved increasing the aooouat from
$400,000,000 to $500,000,000 with the understanding that a ll effort
«ml4 tw Mda to
dlatorlwiioe to ti» a ttq Motet. *o motion u s
rn
IiJqib Q ti}0 qu0stloss of fortlvr iM n siis^ tin $ 800*000*000 mx]sbh«
g
(p. U )
/
Bote 61 10/24/24 Beeolation paeeed reoowneadln^ that the Ohalraan he gi^ea au
thority to hay or eell up to 1100*000,000 of eeoarltlei to neet any
el tart ion developing la the aoaey aartet.
fp« 13}
(X0 aotion taken hy the Board a a til Bov* 1 2* 1924}
loto fit 11/12/24 Moating of the Board attended by aa^ere of the 0* If* I* C*
approved reoomadatioiie, (1) that the Ooacittee eootlnae to raelce tem
porary oaloa and porchaeee deened aeoe»«ary at tax periods, (2} that
the dietrlhatloa to tho haafce of M ile aad securities parohaeed he contimed oa baeis of eetiaeted deficiencies la earniage* (3} that the
governors Confer* aoe aathorlee the Ooamittee to exchange certificates
mtvxlag after Beceaber 51* 1926 for ehorter natarltleo, aad authorised
the OoraBlttee to, (1) wplaoo tho #66,000*000 of December Maturities,
to the exteat adTleahle la ooaelderatioa of aartoet conditions at that
time, (») to offeet gold movements or eann|rlcla£a to the extent advis
able in ooaelderatioa of aaifcat oondltlone* hat not ia exoeee of
$100*000*000, (3) to ee ll securities to redaoe the S. I* aocouat to
$600*000*000 at rapidly a» money conditions aeke It practicable* (p. 14)
loto 9* IZ/19/M fi* Chalraafi reported to the Board In Joint Meeting and pro
posed that while the Oonalttee ehoald he prepared to e ith e r hay or eell
according to money wartaS't development# i t voold he desirable to maintain
the S* I* account a t about #450*000,000 and that frc* tine to time holdlag* ehoald he liquidated*
fhe report ead proposal* aore approved hy the Board* (p* 26)
vj
r
*
:
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131.
Office Correspc . It ze
T o _____ Federal Reserve Board
From __
FEDERAL RESERVE
BOARD
Subject:,
Committee on Discount & Open_
_
Market Policy.
The undersigned Committee on Discount & Open Market Policy,
whom were assigned the reports of the Governors and of Chairmen at
'their recent Conference on the topic:
to
HThe advisability of a Federal Reserve Bank
investing an amount equal to capital and surplus
Government bonds for earning purposes".
begs leave to report that the Governors after a lengthy discussion of
the question were evenly divided when a vote was taken on the follow
ing motion:
"That it is the sense of the conference that
there is no objection in principle to the investment
by Federal reserve banks in long time Government ob
ligations of so much of their capital and surplus as
is not represented by buildings or other fixed in
vestments.”
The Chairmen in conference by unanimous vote adopted the
following resolution:
"The committee believes that the System should
not change its investment policy any more^than it
should change its policy in regard to services and
other operative matters, because of tenporary changes'
in credit conditions. The policy of the System has
not been to invest in long time Government bonds to
any extent, although the matter has been discussed
many times.
The committee moreover believes that in
view of the present cheapness of credit and "consequent
high quotations for bonds, the present is not an oppor
tune time to make such an investment even if, as a
matter of policy, it was considered desirable.”
The Committee after consideration of the matter finds itself
in substantial agreement with the position stated in the resolution
adopted at the Chairmen’s conference and recommends it for careful con
sideration by the Board should the Board at any time be disposed ta
formulate an expression of its attitude in the matter of investment by
Federal reserve banks of amounts equal to their capital and surplus in
Government bonds for earning purposes.
)Conmittee
)on Discount
)5 Open Market
<b
)Folicy.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131.
Office Correspc
le ce
FEDERAL RESERVE
BOARD
T o _______ Consalttee on Discount & Open Market
Subject:
Policy (Messrs* Miller, Platt
TMAj_______ & Cunningham)
By direction of the G-overnor, there is respect fully
referred to the Conmittee on Discount and Open Market Policy,
for report at the meeting on Friday, the attached memorandum
of action by the recent Governors* and .Federal Reserve Igents
Confersnces on the advisability of a Federal Reserve bank in
vesting an amount equal to capital and surplus in government
bonds for earning purposes*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Report of Joint Conference discussion on the following
topics
"Advisability of a Federal reserve bank investing
an^amoxmt equal to capital and surplus in Government
bonds~‘
Toir e&raing purposes *"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
7
Go v e r n o r Strongs
If It is the d e s i r e o f t he B o a r d
to go o v e r this p r o g r a m w h i c h has b e e n submitted, w e w i l l
take u p the fitfst i t e m o n t h e program, w h i c h is
1.
Advisability of a Federal reserve bank
I n v e s t i n g a n amount equal to c a p i t a l and
surplus in G o v e r n m e n t b o nds f or e a r n i n g
purposes,
I h a v e not th e minutes of o u r p r o c e e d i n g s to r e f e r to,
of course, but the a c t i o n of the C o n f e r e n c e was tha t It
was
not a d v i s a b l e to do so at this time,
Gov e r n o r
Crisslnger:
Are there a n y remarks a b o u t
that?
Mr*
Miller;
X) id y o u t a k e a v o t e o n t h e s e things?
Governor S trong:
Yes.
Mr. H a r r i s o n r e m i n d s m e that
that was a n e v e n l y d i v i d e d vote.
I t h i n k I v o t e d o n it,
did I not?
Mr* Ha r r i s o n s
Yes.
T h e Chairman*
T h a t is correct*
divided,
Y o u v o t e d a g a i n s t it.
T h e v o t e was e v enly
a n d X v o t e d a g a inst it.
G o v e r n o r Seay:
Ma y I suggest that it was a n evenly
divided v o t e as to p rinciple.
G o v e r n o r Strong?
I t h i n k if the r e c o m m e n d a t i o n h a d
b e e n to buy some l o n g t e r m bonds at this time it w o u l d
h a v e b een different.
G@veraoi* <&»lsslngei?t
the banks voted?
Doe s anyone d e a i r © to k n o w h o w
(After a pause)
A p p a r e n t l y not.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
G o v e r n o r Orissingers
Mr* Perrin*
H a * e y o u a n y r e p o r t o n No, 1?
T h e C o m m i t t e e be l i e v e s that t h e s y s t e m
s h o u l d not c h a n g e its i n v e s t m e n t p o l i c y a n y mor e t h a n it
sh o u l d c h a n g e its p o l i c y w i t h r e g a r d to ser v i c e s a n d o t her
o p e r a t i n g m a t t e r s b e c a u s e o f t e m p o r a r y c h a n g e s In cred i t
conditions*
T h e p o l i c y o f th e S y s t e m is n ot to Invest in
l o n g t i m e g o v e r n m e n t bonds to a n y extent,
ter h a s Is e a d i s c u s s e d m a n y times *
a l t h o u g h the m a t
T h e committee,
more*
over, b e l i e v e s tha t i n vie w o f t h e p r e s e n t c h e a pness o f
c r e d i t a n d c o n s e q u e n t h i g h q u o t a t i o n s f o r bonds, the
p r e s e n t Is not a n o p p o r t u n e t i m e to m a k e s u c h a n i n v est-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
30
ment,
e v e n if, as a m a t t e r of policy,
I t was c o n s i d e r e d
desirable,
T h e C o m m i t t e e attac h e s h e r e t o t h ree a r g u m e n t s w h i c h
h a v e b e e n made,
o ne in favor o f i n v e s t i n g in bonds,
a nd
th e o t h e r t w o a g a i n s t d o i n g so.
I might
say that the C o n f e r e n c e of F e d e r a l R e s e r v e
A g e n t s w as split u p into f o u r c o m m i t t e e s o f t h r e e each,
the topics w e r e r e f e r r e d to these c o m m i t t e e s
tion,
for c o n s i d e r a
r e p o r t s w e r e m a d e to the coiafierence a n d adopted,
in this
as
case.
Governor
in t h e record,
Orissinger:
L e t us h a v e t h o s e arg u m e n t s
a n d if there is n o t h i n g f u r t h e r * w e w i l l
go to topic No. 3.
(The a r g u m e n t s
r e f e r r e d to a ^ e as followst)
Advisability of a Federal Reserve Bank Investing
a n a m o u n t equal to capital
a nd surplus in G o v e r n
m e n t bonds for e a r n i n g p u r p o s e s .
In c o n s i d e r i n g this matter,
d i s p o s i t i o n f i rst should
b e mad e to the b r o a d e r q u e s t i o n as to w h e t h e r or n o t a
F e d e r a l r e s e r v e b a n k s h ould m a k e i nvestments for income
p u r poses, w h p n s u c h i nvestments do not s e e m to be r e q u i r e d
by the demands o f trade.
T h i s q u e s t i o n has b e e n t o u c h e d
Reproduced from the Unclassified I Declassified Holdings of the National Archives
31
- r o n time to time a y o u r conferences,
but the a t t i t u d e
o f the F e d e r a l R e s e r v e B o a r d a n d the o f f i c e r s o f the banka,
as far as the w r i t e r knows,
certained,
banks
market
never has been accurately as
Prop o n e n t s of the t h e o r y t h a t F e d e r a l r e s e r v e
should not p u t m o n e y into the m a r k e t u n l e s s the
needs it,
d isturbance,
or at l e a s t c a n take it w i t h o u t c a u s i n g
h o l d t h e o p i n i o n t hat at
eral re s e r v e b a nks
such times the F e d
s h o u l d r u n at a loss r a t h e r t h a n m a k e
e a r nings t h r o u g h s u c h investments.
But it is b e l i e v e d
tha t it w i l l be f o u n d t hat a l a r g e m a j o r i t y feel that the
F e d e r a l r e serve banks w e r e o r g a n i z e d to be s e l f - s u p p o r t
ing - that the r e d u c t i o n s in the r e s e r v e r e q u i r e m e n t s o f
m e m b e r banks,
and o t h e r measures,
are a m p l y s u f f i c i e n t to
c o m p e n s a t e t h e m for the slight c o m p e t i t i o n the y m i g h t m e e t
f r o m the F e d e r a l r e s e r v e b a n k s , - that g e n e r a l l y speaking,
b u s iness w i l l absorb,
w i t h o u t m a t e r i a l disturbances,
the
a m o u n t of funds the F e d e r a l r e s e r v e banks w i l l h a v e to
inve s t to m a k e suf f i c i e n t earnings to c o v e r their e x p e n s e s , that it w o u l d be a great m e n a c e to the c o n t i n u a n c e o f the
S y s t e m s h o u l d the banks n o t be a b l e to support t h e m s e l v e s , a n d t h a t t h ere w o u l d h a r d l y ever be a tlrae w h e n t he l a tter
w o u l d be j u s t i f i e d in r e f r a i n i n g f r o m m a i n t a i n i n g s u f f icient
Reproduced from the Unclassified / Declassified Holdings of the National Archives
32
e a r n i n g a s s e t s to p a y e x p e n s e s a n d dividends*
B e l i e v i n g t h e n that a m a j o r i t y o f this body feels
that F e d e r a l r e s e r v e banks s h o u l d carry suff i c i e n t e a r n i n g
assets to m e e t t h e i r expense,
ments,
the
d i v i d e n d and surplus r e q u i r e
q u e s t i o n arises - "Why s h o u l d rot a r e a s o n a b l e
p a r t of s u c h earning assets c o n s i s t of
Government b o n d s ? ”
B e c a u s e w e hav e not b e e n i n v e s t i n g in G o v e r n m e n t bonds,
is Inclined to a s k • nW h a t is t h e m a t t e r w i t h t h e m ? 1
*
s e c u r i t y is u n q u e s t i o n e d ,
other
g o o d to h o ld*
and,
The
the income l a r g e r t h a n that from
Government obligations,
t hey are flexible,
one
or f r o m b a n k e r s 1 bills;
for s t r ategic purposes,
just as
T h e q u e s t i o n b e f o r e us is the same as the
o n e s u b m i t t e d to the B o a r d some t h r e e y e a r s ago w h e n the
f i n a n c i a l c o n d i t i o n s e x i s t i n g t o d a y w e r e p l a i n l y f o r e seen.
The
s u g g e s t i o n t hat F e d e r a l r e s e r v e banks b e a l l o w e d to
invest In L i b e r t y bonds a n d V i c t o r y notes f o r income p u r
poses w a s
not t h e n approved,
States n o t e s a n d
ted*
but i n v e stments In U n i t e d
Certificates d f I n d e b t e d n e s s w e r e p e r m i t
T h e F e d e r a l A d v i s o r y C o u n c i l , to w h i c h t he q u e s t i o n
of i n v e s t m e n t s of F e d e r a l r e s e r v e banks w as r e f e r e e d in the
sp r i n g o f 1922,
said:-
^Whlle the C o u ncil believes at the same time tha t the
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33
F e d e r a l R e s e r v e S y s t e m w o u l d be w e l l a d v i s e d in m a k i n g ef
forts to incre a s e its h o l d i n g s o f a c c e p t a n c e s , there is
no d o u b t that t he F e d e r a l r e s e r v e banks as a w h o l e c a nnot
a v o i d at this time for re a s o n s a b ove explained,
Investing
ver y s u b s t a n t i a l a m o u n t s e i t h e r i n G o v e r n m e n t b o n d s , C e rti
ficates o f I n d e b t e d n e s s or w a r r a n t s .
doubt,
Of these three,
no
the short t e r m T r e a s u r y c e r t i f i c a t e s are t h e most
su i t a b l e as i n v e s t m e n t s
for the F e d e r a l r e s e r v e banks.
B e a r i n g i n min d that the c a p i t a l a n d surplus o f the c o m
b i n e d F e d e r a l r e s e r v e banks a m o u n t s to a p p r o x i m a t e l y
$30 0 ,000,000,
the C o u n c i l does
sot feel that t h ere is Just
cause to c r i t i c i s e the F e d e r a l r e s e r v e b a n k s for h a v i n g
in v ested In T r e a s u r y c e r t i f i c a t e s a n d s h o r t - t e r m G o v e r n
m e n t o b l i g a t i o n s u p to m
a m o u n t w h i c h is n ot l a r g e l y in
excess o f t h e l r c a p l t a l and surplus,
ing t he amount o f t h e i r assets,
a n d which,
consider
c o n s t i t u t e s o n l y a small
part of their res o u r c e s *
"The
Council
is still o f t he o p i n i o n t hat the F e d e r a l
r e s e r v e b a nks shou l d a v o i d i n v e s t i n g in l o n g - t e r m G o v e r n
ment
bonds *”
W h y this d i s t i n c t i o n was made,
v i n c i n g l y explained.
never has b e e n c o n
It is not u n l i k e l y that the a t t i t u d e
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34
towards
Gov e r n m e n t bonds w as duo to t h e u n s a t i s f a c t o r y
c o n d i t i o n o f the b o n d m a r k e t that h a d
time.
existed u p to that
T h e g r eat w a r Issues h a d not b e e n digested; m e m b e r
b a nks a n d F e d e r a l r e s e r v e banks w e r e c a r r y i n g as c o l l a t e r a l
s e c u r i t y f or loans h u n d r e d s o f m i l l i o n s o f t h e m w h i c h h a d
b e e n bought,
ic motives,
them#
not for i n v e s t m e n t purposes,
but f r o m p a t r i o t
a n d the banks w e r e m o s t anxious to get ri d o f
Securities,
f l o a t e d in s u c h a way, w o u l d
l o o k e d u p o n f a v o r a b l y by bankers,
not be
a n d this p r o f e s s i o n a l
a t t i t u d e o f t h e b a n k e r s t o w a r d i n v e stments w a s a l l o w e d
to a f f e c t their thinking;
even about
G o v e r n m e n t bonds*
T h e G o v e r n m e n t b o n d m a r k e t has so c h a n g e d that it is
d o u b t f u l if the same a t t i t u d e w o u l d be t a ken today,
as
no one s e r i o u s l y c a n say that the b o n d s of our Government
do n o t p r o v i d e the safest inve s t m e n t that can
T h a t h a v e a broader market,
can be sold at a n y t ime in
a n y k i n d of a m o n e y m a r k e t w i t h less
p r i c e t h a n a ny o t h e r
be made#
security,
fluc t u a t i o n s
in
a nd as far as o ur o p e r a
tions f or s t a b i l i z i n g the m o n e y m a r k e t m a y go,
vide b e t t e r i n s t r u m e n t s t h a n any o t her
t h e y pro -
investment.
H a d i n v e s t m e n t s in G o v e r n m e n t bonds b e e n p e r m i t t e d
at the time t he s u g g e s t i o n was made,
no d i s t u r b a n c e o f
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55
the m o n e y m a r k e t w o u l d h a v e r e s u l t e d .
The reserve
banks., u n d o u b t e d l y , w o u l d h a v e b e e n sold t h e bonds w h i c h
t hey a l r e a d y w e r e h o l d i n g as s e c u r i t y for loans to m e m b e r
banks*
Thus t he bor r o w i n g s of m e m b e r banks w o u l d h a v e
b e e n m o r e s p e e d i l y liquidated;
e a r n i n g i nvestments of
F e d e r a l r e s e r v e banks w o u l d not h a v e b e e n Increased;
the G o v e r n m e n t
bond m a r k e t w o u l d h a v e b e e n stabilized;
the banks w o u l d h a v e h a d a n a s s u r e d income,
and would
not h a v e b e e n so c o n s t a n t l y in the m a r k e t f o r bills a nd
G o v e r n m e n t s h o r t - t e r m i n v e s tments.
It is s u r p r i s i n g
no* to t h i n k t h a t a ny o p p o s i t i o n w as o f f e r e d to s u c h in
v es t m e n t s .
S h o r t l y after t h e i r o r g a n i z a t i o n t he Fe d e r a l r e s e r v e
b a n k s m a d e large p u r c h a s e s of U n i t e d S t ates bonds f o r
i n c o m e pur p o s e s .
T h e F e d e r a l R e s e r v e Act p r o v i d e d that
F e d e r a l r e s e r v e banks
should p u r c h a s e f r o m member banks
at p a r U n i t e d States two per cent bonds, w h i c h bonds
might be e x c h a n g e d ^
fifty pel- cent f or 3 0 - y e a r three
p e r cent bands and f i f t y p e r cen t for on e y e a r 3 p e r c ent
notes,
s u b j e c t to t h i r t y r e n ewals*
T h i s p r o v i s i o n of
the Act a p p ears to be a c l ear a p p r o v a l of the i n v e stment
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36
b y r e s e r v e b a n k s in U n i t e d States
bonds•
A s t u d y o f t h e charters a n d o p e r a t i o n s o f t h e Gariks
of England,
France,
Belgium, Holland,
S w e d e n a nd J a p a n
shows tha t all are a u t h o r i z e d to h o l d G o v e r n m e n t s e c u r i
ties?
that some a re r e q u i r e d to invest a ll o r a p a r t o f
their c a p i t a l a n d surplus i n the loans o f their r e s p e c t i v e
governments;
a n d t h a t all c a r r y large amounts o f them*
T h e a b o v e s t a t e m e n t s a re s u f f i c i e n t to show t h a t
F e d e r a l re s e r v e banks d i d invest in G o v e r n m e n t
that,
u n d e r c e r t a i n circumstances,
do so;
that it is a p r o p e r policy,
bonds,
and
they w e r e r e q u i r e d to
an d o ne f o l l o w e d by
the central banks of the nations of the world*
T h e a v e rage p r i c e of U n i t e d States four a nd a h a l f
per c e n t bonds is a b out 102*
W e r e t h e capital
plus of the F e d e r a l r e s e r v e banks,
I n v e s t e d i n those
a m o u n t i n g to # 3 3 $ , 0 0 0 , 0 0 0
bonds at that a v e r a g e price,
w o u l d a m o u n t to $ 1 3 , 8 7 5 , 0 0 0 *
a n d s ur
t h e income
To p r o d u c e a n e q ual income
it w o u l d r e q u i r e a n i n v e s t m e n t o f # 6 1 6 , 0 0 0 , 0 0 0 in bankers
bills at the rate they are r e t u r n i n g today,
or a n i n v e s t
m e n t of $ 5 4 2 , 0 0 0 , 0 0 0 in U n i t e d States c e r t i f i c a t e s
o f I ndebtedness*
Thus a c o n s e r v a t i o n of res o u r c e s
a m o u n t i n g to $ 2 8 3 , 0 0 0 , 0 0 0 c o u l d b e m a d e b y I n v e s t i n g in
Reproduced from the Unclassified I Declassified Holdings of the National Archives
37
bonds
in s t e a d o f
Certificates o f I n debtedness.
About e i g h t e e n months ago,
vestment p o l i c y o f the banks,
in c a r r y i n g out the in
we sold,
at quite a loss,
some o f o u r h o l d i n g s of U n i t e d Stat e s C e r t i f i c a t e s o f
I ndebtedness,
and also r e d u c e d o u r h o l d i n g s of b a n k e r s 1
bills, p r e s u m a b l y be c a u s e m o n e y was so a b u n d a n t that It
was c o n s i d e r e d u n w i s e for F e d e r a l r e s e r v e banks to
c o n t r i b u t e funds to the m a r k e t w h e n the a p p a r e n t d e m a n d
t o r t h e m was so small.
S o m e months later,
e n tly there was a less d e m a n d for funds,
p o l i c y was changed,
when appar
the investment
a n d It w a s d e d i c e d to buy for the
banks $ 3 0 0 , 0 0 0 , 0 0 0 o f T r e a s u r y bills*
F o l l o w i n g that b y
a few months, when' still the m o n e y m a r k e t f a i l e d to show
a n y Improvement,
a fu r t h e r I n c r e a s e in the a m ount o f
T r e a s u r y bills to be p u r c h a s e d w a s a g r e e d upon.
The com
b i n e d sta t e m e n t s of the F e d e r a l reserve banks s h o w that
d i s c o u n t s h a d d e c l i n e d f rom $ 8 8 4 , 0 0 0 , 0 0 0 on O c t o b e r 31,
1923,
to $ 4 0 1 , 0 0 0 , 0 0 0 o n June 4, 1924,
and t h e Increase In
the p u r c h a s e s of T r e a s u r y notes and C e r t i f i c a t e s
of Indebt
edness m a y h a v e b e e n m a d e to offset this d e c line In the
h o l d i n g s of d i s c o u n t e d bills.
of purchases
W h i l e the a d v i s a b i l i t y
in the o p e n m a r k e t to m a i n t a i n the earnings
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38
assets
at
t h e banks was recognized,
some t h i n g that
e r n m e n t bonds w o u l d h a v e b e e n a f e t t e r p u r c hase.
Gov
But,
it w o u l d s e e m that this p o l i c y of m a k i n g a n y p u r c h a s e s
d u r i n g these periods
is a d i s t i n c t r e v e r s a l of the p o l i c y
a c c o r d i n g to w h i c h several of the banks a few months p r i o r
h a d b e e n c o m p e l l e d to
W i t h o u t a doubt,
large inve s t m e n t s
sell
securities*
it w o u l d be u n w i s e at once to m a k e
in G o v e r n m e n t bonds,
but it w o u l d seem
to be s o und to r e f r a i n from further buyi n g of
of Indebtedness,
and as funds
r e i n v e s t those funds
portunities
in bonds*
Certificates
a r e r e l e a s e d f r o m them,
to
S h o u l d there be any o p
to m a k e a d d i t i o n a l i n v e s t m e n t s
in bonds,
a d v a n t a g e s h ould be t a k e n of t h e m lip to a r a s o nable extent
(The secons a r g u m e n t is by Mr.
S h e p a r d M o r g a n and is
as follows:)
?T h l s
’
is In re s p o n s e to your r e q u e s t f or a m e m o r a n d u m
o n the f o l l o w i n g topic, w h i c h is o n t h e p r o g r a m f o r the
joint c o n f e r e n c e o f G o v e r n o r s an d Agents:
,T h e a d v i s a b i l i t y of a F e d e r a l re s e r v e b a n k I n v e s t
f
ing a n amount equal to c a p i t a l a n d surplus,
bonds
in G o v e r n m e n t
for e a r n i n g purposes. .
This p r o p o s a l m u s t be c o n s i d e r e d f r o m the
standpoint
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39
o f the s y s t e m r a t h e r t h a n as a m a t t e r o f I n d i vidual b a n k
policy,
b e c a u s e changes
in the i n v e s t m e n t a c c o u n t s o f one
b a n k are apt to be felt pr o m p t l y by some o r all of the
o t h e r r e s e r v e banks*
ment
T h e p u r p o s e o f the p r o p o s e d i n v e s t
is to p r o v i d e earnings,
a n d h e n c e involves a d e p a r t u r e
f r o m the p r e s e n t o p e n m a r k e t p o l i c y of the
system, w h i c h
is d i c t a t e d not by a n e e d for earnings
but by the s y s t e m 1s
obligations
if the i n v e s t m e n t
t o w a r d credit.
di d i n d e e d p r o v i d e earnings,
if it did not involve
e i t h e r case,
Further,
it w o u l d i n v olve inflation;
inflation,
it involves
it w o u l d be futile.
In
i n v e s t m e n t b y a R e s e r v e b a n k in
a larger amount of l o n g - t i m e s ecurities t h a n c o m plete l i
q u i d i t y war r a n t s .
First.
T h e i n v e s t m e n t p o l i c y o f the s y s t e m is n ow
a nd s h o u l d r e m a i n e n t i r e l y i n d e p e n d e n t of the q u e s t i o n
of earnings.
This p r i n c i p l e was d i s c u s s e d at l e n g t h at the
Governors*
c o n f e r e n c e in May,
a n d Mit was t h e consensus
of o p i n i o n that t he o p e n m a r k e t o p e r a t i o n s o f the s y stem
s hou l d be c o n d u c t e d i n d e p e n d e n t l y o f the q u e s t i o n of
earnings."
( S e c r e t a r y ’s summary,
page 4),
No f u r t h e r
a r g u m e n t o n the e c o nomic c o n s i d e r a t i o n s l e a d i n g to the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
40
a d o p t i o n of this p r i n c i p l e is necessary,
except in vie w
of the r e c e n t p u b l i c d i s c u s s i o n s o f the s y s t e m ’s holdings
of Government
securities*
These discussions have assumed
that t h e R e s e r v e b a n k s are h o l d i n g a l a r g e p o r t f o l i o of
Government
securities in o r d e r to m a k e earnings,
a n d In
so d o i n g are c o m p e t i n g w i t h the n o r m a l functions of
If,
the m e m b e r b a n k s •
as is not the fact,
the r e s e r v e
banks h ave a c c u m u l a t e d t h e i r h o l d i n g s of Gov e r n m e n t
secur
ities in f u r t h e r a n c e o f t h e i r o b l i g a t i o n s t o ward credit,
s u c h c o m p e t i t i o n in the m a r k e t as m a y h a v e t a k e n place,
wa s p u r e l y Inci d e n t a l to the p e r f o r m a n c e o f a public duty,
and was not c o m p e t i t i o n in the o r d i n a r y bu s i n e s s sense at
all.
If, o n the o t her hand,
t he R e s e r v e banks
s h o u l d not
p r o c e e d to a c c u m u l a t e a l a r g e p o r t f o l i o of G o v e r n m e n t
b o n d s for p u r p o s e s of m a k i n g earnings,
be c o m p e t i n g w i t h the m e m b e r banks
m e a n i n g of the term.
Increase,
in the full c o m m e r c i a l
T h e e m b a r r a s s m e n t of s u c h a n a d m i s
s i o n at this time is obvious;
so i n the future,
the y w o u l d in fact
it w o u l d be s c a r c e l y less
w h e n d i s c o u n t rates rise and earnings
a n d d e m ands r e a p p e a r f o r int e r e s t o n deposits;
for it w o u l d be i m p o s s i b l e to e s t a b l i s h that the re s e r v e
banks c o n s i s t e n t l y d e t e r m i n e t h e i r d i s c o u n t a nd invest-
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41
m e n t p o l i c y w i t h an eye sing l e t o w a r d credit,
and not on
earnings.
Second.
If the p r o p o s e d i n v e s t m e n t i n G o v e r n m e n t
b o n d s d i d i n c r e a s e earnings,
it w o u l d i n v olve inflation;
if it d i d not involve I n f l a t i o n it w o u l d be futile.
Th e p r e s e n t c a p i t a l a n d surplus o f t h e r e s e r v e banks
amou n t a p p r o x i m a t e l y to $ 3 3 3 , 0 0 0 , 0 0 0 a n d t h e i r h o l d i n g s of
Government
bonds to a b out $ 41,000,000,
thus l e a v i n g a m ar
g i n f or f u r ther i n v e s t m e n t of $ 2 9 2 , 0 0 0 , 0 0 0 .
At first
glance there is w a r r a n t for I n v e s t i n g a r e s e r v e b a n k 1s
capital
and surplus
other r e s e r v e
represent
bank funds,
s i nce c a p i t a l a n d surplus
(a) d i v i d e n d - b e a r i n g o b l i g a t i o n s h e l d by the
m e m b e r banks,
ings.
that does not exist w i t h respect to
and
(b)
th e re s i d u e o f re s e r v e
G r a n t e d that this is so,
bank e a r n
there are a l r e a d y r e
sources of t h e R e s e r v e b a nks w h i c h are p a r t i a l o f f set s
to capital
and surplus,
n o t a b l y the i t e m "bank p r e m i s e s ’
1
w h i c h amounts to $ 60,000,000;
overdue l o a n s .
ples,
These
a n d I n some banks s low an d
items should,
on accounting princi
r e d u c e the a m o u n t a v a i l a b l e for Investment,
but the
r e m a i n d e r w o u l d still be large.
■"
T h e c o n t r o l l i n g p r i n c i p l e in this case, however,
is
Reproduced from the Unclassified / Declassified Holdings of the National Archives
42
not tha t of a c c o u n t i n g but of credit r e s p o n s i b i l i t y .
A ny
i n v e s t m e n t mad e b y the R e s e r v e banks o n their o w n i n i t i a
tive w h i c h is n ot o f f s e t by a c o r r e s p o n d i n g r e d u c t i o n
in e a r n i n g a s sets
e l s e w h e r e or b y an
gold forces expansion,
e q u i v a l e n t export o f
a n d this e x p & m s i o n is I n f l a t i o n in
a m o r e or less m i l d form.
If the r e s erve banks
s h o u l d now
b e g i n g r a d u a l l y to a c c u m u l a t e a p o r t f o l i o of $ 2 9 2 , 0 0 0 , 0 0 0
o r a ny f r a c t i o n o f t h a t s u m in G o v e rnment
bonds,
a n d if
that a c c u m u l a t i o n s h o u l d toot be o f f s e t by red u c t i o n s
elsewhere,
a n e x p a n s i o n o f m e m b e r b a n k loans and
d e p osits w o u l d foll o w to a n amou n t s e v eral times the
a m ount of G o v e r n m e n t bonds p u r c h a s e d .
hand,
the p u r c h a s e s
s h o u l d be offs e t
o t h e r assets accounts,
If, o n the o t h e r
by r e d u c t i o n s i n
a n d I n f l a t i o n be avoided,
serve banks w o u l d re c e i v e no a d d i t i o n a l earnings,
the r e
save
as the bonds p u r c h a s e d m i g h t h a v e a y i e l d d i f f e r e n t fro m
the assets r e l i n q u i s h e d
.
Hence,
the r e s u l t o f the
a c t i o n w o u l d be e i t h e r i n f l a t i o n of futility.
T h e f o r e g o i n g holds true e ven if o n l y a few r e serve
b a n k s a d o p t the p r o p o s a l .
If i n v e s t m e n t by those banks
Involves a n increase in their ea r n i n g a s sets and h e n c e
o f their earnings,
that in c r e a s e w i l l b e at the expense
Reproduced from the Unclassified / Declassified Holdings of the National Archives
43
of o t h e r F e d e r a l r e s e r v e b a nks or else I n f l a t i o n m ust
result.
T h ird.
The proposal contemplates
I n v e s t m e n t in
a l a r g e r a m o u n t of l o n g - t i m e sec u r i t i e s t h a n co m p l e t e
l i q u i d i t y war r a n t s .
More t h a n h a l f of the
securities p u r c h a s e d t h r o u g h t he
o p e n m a r k e t c o m m i t t e e a n d now h e l d b y t he b a n k s , m a t u r e
within eleven m o nths;
of D e c e m b e r 1924*
all,
the two n e a r e s t m a t u r i t i e s ,
a n d March,
a n d the o t h e r s are
three years.
1925*
those
are the h e a v i e s t o f
spread at short i n t e rvals t h r o u g h
This pe r m i t s the r e s e r v e banks
to a v o i d
h e a v y sales o f securities in cap e cred i t c o n d i t i o n s m a k e
l i q u i d a t i o n desirable.
Quite the c o n t r a r y w o u l d be the
case if i n v e stments w e r e to take the f o r m of longert e r m bonds.
T o the e x tent that a n y r e s e r v e b a n k m a k e s
such investments
to m e m b e r banks.
it limits
its p o w e r to l e n d i n e m e r g e n c y
Maki n g & rge inve s t m e n t s i n bonds at
times like the p r e s e n t is c o m m o n l y the subject of
c r i t i c i s m w h e n f o l l o w e d b y m e m b e r banks,
volves
a n d u s u a l l y in
the sale of bonds o n a f a l l i n g m a r k e t or the
w r i t i n g o f f o f losses as
values decline.
In a ny case,
it is c o n t r a r y to p r i n c i p l e s g o v e r n i n g bank.** o f issue.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
44
T h e p r o p o s a l h a s no m e r i t s to r e c o n m e n d it a n d Is
a oonproraise w i t h s o u n d principle-.
ings,
it w o u l d p r o d u c e inflation,
If it p r o d u c e d e a r n
a n d w i t h o u t i n f l a t i o n It
w o u l d p r o d u c e no e arnings.
(The t h i r d arg u m e n t is toy Mr*
Reserve
Curtiss o f t h e Fe d e r a l
B&nk of B o s t o n a nd Is as followsi
Federal Reserve Bank of Boston
F i n a n c i a l S t a t i s t i c s D i v i sion.
1.
T h e a d v i s a b i l i t y o f a F e d e r a l r e s e r v e b a n k in
v e s t i n g a n amount e q u a l to c a p i t a l a n d surplus i n g o v e r n
m e n t bonds for e a r ning p u r p o s e s *
B e l o w is a t a b u l a t i o n o f t he earnings a c c r u i n g at
the r a t e of two p e r cent,
three p er cent a n d f o u r per
cent o n amounts equal to the c o m b i n e d c a p i t a l a n d s u r plus
o f e a c h F e d e r a l r e s e r v e b a n k as o f O c t o b e r 8, 1924*
F or c o m p a r a t i v e purposes,
the c u r r e n t expenses,
c o l umns a r e also g i v e n s h o w i n g
the c h a r g e - o f f s fo r r e s e r v e s a n d
the d i v i d e n d s p a i d by e a c h bank d u r i n g the c a l e n d a r y e a r
1923.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
46 ^
$ 5 4 0 , 0 0 0 , 0 0 0 i n such inves t m e n t s .
If to this figure
w e r e a d d e d the # 3 3 3 , 0 0 0 , 0 0 0 e q u i v a l e n t to t h e t o t a l capital
an d surplus as s h o w n above,
the banks w o u l d hold about
# 8 6 0 , 0 0 0 , 0 0 0 of s h o r t - d a t e d g o v e r n m e n t
securities.
T his
is s o m e t h i n g u n d e r o n e - f i f t h of the t o t a l s u p p l y of suc h
s ecu r i t i e s w h i c h n o w amounts to about # 4 , 5 0 0 0 , 0 0 0 , 0 0 0 .
I n conclusion,
it a p p e a r s that the w e i g h t o f evide n c e
is d i s t i n c t l y a g a i n s t t he a d v i s a b i l i t y of i n v e s t i n g a n
a m o u n t e q ual to c a p i t a l a nd surplus I n g o v e r n m e n t bonds
for e a r n i n g purpos es.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
'V
Bec«afoer 89 1924,
Dear Mr* Borgeses
Receipt, It aofcnflwled&ed
a* Paomfoar flfo
ym are advised iM T T T iill
&¥~Isrfsrao tory to the Board for you to cont inae,
m in the past, to raport other federal Reserve
u
banka* jjarohaaa* of toills toy maturities and fey
rates in the aggregate for each week, bat to
segregate parchaseir for the Federal Reserve Bank
Of S«v York toy days*
Very tru ly yours*
(Signed) W a l t e r L. E d d y
Walter 1* Bddy#
«
Secretary#
Hr* V R Bargee**
* *
A ealitant Federal Reserve Agent#
M bw *i Reserve Bank,
Sew York, ir.T.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m No. 131.
Office Correspo._iei ;e
Yo
FEDERAL RESERVE
BOARD
All Member^ o$ A s Boi
Da
Subject:
From_ m d7
_
/ 3/ v f V
/>
hereto,for the information of the members, letter
2
?here Is
from the Secretary of the Open Market Investment Committee, transmitting
a schedule showing the revi sed ratlqf fic s&rt iclpation of Federal reserve
ff
banks during December in~T5ysTin purchases of (Government securities and
bankers acceptances*
I^Kfr. Miller
/ M r # Platt
/ I r . OtmningbaB
Members, Committee on Discount
and Open Market Policy
, Governor Crissinger
V
/
ir. Hamlin
Mr# James
w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
&ao*o&#r 8t 1924*
S t a r M m 14*ttaaont
w
.
U MtmortUdgtft of voxae lottay of
13e«SB5^r3rd\enolo«lng atfhadula rtwmiag tha *wt§ai
ifcUdsTFpSrtiolpaUoa of M o ral
taring
Daoambor In Syotom ptirohftaas of dOTawwrnt aaouritiaa
and toftnksra ft*oaj>t«noos *aaad on tho aarolng yaqalrawanta as rep or tad to tlia Opan MBiteft JaYoatesant Oorrmlttea
aa of tha oloaa of fcaalnaaa Ifwaiafoor SO 1924.
*
t o u r l o t t a r w i l l * • f c r o ^ t t o th a a t t a i n
tion of th o nantbara of th a Board.
Y aiy tr u ly yoisrs,
(% n e d ) Waite.
TL EcfoV
Valter Jm Bddy,
Soontar?.
fcr. 9. B. mtt— m, Stmntmry,
<fc»n Utgttt
OamlttM,
o/o Vetonl SM«rr« m k ,
Saw T o rt, B . T.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
"
DECLASSIFIED
A u th o r ity * E
F o r m N o . 131.
1
Office Correspo. ^ei ;e
To
m
m
FEDERAL RESERVE
BOARD
All Kombers o j j f c s Boaojl
Ua
Subject:.
From
/j/v fV
'V / W
A
jafifefiJiparetOtfor the information of tha members*letter
'from the Secretary of the Open Market Investment Committee, transmitting
a schedule showing the revised ratios of participation of Federal reserve
■banks during December i n ^ y s t ^ P’
orchases of Government securities and
bankers acceptances*
i^ifr. Miller
1/Mr# Platt
/^■'Kr. Chznningham
Members# Committee on Discosmt
Q?®n Market Policy
, Governor Orissinger
v Er. Hamlin
/ Mr. James
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
Fe d
eral
of
Rese
r v e
^
Ba n k
New York
December 5, 1924*
Mr. Walter L. Eddy,
Secretary, Federal Reserve Board,
Washington, D. C.
Dear Mr. Eddy:
This note is to save a telephone call, as we seem to have difficulty
in getting connected.^ 7We have been going over carefully the subject of your
/
letter of November JbtTko Mr. Matteson, although things have been boiling here
so that it has been difficult to attend to these matters promptly.
I have already talked the problem over somewhat with Mr. Stewart.
In order to inaugurate the complete report of maturities and rates of purchases
each day by all Federal Reserve Banks, it would be necessary for us to arrange
a three to five hundred-word telegram from each bank to us each week.
This
would, of course, seriously clog the wires and entail a considerable amount of
extra labor.
It would mean adding four or five extra pages to our open market
investment report.
The information, moreover, is now contained in the schedule
of purchases which each bank sends to the Federal Reserve Board daily.
More
over, the daily statement of condition of each bank shows the holdings of bills
by maturities.
My suggestion would be that for other Federal Reserve Banks we continue
as in the past to report their purchases of bills by maturities and by rates in
the aggregate for each week, but that for the Federal Reserve Bank of New York
we segregate our day*s purchases since a large proportion of all purchases is
Reproduced from the Unclassified / Declassified Holdings of the National Archives
federal
reserve
bank
of
new
made in New York.
york
I.
Mr. Walter L. Eddj
ceHiber 5, 1924*
This will give the Board the trend of the market and further
details can be obtained from the schedules as they come through.
We are making
out our open market investment report today on this basis, and I trust it will
be satisfactory.
If it is not I should be glad if you would telephone me and
we will undertake to collect the figures from the other Reserve Banks by wire
for the report next week.
I understand that the second paragraph of your letter is taken care
of by our daily telegram.
Very truly yours,
W. RANDOLPH BURGESS
Assistant Federal Reserve Agent.
ffifficfed from the Unclassified / Declassified Holdings of the National Archives
Reproduced from the Unclassified I Declassified Holdings of the National Archives
C O P Y
FEDERAL RESERVE BANK
-
.3",? 3 '
^'
of NEW YORK
December 5, 1924.
My dear Governor:
I am sending out notices calling the meeting of the Open Market Committee
on Investments for Wednesday, the 17th instant, with a warning to the members of
the Committee that it will be highly desirable for them to make plans to stay over
the 18th also.
It is impossible as yet, and probably will not be possible any time to fore
cast exactly when the money market effect of all the transactions of the 15th of
December will be felt in New York.
Mr. Case and I agree, however, that probably the
17th and 18th will be the best time for observation.
I hope that you can arrange to attend the meeting.
I also understand in
formally that it was your expectation to have Dr. Stewart come over the same time and
hope that he will do so.
In connection with the policy of the bank in its relation to the money
market, it is necessary to bear in mind that what we do must be matched in with a very
large volume of transactions which we sire now conducting for the Treasury.
making some very large sales and counter purchases.
They are
Mr. Winston understands quite
fully what our attitude is toward the market, and is so arranging his operations that
they will coordinate with ours, and I regard the whole affair as being in excellent ~\/
shape.
The market is being swept bare of short maturities of Government obligations
in connection with the refunding loan.
This is leaving a vacuum, which we expect will
result in a good distribution of bills through the hands of the dealers.
On the other
hand, we must be careful that money rates do not stiffen to such a point that this
market is lost, as bills will not distribute satisfactorily if rates on the Stock Ex
Reproduced from the Unclassified I Declassified Holdings of the National Archives
C 0 P I
Honorable D. E. Crissinger
12/5/24*
change are too high in relation to the rates at which bills are selling*
The situation is one that requires management and, as I explained to you ove
the telephone yesterday, we must be prepared to sell some of our March maturities at
any time there is to be an over supply of funds in the market, but later on it may be
necessary for us to be buyers of some of the short maturities in case the amount of
money taken out of the market has the effect of running up the rate for bills too rap^d
ly*
It is, in fact, a situation which requires watching from day to day very care
fully*
^
Very truly yours,
BENJ. STRONG
Governor*
Honorable D* R* Crissinger,
Governor, Federal Reserve Board,
Washington, D* C.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
33 - 4 /
, ~~
F o s m N&. 131.
Office Correspc _*ei ;e
T0
Federal Reserve Board
FEDERAL RESERVE
BOARD
ember 4, 1924*
Subject:
From___ I ! r *
She recent conference of Federal Reserve Agents congidarad
the following topic:
‘s=i
a=s
"Advisability of a Federal reserve bank investing an
amount equal to capital and surplus in Government bonds
for earning purposes*”
fhe following committee report was unanimously adopted:
"The committee believes that the System should
change its investment policy any more than it si
I
change its policy
in regard to services and other
operative matters, because of temporary changes in
credit conditions* f ie policy of the System has ^nog
B
been to invest in long time Government bonds to any
extent, although the matter has been discussed many
times.
The committee moreover believes that in view
of the present cheapness of credit and consequent high
quotat ions for bonds, the present isUio£) an opportune
time to make such an investment even if, ae a matter
of policy, it was considered desirable*M
J
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
Fed er a l R e
of
Ne
ser v e
w
Ba n
k
-1
im
OffFIOJO O F
Yo r k
December 3, 1924
S i r :
I an enclosing a schedule showing the revised ratios
of participation of Federal reserve banks in System purchases
of Government securities and bankers acceptances based on the
earning requirements as reported to the Committee as of the
close of business November 30, 1924.
These ratios are to apply on all purchases made dur
ing the month of December.
Respectfully,
W. B. Matteson
Secretary, Open Market
Investment Committee
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
Enclosure
t> - ■:24
;
Q g )
yd
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
Jan.l - Nov,30/24
Boston
8,900
Estimated Gross
Earnings Dec. 1 Dec, 3l/24 Based
on Earning Assets
Held Nov. 30 Re
maining Unchanged
v
244,594
Total
Net Earnings
Jan.l/24-Nov.30/24
and Gross Earnings
Dec.l/24-Dec.31/24
v
253,494
Estimat ed
Estimated Expenses Charge-offs
Dec*l/24-Dec.31/24
for
Including Dividends 1 9 2 4
v
192,155
*
134,047
Total Estimated
Expenses Includ
ing Dividends
Dec.l/24-Dec.31/24
and Charge-offs
for vear 1924
v
326,202
New York
391,938*
830,000
438,062
777,000
771,000
1,548,000
Philadelphia
109,234
226,000
335,234
242,000
38,000
280,000
Cleveland
181,000
323,000
504,000
288,000
770,000
1 ,058,000
Richmond
350,000
107,000
457,000
165,000
190,000
A tlanta
404,907
123,344
528,251
119,824
Chicego
221,286
420,495
641,781
123,000
5t
Duis
30,413*
Amount of
Earnings Over
or Short of
Estimated
Requirements
for Year 1924
v ,
72,708-
Revised
Ratio
of Particiration
2>
1,109,93855.234 +
0
554,000-
13£
355,000
102,000 +
0
459,066
578,890
50,639-
406,921
657,196
1,064,117
422,336-
10%
02,587
. 186,000
316,000
502,0^0
4^9,413-
10/o
0
Minneapolis
224,477
109,055
333,532
163,213
91,180
254,393
79,139 +
Kansas City
99.300
174,000
273,300
177,000
359,700
536,700
263,400-
6$
Dallas
580,307
131,000
711,307
132,661
1,042,241
1,174,902
463,595-
ir/o
*|an Francisco
100,000*
„ 274,000
174.000
272.000
777,000
1.049,000
.8.75^000-
*,3,121,774
^5,605,430
v8,727,204
v4,221,029-
Totals
41 ,657,060
*3,085,488
$4,742,548
Expenses exceed earnings.
100%
Reproduced fro th Unclassified I Declassified Holdings of th National Archives
m e
e
REVISED PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BANKS IN SYSTEM. PURCHASES OF
GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON THE EARNING REQUIREkENTS
AS REPORTED TO COMMITTEE AS OF THE CLOSE OF NOVEMBER 30. 1924
f
Reproduced from the Unclassified / Declassified Holdings of the National Archives
E o r m K o . 131.
FEDERAL RESERVE
BOARD
^
T o ----------- The Federal Reserve Board,
From__
am b er 2 8 . 3.924*
Subject: _
W * Bdd y .___
The Federal Reserve Board submitted the following topio to the
recen t Governors * Conference:
"The a d v isa b ility of a Federal Reserve Bank investing
an amount equal to c a p ita l and surplus in Government bonds
fo r earning purposes."
A fter a lengthy discussion of the p rin cip les and p r a c tic a l ques
tio n s involved, Governor H orris made the following motion*
“That i t i s the sense of the conference th a t there is
no objection in p rin cip le to the investment by Federal
reserve banks in long time Government obligations of so
much o r th e ir c a p ita l and surplus as i s not represented
by buildings or other fixed investm ents."
This nation was l o s t by a vote of s ix to s i x , the Governors re
cording themselves as follow s:
"Aye" — Wellborn, MsDougal, Young, N orris, Bailey and
Herding*
"Ko" - Strong, McKinney, Biggs, Fancher, Calkins and
Seay.
There i s attached hereto stenographic re p o rt o f the conference dis
cussion on the above to p ic .
i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Governors * Conference discussion of Topic I . D ., sug-
/
/
/
gested by the Federal Reserve Board?
"The ad v isab ility of a Federal Reserve Bank
equa 1 to c a p ita l and
surplus in Government bonds fo r earning
purposes.*
ftis Chairman!
l - ( c ) la withdrawn.
I would lik e to
your a tte n tio n to th is in connection w ith the sugges
tio n o f sub-topic (b ), obviously, t&e proposal to invest
an amount equal to c a p ita and surplus in long tim e govern-
m m t tends is based upon the theory th a t c a p ita l and surplus
are $@tsiit)jeo$ to the seats rmles as to li q u i d it y as apply
to assets arising..fr©n^.Ae|i®S'lts#
The c a p ita l and surplus
Reproduced from the Unclassified / Declassified Holdings of the National Archives
194
of the Federal Reserve System today is $333,000,000, or
thereabouts.
Of that $333,000,000 some $41,000,000 Is
already Invested in long time bonds, which would reduce
the free capitaL and surplus to $292,000,000.
Of that
$292 ,000,000 $60,000,000 Is Invested in buildings, which
would reduce it to $232,000,000.
Of that $232,000,000,
I assume that certain of the reserve banks have certain
more or less fixed assets, as the result of the period
which we have just been through, which could be considered
more or less permanent investments of capital and surplus.
That amount is undetermined.
So that It Is not $333,000,000
that Is being considered on that thlery, but It is some
sum possibly in excess of $200,000,000 or thereabouts.
Governor Norris:
As it la stated here it would be
the whole #333,000,000 because the topic does not make any
exception at all'.
The Chairman:
No, it does not.
I am just discussing
certain aspects of It,
Governor Wellborn:
How would It be to Invest the
surplus in Government bonds?
The Chairman:
I hesitate to express any very strong
opinion, because we have no Intention of doing that in New
Reproduced from the Unclassified I Declassified Holdings of the National Archives
195
York.
Governor Seays
I thought it was recognized that no
part of the reserves of the Federal Reserve Bank should
be Invested purely for the purpose of income; that the
whole matter of the use of Federal Reserve Bank resources
was controlled by a much broader principle than that, in
fact the principle which governs the actions of the Open
Market Investment Committee#
I think the two are very
closely allied, and the very statement of this question I
think is a negation of the principle.
Governor Wellborn*
My idea is that the banks have
to pay their dividends out of surplus.
Governor Seays
I think it must be remembered that
this is intimately connected with open market operations
and we are on record as having given voice to the convic
tion that no part of the operations of the Open Market
Investment Committee should be undertaken purely for the
purposes of revenue.
Governor McDougals
That applies, I think, Governor
Seay, entirely to the special fund.
Governor Seays
X believe, Mr. Chairman, that it
ought to apply fundamentally to all investments of Federal
Reproduced from the Unclassified / Declassified Holdings of the National Archives
196
reserve banks.
The Chairman:
Perhaps so, but it does not.
Governor McKinneys
In other words, when we inject
two hundred millions of our resources into the money mar
ket, It has the same effect whether contributed to us by
the member banks as capital, or whether it is deposits—
Governor Seay;
Whether it is capital and surplus or
deposits, it amounts to the same thing.
Governor Calkins!
This is a matter that could not
be determined except by reference to the boards of direc
tors of the various reserve banks.
It is Impossible for
me to say what the view of the directors of the San Fran
cisco Bank would be, except to say that I should personally
at the present time be very rigidly opposed to any such
proposal, and I have no doubt that they would be.
Governor Seays
I would like to ask what we would
do with our discounted paper when it had accumulated In
volume, and when we had an abundance of earning assets
Independent of that portion of our resources which was
invested in Governnent securities?
Governor Norris:
The Chairmans
Would we sell them?
I should think so.
We would realize a good fat loss if
Reproduced from the Unclassified I Declassified Holdings of the National Archives
197
we did.
Governor McDougalt
May I inquifce who put this topic
on the program?
The Chairman:
The board.
Governor McDougalt
In respect to the subject, I
think it should be considered that the Federal Reserve Sys
tem has taken on obligations in the form of services which
we have voluntarily extended to our member banks,the cost
of which representa a very large proportion of the cost of
operating the reserve banks.
It seems to me that the
Federal reserve tenks cannot be expected to be a medium
through which the member banks will borrow, excepting in
times of seasonal or unusual requirements, and in emer
gencies great and small, and it seems to me that as a mat
ter of prudence it would be advisable for the Federal Re
serve Banks to lay in a reasonable supply of assets of this
sort for earning purposes.
I am not intending to say
that it should be an amount equal to the capital or the
capital and surplus, but a backlog upon which we cotild de
pend for an income during a long period of lean earnings
which these banks can look forward to.
The Chairmans
But would you do that now?
Reproduced from the Unclassified / Declassified Holdings of the National Archives
198
Governor McDougal*
Not at present, no.
do it as the opportunity arises.
I would
Two or three months ago
our Board passed a resolution under which it was decided
that instead of immediately marketing all of any one specif
ic issue of bonds that came to us from rnenber banks in
amounts of five, ten thousand, or larger, that we would re
tain those.
this purpose.
We are doing it and have been doing it for
We are one of the banks I think Governor
Strong has in mind, and there are others that have been
doing the same thing.
We have accumulated I think seven
or eight million dollars over that period of time of that
class of securities for that purpose, and we think we are
perfectly justified in doing so.
Governor Young:
Minneapolis 3s the worst offender
in that respect on this question of buying long time bonds.
That came about for a number of reasons.
Two or three
years ago we anticipated the time would dome when our mem
ber banks would not borrow a groat deal of money from us.
We appeared before this conference several times and tried
to eliminate certain gratuitous services that we had been
performing.
We realized that there was a large expense
that we could not cut down.
we felt that it was good
Reproduced from the Unclassified I Declassified Holdings of the National Archives
199
commercial banking to invest the capital And surplua in
long time assets, that is, your capital and surplus that
you perhaps would never be called upon to pay# so that we
have purchased seven million dollars worth of long time
government bonds and it has been a nice source of income.
At that time you will recall that all the other Federal
reserve tanks were bidding against each other to buy short
time government obligations.
In fact we got so much in the
System that the Secretary of the Treasury requested us to
sell some of them.
Minneapolis did not participate in
that, but bought long time bonds in preference to short
time bonds and we have quite a handsome profit inthose
bonds at the present time.
I do not believe that our
people would go into this market and buy those bonds, C f
f)
We have made a profit.
per cent.
They have earned us better than
If we were forced to sell them this year
we would just have to turn the money over to the Govern
ment.
If we can go along until next year perhaps we
could sell them and use those profits to advantage.
It
may be bad Federal reserve banking and financing, I do not
know, but I think it was good commercial bank financing.
Governor McKinney:
Will you not have to readjust
Reproduced from the Unclassified I Declassified Holdings of the National Archives
200
the value of those bonds at the end of this calendar year,
in accordance with the Board*s program?
Governor Young:
X did not Intend to take that up
with this confez^ence.
that myself.
I intended
to
see the Board about
If we do we will sell them.
1 would not
put those on the books at the present values.
Governor Norriss
I will offer a resolution that it
is the sense of this conference that there is no objection
in
rlnclple to the investment by reserve banks In long
time government bonds of such of their capital and surplus
as is not represented by buildings or other fixed Invest
ments •
Governor Young i
I will second that motion.
Governor Wellborn:
Governor S©ay:
I will second it.
X have been unable to adopt the view
that any portion of the resources of reserve banks should
be Invested with a view to permanency.
I believe it is
inconsistent? with the usage of reserves.
Governor McKinneys
I concur with Governor Seay1a
views on that.
Governor Seays
It is ray conviction that we are all-—
Reproduced from the Unclassified I Declassified Holdings of the National Archives
201
|
some o f us a t le a s t—— a t le a s t b i t to hasty In reaching
i
|
the conclusion that the ordinary demands upon the reserve
banks will not be sufficient to give them an earning power,
There have been enumerated here today a number of factors
which are gradually making for a higher money rate and a
greater activity in the money market and a greater demand
upon the Federal reserve banks.
We are never able to anti
cipate that and because of that fact I think the invest
ment of any part of the resources of the reserve banks
with a view to permanency is positively inconsistent with
reserve banking principles,
\
I
The Chairman:
|
Governor Norriss
|
Is there any further discussion?
Mr. Chairman, this is a topic that
Mr. Austin, our Chairman, has always been very much In te r*
f
i
j
t
|
ested in,
% e n it was put on this program I asked him
to put his views in writing, which he did, and I would like
!
to read from his memorandum,
"In considering this matter, disposition first should
be maee to the broader question as to whther or not a
Federal reserve bank should make investments for income
purposes, when such investments do not seem to be required
by the demands of trade.
%
This question has been touched
Reproduced from the Unclassified I Declassified Holdings of the National Archives
202
on from time to time at our conferences, but the attitude
of the Federal Reserve Board and the officers of the
banks, as far as the wroter knows, never has been accur
ately ascertained.
Proponents of the theory that Federal
reserve banks should not put money Into the market unless
the market needs it, or at least can take it without caus
ing disturbance, hold the opinion that at such tines the
Federal reserve banks should run at a loss rather than
make earnings through such investments#
But it is be
lieved that it will be found that a large majority feel
that the Federal reserve banks were organized to be selfsupporting— - that the reductions in the reserve require
ments of member banks, and other measures, are amply suf
ficient to compensate them for the slight competition they
might meet from the Federal reserve banks,—
that general
ly speaking, business will absorb, without material dis«»
turbance, the amount of funds the Federal reserve banks
will have to invest to make sufficient earnings to cover
their expenses,—
that it would be a great menace to the
continuance of the System ahould the banks not be able
to support themselves, - and that there would hardly ever
be a time when the latter would be justified in refraining
Reproduced from the Unclassified I Declassified Holdings of the National Archives
203
from maintaining sufficient earning assets to pay expenses
and dividends.
*Believing then that a majority of this body feels
*
that Federal reserve banks should carry sufficient earning
assets to meet their expense, dividend and surplus require
ments, the question arises - *Why should not a reasonable
part of such earning assets consist of Government bonds?”
Because we have not been investing In Government bonds,
one is inclined to ask - rWhat Is the matter with them?”
t
The security Is unquestioned, th© Income larger than that
from other Government obligations, or from bankers bill*;
they are flexible, and, for strategic purposesp just as
good*
This question before us is th© same as the one submit
ted to the Board some three years ago when the financial
conditions existing today were plainly foreseen.
The sug
gestion that Federal reserve banks be allowed to invest
in Liberty bonds and Victory notes for income purposes
was not approved, tut investments in United States notes
and Certificates of Indebtedness were permitted*
The Federal
Advisory Council, to which the question of Investments of
Federal' reserve banks was referred in the spring of 1922,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
204
said:,,
f While the council believes at the same time that
the P©d ral Reserve System would be well advised In making
efforts to increase its holdings of acceptances, there is
no doubt that the Federal reserve banks as a whole cannot
avoid at this time, for the reasons explained, investing
▼ery substantial amounts either In Government bonds. Cer
tificates of Indebtedness or warrants.
Of these three,
no doubt, the short-term Treasury certificates are the
most suitable as investments for the Federal reserve banks.
Bearing in mind that the capital and surplus of the com
bined Federal reserve banks amounts to approximately
$300*000,000, the Council does not feel that there is Just
cause to criticise the Federal reserve banks for having
invested in Treasury certificates and short-term Goverament obligations up to an amount which is not largely in
excess of their capital and surplus, and which, consider
ing the amount of their assets, constitutes only a small
part of their resources.
HThe Council is still of the opinion that the Federal
reserve banks should avoid investing in long-term Oovern?ment bonds.*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
205
w
Why this distinction was made, never has 1 en convinc
b
ingly explained#
It is not unlikely that th© attitude
towards Government bonds was due to the unsatisfactory
condition of the bond market that had existed up to that
time.
Th© groat war issues had not been digested; member
banks and Federal reserve banks were carrying as collateral
security for loans hundreds of millions of them which had
beenbought, not for investment purposes, but from patriot
ic motives, and the banks were most anxious to get rid of
them.
Securities, floated in such a way, would not be
looked upon favorably by bankers and this professional
attitude of the bankers toward Investments was allowed
to affect their thinking even about Government bonds*
The Government bond market has so changed that it is doubt
ful if the same attitud© would b© taken today, as no on©
seriously can say that the bonds of our Government do
not provide th© safest Investment that can b© mad© . They
have a broader market, can be sold at any time in any
kind of a money market with less fluctuations in price than
any other security, and as far as our operations for
sabilizing the money market may go, they provide better
Instruments than any other investment*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
206
"Had investments in Governnent bonds been permitted
at the time the suggestion was made no disturbance of the
money market would have resulted.
The reserve banks un
doubtedly would have been sold the bonds which they al
ready were holding as security for loans to member banks.
Th^s the borrowings of member banks would have been more
speedily liquidated; earning investments of Federal re
serve banks would not have been increased! the Government
bond market would have been stabilized;
the banks would
have had an assured income, and would not have been so
constantly in the market for bills and Government short
term investments.
It is surprising now to think that any
opposition was offered to such investments.
"Shortly after their organization the Federal reserve
banks made large purchases of United States bonds for in
come purposes*
The Federal Reserve Act provided that
Federal reserve banks should purchase from member banks
at par United States
2
per cent bonds, which bonds might
be exchanged 50 per cent for 30-year 3 per cent bonds and
50 per cent for one year 3 per cent notes, subject to 30
renewals.
This provision of the Act appears to be a clear
approval of the Investment by reserve banks In United
Reproduced from the Unclassified / Declassified Holdings of the National Archives
207
States bonds.
"A study of the charters and operations of the Banks
of England, France, Belgium, Holland, Sweden and Japan
shows that all are authorized to hold Government securities
that some are required to invest all or a part of their
capital and surplus in the loans of their respective gov
ernments;
and that all carry large amounts of them*,
"The above statements are sufficient to show that
Federal reserve banks did invest in Government bonds, and
that, under certain circumstances, they were required to
do so;
that it is a proper policy, and one followed by
the central banks of the nations of the world.
"The average price of United States 4|$ bonds is about
102.
Were the capital and surplus of the Federal reserve
banks, amounting to $333,000,000 invested in those bonds
at that average price, the income would amount to
$13,875,000,
To produce an equal income, it would re
quire an investment of $616,000,000 in bankers bills at
the rate they are returning today, or an investment of
$542,000,000 in United States Certificates of Indebted
ness.
Thus a conservation of resources amounting to
$283,000,000 could be made by investing in bonds instead
Reproduced from the Unclassified I Declassified Holdings of the National Archives
208
of Certificates of Indebtedness.
MAbout 18 months ago, in carrying out the investment
policy of the banks, we sold at quite a loss some of our
holdings of U. S. Certificates of Indebtedness, and also
reduced our holdings of bankers* bills, presumably because
money was so abundant that it was considered unwise for
Federal reserve banks to contribute funds to the market
when the apparent demand for them was so small.
Some
months later, when apparently there was a less demand for
funds, the investment policy was changed, and it was de
cided to bay for the banks #300,000,000 of Treasury bills,
fallowing that by a few months, v.hen still the money market
failed to show any improvement, a further increase in the
amount of treasury M i l s to be purchased was agreed upon.
The combined statements of the Federal reserve banks show
that discounts had declined from $884,000,000 on October
31, 1923, to $401,000,000, on June 4, 1924, and the in
crease in the purchases of Treasury notes and Certificates
may have been made to offset this decline in the holdings
of discounted bills.
VSfhlle the advisability of purchases
in the open market to maintain the earning assets of the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
209
banks
was recognized, some thing that Government bonds
would have been a better purchase.
But it would seem
that this policy of making any purchases during these per
iods is a distinct reversal of the policy according to
which several of the banks a few months prior had been com
pelled to sell securities*
"Without a doubt, it would be unwise at once to make
large investments in Government bonds, but it would seem
to be sound to refrain from further buying of Certificates
of Indebtedness, and as funds are released from them, to
reinvest those funds in bonds«
Should there be any
opportunities to make additional investments in bonds,
advantage should be taken of them up to a reasonable
extent #1
1
Governor Norris 8
that#
I think there is a good deal in
I think there is no doubt about the fact that
our original purchases of government bonds and certifi
cates were made for earning purposes, and if we are going
to carry any government securities at all for earning pur
poses, it would seem to me to be wiser to deal in the
larger market than in the smaller market, and to buy secur
ities which we do not have to be continually replacing*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
210
Th© Chairman:
cited tl ere, I think
i
Governor Jforris, the precedents
are liable to be misleading if you
do not go a little bit underneath the surface.
In the
case of the Bank of Kngland, a charter to the Bank of Eng
land was granted upon the condition that the bank would make
the loan to the British Government and the increment of
some part of the public debt now owned by the Bank of Eng
land has toen due to an operation of a system of reti<ement of /private banks) of private banks which has resulted,
just as it would have resulted in the case of the Federal
Reserve System if we had taken over the national bank
notes*
In the case of the Bank of France, when Napoleon
granted a charter to the Bank of France he did It in
return for a Government loan, which is a statutory loa*t,
and that loan has always been carried since then.
When the Mikado made a decree establishing the Bank
of Japan, that was done upon the basis of a loan to the
Government by the Bank of Japan without Interest*
It is
a statutory loan and was mase for the purpose of facilitat
ing the Ultimate retirement of the national bank note
circulation that took the place of the Shogun notes•
Reproduced from the Unclassified / Declassified Holdings of the National Archives
211
The s itu a tio n in Germany, which X cannot describe
in d e t a il, is very much th e same.
A ll o f these larg e
holdings o f government bonds by the banks o f issue o rig in
ated a t the time o f the establishment o f the bank, because
the government made a bargain w ith the p ro p rieto rs o f p r i
vate banks to grant a ch arter in exchange fo r a loan, and
those banks, except as the re s u lt o f war emergencies, are
not larg e buyers o f Government bonds in the markets a t
a ll.
The Bank o f France is in f lic t e d w ith an enormous
volume o f government loans, which were imposed upon i t as
the re s u lt o f the war, and as you know, the e n tire surplus
o f the earnings o f the &nk o f France are now appropriated
to reducing th a t debt Just as fa s t as they can,
th e re
fo re , I th in k the precedent, when you analyze i t , in the
h is to ry o f t-wse banks is q u ite the other way,
I t is
not a subject th a t I put on the program, and X have no
strong fe e lin g about i t , but as long as i t was under d is
cussion, I wanted to present th a t view o f i t ,
Ooveraor seay:
The banks you r e fe r to are not essen
t i a l l y what you might term reserve banks.
The Chairmans
A re you ready fo r the question on
812
ifeveraar ■ o rris * notion?
(Th* n o tio n , iM ying been d u ly seconded, was lo s t,
• 1 * voting in fc m p W I t , and s ix voting n o.)
T
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Hov an ker
2 5 ,
Bear H Kstteaom
r*
Confirming r y statem
a
ent to you over the
t© bphone on H
3
ovenfcer 20th, you are advised that I
have been instructed by the Federal Eeserve Board
to request that is the O e M
p n arket Investm
ent C m
o
m
ittee*© weekly report of t redactions in governm
ent
securities en bankers acceptances you s o for each
d
hw
day during the period covered by the report the actual
am
ounts of different maturities of bills purchased
jmd the actual rates & W
t hich they w
ere obtained*
I w s also Instructed to ask thftt the daily
a
letters of the federal fieserve B
ank of H w Yoik,
e
copies of w
hich w receive here regularly, s o the
e
hw
am
ounts of the various maturities of acceptances pur
chased by the federal Reserve bank and the rate on each
maturity*
fery t roly yours,
(Signed) W alter L. Eddy
Walter u B d *
dy
Secretary*
M W B Matteson, Secretary
r# . *
Oe M
p n arket Investm
ent Com ittee,
m
c/o Federal Eeserve Bank,
H w fork, H T
e
#*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr, M iller then called atten tio n to the sharp increase in the
holdings of bankers acceptances purchased through the Open Market
Investment Committee and state d th a t in h is opinion the Federal
Reserve buying ra te on these acceptances may be too lew*
Thereupon i t was voted th a t the weekly rep orts of
the Open M a rk e t Investmen t Committee and the d a lly
l e t t e r s of the Federal Reserve Bank of N York~'lnclude
ew
h e re a fte r the a ctu al ra te s a t which acceptances of
d iffe re n t m aturities have been bought*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
I0? £ L
Authority*
I I II I £ I L A L
*
\
\J
F S D m A L RESERVE BANK .
OF N3W YORK
*
W
November 19, 1924.
Federal Reserve Board,
Washington,
D* C.
S i r s :
LOAMS AND i N T E STM^NTS:
Accompanying evidences of a continuance of slightly firmer
conditions in the money markets,
our total earning assets advanced ^27,300,000
today and at ^320,200,000 are the highest, since November 10 and about ^31,000,000
higher than November 12,
last previous reporting date.
The gain today resulted from an increase in loans toc member banks of
v21,000,000 and an increase in bills purchased outright of $6,900,000,
the slightly firmer conditions in the bill -market*
tracts decreased slightly. h o w ever.
following
Bills held under sales con-
The increase in bills purchased outright
reflected new purchases of ;>10, 200, 000, which were partly offset by maturities
of $1,600,000 and deliveries to other banks of £1,700,000 held overnight in oui
account.
tomorrow.
Of today*s new purchases,
^ 5 800, 000 are for delivery to other banks
>,
A summary o.f our earning assets follows:
i
Today
51.0
3.1
78.9
186.1
r i l l s discounted
Bills held under sales contracts
Other bills purchased
Special investment account
Other investments
- Total earning assets
Millions of Dollars
Change from
Yest er day
+ 21.0
- 0.6
'■+ 6.9
0.0
1. 2
320.3
0. 0
+ 27* 3
Nov. 12
+ 25* 8
» 12«7
+ 17*9
0, 0
0. 0
+ 31.0
The increase in loans to member banks today resulted chiefly the reopening of
National City Bank’s account in the amount of $21,000,000 and a further loan of
$2,000,000 to the New York Trust Company, which now owes 44*000,000.
R E SERVE R A T I O :
vie appear t o have lost $5,000,000 further to the interior today in
ordinary commercial settlements,
about $45,000,000,
making a total loss in the past three days of
Total cash reserves declined ^1,100,000 today but combined
deposit and note liabilities increased ^24,000,000*
$27,000,000 in our earning assets today,
points t o 76*5 per cent,
accompanying the rise of
so that our reserve ratio declined 1,6
according to an early estimate tonight.
t
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority’
2.
G OVER
Federal Reserve Board,
AC C O UNT:
Washington,
B* C.
ll/l9/24
At v 3, 600, OOO, the Treasurer*s balance with us shows practically
no change as a result of t o d a y 1s operations.
terest payments of ^800,000,
Check payments of v3, 400, 000,
in
and mutilated currency shipnents of * 1 300, 000 were
-,
offset by collections of ^2,900,000, new money received <^600,000,
r?nd a transfer
of $2t 000, 000 from Philadelphia.
STREET L O A N S :
(The following information is reported to this bank in confidence and
should not be quoted.)
Notwithstanding the continued activity on the stock ex-
ch ange, total street lo-ans which daily reporting banks in New York City have out
standing for their own account and for correspondents declined in the first two
days of the week about v40,000,000 from the high record figure reached last Sat
urday.
As loans for their own accounts remain practically unchanged, this decline
has been due almost entirely to a reduction
ponoents,
in loans for the account of corres-
.during this period
following the loss to the interior/of about ^40,000,000 in ordinary
commercial settlements.
I ONSY MARICffT: Accompanying the loss of funds t o the interior, aggregating about
.*45,000,000 in the past three days, money conditions in New York have been slight
ly firmer.
Stock exchange call money opened and renewed today at 2 l/2 per cent,
end continued unchanged throughout the day.
The demand continued active and the
tot^l volume of n e w loans placed was substantially above the usual daily requires
ments.
Outside the exchange a moderate amount of money was placed at the pre
vailing rate.
Following *the recent period of activity, the time money market was
quiet and rates were unchanged*
Commercial paper dealers report a moderately active market with a v
scarcity of good named paper.
levels reached last week#
unchanged,
Rates were generally steady at the s o m e ^ a t higher
The bank accept-'nee market was quiet and rates were
several dealers continuing to bid 2 3/4 per cent,
all dealers,
offering this maturity at 2 l/2 per cent.
for 90 day bills but
Short term Government
securities continue t o be freely offered with moderate declines in prices and cor
responding rise in yields.
A summary of money rates follows:
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
[0*7$I_
Authority*
7> / )
U
3.
Federal Reserve Toard, Washington,
Today
Call money, renewal Call money, new loans, average
Time money, 61-9.0 days, offer
Commercial paper, prime
B ill s , 90 days, offer'
U. S. Sec, -" Mar. 1925, yield
U. S. Sec* - Sept. 1925,^yield
U, S. Sec. - Sept. 1926, yield
JiQ D M
N
ARKET:
D. C.
11/19/24
Yester day
~r
’eek Ago
2.50
2
2.50
2,42
2 3/4 - 3 l / 4 & S /4 - 3 l / 4
3 l /4 -3 l/2 3 i/4 - 3 l/2
2 l/2
2 l/2
2.66
2.63
2.8 2
2.7 8
3.49
3,4 8
-2
2
3 l / 4 “ 3 l/Z
3 l/4
2 l/4
2.53
2 .7 4
3.46
Railroad bonds continued to be the most active element of the bond
market, but price movements were irreg u lar, fractio n al declines appearing in a
number of issues th at have rece n tly shown substantial gains.
Public u t i l i t y and
in d u strial issues were gen erally steady, and the foreign l i s t held p ra c tic a lly
unchanged.
The volume of trading was the la rg e s t in a-week, sales on the Sxchang
to ta lin g $ 2 0 ,000,000.
sa le s shows.
L ib erty bonds were firmer, as the following, summary of
Decimals expre'ss 32nds:
•
Sales in
Thousands
162
154
490
645
1661
178
ing
Issue
1st
2nd
3rd
4th
Treasury
: M
ARKET:'
Closing P rices
Yesterday
Todav
3
4
4
4
4
4
1 /2 s
l/4 s
l /4 s
l/4 s
l /4 s
l/4 s
100.16
101.18
101.2
101.11
101.30
105.12
fcaSfToday
Gain since
January 1
,2
,3
a
.5
.4
.6
1.12
3.12
2.28
2?6
3.22
6 ,8
100,18
*.101.21
1 01.3
101.16
102.2
105.18
Stock sales reached the la rg e st volume of the year today, sales
450,000 shares.
A strong advance in p rices continued in early trading, but
around noon heavy sellin g appeared th at caused reaction s in a number of leading
stocks, with no substan tial recovery before the clo se .
A few stocks again showed
substan tial net gains^ but the Bow-Jones averages below show declines for both
in d u strials and r a i l s .
20 railro ad s
20 in d u strials
FOREIGN EXCHANGES:
were firm er.
Today
9 5 .2 6
110,24
Change from
1924
1923
Yesterday High
Low High
Low
“ - 0 .3 4 9 5 .6 0 79.98 9 0 ,6 3
76.78
- 0.49 110.73 88.33 105.33
85.76
S terl ing showed a sligh t reaction today, but other European ra te s
L i t t l e change appeared in South American and Far-eastern ra te s,
with the exception of the Argentine r a te which advanced 90 points to a new high
for the year*
Closing cable ra te s in New York were;
Reproduced from the Unclassified
I Declassified Holdings of the National Archives
DECLASSIFIED
Authority' [5,(9*
lC
4.
1
vJ
—
f\
Federal Reserve Board, Washingt on, D c.
*
Par
London
Paris
Belgium
I ta ly
Holland
Germany
Rio de Jan eiro
Buenos Aires
Yokohama
Shanghai
C alcutta
Canada (check)
C M O ITY M
O MD
ARKSTS:
<M*365
,1930
.1930
.1930
*4020
*2380
*3244
.9643
*4935
. 4866
1 ,0 0
'"
s
A
J
1 1 /1 9 /2 4
\
Ye st er dav
Today
$4.6275
^4* 63375
.05245
,0523
.0482
.0481
.0433
.043275
.4016
.4015
* 2380
.2380
.1180
*1188
*8696
*8606
*38625
*385625
,7650
.76375
.34375
*3450
,9 9 63/64
*99 63/64
Cotton was quiet and but l i t t l e changed in price through most of
the day, but a moderate decline occurred in la te trading th at l e f t net lo sse s of
11 to 20 points for the day*
New York spot was 15 points lower at 24.35 cents*
Price movements were irreg u lar in the grain market, December wheat showing a met
decline of 1 3/8 cents to $1,51 $ /4 , while corn advanced 2 3/8 cents further to
$1*18 l/8^
Copper is said to have been le s s activ e since the price was advanced
to 14 cents, and a few concessions were reported.
P rices of both raw and refined
sugar were ste-ady, and a f a ir volume of business was reported*
Crude rubber was
quoted l / 8 lower at 33 3 /4 cents*
IRON A D STEEL:
N
Pig iron p rices were. advanced 50 cents to <^2*00 a ton during the past
week and ste e l p rices were raised in a number of cases.
I t is said, however, th at
th e substantial volume of orders recen tly reported was placed at the p rice s pre
v ailin g before the advance.
Pig iron safes for th e week to ta le d 450,000 ton s;
stru ctu ra l s te e l o rd ers-totaled 45,000 tons * the la rg e s t in two months; railro ad
buying included 40,000 tons of r a i l s and over 4 ,000 c a rs f
Mill operations in the
v ic in ity of Pittsburgh are estimated at 65 per cent* of capacity, compared with
60 per cent, in the previous week, and several more b la st furnaces were blown in*
H7RB/CA
R espectfully,
T. Randolph burgess,
A ssistant Federal Reserve Agent.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
f**
a**
2 3
*
'.e c u t i v e
fflrranfeer 10, 1924.
$•«*
I f !!?
^
f®
Hattatcmt
t
:
of Hb4 m* 1 r*M x r«
f F S f * * * ! I,th 0# » » « * • « . to
p a r«<> ’wnfe»r. M M ptth *
y o q a ir iiD m t #
a s ra p o rfe a d
tha Oownitta* a« of tha oloaa of busin***
Oataba* 8Xf 1924.
?»*y tm ijr youra,
(Signed) W a ite r L. EddjT
W altiF L. IM y*
8aaratary*
»r# W. 8* SSaUaaen* S to n U iy .
op*# /• * * » ♦ » » • • * * « » s m u
°/®
S *««rr« BknK.
H«wTor», I , T.
m
,
4~1
Folder
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Poar I'r . I*atto«€mt
toooipt la aoicno^Lo&god of 3amr le tte r o f ..
Qstobor i t j u .'Xnoloting $oh«d«l& allowing tho roviaed
r a t loo o fp a r t icipatlon of gadoral roaar?o tatiw
duHHg m i
oFlKkibWr iaToystatt p-arohaaoa of
Government aooorltioo arid baalosrs aooirptasiooa, baaed
oa tho oarsiing r&airvnsxits as reportod to tho Qpon
Uuncot Swrostraont Goranittoo as o f tho oloao of
btmliMtas Sopiombor 30# 1924.
Yoor lo tto r will bo brought to tho attention
of tho taombora of tho Board*
Toi^r truly 3roiir»f
( i n d Walter L. Eddy
Sge)
Walt or L* Mdyf
Sooretary*
Kr* ?/» 3* laiteaoii* Secretary,
O L&rtojt Imreatmont 0omittoo#
pon
0/0 Fodoral Beservo Saak*
low Yorfct I* Y#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
y
Fe d e r a l R e s e r v e
/
o f
Ne
w
Y
Ba n k
o r k
November 7 , 1924
S i r :
I am enclosing a schedule showing the
revised ra tio s of p articip atio n of Federal re
serve banks in System purchases of Government
s e c u ritie s and bankers acceptances based on the
earning requirements as reported to the Committee
as of the close of business October 5 1 , 1924.
These r a tio s are to apply on a l l purchases
made during the month of November.
S ecretary , Open Market
Investment Committee
Honorable E. R. C rissin g er,
Governor, Federal Reserve Board,
Washington, D. C.
Enclosure
0
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
J a n .l - O ct*3l/24
- ^ston
*
New York
#
*
*
27,177
525,731
^^
Total
Net Earnings
J a n .l /2 4 - 0 c t - 31/24
and Gross Earnings
Nov.l/2 4 -D e c.3 1 /2 4
340,200
4
313 r 023
Estimated Expenses
N ov.l/24-D ec.31/24
Including Dividends
4
415,6ou
Estimated
Chargo-o f fs
for
19 2 4
v
137,047
Total Estimated
Expenses Includ
ing Dividends
Nov.l/2 4 -D e c.3 1 /2 4
and Charge-offs
for year 1924
*
552,647
Amount of
Earnings Over
or Short of
Estimated
Requirements
for Year 1924
v
Revis
hati
of Fa.
tic ip a t:
239,624-
q*
1 , 613,000
1 ,0 8 7 ,2 6 9
1 ,4 5 2 ,0 0 0
1 ,7 6 0 ,0 0 0
3 ,2 1 2 ,0 0 0
2 ,1 2 4 ,7 3 1 -
- j f f 37'/.
1%
Philadelphia
115,992
378,000
493,992
481,000
35,000
516,000
22, 008-
Cleveland
143,500
568,000
711,500
564,500
770,000
1 ,3 3 4 ,5 0 0
623 ,0 0 0 -
Hi
Richmond
384,000
257,000
641,000
319,000
190,000
509,000
132,000 +
0
Atlanta
421,159
230,602
651,761
255,301
414,934
670,235
1 8 ,474-
Chicago
170,979
815,920
986,899
818,563
657,196
1,475,759
4 8 8 ,8 6 0 -
9/o
13,514
267,000
253,486
299,000
318,000
363,514-
6/1
meapolis
223,997
240,300
464,297
284,816
91,180
375,996
Kansas City
98,800
339,100
£37,900
3 4 3,400
459,700
803,100
3 6 5 ,2 0 0 -
6 '/o
545,862
260,000
805,862
265,374
1 ,0 4 2 ,2 4 1
1 , 307,615
501,753-
3%
*26.000
431.000
548.000
781.000
*
1 ,3 2 9 .0 0 0
898.000-
16 %
,5,835.122
*•7,277,989
,6 ,0 4 6 ,5 5 4
.£6 , 656,298
>
^12,702,852
$ 5 ,6 4 5 ,1 6 4 -
loofi
I . . Louis
*
Dallas
San Francisco
Totals
*
95,000
•^1,442,867
* Expenses exceed earnings
617 , O
uO
8 8 ,3 0 1 +
0
I Declassified Holdings of the National Archives
Estimated Gross
Earnings Nov. 1 Dec. 31 /2 4 Based
on Earning Assets
Held O ct. 31 Re
maining Unchanged
Reproduced fro th Unclassified
m e
REVISED PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BAN IN SYSTEM PURCHASES O
KS
F
G V N EN SECURITIES A D BANKERS ACCEPTANCES BASED O *HE EARNING REQUIREM
O ER M T
N
N
ENTS
___________ A REPORTED ^O COf^IT^EE A OF THE CLOSE OF OCTOBER 31. 1924
S
S
__________
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal R eserve
o f
Ne
Y
w
Bank
o r k
October 4, 1924*
CONFIDENTIAL
S i r :
I am enclosing schedule showing the revised ratios
of participation of Federal reserve banks in System purchases
of Government securities and bankers acceptances based on the
earning requirements as reported to the Committee as of tae
close of business September 30, 1924.
These ratios are to apply on purchases that may be
made during tae month of October.
Respectfully,
f. B. Matteson
Secretary, Open Market
Investment Committee
Honorable D. P . Crissinger,
.
Governor, Federal Reserve Board,
Washington, D. C.
Enel,
\J \
oL -
Net Earnings JLess
Current Expanses
Paid and Accrued
and Dividends
Jan.l - Sept.3o/24
Estimated Gross
Earnings Oct. 1 Dec.31/24 Based
on Earning Assets
Held Sept- 30 Remaining Unchanged
Total
Net Earnincs
Jan.l/24-Sept♦3o/24
and Gross Earnings
Oct«l/24-Dec.31/24
4
Amount 0 f
Earnings Over
or Short of
Estimated
Requirements
for Year 1924
Revisi
Rati<
of Pa]
ticipai
4/0
S 137,047
P
1,824,365
2,175,000
1 ,760,000
3>°35,ooo
2,110,635-
462,000
615,000
732,000
35,000
767,000
152>000-
20
/
137,500
74o,5oo
878,000
861,000
770*000
i,,631,000
753,000-
12/c
R * *hmond
-
394,000
401,000
7 95,,000
493,000
190,000
683,000
112,0004
0
At
ita
433,626
325,126
758,752
384,459
408,527
792,986
34 ,234-
Ch* .go
156,128
1,074,248
230,376
1,236,118
657,196
1,893,314
662,938-
11/0
St
* 2,815
413,000
410,185
450,000
315,000
765,000
354 ,815*
6/0
Minneapolis
208,779
403,729
612,508
398,080
91,180
489,260
123,248+
0
Kanses J^ity
100,100
483,900
58 4<000
523,200
459,700
982,900
398,900-
7a
Dallas
547,018
389,665
936,683
395,203
1,042,242
1,437,445
500,762-
8/0
5 6 ,0 0 0
771.000
715,000
835,000
786,000
1.621,000
906.000-
15/q
; 1 447,109
>,
*8,424,222
#9,871,331
$6,651,892
^15,764,946
^6,128,863-
lO /o
O
| x 8 ,5 9 2
520,054
Ne^' York
x 615f 635
2,440,000
Philadelphia
153,000
Cleveland
/ou is
x
3an Francisco
T O T A L S
•
xExpenses exceed earnings.
?
Est imat ed
Total Estimated
Charge-offs
Expenses Includ
for
ing Dividends
1924
' ct.1/24-Dec.31/24
r. d Ch arg e-0 ff3
5n
for Year 1924
629,994
Boston
511,462
Estimated Expenses
Oct.l/24-Dec.31/24
Including dividends
#9,113,054
)
767,041
v
255,579-
>
3 V*
I/ O
Reproduced fro th Unclassified / Declassified Holdings of th National Archives
m e
e
REVISED PERCENTAGE OF PARTICIPATION OP FEDERAL RESERVE BANKS IN SYSTEfc PUr,/ - A3E3 Ci
"T
GOVERNMENT SECURITIES AND B N E S ACCEPTANC33 BASED ON ^ ’ EARNING RE.ti RELEN 3
A KR
E
l:
T
AS REPORTED ^0 COUITV^E / 3 OF *HE CLOSE OF SEPTEMBER 30, 1924
\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
‘X
September S f 1924.
Dear lie*, itettpaon*
Receipt 1ft acknowledged of your le tte r
of ^Pte*feer4tiL! enclosing •oheduleshowlng
reviseJ '^tioii of participation of Federel
reserve bank* In Systesi purchases of Govern
ment secu rities and bankers acceptances dur
ing the month of Septeatoer, which he* been
brought to the attention of the Federal Re
serve Boerd.
Very truly your#,
(^ig’ned) Walter L. Eddy
' Walter L* Eddy*
Secretary*
M W B. Mstteson, Secretaryf
r* .
Open Market Investment Ooaaittee,
o/o Federal Reserve Bank,
H Torkf H.T,
ew
th
Reproduced from the Unclassified I Declassified Holdings of the National Archives
r e c e iv e d
Federal R eserve
:' -
1924
OFFICE OF
/
Bank
o f
N
e w
Y
TUM a O Y E E N O B
o r k
33 3
September 4, 1924
S i r :
I am enclosing a schedule shoving the
revised ra tio s of p a rticip a tio n of Federal re
serve banks in System purchases of Government
s e c u ritie s and bankers acceptances based on the
earning requirements as reported to the Committee
as of the close of business August 31, 1924*
These ra tio s are to apply on a l l purchases made
during the month of September*
Investment Committee
Honorable D, R. C rissin ger,
Governor, Federal Reserve Board,
Washington, D. C*
Enclosure ( l )
fju, < W
Da
-
REVISED PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BA K IN SYSTEM PURCHASES OF
NS
G V N EN SECURITIES A D BAN
O ER M T
N
KERS ACCEPTANCES BASED O THE EARNING REQUIREN
________ M TS AS REPORTED TO COkklTTEE A O THE CLOSE OF A G ST 31, 1924________
EN
S F
UU
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
Jan . 1 - Aug.31/24
■uoston
f
6,8 3 7 \
Estimated Gross
Earnings S e p t.l Dec.3 1 /2 4 Based
on Earning Assets
Held Aug. 31 Re
maining Unchanged
$
682,846
Total
Net Earnings
J a n .1 / 24-Ayg.3 1 /2 4
and Gross Earnings
S e p t,l/2 4 -D e c.31/24
$
689,683
Estimated
Expenses
Sept»l/24~D ec»3l/24
Including Dividends
$
850,518
Estimat ed
Charge-offs
for
1924
£
142,048
Total Estimated
Expenses Includ
ing Dividends
Sept * 1 /24-Dec.3 1 /2 4
and Charge-offs
foir Year 1924
I
992,566
Amount of
Earnings Over
or Short of
Estimated
Requirements
for Year 1924
|
Revisei
Ratio
of
P a rticip a
302,883-
4^
x640#091
2 , 780,000
2,1 3 9 ,9 0 9
2 ,904,000
1 , 760,000
4 ,6 6 4 ,0 0 0
2 ,5 2 4 ,0 9 1 -
,i ^ 3 6 >
Philadelphia
189,241
652,000
841,241
975,000
35,000
1 , 010,000
168,759-
2b
Cleveland
156,400
916,000
1 ,0 7 2 ,4 0 0
1 , 158,000
770,000
1 , 928,000
8 5 5 ,6 0 0 -
12/o
Ri chmond
397,000
526,000
923,000
658,000
180,000
838,000
85, 000-^
0
>* lan ta
-■
441,010
421,320
862,330
518,256
408,527
926,783
6 4 ,4 5 3 -
1/0
ticago
152,113
1 ,3 6 2 ,5 9 4
1 ,5 1 4 ,7 0 7
1 ,6 6 2 ,7 3 5
657,197
2,319,932
805, 225-
11/0
5,689
473,000
478,689
598,000
315,000
913,000
434,311-
67°
inneapolis
184,444
548,401
732,845
518,891
391,180
910,071
1 77 ,2 2 6 -
3°/»
Kansas City
102r000
640,500
742,500
705,300
459,700
1 ,1 6 5 ,0 0 0
422,500-
6j
*
Dallas
525,775
649,808
1,175,583
506,977
1,042,242
1 ,5 4 9 ,2 1 9
3 73,636-
5>
952,000
916.000
1 .1 0 9 ,0 0 0
8091000
i.v ie .o c c
1 ,0 0 2 ,0 0 0 -
14£
# 10,604 ,46 9
* 12 , 088, 88?
$ 12,164,677
16 , 969,894
s i9 , m , 5 7 i
*7 ,1 3 0 ,6 8 4 -
100/fc
Ner "York
St* Louis
San Francisco
x 36,000
#1,484,418
x
Expenses exceed earnings
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Aupwt 14* 1924#
Dear My# Hatteaons
Baoeipt i* acknowledged of
of the 8th iW ta n t t addreaaed to Governor
C rissin g er, enclosing a aohedule showing
th© reviaed ratio n o f p a rticip a tio n of
Federal ros^rve b&n’<a In System purchase*
of Government securit^e# based on the Gam
ing requirement* as reported to th© Ooimaitte©
as of the oloe# of business Ju ly 3 1 , 1924,t
whioh hfis h e m brought to the a tte n tio n of
the Board*
Very tr u ly youra.
(S ign ed) J . c . N oe!!
J* Ct N oellf
A ssistan t Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
\J
Fe d e r a l R e s e r v e
o f
Ne
w
Y
Ba n k
o r k
August 8 , 19S4,
S i r :
I am enclosing a schedule showing the revised r a tio s
of p articip atio n of Federal reserve banks in System purchases
of Government s e c u ritie s based on the earning requirements as
reported to the Committee as of the close of business July SI,
1924.
These r a tio s are to apply on a ll purchases of Govern
ment s e c u ritie s made during the month of August.
R espectfu lly,
W. B. Matteson
S ecretary , Open Market
Investment Committee
Encl.
Honorable D. R. C rissin ger,
Governor, Federal Reserve Board,
Washington, D. C.
A £ t Cc-lAyO
Qa A s w J L
REVISED
OF PARTICIPATION OF FEDERAL RESERVE BA K IN SYSTEM PURCHASES O
NS
F
G V N EN SECURITIES liASED O THE EARN G REQUIREM
O ER M T
N
IN
ENTS AS REPORTED
____________________ TO CO M
M ITTEE A OF THE CLOSE OF JULY 3 1 . 1924____________________
S
Net Earnings Less
Current Expenses
Paid and Accrwed
and Dividends,
Jan . 1 - July 31
1924
Bop4 on
,
|
29,462
Estimated Gross
Earnings Aug.l/24Dec. 3 1 /2 4 Based
on Earning Assets
Held July 31 Re
maining Unchanged
$
810,318
T otal Net Earnings
J a n * I / 24-J u ly 31/24 Estimated Expenses
and Gross Earnings Aug.l/2 4 -D e c.3 1 /2 4
Aufi.l/24-Dec»3l/24 Including, Dividends
$
839,780
$ 1 ,0 6 5 ,8 7 0
Estimated
Chargeoffs
For 1924
$
T otal Estimated
Expenses Includ
ing Dividends,
-fcig. l / 24*rDec. 3 1 /2 4
and Charge-offs
for Year 1924
142,147
1 ,2 0 8 ,0 1 7
*567,943
3 ,1 5 6 ,0 0 0
2,5 8 8 ,0 5 7
3 ,6 2 5 ,0 0 0
1 ,7 6 0 ,0 0 0
5 ,3 8 5 ,0 0 0
Philadelphia
209,207
846,000
1 ,0 5 5 ,2 0 7
1 ,2 0 9 ,0 0 0
17,000
Cleveland
196,600
1 ,1 7 8 ,4 0 0
1 ,3 7 5 ,0 0 0
1,4 4 8 ,5 0 0
Richmond
409,000
762,000
1 ,1 7 1 ,0 0 0
Atlanta
455,670
5 80,306
Chicago
160,008
3t» T~*iis
Nc
Amount of Earnings
Over or Short of
Estimated Require
ments for Year
_______ 1124_______
*
*
368,237 -
Revised
Ratio
of
P a rticip a tio n
n
2,796,943 -
37/£
1 ,226,000
* 170,793 ~
2*
770,000
2 ,2 1 8 ,5 0 0
843,500 -
11;
%
525,000
190,000
1,0 1 5 ,0 0 0
156,000 ♦
0
1 ,0 3 5 ,9 7 6
648,922
408,527
1,0 5 7 ,4 4 9
21,473 -
1,7 0 6 ,0 5 8
1 , 866,066
2 ,0 9 6 ,1 7 4
657,197
2 ,7 5 3 ,3 7 1
887,305 -
33,455
ork
522,000
555,455
747,850
315*000
1 ,0 6 2 ,8 5 0
507,395 -
7%
Yf.
12
%
Mi;
apolis
148,430
704*500
852,930
628,399
391,180
1,019*579
166,649 -
2%
Ka
,s City
98,200
874,200
972,400
902,500
459,720
1 ,3 6 2 ,2 2 0
389,820 -
5%
474,888
841,615
1 ,3 1 6 ,5 0 3
632,315
1 ,0 4 2 ,2 4 2
1 ,6 7 4 ,5 5 7
358,054 -
5$
27,000
1 , 269.000
1» 296.000
1 .4 1 6 ,0 0 0
842.000
2 .2 5 8 .0 0 0
HJihlU
$13*250,397
1 1 1 ,9 2 4 ,3 7 4
|15i2£5.t530
*6 ,9 9 5 ,0 1 1
t2 2 .2 4 0 .5 4 3
Dallas
San Francisco
T o t a l
^Expenses Exceed Earnings
,,
9*2*000 -
>7.472,169 -
m
100£
Reproduced from the Unclassified
I Declassified Holdings of the National Archives
3
Saar M Mafctoaoaj
r*
I h«era diaoaaaad. tiit <*aaation of tha diatrlfcat Ion
mom
fWdaral raaarr* ban** of tfnitaA Statoa a*«*r ItiOa
parchaaad hy tha Qpon Harkot Xnr«»ta*ot Qcnaittoa with u r n a l
manfcar* of tha Board and heiiava feat it wUl la tha Board*a.
policy 'tor fcha preaant a t l m * t to a*p*oaa no opinion with
rafaronoe to . thi* su ito r. I t ia aasgaatad iharafora that yoa
proaood aa yoa h&vo ia ti* past and fc&aa yaar ra tio s of par
ticip ation on flgaree furaitfiad T the reaaryo fcaisl*.
»y
With a fiaw of h m lm aaralns* figaroa of aaoh
JWdariO, roaerva basic properly recorded in tho raporta Ofrr tin
month o f Jo ly, wo would i i ) * Tory mah to haro you mdca tha
dlatributioa of purahaaaa a&ia O arlif
sot ia to r d«B
tomorrow, tha Slat* I f tMa i t not $ m m m may t&
avo coua id* mbla d iffio alty ia *tr*ightaning oat mo roporta and in
getting the correct rat# of earning* for publication In tho
B u llatii* and in tho Anmal flaport.
9
V
I rWBrat *a*y ntuah that i t waa si# poaaltla to writ#
yoa aarliar with roforanoe to this tiaoation* Im't Ii «aa is^r&ctiaable to Jwn&a tha »attar any *&** aacptditieaaXy* A* I
atatrart mrarUlkia
tnim w M > to foar ama&atant*
M »aiw
Mr* loon&a and X diaouaeed thla aubjact %mito thoroa&ly axid
ho agraea with «o chat i t wmid ha advia&io to hasro parohaaaa
slraady tai&e dlstrihatad swoag tha $*d*r& roaarVa haftsa hfforo
tha oioaa of bnainaaa on tho S lat,
Tory traly yoara,
(Signed) E. L. Sm**d
I« 2»* Saaad, Qhioft
Division of B a i Oparationa,
Mr* W I . Mattaaoa. Saorat«xy9
.
OpanMarfcat Xnraataant Ooanlttaa,
llr fiffftl
M M av w
Bav Torlt, H. T.
^
Hi
Jwwweib*§
W *K
a w ? J!e%£h»
/ ^e>v
*
V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
July 2©f 1924,
Deer Governor Strongs
Receipt le acknowledged of your le tte r of ,
J u ly i8th . enclosing draft of the minutea of "ffie
’S stE g ^ o f the Open Market Investment CosMittee
for the Federal Reserve System* held In Boston
on July 16, 1924, and copy of e le tte r addressed
by you to the Governors of the various Federal
reserve banks, relative to action taken a t the
nesting*
Tour le tte r and enclosures havt* been brought
to the attention of the members of the Board, and
a t the meeting th is Morning, it was voted to ap
prove the reeowaendation of the Open Market Investment Cocwlttee that the open market holdings
of the Federal reserve banks be increased from
$400,000,000 to fSQ0v O O The Board desires,
0Q »0O *
however, that in carrying through this program
a ll effort be made to avoid any disturbance of
the money market*
Action on the suggestion of the CouRlttee
that the Federal reserve banka* holdings be
further inoreaaed to $600,000,000 was deferred*
Very truly yours,
(Si&ueG^
M Mwtf* Strong, Governor,
r*
Federal Eeserve Bank,
M York, H.T*
ew
1). R. Crtesin^
Governor*
v
Reproduced from the Unclassified
I Declassified Holdings of the National Archives
Mr. Walter L. Eddy, S ecretary,
Federal Reserve Board,
Washington, D. C*
% dear Mr. Eddy:
At the regular meeting of our Board of M reotors held
yesterday, i t m s noted that the earnings for several months past
have been in su fficien t to provide for commitments in the form of
expenses, dividends and reasonable ch a rg e -o ffs, including possible
lo s s e s .
Consideration was also given to the large expense commit
ments, occasioned to a considerable extent by the cost of free
s e rv ic e s, "which we have v o lu n tarily offered to the member banks and
which se rv ice s in the opinion of our Board cannot be co n sisten tly
withdrawn a t th is time*
Whil® our Board is not unduly apprehensive because of
the present low earnings, which in a l l prob ab ility may be only
temporary, the conclusion reached on previous occasions when th e
subject has been under consideration m s reaffirm ed, to the e ffe c t
that over a longer period of time the bank should be made to pay
i t s o m way.
[
Por several y e a rs, as a service to our member banks, we
have received from them such government bonds as they desired to
dispose o f , s e llin g the same at once in the open market. In view
of the f a c t that th is bank: needs investments, our Board concluded
th at instead of s e llin g such bonds as they were offered , i t would be
advisable and proper fo r th is bank tp purchase these voluntary o ffe r
ings as an investment, thus gradually accumulating a backlog for
earning purposes*
I am addressing you in order th at the Board may be fu lly
ap p ri^ d of the views of our Board of D irectors and the proposed
Very tru ly yours,
rvvx>
jfcfe
Reproduced from the Unclassified / Declassified Holdings of the National Archives
■ ?
Federal R eserve
o f
Ne
w
Y
'- ?
Bank
o r k
July 25, 1924.
Mr. E. L. Smead,
Chief, Division of Bank Operations,
Federal Reserve Board,
Washington9 D« C#
Bear Mr. Smead;
Since writing you on July 2l(we have had some further discussion
here concerning the basis for distributing the Governaent Securities being
acquired for the special investment account of the system.
The difference between the figures assembled by us and those pre
pared by your office for the purpose of determining the deficiency in earn
ings of the several banks, results almost entirely from the fact that our
figures contain the estimated chargeoffs for the current year while yours
do not.
Both estimates include an allowance for the payment of dividends,
from which I assume it was the thought of your office, as well as of the
several banks, that the amount of earnings necessary to be obtained should
cover all known charges against earnings.
This being the case, the only question to be determined is whether
or not the amounts estimated for the chargeoffs are reasonable and proper
items to include in such a statement.
Each bank has, of course, prepared
its own estimate of chargeoffs and while it may be that they are not in all
respects on a comparable basis, it is undoubtedly true that a considerable
portion of these chargeoffs would in any event in ordinary practice come
ahead of dividends as a charge against earnings*
The committee would
i
1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL
RESERV E
BANK
OF
N E W Y O R ..............
M E*. L* . Sk
l**
scarcely be justified in arbitrarily changing or questioning the estimate
submitted by any bank; I, therefore, think ve must assume that the estimates
as submitted are approximately correct*
After giving consideration to all angles of this matter we believe
it would be desirable to make the distribution of the investments acquired
from June 16 to the end of this current month on the basis of the figures to
be furnished me as of July 31, which will be prepared in the same manner and
on the same basis as those which were assembled from the figures furnished
to the committee as of June 30, 1924*
Even assuming that there may be some inconsistencies as between the
figures prepared by different banks, it is not at all likely that these fig
ures would have any appreciable effect on the total amount of purchases made
but would merely affect slightly the percentage to be alloted to the dif
ferent banks*
As you know, the Federal Reserve Banks are being requested to
furnish new figures each month and we believe it may be advisable later in
the year, say about October, to request each bank, in the light of nine
months actual operation, to review their figures and also to indicate anew
the amounts of its estimated chargeoffs*
It should be possible at that time
to make reasonably accurate estimates and during the remaining three months
of the year there would be the opportunity to adjust the allotments in such
a way as to closely equalize the earnings of the several banks in proportion
to their needs*
The New York Bank is, as you know, temporarily carrying the amount
so far invested since the last meeting of the committee*
It is, therefore,
desirable that the basis of apportionment be promptly determined so that the
http://fraser.stlouisfed.org/
distribution
Federal Reserve Bank of St. Louis
of the amounts already purchased can be made to the banks as
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL
RESERVE
BANK O F
Mr* E.
N EW YOR*
Sr
i
\$
soon after the first of the month as possible*
Ur* Rounds is to be in Washington on Monday next and as he is
familiar with this subject, he will be able to discuss with you any points
which I have not made entirely clear*
I understand you will have an opportunity to present the matter on
Monday or Tuesday next to some of the members of the Board who are now absent*
If there appears to be any objection to our proceeding with the distribution
as outlined above, it would be appreciated if you would let me know as prompt
ly as possible*
Yeny truly yours,
Ly /
OL
W* B* Matteson
Secretary, Open Market Investment Committee*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
•3 3
FEDERAL RESERVE BANK
of NEW YORK
July 24, 1924
Mr. W. L. Eddy,
Secretary, Federal Reserve Board,
Washington, D. C.
My dear Mr. Eddy:
Tiiis is to advise you that all members of the
Committee have approved, without change, the minutes of
the meeting of the Open Market Investment Committee held
in Boston on July 16, 1924, a draft of which was sent to
Governor Crissinger in Chairman Strong’ letter of
s
July 18.
Very truly yours,
W. B. Matteson
Secretary, Open Market
Investment Committee
3
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 181.
Office Corresponded ;e
T o _______Mr. Eddy
FEDERAL RESERVE
BOARD
Date
33» 1 9 2 4 .
Subject:
L
s__Smead
At a meeting of the Open Market Investment Committee'held a t the
Federal Reserve Bank of Boston on July 1 8 , 1924, Dr. M iller presented a
memorandum ^prepared by th is o ffic e comparing our estimate of earning a sse ts
required to cover 1924-^expenses and dividends with a sim ilar estim ate pre
pared by the Committee,* which was based on figures reported by the various
banks. Ebe two statements were in substan tial agreement except that our
statement was based on operating expenses and dividends only, whereas the
Committee^ statement included also estimated allowances fo r reserves and
extraordinary charge-offs aggregating about |>7,0 0 0 ,0 0 0 .
I t was the understanding of the Committee th at before the r a tio s to be
used in a llo tin g s e cu ritie s purchased during July were prepared, the
se cre ta ry of the Committee would confer with this o f f ic e . Before discuss
ing the question with the s e cre ta ry of the Open Market Investment Committee,
however, I should lik e to know what the a ttitu d e of the Board is with r e
ference to these ch arg e-o ffs, that i s , whether current expenses, dividends,
and the normal annual depreciation charge on bank premises should be con
sidered as the earning requirements of the banks for the purpose of a llo tin g
open market purchases of U* S. s e c u r itie s , or whether in addition to the
above items allowance should be made fo r prob&ble losses on paper now held
under discount fo r member banks considered to be in an unsafe condition,
fo r extraordinary charge-offs to bring the book value of bank premises down
to approximate replacement c o s ts , and for furniture and equipment purchased
during the y ear.
EJven though Federal reserve banks should a t times purchase s e cu ritie s
in the open market fo r the purpose of making expenses, i t would not seem
th at open market investment p o licy should be influenced by any desire on
the p art of the banks to make s u fficie n t earnings during any given year to
cover extraordinary charge-offs on bank premises to bring; book values down
to approximate replacement c o s ts ; fo r the purpose of making su fficie n t
earnings to cover possible future losses on paper-held under discount fo r
banks considered to be in an unsafe condition; or to enable them to chargeoff the f u ll value of furniture and equipment purchased during the y ear.
I t is therefore f e l t th at in determining the ra tio s to be used in a llo tin g
s e c u ritie s purchased by the Open Market Investment Committee, which a l l o t
ments are now based on earning requirements, allowance should be made only
fo r current operating expenses, dividends, and normal annual depreciation
charges, or for current operating expenses and dividends only in case i t is
evident that earnings w ill not be su fficie n t to also cover normal depre
c ia tio n charges on b^nk premises.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
r
F o r m N o . 131.
Office Correspon 31 le
Tn
Fm m
FEDERAL RESERVE
BOARD
Dare
HO i l l Members of t he Board_______ _
Subject:.
Mr. Eddy
22. 1924,
—
4 ____________
At
meeting of the Board today
l e t t e r irom the Governor of the Federal Reserve Bank
f
of f e w York r e la tiv e to actio n taken a t the meeting
of the Open Maifcet Committee held in Boston on July
16th, was ordered circu la te d and placed on the docket
fo r consideration a t the meeting of the Board to he
held on Tuesday, July 29th .
Governor C rissin ger
Mr. P la tt v 7
Mr. Hamlin S *
Mr. James r
Mr. M iller
Mr. Gunni3
4~
»
.J /
.k
Kiere is also attached fo r thm in fo r;^ ?io n of the
members of the Board a memorandum
chart^prepared by
the D irecto r of the Board’ s Division of Analysis and
Research commenting on the a ctio n taken by the Open Market
Committee in voting to increase holdings of Government
s e c u ritie s from $400,0 0 0 ,0 0 0 to § 5 0 0 ,0 0 0 ,0 0 0 , and to l a t e r
a& with the approval o f a l l Federal reserve banks and the
Board to increase such holdings to $600,000,000*
■339
A.T BO^
]l!L *
y V/
-2
■
Reproduced from the Unclassified I Declassified Holdings of the National Archives
o f
N
e w
Y
o r k
July 21, 1924.
Mr. E* L. Smead,
Ghief, Division of Bank Operations,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Smead:
Referring to our tel/ephone conversation to-day, I am enclosing a copy
__________ the meeting/of the Open Market Inveetmer t Committee held at
_
of the minutes of
the Federal Reserve Bank of Boston on July 16, 19?,4.
You will observe that on
the fourth page reference is made to the memorandum from you to Mr. Eddy which
contains a comparison of the B o a r d 1s estimate of earning assets required to
cover 1984 expenses and dividends, taken from reports made to the Board by re
serve banks, with a similar schedule prepared by the Committee based on esti
mated requirements for the year as reported by the various banks to the Com
mittee.
I am also sending you a copy of the schedule showing, the apportionment
to the various Federal reserve banks for the current month.
/
-r— y.
For your further information I am enclosing a copy of the minutes (of w J
the Open Market Committee meeting on May 29, 1924 from which you will note that
it was
VOTED that the Secretary be instructed to prepare a new plan
of apportionment of Government securities based on earning require
ments of the respective banks as shown by figures furnished to the
Committee on May 21, 1924, with adjustments from time to time as
conditions warrant and new estimates are made; such plan to be sub
mitted to the members of the Committee and the participating banks
for their approval.
I therefore asked the Federal reserve banks to furnish me the following figures:
1.
Earnings less current expenses paid and
accrued and dividends down to May 31
2.
Estimated gross earnings from June 1 to
December 31, if present total of earning
assets remains unchanged
Estimated expenses from June 1 to December
31 including dividends, estimated chargeoffs, etc.
These figures were the basis for the apportionment schedule for the month of June
and similar figures for the month of June were used as a basis for the July
schedule of apportionment.
3.
You will note from the minutes of the July 16 meeting that I wa.s in-
AJUL
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F E D E R A L 'R E S E R V E BA N K O F NEW YOR
_JL
^m
0a<^»
Federal Reserve Board,
Washington, D. C.
7 /2 1 /2 4
stru cted to confer with you before preparing a new apportionment schedule and
I would suggest th a t as a preliminary step in th at d irection we ta lk the m atter
over by telephone to-morrow,
Ae I advised you over the telephone th is morning,
I think i t would be a good plan fo r us to talk the m atter over personally i f
possible and I may decide to pay you a v i s i t fo r th a t purpose in the event th a t
the other m atter with Mr, Rounds* which you spoke o f , w ill not bring you to N York
ew
within the next two or three days.
S e cre ta ry , Open Market
Investment Committee
E n d s . (3 )
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131.
Office Correspoi. ut ce
T o -------------Mr . Eddy
FEDERAL RESERVE
BOARD
Date— J u l y £ l r 1924.
Subject:_Onen-market ODer&tiaife.
From______Mr. Stewart
I have your memorandum asking for comments on the letter from Governor
.....
..... - ......
'
..... "‘1*
1
------T T * * * " * ' *
n
r'
Strong of July 18 (and the minutes of the meeting of the open-market investment
committee held in Boston on July 16.
The only important questions of policy raised in the recommendations of
the committee are in paragraphs 4 and 6 of Governor Strong*s letter to the Fed
eral Reserve banks• These recommendations are that farther purchases of Governi
ment securities he made t p to a total of #500,000,000 and that the desirability
i
of increasing the total by another $ 100,000,000 be considered.
In both of these matters it is important to distinguish between the effect
of further purchases under present money market conditions and the effect of
purchases made
earlier this year*
At present not only are money rates at an
extremely low level, but there is an accuEsilation of funds at the member banks
in New York, which they have found it difficult to place, even at existing rates*
This is evidenced by the fact that there has been for the past two months a
continuous excess of reserves at the Few York clearing house banks in large
volume, amounting on July 19 to $38,000,000.
Such a condition can arise only
when the member banks in New York are practically out of debt to the reserve
bank and when acceptance holdings of that bank have been reduced to a low level.
The earlier purchases, though also made at a time when rates were low, had the
effect chiefly of reducing- the discount and acceptance holdings of the bank
without adding greatly to the loanable funds in the market. The effect of purchases at present would be to add to the present supply of unloanable funds* In
the absence of a commercial demand for credit the New York banks, though they
have rapidly increased their investments, have not been able to find immediate
Reproduced from the Unclassified / Declassified Holdings of the National Archives
131.
Office Correspoi^e ce
FEDERAL RESERVE
BOARD
Date.
T o ___________ ____________________________
From_________
_______
Subject:
_____
2
employment for their funds*
•
?
A chart is attached ^showing the position of member banks in ITew York
City*
Attention is called to the rapid increase during the last month in
their demand deposits, their loans secured by stocks and bonds, and their
investments; also to the fact that, while their "all other loans" (conmercial) have declined, the total of their loans and investments is at a peak
figure and their accommodation at the reserve bank has practically dis
appeared*
It is evident that under these circumstances a purchase in the
open market will have a different effect than earlier in the year*
The committee's suggestion that, wherever possible, new purchases be
made elsewhere than in New York is not likely to overcome the probability of
a further accumulation of funds in the Hew York market • Funds arising out
of purchases in the interior, while they may lead to some reduction of dis
counts at other Federal reserve banks, are likely at this time, when balances
of interior banks in lew York are increasing, to be added for the most part '
to the flow of funds to Hew York*
As has been recognized by the committee in
earlier discussions, in open market operations, the Few York market is the
national money market, and the effects of purchases and sales wherever made
are reflected in the condition of that market*
In considering the recommen
dations of the committeei therefore, decisions must rest primarily upon the
situation in ITew York*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131.
^
*
Orrice Correspoi j
t
FEDERAL RESERVE
ze
To
Mr. M d y .
____________________ ____
.y 21. 1924.
Dr. Stewart______________ _____ Subject:.
Frnm
BAD
O
R
_______
Referring to our telephone d riv e r sation please reed and
■
comment upon the attached l etter fend enclosures from Governor
Strongo Please return the file today, in order that it may
be presented at an Executive Committee meeting_to be held ta
mo rr ow morning.
' i ■f "
.
r\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
COP Y
FEDERAL RESERVE BANK
,v
?
of K M YORK
July 18, 1924*
My dear Governor Crissinger:
/
(fyHed
With this X am enclosing to you a draft of the minutes of the meeting
of the open market investment committee which was held in the Federal Reserve
Bank of Boston on July 16. Of course, the minutes have not yet been approved
by the members of the committee, and if there are any material changes a re
vised copy will be sent to you.
Accompanying this is a copy of a letter which is being addressed to
all the Federal Reserve Banks in order to give effect to the action taken by
the committee, and from which I believe the Board will be fully advised of
all action taken at the meeting.
I would appreciate an expression of the views of the Board as to
paragraph 6 of the letter addressed to the Federal Reserve Banks. Of course,
the proposal is a purely tentative one based upon conditions as they are now,
and the views of the members of the committee may change before the time comes
to take definite action.
I beg to remain,
Yours very truly,
Benj. Strong,
Governor.
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
BS.l
enc
http://fraser.stlouisfed.org/
AJ( f Ti
Federal Reserve Bank of St. Louis
Dear Mr. Matteaoni
I acknowledge receipt of vom* letter
of the 25th i
lnatant. addressedto Gfovernor
Orlssinger,enclosing schedule which you
state has been approved by all nepers of
the Opes Ifcrket Investment Comittee, shov
ing the.revised ratio of participation of Syatgfa
purchases of dovemment securities and bankers
aooeptanoea which ape to be applied on all pur
chases during the aosith of July. ,
.—
truly yotxra.
^P^ned) Walter t . Eddy
Valter I . Eddy,
*
Secretary,
Mr*. I* B. Matteson, Secretary,
gpen Market lutes taeat Cos«itteef
c/o Federal Reserve Bank,
He* York, II,T.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Federal R eserve
o f
Ne
w
3
Bank
3
3
York
Ju ly 15, 1924.
S i r :
I am attaching herewith a schedule, which has been ap
proved by a ll the members of the Open Market Investment Committee
fo r the Federal Reserve System, showing the revised r a tio of par
ticip a tio n of System purchases of Government s e c u ritie s and
bankers acceptances based on the amount of estimated d eficien cies
of earnings fo r the year as shown by the figu res furnished as of
the close of business June SO, 1924.
These r a tio s are to apply on a ll purchases made during
the month of Ju ly .
Investment Committee
En cl.
Honorable D. R. Grissinger,
Governor, Federal Reserve Board,
Washington, D. C.
/L&L
REVISED PERCENTAGE OF PARTICIPATION Oi FEDERAL RESERVE BA K IN THE SYSTEM PURCHASES O
NS
F
G V N EN SECURITIES A D BAN
O ER M T
N
KERS ACCEPTANCES BASED O THE EARNING
N
_________________ REQUIREM
ENTS AS REPORTED TO COkklTTEE O JUNE 30. 1924_________________
N
Net Earning Less
Current Expenses
Paid and Accrued
and Dividends
Jan *l/24-Ju n e 3 0 /24
Estimated Gross Earn
ings July l/24-DeC*3 l/2 4
Based on learning Assets
Held June 30 Remaining
Unchanged
Total Net Earnings
Jan *l/24-Ju n e 30/24
and Gross Earnings
July l/24-D ec- 3 1 /2 4
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
| 425,637-
Amount of Earnings
Over or Short of
Estimated Require
ments for Year
1924
Revised i
of
Participg
Boston
4 71,312
Nt
x5oo, 89 1
3 ,5 1 8 ,0 0 0
3 ,0 1 7 ,1 0 9
6 ,1 2 5 ,0 0 0
3 ,1 0 7 ,8 9 1 -
Philadelphia
266,022
1 ,0 2 6 ,0 0 0
1 ,2 9 2 ,0 2 2
1 ,4 9 5 ,0 0 0
202,976-
Cleveland
261,400
1 ,258,500
1,5 1 9 ,9 0 0
2 ,5 0 7 ,0 0 0
9 87,100-
Richmond
368,530
1 , 152,500
1 ,5 2 1 ,0 3 0
1 , 180,000
341,030+
At lanta
463,200
692,960
1 ,1 5 6 ,1 6 0
1,185,807
29,647-
Chicago
195,115
1 ,956,087
2,151,202
3 ,1 7 5 ,2 1 5
1 ,0 2 4 ,0 1 3 -
12%
73,072
636,179
709,251
1 , 188,000
478,749-
6/e
108,000
828,000
936,000
1 ,1 5 3 ,0 0 0
217 , 000-
3*
84,300
1 , 067,000
1 ,1 5 1 ,3 0 0
1,5 3 8 ,0 0 0
3 8 6 ,T00-
5>
430,178
875,148
1 ,3 0 5 ,3 2 6
1 ,8 1 7 ,2 2 0
5 11,894-
(
3/0
85*000
1*504,000
_ .1 x 58VQOO
2 .5 4 4 ,0 0 0
.215*000-
- l l&
# 1,905,238
115,459,046
J1 7 ,3 6 4 ,2 8 4
125,349,863
48, 326, 609-
100$
ot
iork
*#ouis
Mi:«.oeipolia
K
&
s City
Dallas
Sun Francisco
4
'xE*penses Exceed Earnings
5/.
1 2
%
0
ip——----------------;--------------- :---------;-------------------------------------------------— ................
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o * rn i j p . 131
ice Correspc.
Off;
je
FEDERAL RESERVE
BOARD
Lrate___adly .1 2 , 1924___
Subject:.
To
From.
For your information.)
for acknowledgment.
V-v
1 v
:
Please return to S ecretary1s Office
4 'l
Reproduced from the Unclassified / Declassified Holdings of the National Archives
si
* ®0a rd
f
Federal R eserve
T*
9;
Bank
i
3 33,
o f
N e w
-
Y o r k
*
'
Federal Reserve Board,
Washington, D. C.
Gentlemen:
#,
- / , //
“
7*
Enclosed please find copy of l e t t e r (w ritten to-day by
Governor Strong, Chairman, to the other members of the Open Market
Investment Committee fo r the Federal Reserve System, also copy of
schedule of r e v is e d r a tio s of p a rticip a tio n of System purchases of
Government s e c u ritie s and bankers acceptances based on earning re
quirements as reported to the Committee as of the close of busi
ness June 30, 1924.
Upon re ce ip t of the approval of the new r a tio s by the
other members of the Committee they w ill be put into e ffe c t with
advice to a l l Federal reserve banks and to the Federal Reserve
Board.
S e cre ta ry , Open Market
Investment Committee
E n d s . (E)
V
‘
v
■
^
^
\ \
h
1A
Reproduced from the Unclassified / Declassified Holdings of the National Archives
C
0
F
Y
3
~s o .
Ju ly 1 1 , 1924.
Mr. W. P . G. Harding,
Governor, Federal Reserve Bank of Boston,
Boston, Mass.
Dear Governor Harding:
You w ill r e c a ll th a t under the new plan of apportionment of Govern
ment s e c u ritie s and bankers acceptances purchased by the System, adopted at
the meeting of the Open Market Investment Committee held in Washington on
May 29, 1924, i t was voted th a t the apportionment should be based on the
earning requirements fo r the balance of the current year, such r a tio to be
^
^
.^
___
-J» IIII........ .
.
».M HIM.... . H T •r-I—
U
revised monthly as changes in earning assets occur.
I t is understood th a t the ra tio s of p a rticip atio n in e ffe c t up to
the time the System purchases amounted to $ 2 5 0 ,0 0 0 ,0 0 0 . w ill remain constant
as applied to th at amount and th at the ra tio s e ffe c tiv e during the month of
June as submitted to you in m l e t t e r of June 10 w ill pertain to a l l securi
y
t i e s purchased up to June .30, 1924 in excess of the $ 2 5 0 ,0 0 0 ,0 0 0 . namely,
$ 1 1 2 ,8 3 1 ,1 0 0 .
I am enclosing a statement showing the revised ra tio s of p a r tic i
pation based on the amount of the estimated deficiency of earnings fo r the
j
year as shown by the figures furnished at the close of business June 30, 1924.
?
I
These ra tio s w ill apply on the increased purchases over the $ 3 6 2 ,8 3 1 ,1 0 0 . held
\
5
|
i
\
at the close of business June 30, 1924.
Will you please wire me whether th is meets your approval in order
th a t we may advise the other federal reserve banks and make the necessary ad
justments as soon as p o ssib le.
Very tru ly yours,
(Signed) Benj. Strong
Chairman, Open Market
Investment Committee
J
I
f
Reproduced from the Unclassified / Declassified Holdings of the National Archives
i
)
Federal Reser v e
o f
.
Ban k
J
*. 2
2 __! .
J o
Ne w Y o r k
July 9, 1924*
Dear Governor Crissinger:
Thank you fo r youj jajplfl.of July 5.)
As suggested in your
le t t e r , I have sent notice to the members o f the Open Market Invest
raent Committee suggesting a meeting fo r the 25th o f July to be held
in Chicago, and as soon as rep lies are received w ill advise you
whether i t w ill be possible to have a quorum.
Yours very tru ly ,
Benj. Strong,
Governor.
Honorable D. B. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
BS.MM
)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
worm Nt
1
.
Office Correspc .dc.ice
To
..M .—
r Sm.ea.d-..
From_
FEDERAL RESERVE
BOARD
Date_
Subject:.
Mr.
M
P I e sse n o te th e attach ed ^and r e tu r n to t h i s o f f i c e
to d a y .
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Ju ly
3,
1924
Dear Governor strongs
I a c k n o w le d g e r e c e i p t o f an d t h a n k y o u
f o r y o u r p e r s o n a l no t e o f t h e 3 0 t h ultimo/ w h ic h
1 h a v e b r o u g h t t o t h e ' a t t e n t i o n o f t h e O th e r mem
b e r s o f th e B o ard *
We t h i n k h e r e t h a t i t w o u ld
b© a g o o d i d e a f o r y o u t o h o l d a m e e t i n g o f t h e
Open M a rk e t I n v e s t m e n t C o m m itte e i n C h ic a g o som e
tim e d u rin g J u l y , on a d a te t o be d e te rm in e d by
y o u a n d G o v e r n o r M cD o u g a l*
When a d e f i n i t e d a t e
h a s bteen f i x e d , w i l l y o u n o t p l e a s e a d v i s e t h e
B o ard ?
V e ry t r u l y
y o u rs,
G o v ern o r.
M r,
-e n j. S tr o n g , G o v ern o r,
F e d e ra l R e se rv e B ank,
/Let
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-edera! geserve Board
~ 33
3
F ed eral R eserv e
o f
Ne
w
K fr„
V
Bank
Y ork
% ■
j°i. j k +
June 30, 1984.
Dear Governor Criesingers
As I think I explained to you verbally, Mr. Matteson* s w ife «aa struck by
an automobile, and his necessary absence from the o ffic e in connection with her
accident and the fa ct that he was very much upset about i t is .r e a lly the cause o f
( ..JjUL-
< 3fU S C ^
*
the delay in sending forward the reports^which acoompany th is le t t e r .
3
«•
The action o f the committee covered in Vote (2 ) certainly seemed to g iv e
su ffic ie n t authority fo r the preparation o f a new plan which would in a measure
take account o f the earnings position o f the respective Reserve Banks as a resu lt
o f the f i r s t f iv e months operation this year.
I interpreted the action o f the
committee as ju stify in g such a procedure, but not as ju stifyin g any retroactive
r©apportionment o f the origin al purchase o f $250,000,000 o f government secu rities.
You w ill observe by the record that the table o f reapportionment, o f
which copy is enclosed, m s submitted to a l l Reserve Banks and the division o f
purchases in excess o f $250,000,000 was not made until a fte r i t s approval by
of
allTthe banks.
I t resulted, as you w ill observe, in the exclusion o f Philadelphia
Richmond and Atlanta from participation a t a l l , very much reduced some o f the
other allotments, and increased the Hew York participation from 29 to 51 per cent.
A ll o f thia may not be exactly in accordance with the understanding expressed in
your le t t e r o f June
and fo r that reason I am ca llin g i t especially to your
attention*
Requests have already gone out fo r revised estimates as o f June 30, and
in accordance with the committee's minute, which i s as expressed in your le t t e r ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BANK OF NEW Y O R K
_ £___
Governor Crissinger
June SO, 1924.
we are proposing to submit a new schedule o f apportionment a fter those figu res are
in hand.
I now have a le t t e r from Governor McDougal advising that as the weekly
meetings o f th eir executive committee are held on Fridays and the monthly board
meeting is held on the fourth Friday o f each month, he hopes that the next meeting
o f the open market committee can be held in Chicago to coincide with one o f th eir
regular meetings so that th e ir directors, or at least the members o f th eir executive
committee, may be able to meet with the open market committee.
He reitera tes the
statement which he made in Washington that he believes the Federal Reserve Banks
should purchase a reasonable amount o f long-time government secu rities.
In view
o f your le t t e r and his, I was proposing to c a ll a meeting o f the committee to be
held in Chicago sometime next month (J u ly ), when he might expect a satisfactory
attendance by his directors.
Possibly the 25th o f July w ill be the best date
as that is the date o f his directors meeting.
I beg to remain,
Yours very tru ly ;
Benj. Strong,
Governor.
Honorable D. R. C rissin ger,
Governor, Federal Reserve Board,
Washington, D. G.
BS.M
M
enc.
N PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BA K IN THE SYSTEM PURCHASES O
EW
NS
F
G V N EN SECURITIES A D BAN
O ER M T
N
KERS ACCEPTANCES BASED O ^he EARN G
N
IN
_________________ REQUIREM
ENTS AS REPORTED TO CO M
M ITTEE O JUNE 6 , 1924________
N
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
Jan. l/2 4 -ta y 31/24
Estimated Gross Earn
ings June l/2 4 -D e c.3 1 /2 4
Based on Earning Assets
Held M 31 Remaining
ay
Unchang ed
Total Net Earnings
Jan*l/24'*May 31/24
and Gross Earnings
June l/24-D ec- 31/24
Boston
$ 87,500
<$1,188,900
$1,276,400
$1,672,000
New York
x38o ,150
3 ,8 9 6 ,0 0 0
3 ,5 1 6 ,0 0 0
Philadelphia
270,245
1 ,6 2 4 ,0 0 0
Cleveland
255,500
Richmond
Estimated Expenses
June l/2 4 -D e c,3 1 /2 4
Including Dividends
Estimated Chargeo ffs , E tc .
Amount of Earnings
Over or Short
of Estimated Re
quirements for
Year 1924
New Ratio
of
P a rticip a tio n
3 9 5 ,6 0 0 -
(%
>
7 ,0 0 4 ,0 0 0
3 ,4 8 8 ,0 0 0 -
5%
1
1 ,8 9 4 ,2 4 5
1,697,000
197,2454-
0
2 ,0 9 0 ,0 0 0
2,3 4 5 ,5 0 0
2,820,150
474,650-
315,790
1 ,4 5 5 ,0 0 0
1,7 7 0 ,7 9 0
1,3 6 0 ,0 0 0
410, 790 +
1°
7
0
Atlanta
444,370
1 ,2 6 7 ,6 0 0
1,711,970
1,3 1 5 ,4 1 0
396,560+
0
Chicago
153,130
2 ,7 7 6 ,6 5 0
2,929,780
3 ,6 2 4 ,5 8 0
694 ,8 0 0 -
96,100
1 , 065,000
1,1 6 1 ,1 0 0
1,241,600
8 0 ,500-
lOfi
1
%
dnneapolis
64,390
1 ,0 2 0 ,0 0 0
1 ,0 8 4 ,3 9 0
1,2 6 8 ,2 6 0
183,870-
y/°
Kansas City
53,080
1 , 355,150
1,4 0 8 ,2 3 0
1,755,400
3 4 7 ,1 7 0 -
5/0
341,000
1,044,000
1 ,3 8 5 ,0 0 0
1 ,9 7 0 ,0 0 0
5 8 5 ,0 0 0 -
8/0
93,000
2 ,0 7 7 ,0 0 0
2,1 7 0 ,0 0 0
2,777,000
607.000-
%
jt* Louis
Dallas
San Francisco
1
$6,856,590-
xExpenses in Excess of Earnings Jan* l/24-May 31/24
100%
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F ederal/ R
es
^rv
925
AN K O F P H I L A b
G
OAR D AND
ERJf'E A G E N T
AQf
June 30, 1934
*9; .4
\ iH
i 3 '••
■•.
; \
:J!
/ /
,/y
rft
ie
FEDERAL RESERVE BO
ARD
,
Washington,
D. C.
Attention of Governor C rissinger Dear S irs W are duly in re ce ip t o f your favor of June 26th,j
e
in reference to investing in Government bonds, advising us th at
you regard such investment a t th is time as undesirable, but
th at the question has been scheduled fo r consideration at the
autumn conference o f Federal Reserve Agents and Governors.
........ .
iMMmrii
imwvwu
Very tru ly yours,
Federal Reserve Agent,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Dear U Austins
r*
Referring again to To r latter of June 1 th
/u
8 »
you are advised that the Board has given consideration
to the request m d by your directors for authority to
ae
l&vest in Goverment bonds a s m equal to your bank's
u
capital and surplus, in order to give the bank ’’assur
ance of sufficient earnings to pay dividend and operat
ing expenses and really m k it very m ch less of a
ae
u
cornet Itor rith m m e banks in the m n y market".
e br
oe
W
ithout committing itself on the question of
whether an investment in G vern en bonds by your bank
o
m t
of a s m equal to your capital and suiplus w
u
ould be
right In principle* the Board is of the opinion that
such an investment at this time mvM be undesirable*
Hosvevor, the question as to Fedoral reserve
banks investing their capital and surplus in vfoole or in
part In G
overnm
ent securities has been scheduled for
consideration at the m
ituian conference of Governors a d
n
Federal Eeserve Agents*
Yery truly yours*
T R. Crisslngfi}'
\
Governor*
M B L Austin, Chairm
r* « *
an,
Federal Reserve Bank,
Philadelphia, P *
a
c
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
3
Jane 25. 1924
3
^
Report of Committee on Discount and Open Market Policy on the
matter referred to it at the meeting on June 19th, namely, l±"ce_
sLf,r
dated June 18th (from the Chairman of the Federal Reserve Bank of
Philadelphia, requesting approval of an investment by that bank in
government bonds of a sum equal to the capital and surplus of the
bank; the Committee’s report reading as follows:
"The Discount and Open Market Policy Committee at
its meeting on June 24th adopted the following:
"TheLCpmnitte^. has given consideration to the request
m .de by tne/^FeaerRi^e serve Bank in its letter of June 18th
a
asking for authority to invest in government bonds a sirm
equal to its capital and surplus, in order to give the
bank ’assurance of sufficient earnings to pay dividend
and operating expenses and really make it very much less
of a competitor with, member banks in the money market *•
Without committing the Board on a question of principle,
the Committee is of the opinion that authority to' make such
investments as the Reserve Bank of Philadelphia asks would
at this time be undesirable. It therefore recommends that
the authority asked for be not granted.
The Committee suggests that the questions as to Federal
reserve banks investing their capital and surplus in whole
or in part in government securities be scheduled for con
sideration at the autumn conference of Governors and Federal
Reserve Agents."
After discussion, Mr. Platt moved adoption of the
Committee’s recommendation that the authority asked for
be not granted.
Mr. Platt’s motion being put by the chair was
carried, the members voting as follows:
Mr. Platt, "aye”
Mr. Miller, "aye"
Mr. Cunningham, "aye"
Mr. Hamlin, "no"
Mr. James, "no"
Governor Crissinger, "not voting"
%
Mr. Hamlin stated that he voted "no” as he had grave
doubt as to the power of the Board to make any such ruling.
Mr. Platt stated that h . voted for the recommendation
e
on the theory that it is probably undesirable to make such
investments at this time, but that ho - n-nks flnr>frags dis
hV
tinctly cowtftTnplatari iTrypstments by Federal Renorva •howVc
in government bonds and that the time will come when it
might be advisable for the banks to buy such bonds to some
extent.
reproduced from the Unclassified / Declassified Holdings of the National Archives
June 25, 1924 (Cont«d)
Mr. P la tt then moved approval of the Committee's sug
gestion th a t the question of Federal Reserve banks investing
th e ir c a p ita l and surplus in whole or in part in government
s e cu ritie s be scheduled for consideration at the autumn con
ference of Governors and Federal Reserve Agents,
Carried.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
K a im if o . 131.
Office Correspoi le. ce
FEDERAL RESERVE
BOARD
Dag
l
25,
2
To
BMtffctowd
Baw rt
From.
. ..
. .
^
3.-.
Discount m i Opea~markst Seller Cq«»ittoo
Subject:
for
authority
tr m
Federal Heserre
2
—8498
i* «ovwmatnt tends.
$he Discount and Open-market Policy Gossaittee at its meeting on June 24th
adopted the following*
OPBltttt has given oonsi deration to the request
fcy the Phila
delphia Feieral leserre Bank la its letter o f june X8th ^ skjng for authority
t© invest in government bonds a sum equal to its capital tad surplus f
in order
t© giv© the hank "assurance of sufficient earnings to pay dividend #«»4 operating
expenses and really *ak» it very much less of a competitor with mmbw hanks ia
the money Market."
Without eoamitting the Board on a question of principle* the Cesnittee is
of the opinion that authority to Bake such investments as the Reserve
Philadelphia asks would at this time he undesirable*
of
It therefore recaEsaends
that the authority asked for fcejnot granted*
i/
the GGaandttee suggests that the question as to federal reserve hanks lurest^
lag their capital and surplus in whole or in part in government securities he
scheduled for consideration at the an tu m conference of governors m?r# Federal
reserve agents
/
/
AT BOA'Rtf
J N 25 1 2
U
94
a
m
Dear Governor Strong*
if'
The Federal Res ervf/Board at its meeting this
morning considered a report tbf its Committee on Discount
j
and Open iforket Policy with ppftey«mag-Jm^ m w i R of
epportionmciit of future purchases 9f.Jteer«ffi^»t-*e*uri~
tie s for ’tJrer.6f»£n market inver tment account of the
Federal reserve banks,. se outlined in yeur letter to
the Bogrd .o£-Jkne 6 th A T
Upon the recornmefiimrtm^n^r^e
t®ESBiee7^ETSdird~v$teTt£^prove tfie pien^g^esied
by you#
The Board el do -voted to request the Open Market
Investment Oomralttee to consider «t ef*ch of its meetings
the question of an equitable basis of apportionment of
Government security purchases in the light of existing ■
conditions and the situation et each of the reserve banks.
For your information, the Board also approved
a recommendation of its Committee that it would be ln~
advisable
this time to adopt t e suggestion that”
h
a~
respportiOTrent of Government aeourTfy Koiffiigi.of"....
Federal reserve banks shoving m m l n g a for the first
six months of 1924 in eroess of expenses pnd dividend requirements be made in favor of those benks which have
shown a deficit during the period.
Very truly yours,
Signed) D R. Cri3siD.ger.
>
D# R» Griwsingerf
Governor.
%
&*■*
J&v Be&j.
Strong., Chairman,
Op«n Market Investment Conmlttee,
a/o Federal Reserve Bank,
New York, N. Y*
\/
Report of Committee on Discount and Open Market Policy on the
matter referred to it at the meeting yesterday, namely, letter dated
JttggjSjjh/from the Governor of the Federal Reserve Bank of"New^York,"'*
suggesting the apportionment of government securities and bills
between the Federal Reserve banks on the basis of earnings’ reauirements; the Committee’s report reading as follows:
"The Discount and Open Market Policy Committee at its
meeting on June 24th adopted the following recommendation
to the Federal Reserve Board:
The Board has given further consideration to the basis
of apportionment of future purchases of government securities
for the open market investment account of the Federal Reserve
banks, as outlined in a letter to the Board dated June 6th
from the Chairman of the Governors’ Open-market Committee.
The B o a r d ’s Committee sees no present occasion for the
B o a r d ’s recommending a change of this basis of apportionment.
It does, however, recommend that the Board ask the Governors’
Open-market Committee to consider at each of its meetings
the question of an equitable basis of apportionment of
government security purchases in the light of existing con
ditions and the situation at each of the reserve banks,
ihe Committee has also given consideration to the sug
gestion that a reapportionment of government security hold
ings of Federal reserve banks showing earnings for the first six
months of 1924 in excess of expenses and dividend requirements
"be made in favor of those banks which have shown a deficit
during the period, and it is the opinion of the Committee
that it would be ^hmdvfsable} at this time to propose to the
Open-market Committee any such reapportionment
Mr. Platt moved adoption of the Committee’s report.
Carried, Mr. James voting "no"»
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Form No. 131.
1
Office Corresponde ;e
FEDERAL RESERVE
BR
OD
A
wm
o
To
Fmm
$ha gadaral Basorra I w i ____ __
Subject:,
*$ 3
*
'
*
,..og_g g ^ f tiia _ i^ .
g a ra ro sa a * • • o a ritiw a a a n t
Discount and Oposwnarkat P ollflgt-flcssilttaa------------- J a ia y a l ro sary # haak>»---------
^fha Bisooant an*. Opaa Harkst Poliay Ga*»ittaa at its maating
Jima
84th
aioptoi tha following roaossasniaticm to tha Falaral Basarra Board*
Iha Gosnittaa has givan furthar oonaiisration to tha basis of apporttonmant
of future porefcasas of goranarnmt saaaritiaa for tha opan-aaTtost iaraataaat
aaoorcat o f,tha foiaral rasarra banks, as outlinad ia a lattar to tha Soar* lata*
J
Sjrtufc
Jiaaa 6th jt r m tha Ctoairaaa of tha Soraraoif's Opaa»-*atfBat Gowalttao. fha^Oanaittaa
aaaa ao praaont oooaaion for tha BoarA raaownoading a ohanga of thia haaia of
’a
agpertioanaat* It iaas9 hovarar, raaaanoaA that tha Board ask tha Ctowaor’s
Opaa-aarkat Gosaittaa to aaaaiter at aaoh of its matings tha qaastlon of aa
aqnitable haaia of apportiaaaaat of gorarnnaat saoarlty purcfeaaaa $a tha light
of axiatiag oonditions aad tha sitaatiaa at aa<*h of tha raaafra hanks*
Tha Gsaadttaa haa also giTfa ooaaidaratioa to tha snggostloa that a *aapportionasnt of garam oat saaarity holdings of ViiaraX yaaatra hanks showing
aarnings for tha first six months of 1984 ia axaass of axpansas aa* diridand
ha nada
raqnirsmants/in favor of thoaa hanks which hava shown a dafioit during tha
pariod, and i t ia the opiaioa of tha @SMR4ttaa that it would ha laafrisahla
\
4a£
S u e J j & r
c /
6/ 4 / W
i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
fi
r
Jun e 2 4 , 1924
Governor Stro n g th e n d is c u ss e d w ith th e members o f th e Board
a t some le n g th ( l ) th e a c tio n o f th e d ir e c t o r s o f h is bank in v o tin g
t o pay th e u su a l sem i-annual d iv id en d p a r t l y from th e b an k *s su rp lu s
( 2 ) th e d e s ir e o f th e d ir e c t o r s o f th e F e d e ra l R eserv e Bank o f
P h ila d e lp h ia t o in v e s t in government s e c u r i t i e s up t o th e c a p i t a l
and su rp lu s o f th e b an k; and ( 3 ) a memorandum d ated Jun e 2 0 th from
th e C h ie f o f th e B o a rd ’ s D iv is io n o f Bank O p eratio n s re g a rd in g th e
proposed p la n f o r re a p p o rtio n in g fu tu r e p u rch ases o f government
s e c u r i t i e s and b i l l s among th e tw e lv e F e d e ra l R eserv e banks*
A fte r d is c u s s io n , th e proposed p lan was r e f e r r e d b ack
t o th e B o a rd 's Committee on D iscou n t and Open Market P o lic y
f o r a fo rm u la tio n o f p r in c ip le s upon w hich th e Board could
b a se i t s su g g e stio n fo r th e reap p ortion m en t o f open m arket
p u rch a se s*
FEDERAL RESERVE BOARD,
Washington,
D. C.
Dear Sirs We beg leave to acknowledge the receipt of your
e^yxn,| advising ue of your approval of the action
of our Board in voting to establish a minimum buying rate of
2% for bankers acceptances, for which we thank you*
We note what you say about our investing in U. S.
Government bonds to an amount equal to our capital and surplus,
and will/ await further advice from you on this matter.
Very truly yours,
CHAIRMAN.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131.
FEDERAL RESERVE
BOARD
Date__ V ~aI6 20 , 19J*4i
To
Mr. Eddy
Mr. Smead
Subject:-Allotment of Government
Securities and bills.
apportionment
bills "between the Federal reserve banks and wish, to make the following sugges
tions in regard thereto:
X. Inasmuch as there is s c e b doubt as to whether or not the System
as a Tfaole will earn a sufficient amount during 1924 to cover current operating
expenses and dividends, it is thought that the Open Market Investment Committee
in making the allotments of securities and bills should consider current operat
ing expenses, dividends, and actual determined losses in excess of available
reserves as the s a m i n g requirements of each reserve bank. In case the System
A
fails to make sufficient earnings this year to cover depreciation charges on
bank pranises, It is thought that such charges should be deYerr e d '
until.suoh
time as current net earnings are sufficient to take care oTlhenu
V
2. From figures available at the present time, it looks as if
Hew York, Boston and possibly St. Louis may fail to earn sufficient amounts
to cover current expenses and dividend requirements, but that the nine other
Federal reserve banks will probably^ear n more than is necessary to cover oper
ating expenses and dividends. The'Federal~Seserve Banks oFAtlanta, Richmond,
Balias and Minneapolis are likely to have materially larger net earnii^s than
any of the other banks and could very well relinquish some of their present
holdings of open market securTETes and bilXsr;
----- ---— ----------3. In view of the fact that the ITew York building will be completed
and occupied this year it would be particulaTlyninfortunate if tiratr baHfcrwere
to be the only one which failed to make sufficient earnings to cover operating
expenses and dividends, as those inclined to criticize the System would cite
the new building as the real cause of~theHe ficlt in earnings, thus drawing
considerably more attention to the cost of that buildii^.
4. It is therefore recamended that the Federal Reserve Banks of
Minneapolis and Balias each sell $10,000,000 of securities to the Federal
Reserve Bank of New York; that the securities and bills held by the Federal
Reserve Banks of Richmond and Atlanta with the exception of acceptances
originating in their own districts be all sold to the Federal Reserve Bank of
New York; and that all future purchases of securities and bills by the Open
Maifcet Investment Conmittee be allotted to the Federal Reserve Bank of ¥ew York
except such amounts as are necessary to replace maturing securities and bills
held by other Federal reserve banks. If the System is to purchase another
$150,000,000 of securities all such securities under this plan would be
allotted to New York with the result that the bank*s earnings would be in
creased m a W H a i l y altKotrgh per haps not sufficiently to take care of all
operating expenses and dividends.
If along about the end of September it appears that ary of the
western or southern reserve banks are likely to have a deficit in earnings
the allotment of securities oould be changed at that time.
'(F""
'
:
;
~— *■ ■■
■
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131.
Office Correspond ce
_________________________________
From._____ Mr* Eddy*___________ ___ ________
FEDERAL RESERVE
BOARD
*2 **
“
*
_ i_______ . __________________ ^
_
_
__;___
_________ ____......... ...
Please read the attached oaroaunioatioqIfrora the Federal
Reserve Bank of New York, which is "seiT-explanatory, and return
i t to me promptly with any comments or suggestions you may have
to make as to the new plan of a llo ca tin g open market purchases
of Government s e cu ritie s and b i l l s .
3
/UUL.
/ UL&
f
i f " " -----------------:--------------- ----------------------------------------------------------- —
-—
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*
Dear l'r« Austin*
Referring to tooil l«tt«r ef J m w 18
I wiati fco-ocm£ly»
telegram to you of this date
advising that tho federal Reserve Board approved
tho action of your Mreotors in voting to estab
lish aMfainisrcon Graying rato of Z$ for baalosrs
aooeptanoes*
The question of your bank's investing
in TTnited States Government bonds an amount
equal to your oapital and surplus, has been re
ferred to the appropriate ©ommittee of the Board
end you will he advised later of the Board’s
attitude toward the proposal*
Te*y truly yours.
miter U Wdy,
ottoretcry.
Hr* &* L« Austin, Chairman,
Federal Heserve Bank,
Biiladelphla, Pa*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m 118
TELEGRAM
FEDERAL
RESERVE
LEASED WIRE SERVICE
W A SH IN G TO N
BOARD
'
2-i>«4
Jun# %$9 l $ m
Austin - Philadelphia
Yang irtto r la th A * * * *
•flrcao&3UBi iWlttwUi CKQ/utg » w
wrtion your dinvfeomi in wtlng to
fia W i l X l V 3WP l*UMBEr8 WKwptWMNIl*
BDDST
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 181.
Office
To
C o r r e s p o i.
Jc . ze
c? nm« 011 discount & Open Market Policy
:
(Messrs. 1 I X r ,~F1st £~
Te"
i ngham)
FEDERAL RESERVE
BOARD
Date
< - n 19,
.^e
Subject:.
At th e m eeting o f tiie Board t i i i s morning 'th e r e was
r e f e r r e d to th e Committee on D iscou n t & Open ! a r k e t P o lic y ,
f o r r e p o r t a t an ea rly / m e e tin g o f th e Board, th e a tta c h e d *
l e t t e r d ated June lo tly from th e Chairman o f th e F e d e ra l
: R eserve ^Banlc o f P h ila d e lp h ia a d v is in g o f th e a t t i t u d e o f
t n e i r D ir e c to r s tovmrd an in vestm ent 5r Government bonds
o f a sum eq u al to th e c a p i t a l and su rp lu s o f th e b an h .
Reproduced from the Unclassified / Declassified Holdings of the National Archives
w*
y-
/
June 1 9 , 1924
L e t t e r d ated June, „1fit h\fronn th e Chairman o f th e F e d e ra l R eserve
Bank o f P h ila d e lp h ia , r e q u e s tin g approval o f th e a c tio n o f th e d ir e c t o r s
o f t h a t bank in v o tin g t o e s t a b l i s h a 2% minimum p u rchase r a t e on
b an k ers a c c e p ta n c e s and a d v is in g th e Board o f th e a t t i t u d e o f th e
d i r e c t o r s o f th e bank t h a t an in v estm en t in government bonds to an
amount e q u a l to th e c a p i t a l and su rp lu s o f th e bank would be r ig h t
in p r i n c i p l e , g iv in g a ssu ra n ce o f s u f f i c i e n t e a rn in g s t o pay d i v i
dends and o p e ra tin g e x p e n se s, and red u ce c o m p e titio n w ith member
banks in th e money m a rk e t.
Upon m otion i t was voted t o approve f o r th e P h i l a d e lp h ia bank a 2% minimum p u rchase r a t e on b an k ers a c c e p ta n c e s .
a
Mr. Hamlin th e n moved t h a t th e q u e s tio n o f in c r e a s e d in v estm en ts
in government bonds be r e f e r r e d to th e Open M arket In vestm en t Committee
fo r th e F e d e ra l R ese rv e System f o r r e p o r t .
Mr. H a m lin 's m otion b e in g put by th e c h a ir was l o s t ,
th e members v o tin g a s f o llo w s :
------------------------------Governor C r is s in g e r , "n o ”
Mr. M i l l e r , "no"
Mr. Cunningham, "n o ”
Mr. Ham lin, " ay e "
Mr* Jam es, "a y e "
Mr. Hamlin th e n moved t h a t th e m a tte r be r e f e r r e d to th e B o ard ’ s
Committee on D iscou n t and Open M arket P o l i c y .
C a r r ie d .
s
Reproduced from the Unclassified / Declassified Holdings of the National Archives
June 19, 1924
The Governor then presented the matter ordered circu la te d a t the
meeting on June 10th , namely, letter.._dated June...Sth/from the Governor
of the Federal Reserve Bank of New York, with regard to the manner of
apportioning further purchases of government s e cu ritie s and of b i lls
between the Federal Reserve banks.
Upon motion the matter, was referred to the Board*s
Division of Bank Operations for re p o rt.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
Ba
n k
of
P
hila d elph ia
9 2 5 C H E S TN U T STREET
'C
June 18, 1924
CHAIRMAN OF THE BOARD AND
FEDERAL RESERVE AGENT
FEDERAL RESERVE. BOARD,
Washington,
D. C.
*U * M
t
(OfrPPl4*1-, Ovu lUcea. tsf
w (
.. *
.......
... /
,*
AT BOARD
■ iNO-
JU 1 9 1 9 2 ^
N
Dear Sirs -
Confirming our telegram^ we beg leave to say that at the meeting of
our board of directors, held today, we established the rate of discount of\3f
v
(.:x
for maturities of 90 dsys or less, a n d ! ^ or fill maturities beyond that.
We have been discussing the rate of discount for some time at our board
meetings, and action probably would have been taken before this, except for the
V
absence of some members of the board at recent meetings.
I discussed with the Board the advisability of making a lower rate for
paper of short maturity, say 15-days.
we had such a rate.
Previous to the breaking out of the war
It seemed to have answered a good purpose, and if put in
force now we think it would help the business community, add to our income with
out bringing us into competition with our member banks, and give us a desirable
amount of paper of short maturity.
Our board also passed a resolution asking for authority to buy bankers
bills at a rate as low as two per cent, upon which we would be glad to have your
action.
We have taken up again the question of investing some of our funds in
United States Government bonds.
years ago, but were refused.
We asked for authority to do this over two
It seems to us now with the low price of Govern
ment notes, Certificates of Indebtedness and bankers bills, and the difficulty
of getting investments for our funds, that investment in Government bonds of
a eum equal to our capital and surplus would be right in principle, give us
/UlSL.
A&L
Reproduced from the Unclassified / Declassified Holdings of the National Archives
r
,'e d e r a l R e s e r v e
B a n k Or
Page N
Federal Reserve Board,
o
.
2
To
P h .*a d e l p h i a
.
assurance of sufficient earnings to pay our dividends and operating expenses,
and really make us very much less competitors with our member banks in the
money market
date the feeling
which prevailed sometime ago, that investments in Government bonds are/not)de-
V
sirable ones for Federal Reserve Banks.
Very truly yours,
Chairman of the Board
P.S. - Since writing this letter I have had your communication over the *phone
in reference to the rate of 4 l/2$ for all maturities in excess of 90-days.
Frankly, I would say the rate for maturities beyond 90-days to six months
was not brought up, but the six months to nine months rate was discuesed quite
a lot, and we felt it was a bad principle to make a rate for so long time
paper the same as that for 90 days.
You probably recollect that when the
nine months rate was put into effect we made it higher than our 90-day rate,
and we feel convinced that that represents the proper principle in rate making
4j$6 may be too high a rate for paper of maturity beyond 90 days to six months,
and 4j# may be too high for six months to nine months paper compared with
for 90 days.
I know our Board will be very glad to give further thought to these
rates and make a proper adjustment of them if they are out of line.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*2
h**
a* '
■
Ju n e
17,
1924
['
:(
^
T e l e g r am d a t e d J u n e 1 6 t h f r o m t h e S e c r e t a r y o f t h e Open M a rk e t
I n v e s t m e n t C orrim i11ee"”
quotlT Tg a t e l e g r a m a d d r e s s e d t o t h e G o v e rn o r
o f e a c h F e d e r a l R e s e r v e B an k w i t h r e g a r d t o m oney r a t e s an d s t a t i n g
t h a t t h e d i r e c t o r s o f t h e F e d e r a l R e s e r v e B an k o f New Y o r k a t t h e i r
n e x t m e e t i n g w i l l p r o b a b l y a u t h o r i z e a minimum p u r c h a s e r a t e o f 2%,
N o te d .
i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
si
Ju n e
11,
3
1924
L .I z .
*
L et t e r ..d a t e d J u n e ...1 0 t l ( f ro m t h e G o v e r n o r o f t h e F e d e r a l
R e s e r v e B an k o f P h i l a d e l p h i a , r e q u e s t i n g t h a t d u r i n g h i s e x t e n d e d
l e a v e o f a b s e n c e t h e P h i l a d e l p h i a b an k b e r e p r e s e n t e d on t h e Open
M a r k e t I n v e s t m e n t C o m m itte e an d o n t h e B o a r d ^ s C o m m itte e on
E co n om y a n d E f f i c i e n c y b y M r. W i l l i a m H . I l u t t , J r . , who w i l l
b e A c t i n g G o v e rn o r o f t h e b a n k d u r i n g M r. N o r r i s ' a b s e n c e .
Upon m o t i o n , i t w a s v o t e d t o
s u b s t i t u t i o n f o r G o v ern o r N o r r i s
nam ed.
a p p ro v e M . H u t t 's
r
on t h e C o m m itte e s
¥
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Jun e 1 0 , 1924
—
t he Governor o f th e F e d e ra l R eserve
Bank o f New Y ork, su b m ittin g f o r th e B oard *s c o n s id e r a tio n a resume
o f th e m a tte r d is c u s s e d by him a t th e m eeting on June 6 th , nam ely,
th e p la n o f th e Open M arket In v estm en t Committee f o r a p p o r tio n in g *
p u rch ases o f s h o r t tim e government s e c u r i t i e s f o r acco u n t o f v a rio u s
F e d e ra l R ese rv e banks on th e b a s i s o f t h e i r e a r n in g s ' re q u ire m e n ts*
Ordered circu la te d and docketed fo r a future
meeting.
r —---------- ;--------- ! ---- ; ------------------------------ — ------Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fi f t e e n
N
Na
e w
ssau
Y
Street
ork
June 6, 1924
Federal Reserve Board,
Washington, D. C.
Gentlemen:
At the last meeting of the Committee on Open Market
Investments, a resolution was passed directing me to pre
pare a new basis to apply thereafter to the apportionment
of additional purchases of Government securities and of
bills between the reserve banks, which would be based more
nearly upon the earning requirements of the participating
banks, a s disclosed from time to time by reports to be
made to the Committee.
/
■
In order to carry out the terms of the resolution, I
have asked each reserve bank to furnish the Committee with
the following figures:
(a)
The amount of its net earnings down to
June 1st, after deducting all expenses
and accrued dividends.
(b)
The estimated amount of gross earnings
which will be realized for the balance
of the year, assuming that the total of
earning assets continues at the amount
reported as of June 1st*
(c)
An estimate of total expenses, and of
dividend requirements plus an estimate of
the amounts to be charged off, for the
balance of the year.
You will observe that these figures will enable the Com
mittee to roughly estimate what amount, if any, of additional
earning assets will be required for this year (in excess of the
total of June 1st) in order to enable each bank to meet all ex
penses, its dividend and the amount to be charged off for losses,
depreciation, etc.
The result will be a reduction of future
AT BO
JUN
1 0 1924
/
i
C '
' /
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Federal Reserve Board - 2
allotments of Government securities and of bills to those
banks which have earned a surplus in the early part of the
year, until such time as surplus earnings are absorbed by
the expenses of the last half of the year, and a monthly
revision of allotments throughout the rest of the year will
likely result in an equalization of earnings between all re
serve banks.
My own feeling is that those banks which, by reason of
local conditions and of earnings from their participation in
the original purchase of 0250,000,000 of Government securi
ties, are able to earn their dividends and even some small
surplus, should not suffer any reduction in their participa
tion in the original $250,000,000 purchase, and so convert a
possible surplus into a possible deficit of earnings, but
that the reallotment should be so arranged that those banks
which are capable of earning a surplus should do so, but from
now on should not take a share in new purchases.
Some of the
banks, notably New York, will not, however, be able to make up
the probable deficit of earnings, even though they took all of
the additional securities now being purchased, and I antici
pate that the result of the policy suggested will be to have
some deficit shown at the end of the year by a few of the re
serve banks, (possibly only by New York) but that most of them
will likely show the full amount of their requirements earned,
with none having any considerable surplus over requirements.
So far as I am aware of the view of the governors of the
different reserve banks with whom I have discussed the Com
mittee’s operations, this will prove satisfactory.
It seems
desirable, however, that the Federal Reserve Board be made aware of what will result from this basis of reapportionment,
in order to anticipate possible objections.
It will also possibly have the effect of reducing the
amount of franchise taxes to be paid, in case surpluses which
would otherwise be earned are, in effect, transferred to those
banks which would not otherwise earn the full amount of their
expenses and dividends.
It hardly seems necessary to reiterate that this sug
gestion of allotments of securities purchased among the re
serve banks should not be construed as an indication that the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal Reserve Board - 3
purohases are made simply for the purpose of earnings,
which might appear to be the case if this letter were
read alone without considering in connection with it
the motives which have led to the accumulation of shorttime Government obligations by this method#
Obviously,
the fair basis of division is that which relates to
earnings rather than to reserves, capital, etc*
Very truly yours,
4,
Benj. Strong, Chairman,
Open Market Investment Committee
TSf
Net Earnings Less
Current Expenses
Paid and Accrued
and Dividends
Jan* l/24-kav 31/24
Estimated Gross Earn
ings June l/24-Dec.3l/24
Based on Earning Assets
Held May 31 Remaining
Unchanged
Total Net Earnings
Jan*l/24-May 31/24
and Gross Earnings
June l/24-Dec* 31/24
boston
$ 87,500
<§1,188,900
$1,276,400
11,672,000
New York
x380,150
3,896,000
3,516,000
7,004,000
3,488,000-
Philadelphia
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/o
„ Louis
96,100
1,065,000
1,161,100
1,241,600
80,500-
1;%
inneapolis
64,390
1,020,000
1,084,390
1,268,260
183,870-
35*
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
585,000-
8%
93,000
2,077,000
2,170,000
2,777,000
607*000-
Dallas
San Francisco
Estimated Expenses
June l/24-Dec,3l/24
Including Dividends
Estimated Charge_____ offs. Btc«____
Amount of Earnings
Over or Short
of Estimated Re
quirements for
Year 1924
$
395,600-
$6,856,590-
xExpenses in Excess of Earnings Jan, l/24*May 31/24
New Ratio
of
Participation
51%
100%
Reproduced fro th Unclassified / Declassified Holdings of th National Archives
m e
e
NKRT PERCENTAGE'OF PARTICIPATION OF FEDERAL RESERVE BANKS IN THE SYSTEM PURCHASES OF
GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON m s EARNING
_________________REQUIREMENTS AS REPORTED TO COMMITTEE ON JUNE 6, 1924______________
Reproduced from the Unclassified I Declassified Holdings of the National Archives
?
V.--
3
\ T *~~~f>
*
June 6, 1924
At th is point, Governor Strong of the Federal Reserve Barnc of
New York entered the meeting and outlined to the Board the plan of
the Open Market Investment Committee for apportioning additional
purchases of short time government s e cu ritie s for account of the
various Federal Reserve banks on the basis of the earnings of the
individual banks during the f i r s t five months of the current year,
and the estimated amount of earnings necessary to enable each bank
to meet i t s expenses and dividend payments.
After discussion, i t was suggested th at Governor
Strong submit the matter in w riting to the Board for i t s
consideration in order th at i t might then be transm itted
to the Federal Reserve banks with the Board's approval.
r
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Dear Soremor Strongs
I ,
l? M ’
raowl.dg^ of gony l«tt»r of Jnim
Srdjand you are advised that tha report raa8e therein
coincides with tha Board’s understanding of aotlon taken
at tha recant meeting of tha Open Barfcit Ooamittaa*
Under such aotlon tha Committee may purchaae vp to
^400,000,000 of abort tine Ocv-emrient obligations at
fair market prlcea, tha additional 33.50,OOP,OOP to bf
.
apportioned on tha basis of tha eanting requirements
o|5haIiipioua part
by estiinates^tb
ha aubmit te¥ “
fro&rtline to time# fhan tha total pur
chases by tha Committaa approach $400t000f00G, tha
Board should be advised In order that It may oonaldar
the advisability of another seating of tha Coir*»ittee
at i$iich future policy and practice can be discussed*
Very truly yours,
j„ AI W W -*
D# 1* Orissinger,
Governor*
Itr# Benj*Strong, Governor,
F ed eral Ite serv e Bank,
Haw York, 1* Y*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
}
Ju n e 4 ,
1924
L e t t e r d a t e d June 3 r d / f r o m t h e G o v e r n o r o f t h e F e d e r a l R e s e r v e
B an k o f New Y o r k , r e q u e s t i n g a d v i c e a s t o t h e a t t i t u d e o f t h e B o a r d
o n a c t i o n t a k e n a t t h e m e e t i n g o f t h e O pen M a rk e t C o m m itte e h e l d
on May 2 9 t h ,
U pon m o t i o n , i t w a s v o t e d t h a t G o v e rn o r S t r o n g b e
a d v ise d t h a t th e a c t i o n re p o rte d in h is l e t t e r i s in
a c c o r d a n c e w i t h t h e u n d e r s t a n d i n g o f t h e B o a r d , m a k in g
i t c l e a r t h a t th e b an ks a r e a u th o riz e d t o p u rch a se
t h r o u g h t h e C o m m itte e up t o # 4 0 0 , 0 0 0 , 0 0 0 o f s h o r t t i m e
g o v e r n m e n t o b l i g a t i o n s , a n d t h a t t h e B o a r d s h o u ld b e
a d v i s e d w hen t h a t i s d o n e .
\ /
A
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
Federal Reser v e
of
Ne w
Bank
York
June 3, 1924.
Dear Governor Crissinger
While I do not understand that the Federal Reserve Board took any action
at our committee meeting last week, X am now engaged as chairman of the committee
in reporting the various decisions of the committee to the other Federal Reserve
Banks, when the minutes shall have been approved by the members of the committee,
and I should appreciate advice as to the attitude of the Federal Reserve Board so
that each Reserve Bank may be notified.
The actions taken, you will recall, were as followss
(1)
The committee authorized the purchase of an additional $150,000,000
of short-time government obligations at fair market prices.
(2)
The secretary was directed to prepare a reapportionment of the
Additional purchases beyond the original $250,000,000, upon the basis of the
earning requirements of the various participants as shown by estimates to be sub
mitted from time to time.
(3)
The Federal Reserve Bank of New York was authorized to make temporary
sales of short-time obligations held in its special account under repurchase
arrangements, so as to neutralise any possible disturbing effect due to large
transactions by the Treasury on dates when the income tax payments are made and
when the Treasury makes its issues of securities.
The total amount now held in the account is $526,543,300, but purchases
from now on are likely to be considerably slower.
I would appreciate a line from
you on this subject.
Hon. D. R. Grissinger,
Governor, Federal Reserve Board,
Washington, D. C.
A
/LSJL
Yours very truly,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
N
v)y
i
Fed eral R eserv e
Bank
A . ,v.
.
o f
N e w
-- t :
fp
^ ^ 7
i
i
5
^
p
: - ir
........
|
Y o r k
May 28, 1924.
Aosom t e ,
RspQrt
To the members of the
0 P M MAEKET W V E S W M T COMHIEWSE.
An increase of $22,500,000 in the amount of bills held
for foreign banks has occurred since the last meeting of the Com
mittee on April 22, bringing the total amount so invested up to
#39,800,000.
Bank account.
Siis increase is accounted for in de Nederlandsche
We received from that bank: two further shipments
of gold of which $8,000,000 was invested in bills, and from the
proceeds of the Netherlands Government Loan recently sold here
we received $14,000,000 for the purchase of bills to be held in
special account for de Nederlandsche Bank.
©iere have been no important changes in the other ac
counts and the usual comparative statement is attached for the
information of the Committee.
Very truly yours,
J. H. CASE,
Deputy Governor.
_
\
i
Reproduced from the Unclassified I Declassified Holdings of the National Archives
2
S
4
4
id
Ju n e 6 ,
i
1924
A t t h i s p o i n t , G o v e r n o r S t r o n g o f t h e F e d e r a l R e s e r v e B an k o f
New Y o r k e n t e r e d t h e m e e t i n g a n d o u t l i n e d t o t h e B o a r d t h e p l a n o f
t h e Open M a rk e t I n v e s t m e n t C o m m itte e f o r a p p o r t i o n i n g a d d i t i o n a l
p u r c h a s e s o f s h o r t t i m e g o v e rn m e n t s e c u r i t i e s f o r a c c o u n t o f t h e
v a r i o u s F e d e r a l R e s e r v e b a n k s on t h e b a s i s o f t h e e a r n i n g s o f t h e
i n d i v i d u a l b a n k s d u r i n g t h e f i r s t f i v e m o n th s o f t h e c u r r e n t y e a r ,
an d t h e e s t i m a t e d am o u n t o f e a r n i n g s n e c e s s a r y t o e n a b l e e a c h b a n k
t o m e e t i t s e x p e n s e s an d d i v i d e n d p a y m e n t s .
A f t e r d i s c u s s i o n , i t w as s u g g e s t e d t h a t G o v e r n o r
S t r o n g s u b m it t h e m a t t e r i n w r i t i n g t o t h e B o a r d f o r i t s
c o n s i d e r a t i o n i n o r d e r t h a t i t m ig h t th e n b e t r a n s m i t t e d
t o t h e F e d e r a l R e s e rv e b anks w ith t h e B o a r d f s a p p r o v a l.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
JJear Qoremor Strong*
,
Reooipt 1* aoknowladgod of towt l«tt.r of Junm
3rd ( mi you are advised that tha report mala tharain
a
coincides with tha Board*» understanding of action taken
at tha recent meeting of tha Open Iarlwt Oonnittaa«
’
Under suoh aotlon tha Committee may purchase vp to
1400,000,000 of short tine (lorerarient obligations at
fair market prices, tha additional 1150,000,000 to bf
apportioned on tha bail a of tha eaim l^ua^P^regent %
^
of3haZa5rioua participants as shoim by estimates^)
be submitteJ froST'tiine to time* Whan tha total pur
chases by tha Committee approach >100,000,000, tha
3oard should ba advised in ordar that It may oonalder
tha advisability of another meeting of tha Committee
at ^Aiioh future policy and practice can ba discussed*
Very t m l y yours,
B« 2U Orissinger,
Governor*
l*r* 9enJ .Strong, Governor,
Federal Hasarra Sank,
Hew York, H. Y*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
June 4 , 1924
L etter d a te d J u n e 3rd / from the Governor of the Federal Reserve
Bank of New York, requesting advice as to the a ttitu d e of the Board
on action taken a t the meeting of the Open Market Committee held
on May 29th .
Upon motion, i t was voted th a t Governor Strong be
advised th a t the actio n reported in his l e t t e r is in
accordance with the understanding of the Board, making
i t c le a r th at the banks are authorized to purchase
through the Committee up to $400,000,000 of short time
government ob ligation s, and th at the Board should be
advised when th a t is done.
\ /
A
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.
Federal Reser v e
of
^
/
/
Ba n k
N e w Yo r k
June 3, 1924
Dear Governor Criasinger:
While I do not understand that the Federal Reserve Board took any action
at oar committee meeting last week, I am now engaged as chairman of the committee
in reporting the various decisions of the committee to the other Federal Reserve
Banks, when the minutes shall have been approved by the members of the committee,
and I should appreciate advice as to the attitude of the Federal Reserve Board so
that each Reserve Bank may be notified.
The actions taken, you will recall, were as follows:
(1)
The committee authorized the purchase of an additional $159,000,000
of short-time government obligations at fair market prices.
(2)
The secretary was directed to prepare a reapportionment of the
additional purchases beyond the original $250,000,000, upon the basis of the
earning requirements of the various participants as shown by estimates to be sub
mitted from time to time.
(5)
The Federal Reserve Bank of New York was authorised to make temporary
sales of short-time obligations held in its special account under repurchase
**7
arrangements, so as to neutralise any possible disturbing effect due to large
transactions by the Treasury on dates when the income tax payments are made and
when the Treasury makes its issues of securities*
The total amount now held in the account is $$26,543,500, but purchases
from now on are likely to be considerably slower.
you on this subject.
Hon. D. R. Crissinger,
Governor, Federal Reserve Boar*
■ashington, D. C.
I would appreciate a line from
Reproduced from the Unclassified I Declassified Holdings of the National Archives
P
Fed eral R eserv e
F
r 1
Bank
i
of
N ew Y o r k
May 28, 1924.
Report on ^foreign Accounts.
To the members of the
O P M MARKET INVESTMENT COMMITTEE.
An increase of $22,500,000 in the amount of "bills held
for foreign banks has occurred since the last meeting of the Com
mittee on April 22, bringing the total amount so invested up to
$39,800,000.
Bank: account.
This increase is accounted for in de Nederlandsche
We received from that bank two further shipments
of gold of which $8,000,000 was invested in bills, and from the
proceeds of the Netherlands Government Loan recently sold here
we received $14,000,000 for the purchase of bills to be held in
special account for de Nederlandsche Bank.
There have been no important changes in the other ac
counts and the usual comparative statement is attached for the
information of the Committee.
Very truly yours,
J. H. CASE,
Deputy Governor.
(Enc.)
BANKERS ACCEPTANCES.
De Nederlandsche
Bank
De Javascho
Bank
Swiss Nc.tl.
Bank
% 2,518,642.39
t 5,796,310.31
* 5,933,353.11-
? 1 ,981 , 1 3 .3 3
0
Purchased
1,67*,088.53
23,339,583.15
3,661,504.40-
1,138,566.56
Matured or dis
counted
1,677,904.51
943,428.25-
3,608,950.47-
991,937.80-
On Hand 5/27/24
2,516,826.41
28,192,465.21'
5,985,907.04-
2,127,642.09
•Close of Business
On Hand 4/19/24
Bank of England
492.709.15
Bank of IY*ance
?
548,410.69
Totals
? 17,270,438.98
-
0-
-
0-
29,815,742.64
-
0-
-0-
7,222,221.03
492.709.15
548,410.69
39,863,960.59
EARMARKED GOLD
Swiss National Bank
Close of Business
On Hand 4/19/24
$4,751,122.50-
On Hand 5/27/24
4,416,737.50£REE BALANCES
Bk. of Japan Nederlandsche Bk. Javasche Bk. Swiss N.B.
Close 4/19/24
I 499,680.99
Close 5/27/24
504,365.64-
♦ 229,966.42
252,582.83-
De Nederlandsche Bank
Bankers Acceptances
$10,312.96'
| 251,113.35
250,181.66''
*139,2 88 .12
4,866.88-
Bk. of
France
1101,171.12 1300.52
$433.44
« 3,666.64
11,225,620.60
433.44
3,666.64
1,117,568.73
101,171.12-300.52-
TOTAL C M > ISSIONS EARNED
0lf
From 4/ 19 /24 to 5/27/24' inclusive.
Bank of Japan
Javasche Bank
Bank of England
f 867.35 "
$1,867.11-
Natl. Bk.
of Belgium
Bk. of
England
Bankovnl
-0 -
Bank of France
- 0 -
Totals
Swiss N.3.
Totals
$554.48 •
113,601.90-
I Declassified Holdings of the National Archives
Bank of Japan
Reproduced fro th Unclassified
m e
May 28, 1924.
REPORT TO OPEN MARKET INVESTMENT CCISITTEE.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F E D E R A L R E S E R V E BANK O F C
230
OFFICE
OF
THE
SOUTH
LASALLE
STREET
GOVERNOR
May 26, 1924*
Mr. Walter L. Eddy, Secretary,
Federal Reserve Board,
Washington, D. C.
My dear Mr. Eddy:
I am in receipt of your rnIletter -of
.u i iIj(| li I
nf , , h Y"
,
•H
fM
f
eM*
the 23rd instant.^containing information in relation
to the meeting of the Open Market Investment meeting,
called for Kiursday, lay 29th.
fh&nking you, I am
Tery truly yours,
HS.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
r ?
Z4-,
May 23, 1924.
Dear (xQ'rernor McDougal*
Referring to our telephone conversation this morning, I
em quoting below fro© the recommendati m s of the Federal Ad
visory Council, made following the Council meeting of May 13,
1924 s
"With regard to open market operations Council reiterates the vi ew expre ssed o n "
pretTous occasions that
the Federal Reserve bani;s should not w k e investments
for the sole purpose of increasing their earnings and
earning dividends- On the other hand, the Council is
of the opinion that it la desirable for the Federal Re—
'
serve System in normal times to be possessed of a suffi
cient volume of investments (total earning assets) so as
to be able to steady the market in case that should be
necessary.
The Council finds it extremely difficult to
A
lay down any definite rule aa to what the normal figure x/
of investments should^be because naturally It would
' A
change from~~C3Se™to~~tiiae in accordance with the economic
and financial conditions which prevail in given circum
stances.
Under present conditions, it would seem that
it would not be out of line for the Syatem to seek to
preserve an aggregate investment of substantially its
present voluae with a tendency somewhat to increase these
V
investments if g S G P o a n be done wllliuutTunduly affecting"
the market. The Council^ makes^ H e i e suggestions with a
great deal of reluctance as it feels that an authorita
tive opinion can only be given by those actively in charge
of operations.**
Very truly yours,
(Signed) Walter
Mr. J* B. McDougal, Governor,
Federal Reserve Bank,
CCh1°«gQ, m .
Walter L. Eddy,
Secretary.
l . Eddy
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal Reser v e
of
Ba n k
N e w Yo r k
IN R E P L Y P L E A S E R E FER
TO
February 27, 1924♦
Dear Governor Crissinger:
_
Thank you for your n o t e o f F e b r u a T v ^ 2 ^ W regard to
handling of special orders in open market purchases.
Since I wrote
you, Governor McKinney has been here and we feel that the matter is
adjusted to everybody's satisfaction.
We have not only filled up
his requirements for the present, but for all maturities during this
month.
Yours very truly,
Beaj. Strong,
Governor.
Honorable D.R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
BS.MM
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February 21* 19£4*
Baar Oovemor Stro&ft
baan rooo iT0 d s n a w ^ n t to theattention of
th Board* u h is of tha opinion that tha
a
tifo
mmmr in uliioh special ordars for ©pan warkat
jmrohfttaa fr m th Fsd«ral Hasarva B n of
o
e
ak
Dallas hava baan humllsd b tha Gorarnors*
y
oonaaittaa if satisfactory* Tha Board saaa no
oooaaion for a departure fro tha understand*
m
ing reaohod at tha recent conference of tha
Opm
Polio;/ Ooraittee of tha Federal
Keserre banks with tha Federal Beserve Board*
?e*y truly yourst
v^igiiicii;
i wrissingtfe„
<,
D k Orlssingerf
* *
Governor*
Ir* Benjamin Strong. 0oramorf
Federal Beaerre Bank#
Haw York* I* Y*
/
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o .rm ^To. -131.
C C*
U r r i c e
To
1
L o r r e s p o k . J e
Federal Reserve Board
FEDERAL RESERVE
c e
_______ _
BOARD
bate ___ 3 b . 2 0 . 1 9 2 4 . ___
Subject:.
From Gom. 021 Open Market & Discount Policy,
2 S4S
— 9
J
rhe Committee, to whom was referred the attached
f
_ from the Governor of the Federal Reserve Bank of Hew
_
York, begs leave to report that the manner in ^lich special
orders for open market purchases? from the Federal Reserve Bank
of Dallas have been handled by/$ie^cSanittee is satisfactory,
and Mr. Strong should be advised that the Board sees no occa
sion for a departure from the understanding reached at recent
conference of the Open Market Policy Committee of the Federal
Reserve Banks with the Federal Reserve Board.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F eb ru ary 1 9 , 1924
'Z-
' /f
L e t t e r d ated F e b ru a ry I8th \ from th e Governor o f th e F e d e ra l
R ese rv e Bank o f New York w ith reg ard t o th e e x e c u tio n by th e Open
M arket In v estm en t Committee o f s p e c ia l o rd e rs r e c e iv e d from F e d e ra l
R eserv e banks*
R e fe r r e d t o th e Committee on D iscou n t and Open
M arket P o l i c y .
F e b ru ary 2 0 , 1924
R ep ort o f Committee on D iscou n t and Open M arket P o lic y on M atter
r e f e r r e d t o i t a t th e m eeting on F e b ru a ry 1 9 th , nam ely, l e t t e r dated
F e b ru ary 1 8 th from th e Governor o f th e F e d e ra l R ese rv e Bank o f ITew
York w ith re g a rd to th e e x e c u tio n by th e Open M arket In vestm en t
Committee o f s p e c ia l o rd e rs r e c e iv e d from F e d e ra l R eserv e b a n k s,
p a r t i c u l a r l y th e F e d e ra l R eserv e Bank o f D a lla s ; th e Committee
r e p o r tin g t h a t th e manner in ?>rhich s p e c ia l o rd e rs f o r open m arket
p u rch ases from th e F e d e ra l R eserve Bank o f D a lla s have been handled
by th e G o v e rn o rs’ Committee i s s a t i s f a c t o r y and t h a t Governor
S tro n g be ad v ised t h a t th e Board s e e s no o c c a s io n f o r a d e p a rtu re
from, th e u n d erstan d in g re a ch e d a t th e r e c e n t c o n fe re n c e o f th e Open
M arket P o lic y Committee o f th e F e d e ra l R eserv e banks w ith th e F e d e r a l
R eserv e B oard .
Approved,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
B o r n . N o . 131.
/ \ r r *
1
Urrice Correspo: Je ce
r_
r,
FEDERAL RESERVE
Committee on Discount & Open Market Polios?! .
t®8 88 rs• MillBr, Platt -S-GunninghaMT J
____
L/ate. l l _* 19, 1924 »
"2 1? ^
:
----- ------------------- ^
From___ Mr* -^ddy
At the meeting this morning, there was referred to the Committee on
Discount and Open Market Policy the attached letter dated ^ ]tfflg£g[18th.\
from the Governor of the Federal Reserve Bank “of Hew York w ith regard' 'Tor
the’ execution "by the Open Market Investment Committee of special orders
received from Federal Reserve "banks*
/UULr
IF
------------------------------- ----------------------------------------------------------------1
............ ........
Reproduced from the Unclassified I Declassified Holdings of the National Archives
.
Fed eral R eserv e
of
Bank
N e w Yo r k
IN R E P L Y P L E A S E RE FER
TO
February 18, 19E4.
Dear Governor Crissinger:
After going over the Investment Committee’s minutes and operations with
Mr. Case, I feel quite satisfied that there will be little difficulty in handling
the Dallas maturities for reinvestment in such a way as will conform to the action
taken by the committee when it met in Washington the week before last*
Possibly
when a similar situation arises in the future, you will feel willing to give con
sideration to the position of the committee in respect to these special orders $10,000,000 in the case of Dallas - which we fear will have the effect of impairing the harmonious operation of the policy if other cases of that sort develop.
The particular point that we have to watch with great care, of course,
is always the interest of the Treasury.
Every order that we get from Reserve
Banks, including the execution of orders by the committee, is subordinated to all
orders and transactions conducted for the Treasury.
No possibility of conflict
in our transactions can arise with the Treasury on that account.
I^hen one
Reserve Bank, however, which is participating in the general purchase puts in a
special order for the same securities, some one must at once decide whether that
bank is to have the right away - so to speak - in allotments, or whether purchases
are to be made for the committee, or whether they are to be divided, etc., etc.
V#
HC'
\V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
£
FEDERAL RESERVE BANK OF NEW YOR
Fe b ru & ry
18 , 1924 .
le don’t feel willing here to take the responsibility for any departure from the
committee’s procedure;
in fact, if special orders are to be executed in that way,
the whole purpose of the committee1s organisation falls to the ground.
We have transferred $5,000,000 of bills to Dallas.
We have other
transfers in prospect, and we believe that by this method and by special transfers
of allotments, such as were provided for at the last Washington meeting,
we will
cover the requirements at Dallas without it being necessary for them to proceed
with any special purchases.
We hope all of this is in accordance with your own views.
Tours very truly,
Governor.
Honorable D„ H. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
BS.MM
I
Reproduced from the Unclassified / Declassified Holdings of the National Archives
as
« M
J
fto Q m rm w ar w oam m m A tl» t Ifce s*xt aMUng of tfe» O
pen
Ifcrtart 2fcv*0ta»ii* Conal1*#« t m th* * idtral BtMivi Sy®t«e wouM
!• 1*14 to «Mftrfngt«Q 0mFriday, y*bmaiy M u
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
Oovemor Strong*
O bflhaif of Qovonoor
n
1 a o M i% » roooipt of voar lo ite r to him
I adviaaig or tea apportionm
ent
ta m e tho twalve Fadoml H
oockpvq 1501008 of tiao
8hori-*torm Qovoimant aoeuritie* itoick havo
boon ooqulrod for tho 3yst«af6 s^ooial inreatmb* aoootmfc under tiao poXioy ograod v p m a t
m r m m t raaotiag of tlio Board* Shit le tte r
w i l l b« broo^hfe to ttio iittoRtlon of the
M & m i of t h o Board.
Toiy t r u l y y o u rs.
if c lto r U Bddy#
S oorotory*
3 Boo|# Strong* Chainsiux*
£f«
Qp^ a, H nvnt S qfoisssbbbS CQxasittoo*
C /o Podoral Booorro Bwflc*
Son Toilt* H*T*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Executive Folder
Dat
Federal R eserv e Bank
o
f
Ne w Y o
R K
January 4, 1924.
Dear Governor Crissinger:
In line with the policy recently agreed upon at a meeting between the
,
Federal Reserve Board and the Open Market Investment Committee, the following short
term Government securities have been acquired for the System's special investment
account:
Treasury certificates of indebtedness due 1924
"
notes due 1924-25
$ 9,346,000.
9.257.000*
Total
$18,583,000.
This investment has been apportioned among all twelve of the Federal
reserve banks, in the percentages agreed upon, as follows:
Federal Reserve Bank of
Percentage
Boston
New, York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Par Value of Apportionment
8.4$
27. %
B.1%
9.7%
4.1%
4.8%
16.3%
3.5%
2.7%
3.4%
2.9%
9.1%
$ 1,560,900.
5,017,500.
1,505,200.
1,802,500.
761,700.
891,900.
3,029,100.
650,300.
501,900.
638,000.
538,900.
1.691.100.
$ 18,583,000.
Very truly yours,
Benj. Strorfg, ^
Chairman, \)pen Market Investment
Committee for the Federal Reserve System
Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
/XJJL
■A/w
Reproduced from the Unclassified / Declassified Holdings of the National Archives
N.
Federal R eserv e Bank
\ / *7 2
January 3, 1924,
Mr* E. L. Sinead, Chief
Division of Bank Operations
Federal Reserve Board
Washington, D. G.
Dear Mr. Sinead:
/
I
d .‘ . * :..
"
In accordance with ouj* conversation of last night, I am
enclosing herewith a copy of a lett ed sent to .each Governor outlining
the method of operation in connection with the handling of the special
investments. After this letter went out it was decided to separate the
two classes of investments, namely Certificates of Indebtedness and
Treasury Notes, and to carry them in two aocounts as follows;
Special Investment U. S. Certificates of Indebtedness
Special investment 0. S. Treasury Notes
This will obviate the necessity of the procedure outlined in paragraph #4
in connection with the transmitting of these figures to the other banks
for press statement purposes. In other respects it is my understanding
that the plan is being followed as outlined.
As you know, the actual distribution of the amounts already
purchased was made yesterday, the percentage of participation of eaGh bank
being as follows:
B o s t o n ...... 8.4
New Y o r k ...... 27*
Philadelphia ... 8.1
Cleveland ...... 9.7
Richmond ....... 4.1
A t l a n t a ....... 4.8
C h i c a g o ....... 16.3
St. Louis ...... 3.5
Minneapolis .... 2.7
Kansas City .... 3.4
Dallas ....... . 2.9
San Francisco... 9.1
.
100
I talked with Mr. Higgins and it is my understanding that
he will see that there is reported on fern 34 for this bank the maturity
data for the total investment for the system, inasmuch as this information
will not be available to the other reserve banks.
http://fraser.stlouisfed.org/ LAL
Federal Reserve Bank of St. Louis
Very truly yours,
P :
L. R. Rounds
Acting General Auditor
