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
K IN D OF M A T E R IA L OR NUMBER
333.
name o r s u b j e c t
Open Market Policy Conference
Meetings
Open Market Operations
DATES ( I n c l u s i v e )
1931
PART NUMBER
Part 2
-C
-2
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
For C IR C U L A T IO N :.
■’’
■i. Jam es
.,
.
Maose
•< r. M i l l e r . * *
Fe d e r a l R e s e r v e B a n k
Poie .................
Harrison..
r ivornii
OF N e w Y O R K
r. M c C le lla n d .,
iv'f. Wyatt
r-;f. .... ...... ...
;Vr, ______ ____
Please n o t e -in itia l
and r e tu r n to GOVERNOR.
January 5, 1952.
.
Dear Governor Meyer:
Mo suggestions have bean received for changes in
the tentative minutes of the November 50(meeting of the
Open Market Policy Conference mailed you with our letter
of December 10.
These minutes may, therefore, be con
sidered as final |
^ j 3 jj t
Very truly yours,
W. Randolph Burgess,
Deputy Governor.
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. G.
„ :
\
Reproduced from the Unclassified / Declassified Holdings of the National Archives
'j. 5>3..
D e o a e b a r IS, 1931.
Br* W. Randolph Burgess,
Federal I%»Bem Sank,
K«v York* N« Y*
Dear Doctor Burgees:
This la the first opportunity I h a w had to
acknowledge receipt of your letter of December 10 tranesitting a preliminary draft of the Minutes of the seating
■■■
H j 3 oj 5| *. h.^-4
.j
of the Open Maxfcet Policy Conference hell in Waehington
on Noreoiber SO *
I have read the draft and hare no suggestions
to wake with respect thereto.
?ery truly yours,
"(Signed) Eugene Meyer
Governor
FD
E COPY
Reproduced from the Unclassified / Declassified Holdings of the National Archives
;
b }3.
-C'*"
Daeeaber %Ȥ 1983.*
Bob* 0aoi?(pi
1^m8N9m JL Rm m h h w Settlep
He* Tork, N. Y.
*
Dear Governor Harrieo&i
^
I have not had as opportunity until sow to thank
you fter your I#tier of Pooaefter » irttfa vhleh 3
m
aoelooad a
oopy of tho niautaajof the b h IIs k of the Open Mutit Poliay
—
I!|3 0 / 3 1 L L lA, 3 3 3 .- C - X ^
CoafaroBoa held in Waafeinnton on WmmSmt 50#
Br# Bargee* aleo sent n» a oopy of the aisatai, ana
1 aa
a«vi*ing his that X have no suggeatlons to sake witfc
reapeat to the»*
¥«ry truly years,
(Signed) Eufene Meyer
G0V#7S03P
(
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
o f N ew Y ork
Decant) er 10, 1951.
Dear Governor Meyer:
I am enclosing herewith for your information a
,//- 3 0 - 3 / A-ou j % 3 *preliminary draft/of the minutes of the meeting of the
Open Market Policy Conference held in Washington on
November 30.
If you have any suggestions as to desirable
changes I hope you will please be good enough to let me
know.
Very truly yours,
i
W. Randolph Burgess
Deputy Governor
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D, C#
WHB.H
encl.
*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
o
t
Ne w Yo r k
December 9, 1931
Dear Governor Meyer:
For your information I am enclosing a copy
. _
,
, I ( - 3 ^ - 4 / UJU4
3 33. -c-a
of the minutes fof the meeting of the open market
policy conference held in Washington on November 30.
These minutes are today being distributed to the
members of the conference and should, I believe, be
regarded as tentative pending an opportunity to the
members of the conference to suggest any corrections.
Very truly yours.
George L. Harrison,
Governor.
Hon. Eugene Meyer,
Governor, Federal Reserve Board 9
Washington, D. C.
Ehc.
/if
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
Ne w Yo r k
December 9, 1931
Dear Governor Meyer:
For your information I am enclosing a copy
I{*-36 - 4 /
3 3 3t~C ~
>»w
of the minutes[of the meeting of the open market
policy conference held in Washington on November 50.
these minutes are today being distributed to the
members of the conference and should, I believe, be
regarded as tentative pending an opportunity to the
members of the conference to suggest any corrections.
Very truly yours.
George L. Harrison
Governor.
Hon. Eugene Meyer,
Governor, Federal Reserve Board 9
Washington, D. C.
Enc.
4
^
tml-1 I"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0»
5..,
CONFIDENTIAL
^
v
REPORT OF OPEN MARKET OPERATIONS TO THE MEETING OF THE
OPEN MARKET POLICY CONFERENCE HELD IN WASHINGTON ON
________________ NOVEMBER 50, 1951_________________
The total of the government securities hald in
S£st.era.-Account is the
same as at the
.2* the Executive Committee of the Open Market
PoTi^njon'ference held in the Federal Reserve Bank of Hew York on October 26, 1951,
full reports of which were sent to all governors. Changes in maturities since
October 26 consisted partly of the replacement of $44,215,000 Treasury bills, which
matured from November 2 to November 25 inclusive, for a like amount of Treasury bills
maturing in January and February, and exchanges effected advantageously in the market
of $18,850,000 - December 15 and $5,750,000 - March 15 maturities for a like amount
of Treasury bills maturing in January and February. The following is a statement of
the holdings in the Account on October 21 and November 25, 1951:
October 21
U. S. Treasury Bills
tt
H
W
»t
w
tt
w
tt
tt
tt
tt
tt
tt
n
it
tt
w
tt
H
It
1
5
2
1
4
5
4
7/8$
1/2$
$
1/8$
1/4$
1/2$
1/4$
tt
H
Nov,
tt
2 ,
9,
it
tt
it
16,
tt
tt
ft
25,
»t
ft
»
50,
it
tt
Dec. 50,
tt
It
Jan. 15,
t»
»
II
25,
tt
«
Feb. 8,
tt
tt
t»
15,
tt
H
it
24,
Cert, of Ind.
Dec. 15,
Treasury Notes called »
15,
Cert, of Ind.
15,
Mar.
tt
tt
n
Sept .15,
4th L/L Bds. 1955-58
1st "
"
1952-47
1st "
•" 1952-47
Totals
1951 $ 9,670,000
1951
7,225,000
1951
8,111,000
1951
19,207,000
1951
15,425,000
1951
12,652,000
2,000,000
1952
1952
0
1952
0
0
1952
1952
0
1951
68,574,500
1951
1,807,250
1952 115,481,500
55,500,000
1952
115,059,750
80,025,000
15,750,000
$524,468,000
November 25
$
0
0
0
0
15,425,000
12,652,000
2,000,000
18,000,000
22,725,000
7,111,000
18,957,000
50,744,500
807,250
111,751,500
55,500,000
115,059,750
80,025,000
15,750,000
$524,468k000
Changes in Participations in Government Securities
____ Held in System Special Investment Account
Since the October 26 meeting the following changes took place in the
participations in government securities in the System Account:
Oct. 27, 1951 - Atlanta was temporarily relieved of
$5,000,000 of its participation.
Nov.
4# 1951 - Minneapolis repurchased $5,000,000
participation of which it was relieved
on October 16,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
B •0•V23S&?
Nov. 13, 1931 - Dallas repurchased $2,500,000 partici
pation of which it was temporarily re1
lieved on July 15.
Nov. 19
1931 - Dallas repurchased $'2,500,000 of
$5,000,000 participation of which it
was temporarily relieved on August 26;
Nov* 27, 1931 - Dallas repurchased balance of
$2*500,000 participation of which it
was temporarily relieved on August 26*
At the present time the amounts of participations of which several of the banks
have been temporarily relieved, and the amounts of such participations that other
banks are temporarily carrying are as follows:
Anount of partic
ipation of which
banks were tempor
arily relieved
Dallas
Kansas City
Richmond
Atlanta
Totals
$ 8 , 000,000
Amount of partic
ipation temporarily
carried by banks
Boston
New York
Philadelphia
Cleveland
Chicago
St. Louis
San Francisco
20,000,000
3.000.000
5.000.000
# 3,867 -,00b
20*440*500
3.236.500
1»148*500
4.526.500
502,500
2,278 ,50 .0
$36,000,000
#36j000 *000
„ii»i
Changes in Participations ift System Purchases
of Bankers, Acceptances.......
At the time of the last meeting the fallowing banks were not partici
pating in the System’s bill purchases)
Philadelphia
St. Louis
Minneapolis
Richmond
Kansas City
Dallas
On October 29, Cleveland also temporarily discontinued its participation in System
bill purchases and during the past week St. Louis, Minneapolis and Kansas City
resumed their participations, leaving four banks not participating at present,
namely,
Philadelphia
Richmond
Cleveland
Dallas
On November 4, the Federal Reserve Bank of Kansas City, at its request,
was relieved of $2,419,000 of its bill holdings.
These bills were taken over by
the Federal Reserve Bank of New York.
ALLOTMENT RATIOS
In accordance with the plan that has been in effect during the past few
years, System purchases during the first half of the current calendar year have
been made according to percentages based on the ratio that each bank’s expenses,
dividends and charge-offs for the previous year bore to the total of such items for
the System with adjustments in the percentages being made each month based on the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0■ V23Sfe>
actual and estimated figures available at the end of each month during the last half
of the year.
The following statement shows the percentage ratios that were in
effect during the first six months of the current year and the subsequent adjust
ments that have been made in these percentages based on the figures received at the
end of each month since June 30, 1931. (In allotting System purchases, however,
these percentages were adjusted to provide for the distribution of the non-partici
pating banks1 share.)
Ratios
effective
first 6 mos.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
7
25
7
9
5
5
13
5
3
5
4
9
100
1/4$
1/4$
1/2$
Z/¥Jo
1/4$
1o
fo
1/4$
1/4$
1/2$
%
1°.
1o
Ratios
effective
July 15
7
27
8
10
5
4
13
4
3
5
3
8
100
Ratios
effective
Aug. 15
i A$
Ratios
effective
Sept. 15
Ratios
effective
Oct. 15
Ratios
effective
Nov. 12
$
1/2$
1/4$
1/4$
7
26
8
10
5
4
13
4
3
5
3
8
3/4$
1/4$
$
1/4$
1/2$
1/2$
1/2$
$
1/2$
1/4$
1/4$
7
26
8
9
5
4
13
4
3
5
3
8
1/4*
3/4$
$
3/4$
1/4$
1/2$
1/2$
3/4$
1/4$
1/2$
1/4$
1/4$
7
26
8
10
5
4
13
4
3
5
3
8
1/4$
3/4$
$
$
1/4$
1/4$
1/2$
3/4$
$
1/2$
1/4$
1/2$
7
26
8
10
5
4
13
5
3
5
3
8
$
100
$
100
$
100
$
100
1/4$
%
%
%
1/4$
1/2%
1/2%
1/2%
1/4$
1/2$
$
$
1/4$
1/4$
1/4$
1/4$
$
1/2$
1/4$
1/2$
y
1°
NET PROFIT REALIZED ON SALES OF GOVERNMENT SECURITIES
IN SYSTEM ACCOUNT AFD HELD BT SUSPENSE ACCOUNT BY
_______ FEDERAL RESERVE BANK OF NEW YORK__
Under the plan adopted at the Governors * Conference held in Decamber, 1929,'
the net profits realized on sales of government securities sold from holdings in the
System Account during the current calendar year are held in a Suspense Account by
the Federal Reserve Bank of New York until the close of the year.
Attached Exhibit
"D" shows the amount of such profits held in Suspense Account at the close of busi
ness November 25, 1931, and the amount of paper loss on the present holdings in the
Account as represented by the differnce between the book values of the securities
held and the market bid prices for such securities on November 25.
Under the
present plan, it would seem desirable, in view of the probable loss which will be
reflected in the book values of the securities held in the Account on December 31,
to retain in the Suspense Account during the coming year the amount of net profit
realized on sales during the current year, so as to offset as far as possible any
losses that might be taken on securities sold from the Account during the coming
year. When the present plan was adopted in 1929 it was suggested that the taking of
profits might be postponed in any year when the security holdings might fchow a con
siderable depreciation at the year end.
It does not seem necessary to make any further provision for depreciation in
view of the relatively short maturities in the Account and the provision which is
made for rapid amortization of premiums.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0« l23Sfc>
4
Attached are statements showing:
Exhibit MAW ** Outright holdings of government securities by
individual Federal reserve banks and their
participation in government security holdings
in the System Special Investment Account as
of Nov. 25, 1931, and ratio of each bank’s
total holdings to the total for the System.
Exhibit WB* - Earning asset holdings of all Federal reserve
banks Nov. 18, 1931, as compared with previous
week and Nov. 19, 1930; also weekly average of
earning assets from Jan. 2 to Nov. 18, 1931,
as compared with corresponding period 1930 and
entire year 1930.
Exhibit "C" - Bills purchased outright by System by weeks
from Jan. 2 to Nov. 18, 1931.
Exhibit "DM - Amount of net profit realized on sales of
United States Government securities in System
Account during period Jan. 2 to Nov. 25, 1931,
and held in Suspense Account by the Federal
Reserve Bank of New York and each bank’s pro
rata share, also amount of loss as represented
by the difference between the book values and
market bid prices on Nov. 25 of the government
securities in the System Account and each bankfs
pro rata share.
Exhibit MEM - Amount of each Federal reserve bank’s earnings,
expenses and dividends for the year 1931, the
first ten months* figures actual and last two
months estimated (including estimated charge-offs).
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0•U3Sfe>
Exhibit ’’A"
OUTRIGHT HOLDINGS OF GOVERNMENT SECURITIES
BY INDIVIHJAL FEDERAL RESERVE BANKS AND THEIR
PARTICIPATION IN GOVERNMENT SECURITY holdings
IN THE SYSm i SPECIAL INVESTMENT ACCOUNT AS
OF CLOSE OF BUSINESS NOVEMBER 25, 1951
(000 Omitted)
Outright
Holdings
Ratio of each
bank’s total
holdings to
Participation in
System Account
Total
689
$ 56,387
$ 57,076
124,797
113,891
238,688
33
1o
Philadelphia
10,005
47 ,799
57 ,804
8
#
Cleveland
10,000
62,951
72,951
10
1c
0
27,406
27,406
3 3/4#
Boston
New York
Richmond
$
7 3/4#
Atlanta
2,560
14,646
17,206
2 3/4#
Chicago
21,598
78,382
99,980
13 3/4#
St. Louis
4,000
26,967
30,967
4 1/4#
Minneapolis
7,532
20,273
27,805
3 3/4#
Kansas City
84
18,875
18,959
2 1/2#
Dallas
9,999
12,132
22,131
3
San Francisco
9,525
44,759
54,384
7 l/2<j£
#200,889
$524,468
$725,357
Totals
100
1o
STATSHiHT SHOWING EARNING! ASSET HOLDINGS OF ALL FEDERAL RESERVE BANKS K0VSL<BSR 1 8 , 1931 COMPARID H 'lH PREVIOOS IfflEK AND NOVEMBER 1 9 , 1 9 3 0 ; ALSO VBBCLT AVSRAOI
( 0 0 0 O n it t e d )
B oston
B i l l s D is c o u n te d
- N ov, 11
18
N e t Change
B i l l s P u rch a sed
4 2 1 ,2 0 9 1 1 1 6 ,2 0 1
2 5 ,7 6 2 1 0 9 ,5 2 3
4 ,5 5 3 +
- Nov* 11
"
13
N et Change
6 3 ,7 4 0
5 8 ,4 7 0
5 ,2 7 0 -
(io v e n ru e n t S e c u r i t i e s - N ov . 11
18
5 7 ,5 6 5
5 7 ,3 4 7
218-
N e t Change
T o t a l E a r n in g A s s e t s
"
«
»
New Y ork
- N ov.
"
11
i3
Net Change
C om p a rison o f W eekly A vera g e
o f E a r n in g A s s e t s
J a n . 2 t o N ov. l 6 , 1931
Same p e r i o d 1930
v t i r e y e a r 1930
‘'■et Change from ssroe p e r i o d 1930
"
»
"
e n t i r e y e a r 1930
C o m o a riso n o f E a r n in g A s s e t s
N ovem ber 18 , 1931
1 9 , 1930
N et Change
1 4 4 ,4 8 4
1 4 3 ,4 8 9
995-
8 2 ,4 6 6
7 2 ,6 8 6
7 4 ,0 0 2
9 ,7 8 0 +
3 ,4 6 4 +
1 4 3 ,4 8 9
7 7 ,7 1 8
6 ,6 7 8 -
1 6 3 ,7 6 7
1 4 4 ,5 9 5
1 9 ,1 7 2 -
2 4 1 ,9 8 9
2 4 1 ,2 2 6
763-
5 3 7 ,1 3 7
5 1 1 ,0 3 4
2 6 ,1 0 3 -
3 2 1 ,2 0 3
3 1 3 ,9 8 4
3 2 3 ,0 7 5
7 ,2 1 9 +
1 ,8 7 2 -
5 1 1 ,0 3 4
2 6 7 ,1 3 7
6 5 ,7 7 1 + 2 4 ^ ,3 9 7 +
$ 1 0 6 ,6 6 2
1 0 7 ,6 9 6
1 ,2 3 4 +
8 ,2 9 0
6 ,9 1 4
1 ,3 7 6 -
C le v e la n d
Richmond
A & a& s
1102 ,230
9 4 ,8 2 4
« 3 9 ,0 7 8
3 9 ,6 3 2
I
7 ,4 0 6 -
4 2 ,3 6 3
3 6 ,6 4 7
7 3 ,2 3 3
5 3 ,1 1 1
7 2 ,9 5 1
1 8 1 ,0 8 9
1 8 0 ,7 4 6
j 43-
9 1 ,6 1 3
8 2 ,3 6 0
8 2 ,3 7 1
9 ,2 5 3 +
9 ,2 4 2 +
1 8 0 ,7 4 6
7 5 ,8 4 9
1 0 4 ,8 9 7 +
1 6 .1 4 9
1 6 .1 5 0
5 ,7 1 6 -
2<},3J7
226-
55 4*
282-
2 1 7 ,3 2 6
2 0 4 ,4 2 2
1 3 ,4 0 4 -
1 1 8 ,3 0 6
9 5 ,9 7 0
9 8 ,7 3 6
2 2 , j 36+
1 9 ,5 7 0 +
2 0 4 ,4 2 2
1 0 5 ,9 3 0
98 , 492+
1+
2 7 .4 0 6
2 7 .4 0 6
-0 -
8 3 ,3 3 3
3 3 ,3 8 8
555+
5 2 ,6 7 1
4 3 ,3 5 1
4 4 ,7 9 5
9 ,3 2 0 +
7 ,8 7 6 +
5 0 ,6 7 1
5 1 ,3 2 8
657+
3 5 ,4 8 4
2 9 ,7 9 7
5 ,6 8 7 -
1 7 ,3 0 6
1 7 ,1 8 7
119-
1 0 4 ,0 6 1
9 8 ,9 1 2
5 ,1 4 9 -
4 9 ,3 7 0
5 0 ,0 0 4
4 9 ,9 9 5
634625-
C h ic a g o
1 6 9 ,3 8 5
6 0 ,6 4 1
8 ,7 4 4 -
9 6 ,3 1 7
9 0 ,0 4 4
6 ,2 7 3 -
1 0 0 ,8 6 4
1 0 0 ,4 8 3
j8 l-
2 6 8 ,6 5 1
2 5 4 ,2 5 3
1 4 ,3 9 8 -
1 4 6 ,6 2 1
1 2 6 ,2 4 1
1 2 7 ,6 9 3
2 0 ,3 8 0 +
1 8 ,9 2 8 +
S t . L o u is
• 2 4 ,5 8 7
2 5 ,4 7 1
884+
2 6 ,3 8 7
2 4 ,3 0 4
2 ,0 8 3 -
3 1 ,2 1 1
3 1 ,0 8 4
127-
8 2 ,8 1 5
81 ,489
1 ,3 2 6 -
4 8 ,1 5 4
4 7 ,1 3 2
4 6 ,6 1 1
972+
1 ,5 4 3 +
M inn.
K a n .C it y
1 6 ,1 4 5
8 ,1 6 9
1 3 5 ,0 1 2
3 2 ,0 9 6
2 ,0 2 4 +
2 2 ,1 2 7
1 7 ,2 4 4
4 ,3 8 3 -
2 7 ,9 3 3
2 7 ,9 8 4
2 ,9 1 6 -
3 6 ,0 7 7
3 4 ,3 7 6
1 ,7 0 1 -
1 9 ,5 1 5
1 8 ,9 5 9
556-
1+
5 6 ,9 0 9
5 4 ,0 7 6
2 ,8 3 3 -
3 8 ,3 2 6
3 4 ,2 5 1
3 4 ,5 9 1
4 ,0 7 5 +
3 ,7 3 5 +
9 0 ,6 0 4
8 5 ,4 3 1
5 ,1 7 3 -
5 8 ,2 9 5
3 9 ,6 3 4
4 1 ,4 0 5
1 8 ,6 6 1 +
1 6 ,8 9 0 +
P «H
T a ta ls
m
♦ 2 4 ,3 3 5
2 1 ,5 8 2
2 ,7 5 3 -
1 8 ,4 1 0
1 7 ,5 2 1
889-
1 7 ,1 3 0
1 9 ,6 3 0
2 ,5 0 0 +
5 9 ,8 7 5
5 3 ,7 3 3
1 ,1 4 2 -
4 5 ,6 9 4
4 5 ,1 3 6
4 5 ,0 6 6
508+
628+
I 8 8 ,2 4 9
8 5 ,1 1 7
3 ,1 3 2 -
6 7 ,6 4 1
5M 55
9 ,6 8 6 -
5 9 6 ,7 5 2
5 3 4 ,0 1 7
6 2 ,7 3 5 -
5 4 ,6 9 1
7 2 7 ,0 5 9
233-
2 1 2 ,7 9 4
1 9 9 ,6 7 3
13 , 121-
1 0 1 ,6 3 1
6 9 ,2 7 1
7 2 ,5 2 2
3 2 ,3 6 0 +
2 9 ,1 0 9 +
2 5 4 ,2 5 3
1 2 0 ,4 8 7
8 1 ,4 8 9
3 7 ,3 0 4
5 4 ,0 7 6
3 5 ,1 7 3
8 5 ,4 3 1
5 1 ,3 8 6
5 8 ,7 4 3
4 4 ,2 9 7
1 9 9 ,6 7 3
7 4 ,8 4 3
3 4 ,2 1 5 +
53 , 329 +
1 j 3 , 766+
44 ,1 8 5 +
1 8 ,9 0 3 +
3 4 ,0 4 5 +
1 4 ,4 3 6 +
1 2 4 ,8 3 0 +
8 3 ,4 3 2 1 3 4 ,2 3 0 +
1 1 3 ,4 8 8 +
9 7 0 ,7 6 6 +
2 1 ,7 2 3 -
7 2 7 ,4 6 3
9 8 ,9 1 2
4 5 ,5 8 3
2 1 ,7 2 3 *
6 2 ,7 3 5 404-
4 8 3 ,7 6 4
6 6 2 ,0 4 1
5 4 ,9 2 4
8.3,868
4 9 ,6 7 3
SUMMARY FOR SYSJB*
B i l l e D is c o u n te d f o r week
B i l l s P u r ch a se d f o r m e k
G overnm ent S e c u r i t i e s f o r week
T o t a l E a rn in g A s s e t s f o r week
C om parison o f W eekly A vera g e o f E a rn in g A s s e t s Jan . 2 t o N ov. 1 8 , 1931 w ith sane p e r i o d 1930
C om p a rison o f M eekly A vera g e o f E a rn in g A s s e t s Jan . 2 t o N ov. 1 8 , 19^1 w it h e n t i r e y e a r 1930
C om p arison o f E a rn in g A s s e t s N ov. 1 8 , 1931 w it h Nov. 1 9 , 1930
#
>
I
o
i- i
404-
2 ,0 3 9 ,5 7 8
1 ,9 5 6 ,1 4 6
8 3 ,4 3 2 -
1 ,1 5 4 ,3 5 0
1 ,0 2 0 ,1 2 0
1 ,0 4 0 ,8 6 2
1 3 4 ,2 3 0 +
1 1 3 ,4 8 8 +
1 ,9 5 6 ,1 4 6
9 8 5 ,3 8 0
9 7 0 ,7 6 6 +
SI
5;
or ® i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
fchiblt *B*
1
BStXBXT *0*
Reproduced from the Unclassified
BILLS PURCHASED OUTRIGHT II STSTBI IT IBKI
um m v w *
kdm
XNCKASI or DBCMAM
is Holdings
Vlth Other
Vaaka
_MiW lark
Dealera
April
Hay
June
July
Sept.
O ct.
• 35,498
404
2,351
59*
4
11
18
25
-0 -0 •090
2,994
2,894
20,904
14,499
4
U
18
25
50
♦ 41,778
728
3,069
593
264
-0 -0 -0 -
3,258
2,894
20,904
14,499
-0 -0 "
-0 -
-o -
105
3,218
1,188
-0 -
17,071
50,440
13,293
14,353
~o-»
-0 -0 -0 -
M0«*
16,966
47,£22
12,105
14,353
1
8
15
22
2*
4,040
-0 -0 457
3,339
57,800
45, 476
12,442
17,061
27,723
6,794
16,503
8,207
1,212
5,081
64,594
61,979
20,649
18,273
32,804
-0 -o -0 -0 -0 -
6
13
20
27
123
-0 1,201
252
40,193
5,407
16,355
17,060
4,595
8,423
2,121
1,101
44,788
13,830
18,476
18,161
-0 -0 -0 -0 -
3
10
IT
24
«aQ«*
115
135
-0 -
11,387
22,509
2,771
698
2,910
3,209
720
10,911
14,297
25,718
3,491
11,609
-0 -0 -0 -0 -
1
8
15
22
29
-0 -0 -0 -0 -
2,996
2,714
206
1,013
592
1,227
41
600
-0 -0 -
4,223
2,755
8o6
1,013
592
-0 -
5
12
19
26
9,946
36,333
4,782
12,932
-0 2,445
2,698
42
9,946
38,778
7,480
12,974
-0 -
-0 -
-0 -0 -0 -
-0 -o -0 -
-0 -0 -o -
2
9
16
23
30
-o -0 -0 5,011
3,670
23
7,299
5,905
86,363
217,545
110
102
4,097
23,148
13,395
133
7,401
10,002
109,511
230,940
-0 -0 -0 -0 20
1,582
7
14
21
28
N ov.
m i*
mQm
wQm
-0 -
-0 -
1 ,5 7 3
3 ,4 3 5
989
203
4
11
13
J’^CALS
521
304
-0 -
1
6,280
322
718
lol,494
U2.491
1 3 ,2 7 0
53,351
6 ,9 6 9
3 4 ,0 7 2
1 ,7 4 1
5 ,0 9 0
477
53
6
205
-0 -
# 2 6 ,4 3 4 # 1 ,1 6 9 ,2 4 1
# 2 4 7 ,6 3 2
_
1 4 4 ,7 6 4
1 9 9 ,0 4 2
8 7 ,4 2 3
8 ,7 1 0
66,551
* I n c lu d e s # o 0 0 ,0 0 0
* * I n c lu d e s
8 3 ,0 0 0
8 ,0 9 6
682
53
#1,
GJ
March
362
407
-C**
15*
OO
Feb.
1
«o«
-0 -
-0 -0 -
-0 -0 -o -0 -
-0 -o -
#
248
21
•O«()«•
290
60
•<-0 -0 •0-0 -0 -
-o -
-0 -
-0 -
-c-
-0 -0 -0 -0 -0 -
Atlanta
Chicago
#
♦
22
580
83
75
37
80
357
•O-
-0 -0 •O"
Mi«a.
IHU m
24
126
-o -
-0 -0 -
-0 -
mQm
120
28
50
■0"
2,434
aan Fran.
M A I
awrttn
Am e s U i m
IWI
-0 -
93
1
31
438
280
7f
36
-0 "0 -0 -0 -
16
7
1
40
12
■0*
2,578
9 ,? a
3,081
21,262
17,257 .
11,303( ,5 M 8,352*
1*,984*
15,96414,5144,254*
12,122*
2,094
2,501
1,474
1,421
4,272
1,323
4,340
2,80S
1,775
2,448
1,653
3,204
19,4»7
55,129
14,946
17,607
6,86546,867*
28,64738,681-
5,74250,847*
28,85239,278-
825
4,201
2,054
2,518
2,21J
5, *71
7,5*7
7,052
18
13
25
3,653
2,476
607
2,648
1,523
73,497
65,797
21,708
a , 793
38,369*
77,535*
7,762*
38,9848,729*
19,508*
83,350*
5,107*
40,25020,132*
18,154*
1,962
1,1*4
4,259
2,227
10,425
4,900
4, *51
7,912
4,847
1,499
10
-0 35
-0 -
3,066
279
600
218
48,122
14,477
20,811
18,898
26,734*
36,14219,0014,065-
24,104*
40,74122,1016,506-
8,878
8,549
3,972
4,417
2,414
4*9
1,045
1,000
751
1,248
1,466
14,575
26,584
6,624
13,176
4,529*
4,24718,0081,288*
9,454*
6,93820,403424-
5 ,U 8
5,442
5,909
8,501
1,2*0
1,249
*,015
94*
4,0645,59519,8977,0351,374*
3,04911,55321,3803,375497-
13,27?
5,849
3,514
5,550
3,812
a ,*84
5,904
1,55?
12,192
4,4*5
460
-0 -0 -
50
|
T * lt
141
7
-0 -0 -
I 42,872
2,235
3,232
' 892
$ 84,70764,07140,3l6*»
24,T63-
1 98,38869,2764^ 5 5 5 31,384-
I
4.588
5,128
3,475
7,419
1
1.T24
999
3,74?
4,499
-0 -0 -0 -
-0 "0 "
384
-0 -o -
1,210
874
55
390
403
-0 -
-0 -0 -0 -0 -
-0 -0 -0 -0 -
-0 368
499
267
-0 -
-0 -
-0 -
-0 -0 -0 -
-0 -0 -0 -
278
-0 -0 101
-0 -0 1,747
-0 -
-0 ■0-0 “0 -
-0 -0 -
-0 -0 -o -
-0 -0 -0 -
-0 -0 -0 “
-0 200
-o »
-0 -0 -
-0 -0 46
1,501
-0 -
-o -o -0 -
-0 -
-0 -0 -0 -0 -0 -
-0 -0 -
-0 -0 -
-0 -0 -0 -0 -
-o -O702
"0 “
a^a,
-o->
-0 -
-0 -
"0 “
1,477
9,946
40,25*
8,112
12,974
59*
68,307*
19,840*
26,294*
46269,664*
18,890*
25,890*
8,002
3,447
4,411
2,6l8
2,701
10,444
2,254
1,540
-0 -0 -0 -0 -
-0 ■K)-0 "
-0 -0 -
250
-0 5oo
4,774
2,907
2,116
7,446
10,842
153,042
250,459
16,925*
83*
14,099*
15,699209,587*
17,350*
8019,982*
25,419*
225,338*
3,892
2,294
2,121
2,880
7,662
1,9*8
2,878
2,787
1,114
2,744
-0 -0 350
50
125
2 ,7 6 1
-0 -0 -
2,3 4 9
2 ,0 5 3
595
792
150 ,17 1
2 1 0 ,2 8 3
9 2 ,0 0 8
1 0 8 ,0 1 4 +
3,174
1 1 ,9 0 5
1 1 2 ,8 2 9 *
1 4 9 ,0 5 1 *
3 8 ,6 5 9 *
4 4 ,3 8 6 -
5 ,0 2 3
1 5 0 ,7 8 5 *
4 2 ,3 1 9 *
3 7 ,1 0 0 -
3 ,5 0 5
2 ,8 9 9
1 ,5 9 0
1 ,3 2 0
1 ,3 0 0
2 ,8 9 6
375
75
—
0~
-0 262
256
3
-0 -
1 1 ,0 7 4
2 ,9 8 6
1 .4 1 2
7 7 ,7 9 9 4 3 ,6 1 4 5 9 .6 2 9 -
8 2 ,6 4 7 4 5 ,2 8 1 6 2 .7 3 5 -
1 ,0 8 0
1 ,3 1 1
1 .1 2 6
4 ,0 9 8
1 ,3 4 4
1.548
#3 ,6 0 4
♦ 5 0 ,4 8 4
♦ 1 ,5 7 6 ,1 8 7
# 1 7 8 ,1 7 6 *
♦ 17 0 ,1 7 3 *
♦197,552
♦ 1 6 1 ,0 0 8
-0 443
497
-0 -
-0 -
-0 -0 1,843
43
263
-0 50
80
-0 -0 -0 -0 -
-0 -o~
-0 -o—
-0 -0 -0 -0 -0 -
151
45
290
220
1,419
-0 -0 -0 351
567
1 ,5 0 5
-0 -0 50
33,526
9,660
750
763
781
1,391
907
842
147
453
-0 -0 -
432
353
-0 238
-0 -
952
1 ,1 4 6
300
744
- o -
♦ 1 ,4 1 3
# 4 ,6 46
$ 1,208
4 1 1 ,2 5 4
p u rch a sed by S t. L o u is
p u rch a sed by Kansas C it y
•57,291
-o 450
-0 "
-0 135
-0 -
-o-
#2,597
-o -
3
-o -
15
-0 -
1,691
242
-0 1,557
"0 “
5 ,9 9 7 «
3,012
852
4,071
792
>
§■
o
w!
m H
>»l
c
0
3j
§ 1
«j
-Qo
S;
(
I Declassified Holdings of the National Archives
T
14
21
28
H
O'
-1931
Ju.
Rn
Total
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B •0•V23Sb
Exhibit "Cw (a)
CLASSIFICATION BY MATURITIES OF BILLS PURCHASED
BY FEDERAL HESERVE BANKS IN THEIR RESPECTIVE DISTRICTS
DURING THE PERIOD FROM JANUARY 2 TO NOVEMBER 18, 1931
_________ (EXCLUDING SALES CONTRACTS)___________
(000 Omitted)
1-30 days
Boston
31*60 days
61-90 days
Over 90-days
Total
4,587
§ 11,833
734,572
332,342
341,567
Philadelphia
347
16
1*050
0
1,413
Cleveland
762
2,274
1,610
0
4, 546
Richmond
178
234
796
0
1,208
Atlanta
3,104
3,110
4,688
Chicago
25,902
17,594
13,795
0
57,291
0
0
0
300
New York
St. Louis
$
9,072
300
$
$
942
8,392
352
#
26,434
1,416,872
11,254
Minneapolis
1,246
500
851
0
2,597
Kansas City
6
74
3
0
83
325
265
2,434
580
3,604
San Franciscci 24,404
17,138
6,711
2,231
50,484
|800,218
$378,134
$385,338
$12,497
01,576,187
Dallas
Totals
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E .0•\23St?
Exhibit MDM
AMOUNT OF NET PROFIT REALIZED ON SALES OF UNITED STATES GOVERNMENT SECURITIES IN THE
SYSTEM ACCOUNT DURING THE PERIOD JANUARY 2 TO NOVEMBER 25, 1931, WHICH IS
HELD IN SUSPENSE ACCOUNT BY THE FEDERAL RESERVE BANK OF NEW YORK
AND EACH BANK’S PRO RATA SHARE BASED ON AVERAGE DA.ILY HOLDINGS!
ALSO MOUNT OF NET LOSS AS REPRESENTED BY THE DIFFERENCE BETWEEN THE BOOK VALUES AND
THE MARKET BID PRICES ON NOVEMBER 25, 1931, OF THE GOVERNMENT SECURITIES HELD
IN THE SYSTEM ACCOUNT, AND EACH BANK’S PRO RATA SHARE
_________________________ BASED ON AVERAGE DAILY HOLDINGS______________ __
Net Profit
Held in
Suspense
Account
Boston
|
163,683*02
Loss as
Represented by the
Difference Between
Book Values and
Market Bid Prices
$
581,073.51
New York
281,124.65
997,990.42
Philadelphia
136,698.36
485,278.18
Cleveland
183,218.17
650,423.14
Ri chmond
79,511.14
282,263.94
Atlanta
46,992*03
166,821.37
Chicago
224,992.62
798,722.16
St. Louis
70,961.82
251,913.92
Minneapolis
63,064.69
223,879.19
Kansas City
106,312.75
377,409.46
57,962.48
205,766.38
123,679.03
439,059.65
11,538,200.76
|5,460,601.32
Dallas
San Francisco
Totals
yujPTT
"r"
AMOUNT OF EACH FTDFRAL^EBiHVE BANK*S EARNINGS, FXPENSJc t Tnd
DIVIDENDS AND ESTIMATED CHARGE-OFFS FOP YEAR 1951,FIGURES
IOF. IIF ST TEN YOUTHS ACTUAL. LAST TI7Q MONTHS ESTIVATED
(OOO Omitted)
YEAR 1951
BOSTON
Actual
for 10 months
2
"
Estimated n
Total
NEW YORK
Actual
for 10 months
2
"
Estimated tt
Total
PHILADELPHIA
for 10 months
Actual
2
"
Estimated n
Total
CLFVELAND
for 10 months
Actual
2
"
Estimated n
Total
RICHMOND
Actual
for 10 months
Estimated n
2
«
Total
ATLANTA
for 10 months
Actual
Estimated n
2
"
Total
CHICAGO
Actual
for 10 months
Estimated 'it
2
"
Total
ST. LOUIS
Actual
for 10 months
Estimated n
2
»
Total
MINNEAPOLIS
Actual
for 10 months
2
"
Estimated n
Total
KANSAS CITY
for 10 months
Actual
2
"
Estimated
Total
DALLAS
for 10 months
Actual
Estimated n
2
"
Total
SAN FRANCISCO
for 10 months
Actual
Estimated n
2
"
Total
Actual
Totals
Fstimated
"[
SYSTEM[ TOTALS
Expenses
Dividends &
Deductions from
and /ddltions
to Net
Earnings
Gross
Earnings
Fstimated
Year-end
Cherge-offs
$1,242
491
$1,7?5
$2,209
441
$2,650
152
5,172
1.920
$7,092
7,970
1.754
$9,724
478
1,789
649
£2,458
2,419
652
$5,051
59
2,929
618
£5,547
275
994
595
$1,589
1,559
515
$1,854
155
969
596
*1,565
1,519
265
$1,682
96
2,965
819
$?,784
5,928
751
$4,679
450
881
508
$1,199
1,527
274
*1,601.
590
759
206
945
864
182
$1,046
92
1,196
581
*1,577
1,606
515
$1,921
168
944
507
*1,251
947
278
$1,225
47
1,827
1.050
. $2,957
2,552
510
$5,062
191
$20,841
7.797
$29,609
6.555
$28,658
$55,942
2,125
895
$5,018
$
.
Nrt
Fcrnlnps
T
r~
TT
$2,555
*,
$,
ii
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E . 0•
(November 27, 1931
X.
J J
PRELIMINARY MEMORANDUM FOR THE OPEN MARKET
POLICY CONFERENCE, NOVEMBER 30, 1931.
In the past three months the United States has gone through an extra
ordinary ..financial
criaia^in.* which were combined the largest gold export movement
..... .
in the history of the country and a heavv domestic withdrawal of currency contin
uing a movement of almost a year’s duration.
These foreign and domestic drains
upon bank reserves were met in the classic way by increases in discount rates com
bined with a policy-of free lending.
This is the method of meeting such an
emergency described by Walter Bagehot in his Lombard Street in the following terms
"Whatever persons - one bank or many banks - in any
country hold the banking reserve of that country, ought at the
•very beginning of an unfavorable foreign exchange at once to
raise the rate of interest, so as to prevent their reserve
from being diminished farther, and so as to replenish it by
imports of bullion,
"A domestic drain is very different.
Such a drain
arises from a disturbance of credit within the country, and
the difficulty of dealing with it is the greater, because it
is often caused, or at least often enhanced, by a foreign drain.
Times without number the public have been alarmed mainly because
they saw that the banking reserve was already low, and that it
was daily getting lower. The two maladies - an external drain
and an internal - often attack the money market at once. What
then ought to be done?
"In. opposition to what might be at first sight sup
posed, the best way for the bank or banks who have the custody
of the bank reserve to deal with a drain arising from internal
discredit, is to lend freely.
The first instinct of everyone
is the contrary. There being a large demand on a fund which you
want to preserve, the most obvious way to preserve it is to
hoard it - to get in as much as you can, and to let nothing go
out which you can help.
But every banker knows that this is not
the way to diminish discredit. This discredit means, fan opinion
that you have not got any money,* and to dissipate that opinion,
you must, if possible, show that you have money; you must employ
it for the public benefit in order that the public may know that
you have it. The time for economy and for accumulation is before.
A good banker will have accumulated in ordinary times the reserve
he is to make use of in extraordinary times.*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0» V23Sfc>
2
In recent weeks these methods of dealing with the acute situation proved
effective:
the gold drain cane to an end and was in fact reversed early in
November and domestic currency withdrawals slackened.
The drain itself and the
remedies which it became necessary to apply,wrought, however, a profound change in
the banking and credit situation.
The results of these events on the country's
financial position may be summarized as follows:
1.
Gold. The countryf s gold stock is reduced by $600,000,000,
and nor/ stands at about $4,400,000,000.
serious:
This loss of gold is not
'
it had lonp; been expected that at some time large gold
exports would occur*
There is plenty of gold left, since we still
have about $1,500,000,000 in gold in excess of minimum requirements.
Moreover, foreign short term funds in this market have now been re
duced to a point where they are now covered by our excess gold
quite apart fron our credit balances abroad.
2*
Federal Reserve Credit.* As a result of gold exports and
currency withdrawals the total amount of Federal reserve credit in
use has been expanded from about $>1,000,000,000 to about
$2,000,000*000.
This change in itself is not disturbing.
It was
normal that when gold left the country the Reserve System should be
called upon to replace in the market the funds withdrawn.
Moreover,
it seems reasonable to anticipate a return of the volume of Federal
reserve credit to figures comparable with the averages of recent
previous years.
For money in circulation is now $1,000,000,000
larger than appears to be required by the active business of the
country, and when habits of hoarding are broken
a considerable
part of the extra money outstanding may be expected to return to
the Reserve banks and in the process repay Federal reserve credit.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 0» V23Sfc>
3
Meanwhile the elements requiring scrutiny are the
large volume of discounts and the large holdings of bankers
bills.
Member banks are now borrowing about ^675,000,000.
Such a volume of discounts has always in the past been ac
companied by relatively film money conditions and sane pres
sure upon credit, as illustrated in the accompanying chart*
Member banks which are in debt are constantly seeking some
means by which they may get out of debt and are reluctant to
make loans or investments liberally.
The existence of this
volume of discounts is today more than usually an important
element in the credit situation.
This is especially true
because of the nature of distribution of discounts:
the New
York City banks are carrying less than their usual share of
the load, and banks in the interior are carrying more than
their usual share*
The credit pressure in certain interior
districts is, therefore, severe.
In addition to relatively large discounts the Reserve
banks now hold about half of the total volume of bills outstand
ing.'
It was fortunate that the crisis found the member banks
supplied with large holdings of bills by the use of which they
were able to secure Federal reserve credit, and thus to that
extent avoid the necessity of borrowing with its accompanying
pressure.
Under these circumstances the proportion of bills in
the Reserve System does not appear excessive, but on the contrary
helpful to the general situations.
3* Money Rates. An increase of 2% in the discount rate of
the New York reserve bank and sharp increases in member bank dis
counts was accompanied by substantial increases in the general
-Lt-Li
Pepo. u
7'7, -. c; -
PER CENT
-20
4
-3 0
3
1919
MILLIONS OF DOLLARS
1920 1921
1922 1923 1924 1925 1926 1927
1928 1929
1930
1931
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E ■0» \23Sfc>
4
level of money rates as indicated below.
MONEY RATES AT NEW YORK
Aug. 31,
1931
Stock Exchange call loans
Stock Exchange 90 day loans
Prime commercial paper
Bills - 90 day unindorsed
Customers1 rates on commercial loans
Treasury certificates and notes
Maturing December 15 (yield)
Maturing
March 15 (yield)
Federal Reserve Bank of Hew York re
discount rate
Federal Reserve Bank of New York
buying rate for 90 day indorsed bills
Sept .30 , Oct. 30,
1931
1931
1 1/2
1 1/2
*1 1/4-1 1/2 2 1/2
2
2
7/8
1 1/4
x3.44
x3.33
Nov. 27,
1931
2 1/2
2 1/2
*3 1/2-4
*3-3 1/2
3 3/4-4 1/4 3 3/4-4
3 1/4
3
x3.67
x4.50
.34
.48
►85
1.17
1.48
2.32
1.10
1.87
1 1/S
1 1/2
3 1/2
3 1/2
1
1 1/4
3 1/8
3 1/8
* Nominal
x Average rate of leading banks at middle of month.
4.
Public Psychology. The upsetting of the gold standard
in London, together with the threat to the dollar was a powerful
disturbing factor to public pschology both in this country and
abroad, the results of which are impossible to measure.
One re
sult was certainly to make bankers and others more timid and re
luctant in contemplating new uses of funds or new enterprises, or
even the maintenance in some cases of existing credit lines.
5.
The Bond Market. Following the sharp increase in money
rates, the pressure upon the banks, and the psychological in
fluence of all these bond price averages dropped 6 to 1$ points
in a few weeks.
The simultaneous movement of interest rates and
bond yields ars shown in the accompanying chart.
This movement in bond prices is of particular import
ance because of the weakened position 6f many banks.
A few
points difference in bond prices may make the difference between
the solvency or insolvency of no inconsiderable number of banking
institutions.
m»m
m
a------------------------------------------------ — .Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •t)•
Federal Reserve Bank
of New York
Reports Department
SLt> f 193 t•
RATE
YIELD
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E *0•\23Sfe?
5
Broadly speaking the effect of these developments was to place additional
credit pressure upon a situation already uncertain, to make banks more reluctant
to lend and invest at a time when they were already reluctant, and in particular
to worsen the position of many banks.
At the end of October and early November, following the establishment of
the National Credit Corporation, it looked for a time as though a turn might have
been reached in the business and financial situation.
But that hope now appears
to bo dissipated and there is no convincing evidence of recover.
To a considerable extent the basic forces operating upon the present
financial situation are political and industrial, and thus outside the immediate
influence of the Federal Reserve System.
But with respect to the volume of redis
counts and their pressure upon, the situation, the influence of money rates, and the
general attitude of the financial community, the Reserve System exercises an in
fluence which is or may be important.
There are now two major problems for the Reserve System - the long time
policy and the policy to deal with events of the year-end.
The first of these
questions is so largely affected by the large movement of funds at the year-end,
and again by the normal tendency for currency to flow back in January, that it
seems difficult to deal with broader questions of policy before tho first of the
year.
In the meantime the year-end offers problems deserving of full attention.
YEAR END PR0BL5M
Currency demand and large bill maturities may require something over
|500,000,000 of new Federal reserve credit in some form by December 23.
The fol
lowing rough estimates may be made although the many complex factors in the present
situation necessarily make estimates most uncertain.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E *0•\23St>
6
(In Millions of Dollars)
To Ileet
Currency
Dsmand
To Meet
Bill Maturities
Total
80
80
120
220
135
210
290
350
195
290
410
570
Dscember 2
*
9
"
16
"
23
While the maximum figures are likely to bs for the few days before Christmas, the
year-end will also offer a complicated and perhaps difficult situation because of
the sensitiveness of many banks and their customers, to any borrowing position which
year-end reports may show, at a time when the volume of discounts is so large.
In view of the considerable amounts of-currency now outstanding in excess
of estimated normal demands the Christmas increase in currency may be smaller than
usual*
It seems unsafe, however, to count upon this since any increase in bank
failures would further increase currency requirements.
The large bill maturities
reflect heavy purchases of bills by the Reserve system in September and early
October*
It is improbable that the full amount of these maturities can be re
placed from offerings of bills to the Reserve banks in coming weeks.
The member
banks now hold somewhat limited amounts of bills and at present rates there is
going forward a considerable distribution of bills "-outside the Reserve banks.
In
the past week adjustments of rates have been made which should make possible the
maintenance of present market rates throughout the balance of the year and give
reasonable encouragement to the offering of bills to the Reserve banks especially
under repurchase agreement,
Daring the past week the dealers have raised their
rates to 3 1/8$ bid, 3$ offered.
The New York Reserve bank some days ago reduced
its 1 to 45 day buying rate to 3
and reduced its carrying rate to 3f0 this past
week so that the market rates and our own buying rate are in a reasonable relation
ship,,
Even with these adjustments it seems clear that there will be a considerable
gap to be filled in some other way than by bills.
The two methods deserving of
thorough consideration appear to be, first* a-discussion with the banks in important
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B •0•V23Sfc>
7
centers as to their willingness to show borrowing on their year-end statements,
and second,.provision for year-end purchases of government securities similar to
those made last year.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
* o r C IR C U LA TIO N :.................
if.i.i.^er -i
Fe d e r a l R e s e r v e B a n k
Foie
tJ,r. H a rris o n . .
of
Ne w Yo r k
for. Morrill --Mr. McCieiisnd^
Ux, W yatt
i* T ~
f/.r.................................
UTbm
* i* > r * c
November 17 f!^ i aie'm!!La* B.
and return to GQVi-nPtOfli
Dear Governor Meyer:
Ho suggestions have been received for changes in
the tentative minutes of, b|j.)e.Uctaher 26 Meeting of the
Executive Committee of the Open Market Policy Conference
mailed you with our letter of October £7*
These minutes
may, therefore, be considered as final
Very truly yours,
W. Randolph Burgess
Deputy Governor
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
rt^ptoduced from the Unclassified I Declassified Holdings of the National Archives
w. Randolph Burt?— ,
Qmr* T*d«r*l Rt**rff M n k #
m m York, K. T.
Stfct Jir. Burg***:
till* *111
a?t$*i#t of yowr
Ootohor ift addf»«»#d
(krroraor Mtwr, with which ym
"
(oj 2-bi 3 I
3' 3 6
•ool*«a4 * «opy Of tfc» mUtttM .of th* ntttlng #f tb«
M*#<ltlYW OCNRl *«*« #f tfc« Oj** kiftTfc**
h«U *t tho M
i l
Mak of
mm
Tork on *it*bor
M , fffil eoplv* of maoiVLitfl* oatolttM At that
Vwef tplly JM&Wtl*
($lgmJ) Chester
K. *.
A*« 1•t *nt S**Hf|«ary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o m NO . 181
Office Correspoi*Je^ce
To
A H Btolbore Of thi Board_______ __
FEDERAL RESERVE
BOARD
fI
uat«_ wtober 88f 1951.
Subject
•t•
There are attached hereto, for your information, the copies
which Governor Meyer presented at the meeting this morning of the
minntea of the meeting of the Executive Committee of the Open Miarlcet
Polic^rConference held in Hew Tork City on October 26, and of
memoranda presented at that meeting.
t
/ & ~~JL 4 " ?/ hJL-JL.-4i 3 ^ 3 * * V-. •
4
£
Governor Meyer lr
Mr. H a m l i n V X ^ r —
Mr. SHller
Mr. James
Sr. Magee r
Mr. Foie
Please circulate promptly and return to the Secretary* a office*
2— 8495
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •D» \23Sfe>
Fe d e r a l R e s e r v e B a n k
of
3
^>3 *
Ne w Y o r k
CuMFlDHinAL
October 27, 1931,
Dear Governor Meyer:
*
^ ^
J J U 4 3 3 l r c '2Attached herewith are the minutes jof the meeting of
'°hJ*
the executive committee of the Open Market Policy Conference
held yesterday at this bank.
I
am also enclosing copies of the memorandum on credit
conditions and the report of operations submitted to the meeting.
Veiy truly yours
W. Randolph Burgess
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. 0.
FffiB.H
AT BOARD yam m ot
o o t i u rn
"I11/ 3!
t .Z U y
/L&L- ^
1
fyf/n
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0 •V23S£?
EXHIBIT "E"
MOUNT OF EAc J ^ D bA
RESERVE BANK'S EARNING Sj^kp^fcs AND
DIVIDENDS AND ESTIMATED CHARGE-OFFS FOR YEAR 1951, FIGURES
FOR FIRST NINE MONTHS ACTUAL, LAST THREE MONTHS ESTIMATED
(OOO Omitted)
YEAR 1931
BOSTON
Actual
for 9 months
it
Estimated " 3
Total
NEW YORK
Actual
for 9 months
tt
Estimated n 5
Total
PHILADELPHIA
Actual
for 9 months
n
Estimated ,f 5
Total
CLEVELAND
Actual
for 9 months
ii
Estimated " 3
Total
RICHMOND
Actual
for 9 months
it
Estimated ” njsr
Total
ATLANTA
Actual
for 9 months
it
Estimated n 3
Total
CHICAGO
Actual
for 9 months
tt
Estimated 11 3
Total
ST. LOUIS
Actual
for 9 months
it
Estimated " 3
Total
MINNEAPOLIS
Actual
for 9 months
tt
Estimated " 3
Total
KANSAS CITY
Actual
for 9 months
tt
Fstimated n 3
Total
DALLAS
Actual
for 9 months
n
Estimated *» 3
Total
SAN FRANCISCO
Actual
for 9 months
tt
Estimated « 3
Total
Actual
Totals
Estimated "
SYSTEM TOTALS
Expenses
Dividends &
Deductions from
and .Additions
Gross
to Net
Earnings
Earnine:s
Estimated
Year-end
Charge-offs
$ 1,041
404
$ 1,445
$ 1,993
663
$ 2,656
132
4,214
1,542
$5,756
7,085
2?656
$9,741
478
1,427
569
$1,996
2,163
886
$3,049
59
1,760
592.
$2,352
2,616
904
$3,520
2.75
841
394
$1,255
1,400
465
$1,865
155
787
386
$1,173
1,192
396
$1,588
96
2,496
915
$3,411
3,552
1,188
$4,740
450
753
291
$1,044
1,190
408
$1,598
190
646
210
856
748
272
$1,020
92
1,042
329
$1,371
1,450
475
$1,925
168
814
277
$1,091
812
371
$1,183
47
1,426
719
$2,145
2,273
758
$3,031
191
$17,247
6,628
$26,474
9,442
$23,975
$35,916
$
Net
Earnings
$
$
2, <3VI
l
i
•57A
.
$|
$
■
$
,ti
43 7
*
$
$
2
$
0
$2,333
.
-
$
"4 p
, 7^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority
E •0• V23Sfc>
CONFIDENTIAL
REPORT OF OPEN 1'IARKET OPERATIONS TO MEETING OF THE
EXECtTEVE COMMITTEE OF THE OPEN MARIC E T POLICY CONFERENCE
HELD IN THE FEDERAL R E S E R V E B A N K OF NEl -Y O R K -ON
___________ OCTOBER 26, 1951__________________
The total of the government securities held in the System Account is the
same as at ttje
on
^
August 11, 1951, namely........................................ $524,468,000.
S.
-. *\,v* *•
Changes in maturities consisted partly of the replacement of maturing Treasury bills
and certificates of indebtedness and partly of exchanges which included the taking
over of about £24,000,000 of Fourth Liberty Loan bonds through the Federal Reserve
Bank of Philadelphia from a Philadelphia member bank, against which other issues
v/ere sold.
The follovdn? is a statement of the holdings in the Account on August 11
and on October 21:
Due
r
.
S. Treasury B i l l s
tt
tr
tt
h
tt
tt
tt
Tt
tt
tt
»t
ft
t?
tt
tt
tt
tt
tt
t?
ft
tt
tt
tt
tt
tt
tt
tt
tt
tt
tt
tt
ft
tt
tt
tt
St
tt
tt
tt
1
1
5
f>
1
4
4
5
1 /2 # C ert, of In d .
7/ Q°/d
1/2?; Treasury Notes called
C ert, of In d.
tt
t? tt
1 /8 #
1/4 # 4th L/L Bds, 1935-1958
"
1952-1947
l/4/0 1st
1 /2 # 1st "
"
1932-1947
TT
Tt
tt
Aug.
17,
31,
S e p t . 50,
O ct. 15,
Nov.
2,
9,
16,
25,
50,
D ec
50,
15,
Jan.
S e p t. 15,
D ec. 15,
15,
15,
I:i&r
Sept. 15,
tt
ft
tt
tt
tt
.
tt
.
Holdings Aug. II Holdings Oct. 21
1951
1951
1951
1951
19 51 1951
1931
1951
1951
1951
1952
1951
1951
1951
1932
1932
”
Totals
I 1 3 ,700 ,0 00
25,425 ,0 00
5 ,0 0 0 ,0 0 0
24,700,000
20,750,000
7 ,225,00 0
-0 -0 -0 -0 -c 4 5 ,407 ,0 00
120,076,500
9 ,0 2 7 ,2 5 0
118,481,500
-0 68,625 ,7 50
22,950,000
47 ,1 0 0 ,0 0 0
£
-0 -0 -0 -0 9 ,6 7 0 ,0 0 0
7 ,2 2 5 ,0 0 0
8 ,1 1 1 ,0 0 0
19,20 7,000
15 ,4 2 5 ,0 0 0
12 ,6 5 2 ,0 0 0
2 ,0 0 0 ,0 0 0
-0 6 8 ,574 ,5 00
1 ,8 0 7 ,2 5 0
115,481,500
55 ,5 0 0 ,0 0 0
115,059,750
15 ,7 5 0 ,0 0 0
80 ,0 2 5 ,0 0 0
£524,468,000
£524,468,000
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0■\23S(?
S
CHANGES IN PARTICIPATIONS IF GOVERNMENT;SECURITIES
HELD IN SYSTEM SPECIAL INVESTMENT ACCOUNT
At the time of the last meeting the participating Federal .reserve banks
'except Richmond and Minneapolis, were holding temporarily $2,500,000 of the Federal
Reserve Bonk of Dallas’ participation in government securities in the System Account
of T/hich it had been relieved on July 15.
Since August 11 several of the partici
pating reserve banks as shown below have been relieved temporarily at their request
of part of their participations in government securities, owing to their reserve and
free gold position.
The reserve banks that ?:ere relieved temporarily of part of
their participations and the dates and the amounts taken over ?;ere as follows:
Dallas
"
"
Kansas City
"
"
Richmond
Minneapolis
August
October
"
September
October
"
w
26
$ 5,000,000
9
19
5,000,000
3,000,000
10,000,000
10,000,000
5,000,000
5,000,000
22
10
15
16
The Federal reserve banks which participated in the securities taken over
temporarily from other banks and the amount of such securities that each of these
banks are temporarily holding for ether banks at present are as follov/s:
Boston
New York
Philadelphia
Cleveland
Atlanta
•Chicago
St. Louis
* Kansas City
San Francisco
$ 4,251,000
23,092,500
3,679,000
1,218,500
127,000
4,913,500
862,000
155,500
3,201,000
£41,500,000
* This represents participation by the Kansas City bank in ^2,500,000 government
securities given off by the Federal Reserve Bank of Balias or, July 15.
A request by the Federal Reserve Bank of Kansas City that a further ^10,000,000 of
government securities be taken over from them, raised the question of the principles
which should govern this operation and for the time being it was suggested that the
Kansas City bank improve its position by the sale of some of its bills,*
Accordingly
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority
E ■0• l235fe>
5
on October 22, $5,000,000 of their bills were taken over and allotted to other
participating banks.
CHANGES IN PARTICIPATIONS IN SYSTEM PURCHASES
_________ OE BANKERS ACCEPTANCES___________
Up to the past week all of the Federal reserve banks have been partici
pating in the System’s bill purchases, with the exception of the Federal Reserve
Bnnk of Philadelphia, which bank has limited its participation to bills discounted
for foreign banks.
However, during the past week several of the reserve banks dis
continued participating in the System’s bill purchases, o?/ing to their reserve
position.
The banks which discontinued their participation and the dates their
non-participation became effective, are as follows:
St. Louis
Minneapolis
Richmond
Kansas City
Dallas
October
"
"
”
"
15
16
16
19
IS
In addition, the Federal Reserve Bank of Richmond vas relieved of
$10,000,000 of its holdings in bills on October 19,
These bills were sold to the
other participating Federal reserve banks except Atlanta, the latter being unable
to participate.
ALLOTMENT RATIOS
In accordance with the plan that has been in effect during the p&st few
years, System purchases during the first half of the current calendar year have been
made according to percentages based on the ratio that each bankfs expenses, dividends
and charge-offs for the previous year bore to the total of such items for the System
with adjustments in the percentages beinig made each month based on the actual and
estimated figures available at the end of each month during the last half of the year.
The following statement shows the percentage ratios that were in effect during the
first six months of the current year and the subsequent adjustments that heve been
made in these percentages based on the figures received at the end of each month
since June 30, 1931.
(In allotting
System purchases, however, these percentages
were adjusted to provide for the distribution of the non-participating banks’ share.)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 0•V235&?
4
‘Ratios
effective
first (6 ii^os.
Boston
7
New York
25
Philadelphia 7
Cleveland
9
Richmond
5
Atlanta
5
Chicago
13
St. Louis
5
Minneapolis
3
Kansas City
5
Dallas
4
San Francisco 9
Totals
100
1/4$
l/4fo
l/2%
3/4fo
1/4$
%
fo
l/4%
l/4$
l/2
f0
fo
fo
fo
Ratios
effective
July 15
Ratios
effective
Aug. 15
7 1/4fo
27
fo
8
%
7 1/4$
26 3/4fo
8 1/4fo
10
10
%
5 1/4$
4 1 /2 %
13 1 /2 %
4 1 /2 %
3
fo
5 1 /2 %
3 1/4fo
8 1/4fo
100
fo
5
4
13
4
3
5
3
8
100
Ratios
effective
Sept.15
7
26
8
9
5
4
13
4
3
5
3
8
fo
1/4fo
1 /2 %
1/2%
1/2fo
fo
1/2fo
1/4fo
1/4fo
fo
1/4fo
3/4$
fo
3/4fo
1/4fo
1/2fo
l/2/o
3/4fo
1/4%
1/2 f o
1/4fo
1/4fo
100
fo
Attached are statements showing:
Exhibit "A* ** Outright holdings of government securities byindividual Federal reserve banks and their
participation in government security holdings
in the System Special Investment Account as
of Oct. 21, 1931, and ratio of each bank's
total holdings to the total for the System.
Exhibit "B" - Earning asset holdings of all Federal reserve
banks Oct. 21, 1931, as compared with previous
week and Oct. 22, 1930; also weekly average of
earning assets from Jan. 2 to Oct. 21, 1931,
as compared with corresponding period 1930 and
entire year 1930.
Exhibit ”CM - Bills purchased outright by System by weeks
from Jan. 2 to Oct. 21, 1931,
Exhibit ”D?,< « Amount of net profit realized on sales of
United States Government securities in System
Account during period Jan. 2 to Oct. 21, 1931
and he3.d in Suspense Account by the Federal
Beserve Bank of New York and each bank's pro
rata share, also amount of loss as represented
by the difference between the book values and
market bid prices on Oct. 21 of the government
securities in the System Account and each bank's
pro rata share*
Exhibit wEn - Amount of each Federal reserve bank's earnings,
expenses and dividends for the year 1931, the
first nine months1 figures actual and last throe
months estimated (including estimated charge-offs).
Ratios
effective
Oct. 15
7 1/4fo
26 3/4f 0
8
fo
10
5
4
13
4
3
5
3
8
100
fo
1/4fo
1/4fo
1/2fo
3/4$
fo
1/2f 0
1/4fo
1 / 2 fo
fo
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E • 0*V23S&?
Exhibit "A"
OUTRIGHT HOLDINGS OF GOVERNMENT SECURITIES
BY INDIVIDUAL FEDERAL RESERVE BANKS AND THEIR
PARTICIPATION IN GOVERNMENT SECURITY HOLDINGS
IN THE SYSTEM SPECIAL INVESTMENT ACOOUNT AS
OF CLOSE OF BUSINESS OCTOBER 21. i1931
,
.^.1..niniii
(000 Omitted)
Outright
Holdings
participation in
System Account
To tal
Ratio of e
bank’s tot
holdings t
System tot
7 3/4$
$ 56,502
$ 57,206
134,797
115,358
240,155
33
Philadelphia
10,007
47,934
57,941
8
$
Cleveland
10 ,000
63,021
73,021
10
p
Richmond
0
27,406
27,406
3 3/450
3
New York
$
*
—1
704
Boston
Atlanta
3,594
19,773
22|367
Chicago
21,598
78,266
99,864
13 3/4'-'jo
St. Louis
4,000
27,210
31,210
4 l/4£
Minneapolis
7,305
17,273
24,658
3 1/35S
Kansas City
84
19,031
19,115
2 3/4^
Dallas
9,999
7,132
17,131
2 1/4;;
San Francisco
9,625
45,568
55,187
7 3/4$
£200,793
$524,468
§725,261
Totals
100
EXHIBIT "B"
8TAZEI3KT SHOV/ING EARNING ASSi.* HOLL
3 OF ALL FEDERAL RESERVE BANKS OCTOBER 21
* 3 1 COMPARED WITH PREVIOUS WEEK AND OCTOBER 22 , 19 30; ALSO WEEKLY AVERAGE
____________________ o f earning a s s e t s January 2 . 1931 to October 21. 1931. in c lu siv e .- compared with corresponding period 1930 and e n t ir e year 1930
j000 Quitted)
B i l l s Discounted
N
H
- Oct. 14
M
21
- Oct.
*i
14
21
Net Change
P h ila .
♦ l 6 ,l b 0
1 9 ,9 1 8
♦ 20 5,94 5
1 5 9 ,0 3 2
♦ 9 1 ,2 9 2
9 8 ,2 * 9
71,969
7 8 ,9 2 0
6 ,9 5 1 +
G ovorm ent S e c u r itie s
~ O ct. 14
*
M
M
21
N et Change
T o te l la m in g A s s e ts
H
N
N
Now York
3 ,7 58+
N et Change
B i l l s Purchased
M
M
Boston
5 6 ,2 8 7
5 7 ,2 0 5
918+
- Oct. 14
M
21
1 4 5 ,3 7 6
1 5 8,03 8
1 2 ,6 6 2 +
Net Change
4 6 ,9 1 3 -
20 0 ,7 4 5
214,149
1 3 ,4 0 4 +
2 4 5,25 9
2 4 1 ,6 9 8
3 ,5 6 1 -
65 7 ,8 8 9
6 2 9 ,5 6 4
2 8 ,3 2 5 -
6 ,9 5 7 +
1 3 ,6 2 4
1 4 ,6 6 7
1,0 4 3 +
5 7 ,1 8 7
5 7 ,9 4 2
755+
1 6 8 ,8 6 3
1 7 7 ,6 1 8
8,7 55+
Cleveland
# 7 6,86 5
9 2 ,# 6 5
1 5 ,6 0 0 +
5 7 ,4 5 4
5 7 ,5 6 6
112+
7 2 ,085
73,021
936+
2 0 6 ,4 0 4
22 3,05 2
1 6 ,6 4 5 +
Richmond
A tla n ta
Chicago
St^Louis
Minn.
| 3 1 ,l 8 l
4 0 ,0 7 0
♦ 3 1 ,5 7 8
4 1 ,1 0 5
♦ 39,492
6 1 ,5 1 8
♦ 14 ,101
2 1 ,1 8 8
♦ 5 ,8 9 2
8 ,2 5 9
8 ,889+
31,791
20,562
9 ,5 2 7 +
3 9 ,4 3 6
4 0 ,3 5 5
1 1 ,2 2 9 -
3 1 ,5 5 8
2 7 ,406
919+
2 2 ,3 4 0
2 2 ,3 6 7
27+
4 ,1 5 2 -
9 5 ,2 3 0
8 8 ,738
6 ,4 9 2 -
9 3 ,9 5 4
1 0 4 ,4 2 7
1 0 ,473 +
2 2 ,0 2 6 +
1 1 6 ,3 4 4
1 2 6 ,5 2 7
10,183 +
7 ,0 8 7 +
3 4 ,9 4 4
3 3 ,9 3 2
1 ,0 1 2 -
9 9 .8 6 4
9 9 .8 6 4
3 1 .2 1 1
31.211
-C -
—0 —
2 5 7 ,4 9 0
2 8 9 ,9 9 4
80,886
8 6 ,9 6 1
3 2,504+
6 ,0 7 5 +
2 ,2 6 7 +
2 6 ,5 8 6
* 2 6 ,9 1 9
333+
2 7 ,9 6 8
2 4 ,8 5 8
3 ,H O -
6 1 ,002
6 0 ,5 9 3
409-
Kan.City
♦ 21,971
2 8 ,5 6 7
6 ,5 96+
4 2 ,6 1 7
47,662
5 ,0 4 5 +
9 ,1 1 5
1 9 ,3 1 5
10 ,0 0 0 +
7 3 ,7 0 3
9 5 ,3 4 4
21,641+
D a lla s
♦ 18,832
24,339
5 ,5 0 7 +
22,749
2 3 ,851
1 ,1 0 2 +
2 0 ,1 6 5
1 7 ,1 3 0
3 ,0 3 5 -
6 1 ,7 4 6
6 5 ,3 2 0
3 ,5 7 4 +
San Fran.
♦ 7 4 ,270
1 0 3 ,6 0 1
2 9 ,331 +
7 2 ,1 4 8
8 3 ,9 5 6
1 1 ,8 0 8 +
5 4 ,3 9 2
5 5 ,1 8 7
795+
2 0 1 ,9 0 0
2 4 4,74 9
4 2,849+
T o ta ls
♦
6 2 7 ,5 7 9
6 9 8 ,3 1 1
70,732 +
7 3 0 ,4 0 7
7 6 9 ,0 6 6
38 ,6 5 9 +
72 7 ,4 3 1
7 2 7 ,0 0 4
427-
2 ,1 0 4 ,4 4 3
2 ,2 2 4 ,3 9 8
1 1 9 ,9 5 5 +
Comparison of Weekly Average
o f Earning A sse ts
7 6 ,2 7 8
7 2 ,6 4 7
7 4 ,0 0 2
Jan. 2 to O ct. 21, 1931
Sams period 1930
X n tir e year 1930
Net Change from same period 1930
"
"
"
e n tir e year 1930
3,6 31+
2 ,2 76+
2 9 9 ,3 1 0
3 1 7 ,1 3 1
3 2 3,07 5
1 7 ,8 2 1 2 3 ,7 6 5 -
8 3 ,1 3 3
83 ,082
8 2 ,3 7 1
51+
762+
1 0 8 ,6 6 8
9 5 ,1 3 2
9 8 ,7 3 6
1 3 ,5 3 6 +
9 ,9 3 2 +
4 9 ,6 5 2
4 3 ,0 7 4
*4 ,7 9 5
6,5 78+
4,6 57+
44,342
5 0 ,3 8 3
4 9 ,9 9 5
6 ,0 4 1 5 ,6 5 3 -
13 4 ,4 6 3
1 2 6 ,8 3 8
1 2 7 ,6 9 3
4 4 ,6 9 4
4 7 ,443
4 6 ,611
7 ,6 2 5 +
6 ,7 7 0 +
2 ,7 4 9 1 ,9 1 7 -
3 6 ,5 6 1
3 4 ,1 7 6
3 4 ,5 9 1
2,385+
1,9 70+
5 5 ,2 6 3
3 8 ,5 9 3
4 1 ,4 0 5
1 6 ,6 7 0 +
1 3 ,8 5 8 +
4 4 ,2 1 7
4 5 ,2 3 4
45 ,066
1 ,0 1 7 849-
9 0 ,1 1 2
6 8 ,942
7 2 ,522
21,170+
17,590 +
1 ,0 6 6 ,6 9 3
1 ,0 2 2 ,6 7 5
1 ,0 4 0 ,8 6 2
44,018+
25,831+
Comoariaon of Earning A sse ts
O ctober 21, 1931
"
2 2 , 1930
Net Change
1 5 8 ,0 3 8
7 0 ,4 9 6
87,542 +
6 2 9 ,5 ^ 4
2 6 6 ,0 9 7
1 7 7,61 8
7 3 ,0 9 4
223,05 2
10 5 ,0 0 6
8 8 ,7 3 8
45,699
36 3,467+
10 4 ,5 2 4 +
1 1 8 ,0 4 6 +
43,039+
1 0 4 ,4 2 7
4 7 ,0 9 8
5 7 ,3 2 9 +
2 8 9,99 4
11 8,66 3
86,961
5 0 ,2 8 9
6 0 ,593
3 6 ,2 5 7
9 5 ,3 4 4
4 7 ,0 1 7
6 5 ,3 2 0
4 5 ,6 1 0
244,749
7 1 ,5 7 4
2 ,2 2 4 ,3 9 8
9 7 6 ,9 0 0
1 7 1,33 1+
36,672 +
24,336+
4 8 ,3 2 7 +
1 9 ,7 1 0 +
173,175+
1 ,2 4 7 ,4 9 8 +
SUMMARY FOR SYSTEM
B i l l s Discounted fo r week
B i l l * Purchased fo r week
Government S e c u r it ie s fo r week
T otal Earning A sse ts fo r week
Comparison of Weekly Average of Earning Assets Jan. ? to Oct. 21,
"
*
n
» h
m
n
"
2 "
"
21,
Comparison o f Earning Assets O ct. 21, 1931 w ith O ct. 22, 1930
♦
70,732+
3 8 ,6 5 9 *
427—
11 9 ,9 5 5 +
1931 with same period 1930
1931 with en tire year 1930
4 4 ,018 +
25 ,8 3 1 +
1 ,2 4 7 ,4 9 8 +
Weeks
Ending
-1931Jan.
7
14
21
28
r«b.
4
n
18
25
March
April
J u ly
.
Aug*
S ep t,
O ct.
362
407
-C 157
♦ 35,498
406
2,351
59*
-o ■O*
-0 90
2,994
2,894
20,904
14,499
Ms* York
Dealers
♦
Total
Cleveland Richmond
♦ 41,778
728
3,069
593
-0 -0 - 0“0 "
-0 - 0-0 -0 -
248
21
-0 -0 -
264
-0-0 -0 -
3,258
2,394
20,904
14,499
-0 -0 -0 -0 -
-0 - 0-0 -0 -
290
60
-0 - 0-
17,071
50,440
13,293
14,353
mQm
-0 -0 -0 -0 -
-0 -0 -0 -0 -
6,794
16,503
8,207
1,212
5,081
64,594
61,979
20,649
18,273
32,804
-0 -0 - 0-0 -0 -
-0-
-0 -
-0 -0 - 0-
4,595
16,966
47,£22
12,105
14,353
1
8
15
4,040
-0 -0 457
3,339
57,800
45,476
12,442
17,061
27,723
123
-0 -
4 0 ,1 9 3
5 ,4 0 7
8 ,4 2 3
4 4 ,7 8 8
1 3 ,8 3 0
27
1,201
252
16,355
* 17,060
2,121
1,101
3
10
17
24
115
135
-0 —
11,387
22,509
2,771
698
3,209
720
10,911
2,996
2,714
206
105
3,218
1,188
.
Phil a.
6,280
322
718
-0 -
50
-0 -0 -0 -
6
13
20
June
♦
Banks
4
11
18
25
22
29
May
Bnatan
-0 -0 —
-0 -
#
-0-.
2,434
“0 "
50
460
- 0-0 -0 -0 450
-0 —0—
- 0-
25
“ 0~
135
-0 -
10
-0 -0 -
♦ 4 2 ,3 7 2
2 ,2 3 5
3 ,2 3 2
892
-0 12
3 ,7 2 1
3 ,0 8 1
2 1 ,2 6 2
1 7 ,2 5 7
1 9 ,4 9 7
5 5 ,3 2 9
1 4 ,9 4 6
1 7 ,6 0 7
7
1
40
2 ,5 7 8
141
7
1 ,7 7 5
2 ,4 4 8
4 8 ,1 2 2
1 4 ,4 7 7
2 0 ,8 1 1
1 8 ,9 9 8
26,7 36 +
3 6 ,1 4 2 1 9 ,0 0 1 4 ,0 6 5 -
2 4 ,1 04 +
4 0 ,7 6 1 2 2 ,1 0 1 6 ,5 0 6 —
'8 ,8 7 8
8 ,5 4 9
3 ,9 7 2
4 ,6 1 7
2 ,6 3 4
639
1 ,0 6 5
1 ,0 0 0
-0 -
1 4 ,5 7 5
2 6 ,5 8 4
6 ,6 2 4
1 3 ,1 7 6
6 ,5 2 9 +
4 ,2 4 7 1 8 ,0 0 8 1 ,2 8 8 +
9 ,6 5 4 +
6 ,9 3 8 2 0 ,4 0 3 424-
5 ,1 1 8
5 ,4 4 2
5 ,9 0 9
8 ,5 0 1
1 ,2 3 0
1 ,2 4 9
3 ,0 1 5
963
4 ,0 6 4 5 ,5 9 5 1 9 ,8 9 7 7 ,0 3 5 1 ,3 7 4 +
3 ,0 4 9 1 1 ,5 5 3 2 1 ,3 8 0 3 ,3 7 5 497-
1 3 ,2 7 7
5 ,8 6 9
3 ,5 1 6
5 ,5 5 0
3 ,8 1 2
3 ,3 8 6
5 ,9 0 6
1 ,5 5 7
1 2 ,1 9 2
4 ,4 3 5
59+
6 8 ,3 0 7 +
1 9 ,8 4 0 +
2 6 ,2 9 4 +
4626 9 ,6 64 +
18 , 8) 0+
2 5 ,8 9 0 +
8 ,0 0 2
3 ,6 6 7
4,4 1 1
2 ,6 1 8
2 ,7 0 1
1 0 ,6 4 6
2 ,2 5 6
1 ,5 6 0
7 ,4 4 6
1 0 ,8 4 2
1 5 3 ,0 4 2
2 5 0 ,4 5 9
1 6 , ?25+
03+
1 4 ,0 ? 9 +
1 5 ,6 9 9 2 0 9 ,5 8 7 +
1 7 ,3 5 0 +
801 9 ,9 8 2 +
2 5 ,4 1 9 +
2 2 5 ,3 3 8 +
3 ,3 9 2
2 ,2 9 4
2 ,1 2 1
2 ,3 8 0
7 ,6 6 2
1 ,9 3 8
2 ,3 7 8
2 ,7 8 7
1 ,1 1 4
2 ,7 4 6
1 5 0 ,1 7 1
2 1 0 ,2 8 3
9 2.0 C 8
1 0 8 ,0 1 4 +
1 5 0 ,7 8 5 +
4 2 ,3 19 +
1 1 2 ,3 2 9 +
1 4 9 ,0 5 1 +
^ 3 8 ,6 5 9 *
5 ,0 2 3
3 ,5 0 5
2 .8 9 9
3 ,1 7 4
1 ,3 2 0
♦ 1 ,5 4 8 ,8 1 0
♦ 396 ,3 1 8 +
♦ 405,222+
♦ 19 2 ,4 4 5
♦ 1 5 1 ,1 2 2
-0 -0 - 0-0 -
275
-0 - 0101
-0 -0 1,747
-0 -
-0 -0 “0**
- 0-0 3
«o»
-0 - 0-0 -0 -
-0-
-0 -
751
1 ,2 4 8
1 ,4 6 6
1,227
41
600
4,223
2,755
806
- 0-0 -0 -
- 0-0 -0 -
-0 -0 -0 -
-0 -
mQm
-0-
-0- 0-
- 0-0 - 0-
-0 200
-c-0 -
-0 15
- 0- 0- 0-
1 ,6 9 1
242
-0 1 ,5 5 7
-0 -
-0 “
-0 “
-0 -
-0 “
-0 702
- 0- 0-O "
-0 -
-0 1 ,4 7 7
- 0-o -
8,182
12,974
250
2,116
9,946
3 8 ,7 7 8
19
-0 -0 -0 -
-0 -0 -0 -
-0 -0 -0 -
26
-0 -
12,932
42
-0 -
“0“
-0 -
2
9
-o -
16
23
5 ,o ii
8 6 ,3 6 3
110
102
4,097
. 23,148
-0 -0 -
mQmrn
23
7,299
5,905
-0 -0 -0 -
30
3 ,6 7 0
217,545
1 3 ,3 9 5
20
1,582
—0“
- 0-0 1,843
- 0-
-0 -
43
263
-0 -
-0 *0“
-0 -
♦3,731
7,480
12,974
133
7,401
10,002
109,511
230,940
-0 -0 -
1 3 1 ,4 9 4
1 3 2 ,4 9 1
5 3 .3 5 1
1 3 ,2 7 0
1 4 4 ,7 6 4
66,551
199,042
3 4 .0 7 2
8 7 .4 2 3
- 0443
497
♦ 2 5 ,4 0 6 ♦ 1 ,1 5 3 ,6 5 2
♦245,680
♦ 1 ,3 9 9 ,3 3 2
♦960
* I n c l u d e s $iOO,OCO p u rch a sed by S t. L o u is
t* In c lu d « «
8 3 ,0 0 0 p u rch a sed by Kansas C i t y ,
♦619
-0 -
-c -0 -0 -
151
45
290
-0 -0 -
35
-0 -0 -0 -0 - 0-
-0 50
-0 -0 -
220
1 ,4 1 9
3 3 ,5 2 6
9 ,6 6 0
-0 -0 “
567
750
781
1 .3 9 1
- 0-
125
-0 -
2 ,7 6 1
1 ,5 0 5
763
♦ 8 ,5 0 4
♦ 5 5 ,00 3
2 ,2 1 5
5 ,3 7 1
7 ,5 3 7
7 ,0 5 2
3 ,0 6 6
279
600
218
25,718
3,491
11,609
-0 2 ,4 4 5
2 ,6 9 8
825
4 ,2 0 1
2 ,0 5 6
2 ,5 1 8
6 ,7 0 0
6 ,3 5 1
7 ,9 1 2
4 ,8 6 7
1 ,4 9 9
1 4 ,2 9 7
9 ,9 4 6
3 6 ,3 3 3
4 ,7 8 2
5 ,7 6 2 5 0 ,8 4 7 +
2 8 ,8 5 2 3 9 ,2 7 8 -
1 ,9 0 2
1 ,1 3 4
4 ,2 5 9
2 ,2 2 7
1 0 ,6 2 5
-0 -0 -
-0 -0 -0 -
6 ,8 6 5 4 6 ,8 6 7 +
2 8 ,6 4 7 3 8 ,6 8 1 -
8 3 ,3 5 0 +
5 ,1 0 7 +
4 0 ,2 5 0 2 0 ,1 32 +
1 8 ,1 5 4 +
499
267
5
12
4 ,2 7 2
1 ,3 2 3
6 ,3 6 0
2 ,8 0 3
7 7 ,5 3 5 +
7 ,7 6 2+
3 8 ,9 8 4 8 ,7 2 9 +
1 9 ,5 0 8 +
-0 -0 -
-0 -
2 ,0 9 6
2 ,5 0 1
1 ,6 7 6
3 ,6 3 1
7 3 ,4 9 7
6 5 ,7 9 7
21, 708
2 1 ,7 9 3
3 8 ,3 6 9 *
-0 -0 -
■o>
-0 -
1 5 ,9 6 6 1 6 ,5 3 6 —
6 ,2 5 6 +
1 2 ,3 2 2 +
1 ,7 2 4
999
3 ,7 6 7
6 ,6 7 9
3 ,6 5 3
2 ,4 7 6
607
2 ,6 4 8
1 ,5 2 3
-0 -
46
1,501
1 1 ,3 0 3 6 ,5 6 0 —
8 ,3 5 2 +
1 3 ,9 8 4 +
♦
-0 18
13
- 0-
-o -
4 4 ,5 5 5 3 1 ,3 8 4 -
4 ,5 8 8
5 ,1 2 8
3 ,6 7 5
7 ,419
3 ,2 0 4
18,476
18,161
-o - 0-
♦
1,653
-0 368
~
♦ 9 8 ,3 8 8 6 9 ,2 7 6 -
-0 -
-0 -0 -
2 ,9 1 0
% 84, 7076 4 ,0 7 1 4 0 ,3 1 6 2 4 ,7 6 3 -
Deal e r s
O p e r a t io n s
W ith O ther
D is tr ic ts
R e c e iv e d
Sent
-o ~
-0 -0 -
-0 -0 -
-0 -0 -0 -0 -
16
438
280
79
36
-0 -0 -
-0 -0 -
TOTALS
- 0-0 -o~
-0 -
♦
93
1
31
-0 -0 -
1 ,0 1 3
592
21
120
28
-0 »
5°
mQm
-0 -
-o -
-0 -0 -
1,573
37
80
357
-0 -
24
126
384
-0 -0 -
1 ,0 1 3
592
3 ,4 3 5
989
-o -
-0 -0 - 0-0 -
22
580
83
75
aan F ra n .
-0 -0 -0 -
-0 -
7
♦
U a lla e
1,210
874
55
390
403
29
14
|
Minn,
-0-
-0 -0 -0 -
Chic auto
INCREASE o r DECR3ASS
i n H o ld in g s
I n c l u d i n g S a le s C o n t r a c t s
System
New York
T o ta ls
O p e r a t io n s
O p e r a t io n s
-c-
1
8
15
22
-0 -
Atlanta
J
350
-0 -
♦ 2 ,0 9 7
♦ 3 ,3 4 2
-0 -
500
4 ,7 7 4
2 ,9 0 7
2 ,3 4 9
2 ,0 5 3
m
♦ 4 9 ,43 3
5 ,9 9 7 * *
3 ,0 1 2
852
4 ,0 7 1
792
9 ,9 4 6
4 0 ,2 5 5
1 .3 0 0
>
e
&
o
®i
Ml
|m n \
►
o CO
G0iI
51
S i
<r
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXHIBIT "C"
BILLS PURCHASED OUTRIGHT BY S Y i
BY 7
FROM JANUARY 2 CO OCTOBER 2 1 . 1 9 3 * . INCL
(0 0 0 O m ittod )
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E . 0•V23S4?
Exhibit "C" (a)
CLASSIFICATION BY MATURITIES OF BILLS PURCHASED
BY FEDERAL RESERVE BANKS IN THEIR RESPECTIVE DISTRICTS
DURING- THE PERIOD FROM JANUARY 2 TO OCTOBER 21, 1931
_____________ (EXCLUDING SALES CONTRACTS)____________
(000 Omitted)
1-30 days
$
942
$
25,406
728,614
328,125
334,822
Philadelphia
347
16
597
0
960
Cleveland
650
2,028
1 ,0*33
0
3,731
Ric hmond
40
234
345
0
619
Atlanta
2,640
2,076
3,438
Chicago
25,887
17,054
12,062
0
55,003
0
0
300
St. Louis
300
$
Total
Over 90-days
$ 11,345
New York
8,547
61-90 days
4,572
Boston
$
31-60 days
0
7,771
350
1,399;332
8,504
Minneapolis
1,246
200
651
0
2,097
Kansas City
6
74
3
0
83
295
132
2,335
580
3,342
24,122
16,638
6 >442
2,231
49,433
$792 <694
$371,149
$373,093
$11,874
$1,548,810
Dallas
San Francisco
Totals
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0• V23Sk
Exhibit "D"
AMOUNT OF NET PROFIT REALIZED ON SALES OF UNITED STATES GOVERNMENT SECURITIES IN THE
SYSTEM ACCOUNT DURING THE PERIOD JANUARY 2 TO OCTOBER 21, 1931, WHICH IS
HELD IN SUSPENSE ACCOUNT BY THE FEDERAL RESERVE BANK OF NEW YORK
AND EACH BANK'S PRO RATA SHARE BASED ON AVERAGE DAILY HOLDINGS;
ALSO AMOUNT OF NET LOSS AS REPRESENTED BY THE DIFFERENCE BETWEEN THE BOOK VALUES AND
THE MARKET BID PRICES ON OCTOBER 21, 1931 OF THE GOVERNMENT SECURITIES HELD
IN THE SYSTEM ACCOUNT, AND EACH BANK’S PRO RATA SHARE
_________
'
BASED ON AVERAGE DAILY HOLDINGS
Net Profit
Held in
Suspense
Account
Loss as
Represented by the
Difference Between
Book Values and
Market Bid Prices
0
822,825.20
Boston
164|8cl#65
New York
275,808.06
1,376,642.71
Philadelphia
137,347,40
685,543.00
Cleveland
184,660.81
921,-698.77
Riclmiond
80 ,141 •8o
400,012.46
Atlanta
47,668.98
237,930.50
Chicago
236,237.05
1,129,218.55
St. Louis .
70,440.65
351,590.92
Minneapolis
64 ,.605*66
322,466.69
Kansas City
114 r390.02
570,456.60
63 ,-032.79
314,616.02
,123.r599,92
616,925.16
$1,552 ,.684.82
$7 ,749,926.58
Dallas
San Francisco
To tals
Reproduced from the Unclassified / Declassified Holdings of the National Aichives
DECLASSIFIED
Authority E-C).\ 23S k
Preliminary Memorandum on Credit Condit ions for the Meeting
of the Executive Committee of the ^pen Market Policy Conference,
October 26, 1931
A number of developments of unusual importance have occurred
since the last meeting of the Open Market Policy Conference on August 11*
Continued withdrawals of funds from London led to sus
pension of gold payments by Great Britain; this has been
followed by similar action in a number of other countries;
Subsequent strengthening of foreign central bank gold
holdings and a ’'run on.the dollar” have led to heavy pur
chases of gold from the United States by foreigners;
Currency hoarding has resulted in further heavy withdrawals
of deposits from the banks;
As a result the demand for Federal Beserve Credit has ir
creased at an extraordinary rate;
Federal Reserve Bank discount rates and open market mone
rates have risen;
Security prices have declined further; prices of United
States Government securities have dropped precipitately with
in a few weeks from approximately the highest levels in re
cent years to levels even lower than were reached in 1929;
Bank failures have increased considerably in number;
Liquidation of member bank credit has been resumed at an un
precedented rate* with consequent shrinkage in the supply of
money available for business use;
The emphasis of banks on liquidity has increased and the finan
cing of business either by investors or by banks has become
increasingly difficult;
Business activity and employment after seasonal adjustment have
declined further, and commodity prices are lower;
Efforts toward the restoration of confidence in the banks have
been undertaken chief of which has been the organization of
the National Credit Corporation.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority
E • 0• \23Sk
2
System Gold Position
The effects of gold losses and currency hoarding on the System gold
position are shown in the attached diagrams and the following table.
Redent
gold losses of about $700,000,000 have not yet entirely offset the gain to the
country^ gold stock since early 1929 when it was generally considered that the
gold supply was well in excess of the country’s needs.
The "free gold" of the Federal Reserve System has shown little change
during the recent outflow, as the second diagram indicates.
This is due to the
fact, which is also illustrated by the diagram, that the amount of gold required
as collateral for Federal Reserve notes has diminished about as rapidly as have
the gold reserves of the System.
The foreign demand for gold, together with the
domestic demand for currency, have brought into the Reserve Banks a large volume
of eligible paper in the form of discounts and acceptanccs, which has been
pledged as collateral for Federal Reserve notes, so that a large part of the
gold used until recently as collateral has been released.
The following table
summarizes the demands on the reserves of the Federal Reserve System between
September 16 and October 21, and shows the position of the System with respect
to gold after meeting these demands*
Demand for Gold and Other Reserves between September 16 and October 21,
and Effect on Reserve Position of the Federal Reserve System
(In millions of dollars)
Demand for Gold (and other reserve cash):
For earmarking - - - - - - - - - - — - - - - - - - - - - For gold exports ( n e t ) - - - - - - - - - - - - - - - - - - Total - - - - - - ----- — -------Reduction in required reserve against F.R. deposits - - - .
Increase in required reserve against F.R. notes - - - - - Total - - - - - -
—
-
- - - - - - - - - - - - -
Estimated increase in gold certificate and coin circulation
Total demand from all sources - - - - - - - - - - - - - - -
418
261
679
- 49
151
102
41
822
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0■V23Sfe>
3
Effect on Reserve Position of Federal Reserve System:
Sept. 16,
1931
Total reserves - - - - - - - Excess reserves over min
imum requirements-- - - Gold required as collateral
for F. R. notes - - - - ’’Free Gold” - - - - - - -
Oct. 21,
1931
Change
3647
2927*
-720
1919
1097*
-822
1037
281
-756
882
816*
- 66
*The issuance of Federal Reserve Notes in place of gold certificates
will tend to increase the reserves of Federal Reserve Banks and
eventually to increase the amount of "free gold"; this process is
already under way.
As this indicates, the System on October 21 still had excess reserves
totaling about $1,100,000,000, either in the form of ’’free gold,” or in the
form of gold collateral which will be released when further needs for funds
bring in additional bills or discounts.
Recently dollar exchange has strength
ened relative to the exchanges of European countries which have been taking gold,
and there are indications that the outflow of gold is subsiding.
Net Change in Monetary Gold Stock
of the United States
Week ended:
September 26
October
3
"
10
"
17
"
24 (Preliminary)
- $173,000,000
- 168,000,000
- 153,000,000
- 151*000,000
58,000r000
The Banking Position
From the viewpoint of the business of this country* the cevelopments
relating to the position of commercial banks - the great numbers of bank fail
ures, the continued hoarding of currency, and the consequent excessive caution on
the part of bankers which has been instilled by these occurrences - have been
of more importance than the gold outflow.
Security markets have become almost
completely closed to new financing; banks are more reluctant than ever to employ
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E . 0• V235&?
4
their funds in any but the most liquid foims of loans or investments; the supply
of credit available for business has been shrinking rapidly.
The following table
shows changes in the loans and investments and in the deposits of weekly reporting
member banks during October and since the beginning of July*
(In millions of dollars)
July 1,
1951
Sept. 30,
1951
Oct. 21f
1951
- - - - - - - - - - - -- - - - - - - - - - -- -- -- -- -- -
6,746
7,945
4,129
3,666
6,346
7,845
4,225
5,695
5,875
7,681
4,158
5,606
Total loans and investments - - - -
22,486
22,107
21,514
Net demand deposits - - - - - - - - - Time deposits - - - - - - - - - - - - -
13,688
7,172
13,227
6,775
12,532
6,459
20,860
20,002
18,991
Security loans All other loans
U. S. securities
Other securities
-
Total---------------- --------
*Estimated largely on basis of October 21 figures for New York City banks.
During the past three weeks the loans and investments of reporting banks
have been reduced nearly $800,000,000.
To the effect of this on deposits has been
added the effect of gold and currency withdrawals, partly offset by funds paid out
by the Reserve Banks through bill purchases.
Consequently the deposits of these
banks have shown a decline of about $1,000,000,000 during the three-week period
and a decline of nearly $1,900,000,000 since the first of July,
This constitutes
by far the most rapid shrinkage in member bank deposits during the life of the
System.
The closing of banks has proceeded at an accelerated rate.
In July
the number of closed banks was 93, in August 158r in September 298, and in the
first three weeks of October 386,
This brings the number of banks closed since
the beginning of the year to a total of more than 1,600.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority
E •0• V23S4?
5
Depreciation in the market value of bond holdings is probably respons
ible for the difficulties of more banks than any other cause.
Until recently
the depreciation was confined largely to the lower grades of bonds, but within
the past few months prices of even the highest grade corporation bonds have de
c-lined considerably, especially railroad bonds the status of which with respect
to "legal lists” has been endangered by the continued decline in railroad earn
ings.
Since the beginning of September there has been an extraordinary severe
decline in the market prices of United States Government securities - the only
class of bank assets which up to that time had maintained an unimpaired market
value*
Between September 16 and October 19 the market value of long-term Govern
ment bonds declined about 8 per cent on the average, representing a "paper" loss
to all member banks in the neighborhood of 0200,000,000.
Thus altogether, present banking conditions are such as to constitute
a serious obstacle, rather than an aid, to business recovery.
Some improvement
in this situation may be hoped for from the operations of the National Credit
Corporation.
shown.
Sentiment is already better though no definite results have been
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c la s s ifie d
Authority
E ■0•\23Sfc?
Federal Reserve Bank
o f Now Y o r i
Report* Sopor tiaprt
BILLIONS OF DOLLARS
Monetary Gold Stock of the United StateE
(End of month figures;
latest figure Oct.21)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0• \23S4?
Exhibit "C" (a)
CLASSIFICATION BY MATURITIES OF BILLS PURCHASED
BY FEDERAL RESERVE BANKS IN THEIR RESPECTIVE DISTRICTS
DURING THE PERIOD FROM JANUARY 2 TO OCTOBER 21, 1931
_____________ (EXCLUDING SALES CONTRACTS)____________
(OOO Omitted)
1-30 days
31-60 days
Total
Over 90-days
4,572
$ 11,345
728,614
328,125
334,822
Philadelphia
347
16
597
0
960
Cleveland
650
2,028
1,053
0
3,731
Richmond
40
234
345
0
619
Atlanta
2,640
2,076
3,438
Chicago
25,887
17,054
12,062
Boston
New York
St. Louis
$
8,547
300
$
61-90 days
0
0
$
942
7,771
350
$
25,406
1,399i332
8,504
0
55,003
0
300
Minneapolis
1,246
200
651
0
2,097
Kansas City
6
74
3
0
83
295
132
2,335
580
3,342
24 *122
16,638
6 ,442
2,231
49,433
$792,694
$371,149
$373 ,093
$11,874
$1,548,810
Dallas
San Francisco
Totals
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E ■0• \23S4?
Exhibit ”D"
.AMOUNT OF NET PROFIT REALIZED ON SALES OF UNITED STATES GOVERNMENT SECURITIES IN THE
SYSTEM ACCOUNT DURING THE PERIOD JANUARY 2 TO OCTOBER 21, 1931, WHICH IS
HELD IN SUSPENSE ACCOUNT BY THE FEDERAL RESERVE BANK OF NEW YORK
AND EACH BANK'S PRO RATA SHARE BASED ON AVERAGE DAILY HOLDINGS;
ALSO AMOUNT OF NET LOSS AS REPRESENTED BY THE DIFFERENCE BETWEEN THE BOOK VALUES AND
THE MARKET BID PRICES ON OCTOBER 21, 1931 OF THE GOVERNMENT SECURITIES HELD
IN THE SYSTEM ACCOUNT, AND EACH BANK’S PRO RATA SHARE
BASED ON AVERAGE DAILY HOLDINGS
Net Profit
Held in
Suspense
Account
Boston
$
164,851.65
Loss as
Repx,esented by the
Difference Between
Book Values and
Market Bid Prices
0
822,825.20
New York
275,808.06
1,376,642.71
Philadelphia
137,347.40
685,543.00
Cleveland
184,660.81
921,698.77
Richmond
80,141.83
400,012.46
Atlanta
47,668.98
237,930.50
Chicago
236,237.05
1,129,218.55
St. Louis .
70,440.65
351,590.92
Minneapolis
64 ,.605.66
322,466.69
Kansas City
114*390 .'02
570,456.60
63,-032.79
314,616.02
.123,599,92
616,925.16
$1,552 ,.684.82
$7,749,926.58
Dallas
San Francisco
To tals
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E • 0 • \23Sfe>
Preliminary Memorandum on Credit Conditions for the Meeting
of the Executive Committee of the Open Market Policy. Conference,
October 26, 1951 «
A number of developments of unusual importance have occurred
since the last meeting of the Open Market Policy Conference on August 11;
Continued withdrawals of funds from London led to sus
pension of gold payments by Great Britain; this has been
followed by similar action in a number of other countries;
Subsequent strengthening of foreign central bank gold
holdings and a ’'run on.the dollar" have led to heavy pur
chases of gold from the United States by foreigners;
Currency hoarding has resulted in further heavy withdrawals
of deposits from the banks;
As a result the demand for Federal Reserve Credit has in
creased at an extraordinary rate;
Federal Reserve Bank discount rates and open market mone
rates have risen;
Security prices have declined further; prices of United
States Government securities have dropped precipitately with
in a few weeks from approximately the highest levels in re
cent years to levels even lower than were reached in 1929;
Bank failures have increased considerably in number;
Liquidation of member bank credit has been resumed at an un
precedented rate, with consequent shrinkage in the supply of
money available for business use;
The emphasis of banks on liquidity has increased and the finan
cing of business either by investors or by banks has become
increasingly difficult;
Business activity and employment after seasonal adjustment have
declined further, and commodity prices are lower;
Efforts toward the restoration of confidence in the banks have
been undertaken chief of which has been the organization of
the National Credit Corporation.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E.0-G3Sfe>
2
System Gold Position
The effects of gold losses and currency hoarding on the System gold
position are shown in the attached diagrams and the following table.
Recent
gold losses of about $700,000,000 have not yet entirely offset the gain to the
country's gold stock since early 1929 when it was generally considered that the
gold supply was well in excess of the country's needs.
The "free gold" of the Federal Reserve System has shown little change
during the recent outflow, as the second diagram indicates.
This is due to the
fact, which is also illustrated by the diagram, that the amount of gold required
as collateral for Federal Reserve notes has diminished about as rapidly as have
the gold reserves of the System.
The foreign demand for gold, together with the
domestic demand for currency, have brought into the Reserve Banks a large volume
of eligible paper in the form of discounts and acceptanccs, which has been
pledged as collateral for Federal Reserve notes, so that a large part of the
gold used until recently as collateral has been released.
The following table
summarizes the demands on the reserves of the Federal Reserve System between
September 16 and October 21, and shows the position of the System with respect
to gold after meeting these demands.
Demand for Gold and Other Reserves between September 16 and October 21,
and Effect on Reserve Position of the Federal Reserve System
(In millions of dollars)
Demand for Gold (and other reserve cash):
For earmarking - - - - - - - - - - —
For gold exports ( n e t ) - - - - - - - - -
413
- - - - - - - - - - - -
261
Total---- ------- -------- ------- -----------------
679
Reduction in required reserve against F.R. deposits - - - - - Increase in required reserve against F . r . notes - - - - - - - -
-49
151
T otal------------- --
- -------------------------
Estimated increase in gold certificate and coin circulation
Total demand from all sources - - - -
- - - - - - - -
- -
- - ---
102
41
022
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E • 0» V23Slo
5
Effect on Reserve Position of Federal Reserve System:
Total reserves - - - - - - - Excess reserves over min
imum requirements - - - - Gold required as collateral
for F. R. notes - - - - -
Sept• 16,
1931
Oct. 21,
1931
Change
3647
2927*
-720
1919
1097*
-822
1037
281
-756
882
816*
- 66
'’Free Gold" - --------
*The issuance of Federal Reserve Notes in place of gold certificates
will tend to increase the reserves of Federal Reserve Banks and
eventually to increase the amount of "freo gold”; this process is
already under way.
As this indicates, the System on October 21 still had excess reserves
totaling about $1 ,100 ,000»000, either in the form of "free gold,” or in the
form of gold collateral which will be released when further needs for funds
bring in additional bills or discounts.
Recently dollar exchange has strength
ened relative to the exchanges of European countries which have been taking gold,
and there are indications that the outflow of gold is subsiding.
Net Change in Monetary Gold Stock
of the United States
Week ended:
September 26
- $173,000,000
October
3
-
168,000,000
"
10
-
153,000,000
"
w
17
34 (Preliminary)
-
151*000,000
58,000r000
The Banking Position
From the viewpoint of the business of this country* the cevelopments
relating to the position of commercial banks ~ the great numbers of bank fail
ures, the continued hoarding of currency, and the consequent excessive caution on
the part of bankers which has been instilled by these occurrences - have been
of more importance than the gold outflow,
Security markets have become almost
completely closed to new financing; banks are more reluctant than ever to employ
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E . 0• \23Sfe?
4
their funds in any but the most liquid forms of loans or investments; the supply
of credit available for business has been shrinking rapidly.
The following table
shows changes in the loans and investments and in the deposits of weekly reporting
member banks during October and since the beginning of July*
(In millions of dollars)
July 1,
1931
Sept. 30,
1931
Oct. 2]
1931
- - - - - - - - - - - —
- —
—
- - -- -- -- -- - - - - - - - - - - - - -
6,746
7,945
4,129
3,666
6,346
7,845
4,223
3,693
5,873
7,681
4,158
3,606
Total loans and investments - - - -
22,486
22,107
21,314
13,688
7,172
13,227
6,775
12,532
6,459
20,860
20 ,002
18,991
Security loans All other loans
U. S. securities
Other securities
-
Net deir&nd deposits
- -- --
- - - -
Total-------- -------------------
*Estimated largely on basis of October 21 figures for New York City banks.
During the past three weeks the loans and investments of reporting banks
have been reduced nearly $800,000,000.
To the effect of this on deposits has been
added the effect of gold and currency withdrawals! partly offset by7 funds paid out
by the Reserve Banks through bill purchases.
Consequently the deposits of these
banks have shown a decline of about $1 ,000,000,000 during the three-week period
and a decline of nearly $1,900,000,000 since the first of July,
This constitutes
by far the most rapid shrinkage in member bank deposits during the life of the
System.
The closing of banks has proceeded at an accelerated rate.
In July
the number of closed banks was 93, in August 158r in September 298, and in the
first three weeks of October 386,
This brings the number of banks closed since
the beginning of the year to a total of more than 1,600.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c la s s ifie d
Authority
E •0•V23Sfe?
5
Depreciation in the market value of bond holdings is probably respons
ible for the difficulties of more banks than any other cause.
Until recently
the depreciation was confined largely to the lower grades of bonds, but within
the past few months prices of even the highest grade corporation bonds have de
c-lined considerably, especially railroad bonds the status of which with respect
to "legal lists” has been endangered by the continued decline in railroad earn
ings.
Since the beginning of September there has been an extraordinary severe
decline in the market prices of United States Government securities - the only
class of bank assets which up to that time had maintained an unimpaired market
value.
Between September 16 and October 19 the market value of long-term Govern
ment bonds declined about 8 per cent on the average, representing a "paper" loss
to all member banks in the neighborhood of 0300,000,000.
Thus altogether, present banking conditions are such as to constitute
a serious obstacle, rather than an aid, to business recovery.
Some improvement
in this situation may be hoped for from the operations of the National Credit
Corporation.
shown.
Sentiment is already better though no definite results have been
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E • 0 • \235k>
3 L i*3 f
Federal Reserve Bank
o f Now York
Reports Dopartapaft
?h€i**JL^s'0 f
BILLIONS OF DOLLARS
Monetary Gold Stock of the United States
(End of month figures;
latest figure Oct.21)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E ■0 • \23St?
OcJ*3
’
MILLIONS OF DOLLARS
2
9
16
23
30
SEPT.
7
14
21
28
OCT.
1931
Gold required as collateral for Federal Reserve notes has been replaced
ty eligible paper as total reserves have been drawn down ty gold exports
and earmarkings, leaving the System's free gold virtually unchanged
!
:
—
----
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
N e w Yo r k
^ B
V*
November 24, 1921.
Dear Governor Meyer:
t
1 find and regret the necessity for a correction .
I
33
31
3 , 0
?
*m >
ihiao I\of
n f * %he
T . h o (Jpen
;
M orV eh P
o l i mr
in the correction of the Qinutes
Market
Policy
Conference for August 11 as noted in w
letter last night.
In making the change suggested in that letter the text should
read as follows:
"if governments are purchased we should not
hesitate to sell them if and when conditions
make it necessaiy or desirable*"
Very truly yours,
w. Randolph Burgess
Deputy Governor
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
tTxiB.H
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I /'
Fe d e r a l R e s e r v e B a n k
of
N e w Yo r k
3 5 V<- -V
iiovember 25, 1951.
Dear Governor Meyer:
'
, „, * *
A minor change has been suggested in the minutes {of 3 3 3
the Open Market Policy Conference for August 11.
Will you
therefore please have tne following change made in your copy
of the minutes which was forwarded some weeks ago.
Line 17 on page 6 which reads at present as follows,
nhe did not think we should hesitate to sell
governments in order to help England. ’1
should be changed to
”if governments are repurchased we should not
hesitate to sell them if and when conditions
make it necessaiy or desirable. 15
Veay truly yours,
(j$ * W. Randolph Burgess
Deputy Governor
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Wasiiington, D# C.
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
CIRCU*
Mr.
Mr.
Mr,
Mr.
Mr.
Mr.
Mr.
Mr,
H am lin .*!
James .
Magee
Miller
kf
Harrison..
Morrill . . .
McClelland
loveaber 2 1 , m t i y j t
f
and return to G OVERNOR,
Dr* 1. Randolph Burgess*
Federal Reserve Bank,
lew Tork City*
Dear Doetor Burgesa:
Thank you Tory much for 7$ur letter of
Va
i
9A
Perhaps It would be desirable, *• you indloatej
133.-CO ?
to correct the Minutes'of the meeting of the Open
Market Policy Conference on August 11, in view of the
fact that they constitute a permanent record.
The
change you suggest is entirely satisfactory to m and
accurately expresses the thought I intended to convey.
With kind regards, I am
Very truly yours
Oovernor
/ k j u .. J c£ ^X a^ "/
h j
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
o f New York
November 20, 1931•
Dear Governor Meyer:
I have your note of November 19 and I am inclined „
I 3 / ~LJLmJSi 3 3 3 * -J 7
to think that since these minutes\are in the nature of per
manent records it would be well to make a change to cover the
point you raise.
I, therefore, suggest that we change line
17 on page 6 to read, ,!if governments are purchased we should
not hesitate to sell them if and when conditions make it necessaiy or desirable.n
I f you agree I can send the change to
the various people who have copies of the minutes, and have
the correction made.
I am soriy that the minute did not
express your thought more precisely.
As a matter of fact, I
was not myself present at that meeting.
Very truly yours,
W . Randolph Burgess
Deputy Governor
Hon. ifiugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
,
CIRWUTION:. — ~
ttf.Hamlin.
«r.
—
Harrison,vf
Mr, Morrill....
Dr. W. Randolph Burgess
Fodoral Reserve Bank,
Hew York, N. T.
J 'JPImm nm*InJffal
and rerow to WEBHOt
Dear Doctor Burgess:
Ever since X received, cm October 29, the minutes of
the meeting of the Open Maxfcet Policy Conference on August 11,
I have intended to drop you a line about a statement which ap*
pears on page 6 , hut one thing or another has prevented me fros
doing so*
The matter Is not of sufficient Importance to require
correction, bat I feel that I ought to bring it to your atten
tion.
The statement to which I refer is this: "Governor
Meyer stated that he did not think we should hesitate to sell
Governments In oider to help England.*
I did not intend to convey the Impression that I thought
we should sell Governments "in order to help England*”
What 1 had
la mind was that if the System should buy more Governments, it
should not hesitate to sell them if and when conditions should
arise which would make such action necessary or desirable.
In
other words, I was thinking about the matter, not from the stand*
point of selling Governments "to help England”, but from the stand*
p o in t
of w h ith e r consideration of the question of buying Governments
should be affected by the possibility that it might be necessary
l$ t e r
on t o sell G o v e n » « « t * .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
W* Randolph Burges*
Aa I said before, I do not think It is worth while to
correct the minutes, and I am writing this note
merely for
own Information*
With beat wishes, I an
Very tiuly yours,
(S ig n e d ) Eugene M eyer
Go Timor
your
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
N e w Yo r k
October 28, 19SI.
Dear Governor Meyer:
I
am enclosing fpr your records a complete copy
of the minutes of the meeting of the Open Market Policy
1
^
4
.
^. . ^. l us us b 1 1 »
—— --------- .— 0
.. —
* «.jj»re—
sentabives of all the Reserve banks, and copies of the resol
utions adopted were mailed out previously, but due to the
pressure of other matters the complete minutes had not here
tofore been sent out.
Veiy truly yours,
W. Randolph Burgess
Secretaiy, Open Market
Policy Conference.
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
77KB H
encl.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
£u.;met
10 S1 .
Bear Ckfveraor Harrisons
I acknowledge rooeipt Of your letter of toxmmt
_il»t. returning that part of tentative draft of 13a© Board's
afimtea of the nesting of the Open Hurkot Policy Confer•nee cm Au&uit Xlthf relating to your statement* Tim
ohaages aade thereom are noted and will all be incorporated
ia tha final draft of the ratnutes#
Tory truly your»f
S» M. McClelland,
Assistant Seeretazy*
Mr* George L« Htrrlnon, Governor,
Federal Reserve B«nk,
How York City, H* T*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal R eserve Bank
of
x \
N e w Yo r k
August 21, 1951.
Dear Mr. McClelland:
I am sorry that, owing to my absence from the
bank for a few days earlier this week, I have delayed re
plying to your letter of August 15 with which you were
good enough to send me a section of the tentative draft
of your minutes of the meeting of the Open Market Policy
Conference on August 11.
As you have given me an opportunity to suggest
some changes in that part of the minutes relating to my
statement, I have taken the liberty of noting my suggesions in pencil on the enclosed draft which I am return
ing to you.
Very truly yours,
Geofcge L. Harrison,
Governor.
Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D. C.
Enc.
National Archives
a r
✓A
■%
-,
>
‘.
A meeting of the Federal Reserve Board with the Open Market Policy
^
'Conference was held in the office of the Federal Reserve Board on Tuesday,
August llf 1931, at 5*50 p*m*
PRESET*
ALSO PRESENT*
Governor Meyer
Mr* Hamlin
Mr* Miller
Mr* James
Mr* Magee
Mr* McClelland, Assistant Secretary
Governor Young
Governor Harrison
Governor Fanoher
Governor Black
Deputy Governor McKay
Governor Martin
Governor Geexy
Deputy Governor Worthington
Deputy Governor Gilbert
)
)
)
) Members, Open
) Market Policy
) Conference
)
)
Mr* Matteson, Secretajy, Open Market Policy
Conference
Dr* Goldemrelser, Director, Division of Re
search and Statistics
Mr* Snead, Chief, Division of Bank Operations
Mr* Wyatt, General Counsel
Governor Harrison, Chairman of the Open Market Policy Conference, presented
a preliminary memorandum relative to credit conditions, submitted to the Con
ference, a report of operations in tbe system account since the last meeting
of the Conference, and tentative minutes of the meeting of the Sceeutlve Com
mittee of the Conference held in Hew lork on August 4th*
He stated that the Conference had hem in session all day discussing can/ ' / . t t
ditlons both in this country yand abroad and he referred particularly to the
( td u d b m w it €a O r j j c t " h w
h * m u Jo w tch ty
- decllitein commodB^
>i~w* c m lc f c u ik /L Ul -
He stated that at the mosent it appears that
n
^
...■.............. ......”
nothing can be done by the Federal Reserve System to kelp tbe situation
through the discount rate or tbreogH operations in the bill market, the only
possiblitfCaS^fon bglitg the purchase of Government securities in rather l*rge
amounts* In this, connection,
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banks now amounting to about $750,000,000, which could probably be in
creased to #1 *000,000,000 through the retirement of excess Federal Reserve
notes held in the cash of the Federal Reserve bank® and branches, and to the
distribution of this free gold and the fact that five of the Federal Reserve
banks hold only what might be considered very close to their operating min
imum* •
He stated that no member of the Cc
large amounts of Government securities
ce is in favor of purchasing
at this time, and it is felt
that there would be no point in putting large amounts into the market until
such time as it should appear that the effect would not be limited to the
mere piling up of excess reserves in member banks which would not be employed.
He stated that the natural outlet for such excess reserves is in investments,
and if action were taken at the right time it might result in pressure being
imposed on the banks for the use of their surplus funds through the purchase of
bonds, mortgages, etc*
The difficulty at the present time, he said, lies
in the fact that prime investments have been bought up until they are on a
very low yield basis] that secondary bonds consist largely of railroad issues
aggregating approximately $7,750^00,000, $5,500,000,000 of which are likely
within a.short time to become
for investment
It/
savings banks, in
surance companies and for trust funds due to provisions of law relative to
earnings of issuing companies J and that in addition there Is pressure on the
market due to forced liquidation of bond portfolio! of closed banks*
On the other hand, he stated the existing situation is so critical that
most of the Conference felt that the system should be prepared to aot quickly
in the event conditions develop to a point where It appears that an operation
in Governments might enccxirage or facilitate recovery*
- 5 -
e /ii/s i
He stated that the following resolution was prepared and presented
*It is the sense of the Conference that, subject to the
approval of the Federal Reserve Board, the Executive Committee
be authorized to purchase, for account of such Federal Reserve
banks aa desire to participate, up to (|500f000,000) of Govern
ment securities, if and when it becomes necessary or advisable
to do so*
*It
Is
the opinion of the Conference that economic conditions
in this count *y and throughout the world are now such that it is
essential that the System be prepared promptly to take whatever
further proper steps are in its power to encourage or facilitate
a
as
recovery in conditions
soon a* it appears likely that such
steps will be effective in accomplishing this purpose.*
■
b w im m u .
He reported, however, a motion .to amend the abOv* resolution so ai
V
K
i&sr
make it read as follows!
*Xt is the sense of the Conference that, subject to the
approval of the Federal Reserve Board, the Executive Committee \
be authorised to prchase, for account of such Federal Beserve
banks as desire to participate, up to #120,000,000 of Government
securities, if
and when
it becomes necessary or advisable to do
•Op or if necessary or advisable to sell up to
"It
similar amount;#
is the opinion of the Conference that economic condition*
in this country and throughout the world
essential that the
Sjystea be
further proper steps
a
are
are
now such that it Is ;
prepared promptly to take whatever
in Its power to encourage or facilitate
- 4 a recovery In conditions as toon as it appears likely that
such steps will be effective in accomplishing this purpose**
^
t(jU4
jft
He stated that M m motion to amend m s carried with two negative
^pivu )t
votes^ following which the resolution as amended was adopted, one member
/
s
.
of the ConferenceWotlng in the n e g a t i v e ^ *yf H<
*
Governor Harrison stated that he voted against the amendment because
he was of the opinion that if purchases were to
e effective they should be
Ha C*T4*<4. £ TtFr
made in a more substantial amount; that 1M
1 withdrawals of currency ror^/
for.
fk ffW j ,
hoarding plus the retirement of bills and Governments held by w o
,
< to *U /U u tC
ef
f¥ance the authority contemplated by the amendment would do no more than
offset present withdrawals fro® the market#
He stated, however, that a majority of the members reported that it
'
was their opinion and the o inion of the directors of their banks that it
would be inadvisable to purchase any governments at this time, and that they
could not forseo the likelihood of any occasion to bvy governments in the near
future*
He had voted for the amended resolution, he said, because he thought
it was important that the Sceoutive Committee should not be without some
authority to act#
Governor Harrison also stated that it was not contemplated
that the #50,000,000 of governments purchased by the Federal Beserve Bank of
Hew York within the last two or three days would be absorbed into the System
account under the authority given in the amended resolution of the Conference,
and that unless soma of the other individual Federal Reserve banks desired to par
ticipate in those purchases they would be carried in the portfolio of the
New York Bank*
Governor Young wported that he had voted against both the motion to
amend the original resolution and the adoption of the resolution as amended
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RE S E RV E
BANK
OF BOSTON
ROY A .Y O U N G
GOVERNOR
August 15, 1931
Mr, E. M. McClelland, Asst* Secretary,
Federal Reserve Board,
Washington, D. C.
Dear Mr* McClelland:
This -will acknowledge receipt of your letter of August 13
furnishing copy of a statement that appears in the Board's records of
the Open Market Policy Conference which was held on August 11.
I have
but one suggestion to offer.
The following appears: ”......rediscounting
and bill operations nullified by....M and I would like to Jwbre it changed
to read - 11. •. •.rediscounting and bill operations furthear nullified by,
Thanking you for sending the statement to
Yours v
R. A. Yo
Governo
J
August 18, 1981
Otar Oorarnor Young I
Xn tho nlnuto^ of tho Board's aooting with tho Opon Market
Policy Conference on A\jgu»t llthf your statoaont is susBsarisod
a« follows*
"Oovernor Young reported that he hud Toted
against both the notion to ftaand tho original res~
olution and tho adoption of tho rosolution a* attended
because ho #oit that any eawrgonoy oould bo taken
oaro of by tho $r«t«n through purohasea of bill**
whioh *111 oo*e to tho Syoto® at a ono per dost rate,
and that ho would father «oo ah increase in tho bill
portfolio of m m in rediscounts rather than in ineli~
gible Qoveraaent seouritiost Ho said ho would rogrot
to (NNi tho ia^ortant functions of tho Federal Reserve
Systsei in rediscounting and bill operation* nullified
by purchases of OoYerraaofct securities* Ho expreseed
tho opinion that neither tho eowaodity price situation
or tho bond market would bo holytfd by an oporation in
Qofornnont seourf1rt#s* Bo stated that even if thoro
woro anything la tho idea that exoeaa reserves oould
bo put in tho narkot and oroato activity, ho did not
fool that tho prooont was tho tlao to do it* Ho
statod that whan tho tiao did oono ho thought thoro
would bo opportunity for a thorough-going discussion of
it by tho Conference boforo action was takon-”
Xill you please lot mo know if this atatoaent is oatisfaotory
to you, or advise m of any ohangos you would like to have made* I
would approoiato hearing fro» you at your early convenience as tho
ainutos should bo prosonted to tho Board proaptly*
Vary truly yours t
1* M, McClelland*
Assistant Seoretary
Hr* R# A* Young# Governor,
Fodoral Reserve B«nkt
Boston, Mass*
Augunt n 9 %m
Dsar aovornor Harrison t
P i
. /■
**•;
;d ' X / ' - J /
I aa sanding you hsrovith tho t ir w t four
pngas of ihs tsutstir* draft of W L M m m h t tho
asotlng with til# Opsn Marfcat Poiioy Confaranoa on
August nth* Thay contain a aunnaiy of your stat#**
•out to tho Board and art sont you in order that you
nay Miles •ay ohaitgos whioh you think aro naooasary or
dosirablo*
It wm lA bs appraolatod if you would raturn
tho oorraotad pagaa as soon as oonToniant, as tho ain«
utos should bo suboittod to tho Board proiptiy*
Voiy truly yours,
flit M
A#* MsClelland
It
Assistant Soorotaiy
Hr* Oso:
Qaorga L« Harrison, Ooraraor,
Fadaral losorro
■aorro Bank*
Bank.
Hasr Yortc# How York*
(aioloaura)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
"A /
Moved,
fl
It is the sense of the Conference that, subject to the
approval of the Federal Reserve Board, the Executive Committee
be authorized to purchase, for account of such Federal Reserve
banks as desire to participate, up to ($300,000,000) of Govern
ment securities, if and when it becomes necessary or advisable
to do so*
It is the opinion of the Conference that economic conditions
in this country and throughout the world are now such that it is
essential that the System be prepared promptly to take whatever
further proper steps are in its power to encourage or facilitate
a recovery in conditions as soon as it appears likely that such
steps will be effective in accomplishing this purpose*
Moved to amend to read as follows:
It is the sense of the Conference that, subject to the
approval of the Federal Reserve Board, the Executive Committee
be authorized to purchase, for account of such Federal Reserve
banks as desire to participate, up to $120,000,000 of Government
securities, if and when it becomes necessary or advisable to do
so, or if necessary or advisable to sell up to a similar amount*
*
It is the opinion of the Conference that economic conditions
in this country and throughout the world are now such that it is
essential that the System be prepared promptly to take whatever
further proper steps are in its power to encourage or facilitate
a recovery in conditions as soon as it appears likely that such
steps will be effective in accomplishing this purpose*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Motion "bo amend carried, Governors Harrison and Young voting in
the negative.
Motion as amended carried, Governor Young voting in the negative.
AJ3Uf193f
Reproduced from the Unclassified I Declassified Holdings of the National Archives
5
X meeting of
i>,
*C ■
3 -
tha Federal Reeerre B ea d with D m Open Martot Policy
Conference was bald la the office of the Federal Baaanw Board cm tuaadagr,
S^// “ 11
Auguat U , 1931, at St50 p. a.
PRESENT:
Governor Meyer
Mr* BMalla
Mr. Killer
K r . Junes
Mr* Magee
Ur* McClelland, Assistant secretary.
ALSO PRESKWTj Governor Young
Gorvoroor Harrison
Governor Rancher
Governor Black
Deputy Governor McKay
Governor Martin
Gorsmor Oeory
Deputy Gorsmor Worthington
Deputy Governor Gilbert
Umabere, Open
Market Policy
Conference*
Mr* Matteaon, Secretary, Opan Market Policy
Conference*
Dr* Qoldeneeieer, Director, Divleion of Hessaroh and statistics*
Ur* Skaead, Chlsf, Division of Bask Operations*
Ur* Wyatt, General Counsel*
Governor Harrison, Chatman ef the Open Market Policy Gonferanoe, present
ed a preliminary m m
— *m relative
to credit conditions, submitted to the Con
ference, a report ef operations in the System account sines the last meting
of the Conference, and tentative minutes of the meeting of the Xaaautlve Com
mittee of the Conference held In Hew York on August 4th*
He stated that the Conference had been in eesalon all day discussing
conditions both m this country and abroad and he referred particularly to the
drastic deeline in eceandlty prices which has been so great as to H&reeten
bankruptcy la certain countries ef the sorld and in certain sections of lndivid-4
ual countries itoese chief eources of insoms are raw materials*
In many instance^
theee products at preemit prleee are not adequate to cover fixed cfcargea ao that
either oosamdlty prleee most rise or else ma must expect defaults on m a y debts
national and private.
Ha stated that at the moment It appears that nothing can
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-8 -
8/11/31
be doaa by tha Federal Bosorwe aystsm to M l * tula situation through the dleeount rata or through operations In the M I X market, the only possible helpful
notion being the purohaee of OotaxaMat aoourltiee la rather large vaunts.
IB thla aonneotion, he referred to the free gold ef the Federal Reeenw banks
a n amounting to about ^7 3 0 ,000 ,000 , whloh oould probably be lao*eassd to
H , 0 0 0 ,0 0 0 ,0 0 0 through the retirement of exeeas Federal fieeerre notes hold In
the oash of the ledaml Hosono benks end branshea, and to the distribution of
this free gold end tho fact that fire of tho Federal B e s o m banks held only
what might be oonsiderad very oloee to their operating minimum*.
Be stated that no member of the Coaferenee le In faror ef purchasing
large amounts of Ooronoont eeeurltlos Just nt this time, and tt Is felt that
there mould be so point la putting large amount* into the market until aueh
time as it should appear that tha offset mould not be limited to tho more pil
ing up of eneeee reeervoe In amber bonks whloh mould not be employed*
Be
stated that the natural outlet for suoh essese reserves is In inrootaaato, and
If ostlM mere M m
at tho right tin* tt mldfct result In pisssure M a g Im
posed on the hanks fer tho use a t their surplus funds through the purohaee of
boitfa, mortgages, oto.
The dlffleulty at the pwaeattl'Te, he aald, lies la the
faot that prlao imreetsaats hare been bought up until they are on a very low
yield boaloj that secondary bond* oonsist largely of railroad lsauee eggrogsttag w m M M l
|f,no,000 ,000 , |g,900,0 0 0 ,0 0 0 *r whleh at* likely within a
atert time ts beeene 111tt* M r lncostacat by ecrlngs baiks, insurwaos mm*
pantos and for trust funds due to provisions of law relative to earning* of
issuing ooavoatoo) aad that In addition there Is pressure on the mnxfcet duo to
f
ood liquidation of head portfolios of closed banks.
On the other hand, he stated the existing situation is so critical that
Reproduced from the Unclassified I Declassified Holdings of the National Archives
8/11/31
moat of the Conference felt that tha Syetera Should be prepared to act quickly
In tha event conditions develop to a point where it appeere that an operation
In Oovernraenta might enoourage or facilitate recovery.
Ha etated that tha following reeolution waa prepared and presented
to tho Conference hy tha ChaixstfUM
•It is tho sense of tha Conferonee that, subject to tho
approval of tho Federal Heeerve Board, tha Executive Committee
ha suUttrtncl to purchaee, ffer account it sueh m o r a l B i u m
hanks as doaira to participate, up to (#20 0 ,000 ,0 0 0 ) of Govern^
a n t securities, if and Whan it hseomes necessary or advisable
to do 00 *
•It ia tho opinion of tho Conference that oooaooio conditions
in this country and throughout tho world ara now auoh that it io
oaaantial that tho System ho prepared promptly to taka Whatever
furthor proper atopa are in ita power to enoourage or facilitate
a recovery in oonditiona an soon aa it appears likely that auoh
atopa will ho effective is acwpllchlsg this purpose.*
Sis reported, heeever, that a notion mm wmA* to shmA the dpve
reaolution so as to naks it read as follows)
•It is the sense of the Conference that, auhjoot to the
approval of the M o r a l Reserve Board, the Kxscutive Committee
ho authorised to purchaae, for aoeount of such Federal Beeerve
honks as desire to partieipate, up to $120,000,000 of Governpont
seourities, if and
it become neeoaaary or sdvisablo to do
o»» ear if ssssceary or n^rtsiMLs it sell up to a atrtU? amount.
•It is the opinion of the Conference that economic conditions
in this eonntry and throughout the world are now auoh that it is
essential that the System he prepared promptly to take whatever
further proper atepe are in its power to encourage or facilitate
a recovery in conditions as soon as it appears likely that such
stsps will he effective in aeeaspliching this purpoes»w
He stated that this notion to emend was carried with two negative votes, Governor
Tonne end Governor Harrison, following which the resolution as emended was adopted,
one mmtom of i s Conferenee, Governor Yeung, voting In the negative.
Governor Barrieon stated that he voted agalaet the amendment becauS*
he was of the opinion that if purchases were to he effective they ahould he
aade in s M m
substantial mount i that in view o f the withdrawals o f currency
for hoarding plus tho retirement of Mils end Governments held hy one foreign
central hsnk the authority contemplated hy the emendment would do so store then
Reproduced from the Unclassified I Declassified Holdings of the National Archives
8/11/31
-* •
present
offeot/withdraeale from tha market#
He iliMi, M i i f t m a t ft majority if tha U l i
reported that it
m a their opinion and tha opinion of tha directors of thair banka m a t It
would ha inadviaable to purehaee any Govarnmeate at thia tiraa, and that they
oould not foraaa tha likelihood of any oaaaaion to buy Qovernraente in tha naar
futura*
Be had wted for the aasnded resolution, he eaid9 heoause ha thon^xt
It aaa important m a t m e Exseat Its OoasULttee should not he without some
authority to aet.
Governor Barriaen eleo state* m a t it aaa not contemplated
m a t tha 180,000,000 of Ocvericaanta purchased hy tha Federal Beeerre Bank of
Bee York within the last two or throe day* would he abeorbed into the System
account under the authority given in the emended resolution of m e Confersnee,
and that unis as aoiss of m e other individual M o r a l Bsserte banka deaired to
participate in those purehaaes they would he earried in the portfolio of m o
How York Bank*
Governor Young reported m a t ha had voted against bom the notion to
«ssad the original resolution and the adoption of the resolution aa amended
baeauae he felt mat any emergency oould be taken ears of by tha Syatsm through
purchases of bills, which will come to the Syetea at a one per cent rate, and
that he would rather see en increase in m e bill portfolio or even in radio*
counts rather than in ineligible Government securities*
Be eaid he would
regret to eee the important functions of the Federal Reserve System in radio*
counting and bill operation* former nullified by purchases of Government
securities*
Bo oppressed the opinion that neither m e cammedity price aituation
or the bond market would be helped by an operation in Government securities*
He stated that evsn if thsrs were anything in m e idea that eaftese reserve*
0m
oould be put in m o meiket and areata aatiwity, ha did not faol that the pres
ent waa m e tins to do it*
Bs stated m a t when m e tine did ocqmi ha thougit
Reproduced from the Unclassified I Declassified Holdings of the National Archives
8/11/31
«* »
there would to opportunity for a thoroughgoing dlecueslon of it by the Con
ference before action w i taken*
4% this point Governor Slack left the Meeting*
Governor Meyer, *ho had attended a part of the preliminary meeting of
Open tbnlwt Policy Geaferemee, ctatcd that the authorization vaa given Its*
oause the Conference felt the Executive Committee should have authority to take
eome action, either to buy or to eell Ooremramt eeeurltlee, if drcramstanees
required, pending another meeting of the Conference*
The Governor then made inquiry of Doctor Goldenweleer regarding the
qaeetlon of free gold in the System and the Idea apparently held by acme of
the Oovernore that a dengsr exists of employing too large a portion of the
System* e free gold in purchase* of Government eeeurltlee vhleh arc not Eligible
aa collateral for Federal Beecrve notee, in the face of the poealbUlty of
currency damanda arising fi
rffi local aituatione*
Doctor Goldenweleerreplied that he did net eee cny real danger in the
inacdlate eltuetlon for the Syetcsa aa a whole, elnce any euetalned deeand for
o u m o i y would neoeeeltate borrowing by m— tsr banka ehleh eculd of 1 M I
fumleh the collateral neeeeeery for the lasusnee of the netee*
Doctor Miller then eteted that he did not feel that a policy of main
taining the etatua quo in a money market at depression levels for feer that It
might cause eome disturbance had an adequate baaie*
Be stated rather that be '
felt, skeptical ae he ml^it be toward Open Market Policy aa an inetnsment of
the Federal Beeerve System, that if there ever bad been a juatlfleatlon for
ite *tld, expert cental nee , even though it might only eerve to demonstrate the
H a d to of the availability of sueh a policy, that dtuatlon exlata at the preeeat time*
He etated that chile not over optimistic aa to chat might be eeccm-
pllahed, he felt sure that if ever the experiment could be undertakes* with the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-6 -
8/11/31
m ini**** 0f haaard it ««• at the present tisae, or in the near future, sad that
since the Federal Reserve System is the one agency which a large part of the
public think* haa Hie power to do soasthing, he felt that either no action
should he taken or else such action should be taken ae night result in some
I
jnwwcat in the moribund condition Which now exists*
Gorsmor i*5eyer then referred to the initiation of the present nesting
of the Conference by the Federal Boeerte Board, through the suggestion made
to the Chairman ef the Conference of the Board«e willingness to sympathetically
consider a program of positive open market action, which decision had been
reached by the Beard after a careful consideration of all related conditions.
Be etated that at the recent Meeting of the Executive Committee of the Confer*
ence an interesting discussion had ensued, but that it was recognised that in
any mdh a major program a mooting of the full Conference was necessary*
He
stated that a majority of the Governors apparently cane to this meeting carry
ing mandates to a certain extent from their boards of directors and that the
Board had net had an opportunity to participate in the discussions until after
action had been taken by the Conference*
He stated that he did net feel that
the Beard was ftiUy Informed of the views of Hie Conference and suggested that
perhaps further study and consideration Should be given to the eltoatlon with
the expectation ef having another meeting ef the Conference in the not distant
future, at which a full snd free discussion can be had*
Be stated that he has
felt f*r some tins that it would make for a more satisfactory procedure if the
Beard were brought into the jrcliminary discussion and that he believed in
future the meetings of the Open Market Policy Conference should begin with a
discussion of the 'alieJje actuation with the Board, following ifal4h a separate
session could be held by the Conference, and a further Joint meeting with the
mambere ef the Board, if deaired*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
8/11/31
-7 Governor Harrison expressed hla own objections to tha present organi
sation of the Open Market Poliey Conference, but stated that the procedure at
this meeting see whet had been followed since the Conference was organised
and that there had been no Intent to exclude the members of tha Board from a
full participation In tha discussions*
Governor Meyer also referred to the feet that several of tha Governors
had left the Conference before Its completion aad expreseed the opinion that
la tho future when attending » i f » W i i of. D m Open ttaxfeet Poliey Coafereneef
arrangements should be made by the rarloue Governors to sflbrd themselves ample
time to participate In the entire proceeding*
Tha meeting adjourned at dtfSO p* m«
Assistant secretary*
Approvedi
Govexnor*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d ec la s si f ie d
Authority E .0 * £ 3 S k
CQNFIOTTIAL
REPORT OF OPEN MARKET OPERATIONS
TO MEETING OF THE OPEN MARKET POLICY CONFERENCE
_________ IN WASHINGTON, AUGUST 11* 1951
At the last meeting of the Open Market Policy Conference on April 29, 1931,
the total holdings of Government securities in the System Account amounted
t o - -------------- ------- ------------------------------------------$402,300,000
Rirsuant to the discussion at the Governors* Conference
in April, a transfer was effected early in May from the holdings
in the Investment Account of the Federal Reserve Bank of Few York
of $37,543,000 of Government securities, representing the amount
of its excess holdings of Government securities, to the partici
pations in the System Account of other Federal reserve banks which
showed shortages in their pro rata share of Government security
holdings, as follows:
Amount
Banks
Cleveland
Richmond
Atlanta
St. Louis
San Francisco
Atlanta
Transferred
$ 5,000,000
13.000.000
3.000.000
1,543,000
.
10 000.000
5.000.000
Date
Effected
May
"
"
"
"
"
5,
5,
5,
5,
8,
9,
1931
1931
1931
1931
1931
1931
37,543,000
At the request of the Federal Reserve Bank of s£. Louis,
and with the approval of the Open Market Policy Conference, a block
of $4,625,000 United States 1 1/2$ certificates of indebtedness
maturing September 15, 1931, was transferred on May 19, 1931, from
the holdings in the Investment Account of the Federal Reserve Bank
of St. Louis to the System Account, and the participation of the
St. Louis bank in the System Account was increased by - - - - - - -
-
-
4,625,000
Neither of the foregoing transfers affected the total amount of
Government securities held in the System, but increased the total
amount of holdings in the System Account t o - —
- - - - - - - - -
-$ 4 4 4 ,4 6 8 ,0 0 0
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority £.Q -V23Sk
2
Subsequent to the meeting of the Executive Com
mittee of the Conference on June 22, 1931, purchases of
United States Government securities were made, under
authorization given at the April 29 meeting of the Con
ference, aggregating $80,000,000, as follows:
During week ended June 24 - - - - * $20,000,000
n
tt
w
July 1 - - - - - 20,000,000
tt
»t
tt
tt
q - - - - 30,000,000
tt
*t
tt
tt 1 5 -------- -10 ,000,000
80,000,000
These purchases brought the total holdings in the Account,
at the close of business July 15, 1931, up to
$524,468,000
This increase in the portfolio took the form principally of 1st and 4th
Liberty loan bonds.
In addition to the foregoing operations,there have been some changes in
the maturities of the issues held in the Account, partly due to the replacement of
maturing issues, and partly to sales and purchases made to effect an improvement
in the yield.
June 15
Tax Period
Operations
As a partial offset to the easing effect in the money market
caused by the Treasury’s operations during the June 15 tax period,
delivery was deferred for two days, of $11,500,000 of replacement pur
chases made in the market for the Investment Account of the Federal
Reserve Bank of New York.
Dae to the small amount of the Treasury
certificate of indebtedness issued on June 15 to cover the Treasury
overdraft, which amounted to $2 1 ,000,000 for only one day, no partici
pations were sold to New York City banks.
PARTICIPATION IN SYSTEM SPECIAL INVESTMENT ACCOUNT
At the present time all of the Federal reserve banks have participations
in the holdings of Government securities in the System Account.
Hiring the period
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority B ■0 • U3Sfc>
3
covered by this report there have been some changes in the participations, in addi
tion to those previously mentioned in this report, as follows:
On June 29 - The Federal Reserve Bank of San Francisco was relieved tem
porarily of $>10 ,000,000 of its participation, at its request,
which was taken over by the Federal Reserve Bank of New York
until July 3 when San Francisco repurchased the securities.
On July 15 - The Federal Reserve Bank of Dallas was relieved temporarily
of $2,500^000 of its participation, at its request, which
wa3 pro rated to all the banks, except Richmond and
Minneapolis, which were not in a position to take on more
Governments. The Dallas bank has indicated that they expect
to repurchase their participation in this amount in about
sixty days.
CHANGES IN PARTICIPATIONS IN SYSTEM PURCHASES OF BANKERS ACCEPTANCES
On May 6 , 1931, a sale was made of $2,000,000 bills from the portfolio
of the Federal Reserve Bank of New York to the Federal Reserve Bank of Atlanta, to
compensate for Atlanta’s inability to take sufficient governments to cover fully
the shortage previously mentioned in this report.
On May 14, 1931, the Federal Reserve Bank of Richmond resumed its partici
pation in System purchases of bankers acceptances, which had been discontinued on
February 5, 1931.
At the present time all of the Federal reserve banks are participating
in System purchases of bankers acceptances, with the exception of the Federal
Reserve Bank of Philadelphia.
AIXOTMENT OF SYSTEM HJRCHASES OF GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES
For the first half of the current calendar year, in accordance with tho
plan that has been in effect during the past few years, System purchases were al
lotted according to percentages based on the ratio that each bank’s expenses,
dividends, and charge-offs for the preceding year bore to the total of such items
for the System, with the understanding that adjustments would be made in the ratios
during the second half of the year on the basis of actual and estimated figures
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 0 • \23S£?
4
available at the end of each month.
New ratios were accordingly put into effect
in July, based upon actual figured for the first six months and estimated figures
for the last six months of this year.
The ratios used for the first six months,
and the ratios now in effect for allotment of System purchases of Government securi
ties and bankers acceptances, are as followst the Federal Reserve Bank of
Philadelphia being omitted from tho bill ratio as it does not participate in bill
purchases:
GOVERNMENT SECURITIES
Ratios in
Ratios Used
Effect
For First
in July
Six Months
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
7
25
7
9
5
5
13
5
3
5
4
9
l/4#
1/4$
1/8#
3/4#
1/4#
#
#
1/4#
1/4#
1/2#
#
#
7
27
8
10
5
4
13
4
3
5
3
8
1/4#
#
#
#
1/4#
1/2#
1/2#
1/2#
#
1/2#
1/4#
1/4#
100
#
100
#
BANKERS ACCEPTANCES
Ratios in
Ratios Used
Effect
For First
in July
Six Months
7 3/4#
27
0
10
5
5
14
5
3
1/4#
1/2#
3/4#
1/2#
#
3/4#
1/2#
e
#
4 1/4#
9 3/4#
100
#
Attached are statements showing:
Exhibit "A" - Outright holdings of Government securities by
individual Federal reserve banks, as of close
of business August 5, 1931; also, their par
ticipation in Government security holdings in
the System Special Investment Account, and
the classification of issues held in the
System Account by maturities, as of close of
business April 22, 1931 and .August 5, 1931*
Exhibit WBW - Earning asset holdings of all Federal reserve
banks August 5, 1931, as compared with pre
vious week and August 6, 1930; also weekly
average of earning assets from January 2 to
August 5* 1931, as compared with correspond
ing period 1930 and entire year 1930,
8
29
0
11
5
4
14
5
3
#
1/4#
e
#
#
3/4#
3/4#
3/4#
#
1/4#
3 1/2#
8 3/4#
100
#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E • 0 • \23Sk
5
Exhibit nCn - Bills purchased outright by System by weeks
from January 2, 1930 to December 31, 1930,
and from January 2, 1931 to August 5, 1931,
Exhibit "D" - Amount of net profit that was realized on
various sales of United States Government
securities in System Account during period
January 2, 1931 to August 5, 1931, and held
in Suspense Account by the Federal Reserve
Bank of New York, and amount of each bank’s
pro rata share of such profits; also the
approximate amount of net profit as represented
between the book values and the market bid
prices on August 5* 1931, of United States Gov
ernment securities held in the System Account.
Exhibit "EM - Amount of oach Federal Reserve Bank’s Gross
Earnings, Expenses and Dividends, and net earnings or net deficit, for the first six months
of 1931.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E - O - U S S k
EXHIBIT "A"
(Excluding Sales Contracts)
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
Outright Holdings of
Government Securities
by Federal Reserve Banks
as of the Close of
Business August 5, 1931
$
709,950
74,776,900*
18,791,250
10 ,000,000
1,152,100
2,559,350
21,598,100
4,000,000
7,167,000*
46,500
9,997,900
9,625,050
Participation by Federal
Reserve Banks in System
Special Inv. Acct. Govft
Securites as of the Close
Totals
of Business August 5, 1931
$ 53,165,450
r $ 52,455,500
167,992,900
93,216,000
57,272,730
44,481,500
72,085,000
62,085,000
31,557,600
30,405,500
22,332,850
19,773,500
95,332,100
73,734,000
30,475,500
26,475,500
27,440,000
20,273,000
39,077,000
39,030,500
30,129,900
20,132,000
52,031,050
42,406,000
$678,892,100
£>524,468,000
0154,424,100
*Excluding Self Insurance Reserve.
CLASSIFICATION OF ISSUES OF GOVERNMENT SECURITIES
HELD IN THE SYSTO! SPECIAL DTVESUOTT ACCOUNT
Close of
Business
August 5
Close of
Business
April 22
4,
U. S. Treasury Bills due May
tt
t»
«
tt
18,
May
tt
tt
tt
»♦
tt
July
1,
t*
ft
tt
tt
n
July
2,
»t
tt
»»
«
n
Aug. 1 0 ,
tt
tt
n tt
tt
Aug. 1 7 ,
tf
tt
tt
tt
tt
Aug. 3 1 ,
tt
it
tt
tt
tt
Sept. 3 0 ,
tt
It
tt
tf
tt
Oct. 1 5 ,
tt
tt Nov.
n
tf
tt
2,
t? June
15,
2 7 / 8 $ Cert, of Ind.
tt
♦t
tt
tt
June 1 5 ,
1 3/4$
tt
tt
tt
«
Sept.
15,
1 1/2$
tt
tt
tt
tt
Sept. 1 5 ,
2 3 /8 $
tt
tt
tt
tt
Dec. 15,
1 7/8$
n
tt
M
tt
March 15,
2
$
3 1/2$ Treas. Notes called Dec .15,
4 1/4$ 4th L/L bonds due Oct. 15,
ft
ft
June 15,
3 1/2$ 1 st "
tt
tt
tt
tt
June 15,
4 1/4$
Totals
1931
|
2 ,0 0 0 ,0 0 0
$
0
1 931
1 9 ,2 0 0 ,0 0 0
0
1 931
2 1 ,3 0 0 ,0 0 0
0
1931
1 1 ,5 0 0 ,0 0 0
0
1931
0
1 ,0 0 0 ,0 0 0
1931
0
1 7 ,7 0 0 , 0 0 0
1931
0
2 3 ,4 2 5 ,0 0 0
1931
0
5 ,0 0 0 ,0 0 0
1931
0
2 4 ,7 0 0 ,0 0 0
0
2 0 ,7 5 0 ,0 0 0
1931
1931
4 3 ,7 8 1 ,0 0 0
1931
2 3 ,3 0 0 ,0 0 0
1931
5 7 ,0 2 7 ,0 0 0
1931
7 2 ,8 8 0 ,5 0 0
1931
1932
1931
1938
1947
1947
87,626,500
45,332,000
14,012,000
4,341,000
0
0
5 0 ,6 3 2 , 0 0 0
0
1 1 8 ,0 7 6 ,5 0 0
,.500
11,027,250
63,125,750
1 1 8 ,4 8 1
0
4 4 ,6 0 0 ,0 0 0
0
22,950,000
$402,300,000
$524,468,000
E X H IB IT
"B "
SXATJOtiBtT SHOWING EARNING ASSET HOLDINGS OF ALL FEDERAL RESERVE BANKS AUGUST 5, 1931 COMPARED WITH PREVIOUS WEEK AND AUGUST 6, 1930; ALSO WEEKLY AVERAGE
(000 Omitted)
Bills Discounted
M
*
- July 29
Aug. 5
Net Change
Bills Purchased
m
n
New York Phileu
♦ 9,376
7,271
•26,845
36,105
2,105- July 29
Aug. 5
4,845
5,327
482+
Net Change
Government Securities - July 29
N
«
Aug. 5
Net Change
Total Earning Assets
«
**
w
Boston
- July 29
Aug. 5
Net Change
9,260+
23,502
25,973
2,471+
53.162
53.162
169.535
169.535
-0-
-0-
67,683
66,010
223,122
234,153
1,673-
11,031+
117,055
18,033
978+
3,406
3,412
6+
54,473
57,273
2 ,800+
75,494
79,428
3,934+
Cleveland
Richmond
Atlanta
Chi caRO
St.Louis
Minn.
Kan. City
Dallas
San Frktu
Total*
*16,262
17,484
♦17,785
18,231
♦16,008
17,058
♦13,636
14,992
♦ 9,724
9,553
♦ 4,667
4,796
♦10,340
12,059
♦12,241
12,577
♦29,097
20,416
♦ 183,034
188,575
1,222+
6,071
5,442
62972.085
72.085
-0-
94,818
95,361
543+
446+
2,216
2,347
131+
31,558
31,557
151,779
52,320
541+
1,050+
1,356+
6,689
4,374
7,770
7,471
2,31522,302
22,333
31+
45,209
43,940
1,269-
29995.332
95.332
-0117,268
118,250
982+
1711,738
1,891
153+
30.476
30.476
-0-
42,138
42,120
18 -
129+
1,083
1,18 8
105+
27,816
27,640
17633,842
33,806
36-
1,719+
2,366
2,160
206-
39.077
39.077
-0-
52,563
54,076
1,513+
336+
1,682
1,468
214-
8,6815 ,16 8
5,021
147-
30.130
30.130
52.031
52.031
-0-
—0—
44,213
44,335
86,666
77,783
122+
8,883-
5,539+
66,536
66,074
462-
677,977
686,681
2,654+
934,795
941,562
6,787+
Comparison of Weekly Average
of AarainfL A^ietf------------------_
Jan. 2 to Aug. 5, 1931
Sants period 193CT
Intire year 1930
Net Change from same period 1930
"
"
" entire year 1930
68,868
70,832
74,002
1,9645,134-
252,487
330,577
323,075
78,09070,588-
72,324
87,711
82,371
15.38710,047-
94,435
95,670
98,736
1,2354,301-
43,041
41,962
44,795
1,079+
1,754-
37,474
50,232
49,995
12,75812,521-
118,034
131,108
127,693
13,0749,659-
40,472
46,716
46,611
6,2446,139-
34,594
33,106
34,591
1,488+
3+
52,033
35,268
♦1,405
16,765+
10,628+
42,031
43,800
45,066
1,7693,035-
74,761
69,851
72,522
4,910+
2,239+
930,554
1,036,833
1,040,862
106,279HO, 308-
Comoarison of Earning Assets
August 5, 1931
"
6, 1930
Net Change
66,010
71,651
5,641-
234,152
275,723
41,570-
79,428
71,262
8,166+
95,361
83,392
11,969+
52,320
42,786
9,534+
43,940
46,808
2,368-
118,250
106,617
11,633+
42,120
41,866
254+
33,806
34,953
1,147-
54,076
*3,829
10,247+-
44,335
45,689
1,354-
SUMMARY FOR SYSTEM
Bill® Discounted for week
Bills Purchased for week
Government Securities for vsek
Total Earning Assets for week
Comparison of Weekly Average of Earning Assets Jan* 2 to Aug. 5, 1931 with same period 1930
M M
N
M M
M
H
M
2 " H
5, 1931
« entire year 1930
Comparisot; of Earning Assets Aug. 5* 1931 »ith Aug. 6, 1930
♦5,539*
4*2-
2,6544
6,787*
106,279110,30818,592*
77,783
58,414
19,369+
941,582
922,990
18,592+
-----------------------------------------------------------------------------------------------------------------------------------------— =-------------------
Reproduced from the Unclassified / Declassified Holdings of the National Archives
jcxh: ? : ?
TKMJA
Haw York
Dealer* _
V llk l
Banka
Boiton
-1930Jan.
6
15
22
29
m ,
liar.
1
2,359
3,359
1,627
563
*
*
25,766
20,539
9,398
10,740
7,338
30,900
14,187
4,834
2TO
P h ila .
Total
|
1)11X8 PURCHASED OUTRIGHT BY STSTBJ BY WBK8
MBER 31. 1930 AMD FROM JAHUARY 2 TO APOPBT 5. 193:
' "
. (000 Oalttad)
Clavaland
172
-0613
2,175
37,970
6,073
37,852
30,381
14,294
8,973
12,431
15,677
5
12
19
26
900
301
85
1,009
28,464
8,714
13,650
7,404
3,858
2,387
4,567
-0-
32,322
11,101
18,217
7,404
ChicsEO
*
615
975
1,107
137
Ulnn.
-0 -0 -0-0 -
1,160
♦ 599
■ 650
473
-0 -
♦ 1,790
303
965
942
1,813
544
878
2,585
-0 -0-0 -0-
-0-0403
ft
769
426
96
323
4«9
361
730
389
“ 0-0 708
547
1,150
279
698
137
-0-0 -0 -0 -
283
514
100
162
496
223
-0 -0 -
721
2,960
590
854
-0-0 -0-
* 1,385
1,838
1,608
5
11
19
26
Atlanta
-0 -0 -0 -0 -
33,104
51,439
23,585
15,574
52,264
15,046
50,283
46,058
Richmond
168
15Z S F
0
n il
»
"o"
INCREASE or DECREASE
In Holdings
Including Sales Contract*
dyatem
New York
Operation*
„
Daaler*
Operation*
With Other
D is tr ic te
4,961
3,761
1,913
42,761
64,^33
33,718
20,645
♦ 56,5345|149+
28,77430,555-
* 73,0424,180+
24,95839,917-
* 13,068
3,179
5,075
3,819
595
402
550
ti.0
2,129
430
2,902
1,930
58,211
17,209
57,163
54,467
36,257+
19,3187,701+
12,031+
37,319 +
19,7074,963+
13,249+
7,154
2,615
4,887
5,314
316
443
281
115
5,427
984
152
135
42,469
16,305
20,123
9,130
24,57810,97162,03173,104+
28,10414,66471,52171,465+
11,346
8,640
8,007
5,939
3,518
8,026
4,033
25 , 431+
34,13439,897+
45,15840,274-
44,315+
34, 29535,412+
45,54547,305-
6,719
9,315
7,240
3,844
5,044
2,768
2,552
5,546
4,454
2,56o
661
483
592
356
♦
2,2*3
♦
7,753
♦
7,113
876
3,440
3,550
2,143
1,086
1,337
10,532
23
30
3,542
6,455
3,428
2,122
1,586
18,474
8,412
19,450
7,498
le ,6 l3
26,186
24,203
19,295
371
26,680
34,598
43,653
26,793
16,984
1,899
3,515
1,442
1,964
245
-0 -0 -0-0 —0-
269
-0454
-0 109
125
-0 468
21
220
4,749
853
507
480
717
335
-0-0 1,780
366
633
190
418
57
132
3,428
2,865
2,194
1,433
1,714
41,660
48,476
52,564
34,650
22y073
Hay
7
14
21
28
824
332
2,535
688
2,341
23,380
30,177
5,307
3,962
9,917
1,742
3,064
6,303
33,297
31,919
8,371
-0 143
-073
-0 -0 -0 -0 -
102
-0232
367
-0 -0—
-o 75
669
1,365
558
637
-0 -0—01,000
108
138
104
112
434
1,225
1,585
1,907
8,440
36,500
36,933
13,230
30,1731,30915,354*
18,991-
34,3614,168—
15,349+
11,324-
2,295
8,140
8,137
4,430
2,938
2,974
1,241
2,543
June
A
11
18
25
231
2,27 5
620
1,244
22,244
24,431
11,691
11,779
10,373
-0 -0-0 -o -
-0-0-0-0-
165
245
245
144
45
-0 -0 -0-
349
710
1,175
4,243
427
-0 -0852
32
77
169
30
1,903
552
6,475
7,945
2,187
4,602
5,304
2,428
2,312
27,583
15,550
15,268
19,698
22,991+
42,45914,74431,975-
13,680+
41,06915,39630 , 457-
5,081
4,771
9,263
4,000
1,603
1,705
4,060
5,342
2
9
501
427
1,146
1,441
1,203
35,561
8,094
41,660
11,313
7,404
3,525
4,045
8,719
5,532
4,100
39,086
12,139
50,379
16,845
11,504
-0-0-0-0-0-
-0-0-0-0-0-
110
30
1,116
60
1,166
-0 237
75
25
-o 33
393
451
-0 -
-0 -08l8
-0 262
81
80
17
-0 38
66
876
374
2,152
1,039
500
41,800
14,263
54,913
20,051
13,643
59,363+
6,52021,11914,43915,709-
55,172+
8,54019,722+
*0,14419,7ol-
9.008
3,030
3,993
4,766
2,444
4,612
1,254
4,403
2,504
-0-0 -0 -0-
-0-0 -0-0-
81
25
-0 -
20
63
510
1,569
-0 -
-0-0 -0 -0-
14
19
-019
841
729
1,276
-0 -
14,152
43,503
36,213
17,769
6,530+
21,458+
1,604+
1C,257+
2,309 +
20,757+
4,594+
4,352+
7,300
4,619
3,426
8,496
739
3,169
2,720
2,253
246
-0-0-o-
-0 -0 30
5
781
100
696
1,737
18,249
55,441
28,116
22,370
6,020+
23,801+
15,035+
14,432-
7,121+
22,725+
15,741+
11, 118-
3,096
5,924
5,071
4,210
1,933
4,107
2,407
2,102
29,9 24
37,273
36,047
41,319
8,743
3,82917,498+
30,9807, i n 5, 793-
4,63517,915+
25,5311,098+
20,932-
6,919
9,855
6,167
7,471
7,007
4,660
2,486
5,273
1,506
4,099
Apr.
2
9
16
July
16
23
30
Aug.
6
13
20
27
8,206
7,089
863
-0 443
482
11,990
41,288
31,820
17,052
280
907
1,105
129
12,270
42,195
32,925
17,181
60
-o 27
3,924
6,044
113
7,744
16,576
54,111
26.449
19.449
-0 -0 -0-0-
-0-0-0-0-
-0-0-0143
236
550
193
209
25
232
100
160 .
527
1,280
6.008
bapt.
3
10
17
24
178
580
588
300
12,652
48,067
26,336
11,705
Oct.
1
8
15
22
29
1,917
6,298
260
670
500
23,799
23,327
29,196
30,948
4,237
63
3,864
2,257
7,822
1,105
23,862
27,691
31,453
38,770
5,342
-0 -0 -0-0-0-
-0 -0-0-0-0-
-070
-0-0328
590
-0 149
117
387
-o 113
849
200
861
200
-0-0 -0200
299
-0 -0-0 -
3,056
3,101
3,320
1,562
1,125
I) ov,
5
12
19
26
73
200
-0“0“
25,710
17,970
13,075
10,316
290
777
30
2,510 .
26,000
18,747
13,105
12,326
-0-0-0 -0-
-0-0-0-0-
-0-040
384
-0 80
-0 -
118
-0434
588
-0 -0-0-0-
7
32
571
112
3,613
883
538
2,507
30,195
19,862
14, 768
16,251
14,662+
23,505+
29,9112,472-
19,944+
21,740+
29,0692,137-
5,901
2,675
7,787
5,654
3,715
4,688
1, 709
444
Dae.
3
10
17
24
31
1,286
43,204
34,659
34,066
6,541
91.229
311
4,393
1,829
-05.722
43,515
39,052
35,895
6,541
96.951
-0-
-0-0—0—
-0-0-
71
322
-0 -0-
544
75
1,151
3,235
13.984
660
-015
-0 -0 20
1,470
884
1,146
1,544
419
48,844
41,984
33,950
13,921
114,694
39,338+
21,926+
6,345+
14, 23345.198+
42,331+
24,760+
7,394+
8,246+
104.007+
3,047
3,462
4,302
5,219
2.882
1,233
2,054
1,154
1,249
2.963
» 8,765
♦86,573
♦1,682,592
$112,740-
* 38,389-
*312,481
♦164,429
TOTALS
1,010
103
855
688
♦61,057
-1931Jaa.
7
14
21
28
*1,106,075
1308,053
♦1,414,128
6
-0-0 «23,362
218
216
1,29 8
626
649
1,746
l.fl4
-0 -
♦7,642
#16,235
-0-0-0902
♦ 54,673 ♦lO ,157
16
362
407
-0157
35,498
406
2,351
594
6,280
322
718
-0-
41,778
728
3,069
593
-0-0 -0-0-
-0-0-0-0 -
248
21
-0-0 -
22
580
83
75
24
126
-0 -0 -
-0-0-0-o -
-093
1
31
438
280
79
34
42,872
2.235
3,232
892
84,70764,07140,31624,763-
98,38869,27644,55531,384-
4,588
5,128
3,675
7,419
1,724
999
3,767
6,679
4
11
18
25
-0 -0 -0 >0
“ 2,994
2,894
20,904
14,499
264
-0 -0-0-
3,258
2,894
20,904
14,499
-0-0-0-0-
-0 -0 -0 -0-
290
60
-0 -0 -
37
357
-0”
120
28
-0 50
-0 -0-0 -0 -
16
7
1
40
-012
-02,578
3,721
3,081
21,262
17,257
11,3036,5688,352+
13,984+
15,96616,5366,256+
12,322+
2,096
2,501
1,676
3,631
4,272
1,323
6,360
2,803
4
11
25
50
-0 -0 -0 -
16,966
47,222
12,105
14,353
105
3,218
1,188
-0*
17,071
50,440
13,293
14,353
-0-0-0-0 -
-0-0 -0 -0 -
-0 -0 -0 -0 -
-o -0 -0 -0 -
-0 2,434
-0 50
460
-0-0 -0-
141
7
—0—
-0“
1,775
2,448
1,653
3,204
19,497
55,329
14,946
17,607
6,36546,867+
28,64738,681-
5,76250,847+
28,85239,278-
825
4, 201
2,056
2,518
2,215
5,371
7,537
7,052
1
8
15
22
29
4,040
-0 -0 457
3,3*9
57,800
45,476
12,442
17,061
27,723
6,794
16,503
8,207
1,212
5,o8l
64,594
61,979
20,649
18,273
32,804
-0-0 -0 -0 -0“
-0-0 -0 -0 -0 -
-0“ 0"
•0*
-0“
-0 -
-0 -0 384
-0 -0 -
1,210
874
55
390
403
-0 450
-0-0 -0 -
-0 -
13
25
“0-
3,653
2,476
607
2,648
1,523
73,497
65,797
21,708
21,793
38,369*
77,535*
7,762+
38,9848,729+
19,508+
83,350+
5,107+
40,25020,132+
18,154+
1,902
1,134
4,259
2,227
10,625
6,700
6,351
7,912
4,867
1,499
Hay
4
13
20
21
123
-0 *1,201
252
40,19>
5,407
16,155
17,0(0
4,595
8,423
2,121
1,101
. 44,788
13,830
18,476
18,161
-0-0 -0 -0-
-0 -0 -0 -0 -
-0 -0 -0 -0 -
-0 -0—
-0 -0-
-O348
499
267
1*5
-0 -0-o -
10
-o35
"0“
3,066
279
400
218
48,122
14,477
20,811
18,898
26,736+
36,14219,0014,065-
24,104+
40,76122,1016,506-
8,878
8,549
3,972
4,617
2,634
639
1,065
1,000
June
3
10
If
24
-0 115
135
-0 -
11,387
22,509
2,771
2,910
3,209
720
10,911
14,297
25,718
3,491
' 11,409
-0 -0 -0 -0 -
-0 -0 -0 -0 -
-0 -o ■0*
-0 -
278
-0-0 io i
-0 -01,747
-o -
-0 -0-0-0-
-0 -03
-0 -
•0“
751
1,248
1,464
14,575
26,584
6,424
13,174
6,529+
4,24718,0081,288+
9,654+
6,93820,403424-
5,118
5,442
5,909
8,501
1,230
1,249
3,015
963
-0 ■0“
-0 - ’
-0 -0 -
2,>94
2,714
204
1,013
1,227
41
400
-0 -0 -
4,222
2,755
806
1,013
5*2
-0 •*-0“
-0 -0 -
-0“
-o “ 0-0 -0 -
-0 -0 -0 -0 -
-0 -0“
44
1,501
-0 -
"0“
“0 "
-0-©200
-0 -0 -0 -0 -0 -
■0“
15
-0 -0 -0 -
1,491
242
-0 1,557
-0 -
4,0645,59519,8977,0351,374+
3,04911,55321,3803,375497-
13,277
5,869
3,514
5,550
3,812
3,386
5,904
1,557
12,192
4,435
-0-
-0 »
1111- J-1---
-0-
-0-
*0 m
m
m
m
m
m
m m'0 -
-0-
-0-
-0 -
9,944
59+
442-
8,002
2,701
-0 -
1419
♦3,544
11.045
1454
*411,032
*244,234-
*297,770-
♦151,473
♦119,403
Fab.
Harah
18
A pril
‘
July
1
15
22
*9
Aug.
TOTAL*
5
$10,721
w
m
9,944
1445,124
•XmIKm 1*00,000
m M m I U ,0 0 0 y m k u M
Digitized for• HFRASER
------9,944
485,750
br «. u«l*
k j Km m * C ity
--- 1-u.
♦550,8*4
-0 -
80
|8,845
18
*34,528
5,997**
3,012
852
4,071
792
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT nC" <a)
CLASSIFICATION BY MATURITIES OF BILLS HIRCHASED
BY FEDERAL RESERVE BANKS M THEIR RESPECTIVE DISTRICTS
DURING- THE PERIOD FROM JANUARY 2 TO DBCEi.iHCR 31, 1930
AND FROM JANUARY 2 TO AUGUST 5, 1931
(EXCLUDING SALES CONTRACTS)____________
(000 Omitted)
JANUARY 2 TO DECEMBER 31, 1930
61-90 days Over 90-days
31-60 days
1-30 days
Bos ton
New York
Philadelphia
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Dallas
San Francisco
Totals
785,107
5,253
2,014
18,955
22,549
325
1,015
4,379
19,428
$ 14,949
445,452
8,036
3,142
4,009
24,202
0
3,479
3,055
44,914
$ 19,679
150,809
10,073
2,462
3,032
7,922
0
5,663
829
21,766
$ 1,332
16,206
0
24
265
0
0
0
502
465
0
65,370
1,397,574
23,362
7,642
26,261
54,673
325
10,157
8,765
86,573
$888,435
$551,238
$222,235
018,794
$1,680,702
$ 29,410
1-30 days
Boston
New York
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
Total
JANUARY 2 TO AUGUST 5 , 1931
Over 90-days
31-60 days
61-90 days
Total
0
523
38,675
345
709
292
0
0
3
30
1,936
£
805
796
0
48
0
0
0
0
32
431
0
295
18,829
0 1,890
124,436
234
739
2,384
0
0
74
99
13,332
10,728
550,884
619
3,544
8,845
300
1,045
83
456
34,528
#423,219
$143,188
$42,513
#2,112
$
611,032
0 7,510
386,977
40
2,048
6,169
300
1,045
6
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXHIBIT ,rD"
Anount of Not Profit that ttas roalizod on various sales of
United States Government securities in Syston Account
during poriod January 2 to .August 5, 1931, and hold in
Suspense Account by tho Federal Rosorvo Bank of Nor York
$1,289,832.78
Amount of Each Bank’s Pro Rata Share
#
Boston
139,272.27
Ngt7 York
222,359.43
Philadelphia
115,001,49
Gloveland
153,656.49
Hichnond
63,728.06
Atlanta
35,727*08
Chicago
188,963.08
St. Louis
55,304.16
Minneapolis
55,631.78
Kansas City
100,658.55
Dallas
58,501.66
San Francisco
Total -----------------
101,028.73
*1,289,832.78
Approximate amount of Not Profit as reprosontod botweon
tho book values and tho narkot bid prices on August 5,
1931, of United Statos Government securities hold in
the System Account -------- - - ---- - - - ---- - -
01,120,475.53
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT E
STATEMENT SHOWING TEE AMOUNT OF EACH FEDERAL RESERVE BANINS GROSS EARNINGS
EXPENSES AND DIVIDENDS, AND NET EARNINGS OR NET DEFICIT* FOR THE
FIRST SIX MONTHS OF 1931 __________________ ___
Gross
Earnings
Expenses
and
Dividends *
Not Earnings
or
Not Deficit
v
640,237
706,655
| 1,346,892
2,797,218
4,582,382
1,785,164
917,230
1,457,311
540,081
1,153,537
1,810,977
657,440
Richmond
543,022
958,149
415,127
Atlanta
486,024
812,796
326,772
Chicago
1,645,866
2,391,576
745,710
St. Louis
519,783
770,454
250,671
Minneapolis
433,676
557,184
123,508
Kansas City
715,463
970,766
255,303
Dallas
530,381
442,829
87,552
San Francisco
887,199
1,490,789
TOTALS
1311,336,054
$17,592,105
$
Boston
N ot; York
Philadelphia
Cleveland
1
603,590
^ I 11" l H
#6,256,051
*Including currant debits and crcdits to profit and loss account, but not
for profit or loss on sal-s of United States socuritios hold in Spccial
Investment Account.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d ec la s si f ie d
Authority E • 0 • \23Sk
PRELIMINARY MEMORANDUM, SUBJECT TO REVISION
CONFIDENTIAL
.August.3 * 193i*
IvffiMORAJSIDUM ON CREDIT CONDITIONS FOR THE MEETING OF
THE OPEN MARKET POLICY CONFERENCE AUGUST 11, 1931.
In the past six weeks there has been no evident improvement in business.
In fact the available indexes rather show some decrease in activity.
The com
plete figures for June show a volume of activity considerably reduced from the two
preceding months and nearly as low as the lowest point reached in January as indi
cated by the following principal indexes.
Jan.
Feb.
Mar.
Apr.
F. R. Bank of N. Y. Volume of Trade I n d e x ^
81
83
83
F. R. Bd. Production I n d e x ^
83
86
88
(1)
(2)
In per cent of calculated normal.
In per cent of 1923-1925 average.
May
June
84
83
82p
90
89
86p
p Preliminary
Yifhile tho weekly indexes of commodity price movements show a practically
stable level for the past two months, a number of important individual commodities
have boon weak, especially agricultural products.
showing at least tho usual expansion in
Industrial employment, after
tho spring, declined in June to a ne\. low
level for rocent years.
Tho great impediment to business improvement has been a series of finan
cial disturbances both at homo and abroad which have unsettled confidonco.
In
June there were 166 bank failures in tho United States, the largest number since
January, with total deposits involved of ^218,000,000, tho largest since last
December.
The preliminary figures for July indicate 89 failures with deposits of
$45,000,000, tho same as in May.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 0 • \23Sk
2-. .
Bank Suspensions
Deposits
In millions of dollays
Numbor
January
February
March
April
May
June
July
August
September
Octobcr
November
December
1930
1931
1930
1931
99
85
76
96
55
66
65
67
66
72
254
344
202
29
33
24
33
19
71
32
22
24
25
186
367
78
35
35
42
45
218
45p
77
86
64
89
166
89p
P
But of considerably greater magnitude than the financial troubles at
homo have been difficulties abroad, which have included temporary breakdowns of
the financial structure in a number of the central European countries.
These
events in turn have placed such pressure on the London money market as to cause
a drain in a fei; brief weeks of more than ^150,000,000 in gold, with the conse
quence that the Bank of England has sought and obtained a central bank credit and
has arranged by Treasury minute an increase of 15 million pounds in its fiduciary
issue.
A lesser but contributing factor to financial unrest has been the addi
tion of Chile to the list of South American countries which have suspended payment
on their foreign debts.
These financial developments are only tho symptoms of a deeper underlying
economic disequilibrium*
The worldwide drop in commodity prices has thrown out
of balance tha international trade position of many countries and has increased
the burden of the payment of international debts to a point where many of these
countries will have grave difficulty in meeting their external obligations.
This
disturbance to the balance of trade has accompanied a decline in national income
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E • 0 • \23Sk
3
which has forced out of balance the government budgets of many countries.
At a
time when unemployment is creating great social distress and when government enter
prises are being advocated as a means of relief, governments are finding their
income insufficient to meet even their ordinary budgetary expenses.
Under these
circumstances our trade with other countries has been cut to less than half the
1929 figures.
Prior to the recent outbreak of financial difficulties in central Europe
there was perhaps some reason to hope for a business improvement in the autumn with
some recovery in commodity prices.
ability of any such recovery*
Recent developments have decreased the prob
It now appears that in this and other countries a
winter of severe unemployment and distress is to be expected unless some unusual
development now unforeseen occurs to change the situation.
Another winter of this
sort may bring with it a severe threat to the capitalist system in some countries,
the risk of the overthrow of conservative governments and the danger of critical
social and political disturbances in many parts of the world.
The situation is
sufficiently serious to justify the consideration of every sound remedy.
Fedoral Reserve Position
Since June 22 the Federal Reserve banks have purchased $80,000,000 of
Government securities under the authorization to purchase up to §100,000,000,
arranged at the meeting of the open market policy conference on April 29 and
approved by the Federal Reserve Board*
The changes since that time in tho various
elements of Federal Reserve credit and other factors influencing the money market
are shown in the following table.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E • 0 • \23S£?
(Averages of daily figures.
In millions of dollars)
Week Ended
June 20, 1931
Bills discounted
Bills bought
U. S. securities
Other reserve bank credit
Total reserve bank credit
Monetary gold stock
Treasury currency - adjusted
Money in circulation
Member bank reserve balances
Miscellaneous
Week Ended
Aug. 1, 1931
197
118
601
50
946
4,884
1,764
4,773
2,407
414
185
678
25
952
4,951
1,788
4,812
2,388
491
Change
- 12
- 52
+ 77
-__ Z.
+ 6
+ 67
+ 24
+ 39
- 19
+ 77 *
*Due chiefly to increase in balances of foreign correspondents with Federal
Reserve Banks which now total over $>100,000,000.
Bills discounted and acceptances purchased taken together have declined
$64,000,000, nearly offsetting the purchases of Government securities.
A gain of
$67,000,000 in gold has been practically absorbed by an increase of currency in
circulation, and in addition balances of foreign banks at the Beserve Banks have
increased by an amount sufficient to absorb all of the excess reserves and leave
the member banks just about even in their reserve position.
Thus neither the pur
chases of securities nor the gain in gold have placed any more funds permanently
at the disposal of the member banks, but on the contrary there are now loss free
funds than a month ago.
Member banks generally did not put to active use the excess reserves in
their possession for some weeks past.
The temper of the banks has boon to make
their position constantly more liquid rather than to seek full employment of their
funds.
In pursuance of this aim they have reduced their loans on securities and
their holdings of securities other than Governments and have increased their hold
ings of bankers acceptances and Government securities,
Tho New York bonks, in
which the surplus of reserves centered, have indeed increased their extensions of
Reproduced from the Unclassified/ Declassified Holdings of the National Archives
DECLASSIFIED
Authority £ . 0 •
I
5
credit, but not in sufficient amount to offset decreases elsewhere#
These tenden
cies are shown in the following table.
Weekly Reporting Banks - figures in millions of dollars
Change from June 24 to July 29
N. Y. City
Other cities
Total
Loans
On securities - - - - - - - - - All other* -
- 106
+ 138
-
53
33
- 159
+ 105
Investments
U. S. Government securities - - Other securities - - - - -- - -
+ 118
- 19
-
79
13
+39
- 32
T otal--------------
+13 1
- 178
-
47
* Includes bankers acceptances*
This conservative attitude of the banks and their desire to maintain
their funds in very liquid form operates as a limitation to their putting into
active use additional funds which become available.
In considering the prospective influences upon tho Federal Reserve posi
tion for tho next few weeks the following comments may be made.
(1)
The gold movement appears at the moment to be partly arrested
though some imports continue and though there are a number of countries from which
more substantial imports might easily come.
(2 ) Bills discounted and bills purchased appear to be at a practical
minimum,
The present amount of bills purchased appearing in the statement as
■^60,000,000 includes less than $30,000,000 of domestic bills,'the balance consist
ing of foreign bills.
The amount of foreign bills held is not likely to diminish
but may well increase, and before many weeks we shall roach the period when more
domestic bills come into the markets
The System appears now therefore to have
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E • 0 • 12354?
6
just reached the point where further purchases of Governments will no longer be
effset by declines in discounts and bills.
(3)
Currency circulation ordinarily reaches approximately its lowest
point for the year in the last week of July and theroafter begins to increase.
The future
movement of circulation depends not a little upon the state of confi
dence in banks.
(4)
Thoro is now probably as much as $500,000,000 of hoarded currency.
The increase in foreign balances with the Rasorve Banks has becomc
an important influence on the money market, though this movement is probably
nearing its end.
In the consideration of any further purchases of Government securities
or equally of credits to foreign countries question arisos as to tho gold position
of the Reserve System and how much leoway the System has for further such opera
tions.
It may reasonably be assumed that at the present time for the first time
in recent years purchases of Government securities would cause very little if any
reduction in discounts or acceptances, but would be followed mainly by an increase
in member bank rosorvc balances, (unless some other cause not now foreseen operated
to absorb the funds)*
On this assumption $35 of gold would be required to be set
aside for every $100 of Government securities purchased.
To the extent, however,
that purchases were accompanied by decreases in discounts or acceptances $100 of
gold would have to be set aside for every $100 of security purchases, since this
amount would be required as collateral for Federal Reserve notes to replace tho
discounts or bills liquidated.
The effect of investments in foreign bills which
are not under present arrangements eligible as collateral for Federal Rcservo
notes would bo somewhat similar to the effect of buying Government securities.
The various possible effects arc shown in the attached table.
The amount of free gold available to meet these or other requirements,
such as an emergency demand for currency, is shoY/n in the following tabic both for
r
!
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0• \23Sk
7
the system as a whole and for the several Reserve banks.
The first column shows
the amounts of free gold on the assumption that Federal Reserve notes are treated
as at present, with considerable amounts of notes in the tills of most of the
Reserve banks that have been issued to the banks but not put into circulation.
The second column shows the results if these notes in till are reduced to a
reasonable m inimum in accordance with computations made by the Federal Reserve
Board on the basis of information from the Reserve banks,
» M E GOLD” OF TEE FEDERAL RESERVE SYSTEM
(Figures as of July 29, 1931
-
District
Boston............ ...............
New Y o r k -- --------------------Philadelphia - - ~ -- - - - - - - Cleveland - - - - - - -- - - - - Richmond - - - - - - - - - - - - - A t l a n t a ---- -------- --------- ‘ **
Chicago ---- --- -------------- St. Louis - - - - - - - - - - - - Minneapolis - - - - - - - - - - - Kansas City - - - - - - - - - - - Dallas------ -------------------San Francisco - - - - - - - - - - System - - - - - - - - - -
In millions of dollars)
Actual
Free Gold*
Potential
Free Gold**
32
469
40
60
8
5
69
7
5
13
6
54
48
623
68
75
748
.?
149
11
5
8
9
,
1,086
* After providing collateral for all notos actually issued to
Federal Reserve Banks.
** Computed by Division of Bank Operations of Federal Reserve Board
assuming provision for collateral for only a minimum supply of
Federal Reserve notes issued to the banks but not in actual
circulation.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E • 0 • V23Sk
CHANGES IN FEDERAL RESERVE SYSTHi POSITION
RESULT INC r'RO!.'. $100,000,000 CREDIT TO A FOREIGN BANK OF ISSUE
Assumptions
1. That the credit is entirely used.
2. That foreign bills purchased are not available as collateral for Federal Reserve Notes.
Actual Statement
July 8
(millions)
$ 3592
Position after buying $100,000,000 of Foreign Bills
If Proceeds Are Used If Proceeds Are Used If Deposit so Created
to Earmark or
to Create Deposit
is Used to Lake
ExDort Gold
At Reserve Banks
Payments
(millions)
(millions)
(millions)
3492
$ 3592
162
92
668
10
932
162
— > 192
668
10
— > 1032
162
-- >192
668
10
— >1032
668
10
— 71032
4
4
4
4
Note Circulation
1737
1737
1737
1737
Depos its
Member Banks
Foreign Banks
Other
Total
2439
40
__48
2527
2439
40
__48
2527
2439
140
__48
— V 2627
--► 2539
40
48
— * 2627
Total Reserves
Earning Assets
Bills discounted
Bills bought
Gov. securities
Other securities
Total
Due from Foreign Banks
Reserve i»
Combined
Against deposits after
providing for note
collateral
Free Gold Remaining
—
162
— y 192
84.2$
— > 81.9#
— > 82.3$
--y 82.3$
66.3$
— >* 62.4$
— >■ 63.8$
— > 63.8$
792
Effect on Market
— V
♦ 3592
— r 692
None
-- >757
None
— v 757
Gain of
100 million
If instead of buying bills the credit should take the form of placing a deposit in
a foreign bank, the only change in the above would be that bills bought would
show no increase fran the actual amount on July 8 and due from foreign banks
would be increased #100,000,000. The effects on the reserve percentage, free
gold, or the money market would be the same as those shown above.
indicates itens showing change
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E ■0 • 12354?
PRELIMINARY MEMORANDUM. SUBJECT TO REVISION
CONFIDENTIAL
August 3, 1931.
MEMORAL'JDUM ON CREDIT CONDITIONS FOR THE MEETING OF
THE OPEN LARKS7 POLICY CONFERENCE AUGUST U , 1931.
In the past six leeks there has bee# no evident improvement in business.
In fact the available indexes rather show some decrease in activity.
The com
plete figures for June show a volume of activity considerably reduced from the two
preceding months and nearly as low as the lowest point reached in January as indi
cated by the following principal indexes.
Jan.
Feb.
Mar.
Apr.
May
June
84
83
82p
90
89
86p
mmmmrnmmmmmm
m hm nm m
m m n m *
trnmmkmnamrnm^
F. R. Bank of N. Y. Volume of Trade I n d e x ^
81
83
83
F. R. Bd. Production I n d e x ^
83
86
88
(1)
(2)
In per cent of calculatod normal.
In per cent of 1923-1925 average.
m/mmmtmmm
p Preliminary
V/hile the weekly indexes of commodity price movomants show a practically
stable level for tho past t*vo months, a number of important individual commodities
have been weak, especially agricultural products.
showing at least the usual expansion in
Industrial employment, after
tho spring, declined in June to a now low
level for recent years.
Tho great impediment to business improvement has been a series of finan
cial disturbances both at home and abroad "hich have unsettled confidence.
In
June there "ere 166 bank failures in the United States, the largest number since
January, with total deposits involved of ^218,000,000, the largest since last
December.
The preliminary figures for July indicate 89 failures with deposits of
$45,000,000, tho same as in May.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E • 0 • V23S4?
Bank Suspensions
Deposits
In millions of dollars
Number
January
February
March
April
May
June
July
August
September
Octobcr
November
December
1930
1931
3.930
1931
99
85
76
96
55
66
65
67
66
72
254
344
202
29
33
24
33
19
71
32
22
24
25
186
367
78
35
35
42
45
218
45p
77
86
64
89
166
89p
P
But of considerably greater magnitude than tho financial troubles at
home have been difficulties abroad, which have included temporary breakdowns of
the financial structure in a numbei* of the central European countries.
These
events in turn have placed such pressure on the London money market as to cause
a drain in a few brief weeks of more than $150,000,000 in gold, with the conse
quence that the Bank of England has sought and obtained a central bank credit and
has arranged by Treasury minute an increase of 15 million pounds in its fiduciary
issue.
A lesser but contributing factor to financial unrest has been the addi
tion of Chile to the list of South American countries which have suspended payment
on their foreign debts.
These financial developments are only the symptoms of a deeper underlying
economic disequilibrium.
The worldwide drop in commodity prices has thrown out
of balance tha international trade position of many countries and has increased
the burden of 'tho payment of international debts to a point where many of these
countries will have grave difficulty in meeting their external obligations.
This
disturbance to the balance of trr.de has accompanied a decline in national ineome
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority E •0• \23Sfe?
which has forced out of balance the government budgets of many countries.
At a
time when unemployment is creating great social distress and when government enter
prises are being advocated as a means of relief, governments are finding their
income insufficient to meet even their ordinary budgetary expenses.
Under these
circumstances our trade with other countries has been cut to less than half the
1929 figures.
>pe
Prior to the recent outbreak of financial difficulties in central Europe
I
there was perhaps some reason to hope far a business improveinent in the autumn with
some recovery in commodity prices.
ability of any such recovery.
Recent
-
It now appears that in this and other countries a
winter of severe unemployment and distress is to be expected unless some unusual
development now unforeseen occurs to change the situation.
Another winter of this
sort may bring with it a severe threat to the capitalist system in some countries,
the risk of the overthrow of conservative governments and the danger of critical
social and political disturbances in many parts of the world.
The situation is
sufficiently serious to justify the consideration of every sound remedy.
Fodoral Reserve Position
Since June £2 the Federal Reserve banks havo purchased $80,000,000 of
Government securities undor the authorization to purchase up to #100,OCX),000,
arranged at tho mooting of tho opon market policy conference on April 29 and
approved by the Federal Reserve Board.
The changes since tbat time in tho various
oloments of Federal Roservo credit and other factors influencing the money market
are shown in the following table.
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E . 0•\23S(?
4
(Averages of daily figures.
In millions of dollars)
Week Ended
June 20, 1931
Bills discounted
Bills bought
U. S. securities
Other reserve bank credit
Total reserve bank credit
Monetary gold stock
Treasury currency - adjusted
Money in circulation
Member bank reserve balances
Miscellaneous
Week Ended
Aug. 1, 1931
197
118
601
50
Change
4,884
1,764
185
66
678
23
952
4,951
1,788
+
+
+
+
4,773
2,407
414
4,812
2>388
491
+ 39
«* 19
+ 77*
946
12
52
77
7
6
67
24
*Due chiefly to increase in balances of foreign correspondents with Federal
Reserve Banks which now total over $100,000,000.
Bills discounted and acceptances purchased taken together have declined
$64,000,000, nearly offsetting the purchases of Government securities.
A gain of
#67,000,000 in gold has been practically absorbed by an increase of currency in
circulation, and in addition balances of foreign banks at the Reserve Banks have
increased by an amount sufficient to absorb all of the excess reserves and leave
the member banks just about even in their reserve position.
Thus neither the pur
chases of securities nor the gain in gold have placed any more funds permanently
at the disposal of tho member banks, but on the contrary there are now less free
funds than a month ago.
Member banks generally did not put to active use the excess reserves in
their possession for some weeks past.
Tho temper of the banks has boon to make
their position constantly more liquid rather than to seek full employment of their
funds.
In pursuance of this aim they have reduced thoir loans on securities and
their holdings of securities other then Governments and have increased their hold
ings of bankers acceptances and Government securities*
The New York banks, in
which the surplus of reserves centered, have indeed increased their extensions of
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E - 0- V23Sk
5
credit, but not in sufficient amount to offset decreases elsewhere*
These tenden
cies are shown in the following table*
Weekly Reporting Banks - figures in millions of dollars
Change from June 24 to July 29
N. Y. City
Other cities
Total
Loans
On securities - - - - - - - - - All o t h e r * --------------------
- 106
+ 138
-
53
33
- 159
+ 105
Investments
U. S. Government securities-- -Other securities - - - - - - - -
+ 118
- 19
- 79
-» 13
+39
* 32
+131
- 178
-
T o t a l --------------
47
* Includes bankers acceptances.
This conservative attitude of the banks and their desire to maintain
their funds in very liquid form operates as a limitation to their putting into
active Use additional funds which become available.
In considering the prospoctive influences upon the Federal Reserve posi
tion for tho next few weeks tho following comments may be made*
(1)
The gold movement appears at the moment to be partly arrested
though some imports continue and though there are a number of countries from which
more substantial imports might easily come.
(2)
minimum*
Bills discounted and bills purchased appear to be at a practical
The present amount of bills purchased appearing in the statement as
#60,000,000 includes less than $30,000,000 of domestic bills, the balance consist
ing of foreign bills.
The amount of foreign bills held is not likely to diminish
but may well increase, and bofore many weeks we shall roach the period when more
domestic bills come into the market.
The System appears now therefore to have
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority
E ■0•V23S(?
6
just reached the point where further purchases of Governments will no longer be
offset by declines in discounts and bills,
(3)
Currency circulation ordinarily reaches approximately its lowest
point for the year in the last week of July and theroafter begins to increase.
The future
movement of circulation depends not a little upon the state of confi
dence in banks.
(4)
There is now probably as much as $>500,000,000 of hoarded currency.
The increase in foreign balances with tho Reserve Banks has becomc
an important influence on the monoy markett though this movement is probably
nearing its end.
In the consideration of any further purchases of Government securities
or equally of credits to foreign countries question arises as to tho gold position
of tho Roserve System and how much leeway the System has for further such opera
tions.
It may reasonably be assumed that at the present time for the first time
in recent years purchases of Government securities would cause very little if any
reduction in discounts or acceptances, but would be followed mainly by an increase
in member bank resorve balances, (unless
to absorb the funds).
soiqd
other cause not now foreseen operated
On this assumption $35 of gold would be required to be set
aside for every |100 of Government securities purchased.
To the extent, however,
that purchases were accompanied by decreases in discounts or acceptances $100 of
gold would have to be set aside for every $100 of security purchases, since this
amount would be required as collateral for Federal Reserve notes to replace the
discounts or bills liquidated.
The effect of investments in foreign bills which
are not under present arrangements eligible as collateral for Federal Reserve
notes would be somewhat similar to the effect of buying Government securities.
The various possible effocts arc shown in the attached tablo#
The amount of free gold available to meet those or other requirements,
such as an emergency demand for currency, is shown in the following table both for
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E ■0 • \23St?
7
the system as a whole and for the several Reserve banks#
The first column shows
the amounts of free gold on the assumption that Federal Reserve notes are treated
as at present, with considerable amounts of notes in the tills of most of the
Reserve banks that have been issued to the banks but not put into circulation.
The second column shows the results if these notes in till are reduced to a
reasonable minimum in accordance with computations made by the Federal Reserve
Board on the basis of information from the Resorvo banks#
"FREE GOLD” OF THE FEDERAL RESERVE SYSTEM
(Figures as of July 29, 1931
District
Boston - - - - - - - - - - - - - - New York - ---- --- ----- Philadelphia - ------ - - ---- --Cleveland - - - - - - - - - - - - Richmond - - - - - - - - - - - - - Atlanta —
- —
- -- —
Chicago - - - - - - - - - - - - - St 4 Louis - ---- ----- ---- ----Minneapolis - - - - - - - - - - - Kansas City - - - - - - - - - - - D a l l a s ........ ...................
San F r a n c i s c o-- ---- ---- - - System - - - - - - - - - -
In millions of dollars)
Actual
Free Gold*
Potential
Free Gold**
32
469
40
60
8
5
69
7
5
13
6
34
48
623
68
75
7
7
149
748
5
8
9
76
1,086
* After providing collateral for all notos actually issued to
Foderal Reserve Banks.
** Computed by Division of Bank Operations of Federal Reserve Board
assuming provision for collateral for only a minimum 3upply of
Federal Reserve notes issued to the banks but not in actual
circulation.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority E •0•\235fe>
CHANGES IN FEDERAL RESERVE SYSTEM POSITION
RESULTING FROM $100,000,000 CREDIT TO A FOREIGN BANK OF ISSUE
Assumptions
1. That the credit is entirely used.
2. That foreign bills purchased are not available as collateral for Federal Reserve Notes.
Actual Statement
July 8
(millions)
Total Reserves
Position after buying $100,000,000 of Foreign Bills
If Proceeds Are Used If Proceeds Are Used If Deposit so Created
to Earmark or
to Create Deposit
is Used to kiake
At Reserve Banks
Export Gold
Payments
(millions)
(millions)
(millions)
$ 3592
Earning Assets
Bills discounted
Bills bought
Gov. securities
Other securities
Total
3492
1 3592
$ 3592
162
162
192
668
10
-^1032
162
92
668
10
932
668
10
— T 1032
162
-^192
668
10
—>•1032
4
4
4
4
Note Circulation
1737
1737
1737
1737
Deposits
Member Banks
Foreign Banks
Other
Total
2439
40
__48
2527
2439
40
__48
2527
2439
140
48
— ► 2627
- > 2539
40
48
— ► 2627
Dus from Foreign Banks
Reserve %
Combined
Against deposits after
providing for note
collateral
Free Gold Remaining
84.2%
66.3*
792
Effect on Market
— * 192
—
81.9%
— * 82.3%
—
62.4%
^►63.8%
— > 63.8%
— »-757
-9-757
—► 692
None
None
82.3%
Gain of
100 million
If instead of buying bills the credit should take the form of placing a deposit in
a foreign bank, the only change in the above would be that bills bought would
show no increase frcu the actual amount on July 8 and due from foreign banks
would be increased #100,000,000* Hie effects on the reserve percentage, free
gold, or the money market would be the same as those shown above.
— > indicates items showing change
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E•0• \23S(?
Fe d e r a l R e s e r v e B a n k
of N e w Y o r k
August 22, 1951.
CONFIDENTIAL
Mr, E. M. McClelland,
Assistant Secretary, Federal Reserve Board,
Washington, D. C.
Dear Mr. McClellands
In accordance with the request contained in your letter
of August 21, 1951, we are pleased to enclose one copy each of
the report of open market operations presented at the meeting of
the Open Market Policy Conference on April 29land at the meeting
of the executive committee meeting of the conference on June 2 2 ,
also a copy of the memorandum submitted by Governor Harrison at
the latter meeting. ^
Ends. (3)
c
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority
E • 0 • \23S(?
CHANGES IN FEDERAL RESERVE SYSTH1 POSITION
RESULTING FROM $100,000,000 CREDIT TO A FOREIGN BANK OF ISSUE
Assumptions
1. That the credit ia entirely used.
2. That foreign bills purchased are not available as collateral for Federal Reserve Notes*
Actual Statement
July 8
(millions)
Total Reserves
Position after buying $100,000,000 of Foreign Bills
If Proceeds Are Osed If Proceeds Are Used If Deposit so Created
to Earmark or
to Create Deposit
is Used to Make
Export Gold
At Reserve Banks
Payments
(millions)
(millions)
(millions)
$ 3592
Earning Assets
Bills discounted
Bills bought
Gov. securities
Other securities
Total
-*•$ 3492
$ 3592
♦ 3592
162
668
10
1032
162
-*-192
668
10
—♦•1032
162
192
668
10
— ^1032
4
4
4
4
1737
1737
1737
1737
2439
40
2439
40
__48
2527
2439
140
__48
2627
— y 2539
162
92
668
10
932
Dus from Foreign Banks
Note Circulation
Deposits
Member Banks
foreign Banks
Other
Total
2527
Reserve %
Combined
Against deposits after
providing for note
collateral
Tree Gold Remaining
84.2*
66.3*
792
Sffect on Market
— * 192
—
—
81.9$
— * 82. %
— r 82.3^
62*4$
— y 63.8$
— > 63.8%
— *-757
— *“757
-*■ 692
None
If instead
—
40
__48
2627
None
Gain of
100 million
of buying bills the credit should take the form of placing a deposit in
a foreign bank, the only change in the above would be that bills bought would
show no increase from the actual amount on July 8 and due from foreign banks
would be increased $100,000,000* The effects on the reserve percentage, free
gold, or the money market would be the same as those shown above.
— > indicates items showing change
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Augaat
1*51
Doar Mr* Burges* i
It m M bo appraoiatod if you would M ad to ao
one copy each o f the s e c r e ta r y 's re p o rts of open aarkot
o p eratio n * fo r 8ystoa account which were presented at
tho aootl&i Of tha Open Market P o llo y Conference on
A p r il *9 th and a t tho Mooting o f tbs Executive Coomittee
o f tha Conference on JUne Sind, aa w a ll as a copy o f tha
MEtoraadun subm itted by O oreroor B a rr icon a t tha la t t a r
aootlng#
Tary tru ly youre,
(Steeed) B. M.
X. M, M oG lelland,
A ssista n t Saoratary
Mr* W. R. B argees, S e cretary ,
Open Markst P o lto y Conforsnoo
O/O F ed eral Reserve Bank,
Sow T ork, K. T*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondedje
To______ All Members of the Board_____
F r o m ___ Mr. McClelland_______________
FEDERAL RESERVE
BOARD
Date_— July 20, 1931
S
u
b
j
e
c
t
^
_____________________________________
There a» attached hereto, for the information of the members of the
Board, tentative minutes of the meeting of the Open Market Policy Confer
ence held on April 29th(and of the Executive Committee of the Conference
held on June 22nd ^ which have just been received/from the Secretary of
theConference•
Governor Meyer
Mr* Hamlin
Mr* Miller
Mr* James
Mr* Magee
Mr. Pol©
Please circulate promptly and return to the Secretary*s Office
Reproduced from the Unclassified / Declassified Holdings of the National Archives
^ "x
j t
j j i ^
kf
t %*
f
Fe d e r a l R e s e r v e Ba
U v
Vv
of
nk
N e w Yo r k
*>
'*
July 20, 1951.
Dear Governor Meyer:
On June 24 we sent you a draft of the minutes of
the meeting of the executive committee of the Open Market
Policy Conference held June 22J together with a draft of
the minutes of the Open Market ?olicy Conference meeting on
April 29j
As no suggestions for changes in either of these
Deputy Governor
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. G.
<*• y ’
Reproduced from the Unclassified / Declassified Holdings of the National Archives
of
N e w Yo r k
July 18, 1951
Dear Mr. McClelland:
I am enclosing herewith copies of the tentative
minutes lof the Open Market Policy Conference meeting of
April 29, and of the Executive Committee meeting of June
Veiy truly yours,
W* Randolph Burgess
Deputy Governor
Mr* E. M. McClelland,
Assistant Secretaiy,
Federal Reserve Board,
Washington, D. C #
WEB.H
end*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
I
I Authority E . 0 • 123^4?
Fe d e r a l R e s e r v e B a n k
of
N e w Yo r k
June 24,. 1931.
CONFIDENTIAL
Dear Governor Meyer:
¥-JLf-V
I am enclosing Herewith a copy of the draft of the minutes)of
the meeting of the Open Market Policy Conference held in Washington on
April 29, also of the minutes of the meeting of the Executive Committee
of the Open Market Policy Conference held at this bank on June 22,(which
have been forwarded to the governor of each Federal reserve bank.
These minutes are subject to correction or amendment after the
various members of the Conference and Executive Committee have had an
opportunity to read them.
Should any changes be necessary, however, I
shall of course send you a corrected copy.
We regret the delay in sending out the minutes of the meeting
of April 29, due to the many pressing matters which Governor Harrison
has had on hand since that time.
Very truly yours,
W. Randolph Burgess
Secretary, Open Market
Policy Conference
Honorable Eugene Meyer,
.,
Governor, Federal Reserve Board,
Washington, D. C.
? 5 1931
O M O E OF
Ends.
R E C E IV E D
Ajzjl
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I
DECLASSIFIED
I Authority E - 0 - V23S4>
TENTATIVE * SUBJECT TO CORRECTION
CONFtlENTlAL
MttTUTES OF MEETING OF THE EXECUTIVE COMMITTEE
O f THE OPEN MARKET POLICY CONFERENCE HELD AT THE
OFFICE OF THE FEDERAL RESERVE BANK OF NEW YORK
AUGUST 4, 1951.___________________
The meeting was called to order at 10;50 a. m . , there being present
Governors Young* Harrison, Norris, and Black, and Deputy Governors McKay and
Burgess.
A memorandum summarizing the credit situation was presented by the chair
man, together with a report of the secretary*
Governor Harrison then reviewed the developments since the last meeting,
saying that the meeting had been called because the world situation both economic
and financial appeared to have developed to a point requiring caroful review.
While there had been some hope of an improvement in business conditions this autumn,
recent developments in Europe have led to a lack of confidence and a state of fear
and unrest more severe than at any timo since the World War.
national difficulties lay the commodity price movement.
At the root of inter
With commodity prices
where they are now many countries are unable to meet their fixed charges.
two things must happen:
One of
either commodity prices must go up, or else some parts of
the world must completely reorganize their debt structures involving defaults or
postponements in many cases.
Bank credits, while they patch up the situation
temporarily, cannot correct the basic difficulties.
In these circumstances the only possible additional step which appears to
be open to the Federal Reserve System is the purchase of government securities.
There is now a substantial body of opinion which believes that government purchasss
by the Reserve System would be helpful.
Because of the greater general lack of
confidence purchases at present are perhaps less likely to be effective than ap
peared to be the case six weeks ago*
But now, for the first time, because of the
system’s small holdings of discounts and bills, any money the Reserve system puts
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out has to stay out.
There is of course no assurance that a program of government
purchases would necessarily be effective;
the banks might keep excess reserves
unused, reducing their deposit rates to zero.
In any event it seems that such a
program would be most likely to succeed only if the bankers in principal centers
were taken into confidence and their cooperation secured.
Governor Meyer entered the meeting at this point.
Governor Harrison reviewed recent developments abroad in those countries
to which credits had been granted by the Federal Reserve Banks, discussing in some
detail the situations in Austria, Hungary, and Germany, and reviewing the reasons
for the $10*000,000 deposit in the B. I. S.
Governor Black raised the question of the possible use of sterling bills
as collateral for Federal Reserve notes, and Governor Harrison pointed out that the
difficulties were not legal but rather mechanical and perhaps also related to the
criticisms which might be provoked by the use of these holdings of foreign bills as
collateral for Federal Reserve notes.
Reverting to the previous discussion, Governor Harrison summarized the
position with regard to purchases of governments by saying that, admitting the
world was in the midst of a social, economic, and political crisis, the question
was whether there was anything the Federal Reserve System could do.
If by the
purchase of government securities it could facilitate an increase in world prices,
clearly it should be done.
It is doubtful whether a purchase of governments would
have such an effect, at least immediately, but the question is whether in the
present crisis, which involves perhaps a struggle between socialism and capitalism,
the system can wisely omit doing anything which might be helpful and which a growing
number of responsible people believe would be helpful.
Deputy Governor McKay said that in his opinion everything should be done
to strengthen the position of the Federal Reserve System so that there might be
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continued confidence in the system.
Any disturbance abroad might bring withdrawals
of deposits from banks in this country.
In those circumstances it would be better
if the member banks rather than the Reserve system held the government securities;
so that they might be used as a basis for borrowing and as a basis for Federal
Reserve note issues.
He did not believe that purchases of government securities
would help the situation, but would rather hurt it, since interest rates were very
low and many banks were already suffering from lack of earnings and would have to
cut their dividends.
Governor Harrison said that he would be doubtful about buying governments
unless there were at least an informal understanding with the principal member banks
concerning the employment of excess reserves.
He would not want to suggest that
the banks make wholesale purchases of bonds, but would rather suggest the placing
of substantial bids for second grade bonds to aid the market price, the difficulty
now being not so much that many bonds are being pressed for sale as that in many
cases the^e are no bids whatever.
Governor Meyer said that all were agreed that it is desirable to keep
the banks in a strong position, but that their losses were occurring more largely
in principal than on income account.
The policy of buying governments would be
designed to affect attitudes and sentiment in the country and so improve the value
of principal, a step which would be more effective in preventing losses by the
banks than anything that could be done to improve their income.
A large body of
responsible opinion favored the buying of government securities and there is ques
tion whether the Reserve system can be said to have done everything within its
power, until it has tried that policy more vigorously.
Governor Black stated his general agreement with this position and, re
ferring to the attitude of the banks, said that there appeared to be two questions;
first, are the banks following tho right policy because of timidity, and if not
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what can we do to help them?
He did not believe that the purchase of governments
would weaken the Reserve system.
At 1:10 the meeting adjourned for lunch.
At 3:20 the members of the committee met with the executive committee of
the Federal Reserve Bank of New York and there ensued a general discussion of the
proposal to buy government securities covering somewhat the same ground as the
morning meeting.
At 4:05 the meeting of the executive committee of the Federal Reserve
Bank of New York adjourned and the executive committee of the Open Market Policy
Conference reconvened.
Governor Young stated that he found it difficult to be
lieve that a purchase of government securities at this time would prove of value,
but he had an open mind on the question and believed that it would be desirable to
call a meeting of all the governors to consider the question.
After further dis
cussion the following resolution was passed.
The executive committee having reviewed the
general credit and economic situation at home and abroad
and believing it to bo serious, with the consequences of
present tendencies impossible to foresee, it was voted
that there should bo a moeting of the Open Market Policy
Conference in the near future to consider the wisdom of
granting such authority to the exocutive committee as
would prepare it to act in the further purchase of govern
ment securities if and when that might seem to be necessary
or desirable.
After discussion with Governor Meyer it was agreed that the meeting should
be called for Tuesday, August 11, in Washington, at 10 a. m.
There was some general discussion of the attitude of bank examiners to
ward the treatment of bonds in the portfolios of member banks.
The meeting adjourned at 4:30.
Reproduced from the Unclassified
I Declassified Holdings of the National Archives
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DECLASSIFIED
I Authority __E •0 •
MINUTES OF THE MEETING- OF THE EXECUTIVE COMMITTEE
OF THE OPEN MARKET POLICY CONFERENCE HELD AT THE
OFFICE OF THE FEDERAL RESERVE BANK OF NEW YORK
JUNE 22, 1931*
The meeting was called to order at 11:10 a* m . , there feeing present
Governors Young, Harrison, Norris, Black, and McDougal, Governor Meyer of the
Federal Reserve Board, and Deputy Governor Burgess.
/I Governor Harrison outlined developments in recent weeks in the interna
tional markets, and particularly in connection with the assistance required by the
Austrian Credit Anstalt, and the further succeeding developments in Hungary and in
Germany, and indicated that on Friday the Reichsbank reserve was close to its legal
minimum, that altogether the Reichsbank had sold us over $100,000,000 in gold, and
its total losses of gold and foreign exchange had been approximately $250,000,000.
It had begun a policy of credit rationing at home.
As a result largely of the
gold frcm Germany this country had gained $112,000,000 of gold since June 1, and
the total net gain since January 1 amounted to $298»000,000.
Governor Harrison stated that at the April meeting of the Open Market
Policy Conference all appeared to be in agreement that this country was receiving
gold which it did not desire, and which other countries could not afford to lose,
and that if possible we should find some way to avoid being in the position of re
ceiving this gold without allowing it to produce its usual effects in expanding
credit.
Since the April meeting incoming gold may be considered to have been
partly absorbed by currency withdrawals in connection with bank difficulties.
If
the influence of these currency withdrawals could be eliminated Federal reserve
earning assets would show a substantial reduction.
In other words, the gold has
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been to a degree sterilized, and the aim of the April meeting of maintaining earning
assets and putting new gold to work has not been fully achieved.
Governor Young objected at this point that he did not agree with the con
clusions of the April conference with respect to the sterilization of gold.
*
Governor Harrison, continuing, pointed out that the other aim of the
April conference was to reduce short money rates and thus encourage the shifting of
funds to employment in longer use.
Partly as a consequence of the action taken
there had been large and widespread reductions of rates paid by banks on deposits,
and in short time money rates generally.
He further stated that the events of the past two weeks were in some ways
the most critical which the world has passed through since the war, that there had
been a threat of a general moratorium and a possible breakdown of capitalism in
Europe.
In the meantime developments in South America had indicated the danger of
a moratorium in certain countries there.
In these circumstances it seemed desir
able to take every possible measure available to the Federal Reserve System for
improving the situation.
but considerable advantage.
He could see no risk in buying governments at this time,
It was a particularly good time, because the improve
ment of psychology and the lift in the commodity markets and the security markets
following the announcement of the administration's position as to reparations pro
vided an impetus toward revival which, with proper encouragement, might now bring
the turning of the tide.
xvAs far as the bill holdings of the system were concerned Governor Harrison
stated that it would probably be somewhat easier to maintain these holdings because
of the fact that the Bank of France was allowing all its bills to mature.
Since
these holdings constituted something like 25% of the total bills outstanding in the
.American market, the release of these bills would provide a more ample supply, part
Reproduced from the Unclassified
I Declassified Holdings of the National Archives
I
D E C L A S S IF IE D
I Authority_E: 0 -1 2 3 5 k
3
of* which would presumably come to the Reserve bank.
The Bank of Franc® intended,
however, to increase its balances at the Reserve banks as its bills matured, an
action which would be a tightening factor in the money market.
It might be desir
able in the near future to make some reduction in bill rates since technically bill
rates were becoming out of line with other short term money rates.
In fact the
directors of the New York bank had already requested from the Federal Reserve Board
a lower minimum buying rate on bills, though there was no present intention of re
ducing thq actual buying rate*
^ Governor Meyer reported that the statisticians of the Federal Reserve
Board computed that from $350,000,000 to $375,000,000 of currency was now hoarded
throughout the country as a result of banking disturbances since last autumn.
This represented an additional demand for Federal reserve credit which tended to
offset the effects of gold imports under the normal working of the gold standard.
A draft of the minutes of the meeting of the Open Market Policy Confer
ence in April was distributed and read by each of those present.
It was agreed
that these minutes should be sent out in their present form even though it was
somewhat more detailed than usual.
The secretary’s report of operations in the System Account was received
and placed on file#
The memorandum submitted by the chaixman was received and placed on file.
^Governor Norris suggested that the two major objectives of the April
program were
(1)
to check gold imports, and
(2)
to drive down the interest rates paid on deposits by banks,
lVThere had been great success in pursuing the second objective, though as
to the first we appeared to have gone as far as it was possible to go, since gold
to
iftoveanents now appeared not to be due to interest rates but rather due/necessity or
Reproduced from the Unclassified / Declassified Holdings of the National Archives
I
d e c l a s s if ie d
I Authority E . 0 • £ 3 S fc
4
due to this market being the safest place for funds*
''‘Governor Harrison pointed out that the fifrst objective of t&e April meet
ing was perhaps somewhat broader, and included a desire to make the incoming gold
effective and not sterilize it.
^Governor Norris asked whether the real difficulty at present was not the
rates for money but lack of demand for credit from high grade borrowers while lend
ers were timid and hesitant with respect to any other type of borrower.
Governor Harrison suggested that the pressure of excess reserves sooner
or later tends to overcome timidity.
Under the traditional gold standard the pil
ing up of funds in any country sooner or later operates toward an expansion of
credit which in turn is an influence towards raising the price level.
He hoped
that the purchase of governments might first avoid sterilizing gold, and might
second be a stimulus operating with other favorable recent events towards giving an
additional lift toward business recovery.
^Governor Norris raised the question whether the system would not be
criticized for talcing a step to make money still easier when it was already very
easy.
Governor Harrison suggested that the proposal simply recognized that in
coming gold would inevitably produce credit ease, and the effect of the action was
to bring somewhat earlier rather than later the normal effects of the gold movement,
and thus to avoid in part some of the serious effects On European countries of the
loss of gold.
\\>overnor Meyer suggested that other critics would say that by inaction
we were preventing the normal influence of gold.
Governor Black coranented that the action taken at the April 29 meeting at
Washington was affirmative, in favor of positive action which was to continue until
it accomplished its results*
The methods to be followed were first the reduction
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DECLASSIFIED
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5
of bill rates and second the purchase of governments.
The results hoped for were
a favorable psychological reaction, lower interest rates, and the prevention of the
sterilization of gold.
The first remedy, action through the bill market, appeared
to have been exhausted.
situation was worse.
Business had not shown any recovery.
The European
The remaining remedy was to buy governments which should be
done as a logical continuation of the affinnative policy.
The President, by his
announcement, had taken a constructive step which should be backed up to the limit,
and Governor Black believed that the purchase of governments would give this im
pression and have this effect.
''Governor Meyer stated that the Federal Reserve Board would be sympathetic
to the purchase of Government securities,would have sane preference for a larger
program of purchases than $50,000,000, and that the Board would regard this program
as simply discounting in advance the easing effect of the return of hoarded cur
rency when tho period of appj^ehension was over.
V'Governor Young discussed the question of gold sterilization and indicated
that he believed that sterilization had been and was natural and inevitable under
the operation of the Federal Reserve System;
that the only way sterilization could
be stopped was to have continuously an excess of credit, but that any such excess
never lasts but is rather quickly absorbed through a reduction in Federal reserve
credit.
It is, therefore, impossible to prevent sterilization without adopting
the Macauley policy of buying an exceedingly large volume of government securities.
He agreed that something should be done to support the action of the President,
but did not believe that the purchase of $50,000,000 of Government securities would
accomplish this purpose.
He did think that there was a great opportunity to deal
more directly with the problem by some foim of advance to Germany.
This might
mean announcing the advance on gold in transit, or announcing that we were pre
pared to make advances to the Reichsbank.
Such action would put the injection
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^ C L A S S IF IE D
I Authority E . 0 • )23S£>
6
precisely into the place where needed.
^Governor Harrison stated that it would hardly be appropriate to announce
the advance against gold since that was in the nature of temporary and ordinary
banking operation which would pass quickly, and moreover, might suggest weakness
on the part of the Reichsbank*
He said that there had not yet been any request
from the Raichsbank for a credit though word from abroad indicated that such a
request might come before long,
'vGovernor MeDougal stated that while he was impressed at the last meeting
by the considerations with respect to gold, he considered the domestic bank situa
tion the most important and pressing element in the situation, and speaking in
general he questioned the desirability of putting out more credit now that the
market is already glutted.
Following the President’s announcement, however, we
have had an exhibition of the effect upon the state of mind of some positive action.
If purchases of governments would be received by the public as supporting the
President’s announcement that would appear to him of great importance.
''Governor McDougal asked what the prospective demands for credit from
Europe were likely to be, and Governors Harrison and Meyer reported recent communi
cations from Europe and indicated that any demands from Europe would be in suffi
ciently limited amounts as to constitute no strain upon the System and leave us
free to pursue the policy which seamed best from other points of view*
At 1:20 the meeting adjourned for lunch.
At 3:25 p. m. the meeting reconvened, there being present Governors
Young, Harrison, Norris, Black, McDougal, and Talley, and Deputy Governor Burgess,
Governor Harrison stated that the directors of the Federal Reserve Bank
of New York were unanimous in favoring the purchase of government securities at
this time.
Governor Meyer joined the meeting at this point*
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I Declassified Holdings of the National Archives
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DECLASSIFIED
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7
^Question was raised as to the general effects of buying government
securities, on sentiment and otherwise, and there was also discussed the form
which publicity might take.
The general opinion was that probably no attempt to
explain the reason for purchases was desirable.
The action would probably be
interpreted as part of the general program.
^Governor Harrison suggested that the attitude of the member banks toward
purchases of government securities had changed considerably during recent weeks and
that two New York City bankers had suggested to him the desirability of buying
governments as a means for aiding the situation.
^Governor Talley said that the purchase of government securities might
have
an important effect in helping banks to maintain their liquidity and so en
couraging them to use their funds courageously.
11
After some further discussion it was voted to buy up to 050,000,000 of
government securities with the understanding that there would be further conference
by telephone or otherwise between members of the canmittee before any purchases
were made beyond that amount. I|
Governor Young asked to be recorded as voting in the negative,and
Governor Norris did not vote.
The meeting adjourned at 4s12.
W* Randolph Burgess,
Secretary.
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I Declassified Holdings of the National Archives
I
d e c la s s ifie d
I Authority £ * 0 * 1 2 3 $ ^
>, ^ -3 ./
J ' .u
PRELIMINARY MEMORANDUM, SUBJECT TO REVISION
CONFIDENTIAL
August 3, 1931•_
IM\10RAXDUI\1 ON CREDIT CONDITIONS fOR THE MEETING OF
THE OPEN MARKET POLICY CONFERENCE AUGUST 11, 1931.
In the past six weeks there has been no evident improvement in business.
In fact the available indexes rather show some decrease in activity.
The com
plete figures for June show a volume of activity considerably reduced from the two
preceding months and nearly as low as the lowest point reached in January as indi
cated by the following principal indexes.
Jan.
Feb.
liar.
Apr.
F. R. Bank of N. Y. Volume of Trade Index^
81
83
83
F. R* Bd. Production Index^
83
86
88
(1)
(2)
In per cent of calculated normal.
In per cent of 1923-1925 average.
May
June
84
83
82p
90
89
86p
p Preliminary
Vfhile the weekly indexes of commodity price movements show a practically
stable level for tho past two months, a number of important individual commodities
have been weak, especially agricultural products.
showing at least the usual expansion in
Industrial employment, after
the spring, declined in June to a new low
level for recent years.
Tho great impediment to business improvement has been a series of finan
cial disturbances both at homo and abroad which have unsettled confidence.
In
June there were 166 bank failures in the United States, the largest number since
January, with total deposits involved of ^218>000,000, the largest since last
December.
The preliminary figures for July indicate 89 failures with deposits of
$45,000,000, tho same as in May*
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d e c l a s s if ie d
I Authority J = J M 2 3 S f e
Bank Suspensions
Deposits
In millions of dollars
Number
January
February
March
April
May
June
July
August
September
Octobcr
November
December
1930
1931
1930
1931
99
85
76
96
55
66
65
67
66
72
254
344
202
77
86
64
89
166
89p
29
33
24
33
19
71
32
22
24
25
186
367
78
35
35
42
45
218
45p
p Preliminary
But of considorably greater magnitude than tho financial troubles at
home have boon difficulties abroad, which have included temporary breakdowns of
tho financial structure in a number of the central European countries.
These
events in turn have placed such pressure on the London money market as to cause
a drain in a few brief weeks of more than 1)150,000,000 in gold, with the conse
quence that tho Bank of England has sought and obtained a central bank credit and
has arranged by Treasury minute an increase of 15 million pounds in its fiduciary
issue.
A lesser but contributing factor to financial unrest has been the addi
tion of Chile to the list of South American countries which have suspended payment
on their foreign debts.
These financial developments are only the symptoms of a deeper underlying
economic disequilibrium.
off balance
The worldwide drop in commodity prices has thrown out
international trade position of many countries and has increased
tho burden of the payment of international debts to a point where many of these
countries will have grave difficulty in meeting their external obligations*
This
disturbance to the balance of trade has accompanicd a decline in national income
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|
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I Authority E . 0 • USSfc
3
which has forced out of balance the government budgets of many countries.
At a
time when unemployment is creating great social distress and when government enter
prises are being advocated as a means of relief, governments are finding their
income insufficient to meet even their ordinary budgetary expenses.
Under these
circumstances our trade with other countries has been cut to less than half the
1929 figures.
Prior to the recent outbreak of financial difficulties in central Europe
there was perhaps some reason to hope for a business improven©nt in the autumn with
some recovery in commodity prices.
ability of any such recovery.
Recent developments have decreased the prob~
It now appears that in this and other countries a
winter of severe unemployment and distress is to be expected unless some unusual
development now unforeseen occurs to change tho situation*
Another winter of this
sort may bring with it a severe threat to tho capitalist system in some countries,
the risk of the overthrow of conservative governments and tho danger of critical
social and political disturbances in many parts of the world.
The situation is
sufficiently serious to justify the consideration of every sound remedy,
Fodoral Reserve Position
Since June 22 the Federal Reserve banks have purchased $80,000,000 of
Government securities under the authorization to purchase up to $>100,000,000,
arranged at tho meeting of tho open market policy conference on April 29 and
approved by the Federal Reserve Board.
The changes since that time in the various
elements of Federal Reserve credit and other factors influencing the money market
are shown in the following table.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I
declassified
I Authority J = j J M 2 3 S k
(Averages of daily figures.
In millions of dollars)
Week Ended
June 20, 1951
Bills discounted
Bills "bought
U. S. securities
Other reserve bank credit
Total reserve bank credit
Monetary gold stock
Treasury currency - adjusted
Money in circulation
Member bank reserve balances
Miscellaneous
Week Ended
Aug. 1, 1951
197
118
601
50
946
4,884
1,764
4,775
2,407
414
185
66
678
25
952
4,951
1,788
4,812
2,388
491
Change
- 12
“ ^2
+ 77
.7
+ 6
+ 67
+ 24
+ 39
- 19
+77*
*Due chiefly to increase in balances of foreign correspondents with Federal
Reserve Banks which now total over $100,000,000.
Bills discounted and acceptances purchased taken together have declined
$64,000,000, nearly offsetting the purchases of Government securities.
A gain of
$67,000,000 in gold has been practically absorbed by an increase of currency in
circulation, and in addition balances of foreign hanks at the Reserve Banks have
increased by an amount sufficient to absorb all of the excess reserves and leave
the member banks just about even in their reserve position.
Thus neither the pur
chases of securities nor the gain in gold have placed any more funds permanently
at the disposal of the member banks, but on the contrary there are now loss free
funds than a month ago.
Member banks generally did not put to activc use the excess reserves in
their possession for some weeks past.
Tho temper of the banks has been to make
their position constantly more liquid rather than to seek full employment of their
funds.
In pursuance of this aim they have reduced their loans on securities and
their holdings of securities other than Governments and have increased their hold
ings of bankers acceptances and Government securities.
The New York banks, in
which the surplus of reserves centered, have indeed increased their extensions of
Reproduced from fhe Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E- O- US S f e
credit, but not in sufficient amount to offset decreases elsewhere.
These tenden
cies are shown in the following table.
Weekly Reporting Banks - figures in millions of dollars
Change from June 24 to July 29
N. Y. City
Loans
On securities - - - - - - - - - -
Other cities
Total
- 106
+ 138
-
53
33
- 159
+ 105
Investments
U. S. Government securities - - Other securities - - - - - - - -
+ 118
- 19
-
79
13
+
-
39
32
Total - ~ -------- -
+ 131
- 178
-
47
* Includes bankers acceptances.
This conservative attitude of the banks and their desire to maintain
their funds in very liquid form operates as a limitation to their putting into
active use additional funds which become available.
In considering the prospective influences upon the Federal Reserve posi
tion for tho next few weeks the following comments may be made.
(1)
The gold movement appears at the moment to be partly arrested
though some imports continue and though there are a number of countries from which
more substantial imports might easily come,
(2)
minimum.
Bills discounted and bills purchased appear to be at a practical
The present amount of bills purchased appearing in the statement as
$60,000,000 includes less than $30,000,000 of domestic bills, the balance consist
ing of foreign bills.
The amount of foreign bills held is not likely to diminish
but may well increase, and before many weeks we shall roach tho period when more
domestic bills come into the market*
The System appears now therefore to have
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I Declassified Holdings of the National Archives
I
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I AUthorityE: 0 • 1 23$^
6
just reached the point where further purchases of Governments will no longer be
offset by declines in discounts and bills,
(3)
Currency circulation ordinarily reaches approximately its lowest
point for the year in the last week of July and thereafter begins to increase.
The future
movement of circulation depends not a little upon the state of confi
dence in banks.
(4)
There is now probably as much as $500,000,000 of hoarded currency.
The increase in foreign balances with the Reserve Banks has become
an important influence on the money market, though this movement is probably
nearing its end*
In the consideration of any further purchases of Government securities
or equally of credits to foreign countries question arises as to tho gold position
of the Reserve System and how much leoway the System has for further such opera
tions.
It may reasonably be assumed that at the present time for the first time
in recent years purchases of Government securities would cause very little if any
reduction in discounts or acceptances, but would be followed mainly by an increase
in member bank reserve balances, (unless some other cause not now foreseen operated
to absorb tho funds).
On this assumption $35 of gold would be required to be set
aside for every $100 of Government securities purchased.
To the extent, however,
that purchases were accompanied by decreases in discounts or acceptances $100 of
gold would have to be set aside for every $100 of security purchases, since this
amount would be required as collateral for Federal Reserve notes to replace the
discounts or bills liquidated.
The effect of investments in foreign bills which
are not under present arrangements eligible as collateral for Federal Reserve
notes would be somewhat similar to the effect of buying Government securities.
The various possible effects arc shown in the attached table.
The amount of free gold available to meet those or other requirements,
such as an emergency demand for currency, is shown in the following table both for
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d e c l a s s if ie d
I Authority __E jJ M 2 3 S k
7
the system as a whole and for the several Reserve banks.
The first column shows
the amounts of free gold on the assumption that Federal Reserve notes are treated
as at present, with considerable amounts of notes in the tills of most of the
Reserve banks that have been issued to the banks but not put into circulation.
The second column shows the results if these notes in till are reduced to a
reasonable minimum in accordance with computations made by the Federal Reserve
Board on the basis of information from the Reserve banks.
"FREE GOLD” OF THE FEDERAL RESERVE SYSTEM
(Figures as of July 29, 1931
-
District
Boston
—
New York - - - - - - - - - - - - - Philadelphia - - -----40
Cleveland - - - - - - - - - - - - - Richmond - ---- Atlanta - - - - - - - - - - - - - Chicago
St. Louis - * -------- -----------Minneapolis - ------ --- -----Kansas City - - - - - - - - - - - D a l l a s ---------------------------San Francisco - - - - - - -- - - System - - - - - - - - - -
In millions of dollars)
Actual
Free Gold*
Potential
Free Gold**
32
469
48
623
68
75
7
7
149
11
5
8
9
76
60
8
5
69
7
5
13
6
34
748
1,086
* After providing collateral for all notes actually issued to
Federal Reserve Banks#
** Computed by Division of Bank Operations of Federal Reserve Board
assuming provision for collateral for only a minimum supply of
Federal Reserve notes issued to the banks but not in actual
circulation.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
I
declassified
I Authority _ j ^ M 2 3 S f e
CHANGES IN FEDERAL RESERVE SYSTHi POSITION
RESULTING r'ROM $100,000,000 CREDIT TO A FOREIGN BANK OF ISSUE
Assumptions
1. That the credit is entirely used.
2. That foreign bills purchased are not available as collateral for Federal Reserve Notes*
Actual Statement
July 8
(millions)
Position after buying $100,000,000 of Foreign Billa
If Proceeds Are Used If Proceeds Are Used If Deposit so Created
to Create Deposit
to Earmark or
is Used to Lake
At Reserve Banks
Export Gold
Payments
(millions)
(millions)
(millions)
$ 3592
3492
$ 3592
$ 3592
162
92
668
10
932
162
— ► 192
668
10
— ♦ 1032
162
—♦ 192
668
10
— ►1032
162
192
668
10
— *1032
4
4
4
4
Note Circulation
1737
1737
1737
1737
Deposits
Member Banks
Foreign Banks
Other
Total
2439
40
__48
2527
2439
40
__48
2527
2439
— * 140
_48
— ► 2627
— * 2539
40
__48
— * 2627
Total Reserves
Earning Assets
Bills discounted
Bills bought
Gov. securities
Other securities
Total
Due from Foreign Banks
Reserve %
Combined
Against deposits after
providing for note
collateral
Tree Gold Remaining
84.2#
— * 81.9#
66. %
—
792
Effect on Market
62.4#
>692
None
If instead
82. 3$
—
—
82.3$
— 63.8#
— *-63.8?&
—>-757
—►757
None
Gain of
100 million
of buying bills the credit should take the form of placing a deposit in
a foreign bank, the only change in the above would be that bills bought would
show no increase fran the actual amount on July 8 and due from foreign banks
would be increased #100,000,000. The effects on the reserve percentage, free
gold, or the money market would be the same as those shown above.
— ► indicates itons showing change
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DECLASSIFIED
Authority E •0 •
CONFIDENT!Ai
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/
June 19, 1931.
j
m e m o r a n d u m f o r t h e m e e t i n g o f t h e sxeccttive c o m m i t t s e
OF THE OEBN MARKET POLICY CONFERENCE, TONE 22, 1931.
At a masting of tho Open Market Policy Conference on April 27 it was
agreed that it would be desirable for the Federal Reserve System to pursue a
policy designed to facilitate the more normal operation of the gold standard and
if possible to stimulate a more active use of credit by banks and their deposi
tors.
Tbe three means directed toward this purpose which were considered were (1) The maintenance of the bill portfolio through reduced
bill rates.
(2)
Reductions in discount rates.
(3)
The possible purchase of government securities.
With regard to government securities tho following resolution was
adopted:
"VOTED that pending another meeting of the conference,
as soon as that may be deemed necessary by the Federal Reserve
Board or the members of the conference, the executive committee
of the conference should be authorized, if and when it appears
to them necessary or advisable, to purchase up to $100,000,000
of government securities.**
'JJn J purchases of
thQg-f •{;y grnnttth-nt Irfon-ti
.in|r^ | e3 have aa vat b«an anita nnrta,s-*h«
^hut successive reductions in the bill rate
were made in the early weeks of May and the discount rates of a number of the
Reserve banks were reduced.-
Reductions in bill rates were an influence t o ard
maintaining the total volume of bills in the Federal Reserve system fairly well
until the past few days despite the large volume of gold imports.
The figures
for bill holdings this year compared with the average for the years 1926-1930,
together with the reserve position of the New York City banks, are shown in the
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d e c l a s s if ie d
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2
attached diagrams.
In the past few days bills have been running off as the banks
have held large surplus reserves, and as rates on short governments have declined
relative to bill rates.
!In the weeks since April 27 two important credit movements have taken
place.
First, gold imports have been supplemented by large releases of gold held
eaimarked for foreign account.
During the month of May the country’s gold stock
increased $70,000,000 and during the month of June up to the present, more than
$100,000,000, with $26,000,000 additional on the way from Germany.
This gold has
come out of the bank reserves of foreign central banks principally Germany and the
Argentine, at considerable cost to those countries.
From the point of view of
world economics it is important as was agreed at tho last meeting of the Conference
that the gold standard should operate normally by this gold being put to work
as a
basis for credit and not nullified by its sterilization through continued reduction
in Federal Reserve credit outstanding.
Caring this period the gold has, however, been largely absorbed, not so
much by a reduction in the total earning assets of the Federal Reserve System as
by an increase in the volume of currency in bank tills
or for hoarding.
This
increase in circulation has occurred in a number of districts where there have
been bank disturbances, and particularly in the Chicago district.
The total such
increase amounting to over $100,000,000 has brought the total volume of currency
in circulation to a point about $300,000,000 higher than at this time last year.
It has been estimated that much if not all this increase lias been for hoarding.
'The question now arises whether this expansion in currency circulation
is not an abnormal factor for which compensation should be made in order that in
coming gold might have a direct influence upon credit conditions.
The question is complicated by the movement of the system bill portfolio,
which is now subject to a number of unusual influences.
It is clear that any
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DECLASSIFIED
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3
purchase of government securities or other means of placing more funds in the
market might be expected to result, other things being equal, in a diminution in
system holdings of bills.
Some adjustment of bill rates might assist in maintain
ing the bill portfolio and preventing it from being reduced quite as rapidly as
government security holdings may be increased.
The maintenance of a bill port
folio on the other hand should be considerably aided by a recent decision of a
foreign correspondent holding more than $300,000,000 of bills in this market to
allow these bills to run off, as it may be assumed that the Reserve system will be
called upon to absorb some of these bills.
l'At the present moment the reserves of the New York City banks are con
siderably in excess of requirements.
Daring the next two weeks, however, midyear
demands for funds may be expected to draw upon these reserves and fairly quickly
to exhaust the surplus.
N,It is clear that the purposes of the policies adopted at the April con
ference have not been fully accomplished though some progress appears to have been
made.
The movement of gold imports had slackened up until the time difficulties
arose in Central Europe leading to large releases of gold from earmark in this
country.
Rates paid by banks for deposits have been reduced in most important
centers.
There has been some recovery in the bond market, though this is perhaps
due as much to direct action on the part of some New York City banks as it is to
any change in the monetary situation.
Despite the increase in government securi
ties outstanding there has been no net increase in the total volume of bank credit.
Interest rates are on a definitely lower basis than they were in April, but this
reduction has not yet evidently led to any considerable shifting of funds from
short to long use.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c la s s ifie d
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Authority J ^ O - U S S i .
MILLIONS
9
\
)
•
V
V
EXCESS DR DEFICI1r IN RESEIRVES
OF NEW YORK C ITY BAN KS
.......................
FEDERAL RESERVE BILL HOLDINGS
.
. .
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 0 • l23Sfe>
$ .. ■
3 !> V C
crB3iccT^f<u?er®STTnr
^TrtmTT.T
CONFIIENTIAL
^
J (
L
MINUTES OF MEETING OF THE OPEN MARKET POLICY CONFERENCE
HELD AT THE OFFICES OF THE FEDERAL RESERVE BOARD
WASHINGTON, D. G., APRIL 29, 1931,
The meeting convened at 2:30 o’clock, there being present the following:
Governors Young, Norris, Fancher, Seay, Black, Geery,
McDougal, Martin, Talley, Calkins,
and Harrison, Chairman,
Deputy Governor Worthington*
The chairman presented the secretary’s report of open market operations
since the last meeting of the conference on January 21, 1931.
After considera
tion, it was
VOTED that the report be received and placed on file.
The chairman then stated that the attached report of the chainaan of
the conference, which had previously been read during the meeting of the governors’
conference, was before the open market policy conference for consideration.
There was a long discussion of the report by the various members of the
conference with particular reference to the present gold trends and the possibility
of making the gold standard work more effectively.
It was pointed out that in
view of the present favorable trade balance of the United States, amounting in re
cent years to about $500,000,000 a year, the only way in which that trade balance
could now be paid for was by the shipment of gold since the foreign bond market in
this country was practically closed to any new issues.
As indicated in the report
of the chairman, this country has received over $400,000,000 of gold in the last
fiftean months.
Hiis gold, however, has not in any way reflected itself in tha
expansion of member bank loans and investments but rather has been utilized to re
duce the amount of Federal reserve earning assets.
To that extent it may be said
that the normal effects of the import of this volume of gold have been nullified.
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(
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The question which was discussed by the conference was whether there was any ap
propriate way in which the Federal Reserve System could take action in order that
any further gold imports will have their normal and natural effect upon the loans
and investments of member
banks.
Governor Harrison pointed out that this was one of the reasons which had
prompted the Federal Reserve Bank of New York in recent weeks to reduce its bill
rates, hoping that by that action it would be possible to maintain or even in
crease the System's bill portfolio in spite of the fact that gold is still earning
into the country.
He said that to have done nothing with the bill rates would
very likely have resulted in a rapid diminution of the bill portfolio of the System
as gold came in, not only thereby nullifying gold imports but liquidating the
System’s earning assets by a substitution of gold, of which we already have a
plethora.
Governor Harrison then said that it was the purpose of the New York
bank, if necessary, to reduce its bill rate as low as one per cent in the hope of
accomplishing its objectives of maintaining or even increasing the bill portfolio
in the face of gold imports;
that it was likely that next week or the following
week he would recommend a reduction in the discount rate.
The chief pui'pose of
this program was, he stated, not only to tend to reduce the amount of gold imports
or to make those imports that actually take place more effective, but also, by its
effect upon the short time money market, ultimately to make credit, of which there
is now plenty, especially in the big centers, more active and more widely distribut
ed.
It was felt that this policy sooner or later would necessarily, because of
its effect upon the short time money rates, encourage banks and depositors in banks,
in spite of their.present liquidity, to employ their money, which now is becoming
relatively so unprofitable.
More specifically, he said that he hoped that this
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DECLASSIFIED
I Authority j = : 0'J23Sfe
3
policy might encourage the New York Clearing House banks further to reduce interest
rates on deposits.
In this connection, it seemed to be the general sentiment of the con
ference that one of the difficulties with the banking situation today is the con
sequence of the competition of banks throughout the country for increasing deposits
at unjustifiably high rates of interest, and that any action which might encourage
a more general reduction in those interest rates could not but be helpful to the
banking situation as a whole.
Governor Harrison then said that if the policy
which the New York bank has adopted is to become completely effective it requires
System cooperation both in the matter of rates and in the matter of open market
purchases of government securities for with bill rates as low as they are, in the
event that the System*s bill portfolio runs off, even after rates may have been
reduced to one per cent, the only effective instrument which the System has left
to aid in maintaining the total volume of its credit outstanding is the purchase of
government securities.
He, therefore, recommended that the conference authorize
the executive committee of the conference, if and when it appears to them necessary
or advisable, to purchase up to #100,000,000 of government securities.
In making
this recommendation, he pointed out that it was not the intention to purchase
government securities immediately but rather to attempt to carry out the policy,
first, through bill rates, second, through the reduction in discount rate, and then,
if necessary, to resort to the purchase of government securities.
Governor Meyer was then invited to join the conference, and each member
of the conference, in turn, discussed this proposal.
Governor Norris was of the opinion that the proposed policy might not
accomplish any great amount of good;
that the System was in a strong position;
that there was little or no danger of speculation;
that he saw no probability of
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I Authority J
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4
any bad results from the policy;
and that in those circumstances he was ready to
participate in the policy and to contribute by recommending a reduction in the
Philadelphia bank rate to three per cent.
His chief misgiving about the adoption
of the policy was the danger pf a slowness in the reversal of the policy when that
might become necessary.
This was a danger to which all the members of the con
ference referred and which Governor Meyer stated he did not believe would be ex
istent in the present circumstances, especially in view of the fact that the country
would look upon a reversal of the policy as an evidence that the turn had come in
the business depression.
Governor Young stated that they are even now following the New York re
ductions in bill rates and in the past have followed in the reduction of discount
rates;
that he believes it is important to have harmony in the System;
and that
if New York reduces its discount rate to 1 1/2 per cent, he will recommend the
same rate in Boston.
He believes that it is inadvisable to buy more government
securities at the moment but that even so he would, of course, be willing to buy
government securities at the present time from any member bank that needed accommo
dation in that fashion.
He felt that while the program might be right or wrong,
tho only thing to do, in view of all the circumstances discussed by the conference,
is to go through with it.
Governor Fancher stated that the economic situation throughout the world
has seriously changed in the past year and is perhaps more serious than ever;
gold flow is most important;
program designed to check it.
the
and he said that he was willing to go along with any
He also agreed that the System can lend its efforts
to make money so cheap as to put it to work.
He stated that it was probable that
Cleveland would not reduce its discount rate but that the System cannot afford to
go along drifting in this extreme situation, and that he was, therefore, in favor
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I
d e c l a s s if ie d
I Authority B - 0 - 1 2 3&
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of the recommended program.
Governor Seay stated that he had no great degree of confidence that the
proposed policy will accomplish anything very definite or that business recovery
is dependent upon any further ease in credit*
He intimated that it was possible
that a further easing program might be construed as a move in the wrong direction
and as a policy of desperation.
He did feel, however, that any move that would
force banks to reduce rates which they pay on deposits is a most important one, and
that if the proposed program fails in accomplishing that, the program itself would
fail.
He stated that if New York reduces its rate to 1' 1/2 per cent, he would
recommend a reduction in the Richmond rate to three per cent.
He felt, therefore,
that while the program may or may not accomplish good, it would probably have very
little risks attached to it, and that as far as possible the Richmond bank would
follow the program.
Governor Black stated that, in his opinion, the present situation is
extreme and that it was important that we do something;
that there were only three
courses before the System:
(1) that it should follow a policy of further pressure
by going up in its rates,
(2) that we should maintain the status quo, or (3) that
we should make further ease.
He liopes and believes that the program recommended by
Governor Harrison will be effective, at least in part;
the gold which we have more useful;
that it would tend to make
and that it would tend to drive some short
time money to work, which is what the situation now needs.
He questions whether
the Clearing House banks in New York will further reduce their rates, but that
even so that should not deter us in the adoption of the program, which he is pre
pared to follow.
He said that the Atlanta bank would follow on bill rate reduce
tions but is not sure what the bank would do about discount rate, but that he is
deteimined to have the Atlanta bank -follow the program as far as it can.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
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Governor McDougal stated that the gold problem, as discussed by the
conference, is an impressive one and should be corrected, if possible;
is the big Question before us.
problem;
that that
The banking situation is also an outstanding
and that while he thinks money rates are now cheap enough and does not
see how cheaper rates will stimulate business, nevertheless it may serve to move
gold elsewhere.
In his judgment, there is no danger in the stock market but fears
that low or lower rates may lead banks to take imprudent steps.
He was not in
favor of buying governments at the moment but that if lower discount rates were
established in the Eastern districts, Chicago would probably have to follow.
Governor Martin said that there is no historical precedent for the present
situation, and that it would, therefore, be difficult to predict the results of the
proposed policy.
He saw some objections to it but, on the whole, the majority of
reasons were in favor of it.
What objections there are he felt could be overcome
if we were prepared to go quickly enough to reversal.
He was in favor of trying
the experiment and said that St. Louis would follow with reductions in the bill
rates and probably with the discount rate.
Governor Geery was somewhat at a loss to foresee the precise results of
the proposed policy but was willing to give it a fair trial at this time and was
willing to vote for it.
Governor Talley stated that he still has confidence that gold will finally
express itself.
It always has in the past sooner or later, and he said we are now
at a practical minimum of discounts and have only $18Q,000,000 of bills to be
absorbed.
If gold ccmes beyond that point, it will certainly express itself in the
country’s credit structure.
The proposed program would
bring this
event nearer.
He also agreed that the policy would tend to shove short time funds outside of New
York, though probably not into remote country districts.
In his judgment, there
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DECLASSIFIED
Authority
E ■0•l23Sk
7
was seme question whether it would be desirable to have the New York banks reduce
their interest rates further;
that it was more desirable, in his mind, for those
banks to send money abroad into short canmercial credits.
While somewhat appre
hensive about attempting the policy, he saw little ammunition loft, and he was in
favor of trying it.
Deputy Governor Worthington said that while the Kansas City bank has felt
for some time that money rates have been too low and that there would be no revival
in business until rates
go up, nevertheless he sees no objection to the program
and that it was necessary, in his judgment, notf to make some effort to overcome
present difficulties.
He sees no harm and possible good in the program and that
Kansas City would always cooperate with any plan approved by the conference.
Governor Calkins said that he agreed with the desirability of harmo
nious action in the System but questioned how harmonious it would be unless a
program is agreed to without reluctance.
He is somewhat skeptical of the pro
posed program becauso of the fact that the present situation was so lacking in
precedents that it is not possible to compare it with the past.
Furthermore,
conditions are largely psychological and causes of it go away back to the war at
least.
He disagrees with the theory that small reductions in bill rates and
discount rates would stimulate credit or that it is possible to make the gold
standard work in any orthodox fashion when two nations have most of the gold.
He referred to the fact that the Federal Reserve System has already contributed
in a large measure to the mobility of credit because o f the telegraphic transfer
system, and that indeed this system contributed largely to the inflation during
1928 and 1929.
The big question, in his mind, is whether we would be prepared
to correct or reverse the policy if it proves to be wrong, but that San Francisco
will be prepared to follow and participate in the program, even though not with
the wholehearted acquiescence which he thinks so advisable*
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8
Governors Moyer and Harrison then said that they did not have any
fixed certainty of the outcome of the procedure but that it was one in which
we had little, if any, volition since it would be forced upon us by the
present gold movement sooner or later, in any event.
After further general discussion and upon recommendation of Governor
Harrison, the conference
VOTED
that pending another meeting of the conference, as soon as
that may be deemed necessary by the Federal Reserve Board or the members of
the conference, the executive committee of the conference should be author
ized, if and when it appears to them necessary or advisable, to purchase up
to $100|000f000 of government securities.
Ghairman.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
C O P Y
FEDERAL BESERVE BANK
OF NEW YORK
July 20, 1931,
Dear Governor Meyers
On June 24
we
sent you a draft o f the minutes of
the meeting of the executive committee of the Open Market
Policy Conference held June 22, |ogether with a draft o f
the minutes of the Open Market Policy Conference meeting on
April 29./ As no suggestions for changes in either of these
v/ <?■f i ^ //■f 1 ^
have been received, they may now be considered as fin a l.! 11
Very truly yours,
(Signed)
W. Randolph Burgess
W. Randolph Burgess
Deputy Governor
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
/
u
^^
^f
*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
u U F I
FEDERAL RESERVE BANK
OF NEW YORK
?
July 18, 1931*
Dear Mr. McClelland:
I am enclosing herewith copies of the tentative
minutes of the Open Market Policy Conference meeting of
April 29,|and of the Executive Committee meeting of June
22#
Very truly yours,
(Signed) W. Randolph Burgess
W # Randolph Burgess
Deputy Governor
Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D. C.
WRB.H
encl.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E-O-USSfe
FEDERAL RESERVE BANK
OF NEW YORK
CONFIDENTIAL
June 24, 1951.
Dear Governor Meyer:
I
am enclosing herewith a copy of the draft of the minutes of
the meeting of the Open Market Policy Conference held in Washington on
April 29 , ¥lso of the minutes of the meeting of the Executive Committee
of the Open Market Policy Conference held at this bank on June 22, \which
have been forwarded to the governor of each Federal reserve bank.
These minutes are subject to correction or amendment after the
various members of the Conference and Executive Committee have had an
opportunity to read them.
Should any changes be necessary, however, I
shall of course send you a corrected copy.
We regret the delay in sending out the minutes of the meeting
of April 29, due to the many pressing matters which Governor Harrison
has had on hand since that time.
Very truly yours,
(Signed) W. Randolph Burgess
W. Randolph Burgess
Secretary, Open Market
Policy Conference
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
Ends.
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DECLASSIFIED
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CONFIDENTIAL
^
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REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
EXECUTIVE COMMITTEE OF THE OPEN MARKET POLICY CONFERENCE
HELD W THE FBIERAL RESERVE BANK OF NEW YORK CN JUNE 22, 1931.
At the last meeting of the Open Market Policy Conference during
the Governors* Conference held in Washington commencing April 27, 1931,
the total holdings of government securities in the System Account amount
$402,300,000
ed to
At the meeting referred to, authorization was given
for the purchase up to $100,000,000 of government securities.
There have been, however, no purchases made under this auth
orization.
Pursuant to the discussion at the Governors*
Conference in April, a transfer was effected from the hold
ings in the Investment Account of the Federal Reserve Bank
of New York of $37,543,000 of government securities, repre
senting the amount of its excess holdings of government se
curities, to the participations in the System Account of
other Federal reserve banks which showed shortages in their
pro rata share of government security holdings.
This trans
fer, which did not affect the total amount of government se
curities held in the System, increased the total amount of
holdings in the System Account to- - - - - - - - - - - - - Below is a schedule of the amounts transferred to the par
ticipations of the Federal reserve banks referred to, and
the dates that the transfers were effected with their ap
proval.
Banks
Cleveland
Richmond
Atlanta
St. Louis
San Francisco
Atlanta
Amounts
Transferred
| 5,000,000
13,000,000
3,000,000
1,543,000
10,000,000
5,000,000
$37,543,000
Date
May
May
May
May
May
May
Effected
5, 1931
5, 1931
5, 1931
5, 1931
8, 1931
9, 1931
439,843,000
-.r
"V'"
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2
At the request of the Federal Reserve Bank of St. Louis
and with approval of tho Open Market Policy Conference, a block
/
of $4,625,000 - 1 1/2$ Treasury certificates of indebtedness,
maturing September 15, 1931, was transferred on May 19, 1931 from
the holdings in the Investment Account of the Federal Reserve
Bank of St. Louis to the System Account, and the
participation
of the St. Louis reserve bank in the System Account was in
creased by $4,625,000.
This transfer also did not affect
the total amount of government securities held in the System
and increased the total amount of holdings in the System
Account t o - -- - $444,468,000
There has been no change in the total amount of holdings of
government securities in the System Account since the transfer on May 19, noted
above*
held.
There have been, however, some changes in the maturities of the issues
These exchanges were made in replacement of maturing issues, in antici
pation of early maturities, or to effect an improvement in the distribution of
maturities or in the yield return*
The amount of net profit that was realized on various sales of United
States Government securities in the System Account during the period January 2,
1931 to June 15, 1931, and held in Suspense Account by the Federal Reserve Bank
of New York and the amount of each reserve bank’s pro rata share of such profit,
are as follows:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
#110,473.61
171,609,57
90,676.68
119,126.77
45,632.70
23,820.17
148,652.52
40,165.60
44,330.53
79,068.94
46,845.06
77,426.51
Total
$997,828*66
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CHANGES IN PARTICIPATIONS
IN S Y S T M PURCHASES OF BANKERS ACCEPTANCES
On May 6, 1931 a sale was made of $2,000,000 bills from the portfolio
of the Federal Reserve Bank of New York to the Federal Reserve Bank of Atlanta,
to compensate for Atlanta’s inability to take sufficient governments to cover
fully the shortage previously mentioned in this report.
On May 14, 1931, the Federal Reserve Bank of Richmond resumed its
participation in System purchases of bankers acceptances, which participation
it had discontinued on February 5, 1931.
At the present time all of the Federal reserve banks are participating
in the System purchases of bankers acceptances with the exception of the Federal
Reserve Bank of Philadelphia.
ALLOTMENT OF SYSTEM PURCHASES
Since the beginning of the current calendar year, in accordance with
tho same formula that has been in effect during the past several years, System
purchases have been allotted on percentages based on the ratio that each bank's
expenses, dividends and charge-offs bore to the total of such items for the
System for the preceding year, with the understanding that adjustments would be
made in the ratios during tho second half of the year based on the requirements
of the banks calculated on the figures available at the end of each month.
The ratios based on the expenses, dividends and charge-offs for the
year 1930 and the present ratios for allotment of System purchases of bankers
acceptances, excluding the Federal Reserve Bank of Philadelphia from participation,
are as follows:
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E .0 •\23Sk
4
V
Ratios of each
bank’s expenses,
dividends and chargeoffs for year 1930
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
7
25
7
9
5
5
13
5
3
5
4
9
Ratios for
allotment
of bills
7 3/4#
27 1/4fo
0
10 1/2fo
5 3/4fo
5 1/2%
14
fo
5 3/4#
3 1/2#
6
%
4 1/456
9 3/4$
1/4$
1/4#
1/2#
3/4#
1 /0
%
fo
1/4#
1/4%
3/2#
fo
fo
100#
100%
The following statement shows the amount of each Federal reserve
oss earnings, <
expenses and dividends and net earnings or net deficit
for the first five months of 1931.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
Gross
Earnings
Expenses
and
Dividends *
Net Earnings
or
Net Deficit
598,159
2,360,826
775,475
974,958
437,439
403,482
1,404,581
442,864
364,801
606,421
442,806
725,608
$ 1,136,671
3,848,435
1,218,355
1,522,677
812,549
684,803
2,010,670
634,997
468,433
815,422
321,705
1,243,006
#
$9,537,420
$14,717,783
t§.180,868
$
538,512
1,487,609
442,880
547,719
375,110
861,321
606,089
192,133
105,632
809,001
121,041
517.893
* Including current debits and credits to profit and loss
account but not for profit or loss on sales of U. S.
securities held in special investment account.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
my t# tnx
Mr* Smui
%• BRrrl«dif Governor,
F f i t m l H t t t m Baak#
Sow
lo w York*
Boor O o fim o r flarrio o n f
A* 1 advlaod you <n»r tho to lap h o ao , th o FodoraX Hosonro
Board
»t
it o aootlisg t h is
aonlsg
oonaidoxod th o ro p o rt
ao tio n tticsR ay i»uo upan M ir low n u * f y
w t o ®m w m I|
of
on Aprxji
X9SX# roading mmfoXIooot
"A ft e r o on* i d eratio n o f tb c iBSOOjraiiitim presented
by the C h aim ao, e »d fo llo w in g m lon g diooueeiait
o f the prooao t b u sin e ss, btfiking aed e r e d it l i t u a tio n , both n a tio n a l and In te rn a tio n a l, I t * * •
voted th a t pozidiag an oth er M eeting o f tho C o n ferenoe* aa soon a s th at aay b e dmmmd neeeeasry by
the F ed eral II— eyre Board or tho M a k e rs o f tho
Conference* th o Ix e o u tiv e C ooalttoo of tho lo a f e r oooo should ho a u th o riso d , i f and when i t appear*
to than noooooovy or a«hrieeble# t o puroh&so up to
tIOO#0OO,OOG of Q tifin w ant a e o u rit ie s * *
Tho Board haa vo ttd to approve th o requeet th a t tha 3xeo«»~
t iv o C oaaittee
of
th o Opon Msrtoet lo lio y Conference ho a u th o rise d .
I f and when it appears to th oa noooasory o r a d v is a b le , to purchase
up to 5X00,000,000 o f Oorom — n t s e c u r it ie s .
Very truly yours.
Eugene 'ie y e r.
Governor
3
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E . 0 •\23Sfc?
3, -C
Fe d e r a l R e s e r v e B a n k
o f N ew Y ork
May 7, 1931.
Dear Governor Meyer:
I am enclosing herewith for your files a copy
f
of the repord ishich Governor Harrison made to the Governors
Conference relating to open market operations.
Very truly yours,
I
f w tl
W. Randolph Burgess
Deputy Governor
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D # C.
WKB.H
encl.
RECEIVED
H A Y - 8 1231
OFFICE Q T
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
Authority B •0 ■\23Sfe
/;
'
confidential
REPORT OF THE CHAIRMAN OF THE OPEN MARKET POLICY CONFEREN
TO THE GOVERNORS CONFERENCE
April 27, 1931.
Government security holdings of the Federal Reserve System now
total $602,000,000, which is about the same figure at which they have been
maintained since the middle of August, 1930, except for a temporary increase
and decrease over the end of the year amounting in the aggregate to about
$100,000,000.
In fact the present total represents an increase of only
$25f000*000 over the amount held the middle of last June, the $25,000,000
having been bought in August when gold was moving to France.
Broadly speaking the open market program of the Federal Reserve
System since the stock market crash in the autumn of 1929 consisted of a
rapid reversal of the policies which had been designed in 1928 and 1929 to
place vigorous pressure upon the money market and the member banks.
These
policies had involved a decrease of about $450,000,000 in security holdings
between December 1927 and October 1929.
Between October 1929 and August 1930
the operation was exactly reversed and $450,000,000 of securities were pur
chased, bringing the total back again to around $600,000,000.
/
It is fair to say that the open market operations undertaken during
this period were |not^pursued with the idea that thereby any vigorous stimulant^
might be given to business or finance, but rather with the idea of removing in
a period of reaction and depression the pressure which had been placed upon
the market in 1928 and 1929, a period of inflation and expansion.
In this
way the System undertook simply to remove impediments which might otherwise
unnecessarily delay a restoration of more normal operations in the money market,
In particular it was recognized that the pressure of high money rates and a
restricted supply of funds in 1929 had shut off a certain amouiit of the supply
of mortgage and long time capital to various types of borrowers including
foreign borrowers whose purchasing power ibr our goods was thus seriously
( /
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority B . 0« \23Sfc>
2
curtailed.
Ordinarily there has been in times past a close relationship
between the volume of new financing and business activity, and financing in
this market for roreign countries has been closely related to the gold move
ment and to the maintenance of trade equilibrium between the nations especially
since the war.
Foreign countries have in recent years owed the United‘States
currently on balancc approximately $500,000,000 a year which includes
.*>220,000,000 due on account of interallied debts.
This amount they have to
pay in goods, in gold, or by an increase in their indebtedness to us or a de
crease in our indebtedness to them.
At the present time our market is pretty
effectively closed to any increase in foreign shipments of goods for one reason
or another including reduced consumption o I goods and tariff barriers.
Our
money market both short and long term is closed to foreign borrowers so that
they cannot increase their indebtedness.
Hence the two forms of payment that
are open are a withdrav/al of foreign money from the United States or a shipment
of gold to us.
In the present disturbed state of the world foreign individuals
find this the safest market to employ their funds and hence on that account there
has been little movement away from this market.
The net result has been that
we have received considerable amounts of gold as the only means by which for
eigners might meet their obligations to us.
The most hopeful method by which
some other adjustment may be made appears to be through an increase of our loans
to foreigners*-
It was a reasonable hope that the removal of pressure from the
money markets might be followed by renewed financing for enterprises of the sort
which had for some months boon inadequately supplied with capital,, and might
lead also to a resumption of foreign borrowing here to restore trade equilibrium
already considerably unbalanced#
The effect of system purchases of securities in late 1929 and during
1930 was somewhat augmented by continued gold imports from abroad and the re
tirement of currency from circulation due to business depression.
The net
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E • 0 • V23S4?
3
result v»fas to enable the member banks to reduce their Federal reserve indebted
ness to less than $200,000,000 and to bring about easy conditions in the principal
money markets*
Under these circumstances there was a considerable recovery in tho
bond market in the first half of 1930 which was; however, soon interrupted by a
series of unfavorable developments wholly unrelated to the System’s easy money
poliey*
Increasing political disturbances following economic disorders abroad
acted almost immediately to deter investors in foreign bonds, so that while about
^850,000,000 of new money was loaned abroad in the first seven months of 1930,
the civil war in China, revolutions in South America, governmental overthrows
in Eastern Europe, friction between France and Italy and finally the German elec
tions in September practically shut our market to foreign borrowers in the last
five months of the year.
Furthermore the severe drought in this country dimin
ished the purchasing power of large agricultural areas.
The business depression
became more severe and a series of banking difficulties in the course of which a
number of sizeable banks suspended operations accentuated the psychology of fear
and threw upon the market sizeable blocks of bonds both domestic and foreign#
After the turn of the new year there was some revival of confidence.
The bond market staged a considerable recovery.
But at this point a number of
bills was introduced into Congress calling at the maximum for an immediate ^ash
payment to World War veterans of |>5,400,000,000*
The payment of this huge sum,
or any sum nearly approaching it would have required large new issues of govern
ment obligations.
Any such program of financing could only have been carried
forward at interest rates much higher than those currently borne by outstanding
government bonds*
Thus the inevitable consequence of such new issues would
have been to revalue outstanding bonds, not only government bonds but other prime
issues as well, to a higher yield basis in proportionate relation to the new bonds
In the face of this possibility trading in bonds was practically at a standstill
from the latter part of January until the bonus question was finally settled
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c la s s ifie d
Authority E . 0« V23Sb
4
late in February.
Since the passage of definite legislation the bond market has in
part recovered lost ground, and new issues of securities have been in somewhat
more satisfactory volume.
However, the recognition of the necessity for the
Treasury’s securing considerable amounts of npw mnnay
tjlon as passed and to make up a deficiency in tax receipts is s t m a deterrent
influence on the bond market* and severe Repression j_n many lines of businessf
together with continued political and economic unsettlement in various parts of
the globe have stood in the way of the complete restoration of a satisfactory
security market.
Even now, there is practically no market for foreign/issues,
or for securities ol businesses* concerning the credit of which any possible ques
tion has been raised.
While bonds of the highest grade are selling at or close
to their highest prices in recent years practically all other categories of bonds
continue to be depressed and without a broad market.
As far as the business situation is concerned
lished that the turn has come.
There was for a time considerable anticipation
for a spring revival but that hope passed without apparent fulfilment.
Compre
hensive indexes of the total volume of trade do show a slight increase from
January to March, but the increase is not sufficient to indicate a definite
trend and the current reports from business do not offer any certainty of its
continuance, but rather show a little setback.
An interesting change in the banking statistics of the past few
weeks has been an increase in the loans and investments of the reporting member
banks resulting directly from new issues of government securities.
On March 15
the Treasury sold $400,000,000 more securities than it redeemed, most of which
was taken in the first instance by the weekly reporting banks, so that in a
single week due to this and other factors their total loans and investments
showed an increase of about $500,000,000.
On the liability side of the ledger
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
A uthority E - 0 •\23S4?
5
the immediate result was an increase of government deposits in these banks,
but as these deposits were drawn down there was a tendency for them to be
replaced by deposits of individuals as the Treasury funds were paid out to
individuals largely in the form of veteran loan checks,
After some recession
the total volume of credit showed a similar though smaller increase in connec
tion with the April 15 issue of Treasury certificates*
These operations prob
ably tend to result in some increase in available purchasing powrr* and may in
part account for the slight pick-up in some lines of business but thus far not
sufficient time has elapsed for the business statistics to reflect any definite
results.
There ha$ been in the past three weeks an unseasonable increase in
the total amount of monoy in circulation which, in the absence of other explana
tion, appears largely due to the withdrawal of currency by veterans who have
received their bonus money.
Already actual payments to veterans have totalled
about #500,000,000, and the increase in currency as a departure from the usual
seasonal tendencies, has been in the neighborhood of $50,000,000.
Three problems may be suggested as related to future system open
market policy.
The first relates to the bond market.
Generally speaking
the volume of new domestic issues are now going forward in limited volume, and
these issues are restricted to securities of primest character.
at proper
When put out
prices they appear to meet with satisfactory distribution but bonds
which are less than prime can hardly be sold.
There is no material market
for foreign 'issues*
The unsettlement of the bond market in recent months and the severe
depreciation of many types of issues has focussed attention upon possible
errors which issue houses and the market in general may be said to have made
in the past in the issuance of securities.
It may be that a reconsideration of
procedures and responsibilities is a necessary preliminary to the resumption
of large scale foreign lending in particular.
In any event these matters
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0« V23Sfe>
6
have recently been the subject of considerable discussion and consideration in
the New York market,
An added complication to the status of the bond market has been found
in the reluctance with which banks have made any increases in their holdings of
long time bonds.
It is true that the investments of the reporting member banks
show an increase of approximately 12,000,000,000 as compared with a year ago.
About half of this increase, however, has taken the form of government securi
ties and a considerable part of the rest is probably in the form of short term
obligations of one sort or another.
The second problem lies in the banking situation itself.
As reports
are received of recent bank examinations the extent of bank depreciation on
securities and losses on loans has been revealed.
has been seriously impaired by these losses.
In many institutions capital
One feature of bank examination
procedure which these returns have brought to light has been the widest varia
tion of practice in charging off losses on securities.
In the second district
at least it has become clear that no really adequate method for determining
security losses has as yet been devised, and a wide difference of opinion as
to intrinsic values has been revealed especially with respect to real estate
mortgage bonds.
This appears to be a field in which a considerable amount of
careful work may well be carried forward,
From the point of view of Federal re
serve policy question may be raised as to the effect on the position of many
banks of any changes in policy which may be made.
An easier money policy in
evitably would tend to reduce the interest return of member banks on a part of
their earning assets, particularly short term governments and bills which are
held most largely by city banks.
On the other hand any policy which would have
an influence even in small degree toward restoring a better bond market would
aid many banks throughout the country in larger degree.
The third problem is perhaps the most deep rooted one of the moment,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E . 0» V23Sifc>
7
that is, the gold movement.
Since the first of the year about $120,000,000 of
gold has come to the United States with approximately $33,000,000 on the way.
This follows a movement of $275,000,000 in 1930, and the present rate of import
is increased by a movement from France which may reach considerable proportions.
From the point of view of world public opinion the movement from France is of
importance because during 1930 we shared with that country the distinction of
acting as a magnet to draw gold from countries which sorely needed it to money
markets where it was already excessive.
But as we become the single important
destination of gold movements our position becomes even more conspicuous and
our responsibilities even greater.
The causes of this movement may be sum
marized briefly:
(1)
The rest of the world owes the United States on
trade balance in the neighborhood of $500,000,000
a year, which on the basis of the present trade
balance in merchandise goods can be paid only by
further foreign financing in this market or by
shipments of gold.
(2)
Reductions in prices and money value of exports
from many raw material producing countries is
serving to accentuate trade deficits of those
countries.
(3)
A condition of distrust in many money markets
encourages short money to stay here rather
than move to higher rate markets.
As a result of these three causes many countries find themselves with
a balance of trade which can be met only by gold exports.
Foreign commentators
are particularly critical of the monetary policies of the United States, because
this gold which comes to us does not find its way into use.
Imports in the past
fifteen months of nearly $400,000,000 of gold have been accompanied by practically
no increase in the total loans and investments of the reporting member banks and
by a considerable liquidation of loans in country banks, whereas the normal ratio
of expansion of credit on gold would have indicated an expansion of perhaps
$4,000,000*000.
For the gold as it came into the country has been used by
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
"
Authority
E « 0» \23Sfc>
8
member banks to repay Federal reserve credit in one form or another, with the^/
result that in this period the total volume of Federal reserve credit has
declined by an amount equal to the gold imports.
Thus it may be said that the
United States has prevented the usual or normal effect of gold which has come
to it.
The problem of putting gold imports to work is a particularly puzzling
one because of the obstacles which lie in the way of almost any kind of use which
is considered.
An expansion of foreign lending requires that investors should be
willing to purchase foreign bonds.
An expansion of domestic commercial credit
requires that business men should be willing to borrow.
An expansion of long
term bank investments to provide capital which is in demand hrre and abroad,
requires that banks which have recently taken huge losses in securities, and
upon which the lesson of liquidity has been enforced by sad experience, should
be willing to purchase bonds.
The evils to the world of continued gold steriliza
tion, however, are so great as to make desirable a careful scrutiny of Federal
reserve open market policy to see whether any action may yet be taken to put
more Federal reserve credit to work or at least to avoid any further reduction
in the volume of earning assets in the System.
While it is commonly stated that money conditions have been exceedingly
easy in recent months, and while indeed money rates have been at very low levels
there has not been over a period of months any consistent surplus of Federal re
serve funds pressing for use upon the market.
stantial surplus in the reserves
of
During January there was a sub
New York City banks but early in February
this surplus disappeared and was only present consistently again for two weeks
in March.
Over a period the banks even in the principal centers have not had
any considerable amount of unemployed funds on their hands as was the case in
previous severe business recessions in this country, as in the 90s and in 190? 08.
Question may well be raised whether methods could be devised for keeping
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d e c l a s s if ie d
’ *
Authority
E •0•l23Sk
9
in the hands of these member banks some surplus of funds pressing for employ
ment,
Even though it is true that the banks in the largd
centers M v e had
a considerable amount of their funds employed at very low rates, that does
not exert a pressure for credit growth which lies in an actual surplus of re
serves,
Furthermore, apart from the relatively easy position of the banks in
the larger cities, credit cannot be said to be very cheap or very plentiful
generally throughout the country.
For one reason or another it has become
fairly well bottled up in the larger banks in the larger cities.
In all these circumstances it has seemed desirable to consider
possible means by which gold imports may
have their effect on the credit
position rather than being nullified, as they have been, by a reduction in
total earning assets of the System*
Toward that end the New York bank has
already, with the approval of the Federal Reserve Board, made a reduction of
1/8 in its buying rate for short bankers bills.
It remains to be seen whether
this step results in keeping more Federal Reserve credit in employment, or in
deed whether it will even serve to avoid a further reduction in reserve credit
as gold continues to oome in.
In any event it is clear that the seriousness of the present world
situation and the central position of the United States in the whole world
picture makes it desirable to tax our ingenuity that the Federal Beserve System
may put forth every possible effort within its power towards maintaining a
measure of credit stability throughout the world and towards eventual business
recovery.
Prepared April 24, 1931.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0 •\23Sfe>
CONFIDENTIAL
2.
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE
OPEN MARKET POLICY CONFERENCE HIRING- GOVERNORS* CON
FERENCE HELD IN WASHINGTON C0IBOTC3NG APRIL 27, 1951
-i
<
J
There have been no changes in the amount of total holdings of government
securities in the System Special Investment Account since the last meeting of the
Open Market Policy Conference held in Washington on January 21, 1931, the total
holdings remaining throughout this period a t - - - - - - - - - - -
$402,300,000.
It was not considered desirable to make any sales from System
Account under the authorization recommended at the Open Market
Policy Conference in January, as the excess of reserves then
existing was shortly absorbed, partly by sales of sterling and
bill maturities.
There have been a number of changes in the maturities of the issues held
in the Account, to maintain a desirable distribution of maturities, and including
the replacement of March maturities.
PARTICIPATIONS IN SYSTEM SPECIAL INVESTMENT ACCOUNT
GOVERNMENT SECURITIES
Changes
in
Participations
At the present time all of the Federal reserve banks have
participations in the holdings of government securities in the System
Account (the amount of each bank’s participation as well as the amount
of its outright holdings of government securities is shown on an
attached exhibit).
During the period covered by this report there
have been some changes in the participations as follows:
On Feb. 2 -and
Feb. 10, 1931
At the request of the Federal Reserve Bank
of Kansas City for additional earning asset
holdings, a sale was made to that bank of
$5,000,000 of government securities on each
date from the Federal Reserve Bank of New
York’s participation in the System Account.
On Mar% 11 and
Mar. 18, 1931
The Federal Reserve Bank of Atlanta repurchased on each date $2,500,000 of its par
ticipation of government securities in the
System Account of which it was temporarily
relieved on Nov. 14, 1930, owing to its low
reserve position at that time.
V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority E •0 * \23Stp
Z
GOVERllift SECURITY OPERATIONS IN FEDERAL RESERVE BANK
OF NEW YORK* 8 INVESTMENT ACCOUNT
At the time of the Open Market Policy Conference meet
ing in January, the total amount of government securities held in
the Investment Account of the Federal Reserve Bank of New York
was -
$147,000,000.
which included a. balance of $35,000,000 of
$45 ,000,000 of Liberty Loan and Treasury
bonds temporarily taken over from two
New York City banks during the month of
December 1930.
During January and February, as market con
ditions permitted, this balance of
$35,000,000 was disposed of which reinstated
the amount of total holdings in the New York
bank’s Investment Account t o - - - - - - - - - - -
$112,000,000
Classification of Issues Held in
Investment Account of Federal Re
serve Bank of New York as of Close
of Business April 22, 1931________
Treasury Bills
n
tt
1
2
2
1
1
2
3
3
4
4
3/4$
7/8$
3/8$
1/2$
7/8$
$
1/2$
1/2$
1/4$
1/4$
due
ti
it
certificates
it
»
it
"
»
"
t
i
"
t
r
"
t
t
Treasury notes
First Liberty Loan
it
"
"
Fourth
•»
May
July
June
June
Sept.
Sept.
Dsc.
Mar.
Dec,
bonds
M
*1
Total
4,
2,
15,
15,
15,
15,
15,
15,
15,
1931
1931
1931
1931
1931
1931
1931
1932
1932
$
3,000*000
7,500,000
5,137,500
14,575,500
1,009,500
14,130,000
29,653,000
8,803,000
9,280,100
4,000,000
2,500,000
12,731,300
$112,319,900
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B •0 ■V23Sfe>
3
March 16
tax period
operations
As a partial offset to the easing effect in the money market
caused by the Treasury’s operations over the March 16 tax period, de
livery was deferred until after March 18 of about $>10,000,000 of
replacement purchases made in the market for the Investment Account of
the Federal Reserve Bank of New York and sales of government securities
were made from that account to a large New York City bank, under oneday repurchase agreement of |30}000,000 on March 17, $15,000,000 on
March 18 and $10,000,000 on March 19.
Sales were also made to New
York City and other banks of participations in the Treasury Special
certificate of indebtedness issued to the Federal Reserve Bank of New
York to cover the Treasury overdraft.
The amounts of the Special
Treasury certificates issued to cover the Treasury overdraft and the
participations sold were as follows:
Special Treasury Certificates
March 16
17
18
19
20
$ 170,000,000
21
23
12 , 000,000
Participations Sold
103,000,000
85,000,000
57,000,000
9,000,000
$106,000,000
76,000,000
40,000,000
35,000,000
22,000,000
PARTICIPATIONS IN SYSTEM PURCHASES OF RANKERS ACCEPTANCES
At the present time all of the Federal reserve banks are
participating in purchases of bankers acceptances by the System with
the exception of the Federal Reserve Bank of Philadelphia (whose only
takings of bills are those purchased in its own market) and the Federal
Reserve Bank of Richmond.
On February 5, the latter bank withdrew from
participating in the System*3 bill purchases because it believed the
System bill rate to be unjustifiably low.*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c la s s ifie d
Authority B •0 •\235(p
Ratios of
allotments
of System
purchases
Since the beginning of the current calendar year, in accord
ance with the same formula that has been in effect during the past
several years, System purchases have been allotted on percentages based
on the ratio that each bank's expenses, dividends and charge-offs bore
to the total of such items for the System for the preceding year with
the understanding that adjustments would be made in the ratios during
the second half of the year based on the requirements of the banks
calculated on the figures available at the end of each month.
The ratios based on the expenses, dividends and charge-offs
for the year 1930 and the present allotment ratios, excluding the
Federal Reserve Banks of Philadelphia and Richmond from participation,
are as follows:
Ratios of Each
Bank's Expenses,
Dividends and
Charge-offs
Year 1930
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
7
25
7
9
5
5
13
5
3
5
4
9
1/4#
1/4#
1/2fo
3/4#
1/4fo
f0
fo
1/4#
1/4fo
1/Zfo
100fo
f0
fo
'
Ratios
for
Allotment
8
29
0
11
0
5
15
6
3
6
4
10
1/4f0
fo
1/4#
3/4fo
fo
f0
3/4#
1/4#
1/2#
1/4#
100#
Attached are statements showing;
Exhibit "A"
Outright holdings of government securities
by individual Federal reserve banks, as of
close of business April 22, 1931; also,
their participation in government security
holdings in the System Special Investment
Account, and the classification of issues
held in the System Account by maturities,
as of close of business April 22, 1931.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0« \23Sifc>
E x h ib it nA,f
STATEMENT SHOWING HOLDINGS OF GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS
(E xcluding Sales C o n tr a c ts )
O utright H oldin gs o f
Government S e c u r it ie s
by F ederal r e se r v e banks
as o f the c lo s e o f
b u sin ess A p r il 22, 1931
p a r t ic ip a t io n by Federal
reserv e banks in System
S p e c ia l Investment A c c t .
Government S e c u r it ie s as
o f the c l o s e o f bu sin ess
A p r il 22, 1931
T o ta ls
709,950
$ 4 5 ,472 ,5 00
$ 46,182 ,4 50
112,319,900
6 8 ,8 5 1 s000
181,170,900
P h ila d e lp h ia
1 2,107 ,1 00
3 7 ,2 4 5 ,0 0 0
49 ,5 5 2 ,1 0 0
Cleveland
10,002 ,6 00
47 ,690,000
57,692,600
Richmond
1 ,1 5 2 ,1 0 0
15,830 ,5 00
16,982 ,6 00
A tla n ta
2 ,6 1 1 ,2 0 0
10,146,500
12,757 ,7 00
Chicago
19,927 ,4 00
61,201,000
81 ,1 2 8 ,4 0 0
S t. L ou is
8 ,6 2 5 ,0 0 0
15,274 ,0 00
23,899 ,0 00
M inneapolis
7 ,3 2 8 ,5 0 0
18,248,500
25,577 ,0 00
Kansas C ity
46,500
33,733 ,0 00
55,779 ,5 00
10,033 ,2 50
19 ,241 ,0 00
29,274,250
9 ,6 25,05 0
29,567 ,0 00
58,992,050
$194,488,550
$402,500,000
$59 6,788,550
Boston
$
New York
D a lla s
San F ra n cisco
T o ta ls
CLASSIFICATION OF ISSUES OF GOVERNMENT SECURITIES
HELD IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT
_________ CLOSE OF BUSINESS APRIL 22, 1951___________
U.
tt
tt
tt
2
1
1
2
1
1
2
5
4
S. Treasury
tt
t*
tt
♦t
tr
tj
7/8% C /I due
tr
5/4.; tt
♦
t
tt
1/2%
t»
it
5 / 8%
tt
tt
7/8%
tt
tt
7/8%
it
" tt
1/2% T/N "
-1/4/c 4th L/L
1951
B i l l s due May
tt
tt May
18, 1931
tt
tt Ju ly
1 , 1951
tt
tt Ju ly
2, 1931
June 15, 1931
June 15, 1951
S ep t. 15, 1951
Sept. 15, 1931
Dec. 1 5 , 1951 TD
Dec. 15, 1951 TD2
Mar. 15, 1932
Dec. 15, 1932
bonds due O ct. 15, 1958
$
2 ,0 0 0 ,0 0 0
19 ,200,000
21,500,000
11,500 ,0 00
45,781 ,0 00
23 ,3 0 0 ,0 0 0
57,027,000
72,880,500
80 ,1 2 6 ,5 0 0
7,500,00 0
45,352,000
14,012,000
4,541,000
$ 4 0 2 ,3 0 0 ,0 0 0
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
'
Authority £ •0 •V23St?
5
Exhibit "B” - Earning asset holdings of all Federal re
serve banks April 22, 1931, as compared
with previous week and April 23, 1930;
also weekly average of earning assets from
January 2 , 1931 to April 22, 1931, as com
pared with corresponding period 1930, and
entire year 1930.
Exhibit ”CM - Bills purchased outright by System by weeks
from January 2, 1930 to December 31, 1930,
and from January 2, 1931 to April 22, 1931.
Exhibit ”D" - Amount of net profit that was realized on
various sales of United States Government
securities in System Account during period
January 2, 1931 to April 22, 1931, and held
in Suspense Account by the Federal Reserve
Bank of New York, and amount of each bankfs
pro rata share of such profits; also the
approximate amount of net profit as represent
ed between the book values and the market bid
prices on April 22, 1931, of United States
Government securities held in the System
Account,
Exhibit "E” - Amount of earnings, expenses and dividends,
and net deficit of all Federal reserve
banks for the first three months of 1931.
*Z *
STATfflSlWT SHOWING EARNING ASSET HOLDINGS OF ALL FEDERAL RESERVE BANKS APRIL 22, 1931 COMPARED WITH PREVIOUS WEEK AND APRIL 23, 1930; ALSO WEEKLY AVERAGE
(000 Omitted)
*
N
22
- April 15
B i ll s Purchased
N
"
22
Net Change
ii
"
22
Net Change
Total Earning Assets
M
M
Cleveland
Richmond
Atlanta
Chicago
bt.Louis
Minn.
Kan. City
9 7,534
7,160
$26,144
31,192
114,385
15,822
*14,437
11,768
•14,475
11,937
t 9,770
10,048
♦12,351
13,337
9 7,490
8,489
* 3,415
3,401
1 8,935
9,059
10,255
17,510
7,255*
Government Securities - A p ril 15
m
Phila.
374-
Net Change
N
New York
- A p ril 15
M
h
22
24,551
40,985
16,434+
1,437+
105
105
20,806
19,430
1,376-
57,355
57,693
182.713
182.713
49.352
49.352
-0-
“0—
-0-
63,971
70,852
233,408
254,890
63,342
65,279
21,482+
2,669-
—o—
46.182
46.182
6,88l+
Net Change
5,048+
1,437+
16293,098
88,891
4,207-
2,538104
43
6l16,983
16,982
131,562
28,962
2 ,600-
278+
5,675
6,106
431+
12,354
12,757
9728,299
28,911
612 +
986+
22,557
21,032
1,525-
9,888
7,928
23.899
23.899
-0-
—0—
539-
5,883
5,632
1,960-
81,128
81,128
116,036
115,497
14-
999+
41,277
40,316
8,041
7,768
25125,668
25,777
273-
33.780
33.780
109+
34,966
34,310
961-
124+
-050,756
50,607
156-
149-
Dallas
t 7,326
7,477
151+
5,510
5,106
404-
29,229
29,274
45+
42,065
41,857
208-
San Fran.
Totals
I 5,742
5,560
I 132,004
135,250
18218,104
19,966
1 ,862+
38.992
38.992
-062,838
64,518
1,680+
3,246+
131,479
151,611
20,132+
598,635
598,529
106862,118
885,390
23,272+
Comparison of Weekly Average
fan^,bk
--------
9l
Jan. 2 to April 22, 1931
Same period 1930
Entire year 1930
Met Change from same period 1930
"
m
* entire year 1930
67,872
66,876
74,002
277,672
382,347
323,075
996+ 104,67545,4036,130—
74,075
95,679
82,371
21,6048,296-
94,231
102,922
98,736
8,6914,505-
37,111
43,066
44,795
5,9557,684-
34,182
50,346
49,995
16,16415,313-
121,342
149,490
127,693
28,148—
6,351-
39,679
48,518
46,611
8,8396,932-
34,287
31,494
34,591
51, 664
29,986
41, 405
2,793+
304-
21, 678+
10, 259+
40,355
45,164
45,066
4,8094,711-
69,294
72,494
72,5e2
3,2003,228-
941,764
1,118,382
1,040,862
176,61899,098-
Ottmaarieon of Earning Assets,
April 22, 1931
"
23, 1930
Net Change
70,852
72,202
1,350-
254,890
308,273
53,383-
65,279
83,182
17,903-
88,891
92,982
4,091-
28,962
28,911
39,504
55,612
10,542-
26,701-
115,497
115,251
246+
40,316
45,741
34,810
35,111
5,425-
50,607
31,982
301-
18,625+
SUMHARY FOR SYS ISM
Bills Discounted for week
Bills Purchased for week
Government Securities for week
Total Earning Assess for week
Comparison of Weekly Average of Earning Assets Jan. 2 to April 22, 1931 with same period 1930
"
"
" "
2 22, 1931 with entire year 1930
Comparison of Earning Assets April 22, 1931 with April 23, 1930
» 3,246+
20,132+
106-
23,272+
176,61899,098119,573-
41,857
41,136
721+
64,518
83,987
19,469-
885,390
1,004,963
119,573-
I Declassified Holdings of the National Archives
- April 15
B i l l * Discounted
Boston
Reproduced from the Unclassified
E X H IB IT
Reproduced from the Unclassified I Declassified Holdings of the National Archives
jO H I ’IT
"C"
blLLS PURCHASED OOTRIOHT BY SYSTEM BY WEEKS
FROM JAMJAR? 2 TO DECBfflER 31, 1930 AMD FROU JAHUAHY 2 TO APRIL 22. 1931. INCLUSIVE
(OOO O tiiU ad)
Ending
-1930 Jan.
8
15
22
29
Banka
Boston
♦
2,359
3,359
1,627
563
♦
25,766
20,5*9
9,398
10,740
Nan York
D ea lers
♦
7 ,3 M
30,900
14,187
4,834
Clavsland
T o ta l
♦
33,104
51,439
23,585
15,574
♦ 1,385
1,838
1,608
1,160
-0 - 0-0 -0 -
Richmond
♦
A tla n ta
599
65C
473
-0 -
♦ 1,790
303
96 5
942
Chicp£0
♦
615
975
1,107
137
!_'lnn.
-0 •0*
-0 -0 -
U a llM
•
T o ta ls
San Fran.
661
483
592
356
♦ 2,248
4,961
3,761
1,913
♦
INCREASE o r DECREASE
In H oldings
In clu d in g Salas Contracts
&ystaia
New York
O porations Oparationa
D aalars
Operation*
W ith Other
Die*, r i cte
Racaivad
42,761
64,038
33,718
20,645
♦ 56,5345,149+
28,77430,555-
♦ 73,0424,180+
24,95839,917-
♦ 13,068
3,179
5,075
3,319
♦
7,113
876
3,440
3,550
m .
' 5
11
19
26
172
-0 613
2,175
37,970
6,073
37,852
30,381
14,294
8,973
12,431
15,677
52,264
15,046
50,283
46,058
1,813
544
878
2,585
-0 -0 -0 -0 -
-0 -0 403
5e
769
426
96
323
469
361
730
389
-0 -0 708
5 47
595
402
550
410
2,129
430
2,902
1,930
58,211
17,209
57,163
54,467
36,257+
19,3187,701+
12,031+
37,319+
19,7074,963+
13,249+
7,154
2,615
4,887
5,314
2,143
1,086
1,837
10,532
Mar.
5
12
19
26
900
301
85
1,009
28,464
8,714
13,650
7,404
3,858
2,387
4,567
-0 -
32,322
11,101
18,217
7,404
1,150
279
698
137
“ 0“
- 0-0 -0 -
283
514
100
162
496
223
-0 -0 -
721
2,960
590
168
854
-0 -0 -0 -
316
443
281
115
5,427
984
152
135
42,469
16,305
20,123
9,130
24,57810,97162,03173,104+
28,10414,66471,52171,465+
11,346
8,640
7,753
8,007
5,939
3,518
8,026
4,033
Apr.
2
9
16
23
30
3,542
6,455
3,428
2,122
1,586
18,474
8,412
19,450
7,498
16,613
8,206
26,186
24,203
19,295
371
26,680
34,598
43,653
26,793
16,984
1,899
3,515
1,442
1,964
245
-0 -0 -0 -0 - 0-
269
-0 454
-0 109
125
-0 468
21
220
4,749
853
507
480
717
335
-0 -0 1,780
366
633
190
418
57
132
3,428
2,865
2,194
1,433
1,714
41,660
48,476
52,564
3 4 ,650
22T073
25 , 431+
3 4 ,l3 4 —
39 , 897+
45,15840,274-
44,315+
34, 2953 5 ,412+
45,54547,305-
6,719
9,315
7,240
3,344
5,044
2,768
2,552
5,546
4,454
2,560
Uay
7
14
21
28
824
332
2,535
688
2,341
23,380
30,177
5,307
3,962
9,917
1,742
3,064
6,303
33,297
31,919
8,371
-0 143
-0 73
-0 -0 -0 -0 -
102
-0 232
367
•0"
-0 -0 75
669
1,365
558
637
-0 -0 -0”
1,000
108
138
104
112
434
1,225
1,585
1,907
8,440
36,500
36,933
13,230
30,1731 ,3 0 9 15,354+
18,991-
34,3614,16815 , 349+
11,324-
2,295
8 ,i 40
8,137
4,430
2,938
2,974
1,241
2,543
June
4
11
18
25
231
2,27 5
620
1,244
22,244
7,089
6,475
7,945
2,187
4,602
5,304
2,428
24,431
11,691
11,779
10,373
-0 -0 -0 -0 -
-0 -0 -0 -0 -
165
245
245
144
45
-0 -0 -0 -
349
710
1,175
4,243
*27
-0 -0 852
32
77
169
30
1,903
552
1,280
2,312
27,583
15,550
15,268
19,698
22,991+
42,45914,7443 1,975-
13,680+
41,06315,39630,457-
5,081
4,771
9,263
4,000
1,603
1,705
4,060
5,342
July
2
9
16
23
30
501
427
1,146
1,441
1,203
35,561
8,094
41,660
11,313
7,404
3,525
4,045
8,719
5,532
4,100
39,086
12,139
50,379
16,845
11,504
-0 -0 -0 -0 -0—
-0 -0 -0 -0 -0 -
110
80
-0 237
75
30
60
25
-0 33
1 ,1 1 6
1,166
393
451
-0 -
-0 -0 818
-0 262
81
17
-0 38
66
876
374
2,152
1,039
500
41,800
14,263
54,913
20,051
13,643
59,363+
6 ,52021,11.814,43915,709-
55,172+
8,54019,722+
i.3,14419, 761-
9,003
3,030
3,993
6,008
4,766
2,444
4,612
1,254
4,403
2,504
Aug.
6
13
20
27
863
-0 443
482
11,990
41,288
31,820
17,052
280
907
1,105
129
12,270
42,195
32,925
17,181
-0 -0 -0 -0 -
-0 -0 -0 -0 -
81
25
-0 60
20
25
-0 27
63
510
1,569
-0 -
-0 -0 -0 -0 -
14
19 •
-0 19
841
729
1,276
-0 -
14,152
43,503
36,213
17,769
6,530+
21,458+
1,604+
10,257+
2,809+
20,757+
4,594+
4,352+
7,300
4,619
3,426
3,496
739
3,169
2,720
2,253
bapt.
3
10
17
24
178
580
588
300
12,652
48,067
26,336
11,705
3,924
6,044
113
7,744
16,576
54,111
26,449
19,449
-0 -0 -0 -0 -
-0 -0 -0 -0 -
-0 -0 -0 143
236
550
193
209
232
100
160
527
246
-0 -0 - 0-
“0-0 30
5
781
100
696
1,737
18,249
55,441
28,116
22,370
6,020+
23,801+
15,035+
14,4?2-
7,121+
22,725+
15,741+
11,118-
3,096
5,924
5,071
4,210
1,938
4,107
2,407
2,102
Oct.
1
8
15
22
29
1,917
6,298
260
670
500
23,799
23,827
29,196
30,948
4,237
63
3,864
2,257
7,822
1,105
23,862
27,691
31,453
38,770
5,342
-0 - 0-0 -0 -0 -
-0 -0 -0 -0 -0 -
-0 70
-0 -0 328
590
-0 149
117
387
-0 113
849
200
861
200
-0 “0"
-0 200
299
-0 16
-0 -0 -
3,056
3,101
3,320
1,562
1,125
29,9 24
37, 273
36,047
41,319
8,743
8 , 82917,498+
30,9807,1715 , 793-
4,63517,915+
25,5311,098+
20,932-
6,919
9,855
6,167
7,471
7,007
4,660
2,486
5,273
1,506
4,099
Nov.
5
12
19
26
73
200
-0 -0 -
25,710
17,970
13,075
10,316
290
777
30
2,510
26,000
18,747
13,105
12,826
-0 -0 -0 -0 -
-0 -0 -0 -0 -
-0 -0 40
218
384
-0 80
-0 -
118
-0 434
588
-0 -0 •0 -0 -
7
32
571
112
3,613
883
538
2,507
30,195
19,862
14,768
16,251
14,662+
23,505+
29,9112,472-
19,944+
21,740+
29,0692,137-
5.9C1
2,67 5
7,787
5,654
3,715
4, S88
1,709
444
Dec.
3
10
17
24
31
1,286
1,010
103
855
6?8
43,204
34,659
34,066
6,541
91.229
311
4,393
1,829
-0 5.722
43,515
39,052
35,895
6,541
96.951
-0 -0 6
-0 -0 “ 0“
-0 -0 "
71
322
-0 -0 ___ a 6
1,2 9 8
626
649
1,746
1.514
544
75
1,151
3,235
13.984
660
-0 -0 -0 902
-0 15
- 0-0 20
1,470
884
1,146
1,544
419
48,844
41,984
38,950
13,921
114,694
39,338+
21,926+
6,345+
14,23345.198+
42,331+
24,760+
7,394+
8,246+
104.007+
3,047
3,462
4,302
5,219
2.882
1, 233
2,054
1,154
1,249
2.968
♦61,057
♦1,106,075
♦308,053
♦1,414,128
♦23,362
-0 -
' ♦7 ,642
*16,235
♦ 54,673 ♦10,157
• 8,765
♦86,573
♦1,682,592
»1 1 2,740-
♦ 38,389-
♦312,481
♦164,429
7
14
21
28
362
407
-0 157
35,498
406
2,351
594
6,280
322
718
•0 -
41,778
728
3,069
593
-0 -0 -0 -0 -
-0 -0 -0 -
248
21
-0 -0 -
22
580
83
75
24
126
-0 -0 -
-0 -0 -0 -0 -
- 093
1
31
438
280
79
36
42,872
2,235
3,232
892
84,70764,07140,31624,763-
98,38869 , 27644,55531,384-
4,588
5 ,12 8
3,675
7,419
1,724
999
3,767
6,679
Fab.
4
11
18
25
-0 -0 -0 90
2,994
2,894
20,904
14,499
264
-0 -0 -0 -
3,258
2,394
20,904
14,499
-0 -0 -0 -0 -
-0 -0 -0 "0 “
290
60
-0 -C-
37
80
357
-0 -
120
28
-0 50
-0 -0 -0 -0 -
16
7
1
40
-0~
12
-0 2,578
3,721
3,031
21,262
17.25T
11,3036,5688,352+
13,984+
15,96616,5366,256+
12,322+
2,096
2,501
1,676
3,631
4,272
1,323
6,360
2,803
Mar.
4
11
18
25
50
-0 -0 -0 -
16,966
47,222
12,105
14,353
105
3 ,2 1 8
1 ,1 8 8
-0 -
17,071
50,440
13,293
14,353
-0 -0 -0 0-
-0 -0 -0 0-
-0 -0 -0 -0 -
-0 -0 -0 ~o-
-0 2,434
-0 ;o
460
-0 -0 -0 -
141
7
-0 “ 0~
1 ,7 7 5
2,448
1,653
3,204
19,497
55,329
14,946
17,607
6,86546,867+
28,64738,681-
5,76250,847+
28,85239,278-
825
2.C56
2,518
2,215
5,371
7,537
7,052
1
8
15
22
4,C40
- 0-0457
57,8C0
45,476
12,442
6 ,7 9 4
16,503
8,207
1.212
64,594
61,979
20,649
-0 -0 -0 -
-0 -c-0 -0 -
-0 -0 384
-0~
1 ,2 1 0
874
55
3,653
2,476
607
2.648
73,497
65,797
21,708
21,793
77,535+
7,762+
38,9848.729+
83,350+
5.1C7+
1,902
1,134
__220
“ 0“
450
-0 "0 -
-0 18
13
..J L fliffS
-0 -cv
-0-o -
40,25020.132+
4,259
2.227
6,700
6,351
7,912
4.867
♦44,811
#348,375
-o-
-0 -
619
♦ l,6 l8
♦5,361
♦910
♦393
♦21,887
♦384,726
♦181,676-
♦212,233-
♦49,336
♦75,932
TOTALS
-1931'
Jem.
A p r il
JLTiflft
TOTALS
♦5,563
♦303,564
-0 *c»
- 0♦
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXHIBIT "C" (a )
CLASSIFICATION BY MATURITIES QF BILLS PURCHASED
BY [FEDERAL RESERVE BANIvS IN THEIR RESPECTIVE DISTRICTS
DURING THE PERIOD FROM Ja ML*RY 2 TO DECEMBER 31, 1950
and from January 2 to a f r i l 2 2 , i y s i
_______ ^
_______ (EXCLUDING sales CONTRACTS)
(000 Omitted)
1-30 days
Boston
New York
P h ila d elp h ia
Richmond
A tla n ta
Chicago
St, Louis
M inneapolis
D allas
San Francisco
To ta ls
T o ta ls
T ota l
$ 29,410
785,107
5,253
2,014
18,955
22,549
325
1,015
4,379
19,428
v 14,949
445,452
8,056
3,142
4,009
24,202
0
5,479
3,055
44,914
# 19,679
150,809
10,073
2,462
3,032
7 ,922
0
5,663
829
21,766
•5 1,332
16,206
0
24
265
0
0
0
502
465
$
<£888,455
sp551,238
#232,235
018,794
$1,680,702
1-30 days
Boston
New York
Richmond
A tlan ta
Chicago
Minneapolis
D allas
San Francisco
JANUARY 2 TO DECEMBER 51, 1950
31-60 days
61-90 days
Over 90-days
65,570
1,597,574
23,562
7,642
26,261
54,675
525
10,157
8,76 5
86,575
JANUARY 2 TO APRIL 2Si, 1951
Over 90-days
51-60 days
61-90 days
vjp 4, 6o4
271,595
40
653
5,608
910
280
9,749
$
§291,274
$ 69,856
505
56,881
254
275
1,753
0
61
10,347
£
522
19,591
345
657
0
0
20
1,509
-jp 22,424
'4
102
708
T o ta l $
5,563
348,575
619
1,618
5,561
910
593
21,887
$
384,726
0
48
0
0
52
282
0 1,172
Reproduced from the Unclassified I Declassified Holdings of the National Archives
E xh ib it "D"
Amount o f Net P r o f i t that was r e a liz e d on variou s sa les o f
U nited States Government s e c u r itie s in System Account
during p eriod January 2 to A p r il 22* 1931, and held in
Suspense Account by the Federal Reserve Bank o f New York
$ 754,532.18
Amount o f Each Bank’ s Pro Hata Share
Boston
| 85,757,11
134,822.83
New York
P h ila d elp h ia
70,460.48
Cleveland
90,181.69
Richmond
28,974.04
A tlan ta
12,910.80
Chicago
115,381.55
S t, Louis
29,071.37
M inneapolis
34,411.19
Kansas C ity
60,309.00
D allas
36,400.14
San Francisco
55,851.98
T o ta l - - - - - -
|754,532,18
Approximate amount o f Net P r o f i t as represented between
the book valu es and the market bid p ric e s on A p r il
22i 1931, o f U nited S tates Government s e c u r itie s
held in the System Account - - - - - - - - - - - - -
$149,213.62
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXHIBIT "E"
STATEMENT SHOWING EARNINGS, EXPENSES AND DIVIDENDS AND NET DEFICIT
OF ALL FEDERAL RESERVE Ba .'TICS FOR THE FIRST THREE MONTHS OF 1931
Boston
Gross
Earnings
F ir s t
Three
Months 1951
Expenses
and
Dividends
F ir s t
Three
Months 1951
Net
D e fic it
F ir s t
Three
Months 1951
$
5
$
385,904
677,733
291,829
1,567,795
2,133,356
565,561
P h ila d elp h ia
518,264
712,065
195,801
Cleveland
631,959
922,358
290,599
Richmond
883,006
496,853
215,847
A tlan ta
265,777
414,069
148,292
Chicago
897,168
1,204,223
507,055
St. Louis
291,965
373,184
81,219
M inneapolis
327,260
275,383
48,125
Kansas C ity
390,165
491,545
101,380
D allas
268,029
383,919
115,890
San Francisco
462,981
759,764
296,783
^56,190,275
$8,844,452
#2,654,179
New York
T o ta ls
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 181
Office Correspondence
To____________All Members of the Board
FEDERAL RESERVE
BOARD
Subject:.
Mr. McClelland
From
I
For your information, there is attached hereto letter
from the Secretary fcf the Open Market Policy Conference,
%
dated February 18th} enclosing a revised copy of the minutes^ I Zt/3/A
of the^meeting of the Open Market Policy Conference held
/
[
■333,
on Jsn uary 21st in Was lingtoni
Governor Meyer
Mr. Hamlin
/Mr* James
Mr. Miller
Mr. Pole
Please circulate, promptly and return to this office*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
■V".
%» ftandolph fturgoss,
Opon Market Policy Coiifaranco*
mrt* Bank of Xiv York,
Hsw 1^1% City,
JB**r
I
your
of Fabruaj^y 18 anolotiqg
*I £// 3
(
3 3 3
m r re la ad w ^ ;of th » Mlm*fca»id r t W » ^ t i a K o f -t t *
January 21, 1$$!*. and I appreciate your court©«y la
•anile* tii« r#rl»ad
to *©.
Tary truly your».
TSlgned) rumnf! ?•';
Ooftrwr.
-c
t~ C ~
Reproduced from the Unclassified I Declassified Holdings of the National Aichives
.
•?*,
[
- ' /
DECLASSIFIED
Authority E •0•U3Sib
F e d e ra l R e s e rv e B a n k
o f
N e w Yo r k
CONFIDENTIAL
Februaiy 18, 1951,
Dear Governor Meyer:
IM A
Enclosed herewith is a revised copy o f t
h
e
of the meeting of the Open Market Policy Conference held
January 21 in Washington, which I should be glad if you would
substitute for the tentative minutes mailed to you January 29.
There have been considerable changes made in this revised
draft.
Very truly yours,
W. Randolph Burgess
Seeretaiy, Open Market Policy
Conference
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D* C.
WBB.H
encl.
RECEIVED
FEB 1 ^ 1931
OFF! OF: OF
/OUUL..
&*****»
3 3 3* *'C • &
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
0 V23S(p
Authority B • •
Jehmiary 9, 1931*
Br* W. Randolph Burgeoe,
S«crotw.ry, Opos Market Folloy Conferono#,
Foderal S « « « m Bank of How Tork,
low Tork City.
Door Doctor 9urg»»ax
B m u in
of « y preoccupation
w ith
eoea&ttooo
of Coagretta, 1 havo act heretofore had an opportunity
to acknowledge the receipt of your letter of
Janizary 29 onolosing
th o
tentative draft of
th o
Rimxtoo of tho Open Haricot Polloy Conferenoe, oopios
of tho Preliminary looortsdai wibaltted by tho Chair
man* and tho £oorotaryf* Report on Operation*.
shall ho glad to
r o o o iv o
X
tho final minutes of tho
Conference when thoy have boon approved.
With H o d regard*, I m
m
Tory truly yours,
(Clfrnw - tGovernor.
1-
•>
-
—i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E- O*
^
-C
F e d e ra l R e s e rv e B a n k
o f
N e w Yo r k
CONFIDENTIAL
January 29, 1951.
Dear Governor Meyer:
I
, ^ .
am enclosing herewith tentative draft of the admit eg of
Open Market Policy Conference.
These are in somewhat different form
from the previous minutes because several members of the Conference
requested that the views of individuals should be more fully expressed.
Our feeling here is that the result is a rather cumbersome and unsatis
factory record, since the views which are expressed offhand on such an
occasion are of necessity incomplete and are apt to give a misleading
impression.
We have suggested this to the members of the Conference.
These minutes are, therefore, subject not only to changes in detail
but possibly redrafting, and we will send you later tho minutes as
they are finally approved.
Also enclosed are copies of the Preliminary Memorandum sub
mitted by the Chairman, and the Secretary* s Report on Operations.
Very truly yours,
^
£ n
/
W. Randolph Burgess
-y j Secretary, Open Market P o lic y Conference.
/-&<% 2 f
Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
RECEIVED
JAM : i 1931.
OFPIOlf OF
GOV fURNOR
WEB.H
encl.
7V* /
Reproduced from the Unclassified / Declassified Holdings of the National Aich ves
d e c l a s s if ie d ”
Authority
B • 0* V23Sfc?
r
CONFIDENTIAL
DRAFT
MINUTES OF MEETING OF THE OPEN MARKET POLICY CONFERENCE
HELD AT THE OFFICES OF THE FEDERAL RESERVE BOARD
WASHINGTON, D. C., JAMM Y 21, 1951.
The meeting convened at 10:00 o ’ clo ck , th ere being present the
fo llo w in g :
Governors Young, Fancher, Seay, Black, McDougal, M artin,
Geery, T a lle y , Calkins and H arrison, Chairman
Deputy Governors H utt, Worthington and Burgess, se c re ta ry .
The p relim in a ry memorandum submitted by the chairman and the rep ort
o f the s e c re ta ry coverin g System operation s in government s e c u r itie s were d is
trib u te d and read by those p resen t.
I t was moved and c a rrie d that these re
p orts be re ceived and placed on f i l e .
Governor H arrison then review ed f o r the conference h is discu ssions
with European bankers and others and the im pressions he gathered on h is recen t
European t r i p .
In the course o f extended discussion o f these m atters Governor
H arrison poin ted out that the world owes the United S tates on balance about
^600,000,000 each yea r, and that payment has to be made in go ld , in imports from
fo re ig n co u n tries to us, or by borrowing from us.
The p o l i t i c a l debts in volved
a payment to us o f about $800,000,000 a year or about o n e-th ird in amount o f the
net balance due us each y ea r.
These cou n tries were unable to send us much more
go ld , th e ir exports to us were now lim ite d and new fin an cin g c u r ta ile d .
Th eir
on ly a lte r n a tiv e was to diminish t h e ir purchases o f goods from us, which was
nov/ being done to our detrim ent.
He indicated that the people he met abroad appeared to b e lie v e that
reco very from the present business depression depends la r g e ly on America, p a rt
l y fo r p sy ch o lo g ica l reasons and p a r t ly because o f the importance o f exports to
us and borrowing from us.
G en erally speaking he f e l t that the economic s itu a tio n o f European
cou n tries had grown d is t in c t ly worse since h is v i s i t la s t spring, and has
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B • C)» \23Sfp
2
probably grown somewhat worse in the weeks since h is recen t retu rn from Europe,
A ft e r gen eral discussion w ith regard to the fo re ig n situ a tio n *
Governor H arrison r e fe r r e d to the reduction o f the discount ra te o f the
Federal Reserve Bank o f New York, e f f e c t i v e December 24, 1930.
He in d ica ted
that the banking s itu a tio n was o f primary importance in the d e c is io n .
He had
been urged from many quarters to make a reassu rin g statement which might aid
in q u ietin g the banking s itu a tio n .
Such a statement was p r a c t ic a lly im possible
because to be strong enough to do any good i t would run the r is k o f being contra
d ic te d by any small bank f a ilu r e which might th e r e a fte r occur.
The rate re
duction, apart from oth er reasons, served as a method o f s ta tin g to the public
that money was f r e e l y a v a ila b le .
by the money s itu a tio n .
I t would probably help the fo r e ig n s itu a tio n as w e ll
as the comestic s itu a tio n .
to reduce her r a te .
The ra te redu ctioh was ju s t if ie d te c h n ic a lly
In c id e n ta lly , i t might make i t e a s ie r f o r France
The discount r a te d e c is io n had been made v e ry r a p id ly ,
and there had not been an opportunity to discuss the m atter w ith most o f the
ocher Reserve banks.
In f a c t , the proposal had only a ris e n a ft e r the meeting
on December 20 o f the execu tive committee o f the Open Market P o lic y Conference.
Governor H arrison r e fe r r e d to the holdings o f s t e r lin g b i l l s purchased
during the p eriod o f g re a te s t weakness Of s te r lin g la s t autumn.
He said i t
hea been the in ten tio n to s e l l these b i l l s some time a f t e r the turn o f the yea r,
when i t was hoped that s t e r lin g would be strong enough to make that an o rd e rly
op era tion .
Recent weakness o f s t e r lin g , however, has made th is program seem
undesirable up to th is tim e, and instead o f the sa le o f s t e r lin g the d ir e c to r s
o f the New York bank have vo te d at th e ir la s t meeting to s e ll a part o f the se
c u r it ie s which had been added to the p o r t f o lio o f the New York bank during the
recent banking emergency.
Governor McDougal commented on the recent discount rate change by
the Federal Reserve Bank o f Chicago and in d ica ted w ith regard to the la s t three
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E ■0• l23Sfc>
v>
changes in t h e ir discount r a te th at in the case o f the f i r s t two o f these changes
i t had been hoped that the reduction in the rate would have some encouraging
e f f e c t upon business* but that the la t e s t change had been made without any such
b e l i e f , but because the Chicago bank did not f e e l i t could operate w ith so la r g e
a d if f e r e n t ia l between i t s ra te s and that o f the New York bank*
Governor Calkins stated that he had approved o f the New York ra te re
duction, and said th at th ere appeared to him to be reason fo r a redu ction at the
turn o f the year when the hope
o f business improvement might be stim ulated and
the p sy ch o lo g ica l e f f e c t might be good,
Governor McDougal expressed the hope that there would be no fu rth e r re
duction in the b i l l ra te ; that money was too cheap with Federal funds quoted at
1/4 o f one per cen t; and that i t would be b e tte r f o r the market to get the b i l l s
i f i t wanted them.
Governor Calkins suggested that the p o s itio n should be one in which we
kept our b i l l r a te low , but t r ie d to c o rre c t any over-slop p y con d ition in the
money market by the sa le o f government s e c u r itie s .
Governor McDougal suggested that the minutes o f the Open Market P o lic y
Conference m eetings should be more complete and should include statements such
as those he had made.
Governor McDougal made in q u ir ie s concerning the ra te s which banks were
paying on t h e ir balances, and in d ica ted that the change
in the Chicago Clearing
House ra te s had been a fa c to r in the recen t discount ra te change o f the Federal
Reserve Bank o f Chicago.
There ensued a discussion as to the statement o f fa c ts in the prelim
in ary memorandum submitted by the chairman, and Governor Harrison fu rth e r re
viewed. the changes in the money market sin ce the la s t m eeting o f the Open Market
P o lic y Conference, p o in tin g out that the seasonal expansion in the requirements
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
>*
*'-
'
Authority £ • 0» \23St?
4
fo r Federal reserve c r e d it up to the time o f fin a n c ia l disturbances had been le s s
than normal, and b i l l purchases appeared to be s u ffic ie n t to take care o f seasonal
needs without a d d itio n a l purchases o f government s e c u r itie s .
This appeared to be
tru e, u n til the banking emergency when the New York bank had found i t necessary
to take over s e c u r itie s from two member banks and a t the end o f the year when pur
chases were necessary in order to avoid too great tig h te n in g o f c r e d it due to an
unusual amount o f "window d re s s in g ,”
Purchases made f o r the open market account
had since been liq u id a te d as had a lso $20,000,000 o f the emergency purchases made
by the New York bank.
Since the turn o f the year the return flow o f funds ap
peared to have g r e a tly aided the bond market.
There had been a considerable ex
cess o f reserves o f the New York C ity banks, though th is had flu c tu a te d a good
deal.
I t was the gen eral plan o f the New York bank to liq u id a te the balance o f
the temporary purchases o f $45,000*000 o f s e c u r itie s , as the surplus o f re s e rv e s
o ffe r e d opportunity without in te r fe r in g w ith the bond and money market.
I t was moved by Governor McDougal that i t was the sense o f the con fer
ence that the present was an opportune time to l e t government s e c u r itie s go from
the open market p o r t f o lio as and when i t could be done without undue disturbance,
with the understanding that sa les should not be made r a p id ly and should be made
in o rd e rly fash ion .
Governor McDougal explained th is motion by saying that some
time ago System open market operations had fo llo w ed a general p r in c ip le which he
b e lie v e d to be sound, and should be re v e rte d to , that whenever the market is
ready to take b i l l s and government s e c u r itie s the Reserve System should s e l l them,
and con versely, the System should acquire them when the market cannot take them
r e a d ily .
On th is p r in c ip le he would l i k e to hold b i l l ra te s where they were to
push b i l l s out o f the System.
Governor H arrison commented that i f we s e ll governments we should have
the b i l l r a te at a p oin t nearer to the market so that we might be ready to take
in b i l l s without such a b ig p en a lty to the s e l l e r .
He would not fa v o r any sales
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B -0» \23Sfc?
4
for Federal reserve credit up to the time of financial disturbances had been less
than normal, and bill purchases appeared to be sufficient to take care of seasonal
needs without additional purchases of government securities.
This appeared to be
true, until the banking emergency when the New York bank had found it necessary
to take over securities from two member banks and at the end of the year when pur
chases were necessary in order to avoid too great tightening of credit due to an
unusual amount of "window dressing,”
Purchases made for the open market account
had since been liquidated as had also $20,000,000 of the emergency purchases made
by the New York bank.
Since the turn of the year the return flow of funds ap
peared to have greatly aided the bond market.
There had been a considerable ex
cess of reserves of the New York City banks, though this had fluctuated a good
deal.
It was the general plan of the New York bank to liquidate the balance of
the temporary purchases of $45,000*000 of securities, as the surplus of reserves
offered opportunity without interfering with the bond and money market.
It was moved by Governor McDougal that it was the sense of the confer
ence that the present was an opportune time to let government securities go from
the open market portfolio as and when it could be done without undue disturbance,
with the understanding that sales should not be made rapidly and should be made
in orderly fashion.
Governor McDougal explained this motion by saying that some
time ago System open market operations had followed a general principle which he
believed to be sound, and should be reverted to, that whenever the market is
ready to take bills and government securities the Reserve System should sell them,
and conversely, the System should acquire them when the market cannot take them
readily.
On this principle he would like to hold bill rates where they were to
push bills out of the System.
Governor Harrison commented that if we sell governments we should have
the bill rate at a point nearer to the market so that we might be ready to take
in bills without such a big penalty to the seller.
He would not favor any sales
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
■*
Authority
£ •0» V23Sk
5
of governments unless the bill window were opened to provide in this way any money
the market required*
Governor Seay and Talley commented that it would be better to take
bills and sell government securities; that the bills were needed to take care of
the sensitiveness of the market.
Governor Harrison further commented that in executing such a policy as
that recommended by Governor McDougal in re: the sale of governments, serious re
gard should be paid to its effect upon the bond market.
Governor Talley assented,, indicating that forcing governments out too
rapidly would interfere with the distribution of bonds.
Governor Black raised the question whether any resolution adopted should
not state the reasons for sales, that is, should be a statement of policy rather
than a statement of some particular action to be taken.
Governor McDougal stated that sufficient reason for the action was to
be found in the f&ct that there is now a great clamor for government bonds*
There ensued a general discussion as to how a general policy might be
stated in which GovernoisHarrison, Black, Young, and Seay participated, all of
them agreeing that a statement of policy was important*
In the course of this discussion Governor Harrison inquired whether
those present would favor a tighter money policy, an easier money policy, or a
continuance of the present generally easy policy which was in reality a continu
ance of the September policy.
Deputy Governor Hutt indicated that he was prepared to vote for a
tighter money policy, but the general sentiment of the meeting appeared to favor
a continuance of a generally easy money policy, but with some sales of securities
to take up the slack.
Governor Young stated that a sale of $50,000,000 or $60,000,000 of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
*
-
Authority
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governments might perhaps injure the bond market; that a commercial banker who saw
a reduction in government holdings of the Reserve System would be inclined to sell
bonds.
In any event it was important to decide the general policy whether the
conference favored firmer or easier money, or the status quo.
Governor McDougal again stated that the demand for securities was a
sufficient test.
In discussing the amount he added that the sale of $100,000,000
might be too much.
Governor Seay stated that he would rather see a sale of
$800,000,000 than of $100,000,000, but would favor Governor McDougal*s motion.
Governor Calkins and Deputy Governor
Hutt
stated that they believed it
would be better not to refer to. any definite amount, but rather to state the
policy.
Governor Black presented a substitute resolution to that of Governor
McDougal, the provisions of which were then discussed.
The morning meeting adjourned at 1:10.
The meeting reconvened
Governor Black’s resolution.
at
2:37 and proceeded to a redrafting of
Governor McDougal’s motion was re-read, and he
indicated that he would be agreeable to the addition of a preamble to his motion.
As a result the following resolution was finally adopted by unanimous vote:
The Conference has considered the preliminary
memorandum submitted by the Chairman and has reviewed
business and credit conditions as they now appear.
It
is the sense of the Conference that in view of these con
ditions it should be the policy of the System to continue
an easy money policy in the best interest of trade and
commerce.
It is the belief of the Conference, however,
that the seasonal return flow of currency and credit and
other factors have tended during recent weeks to make for
an undue excess of funds in the principal money centers.
It is therefore the opinion of the Conference that in these
circumstances it would be desirable to dispose of some of
the System holdings of government securities as and when
opportunity affords itself to do this without disturbance
or any (undue *) tightening of the money position.
It is
understood that there shall be a new meeting of the Con
ference as soon as or whenever conditions in the opinion
of the Conference or the Federal Reserve Board justify a
reconsideration of this policy.
this word later omitted
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0» V23Sib
7
While this resolution wts being typed, Governor Harrison reported brief
ly his appearance before the Senate sub-committee investigating monetary problems
At 4:30 Governor Meyer and Messrs. Hamlin, James, Miller, and
Goldenweiser, McClelland, and Smead joined the meeting.
Governor Harrison reviewed the discussionsof the Conference) read the
preliminary memorandum of the chairman, and the resolution stating the findings
of the conference.
He also reported the action of the directors of the Federal
Reserve Bank of New York in voting to sell $55,000,000 of government securities
out of the emergency purchase made during December, of which amount $20,000,000
had already been sold.
Governor Meyer raised the question whether some of the extra currency
outstanding as a result of the emergency might not continue outstanding and not
return for a number of months.
Mr. Miller inquired whether the banks of other districts than New York
had surplus reserves.
Governors Young and McDougal replied that -the banks in
the Boston and Chicago districts did not have surpluses,
Mr. Miller Inquired
how surplus reserves were to be interpreted, and Governor Harrison replied that
they appeared to indicate first, little demand for funds by borrowers, and second
reluctance to employ funds.
liquid position,
He stated that the New York banks were in a very
their per cent of liquid assets being as high as perhaps ever
before.
Governor Meyer inquired whether the banks generally were in a frozen
position, and Governor Harrison replied that in the second district they were not,
Mr. Miller inquired what was the leading principle of operation of the
New York banks in recent months.
Governor Harrison replied that they had given great attention to secur
ing the maximum liquidity.
Governor McDougal stated that the three largest banks in Chicago showed
a very liquid statement, probably never exceeded in liquidity.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0 •V23Sfc>
6
Governor Harrison said that the recent test in New York of the ability
of certain banks to stand losses ol SO$ to 50$ of their deposits raised the
question of the desirability of the Federal Reserve System having power to dis
count notes secured by listed bonds under proper safeguards.
He believed such
a provision might make it much easier to deal with cases of banks facing runs.
Mr. Miller suggested that the banking situation might be suffering just
now from excessive caution and excessive desire for liquidity.
Governor Harrison
replied that that was one reason why our easy money policy had not proved more
effective.
Governor Meyer suggested that money was not really easy until last
summer, and that the expected good results from easy money had been interrupted
by bank failures and other difficulties,
Mr. Miller referred to a memorandum which he had received relating to
the possible use of Clearing House certificates and discussing the liquidity of
the city banks, which was then read by the assistant secretary of the Federal
Reserve Board,
Governor Meyer stated that the banking situation was at present the
primary thing to consider, and that whatever policy was adopted should be adopted
with that in view.
He suggested that bill maturities would respond to changes
in the money market, and would act as a buffer in taking up surplus funds.
Any
proposal for tlie liquidation of governments should consider the present extra
ordinary reluctance of banks to show bills payable.
The present banking situa
tion was so delicate that it could be easily disturbed.
Governor Harrison pointed out that the resolutions of the conference
represented a compromise since some of those present were in favor of vigorous
sales of securities, while others were only in favor of such moderate sales as
might be necessary to take up some of the slack.
Governor Meyer suggested that
any move which the Federal Reserve System made in its automatic assets immediate^*
ly put the
tion and
^cts of the System on the skyline where they were subject to observa
criticism.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
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9
Governor Harrison indicated that he would not be content with even
the proposed moderate program of sales of governments unless the buying rates for
bills were nearer to the market rate, as bills coming back to the System would
act as a safety valve in case too much funds were withdrawn from the market,
Mr. Miller, stated that the banking situation was now more important
than the credit situation, and asked what the governors were planning to do in
different districts if further banking trouble started.
The Federal reserve
1 bank is the normal place of leadership, and plans should be developed to keep
J
any bank with good resources from suffering.
Governor Harrison outlined a method which had been devised in New York
to deal with any banks which might hereafter be in trouble.
At
this point Governor Harrison left the meeting.
Governor Meyer stated that a reduction of bills and discounts of the
System did not involve the launching of any major policy, whereas the sale of
governments is commonly interpreted as a major move in Federal reserve policy.
The Reserve System has been accused in a number of quarters of pursuing
a de
flationary policy in the past year, and a sale of government securities at this
time is likely to draw fire.
In this situation it would appear most desirable
to avoid a move which appears to represent a major change in policy when there
is no necessity for doing it.
Governor McDougal stated that he believed the policies which governed
open market operations at the beginning should be reverted to, that the System
should buy when bills and government securities are dragging around, but when
there is demand from the market we should feed them out, and when there is a
large surplus of funds seeking investment it would be a good time to let govern- ^
ment securities go,
Mr. Burgess said that on the basis of that formula the System would
have been buying securities during 1929.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority £ . D« V23Sfc>
10
Governor Meyer stated that temporary conditions of surplus funds ought
not to determine major System policies.
Governor Young said that those present would certainly not favor any
program which they believed would affect bank confidence, or that was a new and
major change in policy*
Government bonds had first been bought under an emergency,
and their purchase had proved helpful, but there was a limit to what the System
could do in buying bonds.
Some sales would put the System into a position to go
back into the market and buy again if it is necessary.
Governor Calkins stated
that the System could not go much further in buying government securities..
Mr. Burgess stated that about $1,000,000,000 was the amount of additional
purchases of government securities which could be made.
Governor Meyer said that he did not believe that System purchases had
been the principal cause of easy money, although they might have hastened it,
that the present ease represented a normal condition for the money market at
periods of depression.
Governor Calkins stated the belief that some sales would not cause ap**
prehension, and it would be an opportunity to put the System in a better position
to meet any emergency that might arise; that the reserve position of the System
would not allow any considerable additional purchases.
Governor McDougal pointed out that
iiig securities in the market, but they favo
gradually.
Governor Calkins stated that he believed the word "undue”should be
omitted in the phrase "any undue tightening of the money posit ion."
There seemed
to be general sentiment in favor of this suggestion.
Governor M eyer stated that in this position the Board has an apparent
resDonsbility to the country; that the world was now in the worst economic con
dition that he had ever seen.
There had been th« worst breakdown in credit
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority £ •0 •V23Slo
11
conditions which he had witnessed*
The present situation in Germany and Australia
in which a nation's credit was at question being cases in point.
rest, and discontent were severe.
Unemployment, un
Under these circumstances everything which the
Federal Reserve System does which is or may be interpreted as a move in major
policy is on the skyline and in the spot light.
If the action taken by the con
ference today were announced, there is danger that it would be interpreted as a
major change in policy and if so it would be sufficient to kill the bond market.
Governor Calkins stated that the redundancy of credit was now a depress
ing influence,
Mr, Miller stated that if this program is interpreted as a major policy
it would make trouble, and he inquired whether this was a change in major policy.
Governor Calkins stated that the proposal was not considered as a major
change in policy, that his idea was that a beginning of sales might be made by
letting February 16 maturities of Treasury bills run off.
It could not be con
sidered a major change in policy because it provides specifically for the "con
tinuance of an easy money policy,”
The meeting adjourned at 6:15,
W. Randolph Burgess,
Secretary,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority B •0 •\23Sk
CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING- OF THE
OPEN MARKET POLICY CONFERENCE HELD IN WASHINGTON
_______________ ON JANUARY 21, 1951________________
>j 7j
^t C -
At the time of the last meeting of the Open Market Policy Conference
held in Washington on September 24 and 25, 1930, the total amount of holdings
of government securities in the System Special Investment Account was $402,300,000
Authorization was given at that meeting for the purchase or sale
of not to exceed $100,000,000 of government securities, if neces
sary, to supplement bill purchases in order to maintain the status
quo of money rates.
In order to avoid undue stringency of money over the
year-end, purchases were made, under authority of the Open Market
Policy Conference of September 25, of government securities as
follows:
December 50, 19 50 - §28,275,000
December 31, 1930 4,650,000
52,925,000
These purchases temporarily increased the total holdings in the
Account to
$455,225,000
Following the turn of the year and the accompanying
ease in money rates, sales were made to the market, as the market
was in condition to absorb them, of all of the $32,925,000 govern
ment securities purchased to take care of year-end demands, as
follows:
January 2, 1931 - $10,000,000
January 5, 1931 7 r500,000
January 7, 1931 9,000,000
January 13, 19 51 6,425,000
T o t a l ---- -- $32,925,000
These sales restored the total amount of holdings in the Account to
$402,300,000
Since September 25 there have also been some exchanges in the matur
ities of the issues' held in the Account, all of which have been made at advan
tageous prices.
These exchanges v/ere made in replacement of maturing issues,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B •0•V23Sfc>
in anticipation of early maturities, or to effect an improvement in the
/
distribution of maturities or in the yield return.
Principally among
these exchanges was the replacement of approximately
$17,000,000 Treasury Bills which matured November 17, 1950
77.000.000 certificates
M
”
December 15, 1930
98.000.000 5 1/2$ Treasury notes called for payment
March 15* 1931
The latter item especially effected an improvement in the distribution
of maturities, as the holdings in the System Account of called Treasury
notes, which on September 25 amounted to approximately
$188,000,000j
were
comparatively larger than other maturities, due, of course, to the fact
that both the Series "A" and "B” notes were called on September 15 for
payment on March 15, 1951.
PARTICIPATION IN SYSTEM SPECIAL INVESTMENT ACCOUNT - GOVERNMENT SECURITIES
participating
Federal
Reserve
Banks
At the present time, all of the Federal reserve banks have
participations in the holdings of government securities in the System
Accounti
In connection with the recent temporary purchase of $33,000,000
governments to take care of year-end requirements in the money market, alll
Federal reserve banks participated in this purchase with the exception of
the Federal Reserve Bank of Chicago^ which advised that it was unable to
participate in this purchase owing to the fact that it anticipated taking,
on substantial amounts of bankers acceptances and possibly some repurchase
agreements over the year-end, and the Federal Reserve Bank of Atlanta,
which advised that it was unable to participate owing to its gold position,
Changes
in Par^
ticipa*
tions
since
Sept.
25, 1950
On November 14, 1950, the Federal Reserve Bank of Atlanta
was temporarily relieved of f>5,000,000
of its participation owing to its reserve position*
On November 17, 1950, the Federal Reserve i^ank of Sti Louis
was relieved temporarily of $10,000,000
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
B ■0•\235fe>
*
*
>
of its participation, due to heavy deman* owing to failures in Little Rock
and Louisville and again on November 21
was relieved temporarily of the balance
of its participation amounting to
$5>526,000.
On December 12, 193Q,the Federal Reserve Bank of Richmond was
relieved temporarily of §5,000,000 of its
participation in order to increase its
gold reserve to care for emergencies*
All of the participations referred to were taken over and appor
tioned to the other participating Federal reserve banks.
The Federal Re
serve Banks of Richmond and St. Louis have since repurchased all of the
participations of which they were temporarily relieved,
GOVERNMENT SECURITY OPERATIONS IN FEDERAL RESERVE BANK OF NEW YORK
INVESTMENT ACCOUNT
Due to the local conditions during the month of December, the
Federal Reserve Bank of New York took over into its investment account
temporarily from two New York Gity banks about $45,000,000 of Liberty
Loan and Treasury bonds.
Of this amount .^10,000,000 has been disposed
of in the market during the past few days and further sales will be made
as conditions make it desirable.
There have been no other changes in
the total amount of government security holdings in the investment account
of the New York reserve bank, the total of such holdings at the present
time being .$147,000,000 «
The operations of the New York bank over the December 15 tax
period consisted of
1,
Sales to New York City banks of participations in
the special Treasury certificate of indebtedness
issued to cover the Treasury overdraft at the
Federal Reserve Bank of New York, These partici
pations amounted to £80,000,000 from December 15
to December 16 and $50,000*000 from December 16
to December 17.
2.
The deferring until Decombo-r 18 delivery of upwards
of .^50,000,000 of government securities purchased
principally to replace maturing issues.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E •0 •U3S(p
These operations accomplished the desired result in the money market
over the December 15, 1930 tax period.
PURCHASES.,,OF BANKERS
Partici
pating
Federal
Heserve
Banks
ACCEPTANCES BY
SYSTEM
At the present ti.ne all of the Federal reserve banks are partic
ipating in purchases of bankers acceptances by the System with the ex
ception of the Federal Reserve Bank of Philadelphia, whose only takings
of bills are those purchased in its own market.
Ratios
of Allot
ments
of
System
Purchases
Pending approval of the Open Market Policy Conference at this
meeting, System purchases since the beginning of the year have been made
in accordance with the same formula as during the past several years,
that is, during the first six months of the year to make allotments on
percentages based on the ratio that each bank’s expenses, dividends and
charge-*offs bore to the total of such items for the System for the pre
ceding year, and to make adjustments in the ratio during the second half
of the year based on the requirements of the banks calculated on the
figures available at the end of each month.
The ratios based on the expenses, dividends and charge-off
figures for the year 1930 and the present allotment ratios, excluding
the Federal Reserve Bank of Philadelphia, are as follows:
Ratios of ii-xpenses,
Dividends and Chargeoffs for Year 1930
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
7
25
7
9
5
5
13
5
3
5
4
9
100
1/4#
1/4 io
1/2%
3/4$
1/4 ^
fc
1/44
1/4#
1/2 $
'$
4>
Allotment
Ratios Excluding
Philadelphia
7 3/4 f0
27 1/2%
0
10 1/2f>
5
5
14
5
3
3/4^
1/2%
f0
3/4 fc
1/2 fc
e
fo
4 1/2 %
9 1/4#
100
fo
¥
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority E-t)- V2
5
Attached are statements showing:
Exhibit "A" - Outright holdings of government securities
by individual Federal reserve banks, as of
close of business January 17, 1931; also,
their participation in government security
holdings in the System Special Investment
Account, and the classification of issues
held in the System Account by maturities,
as of close of business January 19, 1931,
Exhibit "B”- Earning asset holdings of all Federal re
serve banks January 14, 1931, as compared
with previous week and January 15, 1930;
also weekly average of earning assets from
January 2, 1931 to January 14, 1931, as com
pared with corresponding period 1950, and en
tire year 1930.
Exhibit "C" - Bills purchased outright by System by weeks
from January 2, 1930 to December 31, 1930,
and from January 2, 1931 to January 14, 1931,
Exhibit "D" - Amount of net profit that was realized on
various sales of United States Government
securities during the year 1930, and distribu
ted to participating Federal reserve banks
on December 31, 1930; also the approximate
amount of net profit as represented by the
difference between the book values and the
market bid prices on December 31, 1930, of
the United States Government securities held
in the System Special Investment Account at
the close of the year 1930,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority £ •0•V23Sfc>
*
f/ •'
f
Exhibit "A”
/
RVE BANKS
STATEMENT crnrm-ma HOLDINGS OF GOVERNMENT SECURITIES BY FEDERAL RESE
(Excluding Sales. Contracts)
Outright Holdings of
Government Securities
by Federal reserve banks
as of the close of
business January 14, 1931
Boston
New York
$
Participation by Federal
reserve banks in System
Special Investment Acct.
Government Securities as
of the close of business
January 19, 1931
Totals
$ 45,843,500
$ 46,532,500
75,190,500
222,348,050
689,000
147,157,550 *
Philadelphia
12,907,100
37,656,500
50,563,600
Cleveland
10,164,800
48,194,000
58,358,800
Richmond
1,152,100
16,109,000
17,261,100
Atlanta
2,617,550
5,146,500
7,764,050
Chicago
19,927,400
61,917,000
81,844,400
St, Louis
8,625,000
15,526,000
24,151,000
Minneapolis
7,606,700
18,407,500
26,014,200
Kansas City
3,000
29,025,000
29,028,000
Dallas
9,983,250
19,453,500
29,436,750
Snn TT-rftnniSCO
9*642.650
29,831,000
39,473,650
$230,476,100
$402,300,000
$632,776,100
Totals
* Close of business January 19, 1931..
CLASSIFICATION OF ISSUES OF GOVERNMENT SECURITIES
HELD IN THE SYSTEM SPE CIAL INVESTMENT ACCOUNT
CLOSE OF BUSINESS JANUARY 19, 1931
U. S. Treasury Bills due Feb. 16, 1931
3 1/2$ T/N called March 15, 1931
2 7/8$ C/I due June 15, 19 31
1 3/4$ M
” June 15, 1931
2 3/8$ "
” Sept.15, 1931
1 7/8$ w
” Dec. 15, 1931
3 1/2$ T/N ” Dec. 15, 1932
4 1/4$ 4th L/L bonds due Oct. 15, 1938
3 1/2$ 1st L/L bonds due June 15, 1947
Total
$ 26,107,000
90,695,100
83,631,000
6.550.000
80.230.500
62.126.500
42,411,900
8.548.000
2,000,000
$402,300*000
STATEM EN T
S H O W IN G
E A R N IN G
ASSET
CORNING
H O L D IN G S
A SSETS
OF
ALL
FEDERAL
JANUARY 2 . 1931
TO
RESERVE
JAN U ARY
BANKS
JA N U AR Y
1 4. 1931.
(0 0 0
Boston
B
i l l s
D is c o u n te d
N et
B ills
.
J a n .
7
1.4
-
«
7
J a n .
2 3,8 1 6
1 6 ,7 9 5
" 1 4
7 ,0 2 1 -
C h an ge
Government
"
*1 1,5 0 4
1 1,078
426-
C h an ge
P u r ch a s e d
N et
-
S e c u r it ie s
"
- Jan.
" 1
7
4
Net Change
T otal l a m in g A ssets
»
47,511
46,5 3 3
978-
- Jan.
7
14
Net Change
83,681
7 5,2 5 6
8 ,4 2 5 -
Y ork
♦69,492
51,161
P h il a.
♦29,140
2 7 ,2 3 3
1 8 ,3 3 1 -
1 ,9 0 7 -
70,723
5 0 ,9 3 4
3 .56 8
3 .5 6 8
1 9 ,7 8 9 -
-0 -
238,041
233,891
4 ,1 5 0 -
3 81 ,1 06
3 38 ,6 86
4 2 ,4 2 0 -
51 ,6 2 5
50 ,5 6 3
1 ,0 6 2 -
8 4 ,9 8 3
8 1 ,3 6 4
3 ,6 1 9 -
C le v e la n d
♦34,130
2 9 ,4 5 8
4 ,7 2 2 -
26,3 3 1
23 ,1 8 0
3 ,6 5 1 -
59 ,6 8 0
5 8 ,3 5 9
1 ,3 2 1 -
121 ,6 91
1 11 ,9 97
9 ,6 9 4 -
VHE
E X H IB IT
1* , 1?31
IN C L U S IV E .
COM PARED
COM PARED
W IIH
#1 Hi PREVIOUS WSCK
C O R R E S P O N D IN G
AND
P E R IO D
JA N U AR Y
1930
AND
"B "
1 5 , 1930; ALSO WEEKLY AVERAGE OF
Y E A R 1930
E N T IR E
C ta itta d )
R ic h m o n d
A t la n t a
C h ic a g o
s t . L o u is
♦24,281
♦22,710
21,793
*3 0,019
26,029
*11,091
1 0 ,5 3 7
22,899
1 ,3 8 2 -
10,006
7 ,4 3 4
2 ,5 7 2 -
1 2 ,5 8 2
1 7,2 6 1
4,679+
46,869
4 7 ,5 9 4
725+
917-
1 6 ,0 7 3
1 0 ,7 0 2
3 ,9 9 0 -
47,649
36,672
5 ,3 7 6 -
1 0 ,9 7 7 -
7 ,7 1 7
7,763
8 2 ,6 0 3
8 1 ,9 4 4
46+
4 6 ,5 0 5
4 0 ,2 5 8
6 ,2 4 7 -
759-
161,271
1 4 5 ,5 4 5
15 ,7 2 6 -
554-
1 0,0 6 6
7,106
2 ,9 6 0 -
24,801
24,151
650-
4 5,9 5 8
4 1 ,7 9 4
4 ,1 6 4 -
u in n .
» 4 ,08 0
4 ,18 9
K a n .
J it y
#19,641
1 6 ,8 8 0
109+
8 ,8 6 0
5 ,74 9
3 ,1 1 1 -
26,4 0 6
2 6 ,0 1 4
392-
3 9 ,5 5 4
3 5 ,9 5 2
3 ,6 0 2 -
2 ,7 6 1 -
1 2,7 0 3
9 ,5 2 0
3 ,1 8 3 -
2 9 ,7 8 1
29 ,0 2 8
753-
6 2 ,1 2 5
5 5 ,4 2 8
6 ,6 9 7 -
i> a ll a s
ban Fran.
* 5, 009
4 ,39 3
# 31 ,2 38
1 7 ,1 9 0
116-
9 ,3 6 3
6 ,4 8 0
2 ,8 8 3 -
2 9 ,9 8 4
29 ,4 3 7
547-
4 4,3 5 6
4 0 ,8 1 0
3 ,5 4 6 -
1 4 ,0 4 8 -
2 5 ,7 9 3
1 8 ,0 4 0
7 ,7 5 3 -
4 8 ,1 7 0
3 9 ,4 7 3
8 ,6 9 7 -
105 ,2 01
7 4,703
3 0 ,4 9 8 -
i 'o t a l s
*
2 9 2 ,3 8 5
2 4 3 ,3 4 0
4 9 ,0 4 5 -
2 65 ,4 56
1 96 ,1 8 0
6 9 ,2 7 6 -
658,901
6 4 4 ,3 1 7
1 4 ,5 8 4 -
1 ,2 2 3 ,3 0 0
1 ,0 8 9 ,3 9 7
1 3 3 ,9 1 3 -
Comparison of Weekly Average
Karniniz A ssets
Jan. 2 , 1931 to Jan. 1 4 , 1931
Same period 1930
E n tire year 1930
7 9 ,4 6 8
6 5 ,3 4 3
7 4,0 0 2
359 ,8 96
4 75 ,3 40
3 23 ,0 7 5
Net Change from same period 1930
"
m m
* o t ir e year 1930
1 4 ,1 2 5 *
5 ,4 6 6 *
1 1 5 ,4 4 4 3 6 ,3 2 1 *
8 3,1 7 3
104 ,5 81
82,371
2 1 ,4 0 8 -
802*
1 1 6 ,8 4 4
1 2 8 ,2 0 8
9 8 ,7 3 6
1 1 ,3 6 4 1 8 ,1 0 8 +
4 7 ,2 3 2
5 2 ,4 4 5
4 4 ,7 9 5
5 ,2 1 3 2,43 7 +
4 3 ,3 8 2
6 1 ,6 8 0
4 9 ,9 9 5
1 8 ,2 9 8 6 ,6 1 3 -
1 5 3 ,4 0 8
1 9 5 ,1 8 4
1 2 7 ,6 9 3
4 1 ,7 7 6 2 5,715+
43,376
5 3 ,4 5 5
46,611
9 ,5 7 9 2 ,7 3 5 -
37,7 5 3
30 ,7 3 5
3 4,591
7 , 018 +
3,162+
5 8,7 7 7
35,2 7 6
41 ,4 0 5
23,501+
1 7,372+
4 2 ,5 8 3
4 9 ,3 5 6
4 5 ,0 6 6
6 ,7 7 3 2 , 483m
8 9 ,9 5 2
7 0 ,3 7 0
7 2 ,5 2 2
1 9 ,5 8 2 +
1 7 ,4 3 0 +
1 ,1 5 6 ,3 4 4
1 ,3 2 1 ,9 7 3
1 ,0 4 0 ,8 6 2
1 6 5 ,6 2 9 1 1 5 ,4 82 +
Uosmarioon of I am in s A ssets
January 1 4 , 1931
1 5 , 1930
Net Change
75,256
64,9 2 9
3 3 8 ,6 8 6
4 44 ,3 6 1
10,327+
1 0 5 ,6 7 5 -
8 1 ,3 6 4
1 0 2 ,3 0 0
2 0 ,9 3 6 -
1 1 1 ,9 9 7
1 28 ,7 6 9
1 6 ,7 7 2 -
4 7 ,5 9 4
51,556
3 ,5 * 2 -
4 0,2 5 8
6 0 ,4 1 6
20,158*-
1 4 5 ,5 4 5
1 9 1 ,1 5 6
45 ^
l i
4 1 ,7 9 4
4 8 ,4 4 5
6 ,6 5 1 -
3 5 ,9 5 2
28 ,4 2 3
7,529+
SUMMARY FOR SYSTEM
B i l l s Discounted f o r week
♦♦ 9,045“
B i l l s Purchased f o r week
6 9 ,2 7 6 Grovenucent S e c u r itie s fo r week
1 4 ,5 8 4 Total Earning A ssets f o r week
1 3 3 ,9 1 3 Comparieon of Weekly Average o f Earning A ssets Jan.
2 , 1931 to Jan. 1 4 , 1?31
with same period 1930
1 6 5 ,6 7 9 Comparison of Weekly Average of Earning A sse ts Jan.
2, 1931 to Jan. 1 4 , 1931
with e n tire yeer 1930
1 15,482+
Comparison of Earning A ssets January 1 4 , 1931 with January 1 5 , 1930
1 7 0 ,2 3 6 -
5 5 ,4 2 8
3 0 ,7 9 3
24,635+
4 0 ,8 1 0
4 8 ,6 3 4
7 ,8 2 4 -
7 4,7 0 3
5 9 ,8 4 1
1 4,8 6 2+
1 ,0 8 9 ,3 8 7
1 ,2 5 9 ,6 2 3
1 7 0 ,2 3 6 -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ka
W
SXHIBIT "C"
B IL L S
J k FXQU
2
TO
D E C IK B Z R
PU RCH ASED ^ U T R IS H T
31.
19 3f
3Y
.
SYS
j3^”
5oii——^1)
FROT
NUARY
EV
2
BY
TO
W EEKS
JA N U A R Y
1 4 ,
1 9 3 1 .
IN C L U S IV E
IN C R E A S E
in
I n c lu d in g
le e k s
Badine
-1 9 3 0 Jan.
8
15
22
29
**b.
Karch
1 4 ,2 9 4
8 ,9 7 3
1 2 ,4 3 1
1 5 ,6 7 7
5 2 ,2 6 4
15,0 4 6
5 0 ,2 8 3
4 6 ,0 5 8
1 ,8 1 3
544
878
2 ,5 8 5
-0 -0 -0 -0 -
-0 -0 403
50
900
SOI
85
1 ,0 0 9
2 8 ,4 6 4
8 ,7 1 4
1 3 ,6 5 0
7 ,4 0 4
3 ,95 8
2 ,3 8 7
4 ,5 6 7
-0 -
3 2,322
1 ,1 5 0
279
698
137
-0 -0 -0 -0 -
283
11,101
1 8,2 1 7
7 ,4 0 4
514
100
162
1 8 ,4 7 4
8 ,4 1 2
23
30
3 ,5 4 2
6 ,4 5 5
3 ,4 2 8
2 ,1 2 2
1 ,5 8 6
1 9 ,4 5 0
7 ,4 9 8
1 6 ,6 1 3
2 6,136
24,2 0 3
1 9 ,2 9 5
371
26,680
3 4,5 9 8
43,653
2 6,793
1 6 ,9 8 4
1 ,39 9
3 ,5 1 5
1 ,4 4 2
1 ,9 6 4
245
-0 -0 -0 -0 -0 -
7
14
21
28
824
332
2 ,5 3 5
688
2 ,3 4 1
2 3 ,3 8 0
3 0 ,1 7 7
5 ,3 0 7
3 ,96 2
9 ,9 1 7
1 ,74 2
3 ,0 6 4
6 ,3 0 3
3 3,2 9 7
31,919
8,371
-0 143
-0 73
4
11
231
2 ,2 7 5
620
1 ,2 4 4
2 2,2 4 4
7 ,089
6 ,47 5
7 ,9 4 5
2 ,1 8 7
4 ,60 2
5 ,3 0 4
2 ,4 2 8
2 4, 431
1 1 ,6 9 1
1 1 ,7 7 9
10,373
23
30
501
427
1 ,1 4 6
1 ,4 4 1
1 ,2 0 3
3 5 ,5 6 1
8 ,0 9 4
4 1 ,6 6 0
1 1 ,3 1 3
7 ,4 0 4
3 ,5 2 5
4 ,0 4 5
8 ,71 9
5 ,5 3 2
4 ,1 0 0
6
13
20
27
863
-0 443
482
1 1 ,9 9 0
4 1 ,2 8 8
3 1 ,8 2 0
1 7 ,0 5 2
178
2
9
2
9
3
10
17
1
8
5
12
3
10
17
24
31
TOTALS
-1 9 3 1 Jan.
7
14
37,319+
1 9 ,7 0 7 4,963+
1 8,249+
7 ,1 5 4
2 ,6 1 5
4 ,8 8 7
5 ,3 1 4
2 ,14 3
1 ,0 8 6
1 ,8 3 7
1 0 ,5 8 2
854
«o»
-0 -0 -
316
443
281
115
5 ,4 2 7
984
152
135
42,469
1 6 ,3 0 5
2 0 ,1 2 3
9 ,1 3 0
2 4 ,5 7 8 1 0 ,9 7 1 6 2 ,0 3 1 7 3,1 0 4+
2 8 ,1 0 4 1 4 ,6 6 4 7 1 ,5 2 1 71,465+
1 1,3 4 6
8 ,64 0
7 ,753
8 ,0 0 7
5,939
3 ,51 8
8,02 6
4,033
4,74 9
853
507
480
717
335
-0 -0 1 ,7 8 0
366
633
190
418
57
132
3 ,4 2 8
2 ,8 6 5
2 ,1 9 4
1 ,4 3 3
1 ,7 1 4
4 1 ,6 6 0
48 , 476
5 2 ,5 6 4
3 4 ,6 5 0
2 2,0 7 3
25,431+
3 4 ,1 8 4 39,8 9 7+
4 5 ,1 5 8 4 0 ,2 7 4 -
44,815+
3 4 ,2 9 5 35,412+
4 5 ,5 4 5 4 7 ,3 0 5 -
6 ,71 9
9 ,3 1 5
7 ,2 4 0
3 ,8 4 4
5 ,0 4 4
2,768
2,552
5,54 6
4 ,4 5 4
2,56 0
-0 -0 -0 75
669
1 ,3 6 5
558
637
-0 -0 -0 1 ,0 0 0
108
434
1 ,2 2 5
1 .5 8 5
1 ,9 0 7
8 ,4 4 0
3 6 ,5 0 0
3 6 ,9 3 3
1 3 ,2 3 0
3 0 ,1 7 3 1 ,3 0 9 1 5,3 5 4+
1 8 ,9 9 1 -
3 4 ,3 6 1 4 ,1 6 8 1 5,3 4 9+
1 1 ,3 2 4 -
2 ,2 9 5
8 ,1 4 0
8 ,18 7
4 ,4 3 0
2 ,98 8
2 ,9 7 4
1 ,24 1
2 ,54 8
165
245
245
144
45
-0 -0 -0 -
349
710
1 ,1 7 5
4 ,2 4 3
427
-0 -0 852
32
77
169
30
1 ,9 0 3
552
1 ,2 8 0
22,991+
4 2 ,4 5 9 1 4 ,7 4 4 3 1 ,9 7 5 -
1 3,680+
4 1 ,0 6 8 1 5 ,3 9 6 3 0 ,4 5 7 -
5 ,0 8 1
4 ,77 1
9 ,2 6 3 4 ,00 0
1,608
2,812
27,583
1 5 ,5 5 0
1 5 ,2 6 8
1 9 ,6 9 8
110
30
60
25
-0 33
1,116
1,166
81
17
-0 38
66
876
374
2 ,1 5 2
1 ,03 9
500
4 1 ,9 0 0
1 4 ,2 6 3
5 4 ,9 1 3
2 0 ,0 5 1
1 3 ,6 4 3
5 9 ,3 6 3 +
6 ,5 2 0 21 , 1181 4 ,4 3 9 1 5 ,7 0 9 -
5 5,172+
8 ,5 4 0 19,7 2 2+
1 8 ,1 4 4 1 9 ,7 6 1 -
9 ,0 0 8
8 ,0 3 0
3 ,9 9 3
451
-0 ~
-0 -0 818
-0 262
4 ,76 6
2 ,4 4 4
4 ,6 1 2
1 ,2 5 4
4 ,40 3
2 ,5 0 4
60
20
25
-0 27
63
510
1 ,5 6 9
-0 -
-0 -0 -0 -0 -
14
19
-0 19
841
729
1 ,2 7 6
-0 -
1 4 ,1 5 2
4 3,5 0 3
3 6 ,2 1 3
1 7 ,7 6 9
6 ,53 0 +
21,458+
1 ,6 0 4 +
1 0,2 5 7+
2 ,309+
2 0,7 5 7+
4,59 4 +
4,35 2 +
7 ,3 0 0
4 ,61 9
3 ,42 6
8 ,4 9 6
739
3 ,16 9
2 ,720
2 ,25 3
-0 -0 -0 -0 —
-0 -0 -0 143
236
550
193
209
232
100
160
527
246
-0 -0 -0 -
-0 -0 30
5
781
100
696
1 ,7 3 7
1 8 ,2 4 9
55, 441
2 8,1 1 6
2 2,3 7 0
6 ,02 0 +
23,8 0 1+
15,335+
1 4 ,4 9 2 -
7 ,12 1 +
2 2,725+
1 5,741+
11 , 118-
3 ,0 9 6
5 ,9 2 4
5 ,07 1
4 ,21 0
1 ,9 8 8
4 ,1 0 7
2 ,4 0 7
2 ,1 0 2
-0 -0 -0 -0 -0 -
-0 -0 -0 -0 -0 -
-0 70
-0 -0 328
590
■O’ *
149
117
387
-0 113
849
200
299
-0 -
861
200
-0 -o -0 200
-0 -0 -
3 ,0 5 6
3,101
3 ,3 2 0
1 ,56 2
1 ,1 2 5
2 9 ,9 2 4
3 7 ,2 7 3
3 6 ,0 4 7
41,319
8 ,7 4 3
8 ,8 2 9 1 7 ,4 9 8 +
3 0 ,9 8 0 7 ,1 7 1 5 ,7 9 3 -
4 ,6 3 5 1 7,9 1 5+
2 5 ,5 3 1 1 ,0 9 8 +
2 0 ,9 3 2 -
6 ,91 9
9 ,8 5 5
6 ,1 6 7
7 ,471
7 ,0 0 7
4 ,66 0
2 ,48 6
5 ,2 7 3
1 ,5 0 6
4 ,09 9
2 6 ,0 0 0
1 8 ,7 4 7
1 3 ,1 0 5
1 2 ,3 2 6
-0 -0 -0 -0 -
-0 -o -0 -0 -
-0 -0 40
218
384
-0 ~
80
aQa
118
-0 434
588
-0 -o -0 —
-0 -
7
32
571
112
3 ,61 3
883
538
2 ,50 7
3 0 ,1 9 5
1 9 ,8 6 2
1 4 ,7 6 8
1 6,2 5 1
1 4,6 6 2+
23,505+
2 9 ,9 1 1 2 ,4 7 2 -
1 9 ,9 4 4 +
2 1,740+
2 9 ,0 6 9 2 ,1 8 7 -
5 ,90 1
2 ,6 7 5
7 ,78 7
5 ,6 5 4
3 ,7 1 5
4 ,68 8
1,70 9
444
4 3 ,5 1 5
3 9,0 5 2
3 5 ,8 9 5
6 ,54 1
-0 -0 -
-0 -o -0 -0 -0 -
71
322
-0 -0 -
216
1 ,2 9 8
626
649
1 ,7 4 6
1 .5 1 4
544
75
1,15 1
3 ,2 3 5
1 3 ,9 8 4
660
-0 -0 *•0**
902
-0 15
-0 -0 20
1 ,47 0
884
1 ,146
1 ,5 4 4
419
4 8 ,8 4 4
4 1 ,9 8 4
3 8 ,9 5 0
1 3 ,9 2 1
1 1 4 ,6 9 4
3 9,338+
21,926+
6 ,84 5 +
1 4 ,2 3 3 45.198+
42,831+
2 4,760+
7 ,894+
8 ,24 6 +
104.007+
3 ,0 4 7
3 ,46 2
4,80 2
5,219
2.88 2
1,23 3
2 ,05 4
1 ,1 5 4
1,249
2.96 8
2 3 ,3 6 2
-o -
♦7,642
1 16 ,2 35
I 5 4 ,6 7 3
# 10 ,1 57
# 8,7 6 5
•86,573
# 1 ,6 3 2 ,5 9 2
# 1 1 2 ,7 4 0 -
# 3 8 ,3 8 9 -
#312,481
#164, 429
-c -0 -
-c -c -
248
21
22
58o
24
126
-0 -0 -
-0 93
438
42,372
2,23 5
8 4 ,7 0 7 6 4 ,0 7 1 -
9 ? ,3 8 8 6 9 .2 7 6 -
4 ,5 8 8
5 .1 2 8
1 ,7 2 4
4 5 .1 C 7
# 1 4 8 ,7T?-
# 1 6 7 ,664»*
-0 -0 -0 -0 -
102
-0 232
367
-0 -0 -0 -0 -
-0 -0 -0 -o -
39,0 8 6
12,139
50,379
1 6 ,3 4 5
1 1 ,5 0 4
-0 -0 -0 -0 -0 -
-0 -0 -0 -0 -0 -
280
907
1 ,1 0 5
129
1 2 ,2 7 0
4 2,1 9 5
3 2,925
17,181
-0 -0 -0 -0 -
-0 -0 -0 -0 -
81
25
-0 -
588
300
1 2 ,6 5 2
4 8 ,0 6 7
2 6,3 3 6
1 1 ,7 0 5
3 ,9 2 4
6 ,0 4 4
113
7 ,7 4 4
1 6 ,5 7 6
54,111
2 6 ,4 4 9
1 9 ,4 4 9
-0 -0 -0 -0 -
1 ,9 1 7
6 ,2 9 8
260
670
500
2 3 ,7 9 9
2 3 ,3 2 7
2 9 ,1 9 6
3 0 ,9 4 8
4 ,2 3 7
63
3 ,8 6 4
2 ,2 5 7
7 ,8 2 2
1 ,1 0 5
2 3,8 6 2
27,691
3 1,4 5 3
3 8,7 7 0
5 ,3 4 2
73
200
-0 ~
-0 -
2 5 ,7 1 0
1 7 ,9 7 0
1 3 ,0 7 5
1 0 ,3 1 6
290
777
30
2 ,5 1 0
1 ,2 8 6
1 ,0 1 0
103
4 3 ,2 0 4
3 4 ,6 5 9
3 4 ,0 6 6
6 ,5 4 1
9 1 .2 2 9
311
4 ,3 9 3
1 ,8 2 9
-0 -
# 6 1 ,0 5 7 1 1 ,1 0 6 ,0 7 5
362
407
TOTALS
$
769 ♦
35 , 498
406
3 5 ,9 0 4
,
.......
211
$ 308,053 1 1 ,4 1 4 ,1 2 8
6 ,2 8 0
322
$6,602
# 1 3 ,0 6 8
3 ,17 9
5 ,0 7 5
3,81 9
36,257+
1 9 ,3 1 8 7,701+
12,031+
125
-0 468
21
220
.7*722
# 7 3 ,0 4 2 4 ,:8 o +
2 4 ,9 5 8 3 9 ,9 1 7 -
5 8,2 1 1
17,209
5 7 ,1 6 3
54, 467
-0 454
-0 109
688
♦ 5 6 ,5 3 4 5 ,1 4 9 *
2 8 ,7 7 4 3 0 ,5 5 5 -
O th # r
D is t r io t s
Hsceived
Sent
2,12 9
430
2,90 2
1 ,9 3 0
168
855
42,7 6 1
6 4 ,0 0 8
3 3 ,7 1 8
2 0 ,6 4 5
T otals
4 1 ,7 7 8
728
♦42,506
6
-0 -0 -
-0 -
-c -
*
80
-0 237
75
I
269
$
602
393
$
150
-c -
138
104
112
16
#
93
♦
W ith
C o n t r a c t s
oystem
Onerations
595
402
550
410
721
2 ,9 6 0
590
58o
661
S a le s
No# York
Operations
-0 -0 708
547
496
223
-0 -0 -
8,206
*
ian Fran.
D e a le r s
O p e r a tio n s
# 2 ,24 8
4,961
3,761
1 ,9 1 3
469
361
730
389
#
U allas
DECREASE
483
592
356
769
426
96
323
5
19
26
Dec.
*
3 7 ,9 7 0
6 ,0 7 3
37,8 5 2
30,381
15
22
29
N o t.
♦ 1 ,7 9 0
303
965
942
-0 -0 -0 -0 -
172
-0 613
2 ,1 7 5
1
Minn.
615
975
1 ,1 0 7
137
5
11
19
26
24
Oot.
599
650
473
-0 -
-0 -0 -0 -0 -
16
Sept.
Chicago
f 1 ,3 8 5
1 ,8 3 8
1 ,6 0 8
1 ,1 6 0
25
Aug.
A tlanta
Cleveland Kichmond
1 3 3 ,1 0 4
51,439
2 3,5 8 5
1 5 ,5 7 4
18
July
P hil a.
O
CM
June
Total
7 ,3 3 8
3 0,9 0 0
1 4 ,1 8 7
4 ,8 3 4
♦ 2 5 ,7 6 6
2 0,539
9 ,3 9 8
1 0 ,7 4 0
16
May
Banks
2 ,35 9
3 ,35 9
1 ,6 2 7
563
12
19
26
A pril
Boston
New York
Dealers
o r
H o ld in g s
280
$
718
1
t
1 ,7 0 5
4 ,0 6 0
5 ,3 4 2
6,008
#
9 ,7 1 6
7 ,11 3
876
3 ,4 4 0
3 ,55 0
999
I
2 ,72 3
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ir
JA N U AR Y
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
E •0 •U3Sfc>
V
'tin
EXHIBIT "C" (a)
CLASSIFICATION BY MATURITIES OF BILLS PURCHASED
BY FEDERAL RESERVE B/1NKS IN THEIR RESPECTIVE DISTRICTS
DURING THE PERIOD FROM JANUARY 2 TC DECEMBER 31, 1930
AND FROM JANUARY 2 TO JANUARY 14, 1931
(EXCLUDING SALES CONTRACTS}
(000 Omitted)
1-30 days
Boston
New York
Philadelphia
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Dallas
San Francisco
Totals
Totals
Total
$ 29,410
785,107
5,253
2,014
18,955
22,549
325
1,015
4,379
19,428
$ 14,949
445,452
8,036
3,142
4,009
24,202
0
3,479
3,055
44,914
$ 19,679
150,309
10,073
2,462
3,032
7,922
0
5, 663
829
21,766
$ 1,332
16,206
0
24
265
0
0
0
502
465
$
$888,435
$551,238
$222,235
$18,794
$1,680,702
1-30 days
Boston
New York
Richmond
Atlanta
Chicago
Dallas
San Francisco
JANUARY 2 TO DECEMBER 31, 1930
31-60 days
61-90 days
Over 90-days
$
33
34,169
C
353
107
58
271
$ 34,991
65,370
1,397,574
23,362
7,642
26,261
54,673
325
10,157
8,765
86,573
JANUARY 2 TO JANUARY 14, 1931
31-60 days
61-90 days
Over 90-days
$
183
4,106
45
53
43
35
280
$ 4,745
$
451
4,225
224
196
C
0
$
5,165
98
769
42,506
269
602
15G
93
718
206
$ 45,107
C
C
c
c
69
$
102
6
$
Total
$
Reproduced from the Unclassified I Declassified Holdings of the National Archives
declassified
Authority E . 0*U 3 Sk
Exhibit "D"
AMOUNT OF NET PROFIT THAT WAS REALIZED ON VARIOUS SALES OF
UNITED STATES GOVERNMENT SECURITIES DURING THE YEAR 1930
AND DISTRIBUTED TO PARTICIPATING FEDERAL RESERVE BANKS ON
DECEMBER 31, 1930; ALSO, THE APPROXIMATE AMOUNT OF PROFIT
ON UNITED STATES GOVERNMENT SECURITIES HELD IN TEE SYSTEM
SPECIAL INVESTMENT ACCOUNT ON DECEMBER 31, 1930, AS REPRE
SENTED BY THE DIFFERENCE BETvTEEN THE BOCK VALUES OF THE
SECURITIES HELD AND THE MARKET BID PRICES ON THAT DATE.
Amount of Net Profit Dis
tributed to Federal Reserve Banks
_______ on December 31, 1930______
Boston
$
180,927.30
New York
354,282.96
Philadelphia
153,950.82
Cleveland
178,163.14
Richmond
59,218.47
Atlanta
34,042.59
Chicago
255,952.06
St. Louis
5 7 j523.31
Minneapolis
68,138.71
Kansas City
85,439.02
Dallas
78,140.93
San Francisco
Total
106,377.82
$1,622,157.13
Net profit on holdings as represented by
difference between book values and market
bid prices, as of close of business December 31, 1930 - - - - $1,230,896.23
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
-luary 2 0
PRELIMINARY MEMORANDUM FOR
TH5
OPEN
MARKET
,1931.
POLICY C O T ^ RSNCE
TirnA of business activity has declined since the last m e e t m &-of
the Conference in September, and index figures for December reached as low points
relative to normal trends as at any previous time in the country’s history.
There
is some indication of slight increase in activity since the first of the year, but
it is not yet clear whether the recovery is more than seasonal.
Commodity prices
have declined further.
On top of other difficulties a series of bank failures has shaken public
confidence and brought about a state of apprehension which has impeded business
recovery.
*.
The number of bank failures in 1930 was 1,326 ban ks or over 5 per cent
^
----------------
of all the banks in the United States.
over $900,000,000.
--
------- —..... .— ~
— -——»
Deposit liabilities of failed banks totaled
In December 328 banks failed with deposit, liabilities of
$407,000,000.
The necessitous liquidation of bonds by banks and others, together vath
the disturbance to public confidence, affected the bond market with peculiar
severity.
Some of the indexes of bond prices declined in December to the lowest
levels since 1924, while only those composed of the higher grade issues remained
above their 1929 lows.
Under these conditions new financing was practically
stopped.
Since January first easy money conditions in New York, a relaxing of the
pressure on banks, and some indications of lessened public apprehension hxive been
accompanied by a recovery in bond prices of about half their last quarter loss,
and some resumption of new issues, though the market for new issues is highly
selective and foreign bonds particularly are as yet almost unsalable.
The stoppage of foreign financing in this country at a time when other
countries are going through a Serious depression and are most in need of funds has
placed a severe burden on a number of countries.
by some reduction in American
all or t
These difficulties are accentuated
term crelits abroad.
One consequence has been
Reproduced from the Unclassified I Declassified Holdings of the National Archives
2
a weakening of foreign exchanges, and inports of gold totaling 121 million doll&rs
since September 25.
The Money Market
On the money market the primary influence was a large additional demand
for currency accompanying bank disturbances.
The amount of extra currency required
between the middle of November and the first of January, in addition to the usual
seasonal requirement, was about $350,000,000.
Part of this extra demaild for
reserve funds was met by gold imports but most of it required a corresponding in
crease in Federal Reserve credit which took three forms:
an increase in member
bank rediscounting, an increase in acceptance holdings of Reserve Banks, and an
increase in government security holdings.
The following table shows the changes in
the different categories of Reserve Bank credit by weeks over this period, which
ides, the usual seasonal increase.
Bills and Securities of All Federal Reserve Banks
(In millions of dollars)
Nov.
Nov.
Dec.
Dec.
Dec.
Dec.
Dec.
Jan.
Jan.
Jan,
Jan.
19, 1930
26
3
10
17
24
31
2, 1931
7
14
19
Discounts
Bills
Bought
U. S.
Securities
Total Bills
and Securities
205
234
251
257
331
448
251
341
292
243
243
178
176
219
244
252
260
364
328
265
196
170
596
596
602
617
692
642
729
714
659
644
635
985
1, 012
1, 078
1, 118
1, 283
1, 356
1, 352
1, 390
1, 223
1, 089
1, 048
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3
The increase between September 25 and January 2 of about $118,000,000
in Government security holdings consisted of the following:
Purchased by Federal Reserve Bank of New York
to provide two member banks with the means
to secure currency (of which $20,000,000 has
been sold by January 21)
$ 45,000,000
Purchased by Federal Reserve Bank of San
Francisco in a similar situation (sold since
January 1)
7,500,000
Temporary year-end purchase for open market
investment account (sold between January 2
and 13)
33,000,000
Held under repurchase agreement (all now
liquidated)
32,400,000
$117,900,000
The increase in bill holdings in the last quarter of 1930 included
purchases of @35,000,000) of sterling bills by the Federal Reserve Bank of Few
York, participated with other Reserve Banks, for the purpose of supporting sterling
exchange during the period of greatest seasonal weakness, and avoiding
from that source.
gold imports:
This holding of sterling will be liquidated when strength in
the exchange permits it.
Sterling is now at the gold import point.
Since the first of the year -the return of currency has been close to the
usual seasonal amount and extremely little of the extra currency called into cir
culation has come back, perhaps about $50,000,000, leaving outstanding an extra
amount due to extraordinar;r causes of about $300,000,000 and calling for that much
additional Federal Reserve credit.
The rate of return of this extra currency
provides a mathematical measure of the passing of a state of apprehension.
The seasonal return of currency and retirement of year-end credit has
been largely absorbed by a decrease in discounts of $100,000,000, a reduction of
$90,000,000 in Government securities as shown above, and a decrease of $158,000,000
Reproduced from the Unclassified I Declassified Holdings of the National Archives
4
in bill holdings.
Despite this retirement of Federal Heserve credit and the
continued additional demand due to extra currency 'remaining outstanding,money
rates have been easy in Few York since the first of the year, and there has been a
tendency towards the accumulation of surplus reserves.
This appears to reflect
primarily extreme caution throughout the country in the use of funds, the result
of which is to pile up money in Hew York, employed at short term, rather than to
make loans or purchase investments freely.
The surplus reserves of the New York City banks, have fluctuated greatly.
On several days last week they were as large as 80 million dollars but* as in
previous months, there has not been continuously any considerable surplus;
a few
days of plethora of funds has been followed by a drying up of the surplus.
Prospects for Coming Weeks
The seasonal return flow of funds is usually largely completed by the end
of the third week in January;
should now be near completion.
so that the movement due to purely seasonal causes
The System has bill maturities of 0100,000,000
between now and the end of January which should be
cessive slack in funds for the balance of the month.
sufficient to take up any ex
Early in February the spring
demand for funds usually begins, rising to a peak in late March or early April.
The unknown quantity in the situation is now the extra currency called
into use to meet the December banking emergencies. If and when this returns it
(
should make possible a liquidation of discounts to a point where they were before
the unusual needs arose and lead also to some further reduction in bill holdings.
Some return from this source may be available to meet spring demands for funds.
@FedFRASER