Full text of Records of the Federal Reserve System, Record Group 82 : Open Market Operations: Open Market Policy Conference Meetings (May-Dec 1930)1, Box 1437, Folder 4

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Reproduced from the Unclassified / Declassified Holdings of the National Archives

Form P. R. 567

END

SHEET

KIND OF MATERIAL OR NUMBER

333#-C-2

name o r s u b je c t

Open Market Policy Conference
Meetings
Open Market Operations

d a te s

(in c lu s iv e )

p a r t number

May — Dec 1930

Part 1

r r *

A *

Orhce Lorresponaec,je
Tn
From

FEDERAL RESERVE

B
0A
R
D

Subject:

All Members of the Board
McClelland

ao. im
^

_______________________________________________ ____

There is attached hereto, for your information, copy of the
/2-- 2
Jo
3 J B .* C *» 2, ^
minutes/ of the meeting of the Executive Committee of the Open Market Policy
Conference held in Washington on December 20, 1950*
-Go TW ittoarfayor

Mr. Hamlin

. Mr, Miller
Mr. James v^/
Mr. Pole
Please circulate and return to the Secretary's office*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Tl V

jf 5^

Fe d e r a l R e s e r v e B a n k
o f

N e w Yo r k

Januaiy 5, 195<f.

CQHFIDMTIAL

Dear Governor Meyers

iyf
Enclosed please find final copry of the minutes! of

the executive committee of the Open Market Policy Conference,
held on December 20. |
Very truly yours,

U L.

7 W. Randolph Burgess
Secretary, Open Market
Policy Conference.

Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.

*?v

,‘
m a^

4
«L
nw«.X

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 • V235fe>

0 b%
Conf idential

December 19, 1930
MEMORANDUM FOR THE EXECUTIVE COMMITTEE
OF THE OPEN MARKET POLICY CONFERENCE.

At the time of the last meeting of the open market policy conference near
the end of September it was hoped that the bottom of the business recession had
been reached.

Bit since that time business activity has declined further to

about the lowest levels relative to normal ever reached in this country since ade
quate records became available.

Industrial production has continued to decline,

especially in the iron, steel, and automobile industries;
been further reduced;

factory employment has

freight movements and merchandise exports have shewn less

than the usual autumn expansion;

commodity prices have resumed the decline, agri

cultural products in many cases falling to levels even lower than before the
drought.

Only the textile industries have shown material signs of improvement.

These tendencies are reflected in the figures in the following table.
Seasonally Adjusted Indexes
Brotoetlop

Aug. Sept. Oct. Nov.

Industrial production (F.R.Board index; 1923-25 Av. = 100%)
n
»
W
tt
tt
tt
Factory employment

92
84

91
83

88
82

85
81

Pig iron
(F. R. Bk. of N. Y. index; Normal = 100)
W
tt
H
tt
n tt
n
Steel
tt
f
t
w
H
M
t
*
t
i
Passenger autos
»
tt
t
t
t
t
t
t
t
t
t
t
Cement
t
t
t
t
t
t
w
t
t
H
t
t
Cotton consumption
t
t
t
t
t
t
t
t
t
t
t
t
t
t
Silk consumption

86
86
51
114
65
75

79
81
49
106
68
101

71
69
31
94
70
113

62
62
83
71
115

88
88
95

86
79
90

84
71
89

80
63
88

84
85

83
83

80
81

Distribution
Carloadings, merchandise and misc* (F.R. Bk. of N.Y. index)
Exports
« «
w
tt
tt
Efcpartment store sales, 2nd dist.
» w
»
«
tt
Prices
Bureau of Labor Statistics index (1926*100)
F. R. Board index (monthly averages of weekly figures)

The accompanying chart shows an index*.of general business in per cent of
the trend in growth.

Reproduced from the Unclassified

I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 • \23St?

'•Dam
'Il&Tl t.

PER CENT

120

1919

*2 0

*21

’2 2

’2 3

’2 4

’2 5

’2 6

Volume of Trade Index
(Trend of growth = 100 per cent)

>27

’2 8

’2 9

’3 0

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0« U3Sfc>

Banking Situation
In the midst of a severe industrial depression has come a series of
events which has to an important extent shaken public confidence in the banking
situation.

A series of rather spectacular bank failures in various parts of the

country was capped by the failure of the Bank of United States in New York City,
the largest bank ever to fail in this country, with 400,000 depositors largely
among the foreign-born population.

This failure was followed by runs on several

New York City banks, an increase of over $150,000,000 in money in circulation,
necessitating a like expansion in the demand for Federal reserve credit.

A further

result was greatly increased pressure in the security markets as seme banks dumped
securities to make their positions more liquid.

Of still greater importance than

the definite results is the effect of these events upon public sentiment.

These

occurrences may have retarded by some weeks the return of more active business.
Bond Market
Until the past few weeks, prices of the highest grade bonds held re
latively firm, but prices of second grade issues have declined almost continuous
ly until they are now in many cases the lowest in at least six years, and on a
number of occasions recently it has been reported that there has been difficulty
in obtaining a bid on large blocks of bonds.

These conditions

are reflected in

the movements of the Standard Statistics Company daily bond price index, shown be
low, which includes some very high grade bonds and some second grade bonds, and is
now the lowest in the past five years.

High
Low

Sept.

Oct.

Nov.

Dec. 1-18

Year
1950

101.86
101.28

101.54
98.39

99.01
96.80

96.94
93.58

101.86
93.58

Year
1929
99.9
96.3

One effect of weak bond prices has been a substantial depreciation in
the investment portfolios of many banks, in some cases causing an impairment of
capital.

This situation is particularly acute in "country" banks, although, as

the following diagram indicates, these banks in general have shown little tendency

Reproduced from the Unclassified / Declassified Holdings of the National Archives

d e c la ssifie d

Authority E • 0 ■\23S4?

vi ,V.l S * R J

1' <

3
toward rapid expansion of their investments either this year, or in previous years
of easy money conditions.

The investment difficulties of these banks appear to

be due chiefly to a general tendency to purchase a large proportion of high-yield
low quality, bonds, which are particularly vulnerable in periods of reduced busi
ness activity and reduced corporation profits.

Increases in investments of banks

in large centers have been particularly in short-term issues.
Another effect of the weak bond market has been a large shrinkage in
flotations of securities to provide new capital.

This is illustrated in the

following table.
(Domestic corporate issues; in millions of dollars. Refunding issues
and financing by investment trusts, etc., excluded)

August
September
October
November
December

• • • . . • • • • •
• • • • • • • • •
• • • • • . . • • •
............... .
. . . . . . . . . .

1928

1929

178
320
400
534
611

298
661
597
159
223

1930
83
215
123
135
55 (Dec.1-18 est.)

Foreign financing and gold movements
Foreign issues in this market have declined in the past few months to
negligible amounts, due not only to general bond market conditions here, but more
largely to political disturbances abroad.

Thus foreign countries have been unable

to strengi5y their position with funds obtained in our capital market, ami in some
cases have had to ship gold to this country to service their previous debt and
to make other payments.

There were net gold imports to the United States of

$26,000,000 in October, $33,000,000 in November, and |17,000,000 in the first 17
days of December, with additional shipments due to arrive later in the month.
Reserve position of New York banks
At the time of the September meeting, the New York banks had m moderate
surplus of reserves and money conditions were easy.

Since, at present rates,

there has been a tendency to sell bills to the Reserve banks only after firmer
conditions have appeared, it was not possible to forestall a slight tightening of
the money market in the early part of October and again at the beginning of
November, but in general the New York banks have had a moderate surplus of funds

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E * 0 • \23S(?

'c-ceral Reserve Ban!
of Ne-7 York
I'e p c :

/W
■ / *y

D eposits and Investm ent Headings o f Weekly R eporting Member Banks
in Leading C itie s and o f A ll O ther Member Banks
(C o n d itio n statem ent d a te s -la te s t fig u re s September 24)

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
8

T " " .......

COUNTRY MEMBER
BANKS
o. ......1 . 1 . !'. ............A....:_____________ ___
1921

>22

*23

'2 4

’25

>26

'27

>28

’29

>30

----Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0» V23Sib

4
much of the time until within the past three or four weeks.

In these weeks,

Thanksgiving Day and month-end currency requirements, the beginning of the heavy
currency demand for Christmas trade,

and in the past ten days extraordinary de-

mands for curr^ny rtna tn fl-fgturbed banking situations

have absorbed all surplus

funds in the market and caused a rather general increase in rediscounts at the
Reserve Banks.
tinctly firmer.

Money rates have changed little, but the money situation is dis
For a few days past Treasury operations have eased the market

but tax collections to-day are expected to enable the Treasury to retire its special
certificate and absorb any surplus funds.
The following figures represent the weekly average surplus or deficit in
the reserves of New York City banks before the adjustment of their reserve position
through borrowing at the Reserve Bank:
(In millions of dollars)
Week Bnded
Sept. 12, 1930,
19,
S6,

+ 15
+16
+19

Oct.

3,
10,
17,
24,
31,

9
6
- 8
+ 20
+ 28

Nov.

7,
14r
21,
28,

- 19
+30
+ 13
- 1

Dec.

5,
12,
19,

- 22
- 24
+ 2

The present money market situation
In planning for the last ten days of the year, which are always a time of
some strain on the money market, two phases of the situation stand out.

The first

is that the recent bank failure in New York, coming as it did on top of important
failures in other parts of the country, accompanying disastrous declines in the
values of securities, has led to a feeling of great unsettlement, insecurity, and

Reproduced from the Unclassified I Declassified Holdings of the National Archives

declassified

Authority

£ •0 • V235(p

5
caution.

The bond market is almost completely closed to new issues, and banks and

others are most reluctant to make commitments for more than a very short time ahead, and in many cases have been dumping securities to make their position more
liquid.

The situation is thus peculiarly sensitive to any slight increase in

bank borrowing or any other indication of money strain.
The bill market in particular has reflected this situation in the un
willingness of many buyers of bills to buy

any but the very finest bank names.

It is not wholly clear yet how this condition may affect our acquisitions of bills
but it seems possible it may impede somewhat the freedom of access of the money
market to this bank through the bill market.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

October 6# %9Z0

l
!

Dear Havana or Harrison*
la tho absaxKMi of tha Governor* I aoknowy
la&ga reeaipt of your latter of October 2nd>
Qj
I
transsalttlng capy of tha minutes of tha re o nt
J
" J 3 3 ** ^
ln g of tha Open Market Boliegr Cnferenoe* ..~...
It ia noted that these miuto* ®ra subject
^
^ +^
to eorreation or amendment aftar tha various Mahers /
.
of tha Conf©renae hare had an opportunity to read
the® and that should any ehongea be necessary you
will send tha Board a corrected aopy*
Ye*y truly yours*

1* M. McClelland,
Assistant Secretary

Mr* George L# Barriaan, Ghalns&n,
OtwA ‘^rlNrt Foliay Onferertoe,
a/o Federal Baser?* Bank*
Haw York, R. Y*

Reproduced from the Unclassified / Declassified Holdings of the National Aichives

DECLASSIFIED
Authority E • 0 • V23Sk

#01 S M O I A L CTHCUIiATIOJjr
H P f W t W l T l A h ^ m RETU.
TO
II#,mii« k
Mr. James K

Bff
/< ^ *

¥$%

*
Mr. Cunningham
Fe d e r a l R e s e r v e B a n k

&o
0€6V

of N e w Y o r k

CONFIDENTIAL

October

1.00

1930.

Dear Governor Meyer;
I am glad to enclose herewith a copy of the
^ J^'i3 o
3 ^ ^ *"**^ ^ li?
minutesrof the meeting of the open market policy con
ference held in Washington on Thursday, September 25,
1930, ^hich I am today forwarding to the governor of
each Federal reserve bank.

These minutes of the dis

cussions are subject to correction or amendment after
the various members of the conference have had an op
portunity to read them.

Should any changes be necessary,

however, I shall of course send you a corrected copy.
Very truly yours,

Ge6rge L. Harrison,
Chairman, Open Market
Policy Conference.
Honorable Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
Enc.

/e-£~3 0
3 3 3 . 3

a m P< l
/ U & L <£UvoO

. ,
'6

Reproduced from the Unclassified I Declassified Holdings of the National Archives

•y- •
NO. xSl.

ffice Correspondence
>ond<

board

D ate

S e p te m b e r 7>0 1 1 9 3 0

. /____________Subject:-____________________________________
____
C o ________ Governor M egaJL
_

From.

2—8496
o po

You might be interested in looking over the attached report of
the discussion which took place at the meeting with the Open Market
Policy Conference on Thursday which, although not verbatim, is in
considerably more detail than the formal minutes of the meeting
which were read to the Board this morning.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Governor Harrison;

"The Open Market policy Conference met and dis

cussed for the better part of the day, general credit and business conditions
and the open market policy of the System and the action most advisable under
those conditions*

We prepared in New York a preliminary memorandum in

accordance with the usual custom in which we have recited facts and conditions
as they appear without drawing conclusions.

There are not enough copies of

the memorandum for every member of the Conference, but it is impossible to
satisfactorily report our deliberations without a survey of this memorandum
and if it is not asking too much of those who have already read it, I should
like the privilege of reading it to the whole conference. (Governor Harrison
then read the preliminary memorandum referred to).
This memorandum was discussed at some length by the Conference and
we have had a round-robin discussion, not only of business and credit
conditions and commodity prices in this country but in the rest of the
world and the depression is evidenced by every set of statistics, either
domestic or foreign.

The decline of foreign central bank advances to their

customers has averaged from 25$ to 50ft as compared with last .year, so there
is a lack of credit demand there as well as here.

We also considered at some

length the policy followed by the System since the first of January.

With

regard to that, there were differences of opinion, not so much in the
ultimate objective but rather as to the speed with which it was pursued.

After

we had all expressed our different opinions as to the rate and progress of that
policy we presented ourselves to consideration of what should now be the
policy of the System to take care not of the past but of the future.

We had

to crystalize sentiment t>y making a concise effort to determine what could
be the possible policy.

There are only three things that we, as a System

could do. We could either adopt a policy which tends to make rate conditions

easier; we

could adopt a policy which tends to make them fimer; or, a policy,

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-2 -

"the purpose of which is to maintain them about where they are.

We were all

in agreement that we should not endeavor to make an easier money policy, that
in the principal markets the rates are quite easy now and in some cases sloppy.
We also agreed, with possibly two exceptions, that we should not adopt a policy
looking toward firming of rates at this time.

Whether or not we made mistakes

in the past, the greater majority of the Gonference feels that we should not
now tighten money conditions.
of a firmer money position.

One Governor voted definitely, I think, in favor
One Governor asked to be recorded as not voting

and another voted against the resolution for other reasons.

I would now like

to read the resolution which was adopted by nine votes, two voting against it
and one not voting.”

(Governor Harrison then read the resolution adopted by

the Gonference).
"I have to apologize to the members of the Gonference for not being able
in detail to reflect the views on the various aspects of the past policy and
as to this report.

I should like to say that if any of them feel that the

report I have given has been too sketchy, I should feel much better if they
would speak for themselves.

What I have said represents the consensus of views

of the substantial majority of the Conference."
Governor Meyer then asked if the dissenting or non voting members of
the Gonference desired to make a statement or discuss the report.
Governor Harrison;

"I think the Committee would welcome any comments

or questions that any of the gentlemen present may wish to make.”
Governor Talley;

”1 was the non voting member.

My reason for not

voting was because I feel that the views expressed do not fit my situation in
either case. My thought is that we have no approach to the whole situation.
I realize that between now and the first of January is not a time to change the
situation particularly, either by raising the bill rate or selling governments

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-3 -

f,or anything of that kind.

There will probably be no occasion for additional

purchases by reason of the overages in reserves which exist at the present
time.

I don't think there is sufficient recognition or appreciation of that

fact on the part of the nine who voted for the resolution or a v/illingness
to let that be absorbed before they dip in another oar and buy more Governments.
“I think there should be more flexibility and I don’t think we should
be in a position necessarily of being in a long period of buying or selling
Governments.

We should be in a position to buy Governments today and sell

tomorrow or buy some this week and sell next week.

Another reason why I felt

I could not go along is fcfesrt the question of the anxiety as to whether bills
are offered to the System or not offered.

In view of that anxiety there is

not sufficient opportunity given for the determination of just how much money
the market does need.

Is not the feeling of some that &

getting a sufficient amount of bills,

the System is not

a sign that the market does not

want additional money, provided there is a sufficient amount of floating
bills so that the market can get money if it does want it.

This has no

bearing on the method of procedure or mechanics.'*
Governor McDougal;

,fI was one of those who voted against the resolution.

I reviewed the developments of the last year by stating that we in Chicago have
made three successive changes of 1
easier money.

in the discount rate in the interest of

The first in November, I believe, was prompted by the belief

that under conditions that had developed, a reduction in the discount rate
might have and probably would have some favorable effect on business.

The

second was made in the hope that it would have some beneficial results and the
third was made largely because of the action of the New York bank which had
brought its rate down to 2 -1 /2^ when we believed there was too much of a spread

Reproduced from the Unclassified I Declassified Holdings of the National Archives

_4_

"between that and Chicago, which I believe, is obvious to everyone here, but it
was not believed that it would help business.

In the meantime ITew York has

come down in five changes to a full point below.

At the present time the banks

in the cities are possessed of an enormous amount of surplus funds.

All they

can do with it is to buy bills, put it out on call or in Governments, or
something of that sort.

There has not been enough short time investments

of that sort to satisfy the demand.

In the recent offering of Government

securities some of the banks, for the first time, declined to pay by credit
for the reason that the money was not worth ZfQ which was the amount they had
to pay the Treasury.

The seasonal demand that usually comes has not yet

developed and probably will not.

The probability is that unless something

happens to change the outlook the demands through December will psmsai^r not
be so great and in view of those conditions I think we have given this
extremely low money market an apportunity to show what it will do.

Nobody

can say that the policy followed by the System has not done any good.
say it has not done what we hoped.

7/e can

In any event in considering this action,

the first thing was, we were all in agreement that nothing should be done to
make things easier.

(Che second thing that was done or decided upon, was to

do what might be necessary to prevent any firming.

That I don’t agree with.

The third thing was to buy or sell as conditions might make it necessary for
maintaining the present status.
low enough.
business.

I believe money rates at the present time are

I am not sure but what they are too low for the welfare of

Business is afraid to use money.

I voted against the resolution

for the reason that I don’t believe we should inject any more of the
artificial in there.

I believe that it would be well to let the thing take

its natural course and when the shoe begins to pinch, the Committee should
be authorized in advance to act, but I believe it would be just as well and
better than to formulate a policy which it is expected v/ill be in force for

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-5 -

"three months, to go along and take the thing as it comes.
afraid at all if rates would firm a little.
stop it.

I would not be

If they went too far we oould

I don’t think it is a good policy to maintain the present status

of money rates for three months or any definite period of time.
Governor Galkins:

"As the remaining negative, I want to correct your

statement that you assumed the resolution adopted
those who voted for it.
for it.

expressed the views of

It represented some of the views of those who voted

As usual, it was to a certain extent a compromise.

voting against the resolution is a trivial one*.

My reason for

The fact that I am not out

of sympathy with the general purport of the resolution is more or less
indicated by the fact that I wrote it originally, but the inconsistency that
I find is that the Conference said to the Executive Committee;

*We don’t

want to do anything to further ease money rates, inject money into the market
for the purpose of bringing about easier conditions, and we have been and
are authorized at this moment to buy up to $50,000,000 of Government
securities and because we don't want you to ease the market we are going to
authorize you to buy up to ^100,000,000.*

As to the expediency of taking

action that might tend to firm the money market at this moment, I am in dis
agreement with Governor M.cDougal for the reason that I think this is not the
opportune moment.

We have every reason to anticipate the usual seasonal

increase, and I think we should go through that period, the remainder of this
year, before we take any action to bring about a less sloppy condition.”
Govern nr--,-Harrison;

(,Might I on behalf of the Committee explain why we

fixed the limit at §100,000,000 rather than .150,000,000.

It is true we

have authority to buy $50,000,000 now under the agreement wMch was reachel
by the very unsatisfactory process of telephone, but which we felt was
necessary in the event conditions developed which would make it wise to do

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-6 -

"something.

The reason we askedf/fo!fc .$50,000,000 at that time was indicative

of nothing other than the practical problem of getting authority pending a
meeting of the whole conference.

When it was suggested that the limit be

fixed at ^100,000,000, it was not that we anticipated using ^50,000,000 or
<£100,000,000 but rather that the procedure is at best cumbersome and wa felt
it would be wiser, as long as we agreed on the policy to give adequate
authority to the Executive Committee rather than necessitate the reconvening
of the whole Conference in the fall if it were determined we need more than
^>50,000,000.

It was also agreed that as long as the objective is defined by

the Conference and instructions given to the Executive Committee with that
objective in mind the Committee must have proper tools to operate both ways.
If the Committee fails to carry out the mandate of the Conference, procedes
too fast or too slow, or if conditions change which make it advisable to re
consider the objective it is quite competent for the Board or any member of
the Conference to ask for a meeting at which time we could meet and reconsider
the entire policy.

We should have a meeting in January in any event because

we usually have a turn-about at that time.

Whether we will need a meeting

in the meantime will depend upon developments which may come at any time and
which are difficult to anticipate these days,

v/e have been wrong in other

estimates regarding credit needs and currency requirements. I am hopeful that
we will not have to buy any Governments but whether we will or not, no one can
anticipate.

At least we have defined an objective and given the Committee

authority, if approved by the Board, to execute the policy and have provided
*
«
means for any who are interested in checking up to call for another meeting to
study it again denovo.”
Governor Norris;,

“I voted for the resolution with some mental reservation

and I think some others who voted for it had the same feeling.

I think we

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-7 -

”were unanimous in the belief that the System should do nothing to bring about
•— ---------------- —--------- — . '
—-- --- -— -----------— --- -— — *
a further easing in money rates. I think: the large majority felt that money
conditions were unduly and unwholesomely easy at the present time and that there
might be some little hardening in some rates without doing any harm and possibly
doing some good but the thing that principally influenced me and others was that
we don’t care to take the responsibility of bringing that about or letting it
occur just at the present time when we are in the midst of the crop moving
season and with the usual seasonal demand for currency during the few months
ahead of us.

I think some of us would like to see the resolution look a little

more than it does toward a firming of rates but I felt that the form in which
Governor Harrison presented it was one that I could vote for and I did not care
to take the responsibility of saying that any action in the direction of firming
should be taken at once.”
Governor Young;

”1 want to state that I voted for the resolution without

any reservations."
Governor Meyer;

“The Conmittee’s report indicates opposition to any easing

of rates and also advocates a policy against the firming of rates.

Is there

any contemplation of a situation whereby, under your authority you would
prevent a firming of rates which might arise in a temporary way and after the
necessity for the temporary policy had expired you would act under your
authority and reverse that policy?

I have in mind that with a policy against

easing, a temporary tendency for firming being met under your program, would
you have authority to make a reversal so as to return to the original status?”
Governor Harrison explained that the Committee’s recommendation con
templated authority to sell as well as b-uy securities for the purpose of
maintaining the present situation.
Mr. Cunningham;

”1 would like to make an observation on one part of the

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-8 -

"resolution in which reference was made to the fact that the seasonal demand, for
credit would not be up to the levels of previous years.

I am wondering if in

considering that you have given consideration to the other factors in the picture
at this time which did not stand out so forcibly until this season.

Don’t we

have to take into consideration the amount of credit that has been put into the
picture by the Federal Farm Board for the carrying and marketing of commodities.
If that were added to the picture would not that look as though the seasonal
demand is on a par with previous years.
figures in the picture.

Personally I would include those

The Farm Board has 60,000,000 bushels of wheat and

1,250,000 bales of cotton.

This is quite an item.

I wonder if that does not

leave us about where we were last year.”
Governor Young;

"About a year ago I took the loans of the Intermediate

Credit Banks and Farm Loan Board wondering what effect they would have on
the general money market and I had Dr. Goldenweiser follow it all the way
through.

If I remember it correctly, his conclusions were that regardless of

whether the Farm Loan Board or Intermediate Credit Banks lend the money it
would have no influence on the picture.
if a nonmember bank lent the money.

The affect would be just the same as

If the Treasury itself loaned the money

there might be some slight difference.'1 There was some little discussion on
this matter at the conclusion of which Dr. Goldenweiser stated that as far as
Federal reserve credit is concerned the seasonal demand for credit as it
reaches the Federal reserve at this time of the year is practically all due to
increased demand for currency. "Every year the increase in the demand for Federal
reserve bank credit and increase in currency is practically the same.

The

chart shows very clearly that the demand this year has been less because the
demand for currency has been very much less.

The reason it is lower this year

is because wholesale and retail prices are lower and the level of employment
and payrolls is lower.”

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Mr. Miller:

"Ehe proposal of the Committee is to maintain, whether as

a buyer or seller,as occasion should necessitate,the present money position which
is described as a comfortable one.

What comes to my mind is this.

We have

listened to an interesting preliminary memorandum which paints a pretty
depressing picture of the present economic situation.

Does your recommendation

relate itself to the condition which is confronting us?

Is this your program

for handling whatever problems of a financial or credit character that
originate

in this present condition of depression.

I ask that because past

experience is pretty conclusive that in times of depression, particularly a
money rate is a very imperfect indicator of the true state of credit.
words it may be put this way.

In other

You have lower rates precisely because business

is stagnant and what you have to reckon with is not only a stagnant condition
in the commodity markets but a stagnant condition in the money and investment
markets.

I should say that at the present time we are in a depressed condition

and that money is sleeping and it is conceivable that a part of a constructive
program is to wake it up and make it do something and that you may be misled
into a false sense of the soundness of the general money situation because rates
are low.

Hates are low to those with requisites for credit, but part of your

derangement. is that people do not want to borrow or as a matter of fact do not
borrow and the money is not working, and the question you have to consider in
a reviving policy is whether you can do anything to alter the situation and
break the static in the money market, making a condition of static one of
movement and motion.

I rather expected that we might well expect to have

a Committee recommendation with a more definitely constructive proposal.

expected the Committee might come along with the proposal to start something,
not\^i proposal to maintain the existing position but to alter the situation,
perhaps bv bold buying away from the public or banks $50,000,000 or a ^100,000,000

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-1 0 -

**of bonds and make them turn around and look for some other avenue of invest
ment.

In other words, just as you have conditions where you want to put men and

plant to work you have a situation where you have to consider whether it is
expedient and practicable to make money go to work.

I should say a characteristic

of the present situation is the enormous accumulations of money.
the picture so far as it becomes in any sense a shaping influence.

It is out of
My statement

is made really because I question whether that angle of the thing has been
considered.11
Governor Harrison;

"That is a clear exposition of the third alternative,

or an alternative not discussed here.
Hew York bank who want to do just that.
difficulty in a time such as new.

There
of the
- „i
■aresome in the organization
.Sk?——.
That program, however, involves

If we should go out and buy .^100,000,000 of

Governments today, we would give to the banks $100,000,000 of reserves for which
they have no use.

The minute we put in another dollar that would give them

another dollar of reserves.

The pressure of excess reserves not earning: money

would force those banks sooner or later to do something with it.
get borrowers they cannot make loans.

If they cannot

The first thing they would do would be

to go into investments, and the only thing you do is strengthen the bond and
mortgage markets and encourage borrowers of long time money.

The difficulty with

that program is that it is a policy of inflation of credit or currency.

It is

deliberately giving to the country more than we want at the moment and trusting
upon the old theory of supply and demand to force prices up.

It is a program ’*

which, I think, might accomplish what you have in mind, but it is also fraught
with a great many dangers attendant to a policy of inflation."
Mr. Miller;

*1 think the view may well be entertained.

'— ■

When you have

a condition of extreme idleness in the money market you have an involuntary
deflation.

Part of our situation at the present time is that while the money is

Reproduced from the Unclassified / Declassified Holdings of the National Archives

■11

"in the statistical picture it is not in the economic picture.
entry on the books and is not functioning as money*
that a thing of that kind is inflationary.

It is a mere

I don't think it follows

I think it depends on the factors

it affects and which are going to affect it."
Governor Harrison;

"One of the proponents of such a policy has stated

that in the past twelve months the total bank credit in the country has not only
■not) expandedin the normal trend but has actually declined, that, therefore, to
create new credit is not inflation because it would merely back up the volume of
credit which is not being used as it would be if business progressed normally."
Mr. Miller;

“The fellow who sells me his corporate bond which I buy with

the money the reserve bank has given me in exchange for my Government bond turns
^ad eventually has got to find something in the field of some new undertaking
around^ asst* I think the real meat of this matter is that in a condition of this
kind the fellow who is tempted to sell a security, a Government bond in the
first instance, does it because he thinks he sees somewhere an opportunity where
he can replace his investment to his own advantage.

In the meantime you have

started a movement which causes a revision of the relative scale of investment
desirability and values which may work some benefit in a stagnant condition."
Governor Harrison;

"The trouble with that program is that after you once

start it there is no backing out and the further you go relatively, the more
you need and it is a terrifically responsible and onerous task at a time when
the depression is not only domestic but world wide.

Practically,when we reach

our limit without having succeeded,we would be up against it."
Mr. Miller;

"You accept the fact that the present depression at this

lo has reached a point beyond the remedial measures of a credit policy alone.

Governor Harrison;
all the time.

"By credit alone.

That has been our policy in New York
there is
7/e all felt that in a period of such distress witetr no prospect

of speculative demand for funds.
or mortgages.

But we can’t go out and buy commodities or bonds

We can’t do anything except make it possible for the forces of

Reproduced from the Unclassified I Declassified Holdings of the National Archives

- 1

"recovery to operate when they are ready to do so,3xcept the other point that by
currency inflation you can raise prices and that, I think, we have always
admitted is the last resort.”
Mr. Miller;

"In that respect we can't do it.

Governor Harrison;

We can’t inflate currency."

"Definitely if you buy bonds you are putting up

U. S. bonds and that is an immediate

visible

inflation.

You take that amount

of bonds out of the investment market and stimulate people who ordinarily get
them to go out and seek other investments of comparable character.

Then you

get an inflation of railroad and miscellaneous corporate bonds,”
Governor Meyer;

"If additional credit were injected through further pur

chases you would properly export gold to the equivalent of the amount of the
Federal Reserve credit injected.

A limitation is put on by gold exports.

The

injection of credit beyond the status quo would result in, further easing and
in the withdrawing of gold and one would offset the other."
Governor Harrison;

"If the depression were limited to the U. S. it would

be one problem, but where it is world wide I don’t think you could go through
with it.

If we used all our reserve credit and had not succeeded we would be

stumped."
^

Mr. Miller;

"If a policy of that kind were pursued it would be in the

nature of an exploratory operation. You don’t go in blind, but watch what
repercussions there are.

Your own memorandum points out the fact that we are

suffering from the deficiency of both long and short time money.

Just lately

we read of the pulling out of French balances from Germany under the pressure
of recent political crises in Germany.
factors in the distribution of funds.

There are also, therefore, political
I merely mentioned this because we have

assumed, in the past,that the injection of credit in the money market through
8
open market purchases was pretty effective, quick way of giving something in

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-13-

'♦the nature of a fillip to the procession.

We have seen very disasterous

results come from operations in the financial and security markets and I am
wondering whether we have been too much intimidated by our past experiences.
Governor Harrison;

”We did not specifically discuss it today because this

was one step further than one the alternative unanimously disposed of and the
sentiment of the Conference as a whole after very deliberate consideration of
the money markets all over the country was so much opposed to doing anything
that would worsen conditions, that anything to ease money was beyond the dis
cussion.

The feeling was that,if anything,we have gone too far rather than

not far enough.”
Governor Meyer;

"The more direct reflection of money policy in the

normal course of changes which come about from high to low and low to high is
that «£ people on the outside who have not had an opportunity to study the
situation, ask, 'What is the affect on the bond and mortgage market?*

The

construction enterprises of the country thrive on sound money conditions and
are suffocated with money strains.

Construction accordingly stops and labor

is unemployed* ifter a considerable time fiBEt high money rates have cut
construction enterprise and public improvements.

There is inability to sell

bonds.

In 1929 some financing was done through stocks, overloading the stock

market.

The bond market at the present time would seem to be functioning in

a normal way.

It does not appear that the money ease is inflating the bond

market unduly.

On the other hand it is easy enough to keep a good current

consumption.

There is a good volume of bonds being placed for construction

purposes and the mortgage market is beginning to be easy.
things change.

They don’t change in an instant.

I have seen these

You don’t stop all enter

prises as soon as it goes above the legitimate limit for construction and when
it becomes easy there isn’t an immediate revival of construction all over the
country.

It is a little difficult within a limited period to appraise the

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-14-

"effects of the money markets.

It take# time.

connection with the time element.

A rate has to be taken in

I am wondering if the time element is not

one of the things we have to think of.

I remember that in 1908 money was not

quite as easy for commercial paper but call money was on an average of 1-3/4jo
for about twenty months without the Federal reserve.
Federal reserve policy is artificial or not.

I don’t know wkether

We had relatively easier money

for months during that time than during the last few months.
business was very bad.

But of course,

So cause and affect are a little hard to trace and

just looking from the outside I don*t see there has been very much criticism
of the policy nor on the other hand do I see much comment in the discussion of
these financial and economic matters that there is any signs of inflation, as
yetjin the securities market. I mean the bond market particularly, where a
money policy extreme would be reflected in a too great a rise in bonds.

I feel

that in *27 there was a bond inflation which was by no means entirely
connected with the discount rate of the Federal Reserve System but had to do
with the refunding of the Second and Third Liberty Loans.

Bonds aren’t going

up but on the other hand are being absorbed which is what you are interested in.
, Governor Norris;

"iphe bond market has been creeping up in a wholesome

way, and is now about six points above last December."
Governor Harrison;

^__

Isn't it true that we have never been through a

substantial business depresslmfollowed by a recovery without first having a
recovery in the bond market?

If an easy money policy is the right policy in a

period like this we hope to see the movement come after the improvement in the
bond market which always proceeds a business revival.

I have been told that

there never has been a recovery in recent years without first haring some sort
of recovery in the bond market.1*
Governor Norris;

"I made an inquiry of a Philadelphia partner of Morgan

& Company as to how he found the bond market and he said there was no trouble

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-15-

"whatever in disposing of high grade bonds but there was difficulty in selling
second grade bonds, because buying was institutional at the present time as the
individual was practically out of the market, and thought that was probably
caused by the fact that irraestoishad not yet recovered from the propoganda of
last year that stocks are. better than bonds.

I then asked the question whether

he thought easier money rates would stimulate the bond market and he evidently
guessed the purpose of my question because he said, ?I would be very sorry to
see the Federal Reserve System buy any more securities or endeavor to put
interest rates any lower because the immediate effect would be to apply
stimulation to the bond market and bond dealers would then sell at the prices
they could get and as soon as that stimulus was removed there would be a re
cession and we would be left with a lot of disgruntled customers on our hand
and the affect would be most unfortunate.*

I asked him if any corporation in

this country which wants capital today has any difficulty in getting it or if
they could get money 1 or l/2jo cheaper would it induce them to do more, and he
said no."

He also said that was the opinion of the other partners of the firm."

Upon advice from the Chairmen of the Governors and Federal Beserve
Agents Conferences that they were ready to report to the Board, it was decided
to hold a joint conference of Governors and Federal Reserve Agents with the
Federal Reserve Board at 10:30 tomorrow morning.

I^Egasa. 181.

Office Correspondence

FEDERAL RESERVE
BOARD

T o ___ All Members of the Board, individually

Thftfto in ■fttcihart

Subject:.

ft •onv of the itaoit cutei tto4 to th»

Bo^ri ^»t«ri*y br/ th» Op«n f t i M i^lioy CotLf*nm***

Oopi#» of tit#

prillikinftiy nwaar«.r>du* submitted by the Ch«innBrt #£ th# Ccmf»r«i»##
W oP#f w w is# 3m wp® wp<#ni| h w h » «*.ihtj-omwwi

wemp sipsbppfii hsf

AT HDABD MEBTINQ.

SEPA O 1930
&

from the

U n c la s s if ie d

/ Declassified Holdings of the National Archives

$he Open Market Policy Conference has considered the preliminary
aeraorandua submitted to it "by the Chairman and has reviewed at length
general business and credit conditions.
In view of the continued severe depression in huslneae activity,
trade and coraraodity prices in this country, ae well as the rest of the
world, it is the sense of the Conference that it would he inadvisable
for the Federal Reserve System to permit any further easing or any firming
of present money rates because of seasonal re<*oire»ents, gold exports, or
other causes} and that it should he the policy of the System, so far as
possible, to maintain the present easy money rate position in the principal
money centers, and that the Executive Ooraittee should he authorised, if
necessary, to supplement hill purchases by the purchase of Government secur*
ities, in the event that the seasonal demand for ftsdexal Beserve ereaii,
gold exports, or other factors should tend unnecessarily to tighten present
money rates*

(jfi.U -t
Zn the event that

conditions should develop which would require

sales of securities to execute this policy, the Executive Committee should,
of course, have authority to make sales of securities*

It is understood,

however, that if the Committee should have to buy or sell acre than
$100,000,000 of Government securities to maintain the status quo, new author
ity mist he procured in accordance with the prescribed procedure*
It is recosraended that there should he another meeting of the Open
Market Policy Conference early in January, unless a change in conditions
suggests to the Board or the raerabers of the Conference the advisability of
an earlier meeting*

AT BOARD MEBTiNS**

SEP 2*1930

Reproduced from the Unclassified I Declassified Holdings of the National Archives

COPY OF MEMORANDUM READ BY GOVERNOR NORRIS AT THE MEETING OF THE
OPEN MARKET POLICY CONFERENCE HELD IN WASHINGTON
SEPTEMBER 25, 1930

The Directors and officers of the Federal Reserve Bank of Philadelphia
find themselves so much out of accord with what appears to be the sentiment of the
other Banks and of the Board as to the policy which the System should pursue at the
present time, that they deem it proper to state their own view of the situation.
V/e have always believed that the proper function of the System was well
expressed in the phrase used in thejfTenth Annual Reporl| of the Federal Reserve
-

"The Federal Reserve supplies the needed additions to credit in times

business expansion and takes up the slack in times of business recession,'/
have therefore necessarily found ourselves out of harmony with the policy recently
followed

of supplying unneeded additions to credit in a time of business recession

which is the exact antithesis of the rule above .stated.
We realize that there are emergencies and exceptional combinations of
circumstances when it is the part of wisdom to abandon even the best of rules, but
we cannot see that this is one of those cases, or that a continuation of the
present policy can be productive of anything but harm.
If we understand the reasoning correctly, the policy of buying government
securities is justified by some argument as this - We are in a period of depression
characterized by falling commodity prices and a deplorable volume of unemployment.
This condition cannot be corrected without an increase of building activity.
Building activity will be brought about by low rates for long-time loans.

Low

rates for long-time loans will only come with a strong and active bond market.
Therefore we should bring about this condition of the bond market by making shorttime credit so cheap that banks and investors will be driven to the bond market to
utilize their funds.
It is admitted that the conditions we seek to correct are world-wide.
must be admitted also that the decline in commodity prices is almost wholly the
result of over-production, which is evident not only in wheat, cotton* coffeer
rubber, sugar,

copper, cement, coal* and automobiles, but in various other

Reproduced from the Unclassified I Declassified Holdings of the National Archives

commodities, some agricultural and some industrial.

As to most of these commodi

ties, the difficulty cannot be charged to "under-consumption.”

The uses of rubber,

cement, and copper have been continually increasing, and the world’s per capita
consumption of sugar and coffee is probably larger than ever before in history.
This over-production did not manifest itself until a year ago, because, under the
stimulus of instalment selling and an unreasoning belief in long-continued and un
precedented prosperity, over-buying kept pace with over-production.
of such an economic debauch are inevitable.

We are now suffering them.

Can they be corrected or removed by cheap money?
they can.

The consequences

We do not believe that

believe that the correction must come about through reduced pro

duction, reduced inventories, the gradual reduction of consumer credit, the
liquidation of security loans,
of thrift.

and the accumulation of savings through the exercise

These are slow and simple remedies, but just as there is ”no royal road

to knowledge,” we believe that there is no short cut or panacea for the rectifica
tion of existing conditions,

We do entertain, however, the belief that the declines

in commodity prices and in employment have about run their course, and that the
foundations for business revival have already been laid.
Let us take up, first, the particular argument advanced by those who ad
vocate cheap money as a cure - that it will stimulate construction.
stimulation of construction desirable?

Is a

If so, what kind of construction?

The

only division of the building industry that shows any sharp decline is residential
construction.
apartments.

The trend of urban living is away from the individual house to
In most, if not all, of our large cities, one-family houses are very

unsalable, and sheriff’s sales are multiplied.

At the same tine there is a large

percentage of room vacancy in hotels and apartment houses.

It seems to us that a

stimulation of residence construction would be a stimulation of what is already
over-supplied, and would simply be inducing people to go into what

would prove to

be disastrous ventures.
The railroads and other public utilities are spending money freely in

Reproduced from the Unclassified / Declassified Holdings of the National Archives

electrification, removal of grade crossings, new terminals, and in all directions
except equipment.

It is not likely that any large expenditures for that purpose

will be made until car-loadings increase.

It certainly is not wise to encourage

any extensive construction of new industrial plants, or enlargements of existing
plants, when production in most of the major lines is running at from 50# to 80$
of present capacity.
Taking the broader view, we are in accord with the opinions recently ex
pressed by financial writers, one of whom we see quoted as saying "An abundance of
funds for business purposes will stimulate trade recovery when the time is ripe
for such a development;

but it cannot, by itself, go very far toward converting

depression into expansion,” while another says "Cheap money will not induce manu
facturers and merchants to increase their borrowings, or enlarge their inventories
in an unsatisfactory business periods

Cheap money is a stimulant, and also an

intoxicant, that may have temporary effect, but a headache will follow if the dose
is large enough, and persisted in.

It encourages over-borrowing by cities, and

loans on securities or real estate by individuals.w
At all events, the cheap money policy has now been persisted in for near
ly ten months* ^haring which period the call-loan rate has been driven down from 6$
and over to 2$>y the time-money rate from 6$ to 2 1/2%;
from 6$ to 3$;

the commercial paper rate

and the rate on acceptances from 4 1/2$ to 1 7/8$;

and there has

been an advance of nearly 6 points in the average bond price to the highest of the
year.

Insofar as this advance is the result of savings, and a reaction froih the

1929 theory that equities v*ere better investments than obligations, it is whole
some.

To whatever extent it may be the result of the artificially and abnormally

low interest rates which we have been instrumental in bringing about, we believe it
to be unwholesome and - like all artificial interferences with natural lav/s fraught with potentialities of danger.
None of these things has brought about any reversal of conditions.

They

have doubtless avoided greater evils that might have occurred, but it is our judg
ment that they have been carried too far and too long.

It is significant that a

Reproduced from the Unclassified I Declassified Holdings of the National Archives

recent increase in brokers’ loans was accepted as ’’bullish” news, being interpreted
as evidence that the public was coming back into the stock market.

We believe

that the present abnormally low rates for money are regarded by the public as
evidence that no business is being done, and that no one has any use for money;
and that some hardening of rates would be accepted as an indication of a revival
of business activity.
Our objections to recent Federal Reserve policy, however, are positive as
well as negative#
This policy has interfered with the operation of the natural la?/ of supply
and demand in the mpnAy Tnn-riraiL, and has created artificially low interest rates, and
artificially high prices for government securities.

It is open to the same objec

tions which the Treasury urged in 1922 to the purchases of governments which the
Federal Reserve Banks were making at that time.
banks.

It is an injustice to our member

It has resulted in making open market operations usurp the discount

function, and tends to foster tha regrettable impression that there is some element
of impropriety in borrowing by member banks.

It makes our discount rates wholly

nominal and ineffective, and finally, and perhaps most important of all, as the
result of injecting a large amount of unasked and unneeded Federal Reserve credit
into an already glutted money market, we find ourselves with over 600 millions of
governments on hand, the bulk of which must ultimately be disposed of.

This com

pares with a previous high of 592 millions (monthly average) in December, 1927, and
a low of 73 millions in November, 1921.

This previous high was part of a plan

which looked to the stabilization of European currencies, and included provision to
check the inflation which it was feared would follow.

We do not undertake to say

how much Federal Reserve credit should be in use today, but we do hold to the be
lief that a substantial part of it should be the result of a demand expressed in
borrowing by member banks, and used in cooperation with those banks.

Less than

one-sixth of it is of this character today.
The suggestion has been made that we should be prompt to "go into reverse,"

Reproduced from the Unclassified / Declassified Holdings of the National Archives

5
and dispose of these governments when business picks up#

This is a complete and

literal reversal of the policy stated in the Board’s Tenth Annual Report, already
quoted.

We have been putting out credit in a period of depression, when it was

not wanted and could not be used, and will have to withdraw credit when it is
wanted and can be used.

Moreover, it is not difficult to imagine the caustic

comments which will probably be made when this reverse policy is inaugurated, and
credit is withdrawn just as commerce and industry begin to have use for it.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

CONFIDENTIAL
REPORT OF OPEN MARKET OPERATIONS TO MEETING OF THE OPEN MARKET POLICY CONFERENCE
HELD IN WASHINGTON DURING GOVERNORS* CONFERENCE COMMENCING SEPTEMBER 24, 1930.
At the time of the last meeting of the Open Market Policy Conference
held in Washington on May 21 and 22, 1930, the total amount of holdings of
government securities in the System Special Investment Account was
$327,300,000
Since that time the total amount of holdings in the Account has
been increased to $402,300,000 by virtue of the following purchases;
June 1930 - Purchased with the approval of a majority
of the executive committee of the Open
Market Policy Conference, a majority of
the governors of the Federal reserve banks
and the Federal Reserve Board*

50,000,000

Aug. 1930 - Purchased with the approval of a majority
of the Open Market Policy Conference and the
Federal Reserve Board, to offset partially
gold exports.

25,000,000

Total holdings
Latter part
of August
and early
part of
September
1930
In view of the desirability of maintaining the
then existing easy money position and the possi
bility that seasonal requirements and gold
exports might bring about a change in the situa
tion if no action was taken, a majority of the
members of the Open Market Policy Conference
recommended the authorization of a purchase of
government securities up to $50,000,000, with
the understanding that this authority was to
be exercised only if necessary as a supplement
to bill purchases in offsetting seasonal de
mands for credit, gold exports, or other
influences towards firmer money which might
interfere with the continuance of present
money conditions. This authority was granted
by the Federal Reserve Board but with the
continued ease in money no purchases have
been made under this authorization*

$402,300,000

Reproduced from

the Unclassified / Declassified Holdings of the National Archives

There have been several other major government security transactions
in the System Account since the conference in May which did not affect the
total amount of holdings in the Account, as follows:
Latter part
of May
(1) Exchange in
the market of $46,375,000 Treasury Certificates
of indebtedness due June 16 and
December 15, 1930, for $36,375,000
3 l/2% Treasury notes and the bal
ance Treasury certificates due
September 15, 1930.
(The greater part of these exchanges were for the purpose of acquiring 3 1/2%.
Series"A"Treasury notes which the Treasury was desirous of obtaining,)
June 1930
(2) Exchange with
Treasury, ac
count Alien
Property
Custodian of $34,210,000 - 3 1/2% Series "C"
Treasury notes for a like amount
of Series "A” notes which were
acquired for resale to the Treas
ury for account Surplus Money.
Latter part
of May and
first part
of June
(3) Sales to
Treasury for
account Sur
plus Money of $70,000,000 aggregate amount of
3 l/2$ Treasury notes due March
15, 1932* These sales were re
placed in the System Account
by purchase in the market of a
like amount of various issues
of government securities.
(In connection with these sales to the Treasury, the Treasury purchased
$100,000,000 of Series "A" Treasury notes for account of Surplus Money, Of
this amount $70,000,000 was sold from the System Account, $15,000,000 from the
Investment Account of the Federal Reserve Bank of New York and the balance of
$15,000,000 by direct purchase in the market*)
June 1930
(4) Exchange of the
balance of
$10,360,000 - 4 7/8^ Treasury
certificates which matured June
16, 1930, held in System Account
for a like amount of the 2 7/8%,
Treasury certificates dated June
16, 1930.
(In this connection an exchange subscription was entered for $10,360*000 against
which the Treasury allotted $5,802,000. The unallotted balance of $4,558,000
was replaced by purchases in the market at par of a like amount of the 2 7/8$
certificates issued on June 16*}

Reproduced from the Unclassified / Declassified Holdings of the National Archives

3
Latter part of
June 1930
(5) Exchange in
tho market of $10,000,000 Treasury bills maturing
July 14 for a like amount of short
term government securities of later
maturities,
July 1930
(6) Redemption at
maturity of
the balance of $12,500,000 Treasury bills maturing
July 14 which was replaced by purchase
in the market of a like amount of short
term government securities of later
maturities,
July and
August 1930
(7) Exchange in
the market of $6,950,000 Treasury bills maturing
August 18 for a like amount of shortt e m government securities of later
maturities.
August 1930
(8) Redemption at
maturity of
the balance of $38,000,000 Treasury bills maturing
August 18 which was replaced by pur
chase in the market of a like amount
of short-term government securities
of later maturities,
July, August
and September
1930
(9) Exchange in
the market of $78,960,000 - 3 1/8$ Treasury certif
icates maturing September 15 for a
like amount of short-term government
securities of later maturities,
September
1930
(10)

Exchange on
Sept, 15 of

$5,130,000 maturing Treasury bills
against allotment by the Treasury of
a like amount of new 2 3/8$ Treasury
certificates on subscription entered
for the total amount of maturing
Treasury bills and certificates held
in the Account, namely, $34,200,000.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

4
September
1930
(11)

September
1930
(12)

Redemption at
maturity of
tho balance of

Exchange in
the market of

$27,215,000 - 3 1/8% Treasury certifi
cates maturing Sept. 15 and
1,855,000 - Treasury bills maturing
Sept. 15
$29,070,000 which were replaced by pur
chase of a like amount of
short-term government secur
ities of later maturities.

$ 5,000,000 - 3 1/4$ Treasury certificates
due December 15, 1930
5,000,000 - 2 7/8$ Treasury certificates
due June 15, 1931
30,500,000_- 4 1/4$ Fourth Liberty Loan
__________
bonds
$40,500,000 - for a like amount of various
issues of short-term govern
ment securities.

The active market for United States Government securities, following the an
nouncement by the Treasury that the Series "A” and MBM Treasury notes were called
for payment on March 15, 1931, afforded an opportunity of exchanging almost all
the holdings of Fourth 4 l/4s in the System Account and the Investment Account
of the Federal Reserve Bank of New York for shorter maturities. There was also
the opportunity to exchange advantageously in the market the $10,000,000 Treasury
certificates due next December 15 and June 15, referred to above, for other
short-term, issues.
In order to steady the conditions in the money market over the
September 15 Treasury financing period, purchases were made for the System Account
(in replacement of the redemption of the September 15 maturities and a large
portion of the other securities exchanged) from the holdings in the Investment
Account of the Federal Reserve Bank of New York and delivery of the purchases
made in the market in replacement of these and other sales and maturities from
the holdings in the latter account were deferred until September 17, 18 and 19 in
order to provide a partial offset to the easing effect of Treasury tax day opera
tions. The aggregate amount of such deferred deliveries for the Investment
Account of the Federal Reserve Bank of New York was $87,500,000. In addition,
participations in the Treasury $274,000,000 special one-day certificate issued to
the Federal Reserve Bank of New York were sold to New York City banks to an amount
of $170,500,000 on September 15,and $68,000,000 on September 16; as a consequence
the market was relatively undisturbed by tax day operations.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Tho maturities of the holdings of the $112,000,000 United States
government securities held in the Investment Account of the Federal Reserve Bank
of New York on September 19, the date on which delivery of the deferred purchases
was completed, were as follows:
Treasury bills
3 1/4# C/I
2 7/8$ »’
2 3/8% ”
3 1/2% T/N Series "A"
3 1/2$ ”
’’
"B"
3 1/2% "
4 1/4fo Fourth i/L bonds

due
»
»t
w
t»
t»
t»

Nov.
Dec.
June
Sept.
Mar.
Mar.
Dec.

17,
15,
15,
15,
15,
15,
15,

1930
1930
1931
1931
1931
1931
1932

Total

1,000,000
3,075,000
11,575,500
58,500,000
12,548,750
15,740,550
9,171,150
599,750

$112,210,700

CHANGES IN PARTICIPATIONS OF FEDERAL RESERVE BAMS IN THE HOLDINGS
OF GOVERNMENT SECURITIES IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT
The Federal reserve banks which participated in the purchase of
$50,000,000 government securities in June and $25,000,000 in August were as
follows:
$50,000,000 Purchase
Boston
New York
Philadelphia

Cleveland
Richmond
Atlanta

Chicago
St. Louis
Minneapolis

Kansas City
Dallas

$25,000,000 Purchase
Boston
New York
Philadelphia

Cleveland
Richmond
Atlanta

Chicago
St. Louis
Minneapolis

Dallas
San Francisco

At the request of the Federal Reserve Bank of Atlanta on June 11,
owing to the then existing conditions in Florida, they were relieved temporarily
of $8,000,000 of their participation of government securities in the System Ac
count. These securities were hold temporarily over night in New York’s
participation in the System Account and apportioned on June 12 to tho other
Federal reserve banks except New York, St. Louis and Minneapolis. These secur
ities were repurchased by the Federal Reserve Bank of Atlanta on June 16.
On June 24 the Federal Reserve Bank of New York transferred $10,000,000
of its participation of government securities in the System Account to the Federal
Reserve Bank of Kansas City’s participation in the Account at the request of the
latter to aid their earning position.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

6
CHANGES IN PARTICIPATIONS OF FEDERAL RESERVE BAMS IN THE SYSTEM’S
PURCHASES OF BANKERS ACCEPTANCES
Owing to the small amount of bills purchased by the Federal Reserve
Bank of Boston in its local market, the Boston reserve bank was allotted its
pro rata share of System purchases of bills commencing July 8. (The Federal
Reserve Bank of Boston’s participation in the System’s purchases of bills was
previously confined to purchases in Its own market with the exception of spec
ial allotments since May of about $6,500,000 of bills to cover shortages of
purchases in its own market.) This left all of the Federal reserve banks, with
the exception of tho Federal Reserve Bank of Philadelphia, participating in the
System’s bill purchases. While the Philadelphia reserve bank’s participation
has been confined to purchases in its own market, it has not purchased any bills
recently and has no bills in its portfolio at the present time.
RATIOS OF ALLOTMENTS OF SYSTEM PURCHASES OF BANKERS ACCEPTANCES
AND NEW PURCHASES OF GOVERNMENT SECURITIES
At the meeting of the executive committee of the Open Market Policy
Conference held in Washington on June 23, 1930, it was agreed by those present
that it would not be desirable to have a general redistribution of security
holdings in the System Account, in view of the fact that most of the reserve
banks would probably show a loss in their operations for the year, and any dis
tribution would simply operate to reduce the deficit shown by one bank at the
expense of increasing the deficit shown by another bank. Those present, there
fore, agreed that the distribution of purchases of bills and governments should
continue to be made on the same basis as in recent months; that is, on the ratio
that each bank’s expenses, dividends and charge-offs bear to the total of such
items for the System. This plan has since been in operation, the ratios being
adjusted at the end of each month based on the figures submitted by the Federal
reserve banks. Tho currant allotment ratios based on the figures submitted by
all of the Federal reserve banks as of the close of business August 31 are shown
on Exhibit ”C" attached.

Attached are statements showing:
Exhibit ,fAn - Outright holdings of government securities by indi
vidual Federal reserve banks, also their participation
in System Special Investment Account, and tho classi
fication of issues held in the System Account by
maturities, all as of close of business September 17,
1930.
Exhibit ”B” - Earning asset holdings of all Federal reserve banks
September 17, 1930, as compared with previous week
and September 18, 1929; also weekly average of earning
assets from January 2, 1930 to September 17, 1930, as
compared with corresponding period 1929 and entire
year 1929.

mmmm
4?

7
Exhibit "CTT - Earnings, expenses, dividends and charge-offs and
estimated not earnings for the year 1930, based on
figures furnished by the reserve banks at the close of
business August 31, 1930,
Exhibit "Dw - Approximate amount of net profit that was realized on
various salos of United States Government securities
in the System Account during period January 1, 1930 to
September 20, 1930; also the approximate amount of net
profit represented by the difference between the book
values and the market bid prices, as of September 20, 1930
of the United States Government securities hold in the
System Special Investment Account.
Exhibit "EH - Bills purchased outright by System by wooks from January 3
to December 31, 1929, and from January 2 to September 17,
1930 inclusive.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Exhibit "A”

STATEMENT SHOWING HOLDINGS OP GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS
(Excluding Sales Contracts)
Outright Holdings of
Government securities
by Federal reserve banks
as of the close of
business September 17, 1930

Participation by Federal
reserve banks in System
Special Investment Acct*
Government Securities as
of the close of business
September 17, 1930

Tot als

$ 45,472,500

$ 46,177,100

113,689,100 *

73,851,000

187,540,100

Philadelphia

15,007,100

37,245,000

52,252,100

Cleveland

10,164,800

47,690,000

57,854,800

•nichmond

1,152,100

15,830,500

16,982,600

Atlanta

2,558,100

10,146,500

12,704,600

Chicago

20,577,400

61,201,000

81,778,400

St. Louis

8,625,000

15,274,000

23,899,000

Minneapolis

7,706,300

18,248,500

25,954,800

Kansas City

3,000

28,733,000

28,736,000

Dallas

9,987,550

19,241,000

29,228,550

San Francisco

9,642!650

29,367,000

39,009,650

$199,817,700

$402,300,000

$602,117,700

Boston

New York

Totals

704,600

GLASS IFICAT ION OF ISSUES OF GOVERNMENT SECURITIES
HELD IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT
CLOSE OF BUSINESS SEPTEMBER 17, 1930
U., S. Treasury Bills due Nov# 17, 1930
3 1/4$ C/I due .Dec. 15, 1930
M June 15, 1931
2 7/8$ "
3 1/2$ T/N called March 15, 1931, Series A
3 1/2$ "
"
March 15, 1931,
" B
2 3/8$ C/I due Sept* 15, 1931
3 1/2$ T/N ” Dec. 15, 1932
4 1/4$ 4th L/L bonds due Oct, 15, 1938

$ 17,214,000
76,895,000
78,631,000
60,114,100
128,306,000
5,130,000
35,411,900
598,000
Total

Close of business September 19, 1930

$402,300,000

E XH IB IT " B "
STATBiiiNT SHOWING EARNING ASSET HOLDINGS OF ALL FEDERAL RESERVE BAVTKS SEPTEMBER 1 7 , 1 9 3 0 COMPARED WTJH PREVIOUS WEEK AND SEPTEMBER l 8 , 1 9 2 9 ; ALSO WEEKLY
____________AVERAGE OF EARNING ASSETS JA N U A R Y 2 . 1 9 3 0 TO SEPTEMBER 1 7 . 1 9 3 0 . IN CLU SIVE. COMPARED WITH CORRESPONDING PERIOD 1 9 2 9 AND ENTIRE YEAR 1 9 2 9
(0 0 0 O m itte d )

B ills Discounted
"

- 8ept. 10
"1 7

Net Change

Boston

Now York

$10,893
9,966

#26,122
21,603

927-

B ills Purchased
"
"

- Sept. 10
"1 7

Net Change

22,161
21,821
340-

Government Securities - Sept. 10
»
«
"1 7

46.176
46.176

Met Change

51,296
59,599
8,303+

187,946
195,390
7,444+

Total Earning Assets
Net Change

4,519-

- Sept. 10
N

80,230
78,963
1,267-

270,114
281,592
11,478+

Phila.
#18,033
14,670
3,363-

104
104
-0 -

52.252
52.252
-0 -

71,389
68,026
3,363—

Cleveland

Richraond

Atlanta

Chic B«0

#13,140
11,810

#20,299
18,947

#30,703
24,716

#13,048
11,097

1,330-

20,600
21,762
1,162+

57,856
57,855
1-

91,596
91,427
169-

1,352-

10,201
11,186
985+

16,983
16,982
1-

47,483
47,115
368—

•

5,987-

11,682
13,045
1,363+

12,721
12,703
18-

55,106
50,464
4,642-

St.

Louie

#17,117
17,858
741+

1,951-

19,344
21,208

10,366
10,389
23+

1,864+

81,298
82,198
900+

113,690
114,503

23.899
23.899
-O*

51,382
52,146

813+

764+

Minn.
#4,141
4,237

Kan. City
#8,510
8,835

96+

7,723
7,893

325+

12,160
13,002
842+

170+

25,928
25,954

28.736
28.736
e*()w

26+

37,814
38,106
292+

49,406
50,573
1,167+

Uallas

San Fran.

#13,968
12,786

# 7,221
6,624

1,182-

8,869
, 9,020
151*

29.229
29.229

597-

18,614
19,832
1, 218+

39.009
39.009

m Qm

-0 -

52,066
51,035

64,844
65,465

1,031-

621+

Total a
#

183,195
163,149
20,046-

193,120

208,861
1 5 ,7 «1

602,033
610,383
8,350*

985*120

**,415
4,2*5*

Comparison of Weekly Average
J«n. 2, 1930 to Sept. 17, 1930
Save period 1929
Satire year 1929
Vet Change from sane period 1929
*
"
" entire year 1929

Com®ariion

72,083
108,948
99,695
36,865—
27,612-

322,179
352,274
371,248
30,09549,069-

84,824
118,758
120,236
33,92435,402-

94,608
129,887
138,383
35,27943,775-

42,793
61,754
63,530

50,604
80,069
80,105

18,96120,737-

29,46529,501-

47,115
68,108

50,464
80,578

20,993-

30,114-

128,326
186,643
194,135

58,31765,809-

47,136
67,476
66,041
20,34018,905-

33,805
36,582
40,016
2,7776,211-

37,353
50,806
55,420
13,45318,067-

44,885
50,192
51,655
5,3076,770-

68,969
108,335
114,486
39,36645,517-

1,027,5T5
1,351,724

1,394,950
324,149-

J6f,»T5*

of Earning Assets

September 17, 1930
"
18, 1929
Net Change

78,963
84,348
5,385-

281,592
397,620
116,028-

68,026
118,342
50,316-

91,427
119,802
28,375-

114,503
163,608
49,105-

52,146
70,914

38,106
51,503

18,768—

13,397-

*0, 573
43,627
6,946+

SUMAHY FOR SYSTPl
B ills Discounted for week
B ills Purchased for week
Government Securities for week
Total Earning Assets for week
Comparison of Weekly Average of Earning Assets Jan. 2, 1930 to Sept. 17, 1930
with sane period 1929
Comparison of Weekly Average of Earning Assets Jan. 2, 1930 to Sept. 17, 1930
with entire year 1929
Comparison of Earning Aesets September 17, 1930 with September 18, 1929

I 20,04615, 741+
8,350+
4,295+
324,149367,375378,263-

51,035
49,833

1,202+

65,465
119,395
53,930-

9W.415
1,367,678
378,263-

Reproduced from the Unclassified I Declassified Holdings of the National Archives

R^AP 1930
j^SES AND
AND DIVIDENDS
- AND CHARGE-OFFS - FOP
IXEEN5ES
E
EAPNBJGS - EX
ACTUAL AND LAST FOUR. MONTHS EST '
FIRST
b l HOLDINGS CLOSE OF BUSINESS AUGU
ESTIMATED EARNi g f B A ^ H
[0 0 0 O m itted j
------Toe

BOSTON
Actual
for B months
*
Estimated M 4
Total

M&jrn

Actual
for 8 months
«
Estimated " 4
Total

Gross
Sam Inga

E xp enses
and
D iv id en d s

Estimated
Year-end
charge-offs

♦1,678
764
2,442

$1,881
943
2,824

147

7,750

6,404

Net
E a rn in g s

EXHIBIT "C"

Ratios of
Expenses,
Dividends
and Chargeoffs to
System Total

7 l /4 *

1,346
25

511

1/2*

-£ii2£

Jtdlfe

10,246

10,080

2,236
748
2,984

2,037

1,,U.5

2,533

275

9 1 /2 *

3,641

2,457
1.240
3,697

1,134
475
1,609

1,307
636
1,943

200

5 1 /4 *

Actual
for 8 months
"
Estimated " 4
Total

1,394
660
2,054

1,130
562
1,692

611

5 1/2%

CHICAGO
A ctual
for 8 months
"
Estimated " 4
Tot ad

3,513
1.300
4,813

3,577
1.465
5,042

482

13 1/4 %

ST. LOUIS
Actual
for 8 months
■
Estimated " 4
Total

1,240
526
1,766

1,128
565
1,693

222

MINNEAPOLIS
Actual
for 8 months
«
Estimated N 4
Total

830
402
1,232

769
396
1,165

KANSAS CITY
Actual
for 8 months
Estimated ” 4
"
Total

1,106
550
1,656

1,369
698
2,067

168

Actual
for 8 months
"
Estimated " 4
Total

1,115
552
1,667

1,095
551
1,646

SAN FRANCISCO
Actual
for 8 months
"
Estimated " 4
Total

1,674
636
2,310

1.112

$26,203
10.217
$36 ,420

$25,436
12 .959
$38,395

PHILADELPHIA
Actual
for 8 months
"
Estimated " 4
Total

199
7 3/4 *

3,152

CLEVELAND

Actual
for 8 months
«
Estimated ” 4
Total
RICHMOND
Actual
for 8 months
•
Estimated " 4
Total

-1J08

ATLANTA

TOTALS
Actual
for 8 months
«
Estimated " 4

264

112
4 3/4*

5 1/2%

2,282
8 3/4*

197

3,394

$
3,004

767
100*

EXHIBIT "EV
STATEMENT SHOWING APPROXIMATE AMOUNT OF NET PROFIT THAT WAS REALIZED ON VARIOUS
SALES OF UNITED STATES GOVERNMENT SECURITIES IN THE SYSTEM ACCOUNT
DURING PERIOD JANUARY 1, 1930 TO SEPTEMBER 20, 1930
ALSO THE APPROXIMATE AMOUNT OF NET PROFIT REPRESENTED BY THE DIFFERENCE BETWEEN
THE BOOK VALUES AND THE MARKET BID PRICES, AS OF SEPTEMBER 20, 1930, OF THE
UNITED STATES GOVERNMENT SECURITIES HELD IN THE SYSTEM SPECIAL INVESTMENT ACCOUNT

Net Profit on Sales
Diring Period Jan* 1* 1930 to Sept. 20, 1930
on Various Amount of Holdings

Net Profit on Present Holdings
as Represented by Difference Between
Present Book Values and Market Bid Prices

$1,258,522.68*

1,063,830*17

*This amount is being held by the Federal Reserve Bank of New York iii Suspense
Account, to be distributed at the end of the current year.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

IXHZBtT * 1"

m a u s ro oanaaHT i r sto tm bt
OfltmwmT I 10 wcmbxrn. if9 M
j j i y tt o n
b il l s

flikt

imm™

Maw Tart

Xndliut
-1929Jan.
9

Banka

Daalara

lfo t a l

Clavaland

Mohaond

A tla n ta

ChlaaKO

M1w >.

1 ,2 5 1
539
-0 -

150
547
357
1,134

-0 127
-0 1,430

# 2,782
1 ,7 n
1,554
290

-o *
-0 -0 -0—

3,155
1,129
553
969

717
1,303
476
253

75
568
250
-0 -

112
125
201
1,201

883
577
1,088
1,349

15,500
7,585
17,260
17,745

3,311
2,124
1,227
516

418
1,510
863
1,424

515
150
469
1,305

405
200
1,302
657

592
623
25
6a

6,584
2,531
2,504
416

15,657
9,263
6,029
8,737

1,410
1,639
1,594
2,554

498
2,042
-0 -

275
228
134
25

340
403
778
1,214

95
14
20
218

13,843
7,408
4,385
6,382
3,834

8,654
191
9,634
11,898
6,390

22,497
7,599
14,019
18,280
10,224

2,387
1,689
1,399
1,623
1,946

-0 250
8
-0 502

19
26

1,59*
1,040
114
339

4,856
4,OC8
2,810
4,374

2,902
1,355
2,383
945

7,758
5,363
5,693
5,319

2,113
2,177
991
877

1,686

15
—0—
847
1 ,575
4,831

6,606
1,270
-0 8,654
-0 -

6,621
1,270
847
1C,229
4,831

-0 6 ,7C7
2,819
5,926

16
23
30

F«b.

6
13
20
27

liar.

13
20
27
A p r il

10
17
24

May
15

2?
29
5

July

•15,601
8,792

8,624
18,089
14,543
14,893

ZULk.

7,684
7,047
10,624
1,107

# 16,308
25,136
25,167
16,000

♦ 2,925
3,058
2,144
2,524

1,564

16,870
9,382
25,293
8,45?

1,694
5,346
5,099
705

18,564
14,728
30,392
9,162

1,579
6,389
1,506
4,701

13,256
2,018
9,752
5,648

2,244
5,567
7,508
12,097

929
1,665
4,281
2,496

9,073
6,732
3,525
8,321

3,050
1.442
3,230
1,742
1.442

4,605

1,148
1,726
550

016

♦

-0 -

D a lla a
#

San Fran.

Totala

504
747
509
672

#10,059
3,297
1,684
972

- 0-0 -0 -0 -

505
1,069
1,517
983

1,298
5,582
2,704
263

25,631
37,997
15,7*4

-0 -0 - 0-0 -

729
1,093
808
602

1,935
2,539
3,294
3,400

24,984
22,213
26,574
30,971

-0 -0 —0—
-0 -

1,012
1,490
642
722

353
952
241
338

XXCIBAS or IXCKASE
In Haldinga
In aludlm Sal aa Contraota
Haw Tork
Byatam
O p i r r t l m Oparatlona

48,329
44,684

36,559
24,170

• 26,63310,28326,01415,620-

7,2584,139*
27,02118,609-

Daalara
Oparationa
With Othar
D la trlcta
R «e«lv»d
5aa
#

1,557
5,574
2,573
2,852

9,808
7,422
5,604
3,060

17,95618,44825,73815,273-

24,86719,68435,422-

21,561-

2,010
327
903
3,641

2,031
5*582
6,257
3,575

14,39812,82335,520-

29,43121,54346,26328,411-

2, 5 a
3,575
2,556
1,866

4,920
5,243
5,459
17,510

20,569
15,294
15.761
16,304

18,57313,86213,772-

33,72417,386-

2,116*

148*

3,490
3,436
4,730
2,421

6,274
2,853
3,744
3,557

1,036
1,698
323
1,626
1,742

30,747
15,567
22,251
26,459
19,343

20,847+
13,1328,7595,06315,983-

29,246*
13,24011,074-

20,067-

1,904
2,311
2,080
1,884
4,747

3,653
1,775
2,904
2,211
2,403

27,035

17,464-

16,290-

278
101
400
100

524
1,287
761
650
806

539
192
728
830
1,480

-0 -0 -0 -0 -0—

714
1,132
1,682
1,3C8
1,101

-0 -0 792
1,0 5 0

200
225
-0 313

1,145
991
303
178

204
271
450
648

-0 -0 -0 -0—

518
969
654
874

847
748
1,769
769

14,379
11,884
10,766
10,367

4,566+
6,402*
22,822762-

5,1721,370*
27,0854,193-

5,083
6,212
3,000
2,547

3,203
2,082
4,900
4,945

1,305
45
124
771
588

-0 -0 -0 -c-c-

-0 -0 (•Q**
458
147

531
851
729
575
298

629
50
30
526
61

- 0-0 -0—
—0—
-0 -

618
720
1,210
1,125
500

354
-0 700
869
898

11,744
4,244
15,151
8,187

3,2 822,1371,793+
1,4266,197+

8,9177,9461,662+
1,204*
5,725*

2,080
3,836
7,227
2,646
4,785

10,463
297
2,973
6,818
1,715

3,031
8,745
6,748
12,511

1,090
1,356
1,558
3,644

-c-0 104
596

-0 380
-0 85

143
365
354
1,060

470
1,326
1,830
217

-0 -0 -0 - 0-

390
738
625
514

68
1,737
2,710
2,492

5,912
19,504
16,410
23 , 807

2,361+
32,877+
3,949+
17,515+

4,591*
3 8 ,|27+
14,252+
24,377+

891
2,9*8
2,0C3
3,624

2,083
4,853
4,123
1,323

11,184
38,210
27,064
21,707

1,856
2,023
2,202
2,304

1,190
-0 2C0
75

100
350
160
35s

1,563
2,089
1,140
2oe

324
425
631
614

-0 **o«

993
814
501
1,041

2,069
868
1,839
2,314

20,690
46,113
34,868
28,978

21,232+
32,231+
17,408+
20,267+

26,402*
39,313+
18,874+
22,831+

1,1?5
5,645
5,733
6,220

1,403
3,252
3,098
2,860

-0 -0 -0 —0—
-c-

866
686
371
757
204

2,317
2,789
2,334
933
1,013

75,936
6 2,60 0
41,-297
39,434
9 ,86 0

54,263+
4,065+
24,896+
22,846+
29,993-

58,884+
1C,333+
26,959+
19,273+
39,498-

4,07C
1,516
3,457
10,067
6,629

3,129
1,537
4,310
5,299
3,754

9,51'-30,862-

, 26,516-

3,495
3,577
*,412
6,963

1,155
1,058
2,297
2,024

2,?ifc

, -

8 121

—0—

17
24
31

60 4
598
864

14
21

720
4,857
2,261

2 ,686

3,C31
2,038
3,929
6,585

1,411
1,334
1,131
357

2,919
16,779
13,090
16,556

8,265
21,431
13,974
5,151

1,014

1,744
5

14,113
9,828
13,966
2,323
6,053

52,*>86
41,463
18,963
30,092
-0 -

67,099
51,291
32,929
32,415
6,053

2,938
1,961
1,943
952
284

479
- 0460
351
-0 -

65
166
-0 316
995

682
2,79 2
1,847
1,618
560

476
1 ,9 70
551
346
746

3
18
12
333

12,862
775
311
-0 -

—0—
200
1,785
—0—

12,862
975
2,096
-0 -

161
707
338
573

-0 -c-0—
-c-

—0—
-c50
100

1,044
1,460
1,210
364

349
38?
579
32 8

-(%•
- 0-0 -0 -

752
217
421
383

250
760
1,492
2,151

15,421
4,524
6,198
4,?82

4,69825,2309,99425,906-

2,820
9,9*4
19,750
297
33.298

4,171
21,594
37,380
9,271
41.293

141
1,285
1,220
565
2,629

-c-0 -c-c-0 -

715
97
-0 177

645
737
770
1,133
3,148

550
3,657
1,415
2,128
3,352

-0 -0 -0 —0—
-0 -

400
362
654
387
423

686
3,210
1,417
1,478
2,093

7,.3o8
32,360
42,940
16,326
54.762

66257,179 +
15,53838,602+
13,383+

79765,322+
12,42945,532+
37,266+

4,885
3,217
4,696
3,296
2.603

2,579
3,037
3,254
3,031

_Liii

1,351
11,650
17,b30
8,974
7.995

0:,474

#4o-S,4or

♦416,CIO

3822, 412

|8o,6l7

#12,653

♦ 43,056

*41,9C9

-0 -

#39,430

#88,850

#1,246,754

| 62,778-

* 92,149-

1135,645

♦204,415

2 5 ,” 66
20,539
9,398
10,740

7,338
30,900
14,187
4,834

33,104
51,439
23,585
15,574

1,385
1,838
1,608
1 , 16c

-0 -0 -c-0 -

599
650
473
-0 -

1,7 9 0
303
965
942

615
975
1,107
137

-0 -0 -0 -0 -

661
483
592
356

2,246
4,961
3,761
1,913

42, 761
64,008
33,718
20,645

56,5345,149+
28,774-

2,359
3,359
1,627
563

30,555-

73,0424,180+
24,95839,917-

13,068
3,179
5,075
3,819

7,113
876
3,440
3,550

m .

5
11
19
26

l ’>2
-0 613
2,17;

37,976
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
50

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+
1 9 ,T074,963*
18,249*

7,154
2,615
4,887
5,314

2,143
1,086
1,837
10,582

Larch

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
11,301
18 ,
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 -C -0 -

316
443
281
115

5,427
984
152
135

42,469
l6,8C5
20,1?3
9,130

24,57810,97162,03173,104*

28,10414,664—
71,52171,465*

11,3*6
8,640
7,753
8,007

5,939
3,518
8,026
4,033

A p ril

“
9
16
23
30

3,542
6,455
3,426
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
2 6 ,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
34,6 5 0
22,073

25,431*
34,18439,897*
45, 15840,274-

44,815*
34, 29535,412*
45,54547,305-

6,719
9,815
7,240
3,844
5,044

2,768
2,552
5,546
4,454
2,560

Kay

7
14
21
28

824
332
2,535
688

2,3*1
23,380
30,177
5,307

3,962
9,917
1,742
3,064

6,303
33,29 7
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

30,1731,30915,354*
18,991-

34,3614,16815,849*
11,324-

2,295
8,140
8,187
4,430

2,988
2,974
1,241
2,548

Jur.a

4
11
18
25

231
2,27 5
62C
1,244

22,244
\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

427
-0 -0 852

32
77
169
30

1,903
552
1,280
2,812

27,583
15,550
15,268
19,698

22,991*
42,45914,74431,975-

13,680*
41,06815,39630,457-

5,081
4,771
9,263
4,000

1,608
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 -

110
80
-0 237
75

30
60
25
-0 33

1,116
■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*
6,52021,11814,43915,709-

55,172*
8,54019,722*
18,14419,761-

9,008
8,030
3,993
6,008
4,766

2,444
4,612
1,254
4,403
2,504

Aug,

6
13
20
27

363
-0 443
482

11,990
41,288
31,320
17,052

280
907
1,105
129

12,270
42,195
32,925
17,181

-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*

2,309*
20,757*
4,594*
4,352*

7,300
4,619
3,426
8,496

739
3,169
2,720
2,253

Sapt.

3
10
17

178
580

12,652
48,067
26.336

3,924
6,044
113

16,576
54,111

-0 -0 - 0-

-0 -0 -0 -

-0 -O -

236
550
193

232
100

246
-0 -

-0•*
-0 -

.781
100

18,249
55,441

7,121* .
22,725*
15.741*

3,096
5,924
5.071

1,988
4,107
2.407

#705,593

#269,336

#8,406

#31,994

#229,423

#125,089

isapt.

11
1?
25

Oct .

1,125

9S2

f.'ov.

13
20
27
Dec.

4
11
18
24
31

TOTALS

-1930J*r..
?
15
22

TOTALS

-O1,418
84
1,187

Il f

_____m
#46,397

#974,929

|2>,356

#17,353

-0 -

#6,234

160

-0 -0 -

-0-,

___ 30

# 1,195

#7.618

676

28.116

6,020*
23,801*
15,035*

#59,668

#1,167,447

#167,831-

15 681

#193,352-

Reproduced from the Unclassified I Declassified Holdings of the National Archives

EXHIBIT "E"

(a)

CLASSIFICATION BY MATURITIES OF BILLS PURCHASED
BY FEDERAL RESERVE BANKS IN THEIR RESPECTIVE DISTRICTS
DURING THE PERIOD FROM JANUARY 3 TO DECEMBER 31, 1929
AND FROM JANUARY 2 TO SEPTEMBER 17, 1930
____________ (EXCLUDING SALES CONTRACTS)_____________
(000 OMITTED)

1-30 days
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
Dallas
San Francisco
Totals

Totals

Total
100,474
822,412
80,617
17,353
12,653
43,056
41,909
39,430
88,850

# 24,461
362,675
28,019
6,065
2,858
29,939
21,690
13,254
17,275

# 27,309
178,190
19,535
3,848
4,222
5,387
12,838
14,709
34,343

$ 45,645
261,554
33,063
7,440
5,573
7,356
7,381
7,035
34,454

# 3,059
19,993
0
0
0
374
0
4,432
2,778

$506,236

#300,381

#409,501

#30,636

#1,246,754

1-30 days
Boston
New York
Philadelphia
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Dallas
San Francisco

January 3 to December 31, 1929
61-90 days
31-60 days
Over 90 days

January 2 to September .17, 1930. n
31-60 days
61-90 days
Over 90 days

Total
51,210
958,375
23,356
6,234
18,512
31,994
325
8,195
7,688
59,668

# 21,434
535,053
5,253
1,691
15,023
15,084
325
1,015
4,074
14,089

# 12,164
313,423
8,036
2,428
1,561
15,159
0
2,819
2,326
32,432

# 16,280
94,086
10,067
2,091
1,928
1,751
0
4,361
806
12,740

$ 1,332
15,813
0
24
0
0
0
0
482
407

#613,041

#390,348

#144,110

#18,058

#1,165,557

Reproduced from the Unclassified / Declassified Holdings of the National Archives

h S

J , "*

September 23, 1930*

PRELIMINARY MEMORANDUM FOR THE
OPEN MARKET POLICY CONFERENCE

For the past year this country has been in a business recession.
At first it was hoped that the recession would be relatively brief reflecting
the temporary disturbance of a stock market inflation and decline*

But in

recent months the recession has extended until, even if the bottom has now
been reached, it will rank as one of the country’s maior business recessions,
both in extent and

on -

duration of the recession has already been

as long as that of any recession since* the 1880’s.

The causes of the recession

are deep-seated and broad in their scope and involve, in part at least, a
serious shortage of working capital and curtailment of purchasing power in a
number of countries, and some overproduction in basic world industries accompany
ing under consumption.

The recession has been accentuated by the failure of

a number of attempts at arbitrary price control.

As usual in recessions, the

effects of the basic difficulties have been heightened by a psychology of de
pression and pessimism.

The end of the recession does not yot appear by any

concrete evidence to be definitely in sight though there have been of late some
indications of a check in the downward movement.
Chart 1 shows tho course of the Federal Reserve Board index of basic
production, with a trend line drawn to indicate what may be roughly considered
the usual line of growth from year to year.
A major disturbing factor in this business recession has been a
decline in commodity prices much more severe than has usually accompanied
recessions in the past.

Not a little of the severity of•the depression all

over the world is to be ascribed to this factor.
price

Chart 2 llli^str-ates this

m o Y o m e n t.

\ r BOAIU) MEETING.

SEP

1930

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Z0Z3

3 eft 10, -v,0,

PER CENT

Diagram 1

- Federal Reserve Board's Index of Industrial Production
(Adjusted for seasonal fluctuations)

Reproduced from the Unclassified / Declassified Holdings of the National Archives

fede« u

fle s o 2 .V 9

Yori
partment

PER CENT
180

1914 1 5 '1 6 ’ 17 ’ 18 '19 > 2 0 '21 ' 2 2 * 2 3 ' 2 4 > 2 5 ’2 6 ’2 7 ' 2 8 ’2 9 ’3 0
Diagram 2 - Bureau of Labor Statistics Monthly Index of Wholesale

Commodity Prices (1926=100 per cent)

W * ?

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Fedoral Reserve Open Market Policy
As soon as the turn in business had been definitely signalized
by the break in the stock market last November the Reserve System promptly
reversed its policy from one of pressure to one of relaxation.

Tho srtaps

taken in open market operations are shown in chart 3 by changes in System
holdings of Government securities*

Increases in these holdings were

accompanied by a reduction in discounts of member banks at the Reserve
banks, also shown in the chart.

Thus member banks were relieved from the

pressure of large Reserve bank debt and put in a position to lend more
freely to their customers.

At the same time the bond market was relieved

from the prossure of sales by banks which had been resorting to sales of
bonds to meet their obligations.

By the spring and summer of 1930 banks

found themselves with surplus funds'with which to buy amounts of bonds
sufficient to compensate for sales in 1928 and 1929*

Both money rates

and the bond market felt tho effect

oV these changes.

rates reached tho lowest levels since 1915.
highest points since 1928.

Commercial paper

Bond prices rose to the

Reproduced from the Unclassified I Declassified Holdings of the National Archives

'o£6i ‘

^£02,4

RATE

1929

1930

Diagram 3 * Government Security Purchases of Reserve Banks, Discounts
for Member Banks, and Open Market Commercial Paper Rates

Reproduced from the Unclassified I Declassified Holdings of the National Archives

New Security Issues
New issues of bonds for the first eight months of 1930 compare
favorably with those for previous years as shown in the following figures
for now security issues.
(In millions of dollars)
Jan.-Aug.
of
1926
1927
1928
1929
1930

Bonds
Domestic
2,850
3,223
2,450
2,354
3*414

Foreign

Stocks

Total

887
941
1,476
4,367
1,370

4,389
5,065
4,847
7,180
5,631

652
901
921
459
847

It may be noted in interpreting these figures that a considerable part of the
issuos in 1929 were investment trust and similar issues which did not contribute new capital to business.
The typos of issues which account for the increase of 1,448
million dollars in now bond issues over the first eight months of 1929 are
shown in the following table:
Change from 1929
in millions of dollars
Public utility - - - - - - -- - - - -- Railroad Other corporate - - - - - - - - - ---- Total corporate - - - - - - - - - - Municipal - - - - - - - - - - - - - - - F o r e i g n ----------------------------- +
Grand Total-- ------- - —

+ 825
+ 345
- 255
+
+

93.5
144
388

- - - -+1,448

The increase in new bond issues has been reflected in a large in
crease in construction awards for public utility, railroad, and government
work which has partly offset the severe decline in residential construction*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Gold Movement
A further effect of the change in money conditions in the United
States was a reversal of the gold movement from net imports to net exports.
As foreign balances were withdrawn in November and December 1929 considerable
exports took place.

There ensued, however, a series of unusual imports from

Japan and South America so that there was a considerable net import movement
until July 1930t when exports were again resumed.
Bank Credit
The immediate effect of tho stock market crash »vas to throw upon
the banks in principal centers the burden of supplying loans on securities
formerly supplied by ’’other” lenders.
a nunber of months.

This movement in fact continued for

The reporting member banks in principal centers on

this account showed an increase not representing any new extension of
credit to business and not shared by banks outside the principal centers.
Other loans, largely commercial, have declined considerably and bank invest
ments have increased in 1930.

The net result has been that banks in princi

pal centers, which were forced to increase their security loans show an
increase as compared with last year in their total loans and investments.
Banks outside principal centers show no increase but rather a decrease*
Generally speaking the banks have pursued an extremely cautious lending
and investment policy seeking to keep themselves in the most liquid posi
tion.

This tendency is illustrated by the position of the New York City

banks with regard to surplus reserves.

Ordinarily these banks never allow

a surplus of reserves to continue from week to week#

But during this past

summer the New York banks have had surplus reserves in a number of weeks as
indicated by Chart 4.
maintained.

The surplus, however, has not been consistently

Reproduced from the Unclassified / Declassified Holdings of the National Archives

BILUONS o f d o l l a r . *

0£6l ‘ f? jiK

3 6 .0 T

1930
Diagram 4 - Loans and Investments of All Member Banks and of Weekly Reporting Banks,
Drao&ments of Weekly Reporting Banka, and Surplus or Deficiency of Reserves of New Xork
fj^tgr Banks Excluding Reserve Funds obtained thru Discounting at the Reserve Bank

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Mechanics of System Security operations
Only a part of the security purchases shown in chart 3 represented
System operations as shown by the following list of open market decisions.
Sept. 24, 1929

Open market committee recommended purchases of
$25,000,000 a week if necessary to prevent increase
in discounts. Board approved October 1. No pur
chases made at that time.

Oct. 25 - Nov. 14

$186,000,000 of securities purchased by Federal Reserve
Bank of New York of which $75,000,000 were trans
ferred to System account.
$25,000,000 purchased directly for System account.

Nov. 12

Open market committee recommended purchases up to
$200,000,000 if necessary to reduce discounts.
Board approved.

Nov. 27 - Jan, 1, 1930

- $155,000,000 purchased under November 12 authority.

Jan. 18 and 19

Open Market Committee decided "no open market operations
in government securities necessary at that time
either to halt or expedite the trend of credit.”

March 5 - 1 4

$50,000,000 purchased by New York Reserve Bank with
approval of Reserve Board, transferred to open market
account and apportioned to banks desiring partici
pations.

torch 24

- All governors mooting informally as open market confer
ence decided there was no need for further purchases
at that time.

May 21

June 3

- Executive Committee and conference agreed by telephone
to purchases of $25,000,000 a week for two weeks.
Board approved.

June 4 to 11

June 23

- Executive committee decided against further purchases
at that time,

August 7

August 28 to Sept. 3

- Executive committee and conference agreed by telephone
to purchases of $50,000,000 if necessary to maintain
easy money conditions and avoid any firming due to
seasonal or other causes. Board approved. Authority
not exercised.

Open Market Conference decided to make no recommenda
tion but indicated it would be prepared to act on
recommendation of executive committee, if occasion
arose,

$50,000,000 purchased for System account,

Executive committee and conference agreed by telephone
to purchase of $25,000,000 to offset partially gold
exports.
Board approved, $25,000,000 purchased on August 7*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Seasonal Prospects
Aside from gold movements and other causes which cannot now be foreseen
the principal influence upon Federal Reserve credit in the next few months will
be the seasonal requirements for additional currency and bank credit*

Chprt 5

gives an estimate of the normal increase in requirements for Federal Reserve
credit based on the experftence of the past nine years, together with the actual
increase this year.

The actual has lagged behind the customary requirement be

cause of a smaller currency demand accompanying reduced payrolls.
The following table shows average monthly figures indicating the manner
in which this Reserve Bank credit has been supplied in past years.
(Monthly averages of daily figures;
year; in millions of dollars)

increases over August of each

Increase
Change in
Amount of
in other
Actual InF,R.Credit
F.R.Credit
F*R.Credit
crease in F.R. Change in if there had
Supplied
Chiefly
Credit over
gold
been no
Through Bills
Discounts
August average
Stock
Change in Gold
Purchased
and Securities
Average
1922-1929
September
October
November
December

+ 80
+ 133
+ 191
+ 313

+ io
+ 18
♦ 18
+ 8

+ 90
+ 151
♦ 209
♦ 321

+ 44
+ 114
+ 163
4- 199

+ 46
-*• 37
46
122-

On the average, about half of tha September increase in requirements
has been met through bill purchases and half through other Reserve Bank credit,
chiefly discounts for member banka.

This moderate increase in member bank dis

counting in September has ordinarily been accompanied by slightly firmer money
conditions, which continued into the first half of October.

During the months

of October and November as a whole, however, the average increase in bill hold
ings has been approximately sufficient to meet the increase in total Roserve Bank
credit required in those months.

In December the demand for Reserve Bank Credit,

caused chiefly by the holiday currency requirements, has tended to exceed
materially the increase in bill holdings, and has therefore resulted in increased/

20U I
i ; i** , . j .

MILLIONS OF DOLLARS
1500-

A
1350

USUAL
SEASONAL FLUCTUATION IN
FEDERAL RESERVE CREDIT REQUIRED

. /

NOV.

JAN.

DEC.

1931

1930
Di&gI*9U& 5

—E s t i m a t e d

A m oun t

F ed eral

R eserva
in

C r a d it' R e q u ire d
A u gust

and E a r ly

fo r

Autum n S a a s o n ,

S e p ta m b e r

and A c t u a l

A m ou n t

U ea

Reproduced from the Unclassified I Declassified Holdings of the National Archives

member bank indebtedness.

This December increase in indebtedness, however, is

regarded as a normal development and does not ordinarily have much effect on
money rates, except, perhaps, for somewhat higher call loan rates.
It was to avoid the restraining influence of even a moderate increase
in bank indebtedness and accompanying firmness in money conditions, whether due
to seasonal changes, gold exports, or other causes, that preparations were made
to supplement bill purchases with the purchase of Government’s in the early part
of September, if such action appeared necessary to maintain the status quo.
Because

the smaller demmd for Federal credit this year no purchases of

Government securities have as yet been required to maintain the credit situation
in about its present position.

Seasonal needs have thus far been provided for

by increase in the bill holdings of the Reserve Banks.

Whether bills will con

tinue to come to the Reserve Banks in sufficient volume to meet additional needs
for Federal Reserve credit depends both on the total amount of bills drawn and
the conditions governing the proportion offered to the Reserve Banks.
At present the amount of bills outstanding is considerably larger than
it was a year ago, but, as chart 6 shows, the increase over last year has been
lessening due partly to lower commodity prices and smaller foreign trade.

Tho

volume of export and import bills has been showing an unseasonal decline.
Two conditions favor the Reserve System’s getting a fair proportion of
seasonal drawings of bills.

First, the yield is now so low that there has been

some tendency for foreign banks to shift to other means of employing their funds
in this market, and second, large banks are now holding a considerable volume of
bills and when there is any tendency towards firmer money conditions same of
these bills come int® the market or are offered to the Reserve Banks.

Even so,

however, it is not now possible to predict whether sufficient bills will come to
the Reserve Banks to meet seasonal or other needs and maintain present money c^ntjitions.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

2007

Becer.^: ?^orvo r-ar.i
01

.‘r

Report,

J.J30 .

MILLIONS OF DOLLARS

Reproduced from the Unclassified / Declassified Holdings of the National Archives

P o e m No. 181.

Office Correspondence
From

FEDERAL RESERVE

Da*, juiy-is., mo

Mr ♦ Efoell________________________ ______________________ ___________ __________
2— 8496

333.-C-S
At the meeting of the feoard this morniiig, It here was ordered eiroulated the attaahad-JLetter \from the Secre-Barylpf the Open Market Policy
Conference, submitting copy of the minutes Iof tke meeting of the Execu
tive Committee of the Open Market Policy Conference/ feld on June 23,
1950*
Governor Yonng
Mr. Platts/ j
Mr. H a m l i n ( ^ ^
Mr. James r
Mr. Cunningham
Dr. Miller ^
Mr. Pole
Please circulate promptly and return to this office.

op o

JfVw

rorh'the UhclaSsified / Declassified Holdings of the National Archives

J r fy

1£» 1990

Q H f ttr<
I

r w t p t of tod h*r# brou.-ht

to the attention

th* « a b « n o: th« F*4#r*l E*-

• « m 3«ar* ytur Uttar of July I4th» onoloelnc

(» |a 3 / j o

the m fc in g of tbs

|*tJUA 1 3 3 , -c - ^Co«*itt#«

th« Qpea MtogMt Policy C<mfer«w&*,

held on Jub* 2§# 1S50*

V ary t r u ly y a u ra .

4# H# IMUl^

fcrtart
Baeort'ei Hn^fe^

W m %m/tu E* r*

Reproduced from the Unclassified I Declassified Holdings of the National Archives

http://fraser.stlouisfed.org/
Federal
Reserve Bank of St. Louis
i

DECLASSIFIED
Authority E •0 •V23S k

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

Dear Gove»or Xoung,

July 14, 1950.

3 3 3 - C -5

The enclosed minutes] of the meeting of the iixeeutive
Committee of the Open Market Poliqy Conference, held on June 25,
have been revised in accordance with suggestions received.
Will you please substitute them for the preliminaiy
draft of the minutes recently mailed you.
Very truly yours,

Randolph Burgess
*
Secretaiy
Open Market Policy Conference

Honorable Roy A.'*. Young,
Governor, Federal Reserve Board,
Washington, D* C.
WRB.H
encl.

*U^L>

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Dear Mr* !*<idocki
1 aolmowlodg* rsoalpfc of your letter of
July 2nd, and not® thfct you have no ebft&gMt to
suggest" In our raport of tb# fttfttonaRt which you
sm&© at tha apetlng of ikm £x*outive 0o®raitte# of
tit® Open mutet Policy Conference «lth the Board

-Juno 2Sr&*

Y#ry truly your*#

&» S. HoCleU«ad#
A*«l«t&at Secretary

Ir.

1.* ps4d»ek, ©epufcy Governor*
F@dj©ral te»«nro 8aak#
Boston, Ma«** :

Reproduced from the Unclassified / Declassified Holdings of the National Archives

M ly % 1990

D e*r tfereraor Ftoaoheri

t acknowledge re e e ip t o f your le t t e r o f
Jtalv i e t a and note th a t you have no changes t o en gl ^ § t l a o ar re p o rt o f th e statem ent whloh you n*de
a t the a e e tin g o f the Executive Cownltteo o f th e
Open Marfast F o lie y Conference w ith th e Board on
June 23rd*
V ery t r u ly youre*

E* M* M cC lellan d,
A s sis ta n t S ecretary

H r* S» 1# Fenoher, G o im o r t
F ed eral R eserve Beale*
C levelan d* Ottto*

Reproduced from the Unclassified I Declassified Holdings of the National Archives

FEDERAL RESERVE
OF B O S T O N

BANK

F R E DE R I C

W . P. G. H A R D I N G , G O V E R N O R
W I L L I A M W. P A D D O C K , D E P U T Y G O V E R N O R
W I L L I A M W l L L E T T , CA S H I E R
K R 1 C K E L K. C A R R I C K , S E C R E T A R Y

H. C U R T I S S

C H A IR M A N OF T H E BO AR D
A N D FE D E R A L RES ERV E A G E N T

ALLEN

HOLLI S
DEPUTY C HAIRM AN OF T H E BOARD

A S S IS TA N T CASHIERS

CHARLES

ELLIS G .HU LT
E R N E S T M. L E A V I T T
L. W A L L A C E S W E E T S E R

F. G E T T E M Y

A S S I S T A N T F ED ER AL R E S ER VE A G E N T

July 2, 1930

Mr* E. M* McClelland, Assistant Secretary
Federal Reserve Board
Washington, D# C*
Dear Mr* McClelland:
I have your letter of June 27, 1930 enclosing your statement
of the disoussion i/rtiich ^ook place ~at the meeting of the Executive
CoTumittee of the Open Market Policy Conference with the Federal
Reserve Board on June 23, 1930*
I have no suggestions or changes
to make on your report of my statement at that time.
Thanking you for the opportunity to look the report over,
I am
Yours very truly

Deputy Governor
S.

■V

Reproduced from the U nclassified/ Declassified Holdings of the National Archives

J
ye*

taXj a, 1990.

D tir Qowaraor Harrlaoiu
Thank y m

f o r your l a t t e r o f J u ly |>> au g -

g a a t in s * m o t o r o f Oban#** in t h « w r it t e n r e p o r t o f
t& t a ta ta n a n t tm4» b f you a t til# a a a t i a g o f t & i I * *
a a u tiT # C anal t t a a o f the O fe a U ark et P o lio y Conference
w ith th a F a d a ra l R aaerve B oard on June 23, which ohangea
h a re baan B a d e .
V ary t r u l y y ou ra,

S. U# Mo G l e l land,
JLaalatant 3 a c r «t a r y ,

Mr. Cfeo# L* Harrlaon, Ooremor,
yadaml Reaerre Bank,
H«tt Toffc City, H. T.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Fe d e r a l R e s e r v e
o f

Ba n k

N e w Yo r k

July 1, 1930.

Dear Mr. McClelland:
I am much obliged to you for your note of
June 27 with which you were good enough to enclose a
statement of the discussion which took place at the
meeting of the Executive Committee of the Open Market
Policy Conference with the Federal Reserve Board on
June 23.
I have taken advantage of your offer to let
me make any changes in my part of the statement and
hope that the suggestions incorporated in the enclosed
draft in pencil will be acceptable to you.

Some of

them I consider to be quite important.
Very t.rulv

George L. Harrison,
Governor.
Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D. C.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

e d e r a l

O F

e s e r v e

a n k

C l J E V K T-cVTStD

July 1, 1930

Dear Mr. McClelland:
I have gone over the statement of

meeting of the Executive Committee of
the Open Market Policy Conference with
the Federal Reserve Board on June 23,
enclosed with your letter of the 27th,
and have no changes to suggest in the
statement which I made at that time.

Governor

Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D. C.

F.B

Reproduced from the Unclassified I Declassified Holdings of the National Archives

F o r m N o . 131
XV

Urrice Lorrespondei-^e
To______

Mr . McClelland

B
O
A
R
D

__________

FEDERAL RESERVE

Date_,uiyi, i930

Subject:.

Fro m _____ Mr. P a r r y _________________

^ ^ ^
___

50
r
I return herewith the Board1s file copy of the preliminary raemorand
of the Executive Committee of the Open Market Policy Conference at its
meeting in Washington on June

23.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Boar Qofornor lforria:
Thmk you foap your

of* Jubs B8 gufr*

goating ft ohanat la th e w ritte n report of tho •tate*
?^ -1 T - 3 0
■ e a t Made by you a t the a o o tla g of the Kxecutive
CoHMlttoo o f tho Opoa Market P o lic y Conference w ith

IM u ra l Reaenre Board on ftmm 29v vhloh change
kae boo* Made*
Tory troly youre.

Mr* OM. I . Xozxts, I H W I B ,

1* E» McClelland,
Aealatent Secretary*

Reproduced from the Unclassified I Declassified Holdings of the National Archives

F e d e r a l R e s e r v e Ba n k o f P h i l a d e l p h i a
925

CHESTNUT

STREET

■ 'V '
RICHA RD L . A U S T I N

G E O R G E W. N O R R I S , GO V E R N O R
W I L L I A M H. H U T T , D E P U T Y G O V E R N O R
C. A. M 9 I L H E N N Y , c a s h i e r

C H A IR M A N O F T H E B O A R D A N D
FED ERAL RESERVE AGENT

A L B A B. J O H N S O N

ASSISTANT CASHIERS

W .J .D A V IS
R. M. M I L L E R , U R -

D E P U T Y C H A IR M A N O F T H E B O A R D

J A M E S M. T O Y
S . R . E ARL

ARTHUR E .POST
A S S IS T A N T

FEDERAL R ESERVE AGENT

E R N E S T C. H I L L
A S S IS T A N T

FEDERAL RESERVE AGENT

June 28th, 1950.

My dear Hr* McClelland

of
of
ay
of

There are two or three points where the report
my comments at the meeting of the Executive Committee
the Open Market Policy Conference do not seem to make
meaning very clear. For the two sentences at the foot
page 5, I would suggest substituting the following:

j pThe feeling of the Committee is, he said, that
the principal characteristic of the present period of
depression is falling commodity prices, an& that an
analysis will reveal the fact that in the case of most
of the commodities in which price reductions have been
most marked there is a specific reason having nothing to
do with credit conditions or interest rates. He called
attention to the fact that there is no evidence of any
great accumulation of goods in this country, but that on
the contrary inventories on the whole are lower than they
were last year. The trouble, he said, is not so much
over-production of goods, as over-development of product
ive capacity” . j I am,
Very truJ^yours,

Governor

Mr. E. M. McClelland, Asst. Secretary,
Federal Beserve Board,
Washington, D. C.

/A M

6/V

*t>

3 -

Reproduced from the Unclassified I Declassified Holdings of the National Archives

fw m 28, 1950

X m r Mr* Bargeeet

I aoknovledge rooeipt o f and thank you
fo r y o y letter o fth o 27th ln«tanfc«. enoloelng
eojy o f i W tentative oiinut^e o f the meeting o f
the ExeeutlTe (Tnwiltfe of the Open Martlet PoXiey
C<ml*er<3*ioo# held on ^uae 23rd* I t 1* notod that
eepy o f the H j* 2 mimifcoe w ill b« fonwrded to
the Board after rerieion or ©orreettan by the
members of the Conferene#«
Tery truly youre.

£• Um ll&Glelland*
Aasistank Secretary
Mr* W« Bandolph Btirgeoe, Secretary,
O m Uarket M i « y Confereaeo,
i/o federal. Reserve Ba&kp
Wm Tork, I . Y*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E . 0 . \23S£?

FOR SPECIAL CIRCULATION

/PLEASE READ
,/Gov. Young /
Mr.
\ Platt
P l a t t \r
"S

OMF VT, INITIAL AND RETURN Tv
Mr. H a m l i n Mr. Jatnsa
DAMKigham

o f

i §Pf§i

M f , Pole

N e w Yo r k

T a Ty

J UN ? ? 1?

v»>
coimpjmiAL

June 27, 1950.

Dear Governor loungi

Enclosed herewith are the tentative minutes |of last
Monday’s meeting of the executive committee of the Open Market
Policy Conference.^ These minutes are being circulated among
the members of the Conference for revision or correction, and
final copy will be sent you in due course.
Very truly yours,

Randolph Burgess
Secretary, Open'Market
Policy Conference.

Honorable Roy A. Young,
Governor, Federal Reserve Board,
Washington, D. C*

WRB.H
encl.

«, *

Reproduced from the Unclassified I Declassified Holdings of the National Archives

♦Two 27, 1930

Door Ur. Poddookt
ftm u
h»r«»lth a ite tp jR tljtf
tho ^unnia<*i»
took
at tho Shn^EEm of Hi#
icM QilT* Goualttoo t f tho % «& tfailcot PoltcQr Oonformco
vlth tho T o & o m I Htttyy#
o& Ijbm 33* It voudd bo
I p p r M lA t f ld |jf fflU

f ld T ilt SMI o f OUy ^V«T^jr^ g th a t

you a i ^ t 4o *lr» to raauco .in your ililiM ttl bofore It I*
Jt ofeJHfcito

A jmJI
^
iMi
j|" %iA" ■■
lu O O Ip O Ifct0(1
UX ln fl
U O M fl' ^I CtXmiSOO
O l W 0ia_ ifri
Q mdMwllU
i^ *

Vm# tsu&jr y m m §

B* ii* iiOQItl 1 Mfllf
Jtaoistasit Soorot&xy

Ur. W. f » Paddock,
WWmmVmm JWiil fi JtMHUk

10 *1 © % U»m«

Reproduced from the Unclassified / Declassified Holdings of the National Archives

J «ia

Daar

1930

Ooraraoi* Hftrrltont

% **% l» aao lo «ad 'hmm&Wst * t t a t « a « t t t & f
th « d U m i M i o n iihldh took plao© *1 tha n a © tln « if tha
J&caotatlva G aonittaa o f ih t open U ajfctt P o lic y OondTar*Msa
w ith lit# ftdarm l H aaarra Board on
33. I t would fca
approoiatad if p u weald «**& *# » • o f
chan^aa th at
jre i m i# t d a a lre to maicn la y o «r « ta t •went fc a fo ra ' i t 1*
In corpora tad la tiki B o ty d *i aitt&taa o f tha a o e tla g .
Yosqr tr u ly youra

1* $$* ifeO la lia n d ,
A a *i*t *n t Seorat&iy.

Mr* 0ao« It* Ha i t 1io S| C h ain M i
Om d UaJicat P o lio r Conferanoo.

ipfcvi»i oQ997?l M K |

f o lk O lt* . » • T .

Reproduced from the Unclassified I Declassified Holdings of the National Archives

June m, 1930.

M W to w ta o t Hawttt
6 - 2 - t~"% i>
19 m l U n P
PWAfa. ft
th a dl«mwwion i4iio h took place at th a a c tin g of tha
2jtac«tiv« O o ra ltta a o f
Opan Viartm% Poller C<m fer«*oa

w ith th e ft& axm l R o terv* Beard on Jima 3 3 .

I t tfould ba

^sw o£*t«& i f you would *lvlfla ma of any ohangat that
you fillet &mim ta in#£# in your «tat«n«nt %a#©ta it it
Inoofporatad In the lo^r&’a eilnutaa of tha masting.

Very tr u ly y a n tfi.

$* M* MssQiallai^,
Matatsai Saeratnry*

Mr* Oao. W. K a r r i* ,
Q orarnor,
Jrl&wWMk K###Jrv# WpHF|
Ihiladelphia, Pa.

/tee. cue-* cA * / j - d

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Juao

Boar

Sfencher^

8Tb 1930

1# ts&olosod horoirlth a 0totonoat o f
tho d io m io o io ao h iah took $i*oo a t tho m ooting of tho
Btooutlvo C«iialU«o o f tho Opm Itartcot Policy Ccmferonoo
o lt h tho Todoral H o«orro Bo**i on Jtmo 33* I t vould ho
ap proclated I f you would ad v lso no of
ohangeii that
you *al£it d o o iro to m m l a your ttaton on t h o fo ro i t lo
iaoorporatod in tho B oost1* ainutoo O f the n oetln g*
fo iy t u ft y yours

% M* U o C la llatti,
A sttliton t 3ocrota*y

Mr* a* R# Jfcaohor,
{Jo*d6*©ft
fwivini iioaorro .oa&jc,
*»% ..... *
*.
Gloyolanfl,
Ohio*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

In response to Vice-Governor Platt*s inquiry as to whether or not the

Executive Committee of the Open Market Policy Conference had any recommendation
to make to the Board, Governor Harrison stated that when the advisability of
an open market operation was considered some two weeks or so ago, it was recom
mended that the System buy not to exceed $25,000,000 a week for two weeks with
the understanding that the situation would then be reviewed, and this meeting
had been called with a view of carrying out that contemplated review*

He stated

that the Committee had gone over credit conditions as they now see them and had
considered a preliminary memorandum submitted by the Chairman, and a majority of
the Committee - four out of five - had voted that the CaHmitteeskduld not re
commend any open market operation at this time*
He also stated that as he understands the procedure approved by the Board,
there is no recommendation to be made by the Committee to the Board, but that

v
the Committee meets for the purpose of making recommendations to the whole Con
ference, which recommendations would then be submitted to the Board*

The Cam-

mitte is making a report to the Board that the Committee as a whole voted to
make no recommendation as to an open market operation now*
Mr. Platt distributed copies of Governor Calkins letter of June 16 setting
forth reasons why the Federal Reserve Bank of San Francisco did not participate
in the $50,000,000 of Governments recently purchased and then inquired as to whe
ther or not the individual members of the Committee had any comments to make.
Governor Harrison then stated that he was the one in the minority, that
he represented the unanimous views of the New York directors as well as his own
and the officers of the New York Bank that it would be preferable to continue
purchases of Governments up to say $25,000,000 a week for another couple of weeks,
largely on the theory that business and commodity prices have not improved^ that
so far as we can gauge the future by any statistical evidence it is likely they

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-2 -

will get worse before they get better; that we are in what is a major and criti
cal depression and while there is nothing the Reserve System can do directly by
open market operations or rate action to fix commodity prices or in itself to
revive business, nevertheless, there are some thing that we could do indirectly
which might be helpful,

one of them being an open market operation*

He stated

that it is the theory of the directors and officers of the N. Y. Bankjthat a good
part of the difficultly at the present time is lack of purchasing power in var
ious parts of the world which are not in a position to purchase or take up sur
plus commodities on the markets of the world.

JoL

Because of this deficiency in buy-

ing power, priced have ulopped off>

J3?his is reflected through decreased export

trade in the principal countries which

have products for export^ such as Eng-

i\it
land and America.

There is only one way through a monetary operation that it

would be possible to revive buying power and that is through export of long-time
capital to those parts of the world where purchasing power has been curtailed.

oThat means

the bond market^ Purchase of Goveraments^would do no harm, there is

no danger at the moment of speculative revival, and past experience has always
shown that whenever the System is buying Government securities the bond market
becomes more active and stronger and, therefore, kot being aware of any danger
or disadvantages in the purchase of Governments and having a historical record

✓

(for the fact)that they have always been helpful to the bond market,
should jfoitT lihffit c

feelsW6

*»i!! more life to the bond market.

It is difficult to see how you are going to getf rid of commodities.
Prices have been cut to a point/ where goods cannot bef produced at a profit at
all.

Continued production at a loss is uneconomical^ and unless prices can be

increased production will be curtailed and unemployment increased and you ac-

I
centuate a situation which is inevitable.

As Governor Norris pointed out, over!

production is a part of our trouble and the situation will not be helped by a
bond market which might

only

facilitate increased pfroduction rather than in-

•

:r
Reproduced from the Unclassified / Declassified Holdings of the National Archives

-3 ereased consunction*

On the other hand, if you haire an active bond market, or

if you agree that there is a Shortage of capital in certain parts of the world
and purchasing power depends ,4ipon it, the creatiofi of an active and strong bond

/
|

I
;

market through which borrowers could get capital ;by directing funds where they

*
i

are needed, would relieve the situation.

£
!

There |Ls no danger of producers bor-

rowing to extend an already (over-expanded producing capacity.
the world which need the capital will take it

Those sections of

aiMflwritjr* so that

they can buy our products. 1
Governor Harriso^stated that the Cousaittee did a^t agree with him so
that there is no recommendation to make.

Governor Fancher stated that he favorwd the purchase of the #50,000,000
of securities purchased several weeks ago following the meeting here at that
tia. andflfelt that Federal R e a e r a credit then In the market perhaps should not

be withdrawn.
W 8T©tft.

The opinion seeped to be that 9*9? bills were

running off and perhaps the amount in which aaariMMb were running off should be
put back 4 ^ the purchase of Governments.
of Government securities.

M M

On that basis Jr favored the purchase

amount has about offset the decreased bills.

lig p Q ^ M e m b e r bank borrowings have fluctuated up and down

b i n w»ww rates fur-

- W

ther reduced at New York and some of the other banks^
couldaj^do much more to ^ b m ^ p s * a bond market.

It seems to

tsb> that

Money is extremely easy*^ The

banks are finding a problem in how to fcakmxMmi place the surplus money which
they have on hand.
securities and

lAM m lggp opinion that they will first place it in short-time

will go finally to bonds for the sake of earnings/tcflST

going to revive the bond market.

& a,

Governor Norris stated that U a m n

....... .

ft
flio iiihiii1u,im

n+* tlia 'opia-

mittee$ are substantially in agreement with the memorandum from Governor Calkins.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

«BPr feeling is that the depression is due principally to reduced prices of commodities and an analysis of commodities in which the reductions in price have
been most marked

g 1<p<i---M-H* in almost every case a specific reason^

nothing to do with credit.

\aj$v

ItfiEB has

¥uu wll’
l 'ffnd' the products of.agJi.miTtu.rc, wineo-

-fareata end a good asm y m nrm feftturw*"pgQ^ g irr>Tgauget!
l" 'TIiei'q
I flew11 thiwjr&iere has-been any great

pyoduatitfg uapatzitj which- cannot "Im uaet»
accumulation of goods^

den 11 ”^lnd""infia lied inygntoitiaa.

inventories on the whole are lower*

On the contrary

The trouble is not with an over production

/I
of goods, but over production of capacity to produce.

Of aoupgey there •aru tTDB—

economists who sav there is
lion.

oemBtmro-

TO a certain egtenl^

there has

undgr conatogprtlon,

I donftthink

r»rmanmp±J rm In th

conntayiow Hhmrft tg^ ^ a ek o f eaiiKgl1fyr ^%qtohr^^gopgTnBPMw»«^aM^i%y. ---It wmilrt ,

_____l _ __

■■

..........l i & g Z M

see any evidence that any responsible concern in this country has any
difficulty in getting capital for any legitimate purpose

which 11 ILBBflS.TERtr

Ovv
««pM.

There is a very serious question whether it is one of the functions

JS
of the Federal Reserve System to develop# or foster 4 bond market, but granted V fa X
a* A j a a kiurf
it is, the bond market f M M
to foster at this time is a market for foreign
rather than domestic bonds and 3r3fc3S9T the reason nkef there has been such a falling off in the volume of foreign issues in tke country has not been due to credit

'WAA
conditions but to the doubt that has been aroused in ths mlmls"tifyAtni
r'OJPfe iwin m bpablie
^ , , ^ M A 9MligipitAdM4Mtt^Aa#«v*statements on the subject.

.t illln if in n 'l l 1TITTI11l|l|lllT¥n 'tF iT T T tt11^ h
J%y«t«n tn-iTTffyfriri?^

-tt"' r

frfra* anrt nf

* | ' ri 1■»-**—" p1- * T ] n------ ~

"f^'ritp If1,
1!!'

Deputy Governor Paddock stated that at his directors meeting last Wednes-

frW
day the whole situation was gone over and <0 R

the proposition for the Boston

Reproduced from the Unclassified I Declassified Holdings of the National Archives

bank to follow New York by a reduction in the rate, the directors voted four to
three against a reduction.
was just about the same,

In the purchase of Governments

the feeling

X3PSS3?^he majority of the directors would rather see
C*

things go along about as they are for a short time^

la
There is no pressure pi bor

rowing in the Boston district and money is available at reasonable rates*
Governor Harrison stated that he did not want to leave the thought that
there is any feeling in New York different from ti*e
quate supply of credit available for business*
and it has not been for months*
short and long-time money*

immv%

that there is a very ade

That is not the difficulty today

The difficulty has been a bad distribution of

What we have « 1

has not been to give business more

short time money but to facilitate a market through which long time capital could
be distributed to those points where tkere is an admitted shortage of buying
power*

The Systems/ experience has been in the last 10 years that whenever we

buy Government securities the long time market is revived and bonds bring higher

“

“ * “

1 “ “ "** “

“

“ “

■

“

and there is a/serious lack of purchasing power and the question is how can we
get at it.
Governor Norris stated the other members of the committee cannot bring
themselves to believe that a further purchase of Governments would helpf but feel
that doing that would be an interference with the natural effects at this time
and would not be productive of any good and might be embarrassing,

at the time

r s
business does start to pick up, when

would find ouroolrea with a large amount

of Government securities and low discount rates*

then began to mark up

x
rates and sell Governments or both we might check an incipient revival and if
not m * would be accused.no doubt >of doing &

or operating in that direction.

Where

we oouldnrt see any benefit to be derived from affirmative action, the rest of us
felt that no aotion is the safest course.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

la response to Vice Governor Platt*s inquiry as to whether or not the
Executive Committee of the Open Market Policy Conference had any recommenda
tion to make to the Board,Governor Harrison stated that when the advisability
of an open market operation was considered some two weeks or so ago it was
recommended that the System bfcy Government securities not to exceed ^25,000,000
a week for two weeks, with the understanding that the situation would than be
reviewed, and this meeting had been called with a view of carrying out that
contemplated review*

He stated that the Committee had gone over credit con

ditions as they now see thorn and had considered a preliminary memorandum sub
mitted by the Chairman, and a majority of tha 0 o m i t tee - four out of five had voted that the Committee should not recommend any open market operation
at this time*

as
He also stated that/he understands the procedure approved by the Board
there Is no recommendation to be made by the Committee to the Board, but that
the Committee meets for the purpose of making recommendations to the whole
Conference, which recommendations would then be submitted to the Board*

The

Conmittee is making, he stated, a report to the Board that the Cornsit tee as
a whole voted to make no reocraaendation as to an open market operation now*
Mr. Platt distributed copies of Governor Calkins* letter of June 16th
setting forth reasons why the Federal Beserve Bank of Saa Francisco did not
participate in the $50,000,000 of Government securities recently purchased*
He also pointed out that the System*s holdings of Government securities at
the present time are within ^50,000,000 of the peak in 13une 14, 1922 but
that at that time the discouats of meutoer banks amounted to $414,000,000,
while at the present time they are only f253,000,000*

He also stated that

he had talkei with Governor Young over the telephone this morning and that
the latter had stated that he was doubtful as to what his position would be

Reproduced from the Unclassified / Declassified Holdings of the National Archives

If any reeaaaieiidation were made to the Board*

nr* Platt then inquired aa to

whether or not the Individual numbers of the Coesalttee had any comments to make*
Governor Harrison stated that he «wj*eeented3the minority in the Coaaittee* s
vote,that no reoomendatlon he made at the present tine, that he represented
unanimous views of the Hew loik directors as well as his own and the off leers
of the Sew Yortc hank that It weald fee preferable to continue purchases of Gov
ernment securities up to, say, #25,000,000 a week for another tee weeks, largely
on tho the 0 19 that battsess and ooraaedlty prloes hare net improved and that a
good part of the difficulty at the present time Is lack of purchasing power
in various parts of the world whleh are not In a position to purchase or take

up « u rp lo j o o n o d itle . o u tlie

o f ,th . w o rld .

B .0au»« o f t h ii d e fic ie n c y

In buying power, prloes have declined and this is reflected throu^i decreased
export *Epd% in the principal o a m j r i e s which have nr oduota, 1 0 export, suoh

U fo & jL

MKuiiS J

JuM iki
Oh iu . m L .
t ihi»i%^ts eae »way , flMWnqjh s ■sm tal y u y w a*

as Snglanl aM aaerloa^

that I t weal* fro p ossible to r e v ^ n ^ f g Q ^ ^ ^ ^ f ^ ii ^ P throiig}y%jk
port of long time oapltal to those parte of the world where purchasing power
has been anrjelled*

Purohaaes of aoveznmegt securities, he, said, would do no

lirii&ob 9fytu f t w

ti1

Hi-mAt/T

KKlfi^ inhere Is no danger at the moaiont^ef speculative revival and past ex
perience haa always sheen that whenever the System is buying Government se
curities the bond market becomes mere active and stranger and, therefore^

, J.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

/pul
next

weeks, b u t since the, majority/of^the Executive Coaaittee of the Gon-

...
Governor Fancher stated that he favored the purchase of the #50,000,000
of Government securities jxirohased several weeks ago following the meeting here
at that time and felt that the Federal Beserve credit then in the market per
haps should not be withdrawn.

The opinion seemed to be, he stated, that bills

were running off and perhaps the amount In which the System’s holdings of bills
wore declining should be put back through the purchase of Government securities*
0&

that basis, he said,he favored the purchase of securities and the amount

purchased had about offset the decreased holdings of bills*
member bank borrowings have fluctuated up and down*

He stated that

Bates hnve been further

reduced at New Tork and some of tho other banks, and it seems to him that the
System could not do much nore to help a bond market.

Money is extremely easy

and banks are finding a problem in how to place the surplus money which they
have on hand.

He expressed the opinion that they will first place it in short

time securities and will finally go to bonds for the sake of

arnings, which

is going to revive the bond market•
Governor Ho ris stated that the majority of the Executive Ccranittee
of the Open Market Policy Conference are substantially in agreement with the
letter from Governor Calkins.

The feeling Is, he said, that the depression

is due principally to reduced prices in comodi ties and an analysis of com
modities in which the reductions in price have been most marked disclosed in
almost every case a specific reason, which lUt* nothing to do with credit.
There has not been any great accumulation of goods but on the contrary inven
tories on the whole are lower,

©te trouble is, he said, not with an over

production of goods but over production of capacity to produce•

He stated

Reproduced from the Unclassified / Declassified Holdings of the National Archives

that he can not 8#* any evidence that any res;onsible concern in this country
lias say difficulty in getting capital fear any legitimate purpose and that
there is a very serious question whethar It is one of the functions of the
Federal Reserve 3ysta» to develop or foster the bond market, but granted that
it is , the bond aarket which It Is desired to foster at this time is a market
for foreigi m t h a r than domestic bonds and he believes the reason there has
been such a falling off In the volume of forel&i issues In this country has
not lean due to credit conditions but to the doubt that has bean aroused by
public statements on the subject*
Governor I*orris further stated that at the meeting of his board of di
rectors last week they had a long discussion on this subject*

He said he

had called the attention of his Board to the fact that the discount rate of
the Federal xlsierve Bank of fhiXadalphla was out of line with that of the
federal Beserre Bank of Hew York and out of lisa with the two guides which
hare always been accepted In the past - the acceptance rates and the open
market rate for money*

&e stated that of the seven members present, five

felt that no action which they coula take either as regards open market opera
tions or a reduction in the discount rate would have any effect whatever on
the situation which is one for mfclch the Philadelphia Bank Is not responsible
and can not help, and the only effect of a reduction In the d iscount rate would
ba to increase tha margin of profit

for

those baaiks which are chronic borrowers

at tha federal Baserre bank aad would make it m o m difficult for the well man
aged banka to show any earnings at all*

For these reasons, he stated, it was

voted to make no change In the discount rate of tha Philadelphia bank*
Deputy Governor Paddock stated that at his directors* meeting last
Wednesday tha tfiols situation was gone over and on tha question as to whether

Reproduced from the Unclassified / Declassified Holdings of the National Archives

or mot the Boston bank would follow tho Federal Beserre Bank of low York by
a reduction in tho i.isoou»t rate, tho directors voted against a reduction*
In tho purohase of trova lament securities, he stated, ho thought tho fooling
was just ah oat tho same and the majority of his dlrootors would rather see
things go along about as thoy are for a short time as there Is no pressure
for borrowing In tho Boston District and money Is available at reasonable
rates*
Severn cr Harrison stated that ho did not want to leave the thought
that there is azy fooling In How Yoifc different from that exj
other moahers of the dosaalttoo that there is
available for business»

ohms

? adequate

fhat is not tho difficulty today* ho stated, and it

.-Hm^iot boon for Months, tho difficulty^idjg a bad distribution of short

■gi»o bwolasss more short tine money but to facilitate

Coanlttoo of tho Opea X a M t

throu^a which

Policy Conference can not bring themselves to

believe that a farther purchase of Government securities would help, but feel
that suoh porchaoo would bo an interference with the natural effect at this
tine and would not ho productive of any good, and migfct bo embarrassing at
the tine when business starts to pick up, at

hloh tine tho System would find

itself with a large amount of aoTexnmeat securities and low discount rates.
If it then began to a a x k up rates and sell seourltios, or both, it might iheek
an incipient revival and if not would be accused no doubt of doing so or
operating in that direction*

He stated that as the majority of the members

Reproduced from the Unclassified I Declassified Holdings of the National Archives

of the Exeuctive Comnittee could not see any benefit to he derived fran
affirmative action, it was felt that no action is the safest course.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E •0•V23S4?

” '■ CONFIIENTIAL
-------------- " "
1 ""—

PRELIMINARY ERAFT OF
MINUTES OF THE MEETING OF THE EXECUTIVE COMMITTEE
OF THE OPEN MARKET POLICY CONFERENCE
HELD AT THE OFFICES OF THE ESEERAL RESERVE BOARD
WASHINGTON, D. C.,June 23, 1930.

)

/ i

i
> A y
* C ** ^

The meeting was called to order at 10 j40 a* m. , there being present
Governors Harrison (chairman), Norris, Fancher, McDougal, and
Deputy Governors Paddock and Burgess (secretary).
A preliminary memorandum reviewing credit conditions, and the secretary’s
report were submitted to the meeting*
Governor Harrison stated that the occasion for the meeting was to review
the results of purchases of $50,000,000 of securities in the first two weeks in
June and to determine whether the executive committee desired to recommend any
further action to the Open Market Policy Conference.

He then reviewed recent

developments in business and in the banking situation, pointing out that the busi
ness situation appeared to be growing worse rather than better, that commodity
prices continued to decline, and that there was as yet no definite indication of a
turn for the better.

He stated that it was the view of the directors of the New

York bank that the Reserve System should continue to do everything possible to
establish money conditions which would be favorable to the recovery of business,
and particularly which would provide an ample supply of funds for the bond market.
The recent purchase of government securities had been followed by sotoe further
easing of money rates and by some improvement in the bond market, though that
market was not strong and was having difficulty in meeting fully the demand for
capital funds for business use*

This purchase of securities had, however, been

largely offset by a decline in the bill holdings of the Reserve System, and it had
become clear that in order to keep some surplus supply of funds in the money
market and thus stimulate the bond market it would be necessary to continue the
purchase of Government securities further.

Governor Harrison stated that tho

directors of the New York Reserve Bank voted at their last meeting that in their
opinion further purchases in the amount of about $25,000,000 a week should be
continued.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

declassified

Authority

B •0 » V23Sfc?

2
Question was raised whether there was any foundation for a rumor recently
circulated in New York and elsewhere concerning the condition and control of
certain New York City banks and Governor Harrison stated that to the best of his
knowledge these rumors were without foundation.
Governor Rancher left the meeting at 11:30 and returned about 1£:&6»
Governor Norris stated that the directors of
any further purchases of Government securities.

his bank were opposed to

He indicated that in his view the

current business and price recession was to be ascribed largely to over-production
and excess productive capacity in a number of lines of business rather than to
financial causes, and it was his belief that easier money and a better bond market
would not help the situation but on the contrary might lead to further increases
in productive capacity and further over-production.
It was moved and carried by a vote of four to one that it was the opinion
of the executive committee that it was not desirable at this time for the Federal
Reserve System to undertake any further open market purchases of securities.
Governor Harrison voted in the negative.
Question was raised as to whether it would be desirable to distribute
realized profits held in the Open Market Investment Account at the end of the half
year rather than waiting until the conclusion of the year as had been voted at the
Governors Conference in tho autumn of 1929.

It was agreed by those present that

it was not desirable to make any change in the procedure agreed upon at that time
inasmuch as keeping the profits undistributed for the calendar year made it possible
to average out profits and losses.

Governor Harrison raised the question as to

what would be the policy of tho System in ease it was found that discounts of tho
System began to increase accompanying a continued seasonal decline in bill holdings.
It was agreed by those present that any considerable increase in discounts should
lead to a further consultation as to the policy to be pursued, since an increase
in discounts was not desirable at this time.

The meeting adjourned at 1:35 P. M.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E •0• \23Sk

3
IXiring lunch at the Hotel Washington at which all members of the
committee were present the earning

position of the different Reserve banks, as

shown by a tabulation of actual figures for the first five months and estimated
figures for the last seven months of the year was discussed.

It was agreed by

those present that it would not be desirable to have a general redistribution of
security holdings in the System account, in view of tho fact that most of the
Reserve banks would probably show a loss in their operations for the year, and any
distribution would simply operate to reduce the deficit shown by one bank at tho
expense of increasing the deficit shown by another bank.

Those present, there

fore, agreed that the distribution of purchases of bills and governments should
continue to be made on the same basis as in recent months;

that is, on the basis

of the size of the banks as determined by their expenses, dividends, and charge
offs*
The meeting reconvened at 3:35 p. m. with the Federal Reserve Board,
there being present
Vice Governor Platt and Messrs. Hamlin, Tames, and Pole, and also
Messrs. McClelland, 3nsad, and Carpenter, and
For the committee, Governors Harrison, Norris, and Fancher, and
Deputy Governors Paddock and Burgess.
Governor McDougal found it necessary to take an earlier train*
Governor Harrison reported the findings of the Conference, stated the
position of the New York bank, and sxianarized the views of the other members of
the committee*

These views were further amplified by Governor Norris, Governor

Fancher, and Mr* Paddock*

There ensued a general discussion.

Mr. Platt submitted to the meeting a letter dated June 16 from Governor
Calkins, a copy of which is attached herewith.

The meeting adjourned at 4:30

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 » \23S(p

C O P Y

. FEDERAL RESERVE BANK OF SAM FRANCISCO

June 16, 1930.

Mr, Roy A. Young,
Governor, Federal Reserve Board,
Washington, D. C*

My dear Governor Young:

Recalling somewhat late a remark you made to the
effect that when a bank disapproves of the recommendations
of the Open Market Policy Conference it might properly adyise
the Board as to the reasons for its disapproval, I think I
may briefly summarize our reasons for not participating in
the $50,000,000 Governments recently purchased as follows:
a• With credit cheap and redundant m do not
believe that business recovery will be accelerated by making
credit cheaper and more redundant*
b* We find no reason to believe that excessively
cheap money will promote or create a bond market, seeing
evidence in the recent past to the contrary, and, further, do
not consider the promotion or creation of a bond market one
of the functions of the Federal Reserve System*
cu We believe that there may come an opportune
moment to put money into the market when that action will
have a beneficial effect and feel that if* at such a time,
our open market portfolio of Governments is excessive there
may be hesitation to increase it*
There is much more that might be argued, but I have
endeavored to summarize briefly*
Yours very truly,
(s)

Jno, U. Calkins,
Governor*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

June 20, 1930.

r C

H iE L IM m B Y MEMQR&HDPtt FOR THE

KTECUTIVE. C O B I O T E S OF THE OPEN
MAHKST t O L i W Wfii'KHKiCfi

^During the past two weeks the purchase of #50,000,000 of U. S. Govern
ment securities for the System account, approved by a majority of the members of
been completed.

As in the case of

previous security purchases, the principal effect has been to accelerate the
tendency toward easier money conditions, by facilitating the retirement of in-

>
debtedness of member banks and reducing the dependence of the acceptance market
on the System,
The following tabulation shows changes in the various forms of Reserve
Bank credit from the date of the last meeting of the Conference to June 3, just
preceding the recent purchase of Government securities, when the total demand for
Reserve Bank credit still showed some enlargement in connection with the May monthend, and from June 3 to June 18, when the purchase of Government securities had
been completed and the temporary Treasury overdraft eliminated.
(In millions of dollars)
MSZ. 21

Discounts
Bills bought
TX. S. Securities
Other Securities

22
to

210

187
528
__ 6

Juno 3

June 18

276
199
527
6

207
133
598
5

1,008

943

SEE
ZD

Total

932

This shows that since June 3 the purchase of $50,000,000 of U. S. Securities, to
gether with the liquidation of Reserve Bank credit called into use temporarily
over the May month-end, has resulted in a reduction in member bank indebtedness
&

to an amount slightly smaller even than around the middle of May, notwithstanding
the reduction of over #50,000,000 in the bill holdings of the System.

The reduc

tion in System bill portfolio reflects larger holding of bills by member banks,
which gives them a cushion against recurring periods of firm money.

fr-hewvpAn

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Accompanying these changcs in tho form of Federal Reserve credit in use,
there has been a definite, but orderly, decline in money rates.

Treasury tax

period operations did not result in any large surplus of funds in the New York
money market, oven temporarily, such as caused the rapid fluctuation in money
rates during the March tax period.

The following table shows the change in rates

both before and after the change in the discount rate of the Federal Reserve Bank
of New York

effective Juno 20.
May 21

Call money
Time money, 90 days,
Bills, 90 day, unendorsed
Commercial paper
U. S. Certificates
Sept. 1930 - yield
Dec. 1930 - yield

June 3

3 1/4-1/2
2 3/8
3 3/4

Juno 19

3 X/4:
2 3/8
3 1/2-3/4

2*21

1.98
2.41

2.63

2 1/2
2 3/4

2 1 /8
3 1/2-3/4

June 20
2 1/2

2 1/2-3/4

2
3 1/4-3/4
1.60
1.92

1.65
1*95

/BUSINESS CONDITIONS ^
During tho month since the last meeting of the Open Market jPolicy
Conference in May, business conditions have shownfoo^material change - if any
thing, the tendency has been toward a further decline, rather than toward definite
improvement•

In the largest industries, such as the steel, automobile, and build

ing industries, the recent changes have apparently been chiefly of a seasonal
nature, and factory employment also has shown a decline of about the usual pro
portions for the time of year, but substantial curtailment has occurred in the
cotton goods industry.

The Federal Reserve Board’s seasonally adjusted index of

industrial production for recent months and a year ago is shown below.

From

such information as is now available it appears that a further decline in June is
more likely than an increase.

__________

1 9

May 1929

Jan.

Feb,

Mar.

Apr,

May

124

104

107

104

106

104p

DOLLARS PER BUSHEL

C E N T S PER P O U N D

DOL.LA R 5

PER PO U N D

C E N T S PER POUND

1.40

28-

1.20

V 929
*A

1928

>«

1.00
1929

1930

.80.60

D O M E S T IC

D O L LA R S PER

WOOL

RUBBER
J A S O N

J A S O N D J F -M A M

DOLLARS

TON

F M A M J

PER TON

18
•-— .*1928
16

•1928
14'*-*

12 [PIG IRON .

J A S O N

d'j

F M A M

SCRAP
STEEL
1
1
‘

J A S O

N-DJ

F M A M

Reproduced from the Unclassified I Declassified Holdings of the National Archives

3
It is now apparent that the current recession in business bears greater
As in 1921,

the decline in this country has been accompanied by a world-wide business depres
sion, and a world-wide decline in commodity prices*

similarity to that of 1921 than to the recessions of 1924 and 1927*

The last weekly conanodity

index of the Federal Reserve Board, for Juno 13, showed the largest decline for
any week this year.

During the past week wheat and cotton have declined sub

stantially, as shown in the accompanying diagrams, wheat reaching a new low point
since before the War, and cotton the lowest since 1926-1927, when the price was
depressed by an unusually large crop*

( BUSINESS DEMAND FOR FUNDS \
The commercial loans of weekly reporting banks have continued the un
seasonable decline noted at the last meeting of the Committee, so that the total
reduction in these loans since last autumn is now by far the largest that has oc
curred since 1921.

This does not mean, however, that there is (no) business demand

l /

t o r funds; the demand is for capital rather than short-term credit, and the demand

has been so great as to exceed at times the gradually increasing supply of funds

P >S
seeking employment in investment securities, and tho bond market isQiot yet really
strong and easily becomes congested*
Evidence of this large demand for capital funds is contained in the fol
lowing table, which shows new bond issues during the first five months of 1930
compared with the corresponding period in 1928 and 1929;
(In millions of dollars; refunding issues excluded)

Domestic corporate
Municipal and state
Foreign
Total

1928

1929

1,054
629
672

1,083
512
237

2,355

1,832

1930
\ lj654.4

599
552
j2,805]
.J ... ..

-a

The total amount this year has been approximately 50 per cent larger than
in the first five months of last year, and considerably larger also than in the
similar period in 1928*

This large increase in new issues apparently is in re

sponse to an unsatisfied demand for capital which accumulated during the high

)

Reproduced from the Unclassified / Declassified Holdings of the National Archives

SCALE I
BILLIONS

SCALE n
BILLIONS

c o m m e r c ia l A

LOANS
9.5 SCALE I

J \
f \

X lE W BOND
/
ISSUES
/ SCALE H

SCALE
331
INDEX
1.0 125

9.0
V /

8.5

1.5

\ /
V

PRODUCT 10 N \
SCALE in

10 0

8.0

75
1929

1930

Demand for Capital and for Short Commercial Loans Compared with

Industrial Activity

Reproduced from the Unclassified / Declassified Holdings of the National Archives

interest ra1;e period of the past year and a half*
rowing in this market was largely suspended;
market was held back;

During that period foreign bor

municipal borrowing through the bond

and the amount of new capital obtained by dcaaestic producing

and distributing corporations, notwithstanding the extraordinarily large volume of
corporation securities which were sold, was not unusually large.

A large propor

tion of the stock issues in 1929represented funds obtained by investment trusts
and financial trading corporations, new securities issued in exchange for old
securities in cases of mergers, and stock issues sold for the purpose of retiring
bonds or bank loans*

Consequently, this year there has been no evidence that

domestic corporations are oversupplied with capital, but rather there has been an
increase in the demand for capital, especially from railroad and public utility
corporations, and the bond market has not been strong enough to furnish all tho
funds which could be used*
The accompanying diagram shows that in 1921-1922 there was a similar
tendency for an enlarged demand for capital through the bond market to precede
business recovery* whereas the demand for short loans tended to follow, rather
than to precede, business recovery.

In the less severe recessions of 1924 and

1927, also, a large volume of new capital issues preceded business recovery, whilQ
expansion of commercial loans awaited increased business activity.
^ MEMBER BANK CREDIT )
In view of this tendency for a demand for capital funds to precede a
business demand for short-term credit after periods of business recession, it is
not surprising to find that there appears to be a corresponding tendency for
expansion in member bank credit to occur first in the forms of credit related to
the capital market, rather than in short-term comercial credit.

The following

diagrams indicate that in each period of business recession in recent years member
bank investments and loans on securities have increased before commercial loans*
Tendencies in bank credit during recent months, shown in the last diagram, appear
to have been somewhat similar to those of corresponding periods in previous years.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

SCALE

SCALE I

SCALE n

SCALE I
.

BILLIONS

SCALE I

SCALE n

SCALE I

SCALE IL
7

SEC. LOANS,

COM L
LOANS

SCALE E

BILLIONS

BILLIONS
/ tf

SCALEI

SCALE n
INVESTMENTS

INVEST
MENTS

SCALE in SCALE H
INDEX

5 125

PRODUCTION

SCALE m

./SEC. LOANS

:SCALE I

SCALE m
INDEX
5 125

100

100
PRODUCTION

scAle m
4 75
1927

1928

7
1929

Member Bank Credit and Industrial Production

4
1930

Reproduced from the Unclassified / Declassified Holdings of the National Archives

An analysis of security loans indicates that, notwithstanding the high
level of security loans in reporting banks, the total of currently reported se
curity loans, including loans of corporations and others to brokers, has shown a
reduction of nearly $4,000,000,000 since last autumn.

The following figures sum

mer ize the changes since the high point of last October:
(In millions of dollars)

Oct. 2, 1929
Loans to brokers:
By weekly reporting banks
By other banks and customers
By other lenders*
Total brokers loans
Loans of reporting banks to
customers other than brokers
Total

June 11, 1950

2^318
1,396
5,379

3,112
354
1,755

9,093

5,221

5^508

5,453

14,601

10,674

* Includes borrowings of Stock Exchange Members* borrowings from
private bankers, foreign lenders, and others.
From the high point of last September to Juno 11, the Standard Statis
tics Company index of tho prices of 405 stocks showed a net decline of 28 per cent.
The figures above show a decline of 27 per cent in the total of currently reported
security loans during the corresponding period.

In view of the fact that bank

loans on securities undoubtedly include a certain proportion of business loans and
do not roprosent exclusively loans for the purpose of carrying securities on margin,
and include also loans on bonds, it is clear that the amount of loans used purely
for security trading purposes has declined morfc than security pricos, and that a
larger proportion of stocks at the present time are held outright than was the case
last autumn.

Another factor in the volume of security loans has been the large

amount of new securities which have been offered for public subscription during
recent months, some part of which, no doubt, have been carried on borrowed funds,
pending distribution.
The increase in security loans of reporting banks since last October has

Reproduced from the Unclassified I Declassified Holdings of the National Archives

been entirely in loans to brokers - presumably the most liquid type of security
loans - and has represented simply a partial replacement of the large volume of
loans called by corporations and other non-banking lenders.

/EMBER BANK INVESTMENTS AND FEDERAL RESERVE SECURITY PURCHASES
The increase in bank investment holdings during recent months has pro
ceeded rather slowly.

No doubt this has been due to some extent to the decline

in bond prices last year, which has made banks reluctant to increase their invest
ment portfolios.

Investments of weekly reporting member banks now constitute a

smaller proportion of their total loans and investments than was the case three
years ago.

Compared with the growth in the proportion of time deposits to total

time and demand deposits in these banks, the increase in the proportion of invest
ments has lagged decidedly, as the following table indicates:

June 1921
June 1927
June 1930

Percentage of
investments to
total loans and
investments

Percentage of
time deposits to
total time and
demand deposits

22$
28fo
26%

32$
34$

22$

The diagram on the following page indicates quite clearly that purchases
of Government securities by the Reserve Banks at several times during recent years
have expedited the purchase of investment securities by commercial banks.

As in

earlier periods, the increase in the System’s holdings of Government securities
since last autumn has been followed by an increase in the iiivestment holdings of
reporting member banks.

Up to the present time, however, this increase in bank

investments has been considerably smaller than that of 1922 or 1924, although to
produce an equal effect, a much larger increase would be required at the present
time; that is to say, the growth in the business of the country since 1921 has
probably amounted to around 45 per cent, so that the capital requirements of busi
ness have been greatly enlarged.

The increase in investment holdings, moreover,

has not yet been sufficient to replace the decrease last year.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Federal Reserve Bank )9 pr
of Ks-v York
ort.‘3 L'c-pfir1 jiont
, 193^ *

SCALE I

BILLIONS

SCALE n

BILLIONS
2.5

1921 1922 1923 1924 1925 1926 1927 1928 1929 1930

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Tho effect of Reserve Bank purchases of Government securities on the
position of member banks, with respect to their ability to increase their invest
ments, was supplemented in 1921-1922 and. in 1924 by heavy imports of gold.

This

year also there has been an inflow of gold, but it has been small in comparison
with the movements in the earlier periods.

Fo^oai&Jo. 131

r^- w*

Office Correspondence

FEDERAL RESERVE

bo
ard

„

Date _ June 18y 1930______

T o _____ All Members of the Board

Subject:___________________ ^

^ ** C *

P r o m __ Mr. McClelland

______________________________________ .

•to
For your information.
office* J jt jL

3—6405

Please circulate promptly and return to this
/ " ''S 3

jl J U 4

Governor Young frfyurfA
Mr. Platt V } / ^
:Mr. Hamlin
Hr* James y
y
Mr • Cunningham r
Dr* Miller •&****

Mr* P0l#4 > i

o 3 3, - C - X

ft1

Reproduced from the Unclassified / Declassified Holdings of the National Archives

D M r Hr*
. |*i th«
ol1'
I ftoknowXod^ r*o*ipt of yotur lwttT of Junw
.. /
lrth.
r5^%lni *i£ %li«i.
on m y flit; and ffni#. Ai
th*««
■lout** l U l b«
for th« twntativ*
4mtt tranmittwd with your l#tt*r of Mwy 2Tth#
Very truly your»f

£• K» H&C&ill&wi*
Aiilitant $#«r#t*ry

lr# i* Randolph 3urgw«*#
Dwputy 0®v#mor,
Fwdwral
Bank,

m * tm rk t j u y *

* tv UJuJl
1 ^u ^ ^
3 3 3, *
^
n. > ^ t k f
J M ^ K " <*•,<•u,

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E «0 ■VffiSib

Fe d e r a l R e s e r v e
o f

Ba n k

N e w Yo r k

CONFIDENTIAL

June 17, 1930

Dear Governor Young:
There has now been an opportunity to assemble suggestions
from all banks as to the minutes of the meeting of the Open Market
Policy Conference on May 21 and 22, and the minutes have been revised
in accordance with the suggestions received.
Will you please substitute the enclosed revised minutes for
the minutes previously mailed you on May 27*
Veiy truly yours,

Y?% Randolph Burgess
Deputy Governor

Honorable Roy A. Young,
Governor, Federal Reserve Board,
Washington, D. C.

-Hjul.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

B ■0 * V235(p

/
Federal Reserve Ba n k
o f

R E C E IV E D

N e w Yo r k

JUN 18 1930
GFFIOE O P
THE GOV S B N O E

l> E E S O M A

June 17, 1950.

Dear Governor Young:
I

am enclosing for your files an additional copy

of the minutes of the meeting of the Open Market Policy
Conference on May 21 and 22.

These minutes have been revised j

33 3, -C *2in accordance with the suggestions received from all the

-i *

banks.
Very truly yours,

W. Randolph Burgess
* Deputy Governor

Honorable Roy A. Young,
Governor, Federal Reserve Board
11j gjjgi

, Washin

7
.£■

M uinmigM.jjij.nir

n ^

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

B • 0 - \23S(p

May 3®* 1930.

m m

Siity #?*$&> *od

« &r«f% m f th« juifisrtai of ■#»
P#'*i«3r
on ftngr SX *a& 23.

if'
I

wnr*
tfe*.** *£jr&t#* .***
im
mma&~
**&$» during ft#* n^xt ftm
«a*i I, &»»$«£&$* * am r*£mi»tl*C
t$ m ttflfc tttjj * * * • * * p « r» a n * n t record of th e Board m f . f i : 1 f t - '
«#$** f&#
#opr tir & !♦!$** %> % m #f$m% tfe*t '^kmm
'1411 fe* no eo^f^'lion**
Xcmfw -t«fgr truly.

Sf * f.

ISfpti, Secretary,

0p«n )Mk»l PtHl^r
#/q
I # # Tortc, V. T.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority B • 0 • \23fc(p

F e d e ra l R e s e rv e B ank
of

RECEIVED

MAT 2 8 1930

Ne w Yo r k

OFFICE OF

■> IL' X,
J

May 27, 1930.

CONFIDENTIAL

Dear Governor Young:
iinclosed herewith is a draft of the ^ t e ^ f

the

meeting of the Open Market Policy Conference omLlay 21 and 22.
These minutes are subject to whatever corrections or amend
ments may be made during the next few days, and I shall later
send you a final corrected copy*
Very truly yours,

W. Randolph Burgess
Secretary
Open Market Policy Conference

Honorable Roy A. Young,
Governor, Federal Reserve B 0ard,
Washington, D. C.

J J i

CONFIDENTIAL

2 2The Conference has considered a preliminary memorandum reviewing
domestic buriness and credit conditions and has discussed at length the
present trends in world trade, commerce and commodity prices*

Particular

consideration was given to the rapidly declining volume of our export trade
and its probable relation to the decline in commodity prices in this country*
It appears to the Conference that conditions in business, agri
culture and trade are still seriously depressed, not only in this country
but evidently throughout the rest of the world as well*

It is the sense

of the Conference that these conditions merit continuous careful observa
tion by the Federal Reserve System in order that the System will be pre
pared to act promptly in the event that conditions further develop in such
a way as to make action seem advisable*
In the present circumstances, however, it does not appear to the
Conference that any affirmative recommendation as to Open Market operations
is advisable just now9

But it is the sense of the Conference that if the

situation so develops as to require an Open Market operation by the System
the members of the Conference will be prepared to reconvene or else, if a
meeting of the whole Conference is not practicable, to act promptly on
recommendations of its Executive Committee*

1fey 22^, 1920---

DECLASSIFIED
Authority E • 0 • V23Sb

The Governor stated that he called a special meeting of the Board because
he has been informed by the State Department that inquiry has been made of it
as to whether it has any objection to the sale of reparations bonds in the
American market*

As a matter of courtesy, the state Department advises that it

will reply to the effect that it has no objection®

The Governor, therefore,

anticipated that a cablegram will be received tomorrow by the Federal Reserve
Bank of l.ew York from the Bank for International Settlements inquiring whether
the Federal Reserve Bank of Hew York would dissent to an offerins of the bonds
in this market®

He reminded the Board that Governor Harrison of the Federal

Reserve Bank of l\ey York on I,lay 14th advised the Board of the procedure that
would be followed by the Hew York Bank, namely* that they would prepare a cable
reply to the effect that they do not dissent, but before dispatching the same
would refer its contents to the Federal Reserve Board, and if the Board did
dissent to the issue the cablegram would not be dispatched.
The Governor then reviewed the situation with reference to the Bank for
International Settlements, stating that in the Young plan the tentative draft
provided for participation by an officer of a Federal reserve bank in the man
agement of the Bank for International Settlements, both directly and through
selection.

He recalled the position of the State Department, objecting to any

officer of a reserve bank participating in the operation or management of the
Bank, on what he considered the standpoint of national policy*

He iuitner in

formed the Board that representatives of the Adminstration conferred with
Messrs. Traylor and Reynolds before their departure for Europe to participate
in the drafting of the statutes of the Bank for International settlements,
and informed liessrs. Traylor and Reynolds that if foreign central banks of issue
and foreign governments were to be given a veto power witn reference to operations
in their own markets by the terns of the statutes of the Bank for International

DECLASSIFIED
Authority £ • 0 • V23S(g

2 -

Settlements, some such veto power should be lodged with responsible
authorities in this country®

He has been informed by Administration

officials, he stated, that Messrs* Traylor and Reynolds had accomplished
their object, insofar as the Administration was concerned, by giving the
veto power to the Federal Reserve Bank of New York, which is subject to
general s u p e r v is io n and regulation by the Federal Reserve Board, thus
vesting ultimate responsibility in the body which represents the Federal
Reserve System as a whole and which is responsible for the credit policies
of the United States in the same manner as central banks of issue abroad
are respectively responsible for the credit policies of their countries*
The Governor stated that taking all things into consideration he
thought it highly desirable that the Federal Reserve Board retain this
veto power, even though it might not be of any particular importance
at the moment, as the time might come w&en it would be of great importance
and it should not be nullified by the precedent of a failure to assume
or accept the power at this time*
He also stated and recommended to his colleagues that he thought the
best method of procedure for the Board to follow when the inquiry is
made by the Federal Reserve Bank of New York with r eference to their
cablegram expressing no dissent to the flotation of reparations bonds
in this market would be to take the position that inasmuch as we have
a free securities market th® question of the flotation of reparations
bonds in our market at the moment is one of national policy rather
than economic or financial.

He, therefore, suggested that the question

be referred to the State Department to secure an official statement
from them that they do not object to the flotation of the bonds and that
when this is received the Federal Reserve Bank of New York be

DECLASSIFIED
Authority B • Q*

■t

advised that inasimch as the question at the moment is one of national policy
rather than economic or financial, to rahich the State Department does not
object* there are, therefore, no grounds for the Board objecting to the dis
patch by the Hew York Bank of the cablegram that had been prepared, it being
understood, however, that such failure to dissent shall not be icons trued either
as an approval or disapproval of the terms, conditions, or worth of securities,
or as a waiver of any of tha lawful powers of the Federal Reserve System to
take appropriate action at any time to protect credit conditions in the
United Statea#

R e ^ T O d from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E »0» V23Sio

©ie Board has considered the report of the Open Market Policy
Conference and notes:
(1) That it is the judgment of the Conference that Mh©
market Operations in Government Securities are necessary at
this time;*
(2) That it would have an unfortunate effect upon "busi
ness if the demand for additional credit for Spring business
concurrently with running off in the present bill portfolio
of the System should result in the hardening of rates; and
(3) That the Conference recommends that the Mmini mum
buying rate for bills fixed by the Federal Reserve Board be
reduced so that the Federal reserve banks may have such
flexibility in their operation* that the present portfolio*
may not only be maintained but if necessary be increased to
such an extent as to avoid the hardening of rates which might
result from a seasonal demand far additional reserve credit.H
She Board has carefully considered the report of the
^
Conference and is of the opinion that a hardening of rates
whether such hardening should result from demand for additional
j
credit for Spring business or from a reduction of the total
| J
volume of reserve credit should be avoided, and is therefore
j
prepared to consider reduction in the effective buying rate
I
for bills to prevent hardening of canraercial rates. Yfith this
I
in mind the Board is prepared to approve & mi simum effective
j
buying rate of 3 7/8$ for any Federal reserve bank wishing to
j
establish such rate.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 • \23Sifc>

CONFIDENTIAL
MINUTES OF THE MEETING OF THE OPEN MARKET POLICY CONFERENCE
HELD AT THE OFFICES OF THE FEDERAL RESERVE BOARD
WASHINGTON, D. C., May 21 and 22, 1930.

The meeting was called to order by Governor Young at 10:40 a, m.
The following were present:
From the Federal Reserve Board,
Governor Young and Messrs. Cunningham, Hamlin, James,
Miller, Platt, and Pole.
Fran the Federal Reserve Board’s staff,
Messrs. Goldenwoiser, McClelland and Staead.
From the Federal Reservo Banks,
Governors Harrison, Norris, Seay, Black, Fancher, Geery,
Martin, Talley and Calkins, and Iteputy Governors Burgess
and McKay.
Dr. Goldenweiser presented the facts as to the recent credit situation.
Governor Young asked the Conference to consider whether or not it was
desirable to hold a Governors Conference in the near future
Governor Young reported informally on the discussion of the Federal
Advisory Council with the Federal Reserve Board on May 19.
Governor Young reported that the Open Market procedure as amended by the
meeting of Governors of the Reserve banks on March 25 had been submitted to all
the Reserve banks and that they had all indicated their willingness to participate
in accordance with the suggested procedure.

The New York bank had accompanied its

acceptance with a letter explaining its interpretation of the proposed procedure.
A copy of this letter was distributed to the Governors and is attached herewith.
In view of the acceptance of the procedure by all Reserve banks which was approved
by the Federal Reserve Board, Governor Young indicated that this meeting might be
regarded as the first regular meeting of the Open Market Policy Conference.
Governor Young indicated that a number of suggestions had corns informally
before the Federal Reserve Board from various quarters, including the following:

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

B •0• \23St?

2
1. A sale of securities for the purpose of checking
speculation, improving bank earnings, and aiding the liquidation
of security loans.
2. A sale of $200,000,000 of Government securities to
bring about an adjustment of System earning assets so that re
discounts might be approximately equal to the total of Government
securities and bankers acceptances held, this sale of securities
to be simultaneous with reductions in the discount rates of a
number of the Reserve banks.
3. One Reserve bank in order to increase its earnings was
considering the desirability of its buying for its own account
in the market $500,000 a month of Government securities.
4* A proposal to purchase Government securities and reduce
discount rates to secure a deliberate inflation of credit for the
benefit of business, particularly through the bond market.
5. To do nothing now but to be prepared to meet autumn
seasonal requirements for Federal reserve credit (computed at
between $350,000,000 and $400,000,000) by purchases of Government
securities and increases in bill holdings*
There followed a brief discussion of the implications of the findings of
the last meeting of Governors on March 25.

Governor Young indicated that he had

hesitated to vote favorably on the New York application for a three per cent
discount rate because of the position of Governors at that meeting on March 25.
Governor Harrison indicated that the Now York Reserve bank he was sure did not
want to be in a position of feeling that they were violating the spirit of the
findings of the Open Market Policy Conference in making a change in discount rate
following such a conference, particularly wheh a number of weeks had elapsed after
the conference.

The decision as to discount rates he regarded as primarily the

responsibility of the boards of directors of tho respective Reserve banks subject
to the review of tho Federal Reserve Board, and he did not believe the action of
the Open Market Policy Conference should be regarded as in any way restricting
freedom of action on discount rates.

A number of other governors indicated their

agreomont with Governor Harrison’s statement.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority

3
At 11:45 the representatives of the Federal Reserve Board retired from
the meeting and the Open Market Policy Conference reconvened by itself.
The action taken in the organization of the Conference at the meeting on
March 25 was reaffirmed both as to the election of the representative of the New
York bank as chairman of the conference and as ex-officio chaiman of the Executive
Committee, and as to the appointment for one year of an executive committee composed
of the representatives of Boston, Philadelphia, Cleveland, Chicago and New York
banks.

It was agreed that in following the principle of reasonable rotation in

the membership of the executive committee, there should be sufficient flexibility so
that the committee should not be made up altogether of new members and should be
fairly representative of different sections of the country and various interests.
Mr. Burgess was elected secretary of the conference for one year*
Mr. Harrison explained the considerations which had led to the calling of
the Conference indicating in particular that he desired an opportunity to report to
the other Governors concerning his recent trip abroad, and also that a full dis
cussion of the credit situation seemed desirable prior to the beginning of the
vacation season.
Governor Harrison then gave a full report of his trip to Europe, of the
point of view with regard to the credit and business situation held by the heads of
banks of issue of different countries, the developments with regard to the gold
position abroad, and with regard to the establishment of the Bank for International
Settlements and the extent of its relation to the banks of issue, and in particular
to the Federal Reserve System,
In the course of the discussion Governor Harrison emphasized the worldwide
nature of the recent price declines and business depression, and indicated the in
fluence of this world depression upon the position of the United States as reflected
in part by the fact that this country’s export trade for the first quarter of this
year was about 22 per cent less than in the like period of 19£9 and the import trade
was approximately 20 per cent less.

While the worldwide depression appeared in

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 * V23Sfp

4
part to be due to an over-prodtietion of certain principal commodities it also
appeared to reflect a shortage of working capital, and thus a restriction of puirchasing power, in a number of countries, and had been affected by the stringent
credit conditions prevailing last year in world money markets which in turn were in
part a reflection of the use of funds for speculation centering about the New York
security markets but worldwide in its scope*

The recovery of world trade appeared

in turn to be in no small degree dependent upon the restoration of purchasing power
through the medium of foreign borrowings in the New York money market, just as the
recovery of domestic trade appeared to be much dependent on the new financing for
domestic enterprise in the United States.
Before the adjournment of the morning meeting the Conference voted it to
be the sense of the meeting in response to the specific inquiry made by Governor
Young that in view of the full discussion of business and credit conditions had at
this meeting there was no need for holding the usual spring conference of governors.
The morning meeting adjourned at 1:15 p. m.
At 2:30 p. m. the Conference reconvened, all of the Reserve Bank repre
sentatives being present except Governor Black who joined the meeting at about 3
p. m.

Governor Harrison continued his discussion of the European situation and its

relation to business and credit conditions in the United States.
There were distributed to the meeting and reviewed the preliminary memo
randum of the Chairman, the Secretary's report, and a copy of a letter of May 15
from Mr 4 Case to Governor Young giving the New York Reserve Bank's interpretation
of the Open Market Policy prodewure reviewed to March 25.
There was farther extended discussion of the procedure of the Federal
Reserve System in its relationships with the Bank for International Settlements.
Those present indicated that they were in agreement with the policy and procedure
adopted by the directors of the Federal Reserve Bank of New York, first in passing
upon any question submitted to the New York bank by the Bank for International
Settlements, in accordance with the terms of the statutes of that institution,

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

ic» 0• V235&?

and second, in giving the Federal Reserve Board an opportunity to dissent frcm the
conclusions of the directors of the Federal Reserve Bank of New York as to any
major operations which might affect credit conditions in the country at large.
Those present further agreed that it would be impracticable to attempt to submit
questions of this sort to the other Federal reserve banks for their views.
There ensued a general discussion of the credit situation and the dif
ferent proposals which had been made for Federal Reserve action, and there was
a discussion by different governors present both as to the degree of the severity
of business depression and the extent to which it would be wise for the Reserve
System to go in throwing its influence towards easy money and an abundant supply of
credit.

In the course of the discussion Governor Harrison reported that in a

number of recent weeks the Federal Reserve Board had failed to approve without
delay applications of the Federal Reserve Bank of New York for a lower minimum buy
ing rate on bills, and that for considerable periods the New York bank had therefore
been without any downward flexibility in its bill buying rate as was the case at
that very time.

After discussion it was the sense of the governors present that

the minimum buying rate for purchases of bankers acceptances approved by the Federal
Reserve Board should always be at a point which will give flexibility in the bill
operations of the Federal reserve banks.
The discussion reverted to the question which had been raised by Governor
Young concerning the relationship between the findings of the Open Market Policy
Conference and discount rate action by the several Federal reserve banks, and the
following motion was adopted:
The conference voted to go on record that recommendations as to the dis~
count rate of any Federal reserve bank or Federal reserve banks are not within its
proper province and that the directors of any Federal reserve bank must be free at
any time to change the discount rate of their bank subject only to the review and
determination of the Federal Reserve Board.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E »0 • V23S(p

6
The letter of May 15 from Mr. Case to Governor Young giving the New York
Reserve Bank’s interpretation of the Open Market Policy procedure, revised

March 25, was read, and it was generally agreed that this interpretation of the
procedure was not in anyway inconsistent with the sense of the meeting of March 25.
Governor Harrison reported that the Federal Reserve Bank of Kansas City
had requested the allotment of an additional amount of $10,000,000 of Government
securities in order that its volume of earning assets might be sufficient to assure
an amount of earnings adequate to cover expenses and dividends.

A discussion ensued

in the course of which it was reported that a number of tho Reserve banks did not
at that time have sufficient earning assets to cover completely their expenses and
dividends, and that a redistribution of Government securities to one Beserve bank
without a full consideration of the requirements of all might result in possible
unfairness.

It was, therefore, agreed that the figures for each Reserve bank should

be assembled as of the end of May with a view to determining the results of opera
tions of the first five months with respect to earnings, oxpenses, and dividends,
and an estimate be then made of the probable results for the balance of the year on
the basis of which new ratios of allotments of securities might be determined and
necessary readjustments in the Open Market portfolio effected.
With regard to the suggestion of one of the Federal reserve banks, that
it be permitted to purchase government securities for the purpose of supplementing
its earnings, it was the sense of the conference that the supplementing of income
of a Federal reserve bank is not a proper reason for the purchase of government
securities.
With regard to the policy to be pursued to meet fall credit requirements,
it was the sense of the conference that, in view of the uncertainties as to credit
conditions, it is too early at this time to formulate definite plans as to the
means to be used to provide Federal reserve credit to meet autumn seasonal require
ments •

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 • V23St?

7
The meeting adjourned at 6:15 p. m.
The meeting reconvened at 10:00 a* m. on the morning of fcfey 22, there
being present.
Governors Harrison, Norris, Seay, Black, Fancher, Geery,
Martin, Talley and Calkins, and Deputy Governor McKay.
The action taken on the preceding day as it had been formulated in a
series of motions was reviewed and approved by those present.
After a further review of the credit position the following minute was
adopted:
The Conference has considered a preliminary memo
randum reviewing domestic business and credit conditions and
has discussed at length the present trends in world trade,
commerce and commodity prices. Particular consideration was
given to the rapidly declining volume of our export trade
and its probable relation to the decline in commodity prices
in this country.
It appears to the Conference that conditions in
business, agriculture and trade are still seriously depressed,
not only in this country but evidently throughout the rest
\
of the world as well. It is the sense of the Conference
\
that these conditions merit continuous careful observation
by the Federal Reserve System in order that the System will ;
be prepared to act promptly in the event that conditions
1
further develop in such a way as to make action seem advis- 1
able.
In the present circumstances, however, it does not
appear to the Conference that any affirmative recommendation
as to Open Market operations is advisable just now. But it
is the sense of the Conference that if the situation so de
velops as to require an Open Market operation by the System
the members of the Conference will be prepared to reconvene
or else, if a meeting of the whole Conference is not prac
ticable * to act promptly on recommendations of its Executive
Committee.
At 11:00 a. m. the Conference met with the Feioral Reserve Board, there
being present, in addition to the above, the following:

Governor Young and Messrs. Cunningham, Hamlin, James, Miller
and Platt,
and Messrs. Goldenweiser, McClelland and Smead.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority fc • t
)• V23St?

The Chairman of the Conference reported on the action taken by the
Conference in the matter of its organization.

He also read to the meeting the

motions passed by the Conference with regard to
(a)
(b)
(c)
(d)
(e)

the spring Governors* Conference,
the minimum buying rate for bills,
the relation of action of the Conference
to discount rates,
the purchase of Government securities to
supplement earnings, and
the policy with respect to meeting autumn
credit requirements.

The minute with respect to business and credit conditions adopted by the
Conference was then read to the Federal Reserve Board and discussed fully.

The

advisability of the inanediate purchase of Government securities was raised by a
member of the Federal Reserve Board, frcan the point of view of seeing to it that
the Reserve System did everything in its power to remove every possible restraint
of business as far as credit was concerned, and particularly as to the desirability
of an active bond market.

The query v/as also raised as to whether any formula

could be found for the desirable total amount of Federal reserve credit which
might be a guide for open market operations.
In commenting on the minute submitted by the Conference Governor Harrison
indicated that he believed the possible necessity for the purchase of Government
securities might become imminent at any time.

The meeting adjourned at 12:30 p. m,

W. Randolph Burgess,
Secretary.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority

COPY
May 15, 1930

Dear Governor Young:
The directors of this bank have considered the Federal Reserve Board’s
letter of March 31, 1930, together with the enclosed draft of open market procedure
as revised on March 25, 1930, and have voted that this bank accept participation
in the open market policy conference under the terms of the proposed plan as they
interpret that plan.
In considering the plan of procedure it has seemed to our directors that
there may be some possible ambiguity with regard to the extent to which the proposed
procedure is applicable to Federal reserve bank transactions in bankers acceptances
and our directors interpret the revised plan as not establishing any different
procedure with respect to bill operations than has existed heretofore.
Operations in bankers acceptances are, of course, governed by a technique
quite different from operations in government securities.

Whereas idle volume of

purchases or sales of government securities may be determined directly, the volume
of holdings of bankers acceptances on the other hand is subject largely to a rate
oontrol which must be adjusted promptly from time to time to changing market condi
tions, and therefore does not subject itself to determination in advance by an open
market policy conference.
We are mentioning this matter now only because of our desire to avoid
any possible misunderstanding in the future, and to make sure that the plan suggest
ed is not intended to set up any new procedure with regard to bill operations.
Faithfully yours,
(Signed)

Honorable Roy A. Young,
Governor, Federal Reserve Board,
Washington, D. C.

J. B. Case,
Chairman.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority B • 0» V23S(p

CONFI BENTIAL
MINUTES OF THE MEETING OF THE OPEN MARKET POLICY CONFERENCE
HELD AT THE OFFICES OF THE FEDERAL RESERVE BOARD
WASHINGTON, D. C., May 21 and 22, 1930.
The meeting was called to order by Governor Young at 10j4£) a. m.
The following were present;
From the Federal Reserve Board,
Governor Young and Messrs* Cunningham, Hamlin, James,
Miller and Platt.
From the Federal Reserve Board's staff,
Messrs. Goldenweiser, McClelland and Smead.
From the Federal Reserve Banks,
Governors Harrison, Norris, Seay, Black, Fanoher, Geery,
Martin, Talley and Calkins, and Deputy Governors Burgess
and McKay.
Dr. Goldenweiser presented the facts as to the recent credit situation.
Governor Young asked the Conference to consider whether or not it was
desirable to hold a Governors Conference in the near future.
Governor Young reported informally on the discussion of the Federal
Advisory Council with the Federal Reserve Board on May 19.
Governor Young reported that the Open Market procedure as amended by the
meeting of Governors of the Reserve banks on March 25 had been submitted to all
the Reserve banks and that they had all indicated their willingness to participate
in accordance with the suggested procedure.

The New York bank had accompanied its

acceptance with a letter explaining its interpretation of the proposed procedure.
A copy of this letter was distributed to the Governors and is attached herewith.
In view of the acceptance of the procedure by all Reserve banks which was approved
by the Federal Reserve Board, Governor Young indicated that this meeting might be
regarded as the first regular meeting of the Open Market Policy Conference.
Governor Young indicated that a number of proposals had come informally
before the Federal Reserve Board though none of these proposals had taken the
form of an official request for consideration.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED

O V23S(s>

Authority £ « ■

2
[ 1.
A sale of securities for the purpose of checking
speculation, improving hank earnings, and aiding the liquidation
of security loans.
2.
A purchase of securities largely with the object of
reviving the mortgage market.

«5 3. One Reserve bank in order to increase its earnings was
considering the desirability of its buying for its own account
in the market $500,000 a month of Government securities.
4.
A sale of $200,000,000 of Government securities to
bring about an adjustment of System earning assets so that re
discounts might be approximately equal to the total of Government
securities and bankers acceptances held, this sale of securities
to be simultaneous with reductions in the discount rates of a
number of the Reserve banks.
5.
A proposal to purchase Government securities and reduce
discount rates to secure a deliberate inflation of credit for tho
benefit of business.
^ 6 . To do nothing now but to be prepared to meet autumn
seasonal requirements for Federal reserve credit (computed at
between $350,000,000 and $400,000,000} by purchases of Government
securities and increases in bill holdings.
There followed a brief discussion of the implications of the findings of

the last meeting of Governors on March 25.

Governor Young indicated that he had

hesitated to vote favorably on the New York application for a three per cent discount
rate because of the resolution of Governors at that meeting.

Governor Harrison

indicated that the New York Reserve bank he was sure did not want to be in a posi
tion of feeling "that they were violating the spirit of the findings of the Open
Market Policy Conference in making a change in discount rate following such a con
ference, particularly when a number of weeks had elapsed after the conference.

The

decision as to discount rates he regarded as primarily the responsibility of the
boards of directors of the respective Reserve banks subject to the

review of the

Federal Reserve Board, and he did not believe the action of the Open Market Policy
Conference should be regarded as in any way restricting freedom of action on discount
rates.

A number of other governors indicated their agreement with Governor

Harrison*s statement.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E • 0• V23S(p

3
At 11;45 the representatives of the Federal Reserve Board retired from
the meeting and the Open Market Policy Conference reconvened by itself.
The action taken in the organization of the Conference at the meeting on
March 25 was reaffirmed both as to the election of the representative of the New
York bank as chairman of the conference and as ex-officio chaiunan of the Executive
Committee, and as to the appointment for one year of an executive committee composed
of the representatives of Boston, Philadelphia, Cleveland, Chicago and New York
banks.

It was agreed that in following the principle of reasonable rotation in

the membership of the executive committee, there should be sufficient flexibility so
that the consnittee should not be made up altogether of new members and should be
fairly representative of different sections of the country and various interests.
Mr* Burgess was elected secretary of the conference for one year.
Mr. Harrison explained the considerations which had led to the calling of
the Conference indicating in particular that he desired an opportunity to report to
the other Governors concerning his recent trip abroad, and also that a full dis
cussion of the credit situation seemed desirable prior to the beginning of the
vacation season.
Governor Harrison then gave a full report of his trip to Europe, of the
point of view with regard to the credit and business situation held by the heads of
banks of issue of different countries, the developments with regard to the gold
position abroad, and with regard to the establishment of the Bank for International
Settlements and the extent of its relation to the banks of issue, and in particular,
to the Federal Reserve System*
In the course of the discussion Governor Harrison emphasized the worldwide
nature of the recent price declines and business depression, and indicated the in
fluence of this world depression upon the position of the United States as reflected
in part by the fact that this country’s export trade for the first quarter of this
year was about 22 per cent less than in the like period of 1929 and the import trade
was approximately 20 per cent less.

While the worldwide depression appeared in

Reproduced from

the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority E • 0 • V2SS(p

4
part to be due to an over-production of certain principal commodities it also
appeared to reflect a shortage of working capital, and thus a restriction of pur
chasing power, in a number of countries, and had been affected by the stringent
credit conditions prevailing last year in world money markets which in turn were in
part a reflection of the use of funds for speculation centering about the New. York
security markets but worldwide in its scope.

The recovery of world trade appeared

in turn to be in no small degree dependent upon the restoration of purchasing power
through the medium of foreign borrowings in the New York money market, just as the
recovery of domestic trade appeared to be much dependent on the new financing for
domestic enterprise in the United States.
Before the adjournment of the morning meeting the Conference voted it to
be the sense of the meeting in response to the specific inquiry made by Governor
Young that in view of the full discussion of business and credit conditions had at
this meeting there was no need for holding the usual spring conference of governors*
The morning meeting adjourned at 1:15 p. m.
At 2:30 p. m. the Conference reconvened, all of the Reserve Bank repre
sentatives being present except Governor Black who joined the meeting at about 3
p. m.

Governor Harrison continued his discussion of tho European situation and its

relation to business and credit conditions in the United States.
There were distributed to the meeting and reviewed the preliminary memo
randum of the Chairman, the Secretary's report, and a copy of a letter of May 15
from Mr. Case to Governor Young giving the New York Reserve Bank’s interpretation
of the Open Market Policy prodecure reviewed to March 25.
There was further extended discussion of the procedure of the Federal
Reserve System in its relationships with the Bank for International Settlements,
Those present indicated that they were in agreement with the policy and procedure
adopted by the directors of the Federal Reserve Bank of New York, first in passing
upon any question submitted to the New York bank by the Bank for International
Settlements, in accordance with the terms of the statutes of that institution,

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority 1c • D• V23Sk

and second, in giving the Federal Reserve Board an opportunity to dissent from the
conclusions of the directors of the Federal Beserve Bank of New York as to any
major operations which might affect credit conditions in the country at large.
Those present further agreed that it would be impracticable to attempt to submit
questions of this sotft to the other Federal reserve banks for their views*
There ensued a general discussion of the credit situation and the dif
ferent proposals which had been made for Federal Reserve action, and there developed
some difference of opinion both as to the degree of the severity of business depres
sion and the extent to which it would be wise for the Reserve System to go in
throwing its influence towards easy money and An abundant supply of credit.

In the

course of the discussion Governor Harrison reported that in a number of recent weeks
the Federal Reserve Board had failed to approve without delay applications of the
Federal Reserve Bank of New York for a lower minimum buying rate on bills, and that
for considerable periods the New York bank had therefore been without any downward
flexibility in its bill buying rate as was the case at that very time.

After dis**

cussion it was the sense of the governors present that the minimum buying rate for
purchases of bankers acceptances approved by the Federal Reserve Board should always
be at a point which will give flexibility in the bill operations of the Federal
reserve banks.
The discussion reverted to the question which had been raised by Governor
Young concerning the relationship between tho findings of the Open Market Policy
Conference and discount rate action by the several Federal reserve banks, and the
following motion was adoptedi
The conference voted to go on record that recommendations as to the dis
count rate of any Federal reserve bank or Federal reserve banks are not within its
proper province and that the directors of any Federal reserve bank must be free at
any time to change the discount rate of their bank subject only to the review and
determination of the Federal Reserve Board.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority B • 0 * V23S(p

The let tar of May 15 from Mr. Case to Governor Young giving the New York
Reserve Bank's interpretation of the Open Market Policy procedure, revised

A discussion ensued

in the course of which it was reported that a number of tho Reserve banks did not
at that time have sufficient earning assets to cover completely their expenses and
dividends, and that a redistribution of Government securities to one Heserve bank
without a full consideration of the requirements of all might result in possible
unfairness.

be assembled as of the end of May with a view to determining the results of opera
tions of the first five months with respect to earnings, expenses, and dividends,
and an estimate be then made of the probable results for the balance of the year on
the basis of which new ratios of allotments of securities micht be determined and
necessary readjustments in the Open Market portfolio effected.
With regard to the suggestion of one of the Federal reserve banks, that

it be permitted to purchase government securities for the purpose of supplementing
its earnings* it was the sense of the conference that the supplementing of income
of a Federal reserve bank is not a proper reason for the purchase of government
securities.
With regard to the poliey to be pursued to meet fall credit requirements,
it was the sense of the conference that, in view of the uncertainties as to credit
conditions, it is too early at this time to formulate definite plans as to the
means to be used to provide Federal reserve credit to meet autumn seasonal require
ments.

I
j
i

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

jp.0» V23Sfc>

7
The meeting adjourned at 6:15 p. m.
The meeting reconvened at 10:00 a. m. on the morning of May 22, there
being present *
Governors Harrison, Norris, Seay, Black, Fancher, Geery,
Martin, Talley and Calkins, and Deputy Governor McKay.
The action taken on the preceding day as it had been fortnulated in a
series of motions was reviewed and approved by those present.
After-a further review of the credit position the following minute was
adopted:
The Conference has considered a preliminary memo
randum reviewing domestic business and credit conditions and
has discussed at length the present trends in world trade,
commerce and commodity prices* Particular consideration was
given to the rapidly declining volume of our export trade
and its probable relation to the decline in commodity prices
in this country.
It appears to the Conference that conditions in
business, agriculture and trade are still seriously depressed,
not only in this country but evidently throughout the rest
of the world as well. It is the sense of the Conference
that these conditions merit continuous careful observation
by the Federal Reserve System in order that the System will
be prepared to act promptly in the event that conditions
further develop in such a way as to make action seem advis
able.
In the present circumstances, however, it does not
appear to the Conference that any affirmative recommendation
as to Open Market operations is advisable just now. But it
is the sense of the Conference that if the situation so de
velops as to require an Opon Market operation by the System
the members of the Conference will be prepared to reconvene
or else, if a meeting of the whole Conference is not prac
ticable, to act promptly on recommendations of its Executive
Committee,
At 11:00 a. m. the Conference met with the Federal Reserve Board, there
being present, in addition to the above, the following:
Governor Young and Messrs. Cunningham, Hamlin, James, Miller
and Platt,
and Messrs. Goldenweiser, McClelland and Smead,

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E •0• V23Sio

3
The Chairman of the Conference reported on the action taken by the
Conference in the matter of its organization.

He also read to the meeting the

motions passed by the Conference with regard to
(a)
(b)
(c)
(d)
(e)

The minute with respect to business and credit conditions adopted by the
Conference was then read to the Federal Reserve Board and discussed fully*

The

advisability of the immediate purchase of Government securities was raised by mem
bers of the Federal Reserve Board, from the point of view of seeing to it that the
Reserve System did everything in its power to remove every possibile restraint of
business as far as credit was concerned, and particularly as to the desirability of
an active bond market.

The query was also raised as to whether any formula could

be found for the desirable total amount of Federal reserve credit which might be
a guide for open market operations.
In commenting on the minute submitted by the Conference Governor Harrison
indicated that he believed the possible necessity for the purchase of Government
securities might become imminent at any time.

The meeting adjourned at IE:30 p. m.
W. Randolph Burgess,
Secretary.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

E •D• V23S\o

COPY
May 15, 1930

Dear Governor Young:
The directors of this hank have considered the Federal Reserve Board’s
letter of March 31, 1930, together with the enclosed draft of open market procedure
as revised on March 25,.1930, and have voted that this bank accept participation
in the open market policy conference under the terms of the proposed plan as they
interpret that plan.
In considering the plan of procedure it has seemed to our directors that
there may be some possible ambiguity with regard to the extent to which the proposed
procedure is applicable to Federal reserve bank transactions in bankers acceptances
and our directors interpret the revised plan as not establishing any different
procedure with respect to bill operations than has existed heretofore.
Operations in bankers acceptances are, of course, governed by a technique
quite different from operations in government securities.

Whereas the volume of

purchases or sales of government securities may be determined directly, the volume
of holdings of bankers acceptances on the other hand is subject largely to a rate
control which must be adjusted promptly from time to time to changing market condi
tions, and therefore does not subject itself to determination in advance by an open
market policy conference.
We are mentioning this natter now only because of our desire to avoid
any possible misunderstanding in the future, and to make sure that the plan suggest
ed is not intended to set up any new procedure with regard to bill operations.
Faithfully yours,
(Signed)

Honorable Roy A. Young,
Governor, Federal Reserve Board,
Washington, D. C.

J, H. Case,
Chairman.

Reproduced

from the Unclassified / Declassified Holdings of the National Archives

f --C
May 20, 1930

PRELIMINARY MEMORANDUM FOR THE
OPEN MARKET INVES1MEPTT COmilTTEE
Reports on business activity during the two months since the last meeting
of the Open Market Investment Committee have, in general, shown^no^material evidence of recovery.

After allowance for the usual seasonal increase, final figures

for March showed some rediiction from February in general production and trade, and
April figures apparently will show a slight increase, but, in general, there seems
to have been little advance from the lowest levels reached during the recession
which baganJLast autumn.
In some directions conditions appear to have become somewhat worset
rather than better,

Factory employment, for example, failed to show the customary

spring increases, and the Federal Reserve Board’s seasonally adjusted index has

— ■—

—

declined each month to a new low point for recent years.

-------------------------- -— ■—

■ V

The bond market, which

at the time of the March meeting had been showing a .strong advance, has since had
a setback and, although there has been some improvement accompanying the easy
money conditions of the past three or four weeks, the recent cohdition of the bond
market cannot be called better than fair.

Commodity prices, after some indica

tion of a slightly fiimer tendency in the latter part of March, have subsequently
turned downward again and the weekly index of 285 commodities computed by the
Federal Reserve Board has declined gradually, but steadily, to new low levels since
1916.
COMMODITY PRICES
The tabulation below shows the Board’s latest weekly commodity index in
comparison with the index for March 28, and also with the index for July 26, 1929,
which marked the high point just preceding the decline which began last August*
This indicates that there has been a decline of about 2 per cent since March 28,
and approximately 10 per cent since last July.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

July 26
1929

May .16
1930

Mar, 28
1930

General Index - Federal Reserve Board

98.9

91.2

89.2 (May 9)

Wheat
Corn
Hogs
S ceers
Hides
Sugar, refined
Cotton
Wool, domestic, weekly average
Silk* weekly average
Rubber
Pig iron*
Finished steel*
Scrap ateel
Copper
Lead
Tin
2 inc
Petroleum.

1,47 5/8
1.06
11.73
14.92
0.18
0.0550
0.1870
0.8817
4.763
0.21 1/4
18.42
0.03412
18.75
.18
.0675
.47 1/16
.0680
1.727

1.06 3/4
0.81 3/8
9.95
13.25
0.14 1/4
0.0500
0.1600
0.6874
4.258
0,15 1/2
17.75
0.02312
16.25
0.18
0*0575
0.37 5/8
0.0485
1.489

1.06 1/2
.80
9.97 1/2
12.33
0.14
.0490
.1650
0.6518
3.812
.14 1/8
17.58
0.02228
15.50
0.13
0.056
0.32
0.0464
1.522 (May 9)

* Iron age compos ites for preceding Tuesdays.

Tills decline has not been confine! to any one group of commodities.
As tbe tabulation indicates, while some of the most severe declines since last
July have been in agricultural products, there have been substantial declines also
in metals and other industrial raw materials.
SECURITY MAHKETS
Just preceding the last meeting of the Committee on March 24 and 25, the
bond market showed a rapid increase in the volume of trading, and a rapid rise in
prices.

Apparently this represented, in part, a response to the unusually easy

money conditions which developed for a short time during the March tax period be
cause ef the temporary excess of Treasury disbursements over collections.

With

the firmer money conditions that developed in the latter part of March and the
early part of April, there was a reaction in the bond market;

the volume of bond

trading on the Hew York Stock Exchange declined from around $20,000,000 a day to
around $10,000,000;

a large part of the March rise in bond prices was canceled;

and there were reports of a considerable accumulation of undigested bonds in the

Reproduced from the Unclassified/ Declassified Holdings of the National Archives

hands of security dealers.
Accompanying the easier money conditions of the past few weeks, however,
bond market conditions have shown some slight improvement.

There has been no

sustained increase in the volume of bond trading on the Exchange, but it is re
ported that the accumulation of bonds has been to some extent distributed, and
that there has been a little better distribution of new offerings, which have been
in large volume.

Bond pfices, however, have not reached the levels of the third

week in March, and the market is not strong.
The following is a summary of long-term bond issues during the first
four months of 1930 compared with the corresponding period in the two preceding
years.

This shows that there has been a larger volume of domestic corporate bond

issues than in either of the two previous years, an increase also in foreign
corporate issues, and a considerable revival in issues of domestic municipalities
and states, and also in foreign governmental borrowing through the bond market.
The increased issues reflect in part the carrying out of financing postponed by
reason of adverse market conditions last year, and also represent the partial
fulfilment

of pledges made to the President by corporation and public officials.

An analysis of the issues indicates a large part of the proceeds are being used
directly in undertakings involving construction or other undertakings involving
the employment of labor and the purchase of materials.
(First four months each year; figures in millions of dollars;
refunding issues excluded)
1928

1929

1930

859
477
163
287

785
338
157
38

1,279
458
238
208

1,786

1,318

2,183

Domestic Corporate
Municipal and State
Foreign Corporate
Foreign Government
Total

Although recent money rates have made bond yields more attractive than for two
years past there still appears to be reluctance on the part of commercial banks to
increase their bond holdings materially.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Notwithstanding the somewhat firmer money conditions during the latter
part of March and the early part of April, stock prices continued to rise during
that period, and at the highest point reached early in April, a general index of
stock prices showed a recovery equal to nearly 60 per cent of the decline from the
highest, level reached in 1929 to the lowest point of last November,

Subsequently,

although money conditions have eased, there has been a substantial decline in
stock pricesj and recently tho volume of trading has diminished considerably*
MONET RATSS
The accompanying table shows the principal changes in money rates
compared with those shown in the memorandum presented at the March meeting of the
CcwEiittee!

Call loan renewals
Time money, 90-day
Commercial paper
Bills, 90-day
Treasury certificates
Sept, 15
Dec. 15

March 21

April 16

May 20

3
3 3/4-4
4
2 1/2

4
4 l/4
3 3/4-4
3

3
3 1/4-3 ljk
3 3/4
2 3/8

2,65
2.81

3.11
3,19

2.22
2.63

This shows a distinct filming between March 21 and April 16 in a majority of rates,
including call money, time money, and bankers acceptance rates, and yields on
short-dated Treasury certificates.

IXiring that period there was no evidence of

any considerable surplus of funds seeking short-term investment in the New York
money market.

In fact, the advance in rates reflected some slight difficulty in

meeting the demand for funds, a difficulty which was further evidenced by a con
siderable increase in sales of bills to the New York Reserve Bank under repurchase
agreement.

During the latter part of April money conditions eased slightly, re

flecting chiefly a substantial inflow of gold, and this movement toward easier
conditions was accelerated early in May by reductions in the rediscount rate of
the Federal Reserve Banks of New York and Boston, and by a further decline in the
amount of currency in circulation.

Even during this later period, however, there

were only a few days on which the New York banks were completely out of debt,

Reproduced from the Unclassified / Declassified Holdings of the National Archives

5
and surplus funds in tho market were rather promptly absorbed by reductions in the
system bill portfolio,
FEDERAL RESERVE CREDIT
Funds made available through gold imports or currency reduction were
used to reduce the amount of Federal Reserve credit in use, rather than for any
expansion in credit, as indicated in the following figures:
(In millions of dollars)
March 24
Discounts
Bills bought
U. S. securities
Other securities

219
241
533
___ 9

Total

1,002

April 16

May 17

214
227
302
174
535
529
___________ 7

1,061

Discounts for member banks show little change.

938

Between March 24 and

April 16 the bill holdings of the System increased $61,000,000, largely in sales
contracts, accompanying finner money conditions.

Subsequently, gold imports and

the continued reduction in the amount of currency in circulation made available
funds which were used to reduce bill holdings over $100 ,000,000.
MEMBER B A M CREDIT
Since the statement date just preceding the last meeting there has been
a comparatively small increase in the total loans and investments of weekly re
porting member banks, as follows:
(In millions of dollars)
Amount on
March 19
May 14
Loans on securities
All other loans
Investments
Total

Change

8,054
8,793
5,667

8,246
8,560
5,811

+ 192
- 233
+ 144

22,514

22,616

+- 102

One factor in the recent trend of bank loans, no doubt, is the fact that
municipalities and, to scsne extent, corporations, which last year were unable to
obtain long-term loans under favorable conditions through the bond market, and

Reproduced from the Unclassified I Declassified Holdings of the National Archives

consequently relied upon short-term bank loans, this year have sold long-term
bonds and have used part at least of the proceeds to repay bank loans.

To the

extent that the increase in security loans has been due to borrowing by security
dealers to carry such securities pending distribution, the loans which would now
be included in "loans on securities" may be serving the same purpose as last year,
when they would have been included among the "all other loans."
Further light on recent changes in bank security loans is contained in
the tabulation on the following page.

Comparisons in this tabulation are between

October 2 of last year, when the highest point in the weekly brokers loan figures
was reached, October 30, immediately following the first severe break in the market
and consequent shifting of loans;
total brokers loans was reached;
security loans was reached;

December 24, when the lowest recent point in
February 26, when the 1930 low for reporting bank

and May 7, which is the last date for which complete

figures are now available.
This tabulation indicates that, although the security loans of weekly
reporting banks are now higher than on October 2 of last year, there has been a
net liquidation of nearly 4 billion dollars of loans on securities during the in
tervening period.

The analysis indicates further that, although the loans of

weekly reporting banks to brokers for their own account have increased nearly
$1,100*000,000 since December 24, practically $400,000,000 of this amount has
served simply to replace loans to brokers withdrawn by lenders other than domestic
banks, and the remainder has replaced loans made by reporting banks directly to
their customers, so that there has been no net increase in total security loans
since December 24, notwithstanding the fact that tho weekly reports of brokers loans
have indicated a net increase of about $750,000,000.

Even since February 26 a sub

stantial part of the increase in the loans of reporting banks to brokers has simply
offset continued withdrawals of funds from brokers loans by "other" lenders, and
continued reductions in security loans made by the reporting banks directly to
their customers.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

7
The total reduction in loans for "others" indicated by this analysis is
nearly $3,400,000,000 since last October, not including the reduction of unknown
amount in loans to New York brokers by customers of out-of-town banks.

The re

duction did not all take place last autumn, but has continued during the past few
montiis, and it seems quite possible that it may have scane bearing on the continued
decline in the "commercial” loans of reporting banks.

That is to say, the steady

withdrawal of funds from the call loan market by corporations and other lenders may
well have provided current funds for business transactions, which otherwise might
have been borrowed at banks.

Bank Loans to ^rckers
Leans to New York City brokers
New York City reporting banks, own account
Other reporting banks, own account
Loans to brokers outside New York City,
all reporting banks, oun account

Oct. 2

Oct, 50

1,025
430

2,021

Dec. 24

*eb. 26

Hay 7

285

794
297

906
503

1,560
662

663

915

700

585

652

2,288

3,219

1,791

1,992

2,874

1,396

720

419

477

461

3,907
1,472

2,464
796

1,767
620

1,556
659

1,541
654

5,379

3,260

2,387

2,195

1,995

Tptal Reported loans to Brokers

9,093

7,199

4,597

4,664

5,530

Security Loans of Reporting Banks to Customers
Other than Brokers

5,508

5,959

6,140

5,649

5,585

14,601

15,158

10,757

10,515

10,715

Total
Loans to Brokers from Other Banks and their Custcmers*
Loans to Brokers from Other Lenders
Reported by New York City banks
Reported to Stock Exchange^
Total

Total Reported Security Loans

*Loans placed by New
than New York.

York banks for out~o'n-town banks less brokers loans of reporting member banks in cities other

"End of month figures nearest dates specified.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

(In millions of dollars)

Reproduced from the Unclassified / Declassified Holdings of the National Archives

ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE R V ICE )

5 , -C

RECEIVED AT W ASHINGTON, D. C.

Gldea
Cleveland

1010am May 16

/fj[ 0

Ycmng
waslrn
twill 1B06.
<r—

this bank will be represented.
Fancher
1018am
£

*S.MTRNUIHfW
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2—11901

■

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^ZLEGRAM
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3 b b < “C

(L E A SE D W IR E SE RV ICE )

89gb
Chicago May 1& n 09 a m ^ ^ IVEDATWASHINGTON*D*c*
/ft ®

Young

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S u b je c t yo u r te le g ra m f I f t e e n t h | w i l l a rran g e to be re p re s e n te d

at the meeting

p a. abramm*
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Mcdougal
1132am

2— 11801

Reproduced from the Unclassified I Declassified Holdings of the National Archives

" ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

184gb

RECEIVED AT W ASHINGTON, D. C.

Sanfrancisco May 16 957am
— *"■

\
yr,

Governor Young

Washington

^
\

I do not think there are any specific topics that require immediate
attention of a governors conference.

It seemed however undesirable

to have two conferences which, would be attended by governors wsm
something like a month apart

I am unable to see that a governors

conference will be necessary immediately after conference of
council to consider amendments to regulation J as it appears to
me that there has been adequate discussion and as there is no
occassion for great haste

U. 8 OOWHNMKKT
THINTINO MOTS! 1M»

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118p

2—11901

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F or~n . 148

TELEGRAM
F E D E R A L R E S E R V E BOARD '

-C

LE A S E D W I R E S E R V IC E
W A S H IN G T O N

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In roply ywir teleffrga of yotorday./1 fead no% contoaplated * Q&mmmm*
Ooofsnooi booroo© I bollovo oae will ham to %o hold lator following
of Goonool of M m S .
banka, whloh U to bo hold on
Joao 9fe to eonoidor dhft&goo In Be^aSASlOB J o&H ooUootion elrcalarw.
If, howovor, you havo any spoolfie topic* that ytm fool roquir* innediato
a tton tion and think if adrioablo to ,1m m a QoTornoro* ConfOronco at con
clusion of Opon Market noeting, by all means do oo.

ooaf&rmm

mm*m

Yofrio.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

HSLEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT W ASHINGTON. D. C.

167bot
Boston 235p ^ay 15

% 'S 0

Young
Washn

Boston will not be repiroaented at meeting open market policy
conference May ElstT Directors meet that date".

rwKKMv
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Paddock

235p

Reproduced from the Unclassified / Declassified Holdings of the National Archives

ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE R V ICE )

RECEIVED AT W ASHINGTON, D. C.

180bfa
NewYork NY

413p May 15

^oung
Washn

In the absence of Governor ^rfcison I acknowledge receipt of
-—

—

-—

—

your telegram ^stating that a meeting of the open market policy
conference has been called for Wednesday May 21 this bank will
be represented at the meeting

f
aovw nm rt muktom •»«<>■; i«a

Case,
317pm

3— 11901

^---

Reproduced from the Unclassified I Declassified Holdings of the National Archives

" ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

RECEIVED A T W ASHINGTON, D. C.

6808 17
Philadelphia 3pj^ayJL6

Totmg
Washington

fwill 1206]This hank will he represented at oonferenoe on Slat
instant
Norris

tf> B. OOTSBKVSKT rftSKTlNS •VVtOS 19U

201P

Reproduced from the Unclassified / Declassified Holdings of the National Archives

^ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

7Qrhta

r e c e iv e d a t

Riohmond

2pm may
^ ----------

Wa s h in g t o n ,

Governor Young

Washington
Swill 1206# I have an engagement on the twentieth and very nraoh hope you oa*
arrange a later date than the twenty first^Say^ beginning the twenty second.

Seay

206p

Reproduced from the Unclassified I Declassified Holdings of the National Archives

ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT W ASHINGTON, D. C.

lllfo t

Atlanta Ga 415PM May 15 1930
-- -nnurn----

Governor Young
Washington
Our Bank will be represented at meeting of* open market policy
conference Wednesday May Slst*

0. ft eOVMtKMECT
?RIKTm » 9 f t % 9 M

E R Black

Reproduced from the Unclassified I Declassified Holdings of the National Archives

"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A S E D W IR E SE RV ICE )

3
RECEIVED AT W ASHINGTON, D. C.

259gl>
Stlouis May 15 259p

Young
Washn

Will be present open market policy conference may 21st
Martin
348p

■*>

O S. ODTIKXUCKT » « ? ■ » « « * K » IM *

\
8— 11901

Reproduced from the Unclassified I Declassified Holdings of the National Archives

L . _ ________________________ _______ ______________________________________________

"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

RECEIVED AT W ASHINGTON, D. C.

215gb
Minneapolis May 15 lp

I ^

Young

Washn
Bepljjfig

te ^ a n s 120^wi 11 be represented at conference

“c-x ------ -

may 21
Geery

n. a M n am w r reranaa a m m i

213p

2—UW1

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ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

255got 6 0
Kansas City Mo 147pm May 15 193CL,
Tcmng
Washington*
'Pwill 1206. Because of Directors meeting May 20th Illness of Governor
Bailey and important bankers conventions May 21,22 and 25, it would
he very difficult for us to have a representative attend open market
policy conference May 21, Will therefore not he represented unless
you deem necessary.
Worthington

314p

P S. GOVfor
ERNMFRASER
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Digitized

2—11901

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ELEGRAM
FEDERAL RESERVE SYSTEM
(L E ASE D W IR E SE RVICE)

RECEIVED AT W ASHINGTON, D. C.

200gb
Dallas May 15 1238p

^ ;

Young
T

/as -n

Twill 1206

r 8. 00VI8KMBNT MUNTOIO OmCBr

This bank will be represented
Talley
150p

2— 11901

at conference.

Reproduced from the Unclassified / Declassified Holdings of the National Archives

w in e , o b fw iw b /

RECEIVED AT WASHINGTON, D.

309gy

Sanfrancisco 225p
Young

ay 15

/f
,
i2 o y

533,

Washn
1 will attendjconferenee May twenty First do you contemplate
a governorfs conference following

8 s. fidrcRNMSK?
nuimNO m ncx iex«

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602p

2—11901

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Date:.
FOR ANSWERS SEE:
l.

s'/^/zb

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^//i>/30

>5^

Reproduced from the Unclassified I Declassified Holdings of the National Archives

F o r m 148

TELEGRAM
F E D E R A L R E S E R V E BOAj=JDy,
W A S H

IN G T O N

3 3 "hi
Mar U i t w o

m t m mm

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MAY l g 1930

MAY 1 5 1930

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3 2F o r m 148

TELEGRAM
FEDERAL RESERVE B O A t o

L EASED W I R E S E R V IC E
W A S H IN G T O N

aro

2-9454

Uay
Calkins *

19530

3an Fruiioieco

Ymu? wtro*^ OoTdmor Yomn/j away this wm lu

There appears to bo no llklihood

of conference during ijay*

c/ sJ

Platt.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

s
222gb

RECEIVED AT WASHINGTON, D. C.

SanfranciscoMay

1208p

Governor Young
Washington*
In order to enable me to make some forward engagements I would
atroreciate
your
view as to probability
of open market or --------w
governors
JSrJT
•
.... mum|,
, ■ir-nrif— - -w—
futur e ,

Bo you think one is apt to be called

before fifteenth of June

Calkins
314p

r— — — ------------------------------------------------------------------------------------------------------------------------------------- ------------------------

Reproduced from the Unclassified I Declassified Holdings of the National Archives

—ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SERVICE)
■3,

RECEIVED AT WASHINGTON, D. C.

20 o m 8
phi la 1026a may 2
Young

Washn
fwill 1202 May 1st

9 B GOVCBNMBNT
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927a

2—11901

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(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

172bmr

New York 447p May 1
Young
Washn
Twill 1202 today

Harrison
351p

1 ^ 3

b3 .

Reproduced from the Unclassified I Declassified Holdings of the National Archives

-ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D . C.

188dea
Cleveland

4pm May 1

Young
Washn
Twill

1202

Fancher
415pm

1 ^

3 *> 3 , KL

Reproduced from the Unclassified I Declassified Holdings of the National Archives

^ ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SERVICE)

RECEIVED AT WASHINGTON, D. C.

82rhta

fiiohaead giOgn may 1

J ^ 3 1O

Gory Young
Vaahn
f w m 12 0 2 «ay first
S«ay
351j«n

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2—11901

ir""---:
---- '
Reproduced from the Unclassified I Declassified Holdings of the National Archives

""ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SERVICE)

RECEIVED AT WASHINGTON, D. C.

USfy 6
A t la n t a May X,

Waslm
Twill 1202 today

Blaefc

I ■.atmnntnanmaMin im

2—11901

Reproduced from the Unclassified I Declassified Holdings of the National Archives

TELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

250gb 7

RECEIVED AT W ASHINGTON, D. C.

Chicago May l_554p

/ ^ 5 9

Young
Waslin
Twill 1202

Digitized
for
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kic m n n n m #m ci: in i

May first
*

Mcdougal
337p

11«01

---------------------------------------------------------------------------------------------------------------------------------------------- _

—

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■’'ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SERVICE)

RECEIVED AT WASHINGTON, D. C.

265gb 11

St louts May 1 3p

£ &

Young
Washn
Twill ISO2

9 8. OOVBHXMBKT F&EKTIK0 09TI09: 19*8

May 1 1930
Martin
358p

2—11901

Reproduced from the Unclassified / Declassified Holdings of the National Archives

"HELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

257gb 8
Minneapolis May 1 245p

/ f *£ &

Young
Washn
Twill trans 1202 may first

p s. iBovnmoNT m m m m in i: i m

G-eery
351p

2—41901

Reproduced from the Unclassified I Declassified Holdings of the National Archives

i* s. wTwuoiBfT m m w «mm: itsa

TELEGRAM
264gb 9 FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE R V ICE )

RECEIVED AT WASHINGTON, D. C.

Kansas city May 1 249p
Young
Washn
tPwill 1202
Worthington
357p

MllOt

m
3

Reproduced from the Unclassified / Declassified Holdings of the National Archives

"’"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

266gb 5
Dallas 245p May 1
i

Young
Washn
Twill 1202
Talley

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FRASER
9- b. g
k>vfor
*rnm
w*tntom aiA o rp in s *#*#

2— 11801

$ d

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TELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE R V ICE )

RECEIVED AT WASHINGTON, D. C.

284gy 3
Sanfrancisco 154p May 1

Board
Washn

/2c 2.

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s. oormHucK?
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2— 11901

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502p

Reproduced from the Unclassified I Declassified Holdings of the National Archives

jsutsit* izoz,
FOR ANSWERS SEE;

Ds.'fos

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Form 148

TELEGRAM
F E D E R A L RESERVE B
LEASED W IR E SERVICE
W A S H

IN Q T O N

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-ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

12 0 bmr 8
Boston " " r

Young
Washn
Twill 1200 April 29
Paddock
124p

orncsina

2—11001
8 s. <| for FRASER
ya u m N a
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o vx h x u b n t

Reproduced from the Unclassified I Declassified Holdings of the National Archives

^ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A S E D W IR E SE RVICE)

RECEIVED AT W ASHINGTON, D. C.

3bs
NewYork 933A A-nl SO
aT gu n g

Wasfcn

Twill 1200 today
Harrison
836A

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2—11901

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3 3 3,

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""ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SERVICE)

RECEIVED AT W ASHINGTON, D. C.

75omr8
JP&Qa Apr

Young

Twill XEOO April 29.

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for
j. a n
u nFRASER
m nnrran cmca- m s

jjorria
30 9p

MUOl

Reproduced from the Unclassified / Declassified Holdings of the National Archives

- ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE R V ICE )

RECEIVED AT W ASHINGTON, D. C.

176dea
Cleveland Apl 50

Young
Washn
Twill

9- a. moTMvmtmn
ntavfiM w nns im

1200
Fancher
118pm

2—n eo i

116pm

/ ^

3 D

^ ^

Reproduced from the Unclassified I Declassified Holdings of the National Archives

’’"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT W ASHINGTON, D. C.

4rhta
Richmond
Governor

10a© apri

Tease
Washington

twill 1200

958am

0 & OOtrZKNXEXT FEINTING OFfltiB J»38

2— 11902

Reproduced from the Unclassified I Declassified Holdings of the National Archives

■’"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RV ICE )

RECEIVED AT WASHINGTON, D. C.

9fmr
Atlanta

A v r

30 908a

Governor Young
Washington.
Twill 1200•
Blaok.
1010a

P 8. 60VESKMBNT FRTWTINa OWflCB 1926

2 — 1 1901

/^ 3 0

b , -C~X*>

Reproduced from the Unclassified / Declassified Holdings of the National Archives

—ELEGRAM
FEDERAL RESERVE SYSTEM

^ i b,

(L E A SE D W IR E SE RV ICE )

RECEIVED AT W ASHINGTON, D. C.

269gy 5
Chicago 500p April 29

Young
Was‘in
Twill 1200

McDougal
502p

i a.spnsMimiTruNnmmfmkina

a—neoi

_..U

-C

- ^

Reproduced from the Unclassified I Declassified Holdings of the National Archives

—ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A S E D W IR E SE RV ICE )

RECEIVED AT W ASHINGTON,

283gy 12
Stlotiis 415p At>r 29

J 0

Young
lashn
Twill 1200

April 29, 1930

Martin
541p

W"‘ ----------:
------------------- --- --Reproduced from the Unclassified I Declassified Holdings of the National Archives

—E L E G R A M

FEDERAL RESERVE SYSTEM

_
J

(L E A SE D W IR E SE R V ICE )

_
^

^
^

R E C E IV E D A T W A S H IN G T O N , D . C .

281gy 9
Minneapolis 409p Apr 29,

^ ^

-T,

Young
Washn

Twill trans 1200 April 29

Geery
540p

9 B- • o r s B H K m n n m m

2— 11801

Reproduced from the Unclassified I Declassified Holdings of the National Archives

'"ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

R E C E IV E D A T W A S H IN G T O N , D . C .

284gy 5
Kansascity Apr 29
Young
Waslm

Twill 1200

Wort ington
542p

9 ft. «0TBSMK8MV nUVTZMft W M l i M

3— 11901

415 p

3 33

,- d " ^

Reproduced from the Unclassified / Declassified Holdings of the National Archives

—ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

R E C E IV E D A T W A S H IN G T O N , D . C .

282gy 5
Dallas 410p April 29 /f^ ^

Y oung

Washn
Twill 1200

Tall y
54 Op

m
.

Digitized(K
for
naFRASER
nwnum
uMwnot>n*

3— 11801

Reproduced from the Unclassified I Declassified Holdings of the National Archives

^ELEGRAM
FEDERAL RESERVE SYSTEM

^ b i ' C • 'X '

(L E A SE D W IR E SE RVICE)

R E C E IV E D A T W A S H IN G T O N , D . C .

289gy 2
Sanf raneiseo 241p Apr 29
Board
Washn

O d i o u s undeser^tT "

Calfcihs
7 *

545p

3 &

Reproduced from the Unclassified

I Declassified Holdings of the National Archives

ELEGRAM
FEDERAL RESERVE SYSTEM
(L E A SE D W IR E SE RVICE)

-5 -a

o o *

R E C E IV E D A T W A S H I N G T O N , D . C .

166gb
Dallas Apl 29 11am

^
/^ J

Noell
Washn
Inquiry/prompted to avoid conflict of engagements principally
to arrange our hoard meeting regular date of which is May 7
to immediately follow open market meeting if held early as
date first suggested

I am on program may 14 texas hankers

convention but should date conflict gilbert would attend
open market meeting

BS.G
O
V
SftN
M
SN
T STO
C
KIM
S

Talley
i

132p

2 — 11901

r~--------------------------------

Reproduced from the Unclassified I Declassified Holdings of the National Archives

II
F o rm 118

TELEGRAM
F E D E R A L R E S E R V E BOARD

? 2 > - cl

LEASED WIRE SERVICE
W

I N

2— 9464

i,o

April <■&, 19,Dm

TaU ay Your telegm*
1■■■■ *m*mmwwl

infomution aa soon ne available*

EoolJU

iro definite

—

r~ ----------------- -------------------------------- .

—

Reproduced from the Unclassified I Declassified Holdings of the National Archives

“ ELEGRAM
FEDERAL RESERVE SYSTEM

£ ~

(L E A SE D W IR E SERVICE)

R E C E IV E D A T W A S H IN G T O N , D . C .

62gb
t £ ^

Dallas Apl 29^.10am
Mcclelland
Washn
Please telegraph me soon as you know whether or not meeting of
open market policy conference will be called for may 5 or thereabouts

& B. GOV
K&XU
BNTPSOiTIKe 9TTICB

Talley
1112am

‘t / ' y l / i o

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Date;

FOR ANSWERS SEE5
1.

‘i f ' s o j s o

* / f 3 0 / 1>C>

f/3o/30

tf/^oflo

L//

y / W

i h l j ^ o

9.
10

11.

l/ / x

J ’
bO
zo

f j 3a

/ffyCfJ 30
■£fj2 ^ ^ 3 0

t/Jzfj

Reproduced from the Unclassified I Declassified Holdings of the National Archives

F o rm 148

i ELEGRAM
F E D E R A L R E S E R V E BOA RD
L E A S E D W IR E S E R V IC E
W A S H IN G T O N

2— 9454

oro

**.rn 2%
Im p

• Jttanaood

B IacIe -

UNRPi# Tm&mr -

A U m I k
-ill

~lt*velajid

&*OSy * ^sfas^oU*
DftlUgr * fa«*a®
ftell.«gr * Oifilla#
£alkJUi» * §«t* Vr*&ei»Go

I 'VQ O

of t** la&MUtjr of M tote Iw rm ra to
Qpoa f%Vfcet
Oftm&ttM m ifelg i» eaaoeU«& for
3*fe aadt jfou #Ui m m ? is#d
Of m

&&*•
'.ill

Tsftinc

AT BO.
/

MEETING.

APRao 1930 ^

J " " ------------------------------------ :---------------------------------------------------------------_
------Reproduced from the Unclassified I Declassified Holdings of the National Archives

F o rm 148 A

F E D E R A L R E S E R V E BOARD
LEASED WIRE SERVICE
W A S H IN G T O N

*£• _
* *.

______________________________ ,__________

The telegram given below is hereby confirmed.

2— 9464a

April 26, 1930.

Calkins - San Francisco.
Appears that meeting of Open Market Investment Committee will
have to be postponed because of Inability of eertain Governors to
attend. Believe, however, I will be able to wire you a definite
date Monday morning.

Young.

opo

r—— -------------- -------------------------------- -=— —
Reproduced from the Unclassified / Declassified Holdings of the National Archives

F o rm 148 A

F E D E R A L R E S E R V E BOARD
LEASED WIRE SERVICE

3 3 3 ,~£W

W A S H IN G T O N

The telegram given below is hereby confirmed.
.

_ _ _

_________________________________________

2— 9464a

April 23, 1930.

CALKIKS - SAM^RAUOtSCO.

Cosumr/if suggestion contained in your wire twenty-first of Governors
conference kov May 6 and 7. However have not as yet heard, from all banks
about Open Kaaket meeting on May 5. As soon as majority favor a meeting
will be gled to pass the information on to you by wire so that you can
call Governors1 conference

F ”------ :
------------------------- —

Reproduced from the Unclassified / Declassified Holdings of the National Archives

TELEGRAM
FEDERAL RESERVE SYSTEM
(L E A S E D W IR E SE RV ICE )

278G- T

R E C E IV E D A T W A S H I N G T O N , D . C .

Sanfrancisco April 31 258P
Governor Young

F H Board

Washington BG

-j

&T7£

Referring to my letter seventeenth and yours nineteenth^ As it
appears to be entirely unnecessary to have two separated conferences
in month of May and as I beleive an open market conference should
be promptly held may I suggest that it be called to begin May fifth
and a Governors conference May sixth or seventh

** * W tTfor
B R MFRASER
W f n u n i w O IH K l«tt
Digitized

Please wire

nAY V 1930

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Fe d

eral

eserve

n k of

S a n Fr a n c i s c o

April 17, 1950

Mr. R. A. Young,
Governor, Federal Reserve- Board,
Washington, D. C,

My dear Governor Young
I have, in a somewhat round about way, learned
that a conference of Governors is likely to be held toward
the end of May, and as this time I think the conference is
likely to be devoted mainly to discussions of policy and
that, therefore, it will not be necessary to make the ex
tended preparation for it, I am wondering whether you would
feel disposed to set the date as of Monday, May 19th,

soon as the matter is determined, will you be kind enough
to wire me, as I have some other things in mind which should
not conflict.
I am sorry that you did not accept the invitation
to attend the very limited celebration of the opening of
our Los Angeles Branch.
Yours