The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Excerpt from the minutes of the meeting of the Federal Reserve Board with the Open
Market Policy Conference on May 2J, 1930*
__
"Governor Harrison stated that during the separate session of the Open
Market Poliey Conference its formal organization was considered with the result
that he, as representative of the Federal Reserve Bank of New York, was chosen as
Chairman, and Deputy Governor Burgess of the New York Bank as Secretary*
He stat
ed that the Executive Comaittee will be composed of the representatives of the Bos
ton, New York, Philadelphia, Cleveland and Chicago banks for a period of one year,
and that a policy of rotation among the Federal reserve banks will be followed
thereafter in the selection of the committee*
’♦Governor Harrison reported that before taking up the discussion of open
market policy, the conference discussed the question of its functions and juris
diction*
"The Conference also voted, he stated, to go on record that recommenda
tions as to the discount rate of any Federal Reserve bank or Federal Reserve banks
are not within its proper province and the directors of any Federal Reserve bank
mist 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
J
Excerpt from the minutes of the meeting of the Federal Reserre Board with the
Open Market Policy Conference on May 21, 1930*
The Governor "then reported that participation in the Open Market Po
licy Conference under the revised plan recently approved by the Board has been
accepted by all Federal Reserve banks and that this, accordingly, is the first for*
ntal meeting of the Conference*
He stated that in its acceptance the New York bank
set forth its interpretation of the plan as not affecting in any way the present pro
cedure with respect to bill operations.
He stated that a copy of the New York tet
ter will be furnished to each Governor for his information."
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspt
To.
Governor Young
FEDERAL RESERVE
BOARD
Subject:
From__ Mr. McClelland
3-48486
At the meeting of the Board today the attached letter /from the
Chairman of th^ Federal Reserve Bank of Hew York was referred to you
with the understanding that you would prepare and submit to the Board
a repljl regarding the bank* & interpretation of the plan of the Open
Market Policy Conference as not establishing any different procedure
with respecif to bill operations than has existed heretofore.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
t o r m No.
131
Office Correspo * ,i. e
To___
All Members of the Board
F r o m _____M r .
FEDERAL RESERVE
BOARD
jay 19, 1930
Subject:.
M c C l e l l a n d ---------------------------------
At the meeting this morning, there was ordered circulated the
attached letter.dated May 15th.[from the Chairman of the Federal
Reserve Bank of New York, advising that the Directors of the Bank
have voted to accept participation in th Open Market Policy Conferenoe under the plan recently approved
the Board, subject to
their interpretation that the plan does
blish any different
procedure with respect to bill operations
as existed heretofore.
Governor Young
Mr. Platt
Mr. Hamlin^^
Mr. Jamesy/
Mr. Cunningham
Dr. Mille
Mr. Pol
f
MAY 22 1930
Please circulate promptly and return to this office#
0
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F ed era l R eserv e Bank
-A',' 13930
o f
N
e w
Yo
O.f'
:is^nissdy;'>
r k
Dear Governor Young,
The directors of this bank have considered the Federal Reserve Board's
letter of March 31, 1950,(together with the enclosed draft of open market pro
cedure 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 pro
posed 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 estab
lishing any different procedure with respect to bill operation 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 conditions, 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
suggested is not intended to set up any ne?/ procedure with regard to bill
operations.
Faithfully yours,
/
Hon. Roy A. Young,
Governor, Federal Reserve Board,
http://fraser.stlouisfed.org/
Washington, D. C.
Federal Reserve Bank of St. Louis
Ct
II.Case
Chairman
&i/t
“ a t B o T e n ’MHsiriSS,
MAY 19 1930
Reproduced from the Unclassified I Declassified Holdings of the National Archives
April 80, 1930
Diar Mr* Heaths
iReceipt 1s acknowledged of your letter of
April 28, from whioh tho Federal Reserve Board, at Its
mooting this Morning, wae gratified to note that year
Board of Director* cm that dato voted to aooopt parti*
oipation Id the propoood Open Uartot Policy Conference
under tho revised procedure.
It was aleo noted that the Governor was do*
signated to represent your bask at meetings of the oos*»
ference and that In the event of his absenoe or die*
ability, a Deputy Governor will be designated to serve
in that oapaoity*
Tory truly yourst
J* 0. RiieU,
Assistant Secretary,
Mr* V* A* Heath, Ohalrnan,
federal Reserve Bank,
Ohleago, m *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BANK OF CHICAGO
230 S O U T H
LASALLE
STREET
^
^
April 25, 1930
SUBJECT:
Revision of Open Market Procedure*
Federal Reserve Board
Washington, D. C.
Gentlemeni
|
Reference is ma.de to the Board1s letter of March 51^ 1950,
X-6556|on the above subject.
The third paragraph of said letter concludes as follows:
"Please therefoe submit the matter to the board of
directors of your bank at its next meeting and advise the
Board whether your directors accept participation in the
Open Market Policy Conference under the plan as revised.M
At the regular meeting of our board of directors held today,
it was unanimously voted by our board to accept participation in the
Open Market Policy Conference under the plan as revised, namely, the
plan outlined in X-6556a.
It was also voted unanimously to designate the Governor of
this bank as its representative upon the Open Market policy Conference
and that in the absence or disability of the Governor, a Deputy
Governor be such representative.
"a t b o a r d m e i s t i n #-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
«fe» fm&mml Biiirn Bouft ia
to
Mi* f*t»
# ^
IflAtWcli wa* pro««irfc~
ad at tha aaati^ today, ttat j m Board of Diraatora
«i April If T*tad to aaaapt participation in tha pro* n m A Qpaa I t u M PaOiey Oonfaranoa radar tha ravlaad
Twry truly ymam9
X* H« MeCleHand,
A M U t a n t Secretary*
Mr* Is h i B* Ecwtoa, Chaimiin,
Tfe&MP&X
8 *ft Hfi M l W , CNUf*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
pS
F
e
d
e
r
a
l
R
e
s
e
r
v
e
B
a
n
k
o
f
S
a
n
Is a a c B . N e w t o n
C h air m a n
a n d
o f
B o ar ij
t h e
Fe d e r a l
Re s e r v e
A g e n t
April ley
Dear Sirs:
Receipt is acknowledged of the Board’s letter of March 31,
1950, X-6559?Sgubject: Revision of Open Market Procedure.
In compliance with the Board's request the draft of the
Open Market Procedure as revised at the meeting of the Federal Re
serve Board with representatives of the Federal reserve banks on
March 25, 1930, was presented to our Board of Directors at their
meeting held April 17, 1930, and it was voted to accept participa
tion in the Open Market Policy Conference under the plan as revised.
Yours very truly,
Federal Reserve Agent
Federal Reserve Board,
Washington,
D. C.
A T B O A B D MEJETINOAPR 3 3 1931
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 18, 1930
Bear Mr* Norton:
lb* Federal B M t m Board is gratified to
note txm your lAttar of April 16 which was pre~
aented at the Meeting today, tiuit your Board of Di
rector*, at its regular April meeting, voted to an*
oept participation in tha propoeed Open Marfcet
Policy Conferenee under tbe revieed procedure.
It was also noted that Governor Black will
repr»aent your bank at meetings of the Conference,
and in Hie event he ia unable to eerve, an alternate
w i n lie appointed by your executive coMBilttee.
Very truly yours
E. M* HeClelland,
Aeaietant Secretary.
Mr* Oaoar Newton, Chairman,
federal Heaerve Bank,
Atlanta, Cku
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e d e ra l R eserv e Bank
of
O FFIC E
C h airm an
F e d e ra l
o f
OF
t h e
R e s e r v e
At l a n t a
’v
B o a rd .
j j -? -
' V '^ \
" ‘V '
■>’ .
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f:
A g en t.
April 16th, 1950vi, 'S'
^ N' '“V
/
SUBJECTS Revision of Open Market Procedure.
^
Federal Reserve Board,
Washington, D. C.
Attention: Mr. E. M. McClelland, Asst. Secretary.
Dear Sirs:
Reference sis made to your letter (X-6556) under date
ofjferch 31st, 1930j and enclosure, relative to the revision
of open market procedure.
At the meeting of our Board of Directors held April 11th
and l£th, consideration was given to the revised procedure agreed
upon by representatives of the Federal Reserve Banks and approved
by you. Oar Board voted to ratify the procedure and to partici
pate in the open market policy under the plan as revised.
In my letter of February 1fi+h, 3,QI*nT-jr PflYJrqed y?u tMt.
Governor E. R. Black had been elected to represent the Federal
Reserve Bank of Atlanta on the Open Market Policy Conference, and
that in the event Governor Black was unable to attend any meeting
of the Open Market Policy Conference, our Executive Committee was
authorized to appoint an alternate.
Tery truly yours,
Chairman.
............
AT BOARD MEETING.
APR 18 1930
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 16* 1950
Dear Mr# Curtloo*
tho Federal Bosorro Bomrik M gjnifctflod to
not© trm your lottar of April lOtfeJ which wtm pre
sented at It* Meeting today* that your Board of Directors m April 9th rotod to acoopt participation
in tho proposed Opoit Utrlatt Policy Conforcnoo m d a r
tho rovlaed procedure#
Tory truly yours*
£* M* .oClelland,
Assistant Secretary
Mr* F* H* Curtiss* Chairman,
FOiUiriLl KBHBsSJI^hP' J3R«*JEg^
Bostom* His**
Reproduced from the Unclassified / Declassified Holdings of the National Archives
A p ril 16, 1S50
Doar Mr* DoCaapt
tho IMevtl Bosorvo Board Is grmtlfiod to
act© f r m your lottor of April tth* which wtm protouted at Its asotlufe today, that yam Board of Di~
rsotors m April 91b votod to acoopt participation
In the propoiod Opoa Markot Policy Confarenoo under
tho revisod procodura*
It is also noted that tho Goromor of
your Bsnk m s dosignatod a* its roproaontatlvo at
meetings of tho Conferaijee*
Tory truly yours,
II# Mi
Assistant
Hr* Goo* OoOtmp,
Federal Reaerre
Cleveland,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 18, 1990
D**r Hr*
Wmxtemt
tli* fM ortl l« c e m Bo«rd is g r*tifi«4 to
aoto from your latter o f April I4thf /whlola. w « pt%»
**nto& * t it* aooitng teSip* tt* t your- Board o f 8t~
rootor* cm April Ufth fo M i to aooopt participation
la tfc* propo»od 0p4B Xmrkmt Policy ©oi*f#r«BOO undar
tho fwripod proooduro#
Zt io also noted tte t Gkyremor so«y m
4«sig»fttod &• ttio rwprwMMitaBttvo o f your Baalc at
aNtiagt of tho CaBforoaoo#
Vary tisily yoism^
E* M* Mo€loll«»d,
A»«i«t*nt s*«r*tw y
Sr* w# V* tataa* Chairniwi*
tWWmJFmJk mWwwmwW
Rlotmon** ¥*•
Reproduced from the Unclassified I Declassified Holdings of the National Archives
April IS, 1930
Daar
Stewarfci
lh& Fadaral taaasire Board .i« grvtifiad to
nota fro® your latter of April 4th/ whlch vat pra~
aantad at its sooting today, that your Board of Dirootofra on April 2nd *otad to aaaapt participation
in the proposed Opm fJwfcafc Policy Co&f&reti©® undar
tha raviaad procedure#
Vary truly
fmm-9
S* M* McClelland,
Aaaiatant Saeretary
Mr* C# M* Stawart,
Acaiatant Fadaral Sacerra Agent,
Fodorai Kaaarra Bfcnk,
St* Lotda, Mo#
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April
Dear
16, m o
Wt# Mo*h«ri
tha Fadaral Baaaar?* Board I* gratiflad to
note from your t*lagr*« of April 14thJ whioh mm
pra*«citad at lt*a*atinc today* that your Board of
Diractor* m April 14th w t * d to aoaapt partletpa**
tlon la th* propoaad Opaa Hartoat Polioy Sc«ifar«B0*
uader tha rariaod procadura*
It la mlm notad that Gorarmor G#ary wa#
da*ifpsatad aa tha raprasacttatir* of your ftrnk at
aaattaga of Mia Oonfera&oa#
Very truly your*,
S+ M* MoClallaiid,
Aaaistant s^oratary
Mr* C« X** Moahar,
Aa*ist*«t Fadaral Soaarra A^mt#
Fodoral Racarra Sa&k^
Slw&aapolla# Hlnn*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 16, m o
Dear Kr# !2cClure *
fha Federal Saaarra Board is gratified to
not# fswia your lottar of April 12thj whioh was pra•anted at Its taking taSqr# that yovat Board of
Director* on April 10th votad to aoaapt participa
tion la tha proposed Op«n Market Policy Conferaiae#
undar tha rariaad prooadure.
It la also noted that tha Q m w rm t mm
designated aa tha rapraaont&tive of your Bank at
saatlnga of th« CorJfarawaa, with the provision that
an alternate shall ha naaad by your axaoutlva o o w
mittaa la oaaa tha tha Gorernor la uimblu to aanra*
Vary truly yours.
E* li» MoClallaad,
Assistant Saoretaiy
Mr* %. L* UoClura, Chairon,
Fadaral Baaorva 8aak#
Kansas Clty# 80*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
April is# i m o
Bear Hr* m * h *
The ffedersl Seaerre Bosr* is gratified to
not® ^«»a your Jsttsr of April 8thj whloh m
pre
sented st Its meeting todsy, thst your Bosrd of
Directors on April 7th voted to eeoept pftrtlelpstloa
in the proposed Opm mrlmt Bollay Conference under
the revised procedure*
It Is slso noted thst Governor TSlley « «
designated ss the representative of your Bunk st
mootings of the Oonfsrsas*#
V’ery truly yours.
B* 1* MeClellsnd*
Assistant Secretary
Hr* C* C* BSlsh, Chmirmxkp
Federal Eeserre Bank,
Dallas,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
\
Fe d e r a l R e s e r v e Ba n k
o f
R ic h m o n d
April 14, 1930
Federal Reserve Board
Washington, D. C.
Gentlemen:
Our Board of Directors at the meeting last Thursday
considered the Board*s letter of March 31, 1930, X-6556\and
6556a, Subject "Re<rision of Open Market P3^cedure7r
Our Board unamimously accepts participation in the
Open Market Policy Conference under the plan as revised. Further
more, our Board designated Governor S$ay as the representative
of this bank for the Open Market Policy Conference.
Veiy truly yours
¥• W. Hoxton
Chairman of the Board
AT BOARD M e Stinq '
APR 161930
Reproduced from the Unclassified I Declassified Holdings of the National Archives
TELEGRAM
FEDERAL RESERVE SYSTEM
(LEASED W IR E SERVICE)
_
_
R E C E IV E D A T W A S H I N G T O N , D . C .
ib
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Minneapolis 5pm Apl
Board
waslrn
directors today approved buying rates unchanged also
approved open market procedure as outlined i n M 5 8 6 - A j
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-
a- ° lated
G0Vera°r
Gerry member of the conference
7
11 representing this "bank
iI
Mosher 530pm
~ M
z
JL
*AT B O A RD M E PTTNci,
^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F
e
d
e
r
a
l
R
e
s
e
r
v
e
B
a
n
k
CHAIRMAN BOARD OF
W .j . b a i l e y , Governor
AND F tD E R A L
C. A . W O R TH IN G TO N , d e p u t y G ovebnor
directo rs
R ES E R V E A G E NT
J.W .
W M . L . F E "T * R IK IN
B O A R D OF
JO H N
Ka n s a s C ity
DIRECTORS
h e l m :.
Ca s h i e r
P H I L L I P S , J r. , A s s t . C a s h i e r
E . P . T Y N E R , A s s t .Ca s h i e r
G - E . B A R U E Y , A s s t.C a s h i e r
ASST. FEDERAL RESERVE
AND SECR ETARY
AGENT
M .W . E . P A R K, A SST.C A S H IER
G. H
P I P K I N , A s s t .C a s h i e r
Ipril 12, 1930
Federal Reserve Board,
Washington, B* C#
Gentlemen: Attention B, M. McClelland, Asst. Secretary
The subject matter of Boa id letter X-6556, dated
March^li 1930^ with reference to the revision of
open market procedure, was discussed by our Board of
Directors in regular meeting on Thursday, Ipril 10,
and it was unanimously decided to accept participa
tion in the Open Market Policy Conference under the
plan as revised.
The Governor of the hank was designated as the
representative of the bank in the conference, with
the provision that an alternative representative
shall be named by the Executive Committee in case
at any time the Governor may be unable to serve*
^ery
Trmi-r»es
W e
BO Aft.D
Reproduced from the Unclassified I Declassified Holdings of the National Archives
A
FEDERAL RESERVE BANK
OF
\)
BOSTO N
FREDER I C H. CURTI S©
CHAIRMAN
■xS, '*
V
f\
Apjd.1 10, 19SO':.
’'
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■>V, ■
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/•-Oij*
i
i'
'-N
.-'•A
.
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-
Federal Reserve Board,
Washington, D.C.
C>
SUBJECT:
Open Market Procedure
Dear Sirs:
Acting tinder instructions received in the Board fs letter of March 51 «
1 9 5 0 (]y~6556)^ I submitted to the Board of Directors of this Bank
at its meeting held yesterday, April 9, 1950, the draft of the open
market procedure as revised at the meeting of the Federal Reserve
Board with representatives of the Federal Reserve Banks on March
25, 1930 and adopted by the Federal Reserve Board, which was
enclosed in the Board1s letter.
It was the general opinion of the Board of Directors that the open
market procedure as outlined in this plan is satisfactory and a
vote was passed authorizing this bank to accept participation in
the open market policy conference under this revised plan.
I am,
lours very truly,
Chairman.
FHC/D
AT"BOAM)MBiTTNG.
APR X 6 1930
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e i >e i *a i - R e s e r v e B a n k
/
*^
April 9, 1930.
-b
?
Federal Reserve Board,
Washington, D. G.
Gentlemen s
Referring to your l e t t e r X - 6 5 5 6 , dated March 31,
1930,\subjeott
"Revision of Open Market Procedure**
This is to advise that at the regular meeting
of our Board of Directors held today the above letter,
together with the draft of open market procedure as
revised at the meeting of the Federal Reserve Board
with representatives of th 6 Federal reserve banks on
March 25, 1930, and adopted by the Federal Reserve
Board, was submitted for consideration#
Upon motion
duly seconded it was voted unanimously that the
Federal Reserve Bank of Cleveland accepts participa
tion in the Open Market Policy Conference under the
plan as revised*
I
By further action of our Board at its meeting
of today, the Governor of this bank was designated
as the representative of this bank to the Open Market
Policy Conference*
This, I believe, is in accord with the request
of your Board as outlined in the above-mentioned letter*
Federal Reserve Agent*
AT BO A R D MEETING.
APR 1 6 1930
Reproduced from the Unclassified / Declassified Holdings of the National Archives
X
FEDERAL
RESERVE
BANK
OF DALLAS
C. C. W ALS H
April 8 , 1930
CHAIRM AN O F T H E B O A R D
A ND F E D E R A L , R E S E R V E A G E N T
Federal Reserve Board
Washington, D. C.
Gentlemens
Reference is made to your letter of Larch 31, X-6556^ on
the subject, “Revision of Open Market Procedure;1* also your
communication of January 23, last, X-6484, on the same sub
ject.
As stated to you in my letter of Larch 6,\ the latter corrrmunication, in accordance with the request contained therein,
m s considered at the regular meeting of our Board of Directors
held on ^ebruarj^ 7* At that meeting Governor Talley submitted
a memorandum on the subject of open market procedure, which m s
fully discussed and approved by our directors in principle. A
copy of this memorandum was submitted to you with my letter of
Larch 6.
At the regular meeting of our Board of Directors held yes
terday, the 7th, your letter X-6556 of Larch 31 was read and dis
cussed in connection with the draft of open market procedure as
revised at the recent meeting of the Federal Reserve Board with
representatives of the Federal reserve banks.
Our directors voted to accept participation on behalf of this
bank in the open market policy conference under the plan as re
vised, and this should be considered as formal notice of that fact
Our directors also voted to redesignate Governor Talley as the
duly accredited representative of this bank to attend the sessions
of the open market policy conference.
Very truly yours,
\v
X
Chairman of the Board
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 4, 1930*
Dear Hr. Austin;
Ibtir latter of April Z was presented at the
meeting of the Federal Reserve Board today, and it
was gratified to note that your Board of Direetore,
at its Dieting <m that date, voted to participate In
the proposed Open Market Policy Conference under the
revised procedure*. It was also noted that Governor
Harris has been designated as the representative of
your basic at Meetings of the Conference.
Very truly yours,
fci^.od )«. M
K* II* IMlelXaad,
Assistant Seeretaxy*
Hr* B» X** Austin, Cteatrasn,
^federal UmieriM Sank.
Pldladelphia, Pa.
1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
OF
c
I
""Xfj O'-
S t . L o u is
!
CO
Ap r i
Federal Reserve Board,
Washington.
Attention Mr. E. M. McClelland, Asst. Secy,
Gentlemen:
With your letter of Marcn 31, 1930, X-6556,\wa:
enclosed a revision of the open market procedure, which
you stated had been considered by the Board and had been
adopted without change to become effective when ratified
by the Boards of Directors of the twelve Federal Reserve
Banks.
The matter was presented to our Board of
Directors on April 2, and it was moved, seconded and
unanimously carried that the Federal Reserve Bank of St,
Louis accept participation in the Open Market Policy
Conference under the plan as revised.
Yours very truly,
.... —
AT B O A R D
Reproduced from the Unclassified I Declassified Holdings of the National Archives
K
\
F e d e r a l Re s e r v e Ba n k o f P h i l a d e l p h i a
T hird
Rich ard
l
C h a ir m a n
and
District
vv
'-'
^ >
!
.A u s t in
o f th e
Board
April 2,
F e d e r a l R e s e r v e Ag e n t
FEDERAL RESERVE BOARD,
Washington,
D. C.
Dear Sirs
Your letter X-6556 subject "Revision of
Open Market Procedure11 was received this morning and
submitted to our board.
The draft of the proposed
form of open market procedure was considered, and upon
motion duly carried the board of directors of this bank
accepted participation in the open market conference
under the revised plan submitted with your letter.
Also on motion duly carried, the board designated
Governor Norris to be the representative of this bank
at open market conferences.
Very truly yours,
Chairman
A T B O A R D M 3EBTTNQ,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
OF
S t.L o u i s
April 1, 1930.
Federal Reserve Board,
Wash ington, D . C.
Gentlemen:
Attention !'r. E. M. McClelland*
Assistant Secretary.
/ I wish to thank you for copy of
the drafts of the proposed Open Market procedure
as it was revised during the discussion at the
meeting of the members of the Board and repre
sentatives of the Federal Reserve Banks on
March 25th.
Yours very truly,
fa Ik
Governor.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F E D E R A L R E SE R V E B O A R D
WASHINGTON
^
S S E S T "
3 3 ^
March 31, 1930.
\
9C^n€BN.
w
V
^
i
Be vis ion of Open Market P r o c l t e ^
.
^
^ -u y
?
Under date of January 33. 1930 / & letter was addressed to each
Ftdsral reserve hank advising of adoption by the Board of a revision of
the open market procedure mad® effective in
1923. This letter ex
pressed the belief of the Board that the procedure adopted contained the
essentials of a workable plan designed to give expression to the common
Interests of the federal deserve banks in matters of open market policy
sad to provide a reasonable and practicable method for joint action. It
requested thst after each bank had had time to consider the plan its views
thereon be forwarded to the Board.
0n March 24th and 25th, a meeting was held for the consideration
of open market policy attended by representatives of the twelve Federal re
serve banks. At the conclusion of the regular business, a thorough discus
sion w$s had regarding 0T>en market procedure in the light of letters which
had been received by the Board from the directors of eleven of the federal
reserve banks. Following this discussion the representatives of the Fed*
era! r&serve banks, with the Governor of the Fbde*ai Reserve Board, were
anointed a consulttee to prepaid a further revision 6f the plan acceptable
to the©. This revision naa th#n thoroughly discttssed by the Board and the
r^ressntativ©#. of the Fed#r&i reserve banks, with the result that some
further changes Were made.
The revised procedure in its final form, copy of which is at
tached, was •unanimously agreed to by the representatives of the Federal
reserve banks. It has Since been considered by the Federal Eeserve Board
and was adopted by the Board without change, to become effective when rat
ified by the boards of directors of the twelve Federal reserve banks.
Please, therefore, siibmit the matter to the Board of directors of your
bank at its next meeting and advise the Board whether your directors ac
cept participation in the Open Market Policy Conference under the plan as
revised.
In the Board*s letter of January 23, 1930, it was pointed out
that certain working arrangements which might be necessary would best be
deteraifcsd by the conference itself when organized.
In this connection,
ths r#p*es«a|at ives of the Federal reserve banks at the meeting on March
24th Sad 25th voted it to be the sense of those present at the meeting
that the representative of the Federal Reserve Bank of Hew York on the
Open Market Policy Conference should be elected chairsean for one year;
Reproduced from the Unclassified / Declassified Holdings of the National Archives
that the Executive Committee, provided for in the procedure, should con
sist of the chairman and the representatives of the Federal Reserve Banks
of Boston, Cleveland, Philadelphia and Chicago for one year; and that the
conference adopt a principle of reasonable rotation in the membership of
the Executive Committee after the first year.
By order of the Federal Reserve Board.
Very truly yours,
S* M. McClelland,
Assistant Secretary.
TO THE CHAIRMEN OF ALL FEDERAL RESERVE BAMS.
(Enclosure)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-5556-a
(Draft of open market procedure as revised at the meeting of the
Federal Reserve Board with representatives of the
Federal reserve banks on March 25, 1230,
and adopted by the Federal Re
serve Board.)
"(1) The Open Market Investment Committee, as at present constituted, is
hereby discontinued and a new committee, voluntary in character, to be
known as the Open Market Pdlicy Conference, is set up in its place.
(2) The Open Market Policy Conference shall consist of a representative
from each Federal Reserve Bank, designated by the Board of Directors of
the bank.
(3) The Conference shall meet with the Federal Reserve Board upon the
call of the Governor of the Federal Reserve Board or the Chairman of the
Executive Committee, after consultation with the Governor of the Federal
Reserve Board.
(4) 'The function of the Open Market Policy Conference shall be to
consider, develop and recommend policies and plans with regard to open
market operations.
(5) The time, character and volume of purchases and sales shall be
governed with the view of accommodating commerce and business and with
regard to their bearing upon the credit situation.
(6) The conclusions and/or recommendations of the Open Market Policy
Conference, when approved by the Federal Reserve Board, shall be submitted
to each Federal reserve bank for determination as to whether it will par
ticipate in any purchases or sales recommended; any Federal reserve bank
dissenting from the proposed policy shall be expected to acquaint the
Federal Reserve Board and the Chairman of the Executive Committee with the
reasons for its dissent.
(7) An Executive Committee of five shall be selected from and by the
members of the Conference for a term of one year, with full power to act
in the execution of the policies adopted by the Open Market Policy
Conference and approved by the Federal Reserve Board, and to hold meetings
with the Board as frequently as may be desirable.
(8) Each Federal Reserve Bank participating in the Open Market Policy
Conference shall be considered as waiving none of its rights under the
Federal Reserve Act; each Federal Reserve Bank shall have the right at its
option to retire as a member of the Open Market Policy Conference, but each
bank while a member of the Conference shall respect its Conference obliga
tions. H
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE BO A R D
x-~X<£
W ASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
TH E FEDERAL RESERVE BOARD
3UBJECT:
M &I*CXl
31 , 1930 •
Revision of Open Market Procedure,
Dear Sir:
Under date of January 23, 1930, a letter was addressed to each
Federal reserve bank advising of adoption by the Board of a revision of
the open market procedure made effective in April,1923, This letter ex
pressed the belief of the Board that the procedure adopted contained the
essentials of a workable plan designed to give expression to the common
interests of the Federal reserve banks in matters of open market policy
and to provide a reasonable and practicable method for joint action. It
requested that after each bank had had time to consider the plan its views
thereon be forwarded to the Board.
On March 24th and 25th, a meeting was held for the consideration
of open market policy attended by representatives of the twelve Federal re
serve banks. At the conclusion of the regular business, a thorough discus
sion was had regarding open market procedure in the light of letters which
had been received by the Board from the directors of eleven of the Federal
reserve banks. Following this discussion the representatives of the Feder
al reserve banks, with the Governor of the Federal Reserve Board, were ap
pointed a camnittee to prepare a further revision of the plan acceptable to
them. This revision was then thoroughly discussed by the Board and the re
presentatives of the Federal reserve banks, with the result that sccie fur*ther changes were made.
The revised procedure in its final form, copy of which is at
tached, was unanimously agreed to by the representatives of the Federal re
serve banks. It has since been considered by the Federal Reserve Board and
was adopted by the Board without change, to become effective when ratified
by the boards of directors of the twelve Federal reserve banks. Please,
therefor®, submit the matter to the Board of Directors of your bank at its
next meeting and advise the Board whether your directors accept participa
tion in the Open Market Policy Conference under the plan as revised.
In the Board*s letter of January 23, 1930, it was pointed out
that certain working arrangements which might be necessary would best be de
termined by the conference itself when organized. In this connection, the
representatives of the Federal reserve banks at the meeting on March 24th
and 25th voted it to be the sense of those present at the meeting that the
representative of the Federal Reserve Bank of New York on the Open Market
Policy Conference should be elected chairman for one year; that the Execu
tive Committee, provided for in the procedure, should consist of the chair-
Reproduced from the Uncl
2-
>
iMB and the representatives or the
land, Philadelphia and Chicago for
a principle of reasonable rotation
mittee after the first year.
By order of the Federal
Federal Beserve Banks of Boston, Cleve
one year; and that the conference adopt
in the membership of the Executive Com
Reserve Board.
Very truly yours,
E. M. McClelland,
Assistant Secretary.
(Enclosure)
TO THE CHAIRMEN OF ALL FEDERAL RESERVE BARKS.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
(Braft of p H #mmmk open maxket procedure as w i s e d at the see ting of
the federal Reserve Board with M s representatives of
the federal reserve "banks on March 25, 1930*J[
oweL
-My ^ivj.
i
)
(1) She Open Market Investment Cosnittee, as at present constituted, is
hereby discontinued and a new committee, voluntary in character, to he known as
the Open Market Policy Conference, is set up in its place*
(2) Bie Open Maxket Policy Conference Shall consist of a representative from
each federal leserve Saak, designated *bgr the Board of Directors of the hank.
('3} (3) fhe Conference shall meet with the federal Beserve Board vpon the call
of the Governor of the federal leserve Board or the Chairman of the Executive
Committee, after consultation with the Governor of the federal leserve Board*
(4} The function of the Open Market Policy Conference shall he to consider,
develop and recoosnend policies and plans with regard to open market operations*
(5) fhe time, character and volume of purchases and sales shall he governed
with the view of accommodating commerce and business and with regard to their
hearing upon the credit situation*
(6) One conclusions and/or reoonmendations of the Open Market Policy Confer
ence, when approved hy the federal leserve Board, shall he submitted to each
federal reserve bask for determination as to whether it will participate in any
purchases or sales recoansnded? any federal reserve bask dissenting from the preposed
psHijr t W r - t* expected to acquaint the federal leserve Board and the Chairman
of the Executive Committee with the reasons for its dissent*
(?) An Ixecutive Committee of five shall he selected from and by the members
of the Conference for a term of one year, with full power to #ct in the execution
of the policies adopted by tbe Open Market Policy Conference and approved by the
federal leserve Board, and to hold meetings with the Board as frequently as may be
disirable*
(8) Bach federal leserve Bask participating in the Open Mariest Policy Conference
shall be considered a s waiving none of its rigits under the federal leserve Act; each
federal leserve Barifc shall have the ri#it at its option to retire as a member of the
Open Market Policy Conference, hut each bank while a member of the Conference shall
respect its Conference obligations,
if
...JL.
AT BOARD M EEroia.
MAR 2 is 19
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F
W .
J.
e
d
e
r
a
l
R
e
s
e
r
v
e
B
a
n
k
M .L .M 9C L U R E
B A IL E Y ,G o v e rn o r
C .A .W O R T H I N G T O N , Deputy Go v er n o r
O F
ch airman
J O H N
P H I L L I P S , J r ., A s s t . C a s h i e r
E .P .T Y N E R , A ss t.C a sh ie r
G . E .
B A R L E Y ,
M .W .E .P A R K ,
board
Ka n s a s C it y
A s s t .Ca s h ie r
A .M . M9ADAMS
A S S T F E D E R A L R E S E R V E AGEfN
AND SEC RET ARY
A s s t.C a sh ie r
G . H . P I P K I N , A s s t .Ca s h ie r
*
March 29, 1930.
Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D.C.
Dear Mr. McClelland:
This will acknowledge receipt of your ...latter of March 3j5^S
enclosing copy of the draft of the proposed open market procedure
as revised during the discussion at the meeting of the members of the
Board and the representatives of the Federal reserve banks on March
25.
While in Washington, you called my attention to the fact that
Mr, McClure had not answered Board’s letter X-6484, dated January 23,
1930J outlining a suggested procedure for the Open Market Policy
~TJ5nference, and I stated that I would bring it to his attention on my
return.
Since the entire matter was so thoroughly discussed and some
slight changes suggested in the procedure at the conference of March
24 and 25, I assume it will now be unnecessary for Mr. McClure to make
any comment on the letter of January 23.
It is noted that the revised
procedure suggested will be formally considered by the Board and trans
mitted to this bank for final submission to our Board of Directors in
the form approved by the Board at such time.
d irecto rs
L .P E T R IK IN
JTY
BOA
?ECT O F
N . R . O B E R W O R T M A N N, As s t .Ca s h ie r
CAW:L
of
AND FEDERAL R ESE RV E AGENT
J . W . H E L M , C ashier
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL
OF
RESERVE
BANK
DALLAS
3 1- t. * ~
March 29, 1930*
Federal Reserve Board,
Washington, D. C.
Gentlemen:
Attention Mr. E. M. McClelland, Asst. Secy,
Your letter of March 2b\ enclosing copy of the draft of
the proposed open market procedure at the meeting of the members
of the Board and representatives of the Federal reserve banks on
that date, has been received.
I brought a draft of this memorandum home with me but
I understand that the Federal Reserve Board has not yet acted
upon it•
Yours very truly,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
TH E FEDERAL RESERVE BOARD
March 28, 1930
XSUBJECT:
Revision of Open Market Procedure.
Under date of January 23, 1930^, a letter was addressed to each
Federal reserve bank advisTng of adoption by the Board of a revision
of the open market procedure made effective in April, 1923. This
letter expressed the belief of the Board that the procedure adopted
contained the essentials of a workable plan designed to give expres
sion to the common interests of the Federal reserve banks in matters
of open market policy and to provide a reasonable and practicable
method for joint action. It requested that after each bank had had
time to consider the plan its views thereon be forwarded to the Board#
On March 24th and 25th, a meeting was held for the consideration
of open market policy attended by representatives of the twelve Fed
eral reserve banks# At the conclusion of the regular business, a
thorough discussion was had regarding open market procedure in the
light of letters vshich had been received by the Board from the di
rectors of eleven of the Federal reserve banks. Following this dis
cussion the representatives of the Federal reserve banks, with the
Governor of the Federal Reserve Board, were appointed a committee to
prepare a further revision of the plan acceptable to them# This revi
sion was then thoroughly discussed by the Board and the representatives
of the Federal reserve banks, with the result that some further changes
were stgasBB^aBBpam
The revised procedure^ copy of which is a t t a c h e d , c o n s i d e r e d
by the Federal Reserve Board rt iff -mnntimc; -tnrtnj and was adopted by
the Board without change, to become effective vvhen ratified by the
boards of directors of the twelve Federal reserve banks# Please, there
fore, submit the matter to the Board of Directors of your Bank at its
next meeting and advise the Board whether your Directors accept parti
cipation in the Open Market Policy Conference under the plan as revised.
In the Boardfs letter of January 23, 1930, it was pointed out that
certain working arrangements which might be necessary would best be
determined by the conference itself when organized. In this connection,
the representatives of the Federal reserve banks at the meeting on
©
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2
-
March 24th and 25th voted it to be the sense of those present
at the meeting that the representative of the Federal Reserve
Bank of New York on the Open Market Policy Conference should
be elected chairman for one year; that the Executive Committee
provided for in the procedure, should consist of the ohairman
and the representatives of the Federal Reserve Banks of Boston
Cleveland, Philadelphia and Chicago for one year; and that the
Conference adopt a principle of reasonable rotation in the
membership of the Executive Committee after the first year.
By Order of the Federal Reserve Board.
Very truly yours,
E* M. Mo Clelland,
Assistant Secretary
(Enclosure)
To the Chairmen of all Federal reserve banks.
AT BOARD MEETING,
M A g ll 1930
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE BOARD
WASHINGTON
ADD RESS OFFICIAL. CORRESPONDENCE TO
TH E FEDERAL. RESERVE BOARD
March 26, 1930
\
\
SUBJECT:
/
Revision of Open Market Procedure
Dear Sir:
Under date of January 23, 1930, a lefter was addressed to each
Federal reserve bank advising of adoption/by the Board of a revision
of the open market proceduremade^effect&re in April, 1923.
This
letter expressed the belief of the Boar<$f that the procedure adopted
contained the essentials of a workable ^lan designed to give expres
sion to the common interests of the Federal reserve banks in matters
of open market policy and to provide a/reasonable and practicable
method for joint action. It recjuestecjf that after each bank had had
time to consider the plan its vi^ws thereon be forwarded to the Board*
On March 24th and 25th, a meeting was held for the consideration
of open market policy attended by ^presentatives of the twelve Fed
eral reserve banks* At the conclusion of the regular business, a
thorough discussion was had regarding open market procedure in the
light of letters which had been received by the Board from the di
rectors of eleven of the Federal/reserve banks. Following this dis
cussion the representatives of -$ie Federal reserve banks, with the
Governor of the Federal Reservf1Board, Vere appointed a committee to
prepare a further revision of the plan acceptable to them. This revi
sion was then thoroughly discjassed by the Board and the representatives
of the Federal reserve banks/ with the result that some further changes
were agreed upon.
/
The revised procedure, copy of which As attached, was considered
by the Federal Reserve Bo£rd at its meeting ,today and was adopted by
the Board without change/ to become effective when ratified by the
boards of directors of isne twelve Federal re*kerve banks. Please, there
fore, submit the matter/to the Board of Directors of your Bank at its
next meeting and advis# the Board whether your\ Directors accept parti
cipation in the Open !|krket Policy Conference fcnder the plan as revised
Reproduced from the Unclassified I Declassified Holdings of the National Archives
~
2
-
B#trd %/6rbgir coop^inj^ioi^
es not imolu'de a jgfovis|s6n
^
by th#Board, th^s ri#t,
. mor|f >% quejrcioned thaff
the Jfame r|f|b€ q |F
ban^t^ whicji for the piif^bse of^il^&rit^siCas^oeeii
plan#
v
;
In the Board1s letter of January 23, 1^30, it was pointed out
that certain working arrangements which mighiij be necessary would
best be determined by the conference itself -vihen organized# In this
connection, the representatives of the Federal reserve banks at the
meeting on March 24th and 25th voted it to be| the sense of those
present at the meeting that the representatives of the Federal Reserve
Bank of New York on the Open Market Policy Cohference should be
elected chairman for one year; that the Executive Committee, provided
for in the procedure, should consist of the cfiairman and the repre
sentatives of the Federal Reserve Banks of Boston, Cleveland,
Philadelphia and Chicago for one year; and th^t the Conference adopt
a principle of reasonable rotation in the membership of the Executive
Committee after the first y@ar•
1
By Order of the Federal Reserve Board*
Very truly yours,
j
I
|
E* M. McClelland,
Asisistant Secretary
(Enclosure)
To the Chairmen of all Federal reserve banks.
f
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e ra l R e se rv e B ank
of
O F F I C E
G
At l a n ta
O F
o v e r n o r
March 28, 1930.
Mr. E. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Washington, D. C.
Dear Mr. McClelland:
J i..sT
/
I thank you for your favor
of March j^tn^sending me copy of draft
oT“the^proposed open market procedure,
as it was revised during the discussion
at the meeting of the Board and repre
sentatives of the Federal Reserve Banks
on March 25th.
With my regards, I am
Reproduced from the Unclassified / Declassified Holdings of the National Archives
'
/
FEDERAL RESERVE BANK OF CHICAGO
230
O FFICE
OF
THE
SOUTH
LASALLE S T R E E T
March 28, 1930.
GOVERNOR
Mr. E. M. McClelland, Ass’t Secretary,
Federal Reserve Board,
Washington, D. C.
Dear Mr. McClellands
pleased to acknowledge receipt of
your letter'of the £Sth instantt)enclosing copy of the
revised draft of the proposed open market procedure,
prepared at the recent meeting of the Open Market Committee
for submission to the Federal Reserve Board.
Very truly yours,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F ed era l R eserv e
o f
N
e w
Y
B ank
o r k
March 27, 1950.
Dear Sir:
Let me acknowledge in behalf of Mr. Case and myself
the Board1s letters of March ^^transmitting the draft of the
proposed open market procedure, as revised at the meeting of
representatives of the Federal reserve banks with the Federal
Reserve Board on March 25.
V.e note that the Federal Reserve
Board will consider this proposed procedure and submit a draft
including its own suggestions at a later date.
Very truly yours,
W. Randolph Burgess
Assistant Federal Reserve Agent.
LIr. S. M. McClelland,
Assistant Secretary,
Federal Reserve Board,
Wa shing to^, D . C.
u'uB.H/
1/
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
of
Ric h m o n d
March 27, 1950
Mr. E. M. McClelland, Assistant Secretary,
Federal Reserve Board,
Washington, D. C.
Dear Mr. McClelland:
I thank you for your letter of the 25th pending
me a memorandum verbally corrected giving the proposed pro
visions relative to the Open Market Policy Conference.
I
understand of course that this is merely a memorandum sug
gested at the recent conference, in which Governor loung
participated, and that it has not yet been approved or acted
upon by the Board.
Very truly yours,
GJS-CCP
Reproduced from the Unclassified / Declassified Holdings of the National Archives
33V-C.
3
•1
£
At tho mooting of the Board om March 26, following a rot© to reeonsidar
the Board*a action of January 16th in approving tho open market procedure submittod to tho banka with, tho Board's letter of January 23, 1930, Hr. Hiller nored
:
■ .........../ x ^ Ct^ y v
that the third, aixth and serenth paragraphs of the proposed revision be amended
to road as follows:
*(3) Tho Conference shall moot with the Federal Beaerre Board upon
tho eall of tho Governor of tho Federal Reaerre Board*
"(6) Tho conclusions and/or recommendations of tho Open Market
Policy Conference, vhen approred by tho Federal Reaerre Board,
shall bo submitted to each Federal Reaerre Bank for determina
tion aa to whether it will participate in any purchases or sales
reooonended; any M o r a l Reaerre bank dissenting from tho pro
posed poller shall bo expected to acquaint tho FOderal Reservo
Board with tho reasons for its dissent*
*(?) In Bxscutire Ccomittee of fire shall be selected from and
by tho umbers of tho Conference for a term of one year, with
full power to aot in tho execution of the policies adopted by
tho Open Market Policy Conference, and approred by the Federal
Reserve Board.*
Tbs Throe amandmenta mored by Mr* Miller were roted upon sepa-
Mr* Jones mewed that tho rerised proeoduro bo adopted by the
Board, to besoms offeotire when ratified by tho boards of direct
ors of the twolro Federal Reeerre banks*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
March 25, 1930.
^
Dear Sir:
3d
!fhere I s enclosed herewith, m e r e ly for y >
information, copy of tha draft of the proposed open
market proCetoe as it was revised daring the dis
cussion a t the mealing o f the m§mb®i?s of the Board
and representatives Of the Federal *•»**?• banks
today* I t its understood* of c o u r s e , that the su^
jested procedure will be f o r m a l l y considered by the
Federal Betiarve Board asd transmitted t o y o u r baiSc
for final submission t o your Board of Directors when
and in tha form approwd Tby the Board.
Very truly yotsrs,
?*.--.ed) H. M. McCleUanr-.,
S# M, IScOloXl n ,
A ssista n t S aciet r .
'V,
„ P & d dodc, D e p u ty G o v e rn o r,
F e d e ra l R e se rv e B ank,
B o s to n , i^ s s & d m s e t t r ;.
"Snclosure.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Uarch 25. 1930.
dw sin
z.s"-
3d
mmm in oneXoood b*ro*ith * moraly fo r
you* iafoiw U aa, «*gr o f H » dra£% o f ttw pra*
poood opoa aaxtco* proaofciro *• i t was r «v l«o d
dwriikg & • rn m m tm » i tfca m§*U«k o f *mi
a v I i P i o f Umi Board and * o p * *«*a ta tl*i« o f the
?o # »r* l rosarr# !* & • today. I t l i aadorotood,
o f oouroo, tfcot Hi*
prooo&oiro w ill fco
fo ia a lljr oonoldorod
th« Todoral »M «rvo
Board aad tra a oa ittod to jroar t*s& fo r fin a l
satadssioa lo fm r Board o f B lrootoro «hoa aad
ia Hio fora appro*ad ^ $** lo a rd .
▼oiy twOy your#,
B. M. Mooi«iu*»»*
S. M, MoCioUaad*
A*ti*tant Soorotasy*
Mr* i* I. BBXfOftd, AOtln* Storatary,
M r Tortc, 1, T.
S n o t o N 1**
Reproduced from the Unclassified I Declassified Holdings of the National Archives
25, 1930.
&•** Siri
5fetrt to ta e lo ttd harowtth* itoraly fo r
your la forn aU oa, 00|gr o f
d r a ff o f tfct pro*
p ottd opt* aarictt § i* * o i£ i* W W wa» r t r it o d
dorm * d * <tt*out»ioa at tho a a tti* * o f ifco
Mnfetr* o f U * Board and toprooofttat|ip»t f f the
F td tral r o s t r ft *atfK» today. 1% I t madtrttood*
o f cou rt#, that Hit tucgtaU d praoodart u t il tot
foisaalX* oontidorod tp the ?td a ra l B ttorvt
Board aad t r a n s it lt d I t fw x *ax& fo r fin a l
submission t t fm x Board o f Dirto tor a * io a and
In' Hit t o m appro*od lay t io Board.
fo iy tnOjr ycmrt,
X* m. ltoCXtU&ad*
A taiataat 3torota*y
Mr. I. 1* BMSfOtt* mttm Soorotary,
l*tdtral R ta tn t Bank*
Bon York, V* T.
BaoXomro*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Hard*
28# 1930.
©oar S ir*
$h«ro 1« ft*®!#*#* h a rw ith , nioroly fo r
your lo fon a a tie a , copy of tha d w A of tho p ropoaod opoa m *kot proootera as i t woo roH ood
terta g Hi# ditou ssion *1 *ho moottts« of tho » hort of tho 10o*d oad rop rooo»t*ti*oo of tho
I t lH ft l r t s t r v i haifca today. It i » uadoratood,
of ootoroot that tho o«e«o«tod fim m m m m x ho
form ally oontidorod hy tho fo d o ra l B ooofto Board
aad traaaaittad to your haafc for fla a l o«M *oio»
to your Board of mrootor* whom and 1m tho fora
approrod hy tho Board*
?Ofy truly youra*
S* It* HoClalland,
Aaslatant Saerotary
Mr* J. 1* Caoo* Chairman,
radaral Boaarra Sartc,
low Tork, f . T.
moiooaro*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
36, 1930.
Sift
thore I f osoloood herew ith, a oroly fo *
|W I i»f«x*fttlom * e«j>r Q* tho d ra ft o f tho p*o~
p H « p t» aaYfcot prooodoro a§ i t mm rovieod
A t r i^ tho dl®ctt««loa * t tho noettn* o f tho
attafears o f tfca Board aad represen tative* o f tho
Federal reoorvo haako today. I I I t *adar»tood*
o f oourfte, th »t tho etxggoetod prooodare w ill %o
f o r m l l / ooneidorod % m o fed era l Eeoorve Board
and trwunflitted to your haisfc fo r fin a l ombodotlon
to fo u r Board o f M rootoro itoaa aad i » tho fo m
approved Isr tho Board*
Tory tru ly your«f
1, K. liloClelland,
A*§letant Secretary
«r. ooo*fo f . Sorris* ftmraor*
federal Booorve Baak,
^hiladaiphia, PemnylT&nia.
Knoloeuro.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- • -' i
Digitized*••••»
for FRASER
Door
S ift
fh aro i » aifttaaad l&crcwifch, »croXjr fo r forar
iafoxK&tlon* copy of Um d ra ft o f tho propo&od opoa
aaxteat p roao& ro as I I *ao n i l n d daria* tho di*~
eassloa a t %*m aootia g of tfco ssosfcifro of the Board
and ropro»oaiati<roo o f t&o yodoral r i » m bank* to d if* I I in tn&orotood* o f oou rto, that the iW45jp®o|od
proooduro v tU *• fO raalljr eoaoidorod tyr tba fodtraX
Hotm m Board aad traaom ittod to fovat Iwuak for fiaaX
• u taloelo* to jroiiy Board « f D irootor* *hoa and in
tba list* approved I f «ht Board,
VoTjf tr*ljr yooro*
1« K* lioCloXXaad,
A*»l*taat Soorotary.
Hr, S* 1 . I’aaoSior, aoTonior,
fodaraX a»aorro look ,
CloroXaad* Ofcio,
Saoloraro*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Marflh 25, 1930*
BOO* Sift
Umhpo ii oneloiod hsramlth, aoroiy for your ;
lttfomtlom, copy
tn® draft of list paroposod
«p«i Mlfcii proo*<tar« »• It «&§ roritod darin*
th* discussion at tbo mooting of tbo wmb*r* of
Dm *»•*& Mid rop3ro*eatatl*os of ths M itta l f t * !
■orvo I * * * today* I I t « ttftdoretood* o f ooiurtd,
that tho oofgostod proooduro *111 %o fo flio liy
tfitttid H fti b f My| iSndSfSdL
Bo&rd
ItiTBllS*
s i Itod to you* %*#k for fiw a *ab& l«sloa to yow
Board of B lrootors *hoa and ia tho fom approved
"toy tho Boo3Pd*
Tory t*«ly yours,
3 . It. MoOXoliaad,
Assistant Seeret&ry*
M?« Georgs J« fo a y t Oovoraor,
jrWQWTWi s v i i n i iWiw t
Bichaond, T ltglata*
Bncloauro.
N
.
|
\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ttNNfc 36, 1930.
M r «U i
S w n la « ia l«M d te r a r ltk , ■ m i l ’ t o r
f e w I n fo im t lm , m s f * f «tu «n t% o t tte f « * P*M 4 «p«B M ik s l y n tftM m ** I I « m m t n t
ftarlag Umi U M N M loa » t th» b m U iic * f ttw
Board. awl n u m w l t t t n i o f tta vadaval m w w
toofca t o U f. X* 1*
«T M « M , tbm t
Um n w rt rt
» U i *• tonMlljr t w i f r
•rad
t te t *4 w *1 B aa am SompA aaft taMM&tfta*
«a fw or % # * t o r fin a l aalad.a«laa *• jw w Saard
a t U n r t t r i * m u d I * tfca to m •ppw trtH (r « »
M a r t.
f«iv tmS.y your*.
$» K* IKoaAlXaiii,
AtB itt o r t
nr* l«. t* BUak, O o w a o r ,
7«A «r*l
Bunk,
A tlanU , $#or*ia*
aaelorer*.
Prepared by
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Hanfe 80, lt30.
DMT S lrt
Qwro U M flloM d hmroaltfe, w r r ty
y w r ls fo M a tto a , « n r •*
* ■ * * •* «•* P*®»
pMO« «p*a aMfcat »r«M«ur* m it w m ravl««l
M i l ttw 41m«um1 o » *4 e » ■••tin* o f th » mmtW r i o f tho B m t4 u d m M m t o t t m o f * »
Y M cn 4 N N n * %m«c* t o W - I t I* *»d *r»»o«4 ,
o f w w m , tt* t tt* «a«r>*««d p n w a m » U l *•
fo r m a l* H u i l m l t r «h*
Bm otvo b m »*
mA t r a n t t m to >WBf tank fo r f i « o l w S tadf
•ton to ftm B o « 4 o f 9 tr M te n D u n sad ta tho
fo m approvo* tgr tte Board.
?o»jr t n l / fe w *,
1 . U. HoClollaad,
Seorttarjr.
Hr. J . B. Mikmfftl, Qoioner,
I M m l
M w m
Bb*,
CklOMO< JUUoio.
BMfUM**.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Sarah 2»f 1930*
SttdF Sir*
tbara l « oneloood h «r»w ith , a v o ir fo r
yonr In fom a tlon , oopy o f the d ra ft o f th# jaropooad <*p*» naffcat pro#*dnr* m I t *&• rortoad
tar la c th* dl *ea ««loa a t it * m <U o| o f tho
MriMV* o f Una Beard aad vaproaaatatlvaa a f tka
radaral r w « m taak» today. I t la w daratood,
o f oowraa, that tho anaaoatod proaadwra *111
bo foiw aU jr oontldarod Hgr tho rodaral Baaarw
Board aad tsaaaalttad to jrawr D a * fo r fin a l
•riMdaaloa to y m r Board o f Dlraatora * « aad
la the < a » ap piw od fcjr tho Board.
Vtfv tnlir foorii
1* IK* McClelland,
A«»istant Saer»tary.
ttr .
W l l l i a t t H eO .
M a r tin ,
ftta ffa l 3 **«rr« Back*
a t.
L o o ts*
la a s lo s u r s .
'"*T~>y
M is s o u r i.
G o w n o r,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Uartih 36, 1830.
SiMf B i n
fh tr t I t tncXoted h « r «« ltk , a orolj f to r
ywur in form a tion oopj o f tha d ra ft o f Wm p ro *
fo m A «p«ft M fe o t pTOOoamm « s t t «*• rerl»# d
A ir ia t * * * U w m m oim at Us* m ootlx* o f &•
m«ab«r« of th* Board aa^T i^r*««a*at*** • o f «mi
y «* »ra l
teflfea today* I I I* «ad«r*t®od*
ot m wm *
**• « w » u d prooodar* * i u
%t formally »>»*ia»ro4 Igr tho ?•*•*»! B i m w
Board aad t r * m lt t # d to fan * talc im fta tt
Ittbftlasloa to ywur n c r i o f
«mv* and
In tho font mpprov* ly tb* Board.
Tory tru ly youro,
„ Mod) B. M. M oO ieita^1'
S« H* MoClollaad,
A*»l*t«&t socrotoiy.
Mr, 1* b* Ooory, Oo*«raor#
fodoral «•»**?• Iwfc*
Mlms<poHS| Kina*tola*
Baoloooro.
r r o >t; a ,ro d b y
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ifcaxch 25* lt30.
mmt s i n
I t o n d o to d fcarowttli, a oroly fo r
your information* eapy o f tho d ra ft of tbo p roposod i f e* oairkot prooodoro a» I I «a# ro rl»o d
tarin g tho d ttoa toloa a t tho a o o tla c o f Ik#
H i ^ r i o f tho Board and roproton tativo* of tho
fod ora l rotorvo hanke today* I I I s tt&dor stood,
o f oouroo, that tho tu**ostod prooofctfro will *•
formally coatldared If tbo fod a ra l B*»rf* Board
•ad tfa a ottttta t to |oor M
fo r H a il i M i »
s lo * I t y m r Biard o f D trootoro ofcoa «ad ia tho
fosw approvod ly tha Board*
fo if
truly yours.
S. M. McClelland,
Assistant Soorotary,
Mr* c. A* Wortkisgtoa, Doputy Qownor,
rodoral Basono Beak,
Kaaaas City, Ultaouri.
35nolosu*o.
Pr«pn,rod
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Hard* 2$, 1930*
Dm ? s i n
v
fto**# 1» anelovad harawith, *a ra l* f&t
j w r la fom a tloa * m g f o f Ht»
pf#**
j» t# d tipa* markat proiadaara a t i t l a i
dwr t i^ Hi# di«<m *»ioa At tba M M tinc # f Umi
im fe it i o f tk* Board aad t»praaaatat**i« # f Hit
ft d t r a l raaaipfa task* todur* I t I t iiBdtfttood*
o
fmm, U
u
tt
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ow
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tii trana-1 fttail ta r o a r fesuok faf f inal aolMla*
si# a I t r o w l*a *d i f 23ir#«t«ri m9M» aad I * th«
fo m rn00m % € igr tho Board*
faiy tzvlx |wtt'*»
(ttitfiied) II. M. McGle.Ii.aiHi.
2 . X* KeCIftXl<l&d«
&»#ittasst Soorot&ry.
Hr. 2$a* P. fftH *r*
7«4**al Ro»*rro Barifc,
V
fc^iB*%
f
lShfedMMtja
oajuaa,
laxas*
TSaoXofwr®*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
"hJ
Kardk 35, 1930.
bmt
sin
f
iKiwi"'i» »• fwa«M.wiwi
jiwrviy *®r
jw r
efi^r o f tiio darsft o f tho 9*0po##d ops* aaxfcot proce&uro as i t vat ravisad
daring tha dlK M ssioa a t tbs mooting o f tbs
jasaibsrs of tho Board aa& ropros*atati*o« o f
tilt fod aral rosa rfe iarifcs today. I t i t uadsr~
stood, o f ootirss* that tka s u ^ s t s d proesdara
w ill bo form ally aossldarod lay toe fsd a ra l as*
ssarim Board *n§ tra oa a ltted to ;yow ^riifr for
fia a i s a M s s to ii to fo o t Board o f D ireotore
vfeaa and ia the fo m a^protod ty the Board,
Ttry twdy fours,
1* It* KoCloUaad,
Assistant Secretary.
Mr* J, 0. Galkins, Oorsraor,
federal Boserve Ba*ik,
Saa Fraaelsoo, California.
Saalosure.
sail
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(1)
The Open Marker ^tv jstme».v Committee, as at preuont const >uted, is
.
hereby discontinued and a new committee, voluntary in character, to be known as
the Op4h Iferket Policy Conference, is set up in its place*
(2) The Open Iferket Policy Conference shall consist of a representative from
each Federal Reserve Bank, designated by the Board of Directors of the bank*
(S) The Conference shall
trifch the Federal Reserve Board upon the call
of the Governor of the Federal Reserve Board or the Chairman of the Executive
Cosmittee, after consultation with the Governor of the Federal Reserve Board*
(4) The function of the Open Iferket Polioy Conference shall be to consider,
develop and recommend policies and plans with regard to open market operations*
(5) The ti^e, character and volume of purchases and sales shall be governed
with the view of accommodating commerce and business and with regard to their
bearing upon the credit situation*
(6)
The conclusions and/or recommendations of the Open Market Policy Confer*
enoe, when approved by the Federal Reserve Board, shall be submitted to each
Federal reserve bank for determination as to whether it will participate in any
purchases or sales recommended; any Federal reserve bank dissenting from the proposed policy
be expected to acquaint the Federal Reserve Board and the Chairman
of the Executive Committee with the reasons for its dissent*
(?) An Executive Committee of five shall be selected from and by the members
of the Conference for a term of one year, with full power\to act in the execution
of the policies adopted by iiie Open Iferket Policy Conference and approved by the
Federal Reserve Board, and to hold meetings with the Board as frequently as may be
desirable*
(8) Each Federal I w m
Bank participating in the Open Market Policy Conference
•hall be considered aa waiving none of its rights under the Federal Reserve Act; each
Federal Resenr« Bank shall hare the right at its option to retire as a member of the
Open Market Polioy Conference, but each bank while a member o? the Conference shall
respect its Conference obligations*
G
/f
d/
MAR 2 £1930
'
is
Reproduced from the Unclassified / Declassified Holdings of the National Archives
{%) the Open Itoffeat Inree toast M M w , aa at t w i a t eon rtltu tod , Is
hereby dlaeonilnuaA sad a m
e o a a ltto e , Yelwitary in r ttn r tw , to be kaosn M
the Op«ft ttu te t S o liey C onfereaee, l i M t i p l n i t i p la m ,
( t ) Bw Open ’.fcrfcet ioUagr Conference a t o ll oonalet o f * n p M M t e t l n Cvm
eaati Federal t m m
aw fc, d eslfn atod by the Beard o f DJreatew o f th* teak*
( f ) Xh* Confaronoo * a l l attak w ith the VM aval Beeenre Beard upon tb » » 1 1
o f th* a m n w o f th e Federal B a e e m Board o r th* C h k U w o f th* i* e e u tlre
O on d ttee, a fte r con su lta tion w ith th* Oerem or o f the M t n l Eeoepre Board*
(4 )
develop
the I M U o g o f th e 0 p « ttufcefc ittXlagr OoofWrenoe s h a ll be t o eon eldor,
aad m —
(6 )
%e
(I p o l b t w and plane w ith r*ga rt
to open i*rtofc oparafcioiuu
tlfi.ahUMtar end rolun* a t purehneoe end aelee ehall ti governed
vltfe the t1 <jw of nooanaodettag aonaeree ant boeineea and with report to th*ir
bearing
upon the e re d lt situ a tion *
( t ) The eonsluslans and^ar re eo—
ufrtla a e o f th e Open m rhat iollagr Cunffcr-
«o * e , whan apjweaed W th e N w l Baaewe Beard, e h e il lie eata&tted t o eaeh
Federal n w m
beak Ibr d eton d a a tla a aa t o uhether I t w&U partleft|<ate la any
puntaeea o r ealen reeom n d ed t any I M w t t w a r n bank d issen tin g fWaa th* p ro9if
pm *& rv lim /im t e • 9 m M t o aeqaalnt the F odejal Bessw e Board wed th e Ojairaaa
o f th o Saeeut&re 0HHi.tt*a w ith the reaeona f o r I t s dlesaaft*
(7 ) M aoeeattr* u * a d tto e o f A n ahaU he aaleetod fva a and by th* mes4»r*
o f the iTunfiiiTMWa fa r a te m o f one j w , w ith fttU pa*er t o a et la th e aaeauMcai
« f the p e lie la e adapted b y «be Open aw fcet io lla y Conforeaee and apjaw od b
*fea
Federal Beeerre Beard, and t o hold meetings w ith tho Oonrd aa frequ en tly a* * y be
d esirable*
(8) B M h federal R e e e m Bank participating la tha O g m Itotot
W i
M m I
olley confrrwae
be •onaidewd aa wafarteg none of Its ri#*s teidur the federal 8**<-r*» ofcj eaeh
Keeerve Bfcde shall have the rl**t at lte option to retire aa • «*8*or of «io
Open ihrtaet Foliay Csmfsrsnoo, but aaeh bank while a aciator of th* Oanfwrenee shall
reapeet lte Corltareneo obligetlana#
$he Caaaittee appointed at the meeting of tha federal Reserve
Board with the representatives of the twelve Federal reserve baiks yes
terday, net at the Carlton Hotel laat evening and adopted the attached
revissd draft of * propoaed open Market procedure.
It waa also roted to he the aenae of the representative of
the federal reserve banks present at the neeting that the representative of the Federal Heaerre Bank of Hew York be elected Chairman of the
Conferenee for one year; that the Executive Ooomittee provided for in
the proposed procedure should consist of the Chairman and the represen*
tatives of the Federal Reserve Banks of Boston, Cleveland, Philadelphia
and Chicago for one year; also, that the Conference adopt the principle
of reasonable rotation in the membership of the Executive Committee after
the first year*
AT KOA&tf MBKWNO.
(1) Tha Open Market investment Committee, as at present const itulced,
to be discontinued and a now ocaomittee, to be known as the Open Market Policy
Conference9 to be set up In Its place*
(2) She Open Market Policy Conference to consist of a representative
from: each Federal Reserve Bank, designated by the Board of Directors of tbe bank*
(5) Tbe Conference to meet with the Federal Reserve Board upon the call
of the Governor of the Fedsral Reserve Board or the Chairman of the Executive
Comoittee, after consultation with the Governor o f the Federal Reserve Board*
(4 ) Tbe function of the Open Market Policy Conference to be to consi
der, develop and recommend policies and plana with regard to open market operations*
(5)
The time, character and volume of purchases and sales to be gov
erned with the view o f accommodating commerce and business and with regard to
their bearing upon the credit situation*
Tho conclusions and/or recommendations of the Open Market Policy
Conference, when approved by the Federal Reserve Board, to be submitted to each
Federal reserve bank for determination as to whether it w ill participate in any
purchases or sales i f recommended; any Federal reserve bank dissenting from the
proposed policy to be expected to acquaint the Federal Reserve Board and the
Chairman of the Executive Committee with the reasons for its dissent*
(?)
A Committee of five to be selected from, and by the members of the
Conference for a term o f one year, with fu ll power to act in the execution of the
policies adopted by the Open Market Policy Conference and approved by the Federal
Reserve Board, and to i^old meetings with the Board as frequently as may be desirableo
(8)
Federal reserve bank to have the right, at Its option, to re
tire aa a member o f the Open M a r k e t Policy Conference; no member of the conference
to be eonsidered aa waiving any of its rights under the Federal Reserve Act with
witb xaapaet to t&a puroiiaae aad sale of aeouritiaa, but eaak member of tha
Conference w ill respect ita CBonfereno* obligations*
Jlu&i/tMXfitjk
at B b is o iiif iiia .
MAS ^5 >930
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Excerpt frco tho ilsutss of the mooting of the Federal. Reserve Board with the
Open Market Policy Confer©nee on March 25.
The revision submitted by the Conniittee, particularly the points of
difference from the procedure adopted by the Board on January 16th, were thorouthly discussed* Several suggestions for changes were
Baade
with "Hie result that the
revised procedure was further amended so as to read as follows*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
To all Members of the Board:
--S
The Committee that was suggested yesterday afternoon to draft an
open market procedure for the System met last evening at the Carlton
Hotel and after much discussion and many compromises, the attached
draft was finally approved unanimously by the committee.
I believe
that it meets many of the criticisms that were made by the various
boards of directors, but not all.
Nevertheless, I do believe that
after the directors of the various reserve banks learn that their
representatives have agreed to it unanimously that they will no doubt
adopt it•
The eighth section was included on my suggestion for certain
specific reasons, which are as follows:
1.
No board of directors would care to treat its responsibilities
and duties under law in such a light manner as to assign those
duties and responsibilities under all occasions and conditions, and
I believe it advisable under the arrangement to specifically mention
the rights that they have under the law.
2.
From a practical standpoint, however, I do not believe
that any Federal reserve bank would withdraw from representation in
the Open Market Policy Conference except with great reluctance, even
though their board of directors may frequently dissent from the policy.
3.
If one or several of the smaller banks should elect to
withdraw, I still believe that the committee
to function.
would be in a position
If, however, one or several of the larger Federal
reserve banks should elect to withdraw, the probabilities are that
the committee plan would have to be abandoned, and open market
-o «C^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
■2'
operations would have to be handled by regulation.
Eegardless of
what has happened in the past, however, I believe this to be a very
remote possibility.
I realize that this procedure will not meet the approval of my
colleagues in every detail, but I do believe that if this is
approached in the same attitude of mind that the various committee
members approached it last evening in conference, any objections will
be trivial.
AT'
-classified Hote)fi%gp*^Mte^National Archives
f it a l l ttntoara o f tha Board,
iau*h Sft9 m
2Ebq* Qowaxnor Yhting*
Th» CMaai&ttaa that wifi auflgsstad yaatsvtiay aftaraaoa 1hi d ra ft ml ^pm
■aatost praaaiura fo r tha S^rtHmn n i l la a t atoning a t Dm Carltsa, E otsl aa& a fte r
fiiffffo
an i muqt aOMpfrsttiaaat tha attaohad d ra ft w^s fiaaXXy spprorad
y ^ tha ooarittaa* X l)i1 j i n that i t M ata aaay o f tha- o r itio is a a
th at waxa aada by t t e Twrlam tnwrfli o f d ira o to rs , but not
H oftrttatlasit
X d^haXiava that a fta r tha diraatava o f tha ▼arloua raaarva banka tanini that
.flfe
m a ir rspraaantativaa aara agraaa
w &* w iiM a w iiy m a t tnoy w in no doubt adopt
it*
'<Mh
liy h M M y M I
A A
MMMMfeJikdft:
<JI <Al
«*4iHh4fca*'4«HfcdMk*
«tf»
dbtNk*fcdhr
A llk d te *
m
J|
*•
M kjk,
atfc^A
fiia eigh th aaotlon was inoludsd on w$ suggestion fo r oerta in s p a o ifio
rea son s,,
ara as fo llo v a t
(1) Bo Board o f D lrsatora would oars t o tre a t ita r e s p o n s ib ilitie s and
du ties undsr tha
in auoh a lig h t T—fcfn*fy aa t o *»*»f j f* thnm du ties aty| vaspoiva ib llit ia a uodiv *** ooaaaions ^
eanditlosie, ft"d i b e lie v e i t advisable
tha arrangensnt ta spaaifiaaXXy a a atioa Iha rig h ts that thajr hara under tha lav*
(&) fr o * a p xa otioa l standpoint, however, X do not b e lie v e that any
Federal raaarva fr-nfc would wiDidraa f w f represen tation in Iha Opaa iiariost P o lioy
Oosfaxaaaa saaapt w ith groat raXuataaMiy avail
th s ir Board o f B irsotora
zaa$r rra»xiitil1j disMnxt fra a tha poliay*
(*» Xf aaa air a a ra ia l o f tha aaalXar banka should a la o t ta v ith d m it
X s t i l l balia va that tha Cknaittaa wwim ha in a p o a it in ta fbn otioo* I f , has*
arsr* aaa asp a a faral o f tha 1augur Jitefn X raaarva bsnha shou ld alaat t o withdraw,
tha p ro b a b llltle e ara- that tha aaaadlttaa p-V*!! voul/d hava to ha abandoned^ and upm
aarkat aparatioaa
hata t a ha haadlad by ra^ulatiaa* Bacsntlaas o f vhat h u
aappaaaa m was pas •§ aswafairt 1 os m ots v m *a aa a rary raaaw p w a is u it /*
|f''«jMMh3LiJHi th at th ia j^vooadura wilX aat aaat tha ayprafal o f ny nml 1on pi s i
ia svsry d s t^ il9 hat X da baXisrva that i f th ia ia approaahad in tha saaa attitu d a
of
that tha rariana asaadlttaa iswhara awrossdhsft i t la s t
i& aoofsas**
•nos, any ohjaatiaaa v iX l ha triria X «
Reproduced from the Unclassified I Declassified Holdings of the National Archives
0
3/i3y/'^a
Excerpt from minutes of meeting of the Federal Reserve Board with the Open Mar
ket Policy Conference on March 24, 1930*
******^ -the question of open market procedure was taken up in the light
of the replies received from eleven of the twelve Federal Reserve banks to the
Board’ s letter of January 23rd, $-6484, requesting the views of the banks on the
procedure approved by the Board at the meeting on January 16th*
Mr. Hamlin presented a digest of the replies prepared by him.
Atthe conclusion of the discussion, Mr. James moved that a committee
be appointed for the purpose of preparing, based on the letters received
from the Federal Reserve banks and suggestions made during the discussion
at this meeting, a revision of the proposed procedure to be submitted to
the Conference and the Board tomorrow and later to the Federal Reserve
banka.
Governor McDougal moved, as an amendment, that the Committee con
sist of a ll representatives of the Federal Reserve banks present and. the
Governor of the Federal Reserve Board.
Mr. James accepted the amendment proposed by Governor McDougal and
his motion, amended, accordingly was put by the Chair and carried.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
'v-*'
\__'
■v
^Z-6525 ^
O P g &A3ZBT POIiICY COimiTIEE
^
^
Analysis of Replies of the federal Reserve Banks to Bo ard’fs. Letter
dated January 23, 1930. / X"~ &
C a rd e d
(Fo replies received from the Richmond, Kansas City or Dallas Banks.)
1.
Board’s letter; - Changes name to Open Market Policy Conference.
Few York prefers present name.
Cleveland objects, and prefers old name.
Other banks do not mention this.
2.
Board
recommendation: - Each Federal reserve bank to be repre
sented on the Open Market Policy Conference.
Boston:
Suggests representation by the Governor, or by an
officer designated by the Board of Directors.
Hew York:
To be composed of representatives of the twelve Federal
reserve banks, provided an effective operating committee is
appointed with fiill authority to execute approved plans or
policies.
Committee should be composed of Governors.
We do not object if other Boards of Directors should
appoint other representatives.
Philadelphia:
Fot material whether Governor or other representative
be designated by Directors.
Chicago:
Each Federal reserve bank should be represented.
San Francisco:
The Board of Directors has designated the Governor as
its representative.
3.
Board letter: - The Conferences should meet with the Federal Reserve
Board at such times as may be arranged by or with the Board,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-S525
Boston:
Suggests amendment so that Executive Committee can hold
meetings on own initiative as well as on call of Board.
Hew York;
We ass'ume that meetings of the Committee, or the Executive
Committee will be called by the Chairman of the Committee after
consultation with the Governor of the Federal Reserve Board,
whenever desired by the Board or by the Committee.
Philadelphia:
Asserts the right of the Committee to moot whenever in
the judgment of the Executive Committee a meeting is advisable.
Objects to the provision of (3) that the representatives
of the banks shall moot with the Board.
This fails to observe the distinction running through the
Act that the banks are the initiators of all transactions,
subject to the review and coordinating authority of the Federal
Reserve Board.
The Board cannot properly review policies in the framing
of which it participates, nor should it take any part in the
routine execution of policies which it has approved.
Objects to provision that the Conference shall meet only
at such times as may be arranged by or with the Board. This
would give the Board an absolute veto power over meeting
of the Committee.
The Board has a veto power over tho recommendations of
the Committee, but should not have a veto power over its
meetings.
The Executive Committee should have power to call a meet
ing at any time.
Cleveland:
We believe that meetings of the Committee should be called
either by the Board or by the Executive Committee.
Two of the regular meetings of tho full Committee should
be held at the time of the semi-annual Governors'Conference.
Chicago;
The Chairman of the operating body should be authorized
to call a meeting of the body at request of two or more members.
The Federal Reserve Board could always call the bo.&y together.
4.
Board letter:- The function of the Open Market Policy Conference
should be to consider, develop, and recommend plans with regard
to the purchase or sale of securities in the open market.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-3 -
X *6525
Chicago approves this.
The other banks do not mention it.
5.
Board letter: - The time, character, and volume of such purchases
and sales to be governed with the view of accommodating com
merce and business, and with regard to their bearing upon the
credit situation.
The banks do not comment on this.
6.
Board letter: - The conclusions and (or) recommendations of the Open
Market Policy Conference to be submitted to each of the Federal
reserve banks and to the Federal Heserve Board for consideration,
and (or) action.
Bo ston:
Suggests amendment so that conclusions or recommendations of
the Open Market Policy Conference shall be subject only to the
approval of the Board.
Few York;
The policy as to purchase or sale of Government securities
should be made subject to review at any time that may seem wise
either to the Board or to the jjarticipating banks.
We recognize that the banks and the Board have a joint
interest in the matter of open market policies with respect
to purchase and sale of Government securities.
Philadelphia:
Feels that the function of the Federal Heserve Board is as
a supervising and coordinating authority, rather than an originat
ing or operating body.
The Federal Heserve Board letter transforms the Committee
into a Conference, the conferees consisting of a representative
of each Bank and the Federal Reserve Board.
The Board's draft that the recommendations of tho Conference
should bo submitted to each bank for consideration and, - or action, is a very cumbersome requirement which might prevent
prompt action and prove disastrous.
The Board should not be put in the position of having to
consider and decide policies which it has assisted in framing.
These policies would not represent, as they now do, the
uninfluenced and independent views of the banks subsequently
allowed or approved by the Board, but would be the outcome of
a wholly extra-legal conference, in which the reviewing
authority had participated ab initio.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
_4_
'
‘
' X -6 5 2 5
Cleveland:
Objects to (6) as cximb or some, retarding action, particularly
in emergencies.
Prefers rccommcndation of Governors that the full Committee
shall consider and act upon the recommendations of the Executive
Committee, and shall then meet with the Board to discuss those
recommendations before action by the Board.
Chicago:
Objects to (6) as unworkable.
Each bank should delegate authority to its representative
on the Conference to act for his bank at all mootings of the
Conference.
San Francisco:
Suggests that the conclusions and (or) recommendations of
the Conference shall be submitted to the Federal Reserve .board
for consideration, and if approved by it, shall thereupon become
immediately operative, to be participated in by each Federal re
serve bank as it may deem expedient.
7.
Board letter: - A Committee to be known as the Open Market Executive
Committee to be constituted for the purpose of executing such pur
chases and sales of securities as have been approved by the Federal
reserve banks and the Federal Reserve Board.
Boston;
Suggests amendment to give Executive Committee power to
carry out policies agreed on by tho Conference through open
market operations, subject to the review and coordinating
authority of the Federal 'loserve Board.
How York;
Tho Committee (presumably' also the Executive Committee)
should have authority to execute approved plans and policies
in behalf of such banks as care to participate.
The meetings of the Committee, or the Executive Committee,
should be called by the Chairman of the Committee after con
sultation with the Governor of the Federal Reserve Board, wnenever desired by the Board or by the Committee.
Philadelphia:
Objects to provision that the Open Market Committee shall
merely execute purchases and sales which have been approved by
tho banks and the Board.
This would put the Committee in a position little better
than that of a broker or dealer.
The Executive Committee should continue to keep close watch
upon financial developments, and anticipate as far as possible
Reproduced from the Unclassified / Declassified Holdings of the National Archives
— 5-
^r-
X-■w^.'C/O
situations likely to arise, -and be propared to formulate recom
mendations and suggestions for the consideration of the full
Committee.
Cleveland:
Tho "xecutive Committee should have power to carry into
effcct the policies recommended "by the full Committee and
approved by the Board, as recommended by the Governors.
Membership of the Executive Committee should be rotating,
so that the Governor of each bank within over-night traveling
distance from Washington would serve atx ap-oropriate times.
The Governor of the iTew York Bank should be a permanent
member and act as Chairman of the full Conmittee, and of the
Executive Committee, as the Committee’s operations must
obviously be carried on in iTew York.
Chicago;
The Open Market Conference should have an Executive
Committee clothed with authority to function.
St. Louis:
There should be some method of rotation on the proposed
Executive Committee, excepting only the Governor of the
Few York Bank.
Suggestions by the Banks as to participation:
Boston;
"fill participate in all open market operations, without, however,
surrendering any authority, rights, or powers of independent action
conferred by the Federal Reserve Act.
New York;
Any Federal reserve bank may decline to participate in any purchases
or sales at any particular time.
Will continue our participation as long as the composition and
functions of the Committee will insure and facilitate the formulation and
expeditious execution of sound System open market policies.
Our directors are agreeable to continue participation in System
open market procedure worked out and agreed upon by the Board and the Com
mittee, provided it is not inconsistent with these general views.
Cleveland:
will cooperate with the Committee, reserving our legal right to
engage in open market operations under Section 14.
We have declined to participate only when, in our judgment, the
legitimate demands of our member banks made it necessary no t.o do.
We will continue to support the open market policies approved by
the Board, reserving the right to purchase at our option, Government
Reproduced from the Unclassified / Declassified Holdings of the National Archives
X -6 5 2 5
securities and bills in limited or reasonable amounts when offered to us
by our own member banks, and will exercise our right to engage in open
market operations for our own account only in unforeseen emergencies.
San Francisco:
Our Board expressly reserves to the Federal Reserve Bank of San
Francisco, the right to determine whether the bank will participate in
transactions recommended by the Conference and, if it does participate,
the extent of such participation.
j}"o present or future participation by this bank in the transactions
of said Conference shall be interpreted as a commitment to further
participation.
Reservations.
Boston;
Reserves all authority, rights, or powers of independent action
conferred by the Federal Reserve Act.
Few York;
Without waiving the powers conferred upon us by law to make purchases
and sales of Government securities, we would naturally assume, certainly
as long as we continue a part of any approved open market committee pro
cedure acting for the System, that we would not exercise our power to
buy and sell Government securities in conflict with approved System policies,
except as that might be necessary in an emergency in our own market.
Cl eveland;
Will cooperate with the Committee, reserving our legal right to en
gage in open market operations under Section 14.
We will continue to support the open market policies approved by the
Board, reserving the right to purchase at our option, Government securities
and bills in limited or reasonable amounts when offered to us by our own
member banks.
Will exercise our right to engage in open market operations for our
own account only in unforeseen emergencies.
Atlanta:
It is understood that we may continue ordinary every-day practice of
buying acceptances within our own District, and of buying from and
selling to our member banks, Government and other securities authorized by
Section 14.
The above practice will not hamper or interfere with the operations
of the Open Market Conference.
Any action necessary in a large amount, in case of emergency, will
be submitted to Board for approval.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-7-
X-S525
San Francisco;
Approves Board, letter without waiving any right, or delegating
any power conferred uoon this hank under tho Federal Heserve Act.
This Board, in approving the establishment of said Conference,
does not Surrender, but expressly reserves to the Federal Heserve Bank of
San Francisco, the right to determine whether this bank will participate
in transactions recommended by the Conference and, if it does participate,
tho extent of such participation.
Ho present or future participation by this 'Sank in transactions
of said Conference shall be interpreted as a commitment to further
participation.
Joint Interest.
Hew York;
Wo recognize that the banks and the Board have a joint interest
in tho matter of open market policies with respect to purchase and sale
of Government securities.
Eight of Withdrawal from the Conference.
ITew York;
Any Federal reserve bank may withdraw from the Committee procedure
altogether, if it dooms it advisable.
Exigencies.
ITew York:
We would not exercise ouft power to "buy and sell Government securities
in conflict with ajnroved System policies, except as that might be necessary
in an emergency in our own market.
Cleveland;
While we reserve the right to purchase at our option Government se
curities and bills in limited or reasonable amounts when offered to us by
our own'member banks, we will exercise our right to engage in open market
operations for our own account only in unforeseen emergencies.
Atlanta:
Any action necessary in the way of buying acceptances within our own
District, and buying from and solving to our member banks Government and
other securities authorized by Section 14, in a large amount, in case of
emergency, would be submitted to the Board for approval.
Chicage;
The Federal reserve bank retains the powers conferred upon it by
Section 14 to the extent that it may protect any sudden or extreme
emergency.
-------------------------------------------------------wssapsaai
Reproduced from the Unclassified / Declassified Holdings of the National Archives
%
YkjBMfc i«r* I
year
sTT-m*1X^tAoIn,**
Hii I
I acknowledge reoeipt of and thank you
tor r<*»* latter &t m * m m i w wmimim « m
of th* report unanimously adopts by your Board
of Dirootor* on tho rawlaion of the Open Market
icoeedure, aa a«t out In the Board** latter <£
jHttuxJEtaU.JtetftMril lha* th# rtmm'W iSS .
Board* of Direetor. car *11 tha other Feder*l r*~
aefta hank* have fce<at retailed, tha <$i*atloti win
ha §fcren further aoaaldaimtlo® by tha Board*
% * y truly your*#
E. H* McClelland,
Aoalataat faoretary
a
Mr* W* W* Hoxton, Gh&l ji»r» #
Federal faa*r*e Bank*
Richmond, ?a«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e Ba n k
^
„
> ^ 1), *Co f
R ic h m o n d
March 13, 1930
Federal Reserve Board
Washington, D. C.
Gentlemen:
Inferring to the Board*s letter of January 33. 1930,; X 6484,^
Subject "Open Iferket Procedure®, Under
6f (r advised
the Board that & committee of our Directors ha^d been appointad to study
the question and report back to our Board of Directors at the March
meeting.
At our meeting today the Committee submitted its report, a copy
of which is attached hereto. This report was unamimously adopted by our
Board of Directors, and therefore constitutes our Board*s reply to the
Federal Reserve Board*s circular letter specified above*
3£«ry truly yours
Win. W. Hoxton
Chairman of the Board and
federal Reserve Agent.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e d e r a l R e s e r v e Ba n k
of
Ric h m o n d
March 13, 1930
Federal Reserve Board
Washington, D, G.
Gentlemen:
inferring to the Board's letter of January 2^1930,/X 6484 ,\
Subject "Open Market Procedure % Under dat e "of
advised
the Board that a committee of our Directors lid been appointed to study
the question and report back to our Board of Directors at the March
meeting.
At our meeting today the Committee submitted its report, a copy
of which is attached hereto. This report was unamimously adopted by our
Board of Directors, and therefore constitutes our Board's reply to the
Federal Reserve Board's circular letter specified above.
¥«ry truly yours
Wm. W. Hoxton
Chairman of the Board and
Federal Reserve Agent.
t*I!prcxiuced from toe Uncfassifi§^|‘g_^p^|eclii8)4ings of tJ|g|^9tional<AiQ^e^"
I
March
,
l$m,
to IH« Board of Bdlr»ctor»
of the Federal Itmmsrm Baak of Blahaoadf
Tbe nesting of our dlroctors aa Bstwuaay 6 afforded the first oppo*»
tuni^ to consider collectively tha aaaoraadua of tbe Federal Bosan* Board
relating to a propoaad Open Market Policy Canforonee, hence the delay in ap~
polattag you* coaaittae to oonalder tho aeaoraadua and m m a i A views for
adoption and ccwsunication to tbo Federal S i i i m Board, as invited*
da April 11, X929, tbo suggostion of tbe F#d©ral Advisory Souaeil
tbat tbo Opoa Intel Coaaittee bo enlarged to aabrace the governors of all tbo
Fodoral Besarvo Banka, with an m m m U m ooaalttoe ooaposod of fifO wmatom,
was brought up for consideration by our Board,
The action taken on this pro
posal ly tbo Conforonoo of Governors and Agents at o aeetlng bold in lashingtoa ia Boveafear, 1B£8, was roportod, and oar Board approved tbo proposal* this
action aaa takan tp our dime tors under tbo assuaptioa that opea aarket opera
tions would eonticoo lo bo conducted substantially aft ia tbo past*
I t is aot
clear lo a« froa tbo Boafd*s aaaoraadua whether or to what axtent tbo Board
now eonteaplate* a change ia tbo aetbod of opoa aarket practice and procedure,
other than that abioli a m naturally rosult t*m tha ealargaaent of tho ooaaittee*
tbo plaa proposed ia tho naaorstadua of tha Board soaas to bo addre»eed
specifically lo opoa aarket transaction* in securities, but it ia assuaed tbat
it will extend to allopan aaxfcet operations which hava aa important influence
upon the money aarket#
Tory oarly la oporatloa, tlk» Federal Basorvo Banks found it necessary,
m expedient, lo coaduot thair opoa aarket operations, other than those of a
local nature, through a voluataiy ooaaittee, partly ia ardor to avoid conflict
or competition with oaah otbar la thair parohaaos and sales, siaao at tbat tia#
there aaa oaly oae outstanding open wtrfcot la whioh tte ov*rwfa»l*ing aajorlty of
transactions vara conducted*
that coaaittao, heratofore known as tha Open Mar**
ket Investaent Coaaittee, consisted of tho governors of tbo following aaaed
baakst Boston, M r Xork, Philadelphia, Cleveland, and Chicago.
The Opoa Market
Inveataent Coaaitteo bad no authority lo act for axqr Ssdaral Basarvo Bank otbar
than that which was givaa by praarrangeaent, and ovary Fodaral Basarvo Bank had
tha right, upon notice al any tine, to withdraw froa participation la tbe transac
tions of tho oowslttoe, whiah is a right that cannot lawfully bo surrenderod* the
right of Fodoral Baser** Baafca to aot Joiatty or fiovatmlly through a o®a«ittoo
of I M s itiad in tha mmmmmUm of tranaaeUons authoriied by their directors,
under the lav, wo tbiuic oannot bo disputed, although it is provided ia the Act
that parohtsas and isalo* of bU ls la tha <^»oa aarket shall bo subjeet to suoh roetrioti«His» ilaltaUons, and ragulaticnui as aay bo loosed by tho Federal Bosarva
Board*
ia baUova it to bo doairahla to ooatlaa* tho ooadaot of %atoa op«i aarkat IraasotioaB through a oowslttoo substantially aa haretofore conducted* sad,
eproduced from the Unclassified / Declassified Holdings of the National Archives
liBM i t la now proposed to sa la ry th is coa a lttee to twelve aaabers (which pro
posa l haa h eretofore been approved ky oar d ir e c t o r s ), aa b a lla d i t ta ba eaae»»
tla l, as suggested i a the Board’ s aeaoraiidne, fo r convenient aad e ffe c t iv e op oretio n , that a sab oeaalttee, o r aa executive c o a a ltte e , ba appointed, to conalat
o f n ot aore than f l w aaabers*
f h lle i t la aasuaed that tha ftOX coa a lttee w ill
*o aaqpowarad to appoint lt a oaa executive ooa n ltte e, i t la our opinion that tha
neahers o f thia coa a lttee should ha sclecta d fro a tha Beserve Banks i a a ost di~
root aad intdaate touch with open aarket operations aad ia quick eeaaualcatien
with each other fo r frequent a eetln g s, c ith e r aaoag thaaselves o r with the Fade**
a l Beserve Board*
I t la oar fu rth er opinion that with a coa a lttee o f taalve
governors, i t w ill probably ba advisable to have fou r regular aeetlnge la each
y e a r, to review open aarkat eoaditloaa and consider whether any change in p o lic y
ia required*
Meeting* o f tha f u l l coa a lttee to ba oa lla d a t oth er tin es by tha
ohalraan when considered necessary bgr tha executive eoaaittaa or by the Federal
Beserve Board* These meetings may well supersede the governors1 conferences.
la recogn i aa tha antual aad jo in t lataraata aad tha aaad fo r coordina
tio n aad cooperation o f tha Fadaral Beserve Banks aad tha Fadaral Reserve Board
la open aarkat tran saction s, e s p e cia lly ia thoaa transactions ant&red la to with
tha v ie * o f in flu en cin g ora d it con d ition s, o r , aa gen erally designated, fo r *8ys~
tea account**
Without any daaira or in ten tion o f d iffe r e n tia tin g between tha powers
o f tha Fadaral Beserve Board and tha powers and r e s p o n s ib ilitie s of tha d lra otors
o f thia bank, i t saeaa elaar to us that tha r e s p o n s ib ility o f in it ia t in g open
aarkat transactions raeta upon tha diraotora o f Fodaral Reserve Banka*
Our by
law s, A r tic le I I , S ection 2, provide th a t, su b ject to tha supervision aad co n trol
o f tha Board o f ftire e to rs, the Executive C oaalttee sh a ll have tha power to lu lt l~
ata and conduct opaa maiket transactions*
In tha e&aa of th is bank, where aaetla gs o f diraotora occur only once a s n t ^ i t is i t e r a t iv e that the diraotora
▼eat thia au th ority i& tha execu tive o ffic e r s of tha bank* sin ce operating condi
tio n s any a t aay U se a ris e — and In fa c t ara constantly a risin g — which c a ll
fo r la aed late aetioft*
Bolding th is t ia v , I t is our opinion that tha open aarkat
eaeoutivc co a a ltte e , in order to proaote tha aoat effective operation o f tha f u ll
eoa a itta a , should fu n ction p r a c tic a lly aa tha Opaa Market Investment C oaalttee
has h ith erto fu n ction ed, and aore in acoordance with tha reeelutlotta approved bgr
tha Fadaral Baaerre Board m March ZZ9 l# 2$f to a i t , *that I t ha the duty o f thia
co a a lttee to daviaa and reooasiond plana fo r tha purchase, s a le , and d istrib u tio n
o f the open aarkat purchases o f tha Federal Beaarva Banks in accordance with the
above p rin cip le s and such regu lation s as nay fro a tla a to tin e be la id down fagr
the Federal Beaarva Board**
the receaaendatloas o f the exacutive co a a ltte e , however, under the new
plan w ill, we ascuae, he aade to tha f o i l coa a lttee fo r adoption b efore being suba itte d to tha Fadaral Beserve Board fo r d iscu ssion , approval, aad action* I t la
aasuaed that tha executive coa a itta e w ill render weekly reporta to a n Fadaral
Beserve Banka, aa a t present* aad w ill coasmaieate to other aaabers o f tha f u l l
coa a ltte e fro a tla a to tla a , between aaetlaga o f that co a a ltte e , lt a observations
and oplnloaa on changing aarkat oa a d ltia a s, to fa c ilit a t e a ction by the f u ll coa~
a ltt e e when ca lle d togeth er, o r ia case aore proapt a ction i s required to s c o n e
the coasurreaoe o f tha other aaabers o f the coaalttee*
Xassanah as dlfferaaaea o f op laloa with resp ect to opaa m rk at p oX ld as
and a ctlo a are lik e ly to a ris e l a the fu tu re, as they have in the p a st, i t w ill
Reproduced from the Unclassified / Declassified Holdings of the National Archives
be fully understood* wo assuae, that eveiy Federal Beserve Bonk M y decline to
participate in open Market operations contemplated at any particular time, and
that with respeet to its ovn investments, *111 be at fall liberty to liquidate
than should its ova position require it*
Such, situations bare heretofore been
token cere of by tbe individual federal Heserve Banks acting through the coamlttee, whioh practice in our Judgment should continue*
It is of course assuaed that while a aeaber of the coanlttee no Federal Heserve Bank will act con
trary to approved Qyste* policy*
Vo do not believe that the arrangement proposed in paragraphs six and
seven of the Board's aeoorendun is a practical or woifcnble arrangement*
In our
opinion, tbe functions of the executive oosuaittee should be aaterlally enlarged.
For this reason we have indicated in the foregoing in nose detail our views as
to the functioning of tbe new eosodttae*
If the Federal Beserve Banks are to
operate Jointly in the open market* which is constantly undergoing changev they
east act under a polioy and plan which give wide flexibility of decision* subject
to frequent review by the Federal Heserve Board*
the change la tha name of tbe
ooaEsdttoe does not reooaaend itself to us*
BospeotfuDy outwitted,
COMMXTfSE*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Mwroh 10, 1630
\
tm r Mr* m * h t
\
8o0*ipfc li aoknawlodgod of your letter
of
i dthg giving tho vim* of tho Board of
Directors of your Saule on tho porlalon of tho
Hi §#t out *n tho Board’s
letior of Jeiwary If # 10?O# X-6484* &mni tho
vlmm of tho Board* of Dirootora of tho other
Federal roaorro benka h a w boon roooived, tho
will bo £%vm further ocaiatderation by
tho Board#
Tery truly your»»
E*
M*
M c C le lla n d ,
A««i»tant Secretary
Mr* G« C, mlah* Chftlnaan,
Fodovol Eoaorro Bank,
Dalloo, fOMMN
Reproduced from the Unclassified / Declassified Holdings of the National Archives
V
RAL
RESERVE
V
BANK
O F DALLAS
March 6 , 1930#
OFFICE OF
THF« GOVbiRNOB
My dear dbvernor Young:
I am enclosing herewith a copy of a memorandum for
discussion in connection with requested action on Federal Reserve
Board's letter X-6484, of January 23*1930* which was submitted
by Governor Talley at our last Board meeting#
As you will observe from the minutes of our last
Board meeting, our Directors unanimously adopted the memorandum
in principle, realizing that it would be necessary for either the
Federal Reserve Board itself, or at another conference of Governors,
to complete the details of any new setup of the Open Market Comr
mittee.
I have inadvertently delayed sending you this but
assume that the delay in doing so has caused no inconvenience, as
no doubt the Board will require considerable deliberation.
Yours very truly,
C h a i r m a n
The recent special meeting of the Governors of the twelve
Federal reserve banks with the Federal Reserve Board on January 20 and
29, was requested in the following telegram dated January 21:
"Washington, January 21,
"Talley
- Dallas
Trans 1145 Open Market Investment Coramittee has been enlarged to in
clude all banks.
Letter outlining new procedure will follow shortly.
Board, however, has called meeting of committee for Tuesday, January
28, and hopes all banks will be represented.*1
The Federal Reserve Boards letter outlining the organization
of the Open Market Policy Conference to succeed the Open Market Investment
Committee, which was set up in April 1923, was not written until January
23, and was not received here before I left to attend the Conference.
Therefore, I did not have an opportunity to give any consideration to the
letter until I reached Washington for the meeting.
I have read to you the Board’s letter and I have also read to
you from the minutes of the Joint Conference of Governors and Federal
Reserve Agents with the Federal Reserve Board on November 16, 1928, the
action which was taken at that time on this subject.
Although several
of the Governors felt when this subject was discussed at the Conference
that there was a considerable difference in principle between the outline
adopted in November 1928 by the Joint Conference of Governors and Agents,
and the Federal Reserve Board’s memorandum of January 23, my conviction
is that such difference is more imagined than real and grows out of an
apprehension of some that the Federal Reserve Board has a desire and will
usurp the prerogatives of the Federal reserve banks in open u&rket
Reproduced from the unclassified I Declassified Holdings of the National Archives
transactions as either expressed through the recommendations and actions
of the Open Market Policy Conference or otherwise.
Personally, I have no such apprehension and moreover I feel that
it is fundamental to recognize not only the Federal Reserve Board’s place
in the picture but the Board’s ranking sequence and its responsibility
for System policy.
Nothing is farther from my thought than that
the
Federal Reserve Board would ever undertake to stifle or prevent a meeting
of the Open Market Policy Conference that might be initiated by either
the Conference or its Executive Committee.
I think this statement is
clearly supported by the Federal Reserve Board’s action in calling the
Governors in special meeting on August 6, 1929, at the time that a crisis
in credit policy of the System was clearly impending, and again on January
28, for a review of Open Market operations for
the period November 29,
1929 to January 28, 1930, and a discussion of open market policy and
credit policy of the individual Federal reserve banks for the immediate
future.
Therefore, as a conclusion, I feel that this Board could very
well adopt in principle the memorandum submitted by the Federal Reserve
Board in its letter X-6484 of January 23, with the feeling if not convic
tion that it would largely meet the objecti©ns that have heretofore been
raised to the procedure under the present Open Market Committee, composed
of representatives of the Boston, New York, Philadelphia, Cleveland and
Chicago reserve banks.
The plan as submitted by the Board will create the'
opportunity for each Federal reserve bank to express the views of its own
Board of Directors and its Governor in respect to open market operations
and if the suggestion that I shall make in reference to organization is
Reproduced from the Uncl^sjified,./ Declassified Holdings of the NaJpnjI Archives
-3-
adopted, the plan would afford an opportunity for experience of each
Governor on the Executive Committee of the Open Market Policy Conference
and would be of educational value to all of the other seven Governors who
have heretofore not had a hand in, or a close contact with the formation
of open market policy*
If you are in accord with my suggestion that the plan be approved
by you in principle, I would further suggest that the Executive Committee
of the Open Market Policy Conference as proposed by the Federal Reserve
Board’s plan, be composed as follows:
First, that the Governor of the Federal Reserve Bank of New York
be made the permanent Chairman of the Open Market Policy Conference;
that
the membership of the Executive Committee should comprise the Chairman of
the Conference and the Governors of four other Federal reserve banks;
that
the four members of the Executive Committee beside the Chairman of the Con
ference should serve for terms of four months each and be elected in either
odd or even numerical order of the district (except New York), and in the
first instance be elected in such numerical order for terms of one, two, three
and four months each, and that thereafter a new member of the Executive Com
mittee in subsequent numerical order be automatically appointed each thirty
days.
Respectfully submitted,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
m m h
it 1980
Door Mr* Onrtiiii
Rooolpt 1* aoknosrlodgod of ymr latter
of Fobruary lith# giving tho rim* of tho Beard
of Dlrootort of .your Sink m the rwisicwi of tho
Opm ttirkot Proeoduro, ftf tot out In tho B o r d ’a
lottor of January 23rd* X-6484# l/hon tho r im
of tho Board* of Dlrootor# of tho other Federal
rosorro bo»k» haro hooa rooolrod, tho question
w ill ba glvon fUrthor oonoidoration lay tha Board*
Very truly yourot
J* 0« ffooll*
A ssistant S oorotsry
Mr* Frodorio H* Curtiaa, Chaims,
Fedaral Rosorre Bank,
Booton, Hm o *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
lir«h lf
1990
Door Hr* ffowtoni
Hoooipt is noknowledge! of your 1attar
of fobrmry teth^ giving th® riows of th# Board
of Direotor* of your Bsnfc on th# rovision of th#
0pen 'Sfcrkot Fro##6u*#v imr #et out in th# Board's
l#tt#r of Jmmry
J M 4 W * itam th® vi#*rs
#f th# Board# of Dir##t#r# #f th# oth#r F#d©**|
m e m bonks h*To boon roooivod. th# quostlcm
will ho girm furthor oonsidoration by th# Board*
Tory truly your#,
J. Ct Sooll,
Assistant Soerotory
Mr# I##*# B« Somrton, Chairraon,
F#a#s*t los#nN> Sbnkt
% n Frsnoisoo, Calif.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
L_
FEDERAL RESERVE BAN I
O F BOSTON
F R E D E R I C H. C U R T I S S
CHAIRMAN
Federal Reserve Board,
Washington, D.C.
Dear Sirs:
After careful study of the proposed open market procedure set forth
in the Federal Reserve Board’s letter of January 25, 1950 (X-6484),\
the directors at a meeting held today voted that they auprove the
general theory of the plan outlined by the Board, but believe that the
plan would be improved by making the following changes:
" - r jmnidHinr iinTrrvwiiEirwiW iMiiimirriiri-r- rr-“
1. That paragraph 2 be changed to provide that each Federal Reserve
bank be represented on the open market policy committee by the
governor, or by an officer designated by the board of directors of
each Federal Reserve bank.
2. That paragraph 5 be amended so that the policy conference or
executive committee could hold meetings on their own initiative as
well as at the call of the Federal Reserve Board,
5. That paragraph 6 be amended so that the conclusions or recommendations
of the open market policy conference be subject only to the approval of
the Federal Reserve Board.
4. That paragraph 7 be amended so as to give the’executive committee
power to carry out the policies agreed upon by the conference through
onen market operations, subject to review and coordinating authority
of the Federal Reserve Board.
Our directors recognize the importance of all Federal Reserve banks being
kept currently advised of matters pertaining to the open market activities
of this executive committee, and that each Federal Reserve bank should
participate in the open market activities of the system through purchases
and sales made by the committee as freely as practicable with the conditions
existing from time to time in the individual districts. It has been the
policy of the directors of the Federal Reserve Bank of Boston, through its
officers, to participate in all of the open market operations carried on
through the committee and approved by the Federal Reserve Board and it is
their intention and desire to continue to participate in such future opera
tions and commitments without, however, surrendering any authority, rights
or powers of independent action conferred by the Federal Reserve Act.
Yours very truly,
Chairman
FHC/D
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 B a n k o f S a n E rS' A i
Is a a c B . N e w t o n
C
h a ir m a n
and
Board
o f th e
Fed
eral
Reser
ve
February 26, 1950
Agen t
Federal Reserve Board
Washington,
D. C.
Dear Sirs
The Board of Directors and the officers of this bank have given
extended consideration to the Federal Reserve Board’s JLetter of January 23, i
concerning the open market procedure of the Federal Reserve System. Their
views are set forth in the following resolution which was adopted by the
Board of Directors at its meeting of February 20, 1930:
WHEREAS, the Federal Reserve Board has proposed the discon
tinuance of the Open Market Committee and the establishment of an
Open Market Policy Conference, consisting of representatives of
all Federal reserve banks.
THEREFORE, HE IT RESOLVED by the Board of Directors of the
Federal Reserve Bank of San Francisco that, without waiving any
right or delegating any power conferred upon this bank by the
provisions of the Federal Reserve Act, it approves the establish
ment of the Open Market Policy Conference and designates the Gov
ernor of this bank as its representative in that conference;
PR07IDED, however, that it is the opinion and recommendation
of this Board that the conclusions and/or recommendations of the
Open Market Policy Conference should be submitted to the Federal
Reserve Board for consideration and, if approved by it, should
thereupon become immediately operative, to be participated in by
each Federal reserve bank as it may deem expedient; and
PROVIDED FURTHER that this Board does not, by its approval
of the establishment of said Open Market Policy Conference surren
der but expressly reserves to the Federal Reserve Bank of San Fran
cisco the right to determine whether this bank will participate
in transactions recommended by the Open Market Policy Conference
and, if it does participate, the extent of such participation; and
PROVIDED FURTHER that no present or future participation by
the Federal Reserve Bank of San Francisco in the transactions of
said Open Market Policy Conference shall be interpreted as a com
mitment to further participation.
Yours very truly,
Chairman of the Board.
& 9 V^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
J
February 2 4 , 19SO
Dmr Mr. 'JcQ*ri*h*
%-oeipt la acknowledged of your lott*r
a£^ehrui®ry £1i t $ hr i ng the %m®ml Am* of
tho Board.*f Directora 0f your Bunk with roawot
to on*** market operation* In f^ornatttt eoourities fur Systaa account* $ho» the vl«mt of the
Board* af Director# of tho other Mbrwl reserve
banka hftT# b*on rce©iT»df the queation *&U bo
given further oonaideratlon fcy tho Board*
Very truly youra #
4,
C« Noell#
A§*t#t*mt Secretary
Mr* Qatea t. JSoOanmh, Chairman,
Federal Reaenre Bank,
Bow To*fc# I* Y*
j
-J ,
'v
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
Ne w Y o r k
Federal Reserve Board,
Washington, D. C.
S i r s :
The directors have received and considered the Board’s
letter of January
25, 1930 (X-6484jj setting forth certain pro
posed changes in the existing procedure relating to open market
operations for System account, and have noted that the Board
has expressed a desire to have the views of the directors of
this bank relating to the proposed procedure.
The directors would prefer specifically not to pass
upon or to make any detailed suggestions as to the procedure
proposed in the Board’s letter, especially as in some respects
they are not wholly clear as to its full purport.
They feel
that it will be more helpful to the Board and to the committee
to express their general views with respect to open market oper
ations in government securities for System account.
The direc
tors of other Federal reserve banks also will probably send
their views to the Federal Reserve Board so that all of these
will no doubt be kept in mind when the procedure and general
setup of the committee is being finally considered by the Board
and the committee.
In general, we believe it would be desirable to continue an open market committee composed of representatives of
the Federal reserve banks, with the duty of initiating and
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE BAN K O F
}
YG
-2/" ___
Federal IteS<f
T© (
)&T
2/21/30.
recommending plans and policies with, regard to the purcha.se and
sale of government securities in the open market, and with auth
ority to execute approved plans and policies in behalf of such
Federal reserve banks as may care to participate.
Vue also agree with the enlargement of the present
committee to include representatives of the twelve Federal re
serve banks, provided that the procedure to be set up will make
some provision for an effective operating executive committee
with full authority to execute approved plans or policies.
Otherwise, the directors feel that the procedure may become so
cumbersome as to defeat the objects sought by the creation of
a committee to function for Bystem account.
The directors believe that it would be preferable, as
in the past, to have the open market committee composed of
Governors of the several
Federal reserve banks.
They are ap
pointed by the directors as active executive heads of their
respective banks and as such are the ones who would naturally
be expected to formulate and make recommendations to the re
spective boards of directors and on their behalf to initiate and
make recommendations which, under the proposed, procedure, are to
I be approved by the Federal Reserve Board.
Furthermore, they are
the ones v/ho are expected to execute all approved plans or rec
ommendations.
But while it would be our intention to continue
the designation of the Governor as the representative of this
bank, we would not feel free to object if other boards of direc
tors should prefer to appoint other representatives.
It is assumed that meetings of the committee or its
executive committee will be called by the chairman of the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F E D E R A L R E S E R V E B A N K O F ft
YC;
____ _______________ _
Federal Ref
V(
>Oc
.
S/Sl/SO.
committee, after consultation with the Governor of the Federal
Reserve Board, whenever desired by the Board or by the com
mittee, it being evident that open market policies of the Sys
tem relating to the purchase or sale of government securities
should be made subject to review at any time that may seem
wise either to the Federal Reserve Board or to the participat
ing Federal reserve banks.
It is our understanding that any System procedure
which may be agreed upon would contemplate that any Federal
reserve bank might decline to participate in any purchases or ,
sales made by the committee at any particular time or might,
of course, withdraw from the committee procedure altogether
if for any reason that seemed advisable.
we recognize, however, that the federal reserve
banks and the Federal Reserve Board have a joint interest in
the matter of open market policies with respect to purchases
and sales of government securities and we would be agreeable
to a continuance of our participation in an Open Market Invest
ment Committee so long as the composition and functions of
that committee will insure and facilitate the formulation and
expeditious execution of sound System open market policies
with a view of accommodating commerce and business.
Differences of opinion will no doubt develop from
time to time and the views of individual Federal reserve banks
and the Federal Reserve Board may at times be at variance with
the views of the majority.
But, of course, while we would not,
even if we could, ?/aive such powers as are conferred upon us by
law to make purchases and sales of government securities, we
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BAN K O F f
YC
Federal He.c v(
’or "U
2/21/50.
should naturally assume, certainly so long as we continue
a part of any approved open market committee procedure acting
for the System, that we would not exercise our powers to buy
and sell government securities in conflict with approved Sys
tem policies, except as that might be necessary in an emergency
in our own market.
It is not likely that any Federal reserve
bank or the Federal Reserve Board itself would wish, on Its own
account, unnecessarily to defeat a System policy representing
the consensus of views of the System.
The directors of this bank are, therefore, agreeable
to continue its participation in a System open market procedure,
vvorked out and agreed upon by the Board and the committee, pro
vided it is not inconsistent with these general views which we
appreciate your having given us an opportunity to express.
Respectfully,
"Dates W. M^Garrah,
Chairman.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Febnjury 20# 19SO
D^ar Hr* Austin!
Seoeipt I s acknowledged o f your IjfttfE
o f February X fth j tiring the visw t o f the Board
o ? ~ B lr a t o r s o f your Bask <m th » r e v is io n o f tb s
Open !fcrkc?t Prooedure, as a e i out in the Board s
la tte r o f
Whsn the view#
of €fii"lfe,Sis Si Oirootors.of the other fodsral
rsserre banks have been received, ths question
will be given.further oon»ideratia*3 by the Board*
Very truly yours,
1 * M* McClelland,
Assistant Secretary
Mr* IU L« A u stin , Clminaan,
Federal Reserve Bank#
P h ila d e lp h ia , l i t .
PPlLI ■■
--------------------- ---------------------------------------------------------------------------------------------------------- 1.1HIIMIII
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February
IfiO
Dear lfr«
Receipt it acknowledged of your Ifltff
of F^briJi.ry HtbaYiviag tho t M b of th* Board
oFlSreetora of your Bank, on tho revision of the
Open Uarket Praoedure# ** oot Out in tho Board*» .
latter.of Janutry.tSrd » x-6494* When tho rtmm
i f 1'the Boarda of Director* o f tho other Federal
roeerro bank* ha-fo boon reooi*od# tho question
will be given further oonalderetion by tho Board.
Tory t r u ly you r»*
£• II. MeGloXland,
Aooiotant Secretary
Mr* U B* l& H I« a § » Daputy C h a ir m n ,
F e d e ra l B e a e rre ,ta a k p
C le v e la n d * Ohio*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February 20 # 2.950
imt Hr#
Horton t
l« tMtaowledged of your letter
o f .B j branry .J
f r m ifeioh the Board note* that
the que*tlon of the yvviilm of the Open tforiwt
Frooedure, mi M t out in th® Board'# letter of
Itaan y 28rdy X*64?4j> will be further eonaidored
W^your ioard of Creator# at lie lfcroh meeting,
a»d the Board advlgod of it» view**
Tery truly your*,
B# M# tloClcnand,
A*sl#tRnt Secret ry
Mr* W* K* Hoxton, Chairman,
Riehoond, '/a#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
?obruary SO, 19SO
Dear Mr# Newtont
Booolpt Is acknowledged of your letter
of February 15th^ giving tho view* of the Board
W'llTreotora of your Sink on tho revision of tho
Open 1fcyfc»t Procedure, a« fit out in tho Board1*
lotto? of fonuftiY 23rd# JW48ii ®Ho» tho view*
of tho Board* of Director* of tho other Federal
raesrvo bank* h a w boon received, the question
will bo given further consideration by tho Board.
?oty truly your*,
!« M# IioClalland#
A**i*tant Secretary
up#
MoirooRf
FsdtnX K**»rr« Buik,
Atl«nt», G».
Reproduced from the Unclassified / Declassified Holdings of the National Archives
February
tot
19SO
Dear Hr* Miltdi
KeooiRt li aolmowlodgod of your Agt&ftr
of Fobriitiry Iftf^ giving %ti« wimm of tho mmm~
and aarroral of th® othor diroetor*
of your Bank on tho rojvialon of tho Open laurfegt
Froooduro, at sot otat in tho S*atd a lofctof of
«Nw*airy i3rdf X-6484* \ Whan tho *1«*» of tha
Board* of Dirootora of tho other Federal r*«®rro
banka hav© boon roooivod, tho question d U l bo
glvan furthor ©oroldaration by the Board.
¥ary truly ytnira,
B* M. MeCloUaxtd,
Agaiatant Secretary
Mr* Hfc. H* tthlto, Sooretary,
Fodoral Raaorro B«nk#
Chicago, 111#
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fobruory
Do»r
to , 1950
Ur* 9t«wax*tt
B ooolpt I t aoknowlodgod o f you r l e t t e r
of February 6t*4 giving th o ?ioir« o f tho Board
of rirootor* o f your Baak o& tho renrloioa of tho
Op«n Uarket P roo«4uro, *t not mt In tho Board1b
l e t t e r o f Jsmxtry 2$t4t M i 8 4 t i ffbon. th o r i « v * o f
tho S o ^ r d o 'l^ lE r o o io r i of tho afchor Foderol ro•orro bonks hoc*© b o m re*>eirodf tho qu ootion will
bo given further ooniidorotloii tgr tho Board#
fo r y t r u ly y o u ro ,
B« M# McClelland,
Aooifttont Soorotory
Mr* G, M* gtOMUrtU
A#tistont F»d*ral Boootto &go«t#
Federal Eooorvo Bonk,
St# Loui»# Mo.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
fmbrrnty 209 1950
Dear Mr* Mlt«h«XXt
B oooipt I t
o f your
of
*d*i#inc of approval hy your
" B D i r e c t o r * o f the Ojxm Ifcrfcot Proo«<3ur«t
H i «©t out in tho Board*« l i t t e r o f
.1 1 1 $ *
W SdJiiLi
^'-on th# v i« r s o f th o Board# o f 01ro o to r* o f th* o th o r F*d*r*l r<*»erve bank# hrro
boon received * tha quoation w i l l bo givon fu rth e r
oon»id® ration laqf th o Board#
? * t y t r u ly y o u r»#
1# X, HeCiolifmd*
A«il«t8zxk Secretary
l£r« J# E* Mltoholl, Chain*®,
Foderal Ro«erv* Bank,
Minaoapoli*, IfInn*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e d e r a l Re s e r v e Ba n k o f P h i l a d e V
l p h ia
/W .v'
:
T h ir d
Rich ard L .A
D is t r ic t
ustin
C h a ir m a n o f t h e B o a r d
and
F e d e r a l Re s e r v e A g e n t
FEDERAL RESERVE BOARD,
Washington, D. C.
Dear Sirs
Your letter of Jan
subject
"Open market procedure”, stating that you have drawn up
a revision of the 1923 open market procedure, which embodies
a fuller recognition of the joint interest and responsibility
of the Federal reserve banks and the Federal Reserve Board
in the matter of open market policy, with an accompanying
memorandum containing the elements of this procedure, and
asking to have an expression of the views of this bank after
it has considered that plan, was duly received.
The plan was referred to a committee of our
board of directors at its meeting held February 5th, and at
the meeting of the board, held today, that committee present
ed its report, which report was unanimously adopted by" our
board, and a copy of which is enclosed herewith.
Very truly yours,
Chairman
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e d e r a l R e s e r v e Ba n k
925
CHESTNUT
of
P h ila d e lp h ia
STREET
February 19, 1930
To the Board of Directors of the
Federal Reserve Bank of Philadelphia
Your committee, appointed at the meeting of February 5th,
1930, to consider and report upon a revision of the open market
procedure of the Federal Reserve System, suggested by the Federal
Reserve Board under date of January 23, 1930, respectfully reports
as follows:
A
The fundamental purposes of open market procedure were brief
ly defined in 1923, and the application and practice left to a com
mittee composed of the Governors of five banks, designated as the
n0pen Market Committee”.
Views having been expressed that all twelve banks should be
represented in the shaping of open market policy, the Federal Ad
visory Council in September 1928, suggested to the Federal Reserve
Board to consider the advisability of having the membership of the
Committee consist of the Governors of all the Reserve Banks, writh
an executive committee of five with full power to act.
At the Joint Conference of Federal Reserve Agents and
Governors, held in the following November, a resolution was adopted
with substantial unanimity, re-affirming the fundamental purposes
of open market action, as defined in 1923, and adopting in whole
the recommendation of the Federal Advisory Council.
This resolution further provided (a) that it should be the
function of the Committee to l!consider, prepare, and recommend plans
with regard to the purchase or sale of securities in the open market
for account of the Federal Reserve System, or participating Federal
Reserve Banks” 5 (b) that meetings of the Committee should be call4d
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- 2 -
* !teither by the Board or by the Executive Committee11; (c) that in case
1/
of the inability of any Governor to attend, an alternate should be ap
pointed by the Directors of his .bank; (d) that the Committee should
select from its membership an Executive Committee of five which should
ITcarry into effect the policies from time to time determined by the
full Committee and approved by the Federal Reserve Board”$ and (e) that
the procedure at meetings of the Committee should be, first, action up
on the recommendations of the Executive Committee, and then discussion
with the members of the Federal Reserve Board prior to official approv
al or disapproval by the Board,
This resolution appears to represent the practically unanimous
judgment of the Advisory Council, the Agents, and the Governors.
It
appears to us to recognize the following important principles:
(1) The right of any Federal Reserve Bank to participate or not
participate in open market operations undertaken for the System.
(2) The right of the Committee to meet whenever in the judgment
of the Executive Committee a meeting is advisable.
(3) The function of the Federal Reserve Board as a supervising
and coordinating authority, rather than as an originating or operating
body.
The resolution further commends itself to our judgment as being
not only in accord with the spirit of the Federal Reserve Act, but as
providing a simple, clear-cut, and practicable method of procedure.
The memorandum submitted by the Federal Reserve Board apparently
transforms the Committee into a "Conference”, the conferees consisting
of a representative of each Reserve Bank, and the Federal Reserve Board.
Whether it be stated that a bank shall be represented by the Governor,
or by a representative designated by the Board of Directors, strikes us
as comparatively immaterial.
The provision that the representatives of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
__ "■
—
3
—
the banks shall meet with the Federal Heserve Board strikes us, how
ever, as objectionable.
It fails to observe the distinction running
all through the Federal Reserve Act (to which we have already alluded)
that the banks, through their respective Boards of Directors, are the
initiators of all transactions, subject to the reviewing and coordinat
ing authority of the Federal Reserve Board.
That Board cannot proper
ly ITreview” policies in fche framing of which it has participated, nor
should it take any part in the routine execution of policies which it
has approved.
The provision that the Committee (or Conference) shall meet
only ftat such times as may be arranged by or with the Federal Reserve
Board11, would give to the Board an absolute veto power over any meet
ing of the Committee.
The Board having a veto power over the recommen
dations of the Committee, we cannot see why it should have a veto power
over its even meeting.
If the Executive Committee deems it important
that a meeting should be held, we do not think that authority should
exist to prevent such a meeting.
The provision that the recommendations of the Conference should
be submitted to each Federal Reserve Bank and to the Board for "consid
eration and/or action” seems to us to introduce into the procedure a
very cumbersome and objectionable element, which might, at some time when
prompt action was called for, prove disastrous.
The Federal Reserve
Board would be placed in the inconsistent and uncomfortable position of
having to "consider” and decide upon policies which it had assisted in
framing.
These policies would not represent, as they now do, the un
influenced and independent views of the banks, subsequently allowed or
approved by the Board, but would be the outcome of a wholly extra-legal
conference, in which the reviewing authority had participated ab initio.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Is
The provision that the only function of the Executive Committee
shall he the execution of such purchases and. sales as have been approved,
reduces it to a position little better than that of a broker or dealer*
It seems to us that the Executive Committee should continue to keep close
watch upon financial developments, anticipate, as far as possible, sit
uations likely to arise, and be prepared to formulate recommendations
and suggestions for the consideration of the full Committee.
For the reasons above stated, your Committee finds itself in
entire accord with the Advisory Council, the Agents, and the Governors,
and out of accord with the memorandum of the Federal Reserve Board.
Respectfully submitted,
(signed)
Harry L. Cannon
Joseph Wayne, Jr.
C. Fred!k C. Stout
Committee.
[
.
.
.
_ _ _
Reproduced from the Unclassified I Declassified Holdings of the National Archives
i .............................................
. 'V >
FEDERAL RESERVE BANK OF CHICAGO
230
SOUTH
LASALLE
STREET
'
'
, V
- v , ':
February 17,a&30.
SUBJECT:
Open Market Procedure.
Federal Reserve Board
Washington, D. C.
Gentlemen:
Reference is made to the Board’s letter of January £5, 1950T X-6484.1
on the above subject. I note the request contained in the last paragraph of '
your letter to the following effect:
”After your bank has had time to consider the plan, the Board
will welcome an expression of your views.”
On receipt of your letter, copies were sent to each member of our
board with the suggestion that the letter be carefully read and inviting com
ments thereon. At the executive committee meeting last week, the letter was
discussed to some extent, and on February 7, was brought up for consideration
and further discussion at the regular meeting of the executive committee, at
which five directors were present.
The committee finally and unanimously approved the expression which
is quoted below;
!tFirst: Each Federal Reserve bank should have representation
upon the Open Market body.
11Second: Such body should have an executive committee clothed
with authority to function.
!!Third: The Chairmen of the operating body should be authorized
to call a meeting of said body upon the request of two or more members.
The Federal Reserve Board, of course, always may call the body together.
"Fourth: There is no indication that the existing procedure of
buying and selling daily in nominal or reasonable amounts will be changed.
This should continue as at present.
"Fifth: The provisions of sections 4 and 5 of the Federal Reserve
Board’s memorandum are reasonable and satisfactory. Section 6, however,
which imposes upon the Open Market Policy Conference the obligation to
submit its recommendations to all Federal Reserve banks and to the Federal
Reserve Board in advance of action will be under certain conditions
manifestly unworkable. In order to assure the effectiveness of any
operation which the Open Market Policy Conference should agree upon, it
would seem advisable that each Federal Reserve ban": delegate authority
I
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL. R E S E R V E B A N K O F C H IC A G O
-
2
-
February 17, 1950
Federal Reserve Board.
to its representative on the conference to act for his bank at pH 1
meetings of the conference. This section should also be so amended
as to clearly indicate that each Federal Reserve bank retain the
powers conferred upon it by Section 14 of the Act, to the extent
that it may protect any sudden or extreme emergency as it arises.”
A copy of this expression was*forwarded to each member of our
board who was not present at the committee meeting February 7. At this
writing, reply has been received from three of our directors, who
express their entire approval of the action taken.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
O F
A T L A N T A
omcE ob
C tta th m a b t cm t t t f . B o a k d .
TVmnr.pa t . RESERVE A & E H I.
February 15, 1930.
SUBJECT:
Open Market Procedure,
Federal Reserve Board,
Washington, D. C.
Attention Mr, S. M. McClelland, Asst, Secretary.
Dear Sirs 5
^
Your letter of January 23rd\relating to this subject
was read and carefully considered at the meeting of our 3oard
- of Directors held Friday, February 14th, and a resolution ap
proving the program outlined in your letter was adopted*
On motion, Mr, E. R, Black, Governor, was appointed
representative of this hank on the Open Market Policy Conference,
Excerpt from the Minutes containing the resolution
and motion are enclosed.
In discussing and considering this resolution, it was
the understanding of our Board that our Bank would continue its
ordinary every day practice of buying acceptances within"our dis
trict, and of buying from and selling to our member banks Government
and other securities authorized by Section 14 of the Federal Heserve Act.
This practice, we are sure, would not hamper or interfere
with the operations of the Open Market Policy Conference, Any action
necessary in a large amount, in case of emergency, would be submitted
to you for approval. In our operations, we would make every effort to
cooperate with the operations of the Open Market Policy Conference.
A <8>
^
.'<■■■..
Very truly yours,
'V- \
r
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 A t l a .
IXCIHfT m i MIHUTXS OF MEETIHO Of THE BQAED OJ DIBB050BS, ISBEBU.
BS8SRTS BAHK OT ATUHTA, HELD IBBBMHT X1*, 1930.
«fhe Secretary read a letter fro© the federal Reserve Board,
£»6U8U, unier date of January 23, 1930, relating to the procedure with
regard to open market operations,
A resolution was offered, duly seconded and adopted, as fol
lows:
•WHEKEAS, this Board is firmly of the opinion that the
twelve federal reserve hanks should he represented in the
shaping of the open market policy of the System, and that
a representative of the federal Reserve Bank of Atlanta
should participate in the shaping and effectuating the open
market policy and operation; and
WHEREAS* the progrwa contained in memorandum of the
federal Beserve Board as transmitted to this hank hy letter
dated January 23, 1930, provides that the twelve hanks so
participate in open market policy and that a representative
of this hank participate in foxwulating and effectuating
such open market policy#
fHSREfOEE, 336 If HESQLTOD That this Board approve
said program*1
It was moved hy Chairman Hewton that Governor 2, B* Black he
elected to represent the federal Reserve Bank of Atlanta on the open market
policy conference
that, in the event Governor Black was unable to at*
tend any mseting of the open market policy conference, the Executive Com
mittee of the hank he authorized to appoint an alternate*
She motion was
duly seconded and unanimously adopted* *
I, V, Albertson, Secretary of the Board of Directors of the
federal Reserve Bank of Atlanta do hereby certify that the foregoing is
a true aai correct excerpt from the minutes of the meeting of the Board
of Directors of the federal Reserve Bank of Atlanta held on the fourteenth
day of february, 1930 *
SSCRffARY*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
o f
Cl
Tx a n k
3 *5 i#
e v e l a n d
Febfeaai^ 14, 1930.
Federal Reserve Board,
Washington, D. C.
r.-
^v
'
Gentlemen:
The Board*s letter X-6484 of January 25t 1950 ^ subject: "Open
Market Procedure” was the subject of discussion at a meeting of our
Board of Directors on Friday, February 7.
Inasmuch as the Federal
Reserve Board invited an expression from this bank, I am pleased to ad
vise you of the views of our board:
We are in sympathy with the purpose of the Federal Reserve
Board to accord a fuller recognition of the joint interest and respon
sibility of the Federal Reserve banks and the Federal Reserve Board in
the matter of open market policies, by permitting all Federal Reserve
banks to take part in formulating open market policies.
In discussing the procedure outlined in the Board's letter,
our board also considered a recommendation of the Federal Advisory Coun
cil to the Federal Reserve Board in September, 1928, as well as a proce
dure recommended by the Conference of Governors and concurred in at a
joint conference of Governors and Federal Reserve Agents in November,
1928.
The procedure recommended by the Governors1 conference and
concurred in by the Agents, differs in some respects from that proposed
by the Federal Reserve Board, and our Board of Directors have the feeling
that the Governors' plan will tend to operate more smoothly for the fol
lowing reasons:
First:
The Open Market Investment Committee,
operating over a period of years, has acquired a standing
and prestige which should be preserved by continuing the
designation "Open Market Investment Committee” rather than
adopting the new designation "Open Market Policy Confer
ence.”
Enlarging the Open Market Investment Committee to
include representatives of all of the Federal Reserve banks
without changing the designation of the committee can be
readily accomplished without any disturbance of existing
conditions;
Second: The provision in the Governors' recommend
ation that meetings of the full committee shall be called by
either the Federal Reserve Board or by the Executive Commit
tee to be held in Washington, or in such other place and at
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEijERi
Federal Reserve Board
RESERVE BANK OF CLE’k , t A».J
- 2 -
February 14, 1930.
such times as may be arranged by the Chairman of the
Executive Committee and the Governor of the Federal
Reserve Board, will facilitate the prompt action which
may be necessary in emergencies.
In this connection,
it is suggested that two of the regular meetings of the
full open market committee be held at the time of the
semi-annual Governors' conferences.
Third:
The selection of an Executive Committee
consisting of five members which shall carry into ef
fect the policies from time to time recommended by the
full committee and approved by the Federal Reserve Board,
as recommended by the Governors, seems to our board to
insure more harmonious action and to have a tendency to
promote better feeling on the part of all Federal Reserve
banks, particularly if membership on the Executive Com
mittee is rotated so that the Governor of each Federal
Reserve bank within over-night traveling distance to
Washington would serve an appropriate time.
Inasmuch
as the committee’s operations must, obviously, be car
ried on in New York, it seems appropriate that the
Governor of the Federal Reserve Bank of New York should
be a permanent member and act as Chairman of the full
committee and of the Executive Committee.
Fourth: The recommendation of the Governors that
the full committee shall consider and act upon the
recommendations of the Executive Committee and shall then
meet with the Federal Reserve Board to discuss these
| recommendations with the members of the board before ac; tion by the board, is believed to be inducive to prompt
and effective action, whereas the Federal Reserve Board's
proposal that the conclusions and/or recommendations be
submitted to each of the Federal Reserve banks and to the
Federal Reserve Board for consideration and/or action,
would seem to have the effect of making the machinery so
cumbersome as to seriously retard action, particularly in
emergencies.
It is presumed, of course, that the Boards
of Directors of the several Federal Reserve banks will
have the opportunity to review the policies adopted by the
Federal Reserve Board and to participate or not, as they
may decide.
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
✓ '*
of
R ic h m o n d
February 6, 1930
Federal Reserve Board
Washington, D. C,
Gentlemen:
Our Board of Directors to-day considered the Board*s letter
of January 23,1930 X6484,! Subject "Open Market Procedure". There
appeared some quest ion as to whether the procedure suggested by the
Federal Reserve Board is not too cumbersome to insure a smooth and
prompt consummation of open market activities.
After considerable discussion we appointed a committee of
three: Mr. Delano, Class C, Mr. Graham, Class B and Mr. Rieman,
Class A . , to study the question and report back to our Board of
Directors at the Mar£h meeting.
When the Commit tee* s report has been considered by our Board
I will of course, immediately advise the Federal Reserve Board of the
conclusion reached by our Bp&rd.
Very truly yours?,
Wm. W. Hoxton
Chairman and Federal Reserve Agent.
3 5 h ■~£'"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r
ve
Ba n
k
OF
S t. L o u i s
/■£>
/
.0^
•y
February 6, 1930,
Federal Reserve Board,
Washington.
Gentlemen:
In your letter of January 23, 1930, X-6484, \
you outlined a revised open market procedure, and asked
for an expression of our views in regard to the plan.
At the meeting of our Board of Directors
yesterday, Governor Martin presented the letter above
mentioned and, after discussion, the following resolu
tion was unanimously adopted:
wThat the open market procedure as out
lined in general by the Federal Reserve Board
in its letter of January 23, 1930, X-6484,
be approved and that this bank be represented
by its Governor in Open Market meetings. It
is the further feeling of the Board that mem
bership on the proposed Open Market Executive
Committee, with the exception of the Governor
of the New York Federal Reserve Bank, who
should always be Chairman of the Committee,
should be through some method of rotation,
so that all the Governors will serve on this
committee during the year.**
Yours very truly,
Asst. Federal Reserve Agent.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
1
FEDERAL RESERVE
BANK OF
N I N T H
M IN N E APO LIS
D I S T R I C T
O F F I C E
O F TH E
C H A I R M A N
A N D
F E D E R A L
R E S E R V E
A G E N T
J O H N R. MITCHELL
C H A IR M A N A N D F E D E R A L R E S E R V E A G E N T
Jan. 28,
1 9 5 0.
Federal Reserve Board,
V ashington,
D. C.
Gentlemen:
I acknowledge,, receipt of yo&r fevor
y- f V
*/ -
of the 23rd instant\on the subject of Open Market
Procedure.
The letter was read to our Board of
Directors at their meeting on January 27th, end I
beg to say that our Board is heartily in
accord with the procedure set forth in your
letter.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE B O AR D
fl
WASHINGTON
.A
■
34A D D R E S S O F F IC IA L C O R R E S P O N D E N C E T O
TH E FEDERAL RESERVE B O ARD
X-6484
January 23, 1930.
SUBJ3CT:
Open Markst Procedure.
Dear Sir:
This letter invites the attention of /our hank to
changes which the federal Reserve Board, after prolonged con
sideration of the matter, ha^ concluded should he made in the
existing procedure governing open market operations.
It may he recalled that it was in April, 1923, that
the present procedure with regard to open market operations was
adopted. In the preceding year many of the reserve hanks, in
order to maintain portfolios of earning assets, entered the mar
ket on their own separate accounts to purchase United States
Government securities, without much regard to the effects of
their operations on the market for Government securities or on
credit conditions. It was found necessary, in consequence, to
give to open market operations a status which recognized their
credit effects and economic consequences and also their effects
on the position of each Federal reserve hank.
A copy of the Board’s resolution containing an outline
of the procedure adopted in 1923 is herewith enclosed. Under
this procedure the principle governing open market operations
was defined and its application and practice left to a Committee
consisting of five reserve banks acting under the general super
vision of the Federal Reserve Board.
The principle was stated as follows;
11
Chat the time, manner, character and volume of
open market investments purchased by Federal reserve
banks be governed with primary regard to the accommo
dation of commerce and business, and to the effect of
such purchases or sales on the general credit situa
tion.”
The five banks constituting the Open Market Investment Committee
were the following:
Federal
Federal
Federal
Federal
Federal
Reserve
Reserve
Reserve
Reserve
Reserve
Bank
Bank
Bank
Bank
Bank
of
of
of
of
of
Boston
New York
Philadelphia
Cleveland
Chicago.
L.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
.
X -6 4 8 4
-
2
-
Although the necessity of giving to open market opera
tions a System status was recognized in 1923, it was not then
foreseen how much use would "be made of the open market operation
as an instrument of Federal reserve credit policy. As a matter
Ox fact, frequent resort has boen taken to open market operations eitxier "by purchase or sale of United States Government securities as a mode of policy in the five years following the 1923 arrange
ment s.
The experience of this period shows that the open market
operation, when involving other than trifling amounts, may he of
first-rate iinportance in altering credit conditions even when
Viewed on a national scale.
It is not surprising, therefore, that1 suggestions should
have "been made that the System character of open market operations
should he fully recognized Dy having all twelve Federal reserve
hanks, instead of five as at present, represented in the shaping
of open market policy. Views to this effect have been expressed
informally by reserve hanks not included in the existing set—up,
and formally "by tne Federal Advisory Council in the following recom
mendation adopted in September, 1928:
’’The Federal Advisory Council without
any intention of criticising the present
arrangements "but in order that all governors
of the Federal reserve hanks may participate
in the discussions leading up to actions"of
the Open Market Committee suggests to the
Federal Reserve Board to consider the advis
ability of having the membership of the Open
Market Committee consist of all the governors
of the Federal reserve banks with an executive
committee composed of five members with full
power to act.”
For the reasons briefly set forth above, the Board has
drawn up a revision of the 1923 open market procedure, which em
bodies a fuller recognition of the joint interest and responsi
bility of the Federal reserve banks and the Federal Reserve Board
in the matter of open market policy. The elements of this pro
cedure are contained in a memorandum adopted by the Federal Reserve
iBoaxd reading as follows;
(1) The Open Market Investment Committee, as at present
constituted, to be discontinued and a new committee, to^be known
8M $he Open Market Policy Conference, to be set Up in its place.
(2) Each Federal reserve bank.to be represented on the
Open Market Policy Conference.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
X-6484
- 3 (3) The Conference to meet with the Federal Reserve Board
at such times as nay "be arranged "by or with the Board,
(4) The function of the Open Market Policy Conference to be
to consider, develop and re commend'plans with regard to the purchase or sale of securities in tho open market.
(5) The time, character and volume of carafe purchases and
sales to he governed with the view of accommodating commerce and
business and with regard to their bearing upon the credit situa
tion.
(6)
The conclusions and/or recommendations of the Open
Market Policy Conference to be submitted to each of the Federal
reserve banks and to the Federal Reserve Tnarri ^
aafl
i.an.
-------- ;-----—
(7) A committee to be known as the Open Market Executive
Committee to be constituted for the purpose o.f executinsf\such.
purchases and sales of securities as have been approy^d^b-pTJed
ea?«l j.'B§t5'!PYe.bcGky aiicb the Federal Reserve Board.
j
%
/
J
' ' i L t l J
P
Such further working arrangements as may be found necessary to make the aoove outlined plan operative will, in the opinion
of t h e Boar<l> best be determined by the Conference itself when it
is oreanized*
^
The Board believes that the above procedure contains the
y Z. ^essentials of a workable plan designed to give expression to the
^ c o m m o n interest of the Federal reserve batiks in matters of open
market policy and to provide a reasonable and practicable method
for joint action. After your bank: has nad time to consider the
plan, the Board v»ill welcome an expression of your vie^s.
By order of the Federal Reserve Boar a.
Very truly yours,
E. M. McClelland,
Assistant Secretary,
20 CHAIRMEN OF LLL a\ R, BAMS.
^ *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-4586
RESOLUTIONS APPROVED BY FEDERAL RESERVE BOARD AT
MEETING- ON MARCH 22, 1923.
"Whereas the Federal Resetve Board, under the powers given it
in Sections 13 and 14 of th^ Federal Reserve Act, has authority to
limit and otherwise determine the securities and investments purchased
by Federal reserve banks;
Whereas the Federal Reserve Board has never prescribed any limita
tion upon open market purchases by Federal reserve banks;
Whereas the amount, time, character, and manner of such purchases
may exercise an important influence upon the money market;
Whereas an open market investment policy for the twelve banks
composing the Federal reserve system is necessary in the interest of
the maintenance of a good relationship between the discount and pur
chase operations of the Federal reserve banks and the general money
market;
Whereas heavy investments in United States securities, particu
larly short-dated certificate issues, have occasioned embarrassment to
the Treasury in ascertaining the true condition of the money and invest
ment markets from time to time,
THEREFORE, Be It Resolved, That the Federal Reserve Board, in the
exercise of its powers under the Federal Reserve Act, lay down and adopt
the following principles with respect to open market investment operations
of the Federal reserve banks, to-wit;
(1) That the time, manner, character, and volume of open market
investments purchased by Federal reserve banks be governed with primary
regard to the- accommodation of commerce and business and to the effect
of such purchases or sales on the general credit situation.
(2) That in making the selection of open market purchases, care
ful regard be always given to the bearing of purchases of United States
Government securities, especially the short-dated issues, upon the mar.ket for such securities, and that open market purchases be primarily
commercial investments, except that Treasury certificates be dealt in,
as at present, under so-called "Repurchase" agreement.
Be It Further Resolved, That on and after April 1, 1923, the
present Committee of Governors on Centralized Execution of Purchases
and Sales of Government Securities be discontinued, and be superseded
by a new committee known as the Open Market Investment Committee for
!j the Federal Reserve System, said Committee to consist of five repreI sentatives fuom the reserve banks and to be under the general superI visipn of the Federal Reserve Board; and that it be the duty of this
Committee to devise and recommend plans for the purchase, •sale and
distribution of the open market purchases of tho Federal reserve
banks in accordance with the above principles and such regulations
as may from time to time be laid down by the Federal Reserve Board."
Reproduced from the Unclassified / Declassified Holdings of the National Archives
I
- 5
Such further working arrangements as m y "be found
necessary to make the above outlined plan operative will, in
the opinion of the Board, best be determined by the Conference
itself vfoen it is organized*
The Board believes that the above procedure contains
the essentials of a workable plan designed to give expression
to the eonaaon interest of the Federal reserve banks in matters
of open market policy and to provide a reasonable and practica
ble method for joint action*
After your bank has had time to
consider the plan, the Board will welcome an expression of
your views
A.
C. Me
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-.S-
... .
" C ,
■
A
\
'
€>N
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
TH E FEDERAL RESERVE BOARD
X ~ 6 4 8 4
•
SUBJECTi
January 23, 1930.
Open Market Procedure.
1)ear Sir:
Shis letter invites the attention of $bur bank to
changes Which the Federal Beserve Board, after prolonged con
sideration of the matter* has concluded should "be made in the
existing procedure governing open market Operations*
It may he recalled that it was in April, 1923, that
the present procedure with regard to open market operations -wa*.
adopted. In the preceding year many of the reserve banks', in
order to maintain portfolios of earning assets, entered the mar
ket on their own separate accounts to purchase United States
(k^vernaent securities, without much regard to the effects of
their operations on the market for Government securities or on
credit conditions. It was found necessary, in consequence, to
give to open market operations a status which rocognlz§4 their
credit effects and economic consequences and also their effects
on the position of each federal reserve bank.
-A copy of the Board’s resolution containing an outline
of the pr£riMM3orfl» adopted in 1923 is herewith enclosed. Under
this procedure the principle governing open market operations
was defined and its application and practice left to a Committee
consisting of five reserve banks acting under the general super
vision of the Federal Eesprvfc Board.
The principle was stated as follows;
!
i
“That the time, manner, character and volume of
open market investments purchased by federal reserve
hanks be governed with primary regard to the accommo
dation of commerce and business* and to the effect of
such purchases or sales on the general credit situation.”
The five banks constituting the Open Market Investment Committee
were the following:
Federal
federal
federal
Federal
Federal
Re serve
Reserve
Bfcserve
Heserve
Heserve
Bank
Bank
Bank
Bank
Bank
of
of
of
of
of
Boston
few York
Philadelphia
Cleveland
Chicago.
(SbtA . «H
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-6484
-
2
-
Although the necessity of giving to open market opera
tions a System status was recognized in 1923, it was not then
foreseen how much, use would "be made of the open market operation
as an instrument of Federal reserve credit policy. As a matter
of fact, frequent resort has "been taken to open market operations either by purchase or sale of United States Government securities as a mode of loolicy in the five years following the 1923 arrange
ments.
The experience of this period shows that the open market
operation, when involving other than trifling amounts, may be of
first-rate importance in altering credit conditions even when
viewed on a national scale.
It is not surprising, therefore, that suggestions should
have been made that the System character of open market operations
should be fully recognized by having all twelve Federal reserve
banks, instead of five as at present, represented in the shaping
of open market policy. Views to this effect have been expressed
informally by reserve banks not included in the existing set-up,
and formally by the Federal Advisory Council in the following recom
mendation adopted in September, 1928:
j
'
"The Federal Advisory Council without
any intention of criticising the present
arrangements but in order that all governors
of the Federal reserve banks may participate
in the discussions leading up to actions of
/
|
j
|
\
the Open Market Committee suggests to the
Federal Reserve Board to consider the advisJ
ability of having the membership of the Open
j
Market Committee consist of all the governors I
of the Federal reserve banks with an executive/
committee composed of five members with full I
power to act.*1
j
f
;
I
For the reasons briefly set forth above, the Board has
drawn up a revision of the 1923 open market procedure, which em
bodies a fuller recognition of the joint interest and responsi
bility of the Federal reserve banks and the Federal Reserve Board
in the matter of open market policy. The elements of this pro
cedure are contained in a memorandum adopted by the Federal Reserve
Board reading as follows:
"(1) The Open Market Investment Committee, as at present
constituted, to be discontinued and a new committee, to be known
as the Open Market Policy Conference, to be set up in its place.
(2)
Each Federal reserve bank to be represented on the
Open Market Policy Conference*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X -6 4 8 4
- 3 (3) The Conference to meet with the Federal Reserve Board
at such times as may be arranged by or with the Board.
(4) The function of the Open Market Policy Conference to be
to consider, develop and recommend plans with regard to the pur
chase or sale of securities in the open market*
(5) Hie time, character and volume of such purchases and
sales to be governed with the view of accommodating commerce and
business and with regard to their bearing upon the credit situa
tion.
(S)
The conclusions and/or recommendations of the Open
Market Policy Conference to be submitted to each of the Federal
reserve oanks and to the Federal Reserve Board for consideration
and/or action.
(7) A committee to be known as the Open Market Executive
Committee to be constituted for the purpose of executing such
purchases and sales of securities as have been approved by Fed
eral reserve banks and the Federal Reserve Board~.H
Such further working arrangements as may be found neces
sary to make the above outlined plan operative will, in the opinion
of the Board, best be determined by the Conference itself when it
is organized.
The Board believes that the above procedure contains the
essentials of a workable plan designed to give expression to the
common interest of the Federal reserve banks in matters of open
market policy and to provide a reasonable and practicable method
for joint action. After your bank has had time to consider the
plan, the Board will welcome an expression of your views.
By order of the Federal Reserve Board.
Very truly yours,
E. M. McClelland,
Assistant Secretary.
cJ
*
to o m m m rn of all f. r. bams.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
January
1930,
/
of th^&oard of D i r ectO|^
ideral Bes^a^e Bank
SUBJECT:
Pear ■S'
20E*
Open Market Procedure*
-
fhis letter invites the attention of your bank to changes
whioh tha Federal Reserve Board, after prolonged consideration of the
matter, has concluded should be made in the existing procedure govern5ryy open market operations*
It may be recalled that it was in April, 1923, that the
present procedure with regard to open martcet operations was adopted,
in the preceding year many of tha flfeserve bajfics, in order to maintain
portfolios of earning assets, entered the market on their own separate
accounts to purchase United States Government securities, without much
regard to the effects of their operations on the market for Government
securities or on credit conditions.
It was found necessary, in conse
quence, to give to open market operations a status which recognized
their credit effects and economic consequences and also their effects
on the position of each Federal reserve bant.
A copy of the Board’s resolution containing an outline of
the procedure adopted in 1923 is herewith enclosed.
Under this pro
cedure the principle governing open market operations was defined and
its application and practice left to a comnittee consisting of five
-Teserve bants acting under the general supervision of the Federal Beserve Board*
/' .
- 2 -
.
The principle was stated as follows*
v
"That the time, manner, character and volume of open
market investments purchased by Federal Jfl&serve panics he
governed with primary regard to the accommodation of com
merce and ‘
business, and to the effect of such purchases or
sales on the general credit situation#*1
The five banks constituting the Qpen Market Investment Committee were
the following*
,
Federal
Federal
Federal
Federal
Federal
Beserve
Beserve
Beserve
Beserve
Beserve
Bank
Bank
Bank
Bask
Bank
of*Boston
of New York
of Ihiladelphia
of Cleveland
of Chicago*
/
Although th4 necessity of giving to open market operations
a System status was recognized in 1923, it was not then foreseen how
much use would he made of the ©pen market operation as an instrument
of Federal reserve credit policy.
As a matter of fact, frequent resort
has been taken to open market operations - either by purchase or sale
of ttoited States Government securities - as a mode of policy in the
five years following the 1923 arrangements*
The experience of this period shows that the open market
operation, when involving other than trifling amounts, may be of firstrate importance in altering credit conditions even when viewed on a
national scale*
It is not surprising, therefore, that suggestions should
have been made that the System character of open market operations
should be fully recognized by having all twelve Federal l&serve banks,
instead of five as at present* represented in the shaping of open
market poli«y-«
Views to this effect have been expressed informally
by fTeserve banks not included in the existing set-up, and
formally "by the Federal Advisory Council in the following
recoranendation adopted in September, 1928 j
"The Federal Advisory Council without
any intention of criticising the present
arrangements hut in order that all governors
of the Federal ’Reserve banks may participate
in the discussions leading up to actions of
the ©pen Market Committee suggests to the
Federal Heserve Board to consider the advis
ability of having the membership of the Open
Market Committee consist of all the governors
of the Federal Reserve banks with an execu
tive comnittee composed of five members with
full power to act.1*
For the reasons briefly set forth above, the Board
has drawn up a revision of the 1923 open market procedure,
which embodies a fuller recognition of the joint interest and
responsibility of the Federal ffeserve banks and the Federal
Heserve Board in the matter of open market policy.
3?he ele
ments of this procedure are contained in a memorandum adopted
by the Federal Heserve Board reading as follows*
- 4, -
**(1) The Open Market Investment Comaittee, as at
present constituted, to he discontinued and a new comaittee,
to be known as the Open Market Policy Conference, to be set
up in its place.
{2} Each Federal reserve bank to be represented on
the Open Market Policy Conference.
(3) The Conference to meet with the Federal Beserve
Board at such times as may be arranged by or with the Board.
(4) The function of the ©pen Market Policy Conference
to be to consider, develop and reconssend plans with regard to
the purchase or sale of securities in the open market*
(5) The time, character and volume of such purchases
and sales to be governed with the view of accommodating com
merce and business and with regard to their bearing upon the
credit situation.
(6) The conclusions and/or recommendations of the Open
Market Policy Conference to be submitted to each of the
Federal reserve banks and to the Federal Beserve Board for
consideration and/or actiono
(7) A committee to be known as the Open Market Execu
tive Oomnittee to be constituted for the purpose of executing
such purchases and sales of securities as have been approved
by Federal reserve banks and the Federal Beserve Boards w
|
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131.
ft*
U r r ic e
"
L orres^
*e
FEDERAL RESERVE
z e
BOARD
Dute
T o ________________________ ____ ______ ____ ■
Subject;___ :_______ _______________ _______
From
______ ____________ ____ ?
M„
__________ _________
J$UL
‘3j..
Reproduced from the Unclassified I Declassified Holdings of the National Archives
January 21, 1930,
Mr. _______________
Chairman of the Board of Directors,
Federal Reserve Bank o f _________
SUBJECT:
Open Market Procedure.
Dear Er.
^ This letter invites the attention of your bank to changes
which the Federal Reserve Board, after prolonged consideration of the
matter, has concluded should be made in the existing procedure govern
ing open market operations.
It may be recalled that it was in April, 1923, that the
present procedure with regard to open market operations was adopted.
In the preceding year many of the Reserve banks, in order to maintain
portfolios of earning assets, entered the market on their own separate
accounts to purchase United States Government securities, without much
regard to the effects of their operations on the market for Government
securities or on credit conditions.
It was found necessary, in conse
quence, to give to open market operations a status which recognised
their credit effects and economic consequences and also their effects
on the position of each Federal reserve bank.
A copy of the Board’s resolution containing an outline of
the procedure adopted in 1923 is herewith enclosed.
Uhder this pro
cedure ’the principle governing open market operations was defined and
its application and practice left to a Gomaittee consisting of five
Reserve banks acting under the general supervision of the Federal Reserve
Board.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
2
-
The principle was stated as followss
"That the time, manner, character and volume of open
market investments purchased by Federal Reserve Banks be
governed with primary regard to the accommodation of com
merce and business, and to the effect of such purchases or
sales on the general credit situation.**
The five banks constituting the Open Market Investment Committee were
the followings
Federal
Federal
Federal
Federal
Federal
Beserve
Beserve
Reserve
Beserve
Beserve
of
Bank of
Bank of
Bank of
Bank of
Basic
Boston
Hew York
Philadelphia
Cleveland
Chicago.
Although the necessity of giving to open market operations
a System status was recognized in 1923, it was not then foreseen how
\
much use would be made of the open market operation as an instrument
of Federal reserve credit policy.
As a matter of fact, frequent resort
has been taken to open market operations - either by purchase or sale
of United States Government securities - as a mode of policy in the
five years following the 1923 arrangements8
fhe experience of thi9 /period shows that the open market
when involving other than trifling amounts,
operation,
may be of first-rate importance in altering credit conditions even
when viewed on a national scale*
It is not surprising, therefore, that suggestions should
have been made that the System character of open market operations
should be fully recognized by having all twelve Federal Reserve banks,
instead of five as at present, represented in the shaping of open
market policy.
Yiews to this effect have been expressed informally
Reproduced from the Unclassified / Declassified Holdings of the National Archives
"by Reserve banks not included in the existing set-up, and
formally by the Federal Advisory Council in the following
reconmendation adopted in September, 1928:
M©ie Federal Advisory Gouncil without
any intention of criticising the present
arrangements but in order that all governors
of the Federal Reserve banks may participate
in the discussions leading up to actions of
the open Market Gomnittee suggests to the
Federal Reserve Board to consider the advis
ability of having the membership of the open
Market Gomnittee consist of all the governors
of the Federal Reserve banks with an execu
tive Committee composed of five members with
full power to act.**
For the reasons briefly set forth above, the Board
has drawn up a revision of the 1923 open market procedure,
which embodies a fuller recognition of the joint interest and
responsibility of the Federal Reserve banks and the Federal
Reserve Board in the matter of open market policy*
The ele
ments of this procedure are contained in a memorandum adopted
"by the Federal Reserve Board reading as follows*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- 4 -
n (l} The Qpen Market Investment Committee, as at
present constituted, to be discontinued and a new committee,
to be known as the Open Market Policy Conference, to be set
up in its place.
{2} Each Federal reserve bank to be represented on
the Qpen Market Policy Conference.
(3) The Conference to meet with the Federal Beserve
Board at such times as may be arranged by or with the Board*
(4) The function of the Open Market Policy Conference
to be to consider, develop and recommend plans with regard to
the purchase or sale of securities in the open market.
(5) The time, character and volume of such purchases
and sales to be governed with the view of accommodating com
merce and business and with regard to their bearing upon the
credit situation®
(6) The conclusions and/or reconanendations of the Open
Market Policy Conference to be submitted to each of the
Federal reserve banks and to the Federal Reserve Board for
consideration and/or action.
(7) A committee to be known as the Open Market Execu
tive Conmittee to be constituted for the purpose of executing
such purchases and sales of securities as have been approved
by Federal reserve banks and the Federal Beserve Board*"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- 5 Such further working arrangements as may be found necessary
to,make the above outlined plan operative will, in the opinion of the
Board, best be determined by the Conference itself when it is organized.
fhe Board believes that the above procedure contains the
to give expression to
essentials of a workable plan designed/t*£ the common interest of the
Federal reserve banks in matters of open market policy and to provide
a reasonable and practicable method for joint action*
After your bank
has had time to consider the plan, the Board will welcome an expression
of your views. //
Reproduced from the Unclassified / Declassified Holdings of the National Archives
January 22, 1950.
Chairman o f tho Board o f D ire c to rs #
Podoral Reserve Bank o f ____________
SUBJEOft
Opon M arket Brooodure#
Dear M r*
Thift lo tto ? In r lto o th e a tte n tio n o f yo ur bank to oitangeo
whioh the F e d e ra l Reserve Board* a f te r prolonged co n s id e ra tio n o f the
m a tte r* hae concluded should be made in th e e x is tin g procedure governla g open m arket o p e ra tio n s .
I t May bo re c a lle d th a t I t mao in A p r il* 1923, th a t tho
p resent proooduro w ith reg ard to opon narieet o p eratio n s was adopted.
In the preoeding yo ar nony o f tho Eeserve banka t in ordor to M a in ta in
p o rtfo lio s o f earn in g as so ts* en tered tho m arket on t h e ir own ooparato
aooounts to porohase m i tod S ta te s acrrernmont s o o u ritie s * w ith o u t tsooh
reg ard to tho o f fo o ts o f th o ir oporatlono on tho M arket fo r Qororo&ont
s e c u ritie s o r on o ro d it c o n d itio n s .
i t was found neoessary, in oonoe*
fuonoo* to g iv e to opon aarioet o p eratio n s a s ta tu s uhioh recognised
th e ir o ro d it o ffo o to and eoonoalo oonsequenoas and als o t h e ir e ffe c ts
on th e p o s itio n o f eaeh fe d e ra l reserve basic*
A * w o f the Board* o re s o lu tio n o o n ta in in g on o at lin o o f
the proooduro adopted in USB is h e re w ith enclosed*
Uhder th is p ro *
ooduro tho p rin o ip lo gororniug opon mascot o p eratio n s was dofin o d and
I t s a p p lic a tio n and p ra o tio o l o f t to a C a a a itto o c o n s is tin g o f firm
S e ss rre banks a o tin g under tho g e n eral su p ervis io n o f th o fo d o ra l Bo*
oorro Board*
R e p r o d u c e d fr o m the U n c l a s s i f i e d
I D e c l a s s i fi e d
H o l d i n g s of the N a ti o n a l A r c h i v e s
mm
2
«»
The principle was stated as followsi
"That tto tine, manner, character and volume of open
roar^et investments purchased by Federal Reserve Banks be
governed with primary regard to the accon-aiodiction of cat&meroo and business, and to the effect of such purchases or
sales on the general credit situation."
The fire banks constituting the Open Mar to t Investment Oammitteo were
the following!
Federal
Federal
Feaeral
Federal
Federal
Reserve
Reserve
Reserve
Reserve
Reserve
Ban*
Bank
Bank:
Bank
Bank
of
of
of
of
of
Boston
Hew Tor*
Philadelphia
Cl era land
Chicago.
Although the necessity of giving to open market operations
a System status was recognized in X923, It was not then foreseen how
such use would be made of the open market operation as an instrwent
of Federal reserve credit policy.
As a matter of fast, frequent resort
has been taken to open market operations - either by purchase or sale
of united States Qovernaent securities - as a mode of policy in the
five years following the 1923 arrangements*
The experience of this period shows that the open market
operation, when involving other than trifling ataounts, may be of firstrate importance in altering credit conditions even when viewed on a
national scale*
It is not surprising, therefore, that suggestions should
have bean made that the System character of open narket operations
should be fully recognized by having all twelve Federal Reserve banks,
instead of five as at present, represented in the shaping of open
market policy.
Views to this effect have been expressed informally
R e p r o d u c e d fr o m th e U n c l a s s i f i e d
I D e c l a s s i fi e d
H o l d i n g s o f the N a ti o n a l A r c h i v e s
3
by Btserve banks
not Im&luded
■**
In
the
existing sst-*apt
m&
formally by tilt Federal Advisory Council .in the following
reeonznend&t ion adopted 'in September, 1928 1
nfUO tfeaeral Advisory Council without
intention of orltidlsin^ the present
arrangements but in order that all ^ov'-rnors
Of tha M o r a l Reserve banks may participate
the disoufiioms leading,
ta aotions of
the open Market Oownittee suggests to the
Federal Beserve Board to oonaider the advis
ability of having the g^tt&ea*eii£p of the Qpen
liantet Oociclttej consist of all the governors
of the Federal Reserve banks with an exeou^
tive eowaitteo oasg»oeed of five weepers with
full power to aot."
any
For the reasons briefly set forth above, tne Board
has drawn up a revision of the 1923 open market procedure,
whloh embodies
a fuller recognition of
the
joint interest
and
responsibility of the federal Reserve banks and the Federal
tesenre Board
in the
nutter
0$>®n oarket
ments of this procedure are contained in
by
the
federal
leserve- Board
reading
n
polioy.
fh# ele
memorandum
as. follows»
adopted
R e p r o d u c e d fr o m th e U n c l a s s i f i e d / D e c l a s s i fi e d H o l d i n g s o f the N a ti o n a l A r c h i v e s
"(1)
Open &lar*et Investment Comoittee, as at
present canstitut^d* to h© discontinued and a i&sw coioaittee,
to be known as the Open Market Policy Conferonce, to be 8#% ■
up in it® $»!«#**
(2) iSaoh federal reserve bunk to fee represent#*
the Open Market Policy Conference.
on
(3} The Conference to m e t with the Feder&i Reserve
Board at such timws as jaa®r be arranged by or with the Board.
(4)
The i'unction of the Open Karitet Policy Conference
t© be |0' consider, develop and reoounend plana with regard to
the purchase or sale of #eeuritle# In the open Market.
(3) The time, character and volume of such purchase®
and tal.es to &e $©v©raed with the view of »c&QeB»odatin^ coianwroe and buslnaes and with regard to their bearing upon the
credit situation.
(6) The conclusions and/or recoBmendations of the Qpen
Market policy Conference to be submittea to eaoh of the
Federal r«**rv# bank* and tQ the Federal Reserve So&rd for
consideration and/or action.
(7) ^ cosaaitte®' to bo known a# the Open M&rfett Execu
tive 0«hs»itt«e to be constituted for the purpose of exeout in*
such $fnr#h&*e«i end
of securities ai have been approved
by Federal reserve banks and the federal Reserve Board. **
m 0
**
$mh
S»a#aft&t/ %■« is&fe@
m mg' t»e f&m&
j^ore ti«&XSjB#eSl $lan
ls&* «jp.i^i4»a &f % M
’
will* In
"&«*# fee dttetmlaM
*?
Itself m
»rn. it 4# 8*gs&
i$«&
*
flie l « M
fcfafcfc %h$ s&erfr
%h$ ■#»*<$»%i&l* #£ ■& tr&tfSss&l&e. $&a&
t#
ooranon lnt«r##t ®f $fo®
%©
mnMkim
fc^ih^&jujaa
$& mitt?#
wa#3e*fe |H&U*y m & #® p#wi&© a
fcl» wt^©
4 t iit 4$la%
ooiia lcLar t o plan, tho
yipu* ri*##*
A*
CS.f H*
A
£t«y jwef %$&& k m it«
&
Will woloone
#i$» &£
I#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131
CC*
U r h c e
To^
FEDERAL RESERVE
C o r r e s p ^ n u e i i c e
Dr. Miller
Fro m ___ Mr. McClelland_____________
Datc..
Subject:______
n .m o
_______ ^ ^
__________________________________
'• r «
At the meeting yesterday, the Board approved the suggested re
vision of open market investment prooedure submitted by you and also
voted to transmit the revision to the Federal reserve banks, with
the request that the Board be advised, within the next thirty days,
as to its approval or disapproval by their Boards of Directors*
It was understood that you would prepare draft of a letter
of transmittal.
2— 8495
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Reproduced from the Unclassified I Declassified Holdings of the National Archives
f o r m N o . 131
/*“*•',
>■-
(
U r h c e
FEDERAL RESERVE
C o r r e s p o n d e n c e
To._______ \Xo
B0ARD
f
/
pate
3
3 /^
A
I
yt
*
G lfa *iL
O M
...... -<L ^
3
Subject:.__________________________ ^ ^ - 4 .,
# u"
C/
F ro m __,
«ra
2— 8495
At the- saaatlttg o f tho 3©*t\i
kn%amt 18th, 1929, U
v?>t«d t b it
tet ®» w r ljr aaat:log a t stelote tfc* Ifc ll fSomWafcip *? tha Bo^rd akauld tea
praaaat eoaatdaratiai abauld be* glvaa to tbir ajMaabtlAty « f imrin% *11
fa i a fa l r * * * r m tom s ropraaaatad o r ite#
ttariteat la w itw w l caaaadttaa*
Mr# Mi i. i# r &?*va m t% m th a t *£&#» fcbo aafctar o&m up, ha would sso*a th a t ■
A ll awatfja$«
tto* Q m m M m b» wossduetad tsmlfcr Ite au?m*vlalo«t o f tha
Sttird, with H » Suw iw r proaldiwg *m chaitwm*
h t l t « jesting a* foptaaftar 2§# IIS9t tha fadafftl A M tory Smamil
9r<xboLti*& the following r»6’x*w3ctffttlaa*
*Th» F«4#ial Adviaoi? Coimtl vithaut m y intention o f
« r t t i 0itia| Hi* jaraaaist « rranganaota tewt la ord#r that a ll
gvpavsara »>f tha Fadaral laaarwa teac&ka aay iwr&laipata la
tha dlaauaslona Itft^ng up ta aattoaa of tha %an gavtNt
Cawsitiaa au&jgaata to tha Fadoral uaaarva Ss*&rd to e «d d a r
tha adviaatetllty of M a s tin# Mriteaffahlf af tlia Ofjaw tfcflcat
Cawwlitae a-malat of a il th« $e*a*Mo*t of tha fadaral Saaarva
hank.* *tth *.» asao-jilw* ootaalfc .*a a :«p»3ed « f fiwa m&£mr»
with fu ll pssaar ta -at**
Tha 2®#ttar <mm up far ac«>aida«*tlgft Sf? tfe» fkaard m Oatatear 1st, and
it «aa fcrou&ht out that afetea*1phaaaa af tha apa** aarkat prsaadura of tha
Iffe&aw a&$tet tea la aaad of ravlalaci# «iitte tlaa manli tfeat ^aaata* Pillar
and Matt war® a^lntad a apartial «<»Kiltta«' ta draft ask4 satanlt to tha
fio*r& a
ratiai^ of tfe^t prcMs^d^re# ftea ^omtttaa auliHdtMl tb«
fal;o»inct
#(1} That th a
Slarkat laaaataant coawdttfcaa, aa a t i>raaaat
aoaatltaitad# te» dlaa^atjlw iiad*
(2) tteat a CawdtteMl to }>» >tmm aa ttoa Opa» UsHeat ra lla sf g a a fiw rw
be »at up «itl» a. gafffiraawtatdfa i’w aaol^ af th« taalv^ fadaral raa^raa
tea»ka# tfea rapraaaatatlva ta tea daal^aatad by ttea Saafd o f ..Iraators a f
tlwt teank,
*(|J Tba 0|sa« laHcat f flltagf C>mfa9asiaa ta ba aiMMr tfea ahal.rwaaahlp
o f ttea OairarBor a f ttea i'adaiad Sass»rv«
atid ta »aa% at auta^ tiaaa
and ^l^aaa a j isay i*a arraa^ad %■ or »ith tfea Fadaral ;»aa^*rva Baard#
w{4) ?bat I t ahall ba
fuaat&oa o f 'Use- OfMwi m*km$ i&lla^ C«ae^areeee
to a,msild^r# pn^paya
raai3J»>^.4 pla«a #5th ra^ard to th* parateaaa
or aala o f aaaurltl«a 1» tba »?.sa» aarteat fo r aaaauat^ of tba ItedapH
iaaaraa %ate«a and imstiaipatiw* ladatml r^^rra twaka*
*($) that parafaaaaa atsd sa-laa of aao&rltiaa for ?yata« aaemait la tlia.
opm tm*teat ^ » l l aoodat ^ r lm r llf at tewieaM aaaa^taaaaa*
Nf
AT BOARD MBETn^a."
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*(6 ) That the tie *, manner sad vote© of aaoh parehases
and ©aloe shall bo ^veaisd primarily with the view of
aooaunodatiug ccraoerce and business and with »gard to their
bearing upon the general credit situation*
**(7) ?hot for tlio purpose of executing each purchasoe and
aa lo e o f s e c u r itie s ior l^otera account as may be approved My
Federal reserve banka aid tha federal Beeerve Board tiiere
shall be constituted a oonnittee ta be known as Tha Open
V a ttce t a x e e u tiv e Ctnsti tto e * *
*£3118 report was s&endad at tha moating of tha Board on KOvaaber 10f
1928 f end tha ovemor was authorised to refer it to tha forthcoming con
ferences of Governors and Fadaral reserve agsnts* in tha following fonni
**(1) fhat tha Open jttaricet lavesfeient Oammluee, as at present
constituted* bo discontinued*
"(2) Shat a Oocialttee to ba known as She Open UMfo&t Policy
Conference ba sat up with a representative from aaoh of tho
twolvo Fadaral reserve Osaka* tha repreeantatlve to ba deeionated
by tha Board of Directors of tha ba»k*
rt(3) 2he Open Market alloy cion, rence to ba mder tha ehaiwaaap
Ship of tha JJevemor of tha Federal reserve Beard and to meat
with tha Fadaral Beeenre Board at such timos aa stay ba arranged
by or with the Federal ieaerve Board*
that it shall bo the function of B*e Open Market Policy
Oonfe recce to consider# prepare «md foeosamd plans with regard
to the purchase or sale of securities in tho open maiscot for
account of the Federal ^seoree 3yst*» and participating Federal
reserve o&txm*
*(Di Shat the time, iaudnorf character and volume of such pur
chases and sales ahail be governed primarily with tho vie o f
aoet&faod&ting ootsiaoreo and business and with regac-d to their
bearing upon the general credit situation*
**(6) That for the purpose of eseeutimg such purohasee and sales
of securities v for ays torn account as xaay be approved ay Feoersl
reserve 'banks and tho Federal Bcserve >o«rd there shall be con
stituted a committee to be known ao 3ho Opan Market Enscutiwe vto nittee*"
At this sams meeting* it was voted to be the sense of the Board that
It would bs adviseble for each federal reserve bank to be represented at
conferences held £»r the purpose of determining open mar'isst investment
policy*
2be Federal reserve agents in coos soaring tho 5oar&*s proposal
voted to concur in it* after sending paragraph (£) to mad as follows!
I
'That a Oo&nlttee to be known as The Open Market Policy conference
11 be s e t up w ith a re^roeentafc lve fro m oaeh o f th o tw e lv e fe d e r a l r e If so rva banka# the re p re s e n ta tiv e a n d /o r an a lte r n a te to be d e sig n a te d
I
a n n u a lly lay th e Board o f 81 fo o te rs o f th e Bank*"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
The Gorwnop* submitted the f a lowing; prerosed revision in
U to o f that suggested by tho Board*
I f ■ * ft ) **•*
¥ « » M lt t t I nvastment Coasxdttee* wMoh 1»
/f now oottpostd of fivs taraf**?** be enlarge* to aa to Include
I
I la otb«r s&von. Governors* mfcing ft Cwaslttee o f feaalt«0 ‘
II
provided that In o&ee Of the lia b ility of eny Oovemor to
//
attend# on alternate »hali be opr ointed by tho Directors of
/
hi* bank.
*(2) That tho Coo<tee of twelve shall select from its
memberahIp on jxacutiv* ttMasittae to consist o f flvo members*
which shall m rry into effect tho policies from time to tla *
dettfnained by tho fu ll CosRiltteo and approved by tho federal
reserve Board*
*( 8) ?h»t i t shall be tho function of tho Open l^orket
Investment committee to consider* prepare end reoomaiend plena
with regard to the Purchase or sale of securities in the or>en
market for account of the ¥«dopal Beaerve Systeai or p eril*
oi patln& Federal reserve banka*
"(4) That the time*«anner* oh* raoter and volume of auoh pur-*
ahasea and sale# aha 11 be governed primarily with the view of
aeeoenodatinfc commerce and business and with regard to their
bearing upon the general eredtt situation#
'*(6) that the i*4iikg« of the Upm U arlcet Investment C<wwitte«#
which shall bo called either by the Board or by the iixeoutlve
Committee of the pen :S»rket Investment Coaralttee shal be hold
in ’•'■aabingtaii or at such other pieoe ee m y bo arranged by the
Chairman of the Executive Cowait tee of the Open ferkot Investment
Cowalttes and the 3ov«mor of the Federal Keserve Board*
*( 6 ) That the procedure at noting a of the Open Market Invest*
ment Committee Shall be in tho future ae in the past* to wits
tfcst tho Committee shall consider and act upon the reeomraendatl >na
of the .xeeutive Committee and shall then meet *4th the Federal
fieeerre board to discuss those recommendations * 1th menders of
tho Board before action by the Board**
;• ...
.■
this was considered st the ai«Ua| of the Borrd on November 16th
and the feeling was that i f i t were adopted. I t would result merely in
an enlargesaetxt of the existing Open Market Investment Committee without
any practical change in procedure*
Hie doint Conference of Governors’ and Federal Beserve Agents held
on November 16th slightly amended and adopted the reaoar^endation o f the
Governors* Conference# as fo il carat
I
I
/
I
fj
* ( l) That the Open SSarteat i#veetmont Coaraittee* which ia now
composed o f five Governora, be enlarged ®o as to include the other
seven Governors* making a Committee of twelve* provided that In
case o f the Inability of any Governor to attend# an alternate
shall fee appointed by the Directors of his bank*
I
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*(2) That the Committee of twolve shall select from lta
membership an Executive Committee to eonalat of five mem
bers, whioh ahall earry into effeet tho pollolee from tlaa
to tlaa determined by tho full Gormltto© and approved by
tha Federal Beaervo Board*
*(5) Th t it ahall bo tha Amotion of tho Opon Market
Investment Commit too to consider, prepare and raoon^and
plana with regard to tha purchase or sale of aeouritlea
In tha opon market for account of tha Federal Reserve
y atera or participating Federal reserve banka*
*(4) That tha time, manner, eh*r*oter and volume of auoh
purchases and sales shali bo governed primarily with tha
via* of aeooamiKlfctlng oammoroc and buainoaa and with regard
to thoir baaring upon tho general orodit altuntlon*
*(6) That tha meetlnga of tha Opon Market Investment Committee*
whioh ahall bo oallad oithar by tha Bo*rd or by tha iLxeoutlvm
Committee of tha Open Market Investment Committee ahall be
held in aaahSngton or at suoh other pl&ao aa may be armnged
by the Chairman of the ixeoutlve Committee of the Open Market
Investment Committee and the Exeoutlva Offloor of the Federal
Aeaerre Board*
*(6) That the proooduro at meetings of the Open Market
Invoatmont Committee ahall be in tho future aa in tho past, to
witl that the Committee ahall consider and mot upon the reooar
mendati ms of the *eoutive Committee and ahall then moot with
the Federal Kesorve Board to dlaeusa these reeommendatlona
with members of the Board for auoh aotion aa the Board may doom
proper**
i
Tho matter waa further diaouaaed at the meeting of the Bo©rd on
Liasoaber 8* 1928 v and at tha eonaluaion of tho dleeuaalon. it waa tho
oonaenaua of opinion that it might be adriaable for the Board at that
time merely to amend the reeolutiona adopted on Mareh 22, 19239 es
tablishing tho open Jiarket Investment Committee, ao aa to provide
that the Committee should "eonalet of twelve representatives from
tha Reaerve banks'* instead of five aa at preaentf but formal aotion
waa deferred*
The Governors* Conference in Hayf 1929* took the following aoti ait
°The diaeuaaion of thia topic brought out the M
that tha
Federal Heserve Board has not yet aeted upon the reoommendatlon
of the joint oonferenoc of Oovernora and Agents of November,
1923* and it waa
*?0f2D to be the aenae of the conference that it la atlll in
agreement with the reoommendatlona of the Federal Advisory
Council, sado at lta meeting In September, 1928, relative to
\cyiuuuuea rrom the Unclassified / Declassified Holdings of the National Archives
• 4 •
*(2) That the Com-sitiee of twelve ahaIX galoot from its
membership an hxeoutivc Committee to consist of five msbers, which shall carry Into effect the policies from tine
to time determined by the full Committee end approved by
the Federel Beaervc Board*
*(S) Tlv t it shell be the function of the Open Market
Investment Committee to oonsider, preps re end reoonmend
plane with regard to the furehaso or eele of aecuritles
in the open market for eoeount of the Federal Reserve
yatem or prrticlpating Federal reserve banks*
*(4) That the time, wanner, oh* rioter and volume of aueh
purchases end sales shall be governed primarily vdth the
view of aoconmod*tlng eommeroe end business end with regard
to their bearing upon the general credit situation*
*(6) That the meetings of the Open Market Investment Committee,
which shall be celled either by the Board or by the ^*ecuttvw
Committee of the Open Market Investment Committee shall be
held in vmshlngton or at such other place as may bs a rranged
bv the Chairman of the ijDSoutive Comraittoe of the Open Market
Investment Committee end the Executive Officer of the Federal
fteeervc Board*
*(6) That the procedure at meetings of the Open Hflarket
Investment Committee shall be In the future as in the past, to
wit* that the Committee shall consider and sot upon the reeosf
mendstions of the jieoutive Committee and shall then meet with
the Federal Reserve Board to dlaouss these recommendatlonc
with members of the Board for such notion as the Board may dee*
proper*•
The matter was further discussed at the meeting of the Bo»*rd on
December 8, 1928* and at the conclusion of the discussion, it was the
consensus of opinion that it might be advisable for the Board at that
time merely to amend the resolutions adopted on ftSsroh 22, 1923, ea«
tabliehing the >pen Starket Investment Committee, so as to provide
that the Committee should "consist of twelve representatives from
the Heserve banks* Instead of five ac at present, but forwal action
wee deferred*
The Governors' Conference in Bay, 1929, took the following act!ont
"The discussion of this topic brought out the Ifect that the
Federal Reserve Board has not yet acted upon the recommendation
of the joint conference of Governors and Agents of November,
192 ., and it was
to be the sense of the conference that It is still in
agreement with the reeottteadatlons of the Federal Advlsoiy
Council, made et its meeting In September, 1929, relative to
re p ro d u ce d from the Unclassified / Declassified Holdings of the National Archives
*the enlergetnent of the Qpcn Market Committee* and that
the object of those recommendations mi^ht effectively
be aooompliahed by the sdopti *1 of the procedure pro
posed to the conference of Oovernors In November, 1928f
as emended end ftp roved by that 0 nforence end the joint
conference of Governors end Federal Honerve Agents*
"In discussing this subject* the inference further ex
pressed the opinion that it might be helpful and advlsnble
to review the functions of the pen Market Investment Con*
nittee, believing the comraittce can best serve its purpose
by continuing a procedure such aa that referred to by the
Open J^arket Committe a In its report of January 7# 1929,
a procedure which the conference understood to be the
procedure followed in the pest*4
At the meeting on December 12# 19£9t the natter was called up
for consideration and was nade special order of business on a dote
to be fixed by the Governor within the next two weeks*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m No. 131
Office Correspondence
FEDERAL RESERVE
BOARD
To
From
£)ate
*/woaaahor i s t 1029
Subject:.
H r * 2U>vlttll«ii&
2— 8495
At tha mmt%m
tho
m August m
4 1928, It wao rotod that
at aa #az$y itaotla# at whldfct tho ffcll taasfcarship of tho Board ahould ho
proooHt ttonaidoratioa should ^ & tm to tho a& riaabilit^ o f M a s d l
F&daral i m m baako raproa«mtol an tha Opoa Barfcot lafaotaaat JOB»tttoo*
Ur* M iU a f s a il a o tio o th a t whoa tho is a tto r oasa up* h« would naoro th a t
a l l ao o tln g a a f th a O aaaitto a bo eooda&toA uacior th a a u p a rrla ia * o f th a
Beard* w ith t&a d o a m r jaroaiding aa O halm atu
At Its euwtl&c m SOftaofcor 28* 1918* tho Fodoro£
aafenlttod th a f » U » A a g
C a w ll
"tho Foioral 4rU ory Ooosail wlthoat any intaatioa of
orltiolaln g lha proao&t orraagamaata tart la ordor that a ll
gororaaro of tha Fadoral Baaorro M m way parUolpato la
tha dioouastaa load lag up to aotloaa o f tha Opoa gasket
Jcnaittoe aaggeate to tha Fodaral la s a m Board to eaoalder
tha adriaahillty of harlag tha raosbarshlp of tha Ops* Jiarteat
ooaasittee eons 1st o f a ll tha ^ v o m r a o f tha yodoral Boaerva
haafta with an oxocutbro ooaalttee eaapoaed of ffro aaafcoue
with f a ll poaer to aot**
fh e a a tt a r eaao up f a r o o s a id a ra tio a
th a Board on O eteher 1st* «ad
I t aaa broaght o at th a t o th a r jfeaaes of th a epaa rmt&ot praooduro o f th a
Syotaa ttigfct ha la seed o f ro rta lo ^ * w ith th o r o a a lt th a t 8ssora« S i l l e r
aad P la tt were a ^ o lo to d a ap o o lal ooraaittee to d r a ft and a a ta rtt to th o
Beard a proposed rorlsloa o f th a t procedure* Bto Oanalttee subm itted tho
fOllOWlU|9
* (1 ) that tho Qpaa Saittst Xaroateeat cooadttao* aa at p rasaat
o o fea tlt^ te d * fee dlo so at lasted*
**(21 that a Ooaalttoe to ba knoaa aa 3he Opan gaxtret policy
Ooaferoeea ho sot up with a repraoeatat ire fM a aaah of tha twelve
Fedora 1 reeerre fcaafee* the fopreoaatatlro to ha daeigaatad hr tho
Hoard of Plraotoro of tho H a :*
* ( 3j tha Opsa Saitat M i a ; Coaferaaee to ho uader tho ohaiaaoaohip
of tho Governor o f tha federal itoaorva Board aad to ooot at aaafe tlaee
sod p&aoaa aa «a$f ho arraa^ad hgr or with the Federal SSaserre Board*
* (♦ ) Shat i t shall ha tha ffeastlea o f Bio Opoa saneat Policy Goaf aranee to oonaidor* propara aad reoomsaad plana with regard to tho
paroitaee or sale of aaooritloa la tha opoa aazfcot fo r aooooat a f tha
Federal asoawpo Systaat a&d partlolpstla^ Fadoral saaarra haaha*
*(5| that parohaaoo aad aalaa o f aaouriUaa fo r ayataa aoaaaat la tha
opoa aar&at a h A l esaaiot priBarily of ha^eara aoaoptaaooa*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
0c
c c
•{<§) that the tin »# wanner and iroluao of auoh oirohaaoc
and sales cbcl be &m®rmid pvtactlljr with the view of
aeeoai^odatlnjg eowaeree and htu&iioce m3 with regard to their
bwarinf upon tba &ener*l credit clt%i*tl-’>n*
"(7) That fo r t o jSNKrpMN* o f oaeccutlisc euoh purohaceo end
gala# of securities fo r #ttc*ft aoo *>nfc ne my fcc ip p m il by
?eder*l raeerva beaks *ndt the Fedcrol Ftsccrv* $o*a,rd there
eh* 11 ha constituted # eoosaitto to be known ae the Open
Market xecutlve CcocAttee**
Tfeie report ace aisanded at the section of the &»«rd on tovsafcer 10t
2§tt» and the Oovomor wee authorised to rcf*r i t to the forthecaiftg con*
ftrances o f Jotfcraorc m& Federal rwearre agents* in the following Ibimi
#( 1 ) That the Open Ukrtoet lavestaont OmltlHM* ce at present
constituted* he dieoontinued*
* { 8) 'That-a Uossaittsw* to he tfKswet ae The Open Mcrtcct ftClM?
conference he act up with * representative i r o n oitcfe of the
twelve Fcdovol reserve banks, the representative to he <oo1g»stc<t
by the Board of Dir^etere o f the bank*
* (•) The Opm mforfret olloy Conference to ho under the chaSmmchip of the Governor of the Fedenl fesorve 9mrd and to meet
with the Federal Keeerve &oard at fMOfc tlaac ae nay bo arranged
by or with tha Federal Hesorwe Board*
{4} That I t shell bo the tm m tim of The Opm Market Policy
conference to oonelder* prepare and reooRfiaend plane with regard
to the purchaco or calc of securitloe In the &pm market for
account of the federal Eccorto Syctcst and participating ?*td?»r*i
roeervc barfc#*
* (« ) th*t the t i m § m m t*r9 ehcraster and voliscc of s*oh pur**
oticsee and aalca i)sU he $ovom«d prtnsrily with tho view of
*a ««w d ii*to * wiMMMi cndbmtfnnto *n§ *tH i rcptrt to tfcotr
hearing upon the general credit situation*
*(g) that fo r the ptrpoeo of executing such curohases and celes
o f ceourltlee fo r frittti account as m y he approved by Federal
reserve benks and the Federal ieeervc Boerd there shell he con
stituted c oomnttbec to he nown ac the Open Market xooutive CocmI ttec* *
At thie came «eetln$* 1% was oted to bo the sense of the Board that
i t would he advischle fo r each Federal reserve bank to be represented at
confciwuiiX hold fo r the purpose of dstcfisiwt»n open ncffaut i s v i h w rt
policy*
The Federal reserve agents In OPftCldsrfas the Hoard* a propoeal
voted to concur In it * after sending ?«ragmoh ( 2) to read as f o l l m i
*That a Comdttcc to bo m m n ac The open Effect Policy Conference
be cet up with a representative from each of the twelve Federal ra
cers* bents* the representative and/or an altemete to be deeiRtu*ted
annually hy the Board o f rlreotors of tho Sank**
Reproduced from the Unclassified I Declassified Holdings of the National Archives
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lantf tht
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avas^trt* Conftranttvat foUtati
w
(l) w tht O
p
tsM
&
sfe
a
t laraatetat coMttatt ^hith la
- tm
tonptat4of flat O
tfam
afO
f to ^
m
la
tfa
da
oa
a ta Intlnot tht otht*
atftn O
tvam
titt m
M
nn aoanaittaa tf totlvtf^«tvldadthat Is
t or tto Inahlllt^ tf a
a
g
rM
panBsr to attand* a
a«4tam
att
ahall to a^lntad tf «
»
•Dlm
ottmtf Ilia hath*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
m 4 m
*(2) That the Coaaitbee of tweXve ahall seleot froa lt«
aoabership an Sxeoutive Coamitteo to oonsist of fl?« aoa*
b#ri, which ohaXl carry Into offset tho policies froa tine
to tiae detoralned by the fail Coaaittee and fipprortd by
the Federal keaerve Board*
^(8) that it shall bo tho IHinotion of the Open &**rk»t
Invoataant Coaaittee to consider, prepare and roooamond
piano with regard to the ciircheeo or a«le of aeeuritio*
in tho open aarket for account of tho Federal p-oaerre
or
rtioipatln*; Federal reeervo banka*
*(4) That tho tiae, aanner, oharaotor and voluae of auoh
purchaeee and aaloa ahaXl bo governed p r i m r i l y with tho
view of aoooamodating comoroc end bunlnoaa and with regard
to their bearing upon tho general oredit sltuati >n*
*(6) That tho Mooting* of tho Opon Market Invoatasnt Goaatttee*
which ahall bo o&llod oithor by tho Board or by tho latecutivc
lioaaittee of tho Opm &irket Investaent Coaaittee shall bo
hold in iaahlngton or at «uofc other place aa say be arranged
by tho Chairaan of tho Executive Coaaittee of tho Opon flfcrket
Investaent Coaaittee and tho & eoutive Offloor of tho FederaX
Baaerro Board*
"(6) That the procedure at votings of tho Opon Haricot In
vestment Coaaittee ahall bo In tho IHitura aa in tho pn«t# to
witt that tho Caaaitteo ahall oonaidor and aot upon the reooa~
aondationa of the iixooutive Coaaittee and shall than aoot with
tho FodoraX Keaeve Board to disoues these reooamendatione
with aaabers of tho Board for such action as tho Bo^rd any does
proper**
The natter waa farther disausacd at tho ^oatinf of tho Board on
i/oceaber % X02S# and at tho conclusion of tho discussion, it waa tho
consensus of opinion that it sight bo advisable for the Board st that
titao aeroly to amend the rosoXuti >no adopted on &arah 22, 1829, eatabXiiMag tho Q|>cn Market Investment Coaaittee, no aa to provide
that tho C'samittee should ‘consist of tweXvo representatives froa
the Heeerve banks’* instead of five as at present9 tut foraaX aotim
was deferred*
Tho Oovernor*1 Conference in Uayf 182©, took tho following actions
"Tho disousaion of this to to brought out the faot that tho
federal Keserve Board has not yet aotod u on the roaoomondation
of the Joint oonferonoe of Governors and Agents of Kovaaber,
X023, and it was
*?OT&t to be the sanae of the oonferonoe that it i» still in
egrooaent with the reeoaeaettdations of the Federal Advisory
Counoil, aade at its scooting In September, 192$§ relative to
Reproduced from the Unclassified / Declassified Holdings of the National Archives
of t ho Opm Nfertoot C ow «lttoof and thot
tho o b jo o t o f thorn rmwmam&kttm* atfcht offoottvoty
b# oooo*pxi*hod bar tho Mtepfcloo of tho prooo&aro p m *
po#o<l to tho ooftforono* o f <3«ro«*oro in ftovoMber* 18S8#
no ftmndod ond mpprswwS by th ot o>iif*rofioo ond tho jo in !
ootif^ronoo of Ootrerooro **»<! ?ed#m l 3»8anro Agonto*
*ln dloottoolrig till# tfubjoot, tlie ©onfaroiwi® further ox**
pr^oood tho £f?!:r»toii thot It sstght In helpful and oftHoobl*
to m i « » tho ftmottoMi of tho opm tricot Invootnont Com«tfctoo# boltovlng tho o*»*Stoo ooi* b#ot oorto Ito purposo
by oDiitiming. o prooo&iro owoh m thot r^forroi to by tho
opm florkot fitoowitttoo In ito roport of *Jo*itt»fy ?# 1929*
a proeoduro »hi«h th# oonforonoo y*wi«rato>d to bo tho
prooo&aro followod la tho pool**
> t th o a o o tla * on Doooaibor lftt
th o o o tto r woo ooU od up
fo r o m o ld o ra tlo ** oad woo «m£* opooioi & t£or of bttolnooa m o ditto
to bo f txod by th o O orom or w ith in th o noxt two woofeo#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
MEMBERS
O ffi c e r s
F„ O. W ETM OR E. P R E S ID E N T
19 2 9
B.A. M cK IN N E Y , V i c e - P r e s i d e n t
a.
M. HEARD, D i s t r i c t No. 1
W IL L IA M C. POTTER. D i s t r i c t N o. 2
L. L. RUE. D i s t r i c t N o . 3
H A RR IS CREECH, D IS T R IC T N o. 4
J O H N PO O LE, D lS T R IS T NO. 5
J. P. BU TLER , J r .. D i s t r i c t N o. 6
F. o. W ETM O R E, D i s t r i c t N o . 7
W . W . SM ITH, D i s t r i c t N o . 8
THEODORE W O LD , D i s t r i c t N o . 9
P. W . G O EBE L. D i s t r i c t N o . lO
B. A. M CKINNEY. D IS T R IC T NO. 11
F. L. L IPM A N , D i s t r i c t NO. 12
W A L T E R LIC H TE N STE IN , S E C R E T A R Y
FEDERAL ADVISORY COUNCIL
EXECUTIVE COM MITTEE
F. O. W ETM O R E
OFFICE O F THE PRESIDENT
B. A. M CK INNEY
W . C. POTTER
3 8 S O U T H D E A R B O R N STREET
L. L. R UE
H A RR IS CREECH
W . W . SMITH
CHICAGO,
November 21, 1929.
Hon. Roy A. Young, Governor,
Federal Reserve Board,
Washington, D. C.
My dear Governor Young
I had intended to inquire at the
meeting on Tuesday as to what results, if any, had arisen
from the Recommendation of the Council under date of Sept.
28th, 1928,| that all of the banks be given an opportunity
to sit in on the Open Market Committee’s deliberations
where and when time permitted.
recollection in
I seem to have a hazy
mind that you had mentioned this subject
either to me personally or to the Council since that date,
but if so I am unable to recall what it was or what you said.
I would be pleased to hear from you at your convenience, and
with best regards, remain
Sincerely ynwrta,
President.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
333
IINo. 181.
Office Corresponaence
Tn
(DM
FEDERAL RESERVE
bqard
Federal Bsserve Board_________ SuKjer-h Op«a Market Investment i//<(
From Mr. McClelland,_________________
____ ____Committee
______
the aiaute* of the recent Coafereace of Governors contain tarn following
entry with respect to the Conference's consideration of the question of the
organisation of the Open Market Investment Committee*
«fhe discussion of this topic brought oat the fact that th.e
/ Federal Reserve Board has not yet acted upon the recomroeadation
I of the joint conference of Governors and Agents of Hovember, 1928,
and it was
¥0fS9 to be the sense of the conference that it Is still in
| agreement with the recommendation s of the Federal Advisory Council,
made at its meeting in September, 1928, relative to the enlargement
j
of the Open Market Committee, and that the object of those
I
recommendations might effectively be accomplished by the adoption
j of the procedure proposed to the conference of Governors in November,
1928, as amended and approved by that conference and the joint con*
I
ference of Governors and Federal Reserve Agents.
/
In discussing this subject, the conference farther expressed
I
the opinion that it might be helpful and advisable to review the
j
functions of tae Open Market Investment Comal ttee, believing the
I
coanlttee can best serve its purpose by continuing a procedure such
I
as that referred to by the Open Market Committee in its report of
\
January 7, 1929, a procedure which the conference understood to be
(
the procedure followed in the past**
•/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
nm *
■P
1 /
/
~y
W
J
V
(p
\
,Xr
Dear Hr. fbtwore*
T h ic w ill acknowledge re c e ip t o f yo tir le t t e r o f
Bcveaber 3 1 s t and I ad vice tfcat
to th e moment n o th in g ha*
fceendone w ith Use r eqeaaeada tio n o f the C o rn e ll easier date
o f Septenary 3 8 , 1928tx th a t th e Ooen M arket O oanlttee be ex
te n d e d to cover re p re s e n ta tio n from a l l o f th e F ed eral rese rv e
banfcs.
Delay in adopt in* the suggestion na* occurred becease of booc petty difference* of opinion, rhtsh, I “
koHeve,
are now practically eliminated. I expect tc again revive the
jragsestlon and be able to announce to ynu at a later date that
the reooncsendfttion of the Cornell ha* ‘been adopted V **** Board
eod the Beserve banks* Itaring the interim vmt I *ak your kind
Indulgence.
With kind personal regarda, X am
Tours sincerely.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Form No. 191.
Office Correspondence
FEDERAL RESERVE
BOARD
Date _Seyl3, 1929
Subject: .Open Market Investment
To_
_Commi
From„
The minutes of the recent Conference of Governors contain the following
entry with respect to the Conferenced consideration of the question of the
organization ojf the Open Market Investment Committee:
HThe discussion of this topic “brought out the fact that the
Federal Reserve Board has not yet acted upon the recommendation
of the joint conference of Governors and Agents of November, 1928,
and it was
VOTED to be the sense of the conference that it is still in
agreement with the recommendations of the Federal Advisory Council,
made at its meeting in September, 1928, relative to the enlargement
of the Open Market Committee, and that the object of those
recommendations might effectively be accomplished by the adoption
of the procedure proposed to the conference of Governors in November,
1928, as amended and approved by that conference and the joint con
ference of Governors and Federal Reserve Agents.
In discussing this subject, the conference farther expressed
the opinion that it might be helpful and advisable to review the
functions of the Open Market Investment Committee, believing the
comnittee can best serve its purpose by continuing a procedure such
as that referred to by the Open Market Committee in its report of
January 7, 1929, a procedure which the conference understood to be
the procedure followed in the past."
AT B O A R D MEETING.
ii
Reproduced from the Unclassified / Declassified Holdings of the National Archives
May 3, 1929.
Dear Mr. Hoxtonj
T our letter of Aprl1 30th has been brought
to the attention of the Federal Beaerve Board, which
not 99 that tha directors of your bank, at their
meeting on April 11th, concurred In the recommenda
tion of the Pall Conference of Governor* and Federal
Reaerve Agents, that tha Open Market Investment
Committee he enlarged by placing thereon the
Governor of each Federal Eeserve Bank not now reg>re~
seated*
Very truly yoare,
tSi*ne<i) s; M, McCLELLAI®
B. M. McClelland,
Aaalatant Secretary.
Mr, f* W, Hoxton, Chairman,
Federal Reaerve Bank,
Bichioond, Virginia *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
V
. l\
!
Federal Reser
ve
Ba n k
April 30, 1929.
Federal Reserve Board,
Washington, D- C
Gentlemen:At the last meeting of our board of
directors, held on April 11th, our board concurred
in the recommendation of the last conference of
governors and Federal reserve agents to the Federal
Reserve Board that the System’s Open Market Invest
ment Committee be enlarged by placing thereon the
governor of each Federal reserve bank not now repre
sented.
Respectfully,
Wm. W. Hoxton,
Chairman of the Board.
5
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL RESERVE BOARD
WASHINGTON
a d d r e s s o f f ic ia l c o r r e s p o n d e n c e t o
TH E FEDERAL RESERVE BOARD
X-6191
December 10, 1928*
SUBJECT:
Action on Conference Recommendations.
Dear Sir:
There are enclosed herewith, for your
information, copies of letters addressed to,the
Secretary of the Governors' Conference and the
Chairman of the Conference of federal Reserve
Agents, with respect to the status before the
Board of the various matters considered by
either or both of the Conferences*
Very truly yours,
falter L. Eddy,
Secretary.
TO ALL GOVERNORS AND FEDERAL RESERVE AGENTS.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
>
COPT
X-6191-a
December 6, 1928.
Dear Governor Harrisons
The Federal Reserve Board has given careful consideration to the
various topics discussed at the recent conference of Governors of the
Federal Beserve Banks, as reported to it in the Secretary1s minutes
which you forwarded to the Board under date of December 1, 1928. The
status here of the various matters, as well as definite actions which
have been taken with respect to some of them, are as fallows:
............ I I run— m
KM
im
im
- .... r.........----------------------------------------- ]..f| ||.
.i..
Topic I-a- Suggested revision of Open ...Market Investment Pr'oceSuW:^^'^^
The Board still has this matter under advisement and consideration
is being given to the recommendation of the Governors, as amended and
adopted by the Joint Conference of Governors and Federal Beserve Agents.
The matter will he made the subject of a communication to all Federal
Beserve Baziks at a later date.
Topic I-b - Discount rates and open market policies.
The Board noted that the Conference appointed a Committee to make
a study and to report to each G-overnor as soon as practicable any
conclusions or recommendations which the Committee deems necessary with
respect to Federal Beserve credit operations, objectives and policies.
It is requested that you arrange to have a copy of the Committee’s
report forwarded to the Board at the time it is submitted to the Governors:.
/
Topic i-c - Loans by federal Beserve Banks to their member banks.
The Board concurs in the recommendation of the Conference, made
after discussion of the several related subjects listed under this general
topic, that it would be advisable to require all reporting member bawks
each week to* report in the same manner now required of banks in some
of the principal cities, the amount of their call and time loans to
brokers and dealers, secured by stocks and bonds. At an early date
appropriate instructions will go forward to all Federal Beserve Bahfcs.
Topic I-c-5 - Minimum maturity on member bank collateral notes.
Upon further consideration of the suggestion contained in the
Board’s letter of September 4, 1928 (X-6124) relative to the establishment'of a minimum maturity on member banks’ collateral notes, the Board
voted not to adopt the suggestion.
Topic I-c-6 - Suggestion that special effort be made to impress
upon member banks the desirability of maintaining adequate portfolios
of eligible paper and accpiainting them with the kinds of paper eligible
for rediscount (Board’s letter of August 24, 1928 - X-6118).
Reproduced from the Unclassified / Declassified Holdings of the National Archives
X-6191-a
Governor Harrison....2
The Board has voted to adopt the recommendation made "by the Confer
ence that it issue a statement in the Federal Reserve bulletin dealing
with the above question and an appropriate statement is in the course of
preparation and will appear in an early issue of the bulletin.
Topic I-d - Report on relations with foreign “banks.
In the minute entry relating to this topic the statement is made
that in addition to your review of the various matters relating to
operations of foreign "banks of issue, you reviewed plans which are now
pending for the stabilization of certain currencies abroad. The minutes
do not indicate whether or not this report was a written one, and members
of the Board have requested that if a written report was not prepared,
copy of which can be forwarded to the Board, you furnish the Board with a
memorandum setting forth in substance your remarks concerning the various
matters, particularly those relating to stabilization plans which are
pending at this time.
Topic IV-a - Proposed revision of functional expense report.
The Board noted the concurrence of the Conference in the views
set forth in the report submitted by Messrs. Smead and Rounds, and has
voted to approve their recommendation that the functional expense report
be continued in its present form.
Topic IV-b--l - Separate financial statements of corporations or
firms closely affiliated with the borrower.
The Board noted the viaw of the Conference that inasmuch as the
relative provisions of Regulation A were amended only recently, it
would be preferable as a practical matter not to suggest another amendment
to the regulation pending further experience*
Topic IV-b-2 - Desirability of amending Sections 7 and 9 of
Regulation A so as to except from the prohibition on the discount of paper
bearing the signature or endorsement of nonmember banks, bills of exchange
payable at sight or on demand of the kind described in Section 7 (Boards
letter X-6145 dated September 26, 1928).
In view of the understanding had at the Joint Conference on Novanber
16th, that the situation giving rise to this question can be handled under
the regulation as it now stands, it was voted that no amendment to the
regulation be made at this time.
Topic IV~b~3 - Right of Federal Reserve Bank to charge items to the
reserve account of banks "at any time when in any particular case such
Federal Reserve Bank deems it necessary to do so.” (Section 5 Regulation J)
The Board has voted to amend Section 5 of Regulation J by eliminating
from paragraph 4 thereof the phrase ’’Provided, however, that any Federal
Reserve Bank may reserve the right in its check-collection circular to
charge such items to the reserve account or clearing account of any such
bank at any time when in any particular case the Federal Reserve Bank
deems it necessary to do so." This amendment will not be made effective,
however, until after consultation with the various Federal Reserve Banks.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
X-6191-a
Governor Harrison....3
Topic IV-c - Deduction of foreign balances in computing member bank
reserves - (Board*s letter X-6125 dated September 4, 1928.)
The views of the Conference on this topic were noted and the Board
voted that the ruling made by it in 1919, to the effect that balances
due from foreign banks may nrt be deducted from balances due to other
banks by a member bank in calculating its reserves, should not be revoked.
Topic IY-d - Suggestion that meetings between the Federal Reserve
Board and the directors of the Federal Reserve Banks be held annually in
Washington. (Board’s letter X-6142 dated September 22, 1S28).
The Board concurs in the position of the Conference that no further
action is necessary on this question.
Topic IV-e ~ Report of Leased Wire Committee.
The summary appearing in the Secretary's minutes relating to this
report was noted and the Board will request the Chairman of the Committee
to furnish it with a copy of the report for its records.
Topic IV-g - Report of Pension Committee.
The action of the Conference in voting to accept this report was
noted and the Board requests that it be furnished at this time with a
complete copy of the report for its files and, later, with a copy of the
new bill which the Committee plans to offer.
Topic IV-h
acceptances.
The action
instructions to
a complete copy
- Report of Subcommittee of General Committee on bankerst
of the Conference in approving this report and its
the Committee were noted by the Board, which requests that
of this report also be furnished to it.
Topic Ill-b - Future policy with respect to Gold certificate circula
tion.
The Board concurs in the view of the Conference that no change
should be made in the present policy under which gold certificate circula
tion has been maintained at about one billion dollars.
Topic V-b - Collateral for war loan deposits.
The Board noted with approval the recommendation to be made by the
Conference to the Secretary of the Treasury that it would be advisable
to make only government securities eligible as collateral for war loan
deposits.
Canadian Currency.
For the purpose of making a further study and report on this question
the Board has appointed a Committee consisting of Managing Director
Schneckenburger of the Buffalo Branch, Managing Director Cation of the
Detroit Branch, Managing Director Shaw of the Seattle Branch and Deputy
Governor Moore of the Federal Reserve Bank of Minneapolis. The Board
later will make this matter the subject of special communications to the
Governors of those Federal Reserve Banks haying representatives on the
Committee*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-6191-a
Governor Harrison....4
Granting of fiduciary powers to national banks (Memo X-6172 dated low
ember 3, 1928.)
The Board noted that the Conference was favorably inclined to the
suggestions contained in the memorandum "but is not prepared, however,
to immediately take definite action with respect thereto. The Board
will advise all Federal Reserve Banks in due course of whatever action is
taken.
Waiver of six months* notice by state "banks voluntarily withdrawing
from tho Federal Reserve System.
In accordance with the recommendation of the Conference the Board
voted to suggest an amendment, at the proper time, which would give it the
option of waiving the six months' notice required of state member hanks
voluntarily withdrawing from the system. If the amendment is passed
the reserve banks will be given an opportunity to express to the Board
in each individual case their views with respcct to the wisdom of a
waiver of notice.
The several other matters covered in the Secretary *;S report do not
appear to require any action by the Federal Reserve Board.
Copy of this letter will be forwarded to the Governor of each of
the Federal Reserve Banks for his information.
Very truly yours,
R. A. Young,
Governor.
Mr, George L« Harrison, Secretary,
Governors' Conference,
Care Federal Reserve Bank,
New York, N. Y.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
copy
X-6191-b
December 8, 1928.
Bear Mr. Martin:
The Federal Reserve Board has considered the various topics discussed
at the recent Conference of Federal Reserve Agents, as reported in the
Secretary's minutes forwarded to the Board with your letter of November
28, 1928.
The status hete or action taken on the several topics considered
jointly by the Federal Reserve Agents and the Governors are reported in
a letter dated December 6th to the Secretary of the Governors' Conference,
copy of which is enclosed herewith.. The other matters discussed by the
Federal Reserve Agents were dealt with by the Board as follows:
Topic I-a - Suggestion that special effort be made to impress upon
member banks the desirability of maintaining adequate portfolios of
eligible paper and acquainting them with the kinds of T3aper eligible for
rediscount. (Board's letter X-6118, dated August 24, 1928.)
In addition to the action of the Board reported in the attached
letter to the Secretary of the Governors' Conference in approving the
suggestion that a statement on this question be published in the Federal
Reserve bulletin, the Board will confer with the Comptroller of the Currency,
as recommended by the Federal Reserve Agents, with a view to having his
examiners cooperate in the matter of acquainting officers of national
banks with eligibility requirements.
Topic I-f - Classification of member banks by electoral groups.
The Board noted the view of the Conference that the classification
and grouping must be determined by the needs of each individual district.
The replies to.the Board's letter of October 12, 1928, X-6159, requesting
certain information and suggestions are now being compiled and will be
ready for submission to the Board shortly after the first of the year.
At that time the Board will again communicate with the Chairman regarding
this subject.
Topic i-k - Examination of state member banks (Memo. X-6173 dated
October 12, 1928.)
The Board has voted to abolish its Department of State Bank Examina
tions, effective Febraury 1, 1929. In due course a special communication
with reference to this action will be addressed to each Federal Reserve
Agent.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-6191-b
Mr. Wm. McC. Martin...2.
Topic I-k - Applications for reduction in reserve requirements.
(Memo X-6176, dated October 27, 1928)
The Board has noted the recommendation of the Federal Reserve Agents'
Conference on this topic but is not prepared to take immediate action
relative thereto.
Topic II-c - Report of Bank and Public Relations Committee.
The action of the Conference in accepting this report has been noted
by the Board but no action relative to it will be taken at this tin®.
Topic Il-d - Report of Committee on National Summary of Business
Conditions.
The recommendation contained in this report and adopted by the
Conference that efforts be made to standardize the length of the summary
at about 700 words has been noted and the matter has been referred to
the Director of the Board's Division of Research and Statistics.
Topic Ill-e - When such a thing; as a run occurs, how should officers
of Reserve Banks and Branches answer questions?
The Board has noted with approval the view of the Conference with
respect to the position which should be taken by Federal Reserve Banks
and Branches in replying to inquiries regarding bank disturbances.
Topic Ill-g - Unretired stock in Federal Reserve Banks held by banks
in process of liquidation.
In its last annual report the Board recommended an amendment to the
Act permitting the cancellation of Federal Reserve Bank stock held by
member banks which have gone out of business without a receiver or
liquidating agent having been appointed therefor, and lias now requested
its Counsel to prepare a specific form of amendment which will be con
sidered by the Board in due course.
Topic Ill-n - Auditing Departments.
The Board approved the action of the Conference in voting that a
meeting of the General Auditors of the twelve Federal Reserve Banks and
a representative of the .Federal Reserve Board be called in the near future
for the purpose of discussing problems incident to their work. Mr. Smead
will represent the Board at this Conference and it is requested that you
communicate with him regarding the time at which it should be held.
The other matters reported in the Secretary's minutes do not require
action by the Board.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
X-6191-b
Hr. Wm, McC. Martin...3
A copy of this letter and. enclosure is being forwarded, to the
Chairman of each Federal Reserve Bank for his information.
Very truly yours,
R. A. Young,
Governor.
Mr. Wm. McC. Martin, Chairman,
Federal Reserve Agents* Conference,
care Federal Reserve Bank,
St. Louis, Missouri.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXCERPT FROM MIIUTES OF THE MEETING OF THE BOARD HELD ON DECEMBER 3, 1938.
The Governor then referred to the suggested revision of the Open
Market Investment procedure of the Federal Reserve System and reviewed the
past consideration given to the subject.
He submitted the suggestion to
the Governors1 Conference, as amended and adopted by the Joint Conference
of Governors and Federal Reserve Agents on November 16th, as follows:
xx-*xx x x x
* * * * * * A ^©tailed discussion ensued at the conclusion
of which it was the consensus of opinion that it might be
advisable for the Board at the present time merely to amend
the resolutions adopted on March 22, 1923, establishing the
Open Market Investment Committee, so as to provide that the
Committee should Hconsist of twelve representatives from the
Reserve banks” instead of five as at present, but formal
action was deferred.
............................
...........-
■—
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131
Ofrice Correspoiidence
To___liosfeor* of the Board (individually)
From T *
z,7 -1 -:L
FEDERAL RESERVE
_____________________
B
0A
R
D
Date *******
%u**
Subject:-------------- --------------____________ ______ -_______ L_____
a ro
o f tfco
2— -8495
tfcore 1 * <|t*»fco4 t o t a r Ib r your IxUbywotlon tho *«£ fo *to d r o iio lo *
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I
19?!
Office Correspc
Tr>
AT 1 members of the Board
(Individm&lly)
FEDERAL RESERVE
BOARD
Date.
Subject:.
From
W m l*
* #®pr #f 1&* imgg#**** rrrt«t<m
tit*
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Reproduced from the Unclassified / Declassified Holdings of the National Archives
GOVERNORS
(1) That the Open Market Investment OCEsalttee, which is now composed of
five ^roveraors, be enlarged 00 as to include the other seven Governors, s*ikln& a
Canaaittee of twelve, provided that in case of the Inability of any Governor to
attend, an alternate shall be appointed by the Directors of his bank*
(2) That the Cocsalttee of twelve shall select fro® its jasrabership an Exe
cutive Comalttee to consist of five marfcere, which shall carry into effect the
policies from tine to time determined by the f U U CoBB<tee and approved by the
Federal Heserre Board*
(3) That It shall be the function of the Open Martest Investment Ocrauiittee
to consider, prepare and recommend plans with regard to the purchase or sale of
securities In the open oarfcet for account of the Federal Reserve aystem or parti
cipating Federal reserve banks.
(4) That the time, manner, character and v o Iu k © of such purchases and sales
shall be governed primarily with the view of accomodating comnerce ami business
and with regard to their bearing upon the general credit situation*
(5) That the meetings of the Open Market Investment Cocnittee, which shall
be called cither by the Board or by the Executive Ccsaalttee of the Open Market
Investment CoEsaittee shall be held In Washington or at such other place aa may be
arranged by the Ghalzman of the Executive CoaDlttee of the Open Iv&rket Investment
Ooramlttae and the Governor of the Federal Reserve Board*
(S) That the procedure at aeetl&ge of the Open Market Investment Co*-*alttee
shall be in the future as In the past, to wits that the Committee shall consider
and act upon the recosmendations of the Executive Cor.sd.ttee and shall then saeet
with the Federal Reserve Board to discuss those recowiendations with raenfcers of
the Board before action by the Board*
Nov&aber 14, 1928
>§ <
(1) Tfcat tba Qpm iiarint lnvm%a&a% Canlttee, m at preheat coa«titut«d#
1
^
i
(4) f&at * m m in** %o b* known as tit* opan uarfcst Policy ®mtexwsm ba
H4p% q)i vltta a ragursaantativvi £fqsi ttik of tbe tvtlfe Ft4u%X r t a t m h*»v«) the .•*
tad/fsfr an alternate to be A— IgnatWi sraaiaTly by tke Board of Diyil^ni ^ the ^ fyfft
(3) The Open Norteet PoIUy OonfereBoa to b# under tLe
Of the
6N6VWBfl8? <ssf the jNNtoBSl I t t u r co BmlrS. #bm$ to meat with tbs FederaJ. PiMOYTi Board
»i strife flUMi a* why )NI arom^ad by or With the Tadieral Beserre Board*
(4) fbnt It A laIX be tbs Itanotion of
Open Wariest Palloy Oeoferense to
#0Bsi&iKP'f |8?epSJP* anSl roeos**nd yl.fM# with rtguA to tfo# purttha&$ or a*,!* of Re
curitiee in tbs open mjdcot for aooount of the Federal Reserve *>ysiett and partioipatiag fedsaml raaerre benfca*
(5) That tine ti»et Bttmner, ©haraoter and volume of suefc purohnses and sale*
•hall be ftorenad primarily with the view
aseemddaliag aaonerae and business
with rtgixi to their bee?lag hjk <i the usntml oredit aituatlon*
f®J Tbat tor tHa puxpass odT exseutlnc 1*1*!% purobanes synfl galws of vMurltitt
f4ap S n t e aseennt aa any ba aiarand by ffsflaml i— m mu Wwtr« .mmI tbs Tadsral
nsssrri Beard there *4^*11 ba #$Ml&tixts& a souaittee to ba lenosn as 3ke Open fcJarkat WmmUm Oenaiittes.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
EXCERPT FROM MINUTES OF METING ON NOVEMBER 15, 1928
**The Governor then presented the following report of action tak
en by the Conference of Governors, with respect to the suggested revision of the
Open Market Investment procedure of the Federal Reserve System:
(Insert)
A detailed discussion then ensued during which certain members
of the Board called attention to the fact that the recommendation of
the Governors* Conference, if adopted, would result merely in an en
largement of the present Open Market Investment Committee without
any practical change in the existing procedure,. . . .w
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m N o . 131
Urhce Lorrespont.^.ce
T o _______ All members of th e Board___
(Individually)
F ro m ______ jar- iasaiolla&a,_______-________
FEDERAL RESERVE
E0APD
rw
Subject:________________________
«.».
33*hi ~
'----------------------------------------------------------
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Reproduced from the Unclassified I Declassified Holdings of the National Archives
Office Correspo**c~i.ce
T0
From
____
Ctorrmmor Young
_
Mr* McClelland
FEDERAL RESERVE
BOARD
Subject:.
2— 8495
At tha m eeting o f tho Board today i t was Totad to ba th a sanaa
o f tha Board th a t I t would bo a d T isa b la to r aaoh M o r a l lo ao rv o Bank
to bo roproaoixtod a t oonitoronoos h old fb r tho pturpo«e o f d o to n d n in g
op** markot iavootaon t p o lio y and you woro au th o r! sad to aubrait to
tho oonf^ranoM o f Oovam ora and fb d a ra l Eosorvo Agoota tho o u tlln o
o f tho ouggoatod r a r ia io a o f tho opan aark at ia y © «tn »n t proooduro o f
tho t y s t « s whiofa was oonaldarod a t tho mooting*
fw a n t y flT o mimeograph oopios o f tho o u tlin e o f tho suggested
J
‘ ....
........... ...
*
~
Reproduced from the Unclassified / Declassified Holdings of the National Archives
w
X-6175
/// >oj k %
SUGGESTED REVISION 0F OPEN MARKET INVESTMENT
PROCEDURE.
(1) That the Open Market Investment Committee, as at present
constituted, be discontinued.
(2) That a Committee to be known as The Open Market Policy
Conference be set up with a representative from each of the twelve
Federal reserve banks, the representative to be designated by the
Board of Directors of the bank.
(3) The Open Market Policy Conference to be under the chair
manship of the Governor of the Federal Reserve Board and to meet
with the Federal Reserve Board at such times as may be arranged by
or with the Federal Reserve Board.
(4) That it shall be the function of The Open Market Policy
Conference to consider, prepare and recommend plans with regard
to the purchase or sale of securities in the open market for
account of the Federal Reserve System and participating Federal
reserve banks.
(5) That the time, manner, character and volume of such pur
chases and sales shall be governed primarily with the view of ac
commodating commerce and business and with regard to their bearing
upon the general credit situation.
(6) That for the purpose of exocuting such purchases
sales of securities for System account as may be approved
Federal reserve 'banks and the Federal Reserve Board there
be constituted a committee to be known as The Open Market
Committee.
November 10, 1928.
and
by
shall
Executive
Reproduced from the Unclassified I Declassified Holdings of the National Archives
EXCERPT FECM MINUTES OF MEET IE'G 07 FEDERAL RESERVE
BOARD HELD OH HOV^BER 10, 1928.
"fhe Governor then presented the report submitted at the meeting on
October 30th, by the special committee appointed at the meeting on October
2nd, setting forth an outline of a suggested revision of the open market in
vestment procedure of the Federal Reserve System.
A detailed discussion ensued during which the outline
of a new procedure set forth in the Committee report was
amended in several respects*
Mr* James then moved that it be the sense of the Federal
Reserve Board that it would be advisable for each Federal
Reserve Bank to be represented at conferences held for the
purpose of determining open market investment policy*
Mr* James* motion being put by the Ghair was carried.
Mr* Platt stated that he voted in favor of the motion
with the understanding that under the suggested procedure
it would not be necessary for each Federal Reserve bank to
have an individual representative at open market conferences,
but that one Federal Reserve bank coaid be represented, if
it desired, by the designated representative of another bank.
Upon motion, the Governor was then authorized to refer
to the forthcoming Conference of Governors and Federal Reserve
Agents the revised procedure recommended by the Committee, with
the amendments made at this meeting , as follows: ******* »
Reproduced from the Unclassified I Declassified Holdings of the National Archives
5 3 3 . -C
EXCERPT FROM MINUTES OF October 30, 1928.
nA general discussion then ensued with respect to the Committee
report, submitted at the meeting on October 26th, of a suggested revision of the
Open Market Investment procedure of the Federal Reserve System, but the matter
was put over without action until the meeting of the Board on Thursday,w
i
Reproduced from the Unclassified I Declassified Holdings of the National Archives
CP
3 3 5 . - ^
y
(1)
That ^he Open Maaflcet Investment Cosraittee, as
at present constituted, he discontinued*
(2) That a Coamittee to he known as fhe Open Hatfcet
/
Policy Conference he set up with a representative from oach of
the twelve Federal reserve hanks, the representative to he desig
nated, hy the Board of directors of the hank.
(3)
She Open Haricot Policy Conference to he under the
chairmanship of the Governor of the Federal Reserve Board and to
f t f -si't
T
aoep as may he arranged hy or with the
mcet$t such times
Federal Reserve Board.
(4)
That it shall he the fanction of fhe Open Market
Policy Conference to consider* prepare and recommend plans with
i
regard to the purchase or sale of securities in the open market
for acoount of the Federal Beserve System and participating Fed
eral reserve banks.
(5)
That purchases and sales of securities for System
acoount in the open market shall consist primarily of hankers
acceptances.
(6)
fhat the time* manner and volume of such purchases
and sales shall he governed primarily with the view of acooamodating commerce and business and with regard to their hearing upon
NO
the general credit situation*
(?)
'
Shat for the purpose of executing such purchases
and sales of securities for System account as may he approved hy
Federal reserve hanks and the Federal Reserve Board there shall he
constituted a committee to he known as The Open Market Executive
Coemittee.
Qfor FRASER
Digitized
q _
2,4'
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
To_______ Messrs Miller and Platt___
From
Mr. McClelland.
_____
FEDERAL RESERVE
S2 2, "2,
Da it__ 0otober~l2f 1928*
Subject
_____
The Board at its meeting yesterday considered the following
recommendation made by the Federal Advisory Council at its meeting
on September 28:
’’The Federal Advisory Council without any intention
of criticizing the present arrangements but in order that
j
all governors of the Federal Reserve banks may participate \
in the discussions leading up to actions of the Open
>
Market Committee suggests to the Federal Reserve Board to
consider the advisability of having the membership of the
Open Market Committee consist of all the governors of the
Federal Reserve banks with an executive committee composed ^
of five members with full power to act.”
In this connection attention was called to the fact that at
the meeting of the Board on August 16 it was voted that at an early
meeting, at which the full membership of the Board is present,
consideration be given to the advisability of having all Federal
reserve banks represented on the Open Market Investment Committee
and at that time the suggestion was also made that all meetings of
the Committee be conducted under the supervision of the Board with
the Governor of the Board presiding as Chairman of the meeting.
Daring the discussion yesterday it was brought out that other
phases of the Open Market procedure of the system may be in need
of revision and consequently you were appointed a special committee
to draft and submit to the Board a proposed revision of that
procedure.
^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
3 3 3.-C*
B£C&Q£SHI2A3I01f:
"
f - z v -iftS
The Jedexal A dvisory C ouncil w lthqtel any in te n tio n
o f c r it ic is in g the p res en t arrangem ent* "bat l a o rd e r th a t a l l governors
o f tha fe d e ra l E eserre hanks nay p a rtic ip a te in the discussions le a d in g
up to a c tlo a A o f the Open M arket C o o o lttee soggeete te th e fe d e ra l
Beserve Board to co nsider th e a d v is a b ility
h a rin g th e na&bership o f
the Optsa M arket Oossaittee co n sis t o f a l l the governors o f the fe d e ra l
B aserre hwrirs w ith an execu tive committee composed o f fiv e aem ber* w ith
................n
f a l l power to act«
;
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/?
R E C O M M E N D A T I O N S OF T H E FEDERi
F E D E R A L RESER
^
{ COUNCII
September 28, 1928.
TOPIC No. 1. Business conditions in the respeStiraJfederal Reserve,,E>jsfcriet«
R E C O M M E N D A T I O N : Members of the Council have been polled and report
that business is generally good and on a sound basis. The aggregate volume is greater
than the most optimistic forecasts of the earlier part of the year prophesied.
TOPIC No. 2. Effect of prevailing rediscount rates on business.
R E C O M M E N D A T I O N : The prevailingrediscount rates have not retarded business
since itsdemands have been taken care of satisfactorily by the banks in this time of high
money rates and generally have been favored by a preferential discount rate. The
Council believes the banks are disposed to continue this practice of favoring commercial
borrowers as long as possible. It should also be noted that some financing of a more or
less permanent type has been delayed by the present high money market.
TOPIC No. 3. Open Market Committee.
RE CO M M E N D A T I O N : The Federal Advisory Council without any intention of
criticizingthe present arrangements but in order that allgovernors of the Federal Reserve
banks may participate in the discussions leading up to actions of the Open Market
Committee suggests to the Federal Reserve Board to consider the advisability of having
the membership ofthe Open Market Committee consist ofallthe governors ofthe Federal
Reserve banks with an executive committee composed of five members wit,h full power
to act.
TOPIC No. 4. Suggestion that the Board revoke its ruling of 1919 to the effect
that balances due from foreign banks may not be deducted from balances due to other
banks by a member bank in calculating its reserves.
R E C O M M E N D A T I O N : The Council understands fully the need of the ruling of
1919 at the time it was made, but it urges strongly that now under altered conditions
deposits in foreign banks immediately available be made a deductible item in figuring
the required reserves of member banks.
TOPIC No. 5. Suggestion that the Board’s Regulations be amended so as to fix
seven days as the minimum limitation on advances by Federal Reserve banks to member
banks on their promissory notes secured by eligible paper or Government securities.
R E C O M M E N D A T I O N : The' Federal Advisory Council is opposed to the above
amendment of the Board’s Regulations. It seems to the Council it will tend to increase
rather than diminish the funds available for speculation and to increase the sale and
purchase of Federal Reserve funds. It is obvious that, if a member bank must borrow
for a period of seven days even though itneeds the money for a shorter period only, such
a bank will be compelled either to place its idle funds temporarily at the disposal of the
call money market or to sell such Federal funds to some other member bank.
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F o r m No. 131.
*
Urrice Lorrespo .uji ,e
FEDERAL RESERVE
bo ard
^
a te
3 j 3 ,- Z
_____________
T o __________________________________________
Subject:_______________ /
^___________ _
From___________ _____________________________
_____________ ____ __________________ ______
At the meeting of the Board on August 16th it was voted that at
an early meeting* at which the fa ll membership of the Board is present,
consideration be given to the advisability of having a ll Federal Reserve
banks represented on the Open Market Investment Committee*
Mr. M iller gave notice that when this matter comes up for considera
tion, he w ill move that a ll meetings of the Committee be conducted under
the supervision of the Federal Reserve Board, with the uovernor of the Board
presiding as Chairman of the meeting*
@FedFRASER