The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/■N / •/ •«
U m c e
/a
y" t
^E nyn No. lS & s ^
y/
FEDERAL RESERVE
C o r r e s p o n d e n c e
T o _ _ _____ GovernQcZMeyer_________ -
B0ARD
Date
1 V
Subject:__________ Demand for Currency
F r o m -----------
For CIRCULATION:......... ....
^
Mr. KsmliniV-^--. xiemand for Currency
Mr. James _. _Z .y Z .........
-r j ^ ;—
!Mr. Miller..
£ M. /
*■
During the week ending August 24 demand for currency in the
iMr. Pole
---rfxilL ted States declined by $07 non ono more than usual for this
i Mr. Harrison.........V . .
JVJU» JUU
"~V yf\y€eriod.
[Mr. McClellandyZ.uf-*..
The decline was general in all Federal reserve districts
excepting the Richmond district where banking disturbances in
kh*..........
Baltimore resulted in heavy withdrawals of currency on the ISth,
Please note-initial
and return to GOVERiviM^*1* and 20th*
A return flow in that city of substantial pro
portions has now set in.
A part of the greater-than-seasonal return flow of currency
throughout the country during the past week represented that cur
rency withheld from the banks on the 15 th, loth, and ljth to sup
plant the use of checks for middle of month transactions*
New Rational Bank Notes
Approximately $12,000,000 of new national bank notes were is
sued during the week of August 24, of which about $7,5^0,000 went
to banks in the San Francisco district, about $1,500,000 to banks
in the Philadelphia district, and about $1 ,000,000 to banks in the
New York district,
Total issues by Federal reserve districts since the new law
went into effect and up to the close of business on August 24 were
as follows:
t
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Federal reserve
district
Boston
Amount
$
603,000
New York
6,849,000
Philadelphia
2 ,720,000
Cleveland
2,080,000
Richmond
1 ,016,000
Atlanta
840,000
Chicago
2,780,000
St* Louis
591,000
Minneapolis
562,000
Kansas City
742,000
Dallas
470,000
San Francisco
Total
14 ,790,000
$34,042,000
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m NCS 131
Office Correspondence
To__
Governor Meyer
From
Mr . Parry
FEDERAL RESERVE
BOARD
Date
August 24, 1932
Subject:.
The attached table shows the course of blink suspensions and socalled
"hoarding" on a weekly basis from the beginning of 1931 to date*
The tabula
tion was made at the request of the President, transmitted through Mr* Amos
Taylor of the Department of Commerce, who is working with the President on
his speech for the forthcoming conference.
The table presents for the most part merely a retrospective record of
the figures which have been going to the President currently.
A copy of the memorandum to Mr. Taylor is also attached.
For CIRCULATION:
Please note-initial
and return to GOVERNOR*
AUG 24 1932
CFFI
Fbu
OF THE GOVERNOR
l e .t ;,-:r v e b o a r d
Reproduced from the Unclassified / Declassified Holdings of the National Archives
August 24, 1932
Mr. Taylor
Mr. Parry
Attached is the table which you requested this morning for use in con
nection with the Presidents speech.
I should be glad to have you take up wifh me by phone any questions
which may arise with regard to the use of this table and would suggest that
such figures as you finally decide to use should be submitted to us for
checking.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
(Saturday)*
•6 ~
5
10
17
24
31
Estimated change in demand for
currency—adjusted for seasonal
variation*
(In millions of dollars)
Deposits
Change Cumulative
(In millions from preceding
Number
change from w
Deo.
27, 1930
of dollars) — week
_g -----------------51------♦ 53
29
63
17
♦ 12
♦ 66
44
13
- 22
♦ 43
36
• 21
♦ 22
10
37
- 8
27
♦ 14
Bank suspensions
during week
7
14
21
28
22
20
20
15
16
6
7
8
♦
♦
•
10
2
1
3
♦
♦
♦
♦
24
26
26
22
Mar. 7
14
21
28
16
29
19
16
3
11
11
6
♦
♦
♦
12
9
10
3
♦
♦
♦
♦
10
19
29
32
Apr< 4
11
18
26
6
16
17
17
6
9
17
6
♦
♦
♦
♦
40
9
10
16
♦ 72
♦ 81
♦ 91
>107
2
9
16
23
30
13
28
19
21
19
7
15
15
4
8
♦
♦
♦
-
16
32
8
20
14
♦122
♦164
♦146
♦166
♦152
6
13
20
27
28
62
39
32
18
84
61
23
♦
♦
♦
-
7
69
56
2
♦169
♦228
♦283
♦281
4
11
18
25
20
8
21
28
9
5
16
7
♦
♦
♦
♦
26
3
23
20
♦307
♦310
♦333
♦363
1
8
15
22
29
28
36
28
47
35
9
33
14
100
23
♦
♦
♦
♦
♦
10
33
28
64
45
♦363
♦396
♦424
♦488
♦633
Sept,, 5
12
19
26
54
42
63
99
60
16
66
61
♦
♦
♦
♦
30
16
17
81
♦563
♦678
♦696
♦676
Feb.
May
Aug,
*
Based on weekly averages of daily figures
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2
Week ending
(Saturday)--
Estimated change In demand for
currency—adjusted for seasonal
- variation *
(In millions of dollars)
Deposits
Change
Cumulative
(In millions from preceding
change from w
week
of dollars)
Deo. 27, 1930
------- " lif '•
♦ 8$i
+?59
146 *
♦148
♦907
98
♦ 54
♦961
78
♦ 57
♦1,018
72
- 12
♦1,006
Bank suspensions
during weekHumber
1931—Cot. 3
10
17
24
31
143
125
109
70
Wov. 7
14
21
28
62
31
34
36
%34
8
8
12
♦
-
13
7
24
33
♦1,019
♦1,012
♦988
♦955
Deo. 6
12
19
26
36
47
128
82
24
14
138
75
♦
*
♦
10
16
20
40
♦966
♦960
♦970
♦1,010
1932—Jan. 2
9
16
23
30
99
73
95
78
62
99
26
61
41
26
♦ 26
♦128
♦ 79
♦ 26
♦ 12
♦1,036
♦1,164
♦1,243
♦1,269
♦1,281
Peb. 6
13
20
27
45
28
37
9
29
9
26
2
♦
•
-
15
15
17
34
♦1,296
♦1,281
♦1,264
♦1,230
Mar. 5
12
19
26
13
13
12
6
3
2
6
3
•
*
-
29
17
17
32
♦1,201
♦1,184
♦1,167
♦1,135
Apr. 2
9
16
23
30
17
16
14
16
19
4
4
7
6
14
♦
-
51
6
23
11
8
♦1,084
♦1,079
♦1,066
♦1,067
♦1,069
May 7
14
21
28
20
18
23
18
5
12
9
7
♦
♦
♦
-
26
3
14
27
♦1,085
♦1,088
♦1,102
♦1,076
June 4
11
18
26
17
20
29
55
8
28
37
47
0
♦ 23
♦ 31
♦ 81
♦1,075
♦1,098
♦1,129
♦1,210
*
.
Based on weekly averages of daily figures.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
a.
f
.f
s.
tieiinated change In demand for
ourrenoy—adjusted for seasonal
variation*
(In millions of dollars)
Deposits
Change
Cumulative
(In millions from preceding change from week.
of dollars)
Deo. 27, 1930 ending
-------- —$5—
------ *17313-------♦163
10
♦ 19
♦1,332
24*
♦ 21
♦1,363
13
♦ 38
♦1,391
6
♦1,362
- 29
Bank suspensions
during week
Week ending
(Saturday)—
Number
1932—July 2
9
16
23
30
It
Aug, 6
13
30
20
17
22
~nr— t ~fi
>■ / /
^t Z
i$w
§
*
.-•
26
36
31
21
8
9
5
Based on weekly averages of daily figures
2
- 26
- 10
m
♦1,360
♦1,335
♦1,326
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/Z-
I 'tyyii jsro. 1S1«
Office Correspondence
To_
Metfp/
Governor
FEDERAL RESERVE
BOARD
Subject:^
From____Mr* Parry_______________
^
VV,
X n
Zy
The attached memorandum on currency, prepared "by Miss Joy
f C.i^CiK T
before she went on vacation, deals with several matters:
Mr. Hamlin_
Mr. James
Mr. Magee --------Mr. Miller . . I z f - - / ---------Mr. Pole........... ................Mi1.Ila11!HUITT.--Mr. Morrill —
Mr. McClelland/-VC.—
tK U a o ti
Mr.......................—"
Please note- initial
l
r
ao4 return to GOVERNOR.
Decline in hoarding
Gold coin
Return of paper currency from abroad
Vault cash held by commercial banks
AUG 24 1932
r- ■:
T THE GOVERNOR
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 1S1
ft .
Umce vorresponucnce
To
_____ Governor Meyer
From______ Miss
FEDERAL REi
________
Joy_______________
B0ARD
Subject:_i
Currency
_______
2— 8495
DECLINE IN HOABDING
Currency Is still coming out of hiding.
From the peak of demand
on July 20 to August 20 the return was at least $81,000,000, of which
$33,000,000 came back in the two weeks August 8 to August 20.
We are
convinced that still more money was in reality withdrawn from strong
boxes although the movement was obscured by the increased use of cash
instead of checks for business and personal payments#
The daily record of changes in demand for currency in circulation
since August/*is given below, and the course of the return flow since
July 20, when the peak of hoarding was reached, is shown on the accom
panying chart.
Daily Changes in Volume of Money in Circulation
Adjusted for Seasonal Variations
(In millions of dollars)
Change from
preceding day
Date
Aug.
8
- 13
9
+
2
- 1
- 13*
10
11
12
- 15
- 2
13
* Revised,
Change from
preceding day
D^te
Aug. 15
16
+ 1
+ 12*
17
18
19
+
<—
5
-
3*
20
22
0
- 10
s
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2.
The only Important bank suspension during the period was in Balti
more on August 12.
The run on the Union Trust of Baltimore beginning
on August 18 caused considerable hoarding there— at least $2,500,000 on
the 18th, $ 1 6 ,000,000 on the 1 9 th, and $3 ,000,000 on the 20 th.
i.
Around the 1st and the 1 5 th of August the chart shows an increase
in the volume of circulation, after allowance for ordinary seasonal
movements.
This is apparently the result of greater use of cash in
stead of checks for regular month-end and mid-month payrolls and other
payments.
On both of these occasions the increase in circulation was
general in all districts and came at a time when there were no bank sus
pensions of consequence and when other industrial and financial develop
ments were favorable to de-hoarding.
Our records are still too brief,
however, to provide the basis for estimates of the amount by which ex
pansion in demand for currency has occurred at these times in the month.
GOLD COIN
Gold coin is drifting slowing back to the reserve banks.
In the
week ending August 1 7 , $1,800,000 net was returned, of which $1,500,000
came back in New York, where withdrawals had previously been largest.
Here is the weekly record since June 1.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3.
Weekly Changes in Demand for Gold Coin
(In millions of dollars)
Week ending
Wednesday
June
Change from
preceding Wednesday
1
+
+
+
+
+
8
15
22
29
July
Aug.
6
13
20
27
+
+
+
+
3
10
17
-
Cumulative change
from May 2*5
7.9"
8 .2
3.3
2 .1
3.1
1 .2
1 .6
1.0
0*3
0 .3
1-9
1.8
+ 7.9
+
+ 19.4
+ 2 1 .5
+ 24,6
+
+
+
+
2 5 .8
2 7 .4
28*4
28.7
+ 28.4
+ 2 6 .5
+ 24.7
RETURN OF AMERICAN PAPER CURRENCY FROM ABROAD
The rate of return of American paper money from Europe has definitely
slowed up in the past month and a small amount of our currency has been
shipped to Europe since it became apparent that the drain of gold had
ended.
European confidence in the dollar has apparently returned.
In
July $6,700,000 was shipped from European countries to New York banks
($4,500,000 is usual in July) in contrast with shipments of $11,000,000
in May and $16,000,000 in June.
It may be, of course, that the European
supply of our bills has simply been exhausted by the large shipments in
earlier months— $6^,000,000 net from last October to the end of June—
but I doubt it
Reproduced from the Unclassified / Declassified Holdings of the National Archives
4VAULT CASH HELD BY COMMERCIAL BANKS
The commercial hanks of the country have reduced their holdings of
vault cash considerably in the past year.
At the end of June, member
banks held about $ 6 5 >000,000 less cash than a year ago, when allowance
is made for the fact that the call report came on Thursday this year,
when holdings are near their highest point for the week, and on Tuesday
in 1931«
The call report shows a decline of $41,000,000, with no allow
ance for differences in days of the call, distributed among classes of
banks as shown in the table*
Vault Cash Held by Member Banks
(June 30 call reports*
All member banks
Central reserve city banks
New York
Chicago
i23i
47g
94
In millions of dollars)
1231
1230
519
4g4
71
68
Change from
193019311932
1232
-
4l
-
6
58
- 2
10
+ 25
+ 26
- 6
+ 32
+ 23
42
17
Other reserve city banks
131
151
136
- 20
-
Country banks
253
297
280
- 44
- 27
5
Note:- These call reports were» made on different days of the week;
I93 O— Monday; 1931— -Tuesday; 1932- •Thursday,, This makes a very considerable difference in the banks* cash holdings.
If these figures
were all adjusted to a Wednesday basis, the changes for holdings of all
member banks would be: 1 9 3 1 to 19 3 2 — $6 6 ,000 ,000 ; 1930 to 19 3 2 —
$33 ,000 ,000 .
Except for central reserve city banks in Chicago all classes of
member banks held less cash in the aggregate than in 1931*
The suspen-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
5.
sion of a large number of banks contributed to this decline, of course«
Chicago banks, still in the midst of'the near-panic of June, had three
times as orach cash as in 1 9 3 1 (and even in 1 9 3 1 the banking situation
was strained) and four times as much as in 1930 * when the banking situ
ation was cooperatively peaceful*
It is to be noted that since the end
of June almost all of the extra cash withdrawn by reporting member banks
in Chicago has come back to the Federal reserve bank, and on August 10,
their holdings were only slightly larger than before the runs began in
June
CUMULATIVE CHANGES IN DEMAND FOR CURRENCY SINCE JULY 20, 1932
Adjusted for Seasonal Variations
In millions
20 21 22 23 25 26 27 28 29 30 I
July
2
3 4
5 6
8 9
10 II
In millions
12 13 15 16 17 |6 19 20 22 23 2h- 25 26 27 29 30 31
August
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FEDERAL RESERVE BOARD
\
Date: August 23, 1932
MEMORANDUM
1
To:
Governor Meyer
From: Mr. Gardner
Subject: Effect of the Depreciation
of Sterling Exchange on British
Prices.
British prices are now lower than when England suspended the gold
standard on September 21, 1931.
The suspension allowed sterling to go
to a discount on the exchanges, and this in turn tended to raise sterling
prices of international goods on the British market relative to the prices
of these goods in gold standard countries.
Many factors, however —
ticularly tariffs, quotas, and exchange restrictions —
par
interfered with
this tendency; and since "gold1* prices continued to fall, even the relative
rise meant no permanent heightening of the British price structure.
June —
the latest date for which detailed figures are available —
Through
prices
in England rose steadily with relation to prices in the United States; yet
they were lower in June than they were at the time of the gold suspension,
for they had risen on a falling base.
As for the prices of strictly British —
i.e., domestic —
no considerable stimulus through trade expansion
commodities,
or credit expansion was
set in motion by England1s departure from gold, and in the course of this
memorandum they have been touched upon but lightly.
It is the effects upon
the relative prices of international commodities that are especially sub
jected to examination.
Effect on prices of goods traded internationally. - The suspension of
the gold standard was followed by a depreciation of sterling relative to
gold standard currencies.
The same factors which forced the gold suspension
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2.
forced the depreciation.
The discount on sterling in turn compelled those
who sold to England to raise sterling prices "by a corresponding amount if
they were to obtain the same gold prices as before; and it enabled English
exporters to charge correspondingly higher sterling prices without altering
the gold prices at which they were selling in world markets.
The indica
ted adjustment did not, of course, have to work out through a rise in
sterling prices; it might equally be effected through a fall in gold
prices, and indeed there is reason to believe that the difficulties of
selling to depreciated-paper countries and the keener competition from
these countries on world markets have exerted a depressive effect on gold
prices generally.
But whether sterling prices of international commodities
moved up or gold prices down, one would expect a rise of the former relative
to the latter equivalent to the full discount on sterling exchange.
is, one would expect it under conditions of perfect competition.
That
Actually,
however, we are further from such conditions today than at any time since
the war.
In part the barriers to international trade are inevitable.
It costs
something to ship goods from market to market, and these costs vary accor
ding to the country.
Furthermore the organization of markets, the existence
of established selling connections, and the persistent habits of consumers,
prevent large shifts overnight in the channels of international trade.
Un
der these circumstances differentials among gold prices for substantially
the same commodity in various markets of the world are unavoidable.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3.
To inevitable factors of difference of this sort, however, have
*
been added influences deliberately imposed by governments in the form
of tariffs and quota systems.
The increasingly severe application of
these barriers to trade has been characteristic of the whole period of
the depression; but it has been particularly in evidence since England’s
departure from the gold standard.
Furthermore with the actual or threat
ened breakdown of currencies has come a further impediment to interna
tional transactions in the form of government monopolies of dealings
in exchange.
The purpose of these monopolies is to maintain a country’s
currency internationally at a level which could never be maintained in
a free market.
This is achieved by rationing the volume of funds which
can be transferred abroad.
Whether or not an importer can obtain funds
to pay his foreign creditor is wholly a matter of the discretion of the
central bank or exchange commission which administers the monopoly.
This situation may result in absolute prohibition of certain classes
of imports and the serious embarrassment of all importing transactions
so that what otherwise might be profitable trades are never consummated.
Even where exchange markets are left free, the risk of fluctuating cur
rencies must be faced unless there is a well-developed forward business.
And always there is the chance that under present conditions individual
credit may not prove good —
particularly when it is a question of de
veloping new business abroad.
This complex of factors has led to a considerable degree of isolation
Keproduced from the Unclassified / Declassified Holdings of the National Archives
4.
of markets.
Within broad limits price movements in coal, butter, or
meat may occur in the United States quite^without relation to price
movements in the same commodities in England.
Where this is the case,
there is no reason to expect the discount on sterling to be reflected
at all closely even in the prices of international commodities.
Yet
it is in the markets for such commodities that the whole initial effect
of the departure from the gold standard mast be sought.
Evidence of the charts. - Notwithstanding the considerable degree
of isolation which exists between markets of the world today, prices
in England and the United States (to use the United States as & representative gold standard country) reflect relative exchange rates fairly
closely.
Chart 1 is designed to show in perspective the movement of the
three major types of British prices —
wholesale, retail, and cost-of-
living; but by way of comparison the wholesale index for the United
States is also shown.
The American wholesale index is more heavily
weighted with manufactured products than the English and in other res
pects it is not entirely comparable.
clear.
Yet the broad relationship is
The story on the surface of it looks somewhat as follows.
When England returned to the gold standard in April, 1925, British
prices were on a higher level, relative to the pre-war base, than those
in the United States.
drew even.
They continued to fall, until early in 1926 they
Then came the great coal strike in England and prices mounted;
but following the settlement they fell, the gap finally closing again in
PHI CSS III ENGLAND AMD THS UNITED STATES
1925 to 1932
180
170
160
150
140
130
120
no
100
90
1925
1926
1927
1928
1929
1930
1931
1932
Base periods: cost of living end retell foods indexes, Julv,igi4 = 100; wholesale trices '|c]_x = }
Sources:
England, cost of living and retail foods indexes, Ministry of Labour- and wholes* Ve price
Board of Trade; United States, wholesale prices, Bureau of Labor Statistics
Reproduced from the Unclassified / Declassified Holdings of the National Archives
5.
1928,
In 1930 the English index, composed mainly of raw materials,
dropped somewhat more steeply than the American.
have "been an influence in this situation.
Our new tariff may
The similarity of movement
*
persisted, however, until in September, 1931, England left the gold
standard and a discount of from 20 to 30 per cent on sterling devel
oped,
The British index immediately jumped above the American —
though not by the full amount of the sterling premium on the dollar —
and then, as the American index continued to decline, English prices
followed.
The apparent relationship here pictured is a close one.
It would
seem that, notwithstanding considerable dissimilarity in the commodities
compared and the obstacles to international competition that have exist
ed throughout the period, the exchange ratio between sterling and the
dollar lias dominated the relationship between the two indexes.
As one passes from wholesale commodities, representing in the Eng
lish index mainly international goods, to retail commodities which re
flect domestic labor, transportation, and distributing costs, the move
ment of prices becomes more sluggish.
In a general way the prices of
retail foods in England have followed wholesale prices.
There has,
however, been a marked seasonal rise in the fall of each year; and it
is noteworthy that the rise in 1931 —
parture from the gold standard —
those of other years.
the one that followed the de
was certainly no more marked than
In fact it was rather less marked.
is true of the yet more sluggish cost-of-living index.
And the same
So far as the
"
U/ declassified Holdings of the National Archives
6.
consumer in England is concerned there has been almost no reflection
of the momentous shift in England1s monetary standard last September,
This is true even though, as shown in Chart 2, both retail foods
and cost of living in England have risen in price relative to similar
groups in the United States.
Particularly is this noticeable in the
case of retail foods; but there is no direct connection between retail
prices in England and the United States, nor between cost of living in
the two countries.
The link is indirect and works out through those
international markets which are common to the two countries.
The real
ly significant comparison shown on Chart 2 is that between the relative
rise of wholesale prices in England and the sterling price of the dol
lar,
For the purposes of Chart 2 a special index of American wholesale
prices has been used.
This index is composed, so far as possible, of
the same types of price quotations as compose the British wholesale
index.
It is not entirely comparable.
Uo index can be made so and
still represent conditions in the American market.
But it is far more
comparable than the 3ureau-of-Labor-Statistics index of 784 price series
the official index for this country, which was used in Chart 1,
The line on Chart 2 showing wholesale prices represents the ratio
of the English index to the comparable American index.
It is evident
from the rising line that since the departure of England from the gold
standard sterling prices have risen relative to dollar prices but not
CEAJKT I I
BAT 10 Ox ENGLISH TO AMERICAS PRICES
(Sept. 1931 = 100)
Per Cent
Per Cent
Wholesale Prices ■ Board of Trade index (I5 O prices) for England f Federal Reserve Board special index (150 or ices) f
United States.
;
• Retail Foods - Ministry of Labour index for ingland f Bureau of Labor Statistics index for U n it e d S t a t e s .
Cost of Living = Ministry of Labour index f o r xngland f national Industrial Conference Board index for United States
Reproduced from the Unclassified / Declassified Holdings of the National Archives
7.
"by as much as the sterling price of the dollar itself.
At first the
gap was wide; but as sterling developed strength in 1932 and the price
of the dollar fell, while relative sterling prices continued to rise,
the gap closed.
By spring the adjustment between (a) relative whole
sale prices in the two countries and (b) exchange rates, had been work
ed out to a considerable degree.
The lines would indicate that the
price relationship of the two countries on the average reflected the
exchange rates of their currencies, notwithstanding the often widely
diverse fluctuations of prices of the same commodity in England and
the United States.
One technical point with regard to Chart 2 should be noted.
All
the lines on this chart are based on the month of September, 1931, as
100.
During most of September England was on the gold standard and it
was not until October that there was an important upward movement of
prices.
Exchange, however, reacted immediately to the gold suspension,
.and the sterling price of the dollar for September on a daily average
basis was 7 per cent above par.
By measuring the exchange level in
subsequent months relative to the level in September, this 7 per cent
premium is lost; and the line showing the sterling price of the dollar
is lower throughout its course than it would have been had the first
three weeks of September been taken as a base.
Since it was not feas
ible to do this with commodity prices, the entire month of September
Reproduced from the Unclassified / Declassified Holdings of the National Archives
8.
was used as a base for all lines.
The chart as it stands, therefore,
overstates somewhat the closeness of the adjustment of prices to ex
change.
Evidence of individual commodity prices. - That the prices of
different commodities —
bacon, coffee, cotton cloth —
should not
move in unison with one another is quite to be expected.
Even if
markets were free and competition close, one would look for consider
able variation in the movement of individual prices.
This variation
is the very essence of the process whereby supply and demand are in
some measure kept in balance in the face of shifts in climatic con
ditions, available natural resources, technical knowledge, or consum
er preferences.
The major adjustments of our economic life as at
present organized are predicated upon the diversity of movement of
individual prices.
Hence if any dominant influence were making for
an upward movement, one would not expect it to be reflected uniformly
through the entire range of prices.
As a whole, the price structure
might be raised, say, by 20 per cent; but meanwhile the price of a
given commodity might rise by 60 per cent, while that of another might
fall by 10 per cent.
There would be nothing surprising in this; and
it is not the sort of problem we are dealing with in comparing British
with American prices.
The problem we are dealing tvith in making this comparison is that
Reproduced from the Unclassified / Declassified Holdings of the National Archives
of the different movement of prices of the same commodity in two markets.
*
If competition between the two markets were free and unhampered,
the prices of different commodities might move in different directions,
but the prices of the same commodity in both markets would move together
except for the variations in the rate of exchange between the two cur
rencies concerned.
If the sterling price of the dollar rose 25 per
cent, one would expect the sterling price of cotton to rise 25 per
cent with relation to the dollar price of cotton —
and throughout
the entire range of individual commodities one would expect to find
the same differential even though prices of some were moving up and
prices of others down.
All assuming close and unhampered competition —
such as definitely does not exist in the world today.
As a matter of
fact the available evidence shows that there is enormous variation in
the differentials which have developed since September in the sterling
and dollar prices of approximately the same commodities.
Bata are not available to enable us to compare all the individual
commodities of the English wholesale price index with corresponding
commodities of the American index.
In the table following, however,
the comparison is made for a considerable list of individual commodi
ties or groups of closely similar commodities.
About four-fifths of
all the price quotations in the respective indexes are represented.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
10
.
PRICES OF INDIVIDUAL COMMODITIES IN
ENGLAND AND -THE UNITED STATES (September, 1931 = 100)
Commodities
Weight
relative
to
150
June, 1932
English
index
American
index*
English index
relative to
American
All commodities ...........
150
98.9
83.2
119
Bacon .....................
C o r n ......................
Cheese ....................
Butter ....................
H e m p ......................
Leather: hides ............
C o c o a .....................
Wool: r a w ............ .....
Wheat .....................
Z i n c ......................
L e a d ......................
R u b b e r ....................
T i n .......................
Jute ......................
Cotton: cloth .............
Cotton: yarns ..............
Woodpulp: chemical sulphite.
Cotton: raw ...............
Flour .....................
Beef ......................
S u g a r ............... .....
Copper ....................
Linen: yarns ..............
Wool: yarns ...............
T e a .......................
Iron and steel ............
T i m b e r ....................
Sulphuric acid ............
Coal ......................
Sodium carbonate ..........
Barley ....................
Mutton ....................
Glass .....................
Lamb ................. .
Coffee ....................
2
2
2
3
1
4
1
1
3
1
1
1
1
1
9
5
2
2
3
6
2
4
2
8
1
24
4
1
10
1
5
2
1
1
1
107.5
128.5
117.3
83.6
106.4
71.8
109.8
94.2
123.1
101.8
90.1
69.0
100.3
86.2
.96.3
100.7
87.6
97.7
115.5
99.3
97.3
85.3
115.8
95.4
79.2
101.1
89.1
100.0
96.0
100.0
70.6
85.7
106.3
79.4
96.5
59.0
71.5
69.2
54.2
69.4
47.8
74.1
68.4
90.0
78.0
69.0
52.9
79.0
69.2
77.9
81.9
73.3
82.0
98.0
84.1
82.2
73.2
100.0
82,9
72.4
97.0
86.1
100.0
97.5
102.2
74.3
95.7
117.8
101.4
127.5
182
180
170
154
153
150
148
138
137
131
131
130
127
125
124
123
120
119
118
118
118
117
116
115
109
104
103
100
98
98
95
90
90
78
76
* Federal Reserve Board special index,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.
11
The table shows a range from a relative rise in hacon of 82 per
cent to a relative fall in coffee of 24 per cent.
Were the commodi
ties really identical and were there no barriers to competition, they
*
would all show a uniform rise of 24 per cent, the amount by which the
sterling price of the dollar increased during the period.
In consider
able measure it is possible to account for the divergences.
The American tariff is at the root of most of the cases in which
the ratio of English to American prices has risen by more than the dis
count on sterling.
list —
bacon.
Take, for instance, the first commodity on the
By June the price of bacon in New York had fallen 41
per cent from its September level.
In England the price had risen.
Allowance must be made in the English price for the depreciation of
sterling during the period; but even on a gold basis the decline was
far more drastic in this country.
Had prices in the two countries
been competitive in September, a relative drop of such severity here
in subsequent months would have been impossible since it would have led
to exports of bacon and consequent equalization of markets.
Bat costs
of transportation and the American tariff isolated our bacon industry,
permitting prices here to stand in September well above those prevail
ing abroad.
From this high protected level it was possible for Ameri
can prices to drop steeply without placing the American producer in
position to take advantage of markets abroad where the price decline
had been more moderate,
A similar story of tariff-isolated markets with independent price
Reproduced from the Unclassified / Declassified Holdings of the National Archives
12
.
movements could "be told of the next t'm*ee commodities on the
list —
corn, cheese, and hutter.
To some extent the prefer
ences and habits of the British consumer play into the situation.
He prefers Danish "butter and bacon, and he is used to Argentine
corn.
The direction of international trade is not easily changed.
But the chief difficulty has been that in each of these cases the
severe decline in American prices has been from a high protected
level and has left the American producer still unable to compete
abroad.
Much the same analysis can be made of those metals which stand
high on the list.
It is true that the relative rise in the English
price of zinc and lead (largely the result of falling prices here)
was much less in June than in May.
In June prices of both these
metals fell in England, while zinc recovered sharply here, and
lead held its own.
metal to England.
There can now be no question of exporting either
But even in May this opportunity did not exist;
for at that time a decline of 34 per cent from the high tariff-pro
tected price in the United States in September still left zinc pro
ducers unable to dispose of their product in London, although the
sterling price had risen 10 per cent.
On a more moderate scale
this situation was repeated in the case of lead.
On the other hand tin, which comes largely from British Malaya
Reproduced from the Unclassified / Declassified Holdings of the National Archives
13.
and to which no tariffs apply either here or in England, has behaved
as a competitive commodity should.
Both in September and June it
was selling at nearly the same gold price in England and the United
States, which means that the sterling price almost exactly reflected
the discount on sterling.
Broadly speaking, this was also true
of copper in the month of May before we applied a tariff.
The case
is not quite as clear as that of tin because we produce most of our
own copper while an increasing proportion of the English supply is
being drawn from sources outside the United States.
Nevertheless
until our tariff went into effect in June, forcing South American,
African, and Canadian supplies directly upon foreign markets (in
cluding London), the sterling price differential corresponded in
considerable degree to the discount on sterling.
Among the textiles the same close competitive situation exists
with respect to jute, on which there is no tariff.
Raw cotton shows
a somewhat smaller differential; but that is on account of the in
clusion of an Egyptian quotation in the English index.
The price
of American cotton alone in the two markets reflects the full dis
count on sterling.
Rubber, also, which is free of tariff, shows a
differential not much greater than the altered exchange rate of the
currencies, the actual prices on a dollar basis in London and New
York for ribbed sheets being much the same.
Indeed it may in general be said that where identical commo-
(
Reproduced from the Unclassified / Declassified Holdings of the National Archives
14.
dities are being compared and no tariff is in effect to isolate
the markets, the British price relative to the American substan
tially reflects the discount on sterling.
This is particularly
true when the commodity in question is imported by both countries
from a common source.
When this is the case, even the tariff, pro
viding it is unchanged, makes little difference.
Just how widely, however, commodities may differ though desig
nated by the same general name, is shown in the case of coffee.
Coffee in England means the more expensive Central American types.
Coffee here is chiefly the common Brazilian.
Since England left
the gold standard the sterling price of coffee has actually fallen
in the face of a substantial recovery in the price of the Brazilian
product in New York.
Brazilian coffee still remains, however, by
far the cheaper product and there is no incentive for Americans to
change.
The tea which finds its mass consumption in England comes
from India and Ceylon, whereas it is Formosan tea which figures
in the American index.
The British barley quotation is for malting
barley; ours for feeding barley in Chicago.
Even in a common raw
material like hemp, what are in effect two commodities may be cre
ated by the practices of the respective markets.
Almost of neces
sity the English use a low-grade hemp, for their machinery is ad
justed to it.
The higher grades preferred by Americans may drop
Reproduced from the Unclassified / Declassified Holdings of the National Archives
15.
relatively in price, but the English go on consuming low-grade
hemp.
The familiar mutton of the Englishman is a high quality pro
duct representing the slaughter of comparatively young sheep.
The
American mutton, a product of older sheep reared chiefly for wool,
is destined in the main for stews.
Under such circumstances the
English product is so far above the American in price that even a
sharp decline fails to interest Americans —
quite aside from the
prohibitive tariff, which, in this case, is irrelevant.
In the
case of lamb the tariff may have had some effect, though the fact
that Americans are not accustomed to frozen lamb would probably
have been sufficient to keep out the New Zealand product consumed
in England, even after it had fallen in terms of gold somewhat below
the price for fresh lamb here.
The tariff certainly has had some effect on the situation in
wheat and beef; but there again the difference in types compared,
subject as they are to different seasonal movements, has played
a considerable part in permitting relative price changes greater
or less than the discount on sterling.
The same differences in types compared, as well as heavy
transportation costs, underlie the failure of two important
British export groups —
the discount on sterling.
coal, and iron and steel —
to reflect
It is probable, however, that another
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.
16
factor is at work in the case of exports —
namely, the efforts
of British producers to expand their foreign markets by under
cutting prevailing prices.
Particularly in a commodity like
coal where leading customers such as France and Germany have
raised obstacles to the purchase of the British product, the
necessity of an inducement in the way of price concessions is
apparent.
Incidentally it may be noted that coal prices in Ger
many have fallen considerably more than in the United States, which
is a difficult market for English coal exporters to reach.
Other British exports have done rather better, especially
cotton cloth.
Not only have prices of cotton cloth risen by the
full amount of the discount on sterling, but there has been a notable
expansion in the volume exported since the gold standard was aban
doned.
By far the largest relative increase, however, was to China
where the popular embargo on Japanese goods was a more important
factor than the exchange differential.
Furthermore, although cot
ton cloth is the highest export commodity in the list given on page
10, its relative price increase no more than matches the rise in the
sterling price of the dollar.
The British are seeking volume in
their export trade rather than high unit prices,
Npte on British trade. - The effect of the depreciation of
sterling on the volume of British trade is somewhat aside from
the main purpose of this memorandum, except in so far as trade
Reproduced from the Unclassified / Declassified Holdings of the National Archives
17.
*
recovery would in itself lead to a rise in prices.
it may be said that several British industries —
and steel, and even coal —
competitors abroad.
In general
textiles, iron
have stood up better than those of
But world markets have been deteriorating
so rapidly that such relative advantages as have developed still
leave England in the midst of depression.
Even had general re
covery set in, it would probably have been signalized, at least in
its initial stages, more by an expanded volume of production and
the absorption of the unemployed than by a rise of prices.
The
ultimate effects would depend upon whether the recovery of busi
ness in England spread to the rest of the world.
Actually the depreciation of sterling has not brought any
thing approaching full-fledged industrial recovery in England.
Together with the tariff it undoubtedly is responsible for the
better balance of merchandise trade enjoyed by the country since
the gold standard was suspended.
This particular difficulty of
the British situation is by way of being cured.
But at the out
set the effect has been to add to the complications faced by other
countries; and, taken alone, the improved international trading
position of England has been quite inadequate to cure a depression
which is due to a multitude of factors the world over.
Conclusion. - It is apparent that the only immediately effect
ive price-raising influence of the departure from the gold standard
Reproduced from the Unclassified / Declassified Holdings of the National Archives
18.
in England, has been the spread introduced between sterling and gold
prices in the markets for international commodities.
Even with re
gard to international commodities the evidence points to the great
variety of spread —
sometimes actually of a reverse character —
which has followed the depreciation of sterling.
A study of indivi
dual commodities leaves one with the impression that the barriers
to international trade in the world today are so numerous and impor
tant that markets are in considerable measure isolated —
ly where heavy tariffs are in effect.
particular
Certainly there is wide room
for divergence; and the effect of the sterling discount has been far
from uniform.
It would be easy to underestimate, however, the forces of com
petition that are still at work throughout the field.
In a large
number of cases the apparently unrelated movement of the sterling
and dollar prices of a given commodity is attributable to the fact
that really two different commodities are being compared.
Were com
parison made between identical commodities in countries in which they
are habitually traded, the movement of relative sterling prices vrould
in general be found to reflect the movement of the exchange rate of
sterling with the currencies concerned.
Even where the American
tariff is the factor which permits a divergent movement of
sterling and dollar prices, it is still generally true that the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
19.
price in England relative to the price in the country from which
England has imported the commodity reflects the discount on ster
ling.
Furthermore few of the obstacle^ to international trade are
absolute.
The isolation of markets is only a matter of degree.
The nexus of competitive relationship, therefore, between
England and the rest of the world is real, if somewhat loose.
And directly and indirectly that nexus extends to the United
States.
Hence notwithstanding the diversity of situations sur
rounding individual commodities, the general relative position
of British wholesale prices reflects to a large extent the dis
count on sterling relative to the dollar.
As was noted at the beginning of this memorandum, however,
the increase in sterling prices has been only relative.
They
have continued to fluctuate as much as prices in the United States
and other gold standard countries; and after a substantial initial
rise they have fallen till today they are lower than when the gold
standard was suspended in September, 1931,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
For CSRCULAT!
F o rm N o
/ i«r??T. SubjecfeCommodfoies^Opij/ion of ForePole .: M
tvlorri
IcClellaricI
i80M«3A09 oi ujni3J
Wy?tt.
|B|ljUI-810U 9SB9|d
y / .......
r
t/ * ?
sting tier vices:__ Brookmire_________
............ c5
‘i-fhe Brookmir^^ommodityl Bulletin, of^lugust 15, 1932 shows that this
;8eyvi,<»e continues to be cautious*e-i^i''mct, very cautious. The gist of
puB||ai03l'i "JH
2 nd rifurn
Gu ^l Ri’IOR,
’ th&irfiposition, freed from surplus Verbiage, is indicated by the following
uo$;jj?h *jg|
extradt^f
jaflSH "JH
“difllonfidence• - "There remain enough elements of weakness to precipi> ~ susaf
/\ ^tabe itrouble if the situation is not handled with such delicate care as to
y
shocks to confidence,"
Wheat, - "Heavy stocks of wheat are only symptoms of the basic malady
of world over-production...... Any encouragement given to the wheat farmer
in the late summer is likely to induce him to plant wheat heavily in the
sowing season immediately ahead."
"The effort (to stimulate exports) would meet considerable difficulty
in wheat .... when Chicago is the highest market in the world."
general advice. - "Users of commodities (in general) should have their
requirements protected moderately, except in cases where such sharp run-ups
have occurred as to warrant the caution not to follow up advances."
Specific advices;
Steel— "Forward purchases are not necessary," (scrap excepted).
Copper— "Moderate protection of requirements is sufficient."
Tin, Lead, and Zinc--"Some protection is advisable, but buyers
should not follow up advances."
Other building materials— "Continue hand-to-mouth basis on lum
ber, plate glass, window glass.
Contract for cement only on old basis."
Fuels— No forward buying emphasized, except to some extent in
anthracite coal
rxeproaucea rrom the Unclassified / Declassified Holdings of the National Archives
t
F o r m N o ., 131
e Correspondence
Date__ August 6, 1932
Subject: Return of U, S. Gold Coin
governor Meyer
From
FEDERAL RESERVE
BOARD
from Circulation
Miss Joy
2 — 8495
of
About
$3U0,000
LfLh 3- 11
of U, S« gold coin returned from domestic
circulation during the week ending August 3» largely in the Hew
York d istrict.
Philadelphia,
the
There was also a return of about $85*000 at
Withdrawals continued at San Prancisco
and in
Richmond districts, although they were considerably smaller
than last week.
fv.r, Miller— T_\..
___
.r,
Please note - initial
return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
e Correspond
FEDERAL RESERVE
BOARD
Subject:,
• Goldenweiser
From
/
Date August 5* 1932
Demand for Currency_____
Mr* Thompso
^
v y i*-! i
A.
Following a reduction of approximately $60,000,000 in "hoarding"
during the last ten days of July, there was an increase of approxi
mately $30,000,000 during the first three days of August as shown in
the following table:
DAILY CHANGES IN DEMAND FOB CURRENCY
(In millions of dollars)
For CIRCULATION:____ _
Date
Actual
21
22
23
25
26
27
28
29
30
Aug,
1
2
3
+ 11
+ 20
Seasonally
adjusted Mr. Hamlin.
0
4
26
18
20
3U
8
- 3
- 12
- 8
- 14
- 3
+ 4
- 8
- 12
- 3
+ 1
- 17
- lH
+ 7
+ 10
+ 12
+
.+
+
+
T f l r , James
Mr. Magee
Mr. Miller,.
Mr. Pole
AU-ttarrisno
Mr. Morriil . . . 1
Mr. McClelland
Mr, Wyatt .1
Mr.
Mr.
Please note - initial
and return to GOVERNOR.
From July 20 to July 27 the return flow of currency was concen
trated largely in the Richmond and Chicago districts, following the
banking disturbances in earlier weeks, representing a real return of
money from hoarding.
There was also a decrease in other eastern in
dustrial areas*
During the last three days of July the month-end demand for cur-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2.
rency was smaller them usual in all districts and probably reflected
in considerable part the relatively small volume of month-end wage
payments*
Partly in consequence of the small volume of month-end withdrawals
and partly because of the tax on checks, the return of currency to the
reserve banks during the first three days of August was also smaller
than usual, and thus the day-to-day changes in money in circulation
adjusted for seasonal variations show an increase*
Since many wage
earners now keep a larger share of cash from their pay checks for pay
ment of bills instead of depositing it directly in the bank and paying
bills by check as they have formerly done, the return flow of end-ofmonth currency may be expected to be somewhat slower than in the past.
There is no reason to believe that the increase in the first three
days of August reflected any considerable amount of ^hoarding* in the
strict sense of the word*
There were no bank failures of any conse
quence during this period, the demand was of greater than seasonal
proportions in all districts, and only in the San Francisco district
is there evidence that withdrawals were occasioned by banking disturb
ances*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m 3STO. 131 /
Corresponuence
Governor Meyer_____________
1romv_
f
FEDERAL RESERVE
BOARD
Date_
Subjett:__ Demand
^
Miss Joy
-
for Currency
1 a
*
i
—
O
p
The volume of money in circulation on Wednesday, August 3* showed
an increase of $38,000,000 as compared with the preceding week, about
$5,000,000 more than the usual amount.
Demand for currency increased less than usual during the last
three days of July, but on August 1 there was a larger withdrawal
than in past years, followed by an exceptionally small return flow o
August 2 and 3, as shown in the following table:
ESTIMATED DAILY CHANGE IN MONEY IN CIRCULATION
ADJUSTED FOR SEASONAL VARIATION
July 28
29
30
Aug,
-
12
-
3
+
7
10
+ 12
+
lar.
x Please note-initial
This high level of circulation in the first three days of t h e - m o n t h , GOVERNOR,
which also occurred in July, may be due in large part to the substi
tution of cash for checks in making payments.
Wage-earners and
salaried workers who are still being paid by check may be cashing
their pay checks instead of depositing them in the bank, and retain
ing the proceeds to be expended gradually during the month.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
tic use in the country as a whole during the week ending July 2J— the
smallest in any week covered hy our records, which "begin with the last
week in May,
Withdrawals of about $300,000 at Chicago and $100,000 at
San Francisco, with small demands in other districts^ more than offset a
return flow of about $300,000 at the Federal Reserve Bank of Hew York and
some return at the Philadelphia and Richmond Federal Reserve Banks.
However, the net return at New York is encouraging, since gold move
ments in that district have been as important as those in all the other
districts combined.
Between May 25 and July 27 $20,000,000 in United
States gold coin was withdrawn for domestic use, and of this half was ab
sorbed in the New York district, another $4,000,000 in Chicago, and about
$3,000,000 in San Francisco,
small.
In other districts demand was comparatively
The accompanying table shows net demand for United States gold
coin by weeks, beginning with the week ending June 1.
The demand has been definitely slackening since the first week in
June.
At that time withdrawals were about $8,000,000 a week.
There
after they declined steadily until, in July, they were less than $2,000,000
a week, and for the past week dwindled to $3 0 0 ,0 0 0 .
Since last year at this time, when the circulation of gold coin was
near its lowest level in recent years, $9 0 ,0 0 0 , 0 0 0 has been paid out for
domestic use, most of it in two periods— during the gold outflow of last
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2.
September and early October and during May and June of this year.
>
CHANGES IN DEMAND FOR GOLD COIN BY DISTRICTS
June 1 to July 27
(In millions of dollars)
Federal
reserve district
Week ending
June 1
June 8
July 6
June 15
June 22
June 29
4- 0.3
4 0.1
+ 0.1
+
4- 0 . 7
+ 0.8
+ 0.4
4- 0.2
4- 0.2
+ 0.1
+ 0.1
July 13
May 2 5
June 27
July 20
July 27
- 0.1
0.0
+•.0.9
+ 0.7
+ 0.2
~ 0.3
+14.6
0.0
+ 0.1
- 0.1
+
Boston
+
New York
t 5-5
+ 5*0
Philadelphia
+
0 ,3
4-
0.0
4- 0 . 1
0.0
0.0
0.0
0 .0
0.0
0.0
0.0
Ri chmond
+ 0.2
4- 0 . 3
4- 0.1
0.0
0.0
0 .0
0.0
+ 0.1
- 0.1
+
0 .6
Atlanta
+ 0.1
0 .0
4- 0.1
0.0
0.0
0 .0
0.0
0.0
0.0
+
0 ,2
Chicago
+ 0.5
+ 1.3
4- 0 . 5
+ 0,8
+ 1.5
4- 0.3
+
4.4
0.0
0.0
0 .1
0.0
+
0.2
o.l
4- 0.1
0.2
Cleveland
St, Louis
0 .3
Minneapolis
4
Kansas City
+ 0.1
Dallas
Total
0 .2
o.U
4-
1 .6
+
0 .3
0 .0
-
1.1
+ 0 .3
+
1 .5
+ 0.1
0,0
+
0.1
0.0
0.0
0,1
0.0
-
0.1
0,0
0.0
0.0
0.0
+
+
0.1
+ 0.1
+ 0.1
0,0
0.0
+ 0.4
0.0
0.0
+ 1 .5
0.0
0.0
+
1.5
0.1
+
2.9
+ o a
0.0
0.0
0 .0
0.0
+ 0 .6
4- 0.9
+ 0 .2
+ 7 .9
4- 8.1
+
-
0 .0
0.0
0.1
0.0
San Francisco
+
3*3
+
0.1
+ 0 .3
+ 0 .3
+
2.1
+ 3 .1
+
1.2
0,2
+
0.2
+
+ 1.6
+
1.0
+ 0 .3
+
+28.6
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
FEDERAL RESERVE
BOARD
T W
July 25. 1932
Subject: Demand for Currency, July 20-23
i
<V
2 — 8495
During the latter part of the past week, July 20 to July 23, there
was a much smaller increase than usual in demand for currency, indicat
ing a return of some currency from inactive use.
Ordinarily demand in
creases as the week end approaches, and on Saturday, July 23, the amount
in use is ordinarily 30 millions larger than on the preceding Wednesday.
This year the amount outstanding increased only 8 million dollars.
For CIRCULATION:
Mr. Morrill .— A
Mr. MfcCleUandM^
Mr. Wyatt.V——
Mr..................
Mr..................
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
There was a growth of $21,000,000 in the volume of currency
%
outstanding in the week ending July 20, compared with a decline of
about $30,000,000 in past years,
This was the fourth week in which
demand was somewhs.t larger than usual in most Federal reserve dis
tricts, although for the week just past there was a return flow in
the Boston and New York districts.
The Bichmond and Chicago districts account for two-fifths of
the non-seasonal demand for currency.
Withdrawals of about $l6,-
000,000 in the Bichmond district were concentrated in the City of
Washington from July 14 to 18; an equally large withdrawal in Chi
cago accompanied a number of bank suspensions in Iowa during the
latter part of last week end in Milwaukee on July
19
,
In the Cleve
land district, where banks in Pittsburgh, Springfield, and Chilicothe,
Ohio suspended, there was little net change in amount of currency
outstanding, although there is -ordinarily a return of about $10,000,000 in this week,
.
fo r CIRCULATION:............. Mr. Hamlin. ^
Mr. lames Mr. Magee _
*"
Mr. Miller U ? y -------' T Mr. Pole
.
v
-
y / --* ,
e Mi.
--—
Mr. Morrill
- -
Mr. McClelland' - \ * ...........'
Mr, W yatt. X .............
Pie\se j / t e - initial
v
*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Jaly 15 . 1932
Demand--for -Currency
Mr, Ooldenwelser
Mr* Thompson, Mr. Rhodes, aad Mias Joy
RBCTD IN F l M f e S E C T IO N
JU N
2 41953
Since the firs t of June, demand for currency has Increased toy
Ji
about $275 , 000,000 In excess of ordinary seasonal requl
ts.
this
Increase at firs t reflected banking disturbances In Chicago and to a
lesser extent In other districts and, later, the tax on checks, de
mand for currency in excess of estimated seasonal requirements both
for the country as a whole and for each Federal reserve district le
shown In the following table.
charges
in mmnu
for corhefcy bt fbckral hsssrfe districts
Adjusted for seasonal variation.
Weeks ending Wednesday.
(In millions of dollars)
Pl»*rlct
Boston
Mew forte
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Lewis
Minneapolis
Kansas City
Dallas
San Francisco
June S
vm
June 15 .
-1932
June 22
J 332...
♦ 5
♦ l
-
♦ 2- 1
- 1.
....
• 1.
* x* .
♦ 2
♦ 1
♦ 7
♦ x ■
♦ 1
♦ 1
♦ 1
♦ h
♦_\
♦ 2
* 2 •
- 1
% jk -
Total
... •
see"
* 1
«•» 1 ♦ 22 '
♦ 31
1
... •
♦ 3*
♦ 1
♦ >|.
♦ 50
June 29
1932
♦ 3
♦ 1.
- u,
• u•
♦ 1
♦ 3
m o♦ 1 .
♦ 1
+ 1
♦ 1
♦ 2.
♦ 115
July t
1932
Cumulative
June 2 to
July 13 , July 13 .
1932
1932
3
2.
92
H
4 6•
♦ U•
* 6
♦ 2
♦ 9
♦ 3
i♦ 1•
* 3•
♦ 1 .
♦ l .
...
♦ 2
- 1
♦ 6
♦ 29 r
♦ 28 •
♦
~
♦
♦
♦
♦
•
♦
♦
5*
2
5
4•
♦
♦
♦
*
♦
♦
1U
26 10
2
5 <
7
*163 •
♦ 0 •
♦
♦
♦
♦
6
13
is
20
*275
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.
2
In the firs t two weeks la June demand was largest at lew York,
where half of the $55 , 000,000 non-seasoaal increase la circulation was
concentrated.
In the next two weeks—June 15 to June-29—the panic la
Chicago dominated the situation, and $155,000,000 in excess of seasonal
needs went into public circulation and into banks* /suits in that dis
trict#
In other districts only $10,000,000 more than usual was with*
drawn,
yellowing the end of the runs in Chicago there was a gradual
return of cash to the Chicago federal Reserve Bank, particularly from
banks* holdings,
from June 29 to July 6 circulation increased about $30,000,000 more
than estimated holiday and month-end requirements, and in the following
week the return flow was about $25, 000,000 smaller than usual, making a
net non-seasonal increase in circulation of $55 , 000, 000,
Except for
Chicago, this Increase was general in a ll districts.
The influence of the tax on checks in Increasing the use of cash
lines the law became effective on June 21 cannot be estimated with ac
curacy, because demand in excess of estimated seasonal requirements re
flects, in addition to this factor, increased hoarding In certain areas
where there has been uneasiness over the banking situation, such as
omA
Philadelphia, St. Louis, Minneapolis, and San Francisco; B probable de
cline in hoarding in other districts^which may be obscured by the in
fluence of the tax on checks.
Unless the amount of this de-hoarding
is substantial, the limits of the influence of the tax are suggested
by the amount of the non-seaeonal Increase in circulation outside the
Chicago district since June 22, mnstmtlnfc to about $75,000,000,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
July 14, 1932
Mr. Goldenveleer
f ra* ffMrrw nfly fw fchfr— •—
^'iT W T ffiferSE rP lO N
Chicago district
Mr. Thompson
JUN
241953
During the week ending June 29, the demand^or currency in*
/ i
creased by #116,000,000, or #110 , 000,000 in excess of aeaaonal
requirements. The banks obtained the funds with which to meet
ne't
this demand (1 ) through,,withdrawal of funds from other districts—
through sale of securities, borrowing and withdrawal of balances—
of #11,000,000; (2 ) through net Treasury payments of -*4^,000, 000—
probably reflecting H.F.C. expenditures; (3) purchase of United
States securities by the Federal reserve system in Chicago amountW
lng to $8ef,000,000. This supply was offset in part through an in
crease in deposits at the reserve beak of member end noaeember
banks amounting to $30,000,000.
During the week of July 6 , the demand for currency Increased
by #10 , 000, 000, or less than the estimated seasonal amount, the
funds being obtained through drafts upon member bank reserve bal
ances. These balances were reduced by #62,500,000 in order to
meet an adverse balance of payments with other districts and
Treasury receipts.
The figures are summarized in the attached table.
DTgov
■
Keproauced from the Unclassified / Declassified Holdings of the National Archives
Cheeked
DEMAND FOR CURRENCY—CHICAGO DISTRICT
Week ending June 29, 1932
Millions of
dollars
Increase in demand for currency
116
Fund supplied through
»
I# Interdistrict settlements
2. Treasury expenditures
(probably R.F.C.)
3» Increase in reserve bank credit
extended in Chicago district
a. Us Ss securities
b. Acceptances
11
<&
*<*£
436
2
Total known supply
Life
Deductions
1. Increase in member bank reserve balances
2 . Increase in nonmenfoer bank deposits
Total deductions
Net supply
27
g
30
115
Week ending July 6, 1932
Increase in demand for currency
10
Funds supplied through
1* Reduction in member bank reserve balances
2. Reduction in nonmember bank deposits at
reserve bank
3s Reserve bank credit
Deductions
Is Net Treasury receipts
2* Loss through interdlstrict settlements
Net
DTgew
3
2
67
Total
Total
62
)'
27
31
58
9
Reproduced from the Unclassified / Declassified Holdings of the National Archives
ice Correspondence
To* T -Limnnm
FEDERAL RESERVE
BOARD
___
Subject:
Date__ July 9» 1932
Bemand
From__ Mr. Parry- and Misg Joy
The largest part of the $126,000,000 increase in circulation he-
-
tween June 29 and July 6 can he accounted for hy demand for cash for
holiday expenses.
When the Fourth of July week end is a long one, as
in this year, the increase in circulation is ordinarily $90 ,000,000
to $100,000,000,
The $25*000,000-$30 ,000,000 in excess of seasonal
requirements during the week is in part the result of the shift from
a check to a cash basis as suggested hy the fact that the increase was
general throughout the country.
This is shown in the following table:
CHANGES IN DEMAND FOR CURRENCY BY FEDERAL RESERVE DISTRICTS™,,,
ror ulnLuLAT!nN.
Allurl.---Week ending July 6 , 1932
(In millions of dollars)
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St, Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Mr. Hnmlin.V^'
Mr. Jerries _»
Mr. Macee .
Mr. Miller..
Increaser. Pole ..
afterMir. Harrison.
seasonal'^. Morrill..
adjustment. McClellan^
Mr. Wyatt K - 5 Mr.
Amount of
increase
during
week
Normal
seasonal
increase
15
33
g
g
10
35
3
4
6
5
9
5
3
3
lg
3
3
2
- 9
2
• 6
g
5
20
2
2
1
l4
4
6
4
127
98
21
- 2
5
4
(
—
-----
Pleas note/initial
»nd returntto ^GOVERNOR.
R
e c e iv e d
JUL
9 1932
THE GOVERNOR
_ edera°F
l RESERVE- BOARD
Reproduced from the Unclassified / Declassified Holdings of the National Archives
It is to be expected that the Change from a check'to a cash basis
would be most marked in the first week of the month when small monthly
bills, which can readily be paid in cash rather than by check, are or
dinarily settled.
Although no statistical evidence is available, we
have had a number of reports from people who have paid all their small
bills in cash this month for the first time, and have considerably in
creased their customary supply of cash, and this factor may be more im
portant than appears on first consideration.
It is unlikely that
dividend and other corporate payments,vith the possible exception of
payrolls, have yet been shifted to a cash basis.
Certain large cor
porations have already changed the form of their checks in order to
evade the tax,*
The increase in demand for currency in some districts, however,
was larger than can reasonably be accounted for by the increased use
of cash in preference to checks.
The Philadelphia Federal Reserve
Bank reports some drain of currency incident to banking difficulties
in and near Wilkes Barre, Philadelphia, Allentown, and other centers.
In the Minneapolis district, the reserve bank reports that a continuous
and gradual withdrawal of deposits from banks in certain parts of the
district has been under way for a considerable period of time.
It
is possible that the more rapid rate of increase during the past week
is a reflection of apprehension over banking disturbances in the Chi
cago district.
*See attached clipping from the Hew York Times for June 30» 1932.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
The Chicago district was an exception to the general increase.
During the past week the volume of currency outstanding increased hy
about $9*000,000 less than usual, apparently because of a substantial
*.
return of cash from vault holdings of banks, amounting to $12,000,000
for reporting member banks in the City of Chicago alone.
/V£Vtj* fff
The^aemand for gold coin again declined during the week, and with
drawals were only slightly more than $1,000,000.
This document is protected by copyright and has been removed.
Article Title:
Banks to Aid Plan to Avoid Check Tax
Newspaper Title:
New York Times
Date:
June 30, 1932
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N O . 131
/ " 't
FEDERAL RESERVE
U rh ce Correspondence
B0AR
D
rw
7. v > v
holiday week-end was larger than usual, as indicated by the follow
ing table.
Estimated Change in Hoarding
(In millions of dollars)
June 30
+
7
July
1
+ 13
July
2
+12
July
5
0
Increases were general throughout the country, but the demand was
larger‘than normal in the New York district on June 30 and July 1,
in the Chicago district on July 2, and in the San Francisco district
during the entire 3“ &a7 period.
On July
5 , however, volume of money in circulation showed about
the usual change.
For C1SCULATI0N:_______
Mr. Hamlin
...........
Mr. James .
Mr. Magee _,
Mr. Miller .
Mr. Pole
Mr. Harrison..
Mr, M o rrill___ ___________
Mr. M cC lelland/.v^f._____
Mr, Wyatt
...........
M r . ......................................
Mr..................... ...................”
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
and our estimates show an increase in hoar
d
nf more than $35,000,000
in the six days from June 16 to June 21, the largest being $19,000,000
on Tuesday, June 21.
Most of this non-seasonal increase has been in the Chicago district
where it is estimated that $30,000,000 was withdrawn in excess of normal
demands, apparently reflecting uneasiness over the banking situation as
a result of recent suspensions.
There was a small outflow/ in the San
Francisco district, amounting to about $<4,000,000.
In the New York dis
trict, hov/ever, withdrawals have apparently been checked and there has
recently been a small return of currency.
The following is an estimate of hoarding in the Chicago district by
days in June.
Through the twenty-first it amounted to $42,600,000:
ESTIMATED INCREASE IN HOARDING IN THE
CHICAGO FEDERAL RESERVE DISTRICT
1 2
3
4
6
7
8
9
10
11
13
14
15
16
17
18
20
21
+ 0 .7
+ 1 .4
+ 0 .7
+ 1 .1
+ 1 .7
+ 1 .6
+ 0 .3
+ 2 .3
-2 .2
-1 .1
+ 0 .2
+ 4 .4
+ 2 .8
+ 2 .7
+ 7 .7
+ 5 -5
+ 1 2 .8
For CIRCULATION:______
Mr. Hamlin
Mr. James . S .- y l . ----------Mr. Mapee „
-------—
Mr. M i l l e r .......... Mr. Pole —
--------Mr, H a r r is o n ...V L -.___ Mr. Morrill
Mr. McClellan^
..........
Mr. Wyatt . K . .................... Mr............................................
Mr.......................................... ..
Please note-initial
.and return to GOVERNOR.
l
j
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Form NO. 131
COPY FOR f’-OVSRNO^vfEYER ^
/
C fK 1
'
'
------
1 Jr
-----FEDERAL RESERVE
Uttice^w responuence
To—
From,
_
-- -----------Mr. Goldenweiser^
/\0______ _^
June
2 3 .1 9 3 2
Subject:___ ‘_________ ^
£ 4
_______ _____________ '_____ Uf
aL I /
0 .■
For CIRCULATION:
Mr. Hamlin.
Mr. James ”H^artiing of currency, which had declined for ten weeks beginning
Mr. Magee _X j£-.... *
Mr. Miller.. .
Mr. Pole s/ . -
...............
Mr I'orr^''
3
increased after that time, and particularly since the
of June.
The amount of currency returned from hoarding, which
Mr W ^ r v ^ ' fSSbhed $2 5 0 ,0 0 0 , 0 0 0 in the middle of April, was reduced to $125,.... '0007000'by the fourth week in June.
These facts are brought out by the
Please n o te e M m t.
and return to GOVERNOR.
The return flow of currency from hoarding, which followed upon the
organization of the Reconstruction Finance Corporation, was for the most
part in the industrial areas, where hoarding had been in the largest
volume.
Increased hoarding after the middle of April followed upon a series
of important bank failures first in the Boston, later in the New York,
and more recently in the Chicago district.
It was accelerated by the
psychological effect of the outflow of gold, which was in large volume
in May and the first half of June.
There was even some hoarding of gold
coin, at the rate of about $8,000,000 a week for two weeks, but this de
clined in the latest week to $3,000,000.
The announcement of the fact that balances held by foreign central
banks in this country have now been reduced to relatively small propor
tions has had a reassuring effect, and as gold exports have ceased, gold
hoarding has diminished and may be expected to stop-altogether.
It was
never important in quantity, but might have been a dangerous beginning.
'
i
vf
Keproduced from the Unclassified / Declassified Holdings of the National Archives
/
Mr. Joslin, - #2
June 23, 1932
I know of nothing that can be done about the return of hoarding
other than what-is being done to support tije banking situation and to
encourage the resumption of business activity.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
ESTIMATED M O U N T OF HOARDING - WEEKLY
February 2l to ^ m ie 21, 1932
Millions of dollars
Millions of dollars
1600
1600
1500
1500
U00
UOO
1300
1 3 00
1200
1200
Wednesday dates
Federal Reserve
Board
Reproduced from the Unclassified / Declassified Holdings of the National Archives
■
F o r m N o . 131
Office
Correspondence
To_
Governor Meyer.
From
Miss Joy______
FEDERAL RESERVE
BOARD
Date
June 17t 1932
The increase of $15,000,000 in currency outstanding in the
week ending June
15
was contrary to the usual seasonal movement;
ordinarily there is a decline of $15,000,000-$20,000,000.
Thus
the estimated increase in hoarding for the week is $3 0 ,0 0 0 ,0 0 0 -
$ 35 , 000 , 000.
The largest part of this increase in hoarding, as in the pre
ceding week, was in the Hew York Federal Reserve District.
There
was also an increase— much smaller, however— in the Chicago dis
trict.
(Perhaps it was the Convention; perhaps hank suspensions.)
Increased demand for gold coin was only $3,000,000 during
the week ending June
15
, in contrast with increases of $3,000,000
in each of the two preceding weeks.
For CIRCULATION:.^”
Mr.
Mr.
Mr.
Mr.
Mr.
H a m lin .V C «
James
Magee
..............J
M i l l e r , . V . ........... . . . j
P o le ,.. V . ____
Mr Marrionri n■■ n
Mr. Morrill
Mr. M cC lellan/,
Mr, W y a t t .............
Mr. ...........................................1
Mr.......................
J
Please note-initial
and return to GOVERNOR.1
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fo;
31
Office Correspondence
FEDERAL RESERVE
Dat June 10, 1952
FEDERAL RESERVE
BOARD
Subject: Industrial
To__ Governor Meyer
building activity-4ir Hay
Mr. Garfield
2— 8495
INDUSTRIAL PRODUCTION
We have just estimated the Board1s seasonally adjusted index of in
dustrial production for May at 62 per cent of the 1923-1925 average, down
2 points from April.
Output in the pig iron, coal, petroleum, and silk
industries declined and in the meatpacking industry production increased
by less than the seasonal amount.
Trade reports indicate further substan
tial reductions in activity at cotton and woolen mills, following the
drastic cut in production in April.
Lumber output increased slightly dur
ing May, however, and automobile production showed a substantial increase
as Ford expanded operations rapidly.
Total industrial activity, as measured by the Board1s seasonally ad
justed index, has declined 2 or 5 points every month since December when
it was at 74 per cent of the 1923-1925 average.
has declined 50 per cent (from 125 to 62).
Since June 1929 output
The figures for last May and
from November to date, with and without seasonal adjustment, are
nON:
the table below.
INDEX OF INDUSTRIAL PRODUCTION
(1923-1925 average = 100)
Adjusted for
seasonal
variation
1931
1932
May
November (low)
December
January
February
March
April
May
P preliminary
87
73
74
72
69
67
64
p 62
73
68
feta
fl&ase note-initial
tsfcun to GOVERNOR.
M * \ z m
i
Bgg| QJf
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2-
Steel
During May, current weekly trade reports indicated an increase in
activity at steel mills to 24 per cent of capacity for the month as a
whole from 22-J per cent in April, while the official figures of the Iron
and Steel Institute, issued this week, reported a decline to 20 per
cent.
There is evidence that both were in error and that production was
at about the same level as in April.
The Iron and Steel Institute fig
ures, heretofore relied on as final, were based on official figures for
95 per cent of the capacity of the industry, but did not include Ford,
whose steel operations were at an exceptionally high level during May.
Since the first of June a decline in activity of greater than sea
sonal proportion is reported.
Between the week ending May 21 and the
week ending June 11, activity declined from 25 per cent to 20 per cent,
according to Iron Age and Steel.
The current week is estimated still
lower— 17 per cent— by American Metal Markets.
Automobiles
Automobile production in the United States increased from 148,000 cars
in April (usually the peak■month) to about 180,000 in May.
Activity in
recent months has been greatest in the low-price group and it is rumored
that several producers, including Essex, Chevrolet, and DeSoto are plan
ning the introduction of new cars in this field this summer, featuring
low prices.
The latest news indicating the downward price movement in
this industry (already clear in the case of Ford and Chevrolet) is a
drastic cut by Auburn on June 9, amounting to one-third of the delivered
price on some models, and, immediately following this, a smaller cut by
Rockne
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Output in the first six months of the year will be between 850,000
and 900,000, which suggests an output of 1,300,000 to 1,800,000 for the
year, since in the last ten years output in the first half has ranged
from 50 to 65 per cent of the total for the year.
Last year 1,573,000
cars were produced in the first half and 817,000 in the second half.
*
The small volume of factory payrolls, dividends and other types of in
come will unquestionably hold sales for the year at a low level rela
tive to 1931 as well as to years of prosperity (the five-year annual
average, 1925-1929, was 4.3 million), but many of the 26,000,000 cars
on the road are old ones and many owners will be in a position to buy
light cars in the low-price group or heavy cars with new cut-price tags.
Textiles
Until April, production in the textile industries had been main
tained at relatively high levels, as compared with most other indus
tries; but in April, with declining demand, activity in these indus
tries was reduced much more than is usual at this season, and the Board's
seasonally adjusted index of textile output declined from 82 per cent of
the 1923-1925 average in March to 65 per cent in April.
In May the de
cline in output at cotton, woolen, and silk mills continued, and in the
rayon industry production and prices were cut.
Building activity
Construction contracts awarded in May amounted to $146,000,000, an
increase of $25,000,000 over April, largely accounted for by a few Fed
eral contracts for public buildings.
During the first five months of
the year total value of awards was 62 per cent less than last year,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
,4.
reflecting chiefly decreases of 77 per cent in public utilities, 70 per
cent in factories, 67 per cent in residential building, 61 per cent in
commercial building, and 56 per cent in public works and public build
ings combined.
These percentages probably overstate the decline in
physical volume of construction undertaken, because building costs have
declined in the interval and, in the case of work undertaken by public
agencies and public utilities, because a larger proportion of construc
tion is now being done without outside contracts.
During this period
contracts awarded by public agencies have made up 45 per cent of the
total reported.
With continued need of retrenchment in public expendi
tures there is little prospect of greatly increased activity in this im
portant part of the industry, although some increase might develop if
the market for municipal and State bonds improved or if there were as
sistance from the Federal Government.
In the residential field the
value of contracts showed none of the usual seasonal increase this
spring and from April to SSay declined by $3,000,000 to $36,000,000;
their value is now at 14 per cent of the 1923-1925 average.
Building
of apartments and hotels has practically stopped (awards totaled 28
million dollars in the first five months as compared with 637 million in
the corresponding period of 1928) while other residential construction
has shown a smaller decrease (from 636 million in the first five months
of 1928 to 112 million this year).
It is clear that in many lines of
construction, activity is at a complete standstill and can be reduced no
further.
Total volume of construction has been cut four-fifths from
1926-1928 levels and any further declines cannot be of great significance
in the total industrial picture.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
American paper currency continues to flow back from Europe at
a rapid rate.
In the month of M a y total receipts by Hew York banks
were nearly $11,000,000, more than twice as much as in April,and the
largest in any one month since 1923«
There were no shipments to
Europe.
The largest contributors were Germany, Switzerland, Poland, and
por CIRCULATION: „
Holland, as shown in the table below.
Receipts of American Currency from Europe
(000 omitted)
Mr.
Mr.
Mr.
Mr.
Mr.
Hamlin,
James .
Magee ,
Miller
Pole.
A t*', m m swi.,.
Germany
$3,666
Switzerland
1,284
Poland
1,222
Holland
1 ,0 9 0
Mr. Morrill
Mr. McClelland/.!
Mr, W y a t t . X . ........ ..............
Mr.............................................
Mr............................. - ..............
Please note - initial
England
355
Danzig
SUo
Prance
811
All other
Total
inrf return to GOVERNOR.
1,170
$10,938
RECEIVE*
JUN 17 1832
SFFILE #F THE GtVERNBR
FK1ERAL RESERVE BBARS
Reproduced from the Unclassified / Declassified Holdings of the National Archives
A
K
F o r m N o . 131
Office Correspondeifce
RAL RESERVE
BOARD
Date
June 8, 1932
To______ Mr, Goldenweiser
Subject:____ Demand for Currency Week
F r o m ____ Miss Joy___________
___________Ending June H,__________
.ro
a-TM
y
2 -n
During the week just past there was an increase in the volume of
money in circulation which cannot be accounted for by holiday and
month-end demands, particularly on June 1 and 2, and again on June 4,
with the consequence that our estimates of the amount of hoarding in
creased by $30,000,000, and on Saturday, June 4, the total decline in
hoarding since February 4 was estimated at about $210,000,000.
Withdrawals of currency in excess of customary amounts were
largest in the New York, Chicago, and San Francisco districts, particu
larly during the early part of the week.
In the last three days total
withdrawals were smaller and centered in San Francisco, Chicago, Minne
apolis, and Dallas districts.
With the exception of the suspension on Saturday, June 4, of the
First National Bank of Beverly Hills, California, with deposits exceed
ing $6,000,000, there were no bank failures of any consequence during
the week.
The small but persistent withdrawals in the Minneapolis
district, however, appear to be the result of bank runs in scattered
areas throughout the district.
The increased demand during the first
part of the week may be related to general apprehension connected with
gold exports, particularly since the currency demand was concentrated
in financial centers, and since a similar demand occurred at New York
n
J UN P
193?
OPVrrm O ?
2— 8495
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2
-
last October during the period of gold exports at a time when there
were no bank suspensions in the New York area.
On Monday, June 6, howTever, the return of currency from week
end use was slightly larger than usual.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 13
Office Correspondence
FEDERAL RESERVE
BOARD
-TV
Date June 3. 1932
Governor Meyer
From
E- M.
We have recently set up figures that‘enable us to measure changes in
the demand for gold coin each week by Federal reserve districts.
The figures for the week ending June first are as follows:
(in millions of dollars)
+ 0.3
+-5.5
+ 0.5
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
+ 0 .6
Total
+ 7.9
For CIRCULATION:
Mr. Hamlin
—•
Mr. James
Mr. M agee____
Mr. M iller.
Mr. P o le..
Mr. Harrison. _>
Mr. Morrill
Mr. McClelland^
Mr, Wyatt.
M r . ............................
Mr, ............................ “ [ I ”
+ 0 .2
+ 0.1
+ 0.5
-A 0.1
+ 0.1
Please note-initial
and return to GOVERNOR.
]
RSCSiVSB
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o rm . N o . 131
=5- V V '
Office Correspondence
To,___
Governor Meyer
From
Miss Joy
0 -
FEDERAL RESERVE
BOARD
Date
Subje c t:___ Money in
#D '
2 — 849 5
between May 25 and June 1 is about the usual seasonal increase in view
of the larger demands for currency over the holiday week-end and the
For the latter part of last week, there was a decline in
hoarding of nearly $25,000,000.
Beginning with May 28, however, hoard
ing increased again by more than $20,000,000, of which $14,000,000 was
on June 1.
I
.Tune 2 ,
The increase of $57,000,000 in the volume of money in circulation
month-end.
»
For CIRCULATION:
Mr.
Mr.
Mr.
Mr,
Harrison,.
Morrill
McClelland
Wyatt _. \ /
Mr.......
Mr. ...... .
Please note-initial
and return to GOVERNOR,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
FEDERAL RESERVE
BOARD
-
Date
May 26. 1932-
The attached memorandum on hoarding of gold coin gives
a somewhat more detailed discussion than the brief statement recently given to Mr. Robinson.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
HOARDING OF GOLD COIN
Gold coin in this country outside of the U« S. Treasury and the
Federal reserve banks has increased by about $60,000,000 as compared
with a year a g o •
Recent reports from the Federal Reserve Bank of New
York on receipts and payments of gold coin for domestic use indicate
that there has been a substantial increase in withdrawals in recent
weeks.
The increase during the year probably represents in large part
the hoarding of gold coin by banks and individuals, since little gold
coin is in hand-to-hand circulation.
However, it forms a very small
part of the total increase in hoarding, which is at present estimated
at about $ 1 ,350 ,000,000.
The amount of gold coin outstanding had declined steadily for a
number of years until the late spring of 1931 » when there was an in
crease of $10,000,000.
In September and October, after Great Britain
suspended gold payments, there were further withdrawals of about
$20 ,000,000 for use in this country, followed by a return to the reserve
banks in November,
This is illustrated by the attached chart, which
shows the amount in circulation at the end of each month from January,
1929 to April, 1932.
In December about $20,000,000 in gold coin is
ordinarily withdrawn for use as Christmas gifts, and this year the amount
was only slightly larger than usual.
After Christmas, however, the re
turn was smaller than in other years; and in April the amount outstand
ing increased by $7 ,000,000.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
U. S. GOLD COIN IN CIRCULATION
(End of month)
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Reports from the Federal Reserve Bank of Few York'indicate that
the recent increase in withdrawals "began late in March and during April
there were net withdrawals at Few York of $4,300,000, more than half of
the $7,000,000 withdrawn in the country as*a whole*
In the first 24
developments
days of May an additional $8,800,000 net was taken out.
These/are shown
in the table, which gives a record
of receipts and payments "by the Fed
eral Reserve Bank of Few York to banks and individuals for domestic use
for the period September 1, 1931 > to May 24 of this year*
(In thousands of dollars)
Month
Receipts
1931 — Sept.
Oct,
Fov.
Dec.
450
2,190
1932— Jan.
Feb.
Mar,
Apr.
May 1-24 incl.
3,195
3.641
4,683
882
Total (Sept. 1 to
May 24)
5.3 6 1
8,008
868
32 .630*
Payments to
banks and
individuals
7,630
10,908
366
17,73 6
1,925'
2,389
855
5,226
9,710
56,745
________ Fet
Receipts
Payments
7,180
2,718
4,995
9,728
1,270
1,2 5 2
3,828
4,344
8,842
24 ,1 1 5
♦Exclusive of $2,648,000 in imports not shown separately
in the monthly figures.
Division of Research and Statistics
Federal Reserve Board
May 26, 1932
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
0.
F o r m No.
FEDERAL RESERVE
BOARD
r . c r ' 9 ) ^
'
U rrice^uorrespo
To_
Mr, Goldenweiser
From
Miss Joy
//
Date_ May...20, 1332 _____
Subject:__ European Shipments
ceip ts of_. American_Ourrency
a 5.
v f j V, \
The American dollar has evidently completely lost its popularity
as a circulating medium in Europe.
In January, Hew York banks
shipped $25*000 in American bills and since that time there hape,
been no shipments whatsoever.
There have been times in the past
when shipments dwindled to nothing, but never for so long a time.
At the same time, much American currency has been returned from
abroad.
From October, 1931» when the return began, to the end of
April^ nearly $40,000,000 has come in.
These receipts are more than
twice as large as in the corresponding period in 1927-28 and 1928- 29*
Hearly half of these shipments have come from five countries:
many, England, Switzerland, France, and Poland,
Ger
Shipments from Ger
many, which probably represent not only money hoarded by German na
tionals but also by persons in surrounding countries, have amounted
to over $9,000,000 since October, as compared with about $2,500,000
for both England and Switzerland and about $1,700,000 for France
..........................................
please note - initial
god return to GOVbhMOS,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
W
Mr. Qoldenweiser
19, 1932
Demand for Currency >
^
"fklfcMpiREC’D IN FILES SECTION
Mias Joy
IKh VaiaI j i
JUN 241953
Monday, the sixteenth, and Tuesday,^ the seventeenth, have
shown Increases in hoarding; the first of $4,000,000 and the
second of $23 ,000,000.
On the seventeenth there was a return flow of only $10,000,000 which was exceedingly email.
The return flow in Mew York
was $10 ,000,000 less than usual and may have been connected with
rumors concerning the Bank of Manhattan Trust Company which is
sued a statement early this week denying that it was about to
merge with another bank.
The return flow in Boston was also
$1 ,000,000 smaller than usual, probably connected with the fail
ure of the Leominster (Mass.) Bank on the fourteenth,
In the
Chicago district, where the run-back on Tuesday was $2,000,000$4,000,000 less than usual, a bank In Fort Wayne, Indiana, with
deposits of $3,^00,000 failed on that day.
In the San Francisco
district there was no change in demand for currency, although
there is ordinarily a decline of $1 ,000,000-$ 3 ,000,000,
3To >
bank failures were reported, but the existence of some uneasiness
is evidenced by postal savings deposits of $132,000 in Seattle
and $4l,000 in Spokane on the sixteenth.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
T o ____
FEDERAL RESERVE
Gktvernor_Meyer__________
F r o m ____ Mr. Goldenweise
The decline of $17,000,000 in volume of money in circulation
"between May 4 and May 11 was no more than the usual seasonal change.
The large withdrawals of the preceding week have not yet returned
to the reserve "hanks.
In the Chicago district there was a continued withdrawal of
currency during the week while in New York the return flow was
somewhat larger than usual.
At the Boston Federal Reserve Bank
there was an unseasonal increase in demand of $£,000,000 on May 11,
following a considerable return in the first three days of the month,
and again early this week.
In the Minneapolis Federal Reserve District there has been a
slow and continuous increase in circulation since the middle of
March, although there is ordinarily little change at this time of
Pm
For CIRCULATION:...............
Reproduced from the Unclassified / Declassified Holdings of the National Archives
4
that the time is propitious.
Theodore G. Joslin, Esq.,
Presidential Offices,
Washington, D. C.
"d> /. /
~ UMV,aoomcu' utiuidssmea noiaings of the National Archives
Capital R e s e a r c h C o m p a n y
-s ix x x -E A S ." U R e e ." iL y - € J iG < > N e . s t b e w
may
NEW YORK
20 Exchange Place
2 0 1932
0#toe b f t#heSdc’y.
'Coloration
May 17, 1952
Dear Mr. Snyder:
The statement this morning or weekly reporting
member banks was very disappointing.
Obviously the banks
are continuing liquidation on a large scale and are using
the stock market simply as a means for unloading securities
on the other fellow.
In light of the present state of mind of the country,
I fear that the Federal deserve policy is being frustrated
by the persistence of the banker attitude.
I think the
time has come when either the cause must be given up as
lost or else the battle has to be made a real battle.
By
this I mean that in every Federal deserve district there
might be set up an organization for the purpose of assuring
cooperation among the banks within that district.
This will
probably have to go so far as to be almost tantamount to
putting the banicing system on a war basis.
I believe the
country would respond warmly to aggressive leadership of
this type, but can see no indication that when the matter is
left to enlightened self-interest on the part of the individual
" UIM Ulti uiiuidbsmea / ueciassitied Holdings of the National Archives
z
•l -Y 2 0
banker there is any tendency to turn the tide.
I believe a
real battle would be effective but doubt whether the pure
mechanics of the policy will carr^ through unless the cam
paign is carried right out across the country.
Moreover, I am wondering whether the policy will be
effective unless the more active cooperation of Great Britain
is secured.
I'he effect of present British policy is to keep
everything down.
If the Bank of Bngland were to endorse the
type of policy which the Federal Reserve have recently been
pursuing, I believe that the policy would receive a dramatiza
tion which would, for the first time, fully fire the imagination
of the American public.
There may be many difficulties in
the way of such international cooperation, but either these
difficulties must be overcome by deliberate action in advance
of a crisis, or else we shall probably drift to the brink
of
crises and then, at the eleventh hour, overcome them in sheer
desperation.
As you will see, 1 am profoundly conscious of the
extent to which the morale of the public has recently been dis
integrating.
At the moment this is attributed to the sins of
the politicians, but,to go back of that, one finds the source
in the grinding process of the deflation which is still going
on*
Sincerely yours,
i*
M r. Carl Snyder,
Federal Reserve Bank of N.Y•
ob Liberty Street, New York City
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
^ » UCT,W% .
** Reo'd. %
•J A Y 2
0 1932
Confidential
April 19, 1952
Ofl&e of the $«c*y,
FACTORS MAKING- FOR BUSINUBSaflBBflyERY
Conditions and Forces That Might Aid In a Strong Recovery of Industry, If
The Impetus is Supplied.
A singular apathy or hopelessness seems to have seized our business
leaders and especially bankers.
Faith in the fundamental strength and riches
of the nation seems for the moment paralyzed.
continues, up to the latest week.
The contraction of bank credit
Commodity prices are still falling.
And
hope ebbs.
It seems to the writer that possibly never in the history of the
country was this deep pessimism less justified.
Our splendid equipment of
labor-saving machinery, incomparably the finest in the world, is still here; so
also the most highly productive body of skilled workers in the world.
nation with restricted supplies and pent up demandsi
A
Only awaiting the magic
wand of an adequate credit supply to pursue its normal progress.
The writer has listed some fifteen factors which would contribute
to recovery, once the adequate impetus can be given.
of the very conditions which now obtain.
I,
Many of these grow out
They are, in brief:
Deferred or Unsupplied Demand
(1) The normal growth of population with its normal
demands, a slow but persistent increase even in depressions,
(remembering that 80 per cent or more of the normal trade
and consumption of the country still goes on even in the
deepest depression).
(2) The deferred demands created by this and by the
depression itself, alike for comforts, for better housing,
for autos and all sorts of things; and likewise for improve
ments in plants of factories, and the like.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
3
u
2
*
(3)
This deferred demand is very evident in the re
markable fall within the last six months or a year in our
indexes of the production of goods for immediate con
sumption. Though there are notable instances, like silks,
boots and shoes, and others, on the whole the decline in
this type of production has now reached a point at least
three times as far below normal consumption as at the
lowest point in 1921,
.
.
(4)
These findings are confirmed by the tremendous fall
in merchandise and miscellaneous car loadings which likewise
have fallen far below the relative point reached in f21. (The
fall in total railv/ay traffic, in ton miles, is of course the
heaviest known since the figures began to be compiled in 1852.)
(5)
The long duration of the depression, involving the
longest continued decline in trade and the longest continuous
fall in prices certainly in the last ninety years. The usual
type of crisis and depression curve is a violent fall and then
a long, slow recovery. This .time we have had a long end per
sistent decline, which might make for a more rapid recovery
when confidence is restored.
II.
Credit and Banking
(1) Increasing ease of credit conditions, and especially
the lifting of the handicap on the operations of the Federal
Reserve System by the passage of the Glass-Steagall Bill.
(2) The work of the Reconstruction Finance Corporation
which by its loans to some 13 or 14 hundred banks has markedly
decreased the number of bank failures, and the attendant hoard
ing of currency,
(3) The extreme liquidity of the larger banks of the
larger cities, some of which have their funds to an unprecedented
degree in cash or Government securities.
(4) The remarkable reduction in debt, amounting in the banks
alone to over 12 billion dollars since September of 1929,
This
has involved an extreme degree of deflation which has nearly
wrecked the country, but the lending capacity of the banking system
of the nation is now just as great as ever; that is, has full power
to bring about a corresponding expansion of bank credit.
(5) In the face of the drastic decline in commercial bank
deposits the savings banks of the country have shown a gain of
over a billion dollars.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
3 Qr><^ ^ >
3
(6)
Finally, 4 billions of gold in vaults, available as
banking reserves, and a banking system organized to make the most
effective use of this enormous reserve. And experience has shown
that potential bank credit will always be employed, sooner or later,
when it exists.
(There is also to be noted a heavy addition to the world’s
gold stock by a quarter of a billion of buried gold from India
and elsewhere, equivalent to more than the world’s usual annual
monetary supply of new gold. And the supply of new gold from
the mines, available for monetary purposes, will this year be
especially large.)
* e%
T
I*
s*
*
1iA
o
3
5
%
O »
CD
to
® o
o.
CD
III.
Prices and Production
■s a
CD
-n
5:(l)
The extreme fall in all kinds of prices, especially of § ro
%
>
stocks, bonds and commodities, is beyond any precedent. Especially•<,
-P
in commodities the decline has been far out of proportion to the
contraction of bank credit. Even a moderate rise in security and
commodity markets would go a long way to restore the banks to more
normal conditions.
(2) The extreme ebb in speculation and the extinction of
some 8 billion dollars of brokers’ loans, i, e ., largely specu
lative, resulting in an unprecedented fall in all kinds of se
curity prices, and deeply affecting business confidence. Most
kinds of securities are now selling at bargain prices, perhaps
the lowest, relatively, in half a century.
(3) Relatively low factory and warehouse inventories; allow
ing for the normal growth of industry, they are apparently lower
than at the end of 1921.
(4)
The ratio of factory payrolls to the value of manufactured
products fairly high, due probably to the violent fall in raw mate
rial prices. This ratio, representing potential consumer demand,
in the past has been a favorable indication.
Since the passage of the Glass-Steagall Act the Federal Reserve has, by
its purchase of securities, added some 345 millions to the potential reserve of the
member banks of the dystem.
This may be applied either to decreasing the borrow
ings of the banks from the Federal Reserve, or appear as excess reserves.
excess may now be in the neighborhood of 200 millions.
This is, the writer be
lieves , the infallible condition for credit expansion and business recovery.
This
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
3 0 ? ^ ,^
4
The Reserve program, carried out unflinchingly, means, I believe,
the end of unemployment and a country restored to normal conditions.
Why, then,
the apathy, the hopelessness?
It would seem to lie in the mistaken ideas as to the nature and cause
of business depressions.
The long-standing, persistent belief that these pro
found disturbances arise from conditions within trade itself:
Over-product ion,
Excess Capacity, Unbalanced Industry, Mushroom Growth, Extravagance, Too High
Living!
All the fantasies the mind of man can invent.
At most the evidence for all these factors is extremely slight.
It
is after the crisis, after the depression has set in, that these factors begin"
to emerge; not before;
They seem results and not a cause.
This nation has been continuously producing and consuming more goods,
and more goods, actually and per capita; continuously adding to its "capacity,"
continuously enlarging its plants and continuously making its needed adjustments
to conditions, for a good deal more than a hundred years.
This everlasting, continuous, immutable growth, this inherent momentum
of industry, has not stopped.
diminished.
There is no evidence that it has slowed down or
It has simply been checked, as it has been checked a dozen times or
more before.
And, as the writer sees it, invariably for the same reason; a financial
crisis, a check to credit expansion, leading to a contraction of credit, falling
prices, disruption of trade.
exception.
The invariable sequence.
Practically never an
This is the one factor, the one outstanding cause for which there is
clear, abundant and clinching evidence.
/y.
* Beo'd.
2 0 1932
Offlc. of the Secy
Corporation
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
Z<=3C>^'^>
So long as we continue to ignore this evidence, piled up steadily
through the last ten years and covering more than a century of our industrial
growth, so long probably will we continue to believe in the fantasies of Over
production and all its kindred.
Therefore, so long we shall continue to have
crises, depressions and unemployment like the present, because we shall not
apply the preventive measures which forestall the booms that bring about these
disturbances, nor apply adequate remedies after the disturbance has set in.
Meanwhile, there seems to the writer a Macedonian call to carry
forward the present " e x p e r i m e n t a s it seems to be widely regarded, to its
successful issue, viz., to stop the continuous contraction of credit, which
would wreck the nation if it were continued.
periment.
years.
In reality this is not an ex
It has been tried successfully three times within the last ten
And essentially the same forces were equally efficacious even before
the Federal Reserve System in 1908 and in 1914-115.
They can be made to
succeed again.
RUCTION,,
* Reo’d' %
•'.MV 2 0 1932
ttffbe Sec’y.
^WpbtWon
Reproduced from the Unclassified / Declassified Holdings of the National Archives
May
Mr. Ooldenweiser
1 3 , 1932
Swennd for Currency in Boston~
Hies Joy
R EC ’D i n f il e s s e c t i
JUN 211953
I___ 2
On Wednesday the Central Trust Company of Cambridge* Mass%
2
chusettg with deposits exceeding $1 1 , 000,000 suspended,
that day there was an Increase In circulation of $2 , 000, 000, fol
lowed yesterday by another increase of
$1,700,000.
Prior to
that time there had been some return flow of the money which had
been withdrawn at the time of the merger of the Atlantic national
with the First lational of Boston.
/
/ /
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Office Correspoo ndence
FEDERAL RESERVE
BOARD
Subject:
To_______ Governor Meye
♦ Mon
F r o m ____ Ml 3a Jc
k m
: ^
The increase of $50,000,000 in money in circulation "between
April 27 and May
4 was about $35»000,000 larger than usual, chiefly
because of large withdrawals in the Boston, New York, and Chicago
federal Reserve Districts.
This reduces the estimated decrease
in hoarding since February
4 to a little more than $200,000,000.
In the Boston Federal Reserve District about $15,000,000 was
withdrawn during the week as compared with a usual withdrawal of
$3,000,000.
This is shown on the chart which gives actual daily
changes in demand for currency, cumulated from March
30 to May 4,
as compared with the normal seasonal change, shown by the dotted
line.
After the middle of April there was a gradual increase
until April 27; while in the following three days demand increased
very rapidly.
There were withdrawals of $3,000,000 on the 28th;
$7,000,000 on the 29th; and $8,000,000 on the 30 th.
The return
flow in the first three days of the current week has been about
$3,500,000 so that on May
still outstanding.
4 most of the currency withdrawn was
For CIRCULATION:
Mr. Hamlin
Mr. James
Mr.' Magee
Mr. M iiler.
Mr. P o le ..
Mr. Harriso
Mr. Morrill
Mr. McClell
Mr. W yatt.
M r . ..........................
Mr..........
Please note-initial
end return to GOVERNOR.
CHANGE IN DEMAND FOR CURRENCY - BOSTON FEDERAL RESERVE DISTRICT
In millions
of dollars
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 27. 1932
Governor Meyer
Mie» Joy
/•
Money in circulation
on
Monday, April
25
the country as a whole of $5,000,000 as compared with Saturday, which
is a slightly larger decline than usual.
In the Boston district final figures show an increase In demand
for a ll kinds of currency of $1,800,000.
normally there is a return
of about $1,000,000 on Monday so that In a ll probability $2,500,000
or more was added to bank vault cash and private hoards on that day.
Actual payments of currency by the Boston Bank were $5,661,000 and
receipts $3 , 858, 000.
In a ll other federal reserve districts except Cleveland there
was a decline in currency demand,the largest being Hew York where
$U, 000,000 returned from circulation.
J
Reproduced from the Unclassified / Declassified Holdings of the National Archives
April 26, 1932
Governor Meyer
Currency Demend, April 21-23*
R E C ’D I N F IL E S S E C T IO N
Mies Joy
In the last three daye of last week the Increase in cur
rency demand was about 115 , 000,000 smaller than usual for the
week-end, chiefly because of relatively email demand In Mew
fork and Chicago.
In the San /ranelsco district there was a
continued return of currency, and on April 23 demand was at
about the level prevailing before bank suspensions on April
lU and 15 .
In the Dallas and Philadelphia districts demand
Increased somewhat more than usual over the week end, but the
increases were small; while at Boston there was lit t le change,
and circulation continued slightly above the levels prevailing
ten daye earlier.
V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/
The increase of $2,000,000 in the volume of currency in circu
lation in the week ending April 20 is unusual for this season of
the year, when there is ordinarily a decline of about $1 5 ,000,000.
In the San Francisco and Chicago districts there was an unusually
large outflow of currency from the reserve banks, accompanying im
portant bank suspensions in Globe, Arizona; Spokane, Washington|
and Rockford, Illinois.
In the other districts the seasonal re
turn of currency to the reserve banks was somewhat smaller than
usual.
Recent daily figures on hoarding^accordingly, show an in
crease.
The decline in hoarding from February 3 to April 20 is
estimated to be about $225 ,000,000.
For CIRCULATION:
Mr.
Mr.
Mr.
Mr.
H am lin-.Aff.
James
Magee _.
M ille r..
Mr. Pole___ ] / - - ■
Mr. Harrison.
Mr. M o rrill. .
Mr. McClelland.
Mr. W yatt____
Mr................
Mr. .......... .
Please note - initial
m d return to GOVERNOR.
*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
To_____
Governor Meyer
From______Mr,
The absence of decline in hoarding »on the fifteenth and an
estimated increase on the sixteenth appears to be largely the re
sult of unusual withdrawals of currency in the San Francisco Dis
trict where $5»000,000 was withdrawn in these two days, accompany
ing bank suspensions in Arizona and in Spokane, Washington.
There
was also an increase in demand at New York, but it was of about
the usual amount for the weekend.
For CIRCULATION:.™
Mr. Hamlin
Mr. James . . .
Mr. Magee. . . . _____
Mr. M ille r...
Mr. P o le ... a/ . J C . .
Mr. H a rris o n ...V C ...^
Mr. M orrill___
Mr. McClelland,
Mr, Wyatt.
Mr................
M r................
Please note-initial
and return to GOVERNOR.
j
Reproduced from the Unclassified / Declassified Holdings of the National Archives
COPY FOR GOVERNOR MEYER
For the week ending March 30 aet demand deposits of re
porting member banks in leading cities showed an increase of
$98,000,000 and their time deposits an increase of $5,000,000.
This increase in deposits was due in part to a decrease of
$33,000,000 in Government deposits which results in a transfer
of funds from Government to private account.
Since loans and
investments of these banks showed a decrease of $49,000,000 for
the week, it would seem that no significance attaches to the in
crease in deposits, which probably represents an increase in the
volume of checks in transit caused in part by the proximity of
the end of quarter settlement date.
For CIRCULATION:...............
iilr.
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
JWjrlli jSi'fl. 131
Office Correspondence
To.
Governor Meyer
F ro m
Mr. Goldenweise,
As I mentioned to you last night, there was a return
flow
of currency in every district between March 23 and
March 30, the largest decreases being in Rew York, Chicago,
Cleveland, San Francisco, and Philadelphia-
These are the
districts in which the largest amount of hoarding had occurred.
The table also shows the decrease in hoarding between
February 3 and March 3 0 , which has amounted in the aggregate to
$218,000,000, of which $69,000,000 was in Raw York, $56,000,000
in Chicago, $20,000,000 in San Francisco, and $18,000,000 in
Cleveland.
For CIRCULATION:
l/ir.
please note-Initial
and return to GOVERNOR.
Keproauced from the Unclassified / Declassified Holdings of the National Archives
RETURN FROM HOARDING
(In millions of dollars)
Week ending
March 30. 1932
February 3 to
March 30. 1932
Boston
-
3
-
21
New York
- lk
-
69
Philadelphia
-
6
-
5
Cleveland
-
8
-
18
Richmond
-
1
-
6
Atlanta
-
2
-
12
Chicago
-
9
*-
56
St. Louis
*» l
~
10
Uinneap olis
-
2
-
1
Kansas City
-
1
—
Dallas
-
1
—
San Francisco
-
7
Total
- 55
-
20
- 218
Reproduced from the Unclassified / Declassified Holdings of the National Archives
ro r m N o . 131
. EDERAL RESERVE BOARD FILE
FEDERAL RESERVE
BOARD
O ff*.
To__
Governor Meyer
From
Mr. Goldenweise
I)ate
M a rc h
Time Iepos its;
22, 1932
_/H ________
_______
5-/V* ^
----
I attach two tables giving the statistics requested last night
relative to time deposits; separate figures of savings deposits are
not available in satisfactory form for any extended period of time.
In one table time deposits are shown separately for member and
nonmember banks; this table covers the period 1915-1931.
In the other table, which covers the period 1892-1931, time de
posits are shown separately for national banks, State commercial
bonks and trust companies, and savings banks.
These figures are from the files of the System Committee on
Member Bank Reserves.
Separate figures for each Federal reserve district, except for
member banks, are not available.
For CIRCULATION:................
Mr. H am lin_kf-„
Mr. James . .
Mr. Magee _
___
Mr. Miller.
Mr. Pole . _
Mr. Harrison__ ><
Mr. M orrill.
Mr. McClelland
Mr. V/yatt _ _
M r . .............
M r . ............
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
V/
TIME DEPOSITS OF MEMBER AND NONMEMBER BANKS, 1915-1931
(In millions of' dollars)
Member banks"
Total
National
banks**
State
member
banks
Total*
Nonmember banks
Mutual1
Nonmember
stock
state banks,
savings
trust com
banks*
panies and
private banks*
June
30
Total*
1915
9,133
1,351
1,326
25
7,782
2,922
4,860
1916
1917
1918
1919
1920
10,244
11,476
11,672
13,373
15,816
1,775
2,303
3,395
4,343
5,911
1,729
2,179
2,343
2,784
3,485
46
124
1,052
1,559
2,426
8,469
9,173
8,277
9,030
9,905
3,521
3,901
2,953
3,280
3,537
4,948
5,272
5,324
5,750
6,368
1921
1922
1923
1924
1925
16,453
17,406
19,556
21,313
23,118
6,367
7,175
8,378
9,204
10,389
3,695
4,111
4,754
5,259
5,930
2,672
3,064
3,624
3,945
4,459
10,086
10,231
11,178
12,109
12,729
4,218
3,225
3,463
3,867
3,865
5,868
7,006
7,715
8,242
8,864
1926
1927
1928
1929
1930
1931
24,635
26,964
28,832
28,932
29,374
29,053
11,173
12,210
13,438
13,325
13,812
13,515
6,312
7,313
8,294
8,314
8,736
8,563
4,861
4,897
5,144
5,011
5,075
4,952
13,462
14,754
15,394
15,607
15,563
15,518
4,083
5,228
5,384
5,462
5,097
4,402
9,379
9,526
10,010
10,145
10,466
11,116
*
**
Partly estimated.
Member banks only; i.e., exclusive of national banks in Alaska and Hawaii.
Keproduced from the Unclassified / Declassified Holdings of the National Archives
TIME DEPOSITS, BY CLASSES OF BANKS', 1892-1931
June
30
(In milLlions of dollars)
-> State banks,
All banks in
Mutual and
continental National trust companies
stock
United States banks*
and private
savings
banks
banks
1892
1893
1894
1895
1,927
2,002
1,988
2,080
41
46
50
56
128
» 147
160
180
1,758
1,809
1,778
1,844
1896
1897
1898
1899
1900
2,209
2,291
2,374
2,585
2,967
68
74
79
87
107
208
236
269
318
477
1,933
1,981
2,026
2,180
2,383
1901
1902
1903
1904
1905
3,252
3,501
3,733
3,970
4,383
129
155
185
214
251
617
712
756
866
1,076
2,506
2,634
2,792
2,890
3,056
1906
1907
1908
1909
1910
4,692
5,240
5,377
6,145
6,765
290
422
556
743
848
1,148
1,393
1,432
1,803
1,972
3,254
3,425
3,389
3,599
3,945
1911
1912
1913
1914
1915
7,149
7,706
8,187
8,750
9,133
926
1,021
1,134
1,201
1,326
2,137
2,367
2,463
2,753
2,947
4,086
4,318
4,590
4,796
4,860
1916
1917
1918
1919
1920
10,244
11,476
11,672
13,373
15,816
1,729
2,179
2,343
2,784
3,485
3,567
4,025
4,005
4,839
5,963
4,948
5,272
5,324
5,750
6,368
1921
1922
1923
1924
1925
16,453
17,406
19,556
21,313
23,118
3,695
4,111
4,754
5,259
5,930
6,890
6,289
7,087
7,812
8,324
5,868
7,006
7,715
8,242
8,864
1926
1927
1928
1929
1930
1931
24,635
26,964
28,832
28,932
29,374
29,033
6,312
7,313
8,294
8,314
8,736
8,563
8,944
10,125
10,528
10,473
10,172
9,354
9,379
9,526
10,010
10,145
10,466
11,116
*
Exclusive of national banks in Alaska and Hawaii.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
_
" ■1
FEDERAL RESERVE
L/iric© Correspondence
To
Governor Meyer
F ro m
Mr, Goldenweiseu
•
_____
/ )
B0AR
D
S u b je c t:
Date. March21,1932___
Recent Changes A n D e ^ n d for
Currency by fed A m
For CIRCULATION:...—
nr. Hamlink
r. James
i, r. Magee _ ^
^
Reserve Districts.
y t/
;
:
~
... .
The attached chart gives a regional analysis of the recent re-
Mr. Poie
"flow
currency and the withdrawal which preceded it.
It
Mr. Harrison. _
^ mm
Mr. Morrill
weekly increases in ’’hoarding*'— that is, total withdrawals of
Mr. McClelland^
Mr, Wyatt ..(^...currency in excess of normal seasonal needs— beginning with December
Mr........ .......
Mr......... 3*.ISJl•
The week of December 9 has been taken as a starting point
because it preceded the resumption of heavy currency withdrawals acand return to GOVERNOR,
companying the suspension of a number of banks in Boston,
The first large withdrawal in excess of seasonal requirements between December 9 and Christmas week-was concentrated almost entirely
in the Boston Federal Reserve District, where demand was $6^,000,000
more than usual.
This represented increased holdings of cash by
banks as well as by individuals.
The Richmond and San Francisco
districts also experienced unusual currency withdrawals at the same
time, while in other districts holiday requirements were not as large
as in earlier years, and the curves for these districts consequently
show declines.
the increase in
By the first of the year, however, /’’hoarding” had become general
throughout the country, and the curve for the United States as a
whole shows a continuous rise from that time until February 3 * when
currency outstanding, after allowance for seasonal changes, was more
than $375,000,000 above the level of December 9*
Demand was heaviest
in the Chicago Federal Reserve District, where there was actually
2-8495
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2
.
more money in circulation in the first week in February than in Christ
mas week, contrary to all precedent.".
In the Boston district cash
withdrawn during the earlier run was withheld in large part throughout
this period, and in the Hew York area the customary return of currency
after the Christmas holiday was so small tlrat the curve of "hoarding"
shows a sharp rise.
In proportion to their hanking resources, the
San Francisco, Cleveland, Richmond, and St. Louis districts also had
heavy drains of cash.
Since the first week in February, improvement has bpen general
throughout the country, the largest return of currency being in dis
tricts in which withdrawals had previously been heaviest— Chicago,
Hew York, and Boston.
In the San Francisco district, however, with
drawals continued until the middle of February, but in the past four
weeks there has been some return from "hoarding”.
The agricultural
regions of the Middle West and Southwest, where currency demand is
small in comparison with the industrial centers, hold comparatively
little currency in excess of the level of early December, and demand
in recent weeks has been determined largely by seasonal requirements.
Mar.
JciSaBs
m2
Feb 1932
Minneapolis
Dal las
San Francisco
Reproduced from the Unclassified / Declassified Holdings of the National Archives
CUMULATIVE CHANGES IN DEMAND FOR CUBEENCT - DECEMBER 9, 1931 TO MARCH 16, 1932-WITH ALLOWANCE FOR SEASONAL CHANGES
Reproduced from the Unclassified / Declassified Holdings of the National Archives
.
F o r m N o . 131
$ Office Correspondence
To
,Governor Meyefcz
_
FEDERAL RESERVE
BOARD
Subject
________
'E D E R A L RESERVE
late
BOARD FILE
March 18, 1932
-*
s / T
, /
F ro m .. Mr. Ooldenweisier^ P\L
G
X
* " //
0- •
2 -8 4 9 5
I am sending you a record of estimated daily changes in cur
rency outstanding, with allowance for seasonal change.
A report
will he sent each day giving the change for the preceding day.
These figures are commonly designated ••hoarding11, but they
reflect, in addition to changes in holdings by individuals, for
eign shipments of American money and non-seasonal changes in bank
vault cash.
Seasonal changes are estimated from the average of
the corresponding period in the years 1925-1927*
You will note
that of the total decline of $125 ,000,000 in hoarding since Feb
ruary 4, about $15,000,000 has returned since March 7» when the
sale of ”bahy bonds” began.
Latest daily figures of these sales,
(to March 16) given to us confidentially by the Treasury, show a
total of $23 ,000,000.
For CIRCULATION’. - <
Mr. Hamlin
Mr. lames
Mr. Magee _
Mr. Milter
Mr. P o l e . - . - v ^ X Mr. H arris on.-V .
y-
Mr. Morrill
Mr. McClelland/.
M r, Wyatt .................
M r........... ,
Mr. — •_
n tie -in itia l
anti
Jr OOVERkOR.
\ RECEIVED 1
HAP 1 8 193?
OFFICE O F
I
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Z
V
HOARDING —
1312
DAILY
Estimated Daily Change in Currency Outstanding with Allowance
for Seasonal Change.
(in millions of dollars)
Change from
preceding day
Date
Feb.
1
2
3
4
5
6
1
12
6
7
4
2
-
7
3
5
g
9
10
11
12
13
- 7
- 13
- 3
+ 2
- 8
+ 1
-
12
15
+
-
16
17
18
19
20
22
?3
24
25
+
Cumulative
change from
February 4
+
+
+
-
-
2
7
1
5
0
3
-
25
23
26
34
33
31
38
39
44
44
4?
27
- 47
- 56
- 73
- 88
- 96
-105
29
+
-102
3
Division of Research and Statistics
Change from
preceding day
Cumulative
changa from
February 4
1
2
3
4
5
+ 2
+ 10
- 4
- 5
- 3
-100
- 90
- 94
- 99
-102
7
8
9
-
8
2
0
- 5
- 13
- 3
-110
-112
-112
-117
-130
-133
+
+
-135
-128
-125
Date*
Mar.
0
- 9
- 17
- 15
- 8
- 9
26
>
10
11
12
14
15
16
2
7
3
17
18
19
21
22
23
24
25
26
28
29
30
31
*
Unpublished
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
'
F E D ERAL RESERVE
BOARD
To_______ Governor Meyer V
Subject:,
rculation
F ro m
Currency outstanding declined by $39,000,000 between March 2
and March 9» at a time when there is ordinarily a decline of only
$15,000,000.
The largest decrease for the week was in Hew York,
and when allowance is made for usual seasonal changes,decreases
or no change were shown for all the other districts except Phila
delphia, Cleveland, and Dallas which showed small increases.
Since February 3» when currency demand was at peak levels,
there has been a reduction of $110,000,000-$120,000,000 in hoard
ing.
normally there is an increase of about $30 ,000,000 in cur
rency outstanding between February
3 and March 9* while this year
there has been a decline of $87,000,000.
For CinCULATlOH:-,
Hamlin.
James .
Magee „
Mr. M iller. .
L r. Pole —
Mr. Harrison.
\
\
1
Mr. Morrill
Mr. MeClella
Mr, W yatt.
note - initial
to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
The volume of money in circulation declined again this week and
on March 2 was $9,000,000 less than a week earlier, although there
is usually an increase of about $10 ,000,000, principally because of
month-end demands for cash*
This is the fourth successive week in which there has been a de
cline, and the volume outstanding on March 2 was $48,000,000 less than
on February 3 , and in view of the fact that circulation ordinarily in
creases by about $4^,000,000 during this period, it is estimated that
about $90,000,000 in currency has been put back into active circula
tion or has been returned to the reserve banks.
This return has
been chiefly in the New York, Chicago, and Boston Federal Reserve Dis
tricts.
In the San Francisco District there was an increase during
the first half of February, contrary to the seasonal tendency, but
in the last two weeks there has been a decline.
It appears that the
recent return of currency is from holdings of individuals rather than
from banks, whose cash holdings on February Z?4 were slightly larger
than earlier in the month.
Daily estimates of hoarding sent to the White House showed large
declines in the last week in February, particularly from February 23
to February 27, when the total return from hoarding since February 4
Reproduced from the Unclassified / Declassified Holdings of the National Archives
was estimated at $102,000,000#
In the past few days, however, there
have been increases, aggregating about $1 5 ,000,000 between February
29 and March 2,
This is probably due to the erratic nature of daily
data rather than to any increase in hoarding.
It is likely that the
rate of decline was over-estimated late in the month and is now being
somewhat under-estimated
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
^
/
Office Correspondei
ence
TV
Governor Meyer
From
Mr, Goldenweisen
!/
FEDERAL RESERVE
BOARD
Subject:
£
fy*-
2-i
'-vv - 2-8^ f
i
For C
( fRCULATHM
Mr. H am lin ..
Mr. James
fv f M 3Q6 8
District figures through Tuesday indicate that there bag r "
Mr. Pole _
been a reduction in the demand for currency since last Wedhesday, while the seasonal movement for that week is upward.
reduction from Wednesday to Tuesday has been chiefly in thfe Hew
York, Richmond, and Chicago districts with Atlanta, St. Loiis,
Plea^f note-initial
and Dallas also showing declines.
:n to GOVERNOR,
All districts will probably show a less than seasonal de
mand for the week ending February 10.
Philadelphia, Cleveland,
and San Francisco will probably show some increases in actual
demand for the week, but these increases will be substantially
less than seasonal in amount.
| RECEIVED
I
FEB 1 1 1932
I
OFFICE! O F
imrniMm»»«■'■
■ — —-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
To
Governor Meyer
From
Miss Joy
FEDERAL RESERVE
BOARD
Subject:
Pet
CH
The increase of $42,000,000 in circulation between January
27 and February 3 Is $20,000,000 to $25,000,000 more than usual.
This unusual increase occurred entirely in the first three days
of February,
In most Federal reserve districts the demand was normal.
Heavy withdrawals were concentrated in the Chicago Federal Re
serve District, following bank suspensions in Dubuque and
Burlington, Iowa; and in the San Francisco District, where banks
suspended in Long Beach and Anaheim, California, and in the State
of Washington.
On February 3 a large Boston savings bank was
closed.
For CIRCULATION:.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o , 131
Office Correspphdence
Tn
Oovernor Meyer M
}/
AL RESERVE
BOARD
- o
A
W
'
z - n
DateJanuary 30, 1932___
Subject; Qomsentary on charts showing
-
From
prices in France and the United States
Mr- Gardner \
French price indexes are still "based on July, 1914, as 100.
During
the war and post-war depreciation of the franc they rose to about five
times their pre-war level; and in recent years they have fluctuated with
in range of 500.
United States price indexes on the other hand are "based
on the year 1926 as 100.
A drop from 500 to 400 is of the same relative
magnitude as a drop from 100 to 80, each representing a decline of 20 per
cent.
In order to make fluctuations in the indexes comparable at all
levels, the curves have been charted on a ratio scale: i.e., equal move
ments up or down on the chart represent the same relative changes.
A few comments on the significance of the charts are given below:
Chart I
This chart shows that the major element in the price decline that
began in France early in 1929 was the fall in world prices.
The prices
of imported coirmodities have fallen rapidly in the last three years, the
decline being most drastic in 1930. - The prices of French products on
the other hand were only moderately affected until April, 1931.
Accompany
ing this situation there has been a growing excess of merchandise imports.
Chart II
This chart breaks down the general wholesale price index used in Chart
I so as to show the difference in movement between foods and industrial
materials.
There is considerable resemblance between the movements of
industrial material prices and the prices of imported commodities, indicat
ing either the direct inclusion of imported commodities in the industrial
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Governor Meyer
Page Ho. 2
-
'
materials index or a competitive situation.
January 30, 1932
Pood prices on the other hand show
relatively little decline from early 1929 to April, 1931.
The French peasant
was effectively protected from the foreign price decline hy the tariff and quota
system.
A short wheat crop in France in 1930 assisted in maintaining the level
of domestic food prices even after the depression abroad began to spread to
French industry.
Since April, 1931, however, foods have declined along with
industrial materials.
Chant III
The chief feature of Chart III is the Paris retail index.
used as if it were an index of retail prices generally.
This is often
It is, however, com
posed almost entirely of foods weighted according to the consumption of a
laborer’s family of four.
There are but three articles other than food in
i i
the index; and their combined weight is only about 2 per cent of the total.
The retail food index has moved very differently from the general index
of wholesale prices.
In part this is due to the different movement of foods
and industrial materials in the general index.• In part, however, it is also
due to the fact that the particular foods most heavily consumed by French
workers —
i.e., bread, and certain meats and dairy products —
moved differently from foods as a whole.
have often
Particularly in 1930 the short wheat
crop affected the expenditure on bread of a worker’s family more than it did
the unweighted 20-commodity index of wholesale food prices.
These facts are
brought out on the chart which, for convenience, shows not only the retail food
1/ One of these, however, is gasoline, which quintupled in price in the period
April, 1929 - July, 1930, and prevented the retail index from falling as far
as the general wholesale food index.
Governor Meyer
Page- No. 3
-\
January 30, 1932
index and the underlying wholesale index for 13 commodities, hut also re
produces the wholesale food index shown on Chart II as a constitutent of the
general index of wholesale prices.
It may he noted that the spread between
wholesale and retail prices for the same foods in France, as shown in the
two 13-commodity indexes, has at no time been very great.
Since the middle
of 1930 in fact the movement between the two sets of prices has been markedly
close.
Food represents about 60 per cent of the French worker’s budget.
A
quarterly index of the total cost of living of the French worker is compiled
by a Government commission and published by the Statistique Generale —
sub
ject, however, to many reservations as to the comparability of the quotations
employed from time to time.
In general it shows much the same movement as
the retail food index, although its fluctuations are not so wide, and from
May, 1929, to April, 1930, it continued rising while the retail food index
declined.
From a low of about 495 in the fourth quarter of 1927 the cost-of-
living index rose to a peak of about 595 in the fourth quarter of 1930 —
increase of 20 per cent.
about 30 per cent.
During the same period the retail food index rose
Similarly in 1931 the decline of the retail food index
has been greater.
Chart IV
This chart embodies the familiar constitutents of the Bureau of Labor
Statistics index —
charted, however, on the same ratio scale as that used
for the French indexes.
an
The two curves showing farm products and foods
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Governor Meyer
Page No. 4
--
January 30, 1932
taken together, are perhaps most nearly comparable with the French curve
showing foods on Chart II.
The curve showing other commodities comes
closest to the French curve showing industrial materials on Chart II.
In the United States the prices of farm products and foods have suffered
the widest decline —
the exact reverse of the French experience.
The
fall in world prices lias affected American agriculture more than American
industry,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
L
F o r m N o . 131
Office Correspondence
FEDERAL RESERVE
To___________Governor M eyer
F r o m _________Mr. Ooldenweiser
___
The decrease of $24,000,000 in money in circulation
during the week ending January 2J is approximately equal
to the usual seasonal movement for that week.
This is the
first week since the middle of December that there has
been no increase in hoarding.
Our estimate is that during the week hoarding declined
by $5,000,000 each in the Boston, Sew York, and Richmond
Federal reserve districts and increased by $10,000,000 in
the Chicago and $5,000,000 in the San Francisco districts.
for Ci^OUUm.^535
H r. H a m U n . J L / ^
Mr. Jams* . A r C l Z c i J
Mr. Mages
Mr. Mille*Mr-
Mr- IJarriSM1„ v ^ > j
Mr. M o rrill___
Mr. M c C l e l j ^ V ; ^ ” ^
Mr. W yatt.
___ mmm'
—tj
Please
Reproduced from the Unclassified / Declassified Holdings of the National Archives
y /h
\7
i
^
f'hto
January 15# 1932
Governor Meyer
Demand for Currency
Mr. Goldenwelaer
H E C ’D IN F IL E S S E C T IO N
JUN 2 41953
iv y , ^ //
There has been an increase in hoarding by banks and Individuals '
of $250, 000, 000- 1300, 000,000 in the four weeks since the suspension
of the Federal Hatlonal Bank of Boston on December lU.
appears to have been largely domestic.
This demand
American money continued to
return from abroad In the last half of December, but the volume was
not unusual for this season of the year.
In the week Just past—January 6 to January 13—the decrease of
$42,000,000 In the volume of currency in circulation compares with a
decrease of $120,000,000-3125,000,000 in other recent years.
Cur
rency returned from circulation during the week In a ll Federal reserve
districts except Chicago and St. Louis.
In Chicago, where demand has
been unusually large in the past three weeks, there was no change in
the volume outstanding, although there is ordinarily a return of nearly
$20,000,000; and In the St. Louis district there was an Increase of
$2 , 000, 000, at a time when about $5 , 000,000 usually comes back from
circulation.
The decrease in circulation In the Hew fork, Philadel
phia, Cleveland, and Atlanta districts was considerably smaller than
usual.
The following table shows changes in currency demand by Federal
reserve districts:
^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DISTRICT CHASMS IV OtJRRWCT D&iAlD
(Millions of dollars)
Venal
seasonal change
Change from
December 3*
to Jnwiiry 6
It
ted States
- **3 .
*•126
leral reserve districts:
Boston
Hew Tork
Philadelphia
Cleveland
- 7
- 10
- 3
- 2
-
Richmond
Atlanta
Chicago
St. Louis
- 6
• 3
0
♦ 2
- 8
- 17
- 5
Minneapolis
Kansas City
Dallas
San Francisco
*»
•
*•
13
- 6
2
2
2
6
11
37
11
f
*
- *
~
3
3
4
8
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Since the suspension of the Federal National Bank of Boston on
December 15 there has been an increase in hoarding by banks and indi
viduals of $250 ,000t000-$300,000,000.
In the week just past— January 6 to January 13— the decrease of
$42,000,000 in the volume of currency in circulation compares with a
decrease of $120,000,000-$125,000,000 in other recent years.
Cur
rency returned from circulation during the week in all Federal re
serve districts except Chicago and St. Louis.
In Chicago, where de
mand has been unusually large in recent weeks, there was no change in
the volume outstanding, although there is ordinarily a return of nearly
$20,000,000; and in the St. Louis district there was an increase of
$2 ,000,000, at a time when about $5 ,000,000 usually comes back from
circulation.
The decrease in circulation in the New York, Philadel
phia, Cleveland, and Atlanta districts was considerably smeller than
usual.
The following table shows changes in currency demand by Federal
reserve districts:
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2,
DISTRICT CHANCES IN CURRENCY DEMAND
(Millions of dollars)
Change from
December 31
to January 6
Usual
seasonal change
in this week
United States
- U3
-125
82
Federal reserve districts:
Boston
New York
Philadelphia
Cleveland
- 7
- 10
- 3
- 2
- 11
- 36
- 11
- 13
- 6
4
26
Richmond
Atlanta
Chicago
St. Louis
- 6
- 3
0
+ 2
Minneapolis
Kansas City
Dallas
San Francisco
- 2
- 2
- 2
-
8
-
8
- 17
- 5
- 3
- 3
- 4
- 8
Estimated
increase
in hoarding
8
11
0
5
17
7
1
1
2
0
j
Reproduced from the Unclassified / Declassified Holdings of the National Archives
COPY
F o r m N o . 131
Office Correspondence
FEDERAL RESERVE
BOARD
Subject:
To__
Mr. Goldenweiser
From
Mr. Rhodes and Mr. Thompson
Date__ January
14, 1932
Demand
JUN P4 1 9 5 0
|
During the week ending January 13, 1932, there was a return flow of cur
rency from circulation totaling $43,000,000, according to our district calcu
lations, as compared with an estimated average return flow of $126,000,000
for the corresponding weeks of the preceding five years.
Demand for currency
was less in all districts except Chicago, where no change from the preceding
week occurred, and St. Louis where there was an unseasonal increase of
$2 ,000 ,000 .
The return of currency was general in other sections of the country.
The
New York District showed the largest return after sharply increased demand on
Thursday and Friday of last week.
The return of currency from banks and pub
lic was also in considerable volume in the Boston, Richmond, and San Francisco
districts.
An analysis of changes in the demand for currency by districts for the
week ending January 13, 1932, is given in the following table:
(In millj.one of do].lars)
Estimated
Federal reserve
Actual
district
change
average change
Boston.............
Mew York...........
Philadelphia.....,.
Cleveland........ .
Richmond..........
Atlanta...........
Chicago...........
St. Louis.........
Minneapolis........
Kansas City........
Dallas.... ........
San Francisco.....
- 7
-10
- 3
- 2
- 6
- 3
0
+ 2
- 2
- 2
- 2
- 8
-
Total,........
-43
-126
11
37
11
13
6
8
17
5
3
3
4
8
Reproduced from the Unclassified / Declassified Holdings of the National Archives
2.
We estimate excessive withdrawals since the third week in October, 1930
at about $1,445,000,000,
No allowance is made in this estimate for shipments
to or receipts from abroad of paper currency nor for changes in vault cash
holdings of banks.
The volume of currency outstanding resulting from exces
sive withdrawals, as distributed among the various Federal reserve districts,
is shown in the following table, which also shows changes in this amount for
the weeks ending January 6, 1932 and January 13, 1932:
Federal
reserve
district
Boston...........
New York..........
Philadelphia......
Cleveland.........
Richmond...... .
Atlanta....... .
Chicago.........
St. Louis........
Minneapolis......
Kansas City.......
Dallas...... . •. ••
San Francisco....
Total ......
[Figures are to the nearest 5,000,000)
Oct. 22, 1930
Week ending
to
Jan. 13, 1932
Jan. 13, 1932
90
355
160
160 95
20
330
25
35
40
35
100
1,445
Week ending
Jan. 6, 1932
+ 5
+ 30
+ 10
+ 10
0
+ 5
+ 20
+ 5
0
0
0
0
+ 10
+ 45
0
+ 5
+ 15
+ 5
+ 25
+ 5
+ 5
0
0
+ 15
+ 85
+130
Reproduced from the Unclassified / Declassified Holdings of the National Archives
z
F o r m N o . 131
Office
To_
Correspondence
Governor Meyer ^
__
Mr. Goldenweiser
You might be interested in the attached chart which shows
daily changes in the demand for currency for the different Fed
eral reserve districts.
Red lines show the average for 1927-29
and the black lines the course in recent weeks. A startling dif
ference in the demand for currency since the beginning of the year
is shown for practically all districts.
The last week, however,
shows some improvement in Boston, New York, Philadelphia, Cleveland,
and Atlanta.
In Richmond the improvement began a few days earlier.
For CIRCULATION:...............
Mr. Hamlin. V '"
Mr. James .
Mr. Magee _
Mr. Miller
Mr. Pole
Mr. Harrison..
Mr. Morrill
Mr. McClelland
Mr. Wyatt
M r . ____
M r...........
Please noi^-initial
and re iu iM o GOVERNOR.
il y
C
hange
in
D e c . 23,1931
o
>H-
uJ
3
X
<
U
I
Q
O
5
o
z
J
z
z
<
a
5
0
u
X
0
0
u
i
0
0
u
o
0
De m a n d
TO
for
Currency
Ja n . I 4 , I 9 3 Z
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Da
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
FEDERAL RESERVE
BOARD
Date
January 9, 1932
Governor Meyer
As already reported, the week ending January 6 showed an
increase of money in circulation of $23,000,000.
This compares
with a usual decrease for that week of $105 ,000,000, so that
roughly there has been an unseasonal outward movement of currency
of $130,000,000.
Of this amount, $45,000,000 was in New York,
$25,000,000 in Chicago, $15,000,000 each in Richmond and San Fran
cisco, $10,000,000 in Boston and $5,000,000 each in Cleveland,
Atlanta, St. Louis, and Minneapolis. /fDuring the week ending Decem
ber 30 the decrease in circulation was $50 ,000,000 less than usual,
so that the total increase in unseasonal demand for currency since
Christmas can be estimated at about $130,000,000.
For CIRCULATION:...............
Mr. Hamlin _
Mr. James _
L'r.
Mr.
Mr.
Mr.
Mr.
----
Magee
—
Miller....
-------
Pole.
Harrison. **
Morrill
^
Mr. McClelland j K X - -------
Mr. Wyatt___ ....................
Mr. ..........................................
Mr...............
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
January 8, 1932
SECTI0N
JUN 24195,3
Mr. Goldenwelser
Mr. Rhodes and Mr. Thompson
During the two weeks following the Christmas
At v
ding to our district calculations, there has been
tlon amounting to $72,000,000, as compared with
average return of about
$260",000,000 during the same period in recent years.
In the week ending December
30 this return flow was $100,000,000. compared with an average of $150,000,000.
During the week ending January 6, there was an increase of $28,000,000 in demand
for currency, which
comperes
with an estimated average return from circulation of
$m, ooo,ooo.
An analysis of changes In the demand for currency by districts for the week
ending January 6, 1932, is given in the following taole:
Federal reserve
district
Boston....................
lew York...................
Philadelphia ..........
Cleveland.......... .
Richmond.................
Atlanta ...................
Chicago ...................
St. Louis ...............
Minneapolis . . . . . . . .
Kansas City ............
Dallas ....................
Sm» Francisco.........
Actual
.change
e
44
• 8
4 3
4 6
4 1
♦11
♦2
41
4 1
- 1
J L .I ___
Total ............
428
• Increase of $200,000.
Sstlmated average
change (to nearest
5 million)
»
*
•
10
40
10
5
10
5
16
0
0
0
0
- ;o
-105
/fjo
is estimate excessive withdrawals since the third week in OctoberA at about
$1,360,000,000.
So allowance is made in this estimate for shipments to or receipts
from abroad of paper currency nor for changes in vault cash holdings of banks.
The
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Mr. Ooldenwetser
Page Ho. 2
January 8, 1932
volume of currency outstanding resulting from exceselve withdrawals, as d istri
buted among the various federal reserve districts, Is shown In the following table
which also shows changes In this amount for the weeks ending December 30, 1931,
and January 6, 1932.
.................... m Leutss are to the neairo t 6.000.000) .____
October 22.193C Week ending
Week ending
federal reserve
)ec. 30. 1931
to January S. 1932 Jan. 6. 1933
district
Boston ............
lew York........
Philadelphia ., ..
Cleveland ....... ..
Richmond ........
Atlanta . . . . . . .
Chicago ..........
3t. Louie .......
Minneapolis ...
Kansas City ...
Dallas ..........
San Francisco ...
Total
ISO
150
___ 1QQ______
1,360
4- 10
0
4- 5
4- 45
4- 6
0
4 5
4-10
+ 15
4-10
4- 5
4- 5
4- 25
*10
4- 6
0
4- 5
0
0
0
0
0
♦ IS___ ______
4-130
4-60
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F
F o r m N o . 131
Office Correspondence
G-overnor Meyer
FEDERAL RESERVE
BOARD
Date
January 9, 1952
Subject:,
h
h?~
• re
A
W
>
2— 8495
>,/
As already reported, the week ending January 6 showed an
increase of money in circulation of $28,000,000.
This compares
with a usual decrease for that week of $105 ,000,000, so that,
roughly there has "been an unseasonal outward movement of currency
of $130,000,000.
Of this amount, $45,000,000 was in New York,
$25,000,000 in Chicago, $15,000,000 each in Richmond and San Fran
cisco, $10,000,000 in Boston and $5*000,000 each in Cleveland,
Atlanta, St. Louis, and Minneapolis. ^During the week ending Decem
ber JO the decrease in circulation was $50 ,000,000 less than usual,
so that the total increase in unseasonal demand for currency since
Christmas can be estimated at about $180,000,000.
For CIRCULATION:...............
M r......................................... Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
January 8, 1932
Hr. Goldenwelser
Mr. 3hode« and Mr.'Thompson
During the two weeks following the Christmas peak In currency demand, accor-
/
ding to our district calculations, there has been a return of hmney from clrcula*
tlon amounting to $72,000,000, as compared with an average return of about
<rr
$260,000,000 during the same period In recent years.
In the week ending December
30 this return flow was $100,000,000, compared with an average of $150,000,000.
During the week ending January 6, there was an Increase of $28,OCX),000 In demand
for currency, idileh compares with an estimated average return from circulation of
$116,000,000.
An analysis of changes In the demand for currency by districts for the week
ending January 6, 1932, Is given In the following table:
Federal reserve
district
Boston....................
Sew York...................
Philadelphia ..........
Cleveland ...............
Richmond.................
Atlanta ...................
Chicago ...................
St. Louis ...............
Minneapolis ............
Kansas City . . . . . . . .
Dallas ....................
San Ir&nclsco .........
Actual
Change
♦
4
4
- 8
4 3
4 6
4 1
411
4 3
41
4 1
- 1
4 8
T o ta l............
428
• Increase of $200,000.
Istimated average
change (to nearest
5 million)
•
•
-
10
40
10
5
10
5
16
0
0
0
0
________ - 10
-105
ie estimate excessive withdrawals since the third week In October.at about
$1,360,000,000.
So allowance Is made In this estimate for shipments to or receipts
frem abroad of paper currency nor for changes In vault cash holdings of banks.
The
a
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Mr. Ooldenweiser
Page Ho. 2
January 8, 1932
volume of currency outstanding resulting from excessive withdrawals, as d istri
buted among the various federal reserve districts, le shown In the following table
which also shows changes In this amount for the weeks ending December 30, 1931,
and January 6, 1932.
_____ (figures are to the nerarest 6.000.000)
October 52,19 3CI Week ending
federal re
serve
district
to January 5. 195$2) Jan. 6. 1933
Boston ...............
lew York............
Philadelphia . . . .
Cleveland ..........
Richmond ............
Atlanta ..............
Chicago ..............
3t. Louis ..........
Minneapolis . . . . .
Kansas City .......
Dallas ...............
San Francisco .. .
Total
85
325
150
150
95
15
310
20
35
40
35
4- 10
-f 45
0
4- 6
4- 15
4- 5
4- 26
4- 6
4- 6
0
0
Wee*
ending
Dee. 30. 1931
0
4- 5
4- 5
4-10
4-10
4- 5
♦ 10
0
0
0
0
____ m ______ _________ + 1 5 ____ ______
1,360
4-130
4-60
Reproduced from the Unclassified / Declassified Holdings of the National Archives
January 4, 1932
* Demand for Currency
Governor Meyer
Miss Joy
-R E C ’D IN P IL E S S E C T IO N
JUN 2 41953
—
Since Christmas currency has not returned from circulation as
rapidly as usual.
On December 30 the volume outstanding was only
$100*000,000 less than a week earlier, while in the years 1924-1926,
when the holiday came at about the same time in the week, the decline
averaged over $140,000,000.
This le the third successive week in which there has been an addi
tional non-seasonal demand for cash, and for the three weeks as a whole
this extraordinary demnd probably exceeds $100,000,000, approximately
offsetting the return flow of currency in earlier weeks.
From December lU, when the failure of the Federal national Bank of
Boston was announced, to the day before Christmas, the demand for cur
rency Increased $210,000,000, more than $75,000,000 in excess of the
increase in the years 1924-1926, when the cost of living wee 17 per cent
higher and business was considerably more active.
I t le not improbable
that the reduction In the dollar volume of holiday purchasing thie year
reduced the demand for currency considerably in the last ten days before
Christmas, so that the added non-aeasonal demand for money during this
period was considerably more than $75,000,000.
Then, in addition, the
return flow of cash to the reserve banks and the Treasury was smaller
than usual in the week between Christmas and Hew Year1* Day.
I
reproduced from the Unclassified / Declassified Holdings of the National Archives
2
.
prices and the /(mall volume of purchases, the amount of mono* coming hoick
from circulation w ill also he some^haA smaller.
However/ i f i t continues
to he much l/es than usual, i t will/indicate that currency is not Ael*g
returned from bsuks and private safe deposit vaults.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
£ l< lg
3
Oc«-
nr
(ru ^ j
So^ j
t
,<f* s
x * ( 7k )
I t ( n
&t*.
m
5-2.
u
y
/■&-&
>1U>
^
a .
^ Y lP u J ^ 5 4 -3
/3 ( h ltr .) >5 <•2- /
y- I $
/53
Reproduced from the Unclassified / Declassified Holdings of the National Archives
D a te ,,
D e c e m b e r _2 8 , , 133.1
Subject:_i___ D emand for Currency
F r o m __
Miss Joy
2 — 8495
' The volume of money in circulation showed a tendency to decline
from Monday* December 7, through Monday, December lU, except for or
dinary day-to-day variations; this decline occurred notwithstanding
holiday shopping, which although smaller in dollar volume than usual,
nevertheless requires an increasing amount of currency.
On Tuesday, December 15, following the announcement of the clos
ing of the Federal National Bank of Boston on the preceding day, the
demand for currency increased about $30,000,000; and on Wednesday,
December l6, by another $20,000,000.
As a consequence, on the six
teenth, the volume of money outstanding was $ 7 1 ,000,000 larger than a
week earlier.
Federal reserve notes constituted $U3,000,000 of the
$7 1 ,000,000 increase in circulation and showed a growth of $1 7 ,000,000
at Boston and $14,000,000 at New York.
For CIRCULATION:-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m ^ d fia ij
For CIRCULATION:-------------
\\\
Offic^CorrespondenGe^i
inT ^ F - *
Mr. James
7
Tr»
------p rnm
^
fjE - C jfz L -
Date^ce!*®r 1S- 1931
f
Governor Mever
V
; r< ^ a? e9 V>^Sul>Tect: British National Debt ai
“-----------------~~7x---------------------- tvTrTMiller
i — ----------Miss Bulla
* /
^ir. iote fok...-Retard for 1931 c$
Mr. McClelland ?
On March 31, 1931, the
cTebt__qf_the British Government was
M ’
£7,583,000,000.
..............................
This figure represents a net reduction of £13,000,000
Please note-initial
during the year.
Interest cj^rgqftndtoifiOMEBNOibar amounted to £292,000,000.
The total is made up of "deadweight debt" of £7,413,000,000 —
figure quoted officially as the National Debt —
the
and certain "other capital
liabilities." Deadweight debt was reduced £56,000,000 in the year.
"Other capital liabilities" include an item of £75,000,000, which re
presents the total outstanding amount under the various Unemployment Insur
ance Acts.
Since 1914 the composition of the debt has fluctuated considerably.
Annual figures for the period 1914-1931 are given on pp.
Return.
6
and 7 of the
Figures for the beginning and end of the period and the peak
year are shown below:
TOTAL DEBT OF BRITISH GOVERNMENT ON MARCH 31. 1914. 1920. 1931
:Amounts in millions : Percentage of
total
:of rounds sterling :
:1914 : 1920 : 1931 : 1914 :1920 :1931
Total debt
"Deadweight" debt, total
Non-maturing ("funded")
Terminable annuities* capital
value, estimated
Maturing ('hinfunded"), total
Internal, total
Long-term
Floating
External
Other capital liabilities
* For life and terms of years.
706
650
587
7,876
7,829
315
30
34
34
19
7,495
6,216
4,952
1,264
1,279
47
21
13
—
56
7,583
7,413
1,425
12
5,976
4,909
4,315
594
1,067
170
10 0
10 0
10 0
92
83
99
4
98
19
4
5
5
3
— .
—
95
79
63
16
16
79
65
57
2
—
8
1
8
14
2
■
eproaucea from the Unclassified / Declassified Holdings of the National Archives
December 16, 1931
Before the World War there was no external debt.
Non-maturing
('•funded1') debt, composed chiefly of consols, annuities, etc., formed
83 per cent of the total outstanding while the remainder was made up
of terminable annuities, long-term internal debt, floating debt, and
"other capital liabilities" for enterprises such as telegraphs, tele
phones, etc.
Beginning in 1915-1916 foreign debt increased rapidly, reaching a
peak of £1,300,000,000 in 1919, a year before the high point of total
debt was reached.
Since 1919, foreign debt has decreased annually ex
cept in one year.
In contrast to a considerable reduction from 1914 to 1920 in non
maturing debt and terminable annuities, maturing internal debt (both
long-term and floating) increased enormously as a result of war finan
cing.
By 1920 it represented 79 per cent of the total.
the long-term portion has been reduced by more than
floating debt by more than 50 per cent.
10
Since that date
per cent and the
This was accomplished largely by
a process of consolidation into non-maturing debt, which is now four times
its amount in 1920.
Individual loans composing the present indebtedness are classified on
pp. 14 and 15 of the Return.
shown on p. 16.
Interest payments on the individual loans are
Reproduced from the Unclassified / Declassified Holdings of the National Archives
December 14, 1931
Demand
Mr. Goldenweleer
s e c t iw
on
ASqertiMEiLES
Mr. Rhodes and Mr. Thompson
\
JUN 2 4 19 5 3
h
c
During the week ending Wednesday, December 2, there was an Increase of
&
xV
$30,000,000 in demand for currency according to our district calculations.
This
compares with a net average outflow of nearly $10,000,000 during the week follow
ing Thanksgiving of the three years 1927 - 1929.
On December 2, 1931, the volume
of excessive currency withdrawals since October 22, 1930, amounted to $1,115,000,0(0
compared with $1,090,000,000 (revised figure) on November 25, 1931.
Nearly a ll
districts showed moderate increases, largely of a seasonal character, in demand for
currency during the week of December 2.
which showed a gain of $11,000,000.
The largest increase was in New York,
In that district, however, the week follow
ing Thanksgiving has usually shown a return flow with the result that our estima
ted figure of excessive withdrawals for the New York District increased by
$30,000,000.
In the Philadelphia District there was practically no net change
in demand for currency for the week comoared with an average increase of
$5,000,000.
The volume of currency outstanding^ resulting from excessive wlthdrawal»)
as distributed among the various federal reserve districts, is shown in the
y
following table, which also shows changes in this amount for the weeks ending
November 25 and December 2$
|
<A
%
federal
tiLUOttSl are .to .jhe, nw.S?-l.5,0Qfi,,QftQ)____________ , V
October, 1930
Week ending
Week ending i %Jr
di s t r i c t ___ t 2_ D ^ :n b g tr , L ..1 .9 3 L -,^ ia i,,
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louie
Minneapolis
Kansas City
Dallas
oan Trancisco
Total
•revised
10
280
150
135
65
—
275
20
30
40
35
75
1.115
& JSSLL .
-10
-30
-10
-10
- 5
- 5
-10
430
- 5
—
—
—
- 5
- 5
—80
425
tv*
y*r
iI
Reproduced from the Unclassified / Declassified Holdings of the National Archives
December 7, 1931
Demand % S F’B uW eB % E S S E C T IO N
Mr. Goldenweiaer
JUN 24!9§3
Mr. Rhode3 and Mr. Thompson
Bar Inf the two weeks ending with the Wednesday before
,
of currency was returned from circulation according*to our district Calculations.
This
compares with a net average outflow of $50,000,000 during the corree pond lag week pre
ceding Thanksgiving of the three years 1927 - 1929.
The volume of currency that remained in circulation on November 25, representing
excessive withdrawals since October, 1930, amounted to $1,080,000,000, as compared with
$1,180,000,000 on November 4.
The week of November 18 seems to mark the turning point
of excessive withdrawals with an unsesson&l return of currency to the reserve banks of
$15,000,000.
This movement continued on a larger scale and was more widespread geo
graphically during the following week when $75,000,000 was returned.
In the New Tork
District $30,000,000 was returned from circulation during the two weeks, making a total
$40,000,000 of the previous excessive withdrawals returned in that district since Novem
ber 4.
The volume of currency outstanding, resultlag from excessive withdrawals as distri
buted among the various federal reserve districts. Is shown In the following table, which
also shows changes in this amount for the weeks ending November 18 and November 25:
federal
reserve district
Boston
New fork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
3t. Louie
Minneapolis
Kansas City
Dallas
San franc!sco
---- JtiLzL.
October, 1930
to Mot— tor 38. 1981
5
250
150
130
65
—
275
30
30
40
40
75
__ £££*** fc...^a.Vl
Seek ending
November 18. 1931
—10
—.
—
—
4 5
- 5
sew
—
—
—
— 5
Week ending
November 26. 1931
- 10
— 30
- 15
- 10
- 5
— 5
- 5
—
—
—
—
- 5
— 7— : # * **•
Total
1,080
-15
-75
Reproduced from the Unclassified / Declassified Holdings of the National Archives
f
F o r m N o . 131
r EDERAl RESERVE BOARD
Office Correspondence
To_____
Governor M e y e r __________ __
From
Mr. Goldenweiser
fU
FEDERAL RESERVE
BO/
te
Subject -
November 30. 1931
Demand f o
in December
CIRCULATION: - ~
Mr. H crn 'in .V r.
br. James
^ ^ f if * - t
f i r . Magee
r. M i l l e r .... Currency outstanding usually increases by $250,000,000 between
(Mr. P
o
l e
. . -------
■•;arr 0n--' ^ Z & e m k s g iv ing and Christmas, the peak being reached the day before
Mr. M o rrill------ / . J r . . . -
Mr. M
utt'S.-.and
Mr. Wyatt.
Christmas.
This year the increase for holiday shopping purposes is
hdt" "likely to exceed $200,000,000 because of the decline in retail
Mr...............
i
Please n o te - inidp^ices,
'lid return to GOVERNOR.
ping
the number of unemployed, and the general lack of prosperity.
,i
The demand upon the reserve banks for currency for holiday shop
may be offset by the use for that purpose of some of the money
$
now in hoards and also by a continuation of the direct return flow
from hoards that was in evidence in November, particularly in the last
two weeks.
On the other hand, an increase in hoarding, in case im
portant bank failures occur, may raise the figure.
In view of all the facts and prospects it would seem likely that
the total currency demand upon the reserve banks will not exceed
$200,000,000.
Member bank reserve balances usually increase in December by
$30,000,000 or $40,000,000.
This increase, however, is likely to occur
during the last week of the year, after the peak of currency demand has
passed.
This item may, therefore, be disregarded in an estimate of the
peak load.
I have no way of estimating the probable gold movements in December.
In N0vember gold imports amounted to more than $100,000,000, and they are
likely to continue.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
x-
Governor Meyer,
-
#2
November JO, 19J1
Funds derived from, gold imports will serve to meet the demand for
reserve bank credit arising from currency expansion, so that the total
demand for reserve bank credit from now to the peak is likely to be be
tween $100,000,000 and $150 ,000,000, unless there develops a reversal
in the return flow of currency from hoards.
H.
4
V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o rm N o. w l
Office Corresponuience
one of his confidential memos,
CmCUl.ATiON:...............
and I am forwarding it to y
Mr. Hcm!:n.. I X
f, j . j ernes «
Ur. r
-j
Mr. O i3 r..s *
Mr. Pc!
Mr. Han c n _ . X Mr. Mon 1
Mr. Wyatt___Vfu. - nMr.
Mr.
Please nctitc y r ;tial
and return tuyfu.*-.i “Wf>
1931
O F F IC E O F
T H E ©pV'ERigO B, i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
y-XN f t f t •
1
Uriice Correspondence
To______ Governor
From
FEDERAL RESERVE
“
Meyer_______________
Mr. Goldenwelser________ __
Suhject:
\
rw Novem
ber 30. i<m
Persona1 Estimate of the ___
________ Volume of Hoarding______
^
Persons' estimate of excess circulation —
week ending November 21 —
cM
$1,625,000,000 in the
is too high in our opinion.
His estimate
is not comparable with our figure of about $1,100,000,000 hoarded byindividuals in this country since last October for the reason that Per
sons takes no account of shipments abroad or of increased holdings of
cash by banks; and also, he measures "excess circulation" from June,
1930 whereas we have been measuring from the beginning of November, 1930,
In October, 1930, according to Persons' estimate, there was $130,000,000
"excess circulation".
Even with allowance for these differences, how
ever, his estimate is probably nearly $200,000,000 too high.
The error in this estimate arises from the assumption that volume
of money outstanding fluctuates in direct proportion with the dollar
volume of trade, which is the basis of his estimate.
In ordinary times
nearly $2,000,000,000 of the total of $U,500 ,000,000 to $5,000,000,000
of currency outstanding is either in vaults of banks ($850,000,000 on
June 30, 1930) or has been lost, destroyed, melted, or is held in hoards.
The extent of this dead element is indicated by the fact that nearly
$600,000,000 of the old large-sized bills was still outstanding in October
of this year, two years after the new sized bills were introduced.
Thus
the active volume of circulation to which an index measuring dollar vol
ume of trade is applicable is probably not more than 60 per cent of the
total volume of currency outstanding.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority jk J
3 C r> < :^
V
CONFIDENTIAL REPORT OF NOVEMBER 20, 1931
BANK SUSPENSIONS* Monthly and weekly
given in an accompanying tab le,
declining from the high jecord of
to Nov, 20 was 168 compared with
figures for bank suspensions are
The number of bank failures is
October, The number from Nov, 1
512 in October,
A Canadian banker told me recently that the failure of "a
five hundred"million dollar bank in the U.S. outside New York City”
was imminent, Such a failure would be a catastrophe of the first
order.
New York Clearing House banks hold $600,000,000 German short
term paper, other U.S, banks hold $500,000,000 and English banks
a half-billion more, A German moratorium on private debts might
have serious consequences for banks in England and the United States
directly and indirectly,
THE NATIONAL CREDIT‘CORPORATION has been called by one acute observer
a "blown fuse", I have learned, however, of one community where
the failure of fifteen banks was imminent; they asked the National
Credit Corporation "when can; you help us?" The answer, "right
now," so'inspired the group that only two banks actually applied
for help. The larger bankers in New York and elsewhere hold that
(a) the N.C.C, is largely a gesture and (b) its chief benefit is
psychological. An observer from the Northwest points out that
the large banks are lukewarm in supporting the N.C.C, because it
competes with the banking and distributing machinery they have,
themselves, set up and used to distribute securities, now frozen,
to country banks,
HOARDING was practically stationary during the four weeks ending
November 14 and declined nearly 50 million dollars in the week
ending November 21, Weekly and monthly estimates of "excess
currency in circulation" accompany the report,
FEDERAL RESERVE BANK CREDIT increased from $967,000,000 on August 5
to the peak of $2,238,000,000 on Oct. 21, during the period of
increasing domestic bank failures, withdrawal of gold by for
eigners, pronounced increased domestic hoarding, and rapid de
cline of member bank deposits and reserve balances. Between
October 21 and November 18 Federal Reserve Bank credit was con
tracted by $266,000,000# "Bills bought" fell $235,000,000 and
"bills discounted" dropped $36,000,000. During the same interval
"money in circulation" declined $33,000,000 (since the peak on
November 4 the decline has been $72,000,000), Concern has been
expressed, with justice, that if money mre returned to banks by
hoarders (a) the banks would use the funds to pay off their
borrowings from the Federal or (b) the Federal would let its
bill holdings run off and/or sell its governments, or (©) both
would happen. If this were to occur the money returned from
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
*
Authority
-
2-
hoarding would be absorbed by the Federal Reserve sponge and it
would then have no effect in easing the money market or acting as
a basis for the extension of credit by banks to their customers.
The conclusion drawn from this argument is "we might as well tell
people to go on hoarding, for their returned currency will not make
banks any more inclined to extend credit and the Federal Reserve
Banks will immediately absorb the returned currency.” Further, it
is held that "if this is to be the outcome it means that Federal
Reserve authorities, either through design or gullibility, will
throw their support to the thorogoing deflationists and they leave
us the option, therefore, of (a) resigning ourselves to many more
bankruptcies, continued deflation, and the permanent adjustment
downward of everything to the current level of prices of raw
materials or (b)*seeking relief by inflation through greeribaclcism,
bimetallism, etc."
THE LEADING UNKNOWN FACTORS, so far as the future of the next six
months is concerned, are (a) Federal Reserve policy and (b) the
nature of the French-German rapprochement. We have been given
no assurance concerning Federal Reserve policy. The sharply
downward trend of Reserve Bank credit during the past month
that a policy of contraction has been adopted by
member banks and the Reserve banks. If this trend should continue
much longer it could hardly be construed otherwise than as the
expression of "a banking policy of thoroughgoing deflation o f
credit" with all of the bearish indications of such a policy.
My ov/n belief is that, although there are important individuals
both in the Administration aid the Reserve System who favor a
policy of contraction, the leading officials,, both of the Admin
istration and the Federal Reserve System, favor a policy of
"industrial and credit expansion on a gold base," During the
weeks immediately ahead we should get more satisfying or dis
turbing evidence of their policy either (a) through the trend
of bills discounted and open market operations or (b) direct
pronouncement by the Federal Reserve Board or the President.
A FRENCH-GERMAN RAPPROCHEMENT along construct left lines for private
credits is almost as essential for business recovery as a favor
able bank situation and favorable Bank policy in the United States^
The Reichsbank and German finance are in a critical condition be
cause of (a) the flight of domestic and foreign capital from the
mark (b) the pressure of foreign short-time creditors for payment
(c) the withholding of payments on German exports and (d) the un
certain attitude of the French. With a proper French-German
rapprochement and handling of reparations, the balancing of the
German budget, and continued favorable balance of German tradey
the funding of the German short-time credits should be possible.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
declassified
—
Authority
-5-
Indi cat ions of a prospective favorable French-German agreement
are found in Dr. Charles Rist^*s statement on Nov, 19 that,
"Since the war short-term credits have increased greatly. And
humanity1s need since the war has been to employ long-term credits
to finance long-term enterprises. Now the day has arrived when
these short-term credits cannot be redeemed on expiration," and
Paul Marchandeau,s complaint that
"The gold in the vaults of the Bank of France is a sign of
neither riches nor prosperity. There are'21,000,000,000 francs
asleep there, when they should be working. The inter-allied debts
and the conditional part of the reparations should be wiped out,"
Warren M. Persons
Consulting Economist
545 Hudson Street
New York City
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
3Co£$>
SPECIAL CONFIDENTIAL REPORT OF NOVEMBER 20, 1931
NUMBER AND DEPOSITS OF BANK SUSPENSIONS
WEEKLY
MONTHLY
Number
Number
Deposits
(millions)
52
27
18
25
53
44
46
72
Oct. 2
"
9
“ 16
" 23
" 30
95
166
119
109
70
12 2
Nov. 6
M 13
w 20
" 27
76
52
30
11
Deposits
(millions)
1950
1931
Oct.
Nov.
Dec.
72
254
344
25
186 (1 )
367 (2)
Sept.4
n n
”
"
22
95
1931
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept,.
Oct.
Nov.
Dec.
(1)
(2)
(3)
(4)
202
77
86
64
89
167
93
158
298
512
78
35
35
42
44
196
41
186
271
567
(3)
(4)
(5)
(6 )
(7)
Kentucky and Tennessee
Bank of U.S.; Philadelphia
Mississippi
Chicago, Michigan, Ohio
87
2 12
82
50
81
5
Dec. 4
" 11
" 18
n 25
(5) Ohio, New York
(6 ) Pennsylvania, Maryland, Texas,
Illinois
(7) High record; Pennsylvania, Ohio,
Iowa
\
»
Warren M, Persons
Consulting Economist
345 Hudson Street
New York
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority M
3 C e> £ fr
SPECIAL CONFIDENTIAL REPORT
€
COMPUTATION OF ’’EXCESS CURRENCY !n CIRCULATION” BY WEEKS
(1) Estimated do liar-volume of money work.
(2) Volume of money seasonally required on basis of Jan.-June 1930 ’’normal”
(millions of dollars).
(3) Figures of column (2) adjusted for current weekly
shown in column (l).
level of trade as
(4) Actual money in circulation (millions of dollars).*
(5) "Excess” circulation (+).
millions of dollars.
Excess of column (4) over column (3) in
(1 )
(2)
(3)
(4 )
87.0
06.7
86.5
86.2
86.0
4526
4545
4554
4558
4563
3938
3941
3939
3929
3924
4812
4873
4918
4969
5013
f
874
932
979
1040
1089
12
19
26
p85,8
p85.6
p85.3
p85.1
4586
4623
4609
4604
3935
3957
3931
3918
5060
5105
5108
5176
p!125
pll48
pll77
pl258
Oct. 3
10
17
24
31
p84.9
p84.7
p34.4
p84.2
p84.1
4627
4646
4650
4632
4627
3928
3935
3925
3900
3891
5281
5437
5494
5523
5513
p!353
pl502
p!569
• p!623
pl622
Nov. 7
14
21
28
p83.9
p03.8
p83.7
4669
4664
4650
3917
3908
3892
5550
5533
p!633
p!625
(5)
(4)+
(5)+
5471
p!579
1931
Aug. 1
8
15
22
29
Sept,5
Dec. 5
12
19
26
p Preliminary
*Daily average for weeks ending Saturday
*Based on actual circulation for Wednesday
Warren M. Persons
Consulting Economist
345 Hudson Street
New York City
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority MtUf)
SPECIAL CONFIDENTIAL REPORT
COMPUTATION OF "EXCESS CURRENCY IN CIRCULATION" BY MONTHS
(1) Index of the physical volume of retail trade adapted from the index
of total trade of the N. Y= F. R. Bank (Jan.-June 1930 s 100).
(2) Price factor (Jan.-June 1930 = 100) adapted from the index of cost of
living of National Industrial Conference Board,
(3) Product of columns(l) and (2) giving estimated doliar-volume of money
work.
(4) Volume of money seasonally required on basis of Jan.-June 1930 "normal"
(millions of dollars).
(5) Figures of column (4) adjusted for current monthly level of trade as
shown in column (3).
(6 ) Actual money in circulation (millions of dollars).*
(7) "Excess" circulation (#•).
millions of dollars.
Excess of column (6 ) over column (5) in
(2 )
(3)
(4)
(5)
(6 )
96.8
96.4
96.6
95.7
93.8
93.9
98.7
98.4
98.8
98.4
98.0
97.4
95.6
94.8
95.4
94.2
91.9
91.4
4549
4558
4614
4641
4664
4800
4349
4321
4402
4372
4286
4387
4483
4476
4492
4501
4528
4823
Jan.
93.0
Feb.
94.2
Mar.
94.4
Apr.
95.0
May
94.7
June
94.4
July
93.4
Aug.
92.0
Sept. P91.1
Oct. p90.2
Nov.
Dec.
96.6
95.8
95.6
95.1
94.4
S3.9
93.9
93.9
93.7
p93.7
89.8
90.2
90.2
90.3
89.4
4570
4513
4531
4540
4531
4540
4549
4558
4614
4641
4104
4071
4087
4100
4051
4022.
3989
3938
3940
3922
CD
(7)
1930
A'
July
Aug.
Sept.
Oct.
Nov,
Dec.
+
134
155
90
129 *
242
436
1931
8 8 .6
87.7
86.4
85.4
84.5
4695
4598
4590
4647
4679
4750
4836
4947
5133
p5450
591
527
503
547
628
728
847
1009
pll93
p!528
p Preliminary
* Daily average for month
Warren M. Persons
Consulting Economist
345 Hudson Street
New York
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
A uthority h i tO f)
F o r m N o . 131
Office Correspondence
Governor Meyer /
To__
FEDERAL RESERVE
'BOARD
Date
November 28, 193 ^
Subject: Volume of Money in Circulation
From
Volume of currency outstanding increased "by only $8 ,0 0 0 , 0 0 0
between November 18 and November 25.
This is a much smaller in
crease than is usual in the week preceding the Thanksgiving holi
day,
In past years, when the holiday came at about the same time
in the month as this year, the added demand ranged from $3 5 *0 0 0 , 0 0 0
to $5 0 ,0 0 0 ,0 0 0 ,
This is the second week in which currency demand has been defi
nitely smaller than the seasonal expectation, and no doubt indi
cates some decrease in hoarding as well as a continued return to
the reserve banks of cash held in the vaults of member banks,
Re-
porting member banks in New York City podmsaiat their holdings of
vault cash by $7 ,0 0 0 , 0 0 0 during the past week.
For CIRCULATION:--------- —
Mr. Hamlin
Mr. James
Mr. Msnee
Mr. Miller
'^
Mr. Pole
Wir.h.sriic
Mr. Korn.
Mr. iv.euz
Mr. Wyatt
Mr...
Mr...
Please note - initial
and return to GOVcRuQR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
I have made a few notes on the meeting of the American
Statistical Association, which I am transmitting for your in
formation.
Mr...............
Please note-initial
and return to GOVERNOR.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
November 2J, 1931
Meeting of American Statistical Association. November 24, 19^1
The meeting of the American Statistical Association on November 24
was devoted to the general subject of financial liquidation and recovery.
The papers in general may be described as of a deflationary character, in
contrast to the preceding meeting, which was distinctly inflationary.
John E. Rovensky, Vice Chairman of the Bank of America, gave a good
old-fashioned banking talk about the necessity of sound finance, and par
ticularly emphasized the undesirability of making any radical changes in
the Federal reserve system.
He endorsed the President’s proposal for the
home financing reserve bank, but said that the same purpose could be ac
complished and in his opinion better by expanding activities of the land
banks.
Warren M. Persons read a thin paper, the substance of which was that
people should stop hoarding and should spend their money, but that this
should be accompanied by a promise by the banks that they would stop seek
ing 100 per cent liquidity and would lend for legitimate purposes.
He
described his program as an expansion on the gold base.
Robert B. Warren, of Case, Pomeroy & Company, reviewed the course of
the gold standard and gold exchange standard since the end of the war, and
was inclined to attribute a good many of the recent troubles to the col
lapse of the gold exchange standard, because of the possibilities of expan
sion it offered, and because of the heavy burden of the short-time funds
concentrated at London.
He felt that the world must go back to a metal base,
but was not sure that silver might not be added to gold in case gold proves
to be insufficient in quantity.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Page 2
Alexander Sachs, of the Lehman Corporation, talked at considerable
length about the delusion that easy money^cures all evils, and made some
telling criticisms of statistical methods reduced to trends.
He said
that trend lines were borrowed from astronomy— no wonder the sky was the
limit.
Dwight C. Hose, of Scudder, Stevens & Clark, analyzed the position
of common stocks at the present time, and figured on the basis of past
performances that they can be expected to rise 50 per cent in a short
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DINNER MEETING
Amman S>tatistu*al Assnrialtmt
Tuesday Evening, November 24, at 6:00
(Speaking begins at 7:30)
The Aldine Club, 200 Fifth Avenue (at 23rd St.)
PRESIDING OFFICER
W . RANDOLPH BURGESS, Deputy Governor, Federal Reserve Bank of New York.
G E N E R A L TOPIC
jfftnanrial IGiquihatinn attit Errnurrg
W ill the present depression lead to a reconstruction of the financial machinery of the world? If so, what
changes are most probable?
SPEAKERS
JOHN E. ROVENSKY, Vice Chairman, Bank of America.
Some of the Proposed Changes in our Financial Machinery.
WARREN M. PERSONS, Consulting Economist.
Economic Significance of Deflation.
ROBERT B. WARREN, Case, Pomeroy &> Co.
After the Gold Exchange Standard, What?
ALEXANDER SACHS, Economist and Director, Lehman Corporation.
The Role and Responsibility of Academic Delusion in the Depression.
DW IGHT C. ROSE, Economist, Scudder, Stevens 6? Clark.
Common Stocks at the Current Price Level.
DISCUSSION
SHERWIN C. BADGER, Barron’s Magazine.
P R O G R A M COMMITTEE
Helen Slade, Chairman
James Hughes
George B. Roberts
Thatcher Jones
David Roswell
Glenn Munn
Henry S. Sanders
BUSINESS DRESS
LADIES ESPECIALLY INVITED
ADMISSION C H A R G E S PER PERSON
DINNER A N D PROGRAM
Paid by
Monday
Members and Accompanying Ladies (and Husbands of Members)
$ 2.50
A ll Others --------------------- ------ ---------------------------- ---------------
3.75
PROGRAM
ONLY
Paid
Tuesday
$ 3.00
$ .75
4.25
2.00
Kindly give the names and addresses of persons for whom you are ordering tickets.
Make checks payable to the
American Statistical Association
Orders should be addressed to
WILLFORD I. KING, Secretary
Room 530 Commerce Building
236 Wooster Street, New York City
Please hand the enclosed extra copies of the program to acquaintances who are interested.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
sonally adjusted index was the largest in any month since July 1930, accord
ing to a preliminary estimate based on Bureau of Labor Statistics figures to
be released this afternoon.
The Board1s indexes of factory employment and payrolls, 1923-25 = 100,
are shown below for the past year and for the high points in 1929:
FACTORY EMPLOYMENT
Adjusted for
Unadjusted
seasonal variation
1929 High
102.8 (July)
1930 Sept
Oct
Nov
Dec
83.4
82.2
81.1
80.1
1931 Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
78.3
77.8
77.9
78.0
77.8
76.0
75.1
74.1
72.8
p 70.1
FACTORY PAYROLLS
Unadjusted
105.4 (Sept)
111.9 (Sept)
83.0
80.8
75.1
73.7
86.4
84.3
81.0 '
78.8
68.4
73.2
74.9
73.6
72.1
67.6
64.4
64.3
61.8
p 59.5
76.4
77.3
78.1
77.9
77.1
75.0
73.8
74.2
74.7
p 71.3
p Preliminary
In October there were large declines in the number employed at woolen
mills, automobile factories, and shoe factories.
At woolen mills, where an
increase is usual at this time of year, there was a decrease of 16 per cent,
partly as a result of a strike at Lawrence, Massachusetts.
In the automobile
industry the decline was 21 per cent instead of the usual seasonal decrease
reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2-
of about 3 per cent. At shoe factories the decrease was 6 per cent as com
pared with a usual one per cent.
try was also somewhat reduced.
Unployment in the'women’s clothing indus
On the'other hand, there "Were increases in
the number employed in the silk goods and hosiery industries.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Sovimber 19, 1931
-
-
Demand Iji^COTW ^ES SECTION
Mr. Ooldenweiser
Mr. Rhodes and Mr. Thompson
'
.
JUN 2 41953
2y
-
y
£ /y
During the week ending November 11, $25,000,000 of currency
from circulation according to our dietrict calculations.
This compares with an
average return flow of $30,000,000 during corresponding weeks of the three years
1927-1929.
The volume of currency that remained in circulation on November 11, re
presenting excessive withdrawals since October, 1930, amounted to $1,185,000,000.
Changes other than seasonal during the week were small in amount and occurred
only in the Mew Tork district where some $10,000,000 was returned from circula
tion, and in the Chicago, Dallas, and San Francisco districts where in each
Instance circulation increased $5,000,000.
The volume of currency outstanding, resulting from excessive withdrawals
as distributed among the various Federal reserve districts, is shown in the
following table, which also shews changes In this amount for the week ending
Hovenfcer H i
____________________ ilU s u M we to the aaaro.t 5.000.000)______________
Federal reserve
October 1930 to
___________________d l.trle t______ SpT.ab.r U . 1931
Amount
Boston
Mew Tork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louie
Minneapolis
Kansas City
Dallas
San Francisco
Total
TBIi PCOH
20
280
165
145
70
Week ending
BoT.abor 11.1931___
Change
—10
—
—
—
—
290
20
30
40
40
85
1,185
4 5
—
—
4 5
4 5
4 5
./i r
// A
C
1
Is
$ 11/ *
vr $P
<*
>
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Office Correspondence
To__
F E D ERAL RESERVE
BOARD
Date
Subject:. .Annual
Mr. Goldenweiser
From _ Mr
November 17, 1931
meeting of the Harvard
Economic Societyt November 15-14
o po
2— 8495
The chief subject under discussion at the meetings of the Harvard
Economic Society was the outlook for business in 1932, although certain
speakers discussed other problems.
Professor Bullock and Professor Crum of
Harvard both stressed financial developments in their papers, and both
thought that the end of the run on the dollar might be the turning point in
the whole situation.
Professor Bullock reviewed European financial develop
ments after the announcement of the Austro-German Anschluss, and described
the current German situation as a serious one.
Three speakers discussed situations in particular industries in this
country, and each expressed quite a pessimistic viewpoint.
Mr. F. E. Richter
of Loew and Company indicated that the copper situation was much worse than a
year ago, with control now largely in the hands of foreign producers.
He
pointed out that world consumption had been sharply reduced, that foreign pro
duction has shown little change, and that the sharp curtailment in production
in the United States since 1929 had not been sufficient to prevent the further
accumulation of stocks of refined copper which are now very large in the East
ern Hemisphere as well as in the Western Hemisphere.
He stated that in 1931
the output of copper in the United States would be about one-third of the world
total, whereas in 1929 it was about one-half.
He outlined many difficulties
involved in any world curtailment program or in any tariff program for the pro
tection of producers in this country.
He seemed to feel that the outlook for
this industry was very poor for several years ahead.
Mr. F. Leslie Hayford of General Motors mentioned the figure of 600,000
cars in the first quarter of 1932 as a possibility.
This figure was for the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-----------:---------------------------
—
-
2-
United States and Canada, and is IS per cent below the corresponding period
of 1931.
He expected an increase in output from October to November, contrary
to the seasonal movement in other recent years, because certain companies which
usually introduce models in midsummer are bringing them out at the end of the
year.
Mr. Hayford seemed to be very much impressed by the effects of bank
failures on the automobile business and thouglrb that if bank failures continued
in 1932 automobile output would be considerably smaller than in 1931.
He noted
that the automobile business had been hit harder abroad than in the United
States, and he thought that there was no hope for immediate revival in auto
mobile exports.
He mentioned the low agricultural income in this country as a
factor depressing the automobile trade.
Mr. W. C. Clark, now director, courses in commerce and administration,
Queenfs University, and formerly with S. W. Straus and Co., discussed the build
ing situation in some detail.
He expressed the opinion that public building and
public works would be less in 1932 than in 1931, partly as a result of reduced
municipal expenditure in this direction.
He thought industrial building, com
mercial building, and construction by public utility companies would continue at
low levels, and that residential building might stabilize at present levels for
a while and later increase moderately.
He saw little demand for new construction,
and little money available to finance projects proposed.
He discussed the se
quence of declining rents, declining real estate values, mortgage bond defaults,
etc., resulting in a critical situation all the way around at the present time.
He mentioned the proposed discount corporation as a favorable factor but pointed
out that it would not provide needed second mortgage money at reasonable rates.
There were no reports on many leading industries, including steel, textile,
and lumber industries.
Professor Black talked about the agricultural situation,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
adding little to the information already available‘on the subject.
He did,
however, make an estimate for gross agricultural income 'in 1931, which he
figured as less than 7 billion dollars, compared with 9 1/3 billion in 1930,
and a level of 11-12 billion in the years 1924-1929.
Colonel Ayres considered the decline in*wholesale prices and the crisis
domestic
in credit and banking as the most important /developments of the year. The
effects of the banking troubles he thought might be fairly temporary, while
the effects of the price level were certain to continue over a long period.
He thought that the banking crisis reached a critical point in October, but
that many of the effects of the decline in wholesale prices had not yet be
come apparent.
He inclined to the view that many prices which have been
stable thus far would go down rather than that the others would go up.
At
one point in his speech, Colonel Ayres expressed the opinion that if there
were no more serious developments abroad there might be some increases in
production in this country early in 1932.
However, his final list of pre
dictions was as follows:
Railroad car loadings:larger volume in last quarter of 1932 than in last
quarter of 1931
Industrial production:iarger volume in last quarter of 1932 than in last quarter
of 1931
Commercial failures :larger number in 1932 than in 1931
Bank fallured^smaller number in 1932 than in 1931
Brokers loans ‘
.increasing trend in 1932
Electric power:increase in 1932 over 1931
Gasoline consumption:increase in 1932 over 1931
Gold exports:decrease in 1932 from 1931
Money in circulation:decrease in 1932 from 1931
Cost of living:decrease in 1932 from 1931
Earnings of employees:decrease in 1932 from 1931
Number employed; larger number in last quarter of 1932 than in last quarter
of 1931
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Colonel Ayres finally characterized 1930 as a year when businessmen
decided to stand pat, 1931 as a year when they decided to hold the small
pair and call for three cards, and 1932 as a year when they will call for
five new cards.
Neither in the discussions which followed the speeches nor in private
conversations did evidence appear of belief in immediate substantial improve
ment in the business situation, perhaps because wheat and stock prices were
sagging from recent higher levels at the time of the meetings.
The papers relating to subjects other than business prospects were of
little importance.
Professor Joseph L. Snider of the Harvard Graduate School
of Business Administration argued against general wage cuts, as a means of
restoring prosperity, but pointed out the necessity for wage cuts in particu
lar instances.
Miss Eunice S. Coyle of the Harvard Economic Society talked
superficially about bank failures.
Mr. Joseph B. Hubbard, who has been edit
ing the weekly letter of the Harvard Economic Society, discussed hoarding.
Professor J. Franklin Ebersole of the Harvard Graduate School of Business
Administration spoke on "The Recent Operation of the Gold Standard."
Dean
Donham of the Harvard Graduate School of Business Administration attacked
Federal reserve policies in recent years, without knowing elementary facts
concerning the operation of the System.
-—
Reproduced from the Unclassified / Declassified Holdings of the National Archives
V
Hovember 17, 1931
Governor Meyer
Demand for Currency
Miss Joy
IN n u s s R EC TJo JJ
JUN B41913
Currency outstanding has decreased during the past*
§
®BT
Saturday, Hovember lU, was $5,530,000,000.
from the preceding Saturday is about the usual amount for this time of
year.
The continued return of cash from bank vaults has contributed
to the recent decline in the volume outstanding.
Vault cash held by reporting member banks in leading cities on Hovember 11 was $10,000,000 less then a week earlier.
The largest reduc
tion was in the Hew fork district; and there was also some return In the
disturbed Philadelphia and Cleveland areas.
A part of the gold coin
withdrawn by Hew York banks for domestic circulation has recently been
re-deposited at the Hew York federal Beeerve lank.
In magnitude, this
Is not important—about $8,000,000 since October 28—but i t Is important
ne an indicator of the passing of panic psychology.
During the current week there is usually a further decline In the
demand for currency, amounting in past years to $25 , 010,000 or more from
Wednesday Hovember 11 to Hovember 18.
The Thanksgiving Day holiday in
the following week, however, w ill occasion substantial withdrawals.
/ZL.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
t
itorwAer 13, 1931
CTtON
Sfir. Goldenweiser
Mr. Rhodes and Mr. Thompson
JU N 2 4 1 9 5 3
During the seek ended November 4 the increase in demand for currency,
according to our district calculations,
was
.r; J
$67,000,000, an amount somewhat
greater than the average for the corresponding week of the three years 1927-1929
Changes by districts la excess of the three-year average were moderate in
amount and were reported by Hew York, Cleveland, Richmond, S t . Louis, and
San Francisco.
The volume of currency that remained, la circulation on November 4 re
presenting excessive withdrawals since last October, amounted to $1,180*000,000.
This total was distributed aoong the various Federal reserve districts, as
shown in the following table, which also shows the Changes which have occurred
in this amount during the week ended Hbvec&er 4, 1931$
nffs.fr?.
October,1930 to
lorember 4.1931
Federal reserve
district
Boston
Hew York
Philadelphia
Cleveland
Richmond
Atlanta
Chicage
St. Louie
Minneapolis
Kansas City
Dallas
Ran Francisco
Total
—
30
290
165
145
70
•#
385
30
25
40
35
85
1 .1 QQ.
j y --------
SM g
m.-QQO.flOOl
leek ending
November 4.1931
_____
*•
4 10
• «
4 5
4* 5
e•
*»
4 5
•*
• *
e»"—#' * * *
4 $
4 30
X
o a r tro w
\J '
Y
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Sovasiber 6, 1331
Mr* Goldenweiaer
SECTION
Mr* Rhodes and Mr* Thompson
JUN
2. v y ,
During the week ending October 29, detaand for
2 41953
^
by $24,-
000,0001 where** Increased circulation averaging $29,000,000 has bees usual
during the corresponding week of the three years 1823-1929 • The figures indi
cate, therefore, a greater than seasonal return of currency to the federal
reserve banks of $80,000,000, of which $89,000,000 was returned in the lew
Turk District alone, and smaller amounts in the Boston, Richmond, Chicago,
and San Francisco districts*
Excessive withdrawals of currency during the
week occurred only in the Cleveland and Dallas areas*
The volume of currency which remained in circulation on October 28 repre
senting excessive withdrawals since last Catcher amounted to $1,160,000,000*
This total was distributed among the various federal reserve districts, as
shewn in the fallowing table, whieh else shows- the ehanges which have occurred
in this amount daring the week ending October 28, 1981s
(figures ere to the nearest 6,000,000)
n sza
diwtrtot
BostOB
Sot York
Philadelphia
Cleveland
Vf^Va*ApS
Atlanta
Chicago
8t* Louis
ffiimtipol Is
Xans&a City
Dallas
Ban franeiseo
Total
Txsrfsm BSSF Week ending
(October 26,1931 October 28,1981
•
20
260
166
140
66
*e
286
18
26
40
38
80
I7T65
- 6
-38
**
♦10
-10
•*
- 6
**
##
••
♦8
-10
-=55"
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r M N o . 131
FEDERAL RESERVE
BOARD
Office
Date
November U,
Subject:.
Td_
2 — 8496
I transmit herewith tables on the Bank of England,
Bank of France (including a statement of the Caisse), and
Beichsbank, with comments and explanations.
From now on
you will receive a statement pointing out current develop
ments every week.
I apologize for the delay, which has been due to an
effort to organize the material in such a way as to bring
out significant items rather than merely accounting items
from the balance sheets.
H
o
BANK OF FRANCE
Analysis of gold movements and reserve position
s-
(In Billions of francs)
Factors expansion
of which reduces
gold stock
Bate
Gold
Foreign
exchange
Domestic
discounts
and
advances
CD
£
Factors expansion of
which increases gold
stock
Notes
in
circulation
Reserve position
Other
*1
1
CD
Deposits
Gov’t.
&
CD
3
0
Gold
Legal
minimum
Working
reserve
36.6
42.3
55.6
- 56.6
25.8
25.7
26.2
27.9^
9.9
7.7
8.3
7.7
64.3
71.3
77.6
78.3
11.5
6.2
10.5
8.4
6.6
7.1
11.9
18.3
28.8
29.6
35.0
36.8
7.8
12.7
20*6
21.8
Single reports
Oct. 24, 1930
Oct. 16, 1931P
Oct. 23. 1931P
25.6
29.5 ^
88.8^
9.2
10.2
10.7
72.9
81.9
81.8
12.6
7.9
8.8
9.4
23.0
22.7
33.2
39.5
39.6
45
50
56
56
53
55
56
v Preliminazy.
* Total gold to notes and deposits. The legal minimum is 35 per cent.
\t/ These dates have Been selected to show the situation immediately preceding heavy acquisitions of gold
by France in the period since the Bank of France ceased converting its own foreign assets into gold,
and the situation on the last report date before England’s departure from the gold standard.
The average of 4 reports is used in order to eliminate the very considerable cycle within the month —
particularly the distortion introduced by month-end movements, which always inflate the meaningless
item “miscellaneous assets.11
^3/ Not including advances on gold understood to be for account of the Bank of Spain, which averaged
1,022,000,000 francs for the 4 reports ending September 18, 1931, and has since increased somewhat.
n
o
*■*
CD
t3
O
3
&
CD
3
ra t
O
in
c
cr
'n ’
o
17.5
22.7
24.2
CD
CD
CD
Current position compared with week and year ago
"
50.6
62.2
63.9
o
(A
Reserve
ratio*
(per cent)
Position on various significant dates^
Average for 4
reports endings^
July 12, 1929
Hay
2, 1930
Hay 29, 1931
Sept.18. 1931
S i!
?
6
2 jo
5
. to
o
4
D
fa
O
CD
to
ct
$
c»
tH»
to
cl-
§=
3
to
V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
rl 2
The analysis of Bank of France figures is focussed on gold.
Financial
developments in France have not been reflected, as in Germany, in the
volume of borrowing at the central bank; nor is this, as in England, the
result of a policy on the part of the central bank of offsetting gold moveu
ments.
French banks have been subject to enormous drains in connection
with the public’s demand for cash and the transfers of reserve funds to
Government account at the Bank of France.
On the whole they have met these
drains and built up their own cash position, not by borrowing from the Bank
2/
of France, but by drawing upon their short-term balances abroad.
This has
resulted in a heavy import of gold, which, sold to the Bank of France, has
released the necessary volume of funds for the purposes indicated above.
As France remains on a free gold standard, gold movements in one direction
or the other are likely to remain important in the future.
It was in the middle of 1939 that the Bank of France ceased the direct
conversion of its foreign exchange holdings into gold.
holdings have remained at about 26,000,000,000 francs —
cent emergency credits to central banks.
purely commercial operations.
Since that time these
except for the re
Subsequent gold shipments have been
The first large movement of gold to France on
1/ As in Germany there is no adequate domestic open market in which the cen
tral bank can operate, although at some future time the use of Gaisse bonds
may be developed.
2/ One might properly say that the French open market has hitherto been London
and Eew York. Surplus short-term funds of the French banks have gravitated
to these two centers; and demands for currency or other domestic drains
have resulted in withdrawals -thence. It is important to note that, although
the Bank of France has exceptionally large holdings in this 'French open
market," it has been prevented by that very fact from operating in it to
supply French commercial banks with the funds they required to meet domes
tic drains. To have done so would have increased its foreign exchange hold
ings, already regarded as at a maximum. Consequently the banks have had to
bring in gold.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
the new "basis started in the middle of July, 1929, coming to an end early
in 1930,
The second wave started in May, 1930, and came to an end early
in 1931.
The third wave has accompanied the current international crisis.
It is evident from the figures that the dominant factor "behind these
gold flows has "been the growing demand of the French public for currency.
In
the first period, however, this demand was met to an important extent by the
release of funds from Government deposits
2/
at the Bank of France; and conse
quently the inflow of gold was not so great as in the second period when, to
the drain of money into circulation, was added the drain of bank reserves
into Government account at the Bank of France.
It was during this latter
period, too, that because of banking troubles, the banks found it necessary
to build up their own cash position; and ''other deposits” at the Bank of
France markedly increased.
During this second period gold stock increased
by 13,000,000,OCX) francs as against 6,000,000,000 francs in the first.
The third period coincides with the international crisis involving par
ticularly Germany and England.
Whereas in the first two periods the French
banks were bringing in gold largely to replace cash drawn from them by the
public or the Government, in this third period the dominant factor was safety.
This is clearly shown by the growth of "other deposits.”
posits” at the Bank of France pay no interest.
These "other de
Yet funds were brought back
3/ These deposits are of two types i 1 ) deposits of" the French treasury proper
built up for the most part by receipts from taxation; and 2) deposits of
the independent amortization office (Gaisse autonome d ,amortissement) fed
largely from the proceeds of new issues of two-year defense bills (bons de
la defense) — although the Caisse also has substantial revenues from the
tobacco monopoly and certain assigned taxes.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- 4 -
-
from Berlin and London and other centers inhere they were yielding good income
in order to be piled up without interest at the Bank of France.
were seeking a double safety —
The banks
that of having their funds at home in a sound
currency and a sound bank, and that of being able to meet possible runs by
their own public.
This panic movement was altogether the biggest factor be
hind the gold imports of the third period.
It has been particularly in evidence since England left the gold standi/
ard.
Notes in circulation have also increased substantially since that
event —
an increase contributed to in part by demand in neighboring coun
tries for Bank of France notes.
These two forces have been the principal
factors behind the recent movement of gold to France —
a movement that would
have been greater had it not been for the increase of 3,000,000,000 francs in
domestic discounts and advances of the Bank of France.
4J The necessity for the banks to strengthen their cash position was increased
at the end of September by the threatened failure of an important institu
tion, the Banque Nationale de Credit.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*.'5 -
Supplementary note "on the Caisse
1/
The Caisse
was established in 1926 mainly for the purpose of providing
an independent administration of the Government^ floating debt in the form of
defense bills (bons de la defense).
These bills maturing in from one month to
a year had proved embarrassing to the French treasury whenever there was any
loss of public confidence.
There were assigned to the Gaisse the revenues
from the tobacco monopoly and certain special taxes as well as any surpluses
that developed in the regular budget.
Starting in October, 1926, with fr. 48,000,000,000 of defense bills, none
of which had a maturity in excess of a year, the Caisse had reduced the total
aJ
by the end of April, 1930, to fr. 25,000,000,000, all of which represented bills
maturing two years from the date of issue.
At this point, however,the Caisse
proceeded to issue more two-year bills than were currently maturing with
the result that the volume outstanding began to grow again, defense bills
becoming a source of net revenue.
Moreover at the end of June the French
share of the proceeds of the Young Plan loan (German Government International
5 l/2 loan 1965) was turned over to the Gaisse.
sources —
It was chiefly from these two
each of v^iich yielded over fr. 3,000,000,000 —
that the Caisse
built up its deposit at the Bank of France to the extent shown in the figures
1/ The full name of this institution is "la Caisse Autonome de Gestion des Bons
de la Defense Rationale et d ,Amortissement de la Dette Publique" (independent
office for administering national defense bills and amortizing the public debt),
2/ This reduction was not achieved out of revenues alone. The great bulk of
it represented conversion of defense bills into long-term debt of the Caisse.
The reductions in 1930, however, were from revenues; and at the same time the
Caisse was active in retiring rentes by purchases on the open market, spending
over fr. 4,000,000,000 in this way during the year. It has also been gradually
amortizing the negotiable bills issued by it to the Bank of France,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
— 6 —
given below.
These factors are also behind the growth of the item "Govern
ment deposits" in the analysis of Bank of France figures for the period
ending May 29, 1931, although in this period the growth of Caisse deposits
was partly offset by the shrinkage of Treasury deposits proper.
The figures given below cover not onl3r Caisse deposits with the Bank
of France but Caisse bills held by the bank among its assets.
These bills
were issued to the bank to reimburse it for the advances it had made to the
old Russian Government on behalf of the French Government during the war.
They bear no interest and technically have a maturity of three months.
are negotiable.
They
In fact they were issued to the bank with the definite purpose
of providing it with open market paper.
As the bank continues to hold all the
outstanding bills in its portfolio, however, it cannot now, by purchasing
them, supply the market with funds.
Instead the gradual amortization of the
bills by the Caisse has led to a corresponding withdrawal of funds from the
market.
The two accounts of the Caisse with the Bank of France are shown below
for the same dates as those employed in the analysis of Bank of France figures.
In that analysis the Caisse bills are omitted in order not to complicate the
record with a relatively inactive item.
Caisse deposits, however, are in
cluded with the Treasury account in the item "Government deposits. "
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- 7
CAISSE ACCOUNTS WITH THE BANK OF FRANCE
(In billions of francs)
Date
Caisse bills
held by the
bank
Caisse deposits at
the bank
5.8
5.4
5.1
5.1
6.0
2.7
9.0
7.1
5.1
5.1
5.1
7.0
6.8
6.9
Average for 4
reports ending:
July 12,
May
2,
May 29,
Sept.18,
1929.
1930
1931
1931
Single report:
Oct. 24, 1930
Oct. 16, 1931
Oct. 23, 1931
y
b
O
E
Efi f |
n
BANK OF ENGLAND
n>
<p
Analysis of market borrowing and reserve position
n
%
o
&
Disc
ounts
and
Date
advanoes
Factors expansion Factor*
discounts
of which reduces
discounts
Jotes in
Gold
Deposits
Securities
circulaTotal British Gov't.
tion
banks
Reserve position
Gold
Other
Required
against
Working
reserve
a>
CO
Reserve
ratio*
(per
cent)
•n
o
S3
a
ja g J fc g ft-.,
c
S3
Position on various significant dates 1^June 12,
Oct. 2,
July 8,
July 29,
Sent.16.
1929
1929
1931
1931
1931
5.7
8.5
7.1
9.7
8.3
163
129
165
132
136
312
350
316
335
346
362
363
359
359
352
•
107
112
115
105
125
61
65
65
56
58
11
9
16
15
17
36
38
35
34
50
r>
102
103
100
99
77i^
61
26
65
33
59^"
58
24
58
32
. 48
Current position compared with week and year ago
64
21
35
96
58
56
112
Oct. 29, 1930 4.2 160
316
| 356
55
1
5
81
61
19
53
132
43
Oct. 21, 1931p 10.4 136
355
354
81 ^
17
133
63
53
55*— ___£2_____
opt.
J L 3 6 _ . 336 .j , . 356
A M
* Ratio of “working reserve" (plus a small amount of coin in the banking department) to deposits.
p Preliminary
^Including securities assigned as cover for th® fiduciary issue of notes.
These dates have been selected to show the course of market borrowing from the Bank of England during
recent major movements of gold, and the position on the last report date before England's departure
from the gold standard.
^ On August 1, 1931, the bank was given temporary permission (since continued) to transfer 615,000,000
of gold from the legal minimum against notes to the working reserve.
.
CD
T!
tz>
c
CT
‘I
§>
>r
2*
°5
'n '
n
D
P3
£5
o
■4
■c
V
Reproduced from the Unclassified / Declassified Holdings of the National Archives
H
o
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2
-
The analysis of the Bank of England figures is focussed on “discounts
and advances. “
This item represents the extent to which the market has
been forced to draw upon the bank.
The retrospective dates have been
chosen so as to bring out the bank*s policy in recent years of insularting the market from the effect of gold movements.
This it has done
through its open market operations as evidenced in the item “securities J*
Gold flowing out has been replaced by security purchases; gold flowing
in has been absorbed by security sales.
Only in the recent July crisis
was the outflow so rapid that the commercial banks were forced to draw
substantially on their Bank of England balances.
Borrowing by the market
at the bank was hardly affected by any of the great pendulum swings in gold.
The date September 16, 1931, is shown as the last report date before
the departure of England from the gold standard.
Gold as compared with
u
the end of July was somewhat higher; but in the interval the $250,000,000
central bank credit and the $400,000,000 private bank credit had been large
ly exhausted.
The most noticeable change in the position of the bank was
in the item “other deposits,“ which grew to quite unprecedented levels.
This change had begun in August.
It is probable that it reflected operar-
tions by the Bank of France similar to those that also in August began to
boost foreign bank deposits in the Federal Reserve statements —
i. e., the
1J Working gold reserves had been substantially increased by the permission
given on August 1 to increase the fiduciary issue of notes by £15,000,000.
The effect of this permission was to free £15,000,000 of gold from the
legal minimum against notes and transfer it to the working reserve, which
is subject to the discretion of the Bank of England. This transfer, how
ever, did not directly affect the volume of funds available to the market.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
conversion of bill holdings outside France into central bank deposits.
The losses to commercial bank reserves, which resulted from these sales
in England, were largely replaced during the period by the Bank of England's
purchases of securities*
The high level of "other deposits" at the bank has been maintained,
and even increased, in October.
British bank deposits and notes in cir
culation had also risen by October 28 as compared with September 16.
The
funds necessary to effect these increases were obtained by the market
largely from additional security purchases by the Bank of England.
part, however, the market had to borrow directly from the bank.
In
Discounts
and advances since the departure from the gold standard have been substan
tially higher.
This is an indication that the bank is not entirely protect
ing the market, but is keeping a close control over the situation to prevent
possible inflationary developments.
O
H
o
3
f
eeichsbam:
y
0
hi
O
o
1
CD
CD
*1
Analysis of market borrowing and reserve position
U n millions ,of _mLohsmarks )
Factors expansion Factors expansion of
of which reduces
which increases dis
counts
discounts
Reserve position
Reserves
Advances
Other
assets
Notes
in
ci ref
lation
Deposits
Other
Reserves
liabili
ties
Gold
Foreign
exchange
Reserve ratio*
(per cent)
S3
&
CD
CD
lution of the General Council (except for one vote) this ratio may be reduced, subject to the pay- s
ment of a progressive tax.
Uhese dates have been selected to show the effect of reserve losses on market borrowing from the
Beichsbank during the three major crises of the mark, and the situation at the time of England’s
i
Hitler election ecare
o
y
o
Position on various significant dates ^
departure from the gold standard*
£ Young conference panic
tfi
*a
Discounts
Date
CD
*1
ft- Depression oriels
Reproduced from the Unclassified / Declassified Holdings of the National Archives
As in the case of the Bank of England the analysis of the Reichsbank
figures is focussed on "discounts and advances" —— i. e., the measure of
the extent to which the market has had recourse to the central bank.
Where
as in England, however, the notable feature was the steadily small volume of
market borrowing —
gold movements being offset hy Bank of England security
operations — - in Germany the contrary is the case.
in the open market are strictly limited by law.
Reichsbank transactions
The bank can operate freely
only in bankers* acceptances and commercial bills, and no adequate market in
these exists in Germany.
Not only is there no domestic market, but Germany,
in contrast to France, is a net borrower rather than a net lender on short
term account abroad.
In consequence of this situation every large drain upon
German central reserves has been accompanied by heavy borrowings at the Reichs
bank.
The subsequent return flow of funds from abroad has been utilized to
repay borrowings.
The Reichsbank has had no power to insulate the market
against the effects of gold and exchange movements, even had it considered
such a course of action desirable.
The table shows six dates chosen to illustrate developments during the
three major crises of the German mark.
On each occasion heavy losses of
reserves (gold and foreign exchange) were accompanied by equivalent borrow
ings at the Reichsbank.
These borrowings would have shown up as even larger
were it not for the fact that the Reichsbank does not distinguish its hold
ings of non-reserve foreign bills from domestic discounts.
It is known
that during each crisis these non-reserve foreign bills were sold heavily;
hence the combined figure understates the increase in domestic borrowing
during the crisis.
By the same token the published figures of reserves of
the Reichsbank do not show the full loss of gold and foreign exchange.
The
Reproduced from the Unclassified / Declassified Holdings of the National Archives
- 3 -
figures are sufficient, however, to show the sensitiveness of the German mar
ket to the outflow and inflow of central, reserves.
Following the recent crisis there was, of course, no return flow of funds
to Germany,
Indebtedness at the Reichsbank held without much change up to
the time of England’s departure from the gold standard.
Following that event
there appears to have been some hoarding.
The withdrawal of reichsmark balances
1/
and certain other accounts as permitted under the "standstill" agreement
began
at the same time; and in addition the general nervousness led to some further
pressure in all directions to get funds out of Germany into safe currencies.
Reichsbank reserves fell sharply.
than a month earlier.
On October .23 they were Em, 380,000,000 less
This loss and an increase of notes in circulation of
Em. 200,000,000 were the chief factors in the increase of Em. 650,000,000 in
discounts and advances during the month.
So far as the past week is concerned there is no evidence of the movement
becoming cumulative.
In fact the Reichsbank withstood the October 15 release
u
under the "standstill11 agreement without loss of reserves; and the usual return
of notes from circulation following the month-end is in evidence.
But indebted
ness of the German banking system to the Reichsbank remains at record-breaking
levels._________________________________________________________ ________________ _
1j
The "standstill" agreement was the outcome of the Wiggin committee report in
August. Final signature by all the parties concerned was announced September
17 by the Bank for International Settlements. The agreement was made retro
active to September 1 to run for six mouths. It applies only to banks among
the creditors, and to banks and industrial or commercial institutions in Ger
many. Under its terms foreign currency credits (with the exception of securi
ty loans and certain crop-financing loans) must be left in Germany during the
life of the agreement; but reichsmark balances may be withdrawn in install
ments. The first installment, amounting to 25 per cent, became due upon
signing of the agreement. An installment equivalent to 15 per cent was to be
released in each of the five succeeding months. The day of release was later
fixed as the 15th of the month. Provision was also made for payment of due
or over-due forward-exchange contracts; and the Reichsbank later fixed October
3 as the day when these payments must be completed. Actual withdrawals under
Keproaucea from the Unclassified / Declassified Holdings of the National Archives
the agreement "began about September 21 and were in heaviest volume during the
last week of September. The German financial press estimates, partly on the
basis of figures given out by the Reichsbarik, that up to October 3 about
Rm. 330,000,000 were thus withdrawn. Estimates for the October 15 release of
reichsmark balances alone vary from Rm. 50,000,p00 to Rm. 75,000,000. These
latter estimates are surprisingly small. On the basis of the Wiggin committee
figures Rm. 125,000,000 would appear to be nearer the truth; but these balances
may have suffered diminution in one way or another previous to the final signing
of the agreement.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
k
\
Mr. Ooldenweiser
October 28. 1931
Deoond f er = W *# W H 1 s1 ect!on
Mr. Rhodes and Mr. fluiptwi
'
I
JUN 2 41953
iz *£
.^
L —
^ / /
During the week ended October 21, demand for currency increased by
$30,000,000; whereas during the corresponding week of the three years
1927-1929 there was an average return flow of $35,000,000.
Sicessive
withdrawals for the week, therefore, are estimated at $55,000,000, of
which more than half was in the Philadelphia District.
Sxcessive with
drawals were heavier than withdrawals for any week in September except that
of September 23.
Since mid-October of 1930 withdrawals of currency in ex
cess of the three-year average currency movement for the corresponding
period amounted to $1,195,000,000 and were distributed among the federal
reserve districts as follows:
(figures are to the nearest 5,000,000)
October 1930 to
October 21, 1931
lew York
Chicago
Philadelphia
Cleveland
San franc is oo
Richmond
Kansas City
Dallas
Boston
A ll other
Total
BSTirOO*
Week ending
October 21, 1931
♦ 5
> 315
♦ 290
+ 165
+ 130
♦ 80
♦ 75
♦ 40
+ 30
4- 25
j L-JSL
♦ 30
+ 5
—
+ 10
+ 5
- 5
+1,195
+ 55
—
—
+ 5
'^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
1. 1931
REC’D IN FILES SECTION
Ur, Ooldanwelser
Demand fir currency
Mr. Rhodes
Mr. Thompson
JUN
/
2 41953
J r ----
During the week ended October 14, demand, for currency increased by
$50,000,000; whereas during the corresponding week of the three years
1927-1929 there was an average return flow of $25,000,000.
Excessive with
drawals for the week, therefore, are estimated at $75,000,000 — consider
ably lees than the $160,000,000 recorded during the week preceding the
Presidents announcement, but substantially more than withdrawals for any
week in September except that of September 23.
Since mid-October of 1930
withdrawals of currency In excess of the three-year average currency move
ment for the corresponding period amounted to $1,140,000,000 and were dis
tributed among the federal reserve districts as follows:
(Figures are to the nearest 5,000,000)
October 1930 to
October 7, 1931
Hew York
Chicago
Philadelphia
Cleveland
San Francisco
Richmond
Kansas City
Dallas
Boston
All other •
Total
leek ending
October 7, 1931
4 310
4 290
4 135
4 125
4 85
4 65
4 35
4 35
4 25
t ,_2£
4 20
4 5
4 15
4 15
41,140
475
—
—
—
4
—
30
Currency demand In a ll districts other than Boston, Sew fork, Philadelphia,
Cleveland, and Chicago, was of about usual seasonal proportions for the week.
The Increased demand for currency in the Boston district was a reflection of v
M
y
Keproauced from the Unclassified / Declassified Holdings of the National Archives
..'
-i
3, v i i
:•
- 3-
✓
several bank failures in that district —- two of them Involving banks
with more than $5,000,000 of deposits'.Preliminary estimates for the week of the 21st place excessive
withdrawals of currency at $60,000,000, bringing the total
mid-
October, 1931^ to $1,300,000,000.
*
MfiiCoB
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
O ffice Correspondence
To____ Governor Meye
r
_________
FEDERAL RESERVE
BOARD
\ Subject:.
Date
October 2 1 , 1931
Demand for Currency
From
2 — 8495
During the severyday period following the Presidents announcement on
October 7 there was some retardation in the outflow of currency from the re7
serve banks.
The withdrawal during that period amounted to $5)9,000,000 as
compared with weekly withdrawals ranging from $80,000,000 to $ 1 7 5 *000*000
during the preceding three weeks.
Since October l4, money in circulation has increased $75*000,000 to a
figure of $5,54-8,000,000 on Monday, October 19.
This increase of $75*000,-
000 compares with an estimated average Wednesday to Monday increase of
$40,000,000, and indicates that the abnormal demand for currency has not
ceased.
The increase on Monday, October 1 9 , amounted to $15,000,000,whereas
normally currency tends to return to the reserve banks on that day.
The
Federal Reserve Bank of Philadelphia alone paid out $10,500,000 on that day;
New York reported a return flow of currency amounting to about $2,000,000.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
y
October 14, 1931
Mr. Ooldenweiaer
Demand f<
JUN 2 41953
Mr. Rhode* and Mr* Thompson
> jT A f * ^ 2 V V
During the week of October 7, demand for currency increased by $185,'
000,000, exceeding the average Increase for the corresponding week of the
three years 1927-29 by 1160,000,000 or approximately the amount of the ex
cessive withdrawals during the month of September. Since mid-October of
1930, withdrawals of currency in excess of the three-year average currency
movement for the corresponding period amounted to #1,066,000,000 and were
distributed among Federal reserve districts as follows:
(Figures are to the nearest 6,000,000)
October 1930 to
October 7, 1931
Sew York
Chicago
Cleveland
y San Francisco
(Philadelphia
Richmond
Kansas City
Dallas
All other
Total
4
290
286/
♦
IM
4-
44
f
85
J
im y
Week ending
October 7, 1931
4
30
44 30
4 10
4
10
4
45
4
5
36
36
40
4
4
—
20
10
41,066
4
160
4
4
4
4
68
ik.
The recent greater-thanseaeonal increase in demand for currency in
Hw Balias D istrict was firs t svHemssd daring the week ending September
SO, following the failure of several large banks, sad as a m banks sus
pended reached significant proportions during the week ending October 7.
The withdrawals reflected in part larger holdings of vault cash by the
banks.
DC-TgCW
/r
cV• v
'
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m No. 131
Office Correspondence
You may be interested in the following table showing the amount
of currency outstanding by Federal reserve districts in excess of the
amount last year.
INCREASE IN MONEY IN CIRCULATION BY FEDERAL
RESERVE DISTRICTS
(In millions of dollars)
September 50. 1951
over October, 1950
New York ...............
Chicago ...............
Cleveland .............
San Francisco ..........
Philadelphia ..........
Richmond ........... ...
Kansas City ............
All other .............
260
.
.
.
•
.
•
•
+ 255
+ 100
+ 80
+ 75
+ 6o
+ 35
+ 4o
Total ......... .
+ 905
Fer c ir c u la t io n ,.
Please note-initial
and return to GOVERNOR,
;
Reproduced from the Unclassified / Declassified Holdings of the National Archives
\
October 8, 1931
Demand
Dr. Qoldenwelssr
Ur. Rhodes
Ur. Thompson
JP T
-jar
ES SECTION
V
JUN 2 41953
During the week ending September 30, demand for
United dt&tes increased by 180,000,000, exceeding by $45,000,000 the
average for the corresponding week of the three years 1937 - 1939.
During September, excessive withdrawals amounted to $160,000,000.
Since
cid-Oetuber of 1930, excessive withdrawals of currency have amounted to
$800,000,000, and were distributed among federal Reserve Districts as
follows:
OCSS3If2 WITHDIAWALS Of C0&RS8CY
....... (la
M .AaUaa3________________ ___:
October, 1930, to : Week ending
___ i________ 3,qty»b.r ?Qt ?8&_: ,.3,p^egftqt 3p, 1281,,
415
4260
415
4255
420
4100
—
4 80
4 6
4 75
—
4 60
—
4 35
Mew York . . . .
Chicago . . . . .
Cleveland . ..
San Francisco
Philadelphia
Richmond . . . .
Kansas City .
411 ether
♦ 49_______ _______ aUL
JEalsL
1«.». ,T111, t , n t , . U i . 1 »,,« A ..,
d tm
.
±£5
These figures do net of course take into account expected changes
in demand for currency resulting from reductions which have occurred
in the volume of wage and payroll disbursements and in re ta il sales.
Such ehaagis during this ported would probably have resulted in a re
duction in demand for currency of about $300,000,000.
Successive cur
rency demand during the past eleven months, therefore, was probably in
excess of $1,000,000,000.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
in the past week, although ordinarily there is a seasonal decline during
the latter part of September.
On Friday, September 25, the circulation
of $5 ,207 ,000,000 was $gU,000,000 larger than a week earlier, and $723 ,000,000 in excess of the same day last year.
The largest drain of currency was in Hew York where there were with
drawals of $ 25 ,000,000 —
$30 ,000,000 more than usual in the five days
following the suspension of the Gold Standard Act by Great Britain.
Ten
million dollars in gold certificates was withdrawn by a member for the ac
count of a Canadian correspondent.
However, shipments to the Continent
were very small, probably not over $3*000,000, including $2,000,000 sent
to Poland, offset by the receipt of $2,300,000 returning from Germany.
Demand for currency continued to increase in the Chicago, Philadel
phia, Richmond, Cleveland, and San Francisco Federal Reserve Districts
as a result of local banking disturbances.
In the Philadelphia district
withdrawals centered in Wilkes-Barre and Scranton; in the Cleveland dis
trict, in the Pittsburgh area.
The Richmond Federal Reserve Bank fur
nished funds for a run on a large Baltimore Trust Company which, however,
did not suspend operations.
General uneasiness over the banking situa
tion is reported in California, although comparatively few banks in the
state have closed
Keproduced from the Unclassified / Declassified Holdings of the National Archives
September 22, 1931
Money in cire
1ation
«l«u
L t ^ 1LES
Governor Ifayer
S E C T I0 N
JU N 2 41953
2... / y , 2 / /
$629,000,000 more than a year ago at this time.
Hoarding appears to have Increased somewhat slnoe the firs t of Septem
ber; certainly there is no evidence of a reduction in the country as a whole.
The return of cash to the reserve banka following the Labor Day holiday has
been $20,000,000 to $30,000,000 less than usual, indicating that larger
amounts of cash are being held by banks or individuals.
Our latest estimate
of $700,000,000 increase in private domestic hoarding since last October
should probably be increased by several millions.
This expansion in circulation since the firs t part of September centered
chiefly In the Chicago, Philadelphia, Richmond, Dallas, and San Francisco
Federal reserve districts.
Small bank failures continued in the Chicago dis
tric t; there was one suspension in the city of ihlladelphie; and large banks
closed their doors in Frederick, Maryland, SI Paso, Texas, and Ogden, Utah.
The suspension yesterday by the Bank of Pittsburgh, H. A., which with its
subsidiary has deposits exceeding $60,000,000, w ill add to currency demand at
•tiie Cleveland Federal Reserve Bank.
Increased foreign shipments of American currency and hoarding of Ameri
can money already in circulation in foreign countries is almost certain to
result from the British suspension of the Gold Standard Act, and the conse
quent uneasiness throughout the Continent.
In the month of August, the latest
date for which figures were available, foreign ehlnments were smeller then In
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fo^Bt-aro. 131
Office
To_
From
Correspondence
j o m jn
Governor Meye
^
Mr. Parry
l
a
t
J , V 1/, J //
I transmit herewith a statement relating to American investments
abroad, which has been prepared recently, along lines that have, I be
lieve, been discussed with you by Mr. Goldenweiser and Mr. Riefler.
txocutive Folder
Date
Reproduced from the Unclassified / Declassified Holdings of the National Archives
AMERICAN INVkwi'MENTS ABROAD AND FLIGHT OF CAriTAL FROM EUROPE
American investors during the past nine years have placed large amounts of
long-term funds abroad, but the movement of European capital to the United States
has largely neutralized this outflow. - Had foreign purchases of American securi
ties since 1 9 2 2 been smaller by about 20 per cent, the necessity of balancing ac
counts through shipments of gold, which aggregated $1 ,0 0 0 ,000,000 during the period,
would not have arisen.
Increased purchases of European government securities by American investors can
do little to help in the reconstruction of Europe so long as the flow of private
capital from Europe to the United States continues to increase in proportion to our
investments abroad. Until there is a change in the fundamental conditions which
have impaired the confidence of European investors in their own securities and in
creased the attractiveness to them of American securities, low money rates and a
good bond market in this country cannot result in more than a temporary improvement
in foreign credit conditions.
The chart below shows the movement of long-term capital to and from the United
States since 1922. Movements of short-term capital, which have had little effect
upon the situation over the period as a whole, are not included. The bars above the
line on the chart show the volume of long-term funds which American investors have
placed at the disposal of foreigners, while those below the line show the long-term
funds which foreigners have sent to this country. The difference, representing net
exports of long-term capital, is shown by the black areas.
About one-half billion dollars of foreign long-term capital came to this country
in 19 2 2 and again in 1 9 2 3 , when post-war currency inflation abroad was at its height
and there was every incentive for capital to seek safer markets. During these years
American long-term investments abroad were small, reflecting a general lack of confi
dence in foreign securities. Following the adoption of the Dawes plan in 1924 and
the subsequent stabilization of foreign currencies, American investors regained con
fidence in the foreign situation, and foreign long-term loans were floated in this
market in large volume• Only a small proportion of these increased investments, how
ever, represented a net export of American long-term capital, since the greater por
tion was offset by increased foreign investments here. The movement of foreign
capital to this market was not stopped or even slowed down by the moves toward sta
bilization of foreign currencies, which from 1924 to 1929 gave an impetus to American
investment abroad. On the contrary, investment of foreign long-term funds in this
market increased after 1924.
In fact, the more we lent abroad the more capital was
sent by foreigners to this country. Our purchases of foreign government and corporate
securities, in effect, created the foreign exchange that facilitated the movement of
capital of private individuals to America, so that the net amount remaining abroad to
be used for reconstruction was relatively small.
For the nine years as a whole, our gross long-term investments abroad, exclusive
of refunding and redemption operations, amounted to about 10 billion dollars, of which
about half was returned through foreign long-term investments here. Could movements
to European countries be given separately, the proportion of our investment funds that
returned would be shown to be even larger.
Digitized forwas
FRASER
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F o r m N o . 131
Office Correspondence
To
From
Gov. Meyer
V
z FEDERAL RESERVE
BOARD
_________ _______
ft'*’__________________________
Date
Juine 16, 1931.
Subject
'■
----—
5 W ,
3 -> !
Mis s Joy, of the Division of Research,* telephoned in answer to
your request for figures as to the hoarding of currency that they
estimate that the amount hoarded at this time, both by individuals and
held in bank vaults, is in the neighborhood of 1350,000,000 to #370,000,000.
They estimate that, up to last Friday, the increase in the hoarded
amount due to the Chicago bank failures was in the neighborhood of #65,000,000
to #75,000,000} and that since last April the Chicago situation has taken
out of circulation something like #150,000,000 to #175,000,000
Reproduced from the Unclassified / Declassified Holdings of the National Archives
a
F o r m No. 131
Urhce Correspondence
fe
S \ C C 9
rw.
FEDERAL RESERVE
60160
m c. w
tions showing fluctuations in deposits of savings hanks in Ohio and
parts of Pennsylvania.
These data together with those'previously
forwarded to you account for 82 per cent of the savings deposits of
all mutual savings hanks in the United States and 26 per cent of the
estimated total of savings deposits of all hanks in the United States
on June 3°» 1930*
The data of deposits of the four mutual savings hanks in Phila
delphia have not been collected regularly and figures for the current
months of
19 3 1
are therefore not available.
Mr..
Mr..
Please Mivir.itUl
ft-A
return tc
Reproduced from the Unclassified / Declassified Holdings of the National Archives
SAVINGS DEPOSITS AT 28 SELECTED SAVINGS BANKS
IN OHIO AND WESTERN PENNSYLVANIA
(First of month figures)
In millions of dollars
1929
1930
1931
#758
#751
#764
February
761
751
765
March
760
754
April
758
755
May
758
758
June
768
762
July
753
755
August
757
756
September
758
750
October
757
' 761
November
752
767
December
756
776
January
Source
Federal Reserve Bank of Cleveland
Keproduced from the Unclassified / Declassified Holdings of the National Archives
^C L A SSIFIE D
Authority _t\l »Oj\ 3Cr?<£>
CONFIDENTIAL
DEPOSITS OF 4 MUTUAL SAYINGS 3AN*
IN PHILADELPHIA
1
Year
and
Month
RECEIPTS
Total Amount
Received During Month
( 0 0 0 omitted)
2
PAYMENTS
Total Amount
Withdrawn During Month
( 0 0 0 omitted)
3
DEPOSITS
Total Amount
of Deposits
End of Month
( 0 0 0 omitted)
4
DEPOSITORS
Total Number
of Accounts
End of Month
5
DEPOSITS
Average Amount
In Each Deposit
3*4
1929
January
February
March
April
May
June
July
August
September
October
November
December
9,783
7,677
9,001
8,970
8,377
8,042
8,827
7,399
6,940
8,019
7,980
11,181
8,537
7,778
9,482
9,135
9,503
9,824
9,155
7,638
7,735
10,775
10,566
8,346
365,817
365,723
365,252
365,104
363,999
362,240
361,943
361,734
360,972
358,263
355,*724
358,606
521,602
525,874
527,905
528,(4 7
527,950
534,279
533,939
533,937
537,914
546,829
549,973
552,049
701.33
695*46
691.89
691.42
689.46
678.00
677.87
677.48
671.06
655.16
646.60
649,59
1930
January
February
March
April
May
June
July
August
September
October
November
December
13,459
9,888
10,673
9,391
9,118
9,411
9,338
8,813
8,715
10,166
9,228
23,725
8,387
7,514
8,587
8,802
9,092
10,172
8,175
7,047
7,500
8,510
7,672
11,235
376,652
379,033
381,131381,736
381,783
381,049
382,242 '
384,037
385,287
386,988
388,587
401,135
556,851
561,470
564,407
564,282
564,546
565,619
563,212
563,687
566,452
572,715
574,589
586,026
676.40
675.07
675.28
676.50
676.51
676.08
678.68
681.29
680.18
675.71
676.29
684.50
Sources - W. J . Carson, University of Pennsylvania.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
D ECLASSIFIED
Authority
*
CONFIDENTIAL
TOTAL DEPOSITS AT 4 MUTUAL SAVINGS BANKS
III PHILADELPHIA
(End of month figures)
In millions of dollars
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
January
208
225
241
244
252
267
282
301
322
345
366
377
February
212
226
242
244
255
268
283
301
323
346
366
379
March
214
227
241
244
253
269
284
302
324
347
365
381
April
213
226
240
243
254
268
284
302
324
348
365
382
May
210
225
239
241
254
267
284
302
324
347
364
382
June
208
225
238
240
254
267
284
302
324
346
362
381
July
209
226
237
240
254
267
285
303
324
346
362
382
August
210
227
236
239
254
267
285
304
324
346
362
384
September
210
227
235
238
254
267
285
304
324
350
361
385
October
211
228
234
238
255
268
286
305
325
350
358
387
November
212
228
234
237
255
268
287
305
327
350
356
389
December
214
230
234
240
256
270
289
308
330
352
359
401
Source: - W, J. Carson
University of Pennsylvania
1931
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
/ F o r m N o . 131
=5-/z
Office Correspondence
To_
FEDERAL RESERVE
BOARD
Mr._ Go ldenweiser
Date_March
3, 1951
Subject:
From _ Mr. Garfield
2 — 8495
A moderate degree of optimism with respect to the business situation
in the near future prevailed at the meeting held at the Railroad Club,
February 27, under the auspices of the American Telephone and Telegraph
Company.
This generally optimistic attitude was reflected in expressions
of opinion as to the time when recovery would begin and in discussions of
developments in particular industries.
Mr. Andrews reported that the A. T. & T. index of industrial activity,
which had been 32.5 points below normal in December and 33.5 in January,
would probably be minus 33.5 in February.
Mr. Tower, of the Bethlehem Steel Co., was moderately optimistic about
the steel industry, pointing out greater than seasonal gains in January and
February and forecasting a continuance of this move in March.
He said that
structural steel demand had been poorer than demand for other types in Jan
uary and February, but expressed the opinion that with a great deal of work
on the drawing boards the demand for structural steel might pick up in March;
the structural steel will be needed, he said, for bridges, subways, etc. and
not for commercial or industrial building.
Mr. Hayford, of General Motors, spoke of a "terrific jump in sales" of
automobiles— General Motors products— in the last ten days of January.
Fol
lowing this there was some letdown in early February, but the situation was
better at the middle of February than early in January, taking seasonal con
siderations into account. He preferred to consider various makes separately
and I gathered that while Buick and Pontiac sales had been holding well re
cently, Chevrolet, with an earlier introduction of models than usual, was
Reproduced from the Unclassified / Declassified Holdings of the National Archives
not faring quite so well.
He reported an unusual increase in used car
sales in January, but there seemed to be some question as to whether this
was a sign of good or of bad times.
Discussing the export situation, Mr.
Hayford said stocks abroad were liquidated in 1930, sales abroad in 1931
are likely to be less than in 1930, and shipments abroad are likely to be
about the same as in 1930.
Mr. Hettinger, from the Investment Research Corporation,
talked about a study made recently in his office concerning the residential
building situation; analyzing the rate of growth of cities in the decades
from 1900 to 1930, and noting the increases in residential building, he
came to the tentative conclusion that the amount of overbuilding in the
1920-1930 decade has not been as great as commonly supposed.
He expressed
the opinion that with continued depression on the farms, the movement of
population to cities in the next decade would be considerable, resulting
in a demand for more housing in cities.
He thought that once recovery
starred in other lines, the volume of residential building would increase
substantially.
//f )
There was very little comment about the recent^developments in the tex
tile industries, although someone remarked that prospects in the woolen goods
industry were better than for some time previous.
Discussion brought out the fact that construction outlays of the A. T.
& T. in 1931 would be about 25 per cent less than in 1930, and that there
would be somewhat larger reductions in similar outlays of other public util
ities, such as light and power companies.
It was the consensus of opinion that a recovery of moderate proportions
would start in March and that with irregular movements the upward trend would
,uvcu Mum
unciassmea / Declassified Holdings of the National Archives
*
continue until "normal” was reached in the third quarter of 1932.
How
ever, the majority were not able to see what lines of industry would
lead the recovery
@FedFRASER