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R ep rod uced from the U ncla ssified

I D ecla ssified H o ld in g s o f th e N a tional A rch ive s


Authority C W x d x r l a i t f f r i


i ' i ' *' ‘v '•"■-‘t c - i

‘V ' / '


_________ ______ APRIL 2, 1934___________________

The meeting was called to order at 10:35 a# m*, there being present:
Governor Harrison, chairman, Governors Young, Norris, and Schaller,
and Deputy Governor Burgess, secretary#
From the Federal Reserve Board
Governor Black
From the Treasury
Secretary Morgenthau, and Messrs* Smith, Coolidge, Bell,
Stark, and Lanston.
The Secretary of the Treasury presented the Treasury problem of financing
to be carried through in April, and there ensued a general discussion of the ques­
tions of the amount of money to be raised, type of securities to be offered, and
the program to be followed with respect to calling a portion of Fourth 4 1/4$
Liberty Loan Bonds*
At 12:40 this meeting adjourned, and the committee reconvened without the
Treasury representatives, though Secretary Morgenthau, Mr. Coolidge, and Me. Smith
were later present during a part of the meeting*
The report of operations and the preliminary memorandum were distributed
to those present and were discussed*
It wag pointed out that the System held $59,000,000 Fourth 4 l/4% bonds
which were called for redemption on April 15, and also held §57,000,000 of 3$
Treasury notes maturing May 2, and that in case the Treasury made an exchange
offering on April 15 for these two issues a decision would have to be reached as
to the extent to which the System would exchange its maturing issues for the new

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Reproduced from the Unclassified I Declassified Holdings of the National Archives

The intimation hav-L^g been given that tlae new issue

would probably

be of ten-twelve year bonds, there was recognition of the fact that a twelve-year
maturity was rather long for Reserve Bank purchase, and that tho inclusion of such^
bonds in the System portfolio would bo at variance with previous policy#


Harrison suggested, however, that as the System has cooperated so closely with the
government in its program of financing it should be careful now to avoid any action
which might impede or unnecessarily give the impression of impeding Treasury under­

Any attempt by the System suddenly to sell its maturities on a large scale

and replace them with shorter obligations might interfere with the success of the
Treasury refunding issue • ^furthermore, the System has a responsibility for the
long term money market, upon the revival of which the return of business prosperity
depends in considerable measure#
In the course of discussion it was also pointed out that the earnings
problem was likely to be increasingly important for the Reserve banks, and sane
block of bonds with a good yield might be desirable from that point of view*


appeared that for some time to come the Reserve banks would be dependent for earn­
ings on the yield from their government holdings, which was steadily declining#


System was moreover likely to hold a substantial amount of governments for some time
to come, some relatively small part of which might both safely and profitably be
composed -of longer time higher yield securities#
After extended discussion it was agreed by all those present that in
connection with the April 15 financing the System should follow the same procedure
that was followed on March 15;

that is, if favorable opportunity arises, either

in the market or with the Treasury itself, maturing issues should be sold and re­
placed with short governments to the extent that this can be done without dis­
turbance to the market;

and that the balance of th$ maturities not so disposed of

should be offered in exchange for the new Treasury issue#
There ensued a general discussion of pending legislation#
The meeting adjourned at 2:00 p# m#

W# Randolph Burgess,



R ep rod uced from the U ncla ssified

I D ecla ssified H o ld in g s o f th e N a tional A rch ive s



Author^a c o r d g r i d m s \

Note changes from preliminary draft.
Believe new sentence on page 2 should be
brought to Governor Black*s attention.

dov^ftior Black for initial.
Please note particularly new sentence at top
of page Z of mimrtes.
Return to Mr. Carpenter.