View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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

DECLASSIFIED
Authority £ £ 0 ^
/ 3^

;

3 33:

*

CONFIDENTIAL

MINUTBS OF THE MEETING OF THE FEDERAL OPEN MARKET COMMITTEE
HELD AT WASHINGTON, D. C., DECEMBER 17-18, 1935_____

The meeting was called to order on December 17 at 10:10 a,‘m.‘, there
being present:
From the Board of Governors of the Federal Reserve System,
Chairman Eccles,
Governors Hamlin, Miller, James, O ’Connor, Thomas and Szytoczak.
From the Federal reserve banks $
Governor Harrison, chairman, Governors Young, Norris, Fleming,
Seay, Newton, Schaller, Martin, Geery, Hamilton, McKinney,
and Calkins *
Deputy Governor Burgess.
Messrs. Williams (New York) and Strater (Cleveland).
From the staff of the Board of Governors,
Messrs. Morrill, Clayton, Goldenweiser, Thurston, Thomas,
Curry, Gardner, Garfield, Bethea, Carpenter, and Thompson,
Governor Harrison stated that it was proposed that this first joint meet­
ing with the Board of Governors should be devoted to hearing the reports of
specialists who had been studying the credit and financial situation and the problems
before the System.

He then turned the meeting over to Chairman Eccles, who first

called upon Dr. Goldenweiser for a review of the credit situation*
Dr. Goldenweiser then reviewed fully various aspects of the business and
credit situation and discussed alternative policies which might be adopted by the
Federal Reserve System.
After the completion of Dr. Goldenweiserfs statement, there ensued a
brief general discussion of some of the points in his statement.
Chairman Eccles then called upon Dr. Williams, who reviewed the general
question of excess reserves and the methods which might be adopted for dealing with
them*



3 3 3.3-*--/

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED

Authority& & & £ I

2
At the conclusion of Dr. Williams1 statement, there was a brief general
discussion and a number of those present asked questions which were answered by
Dr* Goldenweiser and Dr. Williams.
In the course of the discussion Mr. Miller pointed out that the powers
granted by the law to raise reserve requirements were granted "to prevent injurious
credit expansion.”

Mr. Miller raised the question how far action under this law

could be justified at a time when no injurious expansion had yet taken place, and
there was some brief discussion of this question in the course of which Dr.
Goldenweiser suggested that the discussions at the time the legislation was passed
made it clear that the legislation was specifically directed to dealing with the
problem of excess bank reserves.

Others pointed out that the power was one of

prevention rather than correction and this implied action in advance of expansion.
At 11:50 a. m . , the Board of Governors of the Federal Reserve System and
staff members left and the meeting reconvened with only the representatives of the
Federal reserve banks present.
A final form of the preliminary memorandum on credit conditions was
distributed in substitution for the tentative draft which had been circulated by
mail.
It was thereupon unanimously
VOTED that the report on operation be accepted and placed
on file and the operations since the last meeting of the
full committee be ratified.
It was also unanimously
VOTED that the preliminary memorandum in its final form be
accepted and placed on file.
Governor Harrison reviewed the action of the Board of Governors on the
resolution adopted at the last meeting of the committee as to shifts between
maturities of government securities in System account.

He reported that at first

the Board had limited its approval to the action necessary to replace maturities
between the date of approval and the next meeting of the committee, and that when



Reproduced from the Unclassified I Declassified Holdings of the National Archives

d e c l a s s if ie d

Author

itydcordgriot^.

3
the difficulty of operating under that approval had been pointed out, the Board had
reinterpreted its action to extend its approval to shifts in maturities of Treasury
bills and Treasury notes in an aggregate amount not exceeding $300,000,000.
Governor Harrison reported that he had made this question the occasion for dis­
cussing with Chairman Eccles the desirable procedure to be followed with respect to
questions of this sort, and had pointed out that just as the committee gave the
Board an opportunity to make suggestions with respect to its minutes and the form
of its resolutions, it was also desirable that the Board of Governors should give
the committee an opportunity to make suggestions with regard to proposed Board
action before it was finally taken.

Gheririnan Eccles had informally agreed to this

suggestion.
After some informal discussion of the action which the committee should
take with resppct to operating authorities, it was agreed to leave such action un*r
til after a consideration of general credit policy.
Governor Young then raised the question whether the committee did not
have before it the resolution adopted by the Federal Advisory Council, which had
asked that its action be referred to the Federal Open Market Committee.
Governor Harrison re-Qorted that he had requested the Board to send a copy
of the resolution of the Federal Advisory Council to all governors and he read the
letter from Chairman Eccles, with which the Councilrs recommendation had been
transmitted to him as chairman of the Open Market Committee.
s'
^After further informal discussion of the Council’s action, Governor Norris
presented the following resolution which was seconded by Governor Young,
form includes later changes).

j
j

That the participation of the Federal Reserve System
in the Treasury Bill market no longer serves any useful
purpose; that the System retire from this market by allowing
the present holdings of these Bills to run off as they mature
and that public notice be given to that effect, with such
explanatory statement as may seem advisable.




(this
r \o

Reproduced from the Unclassified I Declassified Holdings of the National Archives

4
PI n discussing the motion, Governor Norris pointed out that while action
was not necessary, it was highly desirable as the excess reserves constituted a
source of danger.

He indicated that even now there was some evidence of inflation­

ary results from the excess reserves, especially in the bond market, where a
r
Z 3/4fo bond of a rural county seat could be sold at a premium.

\

This kind of situa­

tion constituted an incentive to communities to spend money unwisely^
Governor Norris stated the belief that a reduction in the Treasury bill
holdings of the Federal reserve banks would have a more desirable effect on the
public, the Treasury, the banks, and the reserve banks than an increase in reserve
requirements, which he believed would make banks more cautious in making loans and
would constitute a hardship on some banks with only moderate amounts of excess
reserves.

He believed that the limitation of any reduction in securities to the

Treasury bill market would avoid most of the possible harmful effects.

With respect

to the earnings of the reserve banks, he pointed out that an addition of
50,000,000 to the five year note holdings of the banks would bring in as much yield
as $500,000,000 of Treasury bills.
r'
\There ensued a general discussion of Governor Norris’ resolution, during
the course of #iich Governor McKinney pointed out that country banks had available
considerable excess funds outside of their excess reserves on deposit with the re­
serve banks, and Governor Calkins raised the objection that the resolution attempted
to lay down a policy for eight months ahead, which went beyond the province of the
present committee.

There was further objection that the Treasury bill was almost

ideal for holding by the Federal Reserve System and it was undesirable that the
System should dispose of all of its Treasury bills.

Governor Calkins also raised

the point that any action, either in reserves or securities, mi^ht be misinterpreted
as a reversal of policy, and that the most that should be considered would be some
very moderate and tentative proposal.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED

Authority C K Q . J ^ r

5
Governor Martin read a statement, a copy of which is attached to these
minutes, advocating that no action should be taken at the present time because of
danger of discouraging efforts toward recovery.
The meeting adjourned at 1:17 p. m.
The meeting reconvened at 2:37 p. m.
Governor Norris* motion was reread, in slightly revised forir from the
first reading and there ensued a general discussion of this resolution and of the
reasons which might be cited in its support in the record of the committee.
pin the course of discussion Governor Harrison pointed out that in order
to deal fully with the problem of excess reserves, it will probably be necessary,
j
i
i
SI

sooner or later, to use both methods of control.

He raised the question of what

would be the effect on banks if reserve requirements are increased after the sale
of a large amount of government securities had materially reduced the amount of
excess reserves leaving individual banks less prepared to stand an increase in
requirement
Governors Norris and Calkins took the position that the more flexible
method should be used first and the more rigid method afterwards, whereas Governor
Harrison favored the adjustment of reserve requirements first, leaving later ad­
justments to be made by open market operations.
Governor Seay made the point that allowing maturities of bills to run off
would not have any appreciable effect on the amount of excess reserves.
Governor Harrison presented for consideration the question whether there
might be any advantage in adjourning until the middle of January, when some present
uncertainties might be more clear, including,
1.

The effect of the removal from the market of more than
$>600,000,000 by the Treasury through an increase in
its balances with the reserve banks.

2.

The nature of the budget message.

3.

The extent that business might be affected by a slack season.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

d e c l a s s if ie d

AuthonXv^p/oLr;^

6
After further general discussion, Governor Harrison asked and received
permission to read a memorandum on Excess Reserves and Federal Reserve Policy.

A

copy is attached to the minutes.
Aft er some further discussion a vote was taken on Governor Norris’
resolution and it failed of adoption by a vote of seven to five, as follows:
Yes
Governors Young
Norris
Schaller
Geery
Hamilton

j
yj

/) >

No
Governors Harrison
Fleming
Seay
Newton
Martin
McKinney
Calkins

Governor Calkins wished the records to show that he voted no because the
resolution would commit the System too far into the future.^/
Governors McKinney and Harrison wished the record to show that they be­
lieved an increase in reserves should precede a reduction in security holdings as
a means of reducing excess reserves.
Governor Martin then presented, tentatively, for consideration, the
following motion:
At this time the danger of discouraging recovery is of
such weight that it is desirable to take no action until the
general factors in the business situation become more settled.
The possibility at this time has not developed into a probability
though it may do so at any time. It is therefore moved that
this meeting adjourn until some day in the middle of January for
a review of the situation.
v

After further discussion Governor Schaller read the following motion,

which had been agreed to by the board of directors of the)Chicago/ reserve bank:
After a careful review of the report of the meeting
of the Federal Open Market Committee held in Washington, D. C.,
October 22 to October 24, 1935, inclusive, and presented to us
by our member of that committee, the Board of Directors of the
Federal Reserve Bank of Chicago expresses concurrence in the
conclusions reached at said meeting and especially as set out
in the resolution prepared and delivered to the Board of
Governors.




Reproduced from the Unclassified / Declassified Holdings of the National Archives

d e c l a s s if ie d

Authority £)C

Qrckrjaii^:

7

^j

This Board fully realizes that the application of any
of the methods of credit control suggested lie within the power
of the Treasury Department and the Board of Governors, to be
used wben, in their judgment, it is necessary. However, in a
spirit of cooperation with both of these agencies we desire to
call their attention to a feeling of growing uneasiness in the
minds of the public as to possible credit inflation, caused by
repeated reference to this danger by our press and public
speakers.
We cannot help but feel that for the moment our great­
est potential danger is from our excessively large bank reserves,
caused by a rapid rise in bank deposits, through gold imports
and governmental financing, the control of which might well be
considered our first objective.

I
*

We, therefore, as a Board, desire to respectfully
suggest for earnest consideration by the Board of Governors of
the Federal Reserve System, an increase in reQuired reserves
against bank deposits in Central Reserve and Reserve City banks
to possibly twenty-five per cent of the increase now permitted
by law, thereby not only fortifying our banking structure to
this extent, but giving assurance to business and the public that
the levers of control are operative and in the hands of authori­
ties who are reedy to use them. We believe that such action ac­
companied by a proper statement of its objectives would be
favorably interpreted by the financial and business interests
rather than otherwise.
We recognize that in addition to the measure referred
to, that of an increase in required reserves, consideration may
properly be given to another effective power in the control of
inflationary tendencies, under which credit may be withdrawn
from the market either by the sale or by the maturity without
replacement of Government securities held in the Federal Reserve
System. However, because it is considered that the application
of such a measure might be reflected in the market for Government
bonds at this particular time, we are disposed to suggest the
primary consideration of an increase in reserve requirements.
There ensued a discussion of these different proposals.

j

j

The discussion of this general question was suspended in order to deal
•
with the necessary operating resolutions.
After discussion it was agreed that authority voted to the executive
committee of the Federal Open Market Committee at two previous meetings to make
shifts of maturities in the System open market account, should be continued as nec­
essary in the proper administration of the account to enable the executive committee




Reproduced from the Unclassified I Declassified Holdings of the National Archives

d e c l a s s if ie d

Authority £ j C O

f^ ja ^

8
to replace maturities from time to time and to make shifts in maturities to meet
changing market conditions.

With respect to the amount of authority which the

committee should have in shifting from shorter maturities to bonds, it was agreed
that some limited authority was advisable in order to deal with any market situation
that might arise.

It was therefore unanimously

VOTED that superseding previous authorizations, the executive
committee be authorized to make shifts between maturities of
government securities up to $300,000,000, provided that the
amount of securities maturing within two years be maintained
at not less than $1,000,000,000 and that the amount of bonds
be not over $300,000,000.
It was also agreed that authority should be given to the executive com­
mittee to buy or sell (which would include authority to allow maturities to run off)
securities for System account within limits as to amount, in order that the com­
mittee might be in a position to act promptly if circumstances not now foreseen
should make action appear desirable before a further meeting of the full committee.
It was therefore unanimously
VOTED that the executive committee be authorized to buy
or sell up to $250,000,000 of government securities, sub­
ject to telegraphic approval of a majority of the Federal
Open Market Committee and the approval of the Board of
Governors of the Federal Reserve System.
This motion continued in effect a similar authority voted at the meeting
of the committee on October 22-24, 1935.
Governor Young wished to be recorded as voting in favor of both of these
motions on the belief that failure to act on the recommendation of the Advisory
Council might create a situation under which these authorizations might be necessary.
There followed a renewed discussion of the proposals read by Governor
Schaller.
At 4:25 p. m . , by agreement, a recess was taken to attempt to draft a
motion which would embody this proposal.
At 4:37 the meeting reconvened and a vote was taken on the following
resolution:



Reproduced from the Unclassified / Declassified Holdings of the National Archives

d e c l a s s if ie d

Authority S g O f d g r j a t & e

E1SOLV1D that it is the sense of this eommittap that for
reasons outlined in the resolution adopted by this committee
at its meeting last October, supplemented by the memoranda
presented to the committee, that the Board of Governors
should now favorably consider some early increase in the
reserve requirements of member banks.
The resolution was lost by a vote of seven to five, as follows.
Yes

No

Governors Harrison
Fleming
Schaller
Geery
McKinney

Governors Young
Norris
Seay
Newton
Mart in
Hamilton
Calkins

Governor Norris asked to be recorded as voting no on the ground that he
favored some action, but preferred action in the open market . )
Governor Seay asked to be recorded as voting no because he prefers to
see action deferred until after the first of the year, when the situation mightJ
be clearer.
Governor Hamilton indicated that he voted no because the resolution
included country banks.

He said that he would vote for a resolution limiting

the increase to reserve city and central reserve city banks.
Governor Martin indicated that his negative vote was on the ground that
the situation was such as to make it undesirable to act at this time.
Governor Harrison left the room for a few minutes to confer with
Chairman Eccles*
At 5:10 Governor Harrison returned and reported that Chairman Eccles
expressed the hope that the open market meeting would not finally adjourn tonight
but would reconvene in the morning.

It was so voted and the meeting adjourned

at 5:12 p. m . , to reconvene as a Governors’ Conference.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
- 1 ■~ -

Authority

j

10
*^
In the course of the Governors* Conference a discussion arose as to the
interpretation of the Banking Act of 1935 with respect to the power of the reserve
banks to exchange government securities directly with the Treasury when an exchange
offering was made.

It was agreed that it would be undesirable at this time to

raise the legal question and that instead it would be better to replace all maturing
issues in the open market.
The meeting reconvened at 10:15 a. m . , on December 18, there being present
the Governors of all the reserve banks, Deputy Governor Burgess, Secretary, and
Mr. Strater of Cleveland.
Governor Harrison indicated that he was concerned about adjourning the
meeting with the record as it was.

It was clear that the majority wanted to take

some action, but were divided as to the method.

They had before tham a unanimous

recommendation of the Federal Advisory Council to take some action.

The committee

would appear to be functioning badly if it favored some action but was unable to
agree upon the method to be employed.

The question might be asked why those who

favored action through the raising of reserve requirements did not support open
market action.

His response would be that the greatest likelihood of agreement on

action on the part of the reserve System lay in the proposal to increase reserve
requirements.
After some further discussion, a draft resolution was read (this form
includes later revisions).
The Committee has considered the preliminary memorandum
and a memorandum on excess reserves and Federal reserve policy
and has discussed various aspects of the credit situation.
The Committee finds that continued improvement has been
made in business and financial conditions since its last meeting
but the country is still short of a full recovery and there does
not appear to be anything in the situation which makes it necessary
for the reserve system now to reverse its policy of easy money.
It is still the unanimous opinion of the Committee that the primary
objective of the reserve system should be to lend its efforts to­
ward the furtherance of recovery-




Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED

AuU>°rt

11
^ It is the view of the Committee, however, that the
amount of excess reserves of member banks constitutes a source
of danger for the reasons expressed in the reports before the
Committee at its October meeting and those considered at this
meeting. The Committee believes, therefore, that action should
be taken as s^on as possible without undue risk to absorb a
part of these excess reserves as a safeguard against possible
dangers, and not as a policy of credit restraint*^

^

3

tn
<i

Two principal methods of accomplishing this have been
discussed by the Committee: (a) permitting the present system
holdings of Treasury bills to mature without replacement, and
(b) raising reserve requirements. Some of the members of the
Committee would prefer the employment of method (a) and others
would prefer method (b).
Those members of the Committee who prefer method (a),
that is, the reduction of holdings of short-term Government
securities by the system, are so strongly of the opinion that
some early action should be taken that they join with those
members favoring method (b), an increase in reserve requirements,
in a recommendation that the Board of Governors of the Federal
Reserve System should consider some early and substantial in­
crease in the present reserve requirements of member banks which
were fixed at a time when the gold base of the country was sub­
stantially lower than it is now. The Committee refrains from
recommending or suggesting any precise time or percentage of
increase or the classes of banks to be affected believing that
the time or amount and character of action would, of course, have
to be determined by the Board of Governors in the light of all
the conditions as they appear at the time action is actually
taken, not only business and credit conditions but also the
banking situation particularly as it may be affected by the
Government's fiscal policy.
Governor Calkins indicated that he feared the psychological effect on the
banking fraternity of an increase in reserve requirements, even if it were confined
to reserve and central reserve cities.

There ensued a general discussion of this

question in the course of which Governors Martin and Newton stated their belief
that there was no need for action at the present time, and Governors Hamilton and
Geery stated a preference for action in the open market.
Governor Geery suggested tentatively a proposal to allow Treasury bills
to run off without replacement until the next meeting, but to recommend that if the
Board of Governors does not approve this action, the recommendation be made that
the Board should consider an early increase in reserve requirements.




..... r" 1111.. -..... Reproduced from the Unclassified I Declassified Holdings of the National Archives

^ e classif Te d
Authority CJCOrgUr V j i & i

12
There ensued some discussion of this general proposal, in the course of
which Governor Norris stated that he believed some action was desirable and that
he was therefore prepared to approve action by a method different from the one he
preferred for the sake of securing agreenent to some action.
By an informal vote, ten of those present, all excopt Governors Martin
and Newton, indicated that they favored some action at this time.
Governor Young moved that the action taken in all the votes of yesterday
be rescinded.

This motion was defeated by a vote of nine to three, as follows:
Yes
Governors Young
Hamilton
Seay

No
Governors Harrison
Fleming
Newton
Schaller
Martin
Geery
Norris
McKinney
Calkins

Governor Harrison then read, as amended, the resolution presented earlier,
on pages 10 and 11, and this resolution was moved and seconded.
Governor Geery made a substitute motion as follows:
RESOLVED that the System allow its holdings of Treasury
bills to run off without replacement as they mature be­
tween now and March 1st.
If, however, the Board of
Governors does not approve of this method, the committee
then recommends that the Board give consideration to some
early substantial increase in reserve requirements.

i

After discussion, a vote was taken on this motion and it was lost by a
vote of eight to four, as follows:




Yes
Governors Young
Geery
Hamilton
Calkins

No
Governors Harrison
Fleming
Newton
Schaller
Mart in
Norris
McKinney
Seay

Reproduced from the Unclassified I Declassified Holdings of the National Archives

13
There ensued a discussion of the earlier motion in the course of which
Governor Hamilton made the following motion, as an amendment:
While the committee has agreed that it is necessary
to take steps to curb or correct the condition of excess re­
serves, the committee is of the opinion that should reserve
requirements be raised, the Board of Governors should give due
consideration to the inadvisability of raising reserve require­
ments for other than reserve city or central reserve city banks.
In supporting this motion, Governor Hamilton stated that an increase in
reserve requirements of member banks would be a handicap tending to prevent non­
member banks from joining the Federal Beserve System,
The motion was not seconded, a number of those present pointing out that
in their districts the reserve requirements of nonmember banks were higher than
those for member banks.

It was also suggested by a number that it would be better

to avoid detailed suggestions in a recommendation to the Board of Governors regard­
ing the increase in reserve requirements*
There was further consideration of the possibility of adjournment without
definite recommendation and a motion to that effect by Governor Young was lost by a
vote of nine to three, as follows:
Yes
Governors Young
Newton
Martin

No
Governors Harrison
Fleming
Seay
Schaller
Norris
Hamilton
Geery
McKinney
Calkins

A vote was then taken on the original resolution in its revised form as
given on pages 10 and 11, as follows:




Yes
Governors Harrison
Fleming
Norris
Seay
Schaller
Geery
Hamilton
McKinney

J

No
Governors Young
Newton
Martin
Calkins

j

Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
Authority Q c Q r d M C j a ^

14
It was understood, as at the meeting of October 22-24, that any action
"of this sort should be taken only in coordination with Treasury policy.
It was then moved that the Chairman of the committee be requested to call
a meeting on or about January 15.

'This motion was passed by a vote of eleven to

one, Governor Fleming voting no.
r

*

Governor Fleming wished to be recorded in the negative on the ground that

he was opposed to the fixing of a date until after the committee had been informed
of the reaction of the Board of Governors.—
The meeting adjourned at 12:15 p* m . , to reconvene as a Governors*
Conference.
At 12:55 p. m , , the meeting reconvened as a joint meeting of the Federal
Open Market Committee and the Board of Governors of the Federal Reserve System,
there being present:
From the Board of Governors of the Federal Reserve System:
Chairman Eccles,
Governors Hamlin, Miller, James, Szymczak and Thomas.
From the Federal reserve banks:
Governors Harrison, Young, Norris, Fleming, Seay, Newton,
Schaller, Martin, Geery, Hamilton, McKinney and Calkins,
Deputy Governor Burgess, Secretary, and Mr. St rater.
From the staff of the Board of Governors of the Federal Reserve System:
Messrs. Morrill, Clayton, Golderiweiser, Thurston,
Carpenter and Thompson.
The resolution adopted by the committee was read and there ensued a
general discussion of the meaning of the resolution.
The meeting adjourned at 2:3j5 p. m . , with the understanding that the
Board of Governors would meet by itself to consider any suggestions it might have
to make to the Committee with respect to the resolution or with respect to a
public statement.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

~

*

15

The meeting was again called to order at 4:15 p. m * , as a joint confer­
ence, the same people being present 0
Board o

•Mr. Bofth<*a ■e-f the staff of the -

uovernots of the Federal Reserve System was also present.
Chairman Eccles read a draft of a-proposed statement to the press and-

there ensued a general discussion of this statement.
It was then moved and unanimously carried that a committee consisting of
Chairman Iccles,' Governors Miller, Harrison and

Young and Messrs. Goldenweiser,

Thurston and Burgess be asked to draft a statement.
The members of the Board of Governors of the Federal Reserve System and
the staff representatives then left the meeting.
Governor Harrison stated that he feared that any press statement might be
a source of embarrassment to future action though it was agreed that there was
nothing inconsistent between*a press statement of the

sort proposed and the resolu­

tion which had been adopted. Governors Young and Harrison and Deputy Governor
Burgess were authorized to confer with the representatives of the Board of Governors
and agree on some form of public statement and also to make any slight modifications
in the resolution which might be necessary to bring the two into conformity.
At 5:10 p. m . , the meeting adjourned.
At 5:29 p. m., the meeting reconvened with the same attendance and the
following press statement was read and unanimously agreed upon.
The Board of Governors of the Federal Reserve System and
the Federal Open Market Committee have given extended considera­
tion to the general business and credit situation and to the
recommendation of the Federal Advisory Council and are of the
opinion:
1. That continued improvement has been made in business and
financial conditions but that the country is still short of a full
recovery.
2. That the primary objective of the System at the present
time is still to lend its efforts to a furtherance of recovery.
3. That there is at the present time no evidence of overexpansion of business activity or of the use of business credit.



Reproduced from the Unclassified / Declassified Holdings of the National Archives

d e c la s s ifie d

Au*°rity Q C Q f d s c j a t ) ^ :

16
4.
That the present volume of member bank reserves, which
have been greatly increased by imports of gold from abroad, con­
tinues to be excessive, far beyond the present or prospective
requirements of credit for sound business expansion*
Therefore, the special problem created by the continuing
excess of reserves has had and will continue to have the unremit­
ting study and attention of those charged with the responsibility
for credit policy in order that appropriate action may be taken
as soon as it appears, to be in the public interest*
At 5:40 p. m * , the meeting adjourned.




W. Randolph Burgess,
Secretary.