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Reproduced from the Unclassified I Declassified Holdings of the National Archives

d e c l a s s if ie d

Auth°nty 8c0fdgr_ is&5fo\

3 2

HELD AT WASHINGTON* D. 0.. JULY 30 , 1933*


r]j ?

The meeting was called to order at 10:45 a* m., with Governor Black in
the chair, there being presentX
From the Federal Reserve Board

Governor Black and Messrs* Thomas and Szymczak.
From the Federal reserve banks
Governors Harrison, Fancher, Se&y, Martin, Geery,
Hamilton, McKinney and Galkins, Acting Governor
Johns and Deputy Governors Paddock, Hutt, MoKlay
and Buigess*
From the Federal Reserve Board staff
Messrs. Morrill, Wyatt, Goldenweiser, Smead and
Governor Black suggested that the committee tfiich was called together
under the terms of the Glass bill should proceed to organize and meet again later
with the Federal Reserve Board.

The Federal Reserve Board representatives then

left the meeting.
It was moved and carried that Governor Harrison be appointed chairman of
the committee*
It was agreed that the question of the appointment of e vice chairman
be postponed*
It was moved and carried that Mr. Burgess be appointed secretary of the
It was moved and carried that the committee 7ms in favor of the appoint­
ment of an executive committee of five and, subject to the approval of the Federal
Reserve Board as to there being an executive commit tee, it was voted that the
following should constitute that committee:

The representatives of the Boston,

New York, Philadelphia, Cleveland and Chicago banks, the representative
New York bank to act as chainnan of th<= "Executive Committee*
Federal Reserve Bank of St. Louis

/ o/ v / 3 °

5 3-1. 3 - a


of the

Reproduced from the Unclassified I Declassified Holdings of the National Archives


July 22, 1933

The coimittee then proceeded to consider the tentative draft of
regulations governing open market operations, and after extended discussion the
following changes were agreed upon unanimously:


I - No change*


JX . n



in _ n



IV - (a)


That in the last sentence the word "vice
chairman1* be omitted, and the following
clauso added after the word "secretary":
"...and in the absence of the chairman at
any meeting of the committee the committee
shall appoint a chairman pro torn#*
At the end of the paragraph insert the words
"and each Federal reserve bank."
It was also agreed that the attention of the
board should be called to a difference be­
tween the wording of this paragraph and the
law on the question of the attendance of
board members at meetings of the committee.


That the words "for its approval" should be
inserted after "Federal Reserve Board," in
the last lino on page 2 .


That the words "and as" be omitted in the
last line*


That the last clause beginning "and of any
other decisions" be omitted#


That in the second line after the words
"participate in" there be inserted the
words "any specific."
That the last sentence of this paragraph be

Section V

- (a)


That this entire paragraph be omitted.
That at the end of this paragraph the follow­
ing irords be added "and to each Federal
reserve bank."
That in the last line of paragraph (1) the
wards "or prescribed" be omitted.

Reproduced from the Unclassified I Declassified Holdings of the National Archives



Ju-i-y 22, 1933

That in the last two lines of paragraph
(2 ) tlio clause "and shall be subject to
change by the Federal Reserve Board in
its discretion" be omitted.
That in the first line of paragraph (3),
after the words Federal Reserve Board,
there be added "and each Federal reserve
That in the second line of paragraph (4)
the words "or prescribed" be omitted.
Section VI

- That in the second and third lines the
wards "or prescribed" be omitted*
That in the second line of paragraph (1)
the word "sole" be omitted.
That the entire paragraph at the bottom
of page five and at the top of page six,
relating to the agreement to sell at the
request of the Federal Reserve Board, be

Section VII - That in the third and fourth lines of
paragraph (2 ) the words "or prescribed"
be omitted*
That in the second line of paragraph (4),
after the words "cable transfers," there
be added "for its own account."
I*hat paragraph (5) be omitted entirely.
That the last paragraph be omitted entirely.
There ensued a brief discussion of the regulate .ms relating to foreign

The meeting adjourned at 12:40 p* m.

The meeting of the committee reconvened at 2:15 p. m*, with the same
persons present*
| There was a further general discussion of the regulations relating to
foreign transactions.

Governor Harrison pointed out that the regulations in a

number of cases appeared to go beyond the law and he called attention to some of

the difficulties which would be encountered in attempting to operate under these

He stated the view that a much briefer regulation which simply

quoted the law or paraphrased it would be much easier to operate and would at the

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Authority cK O fiU r


July 22, 1933

same time leave the Federal Reserve Board free to amend the regulations later,
if necessary^
It was agreed that a further discussion of this regulation would be
postponed until Friday, and that in the meantime Governor Harrison would review
the question of the nature of these regulations with Governor Black#
Governor Harrison then reviewed briefly his recent trip abroad.
Governor Harrison also reviewed discussions he had held with stock ex­
change authorities and some of the New York bankers on the question of bank margins
on security loans, and indicated that effective action in New York with raspect to
this problem was sometimes hampered by compctitive practices of interior banks*
Ho suggested that the governors of other reserve banks discuss with their principal
bankers the practices which they wore following with respect to margin require­
ments on security loans, with a view to maintaining sound and conservative practices.
At 4 p. m* members of the Federal Reserve Board joined the meeting, there
being present, in addition to the committee, - Governor Black and Messrs* Hamlin,
Miller, James, Thomas, Szymczak and O ’Connor; also Messrs* Morrill, Goldenweiser,
Wyatt, Smead and Carpenter.

Governor Harrison then reported, on behalf of the

committee, the changes in the draft of open market regulations which the committee
f~There was a discussion of the question whether, under the law, a bank
was required to designate a particular individual as its representative on the
committee, or whether the bank might designate (for example) the principal execu­
tive officer, so that the bank might always be represented on the committee.
There was also a discussion of the broad question of the extent of the Federal
Reserve Board’s responsibility for open market operations and particularly the
question whether the Federal Reserve Board has the power under the new law to
prescribe as well as to approve of such operations* \

Reproduced from the Unclassified I Declassified Holdings of the National Archives


July 82, 1933

' Governor Black then reported to the meeting a proposal made by the Farm
Credit Administration that the Federal reserve banks should purchase Federal Land
Bank bonds (possibly under repurchase agreement) in order to enable the Federal
Land Banks to purchase farm mortgages from closed banks and thus aid in their re­

The primary questions with respect to this proposal were the legal

status of such purchases and the desirability of the reserve banks acquiring long
term assets of this sort.

Governor Black asked that the members of the committee

give consideration to this proposal^
During the course of the meeting a memorandum prepared by the Division
of Analysis and Research of the Federal Reserve Board on current credit conditions
was distributed to members of the committee.
The meeting adjourned at 5:22 p. m.
On Friday, July 21, the meeting of the committee reconvened at 10:20
a. nu, there being present the same representatives of the reserve banks, except
Governor Hamilton and Deputy Governor Paddock, who joined the meeting shortly
After a further discussion of the regulation with respect to foreign
operations of the reserve banks the following motion was unanimously carried:
Since the terms of Section 10(g) of the Glass bill
set forth e:sqplicitly and in some detail the terms and condi­
tions under vs/hich Federal reserve banks may engage in foreign
transactions, it was the view of the governors that the board
issue a regulation simply quoting or paraphrasing this
section of the law, with the assun$>tion of course that such
regulation be subject to amendment or amplification if in the
light of experience such action seems advisable.
(There was a discussion of the proposal of the Farm Credit Administration
and the governors indicated that they did not believe the proposal was one in

which it would be desirable for the Federal reserve system to participate.I

Reproduced from the Unclassified I Declassified Holdings of the National Archives


July 22* 1933

At 11:10 a. m. members of the Federal Reserve Board joined the meeting,
there being present, - Governor Black and Messrs. Hamlin, Miller, James, Thomas
and Szymczak, and Messrs# Morrill, Wyatt and Carpenter.
The resolution adopted by the committee with respect to foreign opera­
tions of the Federal reserve banks was read and discussed.

In response to a

question, Governor Harrison pointed out that the draft regulations which had been
submitted to the committee were more detailed and cumbersome and difficult to
operate, than he believed necessary under the law.

He pointed out that some of

the provisions would be embarrassing to effective operations*
Governor Harrison reported the views expressed by the governors present
with respect to a purchase of Federal Land Bank bonds by Federal reserve banks.
At 11:27 a. m. Mr. Sprague, Financial Executive Assistant to the
Secretary of the Treasury, was invited to join the meeting and to discuss with the
governors and the board current problems of Treasury financing.
cussion of this subject ensued.

An extended dis­

During the course of this discussion Messrs.

Goldenweiser, Smead and Harlan (of the Treasury) entered the meeting.
Mr# Sprague particularly desired the views of those present with respect
to the effect of fluctuations of the dollar on the ability of the Treasury to sell
its obligations, and raised the further question whether the present was not a
suitable time for interior banks to become interested in making tenders for
Treasury bills.

He also requested that some of the governors confer with Mr'.

Acheson, at his home, during the course of the day.
At this point Messrs. Sprague and Harlan left the meeting.
It was mo¥ed and carried that the chair appoint a conmittee of four
governors to call on Mr. Acheson*
\After some discussion individual members of the board and many of the
governors expressed the view that fluctuations in the value of the dollar created
a serious obstacle to an adequate program of long term Treasury financing.f

Reproduced from the Unclassified I Declassified Holdings of the National Archives


July 22, 1933

It was agreed, hoY/ever, that it would not be appropriato to adopt a formal resolu­
tion on the subject.
Before the adjournment of the meeting there were distributed to the
committee and the members of the Board the usual report of operations of the Open
Market Committee and the preliminary memorandum on credit conditions.
The meeting adjourned at 12:45 p. m.
The meeting reconvened at 2:23 p . m., there; being present from the
Federal Reserve Board, - Governor Black and Messrs. Hamlin, James, Miller, Thomas,
Szymczak and O ’Connor; the same representatives of Federal reserve banks; and
from the Federal Reserve Board staff, Messrs. Morrill, Goldenweiser, Wyatt, Smead
and Carpenter.
Mr. Goldenweiser reviewed briefly the business and credit situation.
There ensued a discussion of open market policy, f Governor Black stated
the view that it was desirable to continue the present power of the committee and
that in view of the uncertainties of the situation it was extremely difficult to
tell in advance how much of that power it might be desirable to use.

Each of the

governors 7/as asked to give his view and they all concurred in the general view
expressed by Governor Black, though a number also stated that they would prefer to
see no further purchases and favored a conservative course.

Governor Seay ex­

pressed the view that if further extensive operations were undertaken they should
be at the request of the Treasury^
In response to a question by Mr. Miller as to what might be the basis
for decisions by the executive conanittee as to purchases, Governor Harrison statod
(1 ) that there was a government program 'Broadly designed to result in raising
prices and that the System’s object should be to facilitate and not deter that
program; (2 ) that at the moment there ware large-excess reserves, so that on
strictly monetary grounds there was no occasion to buy at present; (3) that a
further serious decline in prices of securities and commodities might affect

Reproduced from the Unclassified / Declassified Holdings of the National Archives








July 22, 1935

confidence and that some purchases might be helpful under these conditions; (4)
that other conditions might arise making purchases desirable $ such as a risk of
failure of some government issue, too great a tightening of money rates due to a
transfer of money out of New York* or other unforeseen events.

In view of these

considerations a renewal of the authority appeared desirable*^ Individual members

of the Federal Reserve Board expressed general agreement with these views*
There was some discussion of the probable action of the board with
respect to the issuance of a regulation dealing with rates of interest on time de­
posits, and it was indicated that a tentative draft would be reedy shortly and
would be sent to the Federal reserve banks for comments.
A question was raised as to the effect of the Glass bill on the service
of bankers as Class A directors, and it was indicated that the board’s counsel had
not yet aade a ruling on that matter.
Governor Hamilton raised the question whether there bad been any indica­
tion that the reserve banks would be called upon for any special work in connection
with the examination

of banks for the Insurance Corporation.

The secretary of

the'board replied that there had been no such indication, but that the prospect of
additional examination work made it desirable for the Federal reserve agents to
consider strengthening their examining forces.
Mr. O ’Connor requested that each of the governors should send him the
names of a number of outstanding state bankers in each state that he might have a
list of people from whom he could obtain information.
There was a brief discussion of the possible effects of increases in
brokers loans on credit conditions and the procedures which might be adopted to
deal with them*

Reproduced from the Unclassified I Declassified Holdings of the National Archives



July 22, 19£3

The representatives of the Federal Reserve Board l e f t the meeting at
3:08 p. m.
Governor Harrison requested. Governors Fancher, Seay, Martin and Calkins
to visit Mr. Acheson.
After a further discussion of open market policy it was unanimously
voted to be the sense of the committee that, subject to thr approval of the Federal
Reserve Board, the resolution of the Open Market Policy Conference of April 22,
as modified’by telegraphic vote after the executive committee meeting of May 23,
authorizing the executive committee to make purchases of up to one billion dollars
of government securities be reaffirmed and continued for the unused portion of
the authority*
It was agreed that it would be undesirable to include in this resolution


any authority to sell, though there was some discussion of the importance of
being prepared to sell securities promptly if the occasion arose.j
There was some informal discussion of the program to be pursued in the
present week, some of the governors expressing the opinion that, in view of the
severe reaction in the commodity and security markets, it might be wise to continue
purchases for the current statement week rather than showing a change of policy by
discontinuing purchases altogether.

It was agreed, however, that this question

could be determined more wisely later.
TGovernors McKinney and Hamilton discussed informally the question of
loans by reserve banks to agricultural credit corporations and after general
discussion those present appeared to be in agreement in seeing no objection to
such loans being made by reserve banks.
Governor Calkins raised the question whether some action ought to be
taken with respect to the report of the committee on branch banking, and it was
agreed that the Federal Reserve 3oard be asked to furnish the governors with
copies of this report in order that a decision might be nBde as to whether or not

Reproduced from the Unclassified I Declassified Holdings of the National Archives

A u t h o r i t y IQZtfpl


July 22, 1933

it should be published.
Governo rs Fancher and McKay were asked to serve as an informal
committee to confer with the Federal Reserve Board as to progress on the pension

©te meeting adjourned at 3s45 p. m.

W. Randolph Burgess,

Secretary, Federal Open Market Committee*