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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

Authority S iO ld e r V3& & S

m rn x m m iA L

m & F T subject to change

m m M L omi m m m < m m r m
held A * u m iw m m , d. o.
June 7, 1955.




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The meeting was called to order at 10:30 a. m., there being presents
Governor Harrison, chairman, Governors Young and Seay, and
Deputy Governor Burgess, secretary*
The secretary reported that Mr, Schaller and Mr. Fleming had been unable
to come because of other commitments.
There was general discussion of the Treasury offering of bonds for
tenders just completed.

The secretary reported messages from the Chicago and

Cleveland banks» indicating that the banks in those districts had not generally
reacted favorably to this method of financing.
There was a general discussion of the effects of a proposed Treasury
offering of four or five year notes on June 15 in exchange for June 15 and August
1 maturities upon the portfolio of the Reserve banks, which included #185,000,000
of these maturities.

The exchange of these maturities for four to five year

notes would have the effect of lengthening the maturities in the System account
somewhat .
The secretary reported that in accordance with proposals at the meeting
of the Federal 0 p m Market Committee on May 27 the Federal Reserve Bank of
Minneapolis had taken #5,000,000 and the Federal Reserve Bank of Richmond
#3*153,000 of government securities from the System participation of the Chicago
At 11:30 the meeting adjourned to the office of Under Secretary Cfrolidge
in the Treasury, Mr. Coolidg© and Governor Eccles also being present.

There en­

sued an informal discussion of the results of the trial on June 5 of the offering
of bonds for tenders as a method of Treasury financing.
of proposals for t o # 15 financing*

There was also discussion

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Reproduced from the Unclassified / Declassified Holdings of the National Archives



8 c 0 r d g r j 9^


At 12:00 o ’clock the meeting adjourned to the Secretary of the Treasury's
office and in addition to those listed above the following were present:
Secretary Morgenthau, Mr* Bell, Mr. Haas, and Mr. Upham.
After a further discussion there was general agreement that a five year
note at an interest rate of 1 1 /2 per cent would be appropriate for the refunding
of June and August maturities on June 15.

There followed a full discussion of

the methods which the Treasury might use to obtain new funds between June 15 and
September 15.

The governors present reported the reactions in their districts

from the method of offering bonds for tenders, and the secretary of the edUinittee
reported the information on this subject received from the Federal reserve banks
of Cleveland and Chicago.

While the majority of those present felt that the

method of inviting tenders might well be established as a possible method to be
used from time to time, Governor Harrison and Mr. Burgess expressed the ^iew
that the traditional plan of borrowing money by the Treasury has on the whole
worked satisfactorily, the country is accustomed to it, and the Treasury has by
that plan successfully and profitably financed itself during recent difficult

In those circumstances there is some question of the advisability of

adopting a new method as a principal means of securing new money just at this time
when the Treasury financing program is progressing so satisfactorily and when the
reports from various districts indicate considerable dissatisfaction with the new
method not only on the part of dealers but by bamks both large and small.
However, it was agreed that no final decision was necessary at the
moment on this question, and that the cosaaittee would meet again with the Secretary
in about two weeks*

The meeting adjourned at 12:30 p. m.

W. Randolph Burgess