Full text of Federal Reserve Governors Conference : Meeting Documents : March 5, 1934

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CONFIDENTIAL

•

Go v ER No

S'

NF E R E N

E

March 5, 1934
Washington, DC

•

Morning S e s s i o n
The Conference was c a l l e d by t h e Federal Reserve Board
to c o n s i d e r t h e proposed B i l l f o r t h e c r e a t i o n of C r e d i t Banks
for Industry.
The Conference was c a l l e d to order at 1: 35 o' c l o c k a.
m. w i t h Governor Black p r e s i d i n g .
Present:

Governor Black a n d Messrs. H a m l i n ,
Szymczak, M i l l e r , O' Connor, and Thomas
of t h e F e d e r a l Reserve Board, Governor
C a l k i n s , Chairman of t h e G o v e r n o r s ' Conf e r e n c e , and Governors Young, N o r r i s ,
Seay, S c h a l l e r , Geery, Hamilton, Martin,
and McKinney.
Also Acting Governor
Johns and Deputy Governors Burgess and
Fleming; Mr. S t r a t e r , S e c r e t a r y of t h e
G o v e r n o r s ' Conference; and Messrs. Morr i l l , C a r p e n t e r , Bethea, Martin, Wyatt,
Goldenweiser, a n d Smead or t h e F e d e r a l
Reserve Board s t a f f .

Governor Black s t a t e d t h a t t h e Federal Reserve Board
d e s i r e d to d i s c u s s t h e f o l l o w i n g m a t t e r s w i t h t h e Governors:
( a)

P r o p o s e d B i l l to p r o v i d e f o r t h e c r e a t i o n of
C r e d i t Banks f o r I n d u s t r y and f o r o t h e r purposes;

( b)

Retirement of F e d e r a l Reserve Bank n o t e s ;

( c)

I s s u a n c e of g o l d c e r t i f i c a t e s by t h e T r e a s u r y
Department to t h e F e d e r a l Reserve banks -

and t h a t t h e S e c r e t a r y of t h e T r e a s u r y d e s i r e d to o b t a i n t h e views
of t h e Governors in c o n n e c t i o n w i t h t h e Government' s f i n a n c i n g program.
The Conference proceeded to d i s c u s s in d e t a i l t h e prov i s i o n s of t h o proposed B i l l , and s e v e r a l minor changes were

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Federal Reserve Bank of St. Louis

•

- 2 suggested during the discussion.
D u r i n g t h e c o n s i d e r a t i o n of

the Bill,

Mr.

O' Connor l e f t

t h e meeting.
At 1 2: 1 o' c l o c k p.
t h a u a n d members of

m. S e c r e t a r y of

t h e T r e a s u r y Morgen-

h i s s t a f f e n t e r e d t h e C o n f e r e n c e and t h e S e c r e -

t a r y b r i e f l y o u t l i n e d t h e Treasury' s requirements, and discussed
w i t h t h e G o v e r n o r s t h e v a r i o u s p h a s e s of t h e T r e a s u r y ' s p r o p o s e d program.

k The c S e c r oe t a r y l of
p.

t hce T r e a' s u r y ol e f t 3t h e m: e e t i n2g at 1

m. a n d t h e C o n f e r e n c e c o n t i n u e d t h e d i s c u s s i o n w i t h t h e

members of h i s s t a f f .
At 1 : 3 o ' c l o c k p.
v e n e at

2: 3 o ' c l o c k p.

m. t h e C o n f e r e n c e a d j o u r n e d to

recon-

m.
Afternoon Session
2: 4 o ' c l o c k p.

The C o n f e r e n c e r e c o n v e n e d at
same a t t e n d a n c e as
Mr.

at

t h e morning s e s s i o n ,

O' Connor a n d t h e r e p r e s e n t a t i v e s of

m. w i t h t h e

w i t h t h e e x c e p t i o n of

t h e T r e a s u r y Department.

The C o n f e r e n c e f u r t h e r d i s c u s s e d t h e p r o p o s e d B i l l f o r
t h e c r e a t i o n of C r e d i t Banks f o r I n d u s t r y ,

a n d it

was u n a n i m o u s l y

VOTED t h a t t h e C o n f e r e n c e a p p r o v e t h e B i l l as s u b m i t t e d w i t h t h e u n d e r s t a n d i n g t h a t c o n s i d e r a t i o n w o u l d be g i v e n by t h e
B o a r d to

t h e s u g g e s t i o n s made d u r i n g t h e d i s c u s s i o n .
Governor B l a c k a d v i s e d t h e Governors t h a t t h e T r e a s u r y

D e p a r t m e n t is

n o w h a v i n g p r e p a r e d g o l d c e r t i f i c a t e s in

t i o n s of $

,

Federal

1

, $ 1

, $ 1 , ,

a n d $ 1 t o be i s s u e d to t h e

R e s e r v e b a n k s u p o n r e q u e s t in

ed on t h e books of


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Federal Reserve Bank of St. Louis

,

denomina-

payment of

t h e T r e a s u r y D e p a r t m e n t in

credits establish-

c o n f o r m i t y to

the

•

- 3 p r o v i s i o n s of

t h e G o l d R e s e r v e Act of 1934,

D e p a r t m e n t was w i l l i n g to d e l i v e r to
s u c h g o l d c e r t i f i c a t e s as

and t h a t t h e Treasury

t h e F e d e r a l Reserve banks

It

were r e q u e s t e d .

was u n d e r s t o o d t h a t

t h e m a t t e r w o u l d be c o n s i d e r e d by e a c h F e d e r a l
t h e B o a r d a d v i s e d of i t s w i s h e s in
The S e c r e t a r y of
r e t u r n e d to

t h e Conference,

the matter.

t h e T r e a s u r y a n d members of

b a n k s in

his s t a f f

and t h e S e c r e t a r y gave t h e Governors

a b r i e f o u t l i n e of r e p l i e s ha h a d r e c e i v e d to
a s e l e c t e d l i s t of

Reserve bank and

the country,

a t e l e g r a m s e n t to

a n d a s k e d t h a t e a c h Fed-

e r a l R e s e r v e b a n k a r r a n g e i m m e d i a t e l y to s e n d t h e f o l l o w i n g t e l e g r a m to

e a c h member b a n k in

i t s d i s t r i c t a n d to

e a c h Chamber of

Commerce:
"I s h a l l a p p r e c i a t e a c o l l e c t t e l e g r a m f r o m
y o u s t a t i n g how much, if a n y , c r e d i t is n e e d e d in
y o u r t r a d e t e r r i t o r y , f o r p u r p o s e of p r o v i d i n g
w o r k i n g c a p i t a l f o r e s t a b l i s h e d i n d u s t r i a l or
commercial b u s i n e s s e s w i t h s u f f i c i e n t unincumbered
a s s e t s a n d p r o s p e c t s to j u s t i f y l o a n s h a v i n g mat u r i t i e s not exceeding f i v e years, s u c h c r e d i t not
to a p p l y on l i q u i d a t i o n of e x i s t i n g d e b t .
Shall
a l s o a p p r e c i a t e your i n d i c a t i n g to what e x t e n t in
numbers t h e e x t e n s i o n of t h i s c r e d i t w o u l d c o n t i n ue t h e p r e s e n t e m p l o y m e n t , as w e l l as t h e n u m b e r s
by w h i c h t h e p a y r o l l s would be i n c r e a s e d . "

After d i s c u s s i o n , it
VOTED

was

t h a t i m m e d i a t e a r r a n g e m e n t s be made to

with the Secretary' s request,

a n d t h a t r e p l i e s r e c e i v e d by e a c h

of t h e r e s e r v e b a n k s be t a b u l a t e d a n d f o r w a r d e d to
Reserve Board,

the Treasury,

t h e members of

his s t a f f ,

Burgess withdrew f r o m t h e meeting.
C o n s i d e r a t i o n was g i v e n to

the Federal


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Federal Reserve Bank of St. Louis

the Federal

together with the original r e p l y telegrams received.

The S e c r e t a r y of
a n d Dr.

comply

t h e p o l i c y to

R e s e r v e b a n k s w i t h r e s p e c t to

be f o l l o w e d by

t h e r e t i r e m e n t of F e d e r a l

•

- 4 R e s e r v e Bank n o t e s ,

t h e s u g g e s t i o n h a v i n g b e e n made by t h e F e d e r would be d e s i r a b l e f o r t h e r e s e r v e b a n k s

al

R e s e r v e B o a r d t h a t it

to

a d o p t a p r o g r a m of g r a d u a l r e t i r e m e n t in

The C o n f e r e n c e e x p r e s s e d t h e g e n e r a l

t h e t a x on t h e n o t e s .
opinion that

t h e n o t e s s h o u l d n o t be r e t i r e d t o o r a p i d l y ,

e l i m i n a t i o n of
al

Reserve

b a n k n o t e c i r c u l a t i o n as shown in

bank s t a t e m e n t may be m i s c o n s t r u e d .
VOTED

ti on to

o r d e r to e l i m i n a t e

as

the

t h e weekly FederIt

was t h e n

t h a t e a c h F e d e r a l Reserve bank g i v e c o n s i d e r a -

t h e a d o p t i o n of a p r o g r a m f o r g r a d u a l r e t i r e m e n t of a l l

F e d e r a l R e s e r v e Bank n o t e c i r c u l a t i o n .
G o v e r n o r B l a c k t h e n r e f e r r e d to

R e s e r v e b a n k s t a k e up w i t h t h e

was made r e c e n t l y t h a t t h e F e d e r a l
member banks in

t h e s u g g e s t i o n which

t h e i r r e s p e c t i v e d i s t r i c t s t h e p o s s i b i l i t y of i n -

c r e a s i n g t h e number of

b a n k s in

each d i s t r i c t

p a r t i c i p a t i n g in

Government s e c u r i t y p u r c h a s e s t h r o u g h war l o a n a c c o u n t a n d t h e
amount of
t a i n of

t h e banks now p a r t i c i p a t i n g .

t h e G o v e r n o r s r e f e r r e d to

by t h e m in
of

t h e a u t h o r i z a t i o n of

t h i s connection,

t h e f u r t h e r a c t i o n to

of e a c h F e d e r a l

Cer-

t h e s t e p s w h i c h had b e e n t a k e n
was u n d e r s t o o d t h a t t h e m a t t e r

a n d it

be t a k e n s h o u l d be l e f t to

the discretion

R e s e r v e bank.

G o v e r n o r C a l k i n s r e a d to

t h e C o n f e r e n c e t h e memorandum

s u b m i t t e d by Mr. Smead to G o v e r n o r B l a c k u n d e r d a t e or F e b r u a r y
28, 1934,
t i o n to
in

w i t h r e g a r d to

avall i t s e l f

t h e d e s i r e of

of t h e s e r v i c e s of

f a c i l i t a t i n g t h e o p e r a t i o n s of

c h a n g i n g bonds of


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Federal Reserve Bank of St. Louis

the Farm Credit Administrathe Federal

the Federal

Reserve banks

Land banks in

ex-

t h e F e d e r a l F a r m Mortgage C o r p o r a t i o n f o r f a r m

•

-; m o r t g a g e s , a n d a f t e r a b r i e f d i s c u s s i o n it

was u n d e r s t o o d t h a t

t h e Governors would recommend to t h e d i r e c t o r s of t h e i r r e s p e c t i v e banks t h a t t h e banks comply w i t h a r e q u e s t f r o m t h e S e c r e t a r y of t h e T r e a s u r y t h a t t h e y p e r f o r m t h e s e r v i c e s c o n t e m p l a t e d
f o r the Farm Credit Administration.


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Federal Reserve Bank of St. Louis

Adjourned at

3: 3 o ' c l o c k p. m.