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jp*pp Reproduced from the Unclassified I Declassified Holdings of the National Archives DECLASSIFIED Authority E.6 .1235fe J ~2 ?p> - ~ b - ~ " V | ;■ y .... ' C OP Y MINUTES OF THE MEETING OF THU OPEN MARKET INVESTMENT COMMITTEE FOR THE FEDERAL RESERVE SYSTEM* HELD AT THE FEDERAL RESERVE BOARD IN WASHINGTON* FEBRUARY 8» 1924_____________ ZU ./ / 1 P resent; Governors Strong, MeDougal and N orris Mr«f Matte son. Secretary o f the Committee* There w #realso present by in v it a t io n ; Honorable D* R* C rissin ger, Governor o f ^ e Federal Reserve Board Dr* Adolph C. M ille r o f the Federal Reserve Board Dr* W. R. Burgess, A ssistant Federal Reserve Agent, Federal Reserve Bank o f New York The meeting was c a lle d t o order at 10:45 a* m* by Governor Strong, Chairman, The minutes o f the meeting o f the Committee hold January 14, 1924 were presented and on motion approved. The Secretary a lso presented rep orts covering the a c t i v i t i e s o f the Committee sin ce the la s t meeting accompanied by e x h ib its showing loans and invest ment holdings o f the Federal reserve banks, and a memorandum on the busin ess and c re d it situ ation * Hie question was ra ised as to what a ction should be taken by the Committee with reference t o sp e cia l orders fo r the purchase o f b i l l s and Government s e c u r itie s in addition to regular allotments*, I t was agreed by those present that such pur chases in te rfe re d with a u n ifie d program o f purchases f o r the System and the opinion was expressed that the p ra ctice should be discontinued or some method adopted which would preserve the percentage plan o f allotm ent* In order, th e re fo re , t o meet the needs o f certa in o f the banks, which at tim es d esire la r g e r h old in gs o f Government s e c u r it ie s and b i l l s than they would norm ally obtain through the regular allotm ents, J U x tU ' S p ¥ Id L j 3 3 3 .- y - X Reproduced from the Unclassified I Declassified Holdings of the National Archives P -------------------------_ DECLASSIFIED Authority E .6 . - 2 - i t was suggested that b i l l s and s e c u r itie s be re d istrib u te d , so far as p o ssib le , from the allotm ents o f banks whose earning assets are more ample ond who w ill consent to such red istrib u tion * With t h is exception it was the opinion o f the Committee that the p rin cip le o f a llo t t in g a ll purchases in accordance wrtn the approved formula should be s t r i c t l y adhered t o . In the statement showing purchases and allotm ents of bankers accept** ances during the period from December 12,. 1923 to January 30, 1924, it was noted that certa in o f the banks had received la rg er amounts o f b i l l s than th e ir pro rata share, dna tr> dlrer.t purchases by th ose banks. I t was understood that the Secretary would endeavor to arrange adjustments which would re su lt in tne re d istrib u tio n o f these excess amounts. In view o f higher current p rice s fo r bankers acceptances and Government s e c u r it ie s , i t was suggested that a p ossib le avenue fo r investment might be found in short-term municipal se cu ritie s* I t was agreed by those present, however, that it was not d esira ble to make such purchases. At t h is point Governor C rissinger and Dr* M illar join ed the meeting and a fte r a general d iscu ssion o f present c r e d it and banking con d ition s throughout the country, the Committee discussed proposals fo r extending i t s purchases of Government securities and raisin g somewhat the authorized buying prices* A fter considering the probable e f f e c t , it was the sense of the meeting that some further purchases could be made at s lig h tly higher p rices without any la rge immediate e f f s c t on the cred it s itu a tio n , the probable resu lt being simply a decrease in the loan account of the Federal Reserve Bank o f hew York corresponding to the amount o f s e c u r itie s purchased* The question was raised as to whether the program o f the Committee should be determined s o le ly with regard to cre d it p o lic y or whether i t snould be influenced by the d e s ir e / o f some o f the banks to increase t h e ir investments Reproduced from the Unclassified I Declassified Holdings of the National Archives DECLASSIFIED Authority E .6 . 1235k - 3 - in order that th e ir earnings might at a l l times be la rg e enough to pay t h e ir expenses and dividends without going into surplus* The Committee recognized that there was a d iv isio n o f opinion among the banks on th is question and i t was suggested that it would be d esira b le for members o f the Committee togeth er with rep resen tatives o f the Federal Reserve Board t o meet p e r io d ic a lly with the Boards o f D irectors o f the d iffe r e n t Federal reserve banks represented on the Committee in order to create a b e tte r understanding by discussing with the d iffe r e n t Boards o f D irectors the various tra n sa ction s o f the Committee* The follow in g motions were thereupon made and ca rrie d : (1 ) That the Secretary be instructed to estim ate from the reports o f earnings and expenses made to the Committee on Economy and E ffic ie n c y the amounts o f earning assets required by the various Federal reserve banks to earn t h e ir expenses and dividends, in order that the Committee may be informed as to banks which request sp ecial reallotm entSj and banks which might be in a p o s itio n to tra n s fe r a p ortion o f t h e ir allotm ents o f b i l l s and (2 ) Government se cu ritie s* That sp e cia l orders fo r purchases of b i l l s or Government s e c u r it ie s be|notyexecuted in the market without Committee a ction but that the Committee endeavor t o arrange when necessary fo r tra n sfe rs from those banks which are w illin g t o surrender them* (3 ) That the authorized p r ic e s fo r purchase o f Government s e c u r itie s be revised to an extent that w il l permit o f increased purchases in moderate volume, say up to the amount of $100, 000,000 as p reviou sly agreed upon, and that a new schedule o f p rice s be sent to the members o f the Committee fo r t h e ir approval* (4 ) That the Committee recommend t o the Federal Reserve Board that one or more members o f the Board jo in the Committee in mm Reproduced from the Unclassified I Declassified Holdings of the National Archives declassified Authority E .6 . •t 4 ■* meetings t o be held by the .Committee with the Board of D irectors o f the Federal Reserve Banks o f Boston, New York| Philadelphia* Cleveland and Chicago, those being the banks whoso Governors at present co n stitu te the Committee* On motion the meeting adjourned# (Signed), w* B, MATTESON Secretary,
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