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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 E.6.1235fe ■*,j i' CONFIIENTIAL 7^U i MIMUTES OF THS MEETING OF HIE MARKET INVESmNT C0M5ITTES HELD AT THE OFFICES tiiF FEDERAL RESERVE BOARD WASHINGTON, D. C ., March 24 and 2 5 , 1930 D j , j 3 / 7 / 3 The m e e tin g was c a l l e d t o o r d e r a t 1 0 :4 0 a , m ., th e r e b e in g p r e s e n t Frcta th e F e d e r a l R e se rv e B oard, G o v e rn o r Young and M e s s r s . Cunningham, H am lin, James, M i l l e r and P l a t t ; F fo n the B o a rd ’ s s t a f f , Dr* G o ld e n w e is e r and M e ssr s. Sraead, M c C le lla n d , N o e ll and C a r t e r ; Frcoi th e F e d e r a l R e s e rv e Banks, G ov ern ors N o r r i s , S ea y , B la c k , Fane h e r , M cDougal, G e rry , M a rtin , T a l l e y , and C a lk in s , Mr. C ase, Chairman o f th e B oa rd , and D eputy G overn ors P addock and W o r th in g to n , and Mr. B u r g e s s , a c t i n g s e c r e t a r y . The p r e lim in a r y memorandum on th e c r e d i t s i t u a t i o n and th e S e c r e t a r y ’ s r e p o r t w6re p r e s e n te d t o th e m e e tin g . Dr. G o ld e n w e is e r th en d is c u s s e d th e c r e d i t s i t u a t i o n i n c o n n e c t io n w ith a s e r i e s o f c h a r t s . G overn or Young and Mr. Case th en re v ie w e d th e o c c a s i o n f o r th e p u rch a se o f $ 5 0 ,0 0 0 ,0 0 0 o f Government s e c u r i t i e s o r i g i n a l l y a c q u ir e d f o r th e a c c o u n t o f th e F e d e r a l R e s e rv e Bank o f New Y ork , betw een March 6 and 1 4, and s u b s e q u e n tly p a r t i c i p a t e d among e ig h t o f th e R eserv e banks thus becom ing a p a r t o f the Open MarksV In vestm en t A c c o u n t. T here ensued a g e n e r a l d i s c u s s i o n o f t h i s t r a n s a c t i o n and o f th e g e n e r a l b u s in e s s and c r e d i t s i t u a t i o n , i n c l u d i n g a d i s c u s s i o n o f th e r e l a t i o n s h i p betw een t h i£ t r a n s a c t io n and th e f i n d i n g s o f th e m e e tin g o f January 2 8 th and 2 9 th . In th e c o u r s e o f t h i s d i s c u s s i o n i t was b ro u g h t o u t t h a t the p rim a ry pu rp ose o f th e t r a n s a c t io n was t o a ttem p t t o a id b u s in e s s w i i c h had d e v e lo p e d a m ore s e r io u s d e p r e s s io n than had b een a n t i c i p a t e d a t th e tim e o f th e p r e v io u s m e e tin g . A number o f th e g o v e r n o r s i n d i c a t e d th a t th e y had n o t been i n sym pathy w ith t h i s p u rch a se o f G overnm ents and f e l t t h a t money r a t e s had been e a sed more r a p i d l y than was d e s i r a b l e . A number o f th e o t h e r g o v e r n o r s i n d i c a t e d th a t th e y w ere i n a c c o r d w it h th e p ro c e d u re w h ich had b een f o llo w e d * Reproduced from the Unclassified / Declassified Holdings of the National Archives d e c l a s s if ie d Authority E .6 . i^SSo 2 The meeting adjourned a t li3 0 to reconvene at 2:45 with on ly the rep resen ta tives o f the Reserve banks p resen t. A fte r some fu rth e r d iscu ssion the fo llo w in g minute was adopted as rep resen tin g the views o f the meeting: The Open Market Committee, in clu d in g in form a lly rep resen ta tiv es o f a l l the reserve banks, has considered the inform ation submitted in the Chairman’ s prelim inary memorandum, by the Federal Reserve Board, and by represen ta tiv e s o f the severa l banks. While Treasury tax period operation s have d isto rte d the near-tim e view of the money s itu a tio n , i t is c le a r that since the meeting o f the Committee on January 28 and 29 money con d ition s have eased su b sta n tia lly and money has become more f r e e ly a v a ila b le and the ease has been extended from the short time to the long time money market. The Committee b e lie v e s the steps already taken by the Federal Reserve System in easing the money market through open market operations have gone as fa r in providing the stimu lus o f easy money f o r business use as seems d esira b le at th is time. The Committee b e lie v e s that at present there is no occa sion f o r fu rth e r purchases o f Government s e c u r it ie s . In the in te r e s t o f f l e x i b i l i t y and preparedness f o r the unexpected, the Committee favors a redu ction in the minimum buying rate on b i l l s , fix e d by the Reserve Board, to 2 1 /2 $ . I t is the sense o f the meeting, however, that in the absence o f some developments that cannot now be a n ticip a te d , b i l l s should not be bought below 3$. At 3:50 the fo llo w in g members o f the Federal Reserve Board join ed the m eeting! Governor Young and Messrs. Cunningham, Hamlin, James, M iller, and P la tt. The minute adopted by the rep resen ta tiv es o f the banks was read and d is cussed in form a lly without any a ctio n being taken. Governor Young ra ised the question as to the extent i t was d e sira b le to c a l l f u l l meetings o f rep resen ta tiv es o f the Reserve banks to consider questions o f th is s o rt as compared with the p o lic y of handling these questions by co rr e s pondence. Messrs C alkins, T a lle y , and Seay in d ica ted that they favored co n fe r ences as the most s a t is fa c t o r y method o f accom plishing the purpose. The question was then ra ise d as to the procedure to be fo llo w e d in the fu tu re by Open Market meetings in view o f the f a c t that the procedure suggested by Reproduced from the Unclassified / Declassified Holdings of the National Archives DECLASSIFIED Authority E .6 . 3 the Federal Reserve Board in i t s le t t e ? o f Jahuary 23 had never been put in to e f f e c t , but that each Reserve bank had made comments upoaa that l e t t e r , including various suggestions f o r m o d ifica tio n . Mr. Hamlin presented a d ig e st o f the r e p lie s made by the s e v e ra l Reserve banks to the Board’ s l e t t e r . A fte r some fu rth e r d iscu ssio n Mr. James moved that the Governor o f the Federal Reserve Board and the rep resen ta tiv es o f the Federal reserve banks there present should co n stitu te a committee to con sid er amendments to the open market procedure ou tlin ed in the Board’ s l e t t e r o f January 23. This motion was ca rrie d . The meeting adjourned a t 6 :0 5 . At 8:30 p. m. Governor Young^and the rep resen ta tiv es o f the twelve Federal reserve banks, with the ex cep tion o f Mr. Case, who had found i t necessary to return to New York, reconvened a t the H otel Carlton to con sider the open market \ procedure suggested in the Federal Reserve Board’ s le t t e r o f January 83, Governor Young a c tin g as chairman c f the m eeting. The sev era l p ro v isio n s o f the l e t t e r were taken up in order, and a s e r ie s o f proposals m odifying to some extent the Board’ s suggestions was adopted. These proposals are included in the minutes o f the meeting o f the fo llo w in g morning, with a few minor changes made at that time. At the con clu sion o f th is meeting the rep resen ta tiv es o f the Reserve banks present e le cte d Governor Calkins chairman pro tempore and discussed the question o f the chairmanship o f the conference and the com position o f the ex ecu tiv e committee. Thereupon i t was Voted to be the sense o f the rep resen ta tiv es o f the Federal reserve banks present at the meeting that the rep resen ta tiv e o f the Federal Reserve Bank o f New York be e le cte d Chairman o f the Conference f o r one year; that the Execu tiv e Committee provided f o r in the proposed procedure should co n s is t o f the Chairman and the rep resen ta tives c f the Federal Reserve Banks o f Boston, Cleveland, P h ilad elp h ia , and Chicago f o r one year; a ls o , that the Conference adopt the p r in c ip le o f reasonable ro ta tio n in the membership o f the E xecutive Committee •w Reproduced from the Unclassified / Declassified Holdings of the National Archives d e c l a s s if ie d Authority E .6 . 4 a ft e r the f i r s t year The meeting adjourned a t 11:45 p* m. The meeting reconvened with the Federal Reserve Board a t 10:30 on March 25 in the Federal Reserve Board rooms, there being present From the Federal Reserve Board, V ice Governor P la t t , p re sid in g , and Messrs. Cunningham, Hamlin, James, and H ille r ; From the Board’ s s t a f f , M essrs. Goldenweiser, Smead, and McClelland, Representing the Federal reserve banks, Governors N orris, Seay, Fancher, McDougal, Martin, Geery, T a lle y , and C alkins, and Deputy Governors Paddock and Worthington. Mr. Burgess, a ctin g se cre ta ry . The conclusion s reached by the committee the preceding evening were pre sented to the meeting and discussed in order# One or two minor changes were agreed to by the rep resen ta tiv es o f the Reserve banks p resen t. The proposals unanimously adopted by the rep resen ta tiv es o f the Reserve banks present a t the evening and morning m eeting were as fo llo w s : (1) The Open Market Investment Committee, as at present co n s titu te d , to be discontinued and a new committee, voluntary in ch a ra cter, to be known as the Open Market P o lic y Conference, to be set up in i t s p la ce . (2 ) The Open Market P o lic y Conference to co n s ist o f a rep resen ta tive from each Federal Reserve Bank, designated by the Board o f D irectors o f the bank. (3) The Conference to meet with the Federal Reserve Board upon the c a l l o f the Governor o f the Federal Reserve Board or the Chairman o f the Executive Committee a ft e r con su lta tion with the Governor o f the Federal Reserve Board. (4) The fu n ctio n o f the Open Market P o lic y Conference to be to con sid er, develop, and recommend p o lic i e s and plans with regard to open market o p era tion s. (5 ) The tim e, ch a ra cter, and volume of purchases and sa les to be governed with the view o f accommodating commerce and b u s i ness and with regard to th e ir bearing upon the c r e d it s itu a tio n . (6 ) The con clu sion s and/or recommendations of the Open Market P o lic y Conference, when approved by the Federal Reserve Board, to be submitted to each Federal reserve bank f o r determina tio n as to whether i t w i l l p a r tic ip a te in any purchases or sa les recommended; any Federal reserve bank d issen tin g from the p ro posed p o lic y t o be expected to acquaint the Federal Reserve Board and the Chairman o f the E xecutive Committee with the reasons f o r i t s d isse n t. Reproduced from the Unclassified I Declassified Holdings of the National Archives DECLASSIFIED Authority E .6 . IBSfe 5 (7) An executive committee o f f i v e to be se le c te d from and by the members o f the Conference f o r a term o f one year, with f u l l power to a ct in the execution o f the p o l i c i e s adopted by the Open Market P o lic y Conference and approved by the Federal Reserve Board, and to hold meetings with the Board as freq u en tly as may be d e s ira b le . (8 ) Each Federal Reserve Bank p a r tic ip a tin g in the Open Market P o lic y Conference to be considered as waiving none o f i t s rig h ts under the Federal Reserve A ct; each Federal Reserve Bank t o have the rig h t at i t s op tion to r e t ir e as a member o f the Open Market P o lic y Conference, but each bank w hile a member o f the Conference to re sp e ct i t s Conference o b lig a tio n s . I t was understood that in agreeing to these proposals the representa tiv e s o f the Reserve banks there present were in no sense committing th e ir i n s t i tu tio n s , and i t was understood that the proposals would be submitted by the Federal Reserve Board to the Boards o f the severa l Reserve banks a ft e r the Federal Reserve Board has i t s e l f discussed them. The meeting adjourned at 11:50 a. m. W. Randolph Burgess, A cting S ecreta ry.
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