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'm Reproduced from the Unclassified I Declassified Holdings of the National Archives DECLASSIFIED Authority E .6 . U35&> MINUTES OF THE MEETING- OF THE OPEN MARKET INVESTMENT COMMITTEE FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE __________________ BOARD IN ¥/ASHINGTON, MAY 29, 1924___________ ___ PRESENT; Governors Strong, Fancier, McDougal, Harding and Norris Mr* Matteson, Secretary o f tbe Committee* There were a lso p resent: Honorable D. R. C rissin g er, Governor o f tbe Federal Reserve Board* Mr. Edmund P la tt, Vice Governor o f the Federal Reserve Board, Dr. A* C. M iller o f the Federal Reserve Board. Mr, Charles S. Hamlin o f the Federal Reserve Board, Dr. Walter W. Stewart, D irector, Bureau o f Research and S t a t is t ic s , Federal Reserve Board* Mr* Walter L. Eddy, Secretary, Federal Reserve Board. The meeting was c a lle d to order at 10:45 a* nu by Governor Strong, Chairman. The report o f the Secretary o f the Committee, w ith accompany ing statements and data, was submitted. There was also submitted t o the rep resen ta tiv es o f tbe p a r t ic i pating banks a rep ort from the Federal Reserve Bank o f New York on fo re ig n acc&unts togeth er with a statement o f tra n sa ction s since the la s t meeting o f the Committee on A p ril 22, 1924* The Chairman reviewed b r i e f l y the a c t i v i t i e s o f the Committee and tbe changes in the cved it situ a tio n sin ce the la s t m eeting- He stated that in view o f present and p roop ective c r e d it con d ition s in New York, the d ire cto rs o f the Federal Reserve Bank o f New York f e l t strongly tbe n ece ssity fo r being in a p o s it io n , e ith e r by the a c q u is itio n o f a p ort f o l i o co n sistin g o f a ssets under th e ir so le co n tro l or by the use through the Committee o f the s e c u r it ie s in the S p ecia l Investment Account, to ex- Reproduced from the Unclassified I Declassified Holdings of the National Archives d e c l a s s if ie d Authority E .6 . - 2 - e r c is e a s t a b iliz in g in flu en ce on the money market during period s o f heavy Treasury tra n sa ction s and t o counteract by the sale o f s e c u r it ie s , i f —and when such a ctio n should be warranted, any undesirable e f f e c t s caused by abnormal ease o f money, growing out o f Treasury op era tion s, when the market was already under th e -in flu e n ce o f heavy gold im ports. An extended d iscu ssion follow ed dealing with (a^/ incregging tfae> amount o f s e c u r itie s in the Special Investment Account; a change in the method o f apportionment o f b i l l s and Government s e c u r it ie s based more nearly upon the earning requirements o f the re sp e ctiv e reserve banks; (c ) the use o f the investments held in the System S p ecial Isrestment Account to n eu tra lize abnormal money con d ition s in New York on quarterly ta x periods and (d ) the creation o f separate p o r t fo lio s by in d iv id u a l reserve banks fo r use in cre d it emergencies* Whereupon, on motion, duly made and seconded, i t was VOTED ( l ) that the Committee approve and recommend to the partici** pating banks an in crease in holdings o f Government s e c u r it ie s fo r the Special JO Investment Account by another $150,000,000, such purchases t o be made at the d is c r e tio n o f the Committee at current market p r ic e s ; (2 ) th at the Secretary be in stru cte d to prepare a new p o f apportionment o f Government s e c u r it ie s based on earning requirements o f the resp e ctiv e banks as shown by fig u re s furnished t o the Committee on May 21, 1924, with adjustments from time to time as con d ition s warrant and new estim ates are made; such plan t o be submitted to the members o f the Committee and the p a r tic ip a tin g banks fo r th e ir approval; (3 ) same manner as Government s e c u r it ie s ; that b i l l s purchased by the System be apportioned mm Reproduced from the Unclassified I Declassified Holdings of the National Archives declassified Authority E .6 . U35fe - 3. (4 ) that the Chairman be authorized to make tempor sa les o f Government s e c u r itie s from tfca S p ecia l Account during quarterly ta x periods in such amounts as may be deemed d e sira b le , under a su itable plan fo r th e ir repurchase fo r the Special Account. In connection with the discussion o f purchases by reserve banks fo r th e ir own account, Governor McDougal asked to go on re co rd as in favcr o f such purchases in order t o provide holdings o f Government s e c u r itie s fo r the reserve banks, p refera b ly long-term , in s u ffic ie n t amount to en able the banks to meet expenses* Tbe Chairman withdrew his suggestion with regard to a separate p o r t f o l io fo r the Federal Reserve Baflk o f New York in view o f the a ction taken in resp ect t5o money con d ition s on the quartet* days. The meeting adjourned at 1:30 p . m, (Signed) W. 3 . Matteson Secretary Reproduced from the Unclassified I Declassified Holdings of the National Archives NEW PERCENTAGE OF PARTICIPATION OF FEDERAL RESERVE BANKS IN THE SYSTEM PURCHASES OF GOVERNMENT SECURITIES AND BANKERS ACCEPTANCES BASED ON ^HE EARNING __________ REQUIREMENTS AS REPORTED TO COMMITTEE ON JUNE 6 , 1924________________ Net Earnings Less Current Expenses Paid and Accrued and Dividends Jan, l/24-Mav 3 l/2 4 Estimated Gross Earn ings June l/2 4 -D e c * 3 l/2 4 Based on Earning Assets Held May 31 Remaining _________ Unchang ed T otal Net Earnings Jan* l / 2 4-May 3 l/2 4 and Gross Earnings June l/24-D ec* 3 l/2 4 Boston $ 87,500 $1,188,900 $1,276,400 |1,672,000 New York x 3 8 0 ,150 3.896.000 3 .516.000 7.004.000 P hiladelphia 270,245 1.624.000 1,894,245 1.697.000 197,245+ 0 Cleveland 255,500 2 . 090.000 2,345,500 2,820,150 474,650- n Richmond 315,790 1.455.000 1,770,790 1.360.000 410,790 + 0 Atlanta 444,370 1 , 267,600 1,711,970 1,315,410 396,560+ 0 Chicago 153,130 2,776,650 2,929,780 3,624,580 694,800- 10^ 96,100 1 . 065.0 0 0 1 , 161,100 1,241,600 80 , 500- 1# Minneapolis 64,390 1 , 020,000 1,084,390 1 , 268,260 183,870- 3/° Kansas City 53,080 1,355,150 1,408,230 1,755,400 347,170- % 341,000 1.044.000 1.385.000 1/970,000 5 8 5 , 000- 8/® at* Louis Dallas San Francisco 93,000 2.077.000 Estimated Expenses June l/2 4 -D e c,3 1 /2 4 In clu d in g Dividends Estimated Chargeo f f s , E tc, Amount o f Earnings Over or Short o f Estimated Re quirements fo r Year 1924 $ New Ratio of P a rticip a tio n 395,600- 3,488,000- 51% IS ' 2 . 1 7 0 .0 0 0 2.777.000 607 , 000$6,856,590- ^Expenses in Excess o f Earnings Jan, l/24~May 31/24 e> o& £ ®! 100% m oi o fi * CGI 8" is; O'
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