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Reproduced from the Unclassified / Declassified Holdings of the National Archives

DECLASSIFIED
Authority

MBiuTisar mwtbkj
Or H fl OP1N MAEKST POLICY CONITOWIC*
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SATURDAY, APRIL 22, 1933,

WASHINGTON, D, C.

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Th® ae9 ting was called to order at 11 a. m.> there being present
the following:
Governor Harrison* chainaan# and
Governors Young, Norris, fane her, Seay* Black, Martin,
Geary, BBtmilton, McKinney, and Calkins, and
Deputy Governor Melay*

t

following completion of the deliberations of th© governors con­
ference, a meeting of the open market policy conference was convened to
consider what, if any, action should be taken by the conference with a view
to giving the executive consulttee power to function if necessary in th
e
*
emergency pending another meeting of the conference*
The report of the secretary of the operations in the system account
since the last meeting, which had been previously distributed, waa received
and ordered to be placed on file*

The conference then considered the pre-

i
liminary memorandum which had also been distributed during the course of tUe
governors conference*

There was a general discussion of the memorandum and

a review of banking and business conditions which had been considered during
the course of the governors conference,

particular reference was made to the

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Thomas Amendment to the Faun Bill giving the President among other powers the
right to direct the Secretary of the Treasury to arrange with tha Federal re­
serve banks for the purchase of government obligations up to three billion,
dollars*

As drafted, this provision of the law is not obligatory so far as

the Federal reserve banks are concerned* But the conference was generally in
agreement that during the period of the emergency it would be advisable for
the Federal reserve banks, so far as possible and consistent with their own
position and requirement#! to cooperate with the Treasury with a view to

fe illtat ta any necessary issuee of government securities or to support the
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Reproduced from the Unclassified I Declassified Holdings of the National Archives

DECLASSIFIED
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market for government securities in order to make such public issues possible, r
The majority of the conference however did not feel that at the present time
it would be advisable for the Federal reserve banks to purchase government
securities solely for the purpose of increasing member bank reserves.

After

further discussion and in order that the executive cornuittee might be prepared#
if deemed advisable at the time* to purchase government securities with a view
to making it possible for the Treasury to meet its requirements, it was
VOTED to be the sense of the conference that
subject to approval of the Federal Reserve Board the
executive committee be authorized to arrange with the
Secretary of the Treasury from time to time to pur­
chase up to one billion dollars of government securi­
ties to meet Treasury requirements.
Deputy Governor McKay of the Federal Reserve Bank of Chicago asked to
be recorded as not voting*

All the other governors voted in the affirmative.

During the debate on this resolution it was pointed out that this
authority, if approved by the Federal Reserve Board, would permit the executive
committee to purchase government securities in the market as a means of facili­
tating public issues of government securities rather than to force the Treasury
to seek accommodation directly from the Federal reserve banks.

It was understood

that a purchase in such circumstances would be with a view to meeting Treasury
requirements as specified in the resolution*
The conference then considered the question of the average maturity
of the securities held in the system account, it being pointed out that in
present circumstances a larger proportion of longer time government securities
might not be inappropriate, especially if the exchange of short term securities
for longer maturities would facilitate the marketing of government issues when
necessary.

It was emphasized that it might be possible by shifting various

issues in the system account from shorter to longer maturities to promote a
better relationship of rates in the government security market and also tone up
the market so as to facilitate public issues where otherwise direct recourse to



Reproduced from the Unclassified I Declassified Holdings of the National Archives

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the Federal reserve banks might be sought*

After discussion it was un­

animously

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VOTED to be the sense of thr conference that
while as a general principle the average maturity of
governments held in the system account should be kept
as short as possible* nevertheless in the present emergency and especially in view of the need of full cooperation with the Treasury in meeting its fiscal problems,
the executive committee should be authorized from time to
time to shift maturities in the system account if condi-_
tions in the market or requirements of the Treasury^appear
to make that advisable* Furthermore, it is understood that
in replacing maturities in the system account the executive
committee will use its discretion in the light of existing
conditions and this resolution in selecting replacements.
In view of the fact that the present emergency might make it necessary

or advisable for the Federal reserve banks to acquire further amounts of govern­
ment securities* it was the belief of the conference that there should be the
fullest cooperation on the part of the several Federal reserve banks in reallo­
cating existing and possible future holdings of government securities as between
reserve banks to enable the reserve banks to operate effectively as a System,

^

Accordingly, it was unanimously

executive
system of
purchases
at a more

VOTKD to be the sense of the conference that the
committee {fshouldjbe instructed to work out a
allotment of existing holdings as well as new
of government securities with a view to arriving
equitable relationship of reserve percentages*

It was pointed out that the reallocation of securities between reserve
banks might be necessary not only to permit of further purchases of securities
by the system but also to enable any Federal reserve bank freely to accommodate
its member banks on 10 B loans in cases whore large amounts of sucl^ loans might
be required to keep open licensed member banks in its district.
At 11:50 a, m. the open market policy conference met with the Federal
Reserve Board.

The three resolutions adopted were read to the Board, it being

pointed out that the first resolution authorizing the executive committee to
purchase up to one billion dollars of government securities would require the




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Reproduced from the Unclassified I Declassified Holdings of the National Archives

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4
approval of the Federal Reserve Board*

Governor Harrison outlined some of

tho reasons which prompted the adoption of th<* resolutions in the form sub­
mitted*
At 12:30 the meeting adjourned*

George L. Harrison,
Chairman*

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102