mss24661_369_008.pdf

The Papers of Charles Hamlin (mss24661)

369 08 001- Hamlin, Charles S., Scrap Book — Volume 259, FRBoard Members

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

205.001 - Hamlin Charles SScrap Book - Volume 259

r1)::PQ FRBoPrd Members


Form F. R.131• BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

Office CorresicondenceTo The Files Subject:

From Mr. Coe

LI

Date August 12, 1941

After correspondence with Mrs. Hamlin (see letters of May25 and June 4, 1941) the items attached hereto and listed below,because of their possible confidential character, were taken fromvolume 259 of Mr. Hamlin's scrap book and placed in the Board'sfiles:

VOLUME 259

Page 47 Report of open market operations.

page 49 Preliminary !WM for Federal Open Market Committee.

Page 63 Memo to Mr. Hamlin from Mr. Goldenweiser re inflation as a re-

sult of the elimination of collateral requirements.Page 69

Letter to Senator Glass from Mr. Hamlin re new building.Pme 7,

Memo to Mr. Wyatt from Mr. Hamlin re various "gold" laws passedby Administration.

Page 75 Memo to Mr. Hamlin from Mr. Chase re Executive Order of April

5, 1933.Page 117

Industrial Advances by F.R. Banks, February 27, 1935. (Not forpublication)

Page 135 Earnings and Expenses of F.R. Banks, February 1935.

Page 144Memo to Mr. Hamlin from Mr. Goldenweiser re Stabilization Bill

in 1928.


•

•CONFIDENTIAL

•

REPORT OF OPEN MARKET OPERATIONS TO no:TING OF THEFEDERAL OPEN mLinT coma riThE HELD AT

WASHINGTON, D. C. j FEBRUARY 5, 1935

The present holdings of United States Government securities in the

System Special Investment Account amount to $2,223,149,500.

There has been no change in this amount since November E3 1933.

Transactions in government securities in the System Account since the

meeting of the Executive Committee on January 25 were as follows:

(1) Redemption on January 30 of $17,688,000 Treasurybills and replacement purchases in the marketconsisting of $14,000,000 miscellaneous Treasurybills and $3,688,000 Treasury notes.

(2) Sale and replacement purchase in the market of$1,000,000 Treasury notes.

At the meeting of the Federal Open Market Committee on December 17,

1934, and as approved by the Federal Reserve Board, it was voted

"that the Executive Committee be givenauthority to make exchanges betweenmaturities in the System Account upto a total of $100,000,000."

Under the above authority the only shifts in maturities have been as

follows:

$ 2,550,000

5,000,000

2,000,000

1,000,000

- Tr.bills due 2/13/35 exchanged for9 99 99

-2 7/8% T/N " 4/15/3611 Tf

-2 3/4% " " 12/15/36 TT tt

V? 9

;'0 " " 3/15/38 tt ft-3 ,

$ 750,000-3600,000-2200,000-2

1,000,000-22,000,000-Tt.bills3,000,000-21,000,000-31,000,000-21,000,000...Ttbbi1lS

% T/H due7/8% " 9

1/2;40 9 ,

1/2% 9 9

9

7/8% TN ,

% " 9

7/8% " 91

It

3/15/386/15/389/15/386/15/39

5/ 1/356/15/382/15/376/15387/101/35

$10.,550,000 $10,550,000

With the exception of the Treasury bills, practically all of these transactions rep-2e-

sent the exchange of issues carrying the gold clause for issues without the gold

clause.

(.5-)<1-7 7Digitized for FRASER

http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

•

voted

2

On January 25, 1935, at a meeting of the Executive Committee, it was

"that a wire be sent to all members of theFederal Open Market Committee to requestthem subject to the approval of the FederalReserve Board to authorize the executivecommittee, pending a meeting of the fullcommittee in the near future, to make pur-chases or sales or shifts between maturitiesin the System Account up to a total ofi25I,000,000. This authorization is inaddition to the authorization to make shiftsbetween maturities up to $100,000,000 votedat the December 17 meeting. This authori-zation is desired primarily to place theSystem in position to use its i fnluencetowards preventing any possible disturbancesin thu market pending a meeting of the fullcommittee."

The rusolution was a-)proved by telegraph by thu Federal Reserve Board and all

members of the Federal Open Market Committee.

The following table shows by classes the holdings of government securi-

ties in the System Account carrying the gold clause and thcse not carrying the

gold clause:

(000 Omitted)

Classificationof Securities

qithGold Clause

WithoutGold Clause Tbtals

Treasury Bills $ 0 ,;501,456 $ 501,456tt Notes 693,935 708,964 1,402,799vt Bonds 0 124,000 124,000Liberty Loan Bonds 194 894 0 194,994

Totals $898,829 ?1,334,320 A,223,149

Attached to this report are the following exhibits:

"A" - Statement showing the maturity distribution of governmentsecurities in the L:ystem Special Investment J,ccount at theend of each month 1932, 1933, 1934, January and February 1,1935.

:1Jtatement showing the classification of issues held inthe System Account on January 30, 1935, and the percent-age of each issue held in the Account as compared withthe amount of the respective issue outstanding.


•Oct,

•3

- Statement showing (1) participation by Federal ReserveBanks in the System Special Investment Account and (2)total holdings of government securities by FederalReserve Banks January 30, 1935, and the amount of (1)and (2) over or short of pro ruta share based on ratioof each bunk's expenses, dividends and charge-offs for1934 to the total for the System,

• - Chart showing weekly average earning rate on holdings ofUnited States Government securities in System SpecialInvestment Account and average yield on outstandingUnited States Treasury bonds and Treasury notes, 1934,and 1935 to February 2.

• - Chart showing average hourly sale prices on New York StockExchange of 3 and 3 1/8 per cent United States Treasurybonds, January 7 to February 2, 1935.

- Chart showing daily average closing prices of United StatesTreasury notes carrying the gold clause and Treasury noteswithout the gold clause, and daily change in spread betweenaverage prices of United States Treasury notes carrying thegold clause and Treasury notes without the gold clause,J%nuary 2 to February 2, 1935.


• • EXHIBIT "A"

MATURITY DISTRIBUTION OF HOLDINGS IN SYSTEM ACCOUNT

END OF EACH MONTH - 1932-33-34-35

(In millions of dollars)

1932

WithinSix

Monthsar-cent

OneYear

Per-cent

Jan. $165 29 $ 355 63

Feb. 191 32 375 64Mar. 299 44 475 69Apr. 583 57 778 76May 716 51 1,058 75June 744 48 1,106 71July 733 45 1,098 67Aug. 622 38 1,029 63Sept. 606 37 998 61Oct. 651 40 1,051 64Nov. 765 47 1,046 64Dec. 779 48 1,021 62

1933

Jan. 644 41 903 58Feb. 577 36 856 53

Mar. 709 44 856 53Apr. 570 35 725 45gay 543 32 823 49June 656 37 879 49July 659 36 903 50Aug. 621 32 1,025 53Sept. 706 34 1,102 53Oct. 860* 39 1,257 57Nov. 845* 43 1,235 56Dec. 887* 40 1,216 55

1934

Jan. 887* 40 1,216 55Feb. 987* 44 1,190 54Mar. 799* 36 1,034 47Apr. 730* 33 1.008 45

May 717* 32 991 44June 765* 34 972 44July 732* 33 939 42Aug. 705* 32 1,018 46Sept. 654 29 868 39Oct. 749* 34 964 43Nov. 752* 34 968 43Dec. 794* 36 953 43

1935Jan. 23 794* 36 953 43" 30 790* 35 950 43Feo. 1 876* 39 950 43

1

7ithinTwoYears

Percen

636469767975717371757573

$ 355375475779

1,1151,1731,1671,1941,1701,2291,2271,203

1,1071,0901,090958962

1,1171,1431,1911,2781,4431,4351,426

1,4261,4151,2871,47610'751,3541,3211,3651,2581,3421,3491,405

1,3991,3941,394

716767595762636262666564

646458676661596156606063

636262

3-5YearsInc.

Percen

Call-ableBonds

Per-cent

$ $212 37212 36212 31239 24290 21

64 322 21132 336 21110 6 336 21134 336 2175 4 336 2177 4 336 21101 6 336 21

116 7 336 22203 12 336 21203 12 33:.J 21335 20 336 21384 23 336 20335 19 336 19341 19 336 18394 21 336 17452 22 336 16498** 23 252 11511** 23 252 11520** 24 252 11

520** 24 252 11531** 24 252 11659** 30 252 11488** 21 195 9489** 22 195 9550** 24 195 9583** 26 195 9539** 24 195 9646** 29 195 9647** 29 110 5640** 29 110 5584** 26 110 5

590** 26 ' 110595** 27 110 5595** 27 I 110 5

OtherBonds

$

•••

0.11

Abolo

Pc;cen

OW.

•••

•••

.11

ONO

25 125 1

25 125 125 164 364 3124 6124 6124 6124 6124 6124 6124 6

124 6124 6124 6

Totals

$ 567587687

1,0181,4051,5591,6351,6401,6401,6401,6401,640

1,5591,6291,6291,6291,6821,7881,8201,9212,0662,1932,223

2,223

2,2232,2232,2232,2232,2232,23

2,2232,2232,2232,2232,2232,223

2,2232,2232,223

*Includes Fourth Liberties "called"**Does not include Fourth Liberties "uncalled" maturing October 1938.


•Exhibit "B"

41,CLASSIFICATION OF ISSUEIPELD IN THE SYSTEM ACCOUNT ON JANUARY 30, 935 AND THE PERC:-NTAGEOF EACH ISSUE IN THE ACCOUNT AS COMPARED WITH THE AMOUNT OF THE RESPECTIVE ISSUE OUTSTANDING

H

It

6,13,20,27,6,13,20,27,5,10,17,24,

29,

Mar. 15,June 15,Aug. 1,Dec. 1E,Apr. 15,June 1E,Aug. 1,Sept. 15,Dec. 1E,Feb. 15,Apr. 1E,Ser)t. 1E,Feb. 1,Mar. 1E,June 15,Sept. 15,June 15,

LO,ifi AND TREALUItY BONDS3 1/2% 1st L/t Fds of 1932-47

4 1/4% 4th4 1/4!, 4th3 1/45 Treas.1/47:

3 %

tt

11

called 4/15/35of 1935-38

Bonds of 1941" " 1943-45• " 1944-46• " 1946-48

(000 Omitted)Pystem Amount Re-Account speetive Issue

Holdings Outstanding1935193519351935193519351935193519351955195519351955193519351935193519351955193519351335193519351935

TOTALS

19551935193519351936193619361936193619371937193719381938193819381939

TOTAL3

(g)

(g)

(g)

(E)

(g)(g)(g)

(g)(g)(g)(E)

TOTALS

GRANE TOTALS

Percentage ofIssues Held toAmount Outstanding

$ 21,555

5,19,26,3,10,17,24,31,

$ 75,327 28.59%17,932 75,320 23.81%16,650 75,090 22.17%19,040 75,065 25.56%22,650 (a) 75,290 8%30.0

Ii17,880 75,365 23.72%24,800 75,041 33.05%27,700 75,023 36.92%13,250 75,038 17.66%14,532 75,360 19.28%20,240 (b) 75,248 26.90%18,703 75,102 24.90%22,250 75,015 29.66%19,440 75,075 25.89%24,287 75,045 32.36%16,875 73,168 22.45%20,700 75,287 27.49%21,203 75,139 50.88%19,230 75,020 '25.63%20,000 75,500 26.56%27,599 75,150 56.46%18,750 75,185 24.9423,200 75,079 30.90%21,200 75,129 28,22%10 010 _76.106, 13.I3%501,456 4 1,878,967

74,350 528,102 14.08%130,395 416,603 31.30%85,723 353,865 24.22%73,621 418,291 17.60%

157,385 558,19 28.16%50,000 686,673 7.28%79,042 364,138 21.71%58,967 514,066 11.47%99,368 3E7,921 27.76%65,685 428,750 15.52%84,175 502,362 16.76%84,750 817,483 10.37%58,820 276,680 - 21.26%27,099 455,175 21.33%53,500 618,057 8.66%80,431 596,405 13.49%69,436 1.294j0c9

1,402,799 t 9,187,370 15.27%

25,025 4 1,398,228 1.7929,000 555,982 5.41%84,668 1,870,00056,201 1,245,578 4.51%20,000 854,47425,060 1,4C0,570 1,78%39,000 1,518,858 2.57%40 OCO 824 508 _A.85%318,894 4 9,62b,198 3.31%

2,223,149 i;20,694,555 10.74%

Total of all issues of TreaJury Bills, Notes, Liberty Loan andTreasury Bonds outstandinE unmatured ,- 26,472,526

Percentat,c held in System Account 8.40%

(a) inr7ludes V2,000,000 purchased temporarily(b) " 1,990,C00(g) contains gold clause


•

(1) PAPTICIPATION BY .hEDERAL RESERVE BANKS IF THE SYSTEM SPECIAL INVESTMENT ACCOUNTGOVERMENT SECURITIES BY FEDERAL RESERVE BANKS JANUARY 30, 1935 AND THE AMOUNT OF (1)RATA ST-TARE BASED ON RATIO OF EACH BANK'S EXPENSES, DIVIDENDS AND CHARGE-OFFS FOR 1934

(000 Omitted)

Participations

FXHIBIT "CAND (2) TOTAL HOLDINGS OFAND (2) OVER OR SHORT OF PROTO TI4E TOTAL FOR THE SYSTEM

(+) Over or Total holdinvsRatio of Patio of (-) Shortof (+) Over or

Participa- Holdings Expenses, Pro Rata Total holdings Ratio (-) Shorttions in in Dividends & Share Based (Portfolio and of of pro rataSystem System Charge-offs on Ratios Participation Total Share based onAccount Account Year 1934 in Col. C in System Account) Holdings Patios in Col. C

(A) (B) (C) (D) (E) (F) (G)BOSTON $ 156,982 7.06% 6 3/4% 6,919+ $ 157,671 6.50% $

6,216-

YEW YORK 655,818 29.50% 28 % 33,336+ 776,115 31.97% 96,285+

PHILADELPHIA 163,734 7.37% 9 e/0 36,349- 167,120 6.88% 51,397-

CLEVELAND 213,025 9.5% 9 3/4% 3,732- 213,024 8.77% 23,702-

RICHMOND 103,562 4.66% 5 1/4% 13,153- 10a',562 4.27% 23,906-

ATILNTA 94,209 4.24% 4 % 5,283+ 94,228 3.88% 2,891-

CHICAGO 365,601 16.44% 11 1/2% 109,939+ 428,343 17.64% 149,127+

ST. LOUIS 92,700 4.17% 4 3/4% 12,900- 93,200 3.84% 22,128-

MINNEAPOLIS 58,054 2.61% 3 3/4% 25,314- 65,154 2.68% 25,895-

*ISSAS CITY 91,659 4.12% 5 1/4% 25,056- 91,741 3.78% 35,727-

DAIIAS 61,475 2.77% 3 3/4% 21,893- 71,475 2.94% 19,574-

SAN TRANCIc-00 166,330 7.48% 8 1/40 17,080- 166,331 6.85% 33,976-

TOTAIS $2,223,149 100 % 100 % $155,477 Adj. $2,427,964 100 % $245,412 Adj.

NOTE: Charge-offs do not include reserves for Iossible losses,Self Insurance Reserve or abnormal real estate depreciation.

•Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

YIELDPER CENT4.0

3.5

3.0

2.

2.

1.

1.

• •

Exhibit "D"

Yeaoral Reserve Bansof Eug York

Reports DepartmentF.6 z, 1936.

28 2 6

U.S.TT

REASURY BONDS

11ii t 4

1/

W

4

11%1 SYSTEM SPECIAL

INVESTMENT ACCOUNT

'•.%

• . ‘\

nc„..„........„i11

_ \• %.

...‘ ....el

,./i

i\•‘.."‘•

S.,U.S.T REAS

(1- 5 YEARURYMATURITY)

NOTES16,..

J J1934

A S OND JF1935

Averge Laming Rate on Holdinds of U. 6. aovernment Securities

in System Special Investment Account and Aver,ge Yield on Outstanding

U. S. Tresury 3onds anu Treasury Notes


Tr. 11-.L 7

•

PRICE AVERAGE104

103

102

10

Exhibit "E"

•

if tit:. Yo:•

'ttep,..,1•to

-1 -1-

GOLD

,.. ...,

GOLD

-7— • MINI •

••

i%% ......3%

3% TREASURYWITH

.. „.•.....TREASURYWITHOUT

'BONDSCLAUSE

1951-55• 4/0",••

....••1

,......,,,„,„•

•

•

/.%%*,,•••1"•••/

...k•.•

N,

•,..•

/%....0%,

•...,te.„".....

BONDSCLAUSE

1946-48

l_L11 11111liji 1111 1111 1111 1111 11111111 1111 1111 1 (111 11_11 11111111 1111 1111 1111_1_1_11_1111 1111

105

104

102

•••°..

3 1/8% TREASURY BONDS 19 4 6-4 9WITH GOLD CLAUSE

se.

•1"'•,..„.• •

3 1/8% TREASURY BONDS 1949-52WITHOUT GOLD CLAUSE

• • 401.4. dh..

I•

*-4Tito•

•• I•••••• •••••

°%../"•tN..

r-t‘4 • •

t

4=Ni.

(Dotted iline indicates no sales)i u_ lilt t "IA I Itill_LU I I I u_Lill 11 11_1_ _LL LI 1 111 I LIA_ LLIA_LL1 I 11111 LL1 L IL

Hour of 123+s12.143 12345 11345 2345 121 234:1 13451 254S 12345

8 9 10 11 12 14

11_11

I23451212345 1 2345 123451 2345 12345 121 2345 12345123451234-51 2.345 1 1 2?

15 1c: 17 le 19 21 22 23 24 25 26 28 29 30 31 1 2 4

1

Janunry February

;.vev,7e ior1i L,'A.e Prices on York'..tock r..,;:clianco: of i. anLi 1,/c- i)er cult Tre fury i,onds


RICE AVERAGE

104

102

101

Exhibit "F"

• TREASURY NOTE ISSUESWITH GoLD CLAUSE

Rezervo Buhl.

of NG, YrJrkReports Department

JAN *4 , 193y.

29/7

•••• Imn• gm. tam.

TREASURY NOTE SSUESWITHOUT GOLD CLAUSE

qms•

MEW

am. ••••

2 3 4 5 7 8 9 10 11 12 44 15 16 17 18 19 21 22 23 24 25 26 28 29 30 31 1 2 4

JANUARY FEB

Daily Average Closing Prices of U. 5. Treasury Ik)tes Carrying Gold

Clcuse and Treasury liotes iithout Gold Clause

32 NDS OF A POINT+15

+40

+5

0

5

•

15 1-73 4 5 8 2 10 11 12 14 16 18 19 21 22 23 24 25 26 28 29 30 31 2 AJANUARY

Daily Change in Spread Betweun Average Prices of U. S. Treasury NotecCarrying Gold oldClause and Tre:Isury Notes 6ithout G Clause

FEB


4• -12A, tli•

February 4, 1935.

PRELIMINARY MIORANIXJM ON MONEY MARKET AND CREDIT CONDITIONSFOR THE FELEliAL OPEN M&RKET COMMITTEE,

FaitiUkRY 5, 1935.

Since the September meeting of the Committee, total reserves of all

member banks have increased approximately $600,000,000 further to a new high

level which, as the diagram at the end of this memorandum indicates, is nearly

double the average level in 1929. Despite a substantial increase in reserve

requirements during this period, excess reserves have increased approximately

$500,000,000, and for all member banks are now around $2,200,000,000. Of this

amount, at least $650,000,000 is in New York City, reflecting in part deposits of

idle funds of banks in various parts of .the country with their New York City cor-

respondents. In addition to large New Xork balances, member banks in other parts

of the country now hold reserves which on the average are double their reserve

requirements.

The principal factor in the increase in excess reserves for member banks

in general has been the further large increase in the monetary gold stock of the

United States, due to the heavy gold import movements of November, December, and

January. The increase in the gold stock since the middle of last September has

been more than ..i400,000,000, and during the past year has amounted to aoproximately

$1,500,000,000, exclusive of the incrpase due to revaluation of pevious holdings

of monetary gold. In addition there has been an increase of more than ;100,000,000

in the amount of silver currency outstanding, and substantial net disbursements by

the Treasury of other funds.

The continued increase in excess bank reserves has been reflected to

some extent in a further decline in short term money rates to new low levels,

but even more in a further reduction in yields on long term securities, especially

those of the highest grade. Changes since last September and during the past

year in short term money rates and bond yields are shown in the following table:


2

Tan. 31,1934

Sept. 29,1934

Tan. 31,1935

Stock Exchange call loans 1 1 1

Open market commercial paper 1 1/4-1 1/2 3/4-1 3/4

90 day acceptances 1/2 3/16 1/8

Direct commercial loans (New York City average) 2.46 2.08 1.75

Treasury securitiesBills (average rate on latest sale)

91 day 1.72 •••

182 day 0.29 0.14Certificates or notes maturing in 11 months 1.67 0.27 no yieldLong term bonds (average yield) 3.35 3.18 2.67

Other bondsMunicipals (average yield on 15 high grade) 4.59 3.81 3.43Corporation bondsAaa (average yield on 30 bonds) 4.25 3.96 3.76Baa ( " 30 " ) 6.47 6.48 5699

The rapid accumulation of excess reserves in member banks has tended to

obscure the fact that bank funds have been employed in very large volume. Reserve

requirements of all member banks have increased approximately cl30,000,000 since

last September and at least '500,000,000 since the middle of 1933, reflecting the

most rapid expansion of bank deposits since 1924. In the principal New York City

banks, net demand deposits are now higher than at any previous time with the ex-

ception of one week at the time of the break in the security markets in the autumn

of 1929, and for reporting member banks in other principal cities, net demand de-

posits now are probably close to the highest levels ever reached. In the smaller

localities deposits remain substantially below the levels of 1930 and a few years

preceding, reflecting a decrease in the number of banks through bank failures.

The whole group classified as "country" banks shows, however, a very large in-

crease in deposits since the middle of 1933.

Part of the increase in deposits has been due to the same factor as

the increase in bank reserves, namely the large increase in gold stock, but a

larger Dart has been due to credit expansion. Thus far there has not been much


. , 4113

evidence of an expansion in ordinary commercial loans, except for a substantial

seasonal increase last autumn, but this is in keeping with the developments follow-

ing other periods of depression, when a rise in commercial loans has usually lagged

considerably behind the upturn in business. Liquidation of security loans has

proceeded further, accompanying erratic fluctuations in the market for the more

speculative securities.

The great expansion thus far has been in Government security holdings.

The increase in holdings of such securities, including Government guaranteed

securities, during the past few years is reviewed in the following table:

U. S. Government Security Holdings of Member Banks

Amount in millions of dollars Per cent of total loans & investrents

New Other New OtherEnd of York Reserve "Country" All York Reserve "Country" All

•

Year City Cities banks Members City Cities banks Members

1930 1,239 1,726 1,159 4,125 14 13 9 12

1931 1,768 2,132 1,418 5,319 24 le 13 17

1932 2,603 2,462 1,474 6,540 35 23 I. 24

1933 2,362 3,209 1,683 7,254 34 32 21 29

1934 3,524 4,904 2,456 10,885 45 42 26 39

U. S. Government Security Holdings of Federal Reserve Banks

End ofYear

Amount inMcpuiojgIit.libirirs

Per cent of totalloans & investments

1930 729 53.9

1931 817 411.8

1932 1,F55 87.2

1933 2,437 91.3

1934 2,430 98.9

As this table indicates, the Government security holdings of member banks

in New York City and in other Reserve cities including Chicago have nearly tripled,


4

and in "country" banks Government security holdings have more than doubled, during

the past four years. For all member banks the Government security holdings have

increased from 12 per cent of total loans and investments to 39 per cent.

Comparable data on the Government security holdings of non-member banks

are not available, but it is clear that their participation in financing the nation-

al debt is nothing like proportionate to the participation of member banks. Mutual

savings bunks in New York State, for instance, had about 8 per cent of their funds

invested in Government securities on June 30, 1934, as compared with more than 33

per cent for all member banks on that date, and non-member banks that are insured

in the Federal Deposit Insurance Corporation had less than 15 per cent of their

funds in Government securities on the same date.

Forty-nine of the principal life insurance companies increased their

holdings of Government securities from $421,000,000 at the end of 1932 to

$1,468,000,000 at the end of 1934. Such holdings increased from about 2 per cent

of :#*.tr total assets of these companies to somewhat over 7 per cent. Despite this

large increase, however, their holdings of Government securities remain small

relative to those of member banks. Other holders of Government securities evidently

have not increased their holdings in anything like the same proportion as have

member banks and life insurance companies.

Percentage of

End ofYear

InterestBearingGov't Debt

U. S. SecuritiesHeld by Memberand F.R.Banks*

U. S. 'SecuritiesHeld by Others

Gov't Debt Held By-Member andF. R. Banks Others

(In millions of dollars)

1930 15,774 4,854 10,920 31 69

1931 17,528 6,136 11,392 35 65

1932 20,448 8,395 12,053 41 59

1933 23,450 9,691 13,759 41 59

1934 27,944 12,326 15,618 44 56

*Exclusive of Government guaranteed bonds.


••

5

In England the holdings of Government securities by the London clearing

banks at the end of 1934 amounted to 11 per cent of the national debt, and their

holdings together with those of the Bank of England accounted for only about

15 1/2 per cent of the national debt, as compared with 44 per cent for member and

Federal Reserve Banks in the United States.

It seams clear that the great accumulation of excess reserves in member

banks has been a very large factor, if not the principal factor, in the strong

market for Government securities which has been reflected in the reduction in

yields on long term Government bonds to the lowest levels in many years, despite

an increase of approximately $4,500,000,000 in the gross debt of the Government

during the past year.

It should be noted at the same time, however, th4leven if there were

no further increase in excess bank reserves, the basis has been provided for a

tremendous expansion in bank credit and bank deposits far in excess of any amounts

that are likely to be needed to finance business recovery. Assuming the same

ratio to total deposits to total reserves as at present, the present volume of

reserves held by the banks would support an expansion of bank credit which would9

raise deposits to something like $35"000,000,000, as compared with an average

of approximately $55,000,000,000 of deposits in 1929 and about $42,000,000,000

at present, exclusive of inter—bank deposits.


I

BILLIONSF DOLLARS

00 •Bano.„ ...,...k

AdepLrtment1931'4.

..)

4

EXCESSRESERVES

2

1

0

BALANCES /RESERVE

'

RESERVE REQUIREMENTS

111 11. 1 111 _111 111 111 Iii1929 1930 1931 1932 1933 1934 1935

Reserve Balances, Reserve Requirements, and Excess Reserves of All Member Banks


rOffice Correspontence

FEDERAL RESERVEEOARD

Date February 8, 1935 •

J-t-i-- niet,•orrn Au.. 1 34 ' •- .. •

To Mr. Hamlin Subject:_ Inflation as a result of the

From Mr. Goldenweiser I elimination ofallateral requirements

•PO 16-852

It is, of course, not true that the proposed elimination of collat-

eral requirements behind Federal Reserve notes opens the field for infla-

tion at the hands of the Federal Reserve Board. If an inflationary move-

ment should develop in this country Federal Reserve banks, as you have

stated, have power under existing law to issue an almost un;imited amount

of 'Federal Reserve bank notes. Even leaving out of consideration the

Federal Reserve bank notes, the potential volume of Federal Reserve notes

on existing gold reserves would amount to some *20,000,000,000, a much

larger volume than there is any expectation of being needed in the predic-

table future.

Inflationary movements in this country, furthermore, are more likely

to originate in credit than in currency.

Attached is another memorandum which has been prepared regarding the

purpose of the change in collateral requirements and answering some of the

criticisms that have been made of it.

VOLUME 259PAGE 63


Foriapq:24 134

Office Correspontence Goldenweiser

From_ Vvoodlief Thomas

C\cf:T.

FEDERAL RESERVELIOARD

Subject:

41111Date February. 8, 1933

Elimination of collateral

requirements against Federal Reserve notes

Elimination of collateral requirements for issuance of Federal Reserve

notes serves the following major purposes:

1. Eliminates much administrative aetail which serves no useful pur-

pose. Process by which collateral was segregated and tarned over by the

Federal Reserve bank to the Federal Reserve agent and the agent issued

notes to the Federal Reserve bank has been merely a formality, involving

unnecessary expense and work.

2. Does away with arbitrary distinction between assets which Federal

Reserve banks may accept in exchange for member bank reserve balances and

those on which they may issue currency. If a member bank may use its bal-

ance to obtain notes, the Reserve bank should be able to use the asset

which created the balance as backing for the notes.

3. Avoids possibility of another crisis such as arose in 1931 and

early in 1932, when because of technical orovisions of the law, Federal

Reserve banks were limited in providing relief during a run on banks for

currency and on the country's gold stock.

This change in the law has been misunderstood, aao incorrect state-

ments have been made regarding its purpose and-effect.

1. It does not abolish gold reserve requirements against Federal

Reserve notes. The amendment specifically states that every Federal Re-

serve bank must maintain "reserves in certificates (DI not leas than

40 oer centum against its Federal Reserve notes in actual circulation."


A• 414 - •

ur,

r. Goldenweiser, - #2 Iebruary 8, 1935

2. It does not give Federal Reserve banks power to issue additional

amounts of money. Federal Reserve banks may not now and may not under the

proposed amendments issue notes except in response to the demands of mem-

ber banks for currency, and in exchange for acceptable assets. Under the

present law, with the emergency amendments, and with the existing supply

• of gold, more notes can now be issued than are likely to be demanded, so

that the change of collateral requirements does *opt Net, remove an

effective limitation on currency issues.

3. It has no relation to the elasticity of Federal Reserve note cir-

culation. Federal Reserve notes will, unaer the nroeosed amendment as in

the oat, tient into and out of circulation in response to the needs of

business. Then currency is needed by the public for day-to-day cash 'pur-

poses or till money, it is obtained from banks by drawing down de9osits

or giving acceptable assets, and when currency is no longer needed it is

redeposited in the banks. Me mOr banks obtain currency from Federal Re-

serve banks by a s s and return it when they have more than

necessary to meet day-to uirements.

Note-issuing banks in most other countries issue notes as 11E:11 as

give deposit credit against unsegregated assets, with certain gold re-

serve reduirements; few require specifically that collateral of a

special sort be segregated against notes.


Februz,ry 13, 1935.

Honorable Carter Glass,United States Senate,Washington, D. C.

My dear senator Glass:

I have your memorandum in regard to Carneal, Johnston

& Wright, of Iticnmond, and in accordance Ath your request return

here:dth for your files their letter of February 8.

I have discussed the matter with Dr. Miller ;,ho is the

Chairmen of the Board's Committee on the new building and Alile

of course we both recall that you asked us to consider this firm

and we assured you that its application ivould be considered, we

have no recollection of promisin that it would be included among

the competito-s. This wr:L before the final determination of the

Boaru to ask Mr. Meeks and the Chairman of the Fine Arts Commis-

sion to advise us LLE to the best names for the competition. In

this connection I may say that, while the qualifications of all

the applicants have been cc:.refully considered, those of Carneal,

Johnston & right were given special attention and it appeared

that their qualifications are primErily along engineering lines

rather than those of architectural design. It was noted particu-

larly that thwvoluntarily suggested that their capacities be

utilized in association ith some other firm of architects that

had outstanding experience in aesthetic design and you may recall

VOLUME 259PAGE 69


Honorable Carter Glass - (2)

that ouch a suggestion "as included in their letter of October Ll

which you brought to the attention of Dr. Miller. EimilLr sug-

gestion ere also received from other applicants.

A very large number of applications were filed with us

and numerous people wrote us letters and called upon us for the

purpose of urging the qualifications of particulnr applicants.

Aft •r considerin,i; the situation at length we felt that we were

not in a position to pass upon the relative merits of all the

applicants and we submitted all the applications to our profes-

sional adviser, Mr. Everett V. Meeks, L;etal of the school of the

Fine Arts in Yale University. At the Bo4,rdls su4estion he con-

sulted with Mr. Charles Moore, Chairman of the Fine :Jets Commis-

sion, as to the best procedure for us to follow. They recommended

that we invite a limited number of the best qualified architectt

with rational reputations to participate in the competition and

pointed out t number of practical reasons in support of their

recomiendecion. As the members of the Board did not feel that

they were qualified to undertake to choose the architects ciho

should be included in the list, Mr. Moore W4; z,ticed to give the

Board the benefit of his judgment as to the architects who should

be invited to participate. In response to this request, Mr. Moore

submitted a list and the architects to ,hom the Board sent its

program and invitation to compete are the first nine on that list.


Honorable Carter Glass - (3)

You may not be aware that the conuitions under which

the Board acquired the site on Constitution Avenue, among other

things, required approval of the National Capital Park and

Planning Commission and the Fine Arts Commission in respect to

-,ert/...in features of the building project, including height and

exterior design, This was an added reason for king for a

recommendation from Mr. Moore in regard to the selection of a

list of architects for the approval of the Federal Reserve

Board.

The whole matter has consumed n great deal of time

and thought on the part of the hoard and the course of procedure

adopted was the one which we felt on the whole would be the most

practical solution of the problem.

With kindest pommel regards,

Sincerely yours,

Inclosure.


ainiteb 'tate matt

MEMORANDUMfor iar. Hamli

I understood that I had a promise

that this concern would be included in tLe

group to submit desi7ns for the new Federal

Reserve Board building. ;jter reading this

letter, be :;00(- enouh to return it for my

files, with such explanation, if any, as may

be desired.

11111 etL.44


(Letterhead or)

CAaNEAL, JOHNSTON & 'OUGHT

Richmond, Va.

Honorable Carter Glass,Eenste Office Building,Warhington, D. C.

?ebruary 8th, 1955

Ae: Federal Reserve Bank

Dear Eenator:-

We noted with a great deal of interest in the Sew York

Times of last Tuesday, February 5th, that the proposed Federal-Re-

serve Bank is taking shape, and that the Bank hrs employed Mr.

Everett V. Meeks, Dean of the School of Fine Arts of Idle, to pre-

pare a schedule of competition, and he haE been retaineJ as pro-

fessional adviser.

This schedule has been approved by the Fine i&rts Com-

mission and the National Capital Park & Planning Commission, also

the American Institute of Architects.

A jury of award hbs beeg selected composed of three

architects, Mr. John W. Cross of mew York City, Mr. William

Emerson of Boston, and Mr. John Mead Howells of New York City,

and to other members who are Mr. Frederic A. Delano, Chairman

of the National Capital Park & Elanning Commission, and Dr.

Miller. This group has invited the following architects to sub-

mit designs:

Arthur 'Drown, Jr. - ban imnciscoCoolidge, Shepley, Bulfinch & Abbott, BostonPaul Philippe Cret, PhiladelphiaDelano &Aldrich - New York CityHolabird & Root - ChicagoJohn Russell Pope - Nev, York CityJames Gamble Rogers - New York City'Eerton Swartwout - New York CityYork & Sawyer - New York City

It is interesting to note that the procedure followed

in 244shington in the past is still continued in that the Invited

competitors are five from Nev; York City, one from Philadelphia,

one from Boston, one from Chicakl'o and one from San irancisco,

and that property bounded by the Potomac on the north and the

Mississippi on the west is not recognized nob, or has it ever

been in the past.


;-:

-

There surely must be some architects in this ter-71tory

who are Tialified and have demonatrated that they are, but the

pitiful part is that they are not recognized in Washington.

There are certainly eminent doctors, lawyere, engineers and in—

dustrialiste in this section, and this cection eertc.inly uoes

6row some few architect.

Please believe me .hen I say that our entire official

family, as well as our fello arcLitectt, who happen to dwell in

thia 2orbiuuen territory, deeply appreciate your efforts, and

perhups if we keep on trying this section will certLihly sooner

or later break through.

Very sincerely yours,

(signei) L.


Falun No. 131 4.4Office CorresponuenceTo Mr. Wyatt

From_ Mr. Hamlin

FEDERAL RESERVEWARD

Subject :_

Date_ an. 14_, 1935.

Dear Mr. Wyatt:

Will you kindly let me know the first law und,r the

present administration which ordered holders of gold to turn

it in to the United States? Please also give me a chronological

sta-vement of the various acts relating to gold, beginning with

the Emergency Act of March 24, 1933.

Very truly yours,

VOLUME 259PAGE 73

RECSIVED

OFFICE: or NER.Lo'jNSE1

JAN 1./..k 1,934 • 1_•1

LUMbL It


Form No. 131

Office CorresponAnceFEDERAL RESERVE

BOARD

To Mr. 'gam"! in_ Subject:

From Mr . Chase

Date_January 15, 1935.

o 16-852

In connection with the first question asked in your memor-

andum of January 14, 1934, it appears that the Emergency Banking

Act of March 9, 1933, authorized :the President to regulate the

hoarding, export and earmarking of gold, and that, pursuant to the

authority thus given, he issued his Executive Order of April 5,

1933, requiring that, subject to certain exceptions, all gold be de-

livered to the Federal reserve banks or member banks.

In connection with the second question, there is attached

a list of Acts of Congress, Presidential Proclamations, etc., re-

lating to gold, since March 4, 1933, with a brief descriptive nota-

tion identifying each item. This list perhaps contains more than

you asked for, but the additional matter WAS incorporated for purpose

of reference.

List attached.

Respectfull

ii/er-Oaa-t-cy

G. Howland Chase,Assistant Counsel.


ACTS OF CONGRESS, PRESIDENTIAL PROCLAMATIONS,ETC., RELATING TO GOLD SINCE MARCH 4, 1933.

March 6, 1933. Presidential Proclamation No. 2039, prohibiting thewithdrawal, transfer, hoarding, etc. of gold during"banking holiday" until March 9.

March 9, 1933. E/ERGENCY BANKING ACT (48 Stat. 1; 12 U.S.C.A.sections 95a, 248), authorizing President duringemergency to regulate the export, hoarding, melting,or earmarking of gold or silver coin or bullion andamending section 11 of the Federal Reserve Act so asto authIrize the Secretary of the Treasury to re-quire the delivery of any or all gold coin, goldbullion or certificates to the Treasurer of the UnitedStates.

March 9, 1933. Presidential Proclamation No. 2040, extending Presi-dential Proclamation of March 6 until further order.

March 10, 1933. Executive Order No. 6073, providing that,until further

"7.-S lvf\A• order, no person shall export gold from the United

LA/ivAl 4.1 States and that no bank shall pay out gold except as

V-41 authorized by the Secretary of the Treasury.

April 5, 1933. Executive Order No. 61C2, expressly prohibiting thehoarding of gold and requiring all gold to be de-livered to the Federal reserve banks before May 1,1933, with certain stated exceptions.

April 20, 1933. Executive Order No. 6111, prohibiting the earmarkingof gold for foreign accounts and the export of gold,with certain restricted exceptions.

May 12, 1933. (ACT OF CONGRESS) (48 Stat. 51), Thomas Amendment,authorizing the President to fix the weight of thegold dollar and containing other provisions relatingto the currency.

June 5, 1933. PUBLIC RESOLUTION No. 10 (48 Stat. 113), prohibitingthe payment of contract obligations in gold, andamending the Aot of May 12, 1933 with respect todefinition of legal tender.

August 28, 1933. Executive Order No. 6260, regulating hoarding and ex-port of gold; requiring the filing of returns in con-nection with hoarding and export of gold, and forbid-ding possession of gold except under license.


•-2

August 29, 1933. Executive Order No. 6261, authorizing the Secretaryof the Treasury to receive on consignment for salegold recovered from natural deposits.

October 25, 1933. Executive Order No. 6359, authorizing mints and assayoffices to receive gold on consignment which has beenrecovered from natural deposits and authorizing theReconstruction Finance Corporation to acquire goldreceived on consignment by the mints or assay offices.

December 28, 1933.0rder of Secretary of Treasury, requiring delivery ofgold to Treasurer of United States.

December 30, 1933.Presidential Proclamation No. 2070, restoring re-sponsibility for nonmember banks to State authorities, andcontinuing prohibition on banks paying out gold.

January 12, 1934. Executive Order No. 6556, amending Executive OrderNo. 6260 with reference to power of Secretary ofTreasury to issue licenses authorizing the acquisitionand export of gold.

January 15, 1934. Executive Order No. 6558, authorizing the receipt ofgold on consignment by mints and assay offices.

January 15, 1934. Executive Order No. 6560, broadening restrictions uponexport of currency or silver coin and the export andearmarking of gold.

January 15, 1934. Supplemental order of Secretary of Treasury, requirirgdelivery of gold to Treasurer of United States.

January 30, 1934. GOLD RESERVE ACT OF 1934 (48 Stat. 337; 31 U.S.C.A.section 440), providing for the transfer of title togold to the United States and for the redemption ofFederal Reserve notes in lawful money instead of ingold, etc., and authorizing the Secretary of theTreasury by regulations to prescribe the conditionsunder which gold may be acquired, held, transported, etc.

January 31, 1934. Presidential Proclamation No. 2072, fixing weight ofgold dollar pursuant to provisions of Thomas Amendment.


For 'Ito 131

'Office CorrespontenceFEDERAL RESERVE

BOARD

To Subject:.

From _Mr. Chase

Date January 16, 1935.

The first question in your memorandum of January 15, 1935

is whether "any order was issued requiring hoarders of gold to turn

over the gold to the Treasury prior to the Executive Order of

April 5, 1933. As I remember, the public generally supposed that'the

Act of 1:_arch 9, 1933, and the Presidential Proclamation thereunder,

ordered hoarders to turn in their gold, whereas such was not the

fact, although large amounts of gold were turned in under this mis-

taken a-pprehension, and the first hoarding order was that issued on

April 5, 1933. Kindly let MB know if I am correct as to this."

I believe that you are entirely correct as to this. 14- con-

clusion is based not only upon an examination of the pertinent statutes

and Executive Orders, but also upon the statement of an attorney who

was working on these matters in the Treasury during that period.

You also ask whether the Executive Order of August 28, 1933

required anything more from "hoarders" of gold than what was required

by the Executive Order of April 5, 1033.

Althou,sh both Orders dealt with the hoarding of gold, they

are materially different in.detail, and the Order of April 5, 1933

was "revoked" by the Order of August 28, 1933.

The Order of April 5, 1933 required all persons who should

then, or thereafter, own or possess any gold, gold bullion or gold

certificates (hereinafter referred to simply as "gold") to deliver it

VOLUME 259PAGE 75


Haalin -- 2

to a Federal reserve bank or to a member bank. The Order exempted

(a) gold required for industry, profession or art, (b) gold in an amount

not exceeding 4100 for any one person, and numismatic coins, (c) gold

earmarked for a foreign government, a foreign central bank, or the

B.I.S., and (d) gold licensed by the Secretary of the Treasury for

other proper transactions, including re-export. The Order also re-

quired member banks to deliver gold to the Federal reserve banks.

The Order of August 28, 1933, in general, forbade all persons,

except Federal reserve banks, to hold or acquire gold, except under

license from the Secretary of the Treasury. It required the filing

of returns with the Secretary of the Treasury relative to all gold

held, except with respect to (a) gold in an amount less than 1.00

belonging to any one person, (b) numismatic coins, (c) gold held under

license from the Secretary of the Treasury, and (d) gold owned by the

Federal reserve banks. No person other than a Federal reserve bank

was permitted to acquire gold, except under license, and the Secretary

of the Treasury was authorized to issue such licenses authorizing the

acquisition of gold (a) required for a lawful transaction for which

other currency could not be used, if the applicant had surrendered an

equal amount of gold since 'larch 9, 1933, (b) by a person requiring

it, if such person held an export license, and (c) for industry, pro-

fession or art. No person was permitted to hold gold, except gold as


•

Mr. Hamlin -- 3

to which no return was required (as stated above), and except under

license issued by the Secretary of the Treasury. The Secretary of

the Treasury was authorized to issue such licenses authorizing the

holding of gold (a) for necessary and lawful transactions for which

other currency could not be used, (b) for industry, profession or

art, (c) if earmarked before April 20, 1933 for a foreign government,

foreign central bank, or the B.I.S., and (d) gold imported for re-

export. The Order also contained provisions dealing with export and

earmarking, and with foreign exchange.

These Orders were printed in the Federal Reserve Bulletin

lot 1933 at pages 213 and 535 respectively.

Respectfully,

G. Rowland Chase,Assistant Counsel.


•

•INDUSTRIAL ADVANCES BY FEDERAL RESERVE BANKS -- SUMLIA.RY OF APPLICATIONS, APPROVALS, REJECTIONS AND CO:LIITIENTS, TO FEBRUARY 27, 1935

(Not for publication) (Amounts in thousands of dollars)

Federal

ReserveBank

By IndustrialAdvisory

Nur.beri, Amount

B-816

Applications received - net ApPiications- recomended I Applications appToved by Federal_evm....aaDkj Rejections of appli_cations_ .

1 By P.R. bank 1 for approval (with and Total I Finally By FederalReserve Bank

BostonNew YorkPhiladelphiaCleveland

ochmondlanta

ChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total

from Industrial without conditions) by lAdv. Committee* Ind. Adv. .Committee

/1.-Zber4 iAl.lount Number Amount

325 15,161630 44,392373 16,981466 13,077359 13,59338 9,960795 36,146243 8,442742 13,582271 7,784 258370 9,226 354633 16,917 533

D,D 205,581 5,194

294 11,980 107 6,995596 43,9991 209 20,709345 15,465 no 6,619434 11,335 125 • 5,043342 12,788 no 7,253367 9,031 133 3,424757 33,322 (15 7,991228 7,503 73 3,007686 12,564 194 4,643

7,272 54 3,3128,853 64 3,40312,610 136 4,166186,722' 1,432 76,575

FederalReserveBank

.s.:pplications under consideration

I

Conditionally Recommended by

awroved _ ylirsItt_pdtte 'f__221.12Pv.ed i Numbed Amount; Nunber I Amount' Number j Amount

Number ! Amount Number . Amount

63 5,367 61 5,327 2 llo 197 5,384 206 5,770

225 23,307 192 10,701 33 12,606 388 22,504

81 6,808 64 6,072 17 736 237 9,405

106 4,278 66 3,243 40 1,035 310 6,230

110 7,297 81 5,172 29 2,125 232 5,566

127 2,989 94 2,018 33 971 236 5,940

71 5,985 54 4,445 17 1,540 670 25,69670 2,980 59 2,590 11 390 155 4,496

162 3,4 496 s,057 55 89 2,363 73 1,092 511

49 3,071 37 2,437 12 634 209 4,201 ,209

-T . 3,103 66 2,046 12 1,057 271 5,577 276

12b 3,885 113 2,868 13 1,017 402 8,656 _407

1,268 72,525 976 49,282 292 23,-2-43 3,03 li1,764 -- ,85

353 17,651258 8,227328 7,056232 5,491239 5,742678 26,861158 4,523

8,9414,2015,7506,725

108,-9-38•=24i SCG"

Distribution of amounts finally approved by Federal Reserve bank

3y Industrial ) By FederalAdvisory Committee i Reserve bank

Number Ammult 1 Number Amount

BostonNew York

ladeltthiaeve land

RichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total

213326311719301552

1593

2,7821,178958

1,754770617

2,457939

1,182271240

4,096

Federal Reserve bank participations

Outstanding Advances In process of1 re- completion 1 duced, or ex- I institution

Advance -Commitments paid AdvancesCommitments ! pired (unused) 'participations ,..........__- -5,327 2,102 2,282 i43 " -- 5 655 1 o

10,701 1,499 5,449 131 1,143 1,436 930 1136,072 3,691 298 398 836 251 598

--1 3,243 1,291 1,322 33 3 __ 165 4295,172 3,087 627 208 941 2 102 205

1 300 2,018 1,087 731 142 7 10 41

8 476 4,445 1,346 453 76 1,610 552 405__ 2,590 497 1,437 63 -- 20 298 275

13 ...o6 ice, 2,353 1,838 30 214 72 16 193

-- 2,437 633 188 33 479 __ 349 755__ __ 2,046 1,406 __ 7 386 16o 47 40

__ 2,868 686 1,146 3 41 797 195

25 04718 3,0416 430

360 17,244

Total - •

71 5,259 49,282 19,163 13,963 1,451 5,518 7,3„11;1;0

-

Financing17ithdrawn, re- Financing institution

guarantees•••••••••• •••••••••• ••••••

2,91211_74163

395

754

3.570 3,197 14,955F DERAL RESERVE BOARDDIVISION OF BANK OPERATIONS

MARCH 5, 1935,aJ Less than $500. *Applications acted on by Industrial Advisory Committee adjusted for changes

and for withdrawals before approval or rejection by F.R.bank

VOLINE 259PAGE 117

in amount applied for

1


•

(Not for publication)

Federaly, Reserve4111- Bank

BostonNew YorkPhiladelphiaCleveland

RichmondAtlantaChicagoSt. Louis

MinneapolisKansas CityDallas

Ippn Francisco

CLASSIFICATION OF APPLICATIONS* INDUSTRIAL LOANS REJECTED BY FEDERAL RESERVE BANKS, TO FEBRUARY 27, 1935

(Amounts in thousands of dollars)

To,torapplkiwtionsrejcted

=No. ! Amount

206 5,770353 17,65258 8,22328 7,056

232 5239 5,7i2678 26,861158 4,523

511' 8,941209 4,201276 dik. 5,750407 1R! 8,725

I Not establish-ec1 industrialor commerciaenterDriNo. AmouL

3 3031 1,0157 2621 494

257145

1,927366

31 1,o137 820

21428 1,580

411111" IneligibleReasons for

Not for Otherwise ,Iworking ineligible 1 condition prospects

t-ciDei tal '0. tAmount No. 7 Amount , No. ! Amount No. ! Amounti ..4._._29 86515 65917 76460 1,762

39 1,04742 1,428146 8,21127 1,300

90 2,512141 3,48562 1,97630 1,025

1 15

2 53OW.

rejections !

1 Unsatisfactory Unsatiafactoryfinancial business

16034747146

7 53 1235 25 152 300 311

4•••••••••

33

97

87 37,d7

133 17238 175

B-816a

Unsatis-factory

management

No. ! Amount

3127,894

31423

4 62543 1,31018 2,3186 230

31 7966 1295 355

3,948 15 1,365 914,186 261 10,760 2121,806 109 3,258 52,830 128 3,749 20

3,291642

8,6871,484

596829

3,0632,547

Total, allDistricts 43,855 108,938

FEDERAL RESERVE BOARDDIVISION OF BANK OPERATIONS

MARCH 5, 1935.•

233 7,887 698 25,034 27 704 1,697 43,909

59 2,50824 67810 59335 1,481

105 1,71696 1,62232 1,8553 105

877 29,690

2 11

3

1

I

In-sufficient'security

No. iA;nount

175 3,256327 11,346145 3,628239 4,143

180 4,367204 4,699367 12,66995 1,622

240 2,43771 605224 3,285369 6,950

Rejectedfor otherreasons

Total,includingduplications

No. !Amount, Not--1- Amount; _____ 1._. . _12 ,651 404 10,442-- -- 1,193 45,86012 532 344 10,0983$ 451 652 13,852

1 5 428 12,15388 2,305 425 11,23275 4,058 997 38,76328 466 298 6,949

12 505 550 9,662113 2,561 501 10,0511 1 507 10,882

945 18,361335 6,105

I ,361 14,434 2,636 59,007 715 17,640 - ,24.4 198,305


CONFIDENTIALNot for publication

EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, FEBRUARY 1935

B-311

FederalReserveBank

Month of February1935 January - February 1935Earnings from - I Current expenses Current net

earnin;sCurrent net earnings

Dis-countedbills

Pur-chasedbills

I Indus- Ti. S. Commitmentstrial Govt. to make in-ad- securi- dustrial

vances ties advances

Othersources Total

Exclusiveof costofF. R.

currency

Total

Ratio

Total topaid-in

capital

Less accrueddividends andnet charges(current) toprofit and loss*

TotalRatioto

paid-incapital

oston $317 $107 $7,425 $215,511 $1,305 $1,042 $g25,707 $163,027 $168,500gent 9r c$57,207 Pe 6. ,685 7cent

$134 Per $26,218New York 7,137 576 5,736 1,114 ,693 4 ,308 4,766 1,137,216 601,248 652,324 484,892 10.6

.71,067,326 '11.1 467,458

Philadelphia 1,443 147 16,9±9 230,932 -- 1,359 250,880 186,651 195,216 55,664 4.8 114,849 4.7 -33,205Cleveland 698 135 5,484 290,194 1,303 5,808 303,622 233,873 239,125 64,497 6.4 157,707 7.4 8,124

Richmond 424 52 13,129 141,067 380 1,814 156,866 135,167 145,149 11,717 3,1 41,496 5.2 -4,748Atlanta p70 55 4,922 128,484 293 4,072 138,0s6 106,474 108.555 29,541 8.8 */,289 13.8 30,448Chicago 143 172 5,716 565,137 570 21,300 593,040 280,466 294,986 296,054 30.4 641,986 31.2 520,190St. Louis ' 39 6 2,058 144,001 1,294 4,874 152,272 113,308 122,145 30,127 9.7 54,991 8.4 16,242

Minneapolis -- 5 8,399 99,051 19 1,143 108,617 104,829 110,519 - 1,902 -- 16,813 3.3 -9,479Kansas City 149 38 2,300 125,320 1,622 15,736 145,165, 135,106 137a79 7,186 2.3 27,796 4.2 -12,669Dallas 69 37 5,838 109,108 -- 1,195 116,247 91,252 91,490 24,757 8.0 56,938 8.7 41,043San Francisco 76 99 3,098 226,586 1,378 17,011 246,248 215,208 215,857 32,391 3.9 78,655 4.5 -28,631

TOTALAlkbruary 1935 10,765 1,425 81,106 3,390,084 12,472 80,129 3,575,976 2,366,609 2,481,845 1,094,131 9.7W.ralauary 1935 18,905 1,544 74,355 3,743,198 13,267 102,917 3,954,186 2,409,070 2,557,783 1,396,403 11.2February 1934 164,213 35,070 -- 3,521,233 -- 99,191 3,819.70/ 2,280,728 2,425,564 1,394,143 12.5Jan.-Feb. 1935 29,670 2,976 155,459 7,133,281 25,739 183,035 7,530,16C4,775,679 5,039,627 2,490,533 10.5 2,490.533 10.5 1,017,991

1934 430,898 84,176 -- 7.380,540 __ 203.773 8.099.387 4,608,938 4,920.9103.178.477 13.5 3,178,477 13.5 1,684,265

FEDERAL RESER&BOARDDIVISION OF MNK OPERATIONS

MARCH 13, 1935.*Exclusive of profits of $263,781 on sales of United States Government securities held in Special Investment Account.

VOLU4E 259PAGE 135 I/


Form No. 131

Office CorresponitnceFEDERAL RESERVE

BOARD

To Mr. Hamlin Subject:

From Mr. GoIdenweiser

• Se'tDate March 16, 1935

In accordance with your request of yesterday, I looked up

the substitute that you oropused for Paragraph H of the Strong

Stabilization Bill in 1928. It reads- as follows:

"The Federal Reserve System shall use all the Dowers and

authority ndA- or hereafter possessed by it to maintain a stable

gold standard and shall furnish credit facilities commensurate

with the requirements of credit stability of agriculture, industry,

employment, and of the purchasing power of the dollar, so far as

such purposes can be accomplished by monetary and credit policy.

To this end the Federal Reserve System is authorized to enter into

relations Aith foreign central banks not inconsistent with the

purposes of this amendment."

VOLUME 259PAGE 144


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