Approval of the Federal Reserve Board

Approval of the Federal Reserve Board

McAdoo, W. G. (William Gibbs), 1863-1941

WWP18465

1914 September 21

An approval form for the creation of a gold fund.

Benjamin Strong Jr. Papers, New York Federal Reserve Bank

English

The President Clearing House Association, At the invitation of the Secretary of the TreasuryWilliam G. McAdoo and the Federal Reserve Board, a conference of delegates from clearing house associations was held at the Treasury Department in Washington on September 4 for the purpose of considering problems growing out of the extraordinary derangement of our foreign exchange markets following the outbreak of the European war. This conference, after a day’s deliberation, appointed a bankers’ committee charged with the duty of recommending to the board a plan for dealing with the situation. The committee so named submitted on September 4 its first report, which advised the creation of a gold fund of $150,000,000. This recommendation, owing to changes in the situation, was modified in a subsequent report, dated September 19, favoring the creation of a gold fund of $100,000,000 to be contributed by the banks and trust companies located in central reserve and reserve cities.
The board has carefully considered the committee’s report, and concurs in its conclusions and recommendations. The board is convinced of the necessity of an adequate plan of national cooperation to meet a situation which is of national dimensions, and it has no hesitation, therefore, in giving its approval to the plan proposed by the committee, and recommends your earnest cooperation.
The board shares the committee’s belief that the creation of a large gold fund at this juncture will have a far-reaching effect for good, and will prove an effective factor in restoring confidence, in bringing relief, in protecting and strengthening the country’s credit, and in facilitating the exportation of our products.
The board, therefore, recommends that your association appoint a committee to secure from the national banks and State banking institutions of your city subscriptions aggregating $_____________ to the proposed gold fund. The board regards this amount as the fair quota to be raised in your city, based upon the holdings of gold and gold certificates by the central reserve and reserve cities as recently ascertained. The allotments provide a fair margin above the total amount named. Any sums pledged in excess of $100,000,000 will be applied to a pro rata reduction of all subscriptions to the fund.
Forms of subscriptions and certified resolutions to be executed by participating institutions have prepared by the bankers’ committee and are forwarded herewith. This board recommends that the sums specified be pledged as promptly as possible, and that you send the pledges and resolutions, duly executed, to the secretary of the Federal Reserve Board at Washington, D. C., in order that they may be available for the committee not later than October 1.
For the terms and conditions upon which the subscriptions to the proposed gold fund are made your attention is particularly called to the report and plan signed by the bankers’ committee and handed to you herewith.

Governor Federal Reserve Board.

I am in accord with the views of the Federal Reserve Board and recommend the adoption by the banks of the proposed plan.

Secretary of the Treasury.

Letter

McAdoo, W. G. (William Gibbs), 1863-1941