23rd were. A meeting of the Federal Reserve Board was held in the office of the. Federal Reserve Board on Thursday, April 25, 1929 at 11:15 a.m.

Transcription

1 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Thursday, April 25, 1929 at 11:15 a.m. PRESENT: Vice Governor Platt Mr. Hamlin Mr. Miller James Mr. Cunningham Mr. Pole Noell, Asst. Secretary Air. McClelland, Asst. Secretary The 23rd were The 24th were minutes of the meeting of the Federal Reserve Board held on April read and approved. minutes of the meeting of the Federal Reserve Board held on April read and the Secretary was instructed to revise them along certain lines suggested. Telegram dated April 24th from the Governor of the Federal Reserve Bank I Bo ston, advising that the board of directors of the bank on that date voted to es tablish a rediscount rate of 6% on all classes of paper of all maturities effective the first business day following that on which approved by the Fed- Reserve Board; the telegram stating that no change was made in the bank's e isting schedule of buying rates. Yr. James moved "that the Federal Reserve Bank of Boston be advised that the Federal Reserve Board has received the advice that the board of directors of that bank has established a rediscount rate of 6,J, and that the Board is taking the matter under review and during the interim has determined the rate of the bank to be 52;." Mr. James' motion, being put by the Chair, was carried, Mr. Platt voting "no". Telegram dated April 24th from the Assistant Federal Reserve Agent at -kkelphia, advising that the board of directors at a meeting on that date

2 4/25/ made no change in the bank's existing schedule of rates of discount and purchase. Without objection, noted with approval. Letter dated April 22nd from the Federal Reserve Agent at Cleveland, advising of the death of Mr. Howard F. Snyder, Examiner at that bank, and requesting approval of the designation as Examiner, to fill the vacancy, of Yr. 'red. L. Brumley, at present Assistant Examiner, without change in salary. Approved. Telegram dated April 23rd from the Federal Reserve, Agent at Dallas, i - cluirtng whether the members of the Board would consider it advisable at this time for the bank to accept an invitation of the Kiwanis Club of Ruston, La. to furnish a speaker, at a meeting of the Club next week, on the subject of how the Federal Reserve System serves the average man. After discussion, it was voted to advise the Federal Reserve Agent that the question is one for determination by the directors of his bank. Letter dated April 23rd from the Vice President of the Foreign Trade Securities Company, Ltd., New York City, requesting a further extension for thirty days of the Board's reservation of the title "Foreign Banking and II/vestment Corporation" for the corporation which it is proposed to organize 114cier Section 25 (a) of the Federal Reserve Act. Upon motion, an extension of thirty days from April 26th was approved. Letter dated April 22nd from the Controller of Administration of the al ieserve Bank of Chicago, advising of a payment of.300 made to aler Galsr, attorneys at Mt. Pleasant, lowa, for services in connection with

3 4/25/29-3- tile filing of claim with the receiver of the Farmers and Merchants Bank, Mt. Pleasant, Iowa, which failed on May 15, 1924, covering items forwarded to that bank in a cash letter dated May 12, Noted, with approval. Letter dated April 18th from the Assistant Federal Reserve Agent at Cleveland, transmitting letter from the Peoples Javings and Trust Company, Pit tsburgh, Pa., accepting the conditions imposed upon it by the Board in ap- 141 Iling its application for membership in the Federal deserve System on March 1, 1929, Noted. Report of Committee an Examinations on letter dated April 22nd from tile Assistant Federal deserve Agent at Cleveland, transmitting reports of stn s e xaminations of the Steubenville Bank and Trust Company and the Union Savings Bank and Trust Company, both of Steubenville, Ohio, the condition of whi 4 is not regarded as satisfactory, and inquiring whether the Board concurs In a recommendation of the executive committee of the Federal Reserve bank that ilaaa Pendent examinations should be made of both institutions by Federal Aeserve 44rniners, the expense of such examinations to be charged against the banks; he Board's Committee recommending approval. Noted, with approval. deport of Committee on District #6 on the matter referred to it at the "citing of the Board on April 23rd, namely, application of the First Bat4real Bank of Take Charles, La., for authority, under Section 13 of the Fed- 4eserve,ict, to accept drafts and bills of exchange drawn upon it up to 100.; C)f its unimpaired capital stock and surplus; the Committee recommending

4 4/25/ a pprovals Approved. Letter dated April 24th from the Chairman of the Federal Reserve Bank of iliqhtond, advising of negotiations for the sale to McKubin-Goodrich and Company, investment bankers of Baltimore, of the old Baltimore Branch building, vhich was PUrchased in 1917 at a price of 4200,000 and has been held for sale at the same figure; the letter stating that the prospective purchasers have offered 0137,500, alld that the Federal Reserve bank has made a counter proposition of 0150,000 1)148 accrued taxes, it being the opinion of the airectors of the Baltimore Branch allci the Federal Reserve Bank of Richmond that it would not be wise to hold the PrcTerty for a higher price. The Assistant Secretary advised the Board that the Coat to the Federal Reserve Bank of Richmond of carrying its investment in the g, which is vacant, including taxes, insurance, etc., runs between 413,000 alici 415,000 a year. After discussion, upon motion, it was voted to advise the Federal Reserve Bank of Richmond that the Board will interpose no objection to the sale of the property at a price of not less than 0150,000 plus accrued taxes. Draft of letter to the Chairman of the Federal Reserve Bank of Dallas, 1311ePared under direction of the Committee on Salaries and Expenditures, with t'ellipe" to fees and allowances to be paid directors of that bank in connection With their attendance at Board meetings; the letter pointing out (1) that a director residing outside the radius of fifty miles from Dallas should receive 4 tee Of 020, a per diem allowance of 410 for each day absent from his home ity Etna railroad and pullman fare; (2) that a director residing outside of 411as but within a radius of fifty miles, should receive the 420 fee, railroad

5 4/25/29 _5_ and Pullman fare and reimbursement of any subsistence expenses incurred while e"y from his home city; and (3) that directors residing in Dallas should re- "I've only the fee of 420, except in cases when they are absent from Dallas on business and return to that city for a meeting when, in addition to the feet they should receive reimbursement of all transportation and subsistence expenses incident to the trip to Dallas. Upon motion, the proposed letter was approved. Drafts of letters addressed to the Chairmen of the Committees on Banking and Currency of the Senate and House of Representatives, prepared in ac- itth 11) cordance with the action of the Board at its meeting on April 18th, submitting and recommending an amendment to Section 9 of the Federal aeserve Act Which would. permit state member banks of the Federal aeserve System to have foreign branches. Upon motion, the proposed letters were approved. In connection with the above, Mr. James moved "that the question of reon deposits held in foreign branches of member banks be considered by the Board along with any other changes in reserve requirements which may be taken under consideration in connection with the studies that are being made Of that question." Carried. Memorandum from Counsel dated April 23rd, submitting draft of reply to letter dated April 19th from the Federal Reserve Agent at Richmond, transflatting an inquiry by the Baltimore Trust Company whether it can establish a new branch a short distance outside of the limits of the city of Baltimore;

6 4/25/29-6- the Proposed reply stating as the Board construes the statute, the dividing line established is the corporate limits of the city of the home office and a state bank, while remaining a member of the Federal Reserve System, may 11 t establish a branch even within a short distance beyond this line. Upon motion, the letter submitted by Counsel was approved. The Vice Governor then submitted a letter dated April 24th from the Governor of the Federal Reserve Bank of New York, with further reference to gold movements from the Reichsbank which will total, when completed, 4146,5 47,000 since March 6th; the letter commenting generally upon these mo vements and upon increases in discount rates of foreign central banks which have been made to protect the gold reserves of those institutions. his letter, the Governor of the New York bank stated that he has been advised that the Reichsbaak, within a day or so, will further increase its rate from 6 1/2,; to 7 1/2/00 Ordered circulated. Letter dated April 24th from the Chairman of the General Committee on ilallkars Acceptances, requesting approval by the Board of a meeting of the "MMittee in Chicago on May 8th and 9th, and requesting also that the Board's ellaral Counsel be permitted to attend the meeting. Approved. Letter dated April 24th from the Acting Chairman of the Board of Di- Or s Of the Federal Reserve Bank of Philadelphia, replying to the Board's letter of April 16th, with regard to the apparent failure of that bank to btain a reasonable cooperation from its member banks in dealing with the

7 4/25/29-7- Present credit situation along the lines laid down in the Board's letter of F ebruary 2nd to an Federal Reserve banks, and inquiring whether the directors Of the Philadelphia bank believe the reasons for this apparent lack of coo peration are good and sufficient. Upon motion, the kssistant Secretary was instructed to furnish a copy of the above letter to each member of the Board. Zr. :diner then read a further revision of the proposed letter to all Fecleral Reserve banks, to which he referred at the meeting of the Board on Pil 23rd, requesting further and fuller cooperation of the Federal aeserve blinks and member banks in the Board's policy of prohibiting the misuse of the cliscount facilities of the Federal Reserve System, particularly in the cases I the thirty-seven or so large member banks which have been continuously in debt to their Federal eserve bank for a considerable period of time, in an a'ount of 5,000,000 or more, while carrying heavy investments in loans to brokers and dealers. kfter a discussion of the proposed letter, Yr. Miller stated that he would further revise and resubmit it to the Board. itt 1:15 p.m. the meeting recessed and reconvened at 3:00 p.m., the same Inernbers being present as attended the morning session, and in addition, the Secretary of the Treasury, who took the Chair. The Vice Governor reported a telephone conversation with the Governor of the Federal Reserve Bank of New York, who advised him that the board of diors Of the bank, at its meeting today, again voted to establish a redisc 11n t rate of 6, with the understanding, however, that their action is predi-

8 416 4/25/29-8- cated upon approval or disapproval by the Federal deserve Board today. The action of the New York directors, according to Governor Harrison, was based Upon the conditions set forth in his letters to the Board of April 9th and 17th anu the further fact that the Aeichsbank today increased its rate from 6 1/2,; to 7 1/2,3, increases having been made by other central oanks charincr the week. The directors of the New York bank, Vice Governor Platt stated, feel that their rate should be made effective by placing it in line with other l'ates. Banks in the Second District, they are informed, are getting more ahd more into an unliquid position, their deposits are going down and the Proportion of their ineligible paper is becoming greater. Although loans t brokers are being called, collateral loans to customers of the banks are in creasing. The Chairman expressed the opinion that the time has come when the Fe'leral Aeserve Bank rate should be put in its proper place. He stated that the expansion is so great that the System is bound to have hiher rates and with h great deal of unanimity among bankers that the rate as it stands is out 01 line, in his judgment, an increase should be authorized. A detailed discussion then ensued, during which the majority of the ard. reiterated the opinion that an increase in rate, which they feel would be t antamount to a confession of the inability of the System to otherwise Prevent the misuse of its discount facilities, should not be approved at this time. Er. Platt moved that the rate of 6,3 established by the New York directors on all classes of paper of all maturities be approved, effective tomorrow, April 26th.

9 r 1 4/25/ Mr. Platt's motion, being put by the Chair, was lost, the members voting as follows: The Chairman, "aye" Mr. Platt, "aye" Mr. Hamlin, "no" Mr. Miller, "no" Mr. James, "no" Mr. Cunningham, "no" Mr. Pole, "no" After further brief discussion, the Secretary of the Treasury and Mr. Pole left the meeting, and the Vice Governor took the Chair. Letter dated April 24th from the Governor of the Federal Reserve Bank of Boston, confirming telegraphic advice of the action taken by the board of directors of that bank yesterday in voting to establish a rate of 6;;, which was taken under review by the Board; the letter stating that the action was unani- / that the directors of the bank are firmly of the belief that the advance 18 necessary in order to check the present expansion in collateral loans, and that they do not believe that it will have any material effect on the rates On commercial paper, which are already as high as they are likely to be. Noted. Telegram dated April 25th from the Chairman of the Federal Reserve Bank Of lansee City, advising that the Board of Directors of that bank, at a meetlag today, made no change in the bank's existing schedule of rates of discount 44a purchase. Ak.192.i6i', OF STANDING CO2,21ITTEE3: Noted, with approval, 1.1r. Platt voting "no". pate(19 April 24th, Recommending changes in stock at Federal Reserve banks as set forth in the Auxiliaryp.inute Book of this date. Recommendations approved.

10 4/25/ OF STANDING COLEITTEES: Cont'd) Dated, April 23rd, Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Dated, April 23rd, Recommending approval of the application of Ir. J. R. Copeland for permission to serve at the same time as director of the Parnassus National Bank, Parnassus, Pa., and as director of the Logan Trust Company, New Kensington Pa. Approved. tea, April 23rd, Recommending approval of the application of Ir. Lewis E. Harrower for permission to serve at the same time as director and officer of the Amsterdam City National Bank, Amsterdam, N. Y., and as director of the Farmers National Bank, Amsterdam, N. Y. Approved. The meeting adjourned at 4:30 p.m. li pproved: Assistant Secretary. Vice Governor.