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At a joint session of the 7edera1 Reserve Board and the Feder..,1 2:dvisory .douncil held in the office of the Poard on e -day, fpril 17, at 10.30 a.m., a • Governor Trardin3., presiding, Mr. .;illiamS, Mr.':7111er, ;;arbarg, . iillis, secretary. Mr. Delano, Yr. Hamlin, Present :Also, Vice President Rue, !Ir. Rowe, 7:,T.r. 21eishhacker, Mr. Lyerly, Mr, Ang, Mr. Lwinney, Mr. iatts, Mr. ccord, Mr. ITorwood, Mr. Morgan. Governor Harding opened the meeting, el,:pressing regret at the absence of President ?organ, and stated that the Board ILA no special list of subjects to present for discussion. He said that the predominant sub- ject of thought at the present time relates to the great lovernment loan now in prospect. The policy of the See- rc'tary of the Treasury had been that of keeping his own counsel up to such tire as the new bond act should be passed, hence he (Mr. Harding) was unable to give any special information as to the situation. It was undoubt- edly the desire of all to aid in the successful flotation of the bonds. Secretry of the Treusary ?cdoo had -sent word that he would be clad to ret the Coxnc11 ii his office at noon this 'n.5.; then slzgc-4 d the consideration governor 7a 'Q .in C loan from the standpoint of rrethods to be followed ii the proceeds, and also front of the loan., whether in installme2nts or not, an t size. :or interposed with an inuiry as to whether it was true, as stated in the newspapers, that it bias now a to authnrie e funds in Sta ._'ecret'y cm' the "rea ( b..Alks and trust comp-/:le In reply Governor larding said that i con. ' te of the,BOa' d had yestrday, April 16, waite on thE,kcrttary of te Treasury,. and had asked hint about this .point. had replied .. what he had ds.in State banks 1ai for p.(r. , to deposit trust cont -nis, but had added that it was not true that he favored dv1n The the circulating r1vIlee to the new bonds. . ''..rdin2; then disass' odyin ,t , _endlnents to tac antillilinc Ii l 410 Fevertheless, it ed in the p h ,d the would be well to have the Council reaffirm its endorseOne new phase of the bill was th'.,.t ment of the measure. and which provided for taking better care of tht paper held by reserve agents. governor Harding then sketched out the provisions of the bill introduced duri ith which they were already familiar, the last the provisions in the new bill and then c S'ov from id t'nir lirr; the admission of y t he tIon to the Hay s am- te then cal led . ithdrawal -;.nd endment, providing for a tax on oh. .1 Ion provision might nion th he extressed t a have to l e measure, although portl.r - s3,7r.estej 'ttee rather J sent to ti g to that Vice President the Council wav e, as presiding discussion al -h held arn 1.1. r'pp0r:1ity of to sing these impo: r, :ormal members had shown t',1:t Lhe Ion of taxation of wealth was regarded s of the it- most i':ortae, and was closely ..111cc'. to the saccets of the The status of Stte bank members was believed that under the Board's sac-7,- 7 (-1 could be permitted to "over-loan" tt.i J . bjet to Y •Lt control. of .the 7c.-deral leserve thas.-enZciyadi tinct advz..nt:-:!;t ovtr , tin lc the details reL. 4 to the lovernment loan, - could not be very thornajAly considered • • law. If the Lloancil should rebill should be,aated upon - In the .7o.4.1d be possil.le. General dis•cuvsion of the F'ord's propozed arend7rents reference was made to the pl4n proIocI tor ()7J-,T1 "'or :.•::.1-n.„rteE-Inc; deroitc,.. of to te Ir fln tie t tor of inte,rst:...te 'Iovcrilor - of c't . to ir...,Jirc .r:Je d :.heth.er the ne7,- boid i tary , , ' it, ' or ,rcjjr 3 -r„ sared Tr. 1."..orsan assured Mr. i'orun that in their .o.uinion the secretary of - the ¶reasurr lid want suestionc, but said that it was probably b tt r to let them wait until the bill had been passed. rir. 7 rgan said the bill ought to embody the power for the Secretary of the 7reas- ry'to ra of interest above 3 possible to s Mr. because In his opinion it was not ::-5,000,000 000 of bodsat this point Z1. overnbr !larding left the room and rbirg took the chair. Morgan thought the e the rate 1.7r. Warburg then asked whether iaimum rate on the bonds ought to be fixed at 41, and received an affirmative reply. Mr. Warbarg said that considering the exemption from ttion, such a rate would be e uivalcnt to • bond without the exemption, and that this would hurt the savinz7 banks very seriously as well as Al corporate sccurities. -an i.ed that the truth was that the borrowing now pro= posed would result in taking futureI L,,s from the community a d that the old bonds co ld not be sold Laa2L there was no one to sell them to. The current and future savins of all would be reluired to float the Droposed issue. 413 loveruor 7-arding at this point returned to thE room -1red the chair. said that he thought the Secretary of the TreasIse the r H of intereet. It would found that ' icY,z.,nd of the ted that the n _ _ 17.r 710iE,hh.Acker in.4.u1red aboAL the st!._.',.ks r.ents that rO-ted thereto. , banl.cs in vic-, '.vhether there U, held by -0 thouht i1 anythinc contined in On beinz. 4bout .Yn in the 5O,003,OOD U old on the in if the ?Ederal reserve 1)n1.7. this losu could . 1 -7 'c,rl bOffn'..1 414. of the effect of the repetition, of sw..th an operation., governor ITarding answered in the. negative 'saying tht,t the operation was not likely to be repeated. • Mr.':;arburg remarked that nobody intended to use the 7ederal 7?eserve RZAI17e;T as heavy investors in long term securities. To this Mr. Uor.gan replied that the 7ederal reserve banks had been in fact practically ordered to buy these notes. Mr. ::arbarg responded that this was by no means the truth. The banks had not been revired to buy them, but had been left to make their own subscriptions or not as they chose. Mr.lue said that the mere amount involved was not important, the real kiaestion was that of principle. The banl:s had, in fact, been oblid to bay the bonds. Mr. Miller expressed the opinion that the 'Ayancil would do %;e11 to st!,,te what part the 7ederal reserve banks ought to take in financing the new loan. Mr. dillams said that he ciesire to make a state- ment, lest by his silence he should Seem to agree to statements made by the 'rovern'or of the Board. He believed that 7arding had said the Board was opposed to having the pro- of,. the loan deposited with •nationl banks., hr. said he thouht the proceeds ,hould be left on deposit with member banks. • 7c considered that it be very if the bonds should be ,dispOsed-. nf, say, a period of years. In such a cuse there v,ould be a serious draft upon the resourer 01' the b:.117,7s, while if the funds were left on deposit with them, it would be possible the the derALtrid to-ajr-iat di ff€ rent r. 0in, iniiired should be reltircd, .nd hr. the tr hether. special Lecarity protect- lye, say ng that the nc as security. liii bonds should be used 7e thought, however, that the non-erlber banks oal;ht not to be pl-ced on a parity with the members. upon a c, llo lay ensued between 7essrs. t rcilied :urence to the illi There- and ..;-rbur,3 stion of using the member banlys as depositories and the details whichshould ,.'ov.c.Irn the oper-tion. iniaircd i'leit.,11k,olzer -- bL the policy with resect to foreign revolvinL; credits zr.d overnor d in ,1-; replie0 tiy_i.t he saw no reason to believe that these need to be continued. - The fact that •4;.3,000,000,003 of oney was to be made avail-_,:ole would obviate the need which had existe.i for such credits. ••, 416 Lr.•illiamssaid that he &ipDod it xas dei red oudd asc the rrocccds of the to know whether the lilies bonds to take up eistin3or o tst:..nding loans, c ro ' Jnd' 2leishhacker responded that he did intend to rat that question, whereipon dilliams said that he belicv , nothing uiad been decided regarding that point. lov. lor 7aiding said the Secretary of the had altered the time of the rorosed conference and sagcsesttd th%,, the met' 1Z.1 5 i isted of 12 o' lock noy :.,d4ourn. Ther :or71411y session tonorro:, dednesd_;* reed to resze the Lpril IC, at 10 60. 't 12.10 p.ni. the jilt conference adjourned
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