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—t a joint session of the Federal leservc Board and the lovernors of Federal reserve banks held in the office of the Board on 77riday. Ipril 6, at 11.30 a.m., Delano, presiding, !!r. Hamlin, .illiams, Yr. aillis, secretary. . Harding present darinc, the latter part of the session. Present also, Yr. iken, Mr. Treman, 1:r. Calkins, L:cDougal, ::r, 7.0:Cord, Mr. Van Zandt, Yr. ',Ihoads, Er. ,1old, Er.Seay, Mr. ?anchor. Er. Aken said th..A the minds of the governors had been disturbed •upon seeing in the newspapers statements with reference to the conference of the preceding day with respect to the sale of lovernment bonds. Nothinz whatever h.,(1 been made known concei.ning the conference by any Governor present. In order to call the m:Itter formally to the attention of the Board, the folloAng resolution had conse uently been adopted: 'aHL„-MilS: there appears in two afternoon papers a statement of certain matters under discussion by the conference of governors from which it might appear that some one connected with the conference has been giving out information concerning its deliberations, 336 17 1OLTD that the chairman of this confererc to assure the 2ecretary of the Treatr: ard the Federal Reserve , Bnd that no one conn!tLd , :lth this conference has given to any one any i!.f2rmation on this or any other subject on our prograe or being discussed by the conference. Likcn then reviewed . the work done by the con17roner_, Lifl lt joint session with the Board, the 7c of a conversation 11:J(1 by the Mv ors with Stati::tHi' n ,Tobson with reference to rel nrt:J n condition of TI, , H1r 1,o be , sent to the Statistic.l Division of the Board by reLrve banks. He. stated that the Statistician desired to have these reports transmitted direct to him, and that the reserve banks would act accordingly. With reference to branches, Mr. .Alien stated that the following resolution favorable to the creation of agencies, which had been adopted by the conference,represented' the position of the Governors present! SOLVED that it is the sense of the Conference' that agencies of the 7ederal rer%,(,-' banks instead of branches be established. In our opinion an age=7 ,IiLAiri.lished from a L: tht reserve Is-unaer the absoll% ts:1,(1. 71'i.nagement of an a hect:d z :K411 UC :; t!r7(- bank. fjf The functions of an agency should be (a) To do all things necessary in connection with the clearing and collection of items. (b) To act as custodian for collaterals, etc., relating to the section served. (o) To pass on eligibility of items which are offered for rediscount, or as collateral for advances. (d) served. To make credit investigations in the section (e) To perform such - other duties as may be prescribed by the management of the reserve bank not inconsistent with the laws governing agents and principals, except that in no event shall an agency be delegated the power to rediscoant for or make loans to a member bank nor to make open market purchases of investments except on specific in-, stractions from the reserve bank." 4:3 to collection, Er. /Liken stated generally that he thought every effort should be made to enlarge the existing system, and that this was the general opinion of all participating. Mr. idicen then took up the uestion of amendments, and said that the Governors desired to recommend some minor changes in the Board's draft of amendments substantially as follows: 1. Specification of number of calls tote made each year for condition of member banks. -ltertion of wording as to the limitation upon - loans so a 3. to make it slightly more liberal. On puce 6, line 9, of the Board's sunTested bill, omit the word "so". -4. On nage 9. line 7, the bill omit the word "mat- a ing. 5. On page 9, lines 11 as to accel; noes, rke clear whether the:languace inol des 6. On p%ie 11, not b€en inclde ns fe lieve that 7. cccrtanoe of finance. ollater%.1 notes of memb r 141111-17 a;..cve in the classes of security which m y be ?ed ral recrve notes. The Governors be- ould be included. On pace 12, line 11, the me.2.ning of the word "reshould be made clear. 6. On page 14, line 21, the word "if" should be omit ted. the con 9. cc was of opinion that etc., s"..aoald be held by reserve banks and orricd on. tae books of the bank, not in joint custody with the ent or subject to joint liability. Liailit The idea of joint was not soand, and the reerve banks were opposed 359 to it. 10. nn page 17, line 17, the v,ord "necessarily" was ob- scure in meaning and might result in placing undue expense upon reserve banks. 11. On page 11, line 13, the word "net" was unsatisfactory, and the word "collected" should be substituted for it both there and wherever the same language occurred elsewhere. L:r. Harding resumed the chair during the discussion of the amendments, ind informed the governors of the substance of the conversation he 11.,(1 this morning had ,ith the Cenate omnit- tee on Banking and Currency. :iith reference to the so-called ntchin Bill, Lr.-iken stated that the governors 11_,(1 adopted a resolution as follows: ,v'LLEilLL it is stated that there is to be reintroduced in the present Congress for enactment the so-called Yitchin Bill, the purpose of which is to so amend the Federal eserve -2,ct as to permit rational banks to impose exchange charges contrary to the basic principles of the Federal reserve collection system, and :11--ti.LriC it is understood that under the direction of a committee of the Imerican Bankers' -ssociation, known as the "Committee of "wenty-five", a vigorous and far-reaching campaign is being conducted to bring influence upon the Congress to secure the enactment of the Yitchin Bill, and 'ihereas it is the belief of the governors of the several Federal reserve banks that should the ntchin Bill become 1w it would not only serve to nullify the great bene- A t_YOU fits which would accrue to the business interests of the country under the operation of a scientific, direct and efficient collection system, but its enactment would seriously affect and serioasly injure 'the best and broadest development of the Ti'ederal reserve system, therefore, aL IT 2;().:4VL.1) that the 3overnors in ".3onference earnestly urge the 7ederal eserve Board to use every legitimate means possible to prevent the enactment of the 7itchin Bill when introduced into- :3onsress, and to promptly:develop arid put into the fullest operation the 7'ederal reserve collection system ° The reading of this resolution was succeeded by genoral discussion of the T:itchin'Bill nd the clearing system as a whole. L'fr. Van Zandt called attentiontO the status of those reserve banks which a situated in non-subtreasury cities, ggestins th-t they are subjected to con iderable difficulty in setting small coin, and V.r. 4,1ken read:the following resolution expressive of the views of the Governors on that subjects it appears that some of the Tederal eserve banks lOcatel in non-subtreasury cities are called upon by their member banks for supplies of currency of small denominations, silver and minor coins, the furnishing of which relieves the "r asury Department from these demands, and - 7aa1.u..ed:. the furnishing of these forms of money is a matter of public benefit, now therefore, be it 361 assoLuD that the Federal leserve Board be requested to use its efforts toward making arrangements 'A.th the 7reasury Department whereby a 7cderl reserve bank, in exchange for gold, may have deposited in its vaults, without expense to the Federal reserve bank, such amounts of currency of small denominations, silver and minor coins, as said Federal eserve Bank may apply for in order to be able to meet the demands of its member banks for such moneys. Generally speaking the Governors expressed the opinion that the 7reasary should keep constantly on deposit with ?ederul reserve banks a certain supply of coin of all kinds. Lr.,.iken next referred to the siaestion of abrasion of coin, saying that it was desired to have the outstanding gold coinage reminted, the Government to absorb and pay for the loss resulting from abrasion. Ir. Harding then called attention to a suggested form of inter-district draft which he submitted to them for expression of opinion as to its suitability. ,i.ken then took up the .0est1on of an issue of Government bonds, and said that a sub-committee of three governors had last night considered the problem of bond Issues, and had prepared and submitted to the others at this morning's meeting a memorandum relating to the ,uestion, which he submitted as follows as the joint opinion of the conference: I' ,mount, lia,000,000,000 or more without maximum free from all taxes (except inheritance taxes) with privilege of conversion into subsequent issue of higher rate bonds issued during the period of the war or rithin some specified time, we would suggest that a provision should also be made for the conversion of United States 30-year 3:g Jonversion Bonds acquired by the 'Federal eserve Banks under the provisions of Section le of the 7ederal Reserve ;ct. This' seems only fair to the purchasers of such bonds. The new issue of bonds should not be available for circulation privileges. Rate. 3:g minimum. Rate should be sufficiently high to Insure the absorption of the issue by ultimate investors, so that the funds of the banking institutions should not be absorbed. Price. Par and accrued interest. Redeemable at par and interest five years from date Of issue; to be retired annually thereafter at the rate of five per cent of the total loan per year - retiring the whole Issue in twenty-five years. - Bonds to be drawn by lot for retirement; provision to be wade by taxation for the payment of bonds so retired. Denomination. Coupon or registered, 4100., .500., $1000. Registered only in excess of ;1000. Jd3 ::ubscription: To be h_mdled by A:Aral Reserve BL,nks as fisc.al agents of the Government; subscriptions - to. be received by all nation,1 banks, state banks, trust companies, savings banks, and, designated private bankers; and post offices, acting for the account of the Federal deserve Bunk of the district in which such subscription agencies e are located. 7.,ethods of publicity to be worked out. be should started campaign publicity a would sucr'est tht at once, 4nd that a committee of first class publicity •men be assembled who shall be assigned to the work of .handling the whole question of material and distribution. feel The actual expenses to be paid by the government. and importance, utmost the of question that this is a should be iieveloped as fast and to as wide an extent as possible. r.ethod of Payment. As the full proceeds of the issue will not be needed at once it is proposed to issue to subscribers: (a) For amounts of .4000. or less in negotiable receipts or bonds, the fall amount of their subscriptions. (b) For subscribers for amounts in excess of 1,J00. negotiable receipts calling for quarterly payments, date of such payments to correspond with . interest date of such bonds, receipts to curry interest on the payments as made., f1n:..1 delivery of bonds to be made on delivery of full-paid receipts. Interim needs of the Government between payments to financed by issue of short time Treasury bills. Disposition of proceeds of subscriptions. In order that there may be as little disturtance as possible of the money market at the time of payment of subscrip- 364 tion. it is essential that so far as possible payments be left. oh:dtpositi.n-institutions receiving subscriptions. It is swrgested that legislation be obtained authorizing the Federal Reserve Banks for the purpose of assisting such financing, to maintain balances in meT:ber banks to an amount not to exceed the capital of such member bank, or perhaps it would be more consistent with various sections of the Federal Reserve Act to limit such deposit balance to 100% of the capital and surplus of member banks. each a credit to the Treasurer of the United Etates upon the books of the Federal Reserve Banks will seriously affect the reserve situation of the Federal iesUrve Banks and exemption from reserve requirements applicable to Government special deposits should be made. Failing such a provision, the reserve position of the Federal Reserve Banks will be seriously affected, a matter that should have most serious serious consideration because of its relations to the commercial interests of the country. MDERAL DVISOY00717JIL. It is suggetted that, the services of the - Federal Avisory Council should be availed of to get as definite informatiOn as possible to the local conditions In the different sections of the country represented by the Federal Reserve Banks, and probably the opinions of the members of the Advisory Council would accurately reflect such conditions both as to the general public's attitude,, and more essentially the effect upon the money situation in each district. Mr. - Harding suF;gested the appointment of a committee of three governors to visit the secretary of the Treasury this afternoon, and inform him generally of the views of the Governor with relation to bonds. was accepted, a committee. The suggestion r. Aiken stating that he would appoint such Mr. Seay brought up the matter of the old 3 bonds, still held by the reserve banks, imiuiring haw they would be affected by the issue of'the new bonds now contemplated. Some discussion of this subject ensued, but no action was taken. an motion at 1.45 p. m. the joint session adjourned. f.ecretary. APPi0T-J): irman.
@FedFRASER