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a special meeting of the Aderal :teserve Board
held in the office of the aovernor on Saturday, June 9,
at eleven a.m.,
PALSLIrT:
Mr. 'tiarbarg, presiding,
Mr. ',Unions,
Mr. Delano,
Mr. dillis, Secretary.
L:r. Miller,
The minutes of the meeting of the Board held on
June 1 were read and, on notion, approved.
The minutes of the meeting of the Executive :Jonmittee held on June 5, June 6
7, afternoon
June 7, morning, and June
were read and, on notioli, approved, and the
action therein set forth ratified.
Mr. ,arbarg reported that he had transmitted to
Governor Strong a letter grunting the approval of the
Board to the holding of gold abroad for 7ederal reserve
banks, such gold to be counted as reserve'up to the 'amount
and under the conditions agreed upon by the Executive Committee at its last meeting, in view of the fact that he
had received from Secretary Maitdoo and Governor TJarding
a dispatch conveying their approval of the action which
had previously been authorized, as just stated,' by Messrs.
Delaao and ialler. the nembers of the .7ord in msiderce
at the tire the policy was decided upon.
letter frorl, lovernor :-tron: with reference to
the qd.estion of filirg with the Board a coy of the Z.J.reE!:t,nt --de bet7'een the. Federal ieserve Punk of :Tu: York and
the .F.,ank of
..„;land, constituting the latter the forti,:n
agency of the '-ederal A,:wrve hank of row York,
read
and after discussion it .;as asrted that the 7cder..i.1 .eserve
P—nk of 77ew York be .,:%-ed to pl-ce•a copy of the contract
on 'Ile
ith the :o-r . the 'Tice Governor to convey this
decision to the ".:ea York Bank,
The application of Tulsa, nlaho-, for designation
as Li. reserve city, was, on motion, approved and the cit
Lo
designated, the :;ecretary being instructed to telegraph the
decision accordingly to those interested.
-ftcr discussion, it was agreed that rx. Meier teletele:xaph the Federal
eserve
nk of a..J.n Francisco that it
Was the desire of the 7oard that the
tate banlzu at Cpol..ane,
.ashin_tor, apply :or -(11121:ion to the Fcdeal 4_1,ervt. I-.y6tem
c fore the fan ?:ancisco 1-3„..nl,c definitely
Lz...111:hr-cnt
of : br.
mdc
ahes the
L-
at that point.
letter received 'corn the Federal A,L,erv( Bak of
reference to the stAas of the
t1 ,nta
the 2ropos,
,,d bnk buildi -
L'or
ontr,-J
n, on notion, referred
there,
to the ,;o1-.1,1t.ce in civ„r-e of the rl...ns for the prorosed
-tl nt
nh iiid1nf,
r. Dclaun,
rrid(nt of the
,tt4r fro:kdcrJ :-r, oyoes "nion,
11-.ries of employee::
redi
:„.1:1/,_; for
id in r-isiu_the
;resented . ni, on
tioe, refer-
t',1„) foniLtce on r-t_rf.
"ore,
. letter from 'Throrable
Ith r(f, renec to the
:i%rtment of
oidtn fror', the ',c,
pre-•nt stat,ls of '.,1..anish e cirtne, were r("(=.red to the
%ecitive
letter from the -11-!:e 7ation_1 Cni
ith refer-
- .re of bills of cnhen , on loch:.- 1I' of
ence to the . ,ce,-4„,
, 1..nter.: in
forci2n Jountr7. under sL,eIfied oonditiOnL
Y:1., on motioo.„ referred to the
or.'.-Ittec on Irvt,:",,
to
letter from "rovc,rr.or LA r0117
:et'Iods of
; the 0tflo- of
;s re-
old to
ferred co the ',Tice 107, rnor for co-„1 ilt.tion 1 th
sListant
-ccret.,r7 o," the '1'ea2ary
_ letter from -r. James Vs
nric
Itherm:
tr:11 accomT,odat.ion In the nortitvet.
reference to
r rLf,,rrei to
1c
e
O
tot:i1 th fcference to the proposed stamp tax on tank
n(7 to t'tc 2owaittee on Lay;.
checks,
_he reuiriation of
in the office of
motic
r.
ail J. .."..oran, a steno rapher
r1in, effective Jane 6,1917, W40, on
aplroved..
01)1 ion of Counsel ;gith refrcnce to the status
of trade accf:tances as affected by
ecti n 5200, and .!(: draft
of a proposed Jtcr on the subject
rittn for the
;.!..nzAure
of the Vice 3overnor, were presented and, on motion, approved,
and their publication in the Aderal Reserve
u11e tin author-
ised.
The minutes of the meetinzs of the Clayton 4,l',ct
tee held on June 1, June 4 and June 6, 1ere read and the action
ein set forth ratified.
On recommendation of the Committee on Operation of the
Ader:11
ecrie
to . uthorize the
t of
annum for the sin nonths
It
of 7Ail
on motion
divdcnt , the rate of
end in
voted
cr
June ZO, 1915, the
Secretry to send notice accordingly.
',Iron recommendation of the Jommittee on
of the ?cdcral „ileserve Banic of Minneapolis,
on motion, voted tothori'ze the rayMent of
tz the
..-L-cs Bank Of MI
the rat': of
Dons
year ending Jane 30, 1916, the ;_co-
rer annln /'or
retry to send notice accordint
.0.pplications for trustee p
r
rs not yet acted upon
the Committee on !:.:cmber and State'Ty-ns were presented
on motion, lid on '
table for the present.
....cserve 1ent 'loath stating
4., tei.'
"that a rePrel,:,c,:ctz..,t7i.";±
-Bank of
▪
.
on 7.onda7, jj.ne
• Ehrhart,
1.roderick:
Ii, wa!
:
- read and, on. motl -,:•••,•,
1 the rcprescrttives
with the suestiora
L:r.
n:
! ▪
as to the
yln member
rate to be,char,sed for redisc 1..t4I't of .7clo
b....nlcs presented throh member bLinks to ?ederal feserve
banks,
nd
a
draft of a reply saying thA sch non member
',71th member ly:nks with ref,
banks cholld,malce L.,rrnelxntc
erence to the rate Vitt they e'..octe:1 to
a.
presentea to the 3o-.rd the
is oantea the note of
r..cmber
2K.;ported by an ,ffidvit that the iT
for th
the Eoard's tAlin.:2. of :ay rediscoant 2A.M. notes
rr
of 7.
bode ander
:'ron Jane 13 to Jaly
t Aderal reserve 'an1-7,s.
,to
In this
connection he Ircsented the draft of a letter addressed to
?ederal reserve banks on this subject, as follows:
"Joar sir:
h-ve been 1.-c o the :ocArd fro several iaarterl concernin:: the 3o-:d's circul-r of -a::
In this circalar the 7,03ed has a zthorized mcmber Lik
to rediscount for nonrember banTs, I cidin savirjs
ban:,-2 from Jane 15 to Jaly 15, whenever the proceeds
have been or are to be ased to nect dem:Inds c..(zsed by
tabscrirtions to the -Aiberty- -,oan. "he „tuestion h-2 been
r: ised whether this r.athorL,ation would permit 77.ember b-n:
to rediscount with their endorsement 'ith Aderal restrve
b_riV2 a direct oblition of a nonmember bank when car-forted by ,m11_1Ar.,L1 of "Aberty Sonn :3onds, provided the
nonmember ban1; st-tes in „n ..ffidavit th3t the roceeds
o' the note hav( been aseC, for the ptrpoc of p.yin:: for
or ctrryin
"The Bo-rd h,s crc LI1r1'siderea this natter
the i:I?ortnu rea,:hed the conclusion th-t, in vie
Laccf:s, and Cirthermore, in
aLOC of m-kin: this lo.tn
view of the fact that the wlenwnents coverinL; the admission
of L;ttc bL,nles are still under the coilsider.tion of ;on_xess
at this time, the '30.1rt' should not, :,,11 thins considered,
hich it is -dvised by Joanscl it
it'ahold this althority
r_ty smnt, it bein,, strictly understood that this _athority
-s st ted before, is jvcn to be in :or...T only between Jane
13 ,,,nd Jaly 15, 1917, .nd the ro...rd is desirous that it
iuestion will be res'tozld be understood Lh,t
viewed after th-t date and - new decision then Aven to
cover similar eases in the fat,re."
Very truly yotrs,
Vice ovtrlor."
600
Discus ion ensu.ed, and a vote being taken, those
in favor of the transmission of the letter as read were
Messrs.,iarburg, Delano and A.111 ms.
Mr. -.1111er was
recorded in the negative.
.Liller in explanation of
is position on:
was, in
this subject stated that the proposed let
his-judr;ment
t ntamount: to
rIing
nJ
bated Olv a highly strained-and:an-unwarranted construction of, the law; also. that the expedient approved in
the letter was most juestionaLle ,both-on_ba king and
fin ncial gl.ounds efore in hi
ak
opinion n
n o nd finance - and
sanstioned or permit-
11 it. was clear that
-Led
flotation of
the Liberty Loan would fail unless. the bills payable of
non-member banks, then .held by member banks, were
to be treated by 'Ted-, al Reserve Banks as customer paper,
and as such e
13. Lie
for rediscount.
:.:r. Liller was not
satisfied that sieh a serious pass 11,1,.d been reached in
the neotiation of the Liberty -on as to jus ify this
extreme expedient, and therefore felt obliged to vote
"o" on the sending out of the
posed lett
. arburg by way of further explanation.of his
60
position on the sabject, in reply to 7,7.T. Liner, stted
it as his view that the 1av
ws not
being .strained LLnd
that Aanscl''s oninion sast ined this view; tht the Board
was simply carryins. oat the 2.1. 71rit of its lett r of
Tlember banks for
LL in Lathovizin
Jane 13th to July 13th to rediscount
United period from
ithoat 'zrtner
sreeial arproval from the 7,oa-d, notes of nonmc.lber b-n;:s
as
ell as savings banks, provided the jroeeeds hai been
or ,;ere to be used for the purchase or c rryin
of_iberty
Bonds.
to
point t7.1
.
he
'2
oiled
not s-
th-t the status of the Liberty Loan sabscriltious
sti-
bur: pointed to the fact
fled action at this time,
th.t the ',-xereta -- of the -Ireaeary hact now laolished that
t of about ,1 000,000,000 were
sabscrlptions in the
in hand and that
five more d-ys.
7 J,00 ,000 r(. c: to Lc raicec,:1 thir
It ;,c)ald be ilmt,sible to await
resqlts before ilesidin; whether or not
arther
scrioas nass
had been reached."
It w.,1!r„, to
r. .arba
1,he pact of the Acer.,„1
's mind, the best policy on
cscrve hoard -nd the 4'eder1
serve F,anks to enjender a cpicit of coura,;(, and con.Lidenee
602
on the'part of.the subscribing public and the banks.
It was to be expected that to a large extent the relief offered by the ruling under discussion would:remain psychological, but it was :important that the banks
'should feel that in carrying their customers. they could
1tderal
rely upon the -full sympathy and support of the--.,
Reserve Banks
It was evident that if the loan .should fail, steps
would have to bc taken which would increase the pressure
on the ?ederal Reserve Banks to an extent which might
Trove of much more serious conse.juence than could any
result from this ruling.
to the criticism that too much liberality.
• - might - be shown to State banks and trust companies.which
were non-member banks, the fact 11...d to be tome in mind
that the amendments which Were to facilitate their entrance were still rending
and that the Board in its let-
ter was making it very clear that the present privileges
were extended only for thirty days and that these privileges might not be extended again upon a future occasion.
Mr. Delano stated that while he was willing to
approve the .letter and had voted in favor of..it,-the only
.4
•
reason that induced hin to do so was that the success
of the Liberty 7,4oan was not at so critical a point that
he thought extreme measures were warranted in order to insure success.
Mr. Delano presented a letter from I:1r. L. I. Talbert, President of the :jerchants Loan and Trust company
of 3hica3o, with reference to the most advantageous time
for joining the 7ederal reserve system-
It was p„y7eed that
it be suggested to him that he take prompt action with reference to entering the system.
On, motion at 1 p. m, the Board adjourned.
,OPAOVI;D:
aeretary.
Jhairman.
@FedFRASER