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801 At a special meeting or tne Federal Reserve Board held in the orrice of the Governor an L:onday, May 13, 1913, at 3:10 P. n., PRESENT: Mr. Harding, presiding, Mr. Hamlin, Mr. Miller, Mr. Millis, Secretary. Mr. Warburg, Present also, a delegation or Kansas City district bankers as follows: J. W. Perry, Chairman, President Southwest Natl. Bank or Commerce, Kan. City. C. W. Allendoerrer Vice President First Natl. Bank, Kansas City. Representing Kansas City Clearing House Association. H. H. Ogden, President First National Bank, Muskogee, Oklahoma. Representing Oklahoma banks. W. W. Head Vice President Omaha Natl. Bank, Omaha, Nebraska. Representing Omaha Clearing House. James Ringold Vice President U. S. Natl. Bank, Denver, Colo. Representing Denver Clearing House. J. T. Mitchell President Denver National Bank, Denver, Colo. Director Federal Reserve Bank, Kansas City. 1.1r. Perry began py stating taat the delegation was here tor tne lurpose of asking relief on excwange and collection conditions. Ur. Harding, interl-)os- in, made a brier statement or the problem, as no understood it, sketcning tne special excnange dirriculties growing out or tne present adjustment of time allowances in Yew York. He stated that should -me present time allowance oasis in rorce in New York be broadened it would oe necessary to broaden it elsewnere in like measure, with the result tiant tfte swstem would go by the board. He furtnor noted the pad ettect upon reserves in the system produced by the growtn or "float" in the several reserve banks. Mr. 12erry thereupon explained wny no reply nad peen sent to Governor Harding's letter or March 10, dealing with trio situation, and stated that he hoped Governor Harding would se,2 his way to chan,:in::; the pos ition taken in the letter of March 18. Governor Harding said he understood the position of tne bankers to be tnat while the bankers were getting tne disadvantage of losing tne intradistrict float they were railing to get a conpensatory advantage through inter-district float surricient in amount to act as an offset. Mr. Perry called attention to tne activity or business and transfers in Kansas City as compared with other districts, such as San Francisco which had accustomed themselves to the principle of telegraphic transfers. Governor Harding urged that there was no reason why a reserve bank should practically grant a premium for the development or float—the most undesirable form or asset that a reserve Dank could have. Mr. Warburg thought that the conditions in tne Kansas City district were local or temporary, out that Mr. Perry was discussing tne situation as ir it were permanent or general. Mr. Perry rejoined -rere that this was not the case except in so far as the peculiarities of the Kansas City district called for special or peculiar treatment. He asked whether a meeting or representatives or tne several districts could not oe called to harmonize dirferences. Discussion of the question or tne proper 4'4 schedule or anarges to be applied by member clanks ensued, and Governor Harding stated the essentials of the charging system, errective July 1, which the Board is now planning. Mr. Perry said the:e were several points in Governor HardiLg's letter of March 18 which the delegation desired to answer as follows: 1. Banks in Kansas City were not able to apply the principle laid down in the letter of March 18 that a check is payable at the counter of the drawee bank. 2. A merchant in New York City under present time allowances can use a local check with loss Of only one-half the interest lost by a Kansas City mercnant through time allowances. 3. It was not true that Now York exchange should normally be at a discount In Western cities. The racts snowed that in the three years before 1914, New York exchange was practically never at a discount. At this point Governor Harding laid before the meeting the discount rate revision wired from the Federal Reserve Bank of Kansas City at the morning meeting of the Board. It was the opinion of the delega- tion that the proposed schedule of rates would do no good whatever. Discussion of the relative rights and merits of the Federal Reserve Banks of New York, of Kansas City and of other places, with reference to the allowances, ensued. Governor Harding analyzed the relationship of the intra-district and inter-district collection system and especially considered the working of a plan for immediate par receipt of transfer orders by all Reserve banks. He said he was convinced that it was possible to give immediate credit for checks all around and overcome the delays due to differences of time and space, but that some one must carry the load and pay for it; the question now was who ought to pay the expense. mot After further discussion of details of transit and remittance methods Mr. Perry recurred to the idea of a conference representing all Fed- • oral Reserve districts. Governor Harding suggest- ed that a conference of technical specialists was not likely to be very helpful, but Mr. Perry replied that the conference should have a membership composed of men of breadth and not of narrow technical experts. _Oo Mr. Harding restated the problem of exchange at Kansas City as he understood it. Further discussion ensued with reference to reserve conditions at Federal Reserve banks, and Governor Harding emphasized the declining tendency of reserves and the necessity of protecting the Federal Reserve banks. After further informal interchange of views the conference was APPROVED: at 5 P. 4., declared adjourned.
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