Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, October 30, 1918, Volume 5, Part 4

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At a meeting of the Executive Committee of the
Federal Reserve Board, held in the Board Room on Wednesday, October 30, 1916, at 3:30
PRESEVT: Mr.
Mr.
Mr.
Mr.

Strauss, presiding
Hamlin
Miller
Broderick, Secretary.

Business was presented and disposed of as follows:
Mr. Miller reported a list of topics and questions
for discussion by the Federal Advisory Council at its
meeting to be held in Washington on i%:ovember 18th and 19th.
After discussion the following topics and questions were
agreed upon for discussion at said meeting:




1. Federal Reserve Notes.
Is it desirable that steps should be taken
to check further growth in the volume of Federal Reserve notes issued? If so, what action
is recommended?
2. Development of open markets for bankers' acceptances.
be taken to promote and accan
steps
That
nt in each Federal Reserve
developme
celerate the
for bankers' acceptmarket
open
an
of
District
ances?
3. Drafts drawn for the purpose of furnishing
dollar exchange.
heretofore granted permission
has
Board
The
drafts drawn upon them
accept
to
banks
to member
and South America
Central
in
bankers
and
by banks
exchange.
dollar
g
furnishin
of
purpose
for the
as to
is
desired
Council
the
of
opinion
The
the
which
in
countries
other
are
there
whether

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3

-2"usages of trade" are such as would warrant
the extension of the Board's policy.
4. Extension of American banking facilities in
foreign countries.
(A) Are there any special steps which the
Council would recommend that the Board should
take for the purpose of encouraging the establishment of additional American banking facilities
in foreign countries?
(B) Should the Board, in the exercise of
its powers over foreign branches of national banks
and banking corporations engaged in foreign banking, in the stock of which national banks are permitted by the Board to invest, require that reserves of not less than a stated per cent be maintained against demand deposit liabilities of such
branches and banks? If so, (a) should requirement
be uniform in all countries in which such branches
and banks are operated, and (b) of what should the
reserve consist, and (c) what reserve percentage
is recommended?
(C) ,i,hat limit or restriction should be imposed upon the acceptance power of banks engaged
in foreign banking, which are operated under supervision of the Federal Reserve Board?
5. What further services should be rendered by
.Federal Reserve banks to the public through
additional free facilities granted to member
banks?

II
In view of the apparent near conclusion of hostilities,
tne attention of the Council is invited to tne consideration
Of:
After-war policies, both domestic and foreign, of
tne Federal Reserve System.
1. With respect to tile requirements of the domestic
situation, should tile policy of the Federal Reserve banks
be restrictive or liueral? In otner words, should contraction °I credit and currency be a controlling consideration in the Board's policies?




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6
it.)

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2. In connection with the consideration of the
changed position of the United States with respect to
international rinance and banking, what snould oe the
policy of the Federal Reserve System with respect to:
(A) The management of its gold reserve;
(B) Operations in the purcnase and sale of
foreign bills?
In connection with the discussion of (A), consideration of the following furtner questions is asked:
(a) Is it desirable tnat the gold embargo
should oe continued on shipments of gold to any
country or group of countries after the termination of tne war? If so, on that nrinciple?
(b) Should tne gold embargo be lifted on
behalf of any country or group of countries before -me termination of the war?
(c) Is it desirable that the Federal Reserve
System should undertake, oy informal conferences
with other central banking systems, to formulate
policies or promote arrangements to regulate the
international distribution and flow of gold in an
orderly manner, at the end of the war?
(d) Is it desiraole that provision should be
made in the treaty stipulations following the conclusion of war for tne establishment, under suitable
safe-guards and international guarantees, of international trust funds of gold so as to minimize the
hazards and costs of gold shipments?
In connection with the discussion of (B), consideration
of the following further questions is asked:
(a) Should it be the policy of the United
States to establisn and maintain a free gold market?
(b) If such a policy is adopted, should tne
main reliance of the Reserve System be the adoption
of the English practice of regulating the flow of
gold by a variable discount rate?
At 4:10 P. M., the meeting adjourned
Pit/f/Lt
Secretary.

Approved:




Vice-uovernor.