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The Papers of Charles Hamlin (mss24661)
357 12 001-
Hamlin, Charles S., Miscellany, Writings,"Memoranda Concerning The Fe_
deral Research Board...," Diary Vol. 12, 21 May — 21 Dec. 1926(PP. 741 785)(16 of 19) .
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CHARLES HAMLIN
PAPERS
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Miscellany
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741.
VOLUME XII
May 21 - Dec. 21, 1926
May 21, Friday
Board met in morning with Federal Advisory Council and later
adjourned until afternoon to hear their answers to our questions.
Afternoon Board met to prepare letter to Secretary of Treasury
as to Cuban Agency voted yesterday.
Miller read a draft which he had prepared asking Secretary
Mellon to obtain from State Department an expression of opinion which
the Platt amendment or the policy of the Government placed upon the
Board any obligation to continue any Federal Reserve Agency in Cuba,
or to supply Cuba with American money.
C.S.H. suggested adding a clause
that, apart from above, there was a banking question for Board to decide,
whether it was its duty to continue the agencies, which were established
primarily to assist the Cuba banks by supplying currency, enabling them
to carry lower reserves.
C.S.H. also suggested annexing copy of a letter from President
Harding three years ago, saying he and the Cabinet were unanimously in
favor of creating such an agency.
Both of these suggestions were adopted.
Finally it was voted to send the letter.
C.S.H. stating he
voted for it only on the understanding that if Secretary Mellon thought
the letter inexpedient the Committee would report back to the Board.
Tames is temperamentally impossible.
Whenever he makes a
committee report, he takes any criticism or suggestion as a personal
insult and refuses to "play".
He seems to think every report he makes
must be promptly accepted by the Board!
742.
The Board then met the Federal Advisory Council which read
the replies to our questions.
In answer to the question - what is the func-
tion of New York call loans in our banking system as modified by the Federal Reserve Act? - the Council replied:
"The New York call money market under our banking system, as
modified by the Federal Reserve Act, affords the basis of a desirable secondary reserve for banks throughout the country."
Miller objected to this as not going far enough, evidently wanting to
fortify his recommendation to Banking and Currency Committee that the
Federal Reserve Act be amended to enable Federal Reserve Banks to refuse
rediscounts when the member banks were carrying speculative loans.
A
long debate followed and the Council refused to add anything.
Alexander and others all
agreed that banks should on general
principle reduce call loans or holdings of Governments before rediscounting, but where a bank's deposits were suddenly reduced and money was
needed only for a few days, it would be perfectly proper to rediscount
and not disturb the market by calling loans which meant that the loans
called must be replaced by some other loans.
Alexander said banks should try to make their paper liquid
and acquire funds in that way as well as by calling loans.
He said the
whole question was one of proper banking judgment and prudence and that
if any bank were using Federal Reserve money acquired through rediscounts to invest in call loans, a word from the Federal Reserve bank
would Quickly rectify the situation; that he believed this action was
not frequent; that no prudent banker would incur a debt to Federal Reserve
bank pleading eligible paper, in order to loan on call.
743.
The whole tone of the Council was opposed to any change in
existing law.
C.S.H. explained what the Federal Reserve Act had done - it
had not prevented member banks from sending their funds to New York banks
but had limited their funds to surplus funds instead of reserves.
Mr. Wetmore of Chicago said that the damage caused by the break
in the New York Stock Exchange was not nearly as imperious as the recent
real estate speculation.
Alexander said it was wonderful that two millions could be taken
from the call loan market suddenly without any appreciable injury to business and agriculture.
Many deprecated attempts to reduce stock exchange speculation
by increasing discount rates.
Rue said to increase discount rates meant
higher call loan rates.
C.S.H. asked Alexander if he was right in interpreting the
Council's answer as to call loan market as not to even imply that these
should be a rigid rule of precedence: - 1. Reduce call loans; 2. Sell
investments; 3. Rediscounts.
Alexander said C.S.H.
was right as he
h d before explained.
Alexander said the break in the Stock Exchange was caused
by an inflation of stock values.
James told me Crissinger was absolutely dominated by Gaernor
Strong; that Strong hated Mitchell of the National City Bank and wanted
the Board to at least threaten to get out of Cuba so that Mitchell must
bend his knees to Strong and implore his help to have the Cuban agency
remain; that this was why Governor Crissinger irsisted on asking an
opinion from the State Department in hopes that an adverse decision
744.
would enable him to induce Board to pull out or threaten to pull out of
James also said that when he first came on the Board, Barney Baruch
Cuba.
warned him not to be dominated by Governor Strong.
James also said that a year ago Governor Crissinger went to Cuba
in company with a Mr. Hayes, n tricky contractor who wanted to get some
contracts in Cuba; that years ago he came to Washington with a Cuban
delegation and delivered addresses to the Board and a joint picture was
taken which Hayes hns been using to show that the Board was behind him
in his effS rts to secure these contractst
James said that Strong was trying to cripple the F. R. Board; that he had arranged
to have Dr. Stewart stolen away from us and placed in a New York position
at an absurdly high salary;
that he had taken Warren away from the
Research Division for the same purposes; that he (Gov. Strong) felt they
were too able to be permitted to remain with the Board.
May 27, Thursday
At the Board meeting Governor Crissinger and James reported they had
seen Secretary Mellon and delivered to him the letter about the Cubnn agency;
that —ellon said he felt re could not withdraw from Cuba, and that the auestion of doing away with the Boston Agency could well wait awhile, that
Boston should be given the right to be heard, and that he feared if this
should come up in the near future, it might result in political discussion
in Massachusetts which should be avoided.
They both said they agreed to
this.
June 2, Tednesday
The Board received a letter from McFadden setting out the hold up
in the Conf. Committee and asked the Board to give its opinion of the Hull
amendments.
Jamas and Cunningham said they rather favored these amendments
but as a matter of oampromise thought they should be eliminated.
of us opposed this.
The rest
"45.
We finally voted to write him quoting his letter and saying
the Board unanimously agreed the Hull amendments should be eliminated.
As the letter was drawn, it could be and was voted for by all - as a
matter of compromise.
June
3, Thursday
The Comptroller snid McFadden told him he was ambarrassed by
our quoting his letter so extensively in our letter, as he would have to
put it in the Record and suggested we write another one, which the Board
voted to do merely referring to his letter but not quoting it.
The Board
reconsidered the first letter and voted to send another which was read
and approved.
It seems extraordinary to address a letter to a Conference
Committee and McFadden's requests show what a hole he is in.
Mr. James introduced to me Mr. Chase of the Havanna Agency
of the Federal Reserve Bank of Boston.
He said it would be much better
for both agencies to have one common office.
Ee said the criticism of
of the vaults in the 1st Nat. building was nonsense as to the Federal
Reserve Bank of Boston did not use the vaults except for one safety
deposit box in which the expense money was kept.
On the other hand, he said the Atlanta Bank used a partition
of the National City vaults xeparated only by a grill and everything
done by the Atlanta Rank could be and was known by the National City
they could hear and see everything done.
people,
I asked him to tell Governor Harding to prepare a plan under
which Boston could pay out a limited amount of its own notes, say 25(":,
8nd divide all profits with Atlanta, and arrange for putting out clean money,
share the expense.
not be easy
to do.
He said he would try to prepare a plan but it would
746.
Be also said the Cuban Government would be willing to pay
one-half of expense of putting out clean money.
I told him squarely
that I feared the Board would discontinue Boston unless I could get
them to accept some plan along the lines indicated to him.
June 5, Saturday
Eddy told me this A.7. that he told James that he (James) had
told the Board the other day that helnd not read to Newton the resolution
of the Board directing the Federal Reserve Bank of Atlanta to investigate
and report on the Cuban Agency charges; that he reminded James that he
wrote him a letter for him to me which Governor Crissinger signed in
Atlanta setting out specifically the resolution against Campbell and
that calling for an investigation by the Atlanta Bank:
that James said
Eddy was correct and that he read Eddy's letter to Newton himself.
June
9,
7ednesday
Board voted to file James' final report on Cuban Agency; also
to approve a notice to show cause to Campbell, Deputy Governor, after
making a few changes in it.
C.S.H. then moved that the Atlanta Committee of the Federal
Reserve Bank of Atlanta be invited to attend the hearing on the order
to show cause which was fixed for June 16.
this
Prior to/the resolution of the Atlanta Committee was read asking
for names of all witnesses.
C.S.H. moved to send the Committee the findings and evidence on
which James based his report.
James objected and Miller said we should give them no evidence
except what -Campbell testified to at the hearing.
C.S.H. said the first
step at the hearing would probably be a request of Campbell to be told
what the charges were and to confront the witnesses, and that he should
747.
vote that this be complied_ with if the request be made.
Wyatt said the Board was not legally bound to do this, but
C.S.H. said, whether legally bound or not, he would vote that all
witnesses be produced.
June 10, Thursday
At the Board meeting, James was asked as to his conference
with Secretary Mellon as to the Cuban Agency.
James said he had
talked with the Secretary; that he said the cabinet and the State
Department still favored an agency in Chba; that personally he was
inclined to favor the consolidation into one agency but that he felt
the matter should rest for the present, at least until Congress adjourned.
June 17, Thursday
Harrison came before the Board to read some letter of Strong
as to the European situation.
Be said there were some confidential
statements which he would not read.
Winston and Assistant Secretary Dewey were present, and of the
Board, Platt, C.S.H., Cunningham, James and the Comptroller.
Harrison read extracts from
3 or 4 letters. One stated the
situation in France and the desire of the French Government to place
loan in the United States.
Governor Strong told them he could only
consult with the Bank of France, and that it would be inexpedient even
to make a loan to it until the whole situation was cleared up, both as
to the Government and private bankers.
Harrison said the report in the
papers as to an ultimatum and a demand that the Governor of the Bank of
France should resign was absolutely false.
-
748.
Winston said the French people were very prosperous but thnt
the parliamentary situation was hopeless; that the French were taxing
so nbsurdly that the tnxes could not be levied, e.g. a bachelor in
France theoretinally pays about 95''l of his income, while on real estate
the tax is absurdly less.
On the whole, the Strong letters gave much hope that all interests in France may before long get together and meet the situation in
an intelligent manner.
Governor Strong also wrote of an interesting interview with
Mussolini.
He said Norman wanted Italy at once to stabilize on the
gold standard but Governor Strong thought she could not do this alone.
Be said Mussolini said there would not be another war for 25
years as the nationa could not afford it, that there might be some
snarling but no war.
He said the Government of Italy under Mussolini was most efficient;
they could do things at once--the very reverse of France.
June 20, Saturday
Governor Harding said that the letter he sent to me last
Thursday on the Cuban Agency was read to his Board of Directprs and
fullyqoproved by them, although not formally ratified.
He said his directors would fully approve if C.S.H. said to
the Board and moved that Boston be discontinued and Atlanta given the
sole agency in Cuba on condition that she keep on hand, say, 15 millions
in lawful money other than Federal Reserve notes and that as often as
her Federal Reserve notes were received by her, she shouldredeem them
and pay the Federal Reserve Agent for them; that it would normally take
three or four years or perhaps longer to redeem all her Federal Reserve
notes now in circulation in Cuba.
749.
He said his note to C.S.H. was intended to be personal and
not official but he had no objection to C.S.H. showing it to individual
members of the Board.
Meeting with Open Market Committee - June 21, Monday
They advocated no change permanently in the System holding
of Government securities but asked authority to buy temporarily between
now and July 15 if the need arose.
Governor Case said the banks would undoubtedly reduce their
rediscounts for window dressing purposes and this would withdraw money
from the call loan market and might put up call loan rates to 5 or
thus creating a nervous condition bad for general business.
He felt
the Committee should be given authority to meet a condition temporarily.
C.S.H. asked that Winston be invited in and he came.
C.S.H. offered a resolution to effect that it was the sense
of the meeting that the System's holdings of about 275 millions should
not be disturbed at present and that the Committee be given authority
to purchase or sell temporarily until july 5 an amount not to exceed
50 millions, such purchases to be liquidated with a reasonable time
as market conditions warranted.
Platt was at first opposed to this as also Governor McDougal
who thought 275 millions as permanent holdings was too much.
Governor
Norris said his directors believed we should hold permanently between
250 and 500 millions.
He favored this resolution because of the peculiar
window dressing conditions but did not believe we should take care of
the stock market under such conditions as existed in April of this
year.
750.
Governor Case said the outside banks withdraw their call
loans and the burden is put on New York banks and they should have
assistance.
Finally all agreed and C.S.H.'s resolution was passed unanimously.
C.S.E. said he favored 500 millions permanent holdings and
Tames agreed with him.
June 22, Tuesday
Winston came in and told us that Governor Strong had gone
before a Parliamentary Committee and testified in the matter before
the Committee - having an absolute gold standard for India.
He said
that the Indians wanted this but if done it would require an enormous
supply of gold which would drive Great Britain from the gold standard
and take much gold from us, to our injury; that it would turn our
silver in India into a commodity and ruin the Indian people.
He said Secretary Mellon tried to get J. P. Morgan to
testify before the Committee but that be said he would have to say
it would injure the U.S. which would make the Indians on the Committee
even more in favor of it; that Secretary Mellon asked Governor Strong
to testify as to the injury this would be to India and that Governor
Strong had carefully studied into this and recently had so testified.
He said Secretary Mellon did not want this to get out but thought the
Board ought to know of it.
Winston spoke in contempt of Senator Pepper.
He said the
bill to buy further silver bullion had passed the Senate; that Glass
was about the only friend of the Administration who fought it; that
Pepper found his boss would vote for it and he accordingly voted for
it - against the Administrationt
751.
June 25, Friday
H.R. refuses to concur in
conf. report on McFadden bill;
refers it back to conf. committee and instructs conf. committee to
stand
by the Bill as it passed the H.R.
Glass c911s up Platt and says Senate will never yield.
Platt said the Comptroller told him that Secretary Mellon wished he
would try to persuade Glass to yield on his opposition to the Hull amendment.
The trouble is, however, that Glass would have to accept the
whole bill as it passed the H.R. which Glass certainly would never do.
June 29, Tuesday
The Comptroller asked me to call up Glass and see if he would
not yield in the Hull amendment.
I did, and Glass said even if he were
willing to yield the Senate never would.
He said I might tell the
Comptroller, that the conf. committee would agree on a bill but that
the Comptroller should drop the Hull amendment.
I told this to the
Comptrollers secretary as the Comptroller was out at lunch.
July 2, Friday
The Board this A.M. approved a letter to the Department of
Justice asking it to continue its investigation of McCrary of the
Atlanta Bank.
It also directed Person to examine the Bank July 10,
the earliest date hd said he could do it, and especially, with assistance
of Department of Justice to examine into all sales of collateral pledged
by embarassed barks.
752.
July 7, Wednesday
Mr. Early, a member of the Tennessee Legislature and a lobbyist
called on C.S.H. with Cordell Hull and Congressman Byrnes about the
Caldwell claim of the Fourth-First National Bank.
C.S.H. said he would
be glad to go over the record with them at any time.
Later Early called along.
C.S.N. asked him to put what he had
to say in writing, which he did not seem willing to do.
He denied that
the repurchase agreement authorized the Federal Reserve Bank to force
Caldwell to buy back the bonds, on 60 days' notice, when their price rose
to the book value of the bank's books.
C.S.H. again asked him to put his views in writing, which he
half promised to do.
Be tried to wheedle C.S.H. telling him he had worked hard to
get him confirmed speaking to many senators.
James said some time ago he threatened him to black the McFadden
Bill as to rechprter if he did not direct the Federal Reserve Bank to
agree to an arbitration of Caldwell's claim.
C.S.H. told Board Governor Harding wished him to come to
directors' meeting next week to talk over the Cuban situation.
including James, agreed
All,
he could go over the whole Cuban situation
with them in confidence.
C.S.H. said he thought the directors would take the position
that if the Federal Reserve notes of Atlanta were to continue in circulation in Cuba, the Federal Reserve Bank of Boston would not want to
continue the Agency.
753.
C.S.H. asked James if the Boston bank reached this conclusion
whether it should tell the Board so now or wait until the Atlanta investigation was over.
James said it made no difference, if they reached this
conclusion, when they announced it.
July 14, Wednesday
Went to Boston to attend Directors' meeting of Federal Reserve
Bank of Eew York.
The Board discussed the Cuban situation and unanimously felt
that if the Atlanta Federal Reserve notes were to be left in circulation
they should prefer to give up the Cuban Agency.
Governor Harding told
them it was not inconceivable that the Boston Bank might incur some
liability if the Atlanta Bank failed to pay promptly cable transfers, and
C.S.H. said he could not deny that conceivably such liability might be
incurred.
The directors felt very strongly that they should know each
week at least just what funds Atlanta had in Cuba and directed Governor
Harding to write the Board to get this information.
C.S.H. told them
that before any decision was made on the Cuban Agency the Boston Bank
would be given a hearing.
C.S.E. was authorized by the Board to say
this.
July 20, Tuesday
Board considered a letter from Secretary Mellon referring to
an expense charge of Governor Strong abroad in connection with his
appearance before a Parliamentary Committee to testify as to the effect
of proposed British legislation putting the gold standard into effect in
India.
Secretary Mellon said that the matter was a fiscal agency one.
754.
There was some discussion as to whether the cost item required
approval of the Board, but it was the coneensus of opinion that the
approval of the cost was for Secretary wellon, as a fiscal agency matter
over which the Board had no control, and that, therefore, nothing more
than acknowledgment and notation was necessary.
Governor Crissinger and James were very bitter against Secretary
Mellon saying he should have consulted the Board before asking Strong to
testify.
Governor Crissinger said he had heard of this before Strong
sailed but not from the Secretary or from the Board.
July 23, Friday
At the Board meeting Mr. Herson sent us from Atlanta a copy
of a letter dated July 17 from Under Secretary Winston to Governor Welborn
urging him to do everything in his power to adsist the embarrassed banks in
his district, in short, the idea was to go the limit.
Herson also s3nt
a copy of Welborn's reply, dated July 20, giving a review of what the
Atlanta bank had done in the past and was doing to assist embarassed banks,
also quoting an old letter to him from Governor Crissinger praising his
work to the limit.
It seems extraordinary that Winston should have written such
8
letter.
It would have been just as proper for our Board to write the
Collector of Customs at Yew York and give him instructions as to passing
the baggage of returning tourists.
At the meeting the Comptroller said the language of Winston
in his letter to Governor Welborn was almost exactly what he had used
in talking with Secretary Mellon.
write this!
Vdry likely we may find that Winston has also written
other Governors.
Possibly Mellon asked Win:ton to
755.
Auvst 3, Tuesday
We appointed a Deputy Federal Reserve Agent for Atlanta.
The
suggestion came from Governor Crissinger but we did not make the appointment until Newton the Federal Reserve Agent and Governor Wellborn asked
for it.
His duties will be to go to the member banks and help them put
their paper into eligible form and give them general assistance.
James at first strongly approved this but when it come to a
vote, voted against it.
Being an executive committee meeting, this
killed it but James finally changed his vote most reluctantly.
James
said nothing could be done until the whole Atlanta outfit was cleaned
out.
He is evidently out on a vendetta and would, I believe, like to
have trouble in Atlanta to vidicate himself.
was laid before the Board.
Hersonis report in Atlanta
It disclosed little that was new and cited
Quite a number of criticisable actions, some of which were of real
importance, but most of which were not vital.
In one part of the report he said that there was no hope
of satisfactory operation until the "one man power", meaning Wellborn,
was eliminated.
The report was referred to the Atlanta committee
much to James disgust.
He told me, in reply to a question, that he
already had read it, and I said I wanted to study it carefully, and
Eddy said he would send it in to me at once.
August 4, Wednesday
Board appointed an Assistant Federal Reserve Agent at
Atlanta in accordance with request of Governor Wellborn and Newton.
Governor Crissinger told Board that Harrison had telephoned
him that the New York directors were in doubt as to increasing
dis-
count rates and wanted to know if the Board would sustain them if they
voted to increase.
756.
Governor Crissinger gave a very patchy account of his talk
with Harrison, mentioning no directors by name; said Case was away
and finally strongly favored an increase.
Goldenweiser also favored an increase but said there was
no reason for this on purely commercial grounds.
He said the Bank of
England rate was 5,10, that customers' rates were about 4-1/24 as against
3-1/2 discount rate; that there was much speculation on the stock exchange.
He admitted that production was increasing and prices practically stable.
C.S.H. said he should like to know more about New York conditions
from the directors before deciding this question.
All present felt that
if rates ought to be advanced this was a good psychological time to do it.
James said the New York directors evidently wanted to pass the
buck to the Board so that if anything went wrong it and not they
would be blamed.
James said he was ready to vote to put in 0, over the heads
of the directors whether they wanted to increase or not.
C.S.H.
said he thought we should announce that if the directors
believed that conditions demanded higher rates the Board would carefully
consider their recommendation, adding that if rates should be determined
to be advanced the present was a good psychological time.
All opposed this.
The Comptroller seemed to want an increase, why, I cannot see.
Finally, it was proposed that the Board reply that if the
directors recommended an increase the Board would approve it.
C.S.H.
objected, pointing out that the Board had not sufficient knowledge of
conditions to say in advance what it would do, and finally it was determined to tell them that if they recommended an increase a majority of
those present would approve it.
C.S.H. insisted on this latter statement.
757.
I am amazed the Comptroller favored the increase.
President
prosperous
Coolidge has just given out an interview showing generally
and sound conditions, and if the Board at once favors
may have a bad psychological effect.
higher rates it
If a rate increase were clearly
necessity
necessary, C.S.H. would not mind this, but to his mind this
is not clear.
C.S.H. read over Hersonts report on examination of Atlanta
Bank.
On a separate memorandum, not signed, Herson spoke of the none
man power", and C.S.H.
filed a memorandum suggesting that Herson give
a brief general resumg
of his report, which was very long, stating
bank
what his conclusions were as to the standard of efficiency of the
of
and also pointinw out what facts he had on whether his statement
"one man power" was based, as there was nothing in the report bearing
on this.
Auzust
6,
Friday
Tames made no objection to the inquiries I put 0 Herson.
Governor Crissinger said it was a mistake for Platt and C.S.H.
to alternate on vacations to
executive committee attendance and
suggested that hereafter we leave the same week so we can have a meeting
of the full Board.
C.S.H. pointed out that this arrangement was made at the
suggestion of the Board members.
Finally, C.S.H. was asked to wire Platt to be here next Wednesday
to have a meeting to decide on appointing a man to study State bank examinations and ultimately a Board to do all such examining ourselves--apart
from the Federal Reserve Bank.
758.
C.S.H. agrees to the appointment but feels ell examin:tion
shotld be made through the Federal Reserve Banks, with our assistance
if necessary.
Did not go to Mattapoisett this week.
August 9, Monday
Eddy said he caught Herson just before he left for his annual
leave - to Bampf and as he then examines San Francisco, he won't be
back here much before Christmas.
Herson asked if he must prepare an
anawer to C.S.H. during his lerave or could he wait until her returned.
C.S.H.
told Eddy to consult Tames, that C.S.H. would do vthatever he
wanted--that before deciding the Atlanta questions he must have Herson's
answers.
August 11, Wednesday
Board granted application of Capital National Bank of New York
for trust powers in spite of adverse report of Federal Reserve Agent
Tay and New York directors.
Aye--Governor Crissinger, Comptroller and Tames.
C.S.H. and Platt.
Governor Crissinger originally gave this bank a charter over
protest of Federal Reserve Bank of New York.
deficiency in reserves.
The report shgwed constant
Governor Crissinger almost foamed at the mouth
denouncing the Federal Reserve Bank of New York for its ill treatment
of the Tew who controlled the Bank. The decision is extraordinary.
The Board took up question of bank examinations--State member.
Governor Crissinger and Tames wanted a new examiner appointed to study
reports of examination by States of State member banks.
to this and so moved and it was passed.
C.S.H. agreed
759.
Governor Crissinger then wanted a Board of examiners appointed
to conduct all examinationshitherto made by Federal Reserve banks of State
member banks.
C.S.H. said he had no objection to such a Board providing its
duties were to cooperate with the Federal Reserve Agents.
Governor Crissinger and Tames would not agree to this.
C.S.E.
said that for the Board through a central bureau to take over the regular
examinations of State member banks, over the heads of the ilederal Reserve
banks would be a case of centralization he could not stand for and moved
that the proposed board cooperate with the Federal Reserve Agents.
There was a long discussion and finally Eddy drew up a resolution providing for appointment of a chief and other examiners to cond,ict
special examinations ordered by the Board.
C.S.H. and all the others voted for this; C.S.H. saying he did
so on understanding that this did not apply to the regular general examinations but merely to special examinations ordered by Board.
Undoubtedly, Governor Crissinger and James mean ultimately to
make all general examinations special, but this can be settled when it
arises.
James pointed out that some of the largest State member banks
in St. Louis had not been examined by the State authorities for four or
five years.
C.S.H. believes that above resolution is wise if not made
general.
In speaking of discount rates Governor Crissinger said that
Harrison told him Governor Strong cabled favoring an increase in rates
and suggesting consideration as to whether it should not be 11 instead
of 1/2 of 1%.
Digitized
6 for FRASER
760.
This, to C.S.H., looks as if the Bank of England felt obliged
to increase its rates and wanted New York to make it easier for them
by putting up its rates.
Governor Crissinger said today the Federal Reserve Bank of
New York adjusted all its rates with a view to the condition of the
stock market--intended to be a slap at the bank, yet shortly After he
said he favored higher rates in order to stop stock exchange speculation.
Yet if our rates are to be used one way they ought to be equally
good the other.
I do not believe in increasing rates, possibly penalizing
business and crop movements in order to control the New York Stock
Exchange.
In present conditions there is a spread 1 to 1-1/2'' between
customers' rates and our discount rates, and it will be well to take up
this slack.
August 12, Thursday
The Board approved application of Federal Reserve Bank of
New York to increase discount rates from 3-1/2 to
4.
August 18, Wednesday
Governor Seay wired Chairman of Open Market Committee as
follows:
"Treasury is welcome to our proportion of bonds if it wants
them.
We do not need the investment, but I find it impossible
to approve the policy of buying System bonds if it results in
taking such a large amount of credit from the market in the
face of rising interest rates at a time when financing crops
and preparation for tax payments is going on. It can hardly
fail to further increase of interest rates at least temporarily
and coming on top of increase in the New York Bank rate cast
a chill over business which has managed to survive splendidly
notwithstanding the work of the oracles and sign readers who
predicted decline and depression. Business does not need a chill
761.
but encouragement when commodity prices and construction
work are showing hesitancy and declining tendencies. Furthermore, rising interest rates should have an unfnvorable influence
on Treasury September financing. Please express this opinion
to the Board and other Federal Reserve banks.
Seay"
I believe this is gospel truth and should have voted
against such sale had I been present.
I voted with regret for the rate increase only after Governor
Strong favored it and even suggested a lqJ increase.
Tinston also
favored the increase.
September 8, Wednesday
Had meeting to decide what to do on hearing on Campbell case
as to allowing Campbell to see our committee report and other evidence.
Campbell
Miller bitterly opposed letting Saisstagast have the evidence. Ile said
=Om
he had made up his mind to vote to remove di
and would agree
that he might see the evidence only if the Board would now agree to
remove him.
C.S.H. attacked this and said Campbell was on trial and
should know what the evidence against him was.
C.S.H. agreed with Miller that under the law we were not
bound to give any hearing but Pointed out that at the last meeting
we promised the Atlanta committee that at the bext hearing they and
Campbell would be given all evidence the Board had taken.
The record was read and fully confirmed this; even Tames
was shown to have agreed to it.
Finally it was agreed that if they
insisted on having the evidence Governor Crissinger should give them
a document prepared by Wyatt giving those parts of the committee
report (Tames, Berson & Wyatt) relating to Campbell and other evidence.
762.
September 9, Thursday
First hearing on Campbell case.
Governor Crissinger rend n general statement of the charges.
Mr. Howard, Counsel of Campbell, put in affidavits from practically all
of the Party (except the Boston witness, Rich and Anderson to effect
that Campbell was not intoxicated; one of the affidavits admitted that
Campbell had taken a few drinks.
Affidavits were put in from all of the Class A and B directors that Campbell was well Qualified for his position and had given
perfect satisfaction; also from many bank presidents to same effect.
Campbell was cross-examined by Governor Crissinger.
He
admitted that a friend gave him two quart bottles of whiskey before
going on board the "Cuba" and that he had taken two drinks.
Governor Crissinger also asked as to his expense vouchers.
Tables prepared by bank auditor showed that Campbell was credited with
a payment of ,'150.00 in two accounts--n duplicate.
Campbell said this
was the auditor's error and that he could show he never credited himself
but once.
He admitted that he had put in board at a hotel for eight
days when only five days should have been entered.
He said the extra
amount represented extraordinary expenditures which could and should
have been entered as such.
Governor Crissinger cross-examined Campbell on certain partd
of our evidence, e.g. be asked him if Rich and Anderson did not have
to help put him to bed.
Then Campbell's counsel asked that he be allowed
to see the evidence of the Board as to this.
He did not, however, demand
all of the evidence, as C.S.B. supposed he would.
Then the chairman of
the Atlanta Rank Committee asked the Board to give the Committee all
763.
of the evidence held by the Board, citing the agreement of the Board
at its last meeting.
The Board then withdrew into executive session.
Miller said
he admitted the Board had so agreed but he was not at the meeting and
was not bound by the agreement.
He favored a refusal but rather weakly.
Finally Miller drew up a resolution stating:
1. Board not bound to have a hearing under the law;
2. Hearings would embarass Board in future;
In this case, because of prior agreement, the Board
will give the evidence (as prepared by Wyatt) relating
to Campbell, to the Atlanta Bank Committee as a privileged
and confidential matter to keep it in it investigation.
C.S.H. asked if Miller meant that Campbell was not to have
it.
He said yes.
C.S.H. then said he would, as a compromise, accept
Miller's motion, if amended so that Campbell also should be given the
evidence.
Miller then withdrew his motion.
C.S.H. then offered Miller's motion amended so as to include
Campbell.
Much discussion
WRS
had.
Some expressed the fear that dis-
closing Rich and Anderson's testimony might subject them to a libel
suit.
Wyatt said he thought the matter might be held to be privileged.
This was reason for putting in the word "privileged" in the motion.
so as
Finnlly after some minor modifications, C.S.H.fs motion--changed
to read thRt Governor Crissinger was to make a statement as above,
Campbell-which was to DrAira be agreed upon in writing by the Committee and
was unanimously voted.
Miller, however, being recorded as not voting.
764.
September 10, Friday
Meeting with Open Market Committ-e.
Governor Case reported
that special investment account now amounted to about 210 millions
and that there would be further payment by Treasury of 10 millions
on September 15.
His report stated that money was hardening and ad-
vised against further unloaAing of government securities, except as to
the 10 millions and asked authority to leave the special investment
account at about 200 millions.
Dr. Miller, to my surprise, said that at the present time,
we should neither increase or diminish amount of money in the market,
and added that the 10 millions should be replaced, also the 12 millions
held as foreign account which matured September 15.
On motion of Governor Norris the committee voted that the
special investment account be left at about 200 millions, still keeping in force a previous vote that the committee have leeway to increase
up to a total of 250 millions.
Governor McDougal moved to amend by
adding "increase or diminish the amount of 200 millions by 50 millions,
which Governor Norris accepted, and this was voted by the Committee.
In the afternoon the Board took up this vote.
All agreed
against the motion of Governor McDougal.
Miller's motion:
No change in System account; 10 millions should be replaced.
Lost.
- Aye - Miller, Hamlin and Cunningham
No
- Crissinger, Platt, James, McIntosh.
Platt's motion:
Board approve action of Open Market Committee except authorization
to decrease System account by not more than 50 millions.
765.
C.S.F. left meeting.
Platt, at James' suggestion, amended his motion:
Committee authorized to maintain special account at from 200
to 225 millions.
Carried.
Aye - Platt, James, Cunningham and McIntosh.
No
- Crissinger.
Not voting - Miller.
Sept. 16, Thursday
3.30 P.M.
The Federal Advisory Counsel asked for a pre-
liminary meeting and went over the papers for tomorrow's meeting.
September 17, Friday
Meeting of Federal Advisory Counsel.
The council reported
in favor of one Federal Reserve Agency at Havana.
September 22, Wednesday
The Atlanta Committee telephonedasking if they could go over
their report on the Campbell case with Governor Crissinger or with
some member of the Board informally so as to be sure that the quotations
of testimony in their report did not violate the instructions of the
9oard as to the privacy and privilege.
James bitterly objected--said the Committee was trying to
put the Board in a hole but did not say how.
After long discussion Eddy was directed to inform the Committee--waiting on the telephone, that the Board declined to have any
individual discussion with the Committee, which must itself construe the
Board's instructions.
Eddy did this, but Mr. Black of the Committee
said that the Committee would be in Washington tomorrow anyway.
766.
C.S.H. asked if there was a quorum of the Board tomorrow,
whether the Board would hear the Committee as a Board, but he
could get no satisfactory answer.
James said the Committee would surely whitewash Campbell
and again referred to that he told the Atlanta directors, that two
of our Board had said they would not vote to continue the Havana
agency unless Welborn, McCreary and Campbell resigned or were removed.
C.S.H. put James the direct question--who were these three?
James said he was one but he would not reveal the others
without their consent!
September 24, Thursday
Atlanta Committee came up.
Board decided not to hear them
but to let Governor Crissinger talk with them.
Later he told me they
wanted to refer to Rich's testimony in some detail and Governor Crissiner
said there was no objection to this.
October 5, Tuesday
Harrison came before Board.
All members, including Secretary
Mellon, were present.
Governor Strong ill in New York.
Harrison laid before Board a proposed agreement under which
Federal Reserve Bank of New York for itself and other Federal Reserve
Banks caring to join.
Based on a cable from Jay in London, New York directors
approved suhject to approval of Board and they will reply to Jay if
Board approves agreement:
767.
The Federal Reserve Banks to join with Bank of England and
other central banks to buy 25 millions of prime bills indorsed and
guaranteed by Bank of Belgium--to cover period of one year--Bank of
Belgium to ship gold in payment if necessary and government not to
interfere.
Agreement conditioned on securing a private banker's credit
for Belgium of 75 millions - to be paid to Bank of Belgium by government in reduction of its liability.
The cable from Jay was read.
C.S.H. moved approval.
be stated.
Miller and Tames said exact terms must
C.S.H. then made reference to cable in his motion.
The
agreement contemplated a commission charge of one-half of one percent
in addition to discount at rate over Federal Reserve Bank of New York
rate--minimum rate - five percent.
Miller and Governor Crissinger objected to charging any commission on bills purchased.
C.S.H. then added a paragraph to his motion that the Board,
without imposing it as a condition, expressed hope a commission would
not be charged by Federal Reserve Bank of New York.
Finally Miller moved to strike out last paragraph as to commission and substitute a direct prohibition of any commission.
Lost.
The vote -Aye -- Gov. Crissinger, Miller, James and Cunningham
No
-- Sec. Mellon, C.S.H., Platt and Comptroller of
the Currency.
C.S.H./s motion was then voted on.
before.
Lost--the vote, same as
768.
Adjourned until 3 P.M.
In afternoon Platt presented a motion very much like C.S.H.ts
but adding at end that the Board desires to have the Federal Reserve Bank
revise the agreement as to commissions as Board does not consider a
commission on purchase of a Bill issued by a central bank as consistent
with Federal Reserve Act or the principles.
Finally on vote, Platt's motion carried unanimously.
Harrison told me later in P.M. he had cabled Tay, Board's
decision adding
that what was said about commissions was not a con-
dition of approval.
I think this is correct, but it may necessarily bring commission matter again before the Board later--but I hope not.
October
7, Thursday
Board considered the Campbell case and Federal Reserve Bank
of Atlanta.
C.S.H. read a resolution reciting that the Board had con-
sidered the testimony and also the report of the report of the Atlanta
Committee of the Federal Reserve Bank of Atlanta; that the Board was
not bound to give any hearing but it had so voted and, therefore, would
decide the case on the Record; that the Board found that the evidence
would not warrant removal of Campbell on charge specified of intoxication but that Campbell did bring liquor on the boat and gave it to his
party for which the Board condemned and censured him; that he was also
unbusinesslike and evasive in rendering his expense account of the trip
and there was no evidence that the money was not actually expended, and
the Bank was directed to take necessary steps so that such inadequate
accounting should never again be tolerated.
769.
The report of the Atlanta directors committee was an absolute
whitewash of Campbell; it was really grotesoue.
Yesterday I spoke to Governor Crissinger who said that
Campbell should be censured but not removed and he should so vote.
Platt told me Cunningham had said the same to him.
James at once
moved as a substitute to C.S.H.ts motion a declaration removing
Campbell as an officer and director, such removal to go into effect
on November 18.
Dr. Miller then said he would agree to advise Atlanta that
the Board had decided to remove Campbell unless he at once resigned,
but that if this was no unanimously agreed to he would second Jamest
motion.
C.S.H. said he would not agree to this, that the Board had
made up a record and had specified charges of intoxication and inefficiency; that intoxication was not shown by the record; that the voucher
question as to accounts was not such as would warrant'removal.
Miller
then seconded James, motion which was carried.
Aye:
Governor CrissinEer, Miller, James, Cunningham and
Comptroller of the Currency.
No:
C.S.H. 9nd Platt.
The absurdity of finding that Campbell was guilty and then
postponing his removal until Nbvember 15 did not occur to the majority.
Finally it was arranged that Governor Crissinger should call
up Campbell, inform him of the decision and tell him it would go out
unless he resigned before
3 P.M.
The Board then adjourned for lunch.
770.
At 3 P.M. Governor Crissinger said he had talked with
Campbell and that he asked for time to consult the directors at
their meeting tomorrow.
The Board after long discussion de,cided
to send out notice of the cause of removal as soon as the minutes
of the meeting were approved—tomorrow morning, the majority saying
that if Campbell resigned before November 15, they would vote to
reconsider.
Governor Crissinger insisted on a complete statement of
the record, charges and findings.
The Board has acted unjustly towards Campbell.
He undoubt-
edly deserved censure but to remove him on this record was to my mind
unwarranted.
Tames gave notice that he should more on a certain date in
November for the removal of Director McCrary.
Tames said over and over again that he was on trial more
than Campbell and he literally forced the majprity to take his dictation--at least Governor Crissinger and Cunningham.
After the meeting Platt confirmed my statement that Tames
specifically threatened to resign if his motion was voted down.
October 19, Tuesday
Harrison appeared before Board.
Secretary Mellon present.
Harrison said a misunderstanding had developed--that the minimum rate
for buying Belgian bills was 6 per cent and not 5 per cent as the
Federal Reserve Bank had understood and that the directors asked approval
to agree to this rate; also that they had tried to carry out suggestion
of Board as to giving up a commission on bills bought; that they had
771.
finally agreed to collect the commission but to rebate it up to the
time of the expiration of the British credit, which was also without
any commission.
Platt moved to authorize the
6)(:,
/ minimum commission.
New
York bank to agree to the
Long debate.
Dr. Miller said that he would be disposed to agree, had
the New York bank shown proper respect for our suggestion as to giving up the commission.
Harrison said the directors had shown all respect to the
Board--that the Board merely made a suggestion which the Bank tried to
c-)rry out and the above was the only way they could do it.
Miller and Tames thought it wrong to charge
6°7, due or
purchase rate.
Secretary Mellon said the foreign banks and Belgians had
apreed to this, that it was not an unreasonable rate, that it helped
rather than hurt Belgium for she would have to increase rates at home
(now normally Wo but really about 6) to prevent speculation on return
of Belgian capital after stabilization.
C.S.H. said the market was fixed in Belgium, the
6% agree-
able to Belgium and the European banks, and there was no reason why
we should tjve Belgium a lower rate than the 6(7,.
The mere fact we were
rich would not warrant giving the stockholders of the National bank of
Belgium 14 on say 10 million dollars.
On vote, Platt's motion lost.
Aye - Secretary Mellon, Platt and C.S.H.
No - Miller, Governor Crissinger, Cunningham and Tames.
Comptroller absent.
772.
Fothing further was done about the matter of comnissions.
Secretary Mellon got another picture of our Board in nction.
They
refused to look on this transaction as a banking one, but looked at
it purely from a charitnble standpoint.
If we give nway q00,000 to the
stockholders of Nntional Bank of Pel.gium, why not give some to the cotton grorers or the wheat growerst
In the nfternoon the McCrnry matter was tnken up.
Jemes spoke about the record and claimed it
to remove McCrary.
VMS
sufficient
C.S.H. reminded James that in his report as a
committee he did not recommend McCrary's removal but merely asked
Ilonrd to consider the whole evidence and determine what ouglit to be
done.
C.S.H. seid if he were to vote on MeCrery's election, he
would vote against it; or if the Iederal Reserve Act provided that the
Board must npprove the election of direcors, he would vote against
epproval, hut ns to removnl, he felt the evidence was clearly not sufficient; that really all that was proved was:
1. Goxing to Cube;
2. Taking a friend with him; and
3. Drinking on board the gunboat, but no intoxication.
C.S.F. said it would be impossible to assign ceuss for removal on
these grounds, and asked Board to remember that if we did remove him
and the banks felt our action unjust, they might at once reelect him
and we should be brought into conflict with them.
The Comptroller and
Platt said they were unwilling to vote for removal on the evidence as
did also Cunningham.
773.
James moved to summon McCrary to Washington to tell
him the Board felt he should resign and if he did not resign it
should remove him.
C.S.F. moved to lny on table, to be taken up at any time
on a week's notic...
Lost.
Aye - Platt and C.S.H.
Eo - All the others.
Dr. Miller moved to summon McCrary to Washineton ard put
further
auestions to him.
James finally accepted Millerts motion.
Then Cunningham moved that this evidence did not warrant
removal by Board.
This was in substitution of Miller's motion.
Carried.
Aye - Governor Crissinger, Cunningham, Platt and C.S.F.
NO - James.
voting - Comptroller and Dr. Miller.
Then Miller moved about same as his original motions,
further auestions to Mil.
Lost.
Aye.
Miller, Janes end Comptroller.
NO.
Plett, Cunningham, Governor Crissinger and C.S.H.
This apparently ends that matter.
October 20, Wednesday
On reading minutes Dr. Miller tried to have them read as
if the orly matter decided yesterday was giving authority to the
Federal Reserve Dank to buy Belgian bills.
Dr. Miller said he would
never agree to our Federal.Reserve banks joining any consortium of
Furopean banks.
C.S.F. pointed out that we had approved such a con-
sortium, as shown by the reference in the record to the cable from
Tay to the New York bank.
774.
October 22
Secretary Mellon spoke of Dr. Miller's statement at the
meeting that he would have voted for the Ee, minimum rate for the
Belgian bills had the Federal Reserve Bank of New York treated with
respect our recommendation for wiping out the commissions agreed upon
for opening the credit for the Belgian bills.
Yovember 9, Thursday
Open market investment committee reported a Governors Conference.
Asked authority to increase purchases by 50 millions in
December to be sold later when money demand fell off.
Board held separate meeting to consider it.
3S
Finally adjourned to get Winston's opinion in after-
usual, objected.
noon.
Dr. Miller,
Winston came in at 2:30.
Said he thought request of committee
a reasonable one.
C.S.A. offered motion of approval of committee's request.
Dr. Miller offered substitute that no occasion existed to change amount
already authorized last October - 200 to 215 millions.
Dr. Miller's motion carried.
Aye - Governor Crissinger, Dr. Miller, Cunningham and
Comptroller.
No.
C.S.H. and James.
Open Market Investment Committee told us they did not intend
to make any specific request to buy securities in their report, so
Board reconsidered its vote.
775.
November 12, Friday.
Hearing on Cuban Agency.
Present:
Committee of clearing houses of district.
Committee from Federal Reserve Bank of Atlanta.
Representatives of National City Bank and Chase
National of New York.
Federal Reserve Agent Curtiss of Boston.
Governor Case and Norris.
Mr. Oscar Wells, president of bank in
- opened for
the Bank, followed by many other ankers all speaking for Atlanta.
Representatives of National City of New York and Chase National spoke
of the vital necessity of keeping an agency there;
agency was impracticable.
all agreed a joint
Federal Reserve Agent Curtiss said if
circulation of Federal Reserve rotes in Cube was to be continued, Boston desired to withdraw from the agency; that a double agency was not
practicable as experience has demonstrated:
that there should be a
single agency to act for the System any other Federal Reserve Bank
tope allowed to participate and pay its share of expense of it if
desired.
No one objected to designation of Atlanta except that Governor
Case said
Federal Reserve Bank of New York did not want it, but that
Board should consider what Federal Reserve Bank was best fitted, and
he filed a brief.
Case, I think, really wanted National City Bank
designated but did not say so nor did the National City ask for it.
In afternoon Oscar Wells and a committee of the Atlanta
stockholders conferred with Board and said they would be glad to try
776.
to clean up the friction between Atlanta and Board; that they would do
nll in their power 4-o secure defent of McCrary and Governor Telborn
if the Board would so indicate.
C.S.H. said the Board had no rirlt to interfere directly
or indirectly with the election of n director or appointment of a
Foverror; that all the Boa-rd could properly do was to let the committee
know that some members felt that neither McCrary nor relborn had their
confidence, but that the stockholders had the richt to elect McCrary
and the directors to rerppoint Welborn if they desired, subject, of course,
to the right of the Board to remove them for cause.
Mr. Wills said he believed McCrary would not be elected again
enI also that Governor Welborn had told him that if reelected in January,
he would resign at end of the year.
Finally the Board--in answer to a
stRtement of Wills, said that if a committee of the directors should ask
for a conference with Board, the Board would grant it.
Governor Crissinger told committee that it had been suggested
to him that the Board extend Campbell's removal until end of year.
If Governor Wellborn says he will resign as above, I think
the Board should let him be reelected and give leniency to Campbell.
Wells ndmitted to Board that Governor Viellborn was drinking
heavily as did also Mr. Ottley.
The Board severely criticised the whitewashing report of
the Atlanta directors and Wills said they were angry because the loard
made the investintior and did not first ask them to do
saiI he thought we should have asked the directors to investigate but
then report about satisfied him that it would have been idb to do so.
Wells intimated that they would have made a different report, but
C.S.H. said it
be nn insult to Board to imply this.
777.
Thursday, November 11
7 P.M. dinner Fiven to Board by Governors and Agents.
Governor Norris presided and said C.S.H./s reappointment was a great
thing for the country.
Vice President Dawes was present as a guest and made a very
interesting address cbn conditions in Furope.
He paid
P
tribute to
Presidert Wilson sayinF he wes one of the greatest men in the world
and the great leader of Idealism but that he v,as ahead of his time.
He said the elections of 1920 and 1924 merely meant that the people
wanted rest.
Dr. Miller spoke of conditions in Furope.
0.S.B . pro-
nounced the benediction.
Friday, November 12
Dr. Miller asked for an informal conference of Board.
He said Governor Crissinger called him up last night before
leaving town and said the Board ought to consider extending the time
of Campbell's removal from November 15 to say January 1.
The Board went over the matter.
Those who originally
voted to remove Campbell called attention to the resolutions of the
Atlanta Committee which not only exonerated Campbell but also attacked
our Board for its arbitrary action.
Three members felt that to change
the Campbell sentence now would make the Board appear as bowing to the
Atlanta committee, and, possibly, to have been influenced by what Mr.
Oscar Wells said about Governor WeLlborntsresignation.
I felt there was much force in the above reasoning.
The
Atlanta directors by their absurd report and bitter attack on the Board
have merged poor Camnbell into a broader ouestion.
778.
November 16, Tuesday
Mr. Hopkins, director of Federal Reserve Bank of Atlanta,
called.
He is one of the supporters of Governor Welborn.
He came he
said to explain the resolution of the Board of Directors attacking the
Federal Reserve Board.
He said he voted for it but he realized now it
was a great mistake; that the directors were angry because they were
not asked in the first instance to make the Campbell investigation.
C.S.H. said he,himself, looking back, felt that the Atlanta Board
should have been asked first to investigate; that when he read their
report, however, he doubted whether they would have made any different
report; that the report they made--a complete whitewash--embarassed him
very much in his effort to have the Board censure Campbell but not
dismiss him; that the Atlanta Bank had the right to reaffirm their confidence in Campbell, but when it went further and attacked the Board,
it was evident that such action did not help C.S.H. in his effort to
induce Board to be lenient with Campbell; that Campbell deserved a
severe censure and the whitewashing report of the Atlanta Committee
did not help matters, to speak mildly.
Hopkins said he advised Campbell to throw himself on the
mercy of the Board as C.S.H. told him at his first interview, but that
Campbell was badly advised.
Hopkins said his directors were very much stirred up by
James' statement to them that three members of the Federal Reserve
Board had told him they would not vote to continue the Havana Agency
with the Atlanta Bank until Campbell, McCrary and Welborn were eliminated.
779.
C.S.H. said the Board had not authorized such a statement
and that it was purely personal.
Hopkins then spoke of Governor Welborn and asked if he
would be removed if reelected.
C.S.H. said he had no authority to speak for Board and
did not know what it would do; that he believed, personally, that
an attempt would be made when the annual salaries were fixed to disapprove the present salary of Governor Welborn.
Hopkins reminded C.S.H. that last year the Board approved
an increase in Governor Welborn's salary and that Governor Crissinger
suggested it and asked him to put it through at the directors' meeting.
Hopkins then said - Governor Welborn wants to get out but not under
fire and said, if I state to you that if reelected he will state that
he will resign at end of year, would this satisfy the Board?
C.S.H. asked if he had authority to make this statement
and could C.S.H. tell this to the Board.
Hopkins said he knew it was true but he would not now
authorize C.S.H. to make the statement but that later he would write
C.S.H. to this effect.
C.S.H. said he would not answer for the Board, but if he
wrote him he would lay it before the Board.
C.S.H. said he had always been a friend
of Governor Wellborn
and that, outside of the Board, he had never been told that Governor
Welborn was incompetent; that he had, however, heard statements that
Governor Wellborn was drinking heavily and that this disturbed him
greatly.
Hopkins said there was no truth in this!
saying he would write C.S.H. later.
Finally, he left
780.
December
3, 1940
At Board meeting Governor Crissinger said Jay was to resign to
accept a position on Transfer Committee under Gilbert in Europe.
Dr. Miller said Warburg should be asked to be Federal Reserve
Agent.
James said New York
Committee should consider this and
Platt was away, so the matter was dropped.
December
C.S.H. suggested Alexander.
4, Saturday
Governor Crissinger came in and seemed enthusiastic for Warburg.
Miller asked me to step into his office.
Warburg.
He was enthusiastic for
He said the New York directors had suggested Governor Case,
Farrison and Burgess,the present Assistant Federal Reserve Agent;
that case di( not want it hut would take it as a matter of duty; that
Harrison did not want it; that the New York directors really wanted
Burgess; that Burgess was a good man for Federal Reserve Agent but
as Chairman would be dominated by Strong.
C.S.F. said Warburg was eminently qualified for the place
S ut that he feared he would not work in cooperation with Strong; thrlt
while the act intended the Chairman to be the dominant officer, a status
had been created and that Strong undoubtedly was a potent factor perhaps
overbalancing Jay although they cooperated together perfectly; that
Warburg would undoubtedly seek to dominate Strong and with his lack
of tact, there might be trouble for them from the start; that certainly
nothing should be done in the way of putting in a man offensive to
Strong and the directors; that as regards Burgess C.S.H. felt he was
an admirable man and that he would cooperate with Strong; that in view
of the status of Governor, towering up at most of the banks over
the
chairman, he felt it was a Question carefully to be considered whether
781.
Burgess would not be a good man; that C.S.H. thought Strong would cooperate
with him rather than dominate him.
Miller said 'lexander refused to take Warburg back as a director
of his bank after he left the Federal Reserve Board, on ground that he
did not want any director who had been actively connected with a banking
house such as Kuhn, Loeb & Co.
C.S.H. then went in and saw Secretary Mellon.
of Burgess and seemed much distrubed as to Warburg.
He was in favor
Fe said he would
ask Governor Crissinger to tell Board he wished to confer with them when
they took up the question.
I am satisfied Warburg's appointment would throw the New York
Tlank into confusion and that Strong would probably resign, =lthough
Warburg is, of course, fit for the place.
December
6, Monday
Atlanta Committee meet Board--said Governor Welborn would
positively refuse to run another year if reelected for 1927.
James
accepted this and nil ended in hnrmony.
Discussed Jay vacancy.
with Secretary Mellon.
Governor Crissinger did not play fair
He knew Mellon wanted Burgess but told Eoard--
of course it could appoint Burgess if it was willing to be dominated
by the New York Bank!
Plett said Warburg if appointed would not represent Board in
New York but he would be a Board in himself in rivalry with our Board.
December
7, Tuesday
C.S.F. and James reported in favor of consolidation of Boston
and Atlanta into one Cuban Agency to be managed by Atlanta alone
7F32.
beginning January 1, 1927.
C.S.H. and James appointed committee to work
out details with an Atlanta Committee and report to Board for final
approval.
Senator Glass asked me to read over * * * *
In the Cuban agency, Miller first moved that the Board give
notice of abolishing the agency after a given date.
Lost.
Governor Crissinger, Miller - aye
C.S.H., Platt, Cunningham and Tames, - No
Then C.S.B.'s motion was carried, I think, unanimously.
December 15, Wednesday
Board took up reappointments of Federal Reserve Agents.
made a savage attaclp on Curtiss.
Miller
C.S.H. and Plat called attention
to this recommendation favoring his reappointment saying he was one of
the best Chairmen in System.
James also said he would vote against
him unless Board agreed to tell him that it elected him only to give him
a chance to arrange his affairs, as he would not be appointed again.
Same suggestion made as to Austin, Heath and one or two others.
C.S.H. demanded postponement to give directors' committee a
chance to prove Curtiss was an outstanding men and Chairman.
Governor
Orissinger intimated that Curtiss would be defeated if a vote was taken
without this notification.
to him.
Governor Crissinger said he had heard objections
C.S.V. asked if they came from the First National Bank.
Governor
Orissinger gave an evasive answer but refused to say.
Even Cunningham who said he knew nothing about Curtiss, said
he felt there was need of new blood at Boston.
Finally after long debate it was agreed that all of the agents
recommended should be unequivocally reappointed but that on January 15
783.
or not later, the Board would consider all the agentsend determine
whether or not notice should be given them that they would not be
appointed for 1928.
Governor CrissinEer said recamp of Cleveland was a greet
failure but that he had recommended him for reappointment because of
the "great pressure" brought, evidently referring to Secretary Mellon.
Then Miller and Cunningham began to melte excuses for DeCamp es he
had served such a short time, evidently to assuage Secretary Mellon.
Governor Crissinger asked C.S.H. to join in this recommendation--as n member of the Cleveland District Committee witbout saying
anything about "pressure".
Evidently Miller has been caucusing with
ZrImes and Cunningham for they know nothing about Curtiss.
Evidently
elso they would have refused to vote for Jay, had he not resigned.
December 22, Wednesday
Board took up consideration of salaries.
The Federal Peserve
Pank of YEW York had recommended an increase of ,"5,000 ( 10,000 to a5,000)
for Assistant _Federal Reserve Agent Burgess.
opposed any increase.
Miller and Tames violently
Finally C.S.H. moved to approve increase.
Lost.
Aye - Governor Crissinger, Platt and C.S.E.
- Miller, James, and Cunningham.
Then
long discussion followed and finally Miller said he would agree
to a ?,000 increase and so moved.
This was voted, I think unanimously.
The sole desire of the "Bloc" was to show their authority
to the Federal Reserve Bank.
Inasmuch es the directors were unanimously for Burgess for
Federal Reserve Agent in place of Tey, the directors will take this as
784.
a direct blow at them - which the Bloc undoubtedly intended as they
are all against Burgess for Federal Peserve Agent.
The directors also recommended an increc,se in salary of
. C.S.H. reminded the Board that Philbin had been
made Secretary of the Bank and that the increase (:'''7,00 to
9,000)
was in part to make up for this increased duty - the previous Secretary having received
8,500 for this alone.
Wyatt said he could not recommend an increase for his work
as counsel but rather grudgingly
admitted that the work of Secretary
was worth at least $1500.
All to no avail.
C.S.H. moved approval.
Lost.
Aye - Platt and C.S.H.
No - Miller, Tames and Cunningham.
voting.
Governor Crissinger not
Another exhibition of "authority"!
I went in and told Secretary Mellon who was greatly disturbed.
I said there was no chance of appointing Burgess as Federal Reserve Agent.
He said he would be glad to give Burgess a position in Pittsburgh at
aslarge a salary as the Federal Reserve Bank of Eew York could give him
es Federal Reserve Agent.
He said he was satisfied that the Bloc wanted
to hit the Federal Reserve Bnnk.
He said he was going away for Christmas; but'would tell Governor
Crissinger he w nted to be present when the matter of Jay's successor
came up.
After the meeting I received a letter from Jay as to Philbin
which I asked to have filed and circulated.
Secretary Mellon said he
tloughtit might be possible to fix up Philbin and Burgess later when
he was present.
785.
He said he did not want to go into the Board this P.M. and
be put in the position of breaking a tie vote.
December 31
Friday
In afternoon met with Secretary Mellon to select Jay's successor.
C.S.E. presented Burgess' name and gave sketch of his life.
Secretary
Mellon praised Burgess.
Platt said Gates McGarrah would be a better man.
adjourned without action.
Finally
@FedFRASER