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266 BOARD OF GOVERNORS OF" THE FEDERAL RESERVE SYSTEM WASHINGTON ADDRESS CF'F'ICIAL CCRREBPCNOENCE TC THE BCARO X-9504 February 26, 1936. Dear Sir: Referring to the Board's letter of January 13, 1936 (X-9427) transmitting a copy of a letter addressed by the Board to the Federal Reserve Bank of San Francisco with regard to the establishment of disc01mt rates every fourteen days, there is inclosed for your information in th~s connec- tion a copy of a letter addressed by the Board to the Federal Reserve Bank of San Francisco under date of February 24, 1936. The telegram referred to in the lust para.gra.ph of the inclosed letter is thn.t addressed to the Chairman of the Federal Reserve Bank of Dallas under date of FebruarJ 24, 1936, a copy of which was sent to you with the Board's letter of that date (X-9501). Ver,y- truly yours, Chester Morrill, Secretary. Inclosure. TO CHAIRMEN OF ALL FEDERAL RESERVE BANKS. : . 267 X-9504-a FebruarJ 24, 1936. Mr. S. G. Sargent, Secretary, Federal Reserve Btink of Gan Francisco, San Francisco, California. Dear Mr. Sargent: This refers to your letter of January 18, 1936, in reply to the Board's letter of January 13, 1956, with regard to the requirement of the statute that rates of discount be established every fourteen days or oftener i f deemed necessary by the Board of Governors. You state that, in order to comply with the requirements of section l4(d) of the Fuderal Reserve Act as amended, your board of diroctors changed tho datus for its regular meetings from the first und third Thursdays of each month to alternate Thursdays. You point out, however, that, if the date for a mooting of the board falls on a holiday, the meeting must be held either the day before or tho day afteF such holiday and that, if held the day boforo, fifteen days will elapse until the next meeting is held, whereas, if held the day after, fifteen du.ys will have elapsed since the previous meeting. As pointed out in its letter of January 13, tho Board of Governors feels that all possible stops should be tELken by the Federal Reserve banks to insure action upon discount ro.tos within the period required by the statute. Howcvor, it is tho view of 268 . .. -2- X-9504-a the Board that there will be a subst<.ntial compliance with the provisions of the statute if rates of discount are established b,y a Federal Reserve bank on alternate Thursdays or, when such an alternate Thursday falls on a holiday, then on the next preceding or the next succeeding business day. On the other hand, when failure to establish discount rates results from the absence of a quorum at a meeting of the directors, a different question is presented. It can only result from a failure of a majority of the directors to attend the meeting, and it would seem obvious that all possible steps should be taken to avoid such an occurrence. For your information in this connection, there is inclosed horewith a copy of a telegram which is being sent b,y the Board today to one of the other Federal Reserve banks relating to the establishment of discount rates. Very truly yours, (Signed) Chester Morrill, Chester Morrill, Secretary. Inclosure.
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