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&nu.try 2L, 1917. Dear lir. Curtios:I have your noto o taauary 13th, as to the form of ooliatoral note, for which plowie accort ray thLinks• iery aiizerely yours, Curtiss, 't Soi.:rd of P1rectors, . iedera lie:servo 13anIt of 1.!oston. Frederic I • RFD L. AIKEN GOVERNOR DIRECTORS FEDERAL RESERVE BANK M. HOWE FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT OF BOSTON CASHIER ', ---WALTER AND DEPUTY FEDERAL RESERVE AGENT 414 1 V Li yi ERNEST M. LEAVITT Lji-1 IV i ASST. CASHIER 9 OPpre. ., r CHESTER C. BULLEN THOMAS P. BEAL, BOSTON. MASS. in THOMAS W. FARNAM. NEW HAVEN. CONN. 1.5'17 ARTHUR OP ASST. CASHIER S. HACKNEY. VICE-CHAIRMAN M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. .........„............ "' ..........„.., EDMUND R. MORSE, PROCTOR, VT. CHARLES G. WASHBURN. WORCESTER, MASS. CHARLES A. RUGGLES ; ALLEN HOLLIS, CONCORD. N. H. _ MANAGER COLLECTION DEPT. r.L.6c.iiVL BOARD I il..:=1 - I 332. 3 , 4 January 16, 1917. Hon. Charles 3. Hamlin, c/o Federal heserve Board, 1ashington, D. C. Dear Mr. Hamlin: Your Javor oi the 9th in reference to the collateral notes which we are using with our member banks has been received. The matter of including United Jtates bonds or notes was considered, but we decided not to include thal form of collateral, both because we felt that it was very doubtful if we should ever be called upon to loan our banks against such a collateral and also that if they did borrow in that way we might prefer a different form of note. In my banking exoerience I never remember to have seen a bank's note secured by government obligations, -LSowe felt that if this were included in the note it m;ght be misunderstood by the member bank and would detract somewhat from the more specific details which we wish to include in reference to commercial paper security. I aooreciate very much your calling our attention to this matter, but wish to assure you that the omission wo..; intentional and not an oversight. With kindest regards, I am Yours very truly, 44, Federal Reserve FHCAEB gent. 4 FEDERAL ,. ESERVE BANK ALFRED L. AIKEN GOVERNOR FLORRIMON M. HOWE * 4:: * BOSTON / CASHIER ERNEST M. LEAVITT ' 53 STATE STREET ASSISTANT CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT. DIRECTORS CHAIRMAN AND FEDERAL RESERVE AGENT VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. DEAL. BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN HOLLIS, CONCORD, N H FREDERIC H. CURTISS. WALTER S. HACKNEY. Dec• 4 9 • 9-16. - Hon. ":1. I. G. Harding, Governor, Federal Reserve Board, Washington, D. C. Dear 3ir ,I beg to acknowledge receipt of your letter (Yr the-azt inst<-, in regard to the use o-r slips carrying the endorsement of a rediscounting bank, to be attached to notes offered for rediscount, or as collateral with us. Thanking you. for :your courtesy in the matter, and for the expression of your opinion, with Which I heartily agree, I am, Very truly yours, AI:L/1.1 BOA:,) II ,74.4i0a i s ‘ V recezeber 1, 1916. Mr. Alfred L. Aiken, Governor, Federal reserve Bellk, Boston, Lear Zir:Receipt is ackno'aedged of your letter of November tv,enty-eighth. It appears that some of the member banks object to endorsing notes hypothected as collateral security for short tern billa payable discounted with ycu. Out of deference to their tiehee you are using a perforated alip which bears the u.ember bnkso endorsee.ent an. when discounted. hich i attached tc the note Thi3 clip is preeultably detached by tLe br &,nk ehen the note is presented to the maker for ilayent. You ask the f3oardts aFproval of this custom. In reply your attention is called to the OiniOn of Counzel dated July 12, 1916, and published on page 610 of the Bulletin for November. by the Pourd. This opinion has been approved The slip used complies with the reco=:endation of Coun..1,1 in that it contains a notation identifyine the note thich is attached. Counsel calls attention, however, to certain cases in which perforation of the attachd slip is construed as indicating that it v,a.; intended for severance and was not, therefore, a part of the original contract and in view of these cases advises zvainst perforation of such In a later olinion 7,hich will appear in t;le recomber issue of the Bulletin Counsel reaches the conclusion that .here such notes are already in negotiable form they need not be endorsed by the LeiLber b1nk hen deposited by the LeLber bunk as collateral for its bill payable. It L:Ay be thai.t this rulinc, which }L.?, been approved by the Board, Nill !Lake 4e, 7 it unnecessary to attach these slips except in a few instances. The Lioard shares your vies that the better practice Li for the endorsement to be a;ade on the note itself. It has, neverthe- less, approved the opinion of Counsel in this mtter and has interposed no objection to the use of such slips where this bccoalec necessary. For reason:; to v.rich you call attention the Board does not desire to formally sanction this practice. Banks should not be encouraed to feel that a legitim.A.e rediscount or a borrowin of Koney from a Federal reserve bank is an in- dication of weakness. It is believed that as the System devel- opo this foelin6 on the part of member banks will gradually be eliminated. In the =eantime you are ftl1y justified in exer- cising your discretion in the matter ,11.1 may per-it the use of these slips whenaver you deem this necessary. It !cay be well in providini: new slips to omit the perforation but under the circumstances the opinion of Counsel for the Board i in accord with that of your Coumel that your interests ,.ill not be jeopardized by the use of the slips submitted for the consideration of thi:, office. argr Dictated by.. • Approved by Peopectfully, Governor. • tIl IS SLII L. AIKEN PUR ,MON DIRECTORS FRED:I:RIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT GOVERNOR M. HOWE FEDERAL RESERVE BANK CASHIER WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS. ERNEST M. LEAVITT OF BOSTON ASST. CASHIER CHARLES G. SANFORD. BRIDGEPORT. CONN. ARTHUR 53 STATE STREET CHARLES A. RUGGLES M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS EDMUND R. MORSE, PROCTOR. VT. MANAGER COLLECTION DEPT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN DIIC 11916 (thOVEFINOR'S corrns Hon. HOLLIS, CONCORD. N H riov. 28, 1916. P. G. Harding, Governor, Federal Reserve Board, Washington, D. O. Dear Sir,We have found among our country banks a great disinclination to endorse notes pledged by them as collateral for short tim%notes discounted with us, and some time ago I discussed with our attorney the legality and propriety of having the endorsement made on a separate slip to be attached to the note so deposited. I enclose herewith samples of our forms that we have prepared, and have in some cases used, and would be much obliged if you would advise us of your approval or disapproval of same. You will notice that the slip contains identifying description of the note, that by means of a gummed end of the slip it is firmly and definitely attached to the note to which it refers, and is so perforated that when the note is returned to the bank depositing it as collateral, it can be detached at the perforated line, leaving the note unendorsed. Having our attorney's approval of this form, we will continue to use it subject to letter of advice from you as to your opinion in the matter. My personal feeling is that the endorsement should be made on the note itself, and that the bank should be accustomed to the idea that there is no impropriety about P. G. fkding, #2. such endorsement, and that it does not carry any reflection upon them. Ve do everything we can to encourage this idea, and I fully expect that in a comparatively short time the prejudice against such endorsement will disappear,,but meantime we have felt that we could save the feelings of some of our banks by the use of the method described above, while at the same time we would entirely safeguad ourselves under the opinion of our attorney. Respectfully yours, a l Govern or. LE A/11 dItit iiiii 1111111 rHis *E BE ATTACHED FOR HE )URPOSE OF ENDORSEMENT TO NOTE OF SLIP TO MAKER ENDORSER NOTE DATED AMOUNT DUE PAY TO THE ORDER OF THE FEDERAL RESERVE BANK OF BOSTON 60 CASHIER I tIIIffffff A' lp I' TO BE ATTACHED FORGE OSE OF ENDORSEMENT TO NOTE OF - TH MAKER ENDORSER NOTE DATED AMOUNT DUE PAY TO THE ORDER OF THE FEDERAL RESERVE BANK OF BOSTON B 0 60 CASHIER FEDERAL RESE ' (4 1 1 BCIARD October 18, 1916. My dear Mr. Elliot: Here is a form of note used by the Boston Federal Reserve Bank in handling the fifteen-day note proposition. I do not know whether we have received forms from other Banks, but, at any rate, I should like to have you look it over, and see if you approve of the form. Yours very truly, Mr. M. C. Elliot, Counsel. ! 11 CI? (Place) \-It' , __,...... e days after date for value received, the promises to pay to the FEDERAL RESERVE BANK OF BOSTON, or order, at said Federal Reserve Bank, _ Dollars, having deposited with said Federal Reserve Bank, as collateral security for the payment of this or any other promissory note or notes made or hereafter to be made by the said member .bank and payable to the Federal Reserve Bank of Boston, the following described security: with power on the non-payment of this or any other such promissory note when due, or at any time or times thereafter, to sell, assign, transfer and deliver said security, or any security added to or substituted for the same, or any part thereof, at Brokers' Board or at public auction or private sale, without notice; and the said Federal Reserve Bank may become the purchaser at any such sale, if at Brokers' Board or public auction; and any security substituted for the above, or added thereto, shall be equally covered by this agreement. Should the market value of the security hereby or hereafter pledged depreciate in the judgment of the said Federal Reserve Bank, this bank hereby agrees to deposit, on demand, additional security satisfactory to the said Federal Reserve Bank. After deducting all legal or other costs and expenses of collection, sale and delivery, the residue of the proceeds may be applied to the payment of this or any other such promissory note, whether then payable or not, returning the overplus to the undersigned. It is hereby certified that the above described notes, drafts, bills of exchange and bankers' acceptances deposited as collateral security are eligible for rediscount, or for purchase by Federal Reserve banks under the provision of the Federal Reserve Act and Amendments and under Rules and Regulations of Federal Reserve Board. 6-3 44,ttauf -A412, September 14, 1916. Mr. Frederick H. Cartiss, Zederal Reserve Agent, Boston, Mass. Dear Sir:The Federal Reserve Board today approved a rate of 3J on promissory notes of member banks secured by eligible paper running not to exceed 15 days for the Federal Eeserve Bank of Boston in accordance with the request contained in your telegram of September 14th. Very truly yours, Governor. greasarg Department TELEGRAM 25:111 11; 50 govt al) Boston 2..ass Fed - .es Board 2 :ashn DC Board of directors voted today to establish rata of three and one if percent on promissory notes of member banks secured by eligible japer running for a period of not oxcooding fifteen days effective Londay 3ept eighteenth subject to your a,Troval 7rodick Curtis Chaiawnn r Ui i V 224p Apuoved:- 4 19 (3 iera It-P.-xecutive Committee. RdSCO's:: FEDERAL RESERVE BOARD Form 156 ,,• THE FEDERAL RESERVE BOARD CROSS REFERENCE SHEET File No. Inquiry of Mr. Case re. Subject rediscount for Marine Trust Co. Buffalo N.Y. the note of Buffalo Saving Bank ( Sp. fader Non-member bank paper ) SEE File No. 332.2 #2 3/3/33 Letter of Dated Remarks 332,3 #....& U. S. 00V 22N22N r PRINTING 0291CS: 1922 (fifteen day note) FILE <-••••t*. " T--; , 30, .,..,........,, .4 9 naocmbor 3, 1:17. Mar Mr. Konqol: , thank you vi;ry much for your letter of Dcoomblr -• ^ firatanr4 fcr the atatistic which v,,u furnishad V.;r7 t:uly Tc.ura go r. PA Zonzol, raq., noiDe,v New Yorh • . 1 7 ) FEDERAL RESERVE BANK ‘/ OF NEW YORK New York, Dec. 1, 1917. Mon. Paul E. Warburg, De-Duty Governor Federal Reserve Board, Washington, D. C. My dear Er. War:burg, In accordance with your convers2tion with Mr. Jay I enclose herewith list showing rediscounts of customers' T)Pper secured by Liberty Loan Bonds maturing beyond fifteen days; giving in omormairmeesioworrimarmiarimmormareertiro each case the name of the bank discounting and the amount of the rediscount for each bank. Also classification of this by maturities. These figures qre as November 30th t close of business 1917. Very truly v_s 21r,‘T— 2 1 Ass tint Cashier. fL FEDE°AL RESERAK IAN OF NEW YORI. STATEMENT OF BILLS DISCOUNTED SECURED BY U.S. LIBERTY LOAN BONDS CLOSE OF BUSINESS DEC.'!. 1(- 17. ) NAME NEW YORK CITY ATLANTIC NAT#BANK BANK OF NEW YORK N.B.A. BANKERS TRUST CO. FIFTH NATIONAL BANK GUARANTY TRUST CO IRviNG TRUST CO LIBERTY NAT BANK MERCHANTS 'JAI' BANK NATIONAL CITY BANK N.Y. COUNTY NAT.BANK UNION EXCHANGE NAT.BANK TOTAL STATE OF NEW JERSEY BUTLER. FIRST NAT. HACKETTSTOWN NAT.BANK CLOSTER NAT.BANK HIGH BRIDGE FIRST NAT. MONTCLAIRE FIRST NAT. NEWARK ESSEX CO.NAT MERCHANTS NAT. NORTH WARD NAT. ft UNION NAT. ORANGE NAT#BANK PATEIRSON NAT#BANK PERTH AMBOY FIRST NATi RED BANK SECOND NAT. WEST GRANGE FIRST NATI' TOTPL DUE IN 15 DAYS DUE 15 TO 30 DAYS DUE 30 TO DAYS 16.000.00 DUE 60 TO 90 DAYS 280.2(1.07280.201.07 615.000.00 80.497.78 9.000.00 90.620.00 597.191.39 34.111.34 10.000.00 19.000.00 33.317.00 16.500.00 100.000.00 71.821.50 1.414.958.44 500.000.00 418.850.00 296.2n1.07 615.000.00 9.685.766.46 38.000.00 162.441.50 12.176.36 321.248.00 1.607.485.53 19.131.298.63 24.597.533:25 273.000.00 6.423.467.50 129.596.78 3.56.26P.75 1.100.00 2.450.00 137.950.00 9.571.155i34 TOTAL 2.061.966.83 600.000.0o 691.850.00 9.979.736.25 130.696.78 335.874.36 3 650 799.09 . . 6.940.00 4.803.00 975.00 554.81 207.88 75.000.00 50.000.00 15.928.60 23.449.00 9.1C0.10 1 50.333.00 152.412.86 21.971.74 22.980.53 359.706.15 50.437.50 50.235.38 25.250.00 10.562.79 24.424.00 11.743.00 75.000.00 150.333.00 202.412.66 111.116.25 25.250.00 339.706.15 50.437.50 600.no 50.000'10o 12.393.50 144.935.00 31.45).84 50.000.00 12.,93.50 31.075.34 465.695.98 1.240.173.H) 69 .50o.00 69.500.00 144.935.00 31.459.84 568.242.97 1 75.359#60 STATE OF CONN. DANBURY NATIONAL BANK 60 RECAPITULATION STATE OF NEW YORK NEW YORK CITY STATE OF NEW JERSEY STATE OF CONN. 7.703.388.29 24.5')7.533.25 1.240.373.89 69.500.00 33.610.795.43 EDE RAL RESERVE BA, OF JE.W YORK ab • DUE t. 15 DAYS DUE 15 TO.30 DAYS 406.00 40.544.69 40.000.00 DUE 30 TO 60 DAYS DUE 60 TO 90 DAYS TOTAL NE W YORK STATE FIRST NAT BANK AM STERDAi., CAYUGA CO. NAT BANK AU BURN NAT BANK OF AU BURN FIRST NAT BANK ALDIIIINSVILLE FIRST NAT BANK AY SHORE GRUATAN NAT BANK ROXVILLE BUFFALO TRUST CO BUFFALO CITIZENS COiil TRUST CO BUFFALO CANVDAIGUA HAT BK CUA"DAIGUA FIRST N AT BANK CATO MERCHANTS & FARMERS DANSVILLE FIRST NAT BANK DOLGEVILLE MERCHANTS NAT BANK ELMIRA SECOND NAT BA: K ELiitIRA FAR ROCKAWAY NAT BANK OF CITY NAT BANK FULTON FTRST NAT BANK GENEVA FIRST NAT GREENWICH FIRST NAT BANK GROTON TOPKINS CO NAT BANK ITHICA FIRST NAT BANK JA,,ESTOWN NAT BANK OF KERHANKSON RONDOUT NAT Bkil< KINGSTON FIRST NAT BANK LACONIA NAT BA.K LEROY NAT BANK FALLS LITTLE NAT BA, K OF MONTGOMERY HIGHLAND NAT BANK NEW BURGH STATE NAT NO. TONAWDA NAT BA K OF :NORWICH OWEGO MX FIRST NAT HAT BANK OSWEGO CITY NAT POTSDA;., FALLKILL NAT PPOUGHKEEPSIE NAT BA K RED CREEK NAT BANK RED WOOD FARMERS NAT BANK ROME FIRST NAT SILVER CREEK FIRST NAT SYRACUSE MERCHANTS NAT BANK SYRACUSE SALT SPRINGS SYRACUSE i:IFGS NAT TROY FIRST NAT TULLY FIRST NAT UTICA UTICA CITY NAT UTICA WYOMING CO NAT WARSAW WATERTOWN NAT BANK FIRST WTESVILLE 402.67 8.000.u0 6.364.55 14.523.50 10.066.67 88.880.00 525.404.02 153.100.46 17.635.04 310.400.00 100.67 57.500.00 69.297.61 19.280.84 23.295.69 342.400.00 633.100.00 14.867.00 909.00 41.512.50 22.834.08 20.400.99 49.490.00 71.901.90 88.880.00 10.016.75 5.752.00 24.230.26 11.192.40 100.00 222.159.06 1041000.00 18.840.89 100.000.00 275.730.00 4.735.37 40.350.00 1.000.00 1.000.00 102.513.60 4.080.75 8.686.96 90.900.00 21.513.00 729.523.21 24.500.00 130.500.00 72.583.65 21.795.80 71.407.00 93.100.00 4.117.84 77.700.00 983.27 402.67 295.14 617.752.50 10.078.00 2.017.26 3.508.61 151.500.00 7.275.00 3.244.50 22.625.00 401.79 300.8,)2.76 3.647.42 5.534.44 34.562.20 26.045.33 213.079.00 520.803.27 331.466.90 153.600..00 55.000.00 101.000.00 148.663.78 102.819.00 19.528.40 156.253.21 665.032.66 22.158.54 10.066.67 17.074.50 17.074.50 5.043.15 88.880. 573.810.02 200.412.37 596.521.64 265.580.78 342.400.00 1.001.000.00 89.207.76 20.290.51' 41.512.50 46.129.77 20.400.99 49.490.00 71.901.90 88.880.00 267.598.47 15.852.00 18.840.89 100.000.00 275.730.00 4.735.37 40.350.00 6.080.75 102.513.60 99.586.96 21.513.00 733.936.19 195.300.00 130.500.00 72.583.65 21.795.80 72.792.94 617.752.50 -10.078.00 5.525.87 151.500.00 3.244.50 543.841.76 524.450.69 337.403.13 153.600.00 55.000.00 101.000.00 183.225.98 128.864.33 19.528.40 5.047.98 7.703.388.29 O '17 •. • Go r ; I f : I , 444G FEDERAL RESERVE BANK OF NEW YORK October 7, 1916. Dear Mr. Allen: ReplyinL; to your letter of September 22nd 4ncerning our rate on fifteen day paper, I did not reply earlier as the matter was left rather indeterminate by our board. I now wish to advise you that the matter was taken up at our meeting on October 4th and it was definitely settled that it should apply to all discounts whether on member bank notes or on commercial paper maturing within fifteen days. Very truly yours, / Chairman. Sherman Allen, Esq., Assistant Secretary, Federal Reserve Board, Washington, D. C. 4 "So R ,:ck• -\.; 0.4•:#4 , v71 PJ/RALI ILL 17 MWM September 22, 1916. Mr. Pierre Jay, Chairman, Board of Dirootors, Federal Re:icrve Now York City, N. Y. Dawe Sir: Referring to your appAcation of SeptaA ar ' 2d for a 3 per cent. rte on 15-day paper and our telegram uf Septonber 21 apiroving application, m. I ..1.y inquire wnethar the new rate applies to advances on member b.Lnks' collateral notes only, or alAo to discounted commorclia p. .per rrF%turing witnin 15 days; in other words, whether trio nJw rate apilias also to discourted commerci-t1 paplr maturing ftor 10 but within 15 dye. Very truly yours, Aasi3tant Secrytz.,ry. O 1"e" 1 FEDERAL RESERVE BANK OF NEW YORK EP 2 4 Jul() 0 , (1,.--trriber 21, 1916. , 0,„1 AM's c •AFFic., 4 Dear hr. Hardin: Receipt is acknowleded of your teleL;ram of to-day dvisinL: us that the Federal Reserve Tioard ap- IToves our recormiended rate of 3,) for 15 day paper. Very truly yours, Honorable W. I. G. Hardin, Governor, Federal Reserve Board, Washiruton, D. C. PJ/RAH • • Form 40 Egi FEDERAL O TELEGRAM RESERVE BOARD WASHINGTON September 21, 1916. 1916 rewpral luotwyt wort i Federal Reserve Agent, New York City. Board approves your recommended rate of three percent for fifteen day paper, effective twenty-second. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD Governor. riAlw O 1 ;;;(:)„, rt4 FEDERAL RESERVE BANK OF NEW YORK i. SF.t) :; 1916 kiceit ptember 12, 1916. i lebatatilikween I write to acknowlede receipt of your letter of September(7th with reference to the amendment to the Federal Reserve Act authorizing Federal reserve banks to make advances to member banks 011 their promissory notes for periods not exceeding fifteen days, which will be brought to the attention of our board of direct(rs at their next Respectfully, A7, 1 4 Secretary. Federal Reserve Board, 74ashinLton, D. C. - /- 33 .21 I December 18, 1917. Dear Governor Rhoado: I have your letter of December qpyciatcebth. The bill oontomplating f:,eaing thc fifteen lay • notes from the proli3ion3 of the stamn tax has been submitted 14 the Board to Congres3, but we cannot, of courae, tell how soon the lat1,er will act in the matter. We have put all the pressure behind it that wz. can. It miT,ht be -Ielpful if you would ace to it that some of your importPnt banking friends in Philadelphia bring some pre33ure upon their representatives to expedite the matter. Very truly yours, C. J. Rhoads, Esq., Gov.Irnor, Federal Reaerve Blmk, Rhiladelphia, Pennaylvania. • (/' • 1, FEDERAL RESERVE BANK OF PHILADELPHIA L -‘') ' 408 CHESTNUT STREET CHARLES J. RHOADS RICHARD GOVERNOR L. AUSTIN CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT EDWIN S. STUART DEPUTY GOVERNOR FRANK HENRY B. THOMPSON M. HARDT DEPUTY CHAIRMAN OF THE BOARD DEPUTY GOVERNOR AND CASHIER ARTHUR E. POST THOMAS GAMON, JR. ASSISTANT CASHIER ASSISTANT FEDERAL RESERVE AGENT C. A. McILHENNY ASSISTANT CASHIER December 17, 1917. Dear Mr. Warburg: Can you tell me whether there is any hope of Congress passing in the near future an amendment to the law by which the stamp tax will be repealed on 15-day notes made to cover loans from Federal reserve banks? It is not satisfactory from an operating roint of view to continue the practice which we are temporarily following,of buying commercial paper of fixed dates under a contract, or of buying United States Bonds under a contract to resell the same, although we can work along on this plan if it is absolutely necessary. Yours Governor. HON. PAUL M. WARBURG, Vice-Governor, Federal Reserve Board, Washington, D.C. CJR-R 3 32 3 . ' / , ,.......":1-„. Novanbcr 26, 1217. Dear Governor Rhoc: '6')n my r, turn fror;( Atlantic, City 3 I find your Llttor of :lovonly.:x t7lentiothAnd in J:47Jret to ;ay that thero haa not been any change with ra3peot to the neoeouity of etampinc not for firtcon—dLy lonas nor do I ee how en.n,expcot any ohanlo in this oonf tr;ction. very truly your, C. J. Rho:lifts, nog., Gcv3rnor, Federal RouervIl Dank. Philielphia, - • • FEDIIAL RESERVE BANK OF PH1LAD LPHIA 408 CHESTNUT STREET CHARLES J. RHOADS RICHARD GOVERNOR EDWIN L. AUSTIN CHAIRMAN OF THE S. STUART AND FEDERAL RESERVE AGENT DEPUTY GOVERNOR FRANK M. HENRY HARDT THOMAS ARTHUR E. POST GAMON, JR. ASSISTANT CASHIER C. B. THOMPSON DEPUTY CHAIRMAN OF THE BOARD. DEPUTY GOVERNOR AND CASHIER AtSISTANT FEDERAL R ERVE AdENT" -- A. McILHENNY ASSISTANT CASHIER November 20, 1917. Dear Mr. Warburg: ' I enclose the detailed statement of the Philadelphia Clearing House which shows a number of banks below the average balance for the week, and others with large excess balances. We are having many inquiries as to the stamp tax on fifteen-day collateral notes,and have told all of our banks that there is no way to avoid this tax that we know of except fresh legislation from Congress. Of course we could discount for banks paper of longer maturities and then rebate it. but we are rather reluctant to start this practice in order to save them the stamp tax. Has anything developed since our recent conference in Washington which would permit our making short fifteen-day loans without requiring the stamp tax? Yours truly, Governor. HON. PAUL M. WARBURG, Vice-Governor, Federal Eeserve Board, Washington, D.C. CJR-R IRCU ATE naiTTLY WA DELAN1, MILLER 'r HAMLIN After which return to tiles"' SeevolOOTAty office ' -71)72AL FW11)ACID FILL • TELEGRAM Form 40 FEDERAL RESERVE WASHINGTON BOARD une- 7..Mills— Austin., Fodor Ll nessrve 'rtnice 2it1w1o1phtn, .ti. Rate of threo thvif 1.'4r cent eatablicked by' your bank for both rodi8004nto oollatera loans having t aturity of firtorot tivn or less* to tttko offoot t0dv* Juno oloventh r U1rLtCJZIsevcsitoon, 3pL,rovorl OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE Ofr http://fraser.stlouisfed.org/ 2-7720 Federal Reserve Bank of St. Louis Sooratary FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT STREET RICHARD L.AUST IN, CHARLES J. R HOADS, CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GOVERNOR EDWIN S. STUART, FRANK M. H AR D T, HENRY B. THOMPSON, DEPUTY GOVERNOR DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT CASHIER ARTHUR E. POST, THOMAS GAMO N, J R. ASSISTANT TO FEDERAL RESERVE AGENT ASSISTANT CASHIER June 6, 1917. FEDERAL RESERVE BOARD, Washington, D. C. Sirs: At a meeting of the board of directors held today, by resolution duly carried, a rate of discount of 31-, per cent was established for both rediscounts and collateral loans having a mnturity of 15 days or less, to - take effect on .June 11, 1917. Awaiting your action upon this rate, I beg leave to be, Yours truly, 'Federal Ileserve Agent. G . 7 /6 9411 - -/1- FqiDEOAL- RESERV E B WAS RESERvE 0i4R0 Fax 'TON z-; The telegram given/below is hereby con& 2-7729 s t"ki F k Federal Reserve 3w3k, 7hiladelphia, a. Please wire date rut, of three peroent on fifteen day paper established by your bank and approved May tenth boogie effeetive. 0 • KSERVE E01130 FILE / ' FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT STREET CHARLES J. RHOADS, RICHARD L.AUSTIN, CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GOVERNOR EDWIN S. STUART. HENRY B.THOMPSON, DEPUTY GOVERNOR FRANK M DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT HAR DT. CASHIER THOMAS GAMON, J R. ARTHUR E.POST, ASSISTANT TO FEDERAL RESERVE AGENT ASSISTANT CASHIER Lay 11, 1917. FEDERAL RESERVz BOARD, Was hin ton. Sirs: The receit is acknowledged of your favor of the 10th inst., confirming your teleram of the 9th, advising us of the approval of the 3 per cent rate on 15 day y,ner estblished by this bank. 6 Yours tr- 1y, Federal Reserve Agent. VEDST:JIAL 2 \)3 * Ic 04-, 10, 1917. Mr. R. Federal Reserve A3ent, a. , hiladelphia,, Sir: say In answer to your letter of Lay 9 I beg to thnt 1 have today telegraphed you as follows: on "Board today approved three per cent rate per established by your bank." fifteen day The above I now confirm. Very truly yours, Secretary. • Form M • TELEGRAM FEDERAL i7;-7 r/ B0..",D, 1 WASHINGTON 144y 10, 1917. 'oderhl _eaerve Bank, r,oi,rd today approved three per oent rate on fifteen day -.'iJ eetablishea by your bank. OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/2-7729 Federal Reserve Bank of St. Louis RESERVE ) • st • FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT STREET CHARLES J. RHOADS. RICHARD L.AUST IN, GOVERNOR EDWIN CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT S. STUART. DEPUTY GOVERNOR FRANK HENRY B. THOMPSON, DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT M. HAR D T, CASHIER THOMAS GAMON, J R. ARTHUR E. POST, ASSISTANT CASHIER ASSISTANT TO FEDERAL RESERVEAGENT Jay 9, 1917.( 2ELFRAL RESERVE BOLRL, ashington. Sirs: It a special meeting of the board of directors held this day, on motion duly carried it was resolved that the rate for the discount of all classes of paper with a maturity of 15 days or less be established at 3 per cent per annum. Awaiting your action upon this rate, I beg leave to be Yours truly, G . Eederal Reserve Agent. BOM\D FILE • May 8, 1917. Dear Mr. Rhoads: T hay, your letter of May 7th ,,, fTh.r s- nd!ng and thank you Clearing House report, which I have noted with interest. Thank you also for what youstate about the gold movement from Philrldelphia to New York. Governor strong was hare for a fer days, and I asked him to discuss this matter thoroughly with you and the other Governors, and to let us have a report about this problem. We are very anxious to do all we can in the matter. As to ycur fifteen-day rate of 3%, the Board no doubt will approve it. It approved such a / 4.e . yesterday for Minneapolis and Kansas City. perfectly justified. Very Charles J. Rhoads, Esq., Governor Federal Reserve Bank, Philadelphia, Penna. .1'.1.13 y , I think it is 1 FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT STREET CHARLES J. R HOADS, RICHARD L.AUSTIN, CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GOVERNOR EDWIN S. STUART, DEPUTY GOVERNOR FRANK HENRY B. THOMPSON, DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT M. HAR DT, CASHIER THOMAS GAMON, J R. ARTHUR E. POST. ASSISTANT CASHIER ASSISTANT TO FEDERAL RESERVE AGENT .ay 7, 1917. Dear _r. Warburg: I enclose herewith summary of the Clearing House report for the past week, which shows a slight increase in the surplus reserve, but I imagine that this surplus is all held by a very few institutions and that many of the banks are very closely loaned up and in some cases below their reserves. I would call your attention to the fact that although the subscriptions to the June 30th certificates received by us amounted to .„;14,000,000, yet we have been requested to transfer to Lew York for the account of the Treasurer of the United States, 0_8,000,000 to date, thus taking out of this district that much gold reserve. As we wish to be in a position to rediscount freely for our member banks I hope that the Treasury Department will arrange to leave substantial balances with us and disburse it in this district so as to equalize. the situation. We have called a special meeting of our Board for Wednesday, the 9th instant, with a view to ,reducing our fifteen-day rate from at per cent to 3 per cent, and would ask that the Board advise us whether or not such a rate will be approved. Yours truly, Governor. HON. PAUL M. WARBURG, Vice-Governor, Federal Reserve Board, Washington, D.C. CJR-R enclosure • PHILADELPHIA NEWS Monday, May 7, 1917. BURE U No. 54 THE PHILADELPHIA BANK STATEMENT Philadelphia—The average condition of members of the Philadelphia Clearing House Association for the week preceding Monday, May 7, 1917, is shown in the weekly statement, with comparison as follows. May 7, '17 Dif.prev.wk. May 8, '16 May 10, '1:5 Loans. $563,681,000 I 83,402,000 8512,268,000 8416,730,000 Depts(in_l) 495,614,000 1 5,089,000 413,688,000 343,469,000 5,000 8,217,000 D 9,427,000 11,284,000 Circulation Due fr bks. 90,095,000 D 5,023,000 74,671,000 54,212,000 Dep.of bks 176,807,000 D 2,944,000 174,338,000 137,877,0(.0 Ex Clear.H 24,136,000 I 1,711,000 21,314,000 13,813,000 Resv.held. 105,957,000 I 2,954,000 113,168,000 99,449,000 819,000 78,305,000 61,977,000 Res reqd . 83,732,000 I Surplus.... 22,225,000 I 2,135,000 34,863,000 37,452,000 Surplus May 11, 1914, was $15,618,000 May 5, 1913, $8,831,000; May 6, 1912, 812,061.000. DOMES MINES CO. N.Y.—Dome Mines Co. issued the following statement: "In view of extremely unsatisfactory labor conditions prevailing in the Porcupine Mining district, which have caused a curtailment of both development and production, and in order to conserve the cash resources of the Dome Mines Co. to meet emergencies which may arise in future, the directors have decided to reduce dividend payable June 1, 1917, from 50 to 25 cents a share," CAPTAIN WAS A "PRUDENT MAN" Washington—German ship Kron Prinzessin Cecilie which turned back to Bar Harbor after declaration of war for fear of capture, was relieved from liability for failure to deliver its gold in England by a decision of the Supreme Court, which held that the captain acted as a prudent man and that a business contract must be considered in a business way. COTTON N.Y., 1.05—Cotton: July 19.49 off 1, Oct 18.68 off 5, Hay 19.61 off 7. 1.05—Phila., quiet: Phila Elec 31, L S Corp 18 up 1.05—Market dull U S S 115Y) up Nod St West 120 up 1, L V 61g up 134, u P 133Y2 up g, / N.Y.—Sales to 1 p m. 339,200 shares; bonds, $1,835,500. 54 PHILADELPHIA NEWS BUREAU. Time 1.10 ;",:3:=T:'1. I a 2 '2°) FEDERAL RESERVE BANK OF PHILADELPHIA )- 408 CHESTNUT STREET CHARLES J. RHOADS, RICHARD L.AUSTIN, GOVERNOR CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT EDWIN S. STUART, DEPUTY GOVERNOR FRANK HENRY B.THOMPSON, M. HAR D T, DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT CASHIER THOMAS GAMON, J R. ARTHUR E. POST, ASSISTANT CASH I ER ASSISTANT TO FEDERAL RESERVE AGENT Eovember 25 1916. T;;arburg: I have your 1ot Le2 of the 24th instailt, the last . i araraph of which zucz;ests an entirely nevithoght to me -J because when I spoke of collateral in my letter of the 23rd instant, I was thinking of collatoral offered to us by a Faember bank for a 15-day note, whereas I think you reply deals with collateral eligible to secare Federal .Leserve notes. In view of the present opinion of the Board's Counsel e will ylot offer 15-day notes as collateral for Federal , Iesorve notes when we have occasion to take out notes. 'je would, however, again ask your judgment as to the first question which vx had in mind when we wrote. Very tru y y 2 7 Governor. HOU. PAUL II. WARBURG, Aiice-Governor, Federal Reserve Board, Washington, D.C. CJR-11 • -) FEDLRAL RESERVE ; t ifib w V (`, • ) r:f4 ( 1 FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT STREET (P ‘ C, HARLES J. RHOADS. RICHARD L.AUSTI N. GOVERNOR EDWIN CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT S. STUART. DEPUTY GOVERNOR FRANK GEORGE W. NORRIS. M. HAR DT. DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT CASH I ER THOMAS G AM ON. R. ARTHUR E. POST. ASSISTANT CASHIER ASSISTANT TO FEDERAL RESERVE AGENT Octouer 2Y, 191u. Dear Er. Warburg: 'Thank you very much for your letter of yesterday enclosing opinion of Counsel to the effect -that eligible—pap6f -aepodited as collateral security for fifteen-day notes need not be endorsed by the member bank, provided the collateral is in negotiable form. I notice that the original letter of Er. Harrison was sent me and thinking that perhaps you might wish to have it in your files, I am returning it to you having kept a copy thereof for our use. I am very glad that Lir. Harrison feels it possible to render an opinion as he has done because it will tend to facilitate business which is always appreciated by our member banks. We were delighted his assistants come to us we have for sometime been Broderick which will give him a number of questions puzzled us. to have Ur. Broderick and yesterday afternoon because hoping for a visit from Ur. us an opportunity of asking on detail matters which have Very truly you Governor. Hop_ PAUL L. _ARBURG, Vice-Governor, 2ederal Reserve Board, Vlashington, D.C. CJR-R ENO. m .. wmmmwwmwmugmmsmmavu,. A 410 FEDERAL RESERVE BOARD WAS October 26, 1916. 4 liar Warburg: The attached letter(from Governor Rhodes raises the question whether eligible paper pledEed by a member bank as collateral security for its promissory note, on which aavances are being made by its Federal reserve bank, shoula be indorsed by such member bank. If the pul:JI: to be pleuged as security is made payable to the order of the member bank, it must, of course, be indorsed by such member bank in order that the Federal reserve bank may have legal title and be in a position to realize upon the security in case of default. This question was discussed in detail in an opinion of this office printed on page 363 of the Awember, 1915, Bulletin. The only que6tioa to be considered is whether the rheE.Ler bank should indorse paper to be pledged as security, even thous:h it i> in neotiable form wit_put such indorsement. Section 13 of the Federal Reserve Act, as amended, L provides that any Feleral reserve bank may ma- e advances to its member banks on their promissory noteL, provided such notes "are secured by such notes, drafts, bills of exchange, or bankera' accelJtances as are eligible for rediscount or for purchase by Federal reserve banks unaer the provisions of this act," etc. There is no doubt, of course, that bills of exchani-2e ant ba4gersl ,ar burgLi 10-26-16 410 acceetances, as dietinguished from promissory notes, need not be indorsed to be acceptable as security, because such paper is eligible not only for rediscount under tne provisions of Section 13, but is also eligible for purchase under the provisions of Section 14 without tie indorsement of a member bank. In no event, therefore, need a member bank indorse bankers' acceptances or bills of exchange which are already in negotiable form in order to make them eligible as security for its promissory notes. The question, therefore, resolves itself solely into a consideration of whether or not promissory notes may be used as security witeout te.e indorsement of the borrowing member bank. Promissory notes cannot be purchased by Federal reserve banks in the open market either with or without the indorsement of a member bank, but Section 13 provides in part that: "Upon the indorsement of any of it., member banks, which shall be deemed a waiver of demand, notice and protest by such bank as to its own indorsement exclusively, any Federal reserve bank may discount notes, drafts, an, bills of exchange arising out of actual commercial transactions," etc. The test of eligibility of a note is the nature of the use to which its proceeds are put. If it is drawn for a com- mercial purpose as defined by the Act, it is elieible paper though of course in procuring its reeiscount the meaer bank nrast comply with certain conditions preceeent require_ either by the Act or the regulation of the Beard. In the opinion of this office the indorsement of a member bank is a condition precedent to the rediscount of eli- 1A1 Warburg . 1/3 10-26-16 gible paper, and is not one of the essential elewents of eligible paper. It is merely a statutory condition precedent to the rediscount of paper which is eligible for rediscount under the terms of the law, - that is, it is one of the steps incident to ti,a rediscount of eligible paper. It would seem, therefore, that ti.e amendizent to Section 13, authorizing Federal reserve banks to advance money to their member banks on the security of their promissory notes secured by such paper "as is eligible for rediscount or for purchase by Federal reserve banks," wakes eligible as security all notes, bills, and acceptances of the kinds made eligible for rediscount or purchase by Federal reserve banks and does not require the additional indorsement of the member bank cri such security. If the security is in negotiable form without the indorsement of the member bank that is sufficient because the Federal reserve bank would then have the requisite legal title. As long as the member bank is bound on its note, its indorsement on the security would in no way strengthen the position of the Federal reserve bank. There is only one obliga- tion and that is on the note, and in case of default the Federal reserve bank could bring wait against the member bank upon that note only. It could not also recover on the namber bank obligation as an indorser upon the security for that note. So in the case of insolvency the Federal reserve bank could file its claim only for the amount of the original note and not for 10-26-16 •• the amount of the note plus the amount of the security. 114 It seems clear, therefore, that it would be futile to require the additional indorsement of the member bank if the paper pledged as security is already in negotiable forw, and th t the law doce not require such indorsement. Respectfully, Hon. Paul M. Varburg, Vice Governor. rl A October 26 '1, 0, Dear Governor Rhoads: have your letter of yesterday. Your nuction :zhether eligible paper put up collateral security for fifteen day notes neu, #e endorsed is ansered by our coun3e1'a letter of .Nhich append a copy. I a= glad that his ruling permits us to do this businesq with as little red tape as possible. Yours truly, C. J. Rhoads, Es., Governor, Federal Reserve Ban, Philadelphia, Pennsylvania. , Enc. - 9ctober 26, .iour .r. T-c; fittActed, }Attu- I'rom Governor Rhoies question whatLxr eligible paper 1.1ed,e1 b7 a nember t.t.nk col tr-dst,curiLy for its priory note, on whk:n aklvanCes i.ret4ing made by its Fjarril rri u.nk, shoul4 ta by ;men metbef If t4e ..3r to be p1etT0,1 s ecuritf i, iy- abl,,, to tat; ordar of tr:, Lumber bani„ it wuat, of caurr.c, 4 inaor30:1 by io4.1 metobar on in order tho.t the Fee:erid rovarve bank irAy n,ve logaI titio qn) be in a poAition to realiz.: upon the ecurity in 4a da, of :lefuolt. Phi.; que:ition w. in jotAl in an °Anion of this office printed on pare 66.i of the ,ov.ber, 1915, Bui.etin. The only glioAion to be cot idrc is whethor the r_ember bank should in!or,e ry-17)er to oe picdFed 4ti security, ev4n tl.ouzh it 1:3 in necotiable form ritiout such indorent. Sziction 1, c.f tr.,c1 7o..ter.1 Re*erv, Act, %1 :. ilroviao;, tn, it lt Fe.leraA ret%erve ma?e aavAnce:i to 1.1.ber batters on thuir Ireni3bory lute!, v.rovilac such notac "are .iecurvl by such notes, drafts, bill of exchnzu, or bank- erit acceptunceq tdz are EAU- ble for rediscount A or for purchasa by FeJeral rol,o.vn banktl umer thcz. :rovisions of this apct,9 etc. , Thmre IA no doubt, of courui, thxt bil.s of exchange an-.1 bat...arse 10-Zb...115 4 rtccet%.Lc6n, aE „iiwtinguialled from promi6ory flot.t, ner. be indorc:3ed to bo A,cceptabit; ae security, bC.tt eligible not only for rv3Jiz..connt tioo L!), hut it such pactir provi.iiioas of Zoo- lo eliibio 104. purche under th,T4 provi4;iioas of Section 14 without tto indorstmeat of 1y:ember bk. In no ovnnt, therefore, rend a mulLber bsnk indorsfi br:af\or:71 1 .tticoptunnes f:r hiAn of exch.Inge which order to It re ireauy in ncEotible fom in them ellgiblo az icurity for it.; proimisory notes. Tho quev,tion, terefor6, r4solveu itself solely into a conidaarxttion of whethur or not promissory not bo AS tlecrity without t'ne indorooz:ent of the borrowinki; mea,ber bank. Promi, lsory no‘teR cannot be purchal,Au by YV.).eral reaerva - ban'4s in the open maret eitaer witt or witi.put the indorsement of a ii-enber bank, but SGction 13 provi-ie;:i in part "Ikon t'n3 indoreei, nt cf any of it: oea,ber banks, A Aaich ;;;:ialL bFe deed a waiver cor .103.1:nd, notice and proby such bnnk "its to its own indorsement exclilsively, Fetoryll :..er7c bn ny discount notes-, drafts, ank4 bill of exclvang art4iaz out of actual comwarcial tranb,Actioa6," etc. The. tect of elieibility of a note i ,se to which its pro, 2e mercial rtAro.e art put. If it i dafinej by the Act, it i the n:4.are of the , dm:.n for elli;ible paper though of cours!t) in procuring its rediscount tLa mother bank trust comply- Ath certlin oonditions prcedont reqviire either by thtl Act or the revalAtion of the Bcard. In the opinion of thic office t'laa im;ornement of a mmbf3r bar.k io tA condition priceent to the rcliscount of eli- .4.el-;urc 10-'26-16 giblo pa7er, an ribie -f:Aper. is not ono of the ow:.entit:ti utieLents of eli- It 3,1 cwrL ,1 sti-J,utory condition precedent to t4, rediscount of par:er whic the trmi of the law, - tii0b1,:: for rodiscovant unjer t is, it if:, one cf tho stepi; inci- dent to t.4 ] redislcunt of eligible pAy.er. . ; It would seet,, tilerofora, that te aiLendeht Section 13, %UthOriiinE to Fu:ieral rezerve 124criKt; to a6vtAnco money to their i:er bans on tho security of their prowiory notei; F.V. 1",1TO b7 ouch p:I.per IL eliO.ble fr rediscount or f(A- purcAse by 1'olor:11 rut;ervo b43.w-,4, all notes, bills, c,2 .,t, Inctt ; c lig ibA of the kind me eligible for reilicount or purclr ise bj Fouarva resi. rve banks ah(1. , t ;1042 not require trie additiond indor4, ALent of tht: zLembor brmk of mei; vecurity. If the Aocu.rity 16 in notil.ble form ithout tho indorement of the mealber ban.A th,t io sufficient bocrt.u.ie the Feciezca rov:orve ban would tilen tau r uicit.t 1ev)1 ti tit,. As ions au thJ tLeinbr bank IL boun indorkiaal*nt on th on its note, its sk:Jcurity ,,auld in no way strccivthen the .“)- vition of trle Federal reserve bank. tion and th3t is on the note, an There is only one obliga- in care; of deflAult tlit Fed- erNi reserve hr.nk conild brin4z suit againzt the :,omter bank upon thit not only. obligation Iv, It cou1. not 7.tik.o reccvt,r on tho nvmbor ban n irOorser upon Le *ecurity for that note. in the case of inuolvency t.w! FederfAl it ban So cold file claim only for the amount of the origitrd note and not for 10-26-16 . thE; ,-hzIount of t not plAL, the amount of Ctl. aecurity. thurforo, tivit it would bo futile to r quire the tion!U It Zooms iiaal- indoreuie:A of tial member baflf. if ti o lylpor pladgod as cirity iz ,.d.rc:3-37,- in m;gttiabli) fort, and tht tii law do:— not requiro such ind.oruement. Hon. P:Aul Vice Governor. GLP-C. Dictated_ by Approved. by ____ _____ _..... Counsel_ FEDERAL RESERVE BOARD 41,1r1444,44, , t: *thrigrA=... # SO 110 • FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT CHARLES J. R H OA DS, GOVERNOR EDWIN S. STUART. DEPUTY GOVERNOR FRANK M H AR DT. CASHIER THOMAS GAM ON. J R. ASSISTANT CASHIER STREET RICHARD L. AU S TI N. CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GEORGE W. NORRI S, DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT ARTHUR E. POST. ASSISTANT TO FEDERAL RESERVE AGENT October 25, 1916. Dear Mr. Warburg: kVf May I trouble you to let me know whether he Board feel that we should insist upon member banks endorsing eligible paper deposited with us as collateral / I for fifteen-day collateral loans when the collateral is in negotiable form without the endorsement of the member ! Generally speaking, I think that the member banks; bank? will be willing to endorse the notes deposited as collat-i eral but in some cases they are reluctant to let their customers-know that they have rediscounted at all, and in these cases they prefer not to endorse the notes. Several days ago you wrote me that you thought it was desirable to avoid too many technicalities in connection with collateral loans and this prompts me to make the inquiry. From time to time our member banks apply to us to secure for them from the Philadelphia Mint new coin of various kinds, and we are always glad to accommodate them, out wonder whether the Treasury Department could do anything to facilitate our getting such new coin. At present we have to go through the formality of remitting a draft to Washington with the request that an order be sent to the Mint authorizing us to get the coin. If arrangements could be made by which we could make payment direct to the Mint, or to the local Sub-treasury whenever we needed coin and the Mint was in position to furnish it,it would expedite matters very much for us. Governor. HON. PAUL H. WARBURG, Vice-Governor, Federal Reserve Board, Washington, D.C. CJR-R d r, 33 2 October 17, 1916. Dear Governor Rhoads: 16, in reply to 7:hich I hal7e your letter of October think it advisable to "1.:7op beg to say that I rould not rnment bond sales. I think horses" now in dealin viith Gove ;ith Harvey Fisk a, Sono fo,it would bs better to necTotin,te make a change only if a continuation of the operations and e with them. you cannot make a satisfactory trad dispose of the balI think it would be a good thin, to hold on to your oneance of your thi:ty-year bonds :_nd to Secretary would change year notes. I do not think that the PerJonally, I see his ruling now and permit a con•ur3ion. notes. You 'iould sell no advantage in sellinc the one-year be on you to rethem for this year but th2 obligation t you would have purchaoe the new notes next year. No doub these one-year notes no aifficulty in sellinc then again, but rve Banks need are only to be sold in case the Federal Rese use their influadditional strength or in case they rant to saction the present ence to tighten rates. For any such tran holdings of one-yec.r notes not as yet large enough. ty-year While I thinL it LI advisable to sell the thir prove a vary desirbonds, I believe the one-year notes A.11 :hat I would like alonc. able investnent as ,“ 0 7 to see is to have the lar; changed so that they mil ht be used in case of need as collateral for the isue of Fed-ral 1/..3377V:3 Bank notal upon the payment of a tax of 1`:, per annum. way, thin is what I should like to see done for th By the thirty-year bonds; provid, however, that only the Federal Reserve Banks 2hould have the ri-.ht to issue circulation ar7inst thm. As to the fifteen-a:ly note which you sent me exar:ined the came and the banks are I have ;17: a little bit apprehensive t'flat all frightening off the i;tron using this note" bymaking the thing too manber banks from• -. The re- 4 "ehrme/c0.a4/ quirements of the notonaro to s:iacting. It is all \Tory well for the weak banks, but, as a matter of fact, sueln locT11:S ou7ht not to make any loans on their fifteen-day notes but should sell , tricht. The fifteen-day note ought to be used primarily by the strong banks for their :.:hort zequirexents. When thus employed, it does not mean more than a conveni=t way of using paper a longer maturity and dizcountinr; the same Ath an agrec!ment to have the sme,r_a,a-tled after a certain number of days. If Ur. Rue's bank wanted to sell you t20',„.,00C of lprikerst acceptances r=turinr ninety days you would take then at a certain rate. If he donosits the same t200,000 of acceptances as collateral for his fifteen-day note, 4 the ri.7,1 is not larg:Ir but smaller because it is only for fifteen days. The Ampler the note in that case the more readily the strong member banks will adopt the habit of using these ne7; Your very truly, 2/f C. J. Rhoads, Governor, Federal Reoervc Bank, Philadelphia, Pa. FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT CHARLES J. R H OA DS. GOVERNOR EDWIN S. STUART. DEPUTY GOVERNOR FRANK M. HAR DT. CASHIER THOMAS GAMON.JR. ASSISTANT CASHIER STREET RICHARD L. AU STI N. CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GEORGE W.NORRIS. DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT ARTHUR E. POST. ASSISTANT TO FEDERAL RESERVE AGENT October 16, 1916. Dear Mr. Warburg: I enclose copy of the collateral note which we have adopted, which is not altogether satisfactory but seems to be the best that we could do at the present time. Any suggestions that you or any member of the Board may make toward its improvement will be greatly appreciated. I learned through Ur. Kenzel that Lessrs. Harvey Fisk & Sons expect to take up before the 25th instant the remaining United States thirty-year 3's on which they have an option,-which will complete the sale of 5,000,000 of bonds. Harvey Fisk & Sons have asked whether we would be disposed to make a further contract with them covering additional bonds. So far as this bank is concerned, we will have left ,525,000 thirty-year 3's which I should be glad to sell at 101 or better with the understanding that the contract did not run for longer While I feel that Harvey Fisk & Sons than January 1, 1917. have been rather slow in moving 4t35,000,000 of bonds, yet I think they have distributed them fairly well so the bonds will probably not come back on the market to bother us. Would you mind writing me your views of the desirability of our making a further arrangement with Harvey Fisk & Sons, or do you think it would be better for us to reopen negotiations with other firms even though Fisk & Sons have done a considerable amount i of preliminary work in laying the foundations for a broad marke'V in these bonds. As you know, this bank has not sold any of thp one-year 3'/0 Notes and I am still hoping that at some future ti* the Secretary of the Ireasury will permit us to convert at leat a part of our one-year 3's into thirty-year 3's, because I ha* a hesitation about selling our one-year 3's as long as we hav the liability to renew them from year to year. Last week our Transit Lepartment handled in days over 171,000 items, aggregating over ,78,000,000., I think is the largest daily average we have yet had. to indicate that our collection system has enough merit commend itself to a subttantial number of our banks. five which This seems in it to Assuming that our current earnings continue for the remainder of the calendar year at about the same rate, we shall probably have aoout t2O0,O00 of net earnings on December 31st available for paying dividends. This amount I think will permit • ESERVE BANK OF PHIL.HIA li • 2 us to pay the accumulated dividends from November 2, 1914 to say, September 1, 1916, and unless the Federal Reserve Board has some objections I believe our Board of Directors would be disposed to declare a dividend at the close of the year to such extent as our net earnings warrant. As the Board, in a recent memorandum, stated that they wished dividends to be paid out promptly after the close of the year, our Board of Directors would have to take action at their meeting on December 20th, basing their action on the estimated earnings up to the end of the year, or else defer action until the first meeting in January which would fall on January 3, 1917. If I correctly recall the form of resolution which the Reserve Board suggested that our Directors should adopt in declaring dividends, it will probably be difficult for our Board to honestly pass the resolution suggested as early as December 17th. The resolution recommended, it seems to me, is somewhat involved in technic, and I would be glad to know whether you think it presumptuous on our part to vary the phraseology recommended, or can we adopt a simple resolution stating that our Board of Directors believe the earnings warrant a certain dividend and authorizing its payment? Very tru Governor. CJR-R ENC. HON. PAUL M. WARBURG, Vice-Governor, Federal Reserve Board, Washington, D.C. • (Place) On the (Date) day of (hereinafter referred the to as member bank) promises to pay to the order of the FEDERAL RESERVE BANK OF PHILADELPHIA, at its office in the City of Philadelphia, Pennsylvania. Dollars, for value received, without defalcation, hereby waiving all benefit of any stay of execution, and of any exemption or privilege under any law now or hereafter in force, in any suit on this note. As collateral security said member bank has delivered Said collateral security and any heretofore or which may hereafter be deposited with said Federal Reserve Bank shall be applicable to secure the payment of this or any past or future similar obligation or liability of said member bank to said Federal Reserve Bank, and all securities so deposited and held at any time shall stand as one general continuing collateral security for the whole or any part of said member bank's similar obligations or liability to said Federal Reserve Bank,so that the deficiency on any one shall be made good from the collateral for the rest. Said member bank hereby agrees that if at any time the collateral securities held by said Federal Reserve Bank shall become unsatisfactory to it, said member bank will, within two hours after demand, deposit with said Federal Reserve Bank such additional security as shall be satisfactory, and that in default thereof this note and any other of said member bank's similar obligations held by said Federal Reserve Bank shall become instantly due and payable precisely as though it or they had actually matured. Said member bank hereby authorizes and empowers said Federal Reserve Bank, on default in the payment of this or any other similar obligation or liability of said member bank at maturity or on becoming due as aforesaid, at any time or times, to sell, assign, transfer and deliver the whole or any part of such collateral securities, either at public or private sale, without previous demand upon, or notice to, said member bank, with the right of becoming the purchaser and absolute owner thereof, free of all trusts and claims and any equity of redemption, or to surrender and deliver any or all of such collateral securities upon payment at maturity, and after deducting all legal or other costs and expenses of collection, sale and delivery,and interest, to apply the residue of the proceeds to pay any or all of said obligations or liabilities, returning the overplus, if any, to said member bank; and said member bank will still remain liable for any amount so unpaid with interest thereon. Said member bank further agrees that upon any transfer of this note said Federal Reserve Bank may deliver said collateral or any part thereof to the transferee, which transferee shall thereupon become vested with all the powers and rights hereinabove given to said Federal Reserve Bank in respect of said note and collateral, and said Federal Reserve Bank shall be thereafter forever relieved and fully discharged from any liability or responsibility in connection therewith. It is hereby certified that the above described notes, drafts, bills of exchange and bankers' acceptances deposited as collateral security are eligible for rediscount, or for purchase by Federal Reserve Bank*under the provision of the Federal Reserve Act and Amendments and under Rules and Regulations of Federal Reserve Board. (Name of Bank) (Signature of officer) (Title) 311A ,113 Octol)ar 3, 11S. My dear Covrnor Rhoads: I have your letter of September 22 and thank you for .sendin me th.T. 3tytoment of tlae Philadelphia banks. We haie not yct prepared oounnel. 1Vry truly yours, one that your I an ta:cin7 up the ratter :7ith - C. J. Ilhoadi7„ Governor, Federal Reserve Bank, Philadelphia, Pennnylvania. • :pecial form of collateral note, and I !)hall be .:1r.d to have a copy of the counsel has drawn. - on • FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT CHARLES J. R H OA DS, GOVERNOR EDWIN S. STUART. DEPUTY GOVERNOR FRANK M H AR DT. CASHIER THOMAS GAMON. JR. ASSISTANT CASHIER STREET RICHARD L. AU ST I N. CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT GEORGE W.NORRIS, DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT ARTHUR E. POST, ASSISTANT TO FEDERAL RESERVE AGENT September 2L, 19: My dear Mr. Warburg: I understand that you have gone to Kansas City to attend the Convention of the American Bankers' ,Issociation, and so merely enclose the usual weekly statement of the Philadelphia Clearing House Association which speaks for itself. If Counsel for the Federal Reserve Board has prepared any special form of collateral note which we should use in making fifteen-day loans, I should be glad if you would have a sample of such note sent to us. We have prepared a form here,under advice of Counsel, but I wish to be sure that we have covered all the points, and would be glad of any suggestions which the Board may have to make on this subject. Governor. IIOL. PAUL M. ':JARBURG, Vice-Governor, Federal Reserve Board, Washington, D.C. CJR-R -,, Chairman Governor Vice Governor Mr. Hamlin Mr. Delano Mr. Miller Mr. Secretary Asst. Secretary Counsel Div. Audit & Exam. Div. Reports & Stal, Information Note and return Would like to confer with you Ackno Aedgment , Reply Prepare reply I will sign Action of Board Calendar Investigation and report Previous papers Disposition Comply Decline Circulate File Date From fiffr TELEGRAM FEDERAL RESERVE BOARD WASHINGTON September 21, 1916. Federal Reserve Philadelphia, Pa. Board approves abolinhing your ton day rate and establishment of rate three and half percent ftr fifteen day commercial and member bank paper, effective twentieth. Governor. ir 1 T..3 - 1 1916 OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD Form 441110.. flig# TELEGRAM FEDERAL RESERVE BOARD WAS HI NGTON ;T:cptetr 209 191C4. Foaoml Bosom :gents t Bour 0 thvt')e revaik- stleOlitatht tid to d v144.1: icr vv. 9rowlota4( LoW3 AMA. QZ cumber banks Lnd anmroLa v‘ier. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD ''ecris 1916 SEP rbuorta edaberve board l'reasurg pepartircent TELEGRAM 16:It hg 5.3 bu Philadelphia 7- ' ) govt Pa 1207p !31) . Sep 20 ; • Fed Res Board A Washn DC Our board has abolished ten day rate and established rate of three and one half percent for commercial paper with not over fifteen days maturity and loans not over fifteen days to member banks collaterally secured please wire if approved Austin Chairman The Federal "eserve Bank of Philadelphia 1246p -ft PAMITtoit.mf.c;) as...A.raos-zr amisqk O FEDERAL RESERVE BANK OF PHILADELPHIA 408 CHESTNUT CHARLES J. R H OA D S, STREET RICHARD L. AU S T I N. GOVERNOR EDWIN DEPUTY GOVERNOR FRANK CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT S. STUART. GEORGE W.NORRI S. M. HAR DT. DEPUTY CHAIRMAN OF THE BOARD AND DEPUTY FEDERAL RESERVE AGENT CASHIER THOMAS GAMON. J R. ARTHUR E. POST, ASSISTANT CASHIER ASSISTANT TO FEDERAL RESERVE AGENT Sept. 20, 1916. •-•"/ leueral :,eserve Board, v.ash.ington, L. C. St:P 2 1 1916 isoataut iit20,1rve Wad S i r s: I beg leave to advise you that at a meeting of our board of directors held today, the rate for discounting commercial paper maturing in not over 10 days was abolished, and a rate of 3tc per cent was established for discounting commercial paper having a maturity of not over 15 days, and for loans to member banks having a maturity of not over 15 days, secured by paper acceptable for rediscount or purchase by this bank, or by bonds or notes of the United states Government. slwaiting your action upon these rates, I beg leave to be, Yours truly, i'ederal Reserve Lgent. • THE FEDERAL RESERVE BOARD CROSS REFERENCE SHEET OMMIMMINNIMINIMINIONIMINI File No. Subject • 15 day paper secured by Liberty Pds, or. SEE File No. 332.12 A Letter of Dated Remarks 9/p. tf.B. 332.3 P4 ( 31/2 c:f,j. >-Ii:i.11‘1F_ \FUYLP,AL. ? ilor" :4- aoh110 FILE _ April 15, 1918. Dear Sir: In reply to your letter of the 1:.th instant, I would state that the Bos.rd understands that it is not your practice to Grant renewals of member banks' fift een-day collateral notes, -her s such notes are secured by commercial 7-..r.er, but that :i- cu require member banks either to rediscount the paper pledged, or other short-torm paper, ura thus liquidat e the loan. The Board regards this as sound policy, as o are all anxi ous to facilitate :ovornment finanoini„.. in every way possible. The Board does not reeard it inco nsistent with your paliqi as to cm:r.orcial paper that ;,/ou should grant renewals at your fifteen-day rate or. short-tires borr owings viiich are wscured by F .pvernment obligations. The Board would suggest, hoviever, that you bear in mind the rate on Treasury certificates is four and one-half per-.,cont, and. on Liberty bonds four and one-quarter perceent, Ind It prosurai that you would not ears to rake repsa,ted ren,eviais of member, banks' fifteen-day notes secured by government oblical ions without makinr: the ninety-day rate effective. The Board has not maje any hard and, last reculat ions as to rer.ewals oi member banks' fifteon-aay paper, tx).lieving that the Federal Reserve banks are in bettor position to wori out thei r own problems with resp ,ct to such Very truly ;yours, Govern° r. :Ir. E. R. Funoher, Governor Federal Reserve Bank, Cleveland, Ohio. 4 ......, -. 1 FEDERAL RESERVE BANK OF CLEVELAND APR1 51918 RNO April 12, 1918. Hon. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. Dear Sir: Referring to your telegram of April 10 relative to the Board's letter of December 6 (X-344) in reference to rates: In considering the readjustment of rates at the last meeting of our Board of Directors, we had in mind the suggestions made in the Board's letter above referred to. As the volume of Trade Acceptances is showing quite a marked increase in offerings by our member banks, we felt it advisable to name the same rate for Trade Acceptances maturing within 15 days, as our commercial rate, and have so advised our member banks in schedule of rates, in order that there might be no confusion or misunderstanding. The rate of 41% for Trade Acceptances running from 16 to 90 days gives a preferential rate of ?;-- of 1% over our commercial rate, which we believe, under present conditions, is an equitable one. In reference to that part of the telegram regarding renewals of member banks' 15-day collateral notes: Where such notes have been secured by commercial paper, it has not been our practice to grant renewals, requiring member banks to rediscount the paper pledged, or other short-tinc. paper, to liquidate the loan. Our policy as to short-time borrowings secured by Government securities has been to grant renewals at our 15-day rate. Are we to understand that it is the Board's desire that in renewals of this class we apply the 90-day rate, which at the presont time woull be 4i%? ERF-B oFFIca . _ , MEMORANDUM FOR MR. WARBURG. L ..ts..•.. 33 L LA) do a l Discount schedules received from the Cleveland Federal Reserve Bank this morning show 4 per cent Certificates of Indebtedness tal:en under a repurchase a7;reement on a 3 per cent discount basis as follows: The Union Trust Co. Pittsburgh, ?e. $2,000,000 Fifth-Third Nut. Bank, Cincinnati, 0. 100,000 The Daimond Nat. Bank, pittsburgh, Pa. 300,000 American Nat. Bank, Newport, Ky. 30,000 Total 5 , 11-2,130;57 Is it the intention of the Board that Certificates of Indebtedness or Liberty Loan bonds be purchased from member banks under an ar,reemont to repurchase within 15 .:_ays at the 15-day discount rate, or should they be taken at rates not lower than those / the bonds or certificates themselves, i.e. 4 and 4-2 per cent/ Respectfully submitted, Statistician. April 1, 1918. 1 • • • THE FEDERAL RESERVE BOARD CROSS REFERENCE SHEET File Subject Rate on 15 day paper, secured hy_aQvt, aacurities. SEE File No. Letter of Dated Remarks mi"32.3 NO. 332.4 114 6/4/17 P4 -^ c. ; r?P'r RVEybR.4i F,y01 . 4 -TELEGRAM Form 40 FEDERAL RESERVE WASHINGTON B0A0ri 4. Imo ; law .:41/1.64 I !:elor41 :r4tio,rve Cievelanl. Ohio° lioard apprOv4s discount naus esUbliuued your am followes :or n4rzber "aaLite ,rollaturat notes, Tata alttlrity of not .1;ore than ti Irn.Tont swahitles, three icr it, oft'uctLve on anti dvs, secured by .;av, :law June eiitii. . :)r nays, arafta and Alia CZ O1zø 11%.twr1 . pankst customers, havl J1F maturity net In 0=0311 of ninGty an;,fs, are uocurod by %-liA.rty LOx ondm o Unitud -tat811 Tra45Itrw Certctu or IndebteUnovn, Lre nd one-Wilf cent, eteective an and aftur Zu!lo fitleanthe 3 ILLfl3. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD 7729 1: http://fraser.stlouisfed.org/Federal Reserve Bank of St. Louis TELGRAM• FEDERAL ifEDEML WSEE4E ;.:41D FILE RESERVE BOARD WASH I NGTON • Slarity• 190— /*demi Iteeerve Bwiks ;Ievelutd, Ihio. todrAy Lproved rate of three peroent on fifteen d3iy notee of member bunks established by yoar bbnk. OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/ 2-7729 Federal Reserve Bank of St. Louis • A ,LE AL •RHEMi MOD r May 10, 1917. D. C. .ills, Federal Aeserve Agent, Laeveland, Ohio. Dear Sir: In answer to your letter of May 9 I beg to say that I have today telegraphed you as follows. "Board today approved rate of three percent on fifteen day notes of member banks established by your bank." 7he above : now confirm. aespectfally yours, Secretary. FILE . 'VEDLIIAL • FEDERAL RESERVE BANK OF CLEVELAND May 10, 1917, Federal Reserve Board, Washington, D. C. Gentlemen: Yesterday this bank wired to the Federal Reserve Board requesting approval of special discount rate of for advances to its member banks for a period not exceeding fifteen days, upon their promissory notes when secured by deposit or pledge of United States Y. Certificates of Indebt- edness. Today the Board's approval of this rate has been received, and, accordingly, I send you herewith form concerning change in discount rates indicating change for the fifteen-day rate by reference to this letter. The other rates are to remain as at present. Very truly yours, W-M-MM. Chairman of the Board. 1 Eno. to us i ........, s, 7 1D - ,4 1 8N.,., / 12 41/ 0 X-120 NOTE: To be forwardod to reach the Foderal Roservc, B.)ard nt later than Thurs.cay a.re. each week. Date. Fearal Reserve Bard, Washington, D. C. S i r s: I have the henor to forward the recommendation that no change be eade in the existing diseount rates for the Federal Reserve Bank of 191 for the week ending Thursday Respectfully, Federal Reserve Agent and Chairman of the Board. --------------------- I have the honor to request that the following rates be approved by the Federal Reserve Board for the Federal Deserve Bank of Cleveland to becone effective MICOPIEULOW Thursday morning, May 101 1917. IOW RECOMMENDED RATES (Code Word (New) Maturities in days. Code words for telegraph. DISCOUNTS DON HUN MAN TRADE ACCEPTANCES AGRA Within 15 16 to 60 61 to 90 Agriculdays, in- days, indays, intural cluding elusive. clusive. and livemember stock banks' paper over collator90 days. al Dotes X X (See special letter accompanying) PRESENT RATES ROD To 60 days inclusive. SOL 61 to go days, inclusive. COMM Commodity paper Maturing Within 90 days. Respectfully, Federal Reserve Agent St4, Chairman of the Board. - COla RMATIONLOExTESG RA nEsavE co A, FEDERAL RESERVE BANK OF CLEVELAtIp . )) Telegraph Co. May 9 1917 NIGle LiaT.F.st sko ts: Federal Lestxyo lAtxd au44.1sc ,• 3ar L.iwoutive Committee hau today fiAcd rate ot tiro porcfnit on . fifteen day note of mealbur banks secured by 141 ed >t,1tos Treasury certificai*J of IndebtQdness effeetivo I,ay tenth 11Jaeo advise by wir‘) 'rhea appnoved. Federal Reserve Bank, Cloy-land Collect official busincuo Yoder .1 iiesorvo Board iovt. :(ate FEDERAL RESERVE by_.... ........... Ak OF CLEVELAND ....... ••• ...... ••• •••••••••••••• ..... Fit,. CLASS OF SERVICE SYMBOL CLASS OF SERVICE SYMBOL Day Message Day Message Day Letter Day Letter Nite NL Night Letter If none of these three symbols appears after the check (number of words)this isaday message. Otherwise its character is Indicated by the symbol appearing after the check. NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT Blue Night Message Blue Night Message Nite N L Night Letter If none of these three symbols the check number of appears after words)this is aday message. Otherwise its character is indicated bythe symbol appearing after the check. RECEIVED AT WYATT BUILDING. COR. 14th AND F STS.. WASHINGTON. D. C. .)V1 COLL 6-.. A620 • 1 1917 MAY 9 pm II 0o . WS CLEVELAND OHIO 9 FEDERAL RESERVE BOARD WASHINGTON DC OUR EXECUTIVE CO:LITTTEE HAS TODAY FIXED RATE OF THREE PERCENT 0:: FIFTEEN DAY NOTES OF 2IEMDER BANKS SECURED BY U:TT7DSTAT7S TREASURY CERTIFICATES OF INDEBTEDNESEFFECTIVE LIAY TENTH ?LEAST ADVISE BY WIRE WHEN =ROVED FEDERAL RESERVE BANK CLEVELAND . 2 Atobr 30$ 1916. Willa, ChairTain, Boar. of Directors, Pcder4 Aiser40 Bectr *-9 )1.ovo1and, •C. r Wiilat 1 have ye:a' nJto of October 2.7,rtio Valeh I received upetl returnint; from rky v;:lan, in which ct co T ;If the ne. form of collatl note, for w)lich plot:a° u.ccept ly thanko. Vory trul yon114, . Ham11114 1 c 4 7 'Y- /4 -a FEDERAL RE3I. WAgLE • FEDERAL RESERVE BANK OF CLEVELAND REC.EIVED I OCT 2,b 7016 OITTCE Uctober 231 •VT, Hon. Charles S. Hamlin, iiiederal Reserve Board, Washington, D. C. Dear Mr. Hamlin: I am enclosing for your information a copy of our new form of collateral note for use of banks taking advantage of the new direct loan provision of the Federal Reserve Act. We expect to send these to banks in the principal centers that will be more likely to require them. Yours very truly, Federal Reserve Agent. WAN Enc a days after date, for value received, the undersigned bank promises to pay to the.order of FEDERAL RESERVE BANK OF CLEVELAND AT ITS OFFICE IN CLEVELAND, OHIO DOLLARS, with interest at the rate of six per cent per annum, from and after the maturity hereof, if the indebtedness evidenced hereby is not then fully paid; having deposited with and pledged to said Federal Reserve Bank, as collateral security for the payment of this or any other liability or liabilities, whether direct or contingent, of the undersigned bank to said Federal Reserve Bank, due or to become due or that may be hereafter contracted, notes, drafts, bills of exchange, or bankers' acceptances, which are hereby certified to be eligible for rediscount or for purchase by Federal Reserve Banks under the provisions of the Federal Reserve Act, or by the deposit and pledge of bonds or notes of the United States, as described in schedule of collateral hereto attached and made part hereof, marked for identification "Schedule of Collateral," and bearing the same date as this note. Said Federal Reserve Bank is also given a lien, for the payment of this note and any other of said liabilities, on all the collateral deposited or pledged with said Federal Reserve Bank as security; and it is hereby agreed by the undersigned bank that the said Federal Reserve Bank has the right to call for such additional security as it may deem proper, and, on failure to respond forthwith to such call, or on the non-payment of this note or on the non-payment of any other liability or liabilities of the undersigned bank as above provided, the said Federal Reserve Bank, or any holder hereof, is hereby given full authority to sell, assign and deliver, or collect, the whole or any part of the above named collaterals as per schedule, or any substitute therefor, or any addition thereto, at any public or private sale or on any brokers' board or stock exchange, at any time or times hereafter, without demand, advertisement or notice; and, upon such sale, the Federal Reserve Bank or the holder hereof may become the purchaser of the whole or any part of such collaterals, discharged from any right of redemption, and, after deducting all legal or other costs and expenses for collection, sale and delivery, may apply the residue of the proceeds of such collections, sale or sales to the payment of any, either or all of said liabilities, as said Federal Reserve Bank, or its assigns, shall deem proper, returning the overplus to the undersigned bank. By SCHEDULE OF COLLATERAL PLEDGED TO FEDERAL AMOUNT • MATURITY MAKER'S NAME RESERVE BANK OF CLEVELAND LOCATION BUSINESS SIGNATURE BY • DATE Customers or Purchased Paper? Statement On File? If So--.Date . 440 40 f -41 * TELEGRAM ( FEDERAL RESERVE BOARD WASH I NG-TON ep teater 13, 1916• Federal Reserve Agent, aevelsad, Ohio. Board approves your proposed rate four peroeat from sixteen t to thArty days. Governor. SEP 1 3 1916 rwleaul OFFICIAL BUSINESS GOVERNMENT RATES CHARGE for FRASER FEDERAL RESERVE BOARD Digitized tscearvb Mad Form 40 40 TELEGRAM • FEDERAL. RESERVE BOARD N?' WASHINGTON sup teater ‘t- ) 4016 ' iederal Reserve Lent, Oleveland, Ohio. Board approves your rate three Enid half percent on fifteen day paper effective Zeptamber fifteen. Governor. SEP I OFFICIAL BUSINESS GOVERNMENT RATES CHARGE for FRASER FEDERAL RESERVE BOARD Digitized 1916 tqiudrzm tideurvu laufArCi FEDERAL RESERVE BANK OF CLEVELAND • September 12, 1916. Mr. Sherman Allen, Assistant Secretary, Federal Reserve Board, Washington, D. C. My dear Mr. Allen:Referring to our telephone conversation today, I am enclosin,; for the approval of the Board my recommendation that the 3-1/2:h rate for maturities not exceeding 10 days be changed to the same rate for matur9 ities not exceeding 15 days, land the 4,:, rate for maturities of 11 to 30 days be changed to 4;/. for 16 to 30 day maturities, the rates to become effective Friday morning September 15th, 1916. Very respectfully, Federal Reserve Agent. D:J :f23 n,? LL- SFP L-) 209. to NOTE: To be reach the Federal Reserve Board hot lati than Thursday A: I% each week. Cleveland, Ohio. Date. September 12, 1?16, Federal Reserve Board, 7ashington, D. C. 'S I R :I have the honor to forward the recommendation, that no change be made in the existing discount rates for the Federal Reserve Bank of for the week ending Thursday Respectfully, Federal Reserve Agent and nairman of the Board. I have the hcno: to rJo,uest that the following rates be approved by the Federal Reserve :oard for the Federal Reserve Lark of Cleveland to become Friday morning Beptember fifteenth, ,1916. .RECO=NDPD RATES. ,Code Word(New) Haturitios in days. --"CVa57767F6 175-r telegraph: - Not exceeding 15 days. PCN. 16.30 PUN. MAN AGRA 31 to 60: 61 to 90:Agricultural and • Ac ce r 7:721-1,r;?s 'live stock paper :over 90 PPT=PT RLTPS (Old) Not exceeding 10 days. m•I I ty t 11-30 days. : Oalbri alMai III .•II • le • a •••••IMINIO 3-1-% Federal Reserve Agent and Chairman of the Board. R FEDERAL RESERVE BOARD Form 156 THE FEDERAL RESERVE BOARD CROSS REFERENCE SHEET File No. Subject First. NB. Frostburg Md. on Govt. securities SEE 6/14 2g- 8/3/28 der 1525- .2.9a9_ Letter of Dated Remarks 45 Corres. with Richmond Bank- Hoxton -Seay re. continuous borrowings by File No. 332 3 ' U. S. GOVERNIMNI,RINTINO OFFICZ: 191, III rm 40 TELEGRAM FEDERAL. RESERVE BOARD WAS HI N GTO N 'A:toper 6, 1916. George J. :.;eay, Fe;eral Reeerve Richmond, Va. Rate establizAed by yonr bcnk thre member banks running eau per cent on promissory notes of one to fifteen days, approved. Secret try. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE for FRASER FEDERAL RESERVE BOARD Digitized October 6, 1916e VI** Geo. J. Governor Federal Reserve Bank, Richnond, Va. S I ElYour letter of the 5th instant rktIvisinc :i that your boar bad established, stib:pct to the review and determination of the *Federal on rromissory Reserve lloard, a rate of 3-l/2 motes of nenber banks runninc from ome to fifteen dAys, has been received. The Board ban approved the rte and teIes. . ... . . Graphic advice to that effect io beim: sent you today. Respectfully, Governor. • FEDERAL RESERVE BANK OF RICHMOND FIFTH DISTRICT DI RECTORS OFFICERS JAMES A MONCURE . CALDWELL HARDY, GEORGE J SEAY.GOVERNOR CHAIRMAN AND FEDERAL RESERVE AGENT DEPUTY FEDERAL RESERVE AGENT CHAS A PEPLE.VICE GOVERNOR H B WILCOX.encrimoRE.mo. EDWIN MANN.aLuEFIELo w GEORGE H KEESEE.cAsHIER JAS.F. OYSTER.wASHINGTON 0 C_ M F. H GOUVERNEUR .WILININGTON N JOHN F. BRUTON,wiLsoN N C D R.COKER.HARTsvILLE,s c. VA EDMUND STRUOWICK , RICH MONO October 5th, 1916. uCT 6 Oove.oivoi:?'s r.r. W. P. G. Harding, Governor, Federul Reserve Board, Washington, D. C. Sir: Our Directors to-day established, subject to the review and determination of the Board, a rate of 3-0 per cent, on promissory notes of member banks running from one to fifteen days. Respectfully, e-0. 7 Governo 1916 ()P-Pltzi• • 411 9 FEDERAL RESERVE BANK OF RICH Mill% FIFTH DISTRICT orncERs DIRECTORS CALDWELL HARDY, GEORGE J SEAY. GOVERNOR CHAS A PEPLE.VICE GOVERNOR CHAIRMAN AND FEDERAL RESERVE AGENT H B.WILCOX.13ALTIMORE, MO. SEP 14 1916 * JAMES A MONCURLicamsta gaprie• bag DEPUTY FEDERAL REsql, EDWIN MANN.BLULFIELD W VA. JAS.F.OYSTER,wA,sHiNoroN o c. M F. H.GOUVERNEUR .WILMINGTON. N.C. JOHN F. BRUTON,wiLsON N c GEORGE H KEESEE.cAsHIER D R.COKER,HARTsviLLE.s C. EDMUND STRUDWICK,RicHmOND September 12th, 191(. Hon. W. P. G. Haraing, Governor, tt 'eLF7/IfFt )L-' 1 ) /9/6 • „,40#4 cwrzteff FedeOal Reserve Board, Washington, D. C. Dear Sir: I have received your favor of September 11th, and I fear that in my letter of September 9th, addressed to the Board on the subject of the rate on fifteen days notes of member banks secured by eligible paper, I failed to make my meaning perfectly clear. I, of course, understoo d that in due course a rate on this class of paper would be established by this Bank and that such rate when established would be referred to the Federal Reserve Board for approval, in accordance with the provision of the amendment to the Federal Reserve Act. The question uhich I intended to raise was whether, pending the establishment of a special rate by the Board of Directors of this Bank, we could accept the notes of our member banks at the rate already established and approved by the Federal Reserve Board for commercial paper. As we did not receive a wire on Monday at the time the Discount Committee met we understood that the trensaction referred to in our letter of September 9th would meet with the approval of the Board, and we accepted the paper at the established commercial paper rate, as advised in my letter of September 11th. d • Hon. W. P. G. Harding: -2- September 12th, 3916. Understanding from the conversation between our Cashier and your Secretary the feeling of the Federal Reserve Board in this matter we had the rate of four per cent. formally established by our Executive Committee and wrote a letter to the Board reporting the rate and requesting confirmation. This letter is practically a reply to your letter written to me on the same day and received this morning. We have also received your communication of the same date suggesting that we inform our member bsnks of the facilities afforded under the provieions of the amendment. We wi71, of course, issue a regular circular on thie subject, but it occurs to me that it would be better to wait until after the meeting of our Board, which will take place on September 21st, at which meeting our rirectors can discuss the situation and decide whether or not a different rte on this class of paper is desirable. This will enable us to explain the situation and announce the permanent rate at the same time. In the meailtim wt all accept such paper as is offered by our member banks at the rate of four per cent.lour telegram approving which has been this moment received, and for which we thank you. Respectfully, 6L_ . Vice Governor* 411) TELEGRAM 4k FEDERAL. RESERVE BOARD WASHINGTON Scptenlier 1:-., 19 ------- 0/.11JE vc 0 gW M- ‘It- 'dederal ''oserve Bank, TA.ohmocd, Va. .S2-2-1—? --------3oard approves your rate four peroent on fiftedn day paper effective tember eleven. Governor. OFFICIAL BUSINESS GOVERNMENT RATES for FRASER FEDERAL RESERVE BOARD CHARGE Digitized SEP 1 1916 ttoatti BA:mem butird FEDERAL RESERVE BANK OF RICHMOND FIFTH DISTRICT DI RECTORS OFFICERS CALDWELL HARDY, GEORGE J.SEAY.GOVERNOR CHAS. A.PEPLE .vice GOVERNOR GEORGE H.KEESEE,cAs HIER JAMES A MONCURE . CHAIRMAN AND FEDERAL RESERVE AGENT H.B.WILCOX.BALTimoRe.mo. JAS.F. OYSTER.wAsHiNeroN ID JOHN F. BRUTON,wiLsoN N c. DEPUTY FEDERAL RESERVE AGENT EDWIN MANN.ei_ucrieLci C. WVA M.F. H.GOUVERNEUR .WILMINGTON. N.C. R.COKER,HARTSVILLE,S.C. EDMUND STRUDWICK,RicmmoNo Sept. 11th, 1916. Federal Reserve Board, Sirs:On Saturday re wrote to you with reference to the special rate on notes made by member banks not exceeding fifteen days and secured by eligible paper, and requested you to wire us if, in your opinion, we should have the rate of 41. (which is our present rate for commercial paper) confirmed by you before accepting any paper under that rate. As we did not receive a wire from you this morning, we aceach cepted three notes of $70,000.00/from the Murchison National Bank of Vilmilvton, N.C., drawn for five, ten, and fifteen days, respectively, at 4,'A Later in the day our Cashier hes occnsion to call up your Secretary, and in the course of conversation your Secretary advised our Cashier that you feel that this rate should be confirmed in the vay. We, therefore, have had a special rate of 4. fixed for this class of paper by our Executive COmmittee, which rate we would thank you to confirm, and if practicable advise us by wire, as re may have more notes of this kind offered immediately. • Federal Reserve Board, Washinton, D.C. #2 Sept. 11th, 1916. The next meeting of our Board of Directors will be held on Thursday, Sept. the 21st, at which time the action of our Executive Committee will be formally confirmed by the Board, and a new rate made, if, in the opinion of the Board, a different rate is desirable. We will, of course, advise you immediately of any ac- tion in the matter taken by our Board. Respectfully, Vice Governor P-11, ' M. B. WELLBORN, Gi P NOR JOS. A.,MCCORpt L. C. ADELSON, DEI • GOVERNOR M. W. BELL, CASHIER W. B. ROPER, ASS, CASHIER FEDERAL ESERVE BANK . CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT EDW. T. BROWN. DEPUTY CH IRMANt I W. R. PATTERSON, ASS, CASHIER •WARD AL,BERTSON, R. A. SIMS, ASS'T CASHIER J. L. CAMPBELL. ASS, CASHIER ASSTOPEDERAL REQE OF ATLANTA. E CREED TAYLOR. J. M. SLATTERY. SECRETARY GENERAL AUDITOR March 21, 111. S , NONal3A0D Hon. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D.C. Dear Governor Harding: We wired you today as per the enclosed confirmation, which message we follow up by saying that one of the banks in Middle Alabama offered us tneir note due fifteen days after date They offered securing tills note a lot of farmers' for ,,15,000. notes tnat would mature on October 1st, anounting to .18,600, and as these farmers' notes would not oe eligible for discount until April 1st were in doubt whether we could accept them as eligible collateral to the member bank's note at this time, although if we had acceoted them they would oecome eligible for discount before the maturity of the member Dank's note behind which tney were pledged. Previous to this time Mr. Wellborn and myself had agreed where the collateral would become eligible before the maturity that of tne note that it was admissible to take it. This matter was put up to Mr. Wellborn last year, and he thus agreed; but Mr. Adelson took the position today that it was not eligible, and tnat v.e could not take it. I therefore wired you as above, and nave your reply, advising that it is clear that we cannot discount tne member oank's note until tne collateral becomes available for discount, and we will govern ourselves accordingly. Yours very truly, 4 -a-7 o-d / ederal Reserve Agent. FEDERAL RESERVE BANK OF ATL drfRIVATE WIRE SYSTEM • 11 TA OUTGOING CONFIRMA DATE Yarding, Governor, Federal Reserve 1.oard, Viashington. larch 21, 1919. We have offering r atiber bank note fifteen thousand due in fifteen days supported by farmers notes maturing October first. Collateral not eligible for discount until April first, r.ember bank's note maturing after that date. r. C Is it permissable to 7 t ; sc ount this paper with this collateral? , di A McCORD_ FEDERAL RES LcCord, C?'.CENT 1919 FHA. -'..ederal Reserve Bank of Atlanta SENT BY PAUL H. FIEBERG COA 'IRYA CO.. CHICAGO ,... Form 10 . 4•I fa FEDERAL_ T.EG , _' '1V . .. , ._.......... ______-....__•• _ . . 1 # '.11vaiiiAL 2E.SETIVE. V;ARD FILE i RESERVE BOARD _) WASHINGTON March 21, 1919. MCCORD ATLANTA Section thirtftL provides that any Tederal Reserve batik may mdkedvance to its manber banks on th:!tir pizonlasory notes for a period of not exceeding fifteen days ;rovided vuch prowits$or7 notes :1.(3 ',Icured by such notas, dritfts, .-icch.,:a4a or hank!,r5: &c..vipt ..Lae.'s as aro eligible . for redicounu or for puroh!tec by F-,dcr:11 Rtlsrle banks or by dap‘oii- or pledge of bJnaa or notes of Vnitel- Statel. If the fifteen doz.' note of mambo: bank vihich ia offared you its secured by paper which is itself ! iteliible you cannot disnount it. STOP Tf st cured by paper which will not ) a clear that you czAnnot •j.1,1c, - nt become eligible until April first, it is the member bank's note until after that date. HaDING. 1/7 OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD • 4 00 TELEGRAM FEDERAL RESERVE SYSTEM 2-4715 (LEASED WIRE SERVICE) itlanta 1150a ',lax 21 a...2(#21 RECEIVED AT WAS /( 1 TON, Governor FRB Washn. o have offering member bank note fifteen thousand due in fifteen days supported by Farmers notes maturing October first000llateral not eligible for discount until first member banks note maturing after that datesis it permissible to discount this paper with this collateral IjcCord F R Agent 1233pm RECEIVED GOVERNOR'S OFFICE I have your letter of the 5th z in ;4 Ant, ..and note with interelt the 1114tsria1 reduction in the, rediscounted paper held by your Na.v Orle-Ans inch since Janu:u7 15th when your new rule regarding pr talcon under a repurchase agreement went into Mr. Jos. A. McCord, Gov irnor Feder , Atlanta, Georgia. EDW. T. BROWN. JOS. A. McCORD, M. B. WELLOORN, GOVERNOR DEPUTY CHAIRMAN OF THE BOARD CHAIRMAN OF THE HOARD AND FEDERAL RCSEFWE AGENT J. B. PIKE. CASHIER M. W. BELL. ASSISTANT CASHIER JOS. M. SLATTERY, ASST FEDERAL RESERVE AGENT FEDERAL RESERVE BANK WARD ALBERTSON. W. B. ROPER. ASSISTANT CASHIER W. R. PATTERSON. ASSISTANT CASHIER GENERAL AUDITOR R. A. SIMS. OF ATLANTA. ASSISTANT CASHIER February 5, 1919. -- - Hon. W. P. G. Harding, Governor, FEDERAL RESERVE BOARD, Washington, D. C. FEB7 -12) RNows oFFICE Dear Governor Harding: Thinking it would be of interest to you know the amount of rediscounts and bills payable handled by to the New Orleans Branch, wish to call your attention to the report of their operations as of February 3rd, just received by me. Before we nut in the order that the repurchase agreement Should apply to only one discount of paper on that agreement, the volume of business at New Orleans rent up to about 42,000,000. On January 15th the order was put into effect that after one discount of paper on that agreement, it was agreeable to use that same paper as collateral for a member bank's note for one period of 15 days, and then any further use of those receivables should be for the regular period of time they had to run to their maturity. All paper under repurchase agreement went out on February 1st, except such offerings as uere submitted for the first time; and their report of February 3rd shows that the total rediscounts, etc. held by our Branch at New Orleans at this time has been reduced to :,)30,268.odo. Therefore there is a reduction in volume at the Branch since this change of about eleven or twelve million dollars; and while of course the entire amount did not come from this source alone, yet the major portion of it seems to have come from this line of discounts, Yours very truly, F , 444Z1‘..01._ — IL, iiE'Ss:',PVF. BOARD V / Sept. 28, 1918. Dear Governor McCord: Your letter of the 5th instant addriissed to Governor Harding and roccilved during his abs9rce . 4kus rferred to the Counsel of tha Board for . rerly, who viirod ;;ou as follows: "Your letter twenty-fifth to Governor Harding in re American 2rut 2avinc Promissory notes member ban'A:s not eligible for discount by Federal reserve bank when :cured by county warrants. Such notes must be secured by notes, drafts,bills of exchan6e, banker acceptances or United States bonds." I return her :with the iet ter from 71r. I. Crawford which you enclosed. Very truly yours, Private Secretary. Josey,h A. IcCord, Governor Fede Ro,ervo Atlanta, Ge, irgia. • THE FEDERAL RESERVE BOARD CROSS REFERENCE SHEET M11•11=0•11101MYMMMI. File No. Subject of f+)-,1 day paper SEE File No. Letter o Dated Remarks 4/ "c! 018 rd. ? . /15 'FEDERAL RES:RVE bl'PD L.3 TTaahington, October 4, 17/6 REPORT is...) , Federal Ro3erve Agent Wellborn's comment on renevtia of fiftecn dy not. tc;.?! P . The luestion has been referred to the ComAittce on Invt.1tLitudl Federal Reselbvt:, M.nks should take 7iith re- mentt3 Thin queation was spect to renewal:.3 of fiftn c1.y not. h..s already ed by Ir. Wolli”rn and I 1)111) ani.:ITA it. 7;oald L7:iv that th:: toaTI/Iy it vithich la a ReAr2ral ono, I niak ,, iJ to 1)L If 17,11,3 It !3., it e_4111r33, eire1=4tance opiniell that .Ain a ry, of corrs, oici. rndr it. ranewal perfJetly lc;ritimte, and there th(!refori.3, be no thout of estblihing any gonerL1 rule that renewalo ohould be zofu'. (The nroneilaln in th-L.t case mccsAnu the giving of a mvs fifteen dAy note aeaured by the same or difforc,nt cc:113tti.) FederJ1 Resorvo If, hovr, aro 1.,1e1 should observe that ncw fiften day noi: ; . ite i1tflt1fl of xv<171( reoountin so aa to 'orofit by or 00 day r- % defin- tho GO or 00 d.7.y ' , Japer lover fift6n df.y rat,1 as loainst the GO a,tbn Facieral Rezservc Bank3 shrmlj. tho bor- rowing banks that their requests for fifteen ;Iv :kocarodation will be rafused and that if the ban; de3ire :1.ccommodation they should rediscount the GO or 20 day paper serving aa collateral. It is not be1Lwo,3 that it , Jould be os4iible to givc more than this c7,en2r1 sugT7estion to our Federal Reserve Banks. r ,Lcf Respectfuliy submitted: O FEDERAL RESERVE BOARD RECEIVED SEP 1 2 1917 GOVERNOR'S OFFICE WAS M.C.ELLIOTT COUNSEL September 13, 1917. My dear Governor : The accompanying letter from Mr. Wellborn, Chairman of the Board, Federal Reserve Bank of Atlanta, raises the question of the right of a Federal Reserve Bank to renew fifteen day notes of member banks. It appears from Mx. Wellborn's letter that it is customary for a few banks in his district at the maturity of a fifteen day note to send in a new note for the same amount with a different 6011ateral and to use the proceeds of the discount o the one maturing. In the o in the poser of a Feder . as the Federal Rese in cash on the should be en the membe note fo the new note in payment of nion of this office it is with- Reserve Bank to permit this so long e Bank has the option to require payment turing note. In other words, DD agreement red into as between the Federal Reserve Bank and bank at the time of the discount of the fifteen day subsequent renewals since that, in effect, would ex- tend the maturity of the fifteen day note. If, however, the F •eral Reserve Bank is under no such agreement and has the option to require payment in cash, it may at the maturity ' 4WD -2- of a fifteen day note discount another note for the same amount, secured by the same or substituted collateral, so lone as the two transactions are independent of each other. The question of how far this practice should be encouraged by Federal Reserve Banks is one of policy rather than Honorable W. P. G. Harding, Governor, Federal Reserve Board. 9 • • --./.> ... •. — j ..1 ._ , .v ,fl'77 ) NJ 1T0 i V‘ i ., i' 1 /1 '4 0 4 33 J./ r 'k, / D, t3 i.A),12t. l;:::, Li?. '..> te ft ' : ' F 7 DERAL RE:S7F.VI: :ARC .:1:110.R.CDUls. For 1,:r. 272. harbarg At a meeting of the Federal Reserve Eoa rd on .e.dnesday, Lept. 12. , the following matter (as Chairman, Conimittee on Invostr ,was referred to you(as member, (as the following minute ,;Lib entered: ,letter was presen ted from Federal .oserve -Lr,ent ,ellborn commenting upo n the temlenoy of te.Anks to renew their l5—day not es. The matter aw.3 referr ed to the .:ommittee on Inv estments. L:eoretsry./ .Please return this :r11;morandum itJn copy of doculLE- s resulting frq ,nt ; action take , if any, Date Doctu:ents Sisnature v: 1 ro" AL RESaVE EO:RD FILO September 12, 1917. 31, B. '.:ellborn, ' 7oderal eservo 2zent, Ltlanta, Ga. Dear :r. „ollborn:I\ Your letter of Meat date in regard to the renewU of fifteen dgy notes made by member banks against collateral was duly received and has been jven consideration by the Board. It seena that in EaMs districts A)deral reserve banks have bean encouraing renewals of paper of this kind. 7..hile the Board doos not wish to prohibit the renewal o:c a Ziftcen aay note, it feels that the renewal should be an excc,ption rather than the rule. r.he utter has been referred to the rroper eorinittee of the Board for report and a circular letter will be sent to all ?ederal reserve brai-al on the subject within the nezt two or three claws. Very truly z:ours, aovernar. RECEIVED FFI CERS SEP - 1917 M.B.W E LLBORN, CHAIRMAN OFTHE BOARD. EDW.T. BROWN, DEPUTY -CHAIRMAN JOS. A.M c CORD, GOVERNOR. O DIR E CTO RS EDW,T. BROWN, ANTA,GA F.W. FOOTE , HAT TIESDURG,MISS. FEDERAL R E$cEEME3'safil K M W.H.HARTFORD, NASHVILLE,TENN L.P.HILLYER, MACON,GA. W.H.KETTIG, W.H.TOOLE, BIRMINGHAM,ALA SECRETARY. J.A.McCRARY, OF ATLANTA. M.S LATTERY, -SECRETARY. DEPUTY DECATUR, GA. VV.H.TOOLE, WiNDER. GA. m.Vv.BELL, M.B.VVELLBORN, CASHIER. AN NISTON,ALA. eptember 6, 1917 Dear bir: There seems to be a tendency of some of our banks to renew their fifteen-day bills payable. The rate on these being 3-1/2 percent is evidently the cause. When a fifteen-day note falls due, they will send it in with another note but with a different collateral and count this as a new transaction. There are only a few banks doing this, but it strikes me before this practice develops into a general custom, it would be well for us to get a ruling from your Board. My interpretation of the law is that the amendement was intended to simply provide a short method for our member banks to replenish their reserves, and that it is not the intention of the law makers to make this a reular way for borrowing by member banks to take the place of rediscounting their customers notes. Lay I ask your opinion and views in this mAter? Very truly yours, Chairman of the Board and Federal Reserve Agent Mr W P Harding, Governor - Federal ieserve Board, W8sflink;ton, JC • ,...... \--........, 2 .=, , /...,, • ....„. _ I treasurg pepartment TELEGRAM PO NO 17 Govt ATLANTA GA sept 15 1916 •rederal 1,eserve Board ash in ton Three and half percent rate promissory notes member 'tanks effective today o Welroorn, Chairman vF SEP j5 19 16 108pm [-Aerai Rds‘rvie Lit 4J n 0 3- to, wir TELEGRAM FEDERAL. RESERVE BOARD • WAS H I N GTO N z-lepterlber 1,4,, 191 5, Federal 3.etlervE) !Agent, A.tlimta, Georgic. Board today tipprovod. :Tour rate three nd hAto r9reert notes of mariber banks runn5.ng fifteen days. Govern or LE SEPj 4 1916 F It/dusAV tiodai.ve6ourd OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD for FRASER Digitized O OFFICERS MB.W E LLB OR N, EDW.T.BROWN, JOS.A.M c CORD, VV.H.TO OLE, • M.S LATTERY, M.W.BELL, W.S.G RAVES, , we..., DIRECTORS EDW.T. BROWN, F.W. FOOTE , W.H.HARTFORD, L.P.H ILLYE R, W.H.KETTIG, J.A.MSCRARYr P.H.SAUNDERS, W.H.TO OLE, M.B.WELLBORN, ATL AN TA ,GA. CHAIRMAN OF THE BOARD. HAT Ti ESBURG,MISS FEDERAL RESERVE BANK DEPUTY-CHAIRMAN. GOVERNOR. NASHVILLE,TENN MACON,GA. BIRMINGHAM,ALA. SECRETARY. OF ATLANTA. DEPUTY-SECRETARY. DECATUR, GA. NEW ORLEANS , LA. CASHIER. WINDER, GA. Sept 12, 1916 ASST.CASHIER. AN N ISTON,ALA. Sir:Our Executive Committee has established a rate -4 0 of 3-1/2 , on promissory notes of nember Banks for a period not exceeding fifteen days, subject to review and determination by your Board. Uay I ask that you wire me your action in this matter. Respectfully, (VreE,4, Chairman of the Board Ur. P. G. Harding, Governor;Federal Reserve Board Washington, D.C. EEI -275:60S ) 4 91 \Nt 1 iNz:troi:5 BE' 0 2 V. 7=3 / N-- Form 40 ? / Y...., / „e . ., WAS.1-1INCI tT i * \ Al E BOARD —7th i 7.---i 1 ON le, 118. ,de Governor Federal -.serve Bank. ..;hicaro• UODOUgna • acterdment perm"ttInt; loans In exoess of' ten per cent capitri usd surplus against Unitek. '..:tatetz bonds reported bj c;ortrlttee will probably pass :_4tsnate. 2cuss bill dealinc rrith saryi sul.ljact An diffrirent Isom aready passed so that :enute taxi after passace of House bills I1i go t3 conference Senate 1lI. C;ovornor• OFFICIAL. BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD 2-7729 , . TELEGRAM' EDERAL RESE 2 1 Aro -1 _ ‘-7 3 . FEDERAL RESERVE BANK OF CHICAGO 79 WEST MON ROE STREET OFFICERS DIRECTORS W.A. HEATH JAMES B. MCDOUGAL GOVERNOR C. R. MCKAY DEPUTY GOVERNOR W.F. Mq LALLEN SECRETARY B.G. MCCLOUD CASHIER W_ F. MC LALLE N CHAIRMAN AND FEDERAL RESERVE AGENT DEPUTY FEDERAL RESERVE AGENT J.W. BLODGETT GRAND RAPIDS. MICH. J. B. FORGAN CHICAGO,ILLINOIS M.B. HUTCH ISON OTTUMWA IOWA S. B. CRAM ER ASST. CASHIER E.L.JOHNSON WATERLOO. IOWA E.T. MEREDITH DES MOINES.10WA G.M. REYNOLDS CHICAGO.ILLINOIS A. H.VOG E L MILWAUKEE.WISCONSIN December 3, 1917. DEC 5 1917 GOVERNOR'S OFFICE: P. G. Harding, Governor, Aderal Reserve Board, Washington, D. J. 'lay dear Governor Harding: We are in receipt of your letter of the first instant, and note therefrom the Board's views and conclusions with respect to the question of this bank loaning to member banks by taking for immediate credit at a fixed interest rate, checks which otherwise would be subject to tine schedule. i shall be pleased to present your letter at the meeting of our Executive Committee called for tomorrow, and if our Committee desires to pursue the matter further will be pleased to comply with your request that we advise you so that the Board may give further consideration to the matter. Very truly yours, K . A nflk w " _ FILE\ \ e ,' ‘"o' '‘ , •. " --) ' • ---. •es December 1, 1917. Mr. J. B. McDougal, Governor Federal Reserve Bank, Chicaeo, Illinois. Dear Governor UoDouual: 1 The .3oard has considered your letter of the in reeerd to a plat which is in ofiect a loan 27th irstart cirlioney to member banks by taking foe immediate credit, — basie an interest oharee el 3.64,aieck..ehice otherwise would be subject to the time sahadule. tile Board has reachaa no definite conclusion matter; feel 1n: that perhaps the plan :aa proposed in the In order to rolievo banks deeirire, short time accommodations of the 'liar Revenue stamns which 'rest now be affixed to their eolleteral notes. The telegrem which was sent you last night, however, hes pointed out a yaw by which member tanks my StilL contiruc to roc Ave short time aceoreameations without the edded expense of War Revenue etee!re, ana it is thought feeet in view of the plan suggested, there -ill no be no occasion for you to purchase uncollected chocks. In the opinion of the board, ar ex.tencir_n of credit by a Federal Reserve bank through purchase of float should be avoided il possible, ler the reason that Lao reserves of the bank would be weakened by such an oparatien without the compensating effect of note issues for which items In transit oannot be used as a basis. However, if you still th:ne it advisable that the plan be adopted, please advise ele to that effect, and the Board el 1 cive tne matter further consideration. Very trely yours, Governor. FEDERAL RESERVE BANK OF CHICAGO 79 WEST MON ROE OFFICERS STREET DIRECTORS W.A. HEATH JAM ES B. MCDOUGAL GOVERNOR C. R. MCKAY DEPUTY GOVERNOR W.F. Mg LALLEN SECRETARY B.G. MCCLOUD CASHIER W. F. Mq LALLEN DEPUTY FEDERAL RESERVE AGENT CHAIRMAN AND FEDERAL RESERVE AGENT J. W. BLODGETT GRAND RAPIDS, M ICH_ J. B. FORGAN CHICAGO,ILLINOIS M.B. HUTCH ISON OTTUMWA IOWA S. B. CRAM ER ASST. CASHIER E.L.JOHNSON WATERLOO. IOWA E .T. MEREDITH DES MOIN ES.10WA G. M. REYNOLDS CH ICAGO.ILLINOIS A. H.VOGEL ?Ai LWAUKEE.WISCONSIN 1917. November 27, 46\1 ?) '0\1 OcVICt. GONISOOVee Idr. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. My dear Governor Harding: At our Board meeting this morning Mr. Forgan reported that some of the Federal Reserve Banks were offering to loan money to member banks by accepting for immediate credit, basis an interest charge of 3.65%, checks which otherwise would be accepted basis the time schedule. The question was discussed informally by the Board and I was requested to take the matter up with you for the purpose of securing your Board's permission for us to loan in this manner, if in the judgment of our Executive Committee it seemeu desirable to do so. We shall appreciate auvice from you in regard to this matter. Very truly jours, K . Form 40 41110 rEDERAL_ I/7 FEDERAL RESERVE BOARD HLE TEtG AM RE$EFRVE BOA p WASHINGTON Mat 19, 1:" L Eciallent FoderAl Reserve Dsmk, Chicago, Illirois. Board, approves rate oi three peroent onv:abesi: baiks fifteen dsy promissory notes establisAel by roar boartie t Has question oik' throe ict one-i- Ur percent rate on oust as ors pver secured by Liberty 3Tde =dor Lonsider:tionT but for savoral reasons, among which is desire to await action of OcrgroTo Board witheo to suspend not ion. 71ILLIS ..Iiaratarys OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/2-772'J Federal Reserve Bank of St. Louis ( osirtgA T Form 40 FEDERAL EG AM RESERVE IFEDI,.;:YAtlESERYE BOA BOARD FILE WASH I N GTON fi Lay 19, 1917. F. 1cLal1en, Federal ileserve Bank, Chicago, Ill. ry Board approves rate o three percent on member banks fifteen day promisso shed by your Board. Has question .est.bli notes customers paper secured by Liberty Bonds under consideration of apmeile rate amendments but requests t t you suspend actionluntil action of Congla as to rve .:Ict becomes known. to Federal OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/ 2-7729 Federal Reserve Bank of St. Louis OP Form .10 FEDERAL TELEGRAM RESERVE BOARD WASHINGTON fe-'^ , 1917. V.. F. lIcLallen, Federal Reserve Bank, Chicago, Ill. aent on member banks fifteen day promissory Board approves rate of three / est.,bliehed by your Board. Has question notes secured by Ctovernment 06 of special rate on custavrs pape seoared by _Liberty Bonds under consideration but requests tiwt you spend aotio until action of Jonsress as to amendments to Federal Reserve Act.becomes known.\ OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/ 2-7729 Federal Reserve Bank of St. Louis MOD FEED41,L. RESERVE BC) WASH I NGITON The telegkam given below is hereby confirmed. .4.ssistan,t Secretary. 2-7729 !Lay 190 2917. Yolia11en0 1 . 2ederal Reserve Blitik, Chicago, Ill. BeLrd approves mte of three Veruent ;)n member banks fifteen day promissory notes secured by Arternment botite estbliated by your 3ord. Ras qaestion of special rate on customers patter secured by Aberty Bords under oonsidemition but requests tir,t yriu suspend ac ion until action of Ansrecs as to sneudments to Federal Reserve ct becomes kn IP Form 40 FEDERAL 4111, TELEGRAM RESERVE BOARD WAS Loy 1$'9 1917. , t, P4, Uo;...aIen, Yederal Reserve Idox,:q, Chloagos Ill. Lo3.r1 L.-Troves rAte or three raarJent on mtaber bz.nks fifteen day ixomisaory notcs secured by ;overmlont b tie estJblished by your Joard, quo s luestion of epeotal rte on oastmers fg.tr *soured by Liberty Bonds under oolleideration but requests th t you suspend at, ion until action of ,:ongress us to amandmants to Federal eserve ,et bvcomes 4u ws• OFFICIAL BUSINESS GOVERNMENT RATES FEDERAL RESERVE BOARD CHARGE http://fraser.stlouisfed.org/ 2-7729 Federal Reserve Bank of St. Louis N Fre/ft digo--0 1 , 6- .., ,„,„...2,..,,(6,...— ,c,__.. h , te„ 4-I,L.. ri-.0 A r 90--ter&-wiAAA-641 -c.-.t t- i--.6 4 /4-0- ....„_ 0 AA-L—A -( 4 --eA - r ,,,;I ,,,t,1 ., )--7 t i (/ -4 0 cz....,44/1„77-,.. r-,_ ' i 42,.....y A.,...46-1- 6tc_tc.44.-/6 1 i Treasurg pepartuxent 6P0 Hgx22 60 collecTEVYARAM Fx Chicago H Parker Willis ay 19 Secy Fed Res Board Washn Subject to approval of your board our board of directors has named a rate of three percent on member banks fifteen day promisory notes secured by government bonds and on customers notes secured by government bonds maturing within ninety days when offered for rediscount please confirm immediately 2 W F McLallen Secy 1050a I1LW:StrIVE BOARD FILE ? FEDERAL RESERV1E BANK OF tH-ICA - 79 WEST MON ROE OFFICERS STREET DIRECTORS JAMES B. MCDOUGAL GOVERNOR WA.HEATH CHAIRMAN AND FEDERAL RESERVE AGENT W_ F. MC LALLEN DEPUTY FEDERAL RESERVE AGENT C. R. MCKAY J.W. BLODGETT GRAND RAPIDS, micH. E.L.JOHNSON WATERLOO, IOWA DEPUTY GOVERNOR W.F. NH LALLEN SECRETARY J. B. FORGAN CHICAGO,ILLINOIS E.T. MEREDITH DES MOINES.10WA B.G. MCCLOUD CASHIER M.B.HUTCHISON G.M. REYNOLDS CHICAGO.ILLINOIS S. B. CRAM ER ASST. CASHIER OTTUMWA.10WA A. H. VOGEL MI LWAUKEE.WISCONSIN Chicago, May 17, 1917. Mr. H. Parker Willis, Secretary, FEDERAL RESERVE BOARD, Washington, D.C. Dear Sirs Our Board of Directors today fixed a rate of a% to member banks on their promissory notes for a periol not exceeding fifteen days when secured by the deposit or pledge of United States bonds or notes, subject to the approval of the Federal Reserve Board. Please advise us of their decision by wire. Yours truly, Secretary. , • , '10.1 Form 40 0 TELEGRAM FEDERAL. RESERVE BOARD -1'0N WASHING September 22, 1916. Federal Reserve Agent, Chicao, Ill. Board approves your recommendation to abolish ten day rate ana estvblieh thr?e and hTlf percat rate for fifteen day paper. GO7ernur. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE for FRASER FEDERAL RESERVE BOARD Digitized 'greasuril GPO MO GO FX Collect Govt epartment TELEGRAM CHICAGO Ill sept 22 1913 7 ederal Resel.ve Board washington D.C. Directors today abolished ten day rate and in lieu thereof established a uniform fifteen day rate of three and one half percent for either rediscounts or promissory notes of member banks effective September twenty third (Etop) Will you please approve or disapprove by wire.This accords with your circular letter of September eleventh Bosworth 1230pm ka0 V'133 SEP 2P 1918 Federal ittdenrC tiOstiq ) 7 4V , December 19, 1919. W. 0. 14. Attebery, De-uty Govermr, Fbderal Resrve Bank, St. Louis, Mo. My dear Olin: I have your letter of December rith : In takIn uj) with Counsel the miltter of our correspondence Oymt part due paper, I did not stret ,! the diference between the rate for pt due parer and the rate at which deficient reserves are penalized, Wthough I mentioned it. That, in my judgment is really not the important thing. The matter to he settled is whether the phrase as to rate after maturity, which appears in your note and in the notez of Chicago, Cleveland, an Kansas City, is a proper phrase under the law, anl whether the Ferleral Reserve Bark of St. Louis is not justifie d by ordinary banking prudence, to protect itself by carrying past due vtper in lieu of unprotected overdraft. Frankly, I myself believe that the conre you hnve tken in at least the wisest course, but there i thing in the daily reports of any of the other Federal Reserve 73onks to indicate that they are actually following the sane prectic, althou& the form of their notes, an you say, wny gi7e notice of. the intention on the part of the Fede ral Reserve Brinks to do so. The matter is now wo for ruling, and I think you can pro' n-17 continue the courve which seems to you best, until you receive some authority to do otherwise. I agree with you perfectly thnt in doll ars tvid cents he 6% rate on overdue paper is sometimes IA hi7her rote than 64% for ift ranlrym d!lficiency which is calculnt ed on a aeekly vverarr,e. If, however, you will examine the Board's circular letter, X-1534, dated June 13, 7919, you will see in paragraph 4 that you can ho authorized to increase your penalty for reserve defency in a progreeiive mann er, to a point which "ill wipe out any posrible differential between the pt due rate and the penalty rate. W. Emerson tollt;,- me that in the next to the last line of the said circular, the words "each subsequent deficiency" may be construed to mean, if the Federal Reserve Bank so desires, a skjjj deficiency . . With best wishes for a happy ChristmaR to you and yours, and hoping to see you before long in Washington, am, Very truly yours, Executive Secretary. • FEDERAL RESERVE BAIK OF IN REPLYIN G PLEASE QUOTE •\. ST.LOU!S. INITIALS r.7 s • 1 'CT %. December 17, 1 9 1 9. Mr. W. W. Hoxton, Executive Secretary, Federal Reserve Board, Washington, D. C. Dear Mr. Hoxtan:Receipt is acknowledged of yours of the 15th. I am returning herewith for your files copy of your memorandum of like date to Mr. Harrison. One point I wished to make in my letter to you of the 12th and upon which I assume you do not agree with me, in view of your memorandum to Mr. Harrison, is that in the majority of cases on past due paper results in the member bank being the rate of charged with a larger amount in dollars and cents than it would be if they were to be penalized for their reserve deficiency at the rate of 4 &N. This, as previously explained, is due to the fact that interest on past due paper is calculated on a daily basis, whereas, penalties on reserves are figured on weekly averages. In respect to the wording of our note, you will find that practically all the other Federal Reserve banks use collateral notes , Promise worded in a similar manner - for instance, Chicago's reads: ' Chicago, at its office, to pay to the order of Federal Reserve Bank of with interest at the rate of 7% per annum after maturity until paid". Kansas City's reads in like manner except that the rate is 8%. Likewise Cleveland is the sane except that the rate is 6%. In respect to your statement that in allowing a collateral note to run past due we are granting a bank a loan for a longer period than 15 days which is not provided for in the law, it occurs to me that the same is equally true of any paper taken by us. We may today rediscount for a bank a piece of agricultural parer maturing in six months. If this paper is not paid at maturity, we must necessarily carry it past . 56 EDERAL RESERVE BANK OF ST. • API S SHEET No. 2 Mr. W. W. Hoxton, Executive Secretary, Federal Reserve Board, Washington, D. C. due, that is, of course, providing the bank rediscounting the paper with us does not have sufficient balance on our books at the time the paper matures to justify our charging same up without overdrawing the account. I cannot see where there is any other plan for us to guruse in a case of this kind and am inclined to believe that the same principal is applicable to a collateral note. Yours very truly, 0. M. Attetery, Deputy Governot. Enclosure. OLIA V : December 15, 1919. Ur. 0. M. Attehery, Deputy Governor, Falaral Re -erve Bank, St. Louis, Mo. Dear Olin: I have your letterr, of December 11th And 13th. The problem of past dIlB paper as you prenent it, is 4 nteresting, ani after the receipt of your second letter I talked it over with Governor Harding. At his suggestion, I presented the cp,se by means of office corresnondence to our Counsel, Mr. Marrison. As on as Mr. Harrison replies, I will advise you. For your own informLtion, and for the information of Governor Biggs if you see fit, I enclose a cony of my office memorandum. Please return it to M9 for my files when YOU have finihed with it. In my judgment, Mr. McConkey was entirely right in his opinion that the collateral cannot be construed as following an overdretft, but it is also pretty plain to me that the phrase on your form of note is not legal. The law does not admit, as you know, that such a loan can be made for more than 15 days, anA ylt the phra-.e in question is an indirect implicti-n that such a thing can be done. We will try to fix up some way by which WD can get around it without being outlaws. With best rognrds to those around you, I am, Very Uncerely yours, Form NoJ 11 4 4 Office Correspilderic To Mr. Harrison, Counsel FE ESERVE RD — -Date. , December 15, 1919. ISINect: In re past-due paper. From ___ Mr. Floxton memorandum is adlressed to you by direction of Governor Harding. The form of collateral note used by the Federal Reserve Bank of St. Louis contains the clause "payable at the rve Bank of St. Louis, Mo. with office of the Federal Res, interest at the rate of 6% per annum from maturity." This form of note was not, so far as I can ascertain, authorized by the Federal Reserve Board, although as vuu know, the phrase commonly appears in forms which are used by commercial banks. There is, as you know, no 6% rate authorized by the Board for St. Louis for any maturity. Certain banks in the St. Louis district permit their 15 day obligations collateraled usually by United States securities, to run past due, sending in a renewal several days later. Sometimes the charging of the note at maturity to the member bank's account, will not only deplete the reserve but will overdraw that account. The Counsel for the Federal Reserve Bank of St. Louis has verbally, I think, rendered an opinion to the officers that in such cases the safe course to pursue was to carry the parer past due, retaining the collateral as secprity instead of paying the note, releasing the collateral and leaving an unsecured overdraft. This practice.arose in the beginning for another reason besides that of prudence, and that was the desire of the Federal Res2rvel Bank of St. Louis to penalize the offending member bank to a greater degree than thnt penalty afforded by the assessment for impaired reserves. This reason does,nat exist now, as the penalty for impaired reserves amounts to 0%, and by authority of the Board's circular X-1584, this penalty can be carried much higher. Tt is realized also that the Federal Reserve Bank of St. Louis should warn such offending member banks, that under the terms of Section 19 of the Federal Reserve Act such banks can declare no dividends and make no further loans until the reserve deficiency is made good. The question, however, seems to ma to be deeper than a mere matter of penalizing a reserve deficiency. The Federal Reserve Bank in pursuing the policy outlined above is actually lending money on a collateral note for a longer time than authorized by the law, and charging, for a part of that time, Misc-37 Correspoltdence FEDERAL RESERVE BOARD 0 Date Subject__ TOM si 2 a rate which is not authorized by the Federal Reserve Board. On the other hand, if the note when it reaches maturity, is charged to the member bank's account and by that charge an overdraft is created, the collateral does not secure the overdraft, and should the member bank fail, it appears to me that the Federal Re-3rve Bank may encoumber loss. Your opinion is respectfully requected as to the, legality of the procedure followed by the Federal Reserve Bank of Sts Louis in these cases, mid as to whether or not the security behind the matured collateral note could be construed as following to the overdraft. It must be remembered that in many cases member banks guilty of the, specified offense, are "weak sisters," or at least are indifferent to the uses and requirerLents of the Federal Reserve Bank. Stisc-37 • vWL\ 1 c, - FEDERAL RESERVE BANK OF IN REPLYING PLEASE QUOTE ST.Louis. INITIALS December 13, 1 9 1 9. Mr. W. W. Hoxton, Executive Secretary, Federal Reserve Board, Washington, D. C. Dear Mr. Hoxton:— Following up my letter of yesterday', after discussing the matter with Mr. Biggs and reviewing the Federal Reserve Act, the fact that the latter is silent in respect to the handling of past due collateral notes and makes no provision in the matter of rate in respect to such paper as we must necessarily carry past due, prompts me to ask that you make such suggestions in the premises as you deem in order. With kindest regards in which the whole "gang" joins me, I am Yours very truly, Attebery O. Deputy Gover. r. 016IA:V BE () , - F:3 P FEDE RAI,IESE RVE BANK OF IN REPLYING PLEASE QUOTE ST.Lo1Is. INITIALS December 12, 1 9 1 9. Mr. W. W. Hoxton, Executive Secretary, Federal Reserve Board, Washington, D. C. My dear Mr. Hox eceipt is acknowledged of your letter of the 10th. I enclos erewith copy of the form of collateral note used by us. I think you will recall a discussion between Rufus and myself which resulted in our asking LIZ. McConkey for an opinion as to which was the more desirable - the charging of collateral notes to the maker's account at maturity, thereby creating an overdraft, or carrying the note past due at the contract rate and avoiding an overdraft. The opinion as rendered was to the effect that the safe course to pursue was to carry the paper past due, retaining the collateral as security instead of paying the note, releasing the collateral and leaving an overdraft unsecured. It is true, as you state, that we also considered the matter from the standpoint of which would greater penalize the offending member bank and it was decided that the carrying of the oast due paper would, in the majority of cases, accomplish that purpose. This is still the case in the majority of instances, even the the penalty rate is 6--N, while the past due rate is 6%, the reason being that penalties are assessed on average reserves for weekly or semi-monthly periods, while the interest charged on past due paper is daily. There is no doubt in my mind but that the rate of 65 Provided for after maturity was included in our collateral note without authority from the Federal Reserve Board at Washington. I will see that this matter is immediately brought to the attention of the Chairman of our Executive Committee. Assuring you of my .appreciation of your action in bringing this matter to my attention and with kindest regards, I beg to remain Yours verruly D eputy. December 10, 1919. Mr. O. M. Attebery, D3- A7,1;,7 Geeerner, Federel Nerve Bark, St. Leeds, Mo. My -leer Olin: It has. -oaee breirzht to my ettention that you are carrying as overdue paper 15 day, collateral notee of certain member bunks,end chareing interest thereon at the rate of 6%. A5 you knew, it i3 the oestom of eal the other Fedeiral Reserve banks to charge up such notes at materity, end then, if necoseary, penalize fee uffen4e14 member. who allows hie obligation to run past the due date, by the imposition of the eeseeasment provided in case of deficient reserves or actuel overdreft. have rather a vague recollection that .;hen Was in the Federel Reserve Bank of St. Louis, we carried, in a few ceons, the =provided for obligation of ,e member bank after due date, as past due pe.per,rather than to charee the note to the member berik(s account and thun create an overdraft. If I remember correctly, the theory eas that the offending timber would be more hauvily penalised by thia method than by anseesing the authorized penalty for deficient reserves. I have e feeling now that the FF:dercil Reeerve Board will not look with favor upon this method of handling such ceees, becauee In tYle firnt plece, it 15 ectually entanding to 4L member bank on its 15 day obligation a loan for a longer, perioa than ie author:In:a by law, and because there is no 6% rate for horrased money etuthorieed by the Federal Reserve Board for your dietrict for any mterity. Reference to the Board's circular letter, X-1584, dated June 13, 1919, Advisee me that additional and vere stringent penalties have been authorized for reserve depletion, and there is, therefore, no letesis left for the artrznant ehet the position of a 6% rate on past due paper will orine the offending member bank to ite good behavior more readily than the impoeition of the reerve dficiency tenalty. A I recall it, the olllateral note used ny the Ferleral Reaerve BRnk of St. Louie / for 15 day borr(,4ings, contains the clause that the note aha ll boar tatereat ett,the rate of 6% aft or mat irity. Please mil , to Ile a ciy. 17 of thn .7orm of note Alc . h t n - .sed in your bank. . Give my very kinilet rogardl to Nrs. Atbery, and romnmblr ne cordtally to all of my old In the bank. Sincerel.y 7oura, nclitivo Secretary. (SigneM N-ViVT 77(;'71tOTI. • ' May 5, 1917. ;:artin, Chairman Pederal Reserve Bank, St. Louis, Lo. Dear Lr. I have your let141' ofj40.2nd instant referrin to confir:z.tion of teleram sent you by the Board on April 19th, which tolegran you have never receivd. he records of the telef;raph office in the Treasury building show that the nessaGe VAS sent on the 19th at 3:21 and should have reached you by three o'clock, St. Louis ti e. P. I note the resolution adopted by your Board on Arril 18th, and will state in this connection that the 17ederal Reserve Board has today requested the Senate Committee to anend the pendik; bill so as to permit the use of fifteen day merber bank collateral par as security for Tederal Reserve notes.. Very truly ,'ours, lovernor. DIRECTORS OFFICERS FEDERAL RESERVE BANK ROLLA WEL.L.S. GOVERNOR W. W. HOXTON, DEPUTY GOVERNOR AND CASHIER JOHN OF JAMESG.McCONKEY, COUNSEL AND SECRETARY W. BOEHNE, EVANSVILLE, NO. D. C. BIGGS, ST. LOUIS, MO WALKER HILL, ST. LOUIS, MO. W. B. PLUNKETT, LITTLE ROCK, ARK. OLIN M. ATTEISERY. ASSISTANT CASHIER ST. Louis R. R.CLABAUGH, ASSISTANT CASHIER W.McC. MARTIN. CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT LE ROY PERCY, GREENVILLE, MISS. FRANK 0. WATTS, ST. LOUIS. MO. S. A. ZIEGLER, ALBION. ILL Llay 2, 1917. Honorable W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. RE.Lwvari M ''(4. 1917 coveatmows OFFIC34 Dear Governor Harding: On ARr,i11 th,II wired the Board saying that, subject to its approval, the Board of Directors of this bank had set a rate of 4',/, on paper maturing within fifteen day, including collateral notes. On 2,.pril 21st, I received confir,-iation of a telegram, evidently sent by the Board on April 19th, readinpi "Your telegram April eighteenth. 3oard today considered Proposed rate, but is unable to approve same. Believes existing rate preferable for present." The telegram, itself, however, was evidently lost, for it has never yet reached this bank. At the meeting of our Board on Lpril 16th, when this rate on fifteen day paper wz's raised from 3-1/25; to 4, the following resolution was passed, which I now transmit to the Feder;1 Reserve Board in accordance with the instructions of our Board: 1";,TIEREAS, Federal Reserve 17otes cannot be issued against 15 day promissory notes of memer banks; and. ViEERLAS, a number of our member banks prefer to use such 15 day promissory notes instead of regular rediscount paper; and, WHEREAS, it Is necessary that the Bank's assets be kept, at all times, in such condition as to render the maximum assistance to its members; and, WHEREAS, it seems desirable that Some arrangement be made by a ruling of the Federal Reserve Board, if permissible, or, by an amendment to the Federal Reserve Law, if necessary, whereby Federal Reserve :otos may be issued against 15 day promissory notes of member banks; f p./4-k a11/4f-f—fi.a 4A4L 144, -Avi Akec,ar•La a/d1,1 RVE BANK OF ST. LO* NOW, THEREFORE, BE IT RESOLVED, that the Chairman of this Board forward to the Federal Reserve Board a copy of this resolution for such attention and action as it may deem wise and proper under the circumstances." The discussion leading IVO to the passage of this reso- lution disclosed the fact that out of approximately *,1,000,000. of loans discounted for member banks, about :900,000. were in the r form of promissory notes, against which Federal Reserve Notes could not be issued. In this connection, i think I should say that since we have explained to the St. Louis banks that Federal Rescrve Notes could not be issued against their promissory notes, they have been extremely reasonable in their demands on us and are avoiding, where possible, putting in this character of note. Yours respectfully, Chairman of the Board. Form 40 4 4 11 • TELEGRAM FEDERAL RESERVE ouXAE5SERVEBOARD)LE WASH IN GTON u_n2u, Federal neeer's 4000 3t. Lciito. Me Your telwas Aril flOktoenth. ,o.ar4 todsy 40p considered proposed Moir- 40-r3t04 but is tangible to approve erJus. 3o11ovos oxistirc rate ublo far prosonte VILLIJ OFFICIAL BUSINESS GOVERNMENT RATES CHARGE FEDERAL RESERVE BOARD 2-7729 prefur— 70STAL TEL=GRAPH 1 : COMMERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT. NTER No. TELEGRAM E FILED or the k!ck othis biank The Postal Telegraph-Cable Company (Incorporated)transmits and delivers this message subject to the terms and conditions orin:eci DESIGN.'PATENT Mo. TOMAttigo Oubloot to " Oond the following inonnaget%WPM an# 4o5n aditiona prisz 1-44#44Iwo* whicis ro horet.vraTa to. 1' -MIR!20 917 Bt. Louie, April 16, inaap3d 1.1471efqf l'ederal kicsry4: Og 2ederal Resewe doard, ariTAT Washington. Telegram this morning raising rate to four percent on all fifteen day paper should have red four percent on "Paper ." maturing within fifteen days, including collateral notes. MO change contemplated in other seven classifications set Governor's out youiletter March thirteenth. Martin. .(Official Business, Government Rate, Charce Federal Reserve 3oard) 3:10 -mm =11•111••••••••••• The telegram given above is hereby confirmed. Chairman of the Board, Federal Reserve Bank of St. Lauis. This telegram sent to make it clear that the word "paper," used in previous telegram, did not include trade acceptances, commodity paper, and bankers' acceptances. We are getting too many collateral notes, against which we is cannot issue Federal Reserve rotes, and this raising of rate about this in :zl1, write fully effort to Protect ourselves. the next day or two. 'OSTAL TELr'GRAPH l COMMERC1 4L CABLES CLARENCE H. MACKAY, PRESIDENT. TELEGRAM The Postal Telegraph-Cable Company (Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this 'rciri'e, DESIGN PATENT No. 40529 ( Send the following message,without repeating,subject to the terms nrad conditions printed on the back hereof, which are hereby agreed to. -4 N'" t. LOViE, April 18, 1917. Ceder.A. Reserve ;3oara, :D.shington. Subject 7our aprroval, our Board to-day raised rate on all fifteen day paper to four percent. Dartin. (Official Business, Government Bate, Charge FeLlerL1 iienerve 3oard.) 11:50 sin The telegram aiVed above ic lure Chairman of the Board, Fecleral Leserve Bank of Ct. bolds. hiiCEiVD APR 20 1317 Federai iteerve fitiat , Form 1201 CLASS OF SERVICE SYMBOL CLASS OF SERVICE Day Message SYMBOL Day Message Day Letter Blue Day Letter Blue Night Message Nite Night Message Nile Night Letter NL If none of these three symbols appears after the check (number of words)this is a day message. Otherwise its character is indicated by the symbol appearing after the check. Night Letter N L If none of these three symbols appears after the check number of words)this is a day message.Otherwise its character is indicated bythe symbol appearing after the check. NEWCOMB CARLTON. PRESIDENT RECEIVED AT WYATT BUILDING, CUR. 14TH AND F STS., WASHINGTON, D. C. 267A AD ALWAYS OPEN 26 GVT NITE STLOUIS MU 8EP 27TH 1916 SHERMAN ALLEN AS8ISTAN1 SECRETARY FEDERAL I9 REFERRING YOUR RESERVE BOARD WASHINGTON LETTER SEPTEMBER TWENTY SECOND XXV= THREE PERCENT RATE FOR FIFTEEN DAY PAPER EFFECTIVE SEPTEMBER SIXTEENTH MARTIN AGENT 924PM Col toalber 22, 1916. - Mr. W. McC. Martin, Chairo:an, Bo.Ird of Dir. ,ctoro, Federal Reserve Bank of St. Louis. Dear Sir: Please adviqo us at your 81U:est convenience then the new 3 per cent. rate for 15-day p.per bece effective in your district, and oblize, Yours very truly, Asaistant SlcrJt._try. • Form 40 -AL • TELEGRAM O FEDERAL RESERVE BOARD WASHINGTON :Aptembor 15, 1916. 2adoral Leserve 'gent, St. Louis, Mo. Board approves roi:xt:menCtIcn your brrh drop ten (Ivy rate tQfl establish fifteen day rate commercial ena member bank paper of three percent. Governor. OFFICIAL BUSINESS GOVERNMENT RATES CHARGE for FRASER FEDERAL RESERVE BOARD Digitized r, Form 1201 ASS OF SERVICE SYMBOL Day Message Day Letter Blue Night Message E4111r J CLASS OF SERVICE SYME.CL Day Message Nita TEL NEWCOMB CARLTON. PRESIDENT Bluo Night Message NI Night Letter If none of these three symbols appears after the check number of words)this is a day message. Otherwise its character is Indicated by the symbol appearing after the check. Day Letter t:ito Night Letter N L If none of these three symbols appears after the check (number of words) this is a day message. Otherwise its character is indicated by the symbol appearing after the check. RECEIVED AT WYATT BUILDING, COR. 14TH AND F STS., WASHINGTON, D. C. VW 192A Y GOVT N -1 S1LOU16 MO SEPT 14 16 rEDERAL_E8ERVE o0ARD rt4 .:A8HINGTON . SULAJECT YOUR APPROVAL OUR EXECUTIVE . RATE AND E8T4'\,,LISHED FIFTEE MEMBER BANK PAPER AT -MEE O DAY COMMITTEE TODAY A0OLISHLD TE04 DAY RATE FOk BOTH CumMERCIAL AND PERCENT THIS bEING RATE HERETOFORE TEN DAY PAPER ANSWER MARTii CHAHMAi4 753P