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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
CROSS REFERENCE INDEX
SECRETARY'S MINUTES AND STENOGRAPHIC REPORT
GOVERNORS *CONFERENCE, APRIL 12-15, 1921.
Paragraphs i n P a g e s i n
Secretary's Stenographic
Topics Covered b y Treasury Program
M
i
n
u
t
e
s
R e p o r t
Z. CGurreney and Circulation:
(a) New Currency
*
3
:
3
1
, 5, 7
9
2
105-110)
)
8
1
1, Expense of shipment of coin and currency
2 )
97-103)
3
3
2, Shipments t o non-member banks Redemption o f fit and deposit o f unfit
National Bank Notes
354
1
Retirement of F. R, Bank Notes
Incomplete Federal Reserve Notes
6
3
1
9
9
1
0
0
II, Accounting:
Standardization of Reconcilement forms
Report printed ;
War Loan Deposit Accounts
2
Reimbursement of Fiscal Agency Expenses
2
9
5
)
2 9 5 - 2 9 7 )
9
9
2
1
3
Assistanee t o Treasury i n Improving
Procedure
309
Expediting Payment of Treasury Checks
‘Mr. Rounds’ letter (extraet) printed
3
3
1
1
5
-
5
3
1
)
7
)
III, F i s c a l Ageney Funetions:
(a) Continuance of War Savings Organizations
2
3
5
, 318
(b) T r a n s f e r of Gov't Loan Organ. t o Fiscal
Ageney Functions
3
{c)} W o r k involved i n Subtreasury Functions
Note,
Review of Treasury Program with Mr, Gilbert
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6
3
2
5
7
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Federal Reserve Bank of St. Louis
CROSS REFERENCE INDEX
SECRETARY'S MINUTES AND STENOGRAPHIC REPORT
GOVERNORS’ CONFERENCE, APRIL 12-15, 1921,
Paragraphs i n
Topics Covered b y Routine Program
M
i
n
u
t
P a g e s in
Secretary*s S t e n o g r a p h i c
e
s R e p o r t
Le O p e r a t i o n
{a) Pension Fund
2
6
(b) Personnel and Welfare
, 28, 54 3 7 1 , 386,775
2
9
3
9
1
)
3
9
2
)
x
2
4
4
2
3
2
4
3
4
4
(e) 1 , Liability o f Reserve Banks f o r Securities
inCustody
3
0
)
(c) 2. Desirability of Uniform Cireular Explain-
ing thie Liability
3
6
3. Should Reserve Banks Insure Securities i n
Custody
3
0
Review of Policy in re Extra Compensation
Measured Service as basis of Compensation
Efficiency o f Personnel ©
a
3
3
Standardization of Saldries
Direct Pouching of Mail
3
0
4-
4
440
4
6
Report b y Committee o n Codes
3
Insurance of Incoming Shipments of Reserve notes
Fire Insurance o n New Buildings
4
8
, 689
6
9
9
7 0
6
0 é
2
2
0
II, Accounting and Auditing
€
(
a
) Survey of Accounting and Procedure
(b)
(c}
(d)
(e)
(f)
4
Collections gaat Direct b y Member Banks
4
Changes i n Statements t o F. R. Board
4
Standardization of Methods o f Auditing
4
Auditor's Certificate to Annual Statement
4
Standardization of Inter-F.R. Bank Forms
4
1
7
0
2
2
3
4
5
6
7
7
7
0
1
1
6
2
6
7
1
7
7
7
1
8
8
7
2
0
III, Collections and Clearing
(a) Uniform Indorsements
4
(>) Uniform Procedure and Circulars —
4
(c) Inter-City and Country Clearing Settlements
(d) Checks o n banks i n Poor Condition
M
2
(e) Float of Federal Reserve Notes
Mr. Rounds' Memorandum quoted
4
5
5
7
5
(f) Limitation o f Wire Transfers
9
2
5
5
-
7
3
8
5 6 5 7 4 2 , 720,753
7
5
7
3
5
° J )
9
)
3
7
7
0
counts,
5
5
Discounts for Non-members Secured b y Governmente6
5
Development o f Discount Market
5
7
Report o n Open Bill Market Conditions
5
7
Acceptance Practices and Regulations
5
7
8
8
8
8
8
0
1
1
1
1
9
0
4
4
4
IV. C r e d i t Transactions a n d Policies
(a) Uniform Indorsements o n Non-member Bk, Redis-
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Cancellation of Confirmed Credits
5
9
first half- Status of Eligibility Committees
, 63 8 1 6 , 948
6 0 )
second half- Compliance with Board's New )
Regulations
6
4
Assistance to Short-handed Member Banks
8
2
6
)
9
5
2
)
)
)
6
5 )
9 5 9
see 50/51 above)
Mr. Puelicher's Suggestion for Conference
6
6
9
Amendment to Section 5202
6
Sales of Bills Reported as Rediscounts
6
6
4
7
9
6
6
1
9
4
0
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CROSS REFERENCE INDEX T O
SECRETARY'S MINUTES AND STENCGRAPHICG REPORT
GOVERNORS' CONFERENCE, Aprii te-15, 1921,
Paragraphs i n
P
e
g
e
s in
Secretary's S t e n o g r a p h i c
M i n u t e s
R
e
p
o
r
t
Topics Not Covered b y Advance Programs
Advance Notice o f Governors! Conferences
5
8
8
1
6
American Farm Bureau Federation
Time o f Appointment
87)
Change i n Time o f Appointment
Discussion
103)
456)
Appointment o f Secretary :
oF
Comptroller o f Currency
eh o e 2 ,
Charges for Complete reports (see alse 71)
2
Charters o f new National Banks
Inf ormation t o Branches o f F.‘R. Banks
Charges for Complete reports
5
3
6 ,264 ,32%
a2
6
5
1004
Coupon Collections
969
Date of Consolidated Statement
4
Daylight Robberies o f Currency
3
1
Federal Reserve Notes Missent :
2
2
3367,
0
8
Federal Reserve B a n k Procedure i n
Handling Discounts
9
Mr. Rich's Letter r e Federal Reserve Policies .
Letter printed i n stenographic report
1
Soviet Gold
Telegraphic Transfers
8
9
Note: T h e discussions covered b y the Thursday
M o r n i n g Joint Session, (referred to on
page 1 8 of Secretary's minutes) appear
en pages
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0
9
-
2
BHR.
5
5
Visit o f Federal Reserve B a n k Officers
to Federal Reserve B a n k o f N e w York i n
re Acceptances
!
7
6890,
7
6
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Federal Reserve Bank of St. Louis
CROSS REFERENCE INDEX T O
SECRETARY'S MINUTES AND STZNOGRAPHIC REPORT
GOVERNORS 'CONFERENCE, A p r i l 12-15, 1921.
Paragraph i n
P a g e s in
Seeretary's
Topics Covered by Joint Program
M
i
n
u
t
II, Gold Policy
(¢) Gold to be held Abroad :
e
s
S
R
6 0 ¢
e
t enographic
p
8
o
r
9
t
5
IV Credit Poliey
(a) Poliey in re Paper of Doubtful Eligibility 60a
(b) Discussion o f so-oalled "Direct Action"
8
7 7
1
7
0
0
5
1
ce R e s e r v e Policy
(a) Resorve in Gold - Elimination of Silvers
)
and legal tenders
b
(
Propriety of Combined
Reserve Percentage
=
) Changes i n Rediseount
e
c
Pol
l Discussion
a
r
iey
e
n
rhe
(
ast,
G
e
WE
_
VI, Earnings o f Federal Reserve Banks
Reserve for Franchise Tax
1029
VII, Par Collection System
(a) Status of Litigation
ss
(b) Effeat of Certain State Laws
(c) MinSmiging Risks inCollections
VIII, Shipments of Coin and Curreney to Menber
and Nonmember Banks upon Request o f a
Member Bank
(a) Advisability of Uniform Policy
X, B a n k e r s Aoceptances
(a) Purchase o f Six Months" Export and
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Import Bills,
h
a
1030
t
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REVISED LIST O F
TOPICS FOR DISCUSSION WITH TREASURY DEPARTMENT
BY GOVERNORS O F FEDERAL RESERVE BANKS
CONFERENCE A T WASHINGTON
COMMENCING APRIL 12, 1921,
(ADDITIONAL TOPIG INDICATED B Y ASTERISK)
I. C U R R E N C Y AND CIRCULATION
(a) N e w eurrency. R e p o r t of committee.
(b) C u r r e n c y and coin shipmente,
(1) S h o u l d the Federal reserve banks absorb the expense o f shipments o f currency a n d c o i n t o a n d f r o m banks i n their r e spective districts. ( F e d e r a l Reserve B a n k o f N e w York).
(2) S h o u l d requests o f nonmember banke f o r currency a n d coin
service, accompanied b y drafts o n city correspondents, b e
received. (Federal Reserve Bank of Cleveland).
Should the Federal reserve banke receive for redemption for account
of t h e Treasury Department unfit national b a n k notes a n d o n deposit
fit national bank notes. ( F e d e r a l Reserve B a n k o f New York),
Should not a uniform system policy b e established with respect t o
the retirement o f Federal reserve b a n k notes.
( F e d e r a l Reserve
Bank of New York).
What arrangements should b e made i n casee where Federal reserve
banks h a v e presented t o t h e m Federal reserve notes unsealed a n d
unnumbered, b u t otherwise duly executed, which were apparently
stolen within the Treasury Department and circulated, i n view of
the advice b y the Treasurer that there i s no provision for their
redemption, (Federal Reserve Bank of Richmond).
ACCOUNTING f
(a) U n i f o r m reconcilement form for use o f the Treaeurer o f the United
States i n reconciling accounts maintained i n reserve banks (report
by committee o n standardized forme).
War loan deposit accounts, ( F e d e r a l Reserve Bank o f Chicago}.
Reimbureement o f fiscal agency expenses. ( F e d e r a l Reserve Bank
of New York).
Assistance t o be rendered t o Treasury Department i n connection
with improving procedure relating t o transactions with Federal
Reserve Banks,
x ( e ) Progress made b y the Treasury Department i n the speeding u p of
operation o f paying its checks,
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Sit. F I S C A L AGENCY FUNCTIONS
(a) As.the issuance of Treasury (War) savings securities ic an exceed-
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ingly expensive method o f procuring funds and such cecurities accomplish very little toward the encouragement o f thrift and a s Liberty
bonde o f later issues are readily available i n denominations o f
$50, and $100. a t market prices, yielding a n interest rate much
in excess o f War Savings securities, a n d a s redemptions i n the
latter clase o f securities appear t o b e heavy, should the War
Savings Organization activities b e continued.
Bank of Cleveland).
( F e d e r a l Reserve
( T h e Federal Reserve Bank of San Francisco
also suggested this topic).
Should the Government Loan Organizations i n the several banke be
transferred to Fiscal Ageney Functions. (Federal Reserve Banks
of New York and Chicago).
Informal discussion o n Subtreasury functions a s they affect Cash
and Fiscal Agency Departments, s o that the banks which have not
yet assumed Subtreasury functione might have the benefit o f those
banke which have. (Federal Reserve Bank of Dallas).
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REVISED LIsT O F
TOPICS (ROUTINE) F O R DISCUSSION B Y GOVERNORS
OF FEDERAL RESERVE BANKS, A T CONFERENCE I N
WASHINGTON, COMMENCING APRIL 12, 1921,
(ADDITIONAL TOPICS INDICATED B Y ASTERISKS)
1. OPERATION.
(a) Pension Fund, Committee to report. (Unfinished bucinese
(>) Personnel and Welfare. Committee to report. (Unfinished busineee)
(c)
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Seeurities left i n custody.
(1) Discussion o f the extent o f liability o f the reserve banks for
euch securities, (Federal Reserve Bank of New York).
(2) Should not a uniform circular be iseued b y the reeerve banks
on thie subject. (Federal Reserve Bank of New York).
(3)
T o what extent should t h e reserve banks insure these custodies,
with a comparison o f the forms o f truet receipts issued b y the
several reserve banks.
( F e d e r a l reserve banks o f N e w York
and Dallas),
Review o f policy o f paying extra compensation,
i n view of the ap~-
parently falling retail prices, ( F e d e r a l Reserve B a n k o f N e w York),
Should measured gervice b e established a e the basis o f compensation t o
Federal reserve bank employes. ( F e d e r a l Reserve Bank o f New York).
Efficiency o f Personnel, T h i s topic was referred a t the last
governors conference for further study t o the four groups o f Federal
reeerve banks formed for purposes o f conference.
Discussion o f progrese o f standardization o f salaries i n the several
Federal reserve banke.
( F e d e r a l Reserve B a n k o f N e w York).
Should there b e direct pouching o f mail t o a n d f r o m the Federal
recerve banks. ( F e d e r a l Reserve Bank o f New York).
o codes, ( U n f i n i s h e d business).
Report b y the c o m m i t t e e n
Should e a c h Federal reserve b a n k ineure i t e o w n incoming shipments o f
Federal reserve notes received f r o m other Federal reserve banks.
(Federal Reserve Bank o f St. Louis).
Should Federal reeerve banks begin t o carry part o f the fire ineurance
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Federal Reserve Bank of St. Louis
aEa
on new buildings erected where the risk i s slight. ( F e d e r a l
Reserve Bank of Cleveland),
ACCOUNTING AND AUDITING,
(a)
Survey o f the accounting and procedure systems i n the several Federal
reserve banks, ( F e d e r a l Reserve Bank of New York).
()
The report of the committee on "Method of Handling Collections Sent
Direct b y Member Banke i n One District t o Federal Recerve Banke o f
Other Districts" will b e submitted. b
y the committee o n etandardization
of inter-Federal reserve bank forms, ( U n f i n i s h e d business).
Statements prepared b y Federal reserve banks and submitted t o Federal
Reserve Board,
Standardization o f methode o f Auditing.
Revision o f auditor's certificate subjoined t o annual etatement o f
Profit and Loce transmitted t o Board,
(f)
Standardization o f Inter-Fedéral Reserve
B a n k Forms.
COLLECTIONS AND CLEARING.
(a) Uniform indorsements upon inter-district acash and collection items
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Federal Reserve Bank of St. Louis
sent direct b y member banks i n one district t o Federal reserve banks
of other dietricte. ( T h i s matter wae referred t o the Federal Reserve Board a t the last governore conference with the request that
Counsel for the Board prepare a uniform letter o f instructions, o r
a regulation covering indorsements t o be exchanged b y the twelve
banks = suggested b y the Federal Recerve Bank of Chicago).
Desirability o f having adequate uniform circulare covering collection
“of cash and collection iteme (Federal Reserve Bank o f New York) including direct routing o f collection iteme payable i n other Federal
reserve banke and direct routing o f cash iteme b y member banke t o
other Federal reeerve banks a n d branches.
( F e d e r a l Reserve B a n k
of Cleveland).
Development o f inter-city and country clearing cettlemente i n
Federal reserve funde, (Federal Reserve Bank of New York).
Collection o f checke o n banke which a r e i n a n unsatisfactory condi-
tion or from which unsatisfactory returne are being received. D i s cuccion o f the credit risk involved, ( F e d e r a l Reserve Bank o f
Dallas),
Can the amount o f float c a r r i e d y
b the Federal reserve banke a s a
result o f the holding o f Federal reserve notee b y a bank other than
the bank o f issue b e reduced, ( F e d e r a l Recerve B a n k o f N e w York).
Should wire trancfere b e limited. ( F e d e r a l Reecerve Bank o f
San Francisco),
;
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Federal Reserve Bank of St. Louis
Iv. CREDIT. TRANSACTIONS AND POLICIES,
(a)
(b)
Establishment o f uniform practice with respect t o the indorsement
of notes and bills discounted o r bought b y Federal reserve banks
for o r from each other, ( F e d e r a l Recerve Bank of New York).
Should t h e Federal reserve banks discontinue rediscounting f o r
member banks notes o f nonmember banke secured b y Government obliga-
tions, (Federal Reserve Bank of Atlanta).
(c)
Discussion o f methods adopted b y the reserve banks t o develop and
widen the discount market. (Federal Reserve Bank of New York).
(a)
Report o f standing committee o n open bill market conditions a n d
operations,
(e)
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Federal Reserve Bank of St. Louis
Bankers acceptances practices ( F e d e r a l Reserve Bank o f San
Francisco) a n d regulations with particular regard t o accommodation of commerce and the open market (Federal Reserve Bank o f
New York),
What should the policy o f the Federal reserve banks b e with respect
to attempted cancellations o f confirmed o r irrevocable commercial
letters o f credit and with regard t o issuers o f credits who have
defaulted o r refused t o honor their credits; especially h o w should
the Federal reserve banks deal with acceptances o f such banks,
(Federal Reserve Bank of New York).
Status o f organization and activities o f eligibility committees
formed i n the reserve hanks.
( F e d e r a l Reserve B a n k o f N e w York).
What procedure i f a n y i s followed b y each Federal reserve b a n k t o
ascertain ‘thether acceptances made b y its members are made i n conformity with the Board's regulations effective since October 25, 1920
and the Board's rulings, a n d what steps i f any are taken t o get
similar information regarding bills accepted b y either member o r
nonmember banks o r acceptances offered either t o the Federal reserve
bank o f the district i n which the bills originate o r to other
Federal reserve banks, ( F e d e r a l Reserve B a n k o f Cleveland),
Desirability o f developing a system program for the relief o f em=
barrasced member banks i n difficulties caused b y deaths, defalcations,
explosions, etc. ( F e d e r a l Reserve B a n k o f N e w York).
Suggestion o f Mr. Puelicher, V i c e President o f the American Bankers
Aseociation, t o Governor Harding that a conference o n the form and
substance o f financial etatements b e held between t h e managere o f
the credit departments o f the recerve banks and representatives o f
commercial banks.
( F e d e r a l Reserve B a n k o f New York).
Amendment o f Section 5202 Reviced Statutes s o that indorcements o f
national banks o n bankers acceptances w i l l b e exeepted f r o m the
limitation o f the section irrespective o f the place where payable..
(Federal Reserve Bank of New York)
Sales o f Bills reported a s rediscounts,.
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s086-a
TOPICS FOR CONSIDERATION AT JC CONHERENCE OF
FEDERAL RESERVE BOARD AND GOVERNORS OF FEDERAL RESERVE BANKS
WASTINGION, A p r i l 12, igel.
RATE POLICY
(a) W h a t considerations s h o u l d b e taken into account before a change
is made i n the present r a t e policy o f t h e Federal Reserve System?
Do conditions warrant any modification o f existing policy 4 t present time a n d should a n y changes o f r@étes b e made i n any o f the
Districts?
Should t h e present differential
i n favor o f loans secured b y
Government collateral b e continued?
loans b e uniform i n all Districts?
i f not, should rates o n sucn
Should there b e progressive rates? S h o u l d they be discontinued i n
the two Districts i n which they are now i n effect, a n d i f continued,
should a maximum rate b e established beyond which there shall b e
no progression?
II. G O L D POLICY.
(a) What action, i f any, should be taken regerding the South African
gold?
What action should b e taken regarding g o l d imports other t h a n those
of South African origin?
Should gold which would otherwise b e imported into the United States
be held abroad and earmarked with foreign agencies, such as the Bank
of England, t h e Federal Reserve Board having ruled that gold s o held
can no longer b e counted as reserve?
(d) S h o u l d Federal Reserve Barks pay out gold certificates i n order t o
prevent undue increése i n reserves?
III. CURRENCY POLICY (to be considered in connection with iI-d)
Should a policy b e established for the entire System i n regerd t o
the kinds o f money t o b e paid o u t b y Federal Reserve Barks i n re-
sponse t o demands o f member banis for currency?
’ Should @ wolicy b e established Z o r t h e entire System a s t o t h e de-
nominations i n which silver certificates, United States notes, Federal Reserve notes, a n d Federal Reserve Berk notes are printed?
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
3086-a
atti
(c) S h o u l d steps b e taken t o discontinue e n t i r e l y paying o u t Federal
Reserve B a n k notes?
CREDIT POLICY.
(a) Discussion o f policy o f Reserve Banks a s t o rediscounting paper,
the eligibility o f which may be doubtful o n account o f condition
statements o f mé@kers and discussion o f feasibility o f adopting a
uniform policy for all Federal Reserve Barks.
(b) D i s c u s s i o n o f so-called "direct action", t h a t is, policy o f ap-
plying pressure upon borrowing member banks t o compel their custom-~
ers t o liquidate,
RESERVE POLICY-
(a) Should reserves of Federal Reserve Perks be based, a s far as possible, upon holdings o f gole coin and gold certificates, eliminating silver certificates and legal tenders b y paying them out i n
lieu of Federal Reserve notes?
Bearing i n mind that prior t o 1917 Federal Reserve notes were sub,stantially gold certificates, because o f the percentage o f actual
gold held b y Federal Reserve Agents against them, would i t be aqdvisable t o prevent any undue increase i n barking reserve b y depositing incoming gold with Federal Reserve Agents, thus strengthening specific reserve against Federal Reserve notes? T o make such
a policy effective i t would s e e m that t h e Federal Reserve B o a r d
should require the Federal feserve Barks t o publish actual percentage o f reserve held against deposits and actual vercentage o f
gold held against notes. T h e combined reserve percentage cculd
be published for purposes o f comparison a s heretoiore, I n order
to equalize the reserve position o f the various Federal Reserve
Barks, a n d t o make i t t o the interest o f Barks t o carry a s large
@ gold reserve against notes a s possible, consideration should be
given t o t h e advisability o f adopting a policy that a n y Federal
Reserve B a n k whose reserve against notes falls b e l o w a certain
specific minimum should be ccmpelled t o apply for permission t o
redisccunt with other Federal Reserve Barks.
(c) W h a t changes i n policy of rediscounting among Federal Reserve
‘Barks appear advisable o n the b@sis o f experience during the
last year?
ae
VI. E A R N I N G S O F FEDERAL RESERVE BANKS.
. T h e large earnings o f t h e Federal Reserve Barks have caused much
c o m m e n t a n d some adverse criticism. T h e franchise t a x t o b e paid
by Federal Reserve Fanks t o the United Statés Government i s fix-
ed by law at 90% of net profits over and above dividends. Practi-+
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
3086-a
7
“—j)*
cally all Federal Reserve Ranks have n o w accumulated their statutory
aside e a c h
surplus. I t i s custo#-ry with many member barks t o set
t o have
month a reserve for taxes. “ o u l d i t be feasible and desirable
Franfor
"Reserve
a
books
the Federal Reserve Barks set up o n their
has been
chise Tax", u n d show tris item i n their weekly staterents. I t
t a x shown rweek=suggested t h a t a n approximste reserv-tion f o r franchise
o f the
ly would give the public a better idea @s t o the disposition
dissipate t h e idea
earnings o r the Federal Reserve Banks a n d gradually
a n d indushat these Berks are profiteering a t the expense o f commerce
try.
VII. P A R COLLECTION SYSTEM.
(a) Status of litigstion.
(v) Effect of laws enacted by various Southern states.
(c) R i s k s a n d losses incurred b y Federal Reserve B a r k s i n waking col-
lections.
H o w t o minimize them.
(d) A r e non-p-r lists necessary?
BANKS UFON
VIII. SHIPMENTS O F COIN AND CURRENCY T O MEMBER AND NON-MEMBER
REQUEST O F A MEMBER BANK,
(2)
t o such
h y should there not be @ uniform policy with respect
transactions?
IX. FEDERAL RESERVE BANK BUILDINGS.
i n order that uniform
(a) h a t methods o f accounting ere necessary
m y b e adopted?
plan of depreciation and amortization o f investment
X. BANKERS ACCEPTANCES.
modified s o as t o make eligib-e
(a) S h o u l d the Boérd's Regulations b e
having not longer
banks
for purchase o r discount acceptances of member
drawn against export
than six months t o run, i n cases where bills are
and import transactions.
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
C O N F E R E
C O V E R N O R S '
15, 1921
1
2
April
N C E
April 1 2
First Day's Session, Tuesday,
2:19 ps. m.
The meeting was called t o order a t
Present:
Governor Strong, Chairman,
Wellborn,
Governors Morss, Norris, Fancher, Seay,
a n d Calkins,
McDougal, Biggs, Young, Miller, VanZandt
Mr: Harrison, Secretary.
Appointment
O f Secretary.
i t was
U p o n motion o f Governor McDougal
o f the Federal Reserve
VOTED t h a t Mr. Harrison, Deputy Governor
Conference.
Bank o f New York, b e appointed Secretary. o f the
Strong reported that h e
American Farm Bureau Federation. G o v e r n o r
t h e representatives o f t h e American
had been advised b y Governor Harding that
a meeting with the
Farm Bureau Federation present i n Washington desired
Governors o f t h e Federal Reserve a
e
U p o n motion i t was
a t 12;00
VOTED t h a t they b e invited t o meet with the conference
4
oeevock noon, Wednesday, A p r i l 13, ( S e e paragraphs
a n d 36)
WITH TREASURY DEPARTMENT
DISCUSSION O F TOPICS COVERING RELATIONS
Treasury I
- Currency a n d Circulation:
{a} N e w C u r r e n c y - R e p o r t o f Committee.
contained i n the report
The Chairman read the final recommendations
the subject o f new currency:
of the sub-committee appointed t o consider
They are:
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Federal Reserve Bank of St. Louis
that. distribution i s
"|, T h a t i t be left with Mr. Emerson + o see
-continued i n afair and equitable manner.
"2. T h a t t h e
amount
"3, T h a t Mr.
should
the
amount o f n e w money p a i d out should n o t exceed
printed.
Department
Emerson i n cooperation w i t h the Treasury
i n order t o
h a v e general supervision o f redemptions,
to bring the
maintain a general standard o f redemptions and
currency u p t o a higher level o f cleanliness.
redemptions should
That t h e time h a s not y e t arrived w h e n total
exceed the issue o f new notes.
for redempThat each bank raise its standard o f currency sent
Board.
tion until checked b y the Federal Reserve
about $2,000,000,t
o
u
p
built
gradually
b
e
stocks
That reserve
900.
“7, T h a t the maximum and minimum figures o f reserve stocks o f
Federal Reserve notes should b e based o n the average circulation o f Federal Reserve notes for 1920 rather than o n the
basis o f t h e v o l u m e o
f emergency currency a n d clearing house
certificates during the crises o f 1907 and 1914."
Bef ore any action was taken, the Secretary read the full report.
Upon motion o f Governor McDougal, i t was
VOTED t h a t t h e report-and i t s recommendations b e adopted w i t h the
understanding that copies o f the report, together w i t h copies o f t h e memorandum
of discussions o f the committee b e forwarded t o each Federal Reserve Bank.
(This report a n d memorandum a r e contained i n the stenographic minutes o f
conf erence! on pages 9 7 - 103 and 105 - 110),
American F a r m Bureau Federation.
G o v e r n o r Strong received a n d re-
ported a-message from Governor Harding t o the effect that the representatives
of the American Farm Bureau Federation would like t o have their meeting with
the Conference a t 5:00 o'clock p. m. o n Tuesday, gies tou .0: Ee
noon o n Wednesday.
T h i s was agreed t o b y the Conference.
Treasury I (a) N e w Gurrency. R e p o r t o f Committee (continued)..
+
The Secretary: then read that p a r t o f t h e memorandum o f the discussions o f t h e Currency Committee. which related t o the plan f o r the retirement
of Federal Reserve Bank notes issued under the terms o f the Pittman Act.
T h e
reconmendat ions contained i n that memorandum w e r e discussed, particular atten-
tion being directed t o the rate of redemption o f excess Pittman Act
certificates.
Upon motion o f Governor Calkins, t h a t part o f t h e memorandum relating
to t h e Pittman Act. certificates a n d Federal Reserve B a n k notes w a s adopted,
but, upon motion o f Governor Norris, i t was
VOTED t h a t the rate of retirement o f Pittman Act certificates b e
increased,
s o f a r a s i t may b e agreeable t o t h e Treasury Department, o v e r t h e
amounts mentioned i n the memorandum o f the committee, that is,#5,000,000 per
month o f the certificates deposited i n excess o f actual circulation. (
paragraph 7).
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Federal Reserve Bank of St. Louis
See
recommendations
i n that memorandum a r e a s follows:
That the policy o f the Treasury Department t o issue silver
certificates a n d United States notes i n denominations o f
$1 and $2 be commendéd,.
That the Federal Reserve Banks accumulate silver certificates
and United States notes of $5 denominations and higher and
in
cooverate w i t h t h e program o f the Treasury Department
denominations.
breaking them u p into smaller
That i n meeting the demand for small notes silver certificates
be paid out first, and, i n case they are not sufficient,
United States notes second.
"A, T h a t n o Federal Reserve Bank notes shall b e paid out unless
other suvvlies o f small denominations should fail.
"Note: Inasmuch as the vrogram outlined with cover a period of one
or two years there a r e t w o things which could b e done t o
economize o n the printing program, b u t which are seemingly
inconsistent with principles stated above:
“1. P a y out Federal Reserve Bank notes -which are already printed
and i n stock and retire them a s they are worn out. T h i s will
effect a
saving i n the printing o f other kinds o f currency.
"2. P a y out Silver Certificates of large denominations now on hand.
They can be used and worn out b y the time they will be needed
for conversion into smaller denominations."
Daylight Robberies o f Bonds and Coupons. Governor McDougal made a
statement with reference t o the daylight train robberies o f bonds and coupons
in his district, suggesting that the matter b e referred t o Assistant Secretary
Gilbert w i t h a view t o exvediting recovery o f the losses f r o m the Treasury
Department. ( S e e varagravh 25).
Pittman A c t Certificates.
A t this point Assistant Secretary Gilbert
joined t h e meeting a n d defined t h e present Treasury policy relating t o the
retirement o f Pittman Act certificates pledged with the Treasurer t o secure
the issue o f Federal Reserve B a n k notes.
H e expressed h i s opinion that a t
the present t i m e t h e retirement o f those certificates should n o t b e a t a rate
faster than $5,000,000 per month.
He also briefly outlined the vrogram o f the Treasury Department i n
relation t o the substitution o f silver certificates for Pittman Act notes.
It was
AGREED t h a t the policy defined b y him was not inconsistent with the
report and recommendations o f the Currency Committee previously adopted b y the
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Federal Reserve Bank of St. Louis
Conference.
( S e e paragraphs 3 and 5).
Treasury I (bo): ( 1 ) Should the Federal Reserve Banks absorb the
expense o f shipments o f curreney and coin
to a n d f r o m banks i n their respective dis-
triste. { F . R . Bank of “N. Ys)
(2) S h o u l d requests o f nonmember banks for curs.
rency and coin service, accompanied b y
draf+s o n city correspondents,
b e received.
(F. K. Bank of Cleveland).
After general discussion o f the subject o f transportation charges
on Saipments o f coin and currency t o and from nonmember banks, upon motion o f
aovernor Fancher,
i t was
VOTED ( a ) t o be the sense of the meeting that Federal Reserve
Banks should not abserb the expenses o f shipments o f currency o r coin t o and
from nonmember banks, except the exnenses o n incoming shipments made i n payment c f collection items, a n d except the expenses o f transportation o n incoming gold and gold certificates, a n d
(b) that requests of nonmember banks for shipments of coin
and currency accompanied b y drafts o n city correspondents should b e received
and honored only a t the expense o f the nonmember banks and only after collection o f t h e accompanying draft.
Treasury I
(c) S h o u l d t h e Federal Reserve Banks receive f o r re-
demption for account o f the Treasury Department
unfit national b a n k notes a n d o n deposit f i t
national bank notes. ( F . R. B. of N. ¥.)
Upon motion o f Governor Seay,
i t was
VOTED t h a t Federal Reserve Banks should receive unfit national bank
notes f o r credit a n d redemption b y t h e Treasury Department, b u t that Federal
Reserve Banks should n o t receive f i t national b a n k notes o n deposit except
when sent i n payment o f collections.
After this vote was taken, Governors McDougal and Norris objected
that the action o f the Conference should not b e binding upon all Federal Reserve Banks. T h e r e u p o n ,
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Federal Reserve Bank of St. Louis
o n motion o f Governor Seay, i t was
VOTED t o reconsider.
Upon motion o f Governor Seay, i t was t h e n
VOTED t h a t Federal Reserve Banks should b e permitted, a t their
own option, t o take o r refuse fit national bank notes for deposit.
Treasury I (d) S h o u l d not a uniform system policy b e established
with r e s p e c t t
o the retirement o f Federal Reserve
Bank notes. (Federal Reserve Bank o f New York.)
This matter w a s disposed o f b y action taken under Treasury I
(a).
(See pars 3 & 5).
Treasury I (e) What arrangements should be made in cases where
Federal Reserve Banks have presented t o them
Federal Reserve N o t e s unsealed and unnumbered, but
otherwise duly executed, which were apparently .
stolen within the Treasury Department a n d
circulated, i n view of the advice b y the Treasurer
that there i s no provision for their redemption.
(Federal Reserve Bank of Richmond.)
Upon motion o f Governor Calkins, i t was
VOIED t h a t the Secretary get a copy o f Assistant Secretary
Gilbert's letter to Governor Harding o n this subject; that h e thereupon
confer with Mr, Logan, General Counsel o f the Federal Reserve Board, a n d
prepare a draft o f letter to Mr. Gilbert for the consideration o f the
Conference. ( T h e Secretary reported later i n conference that Mr. Emerson
had this entire file. and that he, Mr. Emerson, w a s preparing a report with
reference thereto.
I t had not been submitted t o the Conference before
adjournment)
.
Fedéral Reserve Notes Missent.
U p o n motion i t was
VOTED t h a t the Conference transmit, with approval, t o Mr. Gilbert
a letter t o b e prepared b y Governor Young i n reference t o $5,000 Federal
Reserve B a n k o f Minneapolis notes forwarded i n error t o the Federal Reserve
Bank o f Richmond and issued b y the Federal Reserve Bank o f Richmond.
(Governor Youn? reported that h e would prepare such a letter upon his return:
to Minneapolis.)
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T r e a s u r y I - Accounting:
(c) Reimbursement o f fiscal agency expenses.
@.BR. B. of Be.)
After general discussion i t was
MOVED that after June 30, 1921, the end of the current fiscal
year, Federal Reserve Banks should not ask the Treasury Department f o r
reimbursement o n account o f expenses incurred i n the conduct o f fiscal
agency operations,
A l l o f t h e members o f the Conference voted a y e w i t h the
exception o f Governors Wellborn and McDougal, w h o wished t o be recorded i n
the negative.
Rich's Letter in'Re Federal Reserve Policies,
M
r
A t this point
.
Governor Harding joined the meeting and Sreoedvas t o the Conference a letter
prepared b y Mr. Rich, Chairman o f the Board o f Directors o f the Federal Reserve Bank o f Minneapolis,
t o Mr. J . M e Kelly, Devils Lake, N o r t h Dakota,
in response t o a n editorial i n Wallace's Farmer o f Des Moines, Iowa,
After the Secretary read the letter t o the Conference, Governor
Harding advised that h e would have i t mimeographed for fide ributicn t o each
of t h e Governors present,
Treasury I I I - Fiscal Agency Functions:
(a) A s the issuance of Treasury (War) savings
securities
i m a n exceedingly expensive
method o f procuring funds and such securities accomplish very little toward the
encomragement o f thrift and a s Liberty
bonds o f later issues are readily available
in denominations o f $50 and $100 a t market
prices yielding a n interest rate much i n
excess o f W a r Savings securities, a n d a s
redemptions i n the latter class o f securities.
appear t o b e heavy, should the War Savings
Organization activities be continued. ( F . R.
B, o f Cleveland - - F. R . B. o f S a n Francisco
also suggested this topic).
Mr, Gilbert outlined briefly the tentative plan of the Treasury Department gradually t o reduce the War Savings Organization and to have the
various Federal Reserve Banks take over that Organization after June 30, 1921
on some basis similar to that o n which they n o w handle certificates o f indebtedness for the Treasury Department.
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Federal Reserve Bank of St. Louis
a
Mr. Lewis, Director o f the War Savings Organization, elso addressed
the Conference, s a y i n g that t h e propnosal o f Mr. Gilbert would avoid
duplication o f control while still assisting the floating o f securities auc
making those monies already svent worth while. ( S e e varagravh 20)
Charges f o r Revorts o f Examination b y Comptroller o f the Currency.
Governor Harding reported receivt o f a letter from the Comptroller o f the
Currency, enclosing a
memorandum f r o m Mr. Davenvort, C h i e f o f the Examining
Division o f the Comptroller's Office, with reference t o the fund for
expenses o f examinations o f national banks.
This memorandum called attention t o deficiencies o f over
$124,000
i n that f u n d existing a t the time t h e o r
Currency took office.
n t C o m n t r o l l e r o f the
I t was tentatively provosed b y the memorandum that
each Federal Resdérve B a n k should i n the future p a y a charge o f $10.00 p e r
year f o r each national b a n k t o cover t h e cost o f the revorts o f examinations
of those banks furnished b y the Office o f the Comotroller o f the Currency
to the Federal Reserve Banks, a n d also a
examination e r e d t oes Fcncise
o
charge o f $5.00 f o r e a c h r e p o r t f
b y the Office o f the Comptroller o f the
Currency t o the Federal Reserve Banks.
It was, thereupon,
VOTED t o vostpone the discussion o f this matter until the next
meeting. (see Paragravh 16).
Upon motion duly seconded, t h e Conference adjourned a t 6:40 o'cloc-:
"». m. t o reconvene a t 9:00 o'clock a. m. o n Wednesday morning, April 13.
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GOVERNORS*
€ O N F E R E N C E
Second day's Session, Morning, Wednesday, Apyvil o s
The Conference w a s called t o order a t 9:15 a . m
Present: Governor Strong, Chairman
Governors MeDougal, Young, Fancher, Biggs, Calkins,
VanZandt, Seay, Morse and Weilborn,
Mr. Harrison, Secretary.
Paragraph 1 5 (continued), T h e letter o f the Comptroller o f the
Currency, addressed t o Governor Harding, together with the memorandum of
Mr. Davenport enclosed therewith, were discussed a t length. U p o n motion, i t was
“VOTED t h e t i t ic the sense o f thie meeting that Federal Reserve
Banks should make n o contribution caicuiated t o make good a deficit i n the
administration o f the Office o f the Comptroller o f the Currency but that
Federal Reserve Banke will pay all charges made b y the Comptroller o f the
Currency t o cover the expense involved i n furnishing copies o f future complete
reports actually taken b y them. U p o n motion o f Governor VanZandt, i t was
VOTED t h a t t h e Comptroller o f the Currency b e invited t o join
the Conference t o discuss t h e action o f the Conference i n reference t o the
charges for reports furnished b y the @ffice o f the Comptroller o f the Currency t o Federal Recerve Banks,
T h e r e u p o ne
h
t Chairman appointed Governors VanZandt and Mores a
committee o f two t o call upon the Comptroller o f the Currency and Assistant
Secretary Gilbert and invite them to join the Conference a t their con-
venience, ( S e e paragraph 21).
Tfeasury II - Accounting: ( a ) Uniform reconcilement
form for use of the Treasurer o f the
United States i n reconciling accounts
maintained i n reserve banks (report b y
committee o n standardized forms).
Upon motion the report o f the Committee o n Standardized Forms
was adopted.
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Federal Reserve Bank of St. Louis
Treasury I I - (b) W a r loan deposit accounts.
(Federal Reserve Bank o f Chicago).
In a general discussion o f the subject o f War Loan Deposit
Accounts, t h e question was raised whether t h e present p l a n o f the payment
of certificates o f indebtedness b y credit should b e abandoned, a n d whether,
if not, Government obligations should b e made t h e o n l y eligible security
for War Loan Deposit Accounts,
Inasmuch a s i t was t h e sense o f the Conference that b o t h o f
these matters were matters coming primarily within the jurisdiction of the
Treasury Department, Governor McGougal asked that n o action b e taken.
Treasury II - (4) Assistance to be rendered to Treasury
Department i n connection with improving
procedure relating t o transactions w i t h
Federal Reserve Banks.
{e) Progress made b y the Treasury Department
~~ a n the speeding u p of operation o f paying
its checks.
Both o f these topics were discussed together.
The Chairman outlined t o the Conference a suggestion which h e
had made t o Assistant Secretary Gilbert that i t might b e advisable for the
Federal Reserve Banks f r o m time t o time t o offer t o send a
to Washington t o confer w i t h a
a
o
man, o r men,
f those divisions o f the Treasury
Department, concerned vith Federal Reserve Bank operations, with a view of
expediting the handling o f those operations i n the Treasury Department,
and with a view to furnishing a close point o f contact between those operating divisions i n the Treasury Department a n d t h e various Federal Reserve
Banke. U p o n motion b y Governor Fancher, i t was
VOTED ( I I d) that the Conference indicate t o Assistant Secretary
Gilbert that the Federal Reserve Banke will b e glad, from time t o time, t o
send o n e o r more m e n t o appropriate divisions o f the Treasury Department
with a view to simplifying and speeding u p Treasury procedure. ( M r . Gilbert
later expreesed h i s desire t o cooperate i n the manner proposed i n thie vote).
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Federal Reserve Bank of St. Louis
10.
(II e) ‘Governor Strong read a n extract o f a letter from Mr,
Rounds, Controller o f Accounts, Federal Reserve Bank of New York, a d dressed t o Mr, Allen, Acting Treasurer, suggesting a change i n the procedure o f the Treasury Department caleulated t o assist i n detecting forgeries and alterations i n drafts drawn b y government disbursing officers.
Inasmuch a e this matter w a s cevered b y previsus v o t e ‘ o f the
Conference, no action wastuken. (See paragraph 19, II d).
Treasury III =
Fiscal Agency Funetions: ( a ) A s the iscuance of Treasury (War) savings securities i s a n exceedingly expensive method
of procuring funds and such seeurities
accomplish very little toward the encouragement o f thrift and a s Liberty bonds
of later iseues are readily available i n
denominations o f $50 a n d $100 a t market
prices yielding a n interest rate much i n
excess of War Savings securities, and as
redemptions i n the latter class o f seeurities appear t o be heavy, should the
War Savings Organization activities b e
continued.
Supplementing t h e discussion o f this topic a t the meeting o n
Tuesday, April 12 (see paragraph 14) Governor Calkins objected to the
Federal Reserve Banke paying out funds t o contimue a “propaganda organization," the chief purpece o f which i c to distribute propaganda literature.
Upon motion of Governor MeDougal, i t was
VOTED t h a t i t is the cenee o f the meeting that a e soon as
possible after June 30, 1921 Federal Reserve Banke should act only a s the
distributing agents for War Savings Securities, a n d that propaganda material
should b e distributed directly from Washington.
At this point Governor VanZandt returned t o the meeting
accompanied b y the Comptroller o f the Currency. ,
Paragraphs 15 and 16 (continued). T h e Chairman outlined to the
Comptroller the previous‘ diccussion and action o f the Conference i n reference
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Federal Reserve Bank of St. Louis
il.
to the charges for reports furnished b y him to Federal Reserve Banks.
The Comptroller thereupon discussed i n some detail the conditions
existing i n his office, stating that b e found a shortage a s of March l, 1921
of over $100,000.
i n the fund f o r the payment o f examination expenses, a n d
that while the salaries o f the examiners had been paid t o date, none o f the
expense accounts o f the examiners h a d been paid since January 1
198k T h e
Comptroller stated that h e realized that the law would probably not permit o f
the Federal Reserve Banks making any payments calculated t o make u p a deficit
in the administration o f the Comptroller's Office, b u t that h e felt that i t
would b e proper bic Federal Reserve Banks t o pay for the future services o f
furnishing completed reports.
The Comptroller expressed h i s f u l l agreement w i t h the vote o f the
Conference i n this matter, ( S e e paragraph 16).
In view o f the fact that the existing shortage i n the fund i n
question presents a
serious operating difficulty t o the Comptroller's
Office, i t was suggested either that payment might b e made i n advance for
reports t o b e furnished t o Federal Reserve Banks,
o r that i f the Comptroller's
Office would furnish t o all Federal Reserve Banks completed reports running
back t o January 1, 1921, payment might b e made a t once for all of these reports made since January 1, 1921.
Upon general consent, t h e operation o f the p l a n o f procedure,
including t h e mode a n d rate o f payment f o r the reports t o b e furnished f o r
the current year, w a s l e f t t o the Comptroller o f the Currency, w i t h the
understanding t h a t h e would report b a c k t o the Conference further develop-
ments. ( S e e paragraph 71 ).
Charters o f New National Banks.
U p o n the request o f Governor
Calkins, t h e Comptroller o f the Currency discussed a t some length t h e
procedure o f his office with reference t o the chartering o f new national
banks.
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Federal Reserve Bank of St. Louis
12,
The Comptroller stated that i n hie opinion his office should
be guided, e o f a r a
c possible, b y the recommendation o f the Federal Reserve
Agent o f the Dietrict i n which i t was proposed t o organize t h e n e w national
bank, but that other circumstances might ‘make i t impossible t o follow the
recommendation o f the Federal Reserve Agent.
I n such a case, however, h e
stated that before taking any action contrary t o the recommendation of a
Federal Reserve Agent, h e would refer the matter back t o him for reconsideration,
Information t o Branches o f Federal Reserve Banks.
T h e Comp-
troller o f the Currency agreed with the statement o f Governor Calkins that
the Branches o f Federal Reserve Banks should b e kept advised o f examinations
o banks located i n the
by representatives o f the Comptroller's O f f i c e f
territories assigned t o those branches.
Treasury ITI 4c) Informal discussion on Subtreasury
functions a c they affect Cach and .
Fiscal Agency Departments, s o that
the banks w h i c h have n o t y e t assumed
Subtreacury functions might have the |
benefit o f those banks which have-
(Federal Reserve Bank of Dallas).
Governor VanZandt inquired a s to the a
m o ,u additional
fn o
t
work
imposed upon those Federal Reserve Banke which have undertaken Subtreasury
functions.
The Chairman stated that,
New York i e o e e c r a s .
s o f a r a s the Federal Reserve B a n k o f
t h e additional w e r k involved related chiefly t o the.
handling o f eubsidiary coin,
Governor VanZandt asked that n o action b e taken with reference
to this topic.
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Federal Reserve Bank of St. Louis
| T r e a s u r y ITI {b) S h o u l d cna Ceeerneuk Loan Organizations
in the several banks b e transferred t o
Fiscal Agency Functions. (Federal Reserve
Banks of New York and Chicago)e™
Upon motion of the Chairman, i t was
VOTED t h a t i f and when the action o f the Converence, taken i n
reference to Treasury III {a) -- (see paragraph 20) - - becomes effective
the Government L o a n Organization s h a l l b e transferred t o the Fiecal Agency
Functions,
Paragraph 6 (contimed), Governor McDougal reopened the discussion o f the loss o f bonds and coupons from daylight train robberies,
suggesting that the Treasury Department organize a n Insurance Division
whose sole function shall be promptly to handle losses of Government
securities i n transit with a view to expediting payment o n those losses
in some manner commeneurate with the time involved i n making similar recoveries from outside insurance companies, U p o n motion o f Governor
McDougal, i t was
VOTED t h a t t h e Conference recommend t o the Treasury Department
the establishment o f a separate insurance division t o deal with claims
arising f r o m the loss, theft,
o r destruction o f bonds i n transit, including
mail robberies, with the undezstanding that the Federal Reserve Bank of
Chicago will. offer t o furnish a
man t o assist t h e Treasury Department i n
making some solution o f thie problem, a n d with the further understanding
that the Federal Reserve Bank o f Chicago will make a detailed report o f
the results obtained t o all other Federal Reserve Banks,
DISCUSSION O F ROUTINE MATTERS
At this point the Conference, having disposed o f all matters
upon the program relating t o topics for discussion with the Treasury
Department, e n t e r e d u p o n a
cussion b y the Conference,
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Federal Reserve Bank of St. Louis
consideration o f the routine topics f o r dis-
Routine I
=
Qperations
(a) Pension Fund. Committee to Report.
The Chairman referred t o the report o f the committee appointed
at the last Conference o f Governors t o consider the Pension Fund.
There was a
preliminary discussion o f the a g e limit fixed b y
that report, Governor Calkins expressing i t t o b e hig opinion that i t
would b e advisable that there b e n o optional a g e limit, a s proposed b y
the committee, since such a limit might result i n enberracement t o the
Board o f Directors o f any bank having t o consider whether o r not i t would
permit a man to continue i n the employ o f the bank until the mandatory
retirement age.
Review o f Treasury Program,
A t this point Assistant Secretary
=
Gilbert joined t h e Conference a n d Governor Strong reported t o h i m the
action o f the Conference o n the various topics contained o n the program
relating t o matters concerning the relations between the Treasury
Department a n d t h e Federal Reserve Banks,
Thereupon Assistant Secretary Gilbert discussed a t some
length with the Conference matters which -he requested “ b e considered
' strictly confidential,
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Federal Reserve Bank of St. Louis
April 12 - 15, 1921
Second Day's Session Afternoon, Wednesday, A p r i l 13.
The conference w a s called t o order a t 3:20 ov. m.
Present:
Governor Strong, Chairman, Governors Morss, Wellborn,
Norris, Miller, Young, Fancher, Biggs, Calkins, VanZandt, and
Seay. Mr. Harrison, Secretary.
Consideration o f the routine tonics w a s continued.
Routine I-Oneration:
(a) Pension “Fund, Committee to Report.
Uoon motion of Governor Biggs, i t was
VOTED
t o b e vresent a t the
t o request Mr. Kenzel a n d Mr. Sayer
meeting of the Conference o n Friday morning, Avril 1s.
(29)
to report.
R o u t i n e ( b ) = Personnel and Welfare. Committee
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Federal Reserve Bank of St. Louis
prepared to
The Committee o n Personnel and Welfare not veing
motion o f
submit a final revort, offered a vrogress revort. U n o n
Governor Fancher, i t was —
and filed.
VOTED t h a t this progress revort b e received
Routine I (c)- Securities left i n custody.
o f the
1. Discussion o f the extent o f liability
)
T Y4
reserve banks for such securities. (FRB. b y the
issued
2. Should not a uniform circular b e
N.Y.)
(F.R.>.
subject.
reserve banks o n this
reserve banks insure
3, T o what extent should the.
forms
the
these custodies, with a comparison o f
reserve
several
the
b
y
of trust receipts issued
and
York
New
o
f
Banks
banks. (Federal Reserve
Dallas).
was moved a n d
After considerable discussion i t
a s oromotly a s vossible t o
YOTED t h a t Mr. Hart b e reauested
their views
f i r s t i n order t o ascertain
canvass a l l Federal Reserve Banks,
n
i order to safeguard the Fedor
as to the prover vnogedure to be followed
securities devosited with them aithor
Reserve Banks against liability for
°
a n d second, i f the procedure approved
as collateral o r for safekeeving,
ths
t o ascertain their views as to
is to be in the form of @ circular,
form o f that circular.
16.
The question was left onen for decision later as to whether this subject
a
s h o u d d be finally disvosed o f i n this manner b y corresvondence,
o r whether i t should
be vestvoned f o r ultimate decision a t the next Conference o f Governors.
o paying extra compensation,
1 R o u t i n e I (d) R e v i e w o f p o l i c y f
in view of the anvarently falling retail vrices.
(Federal Reserve Bank of New York).
There w a s general discussion o f the policies o f the different Federal
Reserve Banks with reference t o the payment o f extra compensation t o their employes.
No action was recommended.
(32)
R o u t i n e I
(e) S h o u l d measured service b e established a s the basis
of compensation t o Federal Reserve Bank employes -(Federal
Reserve Bank of New York).
Uvon motion o f Governor Fancher, i t w a s
VOTED t h a t this tonic b e referred t o the Committee o n Personnel a n d
Welfare.
(33)
R o u t i n e I (f) Efficiency of Personnel. T h i s tonic was referred
to a t the last Governors' Conference f o r further
studyto the four grouns o f Fedcral Reserve Banks
formed for purposes o f conference.
and
Uvon motion this tonic w a s referred t o the Committee o n Personnel
Welfare.
(34)
of
R o u t i n e I (g)_ Discussion o f vrogress o f standardization
salaries i n the several Federal Reserve Banks.
(Federal Reserve Bank of New York).
There was general discussion of the ouestion of salary standardization,
upon the conclusion o f which i t was
AGREED that, vending fuyther developments, this topic g o over until
the next conference.
(35)
-
mail +o and from the
R o u t i n e I (h) Should there be direct vouching of
Bank o f New York).
Reserve
Federal Reserve Banks (Federal
I
Federal Reserve Banks take
t was suggested b y the Chairman that the
station i n
steps t o consider (1) the auestion o f the establishment o f a contract
which
each Federal Reserve Bank, i f that is deemed advisable, and (2) a vlan by
Bank t o another.
mail might b e vouched and routed direct from one Federal Reserve
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Federal Reserve Bank of St. Louis
bf x
The Chairman called attention t o the fact that t h e Federal Reserve B a n k
of New York has already vresented this matter t o the Postmaster General, w h o has
evidenced both interest i n its development and a desire t o facilitate the handling
of Federal Reserve Bank mail wherever i t is nossible t o do so.
It was understood that sdeaena in: t h Federal Reserve Bank o f New York,
designated b y Governor Strong, would prepare a memorandum o n the matter of direct
Douching o f mail b y the Federal Reserve Bank o f New York and submit i t to each
other Federal Reserve B a n k f o r a n expression o f ‘its views. (
Continued i n
varagranh 37 )
(36)
A m e r i c a n Ferm Bureau Federation.
A t this voint Governor Harding,
Mr. Platt, Mr. Miller and Mr. Hamlin joined the conference and presented t o the
Governors the f e t e s representatives o f the American Farm Bureau Federation:
Mr. George A. Mansfield, Dr. W. H. Walker, and Mr. 0. E. Bradfute, who vresented
their views t o the Conference with reference t o the vresent difficulties o f
farmers and farm interests i n differentt sections of the country.
At 7:00 o'clock p. m. the Conference adjourned t o reconvene a t 10:30 4-m,,
Thursday, Avril 14,
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Federal Reserve Bank of St. Louis
GOVERNORS! C O N F E R E N C E
April 12 - 15, 1921
Third Day's Session, Morning, Thursday, April 1 4
The Conference eonvened a t 10:30 a . m. f o r the purpose o f having
a joint session with the Federal Reserve Board and the Class B directors o f
the Federal Reserve Henke.
O n e o f these directors f r o m cach bank except t h e
Federal Reserve Banks o f N e w York a n d Cleveland, w a s present a n d addressed
the meeting é i general business conditions speved n e i n his district,
At 1:00 o'clock the conference adjourned for luncheon a t the
Metropolitan Club.
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Federal Reserve Bank of St. Louis
G O V E R N O R S * CONFRRENCE
April 12 - 15, 1921
Third Day's Session, Afternoon, Thursday, A p r i l 14.
The Conference reconvened a t 4:25 p, m. t o continue the discussion
of routine topics.
Routine I (h) - Should there b e direct pouching o f mail t o and from
(Par. 3 5 cont'd) the Féderal Reserve Banks. ( F e d . Res. Bk. o f
New York.)
In continuing consideration o f this topic, which had been introduced a t t h e last session,
i t was moved a n d
, V O T E D t h a t each Federal Reserve Bank forward t o Mr. Harrison,
upon request f r o m him, s a t aoned Son a s t o the volume a n d present m e t h o d o f
handling its mail.
Routine I
(i) Report b y the Committee o n Codes.
The progress report o f the committee indicating that the code
would b e ready o n or about May 15. was received without action.
Routine I(j) Should each Federal Reserve Bank insure its own incoming shipments o f Federal Reserve Notes received
f r o m o t h e r Federal Reserve Banks. ( F e d . Res. Bank
of$8. Lovie.) —
It was moved and.
VOTED. t h a t a uniform practice b e established i n each Federal Reserve Bank with ref erence to, the shipments of- fit notes .to-other Federal
Reserve Banks, t h e p o u a t r i b a n k f e saaues a n t p a y Shipping wherees, -
Upon motion,..it..was
-VOTED. that. e a c h Federal Reserve B a n k absorb t h e postage a n d ship-
ping charges-upon all unfit Federal. Reserve Notes s e n ytit
.
b -to: Washington
for redemption, whether o r not
e e
u n f i t notes werevissued.
b y another
Federal Reserve Bank.
a (40)
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Federal Reserve Bank of St. Louis
Routine I.(k) S h o u l d Federal Reserve Banks: begin t o carry part o f
pe e e
t
h
e fire insurance o n new buildings erected where
the.risk is slight. (Federal Reserve.Bank of
Cleveland.)
There was general discussion o f the policy of each Federal Reserve
Benk with reference t o fire insurance o n n e w bank buildings.
N
o action w a s
taken.
Routine IT - Accounting and Auditing:
(a) S u r v e y o f the accounting procedure systems i n
the several Federal Reserve Banks.
OU| Pen ae a se
It was requested t h a t each Federal Reserve B a n k study a
copy o f the
report o n this matter prepared b y the Federal Reserve Bank o f New York and ad-
vise Mr. Harrison of suggestions and comments.
Routinel
I + (b) T h e report of the committee on "Method of Handling
Collections Sent Direct b y Member Banks i n One Dis-—
trict t o Federal Reserve Banks o f Other Districts"
will b e submitted b y the committee o n standardization, o f inter-Federal reserve b a n k forms.
Upon motion o f Governor VanZandt,
i t was
VOTED that the report of the committee be approved.
Routine I
T - (c) Statements prepared by Federal Reserve Banks end
submitted t o Federal Reserve Board.
It e e stated that this topic was placed upen the program merely t o
Promote suggestions o r criticisms of the present
reports. U p o n motion of
Governor Young, i t was
:
VOTED that the Federal Reserve Board be
requested to require reports
of the basic lines o f borrowing banks twice a month, instead o f every ten
days
as a t praesent:
Routine II - (d) Standardization of methods of Auditing.
The Chairman referred t o the memorandum prepared b y the Auditor of
the Federal Reserve Bank o f New York with reference t o the standardization o f
the methods o f auditing.
U p o n motion o f Governor Calkins,
i t was
VOTED t h a t that memorandum b e referred t o the Auditors o f the Federal
Reserve Banks for consideration a t their next conference.
a (45)
R o u t i n e I I - (e) Revision of auditor's certificate subjoined to
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Federal Reserve Bank of St. Louis
annual statement o f Profit a n d Loss transmitted
to Board.
ae
In view of the objections raised b y auditors o f several o f the Fed6ral Reserve Banks t o the form of certificate subjoined t o the annual statement o f Profit a n d Loss transmitted t o the Federal Reserve Board,
i t was
VOTED t h a t thie matter b e referred t o the auditors for consideration
and for the preparation o f a uniform certificate agreeable both t o them and to
the governors w h o have t o countersign t h e certificegs:
Routine II - (f) Standardization of Inter-Federal Reserve Bank
Forms.
Upon motion, t h e report concerning standardization o f inter-Federal
Reserve B a n k forms w a s adopted.
Routine IIT - Collections and Clearing:
(a) Uniform indorsements upon inter-district cash
and collection items sent direct b y member banks
in one district t o Federal reserve banks o f
other districts.
Upon motion o f Governor Fancher, i t was
VOTED t h a t the Federal Reserve Board b e requested a t its convenience
to advise t h e Federal Reserve Banks o f its conclusions u p o n t h e question o f
uniform indorsements upon i n t e r - d i s t r i e th
s
a
c and collection items sent direct
by member banks i n one district t o Federal Reserve Banks o f other districts,
this being a
matter which h a d been referred t o the Federal Reserve Board a t the
last conference o f Governors with the request that its Counsel prepare a uniform ° .
letter o f instructions.
Routine III ~-(»b) Desirability of having adequate uniform circulars
covering collection o f cash and collection items,
including direct routing o f collection items pay-
able i n other Federal reserve banks and direct
routing of cash items b y member banks to other
Federal reserve banks and branches.
Upon motion o f Governor Calkins, i t was
oe
V
O
T
E
D t h a t a committee b e appointed t o consider the entire question
of uniform circulars, procedure, a n d forms involved i n the collection o f both
cash and collection items throughout the twelve Federal Reserve Districts.
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Federal Reserve Bank of St. Louis
22»
Thereupon Mr, Harrison, Federal Reserve Bank o f New York, Mr. Logan,
Counsel o f the Federal Reserve Board, and Mr. J. 5S, Walden, Federal Reserve
Bank of Richmond, were, with the approval o f the conference, requested t o
serve o n this committee, Mr. Harrison t o act a s chairman.
Routine IIT ~ (c) Development o f inter-city and country clearing
settlements i n Federal Reserve funds. ( F . R, B.
N.
¥ ) :
The development o f inter-city end country collection settlements i n
Federal Réserve funds i n the various districts was discussed informally as
interesting and helpfal t o the general collection program.
N o action was
taken,
Routine I I T -(d) Collection of checks o n banks which are i n an
unsatisfactory condition o r from which unsatisfastury returns are being received. D i s c u s s i o n
ofthe credit risk involved (Federal Reserve
Bank of Dallas)
Governor VanZandt, w h o proposed this topic for the considerat ion o f
the conference, Suggested that i t should be referred for consideration t o the
Collection Committee appointed with reference to topic Routine III {») above.
(See paragraph 48)
There w a s a
lengthy discussion b y the various Governors present o f
the difficulties presented at the present time in collecting checks on banks
which are known t o b e i n an unsatisfactory condition o r from which unsatisfactory returns a r e being received.
I t was t h e concensus o f opinion that t h e
question was one of such importance as +o require most serious consideration
bythe committee. ( S e e paragraphs 51 and 45)
Upon motion of Governor Seay the Conference adjourned to reconvene
at 9:00 a . m. Friday morning, A p r i l 15.
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Federal Reserve Bank of St. Louis
GOVERNQGRS'
C O N F E R E N C E
April 1 2 - 35, 1921
Fourth Day's Session, Morning, Friday, April 15.
The conf erence was called t o order a t 9:15 a . m.
Present:
Governor Strong, Chairman, :
Governors McDougal, Young, Biggs, Fancher, Norris,
Morss, Calkins, Vanzandt, Seay and Wellborn.
Mr. Harrison, Secretary. '
The conference proceeded with the consideration o f topics o n their routine
program,
Routine III (d) Collection of checks o n banks which are in an
(Para. 5 0 cont'd) unsatisfactory condition o r from which un-
satisfactory returns are being received. D i s cussion of the credit risk involved. (Federal
Reserve Bank of Dallas),
Upon motion o f Governor Calkins, this matter was referred for conSideration t o the Collection Committee, composed o f Messrs.
Harrison, L o g a n
and Walden. ( S e e paragraph 65)
(52)
R o u t i n e ITI (e) C a n the amount of float carried by the Federal
Reserve Banks a s a result o f the holding o f
Federal Reserve notes b y a bank other than the
bank of issue be reduced. (Federal Reserve
Bank of New York). :
The Secretary r e a d t h e memorandum prepared b y Mr. Rounds, Federal
Reserve Bank o f New York relative t o this subject.
U p o n motion b y Governor
McDougal, i t was
VOTED t h a t i t is the sense o f this conference (1) that Federal
Re~
serve Banks should adopt the plan proposed b y Mr. Rounds,
whereby each Federal
Reserve Bank shall wire each night the amount o f notes o f
each other Federal
Reserve Bank counted and shipped b y it, whether shipped
t o Washington o r baek
to the bank of issue, and that credit for the amount
o f these notes b e given
by the respective banks of issue as of that date; a n d (2) that the
Gover~
nors* Conference recommend t o the Federal Rikers’
sees that i t consider the
advisability, a n d i f legally possible, the adoption o f
a plan whereby each
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Federal Reserve Bank of St. Louis
LAE
Federal Reserve Bank may deduct from the amount o f its o w notes outstanding
the total amount o f all Federal Reserve notes held by it, those issued b y
other Federal Reserve Banks a s well a s its own.
T h e reason for this sug-
gestion i s that i n no other way i s it possible t o obtain a n accurate statewhole.
ment o f the n e t Federal Reserve n o t e circulation o f the System a s a
Routine I I I {f) S h o u l d wire transfers b e limited.
( F P Ree
O
t
San Francisco)
There w a s general discussion o f t h e overcrowded condition o f t h e
leased wires and a concensus o f opinion that all Federal Reserve Banks should
be careful t o eliminate from those wires all unnecessary messages and unr”
necessary words,
Upon motion of Governor Calkins, i t was
VOTED ( 1 ) t h a t free wire transfers over the leased wire system
be limited t o a minimum amount o f $1,000, a n d that anything below that minimum
be transferred over commercial wires a t the expense o f the member bank, and
(2) that telegraphic advices relating to collections be
limited t o a
minimum o f $100 ., and that advices relating t o collections below
that minimum b e transmitted over commercial wires a t the expense o f the
member bank.
Pension Plan.
A t this point Messrs. Kenzel a n d Sayer joined t h e
meet ing, i n accordance w i t h t h e request o f t h e Conference,
t o confer o n the
subject of the pension plan, topic I (a).
The Chairman stated that the Conference appeared t o b e i n accord
with the present pension p l a n w i t h some reservations a s t o certain suggestions
made b y Senator Smoot, which Mr. Sayer was asked t o explain.
f the four main sugIt was the sense o f the Gontannae that t w o o
gestions made b y Senator Smoot might properly b e approved b y the Conference
at once, b u t that there w e r e i e
a k
a k objections t o h i s
n e
r e l a t i v e
(1) to taxation, a n d (2) t o contributions t o be made b y the employes on.
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Federal Reserve Bank of St. Louis
account o f liability a c c r u e d t o data.
| Mr. Sayer explained that w h i l e Senator Smoot felt that t h e r e was
no objection t o the Federal Reserve Banks making payment o n account o f their
own share o f the gecrucd Liability, nevertheless
h e felt that s u c h banks
should n o t b e permitted t o make payment o n account o f t h e eapkoves? s h a r e o f
those liabilities.
cust om, W i e s e
M r . Sayer pointed o u t that i t was almost t h e universal
p e n s i o n plans o f this character w e r e inaugurated, n o t t o
impose u p o n t he employes t o b e benef ited é heveby a n y s i g s
merit i s e e e
i o n t o make p a y -
o f accrued liability. - Some o f the governors expressed
their opinion there would ‘be considerable: Gack a f the success o f t h e —
if t h e employes w e r e compelled t o p a y f o r that l i a b i l i t y . ~
Upon mot ion i t was
VOTED that Governors Calkins and Norris, Mr. Kenzel and Mr.
Sayer be appointed acommittee to confer with S e c a
s a e + o discuss all
‘of the suggest ions made b y him, with n e metoeoenaeee that Governor Harding
bereqtiested to join the committee if P R
E e
Upon motion it was ,
“VOTED that i t is the sense of the pei abonce e u
pension plan: be
B b c
X e ces
a n d that i t b e referred t o the Federal Reserve
Board f o r action, subject t o such satisfactory adjustment
o f the suggest ions
made b y Senator Smoot a s might b e effected b y the sub-committee appointed e s
_the Conference.
The Secretary w a s requested t o advise t h e Salary Standardization
Committ ee of the appropriatenéss o f taking into consideration-the benefits
of t h e pension p l a n i n connection w i t h salary standardization.
Federal
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Federal Reserve Bank of St. Louis
Rout ine IV (a)/~ 5
r r e u r e ” mae rh Bene tece with respect to
: t h e indorsement o f notes and bills d i s c o u n t e dr
o
each
from
o
r
for
banks
Federal
reserve
bought b y
other. (Federal Reserve Bank of New York).
Governor Strong recommended that a i e hone, proposed b y the
Reserve Bank of New York, b e passed.
26,
Routine I V - (b) S h o u l d t h e Federal Reserve Banks discontinue
rediscounting for member banks notes o f nonmember banks secured b y Government obligations.
(F, R. B. Atlanta)
Upon motion o f Governor VanZandt,
i t was
VOTED that this topic b e passed for consideration a t the next
conf erence.
Routine
I V (c) D i s c u s s i o n
o f methods adopted
b y t h e reserve banks
to develop and widen the discount market, (F. R.
Pe a
{d) Report o f standing committee o n open bill market
conditions a n d operations.
(e) B a n k e r s acceptances practices (F. R . B. S a n
Francisco) a n d regulations with particular regard
to accommodation o f commerce a n d the open market
Gea.
B S se 3 3
Upon motion of. Governor Fenerens
i t was
VOTED t h a t these topics b e considered i n connection w i t h topic X
on the Board's program relating t o purchase o f acceptances growing out of
export and import transactions having a maturity i n excess o f three mont hs
but not i n excess o f six months. ( N o t e :
I n the rush incident t o the
Closing hours o f t h e joint conference, t h e s e topics, t h o u g h referred to,
were n o t considered specif ically.)
ADVANCE NOTICE O F GOVERNORS' CONFERENCES
Upon motion o f Governor Calkins, i t was
VOTED t h a t the Federal Reserve Board b e requested t o give t o the
Governors a s much advance notice o f Governors' Conferencesas might b e pos-
sible i n the circumstances.
I t was suggested that five weeks' advance
notice i s desirable.
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Federal Reserve Bank of St. Louis
RoutineIV (f) What should the policy of the Federal reserve
banks b e with respect t o attempted cancelations
of confirmed o r irrevocable commercial letters o f
credit a n d with regard t o issuers o f credits who
have defaulted o r refused t o honor their credits;
especially h o w should t h e Federal reserve banks
deal with acceptances of such banks. (F.R.B, N.Y.)
This topic w a s temporarily passed.
Routine I V (g) Status o f organization and activities o f eligibilaty
committees formed i n the reserve banks (F.R.B. N.Y.)
Upon motion, i t was
VOTED t h a t the recommendation o f the last Conference o n this
subject b e affirmed a n d carried o u t b y each o f t h e Federal Reserve Banks,
that is, that each Federal Reserve Bank appoint a n eligibility committee
which shall report t o a l l other Federal Reserve Banks a n y paper o f general
circulation which i t holds t o b e ineligible.
At 11:45 a. m. the conference adjourned t o meet i n joint session
with the Federal Reserve Board,
Joint I V - Credit Policy:
{a) Discussion o f policy o f Reserve Banks a s to rediscounting paper, the eligibility o f which may
be doubtful o n account o f condition statements
of makers a n d discussion o f feasibility o f
adopting a uniform policy f o r all Federal R e - : serve Banks.
Governor Harding addressed the meeting expressing the views o f the
Federal Reserve Board with reference t o proper credit policies t o be pursued
by the Federal Reserve Banks at this time.
H e outlined i n some detail the
difference between technical eligibility a n d goodness o f paper offered f o r
rediscount, emphasizing the necessity o f extreme liberality o n the part
of
the Federal Reserve Banks i n determining both of these questions.
I t was
pointed out that conditions a t the present time are such that a n
undue re-~
striction o f credit o n the part o f the Federal Reserve Banks might
enforce
a disastrous calling o f loans o n the part o f member banks, a
course which
must b e avoided i f possible.
Joint V ~- Reserve Policy:
;
(a) Should reserves of Federal Reserve Banks be
based, a s far a s possible, upon holdings o f
gold
coin and: gold certificates, eliminating silver
certificates a n d legal tenders b y paying them
out i n lieu o f Federal Reservé notes?
Governor Harding expressed i t to be the clear opinion
o f the Board
that i t i s desirable that t h e reserves o f
t h e Federal Reserve Banks b e based
as far as possible upon gold coin and gold certificates,
a n d that this should
be accomplished b y the elimination o f silver
certificates a n d legal tenders
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Federal Reserve Bank of St. Louis
28
from t h e reserves b y paying
( 60c)
J
o
i
n
them out i n lieu o f Federal Reserve Notes.
t II - Gold Policy:
(c)
Should gold which would otherwise b e imported
into the United States b e held abroad and earmarked with foreign agencies, such as the Bank
of England, t h e Federal Reserve Board having
ruled that gold s o held can no longer b e counted
as r e s e r v e ?
Joint V
- Reserve
(b)
POLICY:
Bearing i n mind that prior to 1917 Federal Reserve notes were substantially gold certificates,
because o f t h e percentage o f actual g o l d held b y
Federal Reserve Agents against them, would i t be
advisable t o prevent any undue increase i n banking reserve b y depositing incoming gold with
Federal Reserve Agents, thus strengthening
specific reserve against Federal Reserve notes?
To make s u c h a policy effective i t would s e e m
that the Federal Reserve Board should require the
Federal Reserve Banks t o publish actual percentage of reserve held against deposits and actual
percentage o f goid held against notes. T h e combined reserve percentage could b e published for
purposes o f comparison a s heretofore.
I n order
to equalize the reserve position o f the various
Federal Reserve Banks, a n d t o make i t t o the
interest o f Banks t o carry a s large a gold re~ - .
serve against notes a s possible, consideration
should b e given t o the advisability o f adeptiug
a policy that any Federal Reserve Bank whose reserve against notes falls below a certain
specific minimum should b e compelled t o apply for
permission t o rediscount w i t h other Federal R e serve Banks.
The Conference t h e n considered t h e topic presented under I I (2%,
with reference t o the desirability o f holding gold abroad, earmarked with
foreign agencies, instead o f importing i t into t h e United States,
i n con-
junction with the questions o f reserve policy presented i n topic V (b).
While Governor Strong favored holding.a limited amount o f gold
earmarked i n the Bank o f England instead o f importing i t into this country
each of the nther Governors present, either for political o r practical
reasons, voted against the adoption o f this policy a t this time.
Governor Harding, thereupon, asked the Conference whether, if,
assuming that the gold i s t o b e permitted t o come into this country, i t would
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29.
be desirable t o change the present method o f calculating reserves s o as to
show t o the public t w o different s e t s o f reserves, o n e against notes, a n d the
other against deposits,
i n the manner proposed i n topic V (bd).
Each of the Governors present voted against such a change i n the
method o f reporting reserves w i t h the exception o f Governor Fancher w h o voted
inet Over ol: 4t< G o v e r n o r Norss expressed i t t o b e his belief t h a t i t was a n
academic question rather than a practical o n e and that t h e combined percentage
was sufficient t o satisfy the needs o f the public. G o v e r n o r s McDougal and
Wellborn expressed i t t o b e their belief t h a t t h e proposed p l a n would have
no practical effect.
Soviet Gold, G o v e r n o r Harding r e a d t o the Conference copies o f
letters exchanged: between Mr. Gilbert and the State Department.
I t was
the conclusion o f the State Department, expressed
i n Mr. Dearing's letter o f
t hat
April 9, 1921,40 Mr. Gilbert,
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1. T h e State Department cannot give any assurance that the title
to Soviet gold will not b e subject t o attack, internationally,
or otherwise.
2. T h e State Department perceives n o necessity f o r the Treasury De-~
partment inquiring into the -origin o f gold which bears the
official coinage o r mint s t a m p o f a
friendly nation.
£o-25
not considered thet the purchase o f gold of this description
is fraught w i t h the likelihood o f international complications,
as the purchase o f gold o f known Soviet origin would be.
3. T h e State Department considers that t h e observations m a d e i n
(2) a r e applicable t o gold bearing t h e official G e r m a n o r
Mexican mint stamps..
GoOC V E FEN O RS: * C O N F R R E N C E
BPTI e a S10; o a d
Fourth Day*s Session, Afternoon, Friday, Apri) 1 4 .
The Conference reconvened a t 2:35 p. m.
Present:
Governcr Strong, Chairman, Governors Morss, Norris, VanZandt
MeDougal, Fancher, Biggs, Calkins, ~ *Young. and Seay.
Mr. Harrison, Secretary.
Routine I V - Credit Transactions and Policies:
(x) Sales of Bills reported as rediscounts.
It was
MOVED AND CARRIED t h a t the Federal Reserve Board b e requested t o
change the caption i n the weekly statement o f the Federal Reserve Board showine
the amount o f "Acceptances Rediscounted With o r Sold To" other Reserve Banks s o
as to indicate more correctly the true nature o f the transaction, that is, s o
that will not purport to include only those bills rediscounted or sold vy one
Federal Reserve Bank for its o m benefit.
I t should read "Aeceptances Redis-
counted with o r Purchased by."
Date o f Consolidated Statement.
U p o n motion o f Governor Norris, i t
VOTED t h a t the Federal Reserve Board b e requested, i f possible and
convenient, t o publish the eonsolidated statement o f the Federal Reserve Banks
on some day other than Saturday.
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Routine I V (f) W h a t should the policy of the Federal Reserve Banks
be with respect t o attempted cancellations o f ecnfirmed o r irrevocable commercial letters o f credit+
and with regard t o issuers o f credits w h o have d e -
faulted or refused to honor their credits; e s - —
pecially how should the Federal Reserve Banks deal
with accentances of such banks. (Federal Reserve
Bank o f New York.)
Upon motion, i t was
VOTED t h a t acceptances made b y banks who have defaulted o r refused
31
to honor their credits b e referred t o the eligibility committee o f the Federal
Reserve Bank: o
t which they are presented for discount o r -purchase for the
ascertainment o f the facts relating t o the alleged default o r dishonor;
and
if the accepting bank i s found t o have been guilty o f such default o r dishonor
with respect t o other credits, all Federal Reserve Banks b e advised o f that
fact with the understanding that such Federal Reserve Banks will not purchase
any acceptances o f such a
bank,
Routine I V - (g) W h a t procedure i f any i s followed b y each Federal
Reserve Bank t o ascertain whether acceptances made
by its members are made i n conformity with the
Board's regulations effective since October 25,
1920 and the Board's rulings, a n d what steps i f
any are taken t o get similar information regarding
bills accepted b y either member o r nonmember banks
or acceptances offered either t o the Federal reserve bank o f the district i n which the bills
originate o r to other Federal Reserve Banks
(Federal Reserve Bank of Cleveland)
There was a short diseussion o f the existing practices i n the several
Federal Reserve Banks with reference t o procedure t o be followed i m order +>
discover the eligibility o f acceptances under the new regulations o f the Federal Reserve Board,
I t was generally agreed that the best method o f insuring
compliance with those regulations i s to have each acceptance shew o n its face
the nature o f the transaction out o f which i t grows, but that i n the absence
of such evidence t h e n e w forms o f certificate required t o b e made upon accept-
ances not presenting such evidence o n their face, will d o much t o obviate the
purchase o f ineligible acceptances,
Visit o f Federal Reserve B a n k officers t o N e w York bank i n r e
acceptances,
It was suggested b y Governor Fancher that i n view o f the many difficulties surrounding the acceptance business and the relations o f the Federal
Reserve Bank t o the acceptance market, i t might b e desirable for the various
Federal Reserve Banks to send one or more of their officers to the Federal Reserve Bank of New York for the vurpose o f informing themselves o f its practices
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32
and policies i n these matters. G o v e r n o r Strong advised the Conference that
the Federal Reserve Bank of New York would be only too glad to cooperate i n so
far as it is possible i n the development of a mutual understanding of these
questions.
Routine Y¥ - (h) Desirability of developing a system program for
the relief o f embarrassed member banks i n difficulties caused b y deaths, defalcations, explosions,
etc. (Federal Reserve Bank of New York.)
It was suggested b y the Chairman that this topic was put upon the
program merely for the purpose of provoking a discussion of what the various
Federal Reserve Banks are doing to aid or assist member banks that are em~barrassed beeause o f the absence o r inefficiency o f their personnel.
The discussion evideneed the fact that practically all o f the Federal
Reserve Banks make i t a policy i n such cases t o assist their members i n so far
asit may be feasible, but that most of them assiduously avoid any arrangement
which might impose upon the Federal Reserve Bank the obligation o f actively
running their member banks,
(At the joint conference between the Federal Reserve Board and the
Governors held later on, o n the afternoon o f Friday, April 15, the question o f
Federal Reserve Banks receiving for collection checks d r a m o n weak member banks
was discussed a t length, t h e suggestion being made b y Governor Harding that i t
might b e proper for Federal Reserve Banks t o take such checks not a s cash
items, but as collection items.
I t was agreed that this matter should be con-
sidered by the Collection Committee «- IIT (b). (See paragraphs 50 and 51)
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Routine I
V - (3) Suggestion of Mr. Puelicher, Vice President of the
American Bankers Association, t o Governor Harding
that a conference o n the form and substance o f
financial statements b e held between the managers
of the credit departments o f the reserve banks and
representatives of commercial banks. (Federal Reserve Bank of New York.)
Upon motion o f Governor Seay, i t was
VOTED t h a t n o action b e taken with reference t o this topic.
Routine IV - (j) Amendment of Seetion 5203 Revised Statutes so
a3
that indorsements o f national banks o f bankers
acceptances will b e excepted f r o m the Limitation
of the section irrespective o f the place where
payable. (Federal Reserve Bank of New York.)
Upon motion o f Governor Calkins,
i t was
VOTED t h a t the Federal Reserve Board b e requested t o procure a n
amendment t o the terms o f Section 5 2 0 2 o f the Revised Statutes b y
eliminating
the words "payable abroad" from the terms o f the seventh exception
o f that
section.
Coupon Collections.
A f t e r discussion,
i t was understood b y the Con-
ference that the matter o f coupon collections i s ons which should come within
the jurisdiction o f the Collection Committee appointed b y the Conference.
Telegraphic Transfers.
G o v e r n o r Calkins called attention t o the
fact that certain o f the Federal Reserve Banks a r e not conforming t o
t h e recommendations o f the last conference with reference t o the question
o f telegraphic
transfers, and, a f t e r discussion,
i t was
AGREED t h a t the following redommendation, made a t the last Gover-
ners! Conference, should be complied with: t h a t is, that Federal Reserve Banke
should receive orders f o r telegraphic transfers o n l y f r o m member
banks.
At this point, t h e routine program o f the Governors having been completed, t h e Federal Reserve Board joined t h e Conference + o continue discussion
of the Joint program.
DISCUSSION O F TOPICS O N PROGRAM FOR
JOINT CONFERENCE WITH FEDERAL RESERVE BOARD.
Federal Reserve B a n k Procedure i n handling Discounts. G o v e r n o r
Harding called uvon each Governor present t o describe to the Federal
Reserve
Board the routine followed by his Federal Reserve Bank with respect to paper
offered for discount, showing the precise procedure followed
within the Bank i n
passing u p o n applications f o r rediscounts.
E a c h Governor i n response t o this
request outlined briefly the procedure prevailing
i n his district.
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Federal Reserve Bank of St. Louis
34
Charges f o r reports furnished b y Comptroller o f Currency.
P a r a -
16
graphs 1 5 and 2 1 continued. G o v e r n o r Harding called upon the Comptroller o f
the Currency t o present t o the baitendieo his report with reference t o the
charges t o be made b y him for furnishing t o Federal Reserve Banks copies o f the
completed reports of national banks. A f t e r some discussion of the reasons
prompting his request that Federal Reserve Banks pay for these reports, he
stated that the fund to cover examination expenses o f the Office o f the Comptroller o f the Currency showed a
deficit o n March 1 , 1921 amounting t o
$118, 215,21.
While i t i s intended t o ask Congress f o r a n a
m
a
k
e
this deficiency good, the Comptroller feels it advisable in order to procure
funds i n the immediate futur@ t o make a charge for completed reports t o be fur-
nished currently to the Federal Reserve Banks, ‘ T h e charges proposed by him
are a s follows:
Proposed Charge
No. o f Banks
A m o u n t o f Capital
P
e
r Report.
4601 $
25,000 - 3 50,000
2750 *
50, 000
2 0 0000,
550
2 0 0 , 060 5 0 0 , 000
161
5
0
0 ,000 1 , 0 0 0 ,000
99 1 , 0 0 9 , 0 0 0 5 , 0 0 0 , 0 0 0
18
O v e r $5,000,000
Upon motion o f Governor Strong, i t was
VOTED t h a t t h e charges suggested b y the Comptroller o f the Currency
be approved and that the directors o f the respective Federal Reserve Banks b e
recommended t o pay those charges for all completed reports furnished b y the
Office o f the Comptroller a f the Currency.
It was informally understood that t h e charges proposed b y the Comp-
troller should relate to all reports furnished since Januay 1, 1921, provided
that those reports be supplemented by the so-called "pink" o r confidential
sheets.
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Federal Reserve Bank of St. Louis
35
Joint V
- Reserve Policy:
(c) What changes in yolicy of rediscounting among Federal Reserve Banks appear advisable o n the basis o f
experience during the last year?
Upon motion o f Governor Strong, i t was
VOTED t h a t there b e n o changes i n the policy o f rediscounting among
Federal Reserve Banks.
Upon motion o f Governor Seay, i t was
VOTED t h a t the Federal Reserve Board b e requested, i f i t be legally
t permit Federal Reserve Banks to rediscount with other Federal Repossible, o
o individual notes or.
serve Banks under some plan not requiring a transferf
bills covered b y the rediscount.
-Joint VI - Earnings o f Federal Reserve Banks:
The large earnings o f the Federal Reserve Banks have
caused much comment and some adverse criticism. T h e _ .
t the
Franchise t a x to be paid b y Federal Reserve B a n k s o
t 90% of net
United States Government is fixed by l a w a
profits over and above dividends. Practically all Fed-
eral Reserve Banks have now accumulated their statutory _
surplus. I t i s customary with many momber banks t o set
aside each month a reserve for taxes. W o u l d i t be
feasible and desirable to have the Federal Reserve Banks
set u p o n their books a “Reserve for Franchise Tax" and
show this item in their weekly statements. I t has been
suggested that an approximate reservation for franchise
tax shown weekly would give the public a better idea as
to the disposition of the earnings of the Federal Reserve
Banks and gradually dissipate the idea that these banks
_are profiteering a t the expense of commeree and industry.
Upon
m o t yi Governor
b
o n
.
Strong, i t was
VOTED that each Federal Reserve Bank set up on its beoks a “Reserve
for Franchise Tax" and that it show this item in its weekly statement.
nonJoint VIIT - Shipments of Coin and-Currency to member and.
(75)
member banks upon request o f a member. bank.
(a) W h y should there not be a uniform policy with
respect t o such transactions?
‘Upon motion of Governor Seay, i t was
VOTED t h a t this t o p i c b e passed without action inasmuch a s i t involves a
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Federal Reserve Bank of St. Louis
matter f o r lecal consideration b y each Federal Reserve B a n k a n d does’
not require a uniform policy throughout the System,
int VIT - Par Collection System:
a s t a t u s o f Litigation
(b) E f f e c t o f laws enacted b y various Southern States
(c) R i s k s and losses incurred b y Federal Reserve
Banks i n making collections. H o w to minimize
them,
Governor Harding reviewed briefly the status o f the litigation o n
the subject of the par collection system, and recited in some detail the effect
of the laws enacted i n various Southern States upon this quest ion.
The Governors advised t h e Federal Reserve Board that t h e questions
raised i n topic VII (c) are ones which will b e considered b y the Collection
Committee previously appointed b y the Conference,
G o v e r n o r Harding stated
that this course o f action would b e agreeable t o the Federal Reserve Board.
Joint I V - Credit Policy:
(b) Discussion o f so-called "direct action," that i s
policy o f applying some pressure upon borrowing
member banks t o compel their customers t o
liquidate.
Upon the request o f Governor Strong, the Conference discussed at
some length*-the propriety o f "direct action,” that i s the policy o f applying
pressure u p o n borrowing member banks t o compel their customers t o liquidate.
It was stated by several present that now is not the time for the
application o f pressure o f that character,
Joint X - Bankers Acceptances:
(a) Should the Board's regulations be modified so as to
make eligible f o r purchase o r discount accentances o f
member banks having not longer than s i x months t o
run, i n cases where bills a r e drawn against export
and import transactions.
Upon motion o f Governor Strong, i t was
VOTED that the Federal Reserve Board be requested to modify its
regulations s o a s t o make eligible f o r vourchase o r discount
i n the open market
acceptances o f member banks having not longer then six months t o run,
i n cases
where t h e y a r e d r a m against transactions involving t h e
importation o r exporta-
tion o f goods,
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Joint V- Reserve Policy:
At6:40 p. m., after a detailed discussion of the Reserve Policies
ofthe Federal Reserve System chiefly by Mr. Miller and Governor Strong, the
conference adjourned sine die.
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