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Federal Reserve Bank of St. Louis
VAI D I N O N T Y T A j
SIN W E R D E I N §
i
WUE
S h oo
S e e
Secretary*s Minutes
General Files
Procied to Library
F.R.Agent’ Files
t.
DY...
When initialed
by those indicated.
Martin ioe apie a e
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ey =
2 Stewart _..
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INDEX T Q SECRETARY'S MINUTES
GOVERNORS CONFERENCE
APRIL 3 0 = MAY 2, 1928
Paragraph i n
Secretary's
Minutes
Adjusting distribution o f investments a t end of year = ~
3
Anendments t o Federal Reserve Act:
Section 13, Desirability of amending
30
24, 29, 46, 47
Section 19, Desirability of amending
Bank stocks, Development o f investment companies for purchase o f - = =
4}
Bankers Acceptances, Report o f Subcommittee o f General Committee on+
34
Bankers Acceptances, Suggested changes i n form of, t o eliminate any
question a s to negotiability
42
Brokers* loans, Senate Resolution No. 113 concerning
6
Canceled Government warrants and checks, Liability o f Federal
Reserve Banks regarding shipment o f
Cash Items:
Recommendation o f Conference of Counsel that Federal Reserve Banks
eliminate from check collection circular provisions giving Federal
Reserve Banks right t o charge cash items t o reserve account
clearing account o f banks
o r
Chairman, Appointment o f Acting
Chamber of Commerce, Report on Federal Reserve System by United States
Check Collection circular, Recommendation of Conference of Counsel
relative t o eliminating provisions giving Federal Reserve Banks
the right t o charge cash items t o reserve account o r clearing
account:
o f banks
Classification o f Governnent securities, Suggested change i n
Board's weekly press statement ~~... 5
-| +
Circular, Uniform collection
Circulation, Federal Reserve note, Advisability of reducing b
deposit o f gold with Treasury
Circulation o f new size currency
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Federal Reserve Bank of St. Louis
44
16, 20, 21
Paragraph i n
Secretary's
Collections:
Minutes
Check Collection
Circular
Collections involving
unus
Signatures f
Drafts with secu
Regulation J,
Report o f §
Resolution
Committees s
Genera} Committee
on
Insurance Committee Bankers Acceptances » Subcommittee
.
of ~ . .
Leased Wire Committee
Open Market Investment
n o i s n e P
Committee
Standing Committee
Counsel, Conference
of :
Bankers Ace
on between F e
of Farners &
Merchant
Carolina, Opinion re
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Federal Reserve Bank of St. Louis
¥ plan t o
ominations
16, 20, 21
16,18
15,16,17
20, 1
2
535
Paragraph i n
Secretary's
Minutes
Federal Reserve Act:
30
30
24, 29, 46, 47
Federal Reserve Board, Visits t o Federal
Reserve Banks b y members
of staff
~
of
Federal Reserve Board's weekly press
statement, Suggested reclassification
s
of Government securities held by
Federal
Reserve
n
a
B
« = +..k
.
—
Federal reserve note circulation,
by
t o f gold
i with TPORGURY.
s
o Advisability
p
eof reducing,
d
aie =
e e e e me
Federal Reserve System, Discussion over
radio by United States
Daily
of operations o f
Federal Reserve System, Report by United States
Chamber of
Commerce o n
+ =
Foreign Relations:
Income and expense o f operation o f foreign
accounts
Report o f foreign accounts
Form E, Proposed revision of Federal Reserve Board.
Form E - ~ Free services t o member banks, Undesirability
of curtailing -
-
Functional Expense Report, P r o p o s e d
revision o f
Golds
Government securities, Suggested reclassification of,
in Board's
weekly press statement
Government securities, Purchases a n d sales of, b y Federal Reserve
Banks for their own account-apart fron System account
Government warrants and checks, Duties and liability of
Federal Reserve Banks with regard t o shipment o f canceled
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes,
Income and expense o f operation o f foreign
accounts
39
Insurance Committee, Report o f - « =
-
32
International gold movenents and gold
points
40
Investment companies for purchase
o f bank stocks
41
Investments, Adjusting distribution of, a t
end of year - « «+ = — «
Lane Co. v. Crum, Decision of Supreme Court
of Texas in case of ~ Leased Wire Committee, Report of
w
s ee eee e e ee
3
42
31
Liability o f Federal Reserve Banks i n
handling a s non-cash collece
tions drafts for acceptance, o r deeds,
mortgages o r other similar
documents for signature
Ligitation between Federal Reserve Bank
o f Richmond and Receiver
of Farmers & Merchants National Bank o f Lake
City, South Carolina
Loans permitted under Section 5200
Member banks a n d membershi
Directors®
27
10,14
24, 29, 46, 47
Undesirebility o f curtailing
members i n greater numbers
rable banks
25
26
15, 3
4
35
37
36
Negotiability o f bankers acceptances, Suggested
changes i n form o f
bankers acceptances t o eliminate any question
of
42
Non-Cash Collections:
Liability o f Federal Reserve Banks i n handling drafts for
acceptance,
or deeds, mortgages o r other similar documents for Signature- «=
16,18
Negotiable securities attached, Handling of non+cash collections
with
15,16,17
Open Market Operations:
Distribution o f investments a t end of yoar, Adiucting
= « = 2. = %
Purchases and sales o f Government securities
b y Federal Reserve
Banks for their own account apart from System
account « - - . ~ «
Report of Open Market Investment Committee <
Weekly press statement o f Federal Reserve Board,
Suggested rew
classification o f Government securities held
b y Federal Reserve
Banks -
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Federal Reserve Bank of St. Louis
= «
Paragraph i n
Secretary's
Minutes
Pension Committee, Report of
oa
Press statemento o f Federal
a
r
dB : ,
Reserve
fication o f Governnent securities h e l d
Weekly, Suggested reclassib y Federal Reserve Banks- =
Purchases a n d sales o f Governn
ent securities b y Federal Reserve
Banks f o r their o w m account apart
from System account
Radio, Discussions o f Federal
Reserve System by United States
Daily
ever
Regulation J, Amendment to, relating t o provisions
o f collection
circular
Reports:
Bankers Acceptances, Report of subcommittee
o f General
Committee o n
Leased Wire Committee
Open Market Investment Committee - «
Pension Committee
Reserves o f member banks:
Computing reserves, Method of
Depleted reserves, Member banks operating with depleted reserves
until close o f business, C a n action b e taken t o prevent
- - - =
Directors’ responsibility for non-compliance with reserve require~
ments o f Federal Reserve Act b y their respective banks - - - - =
Reserve account o r clearing account o f banks, Recommendation o f
Conference o f Counsel t h a t Federal Reserve Banks eliminate
fron
check collection circular provisions g i v i n g Federal Reserve Banks
right t o charge cash items t o
Reserve against time deposits
Reserve cities, Desirability o f revising present list of, t o include cities within short distance o f Federal Reserve Bank o r
20, 2
24, 29,46,7
4
branch city and other cities i n which large volume of bank
deposits a r e carried
Section 1 9 o f Federal Reserve Act, Desirability o f recommending
legislation amending
28
24, 29, 46, 47
Richnond, Litigation of Federal Reserve Bank of Richmond v. =
Receiver o f Farmers & Merchants National Bank o f Lake City, “Youth
Carolina
Savings and other time deposits, Desirability o f amending Section
19 o f Federal Reserve A c t i n order t o write i n t o l a w complete d e fimition o f what constitutes ~ -
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Federal Reserve Bank of St. Louis
20,1
2
Paragraph i n
Secretary's
Minutes
Section 1 9 of Federal Reserve Act relating t o member bank reserves,
Desirability o f legislation amending -
24, 29, 46, 47
Section 13 of Federal Reserve Act, Desirability, o
f amending, i n
order t o conform t o Section 5200 Revised Statutes a s amended b y
McFadden Act » = » «
Senate Resolution No. 113 concerning brokers" loans
Services rendered t o member banks, Undesirability o f curtailing -
Shipment of cancelled government warrants and) checks, Duties and
liabilities o f Federal Reserve banks with yegard t o
State Banks:
Examination o f State member banks with branches
Violation o f regulations and conditions o f membership
Why they do not enter System in greater numbers! - - Sub-Committee o f General Committee o n Bankers Acceptances, R e p o r t o f
Time Deposits:
Reserve against time deposits
Section 1 9 relating t o savings and other time deposits, Desirability of amending, i n order t o write into law complete definition
of what constitutes savings a n d other time deposits
Treasury p l a n t o p u t into circulation n e w size currency
United States Chamber o f Commerce report o n Federal Reserve System =
United States Daily, Distribution o f
Visits t o Federal Reserve banks by members of Federal Reserve Board
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Federal Reserve Bank of St. Louis
24, 29, 46, 47
24, 29, 46, 47
CONF TDENTIAL
P R O G R A M
GOVERNORS
C O N F E R E N C E
30, 1928
A
p
r
i
l
Washington.
D . C,
Ie G R E D I T TRANSACTIONS A N D POLICIES
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Federal Reserve Bank of St. Louis
A. O p e n Market Operations.
leReport of Open Market Investment Committee.
2a Policy.
36 Adjusting distribution o f investments a t
S
a
n Francisco
end o f year,
4. Purchases and sales o f government securi~ F , - R s e Board
ties b y F. R, Banks for their own account
apart from the System account.
Discount Rates a n a Policies.
Gold.
1. Present supply and future production.
Present distribution and future needs
as a basis for different kinds o f gold
standards n o w i n effect.
New York
Relation t o credit a n d prices,
International movements a n d gold points.
Federal Reserve gold policy = present
and future,
Relations with foreign banks.
New York
1. R e p o r t
2. Income and expense of operation of
foreign accounts. .
Development of investinent companies for purchase
of bank stocks,
Digest of reports received from various
F. R. Banks since November 1927 conference.
Suggested changes i n form o f bankers accept=~
ances t o eliminate a n y question a s t o
negotiability growing out of decision o f
Supreme Court of Texas i n case o f Lane
Company v. Crum (See recommendations of
Conference of Counsel, pages 1 and 2 of
record of Conference of Counsel (X~5078).
Also correspondence o n this subject X-4880
and X-4975),
F
. R, Board
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Federal Reserve Bank of St. Louis
COLLECTIONS AND CLEARINGS
Report of Standing Committee o n Collections.
Non-Cash Collections.
1. Handling non-cash collections with
negotiable securities attached.
Necessity for uniform action
S
K
a
a
n
n Francisco
s
a
s City
a
s City
in connection w i t h resolution
ofNovember 1927 Governors
Conference, (See paragraph 37
November 1927 Conference).
ae Liability o f F. R. Banks i n handling
K
as non-cash collections drafts
for acceptance,
o r deeds, mort-
gages o r other similar documents
for signature.
Duties and liabilities o f F. R. Banks with
regard t o shipment o f canceled government warrants a n d checks.
Report t o b e subnitted b y Governor
Talley. ( S e e paragraphs 2 2 and 25
November 1927 Conference).
Recommendation o f Conference o f Counsel
that F. R. Banks eliminate from their
check collection circulars the provisions
giving t o such F. R. Banks t h e right t o
charge cash items t o reserve account o r
Clearing account o f banks “at any time
when in any particular case such F. R. Bank
deems it necessary to do soe” ( S e e page 4
record o f Conference o f Counsel, a n d
correspondence X-4976, X+4990).
Resolution of Conference of Counsel expressing the opinion that pursuit by F. R,
Bank o f Richmond o f litigation contemplated between that bank and Receiver o f
Farmers & Merchants National Bank o f Lake
City, So. Car., i s fraught with most
dangerous consequences t o entire Federal
Reserve collection system. ( S e e record
of Conference o f Counsel, p a g e 5 and
correspondence X-4976 and X-4990),
a
n
s
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Federal Reserve Bank of St. Louis
COIN, C U R R E N C Y D
N
A CIRCULATION
4e Discussion of Treasury plan t o put inte
R i c h m o n d
Circulation a t one time new size o f ali
denominations.
K
Be. Advisability of reducing F. R. note cirevla-
a
n
s
a
s City
C h i c a g o
tion b y deposit o f gold with Treasury,
OPERATION AND ADMINISTRATION
A. R e s e r v e s o f member banks.
i, Reserve against time deposits.
R i c h m o n d
2. C a n action be taken to prevent
S
a
n Francisco
member banks operating with depleted reserves until alese o
business, :
Method of computing reserves = semi-weekly. R i c h m o n d
Desirability of requiring member banks
F
. Re Board
in F, R. Bank and branch bank cities
and i n other cities designated b y
F. R. Board from time t o time t o calculate and adjust their lawful reserves
daily instead of o n a n average semi-~
weekly basis a s at present time.
It has been suggested that such re~
quirement would be found practicable,
so far as member banks are concerned,
if member banks are permitted t o compute their reserve requirements for
a given d a y o n the basis o f their
deposits a t the opening o f business.
If this procedure were adopted, i t
would, o f course, b e impossible t o
determine from a bank*s balance sheet
for a single day or from its quarterly
Condition report whether o r not the
reserves o f t h e bank a s o f that d a y
are adequate. I t is believed, however,
that this is not a serious objection t o
the suggested procedure.
5.Advisability of formulating a program of
advising all member bank directors as
Soon as possible of their legal respons
ibilities individually arising out of
non-compliance with reserve requirements
ofF, R, Act on part of their respective
banks.
F , R. Board
IV.
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Federal Reserve Bank of St. Louis
QPERATION AND ADMINISTRATION (cont'd)
A. Reserves o f member banks (cont'd)
6.Desirability of revising present
list of reserve cities and including i n list certain cities
not now s o designated which
are within a short distance o f
@aF. R. Bank o r branch city and
other cities i n which a
large
Volume o f bank deposits are
carried.
7,Desirability of recommending legise
F
. R. Board
lation amending Section 19 of
F. R. Act relating t o required ree
serves o f member banks and of
writing into law a complete
definition (along lines of the
Board's Regulation D) of what
constitutes savings a n d other
time deposits.
Should not Section 13 of F. R. Act be amend-
K a n s a s City
ed to conform t o Section 5200 o f Revised
Statutes a s amended b y McFadden Act.
Report o f Leased Wire Committee
Report o f Insurance Committee
Report o f Pension Committee
Report o f Subcommittee o f General Committee
on Bankers acceptances.
RELATIONS “VITH MEMBER BANKS
A. W h y State banks d o not enter System in
B
o
s
t
o
n
greater numbers.
B. Violation o f regulations and conditions
of membership b y State member banks.
C. Procedure with reference t o termination
of membership o f undesirable banks.
Discussion as to practice i n all
Pe Rh. Batrictas
S
C
h
a
i
c
n Francisco
a
g
o
VI. S U P P L E M E N T A R Y TOPICS.
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Federal Reserve Bank of St. Louis
Ae Should a classification o f U. S. securities
held b y the Federal Reserve Banks into
F
,
. R. Board
(a) Held in special investment account,
(b) Held under repurchase agreement, and
(e) All other,
be substituted i n the Board's weekly press
statement for the present classification o f
Government securities, i s ec,
(a) Bonds,
(b) Treasury notes, and
{c) Certificates of indebtedness.
B, Undesirability of curtailing services
rendered member banks i n view of
criticisms made b y banks and others,
N
e
w York
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Federal Reserve Bank of St. Louis
G O V E R N O R S
C O N F E R E N C E
April 3 0 = May 2 , 1928
Washinrton, D . C .
First Day’s Session, Monday, April 30.
Mornings
The meeting was called to order a t 10 a. nm.
PRESENT: Governors Harding, Norris, Fancher ,
Seay, Black, McDougal,
Biggs, Geery, Bailey,
Talley and Calkins.
Deputy Governor Case.
Mr. Harrison, Secretary.
Upon motion o f Governor McDougal,
i t was d u l y
VOTED t h a t Governor Calkins preside a s chairman o f
the conference i n the absence o f Governor Strong.
(See pages 2 and 3 stenographic record)
Toric I.A.
O p e n Market Operations.
(
2
1. Report o f Open Market Investnent
Cormittee .
{See pararpraph 48)
Mr. Case reviewed t h e report o f the secretary o f
the Open Market Investment Committee d a t e d April 30, r e f e r
ring i n some detail t o a number o f transactions i n the open
market investment account since last November. M r . Harrison
‘read the preliminary memorandum prepared for the Open Market
Investment Committee dated April 27, which had been considered
by the committee a t its meeting yesterday afternoon, and then
read the report o f the committee based upon that memorandun,
)
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Federal Reserve Bank of St. Louis
After a full discussion of the preliminary memorandum and
the report, together with past and prospective gold movements
and the credit situation generally, upon motion of Governor
Seay, i t was d u l y :
VOTED that the report of the Open Market Investment
Committee b e accepted b y the conference.
(See pages 4 # 4 stuisobaplie record)
TOP L S o t h e O p e n Market Operations.
3. A d j u s t i n g distribution o f invest~—
ments a t end of year.
Governor Calkins referred t o the possibility o f ad~
justing the distribution of open market investments a t the end
of each year. A f t e r Mr. Case read a memorandum (printed o n
pages 45 « 48 stenographic record) outlining the present prac-
tice in some detail, Governor Calkins stated that he considered
the procedure satisfactory, and the topic was passed without
further action.
(See pages 4 4 ~ 48 stenographic record)
TOPIC I. A. Qpen Market Operations,
(
4
4. Purchases and sales of rovernment
securities b y F. R, Danks for
their own account apart from
the System account.
See paragraph 13 :
There was some discussion b y the conference relative
to the object o f the Federal Reserve Board i n proposing this
topic f o r consideration, a n d i t was pointed o u t that while t h e
several Reserve banks have voluntarily agreed that transactions
in the System account should b e handled through the procedure
)
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Federal Reserve Bank of St. Louis
set u p b y the Open Market Investment Committee, nevertheless
the individual banks necessarily reserve their rights to
purchase a n d sell securities,
a s authorized under t h e terms
of section 14 of the Federal Reserve Act. After further discussion, i n which i t was understood that Governor Harding
would b e appointed a committee o f one to draft a resolution
expressing the views o f the conference, the topic was tempo=
rarily passed. ( S e e paragraph 13)
(See page 49 stenographic record)
Governor Y o u n g , o
f the Federal Reserve Board, joined
the conference a t this point.
H e discussed with the confer-
ence the matters recorded i n the following paragraphs 6
= 10,
Senate Resolution No. 113 concerning Brokers* Loans.
( 6 )
Governor Young outlined the amended terms o f Senate
Resolution No. 113 concerning brokers loans, which h e was ad=
vised this morning would b e favorably reported t o the Senate
by the Committee o n Banking a n d Currency.
(See page 49 stenopraphic record)
Distribution of United States Daily.
(
7
Governor Young referred t o the fact that David Lawrence,
editor o f the United States Daily, has been discussinz the
Federal Reserve System and its operations over the radio,
and that s o rmuch interest has been manifested i n these talks
that Mr. Lawrence has been asked t o appear before the conference for a few minutes t o discuss means o f better informing
the public o f the purposes and operations o f the Systen.
)
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Federal Reserve Bank of St. Louis
As arranged b y Governor Young, Mr. Lawrence later
appeared before the conference a n d informally discussed (off
the record) certain proposals which he felt might be helpful
in better informing the public o f the operations o f the Federal Reserve System.
(See pages 49 - 52; 158 stenographic record)
Visits t o F. KR. Banks b y mempers o f Federal reserve
Board Staff.
Governor Young stated that there are about eight
men on the staff of the Federal Reserve Board whose work is
directly concerned with the operations of the Federal Reserve
banks and who would b e much helped i f they could have a n opportunity t o visit some o f the different Reserve banks t o
study
their operations first hand and personally to meet sone of the
staff i n the Reserve banks. U p o n motion o f Governor McDougal,
it was duly
VOTED t o be the sense o f the conference that i t
would b e mutually beneficial t o all concerned t o have some o f
the staff o f the Federal Reserve Board visit various Federal
Reserve banks i n order t o study their operations and to meet
different members of their organization and that such a plan
would meet with the approval o f the conference.
(See pages 52 - 55 stenographic record)
Us. S e Chamber o f Commerce Report o n Federal Reserve
System
(See paracraph 12)
Governor Young referred t o the fact that the United
States Chamber of Commerce proposes to hold a meeting on June 4
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Federal Reserve Bank of St. Louis
5
to consider a report o n the Federal Reserve System prepared
by a committee o f the Chactier » and that i t is contemplated
that i n addition t o a limited number o f the members o f the
Chamber who might be present, all the members of the Federal
Reserve Board and all the governors and chairmen of the Fed«
eral Reserve banks would b e asked t o attend this meeting i n
executive session.
I t was understood that the conference would
discuss this proposal later on.
(See pages 55 = 61 stenographic record)
Examination o f State Member Banks w i t h
Branches.
(See paragraph 14)
Governor Young said h e would Like t o have the c o n
ference consider the question of simultaneous entry for the
purpose of examining State member banks with branches, although h e realized that this i s a matter primerily within the
jurisdiction of the Federal Reserve agents rather than the
governors.
I t was understood that this would b e discussed b y
the conference a s requested.
(See page 61 stenographic record)
At 1
pe m,. the conference adjourned t o reconvene a t
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Federal Reserve Bank of St. Louis
First Day's Session, Monday, April 30.
Afternoon
The meeting was called to order at 2:15 Pe Me
Following a n informal discussion (off the record)
the conference adjourned a t 3:00 P e Me t o meet i n
joint
session with the Federal Reserve Board t o consider the
ree
port of the Open Market Investment Committee.
(See page 62 stenographic record)
Second Day's Session, Tuesday, May 1.
Morning
The meeting was called to order at 10 a. me
U.S. Chamber o f Commerce Report o n Federal Reserve
System.
(See pararraph 9)
Mr. John J, O'Connor, manager of the Finance Depart
ment of the United States Chamber of Commerce, appeared before
the conference, outlined the work done by 2 committee of the
Chamber of Commerce i n preparing an educational report o n the
Federal Reserve System and referred to the proposal of the
Chamber to hold a meeting o n June 4 to discuss the report with
a limited number of its members.
H e explained that the Chamber
of Commerce would be interested i n having present at that mecting all the members o f the Federal Reserve Board and all the
governors and chairmen o f the Federal-Reserve banks for the
purpose of having a n informal discussion of the report i n executive session. While Mr. O'Connor explained that it had not
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Federal Reserve Bank of St. Louis
been planned t o send the report i n advance even t o those who
intended t o be present a t the meeting, nevertheless h e stated
that h e thought i t would b e possible t o arrange t o send a n advance copy of the tentative report t o the governor a n d chairman
of each Federal Reserve bank s o that they might have a n opportunity t o read i t before deciding whether o r not they would at-
tend the meeting. While no formal action was taken, it appeared
to be the sense o f the conference that i t would b e desirable for
representatives o f each Federal Reserve bank to attend the mect~-
ing, not so much to take part in its deliberations a s to listen
to the discussion of the r e p o r t , n
i which all Federal Reserve
banks are necessarily interested.
(See pages 64 ~ 72 stenographie record)
TOPIC IT.A. O p e n Market Operations.
4. Purchases a n d sates o f government
securities b y F. R. Banks for
their o w n account apart f r o m
the System account.
(See paragraph 4 )
The following report, prepared b y Governor Harding
at the request of the conference (see paragraph 4), was adopted
as the sense o f the conference:
“When t h e Open Market Committee w a s a p -
pointed b y the Federal Reserve Board i n March, 1923,
it was agreed b y the Federal Reserve banks that any
purchases mode b y the committee and allocated t o the
banks should b e held b y the banks subject t o the
disposal o f the committee. T h e banks, however, re-
served their statutory rights under Section 14 to
make purchases and sales o f Government securities
independently o f the committee. T h e s e purchases,
however, since 1924 have been negligible and have
been limited t o transactions with own member banks.
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Federal Reserve Bank of St. Louis
"It i s the view of this conference that
the Federal Reserve banks should not and, a s a
matter o f fact d o not, work a t cross purposes —
with the Open Market Committee a n d that n e sube
stantial amounts o f Goverrment obligations should
be purchased b y the Reserve banks a t times when
it is the policy of the coumittee to sell such
securities, nor should sales o f Government oblie
gations b e made b y the Reserve banks, except t o
the committee, a t times when it is the policy
of the committee to purchase Government securities."
(See pages 72 » 74 stenographic record)
Examination o f State Member Danks with
Branches.
(See paragraph 1 6 }
This topic, which was proposed b y Governor Young a t
yesterday’s session, wag discussed at length and after a review
of the practice now prevailing i n the various districts, upon
motion of Governor Seay, it was duly
VOTED t o be the sense of the conference that under
the terms o f the Federal Reserve Act, Federal Reserve banks
should b e permitted t o make examinations o f State member banks
whenever they deem i t advisable i n order t o supplement the ex~
eninations made by the State Banking Department, and that Fede
eral Reserve banks i n making such examinations should not be
expected to make simultaneous entry of the head office and
branch banks i n cases where that i s not deemed feasible b y
the Federal Reserve bank.
(See pages 7 4 ~ 88 stenographic record)
TOPIC IL. A . R e p o r t o f t h e Standing Committee o n
Collections.
(See pararsraphs 16, 17, 18 and 43)
Governor Seay made a motion that the report of the
committee (printed on pages 91 = 107 stenographie record) be
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Federal Reserve Bank of St. Louis
adopted. B e f o r e this motion was acted upon, Governor Bailey
asked whether the report does not, i n substance, reverse the
action o f the last conference (see paragraph 3 7 of
secre~-
tary's minutes of November 1927 conference) when it was voted
gradually t o discontinue the collection o f drafts with securitics
attached.
I n the discussion of the matter, i t was suggested
that the question of the collection o f drafts with securities
attached was referred t o the Standing Committee o n Collections along with other matters and that the vote t o which
Governor Bailey referred was intended merely t o cover the
interim covering the report of the committee.
I t was pointed
out, however, that Governor Strong, who urged the discontinue
ance o f the collection o f drafts w i t h securities attached,
had done s o with the belief that these drafts were different
from any other drafts and that unless eliminated now the System might later completely lose control o f the volume offered
for collection.
(See pages 110 - 113 stenographie record)
in discussing that part of the report of the committee
which quotes a proposed uniform collection circular ,Governor
Geéry stated that there is danger i n requiring Federal Reserve
banks to accept for collection items drawn on points from which
satisfactory returns cannot be obtained. U p o n motion of Governor
Norris, i t was-duly
VOTED t o amend the first line of poragraph 2 entitled
“Terms o f Collection" b y adding the clause “except i n cases where
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id
satisfactory returns cannot reasonably b e expected," after
the words “the Federal Reserve banks."
Governors McDougal, Talley and Seay voted i n the
negative.
{See pages 108 » 110; 413 ~ 120 stenorraphie record)
Governor Talley then made a motion t o strike out
the first proviso i n sub-paragraph 3 of the "Ternis of Collec-
tion" printed on page 4 of the committee’s report, but the
motion was not seconded.
(See pages 121 - 124 stenographic record)
Upon motion o f Governor Seay, i t was
VOTED
t o strike o u t o f the report a l l o f page 7
and all of page 8 down to the heading “Limitation on the
Character o f Non-Cash Items t o b e Handled b y Federal Reserve
Banks."
{See pages 125 - 1 3 stenographic record)
Governor Dailey stated that i n acting upon the re-
port he would not consider that he was compelled to accept
for collection freakish drafts involving unusual orders, such
as getting signatures for deeds, etc. After discussion, i t appeared to be the consensus of opinion that each Federal Reserve
bank should h a v e a
measure o f discretion t o decline t o handle
for collection drafts that have unnecessarily burdensome o r
unusual instructions for handling, such as those to which
Governor Bailey had referred. Governor Talley made a statement indicating that Federal Reserve banks should not be
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il
expected to handle such drafts and Governor Calkins agreed
that i t is a matter for the exercise o f some discretion
by
the Federal Reserve bank,
{See pages 130 = 134 stenographic record)
Upon motion of Governor Seay, i t was unanimously
VOTED t h a t the report, a s amended, b e adopted,
with the understanding that the new uniform circular
proposed
by the committee, and contained i n the report, should
be issued a s of July 1, 1928,
(See pages 134, 136 = 137 stenographic record)
TOPIC I I . B. N o n - C a s h Collections.
i. Handling non-cash collections
with nerotiable securities
attached, —
(See paragraphs 15 and 16)
This topic was passed because o f the fact that i t
was considered to have been disposed of by the adoption
of
the report o f the Standing Committee o n Collections.
(See pages 135 - 136 stenographie record)
TOPIC II. BD. Non-Cash Collections.
Ze Liability of F.R. Banks i n handling 2s non-cash collections
drafts for acceptance, o r deeds,
mortgares, or other similar documents for sirnature.
(See paragraph 16)
This topic was passed without action because o f the
fact that it was disposed of in the diseussion of the
report
of the Standing Committee on Collections (see paragraph 16).
(See page 137 stenographic record )
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Federal Reserve Bank of St. Louis
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TOPIC II. C . D u t i e s a n d liabilities o f F. R. Danks
with regard t o shipment o f canceled
government warrants a n d checks.
Upon motion i t was duly
VOTED t h a t the report submitted b y Governor Talley
(printed pages 138 = 142 stenographic record) b e accepted.
(See pages 137 = 145 stenographic record)
TOPIC II. D. Recommendation o f Conference o f Coun=
sel that F. Rk. Danks eliminate fron
their check collection circulars
the provisions civinre t o such F. R,
Banks the right to charge cash items
to reserve account o r clearine account
of banks “at any time when i n any par~
ticular case such F. R. Bank deems i t
necessary to do so." (See pare 4
record of Conference of Counsel, and
correspondence X%-4976, X4990).
(See paragraph 21)
Mr. Wyatt, general counsel of the Federal Reserve
Board, appeared before the conference and reviewedn
i detail
the history of that part of Regulation J which concerns
the
clause which the conference of counsel recommended should
be
eliminated from the regulation. Mr. Wyatt stated that in his
opinion the phrase i n question should b e eliminated
from Regu-
lation J as well as from any cireular of any Federal Reserve
bank which may now contain it.
Upon mo$i f
Governor Seay, it was duly :
eeeeenenenamn
VOTED t h a t t h e conference should approve t h e recone
mendation o f the conference o f counsel o f the Federal Reserve
banks to eliminate from the terms of Resulation J tho present
provision that Federal Reserve banks have the right t o charge
items t o the reserve aecount o f banks “at any time when i n any
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Federal Reserve Bank of St. Louis
Ls
particular c a s e s u c h Federal Reserve b a n k deems i t necessary
to d o so."
Governor McDougal voted i n the negative.
(See pages 145 - 178 stenographic record)
Upon motion o f Governor Seay i t was then
VOTED t o request the Federal Reserve Board t o amend
Regulation J so as to provide that a n y Federal Reserve bank may 5
at its option, provide i n its cash collection circular that i t
reserves the right t o charge t o the reserve account o f member
banks o r to the clearing account o f nor-member banks, the
anount o f any cash letters for which remittance has not been
received b y the Federal Reserve b a n k before t h e expiration o f
the time provided i n the time schedule.
ao
ait
a >
(See pages 179 - 183 stenopraphic record )
At 1 pe me. the conference a d journed r e c o n v e n e
St 2:10 t e te
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Federal Reserve Bank of St. Louis
14
second Day's Session, Tuesday, May 1.
Afternoon
The meeting was called t o order a t 2:15 p. m
TOPIC II. EB. R e s o l u t i o n o f Conference o f Counsel
expressins t h e opinion that pur=
suit b y F. R. Bank o f Richmond o f
litication contemplated between t h a t
bank a n d Receiver o f Farmers & Merchants National B a n k o f Lake City ,So,.
Car., i
s fraugnt with most dancerous
consequences t o entire Federal Reserve
collection system.
( S e e record o f C o n
ference o f Counsel, pace 5 and correse
pondence 4 9 7 6 and X=4990).
(See paracraph 20)
This topic w a s passed without a c t i o n because o f
the fact that in discussion of Topic II. D. (see paragraph
20) i t was brought out that while the conference o f counsel
considered this litigation fraught with dangerous consequences
tothe Federal Reserve collection system, neverthe2.e.s the
netter had proceeded to the point now where it would be diffi~
cult for the Federal Reserve Bank of Richnond t o withdraw its
suit even if considered desirable otherwise.
(See pages 145 ~ 178; 184 ~ 186 stenographic record)
TOPIC Til. A. Discussion of Treasury plan to put into
circulation at one time new size of
all denominations.
Upon motion of Governor Seay, i t was
VOTED t o be the sense gf the conference (a) that
owing t o the practical difficulties a n d expense involved i n
carrying out the plan of issuing all denominations o f the new
size currency at.one time, t h e Treasury should preferably issue
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Federal Reserve Bank of St. Louis
i5
the one=dollar denomination o f the n e w size currency before
issuing any other denominations of the new size currency (it
being understood that approximately 5 2 per cent o f the total
volume o f notes i n circulation are of the one«dollar denomina=
tion) and (b) that whatever program is finally adopted the Federal Reserve banks should be given a wide discretion i n the
natter o f paying out circulated currency o f any denomination.
(See pages 186 = 199 stenographic record)
SDP Le Lists 2 ¢ Advisability o f reducing F . R. note
circulation b y deposit o f gold
with Treasury.
Governor McDougal outlined the proposal contained
in the memorandum submitted b y the Federal Reserve Bank of
Chicago t o reduce the Federal Reserve note circulation b y the
deposit o f gold with the Treasury, and after considerable discussion o f the plan i t appeared t o b e the opinion o f the cone
ference that it would not be advisable or practicable to adopt
the proposal at this time. T h e topie was passed without action.
(See pages 199 = 213 stenographic record)
TOPIC IV. A. Reserves of member banks.
l. R e s e r v e against time deposits,
(See pararraphs 2 9 , 4 6 and 47)
Governor S e a y submitted f o r t h e consideration o f the
conference a table prepared b y the Federal Reserve Dank of
Richmond showing the c r o w t h f
o demand and time deposits o f
all member banks i n each of the twelve districts since the
year 1918, H e explained that he had proposed the topic not
for action by the conference but beeause of the great interest
of the Reserve System i n the relatively great increase i n the
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Federal Reserve Bank of St. Louis
16
amount of time deposits which require only
a 3 per cent
reserve. A f t e r some discussion the topic
was passed be-
cause it would necessarily be considered under
topic IV.A.7.
(See paragraphs 29, 46 and 47).
(See pages 214 = 218 stenographic record)
T
O
P
I
C
IV. A. Reserves of member banks.
(
2
2.__Can action be taken to prevent
member banks operating w i t h
depleted reserves until close
' o f business,
During the course of the discussion of this topic it
was pointed o u t that owing t o the difference i n
time between
New York and San Francisco and other Federal Reserve cities in
the System, i t
would be possible for funds to be employed
in
one ¢ity. and returned by wire transfer to
another city in time
for u s e a s reserve a t night.
T h e topic was passed without a c -
tion, having been proposed merely for information a n d i n order
thet the Practice of shifting funds about
for use in two places
on the same day might be guarded against.
(See pages 218 - 221 stenographic record)
TOPIC IV. A . R e s e r v e s o f member banks.
3. M e t h o d of computing reserves -
sSemi-weekly.
4. Desirability of requiring menber banks i n F
. R. Bank and
branch bank cities and in
other cities designated b y
F. RR. Board
from time to time
Zo c a l c ud ladjust
a
n t atheir
e
lawful reserves daily instead
of o n an average semi-weekly
basis a s a t present time.
Governor Seay discussed the present method of comput~ing reserves semi-weekly and suggested for
consideration the
5
)
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Federal Reserve Bank of St. Louis
ps
possibility o f calculating reserves each day o n the basis
of deposits a s of the close o f business o f the previous
night. M r . Case pointed out that the chief difficulty i n
maintaining accurate reserves i s not s o much i n ase ertaining
the amount of deposits against which reserves should be earried a s it is i n creating o r maintaining t h e necessary amount
of reserve a t the close o f business i n t h e evening.
Owing to
large payments o r wire transfers towards t h e e n d o f t h e busi-
ness day, the amount o f a member bank's reserves might b e
substantially altered a t the end of the day regardless o f the
amount required t o be maintained o n the basis o f deposits a s
of the opening of business that morning.
I + was agreed, how-
ever, that if member banks should b e required t e compute re~
‘serves daily,
i t would b e o f s o m e help i f that calculation
could b e made upon the basis o f the deposits a s of the beginning o f the day. A f t e r further discussion, i t was duly
VOTED t e bé the sense of the conference that
there should b e n o change i n the present method o f calculat-
ing and adjusting reserve balances on a sani-weckly basis,
in view of the relatively short time we have had for testing
i
i
the effect o n t h e present method.
(See pages 222 = 234 steographic record)
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Federal Reserve Bank of St. Louis
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TOPIC IV. A. Reserves f
o member banks.
5. Advisability of formulating a
program o f advising all men-
ber bank directors as soon as
possible of their legal ree
sponsibilities individually
arising out of non-compliance
with reserve requirements o f
FR, Act on part of their
respective banks.
Upon motion i t was duly
VOTED t o be the sense o f the conference that i t
would be inadvisable to adopt a program which would contem=
Plate sending a circular notice t o advise the individual
directors of all 9,000 member banks of the Federal Reserve
System of what purports to be their legal liability for permitting the banks of which they are directors to become de~
ficient i n their reserves, i t being the opinion o f the confer-
ence that such a course would subject the System to serious
criticism, a n d that the matter i s one which should properly
be left to the discretion of each Federal Reserve bank to be
taken u p i n individual eases where t h e circumstances warrant,
as is the present practice o f the Reserve banks.
(See pages. 234 - 241 stencgraphic record)
TOPIC IV. A. Reserves of member banks.
6. Desirability o f revising present
list o f reserve cities and in-
cluding i n list certain cities
not now so designated which are
within a short distmee of a F
.
R,Bank or branch city and sther
cities i n which a large volume
of bank deposits are carried.
During the course of the discussion of this topic, i t
appeared t o be the sense of the conference that changes in the
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Federal Reserve Bank of St. Louis
19
law affecting the reserves o f member banks should b e made a s
infrequently a s possible, a n d it was therefore
VOTED t h a t t h e conference should recommend t o the
Federal Reserve Board that no action should b e taken t o revise
the present list o f reserve cities unless o r until the whole
subject o f reserves i s given further consideration, with a
view of providing for all of the present inconsistencies.
(See pages 242 - 249 stemographic record)
TOPIC IV. A. Reserves o f member banks.
7. D e s i r a b i l i t y o f recommending
legislation amending section
19 of F, R, Act relating t o
required reserves o f member
banks and of writing into law
a complete definition (along
lines o f the Board's Regulation BD) of what constitutes
savings and other time deposits.
(See also paragraphs 24, 46 and 47)
The discussion o f this topic w a s postponed until t o -
morrow (see paragraph 46) i n order to give some members of the
conference a n opportunity t o study the memorandum submitted b y
the Federal Reserve Board which had been received too late t o
permit o f its study before the conference.
(See pages 249 ~ 250 stenographic record)
TOPIC IV, B, Should not Section 13 of the F. R. Act
be amended t o conform t o Section 5200
of Revised Statutes a s amended b y
McFadden Act.
Governor Bailey referred t o the fact that a t the
present time i t is possible for a national bank, under the
terms o f Section 5200, a s amended b y the McFadden Act, under
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Federal Reserve Bank of St. Louis
20
certain conditions, t o lend a s much a s 25 per cent o f its
capital a n d surplus o n live stock paper, but that under the
terms o f section 1 3 of the Federal Reserve Act, the Reserve
bank could discount only 10 per cent o f such paper,
Governor Bailey thereupon made a motion, which was
seconded, t h a t i t i s t h e sense o f t h e conference t h a t t h e
Federal Reserve Board should b e asked t o urge the amendment
ofsection 13 of the Federal Reserve Act so as to make eligible for discount a s much o f this character o f paper a s is
made a legal loan under the terms of Section 5200, a s amended
by the MeFadden Act,
There was considerable discussion o f the proposed
resolution, i n which it was pointed out that the 10 per cent
limit o f section 1 3 was considered a conservative limit o n any
one borrower's neme for the Federal Reserve bank to discount,
and that regardless of the goomdmess of the paper in question
there would b e n o more reason t o extend t h e 1 0 per cent limit
of section 1 3 for this class o f paper than for
many o f the
other classes o f paper made eligible under t h e present pro-
visions o f section 5200,
Governor Talley offered the following motion as a
substitute for Governor Bailey's resolution:
es
t h e Federal Reserve Board should b e asked t o
make some special s t u d y o f t h e provisions o f section 5200,
as amended, i n relation t o the 10 per cent limit o f seetion 13,
with a view t o seeing whether any anéndment t o the law might
be n e c o
e
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Federal Reserve Bank of St. Louis
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This motion was not seconded. Governor Bailey's
motion was then voted upon, being def cated b y ten votes t o
twos Governors Bailey and Talley voted in the affirmative.
(See pages 251 = 277 stenogrephic record)
TOPIC ive GC. Report o f Leased Wire Committec.
The repert o f the committee was read t o the con+
ference b y Governor McDougal, a n d upon motion i t
was duly
VOTED t h a t the report of the Leaged Wire Committee
be accepted and filed,
(See pages 277 - 278 stenographic record)
TOPIC WV. D. Report of Insurance Committec.
(
3
2
)
The report of the Insurance Committee, stating that
no new matters had been referred to it since the
last conf erMee, w a s accepted and ordered t o be placed o n
file.
(See pages 278 = 279 stenographic record)
TOPIC IV. E. Report of Pension Committee.
(
In considering the report of the Pension Committees
(printed on pages 279 - 291 stenogrephic record), Governor
Fancher, a member of the committee, informed the
conference
concerning the legislative history of the bill during
the
current session o f Congress, A f t e r some discussion,
i t was
duly
VOTED t h a t the report o f the committee
b e accepted
and filed,
(See pages 279 - 292 stenographic record)
3
3
)
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Federal Reserve Bank of St. Louis
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TOPIC IV. F, R e p o r t o f Subcommittee o f General
Committee o n Bankers Acceptances.
Upon motion i t was duly
VOTED t h a t the report of the Subcommittee of the
General Committee o n Bankers Acceptances (printed o n pages
292 = 296 stenographic record) b e accepted and that the attention o f the Federal Reserve Board should b e called t o the
fact that t h e recommendations o f t h e General Committee o n
Bankers Acceptances relative t o domestic acceptance credits,
submitted to the a o e
i
n March 1926 (printed o n pages
378 =378 stenographie record o f that conference) a r e still
undisposed of by the Federal Reserve Board.
(See pages 292 = 297 stenographic record)
TOPIC V. A. W h y State banks d o not enter System i n
greater numbers.
Governor Harding discussed various reasons why State
banks do not enter the Federal Reserve System in greater numbers,
and indicated that one of the most serious obstacles t o member-
ship at the present time is the difference between the reserve
requirements o f various State laws and those of the Federal Re-
serve Act. H e indicated that while the obvious remedy would
be to have the several States adopt the same reserve requirements o n time and savings incite a s those now contained i n
the Federal Reserve Act, nevertheless i t was not probabie that
such amendments could be procured, Other members of the conference gave their views a s to the reasons why State banks and
trust companies d o not wish t o join the System and agreed that
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Federal Reserve Bank of St. Louis
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this question i s a n important one that should b e kept i n
mind constantly.
The topic was passed without action.
(See pages 297 = 318 stenographic record)
TOPIC V . B . Violation o f regulations a n d conditions o f membership b y State menber banks.
While no formal action was taken o n this topic, i t
was suggested by Governor Calkins that great care should be
exercised i n not placing undue emphasis upon minor violations
of regulations o r conditions o f menbership b y State member
banks when such regulations o r conditions e r e not applicable
in equal degree t o national bank members.
(See pages 318 = 319 stenographic record)
TOPIC V . C. P r o c e esure with reference t o termination
hip o f d e s i r a b l e banks
There was a brief diseussion o f this topic b y members
of the conference, w h o stated that i n general they believed i t
better t e give undesirable State member banks a n opportunity
to
withdraw from membership i n the Federal Reserve System than to
force t h e m t o cancel their membership.
(See pages 219 = 323 stenographic record)
At 6 p.m. the conference adjourned to reconvene at
10 a. me o n Wednesday, M a y 2,
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Third Day's Session, Wednesday, May 2.
Morning
The meeting was called t o order a t 10 a, m.
Topic i. D. Relations with foreign benks.
1s R e p o r t .
Mr. Harrison discussed {off the record) the status
of t h e various foreign accounts, referring particularly
to
the changes in those accounts during the course of the past
year end generally to conditions abroad, especially in those
countries which have stabilized their currencies during the
course o f the year.
H e alse discussed with the conference
the responsibility o f the Federal Reserve banks with reference
to the various classes o f investments made b y thom for foreign
account and stated that he would send each governor a letter
concerning the contingent liability assumedy
b the Federal Reserve banks o n account of bills bought for foreign account as
well a s the obligation o f the Reserve banks t o repurchase bilis
or government securities bought for foreign account.
TOPIC J..D. Relations with foreign banks.
2. I n c o m e and expense of operation
of foreign accounts.
Mr. Harrison discussed the present method of apportioning the income received from the operation of the foreign
account.
T h e gevernors present informally expressed their gen-
eral approval o f the existing procedure a n d agreed with t h e suge
gestion made that other items might properly be included i n the
amount o f expense deductible f r o m t h e income apportioned ameng
all Federal Reserve banks.
(See page 326 stenographic record)
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Federal Reserve Bank of St. Louis
TOPIC i. C. Gold,
Mr. Harrison discussed off the record the importance
of considering the System's future credit policies i n the
light of the various aspects of the gold problem; present
and future supplies, t h e distribution between nations, t h e
effect o f the gold exchange standard upon our own reserves,
and such other monetary considerations a s the future disposi-
tion of the national bank cireulation, the gold certificate
circulation, t h e effectiveness o f the gold settlement fund,
and the distribution of the different kinds of gold reserves
among the various Federal Reserve benks.
TOPIC I. E, Development of investment companies for
urthase o f bank stocks.
e e
w a s a long diseussion (much of it off the
record) concerning the development of investment companies
for the purchase o f bank stocks i n the different Federal Re-
serve districts. While it appeared that this movement has
not a s yet made much headway i n some districts, n e v ertheless
it appeared t o b e the consensus o f opinion t h a t t h e mov ement
which has already progressed rapidly i n certain districts will v e r y likely spread t o others a n d that i t i s a matter
that deserves most thoughtful c o n s i d e r a t i o n ”
(See pages 327 + 333 stenographic record)
( 4 1 )
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Federal Reserve Bank of St. Louis
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“TOPIC I. F. Suggested changes in form of bankers
( 4 2 )
acceptances t o eliminate any guestion
as t o negotiability growing out-of d e -
cision o f Supreme Court o f Texas i n
case o f Lane Company v. Crum (See recommendations o f Conference o f Counsel,
es 1 and 2 of record o f Conference
of Counsel (X-5078) .
A l s o corre spon-
dence o n this subject X-4880 and
X-4975)
Upon motion o f Mr. Case i t was duly
VOTED + o approve the recommendations o f the conference
ofcounsel as set forth o n page two of the record of the conference of counsel (X-5078).
(See pages 333 ~ 336 stenographic record)
TOPIC VI. B. Undesirability of curtailing services ( 4 3 )
rendered member banks i n view of
criticisms m a d e b y banks a n d others.
(See paragraph 15)
Upon the suggestion of Mr. Case this topic was passed
without action because t h o questions which h e had had i n mind
inproposing the topic wore disposed of by the adoption of the
report of tho Standing Committee on Collections.
(See page 336 stenographic rocord)
Topic VI, A. S h o u l d a classification o f Unitod
‘Statos securitios hold b y the Fod=
eral Resorve Banks i n t o
Held i n special investment account
(b) Held under repurchase agreement, ond
{c) A l l othor.,
be substitutod i n tho Board's wockly press
stetanont f o r t h e present classification
Upon motion i t was duly
VOTED
+ o b e the sense o f t h e conference t h a t i t would
be unwise, f o r the reasons set forth i n the memorandum presented
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tothe conference (printed on pages 337 « 340 stenographic
record) further t o reclassify United States securities held
by Federal Reserve banks i n the published weekly statement.
(See pages 337 - 341 stenographic record)
revision of the Functional Fxpense Report
P
r
o
p
o
s
e
d
{Federal Reserve Board Form E).
Governor Calkins reported the receipt of a memorandum
from Mr. Smead t o the offect that the matters referred t o him
and Mr. Rounds, in accordance with the action taken by the
November 1927 conference (see paragraphs 30 and 36 of the secretary's minutes o f that conference) a r e still under consider~
ation by himself and Mr. Rounds, and that it will be necessary
to give further study t o the matter before a report can b e pre
sented,
A s suggested b y Mr. Smead, i t was understood that h e
and Mr. Rounds would continue their investigations with a view
of filing a report before the fall Conference o f Governors.
(Sec pages 341 - 342 stenographic record)
TOPIC IV. A . R e s e r v e s o f member banks.
7. D e s i r a b i l i t y o f recommending J e g ~
islation amending section 19 o f
F.R, Act relating t o required
reserves of member banks and of
writing into law a complete definition (along lines of the
Board's regulation D) of what
constitutes savings and other
time deposits.
(See paragraphs 2 4 and 29)
While it was the feeling of many of the governors present
that they had not had adequate opportunity carefully t o study the
memoranda presented t o them b y the Federal Reserve Board concerning the possible amendment o f section 1 9 of the Federal Reserve
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Federal Reserve Bank of St. Louis
28
Act (see Board lettor X-6015 dated April 12, 1928 together
with enclosures St. 5420 and X-5090-c), and while the con«
ference was o f the opinion that i t would b e inadvisable a t
the present time to seek legislation amending the reserve
provisions o f the Federal Reserve Act, nevertheless i t was
duly
VOTED t o express t o the Federal Reserve Board the
individual opinions o f t h e governors present, w i t h respect
tothe terms of the bill (X-5090ec) submitted by the Federal
Reserve Board for consideration a s a n amendment t o section
19 of the Federal Reserve Act,
(See pages 343 - 359 stenographic record)
The views o f the individual members o f the conference
with respect to the different paragraphs o f the suggested draft
of bill were substantially a s follows:
(a) E a c h governor present agreed with paragraphs one and two.
(b) Eight govermers were in favor and four
governors w e r e opposed t o t h e terms o f
paragraphs three and four relative t o
the definition of the term "savings accounts,”
Each governor felt that the terms of
sub-paragraph (3) of paragraph five
should be amended to read as follows:
"(3) After written notice which
the bank must require to be
given n o t less t h a n thirty
deys before the day of repayment: and";
With this emendment all the governors
agreed with the terms of parngraph five.
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Federal Reserve Bank of St. Louis
29
Each governor agreed with the terms
of parographs six, seven, eight and
nine,
In considoring t h e torms o f paragraph
ton, w h i c h fixes t h e amount o f rosorves
to be carried against the different
classes ef deposits, Mr. Case moved
that the proposed 9 per cont reserve
to be carried b y banks i n reserve
cities against net demand deposits,
should b e increased from 9 por cent
to 1 0 per cent.
T h e motion w a s lost
by a vote of seven to five. A l l the
governors present t h o n voted f o r t h e
terms o f paragraph ten a s drafted.
tn considering the terms o f paragraph
oleven, i t was agreed that the phrase
“and other banks" after the words "all
cash items deposited by them with Federal Resorve banks" should be eliminated. W i t h this amendment, t e n governors voted i n favor o f paragraph oleven,
Governors Talley and Seay having requested to b e recorded a s not voting.
(g) A l l the governors presont were in favor
of the terms o f paragraphs twolve, thirtoon, fourteen and fifteen.
(Soe pages 359 = 408 stenographic record)
TOPIC I. A. O p e n Market Oporations.
1, Report o f Opom Market Investment
Committeo.
See paragraph 2
Upon roquest of Governor Calkins, Mr. Harrison road
to the conference a letter dated May 2, received by Mr. Case from
Governor Young, i n which h e advised o f the action o f the Federal
Reservo Board relative to the report of the Open Markot Investment Committec,
At 1 p. m. the conforonce adjourned t o reconvene a t
3 p.m.
i n joint session with the Foderal Reserve Board,
George L, Harrison,
Secrotary,.
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Federal Reserve Bank of St. Louis