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Secretary's Minutes
G O V E R N O R S
C O N F E R E N C E
April 6 - 8, 1925
Washington, D . ©,
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A
R
B
R
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Federal Reserve Bank of St. Louis
INDEX T O SECRETARY'S MINUTES
GOVERNORS CONFERENCE
APRIL 6 ~ 8, 1925
Paragraph i n
Secretary's
Minutes
Acceptances b o u g h t b y Open Market Investment Committee, Apport d o n m e n t
O
f
m w
w e
m e
m e
m e
m
e
m e
m
e
n e
w e
w e e
13, 1 4
e
Advisability o f greater latitude f o r F. R . Banks i n open market
transactions u p t o o r until t h e y have earned their overhead
e x p e n s e s
F
e
S
e
O
e | ae S e e e
7,13, 14
e e e
American Acceptance Council, Membership i n =
= = 0 w 0 a
wo =
American Bankers Association, Membership i n = ~ = - — = = = = =
Apportionment o f Acceptances bought b y Open Market Investment —
O
E
e
S
e
k as
e
h
h
,
a e
e e
e e
4 k ae a e as i
w
Bankers Acceptances, Report o f sub-committee o f General Committee
Cre G e Ga Oey: Lap. Sees. e a e a
p
e ok ee lem ek ta tae See aw sag e s ee ene
Bill o f Lading drafts, Instructions f o r handling ~
~ ~ - « «= « =
Capital Grain and Feed Company vs. F. R. Bank of Atlanta - - = =
Cash Items
Direct sendings o f cach items -« ~ . . = =
Limit, o n dollar amount o f cash items sent direct b y member bank
inone district to a F, R, Bank in another district - +--+ -Checks over $500, Costs of telegraphic advice of non-payment of Circulation, Advisability o f continuing t o maintain i n circulation approximately amount o f gold certificates n o w outstanding
Collateral pledged to secure Special Deposit Accounts, Do F, R.
Banks guaranty the Treasury o = = o
w w we me wm e e
Collection o f charges ineurred i n handling securities forwarded
py insured registered mail o r express +
« = e e w e me we we e e
Collections
Cash items, Should F , R. Banks handle a s cash items drafts
drawn b y a corporation o n itself o r its treasurer a n d items
of similar nature, e v e n though t h e y bear notation "payable
at" o r “payable through" a specified bank «=» « = « s e =
Collection o f charges incurred i n h a n d l i n g f
o bonds, coupons,
and negotiable securities forwarded b y insured registered
m e we we oe we ge we we we we we ae ae we od me tt me me we
mail o F @XPPESS @
Direct sending o f non-cash collection items -~- ~ ~
= e # - =
Direct sendings of cash items ~ o oe we an we opne oe me me me me ne me me
Limit on dollar amount of cash iteme sent direct by member bank
in one district to a F, R. Bank i n another district + « = « =
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Federal Reserve Bank of St. Louis
29
30
Paragraph i n
Secretary's
Minutes
Limit o n Federal reserve exchange drafts - = = < =
= ms « e e |
49, 5 0
Non-cash collections - - - + - - - e c e e e e e e n n e r e nw ee = | 31, 92, 3 6
Procedure i n handling collection o f coupons forwarded b y member
banks o f other districts o r b y other F. R, Banks ~ ~ -~- + = +
Report o f Standing Committee o n Collections =
= - = = «= =
Service charge o n returned transit items —- « «=< -«« = . = = =
Uniform
endorsement
non-cash
o f
i t e m s
a m e ,
tea
o n es
g
e
5
3
5
4
4
3 - 40
1
1
Committees
Committee o n Standardization and Purchase of Supplies
S R a rtaCe C a e l C106
i n i
Leased Wire Committee
A
e
e e
e
e i
~ - ee ow ew = -
Open Market Investment Committee ~
2
8
we -
a
-
- - = ”
~
o
2
.
2,7,13,14,15
Pension Committee —
~ = w w e e we me mo “
“ ~
Standing Committee o n Collections ~ ~ - =e w w e n e o
Sub-committee o f General Committee o n Bankers Acceptances
Cost o f securing reports o f examination o f national banks ~
3
2
3
e
7
3 = 40
e
+
1
7
Costs of telegraphic advice of non-payment of checks over $500
4
6
Coupons forwarded b y member banks o f other districts o r b y other
F,R. Banks, Procedure in handling ~«+ - +--+
Credit,
P r o b l e m
o f
F a r m
w
e w e ae
w e
e e e e ge e t ee
P w
e w ea n u n
ome 8k e m e a e
Custody of securities for account o f member banks i n other
D i s t r i c t s
e
l
Direct Sendings
Cash items, Direct sendings o f «= = = w= ee e m w e m a w
Cash items, Limit o n dollar amount sent direct b y member
in one district to a F. R, Bank in another district Instructions i n letters transmitting items sent direct Non-cash collection items, Direct sending o f « ~ ~ . + -
Discount Rate, Recent change at New York ~ ~ -+ -~+=-—~+Elimination o r consolidation o f current reports b y F. R. Banks
the FoR Rhee oe 6
a
g e& S i S
o e
e e
Examination o f national banks, Cost o f securing reports o f
Exceptions, Semiemonthly statements o f « = = + - me we =
Exchange drafts, Limit o n
o w o o we me we
Expenses, Advisability o f Open Market transactions t o earn
Farm Credit, Problem of =
= # et = wm m e
m
e
Federal Reserve System, Policy concerning legislation affecting
SYSTEM
o r w e e e o e w e w e m e g e w e m e w e w e w e w e m e w e w e w e w e w e a e w e m e m e ee w e m e o e
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes
Foreign Accounts
Reapportionment o f Foreign Accounts o - o os we ee be oe oe ce oe te ie
Report o n Foreign Accounts
- 0 wo a w m m e a we we me we me me we os
Formulation o f Program for Governors Conference -- = ~ - - = = =
Free Services for member banks, System policy when earnings are
low o r insufficient t o cover overhead a n d dividends ~
= = = =
Gold Payments
Advisability o f continuing t o maintain i n circulation approxi-
mately the amount o f certificates n o w outstanding ~ -- = « =
Supply of hand-to-hand gold i n each Federal Reserve Bank = «
Government securities, Should F, R, Banks b e permitted t o buy
from member banks and Federal Land Banks with repurchase
ALTESMENT w r me we we we we me oe we ae we we we we oe oe oe we we we ewe
Governors Conference, Formulation o f Program -
+ - = = =
Instructions f o r handling Bill o f Lading drafts
Instructions i n letters transmitting items sent
Insurance Committee, Report o f +
+
Inter-bank fidelity insurance ~
Insurance contracts -
-
«= « « - « . «=
Leased Wire Committee, Report o f - -
Leased Wires
Report o f Leased Wire Committee - a on oan we ae we we me we ne me me we
When ‘leased wires are unavailable should F. R. Banks charge t o
requesting member banks cost o f telegrams sent over commero o oF we we oe me ae oe me we we oe
Clal wWireS
Legislation, Policy of F. R. System concerning legislation
m w we me me oe oe ne we ae me ee te ee ne ee
affecting System 2
Legislative Committee - - ~ ~ + ee w e e w
e w e
e
Limit o n dollar amount o f cash items sent direct b y member bank
in one district t o a F. R. Bank i n another district - -—~««—- ~
McFadden Bills
H, R. 8887 ~
Enlarging powers o f national banks -
= + = = =
H, R.,12453 - Repealing certain so-called war-time amendments
to the Federal Reserve Act relative t o reserves and note
issues
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Federal Reserve Bank of St. Louis
e
d
a
d
Paragraph i n
Secretary's
Minutes -
Member banks i n other F, R, Districts, Custody o f securities
for account o f ~ ~ ~ - +
20
Membership i n American Acceptance Council and’ American Bankers
Association
g
s
a s e e o ea
e e OS S r e e
Misrouting transit i t e m s -
« — —- e w w e e e
National Banks
Cost o f securing reports o f examination
w e e
52
= es
17
- — + «.
e e e e ee
Nons@ach Coliontrons!= = l e «i'n = e e e an S e
Direct sending o f non-cash collection items + + + < = ¢
Uniform endorsement o f non-cash items = = « «= - = » t o x
31, 32, 36
55
4l
Non-payment of checks over $500, Costs of telegraphic advice of
46
n n nnn wee
wo cewe
Open Market Operations ~ - -
2,7,13,14,15
ee a
Advisability o f greater latitude for F. R, Banks i n open mar-
7,13, 14
ket operations u p t o o r until t h e y earn overhead expenses +
Apportionment o f acceptances bought b y Open Market Investment
C o m m i t t e e
-
7
s e
w e
w e
e e
a e
e e le
lee
l l e
l e l
Reapportionment o f foreign accounts =
S l e e
l l e
l
e
Report o f Open Market Investment Committee + - - + .
Pension Committee, R e p o r t o f = « = wo w w w e e m
PORCH
R e d ee co eran od ns os ee
e
e
lee
e l e
e e
e e
-- «+ ew ee e w w e e m
-
+
27
ee
61
e
Procedure i n handling collection o f coupons forwarded b y
banks o f other F. R. Districts o r by other F. R, Banks
Program for Governors Conference, Formulation of ~ + = «
Reapportionment o f Foreign Accounts -
= + = w o w e me we me we
Reimbursement for services performed b y F. R, Bank of N, Y, for
account o f other F . R. Banks o
we m oe oe me we we we oe me we we we oe we
Reports b y F, R, Banks t o Federal Reserve Board, Elimination o r
consolidation -of ~- « e e
w w e
n e n
e
e
we
Reports o f examination, Cost o f securing » = « e e
a e eee
<= =
Reports
Committee o n Standardization and Purchase o f Supplies
Foreign Accounts
o e t e a ae we oe me e e
e m
i
- «+ = o = « Insurance Committee +
Leased Wire Committee - —= = = = ~
Open Market Investment Committee
- eww ~ ~
Pension Committee Standing Committee o n Collections ~
Sub-committee o f General Committee o n Bankers Acceptances
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Federal Reserve Bank of St. Louis
13, 14
15
13, 14
e e
Paragraph i n
Secretary's
Minutes
Repurchase Agreements
Federal Reserve Board's resolution referred to in Board’s
letter dated March 6, 1925 — oo ec wwe me me we we ee wm
Should F. R, Banks b e permitted t o buy Government securities
from member banks and Federal Land Banks with repurchase
agreement f o r periods a s long a s 90 days ~s# e e e e e e w e
Securities for account o f member banks i n other F. R, Districts,
we
Custody o f « - D e w ewer wri nowr een w a n e e n e r +
Semi-monthly statement o f exceptions «
=
»
om
e
Service charge o n returned transit items - ~ « -~««- e
w
w w
«eww ©
Services performed b y F, R. Bank o f N. Y, for account o f other
banks, Reimbursement for « - 2 a m w w o m e me we we me me ee
Special Deposit Accounts, D o F. R. Banks guarantee t o Treasury
collateral
p l e d g e d
t o SECUFRQ
Standard Silver Dollars +
- - «= ww oe os we am co we ae we ee me we me te
= oe wo oe we we we we we me we me ce we we we me
Standing Committee o n Collections, Appreciation o f work o f
Standing Committee o n Collections, Report o f +
- - «=~
Statements o f exceptions, Semi-monthly ~ = oem o w e w w =
System policy with regard to maintenance of free services for
member banks a t times when earnings o f F, R. Banks are low or
insufficient t o cover overhead and dividend requirements + = =
Telegraphic advice of non-payments of checks over $500, Costs of
Telegraphic Transfers
Should F, R. Banks charge to requesting member banks cost of
telegrams sent over commercial wires when leased wires are
u n a v a i l a b l e
Transfer Drafts
e
e ©
w e ae w e as os o f os G6 @ 6 @
w e a e o f G e es w s s e o e o F S F oe
w o 25 m m me wm oe we we me we
Transit Items
Misrouting transit items - «© «© - =. =
=
Service charge o n returned transit items
Uniform endorsement o f non-cash items -
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Federal Reserve Bank of St. Louis
=
PROGRAM
GOVERNOR
S '
C O N F E R
APRIL 6, 1925
Washington, D . C.
CREDIT TRANSACTIONS A N D POLICIES
A. O p e n Market Operations.
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Federal Reserve Bank of St. Louis
1. Report o f Open Market Investment Committee.
2. Organization o f Open Market Investment
Committee 3. A p p o r t i o n m e n t o f Acceptances Bought b y
Committee.
Recent Discount Rate Change a t New York.
Resumption o f Gold Payments b y Europe.
Problem o f Farm Credit.
(
D
i
s
(Discussion)
c
u
s
Repurchase Agreements.
1. Federal Reserve Board's Resolution
referred t o i n Board's letter
dated March 6, 1925,
C
h
s
i
i
o
c
n
)
a
g
o
2, S h o u l d Federal Reserve Banks b e per-
mitted t o buy Government securities
from member banks a n d Federal L a n d
Banks with a repurchase agreement
for periods a s long a s 9 0 days.
Advisability o f greater latitude f o r Federal
Reserve Banks i n their open market transactions u p to o r until they have earned their
overhead expenses.
( D i s c u s s i o n )
System policy with regard t o maintenance o f
free services f o r member banks a t times
when the earnings o f the Federal Reserve
Banks are low or insufficient t o cover
overhead and dividend requirements.
K
a
n
s
a
c City
Chicago
Report o n Foreign Accounte,
N
Report o f sub-committee o f General Committee
on Bankers Acceptances,
e
w York
COLLECTIONS AND CLEARINGS
A. R e p o r t o f Standing Committee o n Collections,
B. U n i f o r m endorsement o f non-cash items,
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Federal Reserve Bank of St. Louis
Recommended :
That s o m e action b e taken t o make effective
the recommendations o f the Conference o f
Counsel o f the Federal Reserve Banks a t
their meeting o n December 5, 1924, with
particular reference t o the question o f
uniform endorsement o f non-cash items.
K
a
n
s
a
s City
Limit o n Federal Reserve exchange drafts.
Recommended
That the $5,000 maximum limit on Federal
Reserve exchange drafts be removed. C l e v e l a n d
Service charge o n returned transit items.
Recommended ¢ :
.
That o n and after May 1, 1925, Federal
Reserve Banke should m a k e a
service
charge o f 10¢ per item o n all retumed
Minneapolis
transit items,
Should Federal Reserve Banke handle a s cash
iteme drafts d r a m b y a corporation o n it~
self o r ite treasurer and items o f similar
nature, even though such items bear the
notation “payable at" o r “payable through"
(Discussion) Dallas
a specified bank.
Procedure i n handling collection of coupons
forwarded b y member banks o f other dis-
tricts or by other Federal Reserve Banks. (Diecussion) New York
COIN, CURRENCY AND CIRCULATION
A. G o l d Payments,
(Discussion) New York
1. A d v i s a b i l i t y o f continuing f o r t h e
present t o maintain i n circulation
approximately the amount o f certi~
ficates n o w outstanding.
2.Supply of available hand to hand gold.
in each Federal Reserve Bank.
OPERATION
A. Formulation of Program for Governors Conference, ‘
B. C o s t o f securing reports o f examination o f
national banks,
C. Elimination or consolidation of current reports
by Federal Reserve Banke t o the Federal Reserve
Board.
- New York
Custody o f securities f o r account o f member banks i n other
Federal Reserve Districts,
New York
Semi-monthly statements o f exceptions.
Recommended :
That t h e Federal Reserve Banks discontinue sending e a c h
other semi-monthly statements o f open exceptions i n
their respective accounts.
Cleveland
McFadden Bills,
1. H , R, 8887 + Enlargine powers o f national banks.
2. H , R,12453 - Repealing certain so-called war-time amendments t o the Federal Reserve Act relative t o reserves
and note issues,
P i e Board
Should Federal Reserve Banks pass o n to the requesting member ~
banks the cost o f telegrams sent over commercial wires representing transfere o f funds when the leased wires are une available because o f storms o r other interruptions.
The Leased Wire Committee i n May, 1924, recommended that
when the leased wires are unavailable because o f storms
or other interruptions, a n y requests f o r transfers t o
be made o v e r commercial wires should b e accepted a t the
expense o f the requesting member bank, a n d this topic
ie proposed because there i s not now a uniform procedure
in the several Federal Reserve Districts regarding this
matter.
Report o f Leased Wire Committee,
Report o f Insurance Committee.
Report o f Pension Committee.
Membership i n American Acceptance Council and American Bankers
Association.
F, R, Board
The Federal Reserve Board i n its letter o f February 5,
1925, X~-4263, requested that the viewe o f the directors
of the Federal Reserve Banks w i t h reference t o continu-ing membership i n these t w o associations b e reported t o
the Conference,
Collection o f aetual charges incurred i n handling o f bonds,
coupons, a n d negotiable securities forwarded b y insured
registered mail o r express,
Recommended :
That a uniform procedure b e adopted b y the Federal
Reserve Banke regarding the collection o f actual
charges incurred i n the handling o f bonds, coupons,
and negotiable securities forwarded b y insured
registered mail o r express,
Cleveland
FISCAL AGENCY
As D o Federal Reserve Banks suarantee t o the Treasury o f the
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Federal Reserve Bank of St. Louis
United States collateral pledged t o secure Special Deposit
Accounts.
Atlanta
G O V E R N O R S
C O N F E R E N C E
April 6 = 8, 1925
Washington, D.C.
First Day's Session, Monday, A p r i l 6
Morning
The meeting was called t o order a t 10:00 o'clock a. nm.
Present:
Governor Crissinger.
Governors Harding, Strong, Norris, Fancher,
Seay, Wellborn, McDougal, Biggs, Young,
Bailey, McKinney and Calkins.
Mr. Harrison, Secretary.
Governor Crissinger addressed the conference with respect to
what should b e the policy o f the Federal Reserve System concerning legis-~
lation affecting t h e Federal Reserve S y s t e m a n d banking matters generally.
He referred t o the importance of having only wise and proper legislation
passed b y Congress, a n d suggested that the conference consider appointing
a committee t o study the whole question o f banking legislation with
particular reference t o the proposed McFadden bills, a n d to suggest what
might be the proper course for the Federal Reserve System to pursue without
subjecting the System to the criticism that it is trying unduly to dictate
legislation. Governor Crissinger concluded by saying that the board would,
of course, b e willing t o cooperate with the committee i n whatever might b e
necessary t o be done.
(See also paragraphs 12 and 19.)
After Governor Crissinger withdrew from the meeting there was an
informal discussion o f his proposal. “While i t was felt that something
should b e done a l o n g t h e line s u g g e s t e d , e
m
o
s o f those present expressed t h e
Opinion that rather than have the Governors Conference appoint a committee
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Federal Reserve Bank of St. Louis
representing the banks, i t would be better t o have the Federal Reserve
Board appoint a committee o f the Governors a n d Chairmen t o act a s a
committee o f the Board and t o report t o the board.
(See pages 2 - 12 stenographic record.)
Topic I . A . O p e n Market Operations.
(See also paragraphs 13, 14, and 15.)
This topic was passed until after the Open Market Investment
Committee might have a n opportunity t o submit its report.
(See page 12 stenographic record.)
Topic I. 5. R e c e n t Discount Rate Change a t New York.
Governor Strong briefly reviewed the conditions prevailing i n
the New York money market a t the time of, and the reasons prompting, t h e
pesaat raise i n the rediscount rate o f the Federal Keserve bank o f New
York,
(See pages 1 2 = 23 stenographic record.)
Topic 1. D. Problem of Farm Credit.
This tepic was passed pending discussion o f the McFadden bills.
(See page 2 4 stenographic record.)
Topic I . E. 1 . R e p u r c h a s e Agreements
1. Federal Reserve board's Resolution
referred to in board's letter
dated March 6, 1925.
After informal discussion, this topic was passed without action.
(See pages 25 = 26 stenographic record)
Topic I
. EB. 2. Repurchase Agreenenits
,
;
2: Should Federal Reserve banks be
permitted t o buy Government
securities from member banks
and Federal Land Banks with a
repurchase agreement for
periods a s long as 90 days.
After informal discussion, this topic was passed o n request o f
Governor Bailey.
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Federal Reserve Bank of St. Louis
(See page 26 stenographic record.)
Topic I , F. A d v i s a b i l i t y o f greater latitude f o r Federal
Reserve Banks i n their o p e n market transactions u p t o o r until t h e y have earned
their overhead cxpenses.
(See also paragraphs 1 3 and 14)
Governor Bailey called attention t o the fact that the Foderal
Reserve Bank o f Kansas City i s not a t the present time earning its expenses, a n d raised the question whether i t might properly buy bills o r
long-term Government securities i n the open market without reference t o
the Open Market Investment Comnittee. There was a general discussion by
the conference t o the effect that all Federal reserve banks melt properly
buy bills from their o w members whether they originate within the district o r not, a n d may buy bills elon from dealers i f the bills originate
within t h e district o f the buying Reserve bank.
I t was pointed o u t that
the purpose o f the Open Market Investment Committee i s to d o the System
buying f r o m dealers o f general o p e n market bills.
S o f a r a s Government
securities are concerned, i t was pointed out that while a Federal reserve
bank may unquestionably buy from their own member banks without going
through t h e Committee, nevertheless, t h e present understanding i s that
no other purchases o f Government securities will b e made except through
the Committee. Governor Strong then referred t o the fact that the Open
Market Investment Committee proposed a t this conference t o recommend a
redistribution o f its present holdings f o r the purpose o f meeting j u s t
such a difficulty a s that t o which Governor Bailey had referred.
I t was
accordingly
VOTED that this feature of the topic be deferred until after
the meeting o f the Open Market Investment Committee.
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Federal Reserve Bank of St. Louis
(See pages 26 - 53 stenographic record)
Topic I1.G. S y s t e m policy with regard t o maintenance o f
free services f o r member banks a t tines
when the carnings o f the Federal Reserve
Banks are low o r insufficient t o cover
overhead a n d dividend requirements,
Governor Bailey again referred t o the fact that the Federal Reserve Bank o f Kansas City i s not now earning its expenses a n d that while
he has n o objection whatsoever t o a continuation o f free services i f the
Federal reserve banks ean earn expenses, nevertheless the present earning
power o f his bank i s not sufficient t o d o so.
I t was stated b y other
members o f the conference that i n their opinion tthe System a s a whole
will always earn expenses ovep a period o f years, a n d that most o f the
Reserve banks, a n d c e r t a i n l y t
h
e System a s a whole, would probably d o s o
even for the current calendar year.
I t was then generally agreed that i t
would b e inadvisable for the System t o change its policy o n the question
_of free services merely because o f the fact that one o r two o f the Reserve
banks might n o t just n o w b e earning expenses.
T h i s w a s felt t o b e par-
ticularly true i n view of the centerpleted reapportionment o f the System's
open market investments.
G o v e r n o r S t r o n g t h e n stated t h a t i n his opinion,
it would b e a mistake either t o eliminate o r place a charge upon any o f
the present free services a t a time w h e n member b a n k earnings a r e l o w a n d
losses are large and added that i t was t o meet the difficulty presented
by Governor Bailey that the Open Market Investment Committee intended t o
suggest a reapportionment o f the present holdings o f the Committee.
Governors McDougal and Bailey stated that the discussion o f this topic
and the proposed reapportionment o f the Committee's holdings w a s sufficient
a cover what they had i n mind.
N e action was asked for.
(See pages 53 = 79 stenographic record.)
Topic I. H. Report o n Foreign Accounts
(See also paragraph 15)
Upon request o f Governor Strong this topic was referred t o the
Open Market Investment Committee, with a request t o report back t o the
conference,
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Federal Reserve Bank of St. Louis
(See page 79 stenographic record.)
Topic I. I. Report of sub-committee o f General Conmittes
on bankers Acceptances.
Upon motion o f Governor Young, i t was
VOTED t o receive, approve a n d file this report.
(See pages 79 = 82 stenographic record.)
At 12:45 o'clock p. m. the conference adjourned i n order t o
permit the Open Market Investment Committee t o meet, before the Conference reconvened a t 2:30 o'clock p. m.
First Day's Session, Monday, April 6, 1925
Afternoon
The meeting was called t o order a t 2:45 o'clock p. m,
Appointment o f Committce t o Study Legislative Matters
(See also paragraphs 1 and 19.)
Governor Strong reported that the Open Market Investment Conmittee had discussed the suggestion o f Governor Crissinger with respect t o
the appointment o f a committee t o study legislative matters and recommended:
First, that the conference impress upon the Federal Reserve board
its view of the importance o f having the Federal Reserve board and the
System take a
definite affirmative position i n matters o f legislation
directly o r indirectly affecting the Federal heserve System,
Second, that the Federal Reserve board b e requested t o appoint a
System committce t o make athorough s t u d y o f such matters a n d t o advise
with the board i n regard t o the best method o f dealing with the so-called
McFadden bills o r other banking legislation. Governors Harding, Young,
Seay a n d Strong, a n d Chairmen iJills a n d Telley were suggested a s possible
members o f such a committee,
Third, that Dr. Stewart o f the Federal Reserve Board b e associated
with t h e work o f t h e committee.
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Federal Reserve Bank of St. Louis
Fourth, that Professor Sprague, o f Harvard University, b e asscciated w i t h t h e committee i n some s e r t o f a n advisory capacity a n d
Fifth, that steps b e taken t o secure the participation o f the
Comptroller o f t h e Currency.
Upon motion of Governor Bailey, i t was
VOTED t a approve all o f the above recommendations a n d to transmit t h e m t o the Federal Reserve B o a r d a s recommendations
o f the Conference.
(See pages 82 - 83 stenographic record.)
Report a n d Recommendations
o f Open Market Investment Committee
(See also paragraphs 2, 14 and 15.)
Governor Strong reported that the Open Market Investment Committesc had met and submitted the following recommendations:
(1) That under authority now vested in it, the committee should
increase its holdings u p to approximately $300, 000,000 a s and when market
conditions warrant, i t being the belief o f the committee that present a n d
prospective g o l d movements m a k e this increase advisable.
(2) T h a t the chairman shall later suggest t o the individual
members o f the committee a plan relative t o the reapportionment o f the
existing account s o as t o make proper provision for those Federal reserve
banks which are now not earning their expenses,
(3) T h a t a reapportionment b e made o f any further purchases
that m a y b e made b y the committee i n order t o facilitate t h e accomplish-
ment o f this same purpose,
Upon motion o f Governor Strong, i t was
VCTED t h a t the report and recommendations o f the Open Market
Investment ‘Tommittee submitted above b e accepted and approved.
I t was
informally understood that the committee i n making the redistribution o f
present holdings o r reapportionment o f future purchases should give consideration t o the needs o f the Federal Reserve bank o f Minneapolis for a
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Federal Reserve Bank of St. Louis
larger proportion o f bills then Government seeurit ies i n order that i t
might h a v e sufficient collateral f o r Federal reserve n o t e issues.
€ stenographic record.
T h e report i s printed
Foreign Accounts.
(See also paragraphs 2, 13 ané 14)
Governor Strong mede a
brief report concerning certain foreign
accounts o f the Federal Reserve B a n k o f N e w York e n e sinted + hat h e woule
later submit to the Open Market Committee 2 plan for the apportionment of
those accounts among t h e severel Federal reserve
Upon m o t i o n o f G o v e r n o r Y o u n g ,
i t was
VOT=D t o approve the recommendation ¢f the Open Market Com=
mittee that Governors Strong and Hard ng b e authorized t o work out a
redistribution o f the foreign accounts i n order
Reserve Bank o f Boston a s a participating bank.
(See page 8 8 stenogreaphic record)
Topic IV, A . F o r m u l a t i o n o f Progran f o r G o v e r n o r s Conference
Governor Stromeg referred to the difficulty i n preparing a comprehensive program o f topics for conferences unless all o f the Reserve
banks give careful thought t o the question o f submitting topics for consideration.
I t was suggested b y some o f those present that i f eech
Governor would keep a list o f topics thet arise currently between ¢eo-~
ferences, i t would greatly facilitate the preparat b n o f the program
Tt was informally agreed that i t i s better t o continue t h e present procecure f o r preparing t h e program than t o have a
tYe purpose.
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Federal Reserve Bank of St. Louis
committee appointed f o r
T h e topic w a s passed w i t m u t action.
(See papss 9 0 = 95 stenographic record)
Topic IV. 5 . C o s t o f securing reports o f examination
of.national b a n k s .
Governor Strong referred to the fact pit a committee had been
this question
appointed b y the l a s t Conference o f Governors t o consider
been planned t o
with the Federal Reserve Board, a n d that while i t had
o f the
have a meeting o f the committee with the Board, t h e Secretary
meeting had ever
Treasury and the Comptroller o f the Currency, n o such
had stated
been held because o f the fact that the present Comptroller
reports. U p o n request
that h e would endeavor t o reduce the price o f the
dated March 5 , 1925,
of the chairman, the secretary read a copy o f a letter
o f the Gurrency,
which Governor Strong had forwarded t o the Comptroller
principle that Federal reserve
suggesting the importance o f recognizing the
cost o f preparing copies.
banks should not b e asked t o pay more than the actual
Reserve banks that h e had
On March 16, 1925, the Comptroller advisdad the
after April 1,
reduced the cost from $10.00 to $7.50, effective o n and
further reductions i n the
1925, a n d also stated that h e hopes for even
therefore,
future. U p o n motion o f Governor McDougal, i t was,
and
VOTED that the Committee o f Governors should b e continued
b e taken.
report again after any further action might
(See pages 95 - 102 stenographic record)
o current reports :
Topic IV. C . Hlimination o r c o n s o l i d a t i o nf
( 1 8 )
by Federal reserve banks t o t h e Federal
Reserve B o a r d .
Upon motion o f Governor Seay, i t was
t o arrange t o
VOTED that the Federal Reserve Board b e requested
meet with a committes
to havdrepresentatives e f the Federal Reserve Board
the Federal reserve banks,
of Reserve bank operating men, t o be appointed b y
the statements a n d reports now
with a view t o determining whether some o f
Federal reserve banks may be
submitted t o the Federal Reserve Board b y the
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Federal Reserve Bank of St. Louis
reduced, simplified o r climinated.
(See pages 102 - 105 stenographic record)
At this point o f the discussion the Federal Reserve board entered the conference room.
Appointment o f a committee t o study Legislative Matters
(See also paragraphs 1 and 12.) ;
Governor Strong reported t o the board the action taken b y the
conference relative t o the question o f the McFadden bills and other banking legislation, s t x t i n g t h e t t h e conference unanimously recommended that
it was desirable that i n matters of legislation affecting the Federal Ree
serve System directly o r indirectly, t h e Federal Reserve board and the
System should take a definite affirmative position, and recommended that
the Board appoint a System committee composed o f Governors Harding, Young,
Seay and Strong, and Chairmen Wills and Talley, t
o make a study of the
matter and cooperate with the board i n dealing with such legislation;
that such committee should have the advice and services o f seme such
expert a s Professor Sprague, o f Harvard University; that Dr. Stewart,
of the Federal Reserve Board, should b e associated with the work o f
the committee; a n d that steps should b e taken, i f possible, t o secure
the participation o f the Comptroller o f the Currency.
T h e board stated
that they would take s o m e action w i t h respect t o these recommendations
attheir meeting the next day, and thereupon withdrew from the conference room.
(see pages 105 = 110 stenographic record)
Topic IV. D- C u s t o d y o f securities for account o f member
banks i n other Federal Keserve Districts.
There was general discussion o f the objections t o having one
Federal reserve bank hold securities for safekeeping for account o f member
banks i n other Federal Reserve Districts, i t being pointed out that the
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Federal Reserve Bank of St. Louis
LO
expense would b e great a n d the risk large a n d that i f permitted there
might b e n o limit t o its scope.
Upon motion of Governor Calkins, i t was
VOTED ‘that i t should b e the practice o f Federalecg
reserve banks
\
'
‘a!
in holding securities i n safekeeping for o t h e r Federal reserve banks t o
limit such securities t o those actually owned b y the depositing Reserve
bank, except i n special o r emergency cases.
b
n
I t was informally under-
stood that any securities which may now be held for account o f member
banks i n other districts should not necessarily b e returned a t once, b u t
should b e permitted t o b e withdrawn i n the usual
s t a r
(See pages 110 - 116 stenographic record)
Topic IV. E. S e m i - m o n t h l y statements a f exceptions.
Recommended:
That the Federal Reserve banks discontinue
sending e a c h other semi-monthly statements o f open excentions i n t h e i r
respective accounts.
Upon motion o f Governor Fancher, i t was
VorEeD Athat beginning May 1, 1925, Federal reserve banks dis-
\
W
r
continue sending each other semismonthly statements o f exceptions i n their y
respective accounts. ye
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Federal Reserve Bank of St. Louis
(See pages 116 ~ 119 stenographic record)
Topic IV. G .
S h o u l d Federal Reserve Banks pass o n t o the
requesting member banks t h e cost o f
telegrams s e n t over commercial wires
representing transfers o f funds w h e n t h e
lealed wires a r e unavailable because o f
storms o r other interruptions,
The Leased Wire Committee i n May, 1924, recommended t h a t when t h e leased wires a r e unavailable
because o f storms o r other interruptions, a n y
requests f o r transfers t o b e made over com-
mercial wires should b e accepted a t the expense
of the requesting member bank, a n d this topic
is proposed because there i s not n o w a uniform
procedure i n the several Federal Reserve Districts
regarding this matter,
i
Governor Seay made a motion that i t should be left to the discretion o f each Federal reserve bank whether they should charge back
against a member benk the cost of meking wire transfers over the c o m
mercial wires when leased wires are a iendiants because o f storms o r
other interruptions.
T h i s motion was mot seconded.
Upon motion o f Governor Young, i t was
VOTED t h o t Federal reserve banks should absorb the costs
incident t o such transfers.
8 ayes anc 4 noes.
Upon motion o f Governor Seay, i t was then
VOTED t o reconsider the above vote on Governor Young's motion.
7 ayes a n c 5 noes,
banks should
Governor Young thereupon moved that Federal reserve
the commercial
absorb the costs incident t o making such transfers over
wires.
moved
Before any vote was taken o n this motion, Governor Seay
to lay the topic o n the table.
6 ayes and 6 noes.
The motion t o lay o n the table was lost ~
motion t o absorb
Vote was thereupon taken o n Governor Young's
noes,
the costs, a n d the motion was lost - 6 ayes and 6
Leased Wire
It was later decided t o refer this topic t o the
Committee.
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Federal Reserve Bank of St. Louis
record.)
(See pages 119 - 128 and pages 228 - 229 stenographic
Topic IV. H . R e p o r t o f Leased W i r e Committee.
Upon motion o f Governor Norris, i t was
a n d approved.
VOTED t h a t t h e report should b e accepted
(See pagesl28 - 129 stencgrcphic record.)
12
Reimbursement f o r services performed b y Federal Reserve R a n k o f
New York for account o f other Federal reserve banks.
Governor Strong referred t o the fact that a t the present time
services performed b y the New York bank for other Federal reserve banks
cost somewhere between $ 7 5 ,000 a n d $100,000 a
year, a n d that while t h e
New York bank i s opposed t o any plan providing for reimbursenent o n account
of these services, i t was felt that the Leased Wire Committee should study
whether the present system o f allocating wire expenses i s the proper one o r
whether the basis o f charge i n proportion t o the number o f words sent should
be changed i n so far as i t relates t o certain telegrams sent b y the Federal
Reserve Bank o f New York for account o f and at soquaet o f other Federal reserve banks. I t was informally understood that the Leased Wire Comnittee
would make this study and also a study a s t o how many o f these telegrams
might properly b e omitted.
(See pages 129 - 132 stenographic record)
Topic IV. I. R e p o r t o f Insurance Committee.
Upon motion of Governor Young, i t was
VOTED that the report b e accepted, approved and filed.
(See pages132 ~ 135 stenographic record.)
Upon motion o f Governor Fancher, i t was
VOTED that the attention o f the Federal Reserve Board be.
called t o the fact that nothing can now be done b y the Federal reserve |
banks with respect t o effecting the economies o f inter-bank fidelity
insurance unless the Federal Reserve board i s willing t o make a n attempt
to procure appropriate legislation.
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Federal Reserve Bank of St. Louis
(See pages135 - 136 stenographic record.)
Topic IV. J . R e p o r t o f Pension Committee
Upon motion o f Governor Young, i t was
23
VOTED t o accept, approve and file the report, with the suggestion, however,
t o t h e Federal Reserve Board that t h e subject o f
legislation relative both t o inter-bank fidelity insurance and pensions
might properly b e referred t o t h e n e w Legislative Committee i f and when
appointed.
(See pages 136 - 138 stenographic record.)
Report o f Committee o n Standardization a n d Purchase o f Supplies.
( 2 8 )
Upon motion o f Governor Young, i t was
VOTED t o accept, approve and file the report.
I t was informally
understood that Governor Strong should appoint a man t a succeed Mr. Lauckner,
resigned, a s a member o f this committee.
(See pages 138 - 141 stenographic record.)
and
Topic IV. K . M e m b e r s h i p i n American Acceptance Council
American Bankers Association.
The Federal Reserve Board i n its letter
of February 5 . 1925, X-4263, requested t h a t
the views o f the directors o f the Federal
Reserve Banks with reference t o continuing
membership i n these t w o associations b e
reported t o t h e conference.
Upon motion of Governor Calkins, i t was
VOTED
t o b e the sense o f the conference t h a t t h e Federal Reserve
System should continue i t s membership i n the American Acceptance Council.
Governor Wellborn voted no.
Upon motion o f Governor Seay, i t was
VOTED that membership i n the American Bankers Association
appears t o be a matter o f some doubt i n the minds o f the directors o f
many of the Federal reserve banks, but that the Conference recommends
that each Federal reserve bank continue its membership f o r the present
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Federal Reserve Bank of St. Louis
14
with t h e hope that i f membership i s extended beyond t h e current y e a r a
better working relationship will b e established b y the American Bankers
Association i n their consideration o f matters h a v i n g t o d o with t h e
Federal Reserve System.
(See pages 141 - 144; a n d 218 ~ 221 stenographic record.)
At 6 o'clock p . m. t h e conference adjourned t o reconvene a g a i n
at 10 o'clock a. m. o n Tuesday, April 7, 1925.
Second Day's Session, Tuesday, A p r i l 7 , 1925
Morning
The meeting w a s called t o order a t 10:00 o‘clock a . m.
Non-Cash Collections.
(See also paragraph 32)
Mr. Strater, chairman o f the Standing Committee o n Collections,
summarized the special report o f his committee addressed t o the Conference
of Governors and the Federal Reserve Board, dated April 6, 1925, concerning:
(1) T h e desirability and effect of possible charges for handling
non-cash collections, t h e topic referred t o the committee b y the last
Conference o f Governors, a n d
(2) T h e brief of the american bankers’ Aesociation Committee ( The
barton Committee) o n Collection of Non-Cash Items b y Federal Reserve Banks.
As to the first question, the committee recommended that no service
charee should b e imposed for the collection o f non-cash items unless i t is
determined that the income o f the Federal reserve banks will not justify this
service f r e e o f charge.
E v e n i n that event, t h e committee questions whether
some o f the other f r e e serviceg w h i c h a r e more costly, might n o t b e aban-
doned before the free collection o f non-cash items.
T h e committee ex~
preseed the belief that-the expense o f this function will not materially increase even i f the volume o f collections continues its gradual growth.
I t
stated, however, that i f as a last resort some action becomes necessary, a
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Federal Reserve Bank of St. Louis
tae
charge should b e made poseibly for items collected i n Federal Reserve Bank
and Branch cities rather than abandon a service t o which i t believes member banks are entitled.
(See pages 145 + 207 stenographic record.)
At 11:00 o'clock a. m. the conference recessed i n order that the
Committee o n Voluntary Services might m e e t t o consider t h e Reports o f the
Standing Committee o n Collections, referred t o above, a n d also t h e request
of the Federal Reserve Board that the conference coneider a possible
regulation t h a t Federal reserve banke should handle o n l y those non-cash
items that are payable b y or at member banks, o r banks that are o n the
par remittine lists o f the Federal reserve banks,
o r that a r e collectible
through clearing house associations.
Non-Cash Collections (continued)
(See also paragraph 31)
(
3
2
)
When the conference reconvened a t 12:00 o'clock noon Governor Fancher
submitted the recommendation o f the Voluntary Services Committee that the
conference reaffirm a l l o f the recommendations contained i n the report o f
the Committee o n Voluntary Services, approved b y the conference, and submitted t o the Federal Reeerve Board under date o f March 24, 1924, a n d that
the conference approve the supplementary report filed b y the Standing Committee o n Collections, addressad t o the Conference o f Governors and the
Federal Reserve Board under date o f April 6, 1925, D e f o r e action was taken
on this recommendation o f thse Voluntary Services Committes, Governor Fancher
summarized a s follows the recommendations contained i n the committee's report dated March 24, 1924:
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Federal Reserve Bank of St. Louis
16
(1) T h a t the non-cash collection service be continued not only
for items payable a t banks, b u t f o r items payable a t street addresses a s
well,
(2) T h a t n o service charge b e made f o r collecting a n y class o f
non-cash items,
(3) T h a t each Reserve bank and branch endeavor s o far a s possible t o effect its local collections i n that mmner most consistent with
established business a n d banking practices with a view t o eliminating a n y
unnecessary causes o f possible friction a n d discontent o n the part o f those
business houses w i t h w h o m the Reserve banks necessarily c o m e i n contact i n
making presentation o f items for payment,
(4) T h a t each Reserve bank and branch continue a 3 i n the past,
vigorously t o promote further economy and efficiency i n the operation o f
its collection service, giving due consideration t o the encouragement for
more direct sendings b y member banks 2 s well a s to other. practi¢es designe
ed t o climinate e x t r a o r costly handlings.
Upon motion o f Governor Fancher, i t was
VOIED t o approve the recommendation o f the Voluntary Services
Committee a n d t o reaffirm a l l o f the recommendations contained i n its
earlier report o f March 24, 1924, summarized above, a n d t o approve the
supplementary report filed b y the Standing Committee o n Collections under
date of April 6, 1925.
9 ayes a n d 3 noes, Governors bailey, Y o u n g a n d Wellborn voting
in the negative.
It was pointed o u t that b y taking this action, t h e conference
wecandupaie covered both the yuestion o f a charge--end the proposed form
of regulation referred t o the conference b y the Federal Reserve Board,
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Federal Reserve Bank of St. Louis
(See pages 207 = 218; a n d 221 - 228 stenographic record.)
17
Topic il. A. R e p o r t o f Standing Committee o n Collections
concerning routine matters.
The conference thereupon considered i n detail t h e regular report
oithe Standing Committee on Collections, addressed to the Conference of
Governors, d a t e d April 6 , 1925, a n d voted t o accept a n d approve e a c h o f
the recommendations contained therein.
F o r convenience, t h e y a r e summarized
as follows:
Absorption o f postage o n cash letters s e n t direct
by m e m b e r b a n k s
t o o t h e r F e d e r a l r e s e r v e b a n k s a n d branches.
It is recommended that all of the Federal reserve
banks should uniformly adopt the practice o f not absorbing
postage o n such c a s h letters.
Aeroplane wail Services.
/
|
It i s recommended t h a t n o change b e made i n the
present t i m e schedules o f the Keserve banks t o conform with
possible service b y aeroplane until s u c h time a s a i r mail
service schedules a r e sufficiently regular t o justify it;
ut that i n the meantime, checks b e dispatched b y air mail
) band
availability b e given i n keeping with resulting earlier
i
i
'
;
i
presentation i n any case where a member bank requests forwarding b y air mail and pays the postage therefor. I t was
suggested, however, t h a t i n such cases, t h e transaction
might more conveniently b e accomplished b y having the member
bank itself route direct.
Possible charge f o r the non-cash collection service a n d its effect.
The recommendation o f the committee concerning
this topic was contained i n its other report previously
acted upon by the conference. (See paragraphs 31 and 32.)
Reconcilement o f provisions o f telegraphic trans-
fer circulars o f Federal reserve banks with recommendations
embodied i n Board's letter X-4099.
It was pointed out that this topic was already
disposed o f b y the Federal Reserve Board's letter X-4301,
dated lkarch 25, 1925.
Whether o r not a Federal reserve b a n k m a y properly
receive maturing collection items w i t h instructions t o de-
n some commercial bank for the account
| pesit the p r o c e e d s i
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Federal Reserve Bank of St. Louis
1 of a
member bank.
is
|
I
t i s retcmmended that i n sco far a s possible, t h e
handling c f items with s u c h instructicns b e disccuraged,
Recommendations c f Co pihcdves o f Counsel f o r the
Reserve Banks.
(a) C o n d i t i o n s under which matur ing notes,
bills o r cther non-ensh items will b e accepted
for collection.
|
T
h
e committees recommends that t h e non-cash ccollec-
tion circular o f sach Reserve bank b e amended a s indicated
on pages 6 and 7 cf its report, s c a s to comply with the
recommendation o f counsel relative t s this topic.
(b) Guarantee c f all prior endorsements
The committee recommends that the non-cash collec4
ticn circular o f each Reserve bank b e amended s o as to include a new section, a s drafted o n page 7 of the committee's
; report.
T h e committes suggested that the letter of the
| Reserve banks transmitting the new non-cash collection cir| cular should make special reference t o the requirement o f
ithis n e w section relative t o t h e guarantee o f prior endorsements.
(See pages 230 - 249 stenographic record, )
Topic II, B . U n i f o r m endorsement o f non-cash items.
Recommended:
That _some action b e taken t o make
effective t h e recommendations o f
the Conference o f Counsel o f the
Federal Reserve Banks a t their
meeting o n December 5 , 1924, w i t h
part icular reference t o t h e
questicn c f uniform endorsement
of non-cash items.
Inasmuch a s the approval o f the report o f
the Standing Committee
on Collections necessarily covered this topic,
i t was passed withcut further
action.
Limit o n dollar amount o f cash
items sent @ jrect b y = mamher
bank:: (42)
in_one district t o a
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Federal Reserve Bank of St. Louis
Federal reserve b a n k i n enother 4 istrict
Upon mot ion o f Governor Young, i t
was
19
VOTED t h a t t h e Standing Committee o n Collections b e requested
to study the question o f placing a minimum limit o n the aggregate dollar
amount o f cash items sent direct b y a member bank i n one district t o a
Federal reserve bank i n another district.
(See pages 249 - 254 stenographic record. )
Direct Sendings.
Following some discussion o f the principles a n d risks involved
in the direct sending o f cash items b y member banks, upon motion o f
Governor Young, i t was
VOTED t h a t the Standing Committee o n Collections b e requested
to investigate a n d study t h e whole subject o f direct sendings o f cash
items, and to report and make such recommendations a s they see fit t o the
next Conference o f Governors.
(See page 254 stenographic record; )
Instructions
i n letiers transmitting items s e n t direct.
It was pointed out that i n spite o f prevailing regulations requiring wmiform instructions, many direct sending banks fail to comply
with those instructions relative t o pretest and other such matters.
Upon motion, duly seconded, i t was
VOTED
pre~t o request t h e Standing Committee o n Collections t o
banks t o
pare a uniform letter which might b e sent b y all Federal reserve
direct
all direct sending banks advising them o f the regulations covering
sending o f items a n d requiring their enforcement.
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Federal Reserve Bank of St. Louis
(See pages 254 - 259 stenographic record. )
Instructions f o r handling Bill o f Lading drafts.
Upon motion o f Governor Seay, i t was
VOTED t h a t the Standing Committee o n Collections also b e re-
20
h
e
quested t o consider the question o f handling bill o f lading drafts contrary
to instructions contained i n the letter o f transmittal.
(See pages 259 - 260 stenographic record.)
Costs o f telegraphic advice o f non-payment o f checks o v e r 3500.
( 4 6 )
Upon motion o f Governor Fancher, i t was
VOTED t o refer t o the Stmding Committee o n Collections the
question whether Federal reserve banks should charge b a c k t o depositing
member banks the cost of telegrams between the drawee bank and the Federal
reserve b a n k a n d between t h e Federal reserve b a n k a n d the depositing bank
in giving advice o f non-payment o f checks.
(See pages 260 - 261 stenographic record.)
Appreciation o f work o f Standing Committee o n Collections.
Upon motion o f Governor Calkins,
?
i t was
VOTED that the conference express its appreciation o f the work
of the Standing Committee o n Collections for their thorough study o f the
question o f non-cash collections,
At 1:00 o'clock p. m. the conference adjourned t o reconvene a t
2:30 o'clock p, m.
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Federal Reserve Bank of St. Louis
Second Day's Session, Tuesday, A p r i l 7 , 1925
Afternoon
The meeting was called t o order a t 2:30 o'clock p. nm.
Topic IV. Lb. Collection o f actual charges incurred
in handling o f bonds, counons,
and
negotiable securitics forwarded b y
insured registered m a i l o r express,
Recommended:
That 2 uniform procedure b e
adopted b y the Federal reserve
banks regarding t h e collection
of actual charges incurred i n
the h a n d l i n g f
o bonds. coupons,
and negotiable securities forworded b y insured registered
mail o r express.
7
,
al
Upon motion o f Governor Fancher,
i t was
VOTED t h a t this topic b e referred t o the Standing Committee o n
Collections f o r consideration a n d report.
(See pages 262 - 266 stenographic record.)
Topic IJ, C. L i m i t o n Federal Reserve exchange drafts.
Recommended:
That the 55,000 maximum limit o n
Federal Reserve exchange drafts
be removed.
(See also paragraph 50.)
The conference discussed a t some length the difference between
the Federal reserve exchange draft and the transfer draft with special
reference t o the merits o r demerits o f the exchange draft and demand for
its use b y member banks.
Governor Fancher moved that the present (5,000 maximum limit o n
Federal reserve exchange drafts b e removed.
The motion was lost ~- 6 ayes and 6 noes.
(See pages 266 - 287 stenographic record.)
Governor Calkins moved that the Federal reserve transfer draft
be abolished.
The motion was lost ~ 5 ayes and 7 noes.
(See page 288 stenographic records)
Upon motion o f Governor Calkins,
i t was then
votep /that the limit o n the Federal reserve exchange draft b e
raised from $5,000 t o $50,000, with the understanding, however, that each
Federal reserve b a n k give e a c h other Federal reserve b a n k immediate advice
of the names o f member banks t o which permits are given t o draw exchange
drafts a n d that care b e exercised b y all reserve banks i n checking u p such
permits before passing credit o n any exchange draft, making telegraphic
inquiry i n any questionable cases.
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Federal Reserve Bank of St. Louis
I t was also understood that permits
/
might b e withdrawn under advice t o all other Reserve banks t o that
Soe F
This motion was carried - 7 ayes and 3 noes.
(See pages 288 - 295 stonographic record.)
Upon motion o f Governor Seay, i t was
vorep A h a t the preparation o f uniform advice o f the action o f
the conference i n raising t h e limit o n Federal reserve exchange drafts s
be referred t o t h e Standing Committee o n Collections
s o that a l l Federal
reserve banks will issue t h e same notice t o their respective member banks. J/
(See page 306 stenographic record. )
Upon motion o f Governor Biggs, i t was
VOTED t o reconsider Governor Calkins' motion t o abolish the
Federal reserve transfer drafts.
7 ayes and 5 noes,
Governor Fancher then moved t o abolish the Federal reserve
transfer draft.
This motion was lost - 6 ayes and 6 noes.
(See pages 295 - 296 stenographic record.)
Topic JI. D . S e r v i c e charge o n returned transit items.
Recommended:
That o n and after May 1, 1925, Federal
Reserve Banks should make a service
charge o f 1 0 4 per i t e m o n all returned transit items.
o f transit items
Governor Young referred t o the great number
Minneapolis because drawn o n
veing returned b y the Federal Reserve Bank o f
o f other reasons f o r
banks not o n the par list. A f t e r some discussion
and after May 1, 1925,
t a r t a n cash items, Governor Young moved that on
10¢ per item on all
Federal reserve banks should make a service charge of
returned transit items.
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Federal Reserve Bank of St. Louis
&
23
This motion w a s l o s t = 1 0 noes a n d 2 ayes.
{See pages 296 - 301 stenographic record.)
Governor Young then moved that a charge o f 10¢ per item be
placed o n all transit items returned because o f t h e fact that t h e y a r e
drawn o n non-par banks.
The motion was lost.
(See pages 301 - 302 stenographic record. )
Misrouting Transit Items
It was informally understood,/that Federal reserve banks
should make a particular effort not t o forward t o other Federal reserve
banks for collection, checks drawn o n non-par banks, and that each ©
Federal reserve bank should investigate the subject o f return items t o
see how far the practice o f misrouting items has grom, i t being the
sense o f the conference t h a t t h e transit departments o f the various
Federal rescrve banks a n d member banks should reduce v e r y substantially
the number o f non-par checks that are being erroneously forwarded for
collection through other Federal reserve banks. /
(See page 302 stenographic record.)
Topic Ii, i .
S h o u l d Federal Keserve Banks handle a s
cash items drafts d r a w n b y a corporation o n itself o r its treasurer a n d
items o f similar nature, e v e n though
such items b e a r t h e notation “payable
at" o r "payable through" a
specified
bank.
After a n informal discussion, this topic was passed without
action.
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Federal Reserve Bank of St. Louis
(See pages 302 - 306 stenographic record.)
Topic II. F . P r o c e d u r e i n handling collection o f coupons
forwarded b y member banks o f other districts o r b y other Federal Reserve banks.
24
Mri Harrison outlined the difficulties encountered b y the Federal
Reserve Bank o f New York i n handling the large quantities o f coupons forwarded
to i t for collection from other districts a n d explained that the recent request that other Federal reserve banks a n d direct sending member banks con-
Solidate i n one envelope all coupons o f one issue rather than forward them
in the envelopes o f individual customers, had become necessary as a matter
of operation because o f the enormous volume o f coupons handled b y the bank.
Upon motion o f Governor Calkins,
i t was
w
voren / n a t t h e question o f having a l l reserve banks uniformly
h
adopt the procedure now required b y the Federal Reserve Bank o f New York,
f
or some other procedure designed t o simplify the handling o f coupons, b e
referred t o the Standing Committee o n Collections f o r consideration and
N
j
i
N
a
e
report, b u t that t h e N e w York bank should continue i t s present practice
pending such report. /”
(See pages 306 - 317 stenographic record.) |
Direct Sending of Non-Cash collection items.
(
5
5
)
Governor Strong/roferred t o the f a c t that t h e N e w York bank
contemplated requiring all New York City banks t o send direct t o other
Federal reserve banks all non-cash items payable i n other districts.
l
I t
was explained t h a t that requirement might properly b e made under existing x
Federal reserve b a n k rules a n d procedure.
N o objection w a s expressed o n
the part o f the conference and no action was asked i t e
(See pages 317 ~ 319 stenographic record.)
Mr. C. 5. Dewey, Assistant Secretary o f the Treasury, joined the
conference during discussion o f matters o f interest t o the Treasury.
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Federal Reserve Bank of St. Louis
Topic TII. A . 1 . G o l d Payments
1. A d v i s a b i l i t y o f continuing f o r the
present t o maintain i n circulation approximately t h e amount o f
certificates n o w outstanding.
A
a
25
Mr, Harrison reviewed the gold payment policy of the Federal
Reserve Bank o f New York for the past two snd a. half years and stated
that while that policy was first adopted primarily for the purpose of
Paying out certificates i n amounts sufficient t o offset imports o f
gold, nevertheless, e v e n though imports have now materially reduced and
exports have commenced, i t was planned tc continue the payment of gold
certificates i n sufficient quantities t c maintain the gold certificate
circulation at about its present figure of $900,000,000,
I t was stated
that i t would be helpful i n carrying out this policy if other Federal
reserve banks would pay out at least a s mech gold as they received o n
deposit i n the usual course of their business. M r , Dewey referred to
the fact that the Treasury would Like to keep the gold certificate c i r
culation a t about its present level or possibly to increase i t slightly,
(See pages 320 - 325 stenographic record, )
Topic TIl. A . 2
G o l d Payments
2. Supply of available hand to
hand gold i n each Federal
reserve bank,
There was some discussion o f the present holdings o f Reserve
banks o f gold c o i n a n d certificates
i n their relation t o Liabilities.
While it was pointed out that the aggregate of gold coin and certificates
is now approximately 20 per cent of total liabilities, nevertheless the
supply o f coin was considerably less than t h e amount w h i c h t h e committee
representing the Treasury and the Reserve benks had suggested a s desirable.
Mr. Dewey then referred t o the present minting program of the Treasury and
h
stated that about $38,000,000 of double eagles had been coined during M a r c
ané that the Treasury hoped t o continue gold coinage e t that rate.
H e then
referred t a the fact that the increased appropriations for the next fiscal
year would make i t possible t o build u p a larger reserve o f both gold
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Federal Reserve Bank of St. Louis
coin and gold certificates.
Standard Silver Dollars
(
5
8
)
Mr. D e w e y referred t o t h e f a c t that t h e Treasury h a d become
convinced that there i g no substantial demand f o r the circulation o f
standard silver dollare and that the Treasury would not try further t o
force them into circulation.
(Sea pages 325 -~ 333 stenographic record.)
Topic V. A. D o Federal Reserve Banks euarantee t o the
Treasury o f the United States collateral
pledged t o secure Special Deposit Accounts.
After a general discussion o f this topic, i t was agreed that,
in event o f a loss, the Federal reserve banks would not b e liable t o the
Treasurer as an insurer but only for the usual responsibilities of an agent
to exercise reasonable care.
N o action w a s thought t o b e necessary.
(See pages 333 - 340 stenographic record.)
Insurance Contracts.
(
6
0
Mr. Dewey diecussed the question whother o r not Government
securities bourht under original subscription should b e shipped a t Treasury
expense i f the purchaser asked f o r shipment o n l y some time after t h e subscription.
D u r i n g t h e course o f the discussion s o m e o f the Governors
pointed o u t that i t might b e advisable t o have t h e Treasury specify a
reasonable time i n which euch deliveries might b e made subject toTreasury expense, with the understanding that the cost o f shipment b e
at the expense o f the buying bank i n any case where delivery was request~
ed after a lapse o f such reasonable time.
I t was informally understood
that Mr. Dewey would send out a letter t o each Federal reserve bank sug~
gesting t h e various possibilities a n d giving t h e Reserve banks a n Qppor-
tunity t o express their views.
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Federal Reserve Bank of St. Louis
(See pages 340 ~ 344 stenographic record.)
)
Postal Rates.
‘en
The secretary referred t o a memorandum from Mr. Wm. S. Broughton,
t h e provisions
of the Treasury Department, d a t e d April 4 , 1925, concarning
the sender
of a n act of February 28, 1925, requiring a fee of 3¢ whenover
of registered mail requests a
return receipt.
I t was understood t h a t a
each Governor.
copy o f the memorandum would b e forwarded t o
(Sse pages 347 ~ 348 stenographic record.)
Reserve B a n k o f
Capital G r a i n a n d Feed Company vs. Federal
Atlanta.
t o him b y
The secretary referred t o a file o f papers handed
the conference
Mr, Eddy of the Federal Reserve Board, with the request that
p a y a pro rata
consider whether o r not each Federal reserve b a n k should
o f the Capital
share o f the expense o f prosecuting a n appeal o f the case
Atlanta.
Grain and Feed Company vse. the Federal Reserve Bank o f
Upon
motion of Governor Harding, i t was
Governors
VOTED t o b e the sense o f the conference that the
a c t intelligently,
are not sufficiently advised o n this subject t o
and
expense f o r this appeal
that i n a n y event t h e matter o f pro rating t h e
respective boards o f
ie somethine that they would have t o refer t o their
directors.
(See pages 348 ~ 349 stenographic record.)
meet i n
At 5:30 o'clock p. m, the conference adjourned, t o
Wednesday, April 8, 1925,
joint session with the Federal Reserve Board o n
at 10:00 o'clock a. m.
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Federal Reserve Bank of St. Louis
George L. Harrison,
Secretary, Governors Conference.
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Federal Reserve Bank of St. Louis
@FedFRASER