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‘ RESUME On ACTION TAKEN AT GOVERMOKS CONFERENCE APRIL 7th t o 1Oth 1920. an Upon motion Governor James B R McDougal, o f Chicago, was elected chairman. The meeting convened a t 10.30 a . m . Wednesday April 7th, 1920. T h e morning session was devoted t o a conference with the Secretary o f the Treasury, Assistant Secretary o f the Treasury a n d members o f the Federal Reserve Board, The Secretary o f the Treasury made a general statement covering c o n d i t i o n s a n d p r o b a b l e f u t u r e r e q u i r e m e n t s of the T r e a s u r y Department. Assistant Treasurer Leffingwell reported upon t h e above in detail a n d ascertained t h e views o f the Governors a s regards desirable rates a n d methods f o r future issues o f cértificates expressions o f i n d e b t e jness. o f t h e Governors M r . Mohlenpah asked for a s t o how t h e member banks would take i t if the member banks s u e d a n offer direct to the people f o r t h e sale o f Treasury certificates i n - stead c f through the Federal Reservé Banks. T h i s question was not specifically answered eithough i t was brought out ae t h a t o n each issue o f certificates s i x hundred thousend letters w e r e sent o u t t o prospective investors, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Governor Harding addressed t h e Conference a n d reviewed t h e topics listed f o r discussion. H e suggested that the F e d e r a l R e s e r v e B a n k s t a k e p r o p e r s t e p s t o disabuse the public m i n d o f t h e belief t h a t the United States Treasury is n o longer a factor i n the money market. 1. C R E D I T CONTROL: (1)? Effect o f recent rate increase upon Liquidation. After thorough discussion o f this subject Governor Seay was asked t o formulate a report setting forth t h e views o f the Conference u p o n sub-sections 1 , © , 3 and ay G o v e r n o r S e a y s u b m i t t e d t h e f o l l o w i n g r e p o r t , w h i c h was u n a n i m o u s l y a d o p t e a a s t h e s e n s e o f t h e meeting: The r e p o r t s o f t h e Governors d i f f e r e d c h i e f l y a s t o the decree i n which liquididation h a d been brought abaug by increases i n discount rates. S e v e r a l Governors re- ported n o l i q u i d a t i o n d i r e c t l y t r a c e a b l e t o that vausee All agreed thet the increase o f rates, coupled with the moral suasion generally employed b y 811i reserve banks, had acted a s a restreinge upon expansion h i c h undoubtedly would have been greater b u t for this restraint. Several Governors reported considerable diquidation c u e d i r e c t a to i n c r e a s e d r a t e s e https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The chief causes regponsible f o r increased commercial leans, i n spite o f warnings e n d i n c r e a s e s i n rates, w e r e considered t o be, first, t h e volume o f credit actually reqMired t o conduct t h e volume o f business b e i n g done o n ace count o f h i g h p r i c e s a n d a t a time o f t h e y e a r w h e n business: heeviest; second, withdrawal o f bank deposits i n anexpected degree t o meet continuance o f rempant extravagance of the people generally, a n d t o circulation i n all lines of business, includins r e a l estate, and, third, t h e i n crease i n all lines o f businessof a less essential charac- tere It was agreed that t h e rate i s nevertheless a effective method o f procuring expansion, most m d i t was t h e general opinion that t h e increases o f rates already made h a d not yet h a d time t o become fully effective, d u e t o several causes, amon> t h e m being committments previously entered into i n all lines o f trade, t h e t i e u p o f transportation, due t o the weather, a n d t h e more serious underlying reason ae deficiency i n trensportstion ecuipmente with respect t o articles a,b,c,d,end e ¢ it i s t h e o determination opinion o f the Governors t h a t t h e b a s i s f of the so-celled normal line of discount for the purpose https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis fixing a progressive discount rate if, a n d when such rate is fixed, t h e bas i s should b e the amount o f the reserve deposits p l u s p a i d i n capital o f e a c h m e m b e r bank, t h a t beins t h e contribution o f each member b a n k t o the loaning power o f the systeme The so-called normal line t o b e determined b y each c a e Reserve Banke h i l e i t was agreed that this basis. should b e the same i n all districts, i t was unanimously Ly asreec that the rate,/and when applied, should b e left entirely t o e a c h r e s e r v e b a n k , b o t h w i t h r e s p e c t to i matter o f application t h e seasons i n which i t should b e supplied. It was t h e concensus o f opinion that t h e amendment to the ..ct should b e viewed b y all o f the Reserve Panks in all of its angles e n d possible effects before attempt~ ing t o apoly this method o f credit wntrol, t h e difficulties a n d c o m p l i c e t i o n s l i k e l y t o a r i s e o u t o f i t s a p o l i - cation beins fully appreciated. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Topic I , Credit Control, Subssection 5 , It i s b e l i e v e d b y the conference t h a t t h i s i s a matter f o r each bank t o determine a s occasion arises, but t h a t € a c h b a n k s h o u l d f e e l f r e e t o apply t o the Federal Reserve B o a r d f o r data concerning a n y paper of borrowers d o i n g a nation-wide business w h i c h may be f o u n d i n t h e p o r t f o l i o s o f t h e other Federal Reserve Banks, Topic I , Credit Control, Sub-section 6, It was t h e sense o f the conference t h a t i t i s not practical t o discriminate effectively against non-essen-— tial business. Topic I , Credit Control, Sub-section 7, The Federal Reserve Board was present a n d heard t h e expression o f each Governor a b o u t t h e method his bank employs t o inform itself of the uses made b y member banks of credit facilities, D e t a i l s i n stenographic report. Topic I , Credit Control, Sub-section 7a. Written statements i n r e p l y t o this question were handed t o the secretary b y all governors except the Governor o f the bank o f Kansas City. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis If A D V I S A B I L I T Y O F INVOLVING SYSTEM I N LESS PUBLICITY WITH A VIEW T O REACHING M O R E R E A D E L Y APACE TINE AND NORMAL BASIS. Generally t h e Governors a r e n o t aware o f a n y activittes which p r o d u c e a n y undesirable p u b l i c i t y . Governor C a s e be. lieves t h a t i t i s salutary t o make public t h e reserve position and i t was deplored b y several t h a t there should b e loose and i r r e s p o n s i b l e n e w s p a p e r c o m m e n t u p o n r a t e policy. Topic 3 . CLEARING A N D COLLECTION SYSTEM. Sub-Section l . The conference concluded that i n its opinion there should b e no change i n the name "Par Collection System". The result o f this vote was seven t o five. Sub-sections & and 3 with pararraphs under e a c h s u b - s e c t i o n a, b and c o f topic 3 . This m a t t e r w a s r e f e r r e d f o r a e t o a committee consisting o f Governor Young, Governor S e a y a n d Governor Wellborn. T h e committee submitted t h e following report, which was accepted a s t h e sense o f the meeting: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 7 (4° t e ) w h a t will b e the most cffective method o f continuing t h e c a m p a i g n f o r p a r p o i n t s ? walle this committee realizes t h a t t h e campaign f o r par points i n certain districts h a s been delayed because of the action o f non-par banks a n d legislation, s t i l l they feel that t h e recent decision rendered b y the District Judge of the United States Court i n Atlanta establishes t h e l e - gality o f the Federal Reserve B a n s position a n d i t is therefore recommended that every effort b e exerted t o place a l l of t h e remaining non-par banks: as quickly a s possible. o n a par basis s e v e r a l sovernors w e r e con= sulted about t h e methods employed i n their o w n districts and i t i e o u r opinion that t h e non-par banks should b e eporoached first through personal Solicitation, s e c o n d through correspondence, a n d i f these methods a r e n o t suc- cessful, t h a t covery non-par bank i n a given State should be notified that o n a certain date t h e Federal Reserve Banks will handle checks o n their institution f o r member banks on a par basis, s t a t i n g t o t h e n o n - p a r b a n k t h a t it i s o n t i o n a l v i t h t h a t b a n k w h e t h e r t h e y r e m i t a t p a r o r checks a r e presented a t their counter f o r payment i n cash, and requesting r e p l y a s t o which method o f procedure t h e y prefer t o h a v e t h e F e d e r a l R e s e r v e B a n k fallow. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T h e 8 Federal Reserve Banks should then proceed t o collect through the express companies, p o s t office, o r private agencies, the checks o n these banks t h a t d o not signify their i n tention o f remitting a t pare (ob) W h a t will b e the best procedure t o meet a n d pre- vent the recurrence of, the changes o f coercion made b y non-member banks? The dharges generally a r e unfounded a n d anything that tends towards intimidation o r coercion c a n b e avoided through t h e selection o f proper §olicitors a n d i n exerCising care i n correspondencee (c) S h o u l d the Banks n o w publish a non-par list nstead o f a par list? Inasmuch a s s o m e o f t h e d i s t r i c t s h a v e n o t p r o g r e s s e d as répidly a s others i n securing p a r points i t i s the opinion o f this c o m m i t t e e t h a t t h e b a n k s to p u b l i s h a should c o n t i n u e par l i s t f o r t h e presente W e v e r t h e l e s s because O f the banks o f dovbtful standing your committee recommends t h a t a non-par l i s t should also b e published of banks i n States where practically a l l banks a r e o n a par basise https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (3) B o a r d ' s inter-district T i m e Schedule. (a) S h o u l d i t b e published i n the Bulletin? It i s t h e r e c o m n e n d a t i o n o f your comnittee that s u c h s c h e d u l e s h o u l d n o t b e p u b l i s h e d i n the Comment Bulletins (co) <SGorrection o f errorse Inter-district T i m e S c h e d u l e s s h o u l d b e ex- amined promptly b y each Federal Reserve E a n k a n d i f discrepancies o c c u r t h e same should b e corrected promptly a n c t h e c o r r e c t i o n s m a d e i n t h e n e x t schedule. ‘(c) Relation o f intra-district schedules. Hach F e d e r a l R e s e r v e Panix s h o u l d c o r r e c t i t s schedules t o i t s o w n members a s s o o n a s possible. Topic 3 , C L E A R I N G A N D © LLICTION S Y S T E M Subasection 4 , It Was moved a n d seis S n o w c a r r i e d that t h e direct routing o f c o l l e c t i o n i t e m s b y m e m b e r b a n k s i n one Federal reserve district t o member a n d n o n member banks in another Federal reserve district, f o r wire trensfer o f proceeds t o sending bank's Federal resevr bank, b e discontinued until t h e mechanism therefor c a n b e worked out; a n d further t h a t a committee b e appointed t o study the matter, The Chair announced that t h e committee would consist o f representatives f r o m the Federal reserve banks o f Cleveland, N e w York a n d Richmond. G o v e r n o r Fancher designat- ed Mr. Strater. Governor MeDougal appointed Mr. Strater chairman o f the committee. G o v e r n o r Case designated Mr, Hendricks. D e p u t y Governor Peple desired t o postpone Richmond's designation stating h e would make t h e appointment i n due course a n d advise t h e secretary o f the meeting. Topic 3 , Sub-section 4 , Parasraph a . The question o f abuse b y non-member banks o f the facilities a f f o r d e d w a s d i s c u s s e d b u t n o d e f i n i t e a c t i o n was t a k e n . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Topic & , CLEARING A N D COLLECTION SYSTEM, Sub-section 5 / Routing o f checks through intermed-~ tary banking centers instead o f sending direct t o drawees bank. Motion b y Governor Young, t h a t i t i s the recommendation of the Governors t h a t circuitoous routing checks, w h i c h reason-~ delays presentation should b e discontinued within a aS able time. M o t i o n carried, Chicago voting no. Topic 4 . S C H E D U L E O M CHARGES ALLOWED T O B E MADE B Y MEMBER BANKS AGAINST THEIR CUSTOMERS U P O N OUT. O F T O W N CHECKS WHICH A R E CLEARED THROUGH T H E FEDERAL RESERVE SYSTEM. Motion b y Governor Case, unanimously carried, " T h a t the Board b e requested t o continue deferring action o n this m a t t e r f o r t h e present. Topic 5. BANKERS! ACCEPTANCES This general question, together w i t h sub-sections l , 2 and 3 were f u l l y considered. M r . Kenzel o f New York, by invitation, leading t h e discussion. was h a n d e d a H a c h Governor c o p y o f t h a t p o r t i o n o f t h e s t e n o g r a phic report which deals w i t h this subject with reference t o sub-sections 1 , 2 a n d 3. G o v e r n o r Case presdénted t h e following motion which w a s tnanimously adopted: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Re Bankers Acceptances. Sub-Topics 1 - 3 Incle It i s the sense o f the conference t h a t abuses a n d mis-~ use o f the Bankers Acceptance Credit m a y b e abated most efficiently a n d w i t h o u t l i m i t i n g t h e p r o p e r f u r t h e r d e - velopment o f this system o f financing, b y a revision o f Regulations, Series 1917, i n those regards a n d that t h e Board b e r e q u e s t e d date, drafting a t o consider s u c h revision a t a n early committee o r individuals f r o m Federal Reserve Banks t o consult a n d assist i f the Board destres such assistancee le T h a t the cardinal poits t o be covered are: To induce t h e most specific identification rossible o f the underlying transaction o n the bill. ee T h a t accepting banks granting import o r export credits, w i t h o u t d o c u m e n t s a t t h e t i m e o f acceptance, should require that when t h e shipments a r e made a n d cocuments issued that they should b e delivered t o a c c e p t o r , o h ‘ would handle t h e m from that time o n realizing their proceeds i n due c o u r s e a n d a p o l y i n g p r o c e e d s i n retirement o f t h e credite Se T h a t banks granting warehouse secured credit should Limit their lines a s to names, commodities a n d length o f credit t e r m w h i c h s h o u l d b e l i m i t e d t o c o m m e r c i a l https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis m d M t b arterticheas seasonal lesmence and i n no case should specilewtion i n \ comnodities b e permitted o n bankers a c c e p t a n c e c r e d i t a n d that a c c e p t o r s h o u l d r e m a i n s e c u r e d d u r i n e swa t h e l i f e credite https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis o f the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 23 That, donestis-transportation credits should b s liwited t o drawings o f the sslisr e f coods Shipped for ths : of m a evanted b y the seller, d for m a r c h a n t ' s i n g suostantitute a T h e pur~ banker's Tepic 5, BAI KERS!' ACCEPTANCES S u b s e c t i o n 4 , It was moved b y Governor Morss, a n d unanimously carried, that t h e o p e n w e r k e t p u r c h a s e s o f the Federal Reserve Banks should not b e curtailed a t this time with a view o f taking more o f such acceptances for rediscount, b u t that the Federal Reserve banks should assist i n broadening the open market b y offering tos purchase bankers! acceptances f o r t h e account o f member banks. applied a l s o t o topic N o . 3 T h i s motion o n t h e s u p p l e m e n t a r y list. Topic 5 , BANKERS! ACCEPTANCES Sub-section 5 . the dis cussi o n developed that while i n the Cleveland district mich has been done t o encourage t h e u s e o f trade acceptances t h a t v e r y l i t t l e h a s b e e n a c c o m p l i s h e d i n the Other districts d u e chiefly t o the feeling o f most o f the Governors t h a t t h e t r a d e a c c e p t a n c e i s m c h abused therefore t h a t i t s d e v e l o p m e n t h a s b e e n r e t a r d e d tion t o t h a t abuse. a n d i n propore U p o n s i hoes o f G o v e r n o r C a l k i n s was unanimously agreed that t h e views o f Mr. Kenzel, it as appearing i n the stenographic report should b e adopted a s the v i e w s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis o f t h i s conference. Topic 6 , R A T E S S u b - s e c t i o n 1 . Upon m o t i o n o f G o v e r n o r C a s e i t w a s r e c o m m e n d e d t h a t there b e n o change i n the present r a t e o n commercial I t was also resolved that there should b e n o paper. change a t present i n the rate o n paper secured b y Liberty bonds a n d Victory notes, t h e vote standing 8 to 4. Chiceco desiring t o go o n record a s opposing the motion. Topic 6 , R A T E S S u b - s e c t i o n © . It was t h e t h e concensus o f opinion that there should b e n o preference i n rates shown o n paper secured by the receipts o f m y special class-of warehouse. I t was also t h e desire o f the conference t o comment u p o n topic 5 of the supplementary list o f topics a n d t o that end i t was moved a n d carried t h a t while t h e conference approves t h e statement f o r m recommended b y the American Bankers Association,anad deems i t highly desirable t o secufe a wide a use o f this formas possible, i t is not practicable t o m a n t preferential rates t o the paper o f borrowers using these forms. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Topic 7. BUILDING OPERATIONS See stenographic report f o r individual statements, It w a s m o v e d b y Governor C a s e a n d u n a n i m o u s l y c a r r i e d 14 that the secretary convey t o Mr, Trowbridge t h e advisability of making c o m m rions between plans o f tho various Federal reserve banks t o the e n d o f facilitating a comparison o f features o f each f o r t h e benefit o f all. Topic 8 . D E S I R A B I L I T Y O F SEEXING FURTHER ALENDMENTS TO THE ACH. Upon m p t i o n o f Governor V a n Z a n d t t h e c o n f e r e n c e unani-. mously agrred w i t h t h e view o f the Board i n the matter o f interest o n reserve b a l a n c e s a s expressed i n the Board's circular letter X-1844, Topic 8 . Syb-section 2, Sugg s t i o n t h a t a m e n d m e n t b e s o u g h t a l l o w i n g t h e u s e ¢@- the l o % super-surplus f u n d i n the payment o f extra dividends. It was moved b y Deputy Governor Peple, a n d carried, that n o motion covering this point be ontered upon the re. _— e cord inasmuch a s t h e opinions expressed w e r e s o qualified as t o m a k e i m p o s s i b l e t h e t a k i n g o r a yes a n d n o vote. See stenographic report f o r discussion, Topic 9. ORGANIZATION DETAILS, Sub-section 1. Those banks which have organized member banks relations d e p a r t m e n t s e r a New York, Chicaro, Cleveland and Minneapolis. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Topic 9 . S u b - s e c t i o n & . is The member banks relations department i n New York under t h e c o n t r o l partments o f t h e Federal Reserve Agent. Such de- i n Cleveland, C h i c a g o a n d M i n n e a p o l i s a r e u n d e r the joint jurisdiction o f t h e Governor a n d Agent. The matters referring t o state b a r k members b e i n g under t h e jurisdiction o f the Agent a n d all other matters relate ing to member banks being under the jurisdiction o f the executive officers. I t was t h e concensus e f epinien t h a t the member banks relations department should b e under t h e a n d the Agent a s 6xjoint jurisdiction o f the Governor tata H E S S n n n A e e e we enseepeiddhracsa a ne nega i n the practive outlined above b y the Cleveland, Chicago a n d Minneepolis banks. G o v e r n o r Case desired t a ga upon record a s expressing his entire satisfaction with the status o f this department i n his bank, Tepic 9 , S u b - s e c t i o n Ge In the matter o f adjusting differences which arise with member banks, those Federal reserve banks which have a member banks relatiens department are using such department t o that end. I n other Federal reserve banks these matters a r e s a t i s f a c t o r i l y a t t e n d e d https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis t o b y executive officers. Topic N o w 9 , S u b s e c t i o n 4, All banks shift idle clerks t o busy departments. most b a n k s t h e d i r e c t o r o f personnel BtLenas I n t o this matter, Topic 9 . S u b s e c t i o n 5, Moved b y Gevernor F a n c h e r , that i t i s not adwisable a n d unanimously carried t o bring u p methods o f standgrd- nnn, izing check forms, Tople 10, RESERVE SUPPLY O F CURRENCY. The following motion w a s offered b y Governor Case, and Was unanimously carried: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Wight I , therefore, u r g e that a suggestion similar t o the followin: b e placed before t h e Governor's Conference for i t s c o n s i d e r a t i o n o n 4pril 7th.e. whereas t h e current supply o f currency i s ample f o r ordinary needs a n d whereas t h e reserve stock i s below that which i s thought to b e adequate f o r a n y great emergency i t is, therefore, t h e sense o f t h i s C o n f e r e n c e t h a t a s a also a s a common p r e c c u t i o n a n d matter o f practical e c o n o m y t h e f o l l o w i n g p r o g r a m be put into effect a s soon a s possible. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis First. Let each Federal Reserve B a n k report f o r itself and branches the daily amounts o f currency b y months during Januuary, February, a n d March, 1920, a n c b y denominations o f isl u p t o and ineludins »100 paid oute (a) N e w (b) Fit for usee and also t h e emounts received n o t inclucing n e w issues from jiashington, D e 0., n o r issues o f Federal Reserve notes o f other Federal Reserve Banks, (a) Fit for use (b) Sent t o Washington f o r redemptione second~ A g r e e a s t o what percentage o f n e w money should be paid o u t shat vould b e fair t o all and *yhich could be maintained b y t h e Bureau m d y e t allow for 2a large marzin t o b e accumulated f o r a stocite Thirde- A g r e e upon a standard o f unfitness f o r c i r - culation o f currency that would result i n as l o w a percentage o f r e d e m p t i o n a s v o s d b l e e Fourth-~ R e q u e s t t h e Treasury Yepartment through t h e Federal R e s e r v e B o a r d t o m a k e a l l i t s s h i p m e n t s panks a r i s i n g o u t o f redemptions t o throuyh t h e respec~ tive Federal Reserve Banks o f their Districts a n d t o supply such Feder 1 Reserve Banks w i t h t h e kinds a n d de- nominations necessary t o d o soo Fifth U r g e t h e Treasury Department t o keep o n printinge — Sixth- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Aopoint a — Coumittee t o perfect t h e details a n d follow t h e progress o f this progrem e n d t o report t o each Governor when and what changes might b e made in order t o effect the most gradual return t o normal concitionse 19 In order t o thoroughly examine t h e subject a s outlined i n t h e a b o v e m o t i o n i t w a s u n a n i m o u s l y d e t e r m i n e d that a committee should b e appointed t o g o into t h e whole matter o f currency supply a n d use. representatives T h e Chairman © pointed t o serve o n this committee f r o m t h e Federal reserve banks o f New York, B o ton and Chicago. The committee h a s finally constituted i s composed 6 f M r . Higgins of New York, Mr..Chase, o f Boston, Mr. Netterstrom, o f Chicago a n d Mr, E m e r s o n o f t h e F e d e r a l R e s e r v e B o a r d . Topic 11, TREASURY P O L I C Y F O ISSUING CERTIFICATES OF INDEBTEDNESS T O C@VER OVERDRAFTS. This topic, a f t e r some discussion w a s striken f r o m e e n the list. SUPPLEMENTARY LIST O F TOPICS. Topic N o e l . Mre Kenzel, b y invitation presented t o the confer- ence t h e recommendations o f his committees t e the Federal Reserve B o a r d r e g a r d i n g t h e i n t e r - F e d e r a l R e s e r v e pension f u n d . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T h Bek e following motion w a s made b y Governe 20 Cel kins a n d unanimously carried, I n a s m u c h a s the present status o f t h e d i s c u s s i o n o f t h e p e n s i e n p l a n c l e a r l y indi. cates t h a t t h e F e d e r a l R e s e r v e B o a r d w i l l a p p r o v e disapprove t h e r e c o m m e n d a t i o n s or f o r t h e a p p rintment o f a committee o r committees a n d the necessary expenditures, it i s m o v e d t h a t t h i s c o n f e r e n c e o f Governors p e t i t i o n the F e d e r a l R e s e r v e B o a r d t o g i v e p r o m p t c o n s i d e r a t i o n to this m a t t e r a n d r e c o m m e n d s t h a t t h e e x - penditure b e appozved a n d divided equally b e tween t h e twelve F e d e r a l R e s e r v e B a n k s , Topic N o e a e It was t h e sense o f t h e conference that t h e market for Liberty Bonds c a n be strengthened b y educational p r o p a g a n d a a m o n g p r o s p e c t i v e i n v e s t o r s i n the several districts, Topic N o . 6 . The questien o f the method o f making collection of checks drawn o n weak banks i n whole p a r states w a s disposed o f i n the report o n Clearings e n d Collections submitted b y the committee appointed f o r that purpose. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Topic No. 7 . It w a s - a g r e e d - t h a t t h i s t o p i c w a s f u l l y c o v e r e d by the action taken upon topic III,sub-section 4 , referred to heretofore. Topics Nos. 8 , 9 and 10. Passed without action, being dismissed b y the Governorsof those banks which submitted such topics. Topic N o . l l . Charges f o r w i r e t r a n s f e r s f o r t h e a c c o u n t individuals etc. ef T h e following was moved b y Governor Case: "It 4 s r e c o m e n d e d t h a t t h e f a c i l i t i e s f o r m a k i n g tele-~ graphic transfers a t par b e not open t o banks that are e # d known t o charge f o r this gervice f o r i t very much weakens the position o f the Federal Reserve Banks i n enfercing gapar c o l l e c t i o n system, i n a s m u c h a s a bank w o u l d h a v e just as juch right to make a charge for remitting its own draft i n payment f o r cases checks a s they would i n making a n exchange cherge o n a transfer which cost them nothing. T h i s motion was carried b y a vote o f 6 to 5. Governor Miller having previously left t h e conference his vote w a s n o t recorded. Topics Nos. 1 2 and 1 3 were referred f o r action a n d report a t a future meeting, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis t o the committee o f Messrs. Higgins, C h a s e , N e t t e r s t r o m a n d Emerson, w h i c h c o m m i t t e e was c r e a t e d b y t h e a c t i o n t a k e n u n d e r t o p i c N o e 1 0 , occuring o n t h e m a i n L i s t o f topics, Topic No. 14. Modification o f Board ruling giving preference i n routing checks t o member banks o v e r nonmember banks. Discussion d e v e l o p e d t h e f a c t t h a t w h i l e s o m e o f the banks a r e adhering t o the rule s e t forth b y the regulation r e f e r r e d t o , t h e r e s r e o t h e r s w h i c h a r e u s i n g their o w n discretion i n this matter, Second l i s t o f s u p p l e m e n t a l topics: 1. Effect o f closing t h e books b y new p l a n o f settlement through gold settlement fund. Mr. E m e r s o n w a s p r e s e n t b y invitation a n d explained the conditions under which t h e Board h a s b e e n Laboring during recent weeks o n account o f storm damage t o teleZraphic wires, N o action taken, 2. Personnel o r welfare. Governor Case moved that this matter b e referred to a committee w i t h instructions t o report back t o the conference a t its next meeting. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T h e Chairman designated Reserve for this committee representatives f r o m the Federal FanchBanks o f Cleveland, N e w York a n d Chicago. G o v e r n o r representaer having left t h e room the designation o f the b a n k was l e f t tive o n t h e c o m m i t t e e f r o m t h e C l e v e l a n d b y Gavernor vacant until such designation c o u d b e madde Fancher. G o v e r n o r Case appointed Mr. Hopf, Governor MeDougalL a p p o i n t e d M r . Cramer. SPECIAL MATTERS N O T O N PROGRAM. through No.l. Request o f Mr. Leffingwell, submitted Governor C a s e , t h a t t h e c o n f e r e n c e e x p r e s s a n opinion which the as t o certain certificates o f indebtedness Treasury Department expects shortly torissue, fingwell M r . Lef- n e m o r a n d u m designated t h e rates a n d maturities Morss effered which t h e Department h a d i n mind, G o v e r n o r the following resolution: T h a t i n the opinion o f the one, maturconference t h e issue should b e a combination t h a t the ing i n 5 months and 6 months respectively; b e ene-fcurth o f rate difference b e teen t h e t w o should for ene percent a n d o n neither issue should exchanges other issues b e permitted, carriede https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T h i s motion w a s unanimously 24 It was then moved by""POYEmemebeges that the rate o n the S months i s s u e s h o u l d b e _ 5 p e r c e n t a n d t h e m a t e o n t h e 6 months issue should b e 5 per cent, T h i s motion was also carried, w i t h Boston, Chicg@o a n d Atlanta voting no. Each € x p r e s s i n g t h e b e l i e f t h a t t h e r a t e s h o u l d b e one-~ fourth o f o n e p e r c e n t h i g h e r t h a n c a l l e d f o r b y t h e motion. Noe &. U p o n the suggestion b y Governor Case that the T r e a s u r y D e p a r t m e n t w o u l d l i k e a d d i t i o n a l s u b s c r i p - tions t o the present certificates o f indebtedness t o an amount totalling $10,000,000 the Federal Reserve Bank o f New York agreed t o take three million dollars, the Federal Reserve B a k o f Cleveland o n e million a n d t h e Federal Reserve B a n k o f Kansas C i t y one million. No» 3 . Upon motion o f Governor Van. Zandt a conmittee was a p p o i n t e d t o draw u p a r e s o l u t i o n p r i e e a d i a to: t h e Honorable R . CC. L e f f i n g w e l l t h e r e g r e t o f t h e conference to-learn o f his determination t o retire shortly a s Assistant Secretary o f the Treasury. T h i s resolution w a s signed b y all o f the Governors excepting Governor Miller, who h a d p r e v i o u s l y l e f t t h e m e e t i n g City. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis t o r e t u r n t o Kansas 25 No. 4 . G o v e r n o r Case brought u p the question a s to whether t h e gold o n deposit w i t h t h e Benk a f England should b e left there o r brought back. This matter was left t o the discretion o f the Federal Reserve B a k o f New York. Noe 5. Governor Case explained the details o f the arrange e n t o f his bank with t h e Bank o f Japan a n d asked i f t h e o t h e r F e d e r a l R e s e r v e i e vised t o parti. c i p a t e 'n i the deposits a n d guaranties arranged b y the Federal R e s e r v e B a n k o f N e w Y o r k i n this m a t t e r , It was moved b y Governor Fancher a n d unanimously carried that t h e Federal Reserve Banks should participate ratably i n this arrangement. Na, 6 Governor Case suggested, a s a logical se- quence t o the action taken i n the matter e f the Bank o f Japan arrangement, h e would like t o take u p the Qestion ofthe open market purchase of baw aédeptences b y the Federal Reserve d e e N e w York a n d t o suggest t h a t t h e same principle o f distribution obtained a s i n the case o f foreign balances, A f t e r some discusdon i t was moved b y Governor Case, and seconded by Governor Young; "That i t is the sense o f this meeting that the stabilization e f the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis open b i l l m a r k e t i s e n c u m b e n t u p o n t h e s y s t e m a s a whole and that a committee b e appointed b y the Chair t o develop an equitable basis for making such support effective." This motion was carried with Richmond a n d Philadelphia n o t voting, P h e Chairman appointed this committee a s follows: Governor Fancher, Governor Morss a n d Mr. Kenzel, No. 7. Governor Case submitted the following excerpt from a letter f r o m cne o f his member banks: "We wrote you asking if there were not some way whereby we could have t h e Treasury Department, i n Washington, f o r - ward t o you direct t h e incomplete currency o f this bank, and y o u i n turn deliver i t t o the American B a n k note Company, N e w York, t o have o u r signatures imprinted there- one A s i t is now, the currency i s forwarded t o us, and w e in turn have t o reship i t t o the American B a n k Note Compa ny to have t h e s i g n a t u r e s i m p r i n t e d , pense. w h i c h cavwes d e l a y a n d ex- I f our suggestion could be adopted, w e should appre-~ clate it. B y motion d u l y seconded t h i s topic was r e - ferred t o t h e committee mentioned above, namely, Messrs, Higgins, Cheese, Netterstrom and Emerson, Thereupon t h e meeting adjourned until 1 0 a.m. Saturday, April 10,°.1920, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis