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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FEDERAL R E S E R V E B A N E S BOARD O F GOVERNORS INDEX TO PROCEEDINGS DECEMBER 1 9 1 4 Secretary's Report I to XIl Vol, I * I * Ti 4 i m V " V pages 1 to 2 9 i $ 0 to 106 t i t o 8 ¥ 8 to. 3 5 vL to 4 7 I 1 to Vol. A. B e Ae M e Acceptances m b e r s h i p 1 D i s c u s s i o n Account ing C o m m , Report Cipher Codes Commercial Paper C i r c u l a r No. 1 3 Security value with F,.R.Agt. Clearings a n d Collections C o m m . Recgommeniations Discusion 1 8 to 2 5 28 to 24 Mekay Plen Settlement Compution Rebates Discount Rate Reserve S State Banks e H g r e t i g a c t e t o Members i o A d m i s s i o n Waiver o f Demand ami Notice https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis o n https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis thet tne ¢oaferenge mest with the: ef 5:96 Peis The proggsad roiuastiiana ef the Serre palais of Stele Sonke wud Tract Geopemice feppenrieg ia drefi aactered 93) were tekon up for discussion. » He folleving wetes vere paced: Seetion 4, 44 was yotod te suxce thet the poregrenk chewid reads “tgder eutherigntien ef an effirestiw: wete ef sherge holders revTesentins: « wajerity «ef ite sxerse, te wake e p glieetien t e itis Setersi segerv: Sonrd, thrauch fhe ohne halen of the federal Seserve Beak i n t h dietrict, t o subserite for an cement of ghotk b n euch fetierel Asserve Bank ¢eusl o t per te aixz per cent of ite sephicd and surplus . 4@@ tee Semeiesn & be seemed t e i ; “fe mubhe @ statement of iis souditdon os r e p e r w d ay the *oteres Seserwa Seeed, adcamendiec t y = gortis Saute o f the anujerity, int in me seae leet then five ef ite directors, thay i s thedr Spinige the acscie vers setaxiiy werth st least the welues s t whieh they a y in Gosh statement.” amd thet ihe werde efter tia word “exereioine” i n ceetion 2 of perugreph 6 be strigien euig t e t the Ineguece feliowing thed i n Seetion 3 bo strigkon out, a nSB tant the verd “age” b e insurtes just before the werd “exercising.* mc thet at the end of the getend perugrapck em page 3 shoold s¢ inserted tae fellewing: , ah ihe nto Sent or Trust Brine A —e t e menberahig they t h e s t h e a s e B e @ t e c i o n , with out obinining the px <a app roy vai of the “Pederek 3 soserys Desa.” fod that paragraph SB, timvieg t 6 6 with oxenineiiens, b e seneyes. = fia present form wi thea camer ervignags ‘het p e e s tirwe a n i f o u r b o reGuged t a « brief tabuketed fers by p i o mumered and istiered, iustend of the fora in wnicn % aay mow eppemy d m Gireaiar -76, ea6 thet the Govermers gonereliy resomeend i a the federnl “eperyve a g e n tiet t h e regue Yatiens e f the Seard b o mdueed t e that Pars n e c d i n c e o m d déiviatens o f tepios severed S y t h e :ee)A e e d o e d rae gach a way ae tims 4% is segheomieslly simple t e arrive 5 | «t an uaderctiandiag of the reguictions.< a& the requeet of Me. Solis ef 54. Lewin, « letter received by him from the President «nd Goeancel s f t e Siseinegievd Valleys Sruet Company heceted in Rie distriet, boswine o m the adedesion o f State Henke ce monyers, tas y e a inte the reeeri « 6 thie point. A f t e r further coasiderstiga o f thie ostier, snl 64 estien duly sade ani eecende!, 1 4 wee https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis iegerve Sempra b e requested o f ite regulation marked ;78 L i g a t i o n C a n a postpone t h e ¢ m i e a g , subseribing Tract e n d Bankes ‘Stete ve t o eLate until the Governors o f Banke, Keserve Peeeyen. o f re eteck the federal Reserve S e n e v e indivi dually ree Oppo nee 3 . & prepoec : 4 t h i e patty i t , o n t 4 pert dhreet a 0 the | ‘ pict ty. of s h e O V S H O K E t e g e r v e Hoard e e premplly a e veastble o n t h e prengeed reruletiene vnde «nd aweonded, t h e Seeretary was requested t e furnish S e each o f the deverwre « copy o f the phen which had been submite by the Chairaen o f the Conference, t e be considered f m gonnegtion with T h e plan referred t o was incerpornted i n t h e ree regulation ¢78, (wore: cord, ond appenre o n pepe 2 0 of mate +) 4 letter addroseed t o Fr. J . B s M e l e u c e l reletive t e State Bank momvership wig rend iute the record Gn wetion « a re@eae f o r dinner w e e takow o f 6 1 2 0 P e M e After t h e reeees t h e Genferunee tewngsombled w i t h t h e Federal fonerye B e a r d i u t h e L a t i e r ’ s v o o m a t 6 4 5 T r e s a u r y where an informal diseuesion of various motiora took plees, principally eonverning the antter o f clesring beiween the Podemsl Aasorve Bonka, a n d the meaning o f the w e r d "par" i m t h e statute, After this meeting t h e Conference reengeombict i n ite r e e w e t the Pete) Tilierd a ) 12 ‘The ratter o f hendiing t h e c l e a r e n c e b e t w o o n Peaa Ganke until the next meeting o f the Conference wae agnin teken u p ard Guoeed « thereupon, o n motion o f Mr. Geay, seconded b y ir, Ueterd, i t wae thet..we accept checks unen, ether Federni. Reserve diate eped’. * a t y e n ws *e y e d . f u e r k hs YY n e +4 e e s the vate o n thie motion eteanding ayee eoven, mayo three. T h e notion wee declared sarried, motion of Mr. Alken, seconded by Mr. “honin, jOTRD t h e t avy further ddegudeion of tho method of sing & d r a w s eon bonke within their own districts b e fearon 1 pou the next general seeting of the Conforenes. Ypen wetion duly made and sosended, 1 % was YORE? t h e t 4 4 4 6 t h e wense o f the soeting that the treneit cporatione which w e # w u l e r t e k e i n our reapective districts b e werelly in aeeordence with the roport of the Conniitee having wti n sheree e t the Genferende o f D o w rears neha herve i n Gete~ ober; t h e dise« a n d thet transit operations shewld b e eonfined t e tricte of the respective Federnl Reserve Banks, exeept with re spect t o shocks o n Federal Rogerve Danks was gubalttec a i read. o m , O n Shaniderntian motion scaly mete s a d segendod, 1 4 rer nived ef ihe Sereent yeaa b g ageopte . e n g h Governer. T h e revor$. eae ee A a , i e aed Ser tLenente and eseout a e : watursh p e g Be’ repre e e a n e © depertnerite ef A e u w g e ta s u c e s s , a s a e iowinge reeoose was, ‘ T h a t aah ijence m a d d Sing G I G , seePrve comks, ber with yey E s S a iden, t e folie ez e e ms cee ee required y t e federal Reserve i Deaths | (2) ‘Thet on afters ne take to seaure waifermity i m ol} formas uwaed in trensaeiions betowen faderel Keserwe Banke. (3) That each Méderel Regurve Beak elremely urge i t s agrber banka t e howe St6 2,2 eA, capsh ( f m menkd typo) end ite dietrict moter (ia larse deeleten 49% se) ieerinted on all checks hes ble in ite Giciriat. j7 a n eli other reepeole anch F e d e ~ aepresent 2 % Least} pooch ah os any be a ;rowed ty ite offiaers, Neerectfualivy wubeitts Whe Sy ceitenl leer, fichmond 26@0 C o soradweil, Sen fraaciece i d a Kopp, Kansas City S e e FiereAng, Shevelend Shonen: Gamon, «fa, e wea f He henszel, e B e e = e p a a g t o, ieevast, S o u t e n Chin 5. Midchury,. 2i. Leaie" cee weather a f gnilyar «fF d o o c e sheguomtd. O n motion duly mede ond ceeguiled it wes teat t h e Coversors 6 f tha Severve Senksc sited i tha nites a f demesé seihice g e d Atags et t e thelr comecl for e p i a i e n s , n p , tang. the E o SPeTHeTS P t Geet h e gee sexi mGeting ef the confereces. 4 wee inferseliy wetted that the aetier o f discenet rete peesgd far the recast. (ms metion duly wade and seqomied, thet the sanougcesees o f Cisceunt reiot be enda te mauecr bamke a7 the Caverners by tne omtier of the use of tolecgrephie codes wae takenap for seme 4 b a t e A g t s h y Gote for ¢ n e d r m o n B P pela j e s w i t i e s e f sae new York expert in th is for ier end repert ef t i e S e n f e r e n e s . The wubter of but m e Ggidon w o e tenon jhorcon.s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis df ti ne CONFERENCE OF THE GOVERNORS OF THE New Willard Hotel, Washington, D. c., _ Thursday, December 10, 1914. Alfred L, Aiken, Governor, Federal Reserve Bank, Boston, Mass. Benjamin Strong, Jr., Governor, Federal Reserve Bank, N e w York, N. Y. Charles J. Rhoads, Governor, Wederal Reserve Bank, Philadelphia, Pa., E. R. Fancher, Governor, Federal Reserve Bank, Cleveland, 0 . George J. Seay, Governor, Federal Reserve Bank, Richmond, Va. Joseph A. McCord, Governor, Tederal Reserve Bank, Atlanta, Ga. d. B. MeDougal, Governor, Federal Reserve Bank, Chicago, Ill. Rolla Wells, Governor, Federal Reserve Bank, St. Louis, Mo. Theodore Wold, Governor, Federal Reserve Bank, Minneapolis, Minn. Chas. M. Sawyer, Governor, Federal Reserve Bark, Kansas City, Mo. Oscar Wells, Governor, Federal Reserve Bank, Dallas, Texas. | George C. Bordwell, representing the Governor of the Federal Reserve Bank of Sen Francisco. CG. R. Mekay, Daputy Governor, Federal Reserve Bank, Chicago, Til. J. F. Curtis, Secretary and Counsel, — Federal Reserve Bank, N e w York, N. Y. The meeting was called to order at 11 @. m. in the Interstate Commerce Commission hearing room at the New Willard Hotel, Washington, D. ¢. The meeting thereupon proceeded to organize by electing Mr. Benjamin Strong, Jr., Chairman, a n d Mr. J. F. Cartis, Secretary o f the conference. (Note: B y direction o f the Secretary, t h e conference was re- ported as a general informal discussion to a point later indicated.) The Chairman stated that up to the time of the arrival of certain embers o f the committee who-had waited wpon the Federal Reserve Board, and the arrival of the reporter,e h tconference had adopted first, the or https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis dex o f the program, a n d were now about t o contime the discussion o f various suggestions then under consideration. The inquiry was here made as to whether the reserve banks had been invited individually to come in as honorary members of the American Bankers Association, s o that they could have some weight with the Association itself; It was stated that as honorary members they would have n o voting power, and that certain ebjections might be removed from the minds of the Federal Reserve Board in case membership was so restricted, a s otherwise i t might not be advisable for the members t o accept the invitation. The Chairman stated that he thought that one of the advantages to be gained would be a closer relationship and kindlier feeling betweon ali the banks, state and national, and, though he did not imow exactly how many banks were identified with these associations, certainly there were a large percentage of all the banks in the coumtry. I t seemed to him that it would be policy t o cutline their plan t o the Board. T h i s was also the impression of the rest of the members. It was then suggested to the Chairman that it might be well for the reserve banks not to initiate this matter, but let the associations give the invitations. a invitation had been sent The Chairman stated that he understood n to every meuber bank b y the A. B. A. G o v e r n o r MeCord suggested that h e gould report for the six states in his district and for the Georgia State Association, that both had invited them to become members, and that the State Association had invited thom te become an honorary moniber. T h a t in view of the letter which they had received from the Secretary, they considered they could not b e a full affiliated member. G o v e r n o r McDougal stated that he thought that i f they were t o be admitted, then the quest ion might naturally arise as to whether or not some of the rules and regulations might, involve then i n some embarrassment. Governor Fancher inquired a s t o whether any member had been em- barrassed by association with the A. B. A., whether they fouhd it restricting in any sanee G o v e r n o r Fancher stated that he had reference t o the member's institution as a national banking institution -- w a s 4% restric- tive or irksome? https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H e stated that he did not think the member would find (2) it so, so far as the Federal Reserve Board went, and he stated that he thought the proposition should rather come from us than from them. And he suggested that before determining anything further in the mttor, they should determine that. N o objection was expressed b y several members present, a n d one o f the members suggested t o the Chairman that they had @ precedent i n relations with the clearing house, that they were to become members of clearing houses of their cities without the regular obligations attaching to them as attached to clearing houses, and that that would b e the prevailing rule as t o joining the association. The Chairman stated that it had beon moved that the matter be referred to the Federal Reserve Board, a s well as the matter of joining the State Banking Association, for a statement of policy with a recommondation that a uniform policy be adopted in this regard, and that it was the sense of the meeting that such associations should be made. The inquiry was then made as t o whether they should refer i t to the Federal Reserve Board, a s it was thought they should first find out Whether or not it would be objectionable t o them. S o m e one suggested that the word "informal" might be inserted in the resolution. The Chairman stated that there was n o objtecion t o that amend- mont, i n the language of the resolution, and that i n the absence of objec- tion the meeting might consider it as adopted. ( N o objection). The Chairman then stated that the meeting was engaged i n discusSing a question o f rather minor importance ninth that possibly they had better now conclude that topic, which was the method of computing discounts . In order to bring the question before the meeting, h o stated what the situation was in New York, where his district comprised m t one state. On inguiry o f counsel, they were advised that the law i n New York required the discount to be commted by a certain method, not however, gonerally _@bserved i n that district; t h e method prescribed b y the statute would require them to compute the discount for the number o f days from the date of discount to the date of maturity of the note, with interest on the basis o f one day's interest being one 365ths o f a year's interest a t the prescribed rate. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B y custom in New York, however, interest has been cole ! (3) lected by the banks o n the basis of 360 days to the year. T h e advice ef counsel as to the law in New York requiring the basis of 365 days to @ year, they had therefore adopted that policy. In reply t o a question b y Governor MeDougal a s t o whether i t was the Chairran's epinion that they should give information to the various banks o n that point, the Chairman stated that he really did not feel confident enough to express an opinion as to a question which had to do with the laws of different states, and particularly when practically all of the other banks outside of New York covered more than one state, where the law in those different states might be different. S o far as he had any epinion o n the subject a s to the other districts, i t was that 1 % would b e impossible for the Federal Reserve Board to make a wni-forn regulation which would fairly cover all districts. S o m e one inquired as to whether or not the members had received a notice abeut computing interest, t o which the Chairman replied that he had and that personally as to his district he would be very reluctant to observe it. T h e inquiry was here made as to whether that was not a recoumendation, t o which the Chairman replied that it was, b a h that they could not observe 1 ¢ simply because i t was contrary t o S o m e one inquired whether the New York law said discount or the law. T h e Chairman replied that h e believed i t said poth interest and interest. discount. I t was stated that it was very important whether the law did gay that or not, a s etherwise, t n the absence of regulaticn, one might be able to discount paper by whatever method one desired to figure interest. The gensral opinion was then expressed that the law seemed t o require interest t o be colmuted for the 365 days, that is for the actually elapsed time, but that that policy as stated by Governor McBord, would not apply in his @istrict, where the word "discount" i s omitted from the statute. ‘hina one then suggested that they Gold therefore comply with the request ef the Bosrd to meke it 360. It was then moved that i t was thé sense o f the neeting that they should not take any action o n that setter a t this time, a s it would raise & problem which they did not yet comfront. Tho Chairman stated that it had been upved and socended that no action be taken as he umierstood it, b y way of reference to the Federal Reserve https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Board o r by way of adopting a wiiform policy at this time with (4) reference to the method of computing discount. was any further question t o that motion. H e asked whether there I t was suggested b y one o f the members that i n his district they imposed a minimum charge, a n d that t e do so made the matter very complicated, t o run a plece o f paper through their intricate accounting machinery. The inquiry was also made as t o what was the minimum charge throughout that district, t o which the answer was made that it was fitty cents. I t was stated that of course it was the desire of the meeting not to do anything that would interfere with the practices, ani to substitute a different charge or principle might be the means of doing it. That the members believed i t to be the desire t o disturb existing practices ag little a s possible. The Chairman then inguired whether the members were ready for a vote o n the motion, which had been seconded, a n d called for a yea and nay vote. T h e motion was passed. The Chairman then stated that i n connection with this discussion they should alse consider the question o f the value o f notes bearing interest a t which they should b e offered a s collateral for Federal reserve notes te Federal Reserve Agents: w h e t h e r a note should be taken at its face value or discount value. H e stated that the policy of his institu- tions where the note was drawing interest, was to add the amount of interest to emturity to the face of the note, thus avoiding confusion and umnecessary work t o the discount department. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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