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Federal Reserve Bank of St. Louis
mediary o f gormmmisation o n the avhjeots whieh w e ard debating?
lie. Geay? A n d pay our pre pata of tae expense?
2°, Chadrmanr I
had net thought o f thet.
I m ether words, h o w
permanent is “his organiuetdien. Should we elett a chairman and seoretary at each méeting or fer a term? . How do you want it handled?
tie. Vandher: I
think we ought at least to have a permanent
A,
M
x
, Cheigman: I
dent think you ought to have a permanent
Ghademem., :
iy. Fanchort I
merely thought of the ascretary first, having in
mind the sending of thip information, calling of the meetings, things
ofthat, sort: someone with whon ws ean have correspondence and we can
have. éurtospond with the Federal Reserve Gosrd as to these meetings.
I think 4 4 is | d e s i r a b l e t o center semewhared, a n d have i n mind
the matter ef a permanent seoretary, a m i T would offer a metion that
Mr, Gurtis be clected permanent seeretary of this Board of Governors.
sity, Seay? « Seon: ,
Mr, Rhosdest Y o u l d it be eagreonble to amend that te wake it the
present shairman and seorstary for the next calendar year, until the
end of 191.5%
ir. Chaieuent “Tf that were done, i t soem: t o me 1t rould be
desirable to have a n alternets and in the case I should be wiahle to
come - to ettent +
tir, MeDougadts (Intervesing)
W e Gould always make a temporary .
chairman. |
My, Chairman: T h e Miret motion is for the appointment of Mr.
Curtis as permanent, secretary until his suecesaor is elected.
Fancher: “That in’ the pointy
2 Ghademan:
Chairman:
A l l i n Taver say “nye*. Y A v e n * have 44, motion i s
Semsbody wlll.have to put ea motion about this
Chadrmans
Mors Rhoades: i
will take the Diberty of putting that motion
that Mr, Strong be chosen chairnan to serve until the end of 1915.
ltr, MaDougall: Whywatil the ondof1915T Wehave noannual
nesting or anything of that sort, I
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Federal Reserve Bank of St. Louis
would suggest that Mr. Strong
bemado permanent shairzan.
ii, Obairaan: 1 don"t kmer about that.
Me. Mekagr 2 . agree with thes.
Mr, Chairment J + . 4 s a very unfortummte thing t o have an officer
uhde® tie ne odes stiyoor renorval.
fo, MoDoucall: I
chowld Ike te gay that.I don't see why it
was made just until the ond of this month.
Me, Aiken? I
said 1015 1 think.
Mr, Modougall; I
fiken?
understood the end o f the ourrent years
T o moant 1935,
ALL i n faver o f that motion please say "aye".
The
Yaves" Imve It. I t is earricd.
lie, Cheadxemen:
W e might aleo anpoint Vrw Curtir eur adviser in
matters of parlianentary law.
I have deferrad fron the eonsiderction ef the next ftom an long
as possible, I t I think that we hed better decide what is to be done.
i have not appointed the aommittes besause I am in doubt ag to one mat~
ter. I
wonld like: <¢he advice of thin meeting, T h e motion for the
appointment of the coumittes wan made by Mr. Fancher, h e world he
naturslly the chatesan of thet oomittec, T h e qucation might erige
+o bere the somrittes anpointed OOTI«
tec sities ~ of beth of the sities «
one or the cthor of which would noterelly be selected aa the point of
settlement of these oxchanges.
O n the other hemd, “ir. MeDougell and
Mr, MeKay are particularly fitted for this, have msde a pariioular
study o
f thie mitter, and 44 seems to me thet Mr. MeDougall should
certainly .corve
‘Mr, Meboashll: May Iaay thet {f there is anything in evidence
from anything I have said or done thet would indicate that I have
made 2 partiovlar study of thie matter T went te Cispessess your mind
of 44. “Ac @ matter of fact I have taken interest i m the transit depertuent of theso banks. I
should Like te seo Mr. Yotay put on that
ecinittee, and Tbeliove that another w a a to go om that eomnbttee
should be Me Fancher, mon having found through experience just what
they ought to have to serve on that committes., I
think your suggestion
that he be made chairman is a very excellent ones and that the other )
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Federal Reserve Bank of St. Louis
members should bo chosen from those who have had setual expertence,
rather ‘han these tle heve been logking at it from the other side
of the femee. T h a t ia what I would say,
ba. Uhairaani W e l l there ore a number e f considerations thet
roally do outer inte ike service of this somittee, O n e is that the
eomAtties shouid fairiy represent tne point of view of the different
e¢ctlons of the coutry a s acieesed b y exohanges. 1
am sorry that
the ceamlttee is limited to three,
Ure Fanchex; W e l l had i had in mind that this was goimg te take
4 1 ghould have made a pavger comelttee, and i quite agree
‘si the chuivaan.
S u I simply hed i n mind the possibi h e a d i n g
of this inte sore definite shape. i
did not have in mind the work-
ing out of this thing that seems an entirely new proposition.
Un, sGchord; 2
aa willing thet the comaittee be enlarged to
five if it-ds aduissabic,
ats Seay: t J amend that by veling that the ohairsan be one of
that comaittes.
iy, ®hoaden: I
seoond both tie motion and the emendnuent.
Mz, “gvsormd: I
eacceph thet auendent i n the original motion.
ir, Chaiyuma Shen the metien now stands that the original métion
aspassed youterday be amended enlarging the coumittee to a comelttes
of five, insieud of theese, of waich eomittee the chairman should be
Gne member, s r e you ready Loy the question? A l l those in faver will
please siguizy by saying “aye”. ("Ayes" responded.) These opposed
"no", T h e “ayus" hawe it, the motion is carried.
Now aacther point ia cermestion with that eomaittee. S o w will
thet coumittes bo-ebhe teweet. Zor-the purpose of discussing the
subject anc maxing a report, b e e s geography enter into it.
Ur. Fancher;
I t is very. impertant i n the make-up of that com-
mittens :
ties Cnairnad:
Gcogeaphy: éntore inte the problem also.
May i Make a suggestion en ihat peint, that we may - if a com
mittes of Dive Governors ia appointed - have the privilege of each
Gevermer sclecting a man to represent him at any meeting, who in _
the case of the Federal Reserve Bank of few York would know agreat
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Federal Reserve Bank of St. Louis
deal-more ahout thie owbject than I de. ‘These five men sould prepare
& report for subeiselon 4 ¢ their respective pringipeis and sorrespond-
@neo would probelly cnablia the nenders.of the coumlttee to arrive at
au Unceratandiag sulliclently cloar t o enable them to have a meeting
inmediately belers toe meeting on the 2imd, and if euch a meeting
Were Bppoinesa ~ Lf sush a cosmitites were appointed « with the priviiege Gl appoiating alternates, I would ask Governor Mobougall to serve
on thet coumiitee with Ma, Mouay & wepresent hin if desirable; and I
would ask My. Vancher t e serva o n that coomitée@ and if he wanted a
subsiitute could vepiosent hidy and possibly a committee of five in
that way would be appointed t o represent ail sections of the country,
and through $he xepresentalives not taking the Governers away from
their fusiness. G o n e information taus could b a gotten b y the fend.
But X don't want t o appoint that caumittee wiiesa that suggestion
BOURNE bo. neeG wath Payor.
egy
ae, Seay: I
think that is a very practical suggestion.
Ke Chairman: ‘thon i would like t w appoint Mrs Meleugall, Mr,
Aiken, Mer, Sansher aad ux, weay ou Laal eouaiived,
. Poy the appuinweont of thc comaittiee was originally
Sake b y Governor Fancher and I take i t that h e would naturally b e the
Cheizman ef the i M F L O »
My, Fancher: Just a uenoat, 1
rather think that with Mr, demay
working with i. MeDougall ihat by, VoDougell would be the logieal
chairman of that conuiiviee. I t sogas to me wo ehould depart from
precedent i n this cage.
Mr, Melougail:
I f there is anything that 1 ean wiy furtner to
give you & cleaver undevetanding of the fact that I know a very little
about. this busiaess I would like to aay it, S u b with Me, meRay I
shall be very g.ad to undertake whatever sesponsibilities are put
Upon xa,
Ye. Ghairnu I
hepe w e agree t o that very snortly, Wheat I will
dowill bo 40 send te Chisage @ representative of the Federal Reserve
Sank of New York. B a c h gould do the saae thing, s o that they could
doin Me, Meley and dna short time I hope have souething definite,
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Federal Reserve Bank of St. Louis
Geverner McDougall could keep in touch with them,
ur, Aiken: W o u l d 14 be your understanding thet as an alternate
we must appoint « man on the ateff of the Federal Reserve tanks? Boe
cause I kmow there are one or two men who are éfficers of the larger
banks i n Boston, I think one of whom would b e very mich more compe-
tent than anyone we have,
Mr. MeDougall:
W e ought to be permitted to avail ourselves of
the best mon outside of the organisation if neceasary.
Mr, MeGhord: _Ngbne outeide of a member bank.
Mr, Chairman:
W e ought not to go outside the realm of the member
banks.
(Then ensued a general discussion as to the advisability of
going outside the realm of the member banks, which it was the con
sensus of opinion shovld net be done.)
iy. Chairman: I n view of thie discussion then I will appoint
Governor MeDougall chairman of this special committee.
Bhat is your pleasure now i n regard t o the procedure t o he
followed prior to the meeting of the 22nd in ordor to dispose of this
question?
Me. MoChord: Mr. Ghairman, from a practical standpoint I don't
see how you can get away from what New York has done.
I t will atill
beconfined te the District, and thet is one of the things that we
have te got away from, beoause any exchanges we REBEEE agreed to
handle have got to go beyond the District lines and it would tie me
upright off. I f I send out checks to my member benks in reserve
cities and they cannot recoup by giving me exchange o n the Federal
Reserve Genter why the system is tied up at once, ond I don't see
any other way out of it. A national bank of San Francisee can only
recover by giving mo New York exchange but they have none on the
Yederal Reserve Bank of New York but they have it on the Hanover
Natéonal Bank. They have got to switch it around if they are coming
tome in any other way. Ultimately it comes back to the some proposition each and every tame and I see no way out of it to circunmsoribe
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Federal Reserve Bank of St. Louis
it any closer than you have at the present tines
lis Penoher: Covermor MeChord, i f your digtrict was contained
there and did not go outside, would not that sert of wash itself up
within the Distedét? That is the way it has worked with us. W e do
not take anything ont of cur Distelet. :
Myre MoChord: S u t you are not self-contained.
Mee Chairman; L e t me elite a capo, with all due respect, o f some~
thing that happened in-New York. O n e of owr member benks in New York
received a check of one of your member berks on the Cleveland Federal
Roserve Barks I t came to me in the ordinary course of tusinesa, i n
faet they received a geoond or third item of this character. T h a t
check was bivcughtate us for deposit and wnder the terms of
our clrouler ar! forwerded t o you, and under the terms of your
circular was not received from.us for deposit, ‘for our credit. H o w
the only way we might have dealt with that, cheek wea to refuse 14 on
deposdis
Mige Fancher: T h e bank had no right to drew ite T h e y had
rieht t o drow ite
My» MeChord: Y o u mean te say thet you ean control it after it
gees out of ite hands by endorsement?
hive Fancher:
O u r inetrustions are very explicit. W h a t are you
doing i n your District Mrs Moleugall, drawing them this way?
bare MeDougall:
Y e are@e
Mere Adkent Aron't we pursuing something of the course we pur~sued lsst, night? I t sooms to mo we have to settle this up and
settle 1% up ‘promptly.
Mee MoChords I
Mee Weller I
was just acking the questions
beg your pardon ifr. Gheirmen. D e e s not the appoint~
mont of this somittes for the purpose of working out a plan for the
settlement of bolances presuppose our eonvistion thet we are going to
handle checks o n the federal Reserve Banke?
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Federal Reserve Bank of St. Louis
hire NeKay: (Interposing) Mr. Chairman line Nella: I
was going to aay Mrs Mohay thet if we are going to
aneffort to have checks pass current dram on the twelve
13
convinced that this is necessary
Fedebel Reserve Banks w e are, rather
matter we ought to settle beunder the terus of the law. © That te a
then I don't think
fore we go any further. I f that is our eontantion
for the noxt five o r six wookses
thet w e should take a backward atep
this committee ought t o have
But if we are net going t o de that then
theae views before it.
Bank has already
ir, Chadrman: ‘ T h e New York federal Reserve
items. T h e t has been
agreed to take for jumediate oredit all these
Glearing House banks as
done all over the country by the how York
we san get away from that.
well. W e have that start and I don't think
Sank would have to do
Tt would seem to me that every Federal Reserve
the game things
Chicago and
Here is the point, the Federal Reserve Banks of
Ddeteicte end we have got
Cleveland have boon taking items in other
what we could by re~
seme elready. N o w we have beon settling for
mitting i n exchange.
have
jank will
Wr, MoXays H o w I think that every federal Reserve
right away. ‘there
te do the same thing and wili have to do it
of
o question about that. 1 mean they will have to take items
is n
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Federal Reserve Bank of St. Louis
other Federal Reserve Bankse
Me, Fancher: ‘That would be eredit accounte?
go on
don"t agree with ir. Mohay that ve have to
we elected before - or
with it begause it, haa been started, but if
tip, Welle: I
perhaps a
upen some plan i n
the conelusion o f - the next meeting
Gace W e ali agreed.
My, MoDougalls I
think that shat matter haa been definitely
appointed for. I don't
decided that that is what our coumittes was
back inte thet matter.
think that there is any necessity Tor going
of the comaittee
Weare going to do this. J think the appointment
would indicate it.
Mebougar, that
My, Chaismanr W i l l you make a motion,” Governor
to whether we are
will bring that feature of the matter to vote, aa
receive on deposit
agreed that the twelve Yederal. Reserve Janke shall
for immediate credit a t par checks drawn o n other Federal Reserve
Banks?
Mr. McDougall: I
Mr. Chairman:
will make that motion i n those words.
I s that motion seconded?
Mr, MeChord: I
will second that motion.
Mr. Bardwell: I
didn't understand that at par was final.
We
are t o accept checks o n other Federal Reserve Banks, but “at par"
will b e a question o f debate.
I t would not interfere with our plan
ef operation and I think a n experiment will show whether there s h o l d
be a charge or not.
W e can make our plan of operation independently
of whether we are going to charge for exchange o r not.
Mr. Chairman:
Y o u are getting back t o the same question o f how
much o f your reserves are going t o be absorbed b y items i n the mail.
The question i s whether you are willing a s a practical matter t o try
an experiment for a few weeks o r whether you want t o attach t o the
plan some privilege o f protecting yourselves b y making a charge o r
agreeing o n a basis o f settlement, a basis b y which you can remit
exchange t o the creditor bank; and, i f Governor MeDougali's motion
is seconded, that would come a s the next item o n the program.
Mr. MeDougell: I n - m a k i n g that motion i t was having i n mind that
we would decide o n the point as to whether we would have elearing relations o f the twelve banks ~ Federal Reserve Banks.
T h a t w a s what I
hed in mind, I-did-not want my motion to cover the point definitely
as to these items being at par. I
think we ought to keep in reserve
er hold off at least i n the matter o f determining when they ere t o be
credited. Personally I don't like the idea of orediting San Francisoo
and New York the day of receipt. B u t we are. going to have clearing
relations.
Mr. Chairman: W i l l you make your motion subject t o satisfactory
arrangement being adopted later as to the question of time and the
method of settling resulting: balances?
Mr. Aiken: Might I suggest that that motion be amended so that
it might not apply pending the receipt of*and the adoption of a
Clearing plan from t h e committee?
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Federal Reserve Bank of St. Louis
Mr. Seay: S i n c e there was offered yesterday a motion t o that
effeot, which Sesel ved: the same consideration that other motions did,
and since there are.one o r two items i n that connection, m i g h t I
read
this, asking Governor M c D o u g a l l t
o consider it? M a y I offer this t o
Governor MeDougall for amendment o r incorporation into his motion?
| " R e s o l v e d that Federal Reserve Banks from this date accept f o r ’
immediate credit a t par checks o n each other. \
"That any creditor bank shall have the right t o cali for a settle- \
| ment from a debtor bank a t any time i n funds satisfactory t o it, and
| that the expense o f such settlement b e borne half b y the debtor bank
and half by the creditor bank,
"fhat any definite plan o f settlement and clearance a t stated
. periods o r otherwise be deferred until the next meeting of this body,
after the report o f the special committee o n this subject, i n order
. that we may heave for guidance the benefit of experience i m the prac-
| tieal working of “the ‘system.
"That the creditor bank treat a s Reserve Cash its net oredit bal-
‘ ance with all other Reserve Banks, and that the debtor bank deduct
from its reserve oash its debtor balance.
"and that the definition of "par" be referred to the Federal
Reserve Board.® |
As a corollary to that andgas a part of the resolution I would
gay that w e resolve further that after January first checks o f mem=
ber banks o n any member bank i n the Federal Reserve cities b e r e
' ceived for credit at par, subject to such time allowance as may be
+ deemed fit. |
:
M r , McChord: ‘dal Janusity first?
:
Mr, Seay: I
merely offered t h a t i n lieu o f the other, I
make that part of the motion. I
did not
threw that out.as a thought to be
considered while you are considering the first.
Mr. Aiken: I
would like t o ask the Secretary t o read the motion
as made b y Governor McDougall.
— M r , Gurtis: . (Reading) "That we are agreed that the twelve
4
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Federal Reserve Bank of St. Louis
%
’ Pederal Reserve Banks ghall receive o n deposit ffor immediate) eredit
at per cheeks drawn o n other Federal. Reserve Pantie.
ive Kebougall: i
woold Mike te, i f 1 may, change that b y eliminat-
ing the word “iseeliate" and incorporating therein a clause *4o recetve
at por (for eredit after making due allowsmee for thetime nesessary to
reach the dewtination in accordance with a shart to be prepared® / O e
something o f that icind.
lis Wellet Yhat is ea temporary arrangement?
Ky. KGDougells T h e t is temporary; and I would alas Tike to inserporate i n thet, i f we may, m motion that. the Chairman appoint a
comalttiee for the express yuurpose of considering o r devising as Leaporary
plan by which balances aceruing may be settieds
iit. Ghaivnen: G o v e r n o r NeChord, your sdeond t o this motion i e mubject t o revocation i f you are ready t o adopt the reviaions
litte biecherd: I
acquiesce.
Mee Cheademens Governor Seay has offered a n amenduent.
tir. Seays I
don't go quite so far, If you will allow ne, I morely
offered that f o Covernor LeDougell t c congider whether h e wes prepared
to incorporate that i n his present votieme I
think %
we saeh ret
somewhere »
Mee gdougail: I
think thet i t would b e well t o let this g o ea it
4s
lives Seay:
W e wight vote on Governer Melougell'’s motion.
ive MoGhords Eefere that motion is put Mes Chairman, would thet
prevent Governer Strong taking over my cheeks on his member banks in
the elty of New York in order to enoble me to setile my balances
with hin? Would thet only refer te cheeks on Padoral Reserve Ranke?
hts Chairman:
Y o u could refer that 4 c the soemittees Governor
MeDougall's motion provides thet Federal Reserve Banks ghall hereafter
receive o n deposit all checks drawn o n Federal Reserve Senke end ahkall
give credit for an allowanee of time ag provided in charia, end that a
; committee b e uppointed t o consider the methed o f settling balances re«
Suiting from those oredite.
A m I corPeot Governor MeDougallt
ii. Modougalis You ere correct.
Mr. Soayi <chere ig only .one objeetion cegura to me, . If you pase
that you. pass. 44 without knbeiing the settlement proposition thet will
hepeseed.
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Federal Reserve Bank of St. Louis
ie MeDougeli:
T h e intent was that the eoumdties i s te go to
47
work this aferncon.
is Wella: B u t they will expect oredit immediately.
Well o n thet point Governor Wells the qgucation of
whet kind of eredit you oan give to your member banks on New York ozchange is not involved so far os our accounting is congerned. A m i
4? Governor MeDougall's notion prevedls, f sheid teke the ssa ates of
submitting t o the committee thas the Federal R e s e r v e Bank i n New Tork
will be.very giad oieis 4 0 eff eet any arrangement for the receipt o f
cheoks dram o n New York Banks who are teubera of the clearing house
association for the adjustment of these balances if that is more
economical.
I f 44% comes tc the quéstion of the cost of remitting
noney or the cost of buying exchange o n New York elther operation
4s subject i n uy opinion te the same sort of division ef charges o v
expenses that has been suggested hers that would be 4 yolved in the
actual shipment of the currency. ‘The whole plan being an experiment
reports at our next meetings I
would favor the
Bank extending 4 0 the other banks with which i t had accounts
every ponsible facility to settle this exchange and every possible
neens of effeoting a fody adjustment of the cost of doing a6, W e
would simply want a few days i n which t o have our organization under=
stand clearly that v e would get rox Attanees frou the eleven other
Federal Reserve Ranks
iis:
T h e point t e this, when i go back - as cach ef us
goback ~ to our respective Metricts, they are 211 going to use
theix’ checks on us as New York exchanges W e den’ iknow what affoot
that will haves
wold: M a y I ask te heave the méetion Tead?
heirmant T h e substence of the motdon, Governor Wold, is
i that t h e F e R e s e r v e danks shall horeaf'tor reosive e m credit,
for deposit, afier allowance of the (ime of tronamiscisa t o the
ederal Reserve Sank o n which the ites is Grawa a s showm b y the
cherte subsitted, pending the conclusion of the whole subject of
held
settionerts o f the federal Reserve Banke a t a. mocting 4 0 be
in WeshingLon o n denusry 22nd. A n d thet @ somites b e appointed
now 4¢ consider end report at.once - recermend a t once - what
nethed ghould be adopted for settling the resulting belences between
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Federal Reserve Bank of St. Louis
Federal Reserve Banks. ‘ir, MeDougall's motion, i n other words, does
not contemplate that the Fedoral Reserve Bank o f New York o r of Bon-~
ton or of Philadelphia shail continue t o receive Federal Reserve
Bank checks at par, but after an allowance of time for collection
or rewittance to the drawee bank as shown o n the sehedule.
Mp. Weller M r . Chairmen, bearing in wind that we are loading
it down with sone revision asa temperary.mattor, could we not either
waive the matter in tote er at loact waive 4+ as Foxe appl deg to ¢entral
reserve cities?
Mr. Seay: M r , Chaigman, w e are also confronted with the propo-
sition of anether bank offering te do more than we do. Gevernor Wells —
igs doing more for his member banks now than we would propose to de
in Governor McDougall's resolution.
lin, Bardwell; I n regard to the question of "por®, 1 take it thet
we will give Federal Binerre Banks “par” for checks o n us; that if we
haye.to charge exchange we cen charge it against the drawer of the
check. ,
,
:
My, Chairmant T h a t is what this act sentenplates,
T t de a
| perfeotlyunworkable scheme. Wow Imaybewrong aboutthis, but I
‘wmderatand that the gentleman who drafted this act had in mind that
every customer of a member bank might b e charged for the privilege
of drawing on his secount. |
iy, Aiken? I n spite of my expressiona ef opinion a
g
e te the
question of time, I had hoped that thie morning thet we would asrea
to try out an arrangement of exchange that might be established and
bear the expenses, i t seems t o me that i n the lest anelysia the obe 4
jection 18 a# to the cest of the shipment, but for a period of
month or five weeks it will mot be such an. anount es will seriously
hurt any Federal. Resorve. Bank, and pending the report o f the commit-~
teo appointed te sugscest: a clearing scheme, which sormittes I under~
stend has the right to incorporate in that resort the nebher of
time or anything that portaina 40 1t.° E
had hoped that we would
be able to accent thig: ‘general situation for the time being and
go on and attend to some of the other things we have on hand.
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Federal Reserve Bank of St. Louis
1G
Wo can ait here until a woek from now and not arrive at anything.
fie, Chairsean:
I s it your imtention Governorxy Alken to call for a
vote on the metion?
Ue. Asem: T
agk the question.
Mr. Chairman: I don't wank to force this proceeding over any
objections but 14 seemg to me we have to get to some conclusion,
(The Governtrs then engaged in s general discussion as to
whether or not the question should bo put to a vote, during which
discussion Mr, Panchor expressed himself as objegting to it and
stated that he would vote ageitut 4+.) 4
Me, Curtiss, I would. like to.make a suggestion and that is that
the question of whether or hot, the word "par" i n the statute means
par for inmediate credit or par after a certain time is ultimately
a question for, Ahe decision of the Board, and it might be that the
motion @f ur, WeDougall'y should be emonded so as to be subject to
a decision o f the Federal Reserve Beard i n that regard, which might
some down at any moment, 3
|
tie, Aikent W h y can't we take thig right up with the Pederel
Reserve Heard. 8
Mee Suey: I
Had invmind that the opinion of the Federal Reserve
Board 42 in certain respsets on mexplored field, but taking what
you yourself aaid yesterday of having knowledge of the opinion of
onenouber, andtaking whet m
Tyself haveheard eftheopinion of
another menber whieh I believe carries with it the opinion of three
influential members, they certainly contemplate the receiving by
the ¥ederal Réserve Banks of cheeke for fimediste oredit subject to
no time allowance. 1
would Mike t o Yead the resolution which I
thought I offarred yesterday whieh oovers the point, with the varia~
tion Mr. ‘ebougall proposes:
(Roading) "Resolved that Federal Aoserve Banks from this date
accept at par cheeks on sach othor.
"That any orediter bank ghali have the right te call for a°
settlement from a debtor benk et any time in funds satisfactory to
it, and that the expense o f such settlement b e borne half b y the
debtor bank and half by the crediter bank,
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Federal Reserve Bank of St. Louis
Lo
"That any definite plan of clearance and settlexent at stated
periods or otherwine be deferred witdi the next meeting of this bedy,
after the report of the special committee o n this subjest, i n order
that wo may have for guidance the bonefit of experience im the practical werking of the syetem.
"That the erediter benk treat ag Reserve Cash fic net oredit
balance vith 211 other Reserve Banks, and thet the debtor bank deduet from ite Recorve Cash ite debtor balances. |
"And thet the definition of the word * par” ke vefleorred to the
Vederal Reserve board forthwith."
My, Chaiynant Governor MeDeugall I don"t uncerstend that, that
is offered as an amenduant to your sotlon.
My. Goay:
I t merely a statesent. of the idea aa one opposed to
the other, i n weitten for.
My, UeRougelis I f wo don*+ mow what the word "par" noang we
had better find out if we can, W o w it 49 the word immediate there
that I was trying t o eliminate.
Mr, Wellet Mey I ask Uys MeDeugall if hé deaires to bring inte
this six weeks practice the time elemont. or ia he willing to waive
the time element until we have worked out a permanent plan?
Ur, Ghotrman: Covernor WeDougall's first notion immediately
credited at par; he thon euended that by Slininating the word
“immediate” and making en allewsnae sor tine.
Mey I ask Governcr McDougall if thiu motion suggested b y deve
erty Seay, with the added claues sugtested b y Secretary Gurtia t o
the effect that the definition of "pur! be subsiited at onve to the
Federal Reserve Bosrd, g a n b e now the subject o f a resolution and
subeitted to this meeting for 2 vote? T h e vardation of the two
motions i¢ that Governor Seay's suggsetion eliminates the words
Wirmedinte credit" and provided for "credit at par’, amd wr, Gurtis’
augeeetion subritea the construction o f the word "par* t o the Federal
Reserve Board, and Governor Seay'a resolution ales exbodies the proposed plan for settienent which you dasire t o a special soumittes,
tir. Mebongalls ‘That would be satisfaotory to me.
: l i v , Chadrmant M a y I ask Gevermor Seay to let us hawe the objeet
iof his handiwork for subaission to the Secretary,
&
| Be ( Mr, Seayt
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Federal Reserve Bank of St. Louis
I t is this:
y ee
WRosolved: T h a t federal Keacrve Banks from thia date accept at
per checks on each other.
: " T h a t any orediter benk ahall have the right to gall for a
settloenent from a debter bank at any time in fimds satisfactorye
t
it, and thet the expense of such settlement be borne half by the
debter bank abd half by the oreditor bank.
"That any definite plan of clearance ond settienent at stated
periods o r otherwise b e deferred witil the next meeting o f thie body,
after the report of the special committee o n this aubject, i n order
that wo may: have for guidance the henefit of experience i n the rractioal working of the syetome
"hat the creditor bank treat aa Reserve Cash ite net. oredit
balance with a11 ether RKegeuwe Benka, end that the debtor bank de-
duct from its Reserve Cash ite debtor balances
“ind rosolved further that the definition of 1
word “par b e
referred 40 the Federal Reserve Board fortivrith.*
Yr. MeDougall: There fs one matter there, the matter of the plan
ofsettlement. Dees thalembedy gn érrargement for a temporary plan?
:
M r . Seay: This nllows any bank to call upon any bank for immedi-
\ ¥ ate settlement, at any time it becomes in dokt.
a
M r e Mebougnll: W e t l d you mind reading thet agein?
Ee
e a s Seay "Resolve d, That, Boderal Reserve Banks from thia date
anecert at par ‘ghooke o n each other
"That any eroditor bank shall have the right to call for a settlement from a debtor bank at eny time in funds satisfactory to it, and
that the expense of such settlement be borne half by the debtor bank
@nd half by the creditor bask...
Shab any definite plan of clearance and settlement at stated
periods or otherwise befleterred wmtil ‘the Next meeting of this body, —
after the report of the epoteal comdttee on this subjects in order |
that vo may cbave f6r puidance the benefit ef experionce i n the prac~
t4oal working of the system. ;
"That the op@iitor: tank treat ag Reserve Can§ its not credit balence with all other Reserve Penka, and thet the debtor bank deduet
from it¢ Reserve Cashits debtor balaned.
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Federal Reserve Bank of St. Louis
"And thet the definition of *per" be referred to the Federal
Pio
|
Reserve Board forthwith." |
lite. Chairman; T h a t the definition of the word “par” be mibmitted
at once to the Federal Reserve Board for interpretation? F o r Imterpretation by the geneltmen of the Federal Reserve Board?
brs MoDougell;: Theat would be catisfactery to me.
Mr. Cheadroant O n that point, as I understand it, this resolution
binda n o member o f this committee t o express any doubt i n his o m
personal opingon as to whet "pert meang when we appear before the
Federal Reserve Beard,
W e don't want + 9 bind curaelves, w e rent t o
be perfectly frees
ii, Seay? Thig 18 about the most innogteus resolution this som
mittee could possibly pasos
live Chairman: I
Mr. MoGhard: I
have not yet head a second te any motion.
seconded the motions
Mrs MeDougall: I . have withdrawn my original motion in favor of
thias
Mre O}
t
h
e question is.called for on the motion as offered
aru emethied and seconded, e n d I ask fer & vobes A l l t h e s e i
n faver o f
the motion please say "aye". (*Ayos" responded.) Those who. are, op~
: posed pleane say. "no".
,
M e s Fancher: No.»
My. Ghairman:
W e have a chelec of subjects for discussion.
If
4% is permitted that the Chairmen meke a suggestion, I would like that
the consideration of — I would like to suggest thet the consideration
of the question of how the Federal Reserve Danks ore to handle itema
om menbér banks within their ow district be deferred until the afternoon giaditon, and, i f pessible, until after the Federal Roserve Beard
hag considered - if ve decide t e meet this afternoon = the interpre-
tation of the work "part, which has adistinet bearing on how the member
banks shall deal with iteme within their om district. |
Mrs Adkens I
don't believe that anyone would suffer if we left
the general handling of cheska on member banks throughout the district
until the next meeting of thia board, until we tried out this matter.
The minute w e take u p the metter o f handling checks o n all banks you
embark of a formidable undertalings ,
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Federal Reserve Bank of St. Louis
iy, Cheiewean: I
did not contemplate going ac fer os thet. W h a t
I intended 4 6 surrest was that the consideration o f the subject «
the
character of the items to be handled by the Federal fesevve Bauks outsido of these Federal Reserve Pank cheeks be left wniil this afternoon
or the next meeting for the reason that © very decided difference of
opinion is very likely to.ocour on thet. matter. I
can sea reesons shy
gome of the Federal Reserve Banks would prefer 40 Lindt the hendling
of checks within their o m distriote.
I t will be on endless discussion
I an afraid if we don'4 attempt first to dispose of this question of
pars
(The members then indulged i n a general discussion a g to whet
subjects should and what subjects should not be discussed a1, the pres-
ent seesion of the conferences)
Vrs Chairman:
A t o u first geaeion we lndd owt three atbjects
for discussion when all of the mombers were precent: First was the
matter thit we heve just disposed’ ,
f
o clearing between federal Reserve
Ranke; the second was sollestiona, whith I have suggeated, we pase for
the moment; and the third was clroular Nose 1%, paper eligible for dis=
court. I f wo edhere 4¢ the original program we wonld take up this
matter next of eollections.
Mrs Welle: Iomove we mike thot the first order cf business at
the meeting follewving the next cieeting of the Federal Reserve Board,
whieh I presume will be this afternoon.
ve. Cheirran: Gevernor Yells’ motion is thet the subject of collectiona within the verioua districts be made the first subject of discussion after we meot the Federal Reserve Board for the purpose of getting
on interprotation ef the word "par".
My. Wolds I
geoond thot motion.
My. Chairman; Those'whe faver Gevernor Wells’ motion please say
taye". (“Ayea™ vespended ) Those oppesed "no", ‘the motion is carried.
‘fs Wolds Tomove that we proceed to eonsider Clreular No, 15.
ies. Chatrmant T h a de on the calendar and dogs not require any
eotions
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Federal Reserve Bank of St. Louis
Mr» Seayt. I don't kmow whether the bonka in general have received
a letter fron the Federal Reserve Board, but the Richmond Bank hag reeoived aletter from thet Board on this subject.
lie. Chaismans W e have reoelved one in lew York.
hits MeDougali: What te the subjest. of it?
Mx» Seay: T h e nearby banka have roceived 44; I suppose the
others will find it there when. they reach home.
“are MeGhord: Have you that letter with yout
Mire Chairman:
J T heve a copy right before me... I
will read that
Letters ;
This letter from the Secretary of the Federal Reserve Foard is
dated Desember 8, 1914.
(Reading) "A ist of questions has been subsdtted 40 the Federal
Reserve Board by the Pederal reserve agent of Cleveland, and believing
the information to be of interest to all the. benks, herewith follows
excerpt from my reply.
ws * * Wueotion Nos 1+ "May Names of File *
for Credit File No. *
* * b e substituted
* * on rubber stamp?’ Thore 4a no objeetion to
such substitution.
“Question No. 2, ‘should a statement be filed under oath as ex-
pressed in our cirevlar?’ I + is net thought thet a certification under
formal oath should b e a n absolute requirement.
T h e following written
underneath the ctatenent may be considered o sufficient certifiente:
‘Ihereby solermmly dealere and certify thet the above ts a true
statement of the condition of my business.’
"Yn giving this letitude, the Beard is mindful of the conditions
thet have t o be met, and that it may take ‘somo time and a good deal
of educational work to tring the ‘customers up to the standerd which we
ultimately want +0 establiah. -
a
e
I would like to recommend thet they atrike out the words "solemnly
declare and”. to read "I hereby certify". 2
:
"Question No. St ‘ O n Mability wide should be shown long-tern
loans and short-term loanse’ “ A definition of “Long-term loans’ is
asked for. . Any borrowing for any term in excea of three to six months
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Federal Reserve Bank of St. Louis
should, i m connection with thease statenents, b e considered a long-term
loans Long-term loans, o f course, include, i m case of corporations, isaues of funded obligations running in exeeas of six uonths, b e they in
form of notes or bonds, I n onse of firms or individuals, loans secured
by mortgages, o r similar loans, given for any longer period than six
months, would eome under thin headings |
Ymestion Noe 4: ‘Whet is meont by “proper preportion’ in the
phrase contained in our cireuler, ‘Short—term loans should be in proper
proportion to quick asseta’t’ This question cannot be ammwered broadly.
Business judgment m a t govern the member banks in this respect. D i f ~
ferent rules will have to be applied i n tulcing the paper of a farmer or
a packer; aml again, different stendards will have te be applied in dealing with a pecker and a manmefacturer of electrical machinerys T h e longer
the period of time consumed in producing a specific article, the more
necessary it is for the muwfacturing concern to have a substantial
working Capital, and thie must be greater in cases of slow process and
where goods are of slow saic.eml-are to be sold only by individual trensactions, than in onses where it is a question of staples quickly produced
and ef easy sale in broad markets. .
tas time endexperience will permit, wemay beable after #bhile
to work out gone model statements acvewing the different branches of
commerce and trade, and t o subuit thege as a basis for statements te.
berequired in the various cases, but for the tine being, this would not
be practicable, and the business judgment of the momber banks must
: govern.
che Board at this time desires to train thehember banks to
the habit of insigting on statements to be furnished b y all customers,
and wren anelyzing the sete darefully s e as to ascertain whether the
paper offered complién with the provisions of the Act. The best methods
will develop ee ve gh along, - .
: "Question No. S| ‘ i e there o definite statement of an obligation
to be signed by the customer with respect to the maxioun asount up to
which he expects to borrow on short oredit?’ W e have no definite from
for this obligation.
T t is auffictont i f the borrower makes a statesent
inwriting widerneatl his general staterent, naming the meizun sitount
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Federal Reserve Bank of St. Louis
26
up te which he will berrow,
"The Board did not intend to lay down in cirowler thirteen definite
arid well defined rules as to the form of tho stetement, but only te give
@ broad outline of what they shovld contains I t is hoped that Federal
reserve banks and member banks will understand that additional information mast be sacught to enable member banke in each case to reach inde~
portent condlusions. Y e r instanée, 1 + is necessary to inquire i n each
case whether there ure any contingent Mabilities such as guaronties or
pledges with endorsement of bills receivable, ani it might be well to
4upreas member banks that this in a side of the question which cought te
be disregarded i n examining statements. *
* * ¥
Possibly I might follow that by reading some material we prepared
in New Yorks W e have had a very brief digest made of Circular umber
Thixteen which woe an effort to put in the feweat possible words what
thet oirovler intends for the Federal. Reserve Banke to accomplish in
applying it, and 44 raises I think all the questions «e would need
te discurs, and these we have attempted te answer {nh a little memorandum
concerning circular number thirteen.
(Reading) "federal Reserve Board Cireular Nos 15 states that the
stemp of 'Ei4gibtiaty' which’ mexber banks must place upon paper offered
for redigcount after Jamuary 15th ‘will be sensidered a solemn and bind.
ing deglaration that the paper complies with oll the requirements of the
‘Lawand the regulations hereby imposed.’ The Circular outlines certein
information which the mewber bank should have in ite Miles before
offixing the stexp of 'Kligibility’ which 4s summarized belowt
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Federal Reserve Bank of St. Louis
1, Balance Sheets
lle Profit & Lose Account.
ils Division of Asseta into
i Fixed Investmenta
b)S l o w Assets
c)Qilsk Assets
TVs “
#
o f Liabilities into
&
b
8
Capital
Long Terma Loans
Short Term Loess
VY. Meximum expected borrowings o n short-term paper's the borrower
apreoing to obtain the member bank's consent before exeeeding
the a g r e e d L i m i t s
27
VI. A
gemeral description of the character of the business.
Wit. Signature under oath.
It. is eleo mentioned i n Circular No. 13 that
(a) Short term leans should be in proper proportion to
quick assets.
(b) The statement should contain satisfactory evidence
that short term paper is not being seld against permanent or slow ine
vyeotmonts.
"These obviously eannot be incorporeted ag ‘items' in a statement
but must be arrived at through analysis. H a s the Reserve Board indicated
whet it considers a ‘proper proportion’ and ‘satisfactory evidence, 'ete.,
algo ‘short term loana?*
"Items V and VII are net in accordance with general business
practice and meniber banks will undeubtedly be disinclined to insist
upon conformity to them. . Do you regard them essential?
"Girculer No, 1 3 ond the accompanying Regulations Nos. 2, 3, 4, &
and § contain other rulings of the Board in regard.to eligibility of
commercial paper which are summarized.on the attached sheet.
. " G i r c u l a r No. 1 3 states it is incumbent upon each Federal Reserve
Bank to ingiet that the character of the business and the general status
ofthe concerns whose paper is offered sheuld be carefully examined in
order that the discounting bank may be certain that the paper hes not
been issued for purposes excluded by the Aots*
Now we have prepared a little digest of the matter. Possibly I
had better read it if this seems to be a satisfactory basia for discussion or if the members would prefer to discuss the itemg as shown in
this analysis we can take it up om that basis. h i s embodies the views
/we have arrived at in New York after a discussion and examination of
Ciroular No. 15.
(Reading) "We have considered circular Ho. 13 and regulations Nes.
2, 3, 4 § and 6 of the Federal Reserve Board and have endeavored to
ascertain the views of member banks as to their ability o
t somply therewith. O n e difficulty we find to be in regulation He. 4, which requires
that after January 15th, 1915, member banks shall certify thet they have
complete oredit files in their possession concerning borrowers whose
paper they offer for rediscount, including satisfactory evidence that
the proseeds o f short term paper i s not being invested i n permanent o r
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Federal Reserve Bank of St. Louis
a&
slow investments; also, statement of the aggregate amount of short
paper the borrower expects to make and his obligation t o cbtain the
member bank's sonsent before exceeding the Limit so stated.
"We believe that the country banke which constitute the wajor~
ity of our nembers are generally without credit files as imown to
the large city bank. Borrowers are personally imown by the officers
and directors whe are usually their neighbors, and the means, business and character of such borrowers are mattors of intimate personal
knowledge to the bank officors.
"To bring about a uniform understanding among country bankers
ag to what is and what is not eligible paper within a narrow or even
techuioally exact interpretation of the Act will take « long time and
a still longer time will be necessary to arrange for the filing of
finanoial statements b y borrowing customers of country benke which
eomply with the standard proposed.
W e are convinced that to require
paper offered by country banks to be stamped in the manner required
by regulation No, 4 would result in
|
(
a
) The stamping of the paper by country banks in a
majority of cases without having a oredit Pile of the extent indicated and desired, o r
(b). Their failure to rediscount besause they have been
umable to obtain such statements, o r ,
(co) A possible transfer of desirable accounts from
Hational Banke to State Banks if such infornation were required too
BOOT ,
"It is our belief that progress in thie direction may best be
made by correspondence with member banks and by porsonal presgenta~
tion of the subject by officers of Federal Reserve Banks at group
and other meetings of local Bankers Associations, where the purposes
and extent of regulations proposed to be made at some future date
might be explained and discussed.
I n this way, a sentinent i n favor
ofgradually increased safeguards could be created, so that later,
when the country banks were prepared for the operation fo such a
regulation, it would be received understandingly and full compliance
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Federal Reserve Bank of St. Louis
27
with 4t could be obtained at the start. We think that such compliance as gould be obtained by January 15th, o m the part of country
bankers would b e i n form i n most case, rather than i n substance,
and this we feel is not a desirable basis for transactions between
nember banks and Federal Reserve banks.
"Ve think that a differentiation may be properly made at an
carly date, (possibly even January 15th, 1915, but woreconmend
later), between paper which a bank takes fron its own oustomers and.
so~called ‘purchased paper." Pirecnal knowledge of the borrower's
means, business and character is generally lacking in the case of
purchased paper, t h e benk buying it must rely hargely upen finane
‘gial statements and inquiries from others.
W e believe that member
banks should be induced as scon as practicable te compile appropri-
ate credit files concerning the mekera of all purchased paper and
concerning such of their customers as sell their notes through
brokers.
"If the regulations were modified go.as to apply for the present
only to borrowers who sell paper in the open market, 1 t might well
be accompanied with a statement of certain essential information
which wotld be required of that class of borrowers, and be made to apply.te the first Pinansial statenent issued after January 15th.
Many of the statements now furnished b y such borrowers do not con~
tain the information required by the regulations and are not in suit-
‘able form to make the information clear. I t would not be fair or
prasticable to require the use of a prescribed form of statement o n
every note discounted after January iSth, a s the information might b e
impossible +o obtain until nearly a year had elapsed, and great confusion and possibly hardship might ensue. B u t if all statements of
a of a date after Jamary 15th were required to contain
condition s
the necessary infermation, mch less difficulty would arise.
"Those borrowers whose statements disclosed the existence of a
debt secured by mortgage should indicate o n the statement whether the
lien cof the mortgage covers o r exempta current quick assets, such a s
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Federal Reserve Bank of St. Louis
inventories, a c c o u n t s d
n
a billig recéiveble, cash, ste.
I f the lien
of the mortgage does cover quick assets; a copy or digest o f the mort-
gage should be furnished. .
"the requirement i n Circular No. 15 that such statements should
be signed under oath does not conform with usual banking practice in
this comtry, W e do not think it adds to the strength of the statemont and we believe i t is not a necessary requirement.
"Regulation flo. 2 éxeluden 411 Bills, the proceeds o f which have
been or are to be used in permanent or fixed investments of any kind.
this requirement is furthor reflected in reguletion lo. 4, which provides that the statement shall contain eatisfastory evidense that
short term paper is not being sold to finenee permanent. or slow in~
vestments,
A s 4t ia impossible under a oredit aystem based on prom
issory notes t o follew o r sarnark the prooéeds o f any perticular note,
this provision, if rightly enforced would exclude in toto, the notes
of a manufacturer who made any additions, however small, t o his plant
during aparticular year unless his prefits or additions to sapital
bean equivalent, or greeter, amount, While a statement might be
"$0 made an to show clearly the policy of a borrower in financing additions to a plant, s o that an unwise policy im this repseet would injure his credit, nevertheless the prime factor in determining credit
must be the proportion and character of quick assets considered in
relation to short liabilities.
“We consider it impracticable generally te require borrowers to
agree not to exceed a specified limit of borrowing without obtaining
@ member bank's eongent. I n the cago of small local borrowers, this
might be done sometimes, but it would not be practicable i n the case
of large firms and corporations which have many bank accounts.
I t
might not a l w a y s e
b practicable to obtain the consent of all interested
panks; nor would it be possib&& in the case of a borrower selling paper
in the open murket, as auch borrever dees not imow what banks hold his
paper. A
statenent, hovevor, showing the maximum and minimum amount
of bills payable outstanding during the year would give an important
indication of the extent to which euch borrower is obtaining permanent
capital through this means.
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Federal Reserve Bank of St. Louis
"Yt might facilitate standardizing cormercial paper if the maker
S/
#
eould b e induced t o indicate o n the note, b y declaration i n some
appropriate form, that it is eligible for rediscount under the torus
ofthe Federal Reserve Act. Where this were dono, the certificates
of the member might be included in the form of application which its
officer signed when presenting it for rediscount."
I might say that T don't think that last paragraph should be
left in there. I
think it should come out.
uy, NeGhord: I
think that should come out too.
(It wag then agreed that the lost. paragraph reed by the Chair
man should be stricken out.) ,
ur, Cheiymant (Continuing reading) "The application of regulations already published, o r modifications of these regulations t o
the borrowing customers o f member banka could, w e believe, b e more
easily effected by furnishing «11 member banks with brief, concise
o essential information required i n financial statements
statements. f
to be later filed, thé requlreneite t o be increased from time t o
time as experience indicates the wisdon of doing so, the important
requirement of every statement being the form of verification t o
the effect that it contains all information including that required
bythe regulation gecessary to a true Imowledge of the borrovers
credit.
"In suggesting that the toreasinadnoulé be made in Circular
fo. 1 3 and regulations Nos. 2 and ¢, w e are but following the results o f our o m experience, f o r our own credit Piles are scarcely
started iad 4% will take months, i f not years, t o bring them u p
to a proper standard, ‘While recognizing the desirability of
improving the eredit information of meaber banks, we believe
that in this as in other matters eonneoted with the organization
ofthe ayatem, we sho 1dproceed gradually, and along linos which
our experience as we gain it shows to be wize and prac‘icable."
Mr, MeGhords I
wish te speak of another class of paper that
is not treated.
ie. Chairman; I
would like to say + if I may have the privi-
lege of anticipating what’ you are going t o say = that this memorandum
4s based necessarily upon the experience that has been gained in
New York, amd it does not threw any light om the questions and objections and a o o n that must b e encountered i n other sedtions o r
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Federal Reserve Bank of St. Louis
Sr a
e
of the country where business is quite different. T h i e in‘simoly
the Mew York point o f view.
My. MeGhord:: I
think thet that is all right for covering the
large business in other olties. B u t there ie onee class of business,
however, where it would be absolutely iuprasticable to apply the
rule.. A n d some o F the Reserve Danke would ‘eile @ large woount o f
thoir most valuable patrons.
t e is almost.a physical impossibility
to obtain o statement from farmere., Farmers are independent and
they don't care much, I f the national benke don"t. want their peper
there are a muxber of atete banks that will take it. I ? the national
banks are going to require a atatenent from the farmers it ts going
todrive @ most valuable asset over into the state benxs.
li. Chairman; .We wore very sonseloue of that end 14 will be
necessary i f this o r some pubatitution. for 44. is adopted for o u b
mission to the Federal Reserve Bourd that the text of thin momorandum should be subnitted to these Governors of the federal Reserve
Banks she are treating with auesh aclass of payer in order thet
geome provision regarding this matter may be incorporated i n it.
It oeoure to me that there is nothing here which limits the Federal
Reserve Banke in dealing with what ia generally known as farmers
paper. A
peragreaph shovld be added it seems to me providing some
mothod by which the banks in those districts dealing with the eaubject could troat farmers paper.
Yes I agree with Governor MeGhord that specific reference shohld
be mede te that class of paper.
(The Governors here ail engaged in a very goneral discussion as
to the advisability of adding te the memorandum read by the Chairman
& paragraph dealing with the subject of agriowltural o r farmers
papers )
Mr, MeChord: N o w the National Currency Acsociation of Georgia
adopted a very nice rule. they required that two officers of « momber
bank shell sign 4 statement as to the character of the paper offered,
My, Fancher: T h a t ia what we vequice, » statement signed by
officers of the bank.
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Federal Reserve Bank of St. Louis
Mr. Welles W e require one,
Mix, Chairman; I was going to suggest that we ask the meeting
—
to consider whether they wish to take this matter u p along the line
of a nemorandum of this character Gr whether they would prefer te
start with an analysis of Clroular No. 13 and regulations 2 to
6, inclusive, and prepare something néw.
My, Khoades: Let's uso-all of thie we can.
ix, MoGhord: A s far as I am concerned that is all right dow as
fax ag it goes, i n tho way of dealing with comercial concerns. z
think there should be added a further discussion as to the class of
paper mentioned by Governor Wells ond myself and by the other Govern~
Ores
brs MeDougall: I
would consider this digest of circular number
thirteen as a fairy, impartial statement, from the Viewpoint of a
ieantionl barkbn,; ef thevarious. questions involved, end <think the
whole subject o f circular number thirteen perhaps, o r nearly s o at
least, has boen well covered here, and I would sugsest that consideration b e given t o letting this b e submitted t e the beard e s our
viewpoint upon the several questions involved, with the widerstanding
that. the specific olass you have i n mind regarding articultural paper
betaken care of by adding a clause to that effect if you ace fit.
My. Chairman: W i l l you make a motion Governor weDougall authorizing me to appoint a committee t o consider the addition of a peragraph
or paragraphs covering the point you have in mind, the question i n
regard to agricultural paper.
My. Surtiat Shall we have luncheon at one o*clock with tho understanding that we meet at two and then meet the Federal Reserve Board
at three or acme other hour?
bir, MeChord: I
move we got in touch with the Federal Reserve
Board and try to arrange for a conference with them at three o'clock
or half past.
(The members then engaged in a discussion as to when they would
have luncheon and when they would moet with the members of the Federal
Reserve Board. I t was degided to have luncheon at one O'clock; reconvene at two o'olesk, and.endeaver to have the Federal Reserve
Board meet with them.at 6:30 o'clotk, with the understanding that
it was not to be a social meeting. )
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Federal Reserve Bank of St. Louis
3SSe
MeVhord: I
move that a sub-committee. b e appointed that will
draft a clause t o be incorporated i n thie general onelysis, a s t o
farmers paper and as t o cotten m i l l paper, .those are features that
affoot Mr, Seay and myself, A n d if I can. get a second t o that +
My, Aiken:
mittee I
I f it does not involve m y being put o n that c o m
will second the motion.
li, Chairman:
I t i g moved and seconded that a committee b e
appointed t o suggest paragraphs amending the momor amiun submitted
in regard to the definition of commercial paper,
These in faver signify by saying "aye". ( " a y e s responded. )
The motion is cagried.
The chair appoints a s that committee Governor MeCherd, Chairman,
and Governor Aiken.
(At this point several of the members left the room;
4% Chairman
maining ones engadng in various discussions, which the
directed need not be reported. )
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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