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Federal Reserve Bank of St. Louis
CONEIDENTIAL
SECRETARY'S
C5720 N i eas ING OP ERs S o e
M I N U T E S
I N is eae ee see a e s
December 11 and 12, 1929.
Washington, D. C.
INDEX T O SECRETARY'S MINUTES
GOVERNORS CONFERENCE
DECEMBER 1 1 AND 12, 1929.
Paragraph i n
Secretary's
Minutes
Amendment t o Bankruptcy A c t
Amendment t o F. R s A c t permitting payments o f extra
dividends t o member banks
Amendment t o F, R . A c t t o permit limited borrowing o n
investment s e c u r i t i e s
Amendment t o Regulation J
Air m a i l ,
Use of -
- - -
Appointment 'of Chairman a n d Secretary
Bailey, Telegram t o Governor
Bankruptcy Act, Amendment t o
Bonds, Distribution o f Government, held b y F. R- Bank of
New York
Boston reserve bank, Resolutions o f stockholders o f ~ - - - 4 , 45
Branch banking - - = Brokers loans figures, Publication o f
Canadian currency
Checks sent t o drawee banks i n other districts
Check collections, Interpretation o f uniform policy o n - Chain a n d branch banking Chairman, Appointment o f
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Federal Reserve Bank of St. Louis
- + -
Paragraph i n
Secretary's
Minutes
Committee:
Bankers Acceptances, Subcommittee o f General Committee o n
F. R . Banks acting a s custodians o f securities,
Committee
t o study
F. R . credit operations, Committee t o study
Insurance
Leased wire
Open Market Investment
Pension
Standing Committee o n Collections
Uniform policy o f check collections, Committee t o confer
with Governor Young r e action o f conference o n
Customers notes, Specific maturity date i n body o f
Discontinuing payments o f o l d series F . R . Notes a n d
handling o f National b a n k notes a f t e r discontinuance
Discount rates and open market policies
Distribution o f profits a n d losses o n open market operationsDividends t o member banks, Amendment t o F. R. A c t permitting
Eligible p a p e r f o r rediscount
Examinations o f member banks, Memorandum r e proposed bill t o
amend l a w
Expense o f defénding suits brought b y F. R . banks t o recover
on forged endorsements
Federal Advisory Council, Recommendations
of
Federal F a r m Board, Services f o r
Federal Reserve Act, Amendment to, permitting payment o f
extra dividends t o member banks
Federal Reserve exchange, Liability incurred b y member
banks i n purchasing
Federal Reserve notes, Discontinuance o f payment o f o l d
series
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Federal Reserve Bank of St. Louis
10
Paragraph i n
Secretary's
Minutes
Foreign exchange a n d gold movements
Foreign banks, Relations w i t h
Forged e n d o r s e m e n t s ,
Suits brought
b y F. R - banks
t o recover
Glass bill, Provisions o f
Gold movements -
- - +--+ =
Good wishes a t Christmas t i m e
Harding, Telegram t o Governor
*7- =
Increased dividends o n F. R. b a n k stock -
+"
Joint Conference o f Governors a n d Agents -
--+-*+re-#--
Liability incurred b y member banks i n purchasing F. R.
exchange
Loans o n call, P a p e r o f borrowers whose statements s h o w
Market rates, Desirable relationship o f discount rates t o
Maturity d a t e i n body o f customers notes
Member bank&-reserves, Advisability of appointing a committee
of experts t o study a n d report o n - Memorandum X-+6444 o f proposed bill t o amend l a w r e
examinations o f member banks - - - Methods o f popularizing membership i n F. R. System -
-
National bank notes, Handling o f redemptions o f - - - Open Market Investment Committee:
Operations o f
Procedure o f
Report o f
Operations a n d relations w i t h foreign banks
Paper o f borrowers: whose statements s h o w loans o n call
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes
Participation i n Government bonds purchased b y F. R.
of N e w York
Policies o f open market
Procedure o f Open Market Investment Committee
Profits a n d losses, Distribution o f o n open market
operations
Proposed bill t o amend l a w r e examinations o f member banks
4 7
Publication o f brokers loans figures
Recommendations o f Federal Advisory Council
Redemption o f Canadian currency through F. R. banks a n d
branches
Rediscounts, Eligible p a p e r f o r
Regulation J , Amendment t o
Relations w i t h foreign banks
R e l a t i o n s h i pf
o discount rates t o market rates
Reports:
Bankers Acceptances, Sussommittee o f General Committee o n 42
F. R. Banks acting a s custodians o f securities, Committee t o study
Fe R. credit operations, Committee t o study
Insurance committee
Leased wire committee
Open Market Investment Committee
Pension committee
Relations w i t h foreign banks
Standing Committee o n Collections Uniform policy o f check collections, Committee t o confer with Governor Young r e action o f conference o n = = - 2l
Reserve requirements, Computation o f
Resolutions a d o p t e d
of B o s t o n
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a t stockholders meeting,
F . R. Bank
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes
Secretary, Appointment o f - - =
Securities, bills, a n d rates
Services f o r Federal F a r m Board
Standing Committee o n Collections Telegrams t o Governors B a i l e y a n d Harding -
- -
Telegraphic transfers o f funds, Protection against f r a u d
2
s S e oe o e
in Connection w i t h « « <- <-.+ Uniform policy r e check collections, Interpretation o f Unsorted items s e n t i n b y small out-of-town banks -
- - ~
CONFIDENTIAL
PROGRAM
G O V E R N O R S
CONFRRENCOSE
December 1 1 a n d 12, 1929.
Washington, D . C .
CREDIT TRANSACTIONS A N D POLICIES
A. O p e n Market Operations.
1. R e p o r t o f Open Market Investment Committee.
2. S e c u r i t i e s , Bills, a n d Rates.
B. D i s c o u n t Rates a n d Open Market Policies.
Desirable relationship o f discount rates t o
market rates,
C. R e l a t i o n s w i t h Foreign Banks.
4 Report.
ez. Operations.
he F o r e i g n exchanges a n d gold movements.
D. P a p e r o f B o r r o w e r s W h o s e S t a t e m e n t s S h o w L o a n s
on
F r a n c i s c o
Call.
In a number o f instances i t has b e e n found
that borrowers w h o s e paper has b e e n submitted f o r discount showed funds loaned
on call o n statement date.
I t might
seem desirable therefore for the confer-~
ence t O make a study o f this feature for
the guidance o f the Governors.
E. R e p o r t o f committee appointed a t November 1928
conference t o study F , R. credit operations
including effectiveness o f discount r a t e
changes a n d open market operations i n con-
trolling total volume of F. R. credit. ( S e e
paragraph 44 Secretary's minutes April 1929
Conference o f Governors.)
tke C O L L E C T I O N S A N D CLEARINGS
Ae R e p o r t o f Standing Committee o n Collections.
B.
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Federal Reserve Bank of St. Louis
I n instances i n which forgeries o f endorsements K a n s a s
are Claimed t o exist o n checks handled f o r
collection b y a F. R...bank-for t h e account o f
another F . R . bank a n d prior endorsers d e n y
right o f recovery o n such checks w h i c h r e sults i n suits b e i n g brought against t h e
Federal reserve b a n k s o handling t h e checks,
as between t h e t w o Federal. reserve banks,
which b a n k should defend s u c h suits a n d bear
«2 @
the expense o f making defense.
Use o f A i r Mail.
S
a
Due t o increased efficiency o f air-mail s e r e
vice, i t would s e e m that s o m e further thought
n Francisco
should be given t o the practicability o f using such service i n the extension o f collection facilities, t o a greater degree.
Sending C h e c k s D i r e c t
t o DraveeBanks
i n Other Dis-
F
. R s Board
F
. R. Board
F
. R . Board
tricts. ( S e e Board's letter x-6405 dated
October 31, 1929 a n d Report o f Standing Commit-
tee o n Collections o f November, 1927.)
Interpretation o f Uniform Policy r e Check Collec-
tions. ( S e e Board's letter X-6409 dated
November 7, 1929.)
COIN, CURRENCY, A N D CIRCULATION
A. D i s c o n t i n u i n g Payments o f Old Series F . R. Notes.
Question o f discontinuing payments o f o l d
series F. R. notes i n the denominations o f $5
to$100 inclusive, and the problem of handling
National b a n k notes o f those denominations a f -
ter discontinuance o f payments o f F. R. and
U. S. notes i n the old series. ( S e e Board's
letter X-6393 dated October 19, 1929.)
B. Canadian Currency.
C
h
i
c
a
Proposed p l a n f o r redemption o f Canadian curren-
cy through F. R. banks and branches.
g
o
S a n Francisco
(See
Board's letter X-6370 dated September 4, 1929.)
IV. O P E R A T I O N A N D ADMINISTRATION
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Federal Reserve Bank of St. Louis
A. Specific Maturity Date i n Body o f Customers Notes.
Desirability o f requesting American Bankers
Association t o induce commercial banks t o in-
corporate specific maturity date i n the body
of customers! n o t e s instead o f t h e present
practice o f having notes r e a d " 9 0 days after
date", etc. ( S e e report o f Auditors Confer-
ence held March 194%, 1929.)
Report o f committee o n policy o f F. R. banks acting a s custodians o f securities including
bankers bills pledged t o secure public deposits.
(See paragraph 41 Seeretary's minutes April 1929
Conference o f Governors.)
F . R y Board
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Federal Reserve Bank of St. Louis
Member Bank Reserves.
Advisability o f appointing a committee o f
experts t o devote entire t i m e t o study a n d
New Y o r k
report o n whole subject.
Publication o f Brokers Loans Figurcs.
1.Should t h e y b e discontinued a n d i f so, when;
2.0r should t h e y b e more directly associated
with total collateral loans o f reporting
member banks.
New Y o r k
Chain a n d Branch Banking.
Desirability o f appointing a committee t o study
and report o n past a n d future development o f
banking through branches, chains, groups, e t c »
in order that t h e F. R . System might b e prepared i f necessary t o make recommendations t o
Congress i f asked t o d o so.
New Y o r k
Advisability o f recommending amendment t o F. R.
Act permitting payment o f extra dividends t o
New Y o r k
Boston
member banks o n F. R. bank stock a s proposed b y
Dallas
Senator Glass i n a bill introduced b y h i m i n
the last Congress.
Should g o o d wishes a t Christmas t i m e b e taken a s
a matter o f course a n d the sending o f messages
over t h e leased wire conveying Christmas greetings b e discontinued.
Boston
Is there anything t h a t c a n b e done t o protect banks
against f r a u d i n connection w i t h telegraphic
transfers o f funds s u c h a s was imposed o n the
Kansas C i t y
New York banks b y the Bank o f Telluride, Colo.
Services f o r Federal F a r m Board,
Reimbursement o f expenses, etc. i n connection
with F . R . banks acting a s Fiscal A g e n t o f the
United States o n behalf o f Federal F a r m Board
in connection w i t h advances m a d e b y the Board
San F r a n c i s c o
jointly with banks. ( F o r discussion.)
Methods o f Popularizing Membership i n the F. R.
System.
Ls I n c r e a s e d dividends o n stock. S e n a t o r
Glass! bill. A r e proportions fair.
Is i t desirable t h a t earnings s h o u l d b e
pooled t o make extra dividends s a m e i n
all districts.
Philadelphia
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Federal Reserve Bank of St. Louis
4
Advisability o f a n amendment t o the F. R .
Act t o permit limited borrowing o n
strictly defined investment securities
held b y member banks.
Permitting small out-of-town member banks
to send i n items unsorted w i t h a n agrecd
average d a t e o f availability.
Providing a s part o f the much-needed general
revision o f reserve requireiients, t h e deduction f r o m gross deposits o f -
(a) C a s h i n vault;
(bo) I t e m s with F. R. banks i n process
of collection.
Advisability o f a n amendment t o t h e Bankruptcy A c t providing that funds i n the
custody o f the Federal courts shall b e
deposited w i t h member banks o f the F. R e
System.
Report o f Leased Wire Committee.
Report o f Insurance Committee.
Report
o f Pension Committee.
Report o f Subcommittee o f General Committee o n
Bankers Acceptances.
SUPPLEMENTARY TOPICS
Ae A m e n d m e n t t o Regulation J , ( S e e Board's letter
X-6389 dated October 16, 1929.)
Resolutions Adopted a t Stockholders Meeting o f
F. R. Bank o f Boston o n November 8, 1929.
Proposed letter X-6443, subject: "Liability
Incurred b y a Member Bank i n Purchasing F. R.
Exchange.
Proposed Bill t o Amend Law R e Examinations o f
Member B a n k s .
( S e e memorandum X-6444 dated
October 7 , 1 9 2 9 . 7)
Recommendations
o f Federal A d v i s o r y Council.
R
. Board
C O N
GO V - h R N O R S .
December 1 1 a n d 12, 1 S
Washington,
D . C.
First Day's Session, Wednesday, D e c e m b e r 11.
Morning
The meeting w a s called t o order a t 11:15 a . m .
PRESENT: G o v e r n o r Calkins, Chairman, a n d
Governors Harrison, Norris, Fancher,
Seay, B l a c k , M c D o u g a l , M a r t i n , G e e r y ,
and Talley.
Deputy Governors Paddock a n d Worthington.
Mr. Strater, Secretary.
The Chairman announced that t h e first order o f business
was t h e appointment o f a Chairman a n d Secretary f o r t h e calendar
year 1930.
I t was thereupon
VOTED t h a t Governor Calkins b e re-appointed Chairman
and Mr. Strater re-appointcd Secretary o f the Conference o f Gov~
ernors f o r t h e calendar y e a r 1930.
TOPIC 3 4 A s O p e n Market Operations.
Lae R e p o r t o f Open Market Investment
Committee.
as S e c u r i t i e s , Bills, a n d Rates.
TOPIC 7 . a. D i s c o u n t Rates a n d Open Market Policies.
Desirable relationship o f discount
rates t o market rates,
(See paragraphs 7, 8, and 10)
Governor Harrison distributed copies o f the report o f
the Secretary o f the Open Market Investment Committee t o the
i the Open MarGovernors conference, reviewing t h e t r a n s a c t i o n s n
ket I n v e s t m e n t A c c o u n t s i n c e t h e l a s t C o n f e r e n c e
o f Governors.
He also reviewed a t length t h e development i n the N e w York money
market resulting f r o m t h e recent crisis i n the stock market, a n d
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Federal Reserve Bank of St. Louis
«2
explained the actions taken by-the F. R. Bank o f New York during
that period.
At 11:15 a. m. Honorable Roy A. Young, Governor o f
the Federal Reserve Board, entered t h e meeting a n d stated that
in accordance w i t h t h e recommendation o f a majority o f t h e
Conference o f Governors h e l d i n April, 1929, t h e Board h a d
adopted t h e amendment t o Regulation J
as recoumended b y a
majority report o f the Conference o f Counsel h e l d a t t h e same
time. B e c a u s e o f conflicting interpretations placed upon the
proposed amendment by: the F. R . banks, t h e F. R. Board was i n
some doubt a s t o whether t h e Board's letter X-6389 dated
October 16, 1929 should be made effective as of January 1, 1950,
and stated that the Board would like t o have a recommendation
from this conference a s t o whether t h e letter should be. rescinded.
(See paragraphs 20, 21, and 44.)
Governor Young handed t o the Chairman for distribution
tomembers of the conference, copies of the resolutions unanimous~
ly adopted at a meeting of the stockholders o f the F. R. Bank of
Boston o n November 8, 1929, dealing with the distribution o f earnings o f F. R. banks based upon the provisions o f the Glass Bill
although differing from those provisions i n some respects,
Governor Y o u n g a s k e d t h e c o n f e r e n c e
t o give these resolutions c o n -
sideration and if it cared t o do so, make recommendations t o the
F. R. Board.
( S e e paragraph 45.)
Governor Young a l s o provided t h e Chairman w i t h copies
of the following f o r distribution t o the Governors f o r their
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Federal Reserve Bank of St. Louis
( 4 )
aie
consideration a n d such recommendations a s t h e conference c a r e d
to make:
a P r o p o s e d letter X-6443, subject: "Liability
Incurred b y a Member Bank i n Purchasing
F. R. Exchange. ( S e e paragraph 46)
es M e m o r a n d u m X-6444 d a t e d October 7 , 1929 i n
connection with proposed bill t o amend law
re examinations o f member banks. ( S e e
paragraph 47)
x Reconmendations
o f t h e Federal Advisory Coun-
cil adopted a t its meeting o n November 19,
1929. ( S e e paragraph 48)
Governor Young t h e n s a i d that arrangements h a d been
made t o hold a
Fridey,
Joint Conference o f Governors a n d Agents o n
i f possible,
a t t h e United States Chamber
There followed a
o f Commerce.
discussion o f the O p e n Market I n -
vestment Committee procedure i n which Governor Young partici-
pated. ( S e e paragraphs 2, 8, and 10). |
At 1:20 p . m. t h e conference adjourned t o re-convene
at 2:30 p.» m.
First Day's Session, Wednesday, December 11.
afternoon
The meeting was called t o order a t 2:45 p. m.
At t h e C h a i r m a n ' s s u g g e s t i o n ,
Governor Harrison r e -
sumed his discussion o f the O p e n Market Investment operations
in which t h e Governors participated.
D i s c o u n t rates a n d open
market policies w e r e a l s o included i n the discussion after which
it w a s
VOTED t h a t t h e conference i s i n full accord w i t h t h e
present program o f the Open Markct Investment Committee a s ap-
proved b y the Federal Reserve Board o n November 2&5, 1929,
Governor Talley voted i n the negative a n d Governors Norris
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Federal Reserve Bank of St. Louis
a
and Calkins a s k e d t o b e recorded a s n o t voting.
( S e e paragraphs
2, 7, and 10)
Governor Harrison t h e n explained t o the conference
that t h e F . R . B a n k o f N e w Y o r k h a s i n i t s o w n a c c o u n t ,
still un-
distributed, about $80,000,000 o f Government bonds bought during
the emergency o n which there i s a substantial profit.
H e said
that while the New York bank i s quite ready and willing t o hold
these bonds f o r its o w n account,
F. R . banks a
h e i s authorized t o offer other
participation a t cost price i f t h e y wish t o take
over their p r o rata share.
N o action was taken,
i t being under-
stood, however, that any bank desiring t o participate would advise
Governor Harrison a s soon a s convenient.
Governor Harrison discussed w i t h t h e conference a
pro-
posal t o change t h e method o f accounting f o r a n d distributing
profits
caunt.
o r losses
o n operations
A f t e r consideration,
i n the O p e n Market Investment A c -
i t was unanimously agreed t h a t after
January 1, 1930, profits a n d losses o n all operations i n that account, whether between participating banks o r with the market,
should b e c a r r i e d
in a
suspense a c c o u n t
ed a s o f t h e e n d o f the year.
I
i n N e w Y o r k a n d distribut-
t was understood that t h e Secre-
tary o f t h e O p e n M a r k e t I n v e s t m e n t C o m m i t t e e w o u l d a d v i s e e a c h
Governor i n writing o f the details o f the proposal submitted b y
Governor Harrison a n d agreed t o b y the conference.
On motion o f Governor McDougal,
i t was
VOTED t h a t the Secretary prepare a n d send suitable
telegrams t o Governors Bailey a n d Harding expressing regret a t
their inability t o attend t h e conference a n d hoping f o r their
rapid recovery.
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Federal Reserve Bank of St. Louis
Ses a e
TOPIC I . C. R e l a t i o n s w i t h Foreign Banks.
ie R e p o r t .
as O p e r a t i o n s .
38 F o r e i g n exchanges a n d gold
movements.
Governor Harrison reviewed t h e various matters relating
to operations w i t h foreign central banks, calling attention t o
changes i n individual accounts.
H e also reviewed a n d explained
the trend o f gold movements.
es
a
After a
( 4 3 )
P a p e r o f Borrowers W h o s e Statements
Show Loans o n Call.
short discussion, t h i s topic w a s passed with-
Sut a c t i o n .
TOPIC 7 , i y R e p o r t o f Committee Appointed a t
( 1 4 )
November, 1928 Conference t o Study
F. R . Credit Operations, Including
Effectiveness o f Discount R a t e
Changes a n d Open Market Operations,
in Controlling Total Volume o f F.
Re Credit.
( S e e paragraph 4 4
Secretary's Minutes April 1929
Conference o f Governors.
In the absence o f Governor Harding, Chairman o f this
committee,
n o report w a s available a n d t h e topic w a s passed.
TOPIC Il. A. Report o f Standing Committee o n Col~
( 1 5 )
lections.
The Secretary r e a d a report f r o m t h e committee stating t h a t n o t o p i c s h a d b e e n r e f e r r e d
t o i t b y t h e last Governors
conference o r b y a n y o f the F . R. banks, a n d that i t h a d n o
recommendations
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Federal Reserve Bank of St. Louis
t o make.
TOPIC II. B.
I n Instances i n Which Forgeries o f En- ( 1 6 )
dorsements a r e Claimed t o Exist o n
Checks Handled f o r Collection b y a
F. R . B a n k f o r t h e A c c o u n t o f A n o t h er F . R . B a n k a n d P r i o r E n d o r s e r s
Deny Right o f Recovery o n Such Checks
Which R e s u l t s
i n Suits B e i n g Brought
Against t h e F. R . Bank s o
Handling t h e Checks, A s Between
the T w o F . R . B a n k s ,
Which Bank
Should Defend S u c h Suits a n d Bear
Expense o f Making Defense.
Mr. Worthington a n d Governor Talley r e a d opinions
furnished b y their counsel a n d after a
general discussion,it
was
VOTED t h a t e a c h case should stand u p o n i t s o w n merits a n d the matter o f expense o f defending s u c h suits should b e
agreed u p o n b y the F,. R. banks interested.
TOPIC II. C . U s e o f A i r Mail.
After a general discussion, i t was the consensus o f
Opinion t h a t t h e a i r mail i s rapidly developing i n t o a
very use-
ful agency, a n d the Standing Committee o n Collections w a s asked
to give t h e subject further consideration.
At 6:30 p. m. the conference adjourned t o re-convene
at 9:30 a. m. O n Thursday, December 12.
Second Day's Session, Thursday, December 12, 1929.
Morning
The meeting w a s caléed t o order a t 9:40 a. m .
TOPIC II. D. Sending Checks Direct t o Drawee Banks ( 1 8 )
in Other Districts. ( S e e Board's
letter X-6405 d a t e d October 31,
1929, a n d Report o f Standing Committee o n C o l l e c t i o n s
After a
o f November, 1 9 2 7 .
general discussion o f the F . R - Board's letter
X-6405 o f October 31, 1929, t h e following resolution w a s adopted:
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Federal Reserve Bank of St. Louis
WHEREAS,
T h e Standing Committee
o n Collections,
in its report t o the Conference o f Governors o f
November & , 1927, pointed o u t that t h e practice o f a
rs
F. R . b a n k sending checks direct t o member banks
and possibly t o non-member banks i n another district
for remittance, u n d e r arrangements w i t h t h e F.- R.
bank o f that district a n d t h e paying bank, i s n o w be~-
ing carried o n effectively t o a very limited extent
in several o f t h e F. R . districts, a n d
WHEREAS, T h e committee recommended t h a t t h e
F. R - banks b e authorized a t their discretion t o conduct a n experiment a l o n g this l i n e i n a n attempt t o
arrange f o r t h e collection i n this manner o f checks
drawn o n the principle o r large cities i n states adjoining t h e i r d i s t r i c t ,
s u c h experiment
t o b e under-
taken o n l y i n the event that counsel f o r t h e F . R Board approved t h e legality o f such a n arrangement,
and after necessary modification o f Regulation J to
permit s u c h procedure;
NOW, THEREFORE, B E I T RESOLVED, T h a t t h e
Standing Committee o n Collections b e asked t o give
the subject further consideration a n d t o recommend
to the next conference a n amendment t o Regulation J
which will permit F . R. banks a t their option t o s o
effect collection o f checks payable i n adjoining districts, without making i t mandatory u p o n a n y F. R s
banks t o adopt t h e practice, a n d
BE I T FURTHER RESOLVED, T h a t t h e Standing
Committee o n Collections outline t o the conference
the mechanics o f the procedure t o b e followed i n the
event t h a t t h e amendment i s adopted, t o the e n d that
the dangers incident t o such a radical change m a y b e
overcome o r a t least minimized.
TOPIC: Li. B s I n t e r p r e t a t i o n o f Uniform Policy r e
Check Collections. ( S e e Board's
letter X-6409 dated November 7,
19294
The question raised b y the F. R . Board i n its letter
X-6409
a s t o whether
i t would b e inconsistent w i t h t h e uniform
policy, which h a s received t h e approval o f the F . R . Board, f o r
a F. R. bank t o take a pledge o f collateral for the specific
purpose o f protecting itself a s agent i n the collection o f checks
on a specific bank, was the subject o f general discussion i n the
light o f Governor Harding's letter t o the F. R. Board dated
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Federal Reserve Bank of St. Louis
October 1 9 ; 1929, a n d a
letter f r o m t h e General Counsel o f
the Board addressed to counsel of each F. R. bank under date
of November 7, 1929, giving his views upon the question raised
by Governor Harding's letter t o the Board, a n d i t was
VOTED t h a t the conference i s i n agreement with the
uniform policy approved b y the F . R - Board i n its letter o f
October 16, 1929 (x#6389); t h a t they are i n favor of the amendment t o Regulation J recommended b y the majority o f the Conference o f Counsel; t h a t they believe, however, i t should b e made
cleat i n the regulation t h a t a n y F. R. bank desiring t o d o so,
may take collateral i n order t o protect itself o n l y from liability a s collecting agent.
G o v e r n o r Geery voted i n the nega-
tive: ( S e e paragraphs 3, 21, and 44.)
In oréer that the F. R- Board might be advised of all ( 2 1 )
of the points taken into consideration during the discussion
preceding t h e action o f the conference,
i t was
VOTED that a committee b e appointed t o confer with the
Governor o f the Fs. R- Board and t o explain the action o f the conference. G o v e r n o r s Geery, McDougal, Seay, a n d Calkins a n d
Mr. Paddock voted i n the negative.
pointed a
committee consisting o f Governors Harrison, Talley, a n d
McDougal to. report t o the Board.
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Federal Reserve Bank of St. Louis
T h e Chairman thereupon a p -
( S e e paragraphs 3 , 20, and 44.)
TORO Oct Las
D i s c o n t i n u i n g Payments o f Old Series
( 2 2 )
F. R . N o t e s .
Question o f discontinuing payments
of old serics F . R . notes i n the
denominations o f $5 to $100 inclusive, a n d the problem o f
handling National bank notes o f
those denominations a f t e r discontinuance
o f payments
o f F.. R . a n d
U. S . notes i n t h e 9 l d serics.
(See Board's letter X-6393 dated
October 19, 1929.)
This topic w a s t h e subject o f a general discussion a n d
it was
VOTED t h a t t h e payment o f o l d series F . R . notes i n the
denominations mentioned b e discontinued o n January 2 , 1930, a n d
that t h e conference recommend that t h e Treasury continue t o maintain a t t h e highest possible level, i t s facilities f o r t h e redemption o f National b a n k notes.
1UPLC Tile: B e C a n a d i a n Currency.
Proposed p l a n f o r redemption o f
Canadian currency through F . R .
banks and branches.
( S e e Board's
letter X-6370 dated September 4,
192s.)
In connection w i t h this topic, consideration w a s given t o
the Board's letters X-6370 dated September 4 , 1929, a n d X-6413 dated
November 7 , 1929, a s well a s t h e Board's telegram o f November 16,
1929, postponing t h e plan.
T h e consensus o f dpinion was t h a t i n
view o f the prevailing h i g h rate o f exchange, t h e present i s not a n
opportune t i m e f o r putting t h e proposed p l a n into effect a n d that i t
should therefore b e indefinitely postponed.
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Federal Reserve Bank of St. Louis
~ 40 =
Specific M a t u r i t y D a t e
i n Body o f
Customers N o t e s .
Desirability o f requesting
American Bankers Association
to induce commercial banks t o
incorporate specific maturity
date i n the body o f customers
notes i n s t e a d
practice
o f t h e present
o f having notes r e a d
"90 days after date, etc."
(See report o f Auditors Conference h e l d March 19-22, 1929.)
After c a r e f u l a n d d e l i b e r a t e c o n s i d e r a t i o n
posal
t o request t h e American Bankers Association
fluence
t 2 bring about t h e adoption
of a
practice
o f t h e pro-
t o use its ino f incorporat-
ing a specific maturity d a t e i n the b o d y o f customers notes a s
outlined i n the report o f t h e Auditors Conference,
VOTED
Lee c
i t was
t h a t n o a c t i o n b e taken.
e
ee
TOPIC IV. B. Report of Committee o n Policy of F. R. ( 2 5 )
Banks Acting a s Custodians o f Securities, Including Bankers Bills, Pledged
to Secure Public Deposits.
(See
paragraph 4 1 Secretary's minutes April
1929 Conference o f Governors.)
The Secretary read the committee's report and i t was
VOTED t h a t the report b e accepted and filed.
TOeko L e t s M e m b e r Bank Reserves.
fdvisability
(
o f appointing a
2
6
committee
of experts t o devote entire t i m e t o
study and report o n whole subject.
(See paragraphs 3 6 and 37.)
In the discussion,
i t was pointed o u t that this topic h a s
been under study f o r a long time a n d that i t was quite obvious t h a t
a solution could not b e found b y "round table" discussion.
I t was,
therefore,
VOTED t h a t i t is the sense o f the conference that the subject o f bank reserves, s
i one o f the utmost importance requiring the
most careful scientific s t u d y b y experts devoting t h e i r entire t i m e
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Federal Reserve Bank of St. Louis
)
p
o
s es
to the matter w i t h a
view o f drafting a
report t o the F.. R.. Board,
proposing s u c h amendments t o the l a w o r regulations a s i n their
judgment m a y b e necesaary t o remove a n y present inequalities
or
defects a n d t o establish b a n k reserves through o u t t h e country o n
a more logical o r effective basis t h a n n o w appears t o b e possible
under present laws, S t a t e a n d Federal.
Tot
i V . ) P u b l i c a t i o n o f Brokers Loans Figures.
( 2 7 )
Ls S h o u l d t h e y b e discontinued a n d i f
SO, when; 4
Bs O r should t h e y b e more directly a s -
sociated with total collateral
loans o f reporting member banks.
After discussion,
i t was
VOTED t h a t i t i s t h e sense o f the conference t h a t t h e
brokers loans figures a s published b y the F. R . Board i n their
present form, a r e subject t o possible misunderstanding i n that t h e y
represent o n l y a
part o f the total volume o f credit employed i n car-
~ying securities.
T h e conference i s o f the opinion t h a t i t would
be unwise t o discontinue the publication o f these figures a t this
time, b u t believes consideration should be. given t o the advisability
and. practicability o f relating these figures m o r e closely t o the
figures for bank loans o n securities.
TOPIC IV. &. C h a i n and Branch Banking.
(
2
8
Desirability o f a p p o i n t i n g acommittee
to study a n d report o n past a n d future
development o f banking through branches,
chains, groups, etc. i n order that t h e
F. R . System might b e prepared i f neces+
sary t o make recommendations t o Congress
if asked t o d o so.
In connection w i t h this topic, t h e conference g a v e consideration t o the following recommendation o f the Federal Advisory
Council t o the F . R. Board under date o f November 19, 1929;
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Federal Reserve Bank of St. Louis
)
aa
"The Federal Advisory Council recommends t h a t
the F . R . Board appoint a committee t o study t h e
merits o f the branch banking s y s t e m a s practiced
in this a n d other countries, (conditions i n Canada
being apparently more comparable w i t h o u r own), t h e
group o r c h a i n b a n k i n g s y s t e m a s d e v e l o p e d
i n this
country a n d elsewhere, a n d t h e unit banking s y s t e m
of this a n d other countries; a n d , further, t h e e f -
fect o f ownership o f bank stocks b y investment
trusts a n d holding corporations, i n order that t h e
F. R. Board m a y b e i n possession o f accurate a n d
authoritative information o n this important subject."
It was
VOTED t h a t t h e conference endorse t h e recommendation
of the Federal Advisory Council made a t its last meeting t h a t a
committee b e appointed t o study this subject.
U E C i Vw i s A d v i s a b i l i t y o f Reeomacnding Amendment
to F. R. Act Permitting Payment o f
Extra Dividends t o Member Banks o n
F. R , b a n k stock, a s Proposed b y »
Senator Glass i n a Bill Introduced
by Him i n the Last Congress.
In connection with this topic, the conference gave careful c o n s i d e r a t i o n
to a
resolution a d o p t e d
at a
meeting
o f t h e stock-
holders o f the F. R. Bank o f Boston held o n November 8, 1929, and
als? t h e provisions
sion o f Congress.
o f the Glass Bill a s introduced i n the last ses<
& £ f t e r a general discussion,
i t was
VOTED t h a t while t h e conference i s o f the opinion that i t
woul&é be wise t o give member banks some greater share i n excess earnings o f F. R e banks, a s contemplated i n Senator Glass’ bill, nevertheless t h e y believe t h a t there a r e some unavoidable practical difficulties incident t o a regional s y s t e m s u c h a s t h e F . R. System giving
extra dividends predicated o n the amount o f excess earnings i n each
district.
A p a r t f r o m t h e practical difficulties involved, t h e con-
ference i s also fearful l e s t a
distribution o f earnings u p o n such a
basis would inevitably tend t o bring extraneous pressure upon F. R.
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Federal Reserve Bank of St. Louis
a ee
credit policies purely f o r purposes o f earnings.
T h e con-
ference believes t h a t t h e desired objective o f giving member
banks a
larger participation i n F. R . b a n k earnings m a y b e
met with t h e minimum o f difficulty i f t h e present cumulative
dividend
i s increased
to a
definite f i g u r e s u c h a s 8%, r a t h e r
than giving member banks a n interest i n all excess earnings.
Governor Calkins voted i n the negative.
cori A V , h y S h o u l d G o o d Wishes a t Christmas
Time B e Taken as a Matter o f
Course a n d the S e n d i n gfo
Messages O v e r t h e Leased Wire
Conveying Christmas Greetings
Be Discontinued.
After a
short discussion,
i t was
VOTED t h a t t h e sending o f messages o v e r t h e leased
wire conveying Christmas greetings b e discontinued.
Governors
McDougal a n d Black voted i n the negative.
TOPLC V a H e
I s There Anything That C a n B e Done t o
Protect Banks Against Fraud i n Qonnection w i t h Telegraphic Transfers
of Funds S u c h a s Was Imposed on: the
New York Banks b y the B a n k o f
Telluride, Colorado.
Mr. Worthington explained h o w t h e Cashier o f the
Telluride bank succeeded i n effecting transfers through the medium o f bogus telegrams, a n d after a
general discussion o f the
advisability o f taking steps t o prevent a
might involve a
similar fraud which
Federal reserve b a n k i n a substantial loss, i t
was t h e sense o f the conference t h a t there i s n o practical w a y
by which protection could b e afforded a s a
system matter, a n d
that e a c h F. R . b a n k should take s u c h steps a s i t deems advisable f o r i t s o w n protection.
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Federal Reserve Bank of St. Louis
kw
TOPIC IV, tf. S e r v i c e s f o r Federal F a r m Board.
Reimbursement o f expenses, etc.
in connection w i t h F , R . banks
acting a
s Fiscal Agent of the
United States o n behalf o f the
Federal F a r m Board i n connection
with advances made b y the Board
jointly with banks. ( F o r discussion. )
As i t developed that only one o r twe o f the reserve
banks were confronted with this problem, i t was the opinion that
those banks should s e e k a
solution f o r themselves; therefore,
no
a@tion was taken.
At 12:50 p. m. the conference adjourned t o re-convene
at 2:30 p. m.
Second Day's Session Thursday, December 12.
Afternoon
The meeting w a s called t o order a t 2:30 p e m.
TOPIC IV. J. M e t h o d s o f Popularizing Membership
t a n )
in F . R . System.
La I n c r e a s e d dividends
o n stock.
Senator Glass* bill.
Are
proportions fair.
T s 4%
desirable t h a t earnings
should b e pooled t o make
extra dividends s a m e i n all
districts.
This topic, h a v i n g been covered under Topic IV. Fe,
was passed without further discussion.
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Federal Reserve Bank of St. Louis
TOPIC IV. J.
2
. _Advisability of an amend-
( 3 4 )
ment t o the A c t t o permit
o strictlimited b o r r o w i n g n
ly defined investment securities h e l d b y member banks.
This topic w a s generally discussed, b u t n o action taken,
TOPTC TV. o e
3
. P e r m i t t i n g small out-of-town ( 3 5 )
member banks t o send i n items
unsorted w i t h a n agreed average date o f availability.
N2 action was taken, i t being suggested that this b e
» 1B «
left, a s recommended i n the report o f the Standing Committee o n Collections o f March 22, 1926,
t o the discretion o f
the F . R - banks,
TOPTC I V , J .
, Providing
4
a s part o f the
much-needed general r e vision o f reserve reguirements, t h e deduction f r o m
gross d e p o s i t s
(a)
of =
C a s h i n vault;
(>) I t e m s with F. Rbanks i n process o f
collection.
(See paragraphs 2 6
and 37)
This topic w a s passed because i t had been covered b y
the action t a k e n under Topic IV. C .
There followed a
general discussion o f the computation
of member b a n k reserve requirements a n d i t was
VOTED t h a t t h e conference r e n e w i t s recommendation
made a t the conference o f April, 1929, that the F. Re Board b e requested t o consider a n amendment t > its regulations w h i c h will
permit member banks t o compute their reserve requirements against
deposits a s o f the opening o f business o n any d a y instead o f the
close o f t h e day.
( S e e paragraphs 2 6 a n d 36,)
TOPIC TVs g s
5
, A d v i s a b i l i t y o f a n amendment
( 3 8 )
to t h e B a n k r u p tt ccp ry
Ao viding t h a t f u n d s _ i n t h e c u s tody o f t h e F e d e r a l c o u r t s
shall b e deposited w i t h member
banks
c f the F. R . S y s t e m
After a general discussion, i t was
VOTED
t h a t t h e conference favors
a n amendment
t o the
Bankruptcy A c t providing that funds i n the custody o f t h e Federal
courts shall b e deposited w i t h member banks 2 f the F. R , Systeme
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Federal Reserve Bank of St. Louis
» 46 4
TOPLG V 6 ioe R e p o r t o f Leased Wire Committee.
Governor McDougal reported that there had been n o
changes i n the circuits comprising the leased wire system;
that there w a s a n increase o f 5 % i n the volume handled f o r
the first n i n e months o f 1929 a s compared w i t h t h e same
period i n 1928; that the system i s apparently 2perating satisfactorily; a n d that t h e facilities
i n use appear t o b e ample.
It was
VOTED t h a t t h e report o f the Leased Wire Committee
be accepted a n d filed,
geek
I v lis R e p o r t
o f I n s u r a n c e Committees,
The report o f the Insurance Committee w a s r e a d a n d i t
VOTED t h a t the report b e accepted and filed.
T O P O T V . fi. R e p o r t
o f Pension Committee.
The report o f the Pension Committce w a s r e a d a n d discussed a n d i t was
VOTED t h a t i t b e accepted a n d filed.
TOPIC TV. N . R e p o r t o f Subcommittee o f General
Committee o n Bankers Acceptances.
The committec's report was read and i t was thereupon
VOTED t h a t i t b e accepted a n d filed.
The Chairman r e a d a
December 1 2 , 1 9 2 9 , r e f e r r i n g
letter f r o m Governor Young dated
t o the action taken a t the Joint
Conference o f Governors a n d Agents i n November, 1928, i n
connection with a topic submitted b y the F, R e Board for consideration a s t 2 whether special cffort should not be made to:
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Federal Reserve Bank of St. Louis
roa t y e e
T. impress u p o n member banks t h e dcsir-~
ability o f maintaining a n adequate portfolio o f paper eligible f o r redisccunt
at t h e F . R. banks; a n d
Re
T o more f u l l y acquaint t h e m with t h e k i n d
of paper eligible f o r rediscount.
Governor Young stated that i n accord w i t h t h e acticn
taken b y the joint conference, t h e Chief o f the Board's Division
of Bank Operations a n d the Director o f the Division o f Research
and Statistics h a d prepared a n article entitled "Bligibility o f
Paper f o r Redisccunt a t F . R . Banks" f o r publication i n the F.
R. B u l l e t i n ,
a n d asked that t h e conference furnish t h e Board
with its comments a n d suggestions a s t o changes before publication.
After a
general discussion,
i t was
VOTED t h a t i t i s t h e sense o f the conference t h a t
this i s a very important m a t t e r i n view o f the discussions t h e
conference h a s already had, a n d that e a c h Governzr should take
a copy home w i t h h i m a n d then transmit h i s comments t o t h e
Board.
G o v e r n o r Talley voted i n the negative.
SUPPLEMENTARY TOPIC A. A m e n d m e n t t o Regulation J.
(See Board's letter
X-6389 d a t e d O c t o b e r 1 6 ,
1929, )
(See paragraphs 3, 20, 21)
The conference g a v e consideration t s the request o f
Governor Young that t h e Board b e advised a s t 2 whether,
opinion o f the conference,
i n the
t h e letter making t h e proposed amend-
ment effective a s o f January 1 , 1930, s h o u l d be: rescinded,
N
o
action w a s taken a s t h e matter h a d been csvered under Topic II. BE.
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Federal Reserve Bank of St. Louis
» {8 @
SUPPLEMENTARY TOPIC B. Resolutions Adopted a t Stock-~
( 4 5 )
holders Meeting o f F. R - B a n k
of Boston o n November 8 , 1929.
(See paragraph 4)
As t h e s e r e s o l u t i o n s w e r e t a k e n i n t o c o n s i d e r a t i o n a n d
discussed
i n connection w i t h Topic IV. F , a n d a s t h e action recorded
under that topic covers t h e specific point raised, t h e topic w a s
passed without further discussicn.
S
U
P
P
L
E
M
E
N
T
A
R
Y
TOPIC C. Proposed Letter X-6443, Subject ( 4 6 )
"Liability Incurred b y a Member B a n k i n . P u r c h a s i n g
F e Re.
Exchange."
(See paragraph 5 )
After careful consideration o f the proposed letter,
it
VOTED t h a t the text o f the Board's ruling contained
therein w a s satisfactory.
S
U
P
P
L
E
M
E
N
T
A
R
Y
TOPIC D. P r o p o s e d Bill t o Amend L a w R e
Examinations o f Member Banks
( 4 7 )
(See memorandum X-6444 dated
October 7 , 1929.)
(See paragraph 5 )
The proposed bill t o amend the law regarding examinations
of member banks w a s t h e subject o f general discussion a n d after careful consideration,
i t was
VOTED t h a t t h e bill a s submitted i n letter X-6444,-which
would impose u p o n t h e F , R . banks t h e responsibility o f providing
for all expense involved,
i t would b e undesirable t o favor s u c h a
measure f o r the following reasons:
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Federal Reserve Bank of St. Louis
(1) That it would subject all state member banks,
in addition t>. the examinations t h a t t h e y
are now subjected t o under State laws, t o
at least t w o examinations b y the Comptroller
of t h e Currency, w i t h a s many more a s t h e
Fe R, Board might a t any time direct o r the
Fe R , b a n k with t h e approval o f the Board
desire t o make, which w e believe would b e
“ 1D «
@enerally regarded b y State member banks
as a n intolerable burden;
That t h e repeal o f the authority f o r t h e
acceptance o f State examinations w o u l d b e
likely t o antagonize State banking authorities i n every State o f the union;
That t h e requirement t h a t t h e salaries o f t h e
examiners appointed b y the Comptroller o f
the Currency and all expenses o f the examiners provided f o r b y the A c t should b e paid
by the F . R . Board o u t o f the proceeds o f assessments l e v i e d
o n the F. R . banks would in-
volve t h e F . R . banks i n a n expense estimated
at $5,000,000;
That i f i t i s one o f the purposes o f the A c t t o
benefit member banks, w e think that c a n b e much
better accomplished b y the direct method that
we have already recommended t h a n b y this i n direct method.
SUPPLEMENTARY TOPIC E. Recommendations o f Federal
Advisory Council.
(See paragraph 5)
As t h e recommendations w e r e given careful consideration i n connection w i t h other topics appearing o n t h e conference
program, a f t e r a
short discussion, t h i s topic w a s passed a s hav-
ing been previously covered.
At 5:20 p . m s t h e conference adjourned t o re-convene
at 10:30 a . m , Friday, December 13, i n joint session w i t h t h e
F. R - Board a n d F s R e Agents.
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Federal Reserve Bank of St. Louis
H. F . STRATER
Secretarye
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Federal Reserve Bank of St. Louis
@FedFRASER