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tI , •• , I :rr anma 1 ElttftW:6irW f I 378 CONFERENCE OF FEDERAL RESERVE GO E R N S THIRD DAY_, Saturday, March 22, 1919, 1 o ' c l o o k a.m. The conference met, pursuant to adjournment, at 1o'clock a..m. Governor S t r o n g : At the c o n o l u s i o n of l a s t n i g h t ' s session, a committee was appointed to report later upon t o p i c No. 1, Reserve Bank Insurance, but Mr. Kenzel c a l l s my a t t e n t i o n to t h e f a c t t h a t we ho.ve done n o t h i n g on t h e s u b j e c t of p e n s i o n p l a n s , which is r e a l l y i n c l u d e d in the g r e a t e r s u b j e c t of i n s u r a n c e . Would 1 t be t h e w i s h of the meeting to take some action on that subject, to appoint a separate committee or to refer the matter to the s ame commit tee? Governor M@Dougal: I would suggest that this body do what we undertook to do t h r e e years ago, t h a t is formu- late S)me workDble plan whereby a pension fund can be established in behalf of the employees of the Federal Reserve Banks* Governor Strong: How would you go about it, Governor MoDouge.l? https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis um Governor McDougal: By studying t h e pension plans that are in existence, as you are doing, as I understand, in New York. And by appointing a committee, and by securing the necessary permission and legislation, if necessary, to enable us to carry it Governor Strong: out. I gather from your remarks that you suggest we first a s k the F e d e r a l Reserve Board if they will be sympathetic with the idea of the reserve banks establishing a pension plan? Governor McDougal: Yes. Governor Strong: 1oot we appoint a committee to function in case the Board expresses sympathy with the plan- Governor M c D o u g a l ; Tho.t w o u l d be my i d e a . Governor Strong: You offer that as a resolution, Governor McDougal? Governor McDougal: I do, yes. The Cpairmant Is there any discussion? ' (There was no discussion, and t h e r e s o l u t i o n betng duly seconded, was carried.) The Chairman: I w i l l a p p o i n t t h e s ame committee consisting of M r * K e n z e l , as Chairman, if t h e r e is no https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis fil jess . n 11. o i t a6sacs 5NE " c e j b o 8 3 BRANCHES OF FEDERAL RESERVE BANKS. The extent of s e r v i e rendered to member a. banks. b. The value of such service to member banks of the district in which the branch is located. Governor Strong: In the opinion of the meeting, the services rendered to member banks for the establishment of branches, in furnishing prompt s u p p l i e s of currency and collection f a c i l i t i e s , are of sufficient impar t a n c e to justify the establishment of a system of branches, even though the expense involved is considerable, and frequently without regard to the earnings of the branches f r o m discount o p e r a t i o n s . Geographical conditions l a r g e l y determine the extent of tho transit f a c i l i t i e s in each b r o n c h . The e x t e n t to which b r u n c h e s are p e r m i t t e d to g r u n t credits to member banks must be gor e r n e d by l o c o l I geographical, and other c o n d i t i o n s , which vary so g r e a t l y in t h e diff e r e n t d i s t r i ts t h a t no g e n e r a l f o r m u l a cnn be s t a t e a to g o v e r n t h a t t y p e of b u s i n e s s . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis c. v a l u e of service rendered by t h e b r a n c h to o t h e r F e d e r a l Reserve Banks. Extent an 381 Governor Strong: The e x t e n t r-ina vt1. l u e of s e r v i c e which may be r e n d e r e d by b r a n c h e s to o t h e r F e d e r a l R e s e r v e Bunks is c o n f i n e d a l m o s t e n t i r e l y to t h e e f f e c t i n g of prompt collections and transfers, which w i l l be developed w i t h experience. d. Cost of operating branches. Governor Strong: In t h e opinion of the meeting, t h e value of the branch should not be meaaured by its earnings or by cost of operation, tut by the value and e x t e n t of th s e r v i c e s which tt is capnble of rendering to the member banks, to the parent bunk, and to the other reserve banks. In the cases of branches established for the purpose of s u p p l y i n g currency a n d t r a n s i t f a c i l i t i e s , w i t h discounts conducted in t h e head office, no earnings can be shown, a n d t h e o n l y m e a s u r e of t h e value of t h e b r a n c h would be t h e volume and v a l u e of t h e services rendered. Toa c o n s i d e r a b l e e x t e n t , the a c n e d c o s t t h e b n . i n c h r e p r e s e n t s a r e d u c t i o n in t h e c o s t cf opera•- ting the main bank. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis e. Branches with limited functlons. f. Use of or a g e n c i e s i n s t e a d of b r a n c h e s . - I Governor Wellborn: le I z::zrzrmau t h a v e o n l y h a d e month's e x p e r i e n c e w i t h an agency, b u t we h:·iVe g:re[ti:, hor;es t h a t it w i l l f i l l t h e b i l l . Governor S t r o n ; It is the opinion of the confer- ence that we have not sufficient e x p e r i e n c e ut this time to e n a b l e us at this time to form a definite o p i n i o n upon this v e r y important question. when we h a v e further experience and have learned h a t the developments agency st Savenah are from GJovernor ,, ellborn, on cf the possi- b l y from other Governors, :tn Districts where agencies have been estoblished, we will probably be in a position to make recommendations. 12. CONCENTIATION OF GOLT AT FEDEFAL RESERVE BANKS. a.. Possibility of further increase in gold holdings. Governor 3trong: Who.t is the estimated amount cf g o l d in the bunks of the C l e v e l a n d d i s t r i c t , G r e r n o r Fancher? Governor ancher: It ts very hard to form any esti- mate of the holdings of the banks, but they are small. We have tarted an aggressive campaign in which we offered to s t a n d a b r a s i o n e n d t h e s h i p p i n g c h a r g e s , And tha.t b r o u g h t https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rte T JI • 'Mt i • in a v e r y s u b s t a n t i a l amount of F o l d t h a t h a d b e e n h e l d by t h e banks t h a t d i d n o t want to s t a n d t h e a b r a s i o n . We t h e n s e n t out a letter to a l l the member b m k s , and t h a t b r o u g h t in qu i t e a s u b s t a n t i a l amount of g o l d and gold oe:rtiflc&tes. We f o l l o w e d that up in December with a n o t h e r Jetter, r e f e r r i n g to the s t a t e m e n t s of t h e member banks on f i l e w i t h t h e a.gent. ··Na went t h r o u g h a n d made a l i s t of i n s t a n c e s h e 1 e t h e r e was over 1, member b a n k . and we addressed a s p e c i a l l e t t e r to t h e That brought in some gold. 1 ' 1e did t h a t in F e b r u a r y , end we have b e e n r e c e i v i n g g o l d e v e r y d a y . You have g o t to work: on c e r t a i n b a n k s . Wu knew of a c e r t a i n bank in our S t a .te t h a t h a d $ 5 , i n g o l d c o i n in 1 t s v a u l t , and we h=ve b e e n working a l o n g q u i e t l y to g e t t h a t , and me f i n a l l y p r i e d it loose. I do not think there is h a r d l y an instance of a s u b s t a n t i a l amount h e l d by a n y member- b a n k . I t h i n k we now have a l l t h e amounts i n . With regard to the State banks, we are n o t so w e l l i n f o r m e d , b e c a u s e we do n o t h a v e a c c e s s to t h e i r statements. Our larger b ® k s bring in their gold right https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 384 a l o n g as it didly in a c c u m u l a t e s , and t h e y have c o o p e r a t e d s p l e n - that respect. Governor Morss: We know from the' Comptroller's r e p o r t how much the national banks havo, and we c r n e s t i m a t e to some extent what the S t a t e Banks h a v e , but it is n o t so e a s y to a r r i v e at t h e amount h e l d by t h e s a v - ings banks. we e s t i m a t e t h a t t h e r e is orobo.bly in our d i s t r i c t five million dollars. could. We have gotten it in as best we The b u l k of t h a t g o l d seems to be held by s a v i n g s ban ks f o r c a s h r e s e r v e , or by S t a .te I n s t i t u t i o n s as r e s e r v e in l a r g e b i l l s , 1 requests f o r gold just receive t o 5. We hove o c c a s i o n a l c e r t i f i c a t e s in t h o s e amounts* We have F e d e r a l R e s e r v e Notes of l a r g e denomino- t i o n , and v-re a r e be p i n n i n g o.gr1in on t h e b a n k s , t e l l i n g t h e m t h a t we have t h e s e l a r g e n o t e s , and ve want t h e m to exchange their gold for them. It h a s o n l y b e e n r e c e n t l y t h e t "e have ha a suffi- c i e n t s u p p l y of t h e l a r g e d e n o m i n a t i o n n o t e s to w a r r a n t our s t a t i n g t h a t , unc we have not y e t r e c e i v e d n r e n o r t on t h e r e s u l t • Governor M i l l e r : I h e r e a r e b e t w e e n t e n e n d twelve million dollars in our district, and the banks are taking https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1 385 s t e p s to g e t it in. e h D v e rrritten p e r s o n a l l e t t e r s to e v e r y b a n k and have gotten a g r e a t d e a l of gold f r o m them. Governor " e l l b o r n : I co not b e l i e v e I could make an e s t i m a t e t h a t would be w o r t h a n y t h i n g at 91l. We have about two t h o u s a n d State banks in our district, and I b e l i e v e t h e y h o l d u c o n s i c e r a b l e amount of g o l d . We have b e e n u n a b l e to g e t t h e m i n t o t h e system, and e have no Wu y to a r r i v e at t h e amount t h e y h o l d . rve have received gold from most of our r.i.ember banks, ano I would s a y there is hardly over a m i l l i o n dollars in o l d held by t h e member banks of our d i s t r i c t . D e p u t y Governor P e p l e : We have f o l l o w e d t h e policy o u t l i n e d by Mr. F a n c h e r , e x c e p t t h a t me have o n l y r e c e n t l y s t a r t e d a c a r e f u l i n v e s t i g a t i o n of t h e s t a t e - ments of the member banks " i t h a remaining gold. view of coralling the The manager of our B a l t i m o r e b r a n c h r e p o r t e d sometime a g o that t h e r e wes some f o l d in Maryland which he could get i n n s soon as our large bills were available; that the g o l d wos h e l d by the banks b e c a u s e t h e r e mere no l a r g e b i l l s , e x c e p t g o l d certifi- cates, a v a i l a b l e • The large bills have just been de- livered to us recently, and we think we will get in more of t h a t g o l d . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We a r e g o i n g a b o u t it s y s t e m a t i c a l l y to 386 g e t a l l t h e g o l d we c a r , s n d t h e banks have c o o p e r o t e a v e r y w e l l in s e n d 1 n c us t h e i r g o l d f o r Fec1eral r e s e r v e notes. I c o u l d n o t sy j u s t hom much t h e r e is in t h e d i s t r i c t nom* Governor Lynch: ••e have g o t t e n in p r a c t i c s l l y a l l t h e mold t h a t c a n be o b t a i n e d u n t i l t h e Ler;'islatu:re p l a c e s t h e C a l i f orn:tt:4 b a n k s upon t h e same bus l s , ns r e - gards reserves, as the national banks. A satisfactory b i l l h a s b e e n i n t r o d u c e d , and I t h i n k we w i l l p a s s 1t at t h e present session. in a b o u t If it o e s pass e should get twelve m i l l i o n d o l l u r s . able amount of g o l d b u r i e There is a c o n s i d e r - in the district in s a f e deposit b o x e s ond o t h e r p l a c e s , e n d that " o l d " 1 1 l drift g r a d u a l l y into the banks. I t h i n k Lt Ls s a f e to s a y t h a t t h e F e d e r a l R e s e r v e Bank m i l 1 h a v e s u b s t a n t i s l l y a l l of the m o l d in the district inside of the next ten years, or five years, poba.1:)ly. The g o l d h a s d i s a p p e a r e d f r o m c i r c u l a t i o n . as this buried g o l d comes out in a tr·ansa.otion As s o o n 1t d:rifts into the banks and comes in to the Federal Reserve Bank. That :ts t r u e w i t h r e g a r d to t h e n a t i o n a l b a n k s , a n d w i l l be s o , I t h i n k , w i t h r e g a r d to S t a t e b a n k s . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1 • i 3 8 Governor Biggs: 7 After personal e f f o r t , I t h i n k we h a v e s e c u r e d p r a c t i c a l l y a l l t h e g o l d in our d i s t r i c t . Our banks have b e e n v e r y h e l p f u l s i n c e b e f o r e t h e ho11 days. A great many of our banks paid their employees in g o l d and t h e r e was an u n u s u a l r e q u e s t f o r it of t h e h o l i d a y s . in a d v a n c e The b a n k e r s have p r a c t i c a l l y t a l k e d t h e 1:r p e o p l e o u t . of t h a t , anc " h i l e t h e y w i t h d r e w s c e r - tain amount of gold within a period of several weeks, t w i c e as much 9lmost as we had b e f o r e came i n . I I think we have a l l . t h e g o l d in our d i s t r i c t t h a t c a n be g o t t e n i n , now' h e r e is v e r y l i t t l e of 1 t b e i n g h o a r d e d . Governor TuicDouga.1: ·,,:e have c o n d u c t e d o. continuous campaign f o r two y e a r s or more, t h r o u g h c o r r e s p o n d e n c e w i t h s o m e t h t n g l i k e f i v e t h o u s a n d banks of t h e d i s t r i c t , w i t h t h e r e s u l t t h o t me have t h e g o l d f l o w i n g s t e a d i l y i n t o the bank. ne have r e c e i v e d most of t h e g o l d t h a t is the d i s t r i c t . we a r e g e t t i n g it in \ i n , and hove b e e n f r e t t i n g it in for the last five months, at the rate of about $ 2 , 3 , a month. The b k s a r e s e n d i n g it in r e g u l a r - l y , and we a r e r e c e i v i n g f r o m f i v e to f i f t e e n s h i p m e n t s a d a y in sma.11 amounts. g o l d now a v a i l a b l e . It I t h i n k t h e r e 1s v e r y l i t t l e h a s b e e n coming in s i n c e t h e Armis- t i c e was s i g n e d a l i t t l e more g e n e r o u s l y . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The ban ks a r e r e s p o n d i n g to requests, and the gold is coming in satisfactorily. Governor VanZandt: "e have combed our d i s t r i c t f a i r l y w e l l ; e x c e p t i o n a l l y w e l l , I mould s a y , owing to t h e f a c t t h a t so much g o l d is n e e d e d f o r e x p o r t a t i o n to Mexico that whenever any of the bo.nks need gold for this e x p o r t b u s i n e s s we ha.ve to order· it f r o m t h e sub-tressury. I would estimate that there is not over to and hnlf mil1ions of dollars in gold in the banks of the district now. Governor " o l d : State bunks. The banks in our d i s t r i c t a r e mostly There are about 3 , s m a l l State banks as a g a i n s t about 3 m e m b e r banks. They have b e e n v e r y gen- e r o u s in shipping in their gold for the past Jdnr or more, but t h e s t r e n m h a s d r i e d up an coming in less frequently, ond t h e i r s h i p m e n t s Dre in v e r y smell omounts. ' I l e f t 1 n s t r u o t 1 o n s last week to examine t h e n a t i o n a l bank reports f o : r March 4 t h and where any member b n k showed s h o l d i n g of $ 5 o r more, t h e y h o u l d be w r i t - ten a letter urging them to,ship it 1n. We have else s e n t out c i r c u l a r l e t t e r s to t h e non-member S t a t e banks. I w o u l d n ' t a t t e m p t to s a y how may ho" much there is https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis in t h e d i s t r : ! . c t , b u t it 389 ls a v e r y s m a l l amount so f a r as the holdings of the banks are concerned. I i m a g i n e there ls still some held in the stockings. Governor S t r o n g : The s i t u a t i o n in New York h a s been covered as f u l l y as p o s s i b l e . We know what g o l d is there, both through na t i o n a l bank r e p a ts and through the reports to the State Superintendent of Banking· ly speaking, there is 4 , , i Rough- n the national banks, sto. te banks end s a v i n g s bunks, the greater p1:crt of which is h e l d by New Yo:rk C1 ty member b a n k s . G o l d is s t 111 coming 1n regularly, in comparatively small quant1t1es. We expect to get additional gold from the banks thnt hold large denominution gold certificates in exchange for the new large denomination Federal Reserve notes• A fe of t h e New York C i t y banks m a i n t a i n t h a t t h e y s h o u l d c a r r y a po:rt1on of their reserve in gold 1n their own vaults, and we probe.bly w i l l n o t be s b l e to c o n v i n c e t h e m t h a t t h e y should not do t h a t b. Demand for o l d . l. In exchange for F e d e r a l reserve nd es r e c e i v e d a.t F e d e r a l r e s e r v e ban k s . 2. For other purposes, Go ernor f a n c h e r : https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We have no demand • f or goJd .. e.t· the l a r e d e F 9 3 Reserve Bank. Governor Morss: Almost no demsnd in exoho.nge f o r F e d e r . 1 Reserve n o t e s ' D.nd a.bout 6w, . h . _or,1ndusat mon t r i u . l purposes• Governor . M i l l e r : We have no demand. Governor " e l l b o r n : None. Deputy Governor P e p l e : P r u c t i o o . l l y none. Governor Lynch: A v e r y s m a l l demond. Governor-Biggs: None. Governor McDougal: Governor Van Z a n d t : No mu t e r i o . 1 d emo.nd. No demand in exchange for Fed- e r a l D e s e r v e n o t e s , b u t a c o n s i d e r a b l e number of u p p l i c o . - t i o n s f o r g o l d to e x p o r t i n t o Mexico. Governor "old: I P o s i t i v e l y no demand in exchange f o r " e d e r e l R e s e r v e n o t e s , and a v e r y l i m i t e d demand on the part of small monufactue:ris, which we ho.ve supplied with our a b r a 1 d e d gold. Go e r n o r S t r o n g : New York. We have a l e r g e demand f o r g o l d in One :reason is t h e demand f o r l a r g e denomina- tion gold certificates for bank reserves, where they want to l o o k up t h e s e c e r t i 1 ' 1 c e t e s vri th out t h e n e c e s s i t y of f r e q u e n t l y c o u n t i n g small b i l l s . We h a v e a c•Jns t; erab le and c o n s t a n t demand for the t r a d e s , . , · h i c h is a re. ther l a r g e demand, a n d me f u r n i s h t h e g r e n t b u l k of t h e https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis r:rrsrr szrv gold thot is exported under licenses of the Gold Comm1 t t e e • At t h i s time I b e l i e v e our demo.nc f o r p-old would run considennbly in excess of our receipts. Governor t r o n g : After the foregoing discuss ion on t h e s u b j e c t of c o n c e n t r a t i o n of g o l a , t h e c o n f e r e n c e mn.kes t h e f o l l o w i n g recommendations: l• That t h e F e d e r a l Reserve Bee.rd s e n d s p e c i f - 1c d i r e c t i o n s to each Reserve Bank, calling attention ' to the importance that no obstacle shall be o f f e r e d at a n y r e s e r v e b a n k or 1 ts b r a n c h e s to t h e immediate redemption of Federal Reserve notes in gold. 2. That e a c h r e s e r v e b a n k be r e q u e s t e d to k e e p a cn:reful r e c o r d of u 11 rece:1.pts of g o l d and t h e so u r o e s from which t h e go1d comes, and of a l l payments of g a l a and t h e p u r p o s e s f o r which t h e payment is made, whether for redemrtion, f o r manufacturing purposes, f o r export, for reserves of banks, or otherwise; that this informat i o n be a s s e m b l e d in a. r e p o r t to be :render·ed monthly to t h e Feder•e.1 R e s e r v e B<l1. rd ir1 .such f o r m t h a t t h e a.ct U8 .. J g o l d mwement through t h e reserve s y s t e m can be cslculated and made a matter of record. (Resolution regarding provisions of the new tax l a w o.ffe:red by Governor Lynch and s e c o n d e d by Mr• https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis mm r a wtt I ¥55tif fr &z a IH# 't ?Jslfflfffi4'Mll@IMMMMS 32 McDougal, to be p r e p a r e d by m* Morss and Mr. C u r t i s , is to be inserted at this p l a c e • ) 13: INTER-LISI.IST • COLLECTION SYSTEM, Suggestions ss to improvement in present facilities, so that reserve banks may render incrensed or better service to member banks, Governor St,rong: '11he m e e t i n R r·ecog:nizea t h 9 t t h e p r i n c t p u J . :.mpr-ovement in p r e s e n t f a . c 1 l i t 1 . e s vvill o,:mstnt in e.n i n c r e s . s e in t h e number of banks r e m i t t i n g a t p a r , ano tho.t a g g r e s s i v e s t e p s s h o u l d be t 8 k e n , a f t e r the next 1berty Loan, with the object of outt!ng a l 1 non-member banks on t h e par l i s t . b. D e s i r a b i l i t y of h a r m o n i z i n g p r e s e n t 1 n t e r · - d l s t r : t c t time s c h e d u l e s , at least between Federal Reserve cities. Governor S t r o n g : A oommi t t e e of t r a n s i t s x p e r t s 1s now engaged in t h e s t u d y of time s c h e d u l e s , wt th t h e o b j e c t , among o t h e r s , of ho.rmonizing p r e s e n t i n t e r - d i s - trict tlme schedules. they expect shortly to submit a report. . Reduction in flont carried by Reservo banks. Governor S t r o n g : The committee of t r a n s i t e x p e r t s w i l l i n c l u d e in this r e p o r t v a r i o u s p r o p o s a l s f o r t h e https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis lW T z:rra:21 \ reduction in the amount of float carried by Federal R e s e r v e Banks, including revisions of intra-district and inter-district schedules• It is recommended that the iedero.1 Reserve Boards secure from the freosury Department such rulings a.swill reduce the float now arising by r e a s o n of immediate credit for the various checks received on dep it in Federal Reserve Bunks as the Government's fiscal agents. d. Recommendation of F e d e r s l Advisory c o u n c i l that items be sent directly to City or town in whioh they are payable- Governor Strong+ It is urgently recommended to the J..1 t}Oe r u l Hes e r v e Bou rd t h a t no e x t e n s i o n of t h e p l a n f o r direct sending of items be now underteken until the number of par p o t n t s 1s , i n c r e a s e d und u n t : l1 t h e mechani- co1 problems of the collection system are o r e fully developed and the sy tem is working smoothly. In s d d i t i o n to t h e recommendations above m e n t i o n e d , the attention of the B o g r a is c s l l e d to the probability of t h e r e n e w a l of an a g g r e s s i v e enmpaign, under t h e l e a d e r s h i p of t h e s m a l l e r banks of t h e country, to secure the r e s t o r a t i o n of exchange by amendment to the Federal Beserve Act. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis am mzrr r 1 (Adjournment wa.s taken from 1.45 p.m. to o'clock p.m. of t h e s me d n y ) . AFTER FECESS The c o n f e r e n c e r e a s s e m b l e d , pur·suant t.o r e c e s s , at 3 o'clock p:m. Governor Strong: The meeting will come to order, e.n.d v:e w i l l take up t h e next t o p i c , which 1.4. LEASED 13 number 1 4 . WIRE SERVICE. a. Probability that entire cost "ill have to be assumed by reserve banks a.fte:r tr.e V i c t o r y Loan campaign has be-en completed. b. Suggestions as to improvements in prosent service. Governor McDougal; I move t h a .t it ts t h e s e n s e of the meeting that we continue the o r a t i , n of the l e a s e d wire service in the interest of thes ervice. Governor Lynch: I second t h a t . (The motion b e i n g d u l y seconded, was c a r r i e d ) . Governor- McDougal: I have a memorandum h e r e which I would l i k e to s u b m i t , or r a t h e r wou:a l i k e to put in t h e https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 395 f i g u r e s showing t h e volume of t h i s s e r v i c e . " T a k i n g December as an a v e r a g e , f i g u r e s c o m p i l e d f r o m r e p o r t s r e c e i v e d f r o m F e d e r o l F e s e r v e Danks, and t h e Federal Reserve Board, show: " T o e . 1 number of messages t r a n s m i t t e d du:r1.ng t h e month, 22,947; total number of words during month, 1,212,528. Average number of words per message,53. Toto 1 c o s t ( i n c l u d i n g e x t r o c o m p e n s a t i o n to o p e r a t o r s ) for month, $1,354,39. Cost f o r month per me:Jse.ge, • 45,. TotD.l c o s t J.f commercial w i r e s had b e e n u s e d , ( f i g u r ed at Government r a t e ) $ : 1 . . , 8 . .5. Cost per message 1f commercial wires had been used, ( f i g u r e d at Government r a t e ) , 65." Under s u b - t o p i c ( b ) , suggesti_i:,ns as to improvements in present service, Governor McDougal moved that a committ e e be a p p o i n t e d to cons 1.der t h e mat t e : r of 1nc:rea.s i n g efficiency, and all other points in connection with the o p e r a t i o n of the w i r e s . (The motion, having been duly seconded, was carried). ; Governor S t r o n g : I w i l l npno:tnt Governor j\tcDouga.1 and Governor ii'ancher on the t comm.1ttee. Mr• K e n z e I - s u g g e s t s t h a t t h i s c o m m i t t e e aJ.so be c a l l e d https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis upon to consider and report upon the subject of the use of codes, and it was so ordered. 15. PENALTIES FOh DEF IC IENCIES IN MEMDEF BANK RESERVEC. Desi:ra.bi1:!.ty of adoption of uniform method of determining deficiencies 1.n Reserves, and asseasing p a n a l t i e s . Governor McDougal: I offer a motion thr,t the practice be made uniform by assessing on the basis of a twoweekly p e r i o d • (The motion, having been seconded, was lost). Governor F a n c h e r : I move t h e t we have a uniform method of c a l c u l a t i n g reserves. (The motion, having been duly scconded,w Governor S t r o n g : a d o p t e d , it RS carried)u A f t o r t h e s b w e r e s o l u t i o n was was found t h a t t h e p r a c t 1 o e s , which v a r y in t h e d i f f e r e n t Feder-al Reserve Dis t r i o t s , cannot be chs.nged by agreement among t h e Gove:rnors, and if un1fo:rm1.ty ts to be obti ned in the method of calculating deficiencies :tn r e s e r v e s , 1 t vd.11 be n e c e s s a r y to have it a d o p t e d by r e s o l u t i o n of t h e e d e r a l Reserve Board, t h e a l t e r n o t i v e b e i n g t h e continua.nee of' methods which a r e n o t u n i - f o r m in t h e d i f f e r e n t d i s t r i c t s : The d± c u s s i o n d e v e l - oped t h a t t h e r e a r e p e r s i s t e n t o f f e n d e r s a g o . i n s t t h e · https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 397 reserve requirements in some districts, and it is suggested that any rule which may be developed for uniform method of calculating deficiencies, provide an exception in the c a s e of these institutions so that they may be more severe- ly dealt with• 16. FOFM OF APPLICATION FOR EMPLOYMENT AT FEDERAL .. RESERVE BANKS. Governor Strong: It is respectfully suggested that the Federal Reserve Board consider whether a ruling should not be issued as to the form of blanks used by a p p l i c a n t s for· p o s i t i o n s w i t h F e d e r a l r e s e r v e b a n k s , which would eliminate the possibility of criticism arising on account of some c;tscr:tm:tnu tlon in matters of race or religion. It is also suggested that it may be advisable, in the interest of the system, that employees d Federal Reserve banks should only be citizens of the United States, or th@ e who have declared their intention of becomtng citizens. 17. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NATIONAL BANK NOTES. Suggestion of Federal Advisory Council that reserve banks receive national bank notes on deposit, and pay out in place of them clean Federal Reserve notes. R Gover!:or G t r o n a : The m e e t i n g urn n:i p r o v e o of t h e s r r e s t i o n of t h 1 1 1 o u s MIPltltE§!FJUfflattt!P ly d i s a p - Federvl Advisory Council. 1 8 . OFFICEFS OF FEDERAL RESEEVE EI-\NKS ACTING ON COM"!'UTTEES OF Bi\NKING ASSOC I.<\TIONG. Governor S t r o n g : It is t h e unanimous v i e w of t h e m e e t - i n g that t h e recommendption of t h e Governors made in 1 9 1 7 , t h a t o f f i c e r s of h e s e r v e bnnks s h o u l d n o t s e r v e on c o m m i t t e e s of b a n k i n g a s s o c i a t i o n s , be f o l l o w e d o u t . 19. DIRECTOM3 Al'ID OFFICEhS OF F . R . PA1\JKS - MENTION O;J' CCNNECTION WITH FED"ERAL RESERVE BANK IN DEALHJG WITH PRIVATE ENTERPRISES IN WHICH THEY MAY BE INTERESTED Governor S t r o n g : I r i s s u b j e c t v i s d i s c u s s e d nnd v i e s were e x p r e s s e d " h i c h t h e c o n f e r e n c e f e r s s h o u l d be s ta t e d v e r h n l l y to t h e Governor of t h e F e d e r a 1 . : : ' s e r v e ry t h e Chn.irr:.an of t h i s m e e t i n g • t is t h e u n d e r s t a n d i n g of t h e c o n f e r e n c e t h o t t h e F " d e r a l K e s e r v e Board hns t a k e n c o g n i z a n c e of t h e p o s s i r 1 . l i t y of 1111:'arssrr,.ent,: n r i t . i n a - 1.n t h i s "l'l"lf'lttBr, and the conferences expresses its hEnrt encor.sement ct t h e views e n t e r t n i n e d +y t h e F e d e r a l e s e r v e B o a r d . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BO)) rd 2. ADDITIONAL PAR POINTS, PAR POINTS---CAMR IGN FOF Gov e r n o r S t r o n g : This s u b j e c t h a s b e e n co, e r e d in the :recommendation submitted to the Board on topic 21. CHECKS AVAILABLE BUT NOT PAYABIE AT A FEDERAL FESEFVE BANK. S u g g e s t i o n that clearing houses put on d i s c r e t i o n a r y l i s t s checks marked "The omount of t h i s check is i m m e d i a t e l y a v a i l a b l e w i t h o u t deduction, upon p r e s o n t a t i o n at the Feaeral Re- serve Bank of Gr e r n o r S t r o n g : he tt m e e t i n g recommends t h a .t t h e I p r a c t i c e d e s c r i b e o under th1.s h e a d i n g s h o u l d , if possi- b l e , be c h e c k e d and u l t i m a t e l y e l i m i n a t e d . 22. JGGESTED AMENDMENT TO SECTION 5 2 2 OF REVISED STATUTES. S u g g e s t i o n by F e d e r a l Adv1so:ry Council removing limit of bills that a b a n k might n e g o t i a t e by endorsement. Governor Wold: I move t h a t we concur in t h e recommendation of t h e Federal Advisory Counc1.1 upon this top1c.. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (The ' m o t i o n , having been d u l y seconded, was c a r r i e d ) . The Chairman: We now come to t o p i c s s u g g e s t e d f o r • 4 t h e c o n f e r e n c e by G o v e r n o r s . 23, FAILURE TO B T A I N DUPLICATE CHECKS TO REPLACE CHECKS DEPOSITED BY THE COLLECTOR OF INTERNAL REVENUE, AND LOSS IN THE MAILS. Governor S t r o n g : The conference unanimously recom- mends to t h e F e d e r a l Reserve B o a r d , tho.t t h e Board s e n d a c i r c u l a r letter to all F e d e r a l r e s e r v e banks r e q u e s t ing a r e p o r t as to the e x t e n t of t h e difficulties and of possible losses which they have e n c o u n t e r e d by r i n s o n of l o s s e s :tn t h e m a i l s of checks d e p o s i t e d by i n t e r n a l revenue c o l l e c t o r s , of # h i c h d u p l i c a t e s er, n n o t be o b t a i n e d , by r e a s o n of t h e fa:Li_ur·e of t h e c o l l e c t o r s Cf i n t e r n a l r e v e n u e to k e e p a d e q u a t e r e c o r d s and d e s c r i p - t i o n s of checks so d e p o s i t e d . It is f u r t h e r recommended t h a t upon r e c e i p t of t h e s e reports t h e F e d e r a l Reserve Board u n d e r t a k e , in b e h a l f of t h e Feder-tJ1 Re s e r v o Banks, to s e c u r e such r e l i e f in t h i s m a t t e r as t h e T r e a s u r y Dep a r t m e n t is a b l e to afford• 24. PENALTIES F DEFICIENCES IN RESERVE. (On the program suggested by the Board-topic No. 15). Governor S t r o n g : This t o p i c has already been die- c u s s e d under t o p i c No• 15. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • iWt 5 Z z Z E e 8 E S S A 41 25.. Uniform t i t l e f o r bone d e p a r t m e n t s 1n Federal Reserve Banks. Governor Strong: this In the absence of Governor Miller, topic was passed. 26. Advisability of securing an amendment to the postal laws, increasing the weight limit on franked mnil mo.tter- Governor S t r o n g : In t h e ubsence of r::-ov'3rnor M i l l e r , this topic was passed. 27. Our g e n e r a l campaign for additional par points, and in connect!on with this, our campaign for i n c r e a s i n g s t a t e b a n k membership. Governor Strong: c us s:ton under 28, This toric is covered in the dis- top1 c No• 1 3 . , How con excessive borrowing on the part of ind i v ! d u a l banks be b e s t r e g u l a t e d . Governor Gtrong ! This topic has been d:tscussed under t o p i c 5-B. \ 29. Exchane charged by Ne..rYork Bunks on Federal Reserve exchange drafts. Gov e r n o r S t r o n g : It is recommended t h a t F e d e r a l Reserve Bank drafts be placed on the par lists of all Fed e:ra 1 r e s e r v e banks. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -mm 42 t :;o. U n i f o r m f o r m of endorsement s t,.mps u s e d by F e d e r a l R e s e r v e Banks nd t h e i r members a u - t h o r i z e d to senc1. i t e m s d i r e c t .. Governor S t r o n g : It is reco"n:nAnded thn.t. t h e s ub.ject of unifor·m ondor8ement stam"t)s be r e f e r r e d to t h e s p e c i a l cornm1ttee of, t r a n s i t e x p : : " t s f o r investit21.t1on·:tnc1 recommenda.t.i on. 31. P r e s e n t method of recovering f o r p o s t a g e nnd .tnsurnnce f o r s h i p m e n t s bt;;;reen F e c e r n l Re·s e r v e Ban k s • Governor S t r o n g : It 1s recom·nended t h a t t h i s q u e - ti.on be r e f e r r e d to t h e n e x t m e e t i n g of .A.ud:t t o r s of Federal Reserve B n k s . 32. Real Estate and Bank Buildtng. (Ge Bonrd's t o p i c No. 9 ) . Governor S t r o n g : This s u b j e c t vs d i s c u s s e d and recommendations made ot t h e m e e t i n g of t h e G o v e r n a s on Thursday. 533. 2 , D uu t i e s of t h e F e d e r a l R e s e r v e A g e n t , n non pp r o r c o o r d :tna t i o n of h i s 1rork w i t h t h u t of t h e Governor. Governor Strong: above top 1c, AftBr 1scuss1on of the u. the conference requested the Chairmen to discuss this eubj e c t i n f o r m a l l y w i t h Gr.:,ve:rnor H a r d i n g . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis mrtFZF 34. For-motion of Cr·edi t Department and t h e extent to which the banks n.re j u s t i f i e d in g e t t i n g first hnnd information regarding paper offered for reC!sc?unt. Governor S t r o n g : This t o p i c was d i s c u s s o d at an earlier s e e s i o n under heading No• 6, credit statement. 35. C a l c u l a t i o n of i n t e r - e s t . T r e a s u r y Department pays on a 6 5 a u y bnsls while all the Federal Reserve Banks except those of New York and Boston c a l c u l a t e intere s t a n d d i s c o u n t on a 6 d y b a s t s . Cannot u n i f o r m i t y be o b t a i n e d in t h i s r o c s r d . 11-overnor S t r o n g : It ls recommended t h a t a is counts w i t h F e d e r a l r e s e r v e banks and b e t w e e n F e d e r a l r e s e r v e b a n k s , be c a l c u l a t e d on t h e b u s is of 365 d a y s a y e a r , b e g i n n i n g July 1st, next. 36. Necess 1 ty f o r theba.nks mGi n t a 1 n 1 n e : a.n a g e n c y to and v i t n e s t h e d e s t r u c t i o n of F e d o r e l R e s e r v e Bonk n o t e . count Governor Strong: It is s u g g e s t s d t h a t the F e d e r a l R e s e r v e Board a s c e r t a i n f r o m e a c h of t h e F e d e r ? l R e s e r v e Banks t n e t o t e l oos t and t h e c o s t per t h o u s a n d af p r e s e n t fo.c111t1es, und a probable early increase in this c o s t , for witnessing the destruction'of Federal Bank notes, at t h e T r e a s u r y Depo.rtment 1n WnshinFton. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis It 1s a l s o r e s p e c t f u l l y s u g g e s t e d t h a t t h e p l a n rm • •: W 2..., 5 T f 3 "i m 44 recommended by Mr· Emerson to Mr· B r o d e r i c k , be ex.a.mined w i t h a v i e w of d e t e r m i n i n g whether t h a t , or some o t h e r p l a n , c a n n o t be a c o p t e a , which w i l l r e l i e v e t h e bmnks of t h i s e x p e n s e , or at l e n s t reduce i t . I havB o. l e t t e r f r o m t h e tJn:t t e d S t a t e s D e r t m e n t of L a b o r , I n f o r m a t i o n and E d u c a t i o n a l S e r v i c e , a d d r e s s e d to S e c r e t a r y G l a s s , i n q u i r i n g whether t h i s m e e t i n g p r o p o s e s to c o n s i d e r t h e q u e s t i o n of f i n a n c i a l cep1.ta1 n o r m a l l y av£i.1lttble f e r . i n v e s t m e n t s in t e m p o r a r y builc11.ng l o a n s and l o n g t e r m m o r t g a g e s , in c o n n e c t i n w i t h the e f f o r t s of t h e Dopnrtment to s t i m u l a t e the building industry. It is It is a s i m p l e m a t t e r to answer t h i s l o t t e r . e n t i r e l y w i t h o u t our P r o v i n c e . Governor Lynch: I move t h a t the l e t t e r be r e f e r r e d to the Chairmen for s u i t o b l e reply. ( The m o t i o n , b e i n g d u l y s e c o n d e d , wus c a r r i e d ) . Governor McDougal: I would l i k e to b r i n g up t h e s u b j e c t or f o r w a r d i n g to Washington m u t i l a t e d F e d e r a l reserve notes. Unaer t h e pre·:rnnt p:r'.)ctloe, s u c h n o t e s a r e f o r w a r d e d to Washington u n c a n c e l l e d , r e g i s t e r e d mat 1, i n s u r e d , or e x p r e s s e d , a.nd t h e c o s t of s u c h s h i p m e n t charged to the Federal Reserve Bk https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis issuing t b e notes. 45 Th1.s c o s t c o u l d be v e r y Plo. ter·L.:1. l l y r e d u c e a i.f we c o u l d be p e r m i t t e d to ship m u t i l a t e d Federal Reserve n o t e s of o t h e r Federo.1 R e s e r v e Banks to Washington 1n t h e sa.me manner s we do our omn* D u r i n g 1918 a s a v i n g of $ 5 , 3 9 3 . 5 3 c o u l d have b e e n made on Fede:ro.l R e s e r v e n o t e s s h i p p e d to Wash 1 n g t o n by us f o r o t h e r F e d e r a l H e s e r v e Bon.ks, n.nd on our Federo.1 R e s e r v e net e s , s h i p p e d by them. F r o m t h i s you oon s e e tho.t t h e s a v i n g f o r t h e t " e l v e d i s t r i c t s v o u l d be w e l l w o r t h wh.1l e . Th;i.s :ts cm i n t e r e s t i n g m p t t e r and ought to be considered• The C h a i r m a n : . h a t do you recommend? Governor McDougal: I mould recommend t h a t con- s i d e r u t i o n be g i v e n to t h e s u b J e c t by t h e Boo.r-o. (Informal d i s c u s s i o n followed). Governor Dtrong: It is suggested that the Federal R e s e r v e Bon.rd g i v e c o n s i d e r a t i o n to t h e a d o p t i o n of some p l a n by which F e d e r a l R e s e r v e Banks may be p e r m i t t e d to s h i p R e s e r v e n o t o s o t h e r Feder@l R e s e r v e Bunks, unfit for circulation, cancelled snd split, as they do m1th thetr own notes. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 46 (Governor H a r d i n g e n t e r e d t h e c o n f e r e n c e room, and after a little 1nformel·discuss1n the conference ao journod, sub,ject to t h o c:.;11 of t h e Fede:rr,1 Reser•ve Board). NOTE: The c o n c l u s i o n s o x " r e s s e r e c o r d were d i c t a t e hy t h e C n i r m a n wnd approved by c o n f e r e n c e in e a c h instonce. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on t h e nhove the