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Federal Reserve Bank of St. Louis
Secretary's Minutes
G O V E R N O R S
C O N F E R E N C E
May 2-4, 1922.
Washington, D . C.
i INDEX T O
CROSS REVER!
SECRETARY'S MINUTES wie STENOGAAPHIC R E C O R D
MAY 2 - 4 1 9 2 2 CONFERENCE O F GOVERNORS
Paragraphs i n
P a g e s in
Secretary's S t e n o g r a p h i c
Minutes
R e p o r t
A. 8 , A. Numerical System - Enlargement t o
include Federal Reserve Banks a n d Branches
{%
e
:
’
e
s‘
M
e
t+(
Notation o n Checks o f Member Banks) . .
[
=z
Abrasion Losses = Absorption of.
6 , 1 2 1/2,2
3
3
4
Acceptances ~
Sankers
Domestic .
B e c e
5
7
0
a
s
:
.
;
Regulation o f F. R . Bd..
Trade - Preferential rate. 2
1
-
8
4
4
5
5
0
=
7
2
=
7
;
1
1
- 2
2
;
;
; 160-167;
3
207-222
ACCOUNTING A N D AUDITIN
Deduction o f balances d u e f r o m other
banks o r bankers i n computing reserve.
Periods for reporting deposit liabilities
peewe comes Citvoe- « s e s s
S t e e
dvice o f N o R e t u r n s
Allotment o f Certificates
Amendment t o F,R. Act t o permit member banks
to borrow o n o w n collateral note drawn f o r
any period u p to 90 days with Government
RochrIG1G6 g e Col laterd? - S o ,
Basic L i n e ~ - B o r r o w i n g s
S S
1
4
1
-
1
4
8
;
of ....
2
3
-
2
7
:
Serrowings i n excess of Basic Line. . . . .
2
3
-
2
7
;
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Federal Reserve Bank of St. Louis
i n excess
fs...
Secretary's
Pages i n
Stenographic
Minutes
Report
Paragraphs i n
Certificates + Allotment o f « « + « « «
BUDSCEIDtLON t O 4 . 6
< <
4 6 6:6
Chairman - Election o f . . .
4 s 0
enc
Chattel Mtges. a s security for notes redisc.
Charters o f N. Bks. - perpetuation o f -.« « «
Charges
35
36
68
12,54
62
258-260
289-296
553
38-39;
446-451
For reports o f examination o f Natl. Banks
To be collected b y member banks from customers whose checks are cleared through
FR
B a n k e ese 66 s e
e
e
3 9 - 300-316;
4 0
;
551=553
Claims - Filing claims o n behalf o f member
banks o n account o f -ahecks d r a w n o n
f a i l e d
b a n k s
e @ - e e # e e
« e f ©
©
Closing o f Books o f F. R. Banks «
@
@
24, 29
@ ©@
9c, 52b
« « « -
1,33,48,57*
COIN, CURRENCY and CIRCULATION « . « . . .
176-206;
34-37; 465-406
412 ;250 ; 348-373;
Report o f Treasury Currency Committee
Gold'Policy o f F. R. Banks (special Ref. N.Y.)
58
Payments o n account o f Treasurer
Payments o n own account
Absorption o f losses through abrasion ,
Giteney Policy,
o s 6
.
34
1,33,48,57*
k a o w te
Fitness i n sorting
Payments i n kinds, denominations
251-258
4u12;250;348+373
435-438
and fitness
National B a n k Notes
Retirement without legislation.
Shipments for redemption , ,
....
Federal Reserve Notes
3,62
1,33,48, 57%
was
4-12;250;
3 4 8 - 3435-438
7 3 ;
Printing Program
Receipt for fit F. R. Notes
received from Other F.R. Bks.
Distribution o f U. S . Currency
Redemptions o f U. S. Currency
Collateral Note drawn for any period u p to
90 days with Gov't. securities a s collateral
Collection Circular procedure «
< 6 «
+
Unif orm circular a n d
« e e
s w0
Collection Committee
Appointment o f Standing Committee f e e e e e
Report o n recommendations m a d e t o October,
1921 Conference o f Governors ,
,....
Collection o f charges b y member banks from
customers whose checks a r e cleared through
Federal Reserve Banks 3
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Federal Reserve Bank of St. Louis
141-148;
420-426
167-174;
Paragraphs i n
Secretary's
Minutes
Pages i n
Stenogranhic
Reno rt
COLLECTIONS A N D CLEARINGS
Uniform check collection circular
and procedure
In relation t o gratuitous services. . . Reports o n recommendations o f
Collection Committee t o Oct, 1921 Conf.
451-494
167=+174:
Filing claims o n behalf o f member bks.
On a c c o u n t
o f checks d r a w n
176-206; 235-237;
o n failed banks
Par Collection System
237=2 46; 440-446:
Possible legislations Charges t o b e collected b y member banks
from customers whose checks are cleared
through the F,..R, Banks + + + + » e e k
Notation o n checks o f member banks
indicating F.R,.8. o r S8ranch to which
they should b e sent for collection.*
6,12 1/2,2
3
233 39;246-250
Wdviee o f N o returns ... «.c.« s s
40
298-299;
lost and charged back . . . . . .
41
229
Nonmember Clearing Banks . . .. (See Uniform Services)
63
451-494
4&
324=325
28
235
t e8 8
4L
299
Costs o f eervices rendered « * *= © » «
63
451-494
14
15
45=71;
71-80;
Purchase o f Govt, Securities
by F,R,Bs f o r o w n a c c o u n t . . .
2,16, 17,64
13-21; 80-92;92-41;
and for account o f Treasury. .
16,17,59,64
494551
80-92; 92-141;
49 40551
Correspondence referring to items
Computation o f Reserves «
+ + + » »
Conference o f European Banks o f Issue
Cerrespondence referring t o items lost
S e
O O
a
y
y
e a e
CREDIT TRANSACTIONS A N D POLICIES
Bankers Acceptances
Foreign i
i
ge)
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Federal Reserve Bank of St. Louis
8
e w
e e
a
e
Paragraphs i n
Secretary's
Pages i n
Stenographic
Minutes
Report
—_—
Amendment t o permit Member Banks t o borrow
on own Collateral Note drawn for any period
up to 90 days, with Govt. securities a s
Pol Yates
erlj. 6] «0 0 2 6 a e o e e 0 ee e e
141-148
Kiting Operations « « + e « «© © « «
149-154
Rates
o f Discount
154-159;
22-23;207=222;
e e e
e
General Policy -
Preferential r a t e o n Trade Accept.-
332-348
Criticisms o f F, R, System - Answering
1,33, 48, 57%
Currency Policy * -
Custody a n d availability o f reports o f e x
amination o f National Banks « « « e e e« »
40123250; 348-372;
435-438
316-324;551-553
Deduction o f balances due from other banks
or bankers i n computing reserve «
Deposit Liabilities ~
324-325
« « e« e
Periods f o r reporting
in Reseeve UGLIee 2 4 .
y e
e a e
325
e e s
Digest o f replies t o questionnaire o n services
rendered .
4 ee e e e e e e e e e
Discount Rates
Goneteierolie y
e Se vw
e
e o e
Trade Acceptances . . . « e « »
Distribution o f U, S . Currency *
64
494-551
20
5,21, 25
154-159;
22~23;160-167;
207-222
1,33, 48,57
4~12:250; 348-3723
435-438
Dividends - payment out o f surplus.
13-21;
Domestic Bankers Acceptances. .
71-80;
Earning o f F,R.BseComparison o f
net and Sapient Expenses. » e e
Election o f Chairman&Secretary. 3
Examinations o f National Banks=- Reports
30-31;
aod
Cherees
1 6 P
a
>
«26
5 - 0
n e 8
Custody and kvallability. e e e
782 6 e
a e°
°
e e
39-40; 300-316
316-324;551-553
Exchange Charges ( s e e P a r G a Fisction System)
(Current-Comp.with Gross & Net earn.
{ Bebhoies 2 0
s o ee ee
Expenses -(Payment out of surplus
(in connection with uniform services
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Federal Reserve Bank of St. Louis
30=31;
13-21;
451+494
| Paragraphs in) P a g e s i n
Secretary's | S t e n o g raphic
R e p o r t
Minutes
Fsiled Banks = Filing claims o n behalf o f
member banks o n account o f checks drawn
we
e
e a
t a e
Be Pet ted P e e ,
1
7
6
-
2
0
6
;
Federal Reserve Board Acceptance Regulamien Gnoretiove Wunder, . 3. << + s ¢ i 6 6
Yedsral Reserve Notes %
1
6
.-5-s o e w e « e s
4
4
5
-
7
1
;
4 — 1 2 ; 250; 348-
1 , 3 3 , 4 8 , 5 7
373; 435-438
Payment o f new notes as distinguished from
Fit
Printing Program
Receipt f o r fit F,R.Notes received from
other F, R. Banks.
Federal Reserve Pension Fund. . . . . + » 5 +
« @
2
6
0
-
2
6
1
Fidelity and Gther Insurance, . .. « s+ a i
202—285;
Filing Claims o n behalf o f member banks o n
account o f checks drawn o n failed banks . i
176-206;
Fiscal Agency Expenses = reimbursement o f ,
PISCAL AGENCY OPERATIONS
Allotment o f Certificates...
2...
3
5
3
6
Subscriptions t o Treasury Certificates,
Fit notes *
1
,
3
; 250; 348-373
2
1,33, 48,57
Fitness in sorting currency ~ Uniformity*. |
, 48,57
3
Payment of fit F, R, Notes
Receipt f o r fit F.R,Notes rec'd from other
F, R . Banks
5% Redemption Fund for National Bank notes. .
Franchise Tax ~- Pub, o f reserves for . . . -
s
e
2
9 b - 5 2 a
7
-
3
0
; 397~402 5
3 1 - 3 4 ; 402-405
Foreign Bankers Acceptances ~ Operation under
new Regulation of Federal Reserve Board. . .
1 4
Gold Policy
3%
Absorption o f lesses through abrasion. - - 4
«
«
e
+
Payments o n account o f Treasurer. « +
Payments o n own account , « 4 + 2 20 2 2 8 O F
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Federal Reserve Bank of St. Louis
4 5 ~ 7 1 ;
2
5 L258
Paragraphs
i n
P
a
g
e
s
in
Secretary's S t e n o g r a p h i c
Minutes
R
e
p
o
r
t
Government Securities - Purchase b y F, R, Bs. .
BOT ( O r o e e n 0 n o e 6
~
a
e e e ee a
1
ae
4 . 1 6 1 1 , 64
4
For Venter’ Saanee « « é s 0
FOw Soensuryy A C O s , 5
+ bia S e
si a
1 3 - 2 1; 8 0 - 9 2 —
2
0
;
4
; 494-§51
e e 4 , 9 0 5 . "
Se e a ce oe
3 7 - 3 8 ;
1 6 , 1 7 ,59;64 8
0
j
aff §
Gross earnings o f F,R.Bs = comparison with net
earnings &
Current Expenses . . . s s «
« » »
9
a
3
0
-
3
1
;
Importance o f Public Relations W o r k b y member
bank relations departments o f Federal Reserve
B a n k s ,
*
o
Insurance e t c .
e
a
e
o ee
*
e
f e
o eo
o
&
*
o
8
2
.
«
«
a l:
3
3
0
-
3
3
2
;
8
5
;
Fidelity, security, transportation,
e
e
&
e
a e e
P y°
®
s
o
e
*
e
e
e
a
o
w
2
6
2
-
2
Items lost and charged back - Correspondence
3 eee e e a e e r e
a e
Kiting Operations.
.. .
;
Public: Relations W o r k
Laportance .-. s s :
GPUL O L A =
e e
e
1
4
9
e
3
3
e
e
e
-
1
3 0
3 2
-
3
3
5
2
2
6
4
3
4
2
8
Legislation i n regard t o
Hations) f e m k Currency... < <
Par’ L o brectLorwoey Stan f e 6
Pension lundio=. = , 6 8 3 i S
t s « s w e
e e e
be n a a e e a
e i S e ee e e e
o
3
2
2
6
m
7
0
-
e
Lost items - Correspondence regarding items
end charged back. . . .
4
1
6
—0:4
446
4
;
au?
MEMBER BANK RELATIONS
National Bank Charters - Perpetuation of. .
National Bank notes
ShRedeertion Saud... e s « 2 ws t e
Retirement without legislation, .
“ix;mernte
Nek Earnin:’
2
7
...
A
f o r redenption*
-
2
3
0
; 397-402;
2
n
5
? . 2502 3 4 8 ~ 373%
t
:
of F,R,Bs.-comparison w i t h Gross Earn!
& Citrrent
E x p e n s e s ,
e
+
°
®
c
a
»
-
®
s
«
g
e
2
3
0
2
3
1
;
Ninety
t * Day
e Note
G o tvwttn
e r m n e n t securities a s cols
tLe T a y .
7
e
e
a
a e e e
No Returns - Advice m e , .
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Federal Reserve Bank of St. Louis
e
e
2
,
o t e e S e eee e e
e
ea
e
ec
:
1
4
1
-
1
4
j
-92-141;
9 2494~;;
8
;
29B=299
Secretary's
Pages i n
Stenographic
Minutes
Report
Paragraphs i n
Notation o n checks o f member banks t o indicate
F.R.B.
o r Branch t o which they should b e sent
23; 246-250;
for collection (see A-B-A.Numerical System) . .
507-512
Open Market Operations - Report o f Standing Com..
OPERATION
Federal Reserve Pension F u n d . . .
260-261;
Fidelity and Other Insurance . . .
262-285
8
286-289
e R
S
e
e e e
e r e
Reports o f Examination o f National Banks
13,42,6
43,66
39=49 5551-553
316-324;551-553
4,30,61
2 3 7 - 2440-446
4 6 ;
37
260-261;
Periods for reporting deposit liabilities i n
et
C h e e a. S S o e G e e i l e w o e o
45
220
P a g e
39
286-289
5,21, 25
22-23; 207-222
S L A E
L oa
B
E
S
e e e eee
Custody and Availability . . . .
Parsotiection System... s s . +
Potton ( u n i o ,
g a s
e
S
n S 5
e
3 2.
e
Se
R
g s s
e
s
a e
Preferential r a t e o n Trade Acceptances .
.
Printing Program for Federal Reserve Notes
1,33,48,57*
4012 ;250;348-373;
435-438
Public Relations w o r k
PROT TONGG s s
S s
C r i t i c i s m
«
©
o o e
e
e e ‘
°
«
>
bd
46
47
330-332
333-348
11,50
2,16,17,64
37-38; 379-396
13-21; 80-92;
92—141 5494-551
Purchase o f Government Securities b y F.R.Bks.for
Maver Gages -AGCOUNe 6
Ce
Recent
g
o a
g a g
F
P
e
e
e e
e e s
S c
S e
w
e
16,17,59, 4
6
Treasurer's Account
80-92;92<141;
- 494~551
questionnaire covering uniform services performed
ee e r
DORKS 6 5 e e se es
Rates o f Discount
e e e C O L ICY. e i n e r 8 e 0
Trade Acceptances
c k ce
ne
C S
O R
Rediscount o f notes secured b y Chattel Mtges. .
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Federal Reserve Bank of St. Louis
451-494
154-159;
22~23;160-167;
207-222
38-39; 418-420
Secretary's
Pages i n
Stenographic
Minutes
Report
Paragraphs i n
Reports o n
Examination o f National Banks
Open market operations (standing Committee)
43,66
67
3 9 - 3400-0316;;
551-553
316-324;551-552
507-512
Recommendations o f Coll'n Committee t o
October, 1921 Conference o f Governors’
22
167-174;
13,42,6
Ghareesr tor 6 6 eee s e s
Cwet 0dy- and v
a
ol ei t y 6
8 a
e a Se
Reser Ves = ‘eeputation o f < 5 s s .
Publication o f res. f o r Franchise T a x .
Retirenent o f National B a n k notes without
Legislation. 494-6 3 6 s
37; 406-418;
553
avinges Deposits - special . . . .
F
o
s
D E C any
G eo OClLON- O f y w s e o e ce w e e e e
Security transactions for member banks ~ Limita~
tion o n services rendered i n the purchase,
sale, receipt, delivery o r safekeeping . . . .
379-396
Services performed for member banks . . , . . . - .
63
451-494
Shipments o f National B a n k notes f o r redemption*.
1,33,48,57
4-12 ;250;348373;435-438
Sorting o f currency - uniformity concerning
fitness*
1,33,48,57
4 - 1 2 ; 2 53480 ;
373;435-438
37 5406-418;
222-235
30~37 ;
Special Savings Deposits
10,53
26
9,52
. . . . . .
State Bk. Membership i n F.R. System .
Statistics concerning F.R. Banks . .
Subscriptions t o Treasury Certificates
289-296
Surplus =
13-21;
use o f i n paying exp. &
Trade Acceptances -
div.
Preferential r a t e
22-23;160-167;
207-222
Treasury Certificates (see Certificates)
dig OOM ONS B l
G
a
a
pudeCr3 OlLONS She 3 4 7 , S o e o s
s
e e
258-260;
289-296;
UNIFORM SERVICES T O MEMBER BANKS
Digest o f Replies t o Questionnaire
374-379
. . .
Should there b e any limit t o the services
rendered member banks
in purchase, sale, receipt, delivery o r
safekeeping o f securities
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Federal Reserve Bank of St. Louis
. . . . . .
451-494
Paragraphs i n
Secretary's
_Minutes
Stenographic
R
e
p
o
r
t
;
2
5 0 ; 348373 ;435-438
Uniformity concerning
Check collection circular a n d p r o c e d u r e . . .
Payments o f currency i n kinds, denominations
ESie GANGA e e e a ay a
Sorting currency a s to fitnueses*
U r e n s t a t e s C u r r e n c y ©. S
e
G
e
* "Currency Distribution & Payment Policy
for Federal Reserve Banks"
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Federal Reserve Bank of St. Louis
e
s
4
-
1
2
3
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Federal Reserve Bank of St. Louis
TOPICS SUGGESTED B Y GOVERNOR HARDING
FOR D I S C U S S I O NT
A
.
JOINT CONFERENCE O F FEDERAL RESERVE BOARD WITH GOVERNORS
May 1922 Conference o f Governors
1. Desirebility of the adoption by Federal Reserve
banks o f policy o f paying out gold certificates i n
ordinary course of business. (Board's circular letters
ofMarch 9th X-3353 and 3354).
2. P o l i c y of some Federal Reserve banks t o invest i n
Government securities i n order to increase their earning assets.
3. Practicability of action b y Federal Reserve banks,
withsut additional legislation, looking t o retirement
of national bank note circulation.
4. Possible legislation affecting the par clearance
systema
Se Desirability of reestablishment b y Federal Reserve
banks o f special trade acceptance rate,
6. E x t e n s i o n o f A.B. A . numerical system s o a s to
make provision for Federal Reserve Banks and Branches.
te C R E D I T TRANSACTIONS AND POLICIES
Bankers A c c e p t a n c e s
Lg F o r e i g n -
Operations under n e w regulation o f F . R .
Bd, ( R i c h m o n d and
San Francisco )
(a) General Discussion
(b) Recommended
(1) T h a t one officer i n each F.R.B. b e appointed t o b e responsible f o r s u c h opera-
tions; this officer t o keep i n touch with
each other bank's representatives a n d with
Counsel o f Board, a l l t o meet when neces-
sary as a committee; and
(
N
e
w York).
N
e
w York)’
N
e
w York )
That a sub-committee o f officers representing near-by banks b e appointed t o
meet when occasion arises.
(
ref D o m e s t i c +
(a) R e c o m m e n d e d :
That Board b e requested t o consider
advisability o f extending use o f
domestic bankers acceptances either
by regulation, or, i f necessary, b y
amendment.
a
e
(
Purchases o f Government Securities b v Federal Reserve Banks ;
For their own account, and for account of Treasury.
( B o a r d Program )
if S h o u l d i t b e policy o f Reserve Banks t o invest i n
Government securities i n order t o increase earning
assets?
(
N
.
Y
. and Phila.)
Amendment t o permit Member Banks t o borrow o n own
Collateral Note drawn for any period u p to 90 days
With Government Securities as collateral.
( C l e v e l a n d )
Kiting Operations
1. Discussion o f importance of Federal Reserve Banks
taking steps to detect cases of kiting.
(
N
e
w York)
Rates o f Discount
1. General Policy
P r e f e r e n t i a le
t
a
r o n Trade Acceptances |
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Federal Reserve Bank of St. Louis
(Boston)
(
B
o
a
r
d Program’
)
ii. C O L L E C T I O N S A N D CLEARINGS
Check Collections
1. Uniform check collection circular and procedure
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Federal Reserve Bank of St. Louis
( M i n n e a p o l i s )
(a) Discussion i n relation to gratuitous
services to member banks. ( S e e topic VII-A) ( B o s t o n )
(b) Reports o n recommendations o f Collection
Committee made at laat conference.
(
N
e
w York)
Filing claims o n behalf o f member banks o n account
ofchecks drawn on failed. banks.
(
S
a
n Francisco)
(Last conference v o t e d that this b e done unless e x +
press request not to do so.)
Recommended:
That n o claims b e filed except upon
specific authorization from indorsers,
Par Collection. System
(
(a) Possible legislation
S
(
a
B
o
n Francisco)
a
r
d Program )
Charges t o be collected b y member banks from
customers whose checks a r e cleared through
the Federal Reserve Banks.
(
A
t
l
a
n
t
a and
Richnond)
(Postponed from last conference)
Notation o n checks o f member banks indicating
F.R,. 8B, o r Branch t o which t h e y should b e
sent for collection. ( S e e Board's letter
X-3342 Feb, 27, 1922)
(a) C o m b i n a t i o n with A. B,. A. numerical
system
(
B
o
a
r
d Program)
Advice o f N o Returns
Recommended:
That uniformity i n phraseology a n d
general information such a s date and
total o f cash letter i n which items
were originally listed is desirable.
( S t . Louis)
Correspondence referring t o items lost a n d charged back.
Recommended:
That acknowledgments t o correspondence
referring t o items lost and charged
back b e discontinued i n view of the
information given Federal Reserve Banks
in daily statements
o n which s u c h itens
appear as deductions,
(
S
t
. Louis)
. *
NI o n m e m b e r
Clearing Banks
Recommended:
That all gratuitous services, such a s
wire transfers, shipments o f currency,
( S a n Francisco )
ete., b e withdrawn. .
eel. C O I N , CURRENCY AND CIRCULATION
Report o f Treacury Currency Committee
Board's letter X~3381 and (a), April 11, 1922
Po licy o f Federal Reserve Banke
X~-3354, Mch.9, 1922)
Paymente o n account o f Treasurer
(a)
I n accordance with request of Treasury
(See Board's letters X~3353 & (a), March 6, 1922,
& (a), March 18, 1922)
Payments o n owm account
(a)
I n relation to action of Treasury
Absorption o f loeses through abrasion
‘November 1919 Governors' Conference voted
that euch losses be absorbed)
Currency Policy
1. Uniformity concerning
(a) Fitneee in corting
(b) Payments i n kinds, denominatione and fitnece
(See Treasury Committee Report)
Si N a t i o n a l B a n k Notes
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Federal Reserve Bank of St. Louis
o retirement without
(a) Possible m e a n s f
(
B
legiclation ;
(bv)
Shipmente for redemption
(See Board's letter X-3364 and (a) of
March 21, 1922)
o
a
r
d Program)
3. F e d e r a l Reserve Notes
(a) Printing Program (See X~3351 and (a) of Mch, 9, 1922)
1, Minimum printing orders o r stoppage o f
production,
2, Payment o f new notes a s distinguished
from f i t notes,
Receipt for fit F. R, Notes received from
Other F, R, Banks,
(1) Recommended by St, Louis
That such receipt b e discon~
tinued; some banks now require,
others d o not,
Distribution o f United States Currency.
(a) E f f e c t o f instructions o f Treasury Department
letter (See X-3364 and (a), Mch. 21, 1922)
concerning shipment o f U, 8
to applying banks,
Currency direct
Redemptions o f United States Currency
(a) Effect o f Treasury request relative t o
payments i n gold (See X#3353 and (a),
March 6, 1922.)
IV. F I S C A L AGENCY OPERATIONS
Allotment o f Certificates
(
S
a
n Francisco)
1, C o m p a r i s o n o f methods followed and results achieved,
Subscriptions to Treasury Certificates
( P h i l a d e l p h i a )
ie C o u l d not subscriptions t o Treasury Certificates b e
closed three days before date of issue, t o avoid
the calculation o f one o r two days interest and the
making o f refunds?
Vs O P E R A T I O N
Federal Reserve Pension Fund
(Committeen
oas A d v i s a b i l i t y o f urging that something b e done to
bring about desired legislation,
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Federal Reserve Bank of St. Louis
P e n s i o n )
Sp
(
and Other Inzurence
F
i
d
e
l
i
t
S
n Francisco,
Chicago }
a
y
1, F e d e r a l Reserve Banks paying excessive premiume
fidelity, transportation, a n d other insurance,
should a
joint f u n d b e s e t u p f o r those p u r -
poses? (Mr. Cramer, Chicago, hae had this matter
under consideration)
(
Pilfering
N
w York)
e
Ba G e n e r a l diecussion
w York, S a n
Francieco,
i C h a r g e s for Reports ~ Discussion o f abandoning C l e v e l a n d , Fed.
R
e
e
. Board)
temporary agreement reached a t April, 1921,
conference t o meet the then existing deficit.
(
Reports o f Examination o f National Banke
N
e
(See paragraph 71 Secretary's minutes),
Custody and Availability o f Reports ~ Suggested
by Governor Harding that a committee o f governore
be appointed b y the conference t o call o n the
Comptroller and discuss thie subject. ( R e p o r t
of Topic No. 6, Chicago Group meeting Feb, 24-25,
1922)
Vi. A C C O U N T I N G A N D AUDITING
Deduction o f balances d u e f r o m other banks o r bankers i n
computing reterve |
(
P
h
i
l
a
d
e
l
p
h
i
a
)
ae R e c o m m e n d e d :
That each member bank i n all cases have the
privilege o f deducting balances due from other
banke or bankers in computing reserve. ( N o w
under consideration b y Reserve Committee o f
Federal Reserve Agents)
Periods f o r reporting deposit Liabilities
i n Reserve Cities ( P h i l a d e l p h i a )
1. Standardization t o make periods coincident desired.
(See X+1584 - June 13, 1919)
Vii. U N I F O R M SERVICKES T O MEMBER BANKS
Digest of Replies t o Questionnaire. (Digest dated March 1922) ( N e w York)
ae Consideration o f adoption o f uniform service i n all districts.
Should there b e any limit t o the services rendered member banke? (Philadelphia,
i.
I n the purchase, scale, receipt, d e l i v e r y o r s a f e .
keeping o f securities,
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Federal Reserve Bank of St. Louis
VIII. M E M B E R BANKS RELATIONS
Public Relations W o r k
a Importance,
(a) Desirability of vote by Governors that work is
important.and should b e generally pursued.
2. C r i t i c i s m
(a) Diccussion o f policy i n regard t o answering
criticiems.
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Federal Reserve Bank of St. Louis
(New York)
First Day's Sessi
a
y
, May 2, 1922
Joint Conference w i t h Federal Reserve B o a r d
The meeting w a s called t o order a t 10:30 o'clock 5 . m,.
Present;
Honorables D . R. Crissinger,
W . P . G. Harding,
Edmund Platt, Adolph C. Miller, Gharles S. Hamlin,
John R. Mitchell, members o f the Federal Reserve
Srl
Board; Governors, Morss, Strong, Norris, Fancher,
Seay, Wellborn, McDougal, Biggs, Young, Miller,
McKinney and Calkins o f the Federal Reserve Banks;
and Mr. Harrison, Secretary.
Board P r o g r a m 1
# - Desirability o f the a d o p t i o n b y Federal R e serve Banks o f ; i c y . o f paying o u t g o l d
certificates i n ordinsry course o f business.
Governor Harding read to the conference copy of the program entitled "Currency Distribution and Payment Policy for Federal Reserve Banks"
stating that the program would b e distributed t o the conference for discussion a s soon a s printed,
( S e e paragraphs 33, 48, 57)
Board Program # 2 - Policy o f some Federal Reserve Banks t o
invest i n Government securities i n order
to increase their earning assets.
Governor Harding opened discussion o f this matter b y reading
recommendation 7/9 o
n e Federal Advisory Council t o the Federal Reserve
Board o n April 28, 1922,
H e , thereupon, discussed i n general terms the
relation o f Federal Reserve Bank earnings t o expenses, called attention t o
the fact that iir. Cilbert, \in a letter dated May 1, 1922, h a d advised
the Federal Reserve Board that t h e Treasury Department i s prepared t o dis-
cuss with each Federal Reserve Bank the question o f making reimbursement
for fiscal agency expenses.
( S e e paragraphs 56, 65)
H e also referred t o
the opinion o f the Attorney General, d a t e d April 27, 1922, upholding t h e
Opinion o f the Federal Reserve Board's General Counsel t h a t Federal Reserve
Banks have authority t o make payment o f their current expenses and dividends
out of their surplus,
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Federal Reserve Bank of St. Louis
H e concluded his remarks with reference t o the
1 -
subject b y calling attention t o the fact t h a t further economies i n the e x -
peration o f Federal Reserve Banks will undoubtedly b e effected
as a result o f the studies o f the committee o f operating men of all reserve
banks recently held i n Chicago with the committee o f the Federal Reserve
Board o n Efficiency a n d Economy.
H e added however t h a t i t might n o t b e
true economy t o d o anything with the Reserve Bank organizations that would
men in the banks. ( S e e paragraphs 16,
Board Program #3 + Practicability of action by Federal Reserve Banks without additional lerislation, Lookine t o retirement o f national
bank note circulation,
Governor Harding read t o the conference recommendation # 2 of the
Federal Advisory Council t o the Federal Reserve Board o n April 28, 1922, t o
1e effect that Federal Reserve Banks should n o t adopt a n y policy which
would tend to force the retirement o f circulating notes o f national banks
by making their i s s u e unprofitable.
H e then stated that t h e Board agrees
with t h e recommendation o f the Council that there should b e n o discrimina-
tion b y Federal Reserve Banks against national bank note circulation.
(See paragraph 62)
Board Program # 4 + Possible legislation affecting t h e p a r
clearance system.
Governor Harding stated that i t is improbable that any legislation concerning par clearance will b e adopted a t the present time.
(See
paragraphs 30, 61)
Board Program # 5 - Desirability o f r e e s t a b l i s h m e n tyb
Federal Reserve Banks o f special trade
acceptance rate.
Governor Harding,
o n behalf
o f t h e Board, a s k e d t h e conference t o
make specific recanmendation t o the Federal Reserve Board concerning the
desirability o f a preferential open market rate for trade acceptances,
(See pararpraphs 21, 25)
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Federal Reserve Bank of St. Louis
So
Board Program # 6 - Extension o f A . B .
A . numerical s y s t e m s o a s
to make provision for Federal Reserve Banks
and Branches-
Governor Harding discussed briefly the correspondence which h e
has conducted with the President o f the American Bankers"
Association, a n d
explained that i n his opinion the adoption o f this amendment t o the numerical system o f the American Bankers’ Association i s more a matter for that
association to determine and develop than for the Federal Reserve System,
although it requires the cooperation of the Federal Reserve Banks. ( S e e
peragrephs 12 1/2, 32)
Topics supgested b y Federal Reserve Board
not appearing o n program.
Borrowings i n excess o f Basic Line.
G
o ve mor Harding referred ( 7 )
to t h e fact that more t h a n one-quarter o f the member
banks o f the System
are now borrowing i n excess o f their basic line, and called
attention t o
the percentage o f banks i n each district which are borrowing i n excess
of
their basic lines
H e stated that this topic had been discussed
with the
Federal Advisory Council a n d their view asked
a s to the best way to make a
better distribution o f the burden. Particular
reference was made b y the
Board i n its discussion with the Advisory Council
t o the possibility o f
adopting a modified form of the progressive rate, with
a limited number o f
progressions e n d a maximum not greatly i n excess o f
the current rate.
But, h e said, recommendation #11 o f the Federal Advisory
Council t o the
Federal Reserve Board on April 28, 1922, stated that the
most effective
way to handle the situation i s b y the personal influence
o f the Governor
of each Federal Reserve Bank o n the member banks borrowing
i n excess.
5% Redemption Fund for National Bank Notes. G o v e r n o r Harding
presented t o t h e conference a
form o f letter t o all reserve banks w h i c h
has been proposed b y the Board and concurred i n b y
the Treasury Department
relative t o payments i n the 5 % redemption fund for national
bank notes.
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Federal Reserve Bank of St. Louis
-~4
Thic letter was submitted t o the conference f o r consideration with
the request that it report back to the Board concerning the proposed plan.
(See paragraph 51)
Statistics c o n c e r n i n g F e d e r a l R e s e r v e B a n k e ,
conference f o r its
(a) G o v e r n o r Harding submitted t o the
information a
Board comparing
statement o f the Statistics Department o f the
expenses o f all reserve banks for
gross earnings, n e t earnings, a n d current
the first quarter o f 1922 with the same figures f o r 1921.
(b)
H
e also presented t o the conference a
memorandum o f the
o f reserves c e t u p
statietice department i n reference t o t h e publication
tax.
by each Federal Reserve B a n k f o r franchise
that come banks have made s u c h a
T h i s memorandum stated
reserve a n d others not.
A l s o , there i s
time b y some o f the
wide fluctuation i n the amounts c e t u p from time t o
Department t h a t
banke a n d i t was, therefore, recommended b y the Statistics
t a x be
the publication o f the amounts o f reserve set u p for franchise
discontinued.
T h e Board asked the conference t o consider this recom~
b y the Board it~
mendation, which was submitted without any recommendation
celf, a n d to report back t o the Board.
(c)
( S e e paragraph 52a)
of
‘ H e also submitted t o the conference a recommendation
close their books
the Statietice Department that the Federal Reserve Banks
as of December 3 1 only, rather than semi-annually.
T h i e recommendation
o f its views without
was submitted t o the conference f o r a n expression
specific recommendation o f the Board itself.
Special S a v i n g s D e p o s i t s .
( S e e paragraph 52b)
G o v e r n o r Harding referred
t o the re-
t h a t Special Savings
quest o f the Federal Reserve B a n k o f S a n Francieco
a s demand deposits.
Deposits b e considered a s time deposits r a t h e r t h a n
B o a r d h a s notified t h e
de advised t h e conference t h a t t h e Federal Reserve
w a y clear t o amend i t s existing
San Francisco b a n k t h a t i t does n o t c e e i t s
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Federal Reserve Bank of St. Louis
=2
reculations o n this subject, but h e asked that the conference express
its views t o the Board.
( S e e paragraph 53)
\
Purchase a n d sale o f securities f o r member banks. G o v e r n o r
( 1 1 )
Harding asked that the subject o f the execution o f orders from member
banks relative t o purchase a n d sale o f securities b e considered b y the
conference, with a report o f the present practice o f each bank.
(See
paragraph 50)
Rediscount o f notes secured by chattel mortgages. Governor
( 1 2 )
Harding submitted to the conference for its consideration a letter fron
the Chickasha National Bank, Chickasha, Oklahoma, d a t e d April 7 , 1922 c o n cerning t h e rediscount o f notes secured w y chattel mortgages.
( S e e
paragraph 54)
Extension o f A. B. A. Numerical System.
(See Board Program #6)
Governor Harding submitted his correspondence with the
President o f the American Bankers' Association regarding the extension o f
its numerical system t o make provision for Federal Reserve Banks and
Branches. ( S e e ‘paragraphs 6, 32)
Payment to Comptroller o f Currency for Reports of Examination. ( 1 3 )
Governor Harding suggested that the conference appoint a canmittee t o confer with the Comptroller o f the Currency with respect t o making payments
for reports of examination of national banks. ( S e e paragraphs 42,
66=1)
At 11:30 o'clock a . m .
t h e Federal Reserve Board withdrew a n d the
Separate G o v e r n o r s ' C o n f e r e n c e c o n v e n e d .
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Federal Reserve Bank of St. Louis
an
Present;
Governors Morss, Strong, Norris, Fancher, Seay,
Wellborn, McDougal, Biggs, Young, Miller,
McKinney and Calkins.
Mr. Harrison, Secretary.
The conference undertook consideration o f the regular program.
Topic I-A.1. -
Bankers Acceptances: F o r e i g n
There was general discussion o f the operations o f the several
Federal Reserve Banks under the new regulation. G o v e r n o r Calkins
referred t o the fact t h a t while there should b e n o unnecessary restric-
tion o n the development o f acceptances growing out of the importation o r
exportation o f goods, nevertheless, t h e System should watch closely t h e
development o f the domestic acceptance business.
S o m e comment was made
with respect t o the letter issued b y the Federal Reserve Bank o f New York
announcing the issue o f the new regulation o f the Board. G o v e r n o r Strong
explained, however, that the purpose o f that letter announcing the new
regulations w a s n o t s o m u c h t o p a s s u p o n e a c h i s s u e o f a c c e p t a n c e s
as to
advise the accepting banks that w e are anxious t o develop close contact
with them i n order t o discuss general questions o f acceptance policy about
which t h e y might b e i n doubt a n d t o formulate a
sound acceptance atmosphere.
Upon motion o f Governor Calkins, i t was
VOTED ( a ) t h a t one officerin each Federal Reserve Bank b e appointed t o be responsible for operations under the new acceptance regulation; this officer t o keep i n touch with each other bank's representatives
and with Counsel o f Board, a l l t o meet when necessary a s a committee:
(b) t h a t a
sub-committee o f o f ficers representing nearby banks
be appointed t o meet w h e n occasion arises, a n d that this sub-committee k e e p
the representatives o f each of those banks not representad
committee f u l l y informed o f all their deliberations.
o n the sub-
I t was informally
agreed that this sub-committee i s t o b e a standing committee with definite
headquarters a t some place t o be agreed upon b y the sub-conmittes.
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Federal Reserve Bank of St. Louis
The following men were designated i n accordance with sub-paragraph
(a) o f the last v o t e t o b e responsible f o r acceptance operations a n d t o meet
as &@ general committee when necessary:
C.C. Bullen E.R. Kenzel -
Boston C . A . Peple ~ Richmond W . B . G e e r y - Minneapolis
New York 1 . C . Adelson - Atlanta C . A . Worthington - Kans. C i t y
C.A» McIlhenny + Phila. C.R. McKay ~ Chicago
R . G . Emerson ~ Dallas
FJ. Zurlinden = Cleve. 0.M. Attebery ~ St. Louis Ira C l a r k - San Francisco
Upon motion o f Governor Morss, i t was
VOTED t h a t Mr. Kenzel act a s chairman pro tem o f the general committee pending its organization, a n d that that committee when organized ap-
point its o w sub-committee.
“Topic I.A.2. = Bankers' Acceptances - Domestic.
After general discussion o f the whole question o f the development
of domestic acceptances, upon motion o f Governor Calkins, i t was
VOTED
t o b e the sense o f the conference that there i s n o present
o¢casion t o consider the advisability o f extending the use o f domestic ac-ceptances.
Governor S e a y moved that t h e Federal Reserve S o m e b e asked t o
consider whether its present regulations with respect t o domestic bankers
acceptances might b e amended o r defined with the view particularly t o
avoiding the —
é a d e a t i c acceptances,
T h i s nutes was seconded but,
upon vote, w a s n o t carried,
Topic I.B. + Purchase o f Government securities b y Federal
Reserve Banks f o r their o w n account a n d for
account o f Treasury.
The chairman called attention t o the fact that the Federal Ree
serve Board had asked for a n expression o f opinion from the Governors
(paragraph 2 ) concerning what i s their present practice i n reference t o
investment i n Government securities, a n d as t o what i s their general pol-
icy in making such investments. F r o m the discussion of each of the Govere
nors, ‘it appeared that:
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Federal Reserve Bank of St. Louis
~8e
It hae b e e n t h e policy o f the Federal Reserve B a n k o f boston
ceince the first o f the current y e a r t o b u y Government securities f o r i n come purposes,
I t s present holdings o f certificates o f indebtednecs a n d
notes aggregate about $40,000,000.
T h e s e investments w e r e made either
through local dealers o r through N e w York.
t
i s the opinion o f the Federal Reserve B a n k o f Philadelphia
I
that i t i c the richt a n d d u t y o f a Federal Reserve B a n k t o invest i n
Government securities
dividends.
i n amounts sufficient a t least t o e a r n expenses a n d
I t s longest maturities o f these obligations a r e the four-year
notes, G o v e r n o r Norris expressed i t to b e his opinion that Federal Re¢erve Banke have unlimited power t o buy Government obligations unless re-~
etricted b y the Federal Reserve Board, a n d unless interfering w i t h purchases f o r account o f the Treasury Department.
It i s t h e policy o f the Federal Reserve B a n k o f Cleveland t o pure
chase Government obligations i n their own district and through the Federal
Reserve Banks o f New York and Chicago i n amounts sufficient t o meet earnings,
While t h e Federal Reserve B a n k o f Richmond h a s made n o purchases
of Government securities for the purpose o f revenue, nevertheless, a l l the
directors o f that bank feel that t h e bank should b e left free t o b u y f o r such
purpose i f i t cares t o d o #0.
While t h e earnings o f the Federal Reserve B a n k o f Atlanta a r e
sufficient t o meet expenses,
i f they were n o t sufficient t h a t bank would b u y
Government securities i n order t o cover them.
It has been t h e policy o f the Chicago Federal Reserve B a n k t o p u r
chase certificates o f indebtedness (about $8,000,000) a n d Victory notes
{about $28,000,000) through the local market, T h e s e amounts are estimated
to b e sufficient f u l l y t o meet expenses a n d dividends without infringing u p o n
surpluses o f the bank,
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Federal Reserve Bank of St. Louis
The Federal Reserve Bank o f St. Louis has bought $20,000,000 i n
short time certificates a n d one and two year notes through local dealers
or from member banks, i t being estimated that this amount, together with
their other earning assets, will b e sufficient t o meet their expenses.
The Federal Reserve B a n k o f Minneapolis h a s purchased
$13,000 ,000 in short time certificates and a limited amount of 3 3/4% Vice
tory notes i n its own district.
T h e bank has recently purchased some of
each o f t h e four issues o f 4 1/4% Liberty bonds direct f r o m i t s o w n men-
ber banks.
The Federal Reserve B a n k o f Kansas C i t y h a s purchased $25,000 ,000
in short time certificates i n their o w n district and through the Federal
sufReserve Banks o f New York and Chicago, this amount being considered
ficient with their other earning assets to meet expenses.
The F e d e r a l R e s e r v e B a n k o f D a l l a s h a s b o u g h t o n l y s m a l l a m o u n t s
of Government obligations u p to the present time, but i s about t o sdeeider
further investments t o increase its earnings t o take care o f expenses and
dividends, a n d to set u p a small fund to meet possible losses.
The F e d e r a l R e s e r v e B a n k -of S a n F r a n c i s c o h a s i n v e s t e d f r o m
$50,000,000 t o $60,000,000 i n certificates o f indebtedness, notes. and a
few Third Liberty Loan 4 1/4s. T h e s e investments were acquired from meuber banks, i n the local market, o r through the Federal Reserve Banks 0:
New York and Chicago.
T h e board of. directors o f the San Francisco bank
favors investments i n bankers acceptances i n preference t o Government obligations, b u t Governments h a v e been purchased because acceptances a r e practically
unobtainable a t the present time.
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Federal Reserve Bank of St. Louis
( S e e paragraphs 2 , 17, 59, 64)
At 1:05 p . m. t h e meeting adjourned until 2:00 o'clock p . m ,
a 10>=
First Day's Session, Tuesday, M a y 2, 1922.
Afternoon
Topic I.8. - Purchase o f Government securities b y Federal Re(cont'd)
s e r v e Banks f o r their o w n account a n d for account
of Treasury.
Governor Strong called attention t o the fact t h a t t h e Federal
Reserve Bank o f New York has made investments o f approximately
$170,000,000 i n Government obligations, a n d that while one of the purposes was t o assist i n meeting expenses, nevertheless o n e of the chief
purposes w a s t o have o n hand investments w h i c h would enable t h e bank t o
exert control o n the money market i f i t should P R T A
without a n increase i n the discount rate.
necessary t o d o that
H e explained that the New York
bank i n making purchases o f Government obligations recognized the fact that
no purchases s h o u l d b e made f o r its o w n account w h e n t h e Treasury, f o r w h i c h
it acts a s fiscal agent, i s i n the market for similar obligations.
H e also
referred t o the fact that i n making purchases for account o f the Treasurer,
the New York bank buys only through its o w member banks, a n d not directly
through dealers,
I n making purchases for its own account, however, orders
are placed through dealers who may themselves buy through other districts,
thus possibly competing w i t h other Federal Reserve Banks w h o a r e i n the
market a t the time.
There was a long discussion o f practices o f the several reserve
banks and a n expression o f views o f their obligations a s fiscal agents.
It was understood that the conference would, o n the next day, consider the
desirability o f adopting a policy o f buying and selling Government obliga-
tions i n an orderly, systematic way, not solely with regard to earnings,
but with regard t o the whole credit situation end to the interests o f the
Treasury. ( S e e paragraphs 2, 16, 59, 64)
At this point t h e conference w e n t i n t o executive session
(stenographer absant) and confidential matters were discussed.
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Federal Reserve Bank of St. Louis
Topic I,.C, —- Amendment t o permit member banks t o borrow o n
ow
collateral n o t e d r a w n f o r a n y period
up
to 9 0 days with Government securities a c collat~
eral.
Upon request o f Governor Fancher this topic w a s passed, a f t e r
Governor Calkins had referred briefly t o the u n w i s d o m f
o amending: t h e
Federal Reserve A c t i n a n y manner aimed t o extend reserve b a n k loans o n
Government securities.
Topic I.D. ~
Kiting Operations,
Upon motion o f Governor Calkins, i t was
VOTED t h a t i t is the sense o f the conference that Federal Reserve Banks should u s e every possible precaution t o detect cases o f kiting
by their member banks o r customers o f member banks; that they d o whatever
may b e necessary i n the circumstances t o break u p cases o f that character;
and that one m a n i n each Federal Recerve B a n k a n d Branch b e designated t+ o
look after cases o f kiting a n d advise t h e m a n appointed i n each other bank
and branch o f cases arising i n which they may be concerned.
It was understood t h a t each bank s e n d t o the secretary t h e name
of the person it, a n d each o f its branches, designates f o r this purpose.
Topic I.B.1 + Rates o f Discount ~ General policy.
(
2
0
)
There was informal discussion b y several members o f the confer»
ence concerning general discount rate policy, with particular reference t o
the advantage o f control a t the present t i m e through o p e n market operations
rather than through a change i n the discoumt rate.
e
N o specific conclusions
e
oo
reached ar n d n o action
taken ow r requested.
topic 1.H.2,. ~ - Preferential r a t e o n trade acceptances.
(
2
After diecuscion o f the recommendation o f the Federal Advisory
Council, Governor MeDougal moved t h a t t h e conference agree w i t h t h e action
taken b y the Council.
G o v e r n o r Young asked t h a t t h e matter g o over until
the sueceeding day. ( S e e paragraphe 5, 25)
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Federal Reserve Bank of St. Louis
1
)
ee
Topic Il. A.1.b. -
Reports
o n recommendations o f Collection
Committee made a t last conference.
The s e c r e t a r y r e p o r t e d t h e r e s u l t s
o f the action taken a t the
last Conference o f Governors concerning certain informal reports o f the
collection committee, (namely the draft o f letter t o all Federal Reserve
Banks covering the direct sending o f non-cash collection items, draft o f
letter t o all Federal Reserve Banks covering the direct sending o f cash
items, t h e paragraph defining the general conditions under which Federal
Reserve Banks will accept maturing notes and bills and other non-cash
items for collection, the paragraph defining the general conditions under
which Federal Reserve Banks w i l l accept checks o r other c a s h items f o r
collection, a n d the draft o f letter t o a l l member banks concerning t h e
direct -routing o f non-cash collection items payable i n other Federal Reserve Districts) referred t o e a c h bank w i t h instructions t o report b a c k t o
the secretary any suggestions o r criticisms.
H e stated that while seven
of the banks had made reports with respect t o these matters, five o f them
had failed t o d o so, and that, therefore, n o uniform action had yet been
taken b y all Federal Reserve Banks i n this regard.
Upon motion o f Governor Calkins, i t was
VOTED t h a t the secretary b e ingteucted t o write t o each of the
five banks which have heretofore failed t o make reports, urging upon them
the necessity o f expediting action.
( S e e paragraph 5 5 - Standing Collec~
tion Committee)
Topic Il.A.l.a. -
Discussion o f uniform c h e c k collection
circular .and procedure i n relation t o
rratuitous s e r v i c e s
t o member banks.
Consideration o f this topic was postponed until consideration o f
topic VII.A, Digest o f Replies t o questionnaire.
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Federal Reserve Bank of St. Louis
( S e e paragraph 63)
e 1 3
+
Topic I I .A.2.- F i l i n g claims o n behalf o f member banks o n
account o f checks drawn o n failed banks.
After general discussion, Governor Calkins moved that each Feder»
al Reserve Bank file with each other Reserve Bank a general authority,
somewhat i n the form suggested b y San Francisco, t o file claims o n
account o f checks drawn upon failed banks, i t being understood that each
benk will file specific requests t o file claims i n accordance with the
terms o f the general authority when necessaryThere was general discussion o f this motion b y several o f the
governors, some o f whom outlined the practices i n their districts and made
particular reference t o opinions
o f their
respective
counsel concernin
p
P
p
their rights and obligations i n filing claims o n behalf o f their indorsers.
No vote was taken upon the motion, a n d without formal action i t was udere
stood (a) that eath bank determine its own policy i n purely intra-district
claims f o r their o m members a n d (s) t h a t t h e secretary would prepare a
form of resolution i n reference t o inter-district claims to be considered
by the eonference o n the following day. ( S e e paragraph 29)
At 6:20 o'clock the conference adjourned, t o meet at 9:45 o ‘clock
on ednesday, M a y 3, 1922,
Second Day's Session, Wednesday, M a y 3 , 1922,
Morning
The meeting was called to order at 9:45 o*cloek a. me
Topic I.E.2. + Preferential rate on trade atceptencese
(
2
5
{ cont'd)
Governor Youmg stated that h e n o lenger had any desire t o postpone
action o n this topic. Whereupon, upen motion o f Governor Calkins, i t was
VOTED t h a t while n o preferential rediscout rate should b e
established for trade acceptances, nevertheless consideration should b e
given b y each Federal Reserve Bank, i n making purchases i n the open market,
to the especial quality of trade acceptances i n fixing rates a t which
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Federal Reserve Bank of St. Louis
)
purchases would b e made, a n d that the Federal Reserve Board should b e requested t o consider t h e advisability o f amending regulations n o w i n effect
governing o p e n market purchases o f trade acceptances.
( S e e paragraphs
Dee aa}
Senate Bill 3531 -
State B a n k M e m b e r s h i p n
i Federal Reserve
System.
The ghaipaen provénted t o the conference a
letter f r o m Senator
MeLean, addressed t o Governor Harding, tranemitting a copy of Senate Bill
3531, introduced b y Senate Harris, permitting state banks, under certain
conditions,
t o apply f o r membership i n the Federal Reserve System even
though their capital b e less than that required for national banks located
in the same place,
U p o n ’ motion o f Governor Wellborn,
i t was
VOTED t h a t t h e conference endorse t h e printiples o f the bill,
but that subsequent action under the bill, i f it becomes law, b e safe~
guarded b y regulation o f the Federal Reserve Board, providing for careful
supervision
o r examination o f those banks located i n states i n which etate
supervision o f examination i s not o f the highest standard.
Governors Young, Fancher and McKinney. voted no, a n d Governor
Norrig w a s absent w h e n the vote w a s taken,
At this point t h e conference w e n t into executive session (steneg=
rapher absent)
Report o f Governor McDougal.
concerning a
G o v e r n o r McDougal m a d e a
report
confidential matter previously considered b y the conference..
(See paragraph 60)
Conference
o f EKuropean B a n k s
o f Issue.
T h e chairman acked
the secretary t o read t o the conference copies o f the cables exchanged b e ~
tween t h e Bank o f Engiand a n d t h e Federal Reserve B a n k o f N e w York relative
to t h e appointment o f a representative o f t h e Federal Reserve System t o
attend t h e conference o f heade o f t h e European banks o f issue t o b e held
in London,.
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Federal Reserve Bank of St. Louis
( 26)
ie
<
Topic JI.A.2. - Filing claims o n behalf o f member banks o n
(cont'd from a c c o u n t o f checks d r a w n o n failed banks.
para. 24)
Upon motion o f Governor Norris,
i t was
VOTED ( 1 ) - that each Federal Reserve Bank file with each other
Federal Reserve B a n k a
general authority i n form substantially similar t o
that proposed b y Governor Calkins t o file claims o n account o f checks
drawn upon failed banks.
(2) t h a t those Federal Reserve Banks t h a t w i s h t o d o s o file
with each other Federal Reserve Bank a general request t o file such claims
on account o f all checks drawn o n failed banks forwarded through i t subject t o the terms set forth i n the general authority defined i n 1.
(3) t h a t e a c h o f those Federal Reserve Banks w h i c h d o not w i s h
to file such general requests make specific requests whenever occasion re=
quires t o file claims i n accordance w i t h the general authority defined i n
paragraph 1 .
(4) t h a t n o claims b e filed b y any Federal Reserve Bank for
checks coming from another Sistrict without either the general o r specific
request provided i n 2 and 3.
(5) t h a t each Federal Reserve Bank adopt its o w policy with
respect t o filing claims f o r i t s o w n member banks o n account o f checks pay-
able within its o w district,
Topic II.A.3. - Par Collection system
(
3
0
Upon motion o f Governor Seay, i t was
VOTED t o b e the sense o f the conference that inasmuch a s Governor
Harding had stated that there was little probability o f legislation concerning these matters a t this time, i t would b e unnecessary further t o consider
this topic and that i t should, therefore, b e passed over.
4,61)
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Federal Reserve Bank of St. Louis
( S e e paragraphs
)
-
Topic II-A.4. =
1 6
=
Charges t o b e collected b y member banks
from c u s t o m e r s w h o s e c h e c k s a r e c l e a r e d
through the Federal Reserve Banks.
Upon motion o f Govermor Norris, consideration o f this topic
was postponede
Topic 11.4.5. « Notation o n ehecks o f member banks indicating
Federal Reserve Bank o r Branch t o which t h e y :
should b e sent f o r collection. (
Upon motion of Governor Fancher, i t was
VOTED t h a t the conference recommend t o Governor Harding that
the American Bankers* Association should be advised that the Federal Reserve Banks would sympathize with any plan relative t o the enlargement
of the American Bankers' Association numerical system t o include Federal
Reserve Banks and Branches that may be devised t o facilitate the collec‘tion of checks, but that because o f the mechanical difficulties involved
in the adoption o f any such plan, the Federal Reserve System should have
anopportunity to consider hs plan before it is put into effect- (
See
paragraph 6, 12 1/2)
Topic IIT. -
C o i n , Currency and Circulation.
Consideration o f all topics under this heading, with one excep-~tion ~ III B.3, absorption o f losses through abrasion, was postponed until
the program covering t h e distribution a n d payment policy referred t o b y
Governor Harding ( paragraph 1) was printed and submitted t o the conference
for considerations ( S e e also paragraphs 48, 57)
Topic III.B.3. - Absorption of losses through abrasion. ©
Upon motion o f Governor McDougal, i t was
VOTED t h a t while the Governors’ Conference held in November
1919 had determined i t advisable t o absorb all losses through abrasion o f
gold deposited with Federal Reserve Banks, nevertheless, i n view of present
conditions, w h i c h have changed considerably since 1919, Federal Reserve
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Federal Reserve Bank of St. Louis
32)
St =
Banks now discontinue the practice adopted a t that time and that Federal
Reserve Banks d o not absorb losses through abrasion o f gold except i n
oa
P
e
e
trifling amounts beginning June 1, 1922.
Governor Wellborn voted no.
Topic IV.A. -
Allotment o f Certificates.
After informal discussion of the methods employed in various
districts as to the allotment of certificates, Governor Calkins moved that
the topic be passed.
Topic IV.B. ~
Subscriptions t o Treasury Certificates.
Upon motion o f Governor Norris, i t was
VOTED t o b e the sense o f the conference that i t would b e desirable t o have subscriptions t o Treasury certificates c l o s e three days b e e
fore the date o f issue i n order t o avoid the calculation o f one o r two
days’ interest and the making o f refunds; a n d that the conference
recommend the adoption o f this change for the consideration o f the Treasury
Department.
The chairman asked that Governor Norris act a s a committee o f one
to take up these matters with Mr. Gilbert, Under Secretary of the Treasury.
Topic V.A.1. -
Advisability o f urging that something b e
done t o bring about d e s i r e d legislation
on Federal Reserve Pension Fund.
Upon motion o f Governor Morss, i t was
VOTED t h a t i t is the sense o f the conference that i t is not
feasible now to urge upon the Congress legislation providing for
a Federal
Reserve Pension Fund, a n d that consideration o f this matter should
b e deferred a t least until the next session o f Congress, but that
the committee
om pensions endeavor t o be prepared t o present the plan i n complete
form
whenever t h e opportune time should arrive.
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Federal Reserve Bank of St. Louis
Topic V.B. «
Fidelity a n d Other Insurance.
The Chairman called attention t o t h e experience o f the several
Federal Reserve Banke i n payments o f high insurance premiums and the de-~
cirability o f devising ways and means o f reducing the present cost o f such
premiums,
Governor McDougal then presented t o the conference a report prepared b y Mr, Cramer o f Chicago, w h i c h h e read t o t h e conference.
U p o n
motion o f Governor Calkins, i t was
VOTED that the chairman appoint a committee o f three t o meet a t
once t o study the report prepared b y Mr. Cramer and t o submit a proposal
for a common fidelity insurance fund to b e established b y all Federal Re=serve Banks, this committee t o define the procedure, machinery and other
necessary steps t o effect completion and operation o f such a fund, a n d to
employ such assistance a s they. may find necessary i n making their report.
It was understood that the report, when eompleted, should b e fore
warded t o the Secretary o f the Conference and tranemitted b y him to each
Federal Reserve Bank,
The chairman thereupon appointed Mr. Cramer o f Chicago, M r . Taylor
of Cleveland, a n d Mr. Kenzel o f New York members o f the committee, a n d aske
ed that t h e Secretary advise t h e m o f their appointment, requesting t h e m t o
get together a s soon a s possible a t some place that may be mutually convene
ient,.
Upon motion o f Governor Calkins, i t was
VOTED that this committee also extend ite studies on insurance in
order t o ascertain whether some further savings might n o t b e effected i n
other forms o f Federal Reserve Bank insurance, a s well a s i n fidelity insurance.
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Federal Reserve Bank of St. Louis
Upon motion o f Governor Seay, i t was
A
i
s oer
VOTED t h a t the conference extend its thanks t o Mr. Cramer for the
report w h i c h h e prepared for consideration b y t h e conference.
Topic V.C. = Pilfering
There was general discussion o f this topic with reports b y some
of the Governors that there had been noticeable increases i n the tendency
to pilfer small amounts of cash.
N o action was taken,
At 12:40 o'clock t h e conference adjourned t o reconvene a t 2:00
o*clock p , m,
Second Day's Session, Wednesday, M a y 3 , 1922
Afternoon
Topic I1.A.6. =
Advice o f N o Returns
Upon motion o f aeverce Biggs, i t was
VOTED t h a t this topic b e referred t o the Committee o n Standardization o f Accounting Forms Used Between Federal Reserve Banks for further
consideration and recommendation o f a uniform practice.
Topic IT.A.7. ~ Correspondence referring t o items lost and
charged back.
Upon motion o f Governor Biggs, i t was
VOTED t h a t this t o p i c b
e referred t o the Committee o n Standardization o f Accounting Forms Used Between Federal Reserve Banks for further
consideration and recommendation o f a uniform practice.
Topic V.D.1. = Charges for Reports o f Examination o f National
Banks. —
( 4 2 )
Upon motion o f Governor Morss, i t was
VOTED t h a t a committee b e appointed t o confer with the Comptroller
of the Curreney t o express t o him the opinion o f the conf erence that charges
for furnishing reports of national bank examinations should be discontinued,
and that s u c h reports should b e furnished without c h a r ge.
13, 66-1.)
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Federal Reserve Bank of St. Louis
{ S e e paragraphs
Upon motion o f Governor Norris,
i t was
VOTED t h a t t h i s committee a l s o t a l k w i t h t h e Comptroller t o a s k
him whether there i s anything further that Federal Reserve Banks might d o
to assist him i n enforcing the maintenance o f reserves b y National Banks.
(See paragraph 66D )
Topic V.D.2. - Custody a n d Availability o f Reports o f
(
4
3
examination o f National Banks.
Each o f t h e Governors discussed t h e difficulties w h i c h they exper-
jence i n handling the reports o f examination o f national banks furnished b y
the Comptroller u n d e r t h e restrictions prescribed i n a letter addressed b y
the Comptroller t o a l l Federal Reserve Banks under d a t e o f January 3 0 1922,
Particular reference was made t o the embarrassment incident t o the instructions that reports o f examination o f banks located i n branch territory
should n o t b e furnished t o t h e Managers o f the Branch Banks.
U p o n motion
of Governor McDougal, i t was
VOTED t h a t this matter b e referred without specific instructions
to the committees t o b e appointed i n conformity with the action taken under
Topic V.fD.1 for general discussion with the Comptroller.
( S e e paragraphs
42, 66-2& 3)
The Chairman appointed Governors Norris a n d Young t o act a s t h e
committee t o discuss a l l o f these matters w i t h t h e Comptroller.
Topic VI.A. = Deduction o f balances due from other banks
and bankers i n canputing reserves.
Without formal action i t was understood that consideration o f
this topic w a i i b e deferred pending action b y a committee o f t h e Federal
Reservd Agents now studying the whole question o f reserves.
Topic VI.B. -
Periods f o r reporting deposit liabilities
Reserve Cities.
in
It was informally understood that Governor Norris will write
Mr. Curtiss, Chairman o f the committee o f Federal Reserve Agents studying
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Federal Reserve Bank of St. Louis
)
ae
reserves,
t o a s k h i m t o have this matter considered b y his committee.
Topic VIII.A.1. - Importance o f Public Relations Work.
Upon motion o f Governor Seay, i t was
VOTED
t o b e the sense o f t h e conference that t h e public rela~
tions work o f t h e member b a n k relations departments o f t h e several Federal
Reserve Sanks i s of great importance a n d should b e generally pursued.
Topic VIII.A.2. - Criticisms o f Federal Reserve System
(
4
7
)
There was a long discussion o f the necessity o f exercising great
care a n d caution i n public discussion whether written o r spoken concerning
criticisms which have been made against the Federal Reserve System.
Governor Strong withdrew from the meeting a t this point a n d
Governor McDougal took the chair.
Upon motion o f Governor Seay, i t was
VOTED
t o b e t h e sense o f t h e conference t h a t a l l o f t h e Covern-~
ors present appreciate t h e problem a n d realize t h e necessity o f caution a n d
prudence i n connection with controversial questions, and that the higher
officers o f the Federal Reserve Banks should instruct their staff t h a t that
is the sense o f the conference, b u t that i t should b e understood that each
bank must b e left t o ‘its o w n discretion a n d judgment i n determining whether
it shall answer criticisms.
Topic III. - Goin, Currency and Circulation.
The Chairman submitted t o the conference a
(
4
8
report entitled
“Currency D i s t r i b u t i o n a n d P a y m e n t P o l i c y f o r F e d e r a l R e s e r v e B a n k s . "
( S e e
paragraphs 1, 33, 57) Upon motion o f Governor Morss, i t was
VOTED t h a t the report b e accepted and that each Federal Reserve
Bank agree t o carry o u t i t s provisions, w i t h t h e understanding, however,
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Federal Reserve Bank of St. Louis
)
(1) that Federal Reserve Banks should n o t accept n e w national b a n k notes
in bulk from the issuing bank, o r from any other bank t o which such notes
are sent direct b y the issuing bank, but should accept them only i n the
natural and orderly course o f business;
a n d (2) that early legislation
should b e sought looking t o the retirement o f national bank note circulation.
Governor Seay voted i n the negative solely o n the ground that n o
plan h a d yet b e e n presented t o Congress looking t o the retirement o f
national bank notes.
H e stated specifically that were there such a plan,
he would h a v e voted for t h e adoption o f t h e report.
Before final v o t e o n the acceptance o f t h e report, Governor S e a y
moved that i n Topic III - Order o f Payment o f Different Kinds o f Currency,
the i t e m Federal Reserve Notes b e inserted between items 2
Reserve Bank Notes and Silver Certificates respectively.
and 3, Federal
T h i s motion,
however, w a s not carried, G o v e r n o r s Seay, Norris and Wellborn voted i n
the affirmative.
VII. - Uniform Services t o Member Banks
T
o
p
i
c
There was general discussion a s to the need o f uniformity,
Governor Morss expressing i t t o be his opinion that there are certain
matters w h i c h c a n not b e expected t o b e uniform throughout t h e twelve districts.
G o v e r n o r Calkins agreed w i t h Governor M o r s s i n part, b u t stated
that h e felt i t necessary t h a t there b e uniformity o f procedure i n matters
i n v o l v i n ge
h
t absorption o f expenses o n account o f services rendered t o
member banks.
Upon motion o f Governor Fancher, t h e matter was postponed pending
Governor Strong's return to the chair. ( S e e paragraph 63)
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Federal Reserve Bank of St. Louis
Topic VII.B.1. -
Should there b e a n y limit t o t h e services
rendered member banks i n the purchase, s a l e
receipt, delivery o r safekeeping o f
b y the
There w a s considerable discussion o f t h e methods employed
banks for
several Federal Reserve Banks i n placing orders for their member
I t
the purchase, sale, receipt, delivery o r safekeeping o f securities.
for
appeared that the majority o f the banks confine the placing o f orders
their member banks for the purchase a n d sale o f securities t o Government
obligations a n d bankers bills,
T h r e e o f t h e banks, however, N e w York,
Boston and Philadelphia transmit orders for aecount o f their member banks
for the e n e d
a n d sale o f securities other than Government obligations,
are
it being stated that perhaps this was because these particular banks
located where s o much of this business i s transacted.
There w a s also a
( S e e paragraph 11)
short discussion o f t h e policy pursued b y vari-
ous banks i n accepting securities for safekeeping for account o f member
banks.
No action was taken o r asked for.
5% Redemption f u n d for National B a n k Notes.
The draft o f letter outlining the new plan o f making deposits i n
the 5% redemption fund for national bank notes (X-3398 of May &, 1922) was
read t o the conference, and, upon motion o f Governor Fancher, i t was
VOTED that the conference approve the plan. ( S e e paragraph 8)
Publication o f Reserve S e t u p for Franchise T a x
After consideration o f a
(
5
2
a
)
recommendation prepared b y t h e statistics
Morse,
department o f t h e Federal Reserve Board, a n d upon motion o f Governor
it was
VOTED t h a t t h e Federal Reserve Board b e requested t o discontinue
the practice o f publishing t h e amount o f reserve s e t u p for franchise tax,
(See paragraph 9b)
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Federal Reserve Bank of St. Louis
Closing Books Annually instead of Semi-annually.
After consideration o f a
(
5
recommendation o f t h e statistics
2
b
)
nd upon motion of Governor Morss,
VOTED t h a t the books o f the Federal Reserve Banks b e closed only
é3 o f December 31, and not semi-annuelly a s a t the present time, provided,
fowever, that this action b e not considered a s denying the right o f Federel
Reserve Banks t o make semi-annual payments o f dividends.
Special Savines Deposits.
(
( S e e paragraph 9c)
5
3
)
4s requested b y Covernor Harding, t h e conference gave consideration t o the question whether Special Savings Deposits which permit the depositary bank t o require 3 0 days' notice, but which d o not require the presentation o f the pass book, should b e considered a s demand deposits o r a s time
deposits.
U p o n motion o f Governor Fancher i t vas
VOTED t o b e the sense o f the conference that the ruling o f the
Federal Reserve Soard that these deposits are demand deposits, and n o t time
_
deposits, s h o u l d b e concurred in.
—
—
( S e e paragraph 10)
Governor Calkins and Norris did not vote.
Rediscount o f Notes secured b y Chattel Mortpages.
The Secretary r e a d t o t h e conference,
Harding, a
a s requested b y G o v e m o r
letter f r o m the Chickasha National Bank, Chickasha, Okla.,
asking that Federal Reserve Banks i n rediscoumting notes secured b y chattel
mortgages “should require a certificate o f prior lien" a s Federal Land Banks
do a t the present time.
VOTED
U p o n motion o f Governor Seay, i t was
t o b e the sense o f the conference that this i s a matter
which may properly b e handled b y each Federal Reserve Bank i n its o m way.
(See patagraph 12)
Standing Committee o n Collections.
(
5
5
Governor Fancher called attention t o t h e fact that a t t h e present
time there i s n o standing committee o n collections a n d stated, i n his
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Federal Reserve Bank of St. Louis
)
Sie bee
opinion, s u c h a
committee i s highly deeirable.
U p o n motion o f Governor
Fancher, i t was
VOTED t h a t a committee o f five b e appointed t o which ali col~
lection mattere, including forms, b e referred for consideration.
It was unanimously agreed that Governor Fancher should select
the committee, a n d arrange f o r ite organization.
Reimbureement for Fiseal Agency Expenses. ( S e e paragraphs 2,65) ( 5 6 )
The Secretary read t o t h e conference a
letter f r o m Under Secre-
tary Gilbert t o Governor Harding, dated May 1, 1922, i n reference t o the
reimbursement o f Federal Reserve Banke b y the Treasury o n account o f fiscal
agency expenses.
U p o n motion o f Governor Seay, i t was
(1)
VOTED t h a t the Federal Reserve Board b e requested t o forward t o
each Federal Reserve Bank a copy of this letter with instructions to take
up t h e mattere réferred t o therein direct w i t h t h e Treasury,
ed b y the Sikee
h a
2 s contemplate
t h e board b e also asked, i n behalf o f all Federal
Reserve Banks, t o advise the Under Secretary o f the Treasury that each o f
the Federal Reserve Banks will shortly submit estimates o f the amount o f ite
fiscal agency expenses and will ask for reimbursement i n accordance with the
terms o f the letter referred to; ( 3 ) t h a t Sovernor Harding b e advised t h a t
these estimates w i l l b e promptly prepared a n d will cover t h e period t o b e
agreed upon with Mr. Gilbert; ( 4 ) t h a t the date from which reimbursement
will commence w i l l b e taken u p b y Governor Miller w i t h Mr. Gilbert, Governor
Harding being advised o f the date when determined.
Topic III. «
Coin, Currency a n d Circulation
(See paragraphs 1, 33,48)
The Secretary read Secretary Mellon's letter o f M a y 1 , 1922 t o
Governor Harding, tranemitting t h e "Currency Distribution a n d Payment
Policy f o r Federal Reserve Banks" memorandum a s approved b y the Secretar:
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Federal Reserve Bank of St. Louis
» 2 6
of the Treasury,
=
U p o n due consideration o f the Secretary's letter, a n d
upon motion o f Governor Seay, i t was
VOTED t h a t Governor Harding b e advised that the letter was received and read and that the conference assumes that the last sentence i n
that letter refers t o t h e confidential instructions issued b y the Secree
tary o f the Treasury with respect t o Exchanges, Replacement a n d Redemptions
of United States Paper Currency and Coin, a n d that the provisions o f those
instructions are not unsatisfactory t o the Federal Reserve Banks.
It was informally understood t h a t Governor Miller should report
the substance o f this action t o Governor Harding,
Topic III.B. -
Gold Policy o f Federal Reserve Banks.
The Chairman referred t o his discussion with officials o f the
Treasury Department concerning the request o f the Secretary o f the Treasury that Federal Reserve Banks make certain disbursements
ing payments f o r account o f the Treasurer.
i n gold i n make
H e added t h a t the adoption
of the currency program approved b y the conference (paragraph 48), togeth~
@r with a n informal understanding between the Federal Reserve Bank o f New
York and the Treasury Department that the former would furnish certain
amounts o f gold t o t h e Treasury Department which t h e Treasurer himself
might disburse i n accordance w i t h t h e Secretary's instructions,
h a d i n sube
stance obviated a n y necessity o f discussing this matter formally i n confer-
ence, o r of trying to define the strict legal rights o f the Treasury o r
the Federal Reserve Banks i n reference t o payments f o r t h e Treasurer's
account.
It wae informally understood b y the conference that there was
nothing further t o b e done b y i t i n reference t o this matter.
paragraphs 4, 30)
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Federal Reserve Bank of St. Louis
‘(See
27.
Purchase o f Government Securities b y Federal Reserve S a n k s
for t h e i r o w n a c c o u n t a n d f o r a c c o u n t
o f Treasury.
( S e e
Board Program #2 and Topic I.8. Regular Program)
The Chairman referred briefly t o a letter from Secretary Mellon
to Governér Harding, dated April 29, 1922, stating that h e would b e interested t o know the position taken b y the conference i n respect t o the investment i n United States securities.
T h e Chairman suggested that e a c h
Governor consider this matter and b e prepared t o discuss i t at the meeting
onthe next day. ( S e e paragraphs 2,16,17,64)
At 6:35 o'clock p. m. the conference adjourned t o reconvene a t
10:00 o'clock a.m. Thursday, M a y 4,<=? 1922,
Third Dav's Session. Thursday, M a y 4 , 1922
Morning
The conference convened a t 10:00 o'clock a. m.
Present:
Governors Morss, Strong, Norris, Fancher, Seay,
Wellborn, McDougal, Biggs, Young, Miller,
McKinney a n d Calkins,
Mr. Harrison, Secretary.
In executive session (stenographer absent) T h e Chairman reported ( 6 0 )
the substance o f his conversation with Secretary Mellon i n respect t o
matters which the Conference h a d requested h i m t o discuss with t h e Secretary
(See paragraph 27).
Amendment t o Federal Reserve Act i n reference t o Exchange Charges ( 6 1 )
The Chaiman presented t o the conference a letter which Governor
Harding had received from the Chairman o f the House Committee o n Banking
and Currency enclosing draft o f a bill proposed b y Mr. Claiborne, Chairman
@f the Committee o f Five o f the American Bankers' Association, t o amend the
Federal Reserve Act i n reference t o exchange charges.
I n substance the
bill provides for the elimination o f par clearance b y striking out that
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Federal Reserve Bank of St. Louis
28,
proviso which prohibits such charges being made against Federal Reserve
Banks,
It was informally agreed that the Chaiman should express t o
Governor Harding the view o f the Conference that n o legislation o n this
subject i s desirable, certainly until after all pending litigation i s
disposed of. ( S e e paragraphs 4, 30)
senate B i l l 3255 = Perpetuation o f National B a n k charters.
The Secretary read that part o f Secretary Mellon's letter t o
the Chairman of the Senate Banking and Currency Committee under date of
April 29, 1922, concerning Senate Bill 3255, suggesting that i f the bill
is enacted a t the present time t o perpetuate charters o f national banks,
proper consideration should b e given t o a n amendment t o provide for the
elimination o f national b a n k currency.
Upon motion of Governor Seay, i t was
VOTED t h a t the conference concur i n the views expressed b y the
Secretary o f the Treasury a n d that t h e conference u r g e u p o n both t h e
Secretary o f the Treasury and the Federal Reserve Board the desirability
of obtaining a t this time legislation designed t o d o away with national
bank currency o n the ground that unless that s e chivtat ion i s Snactod now
itmay be impossible later on to procure.it. ( S e e paragraph 3)
Topic VII, A.= Digest o f Replies t o Questionnaire covering
services performed b y Federal Reserve Banks.
Governor Calkins moved that i t i s the sense o f the conference
that all Federal Reserve Banks should adopt uniform practices i n all
m a t t e r s i n v o l v i n g t h e absorption o f expense f o r services rendered t o mem-
@
n e x ‘ é r non-member banks,
ee,
e a:
°
O n request o f Governor Calkins this motion was
2
suspended i n view of the objections o f one or two of the Governors and in
view o f the suggestion that specific consideration o f each service defined
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Federal Reserve Bank of St. Louis
in the questionnaire submitted b y the N e w York b a n k would itself prompt t h e
proper action o f the conference.
T h e r e u p o n , e a c h topic i n that question-—
naire w a s considered a n d t h e following action taken:
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Federal Reserve Bank of St. Louis
Tt
I n c o m i n g a n d Outgoing Shipments o f Coin t o Members
Voted t h a t reserve banks absorb a l l costs incident t o t h e
shipment o f coin t o and from member banks, with the exe o i
ception o f silver dollars and gold coin, where absorption shall b e discretionary.
Incoming Shipments o f Coin f r o m Nonmembers.
Voted t h a t reserve banks absorb a l l costs incident t o i n e 4
coming shipments o f coin f r o m such nonmember banks a s
remit a t par, with the exception o f silver dollars and
gold coin, w h e r e absarption shall b e discretionary.
Outgoing Shipments o f Coin t o Nonmembers.
Voted t h a t outgoing shipments o f coin t o nonmembers b e F
made a t the expense o f the nonmember bank.
Incomingd
n
a Outgoing Shipments o f Currency t o Members.
Voted t h a t reserve banks absorb a l l costs incident t o t h e
S O
shipment o f paper currency t o and from member banks,
Incoming Shipments o f Currency f r o m Nonmembers.
Voted t h a t reserve banks absorb a l l costs incident t o i n coming shipments o f paper currency f r o m such nonmember
banks a s remit a t par,
Outgoing Shipments o f Currency t o Nonmembers,
o
Voted that outgoing shipments o f paper currency t o non~
f
member, banks b e made a t the expense o f the nonmember
bank,
Shipments
o f Coin a n d Currency t o Country Correspondents
in district a t Request o f C i t y Member Bank.
Voted that when shipments are made a t the request o f a
city member b a n k t o i t s country correspondent within t
the same district s u c h shipments b e made without c o s t
only where similar shipment would b e made without
cost i f the request had been made direct t o the reserve bank,
Loss o n Shipments o f Light Weight G o l d
In view o f the fact that thie topic w a s disposed o f b y
the conference under Topic III.B.3 (See paragraph 34)
no action w a s taken,
Currency Shipments t o Government Disbursing Officers.
Voted that c o s t o f shipping currency t o Government D i s -
bursing Officers, either direct o r to banks for credit
of their account, b e not absorbed,
o
f
Collection o f Cash Items.
Voted that n o change b e made i n the procedure o f all
reserve banks i n rendering this service free o f
h
e
charre.
Telegraphic Payment o r Non-payment o f Cash Items.
/ Voted that wire costs b e absorbed o n telegraphic advice i S
of non-payment o n items o f $500 o r over.
Voted that all special requests for wire information, I X n y
after a n item h a s been deposited,
pense o f the depositor.
Jt
ed
b e made a t the ex-
w a s informally recommended that items deposited with
request o f wire advice o f fate b e accepted only for
collection a s non-cash items, b u t b y mutual agreement
this topic w a s withdrawn f r o m t h e program.
Supplying C a s h Letter forms, Supplies, S t a m p e d Envelopes
for Remitting, Etc.
Voted that each bank decide, o n the basis o f local conditions, whether i t will supply i t s member banks w i t h
forms for direct sendings, stamped addressed envelopes
for remitting, a n d other ‘items o f this nature i n connection with check collections.
J 13. Expenses Incident t o Maintaining Independent Clearing
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Federal Reserve Bank of St. Louis
Arrangements
i n Outlying Districts.
Voted that the practice o f absorbing clerical costs and
costs o f printing forms i n connection with the maintenance o f clearing arrangements b e continued, where
such practices are now i n effect.
Charges f o r C o l l e c t i o n
o f Non-cash Items. J
Voted that items o f this character b e handled without
cost.
Incoming Shipments o f Coupons o r Maturing Bonds.
Voted that shipments o f this nature b e made a t the ex= ©
pense o f the shipping bank.
Outgoing Shipments o f Coupons o r Maturing Bonds.
Voted that the expense o f such shipments b e not absorbed except where charges are trifling.
( 0 4
Unpaid Coupons o r Maturing Bonds Returned Unpaid b y t h e
Collecting Bank.
Voted that charges o f this kind between reserve banks
be absorbed b y the reserve bank returning the item, v
and that the matter o f absorbing costs between a
reserve bank and its member b e discretionary.
Unpaid Coupons o r Maturing Bonds Returned b y Reserve B a n k
to Depositing Bank.
Voted that charges o f this k i n d between reserve banks
be absorbed b y the reserve bank returning the item,
and that the matter o f absorbing costs between a
reserve b a n k a n d its member b e discretionary.
é
J V kK
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Federal Reserve Bank of St. Louis
an e a e
Telegraphing Payment o r Non-payment o f collection (non-cash)
items
Voted that Federal Reserve Banks discontinue t o absorb /
the costs o f telegraphing p a y m e n t r
o non-payment o f f
<
collection items a s of July 1, 1922.
Registration o f Important Papers involved i n Collections
(non-cash items) F o r Protection o f Federal Reserve Bank... F
Voted that t h e Federal ®eserve Banks absorb s u c h
charges, i f they deem i t necessary t o register
documents.
Sarvice Charges o n Unpaid Collections (non-cash items)
Voted that a service charge b e made o n all uncollected
K
items returned without protest, a n d that this service o f
charge b e retained b y t h e R e s e r v e Bank.
Collection o r Service Charges M a d e b y Collecting Agents
{non-cash items) o
Voted that such charges b e passed o n to the endorser.
Transfer o f Funds.
Voted that a l l costs b e absorbed o n wire transfers o f
funds between Federal Reserve Banks a n d between a
Reserve B a n k a n d a n out-of-town member either way,
Transfers t o the 5% Redemption Fund
While i t h a d been recommended t h a t t h e u s e o f wires
for this purpose b e discouraged a n d that all such
transfers b e made b y mail where practicable, t h e
conference t o o k n o action i n view o f the fact t h a t 2
this matter h a d been disposed o f i n considering
the recommendation o f the Federal Reserve Board
outlined i n paragraphs 8 and 51.
Shipments o f Bills Purchased t o Member Banks J
Voted that t h e cost o f s u c h shipments b e absorbed b y
Reserve B a n k s .
Collateral t o Advances a n d Rediscounts
Voted ( a ) Incoming Shipments t h a t all incoming ship- e
ments b e made a t the expense o f the
member bank.
(o>) Outgoing Shipments t h a t as a matter of
principle outgoing shipments b e made a t /
the expense o f the member bank, i t being
discretionary however with each Reserve
Bank t o absorb trifling charges.
K
X
» 3 2
=
J 27. Safekeeping of Bills and Securities _
Voted (a) Incoming Shipments that all incoming ship- ‘J
ments b e made a t the expense o f the mem-
‘ber bank, ©:
(b) Qutgoing Shipments t h a t as a matter of
principle, outgoing shipments b e made a t
the expense o f the member bank, i t being
discretionary, however, with each Reserve
|
B
25
a
k to absorb trifling costs.
n
Shipments o f Securities pledged against W a r Loan Deposits
For Member Banks and Nonemember Banks
Voted ( a ) Incoming Shipments t h a t all incoming ship» J
ments b e made a t the expense o f the d e w
positary bank, :
2
(bo) Outgoing shipments t h a t a s a m a t t e r f
o
principle, o u t g o i n g shipments b e made a t
the expense o f the depositary b a n k , i
t being discretionary, however, w i t h each R e -
serve Bank t o absorb trifling coets.
{ 29. Qutgoing Shipments o f Securities which have been Purchased
by Reserve Banks a n d Shipped t o a Member B a n k upon Request. ;
Voted t h a t a s matter o f principle, outgoing shipments -
be made a t the expense o f the member bank, i t being
discretionary, however, with each Reserve Bank t o
absorb trifling costs.
if 30. Incoming Shipments o f Securities Forwarded b y a Member B a n k
to b e Sold f
Voted t h a t all incoming shipments b e made a t the expense o f the member bank.
Ls «Treatment
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Federal Reserve Bank of St. Louis
o f Securities O w e d b y a Member Bank o r its Custom
er_in Connection with Purchase and Sale of Securities
Voted t h a t n o differentiation b e made i n treatment o f
charges between securities which a r e t h e property o f
a member bank, a n d seeurities which a r e t h e property
of its customers,
Shipment o f Government Bonds a n d Notes Forwarded f o r Exchanges
from Temporary t o Permanent, Obligations
Voted t h a t a s requested.by the Treasury Department, R e - J
serve Banks continue t o absorb shipping costs o f these
transactions.
Shipment a f Government Bonds a n d Notes S e n t i n f o r Exchange o f J
Denomination
Voted t h a t the shipping costs o f euch transactions b e
not absorbed b y Reserve Banks, .
Miscellaneous Exchange Transactions
Notes
i n Government Bonds a n d
Voted t h a t the shipping expense o f miscellaneous e x e
change transactions o f Government bonds a n d notes b e
not absorbed b y Reserve Banks,
v
é
eto o e
Shipments o f Foreign Currency
Voted that a s a matter o f principle outgoing shipments
be made a t t h e expense o f t h e member bank,
i t being
diséretionary, however, with each Reserve Bank t o
absorb trifling costs.
Out-of~town Telephone Calls.
Voted that each Reserve Bank use its own discretion i n
the matter o f absorbing the costs o f out-of-town telephone calls, a n d that where absorbed t h e practice b e
watched carefully t o avoid abuses.
Miscellaneous Telegrams
Voted that each Reserve Bank use its own discretion i n
the matter o f absorbing the costs o f miscellaneous tel- a
egrams, a n d that where absorbed t h e practice b e watched
carefully t o avoid abuses.
Supplying Member B a n k Drafts 7
Voted that e a c h Reserve B a n k decide f o r i t s e l f whether o r not i t should supply member banks
drafts without charge.
Supplying Exchange a n d Transfer Drafts
Voted t h a t e a c h Reserve B a n k decide f o r itself whether
or not i t will furnish member banks w i t h exchange a n d
transfer drafts without cost,
Suvplying Miscellaneous Forms..,
Voted that each Reserve Bank decide for itself the
character o f forms that should b e furnished b y i t t o
its member banks without cost.
Miscellaneous Services.
Voted that i t be discretionary with each Federal Reserve Bank whether o r not t o absorb t h e cost o f
furnishing services which have not been mentioned i n
this questionnaire.
Clerical. Assistance i n Cases o f Emergency
t i
Voted that the furnishing o f clerical a s s i s t a n c e o
Bank.
Reserve
each
with
discretionary
b
e
member banks
Topic 1.B. - Purchase o f Covernment securities b y Federal Reserve
( 6 4 )
Banks f o r their o w n account a n d for account o f the
Treasury.
The chairman reported his conversation with Secretary Mellon with respect t o this matter, w h o stated that h e is much interested i n the action o f the
conference i n respect t o a possible future policy.
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Federal Reserve Bank of St. Louis
- 34 =-
(a) Estimate of Earnings and Expénses
Upon motion o f Governor Young, i t was
~ VOTED ( 1 ) t h a t e a c h Federal Reserve B a n k immediately prepare
an estimate o f expenses for the current year, allowing for accrual o f reserves t o b e set up, allowing for a n increase i n the surplus o n account o f
possible future increases i n capital o f the Federal Reserve Banks, a l l o w
ing for dividends, a n d allowing for the elimination o f fiscal agency expenses t o be reimbursed b y the Treasury Department;
(2) t h a t each bank estimate the amount o f income from all earning assets i f held t o t e n s
o r t o the e n d o f the y e a r i f maturity i s be-~
yond that period, a n d estimate the amount o f income from probable future discounts for member banks during the balance o f the year; a n d
(3) t h a t each bank calculate the amount o f additional investments
upon a 4% basis that would b e necessary t o make good the deficiency i n earnings t o meet expenses i n the event that there i s such a
s p c
(b) I n v e s t m e n t s b y Reserve Banks when Treasury i s i n biarket
Upon motion o f Governor Young, i t was
VOTED t h a t the shadeuadl be requested t o arrange with Under Secretary Gilbert that suitable notice, properly safeguarded, b e given t o each
‘overnor whenever the Treasury i s i n the market for purchases o r sales o f
Government securities, a n d that e a c h Federal Reserve B a n k will s t a y out o f
the market for its own account either for the purchase o r sale o f these same
securities until advice i s given o f the completion o f the Treasury's orders,
it being understood that notice o f the execution o f orders will b e given i n
the s a m e m a n n e r
a s original notice,
(c) P o l i c y a
s to amount of investments
The secretary then read t o the conference Secretary Mellon's letter
of April 25, 1922, addressed t e Governor Harding, i n respect t o the invest-~
ment o f Federal Reserve Banks i n Government securities,
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Federal Reserve Bank of St. Louis
T h e chairman
~ 35 =
o another leéter addressed b y Secretary Mellon t o Governor
referred t
Harding, dated April 29, 1922, stating that the Secretary is interested i n
what t h e F e d e r a l R e s e r v e B a n k s !
position will
b e i n regard t o investments
in Government securities i n view.of the further deliberations o f the con~
ference, a n d i n view o f the recommendations o f the Federal Advisory
Council,
After a long discussion o f the letters referred t o and o f the
t h e purchase o f
policy o f the several Federal Reserve Banke i n respect t o
Government securities, i t was, upon motion o f Governor McDougal,
VOTED
t o b e t h e sense o f the conference t h a t e a c h governor
recommend t o hie directors that i t be the policy o f the bank t o invest i n
Government securities only t o the extent that i t may be necessary from
time t o time t o maintain earnings i n amounts sufficient t o meet expences,
including dividends a n d necessary reserves.
Governor Norris voted “yes” with the understanding that hie ace
tion carries n o reflection o n anything that the Federal Reserve Bank o f
Philadelphia h a s already done i n respect t o t h e purchase o f Government sceeurities,
(d) Disposition o f Present Investments i n Excess o f Earning
Requirements
Upon motion of Governor McDougal, i t was
VOTED t h a t i f the estimates o f expenses a n d earnings f o r the
current y e a r t c b e made b y each Federal Reserve B a n k i n accordance w i t h
the vote taken under subeparagraph (a) o f this paragraph, s h o w that the
present investments will give a n excese o f earnings over expenses, i t
will b e the policy o f the Federal Reserve Banks t o permit these investments
to run off, rather than t o cell them i n the market.
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
- 36 =
{e) Transactions direct with member banks
Upon motion o f Governor McDougal, i t was
VOTED t h a t t h e principle should b e adopted that nothing should
prevent Federal Reserve Banks from buying Government securities from o r
selling them t o their o w n member banks, provided there i s no violation o f
the principles d e f ined i n previous votes.
(f) Centralization of purchases and sales
In order that Federal Reserve Banks, i n placing both buying and
selling orders for their own account will not destroy the market o r com-=
pete w i t h o n e another,
i t was moved b y Governor Norris, t h a t a l l orders t o
buy and sell for account o f any of the Federal Reserve Banks shall b e given to a committee which shall execute such orders i n accordance with its
best judgnent, a n d which shall distribute the execution o f the orders among
the different markets a s circumstances might prompt, a n d that orders s o ex=
ecuted b e pro rated among those banks having placed orders with the committee,
In discussion o f this motion i t was felt that the methods
b y which
this committee should act might best b e determined after further consideration b y t h e committee itself. W h e r e u p o n , u p o n motion o f Governor Calkins,
it was
VOTED t h a t t h e governors o f t h e Federal Reserve Banks o f Boston,
New York, Philadelphia a n d Chicago b e made a
committee f o r t h e purpose o f
studying this question and working out a n orderly program for handling the
buying and selling o f Government securities b y Federal Reserve Banks through .
some centralized control,
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Federal Reserve Bank of St. Louis
Reimbursement f o r fiscal agency expenses
Governor Miller reported that h e h a d consulted w i t h Governor
“arding a n d Mr. Gilbert w i t h reference t o reimbursement o f fiscal agency
expenses
b y t h e Treasury,
a n d that Mr. Gilbert a n d h e h a d agreed that r e -
imbursement f o r s u c h experses s h o u l d begin a s o f July 1 , 1922, a n d not
beretroactive.
( S e e paragravis 2, 56)
Topic V . D . -
Reports o f examination o f national banks
Governor Young reported t o the conference that h e and Governor \
Norris h a d discussed with the Comptroller o f the Currency those matters :
referred t o his committee.
( S e e paragrapns 13, 42)
The Comptroller advised the committee (1) that i n order t o meet
expenses necessary t o bring examinations u p to the highest standard h e
would like t o charge the banks for furnishing reports o f examination;
(2) that h e had received innumerable complaints about the use of the information contained i n the reports furnished t o reserve banks a n d that h e
would n o t modify h i s previous orders t h a t these reports w e r e n o t t o b e
shown t o directors and that copies o f the reports were not t o be furnished
to the Branches; (3) that h e had no objection,, however, t o having the
deputy governors, o t h e r officers a n d men i n the discount o r credit depart-
ments i n the parent bank having access t o the reports and that h e had no objection t o the substance o f the reports being furnished t o the Branch
managers,
Déficiency i n reserves o f national banks ‘
Governor Y o u n g reported that h e h a d discussed this topic w i t h
the Comptroller o f t h e Curreney, w h o h a d stated that admonitory letters
were mailed from his office t o the national bank i n guestion i n all cases
reported o f deficient reserves, b u t that h e was quite willing t o g o
further than this i f any specific cases were reported b y Federal Reserve
Banks.
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Federal Reserve Bank of St. Louis
tae | eee
Report o f standing committee o n open market eperations
(
6
The report o f the standing committee o n open market operations
was submitted, o r d e r e d accepted a n d placed i n the record.
Election o f chairman a n d secretary.
Upon m o t i o n
o f Governor Fancher,
i t was
VOTED t h a t Governor Strong and Mr. Harrison b e chairman and
secretary respectively o f t h e next conference.
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Federal Reserve Bank of St. Louis
3
At 1:25 p , m. t h e conference adjourned sine die.
7
)
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Federal Reserve Bank of St. Louis
@FedFRASER