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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Secretary's Minutes oe RN OVERS Mey 5 - 7 , 1924. Washington, D . C. By . a 9% W lume indtielea INDEX T O SECRETARY'S MINUTES GOVERNORS CONFERENCE MAY 5 - 7, 1924. Paragraphs i n Secretary's Minutes Acceptances ~ Domestic; Report o f sub-committee o f Gen'l Acceptance Committee Ly, Advances u p t o 9 0 days o n members o w n collateral notes secured b y U.S. Government Securities - Amendment o f Federal Reserve A c t t o permit 13 Automobile Insurance; Report o f Insurance Committee 29 Borrowers Statements: Consolidated statements 14 Practice o f filing credit statements with F. R. Bank instead of with banks with which doing business 39 Branches of Federal Reserve Banks - Principles by which establishment and serviceability a r e t o b e tested Chairman - Election o f Charges for reports o f examination o f national banks Collections: Authority of a F. R. B. to accept i n payment o f a collection item a bank draft given i n exchange f o r the draft o f the drawee - Non=cash collection service; Report o f Committee o n Voluntary Services Notarial w o r k a n d fees, disposition o f Regulation J Report o f Standing Committee o n Collections Should a member bank b e allowed t o direct route its own draft drawn o n a correspondent t o another F. R . B . f o r credit o f its own F. R. B,? Should a member bank's o w draft drawn o n a correspondent b e ace cepted a s a transit item for deferred credit b y a F. R. Ba?- Withdrawals from Par List Commercial Paper a s Collateral t o War Loan Deposits Committee Reports: Committee o n Standardization o f Supplies = - - - = Committee o n Voluntary Services: Re Non=cash Collections Re Currency, Safekeeping o f securities and transfers o f funds Committee t o Study the Cost o f Securing Credit Information ~ - General Acceptances Committee; sub-committee o f Insurance Committee Leased Wire Committee Open Market Investment Committee https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 34 2 33 Paragraphs i n Secretary's Minutes 31 4,16 18 Pension Committee Standing C o m m i t t e e n o Collections = =- Submission o f committee reports t o Secretary o f Conference- 10,26 Comparative table o f expenses o f Federal Reserve Banks for 1923- 14 Consolidated statements - - - + - Credit Information - Cost of Securing; Report of Committee - - 30 Currency Shipments: Consideration o f currency i n transit i n computing reserve requirements and penalties = + - ~ Insurance o n shipments o f currency f o r treasury account~ - = - Practicability o f plan whereby member i n one district can obtain currency f r o m a n d ship currency t o Reserve B a n k o f adjacent district where transit time shorter than between member and own F. R. B. Report o f Committee o n Voluntary Services regarding Deferred Credit - Should a member bank's own draft drawn o n a corres= pondent b e accepted a s a transit item for deferred credit b y a Direct Routing o f Drafts - Should a member bank b e allowed t o direct route its own draft drawn o n a correspondent t o another F. R. B. for credit o f i t s o w Fs. R. B u ? = « « « & © swe s c ecew s e ew e e e Discount Rate Policy i n relation t o general principles discussed i n Federal Reserve Board"s Annual Report - ~ Dividends = payment o f when earnings insufficient f o r both expenses and dividends - - ~ - Domestic Acceptances; Report o f sub-committee o f General Acceptance Committee Earnings f o Reserve Banks - Importance o f conducting open markét operations without considering earnings a s determining factorEconomy a n d Efficiency = progress made. (See various committee reports) ~ ~ e e e e w e Effect o f Open Market Investment Committee"’s operations a n d desirability o f their continuance = ---+-*+-+--- Enlargement o f Membership i n System - - Examinations o f National Banks + charges for reports o f = - = = = + (Comparative expenses for 1923 Expenses - (Fiscal agency (Reimbursement) - --- <-> - https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraphs i n Secretary's Minutes Farm Loan Coupons - Payment. of (Leased Wire Comm, Report) Fiscal Agency Expenses ~ Reimbursement o f Fulmer Bill (to reduce reserves o f country banks); Report o f Federal’ Reserve Agent8* Committee Gold Holdings i n Vaults o f Federal Reserve Banks Gold Payments (certificates) Importance o f conducting O p e n Market operations without considering earnings o f Reserve Banks a s a determining factor Insurance: Automobile Insurance; Report o f Committee Inter-Insurance - Legality o f plan Life Insurance; R e p o r t o f Committee On Currency and Security Shipments f o r Treasury account Interest o n Treasury Overdrafts - rate - Leased Wire; Report o f Committee Legality of Inter-Insurance Plan Life Insurance; Report o f Committee Membership i n System ~ Enlargement o f Non-cash Collection Service; Report o f Committee o n Voluntary Services Notarial Work and Fees + disposition o f Open Market Operations: Effect o f committee's operations and desirability o f their continuance Importance o f conducting open market operations without consider- - = ing earnings of Reserve Banks as a determining factor Report o f Committee Overdrafts - Interest o n overdrafts b y Treasury Par List - Withdrawals from ~ Payment o f Collection I t e m - Authority o f F. R . B . t o aecept i n payment of a collection item a bank draft given i n exchange for the draft of the drawee Payment o f Farm Loan Coupons (Leased Wire Comm. Report) - = https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraphs in Secretary's Minutes Payment o f Gold Certificates i n usual course o f business 8 Pension - Report o f Committee 31 Rates o f Discount ~ Policy i n relation t o general principles cussed i n Federal Reserve Board's Annual Report peo) Reimbursement f o r Fiscal Agency Expenses 36 Reduction o f reserves of country banks (Fulmer Bill) 38 Regulation J ao - = Reports o f Examination o f National Banks ~- Charges for 33 Reports o f Committees: Committee o n Standardization o f Supplies 28 Committee o n Voluntary Services; Re Non=cash Collections Re Currency, Safekeeping o f securities and transfers of funds Committes t o Study the Cost o f Securing Credit Information - ~« General Acceptance Committee; sub-committee o f Insurance Committee Leased Wire Committee Open Market Investinent Committee Pension Committee - Standing Committee o n Collections Submission o f Committee reports t o Secretary o f Conference Reserve Requirements a n d Penalties f o r Deficiencies - Consideration of currency i n transit t o and from Federal Reserve Banks i n computing ~ - - = «= Reserves - Reduction o f (Fulmer Bill) Safekeeping o f securities - Voluntary Services Committee report Security Shipments for Treasury Account - Insurance o n Standardization o f Supplies; Report o f Committee o n Statements o f Borrowers: Consolidated Filing with F. R. B. instead o f with banks with which doing business Submission o f Committee reports t o Secretary Transfers o f funds - Voluntary Services a n d Leased W i r e Committee reports https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis il Paragraphs i n Secretary's Minutes Treasury Overdrafts ~ rate of interest o n - - 6 Voluntary Services; Report o f Committee: Re Non=cash Collections Re Currency, Safekeeping o f securities and transfers o f funds War Loan Deposits ~ Commercial Paper as Collateral t o Withdrawals from Par List— - - + - + - + - + - + - - + - +e +--++ e e- e+ e e+ e Tower Rating Bureau - Circular Letter https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis he C R E D I T TRANSACTIONS AND POLICIES As Open Market Investment Committee Operations 1. R e p o r t o f Chairman - Governor Strong 2. E f f e c t o f operations o f this committee and the desirability o f their continuance. 3. Importance o f conducting open market operations without considering earnings o f Reserve Banks a s a determining factor. (Discussion) S a n Fran, (Discussion) S a n Fran. Discount Rate Policy i n relation t o general principles discussed i n Federal Reserve Board's annual report. C, (Discussion) N e w York Domestic Acceptances Report o f General Acceptance Committee Mr. Kenzel, Chairman. D.£. MMR. - See Supploment. (Discussion ) Cleveland COLLECTIONS AND CLEARINGS fee Report of Standing Committee o n Collections Mr, Strater, Chairman. Bi. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Report o f Committee o n Voluntary Services regarding Non=cash Collection Service Governor Fancher, Chairman, Regulation "J" - Importance o f issuing a new Regulation "J" a s recommended b y the November 1923 Conference o f Governors, (See paragraph 33 minutes Nov. conf.) Should a member bank b e allowed t o direct route i t s o w n draft d r a w n o n a core respondent t o another F.R.B. f o r credit o f i t s o w F , R. Bank? Should a member bank's o w n draft drawn o n a correspondent b e accepted a s a transit item for deferred credit b y a Federal Reserve Bank? (Discussion) S a n Fran, (Discussion) S a n Fran. Ii. COLLECTIONS. AND. CLEARINGS (continued) F, Authority o f a F.R. Bank t o accept i n pay~ ment o f a collection i t e m a bank draft given i n exchange f o r the @raft.of t h e drawee. (Discussion) M e w York Witndrawals from the Par List Recommended P a That i n order t o protect both member bank and reserve bank against less, the Standing Committee o n Collections b e re= quested t o formulate a uniform procedure t o be followed b y all Reserve Banks i n handling direct sent items drawn o n banks removed from the par list between issues o f the Federal Reserve Board's monthly supplement t o the par list. ( A c t i o n ) New York COIN, CURRENCY a n d CIRCULATION A. Report o f Secretary relative t o the recommendation o f the November 1923 con- ference concerning the increase o f gold holdings i n the vavlts o f F.R. Banks. Mr. Harrison, (see paragraph 42 minutes Nov. Conf.) B. Currency i n Transit T o and From F.R.Bks. Letter X-3953 of Jan, 25, 1924 ( D i s c u s s i o n ) (San. Fran. (New York Cc, Payment o f Gold Certificates Discussion o f advisability o f having all Reserve Banks make payments o f gold certificates i n the usual course of business. For discussion with Mr. Winston OPERATION A. E c o n o m y a n d Efficiency https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1. General discussion of progress made 2. Report o f Committee o n Standardization o f Supplies, Mr. Worthington, Chairman 3. Report o f Insurance Committee o n Life and Automobile Insurance, Mr. Kenzel, Chairman, 4, Report o f Committee t o study Cost o f Securing Credit Information. Mr. Childs, Chairman, Report o f Pension Committee (Referred to F.R. Board by Nov. conf.) Mr. Kenzel, Chairman, Treasury IV. OPERATION (continued) C. R e p o r t o f Leased Wire Committee Governor McDougal, Chairman. Recommended That the recommendations made b y the committee which met i n Chicago March 12-14, 1924, i n their report addressed t o Mr. J , 3. McDougal, Chairman o f the Leased Wire Committee, a s follows = "l. That telegraphic transfers of funds be limited t o transfers o f bank balances, 2. T h a t the leased wires should not b e used for any purpose i n connection with handling any non-cash collection items. That the leased wires should not b e used for reconciling exceptions i n accounts between F.R. Bks., except where a loss might be involved." be adopted a s the action o f this conference, with the understanding that the identical clauses recom= mended b y this committee will b e included b y all F.R. Bks, i n their circulars t o member banks relating to the telegraphic transfers of funds ( A c t i s s i o n ) San Fran, Legality o f Insurance Plan (Referred to Board by Nov, 1923 conf.) Mr. Kenzel, Chairman FISCAL AGENCY OPERATIONS A. C o m m e r c i a l paper a s collateral t o War Loan Deposit Accounts. (see paragraph 19 minutes Nov. conf.) For discussion with Mr. Winston B, F i s c a l Agency Expenses For discussion w i t h Mr. Winston RELATIONS WITH MEMBER BANKS A. V o l u n t a r y Services performed for Members. Report f o Committee o n Vol. Services Governor Fancher, Chairman, (see also Collections & Clearings, Topic II B) B. Enlargement o f Membership i n System What, i f anything, should b e done to enlarge membership? ( D i s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis c u o n ) N e w York SUPPLEMENTAL PROGRAM ‘ G O V E R N O MA R S C O N F E R E N C E ng aON i e e e ANS HOE ROG se O N W T.CREDIT TRANSACTIONS AND POLICIES (supplemental topics) D. Amendment t o Federal Reserve Act t o permit advances https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis to member banks o n their o w n collateral notes secured b y U. S , Government Securities a n d drawn for periods u p to 90 days, (Discussion) Cleveland Policy o f Federal Reserve B a n k s i n considering paper o f borrowers who are included i n groups consisting o f parent and subsidiary companies and who issue consolidated statements. ( D i s c u s s i o n ) Cleveland SUPPLEMENTAL PROGRAM GOVERNO TOPICS PROPOSED B Y FEDERAL RESERVE BOARD 1. Principles b y which the establishment o f Federal Reserve Branch Banks and their serviceability are to be tested. ( D i s c u s s i o n While n o branch Federal Reserve Banks h a v e been established during the past several a n d recome- m e n d a t i o n ) years, the Board has been called upon t o consider a n d has disapproved o f a number of applications made by bankers' and business men's associations for the establishment o f branches, a n d there i s reason t o believe that there are applications from several other points forthcoming. Disposition o f notarial work and fees i n the Federal Reserve Banks, (X-3987 = March 6, 1924) ( D i s c u s s i o n Different practices prevail among the Federal Reserve Banks, a n d the Board a s n i d expres= o n of views) feels that a general discussion of the matter would prove beneficial. Is a plan practicable whereby a member bank i n one ( E x p r e s s i o n o f district c a n obtain currency from and ship currency v i e w s ) to the Reserve Bank o f a n adjacent district, where the member bank i s s o situated that the transit time between the member bank and its own Federal Reserve Bank i s considerably greater than the transit time t o the Reserve Bank o f the adjacent district? 2 From time to time, there comes before the Board, f o r its approval, such a plan, a n d the Board would like t o have a n expression of the Governors’ views a s to the practicability o f such a n arrangement. Report o f Federal Reserve Agents’ Committee o n Reserves ( E x p r e s s i o n o f to the Federal Reserve Board, concerning the Fulmer v i e w s ) . Bill, providing for the reduction o f the reserves o f country banks from 7% to 5% on demand deposits, and from 3 % to 2% o n time deposits. The Board asks for a n expression o f the views o f the conference relative t o this report, a copy o f which i s attached, Practice o f certain borrowers f i l i n g credit statements direct (Discussion) with the Federal Reserve Bank o f the district, rather than with the banks with which they transact business. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis REP OR? O 0 8 F084 VER B E L L FEDERAL RESERVE AGENTS' COMMITTEE O N RESERVES In accordance with the request o f the Federal Reserve Board, the Committee of Federal Reserve Agents o n Reserves h a s considered carefully t h e provisions o f the Fulmer Bill relating t o the reserves required t o b e carried b y member banks not in reserve or central reserve cities, both as it affects that class of member banks and as it affects the total reserves carried i n the Federal Reserve Banks, T h e Bill provides f o r a reduction o f reserves o f the country banks f r o m 7 per cent. t o 5 per cent. o n demand deposits and from 3 per cent. to 2 per cent. o n time deposits. T h e effect of this reduction, according to such investigations a s we have been able to make, would b e t o reduce the reserve deposits maintained a t the Federal Reserve Banks by approximately $200 000,000. T h i s $200 ,000,000, i f used a s a basis for credit €xpansion, would permit country member banks t o increase their demand deposits b y the theoretical amount of $4,000,000,000. O n the basis of 7 per cent. reserves, one dollar of reserves theoretically supports fourteen dollars of deposits; but if reserves are reduced to 5 per cent., one dollar of reserves would theoretically support twenty dollars o f deposits. Furthermore, i f part o f the potential increase in country bank deposits should b e i n the form of time deposits, the theoretical expansion permitted b y the change would b e still larger. I n practice, however, the theoretical figure would not b e realized a s such additional deposits would require Some additional cash to be carried i n bank vaults. With gold coming constantly into the country from abroad, with the tendency showm during the past few years b y member banks t o convert demand deposits into time deposits, a n d with the tendency t o reduce the percentage o f reserve balances main- tained by member banks i n the Federal Reserve Banks, the Committee believes i t is extremely unwise a t the present time t o make any change i n the reserve requirementg which might lead to additional expansion. The Committee, therefore, respectfully reports its unanimous opinion that the passage o f the suggested legislation would b e unwise, Respectfully submitted, PIERRE JaY March 31, 1924, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis WILLIAM MCC. MARTIN FREDERIC H. CURTISS, Chairman, G O V E R N O R S C O N F E R E N C E May 5 = 7, 1924 Washington, D . C . First Day's Session, Monday, M a y 5 , 1924 Separate Governors S e s s i o n Morning The meeting was called t o order a t 10:00 o‘clock a. m. Present: v a Governors Harding, Norris, hes o k Sea’ / Well¥orn, McDougal, Biggs, Young, Bailey, McKinney a n d Calkins, Deputy Governor C a s e , Mr. Harrison, Secretary. Upon motion o f Governor Fancher, i t was VOTED that Governor McDougal act as Chairman of the Conference. Opie t a Ae t R e p o r t o f Chairman, O p e n Market investment Committee f o r the Federal Reserve System, The Secretary r e a d the report o f the Chairman (printed pages 5 - 11 stenographic record), and, after a short discussion of the report and its exhibits it was approved b y the conference. (see pages 1 = 14 inclusive stenographic record) Topies 1. A. 2 & 3 . E f f e c t o f operations o f Open Market Investment Committee a n d the desirability o f their continuance. Importance o f conducting o p e n market o p e r a tions without considering earnings o f Reserve Banks a s a determining factor. At the request o f Governor Calkins these two topics were discussed together, w i t h particular reference t o t h e question whether t h e Federal Reserve Banks should p a y dividends o u t o f surplus rather t h a n subject t h e o p e n market operations o f the system to the influence of making earnings sufficient t o cover dividends. After considerable discussion, each member o f the conference was asked to express h i s opinion o n the following question: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Assuming that earnings are insufficient t o meet expenses and dividends, would it be better (a) to curtail services, (b) to resort to the open market, o r (c) to pay dividends f r o m surplus? Nine o f the Governors stated that their first choice would b e t o pay dividends from surplus, a n d three stated that they would prefer first t o curtail Services, I t was the consensus o f opinion that the open market operations o f the System should be conducted independently of the question of earings, I t was also felt that while there i s no question o f the right o f the directors o f the individual Federal Reserve Banks to engage i n open market operations i f in their judgment that should become necessary, nevertheless the present policy of conducting the System's open market operations through the central committee appointed for that purpose, with the consent o f the directors o f the several ReServe Banks, i s highly desirable and t o be commended, (See pages 14-81 inclusive stenographic record) At1:00 o'clock p. m. the conference adjourned to reconvene a t 2:00 o'clock p, m First Day's Session, Monday, May 5, 1924 Separate Governors Session Afternoon The meeting w a s called t o order a t 2:00 o'clock pe me Present: Govemors Harding, Norris, Fancher, Seay, Wellborn, McDougal, Biggs, Young, Bailey, McKisney a n d Calkins ; Deputy Governor Case, Mr. Harrison, Secretary. Topic II. A- R e p o r t o f Standing Committee o n Collections. ( 4 (See also paragraph 16) The Secretary r e a d t h e report o f the Chairman o f the Committee (printed Pages 86-90 stenographic record) which recommended i n substance the following: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1. T h a t the committee should not, a s recommended b y the November 1923 conference, prepare a uniform circular defining the terms used b y the Reserve Banks i n connection with the collection o f non-cash items until there should b e occasion, f o r other reasons, collections; t o issue a general circular o n the subject o f ) 2. T h a t i t would n o t b e advisable f o r the several Federal Reserve Banks t o try to make effective the recommendation o f the November 1923 conference concerning the guarantee o f prior indorsements o n non-cash items until that recommendation c a n be made effective simultaneously b y all Reserve Banks. I t was sug~ gested that this matter b e covered b y incorporating a paragraph on the subject i n the non-cash collection circular whenever i t is reissued b y all Reserve Banks. 3. T h a t t h e revised draft o f the collection circular, when re-issued, should include a n y additional paragraphs which might b e required a s a result o f the action taken b y the con= ference o n the report o f the Leased Wire Committee, a n d by the conference a n d the Reserve Board o n the report o f the Committee on Voluntary Services. After the reading of the report, i t was AGREED t h a t n o action should b e teken until t h e report o f the Com=mittee o n Voluntary Services concerning non-cash collections a n d the report o f the Leased Wire Committee had been acted upon. (see paragraphs 11, 1 2 and 16) (See pages 83 = 91 inclusive stenographic record) Mr. Winston, Under Secretary o f the Treasury, joined the conference at this point. Topic V. B. F i s c a l Agency Expenses (see also paragraph 3 6 ) Mr. Winston submitted f o r the consideration o f the conference a memorandum (printed pages 124-128 stenographic record) concerning the subject of fiscal agency expenses. T h a t memorandum reported that while i n the past it has been the policy o f the Treasury Department t o reimburse Federal Reserve Banks for their expenses incident t o new Treasury issues, a n d while those expenses l a s t y e a r amounted t o about $280,000, nevertheless i t was f e l t that t h e Treasury will b e justified i n using the Expenses o f Loans Appropriation for this purpose o n l y u p t o the s u m o f $200,000 i n the fiscal y e a r 1925. T h e memo- randum pointed out, however, that i n order t o effect a radical curtailment i n reimbursable expenses heretofore made, i t i s proposed b y the Treasury = https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1. T o abandon the sales organization o f the Treasury Savings Certificates o n July 1, 1924. : 2. O w i n g t o the decrease i n the amount o f War Savings Certificates maturing, i t is expected that payment o f these War Savings Certificates will be handled in the same way as Ose. any other Government security maturing, a n d without any special allowance for expenses i n effecting their redemption. 3% O w i n g t o the fact that the Treasury's fiscal program now contemplates issues o f securities quarterly, the banks should b e able t o reduce their fiscal agency organizations t o the extent necessary t o handle just these quarterly issues and current exchanges. 4, T h e fiscal agency expenses o f some o f the Reserve Banks are s o far out o f proportion t o the expenses o f some of the other Reserve Banks, that a comparative s t u d y might be productive o f further savings i n this particular. In elaborating this memorandum submitted t o the conference, Mr. Winston explained that i t was the purpose t o continue the sale o f Treasury Savings Certificates through the post offices. I t was also stated that Federal Re- serve Banks might properly have them for sale when requested, b u t without any special organization for the purpose. (See pages 124 - 133 stenographic record) Rate o f Interest o n Treasury Overdrafts. Mr. Winston reported t o the conference that the Treasury has decided, after conference with one o f the Federal Reserve Banks, that i t will in the future pay Reserve Banks interest a t the rate o f 1 per cent. less than the interest rate o n the short-term certificates which are being issued b y the Treasury a t the time o f the overdraft, w i t h t h e understanding, however, that this rate paid o n overdrafts shall not exceed 5 per cent., n o r be less than 2 per cent. (See page 1 3 3 stenographic record) Insurance Covering Shipments o f Currency a n d Securities for Treasury account. Mr. Winston referred to the insurance policy taken b y the Treasury to cover currency and securities shipped b y Federal Reserve Banks for account of the Treasury t o commercial banks, explaining that the policy has now been extended s o a s to cover the shipments from the post office t o the building i n which the commercial b a n k i s located. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H e also called attention t o t h e fact ae that the rate o n tne new insurance policy has been reduced from 6 cents per $1,000 to 4-7/8 cents per $1,000, (See pages 134 - 137 stenographic record) Topic II]. C. P a y m e n t o f Gold Certificates ( 8 Mr. Winston discussed briefly the policy now pursued b y the Federal Reserve Banks o f Chicago and New York i n paying out gold certificates i n the ordinary course o f their business, a n d referred t o the f a c t that already those two banks together have made net payments aggregating approximately $650,000,000. While he did not advocate all Reserve Banks following this policy, h e stated that i t would, i n his opinion, b e desirable t o have some o f the other larger Reserve Banks make s u c h payments a n d that h e would like t o have a l l t h e other banks pay out a t least a s much gold as they get in, s o that the purpose t o be accomplished b y the two banks which are now “making gold payments will not b e offset by redeposits i n the other banks. In the general discussion that followed, some o f the members o f the conference said that they are a t the present time paying out approximately a s much a s they receive, a n d that they would b e glad to continue t o make payments at least t o that extent. A majority o f the Governors present, however, without any formal vote, appeared to be o f the opinion that i t was undesirable f o r them generally t o pay out gold. Mr. Winston referred t o our present gold imports, amounting t o about yl,000 ,000 a day, a n d stated that the Treasury was anxious t o put i n circulation approximately $500,000,000 o f gold i n addition t o the amount o f current imports, stating that i n his opinion this gold i n circulation would prove a n excellent secondary reserve, v e r y quickly available t o t h e Reserve Banks a n d the Treasury Mahaver i t might b e needed. T h o s e banks which have adopted the policy o f paying out gold have found that i t is redeposited currently, without any appar~ ent hesitation. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (See pages 137 ~ 158 inclusive stenographic record) 6 = Topic V. A. C o m m e r c i a l paper as collateral t o War Loan - (9) Deposit Accounts, The arguments f o r and against t h e discontinuance o f the eligibility of commercial paper a s collateral f o r war loan deposit accounts were reviewed briefly. I n conclusion, nine Governors voted i n favor o f continuing commercial paper a s collateral a n d three i n favor o f discontinuing i t , (See pages 158 ~- 162 stenographic record) Mr. Winston l e f t t h e meeting a t this point, Comparative Table o f Expense o f Operating Federal Reserve Banks during 1923, (See also paragraph 26) The chairman reported receipt o f a letter f r o m G o v e m o r Crissinger enclosing twelve copies o f a comparative table showing the expense o f operating the Reserve Banks during 1923 and requesting that the conference engage i n a general discussion o f the probable expense o f operating the system during 1924, (See page 162 stenographic record) T o p i c II. B. R e p o r t o f Committee o n Voluntary Services ( 1 1 ) regarding Non-cash Collection Service. Governor Fancher referred t o the fact that the report o f the dommities onVoluntary Services (printed pages 92 - 120 stenographic record) had been aubmitted t o the Federal Reserve Board with the suggestion that the Board defer formal action until the conference had an opportunity to discuss it. Governor Calkins moved that the report and the recommendations con~ tained therein b e adopted a s the recommendation o f the conference, Governor Bailey moved a s a substitute t h a t i t i s the sense o f the conference that the non-cash collection service b e discontinued b y the system. This substitute motion was defeated 9 to 2, Governors Young and Bailey voting for it, Governor Bailey then moved that the report o f the Voluntary Services Committee b e amended t o provide t h a t n o i t e m o f less than $100 should b e accepted https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - 7 for collection through t h e Federal Reserve Banks, W h i l e t h i s motion o f Governor Bailey was not seconded,.it was debated, G o v e m o r Bailey stating that such a large percentage o f the items now presented f o r collection through the Federal Reserve Bank o f Kansas City are o f such small amounts that the conference should consider placing some limit o n the dollar amount o f items receivable f o r collection, T h e proposed amendment was lost 1 0 to 2, Governors Bailey and Wellbom voting i n favor o f the amendment. Thereupon, i n acting o n the original motion o f Governor Calkins, i t was VOTED t h a t t h e report a n d t h e recommendations contained therein b e adopted a s the recommendation o f the conferences Governors Young and Bailey voted No. After final action was taken o n the report, Governor Young presented for consideration what might b e the effect o n the non-cash collection service of the System i f the Minneapolis Federal Reserve B a n k should discontinue handling such collections, I t was generally agreed that such -an action o n the part o f the Minneapolis b a n k would b e most unfortunate a n d would result i n difficulty and confusion t o the other Reserve Banks, G o v e r n o r Young stated that h e would not want t o cause embarrassment t o other Reserve Banks, b u t would like t o have the conference consider carefully the question o f limiting the kind o f items now handled f o r collection, H e stated that a s much a s the Federal Reserve Bank of Minneapolis wants t o cooperate, i t may b e impossible f o r i t to continue t o handle certain classes o f non-cash items because o f certain local conditions. After general discussion o f the advisability o f having all Reserve Banks establish a uniform procedure, giving, however, d u e regard t o the difficulties o f particular districts, u p o n motion o f Governor Calkins, i t was VOTED t h a t the matter b e referred back t o the Standing Committee on Collections f o r further study and such recommendation: a s the committee may care t o make with respect both t o the kind and dollar amount o f non+cash https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bw items t o be handled b y the Federal Reserve Banks for collection, It was understood that the committee should b e authorized t o invite representatives o f the interested banks t o p a r t i c i p a t e n i its discussion o r studies o f the question raised. G o v e r n o r Young stated specifically that h e would like t o have Judge Usland appear before the committee, (See pages 91 = 124 and 163 = 189 stenographic record) Topic IV. C. Report of Leased Wire Committee ( 1 2 (See also paragraphs 4 , 11, 1 6 and 41) The Chairman r e a d t h e recommendations contained i n the report o f the Leased Wire Committee (printed pages 191 - 202 stenographic record) together with the recommendations o f the supplemental report (printed pages 204 - 205 stenographic record) relating t o the payment o f farm loan coupons, Upon motion o f Govemor Calkins, i t was VOTED t h a t the report and the supplemental report, together with their respective recommendations, b e approved, It was understood, however, that approval o f the report o f the Leased Wire Committee, w h i c h recommended a m o n g other things t h a t telegraphic transfers o f funds b e limited t o bank balances, should not i n any way restrict the deliberations o f the Committee o n Voluntary Services i n respect t o this a n d other matters, i t being understood that that committee might care t o devise some procedure f o r effecting telegraphic transfers o f funds for account o f individuals over the commercial wires, (See pages 190 - 214 stenographic record) Topic T.uDs A m e n d m e n t o f Federal Reserve Act t o permit advances to member banks o n their own col~lateral notes secured b y U. S . Government Securities a n d drawn f o r periods u p t o 90 cays. There was a general discussion o f this topic, with particular reference t o the action taken a t t h e M a y 1922 Conference o f Governors, w h e n " t h e topic w a s passed, a f t e r Governor Calkins h a d referred briefly t o the unwisdom of amending the Federal Reserve Act i n any manner aimed t o extend reserve bank loans o n Government securities," https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) SReference was made t o the economy i n time a n d expense i n having the maturity o f these advances extended beyond the fifteen day limit when secured not only b y Government bonds, b u t also b y commercial paper. But i t was generally felt b y those present that inasmuch a s there i s no unanimity o f opinion a s to the desirability o f the proposed amendment, the topic should again be passed without action. (See pages 215 - 224 stenographic record) Topic J.-me P o l i c y o f Federal Reserve Banks i n considering paper o f borrowers w h o a r e included i n groups c o n s i s t i n gf o parent a n d subsidiary companies and who issue consolidated statements. Governor Fancher referred t o the action o f the March 1923 Conference of Governors concerning the rediscount o f paper issued b y borrowers making a con= solidated statement. A f t e r some discussion o f the progress made b y the several Federal Reserve Banks during the past year i n having corporations which heretofore have issued only consolidated statement make separate statement, i t was VOTED t h a t the conference recommend to the Federal Reserve Board that the Board amend Regulation A, Series of 1923, b y adding at the end of Sec~ tion I V a paragraph providing i n substance that i n any case where the borrower has closely allied, associated o r subsidiary companies, the statement therein required should b e accompanied b y separate statements o f such allied, associated or subsidiary comanies, unless the statement o f the borrower clearly indicates eligibility a n d acceptability; a n d that, i n order t o permit o f the issuance o f appropriate individual statements a t the usual statement periods, t h e Federal Reserve Banks may waive the application o f this provision until May 1, 1925, i n those cases where the borrower and allied, associated o r subsidiary companies have not issued separate statements prior thereto. (See pages 224 = 243 inclusive stenographic record) At 6:10 o'clock p . m. t h e conference adjourned t o reconvene a t 10:00 o'clock a. m. o n Tuesday, M a y 6, 1924, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TR a e Second Day's Session, Tuesday, M a y 6 , 1924 Separate Governors Session Morning The meeting was called t o order a t 10:00 o'clock a. m. Present: Governors Harding, Norris, Fancher, Seay, Wellborn, McDougal, Biggs, Young, Bailey, McKinney and Calkins, Deputy Governor Case, Mr. Harrison, Secretary. Topic I. B. Discount Rate Policy i n relation to general ( 1 5 principles discussed i n Federal Reserve Board's annual report. Mr. Case referred briefly t o the report o f the Federal Reserve Board concerning the discount rate policy. I t was the consensus o f opinion that the Board's report was a most satisfactory and effective statement o f the discount policy o f the system, (See pages 239 = 241 inclusive stenographic record) Topic Ii. aA. R e p o r t o f Standing Committee o n Collections (See also paragraphs 4, 11 and 12) Mr. Strater, Chairman o f the Standing Committee o n Collections, appeared before the conference t o discuss the report (printed pages 243 - 247 stenographic record) of his committee, previously submitted to the conference (paragraph 4). Upon motion of Governor Calkins, i t was VOTED that the report o f the Standing Committee o n Collections b e received and that the committee b e continued for the purpose o f studying thoke matters relating to non-cash collections previously referred to it for study and report b y the conference (see paragraph 11), a n d that the committee prepare a uniform circular, covering the questions o f uniform indorsements, guarantee of prior indorsement, a n d defining the terms used b y Federal Reserve Banks i n effecting non-cash collections, a s well as any Limitations a s to amount o r kind of non-cash collections, i f any, which the committee feels should be made a s a result o f the study i t makes i n accordance with the recommendation o f this conference. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) Vor A D It was understood t h a t a draft o f this uniform circular, d a s finally fore its Bank Reserve Federal b e sente to each committee, b y the e d n m m o c r / / y approval, a n d if all banks agree, then the circular should b e issued, b u t if there i s no unanimous agreement, t h e n the circular should b e referred t o the / next Conference o f Governors f o r its consideration, (See pages 243 - 268 inclusive stenographic record) Topic I, C, Domestic Acceptances - Report of sub-committee ( 1 7 ) of Goneral Acceptance Committee. Upon motion o f Mr, Case, i t was VOTED t h a t since t h e sub-committee w h i c h f i l e d t h e report o n Domestic Acceptances reached n o common understanding and made n o definite recommendation, t h e matter b e referred back t o the committee f o r further report a n d recommendation, (See pages 8 2 -63; 2 6 8 - 295 ‘stenographic record) Reports o f Committees Upon motion o f Mr, Case, i t was VOTED t h a t all committees that have matters referred t o them b y the Governors Conference b e requested t o file their reports with the Secretary o f the Conference within t h r e e months f r o m t h e date o n which t h e matters are referred t o them, (See page 294 stenographic record) Topic IL C. Regulation "J" ( 1 9 Before discussing the proposed draft of Regulation "J" (X-4025), Mr, Wyatt, Counsel f o r the Board, w a s invited + o attend t h e conference, ( S e c - tion V, o f Regulation "J" printed pages 328 - 330 stenographic record), https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) "19 = he explained that t h e regulation proposed b y t h e Board w a s a n effort n o t only t o cover the existing practices o f the Federal Reserve Banks i n the matter o f making collections, but also t o protect them from loss a s a result o f the decision of the Supreme Court o f the United States i n the case o f Malloy v- Federal Reserve Bank o f Richmond. There was a lengthy discussion o f the various phases o f the proposed i n differreeulation, w i t h particular reference t o its effect o n local conditions ent districts. Subsequently, upon motion o f Governor Fancher ,it was VOTED that, i f agreeable t o Mr. Wyatt, the proposed draft o f Standing Regulation "J" be referred back to him with the request that he permit the Committee o n Collections t o confer with him relative t o its provisions before finally adopted. Mr. Wyatt having expressed his approval o f that suggestion ,it was later, u p o n motion o f Governor Harding, VOTED that in order to expedite final consideration o f Regulation "J" present i n Mr. Strater, Chairman o f the Standing Committee o n Collections, w h o was with Mr. Wyatt iiashington, be requested to represent that committee i n conferring relative t o the form o f the regulation. (See pages 295 - 332 stenographic record) Tonic I I . D . S h o u l d a member b a n k b e allowed t o direct route its owm draft draym_on a correspondent of to another Federal Reserve B a n k f o r credit its own Federal Reserve Bank? reGovernor Calkins, who proposed this topic, a n d other Governors that i t might ferred t o possible dangers o f this practice, put i t was suggested for itself. be a matter properly t o be decided b y each bank I t was, therefore, o f each INFORMALLY AGREED that the question be left to the management Federal Reserve Bank for determination. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (See pages 332 - 336 stenographic record) ow13 6 Topic Il. E. S h o u l d a member bank's own draft draw o n a ( 2 1 ) correspondent b e accepted a s a transit i t e m for deferred credit b y a Federal Reserve Bank? This topic is so closely related to Topic II, D, (paragraph 20) that INFORMALLY AGREED that it, also, should b e left t o the determina~ — tion o f each bank, (See page 336 stenographic record) Topic II, F. Authority of a Federal Reserve Bank to accept in ( 2 2 ) payment of a collection i t e m abank draft, given in exchange f o r the draft o f the drawee. Upon motion of Mr. Harrison, i t was VOTED. t h a t the Standing Committee o n Collections b e requested t o study this topic i n connection with its consideration o f Regulation "J", a s voted b y the Conference (paragraph 19}. (See page 337 stenographic record) Topic II. G. Withdrawals from the Par List Upon motion of Governor Fancher, i t was VOTED t h a t i n order t o protect both member bank and reserve bank against loss, the Standing Committee o n Collections b e requested t o formu~ late a uniform procedure t o be followed b y all Reserve Banks i n handling direct sent items d r a w o n banks removed from the par list between issues o f the Federal Reserve Board's monthly supplement t o the par list. It was understood t h a t t h e report of, o r the procedure recommended by the Standing Committee o n Collections, b e referred t o each Federal Reserve Bank w h e n available, (See pages 337 ~ 339 inclusive stenographic record) Topic III, A. Report of Secretary relative to the recommenda ( 2 4 ) tion o f the November 1 9 2 3 Conference concerning the increase o f gold holdings i n the vaults o f Federal Reserve Banks. Mr, Harrison reported that this matter h a d been referred t o him b y the November 1923 Conference of Governors for consideration with the Treasury https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis sed ee Department a n d r e p o r t b a c k t o t h e conference, H e requested t h a t there b e inserted i n the record a copy o f the report prepared b y him and Mr, Hand o f the Treasury, a c t i n g a s a sub-committee o f a currency committee appointed i n February 1924 by Mr, Winston t o study this and related topics, (Report printed pages 340 - 347 stenographic record), Mr, Harrison stated that while this report had been submitted t o the Treasury Department, t h e Treasury has never, s o far as he had been advised, f o r m a l l y approved o f its recommendations, I t was reported, however, that gold i s now being minted i n accordance with the recommendation o f the sub-committee, I t was also understood t h a t Mr, Winston looked favorably upon the recommendation o f the committee concerning the reserve stock o f unissued gold certificates, (See pages 340 - 351 stenographic record), Opi6 h k be. C u r r e n c y i n Transit T o and From Federal Reserve Banks, ( 2 5 ) Governor Calkins, who presented this topic for discussion, stated to the conference that, a s a result o f a canvass which h e had made, i t appeared that seven banks a t the present time a r e considering currency i n transit in the computation o f reserves a n d assesSing penalties a n d five a r e n o t doing so, In the ensuing discussion, i t appeared that the counsel o f some of the reserve banks have s t a t e d that i n their opinion the practice i n question is illegal, and it was accordingly suggested that in the event that any Reserve Bank cares t o make inquiry, there would b e n o objection t o such individual bank o r banks asking the Federal Reserve Board for a formal Opinion o f its counsel relative t o the matter, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (See pages 351 - 368 inclusive stenographic record), ee a e Comparative Table o f Expense o f Operating Federal Reserve Banks during 1923. ( S e e also paragraph 10) It was the concensus o f opinion that the blueprint containing the comparison o f the expenses o f the several Federal Reserve Banks for 1923 presented an interesting study o f the relative expense o f operating those banks, although not o n a precisely comparable basis Upon motion o f Governor Seay, i t was K V O T E D that in furtherance of the purposes of the Economy and Efficiency Committee, this blueprint analysis o f the expenses for 1923 be submitted to the local Economy and Efficiency Committee i n each Federal Reserve Bank for such study a s i t m a y s e e f i t t o give it, b u t w i t h t h e suggestion o f the confer- ence that each local committee give consideration t o the question o f the adoption of a budget system. (See pages 368 - 376 inclusive stenographic record) Topic IV. A.1. E c o n o m y and Efficiency - Progress Made- The several Governors commented o n the fact that much attention is given b y their organizations i n analyzing t h e reports o f the Board's Economy and Efficiency Committee, a n d that they are working constantly t o increase the _efficiency o f their organizations i n order further t o reduce expenses. It was VOTED t o b e t h e sense o f the conference t h a t a l l o f t h e Reserve Banks are giving careful consideration a t the present time t o the matter o f economy a n d efficiency i n operation. (See pages 377 - 379 inclusive stenographic record) Topic IV. A.2. Report of Committee on Standardization ( 2 8 of Supplies (See also paragraph 30) The report of the Committee o n Standardization o f Supplies (printed pages 380 - 390 stenographic record) stated, among other things, that the committee the matters had sent out a questionnaire t o each Federal Reserve Bank concerning https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ° = the within its jurisdiction and that the committee would tabulate these replies a s soon as received and furnish a copy to each Federal Reserve Bank for its information, together with any suggestions the committee may have to offer at that time. Upon motion o f Mr, Case, i t was VOTED t h a t these matters b e left with the Committee o n Standardization of Supplies for further report t o the conference. (See pages 380 ~ 390 inclusive stenographic record) TODLG 1Vy A e cos R e p o r t o f Insurance Committee (See also paragraph 30) Mr. Case read to the conference the report o f the Chairman of the Insurance Committee (printed pages 490 - 402 stenographic record) and, upon motion o f Governor Seay, i t was VOTED that the report be received and the committee be requested to continue its study o f the entire subject o f insurance. (See pages 391 ~- 403 inclusive stenographic record) At1:00 o'clock p. m, the conference adjourned to reconvene a t 2:00 o'clock p, m,) second Day's Session, T u e s d a y , y a M 6, 1924 Separate Governors Session Afternoon The meeting was called t o order a t 2:00 o'clock p. m Present: Governors Harding, Norris, Fancher, Seay, Wellborn, McDougal, Biggs, Young, Bailey, McKinney a n d Calkins, Deputy Governor Case, Mr. Harrison, Secretary. TOpiC LVs A a 4, R e p o r t o f Committee t o Study the Cost o f Securing Credit Information. The report o f the Committee t o Study tne Cost o f Securing Credit In- formation (printed pages 405 ~ 411 stenographic record) was presented b y the Secretary. T h e committee stated that after giving full consideration to the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis = 17 6 questions before it, i t appeared impossible t o reduce credit operations t o a unit cost basis because o f the fact that credit operations are not mechaneical o r clerical operations which can be measured b y the same standard i n each bank, T h e committee reported, however, that while the methods used vary in ¢laborateness, nevertheless they appear t o b e consistent with the character of the business done and the requirements o f the local boards o f directors, The committee stated that a careful study of its report b y each bank might result i n a greater degree o f uniformity i n the character o f their operations. Upon motion of Mr, Case, i t was VOTED t h a t the report b e received and accepted and that each Governor b e furnished with a copy o f it for the use o f the respective Reserve Banks, Upon further motion of Mr. Case, i t also was VOTED that the reports of the Committee o n Standardization of Sup- plies (paragraph 28), The Insurance Committee (paragraph 29) as well as the Committee t o Study t h e Cost o f Securing Credit Information b e referred t o the Board's Committee o n Economy and Efficiency for its advice, each of these reports having been prepared a s a result o f a recommendation made b y the Board's committee t o the November 1923 Conference o f Governors. (See pages 405 = 412 inclusive stenographic record) Topic IV. B. R e p o r t of Pension Committee. ( 3 The Chairman stated that t h e Pension Committee w o u l d have a 1 meeting and make further recommendations t o the conference a s soon a s i t was possible for i t to have a meeting with its advisers, Messrs, Thayer a n d Curtis. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (See pages 412 - 413 inclusive Stenographic record) ) 8 H 866 3 M 7 25 M U NOTICE O F TUBE STATION CLOSING The Station t o which these papers were routed, i s closed for the day, PNEUMATIC TUBE EXCHANGE, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - 1 8 « ‘COP e R Vivenbe E n l a r g e m e n t o f Membership i n System, What, i f anything, s h o u l d b e done t o enlarge membership? Each o f the Governors present was asked for a n expression o f his views concerning this topic. I t was felt generally t o be o f great importance to the System, a n d while i t appeared that none o f the Federal Reserve Banks i s making any active campaign t o solicit new membership a t this time, nevertheless the member bank relations departments o f the various banks a r e continuing their usual program o f advising member banks, a n d a n y others w h o m a y b e interested, o f the work a n d advantages o f the System, While n o action w i t h respect t o this topic w a s taken b y the con- ference, i t was the consensus o f opinion that i t i s important f o r the Reserve Banks t o continue their public educational program, I t was also suggested that it would b e helpful i f capable public writers would present the subject o f the Reserve System t o their readers i n some popular and non-technical manner, (See pages 4 1 3 = 433; 4 5 6 - 467 inclusive stenographic record,) Charges f o r Reports o f Examination o f National B a n k s b y Comptroller. ( 3 3 ) Mr. Dawes, Comptroller o f the Currency, joined the conference a n d stated t h a t h e would l i k e t o have t h e Governors consider t h e question o f i n creasing t h e price n o w paid f o r the reports o f examination o f national banks furnished b y the Comptroller t o the Federal Reserve Banks. H e suggested that that increase should b e f r o m the present f l a t r a t e o f $4.50 f o r each report to $10.00 f o r each report. H e pointed o u t that while h e hopes t o effect further economies i n t h e cost o f examinations o f national banks, nevertheless it i s difficult t o retain g o o d examiners i n the service a t the salaries n o w paid t o them a n d that s o m e o f them will unquestionably r e s i g n unless t h e y are paid more, H e stated that h e believed the increased revenue resulting from the increased charge t o the Federal Reserve Banks f o r reports o f examination would result i n better reports a n d that f r o m the point o f view of the Reserve Banks t h e extra payment will b e fully justified, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H e explained « \9 « that while h e would have n o objection t o making a graduated schedule o f charges for the reports o f examination, a n average o f less than $10.00 for each report would not serve his purpose. In the discussion that followed, reference was made b y some o f those present to the action previously taken by the conference, when it was unanimously agreed "that payment for reports o f examination o f national banks should b e based not upon any probable o r estimated deficit i n the operation of the Comptroller's office, but rather upon the cost o f preparing the reports," S o m e o f the Governors also referred t o the fact that the Federal Reserve Act contemplates that the cost of examining national barks should be assessed against the banks and not met i n any other way. Finally, upon the suggestion of Governor Harding, i t was UNDERSTOOD t h a t the Comptroller would submit his proposal t o the Federal Reserve Board with a view to having some definite plan agreed upon by the Board a n d notice t h e r e o f forwarded t o the executives o f the Reserve Banks who might discuss i t with their directors. Topic Board 1. Principles b y which the establishment o f Federal Reserve Branch Banks and their serviceability are to b e tested. There was a general discussion of the principles which should be controlling i n the matter o f the establishment o f branch banks o f Federal - Reserve Banks. I t seemed to be the consensus of opinion that branch banks should be established only when the Federal Reserve Banks were not able to provide distant member banks with satisfactory service, and only if the aggregate resources o f the district to be served and the saving of time to member banks i n that district i n the matter o f collections, discounts a n d supplying currency justify it. I n other words, essential service, rather than expense, i s the prime consideration, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I t was felt, however, that i n 70 «a mo case should branches b e established i f agencies c a n satisfactorily answer the purpose, (See pages 468 - 483 inclusive stenographic record) Topic Board 2 , D i s p o s i t i o n o f notarial w o r k a n d fees i n the Federal Reserve Banks. Seven o f the Reserve Banks reported that their notarial work i s handled b y outside notaries, four stated that notaries holding positions i n the hKeserve Bank d o the protesting, a n d one Reserve Bank reported that while the protesting w o r k i s handled b y a n outside notary t h e fees a r e collected b y h i m a n d déposited t o the credit o f a trustee, t h e notary retaining only what the Reserve Bank has agreed t o give him. E a c h Reserve Bank, however, stated that the method by which its notarial work i s conducted has been approved b y counsel. In view of the fact that the amount o f protest work i n the several Federal Reserve Banks appears t o b e increasing steadily, consideration was given to the question whether the present limit of $10.00 might not be raised to $20.00 or #25 ,00, Upon motion o f Governor Fancher, i t was VOTED t o b e the sense o f the conference that the Standing Committee on Collections should make a study o f the cash items protested b y all Reserve Banks for a period of three months, and that they should divide all checks protested into different classes a s to amount, specifying particularly those that are under and those that are over $20.00 o r $25.00, (See pages 483 - 496 stenographic record ) Topic V. B. F i s c a l Agency Expenses (see also paragraph 5) The Secretary r e a d a letter (printed pages 4 9 6 = 497 stenographic record) from Mr. Winston t o Governor McDougal, dated May 6, and just presented t o the conference. T h i s letter confirmed the statement made b y Mr. Winston t o the conference that during the fiscal year 1925 reimbursement will b e made only on account o f expenses arising from new issues, either during that year o r during the fiscal year 1924, a n d that such expenses i n the aggregate shall not exceed 8200 ,000, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis It was UNDERSTOOD t h a t the Secretary should provide.a copy o f this. letter t o each Federal Reserve Bank, a n d to the Federal Reserve Board, a n d so advise Mr. Winston. (See pages 496 = 499 inclusive stenographic record) Topic Board 3. I s . a plan practicable whereby a member bank ( 3 7 ) in one district c a n obtain. currency from and ship currency t o the Reserve Bank o f a n adjacent district, where t h e member b a n k i s so situated t h ae transit ht t time between the member bank and its own Federal Reserve Bank i s considerably greater t h a n the transit time t o the Reserve Bank o f the adjacent district! Upon motion o f Governor Seay, i t was VOTED t o b e the sense o f the conference that there are many objec- tions both theoretical and practical t o the proposed plan and that it should be resorted to only in emergency cases, o r in isolated cases, where, for geo= graphical o r other reasons, i t is peculiarly advisable t o d o so, but only then upon agreement b y both Reserve Banks concerned. (See pages 499 + 504 stenographic record) Topic Board 4. R e p o r t o f Federal Reserve Agents’ Com= mittee o n Reserves t o the Federal R e - serve Board concerning the Fulmer Bill, providing f o r the reduction o f the reserves ofcountry banks from 7% to 5% on demand deposits, and from 3% to 2% on time de~ posits. The Secretary read into the record a copy o f the report o f the Fed- eral Reserve Agents' Committee o n Reserves (printed page 505 - 507 stenographic record) concerming the Fulmer Bill, and, after discussion, upon motion o f Governor Norris, i t was VOTED t o concur i n the report o f the Agents’ Committee that the passage o f the proposed legislation would b e unwise. The Secretary then referred t o the conference a letter from Mr. Eddy of the Federal Reserve Board (printed page 508 stenographic record) stating that Congressman Fulmer proposed t o amend h i s bill b y permitting c o u n t r y . member banks https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis t o count a s reserve t h e c a s h i n their o w n vaults a n d balances with correspondents. was t h e unanimous opinion o f the conference t h a t this proposed vu+ change i n the bill was also unwise. (See pages 5 0 4 ~ 508 inclusive stenographic record) Topic Board 5 . P r a c t i c e o f certain borrowers f i l i n g credit statements direct w i t h t h e Federal Reserve Bank o f the district, r a t h e r t h a n w i t h t h e banks w i t h which t h e y transact business. Mr. C a s e requested t h a t t h e topic b e passed, inasmuch a s the o n l y instance which gave rise t o this topic n o longer exists. (See pages 5 0 8 - 509 inclusive stenographic record) At 6:10 o'clock p, m. the conference adjourned t o reconvene a t 10:00 o'clock a. m. o n Wednesday, M a y 7, 1924, Third Day's Session, Wednesday, M a y 7, 1924. Separate Governors Session Morning The meeting was called t o order a t 10:00 o'clock a. m. Present: Governors Harding, Norris, Fancher, Seay, Wellborn, McDougal, Biggs, Young, Bailey, McKinney, d n a Calkins, Deputy Governor Case, Mr. Harrison, Secretary. Supplemental report o f Committee o n Voluntary Services (See also paragraph 41) Governor Fancher presented the supplemental report (printed pages 510 ~ 527 stenographic record) o f the Committee o n Voluntary Services concern ing the following topics: ( 1 ) currency, (2) safekeeping of securities, and (3) transfers of funds, Mr, Case moved that the report b e received and approved, b u t when it was stated that some o f the Governor would like t e have a n opportunity t o study the third topic, « that i s the subject o f transfers o f funds, Mr. Case amended his motion, a n d i t was https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2% VOTED t o approve all o f the report except that part relating t o the transfer o f funds- Governor Young, who was not present a t the time the report was read, asked t o be recorded a s not voting. (See pages 510-536 inclusive stenographic record) At 11:00 o'clock a.m. the Governors sdjourked their separate session to convene i n joint conference w i t h t h e Federal Reserve Board-~ Third Day's Session, Wednesday, M a y 7, 1924 Serarate Governors Session Afternoon The meeting was called to order at 4:45 o'clock p- mPresent: Governors Harding, Norris, Fancher, Seay, Wellborn, McDougal, Biggs, Young, Bailey, McKinney and Calkins, Deputy Governor Casc, Mr. Harrison, Secretary - Supplemental report of Committee o n Voluntary Services (see also paragraph 40) The conference considered that part o f the supplemental report i the Committee o n Voluntary Services relating t o the transfer o f funds- I t was the consensus o f opinion that the services afforded b y the Federal Reserve Banks i n transferring funds, not only for account o f member banks, but a t the request o f member banks f o r account o f individuals, w a s o f very great value and that while, a s reported b y the Leased Wire Committee, i t was impossible to continue this service over the leased wires for individual account, o n account o f the crowded condition o f those wires, i t was generally thought advisable t o afford t h e service o v e r t h e commercial wires a t the expense o f the member bank. In order t o avoid any possible misunderstanding ,upon motion o f Governor Harding, i t was https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis —24— VOTED t o amend the supplemental report s o as specifically t o provide that the cost o f the messages requesting the transfers and advising the credits a s well a s the cost o f those messages effecting the transfers should b e a t the expense o f t h e member b a n k Upon motion o f Governor Young, i t was, thereupon, VOTED that that section o f the supplemental report o f the Committee on Voluntary Services relating t o transfers o f funds, a s amended, b e approved.» In view of the action taken b y the conference concerning this report, UNDERSTOOD t h a t t h e Leased Wire Committee would b e requested t o revise t h e proposed regulations attached t o its report, previously approved ( paragraph 1 2 ) , so a s t o make t h e m conform n o t o n l y t o that report, b u t also t o t h e supplemental report o f the Committee o n Voluntary Services s o far a s i t relates t o t h e transfer o f funds. (See pages 536-554 inclusive stenographic record) Circular Letter f r o m Towmer Rating Bureau. Governor Young reported that h e had received a letter from the Tower Rating Bureau expressing concern about the losses that they have had_ to pay o n forged paper. T h e other Governors present stated that they, too, had received a similar letter. Upon motion o f Governor Young, i t was VOTED t o aber the letter o f the Tower Rating Bureau t o the Insurance Committee for its consideration a n d attention. ( See pages 554-555 inclusive stenographic record) Upon motion o f Governor Young, the conference adjourned sine die at 5:15 o'clock p-m-, after giving 2 rising vote o f thanks t o the Chairman. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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