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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CONFIDENTIAL Secretary’s Minutes GOVERNORS CONFERENCE November 15 and 16, 1952. Washington, D. C. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ere ee FEDERAL RESERVE BANK OF C L E V E L A N D December 1 5 21932. ~ S S Vim. McC. Martin, Governor, Federal Reserve Bank o f St. Louis, ot. Louis, Mo. Dear Governor Martin: There i s enclosed for your confidential use a copy o f the Secretary's minutes o f the Conference o f Gov- ernors held i n Washington o n November 15 and 16, 1932. ee b a ] I had hoped t o be able t o incorporate the report of the Legislative Committee i n the minutes, b u t as I am informed that this will not b e ready soon, I have omitted it from the minutes i n order t o avoid further delay i n distribution. If you should detect any errors o r omissions, o r have any changes t o suggest, please write m e at your convenience. I want t o take this opportunity t o wish you and your associates a Merry Christmas and a Happy and Prosperous New Year. Very truly yours, oe ARG a t a V i ALCAESAEOe1AL Secretary, Governors! Conference. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Wi a f ? Wis « l y jeral Rb ei se e r vv et A i t s a Bigs Uo ear T , LoHuO UiL . L sD y M Qi W T¥ E T N O WU a1 ie] M a d tl e C a n r p n o t a r r f e wecretarv's g a n m 4 ? r a a d h e y m m i n u t e s S S e t s o n m w U L g | e5 nor Harrison, I o f A F ot r ofc T have of the a ference, a n d 3 five o f of t h e l L ‘i Ccop! oD: ing c o r r e c t e d Newet 1= y larly Oe minutes w h i c h p l e a s e s u b siJ of t h e m i n u t e s numbered V l have. involve a n y action taken 2 | i - srest o f accuracy, oo ad aoc i fs bed b y G i m p r o v e m( i ta i n el a n g) took the liber wt¥ other Very t r u l y rnor H a r r i s o n svernors f o r yours i 3 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INDEX T O SECRETARY'S MINUTES GOVERNORS CONFERENCE NOVEMBER 1 5 and 16, 1932 Paragraph i n Secretary's Minutes Amendments t o Federal Reserve A c t Amendment t o Judicial C o d e Amendment t o Regulation J Banking legislation, Committee o n Banking system, Proposals for general reorganization o f the Banking unification Branch banking Coin, currency, a n d circulation Coin and currency shipments under new Postal Collections and clearings Collection o f shipping charges o n non-cash collections - — — Committees: Conference o f Governors a n d Federal Reserve Agents (Joint) Development o f Acceptance Practice Insurance Leased Wire Legislative Pension Standing Committee o n Collections Sub-committee o f General Committee o n Bankers Acceptances Credit transactions and policies Discounts for individuals, partnerships, a n d corporations https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraph i n Secretary's Minutes Election o f Chairman and Secretary for year 1933 ; Federal Home Loan Banks Fee for reports o f examination Finance company paper Glass banking bill Glass-Steagall Bill, Renewal of Section 3 Government securities a s collateral t o Federal r e s e r v e n o t e s Inter-district t i m e schedules based o n train schedules Joint Committee o f Governors a n d Federal Reserve Agents Legislative problems Loans b y Federal reserve banks under sec~tions 10-a and 10-b of Federal Reserve 4,18 National bank notes Operation and administration 2 2 Reports: Committee o n Development o f Acceptance Practice Insurance Committee Joint Conference o f Counsel and Standing Committee o n Collections Leased Wire Committee Pension Committee Sub-committee o f General Committee o n Bankers Acceptances Standing Committee o n Collections Reserves against possible losses 6 h , 25, 27 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraph i n Secretary's Minutes shipments o f checks b y express Silver certificates Spread—the-Vork program https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis PROGRAM CONFERENCE O F THE FEDERAL RESERVE BOARD with the FEDERAL RESERVE AGENTS AND GOVERNORS OF THE FEDERAL RESERVE BANKS November 14, 1932. Open market policy. Government securities a s collateral t o Federal reserve notes under Section 16, as amended b y the Act o f February 27, 1932. a. P o l i c y b. Q u e s t i o n o f extension o f authority beyond March 3 , 1933. Activities of Banking and Industrial Committees. Proposals for changes i n banking laws and for reorganization o f banking system. Status o f report o f System Committee o n Branch, Group, and Chain Banking. Status of report of System Committee o n Reserves. Policy and procedure i n granting permits under the provisions o f the Clayton Act relating t o interlocking directorates. Loans b y Federal reserve banks under Sections 10-a and 10-b o f the Federal Reserve Act, a s amended b y the Act of February 27, 1932. ae E x p e r i e n c e and policy. b. Q u e s t i o n o f extension o f authority undcr Section 10-b beyond March 3, 1933. Discounts for individuals, partnerships, and corporations under Section 13, as amended by the Act of July 21, 1932. a. E x p e r i e n c e and policy. b. Q u e s t i o n o f amendment s o as t o require endorse- ment or other security in connection with such paper rather than both. Proposed study of acceptance practice. Finance company paper. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CONFIDENTIAL PROGRAM G O V E R N O R S C O N F E R E N C E November 14, 1932 Washington, D . C. ELECTION O F CHAIRMAN AND SECRETARY FOR YEAR 1933 CREDIT TRANSACTIONS AND POLICIES A. Discount rates and open market operations. 1. R e p o r t o n open market operations. New York 2. F u t u r e policy. % 3. Discount rates. Chicago New York Gold. oe R e v i e w o f recent movements a n d fu- ture prospects. : Relations with foreign banks. 1. R e p o r t o f operations and relations. General banking situation. de C o n d i t i o n o f banks and policies o f examinors. 2. C r e d i t surveys and work o f Banking and Industrial Committeés. 3. R e p o r t o n banking conditions i n each Federal reserve district. Cooperation b y Federal reserve banks i n furthering the movement for the more general use of Trade Acceptances.: New York New York New York New York Chicago Philadelphia What has been the experience o f each Fed- eral reserve bank in making loans « 1. U n d e r Glass-Steagall Act; 2. U n d e r Emergency Relief Act. Regional Agricultural Credit Corporations. Given authority t o rediscount with Federal reserve banks. 1. $Dis¢ussion a s t o procedure a n d : policy. Chicago Chicago LEGISLATIVE PROBLEMS A. R e n e w a l o f Section 3 of Glass-Steagall Bill. New York Richmond https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ee LEGISLATIVE PROBLEMS (Cont'd) B. P r o p o s a l s for general reorganization o f the banking system: Ls B a n k i n g unification. N e 2. B r a n c h banking. N e 3. P r o p o s a l s pending before Congress, such a s Glass Banking Bill. N e w York w York w York C. A m e n d m e n t t o Judicial Code. 1. T h a t the Federal Reserve Board recommend t o the Congress a t its next session, a n amendment t o the Judicial Code t o restore t o the Federal reserve banks the right t o sue, o r to be sued, i n the Courts o f the United States. K a n s a s City D. A m e n d m e n t s t o Federal Reserve Act, ; D i s c u s s the advisability o f the Federal Reserve Board recommending t o Congress a n amendment t o Section 1 3 of the Federal Reserve Act b y substituting the word "or" for the word "and", s o as to read as follows: NwHHtK+o discount for any individual, partnership, o r corporation, notes, drafts, and bills of exchange of the kinds and maturities made eli- gible for discount for member banks under other provisions of this Act, when such notes, drafts, and bills of exchange are e n d o r s e d R O otherwise secured t o the satisfaction o f the Federal reserve bank." K a n s a s City Recommend t o the Federal Reserve Board that i t use its best effort t o amend the Federal Reserve Act t o permit the Federal reserve banks t o accept member bank collateral notes secured b y eligible paper with a ma~ turity not t o exceed ninety days. K a n s a s City OPERATION AND ADMINISTRATION As R e l a t i o n s w i t h t h e Federal H o m e L o a n Banks. Le N a t u r e a n d extent o f facilitics t o b e extended b y Federal reserve banks. C l e v e l a n d B. Spread-the-Work program. N e w York C. Setting u p reserves against possible losses. N e w York https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ras, COIN, CURRENCY, A N D CIRCULATION A. N a t i o n a l bank notes. he U n d e r the terms o f the Federal Reserve Act, c a n Federal reserve banks restrict the amount o f National bank notes which will b e accepted from member banks for deposit. I f not, can Federal reserve banks forward National bank notes o f large denominations t o Washington for immediate redemption. K a n s a s Suggested change i n denominations o f silver certificates. 1. R e c o m m e n d e d that the Treasury Department give consideration t o allo- cating $100,000,000, o r thereabouts, of the present silver certificate circulation to bills of $10 denomination with a corresponding reduc- tion in the $1 denomination. Cleveland Coin and currency shipments under new Post- al rates. P h i l a d e l p h i a VI. COLLECTIONS AND CLEARINGS A. R e p o r t o f Standing Committee o n Collections. B. Reconsideration o f Report o f Standing Commit~ tee o n Collections dated July 14, 1932. M i n n e a p o l i s Amendment t o Regulation J. 1. R e c o m m e n d t o the Federal Reserve Board an amendment to Regulation J, which would provide i n effect that member and clearing member banks, b y sending items t o a Federal reserve bank, agree that such Federal reserve bank, a s a n agent for collection, shall guarantee all endorsements prior t o its own o n such items, a n d that such member and clearing member banks shall indemnify such Federal reserve bank against loss o n account o f its guarantee o f such endorsenents. K a n s a s City https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -~A- COLLECTIONS AND CLEARINGS (Cont'd) D. S h o u l d inter-district t i m e schedules o f re- serve banks b e based o n train schedules between various Federal reserve b a n k a n d branch cities, leaving out of considera~ tion direct sendings o f member banks, (See Standing Committee on Collections letter o f November 25, 1931, t o Federal Reserve Board.) Shipments of checks by express. ( S e e Federal Reserve Board's letter X-7272 o f October 15, 1932.) C l e v e l a n d Report o f Joint Conference o f Counsel and Standing Committee o n Collections o n October 1 0 and 11, 1932. Collection o f shipping charges o n non-cash collections. 1. T h e Standing Committee o n Collections, in its report t o the Conference dated November 2, 1925, recommended that charges o n bonds, coupons, and other securities u p to 25¢ o n individual items b e absorbed b y the FedI s it desireral reserve banks. able t o increase this amount t o 50¢? C l e v e l a n d REPORTS OF COMMITTEES Insurance Committee. Leased W i r e Committee. Pension Committee. Sub-committee o f General Committee o n Bank- ers Acceptances. Committee o n the Development o f Acceptance Practice. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis G O V E R N O R S C O N F E R E N C E November 15 and 16, 1932. Washington, D . C. First Day's Session, Tuesday, November 15. Morning The meeting was called t o order a t 10:00 a. nm. Present: G o v e r n o r Calkins, Chairman, a n d Governors Young, Harrison, Norris, Fancher, Seay, Black, McDougal, Martin, Geery, Hamilton, a n d McKinney. Mr. Strater, Secretary. TOPIC I. ELECTION OF CHAIRMAN AND SECRETARY FOR THE YEAR 1933. ( 1 ) VOTED t h a t Governor Calkins be reappointed Chairman and Mr. Strater b e reappointed Secretary for the calendar year £933. The Chairman announced that the Federal Reserve Board (2) would like to have definite recommendations regarding topics which were discussed b y the Board a t the Joint Conference o f Governors and Federal Reserve Agents held o n November 14, and appointed a committee consisting of Governors Harrison, Norris, and McDougal t o confer with a committee o f the Conference o f Federal Reserve Agents. T h e joint committee is to formulate and present a report t o cach conferénce o n the following topics on the Federal Reserve Board's program: II. Government securitics as collateral t o Federal reserve notes under Section 16 as ( 3 ) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis es amended b y the Act o f February 27, 1932, Question of extcnsion of authority beyond March 3, 1933. Loans b y Federal reserve banks under sections 10-a and 10-b o f the Federal Reserve Act a s amonded b y the Act o f February 27, 1932. Question o f extension o f authority under (4) section 10-b beyond March 3, 1933. Discounts for individuals, partnerships, and corporations under section 1 3 as amended b y the Act o f July 21, 1932. Question o f amendment s o as t o require endorsementr o other security i n connec~tion with such paper rather than both. There followed a discussion of the Federal Reserve Board's TOPIC IX. F I N A N C E COMPANY PAPER, a n d i t was VOTED t h a t each Governor express his opinion o n the subject, supported b y appropriate reasons, i n a letter to the Federal Reserve Board. At 11:00 a. m. the conference adjourned and re- convened immediately as the Open Markct Policy Conference, with Governor Harrison presiding. | Adjourned a t 12:40 p. m. and immediately reconvened a s the Governors! Conference. Mr. Awalt, Acting Comptroller of the Currency, together with the members o f the Federal Reserve Agents Conference, then entcred the meeting. A sion followcd. general discus- M r . Awalt asked that the conference agrec upon a n increased fve for reports o f examination, a n d i t was VOTED: t h a t the Comptroller's office b e paid a (6) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis < ee fee of $10.00 for cach report of cxamination furnished t o the Federal reserve banks until December 31, 1933. — At 1:30 p. m. the conference adjourned t o reconvene a t 2:30 p. m. First Day's Session, Tuesday, November 15. Afternoon The meeting was called t o order a t 2:35 p. m. Same attendance a s at the morning session. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES ( 1. R e p o r t o n open market operations. 8 ) 2. F u t u r e policy. 3. Discount rates. As the report o n open market operations had been presented t o the Open Market Policy Conference and the future policy then discussed, sub-topics 1 and 2 were passed without further discussion. Discount rates were considered and, after full discussion, i t was the sense o f the conference that any change i n rates a t this time would have little o r no effect o n existing credit conditions. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES B... O e a g . 1. R e v i c w o f recent movcements a n d future prospects. Governor Harrison reviewed briefly the situation a s i t appeared, a n d expressed his opinion a s to the ( 9 ) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -4- trend o f future gold movements. TOPIC ITI. C R E D I T TRANSACTIONS AND POLICTES C. Relations with foreign banks. i= R e p o r t o f operations and relations. Governor Harrison outlined the status of existing Foreign Central Bank credits and relations with those banks and the Bank for International Settlements. In considering the possibility that there might be some losses i n connection with some o f the Foreign Cen- tral Bank credits, the question was raised as to the advisability of setting u p a specific reserve for such possible losses, o r making a n appropriate increase in a general reserve for undetermined losses to provide for them. I t was understood that the Federal Reserve Bank of New York would consider the subject and communicate with each of the other reserve banks expressing its views. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES D. General banking situation. 1. Condition of banks and policies o f cxaminers. Governor Harrison explained his reasons for placing this topic o n the program and stated that a s this topic had already been discussed a t the Joint Conference with the Comptroller o f the Currency n o action was neces- sary, and the topic was accordingly passed without action. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES D. General banking situation. Ze C r e d i t surveys and work of Banking and Industrial Committecs. After discussion of the expenses incurrcd b y https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a. these committees and their sub-committees, t h e topic was passed a s having been otherwise adequately covered i n the discussion a t the Joint Conference o n the previous day, with the understanding that the Federal reserve banks should continue t o pay reasonable expenses incurred b y the committees i n carrying out the constructive work they are doing. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES General banking situation. 3. R e p o r t o n banking conditions i n cach Federal reserve district. There followed a discussion o f banking conditions generally. TOPIC II. C R E D I T TRANSACTIONS A N D POLICIES E. Cooperation b y Federal reserve banks i n furthering the movement for the more general use o f Trade Acceptances. In the discussion which followed i t was pointed out that the reserve banks have consistently advocated the general use o f Trade Acceptances for legitimate transactions, a n d that they were freely accepted for rediscount when offered. I t was the consensus o f opinion that prefer- ential rates would not b e effective except i n those centers where there was a n active acceptance market, a n d that i n those centers a preferential buying rate might stimulate their use. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “—3% TOPIC II. C R E D I T TRANSACTIONS AND POLICIES F. V h a t has been the experience of each Federal reserve banksin making loans 1. U n d e r Glass-Steagall Acti 2. U n d e r Emergency Relief Act. This topic was passed a s having been adequately covered i n the discussion a t the joint conference o n the previous day. TOPIC II. C R E D I T TRANSACTIONS AND POLICIES G. R e g i o n a l Agricultural Credit . Corporations. < Given authority t o rediscount with Federal reserve banks. Rs D i s c u s s i o n a s t o procedure and policy. At the request o f the Chairman, t h e Secretary read a letter from Governor Geery of the Federal Reserve Bank o f Minneapolis t o the Federal Reserve Board, d a t e d October 13, 1932 (Exhibit A) and the Board's reply of October 25, 1932 (Exhibit B). There followed a general discussion o f the advisability o f Regional Agricultural Credit Corporations rediscounting with the Federal reserve banks, a n d if such rediscounts w e r e made what t h e rate should be. G o v e r n o r Hamilton asked that the conference g o o n record o n this subject. Thereupon it was = VOTED t h a t the Federal Reserve Board b e requested t a outline the procedure t o be followed b y the Fed- eral reserve banks if and when they are asked to rediscount for Regional Agricultural Credit Corporations. —e b i s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ~ eS Governors Harrison a n d Calkins voted i n the negative. G o v e r n o r Black was absent. At 5:45 p. m. the confcrence adjourned t o rcconvenc a t 10:00 a . m . o n Wednesday, November 15, 1932. Second Day's Session, Wednesday, November 16, 1932 Morning The mecting was called t o order a t 10:20 a. m. Same attcndance a s at the previous day's scssion. Governor Harrison reported that the committee appointed b y the Chairman a t the previous day's session, after meeting with a committee o f the Conference o f Federal Reserve Agents, was i n favor o f (a) Extending the authority to pledge Government securities a s collateral t o Federal reserve notes granted under Section 16 of the Federal Reserve Act as amended by the Act of February 27, 1932, and (b) Extending the authority to make loans under Section 10-b o f the Federal Reserve Act as amended b y the Act o f February 27, 1932. The committee recommended that the Fedcral Reserve Board b e asked t o recommend t o the Congress, a t the appropri- ate time, that these provisions be cxtended for a period of at least one year beyond their cxpiration datc - March 3, 1933. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a S The committee also recommended that n o change be made at this time in the provisions of Section 13 of the Federal Reserve Act as amended b y the Act o f July 21, 1932, governing discounts for individuals, partnerships, a n d corporations. VOTED t h a t the report o f the committee b e accepted and approved. TOPIC IIT. LEGISLATIVE PROBLEMS A. R e n e w a l o f Section 3 of the Glass-Steagall Bill. This topic was passed a s having been covered by the committeefs report recorded in the preceding para~ graphs. TOPIC III. L E G I S L A T I V E PROBLEMS eee B . _Proposals _ for general rceor“ganization o f the banking aaees 1. B a n k i n g unification. 2. B r a n c h banking. 3. P r o p o s a l s pending before Congress, such as Glass Banking Bill. After a general discusssion, it was VOTED t h a t the Chairman appoint a committee o f five Governors t o consider the various problems incident t o proposed legislation affecting a reorganization o f the bank- ing system, and submit its recommendations relating to banking legislation t o the conference. T h e committee i s to be a continuing one to consider bank legislation. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis nS Thereupon, the Chairman appointed the following committee: Governor Young, Chairman, and Governors Harrison, Norris, McDougal, a n d Black. TOPIC III. L E G I S L A T I V E PROBLEMS re A m e n d m e n t t o Judicial Code. 1. T h a t the Federal Reserve Board recommend t o the Congress a t its next session, a n amendment t o the Judicial Céde t o restore t o the Federal reserve banks the right to sue, o r to be sued, i n the Courts o f the United States. After discussion o f a memorandum written b y General Counsel for the Federal Reserve Board, i t was VOTED t o recommend t o the Federal Reserve Board that i t have prepared and submitted t o the Congress, a n amendment t o the Judicial Code permitting the Federal reserve banks t o sue, o r to be sued, i n Federal Courts. TOPIC III. L E G I S L A T I V E PROBLEMS D. A m e n d m e n t s t o Federal Reserve Act. : D i s c u s s the advisability o f the Federal Reserve Board rcecommending t o Congr¢éss a n amendment t o Section 1 3 of the Federal Reserve Act b y substituting the word "or" for the word "and", s o as t o read as follows: e H t o discount for any individual, partnership, or corporation, notes, drafts, and bills o f exchange o f the kinds and maturities made eligible for discount for member banks under other provisions o f this Act when such notes, drafts, a n d bills o f exchange are e n d o r s e dR O otherwise secured t o the satisfaction o f the Federal reserve bank." This topic was passcd a s having been covered b y the report o f the committee previously recorded. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis me TOPIC III. L E G I S L A T I V E PROBLEMS ( 2 3 D. A m e n d m e n t s t o Federal Reserve Act. Ds R e c o m m e n d t o the Federal Reserve Board that i t use its best efforts t o amend the Federal Reserve Act t o permit the Federal reserve banks t o ac- ) cept member bank collateral notes secured b y eligible paper with a matur- ity not to exceed ninety days. The Sceretary read a memorandum (Exhibit C) outlining the Federal Reserve Board's efforts t o obtain s u c h a n amendnent, a n d after discussion i t was VOTED t h a t this conference renew its recommendation that the Federal Reserve Board continue its cfforts t o obtain an amendment t o the Federal Reserve Act increasing from 1 5 t o 90 days the maximum maturity of advances t o member banks o n their promissory notcs sceurcd b y cligible paper. Governor McKinney asked to be recorded as not voting. G o v e r n o r s Calkins a n d Fancher were absent. TOPIC IV. OPERATION AND ADMINISTRATION ( 2 A. R e l a t i o n s w i t h Federal Home L o a n Banks. ie N a t u r e a n d cxtent o f facili- ties t o be extended b y Federal reserve banks. As thc Home Loan Bank Act authorizes the Federal Reserve banks to act in certain capacitics for the Federal Home Loan Banks i n the general performance o f their powers under the Home Loan Bank Act, i t was understood that each 4 ) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a) e e Federal reserve b a n k would decide this matter f o r itself. TOPIC IV. OPERATION AND ADMINISTRATION B. Spread—the-Work program. There was a general discussion, a n d Governors Harrison, Norris, a n d Hamilton outlined the plans contemplated o r adopted b y their several banks. N o action was taken, TOPIC V. C O I N , C U R R E N C Y , D N A CIRCULATION A. N a t i o n a l bank notes. 1. U n d e r the terms o f the Federal Reserve Act, c a n Federal reserve banks restrict the amount o f National bank notes which will b e accepted from member banks for deposit. I f not, c a n Federal reserve banks forward National bank notes o f large denom- inations t o Washington for immediate redemption. There was @ general discussion a s t o the policy o f Federal reserve banks receiving o n deposit uncirculated National bank notes, especially those o f large denominations, and methods o f disposing o f them if they are received. The Chairman appointcd Governor Young a committee of one t o discuss with the Acting Comptroller o f the Curreney, the possibility o f discouraging National banks from taking out unnecessary amounts i n large denominations. Governor Young later reported that h c had confered with Acting Comptroller o f the Currency Awalt who agreed to issue a circular t o National banks calling attention t o this matter. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ~ 49s At 1:00 p. m. the conference adjourned t o reconvene a t 2:15 p. m. Second Day's Session, Wednesday, November 16, 1932. Afternoon Meeting was called t o order a t 2:20 p. m. Same attendance a s at previous sessions. (27) TOPIC IV. O P E R A T I O N AND ADMINISTRATION C. S e t t i n g p u reserves against possible losses. After a short discussion, Governor Harrison agreed to send each o f the Governors a memorandum o n the subject. YOPIC V. C O I N , CURRENCY, A N D CIRCULATION B. Suggested change in denominations o f silver certificates. Recommended that the Treasury Department give consideration to allocating $100,000,000, or thereabouts, o f the present silver certificate circulation tobills of $10 denomination with a corresponding reduction in the $1 denomination. There was a goneral discussion o f this subject during which Governor Harrison called attention t o the possible effect o n the Silver situation i f the Treasury were t o issue Silver certificates i n the ten dollar denomination. tion w a s taken. N o ac- ee TOPIC V. C O I N , CURRENCY, AND CIRCULATION C. G o i n and currency shipments under new Postal rates. There followed a short discussion a s t o whether or not t h e Federal reserve banks a r e t o continue t o absorb shipping charges both ways. N o action was taken. TOPIC VI. COLLECTIONS AND CLEARINGS A. R e p o r t o f Standing Committee o n Collections. VOTED t h a t the report b e received and approved. P a r i https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TOPIC VI. COLLECTIONS AND CLEARINGS R, Reconsideration o f report o f Standing Committee o n Collections dated July 14, 1932.4 There was a general discussion with reference t o policies o f the various Federal reserve banks i n handling items drawn b y the makers o n themselves, after which i t was VOTED t h a t when such items are received from other Federal reserve banks o r branches a s non-cash items, they will b e handled b y the collecting Federal reserve bank or branch i n accordance with the instructions o f the sending Federal reserve bank o r branch. po c e TOPIC VI. COLLECTIONS AND CLEARINGS C. A m e n d m e n t t o Regulation J. 1. Recommend to the Federal Reserve Board an amendment t o Regulation J, which would provide i n effect that member and clearing member banks, b y sending items t o a Federal reserve bank, agree that such Federal rescrve bank, as a n agent for collection, shall guarantee all endorsements prior t o its own o n such items, and that such member and clearing member banks https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -~14- shall indemnify such Federal reserve bank against loss o n account o f its guarantee o f such endorsements. Governor Hamilton cxplained that the suggested amendment t o Regulation J would climinate the question o f the effect and application o f state statutes o f limitations o n action o f guarantecs o f prior endorsements, i n so far a s the right o f recovery o f Federal reserve banks i s concerned. U n d e r the present status of the law, a serious question exists a s t o whcther the statute o f limitation commences t o run a t the time a guarantec o f endorsement i s made. A s a result a n action against endorsers, or some o f them, m a y b e barred before i t can be established that a forgery exists. made one o f indemity, I f the contract, however, i s i n so far as the Federal reserve banks are concerned, t h e right o f action o n such a con- tract would not accrue until a loss has been suffered and paid, s o that the statute o f limitations under the laws o f any state would not commence t o run against a Federal reserve bank o n such a contract until a n actual loss had occurred. After discussion i t was VOTED t o refer this question t o the Standing Committee o n Collections jointly with counsel from threc of the Federal reserve banks t o be named b y the Chairman of the Standing Committee o n Collections, for study and report t o the-Governors! Conference. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on L -E mw It was suggested that counsel for the Federal reserve bank o f Kansas City b e one o f the three selected, and that the committee b e advised that a report b e delayed t o await the outcome o f pending litigation i n which the Kansas City reserve bank is involved. At this point Governor Hamilton retired from the conference. TOPIC VI. C O L L E C T I O N S AND CLEARINGS D. s h o u l d inter—district time schedules o f reserve banks be based o n train schedules between various Federal reserve bank and branch cities, leaving ont o f consideration direct sendings o f momber banks. ( S e e Standing Commit— tee o n Collections letter o f November 25, 1931, t o Federal Reserve Board.) After discussion i t was VOTED t h a t the views o f the Standing Committce on Collections, a s expressed i n a letter from its Chairman dated November 25, 1931, addressed t o the Federal Reserve Board (Exhibit D), be adopted and approved, TOPIC VI. C O L L E C T I O N S A N D CLEARINGS e s x : s h i p n c n t s o f checks b y express. This topic, after discussion, w a s passed without action https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a 3B we TOPIC VI. COLLECTIONS AND CLEARINGS ( 3 6 ) 7 ) F. R e p o r t of Joint Conference of Counsel and Standing Commit— tee o n Collections o n October 10 and ll, 1932. The Chairman reported that as a result of that meeting, a letter had been written t o the Secretary o f the Treasury proposing a conference t o bring about a n understanding, a n d that negotiations will continue. TOPIC VI. COLLECTIONS AND CLEARINGS ( 3 G. CGollectionf o shipping charges on non-cash collections. 1. T h e Standing Committee on Collections, n i its report t o the conference dated November 2, 1925, recommended that charges on bonds, coupons, a n d other securities u p to 25¢ o n individual items be absorbed b y the Feder-~ ai reserve banks. I s it desirable t o increase this amount t o 50¢? After a short discussion it was VOTED t o refer this question t o the Standing Com- mittee o n Collections for study and report. I t was the sense of the conference that any Governor should feel free to submit similar questions direct t o the committee for study and report without the formality of first presenting them to the Conference o f Governors. TOPIC VII. REPORTS OF COMMITTEES ' A , Insurance Committee. VOTED t h a t the report be received and filcd with the understanding that each Federal reserve bank will give it consideration. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “it < TOPIC VII. REPORTS Of COMMITTEES B. L e a s e d Wire Committee. VOTED t h a t the report b e accepted, approved, ahd filed. TOPIC VII. R E P O R T S O F COMMITTEES Cc. P e n s i o n Committee. After a general discussion o f the urgent need of some sort o f benefit for officers and employees o f the Federal Reserve System, i t was VOTED t h a t i t is the sense o f the conference that the report o f this committee dated February 11, 1932, as well as the supplementary report dated November 7, 1932, be approved b y this conference, a n d that the report b e resubmitted formally t o the Federal Reserve Board with the request that the Federal Reserve Board advise the conference which form o f organization outlined i n the plan subnitted t o the Board i n the committee's memorandum o f February 11, 1932, i t would approve and support. TOPIC VII. R E P O R T S O F COMMITTEES D. Sub-committee o f General Committee o n Bankers Acccptances. VOTED t o approve the report. TOPIC VII. R E P O R T S OF COMMITTEES LE. C o m m i t t e e o n the Development of Acceptance Practice. VOTED t h a t the report be approved and that Mr. Kenzel, Chairman, b e requested t o furnish each Federal re- serve bank with a list of accepting banks to which the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “at eo suggested questionnaire should b e addressed. At 4:30 p . m . t h e conference adjourned. H. F. STRATER secretary . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Exhibit A FEDERAL RESERVE BANK OF MINNEAPOLIS October 13, 1932. Federal Reserve Board, Washington, D . C. Gentlemen: Under the Act o f Congress providing for the organization o f the Regional Agricultural Credit Corporations, they are given the right o f rediscount with the Federal reserve bank. Would i t be expected that they would rediscount only with the Federal reserve bank located i n the district i n which they are situated? What prompts this inquiry i s the question a s to whether, in case the Regional Agricultural Credit Corporation o f Spokane desired t o rediscount paper taken through its branch i n Helena, they would b e expected t o offer i t to the Federal Reserve Bank o f San Francisco o r t o this bank, and whether the Regional Agricultural Credit Corporation located i n Minneapolis would expect t o rediscount paper taken i n Southern Michigan with us o r with the Federal Reserve Bank o f Chicago. Very truly yours, (Signed) W. B. Geery, Governor. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Exhibit B FEDERAL RESERVE BOARD October 25, 1932. Mr. W. B. Geery, Governor, Federal Reserve Bank o f Minneapolis, Minneapolis, Minnesota. Dear Governor Geery: Reference is made to your letter of October 13, 1932, referring t o the authority o f the Regional Agricultural Credit Corporations created b y the Reconstruction Finance Corporation pursuant t o the provisions of Section 201(e) o f the Emergency Relief and Construction Act of 1932 t o rediscount paper with the various Federal reserve banks, and inquiring whether a Regional Agricultural Credit Corporation located i n one Federal reserve district and having a branch i n another Federal reserve district would be expected t o rediscount paper acquired through such branch with the Federal reserve bank of the district i n which the head office o f the corporation i s located, o r with the Federal reserve bank of the district in which the paper has originated. The Regional Agricultural Credit Corporations are authorized under the law to rediscount with the Reconstruction Finance Corporation and the various Federal reserve banks and Federal intermediate Credit Banks a n y paper that t h e y acquire which i s eli- gible for such purpose, a n d it is assumed that the corporations, before requesting the Federal reserve banks t o rediscount their paper, will consult with the Reconstruction Finance Corporation and also will utilize their authority to rediscount with the Federal Intermediate Credit Banks. I n the event thet i t should become desirable for the Federal reserve banks t o rediscount paper for these corporations, there are a number o f questions t o be considered with a view to obtaining some uniformity of policy and procedure among the Federal reserve banks i n accepting such paper for rediscount. Replying t o your specific inquiry, i t is the view of the Federal Reserve Board that, i f and when the Federal reserve banks are requested t o rediscount paper for the Regional Agricultural Credit Corporations, t h e offering i n each case should b e made t o the Federal reserve bank of the district i n which the head office of the offering corporation i s located, unless exceptional circum- stances are presented which might render it desirable t o follow some other course o f procedure. Very truly yours, (Signed) Chester Morrill, Secretary. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Exhibit C MEMORANDUM FROM ASSISTANT SECRETARY FEDERAL RESERVE BOARD November 8, 1932. An amendment t o the Federal Reserve A c t increasing from 15 to 90 days the maximum maturity of advances by Federal reserve banks t o member banks o n their promissory notes se- cured by eligible paper, was recommended to Congress b y the Federal Reserve Board in its annual reports for the years 1927, 1928, a n d 1929, and i n letters addressed t o the Chairman o f the Banking and Currency Committee o f the House o f Representatives under date of January 16, 1926, April 24, 1928, and March 6, 1930, and i n a letter addressed t o the Chairman o f the Banking and Currency Committee of the Senate under the latter date. The recommendation was again made i n the memorandum submitted b y the Board with its letter o f March 29, 1932, con- taining its comments and suggestions with regard to Senate Bill 4115, the so-called Glass Bill. T h e Board again called attention to the recommendation i n its letter of June 3, 1932, to the Chairman of the Senate Banking and Currency Committce suggesting a further amendment t o the Glass Bill i n order t o retain the amondment t o Section 13 of the Federal Reserve Act making debentures of Federal Intermediate Credit Banks which are eligible for purchase by Federal reserve banks eligible also as security for advances made by them to their member banks. In a letter prepared for the Sccretary o f the Treasury and dispatched over his signature t o the Chairman o f the Banking and Currency Committee o f the Senate under date o f August 29, 1932, with regard to Senate bills 546 and 547, attention was directed to the r e c o m m e n d a t i o ne d a m in the Board's lctters of March 6, 1930, and March 29, 1932. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Exhibit D FEDERAL RESERVE BANK OF RICHMOND November 25, 1931. Federal Reserve Board, Washington, D . C. Gentlemen: A T T E N T I O N : M r . E. M. McClelland, Asst. Secy. Referring t o the question i n connection with interdistrict time schedules, which arose out o f a difference o f opinion between the Federal Reserve Banks o f Boston and Richmond, a n d which was referred t o the Standing Committee o n Collections b y the Chairman o f the Governors! Conference a t the request of. the Federal Reserve Board, t h e committee, a s request- ed in your letter of October 28, 1931, has given consideration to the question o f whether the inter-district time schedules o f Federal reserve banks should be based o n train schedules betwecn the various Federal reserve bank and branch citics, lcaving out of consideration the direct sendings of member banks, The committce i s unanimously o f the opinion that the inter-district time schedule o f cach Federal reserve bank o r branch should be based upon mail train schedules from it to the other Federal reserve banks and branches, a n d should not take into consideration the direct sendings t o the other Federal] reserve banks and branches b y its member banks. I n other words, the deferred credit time a s shown o n the inter-district t i m e schedule o f Federal reserve bank o r branch "A" for checks o n the c i t y o f Federal reserve b a n k o r branch "B" should represent the actual time required t o receive credit for such checks after dispatch b y "A" t o "B" a n d should n o t b e affected a t all b y the direct sendings o f member banks i n the district o f Federal reserve bank "A" t o Federal reserve bank o r branch "B", T h e deferred credit time for the direct scndings o f a member bank in one Federal reserve district t o the other Federal reserve banks and branches, t o which i t desires t o route direct, should be based upon mail train schcdules from the town in which the direct sending member bank i s located t o the other Federal re- serve banks and branches, and should make such items available for reserve purposes when collected without regard t o the regular inter-district time schedule o f its Federal reserve bank or branch. Respectfully, STANDING COMMITTEE O N COLLECTIONS (S). J . S. Walden, Jr. Chairman https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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