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Federal Reserve Bank of St. Louis
FEDERAL
OF
R E S E R V E
N E W
B A N K
Y O R K
November £5, 1926.
On November 19, 1 forwarded t o you a
of the recent Conference o f Governors. I
p y of the Secretary's Minutes
a m glad
n o w t o submit a
5 a
summary o f
a
those actions o f the conference which either require some action b y or concern
the procedure i n certain operations o f the Federal reserve banks. References
are t o paragraph numbers i n the Secretary's Minutes.
Paragraph 5-
Where i t was voted that each Governor b e prepared
to report t o the next Governors Conference the
number o f borrowing banks i n each district, with
particular reference t o the number o f banks w h i c h
have been borrowing for s year o r more, t h e smount
of their capital, surplus and total resources a n d
the average amount o f their borrowings from the
Federal reserve bank.
P a r a g r a p hél - Where i t was voted that the chairman o f the conference should appoint a committee o f three operating men from the Federal reserve banks t o confer and cooperate with Mr. Wyatt, i f desired, i n
the preparation o f regulations a n d forms, including
a draft o f circular letter t o be issued b y the
Several Federal reserve banks concerning the discount o f notes secured b y adjusted service certificates.
The chairman subsequently designated the Federal
reserve banks o f Philadelphia, Richmond and Dallas
as the banks which should appoint representetives
to this committee.
Where i t was voted t o b e the sense o f the conference
that Federel reserve banks have n o legal suthority
to receive deposits o f securities for safe-keeping
from Federal l a n d benks o r farm l o a n registrars.
——
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Federal Reserve Bank of St. Louis
v
<a
-
e
n
t
Where i t was voted t o b e the sense o f the conference
that representation o f Federal reserve banks a t coni o n s within their own district i s of the utmost
i m p o r t a n c e , t h a t s u c h attendance a t conventions o u t -
s
i
d
e of their district is sometimes adviseble, and
that the determination c f such questions i s one which
must necessarily b e left t o the judgment o f the officers and directors o f each Federsl reserve bank, since
it i s impossible t o l a y down a n y uniform practice.
A
FEDERAL
RESERVE
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Federal Reserve Bank of St. Louis
BANK
O F NEW
Governer Biggs.
Y o o
Paragraph &
N o v e m b e r é
Where the conference discussed t h e desirability
of having Federal reserve banks and direct sending member banks (where t h e volume werrents) l i s t
in sepsrate cesh letters items which are payable
in each state served b y Wederal reserve bank o r
branch t o which such items are forwarded.
Where attention was called t o the fact that some
reserve banks still have a n abnormally l o w percentage o f their reserve i n the form o f payable
gold.
Paragraph
Where reference w a s made t o the recent a c t i o n o f
the Treasury Department i n removing the bar charge
on fine gold bars o f standard size.
Where i t was voted t o request the Standing Com-
mittee o n Collections t o contimue its studies of
the collection problem, having i n mind particularly whether a Federal reserve bank may not
shorten the actual transit time b y sending direct
to member banks located i n other districts,
arrangements w i t h t h e Federal reserve banks
districts, a n d also t o study the whole quest
the collection o f cash items and t o report
the conference what, i f any, p a k k n e e ape
provements might b e made either by ruling o r a n
amendment t o the law, i n order to effect a better
and more scientific coliection system.
It was understocd i n taking this action that the
Standing Committee o n Collections might call upen
representatives o f any Federal reserve bank, i f
they care t o do so, i n order t o aid o r assist them
in their studies o r the preparation o f their report.
Paragraph
8
2
A
vA
Paragraph6
3
Where the report o f the conference t o the Federal
Reserve Board o n the subject o f non-cash collections
is quoted.
here i t was voted that a l l Federel reserve banks
should affix test words t e wires advising credit
for direct routed collections just_ as tests are now
provided for wire transfers
E
H
Where i t was voted t h a t e a c h Governor should c o m e
to the next conference prepared t o give a new esti-
=
mate o f the expense involved i n handling Farm Loan
coupons.
Paragraph4
£
-
S
Where there was a discussion c f the present vractice
of the Federal Reserve Banks i n requiring statements
of parent and subsidiary corporations t o be filed
with member banks a s required b y the regulations o f
the Federal Reserve Board.
fit
FEDERAL RESERVE BANK O F NEW YORK
N
o
v
e
m
b
No
m h e r
e
r
Various other matters considered b y the conference and reported i n
Secretary's Minutes have b e e n submitted t
o the Federal Reserve Board for
action o r approval and i t is assumed that you will b e advised directly b y
Federal teserve Board o f their d
o
f those topics. l i e
believe, however, t h a t none o f the topics referred t o i n this letter reouires
the Board's action before adoption b y the Federal reserve banks.
Very truly yours,
P 14
SQL.
nfhh: {vL O U e
s
GEORGE L . HARRISON,
Secretary, Governors Conference.
Mr. D. C, Biggs,
Governor, “ederal Neserve Bank o
St. Louis, Mo.
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Federal Reserve Bank of St. Louis
INDEX TO SECRETARY'S MINUTES
GOVERNORS CONFERENCE
NOVEMBER 8= 10, 1926
Paragraph i n
Secretary's
Minutes
4eceptandes drawn b y elevator o r warehouse company end secured b y
warehouse receipts o f company drawing draft, Amendment t o
Regulation A to make eligible for rediscount o r purchase b y
?; R , B a n k s
Adjusted service certificates, Regulations covering rediscount o f
notes secured b y
Advances t o subsidiaries, Notes of parent corporations representing
borrowings t o be advanced t o subsidiaries
Agencies o f Federal Reserve Bank i n Cuba «
«
Agents? Committee o n Member Bank Reserves, Discussion of report of- - 4mendment t o law to restore t o Federal Courts jurisdiction over suits
by and against F. Re Banks, Advisability of -
Bank mergers and consolidations, Development and trend i n each
district
Bankers’ Aeceptances3
Amendment to Regulation A to make eligible for rediscount o r
purchase b y F. R, Banks a bankers’ acceptance drawn by clevetor
or warehouse company and secured b y terminal warehouse receipts o f
the elevator o r warehouse company that draws the draft
Bankers Conventions, Federal Reserve Bank representation at
Bar charge o n fine gold ‘bars o f standard size, Removal o f
Bills purchased for account of foreign banks, Taxes on income earned- ~
Bonus borrowing ~ Loans secured b y Adjusted Service Certificates -
- «
Borrowing banks i n each district, Report of continuous borrowers to be
submitted t o next conference - - - = - = = »
Borrowings t o b e advanced t o subsidiaries, Notes o f parent corporations representing = ~
Gall loans:
Is it good policy t o allow country banks t o participate i n call
loans, made b y their city correspondents, u p to 1 0 per cent of
ThGif OApIie.. Bnd Surpinh = 26 <6 e a a a e wo o l e e e e e
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Federal Reserve Bank of St. Louis
Paregreph i n
Secretary's
Minutes.
Capital requirement:
Advisability of F, R, Board adopting for all national banks a
minimum capital requirement and imposing other requirements i n
connection with granting authority to such banks to exercise
trust powers
Capital t o Deposite. )
R a t i e a f Bark
“ - =06 = F
« ‘ase 6 w= o e w e e =
Cash Items:
Desirability of having F, R, Banks and direct sending member banks
where volume werrants) list i n separate cash letters items which
are payable i n each state served b y F. R, Bank o r branch t o which
same a r e forwarded - - ~ = =
Chairman,
E l e c t i o n
o f
C e e
e
Checks, Numbers and symbols on--~-+-+-+--+-++- =
Circulars:
Revision of Treasury Department Circular No» 92, April 17, 1919~ Class B and Class C directors o f F, R, Banks, Eligibility o f
directors of Mutaal Savings Banks to serve as
Code Books
Gollectionss
Resolution t o be submitted t o F. R, Board o n question o f nonecash
collections
Ruling of F, R. Board relative to handling o f nonecash collection
items payable a t street addresses
- Report o f Standing Committee o n Collections
Test words should b e affixed o n all direct routed collections
Committees’
Agents? Committee o n Moembor Bank Reserves
Insurance Conmittee
S
e a e eee e
Leased Wire Committee
Open Market Investment Committee ~
Pension Committee ~
Standing Committee o n Collections
Sub-Committee o f Goneral Committee o n Bankers! Acceptances
Treasury Currency Committee - ~ -~ + - - +
+6
Consolidations and mergers, Development and trend i n each district - Contimuous borrowers = Report t o b e made to next conference
Cuban Agencies o f Federal Reserve banks
Currency Committee of Treasury, Report of
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes
Custodian for public officials for bonds owned b y member banks but
pledged with public officials a s collateral for public funds, Should
F,R, Banks act as -
P
e ee ar ae e e
Deposit Liability:
Ratio o f bank capital t o deposits * = e « + - . s + - 2 e 8 e - + 0 4
Development and trend of bank mergers and consolidations i n each
district - + - - - - - + 4
= «
Direct routed collections, Test words should be affixed on all
Direct Sendings:
Desirability of having F, Re Banks and direct sending member banks
(where volume warrants) list i n separate cash letters items which
are payable i n osch state served b y F, R, Bank o r branch t o which
same are forwarded
Directors of F, Re Banks,Eligibility of directors of Mutual Savings
Banks t o serve a s Class B and Class C Discount Rates a n d Policies -
s
e
e
e e e
e e
+
Endorsements, As between F, R, Banks, should statute of limitation be
set u p to escape liability o n forgod endorsements
Failure of member banks, Discussion of steps which might be taken by
F, R e Banks t o prevent
Farm Loan Registrars, Aythority of F, R. Bank to receive deposits of
securities for safe-keeping from = - - Federal Advisory Council recommendation concerning uniform practice o f
F, R, Banks i n requiring statements of parent and subsidiary corporations
«
3
©
= | «
« a
« =
»
Federal Farm Loan coupons, Reimbursement o f F. R, Banks for expense
involved i n paying
Federal Land Banks, Authority o f F, R, Bank: t o receive deposits o f
securities for safe-keeping from = =
Foreign banking relations?
Report =
=
©
=
m e e w
w e me w e
Taxes o n income earned from bills purchased for account o f foreign
Forged endorsements, As between F, R, Banks, should statute of limits~
tion be set up to escape liebility on ~ - - - - + - - s
Gold bars of standard size, Removal of bar charge o n - -
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Federal Reserve Bank of St. Louis
Paragraph i n
Secrotary's
Minutes
Gold holdings and payments = «
23 « 24
Insurance Committee, Report of - - - - - .
37
Intermediate Gredit Banks, Authority of F. R. Bank to receive deposits
of securities for safe-keeping from
15
Leased Wire Committee, Report of
35
Legislation’
Law suits b y and against F. R, Banks, Advisability o f seeking amend=
ment t o restore t o Federal Courts jurisdiction over
Reserves, Should F, R. Banks seek legislation i n connection with
Report of Agents! Committee o n Member Bank Raserves
Liability on forged endorsements, Ag between F, Be Banks, should
statute o f limitation b e set u p to egeape <
Loans made by city correspondents of country bankse I s it good policy
to allow country banks t o participate i n call
Loan policy of Fs R, Banks, Discount and Loans secured b y Adjusted Service Certificates
Mail Robberies
Member Banks?
Cail loans made by city correspondents of country banks, Participation i n - - = -- «
a
s ae
Capital t o Deposits, Ratio o f - = «+. = = «
Consolidations and mergers, development and trend o f
Failure o f member banks, Steps F, R. Banks might take t o prevent - Reserves, Report o f Agents? Committee o n Member Bank Reserves < - -
Safe-keeping o f securities
S
i
k
, oe e n
S e
Mutual Savings Bank directors, Eligibility of, to serve as Class B
and Glass C directors o f F, R, Banks =
National Banks, Minimum capital requirement for - Non-Cash Collections?
Resolution to be submitted t o F. R. Board o n question of non-cash
‘collections - ;
Ruling o f F, R, Board relative t o non-cash collection items payable
at street addresses ~ = = = = «
Notes o f parent corporations representing borrowings t o be advanced t o
subsidiaries © « © « = = « «
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Federal Reserve Bank of St. Louis
Paragraph i n
Secretary's
Minutes
Open Market Operations’
5 e
e
e
a
i
e
C
e
Report of Open Market Investment Committee w e e
e n eee
ee
e e
Parent corporetions, Notes of, representing borrowings t o be advanced
%0. oubsidier ics o f 5 6 ja 6 i e e e e g o e
e
S e le et e e
e e
Fontion Comstites: Report of o.< « « =o a i e a h o a o w a
e k oe
Rates of discount and policies ~ - - - - - - - 0 - - 4 - - 4 - Ratio—of bank sapitel to deposits <
@ a= < < <-aiw e w e e o ame Ss
Rediscounts3
Bankers! Acceptances «= Amendment to Recuiation A « a w a n o w e are
Notes segured b y adjusted service certificates, Regulations covering
SAG
C i
s ie
e
a
s e e i
wn
S e
e e o e
Reculation A , Amendment t o make bankers? acceptances secured
b y ware~=
house receipts eligible for rediscount o r purchase b y F. R e Banks « +
Regulations covering rediscount o f notes secured b y adjusted service
certificates under provisions of Section 502 of World War Aqjusted
Compensation Act « = = « a
A B O e a e aa C e d a ea e g o
Reimbursement o f F, R. Banks for expense involved i n paying Federal
Farm
L o a n
c o u p o n s
D
e
a
a
a
n
Relations with Foreign Banks - --<--=+-<-Reports? |
Agents C o m m i t t e e n
o Member Bank Reserves
Foreign Accounts = =. + - - + ] = - + a - - + Insurance Gommittes - -«- - « = =
Leased Wire Committee « = - « = « =
Open Market Investment Committee
Pension Committee - = = =» = « = « «
Standing Committee o n Collections
Sub-Committee o f General Committee o n Bankers! Acceptances
Treasury Currency Committee -
—-=+«- 6 e+ = se e e e ne
Reserves, Discussion of report of Agents’ Committee o n Member Bank - Revision of Treasury Department Circular No. 92 issued April 17, 1919Robberies, Mail - 2 45 < 5 - - 1 s e e w e t e
mew
e e e
w
w
e
e
Ruling o f F. R e Board relative t o handling o f nonecash collection
items poyable a t street addresses < = = - 6 - © wm e m c e e
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Federal Reserve Bank of St. Louis
n o w w ow
Paregraph i n
Secretary's
Minutes
Eu -
Safe-keeping of securities:
Authority o f F. R, Bank t o receive securities for safe-keeping = - - | 15
Custodian for public officials for bonds owned by member banks but
pledged with, public officiais a s collateral for’ public funds,
Should F. Ra “Banks act a s =
3
Customers securities, Should member banks b e pertiiteed t o leave
with F, R. Bank for safe-keoping
3
3
3
Member banks, Should these functions be confined t o securities
33
belonging t o - - = ~ «=
Perf orm safe-keeping functions, Should F, R, Banks = <
a
o
Reimbursement, Should F, R. Banks charge o o safe-keeping functions- | 33
Section 502 of World War Adjusted Compensation Agt, Regulations
covering rediscount o f notes secured b y adjusted service certificates under provisions o f = = -
Securities, Safe-keeping of, by F, R, Banks
Soldiers’ Bonus borrowing, Loans secured b y adjusted service
certificates
Standing Committee o n Collections, Report of
Statements o f parent and subsidiary corporations, Recommendation of
Federal Advisory Council concerning uniform practice o f F. Rs Banks
in requiring
Statutef
o Limitation, A s between F, R. Banks, should statute o f
limitation b e set u p to escape liability o n forged exdorsements- ~ ~
Sub-Committee o f Generat Committee o n Bankers' Acceptances, Report o f Subsidiary corporations, Notes o f parent corporations representing
borrowings t o be advanced t o - - = = = «
Taxes o n income earned f r o m bills purchesed f o r account o f foreign
a
Test words should be affixed o n all direct routed collections
Time Schedules, Revision of = - = =
Treasury Currency Committee, Report. of progress - ~ = < -<+--- = =
Treasury Warrants, Revision of- < < oi. 2 2 e e e 6 ee e e e
e w
Treasury Department Circular No, 9 2 issued April 17, 1919, Revision
Trust powers, Advisability of adopting minimum capital requirement
in connection with exercise of - - World War Adjusted Compensation Act, Regulations covering rediscount
of notes under provisions o f Section 502 of
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Federal Reserve Bank of St. Louis
P R O G R A M
G O V E R N O R S
C O N F E R E N C E
November 8. 1926
Washington,.D ©.
CREDIT TRANSACTIONS A N D POLICIES
A. O p e n Market Operations.
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Federal Reserve Bank of St. Louis
ile R e p o r t o
f Open Market Investment Committee.
2e Policy.
Discount Rates and Policies.
Is i t a good policy t o ‘allow country banks t o participate i n call loans, made b y their city correspondents,
surplus?
u p t o 1 0 per cent o f their capital a n d
Kanses City
Discussion of the report of the Agents Committee on
Member Bank Reserves with a view to considering
whether n o w is the appropriate time t o seek legislation concerning those features o f the report which
the governors have heretofore approved i n principle.
(See paragraphs 3 to 13, inclusive, of the Secretary's
‘Minutes o f the November 1925 Governors Conference.
New Y o r k
Discussion o f further steps which might b e taken b y
Federal reserve banks t o prevent member b a n k failurese
Atlanta
Amendment t o Regulation A to make eligible for redis~
count o r purchase b y Federal reserve banks 4 bankers!
acceptance drawn by an elevator o r warehouse company
and secured b y terminal warehouse receipts o f the ele-
vator or warehouse company that draws the draft. (See
Board letter X-4693, dated October 13, 1926.)
F. R, Board
Notes o f parent corporations representing berrowings t o
beadvanced to subsidiaries. ( S e e Board letter X-4692,
dated October 13, 1926.)
Regulations covering rediscount o f notes secured b y adjusted service certificates under the provisions o f
Section 502 of the World War Adjusted Compensation Acte
(See Board letter X-4688, dated October 12, 1926.)
F. R. Board
Ratio of Bank Capital to Deposits.
Review of steps taken by the Federal reserve banks t o
urge member banks t o increase their capital and surplus
to at least 1 0 per cent o f their deposit liability a s
recommended a t the November 1 9 2 5 Governors Conferences
{See paragraph 16 of the Secretary's Minutes of that
conf erences
New
York
J. T h e development and trend o f bank mergers and consolidations i n each district.
New Y o r k
COLLECTIONS AND CLEARINGS
A. Report o f Standing Committee o n Collections.
B. Discussion o f recent ruling of the Federal Reserve Board
relative t o the handling o f non-cash collection items
payable a t street addresses. ( S e e Board letter X-4677,
dated September 24, 1926.)
Chicago
C. D e s i r a b i l i t y o f having Federal reserve banks a n d direct
sending member banks (where the volume warrants) list
in separate cash letters items which are payable i n
each s t a t e served b y Federal reserve b a n k o r branch t o
which same are forwarded.
COIN, CURRENCY AND CIRCULATION
A. G o l d Holdings and Payments.
New Y o r k
B. T r e a s u r y Currency Committee.
Report o f propress.
Treasury
OPERATION AND ADMINISTRATION
A, Relations with Foreign Banks.
1. Report.
2. T a x e s o n income earned from bills purchased for
the account o f foreign banks.
New York
Revision o f Treasury Department Circular No. 92, issued
April 17, 1919.
As between Federal reserve banks, should the statute o f
limitation b e set u p to escape liability o n forged endorsements?
Philadelphia
Kansas C i t y
Advisability o f the Board adopting for all national banks
a minimum capital requirement and imposing other requirements i n connection with its granting authority t o such
banks to exercise trust powers. ( S e e Board letter X-4686,
dated October 12, 1926.)
Safe-keeping o f Securities.
1. Should a Federal reserve bank perform safe-keeping
functions?
2. Should these functions b e confined t o securities
belonging t o member banks?
3- Should the function permit mamber banks t o leave
for safe-keeping with a Federal reserve bank, securities that belong t o their customers?
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Federal Reserve Bank of St. Louis
Minneapolis
bt)
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Federal Reserve Bank of St. Louis
4. Should a Federal reserve bank act a s custodian for
public officials for bonds that are actually
owned b y member banks but pledged with public
officials a s collateral for public funds?
Se Should a charge b e made for any or all of these
Minneapolis
6
functions? ;
62 Authority of a Federal reserve bank to receive
deposits o f securities for safe-keeping from
Farm Loan Registrars, Federal Land Banks and
Intermediate Gredit Banks. { S e e Board letter
X-4690, dated October 12, 1926.)
Question o f Federal reserve bank representation a t
Bankers Conventions = to what extent should Federal
reserve banks b e represented b y officers a n d employees.
(See Board letter X-4691, dated October 12, 1926.)
F, R. Board
Advisability of seeking a n amendment t o the law to re=
store t o Federal Courts jurisdiction over suits b y and
against Federel reserve barkse ( S e e Board letter
X-4694, dated October 13, 1926.}
Report of Sub-Committee of General Committee o n Bankers
Acceptancese
Report of Leased Wire Committee.
Report of Insurance Committee.
Report of Pension Committee.
F,
R e
B o a r d
G O V E R N O R S
C O N F E R E N C E
November 8 - 10, 1926
Washington, D . Cc.
First Day's Seseion, Monday, November 8
Morning
The meeting was called t o order a t 10:00 o'clock a. m,
Present:
Governors McDougal, Norris, Fancher, Seay,
Wellborn, Biggs, Yeung, Bailey,
Talley and Calkins.
Deputy Governors Cage and Paddock.
Mr. Harrison, Secretary.
Upon motion o f Governor Fancher,
i t was :
(
1
VOTED t h a t Governor McDougal preside a s Chairman o f the Conference.
Topic 1. A. 1, Report of Open Market Investment Committee.
{See aleo paragraph 39.)
The secretary distributed the report of the Open Market Investment
Committee (printed o n pages 5 ~ 12 of the stenographic record). After con-
sideration by the conference, upon motion of Gevernor Young, it was
VOTED t o adept the report and to ask the Open Market Investment-
ment Committee t
o submit it to the Federal Reserve Board with the approval
. O f the conference-~
(See pages 5 = 16, stenographic record.)
Topic I , A. 2. O p e n Market Operations
2. P o l i c y
~The question o f o p e n market investment p o l i c y heaving b e e n covered
in the report of the Open Market. Investment Committee, this topic was passed
without further action.
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Federal Reserve Bank of St. Louis
(See page 16, stenographie record.)
)
Topic. I. B. Discount Rates and Policies.
Hash o f the Governors reported t o the conference concerning
business and credit conditions i n their respective districts, with
special reference t o a n d discussion o f t h e policy o f t h e Federal reserve
banks relative t o continuous o r excessive borrowers.
After a
discussion o f these matters w a s concluded, u p o n motion
ofGovernor McDougal, i t was
VOTED t h a t each Governor b e prepared t o report t o the next
Governors Conference the number o f borrowing banks i n each district,
with particular reference t o the number o f banks which have been borrow-
ing for a year or more, the amount of their capital, surplus and total
Tesources and the average amount o f their borrowings from the Federal
reserve e
e
(See pages 16 - 41, stenographic record.)
Notes: O w i n g t o the absenco o f the stenographer, tho stenographic report o f t h o conference d o e s n o t cover t h e latter part o f the
discussion o f this topic and none o f the discussion o f topics I , G. and
ee
Topic I. C.
I s it a good policy t o allow country banks
to participate i n call loans, m a d e b y
their city correspondents, u p to 19 per
cent o f their capital and surplus’
Governor Bailey reviewed i n some detail the practice followed
by some member banks i n Kansas City of participating i n call leans. ODur~
ing the course o f the eiectceton i t was Siictod out that the practice t o .
which Governor Bailey referred i s a n old practice i n other districts,
that itwould be difficult toalter, and that it is questionable whother
the Federal reserve banks could with propriety object t o the practice.
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Federal Reserve Bank of St. Louis
Topic I s J e T h e development a n d trend o f bank mergers
and consolidations i n erch district.
Mre C a s e submitted t o the conference a
table o f the t e n Largest
banks i n N e w York City, their relation t o t h e number a n d size o f all other
banks i n N e w York City a n d t h e number a n d amount o f mergers o r consolida=
tions i n cach cases T h e tendency and reasons for mergers and consolidations
in other districts w a s then discussed,
i t being t h e consensus o f opinion that
the present trond results f r o m a number o f causes, intluding competition f o r
deposits and pressure b y many devositors who, i n view of the large percontago
of failures among t h e smaller banks, n o w vrefor larger institutionse
Topic I. E. Discussion o f further steps which micht b e
(
taken b y Federal reserve banks t o provent
member bank failurose
Governor Wellborn, who proposed this topie for the program,
read a memorandum (printed o n pagos 42 ~ 4% of th> stenographic record )
concerning member bank failures a n d t h e responsibilities o f the reserve
bank i n prevonting bank failurese D u r i n g tho course o f the discussion, i t
was pointed o u t that emphasis should b e laid o n preventing member banks f r o m
getting i n t o a
weakened condition rather t h a n i n helping t h e m o u t o f dif-
ficulties later one
I t was the consensus o f views that while a better and
closcr cooperation between the Federal resorvo banks and tho State S u p e r i n
tendents o f Banks, o n d a more strict policy i n the granting o f now chartors,
might b e helpful i n preventing f s n e v e r t h e l e s s perhaps tho chicf
factors which have resulted i n failures during the past several years have
beon b a d managoment a n d the cconomie conditions w h i c h have resulted f r o m
the ware
(See pares 42 = 53, stenographic recorde )
At 12:50 o'clock p e me the conference adjourned t o reeonvene
again a t 2 o'clock p e me
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Federal Reserve Bank of St. Louis
8 )
First Day’s Session, Monday, November 8
Afternoon
The meeting was called t o order a t 2 o'cleck p. m
Topic I , D. D i s c u s s i o n o f t h e repert o f the Agents
Committee o n Memner Bank R e s o r v e s with
aview to considering whether now is
the appropriate t i m e t o seek, lezisla-
tion concerning those features o f the
report w h i c h t h e governors h a v e hersto-
fore approved i n principle.
S e e para-
graphs 3 to 13, inclusive, of the Secte=
tary’s Minutes of the Novembe 2
G o v e r n o rfnsoerente.
C
Upon motion of Gevernor Seay, it was
VOTED + o be the sense o f the conference that this i s not a n
appropriate time to seek legislation concerning any of the matters ree
ferred to in the repert of the Agents Committee on Member Bank Reserves.
In response to the e e setiek that the conference reconsider
thoge topics i n the report of the Agents Committee, concerning which the
Geverners Conference has differed with the Agents Conference, Governor Seay
reported that certain recommendations of. the Agents Committee are still
subject t o study b y the Advisory C o m m i t t e s o
f Governors o n Legislative
Matterse W i t h this understanding, the topic was passed without further
action,
(See pages 54 # 65, stenographic record.)
Topic I. F, Amondmont t o Regulation A to make eligible
for nediseount o r purchase b y Federal reserve hanks a bankers acceptance drawn
an elevator o r warcheuse c o m p a n y 2
secured by terminal
s h o u s e receipts o f
the elevator o r w a r s h
raws t h e draft
ated
b
e
o m p a n y the
S e e Board letter %4693,
r 13, 1 9 2 6 .
Gevernor Young reviewed for the conference the conditions under
which registered warehouse receipts are issued b y terminal elevator o r
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Federal Reserve Bank of St. Louis
warehouse companies operating i n Minnesota under the supervision o f
the
Railroad a n d Warehouse Commission o f t h e State o f Minneseta.
H e called
attention t o the fact that these warehouse reteipts generally have been
regarded without question as prime collateral for bank loans in Minnesota
since the receipts in question are issued under such safeguards and restrictions as, i n practice, make i t impossible for the drawer o f the
draft t o have access t o the grain even though the warehouse companies
may be owned by the drawer.
I n view of these facts and the opinion of
counsel of the Federal Reserve Bank of Minneapolis, that these warehouse
receipts do in fact pass security title under the Minnesota law, it was
VOTED t o b e the sense o f the conference that registered
terminal elevator o r warehouse receipts which are issued under condi-
tions and practices similar to those prevailing i n the case of such receipts
issued under the supervision o f the Railroad and Warehouse Commission
of the State o f Minnesota, are within the spirit o f the Board’s regu-
lations requiring that warehouse receipts to be eligible as collateral
for acceptances must be issued b y awarehouse independent o f the customer and thet, therefore, the Federal Reserve Board should rule that
acceptances secured b y such warehouse receipts are eligible provided,
of course, that such acceptances comply with all o f the relevant requirements o f the Federal Reserve Act.
(See pages 65 - 92; 245 ~ 247, stenographiec record.)
Topic I. I. Ratio of Bank Capital te Deposits.
After discussion o f the steps taken b y the various Federal
reserve banks t o urge member banks t o establish a better relation between their capital account and their deposit liability, this topic
was
passed without action.
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Federal Reserve Bank of St. Louis
(See pages 101 ~ 108, stenographic record.)
Topic I. H. Reculations covering rediscount o f notes
secured b y adjusted service certificates
under t h e provisions o f Section 5 0 2 o f
the World War Adjusted Compemsation Act.
{See Board letter X-4688. dated October
12, 1926.)
i tee general discussion o f the provisions o f Section
502
ofthe World War Adjusted Compensation Act, i t appeared to
be the
sense o f t h e conference t h a t i t i s regrettable t h a t
t h e Federal r e serve banks should h a v e b e e n given authority
t o discount n o t e s secured
by adjusted service certificates, but that as a practical
matter,
since the law makes such notes eligible, i t is realized
that Federal
reserve banks will b e expected t o discount them when
offered b y member
°F nonmember banks under suitable regulations and safeguards.
g
e
I t was
e
VOTED t h a t the chairman o f the conference should appoint
a committee o f three operating m e n from the Federal reserve
banks t o
confer and cooperate with Mr. Wyatt, i f desired, i n the preparation
ofregulations and forms, including a draft of circular istter to be
issued b y the several Federal reserve banks concerning t h e discount
ofnotes secured by adjusted service certificates.
The chairman subsequently designated the Federal reserve
banks of Philadelphia, Richmond and Dallas as the banks which should
appoint representatives t o this o
e
(See pages 108 - 135, stenographic record.)
Cuban Agencies o f Federal Reserve Banks.
Governer Calkins reported t o the conference that all the
Governors are invited b y the Federal Reserve Board t o attend the
meeting o n November 1 1 c o n c e r n i n g e
h
t Cuban Agencies o f the Federal
Reserve Banks. W h i l e n o formal action was taken, i t was the sense
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Federal Reserve Bank of St. Louis
of the conference that all those who could conveniently d o s o would
attend the meeting.
Governor Wellborn reviewed the history of the Havana Agency
of the Federal Reserve 3ank o f Atlanta, and stated thet the proposed
meeting o n November 1 1 i s t o consider recommendations w h i c h have b e e n
made t o consolidate the agencies o f the Federal Reserve 3ank o f Boston
and the Federal Reserve Bank of Atlanta.
Topic IV. DB. Advisability o f the Board adopting for all
national banks a minimum capital require=
mha
h
L r irement
v i
connection with its granting authority
to_such banks to exercise trust powers.
{See Board letter X-4686, dated October
2 1926.)
after discussion of the several aspects of this topic, upon
motion of Governor Calkins, i t was
VOTED t o b e the sense o f t h e conference t h a t i t i s inexpedient
for t h e Federal Reserve Board t o place a
capital limit o n national banks
applying f o r trust powers i n view o f the provisions o f the l a w and t h e
further fact that t h e exercise o f trust powers b y State banks i s governéd
by different laws i n different States.
Upon motion o f Governor Fancher, i t was further
VOTED t o be the sense o f the conference that some limit
should b e placed b y the Federal Reserve Board u p o n t h e time taken b y
national banks to qualify as trustees under the State lew after having
received a permit to exercise trust powers from the Federal Reserve
Board.
Upon motion of Governor Seay, it was also
VOTED t o be the sense of the conference that i t would b e
appropriate for the Federal Reserve Board, i n considering applications
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Federal Reserve Bank of St. Louis
for trust powers, to take inte consideration the relation of capital
and surplus t o deposit liability.
(See pages 135 - 146, stenographic record.)
Topic IV. E. 6. Safe-keepingf
o Securities.
6. A u t h o r i t y o f a Federal reserve
bank t o receive deposits o f
securities f o r sefe-keeping f r o m
Farm Loan Registrars, Federal —
land Banks and Intermediate Credit
Banks.
S e e Board letter 4 4 6 9 0
dated October 1 2 , 1926.
After consideration o f the opinions o f the assistant counsel
ofthe Federal Reserve Board and the counsel of individual Federal
reserve banks, u p o n motion o f Governor Calkins,
i t was
VOTED t o be the sense o f the conference that Federal re-
serve banks have no legal authority to receive deposits of securities
for safe-keeping from Federal Land B a n k s o
r Farm Loan Registrars.
{See pages 146 ~ 156, stenographic record.)
T
o
p
i
c
IV. F. Question of Federal réserve bank representation st Bankers Conventions - to what extent should Federal reserve banks be represented b y officers and employees.
(See
Board letter X~4691, dated October 12, 1926.)
Upon motion o f Governor Norris, i t was
VOTED
t o b e the sense o f t h e conference t h a t representation o f
Federal reserve banks a t conventions within their own district i s of the
utmost importance ,. t h a t such attendance a t conventions cutside o f their
district i s sometimes advisable, and that the determination o f such
questions i s one which must necessarily b e left t o the judgment o f the
officers and directors of each Federal reserve bank, since it is impossible t o lay down any uniform practice.
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Federal Reserve Bank of St. Louis
(See pages 156 - 160, stenographic record. )
Topic IV. G. Advisability o f secking a n amendment t o the
iew to restore to Federal Courts jurisdiction over suits b y and against Federal
reserve banks, (See Board letter X-4694,
dated October 13., 1926.)
Upon motion of Governor Calkins, i t was
VOTED t o be the sense o f the conference that i t is advisable
to sock t o procure a n amendment t o the law to restore t o Federal
Courts
jurisdiction over suits by and against Federal reserve banks, i n the
form suggested in paragraph 3 on page 3 of Mr. Wyatt's
memorandum X-4551,
dated March 9, 1926, a s follows:
Provided that this section shall not apply t o any suit,
action or proceedings brought b y or against a Federal
;
d Bank, Joint Stock
n
Land Bank, aFederal reservel ,
bank o r any corporation incerporated b y o r under
an 2
Act of Congress wherein the Government of the United
States is the owner of more than one-half of its
—
capital stock.
Upon motion of Deputy Govornor Case, i t was also
VOTED t h a t the conference deems i t desirable t o seek the
enactment o f legislation t o exempt Federal reserve banks from the process’ of attachment o r garnishment before final judgment i n any casc, a s
national banks are now exempt under the terms o f the United States Revised o
e
;
w
e
(Seo pages 160 - 163, stenographic record.)
At 5:30 o'clock p . m. t h e conference adjourned t o reconvene
again at 10:00 o'clock a. m. Tuesday, November 9, 1926.
Second Day's Session, Tuesday, November 9
Morning
The meeting was called t o order a t 10:00 o'clock a. m.
T o p i,cIG. Notes of paront corporations representing
berrowings t o be advanced t o subsidiarics.
See Board letter 4.4692, dated October
13,1926.
Governor Fancher referred t e t h e fact that t h e present ruling
of the Federal Reserve Board relative t o the eligibility o f notes o f parent
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Federal Reserve Bank of St. Louis
_
10
corporations representing borrowings t o be advanced t o subsidiaries,
makes any such note ineligible i n any case where the parent corporation owns less than 75% of the stock o f any subsidiary o r where i t loans
funds t o any firm o r corporation other than @ subsidiary.
1 ; was the
sense o f most o f the Governors present that this unduly restricts the eligibility o f notes o f many corporations which have occasion from time t e
time t o make loans o f relatively small amounts o f their available funds
to borrowers other than their subsidiaries i n which they o m 75% o f the stock.
Upon motion of Governor Fancher, i t was then
(
1
VOTED t h a t where a parent corporation owns a t least 51% o f
the stock o f each of a number o f subsidiary corporations, the notes of
such parent corporation, the proceeds o f which have been advanced o r
loaned t o its subsidiary corporations, will not b e considered finance
paper within the meaning of the Board's regulations; provided that
1. T h e parent corporation a n d a l l i t s subsidiaries a r e
engaged i n a distinctly commercial o r industrial
business;
The advances m a d e b y the parent corporation arise
out o f ,and are clearly incidental to, its commercial o r industrial business;
The subsidiaries b o r r o w n o money except f r o m t h e
parent corporation; a n d
The proceeds o f such advances h a v e b e e n o r ars t o
be used b y the subsidiary corporations for a n
industrial, commercial e r agricultural purpose
within t h e meaning o f t h e Federal Reserve A c t
and the Board's regulations.
Nine Governors voted i n the affirmative, a n i Governors
Talley, Calkins ani Paddock voted i n the negative.
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Federal Reserve Bank of St. Louis
.
(See pages 92 - 101; 164 - 183; 364 — 366 stenographic record)
9
)
il
After this action was taken, there was some further discussion ( 2 0 )
of the history and purpose o f the Board'g earlier rulings regarding finance
paper and the need for the original ruling providing thet the proceeds
must have been used for a n eligible purpose i n the first instance. Fur-~
ther reference w a s also made t o the fact that i f this restriction regard-
ing the first use of the proceeds i s to be waived i n individual cases, i t
might legically be necessary to admit the eligibility of the notes of the
ever-increasing number o f finance companies.
Whereupon, upon motion of Governor Norris, it was
VOTED + o reconsider the action of the conference on
Governor Fancher’s resolution (see paragraph 19).
(See pages 183 - 207; 237 : 238. stenographic record. }
Thereupon, efter further consideration, upon motion of
Governor Seay, it was
VOTED thet the conference recommend to the Federal Reserve
Board that the Board's ruling of December 30, 1925 (X-4484) be abro~
gated and that i n lieu thereof t h e Board rule substcntially a s follows:
Where t h e borrower i s a parent corporation having a number o f subsidiaries a n d t h e parent corporation a n d i t s subsidiaries a r e i n practical
effect one single organization and may with propriety b e considered a single
borrower, t h e paper o f s u c h parent corporation, t h e proceeds o f which have
been used or are to be used by the parent corporation or by the subsidiary
corporations for a n industrial, commercial o r agricultural purpose, within
the meaning of the Federal Reserve Act and the Board's regulations, may be
considered eligible for rediscount i f it complies i n all other respects
with the provisions of the law and the regulations of the Federal Reserve
Board.
{See pages 238 - 245 stenographic record, }
Topic Ii. C, Desirability o f heaving Federal reserve
anks and direct sending m e m b e r banks
e a e t h e volume warrants) list _in
separate c a s h letters i t e m s which a r e
payable in eech state served by Fodoral
reserve b a n k o r branch t o which same a r e
forwarded.
In discussing this topic, i t was pointed out that most o f
the Federal reserve banks now list i n separate cash letters, items
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Federal Reserve Bank of St. Louis
32
which are payable i n each state served by the Federal reserve bank
er branch t o which such items are forwarded. W h i l e i t was suggested
informally that all Federal reserve banks should list such items i n
separate cash letters, where the volume warrants it, nevertheless
no formal action was asked
P a c e
(See pages 247 - 250 stenographic record.)
Topic TIT. A . G o l d holdings a n d payments.
Mr, Harrison reviewed briefly the amount of gold coin and
gold certificates n o w held b y each Federal reserve bank, calling atten~
tion to the improvement in the percentage of such gold to Federal reserve bank liabilities during the past few years.
I t was indicated,
however, that while the average for the System as a whole has increased,
a few individual Federal reserve banks still have a n abnormally l o w
percentage o f their reserve i n the form of payable gold.
Me. Harrison also called attention t o the recent action
of the Treasury Department i n removing the bar charge o n fine gold
bars of standard size, and suggested that in view of this action,
some of the Federal reserve banks might care t o consider increasing the amount o f bullion held i n their own vaults.
(See pages 250 - 258 stenographio record.)
Topic III. B. Treasury Currency Committee
Report o f progress.
This topic was passed because of the understanding that the
Treasury Department expects shortly t o submit t o each Federal reserve
bank a written report e f the progress which hae been made b y the Treasury
Currency Committee n o w studying various currency problems.
At 1:00 o'clock p. m. the conference adjourned t o reconvene
again a t 2:00 o*clock p. m.
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Federal Reserve Bank of St. Louis
13
Second Day's Session, Tuesday, November 9
Afternoon,
The meeting was called t o order a t 2:20 o'clock p. m,
T o p i .cIIA, Report of Standing Committee o n Collections.
Mr. Strater read te the conference that part of the report
ofthe Standing Committee on Collections which relates to the revision
of the Time Schedule, and summarized those sections o f the report relat-
ing to the revision of the form of Treasury warrants s o as to facilitate
their handling by Federal reserve banks, and the numbers and symbols on
checks s o a s to indicate the Federal reserve bank o r branch territory i n
which the drawee banks are located.
After careful consideration of a n comments of the Stand ing
Committee o n Collections concerning revision of the Time Schedule,
particularly i n its relation t o split states and the extensive two-day
points now on the schedules f
o the Federal Reserve Banks of Boston,
New York and Philadelphia, upon motion of Governor Seay, i t was
VOTED t o request the Standing Committee o n Collections to
continue its studies of the collection problem, having i n mind pare
ticularly whether a Federal reserve bank may not shorten the actual
transit t i m e b y sending direct t o member banks located i n other dis-
tricts, under arrangements with the Federal reserve banks of those
districts, and also to study the whole question of the collection of
cash items and to report back to the conference what, if any, modifications o r improvements might b e made either b y ruling o r a n amend-
ment to the law, i n order to effect a better and more scientific collection system.
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Federal Reserve Bank of St. Louis
14
It was understood i n taking this action that the Standing
Committee o n Collections might call upon representatives o f any
Federal reserve bank, if they care to do so, in order to aid or
assist them i n their studies o r the preparation o f their report.
(See pages 258 = 313 stenographic record.) -
—
—
Topic II. 3, Discussion of recent ruling o f t h e Federal
——
B o a r d rel ale a e uae Lane Ane
The conference discussed a t some length the recent ruling
ofthe Federal Reserve Boord relative to the handling of non-cash
collection items payable a t street addresses, w i t h particular refer-
ence to its effect upon unifermity of procedure i n the matter of
handling collections,
After voting i t te be the sense of the cenference that
uniformity o f policy and procedure i n the matter o f handling noncash collection items i s essential t o the banking and business
interests of the country, i t was unanimously
VOTED + o appoint a@ committee of three Governors to prepare
a resolution conveying t o the Federal Reserve Board the views o f the
conference regarding t h i s question,
i t being understood t h a t t h e com-
mittee would submit its draft o f resolution t o the conference for its
approval.
Accordingly, the chairman appointed Governors Norris, Calkins
-and Seay as members of this committee, which later prepared the following report (printed o n pagee 3 8 7 » 392 stenographic record ) which wés
read t o t h e conference:
“Section 13 of the Federal Reserve Act, as amended i n 1917,
authorizes Federal reserve banks to receive maturing notes and pills
for collection. T h i s authority is permissive and not mandatary. C o n ceivably, therefore, a Federal reserve bank could technically refuse to
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Federal Reserve Bank of St. Louis
(28)
1S
receive such items for collection just a s they might conceivably decline
to exercise a n y other permissive power conferred b y the law.
But ever since the inauguration of the collection function,
at has been the policy o f the Federal Reserve S y s t e m t
o have the several
Federal reserve banks offer their members u n i f o r m services a n d uniform
privileges.
I t has been and still is the belief o f the Governors Con-
ference that member banks i n one district are entitled t o the same
fundamental services a s are accorded + o member banks i n other districts.
The conference believes that g r e a t h a r m might result t o the System a s
a whole i f the banks and the public i n one district are denied a service
which i s afforded t o banks and the public i n other districts.
Indeed the Federal Reserve Board has by Regulation J provided
for the universal and uniform collection o f cash items and i n its letter
of July 25, O27, (X~298), it directed all Federal reserve banks t o establish a service for the collection o f non-cash items for their member
banks, S i n c e inaugurating each of these collection services, i t has
been the consistent aim of the Federal reserve banks to maintain as far
as possible uniformity o f service f o r a l l member banks i n all sections
of the country, e v e n i n matters o f relatively insignificant detail.
The Governors Conference has a standing committee o n collections to
wh3ath various matters o f procedure a r e referred f r o m time t o time,
chiefly with the purpose o f promoting uniformity.
The conference believes, therefore, that uniformity i n the
cheracter o f the services a n d functions offered member banks i s not o n l y
right i n principle, b u t essential i n practice, i f t h e Federal reserve
banks and the Federal Reserve Board are to avoid serious and possibly
dangerous criticism. I f a small minority of the Federal reserve banks
in exercising t h e option suggested i n the Board*s letter o f September
24, 1926, (X-4677) ,refuse t o handle items payable a t street addresses,
it means not only that those items will not b e received from their own
member banks, b u t a l s o that n o other Federal reserve b a n k c a n reseive
from its members a n y items payable a t street addresses i n the districts
which refuse t o handle those items. T h e resulting discrimination
against a certain class o f items i n a few districts a n d the difficulty
ofprescribing different rules for different cities and districts, will,
the conference believes, result i n such disorder i n the collection
function that i t will likely subject the System t o wholly unnecessary
but justified attack .
That being so, it becomes important in the opinion of the
conference t o determine whether all Federal reserve banks should con-
tinue as at present to receive non-cash items payable at street addresses, o r whether n o Federal reserve banks should receive such items
for collection.
In the fall of 1923 this whole question was referred b y the
Federal Reserve Board t o the Governors for their review and recommendacommittee o f Governors, known as the Committee o n Voluntary
tions. A
Services, was appointed by the Board. That committee prepared and with
the appreval of the Governors Conference filed a report with the Federal
Reserve Board i n March, 1924, i n which it was recommended i n substance
as follows:
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Federal Reserve Bank of St. Louis
16
That t h e non-cash collection service b e continued ,
not only for items payable a t banks, but for items
payable a t street a d d r e s s e s s
a well.
That n o service charge b e made for collecting a n y
class o f nonecash items,
That each Reserve Bank and branch endeavor, s o far
as possible,
t o effect i t s local cellections
in
that manner most consistent with established busi-
ness and banking practices, with a v i e w t
¢ eliminating a n y unnecessary causes o f possible friction
and discontent o n the part o f those business houses
with whom the Reserve Banks necessarily come i n con~tact i n making presentation o f items, for payment.
That each Reserve Bank and branch continue, as in the
past, vigorously to promote further economy and ef~
ficiency i n the operation of its collection service,
giving due consideration to the encouragement for
more direct sendings b y member banks, es well as to
other practices designed t o sliminate e x t r a o r costly
handlings,.
This report was approved b y all of the Federal Reserve Banke ,
except those of Mimeapolis, Kansas City and Atlanta,
At each conference o f Governors since that time, the matter
has been reviewed and the recommendations o f the committees set forth
above ratified and the Federal Reserve Board urged finally t o pass upon
the matter.
O n each of these occasions, nine Governors voted i n favor
of continuing the non-cash collection service a s at present, ine Lud ing
items payable a t street addresses, w h i l e three Governors voted i n oppo-
sition t o doing so.
All of the varieus arguments fer and against the continuance
ofthis service have therefere beer considered a t numerous times by
the Governors and presented i n detail from time t o time i n written reports t o the Federal Reserve Board.
T h e r e seems n o need further t o re~
view those arguments a t this time.
‘Unfortunately, however, upon consideratien of the Board's
letter o f September 24, 1926, which suggests that each Federal Reserve
Bank exercise its own option t o collect items payable a t street addresses,
three Federal Reserve Banks are in favor of discontinuing the collecting
of these particular items, while the remaining nine banks are i n favor
of continuing handling them for all of the reasons which have been fully
set forth i n the previous reports t o the Federal Reserve Board.
In these circumstances, i t is the sense of the Conference that
in order t e preserve that unifQrmity which i s believed t o be s e essential
to the best interests o f the Federal Reserve System, its member banks and
the public, the Federal Reserve Board should reconsider its letter of
September 24, 1926, and determine whether, from the point of view “of the
Federal Reserve System as a whole, all Federal Reserve Banks shali or
whether all Federal Reserve Banks shall not continue t o handle for col-
lection items which are payable at street. addresses.”
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Federal Reserve Bank of St. Louis
17
Upon motion of Mr. Case, i t was duly
VOTED t h a t this report b e adopted a s the report o f the
conference and submitted t o the Federal Reserve Board a s representing
the views o f the Governors,
Governors Bailey, Wellborn and Young voted no.
(See pages 313 - 364; 375; 386 - 393 stenographic record.)
Topic IV, A. Relations with Foreign Banks.
Mr. Harrison submitted t o the conference 2 report o f the
foreign transactions in which all other Federal reserve banks participete, and i n connection with that repert a brief review of foreign conditions, M r , Harrison then referred t o the number and detail o f the
schedules a n d reports n o w submitted b y the Federal Reserve B a n k o f
New York to all Federal reserve banks participating i n foreign transactions and suggested certain eliminations and changes i n these statements
to which the conference informally agreed.
(See pages 366 - 371 stenographic record.)
Topic IV. A, Relations with Foreign Banks.
2. T a x e s o n income earned from bilis
purchased for the account of
ftreign b a n )
Mr, Harrison reported the status of the present Revenue Act
concerning the taxability o f discount earned o n bankers acceptances
purchased b y foreign corporations,
After consideration o f the inequitable effect o f the present
law i n its relatign t o foreign corporations making investments i n this
market, upon motion of Governor Fancher, i t was
VOTED t o be the sense o f the conference that the Federal
Reserve Board should b e urged t o take appropriate steps t o procure a n
amendment t o the law so as to exempt from Lemebinn discount earned o n
bankers acceptances purchased b y foreign corporations, just a s interest
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Federal Reserve Bank of St. Louis
18
earned by foreign corporations on deposits in American
banks is
now exempt.
(See pages 371 = 373 stenographic record.)
At 5:35 o'clock p.m. t h e conference adjourned
t o reconvene
again a t 10:00 o'clock a. m. o n Wednesday, November
10, 1926.
Third Day's Session, Wednesday, November 1 0
Morning
The meeting w a s called t o order a t 10:00 o'clock
a.m.
Topic IV. 8. R e v i s i o n o f Treasury Department Circular
No. 9 2 , issued April 17, 1919.
Upon motion o f Mr. Case, i t was
VOTED t h a t Governor Norris b e appointed a committee
o f one
to disguss with the Treasury Department the propriety
o f revising and
simplifying Treasury Diner tient Cinasios No. 92, issued
April 17, 1919.
(See pages 375 - 379 stemographic record.)
Topic IV.C.
A s between Federal reserve banks, should e e
statute o f limitation b e set u p t o escape
liability o n forged endorsenents?
After discussing the time limit fixed under the statute o f
limitation i y various states f o r outlawing claims
resulting f r o n forged
endorsements, this topic was passed without action.
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Federal Reserve Bank of St. Louis
(See pages 379 - 385 stenographic record.)
Topas iV. 8. Safe-keeping o f Securities.
is Should a Federal reserve bank perform
safe-keepine functions?
2; Should these functions b e confined t o
: S e c u r i t i e s belongine t o mamber banks?
Should the function permit member banks
to leave f o r safe-keeping w i t h a Fed-
eral reserve bank, securities that belong
to their customers?
19
4. Should a Federal reserve bank act as
custodian f o r public officials f o r bonds
that a r e actually o w t e d b y member banks
but pledged w i t h public officials a s col-
lateral for public funds?
5. Should a charge b e maie for any o r all o f
these functions?
The various questions raised under t h i s topic w e r e discussed
in detail off the record and without any formal action.
(See page 385 stenographic record.)
Topic iV.H. R e p o r t o f Sub-Committee o f General Committee
on Bankers Acceptances.
The secretary r e a d t o the conference t h e report o f the Sub-
Committee o f General Committee o n Bankers Acceptances and after consideration, upon motion o f Governor Young, i t was
VOTED
t o renew t o the Federal Reserve Doard t h e recommenda-
tions o f the March 1926 Governors Conference t o t h e effect t h a t t h e re-
port submitted a t that conference b e approved ani that the Federal Reserve Board b e requested t o adopt t h e recommendations contained therein.
(See pages 393 ~ 394 stenographic record.)
Topic IV. I . R e p o r t o f Leased W i r e Committes
Governor McDougal stated t h a t there h a d been n o changes i n
the leased wire arrangements which would require any report t o the
conferences
In connection w i t h t h e consideration o f the matter o f leased
wires, upon motion o f Governor Calkins, i t was
VOTED t h a t a l l Federal reserve banks should a f f i x test words
to wires advising credit for direct routed collections just a s tests are
now provided for wire e
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Federal Reserve Bank of St. Louis
S
a
e
(See pages 395 - 396 stenographic record.)
20
Topic IV. J. Report of insurance Committee.
The report was accepted and ordered filed.
(See pages 396 = 397 stenographic record.)
Topic IV, K. R e p o r t o
f Pension Committee.
Upon motion of Governor Seay, it was
VOTED t o approve the report o f the committee with the understanding t h e t t h e action recommended therein should b e taken i n s o far
as it is practicable.
(Seo pages 397 = 401 stenographic record)
Open Market Investment Committee.
(See also paragraph 2.)
Governor McDougel read t o the conference the Federal Reserve
Board's letter dated November 10, 1926, addressed to Mr. Case, approving
the report o f the committee and suggesting that the committee will confer further with the Federal Reserve Board i f and when i t becomes de-
sirable te make any such increase i n the account, a s the report stated
may become desirable.
(See pages 401 - 402 stenographic record.)
Code Books.
Upon motion o f Governor Young, i t was
VOTED t h a t the question whether o r not new code books should
W i r e Committee
be printed and, i f so, w h i t e w a s referred t o the Leased
with power.
(See pages 402 - 403 stenographic record.)
d
l
n o t Federal reserve banks b e reimbursed b y Federal
u
o
h
S
coupons?
Land Banks f o r expenss invelved i n paying Federal F a r m Loan
Governor Norris, t o whom this matter had been referred b y
the March 1926 conference, m a d e e
report o f his interviewea-with rep-
subject,
resentetives o f the Farm Loan Board concerning this
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Federal Reserve Bank of St. Louis
I n view
21
of the difficulties involved, the topic was passed without action,
although i t was the feeling o f some o f the Governors t h a t , i n principle, the Federal reserve banks should b e paid for the services ren-=
dered i n handling these coupons.
Upon motion of Governor Fancher, i t was
VOTED t h a t e a c h Governor should c o m e t o the next conference 4
prepared to give a new estimate of the expense involved i n handling
Farm Loan coupons.
(See pages 403 ~ 413 stenographic record.)
Mail Robberies.
At the request of the Federal Reserve Board, the secretary
read t o the conference the correspondence between Seetiinier General
New and the Federal Reserve Board (printed e n pages 414 ~ 421 stenographic record) o n the subject o f mail rebberies.
{See pages 414 - 422 stenographic record.)
Eligibility of directors f
o Mutual Savings Banks to serve
as Class B
and Class C
( 4 3 )
directors o f Federal Reserve Banks.
Upon motion of Governor Norris, i t was
VOTED that the Governors Conference request the Federal
Reserve Board t o use its influence a t the first availeble opportunity
to procure a n amendment t o Section I V of the Federal Resorve Act defin-
ing the qualifications of directors of Class B and Class C, by adding
to each clause the words “other than a purely mutual savings bank."
(See pages 423 - 426 stenographic record.)
Recommendation o f the Federal Advisory Council a t its meet-
( 4 4 )
ing o n September 1 7 , 31926, concerning u n i f o r m practice o f Federal reserve b a n k s i n requiri s t a t e m e n t s o f parent a n b s i d i a r o r p o r a t i o n s .
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Federal Reserve Bank of St. Louis
There was a discussion o f the present practice o f the several
22
Federal reserve banks i n requiring these statements t o b e filed with member
banks as required b y the regulations of the Federal Reserve Board.
No
action w a s taken.
(See pages 426 - 434: stenographic record.)
At 1:15 o'clock p . m , t h e conference adjourned t o reconvene a t
2:30 ofclock p. m. i n Joint Conference with the Federal Reserve Board and
Federal Reserve Agents.
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Federal Reserve Bank of St. Louis
George L , Harrison,
Secretary.
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Federal Reserve Bank of St. Louis
@FedFRASER