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Federal Reserve Bank of St. Louis
VotumE 4
PROCEEDINGS
CONFERENCE O F GOVERNERS O F THE FEDERAL RESERVE BANKS
Hote WasHINGTON
WASHINGTON, D.C.
OCTOBER 25-29, 1924
ASSOCIATED S H O R T H A N D REPORTERS
WASHINGTON, D , C.
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Federal Reserve Bank of St. Louis
whe
CONFERENCE O F GOVERNORS O F THE FEDERAL R E S E R V E BANKS.
FOURTH D A Y
Friday, Oct. 28,1921.
The Conference o f Governors o f tha Federal Reserve
Banks reconvened, pursuant t o adjournment o f yesterday,
at 9.30 o'cleck, a.m., i n the Hotel Washington, dashington,
D.C.
Present,
e s indicated i n yesterday's record.
PROCEEDINGS
The Chairman. I
understand the discussion last
night related t o the princinles t h a t sheuld gevern
the fixing o f the rates o f discount b y the Federal R e serve banks.
M r . Harrison h a s reported t h e substance
of the discussion yesterday afternoon,
Gov. McDougal.
i n m y absence.
W e should like t o have t h e views o f
the representative o f the N e w York Bank, Mr. Chairman.
The Chairman.
T o s u m i t all u p I think y o u have
got t o consider t h a t t h e r e a r e ,
a s t h e b e s i s o f exper-
fence i n banking, a variety o f considerations that
enter i n t o t h e f i x i n e o f t h e r a t e s o f d i s c o u n t
b y tha
institution t h e t holds reserves o f t h e commerctal banks.
One i s the a m o u n t
o r p e r c e n t a g e o f the reserve
of the bank o f issue, a n d t h e question o f whether t h e
reserve i s unduly large o r getting dangerously low.
Now, I
have s e e n nowhere i n the literature bearing o n the
subject o f banking anything that i s more illuminating than
a discussion, a s I recall it, b y Walter Bagehot
writings,
i n his
i n which h e refers t o the decline i n the reserve
of the bank o f issue t o what h e calls "the point o f apprehension"; that i s t o say, when the expansion o f the liabilities
of the bank o f issue, o r conversely, t h e loss o f reserve b y
gold exports, gives rise t o a feeling o f certainty o r apprehension, t h a t i s the justification f o r t h e bank t o raise i t s
discount rate a n d protect i t s reserve. I
refer t o that
because i t is one o f the most illuminating phrases relating t o
the influence which t h e amount o r percentage o f reserve h a s
upon t h e determination b y the directors o f the bank o f issue
in changing its rate o f discount.
Gov. Calkins.
A l s o t h e most effective sentence e v e r
uttered with regard t o the policy o f the Bank o f kngland.
The C h a i r m a n .
Yes.
N o w , t h e converse
o f that
naturally would apply according t o m y view i f other conditions justified employing t h e surplus o f a n unduly large
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Federal Reserve Bank of St. Louis
624
reserve a s the occasion o r justification for reducing
rates, a n d i f reserves alone governed rate policies b y the
bank o f issue, u n d e r such conditions a s w e have today,
ae O u l d a l l b e justified i n greatly reducing o u r rates.
Most o f us--I will exclude Governor V a n Zandt a n d
Governor .eliborn and possibly winneapolis--but speaking
generally,
t a x e t h e N e w Y o r k B a n k w i t h 8 2 p e r c e n t reserve,
if the percentase o r quantity o f reserve, viexed from the
standpoint o f salter Bagbhot's formula, s e r e t h e only
consideration,
w e could p u t o u r r a t e d o w n t o 2
per
cent, say, d u t I think o n e must admit t h a t there a r e other
considerations besides the quantity o f the reserve o r the
percentage.
Now, what are those?
O n e o f them i s unjuestionably
the relation xhich must b e borne and maintained between
the rate a t which t h e reserve t a n k manufactures credit,
in a sense, b y lending t o its members o r t o its customers,
and the rate which credit brings i n the market.
There i s the greatest possible misapprehension about the
way i n which bank rate operates i n the London market and the
way i n which i t operates i n this country. E n g l a n d , o r
the British Isles, a r e a very small banking community.
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Federal Reserve Bank of St. Louis
625
They have t h e entire industrial a n d commercial interests
of the island served i n banking b y a very f e w banks, a l l
of which have head offices i n London o r are s o closely
allied with London banks that there i s not a very great
variety o f rates i n England, s u c h a s w e have i n this coun-
try. O u r banking system i s comparable t o the banking systems o f a l l o f Burope,
w i t h o n e s e t o f conditions
i n Kome, o n e
in Constantinople, o n e i n Berlin, o n e i n Copenhagen, o n e i n
Paris,
o n e i n London,
a n d s o on, a n d g e o g r a p h i c a l l y a n d
in s v e r y way, a n d b e c a u s e
o f the fact that w e have n o t
a French banking system, y o u cannot compare t h e influence o f
money rates i n England and especially i n London, and the
rates o f the Bank o f England with similar conditions i n
this country, because t h e y a r e n o t similar.
Further t h a n that, t h e Bank o f England really o n l y
makes o n e Kind o f loan i n normal times o f a n y importance,
That l o a n o r that extension o f credit--it i s not a loan-is brought about b y the discount o f bills o f a substan-
tially similar type, accepted b y a very small number o f
acceptors, which are discounted a t the Bank o f England
when t h e market justifies t h a t taxing place,
b y a very
few firms, a n d n o t b y banking institutions, a n d those
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Federal Reserve Bank of St. Louis
profit o n the trading.
I n other
bill, t h e a c c e p t e d b i l l
i n t h e o p e n market,
is the avenue o f approach t o the
commodity “ i t h just
sny comnodity i n the world.
any imvortance, s s i d e f r o m var
government
i s borrowing, “ h i c h b e a r s uponm:ithne r a t e
the Bank o f England.
“ i t h u s here “ce heave the stock e x -
chenge c a l l money rate, h i c h h»s a n influence i n New York,
They h a v e n o S t o c k E x c h e n g e c a l l m o n e y r a t e i n London.
We o1.@Eso.> h e v e c o m m e r c i a l p a p e r e n d t h e o r d i n s r y e l i -
gible paper of the banks. N o n e o % that exists i n London,
practically.
character b y these joint stock banks i n London are mede
ea
on overdraft e
ccount,
a n d t h e y appear
of the joint stock banks e s advance
o n t h e statements
T h e y a r e not repre-
sented by e piece of paper “hich can be brought t o the
Bank of England end discounted.
I f they were, the
Beni of England would not discount that lind of paper,
unless under certain circumstances.
627
Therefore,
t h e difference b e t w e s n w h a t w e have a n d
theirs i s very great.
J e have a
great variety o f different
Kinds o f paper that c a n b e brought t o the Federal Reserve
Bank t h a t s e l l
i n the market a t a
great v a r i e t y o f rates,
and our rata h a s t o b e adjusted with d u e regard t o the
relation between our rate and this great varisty o f market
ratese
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Federal Reserve Bank of St. Louis
I t i s a wholly different situation.
I was going o n to say that the Bank o f England has
mo such problem t o deal with a s w e have, where i n New
Yorsx the influences bearing upon our rate are four--the
Stock Exchanges call money rates, the rates for commercial
loans m a d e b y b a n k s
o n p r o m i s s o r y notes,
t h e rate o n
Treasury certificates o f indebtedness, and the rate o n
bankers! bills o r acceptances-+all four of those rates
have a
relation t o our rate.
In the same w a y they have n o such problem t o deal w i t h
in London a s w e have here, ahere,
a s i n Governor Miller's
District, according t o the condition o f the usury laws a n d
other conditions, t h e banks i n One part o f his District
will b e lending monsy a t six p e r cent, a n d i n another
part o f his District a t ten o r twelve, and the same way
in Texas.
T h e contract r a t e i n Texas i s 1 0 per cent.
I n
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Federal Reserve Bank of St. Louis
Nebraska i t is 12, isn't it?
Gov. Miller.
T e n , a n d i n .yoming a n d Colorado i t i s
twelve.
The Chairman.
I n ‘#yoming and Colorado i t is 12, and
in Nebraska i t is 10.
T h e country banks also charge all
that t h e traffic will bear, a n d t h e bank rates, w h i c h
should b e a restraint upon borrowing i n Omaha and Kansas
City, cannot prevent t h e possibility o f very large profits
to the banks i n syoming andColorado.
N o such situation
exists i n the central banks o f Europe, a n d i t does n o t ever
exist i n Japan.
Therefore, w e have a very puzzling and difficult
situation t o deal with i n adjusting our rates, s o that
the Reserve Banks shall not b e used a s instruments f o r
making a n interest shave o r profit d h the borrowing.
I think those are the two fundamental o r traditional
influences t h a t a r e first obvious i n dealing with discount rates, b u t there a r e others more general i n char~
acter, u n e i s the general temper o f the community, a n d
whether i t i s i n a speculative frame o f mind, whether
business is active or bad, whether there is a hopeful or
a depressing outlook, a n d certainly a s a matter o f good
judgment, certainly under these conditions o f varying
629
rates that w e deal with, o n a important influence i n
fixing rates i s shether the public i s i n a frame o f
mind t o speculate, look for rising prices, borrowing
money i n order t o make money,
o r whether t h e y a r e i n a
depressed frame o f mind a n d will n o t employ t h e facilitivs o f t h e i r banks,
a n d i n t u r n o u r facilities,
just for
the purpose o f supporting a great speculative movement.
Non, there i s still a fourth consideration, w h i c h i s
an important one, a n d that i s the whole general subject
and a great economical subject itself, a s t o the relation
between t h e cost o f credit a n d prices generally.
“ @ may
o opinion o n that subject, u n find lots o f d i f f e r e n c e s f
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Federal Reserve Bank of St. Louis
less I
a m mistaxen,
u s t o whether rates should b e fixed
with a view t o controlling prices o r not, a n d m y o w n belief i s that while prices a r e affected b y changes i n the
bank rates,
b y restraints u p o n borrowing,
o r by a
liberal
policy t h a t e n c o u r a g e s borronving, t h a t i t i s n o t t h e b u s i -
ness, t h e duty o r the function o f the Federal Reserve System o r o f central banks generally,
Gove Calkins»
t o deal s i t h prices.
Y o u d o not base that, however,
o n any
experience since t h e establishment o f the Federal Reserve
System?
The Chairnian.
Gov. Calkins.
O h ; noY o u sort o f coupled i t with t h e Fed-
eral Keserve Bank, a n d i t appeared t o m e that that i s a n
impossible combination.
The Chairman.
No, I
a m speaking more f r o m a historical
standpoint, Governor Calkins.
T h e Bank o f England,
which w @ generally regard a s the best possible example t o
which w e c a n turn f o r experlence, possibly simply because
the literature i s published i n the same language which a e
understand, t h e Bank o f England i s subject t o a different
influence with regard t o prices than s e are, because the
bank rate i n England operates directly upon the bill o f
exchange which i s drawn i n connection with t h e British i m port trade, a n d the importation o f raw materials i n t o
Great Britain i s a direct reflection o f the state o f
trade i n Great Britain, a n d consequently i f they have a n
excessive activity i n trade and too high prices, they
are importing t o o much a n d exporting t o o little.
I n
other words, i f England becomes a better selling market
than buying market, then the Bank o f England begins t o
lose i t s reserve, a n d inasmuch a s i t i s a n international
trade w i t h t h e m more t h a n domestic, t h e effect o f the bank
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Federal Reserve Bank of St. Louis
VACe.U D O G .
pyecrs
up t h e i r b a n k r o t e t h e p r e s s u r e
goods,
a n d p a y loans,
a n d t h a t reradj
to s o m e e x t e n t .
G6
S
y
e
l
a
n
d
t h e n ste1s
consider increasing
a:
a.
in case there might
be s o m e e m e r g e n c i e s w h e r e i t . v o u l d
a matter
o f importance
b e overnight,
b u t such
a s y o u h a v e j u s t r e l a t e d t o t h e entir:
British Isles a n d the great inters c e n t e r e d there.
The Chairman. I
have never b e e n i n London when they
heave c h e n g e d t h e i r r a t e ,
but I
should
s a y that the change
m
in the bank rate i s made i n London b y the B a n k o f Fngland
the result o f deliberation
f o r one o r possibly t r o
a v
the G o v e r n o r a n d D e p u t y G o v e r n o r o f t h e b a n k a n d t o
three o f t h e directors w h o f o r m ¢
little i n n e r council
of advisors, except i n time o f emergency,
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Federal Reserve Bank of St. Louis
understand
vr. C h e i r u a n , I
reduction
attitude
Cheirman.
o f rates
suggestion
eround
at
~ e should
2T
“
tras c o m i n g t o thet, G o v e r m o r
d t o make a n y
e
hint
Morsse t
a l
t o the other Governor
not
minutes, b u t I
situation
i s eas t o
Up t o the time thet v e entered t h e ver, o u r rate ras
e
gencrellye
merizet
the
v
o
brates
a
<-
T r o m the time w e
entered the wer until lest spring, our rate generally vas
belor t h e marizet rates.
as t o c e r t i f i c e r t e s
o f indebtedness, &
eadually p r o g r e s s i n g
henkeors! bills a n d nor almost reaching t h e p o i n t w h e r e i t i n c l u d e s c o m m e r c i a l p a p e r ,
rate has gotten above t h e market rate.
certificate
o f indebtedness r a t e ,
w e are
our
“ 7 above
a n d w e a r e above
the bankers! rate, a n d ve are only about half a point
635
below t h e r a t e f o r t h e b e s t c o m m e r c i a l papsr,
a n d the
Stock Exchange c a l l rate, which i s a little b i t higher,I
think, than i t would b e i f certain influences were not
operating.
The Stock Exchange call rate i s no longer a n impertant i n f l u e n c e u p o n o u r rate, b e c a u s e t h e N e w Y o r k
banks d o not like t o make Stock Exchange call loans» I
want t o point out what t o m y mind has been the impelling
motice u p t o date i n the rate reductions which w e have made.
when a l l o f the large member banks o f New York City were
borrowing from us and paying seven o r six per cent. for
loans, e v e r y time they h a d a n y money over a s the result
of the day's transactions, they came and paid u s offewhatever t h a y h a d over--and w h e n they were short t h e y came
and borroved i t back again.
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Federal Reserve Bank of St. Louis
S o long a s that condition
continued x i t h all o f the member banks o f importance borrowe
ing from us, there was n o competition t o lend money i n the
market a t alle A l i the money that was available t o loan
wag applied t o repaying us. J u s t a s soon a s a few banks
got out o f debt t o us, then there was a competitien t o
lend money i n the market, because t h e y h a d nothing t o repay
to us, and a s that condition extended a n d a greater number
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Federal Reserve Bank of St. Louis
got o u t o f d e b t t o us, t h e n t h e r e c a m e a
greater competi-~
e n d that r a s the influence t h a t brought
tion t o lend m o n a ,
dorm m o n e y r a t e s e
The r e d u c t i o n
kete
i n our rate h a d n o influence
i n the mar-
I t was t h e competition t o lend money that d i d it,
just a s competition t o sell anything will reduce t h e price.
So that r e have proceeded u p o n thetheorr t h a t v e would l e t
that c o n d i t i o n v o r k t h e m a r k e t r a t a s l o w e r a n d lower, a r d
g o dovne
as t h e y v e n t d o w n « e o u l d
Nor, therefore,
t h e r e a r e t r o modifying statements
think t h a t
T h e first i s t h i s I
that I want t o make.
it would b e o f
to h a s t e n t h a t process
o f rate reduction
to d o i t , a n d w e h a v e e n d e a v o r e d
principally i n two rays.
market t o b u y bills,
if -
e s poses tbe
t o d o i t i n N e w York
O n e i s always t o be i n the
n o t i n very great volume,
have t h e pressure there t o p ut out o u r money.
b u t ealwars
T r e second,
which is the most effective thing “e have, is that the
h
e books close yon aniisshevof certificates a t
minute” t
the Treasury,
that
w e j u m p right
i s offered
i n the market,and
You know, w h e n a
wants i t e
i n and b u y every certificate
put them
t o a
premium.
thing sells s t a discount nobody
t o a premium everybody
T h e minute t h a t i t goes
oO
635
wants i t , a n d there i s a little psychological influence
made effective b y our going into the market the minute
the books close o n these certifleate issues and buying
everything that i s offered, a n d that has h a d a very whole-
some effect i n getting our rates down i n New York, I think.
Now, the other modifying statement I want t o make
is this. I
think i n a broad way, speaking from the stand-
point o f t h e N e w Y o r k market, w h i c h i s t h e m a r k e t f o r t h e
distribution o f securities a n d credit generally, t h a t
we cannot afford i n this country t o impound a l l t h e mone-
tary gold i n ths world and lock i t up and not permit the
world t o do banking here and borrow money here.
I n other
words, w e are shutting down o n the world's recovery and
closing o u r markets,
i f we require g o l d payments f o r avery-
thing, and then don't use some o f that gold as the basis
of some extension o f credit, a n d w e feel i n New York that
the g e n e r a l r e c o v e r y o f t r a d e a r o u n d t h e w o r l d i s g o i n g
to be brought about b y our making Néw York a good market
in which t h e sorid c a n borrow money, a n d that applies
to t h e w h o l e c o u n t r y ,
b u t N e w Y o r k i s where t h e y first
come.
So t h a t o u r policy, I
think,
i s t o reduce r a t e s some-
what faster s o long a s the speculative f e v e r i s not on.
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6356
ju New York this rould b e t h e
i
sidering t h e i n t e r e s t l e v e l o r 6
or the state o f prices,
o r any
f re rere j u s t con~
state o f o u r reserves
e
r individual local
condition.
That, i n © rough rav, i s about t h e w a y r e a r e look®
ing a t t h i n g s
i n N e i Vork.
Gov. Miller.
D o you think t h e rates a l l over o u r
country should b e lover?
The Chairman. I
rates dorn.
think y o u h a v e g o t t o b r i n g y o u r
s a y t l ‘ i t h some hesitations I
think
you heve g o t t o bring vour rates d o w n there i n response
to t h e d e v e l o p m e n t
o f conditions,
h i c h y o u cannot b r i n g
about simply b y reducing y o u r o - n rate.
Y o u are n o t going
to make money cheaper t o the original borrower b y reducing y o u r d i s c o u n t r a t e . I
Gov. M i l i e r ,
O u r experience s h o w s thate
Gov. V a n Zandt. €
The Chairnrn,.
City, f o r instance,
do not think so.
are nots
- h e t h e r thre
a r e means
i n Eans a s
o f forcing retc reductions
b y commercial
banks t o their customers t o such a n extent that i t
rradually extend over t h e district a n d effect a
lowering o f interest r a t e s ,
is a
auestion I
genera
cannot p a s s upon.
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Federal Reserve Bank of St. Louis
637
“ithin o u r p o w e r
i n N e w York t o influence
lorerlevels o f rates b y the market operations o f the bank,
to some extent. L
tninkg 7 6 926
Conference.
just want t o say o n e vord. I
efternoon,
a m go-
N o r , i n view o f the
we vill probably have meetings o f the Governors a t
different Federal Reserve points,
mansas C i t y ©
t h e first meetin
t e vant t o invite y o u t o
"
e heve a
nice t i l d i n g
to e n t e r t a i n y o u
just e s little o r just a s
The Chairman, T h a n k
im t h e m i n u t e s s
(“hereupon,
» t 10:05 o'clock a.m.e, t h e Conference
of Governors r a s recessed until sfter t h e Joint Conference vith the Fedoral “eserve B o a r d a n d the "gents o f
the Federal Reserve Benirs.)
AFTER RECESS
The C o n f e r e n c e
edjournment,
at
o f Governors r e c o n v e n e c , p u r s u a n t
p
m
,
to
a t the Assembly R o o m o f the
Feccral Keserve
The Chairman.
G o v e r n o r Harding wants t o know about
our f u r t h e r m e e t i n g w i t h t h e Board,
anc I
we w i l l c o b e t t e r
rather t h i n ,
i f
t o g o r i g h t sheead w i t h
our meeting this efternoon e n d meet w i t h t h e Boarc tomorrow
morning.
Governor Fancher.
" e r e a r e geveral memoers o f the
Soarc w h o will not b e here,
Chairman.
T h e r e will b e t w o absent, b u t I
G o not
wwe c a n help thet very well.
Governor V a n Zandt. I
s o move, Mr. Chairman,
2
i n eccorc.
with your suggestion.
Governor Fanche
O n e other question enters i n t o that,
when w o u l d w e m e e t w i t h t h e B o a r d t o m o r r o w ?
4 t the sone
clusion o f o u r C o n f e r e n c e ?
The Chairmen.
then w e c a n have a
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(The m o t i o n ,
H o w about a
mecting
a t 1 1 o'clock a n d
morning meetings f o r e n hour e n a a
b e i n g c u l y seconded,
was unanimously car-
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Federal Reserve Bank of St. Louis
we c o n c l u c e c
seussion o n rates,
oflir, Myer's
letter.
you a d v i c e u s i f y o u
who has had ceteil and executive
anc willing t o assume conity i n cispvatching
business
but u n f o r t u n a t e l y h e h a s b e e n i l l
to have h i m cown here,
e
G e physical
m sto t hc i s- tOi m E
e.
Governor
communication
this m e t t e r
He will v a y ..d00
Governor Young,
man, b u t will n o t p a y
any
Governor F a n c h o r .
incication
tached
to the positions.
Governor
o r
ae a r r a n g e m e n t s
Governor Young.
£5 0
he
he
xpenses,.
t +tran' t h e t w o u l d b é v e r y 3
thats 1 . 3 S60
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Federal Reserve Bank of St. Louis
that w o u l d c o m e u p t o h i s recuirements.
H e i s secretary
of our dDoniz:, a n d h e i s not very Susy a t the j e s e n t time.
The Cheirmean.
I s he a
man capsdle o f Gealing with
eepail?
Goycrnor wel
our
to Live i n :ashingtons
a Coneressman.
F e e wormia. Leite t o
provadly.
The C h e i r m a
i
e woulé p r o b e b l y b e necc.ec. s o m e w h a t
Longer.
Governor ‘e]1!
H
o mient. Lies. 2 5 i t n e
here s o m e w h a t longer.
Governor wellborn.
s o p h WM. Slettery,
Governor :ellborn.
T a s
SeVeneyesre,-
times,
e
H e
f i e hes b e e n
a t o w r ban'txr for
i t s with t h e exécutive committee
“ e s ser
k o f a abranch baniz
t
cae
charge
there
of the manager, a n c h e concucted that.
some
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Federal Reserve Bank of St. Louis
He i s a very fine fellow,
of c o u r s e I
would h a v e t o c o n s u l t w i t h him.
The C h a i r m a n .
N e x t "The names
o f t w o o r three
men
a)
from t h e i r c h i e f e u c i t i n g s t a f f cespable o f assunmi
2xssistant t r e a s u r e r
i n suye r v i g
the w o r l
any one
icés,.I thint,
e h e 1 l r e a c y offerec. t h e s e r v -
w
Governor ilicbougal.
o f s u c h 4 man. w h i t h e r this i s another
one or not I Gon't imow. 1
think we are willing
ish another m a n from o u r auciting cepartment.
The Chairman.
S h a l l I
Governor Mcbougal.
put Chicago d o w n here then?
Y o u m a y © o so.
How many?
Governor McDougal.
T h e names o f t w o o r three,
Governor Young.
e w i l l s u p p p l y one.
Governor Fencher.
n
D o y o u ‘ n o w 2hout t h s s a l a r y attac,
No.
i y memory i s thet t h e y had
Little pencil memorancum alongsice o f the letter,
think i t w a s 3 5 0 0 . 0 0
The Chairman.
p c r year.
o a I
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Federal Reserve Bank of St. Louis
Governor #ellborn.
Y o u mischt p u t o p p o s i t e
tery's n a m e t h a t h e i g « bachelor a b o u t 3 6 y e a
The Chairman.
T i r e
M
E
N b o C H S C ese
cer. t H e
collateral,
b y calling
the attention o f the proper officer i n charge.
Governor Young.
H o w many does h e
The Chairman.
Governor Young.
furnish a
H e will need more than that. I
will
man f o r that.
The Chairman. I
may s a y that v e would b e glad t o
furnish t h e men--would n o t hesitate t o d o it, b u t w e
have a
great many calls o f this kind from veashington
from o t h e r p l a c e s
Governor Calkins.
W e would b e glad t o furnish e man,
his expenses i n coming from San Francisco a n d returning t o S a n F r a n c i s c o w o u l d h a v e t o b e p a i c b y somebody,
The Chairman. I
thin: t h e
f F we melre this suggestion
Si
up b y correspond-
Governor
coulc c o n s u l t
jy2
1
t h e officers there.
n
a
t t h e men
i n Boston
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Federal Reserve Bank of St. Louis
Governor
these
men and
Governor
arranged with o n e
Of Our m s n
pay :'7200.00.
Governor N o r r i s . I
d o not dclieve
very f a r i n s u g g e s t i n g names.
I t seems
that
we
t o me all
can d o i s t o take this list a n d then suggest t h e names
efter w e g e t home.
The Cheirman.e T h a t i s e x a c t l y w h a t I
want n e x t a
List o f 2 5 booikkeepers".
W
e c e n furnish
some o f those f r o m N e w York.
Governor Young.
W w e c a n f u r n i s h some.
Governor McPougal. h i l e a c e l p h i a hes several bookKeeCpGre,
y
o
u not, G o v e r n o r N o r r i s ?
Governor Norris.
W e have 2 o m
u n d e r notice t o
no doubt that among t h e m there e r e some
644
who would like t o take some o f these positions a n d would
be c o m p e t e n t
t o fill them, b u t I
do n o t Know t h e namss o f
any o f them now.
The Chairman.
D o y o u have a n y i n Richmond t h a t y o u
can let go?
Governor Seay.
‘ j e have n o superfluous m e n i n Kich-
mond «
The Chairman.
T h e s e m e n must have h a d machine exper-
lence a n d bookkeeping experience.
Governor Calkins.» h a t do they pay?
The Chairman. $ 1 8 0 0 . 0 0 , I
think, i s what they had noted
here.
Governor Caliiins. I
Governor Young.
cannot gend h i n any-
% e have a
l o t o f people w h o a r e
going t o b e l e t o u t a n d they would rather take that than
nothing, I
imagine.
The Chairman-e I
will put down Philadelphia, N e w York
and Minneapolis.
Governor worss.
H o w many bookkeepers d o you want?
The Chairman. Twenty five.
Governor Biggs.
j i e have 1 2 o r 1 5 men there, b u t I
don't know much about them. T h e y all go out the lst of
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
Januery. J
just furnishec ko’ Er. Glesgow a credit man.
them now.
S o I do not think w e c a n furnish
Giich > Vine.
I turn this letter o v e r
to Mr. H e r r i s o n a n d a s k h i m t o p r e p a r e a
thought i s t o ask Mr. Harrison 1
these banizs have inditatec e
reply.
M
y
i v i s e lir. Myer that
delief t h a t t h e y c a n furnish
men needed i f they will b e good enough t o write t o
S)>
bens
a n G the selections
c a
arrangements a s t o salary a n d s o o n can b e advised
Governor Morss. There i s n o objection t o writing
him i f w e finc a n y m a n when w e g e t home?
The Chairmen,
N o .
Governor Fancher.
I f such communications were
possidly w e m i g h t b e a b l e
hac. some iGea o f the salaries,
felt t h a t t h e b a n k s
mentioned c a n n o t furnis!
The Chairman. I
1
S entire p e r s o m
have e l s o receivec f r o m GoO,ernor
corresponcence w i t h a
memorandum w h i c h h e
irom Mr. S , P . Hixon, director of: ihe Ped=
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Federal Reserve Bank of St. Louis
rye pani o f liimneapolis, I
believe,
in
BY
scheme which Governor Harding suggested
It seems t o m e that
tes w a s very well Gisposec o f a t the meeting
this m o r n i n e r t h a t
i t i s n o longer importent
t o submit t h i s
correspondence, w h i c h came t o m e this morning before t h e
meeting t o o k place i n this room.
tercay, b u t I
T h i s w a s discussed yes-
c o n o t u n d e r s t a n d t h a t a n y a c t i o n w a s required,
but this correspondence Governor Harding wants m e t o return t o Mr. Harrison again.
Now, t h e r e a r e o n e o r t w o o t h e r m a t t e r s
and g e t down t o our calendar,
yesterday,
t o clean u p
W e came t o n o conclusion
a s a result o f our conference w i t h Senator Kenhis p a r t y o n o n e point, t h a t i s , w h e t h e r
i t is
irable f o r these Federal Reserve Banks, w h i c h a r e lo-
cated i n the cattle section, abd s e n c i n g a
comuni-
cation t o their member banks.
we woulda h a v e t o deal w i t h Hr.
rangements eas t o the terms o f a n y letter, a n c
me t h a t w e c a n l e a v e t h e m a t t e r
any a c t i o n
o f the Conference
the banks a r e interested.
i n this s h a p e , w i t h o u t
» especially a s o n l y s i x o f
I t i s really n o t the special
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Federal Reserve Bank of St. Louis
susiness o f the other six, b u t I went t o express m y
personal belief t h a t i f some letter along t h e line o f
our Ciscussion, especially relating t o the line o f Giswas b r o u g h t
u p b y Mr. M y e r ,
c a n b e sent b y
Benks t o the member banks o u t i n that section,
that i t will help a
great deal i n connection w i t h this
Governor Young. I
do not think there i s a n y
ficulty a s t h a t i n o u r cistrict.
thirty d a y s w i t h a
W e corresponded
lot o f member banks a n d t o l d t h e m t h a t
they might better g e t along with some finance corporation
and c o m e t o u s i n a
real emergency.
over w i t h Mr. Myer,
and
l a v e talked that
i t hed h i s aporuval.
i e are not
Going t h e t w i t h e v e r y baniz, b u t s o m e o f t h e s e b a n k s t h a t
are unduly over-extenced.
ence f r o m somewhere,
similer action;
and I
n e y have t o have some assistthink t h e i r Governors h a v e t a k e n
a t least, t h o s e w i t h whom I have dis-
cussec t h e m a t t e r have.
The Chairman.
W e l l , t h i s just concludes t h e record.
I thought i t was left i n a n unfinished concition.
not a
matter
Certainly I
I t is
o n w h i c h w e w o u l d v o t e a t t h i s meeting.
would n o t w a n t t o v o t e a s t o w h a t G o v e r n o r
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Federal Reserve Bank of St. Louis
648
Young should c o about t h e cattle business o u t i n his
cistrict.
Governor Young.
W h e a t I ettemptec t o say w a s that
v
we w e r e G o i n g w h a t y o u s u g g
> estea
yesterday,
and I
thinl:
the other Governors i n the agricultural a n d cattle cistricts a r e doing t h e same thing.
The Cheirman. N o w , another matter o f unfinished
business: G o y e r n o r
when h e stated thet the proposal f o r t h e issiing o f a
circular which h e made i n his address,
charges w h i c h m i g h t b e i m p o s e d
i n relation t o
i n tiey o f a n interest
loss, i f you please, o n the collection o f checks b y
member banks, w a s made after conshiting counsel, a n d
that counsel favored sending out such a circular. T h a t
being t h e case, I
suppose t h e t w e had better consicer
this c i r c u l a r a n d s e e w h e t h e r
i t meets w i t h approval
or
not.
Governor Sseay.
4
s I
understood G o v e r n o r Harding,
he referred n o t t o that provision o f the a c t which requires t h e Federal Reserve Board t o fix the charge which
the member bank m a y make, 7b u t
h e referred t o the charge
which the Board might
require the member banks t o make
i
in handling items received f r o m these non-member banks,
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Federal Reserve Bank of St. Louis
which declinec. t o remit a t
The Chairman.
N o , i t was just the other way.
Governor Fancher.
I t was j u s t t h e other w e y around.
Governor Seay. J
The C h a i r m a n .
t h e n e r w a y sround?
Y e s ,
H e r e
i
s Graft ©
the. c i r c u l a r .
I will reac t h e first paragraph:
“Under a u t h o r i t
i - that p a r t e r S e c t i o n 1 S o f
Federel N e s e r v e A c t w h i c h p r o v i c e s t h a t t h e F e d e r a l
Boarc shall,
b y rule,
f i x the c h a r g e s t o b e collected
member b a n k s f r o m t h e i r p e t r o n s w h o s e c h e c t s a r e c l e a
the Federal Meserve Banks, t h e Boarc rules t h a t
no member b a n k shall collect f r o m i t s patrons a n y charge
by way o f interest o n account o f a n y check Gcopositedc w i
it a n c c l e a r e d t h r o u g Sh
e
&S
of 1 0 ¢ p e r #100,
Buc -Chetics
o r fr
Federal
L O Y
e r e of
t
h
e smount o f
t n e
thereof,
are,
O f course, o p t i o n a l ,
ciseretion
Governor Seay.
t h e t ts, t h e y o r m a y n o t b e i m
o f ecch member
I s that t h e circuler, Governor wWell-
porn, t h a t your counsel thought i t would v e helpful t o
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Federal Reserve Bank of St. Louis
issuc a t this time?
Governor Wellborn.
app¥éved that. I
Well, I
was n o t a w a r e t h a t t h e y
would like t o telk with them ebout it,
because m y feeling ebout i t is that i f we put that into
rect n o w i t w i l l a r o u s e t h o s e c i t y banis.
w h i l e they
are n o t c o o p e r a t i n g w i t h u s , s t i l l t h e y w i l l g e t
to see that change take
siudie m r e t t y heavily.
and Atlanta,
T a l s o u r City
t h o y have v e r y heavy
herges o n chects t h a t g o over t h e counter, a n d they d o
any concession.
T h e y charge t h e cepositor
off. I
think i t ought t o b e regu~
latecd a t s o m e t i m e o r other,
retner
b e c time.
Y o u s e s
Governor Seay.
pe h e l p f u l
statec
but I
think r i g h t n o w i s
o u r trial comes
u p in
h a i r m a n BMeCoré said that i t would
t o c o i t a t t h i s time.
t h a t i t wes the opinion
G o v e r n o r Harding
o f t h e counsel
for the
wri
Atlanta Bani: that i t would b e h e l t e n c . Chairman McCord
nocced
h i s assent.
Governor Yiellborn. Y e s , I thini: Mr. McCord now has
651
that view, b u t I
do not s e e h o w that will b e helpful.
It might h e l p t h e c o u n t r y b u n k s
Governor Fancher.
t o s o m e extent.
M r . Chairman, I
if this r e g u l a t i o n i s p u t i n t o offect,
understand t h a t
i t will have t h e
effect o f creating certain charges which are now exacted b y
certain clearing house association.
Senator cDougal.
T h a t i s what i t i s for?
Eee aO T T
Governor Pancher.
T h a t i s exactly what i t i s for.
That i s exactly what t h e y have done.
Governor McDougal. T h e r e i s no question about that,
but t h e concluding sentence i n this letter i s a s folloms:
‘There have been n o complaints, howevar, saith regard
to banks i n the majority o f Federal Reserve Districts.
For this reason t h e Board desires t o leave i t t o the discretion o f each Federal Reserve B a n k a s t o whethar a n d t o
what extent i t is necessary o r desirable t o call this ruling
to the attention o f member banks".
The Chairman» s a h e r e i s the complaint supposed t o
arise?
Governor wicDougal.
N e w York, Chicago and Cleveland.
It undoubtedly i s Chicago, a n d I
think i t i s N e w York.
do not know about your present rules u p there; b u t this
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Federal Reserve Bank of St. Louis
T f
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Federal Reserve Bank of St. Louis
652
no foree a n c effect w i t h this paragraph i n it,
e2use i t leaves
i t t o y o u o r t o me,
T h e y s a y "Here
orcer t o co something", a n c the conclusion i s " D o
you like.
i f you con't like it, let
The Chairmen, I
will a s k H r . H a r r i s o n
he i m o w s a b o u t t h i s c i r c u l a r
Harrison.
t o t h e meeting,
t o explain what
i f h e will.
S o m e timo a g o Mr. Logan referred t o the
g the use o f 4 circular
COnsLCereC T t ter
several years, because
uncer Section
t t ‘ e d e r a s s e r v e A c t requires,
1 6 i a t t h e y shall b y rule f i x the limit
for checits cleared through
Up until this time, however,
for various reasons, t h e y have never cone anything.
They feel now that i t is perhaps important t o issue
ruling,
i f only because o f t h e fact that i n certein
tricts, I
understand t h e r e a r e only two o f them, t h e
ember banks, because o f rulings o f their clearing houses,
are collecting charges t h e t a r e i n excess o f the limit
prescribed b y this regulation.
I t was o n my sugges
prescribe a n y r u l i n g o f t
haracter i t ought t o b e s o phrased a s t o permit these
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Federal Reserve Bank of St. Louis
where t h e r e a
rathsr t h e n t o suggest t o member banizs that a r e n o t now
cherges, thet t h e y shall mate
last sentence w a s p u t in, n o t that in.
nis should nullify t h e regula
not n e c e s s a r y
would n o t b e issucc.
t o issuc a
F o r instance,
i n N e w York
mace u n c e r t h e
the m a x i m u m
its reguietion, w i t h t h e exception o f
hecks collected i n certain states,
i n the
Atlanta district, where t h e y make a n allowance f o r a n
exchange charge i n addition t o the intcrest
woule
fe
s
s n e s e circumstences
thet
w e woulsc b e
ectly justified i n smothering t h e regulation i n New
Governor McDougal.
chargé
D o n ' t v o u still have a
minimum
o n small items?
Vie B e a r e r s
N o a s
Governor hic!
W
i
t
s
: W O U u l G e f fisct s i e t e
= o would
recuire y o u t o handle those items o n the basis o f s o much
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Federal Reserve Bank of St. Louis
654
per huncred o r s o much p e r thousand, instead o f per item.
I a m sure o f that.
Governor Young.
speaks o f “check”.
N o , n o t accorcing t o this.
I t
I t says “The Board rules t h a t n o mem-
per bank shall collect f r o m its patrons a n y charge b y way
of interest o n account o f a n y check Cepositec w i t h i t a n d
cleared through a Federel heserve Bank i n excess o f 10
cents p e r »100.,
such checks.
o r f r a c t i o n thereof,
o n the amount o f
T h e intcrest charges authorized
b y the
Board, equal t o or less than 10¢ per 4100. o r fraction
qhereof, are, o f course, optional, t h a t is, t h e y m a y o r
may not be imposed a t the discretion o f ead member bank"
This will n o t affect m y district a t all.
Governor McDougal.
+
T h e n i f a cepositor o f the First
National Bank i n Chicago brought i n three checks o n Peoria,
they could charge, i f they deposited n o other item i n
the same deposit, 1 0 cents a t least?
Governor Young.
Y e s sir.
Governor McDougal,
T h e n this would b e o f n o force
and effect i n Chicago.
The Chairman.
N o r i n N e w York.
T h e great majority
of t h e cGistricts w o u l d n o t b e a f f e c t e d
b y it.
I t i s for
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Federal Reserve Bank of St. Louis
thet r e a s o n t h e t= + t h e
put through
Governor Callzins
pecause
w
e Cannot g o v e r n
w e do
unc.oubtecly s o m e bant:s
but we con't lmow w h
Mr. H a r r i s o n ,
4-thin: 6
call t h i s t o t h e a t t e n t - o n
w i n g to € o would b e t o
o f e y member b a n i : o f w h i c h y o u
i would n o t G o v e r y much.
Cel’-ins.
T h e n somebody c o m e
& Tule p u l i n t o e f f e c t
b y the
that h e s n o t bee: e m p l o y e c .
violating a
rule
anything
you h a v e t o
epply it, o n o o r the
Governor Seay.u £
t h e Soarc makes a
ruling, 1
think
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Federal Reserve Bank of St. Louis
it will b e communicetec t o our member banks,
to r e a c h t h o s e w h o v i o l a t e
The Chairman.
Oh, I
Governor Calt-ins.
i n order
it.
d e not tmow,
‘ e l i , whet i s the
proposal?
The Chairman.
W e l l , when you get a
violation, t h e
Orcinarily w e
banks o f © regulation, b u t this i s not
Reo Paling...
i n other words,
i n order
disturbance a g p o s s i b l e , I
use this ruling where w e 3
Governor Young.
I t might a p p e a r
Governor “eLllborn.
t h i s-intoe e f f e c t ,
at present ecv
B
w e would h a v e
o
i n the
a
r
t o send each member
d puts
bank
that ruling, w o u l d w e not, i n a circular letter?
Chairman,
Y o u woulc, according t o their notion.
Governor tiellbor:
N o w treet w o u l é b i
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Federal Reserve Bank of St. Louis
Governor
We
h
e
y a r s soms
banks t h e t w e
Governor
them.
The Chairman,
N o w
i t scem
to t a k e a c t i o n w i t h r e g a r d t o a
n
é
e d a t w e a r e astrec. here
ruling w h i c h h a s s i m p l y
peciel application i n the atlenta District, a n d Governor
Wellburn seems t o b e opposed t o it, a n d h e says i t will
Scere eCu.
Governor wWellborn. i
ae
think
p e o p l e will g e t very mac
eee
w
a
i
i b e c a u s e I
s
e a
thi
rumpus e b o u t i t s -
their clearing house c h
Cheirman.
Governor w e l l b o r n ?
Governor Wellborn, I
that.
don't I m o w w h a t t o s a y a b o u t
I t seems f ! M r . M c C o r d agress w i t h Governor
and t h a t c o u n s e l h a v e a g r e e d t h a t i>t w o u l d D e
helpful t o their case.
Crr C a g e s
The C h e i r m a n .
ML
b e e t
e G
O f course,
1 .
h e m t o win
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Federal Reserve Bank of St. Louis
Governor Callins,
w
e have a
¢ase i n o u r d i s t r i c t
end Governor Fancher h a s o n e i n his cistrict.
opinion is, without going into t h e merits o f
ticular regulation o r rule, that i t is uncéesirable t o
change t h e c o n c i t i o n s
decision; a t least, a preliminary Gecision.
me Chairman.
H a s anyvocy a
motion t o offer?
WOULC
t o t o
conversation w e had
whole gencral sudject, though w o cid
fer t o t h i s c i r c u l e r
o r this proposed
sure i n m y o w n juGement t h a t were h e acquaintec w i t h the
possi bility o f 2 issuing
strenuously oppose it.
a
.
l e lite t h
h
e woule
b a s e t h a t assimption simply
nis general statement thet i n his opinion nothing
ought
t o b e done a t this t i m e t h a t i s i n the nature
chenge o f existing p r a c t i c e s
of a
i n the v a r collection busi-
frankly feel thet i t might not be inadviseble
Conference
to
g e s
t h e t y o u i s a v e i t u n t o wr.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
porn?
baniss complain,
"vou w a n t t o t a k e
i n t e r e s t from u s enc
the
Dlaining about t h e
regulate t h a
that, b u t I
p h e €
h e }
believe t h a t
S $ complaining about
i f:7e p u t t h i s i n t o e f f e
on t h e p a r t o f t h e c i t y b a n k e r s ,
they c a n t o help oreak u p this ex-
Reserve Roerd, w i t h t h e inclusion o f the last
sentence, pvrovidec however t h a t counsel a n c
counsel
i n the socalled Atlanta c a s e b o t h approve
Would t h e t s a t i s f y you, G o v e r n o r ‘:ellporn? e
Davis will strenuously oppose it.
Governor W e l l b o r n , I
think
e
o f it.
e s
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Chairman. I
suggested b o t h counsel anc.
counsel.
Governor Wellborn.
B u t f
think i f y o u e r Ne, H a r r i s o n
Will tall t o him about it, h e m i g h u i s e s o m e other v i e w o f
it.
The Chairmen.
M r . Davis h e s expressed himself a s op-
posed t o any change i n the practice.
Goyernor Wellborn. I
think that i n this suit t h e
State b a n k s a l l e g e t h e r e t h a t t h e y e r e p e r m i t t i n g t h e i r
member banks t o charge exchange o v e r t h e counter.
one o f their charges. A l t h o u g h t h a t i s not related en-
tirely t o the subject, i t has some general beering o n it.
It Goes n o t touch o u r immediate qiestion i n issue.
Governor Seay.Di H
the B o a r d h a s r e a c h e d
to ¢ o t h i s t h i n g ,
Chairman,
e a conclusion
and I
believe
i t a p ars t o m e that
that
i t i s calledupon
t h a t there
i s only one
thing t h e t w i l l s t o p them, a n d t h a t i s a n o p i n i o n o f counsel
that i t w o u l d b e i n j u d i c i o u s
t o d o i t a t t h i s time. I
was about t o express the same thing that Mr. Harrison sugI cdo not s e e a n y other issue f o r this Conference b u t t h a t .
The Chairman.
W o u l d that b e agreeable t o you, Govern-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
or Wellborn?
Governor Wellborn.
The Chairman.
Y e s sir.
H o w about you, Governor Fancher?
Governor Fancher.
The Chairman.
Y e s sir, t h a t i s agreeable.
I s that offered a s a motion?
Governor Fancher. I
Governor Young. I
offer i t a s a motion.
second t h e motion.
(The motion, being Culy seconded, w a s unanimously
carried). |
The Chairman. I
,ave indicated t o Mr. Gilbert that
it w i l l p r o b a b l y b e m o r e c o n v e n i e n t f o r u s t o h a v e a
short
conference w i t h h i m t o m o r r o w r a t h e r t h a n today. e
e
satisfactory, I
G e 7Ss
think n o w w e c a n g o ehead with our program,
beginning a t topic [II:
Iii. C u r r e n c y a n d Circulation.
Governor Wellborn, I
we will adjourn tomorrow. I
would l i k e t o k n o w w h a t t i m e
would like
a l e m y reser-
vation.
The Chairman. I
thought w e might g e t through tomorrow
sometime around 3 o'clock.
Governor Wellborn. f
nes
t o stay until t h e cicse o f
the meeting, but the train w v e s a t 3 o'clock.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Come
currency.
@ecemcar
f o u l c i t not
a
revent.
H
;
>
Counter:
o
o
citing
near
meeatinge
Moco L i n g ,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
665
san Frencisco, Cleveland a n c
Governor F a n c h e r ?
Governor F a n c h e r .
M r . Chairman,
t h a t has a
3 =
the action taken b y the Conference a t the
is o u r o p i n i o n
whereby
a n c w e recommenc
bearing
l a meeting.
thet s
1 %
D e worked
out
e a c h F e d e r a l H e s e r v e Bantz: w i l l a b s o r b t h e p £o5s t a g e
Bank n o t e s
t o ail
complete
daily b e t w e e n t h e F e d e r a l K e s e r v e B a n k s .
Governor McDougal,
J I second t h e motion,
i f that i s a
motion.
The C h a i r m a n ,
G o v e r n o r Seay,
Governor S e a y . I
what have
y o u t o s ay?
a m informed b y t h e m e n o f o u r b a n k
that i t i s t h e p r a c t i c e b e t w e e n
Reserve Banizs. t o absorb G
whether f i t o r unfit.
insurance
w e are j
a
crges
A l l charges
r
al :
o h shivments,
e x c e p tostc o f
w
e are i n
of absorbing a l l
and t h e unfit.
Governor Fanchor.
Governor Norris.
‘ i e a r e i n f a v o r o f that.
w e a r e i n favor o f ahsorbing
all, including t h e insurance,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
hat e a c h b a n k h a s i t s o w n p o l i c y
on
the matter i s covered both/incoming
and
a o c s n o t need t o b e dealt
respect t o the postage, t h e practice
absorbing t h e c h a r g e s
o n those b e t w e e n
the several Federal Keserve Banks, b u t I thought i t advisable t o make i t gconeral.
Governor Young. I
Governor Norris. I
The Chairman.
male “Such:ax m o t i o n .
seconé
T h i s covers a
expenses
o f shivping,
fit e n d unfit, including postage a n d s o forth, exceptvance, w h i c h w i l l b e c o v e r e d
b y t h e blantret p o l i c y
of the receiving ban‘,
Governor Young.
The Chairman.
Y e s sir.
l f that is a motion, I
vote.
(The m o t i o n w a s G u l y s e c o n d e c a n c c a r r i c é a n i m o u s l y ) .
The Chairman.» T h e next i s
(2)
e t h o d
o f accounting f o r postage
o n ship-
ments o f Federal N e s e r v e n o t e s m a d e
to banic o f i s s u e .
S h o u l d
b e uniform.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
665
mplest p l a n apmears t o b e t o include postage
in t h e w i r e a d v i c e o f shipment.
B y this method
only o n e entry i s made e n c n o further attention
is necesssry o n the part o f the forwarcing banks.
I wight s a y that there i s some objection
New Ygrk o n account o f the detail involved i n wiri
age amount, a s I und:
G o
v e r
a n d it.
n gonMui
rogYh t w e c o n s i c e r p a r a g r a p h { 4 } b e f o r e
we consider paragraphs ( 2 ) a n d (3), a n d i f w e considered
No. (4) favorably, i t will totally eliminate paragraphs
oe-ene 3 .
The Chairman.
V e r y well,
Cannot s e t t l e m e n t
w e will s k i p t o paragraph
o f shipments
o f other Federal
Reserve notes b e handled through the Federal
Reserve Board i n & manner similar t o the present
daily settlement o f collected funds through t h e
Gold S e t t l e m e n t F u n d .
Submitted
this would
greatly reduce the number o f telegrams over
the p r i v a t e w i r e system.
Ts t h a t p o s s i b l e
t o do?
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Federal Reserve Bank of St. Louis
Governor Young. I
think
S05
r 7oSeay.
n r s
T hya o
t G
is
to h a v e
c
l
e
a
r
the
tclegrams?
her.
T h e n
would
of mail advice, would i t not?
srnor
Governor F a
be a
matter
I mean simply a n entry.
i, ete
a e
what
P E N C E
That w o u l d m e a n t h e
: 3
amounts through t h e
3 oarc. 9
then f o l l o w e d
vice.
The hairman. i x a c t l y .
As I
Governor Secay.
serve B a n i z s w i l l a d v i s e
d o n e tne l e g r aem
to
t h e Boara
s
the
other
anc t h e B o a r c w o u l d
tt
< 4
b
Ciss
other F e d e r a l
on s h i v m e n t s
tloments
sO*:
5
W
e
>
> ~
2
-
Federal H e s e r v e Banizs.
the telegrams.
They w o u l c c l c a r
Reserve Banks,
the
understanc i t ,
s
h
i
Reserve
+
isn't that it?
Governor Young.
Federal
e
o
other Federal
vB arn k
e notes
s e R 8t
effect a
o
settlement
we c a n e f f e c t set=-
o f notes
o n shivments
p
t
of
point i s s h e l l w e G o
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Governor M c D o u g a l . a
h e s sotticments
on the cate o f shioment, I
woulc s e y v 7 I
will
b e made
think theyv
Deo
Governor Fencher. Theat. w o u l d m e a n t h a t y o u r t e l l e r s w i l
a
F
S
termine t h e s h i p m e n t f a i r l y e a r l y i n
suit
everybody
conflict w i t h a n y incivicueal v i e w s ?
I
s ther
greement?
Governor Young. I
make a
the s u g g e s t i o n
motion that w e a c t favor-
in
The Cheirman.
Governor Fencher. I
Governor McDougel.
% will
(whereupon
b e cone
second i t .
M y qualification
o n the cate
t h e motion
was put
is
o f
t o a
vote a n d c a r r i c d
unenimously).
The Chairman.
N o w , w e come beck t o (3).
Governor Young.
The Chairman.
i t i s not necessary
o O o } i s Cisposedc
o f}
t o consicer t h a t
h e a c t i o n taicen
on (4).
Governor Young. a n d so is (2).
The Chairman.
( 2 ) i s likewise disposed of.
Now, i t will b e necessary t o recommend,
o f course,
a set o f code words o r a method o f telegraphing t o deal
with currency shipments.
but I
T h e present code m a y cover it,
think i t w i l l p r o b a b l y b e n e c e s s a r y t o d e v i s e a
graphic formula, w i l l i t not?
tele-
Y o u see each bank will want
tO make a separate advice o f currency shipments a s distin-
guished from the other items requiring settlements, a s I
gather it.
Governor Fancher.
I f this i s put into operation i t
would j u s t mean another settlement; another s e t o f settle}
ments o r entries e a c h day.
Governor wiorss. D o e s ( 4 ) take c a r e o f (3)?
Governor Fancher.
The Chairman.
Yes.
w h o will take charge o f working that
out?
Governor wicbougal. I
will b e glad t o ascertain
nhether o r not o u r present code will cover t h e situation.
The Chairman.
a s a
rule, t h e w i r e s y s t e m c e n t e r s
Governor McDougal, a n d would i t b e satisfactory t o ap-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
in
Governor
Governor F e n c h o r .
t
i
e motion.
Will b e
necessery here; t h e t i s , i n s o f a r e s t h e c o
But I
now refer t o Topi
f
f
Ps
&
Bees
& : ( 3 ) a n d (4). h o s e s a r c
£
i
i
i
i
i
k
or MeDougal,
S a i“
F
t o b e worledout w i t h
:
: B O a r o “ O n p e n eEr
i
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ar. a p n
A N S .
unacerstanc:
o r
+
i s
Goycrnor
ent. t h e y will
Will h a v e
t o De
Gheairman. Yes.
I t will b e reported i n the usual
usually © o , ¢ s s o o n a s t h e r e c o r é i s m a d e
think i t would
Hevougel
be perfectly propor f o r Governor T
t o tele u p correspon.cnce i m m e c i a t e l y w i t h t h e
tO t h i s m a t t e r .
rnor Eechougell.
he
S Cheirmen.
R e
W i l l D e glaG to-do 2 6 s
n
y oEb j e c t i o n t o tLh a t ?
I f not,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ft W i l l
b e consicered
It i s uncerstooc t h a t postage w i l l b e included a s a
O- S h e c o s t .
Sut
i t i s not uncerstooc
whethcr tele}
of postage i s t o b e included
Governor Young.
I t woule n o t b e n e c
Governor Fencher.
I t woulc n o t
Governor Young.
not have t o s a y enything about postage.
The c i r m e r F
S
g h
o
f V e r r i s o n would
to have a motion passec approving o r recommencing
f the recorc, t h a t
really Gisposed o f by (1).
are
Yes, t h er s
e |
right.
and Circulation.
Stancard o f sorting currency should b
Form.
That h a s b e e n C i s p o s e d
Ssurer t h a t a
e
o f by a
.récommencation
b e appointed
very matter i n the Treasury.
t o the
+t
I s there e n y cuestion about it?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
of banks reporting t o
detail o f monthly curroncy reccipts a n c disburse-~
is t o kinds, denominations,
Governor Fancher, y o u sugsestec. t h a t topic.
Govcrnor Fancher,
yoRrobchlyi
t
h
e
: Go_srnors m a y b e more
or f e m i l i a r w i t h t h e object o f form 160. Boarce. report f o r m 1 6 0 a s i n i t i e t c c
B o s a r é ' s n o w currency com-
mittes d u r i n g t h e w a r p e r i o d w h e n G o , e r n m e n t a g e n c i e s w e r e
printing sufficient quelixvies o f
currency.
T h i s monthly report 3 3
e l a b o r a t e cis-
pley o f balances, receipts a n c Cisbursements o f currency
.
néitions, new,
£ t a n d unfit.
at the purpose o f this analytical
report w e s t o determine e a c h FPeaeral Heserv
age r e q u i r e m e n t s
d i turn o v e r a s e a guice t o f u t u r e
printing allotments a n c t o permit a
withholcing o f a certain
percentage o f the procuct o f the Bureau o f Printing a n d
Engraving f r o m issuance,
reserve.
i n orcer t o duilc u p a currency
I t would s e e m that curing t h e period this re-
port h a s been i n effect that accurete enough conclusions
could
b e cGrawn t h e r e f r o m
ea
ed
& or
working o u t the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
peen a c w m m p l i s h
eontinuaence o f t h i s r e p o r t ? 1
considerable worl: t o prepare t h i s re-
2
Tne a C h e i r m a n .
W w e h a v e /man
Cherge o f t h e s e matters,
i n o u r bent:
w h o “haw:
a n c O S L s o l “tic o p i n i o n b i a s b i e
oarc. will b e reluctent t o abancon thet report.
are t o offer a
I f you
resolution f o r i t s abanconment, m i s h t i t
not D e desiraple t o put i t i n t h e form o f a recommenda
to t h i s
Governor F e n c h e r .
n e w commit~
T h e t i s what I
vOUlG m o v e t h e t t h e m a t t e r
b e referred
rency committees, an’. i f i t c a n b e sorsnconss
abandoned
i n the
Governor Young.
Tclegranhic t r a n s f e r s :
(1) L i m i t a t i o n o n céteil matter,
qn, n
nat w a s s u g g e s t e d
b y Richmond.
out a t t h e televhone n o w .
G o v e r n o r s e a ymy, oi
a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
enyone
uncer a
SO D e y m o n t s
Young.
cuestions t h a t h a v a b e e n u o h e r e a t m o s t e v e r y G o v e r n o r ' s
Confcrence.
T h e r e :
N 6 > W a y
t h e t )
k n e w
o f t
p e g a Lo G i o ,
>
that t h e r e
i s t o o m u c h cetsild 3
to t h e a t t e n t i o n
L h e metcte
o f
Governor
o f the
necessary t e l i g
zreat desl, e n d Lf thin’:
sfactorily Cown there. D o n ' t
Governor McDougal.
Governor
Other d a y a n d
ist ianvemrs pairs<
n
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Governor McDougal.
reac a
Ltt h i n k
t o
little memorandum f r o m Mr. Dillard, w h o keeps h i s
eye
the
i t would-be -in-ercer
392 t r i c lLe ingusiry t e e m
There
Roarc a t aifferent times,
c Mir.
ciréct charge o f the leasec wire,
nw
states:
h
ao i s i n
" T h a t there
pesn b u t o n e w i r e
™
is
veing handlec setisfactorily d o n all wires except betwea@m
Chicago e n d Hestorn
enc b d e t v e c n
which i s r o l a y e d
Chicago a n d
In t h o s e c a s e s
there is some ¢onycstion,
At Wiss De: necessary,
o
increase,
cue
i f the
t ot provide
a t ashington,
some
to increase i n volume, a n d
number o f t e l e g r a m s c o n t i n u e s
relief
circuit,
on the Chicago-San Franci
tween Chicago a n d the Hast,
ithe Board i n its l e
sis o f t h e b u s i n e s s
office s h o w e c
that a
ser
received
X-3051 stated that a n analyat the washington telegraph
could have
consicsravle
been f o r w a r d e d a
by mail, requesting that
officers a n d
employes t h e n e c e s s i t y Pso
the u s e
o f the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
675
imneciate c o m n u -
worcing messages i n con-=
it has beon brought t o the ettention o f
employes o n several
occasions, a n d w e believe t h e r e i s v e r y little misuse o f
the w i r e i n -this bank.
"Qur o p e r a t o r i n f o r m s
me
a t t h e l a s t anelysis m a d e
of business relayed through o u r telegraph office indi1Sre W e r e V e r y L 6 w u n n c e e s s e r y 3 i r e s e i n e
Tt w o u l a
p e “CLitseult
t o mae
greet percentage o f
In connection w v
opportunity o f remincin,
to t i m e b e e n r e c
4.
for e s s e n t i e l purposes,
Ooreport. J
there,
a n c t h a t i s e b o u t alld t h e r
think i f y o u w i l l p e r m i t t h a b t o - c o i n
i t will l o o k l i t e w e a 5
leased wire.
F e e s w
a
t h e oreetice
a l t s about this
i n Chicag f
least enceavoring t o c a r r y b
y mail ever
houla g o b yd m a i l
at
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
are coing t h e same
The Chairman. y
i e s o n refresh
anc I recall i t now a
cussion t o o l p l a c e %
y
m y memory,
, t h a t exactly this seme Cis-
h e las
P e r s
a
at c o n f e r e n c e s p r e v i o u s
n
c £
think s
t o t h e last.
T h e
really these, first, unnecessary tele-~
of concise expression i n necessary
still a n o t h e r a u e s t i o n h a s
recently arisen, e n d that i s whether i t is not more ex~
pensive
t o code 3
>
a p e s a n d maintain a
staff n e c e s s c r y
to
to p u t t h e m e s s a g e s
cise m e s s a g e s
Now, I
i n code
t h a n i t woulc b e s e n d c o n -
i n o p e n language.
happen t o have c i s a i s s e a
some o f t h e o f f i c e
i
n our bank a t New Y o r ,
Conference passed a
resolution suggesting these
n¢. including Goyérnor Young's suggestion that
the receiving ban’: should tale a n interest i n the extent
slage o f messages receivec, w i t h
the p r o v i s i o n t h e t e v e r y officer, G e p a r t n e
ploye, including t h e telegraph staff,
a
c ana en=
b e made aware o f
this resolution and its terms, that we might really get
more o u t o f this subject ebout telegraphing.
There is
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
not anything but: manafement andi¢iscipline i n each bank
thet w i i ecceonpiish i t .
Governor Seay.
l e i t topic ©. 41) y o u are taiking
adout?
The Chairman. ,
Governor S e a y .
paragraphs
Y e s , e
The C h a i r m a n .
i s responsible f o r
Richmone
t o discuss
startec
e r o s e f r o m t h i s fact: I
Goyernor Seay.
hicago t h e t took excep
h e oe
i t i n . your
think i t
n , p r o v a v l y correctly~--I will
not--to certain ceteil i
elegrams. I
thint:
Cecides t h a t o u r t e l e g r a p h i c t r a n s f e r s
to our memDer bantts.
for the benef
o
o f non-member banks.
I t should n o t b e
W e have b e e n try-
ing t o limit o u r telegrams t o j u a b o u t this:
willing t o trensmit t o a n y Reserve B a n k a telegram f o r
the cerecit o f a n y m e m b e r bank.
the u s e
o f a
N o w , w h e n i t comes t o
nonemember bank, e n c
P o r c .
L o r e e
e n e
that o u g h t
the member danit which gets t h e bencfi f
the transfer.
That i s t h e l i m i t o f t h e C e t a i l t h e t w e h o p e t e l e g r a p h i c
transfers m a y teach.
678
The Chairman. N o w , Governor Seay, I was going t o add
one suggestion t o this idea o f gatting u p the resolution
or notice, a n d that i s that this telegraph system cexters
in Chicago+s T h e y have a n opportunity o f studying i t there,
aga G o v e r n o r M c D o u g a l a n d G o v e r n o r Fancher, I
recall, w e r e
the original committee o n this telegraph system. I
like t o see this Conferencs pass a
would
resolution referring these
topics about the use o r misuse o f thse telegraph system t o
Governor M c D o u g a l ,
w i t h authority
t o call u p o n a n y near-by
Reserve B a n k Governor o r officer f o r assistance, a n d formu.
late i t scientifically, a f t e r d u e study, a n d find o u t
just where t h e limitations should b e applied, a n d then
submit i t back’ v e r s o n a l l y I
do not think I
feel capable
to pass u p o n that matter without o u r m a n a t the bank having
aropportunity to study something concrete. I have grave
Lo
doubts whether i t 4s wise t o go/the extent of coding the
messages, t o the extent which w e have gonee
i e have a
large department coding messuges all day long, a n d when
you come t o consider t h a t w e sent last year 175,000
telegraphic transfers O u t o f the bank, y o u c a n see t h e
extent o f the labor involved i n i t all. N o x , i f Governor iicDougal would undertake t o formulate something
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
z
that could b e submitted
h e Federal Reserve Banks,
y
and g e t replies f r o m them, a n c G
s t the resulta
resubmit i t ell a s cthe:act. o f this Conference, I
yriats people
result o f thet.
in
I f i n view o f t h e large volume o f tele-
eraphic business t h a t originates i n New York h e would
lile
t o have s o m e o n e come
t o Chicago f r o m N e w York
t o
7
work o n i t with him, w e will senc h i m some
Governor McDougal.
Y o u r suggestion i s
referrec t o the coce committee?
coce o r telegraph committee.
t
Formule te
h
comprehendvs, t h e t will
h e t :
the whole
Didn't Governor MeDougal s a y that
you h a c
m
e
s
s
a
g
e
s
a n c thaet.in y o u r o p i n i o n
there w e s n o t m u c h a i
Governor McDougal.
N o t s o completely a s w e might,
put t h e idea was, accorGing t o this report, a n d according
to this stucy that w a s mece b y the m a n who was i n
he reports t h a t t h e wires s r e apparontly o n l y usec f o r
necessary purposes, t h e exceptions being very f e w comparetively. I
i might..becakite posthink,Governor S t r o n g , t
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Federal Reserve Bank of St. Louis
430
sible that t h e N e w York Bank, w h i c h d o e s use t h e wire
naturally m o r e t h a n t h e o t h e r b a n k s , - - I w o n d e r
sort t o t h e c o d e t o a
We s e n d a
i f you
preater e x t e n t t h a n t h e o t h e r s ?
great m a n y o p e n messages.
Te CGheiyrman. i
want t o n a v e 2 6 stuctec.
- f do not
Y o r v e r y m u c h o r not.
i b a t would
have t o b e developed. ‘ T h e r e A
complaint about t h e
code, giving rise t o the topic o n the next page.
St; E0ULs.
h e v e heard
t h e s a m e state-
it i n RichmonG A l s o ,
T h e
operators e x p r e
Governor Bigg
O u r experience i s that many o f these
coce worcs a r e t o o long a n c t h e y delay t h e t
of the telegrams.
T h e y are n o t easily made i n the tele-
graphic t o m b i n a t i o n s ,
The Chairman. I
s o t h e y say.
would L i k e t o i n c l u c e &
to b e submitted t o Go,ernor MeDougal.
Governor McDougal. t i e I
have a memorandum
regard t o the subject that you are now presenting,
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Federal Reserve Bank of St. Louis
Chairman. I
went t o s a y o n behalf
anc myself a s the
n
e
job when y o u g a v e
o f Goycrnor Fancher
l committes t h a t y o u gave u s
h i s j o b o f worting o u t a
al o f s t u c y a n c
as w e u s u a l l y c o i f
cen b e cone j u
i b l e a
sub-committse.
a s well, o r perhaps better,
rate the Business Men's Code Company,
the contract,
of a n y o t h e r c o c e c o m p a n y i n N e w York.
recognized t h a t there w e r e
and i n respect t o the whole m e
prepared i n the bank:
‘Five hundred. and
code w e r e d e l i v e r e d
stributed
Benks
D y them t e
i n J u n e o f tvuis year.
effect a s o f July I s t
de w a s » 4 9 1 2 . 1 7 ,
T h e total cost o f preparing t h e
which amount was shared ecually among
twelve F e d c r a l R e s e r v e Baniss.
S o m e complaints w e r e
receiyec a f t e r t h e code h a c been i n u s e a short time,
chairman o f t h e s u b - c o m m i t t e e ,
ad-
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Federal Reserve Bank of St. Louis
inquiry t o a l l o f t h e feed
inviting c r i t i c i s m s
o r suggestions,
replyswould incicate t h a t t h e principal objections
coce were
l
unusual w o r d s usec.
a
r
g
e number o f very long m d
i g g i n s requested t h e Business
Men's CoGe Gompany, whko compilec =
code, t o male
as t o whet might
b e Gone about
ntion t o this request
HEeYroing ,
t
n h e c oec e company.
c
i
of t
Harding s t o p p e d
s
A
a r e a d y t oo
o
s e i d his company
any wta y possiovle
s t o make
code satisfactory.
h e enceavor
t h apt H r .
cemée through Chicago,
i n to s e
returning f r o m his vacetion, anc.
coce
wille r e c a lr l
aha tea: thet a i m O u i
as
ed to use wordsa having /much
end i f G o n e
s two-let-e
V i b e s
so m a n y s h o r t w o r a s f o r s o c o m p r e
However,
h e believes
i t i s possible,
£>
ning with the letter "si e
from the coce a
used, t o
o
f the telegraph
operators, c u e t o the fact that o u r test worc began
with t h e l e t t e r s o " .
W
e are o f the opinion that a
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Federal Reserve Bank of St. Louis
little m o r e ozxperience w i l l o v e r c o m e t h e m i n o r obdject-
ions, a n c believe t h a t n o revision shoulc b e mace until
is c e t e r m i n e d whether
i t i s satisfactory
o r not b y a
little further experience”.
Chairm
who
the coce i s all wrong, a n d h e woulc rather abandon t h e
thing e n d l e t the telegraphera u s e 6
Governor M c D
2 .
H
elegraphic
o nas never reported that-te t h e
chairmen o f t h i s
a rumble
o f this
ras
igeins/in m y office one
t-blani: why i t was t h a t he was
any r e c o m m e n d a t i o n
on
ne ax
pretty /treble whet i t . h a s
ration o f t h e
u
p r i o r t o t h e inaugu-
e G a t b o b o 2 1 4 L o L anes e
admitted that h e hac. some hesitation
wes c h a i r m a n
of
t h commi+y+tes
whi
saves Wareybusdr
e
GOughn? t O W a i t e J i ttie ioneer—toe
5
BELOnmitic een ars qrgeaiintee ais
a
i n coing so, because
h a d recommended
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Federal Reserve Bank of St. Louis
recommendation
a t this time,
that
w e would leave
i t to
z
the t e l e g r a p h e r s t h e m s e l v e s
t o work o u t their telegraphic
shorthand.
Governor N o r r i s .
t
T have h e r e a
letter t h a t w a s
of the Business Men's Code Company's
letter t
o ir. Higgins, under date o f October 18th, ana yr,
Higgins'letter t o Mr. Dyer o f b a n k of the
The Chairman.
GoVernor Norris.
you anc. t h e othcor m e m b e r s
o f the lcased wire coce com-
miztes t h e t Mr. H a r d i n g gof
the Business Men's Code Company
woula probably n o t b e a b l e t o make a
to t h e c r i t i c i s m s d e v e l o p e d
complete a n s w e r
i n the u s e o f the n e w coce
in time for the washington conference this month, a n d therefore t h e report t o the Conference might better b e omitted
until s o m e t i m e later.
T h e enclosal c o p y o f a
letter r e -
ceivea this morning from Mr. Harding conveys s o m e general
information such as 'that i t woulc b e advisable t o give
six 1
w
o
u
l
e i t be
your o p i n i o n t h e t t h e s u b - c o m m i t t e e s h o u l d m e e t s o m e
time i n February u r March t o formulate t o the leased wire
of action? :
committee s o m e d e f i n i t e line’ / V e r y t r u l y yours".
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Federal Reserve Bank of St. Louis
ion di. N i get
f
a D y e r o f our benk,
Pay
ee
Tns Cheirman.
Does
e
c
e
n
e pr
m anpmrent thet this
can only be Geelt with b y
committee?
T h a
O
Are y o u willing
that a c t i o n ?
Governor Norris. I
move
Governor V a n Zendt. I
second i t .
(The motion, being culy seconéed, was carrie
r
Me:ougal.
I
o
n
r
e
v
would
jeu s
o
G
te
cennot c o m p r e h e n d w h y i t s h o u l d c o s t y o u r bani:
as [
understood M r . H a r r i s o n
t o statc, t h r e e t i m e s a s
much t o operate u n d e r t n i s c o d e a s i t G i d t h e o l d one.
Wwe never h a d that trouble.
The Chairman...
Y o u d i d n o t uncerstend m y reme
Governor McDougal, I
a m speaking o f
remark.
The Chairman.
S u t i t costs u s t h r e e t i m e s a s m u c h
to o p e r a t e u n d e r t h e p r e s e n t s y s t e m , w h i c h i n c l u d e s t h e
use o f this code, p l u s t h e necessity o f having t o code
a great many morse
a g e
h a n w e have previously coded
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Federal Reserve Bank of St. Louis
Governor “cDougal.
3 u Biers
S e e 2 0 7 t e a t Can.
SApeEri once -oF
one i n c i v i c u a l
t o m y force
understenting o f it.
Governor Norris.
w e have
Governor icbougal.
cQ code &
nless s
that vossibly
gooc many more message i n proportion t h e
The Chairman.
n e t
in response
strong incice n
i s probak
m
e Situation,
t o what
from t h e Federel Reserve 2oard tha
leased w i r e e x o e n s e w o u l d
b e red
4
f w e woulc c o d e o u r
messaces,.
Governor
Net g
f e v e w a l G ia 23 a
sages coming, a n c we a r e sending 2
Harrison. I
great m a n y o p e n mes-
great m a i
W
e c o not
wi p l e i n this,
about i t costing three times a s much ought t o b e qualified
to this extent, that Mr. Higgins edmitted that that i s
vhnat
i t would
oe,
W e
w
e Going everything
angement;
w e were
but
sup-
w e think
we a r e taking certain liberties which has kept t h e e:
e
below that figure o f three times a s much: b u t fbhiwksh. ¢
3
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Federal Reserve Bank of St. Louis
monoran=
postr vleuer ae!
ha
F
y ot
Pichgaas ok,
rSPa
peter topic. =, p a
r
co
man,
Ttw o u l d Lbitze - t o c a l i - S t t e n t i o n t o , i
iG p e s t b y
s
p
é
c
i
t
i
c transaction
brought t h i s up.
Bank o f Atlanta }l1
mt
1D ©
it was relayec through t h e
ww x x 5 4
erriving
a
f e n D r o abe:
n y
e
a et= 1t h e T Fae dr e r
al i He
sPe rs vP ee e s3: a
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Federal Reserve Bank of St. Louis
ne Fourth National B a n k o f atlanta c i c not
credit until efter 2 o'tlock, the same being
messenger instead o f b y telephone.
T h e Atlanta
that this money
transferrec:
t h e t morning,
recsive it, t w o telecrems o f inquiry were sent t o the
Philadslpnia o f f
t
h
e atvice o f erecit recched
This ¢éelcey was r c p o r t e d t o t h e P h i l a c e l p h i e N e t i o n a l
Bank b y t h e Fourth N e t i o n a l Banks o f Atlenta,
was brought
a n a t h e matter
a t t e n t i o n b y our momber bank.
There were a t least three telegrams t h a t were s e n t a s
fers. t o
transfer service,
may realize the
telephone
o r telegraph o f credits
o n eccount
o f wire trens-
transfers of funds, a s is our practice i n hendling such
actions.
The Chairman.
sc
D o you offer a resolution referring
the record which y o u have j u s t made t o this commiftee t o
be e m b o c i e d
i n instructions
also?
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Federal Reserve Bank of St. Louis
a motion
stion t h e t i t b e t h e u n i v e r s a l o r a c t i c e
by t e l e p h o n e
Governor Wollborn..
t o advise
o r telegraph i m m e d i a t e l y .
A r e i s y tekine into
s one hour!
Che Time.
Governor N o r r
the- point. .-Tha
w
a
s sent b y a messenger.
T h a t is
2 4 5 e x p e c t , w a s your time, Governor
fet 0 r n <
Governor w e l l b o r n ,
T h e
delivering t h a t b y messenger.
pani:
h
n
o excuse
f o r our bank not
c t is only about a
two min-
e F o u r t h N a t i o n a l Banik.
custom about ecvising
transfers
Governor W e l l b o r
W
t o the member banks
e usually
s e n d it b y messenger.
It i s more satisfectory T h e r e e @ a l i t h e r e within three
m i
n u t e
k l
anyway.
s a! w
T h e
apout a
Governor Fancher.
S u p p o s e y o u cic n o t have
transaction h e l d u p ?
Governor W e l l b o r n .
N o . I
a m surpris
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Federal Reserve Bank of St. Louis
696
I would lite t o investigate that.
I will m a k e a
memorandum
Governor Norris.
c
o f that.
c not m o w o f it.
W h e n w a s t h a t sent?
O c t o b e r 17th.
If there i s n o objection, I
offer a
=F
rocommendec thst all Keserve Banks
telegraphic t r a n s f e r s
i
a t once,
motion that i t b e
a d p a y e e banks o f
b y telephone
o r telegraph.
You have n o odjection t o heaving that recommittee,
t o b e includea i n their report,
have y o u ?
Governor
Governor welll I
thints t h e t G o v e r n o r N o r r i s
ne m e about this.
is
I f anything like
comes up, y o u shoulc notify m e a t once.
very thin i
i
like
G o i s to get o n to that.
I would l i t e t o m a k e s o m e p r o g r e s s
o n
this progrem i f w e might.
Governor V a n Zandt. I
d o n o t t h i n k what t h e y a r e tall-
ing about really touches this topic here. T h i s says “Federal Reserve B e n k liability f o r telegraphic transfers".
The Chairmen. I
have n o t quite reached t h a t yet.
Governor N o r r i s s a i d h e w a n t e d t o b r i n g t h a t u p i n con*
previous subject.
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Federal Reserve Bank of St. Louis
Governor Fancher.
D o
that matter b e referrec t o
The Cheirman.
well,
tended t h a t emong other things t o b e Gone b y the committee
to formulate-a cireular o f
Reserve Banks,
t o take
question that has arisen, a n d tiis certmatter a s should b e included i n that circuthat action satisf y
y o u , Governor Norris?
Governor N o r r i s .
(The motion, b e i n g c u l y secondec,
w a s carrisd).
The C h e i r m a n .
-
Bani: liability f o r telegraphic
Theat i s suggested b y San Frencisco.
1s n o t here.
n a t
Governor
c o you wish t o d o about it?
Governor Fencher.
w h y not just pass i t until Govyern-
or Calkins returns t o the meeting.
The Chairmen.
V e r y well.
T h e next i s
IIIT F . S h o u l é t h e resolution adopted
Conference,
i n reference
a t the April
t o requests
o f non-
member banks f o r currency a n d coin servi
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Federal Reserve Bank of St. Louis
correspondents,
be
thet a t
Conference w e hec t w o closely rélatec subjects.
shouleé t h e f e d e r a l
shipments o f currency a n d coin t o a n d from
respective c i s t r i c t s .
s e c o n c , s h o u l d requests
of
for currency e n c c o i n service, accompanied b y
crafts o n saic correspondents,
Taere w e s a
v e received.
long discussion
o n the first o n e o f these
subjects en* very little discussi 6
seconc.
W e
heve t a t e l y h a d s o m e c o r r e snondence
pertment, w h i c h r a t h e r thintss t h e t w e s h o u l c s h i p c u r r e n cy t o n o n - m e m b e r b a n k s
o n t h e i r drafts.
of this matter a t ths last Conference, M r .
mittec that t h e Treasury Department h a d never d o n e
reasury a t Philadelphia never c i d it.
heve s o f a r c e c l i n e d
to doing
w
t o d o it.
W w e are v e r y much opposed
e feel t h a t t h e non-member banks have
any privileges already a n d we d o not want t o extend
acCitional privilege t o them.
T h e action o f the
693
Conference l a s t year o n those t w o points s a s summed u p b y
the Chairman-The Chairman. I
huve i t heree T h e action was a
vote
that requests o f non-member banks f e r shipments o f coin and
currency, accompanied b y drafts o n said correspondents, should
be revelved a n d honored o n l y a t the expense o f the non-member
banks, andonly after collection o f the accompanying draft.
Governor Norris.
¥ 6 é s . N o w t h e principal question that
we have h a d correspondence v i t h t h e Treasury Department about
arose i n connection with a non-member b a n k u p i n the coal
region that does not Keep a n account with any correspondent
bank i n our district.
T h e y wanted t o send their drafts o n
New York t o u s a n d have u s ship t h e m currency, a n d w e d o
not see a n y reason w h y w e should d o it.
Governor McDougal.
Y o u should not d o that. T h e r e i s
no reason w h y y o u should.
Governor V a n dandt- I
think y o u have t o d o i t a s a
Suk Treusury function.
Governor Norris.
T h e y never d i d i t before.
Governor Seay.s Doesn't i t mean correspondents within
the city?
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Federal Reserve Bank of St. Louis
Governor Norris. I
would b e a
little m o r e r e c o n c i l e d
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Federal Reserve Bank of St. Louis
it was.
That w e s o u r u n c e r
all o f t h e n o n - m e m b e r b a i
woule heave a c c o u n t s
i n N e w York.
Governor N o r r i s .
is a
bank
Y o u see,
u o neer Seranton,
espondent a c c o u n t
The Ghairman.
a s a
matter
o f fact,
a n c t h e y have their
this
o w n cor-
i n N e w Yor?:.
w e l l , i s n ' t that o n e o f those cases
thet you might call “border line"
s e the
e s t o be
worked out with the Treasury Depertme b e c a u s e i n those
particular matters y o u a r e
Governor Norris.
i n g a s fiscal a g e n t o f the
H N T h e y are asting u s t o verform
a function here that,the S u b Treasury never c i c perform,
The Chairman. S h i p p i n g coin?
Governor Norris. N o . Ship} ,
currency, Because w e
co i t for member banks, t h e y claim w e ought t o d o i t for
hem, a l t h o u g h t h e y m u s t admit,
that the Sub Tréasury never cié d o it f
he Chairman.
2
a s Mr. G i l b e r t d i d admit,
hem.
D o e s ir. Gilbert insist that i t must
be d o n e ?
Go,ernor Norris.
N o , h e coes n o t insist, b u t h e i s
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Federal Reserve Bank of St. Louis
strongly o f the opinion that w e ought t o d o it.
rrison.
Isn't it a
necessary p a r t o f t h e
policy that t h e Federsl Reserve Bani: should b e the sole
4
distributing egency o f currency?
Governor t o r r i s i
in taking over t h e §
have. g o n e o n t h e principle,
that
f r e a s u r y w e wore bounc t o cdo all
that t h e S u b - O C a s u r y d i d
w
e e r e not bound
t o c o any-
thing mors.
you e r e bounc.
lot m o r e t h a n t h e
a
s
the o l c G a z feats.
3
6 washing
ting point f o r currency.
u
r
y cic
W
O8
C O .
to co a
=
an
w a s t h e c e n t r a l Gistribu-~
T h e y n o w use t h
7
F
a
l
a
h
the G0vcrnment.
Governor Norris.
3 % washington coesn't c o this.
sub Treasury d i c n o t c o it.
Governor McDougal.
T h e s u b Treasury i n Chicago c i d
do thet.
Governor Norris.
I n some Gistricts I
if t h e y h e d d o n e i t i n o u r d i s t r
Governor M c D o u g a l
Sub, T r e a s u r y d i d r
w
believe t h e y did,
e would d o i t
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
696
pie +
e
S
e
a
e o n
Bani: s h o u l d c o n -
net w a s t h e c u s t o m t h a t
tinued
i t since.
Governor Norris. I
woulc
BrEChLCE <s- 1
b e
d o n o t belicey ve t h e t m e s t i o n h a s a r i s e n T
with us, but we ship t o non-members when w e get New York
.
e
i f your
sa a r
i
n
think you would
to yourselves,
u
If
i
should
s i n your
SEpicr.
Governor Norris.
T h e n w e are removing snother i n -
Gucement t o membership.
Governor WMorss.
i
p
a
l t h i n g t h e question
of the eep6éngerce o f the shinment o r the funds?
Governor Norris.
I t i s the question w i t h us, purely,
n
o t w e
i e n ta
be
is w h e t h e r
to n o n - m e m b e r
banks
r .Morss.
o
that
m e m bn e r
c
i
e n dt
&n non-member
o
w e shall rencer service
w e have n e v e r c o n e before.
n
r they
e the mast
y
o
G on?
insistent
are
Which
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
697
sinc o f funds t h a t t h e y
Norris.
T h e question reelly erose i n this
it e r o s e a t a
time v
e
i
when this bank wrote t o their N e w York correspondent
wanting funas,
“You g e t i t f r
t h e N e w Yorl correspondent s a i ¢
y o u r R e s e r v e Senk":;
Ceclinec t o g i v e
New Yoriz c o r r e s p o n c e E
there w a s s o m e f
u
o wJ
L
s o t h e y applied
2 1 1 1 8 M
to
T h e n the
p With
G aie
s
r n a n k there w h o
a very ugly lctter writer,
setters “s00ut At,
The Chairman.
s o l l , G o v e r n o r Norris,
t h e independ-
ent t r e a s u r y s y s t e m h a s been e s v a n c o n e d b y t h e U n i t e d
and t h e y h a v e placer: :
gents, t h e duty o f cis
keserve S e n i s ,
currency h a s n o r e l a t i o n
n e o r t h e cuties
of
o u t c u r r e n c y upon
a n d t h e cuty o f distributing
t o w h e t h e r t h e banits a r e m e m b e r s
or nonemembers o f the Federal Kkeserve System. I
think
the T r e a s u r y i s b o u n d t o tatze t h e p o s i t i o n t h a t n o
matter w h e t h e r
i t is a n i n d u c e m e n tr
o not for a
to s t a y - o u t
o f t h e system,
that the bank
State
i n the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
698
district
9
i s entitisa
t o get the currency
United
anc. pays t h e cost o f shipping it.
sTauser
Governor }
3 2
The Chairman.
eone
n
e
g s what
w e have contended.
A n e that i s what woulc have t o be
i n this instance.
Governor Norris
thints t h e T r e a s u r y i s
erally throughout t l
peculiarity i ni
in the Philacelphia c i
Governor Morss. I
thought i t f
t
o what pre-
where
they wanted y o u t o pay t h e expense.
Governor Norris.
Wo.
question, w h e n Mr. Gilbert
t
h
e C3n
o f this
h e 2 rOVer?r kicDougal
Sat p o s t i n :
"Sut you did not give the banks o : e
country the
privilege o f calling u p o n t h e S u b Treasuries f o r currency,
for instance,
b y offering their Graft o n a Chicago b a n k
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
at the frcasury Department.
T h e y would not honor that".
Ane h e repliec "No".
S
e
shoulc. thinis thet this would b e
of your cistrict, t h a t these
non-member bentts woulc D e foreed t o either j o i n t h e Federerve s y s t e m o r else t o o p e n a n e c c o u n t
i n Phils
because y o u e r e n o t g o i n g t o s h i p c u r r e n c y u n t i l y o u
collect t h e N e w York funds, a n c that i s going t o b e such a n
incovenience
a n d expense n
b a n i
they will ¢cither j o i n t h e s y
w
i n Seranton that
i
p e n a n account
Pp
in Philacelphia.
Governor Norris.
e
Governor licDougal.
i
y h a v e not
W h a t would yfo u have done w i t h
the c r a f t b e e n
Governor Norris.
Governor licbougel.
i n the form
o f “4
w e would n o t have cone a thing.
T h e n y o u are n o t performing i n
accordance w i t h t h e v o t e o f t h e Conference. I
think y o u
should.
Governor Norris.
considered, because I
non-membership.
think i t i s putting a
premium o n
n
a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Chairman.
W w e thresher t h a t
HO you offor e resolution, Governor Norris,
Governor S e a y .
account
thet
Y o u are going
i n onc casé
we
s h p
the c u r r e n c y
non-member baniz a n c
to t h e m e m b e r
t o om
i n the o t h
den?
not t h i n :
resolution,
which I
N6E6n m a c e w o u l c
The G h a i r m e n .
gether
expro
b e voted ¢
P S s Agtuel -Secarocs
Governor N o r r i s .
iow of i4
er this morning,
ce
ARDS.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Governor C a l k i n s
would l i k e
L
t o heve h i m here then i
& suggestion
lar mati
s r e s t e c
l
at
s
a n d .
ciscussec.
t o male t o t h e Conference a b o u t t h i s p a r
o
o
k
s lilte a mouthful, b u t whet I have
in mind t o suggsst i s much l e s s t h a n thet.
i f itis
agcrecable w e w i p a s s that f o r t h e time being a n c g o
aown t o t o p i c
Vv. F i s c a l
agency costs.
is suggested b y S a n Francisco. I
thet thet w a s Cisposec.
here yesterday.
e211 your attention
o f at o u r meeting when
n l e s s someone cbjects
=
Will c o n s i c e r t h a t t h a t h e s b e e n d e a l t
Governor Morss. I
VOU G E L
don't believe I wa:
M G 3m Jas b
The Chairman.
out a: vote being talcen,
to reimburse f i s c e l e g e n c y expense;
it w o u l d p r o b a b l y b r i n g c o w 2
heads.
I s that satisfactory
storm
o f protest
t o t h e Conferer
that
o n our
sider that that has been disrosed o f ?
The next i s
VI. 3 B . Direct pouching o f mail i n Federal Keserve
Banks.
I want t o submit a
New Y o r k Bank, I
report which was t o b e made b y the
believe.
At t h e l a s t Conferences I
undertook
t o have a
letter
dispatched t o the other Federal heserve Banks a n d proposals
sent out for dealing with this matter o f direct pouching.
That w a s done b y wr. Saller.
- @ had already adopted a
plan a n d h a d observed i t s satisfactory workings, a n d tincidentally n e find that there i s a n interest saving
from the handling o f items both ways; getting i n items
in time for clearance; getting them out later s o that x e
can include more items i n the mail, thereby reducing the
float.
T h a t has resulted i n a saving o f from a thousand
to twelve hundred dollars a day i n the New York Bank.
That i s a little matter o f »300,000.Q0 a year.
un July 20th wr. Sailer forwarded a
digest o f the
replies t o his correspondence t o all the Federal keserve
Banks.
T h e rephies indicated t h a t seven Federal Keservea
Banks have established o r are i n favor o f establishing a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
n
o f using
a
l
vee
.
p
Yori, G L E v
Dalles. ‘ T h e y s r e cither u s i n g i t o r are proposing t o d o
r Fedcerel
u
sents oe r o o f tre opinion
F
that
effectec. b e c a u s e
h
Bt DOINGS
e ee n em
«T
o f t h e early errival a n c
H O S G
a 6 i
m o n d , St.Louis
Gen Frencisco,
opinion that o n e hour c a n h e ssved i n pouching
moil, b u t b e c a u s e
tims
c a n
c f their p r o x ¥
t o -the= p o s t
b e save
Cheirmen, t h a t
opinion j u s t o f f h a n , 1
| pouchec:
b
e
-
t o t h e m o n t h e trains,
saving t h e Celay o f sorting i n the local postofficc, t h e y
immense
:
s a v i n g .5
jeisy Seren:
t
h
e
r
e i s that the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
to ve reB-6Crgein
s ¢
it i n t o t h e p o u c h e s
t o
LIONS
m u l t i p l i c ,
given trains.
ction with the sorting o n the
3 0%
have f o u n c
i t 4
re
:
w
t
Reserve
Bantiss
have
it fGpossible.
o v e
ri n
about i t previously,
o
r Ve n Z
i s in
e n c th t,whom
iw
oF
'Coverno®. Tancher,
o your
the t r a i n
subt s t a t i o n ?
Goyernor f e n c h o r .
form
of
station.
Chairmen.
t l y recomicnc ation i s ,
at theoybani:, t h e t we c o n o t h a v o
Set a e
W L S
i
i
©
you
titer e x p e r i c n e e
classifice
See u e
Aee- Gieris, w h o ope
mail
ae
At
i n
employes
p ra n uk : o i s h e n c l e d
who
employ a n d c i s
the civil service
i n o u r o w n banits a n d
by o u r
l s eir v ivc e i PULSE,
c
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
705
e pouch outgoing mail t o a
w
Governor Fencher.
number o f
“well, t h a t i s oil resorted o n those
don't t h i n k s o , e x c e p t t h e y a r e
Governor Fencher. I
pouchec. t o certain treins t h e t might b e broken up, b u t
they c o n o t p a s s t h r o u g h t h e p o s t o f f i c e
t h e y tool: i t u p w i t h t h s 4
words,
and w o r k e d o u t a
where t h e r e
plan a s t o i
a t S i isn
OCner
s t e Postmester
s r s e c t i n g rail connections
is
B
Governor S e a y
o t h e y have
m y c l e r k i n there t o
the f a c t t h a t e n v e l o p e s h e v e s t a m p s
Governor Seay.
The Cheirmen.
T n e
F A V S @
o n them?
entire m a t t e r t o you?
n just e x e c t l y e s the post-
m
office.
Governor
Sé
U n é e r your o w n euthority, w i t h their
permission?
The Cheirme
U n d e r o u r o v n authority e n d with their
not thint: that t h e r e is a n y office i n
that g o t the j
of N e
of t h e P o s t m e s t e r G e n e r e l .
f
i
H
s g e until t h e Fedc it b y a
special ruling
e h a d t o look u p theirs
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Lt w a s .
ySeas ak sokoeemeRe
e a
a n t economy.
hese p o u c h e s
to
Lo
mail wagon right a t our front coor.
Y
Governor
Governor
h a v e you,
u h e v e n ' t t h a t privilege,
o
V e n Zencdt’
p
Governor V a n Zenct.
than that.
e Nave
w
in our building,
e
t
a
s e t
t
t
i
n Mipnt, t h e r s
o
o
o n the thirc
r position
e
r building, a n d
u
States Government veys f o r a l l o f the employes,
heir own cancelling machinery, e n c everything o f
i e
A n t
your M m a c e c
ENGSME
Go,ernor V e n Zandt.
there
anc we
C O - a i t
eceive all of our reg
Gove
rnor S
e ay .
A
W
e c e n b u s _our
o f
O U
t
h
S
-
V e r
e
S
r i n g there,
r
e
C
e
u
.
e
-
-
2
8
t h e
New Yortrs Bani, because N e w Yori: hencles i t with their o w n
employes a n d y o u turn t h e matter o v e r t o the Postoffrice
epartment, although i t is your own building.
Governor V a n Zendt.
B u t t h e y turn i t over t o the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
postoffice themselves.
Governor S e a y .
B u t i t i s ell Gone under their o w n
supervision a n c i s a l l h a n d l e d
b y their own employes.
Governor V a n Zenct. Yes, t h e t i s
‘ I woulc l i k e t o p o i n t o u t t h e t t+1,
he
Cheirman.
General i s « Texan e n c it m e y b e that Governor
a DULL w i to b i ,
cu
qQ
W
E
S b o l d o y B o e presen.
ter G e n e r a l t h a t i t w a s n o t t h e p o l i c y o f
e Department,
c
to m a k e «
t o permit t h e opening o f 22
ruling,
letterec s t a t i o n
anc. ihe i c n o f
t thin’: h f
e would b e
o willing,
in @
p r i v a t e establishment,
thet i t was o v e n t o t h e u s e o f t h e p u b l i c
except
e s i s required
by a l l yostorintcess
Governor V a n Zenct.
ihe Chairmen.
O h , o u r s i s suppoasd
Nomanaily 1-18,
Governor V a n Zanat.
t o be.
o u t ectualily 2
1s
O S 1 4 7; 4% 2 3 ore the third F 2 6 0 ,
of t h e banizs c o m e i n a n c u t i l i z e i t .
we-20, n o b w a n t b o s te.
& lot o f people coming i n t o o u r building
special facility.
v
e d o not want
a n d enjoying
our
708
Governor V a n Zandt.
‘ i e get mail t o N e w York one
day ahead o f the regular mail there.
Governor Seay.
T h a t i s what w e understood w e would
be required t o d o i f w e opened i t . I
was n o t aware t h a t
any such arrangement a s you now advise u s has been made i n
New York could b e made there.
The Chairman.
I t has been made, a n d t h e rostmastar
General s a i d t o m e t h a t t h i s l o o k e d t o h i m l i k e s u c h a
g00d thing, w h e n I
pointed o u t t h e saving o f time i n the
receipt and collection o f chhogks, a n d that i t had a greater advantage t o the Treasury o f the United States than
of any Other individual o n account o f the vast amount
of funds going throuzh their account.
H
e said that looked
very good t o him and wanted t o know i f I would not suggest
it t o the Other HKeserve Banxs. N o w , I
do not think mr,
Sailer could have made this thing very cleur, Mr. Harrison.
ir» Harrison.
No, I
The Chairmane
I f you will permit me, I will take
think not.
the liberty o f usking wr. Sailer t o submit the letters
to wr. H a r r i s o n b e f o r e t h e y g o o u t a n d t a k e i t u p again.
Governor Norris. I
wish y o u would.
T h e Outgoing
Postmaster said h e d i d not want t o taxa t t up;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
709
he w o u l d n o t b e t h e r e v e r y m u c h longer,
a n d then when the
new m a n came in, w e took i t u p with h i m and h e referred
it to .ashington, a n d “ashington said they would send thetr
inspector
t o look into it, a n d that i s the last w e ever
heard o f it.
The Chairman. I
and I
saw h i m and told h i m the whole story a n d just what
4t meant.
al.
happen t o know Mr. Hays v e r y wall,
I t should g o directly t o the Postmaster Genar-
I f you will permit me, I
will g e t this thing straight-
ened out with wr. Sailer when w e get back.
The next i s
Ge. p e n s i o n fund. D e s i r a b i l i t y o f urging legislation
-at this time.
This q u e s t i o n w a s s u g z e s t e d
b y N e w York, a n d t h e q u e s t -
ion i s whether i t i s desirable. I
understand t h a t ur.
Curtis heard f r o m Senutor Smoot recently t h a t h e would
not sdvocate t h s introduction o f a bill a t the present
time.
Governor Fancher.
been p l a c e d
D o you know whether the bill has
i n the hands o f Senator Smoot,
o r i s = hyrele Sa
the hands o f Governor Harding?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Tae Chairman. I
think m r . C u r t i s e x p l a i n e d t h a t h e
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
*s
neo h e e n i n cirect c o m m n i c a t i o n w i t h
at h e hac a
copy o f the bill.
I t has been printed,
you iknow.
Governor See. I
think w e ought t o defer t o his judag-
ment, a n c are m p c l l e d t o respect it.
I t would b e
GO LonoOre: i t s
Governor Fancher. P e r s o n a l l y I
3 n s i c e r a t i o n
Cheirman. I
have some Coubts about
a t t h i s time.
would n o t l i k e t o s e e a
Dill i n t r o -
there a n y cissent f r o m that view?
I f
ft in’ custocy.
re i s a revort expected f r o m m e o n that subject.
Governor Seay.
a v e
w
e received t h a t report b y
meil?
Chairman. I
think y o u have received
t h e report
py mail.
We h a v e h a d c o n s i c e r s a b l e c o r r e s p o n d e n c e .
I n &
word,
there seems t o b e such « divergence o f views anc. such
mi4
considerable opposition t o the plan suggested b y our
counsel, Mr. Hart, o f sending o u t a uniform circular,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
thet h e h a s f e l t i t n e c e s s a r y
having @
t o ebandon a n y t h
uniform c i r c u l a r s e n t o u t w h i c h c o n t e i n e c
incicetions
wn
[ c o n o t think 4 3
necessery t o tale t h e
at length, I
will a s k Mr.
when h e comes t o make u p the record t o a s k Mr.fart
about p r e p a r i n g 2
report
i n the form o f a
letter, s u c h a s
time
o f read
apes i c e r s
(The d i s c u s s i o n ‘ i t h r s e f e
n
e above last-men-
Chairman, w e s n o t recorded).
iriatnongWnen G o v e r n o r Call-ins w a s c o m p e l l e d
leave
t h e
i
e SAG.
“w@ might t a k e u p
w
t
e DASSEG-
e
O n G
o r t w o topics,
t 236, Lil, C u r r e n c y
to
whoich
s c oie
veragraph,
telsgraphic
transfers.
La
Governor Calkins.
O u r Circular No. 96,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
transfers a n c purchase o f exchange, contains t h e following p r o v i s i o n r e l a t i n g
p a c a Tap i t y
Of.
b a
6 p a
when making telegraphic trensfers.
lity f o r transfers.
h
el Keserve Bani: o f S a n F r a n c i s c o
proper t r e n s f e r
h
e f
s t
e l i a b i l i t y o f t h e Federi s limited s o l e l y t o the
h
e réeeciving F e d e r e l R e -
acount of, o r for
ment to, €
payee bank.
“£11 telegraphic messages e r e received subject t o
lays i n transmission.
I f leased w i r e service becomes
through causes o v e r which w e heve n o c o n t r o l ,
Cispatchec e t the expense o f t h e #ederal
Reserve B a n i
wires.
h
o f ~an F r a n c i s c o o v e r c o m m e r c i a l t c l e g r a p h
e Federal R e s e r v e S a n k w i l l n o t b e r e s p o n s i b l e
for errors o f telegraph company,
or f
a n y Celey i n trans-
mission."
In t h e p a s t ,
w e have
upon b y o u r m e m b e r b a n k s
o n several eccasions
b e e n called
t o m a k e i n t e r e s t acjustments,
ord
ause o f a n e r r o r
in cocing,
e n i n c o r r e c t t e s t wore,
o r m u t i l a t i t n an
i
transmitting t h e message f r o m this office t o the receiv-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Inder t h e terms o f our circular,
w e have f e l t obli-
the r e c u c s t e c a c j u s t m e n t s .
re
ved b y them from t h e First National
Seattle, w h i c h recuested a n adjustment f o r a celay
transfer o f .100,000 f r o m t h e National P a
Firat Netional seni o f
serve Geni: o f N e w Y o r k declineé.
t o malxe a n y acjustment,
tiested b y the following excerpt f r o m their letter:
$G..verfect t h i a T r e e
in n o w a y g u a r a n t e e t h a t
2 tronsfcr will ealweys b a consunmetec. t h e sems cay.
while w e S
h e pesponsibility i n the metter o f actu-
eaiy setting w a e Tunca-t
as i s practicably possible, i
great a
s
e
e
m t o oe
contingent burcen t o assume responsibility f r o m
eny interest cleims t h e t might b e mace because o f slight
delays a r i s i n g f r o m c e u s e s other t h e n a b s o l u t e n e g l i g e n c e ,
trust thet y o u will appreciete o u r attituce i n >:
2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
o remit the interest".
volume o f telegrenhic transfers psssing
Banizs i s constantly increasing,
more recuestsa f o r
en opportune m o m e n t
Governors! Conference, with the
view o f o b t e i n i n g i
G
é e f i n i t e t e r m s t h e exact’ liability
incurrea b y a Fecoral Hheserve B a n k in. receiving funcs f o r
transfer o v e r t h e private wire, a n é with t h e further
view o f o u t l i n i n g ©
uniform procecure
receral R e s e r v e B a n k s i
copy
letter
o f t h e Federal
gases
R e s e >
t o p e followea
by
o f tne -avove cnaracter,
Banis
N
e
w Yort:'s
t o the Hirst Netional S a n k
With copy o f
letter,
thet some=-
he F i r s t N e t i o n a l B a n k o f S e a t t l e
lost money
The Chairman.
ee c o n o t w e n
o
e
p
e
t personal responsibility
vith m e attending t o other things. .
suitable
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
reply,
o f course,
i s t o rely upon t h e torms o f
Bones,
our m e m b d o r
most i d e n
. l w i t h this,’ a n c
i
f o
VOTLics
n correspond-
which wotuld i n a n y way appear t o b e a podification
PLOVIESLONS O f T h a t c i rcuser.
anc. Unnecesarily long.
or not, b u t I
L G ?
6 .
i sa
very s t u p i d
l m o w wheths
a m goings
that u p also when h e gets back.
Governor Calttins. I
woulc l i k e y o u r v i e w
estion, n o t o n this case, b e c a u s e I
rticular case.
I f there
negligence o n the part o f the bank i n carrying
c
i
h
p
o
r
transfer,
in r e g a r d
31
AO o e C a r e
is e l e a r i y
out t e l e -
+
g t
{ ners
i s a n obligation t o reimburse
t
Governor Colicins.
such a s y o u
woule
b e better
set out
i n a n y other clause which h a s
-sted b y our counsel,--it might not be better--
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
but a
revision
o f the exis
n g cleuse w h i c h would r e a d
something like this:
aoe Itebality o f thi
the proper transfer o f such funds
account. o f - - o r
not b e l i a b l e
i n any case
HUCCEUPSLn
O t n the wer ine
o t
for delays o r errors i n transmission occurring
this point,
o r from other contingencies arising
control.
another
c a s e similar
t o our collection
uniform c i r c u -
from t h o s e
which w e define, w e x
p r o t e c t ourselves against you
by u s i n g t h e s a m e l a n g u a g e
i n our circular
it t o you.
n
Board,
i s t h e r e l a y station.
wJ h
ed
ich
e s a m e applies t o the
Governor Valivins. I
ouite agree w i t h thet, but-£t
G@UGStLen 1
liability
o r not.
8h e e e ,
o n e tat
13
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
We t h i n k
Governor Calkins.
Went o n e f a c t s
s o i n N e w York.
W e think so, too. N o w , i f you
i n this
The Chairmen.
I s i t your opinion t h a t
in t h a t c a s e o n N e w York?
couldn't a n s w e r
don't know. I
Governor Calkins. I
that.
p
The Chairman.
u
r
e
l
y incivicual case. I
not object t o discussing it, b u t I
do
a m very keen t o c l e m
up t h i s program.
do not want t o discuss it, b u t
Governor Calkins. I
I wanted t o discuss t h e question whether w e have liability
in case o f negligence.
The Ghairman.
Unquestionably.
Governor Callins.
W
e have reimbursed banks where w e
been negligent.
The C h a i r m a n .
B u t what irritated
m e about that letter
was thet our circular recognizes that w e have liability.
fhat l e t t e r s h o u l d n e v e r h a v e b e e n sent.
I t does n o t deal
letermine w h e t h e r t h e r e i s l i a b i l i t y o r
not,
and I
would l i k e t o h a v e t h e facts,
i f y o u will b e
good enough t o send them t o me, s o t h a t w e c a n d e a l w i t h
them,
Governor Fancher.
Y o u bring u p ea point t h e r e a b o u t
there being a uniform circular.
I think that all Reserve Banks have got
one circular, because I
h
a
p
p e
o remember
n t;
w h e n I was
with t h e F e d e r a l K e s e r v e R o a r d I
suggestec. a
form o f liabil-
ity clause t o the Federal Reserve Bankg,which w a s trans~
mitted b y the Board, a n d I uncéerstanc t h a t t h a t w a s a d o p t e
;
Governor Calkins’ quotation from|
ead b y m o s t o f t h e banks,
4
i
i
the liability clause i n his circular i s s o nearly identical
f
5]
c4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
with ours that I
a m rather inclined t o believe t h a t that /
p a r a g srthe
a isame.
p h Governor Fancher.
D o e s y o u r a t t o r n e y s u g g e s t @..%5
better c l a u s e ?
he does s o i s ons
Mr. Harrison.
T h e
only reason *f entirely different
from t h e p o i n t a t issue.
H
e conceived t h e idea that i f
the operators i n Washington, f o r instance, m a c e a n error
on &
message t h e t w e w e r e t r a n s m i t t i n g f r o m N e w Y o r k t o
woulG
- e@
€ or would
iong b e i n g w h e t h e r
w e not
t h e operators
b e liable?
i n viashington a r e o u r
agents o r whether t h e y are n o t o u r agents.
There is a
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Federal Reserve Bank of St. Louis
ge:
very k m o t t y l e g a l q u e s t i o n
a s t o whether
o r not w e would b e
liable uncer o u r o w n circular i n that instance.
T h e Chi-
perators, f o r instance, a r e vaic practically b y all
heserve Banks.
I
n that event,
wouldn
a error b y a
Chicago operator b e a n error which would “attribute negligen:
to the N e w Yoris Bank i n transmitting t h e message, a n d I
rather inclined t o believe t h a t i t would.
am
O u r counsel
has dovised this paragraph s o a s t o exempt u s from liability o n account o f a n 6rror i n a message t h a t w e send
through Chicago which i s erroneously transmitted b y the
Frankly, t h e r e i s n o reason w h y w e
should n o t a s s i m e t h a t responsibility.
Governor Gallins. I
h
a
s to,
would s a y t h a t
assume i t .
he Chairman.
Calkins arrived.
W e passed t h i s subject until Governor
I f you aré willing t o a c e this question
of t h e u n i f o r m c i r c u l a r a n c p o s s i b l e p e r f e c t i o n o f t h e
languege o f the circular t o the other topics referred
to the committee o n l e a s e d wire service, a n d i t is agreeto the Conference t o d o that, w e might undertake t o
to
have a l l t h e twelve circulars reviewed,
extent t h e y a r e uniform. I
t o see/just whet
think i t would b e worth having
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
You have e l l t h e circulars
Banks i n Chicago, heave y o u not, Governor
co not know that
nor MeDougal. I
I would
one*point
b e g Sl e d
t o undertake that.
i n connection w i t h this whole subject
HOb sc heer: o n .
Y o u have
the w i r e committee.
r
What
c onnen-
e
Gations?
The Chairmen.
T h e y are t o b e
‘egserve Banks, e n d you ere t o get a report back
you h a v e c o n e For}
Governor Mehpougal.
The C h a i r m a n .
‘No.
o
r
m
a
l Conference‘
721
The Chairman. Governor Young, would i t be satisfactory t o y o u t o s t r i k e o u t t h e d i s c u s s i o n a b o u t t h e
American Institution o f Banking?
Governor Young. Yeés.
The Chairman.
I t is orderad that the record with re-
gard t o the American Institution o f Banking b e stricken out.
Governor C a l k i n s , e
w have also passed topic No. 4 ,
Gold Folicy, awaiting y o u r return, a n d the reason f o r doing
so was this: T h i s topic was suggested b y New York, a n d
what I am going t o say now I would like t o have considered
as espselally confidential.
~e@ recently h a d a visit, a s I mentioned before, f r o m
Governor N o r m a n o f t h e B a n k o f England.
H e w a s accompan-
fed b y Sir Charles Addis, a n d o n e o f the directors o f the
Bank o f England happened t o b e i n Canada, a n d h e came d o w n
also.
e had three directors together, that is, Norman
and addis w e r e h e r f o r three weexs, a n d t h e thirdman f o r
a few days.
- @ Giscussed a
great variety o f things, a n d
I hadhoped t h a t i t would b e feasible t o invite some o f
the Governors o f the Kkeserve Banks t o join us, but for
various
reasonst
i w a s n o t feasible.
‘ “ e did succeed,
however, i n getting Governor siorss down t o dinner one
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Tae
night.
T h i s visit w a s arcanged o n very short notice,
by the way, w a s quite unexpected, a n d was t o b e kept ex-
ceedingly confidential.
-€ discussed a good many matters, a r d i t all boiled
down t o t w o o f s o m e consequence.
The first o n e I
do not want t o g o into a t length, a n d I
will merely refer t o i t a s the consideration o f a tentative
and very sketchy p l a n b y which t h e Federal Ressrve Banks
would joint with certain banks of issues of Europe and might,
in the course o f this ysar and the coming year, participate
im a program for the restoration o f more normal conditions
an Austria, f o r which there i s a crying nesd. I
will only
g0 s O far, inasmuch a s there i s nothing imminent a t the
moment, t o suy that the theory o f dealing financially, eco-
nomically and non-politically with the austrian situation
igs due t o a peculiar situation i n Austria itself, whero,
with a population o f about eight million people c r thereabouts, especially i n the City o f Vienna, t h e y have a l l
of the tradition, machinery, skill and experience o f
government, n o t only for austria itself, but for all o f
those nations that were carved out of austria; a n d the
fealing h a s been strongly developed i n London that i n
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Federal Reserve Bank of St. Louis
723
order t o stabilize t h e whole situation i n that part o f Europe w e have g o t t o begin i n austria, where there a r e peo-
ple who know how t o run government and banks and manage
large railroad systems a n d generally deal with problems
with which the whole o f that part o f Burope i s now confronted,
and that nations l i k e a part o f roland, Hungary, a n d a
of
Czecho-Slovakia,
part
a n d s o on, t h a t w e r e c r o w d e d o u t o f Aus -
tria literally h a d n o one there w h o knows h o w t o run the
economic affairs o f government o r of the goneral business
fabric.
A l l o f that country w a s served b y one central
banx o f issue, which igs now i n liquidation.
Vienna
has often been alluded t o a s not only the political center
but as the heart and nerve center o f a large part o f
Europe.
T h i s proposal h a s b e e n considered a n d discussed
here i n ‘ashington with t h e Federal Reserve Board, w i t h
members o f the Cabinet;
i t was discussed b y the Cabinet,
and i t finally developed t h a t i t did n o t seem feasible a t
the m o m e n t f o r u s t o j o i n i n a
p r o g r a m o f t h a t character,
at least n o t under a n y license o f authority o r approval o f
the Federal Government.
‘ ' e had first been apprised t h a t
the administration would approve o f some s u c h program, b u t
that was subsequently changed. I
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
am under the impression
724
that within possibly a
comparatively short period t h e subject
will come u p again, a n d i f i t does a l l that # e propose t o
do, having ir. mind that this whole system would work together o n anything o f that sort, all that w e propose t o do
would b e t o make n o commitments, t a k e n o step which vould
involve anybody, b u t simply d o whatever was necessary i n
Order t o get information u s t o whether i t was feasible t o d o
anything.
I did not want this meeting t o puss without reporting
briefly what had transpired. W h i l e there was n o definite
proposal that I could submit, a n d i f there w a s o n e I would
explain 1 t , b u t t h e r e i s none, a n d a l l I
can s a y i s that a n
indefinite discussion h a s taken place, a n d i f anything i s
done i t will b e i n the nature o f exploration, s o t o
speak, a n d that s e would not d o anything without keeping
the other heserve Banks advised anyway. T h a t comes under
this topic, which was put in in blind fashion, and because
it had something t o do with the possibility o f a gold loan.
Now, w i t h reference t o the matter that Dr. Millor w a s
discussing this morning, I
do not want t o put that i n your
minds a s something that might b e done, because I am not
sure whether i t 1s feasible o r not, and i t is something for
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Federal Reserve Bank of St. Louis
725
discussion b y the best minds t h a t w e c a n put o n it.
A great deal i s being written just now and a great deal
of discussion i s taking place a s t o when a n d h o w a n d whether,
if evar, t h e i n t e r n a t i o n a l g o l d standard,
bereestablished 1 n the world. I
remarks v i t h a
s o t o speak, w i l l
listened t o Dr. Miller's
g r e a t d e a l o f respect, e x c e p t I
this reservation.
had i n m i n d
H e referred t o the return o f the time
when gold would b e freely shipped betwean nations
i n adjust-
ment o f these necessary b u t very small n e t differences. T h e
fact i s the gold i s being shipped between t h a nations t o d a y
at a rate a n d i n quantity never before witnessed i n history,
and still w e d o not get anything like stuble conditions i n
exchangsThe reasons f o r this a r e obvious, a n d there a r e a va-
riety o f them. I
now,
think possibly the lsast o f the reasons
a s h a s b e e n currently discussed,
i s t h e t r a d e balance.
A large part o f the cause lies i n the inflation o f currency i n certain foreign countries, a n d their currency i s
being a c c o r d n g l y c o n s t a n t l y d e p r e c i a t e d m e a s u r e d
i n the
exchange i n response t o that. another cause i s the insistence
that G e r m a n y p a y r e p a r a t i o n
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
in a
manner a n d a t a
Pate p r o b a b l y
726
a
e
beyond
r capacity t o pay; a
third possible cause o f diffi culty
will arise i n the management o f the debt owed b y the
allied countries t o this country,
i f i t i s not handled w i t h
very great skill and discretion.
N o x , confronted
with these three o r four situations,
i t seems t o m e t o
be impossible t o hope f o r a stable exchange situation generally t h r o u g h o u t t h e vorld.
Y
e have b e e n considering
a little w h a t could b e done i n the absence o f any general
program,
a n d what I
have i n m i n d i s s o m e t h i n g l i k e t h i s - -
Iam not prepared t o say i t is feasible; i t has got t o
be discussed--but there a r e eight nations i n the world
today, speaking o f those w i t h which w e would naturally
deal, which present conditions t h a t s e e m t o afford a n
opportunity f o r s t a b i l i z i n g t h e i r exchange.
T h e y are
not e x p a n d i n g t h e i r c u r r e n c y a n d t h e i r t r a d e i s i n rea-
sonable balance.
T h e y have large gold reserves i n
their banks o f issue, and, with t h e exception o f one o f
them, their exchanges are not very far off par with
ours, a l t h o u g h t h e y h a v e f l u c t u a t e d m o r e t h a n t h e y n o r -
mally would i f gold were being freely shipped.
Those nations a r e Switzerland, Holland, Denmark, Sweden,
Norway, J a p a n a n d England.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
T h e exchangs i s not nearly a t
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Englané, b u t Englanc. would have t o b e
neluded, together w i t h the Unitec States T h e a t makes
eight nations t o b e consicered a s possible elements i n
me exchanges.
Now t h e r e a s o n f o r i
‘ i n g Englanc i s the same rea-
son
the British exchanges a r e s o important i n the worlc,
so
much o f the trade o f the world
sterling bills, a n d i t is s o much a measuring rod around
the world f o r other exchanges, t h a t i t would b e highly
gesirable,
i n eny plan o f stebilization,
it .eould b e cone.
t o incluce i t i f
T h e y still have
are a skilful a n c courageous banixi
credit, a n d they are not inflating their currency,
although their exchange i s a t a heavy ciscount.
@ little b i t u p o n
an experience w h i c h I
w: r
t
IT had n o t h i u g
h .
Girectly t o d o with it, GufPing t h e war, w h i c h was this:
The Italian exchange went d o w n like a
plumnet a t one time.
it was d u e t o some local condition V a n d we felt, those o f
thet were discussing it, that the.decline was not justifie.
the facts
v f the Italian situation;
i t was causing t h e m
728
great hardship, especially i n the face o f the fact that
sterling was sterling was pegged and that frances were also
pegged t o a limited e x t e n t .
M r . Kent undertook
t o s a y that,
with a capital o f »310,000,000.00 t o operate On, h e would undertake t o restore t h e lira somenhat t o the position i t had
been i n before t h e sharp decline, t h a t h e thought h e could
do i t just b y trading i f w e would give h i m §10,000,000.00
Capital. I
am spesking from memory as to the figures,
but I think I
am fairly certain that h e cut t h e discount
of the lira i n half o r thereabouts, just trading i n the
currency, a n d that h e never employed a
dollar o f the capital,
and that h e had a turn-over o f about 750,000,000 lira.
I t
was just a certain «ind o f skill i n furnishing exchange w h e n
it was needed and buying i t when i t wags not needed.
That
suggested the idea that i f we should establish a trading
account, b y a n arrangement between the banks o f issue o f natior
which are capable o f entering into such an arrangement, that
we might g e t a much greuter stability.
The difficulty about a n y trading arrangement i s that
if you undertuke t o trada i n exchange i n a period o f wide
fluctuation,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
s o m s d u y y o u have g o t t o cover y o u r account
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
in c a s e y o u g e t l o n g o r short,
a n c t h e chances w o u l c b e
that a n y nation with which w e made a n arrangement o f this
sort would g e t short o f dollars,
caught f o r a
big loss;
i f you please, a n t get
s o thet i t occurred t o m e t h a t i f w e
were t o b r i n g a b o u t a n y s t a b i l i z a t i o n a r r a n g e m e n t
i t must
be that with those country a n d under s u c h terms that this
speculative l o s s w o u l d b e s e c u r e d a g a i n s t
ing into a n agreement,
b y their enter-
i n the first instance,
t o cover a n y
shortage b y shipments o f gold, w h i c h would insure against
anything b u t a very moderate l o s s i n the a c a unt; e n d I
am turning over i n m y minéd--I have n o t h a d a chance y e t
A:scuss i t with Mr. Jay--whether w e should n o t consider
approaching some o f the other banks o f issue which have a n
adequete g o l d r e s e r v e w i t h a
proposal f o r s u c h a
Giseuss some p l a n along this line.
plan a n d
I f w e cdo so, w e will
probably w a n t t o s a y this, a n c i t s e e m s
t o m e w e would
be required t o s a y this: t h a t these cight nations would
band together i n some such arrangement, a n d each would
have t o pledge a
certain amount o f gold--we, f o r instance,
having t o pledge probably a s much gold a s the rest put
together, b u t instvad o f pledging g o l d i n the case o f the
w woulc 3imUnited States o r the Federal Reserve B a n k s , e
730
ply undertake t o finance t h e operation b y eredit until
the settlement day arvived, a n d i f a settlement day did
be
arrive, then w e would/obligated t o ship gold and i t would
bel d o w n t o that. A
great m a n y d e t a i l s w o u l d h a v e t o b e
worked o u t a s t o h o w the trading would b e conducted,
whether i n London,
e w Y o r k o r where, w h o should buy, w h o
should sell, and s o on; I have not gone into the detail o f
it at all.
‘ h a t I do want t o bring out, however, i s this,
that this proposal f o r some sort o f concert o f action,
whether i t is i n this matter or other matters, i s really
now taking concrete form.
s e have, a s y o u Know, agrea-
ments w i t h t h e B a n k o f England,
a n d w e have a n agreemant
with the Bank o f Japan, w i t h t h e Banw o f The Netherlands,
(the Netherlandische Ban«,) und aith the Tavasche Bank of
Batavia, u n d w e have had correspondence with other central
banks, a n d wir. J a y has visited s o m e o f them while h e was
abroad.
Ihave j u s t received a
very confidential message f r o m
the Governor o f the Banx o f England, stating that h e has
just received a visit from the president o f the heiche Bank;
he 1 s also going t o see Vissering o f the Nethorlanische
Bank, a n d t h e whole scheme w h i c h w e have b e e n planning i n
New Y o r x f o r s o m e s o r t o f c o n c e r t e d a c t i o n b e t w e e n t h e s a
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Federal Reserve Bank of St. Louis
731]
tanks o f issue i s marching along fairly rapidly; I
do not
know what i t vill lead u s to, b u t a part o f what I
said this
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Federal Reserve Bank of St. Louis
morning i n regard t o our rates i s dus t o m y belief that
whether w e want t o or not w e are going t o have t o take some
part i n this situation abroad.
. a probably wont d o i t politi.
cally, b u t s e have g o t t o d o i t financially a n d sconomically,
and m y thought is--I hate t o go too fur i n discussion without a talk with Mir. Jay, and I haven't had a visit with
him since h e got back from #urope--my thought i s that
in the next winter s e may b e approuched w i t h some proposal
or program o f a concert o f action alonzs some line, I do
not « n O w w h a t i t
s111 b e , a n d I
cannot f o r e c a s t i t , b u t I
think the likelihood 1 s that i t sill b e somexhat along the
line o f a n e x c h a n g e a c c o u n t ,
i n the beginning,
such a s I
have
discussed, a n d I would like t o get a n expression o f vieds
from those o f y o u here a s t o how y o u would feel about s u c h
a proposal o f loaning, f o r instance,
t o the most responsible
banking institutions o f the world a reusonable amount o f
money i f the occasion arose, s a c h o n e responsible t o u s f o r
its share, u n d e r a n a g r e e m e n t
o f such a
in the absence o f their payment,
character t h a t
i n cause the account u l -
timately w a s liquidated, t h u t t h e y would s h i p gold t o cover
anything oning us,
Now y o u may a s k h o w w e would make t h e loan»
of f a c t I
A s a matter
think w e w o u l d n o t n a c e s s a r i l y n e e d t o m a k e a
ioan.
it coulé a l l b e done i n current account, w h i c h t h e statute
authorizes
u s t o maintain a t banks t h a t w e appoint o u r agents
and c o r r e s p o n d e n t s .
S o f a r a s t h e Federal Keserve B a n k i n
New York i s concerned, I
England, f o r instance,
am frank t o say that i f the Bank o f
o r the Netherlandische Bank, o r
probably a n y o f the other banks t h a t I
contract t o liquidate a
have named, g a v e u s a
speciul contract o f this character
by shipping gold i f it was not liquidated b y any Other means,
I would r e g a r d
i t a s j u s t a s good,
o r better,
t h a n a n y bill
we could g o out and buy, and under the terms o f the Federal
Heserva act I think s e can buy commercial bills i n foreign |
currency,
b u t that i s a
q u e s t i o n f o r f u t u r e determination.
“hat I have i n mind i s i t may involva a n obligation t o make
advances t o the extent o f probably 2 5 0 , 0 0 0 , 0 0 0 0
. at the
gturt o r a smaller amount, w i t h a n arrangement f o r increas~ing i t , a n d i f w e o n c e u n d e r t a k e
i t w e want t o d o i t with
our eyes open, becuuse w e have a
job that will require
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Federal Reserve Bank of St. Louis
careful and skilful munagement o n our hands.
I d o n o t w a n t t o tuxe t o o m u c h time explaining t h e
733
very indefinite thovghts that v e heve i n mind, but I would
like t o get your reuction from it.
Governor Morss.
of loss, I
T h i s business would b e done a t a risk
suppose, a n d a possibility o f profit.
The Chairman.
V e r y little r i s k o f loss a n d the possi-
kility o f very considerable profit.
Governor Morss.
T o what extent O n the average,
i f loss
occurred?
The Chairman.
That I
a m unable t o ansner.
I t depends
entirely u p o n whether w e enter into this agreement simply
to loan t h e money a n d take n o risk o r whether w e entered
into a n a c c o u n t u p o n t h e basis, w h i c h I
would r e g a r d a s t h e
best basis, o f a mutual undertaking betaeen t h e banks o f
issues t o restore t h e exchanges t o a more stuble condition,
and the rigking o f losing under the plan which I now have i n
mind would b e limited t o the actual cost o f tecnapeesian
the gold from these countries t o this country. T h e r e would
be n o great risk beyond that.
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Federal Reserve Bank of St. Louis
Governor Morss- “ o u l d the Bank o f England b e favorable
to t h i s ?
The Chairman. I
d o n o t know.
“ e have discussed
only i n the most indefinite z a y a n d I
it
do n o t have a n y ideas
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Federal Reserve Bank of St. Louis
Hes a n y o n e e l s e a n y t h i n g 1
Mr. wellborn.
e y about this?
i i o are very much interested i n cecing
the exchenge stabilized a n d I would lite
that p l a n a n c g e t t h e c o o p e r a t i o n
t o see y o u work u p
o f all
I thin’: i t w o u l d
The Chairman.
been consultec. have expressen t h e view that
to get the banks o f
action a n c policies,
of views, b u t just h o w i t i s
know. I
suppose
i t will result
i n somebody
again t o pursue the subject.
Governor liorss.
,
l
M r . e Chairmar
the U n i t e c s t e t e s
T h e object t o b e attaincsc i s most de-~
a
hbe r e 3
o r the Federel
nor count i s v o uSt
ho
Reserve Banks--of
course
TI
am speaking nov m y ovn opinion--coulé ¢ o anything t o help
:
bring that ebout, t h e y ought t o ¢
Now I
asked y o u i f t h e r e
when y o u s e i d t h a t
I dic not suppose that any. o f those things c o u l d ‘be
e
w i t hno u t ristrc
o
o
floss
q
a
i5n ca e business transaction,
£
cert-
ainly u n d e r s u c h unfortunetse c o n c i t i o n s ,
but ¢
i
f there
7135
wag risk o f loss t o the Federal keserve B a n s ,
i f that
could b e limited, a n d i f i t could b e plainly shown just
shat the loss might be, s o as t o make i t a reasonable busithink w e ought t o d o it. I
ness transaction, I
personally
do not understand foreign exchange well enough t o know how
you would d o it.
The Chairman.
Y o u c a n eliminate r i s k o f loss i n deal-
ing with any exchange which i s at a discount measured i n
dollars,
i f you are willing t o ship gold a n d produce t h e
dollars, because y o u produce t h e dollars a t a greater rate
by shipping gold t h a n y o u possibly c a n realize b y a n exchange
transaction when there i s a discount.
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Federal Reserve Bank of St. Louis
Governor morss.
I t would b e o f such benefit t o those
countries t h a t i t would s e e m reasonable t o m e that they would
bea willing t o undertake that obligation.
The Chairman.
T I haven't the slightest idea whether
they would o r note D r . Vissering has for some years past
been convinced t h a t i t sould b e a mistake f o r the Bank o f
the Ketharlunds ulone,
b y gold shipments,
t o attempt t o
stabilize t h e guilder.
Governor worss.
O f course, y o u r proposed arrange:
mant, a s I understand 1 + , would depend entirely o n that.
The Chairman.
I f y
i r e going t o eliminate
fluctuation i n exchange-~
Governor Morss.
Cheirman.
T h a t i s the only w a y t o c o it.
Y o u have g o t t o d o i t b y golc egree-
ment; t h e r e i s n o o t h e r way.
Governor HMorss.
Y
e could finence
i t as a
System, w i t h -
out a n y coubt.
Governor Norris. T h a t is, there would b e « kind o f pool
to operate foreign exchange.
The Chairman.
Y e s , j u s t about that.
Governor Norris.
failure
T h e only r i s
o f o n e o f those f o r e i g n b a n k s
o r loss woulc b e o n the
t o live u p t o E s
obligation t o ship gold i n the event i t became necessary
it.
The Chairman.
Y e s , a n d y o u cannot conceive o f a n y o f
those banks failing t o respect such a n obligation.
Governor Norris.
No. I
a m speaking purely i n a theo-
retical way.
The Chairman.
T h a t i s t h e theoretical risk;
course, Governor Norris, a l l credit operations h a v e a
risk
involved, b u t when y o u deal w i t h such baniks a s that under
a gold contract i t i s hard t o see h o w risk c a n b e more
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Federal Reserve Bank of St. Louis
ay
eliminated/t
recetion i s that i t i s a n uncer-
Govern y
talking
:
aec - v e r y s ¥ t met pa
t o whi 2
the
E
%
part i n a n
alR e s e r v e B a n k c a n t a k e
that
k
n i fi t hhe Fte d e
ay
ea
uncderteking o f t h a t k i n c
risk o f loss, beca
a
c
c
o
m
—
someone
are s o t r e m e n c o u s .
has
of?
ff p r e t t y s o o n i i
The Chairmen.
Y e s , thet
Governor F a n c h e r .
Governor N o r r i s
46°38 s o m e t h i n ?
Lite
s t h i n g
I
}
g o t t o b e cone
f y o u w a n t m y personal r e a c t i o n
4 s :
a m bounc
T
the three great b i g opportunities t h a t
plish t h e
t o it
to
We
h
a
c to
stabilizing o f f o r e i g n exchan:
into t h e L e a g u e o f Netions
of o u r t a r i f f w i t h
as far a s i t could >
o opening o u r coors t o export
t
with t h e least
isturbance
to
our i n d u stries r a t h e r t h a n t o p u t u p barriers.
those things h a s b e e n done o r will b e Gone, ant.
was t o e m p o w e r t h e 5
2
intelligent
w
stary o f t h e f r
with the refunding o f foreign obligat
ITdo not know just whe ‘eb _bhe
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Federal Reserve Bank of St. Louis
sury t o G e a l i n a n
present s t a t u s o f t h e t 1 s
10Ons.
?
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Federal Reserve Bank of St. Louis
I gather t h e impression f r o m -. newspaper report that I
have s e e n that t h e limitations t h a t have been written into
that b i l l w i l l m a k e i t i m p o s s i b l e f o r h i m t o ¢ o a n y t h i n g
that will b e o f any real use.
S o that i t seems t o me
that w e have lost, o r will those, o u r three best opportu-~
nities o f accomplishing t h e purposes.
have lost those three,
S u t because w e
i t does n o t follow,
o f course, t h a t
we ought t o throw aside a n d discard a l l others. I
appre-
ciate t h e cifficulty t h a t Governor Callrins has suggested,
but i t scems
t o m e that t h e proposition y o u have suggested
is one thet undoubtedly has merit enc may reasonably be
expected t o accomplish some 3
Y
e all bmow that a
market that i s left t o itself i s l i e l y t o fluctuate v e r y
much more a n d t o gosto v e r y much greater heights a n d
depths than i t ought t o g o to, and that a controlling
or a large operetor i n i t can accomplish a
of good. I
great ceal
should think that t h e political objection
might perhaps b e overcome i i this thing was Ceveloped
it possible f o r larger exports o f our
rocucts t o be made, b y assisting i n the stabilization o f
exchange, through a n arrangement i n w e made n o loan a n d
gave n o guarantee, but simply entered into a pool, with
739
aqually responsible institutions t o assume a
joint liability
and with a contract o r guarantee from them that was just a s
good a s our contract o r guarantee t o them.
The Chairman.
T h a t i g about t h e point o f vier t h a t I
have taken, Governor liorris, i n simply turning this over
in m y mind-
O f course, a s t o the american actt, I
think
the entire Leneficial results o f anything that w e would d o
or could d o could b e swept a w a y i n twenty-four hours i f the
treatment o f that debt should b e o f a character that would
put s u c h p r e s s u r e
o n all t h e sorld exchanges t h a t dollars
would g o soaring t o a higher premium.
T h a t i s a difficulty
that may o r may not be cupablé o f being controlled, I
not knox.
of that.
do
I t bristles with difficulties, there i s no doubt
T h e thing that inspires m e i s the belief t h a t some-
body should b e doing something,
i f i t i s n o more t h a n talking
it over, looking towards a plan some day.
4t oGevernor McDougal. I
should like t o see you continue
your efforts i n the future and w o r o u t such a Plan. z
belteve this Conference will-assure y o u that,
i n the event
it can b e worked o u t o n a safe a n d workable basis, t h a t
the e n t i r e S y s t e m w i l l b e sympathetic.
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Federal Reserve Bank of St. Louis
The Chairman.
I n any event, there i s one thing surely
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Federal Reserve Bank of St. Louis
that Whil. come o f it, and that
establish e
closer c o n t a c t w i t h
get better i n f o r m a t i o n f r o m
age o f authoritative meens r e a c h i n g facts abroad
about a
s a t m a n y things that w e could not otherwise get.
r McDougal.
o
n T h e rr e i s e one pvo i n t t
o h a t iG s n o t
just clear. I
to t a l e
S
understood f r o m your statement thet i t i s not
B f o r m o f = a toan.
“ E t must
b e inscthe-form-or
s s loan
in s o m e
The Chairman. I
say i t mey take t h e form o f purchase
bills, w h i c h would b e t o some extent a
may be a loan upon golc, i n other
4-34
Governor McDougal.
The Chairman. I
Wag as I
a
s
s
d o n o t imow.
~
~
crecit operation.
V i
u
m
e
d i t would be.
T h e t h i n g i s t o o indef-
d o not k n o w what t h e obstacles m a y b e that will
be e n c o u n t e r e c
c e a l i n g & 3w i t h t h e s e i n s t i t u t i o n s ,
bly sets
s controlled
e
v
e o fs
Governor McDouge 1
m
w h i c h are
owne lesislatures.
h
t
think i t would take the form
golc o r its equivalent.
The Chairman. I
d o n o t imow.
H o w e v e r , whatever
form i t would take, i t would b e g u a r e n t e e o f gold b y
responsible barks.
I t might b e a contribution account s o m e
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
741
time, b u t i t would certeinly,
i n m y opinion,
s o fer
have thought o f it, b e i n such form that ultimately r e payment w o u l c b e a
ri
Lrme
any o t h e r form.
pledge
h
i
p g o l d i n s o m e form.
h e r e woulc b e no legal hancicap i n
h e r e woulca b e l e n
T h e r e woulc
)ht b e more abrosc.
&
doing i t than i n
b e l e s s o n o u r pert, o u t
w e have
°
g o t t o l o o o u t for
de.
the statutes a n c things t h a t limit t h e saetion o f thes
various b a n k s w i t h r e g a r é
t o s h i p p i n g sold.
Governor lichougal. i r . Chairmen, I woule l i e t o introcuce a
subject a t this time, e n c while I
that i t requires formal action, I
co not inow
woulc like t o report.
At the time o f our cinner t h e other evening Governor Harding appointec a
committe c o n s i s t i n g o f Mr. J a y , lr.
Mertin, M r . S e a y a n d m y s e l f
question
a s t o whether
be continued.
t o give consiccration
t o the
o r n o t t h e group conferences s h o u l d
Governor Seey anc I
have r e p o r t e d
o n our
first meeting w i t h the other wing o f that committes, a n d
the f a c t t h a t t h e c h a i r m a n v o t e d i n f a v o r o f c o n t i n u i n g
conrerenctss.
i
t
s
e
c the visw t o the Govern-
and t h e understen®ing w a s thet Mr. J a y a n d Mr.
in woulc g o becl: t o their Conference,
the resulit-wes that. t h e y
Consequently o u r committec,
e
n informal i n t e r v i e w lest
night with Governor Harding, w a s civicec,
of t h e G i s c u s s i o n
w e naturally,
anc I
a n c i n the course
thin: q u i t e properly,
introcuced t h e subject o f more frequent Governors! conferWashington.
I t ce-
veloped that Governor Harcing himself was v e r y emphatically opposed t o such meetings
vanced being t h e t i t woulé acc. very much t o the loac
carrying, perhaps b e embarrassing, t h a t publicity woulc
16 meetings h e l d e l s e here, anc. h s f e l t t h a t
of the Governors, i f helc, shoulc b e helc i n
heve n o ovjection t o our holcing
more f r e o u e n t m e :
He was s n p h e y
g
s h e r e i f w e h a c s o m e t h i n g t o m e e t for.
opposed t o the meeting of Governors
at a n y point other than washington thet there w a s n o use
of pursuing t h e matter a n y furthsr, a n d i n view o f hi
opinion a n c h i s e x p r e s s e d o p i n i o n t h a t t h e Boarc. w o u l c b e
opposec.
t o i t also, a n i i n v i e w o f 3
f e t h a t t h e Chair-
men were i n f a c o n t i n u i n g the group mectings, I
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Federal Reserve Bank of St. Louis
think Mr. Seay a n c r a t h e r felt inclined v e l i e v e
743
for p o l i c e sake, i f not o f consi erstion f o r Governor
himself, t h e t o u r commi;tes might better r e m miconc
thet f o r
t h e present these g r o u p conferences
b e continued
anc t h a t t h e c u e s t i o n o f mors f r e a u e n t m e e t i n g
a
pe)
Governors,which w a s o f necessity introéuced i n t o t h e matter, |
Cciscussec f r o m s o m e
Governor Seay, h a v e y o u a n
have endsavoree t o tell just w h a
Governor Seay.
J u s t t o confirm what Goycrnor
eportec, Governor Harding himself i s unalterably o p posec.
t o t h e m e e t i n g 5 Yo f G o y e r n o r s
e t any
Jashington.
Governor
Van
not a t t h i s i n e P r e s s o u r
F U G
n c e t i n g s
a t points
other t h e n Washington, b u t
for u s t o h a v e m o r s f r e c u e n t M G C L N e s
n s
i n g t o n t o én-
able the Governors t o study anc. disaiss topics covering
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Federal Reserve Bank of St. Louis
anc. policy o f the Federal neserve Bank,
Governor Biggs I
will seconc that,
(The motion, b e i n g c u l y secondec, w a s carried).
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Federal Reserve Bank of St. Louis
Governor Mcbougal.
N o w , o n the other cuestion raisec, [ I
uncer e l l the circumstances, without odjection o n the
Governors, v h a t o u r committee w i l l meet w i t h
other committee a n c report t o Governor Harding that w e think
the g r o u p m e e t i n g s s h o u l d b e continuec,
a t
Is that your motion?
Governor McDougal.
ecessary t o m a k e a
Y e s , although I
motion.
G o not think i t i s
However, I
will m a k e a
motion
that the question o f continuing group meetings has been Cone
sicerec. anc. t h e c o n s e n s u s
they s k a
o f opinion i s that f o r t h e present
b e continued.
Governor Young.
A n e t h a t t h e banizss s h o u l c v e regroupec.
Governor Wellborn.
T h a t t o b e left t o the Board.
hey o u g h t
Govermor McDougal.
$S0¢
t o b e regroupec.
a n c that t h e matter o f
regrouping b e left with the
(The motion, being culy seconéed, was carried).
Governor IcDougal. M e v . Chairmen, I
wouic like t o bring
another subject, w h i c h will take o n l y a moment, a n c I thin:
s
=
i
t
i
anit that
t
h
is
others, anc.
o f importance t o some o f the
question o f d i s p o s i t i o n
o f past-due a n c suspencec
w r
e
e
which
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ainst p o s s i b l e
24
s6 $260,000
o f unccollcetsc p a p e r a
ecommenc.ed
permitted
a t the enc
t h a t purpose,
func t h a t h a s b e c n provicerc
because
i t is a
t o
loss, b u t t o g e t r i c o f
Goyernor V a n Zandt. I
will s e c o n c that.
have n o suggestion t o ofier,
The Chairman. I
heven't any of thet.
Governor Young. I
would like t o c i s m s s that a
little b i t
we have s o m e paper i n our portfolio securcea 1 l i b e r t y Bonds.
sons best known t o ourselves
t
o charge
thet offjust a t the moment.
to
O
some p a st-cue
F
F ad.
i
s better t h a n some
not pastecus.
fae o e
Governor McDougal. I
and n o t "required".
e
s 3
t i=
5
h
usec t h e s x p r e s s i o n " b e p e r m i t t e ,
I t i s only «
recommendation.
(The motion, heving b e e n Culy secondsd, w a s carried).
i
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
746
tS fae & p
The C h a i r m a n .
Overation.
F u t u r e
n ire o S ea
B ery
Operation u n c e r V I :
o
c
policy o f Federal
3
5
e
r
v
e
cjustments a n c e x t
penstion.
s
GOoyernor Fancher. p
Las!
: e aYh
t a Pe
Em
a matter o f infor-
the o t h e r b a n k s w e s .
cdiston tinued p a y i n g ¢ x t r e c o m p e n -
S&S at
ronrevowo
G & Ya o
o
u are havin
g salery acjus tments, h o w -
6VGr,. 26e- Y o u not?
Governor Biggs.
‘ “ e paic nons
this year.
w
year, necessarily.
to make some adjustments
sal-
ray
g n i t s uA
Governor F a n c h e r .
aries?
O n c e e a c h year?
Governor B i g
on J u n e S O t h .
amount
e will. heve
w
S .
C
u
a r e macé annually,
r real ac. justments
Z
e malze s o m e m i n o r
adjustments, b u t they
t o nothing.
r Fo
a n cn
h e rr.
eY o vu
oco nG o t
the e m p l o y m e n t ?
Governor Biggs.
certain periods, u s u a l l y January,
since l a s t January,
rey
AW
a n n i v e r s a r y
of
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Federal Reserve Bank of St. Louis
Governor keDougal, a r e y o u paying
extra c o m p e n s e t i o n ?
Governor kcbougal.
w e h a v e p a i c n o n e t h i s year.
pecn d e f i n i t e l y e n c f i n a l l y c i s p o s e d
of, b u t w e have paid nothing this year.
D o y o u male a
The Chairman.
salery acjustment a t a
GCp e r raa,
Governor McDougal.
ena o f the y e a
six months.
n
T h e y are
d t o some extent a t the e n d o f
W e heve given a gooc ceal o
4
o the matter, a n d w e believe t h a t there should b e
devised b y which these acjustments shoulc b e made
smaller g r o u p s a n c a t more f r e q u e n t intervals.
Governor wellborn.
w e usuelly make o u r adjustments
in January a n c July.
The Chair .
H a v e y o u Giscontinued special compensa~
tion?
Governor vellborn.
W e only G o that once a year, a n d
the last bonus w e gave w e c u t i n helf.
The Chairman.
special bonuses?
G o v e r n o r Norris, h a v e y o u ciscontinued
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Federal Reserve Bank of St. Louis
Governor Norris.
w e p e y t h e m semi~annually.
W
& paid
helf lest year o f what w e hac paid i n the previous December.
I think t h i s D e c e m b e r
w e w i l l n o t p a y a n y e x t r a compensa-=
tion.
Chairmen.
D o y o u reacjust saleries a t reguier i n -
O u r principal reacjustments a r e mace
Governor N o r r i s
semi-ennually.
« i ¢ fecl t h a t t h e t i s a
misteke, b e c a u s e
.
is apt t o create a n impression t h a t a
e
ploys m a y expect e a
a
s *
it
t t i m e s a c h em-
possibile, i t ought t o
be a s Governor licbougal has suggé c d , i n smeller groups
a s often a s possible,
end more frequently,
s o that theye
voulé n o t be, a t a n y certain date, t h e possibility o f ex-~
pectation o f increase.
The Chairman.
= o you p a y bonuses, Governor Young?
‘ e paic o n e i n June, b u t w e
Governor Young.
nounceé
uses.
a t t h a t t i m e t h a t w e w o u l d n o t p a y a n y m o r e bon-~
Salarie
h
e past h a v e b e e n adjusted i n June.
g t hange LEL
2
1 a n d we w i l l
However,
we & g
even £ 0
f a r a s t o a d j u s t t h e incivicual s a l a r y o n t h e
enniversery o f t h e i r employment.
Chairman .
W e will give y o u one year i n which t o
749
it
get tired o f that, b u t i n the meantime y o u should t r y
out -
- ¢ adjust salaries monthly o n the anni-
Governor Seay.
yersary o f employes.
The Chairman.
a r e you paying a bonus?
I t has b e e n our practice f o r several
Governor Seay.
years t o pay a bonus annually.
“ e g expect t o pay a bonus this
year f o r pust time, n o t t o apply t o current work, t h a t is,
for s e r v i c e s d u r i n g t h e e a r l y p a r t o f t h e y e a r e
The Chairman. G o v e r n o r Morss, d o y o u p a y a high cost
of living bonus now?
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Federal Reserve Bank of St. Louis
Governor wWorss.
the l s t o f January.
s
e anticipate t h a t w e will p a y o n e
- @ have v e e n i n the habit o f paying
w e cut i t
one the l s t o f July a n d t h e l s t o f January, b u t
down f r o m what s e paid last January..
fn equal amounts,
‘ 6 never p a y bonuses
b u t w o p a y t h e s m e l l o n e i n June a n d a
larger one i n December.
. ¢ feel w e have not raised our
salaries t O such a point, and. the cost o f living has not
come d o w n f a r enough, b u t what w e should p a y somes bonus
it.
at the e n d o f this year, a n d w e shall probably d o
a year ago, I
But
think i t sas, after t h e first o f last year,
and
we gave t h e m warning that t h e y were n o t permanent
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Federal Reserve Bank of St. Louis
Might b e ciscontinuec o r cut cown. <
f e s i g u e is we
should p a y them some bonus e t the e n e
t h i s s i x months.
Does t h a t a n s w e r y o u r inquiry, G o v e r n o r
Governor. Pancner.
v
n
e
t a r e -y C G i n e i n
about t h e sslary
The Chairman.
r e Y U t r i e d t h e plan o f reacjusting
a year, b u t i t got t o b e such a
dealt with,
month with regard t
occurret,,anc t h a t v e have found i s quite unsatisfactory,
end w e are now practically worling o n the basis o f © regular scale o f promotion with a
CreasGe
n a s1
Governor Seay.
The Chairman.
monthly review
wh. y
corresponding stele o f in~
gone i n t o effect, I
believe.
Y o u a r e making monthly adjustments now?
J u s t n o w w e a r e working o n the basis o f
o n anniversaries, e x c e p t with regard t o cert-
departments t h e t h a v e b e e n t r a n s f e r r e c
system.
Mr H a r r i s o n .
“
@ stopped t h e anniversary
a c justments
he lst o f last August, i n view o f the system o f stancard-
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Federal Reserve Bank of St. Louis
ization w h i c h w e h a v e a b o u t compl:
Governor Seay.
Pires 6
G e o2not- n o w ,
The Chairman. G c n t l e m e n ,
i
s 6 ofcloc’: anc a motion
$0. e c jyourn will. b e i n orcer,
6 o'clock p m, uvon motion culy
the Conference acjournec until saturday, October
at 9:50 o'cloc™ «
GOV. RNORS
O F TH: FPEDSRAL RESERV:
Saturday,
The C o n f e r e n c e
O3 3c t o b e r S 9 t h ,
o f Governors reconvened
BANS
1921.
i n t h e Metropoli-
tan Bank Building, Washington, D . C., e t 9:50 o'clock am.
Present:
T h e Governors
a s previously inéicated
i n the
record (Governor Miller of Kansas City being absent).
The Cheirman (Governor Strong).
T h e meeting will please
come t o orcer.
The next o n the program i s No. VII, accounting andeuciting.
n
a Auciting.
Vise A c c o u n t i n g d
The C h a i r m a n (continuing).
Y o u will notice t h a t A , u y
ere all suggestive o f the same thins, o n d that i s
shell h a v e s o m e p e r m a n e n t m e t h o d b y w h i c h t h e a c c o u n t practices
o f t h e t w e l v e b a n k s may b e m a c e uniform,
and
nefit o f the experience o f one banks placeé a t the cisposition o f esnother. I
d o not k n o w whethcr
while t o ciscuss tnese topics separately.
i t i s worth -
T h e y ere really
one t o p i c a n c f o r m y o w n u s e t h i s c o m m i t t e e
o n procecure,
to which I referred t h e other day, h a s prepared a
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Federal Reserve Bank of St. Louis
report o f
753
what t h e y were doing i n the Bank i n the w a y o f improving
methods
o f procedure,
and I
gathered f r o m s h a t w a s S t a t e d
at the meeting t h e d a y before yesterday that most o f the
Reserve Banks a r e doing about t h e same thing.
Now the question i s t o bring them into uniformity, uniform practice i n accounting,
i n advices, procedure, a n d es-
pecially i n cost accounting.
T h a t would b a a long step t o e
wards efficiency a n d economy.
Let me point out just one thing. T a k e the forms that
we interchange, t h e advices, collection advices a n d other
matters o f that ind, o f which there i s a great mass,
" @
have adopted t h e principle i n New Y o r x o f binding o u r
records instead o f filing t h e m wherever t h e y are capable o f
being filed i n that wayless p e r m a n e n t r e c o r d e
I t makes a very compact and more o r
T h e y a r e n o t s o easily lost, t h e y c a n
not b a ta«cen out o f their bound volume.
I f these forms
that w e use, t h a t w e interchange, a r e uniform i n size, unin
a printing, those bound
form i n weight a n d t h i c k n e s s d
volumes a r e very much sasier handlsd.
another thing,
i f your clerks a r s trained t o look f o r
a figure a t one place o n a n advice aad i t is always i n the
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Federal Reserve Bank of St. Louis
game place o n letters coming from the 1 2 different bans,
44 very much facilitates t h e speed a n d accuracy with which
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ssibly poor illustrations o f ‘hat I heve
thet :
competent :
5
2
«should have
h
a n orgenization
e b e s t prectice intro-
and m o v e
committee
You perhaps w i l l recall t h a t w e d i d have
a committee o n accounting and form procedure, “hich labored
“or about a veer end sugested forms and cortain procedure. ¢
T understand
tent
that s e v e n benks became
o t t e r s
iy idea
Pro
bhose- f o
i s t h a t s u c h s comnittee
p r e p a r e .orms a n d
heave a
“ould t a k e
operation.
am anxious
sequences.
There is a
wa a r e going t o get i
T
t o see
sequences c o m i n g
would l i k e t o amend Governor
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
aa ‘
+
5 S es 2
~
something l i k e
= 3
a
i
tne
c
e
l
e
4
by the apvoiat-
Governor
o f the
~in}
~
s
~
Herero?
2ssion,
a n d t o report
conclusions + t h e next Governors! Gonference, w h e r e v e r
can really accompli
Fancher p u t n i s
seven b a n k s t h a t
I
PLL he
s i d e r i n g s o m e t h i n g w h iL
tinuing c o n m i
Mr. M o r s s .
never t h i n k
h
F o r a
e|
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Federal Reserve Bank of St. Louis
a secretary o r somebody clse ‘ h o vill follow thesc things
to t h e
neve 9
then t h e n e x
t h i s i
‘ m e
w u
epfect a n d if3 a
come
t o t h e Conferences
n
O
es
g
w o u twill
troulLa r e f r e s h vrour m e m o r y t o t h i s e x .
ite
thing b e done,
u
p
e S
; a
istter woes s e n t v h i c h o u t l i n e d
Gov. M o r s s .
The Chairman.
loved u p and,
ter w a s s e n t o u t
D e u
t
h
8
sie 2
e d yadone
h
i t o r thether they
have t o g 0
The C h a i r m a n .
ledgment.
reply, C i d y o u a s k rhethei
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Federal Reserve Bank of St. Louis
it occurs t o mec
up o f yours did, I
far enoughe f
believe, s o m e good,
this committee thet you have
sideration now-- and I believe there hes been a committce
appointed t o prepare ea letter t o b e signed b y you, t o the
Governors-=- i f v
F i n d that they are n
dy
o ho
n ur
s
l d e t va k oe Gt hfe
r
it
I have n o d o u b t g t t h e n e x t C o n f e r e n c e
16 voted t o put this through a n d i t ros
not done.
Gov. V a n Zanct.
F a
Gov.
n c
h e r .
S@aye
V
i n d they 7 1
Y
e
S
a
y they thought i t
e
O n é troupie
r e eal} i m o w ,
h e s been. :
that
“g have n o t quite g o t simmered c o m f r o m t h e experiences
through +
V
e :
I
believe
r e have a r r i v e d a t
a point n o w w h e r e r e c a n a c c o m p l i s h more.
tee, I
believe
all banikse I
or motion.
f
s t o t h e commnit-
i t hos b e e n a-committee t h a t d i d not represent
a m i n s y m p s t h y r i t h Gov. C a l k i n s ' s u g g e s t i o n
I t vill never g e t u s anywhere unless v e have a
committee consisting o f the accounting p l a n man i n each bank,
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Federal Reserve Bank of St. Louis
758
becuse t h e r e e r e d i f f e r e n c e s
the {
Serre >
i n t h e banks, t h e b i g a n d
s i s t e n t i r e l y c o n f o r m s s t o practices,
assentisl 7
W e v e @
representative
and
t r o m efscn
a
en l e t t h e m f o r m 2a supcommit-
tee i f t h e r choose, t h i c h rill b e a n opereting committee.
thet y o u cannot hops t o have
o n procedure c o m e
committer
‘a heve a
2
4n° the p e n k ,
o n d s o 1af-os
our ovn orginizetion i s conesrned v e are endeavoring t o
>
mae
s v c mepouay cess
P
b a n k
e
s
+ f,
COAG
The
h
i
n
g
to h e v e t h e t r e l f t h m a n
g
s
+
con
t o prass
o n that committee
egainst t h e other cleven, a n d t h e n bring that
this C o n f e r e n c e a n d r e o u l d
get s
at least.
officers
o f the
4
Po-nance
i n local conditions
make
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Federal Reserve Bank of St. Louis
753
ome o t h e r p r o c e d u r s
desirable
1
% methodgsoutlined
i n the
t I can reportt.
Governor M o r s s
have t o reporte
Thnile v e f a v o r
the
3
cedure, a n e t o recommend such n e accounting procedure «@s
2
may b e n e c e s s e r y f r o m t i m s
s actions.
S
ni z
eccurr
Ps)
not f e e l t h a t t a i l s
t i m e i n hendling interdistrict
N
e
P ReserveE B a n k s
c o m t u c e s a 1 - D d e v e s t e d vith p o v e r
thority Jj t o i n s i s t u p o n t h e establishmer =
ing p r o c e c u r e
o s t h e y5 -m a y d e v i s e , b u t , rather,
procescings should b e
Reserve B a n k s
m d
t
t h e
4.
h
account
t h a t their
o revier b y all the Pederal
i
n other
~ords, o u r operating depertusnt t h i n k s t h e y should b e lef
Eo e o
E C L
O i
e a r
fhe Chairmen.
f a r ~ s locel conditions necessitate.
tay
‘ n d I want t o call attention t o the fact,
Governor Celkins, t h a t r e have under this o n s heading s i x
seperate s u g g e s t i o n s
t o bring sbout unir
never h e d 2 meeting o f the Governors th»?
760
question does n o t arise; h o w c a n w e bring about uniform
practice i n this o r that work that the banks are doing?
The Operuting men--I have n o doubt i t is s o i n our bank-have a pride i n their o w n views a n d methods a n d they a r e
possibly resisting that very effort, but nevertheless
these suggestions r e a c h t h e program a n d when i t comes t o
such a matter a s unit cost and things o f that kind i t is
absolutely essential t h a t o u r cost rates b e made u p O n
the same basis. Otherzise comparisons a r e o f no value,
Gov. iicDougal. I
want t o say i n eonnection with the
figures recently submitted here, t h a t they tend t o show that
the various relative costs a t the various banks d o not
amount t o anything because they are not prepared o n a
uniform basis.
The Chuirman. Exactly 30.
Gov. Fancher. I
wish t o r e a d t h e r e p o r t o f a
young
man xho i s a member o f that committee o n forms. I t reads:
"at the lust Gonference o f Governors, the Standardization
of Inter-Federal neserve accounting rorms Gommittee submitted i t s final report,vhich w a s adopted b y the conference
and later approved b y the Federal Haserve Board.
A t the
tima i t was realized that the question o f standardizing
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
theses accounting > forms
x
cases p e r t s o f o r n i l ese
heave t o b e changed.
T h e Goce
banks r e p r e s e n t e d
o n the
committee
ormity i n eccountit
ep m o r e t h a n
y s a r ' s
lebor o n
m
the c oAm mE ie ate t| e ts o nee“b t u r a dliy h e d
Lh A
the f o r m s e d o p t e d
i n cll #
‘ederal Reserve
report was d i s t r i b u t e
ussd
anted
i n the
o n the
i n favorable
resulted
eo i e 2
ew cases;
pboame r e s
Bee:
H S
i nA
T tA C ,e
seven b e n k s
o f
e x t e n t
*
tee g s work i s p r a c t i c e l l y
o f
the f o r m s
Officially t h e commit-
acoption.
and
!®
some
- “nstalling
have become
1 ef-
2
rom
forts v u t f o r t h
(Governor Fancher meade o
further
stm
stroa.)
per
seems
an:-0nP
procscure
to bring about
t o
committee organization.
T h e other
follow-up.
organization, I
G o not thin’: there i s
anything w e c a n accomplish except v e have a
committee i n
1 bani working o n this subject, a n c that a
representa-
of t h a t c o m m i t t s e f r o m e a c h b e n k s h a l l s i t i n a
to work o u t a program.
i
n
gen-
k we are
somé s u c h program i s cesirable.
The next thing i s the follow-up.
w e attemptec. a
little follow-up after t h e last Conference, b u t i t would
any a u t h o r i t y t o a n y b o c y t o impose
these cecisions u p o n a n y bank thet Goes n o t want t o observe them. I
would n o t want t o ettempt t o d o thet.
we c a n c o i n N e w Y o r k i s s e n c . a
all
reminder, w h i c h w e w i l l
pe glad t o do, b u t i f w e h e v e p e r m a n e n t organization o f
committces
i n e a c h bani:
p
with a
ssentative +
twelve,
a n c watch those men,
is adopted,
e
s
o f t h e o p e r a t i n g men,
i n the general conference o f
t o follow u p whatever procecure
a n c i f i t i s not followed
u p i t will b e brought
up at this meeting, anc then we can go after it. N o w that
would relieve me, i f I a m acting a
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Federal Reserve Bank of St. Louis
. i r m a
o f a n y respons-
763
ibility f o r enforcement, b u t t h e failure o f obscrvence
of w h a t e v e r p l a n i s s c o p t e d w i l l b e p i c l e c
committecs
i n t h e c i f f e r e n t danizs snc. reportec here.
Gov. MeDougal.
motion,
u p b y these
M r . Chairman, I
woulc l i k e t o withdraw m y
i f i t i s i n orcor, a n c moyve that t h e plan o f pro-
eecure a s o u t l i n e d
b y y o u b e follower.
Gov. Galikins. I
Gov. S o a y .
s e c o n t h e t motion.
M a y I
a s k G o v e r n o r F e n c h e r i f those r e s n o n s i -
ble f o r getting u p those forms c i c n o t meet a t his bani:
defore?
Gov. Fencher.
Y e s , t h e y hac t w o o r three mectings,
I recall i t , G o v e r n o r S e e y . I
remember o n e m e e t i n g
in
end, w e were together t w o o r three cays o n forms.
I recall t h e t comnittee spent «
good Ceal o f time, a n d
their forms were finally recommencec. anc. resultec. i n several c o n f e r e n c e s a n c t h e r e c o n c i l i n g o f d i f f e r e n c e s e n c t h a t
sort. o f
Gov.
z h Y a s the Clevelen: representative chairman
of that committee a t thet time?
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Federal Reserve Bank of St. Louis
Gov. Fencher. I
The Chairman.
Gov F e n c h e r .
e m not sure.
- I thint Mr. R a s h was.
Y e s .
The Chairman.
T h e y made a splendid report.
Gov. Fancher.
Yas, a
splendid r e p o r t .
T h o s e m e n spent
a good deal o f time a n d went over i t thoroughly.
recall i t all.
Gov. Seuy. I
- @ have s u c h a department
in our bank and a n officer a t the head o f it.
Gov. Fancher. M r . wagner has talsed t o me about this,
and they put forth a good deal o f hard work i n this thing
b u t n o t h i n g c o m e s o f it.
and t h e y h a v e m a d e suggestions,
Gov. Seay» T h e labor o f that committee ought not t o
be lost, i t ought t o be taken u p where they stopped.
The Chairman. I
examined t h a t report pretty carefully.
They went into every aspect o f the work.
I t spoke o f the
gize and azeight o f the paper, the color o f the paper, where
44 could b e purchased,
i t dealt with t h e character o f the
machines t o be used, and i t was a s complete and good a réport a s y o u could have, a n d I
a m afraid t h e results w e r e lost
because t h e banks did not pursue it. J I think w e have adopted
the report i n toto i n New York.
Gove Fancher.
Gov. Seaye
. 6 did, yes»
x e did, I think, i n kichmond.
Gove Pancher.
And I
think N e w York, Richmond a n d
Cleveland went straight t o i t and adopted all the forms
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
and a r e using then.
Governor Young. M i n n e a p o l i s i s using these forms.
The Chairman.
T h e motion i s that i t i s the sense o f
have
this meeting that e a c h Federal kKeserve B a n k should
ag part o f its organization a
committee o f its opsrating m e n
who would deal with these matters o f procedure b o t h with
regard t o the internal practices o f the bank a n d t h e practices
between t h e h e s e r v e S u n k s ; t h a t o n e m e m b e r
should s e r v e a s a
member o f a
o f this committes
general c o m m i t t e s r e p r e s e n t i n g
b e submitted
all t u e l v e o f t h e bunks, t h a t t h e i r r e p o r t s h o u l d
rebuck und adopted; that they should b e charged with the
they
sponsibility o f following u p their adoption, a n d where
find that their reports a r e n o t s o adopted t h a t t h e members
aith
of the Committee o f the respective banks a r e churged
of
the responsibility o f reporting b a c k t o the Conference
Governors.
Gov. Seay.
T h a t would involve taking u p the ynole mat-
ter n e w shere w e left off.
Gov. McDougal.
N o , that vould take advantage o f what
we have done. T h i s man would b e the man that has gone along
with t h e other committes, a n d they have made some progress.
The Chairman. I
should suppose t h a t committees would tuke
advantage o f all work that has teen heratofore d o n e i n this
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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dircetion s n d simply carry i t o n more effectivelye
GOV. SO53 T h a t i s wheat I
Gov. McDougal.
heve i n mind.
D o y o u ~snt t o decides o n the
“composition o ° this committce a t this mecting?
W o , m y thoucht vould b e that i n our
The Cheirmmen.
for instance, doubtless «ss ~ould s a y thet Messrs. Oakey,
ounds &
Hendi
t h i s p l e n i s the plan t o b e pursued i n
ro gerd
actions, e n d >
res] i b i l i t y
this program? a n d
n o n v o u t o carry o u t
o o ) ssignete
o n e o f them * s 4
momber
of t h i s c o m n i
gbmilear man, a n c
appoint ©
Gove Fencher.
T I undsrstenc, ™
chairmn
C h a i r m e n , this will
bo follo:ed up ss ve get t h e record, o n e c f the things the
Sceretary w i l l b r i n g t o o u r
por tof e v e r y
dela aol saad
me
ink this orgeanizeatio
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Federal Reserve Bank of St. Louis
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be a p p o i n t e d
1
b e reported
this o r g s n i z e t i o n , d
to
6 committee
b y t h e Federal “essorve B o e r d
ssrel Meserve Board that ve are going
ent sehoead with t h e program that i s undor consideration,
e s e m e n t o produce these results
hould e x p e c t
comittes a n d the Reserve Boards
very c l o s e t i m e b e t r e e n
“ich t o e x p e c t results.
h a r e should b e
The C h e i r m e :
‘ r e you ready
questions”
=e A FAR.
CoaLrme n
e
one o F
Gov. V a n Z a n d
y
the w o r k u n d e r D - - # R e p o r t
comnittee
u vest
o
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a m e committee v i t h
and
to
the v a r i o u s r e p o r t s a n d s t a
i e s Yurnishes
serve Board and Treasury Department."
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that i s exactly t h e type o f
4
Gover
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H
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The Cheirpmon.
G o v e r n o r Calkins, t h e t t o p i c
liberty o f ansvoring
reested b y you, s n d I a m trking the
for you, inadvertently.
Gov. Calkins. I
sccept your snsvers
committee t o d
est immediate cuestion f o r that
T think t h a t
“spout trenty ri
Mr, Gilbert rill b e here i n
pefore h e comes I
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Federal Reserve Bank of St. Louis
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spec ric
would like t < a s k vou what
“4th t h e F e d e r e l R e s e r v e
fem thet o r e p a y mind?
this g o i d matter
k we ought t o t e l k o v e r
discussing yesterday,
pank c o o p e r a t i o n
o r pans
t h e p o s s i b i l i t y o f central
N
?
o t issusA
T v o u l d n l s o likes t o d i s c u s s e
and the possibili
pit tath the Federal Keserve Board,
v
s i d t h e F e dChoos
Ver B i n e n c e c o r p o r a t i o n
good record o s what r e
That makes *
matter
correctly u n d e r s t o o d
>
bill t h a t t h e c e t t l e p e o p l e
heirmen, G o v e r m o r Herding
that, G o v e r n o r ?
R4evye n e n a s
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Federal Reserve Bank of St. Louis
GOV. SCh&yVe
c
t
metter o f p r o t e c =
c , hfa
@i1, i
think
“ith Governor Hordinge
ettonded l l o f t h e meetings t h a t I have h a d vith
he Senntors, a n d
Thursday morning.
d tt h
ge m e e t i n g
atta
ecner
w e h e d vith them
I t seems t o m e tha
b e yond
on
general subject v e talked over wi
the responsibility does n o t rest u p o n u s t o inform t h e other
members
o f t h e #edcral R e s e r v e Board.
D o v o u think co, I r e
Herrison?
Hinverisens.—
4 . c n c
note
Choirmn.e G o v e r n o r H e r d i n g a s b r o u g h t
ference p o r t i c u l e r l y
Harrison.
f o r that purpose»
Y s s
“4th C h a i r m a n A n d e r s o n ?
Cheirmen.
Yes, I
did. 4
ha
V A L S
ought t o discuss
and t h e a p p o i n t m e n t
upone
should m a k e 2
report?
2ne -Cheirnen.
‘ 3 , ~ e should report o u r action regard-
proposed circuler covering charges.
Possibly some othe p i c P i t
occur t o you rite r e
our discussion I
The C o m p t r o l l e r
I s there
o f the Currency
vould like t o report
t
e C o n f e r e n c e
to a luncheon today a t one o'clock a n d
11 o ' c l o c k a n d I
the luncheon.
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Federal Reserve Bank of St. Louis
youid
te£ l i k e t o r e p o r t h o w m a n y c m a t t e n d
S u p p o s e those w h o ¢ m a t t e n d raise their
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Federal Reserve Bank of St. Louis
right hands?
Including Mr. Harrison a n c myself I
Z
count eleven.
t
~\
sub-
Now i n r e g e r d t o m y i n t e r v i e w w i t h Mr. A n d e r s o n , I
mitted t o h i m e v e r y p o i n t t h a t w a s r a i s e d a t t h e G i s c u s s i no
H e was impressed b y all o f the mat-
in regerc t o the bill.
ters. I
indicated t o h i m that I thought i t would b e a
goa
plan t o heave Mr. H a r r i s o n r e d r a f t t h e b i l l t o c o v e r t h o s e
points a n d submit a
memorancum with a n argument e s t o the
reason f o r each change t h a t w e were proposing, a n d that I
think shoule b e done,because a l l that I have Gone i s t o make
2 verbal argument with him, anc he i s not a technical banker, a n c t h e force o f that ergument m a y not appeal t o the
members o f the committee unless i t i s reenforced b y a writ~
ten memorandum, a n d I
proposing
t o meet
a m sorry t o s a y thet t h e committee i s
n order t o a c t o n t h e bill,
M o n é g i
end
at the 1azerd o f very greatly inconveniencing Mr. Harrison
I e m going t o a s k h i m i f h e c a n stay over i n Washington l o n g
enough t o deal with it.
Now, the points t h e t I coverec w i t h him, s o w e could have
no misunéerstanding about it, were t o consider about t h e relation o f c a t t l e l o a n c o m p a n i e s a n d t h e f a r m l o a n system;
t o
consider t h e necessity a n d limitations o f Section 5202;
to
consider whether t h e privilege accorded t o the Federal F a r m
772
Loan System of discounting paper with the Federal Reserve
Banks s h o u l d n o t b e r e s t r i c t e d
t o paper b e u r i n g t h e endorse-
t o consider whether a
ment o f member banks;
clause could n o t
be 3sdded t o the provisions f o r the amendment t o the F a r m Loan
Act which xould make i t not impossible b u t unprofitable f o r
any existing member bank t o withdraw from the Federal Reserve S y s t e m i n o r d e r
t o take advantage
o f aiscount privi-
leges which would b e equally advantageous through t h e Parm
Loan System and which they now get through the Federal Reserve
System.
A n d a further clause which sould p u t the F a r m Loan
System i n the same relution t o existing ageneles f o r obtaln-
ing credit information about bunks that the Federal naserve
System now has, o r should b e with the Comptroller o f the Currency e
Gov. Norris. I
The Chairman.
to banks,
beg your pardon, b u t what was the lust?
I f the Farm Loan System i s t o make loans
i t should b e put i n possession o f the necessary
Anformation, a n d that should b e indicated i n some manner i n
the bill.
lou, w i t h these additions a n d amendments t o the proposal
made b y Mr. darrison, a n d supported b y a memorandum o n each
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Federal Reserve Bank of St. Louis
175
point a n d submitted t o a committee, n o t us a n expression
of opinion f r o m the Governors b u t simply a s a modification
of the suggestions I
made personally,
i t seems t o m e u e
have g o n e a s f u r a s w e c a n s
;@ now propose,
Gonferencs,
a s I understand t h e action o f the
t o take n o formal action i n the w a y o f recommend-
ing any legislation a t all.
(Gov. Van Zandt then made a statement off the record).
The Chairman.
N o w I want t o make o n e more statement
in reference t o m y interview w i t h wr. anderson.
It developed i n the course o f our discussion that
Mr. Anderson vas a little b i t unesrtain a s t o shether
the e x i s t i n g c a p i t a l w h i c h h a d b e e n p a i d i n t o t h e F a r m
Loan Banks a n d t h e Associations w o u l d b e adequate t o
support t h e n e w operutions w h i c h might result f r o m this
amendment, a n d I pointed o u t t o h i m thut i f a part o f the
plan contemplated that all banks taking advantages o f this
program, w o u l d b e required t o p a y i n tha five p e r centy t h a t
wag discussed hare, i t might not only furnish the capital
required but would furnish the protection against withdrawal
against t h e hsserve System.
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
74
O f course t h e requirement
Governor Seay.
t o pay i n
five p e r cent o f the cepital i s n o comparison, c o e s n o t compare w i t h t h e r e q u i r e m e n t n o w g o v e r n i n g m e m b e r b a n k s , t h a t
is t h e c o n t r i b u t i o n o f t h e reserve,
tne Gther, i s very small,
t h e proportion o n e t o
B u t thet i s just b y the way, i t
3iscuss t h a t , w e all know it.
Mr. Chairman, I
think i t would b e useful
informed s o m e w h a t o f t h e p o i n t s t h a t m a y c o m e
uv o n the bill thet will b e brought forwarc.
F o r instence,
I met o n e o f our representatives yesterday a n d h e tolc m e
that there was some legislation o f this sort that h e thought
was bound t o g o through.
H e offerec when this legislation
up t o talk with u s about t h e bill.
H e i s a very good
anc a man w e m o w v o r y well, a n d tales that action
generally when anything o f this sort comes u p that would interest us.
S o i f w e were fairly well posted u p o n t h e other
side w e m i g h t b e a
little b e t t e r a b l e t o t a l k t o h i m t h a n
if w e dic n o t Imow t h e points ebout it.
Tie Chairman. I
refret t o say, Governor HMorss, t h a t
the situation u p a t the Capitol appears t o b e that there i s
a rind o f rivalry between t h e Senators t o ses which o n e could
introcuce a bill first, each one seems t o feel that he ought
to get there first. I
had rather felt, speaking personally,
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Federal Reserve Bank of St. Louis
775
from
should
be
HONG O 0 2 t a e
vas a p p o i n t e d
b y Congress
aericultural e r e d i t - -
a n d w h e n CGonrress a p p o i n t e d
sion t o s t u d y t h e s u b j e c t
a n d recommend legislation
intended t h a t
h t could
get w h a t i n f o r m a t i o n
Morsse
and
D o n o t misunderst
fFintroducing a
Oh, I
bdille
did n o t understenc you.
he h a d
no
se
e A o r s u p p o r t it h e b i l l b y Ba n y informait c a m e
o n
t
h
e
to l e a v e t h i s
. Seay.
v
y f o r m a l a c t ino n ,
nors.
ite,
m
i
o
z s y o u haa v e
g
h
s 2KPresse
x
t b e dan
ought
G
not to b e
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Federal Reserve Bank of St. Louis
is n o t d e s i r - = o
recommendation?
at s e c o n d e d ?
d t nh a to
motione
c
e
BTD
Beh
AS
a
p pears
¢
thint:
to h a v e a
—
iD
Gov. P a n c h e r .
purpose o f the Governors
to c o n c e r n t h e m s e l v e s
Mee S a r r iaon.
i n this
-t--ould
pe
the
a LS m i n u t e s
h
to
i
s
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p
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44
b e loose
s o m e
e = t h o u s
l
p
f
endsthad. i
t rould
F expression f r o m
1 farereaching
sads
l matter
and s h o u l d
t o the Secre-
s t h i n g i s stated about
NS] re w o u l d
+~
e
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Federal Reserve Bank of St. Louis
Gov. F e n c h e r .
T w o u l d like
t o seconc Governor
motion.
(The cuestion w a s teien a n c t h e motion w a s agrecd to).
Tne Chairniean: Now,. o n e othor m
comes. I
G
have t o l d S e n a t o r K e n d r i c k
i
l
that I
b
e
r
t
woulé enceavor
more ocrore l e a v i n g Washington,
him about this cattle matter,
1— shall I
s e y t o hin.
My t o o u g h t
in the centrel scctions a r e willing t o c o anything e n d every- 2
>
hing thet t h e y e a n t o promote handling this metter b y
the “ a r Finance Corporstion,
b y removing
to t h e l i n e
porrowing--*%8s s o m e c o n f u s i o n s e e m s
Moyer anc. s o O n - = t h e t
that y o u
b
o f
e eeporitce a y m s
i t woule. b e helpful. I
uncerstand
c o not contempletée communicating circetly w i t h t h e
member b e n i z s
i n esch Cistrict.
Gov. Young.
W e t a s a general circular b u t b y corre-=
spondence w i t h each incivicual bani. I
jn reporting t h a t w e heve cone 1
C O n bimuc “40. C O F t
ernor C a l l i n s ?
thin»
r e Going
778
do n o t believa myself
Gov. C a l nes... t h i n s I
there i s a n y misunderstanding
some f r i c t i o n o r s o m e t h i n g
Seeae
e
e
e
1 S ! rorTar Association,
but
the m e m b e r
i t whenbenks a r e opposed t o their progrem e n d -tLll block
an n o t s u r e t h e t
aver
they
smooth o u t t h e t r r i n k l e ,
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Federal Reserve Bank of St. Louis
b u t not
i t n a n y SUCCESS o
and believe, thet t h e coopers
SE
bHat
aS. e e
p a n k e r s
e
e
o u g n e
eee
o O
and results as: cll a s some serious
4s coming t o staye
Ty
1
, S e
as
" :
Tne C h e i r m a n ,
BE s t e c
appropriate
Governor
f o r
vour
something 2&
of t h i s c o o p e r a t i v e o r g a n i z a t i o n ,
"nc! &
comes
t o topacco.s
There i s nothing objectionable s t all t o report, and they
Tinese
The Chairman. Governor Van Zandt?
779
W e are talking i t u p not only with
Gov. V a n Z a n d t .
our m e m b e r banizs b u t n o n - m e m b e r banizs a n é e v e n w i t h i n c i -
{ L woule J i e
Gove Calirins.
s a y that there a r e o r a t
least t h e r e w e r e t w o d i s t i n c t c l e s s e s
o f cooperating market
associations, m a n y o f them cealing with tobacco, a n c o n e
Geeling w
o
t
a
n
c
gentleman namec Shapiro,
s o forth,
w e r e voromotec
i n Sanifrencisco.
b y a
Hebrew
S h a p i r o started
out w i t h t h e i d e a t h e t h e t h o u g h t t h e e s s o c i a t i o n c o u l c
eOntrol prices, =. somecor t h e s 6 sssocictions a r e 2 5 y e a r s
ole
d n e i s t h e S a n F r a n c i s c o C i t r u s Grovers.
Shapiro does n o t believe i n controlling prices,
chengec h i s tone.
There
4 s enothcr schoo,
which m a y b e s a i c t o b e r e n r e s e n t e c
leedership, I
B u t now
h e has
i f y o u please
b y R a l p h Merritt.
should say.
H i s program
sound program. i v e r y t h i n g should b e cone t o assist
thet school a n c n o t the other.
The Chairman...
W e l l , t h e W a r Finance Corporation h a s
had consicerable contact w i t h Shapiro a n c his movements, a n d
heave underteken t o make ansiderable loans.
T h e largest
loan I hearc o f w e h a t m e c e t o the Association o f Cotton
Growers
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Federal Reserve Bank of St. Louis
o f t h e Hississippi velta,
a n c there t h e y agreed t o
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Federal Reserve Bank of St. Louis
money. €
+
-Unders
Cotton
Gov, “ellborn,.
made a u i t s a
Mat
lookec
wee e s
e
e =
S i
TEs G O E S
A L ee V e r y i
LOUL “COOLGS.
ere proposing
acti On. O n t h e c o l i i e c e
ROS t a t nits ee
to report o n the question o f group maetings?
The Chairman.
Yos.
want t o report t o the Board o n behalf
Gov. MeDeugal. I
handle t h a t I
of the joint committee, a n d i f you c a n
you would.
wish
their comM r . J a y has asked m e t o speak f o r
mittee a n d state t h a t t h e vote w a s unanimous
i n favor o f
continuing those meetings a s a t present.
Gov. Seay.
T h e Board itself appointed t h a t committees
and i t might be, Governor MeDougal.~
on
I n view o f Mr. J a y having reported
Gov. McDougal.
that I
would l i k e him:to.do i t .
Gov. Calkins.
of
I n your discussion o f the quastion
t o get a n y renewal o f
efficiency a n d economy a p a H e going
t o d o somethe proposal w e had made that w e b e permitted
thing effective.
The Chairman.
action
- e l l , — I am o f the opinion that t h e
those meetings.
ne took yesterday precludes o u r suggesting
Gov. Calkins.
h a t action d o y o u refer to?
The Chairman.
a f t e r you left yesterday afternoon the
Conference p a s s e d a
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Federal Reserve Bank of St. Louis
resolution recommending t h e continuance
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
the group meetings, 2
oat R
regrouping t o b e made b y
n
m
Federal “eserve Board, a n d more frequent c o
the Governors i n i n g t o n . ‘ T h i s
consisting o f Governor McDoug
and Governor S e a
s
t i t “ a s a b s o l u t e l y impossible t o
o f thse G o v e r n o r s
bring a b o u t a n a r r a n g e m e n t f o r m e e t i n g s
in
other places than ‘veshington B t present.
(Gov, Calkins mide e
Tae C h a i r m e n .
e
e
statement o f f the record. )
e
o
h
e y n
Y r O F the
m e e t i n g Bisa a eaa
report t h e section o f the meeting a n d I will also report what
that we- m u s t d s a l w i t h
these m a t t e r s m o r e
=A.
C a n
d o
s o
b y
m e a +
s §
mcebtines
1 ° s
G o v e r m o r
I recall a
C a l k i n s
report made
g eiltogether f r o m t h e stand.
and its position, b u t
from meetings o f the G o
ad a r o u s e c o m n e n t
a n d antago
nism
S&S
o f
As y o u lmov, S e c : o t a r y G l a s s a t o n c
was v e r y c r i t i c a l
o f theses meetings
o r t h e Governors.
had better bring i t out.
Gov. Seay.
h kx
a n
i
s m y deliberate judgmen
783
that i f the Go,crnors cesire t o bring about i n the future
the resumption o f these meetings,
i t will b e very wise t o
go n o further a t this time.
If y o u g e n t l e m e n c o u l d h a v e s e e n t h e v i e w p o i n t o f G o v ernor H a r c i n g I
think y o u w o u l d h a v e b e e n impressed,
have b e e n impressed,
and I
a s we
a m absolutely certain t h a t s u c h
& suggestion would n o t only make n o headway a t this time b u t
it might b e misunterstooc a n d that o u r best chance o f resiming t h e i n d e p e n d e n t m e c t i n g s
cepting t h e s i t u a t i o n
o f t h e Governors l i e s i n ac-
a s i t i s f o r t h e m o m e n t a n d l e t re--
flection take place o n the part o f all o f us, andlet t h e
future develop.
I a m firmly convincec o f that, a n d i f the subject i s
introduced I think: y o u will b e convincec o f i t when i t i s
concluded.
The Chairman.
personally
G o v e r n o r Harding h a
t o postpone v r e s s i n g a n y s u c h recommendation,
and I told h i m that t h e feeling was very strong that i f
the F e d e r a l R e s e r v e B o a r d w i s h e c
are p r o p o s i n g
t o accomplish w h a t t h e y
t o accomplish b y appointing a
committee t h e y
never could c o it, except w e were going t o have more freaquent meetings, a n c o f the charecter which hac b e e n indisated
to him through our sub-committee.
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Federal Reserve Bank of St. Louis
764
Gove Seay.
view
Y o u r committee impressed t h e same
1 s that i f
upon him, a n d there i t stands, a n d m y belief
will b e more t o
it i s allowed t o rest where i t i s that { t
the advantage-b y direction
(Governor Calkins addressed the meeting, p u t
his remarks were not reported).
a
The Chairman: G o v e r n o r Fancher offers
resolution
report under No. VI,
which has b e e n duly seconded, t h a t t h e
made part
operation, entitled “rersonnel and “elfare’, b e
ofthe record and of the proceedings.
I s there any dis-
cussion?
Gov. Seay. I
second t h e motion.
was agreed t O )
(foe q u e s t i o n w a s t a k e n a n d t h e m o t i o n
the
- ( A t this point Under Secretary Gilbert entered
roo!) »
ITI two
Tho Chairman. ‘ v e have left o n Supplement
issue o f Government
subjects, t h e 1 9 2 2 program f o r the
o f the practice followed
savings securities, a n d discussion
checks deposited
by the Federal Keserve Banks i n handling
also wishes t o
in the Treasury accounts, a n d fir. Gilbert
o f allotments
bring u p for further discussion the question
of Treasury certificates.
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Federal Reserve Bank of St. Louis
we. Gilbert. I
would like t o begin o n the allotment
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Federal Reserve Bank of St. Louis
I a m not sure t h a t o n e aspect
ntiy d i s c u s s e d
The g r e a t e d v a n t a g e
tem m o d e l e d a f t e r
o f t h e present system,
t h e other d a y e
o r of
i s that
t h e present s y s t e m ,
i t permit
to b e m a d e t o b a n k s a n d o t h e r s u b s
advance o f the closing date.
I t gives
ahead a n d resell.
I n
redistribution o f t h e
by t h e s u d s e r i b i n g b a n k s that i s a n i m p o r t a n t c o n s i d e r a t i o n ,
2 CEs
will b e b a n k s o n d o t h e r h e a v y s u b s c r i b e r s
i n
particularly w h o will b e absolutely unadle t o
JePinite arrangements o n réseala until t h e d a y
fter t h e closing, a n d the allotments cannot b e made until
Pa
in t h e d a v o f t h e c l o s i n g o f
tt
ons
=
!
would either like t o have some further
Governors! opinion o n that point o r else
Open<t O F - s n e r
d i n
i n the n e x t t w o weeks,
by correspondence
think i n o u r
about :
sold.
nany
b a c k s a s we
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Federal Reserve Bank of St. Louis
786
subdscrile d now?
were the
.
e
t icslly
h everyg district
i
Pract
vashaver e v e re had
t tion
l e r g e s th s u b s c r i p
understand
‘Ov. ~ e l l b o r n . T
is no v e r s u t
i n our district
“ s are
over
/
subscribed
. [ 2 w a riitoen c o l e r s mas. c o m e
Orleans
ey a r e l o c a l s u s s c r i p t i o n s , I
tt
do
not
Chae
t no u
c c oe f s h e i r f riends
F osome
t h a t ts; O n
outside,
to allot
ike
and
o n the
to g e t y o u r s u g g e s t i o n a b o u t h o w
those sunscriptions.
T wired o u r m a n a g e r t o d a y
o givet
the
old subsérib-
subscribing a l l t h e
rey
s r e cA
na
‘
were p r e t t y h a r d
curing. t h e
inic »
to get.
The C h e i r n a n .
on t h a t subject.
account
o : benks
Subseriptions m a d e i n o n e D i s t r i c t f o r
4-7
io-snotner: District.
|
is developing a n d what t h e er ee SULE
w e d y
about this, a s
will be, but t !
more r a p i d l y t h a
is
O
I may b e wrong
s €asing i n New York
A
N
Y
t
or part o f the country.
j
7 é @ na h e
That
a s is
guidation i n the industrial a n d money
787
centers o f the country.
O u r louns have gone d o w n very
sharply a t the heserve Bunite
paid u p ahat they o w e us.
T h e large banks have mostly
T h e y a r e n o w looking f o r inI f the entire
vestments f o r employment o f their funds.
amount o f a n i s s u e o f c e r t i f i c a t e s w a s g u b s c r i b e d
b y the
Hew Y o r k banks, ¢ v e n t h o u g h t h e y w e n t t o t h e o t h e r d i s e
i t would have
tricts i n order t o get their allotments,
the samo effect w h e n t h e Government disbursed t h a t money
ag though the New York banks were lending funds t o the other
gections o f tha country.
I n other .ords,
w e make t h e
entire l o a n t o the Treusury a n d the Treasury uses t h e
proceeds
end I
t o p a y t h e G o v e r n m e n t b i l l s a l l o v e r t h e country,
think i t i s w desirable development. I
would n o t
Interpose a n y obstacles i n the w a y o f these subscriptions
being sent i n t o other districts.
T h e o n l y disadvant-
age lies i n the fact that «here banks i n the other distriets r e a l l y w a n t t h e s e c a r t i f i c a t e s ,
t h e amount o r ths
gubscription i s influted b y the subscriptions f r o m New
York bunks u n d their allotmants u r e correspondingly c u t
dosn.
N o : that i s a hardship o n those Danks t h a t sant
und a e e d t h e i n v e s t m e n t f o r t h s i r c u s t o m e r s ,
b u t t h e ad-
Vantugss o f such a development i t seems t o m e greatly
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
at t h e r e a u e s t o f banizs i n o t h e r
y the
l y w ibl l
saa iw tbh e y wo e n t rt h e mP f o r
Ts =
s t o me,r
proposed;
s wilt
u
set th
c
i
C e a G - Ci rCis
yi
c
n advance
n
o-*
h
y
e y e t e
o s e
i n et
was thet
o
w h i Ch w e s
o n w n i c h t h e subdscript-
let0 t h e m a c c u m u
1l a t e ,
subscriptions
make
as
allotment: until t h e y close,
soot grounds
Treasury
in view, t h a t is, Cistribution.
Mr. Gilbert.
T h e objection I wante
to be a practical objection from the
ple, a n c t h e p e o p l e w h o b u y t o resell
r Morss.
o
n
r
thet
c V e c, i s t r i. o u t i oo n
s oG w e l l
now t h a t y o u c o u l d i g n o r e t h a t u n d e r p r e s e n t
circumstances? I
do n o t think there i s a n y question o f
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
recistrioution now.
imow h o w i t i s going, w e might
3 trouble with t h a t i s t h e long cistance
place w o u l d b e o u t o f
Governor Morss.
Mr. Gilbert.
S u p p o s e y
a i c not announce
it
W e l l , there, toc, i t i s
he whole cistrict, lergely
I
New York, Boston, Philadelphia
f w e only hac t o
w e might
a n c Clevelanc,
announce i t the d a y before, b u t with other cistricts t h a t
would hardly b e fair.
M r . Secretary,
Goyernor Seay.
t h a t woulca p u t t h e origi-
nal subscriber exactly where t h e bank
subscriber
does n o t receive
centage of what he has subseribec for, will not it whe
his a p p e t i t e ?
6r
thought y o u asked wheth/it would hurt
Mr. Gilbert. I
s appetite.
Yes, 4
y
whet h i s appe
T h e r e is
You might close t h e
a day o r two ahead o f t h e issue, a s a
Governor Fancher.
made.
I n o t h e r words,
T h e n your announcement
i t appears
w t f e c e r cote
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Federal Reserve Bank of St. Louis
that using t h e m : 2 6 )
ment e n c
b s e
e
s f o r sencing o u t t h e announce-
L O Y a n i i s , a n c t h e n t h e r e t u r n b y mail,
thet telzes t h e b e t t e e r t o f a week f o r t h e bank:
along, I
Se
yOu
e e
n e v e
mean p a r t i c u l a r l y t h e o u t l y i n g s m a l l
J o a
£OUt
e
S Lene =
t O £ i V G t n o s e
Chairman. 4
iO O G
vooks without coing injustice.
met the minute y o u adopt the, basis o f not making allotments until t h e books close, y o u then throw back o n all
and no subscribing bank woulc know how many certificate
be allotteduntil after t h e books close. T h e r e f o r e
they will n o t imow h o w much t o allot t o their customers
for w h o m t h e v i
b
oi
n
g
BEE has wails
.etween t h e
Fane
Gilbert.
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Federal Reserve Bank of St. Louis
payment.
Governor Fancher.
I n thé matter o f the g a p I see n o
serious objection t o your melting your announcement a
or two cerlicr,
give p u b l i c i t y
s o that there would b e sufficient time t o
t o t h e announcement,
t o get out e i e e s t e s
by meil a n d get replies
tion i n o u r d i s t r i c t
i s n o t a s a t greater
O u r mail facilities a r e
compact.
distances a r e n o t a s long, b u t I think
Y¥time given.
I t takes several deys f o r e country bank
ilpert.
to g e t i n a
subscription,
Governor jsaorss.
h e ones that a r e
a n d t h e y ars
S o m e
f F them have
t o have mestings
o f
2a
the directors t o authorize their officers t o d o anything.
Mr. Gilbert. ‘ W h e t I would like t o c o o n this allotment b u s i n e s s
is
h a v e you |
more, a n d i f you i
¥ é
n s i c d j
within a
further views o r further s u g
‘
h
a
P A R E S
bak
e l k o r two a n y
v
e
,
or
he people i n the
mays.) have, t h a t would b e v e r >
needs some thought.
1} I
1.
think i t
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Federal Reserve Bank of St. Louis
rather longtelégram o n thet early i n
september.
F
e
e
h a t t h e T r e a s u r y o u g h t n o t t o dis-
courage t h o s e s u b s c r i p t i o n s ; b u t ,
o n t h e other hand,
Banks should n o t g o s o far with t h e m a s t o
freeze o u t the local subscribers.
I t i s a difficult thing
to adjust thet, however.
Governor “ellborn.
large subscriptions c o m e
i n immediate
a n d before t h e y
are l o c a l l y s u b s c r i b e d for, b e f o r e o u r l o c a l s u b s c r i b e r s
letters, t h e subscriptions
I.think t h e t d e v e l o p s
reason t o make a
proportionate allotment,
the d e y o f closing.
The Chairman. G e n t l e m e n , t h e understending i s that
endt with
a
g y view dt o then Secretary's
c
a
ageciding upon the principl
abt w r i te reports
or
to m a k e i n r e l a t i o n
Mr. Giibert. 2
for n e x t y e a
n
a
v
guestio:
e a
G o _ e r n m e n t savings
s a y sent out
t o each Governor
everal d e v e l o p m e n t s
i n the
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Federal Reserve Bank of St. Louis
793
last f e w week:
interest
T h e Presicent h a s s h o w n a n unusuelly k e e n
i n t h i s savings ]
prom,
a n c
h e ha
G
d per=
ticulerly t h a t i t b e continued, a n d h e h e F e r e d t o d o
power t o promote t h e s a l e o f the credits
& proclama-
interest
and
s n c i n g
o u t be
for s e v e r a l years.
h a
The s a v i n g s c a m p e i g n h a s b e c n t h r o u g ee
been through s
perioa when
hard
pi y
y
¥ Boncs a n d
at such
freudulent
t o push a n
Securitics.
heve n o w come to a
veriod w h e n w e
active interest
Treasury,
a good t r y next year
basis, a n d sce w h a t c a n b e done
gs securities, c h i e f l y through
offices.
794
The Postmaster General i g particularly anxious, I
think, t o see some field organization maintained o n about
the b a s i s t h a t w e n o w h a v e »
T h e Treasury i s quite p r e -
pared t o d o that, a n d a t l e a s t f o r t h e n e x t s i x months,
until the new plans develop.
I t is the intention t o dis-
continue absolutely the sar Savings Stamps and the Thrift
Stamps, t o continue securities resembling the present
higher denominations, t h e Treasury saving certificates,
to change t h e basis, however,
s o that i t will b e sold a t
a fixed issue price, a n d will mature o n the fifth anniversary o f the date o f issue.
T h a t will make i t possible t o
continue t h e securities o n sale indefinitely without
withdrawing them at the end o f the year; i t sould simplify
the accounting all along the line, and assist
t h e m
materially and put other things i n that are rather advantageous from the point o f view o f the Treasury.
Governor Fancher.
I s i t the thought o f the Department
to continue t h e present w a r savings organization,
t o co-~
operate with the Postoffice Department and the postmasters?
Mr. Gilbert. V e r y largely, with the local postoffices
in the district.
I f the banks should begin t o show any inter-
est i n it, which i s possible b u t perhaps n o t probable, t h e
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
95
local savings organizations
ant f o r t h a t s a l e
I
i n t h e banks w o u l d b e import-
t i s the i n t e n t i o n
t o make t h e n e w
securities m u c h more attractive i n appearance t h a n anything
that h a s p r e v i o u s l y g o n e out.
T h e y a r e being engreved
the b a s i s o f t h e e p p e a r a n c e
o f the Liberty Bonds
and otherwise o n a n attractive basis. I
also b e p o s s i b l e
make i t a
think i t will
to
flat r o u n c amount.
A
t present t h e $100.00
security i s sold a t a discount price o f 82.40, t h e first
month.
T h a t 4
o u g 4
p e r c e n t c o m p o u n d e d quarterly.
The Treasury h a s felt that w e could a t least make t h a t a n
even y82.00.
I t will probsbly b e unwise t o g o a n y lower
than that, b u t »82.00 would b e & convenience a n d might
introduce s o m e n e w attractions.
It w i i l e n a b l e u s t o t a l k i n t e r m s o f a
we a l s o e x p e c t t o h a v e t h e l i m i t o f h o l d i n g sgs i n c r e a s e d
to 5 , 0 0 0 . 0 0 .
T h a t has c e a d y b e e n a p p r o v e d
b y t h e Sen-~
t would b e included i n this revenue bill i f i t
passes i n time.
Governor Calkins. M
say that the W a r S a v :
Say, sune- a f -Aseer
x
r y , a r e y o u intending t o
z a t i o n will b e continued to,
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Federal Reserve Bank of St. Louis
Continued
Governor Fancher. I
priation a
t o a t least J u n e
understand
h
a
c i n y o u r appro-=
certain a m o u n t o f f u n d s that c a n c o n t i n u e that.
Mr. Gilbert. ‘ T h e r e a
i c i e n t f u n c s i n our indefini
appropriation, yes, t o continue t h e organization o n
basis.
(Joint Conference between t h e
the G o v e r n o r s
o f t h e F e d e r a l kKeserve B a n k f o l l o w s . )
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Federal Reserve Bank of St. Louis
@FedFRASER