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https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (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- https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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= https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T f https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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? https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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- https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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". https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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? https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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? https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. ? https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Chairman. I n any event, there i s one thing surely https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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). https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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? https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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- https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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| https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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? https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ¥ 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis yhad | 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 t h 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." > that i s exactly t h e type o f 4 Gover B H O V 6 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Fs) 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 U p E 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 https://fraser.stlouisfed.org 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 , https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis o f t h e Hississippi velta, a n c there t h e y agreed t o https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis we. Gilbert. I would like t o begin o n the allotment https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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, https://fraser.stlouisfed.org 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 . ) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis