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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CONFIDENTIAL SECRETARY'S G O V E R N O R S SEPTEMBER M I N U T E S C O N F E R E N C E 2 4 A N D WASHINGTON, 2 5 , 1930. D . C. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INDEX T O SECRETARY'S MINUTES GOVERNORS CON FERENCE SEPTEMBER 2 4 AND 25, 1950. Paragraph i n Secretary's Minutes 9 Air mail, U s e o f Bank Reserves, R e p o r t o f Committee o n - - ~ ~ 2 Bankers Acceptances, Report o f Subcommittee o f General Committee o n = - - 2 # + - + - + - + e + " + " - - ° 0 at Branch, Group,and C h a i n Banking, Committee o n Business growth, Relation o f credit growth t o Calculation o f reserveS = = ~ = as = = = & = Cash letters, W h y should n o t Federal Reserve receive f r o m nonmembers Chairman, Election o f for year 1931 Collections a n d clearings Credit policy (future) and discount rates e Se 4p 9 S Credit transactions a n d policies - - - - - bEe s & e e Committees: Bank ReserveS - * “ 7 + - - - > 7 Bankers Acceptances, Subcommittee Committee o n Branch, Group, a n d Chain Banking 2 0 2 Insurante « ~ < " < = « 8 + + < » Leased Wire ~ - ~ * + - - + 2 e # = - = - 6 Pension - - - | = < + * # - e + e <#=-- = 4 Standing Committee o n Collections 2 2 Discount rates and future credit policy Election o f Chairman and Secretary for year 1931 1 0 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraph i n Secretary's Minutes Federal Reserve Board regulations, Size o f separate pamphlets f o r each regulation Foreign exchange a n d gold movements = Gold movements a n d foreign exchange Gold - Present supply a n d distribution, production a n d future Governor Meyer, Letter t o from Governors a n d Agents Insurance Committee, Report o f - = Leased wires, Use o f for telegraphic advices i n connection with letters sent b y air mail - - - - * - + - - - 9 Leased Wire Committee, Report o f Member bank reserves, Calculation o f o n basis o f their deposits a t close o f business the preceding day Method t o stimulate a wider d i s t r i b u t i o n - ~ 18 o f Treasury Money market, N e w York, and possible improvements i n its organization a n d operation New York money market a n d possible improvements-in its organization a n d operation Noneash collection items, Should all Federal Reserve banks handle Pension C o m m i t t e e , Report of - - - = - - 7 - 7 7 4 Procedure o f open market policy conference = 2 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Paragraph i n Secretary's Minutes Publication i n Federal Reserve Bulletin o f receipt of notice f r o m member b a n k o f intention t o withdraw f r o m membership + <- «+ « «+ « + = « = e « = " 7 ° Rebates o f unearned discount Reconsideration o f policy adopted a t Governors con~ ference i n March, 1923, r e rebates o f unearned discount - - - + - + * - 7 7 - 7 8 Regulations o f Federal Reserve Board,Size o f separate pamphlets f o r each regulation Relation o f credit growth t o business g r o w t h - - - ~ = Relations w i t h forcign. banks + «+ < < < = “ « + = < 9 Reports: Bank Reserves, Committee o n Bankers Acceptances, Subcommittee o f General C o m = mittee o n - - + - - < - < + < - + . ° s = Branch, Group, a n d Chain Banking, Committee o n Insurance Committee - ~ - - ~ - - " - - 7 7 7 " 7 7 " Leased Wire Committee + - - + - < - < + = - 2 7 ' " r e " 7 " " Pension Committee « = - * > = - = - - * > Standing Committee o n Collections = ----=~- = Reserves, Calculation o f member bank o n basis o f their - - deposits a t close o f business t h e preceding d a y Revision o f membership condition r e purchase o f bank stocks -*.-<-<«8©<+<#se82s8 e e e e e e e e w e e e 1 5 Secretary, Election o f for year 1931 - ~ Should a l l Federal Reserve banks handle noncash col- lections payable a t nonpar points Supply and distribution and future production o f gold = 5 , 16 Treasury bills, M e t h o d t o stimulate wider distribution - 1 5 Unearned discount, Rebates o f © = - - = + - + - - - + - - 7 - - 2 1 8 Use o f a i r mail + = «« = = Why should n o t Federal Reserve banks receive c a s h letters f r o m nonmember banks = - - = https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CONFIDENTIAL P R O G R A M G O V E R N O R S C O N F E R E N C E September 24, 1930.4 Washington, D . C. ELECTION O F CHAIRMAN AND SECRETARY FOR YEAR 1931 CREDIT TRANSACTIONS A N D POLICIES Ae O p e n Market Policy Conference Procedures Be D i s c o u n t Rates and Future Credit Policy. Ce R e l a t i o n o f Credit Growth t o Business Growth. De G o l d = Present Supply and Distribution,and Future Production. New York Money Market and Possible Improvements i n Its Organization a n d Operation. Relations with Foreign Banks: le R e p o r t Re O p e r a t i o n s Se F o r e i g n Exchange a n d Gold Movements COLLECTIONS A N D CLEARINGS A. R e p o r t o f Standing Committee o n Collections. Be W h y should not Federal Reserve banks re~ K a n s a s ceive cash letters from nonmember banks for the credit o f member banks under sat-— isfactory guaranty o f such member banks. GENERAL Ae R e c o n s i d e r a t i o n o f policy adopted a t Governors conference i n March, 1925, i n connection with rebates o f unearned discount. IV. GENERAL (Cont'd) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B. Revision o f membership condition r e purchase of bank stocks. ( S e e F. R. Board's letter X-6692pof September 4, 1930.) Regulations o f Federal Reserve Poard. Ce C l e v e l a n d These are now being printed a s Separate pam~ phlets f o r e a c h r e g u l a t i o n . W o u l d i t not be advisable t o recommend t o the F . R. Board that the size o f the pamphlets b e made t o conform more nearly t o the circular letters o f the Treasury Department a n d o f the majority o f the reserve banks. V. R E P O R T S O F COMMITTEES Committee o n Bank Reserves. Committee o n Branch, Group, a n d Chain Banking. Insurance Committee. Leased Wire Committee. Pension Committee. Subcommittee o f G e n e r a l C o m m i t t e e Acceptances. o n Bankers SUPPLEMENTARY TOPICS Ae Publication i n the Federal Heserve Bulletin o f F . R. Board the receipt o f notice o f intention o f a State bank member t o withdraw from the system.» ( S e e Governor Meyer's letter o f September <4, 1930.) B. Ce Method t o stimulate a ury bills. wider distribution o f Treas- Calculation o f reserves b y member banks o n the bas- F e Re. Soard is o f their deposits a t t h e close o f business the preceding day. ( S e e Governor Meyer's letter o f September 25, 1930.) C O Y R R N O R S C O R r p a a s y c a September 2 4 and 25, 1930. Washington, D . C. First Day's Session, Wednesday, September £4. Mornin The meeting was called t o order a t 11:15 a. me PRESENT: G o v e r n o r Calkins, Chairman, a n d Governors Young, Harrison, Norris, Fancher, Black, McDougal, Martin, Geery, Black, and Talley. Deputy Governors Peple and Worthington. Mr. Strater, S e c r e t a r y ZOPTC. I . B l e c t i o n o f Chairman a n d Secretary f o r the Year 1931. VOTED T h a t Governor Calkins b e reappointed Chairman, and Mr. Strater reappointed Secretary of the Conference of Governors for the calendar year 1931. C Il. Credit Transactions and Policies. I P O T A. O p e n Market Policy Conference Procedure. There was a general discussion o f the results obtained under t h e present O p e n Market Policy Conference procedure. While t h e present procedure h a s been found somewhat cumbersome, it was felt t h a t t h e difficulties c o u l d possibly b e somewhat minimized b y having the Open Market Policy Conference formulate a definite but general policy o r objective, leaving the Execu~ tive Committee w i t h a mandate t o execute t h e policy a n d with adequate authority t o function promptly without t h e necessity o f https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis oe having specific transactions proved b y the conference, phone, i n execution o f the policy a p - o r b y each member o v e r t h e tele- a s has b e e n found necessary was understood, develop a o n several occasions. I t o f course, t h a t i f a t a n y time there should need f o r a change i n the policy o r the objective fixed b y the Open Market Policy Conference, then there should be a new meeting o f the whole conference. TOPIC II. C r e d i t Transactions a n d Policies. Be D i s c o u n t rates a n d future credit policy. At the request o f Governor Harrison, t h t s topic was passed with the understanding that i t would b e discussed at the meeting o f the Open Market Policy Conference. TOPIC 11. C r e d i t Transactions a n d Policies. C. R e l a t i o n o f credit growth t o business growth. At t h e r e q u e s t o f Governor Harrison, this topic was passed without discussion. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TOPIC II. C r e d i t Transactions a n d Policies. De G o l d = Present supply and distribution a n d future production. Ee N e w York money market a n d possible improvements i n its organi-~ zation a n d o p e r a t i o n . Relations w i t h foreign banks: i. _ Report. Re O p e r a t i o n s . ae F o r e i g n exchange a n d gold movements, These three topics w e r e passed f o r later considera~ ~- 3 « TOPIC III. C o l l e c t i o n s a n d Clearings. he R e p o r t o f Standing Committee on, Collections. This topic w a s passed f o r later consideration. TOPIC III. C o l l e c t i o n s and Clearings. ( 7 B. W h y should n o t Federal Reserve banks receive c a s h letters from nonmember banks for the eredit o f member banks under satisfactory guaranty o f such member banks + Mr. Wo®thington, i n explanation o f this topic, point- ed out i n detail a number o f reasons w h y i t was thought desira~ ble t o extend this privilege under proper restrictions. a general d i s c u s s i o n i n which After i t developed t h a t t h e r e w a s a dif- ference o f opinion a s t o the wisdom o f permitting s u c h a practice, the topic was passed without action. At 1:15 p.m. t h e conference adjourned t o reconvene at 2:15 pem. First Day's Session, Wednesday, September 24. Afternoon The meeting was called t o order at 2:50 pem- TOPIC III. C o l l e c t i o n s a n d ClearingsS-e As R e p o r t o f Standing Committee on Collections, (Spring 1930) At t h e request o f the Chairman, t h e Secretary oute lined briefly t h e various topics covered b y the report o f the Standing Committee o n Collections, a n d i t was https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis VOTED t h a t the report b e accepted. ) i he In connection w i t h t h e topic " U s e o f Air Mail", it was understood that t h e Leased Wire Committee w i l l t a k e under consideration t h e committee's suggestion that t h e Federal R e serve leased wires b e used f o r transmitting telegraphic advices o f credit f r o m the collecting Federal Reserve Bank, In connection with the topic "Should All Federal Reserve Banks Handle Non-cash Collection Items Payable a t Non- par Points", Governor Geery agreed t o give serious consideration t o the advisability o f modifying t h e present policy o f the Minneapolis b a n k t o conform t o that o f the other reserve banks « SUPPLEMENTARY TOPIC. P u b l i c a t i o n i n the Federal R e - serve bulletin o f the re+ ceipt o f notice o f intention of a state b a n k m e m b e r to withdraw f r o m t h e s y s t e m . Governor Calkins r e a d a letter f r o m Governor Meyer dated September 24, 1930, stating that t h e Federal Reserve Board h a d v o t e d t o refer t o t h e Conference o f Governors a n d Fed- eral Reserve Agents f o r discussion a s t o the policy involved, a suggestion t h a t whenever a State member b a n k files written n o - at tice o f intention t o withdraw f r o m t h e Federal Reserve S y s t e m the e x p i r a t i o n o f s i x months, t h e Board publish this fact i n the Federal Reserve Bulletin i n order that depositors a n d the public generally m a y have advance information o f the member bank's i n tention t o withdraw. T h e letter was supplemented b y a memoran~ dum X-6718 o f September 20, 1930, f r o m t h e General Counsel o f https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis « 5S = the board indicating that there i s n o legal reason why the board should not publish such information if, i n the board's judgment, it would be in the public interest to do so. A general d i s c u s s i o n f o l l o w e d a t which i t was brought o u t that i n some instances a f t e r notice o f intention to withdraw has been filed, t h e member b a n k reconsiders i t s decision a n d withdraws t h e notice before t h e expiration o f the six-months period. I t was thought that publication o f such notice might tend t o seriously embarrass the member bank without serving any useful purpose and i f notice i s withdrawn, it would b e necessary t o publish that f a c t also. T h e r e are two principal purposes i n requiring the statutory notice; first, t o prevent a n y sudden disturbance o f the resources o f the reserve banks resulting f r o m many State banks withdrawing atone time; and second, to permit the withdrawing State member bank t o reconsider the full effect o f withdrawal from the system upon its own welfare. I t was, therefore, VOTED t h a t the conference i s o f the opinion that nochange should be made in the present procedure of not publishing notice of intention to withdraw o n the part of State member banks, for the reason that such publication will tend to defeat one o f the principal objects o f the law requiring that s i x months notice b e given. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ak a TOPIC IV. G e n e r a l . A. Reconsideration o f policy adopt- ( 1 2 ) ed at Governors!’ conference i n March, 1923, i n connection w i t h rebates o f unearned discount. In the discussion o f this topic, i t developed that while there have been objections from a few member banks, these were evoked principally b y reductions g n the rediscount rate and were n o t considered o f sufficient importance t o justify s u c h a change. I t was therefore VOTED t h a t n o change b e made i n the present practice of rebating unearned discount. ( TOPIC IV. General. 1 3 B. R e v i s i o n o f membership condition re purchase o f bank stocks. (See Federal Reserve Soard's letter x-6692 o f S e p t e m b e r,4 1930.) There w a s a general discussion o f the advisability to of eliminating entirely the condition o f membership relating the purchase o f bank stocks, i n which i t developed t h a t t h e Nationelimination o f this provision might seriously affect t h e al Banking System. into t h e m e e t i n g T h e Comptroller of the Currency was invited t o give h i s views o n t h e subject. T h e Comp- troller expressed t h e opinion that elimination o f restrictions by the Federal Reserve Board would not adversely affect the National Banking System. T h e conference w a s in.agreement t h a t reno material change i n the present condition o f membership garding the purchese o f bank stocks should b e made until the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) oya Committee o n Group, Chain, a n d Branch Banking h a s made a complete report a n d the conference h a s made a mendation. I n order, however, definite recon- t o eliminate t h e petty annoy- or ances arising where State b a n k members h a v e f o r one reason another acquired small blocks o f the stock o f other banks a n d apto relieve t h e Federal Reserve B o a r d o f t h e necessity o f proving s u c h purchases, i t was VOTED t h a t i n the opinion o f the conference, n o menmaterial change should b e made i n the present condition o f bership No. 3 , except that there might b e added a provision t o ob~ that i t shall n o t b e necessary f o r a State member b a n k purchastain t h e approval o f the Federal Reserve Board before ing stock i n other banks where the aggregate amount o f such stock does n o t exceed 5 % of the capital a n d surplus o f the pur- chasing member bank, o r 10% of the capital o f the bank purchas. ed. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ( 1 4 TOPIC IV. G e n e r a l . Ci. Repulations o f the Federal Reserve Board. T h e s e are now being printed a s separate pamphlets for cach regulation. W o u l d i t not b e advisable t o recommend to t h e Federal Reserve B o a r d that t h e size o f the pamphlets be made t o conform more generally t o the circular letters o f the Treasury Department a n d o f the majority o f the reserve banks. Mr. Strater explained that the present size o f the pamphlets containing the separate regulations o f the Federal Reserve ) 2 Board d o not lend themselves t o convenient filing i n the ringbinders furnished t o member banks i n all o f the districts. expressed t h e opinion t h a t a H e change, s u c h a s suggested, w o u l d tend t o insure t h e preservation o f these important regulations by member banks. I t was therefore VOTED t h a t the Federal Reserve Board give consider~ ation t o t h e advisability o f publishing t h e separate regulations i n pamphlets w h i c h conform more nearly i n size t o the ciro f the cular letters o f the Treasury Department a n d t h e majority Federal R e s e r v e b a n k s . SUPPLEMENTARY T O P I C . M e t h o d t o Stimulate a Wider Distribution o f Treasury Bills. Governor Young explained that t h e Federal Reserve Bank o f Boston finds i t i s unable t o get a very g o o d distribu- o f the tion o f Treasury bills w h i c h a r e offered b y the Secretary Treasury f r o m time t o time. A f t e r a n investigation o f the probable reasons w h y a better distribution i s not obtained, the seem to conclusion w a s reached t h a t t h e following difficulties confront t h e country banks a n d the public: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1. T h e y a r e n o t accustomed t o buying securities at a discount; Notables are available for computing the yield o r return; Differences o f opinion have developed a s t o whether t h e bills r u n 90, 91, o r 9 2 days. Pe” a Governor Young w a s o f the opinion t h a t t h e Treasury Department would secure a wider distribution o f Treasury bills if some o f the difficulties w e r e overcome, a n d suggested t h e following: is T h a t w h e n a n i s s u e i s a n n o u n c e d , the Secretary o f the Treasury simultaneously announce whether t h e bills h a v e 90, 91, or 9 2 days t o run; 2. T h a t tables be prepared for distribution t o country bankers a n d t h e public showing yields a t bid prices. After a general discussion, i t was VOTED t h a t Governor Young's suggestion b e recommended t o t h e Undersecretary o f the Treasury f o r consideration. TOPIC Il. C r e d i t Transactions a n d Policies. D. G o l d = Present supply a n d distribution, a n d future production. Governor Harrison discussed i n a general w a y t h e pres~ent world supply o f gold, i t s distribution a m o n g t h e countries for which figures were available, a n d t h e probable extent a n d effect o f future production. At 5:30 p. m. the conference adjourned t o reconvene at 10:00 a. m. o n Thursday, September 25. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Second Day's Session, snursday, September 25. Mornin The mecting w a s called t o order a t 10:15 a. m e a 50% TOPIC: Ii. C r e d i t Transactions a n d Policies. Ep N e w *ork money market a n d possible improvements i n its organization a n d operation. After a general discussion o f the advisability o f the Feder&l Reserve System undertaking t o recommend any changes in practice o r procedure t o improve the credit structure o f the country, i t was VOTED t o b e the sense o f the conference t h a t t h e Chairman should appoint a committee o f five Governors t o study and report i n the light o f the experiences o f the past t w o o r three years, whether a n d i n what way, i f a t all, i t would b e possible o r practicable through a n y change i n Federal Reserve practices o r procedure t o promote a more effective control o v e r undue o r harmful fluctuations i n the country's credit structure. The Chairman thereupon appointed t h e following committee: Governor Harrison, Chairman Norris Young McDougal Calkins SUPPLEMENTARY TOPIC. C a l c u l a t i o n o f Reserves b y Member Banks o n the Basis of Their Deposits a t t h e Close o f Susiness the Preceding D a y . Governor Calkins r e a d a letter f r o m Governor Meyer under date o f September 25, calling attention t o a request f r o m the Committee o n Reserves o f the Reserve City Bankers Associa-~ tion that the Federal Reserve Soard give consideration t o an https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis »1 « amendment t o its regulations w h i c h would permit t h e calcula=tion o f reserves b y member banks o n the basis o f their deposits a t the close o f business t h e preceding day, i n advance o f any a m e n d m e n t t o t h e Board's regulations o n t h e s u b ject o f r e - serves which might result from the studies being conducted b y the System Committee o n Reserves. T h e request o f the Reserve City Bankers Association was referred t o the System Committee on Reserves with the request that i t give immediate considera-~ tion t o this o n e question independently o f a n y other changes which i t might h a v e u n d e r consideration, the board with a recommendation. a n d t h a t i t report to T h e committee’s report under date o f September 2 4 was submitted w i t h Governor Meyer's letter. The committee indicated i n its report that t h e proposed modification o f the existing practice will give member banks a n oppor- tunity t o compute their reserve requirements o n the basis o f known, rather t h a n estimated, deposit liabilities, and, conse~ quently, constitutes a material benefit t o member banks without, as far as the committee can see, any material adverse effect o n the Federal Reserve banks. T h e committee recommended that the request b e approved. There followed a general discussion o f the various factors entering i n t o t h e question o f reserves, i n which i t de- veloped t h a t t h e conference w a s o f the opinion that t h e amount of excess reserve, w h i c h t h e committee o f the Reserve C i t y Bankers Association thought would b e released b y the adoption https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2 12 = of this practice, w a s probably overestimated, a n d that d e - posits i n the reserve banks would not b e materially decreased. The benefit t o member banks resulting from their ability t o adjust their reserve t o a definite requirement would, o n the other hand, b e welcomed b y member banks i n reserve cities. I t was VOTED t h a t the recommendation o f the Committee o n Bank Reserves b e approved. G o v e r n o r Harrison voted i n the negative. TOPIC Ii. C r e d i t Transactions a n d Policies. F. R e l a t i o n s w i t h foreign banks: 2.___Report 2. O p e r a t i o n s he F o r e i g n e x c h a n g e a n d g o l d movements Governor H a r r i s o n r e v i e w e d t h e v a r i o u s m a t t e r s r e l a t - ing t o operations w i t h foreign central banks, calling attention to changes i n individual accounts. H e also reviewed a n d e x - plained t h e trend o f gold movements. TOPIC V. R e p o r t s o f Committees. ( 2 0 he R e p o r t o f Committee o n Bank Reserves. B R e p o r t o f Committee o n Branch, Group, and Chain Banking. At t h e request o f the Chairmen o f theSe committees, t h e conference agreed that written reports o f progress b e read t o the Joint Conference of Governors and Agents. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) «13 « TOPIC V. R e p o r t s o f Committees. C. R e p o r t o f Insurance Committee. D. R e p o r t of Leased Wire Committee. =. P e n s i o n Committee. F. R e p o r t o f Subcommittee o f Genengl Committee o n Bankers Acceptance Se These committee reports w e r e r e a d and, i t was VOTED t h a t they be accepted and filed. At 1:15 p. m. t h e conference adjourned t o reconvene at 10:00 a. m. o n Friday, September 26, i n joint conference with the Federal Reserve Agents and the Federal Reserve Board. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H. F . STRATER Secretary. “1k At the Joint Conference o f Governors a n d Agents, t h e ( 2 2 ) following letter w a s signed b y each o f the Governors a n d each o f the Chairmen: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis "Honorable Eugene Meyer, Governor, Federal Reserve Poard, Washington,D. C . Dear Governor Meyer: This seems t o be a n appropriate time t o extend t o y o u t h e good wishes, a n d t o pledge t o y o u the loyal support, o f the members o f the Conference of Governors a n d Chairmen. pointment a s a T h e news o f your ap- member o f the Federal Reserve B o a r d and a s its Governor was received b y all o f u s with the greatest possible pleasure a n d satisfaction. We feel, a s many others d o , t h a t your wide a n d successful experience i n many lines o f endeavor will b e a real contribution t o the future o f the Fedcral R e n return f o r what y o u a r e bringing serve System. I to t h e S y s t e m , w e want a t this t i m e t o assure y o u o f our complete cooperétion. W e wish y o u t h e greatest possible success i n your n e w undertaking a n d much satisfaction i n its accomplishment. With warmest g o o d wishes, w e b e g t o sub- scribe ourselves Sincerely y o u r friends" https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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