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( 1 6-71-1 g, . g.)_,Lt) A meeting of the Federal deserve Board was held in the office of the Governor on Monday, Anril 1, 1929 at 11:J0 a.m. PAESE1:?: PN? ALSO: The Chairman Governor Young Mr. Platt 'Mr. Hamlin Mr. Mr. Janes Mr. Cunningham Mr. Pole Mr. oell, Asst. Secretary Mr. LeClelland, Asst. Secretary Mr. Burgess, asst. Federal deserve .Agent at New York. Director of the Division Goldenweiser, Dr. Aesear&h and Statistics. of The Governor stated that the meeting had been called in order to permit 131-lrgess, aho has just returned from a trip abroad where he worked with the 14111 1 , Ateri N-an members of the expert committee on reparations settlements, to acquaint the Board with developments in connection -ith the committee's work. 1.1r. Bur8 outlined discussions which have taken place with regard to the amount and 13eriod of reparations payments, and advised the Board of consideration which is giVen the to the organization of an international bank, privately capitalized, Primary purpose of which, he stated, would be to perform the mechanical °Perations incident to reparations payments now handled in the office of the Agent and. General for separations. at the conclusion of Mr. Burgess' statement after a brief discussion regarding it, the Chairman left the meeting. The Governor took the chair and stated tuat the regular order of busi- " aould be the hearing which the Board has granted to representatives of erber banks in Albany, which have aoplied for the termination of the designa, - Oi Albany as a reserve city. :essrs. J. H. Herzog and j. L. Gillespie, Presi ,.11t and Vice President, respectively, of the National Commercial Bank 4/1/29 / -2-- 44d 2-rust Uomrany of ;abany and :lessrs. Frederick Lcjonald and .C.ur:.ey C. Smouse, ...luent and 1,ssistant to the .2resident, respectifely, of the 1;ew York State riational 3ank of Llbany, entered the room. 01 r. L. R. ounds, Deputy Governor the Federal Reserve Bank of Lew Yort, Er. 3mead, Chief of the Division of Beiv Operations and Er. Stearns, Chief National Bank .]xaminer, also joined the ?fleet ?he (1-overnor.outlined, briefly, the general attitude of the Federal tesee Board in the matter of adjustments in the reserve requirements of rilenlber banks, stating that the question is one which the Board must consider trait a national viewpoint. He stated that the application was denied by the Board for the reason that other cities throughout the country, now desimated 48 reserve cities, seem to have as good a case for the termination of that 1°s ignation as ,lluany. He also stated that the Board, in the absence of lec7- islation amending reserve requirements along scientific lines, prefers to ' (l eel with apparent inequalities between comparable cities by increasing reserves in the cities not now designated as reserve cities, rather than reducillp tdae list of cities so designated. Herzo, spokesman for the Albany delegation, read to the Board a in auoport of their request for reconsideration of their application. Is st r-ssed particularly the fact that Llbany which, before the establishment 01 the Federal Reserve System, was an important collection center and .carried, bank deposits has steadily lost such deposits since the System was es- tab'. Shed. He pointed out that the Committee considers to be the ecessive cost Or '"mbership in the Syst-m under the present requirement of 10 (1%11E0,1 reserves against denosits and the disadvantage at which it places those banks in their 90PA e;••• Watural Competition with the larger centers of Boston, Yew York, Philadelphia and ehiclago. general discussion then ensued at the conclusion of which the Governor advised the Albany representatives that the Board will give further consideration to their application and will promptly communicate to them its final action. At 1:00 p.m. the meeting recessed, and reconvened at 3:30 p.m., the follow114; Members being present: Governor Young, 'Mr. Platt, Mr. Hamlin, Mr. Miller, 471% James and Mr. Cunningham. With reference to the hearing at the morning session, and previous discus1°116 by the Board regarding the application of member banks in Albany for the tellinetion of the designation of that city as a reserve city and other inequaliti" which appear to exist in the reserve structure, Mr. James submitted the following resolution: "RESOLVED, That the designation of reserve city be applied to any city where the ratio of 'due to banks' of all member banks in the city exceeds 10% of their total deposits, and that the designation of reserve city be terminated in cases where the ratio of 'due to banks' to total deposits is or becomes less than 10;‘)." He did not request immediate action on the resolution, but, at his suggestion, it was referred to the Conference of Governors now in session. The Governor then brought up the proposal that the Federal Advisory Counor at least the executive committee of the Council, be called in by the Board Ulscussion with regard to the advisability of an increase in discount rates. Ifs dis59.11ested to be advised of the pleasure of the Board, and after a brief ai°4 it was the consensus of opinion that the suggested meeting should be defor the time being. 321 4/1/29 -4Governors' The Governor then announced that the Board will meet with the C°11ference in joint session on Wednesday. nt He also announced that on Saturday Mr. Charles E. Mitchell, Preside of the New York Of the National City Bank of New York, called the Governor of March 29th had hank on the telephone and advised that the Board's letter been received at his bank, but that he did not expect to be at the bank until the Board's Lioncley, unless it was desired that an immediate reply be made to it/gIlirY. tire n to advise The Governor stated that he requested Governor Harriso Idatchell that it will be satisfactory o the Board if he replies to its letter when he returns to New York on Monday. The Governor also stated that National 14 reply to an inquiry made of him direct by another officer of the UltST Bank, as to whether a full exposition of Mr. Mitchell's position is del's reply is for 81red by the Board, he stated that the nature of Mr. Mitchel his °Na determination. from Mr. Paul The Gover.,or then presented a telegram dated April 1st ks, particularly the redarburg, with regard to the present rate structure, lation of acceptances; the telethe Federal Heserve discount rate to rates on deterimental to 1111111 setting forth Mr. Warburg's belief that the situation is the rediscount rate the bill market and recommending an increase in on Member bank collateral notes and to 5 1/2 to 6;; on straight rediscounts. that he After discussion, the Governor stated telegram and would prepare a reply to Mr. Warburg's submit it to the Board later. n of the Federal Letter dated March 29th from the Chairma eserve Bank the by the board of directors of 'Lloago, advising of consideration given barlk question of an increase at their adjourned meeting on March 28th, to the t3t ,--) ) 4r4a 4/1/29 -5- the discount rate of the bank. Ordered circulated. Letter dated March 26th from the Chairman of the Federal Reserve Bank of Elllass advising of the establishment on that date of the following schedule of at for purchases of acceptances: : Bankers acceptances. 1 to 30 days 31 to 45 days 46 to 60 days 61 to 90 days 91 to 180 days Repurchase Trade acceptances _ - 5/3 5 1/8;; 5 1/4,; 5 l/2,0 5 3/4,0 5 l/2;0 5 3/4;4 Noted, with approval, 11r. James voting "no". Letter dated .:arch 28th from the Secretary of the Federal Reserve Bank New York, confirming the action of the board of directors of that bank on that date in voting to establish a rediscount rate of 6/0; the letter quoting the r esolution adopted by the directors of the bank as follows: "Voted, subject to review and determination of the Federal Reserve Board, to establish a rate of six percent for all rediscounts and advances, effective from the opening of business on March 29, 1929 and until further notice and superseding the existing rate but with the understanding that this action of the ward of directors of this bank is predicated upon approval or disapproval by the Federal Reserve Board today." Noted. Letter dated March 27th from the Chairman of the Federal Reserve Bank or so eton, confirming telephone ad'ice of the action of the directors of that bank at a of 6,;; the meeting on that date, in voting to establish a rediscount rate lettAl. -. quoting the following resolution adopted by the directors: 4/1/29 -6- "Voted that, subject to review and determination of the Federal Reserve Board, a discount rate of six percent on all classes of paper of all maturities be and is hereby established for this bank, provided however, that if the Federal Reserve Board's determination of the change in the rate shall not have been obtained by the close of business on April 3, the action hereby taken shall be considered rescinded and the proposed rate shall not be established without further consideration by this board of directors or the executive committee of this bank." Noted. Aeports of Executive Committee on letters dated. March 26th from the Compt roller of the Currency, recommending approval of salaries of „;3,600 and '2,700 per annum for National Bank Examiners James J. Byrne and Horace F. 3t°kes. respectively, assigned to the Sixth and Fifth Federal Reserve Disticts; the Board's Committee also recommending approval. Approved. Letter dated March 30th from the Chairman of the Federal Reserve Bank of Chicago, advising that pending the selection of a new counsel to succeed Yr. Charles L. Powell, deceased, the legal work of the bank will be left in the hands Of the firm of Mayer, Meyer, Austrian and Platt, with which Mr. Powell Wes connected; the letter also advising that Yr. Meyer of that firm will rePresent the bank at the conference of Counsel which is to be held in dashington. Letter dated March 21st from the Governor of the Federal Reserve Bank f New York, advising of the appeal of the case of Frank G. aaichle V. Federal eeervs Bank of New York, which was tried last summer in the .United States Di2triet Court for the Southern District of New York with the result that a 111°tion to dismiss the plaintiff's bill of complaint was granted; the letter 82,1 -7- stating that Honorable Newton D. Baker, who represented the Federal Reserve Bank in the District Court will also represent it in the appeal and it is aftmed that all Federal Reserve banks will desire to pay their pro-rata shares his fee and expenses in the appellate Court, as they did in the lower court. Upon motion, the Azsistant Secretary was instructed to take the matter up with all Federal Reserve banks and ascertain whether they are willing to assume their prorata shares of the expense in ouestion. Letter dated Larch 26th from the Assistant Federal Reserve Agent at ifl riaaPolis, requesting permission to use examiners of that bank in connection With an examination by state authorities of two state banks at Buffalo, S. D., °Ile of which, The First State Bank, is a member of the Federal Reserve System and expects to take over the other, a nonmember bank, the letter stating that at a„1 and -I'1,41cation will be made for the Board's approval of the consolidation It is believed that an examination of both banks should be made before action °11 the application is taken. In the letter, the Assistant Federal Reserve 4gent also requested that the assessment of expenses against the member bank , be . waived After discussion, uT)on motion, the permission requested was granted. Cleveland, Letter dated March 28th from the Federal Reserve Agent at With regard the Agent cornto the Board's letter of January 26, 1929 (X-6223); also, at Upon the adequacy of examinations in the Fourth District and the suggestion of the Governor of the Board, on the proposal that charges on be limited 11111118t a member bank in connection with a credit investigati member bank. to the amount of the salary of the examiner while actually in the Ordered circulated. 4/1/29 (1 -8- liemorandum from Counsel dated March 27th, with reference to the Clayton " 4 application of Mr. Frank 0. ,:etmore, involving the First National Bank and the First Trust Joint Stock Land Bank of Chicago, Ill., and the First Trust Joint Stock Land Bank of Dallas, Texas, on which the Board some time 110 deferred action inasmuch as 11r. “etmore is also serving the Chicago Title and Trust Company of Chicago, Ill., and the Board had no authority to permit him to serve the four institutions; Counsel stating that in view of the amendment of 'larch.2, 1929 to the Clayton -ct, exempting Joint 'Stock Land Banks and banks Which do no commercial business from its provisions, Mr. :ietmorets se vice of the institutions above referred to does not now come within the prohi bitions of the Jlayton Act and it is not necessar 1/ for him to secure a per- mit fram the Board. Upon motion, a letter to 1:r. Uetmore advising accordingly was approved. 1,:emorandum from Counsel dated ::arch 27th, with respect to the Clayton 40t application of Mr. dward A. Duerr, involving the Community 1;.ati3na1 Bank and, the East Side National Bank, both of Buffalo, Y., and the Seneca lation- 1 Bank of Jest Seneca, i. Y„ action on which was deferred by the Board due to of the fact that Mr. Juerr is also serving as a director of the Buffalo Branch theFederal Reserve Bank of New York, and the Board had no authority to 13armit him to serve the four institutions; Counsel stating that, in his opinion, the amendment of March 2, 1929 to the Clayton Act, exempting from its Provisions banks which do no commercial banking business, removes 1.r. Juerr's selbvice as a director of the Buffalo Branch of the Federal Aeserve Bank of iew York- from the prohibitions of the Clayton Lict, and there is now no reason why ( 326 4/1/29 the _9- Board should not grant him permission to serve the three institutions list- el in his application. Upon recommendation of the Law Committee, it was voted to authorize Yir. Duerr to serve at the same time as officer and director of the Community National Bank of Buffalo, N. Y., as director of the East Side National Bank, Buffalo, N. Y., and as director of the Seneca National Bank, West Seneca, N. Y. liemorandum from Counsel dated March 28th, with regard to an inquiry receive 4 from the ManaP;inp: Director of the New Orleans Branch of the Federal deserve Rahlc of Atlanta, as to whether canned shrimp should be regarded as a readily Iflarketable staple, within the meaning of Section 13 of the Federal deserve Act atici the Aegulations of the Federal Reserve Board; Counsel submitting draft of a letter to the Managing Director of the New Orleans Branch, advising that from the information which .the Board has received on the question, it appears that canned shrimp is not the subject of constant dealings in ready markets nor easy to ealize upon by sale at any time, as required by the definition of a readily illerketable staple laid down in the Board's Aegulation ".0 and, in the opinion °f th -e Federal Reserve Board, therefore, is not to be regarded as a readily rIlerketable staple within the meanino of Section 15. Upon motion, the letter submitted by Counsel was approved. 11P4?°IM3 OP 32ANDING COMMITTEES: D4teci, March 28th, Recommending chanpes in stock at Federal Reserve Banks 29th, as set forth in the Auxiliary Linute Book of this date. Recommendations approved. April 1st, Datea, March 28th, Recommending action on applications for fiduciary powers this date. April 1st, as set forth in the Auxiliary Minute Book of Recommendations approved. Datea, William W. March 28th, Recommending approval of the application of Er. director as time same the at serve to Cohen for permission N. Y., York, New Batik, National Lormandie of the Lefcourt 897 -10- 4/1/29 OF ST2,iID LNG C/0:.2:I:21121:35: C ont d and as director of the Brooklyn National Bank, New York, Y. Approved. Dated, Larch 29th, Recommending approval of the application of Yr. Emil A. Stake for permission to serve at the same time as officer r of the First National Bank, Chicago, Ill., and as directo , Ill. ChicacPo Bank, of the Fidelity Trust and Savings Approved. Datea, Larch 29th, Recommending aoproval of the application of Mr. F. J. Humphrey for permission to serve at the same time as director and officer of the Wyoming County National Bank, arsaw, N. Y., as officer and director of the First National Bank, Arcade, N. Y., and as officer and director of the National Bank of Wyoming, N. Y. Approved. Yr. Ralph S. 13eted, March 29th, Recommending approval of the application of as officer time samc the at Davis for permission to serve and as Ill., , Chicago of the Portage Park National Bank, Ill. , Chicavo Bank, director of the West Irving State Approved. Dated, March 29th, Recommending approval of the application of Yr. Frank Krzykowski for permission to serve at the same time as Ill., director of the Portage Park Nationnl Bank, Chicago, , Chicago Bank, State Irving and as director of the West Dated, March 29th, Approved. Recommending approval of the application of Miss Annabel diHumphrey for permission to serve at the same time as Y., N. rsaw, Bank,Wa l Nationa rector of the Wyoming County Y. N. , Wyoming of Bank l Nationa and as uirector of the Approved. The meeting adjourned at 5:15 pen. Assistant Secretary. APProved:
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