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3c4`) At a meeting of the Federal 77'eserve Board held in the office of the *Board on Thursday, April 15, 1920, at 11 A.L. P7flENT: The The 1.1r. • • r. • Chain:Ian Governor Lliller Hamlin L:oehlenpah Yilliams Chapman, secretary. :inutes of meeting of the Board held Aril 14th were read, and on motion approved. The Governor reported the reserve r,ositions of the sever .1 Federal reserve Ban",cs s at close of business Anril 17th, and the status of rediscounts between Federal 'eserve Bon"-cs as of the same date. (At this Point the Chairman joined the meeting) Telegram dated April 14th from the Chairman, Federal —eserve Bank of San Francisco, requesting continuation of the employment of Yr. Edward Elliott in 3tate bank membership campaign work, and suygesting that his compensation should perhaps be increased from the rate of 1.0,000 per annum to the rate of .:1,:))0 rer month. Toted to approve the continuation of Yr. :11iott's services until not later than July 1st next at his rresent rate of compensation. (At this point Er. TAlliams joined the meeting) Tele(Tan dated April 14th from the Governor, 7eder 1 38:3 'eserve Bank of :Cansas City, rocfuesting the views of the Board upon a suggested rlan of cradtlated discount rates to be submitted to the directors of that 2ank at their meetintj tomorrow. After prolonced discus100, on ;flotion aAy secon(led, it 7,-as voted that .the :yecutive Colfnittoe submit for approval by the Board, to 1::r. 7i11er's telecram. draft of re:)ly ,:.irino.n. and Mr. Pilliams with.dre., (At this ioint the Ch. from the meetinij) 1723 OF067-177- ', 1: Dati April 14th, recoaendin chaajes in stoc . at Federal Peserve Banks, as set forth in the au:dliary minute book as of this date. Dated April 14th, recommendinL: ar-oroval of application of Join 7. Thayer, Jr., to serve at the same the as Director of tIle 7ationa1.-3hawmut Tice--President, Bank, ana as Director Equitable Trust Clmpany, both of Poston,7.7ass. Approved. 'Dated April 12th, re00lnend1n,!7 ap-orowl of salary of :!2,400 per annum for r,r.7. 3nith as 71.:tional Ban-,c 7xa1iner in the 1- (:)th Federal Peserve District. Approved. A Dated April 14th, recomnending approval of salary of ;3,000 .:..aa;oner as per annum for Mr. David in. the 7th Federal rational Bank 7xa,flincr Reserve District. ted April 15th, recorz:endinz ‘,,,,proval of appointtaent of 1:r. John. fosei-,.h. Connell ;Jis 3tenorapher eu 38-1 '7 the rolls of the Board det2iled to the office of the Oornntroller of the Currency, at :1,300 per a:..rinui-J, vice hiss Louise E. Peiffer, resigned. Apnroved. (Lt this point a recess :as t.--ed until 7.)-30 The rLeetin=- reconveLed at the cypiration of the recess -ith the same members nresent as at the oenivx, session. The Governor submitted for approval draft of tele_ralr. to the Governor, rederil -esrve Ban'.: of 1:ansas City, in 'reply to his telo,ram submitted at the r.ornin ' session. :,.L.)roved, amended to read as follows; "Lour tele,:ram 14th. Board expects you to control your rediscount sitution and if your directors agree that Lriduated rates are essential for 7)roner control, Board will coonerate in establishing them. Board, however, questions effectiveness of any rate of progression below one-half percent and does not think it i7ould be vise for either Board or reserve Bank to bind themselves as to future rates of prozression. Board would suggest that differentials Opted be made ap-21icable at once to all new loans, letting progressive rates apnly to eyisting lines on ?...[Pi after .71ne first or such other date as may be agreed upon. Otherwise you will have big expansion because of anticip. ..itory borrowings. Proposed method of determiniw basic line seems logical but Board has been debating suggesting to you an alternative in order to facilitate distribution of Treasury certificates in your district and to avert undue hardship to banks having u..isold amounts of Liberties and 7ictories subscribed for in good faith. Proposed alternative suggestion is that your directors consider making basic discount line and progressive rates anply only to commercial paper, having 110 rate progression as to member banks notes secured by Treasury certificates; or by Liberties and Victories actually owned by borrouing banks on April 1, 1920. If this -4plan is adopted it is suggested that if total borrowings secured in this way by Government war obligations equal or exceed normal discount line, that progressive rates apply to other loans, figuring rate upward from the basic line established. For example, if a bank havint, a normal line of one hundred thousand dollars offers its own paner secured by certificates or by Victories and Liberties actually awned by it on April 1st to extent of two hundred thousand dollars, entire II,Iount should be taken at the basic rate. If, in addition, however, the bale,: should offer one hundred thousand dollars of con-nerci31 paper, then, this paper should be taken at the progressive rate based on the excess above the normal line of one hundred thousand dollars. . - hat does your Board think of this?" An exhaustive discussion was thereupon had of the general question of discount rates in their relation to credit control,an-i the Governor was authorized to transmit the following telegram to the Governors of all Federal Feserve Banks: 'Three reserve banks have recomylended to Board chanLes in discount rates. One, while suggesting rate of five and three-quarters percent on member banks promissory notes or rediscounts secured by Liberties and iictories all maturities, indicates a real preference for six percent. Another suggests five and three-quart( rs percent rate on Liberties and Victories and five and onequarter Percent rate on certificates, while the third suggests five and one-quarter and five and one-half percent respectively on three months and six months certificates. 7as there been any change in your own views regarding rates since your return from Washington? Do you feel that practice should be continued of having substantial uniformity in all districts in rates on all classes of paper secured by Government obligations? If so, do you regard any change in existing rates on paper sec'ired by Government obligations advisable, and if your local condition is such that uniformity in rates with other districts is inexpedient, what rates would you suggest as being necessary to control your rediscount situation? 386 ';','hether or not rates on Government secured paper are aCrTmced, what do you recommend as regards rates on commercial paper? Does advance of Bank of Pngland rate to seven percent in your opinion call for any action by Federal 7eserve Banks?" A.t 5 4pprovedt . the 7-icet1nc adjourned.
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