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294

At a meeting of the Federal Reserve Board held in the
office of the Board on Wednesday, April 16, 1919, at 11 A.M.
PEL3ENT:

The Governor
Mr.Strauss
Mr.Miller
MrsHamlin
Mr.Williams
Mr.Chapman, Assistant Secretary.

The minutes of the meetings of the Board held on April
7 and 11 were read and on motion approved.
The minutes of the meetings of the Executive Committee
held on April 8, 9, and 14 were read and on motion approved.
The minutes of the session of Federal Reserve agent with
the Board, held an December 5, 1918; and of sessions of the
Advisory Council with the Board, held on February 17 and 18,
1919, were presented and approved, same having theretofore
been circulated and read by Board members.
The minutes of the meetings of the Gold Export Committee held on April 7, 8, 9, 10, 11, 12, 14, 15, and 16
were presented and approved, and the action therein set forth
ratified.
Morning business was presented and disposed of as follows:
The Governor reported the purchase, on April 14, of
special 2% certificate of indebtedness of the United States
for 41,000,000 for the Federal Reserve Bank of Philadelphia,




2°.
o3
r.

-2for deposit with the Comptroller of the Currency as collateral for Federal Reserve bank notes.
Approved.
The Governor reported the following rediscount transaction pursuant to authority heretofore vested in him:
April 14, for the Federal Reserve Bank of Dallas
by the Federal Reserve Bank of Chicago, 0,500,000
member bank 15 day collateral notes secured by Government obligations; rate 4%.
Noted.

•

Letter dated April 12 from the Chairman of the Federal
Reserve *Bank of Atlanta, requesting approval of an amendment
to Section I, Article 2 of the by-laws of the New Orleans
Branch of the Federal Reserve Bank of Atlanta, fixing compensation of Directors serving on the Executive Committee as
follows:
4j 5 per day for residents of New Orleans,
Z;110 per day for non-residents of New Orleans.
Approved upon condition that such compensation
shall not be paid when Executive Committee meetings
are held on the same day as regular or special meetings of the Board of Directors.
(At this point Er.Williams joined the meeting.)
Letter dated April 8 from the Federal

Reserve Agent at

San Francisco, in re losses incurred by subscribers to Liberty
Loan.bonds through volunteer solicitors.




296

-3Referred to Assistant Secretary of the Treasury
Leffingwell.
Letter dated April 14 from the President of the National 4ssociation of Comptrollers and Accounting Officers,
requesting the attendance of Mr.Hamlin at the Convention of
the National Association of Comptrollers and Accounting Officers to be held in Baltimore, June 18, 19, and 20«
Referred to Mr.Hamlin with power.
REPORTS OF CO1MITTEE. N0.1:
Dated April 15, (2 reports) recommending changes in stock
at Federal Reserve banks as set forth in
the auxiliary minute book as of this date.
Approved,
Dated April 16, recommending admission of State institutions as set forth in the auxiliary minute
book as of this date, subject to the conditions stated in the individual reports attached to each application.
Approved,
Dated April 16, recommending action on applications for
fiduciary powers as set forth in the auxiliary minute book as of this date.
Approved.
Other business was presented and disposed of as follows:
The Governor submitted for approval draft of letter
dated April 16, to all Federal Reserve banks, in re method
of collection of trade acceptances.




Approved.
The Governor submitted for approval draft of telegram

297

dated April 16, to all Federal Reserve banks, stating the
Board's views as to suggested policy to be pursued in connection with the fixing of discount rates on paper secured
by Victory Loan notes, which was amended as follows:
"For confidential information of your officers and
directors, Board has received recommendations from
some reserve banks regarding rates of discount on
paper secured by Victory Loan notes and has reached
the conclusion that there should be no difference
in rates on paper secured by Liberty Loan bonds or
by the new Victory notes. Although the spread on
notes secured by Victory loan is wider than that on
notes secured by other Government obligations there
seems to be no reason to expect great volume of additional rediscounts, for in view of attractive
features of Victory loan, preference in allotment
to smaller subscribers and announcement that it is
the final loan, there is every reason to believe it
will be well distributed. in the event any particular banks attempt to make excessive use of discount privilege appropriate action can be taken in
each case. Board is informed that many banks are
still carrying considerable amount of Fourth Liberty
Loan bonds under commitments to carry them for a year,
and this engagement will terminate in October or November next. Board suggests that unless there should
be some unexpected change in situation, reserve banks
discourage member banks from making agreements in
connection with Victory Loan for a longer period than
six months, thereby leaving situation with respect to
loans secured by Government bonds entirely clear after
November. Board invites comment on policies proposed
in this telegram."
Approved.
(During the discussion of this question Mr.Williams
withdrew.)




Telegram dated April 15 from the uovernor of the Federal

298

m5.
Reserve Bank of Chicago, recommending changes in discount
rates.
Referred to the Governor for report.
REPORTS OF CO:M1TTEE NO.I: (Continued)
Dated April 15, recommending approval of the application
of Gustave Freund for permission to serve
at the same time as director of the Fort
Dearborn National Bank and the Franklin
Trust and Savings Bank, both of Chicago,
Illinois.
Approved.
Dated April 15, recommending approval of the application
of Frederick D.Underwood for permission
to serve at the mime time as director of
the Chatham and Phoenix National Bank,
New York City and the First National Bank,
Nauwatosa, Wisconsin.
Approved.
Dated April 15, recommending approval of the application
of Leroy A.Goddard for permission to serve
at the same time as president and director
of the State Bank, Chicago, Illinois and
as director of the First National Bank,
Mt.Carmel, Illinois.
Approved.
Dated April 14, recommending the appointment of lir.Harry
B.2tone as Assistant File Clerk at a salary of ;41,200 per/kruTum, effective April
16.
Approved.
Other business was presented and disposed of as follows:
Letter dated April 11 from

submitting the

resignation of Miss Priscilla Galt from the Division of Analysis and Research, and advising that it will not be possible




299

-6for her to undertake the work with the Forest Service for
which she had been intended.
Referred to the Governor with power.
Draft of letter dated April 16, to all Federal Reserve
Agents, in re revision of "Weekly Report of Gold Receipts and
Disbursements" form X-1053.
Approved.
The Governor reported the reserve positions of the several
Federal Reserve banks.
Letter dated April 9 from the Federal Reserve Agent at
San Francisco, in re unsatisfactory conditions at the Scandinavian American Bank, Seattle, 7;ashington.




On motion duly seconded the Governor was authorized
to send to Mr.Perrin the following telegram:
"Your letter 9th. Board agrees with view that
your bank should take immediate action, but feels
that Clearing House Committee, State Guaranty
Board and State Bank Axaminer should be notified
to meet representatives of your bank, including
yourself, on a stated data. Resolutions adopted
by banks give you authority to make full statement
to Clearing House Committee regarding conditions,
and Board feels that you should be thoroughly independent in the matter. You should give notice
that membership of bank concerned will be terminated at once unless arrangements satisfactory to you
are made to assure the conduct of business on lines
satisfactory to you. Bank was admitted to membership under certain_conditions which have not been
complied with and from your report it is clear
that present management cannot be relied upon to

300

-7live up to requirements. If bank is to retain
membership in system therefore radical changes
In oolicy and personnel seem to us to be imperatively necessary. Your bank is charged with
a serious responsibility in the matter and while
no doubt it is justified in taking drastic steps
without consulting other parties it appears to
Board that in fairness to those that might be
affected by action taken they should have notice
of your intentions and be given an opportunity of
making some arrangement satisfactory to you Which
would permit you to continue the membership of the
bank concerned.
The Governor stated that Mr.Jay had informed him that it
would be very desirable that Mr.Clifford Hubbell, President of
the Buffalo Clearing House Association, be appointed on behalf
of the Federal Reserve Board a Director of the Buffalo Branch
of the Federal Reserve Bank of New York,

The Governor stated

that, for the reasons explained to him he concurred in lk.Jay's
view, and requested approval of the appointment by the Board.
Approved.
At 1 P.M. the meeting adjourned.

Assistant Secretary.

Approved: