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I A meeting of the Federal Reserve Board was held in the office of the Pederal Reserve Board on Tuesday, April 16, 1929 at 11:00 P&ISENT: Vice GovernorPlatt Mr. Hamlin Mr. James Mr. Cunningham Yr. Pole Mr. Noell, Asst. Secretary Mr. McClelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held on April llth were read and approved. The minutes of the meeting of the Executive Committee held on April 11th were read and noted, no action being required. Telegrams dated April 11th from the Chairman of the Federal Reserve Bank Of Richmond and April 12th from the Secretary of the Federal Reserve Bank of Atlanta, advising that their boards of directors at meetings on the dates statade no changes in the banks' existing schedules of rates of discount and Parchaee, Without objection, noted with approval. Telegrams dated April 15th from the Secretary of the Federal Reserve 1344It of Minneapolis, and April 11th from the Chairman of the Federal Reserve 1144k 01 Kansas City, advising that their boards of directors at meetings on the dat _ es stated made no changes in the banks' existing schedules of rates 01 d iscount and purchase. Noted, with approval, Mr. Platt voting "no". Letter dated April 11th from the Secretary of the Federal Reserve Bank "Ilew York, advising that the board of directors at its meeting on that date 144(1a no change in the bank's existing schedule of buying rates; the letter 371 4/16/29 also quoting the following resolution adopted by the directors with regard to the discount rate of the bank: "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 April 12, 1929 and until further notice and superseding the existing rate but with the understanding that this action of the poard of directors of this bank is predicated upon approval or disapproval by the iederal eserve Beard today." Noted. Letter dated April 12th from the Chairman of the Federal Reserve Bank of Ilohmend, advising that although the bozird of directors at its meeting on April lith made no cham:e in the discount rate of the bank, the directors believe that,viewed from a nation wide standpoint, there is stroni- reason for raising the Federal Reserve rate to 6,, but do not believe that the local condition 14 the Fifth District would justify a raise in rate there, if in New York, Where the all money market is most active, the discount rate is held to 5;;. Noted. Letter dated April 12th from the Chairman of the Federal Reserve Bank 01' ChicaM, advising that although no action with respect to the discount "was taken at the meeting of the executive committee of the bank on that 1'4 4te, only three members of the committee were present and if there had been 4 or ctically full attendance at the meeting, there is no doubt but what action d. have been taken to increase the rate of the bank to 60. Noted. Reports of Committee on 6alaries and Expenditures on lists submitted bY t he Federal Reserve Banks of New York, Richmond, Atlanta and Kansas City -3- 4/16/29 of employees for whom the directors of the banks authorized leaves of absence with pay, on account of illness, during the month of Larch, where the total Of such absences since January 1, 1929 has exceeded thirty days; the Board's Committee recommending approval of the salary payments involved. Approved. Memorandum from Counsel dated April 12th, recommending renewal of the Board's subscription to the Congressional Service of the Corporation Trust C°111Pany for the First Session of the 71st Congress, at a cost of „100. Upon recommendation of the Law Committee, renewal of the subscription was approved. Letter dated April 13th from the Assistant Federal rieserv.e Agent at New York, advising of announcement of the consolidation on or about 1:ay 1st °f the Claremont Bank, Jersey City, N. J., a member bank, and the Trust ComPanY of New Jersey, Jersey City, a nonmember; the consolidation to be effected 1111(13r the charter and title of the nonmember bank. Noted. Letter dated April 13th from the Governor of the Federal iteserve Bank Of New York, Chairman of the Open narket Investment Committee, transmitting °()PY Of the minutes of the meeting of the Committee held on April 1st, at hioh no recommendation was made to the Board; the letter also transmitting iee of reports submitted at the meeting. Ordered circulated. Letter dated April 12th from the President of the Society for Savings, Rartford, Conn" transmitting and requesting comment by the Board on a news- "advertisement suggesting the deposit of funds in bank in lieu of their /)413 6) 4/16/29 investment in securities; the advertisement reciting that even the soundest securities if bought at prices unwarranted by conditions, may be subject to heavy depreciation of principle, whereas a deposit in that bank is not subject to depreciation. After discussion, it was voted to reply to the above letter that the Board would not care to comment upon the advertisement inasmuch as its comment might be construed as referring to the prevailing level of security prices, although publicity of the kind would undoubtedly be beneficial to banks generally since it would tend to exert an influence against the withdrawal of bank deposits for speculative investment purposes. The Assistant Secretary then presented drafts of telegrams to the Governors ahd Federal Reserve Agents at those Federal Reserve banks having branches, with respect to consideration which will be given at the forthcoming currency conference to the question of joint custody of reserve stocks of Treasury issues °f small size currency which may be established at branches during the turnover Period and arrangements for such temporary reserve stocks of small size Federal deserve notes as may be desired at branches; the telegram to the Federal Reserve Agents pointing out that the Board would prefer not to renew Assistant Pederal Reserve Agents at the Branches, even for a temporary period, and in94iring whethar it would be feasible to have Branch Directors residing in those cities where reserve stocks of Federal Reserve notes may be desired des ignated temporarily as Acting Assistant Federal Reserve Agents, as is now clOne at Jacksonville. Upon motion, the telegrams were approved. Letter dated April 13th from the Assistant Federal Reserve Agent at 141hIleapolis, requesting permission to make an examination, jointly with State 374 4/16/29 -5- authorities, of the State Bank of Madelia, Minn., without assessing the cost Of the examination against the member bank; the letter stating that the inhas been a source of anxiety since it was practically compelled to absorb the First National Bank of lIadelia some time ago, which action was ecnsidered necessary in order to save the banking situation at Y.adelia. After discussion, the Assistant Secretary was directed to advise that if the Federal Reserve Examiners are to take part in a regular joint examination of the bank, their services should be paid for, but if they are merely to conduct a credit investigation at the time the examination is made by the State Authorities, the 3oard will consider waiving charges in connection with such investigation. at YinLetter dated April 13th from the Assistant Federal Reserve Agent State 464Pclis, requesting permission to make an examination of the Farmers 1344k of Fullerton, North Dakota, without assessing the cost of the examinanecessary due ti°4 against the member bank; the examination being considered to the fact that the state bank has taken over certain assets and assumed certain Iiito Fullerton, which has gone liabilities of the First National Bank of voluntary liquidation. to After discussion, upon motion, it was voted Minadvise the Assistant Federal Reserve Agent at of the made be to is tion examina an if neapolis that assessed be state member bank, the cost thereof must against the bank. letter dated March 25th Memorandum from Counsel dated April 11th on an inquiry by the fli°111 the Federal Reserve Agent at Richmond, transmitting the American Trust 4111eriean Bank and Trust Company, Richmond, Va., formerly special condition 0°111PanY of Richmond, as to the proper interpretation of the Of Membership imposed upon the bank at the time of its admission to the Sys- ;375 4/16/29 -6- that except with the permission of the Federal Reserve Board it should ten41 not exercise certain unusual powers which it has under its charter. After discussion, during which the Board concurred in the interpretation placed by Counsel upon the special condition of membership referred to, in relation to the several powers covered thereby, it was voted to advise the Federal deserve Agent at Idchmond in accordance with Counsel's memorandum. The Assistant Secretary then submitted, at the request of the Undersecretary Of the Treasury, a revision of the proposed letter to the Chairman of the Committee on Banking and Currency of the Senate, for the signature of the Secretary Of the Treasury, regarding S. 5723, to amend Section 7 of the Federal Reserve Act, relating to the distribution of the earLings of the Federal Reserve banks, 411d Section 18, providing for the retirement of national bank note circulation. After discussion, it was voted that the Vice Governor advise the Undersecretary of the Treasury that although certain members of the Board are not necessarily opposed to the proposition of increasing the participation of member banks in the earnings of the Federal Reserve banks, there is no objection to the Secretary of the Treasury transmitting the proposed letter as an expression of his own opinion. On this motion, Llessrs. James and Cunningham voted "no". Letter dated April 13th from the Governor of the Federal Reserve Bank of 141W Ycrk, confirming advice of an advance made to the Reichsbank against a shiPment of .6,437,076.74 of gold consigned to the Federal Reserve bank on 4Pri1 llth, for the transit time of the shipment only and in the amount of / (31 the value of the gold, with interest at the rate of 5/o; the letter also 11.m1ariz1ng recent gold and exchange movements affecting the Reichsbank. Ordered circulated. -7- 4/16/29 l deserve Bank Letter dated April 13th from the Governor of the Federa Of Chicago, transmitting copy of letter addressed to the Managing Director Of the Detroit Branch, to be submitted to the Branch board of directors, with regard to the heavy and continuous borrowing of the First National Bank of Detroit; the letter to the Board commenting generally upon the reduction in 'borrowings of member banks in Chicago and Milwaukee and the expectation of substantial liquidtion in Detroit. Ordered circulated. Mr. James referred to the apparently unsatisfactory cooperation which the Federal deserve Bank of Philadelnhia is receiving from its member banks the opinion that a liiaealing with the present credit situation and expressed letter on the subject should be addressed to the board of directors of the 8ank for consideration at their regular meeting tomorrow. it was fter discussion, upon motion by Mr. James, an Chairm the to letter voted to address the following "no": voting Platt of the Philadelphia bank, Mr. Board has "For some time past, the Federal reserve ers that borrow nt freque been concerned about several the Board of view the is It you have in your district. results, lished accomp not has that the Philadelphia Bank ncontai Board the of tion in connection with the sugges those to able compar 2nd, ed in its letter of February e banks. The shown by most of the other Federal reserv Federal rethe of most in favorable results obtained the Board by reted interp serve districts were rather getting were banks e reserv as meaning that the Federal in their banks ing borrow very good cooperation from the the in true been not has districts. This, however, to ed prompt is ore, theref Third District. The Board, their at matter the tder cons request that your Directors the for s reason meeting tomorrow and advise it as to the able reason a apparent failure of your Bank to obtain cooperation from your member banks." 0I I -8- "Do your Directors feel that these reasons are good and sufficient, and are they of the opinion that every reasonable practicable method has been employed and exhausted by your bank to protect its credit facilities against diversion into channels not contemplated by the Federal Reserve Act? An early reply to this letter from your Board of Directors will be appreciated." REP°ItTS OF 3TANDING COMMITTEES: Dated, April 11th, 12th, 15th, 16th, Dated, April 12th, 13th, 15th, Dated, April 11th, Recommending changes in stock at Federal Reserve banks as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending action on applications for fiduciary powers as set forth in the Auxiliary Linute Book of this date. Recommendations approved. Recommending approval of the application of 1.:r. Harry Lewis for permission to serve at the same time as director of the Lafayette National Bank of Brooklyn, N. Y., State Bank, Brooklyn, N. Y. and as director of the Uit Approved. Recommending approval of the application of Mr. Nathan Aieger for permission to serve at the same time as director and officer of the Home Trust Company, Kansas City, Mo., as director and officer of the National Bank of North Kansas City, North Kansas City, Mo., and as director of the Stock Yards National Bank, Kansas City, Mo. Approved. Dated, April 15th, Recommending approval of the application of Yr. G. A. Sievers for permission to serve at the same time as director and officer of the Home Trust Company, Kansas City, Llo., and as director of the National Bank of North Kansas City, North Kansas City, Mo. Approved. Dated, April 15th, Recommending approval of the application of 1:r. AucTust Heckscher for permission to serve at the same time as director of the Empire Trust Company, New York, N. Y., as director of the Liberty National Bank and Trust Company in New York, N. Y., and as director of the Bank of Huntington, Huntington, Long Island, N. Y. Approved. Dated, April 15th, The meeting adjourned at 12:30 (19 .tipprovea: Assistant Secretary. ••••••••• Vice Governor.
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