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325 4 meeting of the Federal deserve Board was held in the office of the Nara] . Reserve Board on :/ednesday, April 18, 1928 at 10:00 a.m. PRESENT: The The Mr. Mr. Yr. Mr. Mr. Mr. Chairman Platt Hamlin Miller James Noell, Asst. Secretary McClelland, Asst. Secretary minutes of the meetings of the Federal aeserve Board held on Dril 9th and 11th were read and approved. The minutes of the meetings of the Executive Committee held on April 1.411 and 17th were read and upon motion the actions recorded therein were Nifiea. Letter aated April 16th from the Chairman of the Federal deserve of "nsas City, advising of the establishment on April 13th of the 4144ing rates for parchases of bankers acceptances: 1 to 30 days 31 to 120 days 121 to 180 days 3 5/8/0 33/4;? 4;7 0 Without objection, noted with approval. Telegrath dated April 17th from the Chairman of the Federal Reserve 11k13"f San Francisco, advising of approval by the Executive Committee of 47/1ng schedule of rates for purchases of bankers acceptances, made ett'ettlria on April 12th: 1 to 30 days 31 to 120 days Repurchase Without objection, 3 5/8,; 3 3/4;40 33/4 noted with approval. teort Of Committee on Salaries and Expenditures on letter dated 4Dril 16 th rom the Deputy Governor of the Federal iieserve Bank of New York, 326 4/18/28 -2- 81thnlitting list of employees for whom the directors of that bank approved leavG5 of absence with pay on account of illness during the month of Earch, Ikere the total of such absences since January 1, 1928 has exceeded thirty 4Y8; the Board's Jommittee recommending arproval of the salary payments alahor. ized by the New York directors. 4proved. 11,E) Vice Governor stated that special order of business for this meet11 wa consideration of the telegram received yesterday from the Chairman t the 1, Rederal ..ieserve Bank of Boston, advising that the board of directors °4 tha t. , Ltate voted unanimously to establish a rediscount rate of 4 1/2/6 on 411 lasec of paper of all maturities. E'°11 the information of the Board, in connection with the consideration the above matter, the Vice Governor read a letter addressed to him under 'April 17th by the Deputy Governor of the Federal cl4t11 °I eserve Bank of 1414"(Irk, advising of sales of securities from the System account since 441411 11 '4th amounting to 47,370,000, reducing the account at close of busiIle 41311.1 18th to „201,000,000; the Jenuty Governor advising that an ag*egat „ 6 029000,000 is being taken from the market this week including, 4(1(liti°11 to the securities sold, 420,000,000 of acceptances being turned NI' to a foreign correspondent in exchange for 20,000,000 of June 15th IV certificates for sale to the Treasury today and the earmarking of 61°C/0 On $-() of gold for account of the Bank of France. Discussion then ensued of the necessity and advisability ` cit I action by the Board on the proposed increase in the reolscount rate of the Boston bank in the light of the substantial Pen market operations reported in the letter read by the Vice 327 4/1e/28 -3- Governor. Some members of the Board expressed the opinion tnat the influence of the open market operations, and the Psychological effect of the sales of securities, when made public in the weekly statement which will be released to the press tomorrow, may make unnecessary any immediate increase in Federal deserve discount rates. They expressed the opinion that the System, in any event, should take no action relating to rates until it is demonstrated that con.h further trol of the money market cannot be obtained throuf; Other account. System liquidation of the securities in the rate in increase any members expressed the opinion that if made change is the promptly Should be necessary the more the better. During the discussion, Yr. Hamlin moved that the Board approve the rediscount rate of 4 1/2 established by the directors of the Federal deserve Bank of Boston for all classes of paper of all maturities, effective Friday, April 20th. 'tter farther discussion of the matter the Board recessed at 12:30 p.m. A't 3:00 P.m. the Board reconvened the same members being present as at$440 '‘ the morning session. 'iller reported that during the recess he communicated over the teletate4 ti048 th DePuty Governor Case of the Federal Reserve Bank of New York. He that he discussed with Mr. Case the effect of the open market opera- rePOrted in his letter of April 17th and that Mr. Case stated he was (1114 thq aPPointed at the results which have been obtained. Case He stated further informed him the directors of the New York bank have been con- sidering the situation and feel that it is getting out of the conthe Federal Reserve bank, largely because of money coming into the 14elv ma rket from the outside, nresumably attracted by the high call rate, 'ee particularly at the openinp. of the week indicating a large flor 441 ot "clel money from the Boston district. Mr. Miller stated that before his t)1113EttiOn With Mr. Case he was inclined to agree with the view which he 328 4/18/28 -4taUrstaais is held by Yr. James, that no action should be taken looking to a, " Increase in Federal Reserve bank discount rates while the System has 4411abl -e another instrument for meeting the situation, namely, further sales °f securities from the open market account. He stated, however, that sitce talkin.c; with Mr. Case he has reached the conclusion that security sales 1). °t have the desired effect and that he is, therefore, prepared to vote illf4"r Of the action of the directors of the Federal Reserve Bank of Boston. ch,ir Following the discussion of the matters reported by Mr. Miller, the called for a vote on the following motion made by Mr. Hamlin during the kor4; 41g Se8siOn: "That the Board approve the rediscount rate of 4 1/2,0 established by the directors of the Federal Reserve Bank of Boston (31 'all classes of paper of al1 maturities, effective Friday, 414'11 20th." vr 4 vote being taken on Mr. Hamlin's motion, it was carried, I J4Ines voting "no". Ilr• James submitted the following statement: ofVhile sharing the desire to check the inflationary tendency the stock market and the flow of Federal reserve credit in that direction, I am strongly of the opinion that the security reciaihP;s of the Federal Aeserve System should be substantially / rea, if not entirely disposed of, prior to making any increase 1.11 , ,kiscount rates. th.,I9 therefore, vote "no" on the proposal of the directors of ai..ukFederal Reserve Bank of Boston to increase the discount rate Qlat bank today." atiZuTs 1/4te(7--TANDING COLIEI2T -:ES: itDril 17th, Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendationsapprov adjourned at 3:3 meeting The k4tovea: Assistant Secretary. Chairman.
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