The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
The meeting of the Board of Governors of the Federal Reserve System with the Presidents of Federal Reserve Banks was reconvened in Washington on Tuesday, April 18, 1939, at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel Mr. Mr. Mr. Mr. Messrs. Harrison, Sinclair, Fleming, Leach, Parker, Schaller, Martin, Peyton, Hamilton, Gilbert and Day, Presidents of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco, respectively Mr. Kimball, Secretary of the Presidents' Conference Mr. Ransom called attention to a news item in today's Wall Street Journal which stated that a comprehensive banking and monetary Policy study by the Senate Banking and Currency Committee was proposed Yesterday by Senator Wagner, Chairman of the Committee, with a view to a general revision of present statutes, if necessary, in order to Provide the best possible machinery with which to carry out the policies of Congress already outlined in the laws now on the statute books. 544 -2- 4/18/39 Mr. Ransom also stated for the information of the Presidents that on APril 13, 1939, Senator Townsend introduced a concurrent resolution calling for the creation of a special joint committee to make a full and complete study and investigation of the gold, monetary, and banking Policies of the United States in view of the present division of resPonsibility with reference to monetary and credit policies. Mr. Ransom then read a draft of reply, which he had prepared but which had not been considered by other members of the Board, to the request received from the Chairman of the Banking and Currency Committee for a report on the Brown Bill (S. 2045). He stated that the draft of reply represented his views at the moment as to the rePort that might be made by the Board on the bill. In accordance with the suggestion made at the meeting yesterdaYMr. Goldenweiser was called upon to discuss the principal problems confronting the Federal Reserve System in the monetary and banking field and he read the following list of questions copies of which were distributed among the members of the Board and the Presidents: "1. What should be the Federal mechanism for bank supervision? What shall be the respective duties in this field of the System, of the Comptroller, and of the F.D.I.C.? Whatever the answer to this question, what could be done, if anything, to decentralize the actual examinations and supervision and to utilize the Federal Reserve banks for the purpose? 545 4/18/39 -3- What, if any, changes need to be made in the ownership, directorates, and membership of the Federal Reserve banks? Should the capital be repurchased and the banks operated on surplus? Should any changes be made in the directorates of the Federal Reserve banks, and particularly should bankers be retained on the boards? Should Federal Reserve facilities be extended to all insured banks and, if so, what distinction shall there be between members and nonmembers and what, if any, Federal Reserve regulations should nonmembers be subjected to? the purpose of the Federal Reserve System? is "3. What Should the objective of monetary policy be written into the law, and should the Board be required to study and renort on economic factors beyond its control that may interfere with the effectiveness of monetary policies? "4. What should be done in order to regain control of bank reserves? Should percentages of reserves be prescribed in the law; what powers over these reserves should the Board have? Should any changes be made in the character of reserves, for example such as including vault cash? Should any change be made in the classification of cities for reserve purposes? "5. Should the System have a plan about capital loans to industry? Should there be a Government agency, or a private one? Should it be controlled by the System? Mat should be its capital and where should it came from? that character of loans should it be authorized to make and how should it raise the funds for the purpose?" "2. There ensued a discussion of the procedure to be followed in d etermining upon a program which might be agreed upon by the Presidents end the Board of Governors as a possible solution of the bsnking and monetary problems presented by the Brown Bill. 546 4/18/39 During the discussion of this matter President Young joined the meeting. At the conclusion of the discussion President Harrison stated SS the view of the Presidents that (1) the Presidents agreed with the Board's suggestion that a Congressional study of the banking and monetary field should be made and (2) the System should be prepared at an appropriate time to make suggestions as to solutions of the problems in that field. He expressed agreement with the suggestion made by Mr. Ransom that the legislative committee of the Presidents' Conference and the Board give separate consideration to the matter and that, when deemed advisable, the committee and the Board meet again for the purpose of determining upon a program which, if possible, could be approved by the Board and the Presidents. Thereupon the meeting recessed with the understanding that the Presidents would meet separately for further consideration of the flle.tter. At 2:30 p.m. the meeting reconvened with the same attendance as at the morning session except that Mr. Szymczak was not present. President Harrison stated that at the separate meeting of the Presidents just before lunch it had been agreed that the legislative committee of the Presidents' Conference (Messrs. Harrison, Young, Sinclair, Parker and Hamilton) should study the approach to be made by the Presidents' Conference to the problems presented by the Brown -5- 4/18/39 Bill and other legislation and should meet with the Board for the Purpose of working out a program which could be approved by the Board and the Presidents. It was agreed, President Harrison said, that the legislative committee should remain in Washington for this purpose in order to save time and to take advantage of the factual information assembled by the Board's staff and for a subsequent meeting with the Board so that the studies by the legislative committee and the Board could be correlated in the interest of reaching a decision promptly on an acceptable program. The members of the Board concurred in the Procedure agreed upon by the Presidents and it was understood that such procedure would be followed. Messrs. Bethea, Carpenter, Clayton, Thurston, Wyatt and Dreibelbis then left the room and the meeting went into executive session for the purpose of discussing the steps that might be taken by the Government to ease any shock on the American markets resulting from a major armed conflict abroad. Assistant Secretary. Chairman.
@FedFRASER