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4 meeting of the Federal Reserve Board was held in the office of the 44eral Reserve Board on 2londay, April 23, 1928 at 12:20 p.m. PAESEI:T: (2%overnor Young Mr. Platt Mr. Hamlin Mr. Miller Er. James Mr. Noah, Asst. Secretary Mr. 11cClelland, Asst. Secretary Telegram dated Aril 23rd from the Chairman of the Federal eserve °f Richmond, advising that the board of directors of that bank today Voted. to establish a rediscount rate of 4 l/2:0 on all classes of paper of 44 ma tu rities, effective the first business day following that on which approv ed by the Federal Reserve Board. The Governor stated that upon receipt of the above telegram he com4141Qatad with the Federal Reserve Bank of Richmond and requested that the C14.1Aurnm 4 and Governor of the bank furnish the Board with a statement of the 11480,4 8 actuating the directors in taking the action reported. He stated that he e xpected telegraphic reply sh.ortly. 4 detailed discussion then ensued with respect to the general credit 4ituatt °II awl the nossible effects thereon of the discount and open market Na4iv which is being pursued by the Federal Reserve System. 011rin : 40ver the discussion, the following telegram from the Chaimman and r Of the Richmond bank was received and read to the Board: "1:la resolution adopted by our directors at their last meeting with respect to discount rate, sent to you immediately after meeting, expressed the conviction that the investment securities the Federal Reserve System should be sold to check the unestrained inflation of creait and directed the sale of the In— ; vestment securities of this bank. The further conviction was that unless this inflation .vas decisively checked, it expressed: w -111d be necessary to raise the discnunt rate. Since that action (35 4/4/28 -2- "a marked increase in the employment of credit has taken Place, nationally and locally, and we therefore feel that further restraint should be exercised in the way of increase in the discount rate of this bank. It is manifest that funds continue to flow from the interior to the New York market for employment on call, and we believe they are flowing from this district as well as from most other districts. Attention is very widely being diverted from business to speculation and the absorption of credit to an unexampled degree calls for the further restraint in the rise of the discount rate. While we have no direct Proof of the employment of funds borrowed from us on the cell market we have reason to conclude that employment in that direction has taken place in this district. iO know that speculation is rampant in this district as elsewhere end that mOre and more funds are being absorbed for this purpose. Some of our directors who were hesitant to initiate the raise of rates at our last meeting now believe it logical in view of action taken by other Federal deserve Banks. The amount of our bills discounted and purchased Will today be about 56 million dollars and our reserve ratio is expected to be about 60.fl . Thereupon Mr. Platt moved approval of the rediscount rate of 4 1/2,0 fixed by the directors of the Federal aeserve Bank of -dchmond for all classes Of paper of all maturities, effective tomorrow, April 24th. Carried. The GONI, erior then submitted draft of a letter to the Secretary of the ?0,1 Aerai ViSOry 14R . 0 4 the Council, submitting topics for discussion at the next meet- °tine il which will be held here on May 16th. pon motion, the letter was approved. he meeting adjourned t 1 p.m. Assistant :3ecretary. or.
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