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April 7, 1923. MZMORANDUV FOR VICE GOVEUTOR PLATT: The undersigned request that you call a special meeting of the Federal Reserve Board for today, Saturday 7th, 1923, at 11:00 a.m. April Upon the written request of three members of the Federal Reserve Board, a special meeting was held in the office of the Federal Reserve Board on Saturday, 'i1 7th, at 11:00 a.m. 4P1 PSENT: The Chairman, the Secretary of the Trea9ury, :r. Mellon Vice Governor Platt Mr. Hamlin Mr. Miller Mr. Crissinger Yr. Tioyton, Secretary The Chairman read a telegram dated April 6th, from the Chairman of the Federal Reserve Bank of Chicago, advising that the Executive Cormittee of that 1344k had yesterday voted, subject to the review and determination of the Federal Reserve Board, to establish a discount rate of 5% upon paper of all maturities and all classes, and giving the reasons which prompted the said action. After full discussion Mr. Miller moved the following: "It is 1-ie sense of the Federal Reserve Board that Federal Reserve banks which are carrying in portfolio a considerable volume of open market investments should not increase their discount rate under present conditions until they have substantially effected the liquidation of their open market investment q. (1) By selling to the market through the Central Committee, their holdings of short-dated Government securities; (2) By selling to the market as rapidly as conditions warrant their holdings of United States Government notes; and (3) By selling, or else allowing to run off, their holdings of acceptances, and by advancing their buying rates on acceptances. It is further the sense of the Federal Reserve Board that until the degree of dependence of the existing credit structure u90n Federal Reserve bank accommodation can be determined by the course outlined above, the basis of a well-informed discount policy will be lacking, and that the effect. of an advance of discount rate will be psychological. It is furthermore the opinion of the Federal Reserve Board that there is nothing in the immeuiate business and credit situation that requires the advance of discount rates for merely psychological reasons." CNri() 4/7/23 -2Mr. Miller's motion being put by the chair was carried, Mr. Hamlin stating that in his opinion the paragraph referring to the matter of acceptances should be stricken out; and Mr. 131att expressing the view that the 5% rate for Chicago should be approved and that if the Board does not act upon the recommendation at this tine, the matter should be taken up again very shortly. I:r. 7latt further stated that he concurred with the views of Mr. Hamlin with respect to the paragraph referring to the matter of acceptances. Mr. Miller then moved that the recommendation of the Federal Reserve Bank of Chicago conveyed in the telegram above referred to be laid on the table. carried. At this point the secretary of the Preasury withdrew from the M eeting. The Vice Governor stated that in accordance with the action of the Board taken A ril 4th, he had inouired of the Treasury Department if it has 3. Objection to the payment of .)',1,000 by the Federal Reserve Bank of Kansas ' an ei tY to the heirs of the guard who was murdered in Denver while in discharge iS duty, and th.:t he had been informed by the Undersecretary of the Treas11rY that the Treasury Department will not object to such payment. Upon motion of Mr. Hamlin, it was thereupon voted that in view of the report of the Vice Governor as to his interview drith the Undersecretary of the Treasury, the Board offers no objection to the proposed payment of :11,000. Telegram dated April 6th, from the governor of the Federal Reserve Bank .chmond, requesting authority to accept paper with maturity from six to tline months at the current discount rate for all classes of paper, namely, 1-11. Approved, Mr. Platt voting "no". Letter dated April 3rd, from the Chairman of the Federal i)eserve Bank Of -oston, advising that the Board of Directors of that Bank had, subject to the review and determination of the :ederal Reserve Board, voted that, effective 417/23 -3- 11130:a approNT1 by the Federal Reserve Board, the discount rate on agricultural DaPer with maturities in excess of six months and not exceeding nine months shall be 5%, and that the Federal Reserve Board be requested to advise What P"centage of the assets of that bank may be represented by agricultural paper Of different maturities discounted under the provisions of Section 13 (A) of tlie Federal Reserve Act. Upon motion, the discount rate of 5% upon the paper specified was approved, Mr. Cris singer voting "no". //, Proposed circular letter dated April 6th, addressed to the Governors "all Federal Reserve banks on the subject of the "Policy Governing Open Ilarket Purchases by Federal Reserve banks and the Administration Thereof". Approved. Proposed circular letter dated April 6th, addressed to all Federal ileBerYe Agents, subject "Rules Governing Examinations of State MeMber Banks". Approved. At 12:30 p.m. the meeting adjourned. Secretary. Pproyed: Vice GoveY7Tr.
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