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83 held in the office of the A meeting of the Federal Reserve Board was a.m. Governor on 'Monday, August 13, 1928 at 11:00 PRESENT: Governor Young Mr. Platt Mr. Miller Mr. James Mr. McIntosh Mr. Eddy, Secretary Er. McClelland, Asst. Secretary the Federal Reserve Letter datea August 9th from the Secretary of the Secretary of the Bank of New York, telegram dated August 10th from aated August 10th from the Federal Reserve Bank of Cleveland, telegram ta and telegram dated August Chairman of the Federal Reserve Bank of Atlan City, all ad9th from the Chairman of the Federal Reserve Bank of Kansas meetings on tne dates stated made vising that their boards of directors at unt and purchase. no changes in the banks' existing schedules of rates of disco Without objection, noted with approval. the Federal Reserve Letter dated August 9th from the Chairman of the rediscount rate of the Bank of Chicago, advising that on July 11th when bank was increased irom 4 l/2,0 to 5 a similar increase was made in the ities under resale aErreement. bank's rate for purchases of government secur Without objection, noted with approval. ditures on letters Reports of Committee on Salaries and Expen man of the Federal Reserve gated August 7th and August 9th from the Chair lists Of employees Banks of Dallas and Rilhmond, respectively, transmitting ved leaves of absence with pay on for whom the directors of the banks appro July, where che total of such absences account of illness during the month of the Board's Committee recommending since January 1, 1928 exceeds thirty days; -2- 8/13/28 approval of the salary payments involved. Approved. Federal Reserve Bank Letter dated August 10th from the Chairman of the like a leave Of New York, advising that, if agreeable to the Board, he would to attend the of absence from September 12th to October 12th to enable him Fall meeting of the General Council of the Reichsbank. Approved. al Reserve Agent at Letter dated August 9th from the Assistant Feder Bank of United States, a memNew York, advising of a proposed merger of the New York City. ber bank, and the Cosmopolitan Bank, a non-member, both of Noted. ve Agent at Richmond, Letter dated August 9th from the Federal Reser Royal, Va. has had an aavising that the Front Royal National Bank, Front computation period during average deficiency in reserves for each reserve of the Comptroller six consecutive months; the Agent stating that the office be done to rehabiliOf the Currency is, in his opinion, doing as mach as can take no action beyond calling tate the bank and recommending that the Board the attention of the Comptroller to his letter. Federal Upon motion, the recommendation of the Reserve Agent was approved. the Federal Reserve Letter dated August 11th from the Chairman of of a resolution adopted by the Bank of Atlanta, transmitting certified copy 10th, requesting that the Fedboard of directors at its meeting on August of Atlanta and its Braneral Reserve Board permit the Federal Reserve Bank ille and New Orleans to discontinue ches at Birmingham, Jacksonville, Nashv 85 -3- 0/13/28 the collection of noncash items. expressed the opinion Discussion then ensued during which the Governor d not be taken up for conthat the resolution of the Atlanta directors shoul and he suggested that in the sideration except at a meeting of the full Board the bank, inquiring whether meantime a letter be addressed to the Chairman of sh items, or whether the bank the resolution intentionally covered all nonca intends to continue the handling of coupons. was Upon motion, the suggestion of the Governor red defer was r matte approved and action on the above accordingly. ve Board held on July The minutes of the meeting of the Federal Reser 30th were read and approved. Committee held on August The minutes of the meetings of the Executive ded therein were 3rd and 9th were read and, upon motion, the actions recor ratified. ed by the Board at its meetMr. Platt referred to the resolution adopt er of the Board, for a ing on July 18th, authorizing the executive offic rate of 5 per cent established period of thirty days, to approve a rediscount by any Federal Reserve bank. authority Upon motion by him, it was voted that the Board. the by ed in question be effective until revok tary read, a proposed circular Mr. Miller then submitted, and the Secre t "Special rates on seasonal letter to all Federal Reserve banks on the subjec seasonal crop marketing paper and crop marketing paper"; the letter defining s ready to approve a rediscount advising that the Federal Reserve Board stand cent to one per cent below the rate rate on such paper of from 1/2 of one per 86 -4- 8/13/28 re on other classes of paper, with a view of adjusting the present rate structu SO as to facilitate seasonal accommodation to commerce and business. that he is in Discussion then ensued during which Mr. James stated by Mr. Miller's hearty sympathy with the result sought to be accomplished suggest that this result suggestion but that in lieu thereof he wished to Reserve banks could be better obtained if the Board would advise the Federal nces and that it stands ready to approve buying rates for bankers accepta cent to one per trade bills, regardless of origin, from one-half of one per cent below the rate for other classes of paper. Mr. James stated his belief System. that that should be the method of action by the Federal Reserve Following the discussion, it was voted that the ed suggestions of Mr. Miller and Mr. James be discuss is which ee Committ ent Investm with the Open Market now in session. stated that he had The Governor left the room and upon his return ee and that the Committee would submitted the two suggestions to the Committ like to meet with the Board this afternoon. ned in the Board At 12:20 p.m. the meeting recessed, and reconve as attended the morning room at 2:30 p.m., the same members being present Harrison, Norris, Fancher and session and, in addition, Messrs. Harding, Committee, Mr. Burgess, Acting McKay, members of the Open Market Investment Director of the Board's Division Secretary of the Committee, Mr. Goldenweiser, the Division of Bank OperaOf Research and Statistics and Mr. Smead, Chief of tions. ee, presented a memMr. Harrison, Acting Chairman of the Committ lath which had been submittea to orandum on credit conditions dated August and considered by the Committee. c-11-4 (, S/l3/28 y the sugHe then reported that the Committee had considered briefl by Mr. Liller and gestions made at the meeting of the Board this morning nal crop Mr. James for the establishment of preferential rates on "Seaso bills, respectively. marketing paper" and bankers acceptances and trade Harding, felt He stated that the Committee, with the exception of Governor probably not acthat preferential rates on special classes of paper would feels that the question complish what is desired and that the Committee tiously and reasonably involves whether the season's crops can be moved expedi be dealt the bigger question of the whole credit structure and will have to ential rates With through open market operations rather than through prefer on commodity paper. reHe expressed the opinion of the Committee that to g of a vast volume duce the bill rates would undoubtedly result in the dumpin have the Of acceptances on the Federal Aeserve banks, which tnouga it might work of many years in effect of easing the credit situation would undo the developing a bill market. as He then presented the report of the Committee follows: of its "The policy recommended by the committee in most unduly t preven meetings since January, has been to check or uank credit. rapid or unnecessary increase in the volume of of reporting ments While the total volume of loans and invest at the law was it member banks is now considerauly above what y 0300,000,000 imatel approx point in iebruary, nevertheless, it is member that ce eviden is below the high point of May, and there ings borrow their reduce to s banks are making continued effort at Federal Heserve Banks. necessitate The Committee does not believe that conditions It is of the . System the by an immediate purchase of securities g, an exmeetin last its at out d opinion, however, that as pointe pressure resulting tended period of high money rates and heavy be wholesome and not would banks from large borrowings by member approaching fall that there are some indications that with the necessary to take or le possib be soon demands for credit it may 88 -6- 8/13/28 "steps looking toward the reduction, or at least the avoidance of the necessity of any substantial increase in the volume of member bank discounts. Yith these facts in view and realizing that if and when the time arrives undue delay may be hurtful to the situation, the Committee recommends that it should be the policy of the System to purchase securities whenever that should become necessary to avoid undue credit stringency. The Committee would expect to take such steps as may be needed to carry out this policy, if approved, believing, however, that it might be advisable to have another meeting of the Committee to review the effect of any steps that may be taken in pursuance of this policy." A detailed discussion of the report ensued, during whieh Mr. Harrison stressed the fact that the Committee's recommendation for the purchase of securisecurities is intended to cover only an emergency situation and that ties would be purchased only as a last resort if a dangerously tight money n through situation should arise despite efforts to prevent such a situatio Purchases of acceptances, exchange operations and otherwise. Upon inquiry by the Governor, the other members of the Committee confirmed Mr. Harrison's statement that their recomonly mendation contemplated purchases of government securities n. situatio as a last resort in an emergency ...B.POATS OF STANDING OOMMITTaia: deserve banks Dated, August 10th, Recommending changes in stock at Federal of this date. Book Minute y Auxiliar the in 11th, as set forth Aecommendations approved. fiduciary powers Dated, August 9th, Aecommending action on applications for of this date. Book y Minute Auxiliar the in forth as set 13th, Aecommendations approved. William Dated, August 7th, Aecommending approval of the application of Mr. F. Garcelon for permission to serve at the same time as director of the United States Trust Company, Boston, Mass., and as director of the Newton National Bank, Newton, Mass. Recommendation approved. approval of the application of Mr. Wynant D. ding Aecommen 7th, Dated, August Vanderpool for permission to serve at the same time as director of the National Newark and Essex Banking Company, Newark, N. J., and as officer and director of the Morristown Trust Company, Morristown, N. J. Recommendation approved. r-, 8/13/28 • -7- PORTS OF STANDING COMMITTEES: (Cont'd) Recommending approval of the application of Er. Albert Graham for permission to serve at the same time as director of the First National Bank, Crafton, Pa., and as officer and director of the West End Savings Bank and Trust Company, Pittsburgh, Pa. Recommendation approved. of Mr. Tom M. Dated, August 9th, Recommending approval of the application time as same the at serve to Girdler for permission Pa., urgh, Pittsb Bank, l Nationa director of the Union New of y Compan Trust ble Equita and as trustee of the York, New York. Recommendation approved. ation of Yr. T. C. Dated, August 9th, Recommending approval of the applic same time as dithe at serve to ion permiss Erwin for Southern National and ns Citize the of r rector and office Bank, Savannah, Ga., and as director of the First Nation al Bank, Marietta, Ga. Recommendatima approved. ation of Mr. T. A. Dated, August 10th, Recommending approval of the applic time Wright, Jr., for permission to serve at the same Tenn., lle, as director of the City National Bank, Knoxvi od, Rockwo as director of the First National Bank of y, Tenn., and as director of the Bankers Trust Compan Knoxville, Tenn. Recommendation approved. ending approval of the appli tion of Mr. S. D. Recomm Dated, August 10th, time as diDimmick for permission to serve a the same Pa., and oke, Nantic rector of the First National Ba y, Compan as director of the Dime Bank-Lin ln Trust Scranton, Pa. Recommendation approved Dated, August 7th, e meeting adjourned at 4: Secretary. Approved: acol Govern()
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