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1197 A. meeting of the Board of Governors of the Federal Reserve Syst-til was held in Washington on Friday, August 27, 1937, at 10:30 a. m. PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Davis Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Paulo.er, Chief of the Division of Examinations Mr. Parry, Chief of the Division of Security Loans Mr. Thomas, Assistant Director of the Division of Research and Statistics Mr. Van Fossen, Assistant Chief of the Division of Bank Operations Mr. Ransom stated for the information of the other members of the 'oard that President Harrison of the Federal Reserve Bank of New called him on the telephone this morning and advised that yesterciltiafternoon the Guaranty Trust Company of New York and the Chase Natl°111 Bank of New York had reported to the Federal Reserve Bank that they had been lending to The Yokahama Specie Bank, Limited, Yokahama, ' s-49 (which institution handles financial transactions for the Japanese qover 4Ment) on the security of Governments and gold. The Guaranty Trust Cotap e'laY had advised Mr. Harrison, Mr. Ransom stated, that the London betik s' which had been making similar advances to The Yokahama Specie IrLk T 'imited, had informed the Guaranty Trust Company that they had clise (331tinued such transactions on the security of gold but were con'n i? to lend on Governments. Mr. Ransom also said that Mr. Harriile'd stated during his conversation that the two New York banks 1128 8/27/37 had advised that they proposed to continue to make advances to the 1.°433.ama Specie Bank on both kinds of collateral, that they had called 414 (Mr. Harrison) for the reason that they wanted the Reserve Bank to be advised of the situation, that there had been a feeling that the 4"e Department in Washington should be advised, and that he (Mr. 8°n) had therefor called Mr. Stanley K. Hornbeck, Chief of the " 11 -10n of Far Eastern Affairs of the State Denartment, yesterday and had reported to him the conversations which he had had with the two lork banks. Apparently, Mr. Ransom said, Mr. Hornbeck had no corn- to make regarding the matter. Mr. Ransom then referred to a draft of a letter which was in eirellietion among the members of the Board to Messrs. Kenefick, Cooke, Bass and Letchworth, Attorneys, Buffalo, New York, with reto the question whether member banks in New York may pay interest "ter August 23, 1937 on demand deposits of trust funds. He stated that it did not appear from the correspondence that the firm of att°111 was representing any member bank or had any interest in the (leterm. --illation of the question involved and that he felt that, because C/r the great amount of work and time required to prepare replies to %lest; °118 of this kind, the Board should adopt a policy of declining to Et4Wer questions with respect to the rights of member banks, unless the is received from a member bank or from an attorney representing "af4nb er beuilt, or, when the inquiry is from some other person, there apIleelss to be a satisfactory reason why a reply should be made. The other 1199 8/27/37 -3- 'ellibers present concurred in Mr. Ransom's suggestion. There was presented a telegram dated August 27, 1937, from Mr. 1311,g, Vice President of the Federal Reserve Bank of Chicago, stating that the board of directors of the bank on that date voted to establish, tractive August 21, 1937, a rate of 2% on advances under Section 10(b) "t• he Federal Reserve Act and to establish without change the other l'"as of discount and purchase in the bank's existing schedule. The rate of 2% on advances under Section 10(b) of the Federal Reserve Act, fixed by the board of directors of the Federal Reserve Bank of Chicago, effective August 21, 1937, and the establishment, without change, of the other rates of discount and purchase in the bank's existing schedule, were approved unanimously. Mr. Mee stated that if, during the period he is absent from kshington, any of the remaining Federal reserve banks, which now have Illa• rreet a rate of 2% on rediscounts of eligible paper for member banks rlcildvances to member banks under the provisions of Sections 13 and 13a (It ti• le Federal 'Reserve Act, voted to reduce such rate to l percent, he l'1°Incl be in favor of approval by the Board of the reduced rate. There was also presented a letter to Mr. George L. Harrison, a 04 airman of the Presidents' Conference, reading as follows: "Section 14(d) of the Federal Reserve Act, as amended bY the Banking Act of 1935, requires that the Federal rebanks shall establish rates of discount at least every lour-teen days. The experience of the Board of Governors in °111nection with the approval of the rates established by the ; i edoral reserve banks has convinced the Board that, in the 'flterest of a more expeditious and efficient administration the law, it is desirable that biweekly meetings of the uc3ards of directors of all Federal reserve banks be held Or uniform dates. "It will be appreciated if you will place this subject °11 the pro6.7ram for discussion at the next Presidents' Con- r 1200 8/27/37 -4- "ference and request the President of each Federal reserve bank to discuss the matter with the directors of his bank Prior to the Conference, with a view to reaching an agreement, if possible, on uniform dates for such meetings every fourteen days." Approved unanimously. At this point Messrs. Thurston, Wyatt, Paulcl.er, Parry, Thomas 11171(11/411 Fossen left the meeting and consideration was then given to each or th sPact a matters hereinafter referred to and the action stated with rethereto was taken by the Board: The minutes of the meeting of the Board of Governors of the Fed- eral Reserve Systell held on August 26, 1937, were approved unanimously. Telegram to Mr. Newton, President of the Federal Reserve Bank "Ati nta, stating that the Board approves the establishment without el144e by the bank today of the rates of discount and purchase in its °1-8ting schedule. Approved unanimously. Letter to Mr. Powell, Secretary of the Federal Reserve Bank of Mir 4eaPo1i5, reading as follows: "Reference is made to your telegram of August 23, 1937, Which you advised the Board of Governors of the action Your executive committee in establishing rates of 1W° and , 2/0 on rediscounts of eligible paper for member banks and eklvances to member banks under Sections 13 and 13(a), and 11 advances to member banks under Section 10(b), respectively, Etnd to the Board's telegraphic reply to you of the same date 113Proving the establishment of such rates effective August 24. "It is assumed that your executive committee at the rfle time established, without change, the other rates of t cilacount and purchase in your existing schedule, which aeon is approved by the Board of Governors." in Approved unanimously. Memorandum dated August 23, 1937, from Mr. Woodlief Thomas, Asst ant Director of the Division of Research and Statistics, recam- 1201 8/27/37 -5- ericling the appointment on a temporary basis for a period of three 14°11ths of Miss Muriel G. Webb as a clerk in the Division, with salary "the rate of Te120 per month, effective as of the date upon which she elite "upon the performance of her duties. Approved unanimously. Letter to Mr. Leo Crowley, Chairman of the Federal Deposit 1141 ' ance Corporation, reading as follows: "As requested in your letter of August 20, 1937, the Board of Governors of the Federal Reserve System hereby grants written consent, in accordance with the provisions 0D subsection (k)(2) of section 12B of the Federal Reserve Act, for examiners for the Federal Deposit Insurance CorPoration to examine the affairs of the 'Perth Amboy Trust C°111PanY', Perth Amboy, New Jersey, in order that your CorPoration may obtain information relative to the progress lade in eliminating or adequately adjusting the unsafe and Unsound practices for which the bank was cited under date ?! April 29, 1937, by your Corporation under the provisions subsection (i)(1) of section 12B of the Federal Reserve Act. "In your letter it was stated that the statutory period or 120 days allowed the bank in which to effect the required ecrrections expires on August 27, 1937. Your attention, howis called to the Board's letter of May 5, 1937, to 4.1-is Perth Amboy Trust Company, a copy of which was forwarded ° Your Corporation, in which the trust company was advised !hat the Board of Governors had fixed the period ending siptember 2, 1937, 120 days from the date of the Board's , et ter to the trust company, as the time within which the ' csired corrections should be effected. is suggested that the Federal Reserve Bank of New t°1‘tc be advised regarding your plans for the examination of 11111e State member bank in order that the Federal Reserve Bank IIIRY be kept informed as to developments in the situation and arrange to participate in the examination if it be deemed ad visable:" y , "It Approved unanimously, together with a similar letter to Mr. Crowley with respect to "The Raritan Trust Company of Perth Amboy", Perth Amboy, New Jersey. 1202 8127/37 -6Letter to Mr. Peyton, President of the Federal Reserve Bank of lallneepolis, reading as follows: "In response to your letter of August 19, 1937, you are advised that the Board of Governors of the Federal Reserve System has granted its permission under the provisions of section 14(g) of the Federal Reserve Act for Mr. H. C. Timberlake, Statistician of the Federal 'Reserve Bank of Minto visit the various central and commercial banks in Europe for the purpose of gaining such statistical knowledge as he may be able to absorb while he is in Europe during the months of October and November, 1937, as a representative of the American Legion. "The Board will appreciate receiving a report covering all of the visits which Mr. Timberlake makes to European banks or bankers during his forthcoming trip." Approved unanimously. There was submitted a recommendation, which had been approved the Personnel Committee, that the Board authorize the purchase of a bad, e for the Captain of the Guard, rubber link mats and scrub brushes, ' li 'stscl in purchase orders Nos. 1974, 1976 and 1977, and the purchase allclinstallation'of flat key locks for four corner cupboards, as listed tri '°11cher No. 11492, at a total cost of 082.10. Approved unanimously. Thereupon the meeting adjou Assistant Secretary.
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