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11 :j11 1, kJ'kJ A meeting of the iederal Reserve Board was held in the office of the Federal Reserve Board on dednesday, Augast 7, 1929, at 11:00 a.m. PRESENT: PRESENT ALSO: Governor Young Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Pole Mr. McClelland, Assistant Secretary Governor Harding, Federal Reserve Bank of Boston. Governor Harrison, Federal Reserve Bank of NOW York. Governor Norris, Federal Reserve Bank of Philadelphia. Governor Fancher, Federal Reserve Bank of Cleveland. Governor Seay, Federal Reserve Bank of Richmond. Governor Black, Federal Reserve Bank of Atlanta. Deputy Governor McKay, Federal Reserve Bank of Chicago. Governor Martin, Federal Reserve Bank of St. Louis. Governor Geery, Federal Reserve Bank of Minneapolis, Governor Bailey, Federal Reserve Bank of Kansas City. Governor Talley, Federal Reserve Bank of Dallas. Governor Calkins, Federal Reserve Bank of San Francisco. Mr. H. F. Strater, Acting Secretary for Governors. Dr. Goldenweiser, Director of the Division of Reasearch and Statistics. The Governor advised the conference of discussions during the past several days regarding the present credit situation and possible courses of System policy in dealing with the Fall credit requirements. He stated that the following suggestions have been made on which the Board would like to have the views of the Governors as to effects in their districts, as well as any other suggestions • they might care to make. k'(). Li c,1 -2- 8/7/29 1. That the System do nothing, taking care of seasonal requirements through rediscounts or purchases of bills as offered. 2. That the System ease the situation by reducing the bill rate to a point where it will accumulate bills and, at least, maintain rediscounts where they are. 3. That the System ease the situation through the purchase of Government securities if it feels that the acquisition of bills is not proceeding or will not proceed quickly enough. 4. That the System lower the bill rate, accumulate bills, and also purchase Government securities, raising the rediscount rate, not at the moment, but later if the open market operations should invite speculative demand for credit to any great extent. 5. That the System raise the rediscount rate in the larger centers, simultaneously reducing the bill rate and possibly going so far as to buy some Government securities, thus building up the bill portfolio and reducing the large line of rediscounts. ve banks expressed their individual The Governors of the several Federal reser led to them, and the effects of that plan opinions as to the plan which most appea in their respective districts. of the Federal Reserve Bank All of the Governors, except Governor Harrison not favor an increase in their own of New York, reported that their banks would have the effect of raising the level rates of discount because such action would seasonal requirements. of commercial rates in the face of the All except three, n, were of the opinion that some action however, Messrs. Seay, 1,:cKay and Marti the situation in connection with should be taken, if it could be safely, to ease 111 the Fall credit requirements. y then ensued. A general discussion as to the best System polic -3- 8/7/29 reconvened at 2:45 p.m. At 1:30 p.m. the meeting recessed and n having hinged upon the question The discussion at the morning sessio of the Federal Aeserve Bank of New York, of an increase in the rediscount rate minimum buying rate for acceptances, the with a simultaneous reduction in the express themselves on that point. various Governors were requested to . Harding, Harrison, Norris, Eight of the Governors, namely, Messrs as favoring Fancher, Geery, Bailey, Talley and Calkins, expressed themselves and Martin opsuch action by the New York Bank, while Governors Seay, Black f. s posed it, and Deputy Governor McKay of Chicago, did not expres himsel New On the question whether an increase in the discount rate of the cts, nine of the York Bank would force a rate increase in their own distri seen developments, Governors expressed the opinion, that except for unfore per cent, at least for their banks could maintain existing rates of five se in the rate of the Fedsome time, with the understanding that the increa by a reduction in the bill eral Reserve Bank of New York would be accompanied rate and purchases of acceptances. a, Deputy GovGovernor Black of the Federal Reserve Bank of Atlant and Governor Martin of ernor McKay of the Federal Reserve Bank of Chicago, opinion that the effect the Federal deserve Bank of St. Louis, expressed the cts would be to force a of an increase in the New York rate in their distri prompt increase in the rates of their awn banks. se in the rate Mr. Hamlin expressed himself as favoring an increa ease, while Messrs. James and of the New York Bank as part of a program of increase. Cunningham expressed opposition to any rate 8/7/29 Mr. Miller stated that he was disposed to go along with the program provided there is a firm undertaking by the other reserve banks that they will hold to their present rates unless there should be unusual developments not now foreseen. He expressed the opinion that a six per cent rate could be justified in New York, but when it became the governing factor in the fixing of the discount rates in other districts, to him it had insurmountable objections. At 5:15 the meetinfr adjourned with the understanding that separate meetings of the Board and the Governors would be held at 10:00 o'clock tomorrow morning to be followed by a joint meeting. 6V/e(0 Assistant Secretary. Approved:
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