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916 t a meeting of the Lxecutive Committee of the Federal Reserve Board held in the office of the Board on Thursday, December 11, 1919, at 11 Pali=T: The Governor Mr. Liller Mr. Mr. Chapman, Secretary. Business was presented and disposed of as follows: Letter dated December 10th from Frank R. Killingsworth, L:essenger on the Board's staff, submitting his resignation to become effective at the pleasure of the Board. Voted to accept, effective at close of business December 11, 1919. The Governor read a letter addressed to him under date of December 10, 1919, by assistant J,ecretary of the Treasury -effingwell, containin a statement as to the status of the Treasury's financial operations, and advising that he did not wish the viev.s expressed in his letter of rovember ...9th addressed to the Beard to stand in the way of any action which the Federal heserve Board might now desire to take. The Governor stated that he had addressed to all Federal lieserve banks under date of December luth, telegrams as follows: :;trong rew York. Board believes that in order to discourage speculation and check loan expansion, it is necessary to use discriminating judgment in making discounts and advancements as provided in section Four, and to have member banks understand that resources of system are 9:17 -2not unlimited. Board realizes, however, that'advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory notes. Maintenance of four and one-half percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates but on the contrary offers inducement to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and one-quarter percent rate on four and onequarter percent certificates. In bringing these facts to your attention Board desires to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificates and abolition of the one-quarter percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. Morse - Boston. Passmore - Philadelphia. Wellborn - Atlanta. Miller - Kansas City. McDougal - Chicago. Board believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in Jection Four, and to have member banks understand that resources of system are not unlimited. Board realizes, however, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory notes. Maintenance of four and onehalf percent rate on Treasury certificates seems'necessary to insure success of future certificate issues, but -3-maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates but on the contrary offers inducement to distribute certificates among taxpayers and other investors. Treasury does not ask continuance of four and one-quarter percent rate on four and onequarter percent certificates. In bringing these facts to your attention Board desires to say that if conditions in your district are such aa to render desirable four and one-half percent rate on all certificates, and abolition of the one-quarter percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. Fancher - Cleveland. Board believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in section 4, and to have member banks understand that resources of system are not unlimited. Board realizes, however, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory $ notes. Laintenance of four and one-half percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates but on the contrary offers inducements to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and ono-quarter percent rate on four and one-quarter percent certificates. In bringing these facts to your attention Board desireb to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificate paper, Board is prepared to approve such change. In making your recommendation you should consider effect of any proposed changes on market price of Liberty bonds and Victory notes. 91.9 -4Jeay Liehmond. Board believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in section Four, and to have member banks understand that resources of system are not unlimited. Board realizes, however, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of'preferential rates in favor of paper secured by Liberty bonds and Victory notes. Maintenance of four and one-half percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates, but on the contrary offers inducement to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and one-quarter percent rate on four and one-quarter percent certificates. In bringing these facts to your attention Board desires to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificates and abolition of the one-quarter Percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. Board culls attention to the fact that you have still maintained four and one-half percent rate on member banks fifteen day collateral notes secured by eligible commercial paper as against four and three quarters percent rate for all other maturities. This difference in favor of fifteen day paper has led to abuses in other districts and should you recommend discontinuance Board would approve. Biggs - St. Louis. Board believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in L;ection Four, and to have member banks understand that resources of system are not unlimited. Board realizes, however, that advances in rates constitute an important element in making member banks and their customers understand need of such 920 -5discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory notes. Maintenance of four and one-half percent rate on Treasury certificates seams necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of 01.panSiOn as that rate affords not profit to banks carrying certificates but on the contrary offers inducement to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and one-quarter percent rate on four and one-quarter percent certificates. In bringing these facts to your attention, Board desires to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificates and abolition of the one-quarter percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. Board calls attention to the fact that you still maintain four and one-half percent rate on fifteen day member bank collateral notes and on fifteen day rediscounts of eligible commercial paper against four and three quarters percent rate for all other maturities. This difference in favor of fifteen day paper has led to abuses in other districts, and should you recommend discontinuance Board would approve. Young - Minneapolis. Board believes that in order to discourage speculation and chuck loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in section Four, and to have member banks understand that resources of system are not unlimited. Board realizes, how- over, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory notes. 2,1aintenance of four and one-half percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate invelves no great danger of expansion as that rata affords no profit to banks carrying certificates but on the contrary offers inducement to distribute certificates Y21 -6among taxpayers and other private investors. Treasury does noc ask continuance of four and one-quarter percent rate an four and one-quarter percent certificates. In bringing these facts to your attention Board desires to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificates and abolition of the one-quarter percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. Board calls attention to fact that you still maintain four and onehalf percent rate on member banks fifteen day notes and fifteen day rediscounts secured by eligible commercial paper as against four and three quarters and five percent rate for all other maturities. This difference in favor of fifteen day paper has led to abuses in other districts and should you see fit to recommend discontinuance Board would approve. VanZandt - Dallas. Board believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in section dour, and to have member banks understand that resources of system are not unlimited. Board realizes, how(war, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victor.; notes. Maintenance of four and one-half percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates but on the contrary offers inducement to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and one-quarter percent rate an four and one quarter percent certificates. In bringing these facts to your attention Board desires to say that if conditions in your district are such as to render desirable four and one-half percent rate on all certificates and abolition of the one-half percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve such changes. -; 922 -7Calkins - an Francisco. 3oard believes that in order to discourage speculation and check loan expansion it is necessary to use discriminating judgment in making discounts and advancements as provided in 6ection Four, and to have member banks understand that resources of system are not unlimited. Board realizes, however, that advances in rates constitute an important element in making member banks and their customers understand need of such discrimination and limitation. Treasury position at present is sufficiently favorable as to warrant abolition of preferential rates in favor of paper secured by Liberty bonds and Victory notes. Llaintenance of four and mehalf percent rate on Treasury certificates seems necessary to insure success of future certificate issues, but maintenance of this rate involves no great danger of expansion as that rate affords no profit to banks carrying certificates but on the contrary offers inducement to distribute certificates among taxpayers and other private investors. Treasury does not ask continuance of four and one-quarter percent rate on four and one-quarter percent certificates. Board brings these facts to your attention and if condition in your district render desirable four and one-half percent rate on all certificates and discontinuance of the one-quarter percent differential in favor of rediscounts and advances secured by Liberty bonds and Victory notes, Board is prepared to approve changes. Board calls attention to fact that you still maintain four and one-half percent rate on fifteen day member banks collateral notes and fifteen-day rediscounts secured by eligible commercial paper as against five percent rate for all other maturities. This difference in favor of fifteen day paper has led to abuses in other districts, and should you see fit to recommend discontinuance, Board would approve. In making your recommendation you should consider effect of any proposed changes on market price of Liberty bonds and Victory notes. Telegram dated December 11th from the Federal Reserve Bank of New York in response to the Board's telegram of December 10th, recommending apt)roval. of the following rates, effective at the pleasure of the Bank; -8Advances .not exceeding 15 days to member banks on their promissory notes sedlared by certificates of indebtedness 4-1/4 same, secured by Liberty bonds, Victory notes and customers notes secured by either Liberty bonds or Victory notes Same, secured by eligible commercial paper 4-3/45 'Totes, drafts and bills of exchange having maturity at time of rediscount of not more than 90 days including rediscounts, for periods not exceeding 15 days, of eligible paper having maturity at time of rediscount of more than 15 days 4-3/4% rotes, drafts and bills of exchange having maturity not in excess of 90 days secured by Liberty bonds or Victory notes 4-3/45 Trade acceptances and bankers' acceptances having maturity at time of rediscount of not ... 4-1/27, more than 90 days Agricultural paper having maturity at time Of rediscount of more than 90 days but not more than six months Approved. Telegram dated December 11th from the Federal Reserve Bank of Richmond in response to the Board's telegram of December 10th, recommending approval of the following rates, effective December 15th: Member banks collateral notes and customers notes secured only by U.S.Treasury certificates, one to 90 days Member banks collateral notes .and customers notes secured by Liberty bonds or Victory notes, 4-3/45 one to 90 days . 924 -9_ Member banks collateral notes and customers notes secured by 4ar finance Corporation bonds, one a 5-3A: to 90 days Member banks collateral notes secured by eligible paper, one to 15 days Trade acceptances, one to 90 days 4-1/2:; Cornmercial paper one to 90 days 4-6/4:1 ricultural or livestock paper, one to 90 days 5; 91 days to six months Approved. (At this point Mr. Harrison joined the meeting) Mr. Harrison read to the 3oard, dn.:ft of letter propared by him under date of December 11th for signature by the Governor, addressed to the $candinavian-American Bank of .-Jeattle, 4ashington, cancelling the membership of that institution in the federal Reserve Bank of an Francisco. Voted to approve the latter as submitted. Voted further, that the Governor telegraph Mr. Perrin, advising of the forwarding of the 'otter to be delivered to the member bank, unleas new facts or circumstances develop at the conference to be held with representatives of the member bank on December 14th wich should appear to Mr. Perrin to justify an extension of the period for cancellation of membership.. (At this point Mr. Harrison withdrew from the meeting). 925 -1u.nutter dated December 6th from the Governor, Federal Reserve Bank of an Francisco, requesting that the Assistant Treasurer at San Francisco be instructed to cease le paying out .;A and 41U gold pieces wherever it is possib to pay out ;,;20 gold pieces in lieu thereof. Referred to the Governor for transmission to proper authorities of the Treasury Department. the On motion duly seconded, it was voted that of the Governor be authorized to make public a statement ity to Board's policy in withholding at this time, author of new Federal Reserve banks to engage in the erection bank buildings. l Letter dated December 9th from Assistant Federa . . j.-serve Agent revin at Cleveland, in response to the Board's the Guardian letter of :,ovember 19th (1728) advising that Trust Company and the Cleveland Trust Company, in both of Cleveland, Ohio, due to a change in their policy ered as soliciting commercial business, may now be consid . in'substantial competition with national banks. bein;, Referred to General Counsel for report on permissions granted under the terms of the Clayton Act affecting directors of the institutions named. 9r)6 -11- Letter dated December 8th from the Governor, Federal Reserve Bank of rew York, submitting for approval, schedule of recommendations of salaries of officers and employees of that Bank, effective January 1, 1920. Referred to la*. Paddock for report. Letter dated December 8th from Consulting Architect TrcAbridge, submitting expense accounts of himself and Mr. Ten Lyck, incident to conference on vault testing. Referred to the ,iocretary for report. Report of discount rates at the various Federal Reserve banks; no changes recommended. 'noted. The Governor reported rediscount transactions, pursuant to authority heretofore vested in him; member bank promissory notes secured by Government obligations, rate 4-1/2,S,as follows: Date Dec.8th Bank Rediscounting. Philadelphia Philadelphia roted. With Chicago Dallas Amount 4.1,000,000 5,000,000 Maturities 11-15 days .T -12Letter dated December 8th from the Federal Reserve Agent at Philadelphia, re4uesting approval of the payment of additional compensation to the employees of his department for the current period upon the same basis as paid to the employees of the Federal Reserve Bank of Philadelphia. Approved. Letter dated December 6th from the Federal Reserve ng schedule Agent at Boston, submitting for approval the followi of extra compensation to be paid to employees of that Bank, for the sb month period ending December 31, 1919: 4(); on compensation under 4500. and under 41,000. ? 30 on compensation of '5UU 210 on compensation of $1,000 and under 42,500. Approved. Memorandum by 1.1r. Paddock dated December 9th, recommending approval of organization chart of the Federal Reserve Bank of Philadelphia. Tabled for meeting of the Board to be held on Friday, December 12th. REP0RT6 OF COM2iITT4S NO. 1: ReDated Dec. 10th, recommending changes in stock at Federal ry minute auxilia in serve banks as set forth book as of this date. Approved. Dated Dec. 10th, recommending action on applications for fiduciary powers, as sot forth in auxiliary minute book as of this date. Approved. 928 -13Cn motion duly seconded it was voted that at the meeting of the Board to be held at. 11 on Wednesday, De- cember 17th, special order business be made of the questions of election of Class C director of Federal Reserve banks and directors of branches of Federal Reserve banks appointed by the Federal Reserve Board, whose terms expire on December 61, 1919, and increasss of salaries of officers and employees of the Federal Reserve Board and Federal Reserve banks. Letter dated December 9th from the Chairman, Federal Reserve Bank of St. Louis, advising that the County of Humphreys, Ilississippi, has been created by assigning to such county, territory heretofore lying within 7umu, Sunflower and Washington Counties (now assigned to the Eighth Federal Leserve District), and Sharkey and Yazoo Counties (now assigned to the Sixth Federal Reserve District), and requesting advice as to what steps should be taken with respect to the assignment of the newly created county. Referred to the ;,:cutury for report. Memorandum by 1.1r. l'addock dated December 10th, in re application of the First rational:Bank, Emporium, PeLnsylotania, for fiduciary powers. Referred to the committee for report. -14At 12-30 P.M., the meeting adjourned. • proved;
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