Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 25, 1929, Volume 16, Part 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Anaeeting of the Federal Aeserve Board was held in the office of the
hderei Rees
rye Board on Monday, February 25, 1929 at 11:30 a.m.
PRESEKT:

Governor Young
Mr. Platt
Mr. Hamlin
Mr. Miller
Mr. Cunningham
Mr. Eddy, Secretary
Mr. McClelland, Asst. Secretary

The reading of the minutes of the last several meetings of the Board
was dispensed
with.
The Governor reported a telephone conversation with the Governor of the
l'etiaral Reserve Bank of Boston, who stated he is addressing a letter to the
BI°1111(1 questioning the eligibility of member bank 15-day notes secured by goverrInlent obligations as collateral for Federal Reserve notes. He also stated
that n
40vernor Harding has in mind an increase in rate on 15-day collateral
40tee
secured by government obligations, maintaining a 5/0 rate on eligible
PaPer * and
requests that the Board give consideration to the matter.
The Governor then stated that some time ago a group of about forty
8tate b
ankers in Minnesota held a meeting and conceived the idea of a state
°f Llinnesota modeled along the lines of the Federal Reserve Bank. He
etilteci that a later meeting of about ninety bankers and a number of state
leislatore endorsed
the idea.

The bank, he stated, would have a capital of

b°14t 415,000,000 on the basis of a 3:0 capital subscription and would have
reserve
requirements of 710 on time deposits and 10-i; on demand deposits, Which
latter,
'eature the Governor suggested miPiat result in a considerable demand
f°rIlati011a1 charters by good state institutions in Minnesota.
The Governor then presented a letter, dated February 21st, from the




81`;')
2/2544*

-2-

4"ellaor of the
Federal Reserve Bank of Dallas, advising that the Texas legislatilrehas just passed a law which would authorize depositary banks to include
balikers acceptances of institutions having a capital of 4500,000 or more in the
141
"Of collateral to secure public deposits, which should broaden the demand
4rbarik
ers acceptances in Texas.
The Governor stated that the Federal Reserve bank would
Probably be called upon to act as custodian of bills pledged
13W member banks, but that he could see no objection to their
so acting.
The Governor
then reported that Mr. Heath, Federal Reserve Agent at Chicago
?owell, General Counsel of the bank, are in Washington consulting with

the b_ la

rdt

Counsel regarding the proposed consolidation of the Illinois Merchants

On,
--Pany and the Continental National Bank and Trust Company of Chicago,
Which
it
eherter

is expected will take place between March 16th and 18th unier a State

-11u., therefore, involves an application for membership in the System.
After discussion, the Executive Committee of the Board was
authorized to act in the matter on behalf of the Board in the
event that a quorum of the Board is not immediately available
When the application comes up for action.

The Governor
then brought up for consideration the question of the Board's
el51Y to s
R. 323 and again submitted the draft, prepared by Yr. Miller, which

r

clIseed at the meeting of the Board aa February 14th. Yr. Platt submitted,
w4e
°ard discussed, a substitute for the last several pages of the proposed
lettere

Following the discussion, it was understood that Mr. Miller
would revise his draft of the proposed letter and submit same to
the Board at the meeting tomorrow.
The
ector

Governor then presented a memorandum, dated February 25th, from the
the Division of Research and Statistics, submitting page proof of




-1 ()CI
_A.° or
2/25/29

-3-

the Boa-..s
rv Annual Report for the year 1928 with the suggestion that if it is
returaed. ,o

the printer today press copies could be received on Wednesday and

iSt1bu utio, to
the newspapers for publication Saturday morning Larch 2nd, the
114*rt being
submitted to Congress on Friday, March 1st.
Dr. Goldenweiser entered the room and certain
minor changes in the page proof were suggested.
Upon motion, the report was then approved for
submission to Congress on Larch 1st, and for release
to the press on February 27th for publication in the
morning pavers of Larch 2nd.

The Secretary then submitted application of the First National Bank of
Texas, for permission to exercise general fiduciary powers, totether with a
divided report thereon by the Law Committee; Kr. Hamlin recommend.
oval and Mr. Platt expressing the opinion that the institution is too
11411 to

receive fiduciary powers, having a capital of „50,000, surplus of
410
000 and
deposits of only 4100,000.
After discussion, upon motion, the application
was approved, Mr. Platt voting "no".
Letter dated
February 15th from the Secretary of the Federal Reserve
hak of
Ilew York, confirming rates for purchases of acceptances established
°II that
date and quoting the resolution adopted by the board of directors at
44 tee
tille on February 14th with respect to the discount rate of the bank,
follows:

the
"VOTZD, subject to review and determination of
cent.
per
six
of
rate
a
establish
to
Board,
Bsderal deserve
openfor all rediscounts and advances, effective from the
ing of business on February 15, 1929 and until further
undernotice and superseding the existing rate but with the
this
of
standing that this action of the board of directors
Fedthe
by
bank is predicated upon approval or disapproval




9

2h5/29

-4."eral Reserve Board today because in the present circumstances the directors believe it would be unwise
to hold the matter in abeyance."
Noted.

Bank
Telegram dated February 20th from the Chairman of the Federal Reserve
Of Bro
-- 48 9 advising Of the establishment on that date of the following schedule
'

"rates for
purchases of bankers acceptances:
1 to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
Repurchase

4 1/21,'0
4 3/410
5-7;
5 1/4/0
5%

NMI

mip

Without objection, noted with approval.
Reserve Bank
Telogram
dated February 19th from the Chairman of the Federal
(4Q.,
`"41a Francisco, advising of approval by the Executive Committee of the bank
of th_
'1" t ollowing schedule of rates for purchases of bankers acceptances, made
lye on
February

15th:

1 to 45 days
46 to 180 days
Repurchase

5l/8
•••

Without objection, noted with approval.
Letter dated February 21st from the Secretary of the Federal Reserve Bank
°t en
Federal Reserve
4 4-- Y°rIct telegram dated February 20th from the Assistant
Chairman of
al4Lt at ?Iiiladelphia and telegram dated February 21st from the
the
of directors
ecleral Reserve Bank of Chicago, all advising that their boards
Ett mee,.
ge on the dates stated made no changes in the banks' existing schedules
Or mtem
Of

discount and purchase.
Without objection, noted with approval.
,
of the Federal Reserve
"at dated February 21st from the Chairman




2/25/29

-5_

192

Of San Francisco, advising that no meeting of the board of directors was
made
011 that date due to lack of a quorum and, consequently, no change was
14 the ba ,
se.
Luc s existing schedule of rates of discount and purcha
Noted.
from the
Report of Executive Committee on letter dated February 13th
ees
C11141112042 Of the Federal Reserve Bank of Richmond, transmitting list of employ
on
tot whom the directors of that bank authorized leaves of absence with pay,
thirty days; the
c1C1C474144t Of illness, during the month of January in excess of
44Nle Committee recommending approval of the salary payments involved.
Approved.
from the Chairman
The Governor then presented letter dated February 21st

Of the

D
letter of Febru,ederal Reserve Bank of New York, replying to the Board's

"4, 0
t
144. to the boards of directors of all Federal Reserve banks, on the subjec
Oft),
Reserve System.
improper use of the credit facilities of the Federal
letter had
After certain passages of the above
the letter
Board,
the
of
been brought to the attention
was ordered circulated.
Federal Reserve
Letter dated February 13th from the Chairman of the

441c oI

the board of directors
Dallas, transmitting memorandum of action taken by
Of
b that
to membank With respect to the advisability of issuing a general letter

press statement is"1544k8 in the Eleventh District, calling attention to the
Febty
the Board on February 7th and the substance of the special letter of
241 f

rft the Board to the Chairman of the bank; the letter requesting an expres-

"04
bY the Board regarding the matter.




Miller was
After discussion, upon motion, Mr.
draft of
Board
the
to
abmit
requested to prepare and s-

193
2/25/29

-6-

a reply to the above letter.
Letter dated February 16th addressed to thE Secretary by Professor Louis
11° Vihitehead of the College of Business Administration, Syracuse University,
lrig

refuse to rediscount for
"whether or not a Federal Reserve bank may

rs
tlenlber bank if that member bank maintains a large volume of loans to broke
ag4inst the vishes of Federal Reserve authorities".
directed
After discussion, the Secretary was
mit a copy
in replying to the above letter to trans
ment.
state
c
pabli
t
recen
OX' the Board's
liemorandum from Counsel dated February 12th, with reference to the
ClaVt°1i ict
, involving the Ashland National
application of Mr. J. E. Buckingham
131241k

Ashland, Ky., the Paintsville National Bank of Paintsville, Ky., and the

that Mr. Buckingham is
irst "tional Bank of Jenkins, Ky.; Gounsel stating
E°.so s

National Bank of Fleming,
erving as officer and director of the First
and that the
hich also comes within the prohibitions of the Clayton Let

13oard has
nue to serve
no authority to grant a permit authorizing him to conti
411 1,0

ur of the National banks.
stion by the
The Secretary presented a sugge
Bucking1,:r.
e
Law Committee that the Board advis
sever
to
him
ham that it will be necessary for
one of
of
tor
his connection as officer and direc
as memserve
might
the banks, but su .gest that he
banks
the
of
ber of an advisory committee of one
as
serve
to
and receive authority from the Board
.
three
officer and director of the other
approve the ComUpon motion, it was voted to
voting "no".
mittee's suggestion, Yr. Cunningham
Federal Reserve
Letter dated February 21st from the Governor of the
44k
44tile

of membership of the MerDallas, advising that during interruption
the 1;:ercantile
0,Ink and Trust Company of Texas, Dallas, successor to




2/25/29
Nat

thrial Bank, the institution qualified as a nonmember clearing bank, and

inee the Federal Reserve bank could not make advances to it on bills payable
01' rediscounts,
government securities were purchased from it under resale
agreement in order to meet its needs during the period.
Noted, without objection.
?.ITIATS OF STAHDING COLMITTEES:
Dated., February
23rd,
25th,

Recommending changes in stock at Federal Reserve banks
as set forth in the Auxiliary Minute Book of this date.
Recommendations approved.
Dated, February
approval of the application of Mr. Neil
Recommending
19th,
to serve at the same time as ofpermission
Sims, for
Bank, Ft. Smith, Ark.,
National
First
ficer of the
National Balk, HartHartshorne
of
the
and as director
shorne, Okla.
Approved.
1)eted., February
approval of the application of Mr. 3illiam
Recommending
19th,
T. McCaffrey, for permission to serve at the same time
as officer and director of the Union Trust Company,
Y., and as director of the Lyons National
Aochester,
33ated,
FebrUary

19th,

Bank, Lyons, N. Y.
Approved.
Recommending approval of the application of Mr. Harry
L. Machen, for permission to serve at the same time as
officer of the Anglo & London Paris National Bank, San
Francisco, Cal., as director of the First National Bank
in Oakland, Cal., and as director of the First National

Bank, Hanford, Cal.
Approved.
February
approval of the application of Mr. A. V.
Recommending
19th,
Ankeny, for permission to serve at the same time as
director of Tile Bank for Savings in Seattle,
and as director of The Seattle National Bank of Seattle,
7:ash.
Approved.
Latsa
ebrtzary
approval of the application of Mr. H. C.
Recommending
19th,
::.acDonald for permission to serve at the same time as
director of The Bank for Savings in Seattle, ';:ash., and
as director of The Seattle National Bank, Seattle, 7ash.
bate

Pebruar




Approved.
19th, Recommending approval of the application of Mr. J. H.
I:ewberger for permission to serve at the same time as
director of The Bank for 'Savings in Seattle, 7ash.,

2/25/29

siaias

IMPOLiT
'
----.1.21

Dated

424E21.11,O011MITTEES:(Cont e d)

February 19th,

Dated. February 19th,

Dated, February 19th,

Dated,

February 20th,

Seattle,
and as director of The Seattle National Bank,
Wash.
Approved.
Recommending approval of the application of Mr. P. B.
Truax for permission to serve at the same time as director of The Bank for Savings in Seattle, Wash., 4nd
as director of The Seattle National Bank of Seattle,
Wash.
Approved.
Recommending approval of the application of 1:r. J. W.
Spangler for permission to serve at the same time as
director of The Bank for Savings in Seattle, Wash.,
and as director of The Seattle National Bank, Seattle,
Wash.
Approved.
Recommending approval of the application of Mr. John W.
diEddy for permission to serve at the same time as
and
Wash.,
Seattle,
in
Savings
for
rector of the Bank
:lash.
Seattle,
Bank,
National
Seattle
as director of The
Approved.
Recommending approval of the application of Kr. Thomas
time as
P. Mount for permission to serve at the same
Philadelphia,
in
Olney
of
Bank
director of The National
and
Pa., as director of the Mt. Airy National Bank
director
as
and
Pa.,
Philadelphia,
Trust Company in
Philadelphia,
of the City National Bank & Trust Company,
Pa.
Approved.
The meeting adjourned at 1:00 p.r

Noik,/14

Secretary.
4)
1 Proved