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A meeting of the Federal Reserve Board was held in the office of the Paderal Aeserve Board on Saturday, January 19, 1929 at 11:00 a.m. PRESENT: Governor Young Mr. Hamlin Miller Yr. James Mr. Cunningham Mr. Noell, Asst. Secretary Mr. McClelland, Asst. Secretary The Governor reported a telephone conversation this morning with Deputy Governor Kensel of the Federal Reserve Bank of New York, during which he was ativised that, in an effort to secure a better distribution of bills, dealers New York are increasing their buying rates to a maximum of 5 1/8/; for longer Maturities, with the result that on Monday the Federal Reserve Bank of New York Will probably find it necessary to further increase its buying rates. Mr. Kenthere is an Stated that the change will probably have to be made before °PPortunity for discussion of the matter by the Executive Committee or Board Of Directors of the Bank, and that the necessary adjustments will be made and later presented to the Executive Committee of the Bank for approval. During joined the discussion which followed, the Secretary of the Treasury and Mr. Pole the meeting and the Secretary took the Chair. The discussion covered the prob- possibility of a able effects of a further increase in buyiwz rates, with the upon business and later increase which might be necessary in rediscount rates, the money market. be It was the consensus of opinion that the matter should Bank of New York. thoronhly considered by the directors of the Federal Reserve of the Board It was suggested that the Governor and one or two other members stated that ?night go to New York on Thursday for a conference, but Mr. miller Tuesday D irectors Young and Woolley of the New York bank may be in Washington on 1/19/29 14 connection with another matter, and that it might be possible to arrange to have them meet with the Board. Mr. Miller was requested to endeavor to arrange for such a meeting. The "Secretary of the Treasury then left the meeting and, with the Liovernor in the Chair, further discussion ensuel with respect to the general business and credit situation and methods by which the Fej.eral deserve System mic2ht control the seepage of Federal deserve credit into the speculative security loan markets. At the conclusion of the discussion, iLr. Cunninham moved that the Board's Counsel be directed to prepare and submit to the Board an appropriate amendment to Section IV of the Federal deserve -ct, reading as follows: "Except with the approval of the Federal Reserve Board, which is co'ncurred in by the affirmative vote of not less than five members of the Board, no member bank shall be entitled to the privilege of rediscounting with the Federal deserve Bank of its district while simultaneously having an investment in notes, drafts or bills covering merely investments or issued or drawn for the purpose of carrying or trading in stocks, bonds or other investment securities." lir. Cunningham's motion, being put carried, the members statinc. that they it with the understanding that it does the merits of the suggested amendment, the preparation of a form of amendment the Board later. by the Chair, was voted in favor of. not commit them on but merely permits to be submitted to hr. Cunningham stated that he introduced the above motion in order that the amendment suggested may be recommended to Congress if it is concurred in later by the Board. The mtjng adjourned at 12:50 p.m. Assistant Secretary. APproved: Govern° r. 1.1
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