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A meeting of the Federal Reserve Board with the Governors of Pederal reserve banks was held in Washington on Friday, July 15, 1932, at 10:3D a. m, PRESENT: Governor /:eyer Hamlin Mr. 11111cr Mr. Tames Er. Magee Mr. Mt. Llbrrill, Secretary Mr. 11:eClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor Goidenweiser, Director, Division of Research and Statistics Mr. Smead, Chief., Division of Bank Operations Mr. Wyatt, General Counsel. PRESENT ALSO: Governors Young, Harrison, Fancher, Seay, Black, EcDougal, Martin, Geery, Hamilton, Fc.Ki.r.rey, and Calkins, and Deputy Governors Burgess and Hutt. Reference was made to the proposed amendment to section 13 of the Reserve Act, contained in section 210 of the new unemployment rebill, H. R. 9642, and the Secretary of the Board stated that the '61111clents as reported by the conferees, reads as follows: "In unusual and exigent circumstances, the Federal Reserve 8°8.rd, by the affirmative vote of not less than five members, TaY authorize any Federal reserve bank, during such Periods as 6he said board may determine, at rates established in accordwith the provisions of section 14, subdivision (d), of Act, to discount for any individual, partnership, or cor! ation, notes, drafts, and bills of exchange of the kinds and '''uurities made eligible for discount for member banks under °other Provisions of this Act when such notes, drafts, and bills i exchange are indorsed and otherwise secured to the satisfaatr ' c 011 of the Federal reserve bank: Provided, That before disi nting any such note, draft, or bill of exchange for an bilu ividual, partnership, or corporation the Federal reserve ork shall obtain evidence that such individual, partnership , corporation is unable to secure adequate credit accommodations am other banking institutions. All such discounts for indi1: 1thlale, partnerships or corporations shall be subject to such lIndtations, restrictions, and regulations as the Federal Rerye Board may prescribe." t J C°11.sideration was then given to a tentative draft of a letter to 7/15/32 Ok) -2- 411 Federal reserve banks, prepared by Counsel as a basis for discussion at this meeting, copies of which were furnished to the governors yester- %., and which outlined the requirements of the law and a tentative procedure to be followed by Federal reserve banks in connection with paper 418coUnted under the provisions of the amendment. Governor i_eyer stated that in his opinion the amendment offers the Pecleral reserve banks an opportunity to do constructive work, particularly eases where business men and other legitimate users of credit are 1°e4ted in districts without banking facilities or where the bank with they have done business is not in a position at the present tire to niekke loans to its customers. He stated that he believes the administration Of the amendment should be approached with the attitude of good faith and helpilllness and not with the idea of avoiding responsibility in connection With that it will afford the Federal reserve banks an opportunity to tt'l(al"tain definitely to what extent the comrercial banks are meeting the 1."rnate credit needs of the country; and that the amendment enables the reserve banks to take a more definite position in endeavorinc: to adequate credit accolimiodations for worthy applicants. Be also 111.4(1 attention to the fact that the administration of the amendment in'olves a now kind of banking, so far as Federal reserve banks are concerned With which sone of the Federal reserve officials have not had a great deal Of -XlIerience, and that to take care of the business which may come to then , - result of the amendment, the banks Should, if necessary, add to their forcea tie n exPerienced in granting commercial bank loans. There ensued a general discussion of various questions of law and Droesti_ `'re which it was contemplated would arise under the amendment. 7/15/32 _3Governor Meyer stated that it would be helpful to the Federal Re- 8ervo Board if the Federal reserve banks would make weekly reports to the 1313ard on the activity at the banks under the amendment, not only as to the discounts made and the circumstances surrounding them, but, also, as to aPPlications denied, and credits which may be arranged through commercial beauca. Governor 1A3yer then referred to the publicity which is now being given to the desirability of the use of trade acceptances as a means of 611384Ung credit in the present sitIntion and he inquired whether there la et Y evidence in the various districts as to the increased use of this r0:04 of credit. e0/144,4.. 18 It was pointed out that the American Acceptance Council is a cAmpaign in this direction at the present time and that there P°38ibilitY -"ence. of a larger volume of trade acceptances coming into The nuestion of the advisability of a preferential rate at reaerve banks for trade acceptances also was discussed briefly. The matter of another meting of the Governors or of the Open 11/17stPolicy Conference was referred to and it was the consensus that a fleet g should be held not later than the first of September. Thereupon the meeting adjourned. Secretary.
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