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.••• ;T.) of the A meeting of the Federal Reserve Board was held in the office Federal Reserve Board on :lednesday, ,lune 12, 1929 at 12:30 p.m. PRESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Pole Ur. McClelland, Asst. Secretary Reserve Board The reading of the minutes of the meetings of the Federal held on June 10th and 11th was dispensed with. Board The Governor stated that in accordance with the action of the ing an outline of System Yesterday, Mr. Cunningham and he have conferred regard ing to submit credit policy during the coming months and expect to have someth & 1t to the Board this afternoon. Federal Reserve Bank Telegram dated June 10th from the Chairman of the Of Minneapolis, advising that the board of directors at a meeting on that date of discount and purchase. made no change in the bank's existing schedule of rates Without objection, noted with approval. on of Bank OperMemorandum dated June 10th from the Chief of the Divisi clerk in the Division, ations, submitting the resignation of Mr. William J. Mays, ity to fill the affective at close of business July 1st, and requesting author per annum. Vacancy thus created at a salary of not to exceed .2,000 Upon motion, the resignation was accepted effective July 1st, and the authority requested was granted. on list submitted by Report of Committee on Salaries and Expenditures for whom the directors of the Federal Reserve Bank of Cleveland of employees s, during that bank approved leaves of absence with pay, on account of illnes f -2- 6/12/29 the month of May where the total of such absences since January 1, 1929 has exceeded thirty days; the Board's Committee recommending approval of the salary payments involved. Approved. Bonds in the amount of v50,000 each, executed by Messrs. T. Gordon Sanders, Judd W. Jones and J. C. Clark, Jr., recently designated as Acting Assistant Federal deserve Agents at the Omaha, Denver and Oklahoma City Branches, respectively. Approved. Memorandum dated June 11th from the Director of the Division of Hesearch and Statistics, recommending that the recent report of the Committee Of Experts on Aeparations be printed in full in the next issue of the Federal lieserve Bulletin, and that 2,000 reprints be made of this part of the Bulletin, With the understanding that the Printing Office will be asked to hold the type for a reasonable time in order to provide for the printing of additional copies in case the demand should justify. Upon motion, the recommendation was Memorandum dated June 11th from Counsel, approved by the Taw Committee, requesting that the Board authorize the following expenditures in addition to the normal expenditures heretofore authorized in the annual budget for his office: (1) Additional bookcases and other furnishings and equipment 4298.00 for new library room new lig4ts installing and (2) Cost of changing electric wiring 17.61 in the new library roam 461.55 (3) New law books 5G5 -3- 6/12/29 (4) Expenditure for Corporation Trust Legislative Service which has been received for a number of years but was not included in estimating the budget of Counsel's office - 200.00 Approved. Memorandum from Counsel dated June 10th regarding the application of Mr. Ralph B. Leonard, for permission to serve at the same time as director of the Richmond Hill National Bank and the Port Morris Bank, both of New York City; the Law Committee concurring in a recommendation of Counsel that the firm of Ralph B. Leonard & Company of New York City, of which Mr. Leonard is a member, should not be considered a firm of "private bankers" within the meaning of the Clayton Act and that the application be approved as to the two banks named. Upon motion, the arplication was approved. Memorandum from Counsel dated June 10th regarding the application of Mr. B. J. Nolan, for permission to serve at the same time as officer and director Of the Bank of America of California, Los Angeles, Cal. and as director of the First National Bank of Beverly Hills, Cal.; the Law Committee concurring in 4 recommendation of Counsel that the Title Insurance and Trust Company and the F idelity Savings and Loan Association, both of Los Angeles, which Mr. Nolan is also serving, be not considered as cominF, within the meaning of the Clayton Act as they do no commercial banking business and that the application be apProved as to the other two banks named. Upon motion, the application was approved. The Governor then stated that the special order of business for this meeting la a henring to show cause why the Texas State Bank and Trust Company of San Arltonio, Texas, should not be required to surrender its stock in the Federal 566 fit -4- 6/12/29 tott Reserve Bank of Dallas and to forfeit all rights and privileges of membership in the Federal Reserve System. No one appearing on behalf of the Texas State Bank and Trust Company of San Antonio, Texas, at the said hearing before the Federal Reserve Board, under the terms of Section 9 of the Federal Reserve Act; and it appearing to the Federal Reserve Board that the Texas State Bank and Trust Company has violated the provisions of Section 9 of the Federal Reserve Act in that it has failed to comply with the provisions of the condition of membership imposed on such bank at the time of its admission to the Federal Reserve System that "except with the Permission of the Federal Reserve Board, you shall not cause or permit any change to be made in the general character of your assets or in the scope of the functions exercised by you at the time of admission to membership, such as will tend to affect materially the standard maintained at the time of your admission to the Federal Reserve System and required as a condition of membership"; the Texas State Bank and Trust Company having ceased to exercise banking functions and having sold and disposed of all of its assets except an amount equal to its capital stock; Upon motion duly made and seconded, the following resolution was unanimously adopted: "Whereas, it app9ars to the Federal Reserve Board from a consideration of the information received by it that the Texas State Bank and Trust Company of San Antonio, Texas, has violated the provisions of Section 9 of the Federal Reserve Act in that it has failed to comply with the provisions of the condition of membership imposed on such bank at the time of its admission to the Federal Reserve System that 'except with the permission of the Federal Reserve Board you shall not cause or permit any change to be made in the general character of your assets or in the scope of the functions exercised by you at the time of admission to member- 4 41 6/12/29 -5- "ship, such as will tend to affect materially the standard maintained at the time of your admission to the Federal Reserve System and required as a condition of membership'; the Texas State Bank and Trust Company having ceased to exercise banking functions and having sold and disposed of all of its assets except an amount equal to its capital stock; NU::, THEREFORE, BE IT AESOLVZ,D, That the Federal Reserve Board require and direct the Texas State Bank and Trust Company, of San Antonio, Texas, under the terms of Section 9 of the Federal Reserve Act, as amended, to surrender its stock in the Federal Reserve Bank of Dallas and to forfeit all rights and privileges of membership in the Federal Reserve System as of the date on which notice of this action on the part of the Federal Reserve Board is received by said bank." At 1:00 p.m. the meetilig recessed and reconvened at 2:30 p.m., the sane Members being present as attended the morning session and, in addition, the Secretary of the Treasury who took the Chair. The Governor presented an outline of future credit policy for the Federal Reserve System prepared by Lr. Cunningham and himself, the committee 413Pointed at the meeting yesterday, in the form of a communication addressed to the chairman of the Board of Directors of the Federal Reserve Bank of New York, which, auring the discussion which ensued, was amended,and upon motion Iltanir,ously approved in the following form: "The Federal Reserve Board has given further consideration to the question of future program. The Board thoroughly realizes that many factors now unforeseen may enter into the credit situation during the coming months. However, it believes that at the moment there is a posan imsibility of carrying out a program for the future months without mediate raise in the discount rate or, at this writing, easing the situation either by the purchase of bills or Government securities. Therefore, in an effort to develop a mutually satisfactory prowith the gram, the Board suggests the following for your consideration, anyone prompt will which occur will developments hope that no unforeseen to change his position: . 1/ (14 6/12/29 -6- "Since February the policy of the Federal Reserve System has expressed itself primarily through what is called 'direct action' and this position was taken deliberately by the Federal Reserve Board. To this position it holds fast. It is satisfied with the reasonableness of its policy and with its necessity, even though the methods and degree of application may be controversial. The Board, after a careful review of the credit situation, finds that the increased demand for credit to meet mid-year requirements and also the credit demands for early autumn will probably require member banks to increase their rediscounts at the Federal reserve banks. This situation will be better served by a temporary suspension of a rigid policy of direct pressure, which, however, should not be abandoned, but rather tempered in order to permit member banks that have not found it practicable to readjust their position in accordance with the Board's principle, to avail themselves of the rediscount facilities of the Federal reserve banks for the purpose of avoiding, as far as possible, any undue strain or any unnecessary increase in the cost of credit in meeting the seasonable needs of agriculture, industry and commerce. If such rediscounts become excessively large so as to unduly tighten the credit situation to a point where it acts as a deterrent to business and there are no other unsatisfactory factors in the situation, relief should be given through some release of Federal reserve credit, preferably through the purchase of bills, but if it should appear at the time that such relief is not adebe glad quate or practicable, then, the Federal Reserve Board would purthe h throug relief the g to give consideration to supplementin chase of short-time Government securities. In suggesting this program for the future months, the Board is not unmindful that a limited number of member banks may expand undesirable loans upon Federal reserve credit to a point which ndwould not be justified by conditions and circumstances surrou expect would Board the ing these institutions, and in such cases . the Federal reserve banks to resort to the usual direct action l reserve Federa and unts Again, if such increase in redisco the earmarks portfolios leads to an undue increase in loans having banks member of number great of unsound banking practice in any y quickl and ly aneous where direct action can not be applied simult be would Board the enough to protect the general credit situation, glad to consider other corrective measures. directors The Board would be glad to hear the views of your after they have considered this outline." At the conclusion of the discussion, Mr. James moved that the committee consisting of the Governor and Mr. to Cunningham proceed to New York and in person present the e bank Reserv the Board of Directors of the Federal communication as approved by the Board. 6/12/29 •••• OP* 1:r. James' motion, being was carried. it by the Chair, RE':)ORTS OF STANDING COY2IITTia'S: Dated, June 11th, Dated, June 8th, 10th, Dated, June 10th, Dated, June 10th, Dated, June 10th, Dated, June 10th, Dated, June 10th, Dated, June 10th, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary I:Inute Book of this date. Recommendations approved. Recommending action on applications for fiduciary powers as set forth in the Auxiliary 1.:inute Book of this date. Recommendations approved. on an application for admission of a action Recommending to the conditions stated in the indisubject state bank, to the application, as set forth attached vidual reports of this date. Book Minute in the Auxiliary Recommendation approved. Recommending approval of the application of Mr. Crawford Moore for permission to serve at the same time as officer and director of the First National Bank of Idaho, Boise, Idaho, as officer and director of the Ontario National Bank, Ontario, Oregon and as officer and director of the Vale National Bank, Vale, Oregon. Approved. Recommending approval of the application of Kr. C. C. Anderson for permission to serve at the same time as director of the First National Bank of Idaho, Boise, Idaho, as director of the Ontario National Bank, Ontario, Oregon and as director of the Vale National Bank, Vale, Oregon. Approved. Recommending approval of the appli3ation of Yr. Eugene Looney for permission to serve at the same time as director of the First National Bank of Idaho, Boise, Idaho, as director of the Ontario National Baak, Ontario, Oregon and as director of the Vale National Bank, Vale, Oregon. Approved. Recommending approval of the application of :r. J. w. Cunningham for permission to serve at the same time as officer and director of the First National Bank of Idaho, Boise, Idaho, as officer and director of the Ontario National Bank, Ontario, Oregon and as officer and director of the Vale National Bank, Vale, Oregon. Approved. Recommending approval of the application of Mr. E. A. Van Sicklin for permission to serve at the same time as director of the First National Bank of Idaho, Boise, Idaho, as director of the Ontario National Bank, Ontario, Oregon and as director of the Vale National Bank, Vale, Oregon. Approved. 6/12/29 _8_ ,REPORTS OF STANDING 001MI1Y2EES: (Conttd) Dated, June 10th, Recommending approval of the application of Mr. Raymond Moore for permission to serve at the same time as officer and director of the First National Bank of Idaho, Boise, Idaho as director of the Ontario National Bank, Ontario, Oregon, and as director of the Vale National Bank, Vale, Oregon. Approved. The meeting adjourned at 3:15 p.m. Naag Assistant Secretary. Approved:
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