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r-- A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Friday, June 14, 1929 at 11:15 a.m. PRESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. McClelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held an June 10th were read and approved. The minutes of the meetings of the Federal Reserve Board held on June llth and 12th were read and approved, as amended. Letter dated June 6th (13th) from the Secretary of the Federal Reserve Bank of New York, telegram dated June 13th from the Chairman of the Federal Reserve Bank of Richmond and telegram dated June 12th from the Federal Reserve Batik of Dallas, all advising that their boards of directors at meetings on the dates stated made no changes in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Letter dated June 13th from the Assistant Federal Reserve Agent at RidntIOacl, advising that Mr. Charles H. Wyatt, recently designated as Acting Assistit Federal Reserve Agent at the Baltimore Branch, has been ordered by his PhYBician to give up work for several weeks and recommending that Mr. William 13° Elliott, Assistant Manager of the Baltimore Clearing House Association, be 4Ploointed to succeed Mr. Wyatt as Acting Assistant Federal Reserve Agent at tba Branch for a temporary period with salary at the rate of :$50 per month. Upon motion, Mr. Elliott's temporary designation as Acting Assistant Federal Reserve Agent was approved. 6/14/29 -2- Memorandum dated June 13th from the Chief of the Division of Bank Operations, submitting statements of expenditures by the Federal Reserve banks for educational and welfare work, etc. during the month of May and for the five months' period ending May 31st. Ordered circulated. Letter dated June 12th from the Deputy Governor of the Federal Reserve Bank Of New York, replying to letter addressed to him by the Governor in accordance with the action taken at the meeting of the Board on June 10th, inquiring whether Federal reserve banks in making temporary sales of securities to other Federal aeserve banks should not report them as a contingent liability; the Deputy Governor expressing the opinion that the securities should not be so reported, inasmuch as they are sometimes purchased outright by the Open Market Investment ComMittee and on other occasions are taken over temporarily with the understanding that the selling bank may later reacquire them provided they have not, in the Meantime, been otherwise disposed of by the committee - the obligation, if any, °t1 the selling bank being so indefinite as to make it unnecessary for that bank to show a contingent liability in respect to these transactions. In the letter it was also stated that even though the liability were more definite than it is, there is doubt as to whether it would be necessary or desirable for the selling bank to show a contingent liability for the reason that the matter is one of illter-bank relationship. Noted. Federal Reserve Letter dated June 11th from the Deputy Governor of the Bank of New York, with respect to the status of the Open Market Investment the 'lecount and conditions in the government securities and bill markets; -3- 6/14/29 Deputy Governor stating that there have been two chanes in the account since his last letter to the Board - the sale of w3,000,000 of Treasury bonds recentlY taken over from the Federal Reserve Bank of Kansas City and the repurchase by the Federal Reserve Bank of St. Louis of y2,125,000 of securities which were temporarily held for that bank in the System Account. Noted. At this point, the Comptroller of the Currency joined the meeting. The Governor then advised of the receipt of an opinion of Messrs. Murray, Aldrich and ,iebo, counsel to the Equitable Trust Company of New York, contrary to the opinion rendered by the Board's Counsel that the Equitable Trust Company illaY not since February 25, 1927, the date of the enactment of the McFadden Act, lawfully establish a branch in a foreign country and continue to hold stock in the Federal Reserve Bank of New York, and further, that the Equitable Trust 121Pany may not lawfully acquire a branch established since February 25, 1927 " bY a national bank and retain stock in the Federal Reserve bank. He submitted (11%ft of a letter to the Secretary of the Treasury requesting him to sign and forard one to the Attorney General of the United States, asking for an opinion 04 the questions; the letter to the Attorney General transmitting copies of the °Pinions rendered by Counsel for the Board and the Equitable Trust Company. Upon motion, the letters submitted by the Governor were approved. At 1:r. Hamlin's request, the Law Committee to furnish the Attorney General, authorized was an expression of the Committee's with desires, if it questions regarding which his the on views personal asked. being opinion is The Governor and Mr. Cunningham then reported their meeting yesterday with r -4- 6/14/29 the letter the board of directors of the Federal Aeserve Bank of New York at which nted in person. approved, by the Board at the meeting on June 12th was prese The received by certain of the Governor stated that the Board' proposal was not well program suggested but because directors of the New York bank, not because of the Of question as to the Board's authority in the premises. He explained the cir- raw the Board's letter, after cumstances which prompted him personally to withd it had been read to the directors. After discussion, it :.as the majority opin- chairman of the New ion of the Board that the letter should be dispatched to the York bank for presentation to his directors. letter simed by the GovThe Governor then stated that the following ng forth the views of the diernor of the bank, under date of June 12th, setti ; rectors, was handed to him for presentation to the Board est the report of the dis"Our directors have considered with inter al (eserve Board on June cussion which some of them had with the Feder nt and prospective 5, relative to a possible ,)rogram to handle prese credit problems. r, it seems likely In the face of conditions as they now appea borrow(a) That there will be an increase in security the and now en betwe ry count the ghout ing throu July. of part early credit (b) That there will be a large readjustment of over July 1 by reason of interest, dividend and currency requirements and by reason of window dressing, that may create v. heavy strain upon in the banks in financial centers, especially i\:ew York. agricultural bor(c) That there will be an increase in rowing as the summer advances. they now view the situaviith these facts in mind the directors, as tion, believe in a general way increase in (a) That there will be a necessity for an district this in banks r membe the rediscounts by to borrow tted permi be must banks and that member r conprope the for Bank ve Aeser al from the Feder that fact the of dless regar ess, busin duct of their collateral loans they may have substantial amounts of outstanding. e..) 6/14/29 -5- "(b) That if rediscounts required by the conditions above referred to become so large as to cause an undue credit strain then the Federal deserve Bank might well be prepared, if necessary, to pAve temporary relief through open market operations in bills, government securities, or both, as the occasion warrants. E (c) That if for any reason, whether through the releas reh throug e credit reserv of additional Federal discounts, or through possible later open market operations, or for any other reason, there should be renewed evidence of an excessive demand for credit, due to speculation in securities or to speculation in land, building, trade inventories, or commodities, then the remedy of increased discount rates should be applied promptly and vigorously in the interest of sound banking and the ultimate ease of credit. requir(d) That any such rate increase or increases, if expecthe with only made be ed should of course tation that rates will be reduced as promptly as conditions permit. ible, definitely Our directors feel that it is difficult, if not imposs e inasmuch as advanc in much to lay out any very specific credit program ance with accord in d change such a program mi...ht necessarily have to be above the if that r, howeve conditions as they develop. They believe, taken are needs, al season steps, designed to take care of mid-year and felt have they as such rate, without the protection of a higher discount of permit to safely and y quickl Would have been desirable in order more reto ed prepar be then must relaxation in credit conditions, the system d pointe s ilitie possib the of sort to immediate rate action in the event out above. told you on the teleThis letter will in substance confirm what I directors." our of phone on June 10, 1929, concerning the views als A general discussion ensued regarding the propos action no but ors, of the Board and the New York direct was taken. he learned that the The Governor stated that during his visit to New York ered to be somewhat out of bIlYing rate of the bank on 30-day bills is consid York bank is not getting with the market, but that inasmuch as the New no action has been taken InanY bills and has no objection to accumulating some, to change the rate. of the Federal'Aeserve He also reported a telephone inquiry by the Chairman -6- 6/14/29 Bank of Boston as to whether it would be agreeable to the Board if the directors Of that bank rescinded their previous action in voting to establish a rediscount rate of 6:/;,, and left the matter to their Executive Committee. He said that he advised Mr. Curtiss he did not believe the Board would have any objection. REPORTS OF STANDING COMMITTEES; Recommending a change in stock at a Federal Reserve bank as set forth in the Auxiliary Minute Book of this date. Recommendation approved. Dated, June 12th, Recommending action on applications for fiduciary powers 13th, as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Dated, June 11th, Recommending approval of the application of Mr. Nathan O. Vosburgh for permission to serve at the same time as director of the West Side National Bank, Denver, Colorado and as officer of the Denver National Bank, Denver, Colo. Approved. Dated, June 13th, The meeting adjourned at 1:00 o'clock. Assistant Secretary. APproved:
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