The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
234
A meeting of the Federal Reserve Board was held in the office of
the Federal Reserve Board on Friday, ilarch 25, 1932, at 12:15 p• m.
PRESENT:
Governor Meyer
Mr. Hamlin
NI% Miller
Mr. James
Mr. Magee
Mr. Morrill, Secretary
Mr. 1:IcClelIand, Assistant Secretary
Mr. Harrison, Assistant to the Governor.
The following matters of business were considered and acted upon
by the Board:
Letter dated March 24, 1932, from the Secretary of the Federal Reserve Bank of New York, and telegrams dated Larch 23, 1932, from the
Chairman of the Federal Reserve Bank of Boston and March 25, 1932, from
the Chairman of the Federal Reserve Bank of Chicago, all advising that at
meetings of the Boards of Directors on the dates stated, no changes were
made in the banks' existinf; schedules of rates of discount and purchase.
Without objection, noted with approval.
Telegram dated March 25, 1932, from Deputy Governor Kenzel of the
Federal Reserve Bank of New York advising of the establishment at that
bank today of the following schedule of buying rates on acceptances:
Bankers' Acceptances:
1 to 120 days
121 to 180 days
Repurchase
Trade Acceptances
2 1/2%
2 1/2%
3%
Without objection, noted with approval.
Telegrams dated March 25, 1932, from the ChaiiAen of the Federal
Reserve Banks of Richmond and Chicago, the Secretary of the Federal Reserve
Bank of Atlanta, and the Governor of the Federal Reserve Bank of St. Louis,
all advising of the establishment of the schedule of buying rates on out-
rw11 S rs,ti
3/25/32
-2-
right purchases of bankers' acceptances made effective at the Federal Reserve
Bank of New York today; the Federal Reserve Bank of Atlanta having also
established a rate of 2 1/2
for the purchase of bankers' acceptances under
agreement to resell.
Without objection, noted with approval.
Bond in the amount of Y50,000, executed on March 17, 1932, by
Mr. L. S. Hazard, as Alternate Acting Assistant Federal Reserve Agent of
the Federal Reserve Bank of Minneapolis.
Bond approved.
Report of the Committee on Salaries and Expenditures on a letter
dated March 21, 1932, from Deputy Governor Gilbart of the Federal Reserve
Bank of New York requesting approval of a change in the personnel classification plan of the bank to provide for the creation of the new position,
"Page and Office Boy", in the Bookkeeping Division of the Accounting Department; the Board's Committee recomrending approval.
Approved.
Letter, approved by five nembers of the Board on March 24, 1932, to
the Lechanics Bank and Trust Company, Liciberly, Missouri, advising that the
Federal Reserve Board has approved the bank's application for membership in
the Federal Reserve System and for 126 shares of the capital stock of the
Federal Reserve Bank of St. Louis, subject to certain conditions set forth
in the letter.
Letter approved.
Telegram dated March 23, 1932, from the Governor of the Federal Reserve Bank of Kansas City stating that it is believed desirable for the
Federal Reserve bank to absorb the abrasion losses on Shipments of gold
236
3/25/32
-3-
coin from member banks and inquiring whether such action would be in line wi-uh
the Board's policy.
Er. Magee stated that he had discussed the matter over
the telephone with Governor Hamilton who advised that the amount involved in
the shipments received is very small, averaging approximately •a0 on each
0_00,000 of gold received, and that it is not planned to make any announcement to member banks of the temporary change of policy proposed.
After a brief discussion, the Secretary
was instructed to advise Governor Hamilton
that if the directors of the bank consider
such action desirable, the Federal Reserve
Board will interpose no objection to the
absorption by the reserve bank, for a temporary
period, of abrasion losses on gold shipments
received by it from its member banks.
The Governor then presented a letter addressed to him under date of
March 21, 1932, by Senator Garter Glass, reading as follows:
"I have yours of I.larch 19th acknowledginr. receipt of copies
of S. 4115. The copies thus hurriedly sent contained some inconsequential typographical errors; hence they were supplemented by
corrected copies.
In order that the record may be accurate, I take leave to
state that those members of the staff of the Federal Reserve Board
and of the Federal Reserve Bank of new York who conferred, from
time to time, with the sub-committee of the Senate Banking and
Currency Committee were not 'called into consultation' by the
Committee, nor is it true that these gentlemen, before making
their written report to the sub-committee, 'made it clear that
they were acting solely in their personal capacities.' On the
contrary, these two gentlemen, by name, were delegated by the
President, as representatives of the Treasury and the Board, to
review the work of the sub-committee and to mole suggestions with
respect to desirable modifications. Naturally the committee
assumed they had been authoritatively assigned by the Treasury
and the Board as tested experts.
We assumed that these experts were acting for the Treasury
and the Board, not merely because they were designated by the
President, but because we had knowledge of the fact that they were,
over the period of this work, in consultation with the Governor
of the Board, with the Under-Secretary of the Treasury and with
the Governor of the New York Federal Reserve Bank. To the very
last meeting of the sub-committee the Secretary of the Treasury
expressed a desire to have our work reviewed by Er. Goldenweiser,
7
C'
3/25/32
1,1
(
"who unhappily was ill.
The sub-committee did not learn until these gentlemen
presented their written report that they were assuming to speak
only for themselves. The committee, if I may venture to say so,
did not need unauthorized advice. It was endeavoring to
expedite legislation by Getting authoritative suggestions in
order to avoid delay incident to further public hearings on the
banking problem. The committee was utterly astonished to be
told that it had spent weeks without accomplishing this purpose.
As to the suggestion now made for hearing the Board, of
course any written recommendations made by the Board will be
given to the full committee and the committee will have further
public hearings. In this connection I take leave to remind you
that, by request of the sub-committee, I personally called the
Governor of the Board on the telephone and offered to give the
Board a public hearing and likewise personally called the
Governor of the New York Federal Reserve Bank on the phone and
made the same proffer. The invitation in each instance was
definitely declined.
The bill introduced last Wednesday, I may add, is not
fundamentally different from that reviewed by the experts
assigned to the sub-committee, beyond the fact that three important provisions were lifted into the so-called GlassSteagall Bill and several provisions affecting private bankers
have been eliminated."
The Governor also presented for consideration a draft of a reply
to Senator Glass setting forth the facts according to his understanding.
A discussion of the reply followed, during which reference was made
particularly to the tense atmosphere of the legislative situation in
connection with the Glass Bill, and to the controversial character of the
legislation proposed in the bill, and the feeling was expressed by some of
the members of the Board that it might be desirable to defer sending the
proposed reply.
Accordingly, the reply, which is quoted below, was laid
on the table for consideration at a later meeting.
"This is the first opportunity I have had to acknowledge the
receipt of your letter of "Larch 21 in regard to bill S. 4115.
I regret that there should seem to be any misunderstanding
between us regarding the matters nentioned by you. You will
perhaps recall that on January 31 you telephoned Dr. Goldenweiser,
3/25/32
-5-
"who happened to be at my house at the time, and suggested that
he and Dr. Burgess meet you and Senator Walcott at your office
that afternoon for the purpose, as I understood it, of discussing
your bill S. 3215 which had been introduced on January 21. I
advised Dr. Goldenweiser then that he should make it clear that
neither he nor Dr. Burgess could undertake to speak for the Board
and that any views they might express necessarily would be purely
personal. He has informed me that he so stated in his conversation
that day with you and Senator Walcott. The Board did not at any
time designate Dr. Goldenweiser and Dr. Burgess to represent it
on the matter and did not authorize them to speak for it, but it
is my understanding that the possibility of using their services
in their personal capacities had been discussed in the course of
conversations between Secretary Tans and Senator Walcott, as a
result of which Secretaryllills was advised by Senator Walcott
that it would be agreeable to you and to him to have the assistance
of these gentlemen. It was felt that Dr. Goldenweiser and Dr.
Burgess would be able to render helpful service to the subcommittee and as a measure of cooperation they were detached from
their respective organizations in order that they might assist the
committee in every way possible in the capacity of experts.
Dr. Goldenweiser and Dr. Burgess then undertook to prepare
a memorandum of such suggestions as they might have to offer concerning the bill and I have before me a copy of a letter which
they addressed to you one week later, February 7, 1932, in which
they made the following statement:
'The undersigned have been asked by the sub-committee
of the Senate Banking and Currency Committee to give
consideration to the Glass Bill, S. 3215, and to
make constructive suggestions with respect to that
bill. We have undertaken this task as individuals,
detached from our organizations for this purpose,
and we are acting in no sense as representatives of
our institutions. This report, therefore, has not
been submitted to, or considered by, our institutions,
and it represents only our own personal views and
recommendations.'
From that letter it appears that Dr. Goldenweiser and Dr. Burgess
deferred making suggestions as to certain provisions of the bill
until they had more time, and I also have before me a copy of their
letter of February 29 in which they submitted their further recomrmendations and stated:
'As was the case with our first report, the recommendations represent our awn personal views and
opinions and in no sense the views of our institutions'.
("at,
-6-
3/25/32
"The Board was not informed as to the contents of either communication
until after it had been delivered to you. On the other hand, the
Board was informed that the sub-committee was giving consideration
to the possibility of revising the bill and of introducing a revised
bill at a later date. The Board was not advised as to what would be
the provisions of the revised bill until it received the copies of
S. 4115 which were transmitted with your letter of March 17.
The conversation between you and myself over the telephone, to
which you referred in your letter, related, as I understood it,
entirely to the question whether the committee should hold public
hearings. After consulting with the Board, I called you on the
telephone and told you it was our feeling that the question whether
public hearings should be held was one solely for the determination
of the committee.
In view of your reference to your call on the telephone to
Governor Harrison of the New York Federal Reserve Bank, I discussed
this aspect of the matter with him and he advised me that he had the
same understanding of the purpose of your call to him that I had of
your telephone conversation with Me, and that he entertained the
same view of the question as to public hearings.
I have taken the liberty of reviewing these matters solely
for the purpose of giving you my understanding of the facts which
forned the background of my letter of March 19. The proposed
legislation involves questions of fundamental importance and I
want to assure you that there is every desire on our part to
cooperate with you and the committee in every way. To this end,
the Board has directed certain members of its staff to drop, as far
as possible, their other duties and to devote themselves to preparing material to aid the Board in its consideration of your
bill; and they have been engaged for several days and nights in
that work, with the view of enabling the Board to submit its
comments upon the bill at the earliest practicable date.
;iith cordial regards and best wishes, I am./
Reports of Standing Committee dated March 23 and 25, recommending
ap)roval of the following changes in stock at Federal reserve banks:
Application for ORIGINAL Stock:
District No. 9.
Bessemer National Baal:, Bessemer, Mich.
Shares
45
45
2
2
Applications for SURRITDER of Stock:
District No. 1.
City National Bank, New Britain, Conn. (V.L.Abs.
150
by New Britain National Bank)
150
231)plication for ADDITIONAL Stock:
District No. 6.
Liberty National Bank & Trust Co., Savannah, Ga.
240
-7-
3/25/32
Shares
APD1ications for SURRENDER of Stock: (Conttd)
District No. 2.
Matteawan National Bank, Beacon, N. Y. (Decrease
in surplus)
36
36
District No. 4.
First National Bank, Dillonvale, Ohio. (Decrease
in capital)
30
30
District No. 5.
Pikesville National Bank, Pikesville, Md. (Insolvent)
60
60
District No. 6.
Parish Bank & Trust Co., Opelousas, La. (Insolvent)
Hartford National Bank, Hartford, Ala. (Decrease
in surplus)
39
District No. 7.
Citizens Nationpl Bank, Kendallville, Ind.
(Insolvent)
6
45
60
60
District No. 8.
Sedalia National Bank, Sedalia, No. (Insolvent)
First National Bank, Mounds, Ill. (V.L.Abs. by First
State Bank)
18
90
District No. 9.
First National Bank, Davis, S. .Thak. (V.L.Abs. by
Security National Bank of Viborg, S. Dak.)
18
18
District No. 10.
Craig National Bank, Craig, Colo. (Insolvent)
First National Bank, Craig, Colo. (Insolvent)
24
24
48
District No. 12.
First National Bank, Newport Beach, California.
(Insolvent)
Olympia National Bank, Olympia, Wash. (Insolvent)
Commercial Bank & Trust Co., Wenatchee, Wash.
(Insolvent)
72
20
105
90
Total
215
752
Approved.
Reports of Standing Committee dated March 24, reconnending approval
of the following Clayton Act applications:
Mr. G. W. Connell for permission to serve at the same time
as director of the First National Bank of Fort Worth, Texas, and
as officer of the Citizens National Bank of Post, Texas.
tiTit
r
3/25/32
Mr. Manly H. Johnston for permission to serve at the same
time as an employee of the First National Bank of Birmingham,
Alabama, and as director of the First National Bank of Jasper
Alabama.
Approved.
Thereupon the meeting adjourned.
@FedFRASER