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A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on -lednesday, Mirch 5, 1924, at 11:05 a.m. P3=: Governor 2rissin,;.er Mr. Platt Mr. Hamlin Mr. Miller Mr. Cunningham Mr. 3ddy, Secretary file minutes of the meeting of the ...ledert...1 Reserve Board held on March 4th wore read and approved as amended. The Governor then presented v letter dated March 4th from Mr. 7;alter Stewart tendering his resignation as Director of the Division of Research and Statistics, to become effective not later ',Jinn May 1, lkoon motion by Mr. Hamlin this ma-,ter was laid on the table. 1.1r. Cunningham then stated that he had studied the ';alley proofs of the Annual Report and that he has no serious objection to any part of it although he felt that the fo1lowin7 sentences in the chapter on Federal aesorve Discount Policy were a rarotition of preceding statements and might wal be eliminated: " It is its responsibility to regulate the flaw of now and additional credit from its reservoirs in accordance with solid indications of the economic needs of trade and industry." " It seems clear that if business is undergoing a rapid expansion and is in danger of dcveloping an unhealthy or speculative boom, it should not be assisted by too easy credit conditions. In such circumstances the creation of additional credit by rediscountiflr at Federal reserve banks should be discouraged by increasing the cost of that credit - that is, by raising the discount rate. It seems efually obvious that if industry and trade are in process of recovery after a period of reaction, they should be given the support and encoura3 ,oment of cheaper credit by the prompt establishment at the Federal reserve banks of rates that will invite the use of Fedei-al reserve credit to facilitate business ro3overy." 1,70 action taken. 3/5/24 The Governor then announced that the special order of business for this morning's meet in would be the nutter chi' inclusion in the Annual Re- port of articles re-;ardine; branch bankin; and the separate statin: of reserve reties on note and deposit liabilities. 2he Governor reiterated the statement nr..de l him at the reeetin; on Llarch 4th that he had talked with the Secretary regarding the suggested explanation in the 2,nnual Report of the proposal to state ce:•arately the note and deposit reserve ratios in the weekly consolidated statement, and that vthile the 3ecretary worroved of the plan in principle, he did not believe that it would be expedient to make any announcement regarding it at the present time. The Board then discussed the action which should be taken, in the :ht of the position of the Secretary of the Treasury as nude lmown to it 1),. the lovernor. Hamlin moved that the chapter on "Statement of Reserve Position" be amended by striking out the following: "In view of important differences between the affects of changes in note circulation and in deposits on the reserve ratio, and in view Of the nranner already discussed in which a demeni for currency arises out.of and follows upon an antecedent growth of credit, the board has decided to publish separate reserve ratios for Federal reserve notes and for deposits. Beginning with the year 1924 the consolidated statement of condition or the 12 'Federal reserve banks will show each 7.-eek the position of the note reserve and of the deposit reserve in the iorm Of two reserve ratios, namely, a note reserve ratio and a deposit reserve ratio. In the computation of these ratios the note reserve is arrived at by adding the gold held with the Federal reserve agents coll:teral against Federal reserve notes outstanding and the gold in the redemption fund with the Treasury which constitutes, in accord, nee with the law, the reserve against 2edereel reserve notes. The dePesit reserve consists of ;old in the gold settlement :Auld with the Pederal Reserve Board and gold and lawful money in the vaults of 3/5/24 , "the Federal reserve banks. The law provides that the ' gold in vault and in the gold settlement fund may be counted, at the option of the banks, either as reserve against deposits or against Federal reserve notes. The deposit reserve ratio is computed on the assumption that the barks, on the date of the statement, have elected to count this gold as deposit reserve. The items entering into the composition of the note reserve and ;he deposit reserve have been shown in the statement of condition of the reserve banks from the beginning, but totals of the separate reserves have rot been carried in the statement. The new form of statement will dhow 'total reserves against Federal reserve notes' and 'total reserves against deposits'. The Board is of the opinion that the publication of these totals and of the separate note and deposit reserve ratios is in accordance with the spirit of the Federal reserve act, which prescribes different reserve requirements against notes and against deposits. The act provides that 'every Federal reserve bank shall maintain reserves in .;old or lavreal money of not less than 35 per centum against its deposits and reserves in cold of not less than 40 per centum against its Federal reserve notes in actual circulation'. The statement of the reserve position of the Federal reserve banks in the form of separate note and deposit reserve ratios is no innovation, but a return to the method adopted by the board Immediately following the important amendments to the Federal reserve act of June 21, 1917, and continued during that year. It is the belief of the board that those two separate ratios will give the public a clearer picture of chances in the reserve position of the Federal reserve system and of the factors responsible for those changed. Ur. Miller suggested that this mould leave this section of the report With an unsatisfactory ending and asked Mr. Hamlin if he would be willing to accept the fAlowin; to be added to the concluding sentence of the paragr4h Preceding the one he wished to have omitted: "and does not give a clear picture of changes in the reserve position of the Federal Reserve System and of the factors responsible for those dhanges." ar..Hamlin stated that he would. Thereupon after discussion, the motion being put by the chair was 3/5/24 -.4.. voted upon is follows: Mr, Hamlin, "aye" .Mr. Mill or, "aye" Mr. Cunningham, "aye" Governor Crissim;er, "no" Platt, "no' IMPORTS OF STArDING 001 MITLS; Recommending action on application for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Approved. Dated, March 4th, Recommending approval of the application of Mr. Sealy Hutchings to serve at the same time as Member of the firm of Hutchings, Sealy & Company and as director of the South Texas National Bank, both of Galveston, Texas. Approved. Dated, March 4th, ilecommending approval of the application of Mr. N. 0. Stein to serve at the same time as director of the South Texas National Bank and as Member of the), private banking firm of Hutchings, Sealy & Company, both of Galveston, Texas. Approved. Dated, March 4th, ,lecommending approval of the application of Mr. John Sealy to serve at the same time as Member of the firm of Hutchings, Sealy & Company and as a director of the South Texas rational Bank of Galveston, Texas, Approved. D Dated, March 4th, Recommending approval of the application of Er. eorge Sealy to serve at the same time as director of the South Texas National Bank and as a member of the firm Of Hutchings, Sealy & Company, both of Galveston, Texas. Approvea, Dated, barch 4th, R - ecommending approval of the application of Mr. Julian H. Schermerhorn to serve at the same time as director of the First National Bank of JerseyCity, N.J., as director of the New Jersey Title Guarantee & Trust Corm ny, also of Jersey City, N.J. Approved, Dated, March 5th, A stin A pproved: jie JA Gaverno adj ed at 1:05 p.m.
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