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229 Upon call of the•Governor a special meeting of the Federal .zieserve Boa ri was held in the office of the Board on Monday, March 8, 1926 at 11200 aslm, PRESENT: 2.11:SENT ALSO: Governor Crissinger Mr. Platt Mr. Hamlin Mr. Miller Cunninjiam Mr. McIntosh Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Mr. Benjamin Strong, Governor, Federal aeserve Bank of New York. Governor Strong discussed with the members of the Board present and IroePective business and credit conditions. He stated that the System held b°11t ;i 100,000,000 of government securities which would mature on :larch 15th, ab°11t w34,000,000 of which were held for account of foreign banks and the l'elliaitcler in the open market investment account. He stated that the bank haa t0 date received from foreign correspondents request3to replace about 431 9°00,000 of securities held for their account and that he thousht it adIrieable, and would recommend, that the run-off of about v66,000,000 of securities from the open market investment account be replaced, if it is possible to c10 8°He stated, however, that it might be fauna impossible to replace the entire amaant. 14.r, Platt expressed the opinion that it might not be inadvisable to r educe the voluro of the system account by permitting some of the Larch 15th idurities to run off without replacement. Governor Strong stated that he also wished to discuss with the members the Board an amendment to the proposed program for the extension of a 230 3/S/26 -2- credit to the National Bank of Belgium, participation in which by the Pede ral Reserve banks was approved by the Beard on November 25, 1925. that At time the program had. contemplated the floatation of a „;150,000,000 14M3 term bond issue by the Belgian government pending which a credit of v559000,000 to run for six months with one six months/ renewal had been arraneed by the Belgian government with bankers in 2ng1and, Holland, Switzerland, Sweden and the United States. It was also arranged that the 44'4 of England, the de Nederlandsche Bank and the National Bank of 317itzer1and would each purchase from the National Bank of Belgium the s(Mvalent of ,5,000,000 of three months' Belgian trade bills, giving cash Or f' them, and the Federal Reserve Board had aioproved of the Federal Reserve 134tLi s purchasing v5,000,000 or .10,00,000 of these bills, with exchange °Iarcalteed, and with an understanding that the Government of Belgium would crPose no objection to repayment, even by the export of gold if necessary. It had been understood that while the bills to be purchased were of three 14°11ths' maturities it right be necessary to extend the credit for a period Qts3he year. Governor Strong stated that the National Bank of Belgium had 143t Izsed the credit extended by the Federal Reserve Banks and that the Belgian had employed only ,27,500,000 of the ,55,000,000 credit arranged f" it, but that it had been decided inadvisable to attempt the floatation °t the long term bond issue and it was now proDosed to sell 4100,000,000 of tIll 'ee year notes of the Belgian government. He stated it was also proposed to 14crease to v50,000,000 the credit to the Bank of Belgium, .415,000,000 441 to be taken by the Federal Reserve banks and the Bank of England, the 231 3/3/2G l er-lainin:; .20,000,000 to be divided amenr_; the banks of issue of :olland, ' 6w1tzerland and Sweden. He stated it was Proposed that this latter credit sheuld rum for three years but that he was opposed to this and from the Pokat of view of the Federal Reserve banks stated he would not agree to a three year credit but was of the opinion that it would be better to extend the bankcredit for one year or possibly eighteen months, at the expiration °f dhieh time it could be reviewed and another credit extended Peried if it seemed advisaole. or a like lie stated that the only change so far as the eral,Aeserve banks were concerned was to increase to ,?l5,000,000 the amount Ot th jelE;ian bills they might flurchase, with oxchene guaranteed, and stated od iould secure, as they had in connection with the previous credit, a letter from the Finance LAnister of Belgium stating that the Government of would interpose no objection to the liquidation of the credit by nlethod, including the shiment of -old. He read to the hoard a cablegram - nraand, „=52, and °4 t,40 subject received from the Governor of the 3ank of E clraft of his Proposed reply and stated that while the arrangement was not ;Jet in a finite form ho wished to secure the tentative approval of the 38.rcl or at least have an understanding on which he could proceed without --barrassment. Governor Strong then left the meeting. Hamlin presented the followinc: resolution: "7,2S0LVED, 2hat the Federal Jeserve Board will interpose no objection to an increase to .15,000,000 for one year Or eihteen months in the amount of Belgian bills which may be purchased by the Federal Reserve Bank of ilew York, along the lines of the cablegram from the Governor of the Bank of England, 232 3/8/26 "452, and Governor Strong's proposed reply, the details of the nroposed credit to be submitted. to the Board for its approval before the final agreenent is made*" Carried. :Ir. Hamlin then moved that the Federal lieserve Board. interpose no objection to the Open Market Imrestmont Committee replacing so far as possible the ;.iii66.,000,000 of government securities held in the system account which mature on March 15th. Carried* In accordance -;iith the request made by the Governor at the meeting on Llar°4 3rcit 1.:r. :Mier presented a memorandum on the subject of the relation or the call loan market to the Federal _ieserve System., proposed for incor-ooratiori in the Board's Annual iieoort for the year 192 " Ordered circulated. he meetingadjourned at one o'clock. 413PrOVed
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