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449 upon call of the Governor, a special meeting of the Federal Reserve 130skrciv -as held in the office of the Governor on Friday, Lay 21, 1926, at 313° P.m, PRESENT: The Governor Crissinger Mr. Platt Mr. Hamlin Yr. Miller Mr. James Yr. Cunningham Mr. Eddy, Secretary. minutes of the meeting of the Federal Reserve Board held on Lay 20th Vel'e re "and approved as amended. **Miller, a member of the committee of three appointed at the meeting hilite"aY to confer with the Secretary of the Treasury regarding the plan for the tUturo operation of the Havana agency, suggested by Er. James, submitted of a letter to the Secretary of the Treasury on the subject, requesting 141 eXPressi _n of the attitude of the President of the United 6-bates or the 3tate ' m partment at this time toward the maintenance of Federal reserve agency t114stiona on the Island of Cuba. After discussion the proposed letter was 8.4ettaad to read as follows: If In connection with the recent financial disturbances in Cuba, br . aulY the runs upon the American and Canadian banks operating R el°1105 in Cuba, the Board has had occasion, through Fr. George Peeealnes, to make a thorough inquiry into the operation of the two tabir.al Reserve Agencies authorized by it in the year 123 and esape 3-shed by the Federal Reserve Banks of Boston and Atlanta, reenelttvely. Copies of lir. James' report and recommendations are osed lea i"It herewith. is not necessary to recall to you the considerations that cub 'the Board to authorize the establishment of the two agencies in Ree:,tnd to apportion the agency functions between them. The Atlanta Bank Agency was assigned the currency function and the Boston tem" e Bank Agency, dealings in exchange. The working of this sysractof divided responsibility has not proved in all respects satiseffio! *Y. and some members of the Board are of the opinion that an eralernt Performance of the agency functions undertaken by the Fedrutoti.xeservo in Cuba will necessitate the consolidation of these conail_;°118 in the hands of a single agency. This matter is now under klere*4 --°n by the Board. tot, 450 f V21/26 -2- Boa r4 Before proceeding further in the natter, some members of the 1.1/4 feel that the whole question as to the necessity of the FedLeserve System undertaking agency functions in Cuba should be remore particularly with a view of determining, (1) her or not there is ,.ny obligatien, legal or moral, imposed 1_11D°n the United States Government to provide facilities in Cuba 1".7't provided in other countr4 es, because of the political relaonship of the Republic of Cuba to the United States of America; whether any obligation is imposed upon the United States for the condition of Jtmerican currency in use in the ernment ic j d .,and of Cuba, because of the fact that about one hundred million erlars of this currency is in circulation in the Island and thed with the power of legal tender under Cuban laws. ti .,These aspects of the agency question were given considerato°11 when the agencies were authorized by the Board in 1923. The as."d was then advised by the President, in a communication adj?ssed to it, under date of Pay 8, 1923, (copy attached hereto) iZt it was the opinion and the desire of the Administration that 0+r"erral Reserve Agency facilities should be provided in Cuba for 1, than strictly financial or Federal Reserve considerations. too "is, however, a doubt in the minds of some members of the t, 111rd as to whether it can still properly and safely be assumed continues to be the attitude of the Department and of the 'United States Government. The Board is, therefore, addressing this communication to its Chairman from a desire to ascertain the attitude of : otrt y ernment as interpreted by the President or by the SecretLry of tte .ith respect to the two following questions: • "(1) Is there an obligation, legal, moral, or Otherwise implied, imposed upon the Government of the United States under the relations which obtain between it and the Government of Cuba, to assume responsibility tor the condition of American currency circulating in the Island of Cuba and, therefore, to maintain at its expense agency facilities in Cuba for exchanging fit for unfit circulation? "(2) Is it the view of the President or the State Department that it is in the interest of our national policy toward Cuba that currency facilities of the kind referred to should be provided by the United States for Cuba? izrb "There is another question the Board must determine - a purethe , , ttlikinr, question - that is, whether or not it is the duty of of icORrd to assist the banks in Cuba, of which three are branches Whi ,lerican banks, by keeping a supply of currency on hand in Cuba depo'l will enable the banks to maintain a lower reserve against 411d ! its than that which they -;;culd otherwise have to maintain, facilitate the transfer of funds between the United States rleed'ns Island. 7Thile the answer to the two foregoing questions "t necessarilY cover this, the views of the President, or 451 5/21/26 of the State or Treasury Departments will greatly facilitate the Board's approach to the problem." Mr* Cunningham moved approval of the proposed letter as amended. • Carried, Yessrs. Crissinger and Janes not voting. 15*. Hamlin stated that he voted in favor of the letter with the understEltd4 4ng that should the Secretary of the Treasury advise against approach the President or the State Department regarding the natter the Committee 41102Jalted on May 20th will report back to the Board. The meeting adjourned at 4:20 p ecre ary. PProyed:
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