Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, May 23, 1929, Volume 16, Part 1

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503

A meeting of the Federal Reserve Board was hell in the office of the
Federal Reserve Board on Thursday, May 23, 1929 at 11:30 a.m.
PRESE1' T:

Governor Young
Mr. Platt
Mr. Hamlin
ir.Miller
Mr. James
Mr. Cunningham
Mr. McClelland, Asst. Secretary

The reading of the minutes of the recent meetings of the Federal Reserve Board was dispensed with.
The Governor reported that Mr. Eddy, 3ecretary of the Board, has a
serious ailment and that his physicians have directed him to take a leave
of absence from his duties of one year, if necessary, to be spent in the
s
outhwest.

He stated that he advised Mr. Eddy that there would be no diffi-

cIlltY in securing the necessary leave of absence and discussed with the members of the Board the question of compensation, his own personal feeling
being that the Board would be justified in granting an indefinite leave of
absence with full play.
Discussion ensued following which Ur. Miller moved adoption of the
fo
llowing resolution:




"Whereas, the Board has heard with profound
regret of the physical condition of its Secretary,
Mr. Walter L. Eddy, who has been ordered by his
physicians to take a year's leave of absence from
duty in a milder climate;
Be It Resolved, that the Board in view of the
long and conscientious service rendered by Mr.
Eddy hereby grants him leave of absence without
prejudice for a period of one year should that be
necessary in the judgment of his physicians; his
compensation to be full pay for a period of four
months from June 1st, with half pay thereafter
for such further part of the year as it may be
necessary for him to be absent."

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Mr. James moved as a substitute for 1,.r. Miller's motion:
"Whereas, the Board has heard with profound regret of
the physical condition of its Secretary, Mr. -Walter L.
Eddy, who has been ordered by his physicians to take a
year's leave of absence from duty in a milder climate;
Be It Resolved, that the Board in view of the long
and conscientious service rendered by Mr. Eddy hereby
grants him leave of absence without prejudice for a
period of one year should that be necessary in the judgment of his physicians; his compensation to be full pay
for a period of six nonths from June 1st, with half pay
thereafter for such further part of the year as it may
be necessary for him to be absent."
After discussion, Mr. James' substitute motion
was pat by the Chair and carriei, Mr. Miller voting
"no".
Telegram dat3d May 22nd from the Chairman of the Federal Reserve Bank of
4118as Oity, advising that the board of directors at a meeting on that date
14de no
change in the bank's existing schedule of rates of discount and purchase,
Without objection, noted with approval.
Memorandum dated May 17th from the Director of the Division of Research
'414 Statistics, recommending the appointment of Mr. George W. Blattner as
be Of
of the Research Staff of the Division, with salary at the rate of 14,800
13er annum, effective June 17th.
Approved.
Memorandum dated May wth from the Director of the Division of Research
44a Statistics, recommending that Mrs. Effie Mehan, clerk in the Avision, be
alLted fifteen days' leave on account of illness, in addition to the regular
14141xal

allowance of thirty days.




Approved.

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stenographer
Memorandum dated May 15th from Miss Josephine E. Lally,
14 the office of the Fiscal Agent, requesting leave Ot a sence without pay,
fl'arn August 16th to August 29th.
Approved.
from the CompReport of Executive Committee on letter dated May 21st
annum
troller of the Currency, recommending approval of a salary of „y3,600 per
Or National Bank 3xaminer John W. Hawkins, assigned to the Eleventh Federal
4serve District; the Board's Committee also recommending approval.
Approved.
submitted
Report of Committee on Salaries and Expenditures on lists
bY the Federal Reserve Banks of New York and Kansas City, of employees for
whom the
absence with pay, on
directors of those banks approved leaves of
abaccount of illness, during the month of April, where the total of such
thirty days; the Board's Committee
sences since January 1, 1929 has exceeded
riecommenaing approval of the salary payments involved.
Approved.
Expenditures on letter dated May
Report of Committee on Salaries and
inquiring
17th from the Chairman of the Federal Aeserve. Bank of .leveland,
hether the Board
bellk

contribution of „1200 by that
uld have any objection to a

National Asto the "Second Credit protection fund" being raised by the
recommending approval of the conOf Credit Men; the Board's Committee

tritmtion.
Approved.
Reserve Agent at Atlanta,
Telegram dated May 23rd from the Federal




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re
commending approval of the desi-nation of the following -cting Assistant
Federal deserve 47ents at branches of that bank during the period of turnover
°f the new size currency; the Anent advising that an appointment at the Jacksonville Branch will be recommended later:
Birmingham
lashville
New Orleans

-

Thomas Bowron
Laclin P. Davis
d. E. Liller

Upon motion, the designations recommended
by the federal deserve Agent were approved.
Letter dated Lay 18th from the Federal deserve Agent at Chicago, advising

that due to the disability of Assistant Federal

eserve Agent

H. :Mite, it

Will be necessary for him to retain at the head office :.1r. Clifford S. Young,
Who was temporarily desionated as Acting :.ssistant Federal

eserve 2..gent, with

the understanding that upon Lr. dhite's return to duty he .ould be detailed to

the Detroit Branch uurino. the currency turnover period; the Agent now recommendlig approval of the temporary desi2:nation of LX.

L. ,;ilson, another of his

fliines, as Acting Assistant Federal deserve Agent for service at the Branch.
Approved.
Telegram dated Hay 23rd from the Federal

eserve Agent at Dallas, advis-

- flat after careful consideration it is deemed unnecessary to maintain stocks
Of 11;
,
-.4-Lssued currency of the new size at the branches of that bank during the
tll.rnover period and that, accordingly, it will not be necessary to designate
4ssistEelt Federal Aeserve Av;ents at the Branches under the plan approved

bY the
75oard on Diy 3rd,.
Noted.
I:.emorandum dated Lay 16th from the Chief of the Division of Bank Opera-




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Submitting statements of expenditures by the '2ederal _ieserve banks for
elaoational and welfare work, etc. Jurinr the month of April and for the four
Months period endin

April 30th.
Ordered circulated.

::lemorandum dated Lay 21st from Coansel, recommending publicttion in the
next issue of the .L-'ederal -eserve Bulletin of the recent decision of the supreme
Court of the United states in the so-called :iorcester County National Bank case.
Approved.
Aeport of Committee on 3xaminations on letter dated Lay 14th from the
Federal 2,eserve Agent at Linneapolis, recommending approval of the action of
the

wift County 'Bank of Benson, Linn., a member bank, in assuming certain

liabilities
and taking over certain assets of the Farmers and Merchants 3tate
:3allk of De Graff, Minn.; the Board's Committee also recommending approval.
oted, with approval.
Memorandum from the ,Assistant 3ecretary dated May 22nd, approved by the

Uom pt roller of the Currency and by the Law Jonnittee, recommending approval
or an
application by the Union Trust and Javings Bank of Spokane, :ash. for
Permission to exercise p.eneral fiduciary powers, if ana when converted into
the Pirst

ational 2riist and Savinirs Bank of Spokane.
Approved.

Letter dated May 22nd from the Assistant Zederal Aeserve Agent at New
adVjj

that the Cern Exchange Bank, New York, N. Y. at close of business

Zu
Y 20th converted into a trust company under the new name "Corn 1..xchanr,,e Bank
111‘11

St uompany".




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Letter dated ;Lay 22nd from the assistant Federal ,?,eserve,....gent at
York, advisinp, of plans under way by the International Union Bank, New York,
r

'e to mere into that institution the Community state Bank of New York and

the Unity

tate Bank of Brooklyn, nonmember banks.
Loted.

Memorandum dated May 22nd from the Chief Examiner, submitting report of
examination of the First Federal

oreign Banking Jorporation, New York,

y*

Illade as at the close of business December 12, 1928.
Ordered circulated and referred to the Committee on Examinations.
Letter dated May 15th from the Jecretary of the Civil Service ,ommission,
requesting reports of changes in personnel from the Federal aeserve Boarl to
4141ete records of that office as to personnel in the executive 'Civil Service;

the letter stating that the last Proviso of Clause (1.), 3ection 11 of the Federal lieserve
.:ct indicates that the employees of the Board are in the executive
C

l Service, although not in the classified service.
i.eforred to the Law Committee.
Zatter ordered circulated at the meeting on May3rd, namely, letter dated
Pril 00th from the Federal Heserve ilgent at Dallas, requestinr, an expression

trft the r30ard as to the advisability of distributing among member banks and
eliible nonmmber banks in the district an article on the subject of the ro1144ta ee of state bank membership in the Federal deserve 3ystem, pre-ared by
4seistant Felieral deserve 2,4gent 2vans.
Upon motion, it was voted to interpose no
objection to the distribution of the article.

Letter uated May 16th from the Governor of the Federal




eserve Bank of

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Philadelphia, replying to the Board's letter of April 30th, requesting further
and fuller cooperation by the Federal deserve bank and member banks in the Board's
Pe'lloY of preventing the misuse of the credit facilities of the Bystem.
Copies of the above letter having ueen furnished
members of the Board, it was, upon motion,
individual
the
noted.
Letter dated Lay lbth from the Chairman of the Federal -eserve Bank of
Boston, supnlenrntinc' his letter of 2.:ay 6th in reply to that addressed to him
by the Board on .:.ay 3rd on the subject of the use of Federal e.eserve credit by
riember banks.
Upon motion, the above letter was noted, copies
having been furnished to the individual members of the
Board.
1.:emorandum from Counsel dated. 1.*.ay 9th, submitting letter dated April 29th
fIVRI the Assistant Attorney Cieneral, advising that investigators of the DepartJustice frequently find difficulty in locating the necessary records
to

eupport chares against officers and employees of member banks for alleged

vi
olations oi the Federal Oriminal Jtatutes; the letter inquirin,- - hat ster)s,
if anY, the 3oard mii-ht properly take to arrange for the preservation of all
beak

records, suosiiiary or othersise, for the period of three years named in

the statute of limitations.

Upon motion, it was voted to transmit a copy of
the Lssistaht .:ttorney Cieneral's letter to each Federal deserve Agent with the suggestion that although
the Board has not authority in the matter, it miplIt be
well to bring the letter to the attention of all member
banks.
The Assistant Secretary then submitted for the record memoranda dated
418'T 13th reporting action or discussion at the last conference of Avernors on




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the following matters which have not yet been brouOit to the attention of the
Board,

althoup:h the members are acquainted with them throuph being furnished

with a copy of the minutes of the Secretary of the Conference:
iieport of Special Committee on Credit Operations.
Organization of Open Lancet investment Committee.
Broadening of Bill Darket.
Development of Investment Companies for the Purchase of
Bank Stocks.
..1.1imination
of one of the iederal deserve Yote itedemption
Funds.
Collateral for War Loan Denos its.
deserve kgainst Lkwernment Deposits in Lember Banks.
Lember Bank eserve 1-",equirements (Computation at onening of
business.)
eport of Leased .ire Committee.
_enort of Insurance Committee.
_eport of Pension Committee.
_'.eport of Sub-committee of General Committee on Bankers
Acceptances.
Aeport Of Standing Committee on Collections.
:foted.
this point, the Gecretary of the Treasury joined the meeting and took
the jhair, and a discussion ensuea with respect to the rate situation.
Go

The

vernor was called from the meet inc and upon his return reported telephone

aavice that the directors of the iederal deserve Bank of rew York in session
tc)claY again voted to establish a rediscount rate of 6, on all classes of paper
of all maturities with the understandirw, however, that their action is predi°ated

Upon approval or disapproval by the Federal iieserve Board today,
.Governor Young moved approval of the rate
of 6, established by the irectors of the Federal
deserve Bank of New York on all classes of paper
of all maturities, effective tomorrow, Lay 24th.

DUring. the discussion which ensued, certain members of the Board expressed
the

°Pinion that the policy which has been pursued by the System has been ef-

feativ
- -e

as evidenced by the present credit situation, but questioned whether




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relaxation which it is desirable to bring about to facilitate the meeting

(If the fall demands for credit would be aided by an increase in rate, particu1Y outside of New York City.
'
1411

The suggestion was made that a rediscount rate

or6, Might be justified if some plan could be worked out looking toward the
establi shment of a rate on acceptances of 5); or even 4 l/2;; during the fall to
Meet current requirements for business and crop moving.
At the conclusion of the discussion, Governor
Young's motion was put by the Chair and lost, the
members voting as follows:
"aye"
Governor Young, "aye"
Platt, "aye"
Li*. Hamlin, "no"
r. Liller, "no"
2.:r. James, "no"
2.1r. OunnirOmm, "no"
Telegram dated Llay 22nd from the Chairman of the Federal iieserve Bank of
11°"°119 advising that the board of directors of that bank at a meeting on that
clete reaffirmed their previous action in voting to establish a rediscount rate
Of 61.
In accordance with the understanding with the
Governor of the Boston Bank, upon motion, the action
of the directors of that bank was continued under review.
The Governor then requested authority, until such time as the majority of
the

Board changes its position on the question, to take under review or disap-

l*"e aay rediscount rate of ev; established by a Federal leserve bank, which-

action is preferred by the individual bank taking the action.
Upon motion, the authority requested by the
Governor was granted.




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azi...01ITS OF STATT.DINC- )0".•MITTEES:
Dated, May 21st,
22nd,

Aecommending changes in stock at Federal deserve Banks as
set forth in the Auxiliary Minute Book of this date.
Aecommendations approved.
Dated, May 20th, Aecommending action on applications for fiduciary powers
21st, as set forth in the Auxiliary Minute Book of this date.
Aecommendations approved.
Dated, 11._ y
of the application of Mr. a. G. Ahett,
approval
Aecommending
a 20th,
serve at the same time as director
to
permission
Jr., for
Bank, Charleston, S. C., and
National
Peoples-First
the
of
as director of the National State Bank, Columbia, S. C.
pproved.
Dated, may 20th, Aecomnending approval of the application of Mr. Edward J.
Maguire, for permission to serve at the same time as officer
of the First National Bank, Mount Vernon, N. Y., and as officer and director of the Fallkill National Bank and Trust
Company, Poughkeepsie, Y. Y.
Approved.
Dated, May 20th, Aecommending approval of the application of Mr. E. H. Ayers,
for permission to serve at the same time as director of the
Harpeth National Bank, Franklin, Tenn., and as officer and
director of the Commerce Union Bank, Nashville, Tenn.
Approved.
Dated, May 21st, aecommending approval of the application of Mr. William J.
Large, for permission to serve at the same time as director
of the Douvlaston National Bank, Douglaston, New York and
as director and officer of the Claremont National Bank, New
York, N. Y.
Approved.

The meeting adjourned at 2:00 p.m.

Assistant Secretary.
7
PPrOVed.: