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e1.38 4 meeting of the Executive Committee of the Federal Reserve Board was ileld in the office of the Federal Reserve Board on Tuesday, May 31, 1928 at 4:00 a.m. PRESENT: PRESENT ALSO: Governor Young Mr. Platt Mr. Hamlin • Mr. James Jecretary Mr. Eddy, Mr. McClelland, ksst. Secretary Mr. Wyatt, General Counsel Mr. Smead, Chief of the Division of Bank Operations Director of the Division Goldenweiser, Mr. of Research and Statistics. The Governor stated that special order for this meeting was consideratiola Of the various proposals relating to revision of reserve requirements bLAnks which have been considered by the Board from time to time. stated that in addition to the formulation of a general legislative prodealing with reserve requirements for submission to Congress, the four Hi iliNic)r proposals before the Board are: (1) 1.dvisability of requiring the daily computation of reserves by member banks in all Federal Reserve Bank and Branch cities, based upon deposits as at the opening of business. (2) /tdvisability of formulating a program of advising all member bank directors as soon as possible of their legal responsibilities individually, arising out of noncompliance with the reserve requirements of the Federal Reserve kct on the part of their respective banks, (3) Desirability of increasing the present list of reserve cities by including therein certain cities not now so designated, which are within a short distance of a Federal Reserve bank or branch City and other cities in which a large volume of bank deposits are carried. (4) 44visability of designating as central reserve cities certain cities now designated as reserve cities, namely, Boston, Philadelphia, Cleveland, St. Louis and San Francisco. "LR 5/31/28 -2- The Governor expressed the opinion that there are certain practical (Thjections to all of the individual proposals listed above, and that in his "Lion the solution of the proolem reouires amendment of the Federal eserve 44, He stated that he believed a a desirable amendment would be one requir- reserve of 13/; against all bank deposits wherever held and that he was 440 inclined to believe that a higher reserve should be required against 411e ign deposits. A discussion ensued during which the Governor submitted draft of a letter to the Governors of all Federal Reserve banks prepared by Mr. Smead, Igillesting that the Board be furnished with a statement showing required "es and reserves actually maintained by member banks in Federal Reserve bank and branch cities and other reserve cities in which the Board rethe semi-weekly computation of reserve balances. v'ination is desired to N41 At change from weekly He stated that this give some general idea as to the effect of the to semi- w eekly reserve computations in these %ties. Upon motion, it was voted to approve the letter requesting that the information be filed with the Board not later than June 15th,with the understanding that the Governor might for cause permit filing by individual banks not later than July 1st. The Governor also suggested that in connection with any program for the tormulation of recommenuations for legislation the Board might address -C14111Inication to the Governors and Chairmen of all Federal 414 to eserve banks all members of the Federal l'idvisory Council, requesting them to furn- the Board -iith specific recommendations which they would suggest. He 4140 -3- stated that if replies to these communications were received by the Board 11°t later than September 1st he believed that some legislative procrram could beworked out for submission to the Fall Conference of Governors and Federal ilaserve igents, if not before. the suggestion of Mr. Smead, Yr. :lyatt and he were requested by t141 Governor to prepare for the Board an up to date compilation of reserve NAirements in the various states. The Governor also stated that he had wired the Governor of the Fed°41 aeserve Bank of Chicago to inquire of Mr. letmore, President of the -4al advisory Council, when the Board might expect the brief which the 41111cii stated it would file in support of its recommendation that no change 1.1111 a semi-weekly to a daily basis be made in the reserve computation requireOf member banks in Federal eserve Bank and Branch cities. He submit- ted a reply statincr that each member of the Council has been requested to c441r, 'as the situation and that it will probably be a month before the brief 4114be prepared and forwarded to the Board. '- further detailed discussion ensued during which it was agreed to adopt the suggestion made by the Governor that individual recommendations as to amendments to the law relating to reserve requirements be secured from the members of the Federal -dvisory Council and the Governor and Jhairmon Of each Federal deserve Bank. The Governor then reported telephone advice received from the .cting Oheti Ilnan of the Open Market Investment Committee that the . 25,000,000 of 4eqlzri is 4 -,J.es referred to during the Committee's meeting with the Board on May 4th have been sold from the system 2.Lccaunt. He also stated that the Federal 441Bank of New York has taken over temporarily from a foreign correspondent " 4 4141 6/31/2s -4- 471°00,000 of securities which will be disposed of within the next three or follr days. The Governor stated that Er. Case also advised him that the provision °t the new tax bill, exempting from tax income received by foreign holders fr°111 4Marican bankers acceptances, will undoubtedly have the effect of causing il°reiga banks to liquidate their holdings of government securities for reinsstIllent of the proceeds in acceptances at a higher rate. Yr. Case stated that tlkis presents a problem for future consideration by the Board and the Open ilarket Investment Committee. deference was then made to the fact that within a short time members (4 the Board will be leavinP: for their vacations and it was voted that beginJUne 1st the Board should adopt its summer schedule providing for regular rileetirls on Tuesdays, ":ednesdays and Thursdays. It was also voted to request Yr. Wyatt to prepare a form of resolatiO4 for adoption by the Board conferring authority upon the 2xecutive Coinr4ittee for the transaction of the Board's business, excepting certain matters it was felt should be acted upon only by the °fall members of the Board. t1 011 01 The Governor stated the resolution to be prepared by 1:_r. ess for the me `T1' I 11,2; of the Board on 2hars etim: ad'ourned at 12: ard or with the knowledge at consideration and adopwill be special order of June 7th. clock no Secretary. Gover
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