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454 A meeting of the Federal Reserve Board was held in the office of the Pederal Reserve Board on Tuesday, May 7, 1929 at 11:15 a.m. PRESENT: Vice Governor Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. McClelland, Asst. Secretary The minutes of the meetings of the Federal Reserve Board held on May 3rd alld 4th ,were read and approved.. Letter dated May 2nd from the Secretary of the Federal Reserve Bank of ley/ York, advising that the board of directors at a meeting on that date made no ' chatge in the bank's existing schedule of buying rates, but quoting the followrate of the resolution adopted by the directors with respect to the discount "VOTED subject to review and determination of the Federal Reserve Board, to establish a rate of six percent for all rediscounts and advances, effective from the opening of business May 3, 1929 and until further notice and superseding the existing rate but with the understanding that this action of the board of directors of this bank is predicated upon approval or disapproval by the Federal Reserve Board today,“ Noted. the Federal Reserve Telegram dated May 3rd from the Deputy Governor of dealers rates on thirty and sixty 1344k Of New York, advising of an advance in 441,Y bills but advising that it is believed the condition leading to such inbank are not teaae is temporary and the minimum rates of the Federal Reserve beillg changed. Noted. of the Division of Bank Operations, Memorandum dated May 3rd from the Chief 1, 455 -2- 5/7/29 submittim- and recommending acceptance of the resignation of Miss M. Virginia Greene as comptometer operator in the Division, effective at the close of busi4ess May 27th. kccepted. Reports of Committee on Salaries and Expenditures on lists submitted by the Federal Reserve Banks of Philadelphia, St. Louis and Dallas, of employees for whom the directors of those banks approved leaves of absence with pay, on account of illness, during the month of April, where the total of such absences since January 1, 1929 has exceeded thirty days; the Board's Committee recommending approval of the salary payments involved. Approved. Report of Committee on Salaries and Expenditures on letter dated April 27th from the Deputy Governor of the Federal Reserve Bank of New York, submitting recommendations, effective May 1, 1929, for the promotion in grade of two employees of the bank to positions where the grade is in excess of 42,500 per in assignment "num, for the establishment of a new position and for a change °f one employee where no promotion in grade is involved; the Board's Committee aChriSing that the proposed changes are in accordance with the salary plan in effect at the bank ana recommending that they be approved by the Board. Approved. dated May 3rd from Report of Committee on Examinations on memorandum of an application of the Comptroller of the Currency, recommending approval the First National Bank of Jibaux, Montana, for permission to reduce its capital stock from „;75,000 to 450,000; the Board's Committee also recommending 5/7/29 -3- approval. Approved.. Letter dated May 3rd from the Federal Reserve Agent at Boston, advising that the Old Colony Associates of Boston, an affiliation of the Old Colony Trust °°1111Deny, hale acquired the controlling interest in the Stoughton Trust Company ••• °f Stoughton, Massachusetts, a nonmember bank. Noted. Letter dated May 4th from the Assistant Federal Reserve Agent at New I r°141c, advisjnP. that the merger of the Bank of Commerce in New York and the klaranty Trust Company of New York, would be effective at noon on that date 4 the 44 merged bank would begin business on Monday morning, May 6th, as the 4Uaranty Trust Company of New York. Noted. Report of Committee on Examinations on letter dated April 26th from the Assistant Federal Reserve Agent at St. Louis, recommending approval of the exercise of trust powers, under authority granted by the Commissioner of 'illarlee of Missouri, by the University City Bank and Trust Company, University CitY, Lo., which was recently admitted to membership in the System as the 13411k of University City; the Board's Committee also recommending approval: Approved. Memorandum dated May 4th from the Comptroller of the Currency, with l'eference to application for permission to exercise trust powers filed on half of the proposed Union National Bank and Trust Company of Lincoln, organize the bank Ilebraeka; the Comptroller advising that the application to 4-57 5/7/29 -4- been disapproved and recommendation as to its application for trust powers therefore, unnecessary. loted, no action being required. Letter date." :ay 3rd from the Assistant Federal Reserve Agent at St. Louis, transmitting correspondence with reference to the condition of the Farmers and hilders Bank, Iberia, Mo.; the letter recommending that with the removal of 44,000 in undesirable assets, the promised attention to the bank's affairs and ' its improved condition, no action be taken to discontinue its membership. In accordance with the above recommendation, it was voted to take no action regarding the membership of the bank named. Memorandum dated May 6th from the Board's General Counsel, submitting letter addressed to him by Honorable Newton D. Baker, with reference to his suggested fee of „5,000 for consultation regarding the opinion rendered in Counsel's memorandum of Larch 7th on the subject of the power of the Board to enthe principles regarding the proper use of the credit facilities of the Peaeral Reserve System laid down in the Board's letter of February 2, 1929; 14r. Baker suggesting that the employment be "for consultations and opinions 111304 the powers of the Board" and that the fee be fixed at :A,000, with the 114aarstanding that it be adjusted to a more reasonable figure if the work tlIrns out to justify it and with the further understanding that the suggested tig4re does not include litigations arising out of the questions considered. 4 discussion ensued during which some members of the Board expressed the opin1°11 that the Board will not require much more in the way of services by Yr. known 135ker in this matter and that its immediate requirements should be made t° him and his fee definitely fixed and paid on that basis. It was suggested 5/7/29 that it might suffice if Yr. Baker were to accept the Board's minute entry of the statements made by him at the meeting on May 3rd., or file a brief written statement of his concurrence in the opinion of the Board's General Counsel dated March 7th, without the filing of a formal opinion. Mr. Miller moved that the portion of the minutes of the meeting on May 3rd which refers to the statements made by Mr. Baker, be transmitted to him with an inquiry as to whether they are a fair statement of his position. Carried. Mr. Cunningham then moved that Yr. Hamlin, Chairman of the Law Committee, prepare and submit to the Board draft of an appropriate letter to Mr. Baker. Carried. The Vice Governor then submitted letters addressed to him under date of 14aY 3rd and 6th by the Governor of the Federal Reserve Bank of Philadelphia, l eferrtag to the letter which the Board addressed to the directors of that ' bnilk under date of April 16th; the letters pointing out a considerable imDistrict, which has i3rWement in the 'situation in the Third Federal Reserve been effected since the enactment recently of a Pennsylvania statute authorizing interest rates in excess of 610 on security loans. Noted. Thursday afternoon Mr. James then stated that he is loaving Washington the Federal for an absence of about ten days, during which he will visit 4eserve Bank of Atlanta at the request of the Chairman of the Board of Directors directors of the Federal Of that bank and will also attend the meetini; of the ileaerve Bank of St. Louis on May 15th. 39_ -6- 5/7/29 n of the Board correspondence The Vice Governor then brourht to the attentio g the letters rewhich he has had with the Governor, in San Francisco, regardin cently addressed to nine of the Federal Heserve banks. :;ommunications presented by the Vice Governor are quoted below: rnor Platt, April 27, 1929: Letter to Governor Young from Vice Gove after the New York "Nothing has happened since I wrote you g that Dr. Liner ptin exce , sday rate was turned down on Thur Federal reserve the to er lett is proposing to get out another so banks which or 37 the of list a banks which is to contain 00,000 from some Felare said to be borrowing as much as .„5,0 ers at the same time. eral reserve banks and loaning to brok the bank of which Li'. One of these banks, by the way, is of the Federal t,dvisory er memb a W. W. Smith of St. Louis, g was said about these thin Some t. Council, is the presiden ing, and 1:r. Smith 37 banks by i;:r. James at the Jouncil meet ion which seemed enImmediately came back with an explanat pointed out that his tirely satisfactory to 11r. James. He loans made before bank had no loans to brokers except time had lost very heavily the first of January, that the bank ral reserve as fast in deposits and was raying up the Fede inclined to think as its loans to brokers matured. I am an almost equally that at lcast 25 of the 37 will present told me a day iser enwe Gold Dr. that good case. I may add the records of the famor two ago that he had lookea into them were not by any means ous 37 and had found that most of med. Lnyway the as continuous borrowers as had been assu raise continuously the rates result of our action has been to customers, and so far charged by banks to their commercial s is concerned, we have as getting dawn to a more normal basi a snare copy of Dr. made no progress at all. I haven't r has sent you one letter but I presume LIr. Carpente ted at a later adop be is to as it was put in circulation and meeting. Governor Young, lLay 6, 1929: Telegram to Vice Governor Platt from such intimidation and co"I am bitterly opposed to any my colleagues and outlined in ercion as proposed by one of want to be so recorded I will apyour letter April 27th. I that a copy of this telegram gets preciate it if you will see d. Intended to leave here Tuesday to every member of the Boar need of my immediate return I will out unless there is urgent San Francisco directors on 2hursday." stay over and sit in with 460 5/7/29 -7- Telegram to Governor Young from Vice Governor Platt, May 6, 1929: "Letters somewhat modified from form referred to April 27 have been sent to Philadelphia, New York, Boston, Chicago, Richmond, Cleveland, Atlanta, St. Louis and San Francisco. They are nearly alike, each containing list of banks. The San Francisco letter mailed May 2nd should arrive today and you can form opinion and telegraph me. Am sending copies of New York and Philadelphia letters air mail but do not think necessary to cut short your visit." Telegram to Vice Governor Platt from Governor Young, may 6, 1929: "I have read letter May 2nd to Newton mentioned in your wire of today and strongly urge that it be withdrawn by telegraph for the following reasons. Four banks that you mention are only borrowing thirty seven million which is a very modest amount in comparison with their total deposits of over billion dollars. One that in Board's apinion was apparently chief offender has dropped from thirty million to nine and one half million and Board cannot exnect the impossible. I have seen sufficient evidence so far in California to learn (1) that there is a demand 'upon California banks from savings depositors to invest in securities (2) that corporations and others are continuing to withdraw to lend on call (3) that direct action used elsewhere has prompted many concerns that borrow nationally to use lines in California that have not been used for four or five years or to increase lines that were modest. Total net deposits of San Francisco have declinea approximately one hundred million dollars and that combined with demand for legitimate loans has produced unusual situation. With the seasonal requirements that will come later there is every reason to believe that these banks will increase their borrowings rather than decrease them. I have consistently backed Board in its policy of February 6th frequently when it was extremely difficult from my poiat of view but it seems to me that if that policy in the opinion of the Board has been productive of such unsatisfactory results that the Board now feels that it rust again reprimand nine of the reserve banks such a nagging program is Inadvisable. Therefore, if the Board feels that more should be done it should at least follow market rates for money." After discussion, with respect to the telegram from the Governor last quoted above it was, upon motion, voted to reply thereto, as follows: 5/7/29 -8- "Your telegram. Board is not of opinion that progress of its policy has been, to mote your language, productive of such unsatisfactory results that it must reprimand nine of the Federal reserve banks. On the contrary, Board feels that good results have already been obtained. Board's letter points out that some member banks apparently have not come into line with Board's policy and asks Federal reserve banks to report, after personal conference, :illy more complete cooperation may not be expected. It will be open to these banks under Board's letter to explain fully their difficulties and Board will give careful consideration to any reasons given by them. By direction of Federal Aeserve Board." ilEPORTS OF STANDING C0121ITTRES: Dated, May 4th, Aecommending changes in stock at Federal Reserve Banks as 6th, set forth in the Auxiliary Minute Book of this date. Recommendations approved. 7th, Dated, May 3rd, Hecommending action on applications for fiduciary powers as 7th, set forth in the Auxiliary Minute Book of this date. Aecommendations approved. Dated, May 4th, ▪ecommendinE action on an application for admission of a state bank, subject to the conditions stated in the individual report attached to the application, as set forth in the Auxiliary Minute Book of this date. Aecommendation approved. Dated, May 3rd, Recommending approval of the application of Mr. Henry H. Holmes for permission to serve at the same time as director of the First National Bank of Jersey City, N. J., and as director of the Greenville Banking and Trust Company, Jersey City, Y. J. Approved. Dated, May 3rd, ecommending approval of the application of Mr. A. J. Peters for permission to serve at the same time as director of the American National Bank, Okmulgee, Okla., and as officer and director of the Security National Bank of Oklahoma City, Okla. Approved. Dated., May 4th, -.aecommenaing approval of the application of Mr. Robert O. Graham for permission to serve at the same time as director of the Citizens National Bank, Evansville, Indiana and as director of the Peoples National Bank and Trust Company, Washington, Ind. Approved. Dated, 1:otay 6th, Recommending approval of the application of 2,:r. Harry C. Stevenson for permission to serve at the same time as director of the First National Bank and Trust Company, Aochester, N. Y. and as director of the Norris Plan Company of Rochester, N. Y. Approved. Dated, May 6th, Recommending approval of the application of Mr. Henry H. Stebbins, Jr. for permission to serve at the same time as director of the "I‘rst National Bank and Trust Company, o.chester, N. Y., and as director of the Morris Plan 'Company, Rochester, N. Y. Approved. 462 -9- OA S OF STANDflTG COMMITTEES: (Conttd) Dated, May 6th, Dated, may 6th, 7th, Recommending approval of the application of Mr. S. Rae Hickok for permission to serve at the same time as director of the Morris Plan Company, Rochester, N. Y., and as director of the First National Bank and Trust Company, Rochester, N.Y. Approved, Recommending approval of the application of Mr. Emil N. Sorgenfrei for permission to serve at the same time as director of the Fordham National Bank, Nev York, N. Y., and as director of the Port Morris Bank, New York, N. Y. Approved. Recommending approval of the application of Mr. Lewis Cass Ledyard, Jr., for permission to serve at the same time as trustee of the United States Trust Company of New York, N. Y., and as director of the National Park Bank, New York, N. Y. Approved. The meeting adjourned at 12:45 p.m. Gq(kg Assistant Secretary. APproved: Vice Governor.
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