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A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Wenesday, May 9th, at eleven o'clock. PR:,•'SErT: Governor Crissinger Fr. Platt Mr. Hamlin Mr. Miller Mr. Mitchell Mr. Dawes Mr. Hoxton, Secretary The minutes of the neeting of the Federal Reserve Board held on May 8th Iler`e read and on motion approved. Memorandum dated May 7th, from General Counsel and approved by the ChairO' the Law Committee on the subject of the proposed double indemnity insur411 "for employees by the Federal Reserve Bank of Kansas City, said memorandum prepe.red in reply to a letter dated April 24th from the Chairman of the ?cetera" Reserve Bank of Kansas City. Upon motion, the report of Counsel in this matter was adopted, the Secretary being instructed to advise Mr. Ramsay accordingly. Letter dateu May rd from the Federal Reserve Agent at San Francisco, tliallelnitting with favorable recommendation the applicat ion of the Security 41-lat company of Bakersfield, Cal., to establish a branch at Fellows, Cal. Approved, Mr. Crissinp;er voting "not'. Upon motion, the Board approved the bond of Mr. Meade L. McClure, ?Meta" Reserve Agent at the Federal Reserve Bank of Kansas City, in the 41kint Of :' !1100,000. Report of Chief Examiner with reference to the matter referred to him tOr lieDort at the meeting of yesterday, with reference to the letter from the thEll rn1111 of the Federal Reserve Bank of 7-ew York, dealing with the matter of 4114 44g the vacancy caused by the resignation of the General Auditor of that 1.1r. Francis Oakey. Referred to the Committee on Salaries and Charge Offs for formulation of a reply. 5/9/23 -2- Hamlin, in accordance with the action of the Board taken yesterdaY, submitted a reoort u)on the communications received from the Federal -serve rank of an Francisco, relative to the cost of building and building illaterials in salt Lake city, Utah. Upon motion, the matter of authorizing the construction of a buildLlg for the alt Lake city branch was ordered laid upon the table 'Until the present vacancies in the membership of the Federal Reserve Board are filled. remoandum dated April 7th, from General Counsel requesting authority t° DurChase for fifty dollars a copy of the stenographic report of oral arguIllelltS before the Supreme 'ourt in the Far Clearance ases. Approved. Lr.Miller reported upon the matter referred to the Committee on larles and Charge Offs at the meeting of Lay 3rd, namely, letter dated 4911.1 26th, from the Governor of the Federal Reserve Bank of Dallas, requ3stillp,, e as tc compensation of the member of the Federal Advisory Council *°111 the ineventh Federal Reserve District. Upon rot ion, the Committee's report was adopted and the Secretary was instructed to advise Governor YcKinney accordingly. rr. miller submitted with favorable recommendation, a proposed cir- "zr lettr addressed to each Fed ral Reserve Agent, requesting submission to he Board of certain additional reports of deposits of member banks. Approved. The Governor stated that the next thing in order would le consideration t he matter docketed as Unfinished Business, namely, the proposal to establish e-11 agency of the Federal Reserve system at Favana, Cuba. nth reference to t 4is matter, the Governor submitted a letter dated May 8th from the 7resident 5/9/23 °f -5- the United States which was ordered spread upon the minutes, together with a letter dated I.:ay 7th addressed to rlovernor Crissinper from Mr. ?hillips Under Secretary of state, and a copy of a cablegram received by the State Departwent on ray 5, 1923, from the American Ambassador at Havana, Cuba. These documc its. are filed in the records of the Board pertaining to the minutes Qf this meeting and are quoted in this record as fellows: 17f-TIT2 HOUS'E Washington May 8, 1923. 1,!Y dear C'hairrran Crissinger: I am returning to you herewith the correspondence from the State Department which you left in my hands last evening. The matter covered therein was taken up for consideration in the Cabinet meeting this morning, and it was the unanimous ()Pinion of the Cabinet that it is desirable to establish an agency of a Federal eserve Bank in Havana, and thEt we can Well afford to expand in the promotion of American commerce and. our fortunate relations abroad. In view of wIpt was said I think it altogether desirable that the Federal Reserve Board should make a favorable decision, though I hope it will be possible to so adjust the contention between Atlanta and Boston that there will be no friction on that score. Very truly yours, (Signed) Warren G. Harding lioh Ohm D. R. Crissinger, -Lriman, .'ederal Reserve Board, .'811ington, D. C." l ePlY refer to LA ' 811.51537/ "DERARTMTT OF STATE Washington May 7, 1923. My dear Mr. Crissinger: Referring to iv letter to Mr. Platt of April 19, 5/9/23 -4- "1923, transmitting the text of a strictly confidential telegram from the American Ambassador to Cuba, dated April 17, 11 p.m., I beg to enclose herorith the substance of a fUrther telegram from Ambassador Crowder, received May 5, 19243, regarding the establishment of an agency in Habana by the Federal Reserve Bank of Boston. The Department concurs in general with the view expressed by the Ambassador and trusts that his suggestion may receive your careful consideration. This T)epartment however, does not feel that it should venture to pass upon the proposal from a financial point of view. I am, my dear Yr. Crissinger, Very truly yours, (Signed) William Phillips. 2nclosure: As above. The Honorable D. R. Crissinger, Governor, Federal Reserve Board, 7ashington, D. C. " " Substance of undated telegram from the American Ambassador, Habana, Cuba, received May 5, 1923, 10:15 p. m. Urgent ro. 24. Referring to my number 17, April 17, 11 p.m. 'ress dispatches report prospective meeting of Federal Reserve Board May 7 to consider application Federal Reserve Bank Boston to establish agency in Cuba. Suggest advantage be taken of presence Governor Harding in mashington on that date and of opportunity to discuss with full board the banking situation in Cuba and latest draft of Torriente de Celis Project for bank of issue et cetera in Cuba, forwarded with my despatch number 90 of April 28. On April 30, 1923 Royal Bank of Canada whose deposits In Havana alone were already reported to be fifteen million dollars and for whole island of Cuba forty million dollars took over entire banking business of private banker Pedro Gomez Mena whose total deposits are approximately thirteen 5/9/23 -5- million dollars in addition to seven branches of Mercantile Bank of Cuba in Santa Clara province formerly under Gomez Mena control. It is definitely known that negotiations in progress between private banker Jacinto Pedroso and Canadian Bank of Commerce for acquisition of former by latter actual terms Of sale now being under examination by head office in Canad4. Tiost arresting information in connection with the expansion of Canadian banking interests secured this morning from trustworthy source, namely, that private banker Gelats has been approached by Royal Bank of Canada and is actually considering offer of purchase by latter. The absorption of such important private banking interests so closely identified with connercial life of Cuba by Canadian banking interests, following upon the collapse and disappearance from activity of banks which went into suspension of payments, should be regarded with consternation by reason of growing disparity betveen Canadian banking interests here and their relatively tnimportant economic interest in Cuba when compared with our preponderate commercial interests. ro doubt appears to be entertained in financial circles here that private bankers are being driven from business partly on account of the near monopoly exercised over commercial bank credits and foreign exchanges by the large Canadian and American banks. I am inclined to think that the establishment here of an active agency of the United States Federal Reserve rank at this time would materially encourage the two private bankers mentioned above and possibly others to resist absorption by Canadian banks. One of the principal burdens upon American and Cuban American business interests here is the high rate of interest charged by banks. I am informed that discount rates below eight per cent are practically unknown while twelve per cent is common; that the rational City now charges ten per cent discount on short time commercial paper of type for which all United States Reserve Banks now charge four and one-half per cent. It is universal opinion among business men here that these ihterest rates are exorbitant. The extent to which an active agency of Federal Reserve Bank could remedy this situation seems a matter of technical banking judgment but it seems to be unquestioned in commercial circles that such an agency would induce competition and thus benefit business. I discredit the assumption that local bankers would not avail themselves of rediscount privileges afforded by such agency. -6- 5/9/23 Whether such an agency would succeed in materially weakening the near monopoly of for el ga exchanges would probably depend in some degree upon extent to which agency is able to acquire good will of important sugar shippers and others. In my opinion the establishment here of an active agency of the Federal. Reserve bank would meet with popular favor among business men, and would add to the potential influence of the United States in Cuba where at the present time our banking influence is apparently waning. I would recommend the fullest discussion immediately of the above situation with the Federal Reserve Board. The Department may well apprehend material and permanent loss of 2_merican banking prestige in ruba unless prompt action of some character is taken." After discussion, the following resolution was put by the chair and carried . 141 alliinously, the roll being called and each member present, namely, Governor cllsainger,Mr. ;-)latt, Mr. Hamlin, Mr. Miller, Mr. Mitchell and Mr. Dawes, votits) 4 411 the affirmative: "WHER.L"S, all phases of the question of establishing a Federal Reserve bank agency at Havana, Cuba, having been presented to the Bcard and. fully considered, r.:MIER-F,FOR3, BE IT RZ,3OLITE7), that the Board now determines to authorize the establishment of a Federal Reserve bank agency at Havana,' Cuba. Thereupon, upon motion duly made and unanimously carried, the Governor was requested to transmit the following telegram to the Governor of the Federal Reserve Bank of Boston and to the Governor of the Federal Reserve bank of Atlanta: "The Boston and Atlanta Reserve banks are reauested to send. their Governors and one or two other officers to rrashington on next Tuesday afternoon at three o'clock in order to work out the details of an agency which the Board has determined to establish in Cuba." P (TIVITT7E NO. 1: Recommending changes in stock at Federal Reserve banks, as set forth in the Auxiliary Minute Book of this date. Approved. 5/9/ 3 Ts OF -7- . no 011. rin Z! Dated May 8th, Dated May 8th, • 1 (Cant ,d) Recommending action on applications for fiduciary powers as set forth in the( Auxiliary rinute Book of this date. Approved. Recommending action on applications for admission of state banks, subject to the conditions stated in the individual reports attached to the application, as set forth in the Auxiliary Minute book of this date. i'l)proved. At 12:55 p.m. the meeting adjourned. Secret ary.
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