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267 A meeting of the Federal Reserve Board was held in the office of the Federal Aeserve Board on Tuesday, November 13, 1928 at 11:00 a.m. PRESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held on November 12th were read and approved as amended. Report of Law Committee on letter dated November 9th from the Acting q°/ernor of the Federal Reserve Bank of New York, reporting and requesting 411131‘oval by the Board of a fee of 42,500 paid to Messrs. Harris, Beach and liat80119 attorneys at Rochester, N. Y., for legal services in connection with tlie ease of Carson et al., as trustees in bankruptcy of G. E. Zartman and 441Paq, private bankers, against the Federal Reserve Bank of New York; the 130"I'8 Committee recommending approval of the payment. Approved. Letter dated November 12th from Mr. Alexander B. Trowbridge, transrilittiNt statement in the amount of 4500 representing one-half of the final thltileilt due him for services as Consulting Architect in connection with the °°48t ruction of the Baltimore Branch building, the other half being payable 1)/' blagi Federal Reserve Bank of Richmond. Upon motion, a payment to Ur. Trowbridge in the amount of 4500 was approved. The Governor then submitted a letter dated October 26th from the 41011ty _ Governor of the Federal Reserve Bank of New York, which he had pre- 268 11/13/28 -2- vicnial7 brourdit to the attention of the individual members of the Board, rePlThift to the Board's inquiry of October 25th as to the proper interpretation Of the last paragraph of the Deputy Governor's letter of October 10th, explain14 in detail the Autumn demand for bank credit and the manner in which that cleMand was being met. Noted. Memorandum from Counsel dated November 8th with reference to letter dated 4ovember 7th from Roosevelt and O'Connor, attorneys for the proposed "Federal Illternational Investment Trust", requesting approval of a change in the title °f tha proposed corporation to "Federal International Banking Corporation"; C°114eal suggesting that before the Board grants its approval to the change it 411eas a letter to Mr. T. J. Caldwell, formerly connected with the Federal I4ternational Banking Company of New Orleans, requesting definite and formal "as to whether that Company has been finally liquidated. 4671 ' Upon motion, Counsel's suggestion was approved. letter from and Memorandum from Counsel dated November 5th submitting rIllIft Of with referproposed reply to National Bank Examiner H. B. Davenport, Pennsylvania having authority ell" to the question whetly,r National banks in of corporations tc)1r4 the Board to exercise trust powers may act as Treasurers "building reply advising that in and loan associations; the proposed capacity, it is necessary "ror National banks to so act, as a fiduciary °11 permitted to do so under t44t clomPeting state institutions in Pennsylvania be received to the effect that tIle laws of that State and that advice has been the state company in that State of Pennsylvania does not approve of a trust 11/13/28 -3- ting as Treasurer of a corporation. in his memorandum, Counsel suggested, h°\178var, that the correspondence be referred to the Comptroller of the Currency possibly may wish 11"e the proposed reply is transmitted, as the Comptroller to take the position that a National bank may perform the duties incidental to a TreaTarership under its general authority to receive deposits, independently Of the provisions of Section 11 (k) of the Federal Reserve 21ct. to the Upon motion, the matter was ordered referred l's Counse with ance accord in cy Comptroller of the Curren suggestion. or of the Federal ;ies— eKram dated November 13th from the Deputy Govern , el've3flkof Kansas City, replying to the Board's telegraphic inquiry of Novembell 12 his letter of Novemth and advising that the secured loans mentioned in b"9th 41110 are in some cases slightly in excess of 10/,' f the borrowing member the amount of v5,000. 8 caPital and some now under discount are in ing telegram fter discussion, upon motion the follow of the Kansas or was ordered transmitted to the Deputy Govern City Bank: am today. Under "Your letter of November 9 and telegr is required if a ent regulations of Board financial statem bank's paid-in nting discou note exceeds ten percent of the secured as menis it though capital or exceeds .„;5,000, even your telefrom notes Board tioned in your letter. However, ly in exslight are ned mentio gram that in some cases notes view of in and l capita bank's cess of ten percent of member set forth in your letter, circumstances surrounding them, as or technical an is not disposed to insist upon too narrow application of the regulation." that some complaint has been made Governor then referred to the fact , 14 the Joint Conferences of Past regarding the inconvenience ef holding the The 4°1411'nore and iederal Reserve .iLgents in the Board room, due to overcrowding. authorized to make Upon motion, the Secretary was the 'ashington Notel at room arrangements for a suitable for the Conference on Friday. 270 "/13/28 -4_ The Governor then advised the Board that the Director of the Division of 48ea1'ch and Statistics is in need of several assistants in order to keep the w°11kof the Division current and would like, if agreeable to the Board, to IleRotiate with at least one research assistant employed by a Federal Reserve 11141c$ The Governor expressed the opinion that it would be desirable to bring raPloYees of the Statistical Divisions of the various Federal Reserve banks to Ilashillgton from time to time for service of a year or more in the Board's Divi"land he requested authority to discuss the matter with the Federal deserve Agellts who are now in session. Upon motion, the authority requested by the Governor was granted. draft Memorandum dated November 12th from General Counsel, submitting of letter to the President of the International Acceptance Bank, Inc., New York, Y_ with the Board suggesting an amendment to that institution's agreement 1111441. 'TALlch acceptances and acceptance transactions would be deemed to be fully the exportaaec4red within the meaning of the agreement when they arise out of tiorl 4or .4. ,uportation of merchandise and the acceptor is guaranteed against loss bY a v. in yank or banker of undoubted solvency; the amendment being suggested Viet. " Of the situation explained in the letter from the President of the Inter114ti°11a1 Acceptance Bank presented at the meeting of the Board on November 10th. Ordered circulated. Letter dated October 30th from the Deputy Governor of the Federal Bes4111'15 Bank of New York, regarding a question raised by the office of the Comp- trol, 'sr of the Currency as to the legality and eligibility of certain bills 1191:Ited by the Nassau National Bank of Brooklyn for the Standard Rolling Mills, 4 customer. 271 11/13/28 -.5_ Ordered circulated. Letter dated November 3rd from the Director of the Bureau of Foreign and hIlleatie Commerce of the Department of Commerce, with further reference to he Matter considered at the meeting of the Board on October 10th, namely, tile Possibility of action by the Federal Reserve System with a view to changthe present practice of American merchants, banks, etc., of refusing to accePt Canadian currency other than at a discount. At the suggestion of the Governor he was authorized to take the subject up with the Conference of Governors Which convenes tomorrow. Letter dated November 8th from the Deputy Governor of the Federal Reserve 41111t Of New York, with reference to an inquiry made by the First Federal Foreig4 Illvestment Trust, New York City, for an interpretation of the phrase iqflarltet vni contained in Section XI of Regulation K, relating to security for qa tures, as applied to retail installment paper, which arises from sales of 4111erir.. -'44 merchandise by foreign merchants and against which the First Federal 4 "Ile gla Investment Trust makes advances to the foreign merchants in amounts eq1141 on the average to 75/0 of the face value of such paper. Ordered circulated. Letter dated November 3rd from the Assistant Secretary of the Treasury, trEkria Mitting copy of report by the Committee designated to consider the adviseL' 4 Of destroying unfit paper currency at the Federal Reserve banks instead Or the Treasury Department; the Committee unanimously recommending no change at 114 tha present redemption procedure. Noted. Letter dated November 2nd from the Secretary of the Federal Reserve Bank 272 11/13/28 ct Atlanta, transmitting copy Of a resolution adopted by the board of directors II/lilting the members of the Board to accompany a committee of directors of that bank on a trip to Havana, Cuba in December for an inspection of the new quarters Cf the Havana Agency and an investigation of the operations of the Branch and gerkeral conditions in Cuba. After discussion, the Secretary was directed to advise the Federal Reserve Bank of Atlanta that the members of the Board appreciate the invitation but at the present time are not in position to accept, although if any member of the be Board later finds that he can make the trip the bank will advised. Letter dated October 25th from the Federal Reserve Agent at San Francisco, transmitting newspaper clipping with reference to the formation of the Transe, as a holding Alnerioa Corporation, incorporated under the laws of Delawar Company for the various Bank of Italy interests. Noted. 27th on the subject The Governor then submitted a memorandum dated October reserve and Of reduction in reserve requirements of outlying member banks in central reserve cities under the provisions of Section 19 of the Federal Res"ACt. er refer At his suggestion, the Governor was authorized to now Agents Reserve Federal of ce Conferen the memorandum to the Federal the of meeting ming forthco in session and to the Advisory Council. made by the Secretary of The Secretary then submitted the following report ngs of the 418 Federal Reserve Agents' Conference, with respect to the proceedi C°4ference at its meeting yesterday, November 12th: the followI,. "At today's session of the Federal Reserve Agents' Conference, LT action was taken: 273 11/13/28 -7- tio_ "In keeping with the suggestion of the Feaeral Aeserve Board, it was ie vad, seconded and carried that the stenographic record of the Federal ;eeerve iLgents' Conference be dispensed with and that minutes of the proeclings be kept by the Secretary in lieu thereof. etvr. Iitchell, who had been appointed to arrange for a dinner to be ta en by the Chairmen and Governors to the Federal Reserve Board, the Secred of the Treasury, and others, reported that it will be held at the 1.1etroit 'an Club on Thursday at 7:00 p.m. On 1 motion, duly made and seconded, it was ordered that Dr. Goldenweiser 07 b ,7 invited to be present with such members of his staff as he desires on Wed"saay at 10:00 a.m. ow.In accordance with the request of Governor Young, memorandum X-6175, am -Lining suggested revision of open market investment procedure, was read it..eonsidered paragraph by paragraph. On motion, duly made and seconded, T, v as in the proposed plan, with the following amenaments: 4.6 wa voted to concur s recommended that in the third line of paragraph 2, after the word lerTesentative' the words 'and/or an alternate' be inserted and that after w,? word. 'designated' the word 'annually' be inserted, so that the paragraph 14 1 read as follows: '(2) That a Committee to be known as The Open Market cY Conference be set up with a representative from each of the twelve ;°*aeral reserve banks, the representative and/or an alternate to be designated lly by the Board of Directors of the bank.' Li'. Curtiss requested to ch,recorded as voting 'no'. A copy of the memorandum, showing suggested gas, is appended. 12 At the request of Governor Young, his memorandum X-6173, dated October banks, was read and consit: 1928, in regard to examination of State member v;'ered paragraph by paragraph. On motion, duly made and seconded, it was in connection with the lated to concur in the statements contained therein, co8t sentence of paragraph 4, which reads 'This report should also be acrliall1Panied, if necessary, by a letter from the Agent stating the corrective Reserve 0.eellres that have been taken by state authorities or by the Federal that fact the to attention himself', -r. Newton (San Francisco) called copies him send to refused ore Bank Supervisors of two states in his district the letters they write to member banks following examinations. X-6173a, to al, Proposed letter of Governor Young, dated October 12, 1928, memoranmentioned above the to attached cl4r1 Federal :;eserve Agents, which was Conference The paragraph. by 110'was also read and considered paragraph ed. with gratification that the Board will again recommend to Conrress in ' Da 12ember that the law be amended so as to make charges for member bank examIons discretionary. On motion, duly made and seconded, it was voted to was recomrlia ctlr in the proposed letter, with the following exception: It placed be period a paragraph second the 4ea that in the fourth line of 4f' fact, those 'in omitted: be matter following weter the word 'agents' and that examination an to resemblance close a such th have in our possession bear except by the label. ?his prat We are unable to distinguish the difference, i;630,000 a year with reimapproximately of 1 cedure has developed an expense 2 v24,000.' approximately of banks member -4rsement for assessments against suggested the with letter, and memorandum ch Copies of the above mentioned 4flges indicated thereon, are attached. nj j 11/13/28 -8- "In regard to topic 1-B on the program, it was moved, seconded and carthat this conference is opposed to the proposed minimum maturity on member "'nit collateral notes. Since additional topics have been added to the program since it was Printed, a revised copy is furnished herewith." The action of the Conference in dispensing with a stenographic record was noted. Inasmuch as the suggested revision of the Open Market Investment procedure of the System, is to be referred to the Conference of Governors which convenes tomorrow, the recommendations of the Federal Reserve Agents' Conference relative thereto were passed over without action at this time. The subject of examination of State member banks, including the changes suggested by the Federal Reserve Agents in the memorandum and letter submitted by the Governor, was made special order of business for a meeting to be held on Tuesday, November 20th. The question of a minimum maturity on imber bank collateral ors' Conference was notes having also been referred to the Gov passed over. The meeting adjourned at 12:30 p.m. q4k%b._ Secretary. APProved:
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