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At a regular meeting of the Federal Reserve Board
held in the office of the Board on Wednesday, November 14,
at 3:00?. M.,
Mr. Harding, presiding

Mr. Delano,

Mr. Warburg,

Mr. Williams,

Mr. Hamlin,

Mr. Willis, Secretary.

Governor Harding stated that he had had a conversation with Mr. Thomas L. Cochran of the firm of J. P.
Morgan & Company, who had visited him this morning, and
who had presented a proposition relative to the financing
of certain bills, on which he desired to have the Board's
attitude defined.

Counsel of the Board was called into

conference, and stated that Mr. Cochran had stated to him
that the Secretary of the Treasury had some time ago asked
the British Government not to offer demand bills of that
Government during the time the Liberty Loan was being
placed on the market.

They had, therefore, been held

back, and the Morgan firm had carried them instead of using the proceeds to take up the outstanding obligations
of the British Government.

Mr. Cochran had further stat-

ed that if hia firm could get the money they need by rediscounting these bills, this would then release other

money for use in the refunding operations referred to.
The Secretary of the Treasury said he would accede to
their floating 90
-day acceptances in an amountsnot over
$150,000,000, in order to carry through this financial
Discussion ensued.

Mr. Hamlin said two problems

presented, the first whether the Federal Reserve

Bank is actually rediscounting the acceptances referred
to, or whether, on the other hand, the Federal Reserve
Think is buying them in the open market.

Mr. Warburg and

Yr. Williams took the view that the proposed transactions
were merely the marketing of finance bills, and hence not
permitted by the Federal Reserve Act.

Counsel took the

view that the transaction was one griming out of importations and exportations.

It was concluded that the pro-

posed bills were probably elirible for discount at reserve banks, but the matter was referred to the Executive
Committee to confer more fully with Mr. Cochran and write
the result to the firm of Morgan

& Company.

The minutes of the meeting of the Board held on
November 12 were read and, on motion, approved.
In connection with the interview with Mr. Curtis
of New York, described in the minutes of the meeting of
November 12, Governor Harding stated that he nad sent

Federal Reserve Agent Jay a letter as follows:
"The Board, this afternoon, considered at
some length the syndicate agreement of the American
Tobacco Company which provides for a loan of 425,000,000
on ninety-day notes with an agreement for renewals up to
two years.
The Board stands by its statement which appeared
in the press on Saturday morning thlt notes of this kind,
as investments for Federal Reserve Banks, are undesirable,
and in view of this statement it would not expect a Federal
Reserve bank to rediscount them."
Subsequent to the transmission of this letter he
had had, on the afternoon of November 13 e conversation
with Federal

Reserve Agent Jay over the telephone, in

which Mr. Jay had said tInt he regretted receiving the
letter, as he had been informed by Ur. Curtis that the
Board was willing the Federal Reserve Bank should rediscount a few items of the paper of the Coodrich Rubber Company, should they think such action expedient.
Governor Harding said he had told Mr. Jay that what the
Board meant was that they should not discount them under
any circumstances.

1:r. Jay finally agreed not to dis-

count any such paper for the present, stating that he

would soon come to Washington for further discussion of
the matter.
Governor Harding submitted to the Board a letter
addressed to Federal Reserve Agent Perrin relative to
the policy and technique of recent purchases of acceptances by the several Reserve banks fro, the Federal Re11
serve Bank of New York.

The letter was approved and

ordered mimeographed for transmission to all other Federal Reserve banks.
Mr. Warburg presented a letter from Governor
Rhoads of Philadelphia, suggesting that the Board withhold action on the proposed changes in rates at his Bank
until efter November 21.

It was agreed that the Board

should regerd the whole subject

as laid on the table ac-

cordingly until after November 21.
The Secretary of the Board reed a telegram from
Chief Examiner Broderick with reference to the advertising of clearing membership on the part of State banks,
raising the question whether they should be allowed so
to advertise.

The matter was discussed, and it was

egreed that while the Board could not prevent them from
advertising that they had the relation of a correspondent
to the Federal Reserve Bank, it could not sanction their

advertising thenselves as members.
The resignation of Mr. Jahn T. Schram from the
Board's staff was presented and approved.
A report of Committee No. 2 relative to the
maturity of eligible trade acceptances was read, and a
reply in accordance was ordered transmitted.
A telegram from Deputy Federal Reserve Agent
McLallen of Chicago as to the nominations for the
Chicago directorate, was read and noted.
A letter prepared for the signature of the Governor of the Board with reference to the cancellation of
stock in the Federal Reserve Bank of Atlanta, formerly
owned by the Hibernia National Bank of New Orleans, now
in liquidation, was read and approved, and its trinsmission ordered.
A report from Committee No. 3 approving

the ap-

plication of Mr. George M. Woodruff to serve as director
of the First National Bank of Litchfield, Connecticut,
and the Colonial Trust Company of Waterbury, Connecticut,
was presented and, on motion, approved.
A report of Committee No. 3 stating, in answer to
an inquiry from Federal Reserve Agent Perrin whether a
State bank may apply for membership after organization


but before beginning business, that it may so apply, was
presented and approved, and it was agreed that the Governor transmit a favorable response.
Upon recommendation of Committee No. 2

the f 1-

lowing institutions were admitted to membership in the
Federal Reserve system upon conditions specified in each
case by the Committee:
Scandinavian Trust Company

Nel York City

Citizens & Southern rank

Savannah, Oa.

Ohio Banking.& Trust Company

Massillon, O.

On motion at 4:20 P. M. the Board adjourned.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102