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A meeting of the Federal Reserve Board was held in the office of the 11 Federal Reserve Board on Thursday, October 22, 1931, at 11:10 a. m. PRESENT: ALSO PRESENT: Governor Meyer Mr. Hamlin Er. Miller Mr. James Mx. Magee Mr. Morrill, Secretary. Mr. McClelland, Assistant Secretary. Mr. Harrison, Assistant to the Governor. Reference was made to the discussion at the meeting yesterday, and it Was suggested that should the Board now be inclined to approve the sale, it and when it becomes necessary or advisable to do so, of securities from the open market account up to 3120,000 000, as recommended by the Open Ilerket Policy Conference at its meeting on August 11, Governor Meyer might ec/Mmunicate the feeling of the Board in the matter to the Executive Committee Of the Conference at its meeting on Monday. During the discussion which followed, it was developed as the feeling of the members present that, if rec°rnmended by the Executive Committee of the Open Market Policy Conference, theY would be inclined to approve the sale of securities from the open Illerket account, or to allow maturities to run off, to the extent of ,000,000, The following matters were then presented and acted upon by the Board: Telegram dated October 21 from the Chairman of the Federal Reserve illarik of St. Louis, advising that his Board of Directors, on that date, voted to stablish a rediscount rate of 3 1/2:0 on all classes of paper of all matur- ttie8, dffective the first business day following that on which approved by the /federal Reserve Board; the rate established by the St. Louis directors lieIring been approved informally by the Board yesterday, effective today. Upon motion, the rate of 3 1/25S established at the St. Louis bank, effective today, was approved. titwOh.I 10/22/31 Telegram dated October 21 from the Chairman of the Federal Reserve Bank of Boston, advising that at the meeting of his Board of Directors on that date) no change was made in the bank's existing schedule of rates of discount and purchase. Without objection, noted with approval. Telegram dated October 21 from the Chairman of the Federal Reserve Bank of St. Louis, advising of the establishment on that date of the schedule Of buYing rates on bankers' acceptances made effective at the Federal Reserve Bank of New York on October 16. Without objection, noted with approval. Draft of reply to letter dated October 13 from the Chairman of the l'edaral Reserve Bank of Philadelphia stating that it has been the practice of the bank to rediscount for member banks which have satisfactory eligible paper to °firer, regardless of the fact that they may be considered as being in critical condition, and inquiring whether such a policy, in the opinion of the 118"rd, is justly subject to criticism; the proposed reply calling attention to the Provisions of Section 4 of the Federal Reserve Act, and stating that the Boa rd feels that these provisions embody the general principles which should (37ern the Board of Directors of a Federal Reserve bank in determining its cileespunting policies, that the law places upon the directors and officers of each bank the responsibility for its operations and they must of necessity date4 'ne whether and to what extent they would be justified in discounting tor Particular bank in the light of the provisions above referred to and all the surrounding circumstances, that while the Federal Reserve Board is vested Power to make rules and regulations with regard to certain matters and is cher god with general supervision over the banks it feels that it cannot under- 10/22/31 -3- take to substitute its judgment for that of the directors and officers of the ballk in matters of this sort which involve the exercise of sound discretion in det ermining the conditions under which they can properly meet the demands made Upon them by member banks, end that it seems to the Board that as a practical Matter the course of action which should be followed in circumstances such as those referred to can be determined only upon careful consideration of the 141arits of each individual case as it arises, and that it is not feasible to laY down any rule for the guidance of the bank in such matters. Upon motion, the proposed letter was approved. Draft of reply, approved by the Executive Committee, to letter dated October 5 from the Assistant Federal Reserve Agent at Cleveland with regard to the "tion of the Union Trust Company of Greensburg, Pennsylvania, a member In acquiring on September 24 certain assets and assuming certain Habilitie8 or the Laddas Bank and Trust Company of Greensburg, a nonmember; the proP"ed reply stating that, in the absence of any classification of the assets of the nonmember bank, the Board is deferring action on the question whether the tlielisaction involves a change in the character of the assets of the member bank °I' the Scope of the functions exercised by it within the meaning of the general ecndition under which it was admitted to membership in the Federal Reserve SYctera, and requesting the Assistant Federal Reserve Agent, following the next e4a1211 " tion, to submit a detailed report and recommendation in this connection, the report also to include advice as to the progress made by the member bank ill the liquidation of the assets and payment of the liabilities takenon over °Qt"er 19, 1929, from the Merchants and Farmers National Bank of Greensburg. Upon motion, the proposed letter was approved and ordered transmitted. adjourned at 11:45 a. Ea.
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