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1_083 At a regular meeting of the Federal Leserve Board hold in the office of the Foard at 10:-30 on Monday, October 23, 1916, PRESENT: governor Harding, presiding, Mr. Warburg, Mr. Miller, Mr. Williams, 7:r. Delano, Mr. Willis, Secretary. The special order for the morning was taken up, and the question of a pending acceptance credit in favor of certain industrial concerns in France was discussed. . Mr. Harding laid before the ',oard a communication from Federal Reserve Agent Jay with respect to the conditions under which the credit is to be offered, and also a letter from Vice President Kent of the Bankers Trust Company, and a copy of the circular which is being distributed to prospective investors. He expressed the opinion that there was danger that the reserve banks might become too heavily burdened with this type of security, nish was in effect not acceptances in the proper sense of 14 tae term, but something closely analogous to the obliga- tions of a forein government, running at least eighteen moths. !le proposed that a conservative press statement i3F,ued by way of caution to Federal Reserve bunks, and in this connection laid before the Board a telegram from the Secretary of the Treasury LcAdoo who had been consulted by wire on the subject. Williams, who was obliged to leave the meeting, stated that he was in favor of the irsuanco of such a statement as the Governor had proposed, and requested to be recorded as voting in its support. 1:iller took the view that some check should be administered to the progress of the acceptance business in the form now proposed - that form being really a concealed type of Government loan, which, however safe, was not a liquid banking credit. 7u doubted the wisdom of a public statement, but believed that the Board should take definite steps to prevent the further expansion of such loans in the hands of the reserve and member banks save upon the definite understanding that they were not a basis for rediscounts. !dr. Warburg concurred in these views, expressing the opinion that the so-called acceptances failed to givs control over gold which would otherwise be obtained througll the purchase of foreign bills because of the fixing of the rate of renewal on the acceptances in advance of the date of such renewal. Lr. Delano,while agreeing in the main with the views expressed by other members, thought that the time not had/come for any public statement on the subject. After further discussion it was voted to refer the matter to the Executive Committee with instructions to communicate with Federal Reserve agents as to the Board's policy and make such additional statement as might be deemed best. A telegram from SaaEor Sherley, relative to the establishment of a branch bank at Louisville having been read, it was on motion, voted that before any action 3culd be taken the Board must have the formal recommendation of the federal Leserve Bank of r.st. Louis. A letter from the editor of the Chicago Herald, asking for a statement relative to the prospects of the alleged demonetization of gold, was read and noted. Letters from Li% J. H. Pulicher and Mr. E. D. Hulbert as to the work of the Section of the American Bankers' 4-,ssoelation organized to deal with State 11;11,k legislation, :',Jru read nd it was agreed that the governor reply thereto. ' letter from Lir. Walker Kill of St. Louis as to the • status of his bank under the Clayton Act, was read and contents noted. 1086 A draft of a proposed letter to the Mechanics and Metals national Bank of New York relative to the acceptance of certain finance drafts and declining to grant the application, was authorized in a modified form. The Secretary of the Board read a letter from Mr. James E. Zunts of New Orleans as to the status of Mr. W. D. Wellborn. A letter from federal Reserve Agent Ramsey as to the definition of the term "assets" under Section 13, was referred to the Governor with the aid of Mr. Broderick for report. A letter from Mr. S. 7.. Mlles of Cleveland with reference to a rehearing was ordered referred to federal Eeserve Agent Wills for report. A memorandum from Assistant Secretary of the Treasury nalburn relative to the cost of redeeming notes, was referred back to the Committee on Issue and Redemption. In answer to a telegram from federal Reserve A:-;ent Perrin as to the date on which federal 1-eserve agents' reports should be in hand, the Secretary was directed to saY that the Board hoped the reserve agents would bring with them their reports in draft form for the conference on 7 December 4th. A memorandum from Mr. J. A. Broderick with reference to the eligibility of. certain Massachusetts municipal warrants, was referred to the Committeo on Discounts and,. Investments. A report relating to certain changes in the management'of the Geld Settlement fund, war referred back to the Committee on Gold Settlent 2und. The Secretary called the Board's attention to a memorandum of the 'Secret service Division relative to a counterfeit note now in circulation. • The minutes of the Board meetings of October 20 morning and afternoon were read and approved. On motion at 12:20 2. the Board adjourned. rotary.
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