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227 A meeting of the Federal Reserve Board was held in the office of the FedReserve Board on Friday, October 26, 1928 at 11:40 a.m. PRESENT: Governor Young Mr. Platt Mr. Miller Mr. Jars Mr. Cunningham Mr. McIntosh Mr. Noell, Asst. Secretary Mr. McClelland, Asst. Secretary Dr. Miller called attention to the fact that the galley proof for the 4°7amber issue of the Federal Reserve Bulletin contains an article on "Switzer1441. and the Gold Standard" prepared by Dr. Bachmann, President of the Swiss 4ational Bank. He stated that this article was sent by Dr. Bachmann to the tlicleral Reserve Bank of New York with the suggestion that if in their judg111814 if - contained appropriate matter for the Federal Reserve Bulletin, it be transMitted to the Board. tai He pointed out that while the article itself con- 8 nothing objectionable, its publication in the Bulletin would be a departfroM the policy which has been followed heretofore. He stated that although (ntic4 441 reports of the foreign banks of issue have been published in the Bulletin, "cua or in part, articles by officers of those banks or other individuals have never been published, and he suggested that a change of policy in this Inatter might later prove embarrassing to the Board should there be submitted fo r PlIblioation an article to which the Board might have objection. After considerable discussion, Mr. James moved that the article be not published in the Bulletin. Mr. Platt moved as a substitute for Mr. James' motion that publication be withheld for a period of thirty days in which time the Board could ascertain whether it is to be regarded as an official document of the Swiss National Bank: 228 "126/28 -2- Li'. Platt's substitute motion being rut by the Chair was lost on a tie, the members voting as follows: Governor Young, "aye" Mr. Platt, "aye" Mr. McIntosh, "aye" Mr. Miller, "no" Mr. James, "no" Mr. Cunningham, "no" Mr. James' original motion was then pat to a vote and carried, Mr. Platt voting "no". The minutes of the meeting of the Federal .reserve Board held on October 25th were read and approved. The Governor then presented a letter dated October 23rd from the Federal assert,. " - e Agent at Minneapolis, recommending that the Board direct the ComptrQller Of the Ourraency to bring suit for cancellation of the charter of the t4 ational Bank of D'enton, Montana; the letter stating that the institution 3 has haci average deficiencies in reserves for every reserve computation period Oight and one-half consecutive months ending October 15, 1926, and that lettel, -8 addressed to the officers and the directors of the institution in ac- eeN4 lice With the Board's .Aegulation D have not brought about any improvement 14 ths s ituation. e331°4 °f the 14e The Governor expressed the opinion that the Board is not in pos- of sufficient information on which to base action on the recommendation Federal deserve Agent, and he submitted draft of a proposed reply request- ilaf ormation which, in his opinion, the Board should have. After discussion, upon motion, the matter was referred to the Governor with power. Letter dated October 24th from the Deputy Governor of the Federal Aeserve BaIlk Of the I New York, confirming telephone conversation with the Governor of 229 10/26/28 -3._ 11°ard and bt advising that on October 26th there will remain in the System account 43,500,000 of the approximately ;23,000,000 of short-term government securi- "acquired from a foreign correspondent on September 6th; the letter also ti Cornenting Upon the probable demand for reserve bank credit in the near future 4134 the prospective situation in the money market. Noted. Mr. Platt then referred to Clayton Act applications of Messrs. E. O. C. P. Noyes, Aobert Lehman, Henry I. Ickelheimer, Herbert P. Howell and 0. 0 Sloan Colt, involving the Commercial National Bank and Trust Company °rewYork City, organizing, and other institutions, all of which were un- favor auly reported upon by the Federal 2eserve Agent at New York. He stated that he has received advice from the Federal Reserve Agent at New York of his willi 4.4e1ess to withdraw his objections to approval of the applications of 4assrs. Jameson and loyes, involving the organizing national bank and the -aers Title and Trust Company of New York City. Upon motion by Mr. Platt, it was voted to approve the E. O. Jameson and Mr. C. F. Noyes for applications of permission to serve at the same time as directors of the Commercial National Bank and Trust Company and the Lawyers Title and Trust Company, both of New York City. After further discussion with regard to the remaining applications, the files thereon were ordered circulated. Letter dated October 25th from the Secretary of the Federal Reserve Balk' Of . 4 " York, and telegram dated October 25th from the Chairman of the Federal ae8erv e Bank of Kansas City, both advising that their boards of directors at Illeetth on that date made no changes in the banks' existing schedules of rates di scount and purchase. Without objection, noted with approval. 230 10/26/28 -4- Memorandum dated October 25th from the Chief of the Division of Bank °Parati, .'vns, submitting and recommending acceptance of the resignation of Liss (IlaclYs itice, stenographer in the Division, effective at the close of business C)etcbAl, 31 9 1928; the memorandum also requesting authority for the employment Of a slIccessor at a salary of not to exceed 1.600 per annum. Upon motion, the resignation was accepted and authority granted as recommended. Memorandum dated October 22nd from Counsel with further reference to the canCellation of stock in the Federal eserve Bank of Chicago standing in then 4me Of the Cruaranty State Bank of Knoxville, Iowa, which, although it has eeEl„ to do business, has not gone into liquidation nor has a receiver been ablv,4 4."-Lntea for it; counsel aabmitting draft of a letter to the Federal eserve ItRelit at. Chicago requesting him to communicate further with the state banking 84thoriti es regarding the institution. Upon motion, the letter submitted by Counsel was approved. The Governor then referred to the action of the Board at its meeting 04 Jill 7 -18th in authorizing the executive officer of the Board for a period °f 1-"d days to approve a rediscount rate of 5,; established by any Federal " G bank, which authority on 1-..u1st 13th was made effective until revoked bY the Board. He stated that at the present time with the full membership of the 8 °ard in :;ashington continuance of the authority is unnecessary. Upon motion by Kr. :McIntosh, the authority referred to was rescinded. Mr. Killer, on behalf of the special committee appointed at the meetOctober 1st, then submitted in accordance with the instructions at that 231 10/4/28 ?fleeting, -5_ a proposed revision of the Open Market Investment procedure of the Federal zleserve system as follows: "(1) That the Open Market Investment Committee, as at present constiea, be discontinued. be se, (2) That a Committee to be known as The Open ,Market Policy Conference . 11P with a representative from each of the twelve Federal reserve banks, th re presentative to be desicnated by the Board of Directors of the bank. ' the of times The Open Market Policy Conference to be under the chairmanship overnor of the Federal Reserve Board and to meet in .;ashington at such aS may be arranged by or with the Federal Reserve Board. a(3) to co_ .(4) That it shall be the function of The Open Market Policy Conference of asider, prepare and recommend plans with regard to the purchase or sale perrcurities in the open market for account of the Federal Reserve System and lcipating Federal reserve banks. Orle r 4 That purchases and sales of securities for System account in the market shall consist primarily of bankers acceptances. (5) be 0. (6) That the time, manner and volume of such purchases and sales shall ..00verned primarily with the view of accommodating commerce and business and ith r egard to their bearing upon the general credit situation. for the purpose of executing such purchases and sales of secur.t(7) That the , 1 -es for System account as may be approved by Federal.reserve banks and as 4leaeral Reserve Board there shall be constituted a committee to be known 8 Open Market Executive Committee." No action was requested by the Committee, it being understood that its report would be circulated among the members of the Board and brought up for consideration at a later meeting. 14 accordance with an informal suggestion made at the meeting on October 17th,, Miller then presented the following draft of a letter addressed to the 4-resldent of the Federal Ildvisory Council: "Credit developments and money market movements during the last year b 44Ire l_eerl. the subject of widespread public interest. Particular attention :',7811 drawn to the behavior Of the call loan market and call loan rates; sit e connection and responsibility of the Federal Reserve System in the qationo 232 10/26/28 -6- "The present seems to afford a peculiarly opportune time for a thorourthgoing c onsideration by the Council of these matters and the Board, therefore, r .,13°808 as the leading subject for consideration at the next conference of the geral Advisory Council with the Board the topic - I 'The relation of the call loan market to the Federal Reserve System.' is In order that the discussion shall not be too general in character, it further suggested that the following subjects be given careful consideration: (1) The relation of call loan rates to Federal reserve discount rates. (2) The effect of open market operations and buying rates of the Federal Reserve System on the call loan market. (3) The relation of call loan rates to other money rates. (4) The proper function under our banking system as modified by the establishment of the Federal i-teserve System of banking investments in call loans. (5) 'That responsioilities has the Federal Reserve System in relation to the call loan market and by what methods of policy, control, management or operation may that responsibility be effectively discharged with a minimum of interference with the free play of money market factors?" Mr. Miller did not request immediate consideration Of the letter and it was ordered circulated and brought up at a future meeting. OF SYANDING JOIVZIITTEES: latsa, October 26th, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary Minute Book of this date. Recommendations approved. The meeting adjourned at 1:00 p.m. //te eceeez.i Assistant Secretary. '413royea: Governo
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