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238 A meeting of the Fed:-,ral Reserve Board was held in the office of the Federal deserve Board on Wednesday, October 31, 1928 at 12:o0 o'clock noon. PRESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunnint:ham Yr. McIntosh Mr. Eddy, Secretary Mr. ncClelland, Asst. Secretary The reading of the minutes of the meeting of the Federal eserve Board hel41 04 October jOth was dispensed with. The Governor presented the application of the Straus Eational Bank and en, permission to exercise general - ---/Pany of I;ew York City, organizing, for Currency strongly recomlarY powers and stated that the Comptroller of the ' Men4s chartering the institution approval of the application and is desirous of surplus of -600,000 hayt()dir, 04e-half of its capital stock of ,2,000,000 and immediately after organbeen paid in, the remaining „1,300,0J0 to be paid in directors of the izati°11. He called attention to the fact that the board of application be dis-al Reserve 3ank of 1;ew York has recommended that the believed the bank should 413Pr°vedt the ,ederal Reserve Agent stating it is the Board's 4111°/16trate its ability before receiving trust powers, and that Jommittea recommending approval is divided, Messrs. Hamlin and McIntosh 111c1 Lir. Platt that the application be held. The Comptroller then advised the Board that Straus National Bank and Trust when the application to organize the at New York and ec411PallY was filed it was referred to the Federal Reserve Agent Agent advised favorable recommendation was received, but that later the ' him p that in view of changes proposed in the directorate and in the ownershi °f et°01c, he was inclined to withdraw the unfavorable recommendation provided the C omptroller felt that the banking situation in the section where it is Proposed to locate warrants the establishment of another bank. He stated that 04 the strength of this advice, after completing his investigation, he approved the a pplication to organize, assuming that the action of the Federal Reserve AerLt in withdrawing his unfavorable recommendation on the organization of the Straus National Bank and Trust Company indicated that the New York bank would hot re object to the exercise of trust powers by the institution. He advised that Presentatives of the organizing bank are in his office today for the purpose of recoivinc, their charter and that he has been placed in an embarrassing positi°101 by the adverse recommendation of the New York directors on the application for trust powers. He expressed the opinion, which was concurred in by other 1116mber8 of the Board, that if the applicants are capable of operating a national bank the downtown section of New York they are also capable of handling trust 1114otions. Some members of the Board, however, felt that by conference with the 141w York directors some agreemnt could be reached regarding the application. After a detailed discussion, it was voted that the Governor and such other members of the Board as he may wish to accompany him, be authorized to go to New York to attend the meeting of the board of directors there tomorrow in an attempt to secure a solution of the difficulty confronting the Comptroller and the Board in reference to the application; and also to attempt to arrive at some understanding and agreement with the directors of the New York bank with reference to future applications of the same character. At the Governor's request, Messrs. Platt and James expressed their willingness to accompany him to New York. At 1:15 p.m. the meeting recessed, and reconvened at 2:45 p.m., the same S being present as attended the morning meeting except Mr. McIntosh. 4_0 10/31/28 -3- The Governor stated that special order of business for the meeting is conry ideration of the proposed letter to the President of the Federal Adviso October 26th °°1-14ci1 l submitted by Lir. Miller at the meeting of the Board on a4a n at the amended at the meeting on October 30th, requesting consideratio relation of the Fedf"the°Ming meeting of the Council of the question of the "41 eserve System and the call loan market. letter After considerable discussion, during which the adopted was it Platt Li.. by was further amended, upon motion "no": in the following form, Li*. James voting year , "Credit developments and money market movements during the last ion attent ular Partic st. intere public lave been the subject of widespread nas been drawn to the behavior of the call loan market and call loan rates; the and the connection and responsibility of the Federal Reserve System in s ituation. gh-going The present seems to afford an opportune time for a thorou ore theref consideration by the Council of these matters and the Board the of ence P'01Doses as a subject for consideration at the next confer .te,teral Advisory Council with the Board the topic the 'The relation of the Federal Reserve System and call.' and time both , market Loan Security following subIn this connection, it is furth3r suggested that the jects be given careful consideration: rates and (1) The relation of Federal reserve discount security loan market rates. and buyini7 rates (2) The effect of open market operations loan market. ty securi Of the Federal .4serve System on the to other money rates. (3) 2he reh.tion of security loan rates of bankin (4) The proper function and use to be made ments in brokers loans. invest- what conditions, and by (5) In the opinion of Council, under ion, may the Federal operat or what methods of policy, management, the Federal Reserve under duties its aeserve System, in discharging Reserve credit into the Act, use to prevent a seepage of Federal time every assurance of a Call Loan 1,arket, retaining at the same of credit to accommodate minimum interference with the free play business and commerce?" 10/31/28 of Upon motion, it was voted further that the date n discretio the to left be letter transmittal of the above Of the Governor. The Governor then brought up the question of bill rates at the Federal 'Ye Bank of flew York, and requested discussion of a suggestion by Mr. Miller that the rates on the shorter maturities mi-ht be advanced, beginning with an aavance of r. Liner pointed out that approximately two-thirds of one-eihth. the outstanding acceptances are held in the Federal ;teserve System either for 4ce°Unt of the banks themselves or for account of foreign correspondents and that 4 recent reduction of one-eighth in open market rates indicates that there is s time for °Ine demand for bills and that the present would be an opportune the 3Ystem to strengthen its rates and let the market absorb the bills without 41Y unnecessary inducem:nt to the banks that have them to turn them into the a "s4eral fieserve Jystem. He stated that although the demand for the Autumn tred has and crop moving purposes appears to be over and the holiday demand 11".Yet ben, there is a that 71-owing volume of credit from which it appears the only anks are turning over their acceptances to the Reserve banks, using ' 13411 of the proceeds to retire rediscounts, with a part finding its way into the security loan market. During the discussion which ensued, there was no conthat the sensus of opinion in the matter but it was agreed bring well might tomorrow, York New in Governor, when he is directors the of meeting the at n discussio the question up for of the New York bank. 41-E%LOP STANDING COMUITTEES: 4te(1, October 30th, Dated * October 30th, powers Recommending action on an application for fiduciary date. thie as set forth in the Auxiliary Linute Book of ecommendation approved. ;iaymond Recommending approval of the application of time same the at C. J. Thatcher for permission to serve c7.1/19 10/31/28 -5- 4Zik alitLSILMMILia_SAggIngli: (Cont'd) as director and officer of the First National Bank, Pueblo, Colo., as director and officer of the First National Bank of Lamar, Colo., and as director of the First National Bank of Denver, Colo.' Recommendation approved. bated, October 30th, Recommending approval of the application of Mr. Herbert F. Boynton for permission to serve at the same time as director of the Winchester National Bank of Winchester, Mass., and as member of the firm of private bankers of F. S. Moseley and Company, Boston, Kass. Recommendation approved. The meeting adjourned at 4:30 p. Secretary. 4PProved:
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