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1078 A meeting of the Board of Governors of the Federal Reserve SYatem was held in Washington on Friday, September 1, 1939, at 9:00 a. m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak Davis Draper Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Special Assistant to the Chairman Mr. Wyatt, General Counsel Mr. Dreibelbis, Assistant General Counsel Mr. Piser, Senior Economist in the Division of Research and Statistics ALSO PRESENT: Mr. Harrison, Member of the Federal Open Market Committee Mr. Williams, Associate Economist of the Federal Open Market Committee During an informal discussion of the procedure to be followed tod4 , by the Federal Reserve Bank of New York in placing bids in the Gove rtzient securities market reference was made to the proposed stateto the press with respect to advances by Federal Reserve banks to Iletaber and nonmember banks on the security of Government obligations. colly Of a memorandum relating to the discussion has been placed in 1-, -00ard's files. At the conclusion of the discussion Mr. Szymczak moved that the statement for the press be approved in the following form for release for the afternoon papers: "The Board of Governors of the Federal Reserve Sys!1 announces that in view of current developments in the int ernational situation, the Federal Reserve banks are 1099 9/1/39 -2- "Prepared at this time to make advances to member and nonmember banks on Government obligations at par at the rates Prevailing for member banks." Mr. Szymczak's motion was put by the chair and carried unanimously. Unanimous approval was also given to the following telegrams to Federal Reserve banks advising them of approval by the Board of rates fixed by their directors in accordance with the policy set forth in the press statement: Telegram to Mr. Young, President of the Federal Reserve Bank of Boston, reading as follows: "Board of Governors approves for your bank discount rate of one per cent per annum on all rediscounts for and advances to member banks under the provisions of sections 13 and 13-a and on advances to nonmember banks secured by direct obligations of the United States under the last paraeraPh of section 13. Board approves establishment without Change of other rates of discount and purchase in existing schedule, all effective immediately." Telegram to Mr. Sinclair, President of the Federal Reserve Bank of Philadelphia, reading as follows: "Your letter April 21 Drinnen's wire August 26. Board aPProves for your Bank rediscount rate of 1 1/2 percent on advances to nonmember banks and 2 1/2 percent to individuals, Partnerships, or corporations other than banks on the security direct obligations of the United States under the last .1?aragraph of section 13 of the Federal Reserve Act effective ImMedaitely. Otherwise Board of Governors of the Federal Reserve System approves establishment by your bank, without Change, of rates of discount and purchase in bank's exist'lag schedule, advice of which was contained in your telegram dated September 1." Telegram to Mr. Fleming, President of the Federal Reserve Bank of Cleveland, reading as follows: 1080 9/1h9 -3- "Board of Governors of the Federal Reserve System aPproves establishment by your bank, without change, of rates of discount and purchase in bank's existing schedule, advice of which was contained in your telegram of August Q1 except that in accordance with action your directors 29 and August 31 Board approves rate of 1 1/2 percent on advances to nonmember banks and rate of 2 1/2 Percent on advances to other lenders secured by direct °Ialigations of United States under the last paragraph of section 13 effective immediately." Telegram to Mr. Leach, President of the Federal Reserve Bank of Richmond, reading as follows: "Your telegram August 28. Board approves for your Bank rate of 1 1/2 percent per annum on advances to nonamber banks secured by direct obligations of the United States under last paragraph of section 13 of the Federal Reserve Act and establishment without change of rate of 4 Percent on advances to others under same paragraph, both effective immediately." Telegram to Mr. MdLarin, Vice President of the Federal Reserve Bank of Atlanta, reading as follows: "Your telegram August 28. Board of Governors approves for your Bank rate of 1 1/2 percent on advances to nonMember banks secured by direct obligations of the United States under last paragraph of section 13 effective immediately." Telegram to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: "Your letter July 27 and Young's telegram August Board of Governors approves for your bank rate of °Ile Percent on advances to member and nonmember banks secured by Government obligations effective immediately, otherwise Board of Governors of the Federal Reserve Sysapproves establishment by your bank, without change, °f rates of discount and purchase in bank's existing schedIlles advice of which was contained in your telegram dated AllgtIct 31." 26. 1081 9/1/39 -4Telegram to Mr. Stewart, Secretary of the Federal Reserve Bank of St. Louis, reading as follows: "Board of Governors of the Federal Reserve System approves establishment by your bank, without change, of rates of discount and purchase in bank's existing schedule, advice of which was contained in your telegrams dated August 29 and 31 except rate on advances to banks secured by direct obligations of the United States under last Paragraph of section 13 for which rate of 1 1/2 percent fixed by your directors is approved effective immediately." Telegram to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, reading as follows: "'Your telegram August 26. Board of Governors approves for Your bAnk rate of 1 1/2 percent on advances to non'amber banks and 3 percent on advances to individuals, Partnerships and corporations other than banks secured by direct obligations of the United States under last paragraph of section 13 of the Federal Reserve Act effective im mediately." Telegram to Mr. Stroud, First Vice President of the Federal Reserve Bank of Dallas, reading as follows: "Gilbert's letter April 26, your wire August 28. Beard of Governors approves for your bank rate of 1 1/2 Percent on advances to nonmember banks secured by direct obliEations of the United States under the lest paragraph of Section 13 of the Federal Reserve Act, effective imMediately." Telegram to Mr. Hale, Vice President of the Federal Reserve Bank of San Francisco, reading as follows: "Board of Governors of the Federal Reserve System 111/Proves establishment by your bank, without change, of rates of discount and purchase in bank's existing schedule, adlrice of which was contained in your telegram dated Aut29 except rate on advances to nonmember banks secured 'Y direct obligations of the United States under the last 1082 9/1/39 -5- paragraph of section 13 for which rate of 1 1/2 percent fixed by your Directors is approved effective immediately." It was stated that a telegram was received yesterday from the rederal Reserve Bank of Kansas City advising that the directors had ap13r(Ived a rate of 2 percent on advances to nonmember banks secured by liract obligations of the United States. Mr. Morrill was requested to call Mr. Hamilton, President of the Federal Reserve Bank of Kansas City, on the telephone and advise him that, in view of the circumstances, the Board was not willing to approve a rate of 2 percent and that in the absence of further action by the Federal Reserve Bank of Kansas City the Board would take appropriate action to fix the rate of 1 1/2 percent for such advances by the bank. Thereupon the meeting adjourned. Pd/Ca.lr Secretary.
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