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1_755 A meeting of the Board of Governors of the Federal Reserve 8Yeteln was held in Washington on Thursday, September 24, 1936, at 11:45 a. m. PRESENT: Mr. Ransom, Vice Chairmen Mr. Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Clayton, Assistant to the Chairman Vice Chairmen Ransom reported that President Harrison, of the Federal Reserve Bank of New York, had talked with him over the telePhone regarding the balance maintained by the Federal reserve bank8 in the Bank of France, which aggregates at the present time aplar°Itittlately $130,000. Mr. Harrison stated that a portion of this b alance is invested in French bills, the remainder being carried un1"-ested, that the Federal Open Market Committee had authorized the 1/ell York bank to permit these bills to run off at maturity, but that the earliest maturity was approximately two months off. He also 8tated that the balance carried with the Bank of France had been 1114tellellY reduced during the last year and a half to its present 11.°11ht; that at the time of the devaluation of the dollar the 40% inease had not been written up on the books of the bank and that even ir the French Government were to devalue the franc to the extent of, 41) 40% the operation as a whole would leave the Federal reserve banks "°11t 6,000 "to the good". He pointed out, however, that if the bal- 14ere withdrawn now the Federal reserve banks would get the advant4e of the devaluation of the dollar without suffering any loss if 1756 9/24/36 0 there should be a devaluation of the franc. Mr. Harrison made some reference to current press stories about the French situation and to the general belief that the French devaluation would possibly occur within a short period. He further stated that he had submitted this situation to his own board of directors last Thursday, their first re"ti011 being that the balance should be drawn down but that after diseus81on they had decided to leave the final decision to him and that theY recognized that some broad questions of general policy were involved. At this time it was his best judgment that the balance should not be disturbed, that the bills held should not be sold, and that the possible alternative of selling francs short should not be resorted to. Vice Chat , 'an Ransom stated that he had asked Mr. Harrison if he desired the BoaTA in Washington to consider the matter at this time but that Mr. 118:rri -s°n said that he was not seeking any action by the Board and saw 4° reason for requesting it, nor did he contemplate asking for a considerti°4 of the matter by the Federal Open Market Committee. He also did ne't think it desirable to submit the situation to the Treasury for conelderation as to its possible international aspects. He stated that his PlIrpose in calling Mr. Ransom on the telephone was merely to discuss ina.11Y with him a rather difficult situation and a rather difficult -111- He added that he might communicate with Mr. Ransom later in the Nr. m -r. Ransom stated that he advised Mr. Harrison that he would disel/se th he French situation with Mr. Goldenweiser and others on the Board's 'as well as with Mr. Szymczak, the only other Board member present th4- time, --me, and that should anything develop from this conversation which 1_757 9/24/36 —3— thought Mr. Harrison would like to know, he would call him back. Vice Chairman Ransom then discussed the matter with Mr. Szymczak, Mr. Gcldenweiser, Mr. Gardner, Mr. Clayton, Mr. Thurston and Mr. Morrill. Mr. Goldenweiser took the position that in the light of the informa— tion before the Board there was nothing that should be done which alight disturb the existing situation and expressed the view that Mr. liarrison was following the only possible course at the moment, with Which all the others concurred. Later Mr. Ransom reported that his 8ecretarY had advised him that Mr. Harrison had called Mr. Ransom on the telephone but learning that Mr. Ransom was in a meeting had stated thathe would call Mr. Ransom the next day, Friday, September 25. Consideration was then given to each of the matters hereinafter l'eferred to and the action stated with respect thereto was taken by the Board: Telegrams to Mr. Leach, President of the Federal Reserve Bank Or Ri ohmond, and Mr. Thomas, Chuirman of the Federal Reserve Bank of it41188-8 City, stating that the Board approves the establishment without eballge by the respective banks today of the rates of discount and pur— chst 8e in their existing schedules. Approved unanimously. Telegram to Mr. Wood, Vice President of the Federal Reserve eulk Of St. Louis, reading as follows: "Relet September 19 transmitting request of 'Planters 'ank and Trust Company', Hopkinsville, Kentucky, for per— mission in accordance with membership condition numbered 1758 9/24/B6 -4- 018 to expend approximately $F0,000 in making improvements to banking quarters. In view of your recommendation and fact • that expenditure of such amount does not appear to be unduly large or improper, Board will interpose no objection thereto and you are requested to so advise the bank." Approved unanimously. Thereupon the meeting adjourned. Pprov V e Chairman.
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