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2956 A meeting of the Federal Reserve Board was held in Washington on /4ecine5day, September 26, 1934, at 2:40 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Morgenthau, Chairman Thomas, Vice Governor Hamlin James Szymczak O'Connor Mr. Mr. Mr. Mr. ALSO PRESENT: Morrill, Secretary Carpenter, Assistant Secretary Wyatt, General Counsel DuBois, Assistant Counsel Mr. Herman Oliphant, General Counsel to the Secretary of the Treasury Mr. Edward Greenbaum, Special Assistant to Mr. Oliphant. At the request of the Chairman, Mr. Morrill read the draft of l'escaliti°11 prepared by counsel in accordance with the request made by the pl._ ' ve-rd at the meeting yesterday afternoon. He also read a proposed 8tatemen+ ---, prepared by counsel to be inserted in the front of the Board's Pl'inted on margin requirements in the event the Securities Ezeu_ ge Commission takes action exempting securities affected by the Mr 'James suggested that, in view of the comments made at the leetta . g thls morning at which representatives of the New York Stock Exhaz t were in attendance, it would seem to be desirable that the exempc)t securities by the Securities and Exchange Commission should extend r 15, 1934. After discussion, during which a minor amendment was made in the form of resolution prepared by counsel, Mr. Hamlin moved that the resolution 9/26/34 -2- 2957 be adopted in the amended form as follows: "WHEREAS, Section 7 of the Securities Exchange Act of 1934 requires the Federal Reserve Board, prior to October 1) 1934, to !prescribe rules and regulations with respect to the amount of credit that may be initially extended and subsequently maintained on any security (other than an exempted security) registered on a national securities exchange); "WHEREAS, the Board has before it for action a draft of a proposed regulation on this subject which has been revised pursuant to its instructions; "WHEREAS, it is desirable that the persons affected by such regalations be given time after October 1 to familiarize themselves with such regulations before the limitations and restrictio ns prescribed thereby become effective; "WHEREAS, it is provided by law that, in addition to the securities specifically exempted by the provisions of the Securities Exchange Act of 1934, the Securities and Exchange Commission may exempt from the provisions of sections and 8(a) such other securities as it deelas necessary or ?.PPrepriate to exempt in the public interest or for the protection of investors; "NOW, THEREFORE, BE IT RESOLVED BY THE FEDERAL RESERVE BOARD, That the Securities and Exchange Commission be quest to issue, prior to October 1, 1934, rules and reguJiations exempting, until midnight of October 14, 1934, the provisions of section 7 and subsection (a) of sec2-on 8 of the Securities Exchange Act of 1934, all securities not exempted by the law, whether registered or not." Carried unanimously. The proposed statement for inclusion in the front of the printed regulation on margin requirements was approved unanimously in the following form: "In order that persons affected by Regulation T of the Fed- Reserve Board might have additional time after October Ir)ral1934, within which to familiarize themselves with this regulation, the Securities and Exchange Commission, at the ?quest of the Federal Reserve Board, has exempted, until of October 14, 1934, from the provisions of sectidniCht &O11 7 and c2 subsection (a) of section 8 of the Securities Exchange 2 of 1934 a all securities not exempted by the law, Whether registered or not." 2958 9/26/34 —5— Mr. Thomas stated for the information of the Chairman that the Beard had met this morning with representatives of the New York Stock Exc ge who had made various suggestions on the basis of the September 23 draft of regulation, and that these will be considered. At this point , Mr. Parry, Assistant Director of the Division of Research P,nd Statistics, entered the meeting. The Chairman inquired as to how long it would take for the Board's staff to consider the suggestions made at the meeting last night of rep— l*eBentatives of the Board, the Treasury. Department, and the Securities arid Exchange Commission and the suggestions made by representatives of the New York Stock Exchange at the meeting of the Board this morning. Mr. 11 --rrY replied that he believed the Board's staff could complete the cleration of the suggestions tonight. After a discussion of the procedure that might be followed in considering further changes made in the draft of the regulation by the BoardTs staff, Mr. O'Connor moved that two members of the Board to be designated by the Chairman, a representative of the Securities and Exchange Commission to be designated by the Chairman of the Commission, and a representative of the Secretary of the Treasury to be designated by him, be requested to meet with the Board's staff t?morrow morning at 9 o'clock for the purpose of giving further consideration to the regulation , with a view to havin g it ready for final action laY the Board at a meeting to be held tomor row af— ternoon at 2:30 p.m. Carried unanimously. Haz1.&°rdingly, the Chairman desig nated Messrs. Thomas and that:" to attend the meeting referred to above and stated Gre_ .as Secre tary of the Treasury, he would designate Mr. enban ---, to repre sent the Treasury Department. It was 2959 9/26/34 -4understood that Mr. Thomas would request Mr. Kennedy to designate a representa tive to attend the meeting. Messrs. Oliphant and Greenbaum and the members of the Board's ste-ffy with the exception of Mr. Morrill, left the meeting which continIled as an executive session. Mr. Morrill read a letter dated September 251 1934, at Chicago, 111111°18, signed by Mr. Walter Lichtenstein, Secretary of the Federal Advisory Council, and stating that, in accordance with instructio ns gtvell t° him by the Federal Advisory Council, he was handing to the 80ard through the kindness of Mr. Howar Bruce d , a copy of a statement Pr'ePared by the Federal Advisory Council for deliv ery to the Federal Reserve Board, and that he was instructed to inform the Board that the e°114eil is planning to give publicity to the statement. The statement referred to in the letter was also reed by Mr. Morrill. Mr. Thomas stated that the letter had been delivered to him this afternoon by a eej 814-1messenger sent to Washington from Baltimore by Mr. Howard Bruce, a illeniber of the Feder al Advisory Council representing the Fifth Federal Reserve District. There followed a discussion, at the conclusion of which Mr. O'Connor offered the following resolution which was adopted unanimously: th,"RESOLVED, That the letter of September 251 1954, received "-Ls afternoon by Vice Governor Thomas from Mr. Walter Lichtenat 2 Secret of the Federal Advisory Council, and fe:,c!PY of a statement of the Federal Advisory Council reer:!;eLl to therein, be returned to the Secre tary of the Fedsi(7 1:_AdvisorY Council, with the comment that the Board conto: 4-4S that the matter contained in the statement referred se not come within the jurisdiction of the Feder al Rerve Board and with the request that in this connection 9/26/34 010 OP, "the attention of the Federal Advisory Council be called to the fact that the second paragraph of Sect on 12 of the Federal Reserve Act reads as rollows: 'The Federal , _ Ldvisory Council shall have Power, by itself or through its ofricers, (1) to conrer directly with the Federal Reserve Board on ,;eneral business conditions; (2) to make oral or written representations concerning matters within the jurisdiction of said board; (3) to call for infornlation and to make recommendations in regard to discount rates, rediscount business, note issues, reserve conditions in the various districts, the Purchase and sale of gold or securities by reserve banks, open-market operations by said banks, and the ceneral affairs of the reserve banking system." MI'. O'Connor then suggested that in the letter written to tichteastein pursuant to the resolution referred to above there should be ellIded a request that the attention of the Federal :.dvisory Council h eal, 'LJ-ed, to the fact that there was no discussion or the subject matter or the s tatement by the Council durinr, its meetin;s with the -ederal on -elytember 17 and 18, 1934, and that no intimation there1 s a 1-ven to the 3oard by the Council at any time prior to the re- or Mr. Lichtenstein's letter. 1.:r. O'Connor's suestion was approved unanimously . It was understood that a copy of the letter to Lichtenstein would be sent direct to each member or the Federal Advisory Council. 445 colYi of the statement inclosed with Lir. Lichtenstein's letter Placed in the Board's files. Thereupon the meeting adjourned. Vice Governor.
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