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MINUTES OF MEETING of the FEDERAL ADVISORY COUNCIL February 14-15, 1938 OFFICERS AND MEMBERS OF THE FEDERAL ADVISORY COUNCIL For the Year 1938 O F F IC E R S : E X E C U T IV E C O M M IT T E E : President, W alter W . Sm ith Vice President, Howard A. Loeb Secretary, W alter Lichtenstein W alter W . Smith Howard A. Loeb Thomas M . Steele W inthrop W. Aldrich Lewis B. W illiams Edward E. Brown M EM BERS: Federal Federal Federal Federal Federal Federal Federal Federal Federal Federal Federal Federal Thomas M . Steele W inthrop W . Aldrich Howard A. Loeb Lewis B. W illiam s Robert M . Hanes Edward B all Edward E. Brown W alter W . Sm ith John Crosby C .Q . C h a n d le r R. Ellison Harding Paul S. D ick 1 Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve District District District District District District District District District District District District No. No. No. No. No. No. No. No. No. No. No. No. 1 2 3 4 5 6 7 8 9 10 11 12 BY-LAWS OF THE FEDERAL ADVISORY COUNCIL ARTICLE I. OFFICERS Officers of this Council shall be a President, Vice-President, and Secretary. ARTICLE II. PRESIDENT AND VICE-PRESIDENT The duties of the President shall be such as usually pertain to the office; in his absence the Vice-President shall serve. ARTICLE III. SECRETARY The Secretary shall be a salaried officer of the Council and his duties and compen sation shall be fixed by the Executive Committee. ARTICLE IV. EXECUTIVE COMMITTEE There shall be an Executive Committee of six (6 ) members of the Council, of which the President and Vice-President of the Council shall be ex officio members. To fill a vacancy, the President, or in his absence, the Vice-President shall be authorized to designate as a member of the Executive Committee for a given meeting another member of the Council other than one elected to the Executive Committee. ARTICLE V. DUTIES OF THE EXECUTIVE COMMITTEE It shall be the duty of the Executive Committee to keep in close touch with the Board of Governors of the Federal Reserve System and with their regulations and pro mulgations, and communicate the same to the members of the Council, and to suggest to the Council from tim e to tim e, special matters for consideration. The Executive Committee shall have power to fix the time and place of holding its regular and special meetings and methods of giving notice thereof. M inutes of all meetings of the Executive Committee shall be kept and such minutes or digest thereof shall be immediately forwarded to each member of the Council. A m ajority of the Executive Committee shall constitute a quorum and action of the Committee shall be by m ajority of those present at any meeting. ARTICLE VI. MEETINGS Regular meetings of the Federal Advisory Council shall be held in the C ity of Wash ington on the third Tuesday of the months of February, M ay, September, and November of each year, unless otherwise directed by the Executive Committee. A preliminary meeting of the Federal Advisory Council shall be called by the Secre tary in accordance w ith instructions to be given by the President of the Council. 2 Special meetings may be called at any time and place by the President or the Execu tive Committee, and shall be called by the President upon written request of any three members of the Council. ARTICLE VII. ALTERNATES In the absence o f the regular representative of any Federal Reserve District, the Board of Directors o f the Federal Reserve Bank of that District may appoint an alternate. The alternate so appointed shall have the right to be present at all the meetings of the Council for which he has been appointed. He shall have the right to take part in all dis cussions of the Council but shall not be entitled to vote. ARTICLE V III. AMENDMENTS These by-laws may be changed or amended at any regular or special meeting by a vote of a majority o f the members of the Federal Advisory Council. February 14, 1938. 3 MINUTES OF MEETING OF THE FEDERAL ADVISORY COUNCIL February 14, 1938 The first and organization meeting of the Federal Advisory Council for 1938 was convened in the Board Room of the Federal Reserve Building, Washington, D. C. on Monday, February 14, 1938, at 10:15 A. M . Present: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Thomas M . Steele Winthrop W. Aldrich Howard A. Loeb Robert M . Hanes Edward Ball Edward E. Brown Walter W . Smith Henry S. Kingman (Alternate for Mr. John Crosby) R. Ellison Harding Paul S. Dick Walter Lichtenstein District No. District No. District No. District No. District No. District No. District No. District No. District No. District No. Secretary 1 2 3 5 6 7 8 9 11 12 Absent: District No. 4 Mr. Lewis B. Williams Vacancy: Mr. W. T. Kemper, duly elected representative of the Tenth Federal Reserve District, died on January 19, 1938, and the vacancy, thus created, has not been filled. Mr. E. E. Brown was elected Chairman pro tem. and Mr. Walter Lichtenstein Secretary pro tem. The Secretary stated that communications had been received from all of the Federal Reserve banks certifying to the election of their representative in accordance with the above list. . ' Upon nominations for the office o f President of the Council being called for, Mr. Walter W. Smith was nominated. On motion, duly made and seconded, the nominations were closed and the Secretary was instructed to cast a ballot for Mr. Smith, who was thereupon declared elected President of the Council for the year 1938. Upon nominations for the office of Vice President being called for, Mr. Howard A. Loeb was nominated. On motion, duly made and seconded, the nominations were closed and the Secretary was instructed to cast a ballot for Mr. Loeb, who was thereupon declared elected Vice President of the Council for the year 1938. The President, Mr. Smith, thereupon called for nominations for the four appointive members of the Executive Committee. Messrs. Thomas M. Steele, Winthrop W. Aldrich, Lewis B. Williams, and Edward E. Brown were nominated. On motion, duly made and seconded, these gentlemen were unanimously elected members of the Executive Committee for the year 1938, the President and Vice President being ex officio members. 4 On motion, duly made and seconded, Mr. Walter Lichtenstein was elected Secretary of the Federal Advisory Council for the year 1938 at a salary of $2,500.00 per annum. On motion, duly made and seconded, the Council readopted for the year 1938 the existing by-laws which are attached hereto and made part of these minutes. On motion, duly made and seconded, the minutes of the Council meeting of December 13-14, 1937, copies o f which had been previously sent to the members, were approved. The Secretary presented his financial report for the year 1937, which had been audited by Mr. J. J. Buechner, Assistant Auditor of The First National Bank of Chicago, which on motion, duly made and seconded, was approved and ordered to be printed. The report is attached hereto and made a part of these minutes. On motion, duly made and seconded, the following resolution, was unanimously adopted: “ Resolved, that the Secretary be and he is hereby authorized to ask each Federal Reserve Bank to contribute $350 toward the Secretarial and incidental expenses of the Federal Advisory Council for the year 1938 and to draw on it for that purpose.” The topic submitted b y the Board of Governors of the Federal Reserve System at the December meeting o f the Council, namely: How can the Federal Reserve System increase the value or scope o f its services to member banks in practicable or desirable ways?, was discussed at some length. Mr. Steele read his letter dated February 3, 1938, addressed to the Secretary of the Council. Mr. Steele also read some of the answers received from member banks in his district in reply to a questionnaire. It was moved to appoint a committee to consider the matter further and President Smith appointed the following committee: Messrs. Williams, Chairman, Smith, Harding, and Dick. It was understood that this committee would file a report to be submitted to the Board at the next meeting of the Council. A resolution expressing the regret o f the Council on the death of Mr. W. T. Kemper, member of the Council, was adopted by a rising vote and appears as part of these minutes. The topic submitted for this meeting by the Board of Governors of the Federal Reserve System, namely: What is the function of the Federal Advisory Council as a part of the Federal Reserve System, and how essential and important is this function and how might it be improved?, was then taken up. It was suggested that the address delivered by Mr. Steele on November 8, 1935, at the annual meeting of the stockholders of the Federal Reserve Bank of Boston be sent to the Board o f Governors of the Federal Reserve System with a covering letter, but it was finally decided that the matter first be discussed with Chairman Eccles and possibly with the other members o f the Board. 5 It was voted unanimously that President Smith appoint a committee of three and that the subject be discussed with Chairman Eccles and other members of the Board. President Smith appointed the following committee: Messrs. Loeb, Chairman, Steele and Brown. Mr. Aldrich reported on behalf of the committee appointed to study the possibility of permitting banks to do secondary underwriting. It seems that various drafts have been prepared in connection with this problem. Mr. Aldrich felt it was better not to take any action at this time. Mr. Aldrich pointed out that the Brookings Institution has made an investigation which shows that there is available for underwriting between one hundred million and four hundred and fifty million dollars. He also reported that it seemed that Chairman Douglas o f the Security Exchange Commission wishes to rely at present more on in vestment trusts than on banks. It was voted to continue the present committee consisting of Messrs. Aldrich, Steele, and Loeb. At 11:30 A. M . Dr. E. A. Goldenweiser, Director, Division of Research and Statistics, appeared before the Council and discussed the general financial and business situation. Dr. Goldenweiser left at 12:40 P. M . and at 12:55 P. M. the Council adjourned for lunch with Chairman Eccles. The meeting reconvened at 2:30 P. M. Mr. Steele read a letter dated February 3, 1938, and addressed to the Secretary of the Council, dealing with the desirability of retaining the office of Comptroller of the Currency. It was suggested that the Secretary have copies of the two Byrnes bills as well as of the Barkley bill sent to the members of the Council. The following resolution, presented by Mr. Steele, was adopted: “ The Federal Advisory Council is opposed in principle to the abolition of the office of the Comptroller of the Currency and is also opposed in principle to the enactment of H.R. 8890 (Patman bill), relative to the ownership of bank stocks by corporations, partnerships, business trusts, and associations. “ In furtherance of these views, the President of the Council is asked to appoint a committee whose duty it shall be to draft resolutions expressing the disapproval of the Council to the aforesaid proposals, such resolutions to be presented at the May meeting of the Council unless developments shall make it advisable that such resolutions be adopted at an earlier date. In such an event, the Executive Committee of the Council is hereby authorized to adopt appropriate resolutions expressing the views of the Council.” N o action was taken in regard to appointing a committee at this time, but the Secretary was instructed to keep in touch with the situation. 6 At 3:50 P. M . Governor Ronald Ransom joined the meeting and discussed with the members of the Council the topic dealing w ith the functions of the Federal Advisory Council which was subm itted by the Board. Governor Ransom left the meeting at 4:20 P. M . A discussion took place regarding possible difficulties of some banks and Messrs. Brown, Smith, K ingm an, and Loeb reported on the situation in their respective districts. In general it seems that relatively few banks, and most of these small ones, are in any difficulty. M r. Steele brought up the subject of H .R . 8890. It was decided that this matter was covered by the resolution previously adopted in reference to the office of the Comptroller of the Currency. The topic suggested by M r. Ball, namely: W hy should not the rediscount rate in all Federal Reserve districts be uniform ? W hat benefits accrue to the Federal Reserve System or to the member banks through the New York Federal Reserve bank having a lower rate than the other districts?, was brought up and some discussion took place at the end of which M r. B all withdrew the topic. The meeting adjourned at 4:45 P. M . W A LT E R LIC H T E N ST E IN , Secretary 7 REPORT OF THE SECRETARY OF THE FEDERAL ADVISORY COUNCIL For the Year Ending December 31, 1937 Balance on hand December 31, 1936.............................. $2,120.30 Assessment— Twelve Federal Reserve B anks................... 4,200.00 Salary.........................................$2,500.00 Miscellaneous............................ 21.65 Postage, telegrams 61.12 and telephone........................ Printing and stationery............ 212.07 Conference expenses................. 687.50 Balance on hand December 31, 1937.................................. 2,837.96 $6,320.30 $6,320.30 Chicago, Illinois. January 10, 1938 To the Federal Advisory Council: I have audited the books, vouchers and accounts of the Secretary of the Federal Advisory Council for the year ending December 31, 1937, and certify that the above statement agrees therewith. Respectfully, T H E F IR S T N A T IO N A L B A N K OF CHICAGO, (Signed) J. J. B U E C H N E R , Asst. Auditor 8 MINUTES OF MEETING OF THE FEDERAL ADVISORY COUNCIL February 15, 1938 A t 10:15 A. M . the Federal Advisory Council convened in the Board Room of the Federal Reserve Building, W ashington, D . C. Present: M r. W alter W . Smith, President; M r. Howard A. Loeb, Vice President; Messrs. T. M . Steele, W . W . Aldrich, Lewis B. W illiams, Robert M . Hanes, Edward Ball, Edward E . Brown, Henry S. Kingm an, R. Ellison Harding, Paul S. Dick, and Walter Lichtenstein, Secretary. President Sm ith listed the various committees of the Council which are to function until the next meeting of the Council: 1. Committee on underwriting by banks: Messrs. Aldrich, Chairman, Steele, and Loeb. 2. Committee on question how Federal Reserve System can be made more helpful to member banks: Messrs. W illiams, Chairman, Smith, Harding, and Dick. 3. Committee on functions of the Council: Messrs. Loeb, Chairman, Steele and Brown. 4. Committee on retention of office of Comptroller of the Currency: not appointed. The President and Secretary of the Council are to be ex officio members of the above committees. The meeting adjourned at 10:25. W A LT ER LIC H T E N ST E IN , Secretary. 9 MINUTES OF JOINT CONFERENCE OF THE FEDERAL ADVISORY COUNCIL AND THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM February 15, 1938 At 10:40 A. M . a joint conference of the Federal Advisory Council and the Board of Governors of the Federal Reserve System was held in the Board Room of the Federal Reserve Building, W ashington, D . C. Present: Members of the Board of Governors of the Federal Reserve System: Chairm an M arriner S. Eccles; Vice Chairman Ronald Ransom; Governors Chester C. Davis, John McKee, and M . S. Szymczak; also Messrs. Lawrence Clayton, Assistant to the Chairm an of the Board of Governors of the Federal Reserve System; L. P. Bethea and S. A. Carpenter, Assistant Secretaries of the Board; Walter W yatt, General Counsel for the Board; D r. E. A. Goldenweiser, Director, Division of Research and Statistics, Board of Governors; Carl E. Parry, Chief of Division of Bank Loans, Board of Governors; E. L. Smead, Chief of Division of Bank Operations; J. P. Dreibelbis, Assistant General Counsel of the Board; Leo H . Paulger, Chief of Division of Examinations; and Elliott Thurston, Special Assistant to the Chairman. Present: Members of the Federal Advisory Council: M r. W alter W . Sm ith, President; M r. Howard A. Loeb, Vice President; Messrs. T. M . Steele, W . W . Aldrich, Lewis B. W illiams, Robert M . Hanes, Edward Ball, Edward E. Brown, Henry S. Kingm an, R . Ellison Harding, Paul S. Dick, and Walter Lichtenstein, Secretary. A discussion took place regarding the topic submitted by the Board at the last meeting of the Council, namely, how the Federal Reserve System may be of more service to member banks, and the Board was informed that the Council hoped to be able to submit a report at the M ay meeting. President Sm ith then read the topic submitted by the Board of Governors of the Federal Reserve System for this meeting, dealing with the functions of the Federal Advisory Council. President Sm ith informed the Board that before finally filing a report at the M ay meeting, it would be the endeavor of the Council or its committee to have a consultation w ith the members of the Board. A short discussion took place regarding the Patman bills that are pending. President Sm ith stated that the Council had no desire to make public any findings, but at the appropriate tim e would like to make a record of its views. A discussion took place regarding the difference in the attitude between various sections of the country and various banks regarding the treatment of collection items. Chairman Eccles pointed out that many small banks feel that they get more help from their city correspondents than from the Federal Reserve System and as a result many banks which ought to be members of the Federal Reserve System either have not joined the System or have resigned from it. The meeting adjourned at 12:20 P. M . W A LT ER L IC H T E N ST E IN , Secretary. 10 THE FIRST NATIONAL BANK AND TRUST COMPANY' of NEW HAVEN, CONNECTICUT F ebru ary 3 , 1938 Dr. W a lte r L i c h t e n s t e i n , S e c r e t a r y , Federal A d v is o r y C o u n c i l, 38 South D e a r b o r n S t . , C h ica go, I l l i n o i s . Dear Dr. L i c h t e n s t e i n : T h is i s o n e o f two s e p a r a t e l e t t e r s w h ic h I am w r it in g y ou u n d e r t o d a y * s d a t e i n r e s p o n s e to y o u r r e q u e s t f o r s u g g e s t io n s o f t o p i c s w h ic h m ig h t b e d i s c u s s e d a t th e m eeting o f th e F e d e r a l A d v i s o r y C o u n c il o n F e b r u a r y 1 4 th and 15th, 1S 38. I s u g g e s t t h a t th e C o u n c il a d o p t and p r e s e n t t o th e Board a r e c o m m e n d a tio n s u b s t a n t i a l l y t o th e f o l l o w i n g e f f e c t : C e r t a i n n e w s p a p e r s h a ve r e c e n t l y c a r r i e d s t a t e m en ts t o th e e f f e c t t h a t th e p o s i t i o n o f th e C o m p t r o ll e r o f th e C u r r e n c y , s o o n t o becom e v a c a n t b y r e s i g n a t i o n , i s n o t to b e f i l l e d e x c e p t b y an " a c t i n g " o f f i c i a l and t h a t bank e x a m in a t io n s h e r e t o f o r e c o n d u c t e d u n d e r th e a u t h o r i t y and s u p e r v i s i o n o f th e C o m p t r o ll e r a r e s o o n t o be ta k e n o v e r b y th e F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a tio n . I t i s c l e a r t h a t e x i s t i n g s t a t u t e s w o u ld h a ve t o b e am ended b e f o r e s u c h ch a n g e s c o u l d l e g a l l y be consum m ated* W h ile th e F e d e r a l A d v i s o r y C o u n c il i s w h o lly i n sym path y w it h th e id e a o f u n ifo r m e x a m in a t io n s f o r n a t i o n a l b a n k s s t a t e member ban k s and n on member b a n k s ( s t a t e ) w h ic h a r e i n s u r e d , i t i s n o t i n f a v o r o f th e a b o l i t i o n o f th e o f f i c e o f th e C o m p t r o lle r o f th e C u r r e n c y , n o r w it h th e c u r t a i l ment o f th e p o w e rs o f t h a t o f f i c e and i t v ie w s w it h e n t i r e d i s a p p r o v a l th e p r o p o s a l t h a t e x a m i n a t i o n s s h a l l b e c e n t e r e d i n th e F e d e r a l D e p o s it In su ra n ce C o r p o r a tio n . > The C o u n c i l w en t on r e c o r d p r i o r to th e a d o p t io n pr# Walter Lichtenstein, Secretary - #2 February 3, 1938 of the Banking Act of 1933 as opposed to the general plan of deposit insurance embodied in that Act upon grounds which are equally applicable to the provisions in the Banking Act of 1935 under which the Federal Deposit Insurance Corporation has been created. When the Banking Act of 1935 was under consideration and members of the Council were requested by Senator Glass to appear before the sub-committee which had the proposed act under advisement, individual members of the Council stated that although the Council, in suggesting certain changes in the text of the pending proposal, had included recommendations with respect to the provisions creating the Federal Deposit Insurance Corporation, they did not under stand that the Council intended to be understood as acquiescing in the general principle of insurance of bank deposits embodied in the measure. T he C o u n c i l now r e i t e r a t e s i t s b e l i e f t h a t t h e g e n e r a l p l a n o f i n s u r a n c e u n d e r w h ic h t h e F e d e r a l D e p o s it In s u r a n c e C o r p o r a tio n has b een c r e a t e d i s u n sou n d an d t h a t th e r e i s d a n g er o f i t s u lt im a t e fa ilu r e . By n o r e a s o n a b le s t a n d a r d s c a n i t b e s a i d to h a ve p a s s e d th e e x p e r im e n ta l s t a g e . On t h e o t h e r h a n d , t h e o f f i c e o f t h e C o m p t r o l l e r o f th e C u rre n cy h as a lo n g r e c o r d o f e f f i c i e n c y and h a s th e a d v a n ta g e o f an e x p e r ie n c e d an d c a p a b le s t a f f w it h s e t t l e d t r a d i t i o n s o f th e h ig h e s t s ta n d a r d s o f p u b lic s e r v ic e . T h e r e m a y , o r may n o t , b e t r u t h i n t h e t h e o r y w h ic h has b e e n a d v a n ce d t h a t th e p r o p o s e d c e n t r a l i z a t i o n o f e x a m in a t io n s may b e d e s i r e d b y som e a s an e f f e c t i v e s t e p i n t h e d i r e c t i o n o f a u n i f i e d b a n k in g s y s t e m w h ic h w i l l d o aw ay w i t h t h e in d e p e n d e n t s y s t e m s o f th e s e v e r a l s t a t e s b u t , i f t h is i s i n f a c t on e o f th e o b j e c t s s o u g h t , th e C o u n c il b e l i e v e s t h a t t o be an a d d i t i o n a l r e a s o n f o r o p p o s i t i o n t o th e p r o p o s a l . F o r t h e r e a s o n s a b o v e s e t f o r t h , th e C o u n c i l u r g e s u p on t h e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S ystem t h a t i t e x e r c i s e i t s i n f l u e n c e t o r e t a i n th e f u l l a u t h o r i t y o f th e C o m p t r o l l e r o f th e C u r r e n c y and t o r e s i s t th e c e n t r a l i z a t i o n o f th e e x a m in in g and s u p e r v i s o r y f u n c t i o n s i n th e F e d e r a l D e p o s i t In su ra n ce C o r p o ra tio n a lo n e . I w o u ld s u g g e s t f u r t h e r t h a t i f th e C o u n c il i s r e a d y to adopt a r e co m m e n d a tio n i n s u b s t a n t i a l l y th e a b o v e fo r m , i t be s t a t e d t o th e B o a rd t h a t th e C o u n c i l may, a t i t s d i s c r e t i o n , decide t o make th e r e co m m e n d a tio n p u b l i c p r i o r t o t h e n e x t Annual R e p o r t o f th e B oa rd o f G o v e r n o r s . Digitized for TMS:aml FRASER S in c e r e ly y o u rs , (S ig n e d ) THOMAS M. STEELE THE FIRST NATIONAL BANK AND TRUST COMPANY of NEW HAVEN, CONNECTICUT F e b ru a ry 3 , 1938 Dr* W a lter L i c h t e n s t e i n , S e c r e t a r y , Federal A d v i s o r y C o u n c i l , 38 South D e a r b o r n S t . , Chicago, I l l i n o i s . Dear Dr. L i c h t e n s t e i n : T h is i s o n e o f two s e p a r a t e l e t t e r s w h ich I am w ritin g y o u u n d e r t o d a y * s d a t e i n r e s p o n s e t o y o u r r e q u e s t fo r s u g g e s t io n s o f t o p i c s w h ic h m igh t b e d i s c u s s e d a t the meeting o f t h e F e d e r a l A d v i s o r y C o u n c il on F e b ru a ry 1 4 th and 15 t h , 1 9 3 8 . A t th e m e e t in g o f th e C o u n c il h e l d on December 1 3 t h - 1 4 t h , 1937 th e B oa rd o f G o v e rn o rs s u b m itte d to the C o u n c il t h e f o l l o w i n g t o p i c : ’’ How c a n th e F e d e r a l R e s e r v e System in c r e a s e th e v a l u e o r s c o p e o f i t s s e r v i c e s t o member banks i n p r a c t i c a b l e o r d e s ir a b le w ays?” At t h e j o i n t m e e t in g o f th e C o u n c il and the B oard on December 1 4 th i t was s t a t e d b y v a r i o u s members o f th e B oard that the q u e s t i o n was in t e n d e d t o be as b r o a d as th e C o u n c il wished to make i t ; th e P r e s i d e n t o f th e C o u n c il s t a t e d th a t the C o u n c il w o u ld l i k e f u r t h e r tim e f o r a s tu d y o f th e q u e s t io n and the B oard r e p l i e d t h a t th e C o u n c il c o u ld ta k e a l l the tim e i t pleased, w it h th e s u g g e s t i o n b y a t l e a s t one o f th e members that the C o u n c i l c o u l d h a v e th e b a la n c e o f th e c u r r e n t f i s c a l year i f i t d e s i r e d . S in c e t h e D ecem ber m e e tin g I have s u b m itte d th e p r o posed q u e s t io n i n w r i t i n g t o some t h i r t y o f th e more im p o r ta n t member banks i n th e f i r s t F e d e r a l R e s e r v e D i s t r i c t and I presum e the o th e r members o f th e C o u n c i l , f o r m a l l y o r i n f o r m a l l y , have fo llo w e d a som ewhat s i m i l a r p r o c e d u r e . I f th e y have done so I presume t h a t i t i s a s a f e i n f e r e n c e th a t t h e i r r e p l i e s have been much l i k e t h o s e w h ic h I h ave r e c e i v e d and t h a t th e y have been a s t o n is h e d b y th e s m a ll number o f s u g g e s t io n s as to m a tte r s o f d e t a i l e d p r o c e d u r e and b y th e l a r g e number o f c r i t i c i s m s o f general p o l i c i e s f o l l o w e d b y th e B o a rd . pr# Walter Lichtenstein, Secretary - #2 February 3 , 1938 I n view of this situation it is my f e e l i n g th a t th e Council should seriously consider the appointment at the February Meeting of a Committee which, between that time and the time of the May meeting, may prepare a carefully-worded answer to the Board1s question, setting forth the views of the Council and of the member banks represented by it so far as the latter have been ascertained or may be ascertained hereafter,, In order to bring this about I would suggest the adoption of a re s o lu tio n substantially as follows: Whereas the Board of Governors of the Federal Reserve System, at the meeting of the Federal Advisory Council held on December 13th-14th, 1937 invited the Council to report to the Board its recommendations as to ways and means in which the Federal Reserve System may "increase the value or scope of its services to member banks in practicable or desirable ways" and, Whereas various suggestions concerning matters of general policy have been made by members of the Council and by member banks which have been consulted and it is felt by the Council that many of these suggestions are of sufficient importance to warrant careful analyses and considera tion to an extent impracticable in the time avail able at stated meetings, and the Board has indicated that it would be satisfactory to it for the Council to take such reasonable time in formulating its re ply as the Council may deem necessary, NOW, THEREFORE, IT IS VOTED: That the President be requested to appoint a C o m m itte e o f t h r e e , t o w h ic h th e P r e s i d e n t and S e c r e t a r y s h a l l b e a d d e d a s e x o f f i c i o m e m b e rs, t o s t u d y s u c h s u g g e s t i o n s a s h a v e b e e n made o r may b e made b e a r i n g u p o n t h e q u e s t i o n s o s u b m i t t e d and t o make a r e p o r t t o t h e C o u n c i l a t th e m e e t in g t o b e h e l d i n May o f t h e c u r r e n t y e a r . I t i s recom m en d ed t o s a i d C o m m itte e t h a t i t e n d e a v o r t o p r e p a r e a p r e l i m i n a r y r e p o r t b y a p p r o x i m a t e l y A p r i l 1 s t , i n tim e t o b e s u b m it t e d t o th e m em bers o f t h e C o u n c i l f o r t h e i r c o n s i d e r a t i o n and s u g g e s t i o n s , i n o r d e r t h a t su ch c r i t i c i s m s and s u g g e s t i o n s a s may b e made b y th e C o u n c i l m em bers may b e e x a m in e d and w e ig h e d p r i o r t o t h e m e e t in g i n May, a t w h ic h tim e i t i s h o p e d t h a t a f i n a l r e p o r t o f t h e C o u n c i l may be p r e p a r e d f o r c o n s id e r a t io n as h e r e in p ro p o s e d . I t would be my id ea th a t the Board o f Governors be in formed that such a Committee had been ap p oin ted . Even in the ^vent that we have re c e iv e d d e f i n i t e recommendations as to s p e c i fic d e ta ils o f a d m in istr a tio n so th a t we might f e e l j u s t i f i e d in Presenting them to the Board o f Governors a t the February m eetin g, * should p e rso n a lly co n sid er i t w iser n ot to do so at th a t time since i t i s not im p o ssib le th a t a Committee studying the whole pr, Walter Lichtenstein, Secretary - #3 February 3, 1938 q u e s tio n m ig h t b e s u r e o f h a v in g so m e th in g s p e c i f i c t o recommend in the e v e n t t h a t l a c k o f u n a n im ity o r c o n s i d e r a t i o n s o f e x p e d ie n cy m ig h t make i t a p p e a r i n a d v i s a b l e t o th e C om m ittee t o make a report a lo n g th e b r o a d e r l i n e s s u g g e s te d . S in c e r e ly y ou rs, (S ig n e d ) -IMS: ami THOMAS M. STEELE BOARD OF GOVERNORS of th© FEDERAL RESERVE SYSTEM Washington February 3, 1938 jjr, 7/alter Lichtenstein, Secretary, Federal Advisory Council, 38 South Dearborn Street, Chicago, Illin o is , Dear Mr. Lichtenstein: Further reference is made to your le tte r of January 14 with respect to topics which the Board might wish to suggest for discussion by the Fed eral Advisory Council at it s February meeting in Washington. As this w ill be the f i r s t meeting of the Council during the new year and since there is a new member on the Council, i t has occurred to the Board that the Council might wish to formulate a statement of it s under standing of the function of the Council and of the matters which i t should discuss with the Board. Such a statement would not only be help ful to the Council in it s deliberations and to the Board in the determina tion of the topics to be suggested by i t for consideration by the Council, but would be effective in promoting the sp irit of cooperation that ex ists between the Council and the Board. For these reasons the Board suggests that at the forthcoming meeting consideration be given to the following topics: 1. (a) What is the function of the Federal Advisory Council as a part of the Federal Reserve System. (b) How essential and important is this function and how might i t be improved. 2. "What types of topics should be discussed by the Council with the Board from time to time. It is understood that, in accordance with the decision reached at the last meeting of the Council, consideration w ill also be given to the subject suggested by the Board for that meeting: ”Ecrw can the Federal Reserve System increase the value or scope of its services to member banks in practicable or desirable ways. 11 Very truly yours, (Signed) CHESTER MORRILL Chester M orrill, Secretary.
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