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uiNinsa or
JCJlHr CUNFililiiNCK OF T l£

sxsfirrxVH oo^aTOB or the rvx:ral advisory council*
r.'.asiiAL w;dBHVJ banks
ikrch 20, 1919*

In response to a le tte r from Governor I P O Hardin*; of tho
Federal Reserve Board the i resident of tho Federal Advisory Council
oilled ite 'ococutive Committee to awot in the Federal Heserve Uo/urd
room, &atropolit?m Bmk building, ashing on, D C, tn joint conference
yith aombsrc of the federal Hecarve Boird and the Governors of the
Federal Reserve b.nks on Thursday, toirch 20, 1319, at 10j3:> A &U
Governor Harding*a le tte r ia aa follov/ss
Wish in g on, March 5,1319
"iir. Jruma JJ Fortin, President
Federal Advisory Council
Chicago, 111.
lear Hr. Forman:
Tho Board hia asked the CJovarnors of the Federal Heserve banks
to Meet here for a conference on Thuradfliy, March 20th, at which time and
on succeeding days various important natters relating to the operation
of tne Federal Reaerve banks w ill bn diacuaeed.
In view o f the failuro of several very important appropriation
b ills, it looks as thouj^h the burden upon a l l banks is ;;oing to be heav­
ier than anticipated, and the f ir s t day's session w ill be taken up with a
diacuasion of some practical questions relating to tha banking situation
rnd to banking p o licy . In dincuesing th® matter at tho Board meeting
this morning, i t was decided to ask who Executive Comttitto* of tho Federal
\dvisory Council to attend the fir s t day*s session on Thursday, torch 20th,
and to authorise you at the same time to invite any other members i f the
Council who mi^ht care to come to ’/aahinrton to do so and take part in the
Trusting that you 't i l l agrae that present conditions which
seen to call for a well defined policy to be formulated after a careful
study of the situation, ju stify th is request of the Executive "otirittoe
of the F deral Advisory Council, 1 am,
Jinearely yours,
(Signed) 7 JP 0 Harding,
Fedar^l Reaerve Board."
In accordance with the 1re sid e n t'& c o ll the following numbers of tho
Executive Committee were prouent
iieaara L 1* Rue, Vico Prefiidont, D 9 #in&t
Hepburn, Y * Ro*e, and F 0 / / t t e , also *» rr itt H Grim, Secretary.

James B /‘organ.

Ihe following momboro of the Federal Reserve Board were present:
Governor, ( 1 0 Harding, in the chair, C S Hamlin, J S Williams, A C U iller,
and J A Broderick, Secretary.

The following Govemora were present:
Strong, J r ., Now York, G A ^orss, Boston, 15 P Passuore, ihildelphia,
jg R Fancher, Cleveland, U B .ellborn, Atlanta, J B McDougal, Chicago, D C
Big'8, St. Louis, Theodore k/old, Minneapolis, J Z U ille r , J r ., Kansas City,
r i Vaniandt, D allas, J K Lynch, San Francisco, also Deputy Governors C A Peple
of Richmond and C £ Spencer, J r ., of Boston*
Benjam in

There were also present by invitation Ur. i’red I* Kent, in charge of the
Division of Foreign .£xcfeange of the Federal Reserve Board, Senator Robert L.
Oven, Chairman of the Banking and Currency Committee of the United States
Senate, ^ r • Jdmund i la t t , Chairman of the Banking and Currency Committee of
the United States House of representatives.
Governor Harding called the meeting to order stating that i t would be
very informal and b rie fly pointed out the various complex problems that confront
the nation and the banks of the country at the present time, making reference
to certain s t a t is t ic s that had been compiled by the Board's sta tistic ia n , and
to a lis t of topics that had been prepared for the meeting, a ll of which are
contained in the verbatim stenographic report of the proceedings, * copy of
which has been provided for each member of tho Council.
Sanator Owen and Cor ;i’ -svvui Platt at the request of the Governor tddreesed
the conference, also Mr* George L. Harrison, Qounsel for the Federal Reserve
Governor Harding called on the Governors to review conditions in th e ir
respective Federal Reserve d is t r ic t s .
Ur. Valker D. ilines, Director-General of the Railroads, who had been invited
by Governor Harding to attend the eonferonce having arrived then explained the
financial conditions confronting the railroads and his administration of them
as Director General.
The remarks of these gentlemen as well as of those who participated in the
general discussion in connection with the subjects under consideration are
contained in the otono#*aphic report hereto attached.
^t 1:30 the conference adjourned un til 3 PM .


As arranged the joint conference of the Executive
Cemraittee of tfce Federal Advisory Council, tho members
of the Federal Reserve Board and the Governors of the
Federal Reserve banka reconvened at 3 I M.
Governor Harding called the meeting to order and said
the various topics would be considered informally* After
a fu ll discussion of the Discount policy of tha federal
R e s e r v e banks and i t s relations to the various national and
interactional financial conditions existing it was the con­
census/opinion that there should be no change in the discount
rates until a fte r the flo ta tio n of the fortheoaing Victory lean
Ur. R. Cf JUiffingwell, Assistant Secretary of the treasury
and iat. Kred 1. Kent addressed the conference on tho questions
of the governmants financing and international exchanges*
Their remarks are also contained in the stenographic report re­
ferred t o .
At 5;30 tne joint confcre.nce adjourned.



17, i ’U .

Action on recommendation made by Advisory Council on February

13th, 1913.

T0^ 4 ;



Aewndm^t to iiection 5160, so aw to require a ll new

National b'jnhs to havo the approval of the Federal Reserve Board before they
are permitted to begin business.
Ho action taken*

rOMC 2* Suggestion that Reserve Banks should send a l l clocks
for collection directly to tho town or city in which tney are
p a y a b le , even i f the town or c iti is located in ar othor Federal Reserve d istric t,
rather, etc.
submitted to Conference with Governors** who recontended that no extension
direct sending plan be undertaken until nu k r of par points increased and until
mechanical problems of collection system uor© fu lly developed and ,vcrk~ng 3moothly.
■Jovsrnors called attention to probable renewal of caafpaign of smaller banks to
secure restoration of exchange by amendment of Federal Reserve Act.
and otner

it e m s

roilC B.
ilmendixint to Section 13 to perniAt member banks to borrow
ujon their promissory notes secured by Government obligations for period of 30
days instead of 15 days, the p i©sent 1-a ita tio n .
Noaction taken.
TGirlC 4 . Recommended that cont infant lia b ilit y of Federal Reserve
Bmks or. account of h ills rodiacou/iiod with Other Federal Reserve Ranks bo
shown in published statement of tho banka so rediscounting.
beginning February 2d, tho federal Aeuerve Board’ s weekly utateuients show
itea "Contingent l i a b i l i t y as endorser on b i lls rediscounted by or cold tc otner
Heserve Banks showing an amount for oaah Reserve Bank so l i a b l e ,’* and Reserve
Banxa requested tc publish the item in future reports.
r u l e 5 . Kdcojuoendoa that the Federal Reserve Board, as a natter of
additional service io member banks, request that Federal Renerve B ,r.ks to receive
on deposit for immediate e rod it from iseisbers National notes unfit for cir­
to Ocnfrrence witn Vov^mors, who voted disapproval, and the Beard
advised Federal 4»fcjerv«* Banks that it would be le f t to discretion of each Federal
Reserve Bank to determine i t s policy in th is re.;peat, but guggeeted that a Reserve
Bark should not ,^iv© jj.-4t-..iile crouit for unfit *'ational b an k notes deposited,
such notee to bfj received as collection items only.
TOJrIC 6. Recomnoded plan under which instant credit would be f,iven
to tne combers' reserve aecounts for bank acce tanc©c poici to any Federal Reserve
Uniform p im adopted and now in oporatien with a l l federal Reserve Banks
aakes proceeds of acceptances available in acoordonee with published schedule
(which cannot be changed except upon 30 day notfcfi) whereby itmw to be collected
oust oe received by co lle ctin g Federal Reserve Bank or branch in time for presenta­
tion at nwLtarity to accepting bank or bank doei^atod aa place ^f payment.
tizue ohsdule provides immediate credit for it ©us On Federal Reserve Bank and Branch
cities and a spread of 1 to 4 days on itenie elsewhere.

Tot IC 7 .
Federal Reserve Bank of St. Louis

Victory Loan Bond i s bus- auggested terms.



Tuig was request of iioard for expression of view* of 3oun :i l
and the Council expressed it e e i; ti length,

ja p>Ajdifferentiatee in discount r t t u ,

action necessary#
Development of acceptance i&arket.
Council expressed viey tnat for reasons *;iven by them, no action bo taken
at preset, looking to stimulation of acceptance market by means of lower ratee#
Council should be advised of action of Governors in racoiwoenoijfrs following
in r« bankers* uccepianqess
( 1 ) fchere voluntary open market purchases are made by one Rooorve
{i.^k through another no vndorseraeni expected cr required*
(2 ) .'here sa lts of bilin by one Reserve Bank t© another »aadfi by
aut&al agreement, indorsement my be required by purchaser and trsAsaction proiaptly
reported to Boar§3) A'hero rediscounts arranged through Reserve Boardi rates fixed
by Beard, indorsements to bo given by borrowing bank.
and of action of Board approving Governors* regemendation except Bjard notified
Banks that a ll in ter*d istrict sale# af uuch acceptances must be oade through* or
under participation arrangec£nt3 approved by, the Board so that it Bay k^ep informed
of loan uid reserve conditions of federal Reserve Banks#
I0.; IJ 10. amendment of sict&on 5202 of National bank act so as to exclude
froo its prohibition tne lia b ilit y created by National banks on accepted b i l l s of
exchnagf actually otfnod by the bank and rediscounts at ho job or abroad, orT if tiua.
abjeqt car, be accoruplished by a ruling of t no -.ioard it would i , i t would be raore
desirable than lc a t t e s t an uasnriaent to the act*
"There is no lim it in the amount of b i lls drawn against actually existing
values which a bank 'may purchase and held, hence i t seeiae logical that there should
be no limit upon the amount which a bank wi*ht negotiate by endoraenent. "
lite r a l &une«il I*sport8 tlwfct the desired result cannot be gained by a
ruling - i . would necessitate ai.ieniaent.