A meeting of the Federal :?.eserve Board was held in the office of the

4°7erncr on ,ednesday, May 2, 1928 at 11:00 a.m.

PX:13=T: Governor Young2,:r. Platt• Hamlin:r. JamesEr. McIntoshMr. 2ddy, Secretary• McClelland, Asst. 3ecretary

The Governor stated that Er. Miller's absence is due to the fact that

is to appearing before the Committee on Banking and Currency of the

iiepresentatives in connection with the hearing on the so-called

StrcnIg Stabilization Bill.

'The Governor submitted a memorandum with reference to credit condi-tions w

ch was considered by the Open Market Investment Committee at its

1141 011 APril nth and he also presented the report and recommendations

of''46 Committee dated April 29th as follows:

"The Committee has considered the memorandum submitted byGhe Chairman, and has carefully reviewed the Open Market oper-

ations of the System since the last meeting of the Committee,• the light of the general creait situation referred to in thememorandum.

In view of the fact that it now appears that the expansionaz the total volume of bank credit, referred to in its last re-

Port, has ccntinued at what seems to be an unduly rapid rate

trace that time, notwithstanding the sales of securities madeY, the Committee and the recent increase in the discount rates

et some of the deserve Banks, the Committee now recommends that

the general policy adopted at its last meeting be Continued un-

its next meeting, which it would expect to hold shortlyafter the middle of June, unless conditions make an earliermeeting advisable.

The Committee would expect to make such changes in the Open

'.arket account as might be necessary to carry out the policyrecommended."

Re-Lerred to the recommendation of the Committee that the general

Polic

aciopted at its last meting be continued and stated that at the

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'fleeting referred to,there be

sOrnewhat

tioll of the Committee's

—7—

held on March 26th,

continued the policy established

firmer money conditions.

report and

/114(re8sed to the Committee clearly

ilr°Irsa by the Board.

During the discussion which

Pernlission to insert in the record

the Committee recommended that

in January of workinc toward

He suggested that following considera-

recommenaations a special letter be

setting forth the policy which is ap-

ensued, Mr. James requested and received

the following statement:

evia"In view of the abnormal increase in brokers' loans and other14-;16,4ces of an inflationary tendency in the money market, I desireBoa'"is time to offer the following suggestions in the hope that the

IIlaY adopt them as a part of its policy:ur 2IA.U.: That daily settlements as to reserve requirements be or-

'or all reserve bank or branch cities. Jeposits computed as at.'4.11g of the day's business to govern.

tem Liquidate the system's Open Market 2,ccount and suspendP°rarily all activities of the Open Market Committee.'TITTT — .

Of 13.-. 441i1: -'_Istablish a rate same as the discount rate for buying141s aad for repurchase agreements.

Inalt POU:OH: The Board to suggest or request the reserve banks tono loans on collateral notes to banks having money on call afternotifyin the member banks of this policy.

that "s / see it, there is nothino: in the present business situationbezit warrants the raising of the discount rates so lom:: as the reservecalls are loanin:, money to member banks having money employed in thebly Market. ihen the open market account is liquidated it will, in

illdMent, be time to consider the rediscount rates."

4rter discussion, the following letter to the Acting Chairman Of

tee was approved:

eetIm4iThe report and recommendations of the Open Market investmentby t ttee as of April 29, 1928, have been received and consideredthe he Board. ;;EJ observe that the Committee now recommends thatthe !elleral policy adopted at its last meeting be continued untilheici-e ct Meeting. The previous meetincc, to which you refer, wasthe °11 1:arch 26 and at that time your Committee recommended thatary!elleral policy established in January be followed. In Janu-

4°11 stated the Oonmittee program should work toward somewhat

the

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"firmer money conditions and to accomplish the program the

Committee :;euld e:Lpect to sell further amounts of Govern-ment securities, the object beinp; to check unduly rapidincrease in the volume of credit. The Board therefore as-sumes that your present policy is a continuation of the pro-gram adopted in January.

also observe from your report of pril 29 that itis now expected by your Committee that this policy will becontinued until the next meeting of the Open Market Investment

Committee, which you contemplate holding shortly after themiddle of June, unless conditions make an earlier meeting ad-visable. The Board realizes that it is extremely difficultfor the Col:.mittee to outline any definite procedure to belollowed between now and June 15, and in like manner, it isextremely difficult for the Board to approve any definite pol-icy for any definite period. It, however, is in areementWith the procedure suggested by the Committee at the momentand therefore gives approval to its recommendations, but in

1.°1nr; so, reserves the same right that the Committee reservesOf changing its position should conditions develop which wouldmake a change advisable."

The minutes of the meeting of the Federal deserve Board held on 4ril

27thwere then read and approved.

Governor reported that on l'onlay during his appearance oefore the

C°r4Ilittee on Banking and Currency of the senate on the subject of Senate

es°1ution 113, the Committee also brouLtht up H. R. 10151, a bill to amend

86"i°11 9 of the Federal .eserve lIct so as to permit all state banks and

trizat comnanies, which are members of the Federal Reserve System, to act

Rerierally as depositaries of public moneys and as financial agents of the

e0Vernment when desifmated for that purpose by the Secretary of the Treasury.lie

stated that the Committee had received a letter from the Under Secretary

of the Treasury stating in effect that the Treasury Department objects to

the

bill, particularly because there are at present no funds which the48481.1

ciePart Arn-lik, would prefer not to be burdened with the correspondence with

IV could place in depositaries of the kinds referred to, and the

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stEtte member banks which will follow passage of the bill. He stated that

he advised the Committee that while he could not speak for the Board he

Personally saw no objection to the bill. He also stated that the Com-

mittee later made a favorable report on the bill.

The Governor also reported that other members of the Board are to be

invited to appear before the Committee on Banking and Currency of the House

°f Ilepresentatives relative to the so-called stabilization Dill introduced

133ongress2an 3trong. The date for the Board's appearance, he stated,

hae not yet been fixed.

Matter approved on initials on oril 26th, namely, application of

thaLumbermens Bank and Trust Company, Hoquiam, 1ashington, for

permission

to (ItIc-rclse general fiduciary powers, effective if and when it is

converted

frit() a tational banking association and is authorized by the

Comptroller

9f thA- Currency to begin business as the Lumbermens National Bank and

Trust

Oomn,„Y; the application having been approved on condition that following

the ecaversion the board of directors of the national bank should

file a

Ilee°111tion ratifying the action of the state bank in aliplying for trust

P°4reti8 on its behalf.

Formally approved.

Latter approved on initials on ;1.pril 30th, namely, anplication of

"e hi rd. National Bank and Trust Company, Camden, 1,,T. J. for permission.

to ex

ercise general fiduciary pavers, effective if and when it is author-

izeci°Y the Comptroller of the Currency to begin business as

a national

Formally approved.

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Letter dated ,q•)ril 30th from the Chairman of the Federal deserve Bank

" Chicago /

, advising that on April 20th a rate of 4 l/2,, was established

f°11 Purchases of (-overnment securities under agreement to resell, to con orm

to 4.1,increase made on that date in the rediscount rate of the bank.

fl.thout objection, noted with approval.

Telegrams dated -4)ri1 27th from the Chairman of the Federal Reserve

4MrOf Chicago and hay Prid from the Chairman of the Federal Reserve Bank

of Philadelphia, ooth advising that their boards of directors at meetings

°11 the dates stated made no changes in the banks' existing schedules of

ates of discount and purchase.

Without objection, noted with approval.

The Secretary then recommended acceptance of the resination of LIr.

glish as stenorapher in his office, effective at close of business

413"1 30th and reuuested authority to fill the vacancy thus created at a

441'Y Of not to exceed ;2,000 per annum.

Upon motion, the resignation was accented and the

authority requested by the Secretary was granted.

r.emorandum from the secretary dated Lay 2nd, requesting authority forthe

eT4PloYment Of an additional messenger for a temporar;" period of six

8 at a salary of ,;75 per month.

Approved.

.leport of Committee on Salaries and Expenditures on letter dated

1)111 30th from the Comptroller of the Currency, recommending approval of

1*Y of -2500 nar annum for National Bank Examiner 7m. C. Grimes,

asie

-

zaizi

to the Fourth Federal deserve District; the Board's Committee also

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tecormending approval.

Approved.

iteport of Committee on Salaries and Expenditures on letter dated April

344 from the Comptroller of the Currency, recommending approval of an in-

°rease from ::3300 to 364.00 per annum in the salary of National Bank Examiner

4* Aoss; the Board's Committee also recommending approval.

Approved.

Iteport of Committee on Salaries and Expenditures on letter dated April

30th fromthe Federal Reserve Agent at St-. Louis, requesting approval of

the action ofthe Executive Committee of that bank in voting to extend

leel% 4 period of thirty days from ay 3rd, with full pay, leave of absence

aeeoUnt of illness previously granted Er. J. M. Mitchell, an employee

tha ,'40neY Department of the Memphis Branch; the Board's Committee

tecom--idending approval of the salary payment involved.

Approved.

ieport of Committee on Salaries and Expenditures on letter dated

41°1'4 60th from the Federal .deserve gent at St. Louis, requesting ap-

t°val °f the action of the Executive Committee of that bank in voting

to° terld for a period of thirty days from May 6th, with full pay, leave

°t absenue on account of illness previously granted :Ir. J. I. Rinkleff,

C1511troll__.Ler of the Bank; the Board's Committee recommending approval of the

44141*Y PaYment involved.

Approved.

Ile/port of Committee on Salaries and Expenditures on letter dated

413ril 21ith from the Deputy Governor of the Federal Reserve Bank of New

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YOrk9 submitting recommendations for the promotion in grade of employees

to positions where the grade is in excess of .2500 per annum, such changes

to -°e effective ,Joril 1, 1998, and also advising of the establishment of

ilevl Position in the Foreign Department of the 'Bank; the Board's Committee

rGeornmendini apc)roval •

_pproved.

Letter (lute :Ia;1 1st from :Ir. :;alter 3. Cox, resubmitting schedule of

rates for handling the stenograrhic reportin- work of the Board, the rates

be the same as those now in effect.

Upon motion, the Board's arrangement with 1,:r. Cox

was ratified.

deport of Committee on -]xaminati9ns on letter dated pril 27th from

the i.%edendAeserve Agent at Boston, recommending approval of a proposed

Pael'7,er the B. :..-.. O. Durfee Trust Company of Fall diver, .-,assachusetts,

Member bank,with the Lassasoit-Pocasset 1:ational Bank and the ::.etacomet

calal Bank, both of Pall iver; the Board's Committee also recommending

1)131'aval.

te c

:oted, without objection.

Letter dated April 27th from the Assistant 'Federal aeserve ,,gent at

urk:, advising of the proposed mers7er of the Bank of United 3tates and

entral ::,ercantile Bank and Trust 'Company, both of New York City; the

4-strp,4-Zederal lesrve Agent stating that the prJsent main office of Lie

(entral ::ercantile Bank and Trust Company will be continued as the main

-Ce Of the merged institution, which will have a total of fifteen bank-

1.11

Loted, without oujection.

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Letter dated. ,pril 27th from the Federal _reserve Agent at l'hiladelphia,

advising of a proposed consolidation of the Peoples 3avins and Dime Bank

ancl Trust Company, a member, and the Lincoln Trust Company, both of 3cranton,

la's which ':,ill be effected under the charter of the member bank; the ,gent

adVising that it aripears the consolidation will result in no material change

114 the character of the business or scope of the corporate powers now eyer-

eisacl by the member bank and that he knows of no reason why it should not

be 413PrOVed.

Noted, without objection.

L:emorandum from Counsel dated 21pril 25th, submitting in accordance

th the directions cAven by the Board at its meeting on April 24th, drafts

of letters to the Federal eserve Agent at 3t. Louis and. to the American

BanItand ?rust Company, Paris, rk., advising of a hearing to be held by the

Boara , at which duly appointed representatives of the member bank are re-

cillEted to appear to show cause wh:f it should not be required to surrender

its t,4ock in the Federal eserve Bank of 3t. Louis and to forfeit all rights

Pl'ivilees of membership in the Federal Heserve 3ystem; the letter stat-

th-1" in the event the member bank desires to waive its right to appear

befor

6 the Federal deserve Board it may, upon due notice, appear before the

?saeral :ieserve Arent for the purpose of presenting such evidence as it may

to have transmitted to the Board.

Upon motion, the proposed letters were approved

and ordered transinitt6a, after June 4, 1928 had beenfixed as the date for the Board's hearing.

Liemorandum from Counsel dated :.:ay and, with reference to letter

pril 26th from Mr. John Evans, requesting approval by the Board

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Of hi n

SerVillc,7

-9-

as President and director of the First National Bank of ':Denver,

Q.olo rado servin - as President and director of the International ?rust

ON,°I that city; Counsel szbmittinry drafts of letters to Mr. 2:vans and

t° t'P's 0

,70vernor of the Federal deserve Bank of hansas City, who is interested

ii the matter, statinr: that the Board some time ago authorized L.'''. Evans to

serip,c-t the same time as director and officer of the International ?rust

CorToaand as director of the First Yational Bank of )enver and that there

110 O.Jection to his srvinp: as '-'resident of the latter bank under

thePermit heretofore issued to him.

Upon motion, the letters submitted by Counsel

were approved.

1)I'aft Of rely to letter dated April 19th from the Federal Aeserve —r-ent

4t 3an'-rancisco, in:luirinc- whether trust funds of the Union Bank and ?rust

eozapally of

Los 1,.nge1es, not segregated from the general assets of the bank

usea

in the commercial or savings department, are to ue classified as

(let)°2its-f_;ainst wnich reserves must be maintained, and if so, whether they

?"e troatei as amounts "due to" other banks; the proposed reply stating

tlIctt flInas Of tn3 kind referred to must be classiAed as deposit liabilities

reserves but may not be classified as amounts "due to" other banks,

they are not in fact amounts aue by the Union Bank and ?rust Company

t° ()ther banks put are amounts due to itself as trustee.

Upon motion, the proposed reply was approved.

r,em-40randum from Counsel dated April 26th, submitting in

accordance

//itla" instructions of the Board at its meeting on pri1 24th, draft of

4

letter to all Governors and Federal eserve Agents advising that

- °I mutual savins banks, Morris Plan Banks and credit unions should

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beelassed by member banks as amounts "due to" banks within the meaning of

Ti 19 of the Federal deserve ct, whilo denosits of Building and Loan

8"c.ations ana cooperative banks of the Massachusetts type may not be so

*4sifiea; k;ounsel suggesting that the ralin-; be published in the -iederal

411aserze Bulletin.

Of

Upon motion, the proposel circular letter was aporoVedand in accordance with Counsel's sarx,estion the ruling con-tained therein was ordered Nblished in the next issue ofthe Bulletin.

Letterdated ;11pril 97th from the Chairman of the Federal deserve Bank

Aew York, advising of the resignation, effective June 1928, of

. 1Mason, General Counsel of the Bank, who is resuming private prac-

ticeand has been designatei, effective July 1 1928, as one of the notaries

to tact ,lor the Federal :eserve Bank of Yew York in connection with the pro-

444 b6 e,7 'appointed to select a successor to Mr. Mason as Gen3ral Counsel of

the bank

test L

uapaid items; the Chairman also stating that a special committee

1,;oted.

110 Governor then stated that

Nete its

*4111 rase t

1-1,11c1

°P_ 6 Mi. 01.2ILI"TEES 1414i ,

4teci.

the Governors' Conference expects to coin-

program early this afternoon, and

in joint

itpril 30th,1:aY 1st,

APril oOth,

411Droveci:

session at 3:00 o'clock.

that the

Aecommendinc-7 changes in stock at

as set forth in the ,%uxiliary MlAecommendations approv

commending action on applicat

set forth in the tuxiliaryjAecommendations a

e meeting adjourned at 1

/

.1

, 0111 tet

Board and Governors

eral Aeserve Bankse Book of this date.

•s for fiduciary powers

ute Book of this date.ed.

3ecreta

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