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FEDER L RESERVE BO RD

WASHINGTON

a d d r e s s o f f i c i a l c o r r e s p o n d e n c e t o

t h e f e d e r a l . r e s e r v e b o a r d

X-6142

September 2 2 , 1 9 2 8 .

SUBJECT: Topic

f o r

G o v e rn o r s '

a n d

Agent s '

C o n f e r e n c e s .

Dear S i r :

There

a r e

a t t a c h e d h e r e t o c o p i e s

o f

s e l f - e x p l a n a t o r y l e t t e r s e x ch a ng e d between t h e

Federa l Reserve Bank

o f

D a l l a s

a n d t h e

Board,

a n d i t i s r e q u e s t e d t h a t t h e s u g g e s t i on r e f e r r e d

t o

t h e r e i n ,

o f

annual meet ings be tween

t h e

Members

o f t h e

Fed e ra l Res e rv e Bo a rd

a n d t h e

d i r e c t o r s

o f

t h e F e d e r a l r e s e r v e b a n k s , b e c o n s i d e r e d a t t h e

f o r t h c o m i n g c o n f e r e n c e s

o f

Governors

a n d

F e d e r a l

Reserve Agen t s .

V e ry t ru l y y o u r s ,

<J. C«

N o e l l ,

A s s i s t a n t S e c r e t a r y .

TO ALL GOVERNORS AND

AGENTS

O F F . R .

BANKS.

I

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COPY

X-6142-a

September

1 8 , 1 9 2 8 .

Dear

M r .

Walsh:

R e c e ip t

i s

acknowledged,

o f

y o u r l e t t e r

o f

September

1 5 ,

with

r e g a r d

t o t h e

r e s o l u t i o n a d o p t e d

a t t h e

recen t mee t ing

o f th e

Advisory Committee

o f

your bank' s S tockho lde r s Ass oc i a t i on , sug ges t ing

t h a t

a

jo i n t confe r ence be tween

t h e

Members

of t h e

Board

a n d t h e

d i r e c t o r s o f t h e Federal Reserve Banks b e he ld each year i n Washington

f o r t h e purpose o f g i v i n g c o n s i d e r a t i o n t o c o n f i d e n t i a l m a t t e r s

which have been brought t o t h e a t t e n t i o n o f t h e d i r e c t o r s , o r o f which

t h e Board shou ld have pe rs on a l a n d in t ima te knowledge . T he Board h a s

c a r e f u l l y c o n s i d e r e d t h e p r o p o s a l o f t h e Advisory Committee a n d w i l l

b o

ve ry g lad

t o

f o l l o w

t h e

s u g g e s t i o n t h a t

t h e

m a t t e r

b e

r e f e r r e d

t o t h e

f o r t h c o m in g c o n f e r e n c e s

o f

Governors

a n d

Federa l Reserve Agents .

I n t h e

meantime, however, sho uld an yt hi ng develop

i n

your

t e r r i t o r y r e g a r d in g w hic h y o ur d i r e c to r s wo uld l i k e t o conf e r wi th

t h e Board you may be sure tha t t h e Board would b e ve ry g lad t o

m e e t w i th y o u r d i r e c to r s a t a n y time the y f e e l th at the y have a

compla in t o r problem o f s u f f i c i e n t i m p o r t a n c e t o war ran t such a

c o n f e r e n c e .

A t

d i f f e r e n t t i m e s

t h e

d i r e c t o r s

o f

o the r Fede ra l

Reserve Banks have co nf er re d wi th

t h e

Board

an d we

have always

assumed tha t t h e d i r e c t o r s o f a n y reserve bank would fee l a t l i b e r t y

to do so whenever they thought i t t o b e n e c e s s a r y . I f such a

procedu re shou ld p l ace t o o much inconvenience upon t h e time o f your

d i r e c t o r s ,

t h e

Board

a t

th e i r r e q u e s t , w o u ld

b e

ve ry g lad

t o

make

a r rangements

t o

have Members

o f t h e

Boar d meet wi t h them

i n

your

own

d i s t r i c t .

The

l a t t e r p r o c e d u r e m ig h t

b e

p r o d u c t i v e

o f t h e

b e s t r e s u l t s

a n d

i n c i d e n t l y

i t

would

b e

l e s s e x p e n s iv e .

I

want

t o

a s s u r e

y o u

tha t

t h e

Board would

b e

w i l l i n g

t o

f o l l o w e i t h e r p r o c e d u r e

a t t h e

p l e a s u r e

o f y o u r d i r e c t o r s .

Wi th k i nd pe r so na l r ega rds , I am,

Very t ruly yours ,

( S ) R . A . Young,

Governor.

Mr. C. C .

Walqh, Chairman,

Federal Reserve Bank,

Dal las , Texas .

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COPY

FEDERAL RESERVE BASK

OF DALLAS

X-6142-b

September 15 , 1928

C. C. Walsh .

Chairman o f t h e Board

a n d Federal Reserve Agent

Federa l Reserve Board

Washington, D. C.

Gentlemen:

The Advisory Committee o f t h e S t o c k h o l d e r s

1

A s s o c i a t i o n , o f

t h e Federal Reserve Bank o f D a l l a s , i n a mee t ing he ld o n September 12 ,

1 9 2 8 , i n

t h i s bank, pa ss ed

a

r e s o l u t i o n s u g g e s t i n g t h a t

a

j o i n t

c o n -

fe rence be tween t h e members o f t h e Federa l Reserve Board , a n d t h e

d i r e c t o r s o f t h e Federa l Reserve banks, b e held each year i n Washington,

D . C . , a t a t ime t o b e d e s i g n a t e d b y t h e Board, f o r t h e purpose o f g i v -

i n g

c o n s i d e r a t i o n

t o a n y

c o n f i d e n t i a l m a t t e r s w h i c h

m ay

have been

b ro u g h t t o t h e a t t e n t i o n o f t h e d i r e c t o r s o f t h e Federa l Reserve banks,

e i t h e r t h r o u g h t h e Advisory Committee o f t h e S t o c k h o l d e r s

1

A s s o c i a t i o n ,

o r b y t h e member ba nk er s them sel ves , a n d o f which t h e Federa l Reserve

Board should have personal

a n d

int imate knowledge#

T he r e a s o n s g i v e n b y t h e Advisory Committee f o r t h e h o l d i n g

o f

such con fe r enc es

a r e ,

s u b s t a n t i a l l y ,

a s

fo l l o w s :

F i r s t - That many member ba nk er s he s i t a t e t o submit t o t h e

o f f i c e r s o f a Federal Reserve Bank a n y m a t t e r s o f c r i t i c i s m , o r

c o m p l a i n t , a r i s i n g o u t o f t r a n s a c t i o n s h a d between t h e member

banks a n d t h e Federa l Reserve banks, o r t h e t e x t a n d a p p l i c a -

t i o n

o f t h e l a w a n d t h e

Board

1

s

r e g u l a t i o n s .

The

s u g g e s t i o n

b e i n g fu r t h e r b a s e d u po n t h e o p i n i o n o f t h e members o f t h e

Advis ory Commit tee, ga i ned through conta ct wi th bank ers i n

t h i s d i s t r i c t , t ha t 9 0 $ o f t h e smal ler banks i n t h e d i s t r i c t

approach

t h e

Fe de ra l Reserve Bank wi th

a

s p i r i t

o f a w e ,

h a r b o r -

i n g t h e

though t tha t

i t s

o p e r a t i o n

i s

su r rounded wi th

a n

^atmos-

p h e re

o f

s e c r e t i v e n e s s

a n d

mys t i c i sm.

Second

-

That s uch member ba nk er s woul d

n o t

h e s i t a t e

t o

di sc us s such problems wi t h

t h e

d i r e c t o r

o f t h e

Federal Reserve Bank

coming f r om t h e i r r e s p e c t i v e d i s t r i c t s , f o r t h e r e a s o n t h a t t h e

member banker regards t h e d i r e c t o r s o f a Federal Reserve Bank,

i r r e s p e c t i v e o f t h e c l a s s w h i c h t h e y r e p re s e n t , a s h i s d i r e c t

r e p r e s e n t a t i v e

i n h i s

r e l a t i o n s w i t h

t h e

Federal Reserve Bank,

a n d h e f e e l s f r e e r t o g o t o t h e d i r e c t o r i n h i s r e s p e c t i v e com-

muni ty wi th a n y g r i e v a n c e , o r m i s u n d e r s t a n d i n g , w h e t he r r e a l o r

i m a g i n a ry , i n s t e a d o f g o i n g d i r e c t t o t h e o f f i c i a l s o f t h e Federa l

Reserve Bank.

T h i r d ~ That i f such con fe ren ces between t h e Federa l Reserve

Board

a n d t h e

d i r e c t o r s

o f t h e

Fe de ra l Res erv e banks were h e l d

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- 2 -

X-6142-b

t h e

member ba nk er s fe e l t ha t t hey would,

b e

b rough t

i n

c l o s e r

touch wi th t h e Board a t Washington, through t h e i n d i v i d u a l

members

o f t h e

Board

o f

D i re c t o r s , w i t h r e f e r e n c e

t o a l l

m a t t e r s a r i s i n g b e t w e e n t h e member banks a n d t h e Federa l

Reserve banks.

A s u g g e s t i o n w a s made th at t h i s w a s t h e f u n c t i o n o f t h e

Advisory Counci l ,

i t

b e i n g

t h e

duty

of t h e

Advisory Counci l -

m an f ro m e ac h d i s t r i c t t o p re s e n t t h e s e m a t t e r s , b u t t h e

s u g g e s t i o n w a s i m m e d i a t e l y o f f s e t b y t h e s t a t e m e n t t h a t 9 0 $

o f t h e

smal ler banks

i n a

F e d e ra l R e s e rv e D i s t r i c t

d i d n o t

know that

w e h a d a n

Advisory Counci l ,

n o r

were they acquain ted

w i t h i t s r e l a t i o n s h i p b et we en t h e member banks a n d t h e Federa l

Reserve Board.

F o u r t h

-

They a l so f e e l th a t

i f

such conf e ren ces

c a n b e

a r r a n g e d a much c loser contact wi l l b e e s t a b l i s h e d b e t w e e n t h e

member banks a n d t h e i r ow n Fed er al R eserve Bank a n d t h e Federa l

Reserve Board; a n d t h a t a s a f u r t h e r r e s u l t a b e t t e r u n d e r s t a n d -

i n g , a

m o re c o rd i a l f e e l i n g ,

a n d a

much more sa t i s f ac to r y

c o -

o p e r a t i o n , w i l l o b t a i n t h rou g h ou t t h e d i s t r i c t s , a s w e l l a s t h e

System.

F i f t h

-

That

b y f a r a n d

wide

a

g r e a t m a j o r i t y

o f t h e

member

b a n k e r s

o f t h e

Federal Reserve System

a r e

s t ro ng p roponen t s

o f

t h e

Federa l Reserve banks,

a n d o f t h e

Federal Reserve System,

a n d h e a r t i l y e nd or s e t h e c o n s t ru c t i v e c r e d i t p o l i c i e s l a i d down;

tha t t hey a r e s t r o n g b e l i e v e r s i n t h e e f f i c a c y a n d e f f e c t i v e n e s s

o f t h e economic views sponsored b y t h e System, a n d t h a t i t h a s

p ro v e n

t h e

g r e a t e s t p i e c e

o f

c o n s t r u c t i v e l e g i s l a t i o n t h a t

h a s

ever been pa ss ed b y a Nat ional Congress o r a S t a t e L e g i s l a t u r e .

S i x t h - That i t i s t h e e a r n e s t d e s i r e o f such member bankers,

a s

p ro p o n e n t s

a n d

a d v o c a t e s

o f t h e

p o l i c i e s

o f t h e

System,

t o

cement each year t h e bonds o f un ion more c l os el y , a n d i n doing

so to e l i m i n a t e , i n s o f a r a s t h i s may be accompl ished, a l l

c a p t i o u s a n d i r r e l ev an t c r i t i c i s ms which have been o f f e r ed f rom

time

t o

t ime

b y

opponents

o f t h e

System.

Seven th - That t h e d e s i r e f o r th ese j o i n t conf ere nce s between

t h e d i r e c t o r s o f t h e various F ede ra l Reserve banks, a n d t h e Board a t

Washington,

i s

prompted so le ly

f o r th e

purpose

o f

c r e a t i n g

a

more

harmonious a n d f r i e n d l y r e l a t i o n , a n d a more i n t e l l i g e n t u n d e r -

s t a n d i n g of t h e us e s , b e n e f i t s a n d r e s p o n s i b i l i t i e s o f t h e System

t o t h e

member bankers,

a n d

t h e i r d u t i e s

a n d

o b l i g a t i o n s

t o t h e

Federal Reserve Bank

o f t h e

d i s t r i c t ,

t o t h e

Federal Reserve Board,

a n d t o t h e p r o f e s s i o n o f banking.

E i g h t h

- I t w a s t h e

o p i n i o n

o f t h e

Advisory Committee that

a l l o f t h e

d i r e c t o r s

o f

e ach Fe de ra l Reserve Bank sho uld

b e

p r e s e n t a t t h e j o i n t con fe renc e be tween t h e Federal Reserve Board

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X-6142-b

a n d t h e bank' s d i r e c t o r s a t t e n d i n g t h e same, a t which time they

c o u l d d i s c u s s f r e e l y m a t t e r s a n d r e l a t i o n s h i p s a r i s i n g o u t o f

t h e re spec t ive bank* s o p e r a t i o n s , g i v i n g p u b l i c i t y t o such i n -

f o r m a t i o n

a s t h e

F ed er al Reserve Board might

s e e f i t t o

r e l e a s e .

Nin th

- I t w a s t h e

id e a

o f th e

in di vi du a l members

o f t h e

S t o c k h o l d e r s

1

Advisory Committee that i f , a n d when, th es e c o n -

f e r e n c e s a r e i n s t i t u t e d , t h ey s h o ul d be h e l d s e p a r a t e l y by t h e

Board with t h e d i r e c t o r s o f each Federal Reserve Bank i n t h e

System. This , o f course , i n t h e even t a l l of t h e F e d e r a l R e -

serve banks i n t h e Sys tem des ired t o t a k e p a r t i n such a c o n -

f e r e n c e , w ou ld r e q u i r e o n e confe rence f o r each bank i n t h e

System during t h e y e a r , a n d w o u l d n e c e s s i t a t e t h e arrangement

o f tw e lv e d i f f e r e n t c o n f e r e n c e s ; but th e th o u g h t w a s a l so

s u g g e s t e d t h a t

i t

might

be

po ss ib le th a t some

o f t h e

Fede ra l

Res erv e banks th ro ug ho ut t h e System might n o t have ma t te r s of

s u f f i c i e n t i m p o r t a n c e t o r e q u i r e a meet ing every year , h u t

i f

they

d i d

t ha t they shoul d have

t h e

o p p o r t u n i t y

o f

meet ing

t h e

B oa r d t h r o u g h t h e i r d i r e c t o r s

a n d

d i s c u s s i n g

t h e

same.

Tenth

- I t was

a l s o sugges ted

by th e

Advisory Committee

t h a t t h i s m a t t e r

be

p l a c e d

o n t h e

program

f o r

d i s c u s s i o n

a t

t h e

Agents

1

a n d

Governors* con fer ence s

to h e

h e l d

i n

Washington

November 12-17, 1 9 2 8 .

I a s s u r e d t h e Advisory Committee that I would t ransmit i t s

views

i n

r e g a r d

t o

those confe rences

t o t h e

Federal Reserve Board,

a n d

I

shou ld

b e

p l e a s e d

t o

r e c e iv e y o u r r e a c t i o n

i n

r e f e r e n c e t h e r e t o ,

f o r

t h e

p u r p o s e

o f

r e p o r t i n g

t h e

same back

t o t h e

Advisory Committee

a t i t s

next mee t ing.

Yours very t ru ly ,

(S ) C . C . Walsh,

Chairman o f t h e Board.

CCW/MK