19370809_Minutes.pdf

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A meeting of the Board of Governors of the Federal Reserve

SYsterawas held in Washington on Monday, August 9, 1937, at 11:30

PRESENT: Mr. Eccles, ChairmanMr. SzymczakMr. McKeeMr. Davis

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the Chairman

Consideration was given to each of the matters hereinafter

referred to and the action stated with respect thereto was taken by

tl"oard:

The minutes of the meeting of the Board of Governors of the

el'41 Reserve System held on August 5, 19371 were approved unani-mouay.

Telegrams dated

?eclerel Reserve Bank

Petleral Reserve Bank

leral Reserve Bank

4sistant Secretary of

?owell, Secretary of the

8141ting that the Board approves

b:rthe New York bank on August 5:

Chicago banks on August 61 and the

147: of the rates of discount and

August 61 to Mr. Austin, Chairman of the

of Philadelphia, Mr. Taylor, Cashier of the

of Cleveland, and Mr. Young, Secretary of the

of Chicago, and August 91 19571 to Mr. Sanford,

the Federal Reserve Bank of New York,

Federal Reserve Bank of Minneapolis,

and Mr.

the establishment without change

the Philadelphia, Cleveland and

Minneapolis bank on August 9,

purchase in their existing

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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schedule,.

Letter to

Bank of New York,

Approved unanimously.

Mr. Knoke, Vice President of the Federal Reserve

reading as follows:

"Reference is made to your letters of May 25,!-9371 and July 3, 1937, the latter submiLting to theBoard, for approval, a final revision of the general

between of agreement covering correspondent relationships

oetween your bank and foreign central banks. In reply,yfou are advised that the Board has considered the.inal revision in the light of the statements containedIn both of the aforesaid letters, and approves the

subject to the provisions of the established

Federal with Respect to Foreign Relationships of

Eederal Reserve Banks', (X-9774).:In this connection, since the authority

rlginally granted in the Board's letters of Februaryi!, 1937 and April 28, 1937, relating respectively tot,ue aggregate amount of bankers' acceptances and to the'5gregate amount of Government bonds that could be pur-

sed for the account of foreign central banks inaccordance with the terms and conditions of the exist-: agreements, extended only until the revised agree-ment should be approved, the Board, in the light of its_ubBequent letter of June 15, 1937 increasing theauthority with respect to the purchase of United States2vernment securities and your request of July 26, 1937,

authorizes your bank:1. To purchase for the account of foreign

central banks, including the Bank for Inter-national Settlements, in accordance with theterms and conditions specified in the revised. reement, bankers' acceptances which are eligiblefor purchase under the regulations of the Boardof Governors; provided that the aggregate amount°f the liability assumed by the Federal Reservebanks in connection with all such acceptancesPurchased for all foreign central banks, includingthe Bank for International Settlements, shall notexceed at any one time the sum of'.:25,000,000,


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"without specific authorization, which shallbe obtained in advance from the Board.

2. To purchase for the account of foreigncentral banks, including the Bank for Inter-national Settlements, United States Governmentsecurities in accordance with the terms and con-ditions specified in the revised agreement; pro-vided that the aggregate amount of the liabilityassumed by the Federal Reserve banks in connectionvith such purchases Shall not exceed at any one timethe sum of .150,000,000, without specific author-ization, 7,hich shall be obtained in advance fromthe Board.

Y0 ti. "As already understood, the authority to exercise your

o n to repurchase from foreign central banks, Governmentl'earities purchased for their account in accordance withthe terms and conditions of the revised agreement, is

70essarily subject to the condition that your bank will notbxerclse its option unless such purchase has been authorized,Y the Federal Open Market Committee by appropriate action'11 effect at the time of the purchase."


The final revision of the general form of agreement coveringeorres

PmIdent relationships referred to above read as follows:mi.

BALANCES

"We do not ask you to maintain with us afixed minimum balance. You should bear in mind,however, that we will be able to execute yourorders to the debit of your account only to theextent that your account is in funds. In thesecircumstances, it is essential that you maintainlr'ith us balances commensurate with the expectedactivity of the account. No interest can bePaid by us on such balances.

IIV1.5DAENTS

"A. Bankers Acceptances

"We will endeavor to purchase for your account,


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"upon your instructions, prime eligible dollar acceptances,and we will guarantee to you the payment at maturity ofacceptances so purchased. Such guarantee will run inYour favor only and will be canceled with respect toany acceptances of which you cease to be the sole owner.If at any time before the maturity thereof you requestus to dispose of any acceptances purchased by us forYour account, we will either (1) purchase the acceptancesfrom you at our then current buying rate, or (2) at our°Ption, offer the acceptances for sale for your accountin the market.

"For our guarantee of payment as above, we willCharge, for the present and until further notice, a corn-

at the rate of 1/8th of 1* per annum on the faceamount of the acceptances purchased by us for your account;and in the event of the repurchase by us of any such ac-ceptances or the sale thereof for your account, we willrebate such commission, at the rate charged, for eachfull 30 day period remaining between the date of repur-chase or sale and the date of maturity, except that weWill make no rebate of commission for any part of thefull 30 day period immediately following the date oforiginal purchase of the acceptances for your account.

"13- United States Government and other Securities

"Upon your instructions we will endeavor to purchaseor sell for your account in this market, without commis-sion charge for our own services, United States Govern-ment and other securities. Acting upon your instructionswe will, as agent, also enter for your account, withoutcommission charge for our own services, subscriptionst° new offerings of United States Government bonds, notesand certificates and submit tenders, at prices fixed byYOU, in accordance with Treasury requirements, for UnitedStates Treasury bills. With respect to any United StatesG°vernment securities which we purchase for you or whichare allotted to you pursuant to subscriptions or tendersas above, we agree that, if at any time before the matur-ltY.thereof you request us to dispose of any such se-curities, we will either (1) purchase such securitiesrl'arll You at the prices we are then paying therefor,Ijovided we are then in the market to buy such securi-,ies, or (2) at our option, offer such securities for'ale for your account in the market.OTHER

SERVICES

"We will perform the following services for you,11-Pon the terms indicated and otherwise subject to our


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usual rules with respect to the performance by us ofsimilar services for domestic banks:"A. Earmarking of Gold

"Vie hold a license from the Secretary of the TreasuryOf the United States to hold under earmark, and to export,gold now so held by us for any foreign government orforeign central bank, or hereafter sent to us fromabroad by any foreign government or foreign central hank,or delivered to us for account of any foreign govern-ment or foreign central bank by the United States orpursuant to a license granted by the Secretary of theTreasury. Within the authority of, and subject to theterms of our license, we will upon your instructionsearmark and hold for your account, individually or asfiscal agent, and subject to your instructions only,g°1d which is your property or the property of yourgovernment or of its exchange equalization or stabiliza-tion fund, providing the same facilities for the custodyor such gold as we provide for the custody of our ownsimilar property, but beyond that assuming no responsi-bilitY. It will be understood that gold which you re-quest us to earmark is your property unless you adviseus that it is the property of your government or ofitS exchange equalization or stabilization fund and insuch event you should reouest us to earmark it in a

:=71, :sol,d account in your name with a distinguishing

for example, 'Central Bank of - Ac-count G', and confirm to us that any gold which you may!squest us to earmark in such special account belongs

government or its exchange equalization or sta-ization fund, as the case may be.

B. Earmarking of Silver

for "Upon your instructions, we will earmark and holdYour account and subject to your instructions only

Vilvar which is your property, providing the same facil-thi's for the custody of such silver as we provide fortl,e custody of our own similar property, but beyondn'" assuming no responsibility.C. Purchase and sale of Foreiy Exchanpe

, "Upon your instructions and as your agent, we willethlaavor to buy and sell foreign exchange for your ac-,°1111-t. However, in case of orders for forward delivery;le reserve the right to ask you to maintain with us a,,arEin against outstanding contracts.

1.). Custody of Securities


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"Upon your instructions, we will receive and holdin custody for your account, and subject to your instruc-tions only, securities which are your property, provid-ing the same facilities for the custody of such securi-ties as we provide for the custody of our own similarProperty, but beyond that assuming no responsibility.In checking or advising as to maturities, names, orOtherwise, we will assume no responsibility with respectto the form, genuineness or validity of any securityOr signature, regardless of whether or not such checkingOP advising is done by us pursuant to instructions fromYou and regardless of the form of any instructions.

"Vie will make no charges for holding custody ofbankers acceptances which we have purchased for your ac-count as provided in section II hereof, or of UnitedStates Government securities, but for holding custodyOf other securities we will, for the present and untilfurther notice, make a custody charge at the rate of1/40th of 1% per annum of the principal amount of suchsecurities.E. Collection of Checks Notes Bills and other Items,

Euable Within the United States

"If you desire, we will act as your agent in thecollection of such checks, notes, bills, and other itemsPaYable within the United States, as we may receive andaccept for collection for your account, and will creditthe collected proceeds thereof only when we receive pay-Ment therefor in actual and finally collected funds(except that for United States Government checks andwctrrants we will ordinarily give credit on the day of,°I' on the next business day after, receipt, subject toPaYment by the Treasurer of the United States). Inthis connection we would point out that, under the rules,Practices, and customs, affecting the presentation and;011ecti0n of checks and other items payable in New°rk City (including the rules, practices, and customs,cf the New York Clearing House Association) most of suchchecks and other items are delivered to the payor banks.7yt or before 10 a. m. through the New York Clearing

TUse Association or otherwise, subject to the right ofhe Payor banks to return such checks or other items

11.1Paid at any time up to 3 p. m. of the day of presenta-lOn, Consequently, most of the checks and other itemspayable in New York City which we handle are not finallylc

s

,,ollected until after 3 p. m. of the day of presentation,which i usually the day following their receipt by us.'rditarily, therefore, credit to your account with us


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"for checks and other items payable in New York Citywill not be given until after 3 p. m. on the next businessday following receipt of such checks and other items byUS, Advices of the collection and credit of such itemsWill be forwarded by mail, or, if you so instruct us,by cable.

"With respect to items which we receive for collec-tion for your account, you agree that, in conformityWith the banking practice in this country, you guaranteeall endorsements on such items; and you agree to indem-nify us against, and hold us harmless from, any loss re-sulting from our handling and collection of such items,including the amount of any claim, costs, damages, and"'Pauses which we may pay or incur if, upon proper evi-dence that any endorsement on any such item is notgenuine, correct or regular, or upon proper evidence offorgery, alteration or irregularity of or in any suchitem, we are called upon to repay the amount or any partof the amount which we collected on the item and creditedto your account; and in reliance upon such agreement°n your part we will, when presenting or forwarding suchitems, place our own guarantee of prior endorsementsthereon. You further agree that all questions with re-Pact to your obligations by reason of your agreementas above, and with respect to the handling and collec-tion of such items by us, shall be determined in ac-cordance with the laws of the State of New York.

"For the presentation of bonds and coupons (otherthan bonds and coupons held by us in custody for youraccount and United States Government bonds and couponsfor which we shall make no charge), we shall, for thePresent and until further notice, make a charge of 1/20°f 1% of the face amount thereof with a minimum charge• 25 cents, and a like minimum charge for each issue,series or maturity of bonds or coupons requiring sepa-rate presentation.

• • -11Eament of Checks or Drafts which you May Draw on us

"We will pay such checks or drafts only if thebalance of collected funds in your account is sufficienttO cover them, and only if such checks and drafts arePresented to us through regular banking channels and if,

en so presented, they bear guarantee satisfactory to'48 of all prior endorsements."G. Transfer of Funds within the United States

ei "We will act for you in such transfers of funds, tiler by telegraph, by draft or by advice of credit.'or the handling of a large volume of small payments


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"to others than banks or bankers we will make a charge,for the present and until further notice of 50 centsPer payment.

. EXPENSES AND CHARGES

"The services outlined above will be performed forYou without charge for our own services except as hereinOtherwise provided and except in special cases wherelarge volume is involved or other considerations seemto us to make such charges advisable, and in such casesthe amount of our charges will be a matter of specialnegotiation with you.

"All such charges and, in addition, all necessaryout-of-pocket expenses incurred in connection with theoperation of your account on our books or other trans-actlons undertaken in your behalf will be charged toeach account.

GENERAL PROVISIONS

A. We reserve the right at any time to limit thetotal amount of our commitments to you on guaranteesOf bankers acceptances and the volume of any other trans-"tions undertaken by us for your account."B. The operations of foreign central banks in ourmarket are of interest to us and knowledge of such opera-tions is essential to proper credit administration. Forthis reason we request you to keep us promptly informed

s-AaY substantial movements of your funds in this marketwhich are not consummated through your account with us,sild also to furnish us with a list of the names of yourOther correspondents in this country (and from time tobilge advise us of any changes therein) and authorizeUd request them to advise us, upon our request, of the

alzount of funds held by them for your account."C. We reserve the right at any time to terminate this!I'Mngement with you, in whole or in part, upon notice°Iittli?:teedffect, except as to transactions previously5.

Nle request that if the foregoing terms and condi-tions are acceptable to you, you signify your acceptancethereui by having your duly authorized officer or offi-cers sign in your behalf the acceptance at the foot ofthe enclosed copy of this letter and return to us theCopy so signed."

Letter to the George A. Fuller Company, Washington, D. O., read-


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"I have received from Mr. Fred M. Kremer, the Board'sIS3uPerintendent of Construction, the 'Disbursement and,ress Report for the Month of July, 1937', showing asvalue

completed since last report' 4128,350.00."With my letter of July 16, 1937, I transmitted a voucher

the amount of 430,910.00 and stated that upon its returnto the Board properly executed payment would be made in that

:tax,!°11nt. As you know, I have had no reply to that letter andvoucher has not been paid for the reason that it has not

ueen returned to me for payment."I am directed by the Board to advise you that uponSubraisslon of a voucher properly executed payment will be

liti!'e to you in the amount of 0_46,425.00, which represents14e total value of materials furnished and work done to andbnuding July, 1937, in accordance with the reports approvedp'a '.Kramer, in the amount of 0,423,250, less previous

rir3411,ents, and less 10'4 to be retained in accordance with the°v1sions of Article Five of the contract."

4DDI'p


Thereupon the meeting adjourned.

Chairman.

Se retary.


19370809_Minutes.pdf

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