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A meeting of the Federal Reserve Board was held in the office of the

Federal Reserve Board on Thursday, September 27, 1928 at 11:00 a.m.

PRESENT: Governor YoungMr. PlattMr. HamlinMr. MillerMr. JamesYr. CunninghamMr. Noe11, Asst. Secretary

Mr. McClelland, Asst. Secretary

Memorandum from Counsel dated September 26th on telegram from the

berilltY Governor of the Federal Reserve Bank of Kansas City inquiring (1)

whether agricultural paper rediscounted by a Federal Reserve bank for a

l'ederal Intermediate Credit bank under the provisions of Section 13 (a)

°f the Federal Reserve Act may be used as collateral security for Federal

Reserve notes and (2) as to the probable action of the Board in the event

the Rensas City bank should request permission to rediscount paper for the

Peclerel Intermediate Credit Bank of Wichita to the amount of „5,000,000 -

the capital and surplus of the Federal Intermediate Credit Bank being

l'1100,000; the telegram stating that the bank is inclined to rediscount

the Paper if the Board will approve and if it is eligible as security for

the issuance of Federal Reserve notes. In his memorandum, Counsel expressed

the opinion that notes, drafts and bills of exchange rediscounted by a Fed-

Reserve bank for a Federal Intermediate Credit bank under the provisions

°I' Section 13 (a) may lawfully be used as collateral security for Federal

Reserve notes, and further, that the Board's power to regulate and limit

the rediscount of such paper for Federal Intermediate Credit banks carries

with it the power to limit or prohibit the use of paper thus acquired by

l'eaerel Reserve banks as collateral security for Federal Reserve notes.

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After considerable discussion, upon motion, it was

voted that the following telegraphic reply be made to the

Kansas City bank:

"In reply to your inquiry of September 26, relative to

notes rediscounted for Federal intermeaiate Credit Banks,

Board has legal opinion which will be mailed later, substance

of which is that such notes may be used as collateral for

Federal reserve notes. Board is prepared to have Federal

reserve agents accept such notes as collateral security and

grants permission to your bank to rediscount up to 45,000,000

for Federal Intermediate Credit Bank at Wichita."

The minutes of the meeting of the Federal Reserve Board held on September

26th were then read and approved.

Telegram dated September 26th from the Chairman of the Federal Reserve

Bank of Boston, advising that the board of directors at its meeting on that

dat e made no change in the bank's existing schedule of rates of discount and

Purchase.

Without objection, noted with approval.

Report of Committee on Salaries and Expenditures on letter dated September

24th from the Deputy Governor of the Federal Reserve Bank of New York, trans-

14itting list of employees for whom the directors of the bank approved leaves

°I' absence with pay, on account of illness, during the month of August where

the total of such absence since January 1, 1928 has exceeded thirty days; the

33(3ard's Committee recommending approval of the salary payments involved.

Approved.

Memorandum dated September 26th from the Chief of the Division of Bank

131)el'ation3, transmitting statements of expenditures by the Federal Reserve

banks for educational and welfare work, etc. during the month of August and

for the eight months' period ended August 31st.

Ordered circulated.

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Mr. Hamlin then referred to copies of correspondence with the First

National Bank of Frostburg, Md., sent to him by the Governor of the Federal

Reeerve Bank of Richmond, dealing with the continued borrowing of the member

barik on its promissory note secured by government obligations. He pointed out

that the correspondence indicates that the Federal Reserve bank expects the

l'adiscount to be paid off by the middle of November and stated that the was

ilafermed by one of the directors that a firm date has been fixed by which the

l'ediscount must be liquidated.

At Mr. Hamlin's suggestion, the Secretary was directed

to ascertain from the Governor of the Federal Reserve Bankof Richmond whether or not the First National Bank of Frost-burg has been directed to repay its indebtedness by a stated

date.

The members of the Board then engaged in a detailed discussion with

Ilespect to the credit situation and conditions in the money markets, particular-

4T with reference to the effect of Federal Reserve policies during the past year,

the extent to which Federal Reserve credit is being used either directly or in-

clirectlY by member banks in support of call loans, and the question whether high

ali rates are exerting an influence on rates paid for commercial funds.

4'-11 ,t2_4_PF STANDING COMIITTEES:

Dated, September 25th, Recommending action on applications for fiduciary powers

as set forth in the Auxiliary2dinute Book of this date.

Date Recommendations approved.

September 19th, Recommending approval of the application of Yr. Frank

Hawkins for permission to serve at the same time as of-

ficer and director of the Citizens and Southern National

Bank, Savannah, Ga., and as director of the Georgia Sav-

ings Bank and Trust Company, Atlanta, Ga.

1at

Recommendation approved.

ecl, September 20th, Recommending approval of the application of Mr. J. Boyd

KoKown for permission to serve at the same time as of-

ficer of the Peoples Savings and Trust Company, Pitts-

burgh, Pa., and as director of the Second National Bank

of Allegheny, Pittsburgh, Pa.Recommendation approved.

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REPOTS OF STAITDING COMMITTEES: (Cont'd)

Dated,

Dated,

Dated,

Dated,

Dated,

September 20th, Recommending approval of the application of Mr. A. K.

Gruoisfor permission to serve at the same time as

director of the Dollar Savings & Trust Company,

Pittsburgh, Pa. and as officer of the Second National

Bank of Allegheny, Pittsburgh, Pa.

Recommendation approved.

September 21st, Recommending approval of the application of 1,:r. W. H.

Correll for permission to serve at the same time as

officer of the First Wisconsin National Bank, Milwaukee,

Wis., and as officer and director of the Bay View Com-

mercial & Savings Bank, Milwaukee, Wis.

Recommendation approved.

September 24th, Recommending approval of the application of Mr. John T.

Cochrane for permission to serve at the sane time as

director of the Merchants National Bank, Mobile, Ala.,

and as director of the Central National Bank, New York,

N. Y.Recommendation approved.

September 24th, Recommending approval of the application of Mr. M. L.

Fletcher for permission to serve at the same time as

director of the First National Bank, Smithville, Tenn.,

and as director of the Fourth and First National Bank,

Nashville, Tenn.Recommendation approved.

September 24th, Recommending approval of the application of Mr. Everett

Mizell for permission to serve at the same time as of-

ficer and director of the First National Bank, Fernandina,

Fla., and as director of the Atlantic National Bank,

Jacksonville, Fla.Recommendation approved.

APproved..

The meeting adjourned at 1:30 p.m.

W14116. _. PP_/Z

overnor.

Assistant Secretary.

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