19250519_Minutes.pdf

Pursuant to a call issued by the Governor, a meeting of the Federal

aeserve Board was held in the office of the Federal deserve Board on

,alesday, 7,11xy 19, 1925 at 3:15 n. m.

• PENT: Mr. Mellon, Chairman

• Governor Crissin-orr. Platt

4Mr. Hamlin

MillerMr. JamesMr. Cunnin(e:hamMr. 2,ddy, Secretary

it1,33: dover_lor Streng ) Federal Aeserve Ba_kDeputy Jever-or Harrison) of New York

:. Stewart, Director of the Division of _I:sears:1and Statistics. -

Mr. Winston, Under Secretary of the Treasury.

The Chairman called the meeting to order, and Governor Orissinmr

stated that the purpose of the meotincr was to ,T.ive consideration to a re-

Port made to the Board under date ef May 1, 1925, by the Governor of the

• Peaoral Aoderve Bank of New York an the arrane'ement, made in pursuance of

44 authorization given by the Federal Reserve Board on January 10, 1925,

htvreon the Federal Reserve Bank of New York and the Bank of Encaand for

tho extension of a revolving credit of „;200,000,000 to the. latter institu-

tion. The Governor stated that the report had been read by dach msmbor

O f the Federal deser.ve Board prior to this meeting, and that he had pre-

1)4rod the following resolution which he submitted and moved be adopted:

".7112AS, the Federal deserve Bank or New York, inpursuance of the authorization of the Federal deserve Board

of January 10, 1925, which by direction of the Board was aot

at that time made a matter of record, has entered into anagreer.e.it with the Bank of J-k-,land, as evidenced by the letter

of M. O. Norman for the Bank of L1171and dated ipri1 S, 1925,

and the letter of BenjAin Strong for the Federal deserve

Bank of New Yor':-. dated ri1 20, 1925.

21Ll't1120,11], BL; 12 ILZOLV:;), that the action of the Federal

Aeserve Board of January 10, 1925, is hereby confirmed and made

a matter of record, and these letters are ordered spread uponthe minutes of the Board.."

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

5/19/25 -2_

At the reTlest of 2..1". 1att, overnor Stron outlined the ne7otiations

.eondueti by his bank with the Ban-z: of Ilo.J71and durin the period from

Jarraary 10, 1925, to date, followin.c7 vfilich the Chairman called for a vote

• on tho resolution.

ilatt,Junain7,ham, James rInd --ellon voted in the

uffirliative, and Jr. 1.1111 Jr stated that he

wished to be recorded as not votino." and tobe :iven the -2r'Lvi1ese of inserties. in the

records of the 3oar1 a statement of his reasonsfor not desirin: to vote. 2ho hedr assented

to Dr. Yliller's reuest.

Socrotar's 1;ote. At the mectinE; of the i;oard of 7Lith those

4r0 tho minutes, Jr. idillar maJe no statement of his reasons for not Vote

04 the resolution offered %, ;:ovornor Orissincr nor did ha .2,articiate in

tho discussion of the,uvranament nlade to =tend the credit to the Bank of

.4.41and. On idaY 22nd ho filed with no the fo11owinr7 wTitten statement jth

th° rocuest tht it be inserted in these minutes;

1:1111er st'-ted in explanation of his re-

cuest to be recorded Liz 'not votinct that while he

a2-21.oved o the purpose vi:lich had led the Federal

2.oserve Bank of i;c-,.7 York to enter into a wor:dus.

urran:er,mt with the 3a:11: oZ connection

with the rc,ostablish'1_nt of a free -old market in

London, he could not approve of the particular form

of credit arran-e.Lent ,..uthorized Ix; the Board and

ras not, therefore, cLle to vote for the approval

of the resolution."

2The Secretary than reed a teleacam, addressed to him under data of

4'c'Y 19, 1995, by J. T;,. ideintosh, Colaptruller of the Uu-crenoy, vLich tale ram

7711c; ordered srlroad on the Pinutes of the rieetin, as follows:


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5/19/25

(3) The of .]n-land w-Jila have the ri;lit:to utilize this Jredit b, ,:ith-

drawinc' -old fo: e::)ort of earmark, or by nA',:in-,)aumints in aollars by draft or cable on the Federaleeor7can: - arid

to live ih use at any time or times withinthe two y),?_r 2c,riod all or any art of the ,200,D00,000with liberty to re2ay anl, redraw in oart or in wholewithin the two year period.

(4) The equivalent of all or :a-1.7 -,Jart of this ,evolv-in7 Jredit whLfc, say rmxtIlle to time be in use throur'h-o-szt he two year p:riod shafl be maintailled at the currentrate or c.- 1.31-: =hanrc in an account in pouu3s sterlinr-to the credit of ne Federal ..eserve 3ank on the booksof the Bank of --.1=-11-4.

(5) The rterlin- balance of the Federal oservoon the 1.00:1.3 of the 3311k of 2.n7land created in the manneraescribed in 1.)ara;---ra h (4) may be 0ended, dqrin- thelife of the redit, only at such times and in such arountsas may be arran;-ed between the Federal -,eserve Bank andthe ianTI: of in the parchase, for '.cc-,11.nt of theFederal eserve 2auT]:, of elifible sterlin co inercial billsruarantced by the _.;aak of .,.;11-land.

I shall be crlacl to know if the a'..)ove s-,zg7estions weuldmeet with your a„Tro-rul, end, if 20, of illterestwould be ch,,r7ed OA the al-I.ok;nts from time to time In useunder this rovolv ' credit.

an,

Bear Lir. ..;ove,:nor,

I'oars most fait"hrllly,

BiJiaJtronc3,_Jver,lor, Federal .deservo Bank of 1;e?; York."

IfFederal of Levi York,ru 20, 1.225

Jovernor:

in o ‘,:yir letter of ril 8, 1975, i 3rve toadvise it 7:1:7 be convenient for the 2edo,,:al .Leserve


'04

5/19/25 -5-

Barfc of York to 2rovide ;Ill to v200,000,000 rold oo_t of

a total credit of 1/300,000,000, subject to the five conditions

enumerated in your letter.Interest will be har=ad. in apilars by the federal

serve Bank of i;ew pon the Lmounts outstaadin:: from time

to time at one 1;er cont. above it s officl rate of disc cant

flat' ninety connercial paper, with a LlilliMUM of :four pe.2

cent. eal a maxiranra of cin jr cent., except that 'whenever

our discount rate shLal be above si:: per cent. the interest

charred in be at the discount rate. iuly discount earned

the elirible storlin.L; co=lercial 1.dils shall be applied

reiuction of ,s;.-i,s,.21 interest.irhe L....aount of discount, cal -

eolated at the cable rate of the day, an.' he not of

Interest earned, shall be payable qua:..ter1;,- in dollars at

Federal lieserve Lanlz of i;ew York, el the entire :,-,mo-vit

of the revolvins credit outstandia' at the ter=inf,tion of the

two year -,-)eriod shall lrze.-aise be repayable t the 2edel.al

cservc Lcifc of igew Yon:..c:old or its equivalent in 'dollars.I tras t that our acceptance of your proposal 77i 11 -prove

to be an effective aid in ie ceneral restoration of :01,1 ay-

iaei:t thr a iout the world.

Pal th..'ully yours,

(;Lr.:!ned)3.-:-or.

;1.1rIntazu. llorrnan,

Governor, The Bank of17,..-na.,1 .

.4„).drovod;

Ohalano


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19250519_Minutes.pdf