837.516/155: Telegram
The Secretary of State to the Ambassador in Cuba (Crowder)
39. Your 23, May 5, 10 a.m.35
Copy of project of banking law given to Governor Harding yesterday and was discussed by him and Federal Reserve Board yesterday afternoon. Federal Reserve Board gave following opinion regarding law:
“There is no authority under the Federal Reserve Act for the investment of funds of the Federal Reserve Banks in the capital stock of foreign banking corporations. The proposed plan for the establishment of a central bank in Cuba would therefore require an amendment to the Federal Reserve Act. The Federal Reserve Board would not be disposed to ask of Congress an amendment for this purpose.
“It is therefore not necessary for the Board to comment on other features for the participation of the Federal Reserve Board in the proposed banking plan”.
Governor Harding concurred in the above and stated that he will also send you his personal views regarding the law.
The Board discussed at great length question of establishing an agency of Federal Reserve Bank in Cuba, but has not yet reached a decision in the matter. A decision may be reached today, and indications are that it will decide in favor of establishing such an agency.
It was the feeling of the members of the Board that if such an agency is established, and with the refusal of the Board to participate in the Reserve Bank of Cuba, no further action would be taken on the project of banking law above referred to.
- Not printed; see first paragraph of the Ambassador’s telegram no. 24, supra.↩