19261020_Minutes.pdf

278

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

Federal Reserve Board on Wednesday, October 20, 1926 at 11:00 a.m.

held.

PRESMIT: Governor CrissingerMr. PlattMr. HamlinMr. MillerMr. JanesMr. CunninghamMr. Eddy, SecretaryMr. McClelland, Asst. Secretary

The minutes of the meeting of the Executive Committee and the Board

cn October 12th were read and approved.

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

Oetober 14th were read and approved.

The minutes of the meetings of the Federal Reserve Board held on

October 19th were mad and approved as amended.

Letter dated October 14th from the Secretary of the Federal Reserve

Bank of New York, advising that the Board of Directors on that day made no

ellallee in the bank's existing schedule of rates of discount and purchase.

Noted.

Telegram dated October 13th from the Chairman of the Federal Reserve

8ank of Philadelphia, advising that the Board of Directors on that day made

11° change in the bprik's existing schedule of rates of discount and purchase.

Noted.

Telegram dated October 14th from the Secretary of the Federal Reserve

84nk of Kansas City, advising that the Board of Directors on that day made

11(1 °Iange in the bank's existing schedule of rates of discount and purchase.

Noted.

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

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Memorandum from Counsel dated October 15th, approved by the Law

Committee, with reference to the application of idr. John A. Coyle for Permis-

sion to serve at the same time as director of the Conestoga National Bank

and the Peoples Trust Company, both of Lancaster, Pa.; Counsel recommending

that the Board refuse the application temporarily, advise the applicant that

with the evidence before it it can not permit him to serve these barks and

l'ePost him to furaish the Board with additional information, and also that

the time within which the applicant shall notify the Board whether he desires

t0 furnish additional information be limited to thirty days with the under-

that if the Board is not not within that time its refusal of

the application will become final.

Upon motion, it was voted to approve Counsel's recom-

mendations and the above application was temporarily refused.

Memorandum from Counsel dated October 11th, approved by the Law

eerftAttee, with reference to the application of Mr. Theodore L. Bean for

13"Illission to serve at the same time as director of the Montgomery National

844k and the Montgomery Trust Company, both of Norristown, Pa.; Counsel

atating that at andsince a hearing held on October 5th evidence has been

fillIlished the Board on the basis of which he is of the opinion that the

11441% concerned may be considered as not in substantial competition.

Upon motion, it was voted to approve Mr. Bean'sapplication for permission to serve the MontgomeryNational Bank and the Montgomery Trust Company.

Letter dated October 11th from the Federal Reserve Agent at Atlanta,

anc)viledging receipt of the Board's letter of October 8th, enclosing letters

8441'essed to the Federal Reserve Bank of Atlanta and to Mr. Joseph L. Campbell


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ativisilig of the Board's action in voting to remove Mr. Campbell as Deputy

Govern° r of the Atlanta bank; the Agent stating that he has made personal

delive-4y to Mr. Campbell of the letter addressed. to him and will present

the letter addressed to the Federal Reserve bank to Mr. M. B. Wellborn,

e4vernor of the bank upon his return, and that he will cause the latter

letter to be read to the board of directors of the bank at their next meet-

Noted.

Telegram dated October 18th from the Managing Director of the

13111110h Federal Reserve Bank at Detroit, alvising of the death of Mr. H. H.

Bassett, one of the Board's appointees to the directorate of the branch.

Noted with regret and referred to theCommittee on District 47.

Telegram dated October 18th from the Deputy Governor of the Federal

ll'eaerve Bank of New York, advising of the death of Mr. James H. McNulty, one

Of the Board's appointees to the directorate of the Buffalo Branch.

Noted with regret and referred to theCommittee on District #2..

Report of Executive Committee on memoranda= dated October 8th from

the Acting Director of the Division of Research and Statistics, transmitting

the resignation of Miss Louise Young as stenovapher in the Division, ef-

fective October 31, 1926, and recommen.ding that Miss Young be granted

thirtST days leave of absence; the Conaittee recommending approval.

Upon motion, Miss Young's resignation wasaccepted and the leave recommended was granted.


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Report of Coxnmittee on Salaries and. Expenditures on letter dated

°otober 16th from the Controller of Administration of the Federal Reserve

Bank of Chicago, requesting approval of a salary of3,000 per annum for

• John Martin, employed in the Loan Department of the bank; the Committee

l'eccommending approval.

Approved.

Letter dated October 15th from the Assistant Federal Reserve Agent

at New York, advising of the merger of the Arerican Bank of New York, a non-

member, into the Central Mercantile Bank of New York, effective at the close

Of basiness, October 13, 1926.

Noted.

Report of Committee on Salaries and Expenditures on letter dated

October 12th from the Secretary of the Federal Reserve Bank of Atlanta,

tegnesting approval of the action of the board of directors of that bank

IA voting to grant an additional thirty days' leave of absence, with full

on accaant of illness, to Miss Frances Shropshire, an employee of the

14°11eY Department; the Committee recommending approval.

Approved.

Letter dated October 14th from the Controller of Administration

°t the Federal Reserve Bank of Chicago, advising of a payment of 4156.92

laacle to Mr. J. H. Patton, attorney, for services and court costs in various

IriEttters in which he has represented the Federal Reserve bank, growing out

Ofthe failure of the Merchants National Bank of Grinnell, Iowa.

Noted, with approval.


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Lemorandum from the Chief of the Division of Bank Operations, dated

October 15th, transmitting statements of expenditures by the Federal Reserve

ballks for educational and welfare work, etc. (hiring the month of September

alld- for the nine months' period ending 'September 30th.

Ordered circulated.

1.:emorandum from the Secretary dated October 16th, advising of the

action of the board of directors of the Federal Reserve Bank of Dallas, in

allthorizing the r-Ixecutive Committee of the bank to make an arrangement for

1 services with the firm of Locke, Locke, Stroud z.Ind Randolph, upon the

te.rms of employment as formrly had with E. B. Stroud., whose resig-

liation as Counsel becam effective October 1, 1926 and whose salary was ,...6,000

Per"4441/11; together with a memorandum from Assistant Counsel dated October

19th with reference to the proposal of the bank to turn over to the sazac firm

411 notarial work which in the -oast has been handled in -Dart by J.P.

plieibolbis who has resigned as Assistant Office Counsel at the Federal Reserve

and become connected with the firm of Locke, Locke, Stroud and Randolph.

After discussion, the above matter was referred

to the Board's Committee on Salaries and Expenditures.

1.1criorandum from Counsel dated October 11th, submitting draft of reply

to letter dated September 1st from the Governor of the Federal Reserve Bank

(3f L:ausas City inquiring whether a member bank in computing its reserves may

1)11°1)(119-y deduct as amounts due from banks, credits actually entered by cor-

l'es1)°11(lent banks renresentin7 items such as coupons, checks drawn on themselves

by c"Porations other than banks, bill of lading drafts, etc. which have not

Ziet4et1ca11y been collected by the correspondent bank; the

proposed reply stat-


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ing that when credit has actDally been entered by a correspondent bank on

iteMS forwarded to it by a member bank and the member bank is entitled to

draw against the credit so entered, the amount of this credit may prooerly

be considered an amount due from banks and deducted by the member bank in

computing its reserve from its balances due to banks, notwithstanding the

tact that the correspondent bank has not yet actually collected the item.

Upon motion, the proposed reply was approved.

Draft of reply prepared by Counsel to letter dated Septamber 28th from

Riahard Y.ayer, trust officer of the Southwark National Bank, Philadelphia,

inquiring vbether a lot in the city of Philadelphia which has been im-

Proved to the extent that the sidewalk in front of it has been paved, the curbs

laia on the streets abutting the lot and such streets have been fully paved,

be considered improved real estate upon which a national bank mi;:ht make

4 loan under the terms of Section 24 of the federal Reserve Act; the proposed

/sePlY statinr; that inasmuch as it does not appear that there is any substantial

crremanent structure upon the lot described it can not, under a ruling of

the Comptroller's office, be considered as improved real estate under the

Drovisions of Section 31.

Upon motion, the proposed letter was approved.

Letter dated October 11th from Mr. W. H. Kettig, Chairman of the

°W°a11. Agency Committee of the Federal Reserve Bank of Atlanta, advising

that both his committee and the committee appointed by the Atlanta Clearing

11°118e Association are prepared to present the Atlanta side of the Cuban


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4eencY cuestion at any time the Federal deserve Board desires a meeting.

Noted, without action, in view of the fact

that the Board yesterday made the matter of the

jubaa Agencies special order for a meeting on

November 11th and ordered all interested parties

advised.

Latter ordered circulated at the meeting of the -..s:ecative Corinittee on

SePternber 15th, namely, letter dated. September 9th from the Governor of the

Pe(leral Reserve Bank of Dallas setting forth circumstances surrounding that

12'a e i recent refusal to extend the use of its rediscount facility to the

CitY National Bank, Decatur, Texas, except upon certain conditions; together

With a memorandum from the Comptroller of the Currency expressing the opinion

that the Federal Reserve bank would be perfectly justified in not extending a

Of credit to the institution named.

Noted.

Letter dated October 11th from Mr. Montgomery B. Angell, submitting a

Statet10rit in the amount of .)5,025.32 for fee and expenses in connection with

tl/k) Par clearance case of the Pascagoula National Bank v. Federal aeserve

1341-1-1t of .Lticsata et al.

Referred. to the Law Contaittee.

Letter dated October 14th from the Deputy Chairman of the board of

(111%ectors of the Federal ieserve Bank of New York, replyinc; to the Board's

lett" of Sertenber 29th, with reference to the need and propriety under the

eszl'Oral -ieserve Act of the uses made by the First National Bank of New Yoai:

er the credit facilities of the Federal aeserve bank.

'Referred to the Committee on District 2.


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Letter dated October 15th fram the Deputy Governor of the Federal

esp--rve Bank of row York, transmitting copies of the program of topics for

discussion at the forthcoming Conference of Governors.

Ordered circulated.

Letter dated October 14th from the Federal Reserve Agent at Boston,

elaclosing copies of the program for the forthcaming Conference of Federal

ileserye Agents.

Ordered circulated.

Draft of reply, prepared by the Vice Governor in accordance with re-

9.116st made at the meting of the Board on October 12th, to letter dated October

8t4 fram the Governer of the Federal Reserve Bank of 1:inneapo1is, with referenee

to certain relourchase transactions had by the Federal Reserve bank v:ith mem-

ber banks in YAnneapolis and St. Paul; the proposed reply stating that inas-

ralleh as the transactions engaged in by the Liinneapolis bank were on a limited

seals and to meet a transitory situation there is no occasion to ,so into the

lloatter formally and more fully.

Upon motion, the proposed reply was approved.

At this point, Lir. James referred to the provisions of the Board's

:iegalations with respect to the appointment of directors of Branch Federal

?'e2ee Banks that the directors appointed by the Federal _Zeserve Board shall

be chosen from the ranks of men of high character and standing, who are en-

in agriculture, industry or commerce, insofar as may be possible or

1)racticab1e, while the directors annointed by the Federal aeserve banks shall

11°flO1I well qualified and experienced in banking. James stated that at


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the beginning of the present year the Board made exceptions to this rule and.

retained as its a000intees certain branch directors who were actively ens'ar.ed.

14 banking. He stated that certain bra-1h directors in districts in which he

We's interested as a Committee member, whose terms expire with the end of the

culirent year, were active bankers aal for his guidance in making recommendations

fc)r Appointments to succeed these men inquired whether the Board in making

agDointments would abide strictly by the -provision of its 2.egulations that its

•131Dointees should be non-bankers.

After discussion, Lir.ller moved that it is the

sense of the Federal lieserve Board that beginning

January 1, 1927 all district committees in making

recommendations for the appointment of branch directors

should_ give full effect to that section of the Board's

allegulations governing the appointment of such directors

which provides that the Board's appointees "Shall be

chosen from the ranks of men of high character and.

standing, who are engar_,red in agriculture, industry or

commerce, insofar as m,r be possible or practicable"

and that in cases where this appears to be impracticable

the matter should be reported to the Board for consider-

at ion.

:.:r. Miller's motion being put by the Chair

was carried, ::r. Platt voting "no".

:latter ordered circulated at the meeting on October 5th, namely, letters

(/3"tecl October 1st and 2nd from the Chairman of the Federal .deserve Bank of

t%tlaza,_"4 with reference to action taken on the various criticisms and sug-

stions 1-mde by the Board's .2,xarain.er, following the examination of the

1D411k made as of the close of V..r.siness July 10, 1926.

deferred to the Board's Chief `.:Ixaminer.

The Secretary then presented draft of a letter to the Governor of the

?ecleral -;;eserve Bank of New York, advising of the action of the Board at its


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fleeting yesterday yesterday in disapproving the recomendation of the board of directors

Of the Uaw York bank that the minimum rate at which bills will be purchased

filora the National Bank of Belgium under the Board's authorization of October

5, 1926 be fixed at 0 instead of 5% as previously approved by the Board.

After discussion, the above letter was approved

after being amended to read as follows:

"At the meetinL; of the Federal ,ieserve Board

yesterday, Lir. Harrison presented verbally the

recameniation of the board of directors of your

bank that the minimum rate at which the bank will

purchase bills from the National Bank of Belgium

under the Board's authorization communicated to

you on October 5, 1926, be fixed at instead of

as previously approved by the Board.

After discussion of the effect upon the pur-

poses of the plan in the event no change was made

in the minimum rate at which bills are to be pur-

chased by the Federal deserve Bank of New York nlyler

the authorization given by the Board on October 5th,

action by the Board resulted in its disapproval of

the recommendation of your directors that the mini-

mum rate at which bills will be lurchased be fixed

at 6%.

The Governor then referred to the action of the Board on October 12th

in votin.s; that 1,:r. Goldenweiser arrange to come before the Board for the

:9111"pose of c7ivi/r: it a comprehensive review of the present credit and business

He stated that Goldenweiser was prepared to come before the

Board immediately, if desired.

Upon motion by Lr. Hamlin, it was voted that

Goldenaeiser be requested to appear before the

Board at a meeting to b.: held tomorrow morning at

10:30 a.m.117,

-.uo OF STADING

Lat"3d, October 15th, .aecommending changes in stock at Federal .32serve banks

16th, "0 nc, set forth in the auxiliary minute book of this date.

16th, Approved.19th,

•


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REPORTS' CF STAIDING CCI.TAIUTEES: (Cont

Dated, October

Dated, October

Dated, October

OctoberDated.,

Dated,

Recoeing act ion

as set forth in theApproved..

Rec ORM nding action

as set forth in theRefused.

Recommending action

on applications for fiduciary powers

Auxiliary Minute Book of this date.

on application for fiduciary powers

Auxiliary Minute Book of this date.

on application for f isiue iary pov..ers

as set forth in the Auxiliary Minute Book of this date.

Ordered. held..Recommending action on application for admission of

state bank, subject to the conditions stated in the

individual reports attached to the application, as

set forth in the Auxiliary Minute Book of this date.

Approved.October 16th, Recommending approval of the application of Mr. F. T.

Manley for permission to serve at the same time as

director of the First National Bank, Port Arthur, Tex.

and as director of the National Bank of Commerce,

Houston, Tex.Approved.

Dated, October 18th, Recommending approval of the application of Mr. Ernest

Peyler for permission to serve at the S ara9 time as

director of the Community National Bank, Buffalo, N. Y.

and as director of the Citizens National Bank, Lancaster,

Approved:

If

13th,16th,19th,19th,

12th,

16th,

N. Y.Approved..

The meeting adjourned at 1 p.m.

e rotary.


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