19270527_1100a_Minutes.pdf

451

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

Pederai Reserve Board on Friday, May 27, 1927, at 11;00 o'clock a.m.

NOSENT: Governor CrissingerMr. PlattMr. Hama inMr. MillerMr. McIntoshMr. Eddy, SecretaryMr. McClelland, Asst. Secretary

Memorandum dated May 20th from the Board's Chief Examiner submitting

l'ePort of examination of the Federal Reserve Bank of St. Louis and its

branches, made as at the close of business October 30, 1926.

Referred to the Committee on Examinationsand the Committee on District #6.

Memorandum dated May 2)th from the Board's Chief Examiner submitting

report of examination of the Federal Reserve Bank of Kansas City and its

1511146heet made as at the close of business November 13, 1926.

Referred to the Committee on Examinationsand the Committee on District 410.

Ilemoraadum dated May 23rd from the Board's Chief Examiner submitting

tePort of examination of the Federal Reserve Bank of Chicago and its

136tIleit Branch, made as at the close of business November 27, 1926.

Referred to the Committee on Examinationsand the Committee on District #7.

The Governor then presented a letter dated May 25th from the Secretary

Q4 the Treasury, acknowledging receipt of a copy of the recommendations

the Federal Advisory Council made to the Board under date of May 20th;

Q'''''oretary referring to the recommendation relating to the proposal to

e''Y a Supply Of unissued Federal Reserve notes at the 'Juban Agency and

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

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Sting the advisability of having a sub-committee from the Board meet

With the Assistant Secretary of the Treasury with a view to devising scale

1)1an which may be an effective substitute for the present arranswent.

2he Governor stated that he would appoint Lessrs.Hamlin and James as a Special Committee for the purposementioned. •

Letter dated Nay 23rd from the Comptroller of the Currency on the matter

l'"errad to him at the meeting of the 3oard on Nay 10th, namely, application

(If the National City Bank of New York for permission to establish branches in

41446'111a. Bayamon, Caguas, Fajardo, uuayama, Humacao, Juncos and Rio Piedras,

all to. Porto 1iioo; the Comptroller recommending approval of the application,

statillg it is his understanding that the National City Bank is not contamplat-

14the opening of the branches at this time, but that conditions may arise

late r. which will maks it advantageous for the bank to be in position to open

4144 branches owing to bad banking conditions.

Upon motion, it was voted to approve the appli-cation of the National City Bank of New York, and thefollowing was ordered spread upon the minutes:

"THE NATIONAL CITY BANK OF NEW YOLK, having on or about May6th. 1927, filed an Application with this Board for the purposeOf obtaining authority to establish Branches in Aguadilla, Baya-111°11, Caguas, Fajardo, Livayama, Humacao, Juncos and Rio Piedras,Or in any one or more of the same,-all of said places being inDioaTo and the said Application having been considered; andIt appearing that the said Application is properly made under/10 laof the United States of America and should be granted,

IlOw, therefore, it is"ORDERFO, that the said Application be and it hereuy is ap-

Proved, and that the said Bank be and it hereby is authorized toaatablish Branches in Aguadilla, Bayamon, Caguas, Fajardo, Guayama,Macao, Juncos and NiO Piedras, or in any one or more of the same,

all of said places being in POliTO RICO."


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Letter dated May 26th from the Assistant Secretary of the Federal

,aeserve Bank of New York, advising that the board of directors at their

4aeting on that date made no change in the bank's existing schedule of

rateS of discount and purchase.

Noted.

Telegram dated May 26th from the Chairman of the Federal deserve

1344k of Kansas City, advising that the board of directors at their meeting

O n that date made no change in the bank's existing schedule of rates of

liecount and purchase.

Noted.

Memorandum dated May 24th from the Director of the Division of Re-

search and Statistics, recommending that Lass Nina Farquhar, an anployee

of the Division, be granted leave of absence without pay for a period of

two weeks beginning May 24th.

Approved.

Letter (kited May 24th from the Federal Reserve Agent at Hew York,

'Ing that the Hamilton Trust Company of Paterson, New Jersey, has been

"lorized by the State Commissioner of Banking and Insurance to establish

a bra--ilea at 500 Park Avenue, Paterson.

Noted.

Letter dated May 19th from the Assistant Federal Reserve Agent at

811111;'1'acisco, advising that on May 14th the Pacific Southwest Trust and.

4vi1lge Bank of Los Angeles, under authority previously granted by the

took over the business and assets of the Valley Savings Bank of

8411ta ideria and consolidated them with the existing branch at that place.

Noted.


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Letter dated May 25th from the Chairman of the Fedora' Reserve Bank

(3t New York, advising of negotiations under way by the Interstate Trust

e°mPanY of New York City to take over the Franklin National Bank and the

deposits of the bank Which is now maintained. by Bloomingdale Brothers De-

Partment Store, Which institutions are to be continued as branches of the

Iuterstate ?rust Company; the Chairman stating that an application for

the Board's approval, with full information on the matter, will be for-

in due course.

Noted.

Report of Committee on Salaries and Expenditures on letter dated

4-4V 25th from the Governor of the Federal Reserve Bank of Philadelphia,

liequesting approval of an increase from 43,000 to 43,300 per annum in the

8414rY of Mr. A. O. Pritchard, who has been arpointed head of the 'Abney

DePartment of the bank to succeed Mr. C. S. Barker; the Committee recom-

4e44ing approval.

Approved.

Report of Committee on Salaries and Expenditures on letter dated

Nr 19th from the Chairman Of the Federal Reserve Bank of San Francisco,

Nile•sting approval of the action of the directors of that bank in voting

to increase from 000 to 43,300 per annum the salary of Mr. L. W. Dalby,

Pr040ted from the position of Chief Clerk of the Salt Lake City Branch

to that of Assistant Cashier of the Branch; the Committee recorsnending

epproval.

Approved.

Memorandum dated May 24th from Counsel, submitting copy of a


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letter addressed by the Federal Reserve Bank of Atlanta to the First National

8411k of Hartford, Alabama, returning to the latter institution certain cash-

iers' checks on which payment had been refused on the ground that the checks

were not payable through the Federal Reserve Bank of Atlanta, and advising

that the checks had been charged to the member bank's reserve account.

Noted.

Letter dated May 23rd from the Secretary of the Federal Advisory

eelalcil. advising that the memorandum regarding the Cuban Agency prepared

Mr• M. A. Traylor and considered by the Council, has not been filed

" ally with the Federal lieserve 3oard and no official cognizance is

to be taken of it.

Noted.

Letter dated May 21st from the Federal .Lieserve Agent at Minneapolis,

Ntlesting that Lir. Oliver S. Powell, statistical clerk in his Department,

be designated as his representative, to act as alternate for the Assistant

.ceserve Agent when necessary, in the receipt of new and fit Federal

ileserlre notes, the issue of new and fit Federal Reserve notes, and in handl-

It/ gold coin and gold certificates; the Agent stating that L:r. Powell will

not be authorized to sign transfer wires which will be signed either by

hilliself or his Assistant.

Upon motion, it was voted to approve the un-official designation of Mr. Powell as representativeof the Federal Reserve Agent in the performance ofthe duties mentioned.

Letter dated May 24th from the Secretary of the Governors' Conference,

tr4113111itting a cony of the minutes of the meetings of the Open Market Invest-


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Ment Committee, held in Washington on May 9th, 11th and 12th.

Ordered circulated.

Memorandum from Counsel dated May 19th on the matter referred to the

Law Committee at the meeting on May 17th, namely, letter dated May 13th

fl'pla the Federal Reserve Agent at Dallas referring to an application for

rsembership in the Federal Reserve System filed by the Guaranty State Bank

°f Sala Antonio, Texas, and inquiring whether under the McFadden Act the

is authorized to admit a state bank to membership upon condition

that the applicant bank shall eliminate certain losses or objectionable

assets Within a specified period; Counsel submitting a proposed letter

t° the Federal Reserve Agent stating that in the Board's opinion it still

has power to prescribe such a condition, which would be considered to be

"Nrsuant to" that provision of Section 9 of the Federal Reserve Act which

requires the Board in acting upon applications for membership to consider

the financial condition of the applying bank, the general character of

it° Management, aad whether or not the corporate powers exercised are

oollsiatent with the purposes of the Federal Reserve Act.

Upon motion, the letter submitted by Counselwas approved.

Letter dated May 23rd from the Deputy Governor of the Federal Reserve

441r of New York, transmitting copies of correspondence exchanged with the

8°11th African Reserve Bank with reference to the appointment of that insti-

tuticm. as agent and correspondent of the Federal ..eserve Bank of New York

14 return for a similar appointment from them.

Noted.


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Memorandum from Mr. Hamlin submitting letter addressed to him under

date of May 23rd by the Federal Reserve Agent at Boston, transmitting copy

Of a synopsis of the McFadden Act published by the Federal Reserve Bank of

• Iiiqhmand, and calling attention to the recent action of the Board in dis-

aPProving the issuance of a similar pamphlet by the Boston bank. Mr. Hamlin

stated that he wrote Mr. Curtiss advising him that the Richmond pamphlet

Was Plablished without being submitted to the 3oard and without the Board's

aPPrOval *

After discussion, the pamphlet issued by theFederal Reserve Bank of Richmond was referred to theGovernor with power to take the matter up with theRichmond bank.

Lemorandum dated May 24th from the Chief of the Division of Bank

°PeratiOns, referring to the Board's Abstract of Reports of Condition of

14eMber Banks, and requesting the Board's permission to have copies of

the abstract sent to each member bank following the next two or three

eall„,a after which each bank would be requested to advise the Board whether

or. aot it desired to continue to receive copies Of the report.

Following a discussion, Mr. Miller suggestedthat a limited number of copies of the abstract beprinted, but that no general distribution be madeand that the abstracts of the June 30th and December31st calls each year be published in the FederalReserve Bulletin.

Upon motion, Mr. Miller's suggestion wasapproved.

Liemorandum from Assistant Counsel dated May 18th on memorandum dated

144V 641. from the Deputy Comptroller of the Currency, regarding apparent

l'icfletions of the criminal provisions of the statutes of the United States


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5/27/27 -8_=158

by 1.1r. Harry Henderson while acting as Vice President of the National Border

Bank of _Li Paso, Texas, and as Vice President of the American Trust and Savings

Bank. z4'1 Paso; Counsel stating that the Board has already foraardel to the

Department of Justice reports received from the Federal Reserve Agent at Dallas

With reference to Mr. Henderson's apparent violations in connection with the

Aterican Trust and Savings Bank, but that the Board has no information regard-

the violations in connection with the National Border Bank except that

transmitted with the Deputy Comptroller's memorandum, and the question whether

Or riot that should be submitted to the Department of Justice appears to be one

or determlnation by the Comptroller of the Currency, rather than by the Board.

Noted.

Letter dated May 4th signed by seven of the directors of the Federal

aeserve Bank of Boston, commenting upon the services of Mr. Frederic H.

Cart.ss as Chairman of the Board of Directors and Federal Reserve Agent at

that bank.

Ordered circulated and filed.

Letter dated May 23rd from the Chairman of the Federal Reserve Bank

(4' St• Louis, transmitting copy of resolutions adopted by the Board of

Directors of that bank with respect to a proposal to change the location

°f the Government Building, removinc: same from the present financial district

where the Federal Reserve bank and other leading financial institutions are

4°14 housed; the Chairman advising of a further resolution directing that the

14(itter be brought to the attention of the Federal Reserve Board and suggest-,

14C that the Board call it to the attention of the Secretary of the Treasury

the information that the proposed new location will not only decrease

f


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the value of the property of the Federal Reserve bank, but will also decrease

the *value of the property of the Federal Land Bank and also the sale value of

till's° other parcels of ground in which the Government has a more direct interest.

44e Governor stated that a copy of the letter and resolutions of the St. Louis

44:k has been furnished the Secr2tary of the Treasury for his information.

Upon motion, the documents were orderedcirculated for the information of the members ofthe Board.

At this point, irre Cunningham entered the meeting.

Zemorandum from the Committee on Examinations dated May 23rd, submitting

drafts of letters Prepared by Mr. Gilbert, Supervisor of Examinations, ad-

4re8sed to the Federal Reserve Agent at St. Louis, with reference to an analysis

444° by Mr. Gilbert of the report of an examination of the Union Bank and Trust

C°111P1111:7 of Batesville, Ark., dated April 9, 1927; one letter calling attention

to aPparent violations of the criminal and other provisions of the Federal

lielaerVe Act by the President and other officers of the institution, and the

ether commenting upon ::eneral information set out in the report of the ex -

Ordered circulated.

Memorandum from the Secretary dated May 25th, suggesting that circular

letters be addressed to the Chairmen of all Federal Reserve banks, advising

clt tile rulings adopted by the Board at its meeting on May 23rd, one on the

a ti-04 whether a national bank formed by the consolidation of a state bank

"g trust business and a national bank without trust powers, may proceed

to'Zereise trust powers without applying for and receiving the permission of


460

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the Board under Section 11 (k) of the Federal Reserve Act, and the other

itterpreting the phrase, "beyond the limits of the city, town or village in

74hich the parent bank is situated", as used in Section 9 of the McFadden

AOt relating to the establishment of branches by state member banks.

Upon motion, it was voted that appropriate circularletters be prepared and submitted to the Board.

The Governor then submitted copy of a memorandum dated May 25th addressed

to the Comptroller of the Currency by the Board's Counsel, expressing the

°131410/1 that the Comptroller would not incur any liability if there should

be'kki,d loss resulting from the carrying of unissued Federal Reserve notes

14 the joint custody of the Federal Reserve Agent and the Federal Reserve

444the Agency of the Federal Reserve Bank of Atlanta in Havana, Cuba,

1111cler the plan approved by the Board on ILly 23rd.

Noted.

The Governor then submitted letters addressed to him and other members

°Is the Board by the Governor of the Federal Reserve Bank of Richmond with

to the specifications and bidding in connection with the proposed

174114 to be installed in the building to be erected for the Baltimore Branch.

The Secretary stated that one of the members of theBoard had suggested that copies of Governor Seay's communi-cations be sent to lir. Trowbridge, consulting architect, forhis information.

After discussion, it was voted that the letters shouldnot be forwarded to Trowbridge until he has completedhis investigation of the matters on which he is to reportto the Board under the request made of him at the meeting onRay 24th.

Liemorandum from Counsel dated April 28th, submitting correspondence

rel4tive to an opinion recently rendered by the Supreme Court of Texas


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lathe case of Lane Company v. Crum, wherein the Court held a trade acceptance

4 rendered non-negotiable by the appearance thereon of the clause "The obli-

gation of the acceptor hereof arisos out of the Airchase of goods from the

cirai'ver, maturity being in conformity with the original terms of purchase";

C131142,31 suggesting (1) that any doubt as to the negotiability of trade ac-

could be eliminated by changing the standard clause thereon to

read' "The transaction giving rise to this instrument is a purchase of goods

bY the acceptor from the drawer"; (2) that copies of his memorandum, the

ttached correspondence and the opinion be sent to all Federal Reserve banks

t°t their information; and (3) that the opinion be published in the Federal

erve Bulletin with a statement suggesting that in view of the doubts raised

blr the decision it is advisable to change the wording of the standard clause

411ggested above.

Upon motion, Counsel's suggestions were approved.

Letter dated May 19th from the Deputy Governor of the Federal Reserve

144k Of Uew York, advising that as the credit extended by the Federal Reserve

1441'42 to the Bank of England expired on May 14th, rebate is being made to

theaXlk B

Of Belgium on the credit extended it of commission paid from OctoberaS

9'-60. the effective date of the Belgian credit, to May 14, 1927, but that

t —41Mission of one-half of one percent is being retained from May 14, 1927,

°Qctober 25, 1927, the date on which the Belgian credit expires.

Noted.

141e) Secretary reported that he has not as yet advised the Federal Reservelikot

c)f Atlanta of the action of the Board at its meeting on May 23rd in


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alVrOving the proposal of the bank to carry a reserve stock of unissued Fed-

eral Reserve notes at its Havana Agency. In View of the Special jommittee

.-rwluted b„ the Governor at this meeting to meet with the Assistant Secretary

Ot the Treasury rogaiding the proposal, he requested instructions from the

Board,

He was instructed to withhold advising the FederalReserve Bank of Atlanta of the action taken by the Boarduntil directed to do so by the Board or the Special Committee.

The minutes of the meeting of the Federal Reserve Boari held on May

leth Were then read and approved.

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

2311 were read and approved as amended.

The minutes of the meeting of the Executive Committee held on May 24th

ella read and the actions recorded therein were ratified.

OF STANDING 001,21ITTM:

Dated, maw

Dated., aiau

23rd,24th,25th,19th,24th,25th,26th,

Ihtted,Iar 19th,20th,25th,

441̀ ovea:

Recommending changes in stock at Federal Reserve Banksas set forth in the Auxiliary Minute Book of this date.

Recommendations approved.Recommending action on applications for fiduciary pcmersas set forth in the Auxiliary Minute Book of this date.

Recommendations approved.

Recommending action on applications r membership bystate institutions, as set forth • he Auxiliary MinuteBook of this date.

commendations approved.

The meeting adjourned at 12: •

Governo

Secretary.


19270527_1100a_Minutes.pdf

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