19280626_Minutes.pdf

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

the Federal Reserve Board on Tuesday, June 23, 1928, at 11:00 a. m.

PRESENT: Tice Governor Platt:tr. Hamlin• Miller

James• IcIntosh

Eddy, Secretary• Noell, Assistant Secretary

Telegram dated June 22 from the Deputy Chairman of the Federal

Reserve Bank of Chicago advising that the Board of Directors of the

bank, at its :ecting on that date, '..lade no change in the bank's e::isting

schedule of rates of discount _,nd -iurchase.

771thout o'c,jectio , noted with approval.

elorandum fro:1 zistnt OoaJsel, submitting applications of Messrs.

Men Nays and Joe Ledbetter for )er.lission to serve at the sa:ne time

the Grand Avenue 1:ationa1 Bank of St. Louis, !:issouri and the First

',rational Bank of Clayton, i:issauri, 2.r. Mays desiring to serve as

Official and director of the banks, resDectively, and Mr. Ledbetter

as emDloyee and director, resnectively; the Federal Reserve Agent

recommending that the applications be refused.

After discussion, unon motion the

a7mlications were refused.

Memorandum from Assistrnt Counsel, anproved by the Law Committee,

with reference to the application of :Ir. T. :. Shelton,' for permission to

serve at the some time as director of the First 7ational Bank and as

director of the A.-aerican "rust Co.nnany, both of Charlotte, :orth Carolina,

Which was refused by the Board on ::arch 23, 1927, since it appeared that

these banks were in substantial competition, following Which Mr. Shelton

severed his connection with the First 7ationa1 Bank. A letter has now

been received from E. C. Johnson, Cashier of the First 7ation-1 Bank,

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in w'lic",-1 he inquires whether under the provisions of the Ola7ton Act as

amended on :!arch 9, 1923, the Board will now ner:lit :r. F'elton to serve

on the directorates of both the First National Bank and the knerican Trust

Upon motion, it was votda to return

the application to the Federal Reserve

Agent at Richmond for recommendation.

Reort of Executive O=aittee on memorandum dated June 22, from

the Oor:gtroller of the Currency recommending all?roval of an application

of the Peoples National Bank of Los Angeles, California, for permission

to reduce its caoital from $5O0,0O to $230,003, on condition that the

following items as s'!:_own by the report of examination he charged off;

Losses. 25,803.77

Doubtful 87,730.22

Stock of a certain corpora-

tion known as :o. 437 South

Hill Street, Inc 100,000.00

With the understandinc that no portion of the reduction is to ':;e retur.aed

to the Shareholders and -upon the further condition that after the ad-

journment of the meeting of the Ei")areholders to vote on the reduction

in canital, another meeting will be convened imaediately and the capital

increased to *500,000.

Upon recommendation of the Executive

Committee, it was voted to approve the

capital reduction on the above conditions.

Letter dated June 22 from the Federal Reserve Agent at Dallas,

stating that if the Mara has no o:Djection he will begin his vacation

on or about July 15, 1323, for the regular period. of 30 days.

approved.

Letter fro. the Federal Reserve Agent at Richmond dated June 20, 1923,

in reAy to the Board's letter of June 14, calling attention to the

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5-25-28

tr):co.atinuous borrowing on Gover=ent bonds by the First National Bank of

Frostburg, Maryland.

Ordered circulated.

'Memorandum from the Chief of the Division of Research and Statistics

recommending that Mr. Morris A. Copeland be appointed a member of his staff

for one year beginning September 15, 1928, at an annual compensation

of $4,500, to fill the vacancy created by the resignation of Mr. Marcus

7adler.

Approved.

Memorandum fro::. the Secretary recommending that the Board ainrove

for Mr. T. 7ernon Ott, -ail clerk on the Board's staff, sick leave

17ith pay through the month of july.

Approved.

Memoranda from the Committee on Salaries and Expenditures, trans-

:aitting resolutions adopted by the Directors of the twelve Federal Reserve

Banks authorizing payment of the regular semi-annual dividend on June 30,

1928; the Committee submitting a statement showing estimated current net

earnings and dividend reauirements for the first six months of 1928, the

Present probable losses on paper of over extended and failed banks and the

reserves held to take care of such losses.

On motion, the Board ap?roved payment

out of current net earnings of the

usual se:ni-annual dividend by the

twelve Federal Reserve Banks.

Letter from the Chairman of the Federal Reserve Bank of rew York

dated June 22, advising that the Board of Directors has voted, effective

"1.1.11:7 1, 1923, to appoint 7:r. Charles Ti. Coe (now 1.7.anaEer of the Loan

and Discount Department) an Assistant Deputy Governor to be assiznea


6-26-28

to the Cash and Collection Fanction, without change in his -,7:resent salary,

and has also voted, effective July 1, 1S28, to appoint L:r. J.

(now Chief of the Credit Division) ::anaLer of the Loan and Discount

De,)art„aent, and subject to the approval of the Federal Reserve Board, to

at the rate of $10,000 -oer annum.

IT-)on motion, in accordance with a

reco_mendation of the Board's Committee

on Salaries and Exnenditures,.it was voted

to approve the salary of $10,000 per anIrx,

fixed by the Directors of the 7ew YorkBank. for Er. Mitchell, effective July 1,1928, tr. McIntosh voting

ae)ort of 0o=littee on Salaries and Expenditures dated June 25,

on letter (lated June 22, from the Federal Reserve Bank of Chicago re-

questing the Board's alproval of salary payments involved in extended

leaves of absence on account of illness granted several employees of

the bank aarinr- the )eriod June 1 to June 21.

Approved.

Memorand-wn from .;ssistant Counsel dated June 22, recommending

that there he -Toblis7:-:ed in the fortiicoai :I.cae of the Federal Reserve

Bulletin, a statement regarding the revised Digest of Rulings is

soon to be published and that orders will now be received by the Federal

Reserve 2oard at a price of $2.00 per vol=e.

Anproved.

::e.:.orandum from General Counsel dated June 21 submitting a letter

addressed to him by Mr. R. Sims, Secretary-Treasurer of the rational

Association of Supervisors of State Banks, inviting him to attend the

convention of the Association, 7-7:Ach is to be held at Coney. Island,

17e17 York, July 25, 25 and 27, Counsel stating that he would he willing

Lo attend the convention if the Board so desires, zvad that it has

occarred to him it lAicjht be well for some member of the Poard's staff

0

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6-26-26

to attend in the interest of better understanding and better coopera-

tion between the Federal Reserve Board and the National Association of

Supervisors of State Banks.

Upon motion, referred to the Vice-Governor

with power to arrange for representation.

Memorandum from Counsel dated June 15, 1928, approved by the Law

Committee, submitting draft of a letter advising the First 4'ederal Foreicn

Investment Trust not n.e Board, in accordance with its action on June

12, will not approve a change in the nor:ie of the corporation involving

t!-0 r'linlinotion of the word "Foreign."

U?on motion, the letter was approved.

e-:,orandum from Counsel dated June 13, ai»roved by the Law

Committee, submitting draft of a circular letter t9 all Federal Reserve

Agents and Governors of all Federal Reserve Banks, in accordance with the

Board's action on June 12, advising of the Board's recent ruling with

regard to the form of certificate evidencing eligibility for rediscount

of bankers' acceptances; Counsel recommending that the Board's ruling and

the certificate in the form now a-)proved be published in the next issue

of the Federal Reserve Bulletin.

r7r,

Upon motion, the draft of circular letter

to all Federal Reserve Agents and Governors

and the recommendation of Counsel were approved.

Secretor:, presented revised draft of a letter to the Secretary

of State w ith reference to the invitation extended to this Government

by the League of tions to be represented at a conference to be held

abroad on November 5, 1923, for the purpose of coniderin the scope

of economic statistics to be published officially in each country;

V:le letter stating that the Board notes particularly the views of the


6-26-28

State Denartment, as expressed in its letter of ::.r)7,3rd, that it

aonears inadvisable to acce)t the invitation and. rss-.1-aes that should. it 6,

later be decided, that this .E7;07.? e rnm en t should participate in the conference,

the Board. will he advised, to that effect and given an oportunity of beinc

represented on the official delegation should. it so desire.

.11-nroved.

orand.-um from Counsel dated.June 25, zl.L:)..2roved by the Law Co=nittee,

mab:ittin.[.:.; draft of letter to r. G. E. Greory,Vice President, Yational

City Bank,e-w York City, in reply to his letters of. June 1:.? and June 22,

asking if .his bank may legally, under the Federal Reserve Act as amended,

accept for the purpose of furnishing dollar exchange, drafts having not

more than three months' sipat to run when such drafts are drawn by the

financial officers of a foreign country; the letters from 1:r. Gregory

stating that the t=saction referred to arises out of a loan made to the

State of 1:inas Geraes, Brazil, in which the- 17ational City Bank and

associate bankers purchased an issue of bonds, depositing in. his bank

as Fiscal Agent as a three months' time deposit the sum of *8,075,000,

the deposit being held to secure a ninety day siht draft drawn upon

the bank by the Secretary of Finance of the State of Minas Geraes, Brazil.

Upon motion, the proposed draft of

reply was aroved.

1,1emorandua from Counsel dated. June 22, with reference to the

aloolication for the Board's aoorovr_l of the title "International !ercantile

Exchange 'Lank" by a group pr000sing to organize a corporation under

Section 25 (a) of the Federal Reserve Act; Counsel stating that if this

:21"0-)osed corooration intends to issue its own bonds, debentures or other

such obligations, the use of the word "hank" in its title is contrary


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to the remireents of the Board's regulations and furnor that the proposed

• title does not contain the word. "foreign", although it does contain

the word "international."

to G

Upon motion, it was voted to have Counselre--)are a letter stating that the word "bank"in its title is contrary to the requirementsof the Board's regulations, if the corporationis to issue its own bonds, debentures, or othersuch obligations, and that under the lawcorporations authorized to do a foreign bankingbusiness under the terlls of Section 25 (a) ofthe Federal Reserve Act are not permitted toenEage in purely local or domestic business.

Letter.from lir. 0. U. W. S7)rague of Harvard University, addressed

vernor Young, advising that one of his students, n, Edens,

an ex-assistant bank examiner, is in C'Acar_o investigating bank failures

and. wis'.2es to some use of data at the Chicago Bank which Mr. Heath

hesitates to give him until he shall have received aunorit: from the

Federal Reserve Board; the letter requesting the Board for such authority.

the

U.)on motion, the Secretary was requestedto notify Ur. Heath that the request should be

comnlied.with.

3ec2etary stated that on May 13, the Board sent a telegram to

Governors and Agents of all Federal Reserve Banks advising of a suit

brol-lit by deT)ositors of the ..7eora 7ational Bank, Neoga, Illinois against

the Directors of that bank and z:,,ainst the Federal Reserve Bank of Chicago,

71127,2anagement the Directors and collusion 7-.):7 the Federal

-„rve Bank; the telegram also stating that the Federal Reserve Bank of

'-icago had requested that all Federal Reserve Banks join in retaining

1:r. Baker to assist in the trial of the case and inquiring whether the

banl:s concur. The Secretary stated that relies 1-1,7.ve been received from

all of the Federal Reserve Banks expressing their willingness to join


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6.:26-28

in retaining :::r. Baker to assist in the trial of the case as a system

matter.

Upon motion of Er. Hamlin, it was voted

that Ur. Wyatt be authorized to make the

. necessary arrangements with Er. Baker.

:10,:lorandum from the Comptroller of the Currency submitting applica-

tion of the Collin County Itional Bank of :.cKinney, Texas, for a

redaction in its er-7)ital stock from $200,000 to *150,000, the full

e:r.ount of reduction to be returned to the shareholders, the bank

agreeing to transfer $10,000 from the undivided profits account to

the surplus account of t'ie bank in accordance with the condition im2osed

by the Federal Reserve Board on April 24.

Ap-oroved.

-emorandum from Counsel dated June 22 submitting information with

resect to a suggestion made by the Dc-)art,:.ent of Justice that a regaltion

be issued by the Federal Reserve Board requiring that each report of

condition made of a Federal Reserve Bank or member bank shall contain a

statement showily.: whether Vlore have been nmy s'_:orta,es, embezzlements or

Other violation of Federal Criminal Statutes committed at their resi)ective

institations which have not theretofore been re,orted to the Federal

aeserve Board.

After discussion, ulpon motion of r. Hamlin,

the matter was referred to the Com:ytroller of

the Currency.

Letter dated June 15 from the Federal Reserve Arent at Chicao

replying to the Board's letter of Jane 12, with reference to the condition

of the First 7ational Bank of Richland Center, 7isconsin; the letter

stating that the reserves of the above named institution have now been

continuously deficient for a period of months lyat that the Agent has


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6-26-28 -9-

not written the Directors in accordance with the renuirements of Section

IV (b) of Rer;alation D, as he believes formal notice to the Directors should

not be sent at the )resent time unless the Board instructs him to do so. The

Agent also stated that a new examination of the bank has just been made,

followin; wIlich the Directors met with Chief Examiner Sims and decided

to place the affairs of the bank in charge of Mr. Pearson, a representative

Of the Co.1)trollerts Office, and that the management of the 'rank will

defer to him in all important matters.

Upon motion, the Board voted to advise Mr.Heath that in view of his recozmendation the Board

is willing, for the time being, that he waive

com?liance with the requirements of Section IV (b)

of Regulation D, and that it feels the Comptroller'srepresentative in the bank should be given areasonable time in which to produce results.

Draft of reily, approved by the Law Committee, to letter from the

President of the Edisto 7ational 3an7:, Orangeburg, South Carolina,

stating that his bank is co-administrator of an estpte consisting in

consideroble -4mount of cash in its savings department and inquiring whether

the two administrL.tors may Z-oe-o this money in the savings del-)artaIent until

the estate is settled u7) which vrill orobr.,7:ly be within twelve months; the

Board's reply stating that inasmuch as the funds are held by the bank in

a tr,:ct or fiduciary ca-)acity, it will be necessary for the bank to treat

them in all rec., ctc as trust funds - however, as these funds are awaiting

investment or distribution, they may be deposited by the trust dei,art-.ent

in the savings department of the bank provided that the bank first delivel's

to the trust department the collateral security defined in the Board's

Regulation (F)

Upon motion, the proposed draft of reply was approved.


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6-26-28 -10-

Mr. Bond, Assistant Secretory of the Treasury, entered the meeting

and acquainted the Board with the status of the Treasury's program

for -Jutting into circulation currency notes of the reduced size. He

explained in detail some of the adjustments which have been under way

at the Bureau of Engraving and Printing prenaratory to the Bureau going

into 2roduction of the new note, and. called narticular attention to the

desirabilit- of laying out the work of the Bureau over a twelve months'

or twenty-four months' period, In order to regulate satisfcctorily the

e.r,ployment of the personnel of the Bureau. Fe stated that during: the

early months of the coming fiscal year, beginning July 1, 1923, the aatnut

Of the Bureau would be confined largely to United States notes, in order

that the Treasury miE;ht have accumulated a sufficient stock of such notes

to begin putting them into circulation on or about July 1, 1929. He

stated further he felt that some, if not all, of the reserve banks would

he in a )osition to begin issuing their notes of the new size by July 1,

1929, and that it scel:.ed o_2)ro-)rinte, therefore, that during the coming

fiscl year the Bureau of Engraving and 7-0intinp, should begin work on the

-2roducti0n of a stock of Federal reserve notes sufficient to :Ieet require-

when a ante or dates for their issue has been detenoined. Bond

advised that with res-lect to the Federal reserve note the issue date or

dates of the reduced size note is dependent unon the time required to

acaul.7alate a sufficient stock thereof, and the extent to which it may seem

desirable to make nc'e o.r the stocks of the present size note. 11r. Bond

requested that the Federal Reserve 7oard place with the Bureau of Engraving

and Printing appropriate orders for Federal reserve notes of the new size

to he printed during the fiscal year beinning July 1, 1928, and that in

estimating the requirements, due consideration be given to the establish-

zent of reserve stocks in addition to Vile notes required for the initialDigitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6-26-28 -11-

tun-lover.

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

June 12 and 13 were read and aroved.

The minutes of the meetings of the E::ec-ative Committee of the

Federal Reserve Board held on June 19 and 22 were read and, upon motion,

the actions recorded therein were ratified.

REPORTS OF ST :"-DI1TG CO:EaTTEES:

Dated, June 23, Recanmending changes in stock at Federal Reserve Banks

June 25, as set forth in the Auxiliary Minute Book of this date.

June 26, Recommendations anproved.Dated, June 26, Recommending action on application for admission of a

state bank, subject to the conditions stated in the

individual renort attached to the application, as set

forth in the Auxiliary Minute Book of this date.

Recommendation approved.Dated, June 18, Recommending approval of the al»lication of Mr. Frank

B. Black for permission to serve at the same time as

director of the Citizens rational Bank and Trust Company,

Mansfield, Ohio, and as director of the Mansfield

Savings Bank and Trust Co..nt.any, Mansfield, Ohio.Recommendation approved.

Dated, June 19, Recommending approval of the application of Mr. A. G.Paine, Jr., for permission to serve at the same time

as director of the American Exchange Irving TrustComnany, 7ew York City, and as officer and director of

the Johnsonburg rational Bank, Johnsonburg, Pennsylvania,and as officer and director of the Essex County rationalBank, Willdboro, Hew York.

Recommendation approved.Dated, June 20, Recommending annroval of the application of Mr. Ferry

E. Wurst for permission to serve at the same time asofficer and director of the Manufacturers and Traders-

Peoples Trust Campany, Buffalo, row York, and as director

of the Lockport Exchange Trust Company, Lockport, Hew

York, and as director of the First rational Bank, Port

Allegany, Pennsylvania.Recommendation approved.

Dated, Jane 21' Ueconvending approval of the application of Yr. Malcolm

S. Vandervort, for permission to serve at the same time

as officer and director of the Monongahela rational Bank,

Pittsbur,,-h, Pennsylvania, and as director of the Homewood

Peoples Bank, Pittsburgh, Pennsylvania.Recommendation approved.

Dated-, June 21, Recommending approval of the application of Mr. John C.

Hill, for nermission to serve at the same time as


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REPCRS OF -.-17.1:-:-DING COMMITTEES (Continued)

Dated, June 21, director of the Monongahela National sank, Pittsburgh,

Pennsylvania, and as officer of the Homewood Peoples

Bank, Pittsburgh, Pennsylvania.Recommendation a:oproved.

Dated, June 21, Recommending a-proval of the application of Mr. Willi=

F. Burke, for permission to serve at the sr-rie time as

director of the Co,monwoalth Trust Copany, Union City,

New Jersey, and as director of the Hilton -ational Bank,

Weehawken, 77ew Jersey.Recommendation approved.

Dated, June 21, Recommending aiyoroval of the application of r. Fred C.

MacMillan, for )ermission to serve at the same time as

officer and director of the Monongahela ::ationel Bank,

Pittsburch, Pennsylvania, and as director of the Homewood

Peoples Bank, Pittdburr-h, Pennsylvania.Recommendation ap)roved.

Dated, June 21, Recommending approval of the application of Mr. D. B.

Heiner, for permission to serve at the same time as

director of the First 1Tationa1 Bank and Trust Company

of Ford City, Pennsylvania, and as director of the

Farmers National Bank, Freeport, Pennsylvania, and as

director of the Armstrong County Trust Com)any, Kittanning,

Pennsylvania.Recommendation ap)roved.

Dated, June 21, Rec3:7 -ending a-nroval of the apnlication of Mr. L. 0.

Evans, for permission to serve at the sr.me time as

director of the Metals Bank and Trust 0ompan7, Butte,

Montana, as director of the F. 'st National Bank, Great

Falls, Montana and as directo of the Western ::ontana

National Ban::, Missoula, Mon a.Recommendation anproveC

A2,-)roved:

The meeting adjourned at 1

Vice Govonlor

: .

Secretary


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19280626_Minutes.pdf