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787
.1.t a regular meeting of the Federal Resurve
Board held in the office of the Board on Friday, September Z4, at 10:10 a. in.
PRI1321NT:
r. Hamlin, presiding
Er. Warburg
1:r. Delano
Er. Harding
Mr. Williams
Mr. Willis, Secretary.
The minutes of the meeting of Thursday, September 23, were read and a-piroved.
On motion it was voted that the Secretary wire
the Federal Reserve Bank of San Francisco suggesting that
there be only one rate for paper running more than 90 days
in order to avoid confusion in agricultural paper rates.
On motion it was voted that before making any
change in the form of the Weekly Statement designed to
show the amount of different kinds of money on hand in
the several banks, the Secretary of the Board should write
each Federal reserve bank to inquire
its
opinion of the
proposed change.
On motion a report from Chief of Division Broderick relative to the application of the City National
Bank of Belfast, Maine, for fiduciary powers, was re-
f*" 88
ferred to the Committee on State Banks for investigation and report.
//
On motion it was voted to ask Mr. Broderick
. to make a short repert.to the Board .relative to the
status of Deputy 2ederal
eserve Agent Hackney of Bos-
ton, as to the duties performed, and the amount of pay
drawn by him.
The Secretary of the Board having presented an
opinion of Counsel relative to the application or the
Mutual Hational Bank of Boston for power to sell 1;200,000
of United States 2
bonds, with a report on the subject
prepared by Mr. Warburg and Mr. Harding, it was voted
that
(1) Banks desiring to dispose of their bonds may
file applications now if they choose, but
(2)
The Board will make no assignments requiring a purchase of any such bonds until the
end of the next quarterly period, namely,
March 31, 1916.
The Secretary of the Board was directed to
publish the facts as to the action thus taken.
The Secretary of the Board presented a letter
from Governor Aiken of Boston relative to the participation of his institution in the task of supplying funds
789
to other Federal reserve banks through rediscounts.
On motion, a committee consisting of Mr. Warburg, Mr.
Harding and Mr. Delano was appointed to report on the
question of Governmr3nt deposits and rediscounts between Federal reserve banks.
To this committee were
referred the letters of Governors Aiken and Strong,
read on September 23, with reference to the same subject, and a letter from Governor McDougal of Chicago
transmitting the resolution of his board of directors
as to deposits and rediscounts, the latter having been
previously referred to the Secretary of the Treasury.
A letter relating to the policy to be pursued
by the Federal Reserve Bank of Dallas in making transfers
under the Gold Fund, the same haying been prepared by
77arburg to whom the matter had been referred, was
read to the Board.
On motion it was voted that the pro-
posed reply be transmitted, but that it be addressed to
the Governor of the bank.
The Secretary of the Board having presented a
memorandum from Chief of Division Broderick suggesting
a form of letter to Mr. J. Z. Miller relative to vault
Conditions at Kansas City, the same having
been ap-
790
proved by I:1r. Warburg and Er. Harding,
it was, on
motion, voted that the 3ecretary write to 1:2..
along the lines suggested.
Mr. Harding reported that he had carefully
examined the papers crowing out of the Dallas-Kansas
city controversy, and that he recommended that representatives of the Dallas and Kansas City banks be invited to come to Washington for a conference.
On
motion the plan was adopted, and the Secretary of the
Board directed to arrange for a meeting of the kind
referred to as soon as possible.
Mr. Warburg reported a form of reply to the
2orieral aeserve Bank of Olelroland with reference to
its recent letter asking for an interpretation of the
Board's policy as to the purchase of warrants.
On
motion the proposed form was approved and ordered
transmitted.
Mr. Warburg having reported his views with
reference to the question of purchasing acceptances
on behalf of national banks of Wilmington, :Torth Carolina, the subject was discussed, and the terms of
his report informally agreed to.
It was, however,
791
agreed that a report substantially along the lines
of :Ir. Warburg's suggestions should be transmitted
informally by Mr. Harding to Governor Seay in a personal letter.
A memorandum from Chief of Division Broderick relating to the acceptance of State bank examinations for certain member banks in Missouri, Kansas, Minnesota, Illinois, Wisconsin and Lassachusetts,
having been received, the same was approved, and action ordered taken ac;ordin{21y.
The Secretary of the Board having presented
draft of a letter to 2edera1 Reserve A:Tout Martin,
relative to the Liethod of ascertaining the population
of a city in ;;hich State banks applying for membership
may be situated, when published data as to such population conflict, the prol)osed draft was approved, and
on motion, ordered transmitted.
The Secretary of the Board having presented
a letter from the South Bend National Bank of South
Bend, Indiana, asking for arbitration between the
Comptroller of the Currency and the bank, and transmittin: certain real estate bonds as exhibits, the
792
natter was, on motion, referral to Counsel for ex.pression of opinion.
The Secretary of the Board having read a
letter received from the Comptroller of the Treasury
relative to the Board's power to expend its own funds,
it was, on motion, voted that said letter be entered
in full in the minutes of the meeting as follows:
TREA3URY D PARTMENT
WASHINGTOr
September 1.6,
The Governor
of the Federal Reserve Board,
Washington, D. C.
i r :
I have your letter of the 10th instant,
requesting a re-consideration of a decision of
this office rendered 2iugust L4, 1915, to the fiscal as'ent of the Federal aeserve Board in which it
was held, in accordance with general laws and rulings governing the allowance of traveling expenses
of Government officers, that the assistant counsel
of the Board might not lawfully be reimbursed for
the expense of travel incurred by him in a trip
from Jamestown, R. I., to his official station at
Washington, D. C., and return to Jamestown, he
being on leave of absence at Jamestown when the
exigencies of.the service required this trip to
Washington.
793
The general rule is correctly
stated in this decision, but certain relevent facts peculiar to the organization
and operation of the Federal Reserve Board,
which are not discussed in the decision,
laerit careful consideration in this connection.
While it is true, as has been held
by this office and by the Attorney General,
that the Federal Reserve Board is a "board"
or "establishment" or the Government within
the statutes governing the accounting for
expenditures of public moneys (Oee 21 Comp.
Dec., 454), it is also true that the funds
from which expenses of the Board are paid
are not appropriated by Congress from the
general fund in the Treasury, but are raised
by assessment against member banks in the
Federal Reserve Organization. Having no
appropriation other than the general statute
authorizing the assessment, collection and
expenditure of these funds, no opportunity
is given to the Board to get from Congress
special exceptions necessary or appropriate
It must be recognized
to its operations.
that the general restrictions placed by
Congress on the use of appropriations can
not be applicable to the Federal Reserve
Board funds.
In the expenditure of its funds the
Board is the judge of what is necessary within the limits of its lawful operations. Only
in case of an expense clearly not connected
with its work: is the Comptroller justified in
refusing to sanction an expense which the
Board has authorized and approved.
In re-submitting this question you
state that the Board has definitely fixed as
its policy that when an employee on annual
leave is ordered by the Board to return tern-
794
Dorarily on account of pressing official
business, his expenses of travel thus incurred aro to be paid by the Board. Under this Policy such expenses, duly authorized and approved by the Board, constitute
a just and lawful charge against the funds
of the Board, and the former decision of
this office hereinbefore referred to is
modified accordingly.
Payment of the voucher in question is authorized, if correct in all other
respects.
lespectfully,
W. W. WARTICY,
Comptroller.
P.
Informal discussion of the toms of the
letter ensued.
Inquiry presented by the Treasury Depart- '
ment regarding certain new items in the daily statement relating to Pederal reserve notes, were presented,
and on motion referred to the Committee on Issue and
Redemption for report.
The Secretary of the Board having presented
an opinion of Counsel relative to the holding of reserve balances by trust companies, the same to be
counted as a part of the reserves of State banks which
are .embers of the Aderal reserve system, the opinion
795
was approved, and its publication authorized.
The Secretary of the Board having presented
a letter from Mr. J. P. Cotton commenting upon the
speech of Honorable Carter Glass before the Conference
Committee of Congress engaged on the Fa,_eral Reserve
act, it was, on motion, voted that Yr. Dalano write a
letter to Mr. Glass as te the clearing situation, and
transmit him a copy of Ur. Cotton's letter.
On motion it was voted that for the present
data relating to the expense of examining national banks
should not be printed in the October let issue of the
Federal Reserve Bulletin.
The question of the status of certain banks
in New Jersey which had applied for fiduciary powers,
coming up, the Secretary of the Board presented a report from the Committee on State Banks submitted by Mr.
Harding.
The matter was made a special order for Wed-
nesday, September 29.
Mr. Williams read to the Board a telegram
sent by him to Chief Examiner Starek on the same subject
and a letter from 1.1r. Starek in reply.
The latter was
read to the Board and referred to the Committee on
796
: udit and 11=nination.
On motion the following applications for
new capital stock in Federal reserve banks, duly
recommended by lir. Harding, were approved:
DiLaaicT
NO. 1.
Shares.
Norwood National Bank
Norwood, Y4ass,
15
DISTRICT NO. 4.
First National Bank
Higsinsport, Ohio
DISTRICT NO. 6.
Alexander City, 41.1a. 1
Florala, Ala.
1
First National Bank
First National Bank
DISTRICT NO. 7.
First National Bank
First National Bank
Steward, Ill.
Richmond, lach.
10
1
DISTRICT NO. O.
Farmers National Bank
Madisonville,
• DISTRICT' NO. 11.
First National Bank
First National Bank
Citizens National Bank
First National Bank
First National Bank
Nogales, Ariz.
15
Wichita Falls, To—.105
6
Brownwood, Tex.
Robert Lee, Tex.
1
Ft. Stockton, Tex.
1
DISTRICT NO. 7.
First National Bank
.
Rembrandt, Iowa.
15
797
Shares.
DISTRICT NO. i.
, First National Bank
First National Bank
Hemet, Cal.
St. 1%:aries, Idaho
15
17
On motion the Collowing applications for the
surrender of capital stock in Federal reserve banks,
duly recommended by Mr. Harding, were approved as follows:
Shares.
DISTRICT NO. 4.
First National Bank
First National Bank
Belpre. Ohio.
Scenery Hill, Pa.
17
6
Oshkosh, Nebr.
16
DISTRICT NO. 10.
First National Bank
A letter from 1.1r. G. H. Lemon, regarding
cotton loans, was read to the Board, noted and ordered
filed.
A letter from the Federal Reserve Bank of
Philadelphia relative to certain (luestions as to reserves, bond conversions, and terms of office of directors, was read and, on motion, referred to Counsel
for opinion.
A letter from the Federal Reserve Bank of
Atlanta relating to rediscounts on behalf of the Hibernia Bank and Trust Company, was referred to Mr.
798
Harding for report.
A letter from Federal Reserve Agent Wellborn, relative to the appointment of associate counsel of the New Orleans Branch, was on motion, referred
to nr. Harding.
The Secretary of the Board presented a letter
from the Comptroller of the Currency informing the
Board of the present status with regard to supplying
portions of the reports of bank examiners to the member
banks examined.
The letter of the Comptroller was
noted and ordered filed.
The Secretary of the Board presented a suggestion from the Comptroller of the Currency that Federal Reserve Agent Bosworth be requested to investigate
the questions raised in certain correspondence relating
to the paper of Armour & Company by sending for the
writer of the letter in which the charges referred to
were made.
The Board agreed to the proposal, and the
Secretary was directed to communicate with Mr. Bosworth
accordingly.
On motion at 12 noon the Board adjourned to
meet on Tuesday, September 28, at 11:00 a. m.
,,Aittvretf,
Secretary.
AaROVED.
Chairman.
@FedFRASER