Full text of Charles S. Hamlin Papers : 205.001 - Hamlin Charles S, Scrap Book - Volume 164 FRBoard Members, Box 360, Folder 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

The Papers of Charles Hamlin (mss24661)
360 01 001-




—1 Hamlin, Charles S., Scrap Book — Volume 164, FRBoard Members




205.001 - Hamlin Charles S
Scrap Book - Volume 164
FRBoqrd Members

CONFIDENTIAL

Form r. R. 131

BOARD OF GOVERNORS
OF THE

•

FEDERAL RESERVE SYSTEM

Office Corregoondence
To
From

The Files

Date June 27, 1941
Subject:

Mr. Coe

After correspondence with Mrs. Hamlin (see letters of May
25 and June 4, 1941) the items attached hereto and listed below, because of their possible confidential character, were taken from Volume 164 of Mr. Hamlin's scrap book and placed in the Board's files:
VOLUME 164
PaFe 81
Memo to Mr. Platt from Mr. Wyatt in re J.A. McCrary.
Page 104
Comparison Between the New York Reserve Bank and Chicago Federal
Reserve Bank with Selected European Central Banks - March 31,
1926.
Page 109
Memo re capital and surplus and total resources of certain central
banks.
PaFe 117
Memo to Mr. Hamlin from Mr. Goldenweiser re Federal Reserve Developments.
Page 145
Earnings & Expenses of F.R. Banks.
Pape 149
Data showing that the Sole Havana Agency of the Federal Reserve
System Should be Attached to the Federal Reserve Bank of
Atlanta.




64(

Fiirn
;
— -.
1sTo. 131.

Office Corresportence
To _

Mr. Platt

From

Mr. Wyatt

FEDERAL RESERVE
BOARD

Date
Subject:

In re J.

Oct.12,1926
McCrary.

In accordance with your request, I have prenared and respectfully
submit herewith a history of the Board's procedure in the above mat ter and also a digest of the information dbtained by the Board in this
cS nnection.
HISTORY OF THE BOARD'S PROCEEDINGS.
At the meeting of the Board on December 5, 1924, Yr. Buchanan
informed the Board verbaily of certain statements made to him by an
Atlanta banker, reiative to a recent election of Class "A" and "B"
directors of the Atlanta bank, and concerning also the alleged un ethical practices indulged in by Mr. J.A. McCrary, one of the directors
of the bank, in the nPtter of obtaining bank credit. The Board
cussed the matter in same detail and adopted the following resolution:
rhereas statements have from time to time come to the
Board reflecting upon conditions at the Federal Reserve Bank
of Atianta, the Board directs its Committee on Dist
tric No.
6 to investigate conditions at the Atlanta Bank, incurring
any necessary cxpenses for that purpose, in order to ascertain whether or not there is any foundation for the state ments, and to recommend to the Board what, if any, action is
necessary in the premises."
The Atlanta Committee, Eessrs. James and Hamlin, discussed the
matter with other members of the Board and decided to ask the Department
of Justice to conftct an investiEation with a view of substantiating
or disproving the allegations.
Mr. Cunningham, of the repartment of Justice, called on ressrs.
Jpmes and Hamlin and was given in detail such information as had come
before the Board. Through him, the Department of Justice was reouested
to conduct the investigation, and the Committee repeatedly impressed upon Er. Cunningham the necessity that the 1i)'LII
be conducted with
absolutely no publicity whatsoever, and in such a manner that the name
of Er. EcCrary wouid not be disciosed to anyone other than officials of
the Department of Justice or its representatives. Er. Cunningham stated
that these precautions insisted upon by the committee might make it
difficult to conduct the investigation.
The Department of Justice undertook the investigation, through
one of its representatives in the Sixth Federal Reserve District, 7.rho
after several weeks made a lengthy report on the cpse, which Mr. Ramsey,
of the Department of Justice, permitted Er. Eddy to read aloud in his
office to Messrs. James, Hamiin, and Herson. A cony of this report
was not fiied with the Board at that time, because the Department of
Justice operative had not produced conclusive evidence either Proving

411111,11....1,
1111S7.0 1.4:1J




Volume 164
Page 81

-2-

or disproving the alleged conduct of l!r. McCrary.
It is Mr. Eddy's recollection that Mr. Ramsey, Mr. Cunningham
and the operative all suggested that it would be futiie to continue the
investigation along the lines iaid down by the committee, and that in order to proceed it would be necessary for the committee to lift the re strictions placed upon them with respect to the use of Mr. McCrary's
name. The committee decided that the investigation should be suspended
for the time being, and the investigation was not resumed until July, 1926.
From this point on, the record of the McCrary investi2ation
may be traced in the Board's minutes which, omitting formai and irreievant matter, may be summarized as follows:
Board MeetinR ::ay 20, i926.Governor Crissinger referred to the special order for this
morning's meeting and in reviering the situation leading thereto stated
that on or about April 28,1926, certain rumors, criticisms and charges of
misconduct refiecting upon the character of service rendered by the Havana
14:ency of the Federal Reserve Bank of Atlanta in Cuba, which occurred on
or about April 10th, came to the attention of the Federal Reserve Board,
and that under date of May ist the Board adopted the following resolution:
"RESOLVED: That Mr. James be authorized and directed
to proceed go Havana, Cliba, to investigate the recent run
on American and other banks in Havana and other parts of
Cuba, and to report on the same, including the assistance
rendered by the Federal Reserve Banks of Boston and At lanta, through their respective agencies in Havana in
meeting the situation and all circumstances connected
with the shipment of currency by the :Federal Reserve
System to Havana.
"And for this purpose Messrs. Herson and Tyatt are detailed to accompany Mr.James and assist in the investigation.
"Authority is hereby given for the emnloyment of
clerical, stenographic or legal aid in Cuba shuuld such
employment be deemed necessary."
1:r. James on behalf of himself, 1:r. Herson and Mr. Tyatt (hereafter referred to as the Special Committee) reported that pursuant to the
above resoiution the Committee had proceeded to Havana and made the investigation directed. He presented formaily a detailed report of the
proceedings of the Committee in Cuba and a memorandum setting forth
their findings of fact as to the charges regarding the Atlanta agency,
cSpies of which had been furnished to the individual members of the
Board in advance of today's meeting.
These documents having been formally received by the Board,
Mr. James suggested that the procedure at this meetinc should be to con-




sider the formal recommendations as set forth in a memorandum addressed
to the Board by the Special Committee under date of May 18,1926, the
first of which reads as follows:
"1. That Mr. Joseph L. Campb-11, Deputy Governor
of the Federal Reserve Bank of Atlanta, be eliminated
from the Federal Reserve System."

Mr. James in discussing this recommendation with the Board stated
that while Yr. Campbell was in charge of and responsible for the party
of employees of the 7ederal Reserve Bank of Atlanta which accompanied
the shipment of currency made by that bank to Havana on April 10th,
Mr. J.A.McCrary, a Class "B" Director of the bank, was also a member
of the party. He stated that so far as he could see the only reason
for Mr. McCrary accompanying the party would have been as a representative of the Board of Directors of the Federal Reserve Bank of
Atlanta. In vier of the occurrences in connection with the shipment
of currency, Mr. James stated that the Special Committee was prepared,
if the Board believed it desirable, to amend its first recommendation
so as to make it provide that Mr.McCrary also be eliminated from the
System.
Following Mt. James' presentation,Mr. Hamlin moved that the Committee's first recommendation, as ouoted above, be temporarily laid on
the table until he had an opportunity of offering other motions.
This motion, being nut by the Chair, was lost, Messrs.
Platt and Hamling voting "aye".
Mr. McIntosh then moved that the Committee's first recommendation
be approved.
Carried, Mr. Hamlin voting "no".
Mr. McIntosh then moved that the conduct of Director McCrary be
investigated by the Special Committee with a vier of determining whether or not he also should be eliminated from the Federal Reserve System
Unanimously carried.
Further discussion then ensued during which certain members of the
Board expressed the opinion that inasmuch as the Federal Reserve Bonk of
Atlanta has not yet been consulted with regard to the subject of the
Special Committee's investigation, the bank should be given an opportunity to present any pertinent facts in its possession.
Mr. Hamlin moved that a complete report be caned for from the
Federal Reserve Bank of Atlanta covering the whole transaction of that
Bank in connection with the movement of currency to its Havana Agency
on Anrii 10th, including all instructions given to the Party which accompanied the currency shipment and the peraonal conduct of the members
of the party.




Unanimously carried.

Mr. Hamlin then moved that Mr. James personally communicate
the actions of the Board to the Federal Reserve Bank of Atlanta and to
.•the individuals concerned.
Carried, Mr. James not voting.

Thereupon, at one o'clock the Board recessed.
At 2:45 p.m. the Board reconvened, the same members and of ficers being present as attended the morning session.

Mr. James then referred to the action taken by the Board this
morning in reouesting him to personally communicate the Board's actions
to the Federal Reserve Bank of Atlanta and the officials concerned, and
he stated that he felt the motion should be nended so as to include
both members of the Board's Committee on the Atlanta District - himself
and Mr. Hamlin.

one and
session
Bank of
members

Mr. Cunningham stated that he felt the suggestion was a good
thereupon moved that the actions by the Board at the morning
of this meeting be communicated nersonaily to the Federal Reserve
Atlanta and the officials concerned by Yr. James and Mr. Hamlin,
of the Committee on District 46.

Mr. Hamlin thereupon stated that he felt a sense of delicacy
in the matter of dealing directly with the Atlanta bank, in view of the
fact that he is a resident of the Boston District and it appears, from
statements made during the discussion of the proposal to consolidate the
two agencies, that there is some conflict between the Boston and Atlanta
banks as to which should operate an agency in Cuba if the two existing
agencies are consolidated. He also stated he felt that Yr. James was
Perhaps better qualified to pursue the matter in view of his having
been chosen by the Board to investigate the circumstances in connection
with the recent shipment of currency to Cuba from the Federal Reserve
Bank of Atlanta.
Mr. James stated that under the circumstances referred to
by Mr. Hamiin he was prepared to go through with the matter in his
capacity as a committee of one appointed by the Board to investigate
and report on the activities of the Cuban agencies in connection with
the recent banking disturbance in Cuba and as a member of the Committee
on District +6.
In view of Mr. James' statement, the Chair did not call for
a vote on Mr. Cunningham's motion.




•

At Board Meeting, June 30, 1926."MAmorandum from Mr. James dated June 5th, as follows:

I

'In accordance with the action of the Board taken on May
20th in voting 'That the conduct of Mr. McCrary be investigated
by a special committee with a view to determining
whether or not he also should be eliminated from the
Federal Reserve System",
I beg to submit this as my report covering the result of n7 investigation.

1(1) Mr. McCrary accompanied the party headed by Deputy
Governor Campbell which on April 10, 1926, accompanied a special shipment
of a very large sum of money from the Federal Reserve Bank of Atlanta to
Havana, Cuba, of his awn volition and not at the reouest or suggestion of
any officer of the Federal Reserve Bank of Atlanta.
1(2) Mr. McCrary took with him on the trip a friend or business associate without any authority whatsoever and over the protest of Mr.
Creed Taylor, Deputy Governor of the Bank, and against the wishes of Governor Wellborn and Deputy Governor Campbell. (See letter from Deputy Governor
Creed Taylor marked :xhibit "C" in my report of June 2).
1(3) Mr. McCrary was aware of the fact that the officers of the
Cuban Gunboat at Key West protested against a large party going aboard the
boat and that objections had been raised to the party going on the trip
from Key West to Havana, but he (Mr. McCrary) made no effort to prevent
this party going aboard the Gunboat but on the contrary he and his guest
did go on the Gunboat and did make the trip to Cuba.
'Mr. McCrary admitted in my presence that he knew there was
some drinking done by members of the Atlanta party while on the Cuban Gunboat, and also admitted that he himself had participated in this drinking.
f
He further admitted that he had made no efforts to prevent the drinking.
1(4) Mr. McCrary contributed nothing whatsoever to the services rendered by the Atlanta Bank in conveying the shipment of currency
to Havana and apparently there was no reason whatsoever for his going
other than that he wanted to make the trip. It is, therefore, a question
in my mind whether he was actuated by the desire to take a joy ride or
to share in the glory that might accrue to those officials connected
with the enterprise, or to further his own business interests by using
this opportunity to make the trip without exrense to himself.
1(5) From time to time during the past three years there has
come to my attention in r more or less confidential way certain rumors
i that Yr. EcCrary was using his nositionas a Director in the Atlanta Bank
-1 for furthering his awn personal interests, especially in a business way;
that he had let it be known rather generally among a large number of
the member banks in the Sixth District that he was a Director and. as such




-.5-

was also a member of the Executive Committee of the Atlanta Bank which
passed on such paper as was sent to the Atlanta Bank for rediscount or as
collateral to loans, and that consequently he was in a position where his
influence could count very materially one way or the other in the relationship of the member banks with the Federal. Reserve Bank of Atlanta.
'In this connection, I desire to call attention to the memorandum
dated - June 5th to me from Mr. Eddy which is in reference to action taken
by the Board on December 5, 1924, which action resuated in the Department of
Justice making an investigation of Yr. McCrary's activities. This memorandum
is attached hereto and marked Exhibit IA".
1(6) As a result of the gossip which I heard regarding Er. McCrary
and his using his position for his own personal advantage, and which was to
the effect that Mr. McCrary made quite a nice little salary by his attendance at the bank each day, I made some inquiries along this line, par ticuaarly with reference to the Executive Committee meetings and I had
Mr. T.S. Johns, General Auditor of the Atlanta Bank, prepare for me statements showing the amount of money drawn from the bank by each of the
Directors of the Atlanta Bank for the years 1924 and 1925. This report
from Lr. Jonns I have submitted with my report to the Federal Reserve
Board on June 2nd and is marked Exhibit "C" to that report.
'The report in question shows that Mr. ::.cCrary's fees were greatly
in excess of the fees paid to other directors of the Atlanta bank, - the
payments to him exceeding those of any other director in an amount in excess of 1.,000 in 1924 and more than 1.,100 in 1925.
had Yr. 7ard Albertson furnish me extracts from the by-laws of
the Federal Reserve Bank of Atlanta covering the authority for the Executive Committee of that bank and am attaching hereto his letter and
memorandum, marked
ibit "E".
'It appears that Mr. YcCrary's attendance at the :Executive Cam mittee meetings of the ban:: continuously is without authority of the bylaws and this, to my mind, is conclusive evidence that there is justification in the idea that
McCrary has used his office for his own
financial benefit.
might say also that I was advised by one of the officers in
the Atlanta Bank that it was customary for tne officers of the bank to
pay $6.00 per month for their luncheons served in the cafeteria of the
bank, which made the cost of the luncheons approximately twenty-five
cents per meal, and that Mr. McCrary made this contribution of $6.00
and that he took his luncheon in the bank practically every day accordingly.
'While I am not sure in my cr7n mind that the information I have
gained is sufficiently conclusive to warrant the Board's acting to remove
Mr.McCrary as a Director of the Federal Reserve Bank of Atlanta, I am myself convinced that he lacks many of the auaiifications which I deem requisite and necessary for a director or an officer of a Federal Reserve
Bank.
recommend, therefore, that each member of the Board review
carefully my report of June 2nd and the exhibits thereto, and also this
report with EXhibits "A" and "3" hereto attached, and that then the matter




-7-

be discussed in open Board meeting and the conclusion reached as to what
would be proper action on the part of the Board with reference to nr.
McCrary and his activities.
Respectfully submitted,
(S) Geo. R. James
6/16. See letter this date from Mr. Newton with reference to the action
of Mr. McCrary on June 7th, 1926 in returning to the bank as !Tart of advance to J.L. Campbell, Deputy Governor, 4-14-26, by Havana Agency of
*36.13.! Said letter and auditor's statement handed Mr. Wyatt on June
17th to be put with. Campbell file.




(S) G.R.J."
In this connection, Mr. James referred to the action of the
Board at its meeting on December 5th, 1924 in adopting the
following resolution - 'Whereas statements have from time to
time come to the Board reflecting upon conditions at the redee
era' Reserve Bank of Atlanta, the Board directs its Committ
-ank,
'
Atlanta
on District 46 to investigate conditions at the
incurring any necessary expense for that purpose, in order
to ascertain whether or not there is any foundation for the
statements, and to recommend to the Board what, if any, action
is necessary in the premises.'
He stated that pursuant to the above resolution the
Committee had ca-used, through the Department of Justice, an
investigation to be made concerning certain alleged unethical
practices indulged in by Director McCrary in the matter of
obtaining bank credit and other matters. The investigators,
he stated, had been handicapped through the Board's informal
decision not to permit the use of Mr. ncCrary's name in connection with their investigations and that finally the investi
gation had been suspended.
He expressed the opinion that the matter should be
'reopened and moved that the Board reouest the Department of
ion
Justice to proceed with all authority and with full permiss
of the Board to complete the investigation regarding Mr.
Mc Clary.
Mr. James' motion being put by the Chair
was unanimously carried.
Mr. James then moved that a snecial meeting of the
Board be held tomorrow morning at 10:00 o'clock to read
the Board's past records with reference to Mr. McCrary.
Unanimously carried."

-8

•

At Board Meeting, July 1, 1926.The Governor stated that the regular order of business would be
dispensed with, and in accordance with the action taken at yesterday's
meeting the record with respect to the allegations made concerning the
conduct of Mr. J. A. McCrary, one of the directors of the Federal Reserve Bank of Atianta, would be read to the Board.
Thereupon, the Secretary read the following documents:
Minutes of a special meeting of the Federal Reserve
Board held on December 5, 1924.
Memorandum prenared by the Secretary and addressed
to Yr. James, under date of June 5-,7 1926, setting forth
the status of an investigation conducted by the Department of Justice early in 1925, at the request of the
Federal Reserve Board and upon recommendation of the
Board's Committee on District No. 6.
Ercernts from the minutes of a meeting of the Board
held on May 20, 1926, authorizing an investigation into
the conduct of Director McCrary by the Committee which
investigated the matter of the shipment of currency to
Cuba on April 10th, the investigation to be conducted
with a view of determining whether or not Mr. McCrary
should be eliminated from the Federal Reserve System.
Report dated June 5, 1926, submitted. by Mr. James,
who constituted the special committee referred to in
the previous paragraph, and certain exhibits attached
thereto.
Following discussion of the contents of the above documents
the Secretary was instructed to request Yr. Cunningham of the Bureau
of Investigation, Department of Justice, to come before the Board
and advise it of the facts, if any, developed as a result of the
investigation conducted by the Department into allegations concerning the official conduct of Director McCrary. Mr. Cunningham then
entered the meeting and handed to the Secretary a report dated January 6, 1925, signed by J. M. Tower, Agent in Charge of the Investigation, which report the Secretary read to the Board.
Mr. Cunningham was advised by the Governor of the Board's
action at its meeting on Yesterday in voting to request the Department to resume its investigation into the conduct of Yr. J.A.
McCrary, and Mr. Cunningham suggested that 2 letter making formal
reouest be addressed by the Board to the Attorney General.




4

-9-

Thereupon, the Secretary was instructed to prepare
such a letter for submission to the Board at its meeting
tomorrow.
The Secretary was instructed to communicate with the
Board's Chief Examiner, who is now on examination of the
Federal Reserve Bank of New York, and request that he be in
7ashington tomorrow morning and sit with the Board during
its discussion of the advisability of undertaking an exnmination of the Federal Reserve Bank of Atisnta at this
time, which question the members of the Board voted should
be made special order of business for tomorrow's meeting.
At Board Meeting, July 2, 1926.The Governor stated that the meeting had been called in accordance
with the action' taken at the meeting yesterday, to discuss with the Board's
Chief Examiner who had been summoned from New York, the question of the advisability of undertaking an examination of the Federal Reserve Bank of Atlanta
at this time. Yr. Herson arlvised the Board that he was prepared to begin an
examination of the Federal Reserve Bank of Atlanta one week:from tomorrowSaturday, July 10th.
Mr. Cunningham, of the Bureau of Investigation,
Department of Justice, then suggested to the Board that
the Board's Examiners be assisted by two representatives
of the Department of Justice, one an accountant, to be commissioned by the Board as an Assistant Examiner and to work
with the Board's Examiners inside the bank, and the other
a regular operative of the Department who would be detailed
to investigate on the outside.
After discussion, Mr. James moved that the Board
approve the suggestion made by Yr. Cunningham.
Unanimously carried.
The Secretary then read to the Board the following draft of
a letter to the Attorney General, prepared in accordance with action
taken at the meeting yesterday:




"Sir:
Under date of December 6, 1924, the Federal Reserve
Board addressed a communication to you requesting the cooperation of the Bureau of Investigation of your Department, in connection with a proposed investigation to be
made by the Board into certain allegations reflecting
upon the integrity and official conduct of certain members
of the Board of Directors of the Federal Reserve Bank of

Atlanta.
After several conferences with Y.r. Cunningham
of the Bureau of Investigation of the Depnrtment of
Justice, an investigation of the allegations referred to
was undertal:en by that buref,u, with certain limitations
imposed by the Federal Reserve 7oard which made it im possible definitely to establish the truth or untruth of
such allegations. Upon report to this effect to the Federal Reserve Board, the investigation was temporarily
suspended.
Recently certain additionaa information has
come before the Board reflec'ing upon the official conduct of J. A. McCrary, one of the directors of the Federal Reserve Bank of Atlanta, and the Board has decided
to request the Department of Justice to resume the in vestigation its arn manner without the Board imposing
upon the Department any restriction as to hor it shall
proceed.
Respectfully,

r. R. Crissinger,
Governor."
The honorable,
The Attorney General,
Washington, r. c. u
Upon motion, the above letter was umanimously approved.

Yeetinp, of Executive Committee, July 14, 1926. Letter dated July eth from the Assistant 4..ttorney General advising that there has been referred to the Bureau of Investigation
of the Department of Justice for annroprinte action at the earliest
possible date the Board's letter of July 1st, requestints resuuption
of the investigation undertaken by the Department in December, 1924,
at the requ'est of the Board, of certain alleged activities of nr.
J.A. McCrary, one of the directors of the 'Federal Reserve Bank of
Atlenta.




Noted.

J




Board LleetinE, Aucust 23, 1926. Letter dated August 18th from the Assistant Attorney
General, transmittinE copy of report made by Mr. Howard T. Rank,
special accountant in the Department of Justice, who was temporarily designated an assistant Fxaminer of the Federal Re serve Board to assist in the recent examination of the Federal Reserve Bank of Atlanta, and reports by rr. P. L. Shivers,
a Snecial Agent in the department.
Ordered circulated.

Board Meeting, October 7, 1926.Mr. James then moved that there be made special
order for a meeting to beheld on Tuesday, October 19th, the
matter of action to be taken by the Board in the case of Yr.
J. A. 11cOrary, director of the Federal Reserve Bank of Atlanta.
Carried.

-12•

•

DIGEST OF INFORMATION.
The following is a digest of the information in the Board's files
pertainin7, to Mr. McCrary. Owing to the fact that the Board's record on this
subject is very voluminous and I hi-ole had to prepare this memorandum very
hastily, I cannot vouch for its absolute accuracy or completeness; but I believe that it will give you a good general idea of the case againit McCrary.
The Buchanan Report.The earliest document in the Board's files specifically criticizing
Mr. McCrary, appears to be an unsigned memorandum addressed by Mr. Buchanan
to Ur. James under date of December 6, 1924, Wherein Mr. Buchanan relates
the substance of certain confidential information imparted to him by Mr. R. E.
Harvey, Vice President of the Atlanta Trust Company, Atlanta, Georgia. This,
apparently-i is the substance of the information reported orally to the Board
It reads as follows:
by Mr. Buchanan at a meeting on December 5, 1924.
"In accordance with your request, there is respectfully submitted
herewith the substance of confidential information imparted by Mr.
R. E. Harvey, Vice President of the Atlanta Trust Company, Atlanta, Ga.,
concerning the recent election of a Class B Director of the Federal Reserve Bank of Atlanta and the conduct of Director :iIcCrary, the successful
contestant, during his past term of office.
"It via stated that prior to the election the unsuccessful Florida
candidate, opposing Mr. J. A. McCrary for reelection as Class 3 Director
of the Federal Reserve Bank of Atlanta, had a sufficient number of
pledged votes to assure him of choice. His defeat was attributed to
the fact that prior to the closing of the polls it became known how
certain banks had voted and that this information was used to whip into
line a sufficient number of votes to elect Mr. McCrary. The leak was
thought to have coma from the office of the Chairman of the Federal Reserve Bank of Atlanta, who, it was said, opened each ballot on the date
of receipt under the pretext that if any irremilarities in the farm of
the ballot appeared, correction could be made immediLtely by the voting
bank.
"Relative to the conduct of Director 'McCrary, it was stated that
he was using his influence as director of the Federal Reserve Bank of
Atlanta and as member of the Discount Committee for obtaining personal
credit, permitting loans to run past due in member banks, and furthering
the interests of the J. B. ncCrary Contracting Co., of Decatur, Ga., of
which company he is En active oartner.




Preliminery Investintion by Department of Justice in 194.No written report of the preliminary investiation made by the
Department of Justice in 1924 has ever been filed with the Federal Reserve Board and therefore it is impossible to sumnarize that report in
this memorandum. It may be said, however, that the report tended to
su-onort in a generrl way the informntion received by Mr. Buchanan;but the Department of Justice was unable to obtain information sufficiently specific or complete to enable it to prove rny of the allegations contained in Mr. Buchanan's report.

Depa,rtment of Justice Report

August 18, 1926.-

Under date of August 18th the Department of Justice gubmitted
P report of its investigation which was commenced on Jvly 10, 1926,
in connection with the examination of the Federal Reserve 2ank of Atlanta -cy the Board's examiners which commenced on that date. In order
to realize the full purport of this report it is necessnry to read
such information in the report
the report, but I shall summarize
as pertnins specifically to Mr. McCrary.

Improper Use of Office.-

Ii

The summary of the report of investigation submitted by the
Department of Justice under date of August 10, 1926, states thnt no information WPS secured through intervigss with competing firms of the
in J. B. McCrary Contracting Company to furnish a lead for further
to
position
his
using
in
s
vestigation concerning McCrary's activitie
further the interests of the J.B. McCrary Comonny.
The following information which a-opears in Mr. Rank's detaiied report, however, wouid seem to furnish valuable leads which
ou,ght to be foilowed out:
The Citizens State Bank of Mariannn, rloridn, is one of the
bnnks gupposed to have been approached by Mr. J. L. McCrary in an
for
effort to have it take some bonds presumabiy received by McCrnry
of
books
the
of
on
examinati
work done by his contracting firm. An
shows
the Executive Committee of the Federal 2eserve Bank of Atlanta
Committee
Executive
that on September 17, i923, at a meeting of the
for
at whdch McCrary was present an offering of paper of this bank
21,
September
rediscount aggregatin,:: ,:;5,085 was declined, and that on
not
was
McCrary
- of the Executive Committee at which
1923, at a meetin,.;
October
between
present, the same offering VIPS accepted. Some time
City of Mnri4;2,566
ncouired
bank
this
1924,
I, 1923, and March 27,
of these certificates
anna Paving Loan Cercntes, and still held some
were acoudred from
as late as November lS, 1925. Whether or not they




•
McCrary or his contracting firm will have to be ascertained by interviewing
J. A. Ormond, Cashier of the Marianna Bank. (Rank's report, page 31. NOTE: It
would seem that the investigator should have interviewed the Cashier of
the Marianna Bank.)
The First National Bank of Leesburg, Florida, is another one
of the banks supposed to have been approached by McCrary in an effort to
have it take some bonds presumably received by McCrary for work done by
his contracting firm. The records of the Federal Reserve Bank of Atianta
show that this bank was indebted to the Federal Reserve Bank from January 22, 1923 to March 26, 1923, and from November 12, 1923 to November
26, 1923, and that no offerings of this bank were declined. G. G. Ware,
President of the First National Bank of Leesburg is now a director of the
Federal Reserve Bank of Atlanta. The reports of examination of the
First National Bank of Leesburg show that on various dates this bank held
considerable amounts of municipal, improvement and good road bonds.
Whether or not any of these were obtained from or through McCrary wiil
have to be ascertained from the Leesburg Bank. (Rank's report page 32.
NOTE: It would seem that this lead should be followed un by ascertaining
from the Leesburg Bank whether any of these bonds were acquired from
McCrary.)
The following is an extract of the minutes of the Executive
Committee meeting of the Federal Reserve Bank of Atlanta, February 2,
1924, attended by Governor Wellborn, Deputy Governor Joseph I. Campbell
and Creed Taylor, Federal Reserve Agent J.A. McCord, and directors
J.A. McCrary and P. R. Kittels:
"In re Citizens First National Bank of Albany,Georgia.
This bank had up for consideration the purchase of municipal
warrants of $48,000 to enable them to handle City of Albany
deposit accounts, and after full consideration, on motion
of Mr. McCord, seconded by Mr. McCrary, the Committee voted
to purchase these warrants if and when submitted, provided
same met the rule of eligibility PS laid down by the Federal
Reserve Board and was accompanied by Counsel's opinion showing same to be the legal obligations of the City of Albany;
also if the Federal Reserve Board approves the purchase, it
being in excess of the limit which we are authorized to purchase without the approval of the Board. This action by the
Committee was for the purpose of aiming to save the bank, on
account of existing emergency."
(NOTE: The last sentence was added to the minutes
with pen and ink) (Rank's report, rage 3).
of AlC5ERY: Were the McCrarys doing any construction work for the City
bany at this time?
The following is an extract from minutes of the Executive
Atlanta.
Committee meeting of Jul7 1, 1924, Federal Reserve Bank of
J.A.
Governor,
Deputy
Taylor,
Present: M. B. Wellborn, Governor, Creed
ReFederal
Assistant
McCord, Federal Reserve Agent, Ward Albertson,




-15-

serve Agent, Directors J. A. McCrary and L. Hopkins.
"In re Bank of Ilberton, Elberton, Georgia. Mr. Bates,
Cashier, appeared before the Committee and discussed an increase in their line based on the action of the Committee on the
26th of June. He went into details concerning their affairs and
stated that they would reoulre $50,000 to carry them through the
summer as R result of a pavin,::: proram which would brirv; about
withdrawals from his bank; also a new hotel and. ordinary withdrawals. Their account was discussed at length in view of his excessive outside borrowings and the condition of their loans as indicated by their last report of examination. The committee called.
:jr. Bates' attention to these unsatisfactory features and particularly impressed him with the fact that in its opinion R well
managed bank did not borrow in excessive amounts. Yr. Bates indicated that they had been under a misapprehension with reference
to the extension of credit by Federal reserve banks and its
members and in view of this fact and the fact that this bank
borrowed up to $50,000 last year, on motion of r. McCrary,
the Committee voted to extend them, on satisfactory paper a
limit of $50,000 on paners other than United States Government
and commodity secured this year provided they furnish us with
$25,000 as additional collateral to their general credit, indicting that while they were doing this under the circumstances as
outlined actuaiiy their preference is not to loan them anything."
(Rank:Report, pages 4 and 5).

McCrary Notes in Federal Reserve Bank._
un page 38 of his report Mr. Rank lists the foilawing:
Note of J. 3. McCrary Engineering Company for $2500 dated
June 15, 1926, due August 15, 1925, payable to order of
Commercial Bank and Trust Comnany, Miami, Florida, en dorsed by J. A. McCrary and J. B. McCrary.
1Tote for $8500, dated Tampa, Florida, June 14, 1926,
due sixty days after date, payable to •National City Bank
of Tampa, Florida, signed by McCrary Building Supply Company, and endorsed by M. F. Lucas and H. F. McCrary.
(Rank did not know whether J.A. :'cCrery is interested in
this concern.)

Purchase of Lot for Bank: Building.Rank's report contain the
Pages 33 to 37(a), inclusive of
subject.
It quotes correspondence
on
the
above
information
principal




- 16-

in the fiies of the Federal 7eserve Bank from whicr. it appears that:
J.A. McCrary and L. F. Hillyer, Directors of the Federal
Reserve Bank of Atlarytn, were appointed a committee to negotiate with
the trustees of the First Presbyterian Church for the purchase of the
church property.
2. October 13, 1916, McCrary alone addressed a letter to
Paul S. Vose offering him $100,000 for an approved deed to the church
property.
3. A counter offer to sell the property for $102,500, signed
Sy 7.T. iTewman, Chairman of the Board of Trustees and attested by Paul
L. Fleming, Secretary of the Board. of Trustees, was addressed to nr.
McCrary and written on the same letter head as the above.
4. This offer was accepted in a letter dated October 14
which was addressed to Newman, Chairman of the Board of Trustees, and
signed as foilows:
"L.P. Hillyer
(By J. A. ncCrary,
(Director, Federal Reserve Bank of 2-Alanta.
Comittee
(,T.A. McCrary,
(Directorjederal Reserve Tank of Atienta."
5. This ietter Wpz approved by M.B. Tellborn, Chairman of
the Board Sf Directors, Joseph Y. rcCord, Governor and Chairman of the
Executive Committee and E,A. Brown, nember of the Txecutive Committee.
6. The deed executed by the church in conveying this
property to the Federal Reserve Bank has set forth for consideration
$102,500. It was signed by seven truntees of the church and apparently Vose WpS not a trustee.

(

From otner information obtained by the Department of Justice,
it further appears that a commission of $2,500 paid for the sale of
this property was split 60-40 between Vose and the Empire Trust Company, Vose receiving 81,500 as his share of the commission. It nlso
appears that Vose and J.3. McCrary (brother of J.A. McCrary) were
brothere-in-law having married sisters of Clifford Talker, Governor
of Georgia, and that because of this relationship the McCrarys
were anxious to do something for Vose, since ne had very ilttle
money. It also appears that the church desired $100,000 net for the
property, and the amount received above that was to go as a coirlinission
on the sale.




Fees for Attendinp; Pxecutive Committee.Attached to Er. Jrmest report of June 5, 1926, which is ouoted
in full in the minutes of the Board meeting of thine 30, 1925 (bee above,
page 5) are copies of certain records of the Federal Reserve Bank
of
Atlanta regarding the Fxecutive Committee from which it appears:

ii

1. That, during,
: the year 1924, Mr. McCrary had attended
232 rxecutive Committee meetings and for this alone had received fees
amountincwhereas no other director except Mr. Lindsey
Hopkins received fees amounting,
_; to more ti-nn 4:240 for attending Executive Committee meetings during the year 1924 and the fees received
by
Lindsey Hopkins amounted to only ,1,200.
2.
That, during the year 1925, Er. EcCrary attended 223
Fxecutive Committee meetings for which he received fees amounting to
2,210; whereas no other director except Yr. Lindsey Hopkins, received fees in excess of %60, and the fees received by Yr. Lindsey
Hopkins amounted to only 1,110.
3.
That the by-laws of the bank provide that the Fxecutive
Committee Shall consist of the Governor, the Federal Reserve Agent
and tuo directors to be elected at the monthly meeting of the Board
of Directors to serve untii the next regliiar meeting.
4. The records of the Federal Reserve Bank of Atlanta
show that Er. IcCrary was officially a member of the Executive Committee for only 94 days in 1924 and 104 dnys in 1925,includino Sundays and holidays.
The minutes of the Board of Directors of the Federal Reserve Bank
of Atlanta shou that, on the dates mentioned below, it wasvoted to appoint the Directors named to serve on the Executive Committee until the
next regular meeting of the Board:




Jnn.
924, Messrs. Simon
and Kitties
ft McCrary Feb. 8, 1924, n
Newton
Mar. 14,1924, .11
Enrtford n Kettig
n
n Hopkins
Apr.
924,
Newton
n
n
Mny 9, 1924,
ettiey
Simon
n Kitties June
924, n
::cCrary
July 11,1924, n
Hnrtford n Kettig
n
n Newton
Aug. 8, 1924,
Hopkins
n Kitties Sept.12,1924, n
!!cCrarit Simon
Oct. 10,i924, n
Ottley
n Hartford
Nov. 7, i924, n
Kettig
is
Dec. 12,1924, n
Hopkins
Kitties
If
Jan. 9, 1925, n
McCrary
flil_IlIlillIl
II
Feb. 13,1925, n
Black
McCoy
n Hsrtford
Mar. 13,1925, n
Kettig
If
Apr. 10,1925, I,
McCoy
Hopkins

-18-

1.!ay 12, 1925, :,,essrs. rittles and
It
II
June 12,1925,
Black
II
tr
July i0,1925,
Kettig
Aug. 14,1925, ..,
.1.,,o auorum.
Sept.li,1925, Messrs. Hopkins ri
11
Oct. 9, 1925,
McCrary it
it
II
Nov. 13,1925,
Black
n
Dec. 11,1925,
Hartford "
ft
Jan. 8, 1926,
Hopkins u
ii
Feb. 12,1926,
McCrary "
ii
rPr. 12,1.926,
Black
"

rcCrary ...
Simon
Hartford
rcCoy
Kitties Simon
Kettig
::elvin
Simon
Tare

7rom this it would appear that McCrary's official membership on
the Executive Committee may be summarized as follows:
He l'IAS NCT officially a member
From
Jan.
Lar.
July
Oct.
Feb.
k T
June
Nov.
LA

14,
li,
10,
13,
12,
13,

mo
1924
1924
1924
1924
i925
1925
1925

Feb. 8,
June 13,
Se-pt.-12,
Jan. 9,
May 12,
Oct. 9,
Feb. 12,

He 17AS officially a member
From

1924
1924
1924
1925
1925'
1925
1926

Feb. 8,
June 13,
Sept.-12,
Jan. 9,
May i2,
Oct. 9,
Feb. 12,

1924
1924
1924
1925
1925
1925
1926

To

Mar.
July
Oct.
Feb.
June
Nov.
nal'.

14,
11,
10,
13,
12,
13,
12,

1924
1924
1924
1925
1925
i925
1926

In other words, it appears that, including Saturdays, Sundays, and
holidays, he VIPS officially a member of the Executive Committee for oniy
94 days in i924 and 104 days in 1925.

Prrticipation in Hrvana Trip.It clearly anperrs from a preponderance of evidence that:
1. Although he had no duty to perform in connection with the matter,
Yr. McCrary accompanied the party headed by Deputy Governor Campbell which,
on April 10, 1926, transported a special shipment. of currency amounting to
$26,500,000 from the Federal Reserve Bank of Atlanta to Havana, Cuba.

t

2. Mr. McCrary todk with him, from Atlanta to Havana,ILone Mr.Lovine.
),
a personal friend and business associate who had no offici-,i connection
with the Federal Reserve Bank of Atlanta and no possible excuse for accompany this very deiicate mission.
3. Mr. McCrary was aware of the fact that at Key Test the officers
of the Cuban gunboat raised some objection to the entire party going on




•

-19-

board the boot for the trip from Key test to Havana; but Mr. McCrary made
no effort to prevent this and, on the contrary, he, and his friend, Yr.
Loving, both went on board the boat and made the trip to Havana, although
neither of them had any duties to perform in connection rith the trip.
4. Mr. McCrary himself participatcd with Mr. CampbeL in the
drinking which took place on board the Cuban gunboat and made no efforts
to prevent the drinking.
Comment: Although Mr. /cCrarylr/F,S not officially in
charge of the party he was Mr. Campbell's official superior;
and,having volunteered to accompany the shipment, cannot escape
responsibility for having at least connived at what took place
on the expedition.
The facts set out above are clearly proven by ample evidence,
including the following:
1. Mr. McCrary's own admissions made oraliy to Mr. James during
the interview with Mr. James at the Biitmore Hotel in Atlanta on Saturday, May 29, 1926.
2. Admiszions made by Yr. McCrary orally at a meeting of the
Board of Directors of the Federal Reserve Ban: of Atlanta on Mondoy,
May 31, 1926.
3. Letter addressed to Mr. Newton by Governor WelYborn under
date of June 4, 1926, making an official report of the Cuban shipment
in response to a request by the Federal Reserve Board.
4. Signed statement made by Mr. Cre-d Taylor in response to
certain questions propounded by Mr. James under date of June ist.
5. Signed statement submitted to the Board by Mr. Campbell
under date of June 13th.
6. Statements made to the rederol Reserve Board by Mr.
Campbell at the hearing on September 9, 1926.
The following is taken from a memorandum addressed to the
Board by Mr. James under date of June 2, 1926, entitled "Report of
Trip to Atlanta made by direction of the Board under date of May 21,
1926."




* * Mr. Campbell thereupon left the conference
and 1:r. McCrary was called over the 'phone and asked to
come to the hotel, which he did very promptly.
"When Mr. McCrary came into the room I read to him
the documents attached hereto marked Exhibit 'A' No. 1;
Exhibit 'A' No. 2, and Exhibit 'A' No. 3. I also told
him exactly what I had told. Governor Wellborn at the

-20-

"outset of the coaference, laying particular stress upon the fact
that in the matter of the second recommendation made by the Board's
Cuban Committee regarding the consolidation of the agencies that no
action had been talml but that after the adjournment of the meeting
and as the members of the Board were ieaving the room, one of the
members made the statement to me that he wouid not vote for piacinE
the agency under the consolidated arrangement with the Atlanta
Bank so iong as Governor '::e±lborn, Director ncCrary and nr. Campbeil were connected with the organization; that two other members of
the Board have indicrted a like position and have reiterated this
statement.

Ii

"nr. VcCrary appeared considerably embarrassed and almost
immediately began to explain his connection with the party making
the trip. He stated that he had Eone on the trir of his volition
and not at the solicitation or renust of any officer of the Atlanta bank. He stated further that he TPS in the Atlanta bank at
the time the matter of the Cuban emergency was under discussion and
plans were being formulated for the shipment by special train and
boat of a large amount of currency to Cuba, and that at the
same time he had under consideration plans for making a trip to
Cocoa, Florida, early the following week. He said that in the
course of the conference that was then going on he had mentioned
this and that Governor Wellborn had said 'Why not go darn on the
speciai train so far as Cocoa since it would entail no adonal
expense on the Atlanta oank and since the Atlanta bank had had
to pay for something like one hundred first class Passenger fares
in order to secure the specialreCrary then said that
when he left Atlanta with the prrty it wrs his intention of
goinE to and only as far as Cocoa, Florida, but that on the way
down he had changed his mind and had decided to go on to Key
Test.
"At this point, I called the attention of Governor Tellborn
Crary to the fact that there were no charges of any kind
and nr.
upon
pending before the Federal Reserve Board either feflecting
to
bringing
was
I
that
them;
them or in connection with either of
the
of
members
the
of
their attention the statement made by one
under the
Board that he would not vote for placing the agency
as Goverlong
so
consoiidated arrangement with the Atlanta bank
connected
nor Wellborn, Director IcCrary and nr. Campbell were
had
with the organization, and that *other members of the Board
in the
indicated a like position - simpiy because I felt that
duty in
o-r
feeling
win
my
of
aut
and
interest of the Atlanta Bank
said
14cCrary
nr.
n.
situatio
the
of
I shauid tell them
the VI
so
do
would
and
writing
in
that he desired to make a statement
afternoon, or,
and that he would give me the statement that
me before my
given
be
to
time
if it could not be prepared in
Washington."
in
me
to
statement
train left, he would mail the




•

-21-

•

(The following relates to what transpired at a special
meeting of the board of directors of the Federal Reserve Bank of Atlanta
held on May 3ist, which was attended by Er. James.

This is also quoted

from Mr. Jamest memorandum of June 2nd.)
"At this juncture, Mr. IcCrary arose and said that
he desired to present a formal statement of his connection with
the entire transaction and that he should like to have me remain
in the room while the statement was read.

1

"Mr. McCrary was given permission to present his statement
at this point. I ask.ed if it would be agreeable to Mr. McCrary
and to the 2oard of Directors of the Atlanta 2ank for me to be
McCrary was
furnished with a copy of the statement wMch
about to Present , and I was given the assurance both by Yr.
McCrary and by Chairman Newton that this courtesywould be
granted me. Mr. McCrary thereupon proceeded with the reading
of this statement in which he set out in P general way that he
haS made tl-e
entirely of.his own volition and not at the
9-%
request o. any officer of the Federal Reserve Bank of Atlanta.
In his statement, however, he said that he had mentioned to
Governor Weilborn the fact that he had in contemplation a
trip to Cocoa, Florida, on a personal business matter for the
early part of the following weeh: and that Governor Wellborn
suggested tWhy not go down on the special train as far as Cocoa
since it would entail no additional expense on the Atlanta Bank
and since the Ltianta Bank had had to pay smething like one
to secure the special
hundred first ciass passenger fares in
S'S
he had said at
what
repeati
was
train." (In tl:is Mr. McCrary
)
n
Saturday.
Hotel
Blitmore
the conference heid at the
":r. 1:cOrnry further explained in his statement that ordinarily he did not take a drink but that he did so occasionally
when attending a social function at which it might be embarrassing for him to refuse a drink tendered to him as a matter of
hospitaiity. Ee said further in his statement to the Board of
Directors that on the trip he had taken a•few drinks but that he
was not drunk. He also stated that Er. Campbell had partaken
of liquor to his knowledge but that he did not believe Mr.
Campbell to have been drunk or at any time unable to perform
his duties.
"The statement of Mr. YcCrary to which reference is
now being made was a rather lengthy one and in view of the
fact that I had expected to be furnished a copy of the document
details of
I did not make any special effort to remember the
I ao recall,
the statement Mr. McCrary was making at the time.
when he got to
however, that he said amonz other things that
that he had not
Cocoa, he decided to go on to Key West and




S

-22-

made up his mind to go beyond Key Test until after the arrival
of the train at that point. He further stated that on the arrival of the train at Key West he went to the telephone to
call up some friend, business associate, or acquaintance, and
was engaged for sometime in the conversntion with the result
that he knew very little of what transpired on the dock at Key
Test. He admitted that he knew there bad been objection raised
as to the large party going on the Cuban Gunboat to Havana, particularly on account of the party bearing arms, and also because
the Cuban boat did not have accommodations sufficient to take
care of the party. He also knew that
Campbell had insisted
upon four of the party from the Atlanta bank going along because
they would be necessary to help count and distribute the large
sum of money on arrival in Cuba. He stated further that his
final understanding was that the entire party had been invited
to go but did not make clear as to who had extended the invitation nor how he gained that impression.
"1:r. McCrary's statement carried almost no reference
to what transpired upon the boat excepting that they had a
very nice dinner and party, but making more emphatic that
in his opinion there was no drunkenness and that the party
was in good shape on the arrival of the boat at Havana. After
the arrival at the dock at Havana, Mr. FcCrary's statement indicated that he had taken very little part in what had transpired but that after going with the party to the National City
Bank and seeing the money moved into the bank, lie proceeded to
the hotel for rest and recreation. After refreshing himself,
and as I recall it, somewhere around eleven oclock, he returned
to the bank and then proceeded to call at the Royal 2ank of
Canada and other places, then proceeded to enjoy a sightseeing
trip in Havana."
The following, which is also quoted from Mr. James'
memorandum of June 2nd, refers to the conversation which took place
in the Federal Reserve Bank of Atlanta on June 1st:
"At about 11:30 Mr. McCrary came into the bank and
with Mr. Tard Albertson he came to me and stated that he
had decided to withdraw the written statement he had made at
the meeting of the Atlanta bank directors and asked if he
mip:nt be permitted to do so. To this I replied that he was
at liberty to do so in so fnr as I was concerned, and that
I would agree to release him from his promise to give me
a copy of his statement if he thought that such a thing were
desirable. I then asked him whether or not he desired to
substitute some other statement to me to be nut into my
records. He said he was not sure but that be thought he would




-23-

and that if he concluded to do so he would send it to me by
mail promptly. (I might say in passing that no further corn munication has been received from Mr. McCrary.)"

"I then asked Mr. Campbell several questions among
which were the following:

lit asked him whether or not he had invited Mr.
McCrary to go on the trip, or had protested at his going,
and he replied, 'not to both questions, saying that at first
he did not want Mr. McCrary to accompany the party for the
reason that he felt this was going to be a wonderful achievement and would reflect great glory on him (Yr. Campbell) and
that he did not wish to share this glory with any one else,
but subsequently was very glad that Mr. McCrary was along be cause as the train was travelling on between Atianta and Key
rest he became more and more imnressed with the great respon sibility resting unon him, particularly as the one in charge of
the shipment and the party."
The following is quoted from a memorandum addressed to
r.r. James by Mr. Creed Taylor under date of June let:
"In response to your three direct questions and
your request to reduce them to writing with reference to
the recent special, large shipment to our Havana Agency, I
am giving you below the following:
"1. Did you know anythin,,, about Director McCrary
and his friends or associates going on the special train carrying this shipment?
"Reply. The first information received IT me as to
Mr. McCrary and his friends or associates going on this trip
was shortly before the train left.
"Yr. Campbell advised me that Mr. McCrary and
some of his friends or associ-tes were going on the train
as far as Cocoa, imlorida. I stated to Mr. Campbell that I
did not think Mr. McCrary should go on this train, and certainly not any of his friends or associates, for the reason that
this was a confidential affair; however, if Mr. McCrary desired
bank, would
to go, I presumed that he, being a director of the
associbe eatitled to go, but certainly not his friends or
this
in
me
with
agreed
he
that
ates. Mr. Camnbeil replied
Governor
to
views
my
opinion and suggested that I express




•

117ellborn, which I did immediately, the Governor replying, according to my best recollection, that Yr. VcCrary had already
;phoned him that he WPS going, and in a casupl manner stated
'oh, well, 1,:c. shouldn't do those kind of things' or some
statement similar to that.
"Nothing further was said regarding the ratter according to my best reco_lection, I understanding that Mr. cCrary
and his friend Mr. Love made the trio on the special train to
Havana, Cuba, and stopped off at Cocoa, Florida, on their return trip."
The following is ouoted from Governor Teliborn's official
report of this transaction, which report was in the form of a letter
addressed to Mr. Newton, Federal Reserve Agent, under date of.June 4,
1926:
"Mr. J.A. McCrary, a director of our bank, intended
to go to Florida, and I suggested that he accompany the
train as far as Cocoa, Florida, his intended destination.
With him went s Mr. Loving, an employee of his engineering
business. I considered that Mr. McCrary end his friend
would be an additional protection, for Governor Crissinger
had phoned me that morning to be sure to have ample forces
accompany the party. After arriving at Cocoa, Mr. McCrary
consulted with Mr. Camobeli,and decided to go with the party
to Havana, Cuba."

"I desire to add here, that I have learned that
::.cCrary, paid his own expenses
Yr. Lioving who accompanied
on the trip."
The following is quoted from a signed statement submitted
to the Board by Mr. Carmbell under date of June 13th:
"The Federal Reserve Ennk party consisted of only
nine men, instead of nineteen as charged, three guards, three
clerks, Mr. McCrary and an employe of his Fngineering Company
and me. Mr. Couch of the Southern Railway Company also went
to 'Havana at no exnense to the Federal Reserve Bank. The entire party consisted of sixteen and not nineteen and only nine
of these were of the Federal Reserve Bank party."




A

a

"I was glad to have Mr. McCrary along, as the responsibil- t
ity of handling this matter was heavy, and his advice and coun- I
sel was welcomed."
NOTE:

The evidence produced at the hearing On September

9, 1926, further bears out and supplements the above.

Expenses of Havana Trip.Adthough, during Mr. James' visit to Atianta, May 29th to
June i, 1926, Yr. McCrary told Mr. James that he paid his aun expenses
on the trip to Havana, the following entries in the records of the Federal Reserve Bank of Atlanta SLAM that, subsequently, on June 7, 1926,
Mr. McCrary refunded to the Irederal Reserve Bank of Atlanta certain expense money advanced to him in Havana on or about April 12th.
The following entries in the records of the Federal Reserve
Bank of Atlanta relate to the return by McCrary on June 7, 1926, of certain expense money advanced to him in Havana on or about April 12:




- 926, Return of 'remainder of unused part of advance
"Jun 7, 1
of 3°0 to
Campbell Anr 14th by Havana
Agency returned by J.A. IcCrary
36.13
"June 12,1926, 'Adjucting difference between debit of
'342.47($300.00 advanced Apr 14th, iess
r_357.53 returned May 12) laly 12 and credit
of $36.13 June 6, being baLance of amount
advanced to Mr. Campbell by Havana Agency
April l4 and credited back as $36.13 June
64
The following comments occur on page 48 of

6.34"

Rank's report:

"Your accountant is unable to say what the $36.13 returned by J.A.McCRARY covered. 111-lis $36.13 was credited
to SUSPENSE ACCOUNT G7NERAL on June 7, 1926, as a return of
a part of the $300.00 advanced to Deputy Governor CAMPBE1.1
by the Havana Agency on Anril 14, 1926 (See DEBIT ticket,
5/12/26, $42.47, and GREDIT tickets, 5/12/26, $300.00;
6/7/26, $36.13; 6/12/26, $6.34, on page 41).
"The following information regarding fares to Cocoa,
.Florida, McCRARY'S objective point, was obtnined from the
office of the Southern Railway Company:

•

"Cne way fare,

. . 26 -

111

Havana
to Key West
Pullman Upper. Key West " Cocoa

ft

11

11

"

ft

ft

ft

Havana
Upper, Key West

20.80

Key West
Cocoa

17.50
4.13

21.63

Cocoa

31.62
3.30

34.92

31.62
4.13

35.75

14.12
3.30

17.42

14.12
4.13

18.25

18.47
5.10

23.57

18.47
6.38

24.85"

ft

"
Havana
Lower, Key West "
It

ft
11

It

ft

11

Upper,

11

If

ft

II

If

it

Lower,

If

If

11

11

Cocoa
Upper, "
tl
ft

11

Havana
Lower, Key West

:17.50
3.30

Lower,

11

"
It

Atlanta
ft

11

ft

ft

ft

Official Attitude in Cp7mbei1 Matter.-

1

Although he accompanied Mr. Campbell on his expedition to Havana
and himself participated in that expedition, Yr. McCrary, in his capacity
as a director of the 7ederal Reserve Bnnk of Atlanta, attended a directors' meeting held on September 24, 1926, and voted to approve the report of the Committee annointed by the Board of Directors to make an investigation of the personal conduct of the parties accompanying the
shipment of currency to Cuba, which report completely 'Whitewashed"
Campbell and exonerated him of all blame and imcidentally unheld McCrary's
own action in accompanying the shipment to Havana and taking along a
friend who had no official connection with the Federal Reserve Bank.
(Letter, Albertson to 7ederal Reserve Board, September 24, 1926.)
He also attended a meeting of the Board of Directors held on
October 8 and voted in favor of the resolution of the Board of Directors expressing confidence in Campbell and surprise at the action of
the -ederal Reserve Board in removing Campbe,,_ from office. (Letter,
Albertson to 7ederal Reserve Board, October 9, i926.)
His participation in the action of the Board of Directors on
these matters affecting his own personal interest is a fair indication of what Yr. ::cCrary's attitude would be toward other matters




',affecting
II,erconL.,_ interest which might come up for ac tion in tTafait.rd of Directors of the Federal Reserve Bank of
Atlanta.
reit
tons with Ilanier Bank .
From conies of certain letters forwarded to the Board by 2'1-.
C. R. Luhrin„ Assistant Attorney General, under date of October 7th,
it appears that McCrary was "very friendly" with 7. D. I:lanley, Presi&
dent of the Bankers Trust Company of Atlanta, Georcjc, and head of
the so-caLied "Manley Chain" or "Witham System" of Banks, which was
undoubtedly the greatest enemy the Federal reserve System had in
the South. Incidentally, it may 'be mentioned that Manley is now
under indictment as a result of certain events leading up to the colk
lapse of the Bankers Trust Company.




''esrectfully,

7aiter Wy t
General ftounsel.

at,

C1474.1i7c.;01 Ten
117 TE7.3.0171: YEDUAI RFSFYVT Bain AMID
Gli/CA3t7
BfirK. rrril 12T.MTIM BWACI'ltalf
7APCH Zi,
1Y.,TnAL

(In

V:011.3::Mett5

UT'S)

•
•

if

Calt.t.:11 and
44r44.1..m.

:

Total
relolrec;pr

Now York Poderml Ileg'dorve BAnk
"
Ikul!.: Of England 11/
1144n1:. of France
.0(17.17%anlleicllani.

930"'&5

10-480CC5

86,916
14,040
85;85'

1,5190.1:37 2,147,n4 .
1,126,767

Chiccgo Federal 116.11rve DIArk

43,NA

C2J.,,Ilj

National Eal.,z of Belcia:
Bank of /t,7 §ii
NerCloriandz P...snis:
Eat1onr1 Dusk of Switscriane

41'.15
12,061
15,42e
6,24e

695,178
2,364,177
3360337
178,09.4

-..

ConvErt7.,c at earrent ratc of .a=ange :lurch 31, n2.1
.T.:3!luo De;),Erturat combined
Bankinc
2c„, 1926.
21/ Statement .of

Volume 164
Page 104

AIL




rrespontence
From__

FEDERAL RESERVE
BOARD

•7

444111

Date

mr. Goidenwoiser

I transmit herewith a supplementary table show rig fr certain
central banks capital and surplus and total resources. I do not believe that the total resources are a very valuable item for comparison because the practice of carrying items ogross" or 'net" differs
from bank to bank and changes in these methods of accounting make a
great difference in the aggregate resources.

I believe that loans

and invest-aonts or n'Ae and de-)2sit aabilities are such more significant for -nu-Doses of comparison. When you al,c n2 about thestrenrth of
the different banks, I must say that -t:-.Le reserve ',00ition of the New
York bank is definitely the strongest of any of the banks included in
the table and parobabl,y of agy other central bank. The volume of credit
of the New York bank t2lat is actually in use, of course, is relatively
sma1_, which does not indicate that the bank is less important, but
merely that at this oarticular time the demand for reserve bank credit
is not as large as the resouroes of the bank would be a'ole to meet. The
liabilities of the bank are also not as large as those of the Bank of
Etgl-nd or the Bank of France, although larger than any of the other
'Danko.

The ea-Atal and surnlus of the New York banl: is larger than that

of any of the other banks and that of Chicago is also larger than any of
the banks listed with the exce -tion of the Bank of England and the Gernan
Reichsbank. I should say that considering the reserves of the bank and




Volume 164
Page 109

)

t

From.

lz the

e3tionab
bank is unqu
k
or
'Y
w
Ne
e
h
wer, t
ial lendtng Do
its potent
world.
l bank in the
ra
nt
ce
t
es
strong




Form

No. 1.tl.

,Office Correspontence
To

2.1r. Hamlin

From__

wLr.

FEDERAL RESERVE
BOARD

•
Date_

/17 s_AA- 441
October 22, 1926 /

Subject:_

Goldenwei er_

I transmit herewith a brief resume of the Federal reserve
system since its organization, which I hope will answer your purpose.

I attach to it a table along the lines that I prepared for

you last summer brought up to date, also a table showing the distribution of earnings of the Federal reserve system and of the
Federal Reserve Bank of Boston from 1914 to 1925 and a table comparing certain items in the Federal Reserve 3ank of Boston with
certain foreign banks.




Volume 164
Page 117

•
FEDERAL RESERVE DEVELOaENTS

The period of twelve years which has elapsed since the Federal reserve
banks opened their doors for business on November 16, 1914, embraces roughly
eight years during which the activities of the reserve banks were largely influenced by the exigencies of jar financing and post-war readjustments, and
only four years of functioning under conditions which may be described as
approaching normal peace time conditions.

In a measure, the extraordinary

economic and financial developments of the earlier period prevented for the
time being the development of a banking and credit policy adapted to permanent peace time requirements.

During the period prior to our entrance into

the war, the Federal Reserve Board and the reserve banks were largely occupied
with the task of organization;

with the definition of the reserve districts;

the location of the reserve banks, the selection of directors, officers, and
staffs for the banks, and the formulation of methods of operation, as well as
the definition of paper eligible for discount.

During this initial period mem-

ber banks were gradually transferring a portion of their reserves to the reserve
banks.

The reduction of reserve requirements, effected by the provisions of the
001.....1.10.11.11410

Reserve Act, released. funds which had previously been held in the reserves, and
the inflow of gold in payment for food and war supplies purchased by the belligerents in this country, provided ample funds to supply the increasinz_imEINements of member banks without recourse to the Federal reserve banks. Under these
conditions the reserves of the reserve banks exceeded their combined note and
deposit liabilities.

Upon our entrance into the war in April, 1917, it became

apparent to those administering the system that Federal reserve policy must be
formulated with a view to assisting the Treasury in floating war loans.
•••=11•1,110.11.11•1101...

The

very rapid increase in the use of reserve bank credit during that reriod was




-2due to the policy adopted by which individuals purchasing war bonds could buy
them on the deferred payment plan, borrowing the balance of the purchase price
.10111111100ORS......

from the banks, which in turn could rediscount this so-called war paper with
the reserve banks.

While it has often been said that the war put a severe

strain on the Federal reserve system, it is equally true that it was owing to
the war that the Federal reserve system began to function on a large scale
and overcame the original inertia and prejudice against it which otherwise
might have indefinitely delayed its development.
In reviewing the developments of the Federal reserve system after the
close of the war and the period of rapid credit expansion fallowing it, a
table is presented which shows some of the most important economic factors
in their relation to Federal reserve credit.

Commodity prices, which had

been advancing rapidly owing to conditions arising out of the war, had reached
their peak in Lay, 1920, and after that began rapidly to decline! 4h14.3 price
advance was characterized by the fact that the physical volume of business
activity was not increasing, and the rise in prices represented largely_competitive bidding for a limited supply of goods.

The purchasing power for this

bidding arose oat of the very rapid growth of bank credit caused by war time
conditions.

In 1920 the discount ratesat the reserve banks were advanced to

a high level, partly because the reserve position of the banks was approachi
the legal minimum, and partly because the rapid expansion of credit needed to
be checked.

Credit, however, continued to increase to the end of 1920, while

prices began to decline rapidly after the spring of the year.

Between :ay,

1920 and January, 1922, the general index of prices declined from 248 to 138,
or by more than 40 per cent.

In was not until the beginning of 1922 that

business andprices began to recover from the decline and it was not until the




-3 middle of that year that the loan liquidation, both at the member banks and
the reserve banks, came to an end.

kn important factor in bringing about the

liquidation at the *reserve banks was the rapid inflow of gold from abroad, together with the diminished currency requirements, resulting in a flow of currency from circulation into the reserve banks.

Industrial activity began to

revive late in 1921 and 1922 was a year of general recovery and readjustment,
accompanied in the latter part of the year by some increase in reserve bank
••••••••

credit.

•••••••••,

Since 1922 the volume of reserve bank credit in use has fluctuated

considerably, but is at present at about the same level as four years ago. During these four years the volume of bank credit in the United States has increased by about .;12,000,000,00
4
0 and the volume of loans and investments of member banks alone by about -8,000,000,000.

The additional reserves required for

this large increase in bank credit arose from continued gold imports and from
a gradual increase in the proportion of time deposits requiring only 3 per cent
0111.11.40.00.101.

of reserves in the total of deposits against which reserves are required.
Since the reestablishment of the gold standard in England and other European
countries in 1925, international gold movements have been on a much smaller scale
and more responsive to price and money rate conditions in the different markets.
In other words, the relation between the different cuuntries of the world have returned more nearly to conditions prevailing prior to the war.

Under these cir-

cumstances, the credit policy of the reserve banks must be adjusted not only to
current trends in domestic conditions, but also to developments abroad, which
through the international :lovement of gold and other liquid funds, have a direct
bearing on the ,
merican money market.




•
-4During these past four years the Federal reserve system has made great
progress in developing the technique of credit administration.

Discount rate

policy has been closely adjusted to business conditions and has been red,
enforced by the development of a system 4ezt open-market policy.

Through the

purchase or sale of securities in the open-market, the reserve banks are in a
position to increase or decrease the volume of funds available and thus to
reenforee the effect of discount rate changes. AT:n 1926 4he business conditions
have been prosperous and business activity in large volume.
.
_

Throughout the

year the polisy of the Federal reserve banks has been oneof watchful waiting
and. ietttpkterl caution.

In the middle of the year the discount rate at the New

York reserve bank was advanced, and later in the autumn the system's security
holdings were reduced by a considerable amount.

The general price level has

been declining since the latter part of 1925 and for the year this decline has
amounted to about 6 per cent.

With the large volume of productioryam4-a sus-

tained consumers' demand for goods and a gradual declining price level, the
situation is in marked contrast to the ,?_ezietd, in 1919-1920. it that time
business activity was declining, while prices were rapidly increasing.

The

growth of bank credit under the conditions prevailing in 1919-1920 is, therefore, fundamentally different from the growth during the past year, because
the recent growth has come during a period of growing business activity at a
price level which not only has not advanced, bat has gradually tended downward.




•

:Production: Prices :
LS1919=-100):(1913=100):
1920:
June

107

1921:
June
Dec.

0

: Total
: U. S. ::
:
Net gold
nces
: earning
rities:Accepta
Discounts:Secu
:
or
iaports
assets 2/
2/
:
:
2/
:
2/
exports 1/ :

on

243
41,0

470,792,633
esn,741
lem,,

77
33

142
140

339,252,155
328,123,916

$2,461,022 $347,445
2,71(.1.360 339,140

$401,184
244,001

t3,209,650
3,313,502

1,817,749
1,185,432

302,710
226,005

54,716

105,499

2,175,175
1,517,194

6
4 1/2

438,789

592,647

663,562

379,763

135,181
261,077

1,166,617
1,304,433

4
4

155,133
103,099

225,396
322,431

1,124,891
1,200,351

4 1/2

842,963
1,220,706

3 1/2
3
3
3

3 1/2
4

1922:
June
Dec.

94

150

116

156

112,868,226
125,426,665

1923:
June
Dec.

122
110

153
151

109,640,912
184,431,485

744,306
774,733

1924:
June
Dec.

94
117

145
157

222,387,212

374,592

415,970

51,125

35,685,393

301,716

554,587

356,613

1925:
June
Dec.

110

157
156

437,621
690,896

345,707
358,412

264,589

121

-150, 269,955
15,903,337

367,864

1,060,667
1,428,732

1926:
June

118

152

81,384,689

476,044

408,776

121

151

-10,107,961

641,797

315,747

244,038
263J992

1,139,808
1,225,236

0

Sept.

17.3j




New York
discount
rate 3/

7
7

4 1/2

1/2
1/2

For the preceding six months; 1926, July to September
Represents daily average holdings (In thousands of dollars) for June and December, 1920-25
and for June and September, 1926
In effect June 30 and December 31, 1920-25 and on June 30 and September 30, 1926

per cent

FEDERAL RESERVE BANK EARNINGS

During the first fifteen months of the system's operation, the heavy
expense of organization was such that the reserve banks did not earn suffiQAA-4 a.;tr; dtitAJ2.4
Beginning with 1916, however, the
cient amounts to cover their expenses.
A
amounts earned were sufficient not only to pay expenses and dividends, but
/90 t714—_
o make considerable payments of franchise tax to the United States Government.

During the years 1920-1921 the banks' earnings were so large that the

franchise tax alone amounted to 4?'60,000,000 for each year.

Since that time

earnings have been much smaller and in some years and many of the banks have
had to pay their dividends and part of their expenses out of surplus.
was trae of the Boston bank in 1924.

This

The Boston bank did not pay any fran-

chise tax in 1924 or in 1925, while in 1921 it paid more than ,7-?3,000,000 to
the United States Treasury.
The attached table shows gross and net earnings of the twelve Federal
reserve barfcs combined and of the Federal Reserve Bank of Boston for each
year from 1914 to 1925.




•

•

DISTRIBUTION OF EARNINGS OF THE FEDFRAL RESERVE SYSTE:4I
AND OF THE FEDERAL RESERVE BANK OF BOSTON FROU 1914
TO 1925
Earnings
Gross

System:
1914
'.163,145
1915 2,110,107
1916 5,217,998
1917 16,128,339
1918 67,584,417
1919 102,380,583
1920 181,296,711
1921 122,865,866
1922
1923
1924
1925

Net

Disposition of net earnings
:Dividends:Transferred :Franchise tax :Profit (4.) or
: paid
:to surplus 1:paid U.S.Gov't:loss (-)carried
1/
: forwarS

2/4310,287
-- 168,828
217,463
2,750, 998 1,742,774
9,579,607 6,301,726
52,716,310
78,367,504
149,294,774
82,087,225

1,134,234

1,134,234

48,334,341
70,651,778
32,916,014
15,993,086

2,703,394
60,724,742
59,974,466

6,307,035 - 659,904
6,552,717 2,545,513
6,682,496 -3,077,962
6,915,958 2,473,308

10,850,605
3,613,056
113,646
59,300

5,540,684
5,011,832
5,654,013
6,119,673

16,497,736
12,711,286
3,718,180
9,449,066

Boston:
1914
891
1915
124,568
1916
490,888
1917
1,285,884

2/ 25,818
27 8,785
-- 295,935
740,359

249,735
601,756

75,100

75,100

2,473,499
3,035,920

4,475,195
7,497,583
12,273,253
6,968,662

3,305,180
5,777,381
10,272,564
4,281,353

384,180
414,447
447,266
473,109

2,921,000
5,362,934
7,351,799
772,324

1922
1923
1924
1925

3,541,313
3,506,683
2,559,016
3,288,546

1,097,402
1,252,135
470,422
1,140,581

481,951
480,267
477,798
502,648

- 170,782
77,187
7,376
637,933

.

-1,158,715

50,498,699
50,708,566
38,340,449
41,800,706

1918
1919
1920
1921

48,635
+1,008,224
+ 509,413

25,818
8,785
46,200
11,597

786,233
694,681

:Lmounts shown as transferred to surplus account for 1922 are net, i.e., after
the
deduction of amounts charged to surplus account on December 31, 1922,
and paid to the
United States aovernment as franchise tax for prior years as follows: for
1921 Boston,

W

Excess of expenses.




•
Comparison of the Federal Reserve Bank of Boston with Selected Central
Reserve Banks of Europe.

:Ratio of:
Total : Loans, :Total note :reserves:
reserves: discounts:and deposit:to note : Capital :
Total
and
:liabilities:and de- : and
:
:resources
:investments:
surplus
:
kities
(In thousands of dollars) 1/
Boston Federal Reserve Bank
Bank of England
Bank of France.li
German Reichsbank
*****.
National Bank of Belgium
Bank of Italy
Netherlands Bank
National Bank of Switzerland

a

222,532
94,846
696,966
713,664
204,640 1,682,106
469,396
585,666
263,280
11,312
66,009
638,996
242,937
89,171
70,392
86,772

300,646
1,321,676
1,920,004
900,840
299,497
622,126
343,095
169,012

74.0
54.0
10.7
52.1
3.8
10.6
70.8
51.3

•
1/ Converted at current rate of exchange on March 31, 1926
Li Gold reserves
1,1 Statement of March 20, 1926




25,792
381,952
88,916 1,519,167
14,049 2,047,324
85,650 1,120,753
4,055
305,178
12,061 2,364,177
15,428
366,367
6,248
178,094

•
et-- •

EARNINGS AND EXPENSES OF FEDERkl, RESERVE BANKS
OCTOBER 1926, Total earais of the Tederal reserve
banks in October were $4,255,000 - the largest
amount reported since Decem-oer, 1925 and prior to
that date, December 1923, Earnings from discounted
bills were $150,000 and from purchased bills and
U. S. securities $179,000 larger than the September
figures.
Current expenses in October aggregated
$2,304,000 as compared with 2,396,000 in the month
preceding and $2,249,000 in October last year.
10 MONTHS ENDING OCTOBER. During the first ten
months of the year earnings totaled $38,654,000 as
compared with $33,223,000 for the corresponding
period last year and $31,698,000 for the first ten
months of 1924.
Current expenses (including the cost of
Federal reserve currency) amounted to22,772,000
during the ten-month pariod, a decline of $278,000
from the corresponding period last year and of
$1,216,000 from the total for the first ten months
of 1924.
After providing for all current expense
and dividend requirements, the balance of net earnings on October 31 was $9,S02,488 as compared with
less than half that amount on the same date last year.
(St.5152a)
Volume 164
Page 111




IrENTIAL
A
r publ..cation

gS
uctobar

Earnin7,9
From
l 7rom 6,:r- 1
disIchased bi1ls1
From
counted 1 and T.J. S. l other_
bills I securities 1I sources

St. 51;2

OCT0111h 192o.
,.

'NNW.

"Anktal

fr
I'

Current
expenses

1926
fBalance availaole for deDividendslpreciation allowances, Buraccrued Ira us _franchisa tax, etc.
to
I On Sept. 30
I On Oct. 31
1
Oct. 31

Year
4..

•L

--laal.rat-6, Current
t !f0f -curfent na
net earnI earningF '1
ings to
,
capital Oct. 31

I
1
I
I

cent

$139,430

$124,312

$5,579

$269,321 $170,576

56,3,=0

317,891

12,644

g86,8.55.. 29,223

69,.586

133,133

7,3E7

Cleveland

239,160

188,671

Ric'.71mcnd

155,132

Atlanta
CLicac-o

9.
a

t0,1 74'71

13.2

$594,441

,

ri..7

0, 1$43c,599
0°
314
3,°
,736,9u2
6°
.13::3

1,4E]

3g,20
1,24F,328

315,64a,

181,04 )

12.7

1,205,745

604,322

523,370

10,933

43,314

197,97& *40,836
%

20.9

1,429,163

67%.- ),475

583,452

61,027

8,102

224,201

113,449 W113,E12

21.9

919,424

1E9,246

109,548

4,683

303,477

118,385

185;092

43.3

1,3,42,63,,
2

,40,270

4
3
;
0,4
1:

930,420

, 303,117

'85,703

24,011

612,336

337,259

c15,577

19.4

,007,980

819,027

1,18E,953

996,7E4

143,092

68,221

1,575

el2,888

19.9

917,124

201,30b55,757

592,685

eapclis

37,661

116,6-.)E

cif;,205

18,324

87,460

30.3

407,247

150,342

310,4u5

230,495

Kans..1.a City

42,316

140,071

l,u65

204,272

143,383

17.1

340,515

210,916

629,597

569,055

Dallas

66,0Eb

1v6,293

16,0(
.--)b

188,475

102,810

23.4

308,615

214,476

5;4,139

529,990

213,043

193,237

3,960

415,245

202,452

c12,793

29.1

1,749,764

419,734

1,330,330

1,1bc,239

2,254,394
2,104,9S4
1,935,246

1,854,810
1,675,743
1,354,159

145,670
150,257
140,169

4,254,874 2,304,265 1,950,009
3,930,984 2,190,113 1,734,871
3,929,574 2,249,360 1,680,208

18.5
17.1
17.0

115,881,547 0,079,059
1
110,172,989 5,747,154

9,802,488

6,468,372

4,425,835

3,328,218

4010.-

St. Louis

iir

San Irancisco
TOTAL
Oct. 1926
Sept. 1526
Oct. 1925

FEDERAL RESERVE BOAR)
DIVISION OF BANK uiERATIONS
NOVEMBER 10, 1926.,!•




89

302,931533,108




•

DATA SH=ING THAT
THE F)OLE HAVANA AGENCY OF THE FEDERAL RES2RVE SYSTEM
SHOULD BE ATTACHED TO
THE.es...ViMAL RESaVE BANK OF ATLANTA

To
THE FEDERAL RESRVE BOARD,




WASHINGTON, D. C.

•

TO THE FEDERAL RESAIVE BOARD,
WASHINGTOri, D. C.
Gentlemen:
ne respectfully submit herewith data relating to the
Sixth Federal Reserve District, comparatively arranged with
similar data of the First Federal Reserve District, to show
that the sole "Havana Agencyft of the Federal Reserve System
should be attached to the Federal Reserve Bank of Atlanta:
The population of the Sixth Federal Reserve District
is growing, particularly in urban population, ixhibit 1.

The

growth of urban population is accompanied by an increasing
volume of building permits, Exhibit 2.
The population of the Sixth Federal Reserve District
is continuing to produce large agricultural values, Exhibit 3,
its growing manufacturing centers are increasing the volume and
value of their products, Exhibits 4 and 50 and these and other
varied activities of the Sixth District arc reflected by 1 rge
and growing values of exports and imports, "Zxhibit 6, and by
its tonnage of water borne comnrce, Exhibit 7.
The Sixth Federal Res-irve 1,istrict being adjacent to
the Island of Cuba, and having many good harbors connected with
the larger part of the United States by direct and shorter
railroad and water routes, it is but natural and logical that
a large comme-ce between it and Cuba is growing up, Exhibit 8.




•

•
2

The. aurrency of the United States having been made
legal tender by Cuba, and the Federal Reserve Board having
established an agency in Cuba "as a means of stabilizing
bankin7 conditions and furnishing an adequate supply of clean
currency" in Cuba, it was good judgment then, and is so today,
that issues of the Atlanta Federal Reserve Bank were determined
upon as Federal Reserve notes for Cuban ciraulation.
This allocation of Federal Reserve note issues resulted
in additional lending power of the Sixth Federal Reserve District,
a direct benefit to and availed of by the agricultural, industrial
and commercial interests within this District, Exhibit 9.
To make these Federal Reserve notes issues of the Boston
Federal Reserve Bank will further increase a lending power not
needed by the agricultural, industrial or commercial interests
of the First Federal Reserve TAstrict, .ixhibit 10.
These exhibits show changes of magnitude that have
quietly occurred in the Sixth Federal Reserve District, even
rapidly when compared with the United States as a whole, and
show conclusively a strong and continuing trend toward the
fuller development of the natural resources within this District;
but the same cannot be said of the data relating to the First
District.




3
Transfor of currency and communication between Cuba
and the Federal Reserve System is facilitated by the uso of the
Federal iioserve Bank of Atlanta, and particularly by the use of
its Jackes:onville Branch Bank, Exhibit 11 and ilthibit 12.
in conclusion, the Sixth Federal Reserve District is
qualified to assume and,exercise for the Federal IZeserve
System all of its runctions in Chiba.

The continuation of the

present arrangement. of two agenaies of the Federal Heserve
System in havana is not conducive to efficiency or economy.
'..tlanta and the flow of commerce between
The proximity of 2,
Cuba and the Sixth District should determine your Honorable
Body to grant to the Federal Reserve 3ank of Atlanta tho
sole Ouban agency.
From
Atlanta, Ga.
October 4, 1926.




khDERAL RESERVE BANK OF ATIANTA.

;..'xhibit 1.

AREA AND PORIPM,E.T AY: SI:

VE DISTRICTS

Prom the Twelfth 4mnual Report of the Federal Reserve
Board, for the Yeqr 1925, page 293, we find thesrea in square
miles and the population estimated as of january 1, 1926, for
each of the several Federal Reserve Districts.
The Sixth 4nnual Ileport of the Federal Reserve BoArd,
for the Year 1919, shows, on pazes 533-534, estimates of population, as of December 31, 1919, for the First and Sixth Districts
which were in excess of the actual populations of those Districts
as determined by the United States Census as of January 1, 1920,
The populations used here for the First and Sixth Districts as
of January 1, 1920 are those shown by the 1920 Census for the
present district areas.

Area Square lAles
Population January 1, 1923
It
January 1, 1920
Increase
% increase

First
District

Sixth
District

61,345

248,226

7,670,000
7,071,000
599,000

10,834,000
9,962,000
872,000
8.76%

4,211,000
3,838,000
373,000

2,283,000
1,712,000
571,000
33.3%

CITIES OF 50:
000 *
?opulation January 1, 1926
January 1$ 1920
Increase
% Increase

* This data dclrived from estimates by Bell lelephone System of
populations in local telephone service areas, and are in excess of
U. S. Census populations within city limits.




Exhibit 2.

"

LITE OP T.TILDING PERMTTS
TES OF FEBRUARY AND JULY

ERAL RESRVE SY_,STEM BULLETINS

18

18

16

16
0
CC
<14

SIXTH
DISTRICT

'4<

FIRST
DISTRICT

12 —1
0
0
10

U-

8
A

06
4

A

FEB

A

A

60

AMMININIMIENIE

4

MEM..MIME

2

2 2 A INA
0

A

A

0

JUL

1922

FEB

JUL

1923

FEB

JUL

1924

FEB

JUL

1925

FEB

JUL

2

0

1926

of
First District data is from 14 Cities, with aprroximate17 605'
present First District Population.
Permits,above 10 months, aggre7ate -

e 80,472,000

Sixth District data is from 15 Cities, with aprate17 18`; of
present Sixth District Population.




Permits,above 10 mulirns, aggregate -

93,988,000

•

•

Exhibit 3.

VALUE AGRICULTURAL PRODUCTS
22 CROPS
1924 Statistical ,:bstract, page 613, U. S. Dept. of Commerce.

The value of the yearly agricultural products of the
Sixth Federal ,.eserve District is from four to five times the
value of the yearly agricultural products of the First Federal
1-:eserve District.
The follawing data is given in terms of thousands of
dollars:
1919
United States

1922

1924

t12,442,997

, 7,073,691

8,703,144

First District

223,563

148,167

162,514

Sixth District

1,110,532

708,780

784,239

NOTE - 241portionment of Crop Values to Sixth Federal Reserve
District: All of leorgia, Alabama,
, laorida, 6CX; of
Tennessee, 60(.; of Louisiana and 50% of Mississippi
Crop Values.




illxhibit 4.

•
VALUE OF MaTUFACTURED PRODUCTS
1924 Statistical .,sipstract, pp. 756-759
U. S. Department of Commerce.

These reports show that the value of the manufactured
products of the Sixth Federal Reserve District is growing faster
than that of the United States, as a whole, and decidedly faster
than the value of manufactured products of the First Feral
District is growing.
The data in terms of thousands of dollars are:
1914
United States

1923

Increase

t24,246,435

60,555,998

15e,

First District

2,926,675

6,419,975

1204

Sixth District

903,494

2,308,692

156%

NOTE - Apportionment of value of :danufactured Products to Sixth
Federal Re!-eyve District: All of Georgia, :Jabama,
Florida, 75,-‘ of Tennessee, 75% of Louisiana and 505 of
Mississippi, values of manufactures.




•

•
E;PII;DLES

Exhibit 5.

IN PLACE AND IN USE

1924 Statistical Abstract,
Activity in Cotton Spinning
Industry, August 1926; U. S. Department of Commerce.
The cotton manufacturing industry, in terms of spindles
installed and in use, is growing rapidly in the Sixth Federal
Reserve District.
In thousands of spindles the data are:
SPINDLES GAINED
Year

United States

1915-1926

4,683

1005

First District
359

7.7%

Sixth District
1,369

29.25

SPINDLES IN PLACE
1915

32,841

17,526

31577

1922

360946

18,856

4,408

Aug. 1926

37,524

17,885

4,946

SPE:DLES
Aug. 1926

31,322

1004,

12,855

41.1%

7,489

100%

2,358

31.5%

40682

14.9

SPIIrDLE HOURS
Aug. 1926

NOTE - Apportionment of Cotton Spindles and Uso to Sixth Federal
Reserve District: All of Ueorgia, Alabama and Tennessee.




7.xhibit 6.

IMPORTS AND EXPORTS
1923 Statistical Abstract, pp. 445 and 461
U
1924
pp. 435 and 440
U.

Department of Commerce.

The following data on imports and exports are given
in thousands of dollars:
IMPORTS

United States

A.cmrage 1915-1919 2,514,557

First District

Sixth District

271,591

126,029

1921

2,509,148

235,486

136,380

1924

3,610,553

336,798

256,406

Avel-4age 1915-1919 5,304,009

276,568

469,677

7X.POrTS

1921

4,485,031

110,395

592,740

1924

4,5900982

115,152

596,382




•

Exhibit 7.

WATER BORNE COMMERCE OF THE UNITED STATES

-

ALM BY STATES OF THE 1ST AND 6TH FEDERAL RESERVE DISTRICTS
Fiscal Year onded June 30, 1925 in Cargo Tons of 2,240 Lbs.
(Prom heport of .3ureau of Research, U. S. Shipping 3oard)
Imports
United Ltates

Exports

Total

41,089,133

52,168,924

93,258,057

557,526

243,732

781,258

2,446,052

343,651

2,789,703

Rhode Island

695,148

401

695,549

Connecticut

41,105

3,055

44,160

3,719,831

590,839

4,310,670

Maine
Massachusetts

FIRST DI'ARICT
Per Cent.of U. S.

1.1

4.6

Georgia

557,304

348,970

906,274

Florida

1,107,880

1,657,668

2,765,548

Alabama

354,248

759,290

1,093,538

Mississippi

20,938

282,350

303,288

Louisiana

5,419,231

5,295,467

10,714,698

SIXTH DISTRICT

7.439.601

8.343.745

15,783.346

Per Gent. of U. S.




18.0

16.0

16.9/,

S

•

Exhibit 8.

COMPARATIVE DATA OF WATER BORNE COMMERCE
BETWEEN THE PORTS OF ThE 1ST AND 6TH FEDERAL RE&TVE DISTRICTS
AND THE ISLAND OF CUBA, IN CARGO TONS OF 2240 POUNDS.
COVERING FISCAL YEARS MANG JUNE 30TH.
COMPILED FROM REPORT OF BUAU OF RESEARCH, U.S. SHIPPING BOARD.
First
District

Sixth
District

281,458
260,042
299,777
841,27/

1,246,054
1,136,014
1,553,928
:5,940,996

1923
1924
1925

27,863
30,717
28,285

761,456
786,263
1,140,840

TOTAL THREE YEARS

86,865

2,688,559

1923
1924
1925

309,321
290,759
328,062

.2,007,510
1,922,277
2,699,768

TOTAL THREE YEARS

928,142

6,629,555

IMPORTS - FROM CUBA
1923
1924
1925
TOTAL THREE YEARS
EXPORTS - TO CUBA

TOTIAL IMPORTS AND EXPORTS

FOREIGN TRADE OF CUBA - PAN AIJERICAH.UNION: NO. 4, 1926,
GIVES THESE DATA ON CUBAN COWIERCE:
1923
Exports - Total
- to United
States
% of Total to U. S.

1924

t421,074,643*

0434,865,295*

367,345,910

362,264,908

87.3%

*Excludes Re-Exports of
1,524,313
and excludes Money ixports

83.3c,
7
1,430,449

This Report classifies exports by articles, with
quantities and values, from which It is calculated that the
Sixth District tonnage imports from Cuba, given above, are
1/3 of the value of all Cuban exports to the United E:tates.




NOTES ON EXHIBIT 9 - FED:RAL RESERVE BANK OF ATLANTA
"

10 - FEMRAL RESERVE BANK OF BOSTON

The graphs showing Bills :Ascounted include accommodations extended other Federal ieserve Banks and accomnodations
received through rediscounting with other Federal Reserve 3anks.
See iAghth Annual :Anort of the Federal Reserve illoard s
p. 216, on Inter District Accommodation.
In that these graphs of Bills Discounted include both
accommodations extended and received, they differ from the graphs
of 9ills Discounted shown in the Twelfth

rinual Report of the

Federal Reserve Board, which graphs include only accommodations
received, thereb

avoiding dunlieations for the System as a

whole; pp. 302 and 307.
2Ls shown here, it is possible to ascertain the District
requirem2nts, as well as the accommodation received and extended,
by the First and the Sixth Districts.
From !.;Xhibit 9 it is -3vident that without . that lending
power resulting from Cuban circulation in notes of Atlanta
Federal aeserve Bank, the Sixth District would have been
obliged to receive additional accommodation in 1920, 1921,
part of 1922 and probably part of 1923.




FEDERAL RESERVE BANK OF ATLANTA
LENDING POWER AND THAT LENDING POWER LESS EFFECT OF CUBAN CIRCULATION
IN NOTES OF ATLANTA FEDERAL RESERVE BANK
BILLS DISCOUNTED, AND BILLS REDISCOUNTED, INCLUDED IN BILLS DISCOUNTED

DATA

300

ARE

soR

A 41, RI POR T

DATE 01

EACH MONTH

ESTIMATED CUBAN CIRCULATION IN ATLANTA FEDERAL RESERVE NOTES•

MILLIONS OF DOLLARS

•

$ 20.000.000

•

$ 25,000,000

$ 30.000.000

$ 45,000.000

-

-

$ 55.000.000

$ 65.000.000

""• $80.000.000 "

25I

250

200

200

150

150
•

LENDING POVVER
.•,
%

''

•

100

& .

\

% .-•.....•,..
,•

50

i

•

/
fp' A
....‘
...,,•-% ,..__
•-•-•....._,
.
;I.
,.."
%
/
%
,
•,.../
% •
%.• .•...- •,„•
%.......•-•••
•-•
s•-•

s'e'.‘•\

•••

,f
. %
.• I `....,''''
•
,

••-.°
.../-•... •••-•-•*.
---•
. ••,..
t....'`.°
•
I
.• •
•••
•
LENDING POVVER AFTER DEDUCTING EFFECT OF CUBAN CIRCULATION/
.
\

50

f
BILLS D,ISCOUNTED

ACCOMMODATION
EXTENDED

HOO

BILLS REDISC;', NTED

./7

—

_




>

C _0

•

7371,00.:./(30)01:1. r,

1920

1921

1922

1923

1924

• C

•

1925

72. 3

Cn a «,
3 41., (..) 0 C.
,

1926

FEDERAL RESERVE BANK OF BOSTON
LENDING POWER: THAT LENDING POWER PLUS EFFEC
T OF
CUBAN CIRCULATION IN NOTES OF ATLANTA FEDER
AL
RESERVE BANK. AND BILLS DISCOUNTED

300

DATA

CUBAN CIRCUL ATION

I
1 I 1
$ 20,000.000 -1-

IN

ATLANTA FEDERAL

$ 25.000.000

$ 30.000,000

•
x-

DAfl

or f ACH MOW,.

300
$ 55.000.000

$ 45.000 000

LENDING POWER

250
IPs111.•

10'4-*

'0.......
\
L...
'
"C

80000 000

41/4
% • ,-•%,

`
f'SP

\

$ 65 000000

AFTER ADDING EFFECT OF CUBAN CIRCULATION

..r41/
1

250

MILLIONS OF DOLLARS

SRI 10A LAST ((PORT

RESERVE NOTES:

LENDING POWER

•
,

,./

•

\•'•\ —•—\

200

\

.

200

150

150

100

100
ACCOMMODATION
EXTENDED

BILLS DISCOUNTED

50

50

cja L
>
0t3u01:1037,LOOLLCiovaCI-0:7




•
3

%.1• _0

L

—

LA.

_C. C..^ L

—•.1

33 vu603, 0 00.0 333 woovovoc2.0 D -33

043 ..)13

• k, L.D L L
0 U. 0 3331
, UOVOWO a 0 3

()L.

•

_

• .

0

>
333(10011

-)-).(tnozca -)6.2.zMn -)at.nozo

1920

1921

1922

1923

1924

1925

1926

miuipNs OF DOLLARS

ESTIMATED

•

f.

Exhibit 11.

MAILS TO AND FROM HAVANA
'11rnished by the Atlanta Post Office 9/24/26.
These Schedules show that for business purposes Jacksonville
is 48 hours nearer Havana than is Boston and that Atlanta is
24 hours nearer Havana than is 'Boston. These Schedulos are
all on Eastern Time
Jacksonville

Havana

Lenve 2.45 P. M.

due 4.30 P.M. 1 day later

Mail Time
25 hrs. 45 min.

Boston
Leave 4.25 P.M.

due 4.30 P.M. 4i days later
3 "
" 4.50

72 hrs. 5 min.
66 hrs. 44 min.
hrs. 29 min.

due 4.30 P.M. 2 days later
ii
II
il 4.30 P
_ • 2
_ •M
?I
tt
It
4.30 P.M. 2

42 hrs. 40 min.
39 hrs. 50 min.
55 hrs. 5 min.

Atlanta
Leave 9.50 p.m.

Leave 10.00 A.M. and are

Havana
tf
tt

Jacksonville
litlanta
Boston

12.01 P.M. 1 day later
7.15 A.M. 2 days later
4.25 A.M. 3 days later

26 hrs. 1 min.
45 hrs. 15 min.
66 hrs. 25 min.

ROUTES 1,,.10
The attached map shows routes from
Jacksonville to Havana, Uuba.

Boston, ..tlanta and

These are railroad and mail routes and would be the
routes used by air mail service.




Distances are as follows:
Miles
Boston - Havana
1.tlanta - Havana
Jacksonville - Havana

1,878
958
627

mails may be assumed as moving 100 miles per hour.

e

•

ROUTES AND MILEAGES
BOSTON—HAVANA
ATLANTA—HA'/ANA
JACKSONVILLE— HAVANA

SE AT TLE
SPOK AN E•

Exhibit 12.

(
•PORTLAND

•HELENA
•
•

(MINNEAPOLIS°

TIN
i
DETROIT

_
SALT !LAKE CITY•

4NRK
\
CLE VELAND

•i AGO

\

OCZA

OMAHA•

1
•PI TSBURGH

ADELPHIA

.
)
,4 FRANCISCO
ORE
ODENVER
)

i

•CINCINNAT
•

KANSAS CITYb
?ST LOUIS/

,RICHMOND

ffILOUISVILLE
•••-t.".• •
(
-

•f

LOS ANGELES

•NASHVILLE
*OKLAHOMA
CITY
•MEMPHI

i
•L IT TLE

ROCK

AN TA
•BIR MIN6HAM

DALLAS°

AVANNAH

•EL-75ASO -

ACKSONVILLE

lb-FiEW ORLEANS
HOUSTON•

•




BOUNDARIES OF FEDERAL RESERVE DISTRICTS
FEDERAL RESERVE BANK CITIES
•

FEDERAL RESERVE BRANCH CITIES

0

FEDERAL RESERVE BANK AGENCY