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8, 1914#

The members of the Federal Reserve Board, sitting as a cojn~
mittee this morning, listened to a discussion presented-by representatives
of Trust Companies* Savings Banks and State Banks, members of American
Bankers Association, with reference to the conditions under which insti­
tutions holding State charters may be permitted to enter the Federal
Reserve System#


Those present included Messrs. Hamlin, Williams, Harding, Warburg,
Delano and Miller of the Federal Reserve Board, and the following bankers:
W. H. McCarter, President, Fidelity Trust Co., Newark, N. J.
John W. Platten, President, United States Mortgage & Trust.Co.,
New York City,
Oliver C. Fuller, President, Wisconsin Trust Co., Milwaukee,Wis*
A, A. Jackson, Vice-President, Cirard Trust Co., Philadelphia,Pa#
John H. MdsOn, Vice-President, Commercial Trust C o P h i l a d e l p h i a ,
B. F. Saul, President, Home Savings Bank, Washington, D. C.
Geo. E. Lawson, Vice-President, peoples State Bank, Detroit, Mich.
A Statement embracing the views of the bankers was presented to the Board,
as follows:

O •


Dec^j&ber 8* 191^*

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The representatives of the banking institutions who
are present to-day desire to express to your associates of
the Federal Reserve Board their appreciation of the courtesy
extended to them in permitting them to appear before you and
of the efforts which have been-made by your Board to meet the
convenience of our committee in the postponement of the meet­
ing from December 2nd until to-day.
While we are appreciative of your efforts in this
direction, we nevertheless feel that sufficient time has not
elapsed since the appointment of our committee by the president
of the American Bankers Association, said committee being
appointed only on November 9, to have given proper and full
consideration to the weighty problems involved- in this subject
and to have arrived at any conclusion in the settlement of
the problems.
The resolution passed by the American Bankers Asso­
ciation, and under which this committee is acting, had for
its object the suggestion of such change or- changes in the
Federal Reserve Act as would permit state chartered institu­
tions to enter the System and, as before stated and for the
reasons given, the committee has been unable to offer any



suggestions to the purpose for which they were appointed, ,and
if, in offering sqme suggestions as to the rules and regula­
tions to be promulgated by the Federal Reserve Board, they
have strayed afield, from the purpose of their appointment, they
would plead their desire of full co-operation with the Govern­
ment in the furthering of the banking interests of the country
by doing' everything, in their power tc assist the Federal Reserve
Board in the determination of the problems with which they are now
While the Trust Companies have given a great deal of
consideration involving'the subject, frankly we are compelled
to admit, for’ the reasons outlined in the beginning of my
remarks, viz: the short time ve have had between the date of
our appointment and the date of this meeting, that we have
been unable to arrive at any conclusion among ourselves by
which we could make any suggestions to you looking toward
such amendments as might be made to the Act which would encourage
Trust Companies to enter the System.
Since, however, it is the intention of the Federal
Reserve Board to promulgate certain rules and regulations,
it may not be inappropriate to bring to your attention one or
two thoughts which have occurred to us and which we would like
to suggest to you for your consideration.





banks and trust companies may con­

tinue to exercise those banking or trust company powers
granted them by their state charters when suck powers are not
in conflict with the limitations imposed by the Federal Reserve
Act or the regulations of the Board.

No power however granted

by a state charter which is not customarily exercised by a
bank or trust company and which is not incident to the business
of a bank or trust company shall be exercised by any associa­
tion (incorporated under the laws of any State) which becomes
a member of the Federal Reserve Systenj.

The Reserve Board

reserves to itself the determination as to whether these unusual
powers are admissible and consistent, The applying bank must
file with its application, as an exhibit, its statement showing
powers granted to it by its stats charter and those powers
which it desires and intends to exercise."
It occurs- to u 3 that it may be difficult to determine
what are the powers usually exercised by trust companies.
Their powers are enumerated in the several state statutes under
which they are incorporated.

There is considerable difference

between the pov/ers- granted such companies by the different
state laws.

In addition to this some of the trust companies

are operating under private charters and exercising net only
the powers given under such charters, but also the powers given

under the general statutes.
Under these conations an applying trust company will
be confronted with the necessity of immediately determining
what powers it would like tc exercise in! the future and possibly
of being compelled to discard some of the powe*s granted by
its charter because the Federal Reserve Bo^rd, which is a con­
tinuing .power, might be of the opinion that scgie of these
powers not customarily exercised were inconsistent with the
Federal Reserve System and therefore inadmissible.
Our disposition being in every respect that of sup­
porting the Federal Reserve Board and the recent banking legis­
lation we had thought possibly, after an opportunity had been
afforded to the trust companies of watching the operations of
the Act as applied to National Banks, that later on any state'
chartered institution would be able to enter the System and,
after a fair trial of the same, if it so desired, might retire

As the law now reads this cannot be done.


Federal Reserve Act opens the door- for voluntary entcyy of
state institutions, but does not permit voluntary exit except
through liquidation..
Sec. 10.

"The Federal Reserve Board will from time

to time make such amendments and adopt and publish such addition
al regulations and by-laws as may be deemed necessary and advis­

This regulation seems to us to contain elements of
great danger to state chartered institutions entering the System
and to impose hardships upon them "<hich are .not imposed upon
national banks, for the duties, the privileges, and the limita­
tions as applied to national banks in the Federal Reserve Act
are defined and prescribed, while under this regulation a future
Federal Reserve Board may prescribe regulations for the conduct
and management of state chartered institutions which may be
difficult to comply with, and the above mentioned class of
institutions would have no remedy or power to escape their
enforcement except again by liquidation.
In offering these comments,.we trust that you will
realize that, for the reasons I have- already stated, they merely
represent the personal views of the members of the legislation
committee of the Trust Company Section.