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280. June 24, 191S 432 NOTICE FOR THE PRESS The Federal Reserve Board today announced that it has approved the request of the Federal Reserve Bank of Atlanta to open a branch at New Orleans, La. Its action was taken m accordance with the pro visions of Section 3 of the Federal Reserve Act which reads as follows "Each Federal reserve bank shall establish branch banks within the Federal reserve district "n which it is located and nay do so in the district of any Fed°ral reserve bank which may have been suspended. Such branches shall be operated by a Board of Directors, under rules ana regulations approved by the Federal Reserve Board. Diredtors of branch banks shall possess the same qualifications as directors of the Federal reserve banks. Foul* of said directors shall be selected by the Reser/e bank and three by the Federal Reserve Board, and they shall hold office during the pleasure respectively of the parent bank and the Federal Reserve Board. The reserve bank shall designate one of the directors as manager." iVhile the Board has carefully considered the principles which should be observed m opening a branch of the Federal Reserve Bank of Atlanta, it is not ready at this time to promulgate any general rules applicable to other points, as it regards the proposition as somewhat experimental. It is felt that the experience gained in this case will have an important bearing upon the future development of the branch bank idea. Incidentally, it may be mentioned that the banks comprised m the New Orleans Clearing House Association have undertaken to make good for the first year of operation any difference betv/een the expense of conduct ing the new branch bank now proposed and the revenues to be derived from it. No definite assignment of territory has been made to the New Orleans branch but it is understood that it is intended to assign to it the member bank65 of Louisiana and Missj.ss3pfi and those of Mob3le and Baldwin Counties, Ala. m District 6, The banks m the territories so segregated will deal with the New Orleans branch only. 3- 433 The Board has directed that the New Orleans "branch shall conduct only operations m the discount and purchase of commercial paper and acceptances and those relating to clearing, collection and exchange transactions and transfers of funds. The issue of notes and the function of rediscounting with other Federal reserve banks, the purchase of United States bonds ant? notes, and dealings m of warrants Municipalities" are to be carried on solely by the Federal Reserve Bank of Atlanta. All operations are to be reported promptly to the Federal Reserve Bank of Atlanta and the Federal Reserve Board is to be advised of the same without delay. Orleans branch The transactions of the New* will b» considered as the transactions of the Federal Reserve Bank of Atlanta, and so reported m the statements of the latter. It is assumed that the provisions of the Federal Reserve Act require that of the seven directors, two shall be bankers, and two business men (not necessarily bankers) and that the three Government directors shall conform so far as possible to the same requirements as those of the "C" class directors of the parent bank. A 1 anager will be appointed from among the directors The terms of office of the first directors are set at one year* those first appointed to hold office for one year from January first 1916. By-laws, salaries, fees, etc., are to be subject to the approval of the Federal Reserve Board. Transactions m foreign exchange on be half of the New Orleans Branch are to be the subject of later regula tions. No other Federal reserve bank has approved a request for branches and the Board does not expect to take further action until more ex perience has been gained.
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