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X-4598. FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE BOARD M a y 3 , 1 9 2 6 . S u b j e c t : Expenses i n Express Hate Case. Dear S i r : The a t t a c h e d c o p i e s of l e t t e r s exchanged by t h e Board w i t h t h e Counsel f o r t h e F e d e r a l Reserve Bank of New York exp l a i n t h e f i n a l d i s p o s i t i o n of t h e complaint f i l e d w i t h t h e I n t e r s t a t e Commerce Commission on b e h a l f of t h e F e d e r a l Reserve Bank of Mew York, e t a l . a g a i n s t American Railway Express Company e t a l . , f o r t h e p u r p o s e of o b t a i n i n g a r e v i s i o n of e x p r e s s r a t e s on shipments of c o i n , c u r r e n c y , s e c u r i t i e s , e t c . I f any f u r t h e r i n f o r m a t i o n i s d e s i r e d , i t i s s u g g e s t e d t h a t your bank communic a t e w i t h t h e F e d e r a l R e s e r v e Bank of New York, A l l F e d e r a l Reserve Banks upon r e c e i p t of t h e B o a r d ' s l e t t e r of August 16, 1923 (X-3812) s i g n i f i e d t h e i r w i l l i n g n e s s t o b e a r a p r o - r a t a s h a r e of t h e expense i n c u r r e d i n c o n n e c t i o n w i t h t h i s c o m p l a i n t . The F e d e r a l Reserve Bank of New York h a s s u b m i t t e d a s t a t e m e n t of expenses t o t a l i n g $10,168*34, copy e n c l o s e d , and on t h e b a s i s of p a i d - i n c a p i t a l and s u r p l u s a s a t c l o s e of b u s i n e s s A p r i l 3 8 t h , t h e p r o - r a t a s h a r e s of t h e s e v e r a l F e d e r a l R e s e r v e Banks a r e a s f o l l o w s : Bos ton New York Philadelphia Cleveland Ricbmond Atlanta Chicago S t . Louis Minneapolis Kansas C i t y Dallas San F r a n c i s c o Total $765. 86 2 , 8 2 5 . 31 962. 59 1 , 0 7 9 . 85 533. 45 405. 17 1 , 3 9 6 . 38 439. 89 316. 00 393. 00 353. 89 696. 95 $10,168. 34 You a r e r e q u e s t e d t o r e m i t your p r o p o r t i o n a t e s h a r e of t h e above expense d i r e c t to t h e New York bank. http://fraser.stlouisfed.org/10 GOVERNORS Federal Reserve Bank of St. Louis Very t r u l y y o u r s , D. R. C r i s s i n g e r . Governor. OF ALL F . R. BANKS. 321 f 3 2 2 c o p y STATEMENT OP EXPBHSES X-4598-a FEDERAL RESERVE BOARD vs AMERICAN RAILWAY EXPRESS PAID BY FEDERAL RESERVE BANK OF NEW YORK November 2 3 , 1923 James W. Carmalt S p e c i a l Counsel F e b r u a r y 2 , 1924 L* R. Sounds Travel Expense March 8, 1924 Brooks T r a f f i c S e r v i c e Company Preparing exhibi t s and t e s t i f y i n g March 11, 1924 - F.R. Bank of $3,000.00 13*40 900.00 Cost of s t e n o g r a p h i c work i n p r e p a r i n g documents 99.66 March 26, 1924 Brooks T r a f f i c S e r v i c e Company Preparing exhibits and t e s t i f y i n g • 1,155.28 March 23, 1926 James W. Carmalt S p e c i a l Counsel 3,000.00 A p r i l 29, 1925 James W. Carmalt S p e c i a l Counsel 2.000.00 $10.168.34 T COPY X-4598-b A p r i l 27, 1926. Dear S i r : I acknowledge r e c e i p t of and have brought t o t h e a t t e n t i o n of the F e d e r a l Reserve Board your l e t t e r of A p r i l 2 6 t h a d v i s i n g t h a t the I n t e r s t a t e Commerce Commission has i s s u e d an o r d e r denying t h e p e t i t i o n f i l e d on b e h a l f of the F e d e r a l r e s e r v e banks f o r a r e h e a r i n g on the e x p r e s s r a t e c a s e . I t i s noted from your l e t t e r t h a t Mr. C a r n a l t concurs i n t h e view t h a t t h e r e i s n o t h i n g to bo gained by p r e s e n t i n g the case t o t h e c o u r t s , a s t h e r e i s but a remote chance t h a t the c o u r t s would review and cnangc t h e f i n d i n g of t h e Commission t h a t the r a t e s c h a r g e d by t h e e x p r e s s companies a r e i n f a c t f a i r and reasonable. I n view of t h e s e f a c t s , the Board approves of the p r o p o s a l t h a t Mr, Carmalt be p a i d the $2,000 b al an ce' due him on the minimum f e e f i x e d under t h e agreement of October 50, 1923. I f , a f t e r making t h i s payment, you w i l l submit t o the Board a s t a t e m e n t of t h e e n t i r e expenses of the ITew York Bank i n connect i o n w i t h t h i s c a s e , the Board w i l l bo glad t o a r r a n g e f o r p r o r a t i n g among a l l the F e d e r a l r e s e r v e b a n k s . Very t r u l y y o u r s , (Signed) E. B. C r i s s i n g e r D. B. C r i s s i n g e r , Governor. Mr. L. R. Mason, General Counsel, F e d e r a l Reserve Bank of ITew York, Hew York, H. Y. 323 COPY FKDEBAL H2SZ3VE BASK X-4558-c 324 Or HEW YQEK I . C. C. Docket Fo. 15449 F e d e r a l Reserve Bank of Few York v# American Railway Express Company e t al# A p r i l 2 5 , 1926. F e d e r a l Reserve Board, Washington, B. C. S i r s : R e f e r e n c e i s made to l e t t e r a d d r e s s e d to me under d a t e of F e b r u a r y 19 "by Vice Governor F l a t t i n r e g a r d to the above case* On A p r i l 14 the I n t e r s t a t e Commence Coimiission p u b l i s h e d i t s o r d e r of A p r i l 5, denying the p e t i t i o n f i l e d on b e h a l f of the r e s e r v e banks to r e open t h e c a s e . i s concerned# This f i n a l l y d i s p o s e s of the ma t t e r , so f a r as t h e Commission Mr. Carina! t concurs in the view t h a t t h e r e i s n o t h i n g to be g a i n e d by o r e s en t i n g the case to the c o u r t s . I t i s thought we might be suc- c e s s f u l i n g e t t i n g the c o u r t s to i n t e r p r e t the Cummins amendment i n a c cordance with our view of i t , but that p r a c t i c a l l y n o t h i n g would be g a i n e d by so d o i n g , s i n c e the Commission has found i n the p r o c e e d i n g s t h a t the r a t e s charged by t h e e x p r e s s companies a r e i n f a c t f a i r and r e a s o n a b l e . The p o s - s i b i l i t y of g e t t i n g the c o u r t s to review and change the f i n d i n g of f a c t by the Commission i s too r e m o t e , in our judgment, to j u s t i f y r e s o r t i n g t o the courts. Mr. Carmali, has s u b m i t t e d h i s b i l l f o r $ 3 , 0 0 0 i n f i n a l payment of h i s p r o f e s s i o n a l s e r v i c e s b e f o r e t h e Commission# This i s t h e b a l a n c e of fee minimum amount p a y a b l e to him under the f e e agreement of October 30, 1923. I t i s proposed to make -oaynent t o him a c c o r d i n g l y and c l o s e the case* Respectfully, ( s i g n e d ) L. R. Mason L.R. Mason, General Couilsel# X-4598-d ^ ®^ ^ February 19, 1926. Mr. L. Randolph Mason, Counsel, f e d e r a l He s e r v e Bank o f New York, New York C i t y , New York. Dear S i r i The F e d e r a l Reserve Board has r e c e i v e d your l e t t e r of Febr u a r y 9th w i t h r e f e r e n c e t o the complaint f i l e d wi tin. the I n t e r s t a t e Commerce Commission on b e h a l f of the F e d e r a l Reserve Bank of New York, e t a l . a g a i n s t American Railway Express Company e t a l f , f o r the p u r p o s e of o b t a i n i n g a r e v i s i o n of e x p r e s s r a t e s on s h i p ments of c o i n , c u r r e n c y , s e c u r i t i e s , e t c . The Board n o t e s t h a t D i v i s i o n One of t h e I n t e r s t a t e Commerce Commission has r e n d e r e d a d e c i s i o n a d v e r s e to t h e f e d e r a l r e s e r v e banks and t h a t you propose t o f i l e a p e t i t i o n f o r a r e h e a r i n g b e f o r e t h e e n t i r e Commission. Inasmuch a s t h e r e i s e v e r y t h i n g to be g a i n e d and n o t h i n g to be l o s t by f i l i n g such a p e t i t i o n , t h e Board s e e s no r e a s o n why i t should not be f i l e d . The Board a l s o n o t e s t h a t you propose t o pay Mr. Carmalt $3,000 on account of h i s f o e f o r s e r v i c e s b e f o r e the I n t e r s t a t e Commerce Commission. Inasmuch a s the F e d e r a l Reserve Board has h e r e t o f o r e approved your c o n t r a c t with Mr. Carmalt f o r a minimum f e e of $8,000 f o r h a n d l i n g t h i s m a t t e r b e f o r e the I n t e r s t a t e Commerce Comm i s s i o n and u n d e r s t a n d s t h a t you have only p a i d $3,000 of t h i s f e e to d a t e , t h e Board s e e s no o b j e c t i o n to your p a y i n g him an a d d i t i o n a l $3,000 a t t h i s t i m e , l e a v i n g $2,000 of t h e minimum f e e to bo p a i d when h i s s e r v i c e s b e f o r e the I n t e r s t a t e Commerce Commission are f i n a l l y terminated. The Board u n d e r s t a n d s t h a t the F e d e r a l Reserve Bank of New York w i l l p a y a l l the expenses i n c u r r e d i n t h i s m a t t e r out of i t s own f u n d s and w i l l c a r r y t h e amount i n a suspense a c c o u n t u n t i l t h i s m a t t e r i s e n t i r e l y d i s p o s e d o f , a t which time the e n t i r e expenses of h a n d l i n g the m a t t e r w i l l be p r o r a t e d among a l l the Fede r a l r e s e r v e banks and the o t h e r F e d e r a l r e s e r v e banks w i l l be c a l l e d upon to reimburse the F e d e r a l Reserve Bank of New York f o r t h e i r pro r a t a s h a r e s . Very t r u l y y o u r s , WW SAD (Signed) Idmund P i a t t Vice Governor* 0 0 P Y X~4598~e 3 2 6 FEDERAL RESERVE BAM OF HEW YOEK February 9, 1925* I.C.C.Docket No.15449 F e d e r a l Reserve Bank of Hew York v. American Railway Express Co. e t a l , F e d e r a l R e s e r v e Board, Washington, D.O. S i r s : On or about September 5, 1923, complaint was f i l e d w i t h the I n t e r s t a t e Commerce Commission on b e h a l f of the F e d e r a l Reserve Bank of HewYork e t a l . v . American Railway Exprass Company e t a l . , a l l e g i n g t h a t t h e r a t e s of the e x p r e s s companies on p r o p e r t y , i n c l u d i n g money, c o i n , c u r r e n c y , bank n o t e s , s e c u r i t i e s , e t c . , and charges made t h e r e u n d e r , being based upon the v a l u e of t h e shipments d e c l a r e d by the s h i p p e r and being e s t a b l i s h e d w i t h o u t the a u t h o r i t y of t h e I n t e r s t a t e Commerce Commission, were i n v i o l a t i o n of S e c t i o n 20 of the I n t e r s t a t e Commerce Act known a s the Cummins Amendment; t h a t t h e r a t e s were e x c e s s i v e and u n r e a s o n a b l e w i t h r e f e r e n c e t o the element of i n s u r a n c e ; t h a t the r a t e s wore d i s c r i m i n a t o r y and were p r e f e r e n t i a l to s h i p p e r s of o t h e r commodities. A h e a r i n g was h e l d upon the i s s u e s r a i s e d by the complaint b e f o r e an examiner of t h e commission i n Hew York City i n February and March of 1924. • At t h i s h e a r i n g the banks were r e p r e s e n t e d by Mr. Carmalt and myself * We o f f e r e d t e s t i m o n y showing the h i s t o r y of t h e r a t e s i n q u e s t i o n and a l s o adduced such f a c t s a s were known t o t h e o f f i c e r s of t h e bank which-tended t o show t h a t the r a t e s were e x c e s s i v e . The e x p r e s s companies adduced t e s t i - 3 2 7 X-4598-c ~ s - mony designed to shew t h a t t h e r a t e s were f a i r and reasonable# Under the r u l e s of t h e commission t h e burden of proof was upon t h e e x p r e s s companies. The examiner h e l d t h a t t h e r a t e s were not i n f a c t u n r e a s o n a b l e , d i s c r i m i n a t o r y or p r e j u d i c i a l to t h e complainants, and i n e f f e c t t h a t the p u b l i c a t i o n of r a t e s on the b a s i s of v a l u e d e c l a r e d by the s h i p p e r was not i n v i o l a t i o n of t h e Cumnins amendment, a s a l l e g e d . The f i n d i n g of f a c t t h a t the r a t e s a r e not e x c e s s i v e or d i s c r i m i n a t o r y was r e a c h e d by the examiner n o t w i t h s t a n d i n g t h a t h e found t h a t t h e s t a t e m e n t of expenses i n c u r r e d by t h e Ameri c a n Railway Express Company i n i t s money department a t t h e Broadway o f f i c e and a t t h e r a i l r o a d t e r m i n a l s i n New York and t h e s t a t e m e n t of revenue and expenses on shipments consigned to or r e c e i v e d from t h e F e d e r a l Reserve Bank of Hew York, o f f e r e d i n evidence by t h e express company, were l a c k i n g i n u n i f o r m i t y and thoroughness and were too narrow i n scope to be of izalue, E x c e p t i o n s were duly f i l e d on b e h a l f of t h e bank to t h e f i n d i n g s of t h e examiner and i n J u l y of 1925 b e f o r e D i v i s i o n One of the I n t e r s t a t e Commerce Commission t h e s e e x c e p t i o n s were o r a l l y argued by Mr, C a r n a l t and myself on b e h a l f of t h e banks, b r i e f s on b e h a l f of both s i d e s h a v i n g beeaa f i l e d # v The commission s u s t a i n e d t h e r u l i n g of the examiner, both on t h e f a c t s and t h e law. The c o n s t r u c t i o n now p l a c e d by t h e commission upon t h e Cumnins amendment i s d i r e c t l y c o n t r a r y to r u l i n g s of t h e commission on t h i s q u e s t i o n of law, which had been r e n d e r e d p r i o r t o t h e time the.comp l a i n t was f i l e d i n t h i s c a s e . The q u e s t i o n s of f a c t and law i n v o l v e d were f u l l y a r g u e d b e f o r e t h e commission o r a l l y and on b r i e f s , i t i s our p u r p o s e to f i l e a p e t i t i o n f o r a r e h e a r i n g b e f o r e the whole commission. The f i n d i n g of t h e commission t h a t i n f a c t t h e r a t e s a r e X4598~e3^8 - 3 - j u s t i f i e d makes i t doubtful that proceedings in the courts would "be of any a v a i l . However, we are desirous of getting the f i n a l ruling on our petition refor/hearing "before ticking a definite rc connendation in this respect. A copy of the ruling of Division One of the comission i s enclosed herewith. Mr. Carnalt has sent a t i l l , dated February 8, in the sun of $3,000. He has already heon paid $3,000 on account of the fee agreement of October 30, 1923, approved "by the Board. The nininun due hin for services "before the coianission, in case the issues were decided against the bank, i s $8,000. It i s nov," proposed to pay hin $3,000, as requested in February 8. , Respectfully, L. R. Mason, General Counsel. End. h i s b i l l of
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