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FEDERAL RESERVE BOARD WASHINGTON X-3566 Novam bar 17, 1'-)22. SUBJECT: Employment of Hon. John W. Davis in all Par Clearance Litibation. D3ar Sir: . In view of certain recant devalopments in the so-called par clearance liti5ation, the Board has decided to su~ast that all of the Federal Reserve Banks employ Mr. John ·F. Davis, of New York, former Solicitor General of tha United Statas,.and former ambassador to Great Britain, to direct tha conduct of ~11 such liti5ation Which may now be pandin6 a 5 ainst any of them or which may arise in the near future. As you know, the Federal Reserve Bank of Atlanta, at the sue;e!;eStion of the Federal Resarve Board., atn:ployed Mr. Davis as its principal counsel to conduct the trial of the case of the American Bank and Trust Company v. Federal Resarve Bank of Atlanta, which at that time had ju.st bean remanded by the Suprema Court of the United States for trial on its merits before the United States District Court for the Northern District of Geor5ia• In viaw of the fact that tha questions at issue in that case had ass~d a nation-wide scope and vitally affected all of the Federal Reserve Banks, the expenses of Mr. Davis' emptoyment in that liti 5 ation were borne at the Board's su5e;estion by all of the Federal Reserve Banks pro rata. While Mr. Da.vis has actea. in an advisory capacity in the other par clearance cases, he has not participated actively in the trial of any but the Atlanta case. The Board feels that, from the standpoint of th.; Federal Reserve System as a mole, the Richmond, San Francisco, and Cleveland cases, as well as others vVhich rnay arise, are just as important as the Atlanta case, and if it was to the interest of all of the Federal Reserve Banks to employ Mr. Davis to conduct the litibation in the Atlanta case, it is equally to the interest of all of the Federal Reserve Banks to employ him in all other cases involving sbnilar liti6ation. Furthermore, it seems unJUSt for tha Federal Reserve Banks of Cleveland, San Francisco and Richmond to be called upon to contribute to the ezpenses of Mr. Davis' emplo~nt in the Atlanta case ana. not have the benefit of his active participation in the trial of their o'W%1 casas. X-3566 - 2 - All casas 6rowin 0 out of this par clearance liti 0 ation are naturally inter-dap,ma.ent, and tha decision in aach ca::;c necessarily has its affect on the liti5ation in every oth3r case. This is well ,illustrated by what happened in tha hichmond case. That casa was handled admirably by local counsal and a decision was won by the Federal Reserve Bank of J:lichmond in the Supreme Court of North Carolina. Quite recently. however, that ccurt 0 ranted a petition to re-hear the case, and it appears that this action was influenced to so~ extant at least by the decision in the San Fr~~Ci3co or Brookin5s case. The Boar~ und0rstands also that the brief filad by Mr. Srrath, counsel for tha Stat.:; bani:s, on the rc-hearinc;; of the Richmond case lays much strJs~ on th~ ~ecisions in thd San Francisco and Cleveland cases. It is obvious that t:1e aaciaion in cha Cla•reland case also vvas influencdd to a lar 6 e extent by tha lan 6 uae;;a of th3 opinion rendered in thJ San Francisco casa. It appears that all the State banks involved in these cases have retained the same chief counsel, Mr • ..1\lexander ','/. Smith, a very able laWYer, and thereby have acnieved a uniform policy and a coordination of tactics in tho:: saveral casas. By this me~'1S they hava c;ained also a distinct advanta 0 6 in beinb represantad in each of these cases by counsel vV.ho is thorouc)lly familiar 'JVi th avery asp-;;c t of each of the other cases. The Board believes, thjr~fore, that it is of first importance to the successful conduct of all of the par clearance liti 6 ation that the Federal Reserve Bat~s employ the same principal counsel to take charge of all euch litibation, and in view of his eAc~ptional lec;;al ability, in addition to tha experience which he has already had in the Atlanta case and his splendid success in the trial of that case, the Boara stronelY recornmands that all of the Federal Reserve 3anks employ Mr. Davis in such capacity. In makin5 this su6gestion, of co~rse, it is not the Board's ida a that the Federal H;;:;s,erve Banks should dispense with the services of their re 6 ular counsel or any of the special counsel whom they have retained or desire to retain in such casas. The Board realizds that the services of local counsel will ba required for much of the actual conduct of such liti 6 ation, but believes that it is to the inter<>st of all concerned that Mr. Davis be plac<:hl in a position to direct the trial of all such cases and to participate actively in the trial of each case to suCh extent as he deems advisable. The Board will be pleasad to laarn at your early convenience of the attitude of your directors in this r.aatter and vmether or not your bank will be willin0 to ratain Mr. Davis, jointly with the othor Federal Raserve Banks, in the capacity indicated abova, tha e~anses of such .:lmployrnent to be borne pro rata by all of the Faderal Reserva Banks. By order of the Federal neserve Board. WM. W. HOXTON Secratary.
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