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Federal Reserve Bank of St. Louis

122.6-1 - Aujustments between FRBanks, New
York & Philadelphia account changes
in Boundaries of FRDistricts

CHARLES J.RHOAD S,

S

GOVERNOR.

EDWIN S.STUART.

•

RICHARD L.AUSTIN,
CHAIRMAN.

GEORGE M.LAMONTE.

DEPUTY— GOVERNOR.

DEPUTY CHAIRMAN.

FRANK M.HARDT.
CASHIER.

FEDERALRESERVE


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Federal Reserve Bank of St. Louis

ANK OFPIIILADELPilLt

408 CHESTNUT STREET
,s4-4

irmLADELPIHAI
August 6, 191

Sirs:
I beg to acknowledge receipt

your favor of

the 5th instant/stating that the Bo. d had approved
the plan for the adjustment of ea
in connection with the transfe

ings and expenses,

of the banks of northern

New Jersey from District No. 3 to District No. 2, presented in our letter of J
ments, and authorizing

21, and accompanying docu-

s to put the same into effect.

We have to ay communicated this information to
the Federal Reserv
to adjust o

a

has been a

Bank of New York, and are arranging

ved.

ounts in accordance with the plan which

Respectfu ly,

Governor.

FEDERAL RESERVE BOARD,
Washington, D. C.

CJR-D

FEDERAL RESERVE BANK
OF NEW YORK

.__1915._____
Aug.. ..4
'
1

-j
JAL FiVE-- BOARD-HI T
1
/

Sirs:
Receipt is acknowledged of your letter of August .5t1/
1
_
addressed to Governor Stronr_;, notifying him of the approval of
the Federal Resorve Board of the plan for the adjustment of earnings and expenses in connection with the transfer of the banks in
northern liew Jersey from District 7o. 3 to District 7o. 2 presented in our letter of July 20th, and authorizing this bank to put
the plan into effect.
71e have already been in colmunication with Governor
Rhoads on the subject and the details effecting the adjustment
will be worked out when Governor Rhoads is here not Tuesday.
Respectfully,

Federal Reserve Board,
—ashington, D. C.

PJ/PE

ad•
RoferrMr.

li
1
f.,

At - .
.jGt
'a."

for the
reply tor the:,IL..,....... .,. ,
.... ..

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Federal Reserve Bank of St. Louis

.
71),
1915

..

I


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Federal Reserve Bank of St. Louis

Auuast 59 1915.

SIR:
By direction of the roderal Reserve Board, I
have the honor to advise you that the plan for the adjustment of earnincs anO enpensos in connection with
the try-Infer of the banlzs in northern !Tow Jersey from
District No 3 to Diatrict 3o. 2, presented inio4Llet,,
ter of ,71.4V4,1and accompanyin,r; Oocuments hare been
aliprored by the Federal Reserve Board; and that you
ha7o been authorized to ;rat it into effect.
Respectfully,

Secretary.

i'Ainjamin Strolz2 Jr.,
Governor, 'Federal Reserve Bank,
Uew


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Federal Reserve Bank of St. Louis

kuc-ast U, 191i5

By direction of the :W.eral Reserve Board,
llwe the honor to advise you that the plan for the adjustmnnt of earnincs and e=penscs in connection with the transfer

of the banks in northern New Jersey from District Ne.

3 to District 7o. 2, presented in your letter of July 21st,
and SCCOria-aul.i7 docnments have been apvroved by the Federal
Reserve Doard ; and that you have been authorized to Iiut

Mr. C. J. Rhoads,
Governor, '
,
sclera' 7,eserve Bank of l'hiladelphia.

•

/c.6-1'

FEDERAL RESERVE BOARD

RECEIVED

WASHINGTON

AUG 4 1915
GOVe.RNOFt'S OFFICE

Auust 4, 1915.

Mv dear 'Iovernor:
I am attaching horeto a letteil lust received
from

r. Cotton, relative to the proposed settlement

of accounts between the Federal Reserve Ranks of
N31v

York and Philadelphia, incident to the transfer

of northern New Jersey from the Philadelphia to the
New York district, together with the complete file on
this subject.
You will orire that

r. Cotton disagreee with

. the opinion filed by 'Ir. Elliott, relative to the proposed

thod of E_djustment and stites that, in his opin-

ion, there is no legal objection to carrying out the
plan as recommended by and agreed to by both the 7od.
eral Reserve Bank of Philaelphia and the Federal Reserve Bank of rew York.
Respectfully,

As3ietant Counsel.
Eon. Charleo C. Hamlin,
governor.


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Federal Reserve Bank of St. Louis

o
FEDERAL RESERVE BOARD
WASHINGTON

July 29, 1915.

kat:

Dear /Jr. Delano:

I have read the brief of Governor Rhoadst and also that of
our Counsel, 'Jr. Elliott, in the matter of adjustment of accounts
between the Federal reserve banks of New York and Philadelphia,
.incident to the transfer of member banks in Northern New Jersey


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Federal Reserve Bank of St. Louis

from Philadelphia to New York.
No method of procedure has been prescribed by the Act in
adjusting the respective accounts of banks thus transferred, and
it would seem to me that as the Board is given the necessary
power to readjust the districts, it must, by necessary implication, have the power to readjust the accounts in a fair, equitable
manner.
In my opinion the proposed settlement reaches a just, equitable result, and is approved by both parties thereto, and, consequently, should be authorized by the Board, unless it is clearly
in violation of law.
While I have great respect for Judge Elliott's opinion, I am
inclined to think in'this case it would be wise to ask an opinion
from Er. Cotton on the matter before reaching a final conclusion.
Very sincerely yours,

Governor.
Hon. F. A. Delano,
Federal Reserve Board.

/.2_2_,-/

•
FEDERAL RESERVE BOARD
WASHINGTON

July 28th, 1915.

M.C.ELLIOTT
COUNSEL.

:!:y de - "overnor:-


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Federal Reserve Bank of St. Louis

I have examined, as requested, the accompanying papers which relate to the adjustment of accounts between the Federal Reserve Banks of New York
and Philadelphia incident to the transfer of member
banks in northern New Jersey from District No. 3 to
District No. 2.
nil° I fully appreciate the force of the
arguments presented in so far as they relate to the
equities of the case, I am unable to agree with the
conclusion reached that the Board can legally authorize the Federal Reserve Dank of Yew York to assume
and pay any part of the expenses of the Federal Reserve Bank of Philadelphia, or that the Board can
legally authorize the Federal Reserve Bank of:alliladelphia to pay any part of its gross earnings to the
Federal Reserve Bank of New York.
The fundamental question involved appears
to be whether the banks in question can make these
payments without exceeding their corporate powers.
I can find no authority to sustain this right on the
part of the banks.
It is contended that if these banks withdraw from the Federal Reserve Dank of Philadelphia
they are not entitled to receive any dividends out
of the future earnings of that bank. There is some
force in this suggestion but as explained to the
Board when the recothmendation was made that accrued
dividend certificates be issued to the banks transferred, it is the opinion of this office that this
course is justified for the following reasons:
nile it is true that as a methdd of procedure
adopted by the Board petitions of banks desiring to be
transferred to other districts have been heard, this
right is not given the banks by the Federal Reserve Act
since the provision to this effect was eliminated from
the House bill and the matter of review was left to the
Federal Reserve Board to be taken up on its own motion.
The method of procedure in question was adopted as expedient in order that the Board might have the benefit
of the arguments of the bankers but, as explained, these


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Federal Reserve Bank of St. Louis

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FAD
•

2

petitions were not heerd in compliance with any provision:3 of the Act.
Consequently, the banks transferred did not
Withdraw voluntarily from the Federal Reserve Bank of
Philadelphia and are not transferred to the Federal
Reserve Bank of New York by their voluntary act since
the Federal Reserve Act does not vest in member banks
the right to select the Federal Reserve Rank to which
they desire to become a stockholder. Their withdrawal
on the other hand is due to the act of the Federal Reserve Board - an administrative body of the Government
in changing the geographical limits of the Federal reserve districts.
This being true, and the Federal
Reserve Act being silent on the subject of what anount
menber banks whose stock is canceled under these conditions shall receive, it is reasonably within the
province of the Federal Reserve Board to determine this
question and since their dividends are cumulative under
the terms of the Act, and their transfer is the result
of change in the district lines, it appears to be consistent with the provisions of the Act for the Federal
Reserve Rank of Philadelphia to issue accrued dividend
certificates to be paid when the earnings of that bank
justify thepayment.
The determination of this question, however,
merely settles the rights as between Federal reserve
banks and their stockholders, namely, the member banks.
This question is entirely independent of the right of
one Federal reserve bank to enter into contractural relations with another Federal reserve bank.
In the accompanying brief the suggestion is
made that the Board is without authority to require the
Federal Reserve Bank of Philadelphia to assume the payment at some future time of dividends not yet earned,
and it is urged that member banks withdrawing from the
Federal Reserve Bank of Philadelphia are entitled to
receive only the book value of their respective holdings.
It is accordingly argued that the Board having
exceeded It authority in requiring the issuance of accrued dividend certificates, it can go further and authorize the Federal Reserve Bank of 1ev; York to assume and
pay accrued dividends to the banks transferred out of its
future earnings, and also to pay a proportionate part of
the organization and current expenses of the Federal Reserve Bank of Philadelphia. As above stated, T cannot
agree with this conclusion. rhether the Board has authority
to require the Federal Reserve Rank of Philadelphia to

4

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3

issue accrued dividend certificates or not, its ruling on this subject can have no bearing on its right
to authorize a contract between the two Federal Reserve Ranks if sUch contract is ultra. vires.
The Board has recently had occasion to
fully recognize and sustain the separate entity of
Federal reserve banks as corporations organized under
As corporations such banks posses only
Federal law.
those powers which lre granted them by law and such
others as are reasonably inoidantal to the powers so
The Board cannot by regulation add to these
granted.
powers and so with great deference to the opinion of
Counsel to the Federal reserve banks, and with full
appreciation of the weight that should be given to the
recommendations of the officers of these banks, I am,
nevertheless, forced to the conclusion that the Board
is without legal authority, by approval of the accompanying plan, to vest in the Federal Reserve Bank of
New York the power to pay any part of the expenses of
the Federal Reserve Bank of Philadelphia, or to vest in
the Federal Reserve Bank of Philadelphia the power to
pay any part of its earnings to the Federal Reserve
Bark of 7ew York.
Resnectfully,

Counsel.
Non. F. A. Delano,
Vi—le Governor.


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Federal Reserve Bank of St. Louis

•

IIARLES J.RHOAD S,
GOVERNOR.

EDWIN S.STUART.

4110

DEPUTY- GOVERNOR.

/
02
RICHARD L.AusTiN.
CHAIRMAN.

GEORGE M.LAMONTE,
DEPUTY CHAIRMAN.

FRANK M.HARDT.
CASHIER.

rEDERALEESERVE BANK OFPIIIIIIADELPHIA_
408 CHESTNUT STREET

-PHILADELPMAIJuly 21,1915

FEDERAL RESERVE BOARD,
Washington, D. C.
sir s

In accordance with your suggestion, we enclose herewith
a brief settin6 forth our views regarding the adjustment of earnings and expenses, etc. in connection with the transfer of the
banks of northern rew Jersey from District ro. 3 to District

To.

2
.
I:le also enclose a. letter from the Federal Reserve Bank
'
Nof

ew York on the same subject, supplementing our brief.
As you will notice from the date of our brief, this

matter was prepared about ten days ago, but there has been delay
in forwarding it to you on account of the absence of Governor
Strong, to whom it was submitted for his consideration.
Hoping that. the reasons set forth in the brief will
appeal to the Board, I remain,
Very truly
ts,41

Y

/
CJE-D
(Enc.)


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Federal Reserve Bank of St. Louis

Governor.

In the Matter of the Transfer of Banks of Northern
New Jersey from District No. 3 to District No, 2, Pursuant
to Order of the Federal ReserveBoard, effective July 1,1915.

To the Federal Reserve Board,
Washington, D. C.
Sirs:-In effecting the transfer of the banks of Northern New
Jersey from District No. 3 to District No. 2, the Federal Reserve
Board has approved repayment to the member banks transferred of
the full amount paid by them on account of their subscriptions to
the capital stock of the Federal Reserve Bank of Philadelphia, or
in fact thepayment of the amount of such subscriptions, on the
order of such member banks, directly to the Federal Reserve Bank
of New York on account of their subscriptions to the capital stock
of the latter.
The Federal Reserve Board is now requested to approve a
plan of adjustment of earnings and expenses in connection with
such transfer, to which the Federal IleservE Banks of New Yoric
Philadelphis have agreed, as follows:


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Federal Reserve Bank of St. Louis

"EXPENSES OF ORGANIZATION
The Federal Reserve Bank of Few York agrees to assume
such part of the expense of organization of the Federal Reserve Dank of Philadelphia as the capital of the banks to
be transferred bore to the total capital of the banks in
ts',. the time the assessment was levied by the
Federal Reserve Bosrd in November, 1914.
Expense of organizKtioil is not to include cost of furniture and fixtures or
cost of printing and shipping Federal Reserve Notes.
CURRELT

Lya-EIT SE

The Feder:a Reserve Bank of New York sgrees to assume
such proportion of the current expenses of the Federal Reserve Bank of Philadelphis as the capital paid in by and
deposits to the credit of the banks to be transferred bears
to the total capital paid in by and deposits to the credit
of all of the member banks in District No. 3 at the close
of business June 30th, 1915.

•

GR0S:3 EARNINGS
The Federal Reserve Bank of Philadelphia agrees to allow as a set-off to the expenses above assumed, such proportion of the gross earnings of the Federal Reserve Bank of
Philadelphia as the capital paid in by and deposits to the
credit of the banks to be transferred bears to the total capital paid in by and deposits to the credit of all of the member banks in District No. 3 at the close of business June 30,
191:3."

It is respectfully submitted that such basis of adjustment is the only equitable and proper one in view of the circumstances relating to the transfer in question, and particularly in
.41••
,

view of the repayment to the member banks of the full amount of
their subscriptions to capital stock of the Philadelphia Reserve
Bank instead of limiting such repayment to the book value of their
holdings.
The Federal Reserve ,,ct contains no specific provisions
respecting adjustment of earnings and expenses upon the transfer
of member banks from one district to another.

It does, however,

contain provisions relative to adjustment upon the surrender of
holdings of a member bank which voluntarily liquidates.

It pro-

vides (Section 5) that in such case
x
x
the shares surrendered shall be cancelled and the
member tank shall receive in payment therefor, under regulations to be prescribed by the Federal Reserve Board, a
sum equal to its cash-paid subscriptions on the shares surrendered and one-half of one oer centum a month from the
period of the last dividend, not to exceed the book value
thereof, less any liability of such member bank to the Feddral reserve bank."
It also provide:, (Section 5) that
"xxAbank applying for stock inaFederal reserve
bank at any time after the organization thereof must subscribe for an mount of the capital stock of the Federal
reserve bank equal to six per centum of the paid-up capital
stock and surplus of said applicant bank, paying therefor
its par value plus one-half of one per centum a month from
the period of the last dividend."
It is submitted that in the case of a transfer of member
banks from one district to another one of two courses should be
followed:

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Federal Reserve Bank of St. Louis

0
••

•

•

I.

•

•

The member banks transferred should be required to

urrender their stock in the Reserve Bank from which they are
ransferred, and receive payment therefor as in the case of volunary liquidation, and to apply and pay for stock in the Federal Reserve Bank to which they are transferred as in the case of any banks
applying for stock subsequent to organization thereof, complying
with the provisions of the Act relating to both transactions, as
quoted; or
II.

If it is deemed proper that the banks transferred

be repaid the full amount of their original subscriptions, without
regard to profits or losses, the Reserve Bank from which they are
transferred should be required to pay any share of profits to which
such member banks would have been entitled to the Reserve Bank to
which they are transferred, or the latter Reserve Bank should be
required to pay the former the proportion of any losses representing the difference between the book value and the par value of the
stock surrendered.
If there is a departure from the requirements of the Act,
in the payment to withdrawing member banks of an amount exceeding
the book value of their shares surrendered, i. e. if the first
course is not followed, the second course would seem to be the
only proper alternative.

No other course, it is submitted, could

be more free from objection, equitable or legal.
Certainly in the present case there would be less
ground for the stockholders of the Yew York Bank to object to the
payment to Philadelphia than ground for the remaining stockholders
of the Philadelphia Bank to object to being made to bear the loss
properly chargeable to those withdrawing.

Philadelphia has re.

moved from it the capital and deposits contributed by the New
Jersey members, the future use of which would aid in making up
its losses.

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Federal Reserve Bank of St. Louis

New York on the other hand will have the benefit of
-3.,

•••

uch additional assets.

The stockholders of the New York Bank

have the further advantage of the payment of par for the new stock
issued to the New Jersey members at a time when their own expenses
are still in excess of earnings.

There is therefore a considera-

tion for the payment egreed to between New York and Philadelphia.
Conditions in the second and third Federal Reserve Districts, in both of which total expenses exceeded gross earnings to
July let, may be such as to eliminate certain objections which
might be raised in cases of transfer where profits have been
earned in one and losses sustained in the other of the Districts
affected by the change.

In no case, however, could it be con-

sidered fair that the remaining members of a Reserve Bank which
has sustained losses should bear the proportion of such losses
chargeable to members withdrawn from it.

Whether or not it should

be required to transfer a portion of its surplus profits, if any,
in excess of accrued dividends, is perhaps not so important to its
••••

remaining members in view of the ultimate disposition of such profits under the Federal Reserve Act.

It would seem that in every

case the course freest from valid objection must be that most
nearly conformable to the provisions of the Act above quoted respecting adjustment on voluntary liquidation and application for
stock in Federal Reserve banks subsequent to organization.

If

it is deemed desirable not to make such adjustment directly with
the member banks, but pay them par on surrender of their stock and
require them to pay par for subscriptions to new stock, the most
equitable adjustment then must be that the Reserve Bank to which
they are transferred should receive an amount representing any
share of profits to which they would have been entitled to date of
transfer, or assume any proportion of losses with which they would
have been chargeable.

In other words, the transfer of the orig-

inal capital stock subscriptions at par from one Reserve Bank to

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Federal Reserve Bank of St. Louis

-4,..

a other, in effect places the banks transferred in the same posiion with respect to stock subscriptions as though they had become
In embers

of the latter Reserve Bank at the outset.

The fairest

method of completing the adjustment must therefore be that which
as nearly as possible places the entire transaction on the same
basis.
We believe that the approval of the plan of adjustment
by the Federal Reserve Board need not establish a precedent which
will be difficult to follow.
In our consideration of the matter we can hardly of
course disregard the special circumstances relating to this transfer, but to certain extent at least, they must exist in all the
early cases of readjustment of districts.

The transfer of the

Banks of Northern New Jersey from District No. 3 to District No.
2 was directed obviously because the Federal Reserve Board considered that Northern New Jersey should not have been included in
District No. 3 by the Organization Committee in the first instance.
The change was not made because of changed conditions within the
territory occurring subsequent to the original determination of the
districts.

The banks of Northern New Jersey were not included in

District No. 3 in response to any request from the representatives
of the other member banks within that district.

They have been

transferred upon their own petition and at a time when the aggregate earnings of the Federal Reserve Bank of District No. 3 were
less than the aggregate of organization and current expenses.
Being permitted to withdraw on their own request at such a time,
such banks would seem to be entitled, certainly equitably and as
we believe also legally/ to receive only the book value of their
stock l and be obliged themselves to suffer the loss represented by
the difference between such book value and the amount they would
be required to pay as subscription to the stock of the Federal
Reserve Bank of New York.

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Federal Reserve Bank of St. Louis

This course was not followed for
51110

A

reasons approved by the Federal Reserve Board.

It is referred to

again merely to emphasize what would have been the position of the
Federal Reserve Bank of Philadelphia upon the most strict compliance
with the spirit if not the terms of the Federal Reserve Act.

It

is difficult to see any ground for placing the Federal Reserve Bank
of Philadelphia in any other position, i

e. in any position in

which there is imposed upon its remaining member banks any proportion of losses chargeable to the banks transferred.
Such considerations as these in connection with the transfer now in question might have been thought to prejudice our view
respecting the proposed plan as a possible precedent.
As we have endeavored to indicate, however, we believe
that apart from any conditions peculiar to Districts Numbers 2 and
to an3) when upon the transfer of member banks from one district
red
other it is found necessary to depart from what must be conside
the most strict compliance with the provisions of the Federal Reserve Act, such a plan of adjustment as that now submitted for the
fair
approval of the Federal Reserve Board must be regarded as the
and proper plan, and the freest from legal objection.
It should be added that the attitude of the Federal Recourtesy
serve Bank of New York in the matter of this transfer, the
various
and consideration shown by its officers in arranging the
adjustment
details and their readiness in agreeing to this plan of
Federal
have been particularly appreciated by the officers of the
Reserve Bank of Philadelphia.
Respectfully submitted on behalf of the Federal Reserve
Bank of Philadelphia.

•

Governor.

Counsel.
July 12th, 1915.

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Federal Reserve Bank of St. Louis

-6--

•
FEDERAL RESERVE BANK
OF NEW YORK

July 20, 1915.

Sirs :
$teferring to the matter of the readjustment of Federal reserve
districts hos, 2 and 3 and the conseciueht transfer of the stock ownership
of the banks of her thorn New Jersey from the Federal Reserve Bank of _Calladelphia to the 20aoral Reserve Bank of

Now

York, we have to say that we

have read the brief submitted to your Board on this subject by the officers
of the Federal Reserve Bank of Philadelphia and heartily concur in the arguments therein presented in behalf of the plan agreed upon between the two
banks.
Je have no additional arguments to 9resent except to emohasize
still further the essential fairness of the plan 7,hiCh seems to make the
liabilities follow the assets.

Assuming as we do that the Federal reserve
-------------

banks will ultimately be successful in earnitheir dividends and also sarplusses for the benefit of the government, it seems to us clearly mom just
that the liability to 9ay such dividends Should follow the assets, i, e.,
the capital and deposits of the transferred banks from the use of which the
dividends will be earned by this bank, rather than to saddle the payment of
such dividencbupon the other stockholders of the Philadelphia bank which
have been deprived of the capital and surplus from the use of %/hich such
dividends would have been earned.
Of course, the same argument holds true with respect to payment
by tills bank of an appropriate share of the expenses of the Philadelphia
bank, which could fairly be chargeable to the presence as members of the
Lew Jersey banks transferred and which would have been recouped had such

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Federal Reserve Bank of St. Louis

—

//
cESERV E BANK OF NEWS
j

2e1era1 Reserve B.

Jul7 20, 191b.

bani:s sta:: d in as stockholders o: the 2hilade1phia bank.
Respectfully,

L;ounsel.
Federal Reserve Board,
Washington, D. C.


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Federal Reserve Bank of St. Louis

I

1_, )? LES

J.Iiitonn s.

RicHAnD L.AUSTIN,

GovERNoR.

CIihIRmAN.

EDWIN S.STUART.

GEORGE NI.

DEPUTY- GOVERNOR.

IONTE,
DEurvOtAmmAN.

FRANK M.HARDT.
CASHIER.

FEI ERMA RESERVE BANK OFFIIIIADE
408 CHESTNUT STREET

PHILADELPHIA, June

19, 1915

F. A. DELANO, Esq.,
Vice-Governor, Federal Reserve Board,
Washington, D. C.
Sir:
I beg to acknowledge receipt of your Agle,gram of_yest pr-,
.
da
advising that the question as to which bank should assume the
iability for the accumulated dividends in connection with the
transfer of the banks of northern New Jersey had been left for
further consideration, but I should have preferred omitting any
allusion to the question in the circular.
I am very glad that this decision has been reached, as
I am convinced that in view of the fact that the Philadelphia
bank has not earned its expenses for the period covered, it would
be improper for us to assume any such liability.
Suppose, for
example, that the Federal Reserve Bank of Philadelphia were to be
entirely abandoned and all of its members transferred to New York:
under such circumstances, it would be absurd for a bank going out
of existence to issue its due bill for accumulated dividends, and
yet, I believe, the transfer of part of its members is really an
analogous situation.
On the other hand, in the case of the
transfer of 121 banks from Dallas to Kansas City, where Dallas
has probably not only earned its expenses but something towards
dividends, I still think that Kansas City should assume liability
for the accumulated dividends in view of the fact that Dallas will
probably in the accounting pay something to Kansas City, the reverse of the situation between New York and Philadelphia.
Appreciating the consideration which the Board and its
Counsel have given to this matter, and regretting that I was unable to be in Washington, I remain,
Very truly you

CJR-D


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Federal Reserve Bank of St. Louis

Governor.

ARAL RESERVE BOARD HL
WM.

Stronz, Jr.;
naufIrva aink,
7ev? York City.


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Federal Reserve Bank of St. Louis

rnor,

mornirt7 it T1:; rtre0a to lelVe
At ttaniamnes
;-nt of lomtnt3 botweln th,r',I two
,
qwztion oN9n of 7vi5uat.
dividond
ni thc, 1:::31nnee of
F:Aeral neeerve 131k
joint lertter
c6rtifivItes, elti to fttlforiz :o:lificmflon of
to 1,:21,Elr bnk by (50)odyinj a rr.lvi:Jon to the .ffret ftrtf
:7r.1 will 1at6r Qon•Aicr 1n1 determim Inhic!I of t;y,
.
Fc14-nrAl Roivrve ranks shou14 14.gune linbiltty or ricr:ruoi
lividondk; Ana will then luthoriso 3uch FrActrrti, ro4mryo 71n1;
t4 &i th tccruc: iiindoortific.Atos.

7ico lovrnor.


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Federal Reserve Bank of St. Louis

File No. --------------Counsel
Office of General
floo,•:(1.
Federal Reserve

r.1. —.
Duty FEderR1 Reserve
Federal noserve P7*,nk,
7)h1ll.delphi:1, Pa.
iy dear Yr. LaMonte:—
Your letter of the fourteenth irrtrtnt
WrIZ:

duly receiviA.
As You have rilroady been livised, the

ncrtrd h1c, thAormined to hive the bl.nke 71TrInge
for the mirrenler lnd cancelltion of stook in
th

lia
Federal Rseerve Tinl: of 71111,delp,

t

aubocribe tc the stock of the Federal Peoerve
Rank of

Y$77

york.

!•coounts
The alluctment of -

between the tTo Federal Ileserve Blnks will
be treated af in indepndent question.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

AP 2 61950
1_2
June 17th, 1915..

File

__
Office of
C--eneral
Feder411 Resilrve Counsel
/3 )r.? rd.
(

:!.r. Pierre Jay,
Chlirmn,
Federal Reserve Dank,
Mev; Ter!: City.
le-.r flr. Jay:Your icttor of

the fourteemth instant

was duly recE!ived.
As you h-lvo laready
been advised, the
Board he detonrined tc
havo the banks arrange
for the surrender aml
en.ncellation of stool: in
the Fedoril Reserve Ban
of ?hiladelphia and to
lv:bseribe

the stock of the Federal

DInk of new "
Perk.
-1.s between the
,

eserve

The adjustment of 71eclInto
Federal Reserve P-nks will

be truated as an
inlependont question.
With beet :71shes,
Very ainc,-,,rely yourc,
,


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

•
FEDERAL RESERVE BANK

I

FFDENAL RESEF BOARD
FILL

OF NEW YORK

y-June 17, 1915.

r s :
Your letter of June 16th enclosing copies of
forme and instructions reco::..ended by Counsel of the Federal Reserve - ,oard and approved by the Board, relative to
_
the details of transfer of meyber banks as a result of recent redistrictint; of Districtsros. 2 and 3, has been received,

Je are proceeding with the preparation of papors

and .111 mail thein to the mebor banks not later than the
first of the week.
Resvectfull;J,

Federal Reserve Board,
Treasury '3uilding,
%;ashington, D. C.

X


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Federal Reserve Bank of St. Louis

JEIVE
/42
4:2

j
.r •

-,,..........:-.7

JUr.13 17, 1915.

2'C Jay,
Federal :loservo -gent,
rim Yoric•

,:s mouostod in, your let tcr of Jane 1G,/I 12:27C) t
(5. =died.
..ay

unclor Geparate cover, 150 corti,n of Porn

B-210.
Rosp.octitally,

Oeozn

i:,,AlLEs

•

D s,
0ovEit mm

L

117.ic:';ERVE

EDWIN S.STIrART.
DEN rry- GOVERNOR.
•
FRANK M HARDT.

Tr,
.11AIRMAN

2
•
FEDERALBESERVE BA*K OFPHILADEL MIA
•

4OS CIIESTN141 STREET

INHLADELpmA,
June 17,

Federal Reserve Board,
Washington D. C.
Sirs:
Your letter of June 16, enclosing
forms and instructions recommended by your
counsel relative to the transfer of member
banks to District No. 2, is duly received.
Yours truly,

ge,
G.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Deputy Federal Reserve Agent.

CuAREEs ,J.RrioAns,
GOVERNOR.

RICHARD L.AUSTIN,

EDWIN S.STUART.

GEORGE N1.1.AMON'I'F.,

CI!AIRMAN.

DEPUTY- GOVERNOR.

.,

fv1.I F•

FRANK M.HARDT.
CAsitiE U.

DEpurY

TEDERAILEESERVE LANK OFPIIILABE
f

4 8 CHESTNUT STREET
0

n

\

irmLADELP1118, fuAe.---3.-Tr i915
:
riL
'

FEDERAL RESERVE BOARD,
Washington, D. C.

JUN 1 9 1915
Teet-thruiReamaistet.

Sirs:

r-H

I beg to acknowledge receipt of telegram\with reference
to the transfer of the banks of northern New Jersey, and also letter, enclosing copies of forms and instructions recommended by
Counsel of the Federal Reserve Board in this connection, both
dated June 16, 1915.
Most unfortunately, I am under the necessity of being
in Cape May Friday morning to address the Annual Convention of
the Pennsylvania Bankers Association, and do not feel it would be
good policy to break the engagement and thus, possibly, offend a
great many member banks in this district.
It also happens that
our Counsel is out of town for a few days and cannot come to Washington, but I have communicated with Mr. Curtis, Counsel of the
Federal Reserve Bank of New York, and understand that he will be
in Washington Friday morning to go over the questions involved.
In accordance with the telegram and letter, we are proceeding to have the letters and forms of resolutions recommended
by Counsel of the Federal Reserve Board, prepared to be sent out
to the banks of northern New Jersey.
I would respectfully submit, however, that it does not
seem proper to me that this bank should issue its due bill for
the accumulated dividends to which the banks of Northern New Jersey are entitled under the law on their capital stock payments,
if they are to be transferred to another district.
The only
way such dividends can ever be earned and paid is upon the employment of the resources which will be in our hands after the transfer has been accomplished, and I do not see how it will be fair
to the banks remaining in this district to charge them with that
liability.
The Federal Reserve Bank of New York will have the
use of those resources, and it would seem to me that they are the
ones who should assume this liability.
I hope that Mr. Curtis
will concur in this view and present it to Counsel of the Federal
Reserve Board.
I can arrange to come to Washington early Saturday morning, if desired, and hold myself in readiness to do so on telegraphic request to that effect.
Trusting that the Board will und
not coming to Washington tomorrow, I rema

Very truly you
http://fraser.stlouisfed.org
CJR-D
Federal Reserve Bank of St. Louis

reasons
Governor.

•


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Federal Reserve Bank of St. Louis

S

•

FEDERAL RESERVE BANK

(

OF NEW YORK

June 16, 1915.

r s :
.deferrin

to telegrar received to-day, we are pro-

0aT)ers in connection
ceedin . with all due haste to 32repare with the transfer of rOrthern ITau Jersey Banks to this district.
It will assist us very much if you will arrange to
have about 150 copies of 2reasury 'iepartrent Corntroller of
the Currency 2orp B-2149 for calculation of reserve

of na-

tional banks in cities other than reserve and centr_l reserve
cities sent to us.

Mese will be forwarded with the other

to the member banks to be transferred.
papers .
,lesl)ectfully,

Federal

eserve Board,

lashinEton, D. C.


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Federal Reserve Bank of St. Louis

•
RECEIVED

FEDERAL RESERVE BANK

JUN 1 7 1915

OF NEW YORK

GOVERNOR'S

OFFICE

litegijuN 17 1915
June 16, 1 ..:8;
.92!

Sir:
Receipt is acknowledged of your teleGram of to-dayAo
Governor Strong, relative to the decision of the Board in regard
to the procedure to be foliaged in the transfer of the banks in
Northern New Jersey from District No. 3 to District No. 2.
We have been in communication with the Philadelphia
bank and understand that the work of preparing the forms is now
under way, and we have telegraphed Governor Strong the substance
of your message in order that he may be fully advised thereof.
Respectfully yours,

--r
Honorable Chas, S. Hamlin,
Governor, Federal Reserve Board,
Washington, D. C.

PJ/LCE

Chairh

TV\

K.SERVE BOOB iota

rediakiikaniftlia

Ftiloada,
r1,111
F;AfIrAl liseerve
nAAllelphiA. PK.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

trnor,

At confeorenee thi.a uernin it was agre0 &c Ivcrn
the question open of mdjueit;nent ol z.,ocounte hetToon th4 tvo
Federal Raoc:Tito aanks nnd thc 103zArtec of 1crmed
tter
eertillerita.4 111,1 to authar3,z4 modiflostion of joint
,
,
previsiell to tl.,o off,JA th!q
to membor 1:1TV47, by eNbodyini;
the rx,r3 111 1Ntsr on4itLr7\111 determine 71.1101 o; the
Fedtrai iNscrv Ilnkg ahoul: :.04414110 liltility for skccrued
.
Aivilend3 Alla wilt than .....uthoriato ioh Psderml P000rvo nno
isiilt* the moorwl

licn Ocorroor.

Form 40

• TELEGRAM
FEDERAL RESERVE

3ioFFE;„Ai..71E,r3ERVF-F,01..r.),9,1FPC
P-2
BOAR
4.)

roN
WASHING-

June 1.6th,TtT
.
Ch:r1o3
,eral Roac.rv,..!
Care Fc

t
J/

, Chicao, Illinois

Yonor-,ndum a ai7exilont b:Awc:on th FAnral Raoror Blnks
-°!11,1 prv;ont lorl
of na., York -1111 7h11lde1phim contldm; lrov5Tionz !
1M11dol7hi1 to lrr7117o for Tgam3a:e
7
difficultioz. Inve viriA you
Inv* tocn t.7,11rovod rto 'xibmittA,
,:)lution by membi:r blnkr;
of ma
zondin7, ollt joint 1at:7r it cortain amenlmQnt. Th3
Alc:o for
Bziarl desiroa you al- vur commol to vizit Ta:ilinton on your return
1:11u3tm5nt of !..cccduntn
from Chicqo to t91, “p tho volltion of botren th Federal rcooma bnko.

^
,ovorror.

OFFICIAL BUSINESS
GOVERNMENT RATES
CHARGE FEDERAL RESERVE BOARD


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

j*eee.)

--• • -

F01113. 40

4
File No, t•-_ _
fris
offic, •
fec.wra

• ••

5

"17#---

•

--TE EGRAM

:1 uounsel
k R

SERVE

B
REC'D IN FILES

H I NGTON

Jun
Itr,n4c,
r.ler1J. wiliwrip a nk$ 71111r5431-AVI,

SECTION

5 1950
•

L'
fl
.
1)-- 1.tt•-1‘,1
.
1n
yvi.3.10-..1 by
moolutic‘n ,
•
tn
of.
t:ar
tc.:.74. in
!t..1.1,cr.tiant
,
12,:,z111
,t
nyzwiAoni tir 7-11rrtl
t',114.1tr&tion
1..-ttr
.
1,1"t4lity or '3eruf0
Tor
o;,
n.k t"Airlde.1Thi.-t tto.lich rr trAn2.so
l 11.-.73derit
L0-3 t talta.1
,r)t re:?xertro hnn
:orty n1n.4
-1
Pw. r,
rcij. T,TIJo
-n,1
,
rtt -ond 11:y.3mor
r r.
bcn-1,nrov 1. lovarnor trn
,
'.1-1 -- ?Arrtort n ti*ir nAttrri from
bi r ueti t,,
zonnool
rt.-.1t11,roviAorse zantAtx2,1
•tr. 4t..;,313;t:tx".nt
Ctic zo t tdifamatir. Mcrae crrt
-1t
*:.4
nk
n th,o t-t.;
•nt betwee
,
,roi!cte 3
ty.! miao
treeitod inikirclOcrstly
file rtry
rc.,.- i.21%.1t...tun;
onto t3
af totttbott.ot,en tho
"1.1511
th:1
tiafis to yri,_tet
11t5r.
t4)
IAL BUSINESS rilena,

flieL:t.,r r,:•f(t:jtc t
,
bnrik:,, In narth-r,1 ro- .7rm97, for41,
LtIn
t'n
.
1 -1
rsorvt, 3 11k*. u 1 7!111.--A

IV

VERNMENT RATES
CHARGE FEDERAL RESERVE BOARD


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

POSTAL TELF1RAPH

COMMERCI^L, CABLES

CLARENCE H. MACKAY, PRESIDENT.

RECEIVED AT
POSTAL TELEGRAPH BUILDING
1345 PENNSYLVANIA AVENUE

WASHINGTON, D. C.

TELEGRAM

DELIVERY

N u

TELEPHONE: MAIN 8800

Post& Telegraph-Cable Company (Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank.
DESIGN PATENT NO. 4o52

leW-19058

83ny a

/22-

447pm
FX-

C•

f
1-15
Chicat.o,ILL. June 16

S. Hamlin,

61_i,07.20.ft'S\OFF 6
G

e,
Governor Federal Rserve Board.,
Trasilin•:ton P I C.
zlortbe in rrashint,ton Frid
Curtis will
Tele?_Tam receival Mr
my y:ding nvself thank
in rezret my boys commenorment prevents
you

,
for tele T aph


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Benj. Stront, Jr.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

E-I_RAI ;7:SERVE
RO:',RD /AP
lrg
I'

:a-

.
41.1.ne 16, 1915.

7

transnit herewith copies of faInt
-

1•%. - trc3d by Cowls el of the Federal
, (

Jerre
?Az
-

instruc.; ti
DoJrd and .-Ap—

T)Tovad by the Bo‘.rd rel...tive to the detAls of transfer of
man b- IrFixtrfks as result of
,

the

rpclitt r3d is tri ctinc decision

=do rlic by the Bo.'. rd..
Please take action in:;.ccorlar.ce ;Tin tlit-3 enclose(' 311.•-t—

tor•
RosIzectfulij,

Secretary.

rr•

‘7.7,
erve
rederal
New York.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

7..-}
-COL-Ftif `1ri_R\FL_ B0h1,11) HU:.
- -V
-,
\
41
1

Dear
.eyfi th conies a:: forr_s (ma instructions
.,.,ounael of the •?ederal Roc; erve BorcI
by tho• TI.',A.4rd relative to the details o4 transfer of
.7

11-rnrovod
Tioi

bealorritz Ivimilt of the recent rodistrictIng d:cioions :. jzi
public by the Bot,rd.,
i-losze take ...lotion in accord zee t.rit'n the on31ose:1 :t
ter•

S:
,
.?.cretary•

r. Craorge
Deputy Fef:oiI 1ocrr
Pal i:.:.O.s.19111:1, i.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

17
.
•

.A

June 16th, 1915.
•

.)4,2

1

V.
dear Govarnor:As roquelztod by tho noarl, T hRve oxlgivuld tho
pl.porr; which mlate to thn pl.An 1!:reod apon by tho

aomIrnyin

..
Foderal R000rve n-411: of No; York and the Foloral R000rve 1i7nk
of nhilAoll'hift for t'w, trAndfer of

rtin b!Inko in northorn

ncr- Joraoy ;:rom Diatrict No. 3 to Dicitrit no.

-)

. Th000 paporo

con:AA or (1) 7ropoaoJ ro3o1utiona to b,:; idoptoJ by w:rmbor
lorik in northrn NO Jor307.
) ,nk:1
(3) PropooeJ Joint l‘ittor to b.a.3ent to thy ly
trInrrol.
tv

(3)

Trclz;l1ry Form B-149 roforrod to in Joint lottor.

botwoon tho FrAoral no(1) !,",olnornlIA 01
aervo Thnk of leJr York 7111 the Fiorn.1 Il000rvo
Ln or niladolphiA.
33c ':111 bo conoilored 171 thc orldr
For cunvoninco th,
inlictod:
(1) Th.;:! propo*ol rO%1ttorto

ru clAbodiod in formc

or ap71icltion for :lurnqidor of otock in tho 7,1orn1 Rosorvo
B-Alk of rhiladolphia rtnd for oub3crIptIon
-44k of Ncr": York.
oral aouorvo P.
tlraly In , coord

:tock in tho nut-

Tho:30 form, 7:Y.viar to ho on-

,
to proviliovu of thc Act rInJ ;;-A. forth

fully rind conol',Ialy ill mitor111

,
t, thercIfor6, rootwimona

InVrit thu BoAril approvo their use in thi::; v.(3 1111 that 4ubot,
tiJily oimilar foralob. Aopte3 fnr uno in othor 11,3trictll affctod by tho orAor of . tho Doard v.th bocomo:1 affcctivo from
V

July 1, 191i.
Thai propotid joint lttor to ho t)ent to tho mombur btnki; to bo trovziorrol 11Io apparJ to bo ontlrely oon-


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

oxcaption
uiztent with tho iroviaion2 of the Act with the
or the not to the la::.t pnrx1pt. on
.

to throo.

Thio nrtra-

tryAph remda ao follovcs,:
to diem
telpon comrletiun of tramsfor of your bl,nk
!
of re. York '1.11
trict 10. 2, the Federal no2ervc 711nk
hrIve accrued
dividend;,1
atri;two all liftbility for
oral noaaricl
to July I, 1915, on your atock in th F
he entitled ;tilDAnk of Philtdallhia to which you mAy
ler tho FoderAl Reserve Act".
d in the
Thiu parvrAph Jo mrknifatly incorpor
1) .;t7:211 th.1 t%to
Iotter in .v.$tion pumuant to th:3 1,7.moment
Federal rnaorv

bqnku.

71.11 ly; more fully
For roaoona which ,
thi%3 aaoliriTtion of

,
diacuoueJ in conolierirt

York

rIe B-.71% of To
li!:tbility on thti p-Jrt of the Fo‘lIrAl flOStI
J060 not :p1)r to be :*.uthrizcd by 1.•
viucd

prosont

1.nd

virea riot on
ou.Li, in my opinion, :13rwtitato on ultr

tho p:trt cJi

olficra 7Ind diroctom. of thlt bAnk.
ahould

T, thcrefore, rocorLmen4 th.2t thia

'3ank of 7hilrtlelbo oliminItod ..nd that the FAerml Pooervc
fc,rrod an accrued
phia ahould itTuo to the mambor blnkc trIno
er b ,nkr1 when other
dividond certificIte rtyablo to such memb
.
acoruo.1 diviAnds Aro paid to Ito otockholdcre

A ou;;Iested

13t.trd for
form of cortificlia hlz been aubmittod to the
to the %vornora of
conoideration nni copitia hiv.c4 bon ',lent
;
the Fed6ra1 nosorT- PAnksof

York An:! Philldelphia.

(3). Transury Fora 13-14
culltin

pnocribin7 mathod of c71.1-

Andoratand, been herotoforo
roaerve h-,a, I ,

proved

rely propor t1-12.t
by tho nspartm,:11t and it to, of courue, enti

this information should be fgrnihod tiro
binks.

doral n.:;orve

•

(

I


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

3

.
C711

(4) Pik memoranlux, of 'toment bcitwtion tho Fodor7Jorvo n-knli of !Iew York -.nd tho FodorAl ilaorvo Blnk of
,7=1r
nol Irp,

4
contAin4 c4rtain provic1on.
to 1:”) 7,11thori4A by the FodorAl noaar7

ct,714 liniqmitooa by

nonTJ cln bo fully lettlqfic-J of

thio oECLoo, And

),
:thotild, of cauro,

Mr,' 1 Tlity of tho*o

Bricfly oummnrIxod, thc3o provlAonz 7.rc; to tho

vzlthhold.

An .momAnt on tho part of thr., Fadorn1 lionoryo

(70

alok of ,
TTe.! Yorl; to

AlWAU

nni ply a nroportIonl.to TvArt of tho

currant

orTinlstion

Aornl roaervo ronk
nnu of tho F,

o; 711111.4olphia.
,
i•,;roomont on thc n-xt of tho FAoral R000rvo

(b)

ri,rik of 7o1-; York to aezumo

111.bliity for divIlondo thlt
by i'lltibor b'Inko of

itecrufA to j7.11y 1, 191:), on Itock he
,
FlorAI 11:oc,rv•. 7 nk of ?hilldAphia.

, 1orri1 no*Qrvo
:Jynt on the p:Irt of thc 17 ,
(0) An .1.
Zlik of 7h1.17,dolph1a to r-1.y t) thb Folol."711 ':aeorvo Rink of Now
,
York -% proportionAto

earrin3 from datc of

irt oC

ovni.4.1tion to July 1, 1915,
Thmw lf;raiont.3
to

aimmptlon ti

Kg) 4th,
to Annul

avilontly prodic71.ted upon the

:2!
ffact of th, reilolution the•TWkrd adopted

rolljuoto tho Iialita of niotrIcta

and 3, ia

,1or711 R000rve Wink
clneol thc rlimberzhip In tho F!

of l'hi1A1lr:111

thooo blnks 77hIch

.Cif , ctod by tho itut
,

oi th, T3o-lrk; Inl to ritko thoir memborlhip in tho FcAerfil N4
oorvo Ihnk of

J
Ttliw York, to l'hich thy ttr, trIlliforrJ4, , iloctivo

from tho &Ito of ittl orgAnix7tt1on.

'


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CH
4
Thie Assumption, however, is not only inconeistent with the
terms of the order which becomes effective on July 1, 1915,
but it would hardly be within the pereer of the Board to
legally enter an order making a bankte membership effective
from a date eeveral menthe prior to it

eubecription to the

otock of a Federa-e reserve bank and eencelin7 a bankls membership ao of come prior date.
The banke in northern New Joreey will not become
ellzible to membership in the Federal Reserve Renk of New
York until July 1, 1915, and any attempt on the eart of the
directors

or

the Federal Reserve Bank of New York to assume

the payment of interest on the caeh-paid subecriptione of ouch
member benka while stockholder

of the Federal Reeerve Bank of

Philadelehia would, as above etated, eepear clearly to be an
uttra vireo act for which the director

miht be hold liable.

The same objection portaino to the eeyalent of any
part of the ore;anization and corrent exensee of the Federal
Reserve Bank of Philadelphie and to the payment by the Federal
Reserve Bank of Philadelphia of any part of its ,eroeca earnings
to the Federal Reserve B-ink of New York.
It ehould be borne in mind that the transfer of membarahip of the bank.> in question ia not a matter of arooment
MI

between the two Federal reserve benks but reoulto from the

fact that the alteration

in the district linen rendere thooe

bank o ineliejble to hold. otock in the Fodern1 Reserve Benk of
Philedelehia and makes then eliejble, after July 1, 1915, to
hold otock in the Federal Reserve Penk of New York.
The letter of the 7,ocrotary to these hank a that they
,
should “work out a

1an" for the tranefer of banko in the af-


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CM?

foctod torritory ahoull not bc, comtruod i

5

authori7;in

:uiy%, 7.r000nt inc6nzistqnt with tho proviAm; or the Act.
,
cluarly intniod to rolato
seaura to bo ,:lduptol in Tarrendorin

a
tht5 dotail, of pro.
anJ clncollik; stock,

tho mfund ol c:u2.1h paywmtl; 7n1 tho trrtn3for of roaervo nnd
In no Ulr

dopoUt bn.lancaz;.

tho r:L:m namitt(11 doale

ith thaae quoationzt the, noard 1, an abovo etltoa, fully
jiL,tificd in ainifyin: itc anrovml but / an unlble to ttroe
tlytt tha Boar

n io.11y authorizo tho Fodoral nesorva flank
of *3,124.04 (tin

,
of Nev: York to pAy no roln.tiv,Ay nartil
nt ()A/mated by

J7y to bc the cot of tranqfer unaer

tho pl,qn ry:ro(d Iron) myi to assume the payment of o.pproximltoly 1:24,)00 acorn:A 1ivilondr3 on 3tock of tho Fodoral Ronorvo
D'Alk of Philadolphia.

If tho Pal.rd dorNirca to .1.1ro thia ph:t.R)

of tho xntter further conAdoratlon, I 'ould rewriectfully
rcommfml
Th7:kt the forin

of 1.7)p1ix.Ition for aurronlor

Ind for
atock in tho 17 clorAl Ronorvo 7;711,f of Philndolphin, ,
oubucription to otook

in tht3 Fodcral Roserwo Wink of

ir York

4 Approvol.
Tblt tho joint Littor be nrprovod vith tht:
1%endment sugested.
Third i

Thlt the) adjuAment of 1.ny claim tblt tho

Federal Reserve aknk of Philldelrhi!T m7Ly hiIr.inat the FoarIl Rascrvu Bank of ler: York on account

or

o
thoLio trAtn3for,

bc traAtod n3tn indoporlont quo6tion atJ tivtt Courrlol for V.1.0
roopvctIvo Yodoml reaJrvo blnkpl bc roque:ytod to aubmit for
tho ToArdos con3iaoration opinionA

with the rizht of

Cra.

in question to
,
dirctorz4 and offtcors of the. ly.nk3
cenuummto th

tentatiT3 areot(ont

0.Ang t

iv
Vic 1.int tIrst both qoverlor Stru

rJ

IttondiT; a meotin:
CoiNrnor Rhealci haw 11,T1 in Chico
ropl1e4 to nly
C;uvorneril, T hal, not yc,t mcolvo/

a

lottora

thekvi AueAiuml.

th7A T v.u.igest thit

It i

lor thic ro7on

urtranoferz of momberuip bo cons

,
ac131Into az botw4Jon
ted and the queution of ttljuLttmont of
indopondontly.
tho Fzdcrli mnerve bAnka be treated
Ra:3poctfully,

Hon. Charit.J S.
Governor.


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Federal Reserve Bank of St. Louis

Conmol.

MEMORANDUM OF AGREFEENT
BETWEEN PEDERAL RESERVE BANK OF 2HILADELPHIA AND FEDERAL RESERVE BANK
OF NEW YORK FOR ADJUSTING THE TRANSFER OF 131 BANEB IN NORTHERN NEW
JERSEY FROM DISTRICT NO. 3 to DISTRICT NO. 2, AS OF JULY 1st, 1915.

EXPENSE OF ORGANIZATION
The Federal Reserve Bank of New York agreeS to assume suoh part
of the expense of organization of the Federal Reserve Bank of Philadelphia
as the capital of the banks to be transferred bore to the total capital of
the banks in District No. 3 at the time the assessment was levied by the •
Federal Reserve Board in November, 1914.

Expense of organization is not

to include cost of furniture and fixtures or cost of printing and shipping
Federal Reserve Notes.
CURRENT EXPENSE
The Federal Reserve Bank of New York agrees to assume such proportion of the current expenses of the Federal Reserve Bank of Philadelphia as the capital paid in by and deposits to the credit of the banks to
be transferred bears to the total capital paid in by and deposits to the
credit of all of the member banks in District No. 3 at the close of business June 30th, 1915.
GROSS EARNINGS
The Federal Reserve Bank of Philadelphia agrees to allow as a
set-off to the expenses above assumed, such proprIrtion of the gross earnings of the Federal Reserve Bank of Philadelphia as the capital paid in
by and deposits to the credit of the banks to be transferred bears to
the total capital paid in by and deposits to the credit of all of the member banks in District No. 3 at the close of business June 30, 1915.
It is agreed that the plan of adjustment shall be presented to the
banks to be transferred in a joint letter signed by the Governor of the

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Federal Reserve Bank of St. Louis

Lemorandum of Agreement -2-

Federal Reserve Bank of Philadelphia end the Governor of the Federal
Reserve Bank of New York.

A oopy of this letter is attaohed, together

with resolutions referred to therein, all of whioh are to be a part of
this Agreement.


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Federal Reserve Bank of St. Louis

4
,
404 *.
:

a
inion _ational Bank,
Union, 11.J.
uear „ire:
._;,7 resolution adopted Lay 4, 1915, the Federal Reserve Board
granted the petition of certain biaks in Northern ilew Jersey for the
readjusting of Districts Nos. 2 and 3.

In such readustment the

countj in which your bank is situated is to be included in :District
No. 2 on and after July 1, 1915.
Por the purose of carrying out the resolution of the 7:edera1
Reserve Board, you are requested to have your Board of Directorn adopt,
on or before July 1st, the enclosed resolutions covering the surrender
of your stook in the Iedorl Reserve Bank of khil!Idelphis and. a , plication
for stook in the

edern1 Reserve Bank of hew York.

done a certified copy should be forwnrde

of hew York.

,hen this has been

to the Federal •eserve Binh

Two co lien of the resolutions are enclosed so that you

h. ve z;. duplicate for your files.
ope
‘
.
2or convenience, v.e have 'i ranged the necesstry

tions

in order, as follows:


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Federal Reserve Bank of St. Louis

1.

.Ldopt the resolutions above referred to and send

certi

Lied copy to the 2ederal
2.

eserve Bank of :eY7 York.

Send toAderal jeserve *3ank of Tlew York with the certified

oopy of the resolutions, yll receiots icif7aed

sent to you for pay-

medts mnde by you on tcoount of your subsoriotion to the capital stock
of the Federcl ileserve Brnk of khilE.delphic,.
3.

7
Execute mqd send to the :deral Reserve Bank of 2ew York

.the enclosed order, authorioing the FederL1 .-.Teserve Bank of ihiladelphia
to remit to the Federcl Reserve Bank of

evi York on your behlf, the

net rmount heretofore pnid by you on account of your subscription to
the en.pital stoc

.
of the .Tederal Reserve Bulk of Fhiladelphi,

payment will be .loplied by the

ederrl

This

eserve 1;ank of lIew York on ac-

.count of your subscription to the czpitca stook of scid Bank.
Upon receil?t of this payment, the Pederal Reserve Bank of
for the
.New York will execute Emd forward to you its temporary receipt
amount so ptAd.
4.

IA the close of business June 30, 1915, for the purpose of

transferring your reserve balance from the Yederta Reserve Bank of


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Federal Reserve Bank of St. Louis

-3_

.-2hiladelphia to the Federal Reserve Bark of re

York, please send to

the Nderal Reserve -Bank of Eew York for your credit, your draft on
the if'ederad Reserve Bank of Philadelphia for the bc11nce as shown on
your books.
5.

1ease fill out '2resu.ry Department 71orm D-2149, calculation

of reserve as of the clo:3e of June 30, 115,

nd. send it to the 2ederal

Reserve Bank of New York.
The Federal Reserve Bank of 2hi1r4delphia will send statement

of your account t*roi the close of blisiflosF3 June 30th End will recon-

cile it in the usual rfiLnner.
Lpon completion of trnsfez .f your Bank to District No. 2,
the Federal Reserve Bank of .Jew York will assume s11 liability for diviaends that have Focrued to
S

uly 1, 1915, on your stocIf in the Yederal

Reserve Bank of Philadelphia, to whic!'l you may be entitled under the
Federal _4)serve Act.
Kindly note that all of the above papers are to be sent to
the Federal Reserve Bank of New York.


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Federal Reserve Bank of St. Louis


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Federal Reserve Bank of St. Louis

B

01
,1

...:317.4 EllI
3

1 EIDER AL RESERVE BADE: OF BEV: Y..0 Rh
1

41040

II.J.

191_.

Federal Reserve Bank of 2hi1ade1phiL,
alladelphic, Pa.
Dear Urs:
In vocordanco with resolution of the
dated "klay 4, 1915, transferrin

ederal

eserve Board

this bank from District ho. 3 to Dis-

trict No. 2 cmd with the resolutions of the Board of Directors of this

nk dcted

its

1915, this bzink has applied for cancellation of

shx,res of the stoc.L of the j'ederal :.eserve Bank of Philadel-

phia and has 7pp11ed for

shares of the stock of the "Tederal

2.eserve Bank of Now York.
To facilitzTte these transactions you tro hereby authorized
and. requested to pcy to the :ledertil Reserve Bank of hew York on ttccount
of our subscription to the caDital stock of that bank

represent-

ing the net nmount paid by us on account of our subscription to
shares of your capital stock.


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Federal Reserve Bank of St. Louis

Yours very truly,

2resident or Cashier.

At a meeting of the Board of Directors of the
duly called and held on the

day

191 , the following resolution was offered and duly adopted:

of

"WHEREAS, this Bank has subecribed
shares cf
the capital stock of the Federal Reccrve Bank of Philadelphia, pursuant to a resolution adopted by its Board of Di1914. in accordance with the provisions cf
day o-f
rectors en the
the Act of Congress approved December 23rd, 1913, and known r.s the Federal Reserve Act, and has paid on account
thereof in instalments the sum of
......
said sum being 50 per cent of the par value of said
shares;
AND WHEREAS, according to the certificate filed April 2nd, 1914, by the Reserve Bank Organization Committee with the Comptroller of the Currency, designating the several Eee'erel Reserve cities and defining the geographical limits of the districts to be respectively served by the Federal reserve banks located in said cities, this Association was at that time located in District No. 1 which district is served by the Federal Reserve Bank of Philadelphia;
AND WHEREAS, the Federal Reserve Board under the authority granted to it by Section 2 of the said Federal
Reserve Act has by resolution adopted May 4th, 1915, ordered that Federal Reserve District No. 2 shall be modified
arid extended so as to include on and after July 1st, 1915, the Counties of Monmouth, Middlesex, Hunterdon, Somerset, Union, Essex, Passaic, Hudson, Bergen, Morris, Sussea and Warren In the State of New Jersey, which said Counties have heretofore been Included in Federal Reserve District No. 3;
in the State of New
........
AND WHEREAS, this Association is located in the County
Jersey, said County being one of the 12 counties transferred by said resolution and order from District No. 3 to
District No. 2;
NOW THEREFORE BE IT
be and they are hereby authorized,
of Philadelphia for the cancellation
of stock heretofore allotted to this

RESOLVED, that the Pres0.ent or Vice-President and Cashier of this Association
empowered and directed to make application to the said Federal Reserve Bank
of said
shares
Bank and for the refund of all payments made thereon;

AND BE IT FURTHER RESOLVED, that the Preeident or Vice-President and Cashier of this Assoziation be
and they are hereby authorized, empowered and directed to make application for and to subscribe to
shares of the par value of $100, each, of the capital stock of
the Federal Reserve Bank of Nev, York, to pay for such stock in accordance with the provisions of the said Federal
Reserve Act, and to take any other action necceesary or desirable to the accomplishment of the said readjustment."

partly Certifu that the foregoing is a true and correct copy of a resolution passed
by the Board of Directors of this Association on the date specified.

Cashier.
(SEAL)


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Federal Reserve Bank of St. Louis

*

Pursuant to the foregoing resolution the
lierrb:- makes application fer the cancellation
of
shares of stock of the Federal Reserve
of..............U....
of Philadelphia heretofore alloted to ii, and for the refund of such call payments as this
Bank
Bank may be entitled to under the provisions of F.ection 5 of the Federal Rserve Act.
Pursuant to foregoing resolution, the

—cat
—

•
.

...

hereby subscribes to makes application to the
shares of the capital
Federal Reserve Board for......_.._.....
stcck of the Federal Reserve Bank of New York of the par value of $.100. each, amounting to
agrees to pay for same in accordance with the provisions
.......
........
of the Federal Reserve Act.
of....

( SEAL)

................................

7166''

........

By

President

Cashier.
We, the undersigned, hereby certify that this Dank has an unimpaired capital of
...
and surplus of $..... .....
.......as shown by its books at the close of
.
business on the day of 191 .
(To be signed by three or more directors)

Directors',
APPLYING—BANK—
LOCATION—OF—
(Please fill ia.)

City or Town
County
State
CERTIFICATE FEDERAL RESERVE AGENT
(
The foregoing application for the surrender of stock in the Federal Reserve Bank of
Philadelphia has been examined and the statement of the number of shares allotted to the applying bank has been verified. I reccomend that
shares of stock be accepted for cancellation and that the cash subscriptions already paid for
this surrendered stock be returned.


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Federal Reserve Bank of St. Louis

...................

..........

•O.0.0•••.••• .............

• HO• .0

Federal Reserve Agent
FEDERAL RESERVE BANK OF PHILADELPHIA

0

•

-5..

CERTIPICi)TE OF BEDERLI REOERVE AGENT
2he foregoing npplication.for .1
sly.res
of stock in the edoral Reserve Bank of New York has
been examined
and checked.
2he mount of stock applied for is equal to G of
the
capital and surplus of the applying bank -7.9 shorn by
certified statement of Dizeoto:os. .1 recoapend
......................shares
of stock be allotted to it by the 2ederal ..eserve ::orrd.
1

;eueral
FEDERAL RE6ERV

•

CERTIFICATE

eserve 4ent
13;IIK OF

,F A2PROVAL

The foregoing application for the surrender of
........shnres of stock in the Lederul eserve Bank of
.ehiladelphic, and for the Cilotiment of
shares
of stook in the 'ederal .eserve Bank of iew York hns been aoprov
ed
the i'edert',1 _eserve Board.

• •.••• *************** ••
.
,oeretary, Federal .ieserve Botrd.

••

0•••

2ECORD OF EUTaY
The foregoing rpplication has been duly entered on the record
s
of the ,edeeal _eserve ;ord.


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Federal Reserve Bank of St. Louis

******** *SIPCO

Lookee,per
191 .


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Federal Reserve Bank of St. Louis

File No,

0 6,37

Office of General Counsel
Federal Reserve Board.

'Tile l57,

11LS SECTION
APR 2 5 1950
-

ciLlfr")
°)
June 158 1915.

My dear Governor:
have examined the agreement submitted by the Federal
reserve banks of Philadelphia and Naw York relating to the transfer of ir.ember banks located in Northern New Jersey fromtthe Philadelphia to the Ney,11 York district, togother with the amended 4or-1s
and resolutions, end find that there i3 but one substantial difference betmeen that agreement and the one suggeoted by Mr. Elliott.
The tome in.(1 resoLltiono in 80 tare,.; they ctffoct .'.ember
,
banks themselves ..re practIcally the %la e. Exhibit "D" of the
the resolution of the bo:-rd of direftore
New York plan embodies
3
of the member bank and the application, for the cancellation of
Reserve Bat of Phil,Aelphia, and for the al-took In the Federal
lotoent of stock in the Federal Reserve Bakk of New York. This
Exhibit "D" seems to be in very good form and contains evorythin:
that is covered by Exhibits "A' and "B" of Mr. Elliott's plan,
,
lith two exceptions: (a) that Exhibit I'D" of the No Y 'fork plan
relates only to the question of capital stock, whoras Mr. Elliott's forms provide also for an application for refund of the reeerve deposits; and (b) Mr. Elliott's form of resolution provides
that the board of dirnctors zive the ire.--rident or cashier authority to authorize the Philadelrhia bank to make the transfer of
funJs direct to the New York bank, whereaseunder the NOV York
;Idelihia bank by the presplan this authority is F;iven to the Phil,
bank without any resolution on
ident and cashier of the rember
e,
the Tart of the Board of directors of such bank. This differenc
.
hovever, would harAy SOSM iMprtant
Tnasmuch as the details of the agreeo.ent were left to the
:est that
various Federal reserve banks by the Bcmrd, I would eug,
the Board. Exhibit "D",in conjunction
Nxhibit "D" bp approved by
with the plan to transfer resorve balances by draft, covers all
"A"
the points provided for in Mr. Elliott's forms marked "Exhibit
and "Exhibit B".
Exhibit "C" of the New York plan is the written authority
its cash,
of the rember bank to the Philadelphia bank to transfer
bank. This point is covered
paid subscriptions to the Nr3-17 York
neceseity
in Mr. Elliott's Exhibit "A", and there seems to be no
of the New 'fork plan to be comfor requiring Exhibits "C" and "D"
bined as Mr. Elliott has done.


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Federal Reserve Bank of St. Louis

C. Et. H.

2.

Txhibit "B" of the New York plan is the letter of instructions to be forwarded to merler banks in the traneferred district.
This letter is not at all inconsistent with the plan proposed by
Mr. Elliott, excert (a) reserve balances are to be transferred by
dsaft on the Federal Reserve Bank of Philadelphia inctead of by
authority of the boAs", of directors of the member bank,. to Such
Federal reserve Pank of Philadolrhia to make the trmsfer; :And
(b) that it contemplates that the New "fork bank will assure all
liability for dividends tat have accrued up to July 1, 1915, on
the stock held by such member hank e in tne Federal Reserve Bank of
Philadelphia.

This raises the vital and important distinction between
the two proposed plans.
Under the NOW York Agresent the Federal Reserve Bank of
RV' York agrees to assume a portion of the organization and current expenses of the Philadelphia bank up to the close of business
June 30, 1915, and tle Philadelphia bank agrees to allow as a setoff a similar proportion of its gross earnines up to the close of
businese on June 30, 1915. The New York plan also contemplates
that the Federal Reserve Bank of New York will assure the liability f(7;r the payment of accrued difidends due to the member banks
transferred.
The agreersont proposed by Mr. Elliott is based on the conclusion that the transfer of northern Now Jersey takes effect on
July 1; that up until th?,t date the member banks located in that
reRion are Tembers of the Federal Reserve Bank of Philadelphia;
and that as such the PhiladelThia bank should pay any expenses in,
volved on account of such banks and that it e entitled to the
earnings resulting from the Use of the deposits of such banks;
And, fartherrore, that it should maintain the liability to pay accrued dividends on the stock of such banks for the eeriod between
Novembor 16, 1914 and July,j, 1915.
Unless the order of the Bosrd made the transfer effective
as of the date of November 16, 1914, - an act wA.ch would be of
doubtful legality, - Mr. Elliott is of the opinion that there is
no legal authority for the Federal Reserve Bank of New York to
pay even a proportionate amount of the expenses involved in the
organization and operation of the Philadelphia bank. So, also, it
is doubtful whether the New 'fork bank would have the legal right
to assume the liability of the Philadelphia bank to ray accrued


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Federal Reserve Bank of St. Louis

dieidends. Similarly, the PhiladelThia bank has no legal right
to pay a proportion of its gross earnings to the New York bank.
It is argued, of course, that the Philadelphia bank in
paying organization expenses reasonably conplated that northern
New Jersey would be located in the Philadelphia district indefinitely, and tha Qrganization expenses would be a very srall item
as compared with the ultimate good or profit to be obtaired out
of the use of the funds of the SrAmbor btnks of northern NST Jersey if they were left inddfinitely in the Philadel-hia district.
The fact, however, thet the expenses of the Philadelphia bank have
exceeded its earnings is reeponsible for the loss that must fall
eceewhere, and to .rue that merely because a part of the Philadelphia district has been transferred to the New York district
New York should assume that loss, is inconsistent with the lova
riehte involved.
The present member!! of the New York district might well
say that the proportionete deficit of $8,000 in the Philadelphia
bank is a miefortune selch they should not be compelled to pay
juet because of the one fact that they are prosperous.
It is felt that the Uw York plan promiees an equitable
adjuet'ent of the eituatien, but it hardly eeoms fair to the
member banks of the New York district. It is purely a gratuitous contributien on their part to the Philadelphia bank, rade
on the ground that the Philadelphia bank has a deficit and the
It is true that the amount involved
New York bank a surplus.
is relatively small, bnd that possibly the New York menber banks
might not complain, but it is equally true that inasmuch as the
amount involved is small, the Philadelehia banks 'ill not complain, and, eartioelarly ae they have no lezel right on welch
the New
to base their objectioniOn theeotherehand it seems to me that
'fork member banks might well show that the Federal Reserve Bank
of New York has no leenl nethority what aver for the paynent,out
of its funds,ofeiteht thoueendee4ii dollars to the Philadelehia
bank becauee it has iailed to pay expenses in the past.
The plan of adjuoteent of transfers should be uniform in
the various districts in so far as it is possible, and certainly
so unleas there is some valid ground for making a distinction in
the various distircts. If this New York plan is adopted nerely
to govern the tranafer of northern New Jersey, Dallas might well
argue that they, too, should be paid for thoir proportion of the
organisation expenses or for the earnings of the Dalles bank exzeod
expenses. Irise Kansas City bank will very probably file a claim
that they should be treated according to the New York agreerent,
in ehich case they would necessarily be paid a certain balance by


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Federal Reserve Bank of St. Louis

C S. H. ----4.
.
tha Dallas lank, in addition to recei ing all the benefits to be
-n
derived from the new ! embers.
T can not zee any arzueent wlich ?rill be eufficiont
for the Board to cake a valid distinction beteeen the
ground
Oklahoma and New Jereey tranefere. In the one case, Philadelphia hal' lost money; in thaother, Dallar has made money. Thera
le no more logical reason for demanding that Nar; York pay Philadelphia, to make god ita lessee, than that the Boerd shculd
aeaand that Dallas pay over to KahsaeCity the proportisatte
earninga it has made due to tha membership of the banks in
southern Oklahoma which are to be trInsferred July let.
It seems inevitable that one bank or another of other
districts will complain if they are treated differently from
New York, and T do not believe that the Board has a ecnvincinz
anipeor to give to justify the distinction.
,
T feel sure that Mr. Elliott will suggest that the Ne.:
York plan be adopted as far as the procedure and the formssubmitted .1.re concerned, but I do not believe that he till feel
at liberty to agree to the rest of the plan, rhich is, at best,
of doubtful legality, merely for the purpose of saving the
Phil. Ulphia bank atnut $8,000.
:
Pespeotfully,

zri
FEDERAL RESERVE BANK File No, ,
C
Office of General Conn:41
OF NEW YORK
Federal Reserve Boa - r!.
REC'D IN FILES SECTION

•

e

14,A1A 5 1950 L.
,
•

My dear Judge Elliott:
Your letter of June 12th Ito Governor Strong has been handed
to me in his absence and I was preparing a memorandum on the subject
when Mr. Warburg happened in about half past two, and I spoke to him
of the matter.
I gave him a copy of the memorandum as far as it had gone up
to the time he was in the office, and a copy of our file of papers on
the subject, all of which he stated he would look over on the train.
In the absence of both Governor Strong and Mr, Curtis, I =merely elaborating slightly the memorandum I gave him when he was

here.

I should like very much, if it seems advisable to the Board to
make any changes in the plan agreed upon between Philadelphia and New
York, to have

the matter lie over, if possible, until the return of Gov-

ernor Rhoads and Governor Strong from Chicago, where they are attending
the Governors' Conference, and trust that this

can be arranged.

Yours very truly,

. 7
4e

Chairman.

Honorable M. C. Elliott,
Counsel, Federal Reserve Board,
Washington, D. C.


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Federal Reserve Bank of St. Louis

PJ/LCE

„

•
FEDERAL RESERVE BANK
OF NEW YORK

June 14, 1915.

Dear nr, Warburg:
Referring to Jud:e Elliott's letter to Governor Strong, da1e4
June 12th, relative to the plan for the transfer of the banks in Northern Yew Jersey from District No. 3 to District No. 2, and confirming• our
conversation on the subject when you were in our office this afternoon,
we have been working on this matter in accordance with the suggestion
contained in Mr. Willis' letter to Governor P.hoads of May 7th, Which reads
as follows:


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Federal Reserve Bank of St. Louis

"I was instructed to say to you that the
Board weuld be pleased if you would nas proceed
to work out, in conjunction with the Federal Reserve Bank of New York, a plan covering the details of the transfer of the banks in the territory which has been shifted from the Philadelphia
District to the New York District, and when such
plan has been arranged to your Ritual satisfaction, transmit it for the consideration and approval of the Board itself,”
The main difference between the two plans is this:
(a) The plan agreed upon by the New York and
:Philadelphia banks contemplated an adjustment of
expenses and earnings between the two banks and
the assumption o: the accrued dividend. by the New
York bank,
(b) Judge Elliott's plan contemplates no adjustment of expenses or earnings and leaves the
payment of the dividend, when earned, up to July
1st on the Philadelphia bank,
The cost of the transfer to us is estimated at 4,8,124.04, as
follows:

DERAL RESERVE BANK OF NEW AIlk

2

Hon. Paul M, War"

6/14/15.

Ratio of expense, both current and organization, less that
part of organization expense appropriated for the cost of preparing Federal reserve notes chargeable against 131 banks in Northern
New Jersey transferred to the New York District, to the close of
business April 30, 1915.

Total

3,198,837,00

18.359,497.51

45,124,137,00

428,935,697.51

Paid to 4/30/15

Earnings
(Basis-Capital &
Deposits)

410,576,200.00

1134,059,834.51

Organization Expense
(Basis-Capital)
Current Expense
(Basis-Caoital &
Deposits)

41,925,300.00

21.558.334.51

Deposits

Balance

412,501,500.00

Capital

North Jersey
Banks

N.Y.Portion

Balance

422 238,96

03,424,93

$18,814.03

65.349.28

9 831 48

55.517.80

087,588.24

13,256.41

74,331.83

34,114,57

5,132.37

28,982.20

53,473,67

8,124,04

45,349,63

A rough estimate shows that the accumulated dividend which the New
York bank would assume would amount to about 4124,000,
The basis of this settlement, which was agreed upon and is satisfactory to both banks, was that as Philadelphia had done the pioneer work for the
banks to be transferred we should reimburse them for the proportion of current
expenses and of organization expenses, except cost of furniture and cost of
printing Federal reserve notes, While Philadelphia would allow us the proportionate part of their earnings from operation.
With regard to the dividend, it was felt that inasmuch as we would
thus be placed in the sage position as though the banks had been in this district from the outset, we should assume the dividend upon the stock to be taken over by us

aJuly 1st.

Of course, if a further transfer were made later,

and dividends were being paid by the banks in question, the adjustment would


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Federal Reserve Bank of St. Louis

•

FEDERAL RESERVE BANK OF NEW Y

.3

Hon. Paul 11. Warbu41,

6/1 /
4 15.

naturally be made as of the ti-e of the last dividend.
Judge Elliott sugy,ests having the .ehiladelphia bank transfer the
reserve balances to the New York bank,

We preferred the transferring of re-

serve balances by draft, since the member banks will deposit with us the net
amount due them leaving the correct balance in ihiladelphia to pay any checks
that may be outstanding.

These drafts will be paid through the cold settle-

ment fund and obviate the transfer of Isold for these particular transactions.
de were very well satisfied with the combined resolutions, applications for cancellation and issue of stock, approvals of Federal reserve agents
ana Federal Reserve Board, prepared as one document by the counsels of the
Federal Reserve Banks of Philadelphia and New York..,

These, together with

the letter to the member banks, and the order for transfer of funds to nay
for new stock, seemed t o present the matter simply and concretely.
Yours very truly,

Chairman.

Honorable x'aul ii, iarburg,
Federal Reserve Board,
Washington, D. C.

PJ/LCE


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Federal Reserve Bank of St. Louis

•
Le have been working on this matter in accordance with the suggestion

contained in Mr.

letter of May 7th, which reads as follows:

"I was instructed to say to you that the Board would be pleased
if you would new proceed to work out, in conjunction with the Federal
l
-, eserve Bank of New York, a plan covering the details of the transfer
of the banks in the territory which has been shifted from the Philadelphia District to the New York District, and when such plan has been
arranged ta your mutual satisfaction, transmit it for the consideration
and approval of the Board itself."

Governor Strong and Yr. Curtis are away - do not like to change the

substance of the agreement since the details were carefully considered by them

and approved.

Glad to tell you the reasons for our conclusions and to show

the results from the plan proposed.

Philadelphia has done all the pioneer work so far as the banks
to be

transferred is concerned.

The benefits to be derived remain to be realized. .

It seemed equitable to us for New York to assure part
of the expenses except
cost of furniture and cost ofprintingFederal reserve
notes, and also apart of
the accrued dividend, and for ihiladelphi6. to
allow as a set-off, the earnings
derived from operation.

e would not suggest this as a permanent
plan of transfer.

After the

banks have begun to earn their dividends, we
would think the transfers should be
maLle upon a different basis.


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Federal Reserve Bank of St. Louis

AS

0

—2_

A calculation of the amount to be assumed by New York as of the close

of business April 30th, has been made.

A copy of this calculation is a- ,tached.
,

It is proposed to adjust current e:menses and earnill„s to July 1st.

There will oc no chae in e.,:pense of or:Anization which has been considered
as
of the date of assessment by the Federal Reserve Board,
to be assumed
A rough estimate shows that the accumulated dividend plannediaill amount
to a little over .24,000.

We were much pleased with the co::oined resolutions, applications
for

cancellation and issue of stock, approvals of Federal Reserve Agents and
Federal
Reserve Bo. rd, prepareC, as one document by the
counsels of the Federal Reserve
Banksof Ihiladelphia and New York.

Those togethei with the letter to the member
,

baaks and order for transfer of funds to pay for
new stock, seems to present the
matter simply and concretely.

We prefer the transferring of rese2ve
bal:mces by draft, since the mem—
ber banks will deposit “ith us the net
amount due them, leaving the corr,ct
balance
in ihilaaelp:Lia to pay any checks that may be
outstanding.

These drafts will be

paid threwih the L:old settlement fund and
obviate the transfer of gold for these
particular transactions.


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Federal Reserve Bank of St. Louis

RATIO OF EXPENSE, BOTH CURRENT AND ORGANIZATION, LESS THA.T PART OF ORGANIZACHARGEABLE
TION EXPENSI., APPROPRIA= FOR THE COST OF PREPARING FEDERAL RESERVE NOTES
TO
AGAINST 131 BAITS IN NORTHERN NEW JERSEY TRANSFERRED TO THE NEW YORK DISTRICT,
THE CLOSE OF BUSINESS APRIL 30, 1915,

Total

North Jersey
Banks

Balance

Capital

12,501,500.00

.1,925,300.00

.10,576,200.00

Deposits

21,558,34.51

3,198,837.00

18,359,.197.51

34,059,834.51

5,124,137.00

28,935,697.51

Paid to 4/30A5

New York :Portion

Organization. Expense
(Basis-Capital)
Current Expense
(Basis-Capital
& Deposits)
Earnings
(Basis-Capital
&Deposit:6


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Federal Reserve Bank of St. Louis

Balance

22,238.96

3,424.93

18,814.03

65,349.28

9,831.48

55,517.80

87,588.24
34,114.57

13,256.41
5,132.37

74,331..83
28,982.20

53,473.67

8,124.04

45,349.63

•
THE FEDERAL RESERVE BANK

REVD
"P

ards siEeTioN
51950

OF PHILADELPHIA

1

1 File NO, _,..f........v? f.. —
,
Office of Gep.:tral Counsel
•Ro(7.erve Ronr(1.
i
. .fil
F,..(10r
,

408 CHESTNUT STREET

•

June Fourteenth
1 9
1 5.

Re: Transfer of northern Nor Jersey banks from
District No. 3 to District No. 2.
M. C. Elliott, Esq., Counsel,
c/o Federal Reserve Board,
Washington, D. C.
My dear Mr, Elliott:
I have before me your letter of the
12th, addressed to Governor Rhoads, upon the above subject

•


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Federal Reserve Bank of St. Louis

matter, with the enclosures referred to.
Inasmuch as Governors Rhoads and Strang have gone
over this matter with a great deal of detail and attention,
and are at this time in Chicago attending a conference of
the governors of the Federal reserve banks, I therefore
suggest that you defer any further consideration of this
matter at the Board meeting on Tuesday, but await the return of Governors Rhoads and Strong to their respective
cities.
Yours very truly,

GML:G.

Deputy Federal Reserve Agent.


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Federal Reserve Bank of St. Louis

filc No,

3_7_ 3 ___

1_ _

Office of.Generi
Counsel
Federal Reserve
13oa?-d.

Epp

14Es SECTION

A PR 2 5 1950
Yr. Benjeuin Straer, Jr.,
Govornor Federal Rooerve Blenk,
York City.
My dear Mr. Strong:
Your letter elth encloeureR, reletine to ee truer,fee of the banks or northern Nee Jerecy from Dietrict No. 3
to District No. 2, was referred to ee yeeterday for attention.
niethout having been advieed that you had this matter
in hand,for adlueteent, T hod eraparei, for eullmieeion to the
of application and other papere, In relatien to
Board, for
/ have 1.!:seen relueeted by the Board to conthose transfers.
sider the papers submitted by you and to male a repert to it
on Tuesday.
Upon ten examination of your papors T find that In so
,far as tho eurrender of stock in the Fedorel Reserve Bank of
Philedelphia end the applicatien for stock in the Federal Reaerve Bank of New York are concerned, the two plane are suetantially in accord. It appearr, hogever, that according to
the tentative agree ,ent reached between the Federal Reserve
Bank of Nee York and the Federal Reerve Be.hk of Philadelphia,
'the Ni York bank le to assume a cortnin prop orticn of the expencee of the Philadelefeie bank and ie to receive a prooertionate part of its grose *amine In consideration therefor.
The Federal Reserve Bea of New York t also to aeauste the
payeont of the cueulative dividend on the calh pe.reent on
nubscrietione ef the eembor benkn transferred.
2ithout goine Into an extensive discussion of the
difference boteeen the two plane, it eeeme that, in effect,
we have proceeeed on the theory that the tranefer ie to
redo na of July the firet; thet each bank 12 to aseuee it.
On expenses to that date, and to to be entitled to receive
all eernings ur: to that date, while under your plan the
tranefer le mede effective as of the date of the organisation of the two bank, e.ed you are enderevorino to place'
each bank in the eeeition that it veuld have been had the
limite of the two dietriete been originhlly as they are!
aince the readjusteent by the Federal Reserve Board.


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Federal Reserve Bank of St. Louis

It seems to me that this will establish a precedent which it will be very difficult to follow in any future readiuetments, and that certain legal eueotions are
For exateple,
involved which will preeent some difficulty.
there ie 'acme ci.uestion of the right of the New York bark
to aeeume any of the expeneee of the Philadelphia bank and
to assume the payrnent of interest on cash-paid subecriptions
to that hank. On the other hand, there le oore:e question of
the rieht of the Philadelfhia bank to pay any part of its
earninpe to the New York bank.
I am encloeing for your consideration, a rough
preliminary draft of papers prepared by this office in connection with tha transfer of zember banks. While they deal
with the transfer or the banks in the Fifth District, they
are intended as a form for use in all dintricta.
In order that I may present the matter properly to
the Board on Tuesday, will you pleaze look over these papers and write me, if possible, on Monday, your objections
If you have the information, I
to the plan as outlined.
to have a stetaeont ?hewing approxixately the
eould like
loss or gain to either bank as a result of making the transfer in the manner suggested, as we, of course, rant to
hring about this adjuntrent on a baste which will be equitable to all parties concorred.
I am tiriting Governor Rhoads, of Pliledelphia, to
the seoee effect.
Very eincerely yours,


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Federal Reserve Bank of St. Louis

-

File No,
(Vice o: General Counsel
Federal Reserve Board.

.vkir
0)

J

Mr. Chaktee J. Phoadr,
Governor, Federal Reeerve Peenk,
Philadelphia, Pennsylvania.
My dear Yr. Rhoade:
The Board has referred to me for attention a letter
from Mr. Strone with erclovuree embodying a plan atreed upon
by you and Yr. strong for the transfer of the banks of northern New Jersey from District No. 3 to District No. 2.
Without having been advieed that you had thie matter
In hand for adjustment, T had prepared, for eubmiseion to the
Board, forme of application and other paper e in relation to
these transfers. T have been requested by the Board to consiJer the papers submitted by Mr. Strong and to make e report
to it on Tuesday.
Upon an exemination of theee !eepara I find that in
urrender of stock in the Federel Reeerve Bank
so far al th
of Philedelehie and the application for stock in the Federal
Reserve Bank of New York are concerned, the two plans are eubetantially in accord. It appeare, however, that accoring to
the tentative agreeeent reached between the Federal Reeerve
Bank o? New York anl the Federal Reserve Bank of Philadelphia,
the Nee York bank is to aeeume a certain proportion of the expensee of the Philedeleti.a bank and 13 to receive a proportionate pert of its growl earnings in consideration therefcr.
The Federal Reserve Bank of New 'York is eleo to aeeume the
Payment of the cumuletive dividend on the canh payelent on
eubscriptiene of the nember banks transferred.
Tithout going into an extensive discussion of the
difference between the two plans, it seers that, in effect,
we have proceeded on the tneory that the transfer is to be
made aa of July the firnt; tbet each bank is to assume itr
oen expenses to that date, and is to be entitled to receive
all earnings up to that date, while under your plan the
transfer is rade effective an of the date of the organization of the two banks, and you are endenvorine: to place each
bank in the position that it would heve been had the limit
of the two dietricto been originally es they are !since the


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Federal Reserve Bank of St. Louis

readjusteent by the Federal Reserve Board.
It seers to ma that this will establish a erocedent which it will be vary difficult to follow in any future readjueteente, end thet certain legal queetions are
involved which will present some difficulty. For example,
there is some question of the rieht of the New York bank
to aenume any of the expenses of the Philadelphia bank and
to assewns tle payeent of interest on cash-paid subscrietions
to that bank. On tha other hand, there is some question of
the 'right of the Philadelphia bank to pay any pert of its
earninge to the New York bank.
I am encloeine for your consideration, a rough
preliminary draft of papore 'reared by this office in connection with the transfer of member bans. While they deal
with the transfer of the banks in the Fifth District, they
ere intended ae a form for use in all district,.
In order thet / may prelent the ratter properly to
the Boere1 on Tureiday, will you please look over these papers and write me, if peseible, on Monday, your objections
If you heve the information, I
to the plan as•outlift@i.
eeve a etuteeent showing approximately the •
eould like to
lose or gain to either bank ee a result of leakine the transfer in the eanner euggeeted, as we, of ceures, want to
bring about this adineteent on a bat e welch will be ()witable to all parties concerned.
ar eriting Governor Strong to the eaee affect.
Vary sincerely your,


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Federal Reserve Bank of St. Louis

Mt
BOO
BESEW.

FEDERAL RESERVE BANK
OF NEW YORK

Jane 10, 1915.

Sirs:
Je have agreed with the Federal Reserve Bank of Philadelphia upon the terms and methods of transferring the member banks located in certain counties in Northern No:: Jersey from District No. 3
to District No. 2 as

rovided in your resolution of

ay 4, 1915.

Me

papers which are attached set forth in detail the terms agreed upon
and the methods to be employed in making the transfer.
Briefly - the Federal Reserve Bank of Neu York has agreed to
assume a portion of the oreanization and current expenses of the Federal
Reserve Bank of Philadelphia, and the Federal Reserve Bank of Philadelphia has agreed to allow, as a sot-off, a portion of its gross earnings;
both to the close of business June 30, 1915.

(For details see

"le have agreed to send a joint letter setting forth the des'eecially addressed to each of the member banks and signed by the
governors of both banks.

(See EXhibit B.)

•e propose sending with this letter an order, to be c:ecuted
by the member banks, directing the Federal Reserve Lank of 2hiladelphia
to pay to the Federal Reserve Bank of Neu York, the proceeds of the
shares surrendered.

...ents to be Li_v_aied by the Federal .eMese p:

servo Bank of Zea York on account of subscription to its stock.
IlIchibit C.)

(See

10

Federal Reserv4iloard

.AL RESERVE BANK OF NEW YC.


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Federal Reserve Bank of St. Louis

6 10/15.
/

1e have drafted a set of resolutions to be adopted by the
Boards of Jirectors of the member banks.

These resolutions have

been approved by the co.nsuls of both bankr.I.

(See Exhibit D.)

Jo also propose sending a cony of the Comptroller of the
Currency's 2orm 3-2149,

Calculation of Lawful -o_luy ..ieserve of Zs.-

tional 13aiks Located ilsewhere qrvm
Reserve Cities.

in Reserve Cities and Central

(See Exhibit E.)

de shall be grateful if you will take this matter under consideration and advise us of your approvalat asearlya date as may be
12ossible.
Respectfully,

2eder- 1 _leserve Board,
.
dashington, D. C.

HLJ/EEB.
Encs. (5)

•
EXHIBIT

/7

A

LadORANDUL OF AGREEUENT
BETWEEN FEDERAL RESERIE BANK OF PHILADaPHIA AND FEDERAL RESERVE BANK
OF KO YORK FOR ADJUSTING THE TRANSFER OF 131 BANES IN NORTHERN NEW
JERSEY FROM DISTRICT YO. 3 to DISTRICT NO, 2, A3 02 JULY 1st, 1915.

EXI'ENJE OF ORGANIZATION
The Federal Reserve Bank of New York agrees to assume such part
of the expense of olgnmization of the Federal Reserve Bank of Philadelphia
as the capital of the banks to be transferred bore to the total capital of
the banks in District No. 0 at the time the assessment was levied by the
Federal Reserve Board in November, 1914.

EXpense of organization is not

to include cost of furniture and fixtures or cost of printinL; and shipping
Federal Reserve Notes,
CURRaNT EXPENSE
The Fech:ral Reserve Bank of New York agrees to assume such proportion of the current expenses of the Federal Reserve Bank of Philadelphia as the capital paid in by and deposits to the credit of the banks to
be transferred bears to the total capital paid in by and deposits to the
credit of all of the member banks in District No. 3 at the close of business June 30th, 1915.
GROSS EARNINGS
The Federal Reserve Bank of Philadelphia agrees to allaa as a
set-off to the expenses above assumed, such proportion of the gross earnings of the Federal Reserve Bank of Philadelphia as the capital paid in
by and deposits to the credit of the banks to be transferred bears to
the total capital paid in by and deposits to the credit of all of the member banks in District No. 3 at the close of business June 30, 1915,
It is agreed that the plan of adjustment shall be presented to the
banks to be transferred in a joint letter signed by the Governor of the

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Federal Reserve Bank of St. Louis

Memorandum of Asreement —2—

Federa1 ieserve Bank of Philadelphia and the Governor of the Federal
Reserve Bank of :Jew Yor:A:,

A copy of this letter is attached, together

with resolutions referred to therein, all of which are to he a part of
this Agreement,


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Federal Reserve Bank of St. Louis

EXHIBITB

Union Yational Bank,
Union,

J.

Dear sirs:
By resolution adopted May 4, 1915, the Federal Reserve Board

granted the petition of certain banks in Northern New Jersey for the re-

adjusting of Districts Yos, 2 and 3.

In such readjustment the county in

which your bank is situated is to be included in District No, 2 on and

after July 1, 1915.

For the purpose of carrying out the resolution of the

Federal Reserve Board, you are requested to have your Board of Directors
adopt, on or before July 1st, the enclosed resolutions covering the surrender of your stock in the Federal Reserve Bank of Philadelphia and application for stock in the Federal Reserve Bank of Yew York.

When this has been

done a certified copy should be forwarded to the Federal Reserve Bank of
New York.

Two copies of the resolutions are enclosed so that you may

have a duplicate for your files,

For convenience, we have arranged the necessary operations
in order, as follows:


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Federal Reserve Bank of St. Louis

1,

Adopt the resolutions above referred to and send a certi-

fled copy to the Federal Reserve Bank of New York,

2,

Send to the Federal Reserve Bank Of New York with the certi—

fied copy of the resolutions, all receipts issued and sent to you for pay—

ments made by you on account of your subscription to the capital stock

of the Federal Reserve Bank of Philadelphia,

3, Execute and send to the Federal Reserve Bank of New York

the enclocerder, authorizing the Federal Reserve Bank of Philadelphia

to remit to the Federal Reserve Bank of New York on your behalf, the

net amount heretofore paid by you on account of your subscription to

the capital stock of the Federal Bank of Philadelphia.

This payment

will be applied by the Federal Reserve Bank of New York on account of

your subscription to the capital stock of said Bank.

Upon receipt of this payment, the Federal Reserve Bank

of New York will execute and forward to you its temporary receipt for

the amount so paid,

4.

Lt the close of business June 30, 1915, for the purpose

of transferring your reserve balance from the Federal Reserve Bank of

,ew York, please send to
Philadelphia to the Federal Reserve Bank of 1--

the Federal Reserve Bank of New York for your credit, your draft on

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Federal Reserve Bank of St. Louis

-3

on
the Federal Reserve Bank of Philadelphia for the balance as shown

your books,

5.

Please fill out Treasury Department form B-2149, calculation

of Reserve as of the close of June 30, 1915, and send it to the Federal

Reserve Ban: of .1:ew Yorko
The Federal Reserve Bank of Philadelphia will send statement

of your account to the close of business June 30th and will recon-

cile it in the usual manner,
Upon completion of transfer of your Bank to District 1To,
\,
the Federal Reserve Barik of liew York will assume all liability for dividends that have accrued tci\July 1, 1915, on your stock in the Federal
to
Reserve Bank of Philadelphia, \ which you may be entitled under the
\\
Federal Reserve Let,
Kindly note that all of the above papers are to be sent to

the Federal Reserve Bank of Ilew York,


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Federal Reserve Bank of St. Louis

FED D

RESERVE BLITZ OF PHILLDELFHL1
By
Governor,

FLDER41, RLSERVE BLITU OF IIEW Yaali
By
Governor,

4ssi
Office Correspoftence

FEDERAL RESERVE
BANK OF NEW YORK

Ts Zoverner Strong, ..1r. Jay and 1.1r. Curtis,

Date

June_

4915.

Subject: Re Transfer of Northern
New Jersey Banks.

From lir. Jefferson.

sent yesterday in conference with Governer Rhoads, Mr.
'Llardt,

Gamon and Mr. iudder, of the Federal Reserve Bnnk of Phila-

delphia, and hand you herewith papers as listed, representing agreement reached with them in connection with the taking over of the one
and thirty one Northern Hea Jersey Banks.

(a)

Memorandum of agreement between Philadelphia nrd
New York.

.(b)

?reposed joint letter to be sent to the banks to be
transferred.

Cc)

Proposed resolutions to be adopted by the Northern
New Jersey Banks.

(d)

Treasury Form B 149 referred to in joint letter.

They have the resolutions set up in their nultieyaTih and
will hold the typo until the Federal Reserve Board has approved the
-n2..00rs and they will then print as many as will be necessary.
In formslike Exhibit (c) we will use printer's ink instead of
tyferiter ribbon,

I also reached an agreement with them regarding

the practical details which need not be considered at this time.


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Federal Reserve Bank of St. Louis

CHAR LES J.RHOAD S.
GOVERNOR.

EDWIN S.STUART.
DEPUTY- GOVERNOR.

•

LRkL

u4rixf

N.

DEPUTY ,HAIRMAN.

FRANK M.HARDT.
CASHIER.

TIDERALRESERVE BANIi OFPHILADE-Lle
408 CILESTNUT STREET
tIZA

PHILADELPHIA, June 9, 1915
JUN 1 1 1915
ifederal ReserveBout
Dear Tr. Warburg:
3 believe we have now settled all the details relative
to the transfer of the banks of northern New Jersey to the
York District.
Bank of Aew

ew

Today, rr. Jefferson, of the Federal Reserve

ork, has been here, an

nIs gone over our sugges-

tions as tu the method of accountinc,, etc., and will take them
back to New York for final approval there.

Probably some one

from the New York Bank w.11 take the papers

to dashin,tola for

review by the Federal Reserve Board on Friday.

The matter does

not present any difficulties; we merely wish to be sure that we
have technically covered the transfer of stock payments from
one district to another.
Very truly your

Governor.

PAUL'
.
Esq.,
Federal ieserve Board,
::tshington, B. C.

\Nvi

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Federal Reserve Bank of St. Louis


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Federal Reserve Bank of St. Louis

i--

\ 1-

-....--,N• .
t:t.. ti,...,... . ,..

118


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Federal Reserve Bank of St. Louis

Jane 3, 191:).

Your letter of June

was duly received.

In reply I Imve to sew that the formal decrees
in tho redistricting cases, and among them that
in the New Jersey case, were cc%1Dletod and transmitted to the_ several banks yesterday. Doubtless you have received the decree in the New Jersey case throah :Ir. Austin before this.
Respectfully,

Secretary.

Chx les J. Rhoads, Esq.,
,
Governor, Federal Reserve Ban.:,
Philadelphia, P.

y•ILE

-

AF21.1.:s J.RHOADS,

If I CH An D

GOVERNOR.

I.AUSTIN,
CHAIRMAN.

EDWIN S.STUART,

GEORGENI.LAi1oNTE,

DEPUTY- GOVF:RNOR.

DEPITTY CI[AIRMAN.

171:ANK NI. HARDT.
CASHIER.

-FEDERAL ESERVE BANK OFPHILADELPHIA
408 CHESTNUT STREET
PHILADELPMA,June 1, 1915.

FEDERAL RESERVE BOARD,
Washington, D. C.
Sirs:
In drafting a letter to be sent to the banks
of northern New Jersey which are to be transferred from
District 7o. 3 to District Yo. 2 as of July 1, 1915, we
desire to refer to the resolution of the Federal Reserve
Board on this subject.

Up to this writing we have only

received a memorandum issued to the press, which informs
that the Board adopted a resolution on May 4, 1215.

This

was supplemented by a telegram, received by us, informing
that the transfer would be effective as of July 1, 1915.
If agreeable, we should be glad to receive a formal resolution or letter on the point, which will be our authority for communicating with the northern New Jersey banks
on this subject.

CJR-D


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Federal Reserve Bank of St. Louis

Governor.


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Federal Reserve Bank of St. Louis

In aaowor to :oar question villether It
necessary for tiz one handred and thirty-om
(131) NOT jersey lv,nks to &loft n:710 file resolutions relativo to t:leir surronder of stool: in tho
T?hiladelphla and take out
Y'ordoral 7leserve :an: of ,
.:
stock Lu the 7oderal 7zeolrve Ban7e: of 7e71 York, you
advisoa

to nattnr Is in the hamde of the

cottiool of the Board cma yott 77111 be informed as
ooaa as further information is in hand.
7oanerrtfu1ly,

Er. Charles J. Rhoads,
CrovEr.lor, 7ederal "tescrve Bank ,
...)11.11aCielphi::.., Pennsylvania,.


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Federal Reserve Bank of St. Louis

- II.A11LES J.RHOADS.

Rictuops

00vERNOR

CHAIRMAN.

TI TART.

GEORGE M.LA NfONTE.

GovERNou

CHAIRMAN

FRANK M.i IARDT.
CAsHIER

FEDERALRESERVE BANK OFPHILADELPHIN-E
408 CHESTNUT STRE .1'

-2-reo,.....

i
r
PH LAIWILPRIA,

May 17, 1915.

Federal Reserve Board,
Washington, D. C.
Sirs:
We are in receipt of your
May 14th

enclosing a copy of the opinion

of your counsel, relative to the rediscount
status of banks included in territory
which has been ordered transferred from
on

Federal reserve district to another,

for which we thank you.
Yours truly,

pLA-G.

Federal Reserve Agent.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

•
FEDERAL RESERVE BAN
OF NEW YORK
It
62
/

_ay 15, 1915.

Ji r s :
Receipt is acknowledged of your letter of I.:ay
14th, transmitting cony of an opinion prepared by Counsel
relative to rediscount status .of banks in territory ordered
transferred from one district to another.
Respectfully,

Federal Reserve Board,
kaashinf-ton, D. C.

PJ/RAH

\

FILE :
FED:flAL E:21VE BOARD


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Federal Reserve Bank of St. Louis

BO1DiF/11:...:,.
l_Ec',.
FEDSIAL i‘ ):.".IVE.
/
,
.
,

-ja.„A. _ . . .
..

1.!..v 14, 1915.

sirs
By directian of the reaeral :Reser
ve
Board I transmit for yoar inf
ormxtion a co'07
o: an opinion

1-0-),ared by Counsel of the
1

Board relative to the rediscoun
t status of
banks incluaed In territory 7,hi
ch Aas been
ordered transferred from one Fed
eral recerve
district

o unotbar.
,7?ospectfu14,

Socr,tar;7.

Mr. Iiierro
Chairman, Iloard of l'Arcotor
s,
Podoral Leoorvo Baulk of Hew
Yor.
Daelomres

......„........
1


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Federal Reserve Bank of St. Louis

/
1
4
..

falmL ille:4
, t2., '2
(Th
\-May 14, 1915.

Sirs
By diroctioa of the Federal

1

oserve

DoardI trinerait for your information a copy
of an opinion pronarod by Couasel of the
Board roLltivo to tho rodiscount statux of
bankm included in torritory which hao boon
ordered transferred from ono Poderal reserve
district to another.
Reopoctfally,

Secretary.

r. Richard L. Austin,
Chairman, Board of Directors,
radar al Resa.*ve %a's. of MI

Inolosaro.

a.

\,
.,_

ID

WARD FILE

FEDERAL RESERVE E1ANK
OF NEW YORK

11E)47 11, 1915.

Sir s:
Receipt is acknovIledged of your letter of May_lienclosing
copy of your letter to Governor Rhoads
1.7.
) dated ..ay 7 relative to the
preparation of .
clan covering the transfer of the banks in northern
New Jersey to the New York district.
Vie shall take this matter up with Governor Rhoads at the first
opportunity, as suggested by you.
Respect2u1ly,

Federal Reserve Board,
Washinzbon, D. C.


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Federal Reserve Bank of St. Louis

CHARLES J.RFIOAD S,

RICHARD L.AUSTIN.

GOVERNOR.

EDWIN S.STUART.
DEPU
,
.
FRANK -M.HARD T
CAS

CHAIRMAN.

GEORGE
7noVERNOR.

M.LAMoNTE,
DEPUTY CHAIRMAN.

4'
H.
_

g

FEDERALRESERVE BANK OFPHHAmomPuu.
410$ CHESTNUT

STREET

72

fie

May 10,

r'
MAY 1 1 1915
YwT Niliok9Avistioig!
,
DR. H. PARKER WILLIS,
Secretary,
Federal Reserve Board,
Sir:

Today Mr. Austin has handed me your letter of the 8th
•

instant, addressed to him, together with a copy of your letter
of the 7th instant, addressed to me, which latter has apparently
gone astray in the mails, as it has never reached me.
In accordance with your suggestion, we will proceed to
work out a plan, in conjunction witn the Federal Reserve Bank of
New York, of settlement, covering the transfer of the banks in
northern New Jersey as of July 1st, and will submit our plan to
the Board for its consideration.
very truly yours,
;

CJR-D


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Federal Reserve Bank of St. Louis

Governor.

CI[ARIA, s
:

RitoAns,
GOVERNOR.

SIP

EDWIN S.STUART.
DEPUTY- GOVERNOR.

LO

VIESEMIONN.

FRANK M.IIAR D

DEPII

CAsHIER.

TIEDERMARESERVE BANK OFT'


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

408 CHESTNUT STREET

PHILADELPHIA,Ms7 10, 1915.

Federal Reserve Board,
Washington, D. C.
Sirs:
I am duly in receipt of your letter of the 8th inst.,
enclosing a copy of letter addressed to Mr. Charles J.
Rhoads, Governor of this Bank, in reference to the preparation of the plan for effecting the transfer of
banks from one district to another.
We have been giving some thought to this matter.
As soon as the plan is worked out, we will ttke pleasure
in submitting it to you.

RLA-G. .

Federal Reserve Agent.

CHAIRMAN.


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Federal Reserve Bank of St. Louis

0:EDERAL RESEW NASD

May 6, 1915.

For your information I anclose cony of
a letter

of riujrpt to Governor Rhoads

Of the Federal Reste Bank of Philadelphin.
It vas the thou3ht of the Board that all
other Federal reserve banks which arc affected
by transfers fron one district to another,
)tea
might, if they chose, follow the plan ado,
,
by the Eew York and :7-hiladelT hia reserve ban'ks,
and approved by the Federal leservc Board.
Very respectfully,

Secretary.

Nr. Richard L. :_ustin,
Chairman, Board of Directors,
Federal Reserve Bank of Philadelnhia.
Enalosare.

Pfu-A)

-n‘

I.

KB


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

It:ay 8, 1915.

or your info=atien I enclose cor)y of
a letter of May 7 sent to Govarmr Rhoads o2
the Federal Reserie Ban% ef Philadelfaia.
,
,
it was the thoar.'1t of tac Board that all
other ?ederal reserve bamks which are affected
by transfers from one district to anothcr,
micht, if they chose,.follow the plan adopted
by tho New York and Philadelphia reserve banks,
and approved by the Federal 7eserve Board.
Very respectfallu,

Secretary.

:Ir. Pierre Jay,
Chairman, Board of Directors,
Federal aeserve Bank of 'New reek.
Enilooure•

FE

.

6ESEP.4'E BOARD FILE

Ea:" 7,

Dear 'overnor Rhoada;
,
mn
.Lanx. you for your yostordnvi s letter.4
I am about to leave for Nfw York and
shll refer yol6 letter to our Secretary, who
will .aier it.
Let me sa:i, thour7h, that I think it will
be best for your District and 7eT York to take
up the matter of the roadjustment of the New

/\


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Federal Reserve Bank of St. Louis

Jersey territory ana then sniAllt to un o plan
which the two Listricts rould suest fo:: the
:
carrying out of the riccessar- 2teps.
Ver:T truly yours,

C. J. .hoajo,

Governor, Federal :eserve Banh,
Zenns:Jvania.


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Federal Reserve Bank of St. Louis

/
#2

FEDERAL RESERVE BOARD
WAS

1`*\ " 9
,
:

ataaacm tr,n,40g
cl.6t L, ).\-Itt\!

0
111.4
MEMaRANDUM FOR MR. WILLIS:

Kindly note the appended letter which
is to go to Governor Rhoads.

Please note

what he says concerning official confirmation, which I think ought not to be omitted.
P. M. W.


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Your letter, addressed to

r. arbura under date

of the sixth instant,was read at the Board meeting this

I was instructed to say to you that the Board would
be pleased if you would now proceed to work out, In conjunction with the Federal Reserve Bank of Few Yoric, a plan
covering the details of the transfer of the ban'Is in the
territory which has been dhifted from the Philadelphia
District to the :Tow Yorlr. District, and When eudh plan has
been arranaed to your mutual satisfaction, transmit it
for the consideration and approval-of the Board itself.

*VOW augseiT matow
St61 i7 I AVtAl

FED E

VE BOARD
INGToN

ELLI OTT

e,

May 6tht 1915.— I9-.111-;

fEDEIIM.. --,

COUNSEL

/
14 dear Yr. Warburg:-


http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

As requested, T have read and considered the
_
attached letter from Mr. C. J. Rhoads, Governor of the
Federal Reserve Bank of Philadelphia, datedjA
Mr. Rhoads submitts the following inquiry:
d
"In case any banks in northern New Jersey
ply to us for rediscounts between now and JW.Y 1st,
T would inquire inether, in your judgment, we should
accommodate them, and I would also inquire whether
it would be satisfactory to let us carry any rediscounts which we may have for northern New Jersey
banks which mature after July let, until the notes
run off".
Thile I have not seen the order of the Board
to be entered in connection with the change in the district lines of District No. 2, it is my understanding
that the transfer of membership from Philadelphia to New
York of those banks located in the district to be assigned to New York is to be made not later than July first.
This being true, the banks in northern New Jersey will
continue to be members of the Federal Reserve Bank of
Philadelphia until that time and will be entitled to any
privileges extended to Other members.
As to the rediscounts carried at the time that
such banks cease to be members of the Federal Reserve
Bank of Philadelphia, while the Act makes no specific
provision in regard to this situation, I can see no legal
objection to the Federal Reserve Bank of Philadelphia
continuing to hold such rediscounts until they mature.
Where a member bank rediscounts with a Federal Reserve
Dank eligible paper held by it the Federal Reserve Dank
becomes the owner of such paper and the member bank is
This being true, there
contingently liable as endorser.
would seem to be no justification for assuming that a
change in the status of a member bank in its relation to
the Federal Reserve Bank should in any way affect the
For example, if a member
legality of such rediscounts.
bank should go into liquidation, the Federal Reserve Bank
would have the right to hold and collect any rediscounts
held by it and would have a claim against the estate of

2

such liquidating bank for any loss suffered under
the contract of the endorser.
I am of the opinion, therefore, that the
Federal Reserve Rank of Philadelphia will be fully
justified under the law in extending the privilege
of rediscount to the banks referred to as long as
they remain members of that bank, and that any rediscounts held at the time when they cease to be
thembers may be retained until collected.
Very sincerely,

Hon. Paul M. Tarburg,
Federal Reserve Board.


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Federal Reserve Bank of St. Louis

Coun,;e1.

CHAR LES J.RH0AD S.
GOVERNOR.

EDWIN S.STUART.
DEPUTY- GOVERNOR.
FRANK M.HARDT.

•

•

)
RICHARD L AUSTIN.
CHAIRMAN.
GEORGE M.LAINIONTE,
DEPUTY CII.XIRMAN.

C ASIIIER.

FEDERALBESERVE BANK OFPHILADELPHIA
40$ CHESTNUT STREET
PHILADELPHIA, 5/6
/1915
Dear Yr, Warburg:
I wish to thank you for your letter of yesterday, regarding the decision reached by the Board, in reference to the
banks of northern New Jersey, and feel that the Board has demonstrated to the country at large that they are actuated by the
best interests of the whole community in discharging their duties,
which is something that all of us who are familiar with the situation knew, but which, perhaps, is not generally appreciated
throughout the country.
On this account I feel all the more
comfortable to leave the future of our territory in your hands,
knowing that you will do the right thing.
May I trouble you to let me know at your convenience
whether the Board proposes to lay down uniform principles on
which adjustments are to be made in the case of transfers of
territory in dealing with the questions of proportionate expense,
earnings, etc., or is it the Board's wish that we take the matter up direct with the Federal Reserve Bank of New York and settle the matter ourselves.
The subject does not present any serious difficulties, although it may be desirable to have a ruling
from the Board as to just what basis is to be used in arriving
at the figures.
So far we have not received any formal notice of your
decision, except a telegram from Secretary Willis and an unsigned
copy of the statement given to the press, but I take it that in
due course a formal order will be sent us, authorizing us to release the banks in northern New Jersey and to pay over to the
Federal Reserve Bank of New York the proportion of capital which
said banks have paid in to us.
Very truly your

Governor.
PAUL E. WARBURG, Esq.,
Federal Reserve Board,
Washington, D. C.

CJR-D

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Federal Reserve Bank of St. Louis

CHARLES J.RHOADS,

i------

\ 411

OovERNaR.

EDWIN S.STUART.
DEPt1,14
,
FRANK M.HAR F)71:f
,

r -,-2\1.7
4
.

C !AIRMAN.
.

GEORGA M.L MoNTE,
D

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/
7

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ii•••,6.11

...•

FlibEIRAILIIESIERVE BANK OF
408 CHESTNUT

-466-- -

41111-A

STREET

PHILADELPHIA,

maXi 1915.

My dear Mr. Warburg:
Because we are not made hippy
by the transfer from this district of certnin banks
In north New Jersey to New York, it does not mean
that we do not approve of the action of the Board.
We are all on record here as favoring the including of north New Jersey in the New York district,
and believe your action will better dispose the
bans toward the system. It sometimes causes one
pain even to accept the right thing.
Just now we are disturbed over the possibility of losing our much esteemed Deputy Federal
Reserve Agent, Mr. LaMonte. I suggested to him that
as long as he has interests in Trenton, that he for
the time being claim his residence there, so that he
will not have to go out of office on July let. I
have made arrangements with him to look after the
duties of this office during part of July when I
hope to be away, and if it can be arranged to keep
him in office until, say the first of August, it would
be pleasing to all of us and entirely agreeable to
Mr. LaMonte. If there is any prospect of having
additional territory added to this district, it
might be well to have the nev director represent
that territory.
Yours ver

RLA-G.

z

To
Paul M. Warburg, Esq.,
c/o Federal Reserve Board,
Viashington, D. C.


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Federal Reserve Bank of St. Louis

11Ty

ly,

Federal Reserve Agent.

CHAIRMAN.


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Federal Reserve Bank of St. Louis