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120 A meeting of the Executive Committee of the Federal Reserve Board was hP1d in the office of the Vice Governor on i.drursday, Augist 26, 1926 at 11:00 o'clock a.m. PIESEITT: Vice Governor Platt Mr.„Healin Mr. Miller 1.1r. Noell, Asst. Secretary Mr. McClelland, Asst. Secretary ,.1.e1egram dated August 25th from the Uhairman of the Federal Reserve Bank of San Francisco, advising of the establishment of the following rates for purchases of bankers' acceptances: 3 3 3 3 1 to 30 days 31 to 60 days 61 to 90 days Repurchase 1/2p 5/873 3/410 3/4/0 Noted, with approval. Memorandum dated August 25th from the Acting Director of the Division Qf Research and statistics, recormnendin Of Of (1) That the temporary appointment Mr. Walter R. Gardner, Research Assistant 3,000 be made permanent at a salary per annum; (2) That the temporary appointment of Mr. J. Courtland Blliott, which expints at the end of Augist, be extended for two months beginning October 15th, at a salary of ‘.,;i200 per month, his present rate of compensation; and. (3) That the temporary appointment of Miss Aryness Joy, which ex13i1'es the eni of August, be extended until September 15th at her present rate Of compensation - 4150 per month. Approved. Latter dated August 23rd from the nairman of the Federal iieserve :Bank of New York, advising that the President of the First 14ational Bank of 121 8/26/26 -2- Albany, 1.. Y. has obtained control of the Albany Trust Company and plans to consolidate the two institutions early this fall. Uoted. Letter dated August 25th from the Deputy Governor of the Federal lieserve Bank of New York, commenting upon criticisms contained in the report of examination of that bank made by the 3oard's examiner as of .the close of business, 1,:5y 29, 1926. :Toted. Je2ort of Executive Committee on the matter referred to it at the meeting on Au2ast 11th, namely, letter dated August 5th from the Federal ;ieserve Agent at Boston enclosing a tentative program for the Fall Conference of Federal aeserm Agents; the Committee recommending that to the program submitted the following topic be added: "The policy of reducing reserve reqairaments on demand deposits from 10p to 7p in outlying banks of the large cities - should this policy be continued - are there cases where the permits Should be revoked and the banks required to keep a 10i; reserve." Approved. Letter dated. August 24th from the Secretary of the Federal Advisory council, advising that a meeting of the Council will be held in .ashington on September 17th, setting forth topics thich the Council would like to discuss with the Board and requesting advice as to matters wtdch the Board desires the Council to consider. After discussion, Mr. Miller moved that the Secretary of the Council be advised that the Board will be glad to discuss with the Council and hear its views on the topics 122 8/26/26 set forth in his letter, and that it would. like to have the council in connection with its discussion of recent rate policies, give consideration to the recent open market policies of the System. Carried. Mr. Platt then suggested that the qu.estion of reductions in reserve regairements, just referred to the i.ederal deserve Agents' Conference, also be submitted. to the Advisory courcil, and. upon motion, this suggestion was approved. Matter referred to the 14.1xecutive Committee at the meeting on August namely, letter dated Augast 11th irom the Chairmen ea the Federal ileserve Bank of Minneapolis expressing the opinion that no further substantial economies can be effected at the Federal deserve banks except th-rough the elimination of some of the free seivices, particularly the handling of non-cash items, and suggesting discussion at a joint confer°rice of iederaa. deserve Agents and uovernors and. with the Federal Advisory C°1-Incil of the question whether the maintenance of earning assets to meet the expenses of these functions does not subject the System to criticism. After discussion, it was voted that the Vice Governor advise Mr. Mitchell that in the opinion of the oard the question discussed in his letter should not be raised at this time. Memorandum from Counsel dated August 19th, with reference to the proof the laws of the State of Kentuckr as to the duty of trust companies arid, other fiduciaries to account to beneficiaries for income received from 'biz) investment of trust funds; Counsel stating that under opinions rendered hY Counsel of the Federal deserve :anks of St. Louis and cleveland there is no. authority in the Kentucky law for the practice of fiduciaries in using 123 -4- 8/26/26 trust funds in any way desired, merely accounting for principle aril 57; 'interest and submitting drafts of letters to the Federal Reserve Agents at St. Louis and Cleveland advising accordingly. After discussion, the above letters were referred to the Vice Governor for revision so as to request that this matter be called to the attention of state banks and trust companies in Kentucky which are members of the Federal Reserve System, advising them that the practice referred to is not authorized by law. Memorandum from Counsel dated August 24th, with reference to furnishing to the Department of Justice retort of examination of the Commercial Guaranty State Bank of Longview, Texas, which disclosed apparent violations Of criminal provisions of the revised statutes; Counsel calling attention to the fact that it has been the practice of the Board to decline to furnish to any one copies of reports examinations of member banks except upon a valid order of a court of competent jurisdiction, and. submitting draft Of letter to the Attorney General transmitting merely a copy of that part Of the report which has to do with the violattons. Upon motion, the proposed letter was approved. Mr. Hamlin then referred to the method of consideration of arplica- tions of national banks for permission to exercise fiduciary porders, and called attention to a letter addressed by the Board in 1916 to all Federal Reserve Agents, setting .Lorth certain conditions in connection with the Operations of national banks under which it is not to be deemed advisable to grant permits for the exercise of fiduciary powers. After discussion, Mr. Hamlin moved that the uomptroller of the Currency be requested to advise the Board of any other matters which in his opinion 124 -5- 8/26/26 would justify the Board's refusing an application of a national bank for permission to exercise trust powers. carried. Memorandum dated August 5th from the Chief of the Qivision of Bank Operations, transmitting reports received from the Federal iieserve Agents for the month of June, showing bills and securities of finance an, credit companies held by member banks; the memorandum stating that the purpose for which these reports were inaugurated has apparently been served and recommending, therefore, that the Federal _eserve Agents be authorized to discontinue submitting them to the Board. Upon motion, the above recommendation vhas approved. The Assistant Secretary then read to the Board draft of a proposed reply to a letter dated August 14th from the r'ederal Reserve Agent at ICansas city, suomitting a plan tor the maintenance of a stock of unissued. Federal deserve notes at the branches of that bank without the necessity of maintaining Assistant .ederal Aeserve Agents at the branches; the Pr°pose(i reply requesting certain additional information as to the method. iiandling releases from the supplies of unissued notes. Upon motion, the proposed letter was approved. Mr. :liner then referred. to the action of the Board at its meting On August 25th in appointing :::r. Platt and him as a special committee to consider possible amendments to the By-laws of the hoard to eliminate certain difficulties of administration which lead some members of the 125 8/26/26 Board to the opinion that the quorum of five provided in the Dy-lam should be changed to four. Ho submitted the following proposed revision of Article VI of the By-lays: Article VI. 2he Executive Committee. Sec. 1. There shall be an Executive Committee of the Board consisting of three members, which shall include the Governor, Vice-Governor and one of the appointive members of the Board. The appointive member of the Committee shall be nominated and elected at a regular meeting of the Board. Llembers of the Board shall serve as far as practicable in rotation and for approximately equal terms. The presence of three members shall be requisite for the transaction of business by the Executive Committee, and action shall be taken only on unanimous vote of the Committee. Sec. 2. In the absence of the Governor and. Vice-Goveriaor the appointive member of the Executive Committee shall act as Chairman and shall, With two other appointive members of the Board present in Washington to be Chosen by him in the order of their seniority, exercise the pomers and discharge the duties of the Executive Committee. In the absence of all three regular members of the Executive Committee the three remaining appointive members of the Board, provided there be three in Washington, shall act as an interim committee and exercise the powers and discharge the duties of the Executive Committee, the senior member acting as Chairman. The Secretary of the Board shall serve as Secretary of the Executive Committee. Sec. 3. It shall be the duty of the Executive Committee to review and eabmit drafts of important correspondence involving the expression of opinions or decisions of the Board, and to prepare and make recommendations governing the conduct of the Board's business. Sec. 4. The Executive Committee shall also have charge of all matters appertaining to the internal organization of the 3oard, and shall make recommendations from time to time on this matter. It shall also prepare annually a budget of proposed expenditures. Sec. 5. In the absence of a quorum of the Federal aeserve Board and for the transaction of business requiring action daring the absence of such quorum, the Executive Committee is authorized to transact business which can be transacted in accordance with established principles and policies of the Board and to perform such additional duties as may be specifically delegated to it from time to time by instruction of the Federal Reserve Board. After discussion, upon motion by Mr. Hamlin, it was voted that the Executive Committee should recommend to the Board adoption of the revision above quoted. 126 -7- 8/26/26 REPORTS OF STAIMING COMIITTEES: Dated, August 25th, 26th, Dated, Ausust 24th, 25th, Dated, August 24th, Dated, August 23rd, 24th, Dated, August 24th, Dated, August 24th, Recommending chances in stock at Federal Reserve Banks, as set forth in the Auxiliary Linute Book of this date. Approved. Recommending action on.applications for fiduciary pavers as set forth in the Auxiliary ]:inute Book of this date. Approved. Recomnendiyig action on aoplication for fiduciary pavers as set forth in the Auxiliary Minute Book of this date. Ordered held. Reconnending action on arplications for admission of state banks, subject to the conditions stated in the individtal reports attached to the applioaotions, as set forth in the Auxiliary Minute Book of this date. Approved. Becommaading approval of the application of 11r. Edward B. Doherty for Darmission to serve at the same time as director of the Flatbush National Bank, Brooklyn, N. Y. and as employee of the Seaboard National Bank, New York, N. Y. Approved. Recommending approval of the application of Mr. Isaac Alpern for permission to serve at the same time as director arid officer of the Perth Amboy Trust Conrcany, as director ami officer of the Peoples National Bank, Elizabeth, N. J. and as director of the Broad & Market National Bank, Newark, N. J. Approved. The meeting adjourned at 12:15 p.m. Assistant Secretary. Vice-Governor.
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