Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, August 5, 1925, Volume 12, Part 2

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A meeting of the Federal Reserve Board was held in the office of
the Federal Reserve Board on Wednesday, August 5, 1925 at 10:30 a.m.
PRESENT:

Governor Crissinger
Mr. Platt
Mr. Hamlin
Mr. Miller
Mr. James
Mr. Eddy, Secretary

The minutes of the meeting of the Board held on July 22nd and the
meetings of the Executive Committee held on July 24th, 27th, 28th,29th
and 31st, having been circulated among the members, were formally approved.
Memorandum dated August 3rd from the Acting Chief of the Division
Of Research and Statistics, transmitting the resignation of Miss Helen
D. Drake, Statistical Clerk, and recommending that same be accepted effective September 15th, at the expiration of one month of annual leave.
Upon motion, the resignation was accepted
and the employee granted thirty days leave with
pay, less the number of days she has been absent
with pay during 1925 to date.
Memorandum dated July 31st from the Division of Examination with
reference to letter dated July 29th from the Federal Reserve Agent at
Richmond, with regard to stock in the Federal Reserve Bank held by the
Peoples Bank of Georgetown, South Carolina, and the Farmers Bank of St.
George, South Carolina, both of which are in the hands of a liquidating
agent; the memorandum recommending approval of the recommendation of the
Federal Reserve Agent that no action be taken at this time looking to the
cancellation of the stock held by the banks in question.




Approved.

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Secretary recommendMemorandum dated August 3rd from the Assistant
le, agreed upon
ing approval of a change in the Interdistrict Time Schedu
Louis, whereby items between
by the Federal Reserve Banks of Dallas and St.
one day basis, each way, instead
Dallas and Little Rock would be placed on a
of two days as at present.
Approved.
A. B. 2rawbridge,
Draft of reply to letter dated August 1st from Mr.
ects for the proposed Birmingham
Consulting Architect, advising that the archit
upon plans and specifications for
Branch building have requested him to pass
time to give proper
the branch building, and advising that he has not had
reply stating that the Board
consideration to the drawings; the proposed
ed plans and specifications
does not desire that he report to it on the propos
same and render a comprehensible
until he has had sufficient time to study
report.
Upon motion, the proposed reply was
approved.
Division of Bank
Memorandum dated July 27th from the Chief of the
ting draft of a letter to the
Operations, approved by the Secretary, submit
ting that they furnish the
Governors of all Federal reserve banks reques
clearing accounts with
Board with a list of non-member banks maintaining
amount of the balances standing
them an July let, 1925, together with the
to the credit of such banks




on that date.

Upon motion, the
approved.

proposed letter

was

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Report of Committee on Examinations on memorandum dated August 1st
from the Acting Comptroller of the Currency, recommending approval of an
application of the Boonville NatiorR1 Bank, Boonville, Missouri, for
permission to reduce its capital stock from

200,000 to ci100,000, on

condition that no money be returned to the shareholders and that the
amount of the reduction be aTlied to removing doubtful assets and slow
paper, all assets removed to be trusteed for the benefit of shareholders
at the date of reduction; the Committee also recommending approval.
After discussion, as to the adequacy
of the reduced capital in relation to the
deposits of the bank, Mr. Hamlin moved approval
of the application.
Mr. Hamlin's motion being put by the
chair was lost, the members voting as follows:
Mr. Hamlin, "aye"
Mr. James, "aye"
Governor Crissinger,"no"
Mr. Platt, "no"
Mr. Miller, "no"
Mr. Miller then moved. that the Comptroller
of the Currency be advised that in the judgment
of the Board, the proposed reduction is too great.
Carried.
Letter dated July 28th from the Assistant Federal Reserve Agent at
San Francisco, transmitting and recommending approval of an arplication
of the Bank of Italy for permission to establish a branch de novo at the
corner of Union and 7/ebster Streets, San Francisco.




Mr. James then presented to the Board certain
figures with regard to the capitalization of the Bank
of Italy and its sufficiency for the establishment of

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additional branches and stated that he would
have no objection to the approval of the application
if the Board felt the Bank of Italy to be adequately
capitalized.
After discussion, Mr. Platt moved
approval of the application.
Carried.
Letter dated July 27th from the Assistant Federal Reserve Agent at
San Francisco, transmitting and recommending approval of an application
Of the Pacific Southwest Trust and Savings Bank for permission to move
Its branch now operated at 4321 South Park Avenue, Los Angeles, to a
new location at 4335 South Park Avenue.
r
I

Noted, without objection.
Letter dated July 27th from the Assistant 'ederal Reserve Agent at
San Francisco, transmitting and recommending approval of an application
Of the Pacific Southwest Trust and Savings Bank for permission to move
Its byanch now operated at 670 West Jefferson Street, Los Angeles, to a
new location at 724 West Jefferson Street.
Noted, without objection.
Letter dated August 1st from the Chairman of the Federal Reserve
Bank of New York, with reference to the previous action of the Board in
deciding that service by Mr. W. J.

Humphrey, Director of the Buffalo

Branch, as member of the Republican County Committee of Wyoming County,
New York, is inconsistent with the provisions of the Board's Circular No.
21, Series of 1915; the Federal Reserve Agent transmitting a letter from
Mr. Humphrey stating he will be glad to resign as a Director of the Branch,




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8/5/25

continue
and expressing the hope that the Board will allow Mr. Humphrey to
as a Director until the expiration of his present term on

December 31, 1926.

After discussion, Mr. Platt moved that the
Board approve the recommendation of the Chairman
of the Federal Reserve Bank of New York that the
Board !emit Mr. HurapNrey to serve until the expiration of his term.
Mr. Platt's motion being put by the.
Chair was lost, the members voting as follows:
Governor Crissinger, "aye"
Mr. Platt, "aye"
Mr. Hamlin, "no"
Mr. Miller, "no"
Mr. James, "no"
l Reserve
Letters dated July 27th and 28th from the Assistant Federa
Board, resrectively,
Agent at San Francisco and the Chief Examiner of the
rumored negotiations
advising of the results of investigations made of the
the Security Trust
for the merger of the Bank of Italy, San Francisco, with
Bank and the
and 3avings Bank, the Pacific Southwest Trust and Savings
l Bank of San
First National Bank of Los Angeles and the First Nationa
ion for the rumor
Francisco, both letters stating that there is no :1 7aundat
Italy
as received, but that negotiations are under way by the Bank of
Bank and the Citizens
looking to consolidation with the Citizens National
al Bank of San
Trust and Savings Bank of Los Angeles and the First Nation
Francisco.




Noted.
Mr. Platt then moved that the Board rescind
its order of July 22nd, to its Chief Examiner that
ted
he remain in San Francisco until otherwise instruc
by the Board.
Carried.

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Report of Committee on Salaries, Expenditures and Efficiency on
letter dated July 29th from the Federal Reserve Agent at Dallas, requesting
reconsideration by the Board of its action in disapproving the salary expenditure involved in the three months' leave of absence granted by the
Executive Committee of the Bank to Mr. Reece T. Freeman, whose services
as Assistant Cashier have been discontinued; the Federal Reserve Agent
advising of certain facts which actuated the Executive Committee of the
BalL: in granting the leave of absence to Mr. Freeman and stating that
he assumes responsibility for failure to take the action subject to the
approval of the Board; the Board's Committee recommending reconsideration
Of

previous action and approval of the expenditure in question.
After discussion, hr. James moved that the
Board reconsider its action of July 28th and
approve he salary expenditure involved in the
leave of absence granted Mr. Freeman.
Mr. James' motion being put by the
chair was carried, the members voting as
follows:
Mr. Platt, "aye"
Mr. Hamlin, "aye"
Mr. James, "aye"
Governor Crissinger, "no"
Mr. Miller, "no"
Memorandum dated July 31st from Counsel submitting copy of report

Of

the recent conference of Counsel of the Federal reserve banks and

representatives of the Office of the Comptroller of the Currency with
reference to proof of claims against insolvent national banks; Counsel
stating tnat the conference resulted in an agreement on all points dis-




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cussed and calling attention to the action of the conference in voting that
it is not essential to the proper administration of the Federal reserve
banks to employ advisory counsel for general supervision of legal matters
affecting the System, as suggested by the Federal Reserve Agent at Dallas
in his letter of June 26, 1925.
Upon motion, Counsel's memorandum was
ordered referred to the Law Committee and
circulated among the members of the Board
for their information.
Memorandum of Counsel, dated July 17th, on letter dated July 15th
from Messrs. Shearman and Sterling, transmitting appliction of the National
City Ban,c of New York for permission to open a sub-branch, agency or office
Of its Cuban branch in the Town of Moron, Province of Camaguey, Cuba; Counsel
stating that the application is in proper legal form and that there is no
legal reason why it should not be granted.




After discussion, upon motion by Mr. Platt,
the following was ordered spread upon the minutes:
"The National City Bank of New York having, on
or about July 15, 1925, filed an application with
this Board for the purpose of obtaining authority
to establish a sub-branch, agency or office of its
Cuban Branch in the town of Moron, Province of
Camaguey, in the Republic of Cuba, and the said
application having been considered; and it appearing
that the said application is properly made under the
laws of the United States of America and should be
granted, Now, therefore, it is
ORDERED, that the said application be and it
hereby is approved, and that the said Bank be and
it hereby is authorized to establish a sub-branch,
agency or office of its Cuban Branch in the town
of Moron, Province of Camaguey, in the Republic of
Cuba."

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Memorandum from Counsel, dated July 9th, submitting draft of a
letter to s all Federal Reserve Agents on the subject "Estimating population
Of towns and cities in which banks applying for membership are located".
Upon motion by 21r. Hamlin, the proposed
letter was approved.
Draft of reply, prepared by Counsel, to letter dated July 20th, from
the Federal Reserve Agent at Chicago, inquiring whether a recent amendment
to the statutes of Michigan, which requires that a State bank exercising
trust powers shall segregate a portion of its capital for the benefit of
the creditors of the bank in its trust department, applies to or affects
national banks as well as State banks; the proposed reply stating that
Section 11 (k) of the Federal Reserve Act does not require a national bank
to segregate a portion of its capital to its trust deloartment, even in a
law
case where the State law requires such segregation and that there is no
authorizing a national bank to segregate a portion of its capital for any
purpose and it is very doubtful that any such allocation by a national bank
in the absence of specific statutory authority would have any legal effect,
and further that the Board is of the opinion that the amendment to the
Michigan laws cannot be construed to apply to or affect national banks which,
if they have the requisite capital, may properly be authorized to exercise
fiduciary powers without regard to the provisions of the anendment.
Upon motion, the proposed letter was
approved.
Draft of letter to Mr. Alexander Wall, Secretary of the Robert Morris
by
Associates, Lansdowne, Pennsylvania, with reference to an inquiry made




0,4'4
C11,
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8/5/25

regarding the interpretation of
him in a letter addressed to Mr. Hamlin
"A", which requires separate
the provision of the Board's Regulation
ower
s closely affiliated with a borr
statements of corporation or firm
offered
ower shows clearly that the note
unless the statement of the borr
that
acceptable; the letter stating
for rediscount is both eligible and
icular
ision and its application to part
the interpretation of this prov
of the
primarily for the determination
cases which may arise are matters
have
to the present time the banks
Federal reserve banks, and that up
n.
ruling interpreting this provisio
not requested the Board to issue any
er was
Upon motion, the proposed lett
approved.
July 31st, approved by the Law
Memorandum from Counsel, dated
ich for
application of Mr. Edward B. Aldr
Committee, with regard to the
and the
of the Industrial Trust Company
permission to serve as Director
which was reof Providence, Hhode Island,
National Exchange Bank, both
the two institutions appeared to
fused by the Board on the ground that
adapplicant being permitted to file
be in substantial competition, the
d fails to
ing that the evidence submitte
ditional evilence; Counsel stat
s and recome different classes of customer
show whether the two banks serv
convenient date.
ted to the applicant at some
mending that a hearing be gran
a hearing
Upon motion, it was voted that
be arranged
to
date
be granted Mr. Aldrich, on a
by the Board's Counsel.
all Federal reserve banks had
The Secretary then reported that
expense inbear a pro rata share of any
signified their willingness to
to assist in
g Honorable Newton D. Baker
curred by the Board in employin




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8/5/25

the preparation and trial of the appeal in the case broupt against the
Federal Reserve Bank of San Francisco by the Brookings state Bank and
suggested that a circular letter be addressed to all Federal Reserve
banks advising them that Mr. Baker has been retained and that his expense
Will be pro rated in the usual manner:
Upon motion, the suggestion of the
Secretary was approved.
Letter dated August 3rd from the Deputy Governor of the Federal
Reserve Bank of New York, submitting for the approval of the Board, the
, agaction of the directors of that bank in voting to grant increases
all
gregating 41,320 per annum, in the salaries of seven employees,
effective August 1, 1925; the Deputy Governor stating that the directors
(1

appreciate the desire of the Board to have increases for the clerical
view of
force of the bank take place only at the end of the year, but in
the particular nature of the cases under consideration, believe it is
time.
most important to make the increases recommended at the present
Upon motion, the above letter was ordered
circulated and redocketed.
The Secretary thaa reported that one of the employees of the
Division of Bank Operations, Miss Marjorie F. Jones, had applied to
the United States Employees Compensation Commission for compensation
due to an injury sustained thraagh continuous operation of a comptometer
machine in the Division; and submitted memorandum from Counsel, dated
August 1st, expressing the opinion that the anployees of the Federal
Reserve Board are entitled to the benefits of the compensation act.




Noted.

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Draft of letter prepared by the Acting Director of the Board's
Division of Research and Statistics to the Federal Reserve Agent at
Philadelphia commenting upon charts and other material submitted by the
Agent for inclusion in a proposed Federal reserve exhibit to be displayed
at the Fall convention of the American Bankers' Association at Atlantic
City.
Approved as amended.
at
Letter dated July 14th from the Assistant Federal Reserve Agent
San Francisco, transmitting and recommending approval of an application of
of
the American Bank of San Francisco for permission to purchase the Bank
the quarters
Alameda, Alameda, California, and to establish branches in
Webster and
of that institution at Central Avenue and Park Street and at
ng data
Santa Clara Avenues, Alameda; the Federal Reserve Agent submitti
on the application which indicates that negotiations for the purchase of
the Dank are already under way and that the bank through inadvertence
of negotifailed to apply for the Board's approval prior to the opening
that it
ations under the condition of membership imposed by the Board
ions or
would not "directly or indirectly through affiliated corporat
of the
otherwise, acquire an interest in another bank in excess of 210;;
promote
capital stock of said other Dank, nor directly or indirectly

he

an interest
establishment of any new bank for the purpose of acquiring such
without first
in it nor make any arrangements to acquire such an interest
Board, filing an aphaving received the approval of the Federal Reserve
plication on a form approved by said Board."




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After discussion, Mr. Janes moved that the
Board disapprove the application of the American
Bank, in view of its violation of the condition
of membership above quoted.
Mr. James' motion being put by the
chair was carried, Mr. Platt voting "no".
Mr. Miller then moved that the Governor prepare

and submit to the Board at its next meeting a letter
to the Federal Reserve Agent at San Francisco, advising of the above action.
Carried.
Letter dated July 26th from the Assistant Federal Reserve Agent at San
Prancisco, transmitting copies of correspondence with the American Bank
Of San Francisco, advising that it has under consideration the establishment
Of one or more branches in the City of San Francisco and stating that it
assumes t;]e Federal Reserve Board will interpose no objection to the openof local or neighborhood branches in the city of the head office, after
the bank has first secured the approval of the State Superintendent of Banks.
After discussion, Mr. Miller moved that the Governor
prepare and submit to the Board at its next meeting a
reply to the above letter stating that it has been the
policy of the Board not to interpose objection to or
decline permission for the establishment of de novo
branches in head office cities, except for very comnelling reasons.
Carried.
The Secretary then stated that the Board had never adopted a uniform

1

application to be submitted by State member banks desiring the Board's approval for the establishment of branches and suggested that a form of
application be prepared for submission to the Board in which the applicant




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bank would be required to set forth for the information of the Board
various information regarding the application which is required under
the regulation3 of the Board.

He stated that under the present procedure,

the duty of asembling this information fell upon the Federal reserve banks.
Upon motion by Mr. Miller, the suggestion of
the Secretary was approved.
Mr. Hamlin then stated that he had granted to his Secretary, Yr.
J. P. Moore, a two month's leave of absence without pay, to be taken
during his own absence abroad.
Noted.
IT'

REPORTS OF STANDING COMITTEES:
Dated, July 31st, Recommending changes in stock at Federal Reserve banks,
Aug. Ord, as set forth in the Auxiliary Minute Book of this date.
Approved.
4th,
Dated, Aug. 5th, Recommending action on applications for fiduciary powers,
as set forth in the Auxiliary Minute Book of this date.
Approved.
Dated, Aug. 5th, Recommending action on applicL.tion for fiduciary powers,
as set forth in the Auxiliary Minute Book of this date.
Ordered held.
Recommending approval of the application of Mr. a. P.
Dated, Aug. 4th,
Brewer to serve at the same time as Director and officer
of the First National Bank, Tulsa, Okla., and as director
of the Commerce Trust Company, Ka as City, Mo., and as
k, McAlester, Okla.
director of the First National
Approved.
The meeting adjourned at 1

en•

"4114•41.

Secretary.

Approved:




Governor