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A meeting of the Executive Conraittee of the Federal Reserve Board was held in the Office of the Governor on Friday, August 6th, 1926, at 11 a.m. PRESEFT: Governor Crissinger Jal:es HEL,ilin L.r.r. Eddy, Secretary McIntosh ALSO PRESETIT: The Governor stated that Dr. Goldemeiser, .,cting Director of the Board's Division of Research Statistics, 1)ad discussed rit h him the ad- visability of holding a conference in Uashington of members of the research and statistical staffs of the Federal reserve banks, and had 81-1.2;osted Septeiaber 13th and 14th as the dates for the conference. After discussion, it was decided to v-ithhold action on the ratter until after the return of L'. Miller, Chairman of the Boa rd s C or.nit te e on Research CI Statistics. The Secretary reported that Jr.7 H. E. Rank, vrho was designated an Assistant Federal. Reserve Examiner in accordance with the authority granted by the Board at its meeting on July 2nd, has returned to :rashington following the completion or the recent examination of the Federal Reserve Bank of .o.tlanta, begun on July 10th, end his turred in the commission as Federal Reserve Examiner issued to him at the time of his appointment. The Secretary vras instructed to cancel the commis s ion in quest ion. Letter dated August 5th from .the Secretary of the Federal Reserve rank of New Yark advisinrr, that on August 5th the Board of Directors considered and made no change in the bankt schedule of rates of discount and Purchase. Noted. Telegram dated August 4th from the Chairman of the Federal Reserve Rank 8/6/26 -2- Of St. Louis advising that the Pec.rd of Directors on that day :lade no chanre in the bank's existing schedule of rates of dircount and purchase. Irote d. Telegram dated uçust 4th frcut the ,,soistant Federal Reserve -gent at Philadelphia advising that the Board of Directors on that day mde no diange in the bankt s existing schedule Of rates of discount and TTurchase. IToted. Telegram dated ugust 5th from the Chairman of the Federal Reserve Bank of San Francisco advising that the Board of Directors on that day do no ohanF;e in the bank's existing schedule of rates of discount and -urchase. Noted. • Ratter approved on the initials of four members of the Board on imr,us.t 5th, namely, application of the )(put,11 Broady-oy TJational DInl: of Denver, Colo., for 135 shares of stock in the Federal Reserve Bank of T7.ansas City, effecth'e if and -rhen the Comptroller of the Currency issues a certificate of authority to contence business. Formally approved. l',Ieraoran.dtra dated im3ust 5th from the Actirr, Director of Research of the Division Statistics, reconnending the continuation of the temrorary etPDointments of ::rs• E. Bess 1-hn5lton and ,Irs. i,:athleen 3. Perry as statistical clerks in the Division, with salary at th rate of !.1130 per Lionth, for the period from September 1st to Deceyber lot, ard also reconrendinr; that the temporary appointment of :liss Lerle 14 Robinson be extended for the period from :alr,-ilst 17th to 7‘Tovember 17th, yrith salanr at the rate of 120 per month. On motion, the recomnendations contained in the memorandtua were approved. 73 8/6/26 • Secretary reported that in accord.a.rcelfith the EzIthority granted The secretary by t're Board on August 4th, he lad employed Frederick G. Furrows as a Messeer in the Board's Telegraph Division, with salary at the rate of ner month, effective August 6th. • Approved. Letter dated August 5th from the Comptroller of the Currency reco...imenclinc approval of a salary of ;3,000 per annum for Hatioral Bank 7xamire r Lawrence P. Connor, assigned to the First Federal Reserve District. Approved. Letter dated August 4th from the Assistant Federal Reserve ITeri, at St. Louis, requesting the Board's approval of the action of the Executive Coll.-Atte° of the bank on that date in granting an extension of sixty days fraa July 13th in the leave of absence on account of illness granted :ass Grace Toler, a cleri: in the Transit Department, who has previously been granted four months leave of absence with full ray; 7Tr. James, Chairman of the Board's Com,diittee on Salaries and 7xpenditures recommending appr oval and that the St. Louis bank be advised that further leave of absence with Pay will not be granted to Lass Toler. Upon motion, the reccyarBndation of 1.!r. James uas approved. 1.:emorandlu dated locust 4th from the Chief of the Divis ion of Brin1_: OPerationr:-,, subnitting letter dated July 30th froln Deputy Governor T:oore of the Federal Reserve Dank of "inneapolis, together with a tabular statement in which the e:zpenses incurred during the first half of the present :ear are cern:pared with this year's and last year's budgets aril also with expenses clurI-112; the first half of last year; the memorandum ccrimenting on the increases _ 74 8/6/26 and reductions of the expenses of the various functions; Er. Jas, Chairmen of the Board's Committee on Salaries arrl 1.1xpenditures recommerrling that the comtaunication from the lanneapolis bank be noted and that a letter be transmitted to the bank conveying the substance of Hr. &mead's comments. Noted and the Secretary directed to transmit to the bank the substance of Hr. Smead's comments. Hatter referred to the law Committee on August 3rd, namely, letter dated July 26th from the Governor of the Federal Reserve Bank of Einnearolis, replying to the Board's letter of July 24th, requesting his views on letter addressed to the Board on July 9th by 11r. Icenzel, Deputy Governor of the Federal Reserve Bank of lieu York, with regard to the recommendation af' the last Governors' Conference that Regulation "I." be amended so as to make eljjbie for rediscount or pirchase by Federal reserve banks bankers acceptances drawn by an elevator cm-many and secured by a terminal warehouse rece irt of the elevator company which draws the draft. Hr. Hamlin suggested that the Board interpret its Regulation "A" to mean that regular registered terminal warehouse receipts constitute documents for commodities so controlled by a third party independent of the borrorrer, as to make them good and eligible collateral. The Secretary was instructed to refer the above correspondence and Hr. Hemlint s suggestion to Counsel for the preparation of a ruling along the lines of Hr. Hamlin's suggestion, for submission to the Board at its next meeting. Heraorandum dated August 3rd frcta Counsel, referring to the previous action of the Beard in referring to the last Governor's Conference for recoizaendation the questions of the advisability of issuing regulations governing the discount of adjusted service certificates issued under the -5- 8/6126 World 4ar Adjusted Compensation Act, and as to what form the regulations Should take if issued, the Governors' Conference having referred the questions back to the Board with the request that they be submitted to the next Conference; Counsel stating that the Director of the United States Veterans Bureau, in a letter to the Governor dated July 14th, has requested that the Board give its views on the questions, and Counsel recomnending that they be referred to the next Governors' Conference for consideration and minimmendation. Ordered placed on the program for the next Governors' Conference. Report of Examination of the Vederal Reserve Bank of Atlanta, its branches and agencies, as at the close of business July 10th, which was referred for comment to the Committee on Examinations and the Committee on District ;f6, at the meeting on August 3rd; Mr. James, member of the Committee on Examinations and Chairman of the Committee on District #6, and Mr. Hamlin, Member of the Committee on District 46, submitting the following memorandums: "I concur in the views and. recommendations set out in the memorandum of the Chief Examiner under date of July 31, 1926, with which he transmitted this report to the Federal Reserve Board, except in the suggestion 'That the Board authorize a letter to be addressed to the Governor of the Bank in say sixty days requesting a detailed report of what action has been taken on the criticisms and suggestions listed by the examiner'. In this I should substitute the suggestion that the Board address a letter to the Chairman and Federal Reserve Agent of the bank within thirty days after the next meeting of the Board of Directors of the Atlanta Bank asking him to report to the Board what action had been taken relative to the criticisms and sag,gestions listed by the Examiner. "The Atlanta Board is scheduled to have its next meeting on August 13th at which time no doubt the report of examination will be presented to the Directors. "One item referred to in the report, namely, the revolving fund at Miami, Florida, should in my judgment have immediate at- 76 8/6/26 -6- terrLion . On page 7 of the rep ort is set out the following caament: 'On Tay 18, 1926, the agreement covering the revolving currency fund with the First National Bank of 1.•iiami, Florida, was supplemented by a nevr agreement limiting the amount of the fund ;:20 000,000. against collateral having a market value of :6,000,000. The new agreement provides that funds in excess of )2,000,000 shall be shipped to the Federal 7?.eserve Lank of Atlanta unless permission is granted to the 71iami Bank to retain them, in -;thic.h event additicnal c ollateral with a lltr• ket value equivalent to such excess shall be pledged". "On Page 39 of the report is the statement of the revo1-crin7 fund at the First III-Llama Bank of Lliami, Florida, showing a cash balance on July 10, 1926, of ;:.3,000,000 and with securities - held in custody by the Federal Reserve Bank as collateral to the above fund amounting in par value to „3,000,000 and hrivinr.; a market -value of •3,026,180. As I see it, the bank had on July 10, 1926, appro:dinatel-y a million dollars in cash in .1i.a.rai over and above the agreed upon amount. • "I feel that the .-ioarcl should be advised at once (a) why this violation of the agreement was permitted, and (b) what steps have been taken to correct. this situation. "In vicvr of the fact that it is evidently possible for the agreement under which the revolving fund as created and is operated to be and is disregarded, my judgment is that the revolving fund at Liiami should be discontinued at the earliest practicable date. • (Signed) Geo. R. James" "I have read this report, and feel that it is very thoroughly worked out. I should like, hcrrever, to be furnished with a general resumd bringing out in general form the major criticisms, arrl statement of conclusions based on the findings in the report as to the general standard of efficiency of the Bank. '.1ith this in view, I -would suggest that the Chief -xaininer be directed: "(1) To give the Board a statement showing briefly in vrhat respects the policies and operations of the Bank are belovr the standard fairly to be expected of a Federal Reserve Bank. "(2) To state specifically the facts contained in his report on which he bases the conclusion in the unsigned memorandum accompanying the report, dated July 31, 1926, as to the control of the Governor aver the Bank officers and operations, which the nemorandua states should be broken, and also to state the facts found by him justifying his conclusion that the L.D.jority of the board of directors conforms to the Governor's wishes in most matters of importance, and that "consequently it resolves itself almost into a one-man organization. . (Signed) C. S. Hamlin" "77 -7- 8/6/26 On motion, the suggestions of 1,:r. James and Vat. Hamlin were approved. Letter dated August 5th from Deputy Governor Harrison of the Federal "deserve Bank of New York, referring to his conference with the Board on July 27th, and reviewing his statements made at that conference concernpolitical and financial conditions in France as communicated to him by Governor Strong. Noted. Discussion then ensued as to the advisability of the Board establishbag a Division of Bank Examinations for the purpose of examining State banks Which are members of the Federal deserve System, when, in the opinion of the Board, examinations by the Board appear to be necessary. The members of the Board present expressed their views as to the scope of the work to be undertaken by such a division in the event that it is decided to establish it, and the matter was made the special order of business for a meting of the Board to be held on Wednesday, August 11th. IigIPAga_goILS_TANDING OOWILIIT2RTIS: Dated, August 4th, Dated, August 4th, 5th, Dated, August 5th, Dated, August 4th, 11, Recommendtag changes in stock at Federal Reserve Bank as set forth in the Auxiliary Minute Book of this date. Approved, decommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Approved. decommnding action on applications for fiduciary pov.ers. as set forth in the Almiliary Ydnute Book of this date. Refused. decommending approval of the application of 1,:r. Charles B. Veghte for permission to serve at the same time as Director of the Broad & Market National Bark, Newark, N. 3. and as President and Director of the New Brunswick Trust Company of New Brunswick, ,, J. Approved. The meeting adjourned at 12:45 p.m. 411.4406 S ‘ Secretary. Approved:
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