The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ClOw*1 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on 1:onday, December 14, 1925 at 11:35 a.m. PRESENT: Vice Governor Platt Mr. Hamlin mr. miller Yr. James Mr. Cunningham Mr. Noell, Assistant Secretary The minutes of the meeting of the Federal Reserve Board held on December 10th were read and approved. Matter approved on initials on December 11th, namely, application Of the Manufacturers and Traders National Bank, Buffalo, N.Y. for the surrender of 2100 shares of stock in the Federal Reserve Bank of New York, effective as of November 27, 1925* Formally aprroved. Memorandum dated December 11th from the Director of the Division °f Research and Statistics, submitting and recommending acceptance of the resignation of nss Olga E. Weirsmith, his Secretary, effective at the Close of business December 31, 1925. Accepted. Memorandum dated December 10th from the Chief of the Division ef Bank Operations, submitting and recommending acceptance of the resignation of Mrs. Rita S. Fugitt, comptometer operator, effective at the close of business December 10, 1925. Accepted. Order dated December 12th from the Secretary of the Treasury, (1"ting executive order of the president of the United States that the ft 12/14/25 -2- several executive departments and independent government establishments in the District of Columbia be closed on December 26, 1926, and that all clerks, except those who may for special public reasons be excepted from the provisions of the order, or those whose absence from duty may be inconsistent with the provisions of existing law, be excused from duty on that day; it being understood that this order displaces the usual orders granting half holidays on Christmas eve and New Year's eve. After discussion, upon motion it was voted that all employees of the Board who can be spared be excused from duty on December 26th. Letter dated December 12th from the Chairman of the Federal Reserve Bank of Philadelphia, advising of the re-election of Mr. J. C. Cosgrove as Class "A" Director of the bank and Mr. Alba B. Johnson as Class "B" Director, both for terms of three years beginning January 1, 1926. Noted. Letter dated December 7th from the Chairman of the Federal Reserve Bank of San Francisco, advising of the re-election of Mr. C• X. McIntosh as Class "Au Director of the bank and Mr. Elmer H. Cox as Class "Bu Director, both for terms of three years beginning January 1, 1926. Noted. Letter dated December 11th from the Chairman of the Federal 12/14/25 -3_ . leserve Bank of Aichmond, advising of the election of Mr. John F. Bruton, President of the First National Bank of Wilson, N. C. as member of the . Federal Advisory Council from the 5th District during the year 1926. Noted. Copy of letter dated December 11th to the secretary of the Federal Advisory Council from the Secretary of the Federal _ieserve Bank of lanneapolis, advising of the election of Mr. Theodore 7b1d, Vice President Of the Northwestern National Bank of Minneapolis, as member of the Federal 41v1sery council from the 9th District during the year 1926. Noted. Telegram dated December 11th from the Chairman of the Federal Reserve Bank of Kansas City, advising of the appointment of Branch allk Directors, effective January 1, 1926, as follows: Omaha L. H. Earhart, Managing Director, 1 year A. H. Marble, j years Denver Olson, Managing Director, 1 year J. H. 7;. Farr, 3 years Oklahoma City Daniel, Managing Director, 1 year C. Ned Holman, 3 years Noted. Letter dated December 11th from the Federal Aeserve Agent at t4 -.44neapolis, advising of the appointment of Mr. 11. E. Towle as Managing roc tor of the Helena Branch for the year 1926 and Mr. Lee M. Ford as 1_ -4- 12/14/25 Director for a term of three years beginning January 1, 1926. Noted. Letter dated November 28th from the Governor of the Federal Reserve Bank of Kansas City, with reference to the policy of rotation in the appointment of directors of Branch Federal Reserve banks; the Governor stating that he can not reconcile himself to the theory that rotation in these offices is logical or for the best interests of the banks. Noted. Letter dated December 10th from the Federal Reserve Agent at New York, advising of authorization issued by the New York State Banking Department to The Peoples Trust Company, Brooklyn, for the establishment of a branch at the southwest corner of Fourth Avenue and Eighty-fifth Street, Brooklyn. Noted. Letter dated December 9th from the Federal Reserve Agent at New York, advising of authorization issued by the New York State Banking Department to the manufacturers and Traders Bank of Buffalo for the establishment of branches at Broadway corner mills Street, Grant street corner Boyd Street, Main Street near corner Fillmore Avenue and Military Road corner Hertel]. Avenue, Buffalo; the Federal Reserve Agent stating that according to his records the first two branches named were branch offices of the Manufacturers and Traders , it 12/14/25 it -5- National Bank before its recent conversion. Noted. Letter dated December 7th from the Assistant Federal Reserve Agent at San Francisco, advising that the Bank of Italy on December 5th Opened the branch at the corner of Hayes and. Divisadero Streets (600 Divisadero Street), the establishment of which was approved by the Board on September 25th. Noted. deport of Comnittee on Examinations on letter dated December 5th from the Cashier of the Citizens State Bank of Maypearl, Texas, applying for approval by the Board of the action of that bank in consolidating on November 16th with the Farmers and. merchants State Bank of Maypearl; the Comnittee recommending approval of the application. Approved. Letter dated December 9th from Mr. Alexander B. Trowbridge, submitting statement in the ann -mt of 4500, balance due him for services as Consulting Architect in connection with the erection of the building for the Omaha Branch of the Federal iteserve Bank of Kansas City. Mr. Ctuininam moved that the Board approve the statement z'or payment. Mr. James moved, as a substitute, that the Board approve the statement for payment subject to formal notification that the Omaha ouilding has been completed and. is being occupied by the Branch. 12/14/25 Mr. James' substitute motion being put by the Chair was unanimously carried. Memorandum from Counsel dated December 12th, approved by the Law Committee, submitting statement of Honorable Newton D. Baker in the amount of 410,000, on account of services in the Pascagoula Par Clearance Case; Counsel also submitting draft of letter to the Governor of the Federal Aeserve Bank of Atlanta transmitting the statement for payment and stating that if agreeable the Board will prefer to wait until the litigation is completed before undertaking to pro rate the expense of Mr. Baker's employment, but that if this arrangement is not agreeable and a statement of all disbursements to date in connection with the expenses of special counsel in the case is submitted, the Board will arrange to have the other Federal Reserve banks reimburse Atlanta for their pro rata shares at this time. Upon motion by Mr. Hamlin, it was voted to approve both the statement and the proposed letter to the Governor of the Federal Reserve Bank of Atlanta. Memorandum dated December 9th from Assistant Counsel calling attention to the similarity of the title "First Federal Foreign Investment Trust", recently reserved by the Board for an Edge corporation to be organized in New York by Mr. Paul Klopstock and others to do a foreign investment trust business, to the title "First Federal Foreign Banking Corporation" which the Board in April 1924 agreed to hold for the possible future use Of the incorporators oz the First Federal Foreign Banking Corporation and Their associates, the original corporation having been liquidated and the IC" 12/14/25 -7- revived. name simply reserved for future use in case it is ever After discussion, it was voted that Counsel's memorandum be filed without action. reference to the Memorandum from Counsel dated December 4th with Bank and Trust Company of continuation of membership by the Peoples the regular requireBell Buckle, Tenn. which reduced its capital below prescribed by the ment for state member banks and failed to take action understanding that its Board for the continuation of membership with the to the necessary amount. capital would be increased within five years After discussion, upon recommendation of should the Law Committee, it was voted that steps memberits t forfei to bank the e be taken to requir to surrender ship in the Federal Reserve System and -of Atlanta. its stock in the Federal Reserve bank It er 1st, submitting draft of Memorandum from Counsel dated Decemb ent of the Second National reply to letter dated November 28th from the Presid rediscount at Federal Bank of Boston, inquiring as to the eligibility for Company of Cleveland, representReserve banks of notes of the Y. A. Hanna y of funds to be advanced to its ing borrowings by the Y. A. Manna Compan taken the own subsidiaries, certain of the Federal Aeserve banks having notes of the company must position that under the Aegulations of the Board l be classed as "finance paper" which is ineligible for rediscount at Federa Board has ruled that where a Reserve banks; the proposed reply stating the Parent corporation awns at least 7& of the stock of each of a number of parent corporation, the proceeds subsidiary corporations the notes of such Of corporations will which have been advanced or loaned to its subsidiary I 1 12/14/25 -6- not be considered finance paper within the mearning of the Board's Hegulations, provided that (1) the parent corporation :makes no advances except to its own subsidiaries, (2) the subsidiaries borrow no money except from the parent corporation and (6) the proceeds of such advances have been or are to be used by the subsidiary corporations for an industrial, commercial, or agricultural purpose, within the meaning of the Federal deserve Act and the Board's aegulations. After disucssion, Mr. Hamlin moved the proposed reply be approved and copies ordered transmitted to all Federal aeserve banks for their information. Mr. Hamlin's motion being put by the Chair was carried, Ur. Miller voting ' ,non. Matter approved on. initials on December 11th, namely, report of • Committee on Salaries, Expenditures and Efficiency, submitting draft of telegraphic reply to letter dated December 3rd from the Chairman of the Federal deserve 3ank of San Francisco inquiring whether the Board will aPProve a charge against the bank's surplus account for the purpose of Setting up a reserve to cover undetermined losses on paper of failed banks, and if not, whether the Board will authorize the bank to use all Of its net earnings for the purpose of increasing its present reserve for losses; the reply stating the Board desires that the polioy followed at the end of 1924 of not reducing surplus in order to increase reserve for undetermined losses be followed this year and that if estimated losses on paper of failed banks at the end of this year exceed present reserves = 12/14/25 -9- by an amoant larger than net earnings remaining after payment of dividends, the Board will authorize the bank to carry the total amount of such earnings to its reserve for probable losses. Upon motion, the above telegraphic reply was formally approved. Memorandum from Counsel dated December 9th on the question of whether the Board has legal authority to require large banks in an outlying district of a reserve or central reserve city to carry the reserve required Of banks in the central sections of the city and at the same time permit small banks in the outlying section to carry lesser reserves and whether the Board may legally require a bank in an outlying district of a reserve or central reserve city, which has previously been authorized to carry reduced reserves, to return to a higher reserve requirement; Counsel stating (1) that the Board has a discretion in granting permission to carry lesser reserves but that this discretion is not to be exercised arbitrarily; that if the relative size of the banks is the only basis for the distinctio n to be made in reserve requirements, he does not believe the position of the Board could be legally sustained and (2) that the Board has the implied authority to require an outlying bank previously authorized to carry reduced reserves to return to a higher reserve requiremen t because of a change in the size and character of the baak, the size and character of the community it serves, or for other reasonable and proper cause. After discussion, it was voted that the above opinion be referred to the Committee on Examinations which Committee the Board on December 8th instructed to conduct an investigation 12/14/25 -10- of banks granted authority to carry reduced reserves. The Vice Governor then referred to the special order business for tomorrow's meeting, namely, the proposals of amendments to the national banking act and other legislative proposals which have been arproved by the Advisory Committee of Governors and Federal Reserve Agents appointed by the Board to study necessary banking legislation. After discussion, Ur. Janes moved that Messrs. Noell, Stewart and Wyatt be appointed a special committee to assemble all recommendations for legislation which have been made to the Board. The Secretary then entered the meeting and submitted the letter dated December 11th from the Chairman of the Federal Reserve Bank of Chicago, submitting copy of a pamphlet entitled "The Federal aeserve Bank System", which is based on an interview with Mr. James Simpson, President of Marshall Field and Company and a Class "C" Director of the Chicago bank, who has prepared and is bearing the expense of the Printing of the pamphlet which he plans to release for publication and distribution on the morning of December 28th; the Chairman stating that he has communicated with the Federal Reserve Agents at the other Federal .:leserve banks regarding an offer by r. Simpson to supply every Federal - eserve bank with a sufficient number of these pamphlets to enable them to send a copy to each of their member banks, the only expense to the banks being the postage, and to supply the Federal Reserve banks with a 12/14/25 -11- sufficient number of advance copies, in proof sheet form, for newspaper distribution in their respective districts. After full discussion, M. Miller suggested that the following *telegraphic reply be made to Mr. Heath's letter: "Answering your letter December 11th with regard to offer of Mr. Simpson to supply Federal Reserve banks at his expense with copies of pamphlet containing his interview on Federal Reserve System, which he proposes to distribute, for distribution by them to their member banks, Board wishes you to express to Mr. Simpson its appreciation of his generosity but believes that it should adhere to the policy that Federal Reserve banks should do nothing that might reasonably be construed as propaganda. Will you please advise eanks with which you have communicated concerning mr. Simpson's offer of Board's position in order that its policy in this matter may continue to be observed." After further discussion, it was voted to refer the above proposed reply to the Executive Committee with power. Mr. Janes, Chairman of the Committee on Salaries, Expenditures and Efficiency then submitted the following report with reference to the request of the special Salary Committee of the Federal Reserve Bank of St. Louis, that the Board reconsider previous action in disacproving salary increases recommended for certain officers of the bank for the year 1925 and in voting to awrove a salary of not in excess of 20,000 per annum for the Governor of the Bank: !I "The Committee feels that there was nothing developed at the hearing of the St. Louis Salary Committee on October 6th, or in the supplementary elt 12/14/25 -.12- ,tbrief filed by Mr. Lonsdale muier date of October 31st, that either warrants or justifies the Federal Reserve Board in changing its position in regard to salaries of certain officers at the st. Louis Federal Reserve Bank. The Committee is also of the opinion that to reverse its position in this matter would work a gross injustice on certain officers of other Federal Reserve Banks, and it, therefore Recommends that the Federal Reserve Board reaffirm its original opinion and position in the premises." Upon motion by Mr. James, it was voted to approve the recommendation of the Committee that the Board reaffirm its original opinion and position in the above matter, Mr. Hamlin not voting. 0.1TS OF STANDING COMMITTEES: Dated, December 10th, 11th, 12th, Dated, December 11th, Dated, December 11th, Dated, December 11th, Recommending changes in stock at Federal Reserve Banks, as set forth in the Auxiliary Minute Book of this date. Approved. Recommending approval of the application of Mr. Nelson Morris for permission to serve at the same time as director of the Drovers National Bank in Kansas City, and as director of the Commerce Trust Company, both of Kansas City, Mo. Approved. Recommending approval of the application of Mr. John G. Groves for permission to serve at the same time as director of the Drovers National Bank in Kansas City an as director of the Commerce Trust Company, both of Kansas City, Mo. Approved. Recommending approval of the application of Mr. Geo. A. Collett for permission to serve at the same time as director of the Drovers National Bank in Kansas of Kansas City, Mo., and as director of the National Stock yards National Bank of National Stock Yards, Ills. Approved. The meeting adjourned at 1:00 o'clock.
@FedFRASER