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112 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on ;Iednesday, February 1, 1928, at 11:15 a.m. PR6;SENT: The Governor Young Mr. Platt Mr. Hamlin Mi. Idller Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Governor reported a request received from the Chairman of the 13exiking and Currency Committee of the House of Representatives for inforIllation as to salaries paid officers of the Federal Reserve banks and branches He stated that this information was desired in connection with Probable discussion on the floor of the House with respect to the salary linat to be made effective under the pension plan which would be authorized by the Federal Reserve Retirement Bill which has been favorably rePorted 1_by the Committee. He stated that although Mr. McFadden advised hinIthat the number and amount of salaries paid officers would be sufflelelit for the discussion, he had requested for his own information a list of the names of the various officers and the salary paid each. The information desired by Mr. McFadden having been prepared under the Governor's direction, he was authorized to forward it. The minutes of the meetings of the Federal Reserve Board held on 40.14 417 26th and 31st were read and approved. Letter dated January 28th from the Federal Reserve Agent at Boston, Whether. the Board would have any objection to his completing 41'Ise.hgellients for an absence from the bank of some six or seven weeks beabout the middle of February. Noted, without objection. 113 2/1/28 -2- The Governor then referred to a letter dated January 5th fror the 44era]. Reserve Agent at Chicago, submitting and requesting comments on draft of a letter prepared by Counsel for that bank to be addressed by the Federal Reserve Agent, in accordance with Section IV (b) of Regulati°11 Ds Series of 1928, to directors of banks not paying due regard to the Maintenance of their reserves, pointing out the personal liability of the directors in connection with any loss or damage sustained by the bkrik its stockholders or its creditors, as a result of its failure to c°fliPly with the law relating to the maintenance of reserves. The erilor stated that under his direction Counsel has prepared several of a substitute letter and at his request the Secretary read to the Board the final draft as folloas: "Pursuant to the provisions of Section IV (b) of Regulation 3 of the Federal Reserve Board, Series of 1928, a copy of which 18 enclosed for your information, I am writing to direct your attention to the fact that the (Tame of Bank), of which you are a director, is not paying due regard to the maintenance of its reserves, having been deficient in its reserves during reserve computation periods betaeen (date) arid (date). "Section 19 of the Federal Reserve Act requires the above mentioned bank to maintain a reserve consisting of an actual net balance with this Federal reserve bank equal to not less thitn % of the aggregate amount of its demand deposits and Vo of its time deposits, and specifically forbids such bank to make any loans or to pay any dividends while its reserves are deficient. Moreover, Section IV of the Federal Reserve Board's Regulation D prescribes penalties for a failure to maintain the !:eserves required by law and provides for summary action to be caken against any bank which is continuously deficient in its reserves for six consecutive months. "I am also directed by the Regulations of the Federal Reserve Board to call your attention to the fact that the di1;e0tors of a bank are required to administer the affairs of such Aank in accordance with the laws to which it is subject; and a 'allure so to administer the affairs of the bank will subject 1 114 2/v28 -3- the directors to personal liability for any loss or damage sustained by said bank, its stockholders, or its creditors as a result of the failure to comply with the law. If, therefore, the (Mame of Bank), its stockholders, or its creditors sustain anY loss or suffer any damage through a failure of such bank to maintain its reserves as required by Section 19 of the Federal Reserve Act, or through the making of any loans or the PaYment of any dividends while its reserves are deficient, you, as one of the directors of said bank, may be held personally liable for such loss or damage." Upon motion, the above letter was approved as submitted. The Governor then submitted memoranda addressed to the Executive C°141attee by the Secretary of the Board and the Chief of the Division of klac O perations, with reference to the pamphlet entitled "Approved Itet11"s for the Preparation of Balance Sheet Statements" which was pubby the Board in April, 1917, in conjunction with the Federal 11444e Commission and the American Institute of Accountants, and has be 54 d istributed since that time; both the Secretary and the Chief of the 13ivision of Bank Operations recommending that the distribution of the PaillPhlet be discontinued, as it is in need of revision and it is lietbelieved that the Board is the proper body to bring up to date and a pamphlet regarding the method to be folloffed in checking up big all " . sheet statements. Upon notion, it was voted to approve the recom mendation that the distribution of the pamphlet be discontinued. The Governor then presented a letter dated January 28th from the 'r of the Institute of International Finance, an organization con'bed 1_ "Y the Investment Bankers Association of America in cooperation 115 (:) 2111/28 With New York University, inquiring whether the Board sould have any Objection to the Executive Commi%tee of the Institute inviting Mr. E. A. Goid ' Ilweiser, Director of the Division of Research and Statistics, to " b 19111e a member of the Advisory Council of the Institute. Referred to the Governor with power. Attehtion was then called to the fact that the action of the Board haterdaY, with respect to salcsies of the Governors of the Federal Res°, ' Ire Banks of Philadelphia and San Francisco results in no salary hoiri g a8 yet been approved by the Board for those two officers during 1928 e‘tld to the fact that under the new procedure of electing officers (It the Federal Reserve banks and fixing their salaries at January meet- Illg4 or the boards of directors considerable time will naturally elapse 1)14een the end of one year and the date of fixing of official salaries cl'the ensuing year. Mr. Hamlin moved that the Board rule that salaries approved for officers of Federal Reserve banks for each year remain in efrect until salaries for the ensuing year have been fixed by the boardsof directors of the Federal Reserve banks with the approval of the Board. Carried. 114ORT3 OF STANDING COMMITTEES: Nted. F ebruary 1st, Recommending changes in stock at Federal Reserve banks as set forth in the Auxiliary Minute Book of this date. Nted. Recommendations approved. January 31st, Recommending approval of the application of Mr. George F. Tyler for permission to serve at the same time as director of the Franklin-Fourth Street National Bank, Philadelphia, Po., and as director of the Jenkintown Bank and Trust Company, Jenkintown, Pa. Recommendation approved. 116 2/1/ze -5- STANDING COMITMS (Cont'd): r14td. January 31st, Recommending approval of the application.. of Mr. Harry C. Carr for permission to serve at the same time as officer of the Bank of Italy National Trust and Savings Association, San Francisco, Calif., as director of the First National Bank, Ducor, Calif., and as director of the First National Bnnk, Porterville, Calif. Recommendation appr ved. The meeting adjourned 12 o'clock noon. oec e ary ) 1 A 114.1) d: I/ c)verril
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