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171 A meeting of the Executive Committee of the Federal Reserve Board was 1184 14 the office of the Federal Reserve Board on Tuesday, February 19, 1929 4t12:00 o'clock noon. PRESENT: Vice Governor Platt Mr. Hamlin Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The Secretary reported that since the last meeting of the Board letters have ueen received, dated February 13th from the Deputy Chairman of the Federal zieeerv e Bank of Philadelphia, dated February 13th from the Deputy Chairman of the n zederal Reserve Bank of Boston, dated February 14th from the Chairman of the n Rederal Reserve Bank of Kansas City, dated Eebruary 16th from the Chairman q the t, cederal Reserve Bank of Richmond and dated February 18th from the Secretary of the Federal Reserve Bank of Minneapolis, replying to the Board's letter Pebruary 2na on the subject of the improper use of the credit facilities of the Reserve banks by member banks, all of which have been placed in eirculatio n Matter approved on initials on February 16th, namely, application of the /.1irst National Bank, Soldiers Grove for original stock (19 shares) 14 the Federal Reserve Bank of Chicago, effective if and when the Comptroller 14 the Currency issues a certificate of authority to commence business. Formally approved. Letter dated February 15th from the Secretary of the Federal Reserve Of -vveland, advising of the establishment on that date, of the follow0 of rates for purchases of acceptances: Bankers Acceptances: 1 to 45 days 46 to 90 days 5/0 5 1/6/0 2/19/29 ..2- 5 1/4-70 5/0 5 1/4;07 91 to 180 days Repurchase Trade Acceptances Without objection, noted with approval. Telegram dated February 16th from the Chairman of the Federal Reserve Bank iiiehmond, advising of the establishment, effective that date, of the follow14g schedule of rates for purchases of bankers acceptances: 5 1/8;) 51/4% 53/8% 1 to 45 days 46 to 90 days 91 to 180 days Without objection, noted with approval. Telegram dated February 16th from the Secretary of the Federal Reserve Bank "Inneapolis, advising of the establishment on that date of the following a°heclule Of rates for purchases of acceptances: Bankers acceptances: 1 to 45 days 46 to 90 days 91 to 120 days Repurchase Trade acceptances - 5% 5 1/8% 5 1/4i; 5% 5 1/410 Without objection, noted with approval. Letter dated February 15th from the Secretary of the Federal Reserve Bank °t l'ellsas City, advising of the establishment, effective on that date, of the qlowing schedule of rates for purchases of bankers acceptances: 1 to 45 days 46 to 0 days 91 to 180 days 5% 5 1/8i; 5 1/4: /; Without objection, noted with approval. Llemoraadum dated February 19th from the Chief of the Division of Bank 173 2/19/29 -3- recommending the appointment of Miss Frances Crump as stenographer 4140.eric , in the Division, at an annual salary of 0.400. Approved. Letter dated February 15th from Miss Nannette L. Milliken, clerk in the Secretary's office, tendering her resignation, effective March 21, 1929. Accepted. Letters dated February 15th from the Comptroller of the Currency, recomter°44g approval of salaries of 4,i4,000 and 3,000 per annum, respectively, for , -114 Bank Examiners Alphonsus J. Mulroney and Russell E. Mooney, assigned to -48 Seventh and Eighth Federal Reserve Districts. Approved. Memorandum dated February 15th from the Comptroller of the Currency, teecm," —46116j-rig approval of an application of the First National Bank of Tremont, 111.1„ for permission to reduce its capital from $70,000 to ,;60,000. Approved. Report of Committee on Salaries and Expenditures on letter dated FebruEtt'114th from the Governor of the Federal Reserve Bank of Boston, requesting 1114)1.0 val Of the action of the board of directors of that bank in voting to ap1*°Pt1ate $500 as a contribution to a fund being raised by the National As4".etion of Credit Men for the investigation of commercial frauds; the Board's ittee recommending approval. Approved. Report of Committee on Examinations on letter dated February 14th from the Asais taut Federal Reserve Agent at Philadelphia, transmitting and recommend14g a PProval Of an application of the Bark of Auburn, Auburn, Pa., for pennis- 2/19/29 to hold 10 shares of stock in the National City Bank of New York, inadvert- ai°11 acquired without prior approval by the Board, in accordance with the con" e ait -011 under which the bank was admitted to membership in the System; the Board's Committee also recommending approval. Approved. Letter dated February 14th from the Assistant Deputy Governor of the Peural the the Reserve Bank of New York, transmitting copy of a letter addressed to wvernors of all other Federal ,leserve banks, concerning participation in 414 k of issue credit to the National Bank of Aoumania, which became effective °II February 7, 1929 and runs for one year from that date. Ordered circulated. Letter dated February 13th from the Chairman of the Federal Reserve Bank laws uI Dallas, advising of an amendment to Article II, Section 1 of the By°I that bank, changing the ciates of meetings of the 3xecutive Committee °f the 2-7th D ,,ank from the second and fourth Thursday of each month to the 17th and Of each month. Noted, with approval. The Secretary then presented for the record the following recommendations 411d, act ' icns of the Federal Advisory Council, in addition to that considered by so thed. at the meeting on February 15th, which were submitted to the Board (111/'ih5 the joint meeting with the Council on February 15th: "TOPIC NO. 1. Is an acceptance credit based on the retail sale of automobiles I, " Iorei MI countries on installment notes, a proper acceptance credit? .i.ZOOMLIENDATION: similar This would be inconsistent with facilities accorded to 4 2/19/29 "business in this country and the Council therefore answers the query of the Board in the negative. TOPIC NO. 2. That procedure could be adopted by the banks of the United States to discourage and possibly eliminate the practice of corporations, foreign banks and others of 'window dressing' at the end of the year, which results in a concentration of borrowing in the New York market at that time? RECOMMENDATION: The Federal Advisory Council knows of no possible way Of preventing the practice of so-called 'window dressing' to Which the Federal eserve Board refers. It may be well to point out that in many states the system of taxation is such as to provide an incentive for depositors to convert cash into non-taxable investments at the close of the year. The Council believes every other effort should be made to correct the present situation in the speculative markets before resorting to an advance in rates." Noted. Letter dated February 18th from the Foreign Trade Securities Company, Ltd., 11"°rk City, requesting a further extension for a period of thirty days of he Board's approval and reservation of the title "Foreign Bankinp: and InvestCor poration" for the corporation which it is proposed to organize under Section 25 (a) of the Federal Reserve Act. Upon motion, it was voted to grant an extension of thirty days from February 25th. 1;lemorandum from Counsel dated February 18th, approved by the Law Committee, °11 the matter referred to Counsel at the meeting of the Board on January 15th, heltlelY, letter dated January 11th from the Chairman of the First Feieral Foreign 4111ting Corporation, requesting a ruling that the Cornoration's bills arising trot , 14sta1lment resales of American automobiles in foreign countries are a ti31.acto1y basis for acceptance credits that banks in New York City are will- -4 2/19/29 -6- g to extend to the Corporation; Counsel submitting draft of a proposed letter tcl the Corporation, prepared in accordance with views expressed by the Chairman e the General Acceptance Committee and by the Federal Advisory Council, disalpr ving the use of bankers acceptances in refinancing advances made to retail leelers in foreign countries against installment paper taken by such dealers &li the retail distribution of American goods abroad. Upon motion, the ruling set forth in the proposed letter was adopted and the letter was ordered transmitted. Xemorandum from Counsel dated February 12th on the matter referred to him at th8 meeting on February 8th, namely, advice that the New York State Banking 4Partment has authorized the Equitable Trust Company of NW York, a member ballk, to establish an additional branch office in the city of Paris, France; Colzuse1 stating that, in his opinion, the member bank may not after February 26 '1927, the date of the enactment of the so-called McFadden Act, lawfully elltablish a branch in a foreign country and continue to be a member of the Nerel aeserve System. Upon motion, it was voted to instruct Counsel to prepare a letter to the Equitable Trust Company along the lines of his opinion, calling attention, however, to the recommendation which the Board has made for an amendment to the law which would expressly authorize the establishment of foreign branches by state member banks. Report of Committee on Salaries and Expenditures on schedules submitted bY the Federal Reserve Bank of New York, covering adjustments in salaries of ebitaoIr,, --es at the head office and Buffalo Branch during 1928; the Committee (1) reDortin —e that all adjustments at the head office were made in accordance with theta 4a for standardization of salaries previously approved by the Board and 2/19/29 —7... $4,04 be approved as submitted; (2) stating that the employees of the Buffalo 4411ch have never been grouped and graded in accordance with the plan approved bY the Board and, therefore, their salaries should have been approved the same as salaries for other Federal Reserve banks and branches, and that the attention °f the New York bank should be called to this fact; (3) recommending, however, that the adjustments made at the Buffalo Branch during 1926 be approved by the BoA.A . Including those in the salaries of three employees receiving in e:t.cess Of 00 per annum. Upon motion, the recommendations of the Committee were adopted and the salary adjustments made at the Federal Reserve Bank of New York and its Buffalo Branch durinp. the year 1928 were approved. Memorandum from Counsel dated February 18th, with reference to applica- tie,_ for cancellation of stock in the Federal Reserve Bank of Chicam standing 14 the il mes of the First ?rust and Savings Bank and the Union Trust Company, both (If Chicago, Illinois; Counsel stating that the two institutions consoliaatea 114der the provisions of a statute of Illinois, which provides that the --e existence of the consolidated banks is terminated and that he is 4ccora. 111E.,1Y of the opinion that the applications for cancellation of Federal ae8e1,— 'Ye bank stock may properly be approved by the Board. Upon motion, it was voted to approve cancellation of 9,000 shares of stock in the Federal Reserve Bank of Chicago, standing in the name of the First Trust and Savings Bank and 6,000 shares standing in the name of the Union Trust Company. he Secvetary then submitted application of the Peoples ?rust Company of Little 240 ' c'ek, Arkansas, for membership in the Federal Reserve System and for Shares of stock in the Federal Reserve Bank of St. Louis, together with a 73 2/19/29 l'sc -8- ommendation of the Committee on Examinations that the application be ap- 'oved subject to the usual conditions of membership set out in Regulation Pl R9 Series of 1928, and the further condition that the bank shall agree to l'a(iucc the amount of its slow assets and past due paper and make every effort to keeP sane at a minimum. 4". discussion ensued during which it was pointed Out that the bank under its articles of incorporation has authority to engage it several unusual lines of business. Following the discussion, upon motion, it was voted to approve the application subject to the conditions of membership recommended by the Committee, and with the understanding that the following additional paragraph will be included in the letter to the bank advising of the Board's action: "The Board wishes to direct your attention to the fact that under condition No. 1 above no change in the general character of your business or in the scope of the corporate powers now exercised, may be made except With the permission of the Board. The Board understands that you are authorized under the provisions of your articles of incorporation to execute bonds as surety for individuals or corporations in court or for any other purpose; to buy and sell real estate; to guarantee the title to real estate and to do a brokerage business. The Federal Reserve Board will consider the exercise of any Of these powers which are not now being exercised by you as among the changes referred to in this condition of membership. The Board does not intend by this to indicate that it will in no event permit you to exercise any such powers, but wishes it to be understood that in case you should desire in the future to exercise any of them it is required that you first ask and obtain the permission of the Board. In order that the Board's records may be complete, it is requested that you advise the Board whether any of the above mentioned powers are now bong exercised by you, and, if so, which of such powers." Discussion then ensued with respect to a possible letter, to be addressed to th a Chairmen of the Boards of Directors of all Federal Reserve banks on the a ubject of securing the cooperation of member banks, in line with the 4 2/3.9/29 -9- 4%etion made by the Federal Advisory Council at its recent meeting, in the frcIrte being made by the Federal Reserve banks to prevent the improper use of tlis credit facilities of the Federal Reserve System by member banks. At 1:00 p.m. the meeting recessed and reconvened at 3:30 p.m., r also being present. Discussion was resumed as to the form which the proposed letter to eciena lett()r Reserve banks, referred to above, should take. Several forms of Were suggested by the members of the Committee, no one of which was -.4 satisfactory. It was understood that the matter would be given fur- ther : Kmsideration at a later meeting of . the Board. A40, S OF STANDING COMMITTEES: 1)14ecl, P ebraary 16th, 18th, 19th, 4teal Pe 16th, Recommending changes in stock at Federal Reserve banks this date. as set forth in the Auxiliary Mihute Book of i Recommendations amroved. Recommending action on an application for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Aecommendation approved. 1)446(1 'Eebruary 14th, Recommending action on an application l'or admission of a state bank, subject to the conditions stated in the individual report attached to the application, as set forth in the Auxiliary Minute Book of this date. Recommendation approved. 1)4ted, February of the application of Mr. George approval Recommending 16th, serve at the same time as de Spence for permission to Y. director of the Midwood Trust Company, Brooklyn, N. liational Peoples and as officer and director of the Bank, Broorclyn, N. Y. Approved. lication of Mr. D. Y. 'l'e bruary 16th, Recommending approval of the 1)4tect as dilliams for permission to se e at the same time and Bank iiational officer and director of the iisst director of Trust Company, Port Chester, i. Y. and as "I Chester, Port the Byram National Bank, Approved. m. The meeting adjourned at 41)Pr°1rect. Secreta Vice Governor.
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