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173 4 meeting of the Federal 2,eserve Board was held in the office of the Federal aeserve Board on Monday, February 27, 1928 at 11:15 a.m. PA7ASENT: Governor Young !:x. Platt Mr. Hamlin Mr. Miller Cunninptiam Mr. Eddy, Secretary Mr. McClelland, Ilsst. Secretary Ifirs Hamlin referred to Senate Resolution #152 introduced by 3enator Of Texas and adopted by the Senate on February 24th, under the t"rls of which the Committee on Banking and Currency of the =Anate or a ,authorized Sub-committee thereof is authorized and directed to make a nil and complete investigation of the administration of the affairs 4 Of the Federal iteserve Bank of Dallas and to report thereon to the Senate as sr, --°11 as practicable. He referred to the record which has been furnished the Bo 4rd Of the hearings held by the board of directors of the Dallas bank calleerning complaints made against the administration of the institution, which, he stated, is so voluminous as to Make it difficult to follow up N,ated testimony. He submitted draft of a letter to the Federal _teserve '41'etit at Dallas, requesting that he have counsel for the Federal Reserve bank pl'epare a digest of the record, consisting of an analysis of the '411.°11s charges and allegations with a table showing the pages of the re"rcl ';Ilere evidence was submitted both to support and refute each ree. Upon motion, the letter submitted by Yr. Hanlin was approved and ordered transmitted. The minutes of the meetings of the Federal 4_, '' * W1., he eserve Board held on 18th and 20th were read and approved. minutes of the meeting of the Executive Committee of the Federal 194 2/27/28 'Iteserve Board held on February 21st were read and upon motion the actions recorded therein were ratified. Report of Law Committee on Clayton Act application of 1:r. aobert L. ithIV, Sr., involving the First Joint Stock Land Bank and the Tri-3tate Loan 44d. Trust Company, both of Fort 'Jayne, Indiana; the Committee concurring it a recommendation of Counsel that action on the application be deferred aillce both gralit the institutions are nonmember banks and the Board has no power to application, which power would, however, be vested in the Board 1113°11 enactment of the amendment to the Clayton Act recommended by the Board. Upon motion, it was voted to defer action on the above application until sUch time as it can be determined whether or not the amendment in question will be passed at the present session of Cono.ress. Letter dated February 23rd from the 3ecretary of the Federal aeserve 1)ank of New York and telegram dated February :_3rd from the Chairman of the Pecierai Reserve Bank of Kansas City, both advising that the boards of di- l'eetors at meetings on that date made no changes in the banks' existing aoheatues Of rates of discount and purchase. Viithout objection, noted with, approval. Telegram dated February 24th from the Chairman of the Federal deserve laqc of n, vnicago, advising that no meeting of the board of directors was held °11 the t , • Ite due to lack of a quorum, but that the Executive Committee voted to Meate II° change in the bank's existing schedule of rates of discount and 1141thase. .lithout objection, noted with approval. Letter dated February 21st from the Secretary of the Federal ,-les-_-!rve vr 4tlante, advising that the Executive Committee on that date voted 175 2/27N to establish a rate of 4,, for mrchases of government securities with agree- Merit to resell. ':iithout objection, noted with approval. 'leport of Committee on 'Salaries and Expenditures on letter dated February 4th fr om the Chairman of the Federal Reserve Bank of San Francisco, requestapp royal of the action of the board of directors of that bank in voting to exi. enl for a period of six months from Earch 1st, with half pay, leave of ' 4bsetr,_ L'u on account of illness previously granted .T.Tr. T. ?exton, an ell4PloYee of the Salt lake City Branch; the Board's Committee recommenuing an01 the salary payment involved. Ilpproved. --eport of ixecutive Committee on letter dated February 17th from the ,i..eserve .;-.gent . at Chicap:0, recommending approval of an application °t the Liidland ilational Bank of Chicago, an outlying institution, for a r,-J.lucti°11 in its 414() 0.1‘ the from reserve requirements from 13,, to 10 of demand deposits and advising receirA of applications for reductions in reserves on demand dethe Ogden Eational Bank of Chicago (from 10;; to 7 -;) and the :_ddison '1°1141 Bank of Jhica - o (from 13, to 10,) on -hich he is not yet prepared to 1‘.ccIllrfiend alynroval by the Board; the Board's Committee also recommending ap1111017a1 of the application of the 7.:idland National Bank. Upon motion, it was voted to authorize the Llidland National Bank of 'Ilicarr,0 to carry reserves of 10 against demand deposits, but not to approve at this time the applications of the Ogden 1:ational Bank and Addison National Bank for reductions in their reserve requirements to 7_ and 10,, of demand deposits, respectively. IT/10 randum from the Secretary, dated February 23rd, submitting the follav- , eha -g.es in the time schedule of the Federal Reserve Bank of Kansas City is Federal ing that the propflsed changes have been approved by the other 176 2/27/28 bailks -4- concerned: Kansas City to Memphis Kansas City to Atlanta Kansas City to New Orleans Kansas City to San Francisco Kansas City to Los Angeles Kansas City to Portland Kansas City to Spokane Denver to Helena Denver to Los Angeles Denver to Portland Denver to San Francisco Oklahoma City to New Orleans Oklahoma City to Los Angeles Omaha to Jacksonville Omaha to Portland Omaha to Seattle From From From From From From From From From From From From From From From From two days to one day three days to two days three days to two days four days to three days four days to three days four days to three days four days to three days three days to two days four days to three days four days to three days four days to three days three days to two days four days to three days four days to three days four days to three days four days to three days Upon motion, the changes proposed by the Federal Aeserve Bank of Kansas City were approved. tl 4port of :41xecutive Committee on memorandum dated February 21st from the tirj Co mptroller of the Currency, recommending approval of an application Of the „ 4orcester County National Bank of :iorcester, Massachusetts, for permis- to t ° reduce Nale ratizler its capital from „4,875,000 to ,,937,500 and to reduce the par °f its stock from .430 to ,;50 be approved on condition : (1) That no be returned to the shareholders but that the amount set free by the N4etin q%lt 476 a -4 be carried to surplus and undivided profits; (2) That the capital be immediately increased from .937,500 to y1,125,000, by the sale at share of 3,750 shares of stock of a par value of ,:;50; and (3) that at e4 dividend of 101,500 0 375,000 be declared thus increasing the capital to and providing a surplus of an equal amount. 9 " Upon recommendation of the Executive Committee, it was voted to approve the reduction in capital proposed Upon condition that the capital be immediately increased in accordance with the plan suggested by the Acting Comptroller. 177 2/27/28 -5- Letter dated February 24th from the Chairman of the. Federal deserve Of Chicago, referring to the vacancy on the directorate of the Detroit . 114111 " caused by the recent death of Mr. John 7. Staley; the Chairman advis- i4 that lt Of at the request of Mr. Julius Haass, who has just been elected Presiau Peoples ffiyne County. Bank of Detroit to succeed Lr. Staley and Who 4- the choice of the Federal deserve Bank of Chicago for appointment to the Detroit directorate, the vacancy will be permitted to remain unfilled 1111t11 the next regular meeting of the directors of the dhicago bank. Noted. Letter dated February 23rd from the Deputy Governor of the Federal . Bank of Kansas City, advising that because of ill health the Governor or t e h uank left on February 22nd for an absence until about the first of 14, under an authorization made by the board of directors of the bank at theit last meetinv. Noted. it this point, Mr. McIntosh joined the meeting. Letter dated February 18th from the Federal deserve Agent at Chicago, aciv ez 4.110>' that unler authority granted by the Txecutive Committee of the bank at a on February 17th the officers have decided, subject to the ap141"Al of the Board, to discontinue from and after March 1, 1928 the enfomeillellt 0? pror7re55ive nenalty for deficient reserves. Noted without objection. Letter dated February 16th from the Chairman of the Federal deserve lk of • 34h Francisco, advising of the acceptance of the resimation of Mr. 178 2/27/28 -6 IrOa„ Aipple, Class A Director, elected by the member banks o,f Group III for„ 1,erm of three years, ending December 31, 1930; the resignation being slthrnitted because of the fact that the 2irst National Bank of Turlock, Cal., of ‘1/1,2_ r. dhipple was President at the time of his election to the Fed- el7a1 isserve bank directorate, has since been taken over by the Security lakat alId Trust Company, a non-member bank, with which Yr. Whipple has become asson2 ted; the Chairman stating that another Class A director of the bank, el"tecl 13Lr member banks in Group II, namely, Mr. Thomas H. Ramsay, President Of the First National Bank of Aed Bluff, Cal., may soon be placed in the 41116 Position, as his institution has recently been acquired by the same 41teliest5 that acquired 1:.r. 'ihipple's bank. also In his letter, the Chairman stated that if there are soon to be two vacancies on the board of di- l'Et°1's Of the sari Francisco bank, it would seem desirable to fill them at one 8Pe'aia1 election. Upon motion, it was voted to interpose no objection to the postponement of the election of a successor to Er. Whipple until it is determined whether or not Mr. Ramsay will also resign from the San Francisco directorate. ,..fter discussion of a reference made in the Chairman's letter to the desirability of changing the classifications of banks as now grouped for elections of directors, it was voted to request the secretary of the Board and the Chief of the Division of Bank Operations to work out and report to the Board a basis for reclassification of the electoral groups in all Federal Reserve districts. ' iePOrt and)c--- of Committees on Research and Statistics and on Salaries • 13e/l kitIll, -es dated February 20th, recommending approval of budgets submitted 179 2/27/28 b -7- the various Federal Reserve Agents for the operation of their statistical aricl analytical functions during the calendar year 1928, as follows: Boston New York Philadelphia Cleveland dichmond Atlanta Chicago St. Louis Liinnearolis Lansas City Dallas San Francisco _ _ _ _ _ „42,531 114,608 44,770 37,790 14,117 10,723 63,063 17,898 18,070 22,146 18,220 52,148 Upon motion, it was voted to approve the budgets submitted aM also to adopt a recommendation contained in the Committee's l'aPort that the letters of advice to the Federal Reserve agents at l'ansas City and 3an Francisco contain a statement to the effect that the budgets should not be exceeded without the prior approval °f the Board, inasmuch as the budgets approved for the year 1927 were exceeded at those two points. 14fterandum from Counsel dated January 7th, submitting for inclusion in the , Annual deport, in accordance with instructions given by the Board at Its I:fleeting on December 14, 1927, two alternative forms.of an amendment to 'Ile provision of 3ection 9 of the Federal Reserve lict that the expenses Or „, examinations of state member banks shall be assessed against and paid the- ...,anks examined; Counsel in his memorandum setting forth various other k49111.Ments to the Federal Aeserve Act which have been under consid3ration the Board and inouiring whether the Board also wishes to recommend these -1alents in its report. After discussion, it was voted to defer decision regarding the inclusion of the suggested amendments in the Annual ieport until such time as Counsel can furnish the Board with a draft of each amendment referred to in his memorandum. 180 2/27/28 -8- During the discussion of the above suuject the Secretary read a memorandum from the Comptroller of the Currency, expressing the opinion that no legislation should be recommended to Oonp:ress at the present time, but reeuestinp; if it is det..!rmined to make recommendations that the Board sugest an amendment to Section 21 of the Federal ,deserve ..ect to provide that the salaries Of National Bank F4xaminers shall be fixed by the 'Comptroller of the Currency in lieu of the present provision under which such salaries are fixed by the Federal eserve Board upon recommendation of the Comptroller. t thi s The point, Mr. McIntosh left the roam. Secretary then presented a letter dated February 16th from the Federal C gent at New York, submitting in accordance with the reeuest made by the Board at its meeting on February 3rd, report of a supplemental investiItiorl covering certain additional names included in the substitute ore.aniza- tiola certificate and articles of association of the proeosed United States ign Financing Corporation; the Federal eteserve ..gent advising that in his c inion the addition of the names in question to the proposed enterprise doeo '3 riot sufficiently improve the prospects for the successful operation of the — °rporation as to warrant the Board granting a preliminary permit to be- Upon motion, the report of the Federal _teserve e.gent was ordered circulated and brought up for consideration by the Board during the next to or three days. accordance with the instructions of the e:xecutive Committee at its ' 11 en February eJst, the 3ecretary submitted drafts of letters to the 4.4 -teserve 4rents at Cleveland and Chicago, requesting that the board be 'iShed ,:ith a firm recommendation of their respective boards of direas to whether authority previously granted by the Board to carry (illeect l'eserves should be continued in the cases of the Highland National the Pennsylvania National hank and the 'Second National Bank of ,llee7heny, 181 2/27/28 -9- Calumet all of Pittsburgh, 2a., and the Northwestern 2rust and 3avings Bank and national Bank, both of Chicago. 3ecretary Upon motion, the letters submitted by the were approved. the recommendation Upon motion, it was also voted to approve its meeting on at Committee made to the Board by the 2xecutive granted authority revoke iebruary 21st that no action be taken to those than other banks of to carry reduced reserves in the cases referred to above. The , in the rediscount lrovernor then reported that the question of a change rate , referred to the ']xecu01 the 2ederal eserve Bank of Cleveland has been tive, was expected the rate L'ommittee of that bank with power and although it wola, held several days ago, `t be increased to 4; at a meeting of the Committee kali action was not taken. tile r that although in explanation, the ,overnor stated increased somewhat, the increase discounts of the Cleveland bank have 114 b en extended to two or three member bank: 6 --due Principally to accommodations The 60vernor also reported that the directors of the Federal Aeserve Bank Of Uew open market situation York at their meeting last Thursday discussed the securities from the special 4141 reached the conclusion that no further sales of 141'418tment account should be made at this time. He stated that he advised the during the course of a person1 of the Federal Aeserve Bank of New York 41 , ..0the Board. 4Lversation that this opinion is shared by all members of that the He also stated for the confidential information of the Board Bellk withdrawals of gold, both from New • Of France is arranging to make heavy 'York Bank's imports will exceed nd London, and that in all probability the the 4Mount of gold held earmarked at those two points. At this point, the Director of the Board's Division of '3tat , esearch and Board the sties entered the roam and reviewed with the members of the of which have been t draft of the annual deport for the year 1927, copies 182 2/27/28 -10- the hands of the various members for a week or ten days. The draft Ivas considered page by page and numerous minor amendments were suggested. At the conclusion of the discussion, the Director was authorized to send the amended draft of the report to the printer for galley proof. The Governor then submitted draft of a letter to the 3ecretary of State acivistng of the action taken by the Board at its meeting on February 14th in toting to accept an invitation extended by the Director of the Economic and 4Iclal Section of the League of Nations to have a representative of the 1111 attend an informal conference to be held in Paris, France during; April 1928 Of representatives of the statistical departments of various central bilmo 411g institutions; the letter inquiring whether the State Dep4rtment would tal department 01 against the Federal Reserve Board_ or air other governmen ' 111Mri,- a representative at the proposed conference. Upon motion, the letter was approved as submitted. OF SairDING C0UMI2T3ES: February 23rd, 25th, 27th, February 23rd, 25th, February 21st, ET 4teci, February 21st, Recommending changes in stock at Federal Reserve Banks, as sot forth in the Auxiliary Minute Book of this date. Recommendations approved, Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending approval of the application of Er. Henry J. Siewert for permission to serve at the National same time as director of the Albany Park as director and Ill, Chicago, Company, Trust Bank and Ill. ChicaF-o, of the Portage Park National Bank, Recommendation approved. Recommending approval of the application of Mr. Gaylard LI. Leslie for permission to serve at the Stock Land same time as director of the First Joint Tri-State Bank, Fort Wayne, Ind. as director of the as and Ind. Loan and Trust Company, Fort Wayne, Ind. Wayne, Fort director of the Old National Bank, Recommendation approved. 183 2/27/2s -11- 2.AID I:AI C0:21I1: 12 :(C ont t d) Dated, February 21st, Recommending approval of the application of Mr. hulls Hattersley for permission to serve at the same time as director and officer of the First Joint Stock Land Bank, Fort :iayne, Ind., as director of the Tri-State Loan and Trust Company, Fort Wayne, Ind. and as director of the Old National Bank, Fort wayne, Ind. Recommendation approved. Dated, approval of the application of Mr. Recommending February 21st, William E. Mossman for permission to serve at the same time as director and officer of the First Joint Stock Land Bank, Fort Wayne, Ind., as director of the Tri-State Loan and Trust Company, Fort Wayne, Ind. and as director of the Old National Bank, Fort Wayne, Ind. Recommendation approved. Dated, February 21st, Recommending approval of the application of Mr. Henry C. Paul for permission to serve at the same time as director of the First Joint Stock Land Bank, Fort Wayne, Ind., as officer of the Old National Bank, Fort Wayne, Ind., and as director of the Tri-State Loan and Trust Company, Fort ::ayne, Ind. Recommendation approved. J3ated, February 23rd, Recommending approval of the application of 2.1r. William C. Hastetter for permission to serve at the same time as director of the First Joint Stock Land Bank, Fort Wayne, Ind., as director of the First National Bank, Fort Wayne, Ind. and as director of the Tri-State Loan and Trust Company, Fort Wayne, Ind. Recommendation approved. 11cited, February 23rd, Recommending approval of the application of Mr. Nilliam J. Vesey for permission to serve at the same time as director of the First Joint Stock Land Bank, Fort Wayne, Ind., as director of the First National Bank, Fort Wayne, Ind., and as director of the Tri-State Loan and Trust Company, Fort Wayne, Ind. te , February 23rd, . Recommendation approved. Recommending approval of the application of Yr. Charles A. Wilding for permission to serve at the same time as director and officer of the First Joint Stock Land Bank, Fort Wayne, Ind., as director of the First National Bank, Fort Wayne, Ind., and as director and officer of the Tri-State Loan and Trust Company, Fort 'Jayne, Ind. Recommendation approved. 184 2/27/28 -12- 1 12Alg OF STANDING COMMITTEES: (Cont'd) 4 Dated, February 23rd, Recommending approval of the application of Mr. February 23rd, Dated, February 23rd, 1)ated, February 23rd, Datea, February 23rd, 4ted, February 23rd, Charles E. Bascom for permission to serve at the same time as director of the First National Bank in St. Louis, St. Louis, Mo. and as director of the St. Louis Union Trust Company, St. Louis, Mo. Recommendation approved. Recommending approval of the application of Mr. Samuel C. Javis for permission to serve at the same time as director of the First National Bank in St. Louis, St. Louis, Mo. and as director of the St. Louis Union Trust Company, 3t. Louis, Mo. Recommendation approved. Recommending approval of the application of Mr. ;/alter d. Smith for permission to serve at the same time as officer and director of the First National Bank in St. Louis, St. Louis, Mo., and as director of the St. Louis Union 2rust Company, St. Louis, Mo. Recommendation approved. Recommending approval of the application of Mr. Thomas P. Hinman for permission to serve at the same time as director of the Fourth National Bank, Atlanta, Ga. and as director of the Atlanta Joint Stock Land Bank, Atlanta, Ga. Recommendation approved. Recommendini7 approval of the application of Mr. E. D. Stair for permission to serve at the same time as director of the First National Bank, Detroit, as director of the Detroit Trust Company, Detroit, Mich. and as director of the Detroit Savings Bank, Detroit, Mich. Recommendation approved. rtecommenuing approval of the app cation of Mr. H. M. Stauffer for permission t serve at the same time as director of the Conest a National Bank, f the Leola National Lancaster, Pa. and as directo Bank, Leola, Pa. Recommendation approv The eeting adjou d a Secretary. Govern°
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