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117 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Wednesday, February 9, 1927, at 11:15 a.m. PRESENT: PRESENT ALSO: Governor Crissinger Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Mr. Samuel W. Reyburn, Director of the Federal Reserve Bank of New York. Mr. James, Chairman of the Committee on Salaries and Expenditures, submitted and read to the Board the following Committee report: "Mr. Samuel Reyburn, one of the Directors and representing the Board of the Federal Reserve Bank of New York, today Presented a memorandum which is attached hereto covering leaves of absence of employees exceeding thirty days during the year 1926. Having gone over this list with Lir. Reyburn, I am of the Opinion that since the list has the full approval of the Board Of the New York bank that the payments made and enumerated thereon should be approved by the Federal Reserve Board. Exhibit "It"• "it . • Reyburn also presented a list of employees whose services as guards had been dispensed with owing to age, etc., and. asks for approval of the action of the Board of Directors of the New York bank in 'raking final salary payments and adjustments as set out in the list attached, said list being marked Exhibit "B"." Following the reading of the Committee report, Mr. Reyburn was invited to discuss the subject thereof. He stated that through inadvertence there had not been submitted to the Federal Reserve Board for its approval "'ion taken by the board of directors of the New York bank during 1926 with respect to granting extended leaves of absence with pay to a number c(f eMployees of the bank on account of illness, and in extending leave with Pay to twenty-nine guards who were being retired, because of Physical illeaPacity, in connection with the reorganization of the protective force (311 the bank. Mr. Reyburn stated that at the time action was taken with respect to the guards, he understood Governor Strong had expected to take 1.1.8 2/9/27 .11.04 CO. k'ne matter up personally with the Board, but that due to his absence from this country and his illness following his return, he had not done so. eyburn stated that the directors and ofricers of the ban.'.: are aware of the fact that their action in these matters was not in accord \Atli the ruling oC the Board with which they are all familiar. In this connection, he suggested the advisability of the Board entering into some arrangement with the directors of the New York bank whereby it would not be necessary ler the directors in granting to employees extended leave of absence on account of illness to report each case to the Board for approval before their action). became effective, and stated his reasons therefor. He sug- gested that perhaps a monthly report of all such absences granted by the directors would suffice for the Board's purposes with the understanding, Of course, that in the event any abuse became apparent, the Board would question the policy of the bank and act accordingly. .21t this point, ',Tr. ,Zeybura left the room and the Board proceeded with its regular business. The reading of the minutes of the meetings of the Federal Reserve ;Soarct , held on February 4th, 5th and 7th was dispensed with. Telegram dated February 4th from the Secretary of the Federal .3eserve Bank of Cleveland, advising tha(.- the board of directors on that day made no °haage'in the bank's existing schedule of rates of discount and purchase. Noted. Telegram dated February 7th from the Chairman or the Federal Reserve Bani' of Dallas, advising that the board of directors on that day made no e 11--"te in the bank's existing schedule of rates of discount and purchase. Noted. 119 2/9/27 -3- Report of Committee on Salaries and Expenditures on letter dated.. February 8th from the Federal Reserve Agent at Philadelphia, requesting approval of the anpointment of Thomas F. Maude as Assistant to Examiners with salary at the rate of3,300 per annum, effective 'larch 3) 1927; the Caaaittee also recommending approval. Approved. Letter dated February 4th from the Assistant Federal Reserve Agent at San Francisco, advising that the Bank of Italy on February 7th would move the branch formerly operated at 3246 Mission Street, San Francisco, to a new location at 3236 Mission Street. Noted, without objection. Memorandum dated February 7th from the Assistant Chief of the Division of Rank Operations, recommending that Yrs. Flora S. Devereux, an eMPloyee of that Division, be granted sick leave for a period of thirty days from January 6th to February 4th, inclusive. Approved. Matter approved on initials on February 7th, namely, letter dated February 4th from the Assistant Federal Reserve Agent at New York, suggestMarch 16, 1927, as the date for opening the polls in a special election Of a Class B Director of that bank for the unexpired term of Mr. Owen D. Young, ending December 31, 1928. Formally approved. Letter dated February 4th from the Chairman of the Federal Reserve 1344k of Cleveland, advising of the election of :Ir. Harris Creech, President Of the Cleveland Trust Company, as member of the Federal Advisory Council 41121 the Fourth District for the year 1927. 1'1 ' 120 2/9/27 Noted. Letters dated February 4th and 7th from the Federal Reserve Agent at Boston, recommending the designation as Assistant Examiner without caaa:-;o, in salary, of ia•• Herbert F. Gramstorff who has been employed in another dePartment of the bank at the rate of ;$2,220 per annum. Approved. Letter dated January 31st from the Federal Reserve Agent at San Francisco, advising that the American Trust Company on February 14th will move the branch previously operated at Sixth Street and 1,1acdonald Avenue (528 Macdonald Avenue) to a new location at Tenth Street and Macdonald Avenue (1001-7 Macdonald Avenue). Noted, without objection. Letter dated February 3rd from the Assistant Federal Reserve Agent at Cleveland, recommending approval of an application of the Lake Erie Trust Company of Cleveland for an extension of the time in which it may °Pen the branch at Superior Avenue and Addison Road, Cleveland, approved blr the Board on September 2, 1926. Upon motion, it was voted to grant an extension of six months from March 2, 1927. Letter dated February 5th from the Department Adjutant of the United SPanish War Veterans, requesting that veterans of all wars employed by the Board be dismissed from their duties on the afternoon of February 15th in order to attend memorial exercises on the anniversary of the f:lestruction of the battleship Mine. The Secretary recommended that the Board foil= the same procedure as the Treasury Department does in the matter and upon motion his recommendation ITTEI.E3 approved. 121 2/9/27 Letter dated February 2nd from the Federal Reserve Agent at San Prancisco, transmitting the resignation of Mr. Charles E. Caches, one Of the Board's appointees to the directorate of the Seattle Bro.rrh; the Federal Reserve Agent stating that he will within a short time forward the Board suggestions as to a successor to Mr. Gaches. Upon motion, Liz. Gaches resignation was accepted and the matter of recommending his successor was referred to the Committee on District Memorandum dated February 5th from the Chief of the Division of Bank OPerations, submitting statements of expenditures by the Federal Reserve banks for educational and welfare work, etc., during the month of December and for the year ending December 31st. Ordered circulated. Report of Conaittee on Salaries and Expenditures on letter dated Pebruary 2nd from the Governor of the Federal Reserve Bank of Minneapolis, ' l ecraestixig approval of payment of full salary until April 1, 1927, to Lir. C. Perry Kintz, a messenger in the Transit Department, to whom. the Executive Committee of the bank has granted leave of absence on account of illries8; 'the Board's Committee also recommending approval. Approved. Report of Committee on Salaries and Expenditures on letter dated ebruary 2nd from the Federal Reserve Agent at Kansas City, requesting LIPProlla 1 of the appointment of Lfr. N. B. Oberrrortmann as Examiner at a aEtlarY of $'4,800 per annum, effective liEtrch 1, 1927; the Committee also Na ar:altending approval. Approved. 122 2/9/27 -6- Report of Committee on Examinations on letter dated February 3rd frora the Federal Reserve il.gent at Atlanta, with reference to the action of the Bank of Locust Grove, Locust Grove, Ga., in absorbing the Citizens Be-nk of Locust Grove and stating that before making recommendation in the ratter it is desired to have an examination of the Bank of Locust Grove 1113.de jointly with the State Banking Authorities; the Committee recommending that action on the matter be deferred pending further report and r ecommendation from the Federal Reserve Agent. Upon motion, the recommendation of the Committee was approved. Report of Committee on Examinations on letter dated February 7th from the Assistant Federal Reserve Agent at New York, transmitting and recommending approval of an application of the First Bank and Trust Company of Utica, New York, for approval of its action in taking over the Merchants Bank of Utica and operating it as a branch; the Committee also recommending approval. Approved. Report of Committee on Lxaminations on letter dated February 2nd from the Federal Reserve Agent at Atlanta, with reference to the action s3f the Evangeline flank and Trust Company, Ville Platte, La., in absorbing the nek Peoples Bank and Trust Company of Ville Platte and stating that before reconmendRtion in the natter it is desired to have an examination Qf the Evangeline Bank and Trust Company made jointly with the State 11/2trilcing Authorities; the Committee recommending that action be deferred Perlding further report and recommendation by the Federal Reserve Agent. Upon motion, the recommendation of the Committee was approved. V)'.1 2/9/27 • -7- Report of Executive Comittee on letter dated February 4th from the Federal Reserve Agent at Chicago, recommending approval of an application of the Lawrence Joienue National Bank of Chicago for a reduction in its l'eserve requirements from 13 to 10% of demand deposits; the Committee also recommending approval. Approved. Ltr• James then referred to the matter discussed with the Board earlier in the meeting by Mr. Feyburn, Director of the Federal Reserve Bank of New York, and moved approval of the report of the Committee on Salaries and Expenditures submitted at the beginning of the meeting. Mr• James' motion being put by the Chair was carried. Mr. Miller then moved that in reporting the Board's action to the Federal Reserve Bank of New York a special letter of advice be prepared. Carried. The Governor appointed Messrs. Miller and Platt as a committee to prepare the letter in quest ion. The Governor then presented the matter on which action was deferred at the meeting on February 4th, namely, letter dated February 2nd from the Assistant Federal Reserve Agent at New York, recommending that Mr. lierbert S. Downs, Manager of the Bank Relations Department, be appointed 48 Assistant Federal Reserve Agent, without change in salary; the Governor • stated that he brought this letter to the attention of Mr. YcGarrah, ChEtirnan elect of the New York bank, who has noted thereon his approval ()fa the appointment. Upon motion, Mr. Downs was appointed Assistant Federal Reserve Agent at the New York 2/9/27 1_24 -8- bank for the balance of the year. The Governor stated that he had also been advised by Mr. McGarrah Of his approval of the matters on which action was deferred at the meeting on February 3rd, namely, request of the directors of the Federal Reserve Bank of New York for reconsideration by the Board of its action of December 22, 1926 in disapproving an increase from $7,500 to $9,000 Per annum in the salary of Mr. J. H. Philbin, Assistant Counsel and Secretary of the Bank, and in disapproving an increase from $10,000 to $15,000 per annum in the salary of Mr. W. R. Burgess, Assistant Federal Reserve Agent, approving for him instead a salary of $13,000. After discussion, it was moved that the Board reconsider its action of December 22nd above referred to. Carried. It was then moved that the Board approve for Messrs. Philbin and Burgess, salaries of $9,000 and $15,000 per annum, respectively, both effective January 1, 1927. Carried. Draft of a letter to the Chairman of the Federal Reserve Bank of Cleveland, prepared in accordance with the action of the Board at its 41eeting on February 1st, with regard to the failure of the board of directors of that bank to take action on a letter addressed to the Ch4irnan under date of March 29, 1926, advising that the Federal Reserve 4a.rd could find no warrant of law for the continuance of the salary Of LI.r. D. C. Wills, Federal Reserve Agent, from the date of his death to De ember 31, 1925, and the payment of same to Mrs. Wills. After discussion, the above letter was referred back to the Law Committee. 125 2/9/27 At 1:00 p.m. the Board recessed. At 2:40 p.m., the meeting reconvened, the same members being present as attended the morning session with the exception of Mr. Platt. Memorandum from Counsel dated February 7th, submitting draft of reply to letter dated February 4th from the Chairman of the Committee on Standardized Banking FornE of the District of Columbia Bankers Associatiml, inquiring as to the eligibility for rediscount by a Federal Reserve baq11: of a form of note enclosed therewith; the proposed reply suggesting that the form of note be forwarded to the Federal Reserve Bank of Richmond for advice whether it would be eligible for rediscount with that tank, as the matter of whether a given instrument conforms to the requirenients of negotiability depends upon the construction of the particular local law applicable thereto. Upon motion, the proposed reply was approved, as well as a form of letter to the Federal Reserve Bank of Richmond submitting copies of the correspondence. Report of Lau Committee on the matter referred b4ck to it at the 4leeting on January 27th, namely, inquiry of the Seaboard National Bank, Los Angeles, California, as to whether it could qualify for permission to exercise trust powers without increasing its surplus, which now ' 13 41°111A8 to less than twenty per cent of its capital as generally reby the Board of national banks exercising trust powers; the C°111mittee submitting a memorandum of cases in which the twenty per cent ' l eqUirement has been waived by the Board and stating that it believes the principles involved in these decisions warrant similar action in the case of the Seaboard National Bank. After discussion, it was voted that the Sea- 126 2/9/27 -10- board National Bank be advised that the requirement of a surplus equal to twenty per cent of capital is not a hard and fast rule, and that the Board, following the next examination of the bank, will be glad to consider an application from it for permission to exercise trust powers. The Secretary then submitted to the Board for its approval the fol.lcnving office procedure adopted with reference to the filing of applications for permission to accept up to 100% and to accept for the purpose of creating dollar exchange by national banks formed through the con8°1j-dation of banks, one or both of which have been previously granted the necessary authority: (1) Where two banks, both of which have power to accept, consolidate, a new application will not be requested. (2) Where two banks consolidate, and only one has power to accept, a new application will be requested in cases where the bank not having the power absorbs the bank with the power. (3) Where the bank having power to accept "absorbs the bank not having such power, no new application will be requested. Approved. Memorandum from Coraiittee on Exarainat ions on the matter referred to it at the meeting on February 2nd, namely, letter dated January 31st from the Federal Reserve Agent at Cleveland, with respect to the City Deposit 111111z) the Highland National Bank and the First National Bank of Etna, three Outlying institutions of Pittsburgh, which through ina.dvertance hEt've been carrying against their demand deposits a reserve of only seven e cent, without specific authority from the Board under the provisions e`e Section 19 of the Federal Reserve Act. After discussion, the above file was referred back to the Committee on Examinations. 1- _27 2/9/27 -11-- Letters dated February 3rd and. 4th from the Chairman of the Federal Reserve Bank of San Francisco, submitting amendments to the by-laws of that bank made in order to conform the by-laws to the provisions of the Federal Reserve Act. Noted. Memorandum from Counsel dated February 5th, submitting draft of a rielir power of attorney conferring authority for the operation of the liavana Agency of the Federal Reserve Bank of Atlanta, revised in line with the Board's resolution of January 27th, defining the functions and Powers of the Agency. Upon motion, the power of attorney was approved as submitted. Memorandum from Counsel dated February 2nd submitting draft of rePly to letter dated November 27th from the Assistant Federal Reserve Aellt at San Francisco, inquiring whether duplicate copies of Clayton Act Permits issued by the Board should not be furnished to the banks involved in the applicat ions, in order that they may have them to display t° examiners; the proposed reply stating that the Board is of the opinion that such a practice is not necessary. Approved. At the point Mr. Platt joined the meeting. Letter dated February 3rd from the Federal Reserve Agent at Chicago, l'equesting the advice of the Board on the question of the propriety of 0 t1Plying with a request from the Manager of the Des Moines Clearing Association for a copy of report of credit investigation of the t7a Loan and Trust Company of Des ::oines made by the Federal Reserve Ic ' 2/9/27 128 -12- tank examiners, for use in connection with a suit being brought by dePositors of the bank, which has since closed. Referred to the Jim Committee. Meartorandurn from the Chief Examiner dated February 7th, submitting report of examination of the Atlantic Corporation, Boston, Lists s , made as tat the close of business April 30, 1926. Referred to Committee on Examinations. Memorandum from the Chief Examiner, dated February 7th, submitting rePert of examination of the First National Corporation of Boston, made a8 at the close of business itly 14, 1926. Referred to Committee on Exam mat ions. Memorandum from the Chief Examiner dated February 7th submitting rePort QV examination of the Shawmut Corporation, Boston, alss., made as at the close of business April 16, 1926. Referred to Committee on Examinations. Memorandum from Counsel dated February 3rd submitting draft of reply to letter dated January 15th from the Governor of the Federal Reserve 13atlic of Kansas City, with reference to the eligibility for rediscount through member banks of certain paper endorsed by officers of non-member banks; the proposed reply having been revised in accordance with the dise1188ion had by the Board at the meeting on February 1st. A further dis- ellesion then ensued, during which certain merabers of the Board expressed the Opinion that additional infornv.tion should be requested_of the Federal Reserve Bank of Kansas City regarding the transactions giving rise to the 'Paper before the Board attempts to pass upon the question of its ility. 129 2/9/27 -1;3- Lccordiogly, the file was referred back to the Law CoAmittee with the request that it procure such additional inforplati0r1• The minutes of the meetings of the Federal Reserve Board held on February 4th were Li en read and approved as amended. The Ininutes of the meetings of the Federal R serve Board held on February 5th and 7th iere read and approved. REFO'm- OF ' 7T. ,"011`irTil C01.^,T.TITTa]3: Dated, February 4th, 5th, 7th, 8th, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary kinute Book of this date. Approved. DWued, February 1st, 3rd, 4th, 5th, Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Approved. "Xted, February 5th, Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Ordered held. 1)ated, February 4th, Recommending approval of the application of Mr. James G. Blaine for permission to serve at the same time as Director of the Theatley Trills National Bank, ',Tiestbury, IT and as President and Director or the Fidelity Trust Company, New York, N.Y. Approved. Recommending approval of the application of r. F. Pratt for permission to serve at the sane time as President of the First National Bank, New Kensington, Pa., and as Vice President of the National Deposit Bank, trnold, Pa, Approved. Recommending approval of the application of Mr. H. Burns Smith for permission to serve at the same time as Vice President of the First National Bank, New Kensington, Pa., and as Director of the National Deposit Bank:, Arnold, Pa. Approved. RecomAending approval of the application of Yr. George -;+, Treat for permission to serve at the same time as Director of the Atlantic National Bank, Boston, Mass., and as member of the firm of private bankers of 11;. 7. Rollins and Cons, Boston, Mass. Approved. Ba ed, February 5th, February 5th, February 5th, 0 2/9/27 -14- IL -47PORTS OF SSANDING CO ITIITT Dated, February 7th, (CorrE, t d): Recommending approval of the application of !Y. Alfred Covrles for permission to serve at the cane t line as Direct or of the Cant inenta1 & Comme re ial National Bank, Chicago, Ill., and as Director of the Congress Trust & Savings Bank, Chicago, Approved. The meeting adjourned at 3:30 p.m.
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