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Pursuant to the terrs of adjournment at the morning session, the Federal Ilsserve Board reconvened on January 18, 1924 at 3 p.m. PRESErT: Governor Crissinger r7r. Platt 17T. Hamlin rr. James riller rr. Cunninghm r±. Dawes rT. Eddy, Secretary. BY unanimous consent, the 3oard reconsidered the action taken at the ession this morning in voting to refer back to the committee on District 7o. 1Z its report defining territory contiguous to the cities of San i‘raneiseo Los Angeles. After discussion, lr. Dawes moved that that portion of the Committee's report which stated that "The committee, therefore, recommends that the area eorprised within the limits described below shall be deemed to constitute the territory contiguous to the cities of San ,:Tancisco and Los Angeles, California, as an amendment of the 3oard's resolution of rovember 7, 1923. be changed to read "The committee, therefore, recommends that the area comprised within the limits described below shall be deemed to constitute the territory contiguous to the cities of an 2rancisco and Los Angeles, as an amendment of the 3oard's resolution of 7overber 7, 1923, but this amendment shall be null and void after August 1, 1924 and the definition of contiguous territory as contained in the resolution of _ovember 7, 1923 shall then be in full force and effect." Ir. Davies' motion being put by the chair was carried, the members voting as follows: Yr. Iiller "aye" rr. Dawes "aye" rr. James "aye" rr. Cunningham "aye" Governor Crissinger "no" 1:r. Platt "no" Yr. Hamlin "no" 1/1a/24 aim* Fr. rifler then moved the adoption of the Committee's report as alrelided. Tr. Filler's motion being put 1:1.7 the chair was carried, the members voting as follows: TA.. Filler "aye" Yr. James "aye" Ir. Cunningham "aye" Yr. Dawes "aye" Governor Orissinger "no" Fr. Platt "no" Fr. Hamlin "no" At this point Ir. Dawes left the meeting. Telegram dated January 16th from the Federal ieserve Agent at Q. ' aohmond advising that the salary committee of that bank wishes to meet with the 3oard on Friday, January 25th. Upon motion, the 3oard voted to receive the committee on the morning of the 25th. lemorandum dated January 17th from the Secretary of the 3oard slIggestin,..; that there be tralisritted to all Federal Eeserve banks (1) a col)y °f the 3oard's ruling of January 15th on the right of a itate member bank to "oke at any time during the required six months period, the notice filed -br it with the Federal Reserve bank of its intention to withdraw from member31149 such withdrawal of the notice not to affect the membership status of the State bank, and (2) copy of letter of January 16th to the Federal Reserve 41ellt at St. Louis with reference to the discount of sight and demand bill °t l din(--7 drafts, in accordance with the amendment of Farch 4, 1923, to 4"ion 13 of the Federal Reserve Act. Approved. 80 1/18/24. Report of Committee on Examinations on letter dated January 16th frori the Federal Reserve Agent at Richmond advising that the Atlantic Exchange Bank and T.rust Company of Baltimore, which was admitted to membership on leoember 31, 1923, had opened on December 26th an additional branch, of which the Board was not advised at the time of the bank's admission to membership; the Committee recommending approval of the additional branch. Upon motion, the report of the Committee on Examinations was approved, Governor Orissinger "not voting." Report of Committee on Examinations on matter referred to it at the meeting on January 16th, namely, telegram dated January 15th from the Federal Ileserve Agent at San Francisco transmitting and Tecommending approval of the ePPlication of the American 3ank of San Francisco, a member bank, for periniesion to consolidate with the American Bank of Oakland, a non-member, and t° maintain branches at the present head office of the American Bank of Oakland 4ad its fourteen branches; the Committee calling to the Board's attention eertain information with regard to the condition and management of the banks and simulrolved and stating that "the Board should know**** from complete in‘ American Bank of San erancisco, taneous examinations the exact condition of the of Oakland and its the Pirst flational Bank of Oakland and the American Bank either considered or granted." btallohes****before the permission asked for is Committee on Examinations Er. Hamlin moved that the report of the be received. Carried. following telegram be After discussion, Er. Eiller moved that the 3ent to Er. Perrin: 't 4 1/18/24 —4— "Board has under consideration your telegram of January 15th transmitting application of American Bank of San Francisco to consolidate with American Bank of Oakland. Before Board can act upon this application it must have information from your bank as to financial condition, soundness and management of American Bank of Oakland. Board understands close affiliation through stock ownership of American Bank of Oakland and First rational of Oakland, and therefore requests you to make simultaneous examination of American Bank of Oakland and its .branches, and to cover in the examination, besides usual matters affecting management and soundness of bank and branches, anything allowing nature of methods that have been pursued in the acquisition of stock control of banks annexed as branches by American Bank of Oakland, and for this purpose to make such examination of .irst rational Bank of Oakland and American Bank of 6an Francisco as you may find necessary. Board is willing to consider application as filed prior to February 1st and whatever time as may be necessary to complete investigations will be allowed." rr. Iiller's motion being put by the chair was carried, rr. Platt voting "no". remorandum from Counsel dated January 17th referring to a letter clated December 29th from the Deputy Governor of the Federal Reserve Bank of 4atsas Uity inquiring as to the eligibility for rediscount with Federal Ileserve banks of notes of non-member banks secured by Government obligati"s; Counsel suggesting a form of reply, stating that as notes of nonbanks secured by Government obligations necessarily bear the signatill ' es of such banks, they clearly come within the prohibition of the 3oard's ttIling of July 18, 1923, withdrawing the privilege formerly extended to "Inher banks to rediscount paper acquired from a non-member bank or bearing the signature or endorsement of a non-member bank. Upon motion, Counsel's memorandum and the letter proposed were approved. 1/18A4 -5remorandum dated January 17th from Er. James stating that Counsel had ruled, in answer to his inquiry of January 10th, that it would not be legal for the Board to permit member banks of the 77 , class to deduct "due , *mm bank balances" in computing required reserves, and submitting for the Board's consideration a resolution favoring an amendment to the law Which would permit member banks to deduct such balances from gross demand %Osits in computing their required reserves and submitting also a proPOsed amendment to the kederal Reserve Act, prepared by Counsel, covering the subject referred to. Ileferred to Law Committee. Report of Committee on .0xaminations, dated January 15, 1924, tecommending approval and adoption of the following resolution regarding eXaMtnations of state member banks, passed at the recent conference of Reserve Agents; "We believe it to be essential that the closest cooperation exist between the executive departments of Vederal Reserve Banks and the state Banking Commissioners. We also believe that as a matter of good faith with our State member banks and in order to be prepared to extend credit intelligently, credit investigations of State member banks should be regularly conducted. We believe, too, that these credit investigations whenever pojsible should be made at the same time that state examiner is examining the bank; first, because of the desirability of cooperation; second, because more information can be obtained at less cost; third, because the bank should not needlessly be subjected to additional visits of examiners. We believe also that where special examinations other than credit investigations are made of member state banks the charge for such examination made by the Yederal Reserve Bank should not exceed the fee that would be charged by the Comptroller of the Currency if the institution were a rational bank." 1/16/24 -6Upon motion by rr. Hamlin, the recommendation of the Committee on Examinations was. approved, Governor Crissinger voting "no" and rr. riller not voting. remorandum dated January 7th from Counsel with regard to the appli- cation of Fr. George I. Cochran to serve at the same time as director of the 1O-California Trust Company of San Francisco, the First rational Bank of Los Angeles, and the Citizens Trust and Savings Bank of Los Angeles; Counsel ccnclarrino„7 in recommendation of the Federal Reserve Agent at San Francisco that the Citizens Trust and Savings Bank and the First rational Bank of Los 411ge1es are in substantial competition and that the 3oard refuse the appli°ation as between these two banks, but approve as between either and the Atno b.-op-California Trust Company of San Francisco. Upon motion by Fr. Hamlin, the recommendations of the Federal Reserve Agent, concurred in by the Board's Counsel, were approved. Report of the Committee on Currency, dated January 15th, on the anbject "Redistribution of Fit United States Currency between Federal Reserve 8allks” as follows: "Your Committee recommends the adoption of the plan suggested by rr. Garrard B. Winston, Assistant Secretary of the Treasury, under date of September 27, 1923, said plan being as follows: 11. For the present, adopt a ratio of payment at each Federal Reserve Bank of 60 new to 40 fit. '2. Where, as a result of the adoption of this ratio of payment, a bank's supply of bills, both fit and new, is excessive or short, that there should be transfers as between banks to equalize the supply of fits, the cost of transportation to be at the expense of the banks. /3. The Treasury will apportion its supply of available new bills among the Federal Reserve Banks so that each bank will have an available stock in the ratio of 60 new to 40 fit (after transfers of other fits have been made). 'The Treasury, of course, will be free to withdraw from this plan or to change the ratio at any time.' 84, 1/18/24 —7— "Your Committee also recommends that the Board establish the ruling that the receiving bank shall pay the cost of shipments arising out of the adoption of the above named plan, id cases where the sending bank has absorbed the cost of sorting." Upon notion by Yr. Hamlin, the report of the Committee on Currency was approved. Report of Committee on Currency, dated January 15th, on the subject "Cost of Shipments of Currency to I-ember Banks for Account of Lisbursing °fficers"; the Committee recommending adoption of the following report of the recent conference of Governors: "That the costs of shipping currency to member banks for the account of G.overnment officers be absorbed by Federal Reserve Banks, but that the costs of shipping currency to Lovernment officers direct be not absorbed." Upon motion, the recommendation of the Committee on Currency was approved. Report of committee on currency dated January 15th on the subject "ShiPnents of Currency by and to Federal Reserve Banks"; the Committee ' l e Commending the adoption of the following resolution: "WIMTLEAS, it is the purpose and desire of the Federal Reserve Board to equalize the services of the System to the member banks whenever possible; and "MEREAS, in securing currency from and depositing currency with the Federal Reserve Banks, member banks located outside of the Reserve Bank and Branch Bank cities are at a considerable disadvantage; and "WHIZIEAS, all e.-penses connected with shipments of currency between the 1),eserve Banks and member banks are borne by the Reserve Banks; and "\=S, all insurance is carried and all possible losses in transit are reiffmrsable to the Federal leserve Banks; and . "*TniS, the legal title to the currency in transit between Federal Reserve Banks and member banks is vested in the Federal 2,eserve Banks; 1/18/24 -8- "THEREFORE, BE IT RESOLVED, that the Board sees no Objection to the Federal Reserve Banks giving full consideration to currency in transit, in computing the reserve requirements and penalties for deficiencies in reserves of member banks; and "BE IT FURTHER RESOLVED, that a copy of these resolutions be furnished each of the Federal Reserve 3anks." Upon motion, the resolutions recommended were adopted. The Governor then presented the matter ordered circulated at the fleeting on December 21st, namely, memorandum of Counsel dated•December 18th, en the subject "Legality of Plan Proposed for Furnishing Federal Reserve totes of Federal Reserve Bank of Dallas to Few York Banks for Export." Upon motion, Counsel's memorandum was ordered filed without action. Report of Committee on Discounts and Open Yarket Policies, dated 4111,1ary 16th, concurring in the view expressed by the recent conference of (1°17ernors that the. Federal Intermediate Credit Banks should float their debentures through the investment market rather than by direct sale to 4deral Reserve banks under repurchase agreement, leaving the Federal iteserve banks nevertheless free to consider each case on its merits and t° afford all possible help whenever temporary needs seem to require it. Upon motion, the report of the Committee on Discounts and Open Iarket Policies was approved. Yr. Taller then presented to the Board, without recommendation, the Matter referred to the Committee on Discounts and Open rarket Policies, at the meeting on January 16th, namely, letter dated January 9th from the lrflan of the Federal Reserve Bank of Boston, suggesting that the Board C0 tSider limiting the right of Federal 1-,eserve banks to use as collateral r-1 -9- 1/18/24 for 2ederal Reserve notes bills bought in the open market, such right to be exercised only upon the approval of five members of the Board. Ordered circulated. Telegram dated January 18th from the Federal Reserve Agent at ban encisco, transmitting and recommending approval of the application of the lercantile Trust Oompany of ban Francisco to take over the First Bank of ban Aneelmo and its two branches, one at ban Anselmo and one at Larkspur, and to establish branches in premises occupied by that institution and its two branches. Ir. Tiller stated that both ban Anselmo and Larkspur are within the territory defined in today's ruling as contiguous to San Francisco. Upon motion by Fr. James, the Board than approved the application of the rercantile Trust Oompany to establish the branches above mentioned. 41:11tatTILDLIQOUNG COTalITTDES bated January 18th, Recormending chanc7es in stock at Federal Reserve banks, as set forth in the Auxiliary Yinute Book of this date. Approved. lated January 17th, Recommending action on application for admission of stated in the state banks, subject to the conditio as cation, the a attached to individual report of this date. Auxiliary rinute in the forth set Approved. The meeting adjourned 4 •171• Secretary.
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