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45
A meeting of the Federal Ileserve Board. was held. in the office of the
Federal Reserve Board on Wednesday, January 19, 1927 at 11:30 am*
.71ESENT:
Governor Crissinger
::7r. Platt
Mr. Hamlin
Mr. Miller
Mr. Cunningham
Mr. Noel', Asst. Secretary
Mr. McClelland, Asst. Secretary
The minutes of the meetings of the Federal Reserve Board held. on
January 13th and. 14th were read and approved*
The Governor referred to the action of the Board on January 13th
in authorizing him to defer until January 19th the change approved in the
'weekly statement of condition of Federal Reserve banks so as to separate
under the caption "Bills Bouijit in Open Market" those payable in dollars
aM those payable in foreign. currency.
He stated that Deputy Governor
Harrison of the Federal Reserve Bank of New York had expected to carnet to
WashinRton before today to discuss the proposed. change, but being unable
to do
so requested. a further postponement.
Upon motion, the Governor was authorized to
defer for another week making the change referred
to.
Letter dated January 13th from the Secretary of the Federal Reserve
8ank of New York, advising that the board of directors on that day made no
in the bank's existing schedule of rates of discount and. purchase*
Noted.
Telegram dated January 14th from the Chairman of the Federal Reserve
B4111
Of
Atlanta, advising that the board of directors on that day made no
change in the bank's existing schedule of rates of discount and. pumhase.
Noted*
1/19/27
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Telegram dated January 19th from the Chairman of the Federal Reserve
Bank of St. Louis, advising that the board of directors on that day made no
change in the bank's existing schedule of rates of discamt and purchase.
Noted.
Telegram dated January 17th from the Secretary of the Federal
eserve
Bank of liinneapolis, advising that the board of directors on that day made
nO change in the bank's existing schedule of rates of discount and purchase.
Noted.
- eserve
Telegram dated January 13th from the Chairman of the Federal R
Bank of Kansas City, advising that the board of directors on that day made
110 Change in the bank's existing schedule of rates of discount and purchase.
Noted.
Memorandum from the Secretary dated January 19th, requesting authority
for the employment of a stenographer with salary at the rate of „;1600 per
4111111m, to be assigned to Mr. Gilbert, Supervisor of Examination.
Approved.
Report of Executive Committee on letter dated January 15th from the
Co
mptroller of the Currency, requesting approval of a salary of „;2700 per
'
,111 for National Bank Examiner Cornelius A. Donahue, assigned to the
r2welft1 Federal aeserve District; the Committee recommending approval.
Approved.
lieport of Executive Committee on letter dated January 15th from the
Q°Mptroller of the Currency, requesting approval of a salary of
ant,
3600 per
for National Bank 2
7 ]xaminer Edwin m. Watson, assigned to the Tenth
?edaral
eserve District; the Committee recommending approval.
1/19/27
-3-
Approved.
iieport
of Executive Committee an letter dated January 14th from the
Comptroller of the Currency, reconmending approval of increases in the
salaries of 69 National Bank Examiners listed therein; the Committee recomMending approval.
Approved.
Letter dated January 15th fram Mr. Lee R. Uhler of Tampa, Fla. requesting permission to reprint in the House Organ of The Uhler Association,
the pamphlet on the subject of "Better Banking under the Federal Reserve
%Totem'',
Upon motion by Mr. Hamlin, it was voted to permit
the reprinting of the pamphlet with the understanding
that proper credit therefor will be given.
The Governor then suggested that Mr. Carl B. Parry, be designated
4osistant Director of the Board's Division of Research and Statistics.
Re stated that Mr. Miller, Chairman of the Commdttee
on Research and Statistics,
approved of the designation.
Upon motion, Mr. Parry was appointed as Assistant
Director of the Division.
Memorandum from the Governor submitting letter addressed to him by
Ih'• Claude Gilbert, recommending the appointment as Examiner of Mr. M. D.
31411E3Y
at
a salary of7500 per annum.
Upon motion, it was voted to employ Mr. Smiley
at the salary stated.
Report of Committee on Salaries and Expenditures on letter dated
Je4uary 13th from the Federal Reserve Agent at Dallas, requesting approval
48
1/19/27
Of
-4-
the payment of full salary to Mrs. H. F. Bryson, an employee of the
Service Department, during leave of absence on account of illness from
December 5th to December 31st; the Committee recommending approval.
Approved.
Report of Executive Committee on letter dated January 14th from
the Federal Reserve Agent at Chicago, reconnending approval of an application of the Mechanics National Bank, Milwaukee, Wis. for a reduction
ill its reserve requirements from 10); to 71; of demand deposits; the Committee also recommending approval.
Approved.
Letter dated January 8th from the Chairman of the Federal Reserve
Bank of San Francisco, advising that Mr. Charles E. Caches, who at the time
Of his appointment by the Board as a director of the Seattle Branch was
"gaged in agriculture, has since engaged in banking and is at the present
ti4le Vice President of the Peoples Savings Bank of Seattle, a nonmember
ballk; the Chairman requesting advice from the Board as to whether it is advisable for an official of a nonmember institution to act as a director of
the Branch.
After discussion, Mr. Miller moved that the
Chairman of the Federal Reserve Bank of San Francisco
be advised that the continuance of Mr. Caches as a
director of the Seattle Branch would be inconsistent
with the principles outlined in the Board's Regulations
governing the appointment of Branch Bank directors, as
he has ceased to be a non-banker and that Mr. Newton
be requested to take up with Mr. Caches the matter of
his retirement and to submit to the Board recommendations for a qualified successor.
49
) 11
1/19/27
_5._
Mr. Miller's motion being put by the
Chair was carried.
Memorandum from Mr. Cunningham dated January 19th with reference to
letter dated January 11th from the Federal Reserve Agent at San Francisco,
transmitting and recommending approval of an application of the American
Trust Company of San Francisco, the consolidation of the Mercantile Trust
Company and the American Bank of San Francisco, for permission to take over
the Bank of Sausalito with its branch at Tiburon and to establish two branches in the premises; Mr. Cunningham in his memorandum pointing out that
Sausalito and Tiburon, which are located across
the Bay from San Francisco,
have not been defined by the Board as contiguous to that city and recom"nding that the application be denied because they are not contiguous
and, because the
establishment of additional branches can well await action
by Congress upon the so-called McFadden Bill which undertakes
to define
the area within which a branch may be established.
A discussion ensued as to whether or not
Sausalito and Tiburon should be defined as contiguous to the city of San Francisco in the same
manner as Oakland, Berkeley and Alameda which
are also situated across the Bay from San Francisco
have been designated as contiguous thereto.
Further discussion ensued as to whether or
not Sausalito and Tibia= were incorporated municipalities and the Secretary reported that according
to the records of the Census Bureau Sausalito was
Incorporated. although Tiburon was not.
I%
Following the discussion, Mr. Miller moved
that in accordance with the precedent established
by the interpretive ruling of the Board of December
2, 1924, to the effect that the cities of Oakland,
Berkeley and Alameda are territory contiguous to
50
1/19/27
the city of San Francisco, within the meaning of
the Board's Regulation "H", the Board now rule
that the city of Sausalito is territory contiguous
to the city of San Francisco; the city of Sausalito
sustaining substantially the same relation to the
city of San Francisco as the cities of Oakland,
Berkeley and Alameda.
Mr. Cunningham moved, as a
the application of the American
laid on the table until January
understanding that 11r. Miller's
up for vote at that time.
substitute, that
Trust Company be
26th with the
motion will core
Yr. Cunningham's substitute motion
being put by the Chair was carried.
Letter dated January 13th from the Secretary of the Federal Advisory
C(31-14011, advising that the next meeting of the Council will be held in
17ashington on Friday, February 18th, and requesting a list of topics
wIlich the Board desires to have discussed at the meeting.
Referred to the Executive Committee.
Letter dated January 17th from the Federal Reserve Agent at Chicago,
44vising that excavation work for the Branch Bank building at Detroit has
pra
ctically been completed and that certain minor changes in plans, which
w.„
-141 probably result in a saving to the Federal Reserve bank, have been
Made necessary by changes in the excavation
work.
Noted, with approval.
Zemorandum from the Chief of the Division of Bank Operations, approved
by
the Executive Committee, submitting draft of a letter to all Federal
11"erve Agents, requesting that in the future all reporting member banks
141 leading cities show in their weekly condition reports amounts due to
and bankers and amounts due from banks and bankers, Which information
-7-
1/19/27
Up to the present time has been shown only by reporting member banks in
Federal Reserve bank cities.
Upon motion, the proposed letter was
approved..
Letter dated January 14th from the Assistant Federal Reserve Agent
at New Yolk, requesting that they be furnished, by telephone some time
during the day Monday, information which would enable them to release
simultaneously with the Board the weekly report of condition of number
banks in leading cities, including the summary and comment prepared in
the Board's offices; the Assistant Federal Reserve Agent stating that
bewspapers are naa receiving the report by telephone and telegraph from
1784hington, with a large chance of error, and are not giving the space
to the report that they would if the figures could be furnished them in
ITela York.
The Secretary reported that there would be
no mechanical difficulty in furnishing the information and upon motion it was voted to approve
the request.
Letter dated January 15th from the Chairman of the Federal Reserve
Bank of Kansas City, advising of officers elected to serve at that bank
the year 1927.
Noted*
Letter dated January 13th from the Federal Reserve Agent at Boston
eferring to the action of the Board in approving payment of full salary
January 15th to Miss Dorothy E. Wadman and Miss Ruth F. Warren, who
1141re been absent from the bank on account of illness since October 13th
52
1/19/27
-8-
a/1d October 18th, respectively, and to his letter of January 7th advising
that the services of these employees will be discontinued as of January
15th; the
Federal Reserve Agent advising of the action of the board of
directors of the bank at their last meeting in voting that the salaries
Of the two
employees above mentioned be continued until such time as
discontinued by that board or otherwise ordered by the Federal Reserve
Board.
After full discussion, Mr. Cunningham
moved that the action of the board of directors
of the Federal Reserve Bank of Boston be approved.
Er. Cunningham's motion being put by
the Chair was carried, Mr. Miller voting "no".
Letter dated January 15th from the Chairman of the Federal Reserve
lalallk of Hansas City, requesting approval of increases in the salaries of
the lianaging Directors of the Branches of the Bank as follows:
Omaha
L. H. Earhart,
48,400 - c?9,000
Denver
J. E. Olson,
6,500 -
8,000
Oklahoma City
C. E. Daniel,
7,000 - 8,000
Upon motion by Er. Cunningham, the above
increases were approved, Mr. Millf)r voting
"no".
Letters dated January 13th from the Chairman of the Federal Reserve
8411k of Boston, advising of the appointment of Er. Arthur M. Heard as member
the Federal Advisory Council for the year 1927 and of officers elected
to serve at the bank during the year; the Chairman requesting approval of
53
1/19/27
the action of the directors of the bark in voting to increase the salary of
1.1r• K. K. Carrick, Secretary, from .37,500 to .2,000 per annum and stating
that 17r. Carrick devotes about one half of his time to legal work, his
Salary being prorated in the annual budget, one half for legal services
and one hali for his official position as Secretary.
Upon motion, it was voted to refer the increase
recommended for I.Ir. Carrick to the Law Committee
for report.
1.:emoran.dalm from Counsel dated. January 7th on the matter referred to the
Law Committee at the meeting on rovember 26th, namely, recommendations of
the last Conference of Governors - (1) That it is advisable to seek to procure an amendment to the law to restore to Federal courts jurisdiction over
Suits by and against Federal deserve banks and (2) That it is desirable to
seek the enactment of legislation to exempt Federal deserve banks from the
Processes of attachment or garnishment before final judgment in any case,
as national banks are now exempt under the terms of the United States Revised. Statutes; Counsel stating that these suggestions are important and
is desirable to recommend such amendments to Congress at the earliest
favorable moment, but for reasons stated recoraiendinp: that the matter be
held in abeyance until the next session of Congress.
Upon motion, it was voted to approve Counsel's
recommendation that the proposed amendments be held
in abeyance.
Memorandum from Counsel dated January 7th on the matter referred to
hirl at the meeting on November 26th, namely, recommendation
of the last
at
G"ornors, Conference on the Question of the eligibility for rediscount
representing borrowings
teserve banks of notes of parent corporations
54
1/19/27
-10-
of funds to be advanced to subsidiaries; Counsel submitting draft of a
letter
to all Federal Reserve banks abrogating the Board's former ruling on the
ellbjeot (X-4484 dated December 30, 1925), and ruling in lieu thereof as
follows:
"Where the borrower is a parent corporation having a number
of subsidiaries and the parent corporation and its subsidiaries
are in practical effect one single organization, and may with
propriety be considered a single borrower, the paper of such
parent corporation, the proceeds of which have been used or
are to be used by the parent corporation or by the subsidiary
corporations for an industrial, commercial or agricultural
purpose, within the meaning of the Federal Reserve Act and the
Board's ..iegulations, may be considered eligible for rediscount
if it complies in all other respects with the provisions of the
law and the Regulations of the Federal deserve Board."
After discussion, Mr. Hamlin moved approval of the
ruling contained in the letter submitted by Counsel
and that the letter be transmitted.
"Jr. Hamlin's motion being nut by the Chair was
carried, the members voting as follows:
Governor Criss Inger, "aye"
Mr. Platt, "aye"
Mr. Hamlin, "aye"
Mr. Miller, "no"
1.1r. Cunningham, "no"
Report of Committee on Salaries and Expenditures on letter dated January
13th from the Federal Reserve Agent at San Francisco, requesting approval of
the a rpointment of Mr. John F. Prahl as Examiner, effective February 7, 1927,
with
- salary at the rate of ;4,800 per annum; the Committee recommending approval.
Approved.
'port of Committee on Salaries and Expenditures on letter dated January
14th from the Federal Reserve Agent at San Francisco, requesting approval of the
ePPointment
of Mr. Henry D. Swengel as Examiner, effective February 1, 1927,
With
salavy at the rate of ;:„;4800 per annum; the Committee recommending approval.
Approved.
55
1/19/27
-11-
Memorandum from Counsel dated January 8th on the natter referred to
the Law Committee at the meeting on November 26th, namely, action of the
recent Governors' Conference with reference to the eligibility for rediscount
ard purchase by Federal Reserve banks of bankers acceptances drawn by an elevator or warehouse company and secured by terminal warehouse receipts of the
elevator or warehouse company that draws the draft; Counsel stating that the
Matter is one of policy for determination by the Board but suggesting, if the
Board
is
not entirely satisfied as to the value of terminal grain elevator
Or warehouse receipts issued under the circumstances described in the recomtendat ion of the Govern() is
Confe ranee, that Mr. H. S. Yohe of the Depa rtment
Igriculture, who discussed the matter with the Conference, be requested to
eeine before the Board and give his opinion whether as a practical matter these
'
leceipts are equivalent to receipts issued by a warehouseman independent of
the borrowers
After discussion, it was voted to request Mr.
Yohe to come before the Board.
Memorandum from Counsel dated December 16th on letter dated October
a3
from the Governor of the Federal Reserve Bank of Dallas, inquiring as
to the eligibility of notes of makers domiciled in Mexico, sadh notes being
1.44ae Payable to the Jouthern Trust Company of Nogales, Llexico and offered
rediscount by the First National Bank of Nogales, Arizona; Counsel stat"
e
111R that these notes do not comply in all respects with the Board's definition
°f a promissory note contained in its Regulation A and are, therefore, techlc
ly ineligible for rediscount and since they are acquired from or bear
the enaorsement of a nonmember bank they are also ineligible because of the
56
1/19/27
-12-
Board's ruling prohibiting the rediscount of nonmember bank paper except
With the Board's permission.
In his memorandum he stated, however, that
the Board may if it desires, give permission for their rediscount and
nay
41se waive the respects in which the notes do not
comply technically with
-Regulation A.
Upon motion by Mr. Platt, it was voted
to grant permission for the rediscount of the
notes in question, waiving their technical ineligibility.
Memorandum from Counsel dated December 22nd on the matter referred
to the Law Committee at the meeting on November
26th, namely, the action
°f the last Governors Conferenc
'
e in requesting the Board to use its infilzence at the first available opportuni
ty to procure an amendment to
Seetion 4 of the Federal Reserve Act defining the qualifications of
directors of Class B and Class C, so as to make eligible directors
of
1341*°1Y mutual savings banks; Counsel submitting drafts of letters to
Chairmen of the Committees on Banking and Currency of the Senate and
41
"of Representatives, recommending an amendment to Section 4 which
would have
the desired effect.
After discussion, it was voted to approve
the proposed amendment but to withhold recommending it to Congress until the next session.
°:1Ts OF
3-2ANDIITG COILLITTEES:
blItclat January 14th,
17th,
19th,
bated, January
13th,
Recommending changes in stock at Federal Ileserve
banks as set forth in the Auxiliary Minute Book
of this date.
Approved.
Recommending action on applications for fiduciary
pavers as set forth in the Auxiliary Minute Book
of this date.
Approved.
5'
1119/27
(3-
,gP0i.i.TS OF STAND'.G C 012.1ITTEES: (Cont'd)
Dated, January 15th,
17th,
Dated, January 15th,
:{econnending action on applications for fiduciary
powers as set forth in the Auxiliary Minute Book
of this date.
Ordered held.
1:Zecorznending approval of the application of 1:r.
Walter L. Heymann for pennission to serve at the
same time as officer of the First lIational Bank,
Chicago, Ill, as director of the Liberty ?.rust
and Savings Bank, Chicago, Ill. and. as director
of the West Side Trust and Savings Bank, Chicago,
Approved.
The meeting adjourned at 1:00 o'clock p.m.
Assistant Secretary
A pproved
:
41
1
@FedFRASER