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104 A meeting of the Federal Reserve Board was held in the office of the Poderai Reserve Board on Wednesday, January 30, 1929 at 10:45 a.m• PRESENT: PRESENT ALSO: Governor Young Mr. Platt Mr. Hamlin Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Mr. Wyatt, General Counsel Mr. Vest, Asst. Counsel Mr. Heath, Federal Reserve Agent at Chicago. The Governor stated that the meeting was called for the purpose of perlttlXlg Mr. Heath to present and discuss with the Board an application for mem11"81111) in the System and for 10,800 shares of stock in the Federal Reserve 4111t Of Chicago by the Central Trust Company of Illinois, Chicago, Ill, to hlch a new charter was issued by the banking authorities of Illinois on Janu417 14th, in connection with a consolidation with the Bank of America of Chicago, tortraember. Mr. Heath stated that prior to the consolidation, and for some time thereit had been assumed that the consolidation would be effected under the old ' harter of the Central Trust Company of Illinois, but that under a court constructift of state law the issuance of a new charter was necessary and upon communicat111R with the Board's Counsel he was informed that this would involve a new application for membership in the System by the Central Trust Company of Illinois. 41's Heath stated that he, thereupon, took steps to secure such an application *ft the directors of the consolidated bank and requested prompt action thereon is 114' the Board in view of the fact that the Central Trust Company of Illinois Owl a the Federal Reserve Bank of Chicago about 45,500,000 and is carrying 1_05 1/30/29 -2- account with the Federal reserve bank. After a considerable discussion, during which it was brought out that the old Central Trust Company of Illinois was a charter member of the Federal Reserve Bank of Chicago and was admitted to the System without any conditions of memto familbership, some members of the Board expressed a desire upacting before case the in iarize themselves with all facts hip. on the new application for members The meeting recessed at 11:15 o'clock in order that members of the Board might have an opportunity of going over the papers in the case. At 3:10 p.m., the meeting reconvened, the following members being present 4°vernor Young, Yr. Hamlin, Mr. Miller, Mr. James, Mr. Cunningham and Mr. McCle1- 14111(1, Assistant Secretary. tions, recommendThe Governor presented a report of the Committee on Examina Company of Illinois for approval of the application of the new Central Trust Membership in the Federal Reserve System, subject to the usual conditions of memn of the old Central Trust bership; the report setting out briefly the conditio C°ImPalay of Illinois and the Bank of America with which it consolidated. apAfter_discussion, upon motion, it was voted to Illinois, of Company prove the application of the Central Trust and System Reserve Federal Chicago, Ill, for membership in the Chitof Bank Reserve Federal for 10,800 shares of stock in the membership set out cago, subject to the regular conditions of in the Board's Regulation H. . At this point, Mr. Platt joined the meeting. 30th from the Chairman The Governor presented a telegram dated January the Comptroller of the °f the Federal Reserve Bank of Dallas, advising that the firm Locke, Locke, CUrre„cy has approached Mr. E. B. Stroud, member of to his employment Stroud and Randolph, counsel for that bank, with reference 011 the Farmers and Merchants National behalf of Thomas A. Early, Receiver of -31/30/29 4111c of Lake City, S. C., in a suit against the Federal Reserve Bank of Mehmnd; the chairman stating that the Federal Reserve Bank of Dallas is hot °41-3 willing but desirous of having Mr. Stroud accept the employment 45 , in its opinion, the decision of the Circuit Court of Appeals in the ease will result in disadvantage to the Federal Reserve Bank of Dallas. In his telegram, the Chairman requested an expression of the views of the Board 45 to whether 2.1r. Stroud should accept the case. Mr. 4att, the Board's General Counsel, was called into the meeting 44c1 explained the case, which is, briefly, to recover from the Federal Re"Is Bank of Richmond a reserve balance of'422,088.48, carried by the 4rmers and Merchants rational Bank of Lake City, S. C. at the time of its 4illire and the sum of 44,115.15, being the surrender value of stock in the ?edema Reserve Bank owned by the national bank at the time of its failure, whiCh the Federal Reserve bank pleaded the right to apply on checks drawn O tha member bank which it had received and forwarded to the member bank c)1' the purpose of effecting collection. 1%:r. 'dyatt stated that at the last °°4f erene of Counsel, ten of the Federal Reserve banks were of the opinion th4t settlemdnt should be made by the Federal Reserve Bank of Richmond withot brut that the Federal Reserve Bank of Richmond had allowed the Ilitter to be taken to court with the result that the district court ruled in l'alr°r of the receiver for the national bank. He stated that appeal was then 414cle by the Federal Reserve Bank of Richmond and that the United States Court of Appeals had reversed the decision of the trial court with an on which, if sustained, might result in numerous suits against the var10118 banks Federal Reserve banks in cases where uncollected checks on failed 1/30/29 • -4- had been turned back to endorsers, rather than charged against the reserve account of the member bank on which drawn. He stated that the Comptroller is "aeevoring to appeal the case to the Supreme Court of the United States and is desirous of securing the services of Mr. Stroud in the appeal. In this connection, 7dr. Wyatt also discussed with the Board a memorandum Pl'epami by him on this date with respect to a suggestion by Counsel for the ede ral Aeserve Bank of Minneapolis, as to the policy to be pursued by that 114111c in asserting rights on behalf of depositors of unremitted for transit items 4;a'inst receivers of insolvent member banks; Judge Ueland's suggestion being that the Federal Aeserve bank insist upon the right to charge such items not onlY to the reserve account and capital stock account of the insolvent bank but la° against additional collateral taken for rediscounts. Mr. :iyatt suggested it would be advisable to hold a conference of Counsel for all the Federal -Ye banks in the near future to discuss the questions raised by Judge suggestion and by certain recent court decisions affecting the collectio., - of checks, includinP that in the case above referred to. After a general discussion, it was voted that the following telegram be transmitted to the Chairman of the Federal Aeserve Bank of Dallas: "Your telegram. Without at this time expressing any Opinion as to whether it is to our advantage or disadvantage in reference to the Early case, Board is of the opinion that Stroud should not accept employment on behalf of anyone bringing action against a Federal reserve bank while he is retained as Counsel for another Federal reserve bank." Action with respect to Counsel's recommendation that a conference of Counsel be held in the near future was deferred. The Governor then called attention to the special order of business for this namelY, the proposed letter to the boards of directors of all Federal -5- 1/30/29 facilities of the Reserve banks on the subject of the proper use of the credit because of other Pederal Reserve banks by member banks which had been deferred blleiness before the Board. pn the table Upon motion, the proposed letter was laid until the meeting of the Board on Friday. The meeting adjourned at 5:15 p.m. Secretary. APProved:
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