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46 A meetin,,. of the Federal eserve Bard was held in the office of the Board on Wednesday, July, 22, 1925 =SENT: at 11:00 a.m. Mr. James, presiding. Lir. Hamlin 1,1r. Miller McIntosh Lir. Eddy, Secretary. The minutes of the meeting of the Federal Reserve 3oard held on July 17th were readand approved. Report of Cornmittee on Exaninations on application of The Insurance oa;ak of $t. Louis, St. Louis, Missouri, for membership in the Federal aeserve iystem and for 135 shares of stock in the Federal Of 13 eserve 3aak auis; the Committee referring to a memorandum of Counsel dated JUly 17th pointing out that the bank expects to open a real estate and insurance denartment, authority for rhich does not appear to be contained in its Charter, and recommending that the 3oard secure further information regard ing the proposed new department and the liabilities, etc., which would be created thereby, before approving the application. Upon motion, the roconunendationef the Committee was approved. Memorandum dated July 21st from ilessrs. James, Hamlin, Miller and 7..1cIntosh, submitting draft of a letter to the Vice President of the Lincoln Bank and TrUst ComPany, Louisville, Ky., with respect to the proposal of the ank to issue debentures secured by first mortgages on real estate nvi tO sell to investors with it r2;aarantee as to principal and intefest real estate mortgage notes, which the 3oard approved on June 26th, althourh ex- Pr r'sing itself as not in favor of the practice of coruriorcial banks handling business of this kind; the memoranlam setting forth that its ic-,rners on _ 7/22/25 July 20th hold a conference with the ',Tice ;President of the bank, at his - with him the views of the 3oard as request, for the purpose of discussin;; to the manner in which the business should be handled, and recommendin3 that the Board anprove the pro7.'esed letter to the bank, which states that while the 3oard does not apyrove the principle of a commercial ban't handlin,. business Of the kind in question, because of the fact that two other member bans in Louisville are engaged in it, thus placing the Lincbln 3ank and 2rast Company at a competitive disadvantage, the board will not object to that institution handling the business, on the followinc:4 conditions: "1. and Trust The total liability of the Lincoln Company as obligor on bonds issued by it and as guarantor of notes or bends secured by real estate mortga3es and sold by it uner this plan, plus its agcros'ate liability to depositors, will not at any time exceed an amount equal to ten times its unimpaired capital and surplus; and 2. The Lincoln iank and Trust Company will establish a se2arate company to handle its mortae loan business under the plan mentioned above as soon as it fa able to accumulate a surplus fund sufficient to enable it to provide the necessary capital for the orf;anization of such a com:any; and 3. In maldnr; up its financial statements the Lincoln Bank and Trust Company will carry bonds issued by it on the liability side as "real estate bonds issued" and against this it will carry on the asset side "real estate mort,7aes purchased". If the Lincoln 3ank and Trust Company sells with its 7uarantee real estate mortgaRes or notes and bonds sec-ired by real estate mortgases, its continent liability as guarantor will be carried at the foot of its statement as "contingent liability as r:uarautor of real estate morta-;es sold." Upon motion by hr. Hamlin, the proposed letter was formally arnroved. 7/2.V20 discussion, moved - "l'hat a cony of the above letter to the Lincoln Bank and '..21'ilst om-)afly be sent to the Chair:-Jan of the 2edera1 Reserve. Bank of L. Louis nith the ra -aost that he briAg same to .the attention of tAe 30ard of Directors o e s re-orese 1 e attitude of .the :oard and for t:neir aidance in co-::inectin -.7ith banks later ap;71yi-i or mem:bership, arid tht the Chairman be advised that the 3oard desHres him to or1in the substance of the above letter to the attention of the Liberty Insurance '3ahk: of Louisville anti t.KB up with them the (1;,e'stion of a similar arran7cnent, es-oecially in view of the fact that the 'ThL,Td not aavised that this Lastittion, which is e-liaed in this type Of b7J.siness, was at th.e time of admission." ler's notion boiuy was ullanimously carried.. 1eut oy the chair ?he Chairman then -orese-:Ited t:1.0 2-::atter aioroved on initials on July 18th, aanl, telernm ncti uly 13th from the federal Jesorvo anent at 77an3as itr, reca=aadin; apjcoval of the LI.:-. 1ication of the :L)roves it ionha ban:o 7,-aisas C,ity for orjina1 stock (zi-b0 shares) in thO 2eCiora1 iii o corve .73a';11: of 7,a.,r,,,s City, effective if and when the ClomotrollE;r of the C-.7,...rrency lthorizes the bank to commence business. 2ormally aoproved. Ilomoraniull from Counsel, dated. July 11th, arroved. by the 1,.= with regard to the a , 7plication of .2L..e nchburr; :Tat lona1 bank of Ly-nchburs., for -Termission to L:.ct as ''trustee, deoositary and re71strar of stocks a`nd be-cids"; Counsel -point hit. out that tho .C2?:xant. to the 'omi is ti'13 power to o rd. has no authority to extrressly ct as d.e7,,o sitary ann that the power to so act especially mentioned i...-1 the 71.2c..:inia , stut7.2te 7:tofining the Do7:,ers T;ldch rnay 'be exercised by trust cornitai es or li7,ze cor)orations, but that the '.'>oard. tlaY, if it sees fit, nerreit he Lyrichb7ar ; . j. t iohal Janic to o:T:ore is o tue -oo-.7ers 7/22/25 -4- 41 02. tr,Istee and re:istrar of stoc:s and bonds. Thon z- lotion, it was voted to a-yorove the a7o1ication• of the above bank for -oemission to act as trustee and re7istrar of stocks anA bonds. '.-110 anaum frori Counz,e1, dated July 17th, on the subject of the of Dauuque, Iowa, for -)er- application of file Jonsoliaa,ed :ational nission to u::arcise conoral fidl'ciary powers; ounsel JointLair out that while autority to e::arciso such -r)owers undo-11)tedly ,)assed to the al?plicant oan'.7 after its for:..a1;ion oy the consolidation of two bans, one of wiL'.ch had authority to exorcise the no.::erf.,, it .:as felt j_esirable for 2he Llonsolidated 3an.;.: to make a now a,Dolication in ocor to eliminate 1 aoJt en.. to de,:loleto the )z.:.•?3r record of the consolidation, ana that there is no 1e:7a1 reason the board „:,hould not -rant the )1()%:ers a,)olied for. UDOA motion, it was voted to a J_irove the aplication. -:emorandum dated July 16th from 'Aunsel on the subject of the atmlication of 2.10 farmers Bank of Clay, .7entuck:7, for pemission to exercise Z'oneral fid.cciey oowers; onisel statin that t:le ba.u.,: had rolaied to t:le 30ard's incuiry as to' the manner in which it proposed to exercise fiduciary poers, if c2ranted to it, itn particu1;!,2 refe...once to the investment of tru„st tunas and accountin,'; for inco e derived t:..erefra-.1, to oomoly with the of the ,oard in this matter, ana recJmile..Idihr that if the 'oard should decide to am)rove the a,)olic:.tion, to tAe ed a letter be addres, ank statin , that the .3oard understands it will abide by the board's ror:alL,:tio.is and directions and cor..i_ance that it aesires not transact the DAS::;IMS e:.:ce-ot in cc- d.th methods a 2roved by the 3oard. U-pou :::)tion, it was voted to apnrove the bank' a -Yolication for rt:orheral trust 1)0 ;ors, L2a1 the _above recoLlr:landation of 0o-..:,neel as to the form of as:vice to t.:ao 1,:erao from Counsel, dated „Lily 17th, with ragard to the aoplic ._;• ion he Laconia National Barfk. of Laconia, New 'P'ampshiro, for crmi scion to aet as trustee tih raistrar of stocks and bonds, in connection 2edora1 Aosefvo isent at ioston has recormended Ci -.:111ch Ze the Hc.rt'missiol, to the bal..: to Let as trustee for a bolia iGuo of tho Laconia A:intry ,jo -ccasol attention to the fact that it is con- troxy to the .. )ractice of the bard, to ::71-aht am a --. .olication for nermission it tO• act, La a fiducinr,, caity j.2.1 one : ,artis:dlar caz., e and that there is no ransom wily tho s:Lauld not -be ;0 act bo',,- h as tr-,.. - stoo amd re:istrar of stocks amd bonds, vhich are the -oafers it has anlied for. Toon, motion, it votea to n-o:)rove, the the for permission to act as trustee miii n:::;istrar of stocks LOla boilds. ')021; of Jomittee on .;alari3s, buecahituros ama _:fficie.A.cy on letter 61a.cod July 17th from the Jomptrollor of tfla Currency, recommemdinc; anproval 01 an :croaso from ,453J to ‘:fb,WJ in the salary of Nat ional Lto HOdY3011; the • recommending. aoDroval. Letter dated July 16th from the Federal :,eserve Agont at ..".tlanta, 11 11° -es ti Lig a-roroval of his talcin7, a vacation from July 27th until 10th -List :..avisih- that the Denut,,, Chairman o: the .-3ank has consented to be in the office 6.1.ring the week oei;innin- -1-, list 3rd. ) 7/22/25 -6- Approved. Heport of Committee on Salaries, Expeaditures and Efficiency on letter dated July 16th from the Controller (01,_ Administration of the Federal .eserve Bank of Chicago, advising of the employment of Ur. John E. Frieling, painter, at a salary of ,2520 per annum, effective July 16, 1925; the Committee recommending approval of the salary. Approved. Letter dated July 17th from the Chairman of the Federal Aeserve lank of Boston, advising of the election of Li'. Albert C. Boman as Class B Director of that bank, for the unexpired term ending December 31, 1925. Noted. Aeoort of Committee on Salaries, Expenditures and Efficiency recomMending approval of the budget submitted by the Federal Aeserve Bank of Ilinneapolis, covering statistical and analytical work =rim; the last half Of 1925 amounting to „r;o,410. Approved. Uemorandum dated July loth from Assistant Counsel, with regard to applications executed by the Commissioner of BanAng Of the State of Texas for surrender oi stock in the Federal Aeserve Bank of Dallas held by the following insolvent banks; The Farmers State Bank, Ganalo, Texas; Guaranty Banc and Trust Company, Orange, Texas; First State Bank, Ladonia, Texas, and the First State Bank Sabinal,Texas; Counsel recommending that the four applications be approved. -7- Aeferred to the Law Committee. San Francisco, Draft of letter to the Federal deserve Agent at an increase from „4500 advising of the action of the Board in approving tive July to ,ASCO per annum in the salary of Examiner C. A. Hupp, effec of Examiner A. 3. 1st, and in approving the extension of the commission ning Department because of Mason, due to a shortage of help in the Exami tment of California the detail of two examiners to the State Banking Depar made with relation in connection with certain sicecial investigations being Bank of Fresno to a suit being brought by the stockholders of the Valley Italy and the Pacific against the State Banking Department, the Bank of that Southwest Trust and SavLags Bank, and advising of "In approving the extension of the commission n actio its wish not Examiner ason, the Board does ners exami ling detai construed as approving of your to assist the State Banking Department in the conduct of the investigations referred to. Your action ve in this matter is disapproved by the Federal aeser ve reser al Feder a Board on the ground that while bank may, if convenient, on a request of state banking aathorities, furnish examiners and assistants conduct to assist the state banking authorities in the d's (Boar bank, state r membe a of n of their examinatio deor " "loan the 8), x-068 1923, 7, letter of April state banktail of Federal reserve bank examiners to purpose the for only made be should ing departments such in s tment depar ng banki state the of assisting conin cted condu are as banks state of ns examinatio duties nection with the discharge of the supervisory the imposed upon the state banking departments by s." state laws of the Upon motion by Mr. Millar, it was voted to approve the above letter after changing the paragraph quoted to read as follows: 7/22/25 -8- "In approving the extension of the commission of Examiner 2,Iason, the Board aoes not wish its action construed as approving of your detailing examiners to assist the State Banking Department in the conduct of the investigations referred to. On the basis of the information oefore it, the Board seriously doubts the propriety of your action in the matter. While a Federal reserve bank may, if convenient, on a request of state banking authorities, furnish examiners and assistants to assist the state banking authorities in the conduct of their examination of state member banks (Board's letter of April 7, 1923, X-3688), the "loan" or detail of Federal reserve bank examiners to state banking departments should be made only for the purpose of assisting the state banking departments in examinations of state banks when such examinations are of concern to the Federal reserve bank and when they are conducted by the state banking departments in the regular course of the discharge of the duties imposed upon them by the laws of the respective states." Aeport of Committee on Salaries, Expenditures and Efficiency on letter dated tjuly 10th from the Chairman of the Federal deserve Bank of Richmond, submitting report of a survey made by a special committee of the Board of Directors of the bank as to its or 7anization and setting forth adjlIstments in personnel made since the first of the year; the Board's Committee submitting for approval draft of a reply expressing the appreciation of the Board Of the spirit with which the directors conducted their examination into the Personnel conditions of the bank. Upon motion, the proposed letter was approved. deport of Committee on Salaries, Expenditures and Efficiency on letter dated July 14th from the Chairman of the Federal Reserve Bank of Atlanta requesting approval of increases, effective July 1st, in the salaries of the following employees; the Board's Committee stating that it does not favor -9- 7/22/25 general salary adjustments except at the end of the year and cannot, therefore, recommend approval: J. B. Tutwiler, Assistant Cashier, w4200 to .„15400. A. H. Alston, Clerk, Discount Dept., ,2400 to 1;2500. P. L. T. Beavers, Chief Clerk, Transit Dept.,6,500 to ,i;3500. V. K. Bowman, Chief Clerk, Discount I Credit Depts., 3600 to vo500. 3. a. Camp, Chief Clerk, Service Dept., ,;3300 to 3500. L. H. Clark, Chief Clerk, Failed Banks Dept., „2550 to v2700. "• d. Aussell, Clerk, Failed Banks Dent., ,,;2400 to 2700. J. a. Honour, Assistant Auditor, v•d000 to ,),5600. 2. P. Paris, i]xaminer, yob00 to ,,.3600. Upon motion, the recommendation of the Board's Committee was adopted and the increases were disapnroved. Letter dated July lath from the Deputy Governor of the Federal Aeserve Bank of Atlanta, inquiring as to the eligibility for rediscount Of notes secured by warehouse receipts covering cotton seed. deferred to Counsel. LIcIntosh then reported for the confidential information of the members of the Boara that he had been reliably informed that negotiations were under way for the merger of the Bank of Italy with the Pacific Southwest Trust and savings Bank, the Security Trust and Savings Bank and the First National Bank of Los Angeles, and that an offer has also been made lor the stock of the First National Bank of San Francisco. After discussion, Mr. Miller moved that a telegram along the follow- 7/22/25 -10- ing lines be sent to the Federal Aeserve Agent at San Francisco: "Rumor has reached Board negotiations under way for merging interests Bank of Italy with Security Trust and Savings Bank, Pacific Southwest Trust and Savings Bank and First National Bark, Los Angeles and also First National Bank, San Francisco. Investigate and advise Board. Please bring this telegram to attention your directors for their confidential information." Mr. Miller's motion being put by the chair was unanimously carried. Miller then moved that a similar telegram be sent to 1:r. Herson, the Board's Chief Examiner, who is now in San Francisco, with instructions to conduct an independent investigation and with further instructions to remain in San Francisco until otherwise directed by the Board. Carried. aEPOI1TS OF STANDING C OMIT T : Dated, July 17th, Reconnending changes in stock at Federal Reserve Banks, 20th, as set forth in the Auxiliary '.7.inute Book of this date. Approved. Dated, July 22nd, Aecommerding action on applications for fiduciary porktrs as set forth in the Auxiliary Minute Book of this date. Approved. Dated, July 22nd, liecommending action on application for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Dated, July 22nd, lecommencling action on admission of state bank., subject to the conditions stated in the individual report attached to the application, as set forth in the Auxiliary •Minute book of this date. Approved. 7 d) -• • 17t1, .7,...ocommandiaF approval the)i1ioation of :r. as director of T)auL)1 J. Boy.1 o 'sorvo at; tba sa, Lass., and the C1tize7a3 as airoctor 3ak, 3ostO14 of tho; 0oulity t ArApany, Hag Yrirk City. —ated, Judy 17th,aecomo,1- :Jain::: a.pproval o tIls_ay2liction of 3hiela to scrys at the s'L.10 tL'ne as diroctof ala oficor of tho Bank, Dallas, l'exas, of tho ns airactor of tho ato .1Tatioa1 ',3anta Lilna, .:1J.:)rovod. '2he mo.)tir,,g•aajourlle - at 12:10 ‘'N _ • Ja,:aittoo.
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