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51 meeting of the Federal .!,eserve Board was held in the office of the Federal iieserve i',Ipard on Thursday, July 28, 1927, at 11:15 a.m. PRESENT: Governor Crissiner 11.. Platt Lr. Hamlin James *Lr. McIntosh Lr. Noell, iLsst. Secretary Jecretary Latter a2proved on initials on July 26th, namely, application of the :ational Bank, Cleburne, 2exas, for stock ;n the Federal .eserve Bank of Jai1as ( 66 shares) effective if aadvihen the Jomotroller of the Currency issues a certificate of authority to commence business. _ormally approved. ; Letter dated July 21st from the 3ecretary pro tern of the 2edera1 .deserve Bank of Ilea York, advising that the board of directors at their meeting an that date made no cha/D-;e in the bank's existim,: schedule of rates of discount and Ilurchase, except to reduce from 3 3/4,, to 3 5/81) the rate for uirchase of bankers accey)tances under resale agreement. • iloted with approval. Telegram dated July 22nd from the Chairman of the Federal eserve Bank of Chicago, advising that the board of directors on that date made no change in the bank's existing schedule of rates of discount and purchase. Tloted. Telegram dated July 21st from the Chairman of the Federal 2,eserve j Bank of -Ban Francisco, advisini. that due to lack of a quorum no meeting , It 52 . 7/28/27 -2- Of the board of directors of the bank was held on that date. 1:ote(1. :Latter approved on initials on July 22nd, namely, memorandum from ': 4 ;o,nsel, requesting authority to have set up in type the proposed new edition of the Board's aegulations in the form in which it was tentatively approved by the Board on June 21, 1927. Formally approved. leport of Committee on 3alaries and Expenditures on letter dated July 21st from the Chairman of the Federal aeserve Bank of ktlanta, requesting approval of the action of the board of directors of that bank in voting to extend for nine and one-half days, with full pay, leave of absence on account of illness granted Mrs. Louis H. Jones, Matron of the bank's infirmary; the Committee recommending approval of the salary payment involved. 1.Lpproved. Report of Executive Committee on letters dated July 21st from the Comptroller of the Currency, recommending approval of the following salaries for national bank examiners: 0. 0. Taylor a. E. 21. Palmer A. J. Cooke 12th District 12th District 12th District .)2,500 2,700 2,500 Upon recommendation of the ixecutive Committee, the above salaries v)ere approved. Letter dated July 18th from the Chairman of the Federal deserve Bank of Minneapolis, advising that he was leaving on that date for a two weeks' vacation, 1;oted without objection. it 53 -3- 7/23/27 2eles-ran dated July 27th from the federal eserve ,,,L;ent at 3an Francisco, recommending approval of an application of the Pacific Jouthmest Trust and Savings Bank of Los Angeles for ,)ermission to take over the Bank of San Fernando and to consolidate the business of same with its present Jan .Fernando branch. Approved. Letter dated July 22nd from the Assistant federal Reserve Agent at :ew York, recommending approval by the Board of an application of the First "2rust and Deposit Company, Syracuse, N. Y., for an until Jetober 25, 1927 extension in witich that bank may open the of the p.)riod branch at 1510 Ast Genesee Street,, Syracuse, authorized by the Board on January 25, 1927. 4i.pproved. Letter dated July 22nd from the assistant Federal Reserve Agent at few York, advisin;3 that on July 25th the ElizabethT)ort Banking Company of thzabeth, J., would open a branch at 1149 East Jersey Street, Elizabeth. Letter dated July 21st from the ssistant Federal eservo nent at ian 1-Tancisco, advising that the, 2acific Southwest Trust and Liavins Bank of Los Angeles on July 16th closed the branch formerly operated at • 222 East queen Street, Inglewood, and transferred its business to the branch located at 100 Commercial Street, Inglewood. Noted. 54. 7/28/27 Letter dated July 21st from the .Lssistant Federal fteserve Agent at an 2rancisco, advising that the Pacific Southwest Trust and Savings Bank of Los Angeles on pril 30th opened at 2043 South Westwood Boulevard the branch authorized by the Board on April 12, 1927. iT.oted. Letter dated July 21st from the Assistant Federal Reserve Agent at New York, advisin that the National American Company Inc., an affiliation of the Uentral Lercantile Bank and Trust Company of New York City, has bought control of the Bronx National Bank, hew York ity, and that the Board will be advised later whether the Bronx National 3ank is to be continued as an independent institution or c:Inverted into a branch of the - ank and :rust ,Jompany; the 2,.ssistant :ederal _eserve (i.entral ;,.gent also advisins' that the Broad. and ::arket National Bank and ?rust Jomoany of hewark, J., plans to merge the Forest Hill National Bank, also of Newark, and operate it as a branch. Noted. Lotter dated July 22nd from the Deputy Governor of the 2ederal Reserve Bank of New York advising of the opening on the books of that bank of an account for the South African Reserve Bank, with v.hich it recently entered into reciprocal relations. Letter dated July 22nd from the Deputy Governor of the Federal .deserve Bank of New York, transmittin copies of telegram and letter addressed to the •Jovernors of all other 2ederal Reserve banks relating - 55 -5- 7/26/27 to the disposition of the balance of the rpld which has been held under earmark at the Bank of Ensdand. :coted. Lotter dated July 25th from the Governor of the federal deserve -3ank of New York, Iquestinc approval of the action of the directors of that bank in votin -: to reconstruct for rental purposes, au a cost of approximately .70,000, the buildinc: owned. by the Federal Street, adjoinin eserve Bank at 1.o. 10 Gold the bank's annex buildin-, and in votini: to -pulhase, at a price between ,10,000 to •.:,15,000, a plot of ground containing 600 square feet directly north of the buildins at De. 10 Gold 3treet; the letter statin that at the proposed annual rental of ,16,500, the estimated yearly cost of operation of the No. 10 Gold. Jtreet building, 7,000, would leave an excess of income over expenses to the bank of .9,700 per annum, and that if the cost of reconstructing the building should be amortized on a ten year basis (y7,000 per annum), the net income to the federal heserve bank would be ,2,5 0 per annum. ..Ifter discussion, upon motion by hr. Hamlin, it was voted to arove the action of the New York directors reorted in the above letter. . LemorandtiJa dated July 21st from the Jhlef of the Jivision of lank Operations, submitting statements of expenditures of Federal .:eserve banks for educational and welfare work, etc., dariny the month of June and for the six month period ended June 30th. Ordered circulated. aeport of i]xecutive 2o2:4mittee on letter dated July 5th from the -Federal ,eserve -gent at :Annearolis, transmittin7 and recommendin ap- 56 -6_ 7/26/27 proval of an application of the Richfield. National Bank of Einneapolis, an outlying institution, for a redaction in its reserve reviraments under the provisions of Section 19 of the federal Reserve Act from 10,; to 7,, of demand deposits; the Committee recommending approval. Approved. Report of Executive Committee on letter dated July 14th from the Federal Reserve Agent at Kansas City, recommending approval of an application of The West Side-National Bank of Denver, Colo., an outlyin: institution, for a reduction in its reserve requirements under the provisions ; of demand deposits; ; Of section 19 of the Federal -es3rve -ct from 10/; to 7; the Committee recommending approval. .,pproved. Letter dated July 25th from the First Federal Foreign Investment Trust, requestinL; information from the :loard as to the probability of early stabilization of the currency of the _epublic of Brazil. After discussion, the Governor was requested to advise the corporation that the Board has no information relating to the stabilization of the Brazilian currency. Letter dated July 19th from the Chairman of the Federal Reserve Bank of *.;t. Louis, inquiring as to the elifiollity to continue as a director of the Louisville Branch of that bank of Jr. Lttilla Cox, who has announced his candidacy for the office of Judge of the Chancellor Court; the Chainfian stating that Mr. Cox would like to remain a dir.ctor • make of the branch, at. least until after election, and has agreod not to active campaign for election. 57 7/28/27 -7- After discussion, the Governor was requested to advise the Chairman that under the rules adopted by the Board, Mr. Cox's announced candidacy for a political office makes him ineligible for service as .a branch bank director. Letter dated July 18th from the 2edera1 ileserve ;..ent at Jan 2rancisco, transmittinc: letter from the Superintendent of Banks of California, with reference to bill in the amount of ..,1,550 rendered against the bank by the State Banking Department for expenses in connection with the examination of the pacific 3outhwest Trust and Savings Bank of Los _mgeles; the Superintendent stating that this charge was occasioned by compliance with the request of the Board that the examination be made by simultaneous entry at the head office and all branches of the bank. • After discussion, upon motion by 1:r. James, the following resolution was adopted: "Whereas, the Federal Reserve Board feels that simultaneous examinations of member banksoperating branches is most desirable; and Vhereas, if an independent simultaneous examination of the Pacific Southwest Trust and Savings Bank had been conducted under the auspices of the Federal Reserve Agent, the expense to the Federal Reserve Bank would have been very much greater than that incurred in connection with the state examination; "Therefore, Be it resolved, that the Federal Reserve Agent at San Francisco be advised that the Federal Reserve Board, under the circumstances, feels justified in approving payment of the bill rendered by the State Banking Department, if such payment meets with the approval of the board of directors of the Federal Reserve Bank of San Francisco." Letter dated July 18th from the Federal Reserve Agent at Ban Francisco, transmitting letter addressed to him by the Superintendent of Banks of the California, advising that due to a reduction in revenues caused by conversion into national banks of several large state branch banking insti- 58 -s- 7/28/27 tutions, it will be necessary for the Department to discontinue the practice of simultaneous entry in examinations of state banks which are members of the Federal Reserve 'ystem; the Federal Reserve hgent advising that simultaneous examinations have been made of all of the large banks with the exception of the Security 2rust and Javings Bank of Los Angeles, giving the Federal Reserve Bank reasonable time to continue negotiations with the Superintendent before the next year's examinations. Thereupon ensued g discussion as to the desirability of simultaneous examinations of state member banks operating branches in California in the light of the fact that the largest branch banking institutions, which caused the Board the greatest concern, have been converted into national banks and will be examined by the Comptroller of the Currency. Following the discussion, the Governor was requested to prepare for submission to the Board, draft of a letter to the Federal Reserve .:,gent at San Francisco along the lines of the discussion at this meeting. Letter dated July 19th from the Federal Reserve Agent at Dallas, transmitting copy, of letter addressed to the Comptroller of the Currency in connection with report of a recent examination of the First National Bank of Amarillo, Texas. Noted. iiatter approved on initials on July 25th, namely, letter to the Federal Reserve Agent at Atlanta, prepared by 1.:r. Gilbert, based upon an analysis made in his office of reoort of a recent examination of the Citizens 3ank of Lake Wales, Lake Ailes, Fla. Formally approved. Matter approved on initials on July 26th, namely, letter to the Federal Reserve Agent at _Anneapolis, prepared by 1:.r. Gilbert, and based upon an tt..t • 7/26/27 analysis :.lade in his office of report o2 a recent examination of the state Bank of Revere, Revere, Formally approved. ,Letter dated July 14th from the Federal Reserve Agent at Kansas City, replying to letter recently addressed to him by the Board regarding the condition of the Custer State Bank, Broken Bow, Nebraska, as disclosed by the last examination of that bank; the Agent expressing the opinion that if the bank is permitted to operate until September or October, and has not at that time restored its capital and in some manner effected a great improvement in its condition, action should be taken looking toward the forfeiture of its membership in the 3ystem. Thereupon ensued a discussion, duritw which 1,r. James suggested that a letter be addressed to the Federal Aeserve Agent at Kansas City, expressing the Board's doubt as to the advisability of temporizing in matters of this kind, but stating that in this particular case the Board is willing to let the matter rest with the judgment of the directors of the Federal Reserve bank due to the short period of time which it is proposed to allow the bank to continue as a member of the Federal Aeserve 3ystem without Improvement in its condition. Following the liscussion, upon motion it was voted to anpfov,3 ;r. James' suggestion. Letter dated July 26th from the Federal Reserve Agent at Atlanta, transmitting report of examination of the Citizens State Bank, Larianna, Fla., made as of Lay 30, 1927, together with an analysis thereof; the Federal Reserve Agent, with the approval of his 2xecutive Committee, recommending (1) that an examiner of the Federal Reserve bank visit the member bank to inform the officers and diroctors thereof that they must _ 60 -10- 7/41/27 dispose of stock of the bank they are now carrying to bona fide holders and take out of the bank such losses and doubtful assets as the examiner may ascertain to be in the bank at the present time, and (2) if this recommendstion'is approved, and its requirements are not complied with in sixty days after the visit of the examiner, that the Board cite the Citizens State Bank Of Marianna to sow cause why it should not surrender its stock in the Federal _Loserve Bank of dtlanta and forfeit all rights and -orivileges of memberz3hio In the Federal Reserve System. - ederal Reserve Upon motion, the recommendations of the l approved. were ..gent The Governor then presented the matter on which action was deferred at the meeting of the Executive Committee on July 21st, namely, 1ett:1er dated July 18th from the Federal Reserve L.sent at Chicago on the subject of coordination of the examination and bank•relations functions at that bank. The. Governor also presented a further letter dz-t d July 22nd from the Federal eserve Agent, replying to an inquiry as to the number of examinations and credit investigations made by the Federal Reserve bank since the beginning of the year. In his last latter, the Federal Reserve Agent stated that he does not propose immediately to increase his force Of examiners or assistants to eicht or ten as swogested in his first letter, but that the first step will be to try out on e::anination work the 17,;() men who are now engaged in bank relations work. Noted, it being understood that the question of - ederal any increase in the examination force at the Z Reserve Bank of Chicago will be taken up with the Board later. 61 -11- 7/28/27 • 2he Governor then submitted a report dated July 16th, signed by Mr. James, on letter dated July 14th from the Chairman of the Federal 3eserve Bank of ::Lichmond, with reference to housing, personnel, etc., for the branch of that bank to be established at Charlotte, North Carolina. I;ir. James requested that no action be taken by the Board on the above report, which nr. Hamlin stated he concurred in, as he (Mr. James) has discussed the matter informally with directors of the Federal Reserve Bank of Richmond and has arranged to make a personal visit to Charlotte far further conference. He stated that upon his return he will submit a further and more comprehensive report. action L:emorandum from Counsel dated July ilth, with reference to the Of the last Governors' Conference in voting' to reuest the 3oard to re- cottonseed consider its previous rulings to the effect that bran, flour, Oil, etc., are not "nonperishable, readily marketable staple aricultural products" within the meaning of that part of Jection 13 of the Federal 2.eserve 21ct with regard to the rediscount of sight and demand bills; Board has Counsel stating that in his best judgment the rulings which the and heretofore made are correct, and. that flour, bran, cottonseed oil canned goods should not be considered agricultural products within the meaning of the statute. In his memorandum, Counsel also expressed the opinion that no satisfactory solution of this problem can be breuht about except by an amendment of the statute rearding the rediscount of drafts. Sight and demand dra;ts, by striking out the limitation that such be secured by "aric.altural" products only. Lttention was called to the fact that such an amendment was considered by the Board at its meeting the on February 1st and that action was deferred until _ 62 7/28/27 -12- 113::t session of Congress. Accordingly, it vas voted that no action should be taken at this time, but that the proposed amendment should be brought to the attention of the Board 1.ater on. Memorandum from Counsel dated July 11th, submitted in accordance With the instructions i_Tiven by the Board at the meting on June 13th in Connection with the Board's consideration of the report submitted at the last Governors' Conference by the committee appointed by the Board to etudy the safekeeping function at the Federal :eserve banks. After discussion, it was voted that the above matter be laid on the table. The Governor then referred to the possibility of the Board receiving during the next week or ten days recommendations from the boards of directors Of the various Federal Reserve banks for adjustments in their rediscount rates. He called attention to the fact that frequently durinr: the past month or so there has been less than a quoram of the Board present and sugc:33ted that some ,-ctien should be taken by the Board which will enable rate •••• recommendations received from the Federal Reserve. banks to be acted upon .12rompt;1y. After discussion, Mr. Hamlin moved that authority be delegated to such member or members of the Board as may be present to give approval to any recommendation received from any Federal deserve bank for a reduction in its rediscount rate to 3. 1/2 per cent. Hamlin's motion being pat by the Chair was carried. 2he Governor then presented letter dated July 19th from the Governor Of the Federal 'deserve Bank of, New York, transmitting copy of an agreement 63 —13— 7/28/27 made an with the Bank of Poland, in which fourteen banks of issue have pledr,e of arrangement for one dear for the sale, or in some cases, the nt — prime con:_ercial bills up to an equivalent of „:20,000,000, the agreeme 000 of such of the Federal "eserve bank bein:: to purchase up to ,5,250, bills. With his letter, the Governor of the New York bank also trans— ent of the mitted copy of the program for stabilization of the Governm promulgation of the Republic of Poland, stating that until the final legal effective, program the agreement of the central banks does not become of the and that if the legal promulgation of the -program and the issue ated before loan by private bankers therein provided for are not consumm unless an ex— AtKust 20, 1927, the agreement shall not become effective tension of time is arran -ed. The above letter and enclosures, having been brought to the Attention of all members of the Board,was ordered filed. The minutes of the meet in' of the Federal eserve Board held on July 13th were read and approved. the Federal The minutes of the meetings of the Executive Uorznittee of motion, the 2.eservo Board held on July 15th and 21st ;:ere read and, upon actions recorded therein viere ratified. held on July The minutes of the meting of the Federal deserve Board 27th were read and approved. REPOLTS OF STANDII:G 002.11IT2E Dated, July 21st, 26th, 27th, 28th, Recommending changes in stock at Federal Jeserve Banks as set forth in the Auxiliary Minute Book of this date. Aecommendations approved. 64 7/28/27 -14- REPORTS OF STANDING COMMITTEES: (Cont'd) Dated, July 23rd, 25th, 26th, Dated, July 21st, Dated, July 21st, Dated, July 22nd, Dated, July 22nd, Dated, July 22nd, Dated, July 25th, Dated, July 25th, Recommending action on applications for fiduciary pavers as set forth in the Auxiliary Linute 3ook of this date. Recommendations approved. Recommending approval of the application of lir. Frank J. Steen for permission to serve at the same time as director of the Third National Bank, dalden, N. Y., and as director of the Highland-uassaick National Bank and Trust company, Newburgh, N. Y. Recommendation approved. Recommending approval of the application of Mr. Lewis E. Bliss for permission to serve at the same time as director of the National City Bank of Los Angeles, Calif., as director and officer of the California Bank, Los Angeles, . Calif., and as director and officer of the California Trust Company, Los Angeles, Calif. Recommendation approved. Recommending approval of the application of Mr. Clarence M. Brown for permission to serve at the same time as director of the Central National Bank, Philadelphia, Pa., as director of the Guarantee Trust and Safe Depostt Company, Philadelphia, Pa., and as director of the Chelten Trust Company, Philadelphia, Pa. Recommendation approved. Recommending approval of the application of Li'. 2ud6lph A. Damn for permission to serve at the same time as employee of the Overbrook National Bank, Philadelphia, Pa., az!;d as employee of the Central Trust and Savings Company, Philadelphia, Pa. Recommendation approved. Recommending approval of the arplication of Mr. William H. Merker for permission to serve at the same time as Assistant Cashier of the M,rket Street National Bank, Philadelohia, Pa., and as director of the Wyoming Bank and Trust Company, Philadelphia, Pa. Recommendation approved. Recommending-approval of the application of Mr. George J. GrifLiths for permisSion to serve at the same time as director of the Standard Trust c7; 3avings Bank, Chicago, Ill., and as director of the :rational Builders Ban, Chicago, Ill. Recommendation approved. Glen L. ecommending arproval of the application of Dark, for permission to serve at the same time as director and officer of the Tradesmens National Tian, Oklahoma City, Okla., and as director and officer of the American National Bank, dalters, Okla. Recommendation anproved. 7/23/27 -15- tOont Dated, July 26th, 2,ecommending approval of the application of L:r. eharles i. Blackford, Jr., for permission to serve at the same time as President and director of the Peoples Trust and Guaranty Jompany of Hackensack, i. J., as director of the Jtapleton National Bank, 3t.4ten Island, 1. Y., and as Vice President and director of the '2eaneck ilational Bank, Teaneck, 17. J. Aecomilendation approved,. The meeting adjourned at 12:30 p.m. clb ,,ssistant E3ecretarir 2.1pproved:
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