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508 A meeting of the Federal Reserve Board was held in the office of the Pederal Aeserve Board on Friday, June 10, 1927 at 11:30 a.m. PRESENT: Governor Crissinger Mr. Platt Mr. Hamlin Mr. James Mr. Cunninghan Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The reading of the minutes of the meetings of the Federal Reserve Boari hela on June 8th and 9th was dispensed with. Memorandum dated June 8th from the Director of the Division of Research 441 Statistics, submitting the resigmtion of Miss Demma Shumate, an employee of the Division, and recommenitng that it be accepted as of July 19th and that 11153 Shumate be granted the customary thirty days leave of absence. Upon motion, the recommendation of the Director was approved. Letter dated June 9th from the Assistant Secretary of the Federal 4eselve Bank of New York, advising that the board of directors at their teetblig on that day made no change in the bank's existing schedule of rates cliseount and purchase. Noted. Letter dated June 9th from Shearman and Sterling, attorneys for the ilatiotal City Bank of New York, advising that the branch which the bank 448 Maintained at San Francisco de Macoris in the Dominican Republic will be closed as of the close of business June 11, 1927. Noted, Telegram dated June 9th from the Federal Reserve Agent at Kansas City, 509 - 6/10/27 —2-Trust that a credit investigation is to be made of The Commerce 41111D8.ny on Juno 11th in conjunction with a regular examination by the State Banking Department and Clearing House Association and requosting kthorization to designate certain employees of the bank as Assistant 4asliners and detail workers in connection with the investigation; together ng With a proposed telegraphic reply, prepared by the Secretary, authorizi the Federal Reserve Agent to designate certain employees of the bank as Aasiatant Examiners and requesting that he later telegraph to the Board will wire formal the names of those designated,followingwhich the Board 411PrOvai, Upon motion, the proposed telegraphic reply was approved. dated aeport of Committee on Salaries and Expenditures on letter INV 25th from Kansas City, the Governor of the Federal Reserve Bank of NIlesting approval Of a contribution by the bank to the Chamber of 4mMerce of Kansas City of .500 a year for a period of five years in industrial 4411action with a survey to be made of the possibilities of ing approval. c144taion in and around Kansas City; the Committee recommend Approved. by the Executive Memorandum from Counsel dated June 1st, approved 2Dth from the e°1ritaittee, submitting draft of reply to letter dated May 4.11clitor of the Mississippi Valley Trust Company of St. Louis, inquiring %ethar a dividend declared on May 11th payable on July 1st to stockholders of l'ecord on June 20th is subject to reserve requirements from May llth, to 4'141a 30th, inclusive; the proposed reply answering the inquiry in tbe 510 6/10/27 -3- Ilegative and stating that while the declaration of a dividend creates a liability it does not create a deposit liability against which reserves mast be maintained. Upon motion, the proposed reply was approved. 1,:emorandum from the Governor dated June 7th, approved by the 11xecutive Committee, with reference to a proposal of the :0'ederal ..eserve Bank of )- nneapolis to offer to its employees the privilege of taking out additional life insurance in an amount equal to that provided by the bank at its own expaase, %/hich additional insurance would be purchased by the bank and ' lesold to the emolees at a rate of fifty cents a month per ,,1,000; the GQIrernor recommending aoproval of the proposal of the Minneas,)olis bank, Sta.till that a recent survey of employees' insurance in effect at the 'secleral 4eserve Banks shows that the Federal ,Leserve Bank of ;:ansas iity ' psorus annually about .?l,,4.00 in connection with additional insurance Issued. to its em doyees - the rate at which the Federal eserve bank 4elle the insurance beim: the same as that proposed by the Minnearolis /344.4 :thich estimates that it will be ca_led upon to absorb annually from 200 to 4 1,800, dependinr_; upon the number of emIdoyees who elect to ' 411 ' ta e the additional insurance. Upon motion, it was voted to approve the proposal of the Federal 'eserve Bank of Minneapolis as stated in the Gov erno r's memo randum. -e. port of Committee on :;xaminations on letter dated Lay 28th from tho _ eederal :Aeserve Ment at Linneapplis, transmitting and recommending 41)151tval of an application of the State Bank of 1.Iadelia, ::inn. for ap- r 511 6/10/27 -4- Pr°17al of the absorotion by that bank of the .Yirst Zational Bank of 71.1ade1ia; the Committee submitting analyses of the condition of the two /344.4s involved prepared by Mr. Gilbert and his recommendation that the .011s01idation, which was effected several days ago, be not approved by the -A; the two .embers of the Ool..illittee submitted individual reports, Mr. Platt recommending approval of the consolidation and Mr. Cunningham diss Dproval. After discussion, Mr. Cunnintjham moved that in view of the analyses prepared by Mr. Gilbert and his adverse recommendation, copies of the analyses be for.arded to the Federal Reserve Agent at Minneapolis with a request for his further recommendations as to whether the State Bank of Madelia shoula be permitted to continue as a member of the Federal deserve System. Ii ?he Governor called attention to the fact that the Comptroller of the Currency was undoubtedly aware of the proposed consolidation and suggested that no action be taken until the Comptroller returns from a Short absence from the city which will probably be on Monday. By unanimous consent, action on Mr. Cunningham's motion was deferred until a meeting at which Mr. McIntosh will be present. Letter dated June 9th from the Chairman of the Federal iieserve Bank of aiehm -.0nd, advising of the action of the board of directors of that bank 14 electing as directors of the proposed Charlotte Branch Mr. Hugh Leach, 111(/ is at present Auditor of the Bank, Managing Director, Mr. W. H. Wood, 4esictent of the American Trust Company of Charlotte, and Mr. W. J. Roddey, 440 Chairman of the Columbia National Bank of Columbia, S. C.; the Chaira150 advising' that subject to the approval of the Board the salary of 11r. Leach as :Ianaging Director has been fixed at „;7500 per annum, an ta' 44e from „6500, and. that of 1:r. W. T. Clements as Cashier of the Branch ii 512 6/10/27 -5- at 44500, an increase from 43900, which salary he now receives as a member of the Bank Relations Department. After discussion, the above letter was referred to the Committee on District #5 for recommendation. Memorandum dated June 9th from the Secretary, submitting report prePared by Mr. A.B. Trowbridge, Consulting Architect, in accordance with the request made of him by the Board on May .4t1i, relating to the plans arid specifications of the proposed vault to be installed in the Baltimore 4411011 Building and to certain anparent irregularities in connection with bidding on the proposed vault. Upon motion, the above report was ordered circulated and made special order of business for a meeting to be held on handy. The Governor then submitted a letter dated June 9th addressed to him 13 the Chairman of the Open Market Investment Committee containing a resume Of °Pen market transactions since the last meeting of the committee and "rnMenting on the outlook over the midyear period. The Governor stated that Governor Strong advised him yesterday over the telephone that the l'aderal lieserve Bank of New York has purchased from the :leichsbank and e4rnlarked abroad 42,600,000 additional of gold, making a total of gold Qarmarked abroad of between 462,000,000 and .p53,000,000. atatea The Governor . that Govera)r Strong this morning advised him that conditions. alla so shaping themselves as to probably make it necessary for the FedIleserve System to convert this earmarked gold into earning assets th1 ' °11Ch the purchase of bills abroad. The Governor then presented a letter dated June 7th from 1,:r. John J. °tOonnor, Manager of the Finance Department of the Chamber of Commerce of 513 6/10/27 -6- the United states,transmitting copy of letter addressed to Honorable Louis T. 1:ePAAA Chairman of the Committee on Banking and Currency of the House of IePresentatives, with reference to the provision of Section 9 of the 1:0Fadden et that "no such state bank may retain or acquire stock in a Federal Reserve 844k except upon relinquishment of any branch or branches established after the date of the approval of this act beyond the limits of the city, town, village in which the parent bark is situated", which apparently makes it Ilinawful for a State bank member of the Federal Reserve System to establish elen branches except u-oon forfeiture of membership in the System, and likewise, makes a State bank nonmember ineligible for memtership except 1113°Il relinquishment of any foreign branches which may have been established ellb8equently to February 25, 1927; the letter to the Chairman stating that 311c11 a result was not intended by Conress in enacting the 1:0Fadden Act 44ci euggesting an amendment excepting foreign branches from the provision reecrx,ed to. Referred to the Law Committee. CO=ITTEES: June 9th, Recommending approval of the applicatio of Lr. Alvan 1:acauley for permission to serve at th ame time as director of the National Bank of Comm e Detroit, Mich., as director of the Guardian Trust Co Ay, Detroit, Lich., aLd as director of the Guardian Lie Bank, Detroit, ::ich. Approved. ?he meet djourned 12:00 441,07ea: Secretary Govern
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