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597 meeting of the ?ederal -eserve 3oard. was held in the office of the Federal ...aserve Board on 2aesday, June 25, 1927 at 11:00 a.m. overnor Crissinger :Ir. :filer 1.74-. James 11.--aa r. Cunn :1CIntosh Eddy, Secretary 17.r. 1:cClelland, Asst. Secretary The Governor announced that the torn of 1:r. Liiller as a member of the .2.xecutive Comittee expires on June 30th, and accordingly - 7ames was dosinated to serve as regular member of the Committee during the quarter beginning July 1st. Telegram dated June 24th from the Chairman of the Federal ,ieserva 3ank of Ohica.rm, advising that the board of directors at their meeting on that late made no chanc:e in the Jank's existing schedule of rates of liscount aud purchase. Letter dated June 25th from the Federal _Wserve t :_innea_,o is, advisinj that the Federal .2,eserve Bank of ::innal)olis will notify all 2edexal Of eserve banks of its return, on July 1st, to its former method handling non-cash items. deport of :_xocative committee on letter dated June 25th from the Co:.lotroller of the Currency, rocoi:1 adding a,)proval of a salary of „;2700 :er annum for ::ational Bank Examiner Benjamin - ned to the assi ; 'Jellth federal _aserve District; the Committee recom:nondin-: a )roval. Approved. 598 8/28/27 NW,.MI Matter approved on initials on June 24th, namely, telegram dated June 24th from the Chairman of the Federal L-Zeserve Bank of Chicago, requesting approval of a salary of :7,000 per annum for Mr. H. J. Chalfont promoted to the position of Cashier of the Detroit Branch and a salary Of .:;6,500 per annum for Mr. John G. Baskin appointed Assistant Cashier Of the Branch, both effective July 1st. Upon motion, the salaries recommended were formally approved, effective July 1st. 2e1egram dated June 25th from the Federal Reserve Agent at San Francisco, advising that the Bank of Italy rational rust and Savings Association, under authority granted by the Comptroller of the Currency, tj has absorbed the Orange County Trust and Savings Bank of Santa Ana, a member bank, aid under date of June 18th consolidated it with their existing branch at Santa Ana. :oted. Letter dated June 20th from the Federal _teserve Agent at 3an Francisco, transmitting and recommending approval of an application of the pacific Southwest 2rust and Savin:s Bank, Los Angeles, for permission to discontinue the branch being operated at 222 :ast cueen Street, Inglewood, and to transfer the business thereof to the branch located at 101 Commercial Street, Iaglewood. Approved. Ilemoranda dated June 27th from the Committee on Salaries and ExPonditures with re6-ard to the action of the directors of the Federal eserve '3anks of Chicago and Kansas City ia votinr. to authorize the payment of the 599 6/2,6/27 ; rec:ular semi-annual dividend ou June 5Qth, 1927; the Co2.2.1ittee 2G.:-)ortinf".7 that the c.-arent net earhinL:s of the banks for the first six months of the year %AA1 be in excess of accried dividends for the same period and mIcomnondinn app_ val of the dividend payments by the Board. A..vnrovad. The Jecretary then presented a letter dated June 9th froin the Dei.- )uty Governor of the federal deserve 1.3aafr: of San :?rz.u.cisco, referri:. - 7 to in,, - :dries concerning the t,uestio;i of renewals by 'oanks of loans made to veterans under the terms of the 'Ionia 'Jar dd.us ted. iom)ensatio:i ....et and. -.:he then bands have sa- e orivilee with reference to a renewal note as in the case of the c)riclual note 1)articularly as to redemption by 'Lzrea.a if the note is not the iirector of the Ve.torans )(9..id. The Secretary presented a letter dated. uno 22nd from the Assistant Director of the United States 70t,.)rans 3,_;.reau, advisi= that renewals will be considered. by the Bureau as now loans and no:: notes redee!.e.d. not less than six :..eLiths from the date of such notes. Upon recontne.idation of the Jecretary, the Board voted that a circular letter, settin.: forth the advice received from the 7,Tetera.ls Bureau, be addressed to all Pede-...•al ;,;013, 1*V3 banks for their information. Letter dated June 24th from the "Jovernor of the federal .,:eserve Ban:: of ::innoal:olis, advising that he has revuestc. , .d. all 'federal .}Lesc)rve ban:, ,s to transmit to the Board their views with /A3sect to the advisability O COlatiaLlin 1.1.1)1,11 the federal deserve far list certain nonmember banks in the :Until, 'Federal deserve District which are ria",:iirj: a chare of 25c:, 011 ever,; check returned to the!: because of insufficient funds, the charge beiar; made against the ban:: -„hich sends them the item; the letter ret:aest- 600 6/26/27 ing a definite ruling from the Board, as soon as it has heard from the Other Federal lieserve banks and considered the (Alestion, as to whether or not the Federal Lieserve bank can accept and allow a charge of this kind. In this connection, the Secretary submitted letters dated June 27th from the :Avernors of the Federal 2.eserve Banks of Cleveland and iiiChmond, expressing their viemon the subject. After dIscussion, action was deferred and the Secretary was recested to report to the Board an: consideration which has been given in the past to this or any similar practice. Telegram dated June 27th from the Governor of the Federal L.;,eserve Bank of Dallas, requesting that effective July 5th, the date on which it Will open for business, the San Antonio Branch be authorized to perform for the Treasury Department so-called subtreasury functions now performed by other branches. Upon motion, it was voted that the application of the Dallas bank be transmitted to the Secretary of the Treasury with the Board's approval. The Governor then presented a letter dated June 20th and telrams dated Juno 23rd and L7th from the ;.overnor of the Federal Jose rye Bank of Dallas, submitting for approval by the Board a proposed time schedule between the 3an Antonio Branch and other Federal lieserve banks and branches, and advising that the schedule is satisfactory to all other Federal :ieserve banks After discussion, the schedule submitted by the Dallas bank was approved as follo=: 1 Jay Dallas Houston ii* 601 -5- V28/27 1/ 2 Days Birmingham Chicago :1 Paso Kansas City Tittle Hock Louisville Lorivhis ashvillo I:aw Orleans Oklahoma City St. Louis 3 Da:vs, Atlanta Baltimore 3uffalo Cincinnati Cleveland Denver Detroit Jacksonville Los Angeles Lanneapolis :ow York Omaha Philadelphia Pittsburgh LI. Days '-3o ston Helena Portland. 11 damond Salt Lake City San Francisco 5 Itaxs Seattle Spokane Reference was mode to the recommendation Governor Talley's telegram of June 27th, that changes in the interdistrict time schedule as Houston and 721. Paso and other Federal - eserve proved by the Board. contained in certain other • between Dallas, points be ap- The Secretary called attention to the fact that at the recent Governors' Conference the Standing Committee on Collections submitted for consideration a proposed new interdistrict time schedule and that the Board approved recently the action of the Conference in voting to refer the nroposed schedule to all banks for study. He suggested that action be deferred on the changes suggested by the Federal aeserve Bank of Dallas 'oending the complete revision of the schedule. Upon motion, the Secretary's suggestion was a:Troved• • €02 6/28/27 -6- e.eport of 'ionaaittee on the 2ederal aeserve 3a.11 D i3 t rict submittinr; by-laws 2.2ro-eosed by of Jealas for the San Antonio 3ranch and recom- mendin3 approval with one amendment, namely, that Section 4 of Article V Of the by-laws be amended so as to provide that the Cashier of the Branch shall annually be desiz.eated to eerforre the routine duties of Ilaea.ger of the branch in the absence or disability of the 2irector. in this connection, the 3ecretaey called attention to the fact that in the proeosed by-laws the territory to be assied to the 3ranch as ereviously apl?roved by the 3oard, has been el]larL;ed by the transfer from the 1 Paso leanch territoxy of the counties of Tradster, ?residio and Thrrell. Upon motion, the by-laws as eebmitted were al:frproved -.;it'e the amanleent to Sect ion 4 of 1 reco'zienled by the (Jommittee. Upon motion, it wae also voted to approve the transfer from the ".:1 Paso to the .:3an 41ntonio Branch territory of the counties of 3ree•ster, Presidio and e'errell. Letter dated June 25th from the Governor of the 'Federal :eserve Baz of Philadel)hia, acknowledE;in; rec.eil,t of and commenting -epon the Eoard's letter (X-4887) advisine; that the Boa x1 is not in harmony with the view of the recent Governors' ;;onference that in ,2rinciple, the Tedoral lieserve Banks should be reimbursed for services 1,erformed for governmerit agencies other than the ".2reasure,-, when the e:e ense involved Is suffie ient to justify the ba eks ashina for reimbursement. Ordered circulated. Letter dated June 25th from the .rederal aeserve Agent at San i'rancisco, acknowleds.ing receipt of the Board's letter of June 14th, direct- f,"4 €03 3/27 in: the ,=.ont, illaeeoraance eith snifom instructions contained in 2oard's letter dated Aj)ril h, 19 t113 to eeort to the 7flitea States District Lttec.ie:, at Los AelLeles colt- 3'n al)2avent criminal 7io1ations of to 1-edera1 .eeserve t a-1 ',he 'Tn...te .;tatae ewised .2tatetes -0,- ; officers and ere„,loyees of the 2acific Jouthwest 2re(st and :;v1 Of Los .111,L;elee, forwarC.ie hank coeies of such report to the Board in order that the .eard _a, transmit a cooy to the De2artm nt of Justice; the Lent stating that the matter has been thorousilly discussed with other officers Of the San Francisco th and 4g.gestin,fs that before the action set gat in oard's letter of Juno 1,1-th is taken, the Bank's ?.ounsel and he bo -17,311 an o_ortunit-y to aa;ear before the P,oard for a discussion of lanai and practical as:2ects of the matter. In this connection, the eovernor also presented a telexam dated June 27th from the 2ederal .,e3serve nkont advisieg Of newsl.)aper reports that indictments have been filed against the President f and certain other officers and a director of the bank. :.ttention was called to the fact that the indictments referred to in the keout's telecram are in connection with violations of State law and discussion ensued as to the action of the '2eaeral .leserve nkoit in aeferrinr: a report to the United States District Attorney of apparent violations of 2edera1 law and his s-ecjcestion that befom such report is made he be given an opportunity alecues the natter ,)ersDnally with the hoard.. Fellowin the discussion, James moved that the federal ..Zeserve .Se,sent be ad-fised that if they desire to confer vrith the hoard, he and the Dan's e'ounsel should come to 'Jashin:eton ieTeediately. 't; €04 612427 .ir. Cunningham moved, as a substitute for L:r. James' motion that the 3oard reiterate to the Federal 2.eserve Agent its instructions set out in letter dated June 14th that he report the apparent criminal violations of the Federal .teserve Act and. the United. States lievised Statutes to the Jnited States Diatrict Attorney at the earliest practicable time. :ir. Lilller moved. as a substitate for :ir. James' motion that inquiry be made of the Federal eserve Agent whether, in view of the change in the situation reported. in his telegram of June 27th to the effect that newspapers report that indictments have been filed against the ?resident and. certain other officers and. directors of tile Pacific Southwest Trust and Savings 3ank, he still feels it desirable to coma on to 7ashington to present his views in connection dith the situation. :ir. 1:flier's substitute motion was -out by the Chair and. lost, the members voting as follows: "aye" Lir. McIntosh, "aye" .Governor Criss inzer, "no" Cunningham, "no" .-.1"r• James, "no" :Ir. Cunningham's substitute motion was then put by the Chair and, lost, the members voting as follows: 1 Govemo r Crissi%,er, "aye" • OunninEtam, "aye" Mr. James, "no" • McIntosh, "no" "not voting" Mr. James' original motion was then put by the Chair and lost, the members voting as follows: Mr. James, ay a" Mr. LoIntosh, "re" Gover,lor Crissinger, "no" • (.1unninj1ani., "no" Mr. Miller, "not voting" 605 6/23/27 -9A further discussion then e:as-.e.1, foil in which lierresubmitted a,,d. moved. adotion of his motion that i_vjuiry be ratide ).C.' the 2- 0ciciral J.0sorvo A:;ent whether, in view of the chan4;e in the situzation reported in his teleL-,rara of June 27th to the effect that newspapers report that indictments had. been filed. ar'ainst the President and certain other officers and. d!roctors of the 7acific 3outhwest .2rast and. -3avi.ac-s hank, he still fJels it desirable to come on to •:ashiniiton to present his views in connection with the situation. killer's notion be 1.7,1'; it by the Jhair was carried., the r...c.,-...bars votin,y, as follows: "aye" Ja3:7 s, "aye" r. Llntosh,rtazie,f Governor ''.2rissins'er, "no" •:sam, "no" s o_inion there is Governor CrLsins'or stated. ..4 ,hat in as : officials of the Federal no ,:arrant for the hoard to brill, .eserve ;an:: of Jan 17rancisco to '..rashinr-ton at a lar:e e:.723nse , where there are plain violations of Ia.:, and when three senior Ba2k have officers of the Pacific 3outhwest 2rast already been indicted. ::e stated. that in his opinion, the Board. should. direct the Federal .3..:..,serve 2....L;e,it at 3an ?rancisco to relort those violations to the ':nited States his trict 41ttorney. Jones stated that in view of the ,uestions of ler7alit:ralsed in the letter from the Federal _Zeserve A,:ient, as :ell as the , uestions of policy and '.)::-.edinscy involved., he thou-iit it most advisable that the oard. should be fully informed_ before :Jo:dn,: any report to the he art.ent of Justice of the apparent criminz.1 violations of law. ::.r..7.::c.Intosh stated that he concurred in the view o:-:pressed by ;Lir. James. The mi-Autos of the metin,s' of the 7ecieral eserve hoai3. held. on June were then road and approved. The Jecre,tar,r..' then oresentc)d. draft of a telecraI.1 to the Federal '.H:eserve ..'ent at 3ana cisco,advis iniL; of...the action ,,:ast a ci b the :3oard with l'os:cect to the pacific Southwest. Trust and 3aviirs hank. Upon motion, the telep:ra-.. 1 7,tas approved. eG6 6/28/27 -10- 1- -E.P0..?..T.(73 OF 3:2:-1..)II,11Dated, June 27th, Dated, June 22nd, aorcl, 24th, Jated, June 23rd, Dated, June 25th, Dated, June 25th, ,ecoirLiendinE: chances in stock at 'Federal -eserve Bans, as set forth in the Auxiliary :.:i-nute Book of this dote. _ecorrnendations a2p roved. ec_vinandin7 action on al;plications for fiduciary powers as set forth in the Auxiliary mute Book of this date. ecornmendations a pi:ro yea. ,ecommendinti: aTroval of the a!)plication of LIr. Leon Littie, for pen.iission to serve at the S3.2.10 time as Assistant Vice President, :irst ::ational Bank of Boston, :lass., as 12rosident and director of the First ::at ional Bank of IDswich, :ass., and as director of the 3.-Lie of :,:ilton, ::ass. aecorz:.'leldation a,,proved. Jecormendinr: a2:roval of the aix). ieLtion of ::r. George 3hriver for Dermission to serve at the same time as director of the Jitizens :ational Bank, Baltimore, and as director of the 2 - 1--an,:lin-_:ourth itreet 1":ationa1 Ban]:, :hiladell)hia, Pa. .•Ocorrzneidation a oproved. .,ecommendini. approval of the a,folication of I.:I . Frank , i. Baker, for permission to serve at the sa,,e time as rector of director of the irie aiti nal Bank and as th of Philadeltlhia, .rust Compalv, the :,:ortg4.-.).);e 2a. 2.ec ornmenaat ion aim-roved., The rdeetih.: adjourned at 12:30 3ecretary. Approved:
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