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(11 meeting of the Federal Reserve Board. was hold in the office of the Federal deserve Board on Tuesday, June 30, 1925 at 11:30 a.m. , 7 'R''.'.5.3731,72: Governor Criss inger Mr. :Platt :Ir. Janes Mr.. McIntosh Secretary The minutes of the Tneetin- of the Federal ieserve -ieara held on June 26th were read. and approved as amended. :,:emorandum dated June 26th from the Division of '.:mmination, recommendin,7 approval of an aryolication of the First National Bank in .ebst,er Groves, Missouri, for original stock (69 shares) in the "Federal Reserve 3ank of 1t. Louis, effective if and when the Comptroller of the Currency issues a certificate of authority to commence business; the sane having been approved yesterday on the initials of two members of the 7,xecutive Formally a,:,provod. Memorandum dated June 26th from the 1)ivision of Hx.a2.-lination, recommendint3 azyproval of an explication of the first National 7an:-c in Lidgerwood, North Dakota, for oric7ina1 stock (18 shares) in the -20,,.'eral Reserve Ban'tc of :Ann .a-polis, effective if and when the Corrmtrolfer of the Currency issues a certificate of authority to commence business; the sane having been approved yesterday on the initials of two members of the Executive Corani ttee. Forlfially a -oorovecl. Memorandum dated. Juno :37th from the )ivision of Examination, recommend.ing aoproval of an s. ) - plication of the ,3,,ate tionsa Bank, C) -2- 6/30/25 Lovelady, Texas, for original stock (17 shares) in the Federal deserve Bank of Dallas, effective if and when the Comntroller of the Currency issues a certificate of authority to commence business; the same having been approved yesterday on the initials of two members of the Executive Committee. Formally anproved. Llemorandum dated June 29th from the Division of Examination, recommending ap)roval of an application of the Manufacturers Trust Company of Na York for additional stock (3,000 shares) in the 2edera1 deserve 3ank of New York; the same havin7 been aoproved yesterday on the initials of two members of the Executive Committee. Formally anprovqd. Memorandum dated June 29th from the Division of Examination, recommending approval of applications of the Fifth National Bank, and the Gotham National Bank, both of New York City, for surrender of stock (1500 and 1800 shares, respectively) in the Federal deserve Bank of New York, that of the Gotham National Bank to be effective if and when the Comptroller of. the Currency issues notice of liquidation; the same having been approved yesterday on the initials of two members of the Executive Committee. Formally approved. deport of Committee on Salaries, Expenditures and Efficiency on letter dated June 27th from the Comptroller of the Currency recommending approval of an increase from 49,000 to :,y9,500 per annum in the salary of Chief National Bank Examiner Ellis D. dobb; the Committee also recommending armraval. Approved. , 6/30/25 Letter dated June 27th from the Chairman of the Federal Reserve Harris as Secretary Bank of Chicago, advising of the election of Mr. E. L. r year. of the Board of Directors of the Bank for the balance of the calenda Noted. as his Mr. McIntosh stated that he had appointed Mr. S. E. Kimball effective Secretary and fixed his salary at the rate of c;2600 per annum, July 1, 1925. 24th from Report of Committee on Examinations on letter dated June the Federal Reserve Agent at Boston, recommending approval of an applica extension tion of the Inman Trust Company, Cambridge, Massachusetts, for an the branch until February 1, 1926, of the time in which it may establish ee also approved by the Board for Central Square, Cambridge; the Committ recommending approval. Approved. on Report of Committee on Salaries, Expenditures and Efficiency Bank of letter dated June 25th from the Governor of the Federal Reserve to the Board as Atlanta, advising that the expenditure of :425 reported a contribution to the "Nashville Booster rip" should have been reported as traveling expenses of the Manager of the Nashville Branch while on y; bank relations work through western Tennessee and southwestern Kentuck the Committee recommending apuroval of the expenditure. Approved. ncy on Report of Committee on Salaries, :]xpenditures and Efficie 11 -4- 6/30/25 letters dated June 25th and 26th from the Federal Reserve Agents at Cleveland, Atlanta, Chicago and Kansas City, submitting recommendations for the designation of Assistant Federal deserve Agents at the branches of those banks to serve during the six months' period ending December 31, 1925; the Committee recommending arproval of the designations. Upon motion, the following Assistant and Acting Assistant Federal Reserve Agents were designated for the last six months of the year: Pittsburgh Cincinnati New Orleans - Detroit - Omaha Denver Oklahoma City - T. M. Jones P. J. Faulkner E. Miller J. A. Stevens (alternate) J. G. Baskin W. C. Schrader (acting) T. G. Sanders D. C. Meigs O. A. Leamon Letter dated June 25th from the Assistant Federal Reserve Agent at Minneapolis, advising of the action of the Board of Directors of that bank in abolishing the office of Assistant Federal Reserve Agent and Auditor at the gelena Branch, transferring the present incumbent, Mr. H. L. Zimmerman, to the head office and providing that there shall be held at the branch an average stock of 2,500,000 of issued currency, all changes effective July 1st. Noted. ,deport of Committee on Salaries, Expenditures and Efficiency on letter dated June 24th from the Federal Reserve Agent at Boston, suggosting that the salary Of Assistant Federal Reserve Agentsbe charged to general overhead rather than allocated to the several derartments under the supervision of the 445 -5- 6/30/25 Agent; the Committee submitting memorandiun from the Chief of the Division of Bank Onerations, dated June 30th, commenting on the suggestion, and stating that consideration is being given to a revised manual of instructions in which it is hoped to devise some plan which will beentirely satisfactory to the Federal Reserve Agents and at the same time fairly reflect orerating Costs. Noted, and ordered that the Federal Reserve "Agent at Boston be advised accordingly. Ilemorandum dated June 30th from the Chief of the Division of Bank Operations, referring to letter dated June 25th from the Federal Reserve Agent at Chicago concurring in a suggestion made to him by the Federal Reserve Agent at Philadelphia that the salary of Assistant Federal Reserve Agents be charged to general overhead rather than allocated to the several departments under the surervision of the Federal Reserve Agent; the Chief of the Division calling attention to his other memorandum of this date regarding a similar suggestion by the Federal Reserve Agent at Boston. Upon motion, it was voted that the Federal Reserve Agents at Philadelphia and Chicago also ,be advised in accordance with the mmorandum above referred to. Draft of letter to the Federal Reserve Agent at San Francisco, who is for Chairman of the Federal Reserve Agents' Conference, submitting as a topic the next conference, the report recently submitted by the Sub-Committee on • the Bank Examination and Credit ?unctions of the Federal Reserve banks which indicates that at present a uniform policy with reference to assessing the costs of examinations against state member banks examined is not being followed 6/30/25 • -6- 44( by all Federal Reserve banks and requesting that the Agents at their next conference draw up a set of rules sufficiently specific to insure that the scone of bank examinations and credit investigations will be ; substantially uniform in all districts and that as a result charges against member banks to cover the cost of examinations will be made on the same basis by all Federal Reserve banks. Upon motion, the proposed letter was approved. Draft of reply, prerared by the Committee on Examinations, to letters dated June 19th and 24th from the Federal Reserve Agent at Chicago, on the subject of branches recently established by Michigan state member banks without the approval of the Board; the proposed reply stating that the Board has no intention of seeking to prevent the establishment of branches in Michigan by well-organized institutions with ami)le capital but believes that application should be made, formal or informal, for the approval of the Board before branches are opened, and further, that if the additional offices to be opened are merely "tellers windows", a notification to the Board of intention to Open, with the endorsement of the Federal Reserve Agent, will be sufficient. Upon motion by Mr. James, the proposed letter was approved. Letter dated June 26th from the Federal Reserve Agent at Dallas, suggesting that the Board employ srecial counsel for the System as a whole, on a retainer basis, so that such Counsel would not only be available for cases like the Atlanta and San Francisco par clearance suits, but could also act as a clearing house for the legal departments of all Federal Reserve banks, and -7- 6/30/25 suggesting further that this matter might be made a topic for consideration at the next Conference of Governors and at the Conference of Federal deserve Bank Counsel which will be held in Washington on July 13th. Upon motion, it was voted that the suggestion be made a topic for consideration at both the Governors Conference and the Conference of Counsel. Letter dated June 26th from the Federal deserve Agent at Kansas City, ' advising of the action of the Board of Directors of that bank in abolishing the office of Assistant Auditor at its branches and advising; furthor that the salary of Mr. T. G. Sanders, who formerly held that position at the Omaha Branch, has been reduced from :3700 to .7;2700 per annum and that of 1.1r. Smith, formerly auditor at the Denver Branch, from ,3300 to ..2600 R. per annum, both effective July 1st. Noted. Letter dated June 26th from the Federal deserve Agent at Boston, transmitting copy of a letter from Mr. "Alliam W. Russell, Treasurer of the National Life Inaurance Company, Montpelier, Vermont, who was nominated for election as Class "B" Director of the Federal deserve Bank of Boston, requesting that he be furnished with a cony of the opinion of the Board's Counsel that an officer of an insurance company is not eligible to serve as a Class "B" Director of a Federal Reserve Bank. Upon motion, it was voted to defer action on the request until Counsel submits to the Board a form of letter to all Federal Reserve banks advising of the opinion. 6/30/25 -8- Letter dated June 27th from the Chairman of the Federal Reserve Bank of St. Louis, inquiring; whether there would be any objection to his taking a vacation of three meks or a month beginning about July 1st; together with telegraphic reply made yesterday on the initials of two members Of the Executive Committee advising that the Board will not object to his taking: the vacation. Upon motion, the telegram was formally approved. Telegram dated June 29th from the Federal Reserve Agent at Kansas City, advising that a considerable amount of currency is likely to be needed by Denver banks in order to take care of a possible emergency, and requesting that arrangements be made with the Comptroller of the Currency for the direct release to the Branch Federal Reserve Bank at Denver from the Denver lant of unissued Federal Reserve notes up to 5,000,000 in denominations specified by the Branch; together with copy of telegraphic reply made yesterday on the initials of two members of the Executive Committee, advising that the Comptroller of the Currency will wire the Director of the Liint to release the currency as requested and stating that as withdrawals are made from the LIint the Branch should wire to the Board the total amount withdrawn and the total amount of each denomination and that formal requisition should also be made and forwarded to the Board in support of each telegraphic advice. Noted. Report of Committee on Salaries, Expenditures and Efficiency dated June 29th on the subject of dividend resolution of the Federal Reserve Bank of Dallas, as 'ollows: 449 6/30/25 -9- "Net earnings available for dividends, surplus, etc., of the Federal Reserve Bank of Dallas for the five months ending May'61, 1925, amounted to ,A5,000 or .„;59,400 less than dividends accrued (104,400) to that date. The earning position of this bank is somewhat better now, however, because of its larger holdings of United States securities, which were allotted to it during May by the Open Market Investment Committee. Statements furnished by the Dallas bank indicate that on May 31 it had six member barks in an over-extended or unsafe condition and thirty-two closed member banks. The indebtedness to the reserve bank of the six banks in an unsafe condition aggregated „,;156,000, on which no loss is anticipated by the Federal reserve bank. The net liability to the Federal reserve bank of the thirty-two closed banks aggregated „;1,901,400, on which .710,300 had previously been charged to the reserve for losses on account of failed banks. The Federal reserve bank estimates the probable additional loss as .A14,000, or ',;10,000 less than the reserve (524,072) the bank is now carrying to cover probable losses on failed banks. In view of the fact that the Dallas bank has a surplus of ,7,592,396, your Committee feels that the payment of the semi-annual dividend is fully mrranted and recommends that Payment thereof be authorized by the Board." The recommendation of the Committee having been approved yesterday on the initials of tuo members of the Executive Committee was formally adopted. Report of Committee on Salaries, Expenditures and Efficiency on the subject of dividend resolution of the Federal Reserve Bank of Chicagp, as follows: "Net earnings available for dividends, surplus, etc., of the Federal Reserve Bank of Chicago for the five months ending May 31, 1925, =minted to c;585,900 and dividends accrued to that date to 386,800, leaving net earnings after providing for dividend payments of c?199,100. Statements furnished by the Chicago bank indicate that on May 31 it had 60 member banks in an over-extended or unsafe condition and 16 closed member banks. The indebtedness to the Reserve bank of the 60 banks in an unsafe condition aggregated .4,541,400, with respect to which the Federal reserve bank states it has no basis on which to estimate its probable loss. In the r -10- 6/30/25 "case of 2 of the 16 closed banks the indebtedness to the Federal reserve bank has already been charged off. The net liability of the other 14 banks on rediscounted paper aggregates c865,500 on which the Federal reserve bank estimates that a loss of z„;123,000 will be sustained. The Chicago statement also shows nUnpaid collateral notes" of these 11 banks as iA,867,500. These notes are evidently not included in "Claims account closed or suspended banks" on the Federal reserve bank's balance sheet and accordingly it is recommended that the ban1t be requested to furnish an explanation of the item. The reserve for losses on account of failed banks now carried by the Federal Reserve batik amounts to .1738,874.90 in addition to which the reserve bank reports recoveries of ,20,600 on losses previously charged off. The Committee believes that the payment of the semiannual dividend of the Federal Reserve Bank of Chicago is fully warranted and accordingly recommends that the payment of the dividend be authorized by the Federal Reserve Board." The recommendations of the Committee having been approved yesterday by two members of the Executive Committee, were formally adopted. The Governor than presented several copies of a report of the Committee on Voluntary Services Assumed by Federal Reserve banks on the brief filed with the Board by the American Bankers Association Committee on Collection of Non-Cash Items by Federal Reserve Banks. Upon motion, it was voted that copies of the report be distributed anon7 the members of the '3oard for their information. =oaTs oF STAnix° CO:MITTEES: Dated, June 29th, 30th, Recommending changes in stock at Federal as set forth in the Auxiliary Minute Approved. The me n adjourne eserve Banks, of this date. 12:30 Secretary. Approved:
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