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191 meeting of the Executive Committee of the Federal deserve Board was held 4 the office of the Governor on Friday, March 2, 1928 at 11:00 a.m. PESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Tel egrcAra dated February 29th from the Secretary of the Federal Reserve 'Jr Boston, telegram dated Larch 1st from the Chairman of the Federal aeserv e Bank of Jan Francisco and letter dated Larch 1st from the Secretary °f the m zederal aeserve Bank of New York, advising that their boards of directors at meetings on the dates stated made no changes in the banks, existing eelledules of rates of discount and purchase. Without objection, noted with approval. kemorandum dated March 2nd from the Chief Examiner recommending that the re sil3nation of Mr. R. B. Wiltse, Federal Aeserve Bank Examiner, be ac"Mod, -'Lective February 15th and that permission be granted to fill the Iklearicys Upon motion, the above recommendations were approved. laemn -randum dated March 1st from the Chief of the Division of Bank Operayrla , Grace Keegin Haley as comprecommending that the resignation of Mrs. tpilleter operator be accepted effective at the close of business March 20th 444 tha# 'authority be granted for the employment of another operator at a Sal 4rY lact exceeding ,„11500 per annum. Upon motion, the recommendations were approved. RePort of Committee on Salaries and Expenditures on letter dated eh arY 29th from the Secretary of the Federal Reserve Bank of Boston, 192 3/2/28 -2- "814R of the action of the board of directors of that bank in voting to texid until its next meeting leaves of absence on account of illness Previ„„, Roberts and Mr. --"°-LY granted Mr. Joseph Buckley, Liss Dorothy L. '.141411: Cs Hoyt, Mr. Buckley and Miss Roberts to receive half pay and Yr. li°Yt tall pay; the Board's Committee recommending approval of the salary 1/11Pnents involved. Approved. Letter dated February 28th from the Federal Reserve Agent at St. Louis, Reserve re°°Itraending approval of the appointment as an Assistant Federal 48.1tiner of Mr. F. P. Maguire, an employee of the Examination Division of the batk. Approved. New York, Letter datea February 28th from the Federal Reserve Agent at York, respect to an application of the Grace National Bank of New tor drafts Permission under Section 13 of the Federal Reserve Act to accept tO 50/a purpose of creating of its unimpaired capital and surplus for the ttallar Agent recommending approval. exchange; the Federal Reserve Upon motion, it was voted to authorize the it Grace National Bank to accept drafts drawn upon desheretofore countries the in bankers by banks or furnishing ignated by the Board for the purpose of dollar exchange. -iemorandum from Counsel dated February 29th, submitting draft of Hardin and Y to letter dated February 15th from Messrs. Pitney, 31t1.141 the necessity for a er, attorneys at Newark, N. J., inquiring as to has been granted permisClayton ,ict application by Mr. Ray E. Mayham who sion the Peoples National Bank, to serve as Vice President and director of 193 -3the South Side Nat ional Bank and Trust Company and the West Side Trust Company, all of Newark, N. J., and who has recently been elected president of each of these inst itut ions; the proposed reply stating that inasnuch as the Board has heretofore authorized Mr. Layham to serve as an officer of each of the banks &t will not the object to his serving as president of the institutions under Dermit appl new heretofore granted and it will not be necessary for him to file a ication. Upon motion, the letter submitted by counsel was approved. "torandum from Counsel dated February 29th with reference to letter d4ted Febaary 6th from the Federal deserve Agent at San Francisco, regarding his 4_. 4Aability to application for the secure from Mr. William G. Kerckhoff an 4 Pe rMiSSiOn ' Farmers and to serve at the same time as director of the Itereha,.. "t8 National Bank and the Security Trust and Savings Bank, both of Los les 'et; Cal., both of which come within the prohibitions of the Clayton recommending that before the Board institutes proceedings to require 4 he be rckhoff to sever his connection with one of the institutions a . flnal opportunity to file an application for permission to serve tilet '44a he tile 8 the advising that unless submittinc, draft of a letter to 1:r. rerckhoff San Francisco with411 application with the Federal Reserve Agent at provisions of days the Board will institute proceedings under the with one of the two aYtc41 Aet to require him to sever his connection batiks, Ae is now serving. was approved Upon motion, Counsel's recommendation transmitted. ordered was and, the letter submitted by him reference to the orandum from Counsel dated February 29th with 194 3/2/28 -4itou 4"ct application of Yr. Parmely 7. Herrick, involving the Harriman 'ati°11/23. Bank of New York City, the New York Joint 3tock Land Bank of ilochester, the Ohio-Pennsylvania Joint Jtock Land Bank of Cleveland and the Union Trust Company of Cleveland, all of which come within the prohibitions Of tu_ '"(apyt011 A'Ict; Counsel stating that the Board is authorized to grant 11"taes1on to Mr. Herrick to serve not more than three banks or trust companies CICAZirl "g Within the provisions of the Clayton Act, provided such institutions are tot in substantial competition. 711th his memorandum, Counsel submitted 14aft Of a proposed letter to Mr. Herrick advising that the Board will be glad t° aPProve his application for permission to serve three of the banks named 411°1/ reCeiPt of advice from him that he has severed his connection with one Of 41_ wie institutions, since it appears that none of them are in substantial itIOu Upon motion, the letter submitted by Counsel was approved. he Secretary then referred to the action of the Board at its meeting Or an --4114rY 21st in referring back to the Law Connittee a proposed letter to the t, l .ieserve Agent at Kansas City, with respect to the desire of the eclIcilleror Trust Company, Joplin, Mo., a state member bank which has disposed °Ir its entire commercial business, to surrender its stock in the Federal 421el'I'e 1/44k; the reference having been made in order that the Committee 11111t cliecuss With the Board's Counsel the question whether a procedure Nrbe leea,,y il adopted whereby the Conqueror Trust Company, or any other 414Lterlieniber bank under similar conditions might, with the approval of the B(1411 3urrenaer its Federal deserve Bank stock without the necessity of 195 3/2/28 -5- fteiting the expiration of the six months' notice of intention to withdraw from the System required by Section 9 of the Federal aeserve Act. The Secretary stated that Counsel has reported that unless the membership of the "tqueror Trust Company is forfeited he knows of no procedure whereby iteillembership may be terminated in accordance with the provisions of the Pederal -leserve Act without awaiting the expiration of the six months' 110ti°6 of tatention to withdraw. He submitted draft of a revised letter t0 zederal rieserve Agent, prepared by Counsel, setting out the legal situat --Jn With reference to the possibility of voluntary withdrawal by the 1m ' -41101c and requesting the Agent to advise the Board whether the institution , . ‘'681res that its membership be forfeited inasnuch as it appears that the trust company has violated the Board's general condition of membership t'hr"gh giving up its commercial business, thus causing a material change 14 the scope of the functions exercised by it without securing the Board's , After discussion, the letter submitted by the becretary was approved. The reasury Governor then presented a letter addressed to the Secretary of the under date of February 18th by the Attorney General of the United atates, s ubmitting the opinion reqaestea at the instance of the Board with relePlect to its authority in connection with the action of the State-Planters 411k 44a Trust Company of Richmond, Va., a member bank, in purchasing the elltire capital stock (except directors qualifying shares) of a new bank 1°qated at Hopewell, Va.; the Attorney General answering the specific in'111111.°8 made as follows: 196 3/2/28 1. The State-Planters Bank & Trust Company, being authorized so to do by its charter and the laws of the State of Virginia, may lawfully purchase the controlling stock interest of a new bank to be located at Hopewell, Virginia. 2. The Federal Reserve Board has no present statutory authority, either express or implied., to regulate, control or prevent the purchase of such stock interest by said bank, so long as the solvency of the bank or the safety of its customers are not jeopardized thereby, and the standard re quired as a condition of membership is maintained. 3. Not possessing the power to prevent the purchase, the Board would have no power to compel said bank to divest itself of the stock when purchased, except under the circumstances above indicated. 4. 'In the event the Board should order said StatePlanters Bank & Trust Company to divest itself of such stock ownership and upon refusal or failure of said bank to comply With the order, the Board would have no authority, pursuant to the provisions of Section 9 of the Federal Reserve Act, as amended, to require said bank to surrender its stock in the Federal Reserve Bank and forfeit all rights and privileges Of membership in the Federal Reserve System, unless the amount and character of the stock investments held by such bank is deemed by the Board to jeopardize the safety of depositors, the solvency of the bank and/or lower the standard required as a condition of membership in the Federal Reserve System. The Secretary then referred to the recent action of the Fidelity Trust °f Portland, Me. in purchasing and continuing to operate the Westbrook 44" c°111Pany of Westbrook, Me. and in later filing notice of intention to Witharaw from the Federal Reserve System. He stated he has had some cor4111144"ce with the Governor of the Federal Reserve Bank of Boston who has bee 114411113ting to secure cancellation of the bank's notice of withdrawal, be-tellIlg that the member bank felt its acquisition of the stock of the Westbrook institution required such action in its part. He requested authority to tilriliah the Governor of the Federal Reserve Bank of Boston with a copy of the /3e the Attorney General for his information in connection with his 197 -7- 4totiations with the Fidelity Trust Company of Portland and his request was The Secretary then reported an interview this morning with the Cashier, the attorney and one of the directors of the 14orstown National Bank, Lyerstown, P4, 'which was authorized by the Board to exercise limited trust powers prior to th 4rnandment of the Federal Reserve Act which prohibited the granting of ktoll Powers to national banks having less than the capital required by state law 00 4 trust companies and banks doing a trust business in the same state. Secretary reported that prior to the amendment the Board granted limited tst Powers to about fifteen national banks in Pennsylvania having smaller e4Pital than that required by state law and subsequently has held that these b xiits have authority to exercise the powers granted them by the Board. He ect stat that the Superintendent of Banks of Pennsylvania has disagreed with iugths Of the Board but has had no occasion to contest it because none °t the bn the Bo the them by --11k8 in question have actually exercised the powers granted ara. He stated that about a year ago, under the impression that it had QessarY authority, the Myerstown National Bank accepted several trusts 414 wha, this was reported to the State superintendent in regular course, he the Qu their authority and quite possibly may take legal steps against itistitution. to ea He stated that the officials of the Ilyarstown National Bank the matter with the Board's counsel and agreed to submit full details the 13 oard in writing. °4T8 uP STANDING COYMITTES: bat;(5, Liarch Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary 1:inate Book of this date. Recommendations approved. 198 -8QS OF Sm ANDING '1:arch 1st, Dated Dated, February Dated._7 tja ted_ 7 eurua— Id J:eb 14tea, — Februaly b4ted_ eb raarJ tea, February 4te, Peb — rualv (3ont,d) Aecommendinr: action on applications for fiduciary ocrters as set forth in the Auxiliary ::_inute Book of this date. Aecommendations approved. 29th, ,ecommending action on application for admission of a state bank, subject to the conditions stated in the individual reports attached to the application, as set forth in the Auxiliary :inute Book of this date. :.ecommendation approved. H. L. 28th, ecommending approval of the application of as time same serve the at to permission Duren for director of the Harriman National Bank, Harriman, Tenn. and as director of the Holston National Bank, Knoxville, 2enn. _ecommendation approved. 28th, Aecommenaing approval of the application of Hr. Harper Sibley for permission to serve at the same time as officer and director of the New York Joint Stock Land Bank, Rochester, N. Y., as director of the LincolnAlliance Bank, ::ochester, N. Y. and as director of the Security Trust Company, iochester, N. Y. l',ecommendation approved. 28th, :lecommena.ing approval of the application of Hr. Charles L. Boyd for permission to serve at the same time as director and officer of the ::_erchants National Bank, Liddletown, IT. Y. and as director of the New York Joint Stock Land Bank, Aochester, N. Y. lecommendation approved. 28th, ecommending approval of the application of Hr. Ledyard Jop,swell, Jr.for permission to serve at the sane time as director of the New York 3tate National Balk, Albany, N. Y. and as director of the New York Joint 3tock Land Bank, Aochester, N. Y. Recommendation approved. 28th, L-iecommenaing approval of the application of Hr. a. V. Hitchell for permission to serve at the same time as director of the Union Trust Comnany, Cleveland, Ohio, as director of the Ohio-Pennsylvania Joint itock Land Bank, Cleveland, Ohio and as director of the New York Joint Stock Land Bank, ochester, F. Y. aecommendation approved. 28th, ,:ecommending approval of the application of Mr. Philip I. Nash for permission to serve at the same time as member of the Advisory Committee of the Bank of Coney Island Branch of the Brooklyn Trust Company, Brooklyn, N. Y. and as director of the Bensonhurst National Bank, Brooklyn, Y. Recommendation approved. 199 3/2/28 -9-, 130:1TS OF STANDEr COLZIIMES: (Cont,d) Dated, Dated, Dated, 4ted° Dated,' Recommending approval of the application of Mr. Harold D. Watson for permission to serve at the same time as director of the ladwood Trust Company, Brooklyn, N. Y. and as director of the Bensonhurst National Bank, Brooklyn, N. Y. Recommendation approved. February 28th, Recommending approval of the application of Mr. Louis K. Hull for permission to serve at the same time as director of the First National Bank in Minneapolis, Minn. and as director of the MinneapolisTrust Joint Stock Land Bank, Minneapolis, Minn. Recommendation approved. February 29th, Recommending approval of the application of Yr. David R. Carson for permission to serve at the same time as director of the National Bank of Lansdowne, Lansdowne, Pa. and as officer of the Central National Bank, Philadelphia, Pa. Recommendation approved. March 1st, Recommending approval of the application of Yr. Maurice Reinitz for permission to serve at the same time as director of the Bay Parkway National Bank, Brooklyn, N. Y. and as director of the Midtown Bank, New York, N. Y. approved. March 1st, Recommending approval of the application of Mr. Wirt Franklin for permission to serve at the same time as director of the Security National Bank, Oklahoma City, Okla. and as director of the American National Bank, Ardmore, Okla. Recommendation approve February 26th, The meeting adjourned at 45 a.m. 4 / 41 ' Secretary 114)0ved: ' Governo
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