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281 A meeting of the Federal Reserve Board was held in the office of the Poderal Reserve Board on Tuesday, March 23, 1926 at 2:30 p.m. PRESENT: Governor Crissinger Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Matter approved on initials on March 20th, namely, memorandum dated 20th from the Division of Examination recommending approval of an aPPlication of the Hillsdale National Bank, Hillsdale, N. J., for original st°01:. (36 shares) in the Federal Reserve Bank of New York, effective if alla When the Comptroller of the Currency issues a certificate of authority to oomgence business. Formally approved. Matter approved on initials on March 20th, namely, memorandum dated lial*oh 20th from the Division of Examination recommending approval of an aPPlication of the First National Bank in Tuckerman, Ark., for original st°ck (28 shams) in the Federal Reserve Bank of St. Louis, effective if eaul When the Comptroller of the Currency issues a certificate of authority to col-:mence business. Formally approved. The Governor then brought up the question of the continuance of the 4011--c3sh collection function of the Federal Reserve banks. He stated that tiu) Governors' Conference in session hem today had again cone on record, b/T a vote of nine to three, as favoring the continmInce of the function as at 282 3/23/26 i -2- IP Present. He read to the Board the letter addressed to it under date of jaruarY 25th by Lr. John 71. Zarton, Chairrnan of the American Bankers A!seciation Committee on Non-Cash Collect ions,transmitting an analysis Of replies to the questionnaire on the subject sent out by that Committee to all member banks. lig The Governor reviewed the Board's action in refer- this letter to the Committee on Voluntary Services of the Governors' C°112erence, and in view of the action taken by the Conference today expressed the °Pinion that the question should be considered and disposed of by the Board, Thereupon ensued a d.iscussion during which it was the consensus of °Pillion that it would. be inadvisable either to continue the fu.nction in it8 PreSent fozn or to discontinue it entirely, but that it would be nacos- 3417 to consider separately the various classes of non-cash item now handled 15Y the Pedera.1 Reserve banks. Following the discussion, Mr. Miller /wired that a letter, as follows, be addressed to the Governors' Conference: "The Be ard has -under cons ideration and. des ires to dispose of the matter of non-cash collections. It is considering the services -under three heads, to wit: those which can be discontinued, those which 332a be continued without imposing a charge for the service, and those that can be continued on payment of a charge the bank for whom the services are rendered. The Board desires to have the present Governors' Conference appoint a Committee of five members to confer with and aid it in reaching a conclusion on these questions before an adjournment of the Conference". Mr. Miller's motion being put by the Chair was unanimously carried. Governor then brought up another natter of unfinished business stated he thought the Board shcyuld dispose of, namely, the petition 283 3/23/26 Of -3 the directors of the Federal eserve Bank of 3ichmond for permission to establish a branch in the southwestern portion of the 5th Federal Reserve District and to locate such branch, if established, at Charlotte, N. C. 111'. Hamlin called attention to the fact that the Attorney General of the thlited States has been requested to render an opinion as to the authority Of the Federal Reserve Board or a Federal Reserve bank to discontime a blialloh and stated that action on the Richmond wplication had been deferred Pe'ldilic the receipt of the Attorney Gaaeral's opinion. Following discussion, 1.1r• Miller moved that the Board sees no reason to change the opinion expressed by it on June 3, 1925 "that there is no present occasion for the establishment of an additional branch in the 5th Federal Reserve District", Er. Cunningham moved as a substitute, that Mr. motion be laid on the table pending receipt of the opinion of the Attorney General above referred to. Cunninccham's motion being put by the Chair was carried, Messrs. Miller and Platt voting "no". 7he Governor then presented fonnal application of the National City Bank Of New York for permission to transfer the main office of its Italian Branch f11(1% the city of Milan, in the Kingdom of Italy, to the city of Genoa, in the 741/ledom of Italy, and to continue to maintain or to establish sub-branches, acetn. "los or offices in the cities of Florence, :Ulan, Naples, Palermo, _Jame, 11.4 and Venice, all in the Kingdom of Italy, or in any of the said places as m, -cly seem advisable to the board of directors of the bank; the application Qaso 4:eque3t1ng the permission of the Boa/T1 for the right, at may time it --cs advisable to the National City Bank, to transfer the main office 284 3/23/26 -4- Of its Italian Branch to any one of the designated cities located in Italy. The Board on March 20th having informally approved that portion of the application first referrad to above, the folloNing was ordered spread upon the minutes: "THE NATIONAL CITY BANK:OF =7 YORK, having an or about May 18, 1916 filed an application with this Board for the purpose of obtaining authority to establish an Italian Branch, with its main office in the City of Genoa, in the Kingdom of Italy, and with sub-branches, agencies or offices in each of the cities of Florence, 1.-Alan, Naples, Palermo, dame, Turin and Venice, all in the said Kingdom, or in any of the said Places, and the said application having been granted by an Order of this Board dated May 25, 1916, and the said Bank having on or about July 29, 1924, filed an application supplementary to the said application of May 18, 1916, asking for an Order amendatory to the said Order of May 25, 1916, authorizing it to transfer the main office of its Italian Branch from the City of Genoa, in the Kingdom of Italy, to the City of Milan, in the Kingdom of Italy, and to continue to maintain or to establish sub-branches, agencies or offices in the Cities of Florence, Genoa, ITaples, 1-,alermo, Rome, Turin and Venice, all in the Kingdom of Italy, or in any of the said places as may seem advisable to the Board of Directors of said Bank, and the said Supplementary Application having been granted by an Order of this Board dated August 14, 1924; and the said Bank having on March 16, 1926, filed an application further supplementary to the said application of May 18, 1916, asking for an order amendatory to the said Order of August 14, 1924; and the said further Supplementary Application having been considered; and it appearing to the Board that the said further Supplementary Application is prooerly made under the laws of the United States of America in so far as the same applies for authorization to transfer the main office Of the said Italian Branch from the City of 'Milan, in the Kingdom of Italy, to the City of Genoa, in the Kingdom of Italy, and to continue to maintain or to establish sub-branches, agencies, or offices in the cities of Florence, Milan, Naples, Palermo, 2.ome, Turin and Venice, all in the Kingdom of Italy, or in any of the said places as may seam aavisable to the Board of Directors of said Bank, ava should be granted to that extent; and the Federal Reserve Board having on March 20, 1926, by informal action approved the said above further Supplementary Application as hereinabove limited and restricted and having authorized the said Bank to transfer the main office of its Italian Branch from the 01 y of Milan in the Kingdom of Italy, to the City of Genoa, in the Zlngdam of Italy, and to continue to maintain or to establish subagencies or offices in the Cities of Florence, Milan, Naples, Palermo, Rome, Turin and Venice, all in the Kingdom of Italy, or in an of the said places as may seem advisable to the Board of Directors 285 3/23,2, -5- "of the said Bank, Now, therefore, it is OliDEREID that the action taken informally by the said. .2ederal aeserve Board on March 20, 1926, as above set out, be and, it hereby is formally ratified and. approved., and, it is further ordered. that the additional application contained in said further Supplementary Application be held. in abeyance for consideration and. determination." Letter dated. March 18th from the Secretary of the Federal lieserve Bank °f 'Tea Yor4, a.dvising that the board of directors at their moeting on that 64 ' 7 made no change in their existing schedule of rates of discount and. purchase, Noted.. Telegram dated March 18th from the Chairman of the Federal Reserve Balt Of San Francisco, advising that no change was made on that day in the baittit's existin.(2,' schedule of rates of discount and. purchase. Noted. 1Zemorandum dated liarth 18th from the Acting Director of the Division Of ii.esearch and Statistics, recommending that the temporary appointment of 1411as a2.0 Frances Dawson as Assistant Draftsman in the Division at a salary of Par month, which terminates on March 31st, be made permanent. Approved. Liemorandum dated. March 22nd from the Chief of the Division of Bank inquiring whether there will be any objection to compliance with ' l e est received from the Federal .Lieserve Agent at New York for the figures riece ivea by the Board each week from reporting member banks in Chicago showth he amount of brokers, loans made for their own account and for account Of ecrrestondents both in the Chicago and. New York markets. 671.; rscJ,.." 3/23/26 -6- Upon motion, it was voted to interpose no objection to compliance with the request. Lletnerandum from Counsel submitting draft of letter to the Federal itesercre Agent at New York, with reference to the Clayton Act application Of Lir. Frank C. Ferguson for rBrmission to serve upon the directorates °f the Union Trust and Hudson County National Bank and. the Merchants lIatielial Bank of Jersey City, N. J., and the Highland. :rust Company of N. J.; the letter stating that Mr. Ferguson is also a director Of the 1;ew York and New Jersey Joint Stock Land. Bank of Newark, that the Bcarci has previously held that a joint stock land bank is a "bank" within the meaning of the Clayton Act, and that it will, the be necessary for 41'• Ferguson either to resign from the joint stock land bank or resign from one of the other banks which he is serving and submit an application fez' Permission to serve the other three. Upon motion, the proposed letter was approved. aeport of Committee on District 1"/-6 and. Committee on Salaries and. xic)eriditures on letter dated March 18th from the Secretary of the board of directors of the Federal iieserve Bank of Atlanta, advising of vacation scheclules for officers and employees of the parent bank, branches and agencies for the year 1926, adopted at the last meeting of the board of directors; the n ,o/runittees recomending that this action be noted with approval. Upon motion, the recommendation of the Cominittee was adopted. Letter dated March 12th from the Governor of the Federal Reserve 141t Of Philadelphia, advising that the recent opinion of the Attorney 287 3/23/2, -7- General that a mutual savingp bank is a "bank" within the meaning of Section 4 of the Federal Reserve Act will increase tile existing difficulty in secaring desirable Class "B" and Class "0" directors for Federal Reserve banks; the Goveraor also describing the operations of mutual savings societies in Philadelphia. Noted. Letter dated March 18th frmm the Chairman of the Committee on Banking 44a Currency of the United States Senate, requesting the views of the Board With regard to a proposed amendment to H. a. 2, the so-called McFadden Bill, to add to Section 11(k) of the Federal Reserve Act a provision that "Whenever a lTational bank in its fiduciary capacity becomes possessed of any shalles Of its own stock, it shall be the duty of the said bank, with the 41313rWal of the State court to which under the law it must mako its accountas fiduciary, to dispose of the same to persons other than its directors withth the term of five years from the beginning of the acceptance of the said trust". Referred to the Law Committee. Llemorandum from Counsel dated March 9th, advising of the action of the Supreme Court of the United States in handing dawn an order denying a writ Of certiorari in the case of the Federal Reserve Bank of San Francisco the Idaho-Grimm Alfalfa Seed Growers Association, Counsel submitting elits with reference to the case and stating that the effect of the acti04 of the Supreme Court is to make final a decision of the Circuit C°111'- t f Appeals, which was unfavorable to the Federal Reserve Bank. 288 3/23/26 -8- The above memorandum, having been circulated, among the membc:rs of the Board, was noted and ordered. filed.. The CT'overnor then referred to the action at the meeting yesterday re.arding the request of the Clerk of the Committee on Banking and Currency the House of Representatives that the Board be represented. at a meeting t°111"row to consider H. R. 7895 to amend Section 14 (d) of the Federal "Reserve Aot to provide for the stabilization of the price level for commodities in 'elleral. As a report, the Governor submitted copy of a letter addressed by 111111 to the Chairman of the Committee confirming telephone conversation from which it was understood that there will be a number of economists and others Who w4ll. appear before the Committee regarding the bill; the letter stating that • Miller, and, possibly otimr members of the Board., will be glad to al-DPear before the Committee before the hearings terminate and, requesting a 59 far as possible, of the remarks made by those appearing in advance °2 the Boar:its representatives, who would then have on hand. ix'ormation from will-ell they can determine what points require answer on the part of the Board. wile4 theY appear. Noted.. Liemorandum from Counsel dated. March 11th prepared in accordance with the Boa, rcl s request of February 16th, and submitting draft of letter to the lja irraan of the Federal Reserve Bank of St. Louis and circular letter to Federal Reserve Agents on the subject of the eligibility for redisc°11nt t a a. Federal eserve bank of a note of a Federal Intermediate Credit `41soounted by a member bank or a note of a cooperative marketing a.seoe. latien made payable to a Federal Intermediate Credit bank and. redis- 289 3/23126 -9-- , collated by it with a member bank; the proposed letter to the Federal Reserve Ageat at St. Louis answering certain specific inquiries on these questions alla both letters stating that the Board grants its poi-mission for the rediscount for member banks of paper made or endorsed by Federal Intermediate Cr'sclit Banks, provided such paper is otherwise eligible under the law and tile Regulations, and. further, that the eligibility of paper endorsed by a l'ecleral Intermediate Credit Bank is to be determined by the same principles 7thicli govern eligibility of any other paper and, 'while in theory this is also true as to paper made by a Federal Intencediate Credit bank, as a 13riactioa1 matter it is almost certain that such paper would be finance Pal3e and therefore, ineligible. After discussion, upon motion by Mr. Hamlin, it was voted to approve the proposed letters and also the recommandation contained in Counsel's memorandum that the ruling set forth in the circular letter be published in the forthcoming issue of the Federal Reserve Bulletin. Memorandum from Counsel, submitting draft of' reply to letter dated el31.111117 20th from the Federal Reserve Agent at New Yolk, with further zieference to the absorption of the Central Park Bank and the Riverside Ilatl°11a1 Bank, both of Buffalo, by the Manufacturers and Traders Trust C°1111141V of Buffalo and the absorption of the Flatbush State Bank by the It -echallics Bank of Buffalo; Counsel also submitting a detailed memorandum on the subject. La this connection, the Governor submitted a letter addressed to him 1.131:14xl date of Mamb. 22nd by the Federal Reserve Agent at New York, submitting 290 4* 3/23/26 -10- a survey for the year 1925 showing (1) Banks which have not participated. in niergore or consolidations or opened. branches during the year; (2) Banks Merged or consolidated. and banks which opened branches during the year; and (3) New banks opened during the year. After discussion, it was voted to refer back to the Law Committee the proposed letter to the Federal Reserve Agent and. to refer to it also the survey transmitted to the Board by him. Zemorandura from Counsel dated March 15th, submitting correspondence with the Federal Reserve Bank of Kansas City relative to the surrender of Federal Reserve bank stock owned by the Meadow Grove State Bank of Meadow Grove, ilebraska, which institution on November 25, 1925 was found to be insolvent by the DePartment of Trade and. Commerce, which took charge of it and. turned it ever to the Guaranty Fund Commission for the conduct of its affairs, the C°11111ission since having made application as liquidating agent of the bank for the surrender of the Federal Reserve bank stock owned_ by it; Counsel stating that there are but two legal methods by which the Meadow Grove State Bank leV Withdraw from the System and have its stock cancelled. - (1) It may withalter six months' notice to the Board. or (2) It may be expelled by the 4ard. for failure since November 25, 1925 to maintain the reserves required. bY the Federal Reserve Act. After discussion, it was voted. that steps should. be taken to expel the bank from the System in view of Its failure to maintain required reserves and. Counsel was directed. to prepare the usual form of notice to the bank of formal hearing for this purpose. The Governor then submitted. letter dated March 23rd. from the Secretary 291 3/23/26 -11- Of the Governors Conference transmitting copies of the report of the Open L:arzc' et Investment Committee to the Governors' Conference; the report having been aiscussed. with the Board at an informal meeting on Mamh 20th and. having been approved by the Governors' Conference on Larch 22nd. After full discussion, upon motion it was voted that the Committee be advised that the Board has considered the retort and. approves the proposal contained therein to the effect that the System's special investment account should. not be changed in amount, except that the March 15th maturities may be replaced as conditions seem to warrant. At this point, Mr. Hamlin left the meeting. The Goverr.or then presented the following telegram addressed to Vice Gove rilur Platt under date of March 16th by the Governor of the Federal Ileserve Bank of New York: "Your letter March 13. The Board's approval of March 8th contained no qualification but it was understood. that if any change In the Belgian. Plan was found necessary the ratter would be resubmitted. The resolution quoted in your letter received a week later advises that the Board will interFose no objection but on the o ther hand that it does no t give final agreement. Following the action of the Board on March 8th which was advised to me by Governor Crissinger as without qualification the plan was submitted. to our directors on Thursday approved, by them and we thereupon cabled that our participation was authorized subject to the reservations mentioned in my letter and enclosures of Larch 9th." The Governor stated that he had not understood that the resolution of tile 3 °aAl of March 8th, interposing no objection to an increase in the Federal E)8e1".ve bank's participation in the proposed central bank credit to the ITati• onai, ank —. of Belgium, contemplated that the details of the proposed credit 292 3/23/26 -12- were to be submitted to the Board for its approval before the final agreeis rnade. After discussion, Mr. Platt moved that a telegram as follows be addressed to the Governor of the Federal Reserve Bank of Now York: "Replying to your telegram your understanding of the action of the Board on March 8th is correct. The approval, 'never, was tentative and. the Board's understanding was that formal approval would be recorded when the transaction was completed." jr. Cunningham moved that on the table. Platt's motion be laid Mr. Cunningham's motion being put by the Chair was carried, Mr. Platt voting "no" and Mr. James "not voting". N 2S_. OF 3ri'.2i-DETTG Dated., March 20th, ba ted., March Datea, L:arch batecl, :larch bated., March Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary Minute Book of this date. Approved. 17th, Recommending action on applications for fiduciary 18th, powers as set forth in the Auxiliary Minute Book 20th, of this date. Approved. 18th, Recommending action on. application for admission of state bank, subject to the conditions stated in the Individual reports attached to the applications, as set forth in the Auxiliary Minute Book of this date. Approved. , approval of the application of Mr. 18th, ilecommendin€, Walter Jeffreys Carlin for i:ermission to serve at the same time as diroctor of the Lafayette National Bank, Brooklyn, N. Y. and. as director of the Franklin National Bank, New Yo Approved. 18th, Recommending approval of the application of Mr. R - obert Driscoll for permission to serve at the same time as director of the Frost National Bank and San Antonio Joint Stock Lana Bank, both of San Antonio, Tex. and. as president and director of the Corpus Christi National Bank, Corpus Christi, Texas. Approved. 3/23/26 .2 21.41.LPF -13- STA:MING 001.ZIMEE3:(Cont'd.) Dated :larch 18th, Dated, March 17th, Dated, Tiarch 22hd, Dated Ilarch 19th, t Dated, , March 17th, Recommending approval of the application of Mr. .dalph Earle for permission to serve at the same time as director of the riaricet Street National Bank, as director of the ltea. Estate Trust Company and as director of the Pinance Company of Penn., all of Philadelphia, Pa. Approved. ,ecommending approval of the application of Mr. Thomas H. Eckerson for permission to serve at the same time as direcLor of the Union Trust and Hudson County Natimal Bank and as director of the Merchants National Bank of Jersey City, N.J., and as director of the Highland Trust Company of Union City, N.J. Approved. Recommending approval of the application of Mr. Allan H. King for permission to serve at the same time as director of the Harrisburg National Bank of Harrisbrug, Tex. and as director and officer of the State National Bank, Houston, Texas. Approved. Recommending a-)proval of the applica.cion of Mr. J. M. Olin for permission to serve at the same time as director and officer of the Wood River National Bank, Wood River, Ills. and as director of the First National Bank, St. Louis, Mo. Approved. Recommending approval of the application of Mr. Thomas J. Maloney for permission to serve at the same time as director of the Union Trust and Hudson County National Bank of Jersey City, N.J. and as director of the Merchants National Bank of Jersey Trust City, N.J. and as director of the Highl Company, Union City, N.J. Approved. The meeting adjourned at 5:15 p.m Nk Secretaryo
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