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169 At a special meeting of the Federal Reserve Board held int he office of the Board at 3.00 p. in. on Wednesday, March 3d PRESENT: Mx. Hamlin, presiding, Delano 11r. Williams Mr. Warburg Mr. Harding Lr. Miller Mr. Willis, Secretary. The proposed draft of a letter to be sent to Federal Reserve Agents with reference to the clearing of checks, the same to take the place of the various circulars heretofore proposed, which had been tentatively considered and approved at the morning meeting, was presented and read to the Board, and on motion was adopted, with instructions that it be sent out over the Governor's signature I as follows: FEDERAL RESERVE, BOARD Washington. March 4, 1915. $ir: The Federal Reserve Board has determined to deal with the provisions of the Federal Reserve Act in respect to the clearing of checks and drafts by Federal reserve banks, under three heads: (a) Intra-district clearing in which each Federal reserve bank clears checks on and for its 170 own member banks. (b) Inter-district clearing in which each Federal reserve bank clears checks for its own member banks on all ,other member banks, either directly or through other Federal reserve banks. (c) The settlement of balances between Federal reserve banks. The Board believes that more rapid and certain progress will be made if one step is taken at a time, in order that experience nay be obtained as a basis for further development. As a beginning, the Board is, therefore, directreserve agents in districts which have Federal ing not yet established a general clearing plan, to take up with their respective boards of directors the establishment at as early a date as practicable, of a general system for the clearing of checks drawn upon member banks within such districts. The plan which has commended itself to the Board upon the immediate debit and credit of items based is deposited by and drawn on assenting member banks, under a voluntary reciprocal arrangement by which each assenting bank agrees to maintain such a balance as may be necessary, and authorizes the immediate debit of checks on it received by its Federal reserve bank from other banks assenting to the plan. The Board does not deem it necessary at this time the details of a working plan; this is elaborate to and discretion of each reserve banK. judgment the to left The Board wishes, however, to be advised of the action taken by your board of directors, and to be kept informed of the progress made in giving effect to the plan above outlined. On the basis of the experience thus obtained, the Board will then consider whether further steps should be taken to harmonize the paTztice and procedure in the various districts, and also what additional steps will be necessary in the further development of clearance under the Federal Reserve Act. Respectfully, Governor. 171 A memorandum stating the substance of a conversation between Senator J. H. Lewis of Illinois, and one of the emrloyees of the Board, in which Senator Lewis made request for certain information, was read to the Board, and the Secretary was directed to send the information desired by Senator Lewis. Senator Lewis having also requested that he be supplied with information as to the affiliations of reserve bank directors with institutions other than the Federal reserve banks. The subject was referred to Mr. Delano for such action as he might deem best. Mr. Harding presented a revised report relating to methods of designating reserve cities, and after discussion the said report was Adopted in the following form: The Federal Reserve Board announces the policy that will hereafter be adopted by it in the consideration of applications for designation as reserve cities. (a) It must be shown to the satisfaction of the Board that the applying city has a population within its legally constituted limits, together with its contiguous and dependent suburbs, of at least 50,000. (b) The National banks in the applying city must , have a combined capital and surplus of at least 0,000,000, with total deposits of not less than $10,000,000. 172 (c) 3ach application must be endorsed by at least 50 National banks located outside the applying city, who will state that they are either carrying, or intend to carry upon such designation, accounts with a National bank in the applying city. II Before final action is taken by the Federal Reserve Board, every application will be referred for report and recommendation to the Federal reserve bank of the district in which the applying city is located, whose chairman shall certify to the Board the names of the National banks that have endorsed said application. On motion it was voted that the application of the City of Nashville for designation as a reserve city be approved, subject to the favorable recommendation of the Federal Reserve Agent at Atlanta, such approval however, to be held confidential until the report is received. On motion, the application of Federal Reserve Agent Jay for two million dollars of Federal Reserve notes as follows: Five dollar notes Ten dollar notes ,A,000,000 1,000,000 was approved, the same having been duly recommended by the Committee on Issue and Redemption. A draft of a letter prepared by 3ounsel relating to the proper definition to be given to the term U. S. Notes having been read to the Board, was referred to the Governor of the Board for reconsideration. The Secretary of the Board stated the substance of a conversation with Mr. F. G. Leo, President of the Broadway Trust Co., in which the latter had asked for early action on the admission of his company to the Federal Reserve system. On motion the matter was referred to Mr. Harding for report. On motion it was voted to send out a letter relating to advertising the savings accounts of national banks in the form recommended by the Governor and Mr. Miller; and the Secretary of the Board was directed to take the necessary steps. On motion a letter relating to the exercise of powers of executor, trustee, etc., addressed to each Federal Reserve Agent was approved and the same ordered sent out. Certain applications for stock in Federal Reserve banks recommended by Mr. Harding, were approved by the Board, as follows: District No. 4. National Bank of Paintsville National First National First National Bank of Hazard Georgetown National First National First National Bank Hustonville, Ky. Paintsville, Ky. Barbourville, r. Hazard, Ky. Georgetown, Ky. Brooksville, Ky. Jenkins, Ky. 114 DISTRICT No. 9. Scandinavian American National First National Bank First National First National Farmers & Merchants National Sioux Falls, S. D. Bristol, S. D. Yankton, S. D. Langdon, N. D. Jamestown, N. D. DISTRICT No. 10. First National Commonwealth National First Nat'l. Bank of First National Lincoln, Nebraska Kansas City, LID' Blue Jacket, Okla. Sheridan, Wyo. DISTRICT No. 11. Farmers National Merchants & Planters National First National Francis National First National Bank of First National First National Tishomingo National Temple National Oklahoma National First National First National Antlers National Durant National Hannon, Okla. Ada, Okla. Haworth, Okla. Francis, Okla. Duncan, Okla. Kenefick, Okla. Sayre, Okla. Tishomingo, Okla. Temple, Okla.. Chickasha, Okla. Kingston, Okla. Idabel, Okla. Antlers, Okla. Durant, Okla. DISTRICT No. 12. Corona National Bank First National First National Rideout Smith National First National First National Commercial National First National Bank of Third National Bank National Bank of First National Bank First National Corona, Cal. Glendale, Cal. Gilroy, Cal. Oroville, Cal. Reedley, Cal. Vallejo, Cal. Upland, Cal. Orland, Cal. Walla Walla, Wash. Tacoma, 'lash. Kent, Wash. Harrington, Wash. 175 The Board took up the question of the establishment of branches of the National City Bank in the West Indies, the question at issue being whether the Board has power to authorize the establishment of a branch in a foreign country which branch may establish sub-branches in other-foreign countries, it being understood that the request for a branch at Porto Rico is disapproved, while the establishment of a branch in Havana with sub-branches in Juba is satisfactory. The subject was on motion referred to lir. Warburg, he to discuss it further with Counsel and report back to the Board. lin Delano reported for the Committee on Issue and Redemption relating to the distribution of Federal reserve notes by banks and denominations. After discus- sion the report was on motion adopted and a requisition was directed to be made on the Comptroller of the Currency for the preparation of the notes. On motion, at 5.30 p. m. the Board adjourned. (/ jecretary. APPROVED: Chairman.
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