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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.