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312 A meting of the Federal Reserve Board was held. in the office of the Federal Reserve Board on Wednesday, March 31, 1926 at 11:15 a.m. PRESENT: Governor Crissinger Mr. Platt Mr. Hamlin Mr. Miller Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held. on March 29th were read and approved. Memorandum from the Acting Director of the Division of Research 411d- Statistics, dated March 29th, recormending that Mrs. Viola A. Hodson, a clerk in that office, be granted additional leave on account of illness Of twenty-three days beyond the regular thirty day period. Approved. Letter dated March 29th from the Federal Reserve Agent at New York, advising that the New York State Banking Department has authorized the Corn 7.-3xchange Bank to open a branch, on or after April 1st, at 1934 13rceciwaY, New York City. Noted. Memorandum from Counsel dated March 29th, submitting draft of reply to letter dated March 9th from the Fedora]. Reserve Agent at St. Louis, with reference to a design consisting of the letter "S" placed over the letter ,r," -u in such a fashion as to closely resemble the dollar sign which the United States Bank of St. Louis proposes to use on its letterheads 44(1 ill its advertisements; the proposed reply stating that the Board is 313 of the opinion that it should not approve the design in question, and reVesting the Federal Reserve Agent to advise the bank of the Board's disapproval. Upon motion, the proposed letter was approved. Memoranamm from Counsel on letters dated January 19th and 30th, tespectively, from the Governor of the Federal Reserve Bank of Dallas and the Chairman of the Federal Reserve Bank of Kansas City, regarding the establishment of funds for the purpose of making loans to needy employees of the ba bY setting aside proceeds of group life insurance policies on employees 'OZ whom the banks have been unable to locate beneficiaries; Counsel stating he is inclined to think that the proceeds of the insurance policies are held 14 a trust capacity and that inasmuch as the loans to be made are approved the officers of the banks and are in their judgment safe and proper, and the trust funds are kept intact against any possible future claim, he is °f the opinion that there is no legal objection to the arrangement proposed. Upon motion, the opinion expressed in Counsel's letter was adopted and it was voted to approve the establishment of the firmis in question. Ilemorandum from Counsel dated March 29th submitting, in accordance Irith the Board's action of March 11th, a formal order approving the transfel 'Of Valencia and Bernalillo counties, New Mexico, from the Eleventh to the Tenth Federal Reserve District, the change to be effective on Avail 15tht the date agreed upon by the Governors of the Federal Reserve banks 11//iblved. 314 -,- Upon motion, the proposed order was approved and it was directed that same be spread upon the minutes of the Board, as follows: "WHEREAS the Federal Reserve Board is an and emPowered under the terms of Section 2 of the Federal eserve Act fram time to time to readjust the Federal Reserve Districts created by the Reserve Bank Organization Committee; and .:,...ELTAS all member banks of the Federal eserve System loeFated in the Counties of Bernalillo and Valencia in the State of idexico have requested the Federal Reserve Board to transfer the said Counties from the Eleventh Federal Reserve District to the Tenth Federal Reserve District, and the Federal Reserve Banlm Of Eansas City and Dallas have been notified of the proposed transfer and have stated that they do not object thereto; and WHEREAS it appears to the Federal Reserve Board that the 2o1 venience and customary course of business of the Tenth and leventh Federal Reserve Districts and the best interests of the r,ecleral Reserve System will be served by the transfer of the ,iounties of Bernalillo and Valencia , in the State of New ilexico, Fr°1M the Eleventh Federal Reserve District to the Tenth Federal 4ieserve District. NOW, THEAwariE, IT IS 02D-2ED: (I) (II) (III) That the Counties of Bernalillo and Valencia, in the State of New Lexico, which are now located In the Eleventh Federal Reserve District, be and are hereby transferred to and included in the Tenth Federal Reserve District, and the boundaries of the Tenth and Eleventh Federal ilOserve Districts be and are hereby readjusted accordingly. That-nth° changes and readjustments in the Tenth and Eleventh Federal Reserve Districts directed in this order shall become effective on the lath day of April , 1926. That the Federal Reserve Banks of Kansas City and Dallas be notified of the changes and readjustments directed in this order and directed to take such action as may be necessary for the transfer of membership of the member banks included in the territory transferred from the _aeventh Federal Reserve District to the Tenth Federal Reserve District." • 315 3/31/26 -4- "(IV) That a copy of this order be filed with the Comptroller of the Currency to be filed with the certificate of the Reserve Bank Organization Commi ttee." rend= from Counsel dated March 30th, submitting drafts of replies to letters dated March 11th and March 15th, respectively, from Mr. Thomas B. ?at°1:1 of New York City, General Counsel for the American Bankers Association al3d Ur. H. R. Dulany, Jr., attorney of Washington, D. C., both requesting a from the Boand as to whether it will be necessary for a national bank t° deposit United States bonds or other securities in its trust department to secure trust funds deposited by it with the consent of the owner with "her banks; the proposed replies stating that (1) If the funds in question 44.7e been deposited'to the general account of the nat ional bank and are being bY it in its general commercial business, it will be necessary to deposit 15/'°Per securities in the trust department of the national bank to secure same, a" that (2) If the trust funds have been deposited in special accounts in the Ilezle of the national bank as trustee and such national bank is not using the funds in its general commercial business the Board is of the opinion that the law does not require the national bank to deposit United States bonds (4. othA —r securities in its trust department to secure these funds. With this opinion, Governor Crissinger submitted a memorandum stating that the spirit of the law is to protect the trust estate and. for that reason before approving the opinion, he would like to know why the trustee bank would deposit such funds in another institution and on what terms. After discussion, it was voted to refer the above matter back to the Law Committee. 711e Governor then referred again to the resolution adopted by the Board 316 -5at its meeting on March 8th inter-Posing no objection to an increase in the Peaeral ,ieserve banks' participation in the proposed central bank credit to the National Banat of Belgium, which provided that the details Of tile Proposed credit were to be submitted to the Board for its approval before the final agreement is made. The Governor reiterated the statement bY him at the meeting on March 23rd that he had not understood the res°11-1tion contemplated resubmission of the matter to the ioard, and stated he bad. advised Governor Strong at the time of the Board's finn approval. By unanimous consent, he submitted the following statement: "In sicning approval to tie minutes of the meeting of the hold on March 8, 1926, at which the Governor of the Federal ese aTh "Ire Bank of New York discussed with the mambers of the Board an Tellament to the proe;i..a.re for the extension of credit to the National Inearik. of Belgium, I wish to be recorded in the minutes of this (today's) , ting that I approved the minutes of the meeting on March 8th above ree Itie:?rred- to as being an accurate report of the proceedings of that ' co 'ing', l aril that in approving said minutes I do not nt nw action fo. ' i trued. as approving the resolution adopted by the Board immediately ti the verbal presentation made by Governor Strong. This resolur,.,°11' has been interpreted informally by some members of the Board to ire that the details of the proposed credit to the Bank of Belgium tie t be submitted to the Bean). for its approval before any final agreeonlit is made Dade by the Governor of the Federal Reserve Bank of New York of the Federal reserve banks. The min-ates of the meeting of airell 8th show that the resolution in question was adopted without a vote, and I wish to erplain that my failure to vote in the thrive was due to an understanding on my part that the action of ; yo Board. authorized the Governor of the Federal .deserve Bank of New ba 4 to enter into firm negotiations on behalf of the Federal reserve astlke along the line of the statements he made verbally to the Boaxd, Of recorded in said minutes, and that the Board merely wished. all details it alY film agreement entered into to be submitted to it, in orde-e that nlight have an opportunity of approving in final form the agreement to eh it authorized the Governor of the Federal Reserve Bank of New York 1t eGot1ate. As the resolution in question might be interpreted to lierize the Governor of the Federal lieserve Bank of New York to negotiate, Bo az,,e 317 3/31/26 "but not enter into a firm agrea-aent, I wish to state that had I so interpreted it at the time it was offered I would have voted against it." During the discussion of the above, the Governor stated that so far as he knew no agreement had been made under the Board's tentative authority due to the failure Of private bankers to arrange the •;100,000,000 three year note loan of the Balgian Government, included in the program, and, that as the matter now stood the Federal Reserve Bank of New York was prepaxed to go ahead whenever the government credit was arranged. Mr. Miller stated. that he thoujit it very important that the Board should have definite information in the premises and. moved: "That the Governor ascertain and report to the Board the present status of the credits to the Belgian Gover.mient and the National Bank of Belgium that were in contemplation at the time Governor Strong appeared before the Board on March 8th, more especially, the status of the arrangements with respect to the credit to the National Bank of Belgium, in which the Federal Reserve banks were to re.rticipate, and. also the status of the .,100,000,000 three-year note loan of the Belgian Government." Carried, Governor Crissinger "not voting". REPoaTs Bated., OF S'211IDING C OT4ITTEES: March 29th, 30th, 31st, Dated, March 19th, 27th, 29th, Dated, 1,Iarch. 29th, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary Minute Book date. thisof Approved. Recorraending action on applications for fiduciary Powers as set forth in the Auxiliary Minute Book of this date. Approved. Recommending a-oproval of the application of Mr. C. B. Merriam for permission to serve at the same time as director of the First National Bank, St. Marys, Kansas and as officer and. director of the Central National Bank, Topeka, Kansas. Approved. The meeting adjourned at 12:30 p.m
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