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203 A meeting of the Executive Committee of the Federal Reserve Board was held in the office of the Federal Reserve Board on Monday, March 5, 1928, at 2:45 p.m. PRE:1NT: PRE3ENT ALSO: Governor Young Yr. Platt Mr. Hamlin Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary Mr. jyatt, General Counsel. Report of Committee on Salaries and Expenditures on letter dated 14" and from the Chairman of the Federal Reserve Bank of Chicago, rethat the Executive CdMmittee of that bank be permitted to exerit8 11 bozo, discretion with reference to keeping upon the payroll of the ror the balance of the year Mr. Frank Noveck, an employee who is ab" from his duties because of a serious illness; the Board's elroitittee r ecommending approval of the request. Approved. Memorandum from Counsel dated March 2nd with reference to the Clayton 4't413Pliettti011 of Mr. Bradford H. jalker, involving the First and Merchants i°nal Bank and the Virginia Trust Company, both of Richmond, Va.; e°111111e1 stating that the banks involved in Mr. Walker's application ap)1141r to be in substantial comnetition and that the Board is not authorappr _ ve 0 0 his application, although it would be under the amendment toth8 ClaYton Act now pending in Congress. the Accordingly, he recommended aeti°11 on the application be withheld until it is determined whether proposed amendment will be enacted into law at this session of Nitrense 204 V5/2e -2- Counsel's recommendation, being concurred in the Law Committee, was approved. by Memorandum dated Marcqi 3rd from the Director of the Division of 11"earch and Statistics, recommending that the set of charts on "bank °reclit, Orthe money rates and business activity", W ich is now used by members Board and its staff in the form of a desk folder, be printed and 41de av ailable for general distribution, the printed set to include only lEtterial that is made public in the Federal Reserve Bulletin. He estitated that 1,000 copies of the set will cost between $150 and $200 and steted it is proposed to give copies of the pamphlet to members of the tatist1 Cal conference which is to meet in Paris on April 11, 1928. Upon motion, the printing of 1,000 sets of the charts referred to was authorized. The Governor then presented an application for membership in the ? -111-1 Reserve System and for 15 shares of stock in the Federal Reserve 13Itztic Of Dallas by the First State Bank, WolfieCity, Texas, a reorganization ne First State Bank of JolfeCity, whose membership in the Federal Reaer lte System was automatically terminated on December 27, 1927, by the 0t "its assets to the new corporation. The Governor stated that Mr. Cunningham, members of the Board's Committee on Examinations, ellbnlitteci 11 ' °v'e the ti Irte 46 Separate application, the recommendations, Mr. Platt being inclined to apand Mr. Cunningham to defer action until such institution can clean up certain assets taken over from the (lid bank. The Governor stated that he believed the application ahould be approved, and, following a discussion, his recomMendation was concurred in by all members of the Executive 205 3A/28 -3- Committee, and the application was approved subject to the regular conditions of membership contained in the Board's Regulation H, Series of 1928, and to the following special condition: "You shall agree not to pay any dividend until you have a surplus of $1,250, and that thereafter, prior to the payment of a dividend, you shall carry to surplus account not less than one-tenth part of your net profits for the preceding dividend period until your surplus fund shall amount to fifty per cent of your capital stock." Memorandum from Counsel, dated February 25th, submitting corresl uce with the First Federal Foreign Investment Trust of New York el:tY on the question whether the corporation was acting in accordance the law and the Board's regulations in acquiring and holding stock ct the National Zinc Company, acquired as a bonus in connection with the Purchase of notes of that company; Counsel stating that although the acqUisition of the stock by the First Federal Foreign Divestment was not .T1 1 his opinion technically in accordance with the law EtIllithe ite`ith regulations, the corporation was apparently acting in good the acquisition of the stock, and as a practical matter, it iedellbtful that any harm can result from the holding of the stock in thi8 particular case. After discussion, the above memorandum was noted. lle331c)ranclum from Counsel, prepared at the request of Mr. Hamlin, tting draft of a letter to the Chairman of the Committee on Banking ci tt" CIll ' relleY of the Senate, suggesting that the pending bill, H.R. 6491, to Etilleild the Kern Amendment to the Clayton Act, be amended by the Senate elhtattee through the addition thereto of a provision expressly exempting 206 3/5/28 Joint -4- Stock Land banks from the provisions of the Clayton Act. After discussion, it was the consensus of opinion that it would be inadvisable to attempt to secure the amendment to H.R. 6491 at this time, and accordingly, it was voted that the proposed letter to the Chairman of the Senate Committee be laid on the table. The Governor then presented a memorandum dated February 28th from C1)141881, submittinp, in accordance with the request made by the Board 4t ita meeting on February 27th, drafts of bills to effect the various ropo„_ , p "o amendments to the Federal Reserve Act and other statutes referred to , ln his memorandum to the Board of January 7th. The Governor 811ggested that the Executive Committee consider the proposed bills "PrtratelY and make recommendations to the Board with respect to suggesting the amendments in the Board's forthcoming Annual Report. Pr°14)eed The amendments were then acted upon as follows: ci 1. An amendment to the first paragraph of Section 19, more etearlY defining demand deposits, time deposits, savings deposits, and making it more difficult to evade the proper classifica"of deposits for the purpose of computing reserves. Upon motion, it was voted to recommend to the Board that this amendment be not suggested in the Annual Report. 00:: . An amendment to Section 19, authorizing member banks, puting their reserves, to deduct "balances due from banks" gross demand deposits instead of from "balances due to 0ther banks" as at present. Upon motion, it was voted to recommend to the Board that this amendment be not suggested in the Annual Report. 3. A complete revision of Section 19, adjusting, clarifying slaplifying the reserve requirements in accordance with a 4-Lan suggested by the Chief of the Division of Bank Operations in alad 207 3/5/28 - a memorandum addressed to the Board under date of June 27, 1927. Upon motion, it was voted to recommend to the Board that this amendment be not suggested in the Annual Report. 4. A proposed amendment to Section 13 eliminating the word _grioultural" from the provision authorizing the discount of sght and demand drafts secured by bills of lading in order to ninate the difficulty in determining what is, or what is not, n°n-perishable, readily marketable, staple agricultural Produot.” A bill for this purpose, S. 1989, having already been passed by the Senate and being now in the hands Of the House Committee on Banking and Currency, it was voted to recommend to the Board that the amendment in question be suggested in the Annual Report, if the bill now pending has not passed the House at the time the Board's report is filed. state6 s. An amendment restoring the jurisdiction of the United es District Courts over suits brought by or against Federal Re banks, Federal Land banks and Joint Stock Land banks. Upon motion, it was voted to recommend to the Board that this amendment be suggested in the Annual Report, 6. An amendment to Section 4 exempting the Federal Reserve 13:IL/Ike from attachment or garnishment proceedings in the same M4nner as national banks are now exempted. Upon motion, it was voted to recommend to the Board that this amendment be suggested in the Annual Report. ty An amendment to Section 13 increasing the maximum maturipro(/ 'advances by Federal Reserve banks to member banks on their by Irlissory notes from 15 to 90 days when such notes are secured b ksPaper eligible for rediscount or purchase by Federal Reserve aa . After discussion, it WAS determined to pass over the above amendment, without recommendation, for consideration at a meeting of the Board. 208 3A/28 -6- , .8. An amendment to Section 8 of the Clayton Act, designed glve the Board more latitude in the matter of granting permits for interlocking bank directorates. A bill for this purpose, H.R. 6491, having already passed the House of Representatives at this session and having been favorably reported by the Senate Committee on Banking and Currency, upon motion, it was voted to recommend to the Board that the amendment be suggested in the Annual Report if the bill now Pending has not passed the Senate at the time the Board's report is filed. 9. An amendment to Section 4 to permit an officer, director employee of a mutual savings bank to serve as a Class Bar Class C Director of a Federal Reserve bank. or Upon motion, it was voted to recommend to the Board that this amendment be suggested in the Annual Report. 10• An amendment to Section 9, as amended by the McFadden Act. permitting state member banks to have foreign branches. Upon motion, it was voted to recommend to the Board that this amendment be suggested in the Annual Report. ti 11. Amendments to Section“ and 9 permitting the cancellabe°11 and surrender of Federal Reserve bank stock held by member which go out of the banking business or cease to function WithOut any receiver or liquidating agent being appointed therefor Upon motion, it was voted to recommend to the Board that this amendment be suggested in the Annual Report. of 12. An amendment to Section 21, suggested by the Comptroller ex the Currency, to provide that the salaries of national bank ijrniners shall be fixed by the Comptroller of the Currency, stead of the Board. The Governor reported that he has discussed this matter with the Comptroller of the Currency, who has agreed to the omission of this amendment from the recommendations to be included in the Annual Report. 209 3/5/28 -7- Counsel then referred to the two forms of bills submitted with his 1111510 "arldUM -P 0 January 7th, one of which would effect an amendment to Sectit)71 9 of the Federal Reserve Act which would make optional with the FElcieral Reserve Board the assessment against State member banks of the eoat8 of examinations made by the Board or the Federal Reserve banks, al:lathe other, in addition, (1) would give to the Board, instead of the direct Ors of the Federal Reserve banks, power to approve examinations 144de bY State authorities; (2) would authorize the Board to furnish "Pies Of reports of examinations of State member banks to State superto the banks examined, to receivers of such banks, and to any other Proper t1(:).111certain persons; (3) would amend Section 21 so as to eliminate thereobsolete language relating to the examination of State 14eniber banks by the Comptroller of the Currency, and (4) 'would amend Section 21 so as to make it optional with the Board whether expenses Of 8Pecial examinations of national banks or state member banks made by Ilederal R eserve banks under the authority of Section 21 should be aseees,sla af%inst the banks examined. After discussion, it was voted to recommend inclusion in the Annual Report of a revised form of bill which would alnend Sections 9 and 21 so as to make the assessment of charges for examinations optional and also amend Section 9 so as to permit the Board to furnish copies of reports of examinations in the manner above referred to. oF STANDING COMMITTEES: 4teds March 3rd, 5th, 4teds March 2nd, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending action on an application for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendation approved. 210 V5/28 -8- REPORTS OF STANDING COMMITTEES (Cont'd): kted, March 2nd, Recommending approval of the application of Mr. H. C. Couch for permission to serve at the same time as director of the National Park Bank, New York, N.Y., as director of the Bankers Trust Company, Little Rock, Ark. and as director of the Simmons National Bank, Pine Bluff, Ark. Recommendation approved. tIlted 'March 2nd, Recommending approval of the application of Mr. Albert C. Eppinger for permission to serve at the same time as director of the First National Bank, West New York, 7.J., and as director of the Weehawken Trust and Title Company, Union City, N.J. Recommendation approved. The meeting adjourned at 4:30 p Appro.oad:
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