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379 A meeting of the Federal Reserve Board was held in the office of the 1/ Federal Reserve Board on Tuesday, May 10, 1927 at 11:00 a.m. PRESENT: Governor Crissinger Mr. Platt Mr. Hamlin Mr. /liner Mr. James Mr. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The Governor presented application of The Pigeon State Bank, Pigeon, laiehigan, for membership in the Federal Reserve System and for 18 shares or stock in the Federal Reserve Bank of Chicago; together with recommenda- ti4n8 or the Board's sub-committee: (1) That the application be approved 11)ject to the nine general conditions of membership contained in the ard ts Regulation H, and the further condition that prior to the payment 'e a dividend the bank shall carry to surplus account not less than onepa -t of its net profits for the preceding dividend period until its e4r131118 fund shall amount to ',;125,000 and (2) That the Bank be advised that the t ,Joard is now considering the question of what changes should be made earldltions of membership in the light of the provisions of the McFadden Act, and if any changes in the present conditions are found necessary the tat . 17111 be subject to such charges, and acceptance by the bank of the e /1,44 A.tions now being imposed will be deemed to be acceptance of any changes 144 th°se conditions which the Board finds to be necessary in view of the 4.14elldnents contained in the McFadden Act. Upon motion, it was voted to approve the application in accordance with the recommendations of the sub-committee. The Governor also presented application of the Bank of Avoca, Avoca, • yo for membership in the Federal Reserve System and for 60 shares of 38,0 5/10/27 stock in the Federal Reserve Bank of New York, together with recommend.Of the Board's sub-committee: (1) That the application be approved subject, to the regular conditions of membership contained in the Board's Regulation H and (2) That the bank be advised that the Board is now conthe question of what changes should be made in conditions of 151e*ership in the light of the provisions of the licFadden Act, and if any changes in the present conditions are found necessary the bank will be eUbject to such changes, and acceptance by the bank of the conditions now bej imposed will be deemed to be acceptance of any changes in those condi- tlelle which the Board finds to be necessary in view of the amendments conned in the McFadden Act. Upon motion, it was voted to approve the application in accordance with the recommendationsof the sub-committee. Letter dated May 5th from the Assistant Secretary of the Federal Reserve Bank of New York, advising that the board of directors on that (tEtY raade no change in the bank's existing schedule of rates of discount ELtla Purchase. Noted. Telegram dated May 6th from the Secretary of the Federal Reserve Bank or Cleveland, advising that the board of directors on that day' made no , ch.411 J-11 the bank's existing schedule of rates of discount and purchase. Noted. Telegram dated May 9th from the Secretary of the Federal Reserve 11441, - of Lanneapolis, advising that the board of directors on that day 1444 no change in the bank's existing schedule of rates of discount and 381 5/10/27 Purchase. Noted. Telegram dated May 7th from the Chairman of the Federal Reserve Bank of Dallas, advising that the board of directors on that day made no change the ba.nles existing schedule of rates of discount and purchase. Noted. Telegram dated May 5th from the Chairman of the Federal Reserve Bank SEtn Francisco, advising that the board of directors on that day made no harige in the bank's existing schedule of rates of discount and purchase. Noted. 11 The Governor then presented telegrams exchanged under date of May 8th with the Assistant Federal Reserve Agent at Cleveland, with reference to the possibility of the organization of an Edge Act Corporation by Otis 1141:1 Company of that city. Noted. Letter dated L.y 5th from the Secretary ,.!; Treasurer of the First ?ecler18.1 Foreign Investment Trust of New York City, advising of the pay14erit °11 that date of the firt3.1 installment on the capital stock of the e°1"Poration. Noted. Letter dated :11.y 6th from the Federal Reserve Agent at Chicago, with ene e to application for membership in the System filed by the Center Lttle ' L tate Savings Bank, Center Line,Michigan; the Agent advising that Ett, th "0 present time the condition of the bank does not warrant favorable 1,000 lar4e4dation on the application and that the management of the bank 382 5/10/27 rea •••11 . 1 ,.. lizing that fact has filed a request that the application lie without action until after another examination can be made at the end of several " 111 tha. the The Agent in his letter requested instructions from the Board in matter. ;1 7. Referred to the Committee on District , Report of Executive Colaiaittee on letter dated May 6th from the Se cretary of the Federal Reserve Bank of Cleveland, requesting approval Of the action of the Executive Committee of that bank in voting to ex- tencl for a period of 45 days from April 8th, with full pay, leave of 4beence on account of illness granted Mr. William E. Evans, an employee the Pittsburgh Branch; the Committee recommending approval. Approved. Report of Committee on Salaries and Expenditures on letter dated 14Y 7th from the Governor of the Federal Reserve Bank of Minneapolis, l'eqUeeting approval of the action of the Executive Committee of that b4nk in voting to extend until June 1st, with full pay, leave of absence c311 a ccotult of illness pr eviously granted Mrs. Myrtle Peters Fletcher, an el711110yee of the Auditing Department; the Committee recommending approval. Approved. Report of Committee on Salaries and Expenditures on letter dated 1411Y 4th from the Chairman of the Federal Reserve Bank at Poston, advising "the action of the directors of that bank in voting, subject to the ap111'°73.1 of the Federal Reserve Board, to extend leaves of absence on account Of illilee4P to Mr.Joseph Buckley of the Transit Department, Miss Olive 44//er of the Bookkeeping Department, Miss Ruth ':larren of the Transit 383 5/10/27 -5- Department, 1iss Mary Quealy of the Transit Department, and Miss Elizabeth MacNeil of the Money Department; the Committee recommending aPProval. Approved. Report of Committee on Salaries and Expenditures on letter dated !day 6th from the Controller of Administration of the Federal Reserve Bank of Chicago, advising of payments in the amount of 584.05 and 1175. 10, respectively, made to Snell Brothers, attorneys at Ida Grove, It:17m, and to the Clerk of the District Court at Ida Grove, for services and court costs in connection with claims against the failed Citizens State Bank of iirthur, Iowa; the Committee recommending that the payments be noted with approval. Noted vrith approval. Letters dated May 5th and 9th from the Assistant Federal Reserve Acent at New York, vrith reference to branch banking developments in New jereeY; the Itssistant "gent advising that the State Banking Commissioner has issued permits for the establishment of branches to the Central Home Company of Elizabeth, the Elizabethport Banking Company of l'izEtbeth, Bayonne Trust Company of Bayonne, Clinton Trust Company of Newttrici Guardian Trust Company of Newark and the Perth Amboy Trust C°411341-1Y of Perth Amboy. Noted. Report of Committee on Examimtions on letter dated lily 7th from the Pedera.1 Reserve Agent at Cleveland, recommending approval of an applitierl of the City Trust and Say ings Bank of Youngstcrtn, Ohio, for per- 384 5/10/27 -6- llliseion to purchase the South Side Savings Bank Company of Youngstown, located at 1507 Market Street, and to operate same as a branch, in lieu of the branch recently approved by the Board for establishment at 1702 Market Street; the Committee also recommending approval. Approved. Report of Committee on Examinations on letter dated May 7th from the Federal Reserve Agent at Minneapolis, transmitting and recommending apProNal of an application of the Fourth Northwestern National Bank of Mirineap olis, an outlying institution, for a reduction in its reserve re- from 10% to 7 of demand deposits; the Committee stating that the Fourth NorthwesternNational Bank was formerly a branch of the Northemn National Bank of Minneapolis, and that it can see no reason for l*eftzsing the application. Upon motion by Mr. Platt, the application was approved, Mr. Miller voting "no". Letter dated May 5th from Mr. Alexander P. Trowbridge, advising that he v.r .441 report to the Board upon the plans and specifications for the 118414 to be installed at the Havana Agency for the SUM of 0200, provided stUdY is made in his own office, as a trip to Atlanta, which he does believe would be necessary, would involve an additional per diem fee 131118 the cost of the trip. After discussion, Mr. Miller moved that the Governor be authorized to employ Mr. Trowbridge, in accordance with the terns of his letter, if in his judgment it seems advisable. Carried. this point, Mr. McIntosh entered the meeting. 4,8r4. Q...) 5/10/27 -7- Report of Committee on District ),-5 on letter dated May 4th and telegrail' dated May 5th from the Executive Committee and the Governor, respecti 'velY) of the Federal Reserve Bank of Richmond, requesting approval of the acceptance by the bank of bid of the Mosier Safe Company, aggregating 21(4,499.00 for the installation of the vault in the new Baltimore Branch Bank building; the Committee recommending approval, provided the vault 6Pecifications are approved by Mr. Trowbridge who is acting as consulting architect in connection with the ccnstruction of the Baltimore building. Upon motion by Mr. Hamlin, the recommendation of the Committee was approved. Letter dated May 3rd from the Chairman of the Federal ?,eserve rani: or Dallas, advising of the rejection of the offer of225,000 made by that bank urder the authority recently granted by the Board for the purhase 11(71 as quarters for the proposed San Antonio branch, of the building °ecuPied by the San Antonio National Bank. Noted. The Secretary then presented a telegram addressed ty the Chairman Or the Federal Reserve Bank of Dallas under date of May 9th to the Governor tils Bank who is now in Washington, advising of the action of the board or d irectors of that bank in voting, subject to the approval of the Board, to 1,„ '(, se temporary quarters for the San Antonio Branch in the Frost Nat i°hal Bank building at a monthly rental of $850 until permanent glItrters become available and requesting that the Federal Reserve Board re"nsider its recent action in voting that the branch should not be "tablished until permanent quarters are secured. After discussion, Mr. James moved that the 386 5/10/27 -8- Board reconsider its action of April 18th in voting that the branch of the Federal Reserve Dank of Dallas at San Antonio shall not be opened until permanent quarters are available. Mr• James' motion being put by the Chair was carried. Mr. James then stated that he would submit to the Board at its next meeting a formal resolution authorizing the immediate opening of the branch in temporary quarters. At this point, nr. licintosh withdrew from the meeting. The Governor then submitted a memorandum from Counsel dated May 4th, with r eference to the action of the Board at its meeting on December 22, 19243 in authorizing The Chase National Dank of the City of New York to eistaAlaish branches in Havana, Cuba, Panama City and Cristobal, Canal 4110; Counsel stating tl.at the Board's formal order was isstEd incorrectlY fl the nano of the Chase National Dank of New York and submitting a torta of nun.° pro tune order desired by the Chase National Bank of the City of New York. Upon motion, the order submitted by Counsel was adopted nunc pro tune and ordered spread upon the minutes as follows: "WHEREAS, on or about December 19, 1924, the Chase National Ple.nic of the City of New York applied to the Federal Reserve Board far an order authorizing said bank to establish branches in the bb CjtY of Havana, Republic of Cuba, the City of Panama, Republic of ' analna, and the City of Cristobal, Canal Zone, Isthmus of Panama; :1-/EREAS, by action taken at its meeting on December 22, 1924, the Federal Reserve Board, acting pursuant to the said application °I* the Chase National Bank of the City of New York, adopted the -"°110'aing order: 'The Chase National Bank of New York, having on or about December 19, 1924, filed an application with this Board for the purpose of obtaining authority to establish Branches in the City of Havana, Republic of Cuba, the City of Panama, Republic of Panama, and the City of Cristobal, 387 5/10/27 -9- Canal Zone, Isthmus of Panama., and the said application having been considered; and it appearing that the said application is properly rilde under the laws of the United States of luirerica and. should be granted, Now, therefore, it is ORDERED, that the said application be and it hereby is approved, and that the said Bank be and it hereby is authorized to establish Branches in the City of Havana, Republic of Cuba, the City of Panama, Republic of Panama, and the City of Cristobal, Canal Zone, Isthmus of Panama.' 1 11-1ERD".S, the said order refers to the said bank as the 'Chase litational Bank of New York' but the correct title of said bank is The Chase Nations.). Bank of the City of Nevr York'; "z-E;iuyis, the Federal Reserve Board in adopting said order, ilraS acting upon the application of the Chase National Bank of the elty of New. York and intended by its action to grant permission to the Chase National Bank of the City of New York to establish the branches named in said order and applied for by that bank; VIHEREAS, the omission of the words 'of the City' from the corporate title of the bank was a clerical mistake; Nai, MIRE:FORE, IT IS ORDERED that the said order of the Federal Reserve Board adopted on the 22nd day of December, 1924, and fully set out above, be and it hereby is corrected in accordance with the intertion of the Federal Reserve Board in adopting sald order to read as follows, to take effect as of December 22, 1924: The Chase National Bank of the City of New York, having on or about December 19, 1924, filed an application with this Board for tliB purpose of obtaining authority to establish Branches in the City of Havana, Republic of Cuba, the City of Panama, Republic of Panama, and the City of Cristobal, Canal Zone, Isthmus of Panama, and the said application having been considered and it appearing that the said application is properly made under the laws of the United States of nmerica and should be granted, Now, therefore, it is ORDRED, that the said application be and it hereby is approved, and that the said Bank be and it hereby is authorized to establish Branches in the City of Havana, Republic of Cuba, the City of Panama, Republic of Panama, and the City of Cristobal, Canal Zone, Isthmus of Panama." ' ileMorandum from Counsel dated 1ay 7th submitting application of the Ilea City Bank of New York for permission to establish branches in 388 5/10/27 -10- Agto.di1la, Bayamon, CagUn Fajardo, Guayama, Humacao, Juncos and Rio Piedras, all in Porto Rico; Counsel stating that the application is in Proper form, and that he knows of no legal reason why it flaould not be granted. After discussion, it MS voted to refer the above application to the Comptroller of the Currency for an expression of his opinion as to the advisability of its approval. Matter ordered circulated at the meeting on May 5th, namely, letter clated 2nd from the Chairtie-n of the Cornittee on Banking and Currency Of the House of Representatives with reference to the reported development Of chain banking in the United States. The Governor also submitted a iller4c)ranclum from Mr. James with reference to the preparation of a reply to Lir. LicFaddents letter* After discussion, the above letter was referred to the Law Committee for the preparation of a reply. The Governor then submitted memorandum from Counsel on letter dated 4151sil 30th from the Federal Reserve Agent at St. Louis, enclosing copy Of 4 trust agreement between the National Bank of Kentucky and the LouisTrust Company, both of Louisville, Ky., through which it is pro- 13°66d to bring about joint control of the institutions, at the same time Preserv, InG their corporate entities. The Governor stated that the Federal Reserve Agent at St. Louis "(1 l'oPresentatives of the two banks involved in the agreement are in "1-11gton today for conference with the Comptroller of the Currency, IL" 17(lad like to present the matter verbally to the Board or a Committee. After a brief discussion, Mr. Platt moved that it is the sense of the Board that it has 389 5/10/27 -11- no authority over the proposed trust agreement. Mr. Cunningham moved as a substitute for Mr. Platt's notion that the Board receive the Louisville representatives referred to by the Governor. Jr. Cunningham's substitute mot ion was put by the Chair and carried. Mr. Martin, Federal Reserve Agent at St. Louis and the Louisville representatives then entered the meeting and discussed their proposition with the Board. Following the discussion, :Ir. James moved that the Federal Reserve Board interpose no objection to the arrangement entered into by the National Bank of Kentucky and the Louisville Trust Company. Mr. James' motion being put by the Chair was carried. Lir. Martin, Federal Reserve Agent at St. Louis and the Louisville C°11411ittee then withdrew from the room. The Board's Counsel then entered the meeting and submitted a letter addy esEecl to him under date of May 6th by Judge Ueland, Counsel for the Pederal Reserve Bank of iiinneapolis, with reference to the par clearance 411it brought against that bank in 1925 by the First State Bank of Hugo, 14411.3 a nonmember. For the information of the Board members, Counsel l'e7ievied the matter, stating that the suit was for damages alleged to }Ave ueen suffered by the plaintiff: (1) Through loss of exchange charges, (2 ) Through being compelled to carry a larger cash reserve thereby losing irlt est on the money, and (3) Through injury to its reputation graving out 0 t the counter collection of checks by the Federal Reserve bank. He stilted that the damages sought by the plaintiff aggregated $19,105 - 115,000 11111itive damages and $4,105 actual, and that verdict in the case, which 390 5/10/27 -12- tr led in the State Court, was in favor of the plaintiff and awarded dairilages amounting to :)1,229.99. He inquired whether the Board desired to arrange for the employment of special counsel to assist in further Pr"eedincs in the case. After a full discussion, Mr. Miller moved that it is the opinion of the Board that the issues in the par clearance case of the First State Bank of Hugo, ilinnesota., against the Federal Reserve Bank of Minneapolis are of interest to every Federal Reserve bank and that arrangements should, therefore, be made for a competent presentation of the System's interests; and further that for this purpose the Board recommend the employment of Honorable Newton D. Baker as special counsel on behalf of the Federal Reserve banks., the cost of his employment to be prorated among the Federal Reserve banks. Carried. The minutes of the meeting of the Federal Reserve Board held on 'jay 5th Were then read and approved. R EPOI,___Z__2yLSTANDING COMLIITTELS; Dated, Lay 6th, 7th, 9th, 10th, bated, Recorilmending changes in stock at Federal Reserve Banks, as set forth in the Auxiliary Minute Book of this date. Recommendations approved. May 3rd, Recommending action on applicatiors for fiduciary powers 9th, 10th, as set forth in the Auxiliary Minute Book of this date. Recommendations approved. tkttec i , May 5th, te.ted, May 5th, Recommending approval of the application of Mr. George S. Silzer for permission to serve at the same time as President and Director of the Interstate Trust Company, New York, N.Y., as Chairman of the Board and director of the New Brunswick Trust Company, New Brunswick, N. J., and as Chairman of the Board and director of the Broad 6: Market National Bank, Newark, N.J. RecomnIendation approved. Recommending approval of the application of Mr. Harry Scullin for permission to serve at the same time as director of the First National Pank in St. Louis, Mo. and as director of the St. Louis Union Trust Company, St. Louis, No. Recommendation approved.
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