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Upon call of the Governor, a special meeting of the Federal Reserve Board was held in the office of the Governor on Thursday, May 22, 1930, at 12:30 p.m. PRESENT: Governor Young Mr. Platt Mr. Hamlin Mr. Yiller Yr. James Mr. Cunningham Yr. McClelland, Asst. Secretary Governor Norris of the Federal Reserve Bank of Philadelphia was also Present and advised the Board of the action of his directors in authorizing negotiations for the purchase at a price of „1850,000 of the property at 10th and Chestnut Streets, adjoining the Federal Reserve bank building, fronting 93'3 1/2" on Chestnut Street and running back 123' 9 1/2" on 10th Street. He stated that the purchase of this property has been discussed at his bank for several years, but the asked price has been considered excessive until the present time. He stated that the bank has no building plans immediately in mind, but that the purchase of the property provides for expansion in the future and also protects the existing prop)rty of the Federal Reserve bank. After some discussion, Governor Norris withdrew from the meeting. The Committee an District 3 recommended that the Board approve the the action of the Philadelphia directors in authorizing negotiations for Purchase of the property mentioned, at a price not to exceed y850,000. Upon motion by Yr. Hamlin, the recommendation of the Committee was unanimously adopted. Telegram dated May 19th from Deputy Governor Kenzel of the Federal Reserve Bank of New York, advising that following a substantial reduction in Portfolios of bill dealers and a reduction in their rates of l/8,; on maturi- 5/22/30 -2- ties up to 90 days, the Federal Reserve bank, in order not to have its bill holdings reduced too rapidly, has made effective the following schedule of buying rates: 1 to 90 days 91 to 120 days 121 to 180 days Repurchase 2 1/2% 2 5/8% 34 2 1/ Without objection, noted with approval. Telegrams dated .1.ay 20th from the Deputy Governor of the Federal RCServe Bank of Boston and the Chairman of the Federal Reserve Bank of Jan Francisco, advising of the establishment of the following schedule of rates for purchases of bankers acceptances: 1 to 90 days 91 to 120 days 121 to 180 days Repurchase 2 1/210 2 5/8/; 2 1/2,4 0 bathout objection, noted with approval. Telegrams dated i.ay 20th from the Chairman of the Federal Reserve Bank Of Chicago, Lay 19th from the Deputy Governor of the Federal Reserve Bank of 3t. Louis, Lay 20th from the Secretary of the Federal Reserve Bank of :anneapolis, and letter dated Lay 20th from the Chairman of the Federal Reserve Bank of Kansas City, all advising of the establishment of the following schedule of rates for purchases of bani(ers, acceptances: 1 to 90 days 91 to 120 days 121 to 180 days - 2 1/2% 2 5/8% 3(;; Without objection, noted with approval. Telegrams dated laty 21st from the Chairman of the Federal Reserve Bank Of Boston and Lay 20th from the Chairman of the Federal Reserve Bank of 479 -3- 5/22/30 Kansas City, both advising that their boards of directors at meetings on the dates stated made no changes in the banks' existing schedules of rates Of discount and purchase. Without objection, noted with approval. Report of Committee on Exaninations on letter dated May 17th from the Federal Reserve Agent at Cleveland, requestirg permission to make the usual credit investigation, without charge to the member banks, of the Allegheny Trust Company and the Peoples - Pittsburgh Trust Company, both of Pittsburgh, Pennsylvania, and the Guaranty Trust Company, Butler, Pennsylvania, at the time they are under examination by State authorities; the Board's Committee also recommending approval. Approved. Report of Executive Committee an letter dated May 19th from the Comptroller of the Currency, recommending approval of an increase from 66500 to $10,000 per annum in the salary of National Bank Examiner Robert Neill; the Board's Committee also recommending approval. Approved. Letter dated May 17th from the Chairman of the Federal Reserve Bank of Dallas, aivising of the death on May 14th of Mr. Ernest Stoves, an appointee of the Bank to the San Antonio directorate, for the term ending December 31, 1931; the letter stating that the board of directors of the Dallas Bank at its next meeting will take action looking to the appointment of a director for the unexpired portion of Mr. Stoves' term. 480 S 5/22/30 Noted, with regret. Letter dated ::.ay 17th from the Federal Aeserve Agent at Dallas, Worth, advising that the indebtedness of the Texas National Bank of Fort Texas, has been liquidated in full and that final sett1em3nt was made reWith the receiver on Lay 15, 1930, without prejudice to either the ceiver of the Texas National Bank or the Federal deserve Bank in the matter of certain disputeu items. Noted. Memorandum from Counsel dated il-ay 19th, advising that The Chase Bank, organizing under Section 25 (a) of the federal Reserve Act, to busiwhich the Board on Lay 9th granted a preliminary permit to begin of ness, has now taken all steps required by the Board before issuance final permit; Counsel submitting draft of such final permit, together With a proposed letter of trananittal addressed to Rushmore, Bisbee and Stern, attorneys for the Corporation, commentin upon certain other questions incident to the organization of the Corporation. After discussion, upon motion, it was voted to issue to The Chase Bank final permit to commence business, in the form submitted by Counsel, and the proposed letter was also approved. Letter dated May 20th from the Chairman of the Federal Reserve Bank of New York, inquiring whether there would be any objection, under the Board's circular of December 27, 1915, with reference to directors and officers of Federal deserve banks holding political or public office, 5/22/30 -5- to acc3ptanee by 1-.1.r. R. M. Gidney, Assistant Deputy Governor at New York, Of appointment as a member of the Board of Education of Ridgewood, N. J., for an unexpired term ending February, 1931, and to his standing for reelection at that time for a term of three years. After discussion, upon motion, it was voted to advise Mr. Case that before takinc, action the Board would like to be advised whether the New York directors are familiar with the circumstances and are satisfied that -r. Gidney's acceptance of the appointment in question and his standing for election at the end of the unexpired term would not be contrary to the spirit of the ruling referred to. Letter dated May 16th from the Federal Reserve Agent at San Francisco submitting, at the suggestion of the Executive Committee of the bank, certain questions raised by the National Bank Examiner in his report of examination of the Bank of Italy National Trust and Savings Association as of December 31, 1929, regarding the classification by the bank for reserve purposes of certain public deposits and trust funds held by it; the letter inquiring whether it is the duty of the Comptroller of the Currency or of the Federal Reserve Agent to determine whether the funds in question are time deposits under the laws of the State of California and the Regulations of the Board, or whether they are demand deposits, and also whose duty it is to enforce compliance of the Bank of italy National Trust and Savings Association in carrying the proper amount of reserve, after that correct amount has been determined upon. 482 5/22/30 -6- After discussion, during which Mr. James sus7;ested that the members of the Board study the report of the last examination of the Bank of Italy National 2rust and Savings Association in connection with the questions raised in the Agent's letter, the letter, along with the report of examination, was ordered circulated among the members of the Board. Memorandum from Counsel dated May 20th, submitting draft of letter to r. H. S. Yohe of the United States Department of Agriculture confirming formally an opinion expressed to him by Counsel that a brokerage concern, organized and controlled by a grain company, and acting as warehouseman in charge of the elevators of the grain company, may not be considered an "independent" warehouseman within the meaning of the Board's Regulation "A", Providing that warehouse receipts covering the storage of readily marketable staples which are the basis for bankers acceptances, must be issued "by a party independent of the customer". Upon motion, the letter submitted with Counsel s memorandum was approved. Memorandum from Counsel dated Lay 19th, with reference to letter dated ,.ay 9th from the Federal Reserve Agent at San Francisco, regarding the appointment of receivers, under the amendment of April 23, 1930 to Section 6 of the Federal Reserve Act, for the First National Bank of Hillyard, Spokane, dashington, and the First National Bank of Alturas, California, which are no longer conducting a banking business but have not been placed in liquidation in accordance with the provisions of the National Bank Act and whose Federal Reserve bank stock is still outstanding; Counsel submitting (1) draft of letter to the Comptroller of the Currency requesting the appointment of a receiver for the First National Bank of Hillyard, Spokane, ,:ashing.ton, (2) draft of letter to the Federal 5/22/30 -7- Reserve Agent at San Francisco, advising that this request has been made and (3) draft of letter to the Federal Reserve Agent advising that if the First National Bank of Alturas is not placed in liquidation by June 1, 1930, aS nomseems probable, the Board will suggest to the Comptroller of the Currency the desirability of a receiver being appointed for this bank. Upon motion, the letters submitted by Counsel were approved. Memoranda from Counsel dated May 19th, submitting drafts of letters to the Federal Reserve Agent at Chicago, advising that in accordance with recommendations made by him, the Board will waive six months' notice of intention to withdraw from the Federal Reserve System in the cases of the Independence State Bank and the ..,adison & Kedzie State Bank, both of Chicago, Illinois, and authorizes, upon the surrender of Federal Reserve bank stook held by these institutions, its immediate cancellation and appropriate refund thereon. Upon motion, the letters submitted by Counsel were approved. Letter dated iay 16th from the Chairman of the Federal Reserve Bank Of Atlanta advising of the appointment of Lr. Robert S. parker and 1.1r. Hollins N. Randolph as attorneys for the bank to serve until January 1, 1931; the letter stating that, subject to the Board's approval, the salary Of ars Parker has been fixed at .,?2900 per annum, with additional compensation of 1.5.00 per annum for clerk hire, and the salary of Mr. Randolph at 10000 per annum, both effective lay 9, 1930. Upon motion, the salaries fixed by the Atlanta directors were approved. _8_ 5/22/30 Aeport of Committee on Examinations on memorandum dated _ay 21st from the Comptroller of the Currency, recommending approval of the application of the Calcasieu National Dank of 3outhwest Louisiana, Lake Charles, Louisiana, for permission to reduce its capital stock from ,4,600,000 to 000,000, aith the understanding that it immediately be increased to $1,200,000 and provided also that no cash be returned to the shareholders but that the amount made available by the reduction in capital be paid to them in slow or doubtful assets, including all other real estate paned by the bank; the Board's Committee recommending ajproval of the reduction subject to the conditions recommended by the Comptroller, and the further condition that the increase in capital be subscribed for and paid in before the reduction is effected. Upon motion, the reduction was approved subject to the conditions recommended by the Committee. Matter ordered circulated at the meeting an May 19th, namely, letter dated Lay 15th from the Chairman of the Federal Reserve Bank of New York, advising that the directors of the bank have voted to accept Participation in the Open Market Policy Conference under the plan recently approved by the Board subject to their interpretation that the plan loes not establish any different procedure with respect to bill operations than has existed heretofore. After discussion of the New York bank's interpretation of the plan, the Governor was requested to prepare a reply to the above letter and submit it to the Board. The Assistant Secretary then reported that replies have been received from all Federal Reserve Agents to the Board's letter of Larch 31, 1930, requesting a survey of investments in bank stocks by State member 5/22/30 485 -9- banks and trust companies in their respective districts as disclosed by the last reports of examination of the nember banks. A brief discussion ensued regardinf7 the desirability of amending the condition of membership set out in the Board's Regulation "H", Providing that State banks and trust companies admitted to membership thereunder shall not purchase stock in any Other bank or trust company except with the permission of the Board. * At the conclusion of the discussion, the letters received from the various Federal Reserve Agents submitting surveys made by them were ordered circulated among the members of the Board. The Governor then reported that he understands from Governor Harrison that the Federal Reserve Bank of New York will probably not submit to the Board before next 2uesday the question of a proposed reply to an inquiry of the Bank for International Settlements, regardin,F the flotation of reparations bonds in this market. P0aT3 OF STANDING COY1MITTEES: Dated, May 21st, Dated, May 20th, 21st, Recommending changes in stock at Federal Reserve banks as set forth in the Auxiliary Minute Book of this date. ;iecommendations approved. Recommending action on applications for fiduciary powers et forth in the Auxiliary Linute Book of this date. Recommendations approved. The meeting adjaurned at 1:30 p.m. Assistant Secretary. APproved:
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