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463 • A meeting of the Federal Reserve Board was held in the office of the Pederal Reserve Board an Tuesday, May 25, 1926, at 10:30 a.m. PRESENT: Governor Crissinger Mr. Hamlin Mr. Miller Ur. James Mr. McIntosh Mr. Eddy, Secretary Mr. L.13Clelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held on May 21411 were read and approved. Telegram dated Mry 25th fmm the Chairman of the Federal Reserve ilealk Of Philadelphia, stating that based upon advices received from the Pecler, ' 144 Reserve Bank of New York on may 20th and 21st of changes in its "leallie of rates for purchases of bankers accertances, the schedule of such l'ates at the Philadelphia bank was changed to the following: 1 to 30 days 31 to 90 days 4 months 5 and 6 months Sales contracts IMO NMI 3 3 3 3 3 1/8% 1/4% 3/8% 3/45/ 0 1/2% Noted with approval. Letter dated May 24th from the Federal Reserve Agent at New York, adviatia g that the Equitable Tru.st Company of New York has been authorized by t1/5 State -.-,14 ealkin.g Department to open an:1 maintain a branch, on or after June 7th, the Corner of Madison Avenue and 28th Street, Manhattan. Noted.. Report of Committee on Examinations on letter dated May 22nd from the 4 Elsie tant Federal. Reserve Agent at Cleveland, recommending approval of 114 411 lc ation of the Citizens Trust an:1 Savings Bank, Columbus, Ohio, for 464 5/25/26 -2- Parnlission to operate a branch on :lain Street, near Ohio Avenue, Columbus; the Committee reconnending approval. Approved. Memoraniurn dated 1,1azi 17th from Mr. Jams, Chairman of the Board's Special 0 (tanittoe on Non-Cash Collections submitting copies of correspondence with 14r6 J01111 71. Barton, Chairman of the Amrican Banlears Association Comittee N°11-Cash Items, and offering the following resolution for the purpose of 481/08ing of the auestion of the Federal Reserve System's handling of noncash collections: "Be it resolved, That the Federal Reserve Board malms it optional with each Federal reserve bank as to discontinuing the collection of non-cash items at street addresses." The Governor called attention to the fact that the above memorandum bear a notation by 1.1r. Platt, the other manber of the Special Comittee 421 IT0,, 'Si Collections, to the effect that he disagrees with the resolutiola Proposed by hr. Jann s, as drawn. 8 After discussion, it was voted that consideration of Mr. Jams' proposed resolution be deferred for a meeting of the full Board. aeport of Connittee on Examinations on letter dated lieu 21st from the aeserve c't Agent at St. Louis, transmitting and recomending approval aPPlication of the First State Bank, Palmyra, Illinois, for approval CIr ita action on January 15, 1926, in absorbing the Palmyra State Bank, a 41:1`410tiber; the Committee recommending, approval. Approved. At this point, Mr. Platt entered the meeting. • 465 5/25/26 -3_ Letter dated May 14th from the Assistant Secretary of the Treasury retertag to the recent action of the Secretary of the Treasury in designating the Federal reserve banks and branches as agents for the redemption of thlited States currency unfit for farther circulation and in modifying the l'elptiOn procedure so as to eliminate the capital now required to finance shi nts of cancelled unfit currency in transit to the Treasury; the Assistant aecretar --Y stating that a considerable additional amount of capital is required tO 4.4 -J.nance shipments of new Currency in transit to the Federal reserve banks 441ibralaches and requesting the comments of the 3oard on a proposal to establi, s4 at the Federal Reserve banks and'at the Pittsburda, Cincinnati, Detroit 441 LO s Angeles branches, reserve stocks of new notes to be held in the joint el4stodv. Of the Federal Reserve Agents and the Federal reserve banks, as a 11" Of the reserve stock of the Treasurer of the United States and to be wq0A uPon order of the Treasurer. The Secretary of the Board stated that he had discussed the natter with the Assistant Secretary and that the proposal to place such stocks at the branches named had been withdrawn due to lack of vault facilities or the absence of an Assistant Federal Reserve Agent at the branches. The Secretary also stated that he had raised a question as to the legality of the Federal Reserve Agents acting as joint custodians of the stocks of notes and read to the Board from a letter addressed to the Under Secretary of the Treasury by the Acting Solicitor of the Treasury, Department of Justice, wherein it is stated that the Federal Reserve Agents may legally act in the capacity. Mr. James moved approval of the proposal subject to an opinion by the Board's Counsel as to the legality of the Federal Reserve Agents' custodianship. Carried. 466 5/25/26 -4- •. UI The Governor then advised the Board that the letter to the Secretary Of the Treasury, approved on Lazy- 21st, on the subject of the future operation "the Federal Reserve agencies in Cuba has not yet been ti'..;insmitted. He stated tam; Mr. C. E. Mitchell, President of the National City Bank of New t.) was to be in Washington within the next day or so to discuss with the 8"I ' etarY of the Treasury, and probably the Secretary of State, the situation Cltha, and inquired whether the Board wishes to have its letter delivered to the Secretary of the Treasury or withheld until the result of Mr. Mitchell's can be ascertained. After discussion, the Governor was requested to forward the letter to the Secretary of the Treasury in the form approved at the meeting on May 21st. r.r• Cunningham then joined the meeting. The Goveraor then read. to the Board a m3morandum from Counsel sub11"t4 ng the opinion requested by the Board. yesterday as to the interpreta- tiort Of the provision of Section 21 of the Federal Reserve Act that "The NA, l. :Reserve Board shall, at least once eaCh year, order an examination Of e a•eh Pederal Reserve bank ***"; Counsel stating that in his opinion it constitute a compliance with this provision if the Federal Reserve 130.9,1„.1 at the beginning of each year, issues a general order to its Chief 1111113.61" directing him to "make at least one examination of each Federal 48erve bank wit,hin the present year". Discussion then ensued as to the advisability of the Board comply- With th.e request of the Federal Reserve Bank of New York that the Board's 467 5/25/26 -57 ' lief Examiner, uoon his arrival to make an examination of that bank, -oresent 4 letter from the Board addressed to the bank, stating in substance that the xalniner and his force are aathorized to examine the bank as of the date 81-.)acified in the letter. 14 :Ir. Platt moved that the Board approve the form of letter subnitted bY the Chief Examiner at yesterday's meeting, which the 2caminer stated he believed would be satisfactory to the ilew York bank* :iller moved as a substitute that the following letter be addfessed to e—, "ull Federal Reserve bank: "You are advised that in compliance with the provision of Section 21 of the Federal Reserve Act that 'The Federal lieserve Board shall, at least once each year, order an examination of each Federal reserve bank ***", the Federal Reserve Board has ordered its Chief Examiner, throu.P.,h its Division of Examination, to make an examination Of each Federal Reserve bank at least once during the calendar year. "In accordance with this action, the Board has directed Er. J. F. Herson, its Chief Examiner, to make at least one examination of the Federal lieserve Bank of during the year 1926* "The Board has also empowered its Jhief Examiner to select the dates on vhich all examinations will be began. "You are requested to give him and his fame all proper assistance in makin, the examinations." After discussion, Mr. Miller's substitute motion was Fat by the Chair and carried, 1.1r. Platt voting "no". Dr. Janes then moved that lairsuant to the above resolution, the Board's Chief Examiner oe notified Of the senaing the letter cla ted to each _Federal reserve bank, and that he be directed to conduct at least one examination of each Federal reserve bank daring the calendar year 196, on dates to oe fixeu uy himself* Carried, 1,:r. Platt votir "no". '••• 14 , 468 5/25/26 -6- Mr. Platt expressed the opinion that to send the above letter to the Federal Reserve Bank of New York at this tine would. place the Board. in a curious position and practicallY give notice to the bank that an examination was in contemplation. it STAIIDING CCEIIITTESS: bate t W 24th, Recommending change in stock at Federal Reserve Bank as set forth in the Auxiliary Minute Book of this date. Approved. bateci, may 24th, Recommending action on application for admi ssion of state bank, subject to the conditions stated in the individual report attached. to the application, as set forth in the Auxiliary Minute Book of this date. Approved. The meeting adjourned at 12 o'clock noon. 41. ea:
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