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352 Upon call of the Governor a meeting of the Federal Reserve Board was held in the office of the Board on Monday, November 22, 1926 at 11:00 a.m. PRESENT: Governor Crissingsr Yr. Platt Mr. Hamlin 1.7,r. Miller Mx. Cunningham Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The reading of the minutes of the meetings of the Federal Reserve Board held on November 9th, 10th and 19th, and the meeting of the Executive Committee held on November 17th was dispensed with. The Governor presented a letter dated November 20th from the Secretary Of the board of directors of the Federal Reserve Bank of Atlanta, advising that at the meeting of that board held on November 16th it was voted to exPllage from the records of the bank a certain paragraph contained in the resolution adopted by that board at its meeting on October Sth,transmitted to the Federal _deserve Board under date of October 9th and presented to this Board at its meeting on October 12th,said resolution referring to the action of the Federal Reserve Board in voting to remove Mr. J. L. Campbell the office of Deputy Governor of the Federal Reserve Bank of Atlanta. Noted and ordered circulated. Letter dated November 19th from the Chairman of the Federal Reserve Ballic of Atlanta, transmitting copy of a resolution adopted by the board of clirectors of that bank providing that a committee of three members of the bcard of directors be appointed to confer with the Federal Reserve Board va all matters of interest to this bank and the System in an earnest effort that those relations may exist between the two boards which will make for 353 11/22/26 the successful conduct. of this bank and enable this bank to contribute to the invaluable service of the entire Federal aeserve System, as well as to cooperate fully with the Federal Jeserve Board in its efforts toward the same end"; the Chairman stating that the Committee is composed of Messrs. Blaok, 'Tare and himself, and ingairing if it would be agreeable for the Committee to meet with the Board on December 6th. Upon motion, it was voted to advise the Committee that the Board will be glad to meet it on the date -suggested. Letter dated November 20th from the Secretary of the Federal ./eserve Bamc Of Atlanta,transmitting copy of mport of a committee appointed by the board of directors of that bank to investieate the expenses of officers alld employees of the oank in connection with the Shipment of currency made to 4 Havana Agency on April 10, 1926. Noted and referred to the Committee on Salaries and Expenditures. Letter dated NoveMber 20th from the Secretary of the Federal Reserve 84424 of Atlanta, transmitting copy of report made by the special Salary C Ommittee of that bank in compliance with a request of the board of directors that it investigate an increase in expenses of the bank for the nine-month 13"icli ending September 30, 1926, as compared with the same period for the ear 1925. f1 Noted and referred to the Committee on . Salaries and Expenditures. The Governor then referred to the action taken at the recent Conference Of acwernors, with reference to the ruling relative to the handling of non- 354 s 11/22/26 cash collection items payable at street addresses contained in the Board's letter of September 24, 1926 (X-3677) which ruling suggested that each Federal Reserve bank exercise its own option as to the collection of the items in question. The Governor read to the Board the action of the Conference in voti ng "that in order to preserve that uniformity which is believed to be so essential to the best interests of the Federal deserve System, its member banks and the public, the Federal 2eserve Board should reconsider its letter Of September 24, 1926, and determine whether, from the point of view of the Pederal Reserve System as a whole, all Federal Reserve banks shall or whether all Federal Reserve banks shall not continue to handle for collection items which are payable at street addresses." Following a discussion, LIr. Miller moved that the Board reconsider its action of September 23 in adopting the ruling referred to and that the matter be made special order of business for a meeting of the Board on a date to be fixed by the Governor. hr. Miller's mot ion being put by the Chair was carried. The Governor then presented letter dated November 19th from the Chairman of the Federal deserve Bank of Atlanta advising that at a meeting Of the Executive Committee of the bank on November 18th, it was determined that .ir. Claude Gilbert, who has been serving there as 1Lssistaat Federal 4gent, had completed the work which had been outlined for him and that he ec)uld be spared to take up such work as the Board may have for him to do. that The Governor stated that Mr. Gilbert was in his office and suggested 355 11/22/26 -4- he be called. into the Meting for the purpose of discussing the woxic which he has been doing at the Federal deserve Bank of Atlanta, as well as the Whole qu est io n of Federal :/eserve examinations of state renter banks, it having been contemplated at the time of the adoption of the Board's resolutions of August 11, 1926 that :.:r. Gilbert, the conclusion of his service with the Federal _deserve Bank of At laatz.1, might be employed by the Board in accordance Wi th the first paragraph of the resolutions referred to. Lir. :Platt, Chairman of the Committee on Examinations, referred to the action of the Board at the meeting on No 3rd in tentatively ap- 1.3roving a report submitted by the Committee on Examinations under date of October 30th and in requesting_; the Committee to report back in detail an outline of the dnties of the examiner whose employment is recommended in its re's-ort. On behalf of the Committee, he submitted the following list of Slestions for the guidance of the examiner in making the survey referred to, in the Committee's report of October 30th: (1) t Do the examinations now made give the necessary information to enable Ile Federal iieserve Board to determine whether or not the member banks are ° t. 1-erating within the requirements of the Federal Heserve Act, the regula1°11.3 of the Board and the conditions of membership? ( s2) How are the examining forces of each of the Federal reserve banks •081ected and organized? Is the personnel of the examining force made up r:len qualified and trained for their work? •:/hat experience in bank examIla•tion did they have before entering the Federal reserve bank? (3.1 Are the Federal reserve banks receiving adequate information as to the t°1.1clition of the State member banks upon which they may safely act in excredit? 41.1 Are their examining fo mos capable of conducting an examination of the are;er banks in their districts? (5) itre their examining forces making adequate credit investigations, vfnich 0 -.tv°1ve the .loan policies, personnel and orani.:ation, as well as an appraisal the assets of a bank? 356 11/22/26 -5 (6) How far do they rely on State examinations? By what means do the Federal reserve banks determine whether State examinations are adequate for their Purposes and are the methods by which they determine whether State examinations i should be accepted adequate? (7) There Federal reserve examiners participate with State examiners in their examinations of State nember banks does such participation tend to raise the standard of State examinations? (8) To what extent are Federal reserve banks aware of the development of unfavorable conditions in member banks, through their daily contacts - cash letters, loans, etc.? (9) 'Alen the Federal reserve bank receives reports of examinations, or makes credit investigations, or otherwise obtains information with relation to the condition of a member bank, is the information properly analyzed and filed so tnat it can be readily obtained? (10) In general what can the Federal 2eserve Board do to improve examinations ln districts or instates where they are most in need of improvement? (*) That steps are taken by Federal reserve banks to secure the correction Of unsatisfactory conditions in member banks? At this point Mr. Gilbert was invited into the meeting, and there foil - ced an informal conference with reference to banking conditions in the , Atlanta district and Mr. Gilbert's experience in banking supervision. During this discussion, Mr. McIntosh entered the meeting. Following the discussion, it 'as moved: (1) That the report of the Board's Committee on Examinations, dated October 30, 1926, which report was tentatively approved by the Board at the meeting on November 3rd, be now definitively approved, and the reconmendation contained therein, to the effect that a competent examiner be appointed "to make a survey, and report as to the efficiency and thoroughfloss of examinutions and credit investigations made by each Federal reserve bank, and as to the efficiency and thoroughness of examinations of Stab banking departments", be adopted; (2) That the outline of the scope of the proposed survey, presented today in a supplementary report of the Committee on Examinations, be approved; :357 11/22/26 (3) r*lhat for the purpose of making this inquiry and. survey Mr. Claude Gilbert be employed by the Board, effective November 24, 1926, with the title of Supervisor of E - xamination, with compensation at the rate of ‘,10,000 a year, and. that for athninistrative purposes he be connected with the office of the Secretary of the Board; and (4) That action under that paragraph of the Board's resolution of August 11, 1926, reading "in order that there may be available a staff of examiners to conduct such special examinations of state member banks as may be found necessary by the 3oani following the report of the bank examiner referred to in the previous resolution, that the Governor be au thoriz ed to employ as and when necessary the services of a sufficient number of bank examiners", be suspended until the results of the survey to be und_ertaken by the Supervisor are available, ',hen it may be determined how far it may be necessary for the Board to go in itself undertaking member i;ank examinations through a division of member bank examination. Action on the above resolutions was deferred until the next meeting of the Board. The meeting adjourned. at 1:10 p 4036).( Secretary. Approved:
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