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372
A meeting of the Federal Reserve Board. was held in the office of the
Federa.1 Reserve Board. on Friday, november 26, 1926, at 11:30 a.m.
PIESMT:

Governor Crissinger
Mr. Platt
Hamlin
Mr. Cunningham
Eddy, Secretary
Mr. LIcClelland, Assistant Secretary.

The Governor stated. that the sicial order of business for this r.prninVs meeting would be cons iderat ion of the matters set forth in the letter
addressed to the Board under date of november 23rd. by the Secretary of the
Governors' Conference, being those -,thich the recent conference subnitted
to the Board for its azivice or a.00roval or those upon which the Board hEd
asked for the opinion and recommendation of the conference.

The matters

were then taken up separately in the order in which they were set forth in
the letter above referred to, as follows:
Report of Federal Reserve Agents' Committee on Member Bank Reserves,
submitted to the Federal Reserve Board under date of :7.ay 12, 1925.
The conference considered virether this is the opportune
time to seek 1is1ation concerning those features of the report which the Governors have heretofore approved in principle.
It was voted to be the sense of the conference that this is not
an appropriate time to seek legislation concerning any of the
matters referred to in the report of the Agents' Committee.
After discussion, upon motion by Mr. Hamlin,
it was voted, to concur in the action of the Governors' Conference.
Amendment to _iegulat ion A to make eligible lo r redis count or purchaSC by Federal reserve banks a bankers acceptance drawn by an elevator or
war ehous.e company and secured by terminal warehouse receipts of the elevator
'.7arehouse company that draws the draft. (Boarti.'s letter X-4693, dated
°ctober 13, 1926).
After discussing the conditions under which registered
warehouse receipts are issued by terminal elevator or warehouse




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companies oimrating in ::innesota under the supervision
of the liailroad and '„arehouse Commission of the State
of :linnesota, it was votea to be the sense of the conference that registered terminal elevator or warehouse
receipts which are issued under conditions and practices
similar to those prevailing in the case of such receipts
issued under the supervision of the _),ailroad and. Warehouse Commission of the State of ::innesota, are within
the spirit of the Board's ..iegulations requiring that
warehouse receipts to be eligible as collateral for acceptances must be issued_ by a warehouse independent of
the customer and that, therefore, the Federal eserve
Board should rule that acceptances secured by such warehouse receipts are eligible provided, of course, that
such acceptances comply with all of the relevant requirements of the Federal eserve
,lfter discussion, it was voted_ that action
on the above matter be deferred for the time
being.
Regulations covering rediscount of notes secured by adjusted
service certificates under the provisions of Section 502 of the -;orld
2',.djusted Conrcensation Act. (See Boars letter X-4688, dated
October 12, 1926).
It was voted that the chairman of the conference should
appoint a committee of three operating men from the Federal
reserve banks to confer and cooperate with :,:r. ',7yatt, the Board's
Counsel, if desired, in the preparation of regulations and forms,
including a draft of circular letter to be issued by the several
Federal reserve banks concerning the discount of notes secured
by adjusted service certificates.
The Governor reported that the Committee
referred to had already been appointed and
that arrangements had been made for a conference between the Board's Counsel and. the committee
some time next week. Inasmuch as the Board has
already formally referred this matter to its Law
Committee, he stated that no further action was
required. at this time.
advisability of the Board adopting for all national banks a
lainimum capital requirement and. imposing other requirements in connection with its granting authority to such banks to exemise trust
Powers. (Board's letter H-4686, dated October 12, 1926.)




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11/26/26

It was voted to be the sense of the conference
(A) that it is inexpedient for the Federal .:Leserve Board to place
a capital limit on national banks applying for trust powers in
view of the provisions of the law and the fu.rther fact that the
exercise of trust powers by state banks is governed, by different
laws in different states.
(B) that some limit should be placed by the Federal Reserve Board
upon the time taken by national banks to qualify as trustee under
the state law after having received a -permit to exercise trust
130-,7ers from the Federal Reserve Board.
(C) that it would be appropriate for the Federal Lieserve Board,
in considering applications for trust powers, to take into consideration the relation of capital and surplus to deposit liability•
The Jecretarj called attention to the fact that the
subject above mentioned was also referred to the Federal
deserve Agents' Conference which submitted extensive recommendations on the general subject of the granting of fiduciary
powers.
After discussion, it was voted that the
recomendations of both the Governors' and
Federal eserve Agents' Conferenceson this
subject be referred to the Board's Law Committee for report.
Mr. Hamlin, Chairman of the Law Committee,
called attention to the fact that Mr. McIntosh,
the other member of the Cormittee, would be absent from the city for a considerable time, and
at his request the Governor designated Mr. Platt
to serve on the Committee during the absence of
1:cInto sh.
ies
Authority of a Federal reserve bank to receive deposits of securit
Federal
and
Banks
Land
(31% safe-keeping from Farm Loan ,,iegistrars, Federal
1926.)
ritermediate Credit Banks. (Board's letter X-4690, dated October 12,

1

After consideration of the opinion of the Board's Counsel
that
submitted under date of June 4, 1926, stating the opinion
of
s
deposit
receive
to
ed
Federal reserve banks are authoriz
securities for safe-lmeping from Federal Intermediate Credit
s from
Banks, but are without authority to receive such deposit
s
opinion
and
ars,
Federal Land Banks or from Farm Loan Registr
voted
was
it
of Counsel of individual Federal reserve banks,
to be the sense of the conference that Federal reserve banks
ies for
have no legal authority to receive deposits of securit
rs.
iegistra
Loan
Farm
or
Banks
Land
safe-keeping from Federal




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-4-

After discussion, I:Ir. Hamlin moved adoption
of the opinion of the Board's Counsel above
referred to.
Hamlin's motion, being put by the
Chair, was unanimously carried.
,),uestion of Federal reserve bank representation at Bankers Conventions
to 'hat extent should Federal reserve banks be represented by officers and
eMPloyees. (Board's letter X-4691, dated October 12, 1926.)
It was voted to be the sense of the conference that representation of Federal reserve banks at conventions within their
own district is of the utmost importance, that such attendance
at conventions outside of their district is sometimes advisable,
and that the determination of such Questions is one which must
necessarily be left to the judgment of the officers and directors
of each Federal reserve bank, since it is imrossible to la, do:rn
any uniform practice.
The Secretary read to the Board the action of
the Federal 2eserve &gents' Conference to which the
same question was referred as follows:
"It was thought desirable that Federal reserve banks
at their discretion be represented at conventions of the
American Bankers Association; that the number of and the
officers who should attend should be decIded by the board
of directors of each of the Federal reserve banks; that it
is important that the present policy of the Federal roserve
banks in being represented at state bankers conventions
and group meetings be continued."
.A.fter discussion, Li.. Hamlin moved approval
of the recommendations of the conferences.
IIr. Hamlin's motion being put by
the Chair, was carried, 7.r. L:iller voting "no".

o

Advisability of seeking an anenaent to the 1 aw to restore to Federal
-"s jurisdiction over suits by and against Federal reserve banks. (Board's
etter 7:-4694, dated October 13, 1926.)
It was voted to be the sense of the conference that it is
advisable to seek to procure an anendment to the law to restore
to Federal Courts jurisdiction over suits by and against Federal
reserve banks in the form suggested in oaragraph 3 on page 3 of
a memorandum submitted to the Board by its General Counsel under




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date of March 9, 1926. It was also voted that the conferere deems it desirable to seek the enactment of legislation
to exempt Federal reserve banks from the process of attachment
or garnishment before final judgment in any case, as national
banks are now exempt under the terms of the United States Revised Statutes.
After discussion, it was voted that the
above recommeniations be referred to the Law
Committee for report.
be

731 igibility of notes of parent corporations representing borrowings to
advanced to subsidiaries. (Board's letter X-4692, dated October 13, 1926.)
It was voted to recommend to the Federal iieserve I3oa/x1
that the ruling contained in its letter of December 30, 1925
(X-4484) be abrogated and, that in lieu thereof the Board rule
substantially as follows:
V/here the borrower is a parent corporation having a number of subsidiaries and the parent corporation and. its subsidiaries are in practical effect one single organization and.
may with propriety be considered a single borrower, the -ea.rer
of such parent corporation, the proceeds of which have been
used or are to be used. by the parent corooration or by the
subsidiary corporations for an industrial, commercial or agricultural purpose, within the meaning of the Federal :Zeserve
and the Board's regalations, may be considered eligible for rediscount if it complies in al 1 ot her res e c ts with the provisions
of the law and. the regulations of the Federal Heserve Board.
After discussion, it was voted to request the
Board's Counsel to prepare for submission to the
Board for its consideration and action a fo rma.1
ruling along the lines of the recommendation of
the conforeme.

non-cash
col ., - 1-11-ing of the Federal ileserve Board relative to the handling of
dated
H-4677,
s
letter
(Board'
es.
street
address
"1-4-oction items payable at
ter.lber 24,
1926.)
It was voted to adopt and. slbmit to the Federal Reserve
committee
Board as representing the views of the conference a
uniformthat
report setting fo rth "that in order to preserve
interests
best
ity which is believed to be so essential to the
public,
the
and.
of the Federal _Ieserve System, its member banks
Septemof
letter
the Federal 3seserve Beard should. reconsider its
of
view
of
point
ber 24, 1926, and determine \hether, from the
deserve
.Cederal
all
the Federal _ieserve System as a whole,




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Banks shall or whether all Federal Reserve. Banks shall
not continue to handle for collection items which are
payable at street addresses."
The Governor called attention to the fact
that at the nk:eting on l'Iovember 22nd, the board.
voted to reconsider its action of September 23rd
in adopting the rulinr: 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 him.
He stated that he expected to set the date for the
meeting upon the return of 1:r. Janes, and that no
,further action was required at the present time.
2axes on income earned from bankers acceptances purchased for account of
I oreL-sn banks
It was voted to be the sense of the conference that the
:Federal deserve Board should be urged to take appropriate steps
to procure an amendment to the law so as to exempt from taxation
discount earned on bankers acceptances purchased by foreign corporations, just as interest earned by foreign corporations on deposits
in American banks is now exempt.
The Secretary called attention to the fact
that in accordance with a request of the Federal
Advisory Council at its meeting on September 17,
1926, the above matter was taken up by the Board
with the Secretary of the Treasury, who advised
that the matter had already come to the attention
of that De9artment, vtaich would be disposed to
recommend that no tax be collected on such income,
but that it was not sure there would be any changes
in the tax lay at the coming sassion of Congress,
but that if there are the matter referred to will
have the attention of the Treasury.
Upon motion, the Secretary was directed
to advise the Secretary of the Governors'
Conference of the previous action of the
Board.
:eport of Sub-Committee of General Committee on Bankers Acceptances.
It was voted to renew to the :Federal lIeserve Board the
recommendations of the Llarch, 1926, Governors' Conference
to the effect that the report submitted at that conference
be approved and that the Federal ,ieserve Board be requested




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to adopt the recommendations contained therein.
The Secretary stated that the report referred
to was made the subject of a memorandum fmm the Board's
General Counsel, dated October 23, 1926, and. that at
the meeting on November 19, 1926, the Board had voted
to request the views of the Federal Advisory Council,
then in session, on the two primary recommendations
cont a ined therein.
After discussion, it was voted that
the memorandum of the Board's Counsel,mentioned by the Secretary, be referred to the
Law Committee for report.
..leport of Pension Committee.
It was voted by the conference to a-oprove the report
of the Committee, dated October 27, 1926, with the understanding that the action recommended therein should be
taken in so far as it is practicable.
After discussion, action on the above
matter was deferred.
Correspondence between the Postmaster General and. the Federal _leserve
dated October 15th, 22nd and 23rd, on the subject of mail robberies.
In accordance with the request of the Board, this
corres-pondence was presented to the conference.
The Secretary stated that no action
by the Board was necessary, as this presentation had been made with the understanding that the 2ostraaster General would be
advised of any discussion which took place
following the presentation.
2ligibility of directors of ::utual Savings ;3anks to serve as Class B
azia 01_
C directors of Federal ::_eserve Banks.




It was voted that the conferenee request the Federal
Reserve Board to use its influence at the first available
opportunity to procure an amendmont to Section IV of the
Federal Aeserve Let defining the qualifications of directors
of Class B and Class C, by adding to each clause the words
"other than a purely mutual savings bank."

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11/26/26
After discussion, it was voted to refer the
above recommendation to the Law Committee.

The meeting adjourned. at 12:30 p.m.

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