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186 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Tuesday, September 27, 1927 at 11:30 a.m. PRESENT: The Chairman Vice Governor Platt Mr. Hamlin Mr. Miller Mr. James Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary An informal discussion was had of a proposed amendment to the Bylaws of the Board. No action was taken as it was the consensus of opinion that the proposed amendment should be considered at a meeting of the Board following the qualification as a member of the Board of Mr. H. A. Young. Bond of Mr. V. A. Burgess, Assistant Federal Reserve Agent at the Federal Reserve Bank of New York, executed under date of September 21, 1927, in the amount of 450,000. Approved. Memorandum dated September 24th from the Director of the Division Of Research and Statistics, recommending the appointment of Miss Bess Brougher as stenographer in the Division at a salary of 41560 per annum, effective October 1, 1927. Approved. Report of Executive Committee on letter dated September 23rd from the Acting Comptroller of the Currency, recommending approval of a salary of :,1i2400 nr annum for National Bank Examiner Carvel C. Linden, assigned to the Twelfth Federal Reserve District; the Committee recommending approval. Approved. 9/27/27 MOB Report of Executive Committee on letter dated September 23rd from the Acting Comptroller of the Currency, recommending approval of an increase from „i;5200 to 45600 per annum in the salary of National Bank Examiner Earl W. Moon; the Committee recommending approval. Approved. Report of Committee on Salaries and Expenditures on letter dated d, September 22nd from the Secretary of the Federal Reserve Bank of Clevelan advising of the action of the Executive Committee of that bank in voting to grant an extension of two months from September 22nd, with full pay, in leave of absence on account of illness previously granted Miss Margaret Osten, stenographer in the Discount Department; the Board's Committee recommending approval of the salary payment involved. Approved. Report of Committee on Salaries and Expenditures on letter dated September 21st from the Federal Reserve Agent at St. Louis, advising of the action of the Executive Committee of that bank in voting to extend for a period of thirty days from September 27th, with full pay, leave Of absence on account of illness previously grantea Mr. R. B. Niese, 14anager of the Custody Deoartment of the Memphis Branch; the Board's Committee recommen-ing approval of the salary payment involved. Approved. Letter dated September 24th from the Assistant Federal Reserve Agent at Cleveland, advising that the Guardian Trust Company of Clevewhich land will be unable to establish before .3eptember 29th, the date on the souththe permit wiil expire, the branch approved by the Board for I8 -3- 9/27/27 west corner of Pearl and Broadview Roads, and that as there seems to be no immediate prospect for the opening of the branch the bank does not desire an extension of time for its establishment. Noted. Letter dated September 19th from the Assistant Federal Reserve Agent at San Francisco, advising that the Security Trust and Savings Bank of Los Angeles on September 17th moved to a permanent location at the southwest corner of West Adams and Victoria Avenue (4450 West Adams Street) the branch which has been operated in temporary quarters at 4349 West Adams Street. Noted. Letter dated September 20th from the Assistant Federal Reserve Agent at. San Francisco, with reference to the Board's action of February 19th, 1927 in approving an application of the American Trust Company at San Francisco, to move a branch located at 3850 San Pablo Avenue, Emeryville, to a new location at 18th Street and San Pablo Avenue, Oakland, and to transfer its business to the branch being operated at 3900 San Pablo Avenue; the Assistant Agent stating that because of the in- adequacy of the quarters at 3900 San Pablc Avenue that branch has been closed instead Of the 3850 San Pablo Avenue Branch, and will be moved to a new location at 2053 San Pablo Avenue. Noted, without objection. Letter dated September 20th from the Federal Reserve Agent at Atlanta, advising that the office of Assistant Federal Reserve Agent at the Jacksonville Branch will be discontinued as of September 30, 1927 F20 -4- 9/27/27 and that the necessary supply of Federal Reserve notes at that branch will be carried as bank cash; the Agent recommending, however, that Mr. W. E. Miller and Mr. James R. Stevens be redesignated as Assistant Federal Reserve Agent and Alternate Assistant Federal Reserve Agent, respectively, at the New Orleans Branch, for terms of three months beginning October 1, 1927. Upon motion, it was voted to redesignate Messrs. Miller and Stevens as recommended. Letter dated September 22nd from the Chairman of the Federal Reserve Bank of St. Louis, transmitting By-laws of that bank as amended at the meeting of the board of directors held on September 21st. The Secretary reported that the important changes are a provision for the annual election of officers, in accordance with the request recently made by the Board, and amendments discontinuing the Governor of the bank as Chairman of the Executive Committee and providing instead that the Chairman of the Committee shall be appointed by the board of directors of the bank. Upon motion, the By-laws, as amended, were noted with approval. The Vice Governor then presented a telegram from the Chairman of the Federal Reserve Bank of Minneapolis, dated September 26th, advising that the board of directors oi the bank on that day appointed Yr. B. Geery, now Deputy Governor, as Governor of the Bank to succeed Mr. A. A. Young, effective when Mr. Young takes oath of office as a member of the Federal Reserve Board. After discussion, the Vice Governor was requested to acknowledge the above telegram and call attention to the fact that it does not mention the salary proposed for Mr. Geery, on which the Board's approval is desired. 190 -5- 9/27/27 The Vice Governor then presented a proposed telegram to the Chairmen and Governors of all Federal iieserve banks, advising of the postponement for one week of the dates of the forthcoming Conferences of Governors and Federal Reserve Agents; the Agents to meet October 31, November 1 and 2, the Governors November 2, 3 and 4, with a joint Conference on Saturday, November 5th. Upon motion, the proposed telegram was approved. The Vice Governor then submitted favorable report of Committee on District 45 on letter dated September 16th from the Chairman of the Federal Reserve Bank of Richmond (1) Submitting contract approved by the directors of the bank covering vault equipment for the Charlotte Branch, in an amount of 0.7,954.00; (2) Requesting approval of increases from 255O to ,2760 in the salary of Mr. H. L. Cherry, and from 2520 to 42700 in the salary of Mr. H. L. Whitemore, being transferred from the head office to the Charlotte Branch as Managers of the Transit and iloney Departments, respectively, and (3) Submitting final draft of bylaws for the Branch, providing among other things a definite territory for the Charlotte Branch embracing the following counties in North and South Carolina: North Carolina Alexander Allegheny Ashe Avery Buncombe Burke Cabarrus Caldwell Catawba Cherokee Clay South Carolina Abbeville Aiken Anderson Cherokee Chester Edgefield Fairfield Greenville Greenwood Lancaster Laurens 191 -6- 9/27/27 North Carolina South Carolina Cleveland Gaston Graham Haywood Henderson irelell Jackson Lincoln Macon Madison McDowell Mecklenburg Mitchell Polk :Iowan Rutherford Stanly Swain Transylvania Union Watauga Wilkes Yancey Lexington McCormick Newberry Oconee Pickens Richland Saluda Spartanburg Union York Upon recommendation of the Committee on District #5, it was voted to approve the three matters covered in the Chairman's letter. Letter dated September 24th from the Chairman of the Federal Reserve Bank of St. Louis, with reference to the eligibility for service as a director of the Louisville Branch of Mr. John T. Reynolds, who was elected by the 3t. Louis directors for the unexpired term of Kr. Attilla Cox; the Chairman stating that Yr. Reynolds is County Treasurer of Luhlenberg County Kentucky, under appointment of a Fiscal Court, and inquiring whether this position should be classed as a political office under the terms of the Board's resolution of December 23, 1915. Mr. James reported that this matter had been taken up with him personally by Mr. J. C. Utterback, one of the Class C Directors of the Federal Reserve Bank of St. Louis, to wham he had expressed the opinion that Mr. Reynolds would not be eligible to serve as a director 192 9/27/27 -7- of the Louisville Branch while holding the office referred to. After discussion, it was voted that the Chairman of the St. Louis Bank be officially advised that service by Mr. Reynolds as County Treasurer makes him ineligible to serve as a director of a Branch Federal Reserve Bank. Memorandum from the Secretary dated September 26th, recommending that the Board fix November 15th as the date for the opening of the polls in the forthcoming elections of Class A and B Directors of the Federal Reserve banks. Approved. The Vice Governor then submitted draft of telegraphic reply, prepared by Counsel, to letter dated September 20th from the Assistant Federal Reserve Agent at Chicago, with reference to a change in the bank's circular setting forth a list of those authorized to vote in the forthcoming elections of Class A and B directors, so as to list officers of banks authorized to cast votes rather than the names of the individuals occupying said office; the proposed telegraphic reply advising that the Board will have no objection to the change proposed, but that in all cases the list should follow strictly the terms of the member bank's resolution of authorization, to wit: if the resolution authorizes certain officers, naming official positions only, the list may correspondingly show official positions only, but in any case where the resolution has authorized a certain officer individually by personal name, the voting list should contain the same designation. Upon motion, the proposed telegraphic reply was approved. In this connection, the Secretary was authorized to take up with all Federal Reserve Agents, through their Committee on Elections, the matter of uniformity in this regard. 193 9/27/27 -8_ The Vice Governor then presented draft of a letter, approved by the Executive Committee, addressed to the Chairman of the Federal deserve Bank of Dallas, replying to certain questions raised by the Chairman in a letter dated April 17, 1927 regarding the new procedure to be followed at all Federal eserve banks in the forthcoming elections of Class A and B directors. Upon motion, the proposed letter was approved. Memorandum dated September 26th from the Secretary, approved by the Executive Committee, with reference to letter dated May 14, 1927 from the Chairman of the Federal Aeserve Bank of San Francisco, with reference to the procedure to be followed in connection with the forthcoming elections of Class A and 3 directors; the memorandum suggesting that the Chairman be adviseu, in reply to a specific inquiry, that he has editorial powers in handling biographical sketches of candidates for election, and recommending that the Board lift the requirement of the new procedure that after the elections each Chairman should inform member banks whose ballots were invalidated of the reason for such rejection and in lieu thereof require the Agents to send out a general letter listing all banks whose ballots were invalidated because election instructions were not followed. Upon motion, the recommendations contained in the Secretary's memorandum .;ere approved. Memorandum from Counsel dated September 20th, submitting drafts of replies to letters from the Treasurer of the First Federal Foreign Investment Trust and Messrs. Kaye, McDavitt and Scholer, counsel for the trustee under a recent bond issue of the corporation, both inquiring whether under the law and the regulations of the Board it is necessary for an Edge corpora- -9- 9/27/27 tion investing in stock of other corporations to obtain the consent of the Board prior to each and every such investment; the proposed replies stating that the Board's regulations on this subject require that a corporation organized under Section 25 (a) of the Federal Reserve Act must obtain the consent of the Federal Reserve Board in each case before investing in the stock of other corporations. Ordered circulated. Memorandum from Counsel on the matter referred to him at the meeting of the Executive Committee on September 14th, namely, telegram dated September 8th from the Federal Reserve Agent at San Francisco, with reference to stock ownership by tnL,Bancitaly Corporation in the consolidation of the United Bank and Trust Company and the French American Bank of San Francisco and inquiring whether the corporation has been guilty of a violation of the agreement regarding ownership of stock of independent banks into which it entered with the Board and the Comptroller of the Currency, prior to the recent consolidation of the Bank of Italy. After discussion, it was voted to defer action on the above memorandum until the next meeting of the Board. Memorandum from Assistant Counsel dated September 16th, submitting draft of reply to letter dated September 7th from the Deputy Comptroller of the Currency, inquiring whether a reserve should be maintained by national banks against foreign deposit liabilities which are customarily paid in the particular kind of currency or coin deposited; the propose, reply stating that deposits of the kind referred to must be considered deposit liabilities against which reserves must be maintained in accordance 9/27/27 -10- with the provisions of Section 19 of the Federal Reserve Act, and that the required reserve may be computed on the basis of the dollar value of the foreign deposit liability at the current rate of exchange and maintained with the Federal Aeserve bank in dollars in the usual manner. Upon motion, the proposed reply was approved. The Vice Governor then referred to the action of the Executive Committee at its meeting on September 23rd in voting to interpose no objection to the Governor of the Federal Reserve Bank of Boston complying with a request made of htm by the editor of the American Bankers Association Journal, for an article relating to the reduction made recently in the rediscount rate of the Federal Reserve Bank of Chicago. The Vice Governor stated that in accordance with the instructions of the Committee, he advised Governor Harding to withhold transmission of the article until the Committee's action could be ratified at a meeting of the Board early this week. After discussion, upon motion by Mr. James, it was voted to ratify the action of the Committee. Memorandum from Assistant Counsel dated September 21st, with reference to letters dated September 15th and 17th from the Assistant Federal zteserve Agent at Dallas, one transmitting opinion of Counsel for that bank with regard to the cancellation of Federal deserve bank stock held by certain member banks whose charters have expired by limitation, and the other transmitting an application for the surrender of stock filed on behalf of one of the institutions, namely, the First State Bank of Seminole, Texas; Counsel stating that the opinion referred to was evidently transmitted to the Board merely for its information and requires no action, ice 9/27/27 -11- and further that the application filed on behalf of the First State Bank of Seminole, Texas, is in the form prescribed by the Executive Committee of the Board at its meeting on August 30th and that there is no legal reason why it should not be approved. Upon motion, the application of the First State Bank of Seminole, Texas, for the surrender and cancellation of 42 shares of stock in the Federal Aeserve Bank of Dallas was approved. Matter ordered circulated at the meeting of the Executive Committee on September 20th, namely, memorandum from Assistant Counsel dated September 2nd, with regard to the interpretation of Sections 5204, 5205 and 5209 of the Aevised Statutes of the United States, in connection with State member banks which, through losses or other withdrawals, have suffered impairmentsin their capital. Action deferred. Memorandum from Assistant Counsel dated September 12th, with reference to an inquiry received from the First Federal Foreign Investment Trust of New York City, with regard to the filing of the financial statement required by the Board's Regulation "K" on the date following an issue of debentures by an Edge corporation; the corporation stating that their recent issue was offered to the public on August 1st, notes were signed and delivered to the trustee on August 19th and were authenticated by the trustee and delivered to the corporation on August 22nd, and inquiring as to the date of the required financial statement and whether state- ments as of July 31, 1927 and August 31, 1927, would be acceptable to the Board in view of the fact that the books of the corporation are closed at the end of each month. In his memorandum, the Board's Assistant Counsel 197 -12- 9/27/27 stated that under the regulation the statement of the corporation should be filed as of August 23, 1927, but that the Board may, if it wishes, waive the requirement. Lessrs. Platt and Hamlin, members of the Board's Law Committee recommended that the requirament of the Board's regulation be waived in this case and that the First Federal Foreign Investment Trust be advised that the Board will accept from it statements of its financial condition as of July 31, 1927, and ,..ugust 31, 1927. Upon motion, the recommendation of the Committee was approved. The Vice Governor presented another memorandum dated September 16th from Assistant Counsel, with reference to information filed by the First Federal Foreign Investment Crust of New York City, under the provisions of the Board's ,:iegulation "K", in connection with the corporation's recent issue of 5/ Five Year Secured Gold Notes; Counsel stating that in his opinion the documents submitted by the corporation comply with the requirements of the 7;oard's regulation on the subject, but that his memorandum is not, of course, intended to pass upon any questions as to the value of collateral security or the safety or protection of the note holders. referred to the Law Committee for recommendation. Letters dated September 15th and 22nd from the Assistant Secretary of the Federal eserve Bank of New York, and telegrams dated September 21st from the Chairman of the Federal Aeserve Bank of Boston, dated Sentember 21st from the Chairman of the Federal Aeserve Bank of Philadelphia, dated September 15th from the Chairman of the Federal lieserve Bank of Richmond, dated September 23rd from the Deputy Chairman of the Federal Reserve Bank of Chicago, dated September 21st from the Chairman of the Federal Aeserve 198 -13- )/27/27 Bank of St. Louis, dated September 22nd from the Chairman of the Federal Reserve Bank of Kansas City, and dated September 15th from the Chairman of the Federal deserve Bank of San Francisco, advising that the boards of directors of those banks at their meetings on those dates made no changes in the banks' existing schedules of rates of discount and purchase. Noted, with approval. The Vice Governor then submitted the recommendations made to the Board by the Federal Advisory Council following the last meeting of the Council held in Viashington on September 16th. Upon motion, it was voted that consideration of these recommendations be deferred until the next meeting of the Board. The Board then considered the report of the Committee on District No. 10, which was endorsed by the Executive Committee at its meeting on September 20th, recommending the appointment of Mr. Wayland W. Magee, Bennington, Nebraska, as a director of the Omaha Branch of the Federal Reserve Bank of Kansas City for the unexpired term of Mr. A. J. Weaver, resigned, ending December 31, 1927. Upon motion, Mr. Magee was appointed a director of the Omaha Branch for the unexpired term of Mr. Weaver. Ileport of Executive Committee on memorandum dated September 8th from the Comptroller of the Currency, recommending approval of an application of the First National Bank of Madison, Ga., for permission to reduce its capital stock from 4150,000 to ,„;100,000 on condition that no dividend be paid to shareholders in cash, but that assets amounting to not less than 470,000, including all "other real estate" and certain other undesirable -14- 9/27/27 assets to be designated by the national bank examiner, are withdrawn and placed in the hands of a trustee for the benefit of shareholders of record on the date the reduction becomes effective; the Board's Committee also recommending approval subject to the condition suggested by the Comptroller. Approved. :latter on which action was deferred at the meeting of the Executive Committee on September 23rd, namely, letter dated September 20th from the Commercial Attache of the Cuban Embassy, inquiring, at the request of the Secretary of the Treasury of Cuba, whether it would be possible to arrange for the exchange, between the Cuban Treasury and the Havana Agency of the Federal Aeserve Bank of Atlanta, of excess American coins totalling about 1.2,500,000, for United States currency. After discussion, durta7 which Mr. James, Chairman of the Board's Committee on District No. 6, reported certain preliminary negotiations looking toward the exchange, the Secretary of the Board was authorized, in the absence of extraordinary complications, to complete negotiations along the lines reported, Mr. Miller voting "no". Letter dated September 23rd from the Chairman of the Federal deserve Bank of St. Louis, who is Secretary of the Federal Reserve Agents' Conference, submitting a revised tentative program for the forthcoming Conference of Federal deserve Agents. Upon motion, the amended program submitted by the Secretary of the Conference was approved. The Vice Governor then referred to the action of the Executive Committee at its meeting on September 23rd, in deferring for a meeting of the Board a proposea letter to the Secretary of the Federal Reserve Agents' Conference advising of topics which the Board would like to have considered -15- 9/27/27 at the forthcoming meeting. After discussion, Mr. Miller moved, that there be stricken from the list of the Board's topics a request for an opinion from the Conference on the question whether uniform rates of discount throughout the Federal Reserve System are gen,2rally desirable, and whether such uniform rates are in accordance with the spirit of the Federal Reserve Act. Mr. Miller's motion, being nut by the Chair, was carried. Mr. Miller then moved that the Federal Reserve Agents be requested to discuss the effect of changes in Federal Reserve bank rates upon rates charged by member banks on customers' loans, including loans to banking correspondents, the individual agents in connection with this discussion to make a particular study of the effect upon customers' rates of the recent reductions in their districts. Carried. Upon motion, it was then voted to approve the above mentioned letter to the Secretary of the Federal Reserve Agents' Conference with the amendments above provided. The Vice Governor also called attention to a proposed letter to the Governors of all Federal Reserve banks, requesting the Governors' Conference to discuss the question of uniform Federal Reserve bank rates, on which the Executive Committee at its meeting on September 23rd also voted to defer action. Upon motion, the proposed letter was disapproved. REPORTS OF STANDING COMMITTEJ-:S: Dated, September 24th, 26th, Dated, September 23rd, 26th, Recommending changes in stock at Federal Reserve Banks as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendations approved. 9/27/27 -16- REPORTS OF 3TANDING COMMITTEES: (Contld) Dated, September 26th, Dated, September 24th, Dated, September 24th, Dated, September 24th, Dated, September 26th, Recommending action on an application of a state institution for admission, subject to the conditions stated in the individual reports attached to the application, as set forth in the Auxiliary 'Minute Book of this date. Recommendation approved. Recommending approval of the application of Mr. Charles B. Beury for permission to serve at the same time as Officer and Director of the National Bank of North Philadelphia, Philadelphia, Pa., as officer and director of the Tioga Trust Company, Philadelphia, Pa., and as officer and director of the _anheim Trust Company, Philadelphia, Pa. Recommendation approved. Recommending approval of the application of Mr. William G. Friedgen for permission to serve at the same time as director of the National Bank of North Philadelphia, Philadelphia, Pa., and as director of the Tioga Trust Company, Philadelphia, pa. Recommendation approved. Recommending approval of the application of Mr. Harcourt J. Pratt for permission to serve at the same time as director of the Kingston Trust Company, Kingston, N. Y., and as director of the First National Bank, Highland, N. Y. Recommendation approved. Recommending approval of the application of Mr. Robert H. Neville for permission to serve at the same time as director and Vice President of the First National Bank, Yonkers, N. Yr., and as director of the First National Bank, A sley, N. Y. Recommendation appr ed. The meeting adjourned a :30 p.m. Secretww. Approved: Chairman.
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