19280601_Minutes.pdf

e42

A meeting of the Federal Reserve Board was held in the office of the

Nieral Reserve Board on Friday, June 1, 1928 at 10:30 a.m.

PRESENT: Governor YoungMr. PlattMr. HamlinMr. JamesMr. McIntoshMr. Noell, Asst. Secretary

Mr. McClelland, Asst. Secretary

PRESENT ,J..SO: Dr. Goldenweiser, Director of theDivision of Research and Statistics.

The Governor referred to ..an article prepared by Mr. Goldenweiser for

ihclusion in the June issue of the Federal Reserve Bulletin, which it is

1)113(3sed to release as an advance statement to the press on Monday, dealing

Vith the subject of security loans and Federal Reserve bank policy. He

"ea that each member of the Board has been furnished with a copy of the

stateMent and requested that it be acted upon at this meeting.

Following a brief discussion, the article was approvedas amended.

1.1r. McIntosh then referred to the action of the Board at its meeting

(11144Y 28th in referring to him a letter, dated May 25th, from the Federal

erve agent at Chicago, advising that the ],:xecutive Committee of the bank

hasvoted to call to the attention of the Board the condition of the First

44tie:11,,44 Bank, Richland Center, Wisconsin, with the recommendation that stens

be 4aMediately taken to put the institution

that can not be speedily accomplished, that

beOvoked Mr. McIntosh advised the Board

°t the bank

1.411 ht he

is still in an unsatisfactory

in wholesome condition and, if

the charter of the institution

briefly regarding the condition

ref,rred to and the steps which have been taken by his office

stated, have resulted in some gradual improvement, although the

condition. He advised that his office is

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6/1/2s -2-

(1111d43avoring to bring about a consolidation of the bank with another institution

ill the locality and that he hesitates to take any action which would necessitate

itsclosing. He stated, however, that he has addressed a letter to the Federal

"e -.gent at Chicago advising that if his Ea'xecutive Oothwittee will furnish

siMed letter statin-: that the bank is insolvent, he will close it immediately,

The 3ecretary then read a letter dated May 31st from the Deputy Governor

°t the Federal deserve Bank of Mew York, advising of the action of the board

or dArectors of that bank in voting, subject to the approval of the Board, to

alltherize the officers to open an account for the Bank of Greece, the new cen-

tral 13_ _"Ilk of issue in that country, to establish a relationship with the bank

41°11g the same general lines as arranp'ements with other foreign central banks

to appoint the said bank as agent and correspondent of the Federal Aeserve

13411 in return for a similar appointment from it.

After discussion, upon motion the action of the New

York directors was approved.

Lemorandum from Counsel dated Lay 29th on letter dated May 26th from

the ,'e lrst Federal Foreign Investment ?rust, New York City, with reference to

131.0

4811ace of 5,000 additional shares of a par value of ,100 each; Counsel

that the approval of the Board is necessary before the capital of

the corporation may be increased as planned, and that he knows of no legal

l'e4s(1/1 Why the Board's approval should not be given. In his memorandum,

-ssl called attention to the fact that if approved by the Board, the

Droho' sea increase in capital must under the terms of the law be fully paid

111 -in 90 days after such approval.

Posed increase in the capital stock of the corporation, involving the


411••••

i-fter discussion, upon motion the proposed increase

in capital was approved.

Letter dated Lay 31st from the Secretary of the Federal Reserve Bank of

OW v'-°11.k and tele7.am ,ated May 25th from the Chairman of the Federal deserve

1341114 °f Chicao, both advising that their boards of directors at meetings on

the aates stated made no change in the banks' existing schedule,s of rates of

clise°1111t and purchase.

dithout objection, noted with approval.

'41sgram dated :_ay 29th from the :3ecretary of the 2ederal Reserve Bank

Of°In ifancisco, advisin that the Executive Committee of the bank on that

clat egPProved the following schedule of rates for purchases of bankers' ac-

effective May 28th:

1 to 120 days

Repurchase

Without objection, noted with approval.

lastt-er approved on initials by the Executive Committee yesterday, namely,

tele—'4."6J71 dated May 31st from the Deputy Chairman of the Federal Reserve Bank

pe s.,'11 Francisco, advising that the board of directors of the bank on that

claY.v4ed to establish a rediscount rate of 4 1/2 on all classes of paper

o11 maturities, effective June 2, 1926.

The rate of 4 1/2c established by the an Francisco

directors on all classes of paper of all maturities, hav-

ing been informally approved by the Executive Committee,

effective June 2nd, was upon motion formally ratified.

r2e1egram dated May 28th from the Chairman of the '2ederal Reserve Bank

ikt1 -.a, roplyinp: to an inquiry by the Governor of the Board as to the

Niao11 or reasons for the action of the irectors of his bank in voting to


V1/28 -4-

establish the rediscount rate of 4 1/2 which was approved by the Board, as

i'13110Ws:

"Vote on discount rate was unanimous by directors present.Am satisfied vote was due first to rapid expansion of bills

discounted for member banks during past forty to fifty daysas compared with same period in 1927. second to have dis-

count rate on all classes of paper slightly hiher than pur-

chase rate established for bills boil ht in open market. Thirdto act on our own account and in accord with other banks in

effort to stem undue expansion of credit."

Loted.

Ylemorandum dated May 29th from the Director of the Division of -esoarch

,4-uatist ics , recommendin7, the temporary appointment of Miss Louise slavin

C% as cleric in the Division, for a period of three mouths beginning June

1, 1928, with salary at the rate of ,1560 per annum; this appointment being

to fill a vacancy which 'iill be caused oy the rosi(7nation of Mrs. Helen

effective July 1st.

2;.pproved.

.e-port of Committee on Salaries and 2xpenaitres on letter dated hay

23th frm the Zederal _ieserve Agent at St. Louis, requesting approval ofte

40tion of the Executive Committee of that bank in voting to extend for

41)eri0d Of thirty days from '1‘ray 3rd, with fall Pay, leave of absence on Lc-

)1111t °f illness previously granted Mr. J. M. Mitchell, an employee of the

4,e;z11311isbranch; the Board's Committee recommendinc: approval of the salary

111ent involved.

pproved.

'.eport of Committee on Salaries and _xpenaitures on letter dated Mayt

11°1m the Governor of the Federal .deserve Bank of Minneapolis, requesting


e-S6-5-

Of the action of the Executive Committee of that bank in voting to

411t leave of absence until July 31st, with full pay, on account of illness,

t°14r• Charles W. Anderson, c,uard at the bank; the Board's Committee recom-

1111441dng approval of the salary payment involved.

Approved.

Letter dated May 31st from the Assistant Federal _:teserve Agent at Mew

advising that the Bank of Manhattan Company, New York City, has pur-

C114886- control of the Flushing National Bank, the First National Bank of

estone and the Bayside :Tational Bank, all located in the Borough of

qltee,4,e; the Assistant Agent advising that all three institutions will be

°Pel'ated as branches, the Bank of Manhattan Company planning to discontinue

t QOther branches now operated in Flushing and Bayside.

Noted.

IlePert of Committee on Examinations on letter dated May 22nd from the

4s4J-stant Federal eserve Agent at San Francisco, transmitting and recommend-

Ic'413Proval of an application of the Twin Falls Bank and Trust Company, Twin

411'4-8 9 Idaho, for approval of its action in assuming, on May 9, 1928, the de-

liability of the Bank of Aogerson, .:-).ogprson, Idaho; the Board's Com-

Mittee also recommending approval.

Approved.

Letter dated May 29th from the Federal Heserve Agent at St. Louis,

Ivithreference to a hearing held by him on May 28th at which the Cashier

th,- iimerican Bank and 'rust Company, Paris, Ark, appeared to show cause

WhY th-at uank should not forfeit all rights and privileges of membership


6/1/28 -6-

the Federal Heserve System; the Agent recommending, in view of the fact

that it apnears that the bank can be put in satisfactory condition and its

evia'kent desire to remain a member of the Federal deserve System, that the

--ng before him be cont;nued until September 18, 1928 at 11:00 o'clock

Upon motion, it was voted to postpone the Board'shearing in the above case, which had been fixed for June4, 1928 at 11:00 o'clock, until 11:00 o'clock on the morn-ing of September 25, 1928 and to advise the American Bankand Trust Company that if it desires to waive its rightto appear before the Board it may appear before the FederalReserve Agent in his office at 11:00 o'clock on the morningOf 3eptember 18, 1928.

Letter dated May 29th from the Secretary of the Open Market Investment

ittee, transmitting a copy of the minutes of the meeting of the Committeeheti

Vashington on May 25, 1928.

Ordered circulated.

4r4°rendum from Counsel dated May 23rd with reference to letter dated May

leth •

'1"aM the Federal deserve Agent at Chicago, advising that the Federal

eethrn-mrcial and Savings Bank, Port Huron, Mich., which exercises trust powers,

1111?lates changing its name to the "Federal Bank and Trust Company"; Counsel

stat thatinasmuch as the bank is already exercising trust powers no change

itsbusiness or powers would seem to be contemplated but only a change in

a• lla consequently there seems to be no violation of the Board's general

or momberShiP• In his memorandum, Counsel also expressed the opin-

4'4 that since the bank has been using the word "Federal" in its title since

1918 i• t Would not constitute a violation of the act of May 24, 1926 for thish

411st• change its title to "Federal Bank and Trust Company". He called at-


6/1/28

teaton,

-7-

however, to the fact that this is a matter of construction of a penal

c)Icrtrninalostatute ana an opinion of the Federal Reserve Board or his office

wolafford no protection if the Denartment of Justice should take the con-

trativ.—etY view and undertake to prosecute.

after discussion, it was voted to advise the Federal

Reserve Agent at Chicago alonc; the lines of Counsel's mem-

orandum, with the suggestion that he advise the member bank

to communicate with the Department of Jutice before its pro-

posed change of title is made.

Llemorandum from Counsel dated May 29th with reference to a request of the

4tt0neYs for the organizers of the proposed United States Foreign Financing

.yuration that the Board permit amendment of the articles of association and

°Illnizatioa certificate filed by them with respect to the name, which might

be changea to either "American Foreign Financing Corporation", "American For-

elall :El:cella e

that it.

44ci, as

Corporation" or "Foreign Financing Corporation"; Counsel stating

this were done the organizers nrobably would dismiss the pending suit

the basis of a new suit file new articles of association with the Board,

t411111e; a less objectionable name. He also stated that after conferring with

4.allain he requested Honorable Newton D. Baker to came to Washington

for a

Ooti.'etence with the Board at his earliest convenience, and he therefore reco

m-

tletA"s that action in the matter be postponed pending the conferenc

e with 1:r.

Bakers

Upon motion, Counsel's recommendation was approved.

Letter dated :ay 28th from the Federal Reserve Agent at Dallas, advising

that khe First National Bank of Kingsbury, Texas has been continually

deficient

t4 it 8 reserves for six consecutive months ending May 15, 1928; for reasons

tatein his letter, the Agent recommended, however, that no

drastic action


e-4196/1/28

-6-

e taken against the bank under the provisions of Section IV of Regulation D.

Upon motion, the recommendation of the Federaldeserve Agent was approved.

Zemorandum from Counsel dated Lay 28th, submitting draft of reply to

lette r dated Lay 24th from the Federal Reserve Agent at _tichmond, transmit-

tling taquiries from the President of the Forest Hill State Bank of Forest

Rti 111a. whether the provision of Section 19 of the Federal deserve Act

thj11 prohibits a member bank from keeping on deposit with a nonmember a

411141 ta excess of 10,J of the capital and surplus of the member bank applies

to the average balance over a period of thirty says or to the balance upon

4 single day, and also whether in figuring the amount of such balances with

the nonmember bank only those funds which are actually cleared are to be

%Lsidered or whether

it eMs which have not yet been

that a nonmember bank balance

411k's capital and

Olb Qie Board that cash items,

surplus is

there should also be taken into account deposits of

finally collected; the proposed reply stating

on any one day in excess of 107 of the member

Prohibited and referring to a previous ruling

endorsed without restriction and forwarded to

noember bank for collection and credit, under an agreement whereby the

14ernbe r bank receives immediate credit but may not check against this credit

the items have actually been collected, constitute sums on deposit

vlitha nonmamuer bank even prior to collection.

After discussion, the letter submitted by Counsel was

approved, Li'. Hamlin voting "no".

Memorandum from Counsel dated Lay 23rd with reference to an application

tileabY the La Grange State Trust and Savings Bank of La Grange, Ill., formed

bY th.consolidation of the La Grange Trust and Savinf.?s Bank and the La Grange


• 1150

6M8 -9 -

State Bank, both member institutions, for the surrender and cancellation of

203 shares of stock in the Federal aeserve Bank of Chicago standing in the

nalte of the La Grange ?rust and Javins Bank and 180 shares of stock stand-

ing ba the name of the La Grange state Bank; Counsel statim- that since the

eCMsolidated bank is a new bank and since the Federal aeserve bank stock held

1)r the constituent banks did not pass by operation of law to the consolidated

stitution, the new bank in his opinion is not properly to be regarded as a

Member of the Federal Aeserve 3ystem and the Board may approve thp application

f" cancellation of Federal Aeserve bank stock standing in the name of the

cotstitutent banks.

Upon motion, surrender and cancellation of the Federaldeserve Bank stock issued to the La Grange Trust and ;:avingsBank and the La Grange State Bank, both of La Grange, Ill.,was approved.

Ilemorandum from Counsel dated May 25th with reference to the necessity for

all" application for membership in the Federal Reserve System by the Peoples

84"1aZs and Dime Bank and Trust Company of Scranton, Pa. in view of its recent

e°115011dation with the Lincoln Trust Company of Scranton, a nonmember bank,

Which consolidation was effected under a statute of Pennsylvania providing

thatthe consolidated institution shall be a new corporation possessing all

the riP:hts, privileges and franchises of each of the constituent banks; Counsel

3teti4g that there are two alternative courses open to the Board either of

would, in his opinion, be in substantial accord with the requirementsot

he law: (1) the Board may permit the new consolidated institution, without

the4.°rmality of a new application, to retain its membership in the System,

to become a nonmember bank, according to its own wishes; or (2) the Board


r.5-f

6/1/28 -10-

requirG a new application for membership from the new consolidated insti-

tution.

liTter discussion, it was voted to request The Peoples,Javings and Jim° Bank and Trust Company to file a new ap-Plication for membership, advising the institution thatthis requirement is made as a precautionary step and re-quiring the bank to file merely the application itself andnot the other customary exhibits and supplementary informa-

tion, which are necessary in the case of an entirely new

application.

143Plication of the :iteelton 'Trust Company, Jtoolton, Pa. for membership

ill the Pederal .:Leserve Jystem and for 150 shares of stool: in the Federal

11080rve Bank of Philadelphia; toether recommendations from the Fed-

eral 4eserve Bank of Philadelphia and from the Board's Commit tee on Examin-

'eti°as that the application be approved, subject to the seven re-ular condi-

ti0Ils of memborship set out in the Board's Regulation H, 6eries of 1928.

Upon motion, the application ':as approved as recommended.

It was also voted to advise the Steelton Trust Company

that the Federal Reserve Board. will interpose no objection

to its proposed purchase of the assets and assumption of the

liabilities of the Steelton National sank, 3teelton, Pa.

The minutes of the metinc of the '7ederal eserve .3oard held on May 28th

fel'e then read and approved as amended.

r-l he minutes of the meeting of the ixecutive Committee held on May 31st

'4el'e read and upon motion the actions

1;11' STAi:DIMc .

DatMay

Llay

28th,29th,

olst,25th,28th,

recorded therein wore ratified..

ecommendin - chanc-es in stock at Federal _eserve Banks

as set forth in the r.uxiliary Minute Book of this date.

.ecommendations approved.Ltecommending action on applications for fiduciary porters

as set forth in the duxilisry Minute Book of this date.

Recomnendations approved.


4526/1/28 -11--

ii--112-g-a3 OF STA1;DING COMMITTEES: (Cont'd)

4teci, May 28th, Recommending approval of the application of Mr. C. G. Rives,

Jr., for permission to serve at the same time as officer

of the Whitney Central Trust and Savings Bank, New Orleans,

La., and as director of the First Joint Stock Land Bank,

New Orleans, La.Recommendation approved.

Dated:, May 26th, Recommending approval of the application of 1.1r. W. T.

Waggoner for permission to serve at the same time as di-

rector of the First National Bank, Fort Worth, Texas, as

director of the First National Bank, Decatur, Texas and as

director of the First National Bank, Rhome, Texas.

Recommendation approved.Ipatea, May 28th, Recommending approval of the application of Mr. Daniel

Bermes for permission to serve at the same time as director

and officer of the First National Bank, Union City, 1. J.

and as director of the First National Bank, Lorth Berf:en,

N. J.Recommendation approved.

1)4tea, May 28th, Recommending approval of the application of Mr. Mills B.

Lane for permission to serve at the same time as officer

and director of the Citizens and Southern National Bank,

Savannah, Ga., as director of the Atlantic National Bank,

Jacksonville, Fla., and as officer and director of the

Atlantic National Bank, Charleston, S. C.

Recommendation approved.

4tecil May 28th, Recommending approval of the application of Mr. Francis H.

Brownell for permission to serve at the same time as di-

rector of the Chase National Bank of the City of New York,

New York, N. Y., and as director o,.theSeattle National

Bank, Seattle, Wash.Recommendation approved.

atea -I "ay 28th, Recommending approval of the appliction of Mr. George 3.

Durell for pennissiOn to serve at the same time as director

of the Guardian Trust Company, Cleveland, Ohio and as di-

rector and officer of the Citizens-i:irst .2ational Bank,

Frankfort, M. Y.Recommendation approved.

D4teat May 28th, Recommending approval of the application of 1,1r. •7illicm G.

Hille for permission to serve at the same time as director

of the First National Bank, Union City, N. J. ana as director

of the First National Bank, North Bergen, N. 3.

Recommendation approved.1)4ted. May 28th, Recommending approval of the application of Mr. illism 1.

Webber for permission to serve at the same time as director

„


6/1/28 -12-

REPOATS OF STIMING C0=I?1:2ES: (Cont'd)

of the Pennsylvania Trust Company, Aeadinp;, Pa., and as

officer of the Tlernersville National Bank,„ -:ernersville,

Pa.

%roved:

aecanmendation approved.

The meeting adjourned at 11:40 a.m.

Gov or.

4,ssistant 3ecretary.

t


19280601_Minutes.pdf

Documents

Transcript of 19280601_Minutes.pdf