19270728_Minutes.pdf

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meeting of the Federal .!,eserve Board was held in the office of the

Federal iieserve i',Ipard on Thursday, July 28, 1927, at 11:15 a.m.

PRESENT: Governor Crissiner11.. PlattLr. Hamlin

James*Lr. McIntosh

Lr. Noell, iLsst. SecretaryJecretary

Latter a2proved on initials on July 26th, namely, application of the

:ational Bank, Cleburne, 2exas, for stock ;n the Federal .eserve Bank

of Jai1as ( 66 shares) effective if aadvihen the Jomotroller of the Currency

issues a certificate of authority to commence business.

_ormally approved.

Letter dated July 21st from the 3ecretary pro tern of the 2edera1

.deserve Bank of Ilea York, advising that the board of directors at their

meeting an that date made no cha/D-;e in the bank's existim,: schedule of

rates of discount and Ilurchase, except to reduce from 3 3/4,, to 3 5/81)

the rate for uirchase of bankers accey)tances under resale agreement.•

iloted with approval.

Telegram dated July 22nd from the Chairman of the Federal eserve

Bank of Chicago, advising that the board of directors on that date made

no change in the bank's existing schedule of rates of discount and pur-

chase.

Tloted.

Telegram dated July 21st from the Chairman of the Federal 2,eserve

jBank of -Ban Francisco, advisini. that due to lack of a quorum no meeting

;

,

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

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Of the board of directors of the bank was held on that date.

1:ote(1.

:Latter approved on initials on July 22nd, namely, memorandum from

'4:;o,nsel, requesting authority to have set up in type the proposed new

edition of the Board's aegulations in the form in which it was tentatively

approved by the Board on June 21, 1927.

Formally approved.

leport of Committee on 3alaries and Expenditures on letter dated

July 21st from the Chairman of the Federal aeserve Bank of ktlanta, re-

questing approval of the action of the board of directors of that bank

in voting to extend for nine and one-half days, with full pay, leave of

absence on account of illness granted Mrs. Louis H. Jones, Matron of the

bank's infirmary; the Committee recommending approval of the salary pay-

ment involved.

1.Lpproved.

Report of Executive Committee on letters dated July 21st from the

Comptroller of the Currency, recommending approval of the following

salaries for national bank examiners:

0. 0. Taylora. E. 21. PalmerA. J. Cooke

12th District12th District12th District

.)2,5002,7002,500

Upon recommendation of the ixecutive Committee,

the above salaries v)ere approved.

Letter dated July 18th from the Chairman of the Federal deserve

Bank of Minneapolis, advising that he was leaving on that date for a two

weeks' vacation,

1;oted without objection.

it


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7/23/27 -3-

2eles-ran dated July 27th from the federal eserve ,,,L;ent at 3an

Francisco, recommending approval of an application of the Pacific Jouth-

mest Trust and Savings Bank of Los Angeles for ,)ermission to take over

the Bank of San Fernando and to consolidate the business of same with

its present Jan .Fernando branch.

Approved.

Letter dated July 22nd from the Assistant federal Reserve Agent

at :ew York, recommending approval by the Board of an application of

the First "2rust and Deposit Company, Syracuse, N. Y., for an extension

until Jetober 25, 1927 of the p.-)riod in witich that bank may open the

branch at 1510 Ast Genesee Street,, Syracuse, authorized by the Board

on January 25, 1927.

4i.pproved.

Letter dated July 22nd from the assistant Federal Reserve Agent

at few York, advisin;3 that on July 25th the ElizabethT)ort Banking Company

of thzabeth, J., would open a branch at 1149 East Jersey Street,

Elizabeth.

Letter dated July 21st from the ssistant Federal eservo nent

at ian 1-Tancisco, advising that the, 2acific Southwest Trust and Liavins

Bank of Los Angeles on July 16th closed the branch formerly operated at •

222 East queen Street, Inglewood, and transferred its business to the

branch located at 100 Commercial Street, Inglewood.

Noted.


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7/28/27

an

Letter dated July 21st from the .Lssistant Federal fteserve Agent at

2rancisco, advising that the Pacific Southwest Trust and Savings Bank

of Los Angeles on pril 30th opened at 2043 South Westwood Boulevard the

branch authorized by the Board on April 12, 1927.

iT.oted.

Letter dated July 21st from the Assistant Federal Reserve Agent at

New York, advisin that the National American Company Inc., an affiliation

of the Uentral Lercantile Bank and Trust Company of New York City, has

bought control of the Bronx National Bank, hew York ity, and that the

Board will be advised later whether the Bronx National 3ank is to be con-

tinued as an independent institution or c:Inverted into a branch of the

(i.entral - ank and :rust ,Jompany; the 2,.ssistant :ederal _eserve

;,.gent also advisins' that the Broad. and ::arket National Bank and ?rust

Jomoany of hewark, J., plans to merge the Forest Hill National Bank,

also of Newark, and operate it as a branch.

Noted.

Lotter dated July 22nd from the Deputy Governor of the 2ederal

Reserve Bank of New York advising of the opening on the books of that

bank of an account for the South African Reserve Bank, with v.hich it

recently entered into reciprocal relations.

Letter dated July 22nd from the Deputy Governor of the Federal

.deserve Bank of New York, transmittin copies of telegram and letter

addressed to the •Jovernors of all other 2ederal Reserve banks relating


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to the disposition of the balance of the rpld which has been held under

earmark at the Bank of Ensdand.

:coted.

Lotter dated July 25th from the Governor of the federal deserve -3ank

of New York, Iquestinc approval of the action of the directors of that

bank in votin-: to reconstruct for rental purposes, au a cost of approximately

.70,000, the buildinc: owned. by the Federal eserve Bank at 1.o. 10 Gold

Street, adjoinin the bank's annex buildin-, and in votini: to -pulhase, at

a price between ,10,000 to •.:,15,000, a plot of ground containing 600 square

feet directly north of the buildins at De. 10 Gold 3treet; the letter

statin that at the proposed annual rental of ,16,500, the estimated

yearly cost of operation of the No. 10 Gold. Jtreet building, 7,000,

would leave an excess of income over expenses to the bank of .9,700

per annum, and that if the cost of reconstructing the building should

be amortized on a ten year basis (y7,000 per annum), the net income to

the federal heserve bank would be ,2,5 0 per annum.

..Ifter discussion, upon motion by hr. Hamlin,

it was voted to arove the action of the New York

directors reorted in the above letter.

LemorandtiJa dated July 21st from the Jhlef of the Jivision of .lank

Operations, submitting statements of expenditures of Federal .:eserve banks

for educational and welfare work, etc., dariny the month of June and for

the six month period ended June 30th.

Ordered circulated.

aeport of i]xecutive 2o2:4mittee on letter dated July 5th from the

-Federal ,eserve -gent at :Annearolis, transmittin7 and recommendin ap-


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proval of an application of the Richfield. National Bank of Einneapolis,

an outlying institution, for a redaction in its reserve reviraments

under the provisions of Section 19 of the federal Reserve Act from 10,;

to 7,, of demand deposits; the Committee recommending approval.

Approved.

Report of Executive Committee on letter dated July 14th from the

Federal Reserve Agent at Kansas City, recommending approval of an appli-

cation of The West Side-National Bank of Denver, Colo., an outlyin: insti-

tution, for a reduction in its reserve requirements under the provisions

Of section 19 of the Federal -es3rve -ct from 10/; to 7;;; of demand deposits;

the Committee recommending approval.

.,pproved.

Letter dated July 25th from the First Federal Foreign Investment

Trust, requestinL; information from the :loard as to the probability of

early stabilization of the currency of the _epublic of Brazil.

After discussion, the Governor was requested to

advise the corporation that the Board has no informa-

tion relating to the stabilization of the Brazilian

currency.

Letter dated July 19th from the Chairman of the Federal Reserve

Bank of *.;t. Louis, inquiring as to the elifiollity to continue as a

director of the Louisville Branch of that bank of Jr. Lttilla Cox, who

has announced his candidacy for the office of Judge of the Chancellor

Court; the Chainfian stating that Mr.•

Cox would like to remain a dir.ctor

of the branch, at. least until after election, and has agreod not to make

active campaign for election.


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After discussion, the Governor was requested to

advise the Chairman that under the rules adopted by

the Board, Mr. Cox's announced candidacy for a polit-

ical office makes him ineligible for service as .a

branch bank director.

Letter dated July 18th from the 2edera1 ileserve ;..ent at Jan 2rancisco,

transmittinc: letter from the Superintendent of Banks of California, with

reference to bill in the amount of ..,1,550 rendered against the bank by

the State Banking Department for expenses in connection with the examina-

tion of the pacific 3outhwest Trust and Savings Bank of Los _mgeles; the

Superintendent stating that this charge was occasioned by compliance with

the request of the Board that the examination be made by simultaneous

entry at the head office and all branches of the bank.

After discussion, upon motion by 1:r. James, the

following resolution was adopted:

"Whereas, the Federal Reserve Board feels that

simultaneous examinations of member banksoperating

branches is most desirable; and

Vhereas, if an independent simultaneous examina-

tion of the Pacific Southwest Trust and Savings Bank

had been conducted under the auspices of the Federal

Reserve Agent, the expense to the Federal Reserve Bank

would have been very much greater than that incurred

in connection with the state examination;

"Therefore, Be it resolved, that the Federal

Reserve Agent at San Francisco be advised that the

Federal Reserve Board, under the circumstances, feels

justified in approving payment of the bill rendered

by the State Banking Department, if such payment meets

with the approval of the board of directors of the

Federal Reserve Bank of San Francisco."

Letter dated July 18th from the Federal Reserve Agent at Ban Francisco,

transmitting letter addressed to him by the Superintendent of Banks of

California, advising that due to a reduction in revenues caused by the

conversion into national banks of several large state branch banking insti-


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tutions, it will be necessary for the Department to discontinue the prac-

tice of simultaneous entry in examinations of state banks which are mem-

bers of the Federal Reserve 'ystem; the Federal Reserve hgent advising

that simultaneous examinations have been made of all of the large banks

with the exception of the Security 2rust and Javings Bank of Los Angeles,

giving the Federal Reserve Bank reasonable time to continue negotiations

with the Superintendent before the next year's examinations.

Thereupon ensued g discussion as to the desirability

of simultaneous examinations of state member banks operat-

ing branches in California in the light of the fact that

the largest branch banking institutions, which caused the

Board the greatest concern, have been converted into national

banks and will be examined by the Comptroller of the Currency.

Following the discussion, the Governor was requested to

prepare for submission to the Board, draft of a letter to the

Federal Reserve .:,gent at San Francisco along the lines of the

discussion at this meeting.

Letter dated July 19th from the Federal Reserve Agent at Dallas, trans-

mitting copy, of letter addressed to the Comptroller of the Currency in con-

nection with report of a recent examination of the First National Bank of

Amarillo, Texas.

Noted.

iiatter approved on initials on July 25th, namely, letter to the Federal

Reserve Agent at Atlanta, prepared by 1.:r. Gilbert, based upon an analysis

made in his office of reoort of a recent examination of the Citizens 3ank

of Lake Wales, Lake Ailes, Fla.

Formally approved.

Matter approved on initials on July 26th, namely, letter to the Federal

Reserve Agent at _Anneapolis, prepared by 1:.r. Gilbert, and based upon an


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•7/26/27

analysis :.lade in his office of report o2 a recent examination of the state

Bank of Revere, Revere,

Formally approved.

,Letter dated July 14th from the Federal Reserve Agent at Kansas City,

replying to letter recently addressed to him by the Board regarding the

condition of the Custer State Bank, Broken Bow, Nebraska, as disclosed by

the last examination of that bank; the Agent expressing the opinion that

if the bank is permitted to operate until September or October, and has

not at that time restored its capital and in some manner effected a great

improvement in its condition, action should be taken looking toward the

forfeiture of its membership in the 3ystem.

Thereupon ensued a discussion, duritw which 1,r. James

suggested that a letter be addressed to the Federal Aeserve

Agent at Kansas City, expressing the Board's doubt as to the

advisability of temporizing in matters of this kind, but

stating that in this particular case the Board is willing

to let the matter rest with the judgment of the directors

of the Federal Reserve bank due to the short period of time

which it is proposed to allow the bank to continue as a

member of the Federal Aeserve 3ystem without Improvement

in its condition.

Following the liscussion, upon motion it was voted

to anpfov,3 ;r. James' suggestion.

Letter dated July 26th from the Federal Reserve Agent at Atlanta,

transmitting report of examination of the Citizens State Bank, Larianna,

Fla., made as of Lay 30, 1927, together with an analysis thereof; the

Federal Reserve Agent, with the approval of his 2xecutive Committee,

recommending (1) that an examiner of the Federal Reserve bank visit the

member bank to inform the officers and diroctors thereof that they must


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dispose of stock of the bank they are now carrying to bona fide holders and

take out of the bank such losses and doubtful assets as the examiner may

ascertain to be in the bank at the present time, and (2) if this recommends-

tion'is approved, and its requirements are not complied with in sixty days

after the visit of the examiner, that the Board cite the Citizens State Bank

Of Marianna to sow cause why it should not surrender its stock in the Fed-

eral _Loserve Bank of dtlanta and forfeit all rights and -orivileges of mem-

berz3hio In the Federal Reserve System.

Upon motion, the recommendations of the -lederal Reserve

..gent were approved.

The Governor then presented the matter on which action was deferred

at the meeting of the Executive Committee on July 21st, namely, 1ett:1er

dated July 18th from the Federal Reserve L.sent at Chicago on the subject

of coordination of the examination and bank•relations functions at that

bank. The. Governor also presented a further letter dz-t d July 22nd from

the Federal eserve Agent, replying to an inquiry as to the number of

examinations and credit investigations made by the Federal Reserve bank

since the beginning of the year. In his last latter, the Federal Reserve

Agent stated that he does not propose immediately to increase his force

Of examiners or assistants to eicht or ten as swogested in his first

letter, but that the first step will be to try out on e::anination work

the 17,;() men who are now engaged in bank relations work.

Noted, it being understood that the question of

any increase in the examination force at the -Zederal

Reserve Bank of Chicago will be taken up with the

Board later.


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2he Governor then submitted a report dated July 16th, signed by Mr.

James, on letter dated July 14th from the Chairman of the Federal 3eserve

Bank of ::Lichmond, with reference to housing, personnel, etc., for the

branch of that bank to be established at Charlotte, North Carolina.

I;ir. James requested that no action be taken by

the Board on the above report, which nr. Hamlin stated

he concurred in, as he (Mr. James) has discussed the

matter informally with directors of the Federal Reserve

Bank of Richmond and has arranged to make a personal

visit to Charlotte far further conference. He stated

that upon his return he will submit a further and more

comprehensive report.

L:emorandum from Counsel dated July ilth, with reference to the action

Of the last Governors' Conference in voting' to reuest the 3oard to re-

consider its previous rulings to the effect that bran, flour, cottonseed

Oil, etc., are not "nonperishable, readily marketable staple aricultural

products" within the meaning of that part of Jection 13 of the Federal

2.eserve 21ct with regard to the rediscount of sight and demand bills;

Counsel stating that in his best judgment the rulings which the Board has

heretofore made are correct, and. that flour, bran, cottonseed oil and

canned goods should not be considered agricultural products within the

meaning of the statute. In his memorandum, Counsel also expressed the

opinion that no satisfactory solution of this problem can be breuht

about except by an amendment of the statute rearding the rediscount of

Sight and demand dra;ts, by striking out the limitation that such drafts.

be secured by "aric.altural" products only.

Lttention was called to the fact that such an

amendment was considered by the Board at its meeting

on February 1st and that action was deferred until the


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113::t session of Congress.

Accordingly, it vas voted that no action shouldbe taken at this time, but that the proposed amendment

should be brought to the attention of the Board 1.ater

on.

Memorandum from Counsel dated July 11th, submitted in accordance

With the instructions i_Tiven by the Board at the meting on June 13th in

Connection with the Board's consideration of the report submitted at the

last Governors' Conference by the committee appointed by the Board to

etudy the safekeeping function at the Federal :eserve banks.

After discussion, it was voted that the abovematter be laid on the table.

The Governor then referred to the possibility of the Board receiving

during the next week or ten days recommendations from the boards of directors

Of the various Federal Reserve banks for adjustments in their rediscount

rates. He called attention to the fact that frequently durinr: the past

month or so there has been less than a quoram of the Board present and sug-

c:33ted that some ,-ctien should be taken by the Board which will enable rate

••••

recommendations received from the Federal Reserve . banks to be acted upon

.12rompt;1y.

After discussion, Mr. Hamlin moved that authority

be delegated to such member or members of the Board as

may be present to give approval to any recommendation

received from any Federal deserve bank for a reduction

in its rediscount rate to 3. 1/2 per cent.

Hamlin's motion being pat by the Chair was

carried.

2he Governor then presented letter dated July 19th from the Governor

Of the Federal 'deserve Bank of, New York, transmitting copy of an agreement


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with the Bank of Poland, in which fourteen banks of issue have made an

arrangement for one dear for the sale, or in some cases, the pledr,e of

— prime con:_ercial bills up to an equivalent of „:20,000,000, the agreement

of the Federal "eserve bank bein:: to purchase up to ,5,250,000 of such

bills. With his letter, the Governor of the New York bank also trans—

mitted copy of the program for stabilization of the Government of the

Republic of Poland, stating that until the final legal promulgation of the

program the agreement of the central banks does not become effective,

and that if the legal promulgation of the -program and the issue of the

loan by private bankers therein provided for are not consummated before

AtKust 20, 1927, the agreement shall not become effective unless an ex—

tension of time is arran -ed.

The above letter and enclosures, having been brought

to the Attention of all members of the Board,was ordered

filed.

The minutes of the meet in' of the Federal eserve Board held on July

13th were read and approved.

The minutes of the meetings of the Executive Uorznittee of the Federal

2.eservo Board held on July 15th and 21st ;:ere read and, upon motion, the

actions recorded therein viere ratified.

The minutes of the meting of the Federal deserve Board held on July

27th were read and approved.

REPOLTS OF STANDII:G 002.11IT2E

Dated, July 21st, Recommending changes in stock at Federal Jeserve Banks

26th, as set forth in the Auxiliary Minute Book of this date.

27th, Aecommendations approved.

28th,


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REPORTS OF STANDING COMMITTEES: (Cont'd)

Dated, July 23rd, Recommending action on applications for fiduciary pavers25th, as set forth in the Auxiliary Linute 3ook of this date.26th, Recommendations approved.

Dated, July 21st, Recommending approval of the application of lir. Frank J.

Steen for permission to serve at the same time as director

of the Third National Bank, dalden, N. Y., and as director

of the Highland-uassaick National Bank and Trust company,

Newburgh, N. Y.Recommendation approved.

Dated, July 21st, Recommending approval of the application of Mr. Lewis E.Bliss for permission to serve at the same time as directorof the National City Bank of Los Angeles, Calif., as

director and officer of the California Bank, Los Angeles,

Calif., and as director and officer of the California .Trust Company, Los Angeles, Calif.

Recommendation approved.Dated, July 22nd, Recommending approval of the application of Mr. Clarence

M. Brown for permission to serve at the same time asdirector of the Central National Bank, Philadelphia, Pa.,as director of the Guarantee Trust and Safe DeposttCompany, Philadelphia, Pa., and as director of theChelten Trust Company, Philadelphia, Pa.

Recommendation approved.Dated, July 22nd, Recommending approval of the application of Li'. 2ud6lph

A. Damn for permission to serve at the same time asemployee of the Overbrook National Bank, Philadelphia,

Pa., az!;d as employee of the Central Trust and Savings

Company, Philadelphia, Pa.Recommendation approved.

Dated, July 22nd, Recommending approval of the arplication of Mr. William

H. Merker for permission to serve at the same time asAssistant Cashier of the M,rket Street National Bank,Philadelohia, Pa., and as director of the Wyoming Bankand Trust Company, Philadelphia, Pa.

Recommendation approved.Dated, July 25th, Recommending-approval of the application of Mr. George

J. GrifLiths for permisSion to serve at the same time

as director of the Standard Trust c7; 3avings Bank,Chicago, Ill., and as director of the :rational BuildersBan, Chicago, Ill.

Recommendation approved.

Dated, July 25th, ecommending arproval of the application of Glen L.Dark, for permission to serve at the same time asdirector and officer of the Tradesmens National Tian,Oklahoma City, Okla., and as director and officer ofthe American National Bank, dalters, Okla.

Recommendation anproved.


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tOont

Dated, July 26th, 2,ecommending approval of the application of L:r. eharlesi. Blackford, Jr., for permission to serve at the sametime as President and director of the Peoples Trust andGuaranty Jompany of Hackensack, i. J., as director ofthe Jtapleton National Bank, 3t.4ten Island, 1. Y., andas Vice President and director of the '2eaneck ilationalBank, Teaneck, 17. J.

2.1pproved:

Aecomilendation approved,.

The meeting adjourned at 12:30 p.m.

,,ssistant E3ecretarir


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19270728_Minutes.pdf