19270628_Minutes.pdf

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meeting of the ?ederal -eserve 3oard. was held in the office of the

Federal ...aserve Board on 2aesday, June 25, 1927 at 11:00 a.m.

overnor Crissinger

:Ir. :filer

1.74-. Jamesr . Cunn 11.--aa

:1CIntoshEddy, Secretary

17.r. 1:cClelland, Asst. Secretary

The Governor announced that the torn of 1:r. Liiller as a member of

the -.2.xecutive Comittee expires on June 30th, and accordingly 7ames

was dosinated to serve as regular member of the Committee during the

quarter beginning July 1st.

Telegram dated June 24th from the Chairman of the Federal ,ieserva

3ank of Ohica.rm, advising that the board of directors at their meeting on

that late made no chanc:e in the Jank's existing schedule of rates of lis-

count au d purchase.

Letter dated June 25th from the Federal _Wserve t :_innea_,o is,

advisinj that the Federal .2,eserve Bank of ::innal)olis will notify all

2edexal eserve banks of its return, on July 1st, to its former method

Of handling non-cash items.

deport of :_xocative committee on letter dated June 25th from the

Co:.lotroller of the Currency, rocoi:1 adding a,)proval of a salary of „;2700

:er annum for ::ational Bank Examiner Benjamin assi -;ned to the

'Jellth federal _aserve District; the Committee recom:nondin-: a )roval.

Approved.

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Matter approved on initials on June 24th, namely, telegram dated

June 24th from the Chairman of the Federal L-Zeserve Bank of Chicago, re-

questing approval of a salary of :7,000 per annum for Mr. H. J. Chalfont

promoted to the position of Cashier of the Detroit Branch and a salary

Of .:;6,500 per annum for Mr. John G. Baskin appointed Assistant Cashier

Of the Branch, both effective July 1st.

Upon motion, the salaries recommended were formally

approved, effective July 1st.

2e1egram dated June 25th from the Federal Reserve Agent at San

Francisco, advising that the Bank of Italy rational rust and Savings

Association, under authority granted by the Comptroller of the Currency,

has absorbed the Orange County Trust and Savings Bank of Santa Ana, a

member bank, aid under date of June 18th consolidated it with their exist-

ing branch at Santa Ana.

:oted.

Letter dated June 20th from the Federal _teserve Agent at 3an

Francisco, transmitting and recommending approval of an application of

the pacific Southwest 2rust and Savin:s Bank, Los Angeles, for permission

to discontinue the branch being operated at 222 :ast cueen Street, Ingle-

wood, and to transfer the business thereof to the branch located at 101

Commercial Street, Iaglewood.

Approved.

Ilemoranda dated June 27th from the Committee on Salaries and Ex-

Ponditures with re6-ard to the action of the directors of the Federal eserve

'3anks of Chicago and Kansas City ia votinr. to authorize the payment of the

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rec:ular semi-annual dividend ou June 5Qth, 1927; the Co2.2.1ittee 2G.:-)ortinf".7

that the c.-arent net earhinL:s of the banks for the first six months of the

year %AA1 be in excess of accried dividends for the same period and mIcom-

nondinn app_ val of the dividend payments by the Board.

A..vnrovad.

The Jecretary then presented a letter dated June 9th froin the Dei-.)uty

Governor of the federal deserve 1.3aafr: of San :?rz.u.cisco, referri:-.7 to in,-,:dries

concerning the t,uestio;i of renewals by 'oanks of loans made to veterans under

the terms of the 'Ionia 'Jar dd.us ted. iom)ensatio:i ....et and. -.:he then bands have

sa-e orivilee with reference to a renewal note as in the case of the

c)riclual note 1)articularly as to redemption by the iirector of the Ve.torans

'Lzrea.a if the note is not )(9..id.

The Secretary presented a letter dated. uno 22nd from the Assistant

Director of the United States 70t,.)rans 3,_;.reau, advisi= that renewals will

be considered. by the Bureau as now loans and no:: notes redee!.e.d. not

less than six :..eLiths from the date of such notes.

Upon recontne.idation of the Jecretary, the Boardvoted that a circular letter, settin.: forth the ad-vice received from the 7,Tetera.ls Bureau, be addressedto all Pede-...•al ;,;013, 1*V3 banks for their information.

Letter dated June 24th from the "Jovernor of the federal .,:eserve

Ban:: of ::innoal:olis, advising that he has revuestc.,.d. all 'federal .}Lesc)rve

ban:,,s to transmit to the Board their views with /A3sect to the advisability

O COlatiaLlin 1.1.1)1,11 the federal deserve far list certain nonmember banks

in the :Until, 'Federal deserve District which are ria",:iirj: a chare of 25c:,

011 ever,; check returned to the!: because of insufficient funds, the charge

beiar; made against the ban:: -„hich sends them the item; the letter ret:aest-

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ing a definite ruling from the Board, as soon as it has heard from the

Other Federal lieserve banks and considered the (Alestion, as to whether

or not the Federal Lieserve bank can accept and allow a charge of this

kind.

In this connection, the Secretary submitted letters dated June

27th from the :Avernors of the Federal 2.eserve Banks of Cleveland and iiiChmond,

expressing their viemon the subject.

After dIscussion, action was deferred and the Secretarywas recested to report to the Board an: consideration whichhas been given in the past to this or any similar practice.

Telegram dated June 27th from the Governor of the Federal L.;,eserve

Bank of Dallas, requesting that effective July 5th, the date on which it

Will open for business, the San Antonio Branch be authorized to perform

for the Treasury Department so-called subtreasury functions now performed

by other branches.

Upon motion, it was voted that the application of theDallas bank be transmitted to the Secretary of the Treasurywith the Board's approval.

The Governor then presented a letter dated June 20th and telrams

dated Juno 23rd and L7th from the ;.overnor of the Federal Jose rye Bank of

Dallas, submitting for approval by the Board a proposed time schedule be-

tween the 3an Antonio Branch and other Federal lieserve banks and branches,

and advising that the schedule is satisfactory to all other Federal :ieserve

banks

After discussion, the schedule submitted by the Dallasbank was approved as follo=:

1 Jay

DallasHouston

ii*

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2 Days 3 Da:vs,

Birmingham Atlanta

Chicago Baltimore

:1 Paso 3uffalo

Kansas City Cincinnati

Tittle Hock Cleveland

Louisville Denver

Lorivhis Detroit

ashvillo Jacksonville

I:aw Orleans Los Angeles

Oklahoma City Lanneapolis

St. Louis :ow YorkOmahaPhiladelphiaPittsburgh

LI. Days

'-3o stonHelenaPortland.11 damondSalt Lake CitySan Francisco

5 Itaxs

SeattleSpokane

Reference was mode to the recommendation contained in

Governor Talley's telegram of June 27th, that certain other •

changes in the interdistrict time schedule as between Dallas,

Houston and 721. Paso and other Federal - eserve points be ap-

proved by the Board.

The Secretary called attention to the fact that at the

recent Governors' Conference the Standing Committee on Col-

lections submitted for consideration a proposed new inter-

district time schedule and that the Board approved recently

the action of the Conference in voting to refer the nroposed

schedule to all banks for study. He suggested that action

be deferred on the changes suggested by the Federal aeserve

Bank of Dallas 'oending the complete revision of the schedule.

Upon motion, the Secretary's suggestion was

a:Troved•

•

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e.eport of 'ionaaittee on D i3 t rict submittinr; by-laws 2.2ro-eosed by

the 2ederal aeserve 3a.11 of Jealas for the San Antonio 3ranch and recom-

mendin3 approval with one amendment, namely, that Section 4 of Article V

Of the by-laws be amended so as to provide that the Cashier of the Branch

shall annually be desiz.eated to eerforre the routine duties of Ilaea.ger of

the branch in the absence or disability of the 2irector. in

this connection, the 3ecretaey called attention to the fact that in the

proeosed by-laws the territory to be assied to the 3ranch as ereviously

apl?roved by the 3oard, has been el]larL;ed by the transfer from the 1 Paso

leanch territoxy of the counties of Tradster, ?residio and Thrrell.

Upon motion, the by-laws as eebmitted were al:frproved-.;it'e the amanleent to Sect ion 4 of 1 reco'zienledby the (Jommittee.

Upon motion, it wae also voted to approve the transferfrom the ".:1 Paso to the .:3an 41ntonio Branch territory of thecounties of 3ree•ster, Presidio and e'errell.

Letter dated June 25th from the Governor of the 'Federal :eserve

Baz of Philadel)hia, acknowledE;in; rec.eil,t of and commenting -epon the

Eoard's letter (X-4887) advisine; that the Boa x1 is not in harmony with

the view of the recent Governors' ;;onference that in ,2rinciple, the Ted-

oral lieserve Banks should be reimbursed for services 1,erformed for govern-

merit agencies other than the ".2reasure,-, when the e:e ense involved Is suf-

fie ient to justify the ba eks ashina for reimbursement.

Ordered circulated.

Letter dated June 25th from the .rederal aeserve Agent at San i'ran-

cisco, acknowleds.ing receipt of the Board's letter of June 14th, direct-

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in: the ,=.ont, illaeeoraance eith snifom instructions contained in t113

2oard's letter dated Aj)ril h, 19 to eeort to the 7flitea

States District Lttec.ie:, at Los AelLeles colt-3'n al)2avent criminal 7io1a-

tions of to 1-edera1 .eeserve t a-1 ',he 'Tn...te .;tatae ewised .2tatetes

-0-,; officers and ere„,loyees of the 2acific Jouthwest 2re(st and :;v1 hank

Of Los .111,L;elee, forwarC.ie coeies of such report to the Board in order

that the .eard _a, transmit a cooy to the De2artm nt of Justice; the Lent

stating that the matter has been thorousilly discussed with other officers

Of the San Francisco and 4g.gestin,fs that before the action set gat in

th oard's letter of Juno 1,1-th is taken, the Bank's ?.ounsel and he bo -17,311

an o_ortunit-y to aa;ear before the P,oard for a discussion of lanai and

practical as:2ects of the matter. In this connection, the eovernor also

presented a telexam dated June 27th from the 2ederal .,e3serve nkont advisieg

Of newsl.)aper reports that indictments have been filed against the President

and certain other officers and a director of the bank. :.ttention was called

to the fact that the indictments referred to in the keout's telecram are

in connection with violations of State law and discussion ensued as to

the action of the '2eaeral .leserve nkoit in aeferrinr: a report to the United

States District Attorney of apparent violations of 2edera1 law and his

s-ecjcestion that befom such report is made he be given an opportunity

alecues the natter ,)ersDnally with the hoard..

Fellowin the discussion, James moved that thefederal ..Zeserve .Se,sent be ad-fised that if they desireto confer vrith the hoard, he and the Dan's e'ounselshould come to 'Jashin:eton ieTeediately.

f

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.ir. Cunningham moved, as a substitute for L:r. James'

motion that the 3oard reiterate to the Federal 2.eserve

Agent its instructions set out in letter dated June 14th

that he report the apparent criminal violations of the

Federal .teserve Act and. the United. States lievised Statutes

to the Jnited States Diatrict Attorney at the earliest

practicable time.

:ir. Lilller moved. as a substitate for :ir. James'motion that inquiry be made of the Federal eserve Agent

whether, in view of the change in the situation reported.

in his telegram of June 27th to the effect that newspapers

report that indictments have been filed against the ?resi-

dent and. certain other officers and. directors of tile PacificSouthwest Trust and Savings 3ank, he still feels it desir-

able to coma on to 7ashington to present his views in con-

nection dith the situation.

:ir. 1:flier's substitute motion was -out bythe Chair and. lost, the members voting asfollows:

"aye"Lir. McIntosh, "aye".Governor Criss inzer, "no"

Cunningham, "no"-..1"r• James, "no"

:Ir. Cunningham's substitute motion was thenput by the Chair and, lost, the members votingas follows:

Govemo r Crissi%,er, "aye"• OunninEtam, "aye"Mr. James, "no"• McIntosh, "no"

"not voting"

Mr. James' original motion was then put by theChair and lost, the members voting as follows:

Mr. James, ay a"Mr. LoIntosh, "re"Gover,lor Crissinger, "no"• (.1unninj1ani., "no"Mr. Miller, "not voting"

11

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A further discussion then e:as-.e.1, foil in whichlierresubmitted a,,d. moved. adotion of his motion that

i_vjuiry be ratide ).C.' the -20ciciral J. 0 sorvo A:;ent whether, inview of the chan4;e in the situzation reported in his tele-L-,rara of June 27th to the effect that newspapers report thatindictments had. been filed. ar'ainst the President and certainother officers and. d!roctors of the 7acific 3outhwest .2rastand. -3avi.ac-s hank, he still fJels it desirable to come on to•:ashiniiton to present his views in connection with the situ-

ation.

killer's notion be 1.7,1'; it by the Jhairwas carried., the r...c.,-...bars votin,y, as follows:

"aye"Ja3:7 s , "aye"

r. Llntosh,rtazie,f

Governor ''.2rissins'er, "no"•:sam, "no"

Governor CrLsins'or stated. .4.,hat in as s o_inion there isno ,:arrant for the hoard to brill,: officials of the Federal,.eserve ;an:: of Jan 17rancisco to '..rashinr-ton at a lar:e e:.723nsewhere there are plain violations of Ia.:, and when three senior

officers of the Pacific 3outhwest 2rast Ba2k havealready been indicted. ::e stated. that in his opinion, the

Board. should. direct the Federal .3..:..,serve 2....L;e,it at 3an ?ranciscoto relort those violations to the ':nited States his trict 41ttorney.

Jones stated that in view of the ,uestions of ler7alit:-ralsed in the letter from the Federal _Zeserve A,:ient, as :ell asthe ,uestions of policy and '.)::-.edinscy involved., he thou-iit itmost advisable that the oard. should be fully informed_ before

:Jo:dn,: any report to the he art.ent of Justice of the apparentcriminz.1 violations of law.

::.r..7.::c.Intosh stated that he concurred in the view o:-:pressedby ;Lir. James.

The mi-Autos of the metin,s' of the 7ecieral eserve hoai3. held. on June

were then road and approved.

The Jecre,tar,r..' then oresentc)d. draft of a telecraI.1 to the Federal '.H:eserve

..'ent at 3ana cisco,advis iniL; of ...the action ,,:ast a ci b the :3oard with

l'os:cect to the pacific Southwest. Trust and 3aviirs hank.

Upon motion, the telep:ra-..1 7,tas approved.

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-1-E.P0..?..T.(73 OF 3:2:-1..)II,11-

Dated, June 27th, ,ecoirLiendinE: chances in stock at 'Federal -eserve Bans,as set forth in the Auxiliary :.:i-nute Book of this dote.

_ecorrnendations a2p roved.Dated, June 22nd, ec_vinandin7 action on al;plications for fiduciary

aorcl, powers as set forth in the Auxiliary mute Book24th, of this date.

ecornmendations a pi: ro yea.Jated, June 23rd, ,ecommendinti: aTroval of the a!)plication of LIr. Leon

Littie, for pen.iission to serve at the S3.2.10 timeas Assistant Vice President, :irst ::ational Bank ofBoston, :lass., as 12rosident and director of the First::at ional Bank of IDswich, :ass., and as director ofthe 3.-Lie of :,:ilton, ::ass.

aecorz:.'leldation a,,proved.Dated, June 25th, Jecormendinr: a2:roval of the aix). ieLtion of ::r. George

3hriver for Dermission to serve at the same time asdirector of the Jitizens :ational Bank, Baltimore,and as director of the -21--an,:lin-_:ourth itreet 1":ationa1Ban]:, :hiladell)hia, Pa.

.•Ocorrzneidation a oproved.Dated, June 25th, .,ecommendini. approval of the a,folication of I.:I,. Frank

i. Baker, for permission to serve at the sa,,e time asdirector of the irie aiti nal Bank and as rector ofthe :,:ortg4.-.).);e .rust Compalv, th of Philadeltlhia,2a.

2.ec ornmenaat ion aim-roved.,

The rdeetih.: adjourned at 12:30

Approved:

3ecretary.

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