ezisting between the First National Bank and the Pennsylvania Company is meeting of the Federal Reserve Board was held in the office of the

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1 184 meeting of the Federal Reserve Board was held in the office of the Peclerea Reserve Board on Wednesday, Febru.ary 24, 1926 at 12:00 o'clock. PIMSMIT Gove rno r Cris singer Mr. Platt Mr. Hamlin Mr. Miller Mr. Ctuinineiam Mr. Eddy, Secretary Mr. McClelland, Asst. Secretary The minutes of the meeting of the Federal Reserve Board held on PebrIlary 19th were read and approved as amended. Report of Lan Committee on memorandum from Counsel dated February 20th, With reference to the application of Mr. John E. Zimmerman for permission to serve at the same time as director of the First National Bank, The sit antown Trust Company and the Pennsylvania Company for Insuranoe on Li./se and Granting Armities, all of Philadelphia; Counsel stating that Ile IS unable to recommend approval because in his opinion competition ezisting between the First National Bank and the Pennsylvania Company is 84betantial but calling attention to the fact that the 'Board has previously )ved interlocking directorates between the Pennsylvania Company and. "her national banks and. that consistency with former action wculd seem to require that this application be granted; the Lan Committee recommend- 133e aloproval of the application in question. Upon motion, the above application was approved. Memorandum from Counsel submitting draft of letter to the Federal Pasel - ve agent at Atlanta, with reference to the practice at the bank and Ita ITashville, Jacksonville and Birminda.am branches by which checks in

2 2/21, I4qment of notarial services are paid over to and endorsed by the employees Performing these services and deposited to the credit of the 'Employees' Eellefit Fund of the Federal Reserve Bank Club; the letter stating that 114 the opinion of the Board it is contrary to public policy for a Federal Reserve bank to enter into any agreement or understanding with a notary PlIblic whereby the notary makes an assignment of official fees and advising that the practice should be discontinued, and that hereafter the notaries 144st he permitted to retain the full amount of all legal fees paid them for their official services. Referred to the Law Committee. ilemorandum from Counsel dated February 18th, submitting for inclusion '1 the March issue of the Federal Reserve Bulletin, material with reference to the recent decision of the circuit court of appeals in the Pascagoula Dar c learance case. Report of Committee on Salaries and Expenditures on letter dated liebrilary 18th from the Chairman of the, l'etleeting approval of the action of the executive committee in granting to Tr... --c J. S. nothschild, night watchman, leave of absence on account of 44Lese, With full pay, fora period of his disability, not to ithre e Months; the Committee recommending approval. exceed Upon motion, it was voted to approve the above action, but the Secretary was directed to prepare for submission to the Board a letter to the Chairman of the St. Louis bank with reference to granting extended leave of employees beyond probable periods of illness.

3 186 2/24/26-0- Letter dated February 15th from the Assistant Federal 'deserve Agent at Si Francisco, advising that the Security Trust and Savings Bank on?ebmary 15th opened the branch in the Pan.1%ianrican Petroleum Company i/1g, 710 ',lest 10th Street, Los Angeles, approved by the Board on 'hule 25, Noted. :Report of Committee on Examinations on memorandum dated February 19th from the Comptroller of the Currency, recommend lug arproval of an 4L;l1 ication of -2he Flora National Bank, Flora, Ills, for permission to x'ethice its canital stock from. i65,000 to,)50,000 on condition that the It al-nount of the reduction be used in rennving doubtful assets; the Committee also recommerxling approval. Report of Committee on Salaries and Expenditures on letter dated --4ary 18th from the Federal Reserve Agent at Atlanta, requesting approval (If the action of the board of directors of that bank in authorizing payments " additional compensation totaling )595, made under date of December 24, 1925, to::essrs.l. L. 1,Iagruder and H. C. -razer and Misses Sylvia Batallier e4:1c1 Grace Brown, employees of the Havana Agency; the Committee referring the /natter back to the Board in view of the Board's letter of November 28' 1923 (X-3900) notifying all Federal _deserve banks that no bonus or etra compensation Doonen ts of any character will be approved by the =;eserve Boa. After discussion, the above letter was referred back to the Committee on Salaries and Expenditures for report as to the salary status of the employees referred daring their connection with the Havana Agency.

4 /24/26 :,:atter ordered circulated and. referred to the Comittee on :,::ar.iinations t tile meeting on February 19th, nainoly, letter dated February 17th from the eera1 -Aeserve Agent at Chicago, with reference.to the condition of the liarathon County Bank of -Tausau, ',:isconsin, which recently filed, notice of its i ntention to withdraw from the Federal deserve S.-stem. noted, without action. Letter dated February 19th from the Governor of the Federal Reserve 8kk Of Atlanta, with reference to the Board's inquiry regarding an article a recent issue of the American Banker stating that in former reports from aeserve officers it is knovm that the position Florida banking ins titliti 11s have maintained throughout the unusual increase in deposits during 1925 has been the cause of mach unfavorable comment in all?)arts of the e 141trY; the letter stating that the article referred to was taken from 411 ther article and that the won1 "unfavorable" was used instead of "favorable" the 'O changing the meaning of the entire statement. Noted.. Liemoranchun from Counsel dated February 16th, submitting draft of reply to letter dated.decem'oer 22, 192C) from the Governor of the Federal iieserve 114* Of San Francisco, enclosing memorandum from the Deputy Governor of the 1)41,L, ' al.1c,,,esting the discontinuance of the practice of requiring member banks to ti esidlate on notes rediscounted for whom such notes were rediscounted, is ill cases where they were acquired from non-member banks, which practice fellowed in compliance with the provision contained in the Board's Rega1ati 11 that a member bank shall certify in its a.,)plication for red.iscount

5 188-5_ lillether the note offered has been discounted for a depositor other than a beatic or for a non-depositor and, if discounted for a bank, whether for a. Izernber or non-member bank; Counsel in his memorandum recommending (1) that 114til further notice, the Board waive the requirement of its Regulation referl'eci to; Provided that the application for rediscount requires member banks to aesiaate which taper offered for rediscount, if any, was acquired from non- 1E31 /5er bans and contains a certificate that none of the paper offered for l'edlisocrunt except that so designated was acquired from a non-member bank; (2) 1-,1 lot the 'Board make this subject a topic for discussion at the next 3vel'ilors' Conference with a view of considering the desirability of an azietdrn ent to this portion of its regulation; (3) that a copy of the Board's c 1 l'espozidence with the Federal.ieserve Bank of Ban :Francisco be sent to all aeserve banks for their information. Upon motion, the recomendations contained in Counsel's memorandum and the proposed letter to the Federal deserve Bank of San Francisco were approved. to The Governor then presented and read to the Board the recommendations he Board, made by the Federal Advisory Council at their meeting on."4;11 15th, dealing with (1) Business and financial conditions; (2) ment financing; (3) Outlook for long and short term money rates ; (4) Outlook for Foreign Financing in 1926, and (5) Outlook for 1) construction in Noted. il emorandum,from Counsel dated February 23rd advising that by direction

6 189, 2/24/26-6- Qf the Vice Governor he visited the State Department to ascertain whether the DePartmert had any objection to the Board's issuing to the First Federal Ic)reiCn Investment :rust a preliminary -2ormit to commence business, and that the Department feels that the matter does not C070 within its jurisdiction all(1 does not care to express any o)inion on it whatever; Counsel submitting With his memorandum a letter to :7.r. Paul 7_lopstock, President of the pro -9osed ccqorat ion, transmitting the Board's preliminary certificate of permission 1 1" the corporation to commence business. 1:oted. the '-2110 Vice dovernor then submitted draft of letter to the Chairman of Oommittee on Lanking and Currency of the Senate, being a revision of a prepared by Counsel to the Chairman's letter of February 1, 1926, req'llesting the views of the Board on S. 667, a bill to amend Section 13 of the a.1 Reserve ict so as to Provide that no note, draft or bill shall be 411 ḻitted 4-,40 discount under the terms of the Federal lieserve.lct unless (1) It i, accam,:anied by a certificate of the member bank showing both the rate ef discount and the rate of commission charged the borrower, and (2)?he "I tlae rate of the discount said the rate of the commission charged by a member bank does not exceed by more than two p3r centam the discount l'ete -I such Federal Reserve bank. Ordered circulated. e Tice, crovernor then submitted two drafts of a letter to the al Reserve ent at Chicago, prepared in accordance with discussion

7 190 2/24/26 at tile meeting of the Board on Feb/mazy 19th with reference to action of the l'aza Rapids Savings Bank in. absorbing the South Grand Rapids State Bank the latter part of 1924 and on the -general question of applications by state member banks fo r the Board's approval of consolidat Ions, mergers, the establishment of branches, etc., both drafts of the proposed reply stating that the Board agrees with the Federal Reserve Agent that it would be unwise 4) r,r at this late date to require the Grand Rapids Savings Bank to apply for rat ification of its action in absorbing the other banking institution referred t ' Ut "pointing out that -wirier the Board's Regulation H and the general con cliti 11 of membership imposed upon. State member banks all State member banks are recnired to request permission of the Board prior to (I) Establishing a branch, aaalley or additional office and (2) Consolidating, merging with, or purchasing tlie assets of another bank or branch bank, the only exception being that under Ilre.tiOus rulings Michigan State member banks are not required to secure approval to the establishment of branches which the Board understands are merely Htellerst windows" and are restricted to the head office city. Upon motion, the two drafts above mentioned. were referred to the Governor with power* MeMorandum from the Chief Examiner dated Febru.a.ry 19th, submitting report tlf ez9zain5.tion of the International Acceptance Bank, Inc* as at the close of btiairloas September 12, Ilat Ordered circulated* eport of examination of the Federal Reserve Bank of Dallas and its and El Paso branches made as at the close of business September 26,

8 191 2/24/26-8- Referred to the Committee on Examinations and the Committee on District 411. :Report of examination of the Federal Reserve Bank of Cleveland with its Pittsburgh and Cincinnati branches, made as at the close of business September 5, 1925, Referred to the Committee on Examinations and the Committee on District 44.. M. Miller than referred to the report of the last examination of the lieserve Bank of San Francisco made as at the close of business an ji117 11, 1925, and called attention to the large number of member banks in ter welfth District listed as requiring special attention, many of which allow amounts due the Federal Reserve bank. He called attention to the lar es losses that it was estimated wculd be sustained and stated that he "41c1 like to have a statement as to the amount of actual and estimated 41ses sustained by all Federal Reserve banks. After discussion, upon motion by :Ir. Miller the Secretary was directed to have prepared for the Board a statement of the losses, both actual and estimated, of all Federal Reserve banks from their establishment to date. 111" Miller then called attention to the fact that while the Board's Wee,lY statement of condition of rerorting member banks dated February 12th, el511tained an explanation of the figures with respect to brokers' loans by tilber banks in New York City, that of February 18th.did not contain any 8/leh s tatement. He suggested that each week the summary of the statement ---"lpoint out the changes in the amount of such loans.

9 2/24/ Upon motion by Mr. Hamlin, the above suggestion was approved. QS 0P STANDING Dated, Febru.a.ry 20th, Recommnding chances in stock at Federal 'Reserve banks as set forth in the Auxiliary Minato Book of this date. Dated, Febrmary 19th, Recommending action on applications for fiduciary 20th, powers as set forth in the Auxiliary Minute Book of this date.. Dated, February 17th, Recommending action on anplicat ion for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Refused. Dated, February 23rd, Recommendimg approval of the application of Mx. Edgar R. Champlin for permission to serve at the same time as director and vice chairman of the Atlantic National Bank, Boston, Mass., and as director of the Central Trust Company, Cambridge, has a. Dated., February 23rd, Recommending approval of the application of Mr. Herbert S. Reynolds for permission to serve at the same time as director of the Griswold National Bark, Detroit, Mich. and as officer and director of the Peoples National Bank, Jackson, Mich. Dated, February 19th, Recommending approval of the application of Mr. George W. Olmstead for permission to serve at the same time as director of the Warren National Bank, Warren, Pa., as director of the Sheffield National Bank, Sheffield, Pa. and as director f the First National Bank, Kane, Pa. The meeting adjourned at 1:15 Alm Sean Y.