A meeting of the -Federal _Leserve Board was held in the office of the

Federal Jeserve .oard on ,riday, October 11, 1929, at 11:50 a.m.

P2=2: Governor YoungPlatt

r. 'iller1 -r. Jamesr. Cunninftam

1,:c0Ielland, Asst. Secretary

The minutes of the meeting of the Federal _deserve 3oard held on October

10th ::ere read and arproved.

deport of ionnittee on 3alaries and _;xpenditures on list submitted by

the Federal _-,eserve Bank of ,dchmond of employees for whom the directors of

that bank approved leaves of absence with on account of illness, kurin -

the month of Jeptember, where the total of such absences since January 1, 1929

has exceeded thirty days; the Board's Committee recommendinfs approval of the

. salary nayments involved.

Approved.

Aeport of Jommittee on Examinations on letter dated October eth from

the Assistant Federal _ieserve Agent at Cleveland, requesting pennission to

have rapresentativus of the bank make the usual credit investinstions, without

cost to the member banks, of six institutions named in his latter, at the

time they are under examination by Jtate authorities; the 3oard's Cormittee

recommending approval.

Approved.

liemorandum dated October 9th from the State Department, transmittinr;

copy of a further telegram from the American Legation at Vienna, advising of

a proposed merger of the Boden Credit Bank with the Credit 3ank for Commerce

and Trade.

Noted.

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

_

10/11/29 -2 -

jraft of reply prepared by Counsel to lettar dated September 20th from

the Federal eserve ent at Philadelphia, advising that the York 12rust Company

of York, Pa., a state member bank, osais the entire capital stock of the York

Jecurities Company ahdch, in turn, ouns 103 shares of stock of the York Trust

Company, and inAluiria -ahather in view of the provisions of 3ection 5201 of the

_tevised 3tatutes, the oernershio of the member bank stock by the subsidiary cor-

')oration is violation of law.

After discussion, upon motion, the pronosed reply

was approved after being zienled so as to advise that

without rulinc- ee)on the clue stion whether such a trans-

action is a violation of the law, the Board is of the

opinion that it is contrary to the spirit and purpose

of the law and to recluest the Federal Aeserve kgent to

communicate the Board's views to the member bank.

Lemorandum from Counsel dated October 9th, submitting copy of letter

from Counsel of the Federal Reserve Bank of Ltlanta, tog2pther with an amended

and supplemental bill of complaint filed in the case of the University of the

_;outh v. Federal eserve eank of Atlanta, challenging the 1 -3 ,a1it:7 of the Board's

Aee,;ulation J and the constitutionality of that provision of the ;:ederal deserve

;let under which the _?esulation was promulgated; Counsel statine. that in view

of the fact that payment of the check in question in the case was refused by

the drawee bank on the ground that it was drawn a,eainst insufficient funds,

he does not believe the court will actually be called ueon to oass upon the

validit; of Aegulation J or the constitutionality of the Federal _eeserve ct

and does not believe the case is of sufficient Lmoortance to justify the re-

tention of special counsel to assist in its trial on a 3ystem basis.

Unon motion, Counsel's memorandum was noted, with

approval, :led the file'was ordered circulated.

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

_ _88

10/11/29

LemoraLdulL from Counsel dated September 20th, with reference to report of

condition as of June 30, 1929, submitted by the Tirst 2edera1 Forein Bankinc:

Corporation; Counsel referring particularly to the fact that the market value

of the collateral behind the corporation's outstanli inld notes as of June

30, 1929, amounted to only 122.3,), less than the 126,: reT,.ired by the trust

indenture but exceeding the 110: rovirement of the Board's Aegalation Es

The Assistant Secretary reported that the callateral has since been restored

and. maintained above the maximum requiradent.

I:oted, without action.

Letter dated October 10th from the Secretary of the Governors' Conference,

callin,-; attention to the fact that no action has been taken by the 'Board on the

report submitted at the Spring Conference of Governors by the Standing Comittee

on Collections and approved by the Conference; the letter requesting that the

report be brought to the attention o2 the Board for such action as may be deemed

necessary.

Ordered circulated.

2he Governor than referred to several legal gaestions on the Board's

docket and stated that he had sent out notices of a special meeting on 2uesday

for consideration of these matters.

At the .su7cestion of Mr. Miller, it was voted that a review of the credit

situation be made at the meeting of the Board on 7iednesday and that Jr. Golden-

veiser be present at that meeting.

A discussion then ensued dith regard to the purchase of bank stock by

holding companies and. investment trusts and the extent to which private owner-

ship has thereby been reduced. During the discussion, 1,1r. Await, Deputy Comp-

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

89

10/11/29

troller of the Currency was invite1 into the meetinEgand advised the c)ard,

that he would endeavor to work up pertinont inioination rega.

banks.

:he in.)etinc; adjourned at 1:00 o'clock.

tonal

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