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The Papers of Charles Hamlin (mss24661) 367_03_001- Hamlin, Charles S., Scrap Book — Volume 237, FRBoard Members P05.001 - Hamlin Charles S Scrap Book - Volume FRBoard Members 237 0 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To The Files From Mr. Coe Date August 11, 1941 Subject: 114 After correspondence with Mrs. Hamlin (see letters of May 25 and June 4, 1941) the items attached hereto and listed below, because of their possible confidential character, were taken from volume 237 of Mr. Hamlin's scrap book and placed in the Board's files: VOLUME 237 Page 18 Preliminary Figures of Gross and Net Earnings and Dividend Payments of Each F.R.Bk. for 1932, Franchise Tax Payments and Amounts Transferred to Surplus. Discounts for Individuals, Partnerships and Corporations. 1-3422-CX-7329) 4-2 Page 46 Memorandum in re salary reductions of F.R. Banks. Page 47 Letter to Senator Glass from Mr. Hamlin re Vacancies on F.R.Board. Page 48 Report on First Federal Reserve District by Carl P. Dennett. Page 68 Gov. Harrison on January 27, 1933, wrote a letter to Gov. of each F.R.Bank, which discusses credit situation. Page u Earnings and Expenses of F.R. Banks, December 1932. X-7337) Re banks qualifying for membership in System. Page 88 Earnings and Expenses of F.R. Banks, January 1933. Page 105 Memo to Mr. Mitchell from Mr. Wyatt re meaning of phrase "tested banking experience" as used in section 4 of the F.R. Act. att. Confiaiiit1zL1, 7-.1AILYII;LZ AND D IV ID aE,11) PAY11'NT3 OF LICH Fra)Nala RiERYE PR&IWINARY IGURZS 01 GROSS Ara) B.,1A YOR 1932, /RANCHIS1: TAX PATIa1,1S AM AIMS TRANSFS-13?"74) TO 3UEPLUS Fed,erc.1 Reserve Bank Gro ss earninc:s I I 1 1 Net EvIrnins Diviend o s pald I $2,7714,000 15,949,000 5,001,000 5,129,000 10,1405,00o 3,271,000 1,871,000 Richmond ii•tlanta Chi cairo St. Louis 1,871,000 2.003,000 5,. 14,000 1,625,000 Minneapolis ICansz.s City Dallas San 1 rai_ci,2co Boston Nev York Philad elrthia Cleve]. -.at 1 $47,000 $676,000 3.562,000 I I i Franchi se tax 4111.1•11 973,000 858,000 033.000 3114,000 293,000 2,243,000 2143,000 314,000 293,000 1,030.000 269,000 1,092,01n ...us 1,435,000 2,021,000 1,307,000 272,000 2145,000 164,000 175,000 2145,000 238,000 5. P89.000 2,306,000 649,000 1932 1931 1930 1929 50,019,000 29, 701,000 36,14214,000 70,955,000 22,314,000 2,972,000 7,98o,000 36,403,000 9.282,000 10,030,000 10.269,000 9,584,000 1920 1927 64,053,000 43,024,000 32,122,000 13,048,000 Z.458,000 1926 47,600,000 it.612,000 4111•11Elo Transferred. to surrlus acc,.m.nt 11,000 6,8143,000 2,207,000 Igo,000 Mao ono 87,000 121,000 -.25,000 10,000 4.••••• .714,000 1,658,000 NUN.. Total: DI VI* 014:1ii.11 Ic).15 RESERVI 110;Jib JAM/AU 4, 1933 VOLUME 237 PAGE 18 7,755.000 7.329.000 2.011,000 17,000 14, 283,000 2,585.000 250,000 818,000 11,021,000* - 7.,054060* -2.298,000 22,5%, ' 21,079,000 5,0144,000 6,464,ono ' 11,4•c1ustro af 4415a.268.14 set eside at the end of 1r31 ant of onrplits returw- . to sur tue to cover risprcoitio n in United 3tiite bonds of tile books et tile eact of 193?. beforc tint clo FEDERAL RESERVE BOARD WASH!NGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD X-7329 January 23, 1933. SUBJECT: Discounts for Individuals, Partnerships and Corporations. Dear Sir: The authority granted by the Federal Reserve Board to all Federal reserve banks in its circular of July 26, 1932, (X-725 1a) to discount eligible notes, drafts and bills of exchange for individuals, -partnerships and corporations, subject to the provisions of the law, the Board's regulations, and that cirualar, will expire at the close of business on January 31, 1933, and the Board has decided to extend such authorization for an additional sxa.onths Section II of the Board's circular of July 26, 1932, on the subject of "Discounts for InLividuals, Partnerships and Corporations" has been amended, therefore, to read as follows: "AUTHORIZATION BY TEE FEDERAL RESERVE BOARD. "The Federal Reserve Board, pursuant to the power conferred upon it by the amendment hereinbefore quoted , hereby authorizes all Federal reserve banks, for a period ending at the close of business on July 31, 1933, to discount gible notes, drafts and bills of exchange for individuals, partnerships and corporations, subject tn the provis ions of the law, the Board's regulations, and this circular." Very truly yours, Chester Morrill Secretary TO AIL CHAIRMEN AND GOVERNORS. VOLUME 237 PAGE 40 January ht, 1933. Leuor_ndum in re Salary reductions of ;federal rosorve banks: The undersigned has dhecked the attached memorandum submitted to htra, but on the undrstanding that it ap?lies solely to rodxti ons in salaries of officers of Fedora re-,-asve banks, and does not a?ply to ::,Iluctions in the salries of employes. The -ithin file shoos Alary reductions of ten Yeaosa). reserve One of these batiks (Sestom) has recommended the reduction of s,:.L.ries of all officer, reeeiving $6000 and over. Yoe: Fedora redwrve banks (Richmond, i'aillette Chicano, iAad City) hive reoemmeadad reductions in salaries of both officers and al2loj-es. The reductions proposed in the case of the Above five banks result in corresi.orxtin roductions in ,,ure:lasint; 2ov.mr Of the lospik0 ponommas consequent gots in the net earnings of the Isniketb• Five banks (New York, Philadelphi, Cleveland, 13411$0, ami Son 2r nol3c0) ',-)commendsil the adoption of a sharo-the.work plaN net intend to increoe net ilrnins; but the banks place the entire burden of t.4cinp; on new era:;loyes uT,on the existin au:loyos, by salary reductions, notaithstandinc the fact that each of theme banks has not only:rNE %rned its dividends for the y.r, but has dzed ifiaterially to its sur:?lus VOLUME 237 PAGE 46 &mow tn, Jaz. Dant Sonata" MOM ao Miro.**** She Irodelara RoEtrirvo Saari to cotzsonitzto nith, INS rielatte.a eitiottaD. with *kb pso,aro zarew4,fixtatar. artesian the neditership of the roiesoi noserve Dowd. rocultina frock the fad that the tam of one of Ito staliboro expired yostorday. With ono loamy progievair exislanc in the appointive Doriberehip of the Nord. ret looser in the *Moo of the Coeptrollor of the Curratcy, ewe are noa oalir five cm:labors or the Palma Raeorre Soot, includine the Searotagy of the Tztr4ury. ilinemoofgm theareeore. Ilia Leon ao Nog 4-th only four amber** lihevalto the oftbiaottay n mI of five risithlro is required in connestiontth eta potation** of compitain lope ruant functions* An on trovio the prodder of the OlsoN4teinpla 1.libith authoriai the Illadgetol reserve brawn in emceptienol sag oblemai. stone* to adio adigonose to nenber bank* ea the tootle* of ascots rhlah ore not 4figiti4 labor Mtn provision, of the 111Wooro2 Mom" AO, copremoly rootage sairisantbro *obits 10,aall low thou Owe astbsesii the 11414,4 *teem Boards II 43nd there rre also warns other lapartnot posers of the laird *IA OM be otesallist only co lbw offiraAtAvo vote of five umbers, andli VOLUME 237 PAGE 47 the power conferred 'by Section 21 (b) to *Iva. a PaAftost memo Isok ID Toilipmeit the disovoihrd MVO anelihm ihidetai near,%Oh OS Matta operating an Boas4 tn the** assomitemms Le of such isvortance that the Inart feels thn owt,tor should be °alma npeciftall, to your -ttaation at once. RormelottAlly, 11401. Sorter 41ase, litINK 'Antos tionato, Washington, ;),„ 04, II • Carl p. Dennett, Chairman, Banking and Industrial Cammittee, First Federal Reserve District. Report dated January 11. States that the credit situation is well in hand. Every complaint has been followed through. We know of no case where sound credit was requested Pna deserved that has not been taken care of. Requests which we could not damply with were for capital and not for credit. Business in New England is satisfied that all sound credit requirements are being met. Discusses home mortgage situation. Discusses farm situation in Aroostook County, naine. Establishment of a branch of the agricultuxal credit bank in Bangor had an immediate beneficial effect. Potatoes were selling at 450 a barrel but when this branch was announced, they moved to 600, and when the branch was established they went to 950 a barrel. This would have enabled the farmers to liquidate a large amount of their loans, but most of them held on for the last 50 to get $1.00 a barrel. The result was that potatoes have since sagged off to fram 75 to 850 a barrel. The banking situation in this District has shown a good deal of improvement. We are still having opportunities from tine to tine to arrange loans for business purposes. One of the woolen mills in Ilaine required money to buy wool to take care of orders that they could secure, and I was alle to arrange this loan directly with the First National BP-Tik of Boston. This particular mill is working day and night and is making money at the present time. Such oases are caming along from day to day, but we are able to take care of all of them Where the credit is warranted, without recourse to direct borrowing fram the Federal Reserve Bank. I have found an extremely helpful attitude on the part of the national bankz here in taking oare of these situations. No outstanding case at the present time is before me of any bank refusing to take a loan, whidh in my judgment, was a sound loan. When our cuestionnaire first went out throughout the District, we had a number of oases of camplaint, but they were all satisfactorily disposed of. VOLUME 237 PAGE 48 • February 1, 1933. noirf Governor Harrison, on January 27, 1933, wrote a letter to the Governor of each Federal Reserve Bank, Which, in substance, is as follows: Governor Harrison writes a long letter analyzing German conditions, and pointing out a great improvenant in Germany. Speaking of our own coniitions, he points out the extraordinary fact that in the 39 months since October, 1929, the New York market has repaid 2078 millions of short term debt to foreign countries, and despite this our country has gained in the same period approximately 170 millions net of goli. He states that in his letter of Decenber 23rd, he brought out that the neak of our gold loss for last year was reached on June 14 at 547 millions, but that the monetary gold stock of the country has increased since that time by 647 millions, including both imports and domestic production, with relatively snail change in the foreign short term liabilities of New York. He ooints out that New York repaid foreign short term liabilities of 1,222 millions between September 1931 and June 1932, and that the balance of such liabilities outstanding on June 15 last was only 723 millions. He states that under ordinary circumstances, we should continue to gain gold. from France, both an account of the balance of payments and because of the steady if still unspectacular flight from the franc, but that all our computations may be rapidly distorted if there is a rise in inflationary propaganda in this country, and especially in Congress. VOLUME 237 PAGE 68 kD'Q CONFIDENTIAL Not for publication B-811 a,w, 60 EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, DECEMBER 1932 Federal Earnings from - Reserve L Bank Boston Yew York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Other sources counted bills $41,747 142,330 151,676 s6,s35 $10,025 27,3oo 13,72s 13,25° $120,877 953,037 174,884 221,403 $7,267 60,008 11,529 8,609 50,524 67,350 Y,146 22,557 6,118 7,160 16,537 4,553 58,485 58,003 272,580 83,251 4,761 6,347 24,26g 5,700 34,730 38,539 17,541 110,102 2,813 3,so5 3,573 10,796 81,365 71,100 69,965 153,077 3,0o5 19,868 2,845 ,94 6,.c 802,037 862,529 2,291,667 17,881,057 9,820,546 Dec. 1932 Jan. 1932 Current net earnings Current net Current expenses Net earnings earnings payments after Ratio to Ratio Exclusive of to Total , paid-in Total Total of cost of dividends paid-in capital F.R.currency capital Per cent Per cent $11,128 $894,120 .7 $6,136 7.9 $173,780 $160,098 6,842,520 16.1 9,572,214 6So,2s1 13.3 522,994 532,435 2,297,442 18.5 3,007,068 181,416 13.3 170,401 158,137 1,012,829 J7.8 2,544,65o 6.9 83,15o 246,952 207,2..3 December Month Total 119,888 138,865 351,531 116,071 118,689 102,309 296,229 100,401 121,280 104,891 301,766 105,667 -1,392 33,974 49,765 '0,404 81,458 '33,367 94,914 190,156 83,316 135,041 95,112 2°1,392 3s,597 -1,729 -1,1S8 79,577 151,801 3,401,583 2,175,456 2,262,592 1,138,991 2,318,037 129,091 3,542,517 2,074,908 2,156,178 1,386,339 2,428,386 482,901 4,751,623 2,205,37_9 2,288,411 2,463,212 1,288,076 2o,9L3,570 2,428,977 50,018,817 25,185,565 26,291,381 23,727,436 12,428,297 2,442,895 29,701,279 25,561,518 27,040,664 2,660,615 s.6 3.6 2.S 8.9 11.1 18.0 15.3 1.6 465,002 785,419 2,180,978 264,822 12.7 5.9 1,212,792 -25,020 508,425 408,754 165,262 2,930,722 17.4 10.0 96,843 4.2 27.1 -74,055 1,657,521 3,727,'3 2,660,6'5 15.3 1.6 13,032,000 -7,057,694 FEDERAL RESERVE BOARD DIVISIO7 OF BANK OPERATIONS FEBRUARY 1, 1933. 8.9 16.1 VOPME 237 PAGE 70 14111011-• -•we • - ge .1-4A-444 FEDERAL RESERVE BOARD WASH I NGTON )C-7337 ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD January 31, 1933. Dear Sir: From the minutes of the Federal Reserve Agents' Confer ence held on november 15 and 16, 1932, the Federal Reserv e Board notes that during the discussion of the general subjec t of membership in the Federal Reserve System and what can be done to bring in more eligible nonmember banks, attention was called to the Federal Reserve Board's letter of June 19, 1931 (X-6914), which requir ed that at the time of admission of a State bank or trust company it should be free from all known losses or depreciation, so that its statement would reflect as nearly as possible the value of its assets. It appears that several of the Federal reserve agents stated that on account of bond depreciation and other unsatisfactory condit ions very few nonmember banks could qualify for membership at the present time. In this connection the Board desires to call the attention of the Federal reserve agents to its letter of March 9, 1932 (X-7113), transmitting for their information and guidan ce a copy of a letter to the Federal Reserve Agent at the Federal Reserve Bank of Richmond with regard to the treatment of depreciation in the investment accounts of State banks and trust companies applying for membership in the System. In the letter to Mr. Hoxton it was pointe d out that in some recent VOLULE 237 PAGE 71 P •4114 X-7337 2 cases the Board had not insisted upon strict observance of the policy outlined in its letter of June 19, 1931, and had approved applications for membership in the System made by banks 7hose managements ,-rere competent and rhose affairs otherrise crere generally satisfactory, upon co:adition that they should, prior to admission to the System, charge off all knorn losses ani depreciation on bonds other than those classified in the four highest grades by a recoglized ilvestment service organization regularly engaged in the business of rating or grading bonds. As a number of the Federal reserve agents no doubt are arare, the Board has taken similar action rith respect to bond depreciation in acting upon applicatiolls for membership i-Thich, since .che date of the letter to Hr. Hoxton, have been submitted -ith the favorable recommendations of the directors of the Federal reserve banIzs of the districts concer.led. Very truly yours, Chester Horrill, IIlIIII!]!w T0 ALL . R. AGEITT S. CONFIDE1:TIAL Not for publication EARNINGS AND EXPENSES OF FEDERAL RESERVE BiTTS, JANUARY of Month Earnings from - Federal Reserve • Discounted bills Purchased bills $36,482 131,116 140,784 73,062 - $8,504 38,165 12,402 46,235 53,796 33,931 23,247 Other sources Total $121,799 969,032 176,523 224,206 $4,474 22,541 13,446 4,604 $171,263 5,099 5,742 16,095 3,904 59,023 56,674 276,492 29,933 34,907 13,192 104,46 723,173 802,07 2,466,404 U. S. securities Banz_- aioston Het- York Philadelrhia Cleveland Rich.ond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 410/TAL January 1933 December 1932 January 1932 1933 January Curren e •enses Exclusive of cost of Total F. R. currency 1933 Current net earnir s Less accrued Ratio to dividends and net paid-in Total charges (current) to capital profit and loss Per cent $13,358 634,514 164,646 1.5 12.7 1,160,454 343,155 317,326 $157,905 526,336 178,509 214,784 102,544 117,245 122,104 350,250 117,630 111,096 90,993 257,415 107,403 113,312 93,553 261,905 126,999 3,933 24,551 88,345 -9,169 .9 7.1 6.4 -22,520 4,116 84,046 4,888 3,452 23,732 6,631 2,540 3,332 3,295 8,133 42,054 71,479 72,184 154,566 2,307 22,471 2, 740 6,945 116,478 132,589 74,540 121,662 93,265 149,242 79,974 125,435 93,464 200,062 36,900 7,154 15.1 2.1 -2,013 74,070 8.4 22,431 _13,239 -21,652 17,094 114,741 119,654 674,o46 2,350,486 122,679 3,315,079 2,079,564 2,172,242 1,142,437 3,4°1,543 2,175,456 2,262,592 1,138,991 4,467,663 2,124,185 2,236,307 2,631,356 8.9 4.9 19.4 11,450 2,332,037 lei,801 1,379,126 346,087 91,451 274,132 12.1 8.5 FEDERAL RESERVE BOArtD DF AK OPERJ,TIOYS FE3RUARY 13, 1532 -$41,247 348,599 43,967 17,274 $147,740 514,207 167,272 200,349 VOLUME 237 PAGE 88 7,367 -31,417 370,397 1,820,634 • a /24., • Mr. Mitchell October 30, 1922. Mr. Wyatt - General Counsel Meaning of phrase "tested banking experience as used in Section 4 of the Federal Reserve Act. ection 4 of the Federal Ressrve Act requires that each Federal Reserve Agent and each Assistant Federal Reserve Agent shall be a person of "tested banking experience", and you have requested me to advise you as to the meaning of the expression "tested banking experience." So far as I can find, the term "tested banking experience" has never been defined either by the lexicographers or by the courts. "tested" seems never to have been defined by the courts. The word The word "banking" has been defined frequently by the courts, but the definition given by Webster, which is quoted below, is substantially the same as those given by the courts, and the meaning of the term is so well understood that it is not believed necessary to quote here the definitions given by the courts. While there have been a few definitions of the word "experience", the subject matter and context has been such that those definitions would be of little or no value in this connection. It is necessary, therefore, to rely upon the definitions of these words given by the dictionary. Webster's unabridged dictionary defines the verb "test" as follows: "Tp put to the test or truth; to try the truth, genuineness, or quality of by experiment, or by some other principle or standard; as, to test the soundness of a principle, the validity of an argument, the strength of a material." It also defines the noun test" as follows: "Examination or trial by the cupel; hence, any critical examination or decisive trial; as to put a man to a test. Hence (a) Moans of trial; discriminative characteristic of fact; specif. subjection to conditions that show the real character of a person or thing in a certain particular; as absence is a test of love. (b) That with which anything is coepared for proof of genuineness; touchstone; standard.* VOLUME 237 PAGE 105 -2- It defines the word "banking" as follows: "The business of a bank or of a banker. The business of banking originally was that of money changing; at present banking, in general, consists in taking money on deposit subject to check or draft, loaning money, as by discounting notes and bills, issuing drafts, and any other associated form of general dealing in money or credit. One or more of the operations if carried on with the public in general may be construed as banking." It defines the word "experience" as follows: "1. Trial or test; either a tentative trial or experiment, or a crucial test, or demonstration. "2. The actual living through an event or events; participation in anything through sensation or feeling; the real life as contrasted with the ideal or imaginary; personal acquaintance with reality; actual enjoyment or suffering; hence, the effect upon the judgment or feelings produced by _persons and direct impression as contrasted with description or fancies; as, to know by experience." * * * * * * * ** * * * * "4. Knowledge, skill or technique resulting from experience; experimental or inductive knowledge; hence skill facility, or practical wisdom gained by personal knowledge, feeling or action. * * * * * * * * * * * * * "7. Philosophy. The sum total of the conscious events which compose an individual life; also the ultimate, non-analyzed data of all hap:enings that may be apprehended; the summqm genus of all knowable reality." Experience, therefore, is the actual living through an event or events Or the participation in anything through sensation or feeling. In another sense, it is the knowl_dge, skill or technique resulting from such living through an event or events or from such participation in anything. Banking experience, then, must be knowledge, skill or technique resulting from actual participation in the business of banking. If we accept this as a definition of banking experi,nce, it only remains to ascertain what acted significance is given by the use of the word "tested". From the definition quoted above, it appears that the noun "test" means "subjection to conditions that show the real character of a person or -3 - thing in a certain particular", and the verb "test" means "to put to the test". It is reasonable to asume, therefore, Ihat the word "tested" was used in this connection to require that the person selected should be a person who has been Oubjected to such conditions as to show the real character of his banking experience - i.e., the real character of his knowledge, skill or technique tesulting from actual participation in the business of banking. Reading these words together in the light of the above definitions,•therefore, I should say that a person of "testA. banking experience" is a -person who has knowledge, skill, or technique resulting from actual participation in the businessfrof banking, and who has been subjected to such conditions as to dela,,nstrate his ability as a banker. To state it more freely, one might say that a person of "tested banking experience" within the meaning of Section 4 is a purson who has proven his &Alit.) as a banker through actual participation in the bILLiness of banking. I realize that _this is not a very precise definition, but I believe that it is not practicable to frame one which is more precise. In the last analysis, the question whethur a particular person is a person of tested banking experience is a question of fact to be decided in the light of all the attendant circumstances; and no deinition can be framed which will be properly applicable to all circumstances which might arise. ResJectfully, General Counsel.
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