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F ed er al R eser v e B oard W A S H IN G T O N F ed er al R eser v e B oard W A S H IN G T O N THE COMPANY WILL APPRECIATE SUGGESTIONS FROM ITS PATRONS CONCERNING ITS SERVICE C l a s s o f S e r v ic e •* This is a full-rate Telegram or Cable gram unless its de ferred character is in dicated by a suitable sign above or preced ing the address. WESTERN U N IO N R . B . W H IT E P R E S ID E N T NEW CO M B CARLTO N J. C. WILLEVER C H A IR M A N O P TH E B O A R D F IR S T V IC E -P R E S ID E N T 1201-S SIGNS DL ” Day Letter NM “ Night Message NL “ Night Letter LC ” Deferred Cable NLT = Cable Night Letter Ship Radiogram D= The filing time as shown in the dateline on full-rate telegrams and day letters, and the time of receipt at destination as shown on all messages, is STANDARD T IME. Received at 708 14th St., N. W . Washington, D. C. r 1935 MAY 8 PM 5 00 2 T O Y 191 DL CP N e w y o r k N Y 325 p M a y 8 Lawrence clayton Asst to G o vernor f R Board Was h i n g t o n W o u l d appreciate your doing your utmost to get that matter to me in Losangeles early M o n d a y w i t h duplicate copy to my Sanfrancisco office STOP consider v e r y important the res t o r a t i o n of that section of Ecjsles bi l l p r oviding f o r c ompulsory membe r s h i p F e d e r a l Reserve s y s t e m of all insured banks f o r a unified b a nking system which to me seems so n e c e s s a r y to have p r o p e r control credit and the removal double l i a b i l i t y b a n k stocks as w e l l as the insurance of deposits and constant t h o r o u g h sup e r v i s i o n f D 1 C thereby making for sounder THE QUICKEST. SUREST AND SAFEST W AT TO SEND MONEY IS B Y TELEGRAPH OR CABLE THE COMPANY WILL APPRECIATE SUGGESTIONS FROM ITS PATRONS CONCERNING ITS SERVICE CLASS' OF SERVICE <• This is a full-rate Telegram or Cable gram unless its de ferred character is in dicated by a suitable sign, above or preced ing the address. WESTERN U N IO N R . B . W H IT E PUdDINT 'N E W C O M B C A R L T O N J. C . W IL L E V E R C H A IR M A N O F T H I B O A R D F IR S T V IC E -P R E S ID E N T 1201-S SIGNS DL = Day Letter NM = Night Message NL ■» Night Letter LC = Deferred Cable NLT ” Cable Night Letter Ship Radiogram The filing time as shown in the date line on full-rate telegrams and day lettera, and the time of receipt at destination as shown on all messages, is STANDARD TIME. Received at 708 14th St., N. W . Washington, D. C. r -2 banks and reducing to m i n i m u m runs and its bad effect on banks ought encourage reinstatement in bank stocks which is so e s s e n t i a l if the R ^ c is to get its preferred stock investment paid off by the publics p u r c h a s e of banks common stocks in its s t e a d y 1stock?unified banking system with a clearing house in ’ T ashington r e c o r d i n g all loans above certain sums ought do away wi t h present local clearing hous e s in country and it would be a fine barometer of countrys business conditions ^T O P Above are just thoughts developed since p h o n i n g y o u all or any p o r t i o n of w h i c h y o u can ignore regards X P Giannini 5pm THE QUICKEST, SUREST AND SAFEST W AT TO SEND MONET IS B Y TELEGRAPH OR CABLE THE COMPANY WILL APPRECIATE SUGGESTIONS FROM ITS PATRONS CONCERNING ITS SERVICE WESTERN U N IO N C l a s s o f S e r v ic e This is a full-rate Telegram or Cable gram unless its de ferred character is in dicated by a suitable sign above or preced ing the address. 1201-S SIGNS DL ” D*y Letter NM = Night Message NL = Night Letter LC = Deferred Cable NLT “ Cable Night Letter Ship Radiogram J . C . W IL L E V E R NEW COM B CARLTON _______________________________________________________________ ft. B . W H IT E P R E S ID E N T C H A IR M A N O P T H E B O A R D F IR S T V IC E -P R E S ID E N T The filing time aa shown in the date line on full-rate telegrams and day letters, and the time of receipt at destination as shown on all messages, is STANDARD T IME. Received at 708 14th St., N. W . Washington, D. C. r 1935 MAY 9 PM 12 30 I t F A 84 D.L. Chicago, Ills. 1035am M a y 9th L a w r e n c e Clayton, Assistant to the Governor F e deral ^es. Board w ash in-: ton Should have said doing away with existing local clearing house credit examinations rather than doing away w i t h clearing houses. Note Father C o u g h l i n is after y o u s e veral months also Geor g e Leblanc NewYork one of coughlin*s m o n e t a r y advisors h a d me out to lunch and tried his best enlist m y support Coughlin»s central Bank idea have known L e b l a n c m a n y years will g l a d l y pho n e h i m if y o u think worth w h i l e however Aldrich his old e m ployer w h ile h e a d Tgquitable Trust company can I b e l i e v e do more wi t h him, A#p> G iannini 1225pfa THE QUICKEST, SUREST AND SAFEST W AY TO SEND MONEY IS BY TELEGRAPH OR CABLE May 9, 1955, Mr# A, P. Gionnini, Bazik of America H« T, & S. A., Los Angeles, California, Dear Mr* Glannlnls We have given sane thought here to the various recommenda tions made by yourself and Ur* Collins respecting amendments to the Banking Bill of 19S5 as now constituted, I will take then up separately, 1, As regards reserve reqireaents for branch banking organiza tions, there is a great deal of fores to the argument that reserves should be computed on the same basis as reserves of unit banks located in the same communities, ft is felt, however, that a suggested amend ment on this line would re-open the entire branch banking controversy in Congress, which it is felt should be deferred until that :>roblea can be presented by itself and after the Banking Bill of 1955 is out of the way, 2, Regarding Section 21 of the Banking Act of 1935, the intent of this section is not so much to prevent banks from underwriting securi ties as it was to prohibit security dealers accepting deposits. However, it waa deemed necessary to restrict underwriting by national banks to government issues (either direct or fully guaranteed) or general obliga tions of any State or political subdivision thereof. In view of this limited field, it is not apparent that such underwriting should be denied to State banks and private bankers, I, With reference to the suggested exemption of government deposits secured ty government bonds from reserve requirements, this has been gone into very thoroughly. Our counsel has referred to the report of the Committee on Bank Reserves of the Federal Reserve Systea mads in 1951, which included the following comments with respect to this parti cular class of deposits! •Reserves on United States Government deposits, - The recommendations of the committee male no exceptions with respect to deposits of the United States Govern ment, but treat these deposits for reserve purposes Mr* A* P. Giannini - 2* the saae as any other deposits* The committee recom mends the repeal of the 1917 amendments which relieved these deposits froa reserves as an induoeaent to aeaber banks to participate to the fullest extent in war financing* The fact that deposits are secured by the pledge of govemaent or other securities does not con stitute a valid reason for their exeaption froa reserve requirements* A bank as a matter of necessity aust have assets to cover and secure all of its deposit liabilities, but this fact does not relieve a bank froa its responsibility to aaintaln adequate reserves* The security of a deposit has nothing to do with the reserve that should be carried against it* The banks have the use of their United States Govemaent deposits the same as of any other deposits and it is equitable, therefore, that these deposits should contribute to the reserve fund in the saae relative proportion*" It is true that the pledging of collateral in the fora of govemaent obligations satisfies the consideration of safety of such deposits but does not answer the other considerations involved in the whole theory of reserve requirements* The principal func tions of reserves are three-folds (l) to provide an available balance which the aeaber bank nay draw against in meeting with drawals of deposits, (2) to furnish a brake on credit expansion, and (5) to serve as a aeaber bank's contribution to the central reservoir of credit to be used in going to the assistance of any aeaber bank which is in difficulties* 4* The abolition of double liability of stockholders of national banks is not to be acooaplished, in any event, until a later date* It has been our feeling right along that the coapulsory accumulation of reserves by holding company affiliates should be either repealed or aaended so as to dovetail with the change In the stockholders liability of national banks* We live doubted, however, the propriety of raising the issue at this tlae with so much prejudice in Congress against holding companies generally9 also with reference to group and branch banking* However, there is no doubt that the present is probably the only chance to introduce such legislation of this kind for seme little time* Certainly an amendamnt on this subject alone would have very little daance of getting through Con gress at its next session and for that reason it oould likely Mr* A* P, Giannini - 5* be tacked onto the present bill* We are, therefore, giving this natter our further attention and shall prepare a draft of a proposed amendment which we think will adequately meet the situa tion* We shall then leave it to you people and others interested to work through your own channels to see that the amendment is proposed before the Senate Committee* When this Is socompliahed you can be sure of our support* Very truly yours, Lawrence Clayton, Assistant to the Governor* LC/lea Hay 9, 1935* Mr* A* P« Glanninij Bonk of America N« T* & S, A.# Los Angeles, California* Dear Mr* Gianni.nil I am returning herewith Sbarboro to Mr* L* M. Giannini, commenting on a ^ loan made by mediate Credit Bank of Berkeley Bank of America N* T. & S« A* the letter froa Mr. dated March 5, 1 9 2 5 , the Federal Inter to a customer of the It is difficult to see how any criticism can be leveled at the Federal Intermediate Credit Bank in this particular matter, inasmuch as the rate at which that bank lends is governed by the rate at which its debentures sell in the open market* The borrower concerned evidently satisfied every requirement of liquidity, as well as sound ness so as to entitle it to the going rate of the Federal Intermediate Credit Bank* Had this been a case of a capi tal loan made by the Bank for Cooperatives, it would have created a different situation, as such loans are usually not made except where available credit sVreasonable rates is not already available to the borrower * Yours sincerely, (Signed) Lawrence Clayton Lawrence Clayton, Assistant to the Governor* tC/lem CABLE A D D R ES S - B A M E R IC A L A . P . OlANNINI C H A IR M A N O r T H E B O A R D O F D IR E C T O R S SA N FR A N C ISC O . CALIFO RN IA May 14, 1935 Mr. Lawrence Clayton, Assistant to the Governor, Federal Reserve Board, Washington, D. C. Dear Mr. Clayton: Thank you very much for your letter of May 9, in which you reported on the consideration given to certain recommendations made by Mr. Collins and myself in regard to the Banking Bill of 1935. I have read your comments with a great deal of interest and assure you that we shall treat the letter in accordance with your request. We also received the article prepared for Moley's magazine, "Today”, and took the liberty of making a few changes which we hope will meet with your approval. The revised article has been sent on, and a copy of it is enclosed for your inform ation. May I take this opportunity of again thanking you sincerely for the consideration you have shown in all matters which we have taken up with you. We all appreciate your co operation very much, and assure you of our willingness and desire to be of service to you and the Governor whenever we can. Wishing to be remembered to your Chief, and with kindest personal regards to you, I remain Cordially vours
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