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0 P Y X-7351 FEDERAL 3ES5MV6 BAH OF HEW YORK February 24, 1933. Dear Governor Meyer: In order to p r o t e c t c e r t a i n banks i n New J e r s e y a law was r e c e n t l y introduced and passed in that s t a t e authorizing the supervisor of banks, whenever in h i s judgment circumstances warrant, to permit banks to d e f e r payment • f a s p e c i f i e d p o r t i o n of t h e i r d e p o s i t s f o r such time as he may determine. Such banks may accept new d e p o s i t s which w i l l not be subject to r e s t r i c t i o n s but s h a l l be payable in f u l l upon demand. So f a r a s we have been informed, t h i s law has been a v a i l e d of by only one i n s t i t u t i o n in our d i s t r i c t , the Hew J e r s e y , a member bank. Trust Company of The enclosed p h o t o s t a t i c copy (a) of a c i r c u l a r i s s u e d under date of February 21, 1933 by the Trust Company to i t s d e p o s i t o r s quotes the New Jersey Act of Assembly #195, known as the "Altman B i l l " and n o t i f i e s i t s d e p o s i t o r s that i t i s a v a i l i n g i t s e l f of the p e r mission granted by the Commissioner of Banking and Insurance to operate under the p r o v i s i o n s of the a c t a s of the c l o s e of business Tuesday, February 21, 1933. Also enclosed are the f o l l o w i n g ; (b) P h o t o s t a t i c copy of l e t t e r , February 23, 1933, from the Trust Company to Mr. L. F, S a i l e r , deputy governor of t h i s bank, n o t i f y i n g us that the t r u s t company i s operating under the New J e r s e y Act of Assembly #195, and i n s t r u c t i n g that a l l d e p o s i t s from the beginning of b u s i n e s s Thursday, February 23, 1933, be kept separate and apart from the general a s s e t s of the company and maintained in l i q u i d funds. (c) Copy of l e t t e r from Mr. S a i l e r to the Company, under date of February 24, 1933. Trust , : 3 9 X-7351 Federal Reserve Sank of Hew York 2l 2/24/33. (d) Copy of l e t t e r from the Deputy Commissioner of the Department of Banking and Insurance, Hew J e r s e y , State of Hew J e r s e y , to Mr. B. M. Sidney, a s s i s t ant deputy governor of t h i s bank, e n c l o s i n g (e) Copy of a l e t t e r which the department i s sending to c e r t a i n of i t s i n s t i t u t i o n s re Chapter 27 of the Laws of 1933. A l l of the f o r e g o i n g i s sent you so that you may be kept currently informed of what i s taking p l a c e along the l i n e s of recent l e g i s l a t i o n which a f f e c t s banks in our d i s t r i c t . At t h i s juncture i t appears probable that only those banks which have p r a c t i c a l l y no l i q u i d resources w i l l a v a i l themselves of the p r o v i s i o n s of t h i s a c t , so t h a t i t i s d i f f i c u l t to say j u s t what i t s e f f e c t on the p u b l i c mind w i l l b e . I understand that Mr. Logan has furnished you with c o p i e s of the *Robinson b i l l passed by the Assembly of the State of Hew York on January 31, 1933. F a i t h f u l l y yours, (Signed) J . H. CASE Chairman. Honorable Eugene Meyer, Governor, Federal Reserve Board, Washington, D. C. enclosures (5) •This b i l l became law on February 21, 1933, by signature of the Governor. X-7351-a COPY (A) TRUST COMPACT , IT. J . TO OUH DEPOSITORS: February 21, 1933. The L e g i s l a t u r e and. the Governor of the State of New J e r s e y , have deemed i t advisable to enact the f o l l o w i n g b i l l to safeguard the d e p o s i t o r s and banking structure of the State of New Jersey: An Act concerning banks, t r u s t companies and savings banks. Be i t enacted by the Senate and General Assembly of the S t a t e of New Jersey: The Commissioner of Banking and Insurance i s hereby authorized and empowered in a d d i t i o n to a l l other powers, whenever in h i s judgment the circumstances warrant i t , to authorize any and a l l banks, t r u s t companies and savings banks under h i s j u r i s d i c t i o n . (a) To extend f o r a period of n i n e t y days, and f o r a f u r t h e r period i f he deems i t expedient, payment of any time accounts where n o t i c e of withdrawal has been given or may h e r e a f t e r be given. (b) To authorize the postponement f o r any l e n g t h of time of the payment of any proportion of the d e p o s i t s in demand accounts of any i n d i v i d u a l , firm or corporation as he may deem necessary and expedient, to be determined by him according to the a b i l i t y of any bank, t r u s t company or savings bank to pay such withdrawals. (c) To authorize a l l such banks, t r u s t companies and savings banks to t h e r e a f t e r r e c e i v e new d e p o s i t s which s h a l l be segregated from the old d e p o s i t s , and s a i d new d e p o s i t s s h a l l not be subject to the r e s t r i c t i o n s or l i m i t a t i o n s h e r e i n or that may h e r e a f t e r be imposed by the Commissioner of Banking and Insurance, pursuant to the p r o v i s i o n s h e r e i n , and s a i d new d e p o s i t s s h a l l be i n v e s t e d in such l i q u i d a s s e t s as may be approved by the Commissioner of Banking and Insurance in order t h a t banks, t r u s t com* panies and savings banks may a t a l l times have s u f f i c i e n t funds to meet the demands on such new d e p o s i t s in accordance herewith* (d) Whenever the Commissioner of Banking and Insurance s h a l l authorize and empower any bank, t r u s t company or savings bank to a c t under the p r o v i s i o n s of t h i s a c t , he i s hereby empowered to make and adopt such r u l e s and r e g u l a t i o n s as he may deem proper f o r the p r o t e c t i o n of the i n s t i t u t i o n and may require d a i l y reports in d e t a i l touching t h e i r financial condition. This a c t s h a l l take e f f e c t immediately. 41 X-7351-a . 2 *** STAT0S5HT The d e s i g n of the above a c t i s to permit the Commissioner of Banking and Insurance to make r u l e s and r e g u l a t i o n s f o r the purpose of p r o t e c t i n g not only the bank but i t s d e p o s i t o r s . The f o l l o w i n g statement was issued by Charles H. P l e n t y , p r e s i d e n t of the Hew J e r s e y Bankers A s s o c i a t i o n , in e x p l a i n i n g the purpose of the emergency bank b i l l : "The Altaian b i l l , passed by the Hew Jersey L e g i s l a t u r e , Lionday, February 20, 1933, i s a law somewhat s i m i l a r to that of Hew York S t a t e , and permits the Bank Commissioner where i n h i s judgment a bank may have too large a percentage of frozen a s s e t s , to a f f o r d such bank a reasonable time to pay i t s d e p o s i t s by requiring such d e p o s i t o r s t o present a ninety-day n o t i c e of i n t e n t i o n s to withdraw savings accounts, and p e r m i t t i n g checking d e p o s i t o r s to withdraw such percentage of t h e i r d e p o s i t s as in h i s judgment l i q u i d a s s e t s would permit. "The object of the b i l l i s to safeguard the d e p o s i t o r s i n a p e r f e c t l y solvent bank where under p r e s e n t business c o n d i t i o n s , i n a b i l i t y to convert frozen a s s e t s into cash might cause the c l o s i n g of such i n s t i t u t i o n . "I have been asked to make t h i s statement that there may be no misapprehension as to the purpose of t h i s new law," The Trust Company has been granted permission by the Commissioner of Banking and Insurance to operate under the p r o v i s i o n s of the above a c t a s of the c l o s e of b u s i n e s s Tuesday, February 21, 1933. Your cooperation and consideration i s s o l i c i t e d . (B) TRUST COUPAMY , N. J . February 23, 1933. L. F. S a i l e r , Esq., Deputy Governor, Federal 3eserve Bank of Hew York, New York, N. Y. Dear S i r : The Trust Company i s operating under New J e r s e y Act of Assembly #195, known as the "Altman S i l l " and, under that Act, a l l d e p o s i t s from the "beginning of b u s i n e s s Thursday, February 23, 1933, s h a l l be kept separate and apart from the general a s s e t s of the Company, and maintained in l i q u i d funds. I t i s the i n t e n t i o n of the Trust Company to maintain a l l funds received from d e p o s i t o r s in the Federal 2eserve Bank, and we wish to open t h i s account as 11 The Trust Company of , New J e r s e y , operating under Act of L e g i s l a t u r e #195, New J e r s e y - Approved February 21, 1933." This account, being d i s t i n g u i s h e d as above o u t l i n e d , we request that the Federal Reserve Bank a d v i s e the Trust Company that no part of t h i s new account w i l l ever be considered a s subject to any loans or discounts that the Trust Company now has or might i n the future have with the Federal Reserve Bank. Thanking you f o r your cooperation, we remain Very t r u l y yours, President. CHF/n-MPC • jG-7351-e COPY 43 (c) February 24, 1933. President, Trust Company, ,, Hew J e r s e y . Dear Sir: Receipt i s acknowledged of your l e t t e r of February 23, 1933, a d v i s i n g us that the Trust Company i s operating under Hew Jersey Act of Assembly #195, known as the "Altman B i l l " and t h a t , under that Act, a l l d e p o s i t s from the beginning of b u s i n e s s Thursday, February 23, 1933, w i l l be kept separate and apart from the general a s s e t s of the Company, and maintained i n l i q u i d funds. As requested by you we have opened a new account designated "The Trust Company of , Hew J e r s e y , Operating Under Act of L e g i s l a t u r e #195, Hew J e r s e y Approved February 21, 1933." '7e agree that funds accepted f o r deposit in t h i s account w i l l not be app l i e d by"us in payment of any loans or discounts h e r e t o f o r e made by us to or f o r the Trust Company, or t o the payment of any loans or discounts h e r e a f t e r made by us to or f o r the Trust Company the proceeds of which are not c r e d i t e d to the above account. Yours very t r u l y , L. F. SAILER, Deputy Governor. COPY (D) X-7351-d STATE OF HEW JERSEY DEPAETlaENT OF MHXI3KJ AMD IFSUSAjCE T3EETOH February 23, 1933. Mr. B. M. G-idney, A s s i s t a n t Deputy Governor, Federal Reserve Bank of New York, Hew York, IT. Y. Dear Mr. Gi&ney: As promised you over the telephone t h i s morning, I am enclosing- herewith a copy of the l e t t e r which we are sending to c e r t a i n of our i n s t i t u t i o n s re Chapter 27 of the Laws of 1933. Very t r u l y yours, (Signed) Enc V. D. Peer, Deputy Commissioner. X-7351-e COPY (E) STATE OF NEW JE2SEY DEPARTMENT OP BANKING- AND INSURANCE TRENTON Gentlemen: Pursuant to the power i n me vested as Commissioner of Banking and Insurance under the terms of Chapter 27, Laws of 1933 and deeming the circumstances to warrant i t i n your i n s t a n c e , your i n s t i t u t i o n i s hereby authorized to operate commencing * in accordance with the p r o v i s i o n s of the said a c t with the f o l l o w i n g r e s t r i c t i o n s and c o n d i t i o n s : (a) To r e s t r i c t the withdrawal f o r a period of n i n e t y days of a l l d e p o s i t s as shown by your books as of the c l o s e of b u s i n e s s excepting school savings and club accounts and such accounts a s are held p r e f e r r e d by s t a t u t e . (b) To continue to r e c e i v e new d e p o s i t s which s h a l l be segregated from the old d e p o s i t s and said new d e p o s i t s and the income therefrom s h a l l be i n v e s t e d in such l i q u i d a s s e t s a s may be approved by the Commissioner of Banking and Insurance in order that the i n s t i t u t i o n may a t a l l times have s u f f i c i e n t funds to meet the demand of such new d e p o s i t s in accordance herewith. In view of the a u t h o r i t y herein conferred the f o l l o w i n g r u l e s and r e g u l a t i o n s are imposed while operating under t h i s a c t : (1) No dividends s h a l l be paid to s t o c k h o l d e r s . (2) Ho payment of f e e s to d i r e c t o r s or committees. (3) Ho new loans of any kind or character may be made. (4) That the i n t e r e s t payments on the deferred d e p o s i t s be continued a s h e r e t o f o r e . (5) That the Commissioner s h a l l be supplied bi-monthly with a complete statement of the i n s t i t u t i o n ' s f i n a n c i a l condition. (6) That a s soon as p o s s i b l e during the above mentioned Ainety day p e r i o d , there s h a l l be made a v a i l a b l e to a l l d e p o s i t o r s a pro rata p o r t i o n of t h e i r accounts, such p e r centage to be approved by the Commissioner upon app l i c a t i o n to him by the i n s t i t u t i o n . • X-7351 "** 2 *~ (7) The c o s t s of p r o t e s t s occasioned by t h i s a u t h o r i z a t i o n s h a l l he home hy the i n s t i t u t i o n in a l l c a s e s where d e p o s i t o r s ' accounts are s u f f i c i e n t to meet checks presented. (8) That the a u t h o r i t y h e r e i n conferred may only r e c e i v e f u r t h e r extension upon the approval of the Commissioner upon a p p l i c a t i o n to him at l e a s t ten days p r i o r to the e x p i r a t i o n of the term s p e c i f i e d . (9) From time to time the Commissioner r e s e r v e s the r i g h t to change or a l t e r i n any way deemed a d v i s a b l e by him the r u l e s and r e g u l a t i o n s above enumerated. P l e a s e acknowledge r e c e i p t . Very t r u l y yours, Commissioner. Received 2 / 2 4 / 3 3
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