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ii
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
V/EEK ENDED J4NUARY 2 , 1 9 3 1 .
CHANGES IN STAT^ BANK MEMBERSHIP:
District
Capital
•
11
11
Date
Admitted, tq Membership*
Dallas Bank & Trust Co., D a l l a s , Tex4s,
Stanford S t a t e Bank,
Stamford, Texas,
#1,000,000
50,000
1 - 2-31
12-30-30
Merger of S t a t e Members:
4
P e o p l e s - P i t t s b u r g h Trust Co., P i t t s b u r g h , P a . , member, 5,322,000
Oakland Savings & Trust Co.,
"
"
"
300,000
Consolidated under t h e t i t l e of the
P e o p l e s - P i t t s b u r g h Trust Co., $ member, . . . .
5,322,000
11-17-30
Closed:
8
8
8
Citizens Bank & Trust Co., England, Ark., member, . .
Bank of Marvell, Marvell, Ark., member,
Bank of Pontotoc, Pontotoc, Miss., member,
100,000
50,000
100,000
12-30-30
1 - 2-31
1 - 2-31
Change ojr T i t l e ;
12
The C i t i z e n s Savings Bank, Pasadena, C a l i f . , a member, has
changed i t s t i t l e to C i t i z e n s Oonmerj?ial Trust & Savings Bank.
12-30-30
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
8
L a f a y e t t e National Bank and Trust Co., Luxemburg, Mo.
(Pull powers)
#
12-27-30
I T
X-1530
FEDEEIL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED JANUARY 9, 1931,
CHANGES IN STATE BANK mtBERSHIP:
Distriet
Capit al
Date
Admitted t o Membership:
None.
Closed:
Merchants & Farmers Bank, Roanoke, A l a . , . . . . . •
$ 75,000
1 - 5-31
500,000
Susquehanna Trust Co., Williamsport, P a . , member,.
merged w i t h and under t i t l e of
2,000,000
Lycoming Trust Co., Williamsport# Pa•> member, . .
500,000
Brighton Bank & T r u s t Co., C i n c i n n a t i , 0 . , member,
,
600,000
Pearl-Market Bank & Trust C o . , C i n c i n n a t i , 0 . , member
merged w i t h and under t i t l e of
4,000,000
Central Trust Co., C i n c i n n a t i , 0 . , a member, . . .
100,000
Oakley Bank, C i n c i n n a t i , 0 . , nonmember,
merged with and under t i t l e of V
F i f t h - T h i r d Union Trust Co., C i n c i n n a t i , 0 . , member 5,000,000
50,000
Youngstown S t a t e BaJik, Youngs town, 0 . , nonmember,.
25,000
Youngstown Savings Co.,Youngstown, 0 . , nonmember,.
merged with and under t i t l e of
1,000,000
City Trust & Savings Bank, Youngstown, 0 . , member,,
Metropolitan Svgs. Bank & Trust Co., P i t t s b u r g ,
200,000
P a . , nonmember,
. * . . . • • • • * * .
250,000
Peoples T r u s t Co., P i t t s b u r g h , P a . , nonmember,
125,000
Terminal Trust Co. , P i t t s t * i r ^ i , P a . , nonmember,
merged with and under t i t l e of
5,319,000
P e o p l e s - P i t t s b u r g h Trust Co., a member, . . .
100,000
F i r s t S t a t e Bank, Stamford, Texas, member, . .
merged with and under t i t l e of
50,000
Stamford S t a t e Bank, Stamford, Texas, member,.
12-31-30
Mer ger of S t a t e Banks %
11
4
11
Absorption of National Bank:
Napoleon S t a t e Bank, Napoleon, Ohio, member, . . .
50,000
absorbed t h e F i r s t National Bank of Napoleon, .
50,000
Dallas Bank & Trust Co., D a l l a s , Texas, member,. . . 1,000,000
500,000
absorbed the Dallas National Bank, .
12-22-30
12-22-30
12-22-30
1 - 1-31
1 - 1-33,
12-31-30
12-31-30
12-31-30
12-31-30
12-15-30
12-31-30
Succeeded by Nonmember:
11
Continental Bank & Trust Co., Shreveport, La..member,
succeeded by Continental Trust & Savings Bank,
Shreveport, L a . , a nonmember.
300,000
12-29-30
2
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED JANUARY 16, 1931.
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
Date
Admitted to Membership*
8
Chouteau Trust Co., S t . Louis, Mo.
. . $200,000
1-15-31
Voluntary Withdrawal:
7
S t a t e Savings Bank, Missouri Valley, Iowa, . . . . . .
50,000
1-12-31
50,000
12-20-30
25,000
1 - 3-31
Succeeded "by Nonmember:
7
9
Kent S t a t e Bank, Kentland, I n d . , member,
Succeeded by The Kent S t a t e Bank, nonmember.
Southern Montana Bank, Ennis, Mont., member, > • • . .
Succeeded "by Madison Valley Bank, nonmember.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
4
7
Union N a t i o n a l Bank & Trust Co., Cadiz, Ohio
Bloomlngton National Bank, Bloqmington, Ind.
(Confirmatory)
(Pull powers)
1-12-31
1-14-31
If-
V
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED JANUARY 23, 1931.
CHANGES IN STATE BANK MEMBERSHIP:
District
~
Capital
Date
Admitted t o Membership:
7
S t a t e Bank of Cuba, Cuba, I l l i n o i s , . . . . .
$50,000
Closed:
None.
PERMISSION GRANT# TO EXERCISE TRUST POWERS:
None.
1-22-31.
4
5
I
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED JANUARY 30, 1931.
CHANGES IN STATE BANK MEMBERSHIP:
Pis —
trict
Capital
Date
Admitted t o Member3hip:
None.
Closedt
2
6
Peoples Banking & T r u s t Co., E l i z a b e t h , N. J . ,
Jackson Banking Co., Jackson, Ga., . .
. . . . $350,000
50,000
1-28-31
1-28-31
Absorbed "by Nonmember:
8
Peoples Savings Bank & Trust Co., H a l l s , Tenn., . . .
Absorbed by Bank of H a l l s , H a l l s , Tenn., nonmember,
25,000
70,000
1-16-31
M & T Trust Co., B u f f a l o , N. Y., a member, . . . . . .6,000,000
has absorbed A. Pepe & Sons, P r i v a t e Bank,
100,000
Marine T r u s t Co., B u f f a l o , N. Y., a member, . . . . 10,000,000
has absorbed Commercial Trust Co., nonmember,. . . 1,250,000
Central S t a t e Bank, MbKinney, Tex., a member, . . .
75,000
has absorbed F i r s t S t a t e Bank, Westminster, Tex.,
a nonmember, . ; .
13,000
12-30-30
Absorption of Nonmembera t
2
2
11
1-23-31
12-13-30
Absorption of National Banks:
4
7
P e o p l e s - P i t t s b u r g h Trust Co., P i t t s b u r g h , Pa.,member, 5,319,000
has absorbed F i r s t National Bank of Birmingham,
P i t t s b u r g h , Pa.
100,000
S t a t e Bank of Cuba, Cuba, 1 1 1 . , a member, . . . . .
50,000
has absorbed F i r s t National Bank, Cuba, 111., . .
50,000
1-20-31
1-22-31
PERMISSION GRANTED TO EXERCISE TRUST POWERS*
1
5
12
Beverly N a t i o n a l Bank, Beverly, Mass.
Citizens National Bank, d a s t o n i a , N. C.
F i r s t National Bank,in B a k e r s f i e I d , C a l i f .
(Supplemental)
( F u l l powers)
( F u l l powers)
1-28-31
1-28-31
1-29-31
X-1530
FEDERAL DESERVE BOARD ANNOUNCEJIENT
WEEK ENDED FEBRUARY 6, 1931
CHANGES IN STATE BANK miBERSHEP:
Capital
Date
Admitted t o Membership:
None.
Closed:
Merchants S t a t e Bank, New P h i l a d e l p h i a , Ohio, • • • $150,000
F i r s t Trust & Savings Bank, Hammond, I n d . , . . . . 1,000,000
Aurora S t a t e Bank, Aurora, Or e g . , . . . . . . • •
25,000
1-31-31
2 - 2-31
2 - 5-31
Reopened?
Bank of Marvell,
Murvell, A r k . , . . .
. . . . . .
50,000
1-31-31
300,000
300,000
1-30-31
25,000
30,000
1-31-31
Converted to National Bank:
Miners Trust Co., Nanticoke, P a . , member, . . . .
Converted t o Itinera Nat ional Bank, . . . . . . .
Consolidation of S t a t e Members:
C i t i z e n s S t a t e Bonk, Tekoa, Wash., member, . . . .
Tekoa S t a t e Bank, Tekoa, Wash., member, . . . . .
Consolidated under c h a r t e r and t i t l e of
Tekoa S t a t e Bank, Tekoa, Wash., member, . . .
30,000
.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
American National Bank, Idaho F a l l s , I d a .
( F u l l powers)
2 - 6-31
7
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED FEBRUARY 13, 1931
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
Date
Admitted to Membership:
5
The Bank of Romney, Romney, W. Va.,
.$100,000
2-11-31
125,000
2 - 9-31
. . . 200,000
2-10-31
150,000
2 - 9-31
Change of T i t l e :
4
Peoples Savings & Banking Co., Barberton, Ohio.
T i t l e changed to F i r s t - C i t y Savings Bank.
Closed:
4
F i r s t S t a t e Bank, Newton F a l l s , Ohio,
. . . . . . .
Reopened:
8
Greenwood Bank & Trust Co., Greenwood, M i s s . ,
Voluntary Withdrawal:
12
Bank of Oregon C i t y , Oregon City, Oreg.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
12
F i r s t National Bank, P r i c e , Utah
(Limited powers)
2-13-31
8
X-1530
FEDERAL RESERVE $OARD ANNOUNCEMENT
1B8K MEED FEBRUARY 80, 1931
CHANGES IN STATE BANK MEMBERSHIP:
Distriot
Capital
Date
Admitted to Membership:
None.
Consolidations:
American Bank & Trust Co., Hazleton, P a . , member, . .
City Bank & Trust Co., nonmeWber, ... . . . . . . . . .
Consolidated under new c h a r t e r and t i t l e of
American Bank & Trust Co., nonmember.
11
F i r s t S t a t e Bank, H i l l s "boro, Texas, member, . . . . .
Farmers National Bank, . . . . . . . . . . . . . . .
Consolidated under new c h a r t e f and t i t l e of
Central Bank & Trust Co., nonmember.
$400,000
125,000
2 - 4-31
100,000
100,000
1-3^.-31
77,600
2-20-31
35,000
2-16-31
Closed:
Bank of Woodruff, Woodruff, S. C.,
. . . . . . . . .
Voluntary Withdrawal:
C i t i z e n s Bank, F e s t u s , Mo., . . .
.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
1
7
7
Boston-Continental National Bank, Boston, Mass.
I n l a n d - I r v i n g National Bank, Chicago, 111.
C i t i z e n s National Bank, South Bend, Ind.
(Confirmatory)
(Confirmatory)
( F u l l powers)
2-17-31
2-14-31
2-17-31
9
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
KEEK ENDED FEBRUARY 27, 1931
CHANGES IK STAgE BANK. MEMBERSHIP
District
Capit a l
Date
Admit ted to Member ship:
None.
Absorption of National Banks:
1
6
Newton Trust Co., Newton, l & s s . , member, . . . . . $1,000,000
absorbed the F i r s t National Bank of Newton, . . .
100,000
Peoples Batik, C a r r o l l t o n , Ga., member, . . . . . .
60,000
absorbed the F i r s t National Bank of C a r r o l l t o n , .
100,000
2-16-31
1-13-31
Merger of S t a t e Banks:
4
7
7
F i r s t - C i t y Trust & Savings Bank, Akron, 0 . , member,
Ohio S t a t e Bank & Trust Co., nonmember, . . . . . .
merged under c h a r t e r and t i t l e of
F i r s t - C i t y Trust & Savings Bazik, member, . . .
American Trust Co., South Bend, I n d . , member, . . .
La S a l l e S t a t e Bank, nonmember, V
merged under c h a r t e r and t i t l e of
American Trust Co., member, .
Commercial S t a t e Savings Bank, Fenton, Mich.,member
Fenton S t a t e Savings Bank, member, . . . . . . . .
consolidated under c h a r t e r of l a t t e r and t i t l e of
S t a t e Savings Bank of Fenton, member
3,500,000
1,000,000
1-31-31
3,750,000
500,000
50,000
2 - 2-31
500,000
50,000
25,000
2-16-31
50,000
Voluntary L i q u i d a t i o n :
8
Federal Bank & Trust Co., L i t t l e Rock, Ark.,
. . .
200,000
1-20-31
25,000
2-24-31
Closed:
8
F i r s t S t a t e Bank, Palmyra, 111.,
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
2
F i r s t Merchants National Bank & Trust Co.,
lliddletown, N. Y.
( F u l l powers)
2—18—31
l-f
10
X-1530
FEDERAL RESEfeYB BOARD ANNOUNCEMENT
vflSBK
ENDED MARCH 6* 1931
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
Date
$ 25,000
3 - 2-31
P e o p l e s - P i t t s b u r g h Trust Oo.j P i t t s b u r , Pa.,metiiber, 5,456,271
D o l l a r Savings & Trust Co., nonmember, . . . . . . 1,000,000
merged under c h a r t e r and t i t l e of
P e o p l e s - P i t t s b u r g h Trust Co., member, . t . . . 5,456,271
Marion Central Bank, Max ion, A l a . , member, i . . i
50,000
Peoples Bank of Marion, nonmember, .
50,000
merged under, c h a r t e r and t i t l e of
\
Marion C e n t r a l Bank, membet, . > >
50,000
Formers S t a t e Bank, Bellevue, Mich., member,. . . .
25,000
Bellevue S t a t e Bank# nonmember, . . . . . . . . . .
20,000
merged under c h a r t e r and t i t l e of
Bellevue S t a t e Bonk, nonmember.
American S t a t e Bank, Saginaw, Mich., member, . . .
400,000
Peoples Savings Bank, nonmember,
.
200,000
merged under t h e p h a r t e r of t h e former and t i t l e of
Peoples American S t a t e Bank, a member, . . . . .
400,000
3 - 4-31
Admitted t o Membership*
None.
Voluntary Withdrawal s
6
Bank of Wadley, Wadley, Ga.,
Merger of S t a t e Banks t
4
1
6
7
7
1-27-31
2-21-31
2-21-31
Change of Tit l e :
12
Walker B r o t h e r s , Bankers,, S a l t Lcke C i t y , Utah.
T i t l e changed t o Walker Bank and Trust Co.
3-1-31
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
4
F i r s t National Bank, R e y n o l d s v i l l e , Ky. (Full powers)
X
3 - 4-31
I * 11
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED KARCH 13, 1931
CHANGES IN STATE BANK MEMBERS HIP:
Pistrjct
Capital
Effective
date
Admitted t o Membership;
None.
Voluntary Withdrawals:
4
Middlefield Banking Co.,
H d d l e f i e I d , 0 . , . . | 25,000
7
Ulch Brothers S t a t e Bank, Solon, Iowa, . . . .
50,000
3-11-31
3-11-31
PERCUSSION GRANTED TO EXERCISE TRUST POWERS:
4
F i r s t National Bank, B r o o k s v i l l e , Ky. (Supplemental)
1
National Bank of Commerce, New London, Conn. (Supplemental) 3 - 9-31
3 - 9-31
I
X-1530
FEDERAL RESERVE BOAED ANNOUIWEMENT
WEEK ENDED MARCH 20, 1931
CHANGES IN STATE BANK MEMBERSHIP;
Pig**
triot
Admitted t o Membership r
Capital
Date
2
Bank of Jamestown, Jamestown, NV Y.,
". . . . .
$500,000
3-20-31
9
Farmers S t a t e Bank, FlancLreau, S. Dak., . . . . . .
50,000
3-19-31
11
F i r s t S t a t e Bank, Robert Lee, Texas,
30,000
3-17-31
11
F i r s t S t a t e Bank & Trust Co., Snyder, Texas,
50,000
3-17-31
100,000
3-16-31
. . . . . . .
. . .
Voluntary Withdrawal :
2
Orleans County T r u s t Co., AIM on, N. Y.,
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
None.
13
f
13
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED MARCH 27,, 1931
CHANGES IN SffAJS BANK MEMBERSHIP:
District
Capital
Pate
. . . .
$450,000
3-23-31
Bristol-American Bank & Trust Co., B r i s t o l , Conn.,
Lake Odessa S t a t e Savings Bank, Lake Odessa, Mich.
300,000
25,000
3-23-31
3-23-31
300,000
50,000
2 - 1*31
Admitted to Membership:
3
American Bank & Trust Co., Hazleton, P a . ,
Voluntary Withdrawal:
1
7
Consolidation of S t a t e Bimks?
7
Dearborn S t a t e Bank, Dearborn, MLch., member,
.
Peoples S t a t e Bank, I n k s t e r , Mich. s nonmenber, .
Consolidated under c h a r t e r and t i t l e of
Dearborn S t a t e Bank, member,
. .
300,000
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
8
Union National Bank, S p r i n g f i e l d , Mo. (Supplemental)
3-27-31
1 4
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED APRIL 3, 1931
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
Date
Depositors S t a t e Bank, Chicago, 111., member,
Southwest S t a t e Bank, Chicago, 111., nonmember,.
Consolidated under c h a r t e r and t i t l e of
D e p o s i t o r s S t a t e Bank, a member,
#400,000
3-28-31
Dearborn S t a t e Bank, Dearborn, Mich., member,. .
American S t a t e Bank,
"
"
, nonmember,
Consolidated under cl^arter and t i t l e of
Dearborn S t a t e Bank, a member,
300,000
Admitted t o Membership:
None.
Consolidation of S t a t e Banks:
200,000
400,000
100,000
3-16-31
300,000
Closed:
C i t i z e n s Bank & Trust Co., J e f f e r s o n , Ga., .
96,420
3-30-31
1,000,000
4 - 2-31
Reopened:
S t a t e Savings Loan & Trust Co., Quincy, 111.,
Chaise of T i t l e and Location:
Camden County Bank, Linn Creek, Mo. T i t l e and l o c a t i o n changed
to Camden County Bank, Camdenton, Mo.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
National Bank of Commerce, New London, Conn.
(Supplemental)
Report f o r week ended March 6, 1931, should be c o r r e c t e d t o
read as f o l l o w s :
F i r s t National Bank, R e y n o l d p ville, Pa. ( P u l l powers)
3-31-31
3 - 4-31
X-1630
FEBBRJU, BSSEBVB BOABD XMOQlEWEm
afo mil 10: mi
~
CHANGES IN STJ3S BANK MBMBgRSHIPt
Admitted to Membership:
2
State Trust Co., Plainfie|id, N. J . , , V" . , , ,
Capital
Date
#|50,000
4 - 9-31
100,000
4? #-31
Voluntary Withdrawal:
2
Bank of Millbrook, Millbrook, N T.,
. . . . . .
Consolidation of State Banks i
2
7
7
7
7
Broadway & Plaza Trust Co., New York, N. Y,,member,
1,350,000
Consolidated under ohirt^r and t i t l e of the
Hibernia Trust Co., npppfober, . . . . . . .3,000,000
S t . Joseph Valley Bank, Blkhart, lad., member,. .
250,000
South Side State Bank, nonmember, . • • • • , . •
25,000
Consolidated under charter and t i t l e of
St. Joseph Valley Bfok# member, . . . . . . ,
250,000
Peoples Wayne County Banjc, Detroit, Mich..member 15,000,000
American State Bank, m«M»ber, . . . . . . . . . . 2,500,000
Consolidated under etwtrter and t i t l e of tfce
Peoples Wayne County Bunk, member,
15,000,000
Highland Park # t # e Bant, Highland Park»IB.(d).,
a mender , . . . . *,096,000
American Stofce Bfmk, ^fmber,
#0,000
Consolidated under cfcertegr and t i t l e of th#
Highland Park State Bank, member, . . . . . . 1,000,000
Peoples Wayne County Bank, Detroit, Mich.,member 15,006),pOO
Mehigan S%*te 6#nk, nonmember,
,
^50,000
Consolidated under Qbarter and t i t l e of the
Peoples Wayne County Bank, member, . . . . .15,000,000
4 - $-31
3-23-31
3-27-31
3--27-31
3-27-31
Closed t
|2
150,000
4-10-31
Peoples National Bank of Brooklyn in New Yorfc,
York, N
N.. Y.
Y»
( f a l l power*)
4 - 7-31
of CpBpseroe, Oregon C i t y , Oreg • I f f * ?
PERMISSION QBASOT) TO m m c i s E TBVST p o w m s *
|
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED APRIL 17, 1951
CHANGES IN STATE BANK MEMBER SHIP:
N o
Cha n g e 3
4
PERMISSION GRANTED TO EXERCISE -TRUST POWERS
NONE
i
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED APRIL 24, 1931
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
S
Date
Admitted to Man h e r s h i p :
None.
Voluntary Withdrawal:
6
Farmers & Merchants Bank, Eatonton, Ga., . . . . $25,000
4-15-31
PERMISSION GRANTED TO EXERCISE TRUST POSTERS:
6
Hamilton National Bank, Knoxville, Tenn. ( F u l l powers)
4-15-31
17
18
1-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED MAY 1, 1931.
CHANGES IN STATE BANK MEMBERSHIP:
District
Capital
Date
Admitted t o Members hlp»
None.
Closep:
12
6
C e n t r a l Bank
Toppenish, Toppenish, Wash.
LB, Grange Banking & Trust 'To., La Grange, Ga.
^Lti.000
250,000
4-22-31
4-29-31
PERMISSION GRANTED T^EJCEBCISE TRUST POTBRS;
P t r e t National Bank, Dickinson, N. Dak, ( P u l l powers)
4i28-31
M
',h r
I
X-1530
FEDERAL RESERVE BOARD ANNOUNCffllENT
WEEK ENDUP MAY 6, 1951
CHANGES IN StfASE BANK MEMBERSHIP:
Pistrict
Capital
Date
$300,000
5 - 6-31
200,000
5 - 8-31
F l e t c h e r Savings & Trust Co., I n d i a n a p o l i s , I n d . , 1,500,000
a member, has absorbed the following nonmemibers:
East Washington S t a t e Bank, I n d i a n a p o l i s , I n d .
25,000
it
I r v i n g t o n S t a t e Bank,
"
50,000
II
Roosevelt Ave. S t a t e Bank,
"
25,000
ti
Broad Ripple S t a t e "Bank,
"
25,000
tt
II
S i x t e e n t h S t r e e t S t a t e Bank,
25,000
ii
n
South Side S t a t e Bank,
25,000
4-15-31
Davison S t a t e Bank, Davis on, Mich., member,
has absorbed t h e f o l l o w i n g nonmambert
Farmers S t a t e Bank, Davison, M c h . , .
3 - 2-31
Admitted to Membership!
11
Conmercial-Ame r i c a n Bank & Trust Go.,
Shreveport, La.
Voluntary Withdrawal:
Twenty-sixth S t r e e t S t a t e Bank, Chicago, 111., .
Absorpt i on of Nonmember s :
50,000
40,000
Consolidation of S t a t e Members:
Fanners S t a t e Bank, Vicksburg,
. , member,
it
ii
F i r s t S t a t e Bank,
"
Consolidated under c h a r t e r and t | t l e of
Farmers S t a t e Bank, Vicksburg, Mich., member,
25,000
30,000
5- 5-31
25,000
Closed:
9
4
S t a t e Bank of Madelia, Madelia, Minn.,
F i r s t Bank & T r u s t Co., Washington, P a . , . . . . .
50,000
600,000
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
None.
5 - 5-31
5 - 4-31
19
20
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
,/EEK BEbED MAY 15, 1931
CHANGES IN STATS BANE MEMBERSHIP:
D18-
Date
trict
Change of T i t l e ;
The F l e t c h e r Savings & Trust Co., I n d i a n a p o l i s , I n d . ,
has charged i t s t i t l e t o F l e t c h e r Trust Company.
5 - 4-31
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
3-15-31
C i t i z e n s National Bank, P a r i s , 111. ( F u l l powers)
/
\
I.
X-1530
FZD1RAL R~S~R?E BOARD ANNOUNCEMENT
WEEK ENDED MAY 88., 1951.
CHANGES TN STATE BATIK MEMBERSHIP:
Pistrict
Capital
Date
Admitted to Membership;
2
Clinton T r u s t Co., New York, N» Y.
#500,000
5-18-31
P5RMISSIQH GRANTED TO EXERCISE TRUST POWERS:
Edgar County National Bank, P a r i s , 111.
( F u l l Powers)
S e c u r i t y N a t i o n a l Bank, Brookings, So. Dak.
(Full Powers)
5—18—31
5-18-31
21
I
22
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
WEEK ENDED MAY 29, 1931
CHANGES IN STATE BANK MEMBERSHIP*
District
Capital
Date
Admitted to Membership!
2
Dover Trust Company, Dover, N. J.> . . . . . . . y200,000'
5*26-01
PERMISSION GRANTED TQ EXERCISE TRUST POWERSt
2
2
6
9
National Bank of Westfield, Westfield, N . J . (Pull powers)
Peoples-First National Bank, Hoosick Palls, N. Y.
(Confirmatory)
Peoples-First National Bank, Quitman, Ga.
(Confirmatory)
First National Bank & Trust Co., Helena, Mont.(Full powers)
5-27-31
5-27-31
5-27-31
5-23-31
I.
23
X-1530
FEDERAL RESERVE BOARD ANNOUNCE!1.™
WEEK ENDED JUNE 5, 1931
CHANGES IN STATE BANK MEMBERSHIP*
Pistrict
6
Admitted t o Membership;
Winfield S t a t e Bank, W i n f i e l d , A l a . ,
Capital
Date
$25,000
6 - 5-31
Consolidation of S t a t e Banks:
7
American Commercial & Savings Bank, Davenport, l a . ,
mem tier, . 1,500,000
American T r u s t Co., nonmem'ber,
. . . .
100,000
C i t i z e n s Trust & Savings Bank, nonmem'ber, . . . .
150,000
Consolidated under t h e c h a r t e r of t h e f i r s t - n a m e d
and t i t l e s American Savings Bank & Trust Co., . . 1,500,000
7
Milan S t a t e Savings Bank, M i a n , lUch., member,. .
Farmers & Merchants Bank, nonmem'ber, . . . . . . .
Consolidated under t h e c h a r t e r of t h e former and
t i t l e of Peoples S t a t e Bank of L i l a n , member, . .
PERLISSION GRANTED TO EXERCISE TRUST POWERS:
None
25,000
25,000
25,000
6 - 1-31
5-23-51
I. • 24
X-1630
FEDERAL RESERVE B&ARD ANNOUNGEIvjENT
ItiBEK ENDED JUNE 12, . 1931
CHANGES IN STATE BANK MEMBER3HIF I
DifiZ
triot
Capital
Date
$900,000
6 - 4-31
Admitted t o Membershipt
2
M e r c a n t i l e Bank & Trust Co., New York, N. 7 . , . .
Changs of T i t l e :
4
Minerva Savings & Trust Co., Minerva, Ohio.
T i t l e changed t o Mnerva Savings & Bank Co.
5-27-31
Consolidation w i t h Nonmembert
7
Bennett Savings Bank, Bennett, Iowa, member, . .
Farmers Savings Bank, Bennett, Iowa, nonmemher, .
Consolidated under new c h a r t e r and t i t l e of
Bennett S t a t e Bank, nonmemher.
50,000
35,000
6 - 8-31
PERMISSION GRANTED TO EXERCISE TRUST POWERSt
5
McDowell County National Bank i n Welch, W. Va. ( F u l l powers)
6 - 9-31
I'
25
X-1630
FEDERAL BBSBBVB BOABD ANNOUNCEMENT
WEEK ENDED JUNE 19, 1931
CHANGES IN STATE BANK iMBEBSHIP*
District
Capital
Date
#25,000
6-17-31
Merchants & Newark. Trust Co., Newark, N. J.,member,2,500,000
has absorbed the Port Newark National Bank, Newark, 200,000
6-11-31
Admitted to Membership:
10
Sundance State Bank, Sundance, tiforo.,
Absorption of National Bank:
2
Absorption of Nonmembers*
2
Bank of Manhattan Trust Co., New York,N.T.,member,22,250,000
absorbed the Seward Bank,New York, N.Y.,nopmember,2*000,000
(a conversion of; the Seward Nat. Bank & Trust Co.)
5-21-51
3
Camden Safe Deposit & Trust Co., Camden,N.J.,member, 1,200,000
absorbed Broadway-tor chant s Trust Co., nonmember, 1,100,000
6-15-31
Closed:
7
7
7
7
7
7
Des Plaines State Bank, Des Plaines, 111., . . .
American Trust Co., South Bend, Ind.,
First State Savings Bank, Birmingham, Mich.,. . .
Pontiaa Commercial & Svga. Bank, Pontiac, M e h . , .
Wayne Savings Bank, W«yne, Mich.,
. 1,000,000
200,000
500,000
200,000
800,000
50,000
6-18-31
6-12-31
6-15-31
6-16-31
6-15-31
6-19-31
#
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
7
6-19-31
I
26
X.-1530
1BDBRA1 RESERVE BOARD ANNOUNCEMENT
WEEK ENDED Jim 26, 1931
CHANGES IN STATE BANK KE13ERSHIP:
Biz
triot
Capital
Date
Admitted to membership:
None.
Closed:
7
Fannington State Savings Bank, Faimington, Mich.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
None.
v 40,000
6-26-31
27,
BANKS REPOBTED CLOSED
WEEK ENDED JANUARY 2, 1931
X-3962
CONFIDENTIAL
Member "banks i n d i c a t e d t y an a s t e r i s k ( • ) .
Name of Bank
City
State
Date
closed
Capital
Surplus
Total
& p r o f i t s deposits
D i s t r i c t No. 3
Aldine Trust Co.
F i r s t I t a l i a n Exchange Bank
Philadelphia
Pa.
Dec .29 1,218,000
Philadelphia
Pa.
Dec .29 ( p r i v a t e "bank - no f i g u r e s )
D i s t r i c t No. 4
Peoples Bank
Doylestown Banking Co.
Greens "bo ro
Doylestown
Pia.
Ohio
Dec .29
n 30
25,000
25,000
Dillwyn
South H i l l
Pamplin
Edenton
Clarkton
Crozet
Covington
Elm C i t y
Candor
Severn
7a.
Dec .27
tt
27
ft
27
tt
27
tt
27
tt
31
tt
31
Jan . 2
2
it
2
50,000
100,000
25,000
100,000
15,000
50,000
40,000
20,000
25,000
20,000
D i s t r i c t No. 5 •Merchants & P l a n t e r s
National Bank
Bank of South H i l l
S t a t e Bank of Pomp 1 i n
C i t i z e n s Bank
Bank of Bladen
Bank of Crozeti,
Peoples Bank
Elm C i t y Bank
Bank of Candor
Bank of Severn
Bank of t h e Mbnongahela
Valley
Morgantown
tt
tt
N.
it
C.
Va.
it
N. C.
tt
tt
Y/.Va.
M
750,000 5,486,000
41,000
4,000
251,000
200,000
5,000
62,000
18,000
51,000
32,000
17,000
23,000
33,000
10,000 •
5,000
180,000
327,000
240,000
338,000
205,000
343,000
423,000
211,000
115,000
77,000
2
300,000
Dec .23
100,000
34,000
800,000
23
23
tt
29
tt
29
tt
29
w 30
tl
31
tl
30
tt
30
40,000
50,000
15,000
75,000
10,000
50,000
25,000
10,000
12,000
5,000
102,000
8,000
68,000
5,000
27,000
17,000
6,000
3,000
251,000
438,000
175,000
319,000
46,000
229,000
61,000
213,000
118,000
Dec .26
it
27
it
27
it
29
it
30
n
30
it
30
tt
30
n
31
.
Jan 2
15,000
50,000
25,000
100,000
14,000
25,000
100,000
30,000
25,000
200,000
337,000 3,796,00Q
D i s t r i c t No. 6
• City National Bank
Bessemer
•Farmers & Merchants
National Bank
Rockmart
•National Bank of Wilkes Washington
White County Bank
.Cleveland
Chambers County Bank
Lafayette
Prospect Bank & T r . Co. Prospect S t a .
Merchants & Farmers Bk Boston
Bank of New Hope
New Hope
Bank of Walnut Grove
Walnut Grove
Bank of Lena
Lena
D i s t r i c t No. 7
Stockton Bank
Mooresville S t a t e Bank
Miller State Bank
Central Trust & J^vgs .Bk
Bank of Earlham J
Farmers S t a t e Bank
Citizens S t a t e Bank
Linn County Svgs. Bank
Maple Road S t a t e Bank
•Lawrence
Ave. Nat.Bank
Ala •
GrC# •
tt
tt
Ala.
Tenn.
Ga.
Ala.
Mies.
tt
Stockton
Mooresville
Gary
Iowa
Indt
Earlham
Harris
Indianapolis
Center Point
Indianapolis
Chicago
Iowa
tt
tv
tt
Ind.
Iowa
Ind.
111.
tt
n
— «•
35,000
3,000
54,000
33,000
— —
127,000
12,000
13,000
20,000
167,000
604,000
130,000
964,000
294,000
150,000
1,435,000
* 444,000
168,000
782,000
Member "banks indicated, "by an a s t e r i s k ( • ) .
Nrjine of Bank
City
State
Week ended January 2, 1951. ...
Date
Surplus
Total
closed
Capital & p r o f i t s .deposit#
D i s t r i c t No. 7 (continued)
2
2
2
26,000
60,000
25,000
13,000
2,000
7,000
156,000
198,000
200,000
27
27
27
29
26
29
tt
29
30
tt
30
30
tt
30
it
30
ft 30
30
it
31
it
31
tt
31
ft
31
Jan. 2
n
2
tt
2
tt
2
50,000
15,000
16,000
20,000
100,000
60,000
10,000
100,000
30,000
50,000
500,000
25,000
50,000
15,000
15,000
30,000
10,000
10,000
50,000
15,000
30,000
100,000
29,000
14,000
20,000
30,000
18,000
3,000
42,000
11,000
5,-000
239,000
10,000
6,000
3,000
4,000
4,000
13,000
4,000
26,000
1,000
21,000
15,000
844,000
221,000
107,000
275,000
1,250,000
844,000
58,000
358,000
251,000
535,000
2,093,000
98,000
300*000
105,000
141,000
275,000
123,000
102,000
360*000
93,000
163,000
732,000
Minn.
Dec. 23
26
N. Dak. ft
»» it
ft
27
S. Dak. J a n . 2
25,000
15,000
10,000
15,000
30>000
3,000
5,000
29,000
600,000
132,000
108,000
439,000
6,000
10,000
26,000
7,000
6,000
11,000
114,000
174,000
459,000
105,000
220,000
100,000
Brocton
111.
Brocton Bank
Iowa
Logan Trust & S,vgs .Bank Logan
F t . Wayne Ave.State Bk Indianapolis Ind.
Jan.
It
tt
D i s t r i c t No. 6
Boonevilie Banking Co.
Bank of She m a n
. Itawamba County Bank
Van Buren County Bank
• F i r s t Nat i o n a l Bank
Bank of Oxford
F l i n t h i l l Bank
• C i t i z e n s Bank & T r . Co.
Bank of Stephens
P l a n t e r s Tr. & Svgs.Bk.
• P l a n t e r s National Bank
• F i r s t National Bank
• F i r s t National Bank
Bank of Myrtle
State Bank of Hecker
Progressive S t a t e Bank
Peoples Bank
Bank of Chidester
•Bank of Mar v e i l
Alma S t a t e Bank
Peoples Bank
•Bank of Pontotoc
Miss.
Booneville
n
Sherman
it
Fulton
Clinton
Ark.
Corinth
Miss.
ft
Oxford
Flinthill
Mo.
England
Ark.
tt
Stephens
Clarksdale
Miss.
11
n
Ludlow
Mo.
Ashdotm
Ark.
Hiss.
Ityrtle
111.
Hecker
Tutwiler
Hiss.
n
Jonestown
Chidester
Ark.
t!
Khrvell
Alma
111.
Dixon
• lib.
Pontotoc
Mi s s .
D i s t r i c t No. 9
• F i r s t National Bank
Farmers S t a t e Bank
Farmers S t a t e Bank
Longford S t a t e Bank
Tyler
Woodvvorth
Leith
Langford
D i s t r i c t No. 10
S t a t e Bank of Elamore
Farmer# S t a t e Bank
Farmer i S t a t e Bonk
College Stat e Bank
Farmers S t a t e Bank
Bank of Tampa
Elsmore
Kons.
ft
Wheaton
Brighton
Colo.
Manhattan
Kans.
P l a t t e Center, Ne"br.
Tampa
Colo.
Dec.
it
tt
it
it
Jan.
26
27
29
30
30
2
10,000
30,000
35,000
25,000
30,000
15,000
D i s t r i c t No. 11
Farmers S t a t e Bank.
• F i r s t n a t i o n a l B-nk
• F i r s t National Bank
H u n t s v i l l e S t a t e Bank
Pottsboro
Plainview
Balls
Huntsville
Dec • 30
tt
29
Jan. 2
tt
2
lO,000
100,000
25,000
50,000
Texas
It
It
It
Dec.
tt
it
tt
it
29,000
10.2 ,.000 1,912,000
15,000
108,000
27,000
453,000
•—
«*•
X-3962
- 3 -
F
CLOSED BANKS EEOPENED$
Capital
Surplus
& profits
12-16-30
30,000
34,000
12-29-30
12-22-30
11-18-30
50,000
15,000
9,000
12,000
12-30-30
1 - 1-31
Nebraska S t a t e Bank
Norfolk
N e t r . . 7-23-30 100,000
(reorganized and reopened as the S t a t e Bank of Norfolk)
35,000
12-20-30
Name of Bank
City
State
Date
closed
Clover
S. C.
Greenwood
Sulphur
Miss.
Ky.
29
Date
opened
D i s t r i c t Wo. 5
Bank of Clover
D i s t r i c t No. 6
S e c u r i t y Bank &
Trust Co •
Peoples Bank,
D i s t r i c t No. 10
. : •
X4^62 30
BANKS S%bieiD CLOSED
WEEK ENDED JANUARY 9, 1931
CONFIDENTIAL "
"bonks i n d i c a t e d "by an a s t e r i s k (•)'.
Total
deposits
Date
closed
Capital
Surplus
& profit s
D i s t r i c t No. 3
Haddon Heights Bank
Haddon H e i ^ i t s . N . J . J a n . 3
& T r u s t Co.
«
8
Pa.
Darty Bank & Trust Co. Darby
100,000
200,000
131,000
153,000
1,707,000
1,734,000
D i s t r i c t No. 4
S t a t e S e c u r i t y Bank
Name of Bank
City
State
Zanesville
Ohio
Jan. 5
100,000
97,000
2,913,000
D i s t r i c t No. 5
Bank of J a r r a t t s
Bank of Macon
Metropolitan Bank &
Trust Co.
Commercial & Svgs.Bk.
Bank of Dundas
Loan & Savings Bank
Bank of Lake View
Bank of Aynor
Farmers & March. Bank
Bank of A n t r e v i l l e
Bank of Montgomery
Jarratt
Macon
Va.
N. C.
Jan. 3
M 2
12,000
10,000
12,000
1,000
210,000
50,000
Norfolk
Andrews
Dundas
Camden
Lake View
Aynor
Littleton
Antreville
Troy
Va.
S. C.
Va.
S. c .
S. C.
s. c.
N. C.
s . c.
N. C.
II
3
Dec. 31
Jan. 7
11 7
ft
7
It
7
ft
7
ft
7
ft 9
56,000
8,000
10,000
100,000
50,000
15,000
15,000
10,000
60,000
37,000
8,000
15,000
4,000
6,000
43,000
6,000
60,000
429,000
8,000
104,000
281,000
115,000
101,000
353,000
60,000
450,000-
D i s t r i c t No. 6
S. Lemon Banking Co.
P l a n t e r s Bank
Bank of Twin City
Peoples Bank
Roanoke Banking Co.
•Merchants & Farmer s Bk
Farmers S t a t e Bank
Decatur Bank & T r . Co.
Ac worth
White P l a i n s
Summit
GiItertown
Roanoke
Roanoke
Ashland
Decatur
Ga.
Ga.
Ga.
Ala.
Ala.
Ala.
Ala.
Ga.
Jan,
tt
n
tt
tt
it
tt
ft
2
2
2
2
5
5
7
8
30,000
15,000
25,000
15,000
200,000
75,000
15,000
100,000
11,000
2,000
27,000
5,000
101,000
50,000
11,000
96,000
156,000
16,000
96,000
113,000
752,009
423,006
170,000
1,006,000
Garrett
Oxford
Gary
F t . Dodge
Lenox
Hamtramck
E .Chicago
E.Chicago
Floyd
Huntertown
Lamont
Ind.
Iowa
Ind.
Iowa
Iowa
Mich.
Ind.
Ind.
Iowa
Ind.
Iowa
Jem.
ft
tt
tt
tt
Oct.
Jon.
ii
it
ii
2
2
5
5
5
7
5
5
6
6
6
40,000
20,000
75,000
100,000
50,000
60,000
100,000
50,000
25,000
10,000
25,000
12,000
31,000
23,000
32,000
15,000
15,000
41,000
50,000
1,000
5,000
6,000
210,000
317,000
625,000
1,189,000
425,000
213,000
518,000
516,000
179,000
105,000
192,000
%stic
Iowa
tt
6
15,000
11,000
178,000
D i s t r i c t No. %
Garrett S a v i n s Loan
& Trust C|.
Farmers Savings Bank
Fir st Ind ianaSgtate Bk
Iowa Savings Bank
Farmers & Merchants Bk
Wojcik S t a t e Bank
C i t i z e n s Tr.& Svgs.Bk
Indiana S t a t e Bank
• F i r s t National Bank
Hvuitertown Bank
Lament Savings Bank
Ifystic I n d u s t r i a l
Savings Bank
»
—
—
•
. '
,,vf'v *
- 2 w
Member bonks i n d i c a t e d by an a s t e r i s k ( * ) .
Name. of Batik
i
t
„
oJ.X-3962
V/eek ended January 9, 1931.
State
Date
closed
Capital
Surplus
& profits
Total
deposits
Oakland
Laciotte
Monroe
111.
Iowa
Wis.
Jan. 7
ft
7
tt
7
25,000
40,000
100,000
9,000
11,000
112,000
140,000
315,000
1,611,000
S t . Paul
Golconda
Rogers
Helena
Joppa
S t . Char l e s
Yale
Barry
Pontotoc
Rockport
Ark.
111.
Ark.
Ark.
111.
Mo.
111.
111.
Miss.
Ind.
13
16
3
5
5
6
6
2
6
10,000
50,000
50,000
250,000
15,000
100,000
15,000
50,000
125,000
40,000
5,000
14,000
65,000
89,000
4,000
56,000
5,000
52,000
37,000
7,000
55,000
315,000
685,000
2,125,000
89,000
801,000
67,000
375,000
832,000
276,000
Manchester
111.
8
25,000
20,000
120,000
Binford
Kerkhoven
Roberts
B a t t l e Lake
N.Dak » Dec, 31
Minn.
Wis.
Minn.
Jan. 5
tt
6
tt
9
15,000
25,000
10,000
25,000
5,000
5,000
7,000
10,000
70,000
100,000
77,000
583,000
Guide Rook
Niobrara
Wilcox
Nebr.
.Nebr.
Mo.
Dec. 5
H 17
Jan. 7
15,000
30,000
10,000
16,000
8,000
4,000
331,000
335,000
31,000
Dec. 17
Jan. 7
15,000
15,000
5,000
10,000
65,000
50,000
Calif > Dec. 17
50,000
14,000
607,000
City
D i s t r i c t No. 7 (continued)
C i t i z e n s S t a t e Bank
Iowa Savings Bank
Citizens Bonk
D i s t r i c t No. 8
Bank of S t . Petal
Pope County S t a t e Bank
• F i r s t Nat ional Bank
• I n t e r s t a t e National Bk
S t a t e Bank of Joppa
Central Trust Co.
S t a t e Bank of Yale
Barry S t a t e Bank
• F i r s t Nat ional Bank
Old Rockport S t a t e Bank
Farmers & Traders
S t a t G Bank
DOCe
tt
Jan.
it
N
?t
tt
tt
tt
tt
tt
2
D i s t r i c t No. 9
First
•First
State
First
S t a t e Bank
National Bank
Bank of Roberts
S t a t e Bank
D i s t r i c t No. 10
Guide Rock S t a t e Bank
S t a t e Bank of Niobrara
Farmers S t a t e Bank
D i s t r i c t No. 11
Guaranty S t a t e Bank
F i r s t S t a t e Bank
Whitehouse
Texas
Ben Franklin Texas
d i s t r i c t No. 12
Be lvedere State Bank
Los Angeles
CLOSED BANKS REOPENED:
D i s t r i c t No. 5.
Peoples Bank
Peoples Bank
S t a t e Bank of Pamplin
D i s t r i c t No. 7.
S t a t e T r . & Svgs. Bank
D i s t r i c t No. 8.
Bank of S t . Helens
Bank of Chidester
Date open
Vinton
Gretna
Pamplin
Va.
Va.
Va.
12-20-30
12-23-30
12-27 -30
100,000
80,000
25,000
84,000
35,000
13,000
1 - 2-31
1 - 5-31
1 - 6-31
Goodland
Ind.
12-23 -30
25,000
8,000
1 - 6-31
Shively
Chidester
Ky.
Ark.
11-18 -30
12-31 -30
30,000
10,000
40,000
4,000
1 - 5-31
1 - 5-31
B i M # W & D CLOSED
WEEK END# JANUARY 16, 1931
|
3 0
X-3962
CONFIDENTIAL
I W b e r t a n k s i n d i c a t e d "by am a s t e r i s k ( • ) .
Namp of Bank
City
State
Date
closed
Capital
Surplus
Total
& p r o f i t s deposits
D i s t r i c t No. 4
Peoples Bank
Bloomingburg Ohio
J a n . 13
25,000
7,000
130,000
D i s t r i c t No. 5
Cabell County Bank
Mechanics Savings Bank
Bamberg Banking Co.
Huntington
Raleigh
Bamberg
w. va.
N. C.
J a n . 10
11 13
11 16
25,000
15,000
100,000
5,000
82,000
41,000
262,000
799,000
331,000
New Smyrna
Eustis
Fla.
tl
J a n . 10
11 12
75,000
55,000
34,000 1,446,000
41,000
60,000
Eicon
Earner
Hartselle
Brookhaven
Center Town
Santa Fe
Nashville
Meridian
Florence
Ga.
Ala*
107,000 1,900,000
4,000
31,000
38,000
593,000
80,000 1,388,000
1,000
58,000
1,000
36,000
40,000
320,000
320,000 5,723,000
31,000
732,000
PikeVille
S.
c.
D i s t r i c t No. 6
F i d e l i t y Bank
C i t i z e n s Bank
Luther Williams Bank
& Trust Co.
Bank of Earner
•Fiyat National Bank
• F i r s t National Bank
Bank of Center Town
Bank of Santa Fe
F i r s t Bank of Nashville
• F i r s t National Bank
Alabama Tr.& Svgs.Bank
Bledsoe County Bank
& Trust Co.
tl
Miss.
Tenn.
•t
Ga.
Miss.
Ala.
ft
It
It
tt
ft
It
tl
ft
12
14
12
13
15
15
14
14
16
100,000
20,000
100,000
100,000
12,000
10,000
25,000
260,000
100,000
Tenn.
tt
16
25,000
D i s t r i c t No* 7
C i t i z e n s S t a t e Bank
Carmel
Jon. 10
Ind.
Nobel County Bk.& Tr. Co.Kendallville "
10
tt
Dawson Savings Bank
Dawson
Iowa
10
ti
A v i l l a Stabe Bonk
Avilla
12
Ind.
tt
L i t t l e Sioux Svgs.Bank L i t t l e Sioux Iowa
12
Farmers S t a t e Bank
Calumet Harbor, Wis tt
12
tt
S t a t e Bank of W e s t f i e I d W e s t f i e l d
14
Ind.
it
tt
Cutler Bank
Cutler
14
it
Keosauqua
Keosauqua S t a t e Bank
Iowa
12
tt
Crawford S t a t e Svgs.Bk. Chicago
12
111.
n
S t a t e Bank of Thcrntown Thorntown
12
Ind.
tt
11
Clayton Bank & Trust Co. Clayton
15
S t a t e Savings Sank
Bearing
15
Iowa
25,000
175,000
25,000
25,000
10,000
20,000
25,000
10,000
28,000
200,000
40,000
25,000
25,000
II
D i s t r i c t No. 8
• F i r s t National Bank
Jan.
Jiolly Grove Ark
it
De Soto Trust Co.
t>e Sot 0
Mo.
tl
ti
Bank of Flemington
Flemington
tt
n
Farmers Bank
Billings
tt
New Car* on Stat e Bonk New Canton 111.
tt
• F i r s t Nat ional Bank
Brookfield Mb.
Bank of Blue Mountain
Blue Mountain^Mi s s . tt
Ashland Branch Bank
tt
of Bank of Blue Mountain,Ashland, Miss.
ii
tt
Citizens Bank
Winona
11
tt
Bank
of
Derma
Derma
-
-
75,000
8,000
195,000
77,000 1,518,000
8,000
167,000
9,000
323,000
116,000
14,000
296,000
15,000
146,000
4,000
152,000
9,000
329,000
107,000 1,490,000
222,000
304,000
160,000
- -
9
10
12
12
14
14
2
25,000
50,000
10,000
*10,000
25,000
100,000
20,000
5,000
37,000
11,000
5,000
6,000
10,000
17,000
156,000
389,000
3
2
3
10,000
25,000
10,000
9,000
14,000
3,000
155,000
305,000
65,000
30,000
518,000
90,000
115,000
—
-»
Vj ' • *- 4^'
33
- 2 Member^Stiks indicated, "by an a s t e r i s k (*]
Nome of Bank
City
State
. X-3962
Week ended January 16, 1931.
Date
Surplus
Total
closed
Capital
& p r o f i t s deposits
D i s t r i c t No. 8 (continued)
Jan* 10
it
10
ft
10
W
10
ft
10
ft
10
ft
10
if
12
ft
12
tt
8
ft
16
ft
16
tt
16
.20,000
30,000
10,000
25,000
10,000
40,000
50,000
24,000
50,000
10,000
25,000
40,000
25,000
6,000
8,000
3,000
10,000
6,000
19,000
44,000
24,000
17,000
2,000
10,000
22,000
52,000
119,000
200,000
65,000
428,000
100,000
518,000
803,000
265,000
328,000
35,000
230,000
686,000
811,000
Columbus
Edgemont
tfaubny
Mont.
Dec. 23
S. bat :• J a n . 13
it
it
it
14
25,000
15,000
20,000
1,000
10,000
10,000
310,000
311,000
225,000
Bruce
Miss.
Bank of Bruce
Calhoun City "
Peoples Bank
it
Merchants & Farmers Bank, Ecru
' tt
Kilmichael
Bank of Kilmichael
*1
Merchants & Farmers Bank, Vardaman
Water Valley "
Peoples Bank
if
Winona
Bank of Winona
C o f f e e v i l l e tt
C o f f e e v i l l e Bank
Marks
Riverside Bank
Arlc.
Lowell
Bank of Lowell
Miss •
Sledge
Bank of Sledge
n
Louisville
L o u i s v i l l e Home Bank
it
Starkville
Peoples Savings Bank
!
d i s t r i c t No. 9
Columbus S t a t e Bank
F a l l River County Bank
Stat e Bank of Waubny
) i s t r i c t No. 10
Home S t a t e Bcnk
Tillman County Bank
S t a t e Bank of Madison
Tecumseh'State Bank
Manchester S t a t e Bank
Bank of Stoithvi l i e
C i t i z e n s S t a t e Bank
Grandfield
Okla.
Kadis on
Tecumseh
Manchester
Smithville
Selden
Mebr.
J a n . 10
it
10
it •
13
it
13
it
13
it
14
it
15
30,000
30,000
30,000
50,000
10,000.
20,000
25,000
3,000
14,000
20,000
7,000
30,000
20,000
272,000
211,000
301,000
265,000
100,000
550,000
200,000
D i s t r i c t No. 11
S t a t e Bnnk of
Walnut Springs,Tex. J a n . 14
17,000
1,000
68,000
30,000
65,000
1,035,000
D i s t r i c t No. 12
Tooele County S t a t e Bk. Tooele
it
tt
Kans .
Mo.
Kans.
Iftah
Jan. 14
—
—
F'
#
- 3 -
X-3962
Member bmks i n d i c a t e d "by an a s t e r i s k ( • ) .
Name of Bank
City
State
34
Week ended. January 16, 1931.
Date
closed
Capital
Surplus
Date
& p r o f i t s reopened
CLOSEi) BANKS. EBQESNfeP :
D i s t r i c t No. 5
Bank of Bo"beson
Ifoxton
N, C.
12- 6-30
50,000
16,000
1-15-51
12-23-30
100,000
50,000
1-13-31
Wis.
"
"
4 - 8-30
4-14-30
4-16-30
50,000
100,000
50,000
10,000
' 25,000
18,000
1-12-31
1 - 5-31
12-15-30
Ark.
11-19-30
12-29-30
11-19-30
11-17-30
?
10,000
20,000
20,000
10,000
25,000
6,000
20,000
6,000
17,000
6,000
1 - 2-31
1-5-31
1 - 2-31
1 - 9-31
1 - 9-31
D i s t r i c t No. 6
City Bank
lliami Beach F l a .
D i s t r i c t No. 7
Lancaster S t a t e Bank
Lancaster
S t a t e Bank of Fennimore Fennimore
Farmers & Merchants Bk. Tomah
D i s t r i c t No. 8
Farmers B^nk
Van Buren County Bank
Bank of Salem
Farmers & Merchants Bk.
Washington S t a t e Bank
Casa
Clinton
Salem
La Grange
Washington
M
"
Mb.
Ark.
D i s t r i c t No. 9
Orient S t a t e Bank
Orient
S. Dak. 11-26-30
20,000
36,000
1-10-31
Guaranty S t a t e Bank
Cresbard
"
"
10-28-30
15,000
5,000 12-13-30
Bank of Creshard
"
"
"
10-28-30
20,000
7,000 12-13-30
(two above "banks r e o r g a n i z e d , consolidated and opened under name of Bank of
Ores "bard)
:
•
L;
•
BAMS naPORtf :'D CLOSSD
WEEK ENDED-JANUARY 23, 1931.
35
X3962 ,
CONFIDENTIAL
Member banks i n d i c a t e d by an a s t e r i s k ( * ) .
Name of Bank
City
State
Capital
Jan.20
It
20
50,000
25,000
22,000
1,000
670,000
83,000
20
22
50,000
100,000
25,000
59,000
800,000
326,000
.
935,000
879,000
2,675,000
150,000
45,000
461,000
208,000
-
D i s t r i c t No. 4 .
Bank of Ludlow
American S t a t e Bank
Ludlow
St.Bernice
Ky.
Ind.
D i s t r i c t No. 5 .
Home Savings Bank
* F i r s t National Bank
Wilmington
Clinton
N.C.
S.C.
D i s t r i c t No. 6.
^Exchange National Bank F i t z g e r a l d Ga.
t?
It
• F i r s t National Bank
* F i r s t National Bank
Jackson
Miss.
Bank of Homerville
Homerville Ga.
C i t i z e n s Bank of
Millry
Ala.,
South S -ide Bank
Birmingham
Bank of Alachua
Alachua
Fla.,
D i s t r i c t No. 7 .
Peoples S t a t e Bank
Ashley S t a t e Bank
S t a t e Bank of Dana
Bank of Rushville
Exchange S t a t e Bank
Farmers S t a t e Bank
Farmers & Merchants Bnk
Surplus
Total
& P r o f i t s Deposits
Date
Closed
So.Milford
Ashley
Dana
Rushville
Walnut
Berwick
Scranton
D i s t r i c t No. 8 .
C i t i z e n s Bank & Tr.Co. Marks
Hardin County Bank
Saltillo
Pinson Savings Bank
Pinson
Washington S t a t e Bank Washington
(This bank reopened J a n . 9 . )
• F i r s t National Bank
Dardanelle
Ind.,
It
II
II
M
II
II
II
II
It
n
it
M
111.
Iowa
111.
Iowa
Miss.
Tenn.
ft
it
it
n
M
ii
ii
if
IT
16
16
20
20
21
22
23
100,000
125,000
200,000
15,000
10,000
50,000
25,000
59,000
58,000
240,000
30,000
3,000
10,000
9,000
17
17
17
19
19
21
21
25,000
25,000
40,000
120,000
40,000
30,000
5,000
139,000
5,000
172,000
29,000
299,000
142,000 1,092.000
16,000
527,000
23,000
63,000
17
17
19
•3
50,000
15,000
7,000
25,000
20,000
4,000
2,000
6,000
451,000
45,000
50,000
96,000
*
—
— —
— ———
Art.,
II
Ark
II
19
25,000
7,000
260,000
D i s t r i c t No. 9.
C i t i z e n s S t a t e Bank
P a y n e s v i l i e Minn.
II
19
15,000
3,000
185,000
D i s t r i c t No. 10.
Rosalia S t a t e Bank
Farmers Bank
Moundvilie S t a t e Bank
Farmers S t a t e Bank
Rosalia
Turney
Moundville
Nelson
II
17
19
19
21
50,000
25,000
15,000
35,000
9,000
6,000
3,000
3,000
265,000
45,000
75,000
225,000
Kans,
Mo.
Mo.
Nebr,
It
II
II
(Reopened Banks on next sheet)
FC 3 6
X-3962
— 2 *•
Member banks i n d i c a t e d , b y an a s t e r i c k (*)
Name of Bank ,
City
State
Week endefl January 23, 1951.
Date
Surplus
" Datd
Closed
Capital
& P r o f i t s Reopened
CLOSED BANKS REOPENED
D i s t r i c t No. 4 .
Savings & Loan Banking Company
D i s t r i c t No. 5 .
Bank of Windsor
P l a n t e r s & Merchants
Bank
Merchants and Farmers
Bank
C i t i z e n s Bank of Yancy
Clayton Banking Company
Bank of French Broad
New London
Ohio
10-6-30
30,000
33,000
1-20-31
Windsor
N.C.
12-23-30
20,000
42,550
1-10-31
Everetts
N.C.
12-12-30
15,000
14,000
1-9-31
Garysburg
Burnsvilie
Clayton
Marshall
N.C.
N.C.
N.C.
N.C.
12-19-30 15,000
12-18-30 50,000
12-16-30 100,000
12-16-30 25,000
13,000
60,000
32,000
54,000
1-9-31
1-17-31
1-19-31
1-19-31
11,000
1-17^31
D i s t r i c t No. 7.
M5ar t i n s vi l i e S t a t e Bank M a r t i n s v i l l e 111.
Farmers & Merchants
Bank
Winchester
Ind.
C i t i z e n s S t a t e Bank
Indianapolis Ind.
12-10-30
50,000
.
50,000
12-8-30
12—30—30 100,000
D i s t r i c t No* 8 .
• C i t i z e n s Bank & T r u s t Co.England
Ark.
12-30-30 100,000
(Reopened as the C i t i z e n s Bank, a nonmember)
Bank of Clark
Clark
Mo.
12-26-30 15,000
<
.
40,000
127,000
1-21-31
1—22—31
42,000
1—19—31
5,000
1-21-31
i-
37
X-3962
BANKS EXPORTED CLOSED
WEEK ENDED JANUARY 30, 1931
CONFIDENTIAL
Member tanks i n d i c a t e d "by an a s t e r i s k ( • ) .
Surplus
Total
& p r o f i t s deposits
State
Date
closed
Capital
D i s t r i c t No. 2
S. Lunghino & Sons
Rochester
•Peoples Banking & T r . C o . E l i z a b e t h
N. Y.
N. J .
J a n . 23
n
28
20,000
300,000
D i s t r i c t No. 3
Cresson Deposit Bank
Pa.
Jan. 24
50,000
20,000
405,000
Pa.
Addison
Crestline
Ohio
New M a r t i n s v i l l e ,
W. Va.
Jan. 28
n
28
25,000
70,000
13,000
8,000
105,000
598,000
29
60,000
121,000 1,277,000
F c y e t t e v i l l e ,W.Va.
«
TI
Huntington
Sure
N. C.
Sharon
S. c .
J a n . 26
ft
28
Dec. 9
J a n . 30
25,000
500,000
10,000
35,000
25,000
198,000
119,000 2,024,000
186,000
11,000
16,000
200,000
Jon. 23
25,000
12,000
393,000
J a n . 24
N
24
Dec. 29
II
31
J a n . 28
N
28
10,000
15,000
30,000
30,000
15,000
50,000
9 >000
2,000
35,000
15,000
15,000
11,000
89,000
79,000
584,000
283,000
57,000
112,000
111.
Ind.
J a n . 30
it
30
75,000
50,000
14,000
34,000
609,000
683,000
Mich.
Iowa
Ind,
J a n . 23
ii
26
II
27
100,000
22,000
40,000
16,000
36,000
850,000
145,000
513,000
Ind.
111.
J a n . 27
ii
26
it
26
N
26
50,000
30,000
36,000
50,000
18,000
13,000
19,000
1,000
571,00C
209,001
325,000
72,000
Name of tank
D i s t r i c t No. 4
* F i r s t National Bank
• F i r s t Nat ional Bank i n
New M a r t i n s v i l l e Bank
City
Cresson
II
637,000
328,000
305,000 6,056,000
D i s t r i c t No. §
Bank of P a y e t t e
Union Bank & Trust Co.
Farmers Bank
P l a n t e r s Bank
D i s t r i c t No. 6
Bank of Buford
with t r a n c h e s a t :
Buford
fiewanee
and Ih.tlu.th
Cumberland City Bank
Cumber land.
City
Preston
Bank of P r e s t o n
Leake County Bank
Carthage
Southern Banking Co.
Eunice
Bank of F l o v i l l a
Flovilla
•Jackson Banking Co.
Jackson
D i s t r i c t No. 7
Scott Walters & RakeWyoming
straw, Bankers
Washington S t a t e Bank South Bend
Farmers & Workingmens
Savings Bank
Jackson
Vincent Savings Bonk
Vincent
S t a t e Bank of Topeka
Topeka
•Farmers & Merchants
National Bank
Sheridan
IfcConnell S t a t e Bank
IfcConnell
S t a t e Bank of
Orangeville
River Park S t a t e Bank South Bend
Ga.
IT
II
Tenn.
Ga.
Miss.
La.
Ga.
II
N
Ind.
—
mm
* 2 Member "banks i n d i c a t e d try an a s t e r i s k ( * ) .
Name of bank
City
State
1*3962
Week ended January 30, 1931.
Surplus
Total
Date
& p r o f i t s deposits
Capital
closed
D i s t r i c t No. 8
Bank of Cave Springs
•Clinton National Bank
S t a t e Bank of Decatur
Bank of Hardinsburg
& Trust Co.
Planters Bank
Gave Spring) Ark.
Clinton
Mb.
Decatur
Ark.
Hardinsburg
Camden
Kjr.
Ark.
J a n . 23
tt
24
it
27
ii
30
30
tt
8,000
50,000
10,000
3,000
55,000
1,000
89,000
600,000
120,000
100,000
50,000
26,000
85,000
669,000
1150,000
D i s t r i c t No. 9
•Anoka National Bank
Farmers S t a t e Bank
F i r s t S t a t e Bank
Farmers Strike Bank
Anoka
Corsica
Bristol
Platte
Minn.
S.Dak
ft Tt
tt ft
Jan.
it
ft
:
»t
27
29
30
26
50,000
24,000
20,000
50,000
2,000
7,000
8,000
8,000
638,000
600,000
184,000
870,000
D i s t r i c t No. 10
S t a t e Bank of Keats
South Denver Bank
Keats
Denver
Kans.
Colo.
J a n . 29
tt
30
10,000
50,000
4,000
11,000
35,000
372,000
Henrietta
Texas
J a n . 26
50,000
(not given)
Opportunity
IfcDermitt
Wash.
Nev.
J a n . 24
28
25,000
20,000
•
D i s t r i c t No-. 11
Dale Bros. & Co.
D i s t r i c t No. 12
Opportunity S t a t e Bank
Q,uinn River Bank
6,000
5,000
CLOSED BANKS REOPENED:
D i s t r i c t No. 5
C i t i z e n s Bank
Bank of F l e t c h e r
292,000
75,000
Date opei
N. C. 11-21-30
ti «t 12-18-i-30
30,000
10,000
13,000
11,000
1-24-31
1-24-31
Cumberland
Ci%y
Tenn.
1-24--31
10,000
9,000
1-28-31
D i s t r i c t No* 7
S t a t e Bank of Topeka
Topeka
Ind.
-31
40,000
36,000
1-29-31
D i s t r i c t No. 8
• F i r s t National Bank
Corinth
Miss. 12-26--30
100,000
30,000
1-24-31
D i s t r i c t No. 8
C i t i z e n s Bank
Bradford
Ark.
11- 5--30
10,000
2,000
1-27-31
D i s t r i c t Nov 9
S t a t e Brink of Waubcy
Waubay
S.Dak# 1-14-31
20,000
10,000
1-24-31
T
D i s t r i c t No. 6
Cumberland City Bank
to3
Bryson City
Fletcher
i
t i 9 X-3962
BANKS REPORTED CLOSED
WEEK ENDED FEBRUARY 6, 1931
CONFIDENTIAL
Member t a n k s i n d i c a t e d by an a s t e r i s k ( * ) .
Name o f Bank
City
Date
closed
State
Capital
Surplus
& profits
Total
deposits
D i s t r i c t No. 3
•Peoples National Bank Osceola Mills
S * s t r i c t No. 4
Guaranty Bank & Tr.Co.
•Merchants S t a t e Bank
S t i l l w a t e r Valley Bk.
Peoples Stoke Bank
Farmers Bank
Miners S t a t e Bank
100,000
40,000
358,000
2
6
250,000
150,000
50,000
50,000
10,000
25,000
81,000
57,000
19,000
18,000
3,000
9,000
3,063,000
698,000
252,000
448,000
88,000
376,000
F l a . Feb. 2
3
Tenn. tt
Miss. J a n . 21
If
21
it
ft
20
ft
La.
19
250,000
50,000
35,000
75,000
18,000
50,000
168,000
22,000
17,000
27,000
11,000
29,000
1,100,000
398,000
630,000
1,041,000
166,000
239,000
150,000
125,000
25,000
3,000
1,000,000 1,149,000
50,000
17,000
100,000
100,000
903,000
132,000
7,389,000
660,000
573,000
Ky.
Lexington
New Philadelphia.,0.
Covington
Ohio
E. P i t t s b u r g h Pa.
Ohio
Utica
Pa.
New Salem
D i s t r i c t No. 6
• F i r s t National Bank
Panama C i t y
Peoples Bank
Cleveland
Ma Comb Svgs «lk.& Tr.Co.,ifcComb
Mechanics S t a t e Bank IfcComb
Peoples Bank
Utica
Farmers Tr .& Svgs.Bk. Lockport
D i s t r i c t No. 7
Rochelie Tr.& Svgs.Bk
C i t i z e n s S t a t e Bank
• F i r s t Tr .& Svgs.Bank
Calumet C i t y S t a t e Bk
Lansing Stat e Bank
Farmers & Merchants
Savings Bank
Cadillac Savings Bank
with branch a t *
S t a t e Trust & Savings Bank
2
Pa.
Rochelie
Denver
Hammond
Calumet C i t y
Lansing
111.
Ind.
It
111.
111.
Feb.
Feb.
Jan.
Feb.
31
4
ft
4
"S
it
5
J a n . 31
tt
31
Feb. 2
ft
2
tt
3
Highland
Detroit
Hrmtramck
ft
4
Ind.
Mich. Sept . 9
Peoria
111.
Feb.
6
200,000
Mo.
J a n . 31
tt
31
Feb. 4
15,000
25,000
30,000
15,000
100,000
10,000
111.
Miss.
111.
Miss.
D i s t r i c t No. 9
farmers & Merchants
S t a t e Bank
Circle S t a t e Bank
Pioneer: Bank
F i r s t S t a t e Bank
Minn. J a n . 31
Mo n t . tt
31
N.Dak.Feb. 2
S.Dak M
4
13,000
206,000
101,000
307,000
1,971,000
-
It
D i s t r i c t No. 8
Farmars Bank
New Bofton
Farmers Savings Bank West P l a i n s
Peoples S t a t e Bank
Ramsey;
C a r r o l l County Bank
CarroH,ton
Waverly
• F i r s t National Bank
Peoples Bank
Weir
Kensington
Circle
Bottineau
Jefferson
25,000
it
tt
5
tt
5
ft
6
15,000
20,000
25,000
10,000
mm
10,000
16,000
5,000
5,000
10,000
2,000
'
—
10,000
9,000
84,000
125,000
136,000
192,000
450,000
340,000
131,000
48,000
117,000
88,000
•
2
X-3962
-
Week ended February 6, 1931
Total
Surplus
&
p
r
o
f
i
t
s
d
eposits
Capital
Member "banks i n d i c a t e d "by an a s t e r i s k (*)
City
Stat e
Date
closed
Cameron
Paxico
Kb.
Kans.
J a n . 31
Feb. 2
100,000
16,000
H i s t r i o t No. 11
• F i r s t National Bank
•American National Bank
Irene
Paris
Texas
i»
Feb.
"
3
5
25,000
150,000
D i s t r i c t No. 12
^Aurora S t a t e Bank
Aurora
Oreg.
Feb.
5
25,000
Name of Bank
D i s t r i c t No. 10
GfWron Trust Co.
S t a t e Bank of Paxico
71,000
21,000
177,000
6,000
181,000 1,382,000
5,000
D i s t r i c t No. 8
•Bank of Marvel!
Bank of Oxford
Merchants & P l a n t e r s
Bank & Trust Co.
.Corinth S t a t e Bank
.American Exchange Bank
Sta$e Bank of Decatur
Bank of E t h e l
Bank of Winona
. Exchange Bank & T r . Co.
(reopened under new
Formers & Merchants
S t a t e Bank
(reopened under new
V i c t o r i a Bank
(reopened under new
365,000
Date
Opened
CLOSED BANKS REOPENED s
D i s t r i c t No. 6
Mechanics S t a t e Bank
538,000
175,000
McComb
Miss.
1—21—51
75,000
27,000
2 - 4-31
Marveil
Oxford
Ark.
M
1 - 2-31
11-19-30
50,000
10,000
26,000
4,000
1-31-31
2— 2—31
Arkadelphia
Corinth
Leslie
Decatur
Ethel
WiriOna.
Dermott
charter)
II
Hiss.
Ark.
ii
Miss.
ii
Ark.
12-20-30
12-26-30
12-17-30
1-27-31
12-26-30
1-10-31
11-19-30
75,000
50,000
15,000
10,000
10,000
50,000
75,000
24,000
13,000
2,000
. 4,000
8,000
44,000
25,000
2 - 2-31
1-30-31
2 - 3-31
2 - 5-31
2— 5—31
2— 5—31
2 - 5-31
9,000
2 - 5-31
15,000
2 - 5-31
10,000
12-18-30
Green F o r e s t "
c h a r t e r and name of C i t i z e n s S t a t e Bank)
25,000
11-19-30
Strong
Ark.
c h a r t e r and t i t l e of C i t i z e n s Bank)
X-3962
I
(For c o n f i d e n t i a l Use 0nly
41
subject to correction)
Member tanks i n d i c a t e d "by an a s t e r i s k ' ( • ) .
Name of Bank
City
State
surplus
& profits
Total
deposits
Date
closed
Capital
( p r i v a t e bank - no f i g u r e s )
79,000 1,020,000
125,000
D i s t r i c t No. 3
Henry Muller & Co.
Ebensburg Trust Co.
P h i l a d e l p h i a Pa.
Ebensburg
Pa.
J a n . 23
Feb. 10
D i s t r i c t No. 4
G1 ouster S t a t e Bank
• F i r s t S t a t e Bank
• F i r s t National Bank
• F i r s t National Bank
Glouster
Ohio
Newton F a l l s
Republic
Pa.
H
Fairchance
Feb.
9
9
11
13
50,000
125,000
50,000
25,000
25,000
87,000
28,000
74,000
800,000
1,927,000
302,000
502,000
D i s t r i c t No, 6
American Banking Corpn, Vienna
Ga.
Pet. 9
tt
Luverne
13
Bank of Luverne
Ala.
t
Peoples Bank
13
Dixon Springs.Tenn. t
75,000
50,000
20,000
16,000
43,000
3,000
149,000
254,000
116,000
D i s t r i c t No. 8
Bank of Phebo,
• F i r s t National Bank
O o l i t i c S t a t e Bank
Merchants & Farmers Bk.
M
n
tt
Pheba
Cowgill
Oolitic
Starkville
Miss.
Mb.
Ind.
Miss.
Dec * 18
Pet* 10
tt
10
it
12
15,000
35,000
25,000
25,000
3,000
41,000
2,000
52,000
38,000
165*000
81,000
811,000
Trimble
Columbus
Mb.
Nebr.
Feb. 10
tt
10
if
12
10,000
12,000
75,000
1,000
3,000
13,000
82,000
159,000
682,000
Feb.
25,000
10,000
25,000
53,000
5,000
3,000
401,000
191,000
385,000
D i s t r i c t No. 10
Trimble S t a t e Bank
Home Savings Bank
Columbus S t a t e Bank
M
tr
District No.12
Malheur County Bank
S t a t e Bank of Hubbard
• F i r s t Not ional Bank
-
Nyssa
Hubbard
Redmond
Or eg.
tt
tt
tt
it
9
10
11
CLOSED BANKS REOPENED :
D i s t r i c t No. 8
People s Savings Bank
Starkville
1-16-31
Bank of Blue Mountain
Blue Mountain,$&ss. 1 - 2-31
Ashland Branch Bank
Ashland
1 - 2--31
(branch of Bank of Blue Mountain)
•Greenwood Bank & Tr.Co. Greenwood
I#8S. 12-20-50
• F i r s t National Bank
Blytheville
12- 1-30
Timewell S t a t e Bank
Timewell
in. 11-17-30
S e c u r i t y Bk & T r . Co.
Paragou.14
Ark. 11-12-30
C i t i z e n s Bk & T r . Co.
Marks
Miss. (1-17-31
D i s t r i c t No. 9
S e c u r i t y S t a t e Bank
Goyville
(reorganized and reopened)
S.Dak. 12-11--30
Date opei
25,000
20,000
10,000
52,000
17,000
9,000
2 - 3-31
2 - 9-31
2 - 9-31
200,000
107,000
2—10—31
150,000
36,000
2-11-31
25,000
20,000
2-13-31
100,000
62,000
2-11-31
r e p o r t e d by Agent i n e r r o r )
25,000
34,000
2-11-31
1
X-3962
| -• •/
r
^
BANKS REPORTED CLOSED
WEEK ENDED FEBRUARY, 20, 1951
(For c o n f i d e n t i a l use only - s u b j e c t t o c o r r e c t i o n )
Member banks i n d i c a t e d "by an
Name of Bank
City
( * ).
State
Date
closed
Capital
Surplus
& profits
Total
deposits
D i s t r i c t No. 4
Canton Bank
Canton
Ohio
Feb. 16
(successor to Canton Bank & Trust Co., t # ' • 4 • •
Dresden S t a t e Bank
Dresden
Ohio
Feb. 17
D i s t r i c t No. 5
N a t i o n a l Bank of
•Bonk of Woodruff
250,000
25,000
90,000
18,000
2,629,000
259,000
Thurmond
Woodruff
W . Va. Feb. 14
«
S. c .
20
50,000
78,000
35,000
18,000
316,000
281,000
Gerster
Mb.
Feb. 16
10,000
6,000
50,000
Goshen
Elk Horn
Greeley
Ind.
Iowa
Iowa
Feb. 14
J a n . 29
Feb. 18
100,000
20,000
15,000
18,000
35,000
15,000
740,000
800,000
149,000
Chicago
111.
Feb. 20
200,000
113,000
942,000
Casnovia
Mich.
Feb. 20
20,000
7,000
245,000
Sheboygan
Wibc.
Feb. 20
2,000
420,000
Elm Springs
Osceola
Perryville
Gerster
Ash Grove
Noble
Ark.
m.
llo.
Mo.
Mo.
111.
Feb.
•i
II
II
II
•f ,
7
13
14
16
16
19
10,000
10,000
50,000
10,000
20,000
25,000
4,000
6,000
24,000
6,000
14,000
1,000
66,000
194,000
211,000
50,000
133,000
90,000
Danube
Minn.
Feb. 14
25,000
5,000
161,000
Kipp
Kans.
Feb. 18
10,000
5,000
58,000
Bonham
Texas
Feb. 18
200,000
59,000
945,000
District No. 6
Bank of Gerster
D i s t r i c t No. 7
S t a t e Bank of Goshen
Farmers Bank
S e c u r i t y Savings Bank
Novak & S t e i s k a l
S t a t e Bank
Farmers & Merchants
Stat e Bank
Sheboygan County
lAitual Savings Bank
D i s t r i c t No. 8
Elm Springs S t a t e Bk.
Citizens Stake Bank
Home Trust Co.
Bank of Gerster
Farmers Bank
Bank of Noble
.
/
District No. 9
Danube S t a t e Bank
D i s t r i c t No. 10
Kipp S t a t e Bank
D i s t r i c t No.. 11
S t a t e Bank & T r . Co.
I • 43
m »
- 2 -
X-3962
BANKS REPORTED R3QPMED
Week ended February 20, 1931.
Member banks indicated, by an a s t e r i s k ( • ) .
Surplus
& profits
Date
opened
State
Date
closed
N. C.
tl
tl
ft
It
It .
12-15-30
12-16-30
12-16-30
12-31-30
12-16-30
11-22-30
15,000
20,000
11,000
20,000
20,000
10,000
19,000
28,000
14,000
5,000
9,000
1,000
1-26-31
1-22-31
2 - 5-31
2.— 6—31
2-11-31
2-14-31
• F i r s t National Bank
McComb City Miss.
1-21-31
50,000
41,000
2—12—31
D i s t r i c t No. 8
Peoples Bank
Bank o f Alpena
Bank of North Arkansas
C i t i z e n s Bk & T r . Co.
Bank of Lead H i l l
(Above Arkansas banks
• F i r s t National Bank
Peoples Bank
Water Valley,Miss,
Alpena Pass Ark.
tl
Everton
It
Harrison
Tf
Lead H i l l
belong t o :
Miss.
Pontotoc
Okolonr.
Ark.
1-10-31
12-17-30
12-17-30
12-17-30
12-17-30
chain)
1— 2—31
12—16—30
40,000
10,000
10,000
100,000
10,000
19,000
1,000
2,000
28,000
1,000
2-14^31
2-16-31
2-16-31
2-16-31
2-16-31
125,000
10,000
37,000
2,000
2-17-31
2-19-31
D i s t r i c t No. 9
Langford S t a t e Bank
Laqgford
S .Dck.
1 - 2-31
15,000
29,000
2-18-31
B-Lstrict No. 10
Guide Rock S t a t e Bank
Center S t a t e Bank
Guide Rock
Center
Nebr.
M
12- 5-30
10-21-30
15,000
10,000
16,000
9,000
2-12-31
2-18-31
•
.
. Nome of Bonk
D i s t r i c t No. 5
Mars H i l l
Bank of liars H i l l
Dallas
Bank of Dallas
Clyde
Bank of Clyde
Severn
Bank of Severn
Swannanoa Bk & Tr. Co. Swannanoa
Clay County Bank
Hayesville
Capit a l
%
y
ICO
D i s t r i c t No. 6
1-3962
BANKS REPORTED CLOSED
WEEK ENDED FEBRUARY 2 7 / 1 9 3 1
(For c o n f i d e n t i a l use ottly
j,
44
subject t o correction)
Member t a n k s i n d i c a t e d by an a s t e r i s k ( • ) .
>
Total
deposits
Date
closed
Capital
Surplus
It p r o f i t s
Feb. 24
it
27
200,000
163,000
243,000
379,000
2,055,000
2,047,000
Feb. 21
ft
24
ft
24
tl
25
26
100,000
125,000
25,000
50,000
100,000
82,000
42,000
9,000
18,000
54,000
1,115,000
1,452,000
408,000
502,000
872,000
32,000
10,000
25,000
53,000
Ala.
Feb. 24
tt
24
tt
24
21,000
280,000
45,000
118,000
D i s t r i c t No. 7
S t a t e Bank of Kimmell Kiimell
Ind.
Feb. 21
25,000
5,000
61,000
D i s t r i c t No. 8
• F i r s t S t a t e Bank
Palmyra
111.
Feb. 24
25,000
16,000
255,000
D i s t r i c t No. 10
Gower Bank
Niwot S t a t e Bank
Gower
Niwot
Mo.
Colo.
Feb. 24
M 25
25,000
10,000
7,000
4,000
62,000
100,000
D i s t r i c t No. 11
Eayo's Money Exchange Bank,
San Antonio ,Texas
Feb. 26
(no f i g u r e s a v a i l a b l e )
Name of Bank
City
D i s t r i c t No. 3
Altoona
Union Bonk
Mountain City Trust CO. "
State
Pa.
ft
D i s t r i c t No. 4
•National Bank of
Peoples Com*l Bank
R o s e v i l i e S t a t e Bank
• F i r s t National Bank
''Lincoln National Bank
Ohio
Toronto
Beliefontaine "
It
Roseville
Ky»
Stone
Pa.
Ave 11a
D i s t r i c t No. 6
Bank of Loudon
Citizens Bank
• F i r s t National Bank
Loudon
Daisy
La Pine
D i s t r i c t No. 12
Farmers S t a t e Bank
Tenn.
n
Independence,Or eg. Feb. 20
25,000
—
—
4,000
Date open
CLOSED B»NKS REOPENED:
D i s t r i c t No. 5
Elm City Bank
D i s t r i c t No. 7
Badger S t a t e Bank
D i s t r i c t No. 8
Cairroll County Bank
Peoples Bk & Tr. Co.
D i s t r i c t No* 11
• F i r s t National Bank
261,000
Elm City
N. C.
1 - 2-- 31
20,000
33,000
2—26—31
Cassville
Wis.
4-17 -30
30,000
11,000
2-24-31
C a r r o l l t o n Miss. 2— 5 -31
12-26 -30
N.Carrollton "
15,000
25,000
5,000
24,000
2—26—31
2-26-31
25,000
6,000
2-24-31
Irene
Texas
2-
3
-31
X-3962
a W
BBPQ:
45
1.
(For c o n f i d e n t i a l use ohly - sutge6t t b c o r r e c t i o n )
Member banks i n d i c a t e d lay an a s t e r i s k ( • ) .
Name of Bank
D i s t r i c t No* 4
• C o o l v i l l e National
Bank
Sun Savings Bank
• C i t i z e n s Nat. Bank
Surplus
& profits
Total
deposits
Date
closed
Capital
C o o l v i l l e Ohio
R i s i n g Sun 'V
Wilmington "
m i 28
Mb* 4 2
tot
5
25,000
25,000
100,000
19,000
65,000
336,000
155,000
825,000
Cotton Port La.
Calhoun
Tenn.
Feb. 14
Feb. 28
35,000
25,000
11,000
5,000
136,000
43,000
Davis City Iowa
«
Bearing
Feb. 28
liar. 2
10,000
25,000
1,000
5,000
112,000
300,000
Abr.
4
50,000
5,000
441,000
liar.
6
25,000
10,000
203,000
Feb. 28
«
28
tt
28
Dec. 16
liar. 6
tt
6
It
6
100,000
15,000
20,000
15,000
10,000
10,000
50,000
165,000
12,000
9,000
17,000
8,000
3,000
24,000
2,210,000
125,000
188,000
432,000
186,000
101,000
876,000
25,000
50,000
3,000
35,000
233,000
404,000
City
State
..
t
• . . ^ v:.. .... '• M
D i s t r i c t No. 6
Partners Bank
Calhoun Bank
D i s t r i c t No. 7
Farmers Bonk
Farmers Bank
Ceder County S t a t e
Bank
Fountain-Parke
S t a t e Bonk
n
Tipton
Kingman
Ind.
D i s t r i c t No. 9
Merchants & Farmers
Bank & Trust Co.
OofflBerolal S t a t e Bk
Bank of West
Bunk of S t u r g i s
Chalybeate Bank
Bank of Falkner
Bank of Ripley
Lexington Miss.
ft
Gtoodmen
tt
West
Sturgis
Ky.
Chalybeate K i s s .
it
Falkner
Ripley
d i s t r i c t No. 9
Dakota S t a t e Bank
F i r s t S t a t e Bank
Bonesteel
Signer
»»
S.D«k. Mar.
it tt
M
2
2
Date opei
CLOSED Bi.NES R30PBNED:
D i s t r i c t No. 2
200,000
203,000
2-20-31
Nor walk
Conn. 12- 1-30
Centr a l - F a i r f i e I d
T r u s t Co.(reopened under t i t l e of Merchants Bank & Trust Go. - same c h a r t e r !
D i s t r i c t No. 8
Bonk of S t u r g i s
Sturgis
D i s t r i c t No. 9
Guaranty S t a t e Bank Eureka
12-16-30
15,000
17,000
3-3-31
S.Dak. 11-^9-30
25,000
83,000
3 - 4-31
Ky.
X-3962
P
.,
MHpae of Bank
City
State
Date
closed,
Capital
Surplus
& profits
District No, 2
46
Total
deposits
,
• f i r s t National Bank Rouses Point N. T.
• f i r s t National Bank Champlain
N. Y.
Max. 11
"
11
50,000
100,000
90,000
215,000
698,000
1,300,000
D i s t r i c t No. 5
Bank of W h i t e v i l l e
•with "branch a t :
Itex 10.
30,000
16,000
850,000
Whiteville
Tabor
D i s t r i c t No. 6
C i t i z e n s Savings Bank,Magnolia
N. C.
tt
-
Miss.
Oct.
2
15,000
33,000
373,000
27,000
50,000
9,000
5,000
175,000
520,000
D i @ W o t No. 7
% & r t a S t a t e Bank
tiwmsrs Svgs.Bank
farmers & Merchants
Savings Bank
Davis Trust Co.
S h e r r i l l Svgs.Bank
Farmers S t a t e Bank
• F i r s t National Bank
, farmers S t a t e Bank
S t a t e Bank of Dows
American S t a t e Bank
American S t a t e Batik
S t a t e Savings Bank
S t a t e Savings Bank
S t a t e Bank of
Cromwell
Minden
Ind.
Iowa
m&r.
6
9
Eldon
Brazil
Sherrill
Potterville
Veedershurg
Wawaka
Dows
Ferndale
Wyandotte
Melvindale
Lincoln Park
West Point
Iowa
Ind.
Iowa
Mich.
Ind.
Mar.
9
10
10
10
11
11
12
13
13
13
13
13
D i s t r i c t No. 8
Bank of Halltown
Bingham S t a t e Bank
S&llis Bank
farmers Bank
Halltoum
Bingham
Sallis
Norborne
D i s t r i c t No. 9
Lewiston
f i r s t S t a t e Bank
farmers S t a t e Bank Eapidan,
farmers S t a t e Bank Stockton
Bound Lake
S t a t e Bank of
• S e c u r i t y Nat. Bank Hope
D i s t r i c t No. 10
farmers Bank
Schell City Bank
Ouitman
# h e l l City
M
Iowa
Mich.
tt
tt
tt
tt
tt
ti
tt
tt
it
tt
M
tt
tt
111..
tt
tt
6
11
Nov. 20
Mar. 12
10,000
25,000
10,000
100,000
9,000
3,000
2,000
12,000
29,000
42,000
166,000
351,000
7
7
7
9
13
40,000
10,000
15,000
10,000
25,000
23,000
5,000
3,000
11,000
6,000
675,000
218,000
179,000
254,000
166,000
9
9
15,000
20,000
—.—
14,000
26,000
121,000
Mb.
111.
Miss.
Mo.
Mar.
Minn.
Mar#
ft
11
it
NeDak. /
Mo.
n
140,000
5,000
25,000
30,000
484,000
50,000
13,000
510,000
25,000
105,000
5,000
20,000
13,000
223,000
35,000
71,000
3,000
25,000
670,000
13,000
50,000
56,000 1,763,000
100,000
(no f i g u r e # a v a i l a b l e )
740,000
44,000
50,000
1,133,000
42,000
50*000
153,000
3,000
26,000
tt
tt
it
tt
11
ikr.
it
H
« 2 -
X-3962
Member tanks i n d i c a t e d "by an a s t e r i s k ( • ) I
Week ended ligrch 13, 1931.
Surplus
Total
Capital
& p r o f i t s deposits
gtofce
Date
closed
Texas
Ear.
9
11
50,000
30,000
25,000
5,000
400,000
130,000
Grand View S t a t e Bank Grand View Idaho
Mar.
9
10,000
5,000
50,000
Neune of Bank
City
M e t r i c t No. 11
*#tteene National Bank Athens
•Stossom National Bank Blossom
n
M
D i s t r i c t No. 12
Date
opened
CLOSED BANKS BB0PBMBD:
D i s t r i c t No. 5
Bonk of Aulander
Btsik of Candor
• f i r s t National Bank
Bank of Murphy
d i s t r i c t No. 6
Citizens Svgs. Bank
Bank of Walnut Grove
McComb Svgs. Bonk
& T r ^ s t Co.
Bank of Lena
12-16-30
1 - 2-31
12-16-30
11-22-30
80,000
25,000
500,000
30,000
23,000
10,000
524,000
19,000
2-13-31
2-25-31
3—12—31
3 - 2-31
Miss.
15agnolia
Walnut Grove "
10- 2-30
12-30-30
15,000
10,000
33,000
6,000
2—28—31
2-28-31
133 Comb
Lena
1-21-31
12-30-30
35,000
12,000
17,000
3,000
2-12-31
2-21-31
1-31-31
25,000
3,000
3-12-31
12- 1-30
12-31-30
1—10—31
1-10-31
1-10-31
1-20-31
20,000
10,000
10,000
10,000
30,000
3 - 7-31
3-10-31
3-10-31
3-10-31
3-10-31
1-21-31
Aulander
Candor
G:.8 t e n i a
lairphy
D i s t r i c t No. 7
Denver
C i t i z e n s S t a t e Bank
(reopened a s C i t i z e n s Bank)
D i s t r i c t No. 8
P o r t a g e v i i l e Bank
Peoples Bank
Merchants & Far.Bank
Merchants & Far.Bank
Bank of Kilmichael
Peoples Bank
N. C.
tl
ft
$1
lilSS .
II
Ind.
P o r t a g e v i l l e , Mo.
J ones to veil K i s s .
Vardaman
"
Ecru
"
Kilmichael "
Weir
"
25,000
10,000
13,000
6,000
3,000
10,000
10,000
47
X-3962
(For c o n f i d e n t i a l U.3* only - s u b j e c t t o c o r r e c t i o n )
% # e r t a n k s i n d i c a t e d "by an a s t e r i s k ( * ) .
,
.- .
Name of Ba,nk
City
State
Date
closed
D i s t r i c t No. 1
I n d u s t r i a l Bank &
Trust Co.
Boston
Mass.
Maf. 19
200,000
35,000 2,312,000
D i s t r i c t No. 2
World Exchange Bank,
New York
N. Y.
Mar. 20
500,000
325,000 1 ,722,000
D i s t r i c t No. 3
Plaza Trust Co.
P h i l a d e l p h i a Pa.
Mar. 18
641,000
160,000
Mar. 14
u
17
It
20
50,000
125,000
100,000
Worthington W. Va.
Mar. 18
30,000
31,000
327,000
Huxley
Pat on
Ferndale
Melvin
Berkley
Mich.
111.
Mch.
Mar. 14
•t
16
tl
16
tl
16
ft
18
15,000
25,000
100,000
25,000
25,000
6,000
4,000
25,000
5,000
9,000
122,000
208,000
895,000
104,000
226,000
Pontiac
Aid en
Lochmoor
Penfield
Mich.
Iowa
Mich.
Ill.
Mar.
18
19
19
20
400,000
35,000
30,000
25,000
D i s t r i c t No. 8
Farmers & Merchants Bk Decker
Ind.
Mar. 16
25,000
15,000
137,000
D i s t r i c t No* 11
• C i t y National Bank
Texas
Mar. 17
200,000
18,000
999,000
D i s t r i c t No. 4
Barion Svgs. Bank Co. Marion
Secw i t y Savings Bank Akron
s
F i * S t Bempel Nat .Bank Logan
D i s t r i c t No. 5
• F i r s t National Bank
D i s t r i c t No. 7
Huxley Savings Bank
Fanners S t a t e Bank
Ferndale S t a t e Bank
Melvin S t a t e Bank
Berkley S t a t e Bank
Peoples S t a t e Trust
& Savings Bank
S t a t e Bank of Aiden
Lochmoor S t a t e Bonk
Bank of P e n f i e l d
D i s t r i c t No. 5
Bank of Weldon
D i s t r i c t No. 7
S t a t e Bank of
# # # »<>< 8
Cires Wood S t a t e Bank
C i t i z e n s S t a t e Bank
Temple
Ohio
11
II
Iowa
it
n
tt
it
Capital
Surplus
& profits
Total
deposits
765,000
22,000
460*000
9,000
814,000
55,000 1,220,000
150,000 2,280,000
12,000
425,000
7,000
384,000
72,000
3,000
Closed &mks Reopened;
Date oper
12-15-30
25,000
63,000
3-16-31
Orangeville 111.
1-26-31
35,000
19,000
3-16-31
Byin.
11-21-30
12- 3-30
15,000
25,000
8,000
6,000
3-16-31
3-10-31
Weldon
Crestwood
GOreville
N. C.
X-3962
BANKS REPORTED CLOSED
WEEK ENDSD mRCH 27, 1931
49
(For c o n f i d e n t i a l us? pnly •* s u b j e c t t o c o r r e c t i o n )
er 'banks indicated by on asterisk (*) *
-
None of Bank
City
State
Date
Closed
Capital
Surplus
Total
& p r o f i t s deposits
D i s t r i c t No. 3
• F i r s t Nat i o n a l Bank, Portage
Pa.
Mar . 24
60,000
127,000
963,000
D i s t r i c t No. 4
C i t i z e n s Bank
Hamden
• F i r s t National Bank Richwood
Ohio
Mar . 23
It
24
25,000
40,000
13,000
25,000
219,000
455,000
Peoples Bank of
Southhampton
Courtland
Va.
Mar . 21
it
•National Bank of
Norton
24
ti
n
Dickenson County Bk Clintwood
26
with branches at* Clinchco and Dante •
25,000
50,000
100,000
12,000
40,000
56,000
129,000
335,000
902,000
70,000
13,000
320,000
n
D i s t r i c t No. 5
»»
D i s t r i c t No. 6
Bank of Newton Co.,
Covington
Ga.
Mar . 23
D i s t r i c t No. 7
Farmers Excharge Bank.Prescott
Exchange Bank
S t . Joseph
Commercial Bank
Mayville
Farmers S t a t e Bank
Melrose
Lyndon S t a t e Bank
Iyndon S t a .
Farmers & Merchants
Savings Bank
Lovilia
Mich.
111.
Mich.
Iowa
Wise.
Mar .
ft
tt
it
. H
Iowa
Mar. 26
15,000
Minn.
Mar . 20
S. Dak . D8c . 30
100,000
25,000
10,000 1,335,000
8,000
69,000
100,000
50,000 1,116,000
21
24
24
25
25
15,000
18,000
120,000
25,000
6,000
200,000
(no f i g u r e s a v a i l a b l e )
30,000
8,000
375,000
20,000
12,000
330,000
8,000
300,000
D i s t r i c t No. 9
• F i r s t & Farmers Nat i o n a l Bank i n
Farmers S t a t e Bank
Luverne
Bancroft
D i s t r i c t No. 10
•Central National Bank, Ellsworth Kan s .
Ivlar . 25
CLOSED BANKS REOPENED:
Date open
D i s t r i c t No. 7
Clayton Bk & Tr. Co. Clayton
Ind.
1-15-31
25,000
10,000
3—25—31
D i s t r i c t No. 8
Bank of Bruce
Bruce
Far .& Kerch.State Bk Virden
• F i r s t National Bank Dardanelle
Miss. 1-10-31
i l l . :10- 1-30
Ark. .1-19--31
20,000
85,000
25,000
"6,000
22,000
7,000
3-16-31
3-20-31
3-21-31
D i s t r i c t No. 9
Far & March.State Bk R u s s e l l
Farmers S t a t e Bank
Corsica
Minn. 9—29—30
S.Dak. 1-29-31
30,000
24,000
8,000
7,000
3-23-31
3-25-31
r
s o
X-3962
BANKS BEP0RT3D CLOSED
WBBK ENDED APRIL 3 , 1931
(For c o n f i d e n t i a l use only - s u b j e c t t o c o r r e c t i o n )
Ifealber tanks i n d i c a t e d by an a s t e r i s k ( » ) .
Name of Bank
City
State
Date
closed
Capital
N. C.
Apr , 3
50,000
59,000
308,000
i.la *
Go,.
Tenn.
Mar.28
" 30
" 28
n
21
M
18
25,000
95,000
15,000
25,000
20,000
20,000
20,000
9,000
11,000
9,000
220,000
51,000
69,000
162,000
95,000
Surplus
Total
& p r o f i t s deposits
D i s t r i c t No. &
Pinetops Banking Co.
Pinetops
w i t h branch a t Hookerton
D i s t r i c t No. 6
Abbeville S t a t e Bank
• C i t i s e n s Bk & T r . Co.
Bank of G r a n v i l l e
Bank of Green Back
Bank of Ooltewah
Abbeville
Jefferson
Granville
Green Back
Ooltewah
D i s t r i c t No. 7
• F i r s t National Bank
S t a t e Bank of
Columbia S t a t e Svgs.Bk.
•Austin National Bank
• F i r s t National Bank
Mellott Bank
F i r s t S t a t e Bank
Ridgeway S t a t e Bank
Cicero Trust & Svgs.Bk.
Hiteman Savings Bank
Rockwell
Iowa
Vforrensburg 111.
it
Chicago
n
t»
ii
Oak Park
Mellott
Ind.
Kanliua
111.
ft
Chicago
ti
Cicero
Hiteman
Iowa
Mar. 27
" 28
" 28
n
30
" 30
" 30
" 31
Apr. 1
n
2
Ear.16
25,000
25,000
300,000
250,000
100,000
10,000
25,000
200,000
200,000
10,000
2,000
13,000
112,000
195,000
31,000
9,000
17,000
44,000
155,000
3,000
204,000
142,000
2,869,000
3,535,000
1,727,000
75,000
311,000
934,000
2,478,000
144,000
D i s t r i c t No. 8
Deputy S t a t e Bank
Baldwin S t a t e Bank
Maben Home Bank
Bank of Stewart
Deputy
Baldwin
Maben
Stewart
Ind.
111.
Miss.
Mar.27
" 30
Jan.10
"
5
25,000
25,000
15,000
10,000
1,000
6,000
10,000
5,000
65,000
108,000
300,COO
76,00')
Blanoa
Colo.
liar. 31
, 10,000
4,000
78,000
Sikes
La.
Nov.24
15,000
M
Ml
M
D i s t r i c t No. 10
Blanc a S t a t e Bank
D i s t r i c t No. 11
F i r s t S t a t e Bank
mm
mm
26,000
• > y - .
51
— 2 —
X-3962
CLOSED BANKS REOPENED
Member tjariks i n d i c a t e d by an a s t e r i s k {*)
Nome of Bank
D i s t r i c t No. 6
S. Lemon Banking Co.
City
State
Date
closed
Acworth
Oq..
1 - 2-31
Capital
Surplus
& profits
Date
opened
30,000
11,000
3-10-31
American S t a t e Sank
S t . Bernice Ind.
1-20-31
25,000
Farmers & Merchants
Savings Bank
Highland
Ind.
25,000
2 - 4-31
Citizens S t a t e Bank
C ar me 1
"
1-10-31 25,000
Calumet C i t y S t a t e Bk Calumet City 111.
2 - 2-31
50,000
Tobacco Exchange Bank Edgerton
Wise.
5-20-30
20,000
Avilla Stat e Bank
Avilla
Ind.
1-12-31 25,000
(reopened as t h e Community S t a t e Bank, new organization)
1,000
2—27—31
13,000
8,000
18,000
78,000
9,000
2-27-31
2-28-31
4 - 1-31
3-30-31
3 - 7-31
46,000
2—20—31
12,000
3—26—31
13,000
3—18—31
5,000
24,000
3-24-31
3-30-31
365,000
7,000
7,000
4 - 2-31
1 - 5-31
2-28-31
52,000
4— 2—3.1
25,000
38,000
3 - 2-31
30,000
30,000
11,000
19,000
3 - 2-3]
3 - 2-91
25,000
8,000
2-25-31
D i a t r i c t No. I
D i s t r i c t No.
—•*—
.
• F i r s t National Bank i n Harrison
25,000
Ark.
12-16-30
( r e s t o r e d t o solvency and s o l d to a S t a t e banlc)
P a o l i S t a t e Bank
Paoli
11-24-30
Ind.
40,000
(member at time of c l o s i n g ; membership discontinued 1 - 5-31)
Orleans
C i t i z e n s S t a t e Bank
11-28-30
Ind.
30,000
Farmers & Merchants
S t a t e Bank
Cyprus
12-19-30
Ill.
25,000
Home Trust Co.
P e r r y v i l l e Mo.
2-14-31
50,000
• S t a t e Svgs. Loan &
Trust Co.
Quincy
I l l . 11-15-30
1,000,000
Bank of Orawford
Crawford
Hiss.
12- 5-30
10,000
>«
C i t i z e n s Bank
Sturgis
1-13-31 10,000
Carterville State &
Savings Bank
C a r t e r v i l l e 111.
4-15-30
50,000
D i s t r i c t No. 9
C i t i z e n s S t a t e Bank
Kobridge
S . Dak. 12-12-30
(reopened a s C i t i z e n s Bank & Trust Co.)
Merchants S t a t e Bank "Freeman
S. Dak. 12-19-30
Security S t a t e Bank
Madison
S. Dak, 12-19-30
(reopened as S e c u r i t y Batik & Trust Co#)
M a t r i c t No. 10
•Hartfdrd Natidnal Bank H a r t f o r d
Kans.
10* 3-30
( r e s t o r e d t o solvency and sold t o a S t a t e tank)
I:'
52
X-3962
$ANKS REPORTED CLOSED
•JK3K ENJSD uIRIL 10, 1951
(For c o n f i d e n t i a l u s i ohiy - Subject t o c o r r e c t i o n )
Member banks i n d i c a t e d by an d i t e r i s k •(*).
Name of Bank
City
State
Date
closed
Surplus
& profits
Total
depos i t s
100,000
25,000
256,000
48,000
13,000
3,182,000
669,000
337,000
Capital
D i s t r i c t No. 2
•Linden Nat. Bank
& Trust Co.
Linden
Stake Bank of
Linden
• F i r s t National Bank Macedon
N. J .
N. J .
N. Y.
Apr,
D i s t r i c t No. 3
•Second Nat. Bank
Pa.
Apr,
125,000
788,000
3,494,000
D i s t r i c t No. 4
•Monongahela Nat.Bk Brownsville P a .
Apr.
100,000
647,000
5,222,000
D i s t r i c t No. 7
Fountain S t a t e Bk Fountain C i t y , I n d .
Bank of IBiir
Muir
Mich.
Apr.
ii
6
6
25,000
3,000
7,000
103,000
223,000
Minn.
Wis.
Apr.
»»
8
8
25,000
10,000
10,000
2,000
357,000
47,000
Nebr.
it
Apr,
it
6
7
25,000
25,000
4,000
2,000
170,000
Texas
Apr.
6
25,000
20,000
287,000
Apr. 10
200,000
50,000
1,139,000
Altoona
M
2
2
8
250,000
10,000
D i s t r i c t No. 9
• F i r s t National Bk Ivr.nhoe
Barronett S t a t e Bk B a r r o n e t t
D i s t r i c t No. 10
.....
'
, — : —
Fanners & Mercha n t s S t a t e Bank Exeter
Basse t t S t a t e Bank B a s s e t t
D i s t r i c t No. 11
F i r s t S t a t e Bank
Seminole
D i s t r i c t No. 12
•Bank of Commerce
Oregon C i t y Oreg.
CLOSED BANKS REOPENED:
D i s t r i c t No. 5
F«r.& Traders Bank Weaverville
Bank of L e i c e s t e r L e i c e s t e r
Bank of Bladen
Clarkton
Polk County Bank
& Trust Co.
Columbus
C i t i z e n s Bank
& Trust Co.
Waynes v i l l e
D i s t r i c t No. 8
Side S t a t e
Savings Bank
Quincy
Poyspn S t a t e
Savings Bank
Payson
IfcSlwtin Meguiar
Brjik & T r . Co.
Franklin
D i s t r i c t No. 11
t4ity NationalBk
Temple
(turned back to d i r e c t o r s and;
N. C.
"
"
12*15-30
11-20-30
12-27-30
18,000
20,000
125,000
Date open
27,000
15,000
22,000
32,000
4- 1-31
3-31-31
3-13-31
11-22-30
15,000
11,000
3-10-31
11-20-30
50,000
45,000
3-30-31
11-15-30
50,000
14,000
4 - 2-31
11-17-30
25,000
9,000
4 - 2-31
11-18-30
75,000
51,000
4 - 7-31
Tex.
3-17-31
200,000
sold t o a S t a t e bank)
o
n
c
18,000
4 - 3-31
111.
Ky.
c
X-3962?
5
BANKS REPORTED CLOSED
WEEK ENDED APRIL I T . l 4 3 l .
(For c o n f i d e n t i a l use only - s u b j e c t t o c o r r e c t i o n )
Member banks i n d i c a t e d by an a s t e r i s k {*).
; Kame of Bank
City
State
Date
closed
.Capital
Surplus
& profits
Total
deposits
D i s t r i c t No. 3
Apr. 11
50,000
.2,000
339,000
Apr. 16
661,000
103,000
1,014,000
Ohio
Pa.
Apr. 13
Apr. 17
50,000
100,000
46,000
222,000
.1,015,000
t 2,032,000
S . C.
Apr.. 11
100,000
103,000
750,000
Fla.
Apr. 16
100,000
132,000
1*049,000
111.
Apr, 11
40,000
14,000
195,000
111.
Apr, 13
450,000
157,000
4,900,000
111.
Ia.
Ia.
Apr. 13
Apr. 14
Apr. 15
25,000
40j000
36j000
11,000
6,000
9,000
133,000
291,000
200,000
Ill,
Apr. 14
200,000
86,000
1,128,000
Willow H i l l
111,
Apr. 15
15,000
1, 000
165,000
Chicago
HI,
A
P?. 16
200,000
39,000
1,233,000
Chicago
111.
Apr, 16
400,000
202,000
3,805,000
Ringling
jPkla.
Apr. 13
25,000
5,000
*Woodlynne Nat. Bk. Woodlynne
N. J .
Security T i t l e
& Trust Co.
Pa.
Philadelphia
D i s t r i c t No, 4
C i t i z e n s Savings Bk.
Salem
• F i r s t Nat. Bank
Masontown
D i s t r i c t No* &
Exchange Bank
Newberry
D i s t r i c t No. 6
Bank of F o r t layers
& Trust Co.
F o r t Myers
.
D i s t r i c t No. 7 .
Seward S t a t e Bank Seward
Builders & Merchants
Bk. & Trust Co.
Chicago
Smlthfield State
Smithfield
Bk.
Danbury S t a t e Bk. Danbury
S t a t e Savings Bk. Rowan
North Town S t a t e
Chicago
Bank
D i s t r i c t No. 8
F i r s t S t a t e Bank
Boulevard S t a t e
Savings Bank
Lincoln T r u s t &
& Savings Bk.
1
D i s t r i c t No. 10.
F ifor
r sFRASER
t S t a t e Bank
Digitized
188,000
54
X-3962
— 2
—
Member banks i n d i c a t e d by an a s t e r i s k ( * ) .
'
Name of Bank
City
State
. ..
Bate
closed
Capital
Surplus
& profits
Total
deposits
D i s t r i c t No. 11
^Citizens N a t i o n a l Bank
"
Odessa
Texas
Apr. 14
50,000
19,000
CLOSED BANKS REOPENED:
579,000
Date open
D i s t r i c t No. 8
Peoples Bank
Ark. 11-10-30
tmb6dtin
C i t i z e n s Bank
Yellville
Ark. 12-17-30
with branch:
Marion County Bk.
Flippin
Ark. 12-17-30
Merchants & Farmers Bk.
Starkville
Miss. 1 2-12-31
C o f f e e v i l l e Bank
C o f f e e v i l l e Miss. 1 - 8 - 3 1
Commercial S t a t e Bk. Goodman
Miss. 2—28—31
21,000
30,000
— —
25,000
24,000
15,000
6,000
10,000
<•»
17,000
24,000
12,000
4-8-31
4-6-31
4-6-31
4-15-31
4-17-31
4-17-31
X-3962
BANKS REPORTED QLOSgD
WEEK M M
I M I I 24,
55
1933,
(For c o n f i d e n t i a l use ohly * i u b j e d t t o c o r r e c t i o n )
Member t&qks I n d i c a t e d by @a &»teyisk ( * ) .
Name of Bank
City
State
Date
closed
Capital
Surplus
Total
& p r o f i t s deposits
D i s t r i c t No. 4
• C i t i z e n s National Bank
.. t f o r m e r l y i n
•Noble County Nat . Bank
C i t i z e n s Bank
Monessen
Pa.
Apr. 17
l i q u i d a t i o n ; how i n s o l v e n t )
Apr. 18
Ohio
Caldwell
it
24
Jackson
100,000
40,000
864,000
60,000
51,000
25,000
706,000
913,000
Apr. 21
it
20
22
125,000
120,000
20,000
77,000 1,411,000
57,000 1,305,000
30,000
212,000
300,000
298,000 2,675,000
50,000
D i s t r i c t No. 5
• F i r s t National Bank
•National Bank of
Farmers Bank
Kinston
»»
Wakefield
N. 0 .
«»
Va.
d i s t r i c t No. 6
•Central Nat. Bk & Tr Co S t . P e t e r s b u r g , F l a . Apr. 17
D i s t r i c t No. 7
F o r t v i l l e S t a t e Bank
, Memphis Bank
F i r s t S t a t e Bank
Fortville
Memphis
Lyndon
Ind.
Mich.
111.
Apr. 17
"
20
" 22
D i s t r i c t No. 8
• F i r s t National Bank
Waldron
Ark.
Apr. 20
25,000
6,000
96,000
D i s t r i c t No. 9
Bank <xf Elk Mound
• F i r s t National Bank
Amiret S t a t e Bank
Elk Mound
Tracy
Amiret
Wis.
Minn.
Apr. 17
25,000
50,000
3,000
13,000
12,000
171,000
640,000
125,000
D i s t r i c t No. 12
Bank of Moroni
Moroni
Utah
Apr. 23
25,000
15,000
136,000
Dist.
"
"
20
20
- 25,000
9,000
298,000
(no f i g u r e s a v a i l a b l e )
25,000
1,000
77,000
10,000
Closed Banks Reopened?
N. J . 4 - 2-31
250,000
2 . * Linden Nat .Bk & Tr.Co.Linden
(turned back t o d i r e c t o r s and sold t o new a s s o c i a t i o n )
6. Merch & P l a n t e r s Bk
Camden
1-30-31
50,000
Ark.
30,000
6. Leake County Bank
Carthage
Mills • 12-29-30
8. Bank of Falkner
Falkner
10,000
Mia 3. 3 - 6-31
7. S t a t e Bank of Lodi
Lodi
Wis.
3—28—30
25,000
15,000
8. Bank of I t y r t l e
l^rrtle
Miss. 12—30—30
10,000
9 . Farmers S t a t e Bank
Rapidan
Minn. 3 - 7-31
l l . * A t h e n s National Bank Athens
50,000
Texas 3 - 9-31
(turned back t o d i r e c t o r s and w i l l l i q u i d a t e )
Date open
256,000
4-15-31
85,000
35,000
3-12-31
3-19-31
3-24-31
4-18-31
4— 8—31
4—18—31
4-18-31
2,000
20,000
3,000
5,000
25,000
A-ovbti
56
BANKS E M M M O CLOSED
WEEK ENDED MAY 1 , 1 9 3 L 7
(For c o n f i d e n t i a l use only *• s u b j e c t t o c o r r e c t i o n )
Name of Bank
Surplus
& profits
Total
deposits
State
Date
closed
N, Y.
Apr. 29
25,000
6,000
135,000
Millshoro
Pa.
Apr. 25
25,000
17,000
138,000
Lima
Ohio
Apr. 28
300,000
Apr. 30
25,000
11,000
248,00(
Apr. 30
48,000
52,000
708,Ov
Ga.
Apr. 29
250,000
111.
Apr. 25
40,000
35,000
Mich.
Apr. 27
23,000
5,000
Minn.
S. Dak.
Minn.
Wis.
Minn.
it
Apr. 24
tl
27
!t
24
Tt
25
rt
27
ft
29
25,000
25,000
10,000
40,000
10,000
65,000
26,000
7,000
5,000
8,000
2,000
15,000
238,000
175,00C
82,000
432,000
48,000
682,000
Crested B u t t e , Colo.
Mo.
Graham
Apr. 24
ii
28
15,000
20,000
9,000
4,000
210,000
106,000
Leavenworth
Kans.
May
1
150,000
Toppenish
Wash.
Apr. 22
50,000
City
D i s t r i c t No. 2.
•Savona National Bank,Savona
Capital
D i s t r i c t No. 4
• F i r s t Nat. Bank
•Old National City
Bank
D i s t r i c t No. 5
Bank of Warm Springs,Warm Springs,Va.
Farmers & Merchants
N. C.
Kinston
Bank
74,000 2,922,000
D i s t r i c t No. 6
•La Grange Banking
& Trust Co.
La Grange
352,000 1,334,00
D i s t r i c t No. 7
Pecatonica S t a t e Bank,
Pecatonica
Churchil1 & Wehber 1
She l"by
Bankers
D i s t r i c t No. 9
F i r s t S t a t e Bank
• F i r s t Nat. Bank
State Bank of
Augusta S t a t e Bank
S t a t e Bank of
Marshall S t a t e Bk
D i s t r i c t No. 10
Bank of Crested
Butte
Citizens Bank
Wulfekuhler S t a t e
Bank
Cleveland
Brandt
Akeley
Augusta
Viking
Marshall
390,00
—
64,000 1,527,000
D i s t r i c t No. 12
•Central Bank
Pis t .
5 . Far.& March. Bk
6. Bank of Mb Lain
8. F i r s t S t a t e Bk
8. FRASER
Alma S t a t e Bank
Digitized for
13,000
294,00C
15,000
15,000
3,000
1,000
Date oper
4 - 4-31
4-22-31
4-21-31
4-17-31
CLOSED BANKS REOPENED:
Stanley
life Lain
Marshall
Alma
N. C.
Miss.
Ark.
111.
12- 6—30
12-22-30
12-17-30
1 - 2-31
30,000
15,000
25,000
15,000
BANKS
X-3962
o;
CLOSKD
8, 1931.
WEEKEND:
r-
57
(For c o n f i d e n t i a l lis a dri^y - s u b j e c t t o c o r r e c t i o n )
Member tanks i n d i c a t e d "by an a s t e r i s k { • } .
State
Date
closed
D i s t r i c t No. 4
• F i r s t Bank & Trust Co . , Washington;t Pa.
ii
•Farmers Nat. Bank
Hickory
Dees burg Bank
Leesburg
Ohio
May 4
II
5
It
8
600,000
90,000
20,000
736,000
44,000
25,000
5,380,000
607,000
Trenton
Dungannon
Grifton
N. C. May 2
It
2
Va.
N. C. ft
5
15,000
25,000
44,000
9,000
11,000
3,000
96,000
123,000
54,000
Tuskegee
Ala.
May. 7
65,000
79,000
446,000
Name of Bank .
District
Bank of
Bank of
Bank of
No> 5
Jdnes
Dungannon
Grifton
D i s t r i c t No. 6
Macon County Bank
City
Surplus
& profits
Capital
,
Total
deposits
—
-
-
D i s t r i c t No. 7
260,000
I n d i a n a p o l i s Ind. May 4
300,000
Farmers Trust Co.
11 4
1,000
Farmers Savings Bank Allendorf
Iowa
12,000
!t
ft
4
27,000
50,000
•Com'l Nat. Bank
Essex
It
ft
4
20,000
40,000
• F i r s t National Bank
Pomeroy
tl
79,000
4
150,000
• F i r s t Not. Bk.& Tr .Co.. P a r i s
111.
(placed i n v o l . l i q u i d a t i o n 3-27-31; declared insolvent 5-4-31)
Breda
Iowa May 6
25,000
10,000
Farmers S t a t e Bank
it
P r i n c e v i l l e 111.
6
25,000
32,000
Farmers S t a t e Bank
— —
6,000
Martensdale Bank
Martensdale Iowa 9-23-30
(not p r e v i o u s l y r e p o r t e d )
50,000
26,000
• S e c u r i t y National Bk. Milford
Iowa May 7
305,000
D i s t r i c t No. 8
Formers S t a t e Bank
Bolivar
I
I
D i s t r i c t No. 10
•Montgomery Co.Nat.Bk. Cherryvale
FOJT.& M e r c h . S t a t e Bk
296,000
266,000
70,000
•
D i s t r i c t No. 9
• S t a t e Bank of Madelia Madelia
New Munich S t a t e Bank
D i s t r i c t No. 11
Dilworth Bank
868,000
74,000
244,000
216,000
942,000
Gonzales
Yoakum
D i s t r i c t No. 12
• F i r s t National Bank
Terra B e l l a
S t a t e Bank of Buckley Buckley
Mny
5
30,000
2,000
148,000
Minn. May
5
8
50,000
12,000
18,000
2,000
531,000
122,000
Kens. May 4
50,000
1,000
300,000
Mb.
n
it
Texas May 4
1*
it
7
( p r i v a t e bank - no f i g u r e s )
50,000
3,000
272,000
25,000
25,000
6,000
28,000
157,000
371,000
Dist.
REOPENED!
5 . Bank of F r a n k l i n F r e n k l i n
N. C. 12-16-30
50,000
8. • F i r s t Nat. Bank
Green Forest Ark. 12-18-30
25,000
( r e s t o r e d to solvency and sold to new organization)
55,000
Date open
4—29—31
5 - 2-31
Calif .May- 4
Wash. "
4
16,000
X-3962
a
R#06TBD OLOSED
15, 1931
(For c o n f i d e n t i a l ti^e only - s u b j e c t t o c o r r e c t i o n )
City
Warn of Bank
I
D i s t r i c t No. 3
I
1
I
Kahaffey
Suburban T i t l e & Tr.Go. Upper Darby
Carbondale Miners &
Carbondale
Mechanics Svgs. Bank
Haverford Township T i t l e .
& Trust Co., Brookline,Upper Darby,
*Overbrook National Bank P h i l a d e l p h i a
d i s t r i c t No, 4
Cummings Trust Co*
Carrollton
d i s t r i c t No. 6
"Beyer-Kiser Bank
Miami
mx
State
Date
closed
Pa.
May
13
9
50,000
47,000
674,000
500,000
464,000
4,006,000
it
ft
12
100,000
1,054,000
3,989,000
it
It
It
13
125,000
11,000
411,000
16
500,000
190,000
3,131,000
it
Ohio
May
9
150,000
281,000
1,451,000
Fla.
May
12
125,000
28,000
185,000
Ind.
May
11
300,000
426,000
2,068,000
111.
tt
ft
14
300,000
80,000
3,155,000
14
500,000
226,000
3,406,000
14
14
100,000
26,000
660,000
May 11
tt
11
it 1 3
100,000
10,000
18,000
10,000
7,500
2,000
573,000
77,000
127,000
9
100,000
25,000
953,000
9
15,000
10,000
25,000
42,000
280,000
620,000
Mch.
D i s t r i c t No. 8
- Iddtuai Standard Bank
. 3»nk of Loose Greek
% r a y Banking Co.
Ky.
Mo.
Tenn.
D i s t r i c t No. 9
^#»nk of Canby
S t a t e Bank of
F i r s t S e c u r i t y Bank
^Peoples N a t i o n a l Bank
T % n k of Dawson
• F i r s t National Bank
F a r . & Merch. S t a t e Bk.
it
ft
ft
tt
(no f i g u r e s a v a i l a b l e )
1
Canby
Carpenter
Raleigh
Shakopee
Dawson
Dawson
Oklee
Mnn.
S.Dak.
N.Dak.
Minn.
May
it
Rensselaer
85,000
tt
it
tt
12
13
50,000
1,000
5,000
8,000
8,000
it
tt
it
14
30,000
2,000
281,000
14
10,000
7,000
164,000
it
it
8
Date
opened
REOPENEDt
D i s t r i c t No. 7
®rust & Savings Bank
Total
deposit!
tt
it
D i s t r i c t No. 7
Indianapolis
- iieyer-Kis er Bank
•Albany Park N a t . Bank
Chicago
& Trust Co.
ft
Humboldt S t a t e Bank
Second Humboldt S t a t e Bk
"
Leonidas
Bank of Leonidas
Louisville
Loose Creek
Luray
Capital
Surplus
& profits
Ind.
12-16-30
100,000
38,000
4-25-31
D i s t r i c t No. 8
Cowgill
lib.
2-10-31
35,000
41,000
5 - 4-31
• f i r s t National Bank
(turned tack t o d i r e c t o r s and sold t o F i r s t National Bank i n Cowgill, a new
organization).
ifi • i.tifc
. »-
X-3962
BAMS EEPOBTED CLOSED
VflDgK ENDED W 22, 1931
59
(For c o n f i d e n t i a l u i e only - s u b j e c t t o c o r r e c t i o n )
•f
Member banks indicated, "by an a s t e r i s k ( » ) .
Surplus
& profit8
(Dotal
deposits
city
Irvona
Pa.
May 19
25,000
32,000
404,000
D i s t r i c t No. 4
• C i t i z e n s National Bank
Conewango Trust Co.
Warren
"
Pa.
n
May 18
« 30
125,000
100,000
49,000
335,000
1,103,000
3,049,000
District
Bank of
Bank of
Farmers
Gray Court S. C.
Grundy
Va.
Belhaven
N. C.
May 12
" 18
18
26,000
21
25,000
75,000
30,000
41,000
13,000
151,000
710,000
187,000
Rayne
La.
Lumber City Ga.
Apr. 4
May 21
50,000
15,000
115,000
546,000
76,000
25,000
268,000
Name of Bank
D i s t r i c t No. 3
• F i r s t N a t i o n a l Bank
No. 5
Gray Court
Grundy, I n c .
Bank
D i s t r i c t No. 6
Commercial Bank
Far .& Merchants Bank
closed
Capital
State
"
2,000
D i s t r i c t No. 7
Bonaparte S t a t e Bank
Bonaparte
Montrose Tr.& Svgs.Bank Chicago
• F i r s t National Bank
Fowler
Iowa
111*
Ind.
May 20
21
22
100,000
14,000
17,000
16,000
674,000
469,000
D i s t r i c t No. 8
Beokman S t a t e Bank
Ferdinand
Ind.
May 21
25,000
22,000
274,000
D i s t r i c t No. 9
• F i r s t National Bank
Crary
N .Dak. May 18
25,000
D i s t r i c t No. 10
Farmer3 & ISsrohants
S t a t e Bank
• F i r s t National Bank
S t a t e Bank of Bee
Kinsley
Hoiton
Bee
Kans.
20,000
22,000
D i s t r i c t No. 11
•Citizens National Bank
D i s t r i c t No. 12
•Farmers National Bank
"
Nebr.
"
"
May 18
75,000
50,000
"
18
"
22
10,000
70,000
32,000
12,000
303,000
451,000
330,000
Blooming
Grove
Texas
May 22
50,000
20,000
197,000
Pomeroy
Wash.
May 16
50,000
19,000
193,000
Date open.
CLOSED BANKS REOPENED»
D i s t r i c t No. 7
S t a t e Savings Bank
Melvindale luich.
" (reopened as the Ifelvindale S t a t e B*nk)
Peoples S t a t e Bank
Berne
Ind.
3—13—31
50,000
44,000
5-15-31
5 - 7-30
60,000
19,000
5-22-31
f
60
X-3562
BANKS EEPQBTED CLOSED WEEK ENDED MAT 29, 1931.
(For c o n f i d e n t i a l utie only - s u b j e o t t o c o r r e c t i o n )
Member tanks indicated. by an a s t e r i s k ( » ) ,
Name of Bank
Pity
State
Date
closed
D i s t r i c t No. 3
Citizens Bank
BarnesDoro
Pa.
May 27
D i s t r i c t No. 4
• F i r s t National Bank
SmithfieM
Pa.
D i s t r i c t No. 6
• F i r s t National Bank
Prattville
Ala.
D i s t r i c t No. 7
Commerce Trust & Svgs «Bk
Farmers S t a t e Bank
United S t a t e Bank
Farmers S t a t e Bank
Farmers Savings Bank
H o l s t e i n Savings Bank
Merchants S t a t e Bank
Gushing Farmers Svgs.Bk
Bank of Fulton
•McCartney National Bank
,
' •
Surplus
& profits
Total
deposits
50,000
34,000
386,000
May 26
75,000
75,000
597,000
May 28
50,000
23,000
542,000
May 28
Ill
Chicago
tt
" 28
Armington
" 29
C r y s t a l Lake n
" 23
Iowa
l a k e City
tt
" 23
Larchwood
«
" 28
Holstein
C o r r e o t i o n v i l l e , l a . " 28
" 28
Cashing
Iowa
" 23
Fulton
Mich.
" 28
Wis.
Green Bay
200,000
25,000
75,000
50,000
25,000
90,000
25,000
30,000
54,000
•5,000
63,000
Capital
500,000
338,000
1,371,000
93,000
923,000
172,000
155,000
1,476,000
313,000
112,000
91,000
2,595,000
— •»
1,000
62,000
12,000
3,000
—
—
D i s t r i c t No. 8
Peoples Bank & T r u s t Co. M o r r i l t o n
Ark.
May 28
60,000
27,000
260,000
D i s t r i c t No. 9
• I r o n National Bank
S t a t e Bank of Hector
Ashereek S t a t e Bank
Irorwood
Hector
Ashcreek
Mich.
Minn.
M
May 25
M
26
" 27
100,000
50,000
10,000
42,000
11,000
2,000
650,000
717,000
108,000
D i s t r i c t No. 10
Nebraska S t a t e Bank
German Bank
Osage Bank
Farmers S t a t e Bank
Long Pine
Millard
Fairfax
Sedgwick
Nebr.
Okla.
Kans.
May 23
M
23
M
22
n
27
25,000
15,000
25,000
10,000
2,000
8,000
5,000
6,000
400,000
230,000
60,000
75,000
D i s t r i c t No. 12
Farmers & Merchants
S t a t e Bank
•National iBank of
Nooksadk
Iflmnwood
Wash. May 25
C a l i f . M 28
15,000
50,000
2,000
95,000
401,000
REOPENED:
None
—
—
X-3962
BANKS REPORTED dLQSED WBElg ENDED JUNE 5. 1931 '
(For c o n f i d e n t i a l use only f Bulgjibt t o bdifototition)
Member "banks i n d i c a t e d fry an a s t e r i s k (»)J
Name of Bank
Ji*L
State
D i s t r i c t No* 3
• C i t i z e n s Nat. Bank
Jenkintown
Pa.
r
Date
closed
June 2
150,000
13,000
473,000
Capital
Surplus
& profits
Total
deposits
-
D i s t r i c t No. 4
F i r s t S t a t e Bank
•Peoples Nat. Bank
Louisville
Delmont
Ohio
Pa.
June 1
It
4
50,000
25,000
29,000
26,000
804,000
323,000
D i a t r i c t No., 5
Phoenix Bank of
Nansemond
.Peoples Bank
Suffolk
Bidgeley
7a.
W. Va.
May 29
June 4
33,000
25,000
2,000
13,000
59,000
140,000
D i s t r i c t No. 6
•Oom'l Nat. Bank
Hattlesburg
Mss.
June 2
100,000
14,000
839,000
Iowa
June 2
25,000
4,000
192,000
D i s t r i c t No. 7
C i t i z e n s S t a t e Bank R u s s e l l
Brown County S t a t e
Green Bay
Bank
F u l l e r t o n S t a t e Bank Chicago
Wis.
111.
it
It
2
5
100,000
250,000
27,000
120,000
772,000
2,489,000
D i s t r i c t No. 8
Miller County Bank
& T r u s t Co.
Texaxkana
Ark#
June
1
75,000
52,000
257,000
D i s t r i c t No. 9
Mi 11 v i l i e S t a t e Bank
C i t i z e n s S t a t e Bank
• F i r s t National Bank
Olivia S t a t e Bank
Minn.
Ivlillville
•1
Twin Valley
Mountain Lake ii
ii
Olivia
June 3
tt
4
tt
4
n
5
10,000
10,000
25,000
25,000
10,000
15,000
18,000
30,000
140,000
200,000
340,000
485,000
D i s t r i c t No. 10
Verdigre S t a t e Bank Verdigfe
C i t i z e n s S t a t e Bank Oreston
Armourdale S t a t e Bk Kansas City
Nefcr.
n
Kans.
June 1
M 2
it
5
20,000
40,000
50,000
5,000
13,000
30,000
293,000
204,000
691,000
D i s t r i c t No. 11
Vivian S t a t e Bank
La.
June 2
30,000
38,000
450,000
Vivian
CLOSED
Date open
REOPENED:
D i s t r i c t No. 7
Fountain Parke S t a t e
Kingman
Bank
Westpoint
S t a t e Bank of
Ind.
111.
3 - 6-31
3-13-31
25,000
25,000
10,000
3,000
5-29-31
6 - 3-31
D i s t r i c t No. 9
F i r s t S t a t e Bank
mnn.
3 - 7-31
40,000
11,000
5-22-31
Lewiston
BANKS REPORTED CLOSED JSBK ENDED JUNE 12, 1931
(For c o n f i d e n t i a l use oply - s u b j e c t to c o r r e c t i o n )
Member t a n k s .Indicated tar an a s t e r i s k (*)i_
' f " Date
Name of B#mk
City
S t a t e closed
D i s t r i c t No. 2
South H i r e r Trust Co.
Capital
Surplus
& profits
j
X-3962
g£
Total
deposits
•
South River N. J . June IE
D i s t r i c t No. 3
Mortgage S e c u r i t y Tr.Co. P h i l a d e l p h i a , Pa.
it
Snowshoe Bank
Snowshoe
June
it
100,000
111,000
1,646,000
6
10
300,000
25,000
110,000
54,000
1,029,000
229,000
D i s t r i c t No. 4
B y e s v i l l e S t a t e Bank
Byesville
Ohio
June
9
25,000
22,000
230,000
D i s t r i c t No. 5
Bank of Gary
daacy
N.C.
Jund 10
6,500
3,750
51,000
D i s t r i c t No. 4
• I n l a n d - I r v i n g Nat. Bank Chicago
111. June 8
526,000
it
tt
•t
•Washington Pairk Nat .Bank
8
600,000
it
tt
•t
I n d u s t r i a l S t a t e Bank
6
100,000
it
Union Truat Co.
South Bend Ind.
6
600,000
it
Cheltenham Tr#& Svgs.Bk Chicago
8
200,000
111.
?•
»t
it
Sheridan T r . & Svgs. Bk
8
800,000
tt
it
South Side Shrgs.Bk.& Tr.Co. "
8
500,000
tt
it
farmers Cooperative S t a t e Bk, Galva
8
100,000
Par .& llerch S t a t e Bank
tt
n
of Bloomingdale
8
Roselie
25,000
it
S t a t e Bank of
Otterbein
8
Ind.
50,000
it
Tale Savings Bank
8
Yale
30,000
Iowa
it
Armitage S t a t e Bank
Chicago
111.
9
250,000
n
it
Auburn Park Tr.& Svgs.Bk
9
300,000
tt
tt
n
Brainerd S t a t e Bank
9
200,000
tt
tt
n
Bryn Mawr S t a t e Bank
9
200,000
Tt
tt
n
Chatham S t a t e Bank
9
300,000
tt
tt
it
Chicago Lawn S t a t e Bank
9
420,000
tt
ft
it
Ridge S t a t e Bank
9
200,000
tt
n
Stony I s l a n d S t a t e Svgs.Bk. "
400,000
9
tt
tt
it
West Highland S t a t e Bank
9
300,000
tt
tt
it
West Lawn T r . & Svgs.Bk*
9
200,000
tt
tt
it
Blaton S t a t e Bank
9
200,000
tt
it
West Snglewood Tr.& Svgs.Bk "
9
750,000
tt
tt
n
Lincoln S t a t e Bank
400,000
10
ft
it
Northwestern Tr.& Svgs.Bk. "
10 1,000,000
ft
it
Second North Western S t a t e Bk."
10
350,000
n
Elmwood Park S t a t e Bank Bloebqd Park "
10
150,000
tt
Par.& lierch. S t a t e Bank H o r t o n v i l l e Wis.
9
20,000
it
Chicago
Oragin S t a t e Bank
111.
10
200,000
ft
tt
it
I t a l i a n Tr* & Svgs.Bank
10
200,000
tt
tt
it
West Town S t a t e Bank
10
600,000
it
Farmers & Merch. Bank
Kendall
Wide
10
23,000
it
Chicago
Oar f i e I d S t a t e Bank
111.
800,000
11
If
H 11
S t a t e Bank of Beverly Hills,Chicago
200,000
tf
it
I l l i n o i s S t a t e Bank
Evanston
12
100,000
Digitized
iltchp it
S t afort eFRASER
Savings Bank
Royal Oak
700,000
12
»»
*.
120,000
440*000 9,161,000
24,000
265,000
424,000 4,363,000
41,000
494,000
429,000 10,370,000
103,000 4,486,000
55,000
530,000
tm
4,000
115,000
65,000
363,000
11,000
197,000
70,000
714,000
116,000
882,000
105,000
337,000
52,000
833,000
124,000 1,040,000
456,000 2,530,000
101,000
308,000
322,000 2,837,000
276,000 1,426,000
126,000
372,000
63,000 1,085,000
639,000 4,793,000
106,000 1,127,000
996,000 14,862,000
191,000 3,661,000
39,000 1,480,000
6,000
261,000
65,000 1,238,000
38,000 1,432,000
637,000 4,765,000
4,000
149,0d0
648,000 8,383,000
61,000 1,011,000
17,000
677,000
304,000 7,688,000
|i
-
63
X-5962
2 -
dnded June 12, 1931 ( c o n t i n u e d ) .
Banks Reported Closed, v
Member "banks i n d i c a t e d "by an a s t e r i s k ( * ) . .
Same of Bank
City
Surplus
Date
closed
State
D i s t r i c t No. 9
June
l a c Qui P a r l e County Bk Madison
Minn.
it
it
n
Madison S t a t e Bank
ft
Worthing S .Dak.
Peoples S e c u r i t y Bank
ft
Vesta
Minn.
S t a t e Bank of Vesta
ft
Milroy
"
S t a t e Bank of l l i l r o y
R e n v i l l e County S t a t e Bk.,Blrd Island,Minn."
ft
Waltham
Minn.
Waltham S t a t e Bank
ft
Clara City "
Clara City S t a t e Bank
ft
Appam
B.Dak.
Appam S t a t e Bank
ft
At water
Minn.
f a n n e r s S t a t e Bank
D i s t r i c t No* 10
Farmers S t a t e Bank
F i r s t S t a t e Bank
Nebraska S t a t e Bank
L i t t l e River S t a t e Bk
Mason C i t y Nebr. June
tt
S t . Edward H
ft
Bloomfield "
l i t t l e River Kans, ft
D i s t r i c t No. 11
Asherton S t a t e Bank
•Farmers National Bank
Asherton
Texas
Cross P l a i n s "
June
D i s t r i c t No. 12
Commercial S t a t e Bank
Bank of West Hollywood
S p r i n g f i e l d Oreg. June
Los Angeles C a l i f ii
M
>
8
25,000
2 1 , 0 0 0
817,000
8
25,000
4 2 , 0 0 0
735,000
8
25,000
15,000
292,000
9
20,000
7,000
275,000
151,000
6
18,000
18,000
11
50,000
23,000
534,000
11
10,000
12,000
150,000
11
25,000
15,000
325,000
11
15,000
3,000
80,000
12
15,000
17,000
375,000
5
2 0 , 0 0 0
2 , 0 0 0
153,000
5
25,000
14,000
200,000
8
25,000
17,000
389,000
11
20,000
3,000
130,000
10
25,000
3 , 0 0 0
89,000
11
25,000
20,000
247,000
8
30,000
6,000
183,000
12
51,000
12,000
625,000
Date
opened
REOPENED:
D i s t r i c t No. 2
200,000
N. J . 8 - 8-30
•Port Nesark Nat. Bank
Newark
(reopened a s "branch of Merchants & Newark Trust Co. , a member ]
D i s t r i c t No. 5
• F i r s t National Bank
I,Mechanics Savings Bank
) i s t r i c t No. 8
Peoples Bank
Merch.& Far.Bk & Tr.Co.
Bank of West
Total
Capital
Ayden
N. C. 12-10-30
Raleigi
N. C.
1-13-31
Calhoun C i t y , K i s s . 1-2-31
Lixing*on Miss. 2-21-31
West
"
2-21-31
58,000
6— 8—31
6,000
75,000
Bank i n Ayden)
82,000
15,000
6—10—31
8,000
165,000
9,000
4-11-31
4—11—31
4-21-31
30,000
100,000
20,000
5-12-31
BJMCss gB^osm) Qtosw mm mm
(For c b f t f l i e i a t i a l
6Aly
k
Member "banks i n d i c a t e d lw an j&3tefriik {*)«
City
Name of hank ,
D i s t r i c t No. 3
Peons Valley Banking Co.
Citizens Bank
State
Centre Hall Pa.
tt
Gallitzin
JUNB 19+
im
X-3962
T
s # j W t tb correction)
Date
Closed
June 15
it
18
Capital
50,000
25,000
Surplus
Total
& p r o f i t s deposits
— —
18,000
— -*
281,000
D i s t r i c t No. 4
farmers & Merch. Bank
M l l e r s t x i r g '» o .
tt
S e c u r i t y Home T r u s t Co.
Toledo
tt
Bank of Ashley ,Unincor p . , Ashley
30,000
June 13
tt
17 1,500,000
it
19
15,000
D i s t r i c t No. 6
F i r s t S t a t e Bank
Johnson County Bank
June 13
Ely 20
25,000
15,000
34,000
94,000
221,000
106,000
June 12
ft
13
tt
13
200,000
200,000
100,000
181,000
71,000
49,000
1,552,000
1,143,000
763,000
New P o r t Richer 71a.
Butler
Tenn.
D i s t r i c t No. 7
•Des P l a i n e s S t a t e Bank
Diversey IT. & Svgs.Bank
Boner C i t y Bank
•Manufacturers National
Bank & T r u s t Co.
Peoples Bank & Trust Co.
• S e c u r i t y National Bank
•American Trust Co.
•Pontiac Com1! & Svgs.Bank
Basel Park S t a t e Bank
• F i r s t S t a t e Savings Bank
• F i r s t National Bank
• F i r s t National Bank
Stake Bank of Mosinee
• F i r s t National Bank
Peoples S t a t e Bank
•Noel S t a t e Bank
Waukegan S t a t e Bank
; F r a n k l i n S t a t e Bank
•Waukegan National Bank
•Wayne Savings Bank
Midwest S t a t e Bank
Des P l a i n e s 111.
tt
Chicago
J a n e s v i l l e Wis.
Bock f o r d
«
n
M
South Bend I n d .
Mich.
Pontiac
ft
Hazel Park
Birmingham
St.Clair Shores,"
Bagley
Iowa
Mosinee
Wis.
Downers Grove,111
Guthrie C e n t e r , l a
111.
Chicago
it
Waukegan
Milwaukee
Wis.
Waukegan
Ill,
Wayne
Mich.
Cicero
111.
D i s t r i c t No. 9
Boyd
F i r s t S t a t e Bank
Coltunibus
Farmers S t a t e Bank
Noonan
S e c u r i t y S t a t e Bank
Prinshurg
PrinsVurg S t a t e Bank
Artas
Artas S t a t e Bank
Herreid
S t a t e Bank of Herreid
Bank of S h e l l l a k e
S h e l l Lake
Alamo
F i r s t S t a t e Bank
Ambrose
C i t i z e n s S t a t e Bank
F i r s t I n t e r n a t i o n a l Bank Fortuna
111.
It
It
It
If
If
II
If
If
It
ft
It
II
It
It
ft
II
It
11
Minn. June
N.Dak tt
it M it
Minn. tt
S.Dak, tt
tt M it
it
Wis.
N.Dak,, "
it n
it
n
it «
15
500,000
250,000
15
15
200,000
15
500,000
800,000
15
25,000
15
200,000
16
50,000
16
25,000
16
50,000
16
17
100,000
17
50,000
18 1,000,000
.18
200,000
50,000
17
250,000
19
50,000
19
19
100 ,000 *
13
13
13
15
13
13
15
16
17
17
15,000
20,000
25,000
10,000
15,000
25,000
30,000
15,000
15,000
10,000
60,000
990,000
2,045,000 27,428,000
24,000
165,000
292,000 3,752,000
170,000 2,714,000
183,000 2,641,000
330,000 4,960,000
659,000 17,088,000
9,000
397,000
211,000 2,620,000
15,000
851,000
5,000
200,000
60,000
398,000
48,000 1,139,000
30,000
885,000
493,000 7,530,000
171,000 2,398,000
29,000
915,000
212,000 3,292,000
128,000 1,852,000
20,000
213,000
8,000
12,000
6,000
7,000
10,000
8,000
11,000
-
-
5,000
6,000
212,000
•247,000
201,000
74,000
150,000
185,000
315,000
41,000
45,000
80,000
65
X-3962
- 2 -
MA i,«, .1.1. i j.
Member "tonka i n d i c a t e d W aft #i
Name of Bank
rro
closed
City
Capital
Surplus
& profits
D i s t r i c t No. 10
Peoples S t a t e Bank
Meriden,
Kans. June 12
15,000
6,000
D i s t r i c t No. 12
Clearwater Valley
S t a t e Bank
Karniah
Ida.
25,000
12,000
June 19
BBOEBNED:
D i s t r i c t No. 8
• F i r s t National Bank
Holly Grove,Ark. 1 - 9-31
25,000
5,000
(restored, t o solvency and reopened f o r "business)
• F i r s t National Bank
Eureka Springs,
Ark.
12-16-30
50,000
12,000
( r e s t o r e d t o solvency and s o l d t o F i r s t S t a t e Bank, nonmember).
Total
deposits
62,000
202,000
Date
opened
6—16—31
6-16-31
I
66
X-3962
BANKS BEPOBTED CLOSED V/EEK ENDED JUNE 26, 1931
(For c o n f i d e n t i a l u s e only - s u b j e c t t o c o r r e c t i o n )
Member "banks I n d i c a t e d "by an a s t e r i s k ( • ) .
Name of lank,
City
State
Date
closed
Capital
Surplus
& profits
Total 1
deposits 1
D i s t r i c t No. 2
• F i r s t National Bank
Mechanicville N. Y. June 20
50,000
91,000
1,580,000
D i s t r i c t No* 4
Com*! Bank & Svgs. Co.
LaFayette Banking Co.
Cop*! Savings Bank
Bluffton
Lafayette
Bawson
Ohio
M
II
June 24
n
24
it
24
60,000
10,000
25,000
22,000
1,000
2,000
1,317,009
140,OOf)
165,OOf)
N. C.
ii
it
S. C.
W.Va.
N. C.
June'
it
tt
it
II
it
22
22
22
22
23
25
30,000
50,000
10,000
100,000
25,000
150,000
12,000
46,000
20,000
25,000
23,000
331,000
442,0$
50,000
524,000
303,000
993,000
D i s t r i c t No. 7
F i r s t S t a t e Bank
• F i r s t National Bank
Belding Savings Bank
Glencoe S t a t e Bank
• F i r s t National Bank
Bank of Grayling
Metropolitan Trust Co.
• F i r s t National Bank
• F i r s t N a t i o n a l Bank
Farmers Bank
•Farmington S t a t e Svgs.Bk
Denmark Savings Bank
Gary
Ind.
Watseka
111.
Belding
Mich.
Glencoe
111.
Blissfield
Mch.
ii
Grayling
n
Detroit
M b r r i s o n v i l l e 111.
Dear "bom
Mich.
Wis.
Viroq.ua
Farmington
Mich.
Denmark
Iowa
June
t«
tt
it
it
it
it
it
it
it
it
it
20
22
22
23
24
24
16.
25
25
25
26
26
75,000
50,000
50,000
125,000
60,000
2,000
500,000
50,000,
150,000
50,000
40,000
10,000
23,000
27,000
29,000
105,000
23,000
45,000
312,000
7,000
36,000
15,000
39,000
11,000
625,000
341,000
602.00C
1,240,0QC
721,0(|C
358,04c
3,058,0QC
296,Ode
900,0(5C
600,0#
1,115,ode
108,ooc
D i s t r i c t No. 8
• F i r s t National Bank
Bank of Weaubleau
Bank of Lirbourn
ChSllicothe
Weaubleau
Lilbourn
June 22
it
17
H 17
100,000
10,000
20,000
26,000
21,000
27,000
937,oqc
122,OOC
133,00%
Mont. June 19
23
N.pak. it
ii
26
Minn.
20,000
25,000
25,000
17,000
14,000
15,000
112,OOC
474,OOC
601,OOC
D i s t r i c t No. 5
Clinton
Bank of Sampson
it
Bank of C l i n t o n
Summerfield
Bank of Summer f i e Id
Saluda
• P l a n t e r s National Bank
Kingwood
•Kingwood N a t i o n a l Bank
•Peoples National Bank, Winston-Salem
D i s t r i c t No. 9
Westby
Farmers S t a t e Bank
•Bottineau National Bank Bottineau
Glencoe
Peoples S t a t e Bank
Mo.
M
II
-
-
67
- 2 -
X-3962
BANKS BSPORTED CLOSED V/EEK ENDED JUNE 26, 1931.
Member "banks I n d i c a t e d "by an a s t e r i s k ( • ) .
Name of Bank
D i s t r i c t No. 10
Andrew County Bank
Farmers S t a t e Bank
Coyville S t a t e Bank
City
Savannah
Conception
Junction
Coyville
State
Capital
Mo.
June 20
20,000
10,000
285,000
lb.
Kans.
"
22
May 27
10,000
10,000
4,000
12,000
60,000
82,000
120,000
31,000
1,149,000
D i s t r i c t No. 11
Arizona Southwest Bank Tucson
A r i z . June 22
"branches a t : Douglas, Coolidge and Casa Grande.
Bank of Matagorda
Matagorda
Texas June 23
- -
Surplus
& profits
- -
BEOEENEDt
D i s t r i c t No. 11
("Citizens N a t i o n a l Bank
Blooming
Grove
Texas 5-22-31
50,000
20,000
(turned back t o d i r e c t o r s and s o l d to F i r s t National Bank i n - )
Total r
deposits
Date
closed
150,000
Date
opened
6-18-31
68
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD
X-6788
January 2, 1931i
SUBJECT:
S t a t e Member Banks Hot Examined During 1930*
Dear S i r :
You a r e requested to f u r n i s h the Board, a t your
. e a r l y convenience, with a l i s t of S t a t e member banks i n
your d i s t r i c t v/hich were not examined e i t h e r "by S t a t e
a u t h o r i t i e s or your own examiners during 1930.
I t i s a l s o requested t h a t you advise what s t e p s
a r e contemplated by you to secure a prompt and s a t i s f a c t o r y examination of any bank reported^
Very t r u l y yours,
E. M. McClelland,
Assistant Secretary.
TO ALL FEDERAL RESERVE AGENTS;
(Except Boston)
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X~6789
January 6, 1931.
SUBJECT:
E x p i r a t i o n of Charters of S t a t e Member Banks.
Pear S i r :
A number of i n s t a n c e s have come t o the Board's a t t e n t i o n i n which the c h a r t e r s of S t a t e member hanks have
e x p i r e d and they have continued to t r a n s a c t "business without
o b t a i n i n g new c h a r t e r s or extending t h e i r c o r p o r a t e e x i s t e n c e
or have t r a n s f e r r e d t h e i r b u s i n e s s to new banks organized f o r
the purpose of succeeding them and the Federal r e s e r v e bank
has not discovered these f a c t s u n t i l some time a f t e r such
t r a n s a c t i o n s have taken p l a c e . In order to prevent- l e g a l
i r r e g u l a r i t i e s and p o s s i b l e l e g a l d i f f i c u l t i e s a r i s i n g from
such s i t u a t i o n s , i t i s suggested t h a t the Federal r e s e r v e •
banks m a i n t a i n a r e c o r d showing the d a t e s upon which the
c h a r t e r s of a l l S t a t e member banks w i l l expire and devise so/ne
means whereby the s i t u a t i o n w i l l be c a l l e d to the a t t e n t i o n of
the o f f i c e r s of the Federal r e s e r v e banks s i x months i n advance of such d a t e s . Upon being advised t h a t the c h a r t e r of
a S t a t e member bank i s about to e x p i r e , i t wolild a l s o seem
a d v i s a b l e f o r the Federal r e s e r v e bank to communicate with
such S t a t e member bank and a s c e r t a i n what s t e p s i t proposes t o .
take with r e f e r e n c e to the s i t u a t i o n .
I f the S t a t e laws a u t h o r i z e the renewal of the b a r k ' s
c h a r t e r , or the extension of i t s corporate e x i s t e n c e , i t w i l l
not be necessary f o r the Federal r e s e r v e bank to take any s t e p s
except to r e q u e s t t h a t i t be f u r n i s h e d with copies of the documents necessary to show t h a t the c h a r t e r has been renewed or
t h a t the c o r p o r a t e e x i s t e n c e has been extended.
I f , however, the S t a t e law c o n t a i n s no p r o v i s i o n f o r
the renewal of c h a r t e r s of S t a t e banks o r the e x t e n s i o n of t h e i r
c o r p o r a t e e x i s t e n c e , or i f f o r any other reason i t i s planned
to organize a new bank t o tAce over the t u s i h e s s of the bank
whose c h a r t e r i s about to e x p i r e , i t would seem a d v i s a b l e f o r
the Federal r e s e r v e bank to s u g g e s t t h a t a p p l i c a t i o n f o r membership be made on behalf of the new bank s u f f i c i e n t l y i n advance
of the date of the e x p i r a t i o n of the c h a r t e r of the o l d bank to
X-6789
~3"
enable the new "bank to become a member of the Federal Reserve
System simultaneously with I t s o r g a n i z a t i o n . This, of course,
may "be done by having an a p p l i c a t i o n f o r membership made upon
behalf of the new bank by i t s o r g a n i z e r s and by submitting i t
to t h e Federal Reserve Board with a recommendation t h a t i t be
approved e f f e c t i v e i f and when the new hank i s organized and
i t s d i r e c t o r s r a t i f y the a p p l i c a t i o n f o r membership made i n
i t s behalf and accept the conditions of membership p r e s c r i b e d
by t h e Federal Reserve Board.
, If the c o n d i t i o n of the o l d bank i s u n s a t i s f a c t o r y ,
the Federal r e s e r v e bank could suggest i n advance such a d justments a s would be necessary to make i t s successor a
d e s i r a b l e member. If the new bank does not d e s i r e to be a
member, or i f the Federal r e s e r v e bank i s u n w i l l i n g to have
i t a s a member, s t e p s should be taken to have any indebtedness
of t h e o l d bank t o the Federal reserve bank r e t i r e d before the
e x p i r a t i o n of i t s c h a r t e r .
By Order of the Federal Reserve Board.
Very t r u l y yours,
E. M. McClelland,
Assistant Secretary.
TO GOVERNORS AND CHAIRMEN OF ALL FEDERAL RESERVE BANKS.
X-6790
FEDERAL
S i SB E H
BOARS
STATEMENT FOB THE PRESS
r e l e a s e a t 3;00 P.M.
- January 7, 1931
The Federal Reserve Board announces t h a t the Federal
?rve Bank of S t . Louis has e s t a b l i s h e d a rediscount r a t e of
n a l l c l a s s e s of paper of a l l m a t u r i t i e s , e f f e c t i v e January
931.
/
X-6792
;
ZiSSRAIt
BBSBRVB
BOARD
STATEMENT FOR THE PRESS
hfor r e l e a s e a t 6:00 P.M.
January 8, 1931.
The Federal Resferve Board announces. t h a t the Fede r a l Reserve Bank of Stin Francisco has e s t a b l i s h e d a r e d i s count r a t e of 3$ on a l l c l a s s e s of paper of a l l m a t u r i t i e s ,
e f f e c t i v e January d, 19&1.
X-6793
1S £ ! 1 4 £
I I S
EEVE
BOARD
STATEMENT FOR THE PRESS
For r e l e a s e a t 4 : 0 0 p.m.
January 9, 1931.
The Federal Reserve Board announces t h a t the Fede r a l Reserve Bank of A t l a n t a has e s t a b l i s h e d a rediscount
r a t e of 3$ on a l l classed of pager of a l l m a t u r i t i e s ,
e f f e c t i v e January 10j 19314
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6794
January 9, 1931,
SUBJECT:
O f f i c e r s and Employees of Federal Reserve
Banks Authorized to Examine Member Banks.
Dear S i r :
Under the p r o v i s i o n s of the Federal Reserve Act the Federal Reserve Board i s r e q u i r e d to a p prove the d e s i g n a t i o n of examiners a t Federal r e s e r v e
"banks. Accordingly, i n order t h a t the Board may a g a i n
make a check of i t s r e c o r d s , i t would he a p p r e c i a t e d i f
you would a d v i s e the names of those now i n the employ
of your bank who have been designated a s examiners, as
v:ell as the names of a l l o f f i c e r s and employees who
have been designated a s s p e c i a l or a s s i s t a n t examiners,
or who a r e a u t h o r i z e d t o make or a s s i s t i n the making
of examinations or c r e d i t i n v e s t i g a t i o n s of member
banks.
Very t r u l y yours,
E. M. McClelland,
Assistant Secretary.
TO ALL F. R. AGEETS EXCEPT ATLA1JTA AND SAB IBA1TCISC0.
I:' 75
X-6795
I I
D E B A It
B E SB EVE
B 0 A ED
STATSl£Ei7T SOB THE PBESS
For r e l e a s e a t 3:00 p.m.
January 9, 1931.
The Federal Be serve Board, announces t h a t the Fede r a l Beserve Bank of Chicago has e s t a b l i s h e d a rediscount
r a t e of 3$ on a l l c l a s s e s of paper of a l l m a t u r i t i e s , e f f e c t i v e
January 10, 1931.
#
(
5 0 P Y
X-6,796
J a n . 8, 1931.
10
Federal Reserve Board
SfiOM Mr. Wyatt- General Counsel.
SUBJECT
L e g i s l a t i o n t o "be recom-
mended i n Annual Report.
I t i s customary f o r t h e Board each year to recommend i n i t s
annual r e p o r t such amendments to the Federal Reserve Act and r e l a t e d
s t a t u t e s as the Board may deem necessary or a d v i s a b l e . The
rep o r t i s now "being p r e p a r e d ; but the Board has not y e t readied any d e c i s i o n as t o what l e g i s l a t i o n , i f any, i t d e s i r e s to recommend.
Of course, the chances a r e not very f a v o r a b l e f o r the enactment
of new l e g i s l a t i o n a t t h i s s e s s i o n of Congress. , The long s e s s i o n of the
next Congress, however, w i l l commence two or t h r e e months b e f o r e the
Board's next Annual Report would o r d i n a r i l y be submitted; and i t might
be h e l p f u l t o recommend i n the 1930 Report such l e g i s l a t i o n as the Board
would l i k e t o have i n t r o d u c e d a t the beginning of the next s e s s i o n .
In order to a s s i s t the Board i n considering t h i s q u e s t i o n , I
r e s p e c t f u l l y submit below a summary of the various proposed amendments
to the Federal Reserve Act and r e l a t e d s t a t u t e s which the Board has cons i d e r e d w i t h i n the l a s t two y e a r s . . At the end of the memorandum there
are a l s o mentioned c e r t a i n other amendments which the Board might d e s i r e
to consider a t t h i s time. There a r e a t t a c h e d f o r t h e Board's f u r t h e r
i n f o r m a t i o n : (1) A summary of a l l amendments to t h e National Bank Act
designed to prevent bank f a i l u r e s which were recommended t y the Comptroller
of the Currency i n h i s Annual Reports f o r the y e a r s 1863 to 1930, i n c l u s i v e , b u t which were n o t enacted by Congress; and (2) Excerpts from the
Annual Report of t h e Superintendent of Banks f o r t h e S t a t e of Hew York
f o r the year 1930 recommending amendments t o the New York Banking Law
f o r the same purpose.
AMB8PMBETS mmwrnTPfm-e RECOMMENDED BUT HOT ENACTED.
An amendment t o Section 4 of the Federaj Reserve Act t o p e r m i t
an Officer,, d i r e c t o r or employee of a mutual saving* haxib- tri s e r v e a s
a Class B d i r e c t o r of a Federal r e s e r v e b^»vT - This amendment was
recommended to Congress by the Board i n i t s Annual Reports f o r t h e
years 1927, 1928 and 1929, and i n l e t t e r s addressed t o t h e Chairmen
of the Banking and Currency Committees of t h e Senate and House under
date of February 18, 1930. Accordingly, i n the 2nd Session of t h e 71st
Congress, Senator Brookhart on A p r i l 2, 1930, introduced a b i l l
(S. 4079) containing t h i s amendment, This hi 11 was passed by the
Senate on A p r i l 14, 1930, and although i t was r e p o r t e d out by the
House Banking and Currency Committee on May 26, 1930, i t has n o t y e t
been p a s s e d by the House.
An amendment t o Section 9 of the Federal Reserve Act a u t h o r i z i n g
the Federal Reserve Board t o r e q u i r e a S t a t e member 'hank to s u r r e n d e r i t s
76
•i
.
- 3 -
I'
?
X-6796
Federal r e s e r v e bank s t o c k and t o f o r f e i t i t s membership whenever such
hank has f a i l e d t o comply.with the a p p l i c a b l e p r o v i s i o n s of the hanking laws of t h e S t a t e i n %
I t i s l o c a t e d . - W i s amendment was
recommended t o Congress by the Board i n i t s Annual Report f o r t h e year
1929, "but no b i l l conforming to the Board f s recommendation was i n t r o duced i n e i t h e r t h e Senate or t$te House. l e t t e r s t o the Chairmen of
the Banking and Currency Commi t t e e s of both this Senate and House r e con**.
ng such an amendment and t r a n s m i t t i n g d r a f t s of a b i l l f o r t h i s
purpose were p r e p a r e d by t h i s off i d e and submitted t o the Board on Febr u a r y 10, 1930, but such l e t t e r s were never s e n t because i t was f e a r e d
t h a t they would cause confusion with r e s p e c t to a d i f f e r e n t b i l l a l ready pending.
An amendment to Section 9 of the Federal Reserve Act t o
permit S t a t e member banks t o e s t a b l i s h f o r e i g n b r a n c h e s . - This
amAndment was recommended ; to Congress'by the Board i n i t s Annual '
Reports f o r the y e a r s 1927, 1928 and 1929, and i n l e t t e r s ad dressed to the Chairmen Of the Senate and House Banking and Currency Committees during 1929. I n the 1 s t Session of the 71st Con —
g r e s s , Senator ftorbeck introduced a b i l l (S. 1070) alofig the l i n e
of the amendment proposed by the Board; but t h i s b i l l was never r e p o r t e d out by the Senate Banking and Currency Committee, and no
s i m i l a r b i l l was i n t r o d u c e d i n the House during t h a t s e s s i o n . I n
the second s e s s i o n of t h i s Congress, Senator Horbeck introduced
on December 11, 1929, another b i l l (S. 2%6) conforming t o the
B o a r d ' s recommendations; and t h i s b i l l was passed by the Senate on
A p r i l 14, 1930. On j ^ r i l 16, 1930, i t was p r e s e n t e d t o the House
.
and r e f e r r e d by t h a t body t o i t s Banking' and Currency Committee. S . 2605
has n o t yet been r e p o r t e d out by the Banking and Currency Comnittee of
the House, and no s i m i l a r b i l l has been introduced i n t h e House.
An amendment t o Section 13 of the Federal Reserve Act iDecreasing from 15 t o 90 day# the maximum maturi t y of advances made by
I n d e r a l r e s e r v e banks t o member batiks on t h e i r promissory notes secured
by paper e l i g i b l e f o r rediscount or f o r purchase by Federal r e s e r v e banks.
An amendment of t h i s k i n d has been recommended t ° Congress by the Board
i n i t s Annual Reports f o r t h e years 1927, 1928 and 1929, and i n l e t t e r s
addressed to Congress under dates of January 16, 1926, A p r i l 24, 1928,
and March 6, 1930. On January 18, 1926, Mr. McFaddett, i n the 1 s t Session
of t h e 69th Congress, introduced a b i l l (H.R. 7894) conforming to the
Board's views b u t no s i m i l a r b i l l was introduced i n the Senate d u r i n g
t h a t Congress. I n the 70th Congress, 1 s t Session, Mr. Sumners of Texas
i n t r o d u c e d on March 23, 1928, a s i m i l a r b i l l (H.R. 12349) i n the House;
and i n the 2nd Session of t h i s Congress, Mr. Baird on A p r i l 8, 1930, and
Mr. McFadden on May 1 , 1930, a l s o i n t r o d u c e d b i l l s of t h i s k i n d i n the
Senate and House r e s p e c t i v e l y (S. 4139 and H. R« 12068). Hone of the
b i l l s above r e f e r r e d t o has ever been r e p o r t e d o u t .
- 3 -
X-6796 "
An amendment t o Section 22 of the Federal Reserve Act tflfiklng the
robbery or b u r g l a r y of any Federal r e s e r v e beak or member bank a f e d e r a l
o f f e n s e punishable through the f e d e r a l c o u r t s - An amendment of t h i s
kind was i n c o r p o r a t e d i n the e a r l i e r d r a f t s of t h e McFadden B i l l whidh
l a t e r became known as the Act of February 25, 1927; and d r a f t s of t h a t
b i l l c o n t a i n i n g such p r o v i s i o n s were favorably r e p o r t e d by the Banking
and Currency Committees of both the Senate and House of R e p r e s e n t a t i v e s .
These d r a f t s of the b i l l , however, f a i l e d of enactment; and, when the
b i l l vras r e i n t r o d u c e d a t t h e next Congress, t h i s amendment was omitted*
The amendment, however, was recommended t o Congress by the Board
. i n i t s Annual Report f o r the year 1929, and i n l e t t e r s addressed t o
the Chairmen of the Banking and Currency Committees of the Senate and
House under date of February 12, 1930. Following the Board's r e com mendations, b i l l s were introduced under dates of February 19 and A p r i l
4, 1930, by Congressman Hooper and Senator Walcott during the 2nd Sess i o n of the 71st Congress i n the House and Senate r e s p e c t i v e l y . These
b i l l s , however, have never been r e p o r t e d out by e i t h e r the House or
Senate Banking and Currency Committees.
An amendment to Section 22 of the Federal Reserve Act to
make i t a crime t o c i r c u l a t e f a l s e statements about or to black, l i s t
a member b a n k . ~ T h e r e were contained i n c e r t a i n e a r l y d r a f t s of
the McFadden B i l l , which l a t e r became known as the Act of February
25, 1927, amendments t o the law to make punishable c o n s p i r a c i e s to
boycott or black l i s t or to cause a general withdrawal of d e p o s i t s
from a member bank. These p r o v i s i o n s , however, did not become l a n
although the Federal Reserve Board approved a d r a f t of the b i l l cont a i n i n g such p r o v i s i o n s . During t h e e a r l y p a r t of 1930, a number
of b i l l s rrere i n t r o d u c e d i n the House the g e n e r a l purpose of which
was t o amend the law along the l i n e s s t a t e d above, and, i n r e sponse t o a request f a r an expression of the views of the Board
with r e f e r e n c e to H. R. 10560, a b i l l on t h i s s u b j e c t introduced
by Mr. Brand i n the 2nd Session of the 71st Congress, the
Board under date of March 27, 1930, addressed a l e t t e r to Con - '
g r e s s s t a t i n g the enactment of the b i l l would be b e n e f i c i a l to
member banks and t o t h e i r d e p o s i t o r s and s t o c k h o l d e r s . This
b i l l vras r e p o r t e d out by the House Banking and Currency Committee
on A p r i l 24, 1930, b u t i t did not p a s s the House; and no s i m i l a r
b i l l -,?as i n t r o d u c e d i n the Senate.
Ah amendment to Section 22(a) of t h e Federal Reserve Act making
i t c l e a r t h a t the p r o h i b i t i o n a g a i n s t examiners a c c e p t i n g loans and
g r a t u i t i e s from member "banks a p p l i e s t o S t a t e examiners. - This amendment was recommended t o Congress by the Board i n i t s Annual Report f o r
the year 1929, and i n l e t t e r s addressed to the Chairmen of the Banking
and Currency Committees of the Senate and House under date of February
10, 1930. I n the 2nd Session of the 71st Congress, Senator Horbeck on
February 12, 1930, and Mr. S e i b e r l i n g on February 19, 1930, i n t r o d u c e d
- 4 -
X-6796
b i l l s conforming t o the Board's recommendations i n the Senate and
House, r e s p e c t i v e l y (S. 3541 and H. B. 10070)« S« 3541 was passed
by the Senate on A p r i l 14th, and was p r e s e n t e d to t h e House and r e f e r r e d "by t h i s "body t o i t s Banking and Currency Committee; but
n e i t h e r t h i s b i l l nor H. B. 10070 have been r e p o r t e d out by the House
Banking and Currency Committee.
An amendment exempting Federal r e s e r v e banks from attachment
or garnishment proceedings b e f o r e f i n a l judgment i n any case or--proceeding. - The enactment of an amendment of t h i s c h a r a c t e r was recommended to Congress by the Board i n i t s A$mual Beports f o r the y e a r s
1927, 1928 and 1929, and i n l e t t e r s addressed to the Chairmen of the
Banking and Qirrency Committees of the Senate and House under d a t e of
February 14, 1929. Accordingly, i n the 2nd Session of the 71st Congress,
Mr. Fenn on February 18, 1930, and Mr. Norbeck on February 19, 1930,
introduced b i l l s conforming t o t h e Board's recommendations i n the
House and Senate, r e s p e c t i v e l y ; but these b i l l s were never r e p o r t e d
out.
An amendment t o the J u d i c i a l Code r e s t o r i n g t o the United
S t a t e s D i s t r i c t Court - j u r i s d i c t i o n of s u i t s by apd against Federal
r e s e r v e banks. - The Board has recommended the enactment of an
amendment of t h i s k i n d i n i t s Annual Beports f o r ttiie years 1927,
1928 and 1929, b u t no b i l l s covering t h i s s u b j e c t have ever been
i n t r o d u c e d i n Congress.
AMSDWmS cmSTTT%PTfp BY FSDEBAL B3SERVS BQABP
BUT HOT BZCOLMEZmZD TO COmBSSS.
*
Aiaeridments p r o v i d i n g f o r a more e q u i t a b l e d i s t r i b u t i o n t o
member banks of e a r n i n g s of Federal r e s e r v e banks. - During the y e a r s
1929 and 1930, a number of b i l l s were introduced i n Congress p r o v i d i n g
f o r a l a r g e r d i s t r i b u t i o n of t h e earnings of Federal r e s e r v e banks
among member banks, and the Board has gone on record i n i t s Annual Bep o r t f o r the year 1929 as saying t h a t such proposals a r e s u b j e c t s "which
i n the judgment of the Federal Be serve Board might w e l l have the cons i d e r a t i o n of Congress i n connection with any l e g i s l a t i o n a f f e c t i n g
the s t a t u s of member banks of the Federal Beserve System; b u t the problem
involves c e r t a i n p r a c t i c a l d i f f i c u l t i e s , and the Board d e s i r e s t o study
the s u b j e c t f u r t h e r b e f o r e recommending any S p e c i f i c amendment f o r t h i s
purpose."
On March 13, 1930, i n response to a r e q u e s t f o r a r e p o r t of
the Treasury Department on S. 3564, a b i l l introduced i n the 2nd Session
of the 71st Congress t o amend Section 7 of the Federal Beserve Act, the
S e c r e t a r y of the Treasury addressed a l e t t e r t o Senator Uorbeck s t a t i n g
t h a t he had c o n f e r r e d with the Federal Beserve Board regarding t h i s
b i l l and t h a t t h e Board disapproved of i t s adoption. I t was s t a t e d t h a t
|f 80
- 5 -
X-6796
"The Federal Reserve Board favors a change i n the e x i s t i n g law which
would accord to member banks a somewhat l a r g e r percentage of the e a r n ings of Federal r e s e r v e banks # a n they a r e Sow r e c e i v i n g , but the Board
b e l i e v e s t h a t the p l a n of d i s t r i b u t i o n proposed i n t h i s b i l l should not
be adopted". The B o a r d ' s o b j e c t i o n to t h i s p a r t i c u l a r b i l l was lodged
a g a i n s t the p r o v i s i o n t h a t , a f t e r the payment of t h e 6$ dividend to member
banks and the c r e a t i o n of the 100$ surplus fund, 10$ of t h e n e t earnings
s h a l l then be p a i d i n t o s u r p l u s , and the remainder, or 90$ of such n e t
e a r n i n g s , which under the p r e s e n t law a r e p a i d to the United S t a t e s as a
f r a n c h i s e t a x , would be d i s t r i b u t e d to the member banks on a p r o r a t a b a s i s .
As s t a t e d above, the Board has expressed t h e opinion t h a t member
banks should have a g r e a t e r share i n the excess earnings of Federal reserve
banks, and the Federal Advisory Council and the December, 1929, Conferences of Federal Reserve Agents and Governors have a l s o taken t h i s p o s i t i o n .
An amendment to Section 9 of the Federal Reserve Act and Section
5240 of the Revised S t a t u t e s regarding examinations of member banks. This amendment p r o v i d e d , among o t h e r thingis, t h a t a l l examinations of
member banks should be under the j u r i s d i c t i o n of the Comptroller of the
Currency, and t h a t the expenses of such examinations should be p a i d by
the Federal Reserve Board out of the proceeds of assessments l e v i e d
a g a i n s t the Federal r e s e r v e banks, i n s t e a d of being p a i d by the banks
examined.
This amendment was prepared a t the request of Governor Young
and vras submitted f o r t h e c o n s i d e r a t i o n of the December, 1929, Conferences
of Federal Reserve Agents and Governors, which recommended t h a t the Board
d e c l i n e t o give i t s approval to t h i s proposed measure. On February 6,
1930, the Board voted not t o recommend the enactment of such an amendment.
An amendment t o the f i r s t paragraph of Section 19 of the Federal
Reserve Act more c l e a r l y d e f i n i n g demand d e p o s i t s , time d e p o s i t s , savings
d e p o s i t s , e t c . , and making i t more d i f f i c u l t t o 6vade the proper c l a s s i f i c a t i o n of d e p o s i t s f o r the purpose of computing r e s e r v e s .
An amendment t o Section 19 of the Federal Reserve Act a u t h o r i z e
ing member banks i n computing t h e i r r e s e r v e s t o deduct "balances due from
banks" from t h e i r gross demand d e p o s i t s i n s t e a d of from "balances due to
o t h e r banks".
An amendment completely r e v i s i n g Section 19 of the Federal Reserve Act so as to a d j u s t , c l a r i f y and s i m p l i f y the r e s e r v e requirements•
The Agents' and Governors' Conferences of December, 1929, recommended t h a t the above t h r e e proposals be submitted t o a s p e c i a l commi t t e e
f o r s t u d y and recommendation, and the Board on February 6, 1930, voted to
take no a c t i o n on t h e s e proposals i n view of the f a c t t h a t t h i s s p e c i a l
committee had been a p p o i n t e d .
- 6 -
X-6796
Amendment t o the Bankruptcy Act providing t h a t funds i n the
Custody of the f e d e r a l courts s h a l l be deposited with member "banks. «.
The December, 1929, Conference of Federal Reserve Bank Governors approved
of an amendment of t h i s k i n d send on January 6, 1930* i n the 2nd Session
of the 71st Congress, Senator Walsh introduced a b i l l (S. 2950) p r o v i d i n g
t h a t member banks may be designated d e p o s i t a r i e s of bankruptcy f u n d s .
The Board has not s p e c i f i c a l l y recommended t h a t an amendment of t h i s kind
be e n a c t e d , but a t I t s meeting of February 6, 1930, the law Committee
was a u t h o r i z e d t o conduct such n e g o t i a t i o n s as might be necessary to have
Senator Walsh's b i l l , S. 2950, so amended as to provide t h a t bankruptcy
funds " s h a l l " be d e p o s i t e d i n member banks i n s t e a d of "may" be s o d e p o s i t e d ; and on February 17, 1930, Mr. Hamlin, a c t i n g f o r the Law Committee,
addressed a l e t t e r to Senator Walsh suggesting t h a t the wording of h i s
b i l l be changed so as to accomplish t h i s r e s u l t . The b i l l was never r e p o r t e d out by the Senate Banking and Currency Committee and no s i m i l a r b i l l
was introduced i n the House.
Amendment to t h e National Bank Act l i m i t i n g the amount of i n vestment by a n a t i o n a l bank i n bank b u i l d i n g and f i x t u r e s . - The December,
1929, Conference of Federal Reserve Agents recommended t h i s amendment, and
on February 6, 1930, the Board voted t o r e f e r t h i s proposal to the
Comptroller of the Currency.
.
Amendment r e q u i r i n g the approval of the Federal Reserve Board
b e f o r e c h a r t e r s a r e g r a n t e d to new n a t i o n a l banks r - An amendment of
t h i s k i n d was recommended by recent Conferences of Federal Reserve Agents,
but the Board voted on February 6, 1930, not to recommend the enactment of
such an amendment.
REDISCOUNT OF NOIES REPRESENTING DIRECT LOAMS BY FEDERAL
IMBRMEDIATB CRJSDIT BAUKS TO .. LIVES TOCK LOASJ COMPANIES.
On J u l y 5 Governor Calkins of the Federal Reserve Bank of San
Francisco i n q u i r e d by telegram whether a note with a m a t u r i t y not i n
excess of nine months which i s given t o a Federal i n t e r m e d i a t e c r e d i t bank
by a l i v e s t o c k loan company or an a g r i c u l t u r a l c r e d i t c o r p o r a t i o n secured
by a g r i c u l t u r a l p a p e r i n accordance with tbo terms of the amendment of June
26, 1950, to the Federal Farm Loan Act i s e l i g i b l e f o r rediscount a t a Fede r a l r e s e r v e bank. On J u l y 9 t h i s o f f i c e advised the Board t h a t such n o t e s
are not e l i g i b l e f o r rediscount i f the proceeds a r e used by the l i v e s t o c k
loan company or a g r i c u l t u r a l c r e d i t corporation f o r the -purpose of making
advances or loans to o t h e r borrowers, b u t t h a t they a r e e l i g i b l e i f the proceeds a r e used by the a g r i c u l t u r a l , c r e d i t c o r p o r a t i o n or l i v e s t o c k loan
company i n the f i r s t i n s t a n c e f o r an a g r i c u l t u r a l or commercial purpose.
The Board has not y e t r u l e d on t h i s question, and I understand t h a t
some members of the Board a r e r e l u c t a n t to adopt the r u l i n g p r e p a r e d by
t h i s o f f i c e . I t has occurred to me, t h e r e f o r e , t h a t the Board might
d e s i r e t o recommend t h a t Congress amend the law so as t o make such
notes c l e a r l y e l i g i b l e for rediscount.
SEPEA1 OP EDGE ACT,
I t has been suggested a number of times t h a t i t might be a d v i s a b l e f o r the Board to re commend t h a t Congress r e p e a l s e c t i on 25(a)
of the Federal Reserve Act, commonly known as the Edge Act, which p r o vides f o r the o r g a n i z a t i o n under Federal c h a r t e r s of corporations to
engage i n i n t e r n a t i o n a l and f o r e i g n banking and f o r the examination and
s u p e r v i s i o n of such corporations by the Federal Reserve Board. Only a
few such corporations have been organized; none of them have been v e r y
s u c c e s s f u l ; and a t p r e s e n t there a r e only two such corporations engaged
i n b u s i n e s s and one o t h e r which has been g r a n t e d a p r e l i m i n a r y p e r m i t
to t r a n s a c t such b u s i n e s s as may be i n c i d e n t a l to i t s o r g a n i z a t i o n b u t
which has not y e t p a i d i n i t s c a p i t a l and obtained a f i n a l permit to
t r a n s a c t b u s i n e s s . This would i n d i c a t e t h a t the Edge Act i s not p r o ductive of ranch good. On the o t h e r hand, the Board r e c e i v e s numerous
i n q u i r i e s regarding the o r g a n i z a t i o n of such c o r p o r a t i o n s and occasional
a p p l i c a t i o n s f o r p e r m i t s to organize such c o r p o r a t i o n s which i n d i c a t e
t h a t the Edge Act o f f e r s a constant temptation to promoters t o organize
such c o r p o r a t i o n s s o l e l y f o r the purpose of s e l l i n g s t o c k t h e r e i n with
the added advantage of being able to a d v e r t i s e t h a t such c o r p o r a t i o n s
a r e organized under Federal law and are under the supervision of the
Federal Reserve Board. I n view of a l l these circumstances, i t might be
a d v i s a b l e f o r the Board to consider a t t h i s time whether i t should
recommend t o Congress t h a t the Edge Act be r e p e a l e d .
POWER TO REMOTE DIRECTORS AND OFFICERS
OF BAKES. ,
'
While no formal recommendation t o t h a t e f f e c t was made, i t was
suggested during the l a s t meeting of the Federal Advisory Council t h a t i t
would enable the Comptroller of the Currency more e f f e c t i v e l y t o take s t e p s
to p r e v e n t bank f a i l u r e s i f he were authorized to remove from o f f i c e
d i r e c t o r s and o f f i c e r s of n a t i o n a l banks which a r e v i o l a t i n g the
banking laws, engaging i n unsound c r e d i t p r a c t i c e s , or otherwise manageing t h e i r banks i n a manner l i k e l y to l e a d to d i s a s t e r . , Such an amendment
was recommended by the Comptroller of the Currency i n h i s Annual Reports
f o r the year 1895 and f o r the years 1914 to 1921, i n c l u s i v e . A s i m i l a r
amendment t o the New York Banking Law was r e c e n t l y recommended by the
Superintendent of Banks of the S t a t e of Hew York i n h i s Annual Report f o r
the year ending December 31, 1930, page 13.
I t i s p o s s i b l e t h a t Congress would not be w i l l i n g to g r a n t such
d r a s t i c power to a s i n g l e Government o f f i c e r ; but i t might be w i l l i n g t o
a u t h o r i z e the Federal Reserve Board to e x e r c i s e such power upon the recommendation of the Comptroller of the Currency. The Board, t h e r e f o r e , may
d e s i r e to consider the a d v i s a b i l i t y of recommending t o Congress an amendment e i t h e r t o the National Bank Act or to the .Federal Reserve Act, g r a n t ing e i t h e r to the Comptroller of the Currency or the Federal Reserve Board,
the power t o remove o f f i c e r s and d i r e c t o r s of n a t i o n a l banks, and p o s s i b l y
of S t a t e member banks, under the circumstances o u t l i n e d above.
- 8 -
X-6796
f
8 3
OTHER POSSIBLE AifflHPMSEfTS EES I SITED TO PKEV53TT1 BASK FAILURES.
•
"
"
'
-Sv'
.
.
. • f
,
The Board, might a l s o d e s i r e to consider what other amendments to
t h e "banking laws could be recommended with a view of p r e v e n t i n g bank f a i l u r e s .
To a s s i s t the Board i n considering t h i s question, I r e s p e c t f u l l y submit
herewith: (1) A summary of a l l recommendations f o r l e g i s l a t i o n of t h i s
c h a r a c t e r made by the Comptroller of the Currency i n h i s jtitoual Reports
from the year 1863 up to and i n c l u d i n g the year 1930; and (2) c e r t a i n
e x c e r p t s from the Annual Report of the Superintendent of Banks of the
S t a t e of New York f o r the year ending December 31, 1930, recommending
amendments to the New York Banking Law.
Respectfully,
Walter Wyatt,
General Counsel.
W OMC-SAD-GC
X-6796-I '
84
EXCERPTS FROM A32IUAI REPORT OF THE SUPERIHMBB2IT OF BANKS
OF THE STATE OF $TEW YOBK. FCB THE YEAE E3DI1TG DECEMBER 31, 1930.
(Pages 12 to 15 i n c l u s i v e . )
HEf LBJISLATIOlT EECOMME2JI3ED.
"1. $o amend the Banking Law i n order to permit prompt mergers
of banking i n s t i t u t i o n s i n case of emergency or when, necessary to p r o t e c t the i n t e r e s t s of d e p o s i t o r s and s h a r e h o l d e r s , "by p r o v i d i n g t h a t
with t h e approved of t h e Superintendent of Banks, the boards of d i r e c t o r s
of any two or more banking i n s t i t u t i o n s may merge such i n s t i t u t i o n s
under an agreement which w i l l p r o t e c t and p r e s e r v e t h e -equities of
the r e s p e c t i v e s t o c k h o l d e r s * Such amendment .might a l s o provide t h a t
such agreement s h a l l be s u b j e c t to the approval of a J u s t i c e of t h e
Supreme Court of New York.
"Under the e x i s t i n g law when a banking i n s t i t u t i o n , because of
l a c k of l i q u i d i t y or d e p r e c i a t i o n i n the value of a s s e t s , can no longer
s a f e l y be p e r m i t t e d t o continue i n the conduct of i t s b u s i n e s s , the
Superintendent of Banks i s p l a c e d i n the p o s i t i o n of being obliged t o
e i t h e r close such i n s t i t u t i o n or urge t h a t i t merge vrith some i n s t i t u t i o n
having a sound f i n a n c i a l s t a n d i n g . The l a t t e r remedy,, providing the merger
i s a proper one, i s much to be p r e f e r r e d to the f i r s t , f o r the reason t h a t .
the c l o s i n g of an i n s t i t u t i o n undermines p u b l i c confidence g e n e r a l l y and
o f t e n l e a d s to heavy withdrawals from other i n s t i t u t i o n s . Furthermore,
the c l o s i n g of a banking i n s t i t u t i o n may r e s u l t i n l o s s t o d e p o s i t o r s f o r
no o t h e r reason then t h e f a c t t h a t the closing o p e r a t e s to d e p r e c i a t e the
value of c e r t a i n c l a s s e s of a s s e t s , not e a s i l y l i q u i d a t e d , though of
s u b s t a n t i a l value to a going i n s t i t u t i o n .
"Why not mergers then i n a l l cases where the c ondition of an
i n s t i t u t i o n w i l l not j u s t i f y p e r m i t t i n g i t to continue i n b u s i n e s s ? Under
the p r e s e n t law, mergers t o become e f f e c t i v e must be approved by s t o c k h o l d e r s . To procure such approval i t may be necessary t o inform them of
the f a c t s n e c e s s i t a t i n g the merger, which i s l i k e l y to lead to u n c e r t a i n t y
and rumors, r e s u l t i n g i n runs which may cause the i n s t i t u t i o n ' s c l o s i n g bef o r e the merger can be e f f e c t e d . Furthermore, because of rumors which may
o r i g i n a t e suddenly, i t becomes necessary i n some i n s t a n c e s t o accomplish
mergers over n i g h t i f i n s t i t u t i o n s a r e to be saved, which under t h e p r e s ent law i s impossible s i n c e approval by stockholders must be obtained a t
a meeting h e l d on two weeks' n o t i c e .
"For these r e a s o n s , and because i t i s a m a t t e r of g r e a t p u b l i c
i n t e r e s t t h a t banking i n s t i t u t i o n s be closed only i n cases where t h e r e i s
no o t h e r a l t e r n a t i v e , i t i s urged t h a t the L e g i s l a t u r e , which i s about to
meet, adopt l e g i s l a t i o n p e r m i t t i n g , i n cases where an emergency e x i s t s ,
the merger of banking i n s t i t u t i o n s by a c t i o n of the r e s p e c t i v e boards of
d i r e c t o r s without the approval of s t o c k h o l d e r s . The proposed s t a t u t e , which
i s now i n p r o c e s s of being d r a f t e d , w i l l permit such a merger only i n cases
where the Superintendent of Banks d e c l a r e s t h a t such a c t i o n i s ne cessary i n
order t o avoid c l o s i n g one of the i n s t i t u t i o n s . I t a l s o makes ample p r o v i s i o n f o r the p r o t e c t i o n of the i n t e r e s t of stockholders of the merging
institutions.
(Annual Beport-Supt of Banks-New York)
X-6796 —a
- 2 —
"Had the p r e s e n t law contained such a p r o v i s i o n , the Baltic of
United S t a t e s would have "been merged with one of our s t r o n g e s t
i n s t i t u t i o n s and i t s c l o s i n g avoided.
" 2 . To permit the Superintendent to remove from o f f i c e , o f f i c e r s or d i r e c t o r s of tanking i n s t i t u t i o n s who have "been g u i l t y of
• p e r s i s t e n t v i o l a t i o n s of the hanking law, or of a continuance of u n s a f e and unsound p o l i c i e s and p r a c t i c e s .
"3. To p e r m i t the Superintendent t o i n s i s t upon c h a r g e o f f s
as d i r e c t e d "by the Department, * i t h i n s i x t y days a f t e r r e c e i p t of
n o t i f i c a t i o n , p e r m i t t i n g r e s e r v e s t o he e s t a b l i s h e d i n l i e u of
chargeoffs.
"4. To provide t h a t the s t o c k of a l l banks and t r u s t comp a n i e s and other c o r p o r a t i o n s s u b j e c t to the s u p e r v i s i o n of the Banking Department he evidenced hy i n d i v i d u a l c e r t i f i c a t e s of s t o c k , which
s h a l l n o t he coupled w i t h the stock of any other c o r p o r a t i o n . A l l
such arrangements e x i s t i n g a t the p r e s e n t time s h a l l terminate w i t h i n
two y e a r s .
*5. To l i m i t the extension of c r e d i t and investment of funds
i n s t o c k and o b l i g a t i o n s of a f f i l i a t e d c o r p o r a t i o n s a s d e f i n e d i n Sect i o n 39 of the Banking La*, hy providing t h a t t h e aggregate investment
i n c a p i t a l s h a r e s or o b l i g a t i o n s o f , or d i r e c t or i n d i r e c t loans t o ,
o r l o a n s secured hy the shares or o b l i g a t i o n s o f , any corporation
a f f i l i a t e d with a banking i n s t i t u t i o n and or any s u b s i d i a r y corporation
of such a f f i l i a t e d c o r p o r a t i o n , s h a l l not exceed i n the aggregate 10
per cent of the c a p i t a l and s u r p l u s of any banking i n s t i t u t i o n .
" 6 . To p r o h i b i t any o f f i c e r , c l e r k or other employee of a
bank or t r u s t company from borrowing from the i n s t i t u t i o n of which he
i s an o f f i c e r , c l e r k or other enployee and from becoming o b l i g a t e d
d i r e c t l y or i n d i r e c t l y , c o n d i t i o n a l l y or otherwise t o such i n s t i t u t i o n .
"7. To p r o v i d e t h a t an o f f i c e r of a banking i n s t i t u t i o n s h a l l
not be p e r m i t t e d to become an o f f i c e r of any company engaged p r i m a r i l y
i n the b u s i n e s s of t h e purchase and s a l e of s e c u r i t i e s . .
" 8 , To provide t h a t every d i r e c t o r of any banking i n s t i t u t i o n
who i s d i r e c t l y , i n d i r e c t l y , c o n d i t i o n a l l y or otherwise o b l i g a t e d on
any loan or other e x t e n s i o n of c r e d i t made by such i n s t i t u t i o n t o such
d i r e c t o r or other i n d i v i d u a l , p a r t n e r s h i p , unincorporated a s s o c i a t i o n
or c o r p o r a t i o n s h a l l f i l e with such i n s t i t u t i o n once i n each year and
a t such o t h e r times a s the Superintendent may r e q u i r e , a statement of
his financial condition.
" 9 . To change the p e r i o d w i t h i n which d i r e c t o r s ' examinations
are t o be made to p r o v i d e f o r such examinations a t l e a s t once i n each
|7
Jt-6796-a
(Annual Report-Supt. of Banks-Hew York)
- 3 -
" s i x months' p e r i o d . The scope of such examinations to include a
complete review by each d i r e c t o r of a l l loans' and investments i n
excess of o n e - t e n t h of 1 per cent of the c a p i t a l and s u r p l u s of such
i n s t i t u t i o n (exceeding a minimum of $1000 however) i n c l u d i n g a l l ext e n s i o n s of c r e d i t t o a f f i l i a t e d or s u b s i d i a r y companies. At l e a s t
once i n two successive years such examination i s t o include a couplete
v e r i f i c a t i o n of d e p o s i t l i a b i l i t i e s .
"10. To r e q u i r e t h a t banks and t r u s t companies s h a l l , a t the
end of each yeax% rezider to stockholders a r e p o r t showing the a t t e n d ance o f , d i r e c t o r s a t meetings h e l d during t h a t y e a r .
•
*
*
*
*
*
*
. *
"12. To l i m i t the amount of the funds of any banking i n s t i t u t i o n t h a t may be d e p o s i t e d with any other banking i n s t i t u t i o n , g i v i n g
e f f e c t to the varying exigencies a t t a c h i n g t o the d e p o s i t i n g of funds
with (a) designated r e s e r v e d e p o s i t a r i e s ; (b) domestic banking i n s t i t u t i o n s not a c t i n g as r e s e r v e agents; (c) f o r e i g n banking i n s t i t u t i o n s .
•
*
*
*
,
*'
*
*
*
"14. To omit f o r e i g n exchange balances c r e d i t e d to a banking
i n s t i t u t i o n from the items t h a t may be deducted from the t o t a l de*
p o s i t s of such banking i n s t i t u t i o n i n a r r i v i n g a t t h e aggregate demand
d e p o s i t s thereof a g a i n s t which r e s e r v e s a r e r e q u i r e d to be maintained*
*
*
*
* 7
-•*
*
*
*
"17. To l i m i t the aggregate amount of funds which a banking
i n s t i t u t i o n may i n v e s t i n the s t o c k , c o n v e r t i b l e bonds, or o t h e r obl i g a t i o n s of o t h e r c o r p o r a t i o n s .
*
- *
*
*
- *
*
*
#
"19. To p r o v i d e t h a t any holding company whi<& owns s t o c k
of a banking i n s t i t u t i o n s h a l l be r e q u i r e d t o maintain r e s e r v e s or
s u r e t y bonds t o p r o t e c t the s t a t u t o r y double l i a b i l i t y which a t t a c h e s
to such s t o c k .
*
*
*
#
*
*
*
*
"23. To p e r m i t the Superintendent to o r d e r , a t the expense of
a bank or t r u s t company, a p p r a i s a l s of r e a l e s t a t e p r o p e r t i e s owned by
or mortgaged t o such i n s t i t u t i o n , tiy independent, i n p a r t i a l a p p r a i s e r s
of recognized s t a n d i n g . "
Wr-sad
86
X-6796-jb ,
January 7, 1931.
TO
Mr. Wyatt
FROM
Mr. Wingfield.
SUBJECT? Amendments suggested by Compt r o l l e r s of the Currency from 1863 to
1930 designed to prevent t a n k f a i l u r e s .
I n accordance with your r e q u e s t , 1 have examined the annual r e ports, made to Congress by Comptrollers of the Currency from the year 1863
down to date t o determine what amendments to the law designed to prevent
bank f a i l u r e s have been suggested by the o f f i c e of the Comptroller of the
Currency. In compiling the suggested amendments, I ' h a v e omitted any such
amendments wliich i t appears have been s u b s t a n t i a l l y enacted i n t o laws. I n
a number of c a s e s , the r e p o r t s of the Comptroller of the Currency r e p e a t
suggestions f o r amendments which have p r e v i o u s l y been madei In the se cases,
I have omitted such r e p e t i t i o n s u n l e s s some m a t e r i a l change has been made
i n the previous recommendations. The suggested amendments I have discovered
t r i l l be described below with a c i t a t i o n to the r e p o r t of the Comptroller of
the Currency i n which the suggestion may be found.
1863 •
I n h i s r e p o r t of 1863, the Comptroller of the Currency suggested
t h a t a number of amendments be made to the National Bank Act. Most of the
suggested amendments were f o r the purpose of c l a r i f y i n g e x i s t i n g p r o v i s i o n s
of t h e Act and to remove ambiguities i n the p r o v i s i o n s of the Act. Two of
the amendments contained i n t h i s r e p o r t , however, were a p p a r e n t l y made p r i marily f o r the purpose of avoiding bank f a i l u r e s .
(1) An amendment providing t h a t the f a i l u r e of a n a t i o n a l bank be
d e c l a r e d prima f a c i e f r a u d u l e n t and t h a t the o f f i c e r s and d i r e c t o r s under
whose a d m i n i s t r a t i o n each insolvency s h a l l occur be made p e r s o n a l l y l i a b l e
f o r the debts of the bank and be punished c r i m i n a l l y u n l e s s i t s h a l l appear
upon i n v e s t i g a t i o n t h a t i t s a f f a i r s were h o n e s t l y administered. This p r o v i s i o n rras intended to take the p l a c e of e x i s t i n g l i a b i l i t y of s t o c k h o l d e r s
i n a n a t i o n a l bank. (Report on the Finances, 1863, p . 51.)
(2) An amendment t o provide t h a t no n a t i o n a l bank s h a l l commence
bus in e s s r i t h a l e s s c a p i t a l a c t u a l l y p a i d i n then $50,000. The Comptroller
a l s o suggested t h a t a n a t i o n a l bank should not be organized with a c a p i t a l
of l e s s then $100,000* $50,000 to be p a i d i n a t the commencement of b u s i ness and the balance i n i n s t a l l m e n t s of 10% every 60 days t h e r e a f t e r .
(Heport on the Finances, 1863, p . 5 1 . )
1864.
-To recommendation f o r amendments designed to p r e v e n t bank f a i l u r e s .
1865.
Ho recommendation f o r amendments designed t o prevent bank f a i l u r e s
— 2
-
f
X-6796-b I
1866.
(1) An amendment a u t h o r i z i n g the C o n t r o l l e r of the Currency to
appoint a r e c e i v e r rhenever s a t i s f a c t o r y evidence i s f u r n i s h e d t h a t any
n a t i o n a l hank i s not carrying on the proper "business of hanking; t h a t
any of i t s r e p o r t s r e q u i r e d hy law have "been f a l s e or f r a u d u l e n t ; t h a t
i t s funds have been w i l f u l l y misapplied by the o f f i c e r s or d i r e c t o r s i n
v i o l a t i o n of law or t h a t i t has committed any a c t of insolvency. (Rep o r t of 1865, p . X I I . )
(2) An amendment l i m i t i n g loans t o , or d e p o s i t s w i t h , p r i v a t e bankers
or b r o k e r s . (Report of 1866, p . X I I . )
(3) An amendment to r e q u i r e monthly r a t h e r than q u a r t e r l y r e p o r t s
of c o n d itio n of n a t i o n a l banks. (Report of 1866, p . X I I . )
1867-1886
During these y e a r s , the Comptroller of the Currency d i d not make
nay not? recommendations f o r amendments to the n a t i o n a l Bank Act designed
to prevent bank f a i l u r e s .
1887
(1) An amendment to p r o h i b i t a m a j o r i t y of the board of d i r e c t o r s
of a n a t i o n a l bank from c o n s i s t i n g of the o f f i c e r s of the n a t i o n a l bank.
(Report of 1887, p . 4 . )
(2) An amendment r e q u i r i n g d i r e c t o r s of a n a t i o n a l bank to include
i n t h e i r oath of o f f i c e an o b l i g a t i o n to inform themselves a t a l l times
as to the b u s i n e s s and condition of the n a t i o n a l bank. (Report of 1 8 8 7 , p . 4 ) .
(3) An amendment r e s t r i c t i n g the investment by n a t i o n a l banks i n
r e a l e s t a t e s e c u r i t i e s . (Report of 1887, p . 8 . )
to law.
(4) An amendment to provide a p e n a l t y f o r making loans c o n t r a r y
(Report of 1887, page 8 . )
(5) An amendment r e q u i r i n g the d i r e c t o r s of n a t i o n a l banks to
charge o f f a l l l o s s e s and bad debts b e f o r e the payment of d i v i d e n d s .
(Report of 1887, p . 9 . )
In h i s r e p o r t of 1887, the Comptroller suggested the enactment of
a n a t i o n a l bank code i n c o r p o r a t i n g a number of changes i n the R a t i o n a l Bank
Act, as i t e x i s t e d a t t h a t time. The amendments above described appear to
be the most important changes suggested and i n c o r p o r a t e d i n t h i s proposed
code to prevent the f a i l u r e of n a t i o n a l banks. The code i s s e t out on
pages 12-38 of t h e Henort of the Comptroller of the Currency f o r t h e year
1887.
— 3 —
X-6796-b f.
1888-1890
Ho recommendation f o r amendments designed to prevent bank f a i l u r e s .
1891
(1) An amendment to p r o h i b i t a c t i v e o f f i c e r s of a National Bank from
borrowing from the bank with which he i s connected and l i m i t i n g the loans to
any d i r e c t o r of a N a t i o n a l Bank to 20$ of the p a i d up c a p i t a l of the bank.
(Report of 1891, p . 3 1 . )
(2) An amendment to r e q u i r e the p u b l i c a t i o n of l i a b i l i t i e s of o f f i c e r s
and d i r e c t o r s of n a t i o n a l banks. (Report of 1891, p . 3 1 . )
1892
Ho recommendation f o r amendments designed t o prevent bank f a i l u r e s .
1893
An amendment t o r e q u i r e National Bank examiners t o take an oath of
o f f i c e and t o give bond i n such amount and with such s u r e t i e s a s the
Comptroller of the Currency may r e q u i r e . (Report of 1893, p . 2 3 . )
1894
Ho recommendation f o r amendments designed to prevent bank f a i l u r e s . ,
1895
An amendment t o a u t h o r i z e the Comptroller of the Currency with t h e
approval of the S e c r e t a r y of the Treasury, a f t e r a h e a r i n g , to remove o f f i cers and d i r e c t o r s of National Banks f o r v i o l a t i o n s of law and mismanagement
of the bank. ( Report of 1895, p . 2 1 . )
1896
(1) An amendment l i m i t i n g loans to o f f i c e r s of a National Bank and
r e q u i r i n g t h a t a l l l o a n s to o f f i c e r s and d i r e c t o r s of National Banks be
secured by c o l l a t e r a l or by personal endorsement. ( Report of 1896, p . 100.)
(2) An amendment to r e q u i r e the d i r e c t o r s of each National Bank to
make an examination of the batik a t l e a s t once a year and submit a r e p o r t
thereof to the Comptroller of the Currency. ( Report of 1896, p , 100.)
1897-1899
No recommendation f o r amendments designed to prevent bank f a i l u r e s .
— 4 —
X-6796-jb
, 90
1900
(1) An amendment to l i m i t loans to o f f i c e r ' s ; d i r e c t o r s and employees
of National Banks. (Report of 1900, p . XIV.)
(2) An amendment p r e s c r i b i n g a s p e c i f i c p e n a l t y f o r v i o l a t i o n s of
Section 5200 Revised S t a t u t e s of the United S t a t e s . (Report of 1900, p.XVIII.)
1901-1905
Ho recommendation f o r amendments designed t o prevent "bank f a i l u r e s .
1906
2To recommendation other than with r e f e r e n c e to extending the j u r i s d i c t i o n of the Comptroller of the Currency of banks i n the D i s t r i c t of Columbia
and with r e f e r e n c e t o the i s s u e of currency by n a t i o n a l banks. (Report of
1906, pages 63-78.)
1907
Ho recommendation other than a general d i s c u s s i o n of the need f o r a
c e n t r a l r e s e r v e and note i s s u e system.
1908
Ho recommendation f o r amendments designed to prevent bank f a i l u r e s .
1909
2To recommendation f o r amendments designed to prevent bank f a i l u r e s , but
r e f e r e n c e i s made to suggestions made by Comptroller of the Currency to the
N a t i o n a l Monetary Commission. (Report of 1909, page 94.)
1910
Ho recommendation f o r amendments designed to prevent bank f a i l u r e s .
1911
(1) An amendment to provide t h a t any c o r p o r a t i o n which purchases stock
of a n a t i o n a l bank s h a l l be l i a b l e f o r assessment on such s h a r e s . I t appears
t h a t c o r p o r a t i o n s which have purchased n a t i o n a l bank stock without having
a u t h o r i t y under t h e i r c h a r t e r to do s o , a r e n o t , i n view of c e r t a i n court
d e c i s i o n s , s u b j e c t to an assessment on such s t o c k . This amendment was sugg e s t e d t o take care of t h i s s i t u a t i o n . (Report of 1911, page 80.)
(2) An amendment to provide t h a t criminal o f f e n s e s a r i s i n g under the
p r o v i s i o n s of the National Bank Act may be prosecuted a t any time w i t h i n ten
y e a r s a f t e r the commission of the o f f e n c e . (Report of 1911, page 82.)
1912-1913
No recommendation f o r amendments designed to p r e v e n t bank f a i l u r e s .
-
5 -
X—6796-|B
m±
(1) i n amendment t o a u t h o r i z e t h e Comptroller of the Currency to
p e n a l i z e "by i m p o s i t i o n of a p p r o p r i a t e f i n e s a l l i n f r a c t i o n s and v i o l a t i o n s
of law an& t h e Comptroller*e r e g u l a t i o n s , such f i n e s t o be imposed upon t h e
o f f e n d i n g o f f i c i a l s , a s w e l l as upon the bank "by which they a r e employed.
The Comptroller a l s o s u g g e s t e d t h a t c e r t a i n v i o l a t i o n s of the law and
r e g u l a t i o n s should, "be p u n i s h a b l e by imprisonment a s w e l l a s by f i n e s .
( R e p o r t of 1914, page 1 7 . )
(2) An amendment f i x i n g a l i m i t upon t h e a g g r e g a t e amount which a
n a t i o n a l bank may l a w f u l l y l o a n t o or d i s c o u n t f o r , d i r e c t l y or i n d i r e c t l y , a s i n g l e b o r r o w e r , such l i m i t t o be e i t h e r a p e r c e n t a g e of the b a n k ' s
c a p i t a l and s u r p l u s o r of i t s t o t a l loans« ( Report of 1914, page 1 7 . )
(3) A s p e c i f i c amendment a u t h o r i z i n g t h e Comptroller of t h e Curr e n c y t o impose a p p r o p r i a t e f i n e s f o r d i s r e g a r d of t h e C o m p t r o l l e r ' s i n s t r u c t i o n s w i t h r e f e r e n c e t o o v e r d r a f t s * (Report of 1914, page 1 8 . )
(4) An amendment a u t h o r i z i n g t h e Comptroller of t h e Cusrfcncy t o
e n f o r c e t h e a d o p t i o n by each n a t i o n a l bank of a s t a n d a r d s e t o f b y - l g w s
c o v e r i n g c e r t a i n e s s e n t i a l r u l e s and elementary r e g u l a t i o n s , (Report of
1914, page 1 9 . )
(5) An amendment a u t h o r i z i n g t h e Comptroller of t h e Currency, w i t h
the a p p r o v a l of t h e S e c r e t a r y of t h e T r e a s u r y , t o r e q u i r e t h e removal of
any d i r e c t o r o r o f f i c e r of a n a t i o n a l bank g u i l t y of a v i o l a t i o n of any
of t h e more i m p o r t a n t p r o v i s i o n s of t h e R a t i o n a l Bank Act and t o d i r e c t
t h a t s u i t be b r o u g h t i n the name of the bank a g a i n s t such d i r e c t o r or o f f i c e r f o r l o s s e s s u s t a i n e d by m a l f e a s a n c e or m i s f e a s a n c e i n o f f i c e .
(Report of 1914, page 1 9 . )
(6) An amendment p r o v i d i n g t h a t i f a d i r e c t o r of a n a t i o n a l bank
does n o t q u a l i f y and f o r w a r d h i s o a t h t o the Comptroller of the Currency
w i t h i n t h i r t y days a f t e r h i s e l e c t i o n , a vacancy s h a l l be immediately d e c l a r e d and s h a l l be f i l l e d by the remaining d i r e c t o r s and t h e d e r e l i c t
d i r e c t o r be made i n e l i g i b l e f o r r e e l e c t i o n d u r i n g t h a t y e a r . (Report of
1914, page 1 9 . )
(7) An amendment t o p r o v i d e t h a t no n a t i o n a l bank s h a l l be p e r m i t t e d t o h o l d d e p o s i t s i n e x c e s s of t e n times i t s u n i m p a i r e d c a p i t a l and
s u r p l u s . (Report of 1914, page 2 1 . )
1915
(1) An amendment t o p r o h i b i t o f f i c e r s of a n a t i o n a l bank from
borrowing funds of t h e bank by which t h e y a r e employed. ( R e p o r t of
1915, page 3 2 . )
(2) A$ amendment t o p r o h i b i t a n a t i o n a l bank f r o m making any l o a n
t o a d i r e c t o r or a f i r m i n which a d i r e c t o r may be a p a r t n e r w i t h o u t
f o r m a l a u t h o r i t y of t h e b o a r d of d i r e c t o r s of t h e b a n k . (Report of 1915,
page 3 2 . ) .
- 6 -
X-6796-b [
9 3
(3) An amendment t o r e q u i r e a l l o f f i c e r s or employees of a
n a t i o n a l bank having custody of i t s funds or s e c u r i t i e s or engaged i n the
h a n d l i n g of i t s money t o f u r n i s h s u r e t y "bonds. (Beport of 1915, page 3 2 . )
(4) An amendment p l a c i n g a c o n s e r v a t i v e and p r o p e r l i m i t a t i o n
upon the a g g r e g a t e amount of money any one p e r s o n , company, c o r p o r a t i o n ,
or f i r m may o b t a i n from a n a t i o n a l bank through the d i s c o u n t i n g of comm e r c i a l p a p e r and b i l l s of exchange and p r o v i d i n g a s p e c i f i c p e n a l t y
e n f o r c e a b l e a g a i n s t the o f f i c e r s and d i r e c t o r s of t h e n a t i o n a l bank
r e s p o n s i b l e f o r any v i o l a t i o n of the p r o v i s i o n s of S e c t i o n 5200 of the
Revised S t a t u t e s . ( Beport of 1915, page 3 2 . )
(5) An amendment l i m i t i n g o v e r d r a f t s and making the d i r e c t o r s p e r s o n a l l y l i a b l e f o r any v i o l a t i o n of such l i m i t a t i o n s and a l s o r e q u i r i n g the
o f f i c e r s of t h e bank t o p r e s e n t a t each d i r e c t o r s ' meeting a l i s t of a l l overd r a f t s made s i n c e t h e p r e v i o u s m e e t i n g . (Beport of 1915, page 3 3 . )
(6) An amendment r e q u i r i n g a l l c e r t i f i c a t e s of d e p o s i t t o be signed
by two o f f i c e r s of t h e bank and p r o v i d i n g a p e n a l t y f o r t h e i s s u e of any
such c e r t i f i c a t e n o t s i g n e d by two o f f i c e r s . (Report of 1915, page 3 3 . )
(7) An amendment to p r o h i b i t any o f f i c e r or employee of a n a t i o n a l
bank from e r a s i n g or c a u s i n g t o be e r a s e d any e n t r i e s on the books of a n a t i o n a l bank and r e q u i r i n g any erroneous e n t r i e s t o be canceled i n such a
manner t h a t i t i s n o t i m p o s s i b l e to d e c i p h e r t h e o r i g i n a l e n t r y .
(Report of 1915, page 3 3 . )
(8) An amendment l i m i t i n g the amount of i n t e r e s t a n a t i o n a l bank
may p a y on i t s d e p o s i t s t o 4$, the r e d i s c o u n t r a t e of t h e F e d e r a l r e s e r v e
bank of the d i s t r i c t or t h e maximum r a t e allowed by S t a t e law. (Report
of 1915, page 3 3 . )
(9) An amendment a u t h o r i z i n g t h e Comptroller of the Currency t o
b r i n g p r o c e e d i n g s a g a i n s t d i r e c t o r s of a n a t i o n a l bank f o r l o s s e s s u s t a i n e d
by t h e bank through v i o l a t i o n s of the p r o v i s i o n s of t h e N a t i o n a l Bank Act
or t h e F e d e r a l Reserve A c t . (Report of 1915, page 3 4 . )
(10) Dae Comptroller c a l l e d a t t e n t i o n t o the f a c t t h a t a l l d i r e c t o r s of a n a t i o n a l bank s h o u l d be r e q u i r e d t o s e r v e by t u r n f o r a s t a t e d p e r i o d
on t h e e x e c u t i v e committee of the bank, b u t he d i d n o t make a s p e c i f i c recommendation f o r l e g i s l a t i o n on t h i s p o i n t . (Report of 1915, page 3 8 . )
The C o m p t r o l l e r a l s o renewed numerous recommendations f o r l e g i s l a t i o n
which had p r e v i o u s l y been made by h i s o f f i c e . (Report of 1915, p a g e s 3 9 - 4 2 . )
1916
(1) An amendment to p r o v i d e t h a t any p e r s o n , f i r m or c o r p o r a t i o n
o b t a i n i n g a l o a n or c r e d i t from a n a t i o n a l bank b a s e d on a f a l s e s t a t e m e n t ,
w i l f u l l y made, of the f i n a n c i a l c o n d i t i o n of the b o r r o w e r , s h a l l be g u i l t y of
a f e l o n y p u n i s h a b l e by a p p r o p r i a t e p e n a l t i e s . (Report of 1916, page 1 9 . )
- 7 -
X-6796-b
(2) An amendment p r o v i d i n g t h a t the "breaking or e n t e r i n g of a
N a t i o n a l Bank f o r t h e purpose of t h e f t or r o b b e r y s h a l l be a crime p u n i s h a b l e under t h e laws of t h e United S t a t e s . (Beport of 1916, p . 1 9 . )
(3) An amendment p r o v i d i n g t h a t no n a t i o n a l Bank s h a l l be p e r m i t t e d t o t i e up by i n v e s t m e n t i n any o f f i c e or bank b u i l d i n g an amount i n
e x c e s s of the p a i d - i n c a p i t a l of the bank. (Report of 1916, p . 2 0 . )
'
"
"
.
The Comptroller r e p e a t e d numerous recommendations f o r l e g i s l a t i o n c o n t a i n e d i n h i s p r e v i o u s r e p o r t s . (Beport of 1916, p p . 1 4 - 1 9 . )
1917
(1) An amendment t o a u t h o r i z e the C o m p t r o l l e r ' s O f f i c e t o r e q u i r e
N a t i o n a l banks t o s h i f t t h e i r bookkeepers and o t h e r employees from time to
time from one desk or s e r v i c e t o smother so as t o make i t d i f f i c u l t f o r
employees t o h i d e d e f a l c a t i o n s or m a n i p u l a t e books. (Report of 1917, p . 2 3 . )
(2) An amendment p r o v i d i n g f o r t h e F e d e r a l i n s u r a n c e or g u a r a n t e e of
d e p o s i t s i n N a t i o n a l banks where t h e c r e d i t t o any one i n d i v i d u a l amounts
to a sum n o t exceeding $5,000.
(Report of 1917, p . 2 4 . )
(3) An amendment p r o h i b i t i n g any n a t i o n a l bank from making any
charge a g a i n s t the a c c o u n t of a d e p o s i t o r except on a charge t i c k e t o r d e r
s i g n e d b y a t l e a s t two o f f i c e r s of t h e bank. (Report of 1917, p . 2 7 . )
The Comptroller a l s o r e p e a t e d numerous recommendations f o r l e g i s l a t i o n made by h i s o f f i c e i n p r e v i o u s r e p o r t s . (Beport of 1917, p a g e s
18-22.)
1918
No new recommendation or amendment d e s i g n e d t o p r e v e n t bank f a i l u r e s b u t numerous recommendations of p r e v i o u s y e a r s a r e r e p e a t e d i n t h i s
r e p o r t of t h e C o m p t r o l l e r .
1919
No new recommendation f o r amendments t o p r e v e n t bank f a i l u r e s
but numerous recommendations of p r e v i o u s y e a r s a r e r e p e a t e d i n t h i s
r e p o r t of t h e C o m p t r o l l e r .
1920
(1) An amendment t o e n a b l e a n a t i o n a l bank t o o b t a i n r e l i e f i n
emergency from a Jtederal r e s e r v e bank by u s e of s e c u r i t i e s o t h e r t h a n
e l i g i b l e p a p e r or U n i t e d S t a t e s bonds. (Report of 1920, page 5 2 . )
(2) An amendment t o broaden and s t r e n g t h e n t h e p r o v i s i o n of law
which p r o h i b i t s an o f f i c e r of a n a t i o n a l bank from p r o f i t i n g p e r s o n a l l y
through c o n t r o l and u s e or misuse of the funds of t h e bank. (Report of
1920, page 5 5 . )
8
X~6796-t|
(3) The Comptroller c a l l e d a t t e n t i o n t o t h e growing p r a c t i c e of
e s t a b l i s h i n g " s e c u r i t i e s conpanies" as a d j u n c t s t o n a t i o n a l banks and
recommended t h a t Congress enact such p r o t e c t i v e l e g i s l a t i o n a s t h e f a c t s
obvious t e n d e n c i e s and e q u a l l y obvious p e r i l s of t h e f u t u r e so c l e a r l y
demand. I n t h i s c o n n e c t i o n the Comptroller s u g g e s t e d t h a t such s e c u r i t i e s conpanies s h o u l d be o p e r a t e d s e p a r a t e and a p a r t from t h e n a t i o n a l
b a n k s . The c e r t i f i c a t e s of s t o c k i n such c o r p o r a t i o n s s h o u l d n o t be
t i e d up w i t h t h e s t o c k c e r t i f i c a t e s of n a t i o n a l banks and the management of t h e bank and s e c u r i t i e s c o r p o r a t i o n s h o u l d be e n t i r e l y d i s t i n c t ,
even when t h e s t o c k h o l d e r s of one a r e the s t o c k h o l d e r s of the o t h e r s .
(Report of 1920, p a g e s 5 5 - 5 7 . )
(4) An amendment t o p r e v e n t the a c t i v e and s a l a r i e d e x e c u t i v e
o f f i c e r s of a n a t i o n a l bank w i t h r e s o u r c e s i n e x c e s s of a p r e s c r i b e d
amount ( $ 3 , 0 0 0 , 0 0 0 o r $5,000,000 s u g g e s t e d a s such p r e s c r i b e d amount)
from h o l d i n g p o s i t i o n s as d i r e c t o r s , t r u s t e e s , or o f f i c e r s of o t h e r
b u s i n e s s , i n d u s t r i a l , r a i l r o a d or o t h e r commercial c o r p o r a t i o n s , or
a s s o c i a t i o n s . (Report o f . 1 9 2 0 , page 5 7 . )
(5) An amendment r e q u i r i n g d i r e c t o r s t o f u r n i s h t o s t o c k h o l d e r s
a t each a n n u a l m e e t i n g a s t a t e m e n t of the a s s e t s and r e s o u r c e s of t h e
bank, the p r o f i t and l o s s f o r the y e a r , s t a t e m e n t a s t o the s a l a r i e s
p a i d t o t h e i r p r i n c i p a l o f f i c e r s , and t h e average s a l a r y p a i d t o a l l
employees. (Report of 1920, pages 5 7 - 6 0 / )
The Comptroller i n t h i s r e p o r t a l s o c a l l s a t t e n t i o n t o numerous
recommendations f o r l e g i s l a t i o n which had p r e v i o u s l y been made.
(Report of 1920, p a g e s 6 0 - 6 8 . )
•
1921
The Comptroller i n t h i s r e p o r t c a l l e d a t t e n t i o n t o numerous
recommendations f o r enactment of l e g i s l a t i o n p r e v i o u s l y made by h i s
o f f i c e . (Report of 1921, page 1 1 . )
1922
(1) An amendment t o r e q u i r e an i n c r e a s e i n c a p i t a l of n a t i o n a l b a n k s commensurate w i t h an i n c r e a s e i n d e p o s i t l i a b i l i t i e s .
(Report of 1922, page 5 . )
(2) An amendment to r e q u i r e the oath of a d i r e c t o r of a n a t i o n a l bank t o be f i l e d w i t h the Comptroller w i t h i n t h i r t y days s u c c e e d i n g
h i s e l e c t i o n and making any d i r e c t o r who becomes d i s q u a l i f i e d by
h y p o t h e c a t i o n of h i s s t o c k i n e l i g i b l e t o reappointment d u r i n g t h e r e mainder of the y e a r .
(Report of 1922, page 6 . )
The Comptroller i n t h i s r e p o r t a l s o c a l l e d a t t e n t i o n t o recommendations f o r enactment of l e g i s l a t i o n p r e v i o u s l y made by h i s o f f i c e .
( R e p e r t of 1922, page 5 . )
-? 9 *•
*-6796|>
9
1923
ITo recommendation f o r amendments designed t o p r e v e n t 'bank f a i l u r e s .
1924
A recommendation f o r the p a s s a g e of p r o v i s i o n s c o n t a i n e d i n t h e
McFadden B i l l . I t does n o t a p p e a r , however* t h a t any of t h e p r o v i s i o n s
of t h i s b i l l were p r i m a r i l y designed t o p r e v e n t "bank f a i l u r e s e x c e p t
p o s s i b l y t h e recommendation t h a t t h e r e a f t e r t h e f t s b y bank examiners
and c e r t a i n o t h e r o f f e n c e s be made p u n i s h a b l e u n d e r t h e F e d e r a l Law.
1925
Comptroller renewed h i s recommendation t h a t the McFadden B i l l
be e n a c t e d .
1926
Comptroller renewed h i s recommendation f o r t h e enactment of
the McFadden B i l l .
1927
ITo recommendation f o r amendments designed t o p r e v e n t bank
failures.
1928
( l ) An amendment t o p r o v i d e f o r r e s t r i c t i o n s on t r u s t companies
l o c a t e d o u t s i d e of t h e D i s t r i c t of Columbia, b u t doing a f i d u c i a r y
b u s i n e s s w i t h i n t h e D i s t r i c t of Columbia, and t o p r o v i d e f o r s u p e r v i s i o n
of such t r u s t i n s t i t u t i o n s . (Heport of 1928, page 5 . )
1929
(1) An amendment t o p e r m i t n a t i o n a l banks w i t h the a p p r o v a l of
the Comptroller of t h e Currency t o e s t a b l i s h b r a n c h e s w i t h i n t h e t r a d e
a r e a s of the c i t i e s w i t h i n which such banks may be s i t u a t e d . (Report
of 1929, page 5 . )
(2) An amendment which would b r i n g bank s t o c k h o l d i n g companies
under some degree of F e d e r a l s u p e r v i s i o n where t h e y own t h e m a j o r i t y of
the s t o c k of more than one n a t i o n a l bank and a f u r t h e r amendment t o
s a f e g u a r d the s h a r e h o l d e r s ' l i a b i l i t y i n c a s e s where t h e s t o c k of a
n a t i o n a l bank i s h e l d by a h o l d i n g company. (Report of 1929, page 9 . )
(3) An amendment making i t a c r i m i n a l o f f e n c e t o c i r c u l a t e
any. f a l s e r e p o r t c o n c e r n i n g any member of the F e d e r a l Reserve System
i n d i c a t i n g i n s o l v e n c y or unsound f i n a n c i a l c o n d i t i o n or which may t e n d
-
10 -
to cause t h e w i t h d r a w a l of d e p o s i t s from such hank.
page 1 0 . )
X-6796-b
(Report of 1929,
(4) An amendment t o empower the Comptroller of t h e Currency
to make r e g u l a t i o n s governing s a v i n g s "banks or t r u s t companies doing
a b a n k i n g b u s i n e s s i n t h e D i s t r i c t of Columbia, (Report of 1929,
page 1 0 . )
( 5 ) An amendment p r o h i b i t i n g b u i l d i n g and l o a n a s s o c i a t i o n s
from doing b u s i n e s s i n the D i s t r i c t of Columbia e x c e p t w i t h the p e r m i s s i o n of the C o m p t r o l l e r . (Report of 1929, page 1 0 . )
1930
(1) An amendment t o a u t h o r i z e a committee composed of t h e
S e c r e t a r y of t h e T r e a s u r y , t h e Governor of the F e d e r a l Reserve Board,
and t h e Comptroller of t h e Currency, to s e l e c t c i t i e s which a r e
commercial c e n t e r s i n t h e United S t a t e s and t o map out t h e i r t r a d e
a r e a s ; t o d e f i n e the term " t r a d e a r e a " ; t o a u t h o r i z e n a t i o n a l banks
s i t u a t e d i n any such c i t i e s , with t h e approval of t h e Comptroller of
the Currency, to e s t a b l i s h b r a n c h e s w i t h i n the t r a d e a r e a of the
c i t y ; and t o r e q u i r e t h a t t h e p a i d - i n c a p i t a l s t o c k of any n a t i o n a l
bank so e s t a b l i s h i n g branches s h a l l n o t be l e s s than $1,000,000, and
t h a t t h e r a t i o of i t s c a p i t a l and s u r p l u s t o d e p o s i t s s h a l l be maint a i n e d a t not l e s s t h a n 1 t o 10. ( Report of 1930, page 5 . )
(2) An amendment t o p e r m i t any banks s i t u a t e d w i t h i n a t r a d e
a r e a t o c o n s o l i d a t e , w i t h t h e approval of t h e Comptroller of t h e
Currency, u n d e r a n a t i o n a l c h a r t e r and t o s p e c i f i c a l l y a u t h o r i z e the
Comptroller t o d i s a p p r o v e any such c o n s o l i d a t i o n upon the ground t h a t
i t might r e s u l t i n an undue c o n c e n t r a t i o n of banking c a p i t a l w i t h i n
the t r a d e a r e a . (Report of 1930, page 5 . )
(3) An amendment c o n f e r r i n g upon the Comptroller of the
Currency such v i s i t o r ! a l powers a s may e n a b l e him t o examine i n t o t h e
a f f a i r s of any c o r p o r a t i o n which owns or c o n t r o l s a m a j o r i t y of t h e
s t o c k of any n a t i o n a l bank. (Report of 1930, page 6 . )
(4) An amendment p r o h i b i t i n g any c o r p o r a t i o n from owning t h e
m a j o r i t y of the s t o c k of any n a t i o n a l bank i f a t t h e same time i t
owns the m a j o r i t y of t h e s t o c k of a S t a t e b a n k . (Report of 1930,
page 6 . )
(5) An amendment to p r o h i b i t a n a t i o n a l bank from l o a n i n g
upon the s e c u r i t y of t h e s t o c k of a c o r p o r a t i o n which may own t h e
m a j o r i t y of the s t o c k of such n a t i o n a l bank. (Report of 1930, page 6
(6) An amendment to a u t h o r i z e the Comptroller of t h e Curr e n c y t o examine s e c u r i t y or i n v e s t m e n t companies a f f i l i a t e d w i t h
a n a t i o n a l bank. (Report of 1930, page 1 0 . )
-
11 -
X-6796-t)
The Comptroller of the Currency i n h i s r e p o r t f o r 1930 a l s o
renewed a number of recommendations f o r l e g i s l a t i o n which were cont a i n e d i n h i s p r e v i o u s Aaiiti&l R e p o r t s .
Respectfully,
B- Magruder W i h g f i e l d
A s s i s t a n t Counsel.
BMf-omc-sad
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
THE FEDERAL RESERVE BOARD
X-6799
J a n u a r y 16, 1931«
SUBJECT:
3xpense, Main L i n e , Leased Wire System,
December, 1930.
Dear S i r :
S n c l o s e d h e r e w i t h you w i l l f i n d two mimeog r a p h s t a t e m e n t s , X-6799-a and X-6799-b, covering
i n d e t a i l o p e r a t i o n s of the main l i n e , Leased Wire
System, d u r i n g the month of December, 1930.
P l e a s e c r e d i t the amount p a y a b l e by your
bank i n the g e n e r a l a c c o u n t , T r e a s u r e r , U. S . , on
your books, and i s s u e C/D Form 1, N a t i o n a l Banks,
f o r a c c o u n t of " S a l a r i e s and Expenses, F e d e r a l Res e r v e Board, S p e c i a l Fund", Leased Wire System,
sending d u p l i c a t e C/D to the F e d e r a l Reserve Board.
Very t r u l y y o u r s ,
F i s c a l Agent.
Enclosures.
To Governors of a l l F. R. Banks except Chicago
REPORT SHOWING CLASSIFICATION AND NUMBER OP WORDS TRANSMITTED OVER MAIN USE
OF THE FEDERAL RESERVE LEASED WIRE SYSTEM FOB THE MOUTH OF December, 1930.
From
Business
reported
ty
banks
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
30,517
150,834
38,593
91,929
66,032
70,065
111,590
102,726
38,559
88,278
71,775
105,599
*otal
966,497
Words sent t y
New York chargeable to other
F. R„ Banks (1)
Net Federal
Reserve
Bank
business
Percent of t o t a l
bank business (*)
2,787
4,413
4,076
10,025
5,162
4,172
. 4,756
4,289
. 12,841
5,775
35,146
150,834
41,380
96,342
79,108
80,090
116,752
106,898
43,315
92,567
84,616
111,374
3.41
14.65
4.02
9.36
6.81
7.78
11.34
10.39
4.21
8.99
8.22
10.82
62,925
1,029,422
100.00
4,629
-
X-6799-a
1,350,327
Treasury Department business Incoming and Outgoing
Total words transmitted over main l i n e s .
(*)
These percentages used in c a l c u l a t i n g the pro rata share of l e a s e d wire exoense as shown
on the accompanying statement (X-6799~h).
(1)
Number of words sent by New York to other F. R. Banks for t h e i r s o l e b e n e f i t charged to
banks indicated in accordance with a c t i o n taken at Governors' Conference
November 2 - 4, 1925-
166,126
1,516,453
BEPORT OF EXPENSE. MAIN LINE
FEDERAL R2SBRVE LEASED WIRE SYSTEM, DECEMBER, 1930.
1,129.46
225.00
306.66
225.00
270.00
3,690,oo(#)
195.00
200.00
257.50
251.00
320.00
$
$
-
-
-
—
-
Total
Expenses
1,129.46
225.00
306.,66
455.00
270.00
3,696.00
199.00
200.00
257.50
251.75
-
-
230.00(&)
-
6.00
4.00
-
-
—
—
-
-
•75
-
3 8 0 . 0 0
—
7,419.62
Wire
Rental
O
—
8
(4)
(f)
(*)
(a)
(b)
$
CVJ
Total
S
-ff>
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Federal Reserve Board
Operators'
Overtime
<&•
%O
Operators'
Salaries
Name of Bank
10.75
15,753.44
$ 16,013.44
15,723.44
$
X-6799-%
Pro Rata
Share of
Total
Expenses
711.86
3,052.27
839-20
1,953^95
1,421.63
1,624.12
2,367-29
2,168.97
878.86
1,876.71
1,715.97
2,2S5.74
Credits
$
-
260.00
1,129.4b
225.00
$
3 0 6 . 0 6
455.00
270.00
3,696.00
199.00
200.00
257•SO
251.75
3 so. 00
-
23,443.n
$ 20,875-57
2.568.24(a)
Payable to
Federal
Reserve
Board
—
*
451,86
1,923# 81
6i4.20
' 1,647.29
966.53
1,354.12
1,328,71<*)
1,969.97
678.86
1,589.21
1,464.22
1,878-74
-
7,660.37 $
*
14,543.91
1,328.71(b)
13,215-20
Main Line r e n t a l , 3ichmond-Washingto n.
I n c l u d e s s a l a r i e s of Washington o p e r a t o r s .
Credit.
Received $ 2 , 5 6 8 . 2 4 from Treasury Department covering b u s i n e s s f o r the month of December, 1930.
Amount r e i m b u r s a b l e t o Chicago.
H1
O
101
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6800
J a n u a r y 19, 1931
SUBJECT:
Holidays d u r i n g F e b r u a r y , 1931.
Dear S i r :
On Thursday, February 1 2 t h , L i n c o l n ' s B i r t h d a y , t h e r e w i l l be
n e i t h e r Gold S e t t l e m e n t Fund nor F e d e r a l r e s e r v e n o t e c l e a r i n g , and
t h e "books of the B o a r d ' s Gold S e t t l e m e n t Fund w i l l be c l o s e d .
For your i n f o r m a t i o n , the o f f i c e s of the Board and the f o l l o w i n g
F e d e r a l r e s e r v e banks and branches w i l l be open f o r b u s i n e s s on Febr u a r y ,12 t h :
Boston
Richmond
Baltimore
Charlotte
Atlanta
Hew Orleans
Birmingham
.Jacksonville
Havana Agency
S t . Louis
L i t t l e Rock
Kansas City
Oklahoma City
On Tuesday, February 1 7 t h , Mardi Gras Day, the Hew Orleans and
Birmingham Branches of the F e d e r a l Reserve Bank of A t l a n t a w i l l be
c l o s e d . P l e a s e i n c l u d e c r e d i t s of February 1 7 t h f o r Hew Orleans
Branch i n the Gold Fund c l e a r i n g of February 1 8 t h .
On Monday, "February 2 3 r d , i n observance of Washington's b i r t h d a y ,
the o f f i c e s of t h e Board and a l l F e d e r a l r e s e r v e banks and b r a n c h e s
w i l l be c l o s e d .
On Tuesday, February 2 4 t h , the Havana Agency of t h e F e d e r a l Reserve
Bank of A t l a n t a w i l l be c l o s e d i n observance of the A n n i v e r s a r y of the
R e v o l u t i o n of B a i r e .
Please n o t i f y branches.
Very t r u l y yours
J • C• J o e l l ,
Assistant Secretary.
TO GOVEEHORS OF ALL
F. R. BANKS.
±02
X-6802
STATEMENT OF BUREAU OF ENGRAVING AND PRINTING
Federal Reserve Notes, Series 1928
December 1 to 31, 1930,
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
110
|5
30,000
94,000
55,000
82,000
158,000
#20
—
-
40,000
40,000
66,000
16,000
-
18,000
-
-
30,000
16,000
1,000
-
72,000
166,000
^5000
1,000
19,000
117,000
#10000
-
-
-
-
-
-
•
-
50
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,150
7,750
-
12,000
-
85,000
13,000
64,000
14,000
116,000
454,000
1,000
500
250
#100
9,000
43,000
8,000
-
:
$1000
700
2,100
800
450
800
-
76,00C) 24,000
-
170,000
8,000
35,000
35,000
137,000
804,000
#50
8,000
18,000
-
-
50
50
1,654,450 sheets, @ $92,45 per M
-
-
2,000
1,000
-
1,000
12,000
88,000
$500
1,400
4,200
800
1,700
3,300
-
2,000
1,000
500
400
500 '
1,800
17,600
Total
Sheets
Amount
$4,539.30
49,100
14,912.18
161,300
11,334.37
122,600
11,477.67
124,150
31,451.49
340,200
1,479.20
16,000
3,050.85
33,000
25,377.52
274,500
2,195.69
23,750
9,189.53
99,400
4,761.17
51,500
33,184.93
358,950
1,654,450 $152,953.90
#152,953.90
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6806
J a n u a r y 2 4 , 1931.
SUBJECT;
Form 160.
Dear S i r :
Beginning w i t h J a n u a r y , 1931 i t w i l l n o t
be n e c e s s a r y f o r the I n d e r a l r e s e r v e banks and
branches to r e p o r t operations i n Federal reserve
bank n o t e s s e p a r a t e l y on Form 160. There w i l l be
no o b j e c t i o n on the p a r t of the F e d e r a l Reserve
Board or t h e Treasury Department t o combining the
r e p o r t of any such t r a n s a c t i o n s w i t h t h e r e p o r t
of o p e r a t i o n s i n N a t i o n a l bank n o t e s .
Very t r u l y y o u r s ,
J . C. 2!oell,
Assistant Secretary.
TO G0V3R5QRS OF ALL F. H. BAMS.
104
DISTRICT NO. 1
X-6808
FEDERAL RESERVE BAM OF BOSTON
OFFICERS AND DIRECTORS. 1931.
OFFICERS
Roy A. Young, Governor
W. W. Paddock, Deputy Governor
Wm. W i l l e t t ,
Cashier
K. K. C a r r i c k , S e c r e t a r y
F r e d e r i c H. C u r t i s s , Chairman of the
Board and F e d e r a l Reserve Agent
A l l e n H o i l i s , Deputy Chairman of the
Board
C. F. Gettemy, A s s i s t a n t F e d e r a l Res e r v e Agent
H. F. C a r r i e r , A u d i t o r
E. G. H u l t , A s s i s t a n t Cashier
E. M. L e a v i t t , A s s i s t a n t Cashier
L. W. Sweetser, A s s i s t a n t Cashier
DIRECTORS
Glass A:
F r e d e r i c k S . Chamberlain
A l f r e d L. R i p l e y
Edward S . Kennard
Term
Expires
Dec. 31
P r e s . , Hew B r i t a i n N a t 1 1 . Bank, 2<ew B r i t a i n , Conn.
Chrm., The Merchants N a t ' 1 . Bank, Boston, Mass.
V. P . & Cash., z Rumford H a t 1 1 . Bank, Rumford, Me. '
1931
1932
1933
P r e s . , The John T. Slack C o r p ' n . , S p r i n g f i e l d , Vt.
P r e s . , B i r d and Son, I n c . , E a s t Walpole, Mass.
Chrm., Bemis B r o t h e r s Bag Co., Boston, Mass.
1931
1932
1933
R e t i r e d merchant, P r o v i d e n c e , R. I .
Boston, Mass.
Lawyer, Concord, New Hampshire
1931
1932
1933
Class B:
A l b e r t C. Bowman
P h i l i p R. A l l e n
A. F. Bemis
Class C:
Charles H. Merriman
F r e d e r i c H. C u r t i s s
Allen Mollis
MEMBER FEDERAL ADVISORY COUNCIL
H e r b e r t K. H a l l e t t
COUNSEL
A. H. Weed
DISTRICT NO. 2
X-6808
1.05'
FEDERAL RESERVE BAM OF NEW YORK
OFFICERS M P DIRECTORS. 1931
OFFICERS
George L. H a r r i s o n , Governor
L. F. S a i l e r , Deputy Governor
E. R. Kenzel, Deputy Governor
L. R. Rounds, Deputy Governor
A. W. G i l b e r t , Deputy Governor
J . E. Crane, Deputy Governor
W. R. B u r g e s s , Deputy Governor
Walter S . Logan, Deputy Governor & Gen.Counsel
R. M. Gidney, A s s t . Deputy Governor
J . W. J o n e s , A s s t . Deputy Governor
W. B. Matteson, A s s t . Deputy Governor
C. H. Coe, A s s t . Deputy Governor
J . M. R i c e , A s s t . Deputy Governor
Allah S p r o u l , A s s t . Deputy Governor & S e c ' y .
D.
E.
R.
J.
R.
H.
C.
F.
A.
M.
Barrows, Manager
French, Manager
McMurray,Manager
Mitchell,Manager
Morgan, Manager
J . H. Case, Chairman of t h e Board &
F e d e r a l Reserve Agent
Owen D. Young, Deputy Chairman of
the Board
W. H. D i l l i s t i n , A s s i s t a n t Federal
Reserve Agent
H. S . Downs, A s s i s t a n t F e d e r a l Res e r v e Agent
Carl S n y d e r , General S t a t i s t i c i a n
E. L. Dodge, General A u d i t o r
G. W. Ferguson, A s s t . Au d i t o r
H.
W.
I.
W.
E.
V.
A.
W.
W.
0.
R o e l s e , Manager & A s s t . S e c ' y .
S c o t t , Manager
Waters, Manager
Burt,
Manager
Douglas.Manager
DIRECTORS
Class A.
Cnas. E. M i t c h e l l
Thos. W. S tephens
David C. Warner
Chrm., H a t i o n a l City Bank, New York, N.Y.
P r e s . , The Bank of M o n t c l a i r , M o n t c l a i r , E . J .
P r e s . , E n d i c o t t T r u s t Conroany, E n d i c o t t , N.Y.
Term
Expires
Dec. 31
1931
1932
1933
Class B:
Wm. H. Woodin
Theodore F. Whitmarsh
Samuel W. ReyTmrn
P r e s . .American Car & Foundry Co. ,NewYork,N.Y.
Chrm. . F r a n c i s H. L e g g e t t & Co., New York,N.Y.
P r e s . , Lord & T a y l o r , New York, N. Y.
1931
1932
1933
New York, N. Y.
Chrm., General E l e c t r i c Co., New York, N. Y.
Chrm., American R a d i a t o r & S t a n d a r d S a n i t a r y
C o r p o r a t i o n , Greenwich, Conn.
1931
1932
1933
Class C;
J . H. Case
Owen D. Young
Clarence M. Woolley
MEMBER FEDERAL ADVISORY 'COUNCIL
Robert H# Treman
ASSISTANT COUNSEL
The odore M. Cri sp
H. S . S c h u l t z
106
DISTRICT HO. 3
X-6808
FEDERAL RESERVE BA1JK OF PHILADELPHIA
OFFIC5HS AND DIRECTORS. 1931
0?FIC2RS
Geo. W. M o r r i s ,
Governor
William H. H u t t ,
Deputy Governor
C. A. Mcllhenny,
Cashier & S e c r e t a r y
W, J .
James
R. M.
S . R.
B i c h a r d L. A u s t i n , Chairman of the
Board and F e d e r a l Reserve Agent
Alba B. Johnson, Deputy Chairman of the
Board
A r t h u r E. P o s t , A s s i s t a n t F e d e r a l Res e r v e Agent
E r n e s t C. H i l l , A s s i s t a n t F e d e r a l Res e r v e Agent
William G. McCreedy, Comptroller
Davis,
A s s i s t a n t Cashier
M. Toy, A s s i s t a n t Cashier .
M i l l e r , J r . , A s s i s t a n t Cashier
Earl,
A s s i s t a n t Cashier
DIRECTORS
Class A:
John C. Cosgrove
Joseph 'Jayne, J r . ,
George .7. R e i l y
Banker and Coal O p e r a t o r , Johnstown, P a .
P r e s . , p h i l a . N a t i o n a l Bank, P h i l a d e l p h i a , P a .
P r e s . , H a r r i s b u r g R a t i o n a l Bank, H a r r i s b u r g , P a .
Term
Expires
Dec. 31
1931
1932
1933
Class B:
C. F. C. S t o u t
Arthur
Sewall
A r t h u r C. Dorrance
John R. Evans & Company, P h i l a d e l p h i a , P a .
P r e s . , General A s p h a l t Company, P h i l a d e l p h i a , P a .
P r e s . , Campbell Soup Company, Camden, New J e r s e y
1931
1932
1933
Farmer and P a c k e r , B r i d g e v i l l e , Delaware
P h i l a d e l p h i a , Pa.
Chrm..Southwark Fndry.&Machine C o . . P h i l a d e l p h i a , P a .
1931
1932
1933
Class C:
Harry L. Cannon
Richard L. A u s t i n
Alba B. Johnson
MEMBER FEDERAL ADVISORY COUNCIL
Howard A. Loeb
COUNSEL
W i l l i a m s , B r i t t a i n and S i n c l a i r
DISTRICT HO. 4
X-6808
FEDERAL RESERVE BAH OF CLEVELAND
OFFICERS AHD DIRECTORS. 1931'
OFFICERS
E.- R. Fancher,
Governor
•M. J . Fleming,
Deputy Governor
F t. , J . ; Z u r l i a d e n , Deputy Governor
H. F. S t r a t e r , Cashier and S e c r e t a r y
e . W.
c. L.
D. B.
w. F.
G. H.
George DeCamp, Chairman of t h e Board
and F e d e r a l Reserve Agent
L. B. W i l l i a m s , Deputy Chairman of the
Board
J . B. Anderson, A s s i s t a n t F e d e r a l Res e r v e Agent
W. H. F l e t c h e r , A s s i s t a n t F e d e r a l Res e r v e Agent
F. V. Grayson, A u d i t o r
Arnold, A s s i s t a n t
Bickford,Assistant
Clouser, A s s i s t a n t
Taylor, A s s i s t a n t
Wagner, A s s i s t a n t
Cashier
Cashier
Cashier
Cashier
Cashier
DIRECTORS
Term
Expires
Dec. 31
Class A:
Chess Lambert on
Robert Eardrop
0 . N. Sams
V. P . , Lamberton n a t i o n a l Bank, F r a n k l i n , P a .
Chrm., F i r s t N a t i o n a l Bank, P i t t s b u r g h , P a .
P r e s . , Merchants n a t i o n a l Bank, H i l l s b o r o , Ohio
1931
1932
1933
Reed Manufacturing Conpany, E r i e , P a .
P r e s . , P h i l i p Carey Mfg. Co., C i n c i n n a t i , Ohio
P r e s . , Ohio S t e e l Foundry Co., Lima, Ohio
1931
Hayden, M i l l e r & Company, Cleveland, Ohio
Cleveland, Ohio
V. P . , Bostwick-Braun Company, Toledo, Ohio
1931
1932
1933
Class B:
R. P . Wright
Geo. D. Crabbs
John E. Galvin
1932
1933
Class C:
L. B. Williams
George DeCamp.
ff. W. Knight
MEMBER FEDERAL ADVISORY COUITCIL
J . A. House
COUNSEL
S q u i r e , Sanders & Benpsey
108
DISTRICT NO. 6
X-6808
FEDERAL RESERVE BANK OF RICHMOND
OFFICERS AND DIRECTORS. 1931
George J . Seay,
C. A. P e p l e ,
R. H. Broaddus,
J . S . Walden, J r . ,
G. H. Keesee,
A. S.- J o h n s t o n e ,
J . TV G a r r e t t ,
Governor
Deputy Governor
Deputy Governor
Controller
Cashier
Manager
Manager
OFFICERS
Wm. W. Hoxton, Chairman of t h e Board
and F e d e r a l Reserve Agent
F r e d e r i c A. Delano, Deputy Chairman
of the Board
J . G. F r y , A s s i s t a n t F e d e r a l Reserve
Agent
T. F. Epes, A u d i t o r
W. W. D i l l a r d ,
A s s i s t a n t Cashier
Edward W a l l e r , J r . . A s s i s t a n t Cashier
DIRECTORS
Team
Expires
Dec. 31
Class A:
J a s . C. B r a s w e l l
L. E. Johnson
Chas. E. Rieman
P r e s . , P l a n t e r s N a t i o n a l Bank, Rocky Mount, N.C.
P r e s . , F i r s t N a t i o n a l Bank, Alders on, I?. Va.
P r e s . , 7 e s t e r n N a t i o n a l Bank, B a l t i m o r e , Md.
1933
P r e s . , N a t i o n a l E l e c . Supply Co., Washington,D.C.
Merchant, H a r t s v i l l e , South C a r o l i n a .
P r e s . , Times-World C o r p o r a t i o n , Roanoke, Va.
1931
1932
1933
T e x t i l e s , C h a r l o t t e , North C a r o l i n a
Richmond, V i r g i n i a
R e c e i v e r , Washington, D. C.
1931
1932
1933
1931
1932
Class B:
Edwin C. Graham
D. R. Coker
Junius p. Fishbum
Class C;
Robert Lass i t e r
Wm. W. Hoxton
F r e d e r i c A. Delano
MEMBER FEDERAL ADVISORY COUNCIL
John Poole •
COUNSEL
M. G. Wallace
109
DISTRICT HO. 6
X-6808
FEDERAL RESERVE BANK OF ATLAiTTA
OFFICERS AND DIRECTORS. 1951
OFFICERS
E. R. Black,
Governor
W. S. Johns,
Deputy Governor
H. F. C o n n i f f , Deputy Governor
W. S. McLarin, J r . , A s s t . Deputy Governor
Oscar Hewton, Chairman of t h e Board
and F e d e r a l Reserve Agent
W. H. K e t t i g , Deputy Chairman of the
Board
Ward A l b e r t s o n , A s s i s t a n t F e d e r a l Res e r v e Agent and S e c r e t a r y
E. P . P a r i s , General A u d i t o r
J . W. Honour, A s s i s t a n t A u d i t o r
M. W. B e l l , Cashier
R.
V.
C.
P.
S.
L.
A.
K.
R.
L.
P.
M.
Sims, A s s i s t a n t Cashier
Bowman, A s s i s t a n t Cashier
Camp, A s s i s t a n t Cashier
T. B e a v e r s , A s s i s t a n t C a s h i e r
Schuessler, A s s i s t a n t Cashier
Clark,
A s s i s t a n t Cashier
DIRECTORS
Class A:
E. C. Melvin
G. G. Ware
H. Lane Young
P r e s . , Selma N a t i o n a l Bank, Selma, Alabama
P r e s . , F i r s t N a t i o n a l Bank, Leesburg, F l o r i d a
V. P . t C i t i z e n s & Southern N a t . Bank, A t l a n t a , Ga.
Term
Expires
Dec. 31
1931
1932
1933
Class B:
J . B. H i l l
Leon C. Simon
J . A. McCrary
P r e s . , N a s h v i l l e , C h a t t a n o o g a & S t . L o u i s R . R . . N a s h v i l l e , T e n n . 1931
1933
V. P . , Kohn, Weil & Simon, I n c . , New O r l e a n s , La.
1933
P r e s . , J . B. McCrary Company, D e c a t u r , Georgia
Class C:
W. H. K e t t i g
Oscar Newton
George S. H a r r i s
Southern R e p r e s e n t a t i v e , Crane Co., Birmingham, A l a .
A t l a n t a , Georgia
Hunter Mfg.& Commission Co.of 1T.Y., A t l a n t a , Ga.
MEMBER FEDERAL ADVISORY COUNCIL
J . P. B u t l e r
COUNSEL
Robert S. P a r k e r
1931
1932
1933
110
DISTRICT HO. 7
X-6808
FEDERAL RESERVE BANK OF CHICAGO
OFFICERS AIID DIRECTORS. 1931
J.
J.
C.
J.
f.
E.
D.
0.
B.
H.
R.
H.
C.
A.
A.
J.
OFFICERS
McDougal, Governor
Blair,
Deputy Governor
McKay,
Deputy Governor
Dillard,
Deputy Governor
Bachman,
A s s t . Deputy Governor
Delaney,
A s s t . Deputy Governor
Jones,
A s s t . Deputy Governor
N e t t e r s t r o m , A s s t . Deputy Governor
Eugene M. S t e v e n s , Chairman of the
Board and F e d e r a l Reserve Agent
James Simpson, Deputy Chairman of
the Board
W. H. White, A s s i s t a n t F e d e r a l Res e r v e Agent
C. S. Young, A s s i s t a n t F e d e r a l Res e r v e Agent
I . R. B u r g e s s , A u d i t o r
W. A. Hopkins, A s s i s t a n t Au d i t o r
F. Bateman,
Manager
J . C. C a l l a h a n , Manager
R. E. C o u l t e r ,
Manager
A. W. Dazey,
Manager
I r v i n g F i s c h e r , Manager
R. J . Hargreaves,Manager
F. A. L i n d s t e n , l^anager
J . G. R o b e r t s , Manager
L. G. Meyer, Manager
A. L. Olson, Manager & A s s t .
Secretary
L. G. Pavey, Manager
H. G. P e t t , Manager
F. L. P u r r i n g t o n , Manager
Geo. L. Prugh, Manager
DIRECTORS
Term
Expires
Dec. 31
Class A:
Edward R. E s t h e r g
George J . S c h a l l e r
Geo. M. Reynolds
P r e s . , Waukesha N a t ' l . Bank, Waukesha, Wis.
P r e s . , C i t i z e n s F i r s t N a t i o n a l Bank, Storm Lake,Iowa
Chrm., C o n t i n e n t a l Nat.Bk.& T r . C o . , Chicago,111.
1931
1932
1933
Sec.& Treas..Huron P o r t l a n d Cement C o . , D e t r o i t , M i c h .
P r e s . , I n d i a n a S e r v i c e Corp., F o r t 17ayne, I n d i a n a
V. P . , A1lis-Chalmers Mfg. Co., Milwaukee, Wis.
1931
1932
1933
P r e s . , B a l l B r o t h e r s Company, Lfcmcie, I n d i a n a
P r e s . , Marshall F i e l d & Company, Chicago, 111.
Chicago, I l l i n o i s
1931
1932
1933
Class B:
S. T. Crapo
Robert M. F e u s t e l
Max W. BaVb
Class C?
F. C. B a l l
James Simpson
Eugene M. Stevens
MEMBER FEDERAL ADVISORY COUNCIL
Melvin A. T r a y l o r
COUNSEL
Carl Meyer
Ill
DISTRICT NO. 8
X-6808
FEDERAL RESERVE BANK OF ST. LOUIS
OFFICERS AND'DIRECTORS. 1931
OFFICERS
Wm. McO. liar t i n , Governor
John- S. Wood, Chairman of the Board
and F e d e r a l Reserve Agent
John W. Boehne, Deputy Chairman of
t h e Board
C. M. S t e w a r t , A s s i s t a n t F e d e r a l Res e r v e Agent
E. J . ITovy, Au d i t o r
A. E. D e b r e c h t , A s s i s t a n t A u d i t o r
6. M. A t t e b e r y , Deputy Governor
Ja&. G. McConkey, S e c 1 y . & Counsel
A.
S.
F.
C.
G.
H.
F.
N.
A.
0.
Haill,
Gilmore,
Hall,
Schacht,
Hollocher,
Controller
Controller
Controller
Controller
Controller
DIRECTORS
'
Class A:
John C. Martin
John G. Lonsdale
Max B. Nahm
Term
Expires
Dec. 31
V. P . , C a s h i e r , Salem N a t ' l . Bank, Salem, 111.
P r e s . , Mercantile-Commerce Bank & T r u s t C o . , S t . L o u i s , Mo.
V. P . , C i t i z e n s N a t i o n a l Bank, Bowling Green, Ky«
1931
1932
1933
P r e s . , P l u n k e t t - J a r r e l l Grocery Co., L i t t l e Bock,Ark*
P l a n t e r , Glendora, M i s s i s s i p p i
P r e s . , H a r r i s - P o l k Hat Company, S t . L o u i s , Mo*
1931
1932
1933
D i l l a r d & C o f f i n Company, Memphis, Tennessee
Retired, Evansville, Indiana
S t . L o u i s , Missouri
1931
1932
1933
Class B:
W. B. P l u n k e t t
M. P . S t u r d i v a n t
J a s . W. H a r r i s
Class C:
Paul D i l l a r d
John W. Boehne
John S. Wood
MEMBER FEDERAL ADVISORY COUNCIL
Walter W. Smith
COUNSEL
J a s . G. McConkey
lis
DISTRICT HO. 9
X-6808
FEDERAL RESERVE BAM OF MINNEAPOLIS
OFFICERS AJD DIRECTORS. 1931
OFFICERS
1 . B. Geery, Governor
Harry Yeager, Deputy Governor
H. I . Ziemer, Deputy Governor & Cashier
F. C. Dunlop, C o n t r o l l e r
John R. l & t c h e l l , Chairman of the
Board, and Federal Reserve Agent
Homer P. Clark, Deputy Chairman of
the Board
C u r t i s 1 . Mosher, A s s i s t a n t Federal
Reserve Agent
Fred M. B a i l e y , A s s i s t a n t Federal
Reserve Agent
Leonard E. R a s t , A s s i s t a n t
Harold C. Core, A s s i s t a n t
A r t h u r R. L a r s o n , A s s i s t a n t
R. F< Hornsti'om, A s s i s t a n t
Cashier
Cashier
Cashier
Cashier
To tin
Expires
Dec. (31
Class A:
Paul J . Leeman
J . C. B a s s e t t
H. C. Hansen
7 . P . , F i r s t iTat' 1. Bank, Minneapolis, Minn.
P r e s . , Aberdeen Nat' 1. Bank, Aberdeen, S . D.
P r e s . , F i r s t National Bank, Churchs F e r r y , N. D.
1933
A. J . Frank Manufacturing Co., S t . P a u l , Minn.
Manufacturer of Bakery P r o d u c t s , Helena, Mont.
John S. Owen Lumber Company, 2aU C l a i r e , Wis.
1931
1932
1933
P r e s . , Menominee River Sugar Cot, Menominee, ivlich.
Minneapolis, Minnesota
P r e s . , "Test Publishing Company4 S t . Paul, Minnesota
1931
1932
1933
1931
1932
Class B:
W. 0. Washburn
J . E. O'Connell
John S . Owen
Class C:
Geo. *7. McCormick
John R. . M i t c h e l l
Homer P. Clark
MEMBER F3D2Sa.iL ADVISORY COUNCIL
George Hi Prinde
C0U1TSLL
Andreas tie land
X-6808
DISTRICT NO. 10
INDERAL RESERVE BANK OF KANSAS CITY
ora OSES M P DI5BCT0RS. 1931
OFFICERS
W . J . Bailey,
Governor
M. L. McClure, Chairman of t h e Board
and F e d e r a l Reserve Agent
Wm. L. P e t r i k i n , Deputy Chairman of
t h e Board
A. M. McAdams, A s s i s t a n t F e d e r a l Res e r v e Agent and S e c r e t a r y
S. A. 7 a r d e l l , Auditor
C. A. Worthington, Deputy Governor
J . W. Helm, Deputy Governor & Cashier
John P h i l l i p s , J r . ,
G. E. B a r l e y ,
E. P. Tyner,
M. W. E. P a r k ,
G. H. P i p k i n ,
N. R. Oberwortmann,
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Cashier
Cashier
Cashier
Cashier
Cashier
Cashier
DIRECTORS
Term
Expires
Dec. 31
Class A:
Frank W. Sponable
E. E. Mallaney
C. C. Parks
P r e s . , Miami County N a t ' l . Bank, P a o l a , Kansas
P r e s . , Farmers & ifer c h a n t s Bank, H i l l C i t y , Kansas
V. P . , F i r s t n a t i o n a l Bank, Denver, Colorado
1931
1932
1933
J . M. B e r n a r d i n Lumber Co., Kansas City* Missouri
V. P . , P h i l l i p s P e t r o l e u m Co., B a r t l e s v i l l e , Okla.
John Doere Plow Company, Omaha, Nebraska
1931
1932
1933
P r e s . , G r e a t Western Sugar Co., Denver, Colorado
Kansas C i t y , Missouri
Farmer - Stockman, Bennington, Nebraska
1931
1932
1933
Class B:
J . M. Be m a r d i n
L. E. P h i l l i p s
1 . D. Hosford
Class C:
WM. L. P e t r i k i n
M. I . McClure
W. W. Magee
MEMBER FEDERAL ADVISORY COUNCIL
Walter S. McLucas
COUNSEL
H. G. Leedy
114
DISTRICT HO. 11
X-6808
FEDERAL RESERVE BANK OF DALLAS
OFFICERS M P DIRECTORS. 1931
OFFICERS
Lynn P . T a l l e y , Governor
C. C. Walsh, Chairman of t h e Board
and F e d e r a l Reserve Agent
S. B. P e r k i n s , Deputy Chairman of
the Board
C. C. H a l l , A s s i s t a n t F e d e r a l
Reserve Agent
W. J . Evans, A s s i s t a n t F e d e r a l
Reserve Agent
W. P . C l a r k e , General A u d i t o r
C. C. True, A s s i s t a n t A u d i t o r
B« R. G i l b e r t , Deputy Governor
R. B« Coleman, Deputy Governor
Pre d H a r r i s ,
Gashier
W. 0» Ford, A s s i s t a n t Deputy Governor
L. G. Pondrom,
E. B. A u s t i n ,
R. 0 . Webb,
A s s i s t a n t Cashier
A s s i s t a n t Cashier
A s s i s t a n t Cashier
DIRECTORS
Term
Expires
Dec. 31
Class A:
W. He P a t r i c k
J". P . Williams
R. E> Harding
P r e s . , F i r s t N a t i o n a l Bank, Clarendon, Texas
P r e s . , F i r s t N a t i o n a l Bank, Mineral W e l l s , Texas
P r e s . , F o r t Worth n a t i o n a l Bank, F o r t Worth, Texas
1931
1932
1933
W. D. Cleveland & Sons, Houston, Texas
V. P . , S o u t h l a n d Cotton Oil Co., P a r i s , Texas
Wholesale Grocer, Waco, Texas
1931
1932
1933
D a l l a s , Texas
P r e s . , Magnolia Petroleum Co., D a l l a s , Texas
P r e s . , P e r k i n s Dry Goods Conpany, D a l l a s , Texas
1931
1932
1933
Class B:
A. S. Cleveland
J . J* C u l b e r t s o n
J . R. Milam
Class C:
C. C. Walsh
E. R» Brown
S. B» P e r k i n s
MEMBER FEDERAL ADVISORY COUNCIL
B. A. McKinney
COUNSEL
%
Charles C. Huff
Locke, Locke, S t r o u d & Randolph
*
115
X-6808
DISTRICT NO. 12
FEDERAL RESERVE BAM OF SAN IBM CI SCO
OFFICZRS AND DIRECTORS. 1931
OFFICERS
J n o . U. C a l k i n s , Governor
W. A. Day, Deputy Governor
I r a Clerk, Deputy Governor
W. M. Hale, Cashier
I s a a 6 B. Newton, Chairman of t h e
Board and F e d e r a l Reserve Agent
Walton N. Moore, Deputy Chairman o f .
the Board
S. G. S a r g e n t , A s s i s t a n t F e d e r a l Re*
s e r v e Agent and S e c r e t a r y
0 . P . Wheeler, A s s i s t a n t F e d e r a l Res e r v e Agent
F. H. Holman, General A u d i t o r
R. T. Hardy, A u d i t o r
C. E. 3 a r h a r t , A s s i s t a n t Cashier
C. D. P h i l l i p s , A s s i s t a n t Cashier
H. N. Mangels, A s s i s t a n t Cashier
E. C. M a i l l i a r d , A s s i s t a n t Cashier
F. C. Bold, A s s i s t a n t Cashier
J . M. Osmer, A s s i s t a n t Cashier
DIRECTORS
Term
Expires
Dec. 31
Class A;
C. K. Mcintosh
T. H. Ramsay
K e i t h Powell
P r e s . , Bank of C a l i f o r n i a N.A.,San F r a n c i s c o , Cal.
P r e s . , P a c i f i c N a t 1 l . A g r i . C r e d i t Corp.,San F r a n c i s c o
P r e s . , Bank of Woodburn & F i r s t N a t ' 1 .Bank,Woodburn,Ore,
1931
1932
1933
V. P . , Madera Sugar P i n e Co., Madera, C a l i f o r n i a
Chrm., Dohrmann Comm'1.Co., San F r a n c i s c o , C a l i f .
P r e s . , Broadway Dept. S t o r e , Los A n g e l e s , C a l i f .
1931
1932
1933
Southern P a c i f i c Railway, San F r a n c i s c o , C a l i f .
San F r a n c i s c o , C a l i f o r n i a
Chrm., Talton N. Moore Dry Goods Co.,San F r a n c i s c o , C a l .
1931
1932
1933
Class B:
E. H. Cox,
A. B. C. Dohrmann
Malcolm McNaghten
Olass C:
Wm. Sproule
I s a a c B. Newton
Walton Nr Moore
MEMBER FEDERAL ADVISORY COUNCIL
Henry M. Robinson
COUNSEL
A. C. Agnew
.I
DISTRICT NO. 2
116
X-6808-a
BUFFALO BRANCH of the FEDERAL RESERVE BANK OF NEW YORK
OFFICERS AND DIRECTORS. 1931
OFFICERS
T l : t a Z -
=: I: % 2 - t :
DIRECTORS
Roht. M. O'Hara
B u f f a l o , New York
Geo. G. K l e i n d i n s t # Chra. P r e s . , L i b e r t y Bask, B u f f a l o , New York
__
John T. Symes
P r e s . , Niagara Co.lTat.Bk.& Tr.Co. ,Lockport,N.Y.
F. B. Cooley #
p r e s . , New York Car Wheel Co., B u f f a l o , N.Y.
Lewis G. Harriman
P r e s . , M. & T, T r u s t Company, B u f f a l o , IT. Y.
Edward G. Miner #
' P r e s . , P f a u d l e r Company, R o c h e s t e r , Jew York
Geo. F. Rand
P r e s . , Marine T r u s t Company, B u f f a l o , New York
#Appointed "by t h e Board,
cashie,
Term
Expires
Dec. 31
^31
19 1
19 1
1933
1932
1933
1933
117
DISTRICT JO. 4
X-6808-a
CIHCmiATI BRANCH of the FEDERAL BLS3HVE BAIIK OF CLEVELAJTD
OFFICERS AiTO DIRECTORS. 1931
OFFICERS
C. P. McCombs, Managing D i r e c t o r
3. J . Lazar,
Cashier
Bruce Kennelly, A s s i s t a n t Cashier
H. N. O t t ,
A s s i s t a n t Cashier
DIBBCTORS
C. F. McCombs
Fred A. G e i e r # Chrm;
E. S. Lee
John Omvrake #
T. J . Davis
Geo. M. V e r i t y #
B. H. Kroger
C i n c i n n a t i , Ohio
P r e s . , C i n c i n n a t i M i l l i n g Machine Co., C i n c i n n a t i , 0.
p r e s . , F i r s t Hat. Bank & T r u s t Co., Covington, Ky.
P r e s . , U. S . P l a y i n g Card Co., C i n c i n n a t i , Ohio
Chrm., F i r s t Hationell Bank, C i n c i n n a t i , Ohio
P r e s . , American B o i l i n g M i l l Co., Middle town, 0.
Chrm., P r o v i d e n t Savings & T r u s t Co., C i n c i n n a t i , 0.
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
PITTSBURGH BRANCH of the FEDERAL RSSSaVB BAIfiC OF CLflVELAHD
OFFICERS ABD PIHECTORS. 1931
OFFICERS
J . C. Hevin, Llanaging D i r e c t o r
T. C. G r i g g s , Cashier
P . A. Brown, A s s i s t a n t Cashier
F. E. Cobun, A s s i s t a n t Cashier
DIRECTORS
J . C. ITevin
James Rae # Chrm.
A. E. Braun
A. L. Humphrey #
J o s . R. Sisaman
J . S. Jones f
R. B. Mellon
#
P i t t s b u r g h , Pennsylvania
S e c . - T r e a s . ,Arbuthnot Stephenson Co. , P i t t s b u r g h , P a .
P r e s . , Farmers Deposit N a t . Bank, P i t t s b u r g h , P a .
P r e s . , Westinghouse A i r Brake Co., P i t t s b u r g h , P a .
D i r . , A t l a n t i c Crushed Coke Co., Greensburg, P a .
S e c - T r e a s . , Stone & Thomas, Wheeling, W. Va.
P r e s . , Mellon N a t i o n a l Bank, P i t t s b u r g h , P a .
Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
X-6808-a
DISTRICT NO. 5
BALTIMORE BRANCH of t h e FEDERAL RESERVE BAM OF RICHMOND
OFFICERS AND DIRECTORS. 1931
OFFICERS
A. H. Dudley,
J . R. Cupit,
Managing D i r e c t o r
Cashier
J . Ai J o h n s t o n , A s s i s t a n t Cashier
F. Wi Wrightson, A s s i s t a n t Cashier
DIRECTORS
A. H. Dudley
Wm. H. Mat t h a i # Chrm.
Levi P h i l l i p s
E. P . C o h i l l #
L. S. Zimmerman
Norman James #
H. B. l i l c o x
Term
Expires
Dec. 31
B a l t i m o r e , Maryland
P r e s . , Beaver Dam Marble Company, B a l t i m o r e , Md,.
P r e s . , Natio:ial Bank of Cambridge, Cambridge, Md*
P r e s . , Tonoloway Orchard Company, Hancock, Md.
V. P . , Maryland T r u s t Company, B a l t i m o r e , Md.
James Lumber Company, B a l t i m o r e , Md.
V. P . , Merchants N a t i o n a l Bank, B a l t i m o r e , Md.
1931
1931
1931
1932
1932
1933
1933
CHARLOTTE BRANCH of the FEDERAL RESERVE BANK OF RICHMOND
OFFICERS AND DIRECTORS.
1931
OFFICERS
Hugh Leach, Managing D i r e c t o r
f . T. Clements, Cashier
DIRECTORS
Hugh Leach
C h a r l o t t e , North C a r o l i n a
John L. Moorhead f Chrm.Manufacturer, C h a r l o t t e , North C a r o l i n a
W. H. Wood
P r e s . , American T r u s t Company, C h a r l o t t e , N. C.
Chas. A. Cannon f
P r e s . , Cannon Manufacturing Co., K a n n a p o l i s , N. C.
C, L. Cobb
C a s h i e r , Peoples N a t i o n a l Bank, R o c k h i l l , S . C.
John A. Law #
M a n u f a c t u r e r - Banker, S p a r t a n s b u r g , S. C.
Robert Gage
V. P . & Cashier, Commercial Bank, C h e s t e r , S. C.
#
Appointed by t h e Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
119
DISTRICT NO. 6
X-6808-a
• MEW ORLEANS BRANCH of the ZSD3EAL RESERVE BANK OF ATLANTA
OFFICERS AND DIRECTORS. 1931
OFFICERS
Marcus Walker,
Managing D i r e c t o r
James A. Walker, A s s i s t a n t Manager
Wm. H. B l a c k ,
Cashier
F. C. V a s t e r l i n g , A s s i s t a n t Cashier
W. 1 . M i l l e r ,
A s s i s t a n t Au d i t or
.
DIRECTORS
Term
Expires
Dec. 31
(
Marcus Walker
Pi H. Saunders #
R. S. Hecht
L. C. Simon # Chrm.
F. W. Foote
A l b e r t P . Bush #
J . D. O'Keefe
New O r l e a n s , L o u i s i a n a
V. P . , Newman, Saunders & Co.,Inc.,New O r l e a n s , La.
P r e s . , H i b e m i a Bank & T r u s t Co., New O r l e a n s , La.
V. P . , Kohn, Weil & $imon, I n c . , New O r l e a n s , La.
P r e s . , F i r s t N a t i o n a l Bank, H a t t i e s b u r g , Miss.
V. P . , T. G. Bush Grocery Co., Mobile, Alabama
P r e s . , .Whitney N a t i o n a l Bank, New O r l e a n s , La.
1931
1931
1931
1932
1932
1933
1933
BIRMINGHAM BRA1TCH of the FEDERAL RESERVE BANK OF ATLANTA
OFFICERS AltD DIRECTORS. 1931
OFFICERS
A. E. Walker,
Managing D i r e c t o r
H. J . U r q u h a r t ,
T. N. Knowlton,
Cashier
A s s i s t a n t Cashier
DIRECTORS
A. E. Walker
W. H. K e t t i g # Chrm.
John H. Frye
Oscar Wells #
W. W. Crawford
E. F. A l l i s o n #
W. E. Henley
#
Birmingham, Alabama
S o u t h e r n R e p r e s e n t a t i v e , Crane Co., Birmingham, A l a ,
P r e s . , C e n t r a l Investment Company, Birmingham, A l a .
P r e s . , F i r s t N a t i o n a l Bank, Birmingham, Alabama
Chrm. American Traders N a t i o n a l Bank, Birmingham, A l a .
P r e s . , A l l i s o n Lumber Company, Bellamy, Alabama
P r e s . , Birmingham T r u s t & Savings Co. .Birmingham, A l a .
Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
DISTRICT NO. 6
X-6808-a
JACKSONVILLE BBMCH of t h e FEDERAL R3S2RVE BISK OF ATLANTA
4-20
OFFICERS AND DIRECTORS. 1931
OFFICERS
Hugh F o s t e r , Managing D i r e c t o r
George S. Vardeman, C a s h i e r
Mary E. : Mahon,
A s s i s t a n t Cashier
DIRECTORS
Hugh Foster,
;
J . 0. Cooper # Chrm. ,
( j . Gr. Ware,
;
j?ulton Saussy #
Edvire ¥. Lane
,
ti. 0 . Chase #
A.
Perry
Term
Expires
Dec. 31
Jacksonville* Jlorida
A t t o r n e y a t £aw, J a c k s o n v i l l e , F l o r i d a
p r e s . , F i r s t N a t i o n a l Bank* L e e s b u r g , F l o r i d a
S a u s s y a n d Common, J a c k s o n v i l l e * F l o r i d a
Chrm., A t l a n t i c N a t i o n a l Batik* J a c k s o n v i l l e , F l o r i d a
Chase and Conpany, S a n f o r d j F l o r i d a
P r e s . , F l o r i d a N a t i o n a l Bank* J a c k s o n v i l l e , F l o r i d a
1931
1931
1931
1932
1932
1933
1933
NASHVILLE BRANCH of t h e FEDERAL RESERVE BANK OF ATLANTA.
OFFICERS AND DIRECTORS. 1931
OFFICERS
•*
J o e l B. F o r t , J r . , Managing D i r e c t o r
$ . R. H a r r i s o n , C a s h i e r ,
Leo W. S t a r r ,
A s s i s t a n t Cashier
DIRECTORS
J o e l B. F o r t , J r . ,
J . B. IH.11 # Chrm.
Frank J . H a r l e
P . M. Davis #
C. W. B a i l e y
Wm. P . R i d l e y #
C. A. Craig
Term
Expires
Dec. 31
N a s h v i l l e , Tennessee
P r e s . , Nashville,Chattanooga & St.Louis R.R..Nashville
C a s h i e r , C l e v e l a n d N a t i o n a l Bank, C l e v e l a n d , Tenn.
Yd P . , American N a t i o n a l Bank, N a s h v i l l e , Tennessee
P r e s . , F i r s t N a t i o n a l Bank, C l a r k s v i l l e , Tennessee
Farmer, Columbia, Tennessee
P r e s . , National L i f e & Accident Ins.Co.,Nashville,Tenn.
SAVANNAH AGENCY o f t h e FEDERAL RESERVE BANK OF ATLANTA
J . H. Bowden, Manager
James A. G o e t h e , A s s i s t a n t Manager
HAVANA AGENCY o f t h e FEDERAL RESERVE BANK OF ATLANTA
H, C. F r a z e r , Manager
#
Appointed b y t h e Board
A. H. A l s t o n , A s s i s t a n t Manager
1931
1931
1931
1932
1932
1933
1933
[ ±21
DISTRICT NO. 7
X-6808^a
DETROIT BRANCH of the FEDERAL RESERVE BAH OF CHICAGO
OFFICERS AND DIRECTORS, 1931
OFFICERS
W. R. Cation,
Managing Director
H. J . Chalfont, Cashier
J . G-. Baskin, A s s i s t a n t Cashier
G. T. J a r v i s , A s s i s t a n t Cashier
F. L. Bowen, A s s i s t a n t Auditor
Isadore Levin,
A s s i s t a n t Counsel
DIRECTORS
Term
Expires
Dec. 31
W. R. Cation
James I n g l i s # Chrm.
Wm. J . Gray
N. P . Hull #
J u l i u s H. Haass
David McMorran #
George B. Morley
#
D e t r o i t , Michigan
P r e s . , American Blower Company, D e t r o i t , Michigan
V.Chrm., F i r s t National Bank, D e t r o i t , Michigan
P r e s . , Grange L i f e Insurance Co. , Lansing, Michigan
P r e s . , , Peoples-Wayne County Bank, D e t r o i t , Michigan
P r e s . , Heinr. Frantic Sons, I n c . , Bay City, Michigan
P r e s . , Second National Bank, Saginaw, Michigan
Appointed by the Board
1931
1931
1931
1932
1932
1933
1933
! 122
DISTRICT HO. 8
X-6808-a
LOUISVILLE BRAliCH of the FEDERAL RESERVE BANK OF S I . LOUIS
OFFICERS A1TD DIRECTORS. 1931
OFFICERS
I f . P. Kincheloe, Managing D i r e c t o r
John T. Moore,
Cashier
Earl R. Muir, A s s i s t a n t Cashier
L. A. Moore, A s s i s t a n t Auditor
DIRECTORS
W. P . Kincheloe
L o u i s v i l l e , Kentucky
E. L. Swearingen # Chrm. P r e s . , F i r s t N a t ' l . Bank, L o u i s v i l l e , Ky.
John T. Reynolds
P r e s . , F i r s t National Bank, G r e e n v i l l e , Ky.
W. R. Cole #
P r e s . , L o u i s v i l l e - N a s h v i l l e R.R., L o u i s v i l l e , Ky.
Eugene E. Hoge
P r e s . , S t a t e n a t i o n a l Bank, F r a n k f o r t , Ky.
E. H. .Yoods #
P l a n t e r , Lucas, Kentucky
W. F. Huthsteiner
P r e s . , Tell City H a t ' l . Bank, T e l l City, Indiana
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
MEMPHIS BRAIICH of the FEDERAL RESERVE BAH OF ST. LOCJIS
OFFICERS Aim DIRECTORS. 1931
OFFICERS
W. H. Glasgow, Managing D i r e c t o r
S. K. Belcher, Cashier
C. E. Martin, A s s i s t a n t Cashier
DIRECTORS
W. H. Glasgow
S. E. Ragland. # Chrm.
J . W. Alderson
Wm. O r g i l l #
J . M. Tarrant
E. L. Anderson #
R. B. Snowden
#
Appointed by the Board
Memphis, Tennessee
P r e s . , F i r s t ITational Bank, Memphis, Tennessee
V. P. Bank of East Arkansas, F o r r e s t City, Ark.
P r e s . O r g i l l Brothers & Co., Memphis, Tenn.
P r e s . F i r s t - C i t i z e n s H a t ' l . Bank, Dyerstmrg,Tenn.
P r e s . King & Anderson, Clarksdale, Mississippi
V. P. Bank of Commerce & Trust Co.,Memphis,Tenn.
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
\. 123
DISTRICT NO. 8
X-6808-a
LITTLE BOCK BRA1ICH of the FEDERAL RESERVE BANK OF ST. LOUIS
OFFICERS AND DIRECTORS. 1931
OFFICERS
A. F. B a i l e y , Managing D i r e c t o r
M. H. Long,
Cashier
C. Wood, A s s i s t a n t Cashier
DIRECTORS
A. F. Bailey
Moorhead Wright # Chrm.
Jo Nichol
G. H. Campbell #
S t u a r t Wilson
Hamp Williams #
W. A. Hicks
L i t t l e Rock, Arkansas
Chrm., Union Trust Co., L i t t l e Rock, Arkansas
P r e s . , Simmons National Bank, Pine B l u f f , Ark.
I n s u r a n c e , L i t t l e Rock, Arkansas
P r e s . , S t a t e National Bank, Texarkana, Ark.
pires., Hamp Williams Hardware Co.,Hot Springs,Ark.
P r e s . , Peoples Trust Co., L i t t l e Rock, Arkansas
# : Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
:
DISTRICT NO. 9
124
X-6808-a
HELBHA. BiUl'CH of the ZSD2RAL R2S2RVE BA2E OF MINNEAPOLIS
02TIC3RS AND DIRECTORS, 1931
OFFICERS
B. E. Towle,
Managing D i r e c t o r
H. L. Zimmerman, Cashier
A. A. Hoerr, A s s i s t a n t Cashier
T. B. Weir, Counsel
DIRECTORS
R. E. Towle
Henry Siehen # Chrm.
T* A. Marlow
W. R. S t r a i n #
S. McKennan
#
Helena, Montana
P r e s . , Sieben l i v e s t o c k Co;, Helena, Mont.
P r e s . , N a t i o n a l Bank of Montana, Helena, Mont.
P r e s . , S t r a i n B r o t h e r s , I n c . , Great F a l l s , Mont.
P r e s . , Union Bank & Trust Co., Helena, Mont.
Appointed by the Board
Term
Expires
Dec* 51
1931
1931
1931
1932
1932
125
DISTRICT HO. 10
X-6808-a
D5HVER BRANCH of the FEDERAL RESERVE BAH OF KANSAS CITY
OFFICERS AIH) DIRECTORS. 1931
OFFICERS
J . E. Olson, Managing D i r e c t o r
S. A. Brown, Cashier
J . A. Cronan, A s s i s t a n t Cashier
DIRECTORS
Term
Expires
Dec. 31
J . E. Olson
Denver, Colorado
Mar do MacKenzie # Chrm. The Matador Land & C a t t l e C o . , l t d . , D e n v e r , C o l o .
Harry W. Farr
Livestock & Farming, Greeley, Colorado
R. H. Davis #
Wholesale Drug Business, Denver, Colorado
Henry Swan
V . P . , U. S. Mational Bank, Denver, Colorado
Merrit .7» Gano #
The G-ano-Downs Company, Denver, Colorado
Harold Kountze
Chrm., Colorado National Bank, Denver, Colo.
1931
1931
1931
1932
193d
1933
1933
OMAHA BRANCH of the FEDERAL RESERVE BANK OF KAlvSAS CITY
OFFICERS AND DIRECTORS. 1931
OFFICERS
L. H. E a r h a r t , Managing D i r e c t o r
G. A. Gregory, Cashier
Wm. P h i l l i p s , A s s i s t a n t Cashier
0. P . C o r d i l l , A s s i s t a n t Cashier
DIRECTORS
L. H« Earhart
Tim. Diesing # Chrm.
A. H. Marble
William E. Hardy #
T«. L. Davis
^
D. M. Hildebrand f
R. 0. Marnell
#
Omaha, Nebraska
Cudahy Packing Company, Omaha, Nebraska
P r e s . , Stock Growers N a t ' 1 . Bank, Cheyenne .Wyoming
Hardy F u r n i t u r e Companyj Lincoln, Nebraska
V. P . , F i r s t National Bank, Omaha, Nebr.
Farmer and Stockman, Seward, Nebraska
Cashier, Merchants N a t ' l . Bank, Nebraska City, Nebr.
Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
i
126
X-6808-a
DISTRICT 110. 10
%
OKLAHOMA CITY BBAJCH of the FEDERAL RESERVE BASK OF KANSAS CITY
OFFICBBS AITD DIRECTORS. 1931
OFFICESS
C. E. Daniel,
Managing Director
R. 0. Wunderlich# Cashier
R. L« Mathes, A s s i s t a n t Cashier
DIRECTORS
C. E. Daniel
T. F. Nichols § Chrm.
Ned Holman
Austin Miller #
H. H. Ogden
J . B. Doolin #
William Mee
f
Oklahoma City, Oklahoma
Merchandising and Livestock, Tulsa, Oklahoma
Chrm.&Director,Liberty N a t ' l . Bank,Oklahoma City,Okla.
P r e s . j Oklahoma F a r n i t a r e Mfg.Co.,Oklahoma City.Okla.
Pros *, F i r s t N a t ' l . Bank & Trust Co;, Muskogee, Okla,
P r e s 4 i Schaefer-Doolin Mortgage Co., Alva, Okla.
Chrm,, Ex.Com., Am. F i r s t Nat 1 1* Bank,Oklahoma City,Okla.
Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
I 127
DISTRICT NO. 11
X-6808-a
3 1 PASO BRANCH of the FEDERAL RESERVE BAH OF DALLAS
OFFICERS
AITD
DIRECTORS. 1931
OFFICERS
J . L. Hermann, Managing D i r e c t o r
Allen Sayles, Cashier
DIRECTORS
'
Term
Expires
Dec. 31
S i Paso, Texas
P r e s . , Newman Investment Co., 31 Paso, Texas
P r e s . , H. Lesinsky Company, El Paso, Texas
Investments, 31 Paso, Texas
Cashier, F i r s t N a t ' l . Bank, P o r t a l e s , New Mexico
Investments, Douglas, Arizona
V. P . , S t a t e National Bank, 31 Paso, Texas
1931
1931
1931
1932
1932
1933
1933
"
J . L. Hermann
C. M. Newman ft Chrm.
E. M. Hurd
A* P. Coles #
A. ? . Jones
S. P. ApplAwhite #
Geo. D. Flory
HOUSTON BRAIICH of the FEDERAL RESERVE BANK OF DALLAS
OFFICERS AND DIRECTORS. 1931
OFFICERS
W. D. Gentry, Managing D i r e c t o r
C. B. Mendel, Cashier
H. R. DeMoss, A s s i s t a n t Cashier
DIRECTORS
•
W. D. Gentry
R. M. Earrar # Chrm.
Guy M. Bryan
J . Cooke *7ilson
ft
N. E. Meador
E. A, peden f
A. A. Home
#
Houston, Texas
P r e s . , F a r r a r Lumber Co., Houston, Texas
P r e s . , Second National Bank, Houston, Texas
p r e s . , The Wilson-Broach Oil Co., Beaumont, Texas
P r e s . , National Bank of Commerce, Houston, Texas
P r e s . , peden Iron & S t e e l Co., Houston, Texas
V. P . , City National Bank, Galveston, Texas
Appointed by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
1933
1933
X-6808-a
DISTRICT 30. 11
SAH AHTOHIO BRAI7CH of the FEDERAL RESERVE BANK OF DALLAS
OFFICERS AH) DIRECTORS, 1931
OFFICERS
M. Crump,
Managing D i r e c t o r
W. E. Eagle, Cashier
T. E. Parks, A s s i s t a n t Cashier
DIRECTORS
Term
Expires
Dec. 31
M. Crump
Reagan Houston if Chrm.
Walter P. ifapier
Frank (J. Crow #
Franz C. Groos
John M. Bennett #
R. T. Hunnicutt
#
San Antonio, Texas
P r e s . , A. B. Frank Co., San Antonio, Texas
P r e s . t Alamo H a t ' 1 . Bank, San Antonio, Texas
V. P . j S t a t e Bank & Trust Co., McAllen, Texas
P r e s . , Groos Hat 1 1. Bank, San Antonio, Texas
P r e s . , Standard Trust Co. ,San Antonio, Texas
V, P . , F i r s t Hat 1 1 Bank, Del Rio., Texas
Appointed by the Board
1931
1931
1931
1932
1932
1933
1933
129
B i s m o l HO. 12
X—6808—8
LOS A1TGELES BRA1TCB 6f the FEDERAL RESERVE BANK OF SAN 3RAJCISC0
OFFICSRS AND DIRECTORS, 1931
OFFICERS
27. Ambrose, Managing D i r e c t o r
M. MbRitchie, A s s i s t a n t Manager
A. J . Dumm, A s s i s t a n t Cashier
L. G. Meyer, A s s i s t a n t Cashier
DIRECTORS
W. N.
C. B.
F. J .
JVB.
A. J .
Ambrose
Voorhis # Chrm.
Belcher, J r .
Alexander #
Cruickshank
Los Angeles, C a l i f o r n i a
Pasadena, C a l i f o r n i a
Chrm., F i r s t N a t ' l . Tr.St Sav.Bk., San Diego, Cal.
V. P . , Globe Grain & Milling Co., Los Angeles, Cal.
P r e s . , F i r s t National Bank, Santa Ana, Cal.
Term
Expires
Dec. 3 l
1931
1931
1931
1932
1932
SALT LAKE CITY BRAiTCH of the FEDERAL RESERVE BANK OF SAB FRANCISCO
OFFICERS Aim DIRECTORS. 1931
OFFICERS
v7. L. P a r t n e r , Managing D i r e c t o r
H, M. C r a f t ,
A s s i s t a n t Manager
W. M. Smoot, A s s i s t a n t Cashier
DIRECTORS
Term
Expires
Dec. 31
7. L. P a r t n e r
L a f a y e t t e Hanchett #
Chrm.
H. E. Hemingway
G. G. ."fright #
E. 0. Howard.
#
S a l t Lake City, Utah
Chrm., Utah Power & Light Co., S a l t Lake City, Utah
P r e s . , Commercial S e c u r i t y Bank, Ogden, Utah
1931
V. P . , Cons o l . Wag on & Machine C o . , S a l t Lake City, Utah 1932
P r e s . , Jalker B r o t h e r s , Bankers, S a l t Lake City, Utah
1932
Appointed by the Board
1931
1931
! 130
DISTRICT HO. 12
X-6808-a
PORTLAND BILAI7GH of the FEDERAL RSS2RVE BASK OF SAN ERAHCISCO
OFFICERS A%8 DIRECTORS. 1931
OFFICERS
H. B. J e s t ,
Managing Director
S. A. MacEachron, A s s i s t a n t Manager
J . P. Blanchard, A s s i s t a n t Cashier
DIRECTORS
R. B. West
Hathan Strauss # Chrm.
J . C. Ainsworth
Edward C. Pease #
John F . Daly
Term
Expires
Dec. SI
P o r t l a n d , Oregon
F l e i s c h n e r , Mayer & Co., P o r t l a n d , Oregon
P r e s . , U. S. National Bank, P o r t l a n d , Oregon
p r e s . , Edw. C. Pease C o . , I n c . , The Dalles,Oregon
P r e s . , H i b e r n i a Com.& Savgs.Bk. .Portland,Oregon
1931
1931
1931
1932
1932
SPOKAHE BRANCH of the FEDERAL RESERVE BAH OF SAN FRANCISCO
OFFICERS AND DIRECTORS. 1931
OFFICERS
D. L. Davis, ivlanaging D i r e c t o r
J . M. L e i s n e r , A s s i s t a n t Manager
DIRECTORS
D. L.
G. I .
D. W.
Peter
R. M.
#
Davis
Toevs # Chrm.
Twohy
McGregor #
Hardy
Spokane, Washington
V. P . , Centennial Mill Co., Spokane, Washington
Chrm., Old N a t ' l . Bank & Union Tr. Co. .Spokane,
McGregor Land & Livestock Co., Hooper, Washington
P r e s . , Yakima F i r s t Hat' 1. Bank, Yakima, Washington
Appointed "by the Board
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
I 131
DISTRICT HO. 12
:
..."
.
'•
'
'
SEATTLE E3A2JCH of the FEDERAL RESERVE BMK OP SAM IEMCISCO
X-6808-a
\
K
\
OFFICERS AITD DIRECTORS. 1931
OFFICERS
C. R. Shaw,
Managing D i r e c t o r
B. A. R u s s e l l , A s s i s t a n t Manager
G. W. R e l f , A s s i s t a n t Cashier
DIRECTORS
#
C. R. Shaw
Chas . H. Clarke # Chrm.
M. A. Arnold
Henry A. Rhodes #
M. F. Backus
#
Appointed "by the Board
S e a t t l e , "Washington
General Casualty Co. of America,. S e a t t l e , TTash.
P r e s . , F i r s t S e a t t l e Dexter Horton National
Bank, S e a t t l e , "Washington
p r e s . , Rhodes Brothers Investment Company,
Tacoma, Washington
P r e s . , National Bank of Commerce, S e a t t l e , Wash.
Term
Expires
Dec. 31
1931
1931
1931
1932
1932
FE
RD
AL RESERVE
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6809
February 2, 1931,
SUBJECT:
Code words to cover t e l e g r a p h i c t r a n s a c t i o n s
i n Treasury B i l l s .
Dear S i r :
In connection with t e l e g r a p h i c t r a n s a c t i o n s i n Government s e c u r i t i e s between Federal reserve banks, the following
code words have been designated to cover new i s s u e s of
Treasury B i l l s , a s follows;
"IJOXAIEER"
S e r i e s dated February 3, 1931 and
maturing May 4, 1931.
"170XAlMU?GrK S e r i e s dated February 4, 1931 and
maturing May 5, 1931.
These words should be i n s e r t e d i n the Federal Reserve
Telegranh Code book, following the supplemental code word
"ITOXAGO" on page 172.
Ve*y t r u l y yours,
J . C. IToell,
Assistant Secretary.
TO GOVERNORS OF ALL F. B. BAMS.
X-6812
DIGEST OF STATE LAWS RELATING TO
PRIVATE BANKS OR BANKERS.
The f o l l o w i n g i s a d i g e s t of t h e laws of t h e s e v e r a l
S t a t e s having r e f e r e n c e t o the o r g a n i z a t i o n and. o p e r a t i o n of
p r i v a t e banks or "bankers, which was prepared i n the o f f i c e of
t h e General Counsel t o the Federal Reserve Board w i t h the a s s i s t a n c e of t h e Counsel f o r the v a r i o u s Federal r e s e r v e hanks.
Only t h e p r o v i s i o n s of S t a t e laws p e r t a i n i n g t o t h e
o r g a n i z a t i o n and o p e r a t i o n of p r i v a t e "banks or "bankers and t h e
n a t u r e and scope of t h e supervision of them exercised "by the
S t a t e "banking a u t h o r i t i e s have "been covered i n t h e d i g e s t ; and
no attempt has been made to d i g e s t i n d e t a i l any p r o v i s i o n s p e r t a i n i n g t o l i q u i d a t i o n . The laws of some S t a t e s r e q u i r e p r i v a t e
"banks or "bankers t o conduct t h e i r "business i n accordance w i t h
the p r o v i s i o n s covering incorporated "banks. In such c a s e s , t h i s
general requirement has "been d i g e s t e d , "but no attempt has been
made to d i g e s t t h e p r o v i s i o n s covering incorporated banks.
In p r e p a r i n g t h i s d i g e s t , i t has been assumed t h a t the
terms " p r i v a t e bank" and " p r i v a t e banker" a r e g e n e r a l l y understood to embrace a l l p e r s o n s , f i r m s , p a r t n e r s h i p s , a s s o c i a t i o n s
or other o r g a n i z a t i o n s engaged i n one or more of t h e g e n e r a l l y
recognized phases of the banking business without being i n c o r p o r a t e d . Where, however, t h e term " p r i v a t e bank" or " p r i v a t e
banker" i s d e f i n e d i n t h e S t a t e laws, such d e f i n i t i o n i s summarized i n the d i g e s t .
«•» i, *k
ki.nmi.
X-5312
: 134
P r i v a t e banks s u b j e c t to same g e n e r a l p r o v i s i o n s as i n c o r p o r a t e d
banks and to c e r t a i n a d d i t i o n a l s p e c i f i c p r o v i s i o n s .
The laws of t h i s S t a t e c r e a t e a banking department which i s
charged with the execution of a l l laws r e l a t i n g to *** i n d i v i d u a l s
doing or c a r r y i n g on a banking business i n the S t a t e of Alabama*"
The laws a l s o provide t h a t 11 The word 'bank 1 as h e r e i n used means any
p e r s o n , f i r m , p a r t n e r s h i p or corporation doing or carrying on a banking b u s i n e s s , * * *, u n l e s s used i n such connection and so as to exp r e s s a d i f f e r e n t meaning" r i n d i c a t i n g t h a t s o - c a l l e d p r i v a t e bankers
a r e s u b j e c t to the same general p r o v i s i o n s as are made a p p l i c a b l e to
i n c o r p o r a t e d banks, ( C i v i l Code, Sec. 6275; Banking laws, 1928, s e c .
6275, p . 3 ) , I n a d d i t i o n , the lairs a l s o contain p r o v i s i o n s s p e c i f i c a l l y covering the o r g a n i z a t i o n , operation and l i q u i d a t i o n of p r i v a t e
bankers, and these p r o v i s i o n s are s e t f o r t h below.
11
Organization; n o t i c e of i n t e n t i o n to commence b u s i n e s s : p u b l i c a t i o n o f .
"Ho i n d i v i d u a l or i n d i v i d u a l s or p a r t n e r s h i p s h a l l commence
the carrying on of the banking b u s i n e s s without f i r s t giving n o t i c e
of i n t e n t i o n to organize and c a r r y on such b u s i n e s s by p u b l i c a t i o n
a t l e a s t once a week f o r four successive weeks i n a newspaper to be
designated by the superintendent of banks p u b l i s h e d i n the c i t y or
town or county where such bank i s proposed to be l o c a t e d . Such n o t i c e
s h a l l s p e c i f y the name or names of the i n d i v i d u a l or i n d i v i d u a l s p r o posed to ce i n t e r e s t e d i n such bank, what i n t e r e s t each w i l l have, the
amount of the c a p i t a l proposed to be used i n the proposed banking
b u s i n e s s , the name under which and the place whore the business r i l l
be c a r r i e d on, and the bona f i d e cash value of the a s s e t s and p r o p e r t y
of each i n d i v i d u a l to be i n t e r e s t e d i n the bank, over and above a l l i n debtedness. Copy of such published n o t i c e * * * s h a l l be made and f i l ed with the s u p e r i n t e n d e n t of banks," ( C i v i l Code, sec. 6349; Banking
Laws j 1928, s e c . 6349, p . 24;)
I n v e s t i g a t i o n by superintendent of banks.
"The superintendent of banks s h a l l i n v e s t i g a t e and a s c e r t a i n
whether the c h a r a c t e r and general f i t n e s s of the i n d i v i d u a l s named, are
sucn as to command the confidence of the community i n which s a i d bank
i s proposed to be l o c a t e d , and t h a t there i s p u b l i c n e c e s s i t y f o r s a i d
bank, and s u f f i c i e n t business to support the same i n s a i d community,
the same as i s r e q u i r e d p r e l i m i n a r y to the i n c o r p o r a t i o n of a bank under the p r o v i s i o n s of t h i s a r t i c l e . " I f , a f t e r such i n v e s t i g a t i o n , the
superintendent i s of the opinion t h a t the f a c t s do not warrant the
e s t a b l i s h m e n t of such bank, "he s h a l l i s s u e under h i s hand and o f f i c i a l
s e a l , in d u p l i c a t e , a r e f u s a l to permit the i n d i v i d u a l s proposed to be
i n t e r e s t e d i n the proposed bank from operating the bank, and s h a l l ****
transmit to the p r o b a t e judge of the county in which the bank i s proposed
135
" g u
X-C.812
to be l o c a t e d and. do "business, one of the d u p l i c a t e s of h i s r e f u s a l ,
which the p r o b a t e judge s h a l l f i l e rnd record in h i s o f f i c e , and the
o t h e r d u p l i c a t e of h i s r e f u s a l the superintendent s h a l l f i l e i n h i s
o f f i c e . " ( C i v i l Code, s e c . 6350; Banking Laws, 1928, s e c . 6350, p .
24.)
A p p l i c a t i o n f o r permit t o commence b u s i n e s s .
"Before any *** i n d i v i d u a l banker s h a l l t r a n s a c t any business
as a bank, such *** i n d i v i d u a l s h a l l f i l e iv i th the superintendent r e quest f o r a permit to commence b u s i n e s s . " ( C i v i l Code, s e c . 8351;
Banking Laws, 1928, s e c . 6351, p . 2 4 . )
Written approval of superintendent of banks r e q u i r e d .
"Ho *** i n d i v i d u a l or i n d i v i d u a l s s h a l l t r a n s a c t any b u s i n e s s
a s a bank i n t h i s S t a t e other than such as r e l a t e s t o the formation of
such bank without the w r i t t e n approval of the superintendent of banks
and without h i s w r i t t e n c e r t i f i c a t e s t a t i n g t h a t such *** i n d i v i d u a l
banker has complied with a l l the requirements of law and i s a u t h o r i z e d
to t r a n s a c t b u s i n e s s w i t h i n t h i s S t a t e as a bank and t h a t such business
can be s a f e l y e n t r u s t e d to i t , which c e r t i f i c a t e s h a l l be recorded i n
the o f f i c e of the superintendent i n a book to be kept by him f o r t h a t
purpose, and a c e r t i f i e d copy thereof under the hand and o f f i c i a l s e a l
of the s u p e r i n t e n d e n t s h a l l be f i l e d and recorded i n t h e o f f i c e of the .
p r o b a t e judge of the county wherein the *** i n d i v i d u a l i s to have i t s ,
h i s or t h e i r p r i n c i p a l place of b u s i n e s s , a t the expense of the bank"•
( C i v i l Code, s e c . 6352; Banking Laws, 1928, s e c . 6352, p . 25.)
Examination by s u p e r i n t e n d e n t as to payment of c a p i t a l .
"The s u p e r i n t e n d e n t s h a l l , b e f o r e i s s u i n g h i s permit to any ***
i n d i v i d u a l banker to commence b u s i n e s s , examine or cause an examination
to be made i n order to a s c e r t a i n whether the r e q u i s i t e c a p i t a l of such
bank has been p a i d i n i n c a s h . The superintendent s h a l l not a u t h o r i z e
such *** i n d i v i d u a l banker to commence business u n l e s s i t appears to
h i s s a t i s f a c t i o n from such examination, or other evidence s a t i s f a c t o r y
to him, t h a t the r e q u i s i t e c a p i t a l has, in good f a i t h , been s u b s c r i b e d ,
and p a i d i n cash." ( C i v i l Code, sec. 6353; Banking Laws, 1928, s e c .
6353, p . 25.)
Transacting b u s i n e s s without permit; p e n a l t y .
"Any person who s h a l l h e r e a f t e r t r a n s a c t any business as an o f f i c e r or agent *** of an i n d i v i d u a l banker h e r e a f t e r commencing b u s i n e s s ,
b e f o r e such *** i n d i v i d u a l banker i s authorized to t r a n s a c t busine ss as a
bank by the permit of the superintendent of banks, s h a l l be g u i l t y of a
misdemeanor and, upon conviction, s h a l l be f i n e d not l e s s than one hundred
nor more than one thousand d o l l a r s . " (Criminal Code, s e c . 3400; Banking
Laws, 1928, s e c . 3400, p . 63.)
** 3 «
X-S812
I n d i v i d u a l ,nay appeal from d e c i s i o n of superincandent r e f u s i n g p e r m i t .
An i n d i v i d u a l may appeal to the S t a t e Banking Board and a court
of competent j u r i s d i c t i o n from a d e c i s i o n r e f u s i n g him the r i g h t to e s t a b l i s h an i n d i v i d u a l bank. ( C i v i l Code, sec. 6356; Banking Laws, 1928,
s e c . 5356, p . 25.)
Annual assessments f o r expenses of banking department.
Each p r i v a t e banker on the c a l l of the superintendent of banks,
i s r e q u i r e d to pay a c e r t a i n amount i n t o the t r e a s u r y of the S t a t e , between the f i r s t day of January and the f i r s t day of April of each y e a r ,
or a t such other time as the superintendent may d e s i g n a t e , to be used
as an a i d i n d e f r a y i n g the expenses of the banking department. ( C i v i l
Code, s e c . 6287; Banking laws, 1928, s e c . 5387, p . C). Each bank f a i l ing to pay t h i s assessment " s h a l l f o r f e i t to tae S t a t e f i v e ($5.00) d o l l a r s f o r each day a f t e r i t i s ( i n ) d e f a u l t , ***". ( C t v i l Code, s e c .
6288; Banking Laws, 1928, sec. 6288, p . 7 ) .
Examinations; number and nature o f .
"The s u p e r i n t e n d e n t of banks s h a l l e i t h e r p e r s o n a l l y , or by comp e t e n t examiner appointed by him, v i s i t and oxaiaine *** every i n d i v i d u a l
banker doing a banking b u s i n e s s , i n and under the laws of the S t a t e of
Alabama, a t l e a s t twice i n each y e a r . On every such examination, i n q u i r y
s h a l l be made as to the condition and resources of the corporation (or
the i n d i v i d u a l or i n d i v i d u a l s i n case of i n d i v i d u a l bankers), the mode
of conducting and managing the a f f a i r s of the bank, ***, the investment
of the funds of the bank, the s a f e t y and prudence of the management of
the "bank, and whether the requirements of i t s c h a r t e r and of law have
been complied with i n the a d m i n i s t r a t i o n of the a f f a i r s of the bank,
and as to such other matters as the superintendent of banks may p r o s c r i b e
In a d d i t i o n , the superintendent Of banks s h a l l in l i k e manner examine or
cause to be examined i n t o the a f f a i r s of every *** i n d i v i d u a l banker doing a banking b u s i n e s s whenever i n the judgment of the superintendent
the management and condition of the bank i s such as t o render an exami n a t i o n of i t s a f f a i r s necessary or expedient, or whenever i n the opinion of the superintendent the i n t e r e s t of the ryublic demands an examinat i o n . " ( C i v i l Code, sec. 6289; Banking Laws, 1928, s e e . 6289, pp. 7 and
8).
Reserve requirements.
"Ifo bank, f i r m , person or corporation doing a banking business
s h a l l reduce, or be allowed to reduce the cash of the bank jr hand below f i f t e e n p e r cent of donnnd d e p o s i t s , provided t h a t t h r e e - f i f t h s of
s a i d f i f t e e n p e r cent reserve may c o n s i s t of the balance due by banks
and bankers to s a i d bank when payable on demand." ( C i v i l Code, s e c .
6337; Banking Laws, 1928, sec. 6337, p . 19).
X-6812
- 4 F a i l u r e of p r i v a t e "banker to pay over money on demand.
Atiy p r i v a t e "banker who s e l l s or disposes of p r o p e r t y f o r
a n o t h e r , and r e f u s e s f o r t h r e e days a f t e r demand made "by t h e person
e n t i t l e d to make such demand or h i s agent or a t t o r n e y , t o pay t h e
amount t o which such person i s e n t i t l e d , must on c o n v i c t i o n , "be
f i n e d not more than one thousand d o l l a r s , and may a l s o "be imprisoned
i n the county j a i l , or sentenced to hard 16bor f o r t h e county f o r
not more than s i x months. (Code of Alabama, 1923, s e c . 3976.)
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X-S812
00#, •
V*™#
Impairment of c a p i t a l : w ^ e r aau duty of s u o e r i m c n c o n t .
"Tnenever the superintendent of "banks s h a l l have reason to "believe
t h a t the *** c a p i t a l of any i n d i v i d u a l "banker i s reduced "by impairment or
otherwise "below the amount of i t s paid-up c a p i t a l s t o c k , he s h a l l r e q u i r e
such *** i n d i v i d u a l "banker to make good the d e f i c i t within t h i r t y days
a f t e r the date of t h e requirement "by him, which requirement s h a l l be i n
w r i t i n g . The s u p e r i n t e n d e n t may examine or cause to "be examined i n t o the
a f f a i r s of any such "bank to a s c e r t a i n the amount of such impairment or
r e d u c t i o n of c a p i t a l and whether t h e d e f i c i e n c y has "been made good a s r e quired "by him". ( C i v i l Code, s e c . 6297; Banking Laws, 1928, s e c . 6297,
P- 9 ) .
Superintendent mast r e q u e s t c o r r e c t i o n of u n s a f e p r a c t i c e s .
"The s u p e r i n t e n d e n t of "banks s h a l l submit to the *** governing
body of any i n d i v i d u a l banker, and request a c o r r e c t i o n of any matter
i n the conduct of the a f f a i r s of the bank which, i n h i s opinion, i s uns a f e . " ( C i v i l Code, s e c . 6298; Banking Laws, 1928, sec. 6298, p . S ) .
Unsafe or unsound condition or other matters of d e f a u l t or misconduct:
superintendent may take p o s s e s s i o n .
"Whenever i t s h a l l appear to the superintendent of banks t h a t
any *** i n d i v i d u a l banker has v i o l a t e d i t s c h a r t e r or any law of the
S t a t e , or i s conducting business i n any unauthorized manner, or i f
the c a p i t a l of *** any i n d i v i d u a l banker i s impaired and not made good
under the requirement of the superintendent within the r e q u i r e d time,
or i f any such *** i n d i v i d u a l banker s h a l l r e f u s e to submit i t s p a p e r s ,
books and concerns to the i n s p e c t i o n of the superintendent or any exami n e r , or i f any o f f i c e r thereof s h a l l r e f u s e to be examined on oath
touching the conduct of any such *** i n d i v i d u a l banker or i f any such
*** i n d i v i d u a l banker s h a l l suspend payment of i t s o b l i g a t i o n s or i f
from any examination the superintendent s h a l l have reason to conclude
t h a t such *** i n d i v i d u a l banker i s i n an unsound or unsafe c ondition
to t r a n s a c t the b u s i n e s s f o r ''hich i t was organized, or t h a t i t i s uo#»
s a f e f o r i t to continue b u s i n e s s , or i f any such *** i n d i v i d u a l banke r s h a l l n e g l e c t or r e f u s e to observe any order of the superintendent
d i r e c t i n g or r e q u i r i n g the doing of any p a r t i c u l a r t h i n g r e q u i r e d to
be done by law, the superintendent may c a l l a meeting of the banking
board and submit to s a i d board m a t t e r s of d e f a u l t or misconduct i n
the a f f a i r s of t h e banks of which the bank s h a l l have n o t i c e and u p on which the bank may be heard i n person or by counsel, and i f s a i d
board or a m a j o r i t y of s a i d board, so d i r e c t s , the superintendent
s h a l l f o r t h w i t h take possession of the p r o p e r t y and b u s i n e s s of such
*** i n d i v i d u a l banker and r e t a i n such possession u n t i l such ***
i n d i v i d u a l banker s h a l l resume b usine ss or i t s a f f a i r s be f i n a l l y
l i q u i d a t e d , as h e r e i n provided". ( C i v i l Code, sec. 6299; Banking
Laws, 1923, s e c . 6299, pp. 9 and 1 0 ) .
139
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Superintendent not, to take char,-. <3 of i n d i v i d u a l "banker u n l e s s d i r e c t e d
to do so "by banking board.
"The s u p e r i n t e n d e n t of banlcs s h a l l not take possession of the
p r o p e r t y and b u s i n e s s of any bank under the p r o v i s i o n s of t h i s a r t i c l e
u n l e s s *** d i r e c t e d so to do by the banking board. On taking p o s s e s s ion of the p r o p e r t y and business of any such *** i n d i v i d u a l banker,
the superintendent s h a l l give n o t i c e of such f a c t t o a l l banks and other
p a r t i e s or c o r p o r a t i o n s holding or i n possession of any a s s e t s of such
*** i n d i v i d u a l b a n k e r . " ( C i v i l Code, s e c . 5303; Banking Laws, 1928,
s e c . 6303, p . 1 1 ) .
".Then business may "be resumed.
" A f t e r the superintendent has taken possession of *** ( t h e )
b u s i n e s s of an i n d i v i d u a l banker, the superintendent may permit such
*** i n d i v i d u a l banker to resume business upon such condition as may
be approved by him including an observance of a l l the requirements
of lav#, and making good a l l d e f i c i t s i n the previous observances of
law." ( C i v i l Code, s e c . 6305; Banking Laws, 1928, s e c . 6305, p . 1 1 ) .
L i q u i d a t i o n of a f f a i r s by s u p e r i n t e n d e n t .
"Upon taking possession of any of the p r o p e r t y and b u s i n e s s of
any *** i n d i v i d u a l banker, the superintendent may c o l l e c t moneys due to
such *** i n d i v i d u a l banker and do such other a c t s as a r e necessary to
conserve i t s a s s e t s and b u s i n e s s , and s h a l l proceed to l i q u i d a t e the
a f f a i r s thereof as h e r e i n a f t e r provided. The superintendent s h a l l coll e c t a l l debts due and claims belonging to the bank." ( C i v i l Code, s e c .
5305; Banking Laws, 1928, s e c . 6305, p . 11). The laws a l s o contain det a i l e d p r o v i s i o n s r e l a t i n g to the powers and d u t i e s o f , and the p r o cedure to be followed by, the superintendent of banks i n the a c t u a l
l i q u i d a t i o n of the a f f a i r s of an i n d i v i d u a l banker. ( C i v i l Code, s e c .
5304, 5307-6319 and 6325; Banking Laws, 1928, s e e s . 5304, 5307-6319
and 6325, pp. 11-14 and 16).
ABIZO'.TA.
P r i v a t e or p a r t n e r s h i p banks e x p r e s s l y p r o h i b i t e d .
The laws of t h i s S t a t e provide t h a t "She e s t a b l i s h i n g or maintenance of p r i v a t e or p a r t n e r s h i p banks i s hereby e x p r e s s l y p r o h i b i t e d ;
P20VIDSD, t h a t a l l such banks now i n operation s h a l l r e t i r e from b u s i ness or i n c o r p o r a t e under the p r o v i s i o n s of t h i s Chapter w i t h i n a p e r iod of f i v e y e a r s from and a f t e r the approval of t h i s Chapter". (Banking Laws, 1922, s e c . 30, p . 24; Senate B i l l No. 26, F i r s t Special Sess i o n of the F i f t h L e g i s l a t u r e of Arizona, sec. 3 0 ) .
- 7 -
X-S812
P r i v a t e banks p e r m i t t e d , "out s u b j e c t to same p r o v i s i o n s as i n c o r p o r a t e d
"banks.
The laws of t h i s S t a t e , i n d e f i n i n g the word "bank", recognize
a p r i v a t e banking b u s i n e s s but i n d i c a t e t h a t such business i s s u b j e c t
g e n e r a l l y to the same provisions as those ^hich cover i n c o r p o r a t e d
banks. This d e f i n i t i o n reads i n p a r t as f o l l o w s :
"Wherever the '7ord 'bank' appears i n t h i s (bank) a c t , i t s h a l l
be deemed to apply a l i k e to any i n c o r p o r a t e d bank, t r u s t company, or
savings bank, *** and a l s o to any p a r t n e r s h i p or i n d i v i d u a l t r a n s a c t ing a banking b u s i n e s s . " (Acts of 1913, Act 113, s e c . 10, as amended
by Acts of 1923, Act 627, s e c . 17; Banking Law Pamphlet, 1929, s e c .
20, p . 1 4 ) .
The f o l l o w i n g p r o v i s i o n s are s p e c i f i c a l l y made a p p l i c a b l e to
p r i v a t e banks.
Organization; a p p l i c a t i o n to bank commissioner.
The laws provide t h a t persons d e s i r i n g to organize a corpora' t i o n f o r the purpose of t r a n s a c t i n g a banking or trust business "may
apply to the (bank) Commissioner to be incorporated and s h a l l submit
t h e i r proposed a r t i c l e s of agreement" which s h a l l s e t out c e r t a i n
i n f o r m a t i o n . (Acts of 1913, Act 113, sec. 11; C. & M. Digest, s e c .
675; Banking Law Pamphlet, 1929, sec. 12, p . 8 ) . I f an a p p l i c a t i o n
to engage i n the b u s i n e s s of banking i s made by a p r i v a t e bank, " i t
s h a l l be i n such form as the Commissioner s h a l l p r e s c r i b e , and he
s h a l l make the same i n q u i r y as i s r e q u i r e d i n cases of i n c o r p o r a t i o n
b e f o r e i s s u i n g to such f i r m or i n d i v i d u a l h i s permit of any kind of
a bank." (Acts of 1913, Act 113, s e c . 14; C & M. D i g . , s e c . 678;
Banking Law Pamphlet, 1929, sec. 15, p . 11).
With r e f e r e n c e to the "same inquiry" which the bank commiss i o n e r i n s t i t u t e s i n the case of an incorporated bank, the laws p r o vide t h a t "the Commissioner s h a l l a s c e r t a i n , from the b e s t source of
i n f o r m a t i o n a t h i s command, the c h a r a c t e r and g e n e r a l f i t n e s s of the
persons named a s s t o c k h o l d e r s (owners), and t h e i r s t a n d i n g i n the
community i n which the proposed i n s t i t u t i o n i s to be l o c a t e d , and
whether the r e q u i s i t e c a p i t a l has been i n good f a i t h subscribed and
p a i d . " (Acts of 1913, Act 113, s e c . 12; C. & M. Dig., s e c . 675;
Banking Law Pamphlet, 1929, sec. 13, p . 9 ) .
Pee r e q u i r e d f o r o r g a n i z a t i o n , i n c r e a s e of c a p i t a l and amendment of c h a r t e r .
"No c o r p o r a t i o n , f i r m or i n d i v i d u a l s h a l l be allowed to do a
banking business of any kind u n l e s s i t , they, he, or she, s h a l l pay
to the Bank Commissioner a fee of o n e - f i f t h of one p e r cent on the
a u t h o r i z e d c a p i t a l stock* Fees a t the same r a t e s h a l l be charged f o r
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X-6312
an i n c r e a s e of c a p i t a l s t o c k . " f o r each amendaent or supplement to
the c h a r t e r , except f o r an i n c r e a s e of c a p i t a l stock, a fee of ten
d o l l a r s s h a l l be charged. (Acts of 1915, Act 113, s e c . 16; C. & M.
D i g . , s e c . 680; Banking Law Pamphlet, 1929, s e c . 17, p . 11).
T i t l e mast show t h a t i n s t i t u t i o n i s not i n c o r p o r a t e d .
Any i n d i v i d u a l or f i r m doing "business as a p r i v a t e bank s h a l l
d e s i g n a t e a name f o r such bank, which s h a l l show t h a t i t i s not incor*p o r a t e d . (Acts of 1913, Act 113, sec. 15; C. & M. Dig., s e c . 579;
Banking Law Pamphlet, 1929, sec. 16, p . 11).
P r o p e r t y must be h e l d i n name of bank.'
A l l r e a l and p e r s o n a l p r o p e r t y cmned by a p r i v a t e bank must be
h e l d i n i t s name and not i n the name of the owner or owners of the bank.
(Acts of 1913, Act 113, sec. 15; C. & 11. Dig., s e c . 679; Banking Law
Pamphlet, 1929, s e c . 16, p . 11).
When c r e d i t o r of owner may a t t a c h bank's a s s e t s .
A l l of the a s s e t s of a p r i v a t e bank a r e exempt from attachment
or execution by any c r e d i t o r of an owner u n t i l a l l of the l i a b i l i t i e s of
the bank have been p a i d i n f a l l . (Acts of 1913, Act 113, s e c . 15; C. &
M. Dig., s e c . 679; Banking Law Pamphlet, 1929, s e c . 16, p . 1 1 ) .
Owner may not use b a n k ' s funds for "private b u s i n e s s : note of owner as a s s e t .
"Ho p r i v a t e banker s h a l l use any of the funds of h i s bank f o r
p r i v a t e b u s i n e s s , and the note of the owner or owners of any p r i v a t e
bank s h a l l not be considered or accepted as a p a r t of i t s a s s e t s . "
(Acts of 1913, Act 113, s e c . 15; C. & H. Dig., s e c . 679; Banking Law
Pamphlet, 1929, sec. 16, p . 11).
When owner's widow can be enaowed of bank's p r o p e r t y .
"In case of the death of an i n d i v i d u a l banker, h i s widow s h a l l
not be endowed of any of the p r o p e r t y of the bank, except such as re—
mains a f t e r the payment of a l l d e p o s i t o r s and other c r e d i t o r s . " (Acts
of 1913, Act 113, s e c . 15; C. & M. Dig., sec. 679; Banking Law Pamphlet,
1929, s e c . 16, p . 1 1 ) .
Acceptances and l e t t e r s of c r e d i t : l i m i t of l i a b i l i t y .
"Any *** p r i v a t e bank, *** may accept f o r payment a t a f u t u r e
date d r a f t s drawn upon i t by i t s customers and to i s s u e l e t t e r s of
c r e d i t a u t h o r i z i n g the holders thereof to draw d r a f t s upon i t or upon
i t s correspondents a t s i g h t or on time not exceeding s i x months; p r o vided, t h a t no bank s h a l l incur l i a b i l i t i e s under t h i s s u b d i v i s i o n to
an amount equal a t any time i n the aggregate t o more than i t s p a i d - u p
and unimpaired c a p i t a l stock and c e r t i f i e d s u r p l u s f u n d . " (Act of March
22, 1919, p . 251, s e c . 4; C. & M. Dig., s e c . 741; Banking Law Panrohlet,
1929, s e c . 30, p . 2 1 ) .
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X-6812
Banking business may only "oe transacted, "by corporations.
The laws of t h i s S t a t e provide t h a t the b u s i n e s s of hanking
may only he t r a n s a c t e d hy corporations duly organized f o r t h a t purpose.
The p r o v i s i o n s i n t h i s connection read a s follows:
"The word 'bank* as used i n t h i s a c t s h a l l be construed to
mean any i n c o r p o r a t e d banking i n s t i t u t i o n wnich s h a l l have been i n corporated to conduct the business of r e c e i v i n g money on d e p o s i t ,
***, *** I t s h a l l be unlawful f o r any c o r p o r a t i o n , p a r t n e r s h i p , firm
or i n d i v i d u a l to engage i n or t r a n s a c t a banking business within t h i s
s t a t e except by means of a corporation duly organized f o r such purpose.
***" ( C a l i f o r n i a Bank Act, 1929, s e c . 2, p . 3 ) .
COLORADO.
P r i v a t e banking b u s i n e s s -permitted, but made s u b j e c t to same p r o v i s i o n s
as i n c o r p o r a t e d banks.
The laws of t h i s S t a t e provide t h a t where the business of banking i s engaged i n by persons or copartnerships such business i s s u b j e c t
to the same requirements as are made a p p l i c a b l e , to i n c o r p o r a t e d banks.
The laws in t h i s connection read as follows:
"The word 'Bank, 1 as used i h t h i s Act, s h a l l include every p e j v
son, c o - p a r t n e r s h i p and c o r p o r a t i o n , except National Banks, engaged i n
the b u s in e s s of banking i n the S t a t e of Colorado". (Laws of 1913, s e c .
1, p . 116; Compiled Laws of 1921, s e c . 2653; Banking Laws, 1928, s e c . 1
p. 3).
"When by the p r o v i s i o n s hereof anything i s r e q u i r e d to be done
by any i n c o r p o r a t e d bank or i t s board of d i r e c t o r s , or any o f f i c e r ,
d i r e c t o r or employee t h e r e o f , or t h e i r r i g h t or power to do a s p e c i f i e d
a c t i s denied, the same act. s h a l l be done, or n o t , as the case may be,
by i n d i v i d u a l s or c o - p a r t n c r s engaged i n the banking b u s i n e s s . " (Laws
of 1913, s e c . 2 , p . 116; Compiled Laws of 1921, s e c . 2654; Banking Laws
1928, sec. 2, p . 3 ) .
In a d d i t i o n to the p r o v i s i o n s a p p l i c a b l e to incorporated banks,
persons or c o - p a r t n e r s h i p s a r e s u b j e c t to the following s p e c i f i c p r o visions:
Word " S t a t e " may not be used a s -part of t i t l e .
" I n d i v i d u a l s or c o - p a r t n e r s h i p s engaged i n banking s h a l l not
use the v, ord ' S t a t e 1 as a p a r t of the bank or f i r m name." (Laws of
1913, s e c . 9, p . 118; Comoiled Laws of 1921, s e c . 2561; Banking Laws,
1928, s e c . 9, p . 7 ) .
143
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X-6812
Ownership of c a p i t a l stock "by c o p a r t n e r s .
"Co-partners conducting a bank s h a l l each own a t l e a s t two per
cent thereof ( c a p i t a l stock) i n no wise pledged or incumbered." (Laws
of 1919, sec. 1, p . 299, amending Laws of 1913, sec. 12, p . 119; Comp i l e d Laws of 1921, s e c . 2664; Banking Laws, 1928, sec. 12, p . 9 ) .
Oath r e q u i r e d of owner of unincorporated t a n k .
"Every owner of any p o r t i o n of an unincorporated "bank a c t u a l l y
engaged i n t h e management t h e r e o f , s h a l l t a k e and subscribe to an oath
t h a t he w i l l , so f a r as the duty devolves upon him, d i l i g e n t l y and h o n e s t l y administer the a f f a i r s of the bank; t h a t he w i l l not knowingly v i o l a t e ,
nor w i l l i n g l y permit to be v i o l a t e d , any p r o v i s i o n of t h e law; t h a t he
i s the owner i n good f a i t h of at l e a s t t h a t p a r t of t h e c a p i t a l s t o c k
of said bank or t h a t p o r t i o n of t h e c a p i t a l employed t h e r e i n " s p e c i f i e d
by the p r o v i s i o n l a s t above quoted. (Laws of 1913, s e c . 14, p . 119;
Compiled Laws of 1921, sec. 2666; Banking Laws, 1928, sec. 14, p. 9 ) .
Loans to co-owners p r o h i b i t e d .
"No unincorporated bank s h a l l loan to any person or c o - p a r t n e r
owning an i n t e r e s t t h e r e i n . Ho i n d i v i d u a l or c o - p a r t n e r owning an i n t e r e s t
i n an unincorporated bank s h a l l become endorser f o r any p e r s o n , f i r m or
corporation borrowing money t h e r e f r o m , nor s h a l l any note or o b l i g a t i o n
of such i n d i v i d u a l or c o - p a r t n e r be considered an a s s e t of such bank."
(Laws of 1913, sec. 33, p . 124; Compiled Laws of 1921, s e c . 2687; Banking Laws, 1928, s e c . 37, p. 21).
COmiSCTICUT.
P r i v a t e banking b u s i n e s s p r o h i b i t e d ; exceptions.
The laws of t h i s s t a t e provide t h a t "Ho p e r s o n , f i r m , corpora t i o n or u n i n c o r p o r a t e d a s s o c i a t i o n cf p e r s o n s , other than a p r i v a t e
banker who, on May 29, 1925, was engaged i n busine ss as a p r i v a t e banke r , and, p r i o r t h e r e t o , q u a l i f i e d as such by the f i l i n g of t h e bond or
s e c u r i t i e s r e q u i r e d by the g e n e r a l s t a t u t e s , or a person, f i r m , corpora t i o n , or u n i n c o r p o r a t e d a s s o c i a t i o n of persons succeeding i n ownership
to the b u s i n e s s of a p r i v a t e banker q u a l i f i e d as above .prbvi&ed, and who
s h a l l , upon succeeding to such b u s i n e s s , comply with t h e p r o v i s i o n s of
law r e l a t i n g t o p r i v a t e bankers, s h a l l engage i n the b u s i n e s s of a
p r i v a t e banker, provided nothing h e r e i n contained s h a l l prevent any
f i r m , p a r t n e r s h i p or unincorporated a s s o c i a t i o n of persons c a r r y i n g on
the business of a p r i v a t e banker from changing or i n c r e a s i n g the member- ship of such f i r m , p a r t n e r s h i p or unincorporated a s s o c i a t i o n of persons
or from r e o r g a n i z i n g i n t o a new f i r m , p a r t n e r s h i p or unincorporated
a s s o c i a t i o n of p e r s o n s " . (General S t a t u t e s of Connecticut, Revision of
1930, sec. 3958).
X-6812
-
1 1
-
"Ito p r i v a t e baialcer shall Use j as a p a r t Of h i s name or as a
p r e f i x or s u f f i x t h e r e t o or as a d e s i g n a t i o n of the "business c a r r i e d
•on "by him, t h e word ' b a n k e r ' , ' b a n k ' , ' b a n k i n g ' , ' t r u s t ' or ' s a v i n g s '
but he may do so i f he q u a l i f i e s i t by the word ' p r i v a t e ' " . (General
S t a t u t e s of Connecticut, Revision of 1930, sec. 3950).
D e f i n i t i o n of term " p r i v a t e banker".
"The term ' p r i v a t e banker' s h a l l mean any p e r s o n , c o r p o r a t i o n ,
f i r m , p a r t n e r s h i p or unincorporated a s s o c i a t i o n of p e r s o n s , engaged i n
whole or i n p a r t i n the b u s i n e s s of r e c e i v i n g d e p o s i t s s u b j e c t t o check
or f o r repayment upon the p r e s e n t a t i o n of a passbook, c e r t i f i c a t e of
deposit or other evidence of d e b t , or f o r repayment upon r e q u e s t of
t h e d e p o s i t o r , or engaged i n the busine ss of r e c e i v i n g money f o r t r a n s m i s s i o n , o t h e r than a bank, t r u s t company or b u i l d i n g and loan a s s o c i a t i o n organized under t h e laws of t h i s S t a t e or of t h e United S t a t e s or
express companies having a c o n t r a c t or c o n t r a c t s with a r a i l w a y or r a i l ways covering express t r a n s p o r t a t i o n . " (General S t a t u t e s of Connecticut
Revision of 1930, s e c . 3949).
Bond must be f i l e d w i t h S t a t e Treasurer; purpose o f .
Every p r i v a t e banker mast deposit w i t h the t r e a s u r e r of the
S t a t e a bond executed by the p r i v a t e banker and by a s u r e t y company
or the owner or owners of r e a l e s t a t e w i t h i n the S t a t e , approved by
t h e bank commissioner. This bond s h a l l be conditioned upon t h e r e payment of any money which may be deposited w i t h the p r i v a t e banker
and upon t h e f a i t h f u l t r a n s m i s s i o n of any money which may be d e l i v e r e d
t o such banker f o r t r a n s m i s s i o n t o a n o t h e r , "and upon t h e payment,
i n the event of the insolvency or bankruptcy of such p r i v a t e banker,
of the f u l l amount r e c o v e r a b l e under the conditions of such bond to
t h e a s s i g n e e , r e c e i v e r or t r u s t e e of such p r i v a t e banker f o r t h e b e n e f i t
(1) of the persons making such d e p o s i t s or d e l i v e r i n g money t o such
p r i v a t e banker f o r t r a n s m i s s i o n t o another and (2) the s a t i s f a c t i o n
of t h e general d e b t s and o b l i g a t i o n s of such p r i v a t e banker". (General
S t a t u t e s of Connecticut, Revision of 1930, s e c . 3951).
Amount of bond dependent upon p o p u l a t i o n .
"The amount of the bond r e q u i r e d of each p r i v a t e banker engaged i n b u s i n e s s i n any c i t y or town having a p o p u l a t i o n of twenty
thousand or l e s s s h a l l be twenty thousand d o l l a r s , and of each p r i v a t e banker engaged i n b u s i n e s s i n any c i t y or town having a populat i o n i n excess of twenty thousand s h a l l be f o r t y thousand d o l l a r s . "
(General S t a t u t e s of Connecticut, Revision of 1930, sec. 3951).
S e c u r i t i e s may be deposited i n l i e u of bonds.
"Any p r i v a t e banker may, a t h i s o p t i o n , deposit w i t h t h e
t r e a s u r e r i n l i e u of such bond, i n whole or i n p a r t , s e c u r i t i e s owned
by him of a s u f f i c i e n t a c t u a l value t o . a g g r e g a t e , w i t h any bond so
f i l e d , t h e r e q u i r e d amount of such bond, which s e c u r i t i e s s h a l l be
such as s h a l l have been approved by the bank commissioner." (General
S t a t u t e s of Connecticut, Revision of 1930, s e c . 3951).
X-6812
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Release of "bond and s e c u r i t i e s .
Any bond or s e c u r i t i e s deposited with the t r e a s u r e r may be
r e l e a s e d and d e l i v e r e d t o the p r i v a t e banker upon the s u b s t i t u t i o n
of another bond or s e c u r i t i e s aggregating the r e q u i r e d amount and
approved by the bank commissioner. Any bond or s e c u r i t i e s s h a l l a l so be r e l e a s e d and d e l i v e r e d t o a p r i v a t e banker upon t h e d i s c o n tinuance of h i s b u s i n e s s and upon d e l i v e r y by him t o the t r e a s u r e r
of the s t a t e of a c e r t i f i c a t e issued by t h e bank commissioner t h a t
a l l d e p o s i t o r s and c r e d i t o r s have been paid i n f u l l and a l l o u t standing l i a b i l i t i e s have been s a t i s f i e d . (General S t a t u t e s of
Connecticut, Revision of 1930, s e c . 3951).
S e c u r i t i e s and money paid under bond because of d e f a u l t c o n s t i t u t e
t r u s t fund.
Any s e c u r i t y deposited with the S t a t e t r e a s u r e r , and any
money which, i n c a s e of d e f a u l t , i s paid under any bond f i l e d by
any p r i v a t e banker " s h a l l c o n s t i t u t e a t r u s t fund (1) f o r t h e benef i t of the d e p o s i t o r s of such p r i v a t e banker and the persons x?ho
s h a l l d e l i v e r money t o such p r i v a t e banker f o r t r a n s m i s s i o n t o o t h e r s ,
which d e p o s i t o r s or persons s h a l l be p r e f e r r e d as t o such
money and s e c u r i t i e s so deposited or recovered i n p r o p o r t i o n to
t h e o b l i g a t i o n s of such private" banker t o them a r i s i n g out of such
d e p o s i t s or r e c e i p t of money f o r t r a n s m i s s i o n and (2) f o r t h e benef i t of the g e n e r a l c r e d i t o r s of such p r i v a t e banker. 11 (General S t a t u t e s
of Connecticut, Revision of 1930, sec. 3951).
r
Real estate of person acting as surety on bond must be described and
is sub.ject to a lien.
Whenever the t r e a s u r e r accepts as s u r e t y on any bond any person
owning r e a l e s t a t e "he s h a l l r e q u i r e such r e a l e s t a t e to be described
i n such bond, and such r e a l e s t a t e s h a l l thereupon be s u b j e c t t o a
l i e n t o the amount of t h e o b l i g a t i o n of such bond, which l i e n s h a l l
take precedence over any subsequent incumbrance, except l i e n s f o r
taxes or municipal a s s e s s m e n t s . " A c e r t i f i e d copy of the bond must be
f i l e d and recorded i n the o f f i c e of the town c l e r k i n each town where
such r e a l e s t a t e i s l o c a t e d , and a recording f e e t h e r e f o r must be paid
by t h e p r i v a t e banker. (General S t a t u t e s of Connecticut, Revision of
1930, sec. 3951).
X-6812
- 13 Provisions not a p p l i c a b l e to c e r t a i n p e r s o n s , f i r m s , e t c .
The p r o v i s i o n s r e l a t i n g to the deposit of a "bond w i t h the S t a t e
" s h a l l not apply to any p e r s o n , f i r m , p a r t n e r s h i p , or unincorporated
a s s o c i a t i o n of persons engaged s o l e l y i n the 'business of forwarding or
t r a n s m i t t i n g money." (General S t a t u t e s of Connecticut, Revision of
1930, sec. 3951).
Statement of a s s e t s and l i a b i l i t i e s must "be f i l e d with t h e bank commissioner.
Every p r i v a t e hank s h a l l "annually, on t h e f i r s t day of November or o f t en er i f r e q u i r e d by the commissioner, f i l e w i t h the
bank commissioner a s t a t e m e n t , under oath, i n such form as may be r e quired by the commissioner, showing h i s a s s e t s and l i a b i l i t i e s , and
giving such o t h e r i n f o r m a t i o n as may be r e q u i r e d by t h e commissioner.
(General S t a t u t e s of Connecticut, Revision of 1930, sec. 3954).
Examinations; insolvency or p o s s i b i l i t y of l o s s t o d e p o s i t o r s ; bank
commissioner may suspend o p e r a t i o n s .
"The commissioner may cause an examination t o be made of
t h e a f f a i r s of any p r i v a t e banker a t any time a t the expense of such
p r i v a t e b a n k e r , and, i f a f t e r a p p r a i s i n g a l l the a s s e t s of such p r i v a t e banker, i n c l u d i n g loans on r e a l e s t a t e and any r e a l e s t a t e owned
by such banker, he s h a l l f i n d t h a t such p r i v a t e banker i s i n s o l v e n t ,
or t h a t the d e p o s i t o r s or persons d e l i v e r i n g money to him f o r t r a n s mission a r e l i a b l e to s u f f e r any l o s s , he may d e l i v e r to such p r i v a t e
banker a w r i t t e n n o t i c e to d i s c o n t i n u e r e c e i v i n g money from d e p o s i t o r s
or money f o r t r a n s m i s s i o n and to d i s c o n t i n u e paying d e p o s i t o r s or other
c r e d i t o r s . * * * The w r i t t e n order of t h e commissioner a u t h o r i z e d hereby
s h a l l be i n e f f e c t a temporary i n j u n c t i o n r e s t r a i n i n g such p r i v a t e banker and h i s employees from r e c e i v i n g money from d e p o s i t o r s , or
f o r t r a n s m i s s i o n , and from paying d e p o s i t o r s or other c r e d i t o r s u n t i l
the same s h a l l be v a c a t e d by any order of t h e s u p e r i o r court or a
judge t h e r e o f . " (General S t a t u t e s of Connecticut, Revision of 1930,
s e c . 3955).
Procedure to r e s t r a i n continuance i n business or to o b t a i n appointment
of r e c e i v e r ; l i q u i d a t i o n .
If the bank commissioner f i n d s t h a t t h e p r i v a t e banker i s i n solvent or t h a t the d e p o s i t o r s a r e l i a b l e t o s u f f e r a l o s s , he must
then make an a p p l i c a t i o n to the superior court f o r the county i n which
such banker i s l o c a t e d s e t t i n g f o r t h the f a c t s and circumstances and
praying f o r t h e appointment of a r e c e i v e r or an i n j u n c t i o n r e s t r a i n ing such p r i v a t e banker from continuing i n b u s i n e s s . If i t appears
to the c o u r t , a f t e r a h e a r i n g on the a p p l i c a t i o n , t h a t such p r i v a t e
banker i s i n s o l v e n t or can not resume business with s a f e t y t o the publ i c , such court may i s s u e an i n j u n c t i o n r e s t r a i n i n g the p r i v a t e banker
from f u r t h e r c a r r y i n g on b u s i n e s s , and, "if i n s o l v e n t , from c o l l e c t i n g
X-6812
f
i-.' 14 la
147
,
"or r e c e i v i n g any debts or from paying out, s e l l i n g , a s s i g n i n g or t r a n s f e r r i n g any of the a s s e t s , moneys, funds or lands belonging t o him u n t i l
the court s h a l l otherwise o r d e r . " The court a t the time of Ordering the
i n j u n c t i o n , or a t any time during the continuance of such i n j u n c t i o n ,
may appoint a r e c e i v e r f o r the i n s o l v e n t p r i v a t e "banker. The r e c e i v e ?
has the powers c o n f e r r e d by law upon r e c e i v e r s of i n s o l v e n t banks and
t r u s t companies. The court may l i m i t the time f o r f i l i n g claims a g a i n s t
such r e c e i v e r and the winding up of the busine ss of t h e p r i v a t e banker,
"the l i q u i d a t i o n of h i s p r o p e r t y and a s s e t s and the d i s t r i b u t i o n of the
a v a i l s thereof among t h e c r e d i t o r s of such p r i v a t e banker". (General
S t a t u t e s of Connecticut, Revision of 1930, s e c t i o n 3955).
D i s t r i b u t i o n of a s s e t s .
The " a v a i l s " s h a l l be applied as f o l l o w s : (1) To the expenses
of s e t t l i n g the a f f a i r s of the p r i v a t e banker; (2) to the payment of the
d e p o s i t s and the money e n t r u s t e d t o the banker f o r t r a n s m i s s i o n ; (3) to the
payment of a l l other l i a b i l i t i e s of the banker. The balance of such
a v a i l s s h a l l be p a i d to such banker. (General S t a t u t e s of Connecticut,
Revision of 1930, s e c . 3955).
•
Receiver r e q u i r e d t o f i l e bond.
The r e c e i v e r must f i l e a bond i n such form and i n such amount as
the court may d i r e c t b e f o r e t a k i n g c o n t r o l of the a s s e t s of any p r i v a t e
banker. (General S t a t u t e s of Connecticut, Revision of 1930, sec. 3955).
Additional p r o v i s i o n s regarding power of "bank commissioner and s u p e r i o r
court to suspend b u s i n e s s i n order to p r e s e r v e a s s e t s or p r o t e c t d e p o s i t o r s .
"The commissioner may i s s u e a temporary order r e s t r a i n i n g
any *** p r i v a t e banker *** from paying out any funds *** or r e c e i v i n g
d e p o s i t s , or may take p o s s e s s i o n of *** such p r i v a t e "banker's business
u n t i l such time as a hearing may be arranged b e f o r e a judge of t h e
superior c o u r t , who may, upon a p p l i c a t i o n of the commissioner, ***
or p r i v a t e banker, whenever, i n the opinion of such commissioner,
*** or p r i v a t e banker, i t may be necessary to p r e s e r v e a s s e t s or p r o t e c t d e p o s i t o r s , make an order r e s t r a i n i n g any *** p r i v a t e banker from
paying out the funds of such *** p r i v a t e banker, or any p o r t i o n t h e r e o f ,
or from d e c l a r i n g or paying dividends on any d e p o s i t s or c a p i t a l stock
f o r such time as such judge s h a l l deem necessary. Such order s h a l l be
i n w r i t i n g d i r e c t e d t o the *** p r i v a t e banker t o be a f f e c t e d t h e r e b y ,
and a copy of the o r d e r . a t t e s t e d and l e f t by the commissioner ***
with such p r i v a t e banker s h a l l be s u f f i c i e n t n o t i c e t h e r e o f . Before
i s s u i n g such r e s t r a i n i n g o r d e r , the judge s h a l l cause reasonable n o t i c e
t o be given to the *** p r i v a t e banker to be a f f e c t e d t h e r e b y . ***
n o t i c e t o an agent of any p r i v a t e "banker s h a l l be n o t i c e t o such p r i v a t e banker. Notice may be waived by any such *** p r i v a t e banker or
a g e n t . Before *** any p r i v a t e banker s h a l l apply to any judge f o r such
X-6812
* • 1 6 it
" r e s t r a i n i n g o r d e r , n o t i c e s h a l l be given i n w r i t i n g to t h e "bank commissioner of i n t e n t i o n to so apply at l e a s t t e n days "before such app l i c a t i o n s h a l l "be made. I f , i n the opinion of the bank commissioner,
(or) p r i v a t e "banker *** such order should "be revoked or m o d i f i e d , any
judge of t h e s u p e r i o r court may, on a p p l i c a t i o n of such commissioner,
(or) p r i v a t e "banker *** revoke or modify the o r i g i n a l o r d e r , and n o t i c e
of such r e v o c a t i o n o r m o d i f i c a t i o n s h a l l "be given to the *** p r i v a t e
"banker a f f e c t e d thereby i n the same manner as i n the case of the
o r i g i n a l o r d e r . " (General S t a t u t e s of Connecticut, Revision of 1930,
sec. 3870).
Annual f e e mast "be p a i d "bank commissioner.
Every p r i v a t e "banker i s r e q u i r e d t o pay annually to the "bank
commissioner a f e e of f i f t y d o l l a r s . (General S t a t u t e s of Connecticut,
Revision of 1930, s e c . 3957).
Purchase of r e a l e s t a t e without approval of "bank commissioner p r o h i b i t e d .
"No p r i v a t e banker doing b u s i n e s s i n t h i s s t a t e *** s h a l l p u r chase any r e a l e s t a t e without f i r s t o b t a i n i n g the approval of the bank
commissioner." (General S t a t u t e s of Connecticut, Revision of 1930, sec.
3952).
Reserve fund r e q u i r e d .
"Each such p r i v a t e banker s h a l l maintain a r e s e r v e fund of
twelve per centum of t h e demand d e p o s i t s and f i v e per centum of the
time d e p o s i t s h e l d by him." (General S t a t u t e s of Connecticut, Revision
of 1930, s e c t i o n 3953).
What r e s e r v e fund s h a l l c o n s i s t o f .
"Such r e s e r v e fund s h a l l c o n s i s t of gold and s i l v e r c o i n , the
demand o b l i g a t i o n s of the United S t a t e s or n a t i o n a l bank currency or
f e d e r a l r e s e r v e notes and f e d e r a l r e s e r v e bank notes and be held by
such p r i v a t e banker i n h i s p l a c e of business and of balances w i t h r e serve a g e n t s , s u b j e c t to demand d r a f t or bonds which a r e l e g a l i n v e s t ments £>r savings banks of t h i s s t a t e , provided each such r e s e r v e agent
s h a l l be a d e p o s i t o r y approved by t h e bank commissioner; and the bonds,
held as a p a r t of such r e s e r v e , s h a l l , at no time, exceed a t p a r value
o n e - s i x t h of the t o t a l r e s e r v e f u n d . " (General S t a t u t e s of Connecticut
Revision of 1930, s e c . 3953).
Dividends or new l o a n s , d i s c o u n t s , e t c . , p r o h i b i t e d while r e s e r v e i s
impaired.
Whenever the r e s e r v e fund of any p r i v a t e banker f a l l s belcw
the requirements, such banker i s p r o h i b i t e d from making any new l o a n s ,
discounts or i n v e s t m e n t s , or any dividend or d i s t r i b u t i o n of p r o f i t s
!
X*»6812
-
149
16 -
u n t i l the r e s e r v e fund i s r e s t o r e d to the r e q u i r e d amount.
S t a t u t e s , o f Connecticut, Revision of 1930, s e c . 3953).
(General
Duty of bank commissioner i n case of impaired r e s e r v e fund.
"The hank commissioner s h a l l n o t i f y any p r i v a t e "banker whose r e serve fund s h a l l f a l l "below s a i d r e q u i r e d amount, and, i f such p r i v a t e
"banker s h a l l f a i l f o r t h i r t y days t h e r e a f t e r t o make good such r e s e r v e
f u n d , the "bank commissioner may apply f o r the appointment of a r e c e i v e r
to wind up h i s business. 1 1 (General S t a t u t e s of Connecticut, Revision
of 1930, sec. 3953).
D e f i n i t i o n of permanent c a p i t a l .
"Any r e a l e s t a t e , s e c u r i t y , personal p r o p e r t y or evidence of
ownership of p r o p e r t y acquired by any unincorporated p r i v a t e banker,
with t h e c a p i t a l of such banker and cash received on deposit i n excess
of the t o t a l l i a b i l i t i e s of such banker, s h a l l be construed and designated as permanent c a p i t a l . " (General S t a t u t e s of Connecticut, Rev i s i o n of 1930, sec. 3960).
Investment of permanent c a p i t a l .
•
"Bach such banker may, subject t o the r e s t r i c t i o n s provided
f o r h e r e i n , i n v e s t h i s permanent c a p i t a l and the d e p o s i t s r e c e i v e d
i n such r e a l and p e r s o n a l p r o p e r t y , as he may deem a d v i s a b l e , p r o v i d ed the s e c u r i t y a f f o r d e d d e p o s i t o r s s h a l l not be imperiled by any
such i n v e s t m e n t , n (General S t a t u t e s of Connecticut, Revision of 1930,
s e c . 3960).
Restriction
upon lending permanent c a p i t a l t o c e r t a i n c o r p o r a t i o n s .
"No p r i v a t e banker s h a l l lend, d i r e c t l y or i n d i r e c t l y , t o any
corporation of which he i s t h e l e g a l or e q u i t a b l e owner of more than
twunty-five p e r centum of the issued c a p i t a l stock, any p a r t of his
permanent c a p i t a l or c a p i t a l stock or the d e p o s i t s received by him."
(General S t a t u t e s of Connecticut, Revision of 1930, s e c . 3961).
Location of p r o p e r t y upon which loans a r e made.
A l l r e a l p r o p e r t y and mortgage loans held by any p r i v a t e banker
on May 29, 1925, or acquired with c a p i t a l or d e p o s i t s , or t o which t i t l e
has been taken i n connection with the business of t h e p r i v a t e banker,
must be l o c a t e d i n t h e S t a t e of Connecticut, or i n c e r t a i n c o u n t i e s of
the S t a t e s of Rhode I s l a n d , Massachusetts or New York. (General S t a t u t e s
of Connecticut, Revision of 1930, sec. 3962).
Real e s t a t e loans p r o h i b i t e d i f aggregate amount exceeds 80# of appraised
value of p r o p e r t y .
"No p r i v a t e banker s h a l l make a loan, d i r e c t l y or i n d i r e c t l y ,
X-6812
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ik
"upon the s e c u r i t y of r e a l e s t a t e i f the t o t a l amount of mortgages,
l i e n s and encumbrances upon such r e a l e s t a t e , i n c l u d i n g t h e mortgage
loan t o be made by such p r i v a t e banker, s h a l l , i n the aggregate amount,
exceed eighty per centum of the appraised value of such r e a l e s t a t e . "
(General S t a t u t e s of Connecticut, Revision of 1930, s e c . 3963).
Branch or new p l a c e of b u s i n e s s p r o h i b i t e d , but l o c a t i o n i n same town
may be changed.
"No p r i v a t e banker s h a l l e s t a b l i s h any branch or open any new
p l a c e of b u s i n e s s , provided nothing h e r e i n contained s h a l l prevent the
change of l o c a t i o n of the p l a c e of business of any p r i v a t e banker w i t h i n
t h e town i n which such b u s i n e s s i s l o c a t e d , but nothing h e r e i n contained
s h a l l permit t h e change of l o c a t i o n of such business from one town t o
a n o t h e r . " (General S t a t u t e s of Connecticut, Revision of 1930, sec. 3959).
Penalties for violations.
Any person v i o l a t i n g any of the above p r o v i s i o n s "or of any
other s t a t u t e concerning the r e g u l a t i o n of p r i v a t e bankers or concerning
persons engaged i n the business of r e c e i v i n g money f o r forwarding or
t r a n s m i s s i o n , s h a l l be f i n e d not more than two thousand d o l l a r s or imprisoned not more than one year or b o t h . " (General S t a t u t e s of Connectic u t , Revision of 1930, sec. 3967).
P r i v a t e bankers may i n c o r p o r a t e ; conditions p r e c e d e n t .
"Any p e r s o n , f i r m or unincorporated a s s o c i a t i o n of p e r s o n s ,
engaged on May 29, 1925, i n t h e business of p r i v a t e banker ***, may i n c o r p o r a t e , f o r t h e purpose of conducting such b u s i n e s s , i n t h e manner p r o vided by law f o r t h e o r g a n i z a t i o n of j o i n t stock c o r p o r a t i o n s , except
as provided h e r e i n . The by-laws of any p r i v a t e banker i n c o r p o r a t i n g ***
s h a l l be submitted t o the bank commissioner f o r approval, and no by-laws
s h a l l be adopted u n l e s s the same s h a l l have been approved by him. Any
such person, f i r m or a s s o c i a t i o n intending t o i n c o r p o r a t e f o r the purpose
of t r a n s a c t i n g such b u s i n e s s s h a l l serve n o t i c e upon t h e commissioner of h i s i n t e n t i o n to i n c o r p o r a t e , and s h a l l f u r n i s h evidence t o t h e
commissioner t h a t the c a p i t a l stock of such c o r p o r a t i o n t o the amount
of a t l e a s t t w e n t y - f i v e thousand d o l l a r s s h a l l have beensubscribed f o r ,
w i t h c a p i t a l s t o c k s h a l l not be invested i n s e c u r i t i e s d e p o s i t e d with
the s t a t e t r e a s u r e r i n l i e u of a bond to t h e s t a t e . " (General S t a t u t e s of
Connecticut, Revision of 1930, sec. 3964),
DELAWARE
Banking b u s i n e s s must be conducted under corporate c h a r t e r .
" I t s h a l l be unlawful t o conduct a banking b u s i n e s s or t h e b u s i ness of a t r u s t company w i t h i n t h i s S t a t e except under a c o r p o r a t e
151
18 -
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" c h a r t e r v a l i d i n t h i s S t a t e a u t h o r i z i n g the conduct df such "business
i n t h i s S t a t e . " (Act approved March 31, 1921, Laws of 1921, s e c . 2;
Banking Laws, 1929, s e c . 2, p . 15). "ITo bank or t r u s t company n o t a c t i v e l y engaged i n b u s i n e s s i n t h i s S t a t e a t the time of the adoption of
t h i s Act s h a l l open a p l a c e of business i n t h i s S t a t e without having
f i r s t secured from t h e S t a t e Baiik Commissioner a c e r t i f i c a t e t h a t i t
has complied '?ith a l l the requirements of law and t h a t i t i s a u t h o r i z e d
t o conduct the b u s i n e s s s p e c i f i e d t h e r e i n . " (Act approved March 31,
1921, Laws of 1921, s e c . 3; Banking Laws, 1929, s e c . 3, p . 15).
Forming banking company without i n c o r p o r a t i o n ; p e n a l t y .
" I t i s u n l a w f u l f o r any persons to a s s o c i a t e i n forming a banki n g cosipany without i n c o r p o r a t i o n ; and any persons who s h a l l r e c e i v e
s u b s c r i p t i o n s to t h e c a p i t a l stock of such company, or s h a l l s u b s c r i b e
f o r s h a r e s t h e r e i n , s h a l l f o r f e i t and pay f i v e hundred d o l l a r s t o anyone '"ho w i l l sue f o r the same; one-half thereof f o r the use of the S t a t e . "
(Rev. Code of D e l . , 1915, s e c . 2102; Banking Laws, 1929, s e c . 2102, p .
31.)
Unauthorized banking o p e r a t i o n s or a d v e r t i s i n g ; p e n a l t i e s .
"If any persons, members, or agents, of such (unincorporated banking) a s s o c i a t i o n , s h a l l issue any "bills, or notes, i n the nature of
bank notes, payable to bearer or order, or loan money upon actual or
accommodation notes, or receive money on deposit, every such person s h a l l
f o r f e i t and pay f i v e h%idred d o l l a r s , to be recovered and applied" as
provided i n the p r o v i s i o n l a s t above quoted. (Rev. Code of D e l . , 1915,
s e c . 2103; Banking Laws, 1929, s e c . 2103, p . 31). "Any person, f i r m ,
or a s s o c i a t i o n of i n d i v i d u a l s * * *, who s h a l l i n any manner r e p r e s e n t
or hold out him, h e r , themselves or i t s e l f , whether by public a d v e r t i s e ment, p l a c a r d , hand b i l l or otherwise, as engaged i n the r e c e i p t of dep o s i t s of money as a savings fund, bank or t r u s t company or any business
s u b s t a n t i a l l y s i m i l a r t h e r e t o w i t h i n the boundaries of the S t a t e of
Delaware, not being a u t h o r i z e d under the laws of t h i s S t a t e to engage
i n such b u s i n e s s or any b u s i n e s s s u b s t a n t i a l l y s i m i l a r t h e r e t o , s h a l l
be deemed g u i l t y of a misdemeanor, and upon conviction thereof s h a l l be
f i n e d i n a sum not exceeding two hundred d o l l a r s or imprisoned f o r a
term not exceeding one y e a r , or b o t h , a t the d i s c r e t i o n of the Court."
(Rev. Code of D e l . , 1915, s e c . 3507; Banking Laws, 1929, s e c . 3507, p .
DISTRICT 0? COLUMBIA.
ITo p r o h i b i t i o n a g a i n s t "private banking b u s i n e s s , and, except f o r t a x a t i o n
p r o v i s i o n s , no o t h e r p r o v i s i o n s a p p l i c a b l e .
.The laws of the D i s t r i c t of Columbia do not contain any p r o v i s i o n s p r o h i b i t i n g the t r a n s a c t i o n of a banking business by a p r i v a t e
bank; nor do such laws contain any p r o v i s i o n s covering the o p e r a t i o n or
s u p e r v i s i o n of such a bank. The laws, however, do contain p r o v i s i o n s
-19-
X-6812
d e f i n i n g a p r i v a t e "bank and Subjecting i t to ''a tax of f i v e hundred d o l l a r s per annum". These p r o v i s i o n s are given below.
Hate of t a x a t i o n : "-private bank or "banker" d e f i n e d .
" P r i v a t e banks or bankers not incorporated s h a l l pay a tax of :
f i v e hundred d o l l a r s per annum. Every person, f i r m , company, or a s s o c i a t i o n not i n c o r p o r a t e d having a p l a c e of business where c r e d i t s a r e
opened by the d e p o s i t or c o l l e c t i o n of moneys or currency s u b j e c t , t o be
p a i d or r e m i t t e d upon d r a f t , check, or order, or where money i s advanced
or loaned on s t o c k s , bonds, b u l l i o n , b i l l s of exchange, or promissory
n o t e s , or ?here s t o c k s , bonds, b i l l s of exchange or promissory notes are
r e c e i v e d f o r discount or f o r s a l e , s h a l l be regarded as a p r i v a t e bank
or banker." (Act of J u l y 1, 1902, 32 S t a t s . 621, ch. 1352, s e c . 5, p a r .
14; Code of t h e D i s t r i c t of Columbia, T i t l e 20, s e c . 765, p . 255.)
When tax mast be p a i d .
"The taxes f o r s a i d p r i v a t e banks and bankers, and note brokers
s h a l l be p a i d t o the c o l l e c t o r of taxes of the D i s t r i c t of Columbia, and s h a l l date from t h e f i r s t day of J u l y i n each year aaa e x p i r e on the
t h i r t i e t h day of June following. Said taxes s h a l l date from the f i r s t
day of the month i n which the l i a b i l i t y begins, and payment s h a l l be
made f o r a p r o p o r t i o n a t e amount." (Act of J u l y 1, 1902, 32 S t a t s . 622,
ch. 1352, s e c . 6, p a r . 17; Code of the D i s t r i c t of Columbia, T i t l e 20,
s e c . 768, p . 253).
FLORIDA.
P r i v a t e banking b u s i n e s s -prohibited.
Under the terms of a s t a t u t e of t h i s S t a t e enacted i n 1915, i t
i s provided t h a t , except f o r p e r s o n s , firms or companies which were conducting a p r i v a t e banking business on or b e f o r e June 4, 1915, "no person,
f i r m or company s h a l l be allowed to conduct a banking business i n t h i s
S t a t e without being i n c o r p o r a t e d under the banking laws of t h i s S t a t e . "
(Acts of 1915, ch. 6812, s e c . 1; Banking laws, 1930, A r t i c l e 14, s e c .
4202, p . 5 5 ) .
Persons, f i r m s or companies conducting a p r i v a t e banking b u s i ness as of June 4, 1915, could have been p e r m i t t e d by the Comptroller
of the S t a t e , up to ITovember 1, 1915, to continue such business i f they
had a c a p i t a l of $15,000; but i f a u t h o r i t y to continue i n business had
not been obtained p r i o r to. ITovember 1, 1915, the laws r e q u i r e d t h a t a
r e c e i v e r be appointed for such p r i v a t e banks. For p r i v a t e banks vhich
were a u t h o r i z e d to continue i n b u s i n e s s , the laws provide t h a t they
" s h a l l be governed and c o n t r o l l e d by the Banking Laws of t h i s S t a t e ,
i n so f a r as the same may be a p p l i c a b l e , as f u l l y and completely as i f
i n c o r p o r a t e d as a banking company, and s h a l l be s u b j e c t to a l l the
p e n a l t i e s of s a i d laws, and to t h e s u p e r v i s i o n , c o n t r o l and d i r e c t i o n
of the Comptroller." (Acts of 1915, ch. 6812, s e e s . , 2 , 3 , 4 and 5;
Banking Laws, 1930, A r t i c l e 14, s e e s . 4203,4205 and 4206, pp.55 and 56).
- 20 w
: 153
X-S812
m^iA
ITo p r o v i s i o n s covering operation except r e s t r i c t i o n s a g a i n s t u s i n g
c e r t a i n a d v e r t i s i n g or banking terms I"
- -•
"Mo p r i v a t e person, f i r m , or voluntary a s s o c i a t i o n engaged
i n the business of banking i n t h i s S t a t e not s u b j e c t to the s u p e r v i s i o n
of t h e Superintendent of Banks, and no p r i v a t e corporation except a
bank duly c h a r t e r e d and organized under the laws of t h i s S t a t e or under
the Acts of Congress" s h a l l make use of any a d v e r t i s i n g importing a corp o r a t i o n or i n d i c a t i n g t h a t the b usiness engaged i n i s t h a t of r e g u l a r l y c h a r t e r e d bank. P r i v a t e banks are a l s o p r o h i b i t e d from u s i n g the
words "bank", "banker", "banking company", "banking house", or any other
s i m i l a r words i n d i c a t i n g t h a t t h e business done i s t h a t of a bank, without a l s o u s i n g therewith the words " p l a i n l y w r i t t e n or p r i n t e d , so t h a t
the same may be r e a d i l y read, ' P r i v a t e Bank, 2*ot I n c o r p o r a t e d ' , and
every person, firm, a s s o c i a t i o n , or p r i v a t e corporation other than a r e g u l a r l y c h a r t e r e d bank, a d v e r t i s i n g t o r e c e i v e , or r e c e i v i n g d e p o s i t s ,
s h a l l a t the window or desk a t which such d e p o s i t s are received p l a c e ,
a conspicuous sign *>ith l e t t e r s not l e s s than one inch i n h e i g h t , upon
which s h a l l be p r i n t e d the words, ' P r i v a t e Banker, i'ot I n c o r p o r a t e d '
P r i v a t e bankers engaged i n business a t the time of the passage of the
a c t containing t h e s e p r o v i s i o n s (August 16, 1919) are not r e q u i r e d to
change the names i n use by them and "may continue to u s e , without f u r t h e r q u a l i f i c a t i o n or r e s t r i c t i o n , the word 'Banker' or ' B a n k e r s ' , "here
the use of t h e i r names conveys unmistakably t h a t they are not i n c o r p o r a t e d . " (Banking Law Pamphlet, with amendments to August 26, 1925,
A r t i c l e 1, s e c . 4, pp. 3 and 4 . ) A v i o l a t i o n of these p r o v i s i o n s cons t i t u t e s a misdemeanor. (Banking Law Pamphlet, with amendments to
August 26, 1925, A r t i c l e 20, s e c . 35, p . 9 5 ) .
P r i v a t e bank may be converted i n t o a bank.
The laws of t h i s S t a t e a l s o contain p r o v i s i o n s permitting a
p r i v a t e bank to convert i n t o a bank upon complying with the laws
covering the i n c o r p o r a t i o n of banks. (Banking Law Pamphlet, with
amendments to August 26, 1925, A r t i c l e 11, s e e s . 1 to 3 i n c l u s i v e ,
pp. 47 and 4 8 . )
IDAHO
P r i v a t e banking -prohibited: but c e r t a i n p r i v a t e bankers ma.v continue
in business.
The laws of t h i s S t a t e provide t h a t " i t s h a l l be unlawful f o r
any c o r p o r a t i o n , p a r t n e r s h i p , f i r m or i n d i v i d u a l to engage i n or t r a n s a c t a banking or banking and t r u s t business w i t h i n t h i s s t a t e except by
means of a c o r p o r a t i o n duly organized f o r such purpose, except t h a t any
i n d i v i d u a l , c o - p a r t n e r s h i p or unincorporated a s s o c i a t i o n a c t u a l l y t r a n s a c t i n g a banking or banking and t r u s t business as h e r e i n d e f i n e d w i t h i n
t h i s s t a t e on the d a t e t h i s a c t becomes e f f e c t i v e , may continue i n such
X-6812 '
154
U 21 -
"business a t t h e p l a c e s where tl>ey a r e then l o c a t e d , under and subjeet
to the p r o v i s i o n s of t h i s actt•' (Banking Laws, 1925, sec. 2, p . 5;
Idaho Bankifig Code, 1925, ch; 133 i sec. 2 . ) The word "bank", as used
i n t h e s e laws, " s h a l l be construed to include any I n d i v i d u a l , c o - p a r t n e r s h i p , or u n i n c o r p o r a t e d a s s o c i a t i o n engaged i n the banking busine ss
as h e r e i n defined. 1 1 (Banking Laws, 1925, sec, 2, p. 5; Idaho Banking
Code, 1925, ch. 133, s e c . 2 ) .
D e f i n i t i o n of banking b u s i n e s s .
"The s o l i c i t i n g , r e c e i v i n g or accepting of money or i t s equival e n t on d e p o s i t as a r e g u l a r business s h a l l be deemed t o be doing a
banking b u s i n e s s , whether such deposit i s made s u b j e c t t o check, or i s
evidenced by a c e r t i f i c a t e of d e p o s i t , a passbook, a n o t e , a r e c e i p t ,
or other w r i t i n g ; P r o v i d e d . t h a t nothing h e r e i n s h a l l apply to or i n clude money or i t s equivalent l e f t i n escrow or l e f t w i t h t h e agent
pending investment i n r e a l e s t a t e or s e c u r i t i e s f o r or on account of
h i s p r i n c i p a l . (Banking Laws, 1925, sec. 2, p. 5; Idaho Banking Code,
1925, ch. 133, s e c . 2 . )
Banking b u s i n e s s must be authorized by law; p e n a l t y .
" I t s h a l l be unlawful f o r any i n d i v i d u a l , c o p a r t n e r s h i p , a s s o c i a t i o n , f i r m or c o r p o r a t i o n to r e c e i v e money upon deposit or t r a n s a c t any
other form of banking b u s i n e s s except as authorized by t h i s a c t . Any
person v i o l a t i n g any p r o v i s i o n of t h i s s e c t i o n , e i t h e r i n d i v i d u a l l y or
as an i n t e r e s t e d p a r t y i n any c o - p a r t n e r s h i p , a s s o c i a t i o n , f i r m or c o r p o r a t i o n , s h a l l be g u i l t y of a misdemeanor and upon c o n v i c t i o n thereof
s h a l l be f i n e d i n t h e sum of not l e s s than $300 nor more than $1,000,
or by imprisonment i n the county j a i l not l e s s than t h i r t y days nor
more than one y e a r , o r by both f i n e arid imprisonment." (Banking Laws,
1925, sec. 102, p . 47; Idaho Banking Code, 1925, ch. 133, sec. 102).
A d v e r t i s i n g banking b u s i n e s s not authorized by law; p e n a l t y .
"Any p e r s o n , f i r m , or c o r p o r a t i o n , other than a n a t i o n a l bank,
not a u t h o r i s e d t o do a banking or t r u s t busine ss under t h i s a c t , t h a t
uses or a d v e r t i s e s as p a r t of h i s or i t s f i r m or c o r p o r a t e name the
word ' b a n k ' , ' b a n k e r ' , ' t r u s t company', 'savings b a n k ' , or any other
word or words of s i m i l a r import, i s g u i l t y of a f e l o n y . Provided, however,
t h i s s e c t i o n s h a l l not apply to t i t l e or t r u s t companies i n c o r p o r a t e d under
Chapter 194 of the Idaho Compiled S t a t u t e s 1919, nor to any company which
p r i o r t o t h e passage of t h i s act has l a w f u l l y assumed and used as a p a r t
of i t s name the word ' t r u s t . ' or ' t r u s t c o m p a n y ' ( B a n k i n g Laws, 1925,
sec. 103, p . 47; Idaho Banking Code, 1925, ch. 133, s e c . 103.)
ILLINOIS
Banking b u s i n e s s f o r b i d d e n t o n a t u r a l p e r s o n s , f i r m s or p a r t n e r s h i p s .
"After January 1, 1921 no n a t u r a l person or n a t u r a l p e r s o n s ,
f i r m or p a r t n e r s h i p s h a l l t r a n s a c t the b u s i n e s s of banking or the b u s i ness of r e c e i v i n g money upon d e p o s i t , or s h a l l use the word 'Bank' or
'Banker' i n connection with s a i d b u s i n e s s ; provided, t h a t nothing h e r e i n
X-6812
1
155
22 —
contained s h a l l "be construed to p r o h i b i t tanks Incorporated, under the
laws of t h i s S t a t e or of the United S t a t e s from appointing n a t u r a l p e r sons as agents t o r e c e i v e d e p o s i t s of savings i n and through t h e p u b l i c
schools. 1 1 (Act of June 4, 1929, sec. 15&; Laws of 1929, s e c , 15s $ P*
188, made e f f e c t i v e by popular vote as of December 2, 1930.)
Penalty f o r v i o l a t i o n .
"Any person or persons v i o l a t i n g t h i s s e c t i o n s h a l l be deemed
g u i l t y of a misdemeanor and s h a l l , upon c o n v i c t i o n t h e r e o f , be punished
by a f i n e of not more than one thousand d o l l a r s ($1,000) or by imprisonment i n the county j a i l f o r not more than one (1) y e a r , or by both such
f i n e and imprisonment, and the Attorney General or S t a t e ' s a t t o r n e y of
the county i n which any such v i o l a t i o n occurs may r e s t r a i n such v i o l a t i o n by a b i l l i n e q u i t y to be f i l e d i n the C i r c u i t Court of such county."
(Act of June 4, 1929, sec. 15^; Laws of 1929, sec. 15&, p . 188, made
e f f e c t i v e by popular v o t e as of December 2, 1930.)
(Note,: — Sec. 15& of the I l l i n o i s Laws of 1929, as i t appeared
i n the laws of 1919, p . 235, p r o h i b i t e d the t r a n s a c t i n g of t h e business
of t r a n s m i t t i n g money t o f o r e i g n c o u n t r i e s and buying and s e l l i n g f o r e i g n
money or r e c e i v i n g money on d e p o s i t t o be t r a n s m i t t e d to f o r e i g n c o u n t r i e s
(express, steamship and t e l e g r a p h companies excepted).
The Supreme Court of I l l i n o i s i n the case of Wedesweiler v s .
Brundage, 297 111. 228, 130 U.B. 520, (April 5, 1921) held t h a t t h e s e
r e s t r i c t i o n s rendered the s e c t i o n u n c o n s t i t u t i o n a l on t h e grounds t h a t i t
embraced a s u b j e c t not mentioned i n the t i t l e of t h e a c t , t h a t i t granted
a s p e c i a l p r i v i l e g e i n v i o l a t i o n of sec. 22 of A r t . IV of t h e I l l i n o i s
Constitution,
t h a t i t deprived the Appellees of t h e r i g h t t o continue
the business i n which they were engaged without due process of law, and
t h a t i t deprived them of equal p r o t e c t i o n of t h e laws i n v i o l a t i o n of Sec.
2, A r t . I I of t h e S t a t e C o n s t i t u t i o n and of Sec. 1 of the 14th Amendment
t o the Federal C o n s t i t u t i o n . The court f u r t h e r held t h a t , i n the absence
of a s t a t u t e , the r i g h t of an i n d i v i d u a l to engage i n the banking business
i n a l l or any of i t s departments i s u n r e s t r i c t e d , but t h a t t h e business i s
of a p u b l i c c h a r a c t e r and i s p r o p e r l y s u b j e c t to s t a t u t o r y r e g u l a t i o n s f o r
t h e p r o t e c t i o n of the p u b l i c ; and, t h a t an i n d i v i d u a l i s not engaged i n
the banking b u s i n e s s because he does some of the t h i n g s which a r e f r e q u e n t l y or u s u a l l y done by banks, such as loaning money and t a k i n g bonds and
mortgages t h e r e f o r and i n t r a n s m i t t i n g money to f o r e i g n c o u n t r i e s or buying
and s e l l i n g f o r e i g n exchange. This case i s c i t e d f o r the purpose of showing
t h a t the scope of t h e p r e s e n t s e c t i o n appears t o be somewhat l i m i t e d . )
IMDIAHA
P r i v a t e banks must be authorized to t r a n s a c t banking b u s i n e s s .
" I t s h a l l be unlawful f o r any i n d i v i d u a l , ( o r ) f i r m *** to
X-68]|2
J_50
-38 .
h e r e a f t e r engage in a "banking b u s i n e s s a f t e r the enactment of t h i s act
(1915) without f i r s t r e c e i v i n g from the ( S t a t e ) c h a r t e r board the approval of t h e i r a p p l i c a t i o n
When in the judgment of s a i d c h a r t e r
board i t i s a d v i s a b l e to mate a personal i n v e s t i g a t i o n as to the need
and n e c e s s i t y of e s t a b l i s h i n g (a) * * * p r i v a t e bank, * * * , then the
board may appoint some person to make a thorough i n v e s t i g a t i o n , and
s a i d person s h a l l make a w r i t t e n r e p o r t of h i s f i n d i n g s and f i l e same
with the c h a r t e r board; *** " . (Acts of 1915, sec. 3, p . 550; Banking
Laws, 1929, sec. 3, p . 77.)
P e n a l t y f o r v i o l a t i o n of above •provision.
"Any person v i o l a t i n g the provision of t h i s (above quoted) sect i o n e i t h e r i n d i v i d u a l l y or a s an i n t e r e s t (ed) p a r t y , s h a l l be g u i l t y
of a misdemeanor, and upon conviction t h e r e o f " , s h a l l be s u b j e c t to
c e r t a i n p r e s c r i b e d p e n a l t i e s . (Acts of 1915, sec. 3, p . 550; Banking
Laws, 1929, sec. 3, p . 77).
- 54 •
'
AbpMo&bility o
f
.
1
9
0
^
X-6812
*
-
!
I
Thfe Act of 1907, provides "That every partnership, firm or i n dividual transacting a "banking "business within t h i s s t a t e , or u s i n g the
word bank, "banker, or "banking i n connection with hi6 or i t s "business,
s h a l l be subject to the provisions of this act." (Acts of 1907, s e c . 1,
p . 174; Banking laws, 1929, sec. 1, p . 43.)
Capital required: investment of: segregation of
"It s h a l l be unlawful f o r any partnership, firm or individual to
transact a banking business in t h i s s t a t e , or to advertise as a banker
u n l e s s said partnership, firm or individual has a t l e * s t ten thousand
($10,000) d o l l a r s of cash capital invested i n well secured notes i n s t a t e
or municipal bonds, or i n bank building, furniture or f i x t u r e s , and shall
be s e t apart for the security of the creditors of s a i d bank; * *
(Acts of 1907, p . 174, sec. 2; Banking Laws, 1929, s e c . 2, p. 43.)
Real e s t a t e investments; r e s t r i c t i o n s upon and conditions regarding.
" * * * not more than o n e - t h i r d of the c a p i t a l * * * f i x e d i n the
d e t a i l e d statement of such p a r t n e r s h i p , f i r m , or i n d i v i d u a l s h a l l be i n vested i n r e a l e s t a t e : * *
I f any p a r t i s i n v e s t e d i n r e a l e s t a t e ,
the r e a l e s t a t e mast be conveyed to the p r i v a t e bank i n i t s own name by
a deed signed and acknowledged by the members of the bank and t h e i r ?
wives. The deed must give a d e s c r i p t i o n of the r e a l e s t a t e and i t s
v a l u e , must convey a good f e e simple t i t l e , s h a l l be recorded i n the
r e c o r d e r ' s o f f i c e of the county where the land i s l o c a t e d and "a copy
thereof f i l e d with the bank commissioner; Provided, That no p a r t of the
c a p i t a l , s u r p l u s or undivided p r o f i t s of said bank, except as a f o r e s a i d ,
may be i n v e s t e d i n r e a l e s t a t e except i t be taken i n settlement of a
d o u b t f u l claim, or purchased a t j u d i c i a l s a l e on a Judgment or a decree
of f o r e c l o s u r e i n favor of s a i d bank; and when so taken, i t must be by
deed made to such; and the president and cashier of such bank are hereby
empowered and a u t h o r i z e d to execute good and s u f f i c i e n t deed or deeds
t h e r e f o r , in the name of such bank, upon proper order made t h e r e f o r by
the board of directors of such bank. All mortgages held by or to secure
money loaned by the bank ehe^l be s a t i s f i e d of record upon the payment
thereof, by a release or s a t i s f a c t i o n of mortgage executed i n the name
of the bank by i t s president, v i c e president or cashier," (Acts of 1907,
P" 1 ? 4 » sec. 2; Banking laws, 1929, s e c . 2, pp. 43 and 4 4 . )
Increase or decrease of capital storfr.
The c a p i t a l s t o c k of any p r i v a t e banker may be increased by an
agreement i n w r i t i n g signed by the p a r t n e r s or owners holding two t h i r d s
of t h e c a p i t a l s t o c k and "paying i n t o the bank i n money the amount of the
i n c r e a s e . This amount and a c e r t i f i c a t e by the cashier or manager of
the bank of i t s payment, s h a l l , w i t h i n f i v e days t h e r e a f t e r , be f i l e d
with the bank commissioner. The c a p i t a l stock may be decreased but a t
no time below $10,000, upon a w r i t t e n p e t i t i o n of the p a r t n e r s or owners
— 25 —
; 158
X-6812
holding t w o - t h i r d s of the c a p i t a l stock to the bank commissioner. The
hank commissioner, a f t e r an ex&itiija&lion df the bank may approve or r e f u s e the r e d u c t i o n . If approved,' t h a t f a c t must toe indorsed upon the
p e t i t i o n , and n o t i c e of such reduction mast immediately be p u b l i s h e d
f o r t h i r t y days in some newspaper published in the town where the bank
i s l o c a t e d , o r , i f no newspaper i s published in the town, then in one
published a t the county s e a t . (Acts of 1907, p . 174, sec. 2; Banking
Laws, 1929, sec. 2, p . 44).
Statement r e q u i r e d to be f i l e d .
Every p r i v a t e banker i s r e q u i r e d to f i l e with t h e bank commissioner a d e t a i l e d sworn statement o f ;
First.
The name of t h e bank.
Second. A copy of the a r t i c l e s of copartnership or agreement under which the b u s i n e s s i s being, or i s to be conducted, which s h a l l be
executed and acknowledged by a l l the p a r t i e s i n t e r e s t e d i n t h e bank, and
a t l e a s t one of whom s h a l l be a r e s i d e n t of t h e S t a t e of Indiana. If a
bank b u s in e s s i s b e i n g or i s to be t r a n s a c t e d or c a r r i e d on by an i n d i v i d u a l , such i n d i v i d u a l mast be a r e s i d e n t of the S t a t e of Indiana,
and the statement mast so show.
Third. The county and c i t y or town in which the bank i s to be
l o c a t e d , and the b u s i n e s s c a r r i e d on.
Fourth. The amount of the c a p i t a l p a i d into the b u s i n e s s and to
be kept and maintained a t a l l times in the b u s i n e s s .
F i f t h . That t h e aggregate r e s p o n s i b i l i t y and net worth of the
i n d i v i d u a l members of such f i r m , p a r t n e r s h i p or i n d i v i d u a l i s equal to
an amount a t l e a s t double the amount of the c a p i t a l p a i d i n t o the bank.
S i x t h . The names of the o f f i c e r s who a r e to manage the b u s i n e s s .
(Acts of 1907, p. 174, sec. 3; Banking Laws, 1929, sec. 3, p . 44).
C e r t i f i c a t e s of stock must be issued to i n d i v i d u a l s forming bank and deemed
c a p i t a l stock.
'
'
•'' ' •
'
-• : '
' •
"
Each p r i v a t e bank s h a l l i s s u e c e r t i f i c a t e s of stock to the individual
or i n d i v i d u a l s forming the bank " i n an amount equal to the c a p i t a l of said
bank, which c e r t i f i c a t e s of s t o c k s h a l l be deemed and considered t h e c a p i t a l
stock of such bank, •*, * * " . (Acts of 1907, p . 174, sec. 4; Banking Laws,
1929, sec. 4 , p . 4 5 . )
C e r t i f i c a t e from bank commissioner to t r a n s a c t banking b u s i n e s s ; when
:
issued; f e e r e q u i r e d .
" ' ~
- : ' '
'
A f t e r the f i l i n g of the statement r e f e r r e d to above and the
"payment to the bank commissioner ( o f ) a f e e of o n e - t e n t h of 1 p e r cent,
- 26 •
, .
X-6812
.
•
•
;
of sudh c a p i t a l atotiki and the f i i l f i g H t h the "bank commissioner, ( o f )
the oath of some member of the p a r t n e r s h i p , f i r m or i n d i v i d u a l , t h a t the
c a p i t a l has been p a i d i n as provided f o r and | n compliance * * * (vrith)
t h i s a c t , then the bank commissioner s h a l l , without u n n e c e s s a r y d e l a y ,
i s s u e to such p a r t n e r s h i p , f i r m or i n d i v i d u a l , a c e r t i f i c a t e a u t h o r i z i n g
such p a r t n e r s h i p , f i r m or i n d i v i d u a l t o t r a n s a c t a banking b u s i n e s s . "
(Acts of 1907, p . 174; s e c . 5; Banking Laws, 1929, s e c . 5, p . 4 5 . )
L i s t of owners must be posted and changes mast be r e p o r t e d to bank
commissioner.
A l i s t of the owners of any p r i v a t e bank, and a statement to
the e f f e c t t h a t the i n s t i t u t i o n i s a p r i v a t e bank, must be p o s t e d i n
the room of every such bank. Any subsequent changes i n the owners
must be shown on the l i s t and a r e p o r t of a l l such changes must be made
t o the bank commissioner. (Acts of 1907, p . 174, s e c . 6; Banking Laws,
1929, s e c . 6, p . 4 5 . )
Report showing resources and l i a b i l i t i e s mist be made to bank COB**
m i s s i o n e r ; number r e q u i r e d and contents o f .
Every p r i v a t e banker " s h a l l make to the bank commissioner two
r e p o r t s during each and every y e a r , according t o the form which may be
p r e s c r i b e d by him, v e r i f i e d by the oath or a f f i r m a t i o n of the p r e s i d e n t ,
c a s h i e r or other managing agent of such bank, which r e p o r t s h a l l exh i b i t i n d e t a i l the resources and l i a b i l i t i e s of the bank a t the c l o s e
of b u s i n e s s on any p a s t day to be by him s p e c i f i e d ; * * * "• These r e p o r t s must be ma.de w i t h i n f i v e days a f t e r they have been c a l l e d f o r by
t h e bank commissioner and a v e r i f i e d copy mist be p u b l i s h e d i n a .newsp a p e r . (Acts of 1907, p . 174, s e c . 7; Banking Laws, 1929, s e c . 7, p .
46.)
Commissioner may c a l l f o r s p e c i a l r e p o r t s .
The commissioner i s empowered to c a l l f o r s p e c i a l r e p o r t s "whenever , i n h i s Judgment, the same s h a l l be n e c e s s a r y , i n order t o a r r i v e
a t a f u l l and complete knowledge of i t s ( t h e p r i v a t e bank' s) c o n d i t i o n " .
(Acts of 1907, p . 174, s e c . 7; Banking Laws, 1929, s e c . 7, p . 4 6 . )
Capital s t o c k , s u r p l u s and undivided p r o f i t s mast be given as i t e m s .
Each p r i v a t e bank " i n making any statement of the l i a b i l i t i e s
and a s s e t s of s a i d bank, s h a l l give the amount of i t s c a p i t a l s t o c k ,
i t s s u r p l u s and undivided p r o f i t s as items t h e r e o f . " (Acts of 1907,
p . 174, s e c . 4; Banking Laws, 1927, s e c . 4, p , 4 5 ) . "In no r e p o r t s
f i l e d * * * s h a l l r e a l or p e r s o n a l p r o p e r t y of an i n d i v i d u a l or i n d i v i d u a l s owning s a i d bank, except the t i t l e i s i n the bank, be p e r m i t t e d as an a s s e t . " (Acts of 1907, p . 174, s e c . 7; Banking Laws,
1929, s e c . 7, p . 4 6 . )
- 27 -
X-6812
P e n a l t y for...fai lvtoe..tqJy&laMA,..MlUlSUteiish r e p o r t s of c o n d i t i o n .
Any p r i v a t e "bank f a i l i n g to make and p u b l i s h any r e p o r t of cond i t i o n w i t h i n f i v e days a f t e r d r e q u e s t i s made t h e r e f o r i s s u b j e c t to
a p e n a l t y of not l e s s than one hundred dollars nor more than f i v e hundred d o l l a r s . (Acts of 1907, p. 174, s e c . 7; Banking Laws, 192$, s e c .
7, p . 4 6 ) .
Additional p e n a l t i e s prescribed for violations.
"Any p e r s o n , f i r m or c o p a r t n e r s h i p v i o l a t i n g any of the p r o v i s i o n s of t h i s (1907) a c t s h a l l he f i n e d in any sum not exceeding one
thousand d o l l a r s , to which may be added f o r the second o f f e n s e imprisonment f o r any term not exceeding two y e a r s . " (Acts of 1907, p . 174, s e c .
9; Banking LaWs, 1929, s e c . 9, p . 4 6 . )
P r o p e r t y held i n t r u s t .
I f p r o p e r t y i s held i n t r u s t by a p r i v a t e banker, complete i n formation regarding the t r u s t must be s e t f o r t h i n an instrument which
must be recorded i n t h e r e c o r d e r ' s o f f i c e of the county i n '"hich the
p r i v a t e bank i s l o c a t e d and the instrument t o g e t h e r with a c e r t i f i c a t e
showing t h a t i t has been recorded must be f i l e d with the bank commiss i o n e r . I f the instrument is. not recorded and f i l e d , * the p r o p e r t y held
i n t r u s t " s h a l l be considered a p a r t of the a s s e t s " of the p r i v a t e bank
i n case the a f f a i r s of the bank a r e wound up and the "remaining a s s e t s
a r e not s u f f i c i e n t to pay i n f u l l the bona f i d e claims of a l l d e p o s i t o r s . "
(Acts of 1907. p . 174, s e c . 10; Banking Laws, 1929, s e c . 10, p . 47 )
Depositors have l i e n on a s s e t s .
The d e p o s i t o r s i n any p r i v a t e bank " s h a l l have a f i r s t l i e n on
the a s s e t s of such bank i n case i t i s wound u p , to the amount of t h e i r
s e v e r a l d e p o s i t s . And f o r any balance remaining unpaid, such d e p o s i t o r s
s h a l l share i n the g e n e r a l a s s e t s of the owner or owners, a l i k e , with,
g e n e r a l c r e d i t o r s . " (Acts of 1907, p . 174, s e c . 11; Banking l a w s , 1929,
s e c . 11, p. 47 )
P r i v a t e banks may sue and be sued; s e r v i c e of p r o c e s s ; e f f e c t of judgments.
Any p r i v a t e banker " s h a l l have the r i g h t to sue, and be sued, u n der the name under which such bank i s authorized to t r a n s a c t i t s b u s i n e s s .
Service of summons or other process of court upon the o f f i c e r or agent
i n charge of the business of such bank s h a l l be good and s u f f i c i e n t s e r v i c e to give the court j u r i s d i c t i o n , and any judgment obtained against
su<£i bank s h a l l be v a l i d and binding against a l l the persons i n t e r e s t e d
therein." (Acts of 1907, p . 174, s e c . 12; Banking Laws, 1929, s e c . 12,
?• 47.)
X-6812
- 26 u
loans to o f f i c e r s r e s t r i c t e d .
No p r i v a t e banker nor any of i t s o f f i c e r s " s h a l l loan any of
the funds of s a i d bank in any amount exceeding t h i r t y (30) p e r cent
of the c a p i t a l stock of s a i d bank to any o f f i c e r or o f f i c e r s t h e r e of" . (Acts of 1907, p. 174, sec. 13; Banking Laws, 1929, sec. 13,
p . 48.)
Branch o f f i c e s p r o h i b i t e d .
I t i s unlawful f o r any p r i v a t e banker "to open, or e s t a b l i s h a
branch bank or branch o f f i c e : Provided, That the p r o v i s i o n s of t h i s
section s h a l l not apply to branch banks or branch o f f i c e s f o r which
c h a r t e r s have h e r e t o f o r e been granted." (Acts of 1921, p. 367, sec.
1; Banking Laws, 1929, p . 139.)
Trust -powers may ~oe executed.
P r i v a t e banks may "accept and execute t r u s t s of any and every
d e s c r i p t i o n which may be committed or t r a n s f e r r e d to them, under the
same r u l e s and r e g u l a t i o n s a s now govern l i k e powers in loan and t r u s t
companies." (Acts of 1915, p. 310; Banking Laws, 1929, p. 81.)
Examinations: number and Character o f .
The a f f a i r s of every p r i v a t e bank s h a l l be examined by one of
the examiners appointed by the bank commissioner "as o f t e n a s s h a l l b e
deemed n e c e s s a r y " , and a thorough examination into a l l the a f f a i r s of
the bank i s r e q u i r e d . The examiner may examine under oath any of the b a n k ' s
O f f i c e r s and a g e n t s , has the power to administer oaths to such o f f i c e r s
and agents, and must make a d e t a i l e d r e p o r t of the c ondition of the
bank to the bank commissioner. Each bank i s charged a f e e f o r such
examinations according to the amount of i t s a s s e t s . (Acts of 1911, p,
30, sec. 2, as amended by Acts of 1921, p. 816 and by Acts of 1929, p,
495; Banking Laws, 1929, sec. 2, pp. 83-85)
Insolvent or f a i l i n g c o n d i t i o n : r e c e i v e r may be appointed; d u t i e s of
examiner and bank commissioner.
If a p r i v a t e bank i s in an i n s o l v e n t or f a i l i n g c o n d i t i o n ,
or if the a s s e t s a r e being wasted or improperly used, a t the time the
S t a t e bank examiner makes an examination, the examiner i s r e q u i r e d immediately to n o t i f y the bank commissioner. I f the commissioner then
deems i t "necessary and expedient" he may d i r e c t the examiner or some
other person to take charge and c o n t r o l of the p r i v a t e bank; and the
commissioner s h a l l , if he f i n d s i t to be to the b e s t i n t e r e s t s of t h e
d e p o s i t o r s and c r e d i t o r s of the bank, make a p p l i c a t i o n to the c i r c u i t
or superior c o u r t of the county where the bank i s s i t u a t e d f o r the appointment of a r e c e i v e r f o r i t . Notice of such a p p l i c a t i o n s h a l l be
given to the s t o c k h o l d e r s and d e p o s i t o r s of the bank by p u b l i c a t i o n as
X-6812
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F
1 6 3
d i r e c t e d by the c o u r t . If ally p ^ i v a t # bank becomes in a f a i l i n g or i n solvent condition or f a i l s or suspends between p e r i o d s of examination,
i t s h a l l be the duty of i t s o f f i c e r s immediately to n o t i f y the commissioner of such condition, f a i l u r e or suspension, and the commissioner
s h a l l thereupon appoint some proper person to take charge of i t s a s s e t s ,
pending a p p l i c a t i o n f o r and the appointment of a r e c e i v e r . Any of
the o f f i c e r s f a i l i n g to so r e p o r t the suspension or f a i l u r e of h i s bank
s h a l l be deemed g u i l t y of a misdemeanor and on conviction may be f i n e d
not l e s s than one hundred d o l l a r s nor more than f i v e hundred d o l l a r s .
The person appointed to t a k e charge of the a s s e t s of any p r i v a t e bank
s h a l l r e c e i v e reasonable compensation to be recommended by the bank commissioner and allowed him by the court having j u r i s d i c t i o n over the
r e c e i v e r , and immediately p a i d out of the a s s e t s b e f o r e any d i s t r i b u t i o n thereof i s made. (Acts of 1911, p. 30, sec. 2, as amended by Acts
of 1921, p. 816, and by Acts of 1929, p. 495; Banking Laws, 1929, sec.
2, pp. 83-85).
F a i l u r e of bank commissioner to discharge d u t i e s with r e f e r e n c e
to f a i l i n g or i n s o l v e n t -private banks,
I f the bank commissioner f a i l s , n e g l e c t s or r e f u s e s f o r
f i f t e e n days to discharge any duty imposed upon him with r e f e r e n c e to
f a i l i n g or i n s o l v e n t p r i v a t e banks, the d e p o s i t o r s and c r e d i t o r s
r e p r e s e n t i n g 25 p e r cent of the t o t a l d e p o s i t s and o b l i g a t i o n s , except stock l i a b i l i t y , have t h e r i g h t to p e t i t i o n the Attorney General
who s h a l l thereupon perform t h e d u t i e s of the bank commissioner in
the p a r t i c u l a r case and apply f o r a r e c e i v e r . (Acts of 1911, p . 30,
sec. 2, as amended by Acts of 1921, p, 816, and by Acts of 1929, p .
495; Banking Laws, 1929, sec. 2, p. 85.)
Voluntary l i q u i d a t i o n ; commissioner may P e t i t i o n f o r r e c e i v e r .
When a p r i v a t e bank has been in voluntary l i q u i d a t i o n f o r eighteen or more months, the bank commissioner may p e t i t i o n the court f o r
the appointment of a r e c e i v e r if he considers t h a t the a f f a i r s a r e not
being administered to the b e s t i n t e r e s t s of the d e p o s i t o r s and stockholders,. Upon the appointment of the r e c e i v e r , he " s h a l l take charge
and proceed to administer and terminate the a f f a i r s of the i n s t i t u t i o n . "
(Acts of 1915, p . 546, sec. 1; Banking Laws, 1929, p . 82)•
F a i l u r e to pay examination f e e a l s o cause f o r appointment of r e c e i v e r .
A f a i l u r e to pay any examination f e e i s a l s o cause f o r the
appointment of a r e c e i v e r of a p r i v a t e bank. (Acts of 1911, p . 30, sec. 2,
a s amended by Acts of 1921, p . 816, and Acts of 1929, t>. 495; Banking Laws,
1929, s e c . 2, p . 85)
Owners may s t a y or a b a t e appointment of r e c e i v e r .
»
Upon the f i l i n g of a bond b e f o r e the court which appointed a
I 163
X-6812
r e c e i v e r f o r a p r i v a t e bank, or "before which the commissioner's app l i c a t i o n f o r t h e appointment of a r e c e i v e r i s pending, t h e owners
of a p r i v a t e t a n k may abate or s t a y the appointment of a r e c e i v e r .
(Acts of 1907, p . 174, sec. 14; Banking Laws, 1929, sec. 14, p . 4 8 . )
Voluntary l i q u i d a t i o n .
The laws of t h i s s t a t e contain p r o v i s i o n s o u t l i n i n g t h e p r o cedure and the c o n d i t i o n s under which a p r i v a t e hank may go i n t o v o l , u n t a r y l i q u i d a t i o n . (Acts of 1907, p . 174, sec. 15; Banking Laws,
1929, sec. 15, p . 4 8 . )
Reports and examination of p r i v a t e banks i n voluntary l i q u i d a t i o n .
P r i v a t e banks i n voluntary l i q u i d a t i o n a r e s u b j e c t t o t h e
same examinations and must, a t the d i s c r e t i o n of the bank commissioner,
make the same r e p o r t s as solvent p r i v a t e bankers. (Acts of 1911, p .
30, s e c . 2, as amended by Acts of 1921, p. 816, and Acts of 1929, p .
495; Banking Laws, 1929, s e c . 2, p . 85.)
Taxation of p r i v a t e banks.
There a r e a l s o p r o v i s i o n s covering the t a x a t i o n of membership
shares or c e r t i f i c a t e s of stock of p r i v a t e banks. (Acts of 1919, p .
198; Banking Laws, 1929, pp. 101-108.)
- 31 -
X-6812
i
16
IMAITo p r o v i s i o n s covering operation except r e s t r i c t i o n s on the use of
c e r t a i n a d v e r t i s i n g or banking terms.
The laws of t h i s S t a t e provide t h a t " I t s h a l l be u n l a w f u l f o r
any i n d i v i d u a l , p a r t n e r s h i p , or unincorporated a s s o c i a t i o n * * * not
s u b j e c t to s u p e r v i s i o n or examination of the "banking department" to
make use of the words "tank", " t a n k i n g " , "tanker" or any d e r i v a t i v e of
the word " t a n k i n g " , or t o make use of any s i g n or a d v e r t i s i n g i n d i c a t ing t h a t the p l a c e of business or the business c a r r i e d on i s t h a t of a
bank. (Banking Laws, 1929, ch. 412, s e c . 9151.) I t i s a l s o provided
t h a t a v i o l a t i o n of these p r o v i s i o n s c o n s t i t u t e s a misdemeanor (Banki n g Laws, 1929, ch. 412, s e c . 9152); but t h a t n e i t h e r the p e n a l t i e s p r e s c r i b e d f o r the commission of t h i s misdemeanor nor the above r e s t r i c t i o n on the use of c e r t a i n a d v e r t i s i n g or banking terms " s h a l l be cons t r u e d as a f f e c t i n g or i n any wise i n t e r f e r i n g with any p r i v a t e bank
or p r i v a t e banker t h a t may be engaged i n lawful business p r e v i o u s to
(Banking Laws, 1929, ch. 412, s e c . 9153). An adA p r i l 16, 1919."
d i t i o n a l p e n a l t y i s p r e s c r i b e d i n case "any * * * p r i v a t e banker, or
p e r s o n , not i n c o r p o r a t e d under the p r o v i s i o n s " of law covering savings
banks," or any o f f i c e r , agent, s e r v a n t , or employee t h e r e o f " a d v e r t i s e s
or e x h i b i t s any s i g n as a savings bank. (Banking Laws, 1929, ch. 413,
s e c . 9200 ) . The laws a l s o r e q u i r e corporations organized under t h e
g e n e r a l i n c o r p o r a t i o n laws to t r a n s a c t a banking business to have the
word " S t a t e " as a p a r t of t h e i r t i t l e s , but these laws s p e c i f i c a l l y
deny the r i g h t to use t h i s word as a p a r t of i t s t i t l e to any " p a r t n e r s h i p , i n d i v i d u a l , or unincorporated a s s o c i a t i o n engaged i n buying or
s e l l i n g exchange, r e c e i v i n g d e p o s i t s , discounting notes and b i l l s , or
other banking b u s i n e s s , " (Banking Laws, 1929, ch. 414, s e e s . 9202
and 9203.)
KANSAS
Corporate c h a r t e r r e q u i r e d to engage in banking b u s i n e s s .
"From' and a f t e r the passage and taking e f f e c t of t h i s a c t , i t
s h a l l be unlawful f o r an i n d i v i d u a l , f i r m or a s s o c i a t i o n to engage in
the banking b u s i n e s s in the S t a t e of Kansas without f i r s t making app l i c a t i o n to and r e c e i v i n g a corporate c h a r t e r t h e r e f o r from the S t a t e
c h a r t e r board, and p r o c u r i n g a c e r t i f i c a t e to t r a n s a c t such business
from t h e bank commissioner, a s provided by law; Provided, That t h i s
a c t s h a l l not apply to any i n d i v i d u a l , f i r m or a s s o c i a t i o n now engaged
in the t r a n s a c t i o n of banking b u s ine ss in the S t a t e of Kansas a s a
p r i v a t e bank." (Laws of 1929, ch. 90, sec. 1; Banking Laws, 1929, sec.
95, p . 29).
P r i v a t e bankers engaged in b u s i n e s s a t the time of the
enactment of the above "provision of law " s h a l l be amenable to a l l the
p r o v i s i o n s " of the s o - c a l l e d bank a c t , (Laws of 1897, ch. 47, sec. 36,
as amended by Laws of 1907, ch. 64, sec. 1; Revised S t a t u t e s of Kansas,
1923, sec, 9-138; Banking Laws, 1929, sec. 36, p. 1 4 . )
X-6812
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mrucgY
P r i v a t e banking b u s i n e s s e x p r e s s l y p r o h i b i t e d .
The laws of
f u l f o r any person or
n e r s , to engage in or
t h i s Commonwealth."
C a r r o l l ' s Ky. S t a t s . ,
t h i s S t a t e provide 11 That i t s h a l l be unlawp e r s o n s , e i t h e r as i n d i v i d u a l s or c o - p a r t conduct the business of p r i v a t e banking in
(Acts of 1906, Ch. 44, p. 278, sec. 1;
1930, sec. 602a-1 ) .
P e n a l t y f o r t r a n s a c t i n g p r i v a t e banking b u s i n e s s .
"Any person or persons who s h a l l engage in such b u s i n e s s
a f t e r t h i s law s h a l l become e f f e c t i v e s h a l l be deemed g u i l t y of a
misdemeanor, and, upon c o n v i c t i o n , s h a l l be f i n e d not l e s s than
twenty nor more than f i f t y d o l l a r s f o r each day he or they s h a l l
be engaged in s a i d b u s i n e s s ; a f t e r April 15, 1906, to be recovered
under indictment in the c i r c u i t court of the country where the
o f f e n s e s h a l l be committed.."
(Acts of 1906, ch. 44, p . 278,
sec. 2; C a r r o l l ' s Ky. S t a t s . , 1930, sec. 602a-2 ) .
P r i v a t e banking p r o v i s i o n s repealed; i n c o r p o r a t i o n r e q u i r e d .
" S e c t i o n s 599, 600, 601 and 602, Kentucky S t a t u t e s , r e l a t i n g to p r i v a t e banking a r e hereby r e p e a l e d , and persons h e r e a f t e r conducting or engaging in the banking busine ss in t h i s Commonwealth a r e r e q u i r e d t o become incorporated as now provided by
law."
(Acts of 1906, ch. 44, p. 278, sec. 3; C a r r o l l ' s Ky.
S t a t s . , 1930, sec. 602a-3 ) .
165
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.
33
166
.
LOUISIANA.
P r i v a t e "banking of d o u b t f u l l e g a l i t y .
Section 275 of the Revised S t a t u t e s of Louisiana (Act 166
of 1855) p r o v i d e s t h a t "Any person or a s s o c i a t i o n of p e r s o n s , or c o r p o r a t i o n
formed i n compliance with the f o l l o w i n g p r o v i s i o n s , may
t r a n s a c t t h e business of banking i n t h i s s t a t e , and e s t a b l i s h o f f i c e s of d i s c o u n t , d e p o s i t s , and c i r c u l a t i o n
f o r t h a t purpose, upon the terms and c o n d i t i o n s , and
s u b j e c t to a l l the l i a b i l i t i e s and p e n a l t i e s h e r e i n described. "
Section 1 of Act 179 of 1902, as amended by Act 140 of 1906,
(Banking Law Pamphlet, 1928, sec. 1, p . 4) provides "*** t h a t t h e b u s i n e s s of banking s h a l l be c a r r i e d on
only by such incorporated a s s o c i a t i o n s as s h a l l have been
organized under t h e laws of t h i s s t a t e , and of t h e United
S t a t e s , by i n d i v i d u a l c i t i z e n s of the s t a t e and by f i r m s
domiciled i n the s t a t e where a c t i v e members s h a l l be c i t i zens of t h i s s t a t e , provided t h a t no p r i v a t e banker or
other p e r s o n or persons not incorporated under t h i s a c t
s h a l l be p e r m i t t e d t o use t h e t i t l e Bank, Banking Assoc ia t i o n or Savings Bank i n connection w i t h i t s name."
Section 1 of Act 137 of 1918 (Banking Law Pamphlet, 1928, -sec.
1, p . 105), p r o v i d e s i n p a r t t h a t "•••Ho p e r s o n , f i r m , a s s o c i a t i o n , company or c o r p o r a t i o n , e i t h e r domestic or f o r e i g n , excepting only banks
organized under the laws of the United S t a t e s , not s u b j e c t
t o t h e s u p e r v i s i o n of t h e Examiner of S t a t e banks, and not
r e q u i r e d by the laws of the S t a t e of Louisiana t o r e p o r t t o
him, and which has not received from the Examiner of S t a t e
banks a c e r t i f i c a t e of a u t h o r i t y t o do a banking b u s i n e s s ,
*** s h a l l engage i n the business of banking, or the b u s i ness of r e c e i v i n g money on d e p o s i t , *** or s o l i c i t or r e ceive d e p o s i t s or t r a n s a c t business i n t h e way or manner
of a bank, savings bank or t r u s t company ***"
Section 4 of t h i s Act (Banking Law Pamphlet, 1928, s e c . 4, p .
108), a l s o p r o v i d e s t h a t " a l l laws or p a r t s of laws i n c o n f l i c t herewith
be, and t h e same axe hereby r e p e a l e d . "
I
X-6812
*. .34 —
The p r o v i s i o n s Of Section 275 of the. Revised S t a t u t e s and Sect i o n 1 of Act 179 of 1902, a s amended "by Act 140 of 1906, above quoted
authorized p r i v a t e "bankers to carry on the "business of "banking";
but whether p r i v a t e "banking can now "be t r a n s a c t e d l a w f u l l y i s a doubtf u l question i n view of t h e f a c t t h a t the laws do not appear t o contain
any p r o v i s i o n s p r o v i d i n g f o r the supervision o f , or t h e Issuance of a
c e r t i f i c a t e of a u t h o r i t y to do a "banking "business t o , p r i v a t e "bankers
by t h e "Examiner of S t a t e banks", which i s r e q u i r e d by t h e above quoted
p r o v i s i o n of Section 1 of Act 137 of 1918, as a condition precedent to
the t r a n s a c t i o n of a banking b u s i n ess by any person or c o r p o r a t i o n .
Furthermore, t h e Examiner of S t a t e banks advises t h a t he w i l l not i s s u e
a c e r t i f i c a t e of a u t h o r i t y to a p r i v a t e banker t o engage i n t h e banking
business.
A d d i t i o n a l p r o v i s i o n s of Act 137 of 1918 a f f e c t i n g t h e p r i v a t e
banking s i t u a t i o n a r e s e t f o r t h below.
X-6812
w
35
.
P r o h i b i t i o n a g a i n s t a d v e r t i s i n g or t r a n s a c t i n g "business as "bank,
savings ."bank or t r u s t company.
No p e r s o n , f i r m , a s s o c i a t i o n , company or c o r p o r a t i o n , except
"banks organized under t h e laws of the United S t a t e s , not a u t h o r i z e d
to do b u s in e s s by t h e S t a t e Bank Examiner or r e p o r t i n g t o or under h i s
s u p e r v i s i o n , can " a d v e r t i s e t h a t he or i t i s accepting money, savings
and i s s u i n g n o t e s or c e r t i f i c a t e s of deposit or investment t h e r e f o r *
* * or t r a n s a c t b u s i n e s s i n such a way or manner as t o lead t h e p u b l i c
t o b e l i e v e t h a t i t s b u s i n e s s i s t h a t of a bank, savings bank, or t r u s t
company, * * * , or u s e the word, 'Bank 1 , ' B a n k e r : , 'Banking', 'Savings
Bank', ' S a v i n g s ' , ' T r u s t ' , ' T r u s t e e ' , 'Trust Company', * * * or any
other word or words of s i m i l a r import as p a r t of i t s name or t i t l e , "
or make use of any s i g n or o t h e r a d v e r t i s i n g i n d i c a t i n g t h a t the p l a c e
of business or the b u s i n e s s c a r r i e d on i s i n any way t h a t of a bank,
savings bank, or t r u s t company. (Act 137 of 1918, sec. 1; Banking Law
Pamphlet, 1928, s e c . 1. pp. 105 and 106.)
Penalty f o r v i o l a t i o n of above p r o v i s i o n s ; procedure t o r e s t r a i n v i o l a t i o n
The laws p r e s c r i b e t h a t a p e n a l t y of $100 a day. mast be paid t o
the S t a t e f o r each day t h a t a v i o l a t i o n of any of the above p r o v i s i o n s
continues. Upon an a c t i o n brought by the Attorney General t h e D i s t r i c t
Court may i s s u e an i n j u n c t i o n r e s t r a i n i n g the use of words or from
f u r t h e r t r a n s a c t i n g b u s i n e s s i n v i o l a t i o n of the above p r o v i s i o n s , and
may make such other order as equity and j u s t i c e way r e q u i r e . (Act 137
of 1918, sec. 1; Banking Law Pamphlet, 1928, s e c . 1, pp. 106 and 107.)
Examiner must examine persons or f i r m s suspected of v i o l a t i n g above
provisions; f e e s .
Whenever i t comes t o the n o t i c e of the S t a t e Bank Exan&ner t h a t
any p e r s o n , f i r m , or c o r p o r a t i o n , i s v i o l a t i n g t h e above p r o v i s i o n s or
i s conducting the b u s i n e s s of banking, i t i s h i s duty to make an intmediate examination of the a f f a i r s of any such p e r s o n , f i r m , or corpora t i o n . For the purpose of making such examination, t h e examiner i s given
f r e e access t o a l l the books, papers and accounts and has power t o admini s t e r oaths to any o f f i c e r , a g e n t , employee, e t c . , of such p e r s o n , f i r m ,
or c o r p o r a t i o n , and t o any o t h e r person whose' testimony may be r e q u i r e d .
The examiner i s a u t h o r i z e d i n h i s d i s c r e t i o n , t o a s s e s s t h e same f e e f o r
such examination as i s assessed f o r the examination of i n c o r p o r a t e d banks
and t r u s t companies. (Act 137 of 1918, s e c . 2; Banking Law Pamphlet,
1928, s e c . 2. pp. 107 and 108.)
Refusal t o permit examination or answer i n q u i r i e s .
A r e f u s a l t o e x h i b i t or t u r n over any books, accounts and papers
f o r examination or to answer any i n q u i r i e s of the examiner ,x c o n s t i t u t e s
a misdemeanor which, upon c o n v i c t i o n , i s punishable by a f i n e of not
l e s s than $100 nor more than $500. (Act 137 of 1918, sec. 2; Banking
Law Pamphlet, 1928, s e c . 2, p . 107.)
X-6812
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169
Examiner to r e p o r t v i o l a t i o n s t o Attorney General.
Where the S t a t e Baric Examiner has duly a s c e r t a i n e d t h a t any
person, f i r m , or c o r p o r a t i o n i s engaging i n the b u s i n e s s of "banking
or otherwise v i o l a t i n g the p r o v i s i o n s above r e f e r r e d t o , i t i s h i s
duty to r e p o r t such v i o l a t i o n or v i o l a t i o n s to t h e Attorney General,
"who s h a l l i n s t i t u t e the necessary proceedings to enforce the p e n a l t i e s " above provided f o r . (Act 137 of 1918, s e c . 3; Banking Law Pamp h l e t , 1928, s e c . 3, p . 108.)
MAIUE
P r i v a t e banking p r o h i b i t e d ; some exceptions.
General r u l e :
"
No p e r s o n , c o p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n
s h a l l do a banking b u s i n e s s u n l e s s duly a u t h o r i z e d under the
laws of t h i s s t a t e or t h e United S t a t e s , except as provided
by s e c t i o n f o u r . The s o l i c i t i n g , r e c e i v i n g , or a c c e p t i n g of
money or i t s equivalent on deposit as a r e g u l a r b u s i n e s s by
any p e r s o n , c o p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n , or a
c o r p o r a t i o n intended to d e r i v e p r o f i t from t h e loan of money
except as a reasonable incident to t h e t r a n s a c t i o n of o t h e r
c o r p o r a t e b u s i n e s s or when necessary to prevent c o r p o r a t e
funds from being unproductive, s h a l l be deemed t o be doing a
banking b u s i n e s s , whether such deposit i s made s u b j e c t to
check or i s evidenced by a c e r t i f i c a t e of d e p o s i t , a pass-book,
a n o t e , a r e c e i p t , or other w r i t i n g ; provided t h a t nothing
h e r e i n s h a l l apply to or include money l e f t with an a g e n t ,
pending investment i n r e a l e s t a t e or s e c u r i t i e s f o r or on a c count of h i s p r i n c i p a l .
Whoever v i o l a t e s t h i s s e c t i o n , e i t h e r i n d i v i d u a l l y or as
an i n t e r e s t e d p a r t y i n any c o p a r t n e r s h i p , a s s o c i a t i o n , . o r c o r p o r a t i o n , s h a l l be punished by a f i n e of not l e s s than t h r e e
hundred d o l l a r s nor more than one thousand d o l l a r s , or by imprisonment f o r not l e s s than s i x t y days nor more than eleven
months, or by both such f i n e and imprisonment." (U.S. of 1930,
ch. 57, s e c . 3 . )
Exceptions:
(a)
Corporations which d e s i r e to encourage t h r i f t among
t h e i r employees may secure r i g h t to r e c e i v e from
such employees d e p o s i t s s u b j e c t to i n t e r e s t a t a
s p e c i f i e d r a t e , upon a p p l i c a t i o n to t h e bank commissioner and compliance with c e r t a i n c o n d i t i o n s .
(B.S. of 19j30, ch. 57, s e c . 4 . )
(b)
Apparently a f o r e i g n person or a s s o c i a t i o n may c a r r y
on t h e b u s i n e s s of accumulating and loaning or i n v e s t i n g t h e savings of i t s members or of o t h e r persons
i n t h e manner of loan or b u i l d i n g a s s o c i a t i o n s upon
compliance w i t h c e r t a i n c o n d i t i o n s .
- 37 "The bank commissioner may a u t h o r i z e any such a s s o c i a t i o n
or c o r p o r a t i o n duly established, under the laws of another s t a t e
t o c a r r y on such b u s i n e s s i n t h i s s t a t e , but s a i d a s s o c i a t i o n
or c o r p o r a t i o n s h a l l not t r a n s a c t such business i n t h i s s t a t e
u n l e s s i t s h a l l f i r s t deposit with the t r e a s u r e r of s t a t e , the
sum of t w e n t y - f i v e thousand d o l l a r s and t h e r e a f t e r a sum equal
t o f i f t e e n p e r cent of the d e p o s i t s made i n such a s s o c i a t i o n or
c o r p o r a t i o n by c i t i z e n s of the s t a t e , the amount of percentage
of d e p o s i t s so r e q u i r e d t o be determined from time to time by
the bank commissioner; or i n l i e u thereof the whole or any p a r t
of s a i d sum may c o n s i s t of any of the s e c u r i t i e s i n which savings
banks may i n v e s t , as r e g u l a t e d i n s e c t i o n twenty-seven a t t h e i r
par v a l u e , and the s a i d deposit s h a l l be held i n t r u s t by
s a i d t r e a s u r e r f o r t h e p r o t e c t i o n and indemnity of t h e r e s i dents of t h e s t a t e w i t h whom such a s s o c i a t i o n s or c o r p o r a t i o n s
r e s p e c t i v e l y have done or may t r a n s a c t b u s i n e s s . Said moneys
or p r o p e r t y s h a l l be paid out or disposed of only on t h e order
of some court of competent j u r i s d i c t i o n , made on due n o t i c e t o
the a t t o r n e y - g e n e r a l of the, s t a t e , and upon such n o t i c e t o the
c r e d i t o r s and shareholders of such a s s o c i a t i o n or c o r p o r a t i o n as
the court s h a l l p r e s c r i b e . For the purpose of a s c e r t a i n i n g the
business and f i n a n c i a l condition of any such a s s o c i a t i o n or c o r p o r a t i o n doing or d e s i r i n g to do such b u s i n e s s , the bank commissioner may make examinations of such a s s o c i a t i o n s or c o r p o r a t i o n s ,
a t such times and a t such p l a c e s as he may d e s i r e , the expense
of such examinations being paid by the a s s o c i a t i o n or corporat i o n examined, and may a l s o r e q u i r e r e t u r n s t o be made i n such
form and a t such times as he may e l e c t . Whenever, upon examinat i o n or otherwise, i t i s the opinion of the bank commissioner
t h a t any such a s s o c i a t i o n or c o r p o r a t i o n i s t r a n s a c t i n g b u s i n e s s
i n such manner as t o be hazardous t o t h e p u b l i c , or i t s cond i t i o n i s such as t o render f u r t h e r proceedings by i t hazardous
t o the p u b l i c , s a i d bank commissioner s h a l l revoke or suspend
t h e a u t h o r i t y given t o said a s s o c i a t i o n or c o r p o r a t i o n ; but t h i s
s e c t i o n s h a l l not prevent such a s s o c i a t i o n , c o r p o r a t i o n , or i n s t i t u t i o n i n c o r p o r a t e d under the laws of another s t a t e , from
loaning money upon mortgages of r e a l e s t a t e l o c a t e d w i t h i n t h e
s t a t e . " (E.S. of 1930, ch. 57, s e c . 122.)
P r o h i b i t i o n of use of words "bank," " s a v i n g s . " " t r u s t "
and r e l a t e d words.
"No person or p a r t n e r s h i p and no a s s o c i a t i o n or c o r p o r a t i o n
u n l e s s duly a u t h o r i z e d under t h e laws of t h i s s t a t e or of the
United S t a t e s t o conduct the business of a bank or t r u s t company s h a l l use as a p a r t of the naae or t i t l e under which such
b u s in e s s i s conducted, or as d e s i g n a t i n g such b u s i n e s s , the
word or words 1 barik, 1 ' b a n k e r , ' ' t r u s t , ' ' t r u s t company,'
' b a n k i n g , ' or ' t r u s t and banking company,' or the p l u r a l of any
such word or words or any a b b r e v i a t i o n thereof i n or i n con-
X-6812
id 3 8
*m
n e c t i o n with any other b u s iness than t h a t of a hank or t r u s t
company duly authorized as a f o r e s a i d . Provided, however, t h a t
t h i s r e s t r i c t i o n s h a l l not apply t o any such p e r s o n , p a r t n e r s h i p ,
a s s o c i a t i o n , or c o r p o r a t i o n , conducting b u s i n e s s under such name
or s t y l e p r i o r t o the t w e n t y - t h i r d day of A p r i l , n i n e t e e n hundred f i v e . No person, p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n ,
hank or t r u s t company, except a mutual savings hank organized
under the laws of t h i s s t a t e , s h a l l use as a p a r t of i t s name
or t i t l e t h e word or words ' s a v i n g , ' ' s a v i n g s , ' or ' s a v i n g s h a n k . '
Provided, however, t h a t t h i s r e s t r i c t i o n s h a l l not apply to any
b u s i n e s s being conducted under such name or s t y l e p r i o r t o t h e
t w e n t y - t h i r d day of A p r i l , n i n e t e e n hundred f i v e , nor t o any
. bank or t r u s t company u s i n g such word or words p r i o r t o t h e
f i r s t day of January, n i n e t e e n hundred twenty-nine.
Any p e r s o n , p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n v i o l a t i n g any of the p r o v i s i o n s of t h i s s e c t i o n may be enjoined
t h e r e f r o m by any court having general equity j u r i s d i c t i o n , on
a p p l i c a t i o n of the bank commissioner or any p e r s o n , c o r p o r a t i o n ,
or a s s o c i a t i o n i n j u r e d or a f f e c t e d by such u s e ; and any such
court may f u r t h e r e n j o i n any attempt on the p a r t of any p e r s o n ,
f i r m , or c o r p o r a t i o n t o mislead or give a f a l s e impression to
the p u b l i c t h a t such person, f i r m or c o r p o r a t i o n i s authorized
under the laws of t h i s s t a t e t o conduct the b u s i n e s s of a t r u s t
company. Any person or persons v i o l a t i n g any of t h e p r o v i s i o n s
of t h i s s e c t i o n , e i t h e r i n d i v i d u a l l y , as members of any a s s o c i a t i o n or c o p a r t n e r s h i p , or as i n t e r e s t e d i n any such c o r p o r a t i o n ,
s h a l l be punished by a f i n e of not more than one thousand d o l l a r s ,
or by imprisonment f o r not l e s s than s i x t y days nor more than
eleven months, or by both such f i n e and imprisonment. 11 (B.S. of
1930, ch. 57, sec. 5 . )
MARYLAND.
Ho p r o v i s i o n s covering o p e r a t i o n except r e s t r i c t i o n s a g a i n s t u s i n g
certain advertising.
Except f o r the following p r o v i s i o n s , which appear to be app l i c a b l e to p r i v a t e banks, the laws of t h i s S t a t e contain no p r o v i s i o n s covering t h e o r g a n i z a t i o n or o p e r a t i o n of p r i v a t e banks:
"No p e r s o n , c o - p a r t n e r s h i p or c o r p o r a t i o n not s u b j e c t to the
s u p e r v i s i o n and examinations of the Bank Commissioner, and not r e q u i r e d
t o make r e p o r t s to him * * *, s h a l l make use of any s i g n a t t h e p l a c e
where such b u s i n e s s i s t r a n s a c t e d , having thereon any a r t i f i c i a l or
corporate name or o t h e r words i o d i c a t i x ^ t h a t such p l a c e or o f f i c e
i s the p l a c e or o f f i c e of a banking i n s t i t u t i o n as d e f i n e d i n t h i s
A r t i c l e " ; nor s h a l l such person or p e r s o n s , make use of or c i r c u l a t e
any a d v e r t i s i n g " i n d i c a t i n g t h a t such business i s the b u s i n e s s of a
bankirg i n s t i t u t i o n ? A v i o l a t i o n of the se p r o v i s i o n s c o n s t i t u t e s a
misdemeanor and s u b j e c t s the person or persons committing such v i o l a -
X-6812!
1
- 39 t i o n to c e r t a i n p r e s c r i b e d p e n a l t i e s . "The p r o v i s i o n s of t h i s s e c t i o n
s h a l l not apply to p e r s o n s , c o p a r t n e r s h i p s , or c o r p o r a t i o n s which, at
t h e time t h i s Act t a k e s e f f e c t , (June 1, 1918), a r e engaged i n "business
i n i n c o r p o r a t e d towns or c i t i e s of the S t a t e of l e s s than t en thousand
i n h a b i t a n t s . " (Annotated Code of Maryland, 1934, Vol. 1, A r t i c l e Eleven
sec, 78; Laws of 1910, ch« 219, s e c . 74, as amended by Laws of 1912, ch.
194, sec. 74 and Laws of 1918, ch. 33, s e c . 75; Banking Laws, 1927, s e c .
78, p . 3 6 . )
D e f i n i t i o n of "Banking I n s t i t u t i o n . "
"the words 'Banking I n s t i t u t i o n s ' , as used i n t h i s A r t i c l e ,
s h a l l be held to mean i n c o r p o r a t e d Banks, Savings I n s t i t u t i o n s and Trust
Companies, * * * *. (Annotated Code of Maryland, 1924, Vol. 1, A r t i c l e ' E l e v e n
Sec. 52; Laws of 1910, ch. 219, sec. 51; Banking Laws, 1927, s e c .
52, p . 27.)
MASSACHUSETTS.
No p r o v i s i o n s p r o h i b i t i n g p r i v a t e banking b u s i n e s s ; but c e r t a i n
a d v e r t i s i n g , and r e c e i v i n g d e p o s i t s as savings bank or t r u s t company
prohibited.
The laws of t h i s S t a t e do not c o n t a i n any p r o v i s i o n s w i t h r e f e r ence to the o r g a n i z a t i o n or establishment of p r i v a t e banks or bankers,
except as i n d i c a t e d i n l a s t paragraph h e r e o f , and except f o r t h e p r o h i b i t i o n s embraced i n t h e f o l l o w i n g p r o v i s i o n s , the laws a r e s i l e n t
with regard to t h e o p e r a t i o n of such banks or b a n k e r s . The f o l l o w i n g
p r o v i s i o n s p r o h i b i t t h e r e c e i p t of d e p o s i t s as a savings bank or t r u s t
company, and t h e use of any a d v e r t i s i n g or banking terms i n d i c a t i n g
t h a t the p l a c e of b u s i n e s s or the b u s i n e s s c a r r i e d on i s t h a t of a
savings bank or t r u s t company, by any p e r s o n , p a r t n e r s h i p or a s s o c i a t i o n other than savings banks and t r u s t companies i n c o r p o r a t e d under
the laws of Massachusetts.
P r o h i b i t i o n a g a i n s t r e c e i p t of c e r t a i n d e p o s i t s and use of s p e c i f i c
banking terms and o t h e r a d v e r t i s i n g .
" * * * no p e r s o n , p a r t n e r s h i p or a s s o c i a t i o n except savings
banks and t r u s t companies incorporated under the laws of t h i s commonwealth", and c e r t a i n f o r e i g n banking c o r p o r a t i o n s , s h a l l h e r e a f t e r
make use of any s i g n s or other a d v e r t i s i n g i n d i c a t i n g t h a t t h e p l a c e
of business or b u s i n e s s t r a n s a c t e d i s t h a t of a savings bank; "nor
s h a l l any such * * * p e r s o n , p a r t n e r s h i p or a s s o c i a t i o n , * * * s o l i c i t
or r e c e i v e d e p o s i t s or t r a n s a c t b u s ine ss i n the way or manner of a
savings bank, or i n such a way or manner a s to lead t h e p u b l i c to bel i e v e , or as i n the opinion of the commissioner might lead t h e public
to b e l i e v e , t h a t i t s b u s i n e s s i s t h a t of a savings bank; nor s h a l l any
person, p a r t n e r s h i p , * * * or a s s o c i a t i o n , (excepting c e r t a i n i n s t i t u t i o n s not connected w i t h or r e l a t e d t o p r i v a t e banks or bankers) * * *
i 173
X-6812
u 40 u
h e r e a f t e r t r a n s a c t "business "under any name or t i t l e which c o n t a i n s the
word 'hank' or 1 "banking 1 , or any word i n a f o r e i g n language having the
same or s i m i l a r meaning, as d e s c r i p t i v e of said b u s i n e s s , o r , i f he or
i t does a banking "business or makes a business of r e c e i v i n g money on
d e p o s i t , under any name or t i t l e containing the word ' t r u s t ' , or any
word i n a f o r e i g n language having the same or s i m i l a r meaning, as
d e s c r i p t i v e of said . b u s i n e s s . " (General Laws, ch. 16V> s e c . 12; as
amended Act 1921, ch. 78, s e c . 1; Act 1922, ch. 114; "Banking Law
Pamphlet R e l a t i n g to Savings Banks, 1929, ch. 167, sec. 12, p . 4 . )
Barflc Commissioner may examine books, accounts, e t c . t o a s c e r t a i n whether
law i s being v i o l a t e d .
"The commissioner or h i s examiners may examine the accounts, books
and papers of any * * * person, p a r t n e r s h i p or a s s o c i a t i o n making a
business of r e c e i v i n g money on d e p o s i t , or which has the word ' b a n k ' ,
•banking', ' b a n k e r ' , ' b a n k e r s ' , or ' t r u s t ' , or any word i n a f o r e i g n
language having t h e same or s i m i l a r meaning, i n the name under vdiich
i t s business i s conducted, i n order to a s c e r t a i n whether such * * *,
person, p a r t n e r s h i p or a s s o c i a t i o n has v i o l a t e d or i s v i o l a t i n g any
p r o v i s i o n of t h e preceding s e c t i o n ; and any * * *, p e r s o n , p a r t n e r ship or a s s o c i a t i o n r e f u s i n g t o allow such examination or v i o l a t i n g
any p r o v i s i o n of said s e c t i o n s h a l l f o r f e i t t o t h e commonwealth one
hundred d o l l a r s a day f o r every day or p a r t thereof during which such
r e f u s a l or v i o l a t i o n c o n t i n u e s . " (General Laws, ch. 167, s e c . 13;
as amended Acts 1921, ch. 78, s e c . 2; Banking Law Pamphlet R e l a t i n g
t o Savings Banks, 1929, ch. 167, sec. 13, p . 4 . )
Commissioner s h a l l r e p o r t v i o l a t i o n s to Attorney General: procedure to
restrain violation.
Any r e f u s a l t o permit such an examination, or any v i o l a t i o n of
the p r o v i s i o n s f i r s t above quoted " s h a l l f o r t h w i t h be r e p o r t e d by the
commissioner t o the Attorney General. The said f o r f e i t u r e may be r e covered by an i n f o r m a t i o n or other a p p r o p r i a t e proceeding brought i n
the Supreme J u d i c i a l or Superior Court i n the name of the Attorney
General. Upon such i n f o r m a t i o n or other proceeding t h e court may i s s u e
an i n j u n c t i o n r e s t r a i n i n g such * * * , person, p a r t n e r s h i p or a&socia^t i o n from f u r t h e r p r o s e c u t i o n of i t s business w i t h i n t h e commonwealth
during t h e pendency of such proceeding or f o r a l l time, and may make
such other orders or decrees as equity and j u s t i c e may r e q u i r e . *
(General Laws, ch. 167, sec. 13; as amended Acts 1921, ch. 78, s e c . 2;
Banking Law Pamphlet R e l a t i n g t o Savings Banks, ch. 167, sec. 13, p . 4 . )
Further p r o h i b i t i o n a g a i n s t use of term "Trust Company" or r e c e i v i n g
d e p o s i t s as t r u s t company.
"No person or a s s o c i a t i o n and no bank or c o r p o r a t i o n , except
t r u s t companies, s h a l l use i n the name or t i t l e under which h i s or i t s
business i s t r a n s a c t e d the words 'Trust Company1 even though said words
- 41 -
X-6812
; ' 174
may "be separated i n such name or t i t l e by one or more other words, or
a d v e r t i s e or put f o r t h a s i g n as a t r u s t company or i n any way s o l i c i t
or r e c e i v e d e p o s i t s as such. Whoever v i o l a t e s t h i s s e c t i o n s h a l l f o r f e i t one hundred d o l l a r s f o r each day during which such v i o l a t i o n cont i n u e s . " C e r t a i n f o r e i g n corporations a r e excepted from the p r o v i s i o n s of t h i s s e c t i o n . (General Laws, ch. 172, s e c . 4; as amended
Acts 1923, ch. 41; Trust Company Law Pamphlet, ch. 172, s e c . 4 , p . 15.)
Persons engaged i n t h e r e c e i p t and t r a n s m i s s i o n of funds t o f o r e i g n
countries*
Persons engaged i n t h e business p r i n c i p a l l y or i n c o n j u n c t i o n .
with t h a t of s e l l i n g r a i l r o a d or steamship t i c k e t s or i n t h e supplying
of l a b o r e r s , r e c e i v i n g d e p o s i t s f o r s a f e keeping or t r a n s m i t t i n g the
same or e q u i v a l e n t s t o f o r e i g n c o u n t r i e s s h a l l , "before engaging or
becoming f i n a n c i a l l y i n t e r e s t e d or continuing t o engage or be f i n a n c i a l l y i n t e r e s t e d i n the b u s i n e s s of r e c e i v i n g d e p o s i t s of money f o r
the purpose of t r a n s m i t t i n g the same or e q u i v a l e n t s thereof t o f o r e i g n
c o u n t r i e s , make, execute and d e l i v e r to t h e s t a t e t r e a s u r e r a bond i n a
sum equal t o twice the amount of money or e q u i v a l e n t s t h e r e o f t r a n s m i t t e d
to f o r e i g n c o u n t r i e s by such person i n any one week, as determined by the
commissioner of banks, i n t h i s chapter c a l l e d the commissioner, but i n no
event s h a l l t h e sum of the bond be l e s s than f i f t e e n thousand d o l l a r s ; p r o v i d e d , t h a t t h e sum of such bond s h a l l be increased on order of the comrmissioner a t any time to such amount as s h a l l be shown by examination t o
be necessary. Said bond s h a l l be conditioned upon the f a i t h f u l holding
and t r a n s m i s s i o n of any money or e q u i v a l e n t s thereof which s h a l l have
been d e l i v e r e d t o such person f o r transmission t o a f o r e i g n country,
and, i n the event of t h e insolvency or bankruptcy of the p r i n c i p a l ,
upon the payment of the f u l l amount of such bond t o t h e a s s i g n e e , r e ceiver or t r u s t e e of the p r i n c i p a l , as the case may r e q u i r e f o r the
b e n e f i t of such persons as s h a l l have been d e l i v e r e d money or equival e n t s thereof to s a i d p r i n c i p a l f o r the purpose of t r a n s m i t t i n g t h e
same t o a f o r e i g n c o u n t r y . " (Acts 1923, ch. 473, s e c . 2; Acts 1929,
ch. 182, s e c . 2 , )
MICHIGAN.
P r i v a t e banks e x p r e s s l y p r o h i b i t e d ; exception.
"On and a f t e r the e f f e c t i v e d a t e of t h i s a c t (1925), i t s h a l l
be unlawful f o r any i n d i v i d u a l person, or unincorporated a s s o c i a t i o n
of i n d i v i d u a l p e r s o n s , t o engage i n the b u s i n e s s of banking, * * *:
Provided, That t h i s a c t s h a l l not apply to any i n d i v i d u a l person or
unincorporated a s s o c i a t i o n of i n d i v i d u a l persons engaged i n the b u s i ness of banking a t t h e time of t h e passage of t h i s act, 1 1 (Public Acts
of 1925, Act No. 284, sec. 1; Banking Laws, 1929, sec. 364, p . 105.)
Penalty f o r establishment of p r i v a t e bank.
"From and a f t e r the passage of t h i s a c t , no person or a s s o c i a t i o n of p e r s o n s , not incorporated under the banking laws of t h i s S t a t e
X-6812
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and. not now engaged i n the p r i v a t e banking b u s i n e s s , s h a l l open up or
attempt to o p e r a t e any p r i v a t e bank, and any such o p e r a t i o n or attempt
s h a l l be deemed a v i o l a t i o n of t h i s act., and the persons so o p e r a t i n g
or attempting to operate s h a l l be deemed g u i l t y of a f e l o n y , and on conv i c t i o n thereof s h a l l be punished by a f i n e not exceeding one thousand
d o l l a r s or by imprisonment i n the S t a t e p r i s o n f o r not more than f i v e
y e a r s , or by both such f i n e and imprisonment i n the d i s c r e t i o n of t h e
courts Provided, That nothing i n t h i s act contained s h a l l be construed
t o p r o h i b i t the s u r v i v i n g p a r t n e r or p a r t n e r s of a c o p a r t n e r s h i p from
continuing the o p e r a t i o n of any p r i v a t e bank operated by such c o p a r t n e r ship a t the time t h i s a c t s h a l l take e f f e c t . " (Public Acts of 1925,
Act Ho. 284, s e c . 2; Banking Laws, 1929, s e c . 365, p . 105.)
MIMESOTA.
"Individual or c o - p a r t n e r s h i p " p r o h i b i t e d from t r a n s a c t i n g b u s i n e s s of
savings bank, s a f e d e p o s i t company or t r u s t company.
From the following p r o v i s i o n s , i t appears t h a t "a p e r s o n , f i r m ,
i n d i v i d u a l or c o p a r t n e r s h i p " i s p r o h i b i t e d from a d v e r t i s i n g or engaging i n business i n any way as a savings bank, s a f e d e p o s i t company or
t r u s t company.
Provisions p r o h i b i t i n g business as savings bank, e t c .
"No i n d i v i d u a l , c o - p a r t n e r s h i p or corporation other than a savings bank or s a f e d e p o s i t and t r u s t company s u b j e c t to and complying
with a l l t h e p r o v i s i o n s of law r e l a t i n g to such bank or s a f e deposit
and t r u s t companies r e s p e c t i v e l y , s h a l l i n any manner d i s p l a y or make
use of any s i g n , symbol, token, l e t t e r h e a d , c ard, c i r c u l a r , a d v e r t i s e ment s t a t i n g , r e p r e s e n t i n g or i n d i c a t i n g t h a t he, i t , or t h e y , a r e
authorized to t r a n s a c t the b u s i n e ss which a savings bank, s a f e deposit
or t r u s t company u s u a l l y does, or under said p r o v i s i o n a r e authorized
t o do; nor s h a l l any such i n d i v i d u a l , c o - p a r t n e r s h i p or c o r p o r a t i o n
use the words ' s a v i n g s ' or ' t r u s t 1 or ' s a f e d e p o s i t ' alone or i n comb i n a t i o n i n t i t l e or name or otherwise or i n any manner s o l i c i t business
or make loans or s o l i c i t or r e c e i v e d e p o s i t s or t r a n s a c t b u s i n e s s as a
savings bank or s a f e deposit or t r u s t company. * * . Every i n d i v i d u a l ,
c o - p a r t n e r s h i p or c o r p o r a t i o n which s h a l l v i o l a t e any of the p r o v i s i o n s
of t h i s s e c t i o n s h a l l f o r f e i t to the S t a t e the sum of one hundred d o l l a r s f o r every day such v i o l a t i o n s h a l l c o n t i n u e . " (Act approved March
21, 1929, Laws of 1929, ch. 77, sec. 1; Banking Laws, 1929, s e c . 1, p .
18.)
"Bank", "savings bank". " t r u s t conqpany" and "banking" d e f i n e d .
"A bank i s a c o r p o r a t i o n under p u b l i c c o n t r o l , having a p l a c e of
bus in e s s where c r e d i t 6 a r e opened by the deposit or c o l l e c t i o n of money
and currency, s u b j e c t to be p a i d ' o r r e m i t t e d upon d r a f t , check, or order,
and where money i s advanced, loaned on s t o c k s , bonds, b u l l i o n , b i l l s of
exchange, and promissory n o t e s , and where the same a r e r e c e i v e d f o r discount
or s a l e ; and a l l persons and c o - p a r t n e r s h i p s , r e s p e c t i v e l y , so o p e r a t i n g ,
a r e bankers,
•
X-6812
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rt
A savings bank i s an i n s t i t u t i o n under l i k e c o n t r o l , managed "byd i s i n t e r e s t e d t r u s t e e s s o l e l y authorized to r e c e i v e and s a f e l y i n v e s t
the savings of small d e p o s i t o r s .
"A t r u s t company i s 9, c o r p o r a t i o n under l i k e c o n t r o l , a u t h o r i z e d ,
w i t h i n p r e s c r i b e d l i m i t a t i o n s , to act as a s a f e deposit company, t r u s t e e
or r e p r e s e n t a t i v e f o r or under any c o u r t , p u b l i c or p r i v a t e c o r p o r a t i o n ,
or i n d i v i d u a l , and as s u r e t y or g u a r a n t o r . " (General S t a t u t e s , 1923,
sec. 7635; Banking Laws, 1939, p. 7)
"A 'bank* i s a c o r p o r a t i o n having a p l a c e of "business i n t h i s
S t a t e , where c r e d i t s a r e opened by the deposit of money or currency,
or the c o l l e c t i o n of the same, s u b j e c t t o be paid or r e m i t t e d on d r a f t ,
check or o r d e r ; and where money i s loaned or advanced on s t o c k s , bonds,
b u l l i o n , b i l l s of exchange or promissory n o t e s , and where the same a r e
received f o r discount or s a l e . A 'savings bank* i s a c o r p o r a t i o n
managed by d i s i n t e r e s t e d t r u s t e e s , s o l e l y authorized to r e c e i v e and
s a f e l y i n v e s t t h e savings of small d e p o s i t o r s . Every 'bank' or ' s a v ings bank 1 i n t h i s S t a t e s h a l l a t a l l times be under the s u p e r v i s i o n
and s u b j e c t t o t h e c o n t r o l of t h e public - examiner, ( s u p e r i n t e n d e n t of
banks) * * * and -when so conducted said b u s i n e s s s h a l l be known a s
' b a n k i n g ' . " (General S t a t u t e s , 1923, s e c . 7636; Banking Laws, 1929,
P. 8 ) .
R e s t r i c t i o n a g a i n s t use of word "bank".
"Any p e r s o n , f i r m or corporation c a r r y i n g on i n t h i s S t a t e the
b u s i n e s s , or any p a r t thereof , d e f i n e d as 'banking 1 i n the preceding
s e c t i o n , who r e f u s e s t o permit t h e p u b l i c examiner ( s u p e r i n t e n d e n t of
banks) to i n s p e c t and superintend said b u s i n e s s , and to see t h a t t h e
same i s c a r r i e d on i n accordance with the banking laws of t h i s S t a t e
s h a l l not be p e r m i t t e d to use t h e word 'bank' as the whole or any p a r t
of the b u s i n e s s name of the p l a c e where s a i d business i s c a r r i e d on,
nor s h a l l the word 'bank' be used on any s t a t i o n e r y or i n any a d v e r t i s e ment of said b u s i n e s s , as the whole or any p a r t of t h e name or d e s c r i p t i o n of s a i d b u s i n e s s . " (General S t a t u t e s , 1923, s e c , 7637; Banking Laws, 1929, p . 8 . )
MISSISSIPPI.
Banking b u s i n e s s may only be t r a n s a c t e d by c o r p o r a t i o n s .
The laws of t h i s S t a t e provide t h a t "any person or f i r m now
engaged i n the banking b u s i n e s s " as described below, " s h a l l i n c o r p o r a t e
w i t h i n s i x months a f t e r t h i s (banking) a c t goes i n t o e f f e c t . This sect i o n s h a l l not apply except when such corporations keep t h e a c t u a l money
on deposit or s o l i c i t o u t s i d e d e p o s i t s , but any person or a s s o c i a t i o n of
r* 44- —
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1 7 7
"persons now engaged i n the "banking "business i n t h i s S t a t e s h a l l be s u b j e c t
to a l l the p r o v i s i o n s of t h i s (blinking) a c t u n t i l such person, persons
or a s s o c i a t i o n s of persons s h a l l be or become incorporated, as provided
i n t h i s s e c t i o n " . Any person or f i r m i s doing a banking b u s i n e s s , under
the l & s s i s s i p p i laws, when he or i t has "a p l a c e of business w i t h i n
t h i s s t a t e , where c r e d i t s a r e opened by the deposit or c o l l e c t i o n of
money or currency or negotiable paper s u b j e c t to be p a i d or r e m i t t e d
upon d r a f t , r e c e i p t , check or o r d e r , or s a l e of d r a f t s or exchange
drawn on l o c a l or f o r e i g n banks, ***
(Laws of 1914, ch. 124, sec*
27; Brown's Miss, and 5ted. S t a t s . , 1925, sec. 27, p . 43 ) .
kissoufti.
P r i v a t e banks may not now be e s t a b l i s h e d .
By an a c t enacted i n the y e a r 1915, t h i s s t a t e p r o h i b i t e d the
e s t a b l i s h m e n t of new p r i v a t e banks, the p e r t i n e n t p r o v i s i o n s t a t i n g
" t h a t h e r e a f t e r no new p r i v a t e bank s h a l l be e s t a b l i s h e d " . This a c t
a l s o contains d e t a i l e d p r o v i s i o n s covering the o r g a n i z a t i o n , operation
and supervision of banks and a p p a r e n t l y p e r m i t t e d p r i v a t e banks who were
engaged i n a banking b u s i n e s s a t the time of i t s passage to continue the
o p e r a t i o n of such b u s i n e s s upon complying with the p r o v i s i o n s covering
i n c o r p o r a t e d banks so f a r a s the same are a p p l i c a b l e . "
In a d d i t i o n ,
the a c t contains p r o v i s i o n s s p e c i f i c a l l y a p p l i c a b l e to p r i v a t e banks,
these p r o v i s i o n s being s e t f o r t h below.
Definition of "private bankers".
"Private bankers are declared to be those who carry on the
business of banking by receiving money on deposit, with or without
interest, by buying and selling bills of exchange, promissory notes,
gold or silver coin, bullion, uncurrent money, bonds or stocks, or
other securities, and of loaning money, without being incorporated."
(Laws of 1915, p. 157; Rev, Stats, of Mo. , 1929, sec. 5403; Banking
Laws, 1919, sec. 11781, p. 88.)
Capital requirements.
A private banker could not engage in business "without a paidup capital of not less than tan thousand dollars, and if said banking
business is to be carried on in a city having a population of one hundred
and fifty thousand inhabitants or more, then without a paid-up capital of
not less than one hundred thousand dollars, * * * ". (Laws of 1915, p.
157; Rev. Stats, of Mo., 1929, sec. 5404; Banking Laws, 1919, sec. 11782,
p. 88.)
Sworn statement necessary; contents of
Before engaging in business a nrivate banker also had to file
"a statement, subscribed and sworn to as correct and true before a
notary public by each person connected with such business as owner or
p a r t n e r , setting forth; First, the names and places of residence of all
X-68lp
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y 45 "persons i n t e r e s t e d , i n the "business, a l l of whom s h a l l be r e s i d e n t s of t h i s
s t a t e , t h e amount of c a p i t a l i n v e s t e d ; and second, the name i n which the
"business i s t o "be conducted and. t h e p l a c e a t which i t i s t o "be c a r r i e d on;
which statement s h a l l "be acknowledged, recorded i n t h e o f f i c e of the r e corder of deeds of t h e county i n which the "bank i s to be l o c a t e d , and a
c e r t i f i e d copy of such recorded instrument s h a l l be f i l e d i n t h e o f f i c e
of t h e bank commissioner: * * * " . (Laws of 1915, p . 157; Rev. S t a t s , of
Mo., 1929, s e c . 5404; Banking Laws, 1919, sec. 11782, pp. 88 and 8 9 ) .
Cashier must give bond; c o n d i t i o n o f .
"The c a s h i e r of each p r i v a t e bank s h a l l give bond t o t h e s t a t e
of Missouri, f o r such sum, and conditioned, as may be r e q u i r e d by the
commissioner, which s h a l l be approved by the commissioner, and f i l e d i n
h i s o f f i c e . " (Laws of 1915, p . 158; Rev. S t a t s , of Mo., 1929, sec. 5407;
Banking Laws, 1919, sec. 11785, p . 90).
License f e e or t a x .
"No p r i v a t e banker * * *, a f t e r having made, recorded and f i l e d
the statement r e q u i r e d by t h i s a r t i c l e , s h a l l be r e q u i r e d t o pay any
l i c e n s e or t a x not r e q u i r e d of banks." (Laws of 1915, p . 158; Rev. S t a t s .
of Mo., 1929, s e c . 5408; Banking Laws, 1919, s e c . 11786, p . 9 0 . )
Provisions covering incorporated banks made a p p l i c a b l e .
A l l of t h e p r o v i s i o n s of law covering the o r g a n i z a t i o n , operation
and s u p e r v i s i o n of incorporated banks " s h a l l , so f a r as t h e same a r e app l i c a b l e , apply t o a l l p r i v a t e bankers doing business i n t h i s S t a t e ; * * * "
(Laws of 1915, p . 158; Rev. S t a t s , of Mo., 1929, sec. 5407; Banking Laws,
1919, s e c . 11785, p . 90)
Loan on p e r s o n a l s e c u r i t y of owner i n excess of 10# of c a p i t a l p r o h i b i t e d ;
v i o l a t i o n cause f o r appointment of r e c e i v e r .
A p r i v a t e banker cannot make any loan or discount on t h e p e r sonal s e c u r i t y or o b l i g a t i o n of any owner i n excess of t e n p e r cent of the
p a i d up c a p i t a l and surplus of the bank. A v i o l a t i o n of t h i s p r o h i b i t i o n
empowers t h e bank commissioner "in h i s d i s c r e t i o n , t o make a p p l i c a t i o n
f o r the appointment of a r e c e i v e r f o r such p r i v a t e bank or banker, as now
provided by law i n case of i n s o l v e n t banks and t r u s t companies." (Laws of
1915, p . 157; Rev. S t a t s , of Mo., 1929, s e c . 5405; Banking Laws, 1919, sec.
11783, p . 8 9 ) .
R e s t r i c t i o n upon use of f u n d s .
fl
No p r i v a t e banker s h a l l employ any p a r t of h i s c a p i t a l , or any
funds deposited w i t h or borrowed by him, i n dealing or t r a d i n g i n , buying
or s e l l i n g l a n d s , goods, c h a t t e l s , wares or merchandise, but he may s e l l
and dispose of a l l kinds of p r o p e r t y which may n e c e s s a r i l y come i n t o h i s
p o s s e s s i o n i n the c o l l e c t i o n of h i s loans or d i s c o u n t s . " (Laws of 1915, p .
158; Rev. S t a t s , of Mo., 1929, s e c . 5406; Banking Laws, 1919, s e c . 11784,
p . 89.)
X-6812
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U 46 m
Loans t o one "borrower a n d . o t h e r use of f u n d s .
A p r i v a t e t a n k e r may not "use or employ h i s c a p i t a l or funds dep o s i t e d with or "borrowed by him i n any other manner than banks a r e * * *
p e r m i t t e d , or loan a g r e a t e r amount to any person or loan any sum whatever,
except upon l i k e s e c u r i t y as i s r e q u i r e d t o be taken by banks'." (Laws of
1915, p . 158; Rev. S t a t s , of Mo., 1929, sec. 5406; Banking Laws, 1919, sec.
11784, p . 8 9 ) .
Surplus of 20$ of c a p i t a l r e q u i r e d b e f o r e p r o f i t s may be d i s t r i b u t e d .
The p r o f i t s of a p r i v a t e banker may not be d i s t r i b u t e d "without
f i r s t s e t t i n g a p a r t t o s u r p l u s accounts a t l e a s t twenty p e r cent of the
net p r o f i t s each y e a r u n t i l t h e surplus equals twenty p e r cent of the
c a p i t a l , and s a i d s u r p l u s s h a l l not be diminished except f o r the payment of
any l o s s e s which may occur; Provided, i f t h e r e a r e undivided p r o f i t s , the se
s h a l l f i r s t be used i n payment of such l o s s e s . " (Laws of 1915, p . 158;
Rev. S t a t s , of Mo., 1929, s e c . 5406; Banking Laws, 1919, s e c . 11784, p . 89.)
Penalty f o r v i o l a t i o n of p r o v i s i o n s .
Any p r i v a t e banker who f a i l s to make and f i l e t h e statement r e quired of i n c o r p o r a t e d banks or so much thereof as t h e bank commissioner
may r e q u i r e "or s h a l l f a i l or r e f u s e to make or render any other r e p o r t
or statement r e q u i r e d by the banking laws of t h i s s t a t e , or who s h a l l ,
w i l f u l l y and c o r r u p t l y , make any such statement f a l s e l y , or who s h a l l
v i o l a t e any of t h e p r o v i s i o n s of t h i s a r t i c l e (covering i n c o r p o r a t e d and
p r i v a t e b a n k s ) , he or they, and each of them s h a l l be deemed g u i l t y of
a misdemeanor, and, upon conviction t h e r e o f , upon i n f o r m a t i o n or i n d i c t ment, s h a l l b e punished by a f i n e * f o r each o f f e n s e , not exceeding f i v e
thousand d o l l a r s nor l e s s than f i v e hundred d o l l a r s , or by imprisonment
not l e s s than one nor more than twelve months i n the c i t y or county j a i l ,
or by both such f i n e and imprisonment." (Laws of 1915, p . 158; Rev. S t a t s ,
of Mo., 1929, sec. 5407; Banking Laws, 1919, sec. 11785, p . 9 0 . )
"If a t any time t h e commissioner s h a l l be s a t i s f i e d t h a t any p r i v a t e
banker * to which has been i s s u e d an a u t h o r i z a t i o n c e r t i f i c a t e or l i c e n s e ,
i s v i o l a t i n g any of t h e p r o v i s i o n s of t h i s c h a p t e r , or i s conducting i t s
business i n an unauthorized or unsafe manner, or i s i n an unsound or uns a f e c o n d itio n t o t r a n s a c t i t s b u s i n e s s , or cannot w i t h s a f e t y and expediency continue b u s i n e s s , the commissioner may, over M s o f f i c i a l s i g n a t u r e
and s e a l of o f f i c e n o t i f y t h e holder of such a u t h o r ! z e t i o n c e r t i f i c a t e
or l i c e n s e t h a t the same i s revoked." (Rev. S t a t s , of Mo., 1929, s e c .
5299).
MONTANA.
Banking b u s i n e s s mav only be t r a n s a c t e d by c o r p o r a t i o n s ; exception,.
The laws of t h i s s t a t e provide t h a t " I t s h a l l be u n l a w f u l f o r
any c o r p o r a t i o n , p a r t n e r s h i p , f i r m , or i n d i v i d u a l to engage i n or t r a n s
X-6812
j
4? .
act a "banking b u s i n e s s w i t h i n t h i s s t a t e , except by means of a corporaa t i o n duly organized, f o r such purpose. * * * t h i s (bank) Act s h a l l not
apply to any p e r s o n , f i r m or a s s o c i a t i o n now doing a p r i v a t e banking
b u s i n e s s ; p r o v i d e d , however, t h a t s a i d p r i v a t e banks hereinabove r e f e r r e d
t o s h a l l come under a l l of t h e p r o v i s i o n s of t h i s Act which may be f a i r l y
applicable thereto; * • » • » .
(Laws of 1927, ch. 89, s e c . 2; Banking Laws,
1927, sec. 2, p . 8)
- 43 -
X-6812
Advertising "before issuance of cMrtejr;:, penalty
-£L<-
"It shall "oe unlawful for any individual, firm or corporation
to advertise, publish or otherwise promulgate that it is engaged in the
banking business without first having obtained authority from the Department of Banking, * * * . Axly such individual, or member of such
firm, or officer of any such corporation so offending, shall be deemed
guilty of a misdemeanor, and upon conviction thereof, shall be punished
as provided by the la'Ts of this State." (lLaws of 1927, ch. 89, see.
107; Banking Laws, 1927, sec. 107, p. 60 )
As stated above, private bankers who wore engaged in the transaction of a banking business as of the passage of the so-called bank
act, March 8, 1927, are required to comply with such provisions of the
bank act as "may be fairly applicable thereto". The bank act also contains other provisions which are specifically applicable to these private bankers, these provisions being set forth below.
ITame of -private bank.
The name of a private bank mast contain the name of the individual conducting the business, or, if a copartnership or association, the
name of at least one actual and responsible member thereof, 11 in addition
to which name there shall be no other designation then the words 'bonk of*,
'Banking house of' * banker *, or 1 bonkers1. nothing in this section
shall apply to any person, firm or association now conducting a private
banking business in this state, which bank is now authorized by the
State Banking Department to do a banking business". (Laws of 1927, ch.
89, sec. 82; Banking Laws, 1927, sec. 82, p. 52 ).
"Approved property of
™ist be owned before de-posits may be received
Every private batik must before receiving any money on deposit
"actually own and possess, within the State of Montana, approved property or assets not exempt from execution of the minimum value" of not
less than $20,000; not less than $30,000 in cities and towns having a
population of over 2,000 and up to 5,000; not less than $50,000 in cities
having a population of 5,000 to 10,000; not less than $75,000 in cities
having a population of 10,000 to 25,000; in all cities having a popular
tion of 25,000 or over the value of the property or assets must be
$100,000. This financial condition must appear and be carried on the
books of every private bank and these provisions "shall extend and be
applicable separately to each and every private bank conducted by any
person, co-partnership, or association, and no asset or assets shall
appear on the books of more than one bank." (Laws of 1927, ch. 89, sec.
83; Banking Laws, 1927, sec. 83, p. 53 ).
Examinations: rower of State Examiner.
Every private bank "shall be subject to examination and visitations of the State Examiner once each year, and oftener when deemed
— 49 —
X-6812
"necessary by said examine!^ who shb.ll have full power and. authority to
investigate and examine all b6oks, papers j and effects of any such "bank
or banking house f o r the purpose of ascertaining the financial condition
of any such bank or ba_J.cs , and shall have the power in aid thereof to
administer oaths t o any person or persons, or the agent or employees of
any person or persons conducting such bank or banking business." (Laws
of 1927, ch. 89, sec. 84; Banking Laws, 1927, sec. 84, p. 53 ).
Heports of' condition; number and nature of;, publication required.
The cashier of every private bank is required, on call of the
superintendent of banks, to make not less than three reports of condition during each year, anyone of which must be not less than two
months apart. These reports must be verified by the cashier, must be
made in such form as the superintendent may prescribe, and mast contain
a full abstract of the general accounts of the bank and show under appropriate heads the resources and liabilities of the bank. A condensed
form of each report must be published in the newspapers and proof of
such publication is required to be made to the superintendent. The
superintendent also has power to call for special reports whenever he
considers that such reports are necessary. (Laws of 1927, ch. 89, sec.
86; Banking Laws, 1927, sec. 86, p. 54 ).
Penalty for receiving de-posits while bank is inr,ol~rer.t or for making
false .statements or entries.
Any person, or the members of any private bank, who receives
deposits when such person or private bank is insolvent "or who subscribes or makes any false statement, or. entries in the books of any
such bank, or who knowingly subscribes or exhibits any false papers,
with the intention of deceiving any person authorizing (authorized) to
examine the condition of any bank provided for in this Act, or who wilfully subscribes or makes false reports to the Superintendent of Banks,
shall be guilty of a felony, and shall be punishable by imprisonment
in the State prison for a uerm not exceeding five (5) years." (Laws of
1927, ch. 89, sec. 87; Banking Laws, 1327, sec. 87, p. 55 ).
Pledging of assets.
"Ho * * * banker * * * shall, except as otherwise authorized by
law, pledge or hypothecate as collateral security for money borrowed,
its assets in a ratio exceeding one and one half times the amount borrowed. (except as otherwise authorized by the Superintendent)." (Laws of
1927, ch. 89, sec. 99; Banking Laws, 1927, sec. 99, p. 58 ).
Taxation of private banks.
The laws of this state also contain detailed provisions covering the taxation of private banks. (Laws of 1927, ch. 64, sec. 1;
Banking Laws, 1927, sec. 1 (2067), pp. 78 and 79 ).
* 50 w
X-6812
,
!
1533
IE3BRASKA.
Banking "business may only "be transacted by corporations*
The laws of this State provide that the "business of "banking may
only be transacted by corporations duly.organized for that purpose. The
provisions in this connection read as follows:
"The department of trade and commerce shall have general supervision and control of "banks and banking under the laws of this state and
no person or persons shall be permitted to engage in or transact a banking business save corporations having complied with the provisions of
this article." (Corap. Stat, of Nebraska, 1922, sec. 7982; Banking Laws,
1929, sec. 7982, p. .3 ).
"It shall be unlawful for any corporation, partnership, firm or
individual to engage in or transact a banking business within this state,
except by means of a corporation duly organized for such purpose under
the laws of this state." (Comp. Stat, of Nebraska, 1922, sec. 7984;
Banking Laws, 1929, sec. 7984, p. 3 ).
NEVADA.
Private banking business mast be licensed; provisions of bank act applicable.
In order to engage in the business of banking in this State a
private banker must obtain a license to do so and is subject "as far as
may be" to the provisions of law covering incorporated banks.
Necessity for license.
"No individual, *** banking firm, *** company, *** shall engage
in the banking business In this state without first obtaining from the
bank examiner a license in the form presented by him, authorizing such
individual, firm, *** company, *** to use the name and transact the
"business of a bank; ***" (Act of March 22, 1911, sec. 47; Banking Laws,
1930, sec. 47, p. 16 ).
Subject to supervision and control of State banking board and bank
examiner; bank act made applicable^
"Ih© state board of finance, sitting as the Nevada state banking board, shall have, in connection with the state bank examiner,
supervision and control of banks and banking in this state, and no persons, firms, associations, or corporations, shall be peri]ri.tte£. to engage
in the banking business in this state, savb in compliance with this
(bank) act." (Act of March 22, 1911, sec. 49, ast amended by Laws of
1919, p. 285; Banking Laws, 1930, sec. 49, p. 16 )>. The laws also
|: '184
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u
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provide that "All of the provisions of this (bank) act shall he applicable as far as may he to individuals, firms, or associations, as well as
to corporations." (Act of March 22,- 1911, sec. 8; Banking Laws, 1930,
sec. 8, p, 6 ).
Definition of words used in hank act.
"The words 1 corporation,' 'hanking corporation,1 'bank*, 1 trust
company, or 'banker*, as used in this (bank) act, shall refer to and
include banks, savings banks, and trust conroanios, individuals, firms,
associations, and corporations of any character conducting the business
of receiving money on deposit or otherwise carrying on a banking or
trust company business, except as herein specially provided." (Act of
March 22, 1911, sec, 75; Banking Laws, 1927, sec* 75, p. 23 ).
1
HEW HAMPSHIRE.
Private banks subject generally to banking and taxation laws.
The laws of this State provide that "Every association or partnership formed for the purpose of loaning money or dealing in money, receiving deposits, buying or selling exchange or transacting such other
business as is usually transacted by banks, shall be a bank for the general purposes of this title and for taxation. The clerk or cashier of
every such bank shall make the same returns to towns where its stockholders reside as the cashiers of other banks are by law required to
make." (Public Stats., ch. 164, sec. 5; Public Laws, 1926, ch. 260,
sec. 24; Banking Law Pamphlet, 1929, ch. 261, sec. 24, p. 9 ).
"This title" (XXVI) is that portion of the laws of Hew Hampshire
relating to and covering the operation of banks, savings banks, and
trust companies; and, apparently,the provision above quoted recognizes
a private banking business, but requires such business to be conducted
in accordance with, the provisions of the laws relating to incorporated
banking institutions and the taxation thereof, in so far as it is possible generally so to do. In addition, the laws contain certain provi*
sions which are specifically applicable to private banks. These pro*
visions are set out below.
Owners deemed stockholders; capital for taxation purposes.
"Every person owning any portion of the funds employed in any
private bank shall be deemed a stockholder therein. The average amount
of the capital of such private bank during the preceding year shall be
the capital of such bank subject to taxation as stock." (Public Stats.,
ch. 164, sec. 6; Public Laws, 1926, ch. 260, sec. 25; Banking Law Pamphlet, 1929, ch. 260, sec. 25, p. 9).
'I
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Liability of stockholders>
"The stockholders of any private bank shall be liable as partners for all the debts and obligations of the bank." (Public Stats.«
ch. 164, sec. 7; Public Laws, 1926, ch. 260, sec. 26; Banking Law Pamphlet, 1929, ch. 260, sec. 26, p. 9).
Prohibition against advertising or transacting business as savings bank.
No person, partnership or association, "except savings institutions incorporated in this state", can make use of any sign or other
form of advertising indicating that the place of business or business
carried on is that of a savings bank, or "receive deposits and transact
business in the way or manner of a savings bank, or in such a way or
manner as to lead the public to believe, or, in the opinion of the commissioner, might lead the public to believe", that the business is that
of a savings bank. (Laws of 1907, ch. 112, sec. 2; Public Laws, 1926,
ch. 261, sees. 53-55; Banking Law Pamphlet, 1929, ch. 261, sees. 53-55,
p. 18).
Examination to ascertain whether above provision is being violated.
"The commissioner shall have the authority to examine the
accounts, books and papers of any ***, person, partnership or association which makes a business of receiving money on deposit in order to
ascertain whether they have violated" the provisions last above referred to, and a penalty is prescribed for any such violation. (Laws
of 1907, ch. 112, sec. 3; Public Laws, 1926, ch. 261, sees. 56 and 57;
Banking Law Pamphlet, 1929, ch. 261, sees. 56 and 57, p. 19).
Recovery of penalty and injunction to restrain further prosecution of
business.
"Any violation of *** (such) provisions *** shall forthwith
be reported by the commissioner to the Attorney General; and the forfeiture may be recovered by an information or other appropriate proceeding brought in the superior court in his name. Upon such information or other proceeding the court may issue an injunction restraining
such person, partnership, *** from further prosecution of its business
within this state during the pendency of such proceeding or for all
time, and may make such other order as justice may require." (Laws
of 1907, ch. 112, sec. 3; Public Laws, 1926, ch. 261, sees. 58 and 59;
Banking Law Pamphlet, 1929, ch. 261, sees. 58 and 59, p. 19).
Treasurer of savings bank shall not carry on private banking business.
11
ITo treasurer or person acting as treasurer of a savings
bank shall carry on or be engaged in the business of private banking, or shall suffer such business to be carried on in the office
of the ban#', and if any person violates these provisions "he shall
be fined not more than one thousand dollars, or imprisoned not more
.
- 53 „
than one year or "both".
(Publiq Laws
: 186
X-6812
1926, ch. 261, sees. 4 and 5.).
NEW JERSEY
Penalty for carrying on banking business without authority.
"No individual, association of individuals, partnership or
joint stock association, shall engage in the business of banking,
except under and in accordance 'with the provisions of this act, unless possessed of unencumbered assets of at least fifty thousand dollars, and that any such individual, association of individuals, partnership or joint stock association and the individual members thereof,
who shall violate the provisions of this act and carry on the business
of banking without authority, shall be guilty of a misdemeanor, and
upon conviction thereof shall be punished by a fine not exceeding
five thousand dollars, or by imprisonment at hard labor for a term
not exceeding seven years, or both." (Laws-of 1925, ch. 189, p,
454; Como. Stat, of If. J., Supplement, 1925-1930, Sec. 17-44.).
Private banker must be a citizen of the United States and at least
one member of the firm mast reside in State.
"No individual or individuals shall engage in the business of banking who are not citizens of the United States, and no
individual, association of individuals, partnership or joint stock
association, shall engage in the business of banking within this
State unless one or more of the persons so engaged shall be residents
in and inhabitants of this State, and for every violation of the
provisions of this section, the person or persons so offending
shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be liable to a fine of not more than one thousand dollars,
and in all reports that shall be made by such individual, association of individuals, partnership or joint stock association, the
full names and places of residence of each of the persons so interested shall be fully set out." (Laws of 1925, ch. 189, p. 454; Comp.
Stat, of I. J., Supplement, 1925-1930, Sec. 17-47.).
Insolvency, etc.; commissioner may apply for injunction or receiver.
In case it appears from any report made by or any examination of any private bank that such bank is insolvent or is
unable to pay its obligations as they severally mature, or is
unable to pay its depositors the money held by it on deposit whenever Called upon so to do, or shall suspend its ordinary business
for want of funds to carry on the same, or shall not be possessed
of unencumbered assets of at least fifty thousand dollars in excess of its liabilities, the commissioner, or any creditor of the
bank, may apply "to the chancellor" for an injunction or the appointment of a receiver. If after a hearing, it appears to the chancellor
that the private bank is insolvent, or is not able to resume business
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with safety to the publid tod &&#jlltkge td the creditors, or is
not possessed of unencumbered assets of at least fifty thousand
dollars in excess of its liabilities, the chancellor may issue an
injunction to restrain such private hank from further carrying on
"business, and if insolvent, from collecting or receiving any debts,
or from paying out, selling, assigning or transferring any of the
assets, moneys, funds, lands, tenements or effects belonging to it,
until the court otherwise orders. (Laws of 1925, ch. 189, p. 455;
Comp. Stat, of IT. J., Supplement, 1925-1930, Sec. 17-48.).
Certificate of authority necessary to engage in business; examination
by commissioner.
.
"Ho individual, association of individuals, partnership
or joint stock association shall engage in the business of banking in this State unless authorized thereunto by the commissioner
of balking and insurance by his certificate to that effect, and
such certificate shall not be made or issued by the said commissioner until after the said individual, association of individuals,
partnership or joint stock association, shall have made to him the
report or reports required by this act; and not until after the
said commissioner of banking and insurance, or some person appointed by him, shall have made an examination of the affairs and financial condition of such individual, association of individuals,
partnership or joint stock association, from which it shell appear
to said commissioner that he or they are then solvent and able to
pay his or their debts at maturity, and are possessed of unencumbered assets of at least fifty thousand dollars in Excess of his or
their liabilities; provided, the commissioner of banking and insurance may refuse to issue such certificates of authorization if in
his judgment the interests of the public would be best subserved
by such refusal;" (Banking Laws of 1925, ch. 189, p. 456; Comp.
Stat, of II. J. , Supplement, 1925-1930, Sec. 17-51.).
Advertisements indicating banking business.
11
that no individual, association of individuals, partnership or joint stock association, not authorized under this act to
do a banking business, shall make use of any office sign at the
place where his or their business is transacted, having thereon
any artificial or corporate name or other word or words indicating that such place or office is the place or office of a bank,
nor in any manner advertise that he or they are engaged in a banking business, nor make use of or circulate any letterheads, billheads, blank notes, blank receipts, certificates, circulars or any
written or printed or partly written and partly printed paper whatever, having thereon any artificial or corporate name or any other
word or words indicating that his or their business is that of a
bank."
(Laws of 1925, ch. 189, p. 456, Comp. Stat, of H. J.,
Supplement 1925-1930, Sec. 17-51.).
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HEW MEXICO .
Provisions of "bank act" made applicable to "individuals and copartnerships."
The laws of this State provide that "This act shall be known
as the 'Bank Act1 and shall be applicable to all corporations, individuals and copartnerships specified in the next section, except as
hereinafter specifically excepted." (Laws of 1915, ch. 67, sec. 1;
Hew Mexico Stats. Ann., 1929, sec. 13-101; Hew Mexico Bank Code, 1929,
sec. 1, p. 5.).
The "next section" referred to sets out that "The
word 1 Bank' as used in this (bank) act includes every person, firm,
coraoany, copartnership or corporation, except national Banks, en-,
gaged in the business of banking in the State of Hew Mexico." (laws
of 1915, ch. 67, sec. 2; Hew Mexico Stats. Ann., 1929, sec. 13-102;
Hew Mexico Bank Code, 1929, sec. 2, p. 5). The bank act provides
further that "Then by the provisions hereof anything is required
to be done by any incorporated bank, or other corporation, carrying on a banking business under any of the provisions of this act,
or by the Board of Directors of any such incorporated bank or corporation, or any officer, director or employee thereof, or their
right or power to do a specific act is denied, the same act shall
be done, or not, as the case may be, by individuals or copartners
engaged in the banking business." (Laws of 1915, ch. 67, sec. 7;
Hew Mexico Stats. Ann., 1929, sec. 13-107; Hew Mexico Bank Code,
1929, sec. 7, pp. 5 and 6.).
It would appear, therefore, that these provisions have
the effect of subjecting persons, firms, copartnerships and unincorporated banks to the same provisions as are made applicable to
incorporated banks. In addition the bank act makes the following
requirements specifically applicable to private banks:
Private bankers engaged in other business in addition to that of banking; capital required; separation of capital; payment of creditors;
manner of keeping books; bank act requirements covering reserves, deposits, investments, etc., made applicable.
"All persons, (and) co-partnerships * * * engaged in business, a portion only of which is banking, shall set apart and keep
separate so much capital for banking as may be necessary for conducting a bank * * *.
The capital so set apart and the assets of said
bank or banking department shall be first applicable to the payment
of the creditors thereof, as distinguished from the general creditors of the persons, (or) co-partnerships * * * conducting the same.
Every person, (or) co-partnership * * * so carrying on a banking
business in connection with any other business shall keep separate
books of account for each banking "business, and shall be governed
as to all deposits, reserves, investments and transactions relating
to such banking business, by the provisions of this act provided for
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the control of such banking busineeB» and with respect to said, banking business or banking depar'tifl*ii|. bhall be subject to all the provisions Of this act." (taws of 1915, ch. 37, sec. 9; Hew Mexico
Stats. Ann., 1929, sec. 13-109; Hew Mexico Bank Code, 1929, sec.
9, p. 6.).
Certified statement as to capital stock, names and residences of copartners, amount of capital owned by each.
The bank act provides that "any individual or co-partnership
desiring to conduct a banking business shall file in the office of the
State Bank Examiner and of the State Corporation Commission a similar
statement" as that filed by a corporation. The laws with reference to
the statement filed by a corporation provide that "As soon as ten per
cent of the capital stock and surplus of the corporation shall be fully paid in cash, a copy of the by-laws of said bank and the oaths of
its directors shall be filed in the office of the State Bank Examiner
and of the State Corporation Commission, together with a statement
executed on behalf of the corporation and sworn to by its president,
and cashier or secretary, certifying: the full amount of the entire
capital stock of said corporation subscribed; the names and residences
of the officers, directors and stockholders of said corporation; the
amount of stock owned by each, and the fact that such corporation will
be fully prepared to transact the business for which it was organized.,
upon the payment in cash of the remaining ninety per cent of the capital stock and surplus." (Laws of 1929, ch. 131, sec. 5; Mew Mexico
Stats. Jinn., 1929, sec. 13-113; Hew Mexico Bank Code, 1929, sec. 13,
p. 7 ).
Word "State" may not be used as part of title.
"Individuals and co-partners engaged in banking shall not
use the word 1 State' as part of the name of the banking business."
(Laws of 1919, ch. 120, sec. 4; New Mexico Stats. Ann., 1929, sec.
13-114; Hew Mexico Bank Code, 1929, sec. 14, p. 8).
Ownership of stock by co-partners.
"Co-partners conducting a bank shall each own at least ten
per cent" of the stock of the firm. (Laws of 1929, ch. 131, sec. 6;
Hew Mexico Stats. Aim., 1929, sec. 13-117; Hew Mexico Bank Code, 1929,
sec. 17, p. 9).
Oath required of owners.
Every owner of an unincorporated bank, actually engaged in
its management, shall annually make an oath that he will diligently
and honestly administer the affairs of the bank; that he will not
knowingly violate, nor willingly permit to be violated, any provision
of the law; and that he is the owner in good faith of the required
amount of capital and that this capital is not pledged or incumbered.
h 5? u
X-6812
fhe State Bank Examiner furnishes blanks for such oath and within
twenty days after execution it must be filed with the State Bank
jbcaminer. (Laws of 1919, ch; 120; sec. 8; Mew Mexico Stats. Ann.,
1929, sec. 13-119; Hew Mexico Bank Code, 1929, sec. 19, p. 9.).
Penalty for failure to comply with provisions re oaths.
"Every bank failing to comply with the provisions of this
section (regarding oaths) shall pay to the State Bank Examiner a
penalty of Five Dollars for each day's delay." (Laws of 1919, ch.
120, sec. 8; New Mexico Stats. Ann., 1929, sec. 13-119; Hew Mexico
Bank Code, 1929, sec. 19, p. 9).
Statement as to names and residences of owners and amount of stock held.
"Every bank shall, within twenty days after the first Tuesday
in January of each year, upon a form to be furnished by the State Bank
Examiner, file with the State Bank Examiner a statement sworn to by *
* * at least two owners of an unincorporated bank, disclosing the names
and residences of all *** owners thereof, together with the amount of
stock or interest held by each. In the event of any change in the *
* * owners of any unincorporated bank, such changes shall within twenty
days be likewise certified to the State Bank Examiner." (Laws of 1919,
ch. 120, sec. 9; Hew Mexico Stats. Ann., 1929, sec. 13-122; Hew Mexico
Bank Code, 1929, sec, 22, p. 10).
Penalty for failure to comply with provisions re statement.
* Every bank failing to comply with the provisions of * * *
(the) section (last above quoted) shall pay to the State Bank Examiner
a penalty of Five Dollars for each day's delay." (Laws of 1919, ch.
120, sec. 9; Hew Mexico Stats. Ann., 1929, sec. 13-122; Hew Mexico
Bank Code, 1929, sec. 22, p. 10 ).
Meetings of owners; examination of books, records, etc., required.
"The board of directors or owners of every bank shall hold
regular meetings once each month. Failure on the part of any director
without good cause to attend three consecutive meetings shall be ground
for his removal by the #State Bank Examiner. At not less than two of
said meetings during each year, which meetings shall be at least five
months apart, the board of directors or an auditing committee consisting of at least two members of the board of directors shall make
a thorough examination of the books, records, funds, securities and.
other property held or owned by the bank, and shall enter upon their
minutes the result of such examinations and a certified copy of such
entry shall within twenty days from the date thereof be filed with
the State Bank Examiner." (Laws of 1929, ch. 131, sec. 7; Hew Mexico
Stats. Ann., 1929, sec. 13-123; Hew Mexico Bank Code, 1929, sec. 23,
P. 10 ).
«> 58 *•
X-6812
Penalty
for failure,
to make attbil examination.
iii
l
i 1 ' ' ii 11 ii il
If the own.ors of any bank fail to ma-re or cause to "be made
an examination of the books, records, funds, securities and other
property held or owned by the bank, each of auch owners is personally
liable to a penalty of fifty dollars for every such failure. If this
penalty is not paid within thirty days after demand therefor, the
State Bank Examiner mast institute civil proceedings to recover the
same, Ho owner can be reimbursed out of the funds of the bank on
account of any penalty paid, nor can any penalty be paid out of the
funds of the bank. (Laws of 1929, ch. isi, sec. 7; New Mexico Stats.
Ann. , 1929, sec. 13-123; New Mexico Bank Code, 1929, sec. 23, p. 10).
Endorsement of paper of borrower by owner.
Ho owner in an unincorporated bank can become endorser for
any person, firm or corporation borrowing money therefrom, nor can
any note or obligation of such owner be considered as an asset of
the bank. (Laws of 1919, ch. 120, sec. 20; New Mexico Stats. Ann.,
1929, sec. 13-136; New Mexico Bank Code, 1929, sec. 35, p. 1 5 ) .
Declaration of dividend; surplus fund required.
The owners may semi-annual1y declare a dividend of so much
of the net profits of the bank as has been actually earned and collected; but every bank must before the declaration of a dividend,
carry one-fifth of its net profits for the preceding half year to
its surplus fund until it amounts to fifty per centum of its capital
stock, and such surplus must thereafter be maintained unless impaired
by unavoidable losses. (Laws of 1929, ch. 131, sec. 11; New Mexico
Stats. Ann., 1929, sec. 13-146; New Mexico Bank Code, 1929, sec. 45,
p. 17 ).
NET TOBK
The laws of this State provide that if a private banker
executes and has accepted by the superintendent of banks a certain
affidavit, the required contents of which are hereinafter set forth,
such banker is exempted from certain other provisions of law. The
provisions covering such banker are digested immediately below.
A private banker who has not executed and had accepted by
the superintendent the so-called exemption affidavit is subject, in
addition to the provisions set out immediately below, to certain other
provisions. These additional provisions are digested separately and
follow after the provisions covering private bankers of the class
first above referred to.
Definition of private banker.
"The term, 'private banker', when used in this chapter,
ik 69 -
X-6812
"means an individual, who, by himself, or as a member of a partnership
or unincorporated association other than an unincorporated erpress
company having a contract with a railroad company or railroad companies
for the operation of an express Service upon the lines thereof, is engaged in the business of receiving deposits subject to check or for
repayment upon the presentation of a pass book, certificate of deposit
or other evidence of debt, or upon the request of the depositor, or in
the discretion of such individual, partnership or unincorporated association; of receiving money for transmission; of discounting or negotiating promissory notes, drafts, bills of exchange or other evidences of debt; of buying or selling exchange, coin or bullion; or
is engaged, in the business of transacting any part of such business.
The term, 'private banker', when so used, shall include the executor or
— 6 0 *•
X-6812
administrator of a deceased private banker and a partnership or unincorporated association of private bankers." (Banking Law , sec. 2 ).
Classes of private bankers covered by provisions.
The laws of this State provide that the provisions applicable
to private bankers, "except as hereinafter further limited, shall apply to every private banker engaged in the business of private banking
in the States
"1. Who makes use of the word, 'bank,' 'banker, * 'banking* or
any derivative or compound of any such word or any words in a foreign
language having the same or similar meanings, in or on any sign or
any passbook, check, receipt, note, stationery, billhead, certificate,
blank, form, pamphlet, circular or newspaper or other advertising matter
or ,fho solicits deposits by means of signs or other advertising; or
"2. Who pays or credits interest, or pays, credits or gives
any bonus or gratuity or any thing of value, except on certificates
of deposit actually outstanding at the time this act takes effect,
to any depositor on any deposit balance of less than seven thousand
five hundred dollars, if such deposit balance is that of any depositor
resident in the United States who does not have with such banker during the period in respect of which interest is so paid or credited,
an average daily credit balance or securities of an average daily
market value, together exceeding seven thousand five hundred dollars;
provided the aggregate amount of such deposit balances on which interest
is so paid or credited exceeds two per centum of the total deposits of
such private banker; or
"3. Who receives money on deposit for safekeeping or for any
other purpose (other than for transmission to others) in such sums
that the average of all the separate deposits so received by such
private banker from all depositors during any twelve months' period
(or for such period, if less than twelve months, that such private
banker has been engaged in such business) is less than one thousand
dollars. * * * ; or
"4. Who receives from any person at any one time money for
transmission to others in any manner whatsoever in amounts of less
than five hundred dollars, provided, however, that any private banker may, without thereby becoming subject to the provisions of this
article, sell letters of credit, bankers' checks, travellers' checks,
bills of exchange, draftp or other similar documents or may make
cable transfers in amounts of less than five hundred dollars, if he
has deposited and shall keep on deposit with the superintendent of
banks interest bearing stocks or bonds of the United States or of
this state or of any city, county, town, village or free school
district in this state authorized by the legislature to issue the
same, in a principal amount equal to one hundred thousand dollars.
* * * ". (Banking Law , sec. 150 ).
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Business not to be begun w l t h o u t ^ i i t h d r l z a t i . o n c e r t i f i c a t e of
superintendent of banks.
•
*
••• - '
Hone of the business comprised i n the above d e f i n i t i o n of a
private banker s h a l l be c a r r i e d on by any " i n d i v i d u a l , p a r t n e r s h i p
or unincorporated association" u n l e s s an a u t h o r i z a t i o n c e r t i f i c a t e i s
granted by the superintendent of banks. (Banking Law y s e e . 1 5 0 - a ) .
Procedure to obtain a u t h o r i z a t i o n c e r t i f i c a t e .
Every private banker or o t h e r individual, p a r t n e r s h i p o r u n incorporated association seeking to engage in business a s a p r i v a t e
banker must submit to the superintendent of banks a verified certificate in duplicate v/hicli shall state:
"1. The full name, residence and post office address of such
individual or of each member of,such partnership or unincorporated
association.
"2. The state, or country, of which each individual named
in such affidavit is a citizen.
"3. The amount of permanent capital such individual, partnership or unincorporated association has kept invested in his business
as a private banker or has deposited in cash to be invested in such
business which shall be not less than the amounts hereinafter specified
"(a) Fifteen thousand dollars if"the place where the
business is to be transacted is an incorporated or unincorporated village having a population which does not exceed
two thousand;
"(b) Twenty-five thousand dollars if the place where
tiiu business is to be transacted is
incorporated or unincorporated village having a "ncpuiation of two thousand or
more and less thau ten thousand; .
"(c) Fifty thousand dollars if the place where the
business is to be transacted is an incorporated or unincorporated village or a city having a population of ten
thousand or more and loss than thirty thousand;
"(d) One hundred thousand dollars if the place where
the business is to be transacted is a cit^ having a population of thirty thousand or more,
"4.
The place at which such business is to be transacted.
"5. If such private b inker is engaged in business as a private banker in a city the population of which exceeds one hundred and
seventy-five thousand, the amount of deposit balance upon which such
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X-6812
private "banker pays or credits interest or pa/8, credits or gives any
"bonus or gratuity or anytMhg of ^alue to a deposi tor and the average
of the separate deposits of such private "banker since January first,
nineteen hundred thirty, or for a period of twelve months immediately preceding the date of such verified certificate, exclusive of dividend checks, coupons or. other small collection items collected "by
such private "banker for customers in the ordinary course of "business
in; or, if the applicant lias not already engaged in such "business,
said certificate shall state the minimum deposit balance upon, which
such applicant proposes to pay or credit interest or to pay, crcdit
or sive such bonus or gratuity, or thing of value.
••
"Such certificate shall be verified by such individual or by
one or more members of a partnership or unincorporated association,
in the discretion of the superintendent, upon a form prepared by the
superintendent of banks, which shall state that the affiant or affiants
have read such certificate and that the facts therein stated are true."
(Banking Law , sec. 151).
When the superintendent receives the verified certificate,
he must ascertain whether the character, responsibility and general
fitness of the person or persons named in such certificate are such
that the business of the proposed private banker M i l be honestly and
efficiently conducted and whether the public convenience and advantage will be promoted by allowing such proposed banker to engage or
continue in business. The superintendent is also required to ascertain whether the facts stated in the certificate are true in case
the private banker has not submitted with it the so—called exemption
affidavit or such affidavit has been refused by the superintendent.
After the superintendent lias satisfied himself that it is expedient
and desirable to permit such private banker to engage or continue in
"business, he may approve the certificate and mast immediately give
notice of the approval to the private banker. (Banking Law , sec.
23 ).
Revocation of authorization certificate or license by superintendent:
effect of.
"If at any time the superintendent shall be satisfied that any
private banker * * * is violating any of the provisions of this
chapter, or is conducting its business in an unauthorized or unsafe
manner, or is in an unsound or unsafe condition to transact its business, or can not with safety and expediency continue business, the
superintendent may, * * * notify the holder of such authorization
certificate or license that the same is revoked." (Banking Law,
sec. 29 ) It is also provided that "Whenever the superintendent
shall have revoked his authorization of any such private banker,
and shall have taken the action to make such revocation effective
specified in section twenty-six of this chapter (section twentysix provides for the revocation of the superintendent's acceptance
u £3 «*•
[ 196
X-6812
of the affidavit entitling private bankers to certain exemptions,
and this section and the seption covering the exemption affidavit
ate Set out hereinafter), all the rights and privileges of such
banker, resulting from such preceding authorization, shall forthwith
cease and determine." (Banking Law , sec. 158).
Conditions precedent to transacting business*
Ho private banker can engage or continue in business until (a)
the amount of permanent capital required by law is invested in the
business, or is deposited in cash to be so invested, and (b) the
superintendent of banks has issued an authorization certificate and
has filed such certificate in his office. (Banking Law , sec. 152.)
When the authorization certificate has been issued and filed by the
superintendent of banks, a private banker is subject to all of the
provisions relating to private bankers. (Banking Law , sec. 152).
Permanent unimpaired capital mast be maintained; if impaired,
superintendent may issue order to make deficiency good.
Every private banker mast keep unimpaired in his banking
business the amount of permanent capital specified in the verified
certificate. (Banking Laws, sec. 154). Whenever it appears to the
superintendent that the capital has been reduced below the requirements of law, he may issue an order directing that such deficiency
be made good immediately or within a time specified in such order.
(Banking Law , sec. 56),
Capital may be increased or decreased.
"From time to time, with the written approval of the superintendent and upon good cause shown, such permanent capital may be
increased or decreased." (Banking Law , sec. 154).
Segregation of investment of capital and deposits.
"All securities, property and the evidences of title thereto,
in which the permanent capital of and the deposits with any such private banker have been invested shall be segregated and kept separate
and apart from all other property and assets of such private banker."
(Banking Law , sec. 155 ).
Reserves required against deposits.
Every private banker is required to maintain total reserves
against deposits in the following amounts (Banking Law , sec. 157 ):
18 per cent of demand deposits if located in a borough having
a population of 1,500,000 or over; and at least 12 per cent of such
deposits shall be maintained as reserve on hand.
;
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197
X-6812
\ 15 per cent of demandflefolsitsif located in a "borough of
1,000,000 and. less than 1,500,000 population and with no office in
a "borough of 1,500,000 or over} and at least 10 per cent of such
deposits shall "be maintained as reserves on hand.
12 per cent of demand deposits if located elsewhere in the
state; and at least 4 per cent of such deposits shall "be maintained
as reserves on hand. (Banking Law , sec. 112 ).
Failure to maintain required reserves; penalties; superintendent may
issue order to make deficiency good.
If any private "banker fails to maintain the required reserves,
"the superintendent shall levy an assessment upon it during such period
as any encroachment upon its total reserves amounting to one per centum
or more of its aggregate demand deposits shall continue", at certain
prescribed rates. (Banking Law , sees. 30 and 157 ). The superintendent is given power, where a private "banker refuses or fails to pay any
such assessment or any penalty or forfeiture incurred under any provision of law, or where he violates any prohibition of law, to "report
the facts to the Attorney General, who shall thereupon, in the name of
the superintendent, institute such action or proceeding as the facts
may warrant" against such private "banker. (Banking Law , sec. 31 ),
The superintendent is also given power, whenever it appears to him
"that either the total reserves or reserves on hand of any such * * *
private banker * * * are "below the amount * * * required "by law to "be
maintained, or that such * * * "banker is not keeping its reserves on
hand" to issue an order "directing that such * * * "banker make good
such reserves forthwith or within a time specified in such order, or
that it keep its reserves on hand" as required "by law. (Banking Law ,
sec. 56 ).
Reports of condition required.
"It shall be the duty of the superintendent to require all * *
* private bankers * * * to make to him * * * regular periodical reports
of their condition * * * and he shall prescribe the form and contents
of all such reports. In addition to such regular reports he may require any such * * * banker * * * to make special reports to him at
such times and in such form as he may prescribe, and may direct that
such special reports be verified and prescribe the form of the verification.
"He shall at least once in every three months, designate some
day therein in respect to which * * * every such private banker * * *
(except such as have obtained certain exemptions through the filing
of the affidavit hereinafter set forth ) shall report to him, and he
shall serve a notice designating such day." (Banking Law , sec. 42 ),
Examinations may be made by superintendent.
All private 'bankers engaged in business in cities or elsewhere
in the State, from and after July 31, 1930, "shall be subject at all
times to full and complete examinations by the superintendent or by his
deputies, examiners or employees when duly authorized."
(Banking Law ,
sec. 150-a).
Ucunber of examinations required.
"The superintendent shall, either personally or by his deputies
or examiners, at least twice in each year visit and examine * * *
every private banker" subject to the provisions of law relating to
private bankers, except such as have obtained certain exemptions
through the acceptance by the superintendent Of the affidavit hereinafter set forth. Private bankers who have had this affidavit accepted
are only subject to examination once during each year. The superintendent is given power to examine private bankers "whenever, in his
judgment, such examination is necessary or expedient.
"On every such examination inquiry shall be made as to the
condition and resources of such * * * , banker * * * the mode of
conducting and managing its affairs, * * *, the investment of its
funds, the safety and prudence of its management, the security
afforded to those by whom its engagements are held, and whether the
requirements of its charter and of law have been complied with in the
administration of its affairs; and as to such other matters as the
superintendent may prescribe.
"The superintendent may also either personally or by his
deputies or examiners, make such special investigations as he shall
deem necessary to determine whether any individual, copartnership,
unincorporated association * * * is violating, or has violated any
of the provisions of this chapter; and to the extent necessary to
make such determination the superintendent shall have the right to
examine the relevant books, records, accounts, and documents."
(Banking Law , sec. 39).
Penalty for refusal to •permit examination.
A penalty is imposed for the refusal of a private banker to
permit an examination or investigation of its affairs. (Banking Law ,
sees. 38 and 150-a).
Unlawful or unsafe practices: superintendent may issue order to discontinue.
"Whenever it shall appear to the superintendent that ***
any private banker * * * has violated its charter or any law, or
is conducting its business in an unauthorized or unsafe manner, he
may issue an order directing the discontinuance of such unauthorized
or unsafe practices and requiring the delinquent to appear before him,
«• s56 —
X-68X2
"at a time and place fixed in said order, to present any explanation
in defense of the practiced directed in said order to be discontinued."
(Banking Law , sec. 56).
Business of delinquent banker may "be taken over by superintendent;
and examinati ons may be made.
"The superintendent may forthwith take possession of the
business and property of * * * any private banker * * * whenever it
shall appear that such * * * banker:
1.
2.
manner;
Has violated its charter or any law;
Is conducting its business in an unauthorized or unsafe
3. Is in an unsound or unsafe condition to transact its
business;
4.
Cannot with safety and expediency continue business;
5.
Has an inpairment of its capital;
6.
Has suspended payment of its obligations;
7. Has neglected or refused to comply with the terms of a
duly issued order of the superintendent;
8. Has refused, upon proper demand, to submit its records
and affairs for inspection to an examiner of the banking department;
9. Has refused to be examined upon oath regarding its
affairs." (Banking Law , sec. 57).
The superintendent, after he has taken possession of the
property and business Of a private banker, may make examinations
and institute Or con time inquiries until such banker resumes business or is finally liquidated in accordance with law. (Banking
Law , sec. 39).
Circumstances under which possession of superintendent may terminate*
"When the superintendent shall have do?.y taken possession of
such * * * private banker * * *, he may hold such possession until
its affairs are finally liquidated by him, unless: (1) he shall have
permitted, such * * * banker to resume business * * *; (2) the superintendent shall have been directed by order of the supreme court to
surrender such possession * * *; * * *; (4) the depositors and other
creditors of such banker * * * and the expenses of such liquidation
shall have been paid in full." (Banking Law , sec. 58).
'
-. 67 -
:•
;
X-6812
Superintendent may pertoit rflswngtlojft of business,
"The superintendent may, upon such conditions as may tie approved by him, surrender possession for the purpose of permitting such
* * * "banker * * • t o resume business.; but the superintendent shall
not authorize any reduction of capital stock or capital as one of
the terms of such resumption**
(Banking Law * s e c . 61)»
liquidation; various provisions in relation thereto.
There are a number of detailed provisions with reference to
the liquidation of the affairs of private bankers by the superintendent of banks. These provisions provide for the appointment of
special deputies, assistants, etc., by the superintendent to assist
him, the payment of expenses, the procedure to obtain possession of
pleadings, etc., in actions in which attorneys' liens are asserted,
the notification to those holding assets of the private bank of the
fact that the superintendent has taken possession of such bank and
the effect of such notification, the inventory of assets, the disposition by the superintendent of property held by the liquidating
banker as bailee or as depositary, the liquidation and conservation
of assets, the deposit of moneys collected by the superintendent,
the appearance in suits, and the execution of instruments, etc., by
the superintendent on behalf of the liquidating banker, the proof
of claims by creditors, the listing of claims by the superintendent, the filing of objections to claims, the acceptance or refusal
of claims by the superintendent, the effect of a lien on a judgment
recovered by the superintendent after taking over a private banker,
and the disposition of dividends to creditors. (Banking law , sect.
62-75).
Change of location.
,
•
• v>x. v'\
\ '
A private banker may change the location of l^ie business with
the permission of the superintendent of banks. (BatiriLng law * sees*
50 and 159).
Affidavit entitling private banker to certain exemptions; contents of;
ex tent of exempt!ons.
"Any: such private banker authorized by the superintendent
to engage in such business, or who has appli3d for such authorization,
may submit to the superintendent an affidcvr:Lb executed in duplicate
and verified in the sajae manner as the (verified) certificate * * *
upon a form to be furnished by the superintendent containing a statement as follows;
"1. If such private banker is engaged in business elsewhere
than in a city having a population of on%hundred and seventy-five
thousand or more, that such private banker has permanently invested
2Q0
- 68 -
! 201
X-6812
"in this state in his banking business immediately ^receding the date
of such affidavit, a caoital over and above all his liabilities as
such private banker at leafrt equal to the minirauifl required by" the
verified certificate; or
"2. If such private banker is engaged in business as a private banker in a city having a population of one hundred and seventyfive thousand or more:
"(a) That such private banker has permanently invested in
this state in his banking business immediately nrdeeding the date of
such affidavit a capital of at least one hundred thousand dollars
over and above all his liabilities as such private banker.
"(b) That such private banker will not pay or credit or
advertise to nay or credit any interest or pay, credit or give any
bonus or gratuity whatever or anything of value to any depositor on
a deposit balance with such private banker of less than five hundred
dollars.
"(c) That the average of the separate deposits * * * received
by such private banker during the twelve months immediately preceding
the date of such affidavit, for safekeeniig or for any other purpose,
exclusive of dividend checks, coupons, or other small collection items
collected by such private banker f or customers in the ordinary course
of business, and also the average of the separate deposits received
during such period for transmission to others, is three hundred dollars
or more."
After the date upon which the superintendent has accepted
and filed in his office such affidavit, and until such acceptance is revoked by the superintendent, the provisions hereinafter set out do
not apply to such private banker, but such banker is subject to all
of the provisions above set out. "The superintendent may at any time
in his discretion require any such private banker to file an affidavit
containing a statement as above specified and as of a date fixed in
said request."
"In the event of the failure of such private banker so to do,
or of the refusal of the superintendent to accept and file said affidavit
all of the subsequent sections of this article (i.e., sections 1S1-175,
inclusive) shall be applicable to such private banker". (Banking Law,
sec, 160 ).
Investigation by superintendent of statements made in affidavit;
refusal or acceptance of affidavit.
If, upon receipt by the superintendent of the affidavit above
referred to, it fails to comply in form and substance with the requirements set out above, "he shall refuse to file it for examination until
the defect or defects therein shall have been remedied". If such
affidavit complies, or has been so amended as to comply, in all respects
w 69 *
X-6812
202
with the requirements tho superintendent shall, "by such investigation
as he may deeii necessary* satisfy himself whether the facts stated
in Such affidavit are true. If the facts are found to be untrue,
the superintendent shall f&f&se to accept the affidavit* If the superintendent shall "be satisfied that the facts stated are true, he shall
accept the affidavit and shall forthwith give notice of the acceptance
to such private "banker. (Banking Law , sec. 25) •
Revocation of acceptance of affidavit; effect of revocation.
If at any time the superintendent has reason to believe that
any private banker whose, affidavit he has accepted "is not keeping
permanently invested in this state in his banking business the amount
of capital specified in such affidavit, or, that such banker is paying or crediting or advertising to pay or credit any interest, or is
paying, crediting or giving any bonus or gratuity whatever or anything of value, on deposits of less than the amount stated in such
affidavit, or that any material statement in such affidavit was in
fact untrue, the superintendent shall forthwith institute such investigation as he shall deem necessary to ascertain the truth of such
facts and may examine or cause an examination to be made into the.
books, papers and affairs of such private banker so far as may be
necessary for such purposes. If from such investigation or otherwise the superintendent shall be satisfied that such banker is not
keeping such capital so invested, or, that such banker is paying or
crediting or advertising to pay or credit any interest, or is paying,
crediting or giving any bonus or gratuity whatever or anything of
value, on deposits of less than the amount stated in such affidavit,
or that any material statement in such affidavit was in fact untrue,
the- superintendent may, over his official signature, notify such
private banker that the acceptance of such affidavit is revoked.
Such notice shall be executed in triplicate and the superintendent
shall transmit one copy to such private banker, attach another to
the duplicate of such affidavit on file in his own office and file
the third copy thereof in the county clerk's office in which the
other duplicate of such affidavit has been filed." (Banking Laws,
sec. 26). It is also provided that "Whenever the superintendent shall
have revoked his authorization of any such private banker, and shall
have taken the action to make such revocation effective specified in
section twenty-six of this chapter (this is the section last above
quoted) all the rights and privileges of such banker, resulting from
such preceding authorization, shall forthwith cease and determine."
(Banking Law , sec. 158).
Additional Provisions Applicable To A Private Banker Who Has Not Executed
The So-called Exemption Affidavit.
Investment of permanent, capital and deposits ^
"Every such private banker may, subject to the limitations
and restrictions contained in this article, invest his permanent capital
203
U 70 -
X-6812
"and the deposits received "by hint infeutihz'eal or personal securities,
or real and personal property, consistent with safety and prudence
of management as he may deem proper, provided the security afforded
depositors is not imperiled "fry such investments#* (Banking Law , sec#
162).
Prohibitions against investments or loans of capital and deposits#
"So such private canker, however, Shall appropriate to his
own use or lend to any person or persons with whom he is associated as
a partner, or invest in any business conducted by a partnership of
which such private banker is a member, or lend directly or indirectly to any corporation of which he is the legal or equitable owner to
the amount of twenty-five per centum or upwards of the issued capital
stock of such corporation, any part of his permanent capital or of the
deposits received by him." (Banking Law , sec. 162).
Real Estate and certain securities; when to be sold.
"All real estate which shall hereafter be purchased or otherwise acquired by any such private banker with his permanent capital
or with money received by him on deposit or to whidh such private
banker shall have taken title in connection with his business as
such private banker, except that upon which his office is located,
shall be sold within five years after taking title thereto; and all
real estate so purchased or acquired, and held by such private banker at the time when this act takes effect, except that upon which his
office is located, shall be sold within five years after this act
takes effect; unless upon his application the superintendent of banks
shall, in either case, have extended the time within which such sale
shall be made.
"All such real estate and all registered securities and mortgages purchased by any such private banker with any part of his permanent capital or vd. th money received by him on deposit, or held by
any such private banker on the date when this act takes effect, shall
be sold within one year after such date unless prior to the expirati on of such year, such real estate or registered securities or
mortgages shall have, been recorded in the name of such private banker * * *
(Banking Law , sec. 163),
Restrictions on purchase of. and loans on real estate.
;
"No such private banker shall hereafter purchase with any
part of his permanent capital or deposits received by him any real
estate which is subject to a mortgage, lien or encumbrance; nor make
a loan, directly or indirectly, upon the security of real estate if
such real estate is subject to a prior lien or encumbrance and the
amount unpaid upon such prior mortgage, lien or encumbrance or the
aggregate amount unpaid upon all prior mortgages, liens and encunybrances exceeds ten per centum of the permanent capital of such
^ 204
- 71 -
X-6812
"private "banker, and, if the litiOunt
secured, including all prior
mortgages, liens and encumbrances, exceeds two-thirds of the value
of such real estate." (Banking Law , sec. 164).
Books and records; superintendent may issue order to keep properly.
"Every such private "banker shall keep separate and complete
"books of account in which shall be promptly entered the details of
all "business transacted by him as such banker including statements
in detail of the liabilities incurred by him as such banker and of
the securities or property in which the permanent capital and the
deposits received by him have been invested." (Banking Law , sec.
165).
Every private banker is required to keep his books and records
in such manner as the superintendent may direct (Banking Laws, sec.
165), the superintendent being authorized to "issue an order requiring such * * * banker * * * or the officers thereof or any of them,
to open and keep such books or accounts as he may in his discretion,
determine and prescribe for the purpose of keeping accurate and convenient records of the transactions and accounts of such * * * banker" whenever it appears to him that any private banker, except those
who have had accepted the so-called exemption affidavit, "does not
keep its books and accounts in such manner as to enable him readily
to ascertain its true condition." (Banking Law , se6. 56).
Penalty for failure to obey order regarding books and accounts.
"Any such banker that refuses or neglects to obey any such
order shall be subject to a penalty of one hundred dollars for each
day that such refusal or neglect continues." (Banking Law , sec.
165).
Report regarding unclaimed deposits.
There are detailed provisions with reference to reporting to
the superintendent of banks regarding unclaimed deposits. This report
must be made annually and must state whether or not any unclaimed
deposits are being held. Publication of a copy of such report is
required to be made in the newspapers and a penalty of $100 per day
is imposed for each day such report or the filing of an affidavit
of proof of its publication with the superintendent is delayed or
withheld. (Banking Law , sec. 166).
Transmission of money.
The laws contain provisions regulating the transmission of
money by private bankers. Money received for transmission must be
forwarded within five days after being received and a receipt must
be given to the person delivering such money for transmission. A
penalty is prescribed for a violation of these provisions. (Banking Law , sees. 167 and 168).
I 205
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X-6812
Monthly statement required, of jftirtllhases and sales of property and
discounts, loans or other advances.
A written verified statement is required to be filed monthly
by private bankers with the superintendent of banks in which must
be listed all purchase and sales of property made in connection
with their business arid all discounts, loans or other advances made
by them, including overdrafts and renewals, since the last preceding statement. A description of the collateral if any, to such indebtedness mast also be made. Discounts, loans, etc., however, of
less than $100 may be omitted from such statement unless they increase by $100 the liability of some individual, partnership, toincorporated association dit corporation since the last statement.
(Banking La* * 6eci 169).
Members of private bankers required to meet monthly.
"The members o f any such partnership or unincorporated asso-
ciation of private "bankers s h a l l on or before the tenth day of each
month meet for the purpose of considering the conditions and affairs
of the banking business conducted by them" and of making the statement above referred to and such statement shall be verified by each
member * * * except in case of disability or unavoidable absence."
(Banking Law , sec. 169).
Reports of condition required.
A private banker who has not executed the so-called exemption
affidavit is required to make reports of his condition to the superintendent every three months upon service of notice by him of the day
on which such reports mast be filed. (Banking Law , sec. 42). Within ten days after service of this notice on him "every such private
banker shall make a written report to the superintendent of banks,
which report shall be in the form and shall contain the matters pre*
scribed by the superintendent and shall specifically state the items
of permanent capital, deposits, specie and cash items, public secoiw
ities and private securitios, real estate and real estate securities
and such other items as may be necessary to inform the public as to
his financial condition and solvency or which the superintendent may
deem proper to include therein, and shall also state the amount of
deposits with him, the payment of which in case of insolvency is
preferred by law or otherwise over other depositors. It shall state
in detail the particular assets in which the permanent capital of
such private banker is invested. Every such report shall be verified
by the oath of such private banker and of each member of a partnership or aiv •unincorporated association of private bankers to the effect that the report is true and correct in all respects to the best
of the knowledge and belief of such banker or bankers and that the
usual business of such banker has been transacted at the location
stated in the (verified) certificate (hereinbefore referred to) * * *,
~ sfe *•
X-6812
"and not elsewhere. In case of the disability or unavoidable absence
of a member of a partnership or unincorporated association, sudh report may be verified by the other members; but the verification shall
contain a statement of the reason for the failure of any member to
sign and verify such report* Every such report, exclusive of the
verification shall within thirty days after it shall have been filed .
with the superintendent be published by such private banker in one
newspaper of the place where such private banker is engaged in business
or if no newspaper is published there, in the newspaper published
nearest to such place." (Banking Law , sec. 170).
Special reports of condition.
Every such private banker shall also make such other special
reports to the superintendent as he may from time to time require in
such form and on such dates as may be prescribed by the superintendent,
which reports shall if required by the superintendent, be verified in
such form as he may prescribe. (Banking Law , sec. 170).
Penalty for failure to make report of condition or include therein
required information.
If any private banker fails to make any required report on
or before the date designated for the making thereof or fails to
include therein any matter required by the superintendent, such
private banker shall forfeit the sum of one hundred dollars for
every day that such report is delayed or withheld and for every day
that it fails to report any such omitted matter, unless the time
therefor has been extended by the superintendent. (Banking Laws,
sec. 170). An extension of time not exceeding ten days may be
granted by the superintendent "for satisfactory cause to him shown"
within which such reports may be filed. (Banking Law , sec. 49).
Restrictions as to place of business*
A private banker shall not do business, or be located in the
same room with, or in a room connecting rdth any bank, thrust company,
savings bank, or national banking association*
(Banking Law ,
sec. 171).
Communications from superintendent must be submitted to members and
noted on records.
Each official communication 'from the superintendent or one of
his deputies to any private bank relating to an examination or irw
vestigation or containing suggestions or recommendations as to the
conduct of the business, shall be submitted by the member receiving
it to all the members of such private bank at their next meeting
and. duly noted on their records.
(Banking Law , sec. 172).
2 0 7
- 74 -
X-6812
CAROLINA,
Private banks permitted but subject to same laws and supervision as
incorporated banks.
The following provisions recognize a private banking business,
but indicate that such business is subject to the same provisions of
law and supervision as are imposed upon incorporated banks.
Definition of term "bank?1.
The law provides that "The term 'Bank' when used in this chapter
shall be construed to mean any corporation, partnership, firm, or individual receiving, soliciting, or accepting money or its equivalent
on deposit as a business: Provided, however, this definition shall
not be construed to include building and loan associations, Morris
Plan Companies, industrial banks or trust companies not receiving
money on deposit." (Consolidated Statutes of Forth Carolina, sec.
216(a); Banking Laws, 1927, sec. 216(a), p. 3 ).
Private banks made subject to bank act and supervision of Corporation
Commission.
"Every bank, corporation, partnership, firm, company, or individual, now or hereafter transacting the business of banking, or
doing a banking business in connection with any other business, under
the laws of and within this State, shall be subject to the provisions
of this chapter, and shall be under the supervision of the Corporation
Commission. The Corporation Commission shall exercise control of and
supervision over the banks doing business under this act, and it shall
be its duty to execute and enforce through the Chief State Bank Examiner, the State Bank Examiners, and such other agents as are now or
may hereafter be created or appointed, all laws which are now or may
hereafter be enacted relating to banks as defined in this chapter."
(Consolidated Statutes of Forth Carolina, sec. 222(a); Banking Laws,
1927, sec. 222(a), p. 32).
Promulgation of regulations covering transaction of business.
"For the more complete and thorough enforcement of the provisions
of this act, the Corporation Commission is hereby empowered to promulgate such rules, regulations, and instructions, not inconsistent
with the provisions of this chapter, as may in its opinion be necessary
to carry out the provisions of the laws relating to banks and banking
as herein defined, and as may be further necessary to insure such
safe and conservative management of the banks under its supervision
as will provide adequate protection for the interests of the depositors, creditors, stockholders, and public in the relations with such
banks. All banks doing business under the provisions of this chapter
mm
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"shall • conduct their "business in a manner consistent with all laws
relating to banks and "banking, and all rules, regulations, and instructions that may "be promulgated or issued by the Corporation Commission." (Consolidated Statutes of ITorth Carolina, sec. 222(a);
Banking Laws, 1927, sec. 222(a), p. 33 ).
Reports of condition required.
In addition to subjecting private banks to the provisions of
law covering incorporated banks, the bank act expressly provides
that "Every person, firm, * * *, or partnership doing a banking
business, or a banking business in connection with any other business, shall make to the Corporation Commission not less than three
reports (of condition) daring each year, on forms prescribed by
the Corporation Commission. If any person, firm, * * *, or copartnership shall show by said reports, or by the examination of
any State bank examiner, that * * * (the) liabilities are equal to
the amount of the capital stock * * *, the Corporation Commission
shall have authority, and is hereby empowered, to make such rules
and regulations for the reduction of said liabilities as it may
deem necessary for the protection of the creditors and depositors
of such banking institution." (Consolidated Statutes of North
Carolina, sec. 222(c); Banking Laws, 1927, sec. 222(c), p. 33 ).
Advertising banking business and use of banking terms; when private
banks may use.
"
"Ho person, association, firm, * * *, domiciled within the
State of North Carolina, except * * *, persons, associations, or firms
reporting to and under the supervision of the Corporation Commission,
or under the Supervision of the Insurance Commissioner, shall therein
advertise or put forth any sign as bank, banking, banker, or trust
company, or use the word bank, banking, banker, or trust as a part of
its name and title; * * * * . Any violation of the provisions of
this section shall be a misdemeanor, and upon conviction thereof the
offender shall be fined in a sum not exceeding five hundred dollars
for each offense." (Consolidated Statutes of North Carolina, sec.
224(c); Banking Laws, 1927, sec. 224(c), p. 38 ).
NORTH DAKOTA.
Private banking business apparently prohibited.
"Ho person excepting national banking corporations shall transact a banking business nor use the words bank, banking company or banker in any sign, advertisement, letterhead or envelope or in any corporate or firm name, without complying with and organizing under the
provisions of this Chapter" relating to the business of banking.
(Compiled Laws of 1913, sec. 5177; Banking Laws, 1929, sec. 5177, p.
209
U 7$ -
X-6812
23). "This chapter" does not contain any provisions authorizing or
covering the organization of a private tank, and it would seem that
the effect of the above quoted provision is to prohibit a private
banking business.
Penalty for violation of above provisions.
"Any person violating the provisions of this section, either
individually or as an interested party in any association or corporation,
is guilty of a misdemeanor, and on conviction thereof shall be fined not
less than five hundred nor more than one thousand dollars, or imprisoned
in the county jail not less than ninety days, or both, in the discretion
of the court." (Compiled Laws of 1913, sec. 5177; Banking Laws, 1929,
sec. 5177, p. 23 ).
OHIO
Unincorporated banks may not now be established.
"2To authority to transact a banking business in this State
shall be granted, except to a corporation duly organized and qualified
for that purpose. Unincorporated banks now authorized to transact and
actually transacting a banking business may continue such banking business in the city, village, or township in which they are now located so
long as they comply with the provisions of this act." (General Code, sec.
710-76; Banking Laws, 1928, sec. 710-76, p. 29 ).
"Unincorporated bank?' defined; scope of term "Board of directors."
"The following definitions §iall be applied to the terms used
in this act; * * * The term 'unincorporated bank' shall include every unincorporated person, firm or association transacting banking business in
this state; and the term 'board of directors' shall include the owner or
owners of such banks." (General Code, sec. 710-1; Banking laws, 1928,
sec. 710-1, p. 5 ).
"Banking business" defined; word "bank?1, unless otherwise stated,
includes unincorporated banks.
"The term 'bank' shall include any person, firm, association,
or corporation soliciting, receiving or accepting money, or its equivalent,
on deposit as a business, whether such deposit is made subject to check
or is evidenced by a certificate of deposit, a pass-book, a note, a receipt, or other writing, and unless the context otherwise requires as
used in this act includes * * * * unincorporated banks; * * *". (General Code, sec. 710-2; Banking Laws, 1928, sec. 710-2, p. 5 ).
210
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From the above provisions, it appears that unincorporated
"banks transacting a banking business at the time the act containing
these provisions became law, are iaa.de subject to the provisions
covering incorporated banks wherever this may appropriately be done.
In addition, such unincorporated banks are specifically made subject
to the following provisions.
Capital required; segregation necessary, purpose of.
Every unincorporated bank in cities or villages of two
thousand or less population is required to have a paid-in capital
of not less than $10,000; in cities or villages of more than two
thousand to ten thousand population, fee paid-in capital must be
$25,000; and in cities of over ten thousand population, the paidin capital must not be less than $50,000. This capital must remain in the possession of the bank as its property, and is to "be
used for its sole purposes and for the security of its creditors".
The capital shall at all times be segregated from any other property of the owners of the bank and shall be kept and maintained unimpaired for the security of the creditors of such bank*.
All
unincorporated banks are required to comply with these provisions
within one year.
(General Code, sec. 710-78; Banking Laws, 1928,
sec. 710-78, p. 30 ).
Advertising capital; restriction upon.
2io unincorporated bank "shall advertise by newspaper, letterhead, or in any other way, a larger capital than has been actually paid
in". (General Code, sec. 710-81; Banking Lavs, sec. 710-81, p. 31 j.
Statement completely describing bank must be filed annually with
superintendent of banks.
Every unincorporated bank, on or before January 31st of each
year shall, under oath, file with the superintendent of banks, a full
and complete detailed statement containing the following:
1.
The name of the bank.
2.
A copy of the articles of co-partnership or
agreement under which the business of such bank
is being conducted. One of the owners of such
bank is required at all times to be a resident
of the State of Ohio.
3.
The location of the bank.
4.
The amount of the permanent actually paid in
capital of the bank which is in its possession
as its property and for its sole purposes.
- 73 5.
A statement of tHe responsibility and net
worth of the individual members of the
bank.
6.
The names of the officers, agents or employees in active charge of the bank if
such names are not given in the articles
of co-partnership or agreement. (Act approved April 18, 1929, sec. 1, p. 4; General Code, sec. 710-77 ).
X-6S13 2 1 1
Fames under which property must be held.
All real or personal property owned by an unincorporated bank
must be held in the designated name of the bank or in the name of an individual as trustee therefor, and not in the name of the owners of the
bank. (General Code, sec. 710-79; Banking Laws, 1928, sec. 710-79, p. 30).
Assets, when exempt from attachment or execution.
All of the assets of an unincorporated bank are exempt from
attachment or execution by any creditor of the owners until all of the
liabilities of the bank have been naid in full. (General Code, sec. 71079; Banking Laws,.1928, sec. 710-79, p. 30).
Restriction against owners using funds for private use.
"ITo person, firm or association owning or conducting an unincorporated bank shall use any of the funds of such bank for his or their
private business; except as a borrower in due course of business."
(General Code, sec. 710-79; Banking Laws, 1928, sec. 710-79, p. 30) .
Depositors have first lien on assets.
"The depositors in any unincorporated bank shall have first
lien on the assets of such bank, in case it is wound up, to the amount
of their several deposits, and for any balance remaining unpaid, such
depositors shall share in the general assets of the owner or owners alike
with general creditors." (General Code, sec. 710-80; Banking Laws, 1928,
sec. 710-80, p. 30 ).
List of owners must be posted and changes must be reported to the
superintendent of banks.
—
—
i
A list of the owners of any unincorporated bank, and a statement to the effect that the bank is unincorporated must be posted in the
room in which the bank transacts its business. Any subsequent changes
must be shown in the list and a report of all such changes must be made
to the superintendent of banks. (General Code, sec. 710-81; Banking Laws,
1928, sec. 710-81, pp. 30 and 31 ).
I
- 79 Advertising matter mast contain wdfd
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2 1 2
unincorporated*'.
Every -unincorporated, "bank must have printed, on all its advertising matter and. business stationery, the word "unincorporated" immediately following the name of the firm or business title. (General
Code, sec. 710-82; Banking Laws, 1928, sec. 710-82, p. 31 ).
Reports of unincorporated "banks, publication required.
All reports of unincorporated banks are required to be kept on
file in the office of the superintendent of banks, and are open to the
inspection of all persons, at the discretion of the superintendent.
These reports must be published in the newspaper by the banks, and proof
of such publication must be furnished to the superintendent. (General
Code, sec. 710-83; Banking Laws, 1928, sec. 710-83, p. 31').
Unincorporated banks may be designated as depositories of State funds.
Unincorporated banks are permitted to bid upon and be designated depositories for State funds upon furnishing such surety or
sureties as is prescribed by law.
(General Code, sec. 710-84; Banking
Laws, 1928, sec. 710-84, p. 31 ).
Loans to any one person, corporation, etc.
The laws contain provisions prescribing the amount which an
unincorporated bank may loan to any one person, company, corporation
or firm. (Act approved April 18, 1929, sec. 1, (710-122); General
Code, sees. 710-122 and 73.0-123; Banking Laws, 1928, sees. 710-122 and
710-123, p. 49).
Voluntary liquidation.
The laws also permit an unincorporated bank to go into voluntary
liquidation and contain detailed provisions with reference to the procedure to be followed by the bank and the powers and duties of the superintendent of banks before and during the actual liquidation of the bank.
(General Code, sec. 710-85; Banking Laws, 1928, sec. 710-85; pt>. 31 and
32).
OKLAHOMA.
Banking,business may only be transacted by corporations "authorized
by the laws of the State of Oklahoma or of the United States".
The laws of this State provide for the incorporation of a "banking corporation" and authorize such corporation to engage in the business
of banking. (Conro. Oklahoma Stats., 1921, sec. 4114; Banking Laws, 1926,
sec. 1, p. 10), The incorporation of a trust company is also provided for
(Laws of 1925, ch. 55, amending sec. 4190, Comp. Oklahoma Stats., 1921;
Banking Laws, 1926, sec. 1, p. 61); and such company is authorized to
I
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213
X-6812
engage in the banking business, (taws of 1925, ch. 56, amending sec.
4216, Conrp. Oklahoma Stats. , 1921; Banking Laws, 1926, sec. 5, p. 74).
Unless authority to engage in the banking business is obtained under
these provisions, the transaction of such business by any individual
or corporation is prohibited, the laws in this connection providing
that "It shall be unlawful for any individual, firm, or association,
or corporation to receive money upon deposit or transact a banking
business except as authorized by the laws of the State of Oklahoma,
or of the United States, or to iise dr advertise, in connection with
any business other than the banking business, Conducted under the
banking laws of this State, the words: Banker, bankers, investment
banker, or any other word or term calculated to deceive the public
into belief that such person, firm, association or corporation, is
engaged in the banking business." (Conrp. Oklahoma Stats., 1921, sec.
4129; Banking Laws, 1926, sec. 44, p. 31). (See also Levy v. Heed,
1918, 690 Okla. 180, 170 Pac. 497).
Penalty for violation of above provision.
"Any person, firm, association or corporation violating any
of the provisions of this section, either individually or as an interested
party, in any firm, association or corporation shall be guilty of a
misdemeanor, and upon conviction thereof, shall be fined in a sum not
less than three hundred dollars ($300.00) nor more than one thousand
($1,000.00) dollars, or by imprisonment in the county jail not less
than thirty days nor more than one year, or by both such fine and inn
prisonment, ***
(Comn. Oklahoma Stats., 1921, sec. 4129; Banking
Laws, 1926, sec. 44, p. 31).
Enforcement of provisions and prevention of further violations.
it *** it is hereby made the duty of the Attorney General to
enforce the provisions of this section; and in order to further prevent
the violation of the section, any court of competent jurisdiction in
this State is hereby authorized and empowered to grant an Injunction
and to appoint a receiver to take charge of the business and assets
of any person, firm, association or corporation found guilty of violating the provisions of this section, and to make all necessary and
proper orders to wind up such business and prevent a violation of this
section." (Comp. Oklahoma Stats., 1921, sec. 4129; Banking Laws,
1926, sec. 44, p. 31).
OREGON.
Banking business may only be transacted by corporations.
"It shall be unlawful for any corporation, partnership, firm
or individual to engage in or transact a banking or trust business
within this state, except by means of a corporation duly organized
- 81 -
X-*6812
"for such purpose."
(Laws of 1925, ch. 207, sec. 2; Banking Laws
1925, including amendiiBnts of 1929, sec. 2, p. 4). "No person,
firm, company, association, copartnership or corporation, either
domestic or foreign, except national banks, not subject to the
suxrvision of the superintendent of "banks and not required by the
provisions of this (bank) act to report to him, and which has not
received a certificate to do a banking or trust business from the
superintendent of banks, shall *** solicit or receive deposits or
transact business in the way or manner of a bank, savings bank or
trust company, or in such a way or manner as to lead the public to
believe that its business is that of a bank, savings bank or trust
company." There are also prohibitions against the use of the word
Dank, banker, etc., or any other form of advertising indicating that
the business carried on is that of a bank. "Every person, firm,
company, association, copartnership or corporation doing any of
the things or transacting any of the business *** (referred to)
mast transact such business according to the provisions of the bank
act.***"
(Laws of 1925,^ch. 207, sec. 54; Banking Laws, 1925,
including amendments of 1929, sec. 54, pp. 19 and 20).
Violation of provisions; power of superintendent of banks: -penalty#
The superintendent of banks has authority to examine the ao*
counts, books and papers of every person, firm, association or copartnership in order to ascertain whether such person, firm, association or copartnership has violated or is violating any provision
of the section last above referred to. Any person, firm, association
or copartnership violating any provision of this section mast pay a
penalty of $100 a day for every day during which such violation continues. Upon an action brought by the superintendent of banks an
injunction may be issued restraining any such person, firm, copartnership or association from further using such words or from further transacting business in such a manner as to lead the public to
believe tnat the business is that of a bank, savings bank or trust
company, and the court issuing the injunction may make such other
order as may be proper. (Laws of 1925, ch. 207, sec. 54; Banking
Laws, 1925, including amendments of 1929, sec. 54, pp. 19 and 20 ).
PENNSYLVANIA.
License to engage ir business of private banking required*
Except as hereinafter provided, "no individual, partnership,
or unincorporated association shall hereafter engage, directly or indirectly, in the business of receiving deposits of money for safekeeping or for the purpose of. transmission to another, or for any other
purpose, without having first obtained from a board, consisting of
the State Treasurer, Secretary of the Commonwealth, the Secretary of
Banking, - hereinafter referred to as the 1Board1, - a license to engage in such business." (Act of June 19, 1911, P. L. 1060, sec. 1,
215
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X-6812
as amended by Act of April 6» 163?.
106, Fdi 73, sec. 1, and
Act of April 25, 1S29, P. L. 813, sec. 1; Pardon'8 Penna. Stats.,
Title 7, sec. 711, p. 175).
The Board to License Private Bankers has been reorganized
and continued by the provisions of the Pennsylvania Administrative
Code of April 9th, 1929, P. L. 177, Section 202 of Article II of
that Code provides that "The following boards, commissions, and offices
are hereby placed and matie departmental administrative boards, commissions, or offices, as the case may be, in the respective administrative departments mentioned in the preceding section, as follows:
. . . . . .
In the Department of Banking, Board to License Private
Bankers."
Section 428 of Article IV of the Administrative Code provides that "The Board to License Private Bankers shall consist of
the Secretary of Banking, who shall be chairman thereof, the Secretary of the Commonwealth, and the State Treasurer."
Section 1604 of Article XVI of the Administrative Code
provides with respect to the powers and duties of the Board to
License Private Bankers that "Subject to any inconsistent provisions
in this act contained, the Board to License Private Bankers shall
continue to exercise the powers and perform the duties vested in and
imposed upon the said board by the act, approved the nineteenth day
of June, one thousand nine hundred and eleven
(Pamphlet Laws, one
thousand and sixty), entitled 'An Act to provide for licensing and
regulating private banking in the Commonwealth of Pennsylvania, and
providing penalties for the violation thereof,' its amendments and
supplements
Statement required of applicant.
The applicant for a private banking license must file a
written verified statement with the Secretary of Banking showing
the amount of the assets and liabilities of the applicant and designating the place where the applicant proposes to engage in business, with the names and addresses of ail partners or members of
the private bank. It mast also be shown that the applicant is a
citizen of Pennsylvania; or, if the applicant is a partnership or
unincorporated association, that a majority of the members having
a controlling interest in the business are citizens of Pennsylvania.
(Act of June 19, 1911, P. L. 1060, sec. 1, as amended by Act of
April 5, 1927, P. L. 106, Ho. 73, sec. 1, and Act of April 26, 1929,
P. L. 813, sec. 1; Purdon's Penna. Stats., Title 7, sec. 711, p.
175).
Bond must be filed; purpose and amount of.
A bond executed by the applicant and a surety or sureties
approved by the board, mast also be filed with the Secretary of
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X-6812
Banking to cover the faithful holding and repayment of all moneys
received on deposit and the faithful transmission of any money
which is received for transmission to another. The bond must also, in the case of insolvency or bankruptcy, cover the payment of
the amounts recoverable to the assignee, receiver or trustee of
the applicant for the benefit of the person making a deposit or
delivering money for transmission to another. The amount of the
bond is to be fixed by the board but is not to be less than
$10,000 nor more than $50,000. (Act of June 19,'1911, P. L.
1060, sec. 1, as amended by Act of April 5, 1927, P. L. 105,
Uo. 73, sec. 1, and Act of April 28, 1929, P. L. 813, sec. 1;
Purdon's Penna. Stats., Title 7, sec. 712, pp. 177 and 178).
Money and securities may be deposited in lieu of bond.
Money and securities equal to the amount of the penalty
fixed in the bond may be deposited by the applicant with the Secretary of Banking in lieu of such bond. The securities may consist of bonds of the United States, or bonds of the State of
Pennsylvania or any municipality thereof, or other securities
approved by the board. (Act of June 19, 1911, P. L. 1060, sec.
1, as amended by Act of April 5, 1927, P. L. 106, Mo. 73, sec.
1, and Act of April 25, 1929, P. L. 813, sec. 1; Purdon1s Penna.
Stats., Title 7, sec. 712, p'» 178.).
Examination of applicant's standing; publication of application.
Upon receiving an application for a private banking license,
"the Secretary of Banking shall cause to be made an examination of
the financial standing and moral character of the applicant, as to
whether the statements contained in the application are true" and
this application must be advertised in the newspaper by the Secretary of Banking at the expense of the applicant. (Act of June
19, 1911, P. L. 1060, sec. 1, as amended by Act of April 5, 1927,
P. L. 106, No. 73, sec. 1, and Act of April 26, 1929, P. L. 813,
sec. 1; Pardon's Penna. Stats., Title 7, sec. 713, p. 179).
License issued in discretion of board; fee; when location may be
changed.
After advertisement of the application, "the board ipay,
in its discretion, approve or disapprove the application". If
approval is granted, the bond, or any money or securities deposited in lieu thereof, shall be accepted and held by the
Secretary of Banking for the purpose for which required, and
he shall issue a license authorizing the applicant to engage
in a private banking business at the place specified in the
license certificate. A fee of fifty dollars is required for
such a license, which may not be transferred or assigned.
X-6812
- 84 The written approval of the board is required for the transaction of.business at any place other than that specified in
the license certificate.
(Act of June 19, 191*1, P. L. 1060,
sec. 1, as amended by Act of April 5, 1927, P. L. 106, No.
73, sec. 1, and Act of April 26, 1929, P. L. 813, sec. 1;
Purdon's Penna. Stats., Title 7, sec. 713, p. 179).
License mast be posted; duplicate license may be issued.
The license must be posted in the place of business
of the licensee and it is made unlawful to post such license
in a place other than that designated as the licensee's place
of business.
Provision is also made for the issuance of a.
duplicate license in case the original is lost or destroyed.
(Act of June 19, 1911, P. L. 1060, sec. 1, as amended by Act
of April 5, 1927, P. L. 106, Ho. 73, sec. 1, and'Act of April
' 26, 1929, P. L. 813, sec. 1; Pardon's Penna. Stats., Title
7, sec. 714, p. 180).
Bonds and money or securities constitute trust funds for
depositors.
The money and securities deposited with the Secretary
of Banking and money which may be paid on any bond in case of
default, constitutes a trust fund for the benefit of depositors in the private bank and of such persons who have delivered
money to such bank for transmission to another.
Such beneficiaries are entitled to an absolute preference as to such
moneys or securities over all general creditors of the bank.
In the event of the insolvency or bankruptcy of the bank,
such moneys and securities, on the order or judgment of a
court of competent jurisdiction, must be delivered by the
Secretary of Banking to the assignee, receiver or trustee of
the bank designated in suph order or judgment. (Act of
June 19, 1911, P. L. 1060, sec. 1, as amended by Act of
April 5, 1927, P. L. 106, No. 73, sec. 1, and Act of
April 26, 1929, P . L. 813, sec. 1; Purdon's Penna. Stats.,
Title 7, sec. 715, p. 180).
:
-
85
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JC-6812
Distribution of assets ,1a c&Be. ci|plfl86Xyer.,c^i
In case of the insolvency of any private banker, the distribution of the assets, other than the proceeds from the bond or securities deposited, shall be made and preferred in the following order:
1. To the payment of all depositors of the private banker.
Bona'fide holders of certified chocks, or of certificates of deposit,
or of checks or drafts of the private banker given in exchange for or
in payment of checks or drafts of depositors drawn on the private
banker, not exceeding the balance to the crodit of the depositor, are
also treated as depositors within the meaning of this section.
2. To the payment and discharge of all the remaining liabilities of the private banker.
3. If there is anything remaining, it is distributed to the
individual or the partners or members of the private banker according to their legal rights. (Act of June 19, 1911, P. L. 1060, sec. 1,
as amended by Act of April 5, 1927, P. L. 106, No. 73, sec. 1, and
Act of April 26, 1929, P. L. 813, sec. 1; Pardon's Penna. Stats.,
Title 7, sec. 716, p. 181).
List of licenses granted mast be published annually; interest on deposits in lieu of bonds; custody of such deposits.
On the first day of January, the Secretary of Banking mast
print annually a list of all licenses granted and unrevoked. Ho mast
also pay over to each licensee all of the interest received by him
upon any money or securities deposited in lieu of the bond. All
money or securities mast be turned into the State Treasury and receipted by the State Treasurer to the Secretary of Banking and the
depositor, and is subject to withdrawal only upon the warrant of the
Secretary of Banking. All interest coupons on any securities deposited shall be surrendered when due to the owners upon their request.
(Act of June 19, 1911, P. L. 1060, sec. 1, as amended by Act of April
5, 1927, P. L. 106, Ho. 73, sec. 1, and Act of April 26, 1929, P. 1.
813, sec. 1; Pardon's Penna. Stats., Title 7, sec. 717, p. 182).
Satisfaction or release of mortgage deposited as security in lieu of
"bond.
The laws contain provisions for the satisfaction or release of
any mortgage, judgment or lien which may be accepted in lieu of a
bond. (Act of May 23, 1913, P. L. 334, sec. 1; Pardon's Penna. Stats.,
Title 7, sec. 718, p. 182).
Character of books which must be kept.
Each private bank must keep such books of account as are approved by the Secretary of Banking. Such books mast show full and
3 1 8
36 -
X-6812
complete records of all business transacted, and a full statement of all
assets and liabilities. (Act of June 19, 1911, P. L. 1060, sec. 2;
Purdon'8 Penna. Stats., Title 7, sec. 719, p. 183).
Statement of assets and liabilities, and publication of, required.
Each private bank is required at least two times each year
to file with the secretary of banking a written statement, under oath
and in such form as the secretary may prescribe, of the amount of its
assets and liabilities. This statement must be made as of such days
as the secretary may designate by a written notice mailed to the private bank and within ten days after the date of such notice. A copy
of the statement must also be published in the newspapers. (Act of
June 19, 1911, P. L. 1060, sec. 2; Purdon's Penna. Stats., Title 7,
sec. 719, p. 183).
Revocation of license; notice of discontinuance of business.
The license may be revoked by the board for cause shown, and
if it is revoked or surrendered, no refund of the license fee will be
made. In case the license is revoked, it must be surrendered within
twenty-four hours after written notice of such revocation has been given
to the holder, and the bond or money and securities received from the private bank "shall continue to be held by the Commissioner (Secretary) of
Banking until otherwise directed by the order or judgment of a court of
competent jurisdiction". In case of a discontinuance of business, "notice thereof must previously have been published once a week during the
thirty days in one newspaper of general circulation, and the legal periodical, if any, published in the city or county where such business has
been conducted, or nearest adjacent county". (Act of June 19, 1911, P. L.
1060, sec. 2; Purdon's Penna. Stats., Title 7, sec. 719, p. 183).
Violations; penalties.
Any person, partnership, or unincorporated association transacting a banking business without a license, or who carries on such
business after the license has been revoked, or who, without such
license, uses the word "banking" or any equivalent term in advertising the business, or who fails to display the license certificate,
or who fails to keep books and make reports as required, or who advertises or publishes in any manner, "either orally or in writing,
any statement intended to convey or actually conveying the idea or
impression that such licensee is in any way under the supervision of
this State, or of any officer thereof, or that this State, or any
officer thereof, has passed in any way whatsoever upon the responsibility, solvency, or qualifications of such licensee to engage
in such business; or that this State, or any officer thereof, has
examined any accounts of said licensee or has in any way certified
that such licensee is in any way a fit person to carry on such business, shall be guilty of a misdemeanor, and punished as hereinafter
provided." (Act of June 19, 1911, P. L. 1060, sec. 3; Purdon's
" 220
^ 39 ^
X-6812
Penna. Stats., Title 7, see. 720, p. 18?).
False swearing as to certain facts.
Any person who, in any application for a private bavJclng
license or in any report, shall s^ear falsely as to the amount of the
assets and liabilities of a licensee, or in any other particular or
in any affidavit shall sv;ear falsely as to any fact therein stated,
shall "be-guilty of perjury. (Act of June 19, 1911, P. L. 1060, sec.
4; Purdon's Penna. Stats., Title 7, sec. 721, p . 184).
Failure to ragke or publish reports; penalty.
Any private bank which fails to make any required report or to
publish any reports as required within the specified time, must forfeit the sum of twenty dollars for every day that such report or its
publication is delayed or withheld. (Act of June 19, 1911, P. L.
1050, sec. 5; Purdon's Penna. Stats., Title 7, sec.722, p. 184).
Recovery of money deposited for transmission; burden of proof in suit.
There are also provisions fixing the burden of proof in an ac tion against a. licensee to recover money deposited with such licensee
for transmission. (Act of June 19, 1911, P. L. 1050, sec. 6; Purdon's
Penna. Stats., Title 7, sec. 723, p. 185).
Forwarding of money for foreign transmission.
Money received far transmission to a foreign country by any
licensee must be forwarded within five days after its receipt and
every person who fails to so forward within the specified time is
guilty of a misdemeanor and punishable as" hereinafter provided. (Act
of June 19, 1911, P. L. 1060, sec. 7; Purdon's Penna. Stats., Title 7,
sec. 724, p. 185).
Applicability of foregoing provisions.
The above provisions became effective on December 1, 1911, and
they applied "to all persons now or hereafter engaging in said (private
banking) business" excipt as provided under the following caption entitled "Exceptions from foregoing provisions". (Act of June 19, 1911,
P. I. 1060, sec. 13; Purdon*s Penna. Stats., Title 7, footnote to sec.
711, p. 176).
Exceptions from foregoing provisions.
The foregoing provisions shall not apply:
(1) To any corporation authorized to do business under the
Pennsylvania banking laws, to any corporation authorized to receive
deposits under the laws of Pennsylvania, nor to any national bank.
- 30 -
X-6812
:
(2) To any hotel keeper who receives money for safekeeping
from a guest*
221
(3) io any express, steamship or telegraph company receiving
money for transmission.
(4) To any individual, partnership, or unincorporated association who would otherwise be required to comply with the foregoing
provisions, "who shall file with the Commissioner (Secretary) of
Banking a bond, in the sum of one hundred thousand dollars, approved
by the board as to form and sufficiency for the purpose, and conditioned as *** (provided above), where the business is conducted in
a city of the first or second class; and if conducted in a city of
the first class, and if conducted elsewhere in the State, such bond
shall be in the sum of fifty thousand dollars; or in lieu thereof,
money or securities approved by the Commissioner (Secretary) of Banking, of the same amounts; Provided, however, That the Secretary of
Banking shall examine the books, papers, and affairs of such individual, partnership, or'unincorporated association, and if satisfied
from the examination that the business of such individual, partnership, or unincorporated association is conducted in an unauthorized
or unsafe manner or is in an unsafe or unsound condition to continue
business, he may, after hearing had upon due notice given with the
approval and consent of the Attorney General, take possession of the
business and property of such individual, partnership, or unincorporated association, and shall then proceed in the same manner as
provided by law he shall proceed after having taken possession of
the business and property of any *** person subject to the supersvision of the Banking Department. If in the opinion of the Secretary of Banking the business of any such individual, partnership,
or unincorporated association is in such an unsafe and unsound condition that immediate action is necessary, the Secretary may forthwith, without such hearing and consent of the Attorney Generali
take possession of the business and property of such individual,
partnership, or unincorporated association; !***"
(5) To any individual, partnership, or unincorporated association, licensed under the laws of Pennsylvania to do a brokerage business, holding a membership in a lawfully incorporated brokerage exchange, and doing only such banking as is incidental to such brokerage
business. The books or records showing the deposit or account of any
depositor with any individual, partnership, or unincorporated association filing the bond, money, or securities referred to above, are not
subject to any visitorial power, inspection, or examination by the
Commissioner (Secretary) of Banking, except as hereinbefore provided;
nor* to examination or inspection by, or production in, any department
or agency of the government, State or municipal; nor to inspection,
examination, or production in any court in any judicial proceeding
except in cases of insolvency or bankruptcy, or a judicial proceeding
or investigation involving the rights and liabilities of a creditor
or depositor.
(6) To any person, firm, partnership, or unincorporated association engaged in business as private bankers "continuously and in the
same locality" for a period of seven years prior to June 19, 1911.
- 89 -
X-5812
(Act of June 19, 1911, p. L« 1060, sec.
as amended, by Acts of May
2, 1925, P. L. 502, sec. 1, and W e h 17, 192?, p. L. 39, sec. 1;
Purdon's pennai S tats4; T i t l e 7, sec. 725, p p . 195-187).
Other violations.
Any private 'banker '"ho violates any of the foregoing provisions,
"the violation of which has not hereinbefore been made a misdemeanor
or a felony, shall be guilty of a misdemeanor, and. punished as hereinafter provided". (Act of June 19, 1911, P. L. 1060, sec. 9; Purdon's
Penna. Stats., Title 7, sec. 726, p. 187.).
Penalty for violations.
"Svery person found guilty of a misdemeanor under any of the
*** (foregoing provisions) shall he sentenced to an imprisonment not
exceeding two years, or be fined in an amount not exceeding one
thousand dollars, or both or either, at the discretion of the court."
(Act of June 19, 1911, P. L. 1060, sec. 10; Purdon's Penna. Stats*-,
Title 7, sec. 727, p. 187).
Definition of "person".
The word "person" as used below "means an individual, a partnership, or an unincorporated association". (Act of June 15, 1923,
P. L. 809, sec. 2, as amended by Act of May 5, 1927, P. L. 762, sec.
1; Purdon's Penna. Stats., Title 7, sec. 2, p. 13).
Department of Banking; scope of supervision; powers; duties.
"There shall continue to be a separate and distinct department, known as the Department of Banking, charged with the supervision of all the *** persons hereinafter described, and with the
duty of- taking care that the laws of this Commonwealth in relation
thereto shall be faithfully executed, and that the greatest safety
to the depositors therein or therewith and to other interested persons shall be afforded. *** The said supervision, duties, and powers
shall *** extend and apply to all private or unincorporated banks,
except such as are or shall - be exempted by law, and to all such individuals, partnerships, and unincorporated associations, as are or
shall be by law made subject to the supervision of said department,
***«" (Act of June 15, 1923, P. L. 809, sec. 4; Purdon's Penna.
S t a t s . , T i t l e 7, s e c . 4 , p p . 14 and 15 ) .
Assessment against -persons to pay expenses of banking department;
failure or refusal to pay.
All the expenses of the department of banking including the
cost of regular examinations "shall be charged to and paid by the
*** persons subject to the supervision of the department, in
equitable proportions, at such times and in such manner, as the
secretary shall by general rule or regulation annually prescribe:
* * * "
For a failure or refusal, after thirty days written notice,
to pay any sum lawfully assessed or charged by the secretary, the
2 3
- 90 -
X-6812
secretary "shall call upon the Department of Justice to bring an .
action at lato to recover the same". (Act of June 15, 1923, p. L.
809, sec. S, as amended by Acts of April 13, 1927, ?. L. 182, sec,
1, and April 25, 1929, P. I. 716, sec. 1; Purdon's Ponna. Stats.,
Title 7, sec. 9(b), pp. 17 and 18 ).
Examination of.
"Every *** person included within the supervision of the
department ***, together with all the property, assets, and resources of such *** person, shall be subject to inspection and examination" by the secretary, his deputies, or any qualified examiners of the department of banking. (Act of June 15, 1923, P.
L. 809, sec. 13; Purdon's Penna. Stats., Title 7, sec. 13, p.
dumber and character of examinations; powers of examiner, reports of
It is the duty of the secretary at least once each year,
to examine the books, papers, and affairs of every person subject
to the supervision of the department of banking. The examiner is
empowered to make a thorough examination into all the business and
affairs of the person and of all property, assets and resources
wherever situated. The examiner also has power to examine under
oath or otherwise, any of the officers, agents, employees or members
of such person in possession of any assets or having knowledge of
any assets of the person. The examiner is required to make a full
and detailed report of the condition of the person who was examined,
or such special report as may be directed by the secretary. (Act of
June 15, 1923, p. L. 809, sec. 14, as amended by Act of May 5,
1927, p. L. 762, sec. 5; purdon's Penna. Stats., Title 7, sec. 14
(a), p. 21 ).
Special examinations; cost of.
"The secretary may also at any' time, make such special investigations or examinations as, in his opinion, the exigencies of
any case may require"; and his power and duties and the powers and
duties of any examiner assigned by him to conduct such special examination are the same as in the case of regular examinations.
(Act of June 15, 1923, ?. L. 809, sec. 14, as amended by Act of
May 5, 1927, p. 1, 762, sec. 5; purdon's Penna Stats., Title 7,
sec. 14 (a), p. 21). "The expenses incurred in connection with any
special examination or investigation of any * * * person * * *
shall be charged to and paid by such * * * -person."
(Act of June
15, 1923, p. 1. 809, sec. 9, as amended by Acts of April 13, 1927,
p. L. 182, sec. 1, and April 25, 1929, P. 1. 716, sec. 1; Pardon's
Penna. Stats., Title 7, sec. 9 (b), p. 18).
- 91 F a l s e testimony of o f f ! c o r , ev^t'gy^e
X-6812
etc*
to examiner; p e n a l t y .
I
!
The w i l f u l f a l s e s h e a r i n g i n any i n q u i r y i n s t i t u t e d "by an
examiner during an examination by a n y . o f f i c e r , a g e n t , e m p l o y e or
member of any p e r s o n " s h a l l be p e r j u r y , and s u b j e c t , upon c o n v i c t i o n t h e r e o f , to the same punishment as i s or may be provided by
la*7 f o r t h e punishment of p e r j u r y . Upon f a i l u r e of any of the
i n d i v i d u a l s , a f o r e s a i d , to make answer to any such i n q u i r y , the
A t t o r n e y General, upon r e q u e s t of the s e c r e t a r y , s h a l l make i n f o r m a t i o n t h e r e o f t o the c o u r t , whereupon s a i d c o u r t , a f t e r h e a r i n g ,
s h a l l make such o r d e r as the occasion r e q u i r e s . " (Act of June 15,
1923, P . 1 . 809, s e c . 14, as amended by Act of May 5, 1927, p . L.
762, s e c . 5; P a r d o n ' s Penna. S t a t s , , T i t l e 7, s e c . 14 ( b ) , p . 2 2 ) .
Reports of c o n d i t i o n ; number and c h a r a c t e r o f ; p u b l i c a t i o n r e q u i r e d . .
Every person s u b j e c t to t h e s u p e r v i s i o n of the department of
banking mast make t o the s e c r e t a r y not l e s s than two nor more than
f i v e v e r i f i e d r e p o r t s of c o n d i t i o n during each y e a r , the number,
form and manner of such r e p o r t s to be p r e s c r i b e d by the s e c r e t a r y .
Each r e p o r t mast e x h i b i t i n d e t a i l and under a p p r o p r i a t e heads the
r e s o u r c e s and l i a b i l i t i e s of t h e person a t the c l o s e of b u s i n e s s
on any p a s t day s p e c i f i e d by the s e c r e t a r y , and mast be s e n t to
him w i t h i n f i v e days or w i t h i n such f a r t h e r time a s he may a l l o w ,
a f t e r t h e r e c e i p t of the s e c r e t a r y ' s r e q u e s t t o make such r e p o r t .
A b s t r a c t summaries of two of t h e r e p o r t s , d e s i g n a t e d by the s e c r e t a r y ,
i n each year mast be p u b l i s h e d i n a newspaper and proof of such
p u b l i c a t i o n mast be f u r n i s h e d t o the s e c r e t a r y . (Act of June 15,
1923, P . L. 809, s e c . 15; P a r d o n ' s Penna. S t a t s . , T i t l e 7 , s e c . 15,
p p . 22 and 23 ) ,
S p e c i a l r e p o r t s of c o n d i t i o n .
"The s e c r e t a r y s h a l l have power to c a l l f o r a s p e c i a l r e p o r t
from any * * * p e r s o n undfer the s u p e r v i s i o n of the department, * *
* whenever, i n h i s judgment, the same may be n e c e s s a r y to a f u l l
and complete knowledge of * * * h i s c o n d i t i o n . " (Act of June 15,
1923, P . L. 809, s e c . 15; P a r d o n ' s Penna. S t a t s . , T i t l e 7, s e c . 15,
p . 23).
R e p o r t s and p u b l i c a t i o n s r e q u i r e d above to be i n l i e u of a l l s i m i l a r
r e p o r t s and p u b l i c a t i o n s h e r e t o f o r e r e q u i r e d .
The laws of t h i s S t a t e p r o v i d e t h a t "The r e p o r t s and p u b l i c a t i o n s provided f o r i n * * * ( t h e above p r o v i s i o n s r e l a t i n g to r e g u l a r
and s p e c i a l r e p o r t s of c o n d i t i o n ) s h a l l be i n l i e u of a l l r e p o r t s and
of a l l p u b l i c a t i o n s f o r s i m i l a r purposes h e r e t o f o r e r e q u i r e d by law
to be made." (Act of June 15, 1923, P. L. 809, s e c . 15; P a r d o n ' s
Penna. S t a t s . , T i t l e 7, s e c . 15, p . 2 3 ) . This p r o v i s i o n a p p a r e n t l y
has the e f f e c t of r e p e a l i n g t h a t p o r t i o n of the Act of June 11, 1911
( P . L. 1060, s e c . 2; P a r d o n ' s Penna. S t a t s . , T i t l e 7, s e c . 719, p .
2f-
- 02 -
X-6812
•
1 8 3 ) , h e r e i n b e f o r e r e f e r r e d to utiddf t h e Caption t i t l e d "Statement of
a s s e t s and l i a b i l i t i e s j and p u b l i c a t i o n o f , r e q u i r e d " , which r e q u i r e s
p r i v a t e banks t o f i l e i n the o f f i c e of the S e c r e t a r y .of Banking a
sworn s t a t e m e n t of i t s a s s e t s and l i a b i l i t i e s and to p u b l i s h a copy of
such s t a t e m e n t i n t h e newspapers.
F a i l u r e to make or p u b l i s h r e p o r t s ; p e n a l t y .
A p e n a l t y i s p r e s c r i b e d i n case a person f a i l s to make and t r a n s mit and t o p u b l i s h any r e p o r t of c o n d i t i o n r e f e r r e d to above. (Act of
June 15, 1923, P . i . 809, s e c . 15; Purdon's Penna. S t a t s . , T i t l e 7,
s e c . 15 ( b ) , p . 2 3 ) .
Report of g r o s s , r e c e i p t s to Department of Revenue and payment of tax
thereon.
The laws of t h i s S t a t e a l s o r e q u i r e a p r i v a t e banker on or b e f o r e t h e f i r s t Monday of December of each y e a r , t o make a w r i t t e n
sworn s t a t e m e n t t o the Department of Revenue i n which mast be s e t
f o r t h t h e f u l l amount of " h i s g r o s s r e c e i p t s from commissions, d i s c o u n t s , a b a t e m e n t s , allowances, and a l l o t h e r r e c e i p t s " a r i s i n g from
h i s b u s i n e s s d u r i n g the year ending w i t h the 30th day of November
p r e c e d i n g the d a t e of such r e t u r n , "and s h a l l f o r t h w i t h pay i n t o
t h e S t a t e Treasury, through the Department of Revenue, one p e r centum
upon the a g g r e g a t e amount of such g r o s s r e c e i p t s * * * " . (Act of
May I S , 1861, p . L. 708, s e c . 1, as amended by Acts of June 27,
1895, P . 1 . 396, s e c . 1, June 13, 1901, P. 1. 559, 2To. 266, and
A p r i l 25, 1929, P. L. 679, s e c . 1; Act of A p r i l 9, 1929, P . L. 343,
Art V I I , s e c . 719 a ) . "All * * p r i v a t e bankers s h a l l be r e q u i r e d
t o pay l i c e n s e as h e r e t o f o r e , in a d d i t i o n t o the amounts which t h e y
s h a l l be r e q u i r e d , t o pay under the p r o v i s i o n s of t h i s A c t . " (Act
of May 16, 1861, P . 1 . 708, s e c . 4 ) .
A d d i t i o n a l r e p o r t t o Department of Revenue upon commencing b u s i n e s s .
"Every p r i v a t e banker, h e r e a f t e r commencing b u s i n e s s i n t h i s
Commonwealth, whether the b u s i n e s s be conducted by an i n d i v i d u a l , or
more t h a n one p e r s o n i n p a r t n e r s h i p , s h a l l , w i t h i n s i x t y days a f t e r
commencing such b u s i n e s s , make a r e p o r t to t h e Department of Revenue,
s e t t i n g f o r t h the name or names of t h e p e r s o n s engaging i n such b u s i n e s s , the name under which the b u s i n e s s i s boing conductod, i t s
l o c a t i o n , and t h e amount of c a p i t a l i n v e s t e d t h e r e i n . " (Act of
A p r i l 9, 1929, P. L. 343, A r t . V I I , s e c . 719 b ) .
P e n a l t y f o r f a i l u r e to make above r e p o r t s to Department of Revenue.
Any p r i v a t e banker who n e g l e c t s or r e f u s e s to make the r e t u r n
of g r o s s r e c e i p t s op the r e p o r t r e f e r r e d to above to the Department
of Revenue, " s h a l l , f o r every such n e g l e c t or r e f u s a l , be s u b j e c t
to a p e n a l t y of one thousand d o l l a r s " , which s h a l l be c o l l e c t e d by
22,
^
- 93 the Department of Bevenuet
XVII, s e c . 1707).
X-6812
(Adt Of April 9, 1929, P. L. 343, A r t .
Branches; g e n e r a l establishment of p r o h i b i t e d ;
The laws of t h i s State provide t h a t "no i n d i v i d u a l , p a r t n e r s h i p ,
or u n i n c o r p o r a t e d a s s o c i a t i o n carrying on a banking.business s h a l l
e s t a b l i s h , m a i n t a i n , or o p e r a t e , e i t h e r d i r e c t l y or i n d i r e c t l y , any
branch bank, branch o f f i c e , agency, s u b - o f f i c e , sub-agency, or branch
p l a c e of b u s i n e s s , w i t h i n the Commonwealth of Pennsylvania, f o r the
t r a n s a c t i o n of any p a r t of * * * , h i s , or t h e i r b u s i n e s s , but a l l of
the b u s in e s s of such * * *, i n d i v i d u a l s , p a r t n e r s h i p s , and unincorpor a t e d a s s o c i a t i o n s s h a l l be c a r r i e d on s o l e l y and e x c l u s i v e l y a t * * *
h i s , or t h e i r p r i n c i p a l p l a c e of b u s i n e s s . " (Act of April 27, 1927,
P. 1 . 400, sec. 1; Purdort's Penna. S t a t s . , T i t l e 7 , sec. 302, p . 100).
• Exceptions; establishment p e r m i t t e d w i t h i n c o r p o r a t e l i m i t s of p l a c e s
where n a t i o n a l banks were operating branches on March 1, 19<J7.
"This a c t s h a l l not apply to * * * any i n d i v i d u a l , p a r t n e r s h i p ,
or u n i n c o r p o r a t e d a s s o c i a t i o n carrying on a banking business which has
* * * , h i s , or t h e i r p r i n c i p a l p l a c e of business i n a c i t y , borough,
or township w i t h i n the Commonwealth of Pennsylvania, i n which one or
more n a t i o n a l banking a s s o c i a t i o n s , * * * was, on March 1, 1927,
o p e r a t i n g one or more branch banks, branch o f f i c e s , agencies, subo f f i c e s , subagencies, or branch p l a c e s of b u s i n e s s , f o r the t r a n s a c t i o n of any p a r t of i t s b u s i n e s s ; and any such * * *, i n d i v i d u a l s ,
p a r t n e r s h i p s , and unincorporated a s s o c i a t i o n s may h e r e a f t e r e s t a b l i s h ,
s u b j e c t to the approval of the S e c r e t a r y of Banking, and t h e r e a f t e r
maintain and operate branch banks, branch o f f i c e s , agencies, subo f f i c e s , subagencies, and branch p l a c e s of business f o r the t r a n s a c t i o n of any p a r t of * * *, h i s , or t h e i r b u s i n e s s , but only w i t h i n
the corporate l i m i t s of the c i t y , borough, or township i n which i t s
p r i n c i p a l o f f i c e i s l o c a t e d and i n which such n a t i o n a l banking a s s o c i a t i o n was, on March 1, 1927, operating one or more branch banks,
branch o f f i c e s , a g e n c i e s , s u b o f f i c e s , subagencies, or branch p l a c e s of
b u s i n e s s . The r i g h t to e s t a b l i s h and maintain branch banks, branch
o f f i c e s , a g e n c i e s , s u b o f f i c e s , subagencies, or branch places of b u s i n e s s , under the p r o v i s i o n s of t h i s s e c t i o n , s h a l l be l i m i t e d to t h e
t e r r i t o r y included w i t h i n the corporate l i m i t s on March 1, 1927, of
the r e s p e c t i v e c i t i e s , boroughs, or townships i n which such n a t i o n a l
banking a s s o c i a t i o n s were on t h a t date operating one or more branch
banks, branch o f f i c e s , agencies, s u b o f f i c e s , subagencies, or branch
p l a c e s of business as a f o r e s a i d ; and such r i g h t s h a l l not extend to
a d d i t i o n a l t e r r i t o r y which may, a f t e r March 1, 1927, be added to such
c i t i e s , boroughs, or townships, by annexation, c o n s o l i d a t i o n with one
or more municipal c o r p o r a t i o n s or otherwise, nor s h a l l i t extend to
other p o r t i o n s or d i v i s i o n s of municipal corporations to which such
c i t i e s , boroughs, or townships may be annexed, or with which they may
be c o n s o l i d a t e d a f t e r t h a t d a t e ; the i n t e n t i o n being to l i m i t to the
r e s p e c t i v e corporate l i m i t s of such c i t i e s , boroughs, or townships a s
94 -
X-6812
11
t h e y e x i s t e d on March 1, 1927,
r i g h t to e s t a b l i s h and m a i n t a i n the
hranch banks, "branch o f f i c e s , a g e n c i e s , s u b o f f i c e s , subagencios, and
branch p l a c e s of b u s i n e s s a u t h o r i z e d i n t h i s s e c t i o n . " (Act of A p r i l
27, 1927, p . L. 400, s u e . 3; p u r d o n ' s Fenna. S t a t s . , T i t l e 7, s e c . 304,
p. 102).
Other e x c e p t i o n s are t h a t the a c t does not apply to branches
e s t a b l i s h e d or f o r which l o c a t i o n s had been secured p r i o r to March 1 ,
1927, or to branches r e s u l t i n g from c o n s o l i d a t i o n s e f f e c t i v e p r i o r t o
A p r i l 1, 1927; "and such * * * i n d i v i d u a l s , p a r t n e r s h i p s , and u n i n c o r p o r a t e d a s s o c i a t i o n s s h a l l have the r i g h t to r e l o c a t e the same w i t h i n
t h e c o r p o r a t e l i m i t s of the c i t y , borough, or township i n which the
p r i n c i p a l p l a c e of b u s i n e s s i s l o c a t e d a t the time of such r e l o c a t i o n ,
s u b j e c t t o the a p p r o v a l of the S e c r e t a r y of Banking." (Act of A p r i l
27, 1927, p . L. 400, s e c . 2; Purdon's Fenna. S t a t s . , T i t l e 7, s e c .
305, p . 101 ) .
S u r e t y on bonds.
An " u n i n c o r p o r a t e d bank" i s p r o h i b i t e d from a c t i n g g e n e r a l l y
as " s u r e t y on any bonds".. . (Act of May 16, 1923, p . L. 248, s e e s . 1 - 3 ;
P u r d o n ' s Penna. S t a t s . , Ti%le 7, s e e s . 281-283, p p . 98 and 9 9 ) .
P r e s e r v a t i o n of r e c o r d s .
Every " p r i v a t e banker" must " p r e s e r v e , i n such form and manner
t h a t t h e y may be r e a d i l y produced on p r o p e r demand, a l l * * * h i s * *
* r e c o r d s of o r i g i n a l or f i n a l e n t r y , i n c l u d i n g cards used under the
card system, and d e p o s i t s l i p s or t i c k e t s , f o r a p e r i o d of seven y e a r s
from t h e date of making the l a s t e n t r y on the same." (Act of A p r i l
4, 1929, P . li. 141, s e c . 1; P a r d o n ' s penna. S t a t s . , T i t l e 7, s e c . 321,
p . 104).
A d v e r t i s i n g as t r u s t company or u s i n g word " t r u s t " as p a r t of t i t l e .
The laws of t h i s s t a t e p r o h i b i t any "person, c o p a r t n e r s h i p ,
( o r ) l i m i t e d c o p a r t n e r s h i p " from a d v e r t i s i n g or p u t t i n g f o r t h any
s i g n as a t r u s t company or u s i n g the v/ord " t r u s t " as a p a r t of h i s or
i t s name or t i t l e . A p e n a l t y i s p r e s c r i b e d f o r a v i o l a t i o n of t h i s
p r o h i b i t i o n . (Adt of A p r i l 2 2 , 1909, P . L . . 1 2 1 , s e c . 2 , as amended
by Act of May 19, 1923, ? , L. 274, s e c . 1; Purdon's penna. S t a t s . ,
T i t l e 7, s e c . 687, p . 169).
Unauthorized or u n s a f e "practices or other v i o l a t i o n s of la'.?; s e c r e t a r y
may i s s u e order t o d i s c o n t i n u e .
Whenever i t appears to t h e s e c r e t a r y t h a t any person has v i o l a t e d any p r o v i s i o n of l a v , or i s conducting b u s i n e s s i n an u n a u t h o r i z e d or u n s a f e manner, the s e c r e t a r y may i s s u e an order d i r e c t i n g such
p e r s o n to d i s c o n t i n u e such v i o l a t i o n of law or unauthorized- or u n s a f e
227
- 95 p r a c t i c e s . (Act of June 15, l 9 $ 3 , p;
S t a t s . , T i t l e 7, s e c . 20, p . 2 5 ) .
X-6812
809, s e c . 20; Pu.rd.on's penna.
S e c r e t a r y may take p o s s e s s i o n of b u s i n e s s ; when.
*
"The s e c r e t a r y may, a f t e r h e a r i n g had upon n o t i c e g i v e n w i t h
the approval and. consent of t h e Attorney General, take p o s s e s s i o n of
the "business and. p r o p e r t y of any * * * person s u b j e c t to t h e s u p e r v i s i o n of the d e p a r t m e n t , whenever i t s h a l l appear t o him t h a t such * *
* person:
"1. Has v i o l a t e d any law r e g u l a t i n g * * * h i s b u s i n e s s , and has
p e r s i s t e d i n such v i o l a t i o n i n d i s r e g a r d of an order d u l y made by the
secretary;
" I I . I s conducting b u s i n e s s i n an u n a u t h o r i z e d or u n s a f e manner
and has p e r s i s t e d i n d i s r e g a r d of an order duly made by t h e s e c r e t a r y ;
" I I I . I s i n an u n s a f e or unsound c o n d i t i o n to continue b u s i n e s s :
P r o v i d e d , in. such c a s e , That the s e c r e t a r y may f o r t h w i t h , w i t h o u t
such h e a r i n g and consent of t h e A t t o r n e y General, take p o s s e s s i o n of
the b u s i n e s s and p r o p e r t y of any such * * * p e r s o n r e c e i v i n g moneys
on d e p o s i t , when and i f , i n h i s opinion the p r o t e c t i o n of d e p o s i t o r s
and the p u b l i c r e q u i r e s such peremptory a c t i o n ;
"IV. Has an impairment of c a p i t a l , which has not been r e s t o r e d
or made good w i t h i n the time f i x e d by order of t h e s e c r e t a r y ;
"V.
Has suspended payment of o b l i g a t i o n s ;
"VI. Has n e g l e c t e d or r e f u s e d to comply w i t h the terms of any
l a w f u l l y i s s u e d order of the s e c r e t a r y ;
" V I I . Has r e f u s e d , upon p r o p e r demand, to submit the r e c o r d s and
a f f a i r s of the b u s i n e s s to t h e s e c r e t a r y , a deputy, or any duly a u t h o r i z e d examiner or agent of t h e department;
'i
" V I I I . Has r e f u s e d to be examined, upon oath or a f f i r m a t i o n , r e g a r d i n g such a f f a i r s ;
"IX. I s i n the hands of a r e c e i v e r a p p o i n t e d by any c o u r t , or i n
any bankruptcy p r o c e e d i n g , oy of an a s s i g n e e or t r u s t e e f o r c r e d i t o r s
a p p o i n t e d by such * * * p e r s o n .
"The s e c r e t a r y may, i n l i k e manner, take p o s s e s s i o n of the b u s i n e s s and p r o p e r t y of any p r i v a t e or u n i n c o r p o r a t e d bank, or t h e e s t a t e
of any p r i v a t e b a n k e r , otherwise exempt from the s u p e r v i s i o n of the
department, whenever such p r i v a t e or u n i n c o r p o r a t e d bank s h a l l have
made an assignment f o r the b e n e f i t of c r e d i t o r s , or f o r any of the causes
mentioned h e r e i n b e f o r e i n t h i s s e c t i o n . " (Act of June 15, 1923, P . I .
809, s e c . 21, as amended by Act of May 5, 1927, I V L. 762, s e c . 7;
: 229
- 95 -
X-6812
p u r d o n ' s penna» S t a t s . , T i t l e 7, s e c . 21, pp. 25 and 26.)
C e r t i f i c a t e of taking -possession; s e c r e t a r y to gupersede r e c e i v e r
previously appointed.
When the s e c r e t a r y has taken possession of the business and p r o p e r t y of any p e r s o n , he mast make a c e r t i f i c a t e s e t t i n g f o r t h t h a t he
has so taken p o s s e s s i o n , and mast f i l e such c e r t i f i c a t e i n h i s o f f i c e
"and cause a c e r t i f i e d copy thereof to tie f i l e d i n the o f f i c e of the
p r o t h o n o t a r y , * * * . " A f t e r t h e f i l i n g of such c e r t i f i e d copy, the
s e c r e t a r y " s h a l l supersede any r e c e i v e r p r e v i o u s l y appointed by any
court f o r , or any assignee or t r u s t e e f o r c r e d i t o r s appointed by, such
* * * p e r s o n . " (Act of June 15, 1923, P. L. 809, sec. 22; Pardon's Penna. S t a t s . , T i t l e 7, s e c . 22, pp. 27 and 2 8 ) .
S e c r e t a r y may be e n j o i n e d from continuing p o s s e s s i o n .
At any time w i t h i n ten days a f t e r the s e c r e t a r y takes p o s s e s s i o n
of any person, such person may apply to the court f o r an i n j u n c t i o n to
r e s t r a i n the s e c r e t a r y from continuing such p o s s e s s i o n . I f i t appears
from s a t i s f a c t o r y evidence that t h e r e i s j u s t cause f o r the t a k i n g and
continuing of p o s s e s s i o n , the s e c r e t a r y s h a l l not be e n j o i n e d ; b u t i f
t h i s evidence can.be overcome by proper proof produced by the p e r s o n ,
"the court s h a l l d i r e c t the s e c r e t a r y to r e f r a i n from f u r t h e r proceedings and to s u r r e n d e r such p o s s e s s i o n . " (Act of June 15, 1923, p . 1 .
809, s e c . 23, as amended by Act of May 5, 1927, p . L- 762, s e c . 8;
P a r d o n ' s penna. S t a t s . , T i t l e 7, s e c . 23, p . 2 8 ) .
Notice of taking p o s s e s s i o n to p a r t i e s holding a s s e t s ; e f f e c t on l i e n s , e t c .
The s e c r e t a r y mast give n o t i c e i n w r i t i n g to a l l p a r t i e s holding
a s s e t s of the f a c t t h a t he has taken possession of the p r o p e r t y and business of a p e r s o n . "ITo one having such n o t i c e or a c t u a l knowledge t h a t
the s e c r e t a r y has so taken p o s s e s s i o n s h a l l have a l i e n or charge a g a i n s t
any of the a s s e t s of puch * * * person f o r any charge, payment, advance,
or clearance t h e r e a f t e r made or l i a b i l i t y t h e r e a f t e r i n c u r r e d . " The
s t a t u s of a l l p a r t i e s becomes f i x e d on the date, the s e c r e t a r y f i l e s the
c e r t i f i c a t e of p o s s e s s i o n i n h i s o f f i c e . (Act of June 15, 1923, P . L.
809, s e c . 25, a s amended by Act of May 5, 1927, P. L. 762, s e c . 9; P a r don's Penna. S t a t s . , T i t l e 7, s e c . 25, p . 2 9 ) .
Inventory of a s s e t s .
The S e c r e t a r y mast make a complete inventory of the a s s e t s of any
p e r s o n , whose p r o p e r t y and business he has taken over, (Act of June 15,
1923, p . L. 809, s e c . 26; pardon's Penna. S t a t s . , T i t l e 7, s e c . 26, p . 3 0 ) .
S e c r e t a r y may suspend or continue b u s i n e s s .
The s e c r e t a r y i s a u t h o r i z e d , upon taking possession of t h e p r o p e r t y
and business of any person, " t o continue or suspend the b u s i n e s s f o r such
- 9? -
X-6812
2 3 0
''period, as he may deem necessary t o enable Mm to determine whether to
l i q u i d a t e the a f f a i r s of such * * * person* and, during such p e r i o d ,
t o "take such a c t i d n as i n hid judgment i s n e c e s s a r y to conserve the a s s e t s
and "business» 11 (Act of June 15, 1923, P. L. 809, s e c . 27; Pardon's
Penna. S t a t s . , T i t l e 7, s e c . 27, p . 3 0 ) .
S u r r e n d e r of p o s s e s s i o n by s e c r e t a r y .
The s e c r e t a r y may, upon c o n d i t i o n s approved by him, s u r r e n d e r poss e s s i o n of the b u s i n e s s of any person for t h e purpose of p e r m i t t i n g such
p e r s o n t o resume b u s i n e s s , to s e l l or convey h i s p r o p e r t y and f r a n c h i s e ,
or t o merge or c o n s o l i d a t e h i s b u s i n e s s with t h a t of another p e r s o n , or
because he i s w i t h o u t funds to continue or l i q u i d a t e the b u s i n e s s and
p r o p e r t y of such p e r s o n . When p o s s e s s i o n i s so s u r r e n d e r e d , the s e c r e t a r y
must i s s u e an order t o t h a t e f f e c t , which order must be f i l e d i n h i s o f f i c e .
A c e r t i f i e d copy of the order must a l s o be f i l e d i n the o f f i c e of the p r o t h o n o t a r y . (Act of June 15, 1923, P . L . 809, s e c . 28, as amended by Act of May
5 , 1927, P.L. 762, s e c . 10; P a r d o n ' s penna. S t a t s . , T i t l e 7, s e c . 2 8 , p . 3 0 ) .
Powers of s e c r e t a r y as r e c e i v e r .
When t h e s e c r e t a r y takes p o s s e s s i o n of the business and p r o p e r t y
of any p e r s o n , he has the same r i g h t s , powers and d u t i e s as a r e c e i v e r
a p p o i n t e d by any c o u r t of e q u i t y i n the S t a t e of P e n n s y l v a n i a . (Act of
June 15, 1923, p . L . 809, s e c . 29, as amended bjf Act of May 5, 1927, P . I .
762, s e c . 11; P a r d o n ' s Penna. S t a t s . , T i t l e 7, s e c . 29, p . 2 0 ) .
Secretary to continue possession u n t i l a f f a i r s are liquidated; exceptions.
When the s e c r e t a r y has taken p o s s e s s i o n of the b u s i n e s s and p r o p e r t y
of any p e r s o n , he s h a l l hold such p o s s e s s i o n u n t i l the a f f a i r s of such
person have been l i q u i d a t e d by him, u n l e s s ( l ) he i s d i r e c t e d by the court
t o s u r r e n d e r such p o s s e s s i o n , (2) he has p e r m i t t e d a resumption of b u s i n e s s ,
or a s a l e or conveyance of p r o p e r t y and f r a n c h i s e s , or a merger or cons o l i d a t i o n , or (3) the d e p o s i t o r s and other c r e d i t o r s of such person and the
expenses of such l i q u i d a t i o n have been p a i d i n f u l l . (Act of June 15, 1923,
P . L . 809, s e c . 31; Purdon's Penna. S t a t s . , T i t l e 7, s e c . 31, p . 3 2 ) .
liquidation.
The laws of t h i s S t a t e a l s o c o n t a i n d e t a i l e d p r o v i s i o n s with r e f erence t o the l i q u i d a t i o n of persons and the d u t i e s and powers of the Secr e t a r y of Banking i n qormection t h e r e w i t h . These p r o v i s i o n s d e a l with the
duty of the s e c r e t a r y to make an i n v e n t o r y and appraisement of a s s e t s of
the p e r s o n , the d i s p o s i t i o n of a l l f u n d s , p r o p e r t y and investments h e l d by
the person i n a f i d u c i a r y c a p a c i t y , the n o t i c e the s e c r e t a r y must give to
d e p o s i t o r s and c r e d i t o r s , the proof of claims by d e p o s i t o r s and c r e d i t o r s ,
the allowance of such claims, the f i l i n g by the s e c r e t a r y of a p a r t i a l or
f i n a l statement of r e c e i p t s and expenditures and a l i s t of claims allowed or
r e j e c t e d , the d i s t r i b u t i o n of dividends to approved c l a i m a n t s , the h e a r i n g
and d e c i s i o n of c o n t r o v e r t e d claims,and the payment of l i q u i d a t i o n expenses.
(Act Of June 15, 1923, p . L. 809, s e e s . 40, 41,43,45 and 49, and s e e s . 38,
4 2 , 4 4 , 4 6 , 4 7 , and 48, as amended by Act of May 5, 1927, P.L. 762, s e e s . 1722; P a r d o n ' s Penna. S t a t s . , T i t l e 7, s e e s . 38,40-49, pp. 3 7 - 4 6 ) .
— 98 -»
X-6812
? 231
igoqq.iSkm,
P r i v a t e "banking b u s i n e s s a p p a r e n t l y -prohibited.
The f o l l o w i n g p r o v i s i o n s would, seem to p r o h i b i t a "person,
p a r t n e r s h i p or a s s o c i a t i o n " from t r a n s a c t i n g a g e n e r a l banking b u s i n e s s .
"Ho c o r p o r a t i o n , e i t h e r domestic or f o r e i g n , and no p e r s o n , p a r t n e r s h i p , or a s s o c i a t i o n , except banks, savings bank, or t r u s t companies
i n c o r p o r a t e d under t h e laws of t h i s s t a t e " s h a l l h e r e a f t e r make u s e of any
s i g n or o t h e r a d v e r t i s i n g i n d i c a t i n g t h a t the p l a c e of b u s i n e s s or the
b u s i n e s s c a r r i e d on i s t h a t of a "bank, savings bank, or t r u s t company;
jior s h a l l any such c o r p o r a t i o n , p e r s o n , a s s o c i a t i o n , or p a r t n e r s h i p r e c e i v e d e p o s i t s and t r a n s a c t b u s i n e s s i n the way or manner of a bank, s a v ings bank, or t r u s t company, o r i n such a way or manner a s to l e a d the
p u b l i c t o b e l i e v e , or a s , i n the opinion of t h e bank commissioner, might
l e a d t h e p u b l i c to b e l i e v e , t h a t i t s b u s i n e s s i s t h a t of a bank, s a v i n g s
bank, or t r u s t company; * *
(P.I,. 1909, ch. 404, s e c . 24; Banking Laws,
1929, s e c . 24, p . 7 1 . )
Examination by bank commissioner t o a s c e r t a i n whether law i s being v i o l a t e d .
The bank commissioner and h i s a s s i s t a n t s have a u t h o r i t y " t o
examine the a c c o u n t s , books, and papers of any corporation* p e r s o n , p a r t n e r s h i p , or a s s o c i a t i o n which makes a b u s i n e s s of r e c e i v i n g money on
d e p o s i t , i n order to a s c e r t a i n whether such c o r p o r a t i o n , p e r s o n , p a r t n e r s h i p , or a s s o c i a t i o n has v i o l a t e d o r i s v i o l a t i n g any p r o v i s i o n of t h i s
t i t l e ; * * * " . ( P . L . 1909, ch. 404, s e c . 25; Banking Laws, 1929, s e c . 2 5 .
p p . 71 and 7 2 . )
P e n a l t y f o r v i o l a t i o n ; banking commissioner must r e p o r t v i o l a t i o n to Attorney
General; procedure to r e s t r a i n f u r t h e r v i o l a t i o n .
Any p e r s o n , p a r t n e r s h i p , or a s s o c i a t i o n v i o l a t i n g any p r o v i s i o n
of the s e c t i o n f i r s t above quoted must pay a p e n a l t y of one hundred d o l l a r s a day f o r every day d u r i n g which such v i o l a t i o n c o n t i n u e s , and a l l such
V i o l a t i o n s must be immediately r e p o r t e d by the bank commissioner to the
A t t o r n e y General. The p e n a l t y may be r e c o v e r e d by an i n f o r m a t i o n or o t h e r
a p p r o p r i a t e p r o c e e d i n g brought i n the Superior Court f o r the County i n
which s a i d v i o l a t i o n has o c c u r r e d , i n t h e name of the Attorney General.
Upon such i n f o r m a t i o n or o t h e r p r o c e e d i n g the c o u r t may i s s u e an i n j u n c t i o n r e s t r a i n i n g such p e r s o n , p a r t n e r s h i p , or a s s o c i a t i o n from f u r t h e r
p r o s e c u t i o n of i t s b u s i n e s s and may make such o t h e r o r d e r o r decree a s
may be p r o p e r . ( P . L . 1909, ch. 404, s e c . 25; Banking Laws, 1929, s e c .
25, p . 7 2 . )
'
SOUTH CAROL I M .
, P r i v a t e bftnks not •prohibited; a p p a r e n t l y s u b j e c t to examination; o p e r a t i o n s
a l s o - s u b j e c t to o t h e r p r o v i s i o n s of law.
•
I t does not appear t h a t the laws of t h i s S t a t e p r o h i b i t p r i v a t e
•* 9-9 —
X-6812
banks from t r a n s a c t i n g k "banking b u s i n e s s ; /but i t does appear from c e r t a i n
p r o v i s i o n s of these laws t h a t
%anks a r e __
s u b j e c t to
examination "by the S t a t e Bank Examiner, a r e e x p r e s s l y r e q u i r e d to p u b l i s h
r e p o r t s of c o n d i t i o n , a r e made s u b j e c t to the general p r o v i s i o n s covering
t h e t a x a t i o n of "banks, and a r e expressly i n h i b i t e d from u s i n g the words
"bank", "banking", " t r u s t " , or " t r u s t company" i n connection with t h e i r
b u s i n e s s , or from making use of any a d v e r t i s i n g or t r a n s a c t i n g b u s i n e s s i n
any manner so a s to c r e a t e the b e l i e f t h a t the b u s i n e s s engaged i n i s
t h a t pf a t r u s t company. These p r o v i s i o n s a r e r e f e r r e d to below.
Banking i n s t i t u t i o n s conducted by "persons" s u b j e c t to examination by S t a t e
Examiner^
The Governor of the S t a t e of South Carolina i s r e q u i r e d to "app o i n t a competent person to examine, from time to time, a s h e r e i n a f t e r
provided, i n t o the a f f a i r s and the c o n d i t i o n of a l l banks and banking
i n s t i t u t i o n s conducted by c o r p o r a t i o n s or persons i n t h i s S t a t e . " (Code
of 1923, s e c . 3977; Banking Law Panphlet, 1928, s e c . 82, p . 4 3 . ) Apparently,
t h i s p r o v i s i o n makes p r i v a t e banks s u b j e c t to examination by the S t a t e
examiner "as h e r e i n a f t e r provided"; but because some of the se " h e r e i n a f t e r
provided" examination p r o v i s i o n s can not be made t o apply to p r i v a t e
bankers, i t would seem t h a t i t was intended t h a t such p r o v i s i o n s should
apply to p r i v a t e banks wherever i t i s p o s s i b l e to make them a p p l i c a b l e and
these a p p l i c a b l e p r o v i s i o n s a r e s e t out beldw.
Duty and power of examiner: r e p o r t of examination.
" I t s h a l l be the duty of such Bank Examiner, and he s h a l l have
power to make a thorough examination into a l l t h e books, papers and a f f a i r s
of the a f o r e s a i d banks and banking i n s t i t u t i o n s , and i n making such examinat i o n s the Examiner s h a l l have a u t h o r i t y to a d m i n i s t e r oaths and to sunmon
and examine any and a l l persons connected with the s a i d banks and banking
i n s t i t u t i o n s , and i f any person in such examination b e f o r e the Bank Examiner
s h a l l t e s t i f y f a l s e l y , he s h a l l b % i n d i c t a b l e as f o r p e r j u r y . The Bank Examiner s h a l l make a f u l l and d e t a i l e d r e p o r t of h i s f i n d i n g s and f i l e the
same i n t h e o f f i c e of the S t a t e Treasurer, and i n t h i s r e p o r t s h a l l be s e t
f o r t h a l l v i o l a t i o n s , i f any, of the banking laws of the S t a t e , and a l s o
such a f u l l summary of the a f f a i r s of the bank as s h a l l be necessary f o r
the p r o t e c t i o n of the r i g h t s of the stockholders, d e p o s i t o r s and c r e d i t o r s
of such bank. I t s h a l l a l s o be the duty of s a i d Bank Examiner to f o r t h w i t h
bring to the a t t e n t i o n of the said banks a l l such v i o l a t i o n s of the banking
laws of t h i s S t a t e and t h a t the same be remedied or d i s c o n t i n u e d . He s h a l l
f u r n i s h a l l banks so examined by him or h i s a s s i s t a n t s with a copy of
s a i d r e p o r t . (Code of 19$2, sec. 3978; Banking Law Pamphlet, 1928, sec.
83, p . 4 . )
Number of examinations r e q u i r e d : f e e s .
"The Bank Examiner s h a l l make,at l e a s t two examinations every
year of a l l the banks and banking i n s t i t u t i o n s in t h i s S t a t e * * * . "
Fees f o r these examinations are to be charged according to the c a p i t a l
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X-6812
333
of the "banks. No bank cati be reqiiifrBd to pay f o r more than two examinat i o n s each y e a r , u n l e s s a d d i t i o n a l examinations a r e necessary "because of
the misoanagement or negligence of a bank's o f f i c e r s i n which cases the
a c t u a l expenses of such a d d i t i o n a l examinations must be p a i d by the bank
examined. The S t a t e Treasurer must hold these f e e s f o r paying the expenses of the S t a t e Examiner and. they a r e payable upon the order of the
S t a t e Bank Examiner, The S t a t e Treasurer mast include i n h i s annual
r e p o r t to the L e g i s l a t u r e an a b s t r a c t of the r e p o r t s made to him by the
S t a t e Bank Examiner, showing the f i n a n c i a l c ondition of the banks examined
by him, and a l s o a schedule of the r e c e i p t s and disbursements connected
with the S t a t e Bank Examiner*s o f f i c e . (Code of 1922, s e c . 3983, as a mended by Acts of 1923, p . 191; Banking Law Pamphlet, 1928, s e c . 85, p . 44).
Examiner may take charge of unsound bank and apply f o r appointment of
receiver.
" I f the S t a t e Bank Examiner s h a l l f i n d t h a t any of the s a i d
banks or banking i n s t i t u t i o n s a r e i n s o l v e n t , or that t h e i r business i s
being so d i s h o n e s t l y and f r a u d u l e n t l y conducted as to j e o p a r d i z e the i n t e r e s t s of the d e p o s i t o r s , c r e d i t o r s or stockholders, - he shall have f u l l power,
upon c o n s u l t a t i o n with the S t a t e Treasurer, to take and r e t a i n p o s s e s s i o n
of a l l the a s s e t s and p r o p e r t y of every d e s c r i p t i o n belonging to such bank
o r banking i n s t i t u t i o n : Provided, He s h a l l have f i r s t a p p l i e d f o r and
obtained an o r d e r to t h i s e f f e c t from a C i r c u i t Judge, e i t h e r r e s i d i n g or
p r e s i d i n g a t the time, i n t h e C i r c u i t i n which such bank or banking i n s t i t u t i o n i s l o c a t e d , two days' n o t i c e of such a p p l i c a t i o n being f i r s t given
tb the Board of D i r e c t o r s of s a i d batik of the a p p l i c a t i o n f o r s a i d o r d e r .
And i t s h a l l be h i s duty, and he i s hereby a u t h o r i z e d and empowered, to
make proper a p p l i c a t i o n to the court f o r the appointment of himself or some
other person a s r e c e i v e r t o wind up and s e t t l e the a f f a i r s of such bank or
banking i n s t i t u t i o n . " (Code of 1922, s e c . 3985; Banking Law Pamphlet, 1928,
s e c . 87, p . 4 6 ) .
Reports of c o n d i t i o n and b u s i n e s s must be published: p e n a l t y f o r f a i l u r e
to publish.
"All i n s t i t u t i o n s doing business i n t h i s S t a t e i n l e n d i n g
money and r e c e i v i n g d e p o s i t s , under Acts of i n c o r p o r a t i o n granted by the
S t a t e , a r e hereby r e q u i r e d , under p e n a l t y of a f o r f e i t u r e of t h e i r c h a r t e r s ,
to p u b l i s h in a newspaper i n the c i t y , town or v i l l a g e where they, or any
branch t h e r e o f , may do business, when and a s c a l l e d f o r by the S t a t e Bank
Examiner, without p r e v i o u s n o t i c e , a c o r r e c t r e p o r t of the c o n d i t i o n and
business of such i n s t i t u t i o n , which r e p o r t Shall contain a statement, under
oath, by the P r e s i d e n t or Cashier of such i n s t i t u t i o n , of the amount of
the c a p i t a l stock p a i d i n , d e p o s i t s , discounts, p r o p e r t y and l i a b i l i t i e s
of said i n s t i t u t i o n , v e r i f i e d by t h r e e of the d i r e c t o r s t h e r e o f .
"Upon failure* of any such i n s t i t u t i o n to p u b l i s h the r e p o r t
r e q u i r e d h e r e i n , t h e Attorney General* on n o t i c e t h e r e o f , s h a l l a t once
take t h e n e c e s s a r y s t e p s t o vacate the c h a r t e r of s a i d i n s t i t u t i o n * This
s e c t i o n s h a l l apply to a l l p r i v a t e banking I n s t i t u t i o n s , whether c h a r t e r e d
or not*" (Code of 1922, sec« 2Bf}Qj Bankii^ Law Pamphlet, 1928, s e c . 60, p .
28
->
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/•
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Taxation.
The laws e x p r e s s l y make p r i v a t e "banks s u b j e c t t o t h e p r o v i s i o n s
covering t h e t a x a t i o n of t h e s h a r e s of s t o c k and r e a l e s t a t e of "banks,
and c o n t a i n d e t a i l e d r e q u i r e m e n t s w i t h r e f e r e n c e to t h e manner of imposi n g such t a x a t i o n . (Code of 1922, s e c . 342, a s amended "by Laws of 1924,
p . 1220, s e c . 366, s e c . 400-403; s e c . 404, as amended "by Laws of 1927,
p . 265, s e c . 405-412, and A c t s approved March 21, 1934, p . 116, Acts of
1924, and A p r i l 14, 1925, p . 294, Laws of 1925; Banking Law Pamphlet,
1928, s e e s . 92-108, p p . 4 9 - 5 5 . ) Taxation of p r i v a t e banking i n s t i t u t i o n s
i s a l s o provided f o r by Chapter 194, Acts of 1925, p . 294.
Use of words "Bank" or "Banking".
" I t s h a l l be u n l a w f u l f o r any p e r s o n or p e r s o n s i n t h i s S t a t e
to u s e t h e words 'Bank' or 'Banking 1 i n connection w i t h any b u s i n e s s ,
c a l l i n g or p u r s u i t , o t h e r t h a n a l e g a l i z e d i n c o r p o r a t e d banking i n s t i t u t i o n . Any p e r s o n or persons v i o l a t i n g the p r o v i s i o n s of t h i s Act s h a l l
be s u b j e c t t o a f i n e of not l e s s than one thousand ($1,000.00) d o l l a r s
and not more t h a n t e n thousand ($10,000.00) d o l l a r s and by imprisonment
not exceeding t e n y e a r s , nor l e s s t h a n one y e a r , i n t h e d i s c r e t i o n of t h e
c o u r t . " (Criminal Code of 1922, s e c . 235; Banking Law Pamphlet, 1928, sec
145, p . 109).
Use of words " t r u s t " or " t r u s t company", or t r a n s a c t i o n of b u s i n e s s as
t r u s t company.
No p e r s o n , a s s o c i a t i o n or f i r m " o t h e r t h a n t r u s t companies c h a r t e r e d under t h e laws of t h e S t a t e of South C a r o l i n a p r i o r t o t h e passage
and approval of t h i s A c t , or o t h e r than a c o r p o r a t i o n a u t h o r i z e d t o do
b u s i n e s s of a t r u s t company and s u b j e c t to t h e s u p e r v i s i o n of t h e S t a t e
Bank Examiner, s h a l l make u s e of t h e words ' t r u s t 1 or ' t r u s t company1
as p a r t of any a r t i f i c i a l or c o r p o r a t e name or title', 11 nor make u s e of
any a d v e r t i s i n g i n d i c a t i n g t h a t t h e b u s i n e s s conducted i s t h a t of a t r u s t
company," nor t r a n s a c t b u s i n e s s i n such way or manner as t o l e a d t h e p u b l i
t o b e l i e v e or a s i n t h e opinion of t h e bank examiner might l e a d t h e p u b l i c
t o b e l i e v e , t h a t h i s or i t s b u s i n e s s i s t h a t of a t r u s t company." A pena l t y i s p r e s c r i b e d f o r a v i o l a t i o n of t h e s e p r o v i s i o n s . (Acts of 1928,
ch. 693, s e c . 24, p . 1283; Banking Law Pamphlet, 1928, s e c . 24, p . 126).
Bank examiner may examine books, e t c . . i n case of v i o l a t i o n of above
provisions.
"The bank examiner s h a l l have a u t h o r i t y to examine t h e a c c o u n t s ,
books and p a p e r s of any p e r s o n , a s s o c i a t i o n , f i r m or c o r p o r a t i o n whom he
has r e a s o n t o s u s p e c t i s v i o l a t i n g the p r o v i s i o n s of t h i s (above) s e c t i o n
and t o summon and examine under o a t h , which he i s empowered t o a d m i n i s t e r ,
any p e r s o n whom he may have r e a s o n t o b e l i e v e has v i o l a t e d or i s a p a r t i c i
pant i n any v i o l a t i o n of t h e p r o v i s i o n s of t h i s s e c t i o n . " (Acts of 1928,
ch. 693, s e c . 24, p . 1283; Banking Law Pamphlet, 1928, s e c . 24, p . 126).
- 102 —
X-68lj3
285
SOUTH DAKOTA..
P r i v a t e banking "business permitted, "but -provisions of "bank a c t made applicable.
I t appears from the following p r o v i s i o n s t h a t a p r i v a t e
"banking "business i s not p r o h i b i t e d , but t h a t where such business i s
engaged i n i t i s s u b j e c t to the sane general p r o v i s i o n s as a r e made app l i c a b l e to i n c o r p o r a t e d banks and t r u s t companies by the bank a c t .
"For the purpose of t h i s chapter every corporation, a s s o c i a t i o n , f i r m CHT i n d i v i d u a l i n t h i s s t a t e whose b u s i n e s s , i n whole or i n
p a r t , c o n s i s t s i n t h e t a k i n g of d e p o s i t s or buying and s e l l i n g exchange
s h a l l be h e l d to be a bank, and as thus d e f i n e d each i n d i v i d u a l s t o c k holder or member of such c o r p o r a t i o n , a s s o c i a t i o n or f i r m , except as to
n a t i o n a l banks, s h a l l be s u b j e c t to the p r o v i s i o n s of t h i s c h a p t e r " .
"This c h a p t e r " covers the o r g a n i z a t i o n and o p e r a t i o n of banking i n s t i t u t i o n s . "Where r e f e r e n c e i n t h i s chapter i s made to banks, t r u s t companies
or the b u s i n e s s of banks or t r u s t companies i n any manner, t h e same s h a l l
be construed a s a p p l y i n g to any such corporation, a s s o c i a t i o n , f i r m or
i n d i v i d u a l so engaged i n b u s i n e s s as d e f i n e d in t h i s s e c t i o n , * * * " .
(South Dakota Revised Code of 1919, sec. 8948; Banking Laws, 1927, s e c .
11
8948, p . 1 5 ) .
* * * no c h a r t e r or a u t h o r i t y to engage i n the banking
business i n t h i s s t a t e s h a l l be issued and no i n d i v i d u a l , c o - p a r t n e r s h i p
or c o r p o r a t i o n s h a l l be p e r m i t t e d to engage i n the banking business
except on C e r t i f i c a t e i s s u e d by the Superintendent of banks upon approval
of the d e p o s i t o r s ' guaranty f u n d commission." (South Dakota Revised Code
of 1919, sec. 8949; Banking Laws 1927, s e c . 8949, p . 15). " I t s h a l l be
unlawful f o r any person to a d v e r t i s e , p u b l i s h or otherwise r e p r e s e n t t h a t
he i s engaged i n the banking business, without f i r s t having obtained
a u t h o r i t y from t h e superintendent of banks as provided i n t h i s c h a p t e r " ,
and a p e n a l t y i s p r e s c r i b e d f o r unauthorized banking. (South Dakota Rev i s e d Code of 1919, s e c . 9000; Banking Laws, 1927, s e c . 9000, p . 3 3 ) ,
3MBSSSE,
Barking b u s in es s may now only be t r a n s a c t e d by c o r p o r a t i o n s . .
The following p r o v i s i o n s of the laws of t h i s State would seem
to r e s t r i c t the r i g h t to o b t a i n the r e q u i s i t e c e r t i f i c a t e to.do a banking
business, a f t e r the passage of the s o - c a l l e d banking act of 1913, ft> a
" c o r p o r a t i o n , f i r m or i n d i v i d u a l " which or who has complied with "the ;
p r o v i s i o n s of the law r e g u l a t i n g the i n c o r p o r a t i o n of banking -corporations" .
"Before any c o r p o r a t i o n , f i r m or i n d i v i d u a l s h a l l open o r com*
mence the t r a n s a c t i o n of b u s i n e s s as a "bank in t h i s State, a f t e r the
passage of t h i s (1913) Act, i t s h a l l f i r s t submit i t s a f f a i r s to an
examination by the Superintendent of Banks, who s h a l l a s c e r t a i n whether
the p r o v i s i o n s of the law r e g u l a t i n g the i n c o r p o r a t i o n of banking corpora
X-6812
236
a t ions havd beeh complied w i t h , and whether t h e f u l l amount of t h e
c a p i t a l stock with which i t proposes to commence doing "business has been
paid i n . I f he s h a l l f i n d t h e s e t h i n g s t o have been p r o p e r l y done, he
s h a l l then i s s u e a c e r t i f i c a t e to the said c o r p o r a t i o n , f i r m or i n d i v i d u a l banker, a u t h o r i z i n g them t o operate and c a r r y on a b u s i n e s s of •
banking." ( P u b l i c Acts of 1913, ch. 20, s e c . 24; Banking Law Pamphlet,
with amendments t o and i n c l u d i n g 1923, sec. 24, p . 22.)
"The p r o v i s i o n s of t h i s Act s h a l l apply to a l l persons and
corporations c a r r y i n g on a banking business i n t h i s S t a t e , except t h a t
the p r o v i s i o n s of t h i s Act s h a l l not apply to n a t i o n a l banks". (Public
Acts of 1913, ch. 20, s e c . 42; Banking Law Pamphlet , with amendments t o
and including 1923, s e c . 42, p. 27.)
"The term or word ' b a n k ' , or ' b a n k s ' , or ' b a n k e r ' , as used i n
t h i s Act, wherever i t may occur i n any p a r t t h e r e o f , s h a l l s i g n i f y , mean,
cover and i n c l u d e every t r u s t company, loan company, mortgage s e c u r i t y
company, s a f e d e p o s i t company, r e c e i v i n g money on d e p o s i t , and every
i n d i v i d u a l , f i r m , c o r p o r a t i o n , a s s o c i a t i o n or company doing a banking,
loan or discount b u s i n e s s and r e c e i v i n g money on deposit a.nd performing
f u n c t i o n s of a bank". (Public Acts of 1913, ch. 20, s e c . 44; Banking
Law Pamphlet, w i t h amendments t o and i n c l u d i n g 1923, s e c . 44, p . 28).
The bank a c t a l s o contains numerous r e f e r e n c e s t o t h e words
"persons", " f i r m s " and " i n d i v i d u a l s " , and, i n some few i n s t a n c e s , the
term " p r i v a t e banker" i s used; f u r t h e r m o r e , the a c t , i n c e r t a i n s e c t i o n s
thereof ( s e c . 10, paragraphs 5 and 15, and sec. 15, paragraph 1 ) , spec i f i c a l l y d i s t i n g u i s h e s between "corporations" and "persons" or "firms"
engaged i n the banking b u s i n e s s i n o u t l i n i n g t h e procedure to be followed
i n complying w i t h the requirements of the r e s p e c t i v e s e c t i o n s , i n d i c a t i n g
t h a t a p r i v a t e banking b u s i n e s s i s a c t u a l l y recognized i n t h i s S t a t e .
In view of t h e p r o v i s i o n s above quoted, however, i t would seem t h a t i t was
intended t h a t t h i s r e c o g n i t i o n should apply only to p r i v a t e bankers who
were t r a n s a c t i n g a banking b u s i n e s s p r i o r t o t h e passage of t h e 1913 bank
a c t , although no such exception i s expressly made i n the a c t i t s e l f .
TEXAS.
P r i v a t e banking b u s i n e s s p e r m i t t e d , but sub.ject t o c e r t a i n p r o v i s i o n s of
law.
" I t i s hereby declared to be the p u b l i c p o l i c y of t h i s S t a t e t h a t
no a d d i t i o n a l p r i v a t e banking i n s t i t u t i o n or business s h a l l be organized
or e s t a b l i s h e d , a f t e r the t a k i n g e f f e c t of t h i s Act, and i t i s hereby
declared t h a t i t s h a l l be unlawful f o r any p e r s o n , a s s o c i a t i o n or persons,
p a r t n e r s h i p s , or t r u s t e e or t r u s t e e s a c t i n g under any common law d e c l a r a t i o n of t r u s t , to h e r e a f t e r organize or e s t a b l i s h , begin or resume t h e
operation of any banking i n s t i t u t i o n or business w i t h i n t h i s S t a t e " , except as provided h e r e i n a f t e r . (Laws of 1923, ch. 185, s e c . 1 ,
X-6812
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a s ?
p . 422; Rev t S t a t e . , 1929, Art) 541.) " I t s h a l l be the duty of p r i v a t e
i n d i v i d u a l s ok* f i r m s engaging i n the banking "business .to use a f t e r the
name under which t h e b u s i n e s s i s conducted, the word i n p a r e n t h e s i s
•Unincorporated', and f a i l u r e t o do so s h a l l s u b j e c t the o f f e n d e r to
a p e n a l t y of one hundred d o l l a r s * * *". (Acts of 1905, S . S . , p . 11;
Rev. S t a t s . , 1925, a r t . 541.)
Advertising.
I t i s u n l a w f u l f o r any p r i v a t e banker "to u s e , a d v e r t i s e or put
f o r t h any s i g n as a bank, t r u s t company, bank and t r u s t company or savings
bank, or to i n any way s o l i c i t or r e c e i v e b u s i n e s s as such, or t o use as
t h e i r name or p a r t of t h e i r name on any s i g n , a d v e r t i s i n g or l e t t e r head
or envelope t h e word bank, banker, banking, banking company, t r u s t , t r u s t
company, bank and t r u s t company, savings bank, savings, or any other term
which may or might be confused with the name of a c o r p o r a t i o n organized
under the g e n e r a l p r o v i s i o n s of the banking laws of t h i s S t a t e . " (Acts of
1925, ch. 148, p . 356; Rev. S t a t s . , 1925, a r t . 541-A.)
Names of persons only can be used i n name.
I t i s unlawful f o r a p r i v a t e bank to adopt or use any a r t i f i c i a l name or bu s i n e s s t i t l e or to use any other than t h e name of t h e p e r son or persons of t h e p r i v a t e bank, i n t h e management, conduct or o p e r a t i o n
of such p r i v a t e bank. (Acts of 1925, ch. 148, p . 356; Rev. S t a t s . , 1925,
a r t . 541-B.)
Funds not to be employed i n s p e c u l a t i v e v e n t u r e s .
No p r i v a t e bank "engaged i n the b u s i n e s s of banking or o p e r a t i n g
a bank of d e p o s i t i n t h i s S t a t e s h a l l employ any p a r t of t h e funds of the
d e p o s i t o r s of such i n s t i t u t i o n i n any s p e c u l a t i v e v e n t u r e or e n t e r p r i s e
owned or promoted by said bank or any of t h e p a r t n e r s , . o f f i c e r s or managers
t h e r e o f . " (Acts of 1923, ch. 185, sec. 3, p. 423; Penal Code, j.925, a r t .
560.)
A f f i d a v i t of solvency r e q u i r e d .
Not l a t e r than January 15th of each y e a r , each p r i v a t e bank i s
r e q u i r e d t o f i l e w i t h the county c l e r k of the county i n which the p r i n c i p a l
p l a c e of b u s i n e s s of the bank i s conducted, an a f f i d a v i t s t a t i n g t h a t t h e
bank i s solvent and has and owns p r o p e r t y and a s s e t s i n t h e S t a t e of Texas
the value of s h i c h i s i n excess of any and a l l of the l i a b i l i t i e s of such
p r i v a t e bank. (Acts of 1923, ch. 185, sec. 4, p . 423; Penal Code, 1925, a r t .
561.)
Statement of ownership r e q u i r e d ; p u b l i c a t i o n o f .
Not l a t e r than January 20th of each y e a r , each p r i v a t e bank i s
r e q u i r e d to f i l e w i t h the county c l e r k of the county i n which i t s p r i n c i p a l
p l a c e of b u s i n e s s i s l o c a t e d , a w r i t t e n sworn statement g i v i n g t h e names of
each person holding or owning any f i n a n c i a l i n t e r e s t i n t h e bank, and a
copy of such statement must be published "in some newspaper of general c i r c u l a t i o n i n s a i d county, i f such newspaper be published w i t h i n s a i d county."
(Acts of 1923, ch. 185, sec. 5, p . 423; Penal Code, 1925, a r t . 562.)
X-6812
R e s t r i c t i o n oh advertisement of r e s p o n s i b i l i t y .
No p r i v a t e bank can a d v e r t i s e i n any manner t h a t i t owns,
p o s s e s s e s or has a f i n a n c i a l r e s p o n s i b i l i t y i n excess of t h e r e a l and
t r u e f i n a n c i a l r e s p o n s i b i l i t y of such bank. The laws d e f i n e t h e term
" f i n a n c i a l r e s p o n s i b i l i t y " t o mean money or r e a l or p e r s o n a l p r o p e r t y
w i t h i n t h e S t a t e . (Acts of 1923, ch. 185, s e c . 8, p . 424; Penal Code,
1925, a r t . 5 6 3 . )
V i o l a t i o n of p r e c e d i n g p r o v i s i o n s ; p e n a l t y .
A v i o l a t i o n of any of t h e p r e c e d i n g p r o v i s i o n s by any p r i v a t e
bank or any member t h e r e o f c o n s t i t u t e s a misdemeanor " p u n i s h a b l e by a
f i n e of not l e s s t h a n one hundred nor more t h a n one thousand d o l l a r s , or
by imprisonment i n j a i l f o r not l e s s t h a n t h i r t y days nor more t h a n
twelve months, or by b o t h such f i n e and imprisonment. Each day s a i d
b u s i n e s s id c a r r i e d on or attempted t o be c a r r i e d on s h a l l be a s e p a r a t e
o f f e n s e . " (Acts of 1923, ch. 185, s e c . 8, p . 424; Penal Code, 1925, a r t .
564.)
Receiving d e p o s i t s w h i l e i n s o l v e n t ; p e n a l t y .
Any p r i v a t e b a n k e r , or any manager, c a s h i e r or o t h e r p e r s o n ,
owning or o p e r a t i n g a p r i v a t e bank, who r e c e i v e s or a s s e n t s t o t h e r e c e p t i o n of any d e p o s i t of money or o t h e r v a l u a b l e t h i n g i n t o t h e bank, or i f
such p r i v a t e bank, manager, c a s h i e r or o t h e r p e r s o n , c r e a t e s or a s s e n t s t o
t h e c r e a t i o n of any d e b t , d e b t s or i n d e b t e d n e s s , i n c o n s i d e r a t i o n or by
r e a s o n of which i n d e b t e d n e s s , any money or v a l u a b l e p r o p e r t y i s r e c e i v e d
i n t o t h e bank, a f t e r knowledge t h a t such banker " i s i n s o l v e n t , or i n
f a i l i n g c i r c u m s t a n c e s , he s h a l l be confined i n ,the p e n i t e n t i a r y not l e s s
than two nor more t h a n t e n y e a r s . " The f a i l u r e of t h e p r i v a t e banker i s
prima f a c i e evidence of knowledge t h a t such banker was i n s o l v e n t or i n
f a i l i n g circumstances when t h e money or p r o p e r t y was r e c e i v e d
' A c t s of
1923, ch. 185, s e c . 7 , p . 424; Penal Code, 1925, a r t . 565.)
Exceptions from above p r o v i s i o n s .
The above p r o v i s i o n s do not apply t o p r i v a t e banks which were
" a c t i v e l y engaged i n t h e o p e r a t i o n of any bank, t r u s t company, bank and
t r u s t company or s a v i n g s bank" a t t h e time t h i s (1925) Act became e f f e c t i v e ;
nor do such p r o v i s i o n s apply to "any bank which may have been i n s u c c e s s f u l
o p e r a t i o n i n t h i s S t a t e f o r twenty y e a r s and s h a l l have suspended o p e r a t i o n s p r i o r t o t h e p a s s a g e of t h i s Act, but which s h a l l resume o p e r a t i o n
w i t h i n twelve months a f t e r t h e passage of t h i s A c t . " The r i g h t to continue
or resume b u s i n e s s " i s hereby e x p r e s s l y r e c o g n i z e d , confirmed and f i x e d . "
These p r o v i s i o n s a l s o do not apply to a p r i v a t e banker "who has f o r a p e r i o d
of one year next p r e c e d i n g t h e d a t e t h a t t h i s Act becomes e f f e c t i v e , and
who, as such, i n t h e course of the l i q u i d a t i o n of any bank or t r u s t company
or bank and t r u s t company w i t h i n t h i s S t a t e , has a c q u i r e d t h e a s s e t s , or
any p a r t t h e r e o f , i n c l u d i n g t h e r e a l e s t a t e used as i t s banking house or
p l a c e of b u s i n e s s and has assumed t h e l i a b i l i t i e s , or a p a r t t h e r e o f of
such l i q u i d a t e d bank or t r u s t company or bank and t r u s t company. " (Acts of
1925, ch. 148, p . 356; Rev. S t a t s . , 1925, a r t . 541-C; Penal Code, 1925, a r t .
566.)
,
X-6812
-106-
"Blue Sky Law1*- not a p p l i c a b l e to p r i v a t e bap3cB,
(The laws of t h i s S t a t e a l s o provide t h a t the s o - c a l l e d H Blue
Slsy Law" s h a l l not apply to p r i v a t e banks. (Rev. S t a t s . , 1925, a r t . 599.)
UTAH.
P r i v a t e banking e x p r e s s l y prohibited'.
The laws of Utah provide t h a t "The e s t a b l i s h i n g or maintenance
of p r i v a t e or p a r t n e r s h i p banks i s hereby expressly p r o h i b i t e d ; provided,
t h a t a l l such banks now i n o p e r a t i o n s h a l l r e t i r e from b u s i n e s s or i n corporate under t h e p r o v i s i o n s of t h i s chapter w i t h i n a p e r i o d of f i v e
years from and a f t e r the approval of t h i s c h a p t e r . " (Act approved March
30, 1911; Compiled Laws of Utah, 1917, T i t l e 19, ch. 6, as amended, sec.
994; Banking Laws, 1927, sec. 994, p . 9 . )
VERMONT.
P r i v a t e banking b u s i n e s s p r o h i b i t e d .
"A p e r s o n , f i r m , a s s o c i a t i o n o r c o r p o r a t i o n , except corporations
r e p o r t i n g t o and under t h e s u p e r v i s i o n of the bank commissioner, s h a l l
not a d v e r t i s e or put f o r t h any sign as a bank, banking a s s o c i a t i o n or
t r u s t company, or i n any way s o l i c i t or r e c e i v e d e p o s i t s or t r a n s a c t b u s i ness as a bank, banking a s s o c i a t i o n or t r u s t company, or use t h e words
' b a n k ' , 'banking a s s o c i a t i o n ' or ' t r u s t company'; but t h i s s e c t i o n s h a l l
not prevent an i n d i v i d u a l , as such, from a c t i n g i n a t r u s t c a p a c i t y . A
person, f i r m , a s s o c i a t i o n or c o r p o r a t i o n s u b j e c t to t h e p r o v i s i o n s of t h i s
s e c t i o n , who v i o l a t e s a p r o v i s i o n t h e r e o f , s h a l l be f i n e d not more than
f i v e hundred d o l l a r s f o r each o f f e n s e . " (General Laws R e l a t i n g t o Banks,
ch. 226, P a r t I I , sec. 5419; Banking Laws, 1918, sec. 5419, p, 31.)
VIRGINIA.
Banking b u s in es s may only be t r a n s a c t e d by c o r p o r a t i o n s ; exceptions.
"No p e r s o n , c o - p a r t n e r s h i p or c o r p o r a t i o n , except c o r p o r a t i o n s duly
c h a r t e r e d and a l r e a d y conducting the business of banking or t r u s t , under
a u t h o r i t y of the law of t h i s S t a t e or the United S t a t e s , or which s h a l l
h e r e a f t e r be i n c o r p o r a t e d under the laws of t h i s S t a t e , or a u t h o r i z e d to
do business under the banking laws of the United S t a t e s , s h a l l engage i n
the business of banking or t r u s t i n t h i s S t a t e ; and no f o r e i g n Corporation
s h a l l do a banking or t r u s t b u s i n e s s i n t h i s S t a t e , except t h a t nothing i n
t h i s chapter s h a l l prevent any person or c o - p a r t n e r s h i p or c o r p o r a t i o n from
lending money on r e a l e s t a t e and personal s e c u r i t y or c o l l a t e r a l , or from
guaranteeing t h e payment of bonds, n o t e s , b i l l s and other o b l i g a t i o n s , or
from purchasing or s e l l i n g a l l stocks and bonds. But t h i s s e c t i o n s h a l l
not apply to or a f f e c t any p r i v a t e banker or f i r m of p r i v a t e bankers who
s h a l l have been engaged i n b u s i n e s s on the f i r s t day of J a n u a r y , Nineteen
Hundred and Ten." ( V i r g i n i a Bank *Act, sec. 3, as amended; ch. 507, Acts
of 1928, p. 1308, as amended by ch. 278, Acts of 1930, p. 7 0 2 . ) . The laws
a l s o contain p r o v i s i o n s p r o h i b i t i n g persons or corporations not l a w f u l l y
X-6812
- 10? engaged i n t h e "business of ba.nld.fig from using a d v e r t i s i n g i n d i c a t i n g t h a t
t h e p l a c e of b u s i n e s s or the "business c a r r i e d on i s t h a t of a "bank or from
u s i n g the word "bank", ""banking", e t c . i n connection w i t h the "business.
( V i r g i n i a Bank Act, sec.
ch. 507, Acts of 1928, p . 1308; Banking Law
Pamphlet, 1929, sec. 4149 ( 4 ) , p. 25.)
P e n a l t y f o r v i o l a t i o n of p r o v i s i o n s .
The laws provide t h a t any person or persons v i o l a t i n g t h e p r o v i s i o n s r e f e r r e d to above " e i t h e r i n d i v i d u a l l y or as an i n t e r e s t e d p a r t y ,
i n any c o - p a r t n e r s h i p or c o r p o r a t i o n , s h a l l "be g u i l t y of a misdemeanor."
( V i r g i n i a Bank Act, s e c . 4; ch. 507, Acts of 1928, p. 1308; Banking Law
Pamphlet, 1929, s e c . 4149 ( 4 ) , p. 25.)
S t a t e Corporation Commission may examine "books, r e c o r d s , e t c . when v i o l a t i o n suspected.
The S t a t e Corporation Commission has a u t h o r i t y t o examine the
accounts, "books and papers of any person or c o - p a r t n e r s h i p whom i t has
reason t o suspect i s doing a "banking "business, i n order to a s c e r t a i n whether
such person or c o - p a r t n e r s h i p lias v i o l a t e d or i s v i o l a t i n g , any p r o v i s i o n
of the "banking a c t . The r e f u s a l to submit such accounts, "books and papers
i s prima f a c i e evidence of a v i o l a t i o n . ( V i r g i n i a Bank Act, Sec. 4;
ch. 507, Acts of 1928, p . 1308; Banking Law Pamphlet, 1929, s e c . 4149 ( 4 ) ,
p . 25.)
WASHINGTON.
P r i v a t e "banking "business a p p a r e n t l y p r o h i b i t e d .
The laws of t h i s s t a t e provide f o r the i n c o r p o r a t i o n of "banks and
t r u s t companies and mutual savings "banks to engage i n t h e "busiress of "banking as d e f i n e d "below. (Laws of 1923, sec. 3, p . 302, Laws of 1999, sec. 2,
p . 93, sec. 3, p . 95, sec. 1, p . 437; Hem. Comp. S t a t s . , 1927 Sapp., s e e s .
3226 and 3229, as amended "by Laws of 1929, s e e s . 2 and 3, pp. 93 and 95,
and sees. 3227 and 3228; Banking Laws, 1929, s e e s . 29-32, pp. 13-16; Laws
of 1915, s e e s . 1 - 5 , pp. 549-552; Rem. Coop. S t a t s . , see. 3313 - 3317; Banking Laws, 1929, s e e s . 145-149, pp. 62-65) The laws, however, axe s i l e n t
with r e f e r e n c e to the o r g a n i z a t i o n or establishment 'of p r i v a t e banks.
The laws f u r t h e r provide t h a t "no person s h a l l engage i n banking
except i n compliance with and s u b j e c t to the p r o v i s i o n s of t h i s (bank) a c t ,
except i t be a n a t i o n a l bank or except i n so f a r as i t may be authorized
so t o do by t h e laws of t h i s s t a t e r e l a t i n g to mutual savings banks, * *
(Laws of 1919, sec. 7, p . 730; Rem. Comp. S t a t s . , sec. 3222; Banking Laws,
1929, sec. 25, p . 1 2 . ) I t would seem, t h e r e f o r e , t h a t t h i s p r o v i s i o n and
the p r o v i s i o n s d i g e s t e d immediately below, coupled with t h e s i l e n c e of the
laws as f a r as t h e o r g a n i z a t i o n of p r i v a t e banks i s concerned, r e s t r i c t
the t r a n s a c t i o n of a banking business to incorporated banks, t r u s t companies
mutual savings banks and n a t i o n a l banks.
D e f i n i t i o n of terms.
"The term 'banking' s h a l l include the s o l i c i t i n g , r e c e i v i n g or
accepting of money or i t s equivalent on deposit as a r e g u l a r b u s i n e s s . "
X-6812
;
241
"The term '"batik' \ where u^ed i n t h i s a c t , u n l e s s a d i f f e r e n t
meaning appeal's from the context) means any c o r p o r a t i o n organized under
the laws of t h i s s t a t e engaged i n hanking, other than a t r u s t company,
or a mutual savings bank."
"The term 'person 1 where used i n t h i s a c t , u n l e s s a d i f f e r e n t
meaning appears from t h e c o n t e x t , includes a p e r s o n , f i r m , a s s o c i a t i o n ,
p a r t n e r s h i p and c o r p o r a t i o n , and the p l u r a l t h e r e o f , whether r e s i d e n t ,
n o n - r e s i d e n t , c i t i z e n or n o t . " (Laws of 1917, sec. 14, p . 375; Rem. Comp.
S t a t s . , s e c . 3221; Banking Laws, 1929, sec. 24, p . 1 1 . )
Use of word "hank". e t c . , and c e r t a i n other a d v e r t i s i n g ; p e n a l t y f o r
unauthorized u s e .
The laws a l s o contain t h e requirement t h a t the name of every hank
s h a l l contain the word "hank", hut provide t h a t only a n a t i o n a l t a n k , a
hank or t r u s t company authorized by the laws of Washington, or a f o r e i g n
c o r p o r a t i o n , a u t h o r i z e d by the bank a c t , s h a l l use t h i s word or the words
"banking", "banker" or " t r u s t " , or other a d v e r t i s i n g i n d i c a t i n g t h a t a
banking b u s i n e s s i s being c a r r i e d on* "Every person who, * * * v i o l a t e
any p r o v i s i o n of t h i s s e c t i o n s h a l l be g u i l t y of a g r a s s misdemeanor".
(Laws of 1925, Ex. Sess. , s e c . 1, p . 177; Rem. Comp. S t a t s . , 1927 Supp.,
sec. 3225; Banking Laws, 1929, sec. 28, p . 13.)
WEST VIRGINIA.
P r i v a t e banking b u s i n e s s p r o h i b i t e d .
"No p e r s o n , p e r s o n s , c o r p o r a t i o n or corporations doing b u s i n e s s i n
t h i s S t a t e , except a banking i n s t i t u t i o n c h a r t e r e d and organized under the
p r o v i s i o n s of t h i s a r t i c l e and a r t i c l e one of t h i s c h a p t e r , and except a
banking a s s o c i a t i o n c h a r t e r e d under a c t s of the congress of the United S t a t e ? ,
s h a l l use i n connection with such b u s i n e s s , or as a d e s i g n a t i o n or t i t l e ,
the term "bank,'" "banker", "banking", "banking company", "tanking a s s o c i a t i o n ' '
"savings bank", or " t r u s t company"; or engage i n the banking busine ss a s
d e f i n e d i n s e c t i o n s s i x and seven of t h i s a r t i c l e , or hold h i m s e l f , themselves
or i t s e l f out a s engaged i n any such b u s i n e s s .
"Any person or c o r p o r a t i o n and/or o f f i c e r or d i r e c t o r of any
corporation v i o l a t i n g any of the p r o v i s i o n s of t h i s s e c t i o n s h a l l be deemed
g u i l t y of a misdemeanor, and, on conviction t h e r e o f , s h a l l be f i n e d not more
than one thousand d o l l a r s ; and a t the d i s c r e t i o n of the court any i n d i v i d u a l
so o f f e n d i n g s h a l l be imprisoned i n the county j a i l f o r a p e r i o d not exceeding
s i x months, or both f i n e d and imprisoned, w i t h i n such l i m i t s . " (Section 2,
A r t i c l e 4, Chapter 31, Code of 1931; 1905, c . 45; 1907, c . 79; 1913, c. 21;
1919, c . 60; Code 1923, c. 54, s e c t i o n 78; 1925, c. 34; 1929, c . 23, Section
1)".
"No c o r p o r a t i o n c h a r t e r e d under the laws of t h i s S t a t e , or of any
other s t a t e , t e r r i t o r y or s o v e r e i g n t y , except banking a s s o c i a t i o n s chartered
under the laws of t h e United S t a t e s of America, and banking i n s t i t u t i o n s
chartered under t h e laws of t h i s S t a t e , as d e f i n e d i n t h i s a r t i c l e , and no
person, p a r t n e r s h i p or a s s o c i a t i o n of persons as a t r u s t , or other
X-6812
- 109o r g a n i z a t i o n , s h a l l engage i n the "business of banking i n the S t a t e of West
V i r g i n i a , or s h a l l r e c e i v e or accept d e p o s i t s of money, or "borrow money by
r e c e i v i n g and g i v i n g c r e d i t s f o r d e p o s i t s , or by i s s u i n g c e r t i f i c a t e s of
deposit or c e r t i f i c a t e s of indebtedness, or by making and n e g o t i a t i n g any
w r i t i n g p u r p o r t i n g to be a bond, c o n t r a c t , or other o b l i g a t i o n , the p e r formance of which r e q u i r e s the holder or other p a r t y to make d e p o s i t s of
money with t h e i s s u e r , or by means of any other p l a n , . p r e t e x t , scheme,
s h i f t or d e v i c e .
"Nothing contained i n t h i s s e c t i o n s h a l l a f f e c t the r i g h t s , p r i v i l e g e s , o b j e c t s or purposes delegated to other corporations by t h e general
corporation law or other laws of t h i s S t a t e .
"Any c o r p o r a t i o n or i n d i v i d u a l who v i o l a t e s any of t h e p r o v i s i o n s
of t h i s s e c t i o n s h a l l be g u i l t y . o f a misdemeanor, and, upon conviction s h a l l
be f i n e d not more than f i v e thousand d o l l a r s , and, i n a d d i t i o n to such
p e n a l t y , every c o r p o r a t i o n so o f f e n d i n g s h a l l f o r f e i t i t s c o r p o r a t e f r a n c h i s e , and every i n d i v i d u a l so offending s h a l l be s u b j e c t t o a f u r t h e r
p e n a l t y by confinement i n j a i l f o r not more than one y e a r . " (Section 18,
A r t i c l e 4, Chapter 31, Code of 1931; 1903, c. 8; 1919, c . 80; 1921, c. 126;
Code 1923, c. 54C, Sections 12, 14; 1925, c. 33; 1929, c. 23, Section 1 0 ) . "
** 110 •*
X-6812
wig cons n r .
Banking "business may only "be t r a n s a c t e d "by c o r p o r a t i o n .
" I t s h a l l "be u n l a w f u l f o r any person, c o p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n t o do a "banking "business without having "been r e g u l a r l y o r g a n i z e d and c h a r t e r e d as a n a t i o n a l "bank, a s t a t e "bank, a mutual
savings "bank, or a t r u s t company "bank." (Wisconsin S t a t u t e s , ch. 224,
s e c . 224.03; Banking Laws, i n c l u d i n g amendments of 1927, s e c . 224.03, p . 6 3 . )
D e f i n i t i o n of term ""bank".
" The term '"bank', as used i n t h i s c h a p t e r , s h a l l "be c o n s t r u e d
to mean any i n c o r p o r a t e d "banking i n s t i t u t i o n which s h a l l have "been i n c o r p o r a t e d under the laws of t h i s s t a t e a s they e x i s t e d p r i o r to toe p a s sage of t h i s c h a p t e r , and to such "banking i n s t i t u t i o n s a s s h a l l h e r e a f t e r
"become i n c o r p o r a t e d under t h e p r o v i s i o n s of t h i s c h a p t e r . " (Wisconsin
S t a t u t e s , s e c . 224.01; Banking Laws, i n c l u d i n g amendments of 1927, s e c .
224.01. p . 6 3 . )
P e n a l t y f o r u n l a w f u l "banking.
"Any p e r s o n or p e r s o n s v i o l a t i n g any of the p r o v i s i o n s of * * *
( t h e ) s e c t i o n ( f i r s t above quoted), e i t h e r i n d i v i d u a l l y or a s an i n t e r e s t e d
p a r t y i n any c o p a r t n e r s h i p , a s s o c i a t i o n , or c o r p o r a t i o n s h a l l "be g u i l t y of
a misdemeanor and on c o n v i c t i o n t h e r e o f s h a l l "be f i n e d i n a sum not l e s s
t h a n t h r e e hundred d o l l a r s nor more than one thousand d o l l a r s , or "by imprisonment i n the county j a i l not l e s s than s i x t y days nor more t h a n one
y e a r , or "by "both such f i n e and. imprisonment." (Wisconsin S t a t u t e s , s e c .
224.03; Banking Laws, i n c l u d i n g amendments of 1927, s e c . 224.03, p . 6 3 ) .
WYOMING.
Banking "business may only "be t r a n s a c t e d "by c o r p o r a t i o n s .
I n order to t r a n s a c t a banking b u s i n e s s a s d e f i n e d below, t h e
laws of t h i s S t a t e p r o v i d e f o r t h e i n c o r p o r a t i o n of banks, s a v i n g s banks,
l o a n and t r u s t companies and t r u s t company banks, (Laws of 1925, ch*
157, s e e s . 3 , 55 , 69 and 75; Banking Laws, w i t h 1927 amendments, sec# 3, p .
11, s e c . 55, p . 22, s e c . 69, p . 26 and s e c . 75, p . 2 8 . ) The law a l s o p r o v i d e s t h a t "Uo p e r s o n , f i r m o r c o r p o r a t i o n (except n a t i o n a l banks) s h a l l
c a r r y on a banking b u s i n e s s except i n compliance w i t h the p r o v i s i o n s of
t h i s (bank) a c t . " (Laws of 1925, c h . 157, s e c . 11; Banking l a w s , w i t h 1927
amendments, s e c . - l l , p . 13) I t i s f u r t h e r p r o v i d e d t h a t " i t -shall- b » u n l a w f u l f o r any p e r s o n o r p e r s o n s , c o - p a r t n e r s h i p or a s s o c i a t i o n to t r a n s a c t
the b u s i n e s s of a savings bank, * * * u n l e s s such p e r s o n , company or a s s o c i a t i o n h a s been duly i n c o r p o r a t e d under t h i s a c t ; * * * . " (Laws o f /
1925, ch. 157, s e c . 68; Banking Laws, with 1927 amendments, s e c . 68, p . 2 6 . )
Scope" of Bank Act.
/
I
•
"Every bank, banker or c o r p o r a t i o n i n t h i s S t a t e doing a jBariking
- I l l •-
X-6812
"business under the p r o v i s i o n s of t h i s (bank) Act, s h a l l he known as a
S t a t e hank; and any and a l l r e f e r e n c e h e r e i n made to t h i s Act to s t a t e
hanks s h a l l apply to every i n d i v i d u a l , firm or c o r p o r a t i o n doing a
hanking b u s i n e s s under the p r o v i s i o n s of t h i s Act. " (Act of February
15, 1539, s e c . 1; Laws of 1939, oh. 54, sec. 1 . )
D e f i n i t i o n of bank and banking b u s i n e s s .
"Any person, f i r m or corporation (except n a t i o n a l banks) having
a place of b u s i n e s s w i t h i n t h i s State where c r e d i t s a r e opened by the
deposit or c o l l e c t i o n of money or currency or n e g o t i a b l e paper s u b j e c t to
be p a i d or r e m i t t e d upon d r a f t , r e c e i p t , check, or o r d e r , s h a l l be regarded
a s a bank or banker, and as doing a banking business under the p r o v i s i o n s
of t h i s Act. " (Laws of 1925, ch. 157, sec. 10; Banking Laws, with 1927
amendments, sec. 10, p . 1 3 . )
R e s t r i c t i o n a g a i n s t use of c e r t a i n a d v e r t i s i n g .
"No person, persons, firm or c o r p o r a t i o n s h a l l a d v e r t i s e , issue
or c i r c u l a t e any card or o t h e r papers, or e x h i b i t any sign using e i t h e r
or any of the terms ' b a n k ' , ' b a n k e r ' , 'banking h o u s e ' , or 1 t r u s t company',
u n t i l they have f u l l y complied with the p r o v i s i o n s of t h i s Act; provided,
t h a t the term ' t r u s t company' may be used by a person, f i r m or c o r p o r a t i o n
when the b u s i n e s s t r a n s a c t e d i s i n no sense a banking b u s i n e s s . " (Laws of
1925, ch. 157, s e c . 11; Banking Laws, with 1927 amendments, sec. 11, p . 13.)
" I t s h a l l be unlawful f o r any person or persons, copartnership or a s s o c i a t i o n * * * to assume the name of a savings bank or a s s o c i a t i o n , u n l e s s
such person, company or a s s o c i a t i o n has been duly incorporated under t h i s
Act; * * *". (Laws of 1925, ch. 157, sec. 68; Banking Laws, with 1927
amendments, sec. 68, p . 26)
Penalty f o r unlawful banking or a d v e r t i s i n g .
Any person, f i r m or corporation v i o l a t i n g any of the above
p r o v i s i o n s s h a l l be deemed g u i l t y of a misdemeanor, and upon conviction
s h a l l be s u b j e c t to c e r t a i n p r e s c r i b e d p e n a l t i e s . (Laws of 1925, ch. 157,
s e e s . 12 and 68; Banking Laws, with 1927 amendments, s e e s . 12 and 68, pp.
13 and 2 6 ) .
C 0 $> t
X-6813.
FEDERAL RESERVE BASK 0? RICHMOND
February 4 , 1931,
F e d e r a l Seserve Board,
Washington, D. G»
A t t e n t i o n Mr . Walter H y a t t , General Counsel.
Dear Mr. Wyattj
I enclose herewith two copies of a complaint i n an a c t i o n of
W. I* Skinner and Company v . Federal Reserve Bank of Richmond and W. P .
Wright, Receiver of t h e National Bank of G r e e n v i l l e , N. C. While the
complaint does not contain a complete d e s c r i p t i o n of the check upon which
i t i s "based, i t appears from our records t h a t on December 8, 1930, we r e ceived from t h e F i r s t and Merchants National Bank a check f o r $4,748.53
drawn on the National Bank of G r e e n v i l l e . This check was sent to the
drawee frank i n our cash l e t t e r of t h e date mentioned, which contained checks
aggregating $27,289.01. The checks i n t h i s cash l e t t e r with the exception
of those r e t u r n e d were cancelled and charged to the drawers on December 9th
and the National Bank of G r e e n v i l l e sent u s the u s u a l s l i p or r e c e i p t d i r e c t i n g u s to charge i t s r e s e r v e accnmit with t h e sum of $27,234.28, which
was the amount of the checks contained i n our cash l e t t e r l e s s a few checks
r e t u r n e d unpaid. The check mentioned i n the complaint was not r e t u r n e d
unpaid.
The above mentioned a u t h o r i t y to charge was received by us on
December 10th, probably a t or about the opening of b u s i n e s s . At the opening of b u s i n e s s on December 10th the National Bank of Greenville had an
a p p a r e n t l y a v a i l a b l e balance i n i t s r e s e r v e account of $17,903.96.
No
a c t i o n was taken on the a u t h o r i t y t o charge i t s r e s e r v e account with the
l e t t e r of December 8th because the account was not s u f f i c i e n t to cover the
charge. During the day of December 10th we r e c e i v e d c e r t a i n t r a n s f e r s and
c r e d i t s f o r the account of the National Bank of G r e e n v i l l e which t o t a l e d
$8,820.43.
$8,000.00 of t h i s sum appears to have been a c r e d i t made to
the account of t h e National Bank of Greenville by a wire t r a n s f e r ; $818.93
appears to have been the proceeds of a cash l e t t e r deposited by t h e National
Bank of Greenville which became a v a i l a b l e on t h a t day; and $1.50 appears
t o have been a c r e d i t f o r an exchange charge.
At 1:00 P . M. on December 10th we r e c e i v e d a telegram s e n t from
Greenville a t 12:58 P . M. advising us t h a t the National Bank of Greenville
was closedE. When t h i s telegram was received we had not charged i t s account
with the amount of the cash l e t t e r of December 8th and t h e r e f o r e d i d not
do so but charged the amount of these checks back t o our endorsing banks i n
the u s u a l nay.
-
2
-
X-6813
Subsequent to the f a i l u r e of the National Bank of G r e e n v i l l e
a few returned, items were charged to t h e reserve account, "bat the amount
of such r e t u r n items was not l a r g e and we a t p r e s e n t hold a r e s e r v e "balance
of $26,625.00.
The National Bank of Greenville had r e d i s c o u n t e d n o t e s w i t h , u s
g r e a t l y exceeding the amount of the reserve "balance and we - had taken no
marginal c o l l a t e r a l a s i t s borrowings had not exceeded i t s "basic l i n e *
The complaint i n t h i s a c t i o n i s as you w i l l see r a t h e r informal
and does not i n d i c a t e c l e a r l y the exact theory of l i a b i l i t y upon which
the p l a i n t i f f i n t e n d s t o r e l y . The a t t o r n e y s who a r e b r i n g i n g a c t i o n , howe v e r , have a v e r y good r e p u t a t i o n , and I am i n c l i n e d to t h i n k t h a t they
a r e basing t h e i r claim both upon the s o - c a l l e d Malloy case and the d e c i s i o n
i n the E a r l y c a s e . I expect to w r i t e to them and c a l l t h e i r a t t e n t i o n to
the f a c t t h a t t h e Regulations of the Federal Reserve Board and our c i r c u l a r s have been r a d i c a l l y a l t e r e d since those d e c i s i o n s ; b u t my p a s t e x p e r i ence with lawyers i n North Carolina gives me l i t t l e reason t o hope t h a t
they w i l l withdraw t h i s s u i t b e f o r e a t r i a l . They did not w r i t e to us bef o r e i n s t i t u t i n g the s u i t and so I d i d not have an opportunity to c a l l
t h e i r a t t e n t i o n t o our d e f e n s e s .
I t seems v e r y probable t h a t t h i s case w i l l e v e n t u a l l y depend
upon the d e t e r m i n a t i o n of the v a l i d i t y of Regulation J , S e r i e s of 1930,
and may t h e r e f o r e be a case of f a r - r e a c h i n g importance t o a l l F e d e r a l r e serve banks.
There a r e , of course, many circumstances which make i t unf o r t u n a t e t h a t t h i s s u i t should be brought i n t h i s d i s t r i c t . I e n t e r t a i n
no doubt of the v a l i d i t y of the p r e s e n t form of Regulation J, but having
cvr ''past?! to l i v e down, my arguments may be somewhat discounted by the
c o u r t . I f t h i s case i s removed to a f e d e r a l c o u r t , the C i r c u i t Court of
Appeals of t h i s c i r c u i t w i l l n a t u r a l l y be on the a l e r t f o r any reasons
which may enable i t to follow i t s own d e c i s i o n . I f we leave the case i n
the s t a t e c o u r t , the s t a t e court of North Carolina may be l i k e w i s e i n c l i n e d
to follow the C i r c u i t Court of Appeals and the Supreme Court of the United
S t a t e s to the same r e s u l t as t h a t reached i n the E a r l y case without regard
to the change in«the r e g u l a t i o n s .
We, of course, could not determine whether or not t h i s s u i t
should be removed to a f e d e r a l c o u r t as i t could .only be removed on motion
of the r e c e i v e r . Of course, i n t h i s case the r e c e i v e r of the f a i l e d bank
and the Federal Reserve Bank would have a common i n t e r e s t and I should be
disposed to u n i t e i n any move made by the r e c e i v e r ; but because the case
seems important and has some i n t e r e s t i n g angles b e s i d e s the bare questions
of law involved, I am immediately t r a n s m i t t i n g to you a copy of the comp l a i n t i n order t h a t you might study i t c a r e f u l l y . I t i s , of course,
—»
3
-
XS813
unnecessary f o r me t o say t h a t any suggestions from you would "be h i g h l y
a p p r e c i a t e d , and i f you consider i t wise to send copies of the complaint
to Counsel f o r o t h e r Federal r e s e r v e hanks and ask t h e i r opinion as to
whether o r , n o t t h i s l i t i g a t i o n should he handled a s a System m a t t e r , i t
would he e n t i r e l y agreeable to me to have you do so*
With k i n d e s t r e g a r d s , I am
Very t r u l y yours t
(s)
M. G. WALLACE
Counsel.
rs
( COPY )
X-6813-a
NORTH CAROLINA
W THE" SUPERIOR COURT
MARTIN COUNTY
W. I . SKINNER & COMPANY, INCORPORATED
COMPLAINT
vs
FEDERAL RESERVE BANK OF RICHMOND, VIRGINIA, NATIONAL BANK OF GREENVILLE, AND
W. P . WRIGHT, RECEIVER OF NATIONAL BANK
OF GREEUVlLLfi
P l a i n t i f f , complaining of d e f e n d a n t s , a l l e g e s
and says:
1;
P l a i n t i f f i s a corporation* duly organized
under the laws of the S t a t e of Delaware, doing b u s i n e s s in the S t a t e
of North Carolina, with an o f f i c e a t Williamston in s a i d S t a t e .
2:
Defendant Federal Reserve Bank of Richmond,
V i r g i n i a , i s a c o r p o r a t i o n , organized under the laws of t h e United
S t a t e s of America, doing b u s i n e ss i n North Carolina, with an o f f i c e
at Charlotte.
3fc
Defendant National Bank of G r e e n v i l l e i s a
banking c o r p o r a t i o n , organized under the laws of the United S t a t e s ,
and W. P. Wright has been appointed a s Receiver f o r i t .
4;
On December 6, 1930, p l a i n t i f f deposited f o r
c o l l e c t i o n with Branch Banking & Trust Company, a banking c o r p o r a t i o n
organized under the laws of the S t a t e of North Carolina, a t Williamston, North Carolina, a check drawn by P e r s o n - G a r r e t t Company, a Virg i n i a c o r p o r a t i o n , on i t s account in National Bank of G r e e n v i l l e .
— 2 —
5:
X-6813-a
As p l a i n t i f f i s advised and b e l i e v e s , the
Branch Banking & Trust Company promptly t r a n s m i t t e d s a i d check to
F i r s t & Merchants National BaAk of Richmond f o r c o l l e c t i o n as
agent f o r p l a i n t i f f , and i t , as agent f o r p l a i n t i f f , sent s a i d check
to t h e Federal Reserve Bank of Richmond to be by i t c o l l e c t e d a s
agent f o r p l a i n t i f f .
6:
As p l a i n t i f f i s advised and b e l i e v e s , Fed-
e r a l Reserve Bank of Richmond on December 8, 1930, mailed s a i d check
d i r e c t to t h e n a t i o n a l Bank of Greenville f o r c o l l e c t i o n *and payment, but c a r e l e s s l y and n e g l i g e n t l y f a i l e d to r e q u i r e a s a condition
precedent to t h e surrender and c a n c e l l a t i o n of s a i d check t h a t t h e
National Bank of G r e e n v i l l e should r e c e i v e and t r a n s m i t only money
in payment of s a i d check.
7:
As p l a i n t i f f i s advised and b e l i e v e s , Na-
t i o n a l Bank of G r e e n v i l l e was insolvent when Federal Reserve Bank
of Richmond mailed to i t the check of Per son-Garrett Company, which
f a c t was o r should have been known to the Federal Reserve Bank of
Richmond.
8:
As p l a i n t i f f i s advised and b e l i e v e s , National
Bank of G r e e n v i l l e upon r e c e i p t of the check given by P e r s o n - G a r r e t t
Company to p l a i n t i f f c a n c e l l e d s a i d check and charged the same to the
account of P e r s o n - G a r r e t t Company, but due to t h e c a r e l e s s and n e g l i gent f a i l u r e of defendant Federal Reserve Bank of Richmond to r e q u i r e
only money to be t r a n s m i t t e d in payment of s a i d check, mailed to Fede r a l Reserve Bank of Richmond on December 9, 1930, a check o r l e t t e r
a u t h o r i z i n g Federal Reserve Bank of Richmond to charge t h e amount of
- 3 —
X-6813-a
the check given p l a i n t i f f to the account of the National Bank of
Greenville with Federal Reserve Bank of Richmond.
9;
i s p l a i n t i f f i s advised and "believes, de-
fendant Federal Reserve Bank, on December 10, 1930, r e c e i v e d the
check or o r d e r from t h e National Bank of Greenville d i r e c t i n g Fede r a l Reserve Bank to charge to the account of National Bank of Greenv i l l e the amount of the check given p l a i n t i f f "by P e r s o n - G a r r e t t
Company, "but defendant Federal Reserve Bank wrongfully r e f u s e d to
honor and pay s a i d check or other order of the National Bank of
G r e e n v i l l e , although, as p l a i n t i f f i s advised and b e l i e v e s , Nationa l Bank of G r e e n v i l l e had on deposit and to i t s c r e d i t with the Fede r a l Reserve Bank of Richmond a t the time said check or order was
drawn and mailed a sum more than s u f f i c i e n t to pay s a i d check or
order.
10;
As p l a i n t i f f i s advised and b e l i e v e s , de-
fendant Federal Reserve Bank of Richmond had made loans or r e d i s counted n o t e s f o r National Bank of G r e e n v i l l e , none of which were due
when National Bank of G r e e n v i l l e mailed i t s check or order to t h e Fede r a l Reserve Bank of Richmond, nor were any of s a i d n o t e s due when
Federal Reserve Bank of Richmond received said check or o r d e r ,
as p l a i n t i f f i s advised and b e l i e v e s , b u t Federal Reserve Bank, as
p l a i n t i f f i s advised and b e l i e v e s , on the same day t h a t i t r e c e i v e d
the check or order of National Bank of G r e e n v i l l e , charged a g a i n s t
the account or deposit owing to National Bank of G r e e n v i l l e the
n o t e s given i t by National Bank of Greenville or papers which had
been r e - d i s c o u n t e d f o r National Bank of G r e e n v i l l e , t h e r e b y causing an o v e r - d r a f t in the account of National Bank of G r e e n v i l l e
P
- 4 -
X-3813-a
with Federal Reserve Bank, or reducing the same to a sum i n s u f f i c i e n t
to pay the check or o r d # sent by National Batik 6f G r e e n v i l l e to
Federal He serve Bank.
Hi
As p l a i n t i f f i s advised and b e l i e v e s , de-
fendant Federal Reserve Bank has in hand c o l l a t e r a l s a n d n o t e s more
than s u f f i c i e n t to discharge and pay any sums "borrowed from i t by
National Bank of G r e e n v i l l e or r e - d i s c o u n t e d with i t by National
Bank of G r e e n v i l l e , and, as p l ' i n t i f f i s advised and b e l i e v e s , the
a c t of defendant Federal Reserve Bank in chrrging a g a i n s t s a i d dep o s i t the n o t e s given by Rational Bank of G r e e n v i l l e or r e - d i s c o u n t e d
by i t was wrongful and u n l a w f u l , or i f Federal Reserve Bank had the
r i g h t to charge the amount owing to i t a g a i n s t the d e p o s i t of Nationa l Bank of G r e e n v i l l e , p l a i n t i f f , as i t i s advised and b e l i e v e s , i s
subrogated to t h e r i g h t s of Federal Reserve Bank of Richmond to the
c o l l a t e r a l and o t h e r papers h e l d by i t .
12$
As p l a i n t i f f i s advised and b e l i e v e s , the
defendants National Bank of Greenville and W. P. Wright, as Receiver,
claim and a s s e r t some i n t e r e s t in said c o l l a t e r a l s or make some cont e n t i o n with r e s p e c t to t h e moneys on deposit with the Federal Reserve Bank of Richmond, which r i g h t s , i f any, a r e s u b o r d i n a t e to the
r i g h t s of the p l a i n t i f f .
WHEREFORE p l a i n t i f f prays t h a t i t recover of def e n d a n t Federal Reserve Bank of Richmond the sum of $4,748.53, with
i n t e r e s t , and t h a t the amount owing to i t be declared s u p e r i o r to
any claims which defendant National Bank of G r e e n v i l l e or W. P. Wright,
as Receiver of s a i d Bank, may have a g a i n s t the Federal Reserve Bank
of Richmond; f o r c o s t s and such o t h e r and f u r t h e r r e l i e f as to t h e
'
X-6813-a
— 5 ~
Court may seem p r o p e r ,
(sgd)
MacLean & Rodman
Attorneys
NORTH CAROLINA
MAHTIN COTOTY
J . E. King, being duly sworn, says: That he i s
P r e s i d e n t of W, I . Skinner & Company, Incorporated, t h e above named
plaintiff;
t h a t the f o r e g o i n g complaint i s t r u e of h i s own knowledge
except a s to those m a t t e r s t h e r e i n s t a t e d upon information and b e l i e f , and a s to those, he b e l i e v e s i t to be t r u e .
(sgd)
J . S. King
Subscribed and sworn to b e f o r e me
t h i s January
(sgd)
28
, 1931.
C. D. Carstarphen
Notary P u b l i c
My Commission Expires
FEDERAL RESERVE BOARD
WASHINGTON
X-6814
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
February 11, 1931
SUBJECT;
Code word to cover t e l e g r a p h i c t r a n s a c t i o n s
In Treasury B i l l s .
Dear S i r :
In connection with t e l e g r a p h i c t r a n s a c t i o n s in
Government s e c u r i t i e s between Federal r e s e r v e banks, the
f o l l o w i n g code word has been designated to cover new i s s u e
of Treasury B i l l s , a s f o l l o w s :
"IvOXBADY11
S e r i e s dated February 16,
1931 and maturing May 18 ,
1931.
This word should be i n s e r t e d in the Federal Reserve Telegraph Code book, following the supplemental
code word "M0XAIMI2TG", on page 172.
Very t r u l y yours,
J . C. Noell,
Assistant Secretary.
TO GOVERNORS OF ALL F.R.BAMKS
f
*-6817
SE1
254
February 10, 1931.
Mr. M . Gr. Wallace, Counsel,
Federal Reserve Bank,
Richmond, V i r g i n i a .
Ity dear Mr. Wallace:
Although I have a l r e a d y communicated with you by wire, I
d e s i r e f o r m a l l y to acknowledge r e c e i p t of your l e t t e r s of January 29,
February 2, February 5 and February 6, with r e f e r e n c e to t h e Attmore
case and the Lucas case and to thank you f o r your c o u r t e s y i n keeping
me so f u l l y informed of a l l important developments i n these c a s e s , I
a l s o wish to c o n g r a t u l a t e you upon your success i n having the a f f i r m a t i v e defenses s t r i c k e n from the answer i n the Attmore c a s e .
In view of the c o u r t ' s a c t i o n i n s t r i k i n g the a f f i r m a t i v e
defenses i n t h e Attmore case, I assume t h a t i t w i l l a l s o s t r i k e t h e a f f i r m a t i v e defenses s e t up I n the answers i n s e v e r a l s i m i l a r s t i l t s now
pasding.
While the g r a n t i n g of your motion t o s t r i k e i n the Attmore
case deprives t h a t case of all System Ii^pQrtaafie, u n l e s s the defendant
a p p e a l s , i t i s c l e a r tiiai the fiiirt'g of the Lucas suit., n&ich r a i s e s
most of the questions r a i s e d
the a f f i r m a t i v e defenses i n the Attmore
case and a l s o r a i s e s -additional <jjfuti!avians of importance to the Federal
Reserve System, j u s t i f i e s our for&s^ghi I h deciding to handle the Att**
more case and r e l a t e d l i t i g a t i o n a s a Syiiejh matter &,nd i n r e t a i n i n g Mr#
Baker to r e p r e s e n t -all F e d e r a l reserve b a h k s / j p i n t i y i n such l i t i g a t i o n ,
I p e r s o n a l l y b e l i e v e t h a t t h i s i s going t o d ^ v i i A i n t o some of the most
important l i t i g a t i o n He have ever had and $ h a i .f$ &iH : s e t t l e s e v e r a l i m p o r t a n t q u e s t i o n s about which the^e,ha6;b#eW
.. of dpiflion f o r
many y e a r s , the p r i n c i p a l qtteitidn oilthW r i ^ h i W
r e s e r v e bank
to take marginal c o l l a t e r a l .
Ifed&reJt
*
' ' "
'
.
.
T&e f i r s t q u e s t i o n t o be d t i i d e d , of,dou^|#i j.6 #hbth4r t h e
Lucas case should be removed to the Federal Court4.. 6ft t h a t question, a s
I wired you on February 7, 1 f e e l that* notwithstanding the views of the
O f f i c e of the Comptroller of the Currency with r e f e r e n c e t o . l o c a l condit i o n s , the arguments i n f a v o r of removal contained i n your l e t t e r to Mr.
Baker a r e p r a c t i c a l l y c o n c l u s i v e , f e c e r t a i n l y cannot a f f o r d t o t r y t h i s
case b e f o r e a j u r y i f we can avoid ^ t ; and I b e l i e v e we can avoid i t by
removing i t to the Federal c o u r t , because I think i t c l e a r l y i s remova b l e t o the Federal bourt and w i l l be t r e a t e d t h e r e a s a s u i t of e q u i t y .
Had i t not been f o r t h e views of the C o m p t r o l l e r ' s O f f i c e about
l o c a l c o n d i t i o n s , I would not have h e s i t a t e d f o f a moment to recommend
t h a t you remove the case to t h e Federal c o u r t . In view of the f e e l i x g
of Messrs. Await and Barse about the general s i t u a t i o n in t h a t d i s t r i c t ,
i 355
-
2 -
X-6817
and in view of t h e f a c t t h a t t h e r e c e i v e r w i l l u l t i m a t e l y have to be
made a p a r t y in t h e cfilae and probably w i l l have the bhief p e c u n i a r y i n t e r e s t i n t h e outcome of t h e c a s e , however, t h e e i t a t s d ; t o tiake such ar . .
recommendation without f i r s t c o n s u l t i n g t h e r e p r e s e n t a t i v e s of t h e Compt r o l l e r of t h e Currency. Tlhen I t a l k e d to them, Messrs. Await and Barse
u n h e s i t a t i n g l y agreed t h a t t h i s p a r t i c u l a r case undoubtedly should b e
removed to t h e Federal c o u r t , in order to avoid the n e c e s s i t y of t r y i n g
i t b e f o r e a J u r y . Mr. Jackson having a l r e a d y i n d i c a t e d h i s concurrence
in your views on t h i s q u e s t i o n , I accordingly wired you on February 7
suggesting t h a t you a c t i n accordance with your own judgment and i n s t i t u t e removal proceedings without delay. Tfhile i t i s u n f o r t u n a t e t h a t we
cannot have Mr. B a k e r ' s views on t h e question whether t h i s case should
be removed, I have no doubt*' t h a t h e w i l l f e e l t h a t we have reached the
r i g h t conclusion on t h a t p o i n t .
I t seems to. me t h a t the noxt question to be considered in conn e c t i o n with the Lucas case i s whether to demur, answer o r move to d i s miss a f t e r the case h a s been removed to t h e Federal c o u r t .
While I
have no mature judgment on t h i s question, I am i n c l i n e d to agree with
you t h a t we should move to dismiss f o r f a i l u r e to j o i n the r e c e i v e r and
l i q u i d a t i n g a g e n t . I have n o t completed my a n a l y s i s of t h e complaint;
b u t I f e e l p r e t t y c o n f i d e n t t h a t i t i s h o t demurrable, and t h e r e would
seem to be no u s e in f i l i n g an answer and going to t r i a l on t h e m e r i t s
u n t i l a l l n e c e s s a r y p a r t i e s have been j o i n e d i n the s u i t . I b e l i e v e
however, t h a t , a f t e r the r e c e i v e r and l i q u i d a t i n g agent have been madb
p a r t i e s to t h e s u i t , i t w i l l be n e c e s s a r y to f i l e an answer and go to
t r i a l on t h e m e r i t s ; and t h a t , t h e r e f o r e , we should be t h i n k i n g about the
kind of answer t o be f i l e d .
I f the case i s removed to the Federal c o u r t , Mr. Baker w i l l r e t u r n in time to be consulted about the f u r t h e r proceedings in t h e case;
and 1 b e l i e v e we ought to have a conference a s soon as p o s s i b l e a f t e r
his return.
If t h i s meets with your approval, I suggest t h a t you r e quest Mr. Jackson to t a k e the m a t t e r up with Mr. Baker a s soon a s he
r e t u r n s and endeavor to a r r a n g e an e a r l y conference.
In your l e t t e r of February 5 you s t a t e d t h a t you had not r e t a i n e d an a s s o c i a t e in New Bern to a s s i s t i n t h e Lucas l i t i g a t i o n and
i n q u i r e d whether I thought t h a t Mr. Baker would p r e f e r to have you r e t a i n an a s s o c i a t e of h i s who I had t o l d you was somewhere i n F o r t h
Carolina. As I wired you on February 7, I am sure t h a t Mr. Baker has
no p r e f e r e n c e a s to the s e l e c t i o n of l o c a l counsel and would p r e f e r
t h a t you use your own judgment on t h a t q u e s t i o n . The a s s o c i a t e I spoke
to you about was Mr* Jackson, who was i n North Carolina on a v a c a t i o n .
Mr. Baker was anxious f o r you t o get acquainted with him; but t h e next
time he heard from Mr. Jackson he had gone to F l o r i d a .
I t was very t h o u g h t f u l of you to forward t o me copies of
t h e newspaper c l i p p i n g s with r e f e r e n c e to the Lucas case, and I apprec i a t e your k i n d n e s s . I n o t e with i n t e r e s t t h a t both papers recognized
t h e f a c t t h a t t h i s case i s one of n a t i o n a l importance and probably w i l l
- 3 -
X-6817
go to the Supreme Court of the United S t a t e s . The newspaper accounts
have a l l the earmarks d£ being based %;on p r e s s Statements i s s u e d by
counsel f o r t h e complainants. I am glad to note t h a t they a r e d i g n i f i e d , f a i r statements and do not i n d i c a t e any i n c l i n a t i o n to t r y t h i s
case in t h e newspapers.
When I have completed my study of t h e complaint, I s h a l l
Write you f u r t h e r about the Budas case; and 1 hope t h a t you w i l l not
h e s i t a t e to c a l l upon me f o r any a s s i s t a n c e which f or my a s s o c i a t e s
in t h i s o f f i c e can r e n d e r .
am
With k i n d e s t p e r s o n a l r e g a r d s , and a l l b e s t wishes, I
C o r d i a l l y yours,
Walter Wyatt,
General Counsel
WW-sad
(Note; Mr. Jackson i s one of Mr. B a k e r ' s p a r t n e r s in Cleveland.)
FEDERAL RESERVE BAHK
OF RICHMOND
January 29, 1931
Federal Reserve Board,
Washington, D. G*
A t t e n t i o n : J f r r "falter Wyatt, General Counsel*
Sear Mr, f y a t t i
I enclose & copy of my l e t t e r to Mr. Newton
Baker and a copy of the complaint i n the a c t i o n of Lucas'
Administrators v. Federal Reserve Bank of Richmond, I
could not send you a copy of the order s t r i k i n g out the
answer i n the Attmore case as our Stenographic Department
i s somewhat rushed and the order i s r a t h e r l o n g . The c o u r t ,
however, s t r u c k out a l l a l l e g a t i o n s except those which
amounted merely to a d e n i a l of our a l l e g a t i o n s and those
which s e t up the existence of a deposit balance due by
the f a i l e d bank t o the defendant. I f the t r i a l judge i s
c o n s i s t e n t i n h i s subsequent r u l i n g s , h i s a c t i o n i n s t r i k - ,
i n g out the answer would mean t h a t he intended to admit no
evidence except evidence of the making of the note and
whether or not i t was t r a n s f e r r e d to us for value and b e f o r e m a t u r i t y , and, of course, whether or not the defendant
had a d e p o s i t b a l a n c e .
I heard with much r e g r e t t h a t you had
been confined t o your house with g r i p p e . I hope t h a t you
a r e now improving.
Very t r u l y y o u r s ,
(Signed) M. G. Wallace
M. G. Wallace,
Counsel*
MOW R
• 258
COPY
X-6817-b
ISDSBAL B3SSHV3 BAH OF RICHMOND
January 29, 1931
Honorable ITewton D. Baker,
c/o Baker, H o s t e t l e r and. S i d l o ,
Union Trust Building,
Cleveland, 0.
My dear Mr. Baker$
I am very pleased, t o advise you t h a t judge Small s t r u c k out p r a c t i c a l l y
the e n t i r e a f f i r m a t i v e defense i n the case of Federal Reserve Bank of Richmond vi
G. S. Attmore, t r a d i n g as Neuse Motor Company* I enclose a copy of the c o u r t ' s
o r d e r . You w i l l n o t i c e t h a t the court has s t r i c k e n out p r a c t i c a l l y a l l of the
answer except so much of i t as amounts only t o a d e n i a l of our t i t l e to the note
and an a l l e g a t i o n of the d e p o s i t "balance which the defendant had i n the f a i l e d
hank.
The court a l s o denied the motion to make the Receiver a p a r t y .
Apparently by inadvertence the court f a i l e d t o s t r i k e out a sentence in
Paragraph 14 which contained a prayer t h a t the note "be c a n c e l l e d and d e l i v e r e d io
the Receiver. I t was obviously i n c o n s i s t e n t t o leave t h i s p a r t i c u l a r sentence i n
the answer a f t e r denying t h e motion to make the Receiver a party*
Attorneys f o r t h e defendant noted an exception to the a c t i o n of the court
and s t a t e d t h a t they would take ah appeal *
a s s o c i a t e informs me t h a t the appeal
i f taken promptly would "be On the do dee t for the February term of the Supreme Court
of North Carolina, but he s t a t e s t h a t he dbes not t h i n k t h a t the a t t o r n e y s f o r the
defendant w i l l take ail appeal*
1 am somewhat a t a. l o s s to i n t e r p r e t the a c t i o n of the court i n the l i g h t
of i t s former order allowing leave to the defendants to f i l e an amended answef and
p e r m i t t i n g the Receiver, to be made & p a r t y tb such an answer. However, the a c t i o n
of $he court as f a r as i t goes i n d i c a t e s a d i s p o s i t i o n to s u s t a i n our contentions
fully.
I r e g r e t to say t h a t judge Small, Who e n t e t e d thiri o M e r j goes t o another
j u d i c i a l d i s t r i c t and i s succeeded i n order of r o t a t i o n by a Judge i)evin# I havd
heard t h a t Judge Devin i s a competent judge, but I have never had any cases b e f o r e
him.
Immediately a f t e r r e c e i v i n g n o t i c e of Judge Small's d e c i s i o n we were
served with process and a b i l l of complaint, a copy of which i s enclosed, i n
the case of W. J . Lucas' Administrators v . Federal Reserve Bank of Richmond.
This i s the s u i t which we were informed t h a t the a t t o r n e y s who r e p r e s e n t e d Mr.
Attmore and many o t h e r defendants were contemplating bringing." You w i l l n o t i c e
t h a t the b i l l i s i n the n a t u r e of a c r e d i t o r s ' b i l l brought by the p l a i n t i f f as
X-6817-b
FSDEHAL RESERVE gANK OF RICHMOND
Honorable Newton £. Baker,
c/o Baker, H o s t e t l e r and S i d l o ,
Union Trust Building,
Cleveland, 0.
-2-
January 29, 1931
r e p r e s e n t a t i v e of himself and other c r e d i t o r s , and the a l l e g a t i o n s a r e sweeping i n
t h e i r n a t u r e . The Receiver of the F i r s t National Bank of New Bern and the liqui#- •
dating Agent of the suspended National Bank of New Bern a r e not made p a r t i e s
defendant t o t h i s s u i t , and i n my opinion, the omission of these p a r t i e s i s a
f a t a l d e f e c t , as the p l a i n t i f f seeks t o e n f o r c e an e q u i t a b l e r i g h t i n a case i n
which the l e g a l r i g h t of a c t i o n , i f any, i s in the Receivers of the f a i l e d banks.
I have not had an opportunity to study the b i l l of complaint with care
as I was anxious to have i t copied i n order to p l a c e copies i n your hands and i n
- those of Mr. Wyatt. The f i r s t question to be determined i s whether or not we s h a l l
remove t h i s case t o a f e d e r a l c o u r t . I t seems t o me t h a t the case i s c l e a r l y r e movable because the e n t i r e cause of a c t i o n depends upon the r i g h t of a Federal r e serve bank to accept as marginal or s u r p l u s c o l l a t e r a l paper which i s not e l i g i b l e
f o r rediscount and upon the a l l e g a t i o n t h a t the Federal Reserve Bank of Richmond
v i o l a t e d the s e c t i o n s of t h e National Bank Act r e l a t i n g to p r e f e r e n t i a l t r a n s f e r s .
I r e a l i z e t h a t the a c t i o n taken by the s t a t e c o u r t i n the Attmore case
tends toward the conclusion t h a t i t would be i l l - a d v i s e d to remove the Lucas case
from the s t a t e c o u r t , e s p e c i a l l y i n view of what we have been t o l d concerning the
l o c a l conditions i n the f e d e r a l d i s t r i c t c o u r t . I , p e r s o n a l l y , however, do not
consider those conditions as s e r i o u s as they appear to be to our f r i e n d s i n the
Comptroller's O f f i c e . One of the o b j e c t i o n s which the Comptroller's O f f i c e has
to the d i s t r i c t judge depends upon h i s tendency to s u s t a i n the r i g h t of pledgees
to c o l l a t e r a l which the Comptroller thinks was t r a n s f e r r e d i n a p r e f e r e n t i a l conveyance. This, of course, would not operate a g a i n s t u s .
Regarding the case without r e s p e c t to the l o c a l s i t u a t i o n , I am disposed
to favor a removal t o the f e d e r a l court f o r two reasons: F i r s t , the questions iinvolved a r e e s s e n t i a l l y f e d e r a l questions of f a r - r e a c h i n g importance, and a decision
by an i n f e r i o r f e d e r a l court would be of more value than a d e c i s i o n by a s t a t e
c o u r t . In the event of a d e c i s i o n unfavorable to u s , we could probably obtain a
, review by the Supreme Court of the United S t a t e s i n any event. My second reason
i s t h a t i t appears to me c l e a r t h a t the a c t i o n would of n e c e s s i t y be regarded by
a f e d e r a l c o u r t as a proceeding i n chancery, and as such, would be heard e i t h e r
by the t r i a l judge on evidence taken ore tonus, or e l s e be r e f e r r e d t o a s p e c i a l
master. E i t h e r one of t h e s e proceedings would be p r e f e r a b l e I think to a t r i a l
before a j u r y . In the s t a t e courts a l l i s s u e s of f a c t a r e t r i e d b e f o r e a j u r y ,
except t h a t i n c e r t a i n cases involving lengthy accounts a r e f e r e n c e to a master
may be made. I have found, however, t h a t the s t a t e c o u r t s i n North Carolina do
not o f t e n use a r e f e r e n c e , and I t h i n k , t h e r e f o r e , t h a t i f we went t o t r i a l i n
a s t a t e court we should probably be compelled to t r y t h i s case b e f o r e a j u r y
with the a t t e n d a n t inconvenience of taking witnesses and many documents to New
Born and being prepared to rebut many a l l e g a t i o n s which the p l a i n t i f f s would f a i l
to prove.
X-6817-b
FSEERAL BES3HV1 BAM OF RICHMOND
Honorable Hewton D. Baker,
c / o Baker, H o s t e t l e r and Sidlo,
Union Trust Building,
Cleveland, Ohio.
-3-
January 29, 1931
The above o b s e r v a t i o n upon t h e d e s i r a b i l i t y of a removal to the f e d e r a l
court i s , of course, submitted to you f o r such c o n s i d e r a t i o n a s you t h i n k t h a t i t
should have. I have d i s c u s s e d the matter with the o f f i c e r s of the bank, and they
are e n t i r e l y w i l l i n g to be guided by you i n determining whether or not i t i s well
to remove t h i s c a s e . I am sending a copy of t h i s l e t t e r to Mr. Wyatt. If you
consider t h a t a conference i s d e s i r a b l e , I can arrange to meet you at any p l a c e
most convenient.
I remain,
Very t r u l y yours,
M. G-. Wallace,
Counsel.
MOW E
- Copy to
Mr. " a l t e r Wyatt,
Federal Reserve Board, Washington, D. C.
(C
X-6817-o
COPY
IN SUPERIOR COURT
NORTH (SAHOLIM
GRAVEN COUNTY
W. J . Lucas, J r . and J . W. Lucas, Administrators
of the E s t a t e of W. J . Lucas, Deceased, and Kate
S. -Lucas, on behalf of themselves and a l l other
stockholders of the National Bank of New Berne
who care to make themselves p a r t i e s h e r e t o , and
on "behalf of themselves and a l l other c r e d i t o r s
of the National Bank of New Berne or the F i r s t
National Bank of New Bern who care t o make them~
selves p a r t i e s h e r e t o .
COMPLAINT
VS
The Federal Reserve Bank of Richmond, Va. a
Corporation e x i s t i n g under the a c t of Congress
known as the Federal Reserve Act.
The p l a i n t i f f s , complaining of the d e f e n d a n t , a l l e g e ;
1.
That the p l a i n t i f f s , W. J . Lucas, J r . and J . W. Lucas, a r e
the a d m i n i s t r a t o r s of the e s t a t e of W. J . Lucas, deceased "by v i r t u e of t h e i r appointment as such under a u t h o r i t y of the Superior Court of Craven County, North
Carolina, and the p l a i n t i f f , Kate S. Lucas, i s a r e s i d e n t of New Bern, Craven
County, North Carolina*
That the National Bank of New Berne was a t a l l times h e r e i n
2.
mentioned, a tanking c o r p o r a t i o n organized and e x i s t i n g under a u t h o r i t y of an a c t
of Congress providing f o r the establishment of National Banks and l i k e w i s e the
F i r s t n a t i o n a l Bank of New Bern was, from and a f t e r March 19, 1929, a banking
corporation organized and e x i s t i n g under an a c t of Congress providing f o r the
establishment of National Banks.
3.
That t h e Federal Reserve Bank of Richmond, Va. i s a corporation
organized and e x i s t i n g under the p r o v i s i o n s of an a c t of Congress known as the
Federal Reserve Act and has such powers gnd only such powers as a r e provided by
the terms of s a i d # c t .
4.
That f h e Peoples Bank was a banking c o r p o r a t i o n organized under
the laws of North Carolina providing f o r the establishment of bonks and was under
the p r o v i s i o n of the Federal Reserve Act a member bank of the Federal Reserve Bgnk
of Richmond, Va. u n t i l i t s merger or c o n s o l i d a t i o n with the National Bank of New
Berne as h e r e i n a f t e r more f u l l y s o t o u t .
X-6817rC
' 262
5.
That W. J . Lucas i n h i s l i f e time and a t a l l times h e r e i n
a l l e g e d , was a stockholder i n the National Bank of Hew Berne, having s t a n d i n g i n
h i s name f i f t e e n s h a r e s of s t o c k which he acquired by purchase on or about the
27th day of March, 1917 and January 8 t h , 1924 and J u l y 24th, 1923, and t h a t s a i d
stock, upon the death of W. J . Lucas, came i n t o the p o s s e s s i o n of h i s administra*
t o r s , p l a i n t i f f s h e r e i n , as a p o r t i o n of M s e s t a t e .
6.
That on February 26, 1929 and p r i o r t h e r e t o , the s a i d 17. J .
Lucas was a d e p o s i t o r i n the F i r s t National Bank of New Bern and p r i o r t o March
19, 1929 f o r more than t e n y e a r s , was l i k e w i s e a d e p o s i t o r i n the National Bank
of New Berne and j o i n t l y w i t h the p l a i n t i f f Kate S. Lucas, was a d e p o s i t o r i n the
F i r s t National Bank of New Bern and t h a t t h e s a i d Kate S. Lucas was a d e p o s i t o r
i n the F i r s t National Bank of New Bern.
7.
That a s p l a i n t i f f s a r e informed and b e l i e v e arid thereupon
a l l e g e , The Peoples Bank, p r i o r to the
day of
1923,
being then a member bank of the Federal Reserve Bank of Richmond, Va. was, on or
about s a i d d a t e , examined by examiners of s a i d Federal Reserve Bank of Richmond,
Va> which s a i d examiners were under the d i r e c t supervision of the Federal Reserve
Bank of Richmqpd, and/or the Chairman of i t s Board of D i r e c t o r s , who by v i r t u e of
s a i d p o s i t i o n was a l s o a member of the Federal Reserve Board and t h a t a t s a i d time
and a l l times subsequent t h e r e t o , the Comptroller of the Currency was, by v i r t u e
of h i s o f f i c e as c o m p t r o l l e r , a member of the Federal Reserve Board.
8.
That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t s h o r t l y a f t e r the s a i d examination r e f e r r e d to i n the p r o c e d i n g paragraph,
the National Bank of New Berne was approached with a view of having s a i d National
Bank of New Berne absorb or take over the s a i d Peoples Bank and t h a t during the
n e g o t i a t i o n s following such proposal, c e r t a i n o f f i c e r s of t h e Federal Reserve Bank
promised, agreed and r e p r e s e n t e d to the National Bank of New Berne t h a t i f the
National Bank of New Berne would take over s a i d Peoples Bank t h a t the Federal Reserve Bank of Richmond would extend such a d d i t i o n a l accommodations i n the way of
discounts a s would be n e c e s s a r y t o meet the a d d i t i o n a l burden thus assumed by the
National Bank of New Beme and t h a t s a i d r e p r e s e n t a t i o n s , agreements and promises
on the p a r t of the Federal Reserve Bank were a m a t e r i a l p a r t of the consideration
upon which the s a i d National Bank of New Berne then took over, absorbed and d i s charged tne o b l i g a t i o n s of the Peoples Bank of New Bern, a l a r g o p o r t i o n of s a i d
o b l i g a t i o n s being due the Federal Reserve Bank of Richmond and which, as these
p l a i n t i f f s a r e informed and b e l i e v e , s a i d Peoples Bank was then unable to pay the
said Federal Reserve Bank of Richmond.
9.
That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t the r e p r e s e n t a t i v e s of the Federal Reserve Bank of Richmond remained i n New
Bern f o r s e v e r a l days and during s a i d time entered a c t i v e l y i n t o the n e g o t i a t i o n s
between the then Peoples Bank and the National Bank of New Berne and p r e s s e d and
urged the s a i d National Bank of New Berne to accept the proposal to take over the
Peoples Bank and l a r g e l y due to the u r g i n g , r e p r e s e n t a t i o n s and demands of s a i d
r e p r e s e n t a t i v e s of t h e Federal Reserve Bank of Richmond, s a i d National Bank of
New Berne did take over s a i d Peoples Bank, i t , the s a i d National Bank of New Berne,
X-6817-6
being a t the time, indebted to the FediJfial Reserve Batik of Richmond and by reason
t h e r e o f , more e a s i l y induced, coerced and p r a c t i c a l l y r e q u i r e d t o take over and
assume the debts and l i a b i l i t i e s of t h e Peoples Bank and to take over as a s s e t s ,
many f r o z e n loans which were then i n the Peoples Bank and which were known to the
r e p r e s e n t a t i v e s of the Federal Reserve Baiik of Richmond to be u n c o l l e c t a b l e within
any reasonable time or by any reasonable d i l i g e n c e and to bo p a r t i a l l y , ' i f not
wholely, worthless as batiking p a p e r .
10.
That s h o r t l y a f t e r the Peoples Bank was merged with the Hation- a l Bank of Hew Berne, s a i d Federal Reserve Bank of Richmond, c o n t r a r y t o i t s
promise and agreement, demanded and p r e s s e d f o r the l i q u i d a t i o n of the paper of
the n a t i o n a l Bank of Hew Berne which i t then h e l d , e i t h e r d i r e c t from s a i d bank
or by reason of discount of customers' n o t e s ; r e s t r i c t e d i t s c r e d i t to t h e n a t i o n a l
Bank of Hew Berne and i n a d d i t i o n t h e r e t o , u n l a w f u l l y , wrongfully and i n v i o l a t i o n
of i t s powers and d u t i e s , demanded t h a t s a i d Hational Bank of Hew Berne should dep o s i t with i t a d d i t i o n a l n o t e s and b i l l s of i t s customers i n an amount equal to
' f i f t y per cent of the r e - d i s c o u n t s or advancements to be held by i t as s e c u r i t y
f o r any sums due by reason of r e - d i s c o u n t s of the Hational Bank of Hew Berne and
t h a t s a i d requirement was unreasonable, unlawful and deprived the s a i d Hational
Bank of Hew Berne of the use of s a i d b i l l s and n o t e s ,
11,
That on or about the year 1925, so p l a i n t i f f s a r e informed and
b e l i e v e and thereupon a l l e g e , the Federal Reserve Bank of Richmond, found and
determined among i t s o f f i c e r s , t h a t the Hational Bank of Hew Berne was i n s o l v e n t
and i t s a s s e t s f r o z e n and u n c o l l e c t a b l e , s a i d f i n d i n g being based l a r g e l y , i f not
wholely, upon the presence i n the Hational Bank of Hew Berne of the notes and
debts i t had taken over when i t acquired the Peoples Bank and t h a t thereupon,
without any order of i t s Board of D i r e c t o r s or without any order of the Board of
D i r e c t o r s of the Hational Bank of Hew Berne and without any a u t h o r i t y v e s t e d i n i t ,
u n l a w f u l l y and wrongfully r e q u i r e d t h a t the Hational Bank of Hew Berne d e p o s i t
with i t , a d d i t i o n a l marginal c o l l a t e r a l as h e r e i n b e f o r e described i n the sum of
f i f t y per cent of the amount of r e - d i s c o u n t s and advancements, making the t o t a l
deposit of s a i d marginal c o l l a t e r a l equal t o one hundred per cent of the s a i d r e discounts and advancements,
12,
That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t i n 1925 the r e - d i s c o u n t s of the Hational Bank of Hew Berne with the Federal
Reserve Bank of Richmond were as g r e a t or g r e a t e r than they were a t any subsequent p e r i o d of the l i f e of the s a i d Hational Bank of Hew Berne or i t s successor,
the F i r s t Hational Bank of Hew Bern and t h a t while s a i d r e - d i s c o u n t s changed
from time to time by the s u b s t i t u t i o n of d i f f e r e n t customers' notes to the nationa l Bank of Hew Berne, y e t the t o t a l amount advanced thereon remained p r a c t i c a l l y
the same,
13.
That on or about March 19, 1929, the F i r s t Hational Bank of
Hew Bern was organized and took over and assumed the o b l i g a t i o n s of the Hational
Bank of ITew Berne arid a c q u i r e d the p r o p e r t y and p r o p e r t y r i g h t s , of which f a c t s
defendant vras f u l l y advised and informed, and t h a t i t thereupon e n t e r e d on i t s
X-6817-c
I
264
ledger s h e e t s a n o t a t i o n t h a t the aetadunt of the National Bank of New Berne had
been t r a n s f e r r e d to the F i r s t National Bank of New Bern and t h a t otherwise s a i d
account remained the same as i t had "been with the n a t i o n a l Bank of New Berne and
t h a t a t s a i d time, t o - w i t , March 19th or 20th, 1929, the s a i d Federal Reserve Bank
of Hichmond h e l d n o t e s , "bills of exchange, d r a f t s , bonds, evidences of indebtedn e s s , warehouse r e c e i p t s and other items of s e c u r i t y i n an amount of a t l e a s t
$208,103. as p l a i n t i f f s a r e informed and "believe, to which i t had no r i g h t i n
law or
e q u i t y or i n f a c t and which i t h e l d c o n t r a r y and i n v i o l a t i o n of the
r i g h t s of the d e p o s i t o r s , stockholders and c r e d i t o r s of t h e National Bank of New•
Berne and the F i r s t National Bank of New Bern and p a r t i c u l a r l y i n v i o l a t i o n of the
r i g h t s of these p l a i n t i f f s * and t h a t a t a l l times h e r e i n mentioned the s a i d
Federal Reserve Bank demanded, received and held wrongfully and u n l a w f u l l y and
without a u t h o r i t y i n law Or i n f a c t , n o t e s , "bills of exchange, d r a f t s , bonds,
evidences of indebtedness, warehouse r e c e i p t s and other evidences of s e c u r i t y
belonging e i t h e r to the F i r s t National Bank of New Bern or the National Bank of
New Berne i n v i o l a t i o n of the r i g h t s of s a i d c r e d i t o r s and these p l a i n t i f f s as
a f o r e s a i d . That as a l l e g e d i n Paragraph 11 h e r e t o f o r e , said o f f i c e r s of the
Federal Reserve Bank, having found and determined among themselves t h a t the
National Bank of New Berne was i n s o l v e n t and i t s a s s e t s f r o z e n and u n c o l l e c t a b l e ,
and having f u r t h e r found among i t s o f f i c e r s i n A p r i l , 1929, t h a t the same condit i o n was t r u e of the F i r s t National Bank of New Bern, based on the f a c t t h a t the
F i r s t National Bank of New Bern had taken over the a s s e t s of the National Bank
of New Bern, u n l a w f u l l y , wrongfully and i n v i o l a t i o n of the laws of the United
S t a t e s , p a r t i c u l a r l y Section 5242 of the Revised S t a t u t e s of the United S t a t e s ,
and i n f r a u d of the c r e d i t o r s , d e p o s i t o r s and stockholders of the National Bank
of New Berne and the F i r s t National Bank of New Bern and p a r t i c u l a r l y i n f r a u d
and i n v i o l a t i o n of the r i g h t s of the p l a i n t i f f s , demanded and r e c e i v e d s a i d n o t e s ,
b i l l s , d r a f t s , bonds, evidences of indebtedness, warehouse r e c e i p t s and o t h e r
evidences of s e c u r i t y , i n the amount h e r e i n b e f o r e s e t out and a t a l l times one
hundred per cent g r e a t e r than the r e - d i s c o u n t s accepted from the National Bank
of Ifew Berne or the F i r s t National Bank of New Bern. That on or about October
23, 1929, a r e p r e s e n t a t i v e of the F i r s t National Bank of New Bern, a t the i n s t a n c e
and d i r e c t i o n of s a i d bank, went to Richmond and demanded of the o f f i c e r s of the
Federal Reserve Bank, a r e t u r n and surrender of the n o t e s , b i l l s of exchange,
d r a f t s , bonds, evidences of indebtedness, warehouse r e c e i p t s and other evidences
of s e c u r i t y amounting to $208,103. which the s a i d Federal Reserve Bank then held
u n l a w f u l l y , wrongfully and i n v i o l a t i o n of the r i g h t s of s a i d F i r s t National Bank
of New Bern and i t s p r e d e c e s s o r and the c r e d i t o r s , stockholders and d e p o s i t o r s
of s a i d banks and p a r t i c u l a r l y these p l a i n t i f f s ; t h a t thereupon the defendant,
Federal Reserve Bank of Richmond, through i t s o f f i c e r s , r e f u s e d to t u r n over and
surrender s a i d items so wrongfully held by i t , although i t was then advised and
informed by said r e p r e s e n t a t i v e of the F i r s t National Bank of New Bern that a
surrender of s a i d items would enable s a i d F i r s t National Bank of New Bern to
continue t o operate and enable i t to provide funds to meet the demands then
being made upon i t atid t h a t the f a i l u r e of the defendant, Federal Reserve Bank
of Richmond, to surrender and turn over s a i d items so wrongfully h e l d by i t ,
would r e s u l t i n the i n a b i l i t y t o s t a y open and meet i t s current o b l i g a t i o n s
and these p l a i n t i f f s are f u r t h e r informed and b e l i e v e t h a t s a i d f a i l u r e of the
defendant Federal Reserve Bank of Richmond to surrender and turn over s a i d c o l l a t e r a l did cause the F i r s t National Bank of New Bern to be unable to meet i t s
X-6817-0
-*5>-
:
265
current demands and Obligations and was the d i r e c t cause of s a i d "bank having to
cloSe i t s dtiors and suspend "business on the 26th day of October 1989, j u s t a t the
peek of the c o l l e c t i n g season of the community i n which the s a i d F i r s t n a t i o n a l
Bank of New Bern vras s i t u a t e d and r e s u l t e d i n g r e a t and i r r e p a r a b l e damage to the
s t o c k h o l d e r s , d e p o s i t o r s and c r e d i t o r s of the F i r s t n a t i o n a l Bank of Heir Bern and
p a r t i c u l a r l y these p l a i n t i f f s .
14.
That by reason of the matters and things h e r e i n b e f o r e s e t out,
these p l a i n t i f f s and those s i m i l a r l y s i t u a t e d , have been damaged i n the g r e a t sum
of One Million ($1,000,000.) D o l l a r s , and t h a t the s a i d Federal Reserve Bank of
Richmond i s now attempting to c o l l e c t t h e commercial paper u n l a w f u l l y h e l d by i t
and i s d i v e r t i n g the same to i t s own use and i s b r i n g i n g s u i t s a g a i n s t v a r i o u s
and sundry people i n i t s o m name and making demands f o r payment through the
Receiver of t h e F i r s t National Bank of Hew Bern and t h a t i t has h e r e t o f o r e
c o l l e c t e d a l a r g e sum which i t has a p p l i e d to i t s ovn purpose, u n l a w f u l l y , wrongf u l l y and i n v i o l a t i o n of the r i g h t s of these p l a i n t i f f s and those s i m i l a r l y
situated.
And f o r a n o t h e r and f u r t h e r cause of a c t i o n , p l a i n t i f f s a l l e g e :
1.
That they r e - a l l e g e a l l e g a t i o n s 1, 2, 3, 4, 5, 6, 7, 8, 9, 10,
11 and 12 of t h e f i r s t cause of a c t i o n .
2 . That p l a i n t i f f s a r e informed and b e l i e v e and t h e r e f o r e a l l e g e
t h a t the Federal Reserve Bank of Richmond i s vested r;ith those powers and only
:-r.
those powers s e t f o r t h i n the Act of Congress e n t i t l e d "Federal Reserve Act" dated
December 23, 1913, as amended, and t h a t s a i d powers a r e s p e c i f i c a l l y and d e f i n i t e l y
l i m i t e d t o the purposes of s a i d Act and no other except such i n c i d e n t a l powers as
s h a l l be necessary to c a r r y on the business of banking w i t h i n the l i m i t a t i o n s
p r e s c r i b e d by the Federal Reserve Act.
3,
That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t the Federal Reserve Bank of Richmond, defendant h e r e i n , c o n t r a r y and i n
v i o l a t i o n of the powers g r a n t e d t o i t by Congress and i n v i o l a t i o n of the r i g h t s
of the c r e d i t o r s , d e p o s i t o r s and stockholders of the n a t i o n a l Bank of Hew Berne
and of the F i r s t n a t i o n a l Bank of Hew Bern, and p a r t i c u l a r l y these p l a i n t i f f s ,
r e q u i r e d and demanded the n a t i o n a l Bank of Hew Berne and i t s s u c c e s s o r , the F i r s t
National Bank of Hew Bern, to deposit with i t , n o t e s , b i l l s of exchange, d r a f t s ,
bonds, evidences of i n d e b t e d n e s s , warehouse r e c e i p t s and other evidences of
s e c u r i t y , i n an amount equal t o n o t e s , b i l l s of exchange, d r a f t s , bonds, evidences
of indebtedness, warehouse r e c e i p t s and other items of s e c u r i t y which the s a i d
Federal Reserve Bank accepted f o r discount and t h a t s a i d requirements was unreasona b l e , unlawful and deprived the N a t i o n a l Bank of Hew Berne and i t s s u c c e s s o r , the
F i r s t National Bank of New Bern of the use and b e n e f i t of said n o t e s , b i l l s of exChange, e t c . and thereby hampered and prevented the s a i d National Bank of Hew Berne
and the F i r s t National Bank of New Bern from having f u n d s , proceeds of s a i d items,
to use i n carrying on i t s ordinary banking business and meeting i t s c u r r e n t
o b l i g a t i o n s and l i a b i l i t i e s .
X-6817-e
4»
That t h e s e p l a i n t i f f s a r e informed and b e l i e v e and thereupon
a l l e g e t h a t the F e d e r a l Reserve System, of r.-hich the Federal Reserve Bank of
Richmond, Va. i s a p a r t , was e s t a b l i s h e d by Congress w i t h the purpose and i n t e n t ! cn
of p r o v i d i n g a means by which l i q u i d commercial paper might be converted i n t o a
b a s i s f o r i s s u e s of c u r r e n c y and as a means of a i d i n g t h e c r e d i t and t r a d i n g powers
of the N a t i o n and to p a r t i c u l a r l y a s s i s t member banks, and of which e v e r y National
Bank was, by s t a t u t e , r e q u i r e d t o become a member, and t h a t Congress, by i t s
s a i d Act, d e s i g n a t e d and r e s t r i c t e d the type and k i n d of commercial p a p e r t h a t
might be so used as b a s i s f o r i s s u i n g of currency i n o r d e r t o p r o t e c t and s a f e guard, a t a l l times, the ™orth of currency so i s s u e d and t o s t a b l i z e and maintain
the confidence of t h e p u b l i c i n such i s s u e s of currency and i n the banking
systems which had or might become members of t h e Federal Reserve System and s a i d
a c t , by i t s terms, l i m i t s p a p e r s t o be d i s c o u n t e d by the Federal Reserve Bank t o
the type and k i n d s e t f o r t h i n s a i d Act which would meet t h e requirements above
s p e c i f i e d and t h a t t h e p l a i n t i f f s a r e f u r t h e r informed and b e l i e v e and t h e r e upon a l l e g e t h a t t h e F e d e r a l Reserve Bank of Richmond i n i t s d e a l i n g s w i t h the
National Bank of Hew Berne and the F i r s t N a t i o n a l Bank of New Bern, d i s r e g a r d e d
the purpose of s a i d a c t and i t s terms and d i s r e g a r d e d t h e types and k i n d s of
paper t h a t i t p r e t e n d e d to accept f o r r e - d i s c o u n t and a c c e p t e d f r o m the n a t i o n a l
Batik of New Berne and the F i r s t N a t i o n a l Bank of New Bern, paper f o r d i s c o u n t t h a t
d i d not meet the requirement of s a i d a c t and was known t o the o f f i c i a l s of the
Federal Reserve Bank a s n o t meeting s a i d requirements and t h a t f u r t h e r i n
v i o l a t i o n of s a i d a c t , s a i d F e d e r a l Reserve Bank of Richmond r e q u i r e d , demanded
and compelled s a i d N a t i o n a l Bank of New Berne and F i r s t N a t i o n a l Bank of New
Bern, t o send o t h e r commercial paper of a k i n d and type n o t meeting t h e r e q u i r e - .
ments of s a i d a c t and s a i d Federal Reserve Bank a r b i t r a r i l y of i t s own motion w i t h out r i g h t i n law and i n f a c t , d e s i g n a t e d s a i d f u r t h e r sendings a s marginal c o l l a t e r a l and advanced no amount of money, no t h i n g of c r e d i t and no t h i n g of value
to the s a i d National Bank of New Berne or F i r s t N a t i o n a l Bank of New Bern by
reason of s a i d a d d i t i o n a l amounts of commercial paper h e r e i n a f t e r r e f e r r e d to as
marginal c o l l a t e r a l and amounting to approximately the sum of $ 2 0 8 , 0 0 0 . , s a i d
amount being approximately t h e amount w r o n g f u l l y w i t h h e l d by s a i d Federal Reserve
Bank a t a l l times h e r e i n mentioned.
5.
That t h e unreasonable and u n l a w f u l requirements of the Fede r a l Reserve Bank of Richmond i n demanding and holding s a i d a d d i t i o n a l commerc i a l paper d e p r i v e d the s a i d National Bank of New Bern and F i r s t
^
N a t i o n a l Bank of New Bern of i t s use and thereby i n e f f e c t , produced a c o n d i t i o n
e q u i v a l e n t t o i n s o l v e n c y i n t h e a f f a i r s of s a i d two banks and p l a i n t i f f s a r e
f u r t h e r informed and b e l i e f t h a t i f such u n l a w f u l r e q u i r e m e n t s had n o t been
made, s a i d banks would have been a b l e to meet t h e i r c u r r e n t o b l i g a t i o n s and would
not have been compelled t o l i q u i d a t e or c l o s e and the c l o s i n g of s a i d banks and
the a c t s on the p a r t of t h e d e f e n d a n t , Federal Reserve Bank, has caused g r e a t
and i r r e p a r a b l e damage to | h e s e p l a i n t i f f s and o t h e r s s i m i l a r l y s i t u a t e d and t h e i r
l i q u i d a t i o n has r e s u l t e d i n a g r e a t and i r r e p a r a b l e damage to t h e s e p l a i n t i f f s
and o t h e r s S i m i l a r l y s i t u a t e d .
X-6817-c.
-7-
'
267
6t
That "by reason bf the matters and things h e r e i n b e f o r e s e t
put, these p l a i n t i f f s and those s i m i l a r l y s i t u a t e d , have "been damaged i n the
g r e a t sum of One Million ($1,000*000) D o l l a r s , and t h a t t h e s a i d Federal Reserve
Bank of Richmond i s now attempting to c o l l e c t the commercial paper u n l a w f u l l y
held by i t and i s d i v e r t i n g the same to i t s own use and i s bringing s u i t s a g a i n s t
various and sundry people i n i t s own name and making demands f o r payment through
the Receiver of the F i r s t n a t i o n a l Bank of Hew Bern and t h a t i t has h e r e t o f o r e
c o l l e c t e d a l a r g e sum which i t has a p p l i e d to i t s own purpose, u n l a w f u l l y , wrongf u l l y and i n v i o l a t i o n of the r i g h t s of these p l a i n t i f f s and those s i m i l a r l y
situated.
And f o r a n o t h e r and f u r t h e r cause of a c t i o n these p l a i n t i f f s a l l e g e :
1.
That they repeat the a l l e g a t i o n s 1 to 12 i n c l u s i v e of the
f i r s t eayse of a c t i o n .
2 . That the Federal Reserve Bank of Richmond, Va. i s v e s t e d
with a u t h o r i t y to examine and i n q u i r e i n t o the condition of member banks and
t h a t i t , through the Chairman of i t s Board, has access to a l l examinations made
of member banks and p a r t i c u l a r l y of N a t i o n a l Banks, of which the National Bank
of He« Berne was one and the F i r s t National Bank of New Bern was one and such
batiks were r e g u l a r l y examined i n the ordinary conduct of t h e s u p e r v i s o r y powers
vested i n the comptroller and the Federal Reserve Bank.
3.
That the Federal Reserve Bank of Richmond knew t h e condition
of the National Bank of New Berne and the F i r s t National Bank of New Bern, the
nature and condition of i t s a s s e t s , and by reason of i t s knowledge of o t h e r
member banks, had a more i n t i m a t e knowledge of the sane than even the o f f i c e r s
of the s a i d F i r s t National Bank of New Bern or the National Bank of New Berne
had, and t h a t with such knowledge i n i t s b r e a s t , the s a i d Federal Reserve Bank
of Richmond determined among i t s o f f i c e r s on or about the year 1925 t h a t the
National Bank of New Berne was i n s o l v e n t and i t s a s s e t s f r o z e n and uricollectable
and thereupon i t undertook and d i d cause t r a n s f e r s of n o t e s , bonds, b i l l s of exchange and other evidences of debt from the s a i d National Bank of New Berne to
be u n l a w f u l l y t r a n s f e r r e d to i t and t h a t s a i d t r a n s f e r s were made i n contemplat i o n of the insolvency of the National Bank of New Berne and i t s s u c c e s s o r , the
F i r s t National Bank of New Bern with a view t o prevent the a p p l i c a t i o n of a s s e t s
of said National Bank of New Bern and F i r s t National Bank of New Bern i n the
manner p r e s c r i b e d by law and with the view to p r e f e r the Federal Reserve Bank
as a c r e d i t o r t o other c r e d i t o r s .
4.
That t h e s e p l a i n t i f f s a r e informed and b e l i e v e t h a t a t . . a l l
the times mentioned i n the f i r s t , second and t h i r d cause of a c t i o n h e r e i n s e t
out, the amount of r e - d i s c o u n t s from the National Bank of New Berne and the F i r s t
National Bank of New Bern remained p r a c t i c a l l y the same and t h a t the exchange
of notes from time t o time was made without an a p p r e c i a b l e i n c r e a s e i n the amount
of money r e c e i v e d from the Federal Reserve Bank of Richmond and notwithstanding
the determination updn the p a r t of the o f f i c i a l s of the Federal Reserve Bank.
as to the insolvency of the National Bank of New Berne and the F i r s t National
X-6817-c
-*8~
? 268
Bank of Hew Bern, s a i d Federal 3cserve Bank u n l a w f u l l y , wrongfully and i n
v i o l a t i o n of the expressed terms of law, r e q u i r e d and demanded a d d i t i o n a l
n o t e s , M i l s and other evidences of indebtedness i n an amount equal t o t h e amount
pretended to "oe accepted for discount amounting, as p l a i n t i f f s are informed and
b e l i e v e , to the sum of a t l e a s t $208,000. and t h a t such a c t s on the p a r t of the
Federal Beserve Bank, made with the s e c r e t knowledge which i t had, c o n s t i t u t e d
a p r e f e r e n c e and a f r a u d on these p l a i n t i f f s and those s i m i l a r l y s i t u a t e d .
5.
That the p l a i n t i f f s , p r i o r to the i n s t i t u t i o n of t h i s a c t i o n , t o - w i t , on the 8th day of October, 1930, i s s u e d a n o t i c e and demand on
R. S. Schumacher, who had t h e r e t o f o r e been appointed Receiver of the F i r s t Nationa l Bank of New Bern by the Comptroller of the Currency, r e q u i r i n g and demanding
t h a t s a i d r e c e i v e r i n s t i t u t e t h i s a c t i o n and t h a t i n r e p l y t h e r e t o , under date
of October 16, 1930, these p l a i n t i f f s , through t h e i r a t t o r n e y s , r e c e i v e d a l e t t e r
from the s a i d E. E. Schumacher, r e f u s i n g to bring s a i d a c t i o n , copies of s a i d
demand and l e t t e r of r e f u s a l being h e r e t o a t t a c h e d and marked E x h i b i t s A and B
respectively.
6. That t h e s e p l a i n t i f f s a r e informed and b e l i e v e and thereupon
a l l e g e t h a t t h e Receiver of the F i r s t National Bank of New Bern w i l l not have
f o r d i s t r i b u t i o n among i t s general c r e d i t o r s an amount i n excess of t e n p e r cent
of the amount due s a i d c r e d i t o r s .
7.
That t h e s e p l a i n t i f f s a r e informed and b e l i e v e t h a t t h e i r
r i g h t s can only be p r o t e c t e d by having a r e c e i v e r appointed to take charge of
s a i d c o l l a t e r a l h e r e i n b e f o r g described and t h a t s a i d r e c e i v e r be a u t h o r i z e d ,
d i r e c t e d and empowered to c o l l e c t and administer s a i d c o l l a t e r a l pending the
f i n a l determination of t h i s cause.
8.
That by reason of the matters and things h e r e i n b e f o r e s e t
out, these p l a i n t i f f s and those s i m i l a r l y s i t u a t e d , have been damaged i n the
g r e a t sum of One Million ($1,000,000.) D o l l a r s and t h a t the s a i d Federal Reserve
Bank of Richmond i s now a t t e m p t i n g to c o l l e c t the commercial paper u n l a w f u l l y
held by i t and i s d i v e r t i n g the same to i t s own use and i s bringing s u i t s
a g a i n s t v a r i o u s and sundry people i n i t s own name and making demands f o r payment through the Receiver of the F i r s t National Bank of New Bern and t h a t i t
has h e r e t o f o r e c o l l e c t e d a l a r g e sum which i t has a p p l i e d to i t s own purpose,
u n l a w f u l l y , wrongfully and i n v i o l a t i o n of the r i g h t s of these p l a i n t i f f s and
those s i m i l a r l y s i t u a t e d .
And for another and f u r t h e r cause of a c t i o n , p l a i n t i f f s a l l e g e :
1. That they r e - a l l e g e Allegations 1, 2 , 3, 4, 5, 6, 7, 8, 9, 10,
11 and 12 of the f i r s t cause of a c t i o n .
2. That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t the Federal Reserve Bank of Richmond required i t s member banks and p a r t i c u l a r l y the National Bank of New Berne and the F i r s t National Bank of New Bern to
deposit with i t funds as a r e s e r v e balance equal t o not l e s s than seven per'cB&t
X-6817-c
^ 269
of i t s aggregate demand d e p o s i t s and -three per cent of i t s time d e p o s i t s .
3. That p l a i n t i f f s a r e informed and "believe and thereupon a l l e g e
t h a t a t times the s a i d n a t i o n a l Bank of New Berne and the F i r s t N a t i o n a l Bank of
Hew Bern were unable t o meet s a i d requirements due i n p a r t to the f a c t t h a t the
Federal Reserve Bank of Hi tihmond was holding u n l a w f u l l y , many of i t s a s s e t s as
s e t out i n the f i r s t , second and t h i r d cause of a c t i o n of t h i s complaint and there-*
upon the Federal Reserve Bank of Richmond, defendant h e r e i n , u n l a w f u l l y , wrongfully
and i n v i o l a t i o n of law -and i n v i o l a t i o n of these p l a i n t i f f s and others s i m i l a r l y
s i t u a t e d , charged and demanded and r e c e i v e d by d e b i t i n g the account of the Nationa l Bank of New Berne a n d / o r F i r s t National Bank of New Bern with i t , p e n a l t i e s a t
the r a t e of a s high as t e n p e r cent or g r e a t e r of the d e f i c i e n c y between s a i d seven
or three p e r cent and the amount of balance i n said bank.
4. That p l a i n t i f f s a r e informed and b e l i e v e and thereupon a l l e g e
t h a t t h e r e i s not a v a i l a b l e to them f u l l information to determine t h e amount of
s a i d charges so wrongfully made but they a r e advised t h a t the same reach a g r e a t
sum and they a r e f u r t h e r advised, and informed t h a t they a r e e n t i t l e d t o have an
accounting of the defendant f o r a l l sums so wrongfully and u n l a w f u l l y charged and
e n t i t l e d to have any amount due from the National Bank of New Berne or the F i r s t
National Bank of New Bern to the Federal Reserve Bank of Richmond, c r e d i t e d w i t h
the sums so wrongfully charged, c o l l e c t e d and r e c e i v e d .
5.
That by reason of t h e matters and t h i n g s s e t out i n t h i s cause
of a c t i o n , p l a i n t i f f s have been damaged i n a g r e a t sum, the exact amount of which
can only be determined by an accounting h e r e i n b e f o r e a l l e g e d to be due to the
plaintiffs.
Wherefore these p l a i n t i f f s pray
1.
That t h e Federal Reserve Bank be r e q u i r e d t o render an account
of a l l commercial p a p e r , n o t e s , b i l l s of exchange, evidences of indebtedness,
warehouse r e c e i p t s and o t h e r evidences of s e c u r i t y held by i t on the 19th day
of March, 1929, as the p r o p e r t y of the National Bank of New Bern, f o r discount
and otherwise, and on the 23rd day of October, 1929 as the p r o p e r t y of t h e F i r s t
National Bank of New Bern, for discount and otherwise, and an accounting of a l l
funds received by i t from such commercial paper since s a i d d a t e s ;
2 . That a r e c e i v e r be appointed to c o l l e c t and a d m i n i s t e r s a i d
c o l l a t e r a l pending the f i n a l determination of t h i s cause and t h a t the Federal
Reserve Bank of Richmond be r e q u i r e d to t u r n over to s a i d r e c e i v e r , a l l the
items now held by i t , t o g e t h e r with a l l sums of money h e r e t o f o r e c o l l e c t e d from
any of s a i d n o t e s , b i l l s , e t c .
3 . That the p l a i n t i f f s have and recover of the defendant the sum
of One Million Dollars t o be discharged <-
X-6817-c
„_io^
:
2 7 0
' Then these p l a i n t i f f s have received from the defendants the
sum of $15,086.71 being the amount of the deposits and p a r value of the stock
a l l e g e d i n Paragraph 5 of t h e f i r s t cause of a c t i o n and t h a t as t o o t h e r s
s i m i l a r l y s i t u a t e d to these p l a i n t i f f s , should they come i n and make themselves p a r t i e s , t h a t t h i s p r a y e r be extended t o cover the amount shown to be
due them;
4 . For an accounting of a l l p e n a l t i e s and excess i n t e r e s t charged
by the defendant and p r o p e r c r e d i t as a l l e g e d i n the f o u r t h cause of a c t i o n
above, given t o the F i r s t National Bank of New Bern and the National Bank of
New Berne;
5. And for such o t h e r and f a r t h e r r e l i e f as p l a i n t i f f s may
show themselves e n t i t l e d to r e c e i v e .
(signed)
(signed)
W. B. B. Qui on
Whitehurst & Barden
Attorneys f o r p l a i n t i f f s .
X-6817-
W. J . Lucas, J r . , A d m i n i s t r a t o r , one of the p l a i n t i f f s
above named, "being duly sworn, deposes and s a y s ; That he has r e a d
the foregoing Complaint and t h a t the same i s t r u e of h i s own
knowledge except as to m a t t e r s t h e r e i n s t a t e d on information and
b e l i e f and as t o those matters he b e l i e v e s i t to he t r u e .
(signed)
Sworn to and subscribed b e f o r e me
t h i s 22nd day of January, 1931
(Seal)
(s igned)
M.
P.
Jones
Hotary P u b l i c
My commission e x p i r e s 11/23/31
W. J . Lucas. Adm«
COPY
NORTH CAROLINA
CRAVE! COUNTY
To R. E. Schumacher, Esquire, Receiver of the F i r s t National
Bank of New Bern, Hew Zern, North Carolina.
Dear S i r :
I n behalf of the e s t a t e of W. J . Lucas, who was a
stockholder i n t h e National Bank of New Berne, predecessor of
the F i r s t N a t i o n a l Bank of New Bern, and who was likewise a
d e p o s i t o r i n the F i r s t National Bank of New Bern, and i n b e h a l f of s a i d
e s t a t e j o i n t l y with Mrs. Kate S. Lucas, w i f e of s a i d W. J . Lucas, de*
^
ceased; and of a l l other stockholders of the National Bank of New Berne
and d e p o s i t o r s and c r e d i t o r s of the F i r s t National Bank of New Bern, and
any other p e r s o n s , f i r m s or corporations s i m i l a r l y s i t u a t e d , r e q u e s t and
demand i s hereby made upon you t h a t you f o r t h w i t h i n s t i t u t e proceedings
i n a c o u r t of competent j u r i s d i c t i o n a g a i n s t the Federal Reserve Bank
of Richmond f o r the r e t u r n t o you to "be handled f o r the b e n e f i t of those
persons making t h e demand and a l l other persons s i m i l a r l y s i t u a t e d , of
a l l n o t e s , b i l l s of exchange, d r a f t s , bonds, evidences of indebtedness,
warehouse r e c e i p t s or other items of s e c u r i t y which have been or may
have been d e p o s i t e d vrith the s a i d Federal Reserve Bank of Richmond a s
s e c u r i t y f o r any indebtedness due from the National Bank of New Berne to
the s a i d Federal Reserve Bank of Richmond and/or from t h e F i r s t National
Bank of New Bern o t h e r than notes denominated e l i g i b l e n o t e s , d r a f t s , e t c .
w i t h i n the meaning and tenns of the Federal Reserve Act which were d i s counted or purchased by the Federal Reserve Bank without c o l l a t e r a l
s e c u r i t y , And i n a d d i t i o n t h e r e t o , t h a t i n s a i d proceeding you w i l l
demand the r e t u r n of the items of the c h a r a c t e r received from t h e
F i r s t National Bank of New Born and/or the National Bank of New Berne
by the Federal Reserve Bank of Richmond not h e l d i n accordance with
s a i d Federal Reserve Act and when s a i d items a r e shown to have been
c o l l e c t e d or i f t h e r e t u r n of same cannot be had, t h a t you demand
f o r t h e b e n e f i t of the c r e d i t o r s of s a i d F i r s t National Bank of New
Bern and t h e National Bank of Now Borne, the cash proceeds r e c e i v e d
by the Federal Reserve Bank of Richmond from s a i d items so c o l l e c t e d
or which they f a i l t o r e t u r n .
This demand i s made upon you i n order t h a t you s h a l l
obtain f o r c o l l e c t i o n and d i s t r i b u t i o n among the c r e d i t o r s of the
i n s t i t u t i o n f o r which you a r e Receiver s a i d items u n l a w f u l l y o b t a i n ed and h e l d by the Federal Reserve Bank of Richmond f o r the b e n e f i t
of t h e c r e d i t o r s of t h e s a i d F i r s t National Bank of New Bern and/
or t h e c r e d i t o r s of t h e National Bank of New Berne.
You a r e f u r t h e r n o t i f i e d t h a t should you f a i l to
comply with t h i s demand and immediately i n s t i t u t e s a i d proceedings
273
X-6817-d
-2•jithin a reasonable time of t h i s n o t i c e , t h a t t h e persons maki n g the demand m i l , i n t h e i r own r i g h t , i n s t i t u t e s a i d p r o c e e d ings.
You r / i l l k i n d l y advise w i t h i n t e n days whether
i t i s your purpose to i n s t i t u t e s a i d a c t i o n f o r the recovery of
the a s s e t s improperly and u n l a w f u l l y held by the Federal Reserve
Bank of Richmond, otherwise your f a i l u r e so t o advise w i l l be
deemed a r e f u s a l by you t o comply with t h i s n o t i c e .
This 9th day of October, 1930.
W . J . Lucas, J r . and J . W. Lucas,
Administrators of the E s t a t e of
W. J . Lucas.
Kate S. Lucas
By
Whitehurst & Barden
B. B. Quion
Attorneys
Received 10/8/30
Served 10/9/30 by reading and
d e l i v e r i n g a copy of the w i t h i n
n o t i c e to R. 3 . Schumacher, E s q u i r e ,
Receiver of the F i r s t National Bank
of Hew Bern.
James S. Bryan
Cons t a b l e .
X-6817-d
R. i i Schumacher* Receiver
I
274
The F i r s t ITational Bank of Hew Bern
Hew Bern, N. C. October 16th 1930
Whitehurst & Barden,
Attorneys a t Law,
New Bern, 17. C.
Mr. W. B. R. Guion,
Attorney a t Law,
New Bern, 11. C.
Mr. W. J .
E s t a t e of
Mrs. Kate
New Bern,
Lucas, J r . & Mr. J . V7. Lucas, Adm.
T7. J . Lucas, Deceased,
S. Lucas,
IT. C.
Subject:
Demand made "by Administrators of W. J . Lucas,
Deceased, to commence a c t i o n a g a i n s t the
Federal Reserve Bank of Richmond.
Gentlemen:
Service having been madd upon the Receiver of the F i r s t
National Bank of New Bern, I n s o l v e n t , i n behalf of the e s t a t e of W. J . Lucas
and Mrs. Kate S. Lucas, r e q u e s t i n g t h a t t h e Receiver i n s t i t u t e proceedings in"
a Court of Competent j u r i s d i c t i o n a g a i n s t the Federal Reserve Bank of Richmond,
has been r e f e r r e d to the Comptroller of the Currency.
You were informed t h a t as Receiver of the F i r s t N a t i o n a l
Bank of New s e r n , I r e f u s e to f i l e the a c t i o n r e q u e s t e d i n your demand of
October 9 t h , 1930, as i t i s not w i t h i n my j u r i s d i c t i o n to do s o .
*
The Receiver a l s o Relieves t h a t any such a c t i o n , I f f i l e d ,
should oe f i l e d i n the United S^p-tes D i s t r i c t Court, and i t i s my i n t e n t i o n
to p e t i t i o n f o r removal to t h a t Court any such a c t i o n t h a t may be f i l e d i n the
S t a t e Court.
Respectfully,
Raymond E. Schumacher,
RES-L
Receiver
FEDERAL RESERVE BOARD
^
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
THE FEDERAL RESERVE BOARD
X-6818
February 13, 1931.
Dear S i r :
R e f e r r i n g to my l e t t e r of February 7 with r e f e r e n c e to t h e
case of ? . I . Skinner and Company v . Federal Reserve Bank of Richmond,
e t a l . , I enclose for"ydur f u r t h e r information the following documents:
(1)
Copy of a l e t t e r addressed t o me by Mr. Wallace,
Counsel f o r the Federal Reserve Batik of Richmond
under date of February 10;
(2)
Copy of a l e t t e r addressed to me by Mr. Parker,
Counsel f o r the Federal Reserve Bank of A t l a n t a
under date of February 10;
(3)
A memorandum summarizing the t e l e g r a p h i c r e p l i e s
to my l e t t e r of February 7 r e c e i v e d from Counsel
f o r v a r i o u s Federal Reserve Banks; and
(4)
A copy of a l e t t e r addressed by me to Mr. Wallace
under date of February 13.
While you w i l l observe from my l e t t e r to Mr. Wallace t h a t an
e f f o r t i s being made to reorganize the n a t i o n a l Bank of Greenville and
no f u r t h e r s t e p s should be taken looking toward the employment of s p e c i a l
counsel to a s s i s t i n t h i s l i t i g a t i o n on a System b a s i s u n l e s s the p l a n s
f o r r e o r g a n i z a t i o n f a i l ; i t i s my opinion t h a t , i f the se p l a n s should
f a i l and i f i t should become necessary to l i t i g a t e t h i s case, i t ought
to be handled a s a System m a t t e r f o r the following r e a s o n s :
1.
I t involves s e v e r a l questions of v i t a l i n t e r e s t to a l l
Federal Re serve Banks;
The Federal Reserve Bank of Richmond d e s i r e s to have i t
2.
handled a s a System c a s e and Counsel f o r s e v e r a l of the Federal Reserve
Banks have expressed a s i m i l a r d e s i r e ;
3.
The check i n question was handled with unusual prompt-
!"
X-6818
O1
-2-
ness; the Federal Reserve Bank had. no s p e c i a l knowledge of the impending
insolvency of the drawee hank; t h e r e appear to be no f a c t s upon which
a charge of a c t u a l negligenbe could he sustained! and, i n every r e s p e c t , the case appears to he f r e e from embarrassing complications of
every n a t u r e , except t h a t i t was brought i n the d i s t r i c t i n which t h e
Early case a r o s e ;
i
4.
The Federal Reserve Banks a r e f o r c e d to t r y most cases of
t h i s c h a r a c t e r i n the S t a t e c o u r t s and t h i s case a f f o r d s an unusual
o p p o r t u n i t y to t e s t the questions involved i n the Federal c o u r t s ; and
5.
In my opinio#, i t i s very important to the Federal Reserve
System t o o b t a i n a d e c i s i o n a s soon as p o s s i b l e i n the Federal c o u r t s
d i s t i n g u i s h i n g the r i g h t s , d u t i e s and l i a b i l i t i e s of the Federal Reserve Banks under Regulation *f, as amended September 1, 1930, from t h e i r
r i ^ i t s , d u t i e s and l i a b i l i t i e s under the preceding r e g u l a t i o n as e s t a b l i s h e d i n the d e c i s i o n of the Supreme Court of the United S t a t e s i n the
case of E a r l y v . Federal Reserve Bank of Richmond.
Mr. Wallace a d v i s e s me t h a t the Federal Reserve Bank of Richmond
would p r e f e r to have t h i s case handled as a System case but i s not d i s posed to i n s i s t upon i t u n l e s s a m a j o r i t y of the other Federal Reserve
Banks a r e w i l l i n g to p a r t i c i p a t e , Mr. Wallace f e e l s t h a t , having t r i e d
the Early case and the Federal Reserve Batik of Richmond haying been
opposed t o the amendments to Regulation J adopted e f f e c t i v e September 1,
i t " o u g h t not t o be i n t h e p o s i t i o n of t r y i n g the f i r s t important t e a t
case a r i s i n g under the amended r e g u l a t i o n s without the o t h e r Federal
Reserve Banks being r e p r e s e n t e d i n t h e case by s p e c i a l counsel.
I f , t h e r e f o r e , the plans to r e o r g a n i z e the National Bank of
Greenville should f a i l , and i f i t should become necessary to l i t i g a t e
t h i s case, I s h a l l recommend to the Federal Reserve Board t h a t s p e c i a l
counsel be r e t a i n e d to a s s i s t i n the t r i a l of t h i s case on a System b a s i s .
I f the Board approves my recommendation, i t w i l l immediately communicate
with a l l Federal Reserve Banks i n # r d e r t o a s c e r t a i n whether they a r e
w i l l i n g to p a r t i c i p a t e , and you undoubtedly w i l l be c a l l e d upon to adv i s e and c o n s u l t with your bank oil t h a t q u e s t i o n . I s h a l l keep you f u l l y informed of q l l important developments, i n order t h a t you may inform
the o f f i c e r s of your bank.
With k i n d e s t r e g a r d s and a l l best wishes, I am
C o r d i a l l y yours,
Walter Wyatt,
General Counsel.
TO COUNSEL FOR ALL H&EERAL R3S3BVE BAHKS EXCEPT RICHMOND.
X-6818-a
FBESRAL B3S2RVS MNK OF RICHMOND
February 10, 1931
Federal Reserve Board,
Washington, D. C.
Attention:
Mr. Walter Wyatt. General Counsel.
% dear Mr. Wyatt:
Replying f u r t h e r to your telegram of February 9 t h , I wish
.to say t h a t i n my p e r s o n a l opinion i t would be advisable to remove
the a c t i o n brought by Skinner and Company to the f e d e r a l c o u r t . I
r e a l i z e t h a t the probable a t t i t u d e of the C i r c u i t Court of Appeals
and the p e r s o n a l q u a l i f i c a t i o n s of the d i s t r i c t judge a r e some
reasons why a removal might not be a d v i s a b l e , but, on t h e other hand,
a f i n a l d e c i s i o n i n the f e d e r a l court would be the only precedent
which could be of any h e l p to other Federal reserve banks. A f i n a l
d e c i s i o n by the s t a t e c o u r t s of North Carolina would of n e c e s s i t y leave
the q u e s t i o n u n s e t t l e d u n l e s s we could o b t a i n a review of the d e c i s i o n
of the s t a t e c o u r t by t h e Supreme Court of the United S t a t e s .
When the National Bank: of Greenville suspended we h e l d r e d i s counted n o t e s a g g r e g a t i n g $112,218.86 and held, marginal c o l l a t e r a l aggreg a t i n g $38,955.00. We have not had an opportunity to make a c a r e f u l
appraisement of the value of the paper h e l d by u s , but the Manager of the
Bank R e l a t i o n s Department i s i n c l i n e d to think t h a t most of the paper
which we h o l d i s f a i r l y good and t h a t we a r e probably p r o t e c t e d from any
l o s s even if we should l o s e t h e reserve b a l a n c e . I t t h e r e f o r e seems
t h a t the Receiver has t h e main pecuniary i n t e r e s t , and i f t h i s case i s
not to be handled a s a System m a t t e r , my own idea would be to employ
as t h e l o c a l a s s o c i a t e the a t t o r n e y r e t a i n e d by the Receiver and t o give
him a l l t h e a s s i s t a n c e i n my power i n conducting the case, but to allow
him or t h e Receiver to determine what s t e p s were a d v i s a b l e . I am sure
you can r e a d i l y a p p r e c i a t e my p o s i t i o n i n t h i s m a t t e r , and n a t u r a l l y i f
the case i s made a System m a t t e r I should p r e f e r to have the f i n a l
d e c i s i o n s made by you or Mr. Baker i f he i s r e t a i n e d , and i f i t i s not
handled a s a System m a t t e r , I should p r e f e r to have the C o m p t r o l l e r ' s
O f f i c e assume r e s p o n s i b i l i t y f o r any important d e c i s i o n s , b u t , of course,
i n any event, I would expect to use my b e s t e f f o r t s to secure a f a v o r a b l e
decision.
I remain,
Very t r u l y yours,
(Signed) M. 0 . Wallace
Counsel.
MOW R
X-68l8-b
COPY
g7B
COLQUITT, PARKER, TROUTimi & ARXWRIGHT
ATTORNEYS AT LAW
SUITE 1607 WILLIAM-OLIV3H BLDG.
ATLANTA, GA.
February 10, 1931.
Mr. Walter Wyatt, General Counsel,
Federal Reserve Board,
Washington, D, C.
Dear Mr. Wyatt;
I wired you y e s t e r d a y , i n e f f e c t , t h a t I 8$w no reason why
the case of Skinner v, Federal Reserve Bank of Richmond should, f o r the
p r e s e n t a t l e a s t , "be r e g a r d e d as p r e s e n t i n g q u e s t i o n s of System-wide imr
portance.
The s u i t has e v i d e n t l y been "brought upon the theory t h a t the
Malloy case i s a p p l i c a b l e and upon the f u r t h e r theory t h a t the Federal
Reserve Bank r e f u g e d , p r i o r to the insolvency of the Greenville bank, to
honor a r e q u e s t to charge the r e s e r v e account with the amount of a cash
l e t t e r which could have been p a i d out of such r e s e r v e b a l a n c e .
N e i t h e r t h e o r y i s well taken under the law or the f a c t s . Any
a u t h o r i t a t i v e value of the Malloy case would seem to be removed by the
Regulation, and, f o r t h a t m a t t e r , by the Regulations which have been of
f o r c e ever s i n c e amendments were made to meet the Malloy c a s e .
I cannot b e l i e v e t h a t counsel f o r the p l a i n t i f f w i l l s e r i o u s l y c o n t e s t the m a t t e r on e i t h e r theory when the new Regulation is brought
to t h e i r a t t e n t i o n and i t i s made p l a i n t h a t a t no time during December
10th was the r e s e r v e balance i n s u f f i c i e n t funds to a u t h o r i z e a charge to
the account of the G r e e n v i l l e bank of the net amount of the cash l e t t e r ,
Had the account been i n s u f f i c i e n t funds p r i o r to n o t i c e of
suspension, I think t h a t the a u t h o r i z a t i o n to charge should have been
honored, and I b e l i e v e f u r t h e r t h a t the mere f a c t t h a t e n t r i e s , charging
the account, were not made p r i o r to the r e c e i p t of n o t i c e of suspension
would not have a l t e r e d the s i t u a t i o n . I t has been my idea t h a t a r e m i t tance d r a f t or an a u t h o r i z a t i o n to charge a r e s e r v e account should be
given e f f e c t a s of the time of r e c e i p t and t h a t the p r o h i b i t i o n contained
i n Regulation J , a s t o the making of charges a g a i n s t r e s e r v e accounts
a f t e r n o t i c e of insolvency, would not be a p p l i c a b l e to cases i n which such
n o t i c e was a c t u a l l y r e c e i v e d a f t e r r e m i t t a n c e d r a f t s and/or a u t h o r i z a t i o n s
to charge r e s e r v e accounts reached the Federal Reserve Bank. As s t a t e d
above, I think the Richmond bank should have p a i d the cash l e t t e r out of
the r e s e r v e balance had t h a t balance been s u f f i c i e n t f o r the p u r p o s e .
I t not having been s u f f i c i e n t , the case, i n so f a r as concerns t h i s
p a r t i c u l a r a s p e c t , should be determined i n f a v o r of t h e Reserve Bank
independently of the p r o v i s i o n of Regulation J .
X-6818-b
-3and
but
lar 1
the!
Of course the case may so develop l a t e r t h a t the v a l i d i t y
e f f e c t i v e n e s s of Regulation J may be s e r i o u s l y drawn i n t o q u e s t i o n ,
u n t i l such time I do ndt b e l i e v e t h a t the case i s of any p a r t i c u s i g n i f i c a n c e * I know, furthermore, t h a t Mr. Wallace w i l l give
m a t t e r h i s u s u a l s k i l f u l l and e f f e c t i v e handling!
With regards, I ata
Very t r u l y yours,
(Signed) Robt» S. P a r k e r .
BSP/w
COPY
2-13-31
X-6818 r c
280
REPLIES OF COUNSEL OF VARIOUS FEDERAL RESERVE BAMS TO MR. WYATT'S LETTER OF
FEBRUARY 7, RE SKIMER & COMPANY V. FEDERAL RESERVE BANK OF RICHMOND.
Mr. Weed. Boston :
"Think case Skinner & Co. v s . Reserve Bank of Richmond could
p r o p e r l y "be handled a s Eastern m a t t e r i f Wallace d e s i r e s o u t s i d e
counsel."
Mr. Logan. New York:
"Your l e t t e r February seventh r e g a r d i n g case of Skinner v .
Federal Reserve Bank of Richmond.(stop) We f a v o r handling case a s
system matter "because i t seems l i k e l y t h a t questions of system
i n t e r e s t may he involved.^Stop) We w i l l he glad to pay our pro r a t a
share of expenses of handling case as system m a t t e r . "
Mr. Williams. P h i l a d e l p h i a :
No r e p l y r e c e i v e d up to 11 a.m. February 13th.
Mr. flewell, Cleveland: ( S q u i r e . Sanders & Dempsey)
"Your l e t t e r seventh r e Skinner v s . Federal Richmond. Believe
p r e s e n t s t a t u s of matter does not warrant handling as system case*"
Mr. Wallace. Richmond:
"Your telegram r e Skinner c a s e . This hank e n t i r e l y w i l l i n g to
have case handled a s counsel f o r o t h e r hanks d e s i r e "but p r e f e r s
t h a t case he handled as system m a t t e r . "
Mr. P a r k e r . A t l a n t a :
"Yours February seventh r e f e r r i n g case of Skinner v s . Richmond
b a n k . ( S t o p . ) I do not think d e c i s i o n w i l l e n t a i l determination of
v a l i d i t y and e f f e c t i v e n e s s of l a s t r e g u l a t i o n J . ( S t o p ) . A u t h o r i t y to
charge r e s e r v e account of Greenville Bank wp.s r e c e i v e d when account
was i n s u f f i c i e n t to pay cash l e t t e r and balance was never s u f f i c i e n t
up to and a f t e r c l o s i n g . ( S t o p ) . . Do not b e l i e v e t h a t Malloy case can
be used a s a u t h o r i t y i n view of new r e g u l a t i o n and while new r e g u l a t i o n r e n d e r s Early case i n a p p l i c a b l e even were t h i s not t r u e i n s u f f i c i e n c y of balanco to pay l e t t e r would a f f o r d ground of d i f f e r e n t i a t i o n . ( S t o p . ) Case may involve negligence i n d i r e c t sending but
t h i s element always p r e s e n t i n s i m i l a r c a s e s . ( S t o p . ) Think Receiver
w i l l wish to remove case and b e l i e v e r e s e r v e bank should j o i n i n
p e t i t i o n f o r removal."
"
Mr. Meyer. Chicago:
" I t seems r a t h e r d i f f i c u l t from complaint i n Skinner v s . Federal
Reserve Bank of Richmond to determine what p l a i n t i f f w i l l r e l y upon
t o r e c o v e r . However i t would seem t h a t v a l i d i t y of r e g u l a t i o n J ,
w i l l c e r t a i n l y be involved as defense w i l l n e c e s s a r i l y be p r e d i c a t e d
t h e r e o n , | n view of t h i s s i t u a t i o n I am ready to advise Federal
Reserve Bank of Chicago to have m a t t e r t r e a t e d a s system m a t t e r i f
other Federal r e s e r v e banks f e e l t h i s should}, be done."
X-6818-c
-2-
:
281
Mr. McConkey, S t . L o u i s :
"The f i g u r e s furnished, by Wallace do not i n d i c a t e s u f f i c i e n t
"balances a t any t i n e a f t e r r e c e i p t of s l i p r e f e r r e d to t o j u s t i f y
the making of the charges r e q u e s t e d , even under the c o n t e n t i o n i n
the E a r l y c a s e . ( S t o p . ) Have no doubt a s t o the v a l i d i t y of r e g u l a t i o n " J " ; n e v e r t h e l e s s when a t t a c h e d i t "becomes a System m a t t e r
of utmost importance and i f Wallace d e s i r e s System a s s i s t a n c e i t
should "be f u r n i s h e d . "
Ueland and Uoland. Minneapolis}
No r e p l y up t o 11 a.m. February 1 3 t h .
Mr. Leedy. Kansas C i t y :
'
" S u i t of Skinner and Company v e r s u s F e d e r a l He servo Bank of
Richmond i n my judgnent should "be handled a s a System m a t t e r p a r t i c u l a r l y i n view of s u g g e s t i o n of Wallace t h a t he may "be p r e j u d i c e d
i n c o u r t s of h i s d i s t r i c t pad s t a t e by r e a s o n of d e f e n s e s made by
him i n o t h e r s u i t s . ( S t o p . ) Aside from q u e s t i o n of a p p l i c a t i o n and
e f f e c t of r e g u l a t i o n J , I c o n s i d e r the case important and of concern
to a l l o t h e r r e s e r v e banks by r e a s o n of charge t h a t Richmond bank
knew o r should have known t h a t drawee bank Was i n s o l v e n t t ( S t o p . )
Also f e e l t h a t every e f f o r t should be made to induce C o m p t r o l l e r ' s
o f f i c e to remove c a s e to Federal Court should t h e r e by any d i s p o s i t i o n i n th&t o f f i c e t o allow the case to remain i n the s t a t e court* 11
Locke* Locke. Stroud & Randolph! Dallas!
"Re your l e t t e r February seventh * We b e l i e v e cases i d e n t i c a l l y s i m i l a r t o one mentioned i n Wallace l e t t e r of February 4 t h
have been s u c c e s s f u l l y defended by Counsel f o r m a j o r i t y of r e s e r v e
banks w i t h o u t a s s i s t a n c e of o u t s i d e c o u n s e l . Of course c a s e i s of
importance t o e n t i r e System and i f Wallace f e e l s any embarrassment
on account of E a r l y c a s e i n making defense we s h o u l d suggest t h e
a d v i s a b i l i t y of employment of o u t s i d e Counsel."
Mr. Agnew. San F r a n c i s c o :
No r e p l y r e c e i v e d up to 11 a.m. February 1 3 t h .
X-6818-d
COPY
February 13, 1931.
Mr. M. G. Wallace, Counsel,
Federal Reserve Bank of Richmond,
Richmond, V i r g i n i a .
My dear Mr. Wallace:
Although I have communicated with you by telephone and t e l e graph, I wish f o r m a l l y to acknowledge r e c e i p t of your l e t t e r s of Febr u a r y 4 and February 10 with r e f e r e n c e to the case of W. I , Skinner
and Company v. Federal Reserve Bank of Richmond and W. P . Wright, Rec e i v e r of the National Bank of G r e e n v i l l e .
As I wired you l a s t n i g h t , Mr. Barse, Counsel to the Compt r o l l e r of the Currency, r e a d i l y agreed with our view t h a t t h i s case
ou^it to be removed.to the Federal c o u r t s and has i n s t r u c t e d the r e ceiver to have h i s counsel get i n touch with you a t once and take prompt
steps to remove the case to the Federal c o u r t . Mr. Barse recognizes
t h a t the i n t e r e s t s of the Federal Reserve Bank and the O f f i c e of t h e
Comptroller of the Currency a r e i d e n t i c a l i n so f a r a s the questions of
law involved i n t h i s case a r e concerned and t h a t , if the case should
r e s u l t i n a d e c i s i o n in the a p p e l l a t e c o u r t s , i t would be a most imp o r t a n t t e s t case f o r the Comptroller's O f f i c e as well as f o r a l l the
Federal r e s e r v e banks.
This morning, however, Mr. Barse c a l l e d on me again and
t o l d me t h a t an e f f o r t i s being made to organize a new bank to take over
the a s s e t s and assume the l i a b i l i t i e s of the National Bank of Greenv i l l e ; and, of course, t h i s p l a n contemplates t h a t a l l c r e d i t o r s of the
National Bank of G r e e n v i l l e would be p a i d i n f u l l , u n l e s s they volunt a r i l y accept some compromise. Mr. Barse s a i d t h a t the proponents of
t h i s p l a n a r e very c o n f i d e n t of success and t h a t we should know w i t h i n
t h i r t y days whether the p l a n w i l l be consummated. Of course, i f i t i s
consummated, Skinner and Company w i l l be p a i d and t h e i r s u i t w i l l be
dismissed. I n the meantime, Mr, Barse and I a r e agreed t h a t i t would
be a d v i s a b l e to proceed with the removal of the case t o the Federal
Court and then mark t i n e u n t i l i t i s p o s s i b l e to determine the outcome
of the p l a n to r e o r g a n i z e t h e bank. -Pending the outcome of the r e o r g a n i z a t i o n p l a n , I f e e l t h a t no f u r t h e r s t e p s should be taken to
employ s p e c i a l counsel and handle t h i s case a s a System c a s e .
I f , however, the r e o r g a n i z a t i o n p l a n s should f a i l and
you should be f o r c e d to l i t i g a t e t h i s case, I agree with you t h a t i t
ou^txt to be handled a s a System case, not only f o r the reasons s t a t e d
by you in your l e t t e r s of February 4 and February 10 and i n your t e l e -
X-6818-d
-3phone conversation with ne yesterday, "but a l s o because i t appears
to be f r e e f r o r . embarrassing circumstances, would make an unusuall y good t e s t case and would f u r n i s h an unusual opportunity t o obt a i n a d e c i s i o n i n the Federal c o u r t s d i s t i n g u i s h i n g the d o c t r i n e of
the E a r l y case from the r i g h t s , d u t i e s and l i a b i l i t i e s of the Federal
reserve banks under Regulation J a s amended September 1, 1930.
As I t o l d you l a s t n i g h t , there i s considerable d i f f e r e n c e
of opinion among counsel f o r t h e o t h e r Federal reserve banks over the
question whether t h i s case ought to be handled a s a System c a s e . For
your f u r t h e r i n f o r m a t i o n i n t h i s connection, I enclose a copy of
the l e t t e r which I addressed to Counsel f o r a l l Federal r e s e r v e banks,
a meaorandnn giving the t e x t of the r e p l i e s r e c e i v e d from Counsel f o r
the v a r i o u s Federal r e s e r v e banks, and a copy of a l e t t e r which I r e ceived from Mr. Parker t h i s morning with r e f e r e n c e to t h i s c a s e .
I s h a l l keep Counsel f o r the other Federal r e s e r v e banks
f u l l y a d v i s e d of a l l developments; so t h a t , i f the p l a n s to r e o r g a n i z e the bank f a i l and i t becomes necessary to l i t i g a t e t h i s case, i t
w i l l be p o s s i b l e to o b t a i n prompt a c t i o n by a l l Federal r e s e r v e banks
on the q u e s t i o n of employing s p e c i a l counsel on a System b a s i s to
a s s i s t i n t h e t r i a l of t h i s c a s e .
With a l l b e s t r e g a r d s , I am
C o r d i a l l y yours,
Walter Wyatt,
General Counsel,
Enclosures.
WW-sad
!
3 8 4
X-6819
STATEMENT OF BUREAU OF ENGRAVING AND PRINTING
Federal Reserve Notes, S e r i e s 1928
January 2 t o 31, 1931.
|5
$10
Boston
New York
Philadelphia
Cleveland
132, 000 205,000
Richmond
28, 000
Atlanta
Chicago
131,
S t . Louis
000
12,
000
Minneapolis
44,000
•Kansas City
Dallas
San Francisco 154, 000 58,000
457,000 307,000
$20
30,000
-
99,000
-
30,000
-
30,000
$50
6,000
46,000
10,000
33,000
46,000
3,000
12,000
-
-
3,000
—
10,000
8,000
13,000
3,000
-
2,000
Total
Sheets
36,000
46,000
20,000
41,000
495,000
34,000
12,000
161,000
12,000
79,000
Amount
$3,328.20
4,252.70
1,849.00
3,790.45
45,762.75
3,143.30
1,109.40
14,884.45
1,109.40
7,303.55
-
-
-
-
-
65,000
17,000
9,000
303,000
28,012.35
254,000
176,000
45,000
1,239,000
114,545.55
1,239,000 s h e e t s , © $92.45 per M
$100
$114,545.55
2m
X-6820
FEDERAL RESERVE BOARD
STATEMENT FOR THE PRESS
For immediate Release
February 17, 1931,
The f i r s t and o r g a n i z a t i o n meeting of the Federal Advisory Council f o r
1931 was h e l d on Tuesday, February 17.
The members of the Council a r e :
Federal Reserve D i s t r i c t No. 1,
Boston, Herbert K. H a l l e t t
No. 2 ,
New York, Robert H. ®reman
No. 3,
P h i l a d e l p h i a , Howard A. l o e b
No. 4,
Cleveland, J . A. House
No. 5,
Richmond, John Poole
No. 6,
A t l a n t a , J . P. Butler;
No. 7,
Chicago, Melvin A. Traylor
No. 8,
S t . Louis, Walter W. Smith
No. 9,
Minneapolis, Geo. H. P r i n c e
No. 10,
Kansas City, Walter S. McLucas
No. 11,
D a l l a s , B. A. McKinney
No. 12,
San Francisco, Henry M. Robinson
1
B. A. McKinney of D a l l a s , was r e - e l e c t e d P r e s i d e n t and Walter W« Smith
of S t . Louis, was r e - e l e c t e d Vice P r e s i d e n t .
These o f f i c e r s as e x - o f f i c i o
members and Messrs. Loeb, Traylor, P r i n c e and McLucas w i l l comprise the Executive
Committee.
Mr. Walter L i c h t o n s t e i n was appointed S e c r e t a r y of the Council.
FEDERAL
A D V t S 0 R Y C 0 U IT C I L
X-6821
1931
Executive Committee;
Officers:
B. A. McKinney
Howard A. Loeb
Walter TT. Smith Walter S. McLucas
George H. Prince Melvin A. Traylor
Bi A. McKianey, P r e s i d e n t
Walter 77* Smith, Vice P r e s i d e n t
Walter L i c h t e n s t e i n , S e c r e t a r y
M E M B IBS
District.
No. 1
Herbert K. H a l l e t t
A t l a n t i c National Bank,
Boston, Massachusetts.
No. 2
Robert H. Treman
Tompkins County National Bank,
I t h a c a , New York.
No. 3
Howard A. Loeb
Tradesmens National Bank & Trust Co.,
P h i l a d e l p h i a , Pa.
Ho. 4
J . A. House
Guard! an Trus t Company,
Cleveland, Ohio.
No. 5
John Poole
Federal American National Bank,
Washington, D. C.
No. 6
J . P. B u t l e r
Canal Bank & Trust Company,
New Orleans, La.
Uo. 7
Melvin A. Traylor
F i r s t National Bank,;
Chicago, I l l i n o i s .
Uo. 8
Walter W. Smith
F i r s t National Bank,
S t . Louis, Missouri.
No. 9
George H. P r i n c e
F i r s t N&tional Bank,
S t . P a u l , Minn.
No. 10
Walter S, McLucas
Commerce Trust Company,
Kansas City, Missouri.
(
No. 11
B. A. McKinney
F i r s t n a t i o n a l Bank,
D a l l a s , Texas.
No. 12
Henry M. Robinson
S e c u r i t y - F i r s t ITational Bank,
Los Angeles, C a l i f o r n i a .
Address of Mr. L i c h t e n s t e i n , 38 South Dearborn S t r e e t , Chicago, I l l i n o i s
February 17, 1931.
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
THE FEDERAL RESERVE BOARD
X-6822
February 17, 1931.
SUBJECT?
Holidays during March, 1931.
Dear S i r :
On Monday, March 2nd, the Federal Reserve Bank of
Dallas and i t s Branches a t 3 1 Paso, Houston and San Antonio,
w i l l be closed i n observance of Texas Independence Day.
On Wednesday, March 25th, the Baltimore Branch of
the Federal Reserve Bank of Richmond w i l l be closed i n observance of Maryland Day.
On the dates i n d i c a t e d , the banks a f f e c t e d w i l l not
p a r t i c i p a t e i n e i t h e r the Gold Settlement Fund or the Federal
r e s e r v e note c l e a r i n g . Please include c r e d i t s f o r the o f f i c e s
a f f e c t e d on each of the holidays with your c r e d i t s f o r the
following b u s i n e s s day, and make no shipments of Federal r e serve n o t e s , f i t or u n f i t , f o r account of the Federal Reserve
Bank of D a l l a s on March 2nd,
P l e a s e n o t i f y branches.
Very t r u l y yours,
J . C. H o e l l ,
Assistant Secretary
TO GrOVlRUORS OF ALL F. R. BAMS.
I
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
THE FEDERAL RESERVE BOARD
X-6823
February 18, 1931.
SUBJ3CT:
Expense, Zfain Line, Leased T i r e System,
J a n u a r y , 1931.
Dear S i r :
Enclosed h e r e w i t h you w i l l f i n d two mimeograph s t a t e m e n t s , X-6823-a and X-6823-1, covering
i n d e t a i l o p e r a t i o n s of the main l i n e , Leased Wire
System, d u r i n g the month of J a n u a r y , 1951.
P l e a s e c r e d i t the amount payable by your
bank i n the g e n e r a l a c c o u n t , T r e a s u r e r , TJ. S . , on
your books, and i s s u e C/B Form 1, N a t i o n a l Banks,
f o r account of " S a l a r i e s and Expenses, Federal Hes e r v e Board, S p e c i a l Fund", Leased Wire System,
sending d u p l i c a t e 6/D t o the Federal Reserve Board.
Very t r u l y y o u r s ,
F i s c a l Agent.
Enclosures.
To Governors of a l l F. R. Banks except Chicago
X-»6823~a
REPORT SHOWING CLASSIFICATION AMD NUMBER OF WORDS TRANSMITTED OVER MAIN LINE
OF THE FEDERAL SHSERVE LEASED WIRE SYSTEM FOR THE MONTH OF January, 1931.
From
Business
reported
"by
"banks
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
29,041
130,056
34,360
83,854
58,016
69,154
102,690
81,646
35,157
88,926
69,487
99,258
2,596
1,844
2,477
2,402
7,107
• 3,106
2,075
3,250
2,575
10,432
4,240
31,637
130,056
36,204
86,331
6o,4l8
76,261
105,796
83,721
38,407
91,501
79,919
103,498
3-42
14.08
3.92
9-35
6.54
8.26
11.45
9.06
4.16
9-91
8.65
11.20
f o t a l
881,645
42,104
923,749
100.00
F
Words sent by
New York chargeable to other
F, R. Banks (1)
Net Federal
Reserve
Bank
"business
R. Board business . . . . . .
(*)
1,223,086
299,337
Treasury Department business Incoming and Outgoing . . . . .
Total words transmitted over main l i n e s
Percent of t o t a l
bank business (*)
.
.
.
.
.
.
.
.
77,426
.
.
These percentages used: in calculating the pro rata share of leased wire expense as shown
on the accompanying statement (X- 6823-b).
Number of words sent by New York to other F. R. Banks for t h e i r sole b e n e f i t charged to
banks indicated in accordance with action taken at Governors' Conference
November 2 - 4 , 1925-
1,300,512
HBPUtil ui1 JSXmitite MAIS LINE
FEDERAL RESERVE LEASED WIRE SYSTEM, JANUARY, 1931.
Operators'
Salaries
game of Bank
Boston
New York
Pniladelohia
Cleveland
Richmond
AfcIant
^
Chicago
St. L$ais
liinoeapplis
lessee# C i t y
$
Se» Weacisco
Federal Reserve Board
Total
$
Operators'
Overtime
260.00 $
1,129-14
225-00
306.66
190.00
270.00
3.675.89(#)
195.00
200.00287.50
251.00
38O.OO
----33.00
.00
1.00
-—
-—
-
-
-
7,370.19
$
4.00
Wire
Rental
---—
2230.00(&)
30.00(6)
--—
--—
-—
~~
15,765.39
$ 15,995-39
$$
260.00
260.00
1,129.1%
1,129.14
225.00
225.00
306.66
420.00
270.00
270.00
3,678.89
196.00
200.00
200.00
287-50
287.50
251.00
380.00
'
15,765.39
$
$
(&)
(#)
(*)
(a)
(b)
Pro Rata
Share of
Total
Bxoenses
Total
Tocoenses
$
1#I
23,369.58
$
1,391.31(a)
21,978-27
Payable to
Federal
Reserve
Board
Credits
751.66
751-66
3,094.54
861.55
22,054.97
,054.97
1,437.38
1,815.40
2,516.51
2,516.51
1,991.23
1.991.23
914.29
2,178.05
11,901.12
,901.12
2,461.57
$$
260.00
260.00 $
1,129.14 '
1.129.14"
2225.00
25.00
306.66
420.00
2270.00
70.00
3,678.89
3,578.89
1 9 66..O0 O0
200.00
287.50
251.00
38O.OO
380.00
491-66
l,90»4o
636.55
1,748*31
1,01708
1,545,40
1,1$2.38(*)
1,795,23
714.29
1,890.55
1,650,12
2,081.57*
-
21,978.27
Main Line r e n t a l , Richmond-Washington.
Includes s a l a r i e s of Washington operators.
Credit.
Received $ 1,391-31 from Treasury Department covering business f o r the month of
Amount reimbursable to Chicago.
X-6823-b
$
7,604.19$
$
15,536.46
1.162.18(b)
14,374.08
January, 1931.
m
ZD
C
1
.
"f.
** ^iyVl
>,• t
2
X-S827
COPY
FIFTH DISTRICT.
Mo. 178.
SUPREME COUHT OF NORTH CAROLINA
Spring Term, 1931.
*********************************
FEDERAL RESERVE BAIIK Of RICHMOND, VIRGINIA,
a tanking c o r p o r a t i o n ,
v.
G. S . ATTMOSE, t r a d i n g as NEUSE MOTOR COMPANY and G. S. ATTMORB, i n d i v i d u a l l y .
**********************************
' i O E X
Complaint —
—
Answer
——
Exhibit A
Exhibit B —
Exhibi t C —:
—
Notice
Order of Small, J .
—
—
Order of Small, J . —
Motion -—•——-——
——
Order of Small, J . - — - — - — —
Appeal E n t r i e s
——
Exception
——
1
4
20
26
26
27
28
28
29
31
34
34
***** ****************************
X-6827
Ho. 178k
FIFTH DISTRICT.
SUPREME COURT OF NORTH CAROLINA
Spring Term, 1931.
****************************************************************
FEDERAL H3SERVE BANK OF RICHMOND, VIRGINIA,
a banking c o r p o r a t i o n ,
• 6 . S. ATTMOHE, t r a d i n g a s EBtJSB MOTOR.COMPANY and G. S. ATTM033, i n d i v i d u a l l y .
****************** **********************************************
Before SMALL, J . , J a n . 27, 1931
Defendant Appealed.
-
-
Craven Superior Court -
****************************************************************
SUMMOHS dated September 9 , 1930, appears i n o r i g i n a l t r a n s c r i p t .
************************ ************* ***************************
COMPLAINT
The p l a i n t i f f , complaining of the d e f e n d a n t s , a l l e g e s :
1 . That the p l a i n t i f f i s a banking corporation duly c r e a t e d
and e x i s t i n g under and by v i r t u e of the banking laws of the United
S t a t e s of America, with p r i n c i p a l o f f i c e s i n the City of Richmond,
Va., and the defendants a r e r e s i d e n t s of Craven County, North
Carolina.
2 . That as p l a i n t i f f i s informed and b e l i e v e s , the d e f e n d a n t ,
(}. S. Attmore, i s the Mole owner of the Neuse Motor Company, and i s
conducting a g e n e r a l automobile business i n the City of New Bern,
s a i d County and S t a t e , and t r a d i n g under the f i r m name of Neuse
Motor Company and as such i s engaged i n the s a l e of Chevrolet a u t o mobiles and o t h e r motor driven cars and trucks and p a r t s and equipment.
3 . That on September 28, 1929, the s a i d defendant, G> S. A t t more, t r a d i n g a s Neuse Motor Company, f o r value r e c e i v e d , executed
and d e l i v e r e d h i s promissory note f o r the sum of $5,000.00, and i n
words and f i g u r e s , as follows, t o - w i t :
"New Bern, M. C.,
S e p t . 28, 1929.
Oct, 29, 1929, a f t e r date we promise to pay to the order of
Ourselves Five Thousand D o l l a r s , $5,000.00.
No.
- 2 -
X-6827'
"Negotiable and payable a t the f i r s t Rational Bank, Hew Bern,
'ST. C./, ? i t h i n t e r e s t a f t e r m a t u r i t y , and we, the makers and endorse r s , hereby agree to continue and remain bound f o r the payment of
t h i s note and a l l i n t e r e s t thereon, notwithstanding any f a i l u r e
and omission to p r o t e s t t h i s note f o r non-payment-, or to give n o t i c e
of non-payment or dishonor or p r o t e s t or to ;nake presentment or demand f o r payment, e x p r e s s l y waiving any -protest and a l l n o t i c e of
non-payaent or dishonor or p r o t e s t i n any form, or any presentment
or demand f o r payment, or any n o t i c e whatsoever.
For value r e c e i v e d .
liEUSE MOTOR CO.
(SEAL)
By G. S. Attmore,
Due:
Manager
(SSA1)"
Partner
4. That t h e r e a f t e r , on or about September 28, 1929, the s a i d
defendant, G, S. Attmore, trading as Neuse Llotor Company, f%r value
received, endorsed, t r a n s f e r r e d and assigned unto the 51 r a t iTationa l l a n k of Ufew Bern the s a i d promissory note and the 51 r e t National
Bank of Hew Bern became the holder of s a i d note i n due course and
f o r value,
5. That t h e r e a f t e r , on or about September 28, 1929, the F i r s t
.rational Bank of IJew B e r n , f o r valuable c o n s i d e r a t i o n , t r a n s f e r r e d
and o s s i ned the s a i d note to the p l a i n t i f f and the p l a i n t i f f t h e r e by became the holder of s a i d note i n due course and f o r value and
i s now the owner and holder of said note i n due course and f o r value.
6. That on October 8, 1929, the defendant, G. S. Attmore, trading as Heuse Motor Company,, f o r value received, executed and del i v e r e d to the F i r s t National Bank of Hew Bern h i s promissory note
i n the sum of $2,000.00 and i n "rords and f i g u r e s as follows, t o - w i t :
"New Bern, U. C.,
Ho. 08065.
Oct. 8, 1939.
Thirty days a f t e r date we promise to pay to the order of the
F i r s t n a t i o n a l Bank, Hew Bern, 3L C., Two Thousand Dollars
($2,000,00).
Negotiable and payable a t the F i r s t National Bank, 2Tew Bern,
H. C., with i n t e r e s t a f t e r m a t u r i t y . And we, the makers and end o r s e r s , hereby agree to continue and remain bound f o r the payment of t h i s note and a l l i n t e r e s t thereon, notwithstanding any
f a i l u r e and omission to p r o t e s t t h i s note f o r non-payment, or to
give n o t i c e of non-payment or dishonor or p r o t e s t or to make p r e sentment or demand f o r payment, expressly waiving any p r o t e s t and
a l l n o t i c e of non-payment or dishonor or p r o t e s t i n any form, or
any presentment or demand f o r payaent, or any n o t i c e whatsoever,
For value r e c e i v e d .
•
ig&USS MOTOE C0MPA.TY (SEAL)
By G. S. Attmore,
Manager
(SEAL)
New Bern, N. C.,, P a r t n e r ,
Due No.v.7."
293
*
-3-.-
Xr6827
7. That a t the time of the execution and. d e l i v e r y of s a i d
note as a f o r e s a i d by the defendant, G. S. Attmore, trading as Ileuse
Motor Company, the d e f e n d ^ , t , G. S. Attmore, 3^d&vidually, endorsed
s a i d note and tnereby bec&A l i a b l e thereon as sucn endorser and
guaranteed the payment of same.
8. That t h e r e a f t e r , on dr about October 8, 1929, the s a i d
F i r s t National Bank of Hew Bern, f o r valuable c o n s i d e r a t i o n , endorsed, t r a n s f e r r e d and,as signed the said note to the p l a i n t i f f and
p l a i n t i f f thereby became tho h o l d e r of s a i d note i n due course and
f o r value and i s now tho ormer and holder of s a i d note i n due course
and f o r v a l u e .
2. That the s a i d notes a r e p a s t due and unpaid and demands
have 'been made upon the. defendants and oatih of them f o r payment
b u t the defendants have f a i l e d and r e f u s e d t o make payment; of s a i d
notes or e i t h e r of thorn or any p a r t thereof or t h e i n t e r e s t accrued
thereon and do s t i l l f a i l and r e f u s e t o spake payment of s a i d n o t e s .
10. That tho defendants a r e due and owing the p l a i n t i f f the
f u l l sum of $7,000.00 T l t h i n t e r e s t on #5,000.00 from October 29,
1929, u n t i l p a i d , and i n t e r e s t on $2,000.00 from November 7 , 1929,
u n t i l paid.
I7HE3EFQRE, p l a i n t i f f demands judgment a g a i n s t the defendants,,
and each of. thorn* j o i n t l y and s e v e r a l l y ;
1. In the f u l l sum of $7,000.00, with i n t e r e s t on $5,000.00
from October 29, 1929, u n t i l p a i d , and i n t e r e s t on $2,000.00 from
November 7, 1929, u n t i l p a i d .
2 . For c o s t s of t h i s a c t i o n and such other end f u r t h e r g e n e r a l r e l i e f as u l a i n t i f f may be e n t i t l e d to r e c o v e r .
W. Ht LEE,
. • ,
Attorney f o r P l a i n t i f f .
(Verified)
,
(9— 6— 30) i
ANSWER
The defendant* answering the complaint^ s a y s : .
,
1. A l l e g a t i o n one i s uenied; save i t i s admitted t h a t the def e n d a n t , G. S* Attmore, i s #, r e s i d e n t of Graven County* Horth Carol i n a ; a t a l l times h e r e i n mentioned. I t i s denied t h a t p l a i n t i f f
i s a Banking Corporation. I t i s admitted, however, t h a t the e f f o r t
has been made by the p l a i n t i f f to p e r v e r t t h i s Federal Be serve Bank,
c r e a t i o n of the Democratic Administration, and to abrogate, d e s t r o y
and d i s r e g a r d the b e n e f i c e n t and "d,se purposes and l l a d i a t i o n s of
the c r e a t i o n , as s e t f o r t h i n the t i t l e of an a c t , t o - w i t : "An Act
to provide f o r the establishment of Federal Reserve Banks, to f u r n i s h e l a s t i c currency, to a f f o r d a means of r e d i s c o u n t i n g commercial
p a p e r , to e s t a b l i s h a more e f f e c t i v e s u p e r v i s i o n of banking i n the
United S t a t e s and f o r o t h e r purposes." (Federal Beserve Act, December 23, 1913),
2 9 4
~ 4 ~
X~68g7
i
2 . In answer to a l l e g a t i o n 2, t h i s defendant admits t h a t he
i s the sole owner of the keusre Motor Company; t h a t the same i s a
t r a d e name, duly r e g i s t e r e d , as provided by law of the S t a t e of
n o r t h Carolina; and t h a t he i s engaged i n the s a l e of the Chevrolet
automobile and t h e e x e r c i s e of the f r a n c h i s e of the Chevrolet Motor
Conpany.
3. A l l e g a t i o n 5 i s denied. I t i s e s p e c i a l l y denied t h a t the
p a p e r w r i t i n g d e s c r i b e d i n the a l l e g a t i o n was executed or d e l i v e r e d
for value.
4 . A l l e g a t i o n 4 i s denied; and i t i s e s p e c i a l l y denied t h a t
the defendant, G-. S. Attmore, f o r value r e c e i v e d , endorsed, e t c . ,
and t h a t the F i r s t Rational Bank of Hew Bern became the h o l d e r ,
e t c . , i n due course and f o r v a l u e .
5. A l l e g a t i o n 5 i s denied; and t h i s defendant demands t h a t
the p l a i n t i f f produce the s e c r e t w r i t t e n agreements and c o n t r a c t s
which i t compelled the i n s o l v e n t F i r s t National Bank of Hew Bern to
execute to i t r e l e v a n t to marginal c o l l a t e r a l ; and to the papers
r e f e r r e d t o i n the complaint; t h a t the p l a i n t i f f be r e q u i r e d to
s e t f o r t h the f a c t s i n d e t a i l concerning i t s p o s s e s s i o n of t h e
paper w r i t i n g d e s c r i b e d i n a l l e g a t i o n 3 of the complaint. The
t r u t h of the m a t t e r s and things s e t f o r t h i n a l l e g a t i o n 5 i s h e r e i n a f t e r s t a t e d , upon the information and b e l i e f of t h i s d e f e n d a n t .
6. A l l e g a t i o n 6 i s admitted.
7. A l l e g a t i o n 7 i s admitted.
8. In answer to a l l e g a t i o n 8, the a l l e g a t i o n i s denied; and
t h i s defendant demands t h a t the p l a i n t i f f produce the s e c r e t w r i t - .
ten agreements and c o n t r a c t s which i t compelled the i n s o l v e n t F i r s t
N a t i o n a l Bank of Hew Bern to execute to i t r e l e v a n t t o marginal c o l l a t e r a l ; t h a t the p l a i n t i f f be r e q u i r e d to s e t f o r t h the f a c t s i n
d e t a i l concerning i t s p o s s e s s i o n of the paper w r i t i n g d e s c r i b e d i n
a l l e g a t i o n 3 of the complaint. The t r u t h of the matters and things
s e t f o r t h i n a l l e g a t i o n 8 i s h e r e i n a f t e r s t a t e d , upon the informat i o n and b e l i e f of t h i s d e f e n d a n t .
9. I n answer to a l l e g a t i o n 9, i t i s admitted t h a t the m a t u r i t y
d a t e s of the paper w r i t i n g s r e f e r r e d t o i n a l l e g a t i o n 3 and a l l e g a t i o n 6 have passed; and i t i s admitted t h a t t h i s defendant has n o t
p a i d to the p l a j n t i f f ei t h e r the sum of $5000 or the sum of $2000•
A l l other m a t t e r s and things a l l e g e d i n t h i s a l l e g a t i o n a r e denied;
save i t i s admitted t h a t t h i s defendant r e f u s e s to make, payment to
the p l a i n t i f f a s demanded i n the complaint.
10. A l l e g a t i o n 10 i s denied.
The d e f e n d a n t , FURTHER PLEADING TO THE COMPLAINT, a v e r s :
That t h e F i r s t National Bank of Hew Bern, being i n s o l v e n t , was
p l a c e d i n the hands of Raymond E. Schumacher, Receiver, appointed
by the Comptroller of the Currency, f o r the purpose of l i q u i d a t i o n ,
and the National Bank of New Bern, being i n s o l v e n t , appointed a
l i q u i d a t i n g ^ a g e n t , t o - w i t , W. W. G r i f f i n . That Schumacher, Receiver,
i s a proper' and n e c e s s a r y p a r t y and should be brought i n t o Court and
p e r m i t t e d to p l e a d to the a f f i r m a t i v e defense and c r o s s - p l e a s e t up
-
5
X-6827
###
by the defendant, and t h i s defendant now so moves*
FOE FURTHER AiTSTIER JUlE DlSZTSS A1ID AS A 00inTiT3HClIAIM, : d e fendant s a y s : 1. That the p l a i n t i f f should sue under i t s proper t i t l e ,
which i s "Federal Reserve Bank of Richmond, Ya.," see s e c t i o n 325,
chapter 5, t i t l e 12, United S t a t e s Code Annotated, and as such
only has power to sue ( s e c t i o n 341, chapter 3, e t c . ) ; and i t i s
not a banking c o r p o r a t i o n , hut i s a Federal Reserve Bank, c r e a t e d ,
e x i s t i n g and organized under Chapter 3, t i t l e 12, United S t a t e s
Code Annotated, the Act of December 23, 1913, under t i t l e , "Fede r a l Reserve A c t , " ( s e c t i o n 226, chspter 3, e t c . ) : and p o s s e s s e s
such powers only as "by s a i d a c t a r e p e r m i t t e d t o i t and as a r e
enumerated under s e c t i o n s 341 to 331, i n c l u s i v e , chapter 3, above
mentioned.
2. That on the 18th day of August, 1928, and p r i o r t h e r e t o ,
the n a t i o n a l Bank of 2Tew Berne was, as sutih, a going concern, and
a "member bank" of the Federal Reserve. Bank of Richmond, t h i s
p l a i n t i f f , a g r e e a b l e to s e c t i o n s 281 and 282, chapter 3 a f o r e s a i d ;
and a t s a i d d a t e and ti/ne, and a t a l l times t h e r e a f t e r , up to and
i n c l u d i n g t h e 19th day of March, 1929, the value of the shares of
the c a p i t a l s t o c k of the s a i d Federal Reserve Bank
Richmond.,
o m e d by the s a i d The National Bank of New Berne, under s e c t i o n
287, Chapter 3 of the a c t a f o r e s a i d , was i n value i n excess of the
sum of $7500.00. That p r i o r to the 19th day of March, 1929, the
value of s a i a s t o c k became a v a i l a b l e i n cash, ( s e c t i o n 288, chapter
3 afoi e s a i d ) f o r a p p l i c a t i o n to the indebtedness of the s a i d n a t i o n a l Bank to the p l a i n t i f f .
That on the 18th day of August, 1928, up to and i n c l u a i n g the
19th day of March, 1929, the s a i d The n a t i o n a l Bank of Hew Berne had
a, d e p o s i t with the p l a i n t i f f of a stun i n excess of $7500, ( s e c t i o n s
461 and 462, chapter 3 a f o r e s a i d ) .
3. That p r i o r ttjj 1920, there was i n e x i s t e n c e i n New Bern,
n o r t h Carolina, the Peoples Bank,a s t a t e c o r p o r a t i o n , a member of
the p l a i n t i f f Federal Beserve Bank. That s a i d bank was l a r g e l y
i n d e b t e d t o the P l a i n t i f f , and, because of the requirements a p p l i e d
by the p l a i n t i f f , u n a b l e to p r o p e r l y f u n c t i o n . That p l a i n t i f f , i n
i t s j 3 x e r c i s e of power a r r o g a n t l y assumed, caused the National Bank
of ..:ew .cerne to absorb the "aid Peoples Bank and to assume i t s
o o l i g a t i ons.
That the National Bank of ITew Berne became i n s o l v e n t , and such
f a c t became known to the p l a i n t i f f , and the p l a i n t i f f , i n f a c t and
i n law, then knew the Hati onal Back of ITew Berne to be i n s o l v e n t
( s e c t i o n 481, ciiaptejr 3 a f o r e s a i d ) . And the s a i d The National Bank
of 'f.en Berne continued i n s o l v e n t on through the 18th of August, 1928,
and through the 20th day of1 March, 1929, and such f a c t continued to
be known to the p l a i n t i f f , and with the f u l l knowledge of the p l a i n t i f f
2 9 6
- 6
X-6827
s a i d . T h e N a t i o n a l Sank oxTfew Berne executed ana e n t e r e d i n t o a
p a p e r w r i t i n g , h e r e t o a t t a c h e d and marked E x h i b i t "A", which same
was k e p t s e c r e t and d i d not o b t a i n p u b l i c knowledge u n t i l about
A p r i l , 1C30, a l l as defendant i s a d v i s e d , informed and b e l i e v e s .
4.. That on the 2 0 t h day of March, 1929, the F i r s t N a t i o n a l
Bank of Hew Berne was organized and p u t i n t o e x i s t e n c e , frith a l l of
the component and surrounding f a c t s and circumstances and c o n d i t i o n s ,
h e r e i n b e f o r e s e t o u t , f u l l y known to the p l a i n t i f f ; and, as t h i s d e f e n d a n t i s a d v i s e d , informed and 'believes and so a v e r s , took over
c e r t a i n of t h e a s s e t s of the s a i d The n a t i o n a l Bank of Hew Berne and
assumed a l l of the l i a b i l i t i e s of the n a t i o n a l Bank of ITew Be m e ,
save the c a p i t a l s t o c k . That the c a p i t a l and s u r p l u s of the s a i d
F i r s t F a t i o n a l Bank was p r o v i d e d , as t h i s d e f e n d a n t i s a d v i s e d , i n formed and b e l i e v e s , i l l e g a l l y and i n f r a u d from the County of
Craven and from t h e p u b l i c funds of the County of Craven, which
s a i d f a c t was f u l l y known a t t h e time, and p r i o r t h e r e t o , to t h e
p l a i n t i f f , and e v e r y d e t a i l , a s , a f o r e s a i d , f u l l y known t o s a i d
plaintiff.
That s a i d F i r s t n a t i o n a l Bank of ITew Bern, i n March, 1929, b e came a member bank and a s t o c k h o l d e r and owned s t o c k in. the F e d e r a l
Reserve Bank of Richmond, of t h e then and now v a l u e i n excess of
$7500, which same ?as owned s u b j e c t to the p r o v i s i o n s Of s a i d c h a p t e r
3 of the a c t a f o r e s a i d ; and, i n a d d i t i o n t h e r e t o , i t m a i n t a i n e d i t s
r e s e r v e b a l a n c e w i t h the s a i d p l a i n t i f f i n excess of the sum of
$7500, as by s e c t i o n 462 i t was r e q u i r e d t o do.
5. That, a s t h i s defendant i s a d v i s e d , informed and v e r i l y
b e l i e v e s , the s a i d F i r s t Hatioss.1 Bank of ITew Berne was, a t the
time of i t s c r e a t i o n , i n s o l v e n t , and i t s c o n d i t i o n of i n s o l v e n c y
c o n t i n u e d from the 20th day of March, 1929, t o t h e 26th day of Octo b e r , 1929, when i t ceased to f u n c t i o n .
That t h e l a s t p u b l i s h e d s t a t e m e n t of t h e s a i d i n s o l v e n t The
n a t i o n a l Bank of Hew Berne, showing i t s c o n d i t i o n a s of December
31, l b 2 8 , i s i n round f i g u r e s as s e t f o r t h i n E x h i b i t B h e r e t o
a t t a c h e d ; and t h e f i r s t s t a t e m e n t of the s a i d F i r s t R a t i o n a l Bank
of rew Bern, a s of March 27, 1829, i s as s e t f o r t h i n E x h i b i t 0
h e r e t o a t t a c h e d . That E x h i b i t A h e r e t o a t t a c h e d has r e f e r e n c e , i h
p a r a g r a p h 1 (c) to- t h e same choses i n a c t i o n i n c l u d e d under t h e
f i r s t item of t h e f i r s t s t a t e m e n t of t h e F i r s t ITational Bank,
l o a n s and D i s c o u n t s , and the same i t e m , E x h i b i t 3 , l a s t s t a t e m e n t
of t h e .National Bank of Bow 'Bern, w i t h the e x c e p t i o n only of t h o s e
choscs i n a c t i o n withdrawn as i n s o l v e n t under the d i r e c t i o n of t h e
examiners, and grouped a s c o l l a t e r a l t o the note of the N a t i o n a l
Bank of Hew Berne t o t h e F i r s t ITational Bank, r e f e r r e d t o i n a l l e g e s
ti.on 3, page 1, a l l e g a t i o n 3, page 2, and e l s e w h e r e , of t h e c o n t r a c t
between the s a i d two bahk%, which c o n t r a c t i s E x h i b i t A. h e r e t o
a t t a c h e d . And t h e p l a i n t i f f , a t t h e time t h e r e o f , was f u l l y a d v e r t e n t
297
0
*
• : . 298
- 7 -
X-6827
t o the f a c t s h e r e i n s t a t e d , and the s a i d $250,000.00 note w i t h t h e
c o l l a t e r a l t h e r e t o a t t a c h e d , was u t t e r l y i n s o l v e n t and, under no •.
c o n d i t i o n s , worth more th#%_ the sum of $20,00.%*QQ or some such
small amount, and the e-amo has never been c o l l e c t e d and can never
"be c o l l e c t e d , as t h i s defendant i s a d v i s e d , informed and "believes.
3. That, as h e r e i ; i b e f u r # s e t f o r t h , s&id Peoples Bank was a
:member of the F e d e r a l Seserve Bank, and, as such, was f u l l y and
r e g u l a r l y and c a r e f u l l y examined and a l l knowledge d e r i v e d t h e r e f r o m
h e l d "by the. p l a i n t i f f . That* as a f o r e s a i d , the p l a i n t i f f r e q u i r e d
and br ought ab out the amlgamabion of the two banks, to-wi t , Peoples
Bank and t h e Uati onal Batik of ITsx-: Berne.
That about 1927 or 1828, the National Bank of ITew Berne was
r e q u i r e d to make good $225,000 worth of l o s s e s , and the same " a s
done "by the u s e of $225,000.00 of the money of Graven County.
That a t or about t h a t time, p l a i n t i f f , dominating s a i d bank,
n o t i f i e d the o f f i c i a l s of the s a i d bank t h a t i t d e s i r e d the bank to
employ Mr. Hugh p . Deal to take charge of s a i d Bsnk, and n e g o t i a t i o n s were thereupon e n t e r e d i n t o w i t h the s a i d Mr. Hugh p . , S e a l ,
then one of the bank examiners of the p l a i n t i f f .
That a t t h a t time Mr. Beal accepted a p o s i t i o n with a member ,
bank i n E l i z a b e t h C i t y , and remained with i t about 5 months, or
u n t i l i t c l o s e d ; b u t thereupon, a t the i n s t a n c e of the p l a i n t i f f ,
came to ITew Berne and examined each and every of the a s s e t s of the
N a t i o n a l Bank: of Hew Berne. That, a t the time of s a i d examination,
t h e r e ~as i n the s a i d bank, as a p a r t of i t s c u r r e n t a s s e t s , a
. l a r g e p a r t of t h e a s s e t s a c q u i r e d from the Peoples Bank above ment i o n e d , which the s a i d r e p r e s e n t a t i v e of the p l a i n t i f f had a l r e a d y
i n v e s t i g a t e d while examining the Peoples Bank and b r i n g i n g about
the amalgamation a f o r e s a i d *
That Lir. Beal became the v i c e - p r e s i d e n t of the s a i d N a t i o n a l
Bank, under the mandate of the p l a i n t i f f , and remained w i t h the
s a i d bank f o r a p e r i o d of about 6 months.
That on or about the 7th day of March, 1929, t h e r e was d e p o s i t e d i n the 7th n a t i o n a l City Bank, under the c o n t r o l of t h e
s a i d Beal, to tne account of The n a t i o n a l Bank of Hew Berne, t h e
sum of $200,000, proceeds from the s a l e of an i s s u e of $600,000,
Craven County Hptes, which said, n o t e s were i s s u e d u n l a w f u l l y by the
Commissioners of Craven County, under a s p e c i a l Act of the L e g i s l a t u r e , a l l done u n l a w f u l l y * That from s a i d $200,000, $180,000 t h e r e , of was p l a c e d , under the o r d e r s , d i r e c t i o n and management of t h e
s a i d B e a l , i n the P l a n t e r s Bank of Richmond; and, t h e r e a f t e r , on
o r about the 1 8 t h , 19th or 20th of March, i n the Federal Reserve
Bank of Richmond, a l l by and under t h e d i r e c t i o n and c o n t r o l of
t h e s a i d B e a l , by means known t o the p l a i n t i f f , b u t unknown to
1
8 -
X-682?
t h i s defendant;
That an or about the 19th or 20th of March, the Comptroller
of t h e Currency l i c e n s e d , and therecame i n t o e x i s t e n c e a N a t i o n a l
Bank t o be o p e r a t e d by the City of Hew Bern, which opened i t s doors
on the 2 0 t h of March, under Federal c h a r t e r ITo. 13298, i n r e s e r v e
d i s t r i c t No. 5, t h a t i s , d i s t r i c t of the Federal Reserve Bank of
Richmond. That t h e s a i d Hugh P. S e a l was t h e v i c e - p r e s i d e n t and
e x e c u t i v e o f f i c e r of t h e s a i d bank, who had organized and c r e a t e d
t h e 1 same, u n d e r t h e advice and counsel of t h e p l a i n t i f f and of the
Comptroller of the Currency, as t h i s defendant i s a d v i s e d and i n formed and v e r i l y b e l i e v e s .
That on or about the 19th of 20th day of March, 1929, the s a i d
sum was p l a c e d t o the c r e d i t of the F i r s t N a t i o n a l Bank of New Bern
a s i t s p a i d i n c a p i t a l stock and s u r p l u s .
That, i n a d d i t i o n t h e r e t o , a n o t h e r sum of $50,000, or $80,000,
or some such amount, was l i k e w i s e , i n some sinfLlar manner, handled
and made a v a i l a b l e f o r t h e u s e of the s a i d F i r s t N a t i o n a l Bank,
through the agency above mentioned*
That p a p e r w r i t i n g , E x h i b i t A, was then made and executed, copy
t h e r o f f i l e d w i t h t h e p l a i n t i f f , and a t a l l times h e r e i n mentioned
i n t h e r e c o r d s of the p l a i n t i f f , i n c l u d i n g t h e e x h i b i t s r e f e r r e d to
i n said paper w r i t i n g .
That a t a l l tjanes h e r e i n mentioned the s a i d The N a t i o n a l Bank
of ITew Berne was i n s o l v e n t , and i t s c o n d i t i o n f u l l y r e p o r t e d t o
and f u l l y known by t h e p l a i n t i f f . That a l l of i t s a s s e t s were,
from time t o time, a p p r a i s e d , and t h e value t h e r e o f determined,
and i n f o r m a t i o n and r e p o r t p r o v i d e d to the p l a i n t i f f .
That, p r i o r t o the s a i d 20th of March, 1929, p l a i n t i f f had
m a i n t a i n e d , a t New Bern, it® agent and r e p r e s e n t a t i v e , to whom
i t s e n t items f o r c o l l e c t i o n i n cash a c r o s s the counter of s a i d
t h e N a t i o n a l Bank of New Berne.
7. That on the s a i d 20th of March, 1929, the s a i d a s s e t s of
the N a t i o n a l Bank of Few Berne became the a s s e t s of the new N a t i o n a l Bank, t h a t i s t o s a y , the F i r s t N a t i o n a l Bank of New Bern. That
the county money, above menti med, obtained u n l a w f u l l y and through
f r a u d , never became the p r o p e r t y of the F i r s t N a t i o n a l Bank of New
B e r n e , b u t always remained the p r o p e r t y of the County of Craven,
and t h e s a i d F i r s t n a t i o n a l Bank of New Bern, w i t h a l l t h e s e m a t t e r s
and t h i n g s f u l l y known t o the p l a i n t i f f , was i n s o l v e n t when i t
opened on the 2 0 t h day of March, 1929, and continued and remained
i n s o l v e n t throughout i t s s h o r t c a r e e r , t h a t i s , to the 26th day
of October, 1929, when i t c l o s e d .
- 9 ~
X-6827
That u n l a w f u l l y , contrary to the power g r a n t e d to the p l a i n t i f f ,
wholly u l t r a v i r e s and i n f r a u d upon the d e p o s i t o r s and c r e d i t o r s
of the n a t i o n a l Bank of Hew Borne and the F i r s t n a t i o n a l Bank, of
2Tex? Lern, p l a i n t i f f held i n i t s possession some pSOO.OOO or $700,000,
f a c e value of t h e a s s e t s of the s a i d t*70 n a t i o n a l Banks a t a l l
times h e r e i n mentioned, including the paper w r i t i n g s r e f e r r e d to i n
a l l e g a t i o n s 3 and 6 of the complaint. That, from i t s very beginning,
twelve of i t s c r e d i t o r s , in eliding the p l a i n t i f f , h e l d about S4$ of
a l l of i t s a s s e t s to cover about 34$ of the t o t a l general l i a b i l i t y
of the s a i d new ITational Bank, leaving about 33$ of the a s s e t s ,
composed of the " l e f t o v e r s , " which s a i d " l e f t o v e r s , " as t h i s
defendant i s a d v i s e d , informed and b e l i e v e s , a r e and were of
p r a c t i c a l l y no e a r t h l y v a l u e .
That t h i s defendant i s advised, informed and b e l i e v e s t h a t
the Receiver appointed by the Comptroller of the Currency, under
the advice and guidance of the Comptroller of the Currency, and
vrith the knowledge and consent of the p l a i n t i f f , has brought
a c t i o n s to reduce to possession a l l of the s a i d 64$ of a s s e t s ,
save prime $600,000 or $700,000, chosen and c a r e f u l l y s e l e c t e d
by the p l a i n t i f f , and, as to t h o s e , s a i d r e c e i v e r has conveniently
s e l e c t e d and d e s i g n a t e d c e r t a i n thereof for use f o r the purposes;
f i r s t , of embarrassment to the community and, second, the d e s t r u c t i o n of the b u s i n e s s l i f e of the community.
That under the law, p l a i n t i f f can n e i t h e r hold nor own the
a s s e t s ' above mentioned, but i s l i m i t e d by the p r o v i s i o n s of Chapter
3, T i t l e 13, U. S. 0. A. That i n law, p l a i n t i f f ought to be r e quired to account t o R. E. Schumacher, Receiver of the F i r s t Nationa l Bank of Hew Bern, f o r a l l of the a s s e t s of s a i d bank i n i t s
hands and to account t o W. W. G r i f f i n , L i q u i d a t i n g Agent, f o r a l l
of the a s s e t s of the Batiimal Bank of Hew Berne, and e s p e c i a l l y
should be r e q u i r e d to account to the county of Craven f o r the f o u r
hundred t w e n t y - f i v e odd thousand d o l l a r s of i t s moneys u n l a w f u l l y ,
f r a u d u l e n t l y , had and obtained.
That the d e b t , i f any debt there was, owed by the F i r s t n a t i o n a l Bank of Hew Bern to the p l a i n t i f f , on the 26th of October, 1929,
was $208,000, more or l e s s . That s a i d i n d e b t e d n e s s , p l a i n t i f f has
undertaken to r e p r e s e n t as $208,000 of the r e c e i v a b l e s of s a i d F i r s t
n a t i o n a l Bank, discounted, m t h $400,000 to $500,000 of the b i l l s r e ceivable of s a i d bank as marginal c o l l a t e r a l , under some s o r t of
w r i t t e n agreement.
8. That on the 18th day of August, 1929, t h i s defendant e x e c u t ed a -paper w r i t i n g as f o l l o w s , t o - w i t t
- 10 -
X-6827
:iTo. 63732
New Bern, N. C. Aug. 18, 1928.
NI2TBTY DA.YS a f t e r date we promise to psy...4»- t h e order of
Ourselves a t the n a t i o n a l Bank of Hew Berne, f i v e
Thousand D o l l a r s ($5,000.00) with i n t e r e s t a f t e r m a t u r i t y ;
and we, the makers and endorsers h e r e o f , hereby agree to
continue arid remain bouM f o r the paj&Bat of t h i s note and
a l l i n t e r e s t thereon, notwithstanding any extension of time
granted t o the p r i n c i p a l , and notwithstanding any f a i l u r e
or omission t o p r o t e s t t h i s note f o r nonpayment or to give
n o t i c e of nonpayment or dishonor or p r o t e s t or to make a
presentment or demand f o r payment, e x p r e s s l y waiving any
p r o t e s t and any and a l l n o t i c e of any extension of time
or of nonpayment or dishonor or p r o t e s t i n any form, or any
presentment or demand f o r payment, or any n o t i c e whatsoever.
For value r e c e i v e d .
Due 11—16—28.
NEOSE MOTOR CO.
By Gr. S. ATTMORE, P a r t n e r .
and d e l i v e r e d the same to the above mentioned The Rational Bank of
Hew Bera^,and a t t h e time no c o n s i d e r a t i o n passed from s a i l the
R a t i o n a l Bank of Hew Berne to t h i s defendant, and the same was
wholly an accomodation o b l i g a t i o n .
That such f a c t ?as known t o the p l a i n t i f f , the p l a i n t i f f b e i n g i n law chargeable with such knowledge i n view of the p r o v i s i o n s
of chapter 3 h e r e i n b e f o r e r e f e r r e d t o , and i n view, e s p e c i a l l y , of
s e c t i o n s 481, 483 and 484, and of i t s examinations made and super-*
vision exercised.
That the p l a i n t i f f had caused an examination of the s a i d The
N a t i o n a l Bank of New Berne to be made s h o r t l y a f t e r August 18th,
1928, and a t s e v e r a l i n t e r v a l s t h e r e a f t e r , and from a proper exami n a t i o n i t was oound to appear t h a t no thing of value passed from
the s a i d The National Bank of New Berne to t h i s defendant, a l l , as
t h i s defendant i s advised, informed and b e l i e v e s .
That i n s a i d t r a n s a c t i o n the s a i d The National Bank of New
Berne vas and became the agent of the p l a i n t i f f , s a i d paper w r i t i n g
b e a r i n g i t s endorsements across i t s back as foilowe
11
The National Bank of New Berne, New Bern, if, C. Nov.
Rengr/od. pay to the order of any bank or banker or pay
to 26451 order of Federal Reserve 4gont Federal Reserve
Bank of Richmond,
Pay to the order of Federal Reserve Bank of Richmond,
Va. Sep. 1, 1928, Demand, n o t i c e and p r o t e s t waived
National Bank of New Bern, W. J . Caroon Cashier.
301
- U -
X-S827
i 303
Pay to t h e o r d e r o f F e d e r a l R e s e r v e B a n k o f Bi chmond
for c o l l e c t i o n f o r t h e a c c o u n t of F e d e r a l R e s e r v e A g e n t .
Sep. 4, 1928."
That, t h e r e a f t e r , on Sucembor 13, 1928, the s a i d accomodation
note r a s '.renewed, i n equivalent -*ords, form, f i g u r e s , and v.ith the
endorsements "by the p l a i n t i f f ' a n d "by the ai'ent of the p l a i n t i f f i n
the i d e n t i c a l or e q u i v a l e n t words, form and f i g u r e s .
That t h e r e a f t e r , on January 4, 1929, the s a i d accomodation
note ras renewed, i n e q u i v a l e n t " ords, form, f i g u r e s and wi th the
endorsements by the p l a i n t i f f and by the agent of the p l a i n t i f f i n
the i d e n t i c a l or e q u i v a l e n t words, form and f i g u r e s .
That t h e r e a f t e r , on February 4, 1929, the s a i d accomodation
note - a s renewed, i n equivalent " o r d s , form, f i g u r e s and ' i t h the
endorsements by the p l a i n t i f f and by the agent of the p l a i n t i f f i n
the i d e n t i c a l or e q u i v a l e n t words, form and f i g u r e s .
9. That s a i d The n a t i o n a l Bank of New Berne and the p l a i n t i f f
Federal F.eserve Ban!*, and the F i r s t n a t i o n a l Bank of Hew Bern wrongf u l l y converted and undertook by t h e i r c o l l u s i v e a c t s ? and e s p e c i a l l y
by paper w r i t i n g 2 x h i b i t A h e r e t o a t t a c h e d , to convert the same; and
the p l a i n t i f f then h e l d the same as t r u s t e e , by v i r t u e of the wrong,
f o r this defendant.
That s a i d accomodation instrument was i n the a c t u a l possession
of the p l a i n t i f f , held as h e r e i n b e f o r e s e t f o r t h , wrongfully and
i l l e g a l l y , and with knowledge of i t s conversion and with knowledge
of the matters and things h e r e i n b e f o r e averred, c o n t r a r y to t h e
power of p l a i n t i f f , a l l as defendant i s advisad and b e l i e v e s .
10. That qn June 1, 1929, the s a i d accomodation note was r e newed, i n e q u i v a l e n t words, form, f i g u r e # and wi t h the endorsements
by the p l a i n t i f f and by the agent of the p l a i n t i f f i n the i d e n t i c a l
or e q u i v a l e n t words, form and f i g u r e s *
That on J u l y 1 , 1 - 0 ,
i n e q u i v a l e n t words, form,
p l a i n t i f f and by the agent
e q u i v a l e n t words, form and
trie paid accomodation note was renewed,
f i g u r e s and with the endorsements by the
of the p l a i n t i f f in the i d e n t i c a l or
'
figures.
That on J u l y 30, 1929, the s a i d accomodation note was renewed,
i n equivalent words, form, f i g u r e s and with the endorsements by the
p l a i n t i f f and by the agent of the p l a i n t i f f i n the i d e n t i c a l or
e q u i v a l e n t worus, form and f i g u r e s .
That on August 3 0 t h , 1929, the s a i d accomodation note was r e newed, i n e q u i v a l e n t words, form, f i g u r e s , and r i t h the endorsements
by the p l a i n t i f f and by the agent of t h e p l a i n t i f f i n the i d e n t i c a l
or e q u i v a l e n t words, form and f i g u r e s .
-
— 13 —
X-6827
That on September Z r t h , 1929, the s a i d accomodation n o t e was
renewed, i n e q u i v a l e n t words, form, f i g u r e s , and with the endorse*
ments by the p l a i n t i f i and o r the agent of the p l a i n t i f f i n 1
t h e i d e n t i c a l or e q u i v a l e n t words, forms and f i g d r e s .
That each and every of %he foregoing instruments a r e and were
renewal accomodations. That t h i s defendant i s not indebted to the
p l a i n t i f f on account thereof i n any sum.
11. That the paper w r i t i n g described i n a l l e g a t i o n 6 i s the
o b l i g a t i o n of t h i s defendant, and r e p r e s e n t s an a c t u a l loan made
to t h i s defendant, but the s a i d paper w r i t i n g i s not the p r o p e r t y
of t h e p l a i n t i f f , nor i s the p l a i n t i f f the holder thereof i n due
course. That t h i s defendant had on deposit w i t h the F i r s t National
Bank of lies? Bern, a t the time i t closed i t s doors, the sum of
$1,585.62, and t h i s defendant i s e n t i t l e d to apply i t s s a i d d e p o s i t a s an o f f s e t and has o f f e r e d to pay to the Receiver of the
F i r s t R a t i o n a l Bank of New .".em the d i f f e r e n c e between tho amount
of s a i d d e p o s i t and the amount of s a i d demand, t h a t the same has
been r e f u s e d . Defendant now s t a n d s ready, a b l e and w i l l i n g t o pay,
and here tenders and p r o f f e r s to pay, the s a i d i n s a t i s f a c t i o n of
s a i d demand. (?)
That t h i s defendant i s advised, informed and b e l i e v e s t h a t
s a i d note was i n the a c t u a l p o s s e s s i o n of s a i d F i r s t n a t i o n a l Bank
of New Bern and i s now i n the p o s s e s s i o n of B. 3 . Schumacher,
Receiver of the F i r s t National Bank of New Bern, and b e a r s u n r e s t r i c t e d endorsement.
12. This defendant i s advised, informed and b e l i e v e s and so
a v e r s , t h a t the p l a i n t i f f nas not paid value or any sum whatever
f o r e i t h e r of the notes described i n the complaint.
13. That i f t h e p l a i n t i f f ?as the holder of s a i d note or of
t h a t paper d e s c r i b e d i n a l l e g a t i o n 3 on the 23th day of October,
1929, then t h i s defendant a v e r s t h a t the same v?as h e l d under and
upon terms ind c o n d i t i o n s s e t f o r t h i n a w r i t t e n instrument, the
p r o d u c t i o n whereof i s demanded, and a t the time the p l a i n t i f f had
i n i t s possession funds of the F i r s t National Bank i n excess of
$7,500, and the s a i d F i r s t National Bank a t t n e time was a s t o c k h o l d e r j holding s t o c k in the p l a i n t i f f i n excess of t h e amount of
$7,500. That the defendant had on deposit w i t h , and the F i r s t
N a t i o n a l Bank was indebted to the defendant i n the sum of $1,585*62.
Then t h i s defendant i s e n t i t l e d to be subrogated to the r i g h t s of
the F i r s t N a t i o n a l Bank of Now Bern in and t o and a g a i n s t s a i d fond
and the value- of s a i d stock and i s e n t i t l e d to have s a i d d e p o s i t
a p p l i e d as a s e t o f f upon the s a i d n o t e .
14.
That t h i s defendant i s e n t i t l e d :
> 13 -
X-6827
1. To have the p l a i n t i f f surrender to R. E. Schumacher and/
or T7. W, G r i f f i n , Receiver ah|. l i q u i d a t i n g Agent, r e s p e c t i v e l y ,
of t h e F i r s t N a t i o n a l Bank of "Hew Bern and T]?.e. National Bank of New
Berne, a l l of the a s s e t s i n i t s hands or p o s s e s s i o n , the p r o p e r t y
of the F i r s t National Bank of New Bern and the National Bank of New
Berne;
Second; To e l e c t , designate and p o i n t out
v a l u e , of s a i d p r o p e r t y and choses i n a c t i o n as
debtedness e x i s t i n g by s a i d F i r s t National Bank
former indebtedness of the National Bank of New
p l a i n t i f f and to r e t u r n and r e s t o r e to the s a i d
s a i d G r i f f i n a l l the excess of choses i n a c t i o n
i n g items d e s c r i b e d i n complaint*
such p a r t , a t f a c e
i s equal t o t h e i n of New Bern and the
Berne t o the s a i d
Schumacher and the
aforesaid; includ-
Third: To have the paper w r i t i n g s d e s c r i b e d i n a l l e g a t i o n s 3
and 6 r e t u r n e d and r e s t o r e d , and the paper w r i t i n g described i n
a l l e g a t i o n 3 surrendered back to t h i s d e f e n d a n t , and the paper raiti n g described i n a l l e g a t i o n 6 c r e d i t e d with t h i s d e f e n d a n t ' s d e p o s i t ,
and, Upon the payment of the d e b t , surrendered up t o t h i s defendants
Fourth; To have s a i d R. E. Schumacher, Receiver, c o l l e c t f o r
t h e p r o p o r t i o n a t e use and b e n e f i t of t h i s defendant a l l such choses
i n a c t i o n so h e l d by the p l a i n t i f f to ? h i c h i t i s i n law not ent i t l e d , .and. which i t i s undertaking and attempting to convert,
c o n t r a r y to law, c o n t r a r y to the Act, chapter 3 , h e r e i n b e f o r e r e f e r red t o , and c o n t r a r y to good morals.
. F i f t h ; To have a p p o i n t e d by t h i s Court some f i t , competent,
d i s c r e e t and d i s i n t e r e s t e d person to have and r e c e i v e and hold and
c o l l e c t and p r e s e r v e a l l the s a i d $600,000 or $700,000 of a s s e t s ,
under appointment as a Receiver of t h i s Court, pending the o r d e r s
of t h i s Court i n the d i s p o s i t i o n of t h i s cause by t h i s Court, to
the e n d t h a t the judgment of t h i s Court be made e f f e c t i v e .
WHEREFORE, t h i s defendant prays t h a t p l a i n t i f f take nothing
on account of the $5000 note described i n the complaint: t h a t the
same be surrendered up to t h i s Court and marked n u l l and void*
That the p l a i n t i f f be r e q u i r e d and d i r e c t e d to surrender t h e
$2,000 note d e s c r i b e d i n the complaint to R. E. Schumacher, R e c e i v e r , and t h a t the same be c r e d i t e d i n the sum of $1585.62, a s
of the 26th day of October, 1929. That a copy., of t h i s answer be
served upon R. S. Schumacher, r e c e i v e r of the F i r s t National Bank
of New Bern, and t h a t s a i d Receiver be r e q u i r e d to e l e c t to make
himself p a r t y defendant or r e q u i r e d to answer t h e a f f i r m a t i v e matter
s e t up by t h i s defendant; and f o r such general and f u r t h e r r e l i e f
as defendant may be e n t i t l e d . That the p l a i n t i f f be r e q u i r e d to
show cause b e f o r e His Honor, Small, Judge, a t New Bern, on October
4 t h , 1930# a t 10 6 1 clock A. M., or such time t h e r e a f t e r as counsel
may be heard, why the paper w r i t i n g described i n the complaint
- 14 -
X-6827
should not be impounded, i n the court; and ~hy a competent and f i t
p e r s o n should not be ^ % ) i n t e d by t h i s Courj^jty. have p o s s e s s i o n o f ,
c o l l e c t and p r e s e r v e tfi8 choses i n a c t i o n d e f e r r e d to i n the
f u r t h e r answer of the defendant. . That p l a i n t i f f be r e q u i r e d to p r o duce the following documents and w r i t i n g s t o - w i t : 1 . D e t a i l e d r e p o r t of the examination of the peoples Bank of
Ken Barn, made and f i l e d with the p l a i n t i f f j u s t p r i o r to i t s a b s o r p t i o n by the National Bank of Hew Berne.
2 . A d e t a i l e d r e p o r t of the examination of The Rational Bank
made immediately b e f o r e and immediately a f t e r t h e absorption of the
Peoples Bank.
3.
after.
Each d e t a i l e d r e p o r t of the National Bank of Hew Berne t h e r e -
4 . The f i r s t and a l l d e t a i l e d r e p o r t s of examination of the
F i r s t n a t i o n a l Bank of Hew Bern.
5 . The s p e c i a l r e p o r t of examination, showing the use by the
s a i d bank of the p u b l i c funds of Craven County.
;
I • :
•' - :
j o, Jhe w r i t t e n documentary information and r e p o r t s from the
Comptroller of the Currency, from the s e v e r a l examiners concerning
the®organization of t h e F i r s t National Bank of ITew Bern, having
especial reference to:
j :( a )/
The c a p i t a l , and s u r p l u s fund and i t s source;
(y) The a s s e t s ;
tc) The l i a b i l i t i e s ;
(&) The choses i n a c t i o n of the National Bank of Hew
Berne i n the p o s s e s s i o n o<T the p l a i n t i f f on the 19th day of March,
1939;
, ( e ) j!ha choses i n a c t i o n remaining i n hand on the" 21st day of
March, 158®,
/
i
\ ( V e r i f i e d Sept. 25, 1950).
W. B. R. GUJON,
Attorney f o r Defendant.
EXHIBIT ""A". .
THIS C017T3LA.CT, made and e n t e r e d i n t o t h i s 19th day of March, ,
A. D. 1929, by and between the n a t i o n a l Bank of New Berne, New Bern,
N« C., a n a t i o n a l banking a s s o c i a t i on having i t s p r i n c i p a l p l a c e of
b u s i n e s s i n the City of New Betn, N. C., h e r e i n a f t e r c a l l e d the F i r s t
Bank, p a r t y of the f i r s t / p a r t , and the F i r s t National Bank of New
Bern, New Bern, IT. C., a n a t i onal banking as a v i a t i o n having i t s
p r i n c i p a l p l a c e of business i n the s a i d City of New Bern, h e r e i n a f t e r
•:k;
-15-
'
X-6827
c a l l e d th6 Second Baiikj p&Hy ttj" the second p a r t , r r i t n e s s e t h :
WHEREAS, the c a p i t a l stock of the F i r s t Bank i s impaired and
such bank i s i n an embarrassed c o n d i t i o n , and,
WH2EEAS, the Second Bank has o f f e r e d to assume and pay a l l
l i a b i l i t i e s to d e p o s i t o r s of the F i r s t Bank, i n c o n s i d e r a t i o n of
the t r a n s f e r by the F i r s t Bank to the Second Bask of c e r t a i n a s s e t s
s e l e c t e d by the l a t t e r , c o n s i s t i n g of Dollars (*1
.
$1,920,756.08) worth
of a s s e t s , and f o r the f u r t h e r c o n s i d e r a t i o n of the i s s u e and del i v e r y by the F i r s t Bank to the Second Bank of i t s promissory note
payable on demand f o r an amount s u f f i c i e n t to cover the d i f f e r e n c e
between the a s s e t s as shown by the books of the F i r s t Bank and a s s e t s
as s e l e c t e d and accepted by the Second Bank amounting to
Dollars
f 2 5 0 , 0 0 0 . 0 0 a s above s t a t e d , l e s s t h e amount of the c a p i t a l , p r o f i t s
and "reserves of the F i r s t Bank a t the time of the t r a n s f e r , the payment of such promissory note to be secured by the pledge of a l l the
a s s e t s of the F i r s t Bank not t r a n s f e r r e d to the Second Bank;
NOW THEREFORE THIS AGREEMENT WITNESSETH: That p a r t i e s h e r e t o ,
i n c o n s i d e r a t i o n of the premises and of One Dollar by each of the
p a r t i e s h e r e t o t o the other i n hand p a i d , and r e c e i p t thereof i s
hereby acknowledged, do agree as f o l l o w s : 1 . The F i r s t Bank does hereby g r a n t , b a r g a i n , s e l l , a s s i g n ,
t r a n s f e r and s e t over unto the Second Bank and i t s successors and
a s s i g n s the following p r o p e r t y of the F i r s t Bank:
(a) The Banking House and r e a l e s t a t e s i t u a t e i n the City of
Hew Bern, North Carolina, t o g e t h e r v/ith a l l f i x t u r e s , appurtenances,
equipment, v a u l t s , o f f i c e f u r n i t u r e and s u p p l i e s now contained i n
s a i d banking house, or elsewhere.
(b) A l l o t h e r r e a l e s t a t e s i t u a t e d i n Craven, Jones, C a r t e r e t
and Pamlico Counties.
•
(c) All B i l l s r e c e i v a b l e , n o t e s , b i l l s of exchange, d r a f t s and
o t h e r evidences of indebtedness, a l l bonds, s e c u r i t i e s , judgments,
claims and chases i n a c t i o n , a l l cash on hand and due from banks,
cash items and revenue stamps, a l l r i g h t , t i t l e and i n t e r e s t i n and
to the s t o c k i n the Federal Reserve Bank of Richmond, Va., and a c crued dividends thereon, and a l l o v e r d r a f t s .
2 . The F i r s t Bank agrees t o execute and d e l i v e r t o the Second
Bank a good and s u f f i c i e n t deed to s a i d r e a l e s t a t e and a l s o a l l
proper assignments, conveyances, b i l l s of s a l e , assurances and a l l
o t h e r instruments and documents vrhich may a t any time and from time
- 16 -
X-6827
o
t o time be n e c e s s a r y or deB^r&ble to t r a n s f e r the t i t l e of s a i d
p r o p e r t y t o and e f f e c t u a l l y v e s t the same i n t h e Second Bank.
3 . The F i r s t Bank agrees to execute and d e l i v e r to the Second
Bank i t s promissory note payable on demand a t s i x p e r cent i n t e r e s t
f o r an amount equal to the d i f f e r e n c e between the a s s e t s of the
F i r s t Bank as shown by i t s books and the a s s e t s a s accepted by the
l e s s the amount of
Second Bank of — D o l l a r s
c a p i t a l p r o f i t s and reserves of the F i r s t Bank, these amounts a r e
not a b s o l u t e and may be changed.
&&($250,000.00)
4 . The F i r s t Bank does hereby g r a n t , b a r g a i n , s e l l , convey,
a s s i g n , t r a n s f e r and s e t over u n t o the Second Bank a l l of the a s s e t s
s e t out i n E x h i b i t A, a t t a c h e d h e r e t o , aggregating — • D o l l a r s #4
($1,926,856.08) and the F i r s t Bank f u r t h e r g r a n t s , b a r g a i n s , s e l l s ,
conveys, a s s i g n s , t r a n s f e r s and s e t s over unto the Second Bank a l l
o t h e r a s s e t s of s a i d bank, i n c l u d i n g i t s f u r n i t u r e , f i x t u r e s , equipment , a l l items chaxged to p r o f i t and l o s s , a l l other notes of every
d e s c r i p t i o n , choses i n a c t i o n , judgments, deeds of t r u s t s , claims
and l e a s e s , as c o l l a t e r a l s e c u r i t y f o r s a i d note of — D o l l a r s —
#5 ($250,000.00) h e r e t o f o r e mentioned to be given by the F i r s t Bank
t o t h e Second Bank. The p a r t i e s hereto agree t h a t the s a i d a s s e t s
so h e l d as c o l l a t e r a l by the Second Bank s h a l l be c o l l e c t e d and conv e r t e d by s a i d bank i n t o money a t such time and i n such manner and
f o r such c o n s i d e r a t i o n as the Second Bank s h a l l deem b e s t , and the
proceeds of such c o l l e c t i o n s h a l l be a p p l i e d by the Second Bank t o wards the payment of the note a f o r e s a i d .
The F i r s t Bank f u r t h e r agrees t h a t i t , from time to time, on
demand of the Second Bank, execute and d e l i v e r to t h e Second Bank
a l l necessary assignments, t r a n s f e r s , deeds and instruments which
may be necessary or d e s i r a b l e to more f u l l y e f f e c t the t r a n s f e r
of s a i d a s s e t s t o the Second Bank and the proper c o l l e c t i o n t h e r e o f . The Second Bank agrees to keep a c c u r a t e books of account show*i n g a l l t r a n s a c t i o n s i n r e s p e c t to the c o l l e c t i o n of the a s s e t s of
the F i r s t Bank, and i t i s understood by the Second Bank t h a t i t w i l l
c o l l e c t a l l a s s e t s of t h e F i r s t Bank, with the l e a s t expense p o s s i b l e ,
b u t s h a l l be allowed a reasonable charge f o r any c o s t s t h a t may be
expended to pay a t t o r n e y ' s f e e s and necessary c o s t s .
5 . The Second Bank agrees t h a t i t w i l l proceed to c o l l e c t and
l i q u i d a t e the n o t e s and other a s s e t s d e l i v e r e d t o i t as c o l l a t e r a l
s e c u r i t y i n such manner and f o r such p r i c e s a s , i n the judgment of
the Second Bank, w i l l be f o r the b e s t i n t e r e s t of both banks, and
a f t e r a l l of s a i d notes and a s s e t s have been c o l l e c t e d or l i q u i d a t e d ,
the Second Bank agrees t h a t i f the aggregate amount received t h e r e from s h a l l exceed the aggregate amount of the note of the F i r s t
Bank and a l l l e g a l expenses and c o s t s , i t w i l l pay over the balance
t o the stockholders of t h e F i r s t Bank, i n accordance with t h e i r
r e s p e c t i v e r i g h t s and i n t e r e s t s , but i t i s understood and agreed by
'h<
- I' "
X-6827
G
t h e p a r t i e s of t h i s bgreemtent ihfet* t h e Second Bank s h a l l have the
r i g h t a t any and a l l times ckttlng a p e r i o d of t h r e e years from d a t e
of execution of t h i s agreement t o s u b s t i t u t e f o r any a s s e t s Which
a r e g r a n t e d , b a r g a i n e d ; #()ld, conveyed, a s s i g n e d , t r a n s f e r r e d or s e t
over unto the Second Bank of any of the notes or other a s s e t s de~
l i v e r e d to i t as c o l l a t e r a l s e c u r i t y f o r the payments of the n o t e
of — — D o l l a r s - #6 ($250,000.00) described h e r e i n a t f a c e value
or w i t h i n t e r e s t a d j u s t e d to the date on which i n t e r e s t has been p a i d
on the item f o r which i t i s s u b s t i t u t e d , or to s u b s t i t u t e cash r e ceived i n l i q u i d a t i o n of any of t h e . c o l l a t e r a l s e c u r i t y to t h e
above mentioned note f o r any items sold to the s a i d Second Bank*
6. The Second Bank hereby assumes and agrees to pay a l l l i a b i l i t i e s f o r the F i r s t Bank which appear on the g e n e r a l ledger s t a t e ment of the F i r s t Bank as of close of business of March 19th, 1929,
with the exception of the stockholders l i a b i l i t y of the F i r s t Bank
under the law, which i s not assumed, a copy of which i s tie r e to
a t t a c h e d and marked Exhibit B and made a p a r t hereof# The Second
Bank does not assume or agree t o pay l i a b i l i t i e s of t h e s t o c k h o l d e r s of the F i r s t Bank.
7« I t i s a l s o understood t h a t the Second Bank assumes none of
the running expenses or l i a b i l i t i e s of the F i r s t Bank beyond March
1 9 t h , 1929, except those employees i t may decide to take over.
8 . I t i s understood and agreed t h a t a l l moneys received by
the F i r s t Bank from any source s h a l l be a p p l i e d on i t s note a f o r e s a i d i s s u e d to the Second Bank u n t i l the same i s p a i d .
9 . A l l i n s t r u m e n t s r e q u i r e d to be given by e i t h e r bank i n
order to c a r r y out the terms, conditions and covenants of t h i s
agreement s h a l l be executed and d e l i v e r e d by the p r e s i d e n t and
c a s h i e r of each bank u n l e s s t h e i r r e s p e c t i v e Boards of D i r e c t o r s
s h a l l otherwise d i r e c t .
IN TESTIMONY WHEREOF the p a r t i e s h e r e t o have caused these
p r e s e n t s t o be signed by i t s P r e s i d e n t s , a t t e s t e d by i t s Cashiers,
and i t s c o r p o r a t e seals a f f i x e d , i n d u p l i c a t e , on the day and year
f i r s t hereinbefore written.
THE JATI0KAL BAH OF HEW BEEN,
NEW BEEN, N. C.,
(SEAL) By: W. W. G r i f f i n , P r e s .
ATTEST:
W. J . Caroon, Cashier.
FIRST HATI0NAL BANK,
(SEAL) By: J . V. Blades.
ATTEST:
W. J . Caroon, Cashier.
(j
8
? 1# n
X-6827
: 309
STATE OF 2TCMH CAEOLIITA,
C0U1TTY OF CEAVE1T: s s .
On the 20th day of Mar oh, 1929, b e f o r e me, p e r s o n a l l y came
W. W« G r i f f i n , to me known, who, being "by me duly sworn," d i d depose and say? That he r e s i d e s i n the City of Hew Bern, t h a t he
i s P r e s i d e n t of The n a t i o n a l Bank of Hew Berne, of Hew Bern, IT. G.,
the c o r p o r a t i o n d e s c r i b e d i n and which executed the above i n s t r u m e n t ;
t h a t he knows the s e a l of the said corporation; t h a t the s e a l
a f f i x e d t o t h e s a i d instrument i s such corporate s e a l ; t h a t i t
was so a f f i x e d by order of the Board of D i r e c t o r s of s a i d c o r p o r a t i o n
and t h a t he signed h i s name t h e r e t o by l i k e order*.
LIZZIJ: Mc&OHAIT,
(SEAL).
notary Public.
STATE OF NCBTH CABQLIHA,
COUHtY OF pRAVEH: s s .
On the 20th day of March, 1929, b e f o r e me, p e r s o n a l l y came
J . V. Blades to me known, who being by «e duly sworn, did depose
and say; That he r e s i d e s i n the City of Hew Bern, t h a t he i s
p r e s i d e n t of the F i r s t National Bank of Hew Bern, N. 0 . , the c o r p o r a t i o n d e s c r i b e d i n , and which executed the above instrument;
t h a t he knows the s e a l of the s a i d c o r p o r a t i o n ; t h a t i t was a f f i x e d by order of the Board of D i r e c t o r s of s a i d c o r p o r a t i o n and
t h a t he signed h i s name t h e r e t o by l i k e order# That s e a l a f f i x ed to said i n LIZZIE McGOWAH,
strument i s such c o r Hotary P u b l i c .
porate seal.
(SISAL).
My com. e x p i r e s :
10-23- 1 30.
NORTH CAROLINA,
JffiAW COmiTT: s s .
The foregoing c e r t i f i c a t e s of L i z z i e McGowan, a Notary P u b l i c
of Craven County, a r e adjudged to be c o r r e c t .
Let the instrument
vith
the c e r t i f i c a t e , be r e g i s t e r e d .
Witness my hand, t h i s 19th day of February, 1930.
.
L. E. LANCASTER,
Clerk Superior Court.
19 &
1950,
X-682?
F i l e d f o r r e g i s t r a t i o n a t 10:50 o ' c l o c k A. M., February 19,
J . S. HtibLAED,
R e g i s t e r of Deeds.
BXHIBIT B
Loans
Overdrafts
U. S. Bonds
'J. C. Bonds
Stotic Federal Reserve
Banking House
Duo from United S t a t e s
Cash and Tue from Banks
Other
LIABILITIES:
C a p i t a l Stock
Surplus
Dividends
Circulation
B i l l s Bediscounted
I n d i v i d u a l Deposits
Due to S t a t e Banks
luo to Banks
$ 2,220,115.53
1,417.01
28,000.00
17,000.00'
9,000.00
75,000.00
1,250.00
176,207.56
877.00
$ 2,528,858.00
•
:
'
250,000.00
56,454.00
75.00
24,550.00
155,283.00
1,929,228.00
28,968.00
84,209.00
$ 2,528,868.00
EXHIBIT C
Charter $fb. 132S8
Reserve D i s t r i c t 17o. 5
Report of Condition of The F i r s t
National.^Bank of Hew Bern
I n the S t a t e of Iforth Carolina, a t the close of "business on March
27,1929.
T
B250URCJS .
l o a n s and discounts
Overdrafts
U. S. Gov. s e c u r i t i e s owned
Other "bonds, stocks and s e c u r i t i e s owned
Banking house, $55,000.00:; F u r n i t u r e and
f i x t u r e s , $10,000.00
Reserve with Federal Reserve Bank
Cash and due from "ba.iks
Outside checks and other cash items
Redemption fund w i t h TJ. S. Treas. and due from
T
J. 3, Treasurer
Total
— — — — —
$ 1,909,255.60
1,477.04
28,000.00
54,900.00
75,000.00
59,109.60
146,404.02
•
7,550.24
1.250.00
$ 2,282 ,046.50
o
o
-
20 -
LIABILITIES:
C a p i t a l stock p a i d i n
Surplus
Undivided p r o f i t s - n e t
Reserves f o r i n t e r e s t , t a x e s , and other
expenses accrued and unpaid
C i r c u l a t i n g n o t e s outstanding
Due to banks, i n c l u d i n g c e r t i f i e d and
c a s h i e r ' s checks outstanding
Demand d e p o s i t s
Time d e p o s i t s
B i l l s payable and r e d i s c o u n t s
X-6827
$
311
150.000.00
30,000.00
1,192.55
38,324.89
25,000.00
104,420.47
514,327.07
1,245,371.92
173,409.60
$
2,283,046.50
S EATS OF NORTH CAROLINA,
c o m m OF CRAVEN; 88.
I , W. J . Caroon, Cashier of the above named hank, do solemnly
swear t h a t the above statement i s true t o the b e s t of my knowledge
and b e l i e f . .
W. J . CAROCN, Cashier.
Correst - A t t e s t :
C. W. HODGES
J . V. BLADES
W. F. DOWDY
T. W. GRIFFIN
F. H. WHITTY
HUGH P. BEAL,
Directors.
Sworn and subscribed to b e f o r e
me t h i s 2nd day of A p r i l , 1929.
THOMAS J . MITCHELL,
Notary P u b l i c .
My com. exp. March 11-31.
NOTICE
To G. S. Attmore, t r a d i n g as Neuse Motor Company, and G. S,
Attmore, i n d i v i d u a l l y , defendant, or W. B. R. Guion, h i s a t t o r n e y :
Take n o t i c e , t h a t p l a i n t i f f i n the above e n t i t l e d a c t i o n w i l l
make motion b e f o r e His Honor, Walter L. Small, Judge, holding Oct,
Term, 1930, Craven Superior Court, on Friday, the 10th day of Octo b e r , 1930, a t 2 P . M., to s t r i k e c e r t a i n paragraphs and a l l e g a t i o n s
from the answer f i l e d i n t h i s a c t i o n and w i l l f u r t h e r move f o r judgment a g a i n s t the defendant as demanded i n the complaint, on the
ground s e t f o r t h i n s a i d motion, a copy of s a i d motion being herewith
served.
FEDERAL RESERVE BAM OF RICHMOND,
Plaintiff.
W. H. LEE,„Atty. f o r P l a i n t i f f .
Service a c c e p t e d ,
t h i s 6th day of Oct. 1930.
W. B. R. GUION,
A t t y . f o r Defendant.
-21"
fiSSil
312
This cause coming on to "be heard, b e f o r e His Honor, Small,
Judge, a t the October Term, 1930, Craven Superior Court, upon
motion of p l a i n t i f f to s t r i k e c e r t a i n a l l e g a t i o n s and paragraphs
from the answer f i l e d by the defendant.
JLad upon h e a r i n g arguments by W. H. Lee and M. G. Wallace,
counsel f o r p l a i n t i f f , and ¥» B. R. Guion, counsel f o r d e f e n d a n t ,
the court d e s i r e s t o f u r t h e r consider the pleadings and motion f i l e d :
I t i s , thereupon, ordered t h a t hearing on the motion be con-*
t i n u e d t o the November Term, 1930, Craven Superior Court, a t which
time a t t o r n e y s f o r p l a i n t i f f and defendant may be heard.
This the 10th day of October, 1930.
;7ALT3R L. SMALL,
Judge Superior Court.
0 1 1 O
This cause coming on to be heard and being heard b e f o r e His
. Honor, Walter L. Small, Judge P r e s i d i n g , (HOVUMBER TEEM, 1930), on
motion of the defendants to make R. E. Schumacher, Receiver of the
F i r s t National Bank of Hew Bern, a p a r t y ; and i t appearing to the
Court t h a t s a i d R. E. Schumacher i s a proper p a r t y to the f u l l
determination of the m a t t e r s i n controversy;
IT IS NOW THEREFORE ORDERED t h a t R. E. Schumacher, Receiver of
the F i r s t National Bank, be served with a copy of the complaint and
of the answers and of t h i s order; t h a t he be p e r m i t t e d w i t h i n ten
days from the d a t e of s e r v i c e t o make himself p a r t y p l a i n t i f f ; t h a t
i f w i t h i n ten days from the date of s a i d s e r v i c e s a i d R. E. Schumacher, Receiver, f a i l s t o come i n and make himself a p a r t y p l a i n t i f f summons be i s s u e d and the s a i d R. E. Schumacher be made a
p a r t y defendant.
Defendants f u r t h e r moving t h e court f o r leave to amend answer;
motion i s allowed and defendants a r e granted t h i r t y days i n which
t o amend answer; t h a t p l a i n t i f f , Federal Reserve Bank and R. E.
Schumacher, Receiver,be allowed t h i r t y days t h e r e a f t e r i n which to
f i l e p l e a d i n g s i n which they may r e s p e c t i v e l y be advised,
APPEAL ENTRIES*
'
WALTER L. SMALL,
Judge P r e s i d i n g .
To the foregoing order p l a i n t i f f excepts and appeals to the
* 22
-
X-6827
Supreme Court* Appeal "bond i l x e d a t $50.00. P l a i n t i f f allowed 30
days to serve case on appeal; defendant allowed 30 days to f i l e exc e p t i o n s and c o u n t e r - c a s e , n o t i c e given i n open court and n o t i c e
received.
17. B. S. Qui on.
SMAIIi, Judge .
#
MOTION BY PMIITIFF TO STRIKE 3R0M THE
AIISIM MB FURTHER AHSWER MD AUiB&ED
COOHTSR-GLAIM OF DBEE3WT FILED III THIS
ACTION;
"Before His Honor, Walter Xi. Small, Judge, a t October Term, 1930,
Craven Superior Court:
TO THE COURT:
P l a i n t i f f h e r e i n , under p r o v i s i o n s of C. S. 53%, begs leave
to f i l e i t s motion i n t h i s cause to s t r i k e c e r t a i n a l l e g a t i o n s and
paragraphs from the answer and f u r t h e r answer and a l l e g e d c o u n t e r claim upon the grounds and f a r the reasons h e r e i n a l l e g e d , a s
follows:
1 . P l a i n t i f f moves to s t r i k e paragraph one from d e f e n d a n t ' s
answer on the ground t h a t Same i s i r r e l e v a n t , immaterial, ambiguous,
i m p e r t i n e n t and f r i v o l o u s , and does not contain a s p e c i f i c admission
or d e n i a l and i s i n c o n s i s t e n t w i t h paragraph one of the a f f i r m a t i v e
defense.
2 . P l a i n t i f f moves to s t r i k e out the a l l e g a t i o n s i n the f i f t h
and e i g h t h paragraphs of the answer, except the s p e c i f i c d e n i a l s
t h e r e i n , on the ground t h a t s a i d a l l e g a t i o n s , o t h e r than the s p e c i f i c
d e n i a l s , a r e i r r e l e v a n t , redundant, i n f e r e n t i a l and i m p e r t i n e n t .
3. P l a i n t i f f moves to s t r i k e out the d e f e n d a n t ' s f u r t h e r p l e a
and paragraphs 1, 2 , 3, 4 , 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14,
and each and every section* and sub-paragraph t h e r e o f , of the f u r t h e r
answer and a l l e g e d a f f i r m a t i v e defense and counter-claim on t h e
ground t h a t t h e same, and each and every t h e r e o f , a r e i r r e l e v a n t and
redundant, and repugnant, impertinent and f r i v o l o u s .
P l a i n t i f f f u r t h e r moves t o s t r i k e out s a i d paragraphs ahd
a l l e g a t i o n s from the answer and a l l of the f u r t h e r answer and
alleged f u r t h e r defense, for t h a t :
1 . Said a l l e g a t i o n s are i r r e l e v a n t and immaterial to the
cause of a c t i o n a l l e g e d i n the complaint.
- 23 -
X-6827
2 . That the reading of s a i d i r r e l e v a n t and immaterial
a l l e g a t i o n s a t t h e t r i a l and i n the presence of the j u r y would be
h i g h l y p r e J u d i c i a l t o the p l a i n t i f f .
3. That the presence of s a i d a l l e g a t i o n s i n the answer would
render admissible a t the t r i a l evidence not p e r t i n e n t to the i s s u e s
which w i l l be determinative of the r i g h t s and l i a b i l i t i e s of t h e
p a r t i e s to t h i s a c t i o n .
P l a i n t i f f f u r t h e r makes motion to the Court f o r judgment
a g a i n s t the defendant as demanded i n the complaint on tiie ground
t h a t the answer f i l e d by the defendant i s f r i v o l o u s and i m p e r t i n ent and p l a i n t i f f i s , t h e r e f o r e , e n t i t l e d to the r e l i e f demanded
on the -pleadings.
IXSSBAL EiSEHTE BASE OF RICHMOND
Plaintiff.
S. H. LBS, A t t y . f o r P l a i n t i f f .
SB DEE
This cause coming on to be heard b e f o r e His Honor Small, Judge,
upon the w r i t t e n motion of p l a i n t i f f to s t r i k e out c e r t a i n a l l e g a t i o n s
and paragraphs of the answer and f u r t h e r answer and counter-claim
f i l e d by the defendant and upon the grounds s t a t e d i n the motion,
and being heard by argument and b r i e f s of counsel f o r both p l a i n t i f f
and defendant, and the Court, of i t s own motion, having continued
s a i d hearing and r e s e r v e d i t s f i n d i n g s and d e c i s i o n i n order to
f u r t h e r consider t h e pleadings and the numerous questions r a i s e d
and involved.
And t h e Court being of the opinion t h a t the motion of p l a i n t i f f
should be allowed:
I t i s , thereupon, considered, ordered and adjudged by the Court
t h a t c e r t a i n a l l e g a t i o n s and paragraphs of the answer and f u r t h e r
ansvrer and defense and counter-claim be, and the same a r e hereby
s t r i c k e n out and as f o l l o w s , t o - w i t ;
1 . That paragraph 1 of the answer be s t r i c k e n out a f t e r the
word " c o r p o r a t i o n " i n l i n e t h r e e and commencing with the word " i t "
i n l i n e t h r e e and i n c l u d i n g the word "purposes" i n l i n e t e n , so
t h a t the s a i d p a r a g r a p h , a f t e r so s t r i c k e n , w i l l read as f o l l o w s ;
" A l l e g a t i o n 1 i s denied; save i t i s admitted t n a t the d e f e n d a n t ,
Gr, S . Attmore, i s a r e s i d e n t of Craven County, ITorth Carolina, a t
a l l times h e r e i n mentioned. I t i s denied t h a t p l a i n t i f f i s a banking c o r p o r a t i o n . (Federal Heserve Act, Dec. 23, 1913)",
2 . That paragraph f i v e of the answer be s t r i c k e n out a f t e r
the word "denied" i n l i n e one and commencing wi th the word "and"
-* 34 —
1-6827
i n l i n e one and i n c l u d i n g the word 11 complaint" i n l i n e s i x , so
t h a t the s a i d paragraph* a f i e f s6 s t r i c k e n , w i l l read as f o l l o w s :
" A l l e g a t i o n 5 i s denied; the t r u t h of the matters ahd things s e t
f o r t h i n a l l e g a t i o n 5 i s h e r e i n a f t e r s t a t e d , upon the i n f o r m a t i o n
and "belief of t h i s defendant".
3 . That paragraph 8 of the answer be s t r i c k e n out a f t e r the
word "denied" i n l i n e one and commencing with the word "and" i n
l i n e one and i n c l u d i n g the word 11 complaint" i n l i n e six* so t h a t
t h e s a i d paragraph, a f t e r so s t r i c k e n , w i l l read a s f o l l o w s :
"In answer to a l l e g a t i o n 8, the a l l e g a t i o n i s denied; the t r u t h ,
of the m a t t e r s and things s e t f o r t h i n a l l e g a t i o n 8 i s h e r e i n a f t e r
s t a t e d , upon the information and b e l i e f of t h i s defendant
4 . That the paragraph unnumbered containing d e f e n d a n t 1 s
f u r t h e r p l e a to the complaint as s e t out on page two of the
answer i s s t r i c k e n out and the motion to make Schumacher, Rec e i v e r , a p a r t y to t h i s a c t i o n , i s denied.
5. That paragraph 1 of the f u r t h e r answer and defense and
counter-claim as s e t out on page 3 of the answer i s s t r i c k e n o u t .
6. That paragraph 2 of the f u r t h e r answer and defense and
counter-claim as s e t -out on page 3 of the answer, and each, paragraph
and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n o u t .
7. That paragraph- 3 of the f u r t h e r answer and defense and
counter-claim as s e t out on page 3 of the answer, and each
paragraph and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n o u t .
8. That paragraph 4 of the f u r t h e r answer and defense and
counter-claim as s e t out on page 4 of the answer, and each paragraph
and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n out.
9. That paragraph 5 of the f u r t h e r answer and defense and
counter—claim as s e t out on pages 4 and 5 of the answer, and each
paragraph and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n o u t .
10. That paragraph 6 of the f u r t h e r answer and defense and
c o u n t e r - c l a i m as s e t out on pages 5, 6 and 7 of the answer, and
each paragraph and sub—section t h e r e o f , i s s t r i c k e n o a t .
11. That paragraph 7 of the f u r t h e r answer and defense
and c o u n t e r - c l a i m a s s e t out on pages 7 and 8 of the answer,
and each paragraph and sub—section t h e r e o f , i s s t r i c k e n out.
12. That paragraph e i g h t of t h e f u r t h e r answer and def e n s e and counter—claim a s s e t out on pages e i g h t and ni&e of
the answer, and each paragraph and s u b - s e c t i o n t h e r e o f , i s
stricken out. /
315
- 25 -
X-5827
13. That paragraph nine qf the f u r t h e r answer and defense
and counter-claim as s e t out on pages nine and ten of the answer,
and each paragraph and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n p u t .
14. That paragraph ton of the f u r t h e r answer and defense
and counter-claim be s t r i c k e n out commencing with the f i r s t
word i n s a i d paragraph and ending vi th the ^ord "accomodations"
i n l i n e 17 of s a i d paragraph, so t h a t the s a i d paragraph, a f t e r
so s t r i c k e n , w i l l r e a d a s f o l l o w s : "That t h i s defendant i s n o t
i n d e b t e d to t h e p l a i n t i f f on account thereof i n any sum".
15. That paragraph 11 of t h e f u r t h e r answer and defense
and counter-claim be s t r i c k e n out a f t e r the word "course" i n l i n e
f o u r and commencing w i t h the word " t h a t " i n l i n e f o u r and i n cluding the word "endorsement" i n l i n e s i x on page 11, so t h a t
the s a i d p a r a g r a p h , a f t e r so s t r i c k e n , w i l l read as f o l l o w s :
"That the p a p e r w r i t i n g described i n a l l e g a t i o n 6 i s the
o b l i g a t i o n of t h i s defendant and r e p r e s e n t s an a c t u a l loan
made t o t h i s d e f e n d a n t , but the. s a i d paperwri t i n g i s not the
p r o p e r t y of the p l a i n t i f f , nor i s the p l a i n t i f f the holder
t h e r e o f i n due course 1 '.
16. That paragraph 12 of the f u r t h e r answer and defense
a n d i c o u n t e r - c l a i m as s e t Out on page 11 of the answer i s s t r i c k e n
out*
'
17. That paragraph 13 of the f u r t h e r answer and defense
and counter-claim as s e t out on page 11 of the answer i s s t r i c k e n
out.
18. That paragraph 14 of the f u r t h e r answer and defense
and counter-claim as s e t out on pages 11, 12 and 13 of the a n s wer, and each paragraph and s u b - s e c t i o n t h e r e o f , i s s t r i c k e n
o u t ; excepting the following p r a y e r on page 12 of the answer,
r e a d i n g as f o l l o w s : "WHEREFORE, t h i s defendant prays t h a t
p l a i n t i f f t a k e n o t h i n g on account of the $5,000.00 note des c r i b e d i n the complaint; t h a t the same be surrendered up to
t h i s c o u r t arid marked n u l l and v o i d . That the p l a i n t i f f be r e quired arid d i r e c t e d to s u r r e n d e r the $2,000.00 note described
i n the complaint t o R* E. Schumacher, Receiver, and t h a t the
same be c r e d i t e d i n the sum of $1,585.62, as of the 26th day of
October, 1929", so t h a t t h e s a i d paragraph f o u r t e e n , and each
paragraph and sub—section t h e r e o f , whether numbered or l e t t e r ed, a f t e r so s t r i c k e n , w i l l read a s follows:
"WHEREFORE, t h i s defendant prays t h a t p l a i n t i f f take nothing
on account of the $5,000.00 note described i n the con$>laint;
t h a t the same be s u r r e n d e r e d up to t h i s Court and marked n u l l
and v o i d . That the p l a i n t i f f be r e q u i r e d and d i r e c t e d to s u r render the $2,000.00 note d e s c r i b e d i n the complaint t o R. E.
Schumacher, R e c e i v e r , and t h a t the same be c r e d i t e d i n the sum
of $1,585.62, as of the 26th day of October, 1929".
3 1 6
X-6827
- 26 -
This the 27th day of January, 1931.
WALTER L. SMALL,
Judge, e t c .
To the foregoing order defendant excepts and appeals t o
Supreme Court* Appeal bond f i x e d a t $100.00.
SMALL, Judge.
EXCEPTION
EXCEPTION 1 - The only exception was to the Order of Small,
J . , of January 27, 1931.
(TRANSCRIPT CERTIFIED 3Y CLHRK StJ?2RI0R COUHT)
8118
X-6827-a
COPY
FIFTH DISTRICT.
ITo. 178
SUFR3M3 COURT OF NORTH CAROLINA
Spring Term, 1931.
*******************************^
F3BSRAL H3SERVH BAM OF RICHMOND,
A Banking Corporation,
v.
Gr. S. ATTMOR3, Trading a s E3US3 MOTOR COMPANY,
and. d . S. ATTM0K3, I n d i v i d u a l l y .
*******************************
ITOEDAIIT APP3LLANTS < BR ISP
*******************************
X-Sa-37-a
COPY
'Ho. 178
FIFTH DISTRICT.
STJPR313 COURT OF FORTE CAROLINA
Spring Term, 1931.
**********************************^
F3DERA1 B3S3K73 SMS. 07 BICHUOtfD,
A Banking Corporation,
v
*
G. S. ATTMOR3, Trading as KBUS3 MOTOR COLCPAHY,
and. G-. S. ATTiiOBE* I n d i v i d u a l l y .
*********************************
DSFISTDA^T APP3LIA1'TS' 2RI3F
*********************************
QU3STIOH ?H3S3I"T5D: OH I'OTIOH TO STRIKE D3F3ITDAFT1S
ABSVT3R AS A iiATER OF LAU:
I t i s -oertinent to a l l e g e i n defense to an a c t i o n on a
note, upon which a l l e g a t i o n of execution and of h o l d e r i n due
course i s denied, upon which defendant a f f i r m a t i v e l y r e l i e s in
support:
1.
t h a t p l a i n t i f f had a c t u a l n o t i c e and o p p o r t u n i t y
of knowledge; 2, t h a t by law and a c t s of the p l a i n t i f f i s not
h e l d in due course.
FACTS
P l a i n t i f f a l l e g e s , a l l e g a t i o n 1, t h a t i t i s a ""banking
c o r p o r a t i o n . " The defendant denies t h i s and says t h a t i t i s the
Federal Reserve Bank of Richmond, e s p e c i a l l y c r e a t e d "by an act
of Congress. P l a i n t i f f a l l e g e s , a l l e g a t i o n 5, t h a t the F i r s t
National Bank of Hew Bern, f o r valuable c o n s i d e r a t i o n , t r a n s f e r r e d and a s s i g n e d the Said note to the p l a i n t i f f ; t h a t p l a i n t i f f
"became the holder i n due course and i s the h o l d e r in due course.
Defendant denied the a l l e g a t i o n and s e t up f u r t h e r t h a t t h e r e
was a s e c r e t w r i t t e n agreement "between the p l a i n t i f f and the
F i r s t National Bank which the p l a i n t i f f compelled the F i r s t
National Bank to execute to i t r e l e v a n t to the note and r e q u i r e d
the p r o d u c t i o n of such agreement. Defendant s e t up f i r s t f o r the
X-6837-a
f-;;
~2"
defense; That the National Bank: of Hew Berne became insolvent
and t h a t W. W. G r i f f i n was appointed l i q u i d a t i n g a g e n t ; t h a t the
F i r s t National Bank of New Berne "became i n s o l v e n t and Raymond E.
Schumacher was appointed r e c e i v e r ; t h a t each was a necessary
and proper p a r t y and should be brought in to n l e a d to the def e n d a n t ' s a f f i r m a t i v e defense.
For i t s f u r t h e r defense, defendant s e t up:,
1, That the proper name of the p l a i n t i f f was The Federal
Reserve Bank of Richmond, and r e f e r r e d to t h e t i t l e , book and
page of the s t a t u t e .
2 , That the National Bank was a member bank and owned
stock i n the p l a i n t i f f , as r e q u i r e d by the Act, the s e c t i o n s
whereof were s e t o u t ; t h a t i t had a deposit with the p l a i n t i f f
i n excess of the amount sued f o r .
3, That i n 1920 t h e p l a i n t i f f r e q u i r e d the National Bank
of New Berne to absorb the Peoples Bank of New Bern, both member
banks. That s a i d National Bank then "became i n s o l v e n t and conveyed a l l of i t s a s s e t s in March, 1929, to the F i r s t National
Back of New Bern, a member bank, and set f o r t h a copy of t h e
agreement.
4* That in March, 1929, the F i r s t National Bank was organi z e d and, as by law r e q u i r e d , became a member bank, owned stock
and maintained a deposit i n the p l a i n t i f f , as r e q u i r e d by law.
5. That the s a i d F i r s t National Bank was, a t the time of
i t s o r g a n i z a t i o n and a t a l l times t h e r e a f t e r , i n s o l v e n t , and i t s
t r u e c o n d i t i o n known to the p l a i n t i f f . The l a s t statement of The
National Bank of New Berne and the f i r s t statement of the F i r s t
National Bank of New Bern are set out a s e x h i b i t s , to be r e a d i n
connection with the agreement under which the F i r s t National Bank
took over the National Bank, which shows the i d e n t i c a l a s s e t s and
the i d e n t i c a l l i a b i l i t i e s , except the diminution of the a s s e t s by
$535,000 of i t s notes taken out, but put up again by the new bank
ias c o l l a t e r a l to a $250,000 n o t e .
6. The dominion, by the p l a i n t i f f , over both the National
Bank of New Berne and i t s successor, the F i r s t National Bank,
and of the j u g g l i n g of f i g u r e s and papers, under the s u p e r v i s i o n
of the p l a i n t i f f .
7. The c a p t u r e , on March 20th, 1929, of c e r t a i n a s s e t s of
the F i r s t National Bank of New Berne by the p l a i n t i f f , as f r a u d
upon c r e d i t o r s of the F i r s t National Bank of New Bern, u l t r a v i r e s
and " i n v i o l a t i o n of the p r o h i b i t i o n both of common law and t h e
f e d e r a l s t a t u t e , " r e f e r e n c e being made to s e c t i o n of the s t a t u t e
pertinent.
8. That on the 18th of August, 1929, defendant executed t o
the National Bank of New Berne, f o r the accomodation of the Nationa l Bank of New Berne, i t s note f o r $5,000; t h a t no c o n s i d e r a t i o n
passed; t h a t the Federal Reserve had t h e r e a f t e r examined the
X-6827-a
'
_3_
331
.
National Bank and did, from i t s records, have knowledge of such
f a c t . That t h i s paper was. renewed from.time to time, a t a l l
times without c o n s i d e r a t i o n and f o r accomodation. That the
same was wrongfully and i l l e g a l l y h e l d and converted "by t h e
plaintiff.
9. That p l a i n t i f f had c r e a t e d the F i r s t National Bank of
Hew Bern i t s agent, and on each renewal of the accomodation
p a p e r , p l a i n t i f f c r e a t e d the F i r s t National Bank i t s a g e n t .
10. That the note described i n a l l e g a t i o n 6 i s a "bona
f i d e o b l i g a t i o n , but the defendant had money on deposit i n
the F i r s t National Bank which was a p p l i c a b l e a s a s e t o f f .
11. That the p l a i n t i f f i s not the owner i n due course and
has p a i d no value f o r t h i s n o t e .
12. That t h i s note, l i k e w i s e h e l d by the p l a i n t i f f i n
f r a u d upon c r e d i t o r s , e s p e c i a l l y of the defendants, a s shown by
a w r i t t e n agreement between the p l a i n t i f f and the F i r s t Nationa l Bank of New Bern, the production of utiiich i s r e q u i r e d . The
prayer i s t h a t p a r t i e s be made and p l a i n t i f f be r e q u i r e d to a c count and t u r n over a s s e t s a c q u i r e d and h e l d by i t i l l e g a l l y ,
c o n t r a r y to law and a s p r o h i b i t e d by law.
At the October Term, 1930, p l a i n t i f f f i l e d motion to s t r i k e ,
which was continued by His Honor, Small, Judge, to the November
Term, and then again continued.
At the November Term, the defendant 1 s motion to make p a r t i e s
and to amend was heard, and the order appearing i n the r e c o r d a l lowing the motion wa.s e n t e r e d .
On January 27th, 1931, the order allowing t h e motion to
s t r i k e was e n t e r e d . The defendant excepted to t h a t order and appealed.
Defendant submits, with apologies f o r the length of i t s
p l e a d i n g , t h a t the question which i t undertakes to p r e s e n t goes
i n t o the c o n s t r u c t i o n of the Federal Reserve Act and i t s r e l a t i o n
with i t s t h r e e meriber banks; the old Peoples Bank of New Bern,
the o l d National Bank of New Berne, and the F i r s t National Bank
of Net? Bern.
The g i s t of the defense i s :
1. There was no value p a s s i n g f o r the $5000 n o t e .
2 . That the p l a i n t i f f i s not the holder i n due course.
3 . That the p l a i n t i f f i s not the h o l d e r of the $2,000 note
i n due c o u r s e .
4 . That the defendant has an o f f s e t a g a i n s t the $2,000 note
i n the hands of Schumacher, Receiver of the F i r s t National Bank,
and i s not concerned about the c l a r i t y of the law of t h i s s t a t e
upon h i s r i g h t under these defenses; b u t , i n order to a v a i l of these
d e f e n s e s , and i n order to make i t s p r o o f , under the r e l a t i o n s exi s t i n g between the p l a i n t i f f and the defunct banks, i t i s necessary
f o r the defendant t o p l e a d in order to prove.
X-6827-a
-4An examination of the Act, conveniently found i n U. S. C. A.,
T i t l e 12, the s e c t i o n s r e f e r r e d to i n the answer, we r e s p e c t f u l l y
submit, makes each a f f i r m a t i o n p e r t i n e n t t o the r e s p e c t i v e sect i o n s of the Federal Reserve Act. For i n s t a n c e , the p l a i n t i f f
i s not a hanking corporation, hut i s a F&deral Reserve Bank, as
d e f i n e d and named hy the Act. I t has only such powers as a r e
e s p e c i a l l y g r a n t e d to i t and l i m i t e d to i t by the Act, and these
powers can not he e n l a r g e d by an unauthorized r e s o l u t i o n of i t s
Board of Governors. Section 341, page 333, t i t l e 12, d e f i n e s
these powers and d u t i e s . Upon the f i l i n g of t h e o r g a n i z a t i o n
c e r t i f i c a t e with the comptroller of the currency, the o r g a n i z a t i o n
of a. Federal Reserve Bank becomes a body c o r p o r a t e . There, under
s e c t i o n 7, p l a i n t i f f contends t h a t i t may carry on a general banking b u s i n e s s .
We do not attempt here to r e f e r to the s p e c i f i c d u t i e s
g r a n t e d and l i m i t e d , but s e c t i o n s 341 through 361, both l i m i t and
d e f i n e . For an i l l u s t r a t i o n : A Federal Reserve Bank may discount
notes a r i s i n g out of a c t u a l commercial t r a n s a c t i o n s , e t c . , i f the
note f a l l s w i t h i n the p r e s c r i b e d r u l e s of " e l i g i b i l i t y . " In o t h e r
words, " i f e l i g i b l e f o r d i s c o u n t . " But nowhere i n the Act i s i t
empowered to take 5 I n e l i g i b l e Botes i n l i e u of t h e discounting
of one e l i g i b l e n o t e .
I t Kas developed, i n a d e p o s i t i o n of the o f f i c i a l s of the
p l a i n t i f f , t h a t i t had a p r i v a t e memorandum agreement with the
executive of the F i r s t National Bank, which was not communicated
to t h e o t h e r o f f i c i a l s or the d i r e c t o r s , which, to the defendant 1 s
mind, completely s u b s t a n t i a t e s h i s a l l e g a t i o n s : f i r s t , of t h e
knowledge of insolvency of the former member bank, and the c a p t u r e
by the p l a i n t i f f of the notes described i n the complaint and the
enormous amounts of other notes mentioned i n the answer, and h e l d
by the p l a i n t i f f without any a u t h o r i t y i n law, or agreement, or
r i g h t , to support the discounted l i n e s of the s a i d member banks.
This c o n d i t i o n i s c l e a r l y v i c i o u s i n every purview of the a c t , and
e s p e c i a l l y i s i t o f f e n s i v e to the common law of p r e f e r e n c e and to
the Federal s t a t u t e , s e c t i o n 91, t i t l e 12, U. S. C. A. page 191.
Defendant r e s p e c t f u l l y submits t h a t h i s answer should not be
s t r i c k e n ; t h a t he should be p e r m i t t e d to o f f e r h i s proof i n substantiation.
R e s p e c t f u l l y submitted,
GUIDE & GUIOU,
Attorneys f o r A p p e l l a n t .
8 2 3
COPY
X-6837-Td
Ho. 178.
FIFTH DISTRICT.
SUPREM3 COURT OF NORTH CjffiOlIHA
Snring Term, 1931.
********:»!****** ****** ***********
F2B3RAL R33S3RV3 3AM OF RICHMOND, VIRGINIA, a
BANKING CORPORATION,
v.
£}. S . ATTMORS, t r a d i n g a s N2US2 MOTOR COMPANY,
and Gr. S. ATTMORS, i n d i v i d u a l l y .
*******************************
PLAIHIIPF APPZLI33*S BRIEF
*******************************
X-6827-b
COPY
- 1 -
No. 178.
FIFTH DISTRICT.
SUPH3ME COURT OF NORTH CAROLINA.
Spring Term, 1931.
*******************************
FEDERAL RESERVE BAH OF RICHMOND, VIRGINIA, a
BANKING CORPORATION,
G. S . .ATTM0R3, t r a d i n g a s NEUSE MOTOR COMPANY,
and G. S. AT MORE, i n d i v i d u a l l y .
******************************
PLAINTIFF APPELLEE'S BRIEF
******************************
QUESTIONS INVOLVED IN THIS CASE
1. I n an a c t i o n to recover on a n e g o t i a b l e note, and
p l a i n t i f f , i n i t s complaint, a l l e g e s i t i s the h o l d e r , i n due
course t h e r e o f , w i l l t h e defendant he p e r m i t t e d , in a d d i t i o n
to h i s d e n i a l t h a t p l a i n t i f f i s a holder i n due course, to
s e t out i n h i s answer and f u r t h e r defense redundant, extraneous,
i r r e l e v a n t , f r i v o l o u s and scandalous and e v i d e n t i a r y and argumentative matter?
2 . Does a d e n i a l "by the defendant t h a t p l a i n t i f f i s a
h o l d e r i n due course of the notes sued on, e n t i t l e defendant to
make t h e p a y e e - t r a n s f e r r e r hank, or i t s Receiver, a p a r t y to
s a i d action?
3 . When motion made i n an answer to make the Receiver of
the p a y e e - t r a n s f e r r e r bank a p a r t y i s s t r i c k e n out, i s t h i s not
a d e n i a l of s a i d motion? ( a ) I f i t i s a d e n i a l , i s i t not cont r o l l i n g over a motion to make s a i d Receiver a p a r t y which was
g r a n t e d while motion to s t r i k e was pending?
FACTS
This i s a c i v i l a c t i o n pending i n Craven Superior Court i n
which p l a i n t i f f i s seeking to recover of the defendant on two
n e g o t i a b l e promissory notes described i n the complaint, claiming to be h o l d e r i n due course t h e r e o f . Defendant f i l e d answer
denying t h a t p l a i n t i f f i s holder i n due course and attempts to s e t
up v a r i o u s m a t t e r s i n f u r t h e r answer and as an a l l e g e d c o u n t e r - c l a i m .
*
,
X-@827.b'
-2-
P l a i n t i f f , "before e x p i r a t i o n of time to r e n l y , gave w r i t t e n
n o t i c e to defendant and moved b e f o r e His Honor, Small, Judge,
a t October Term, 193$'.*'graven Superior C o u r t s to s t r i k e defenda n t ' s answer and f u r t h e r defense and counter-claim upon the
grounds t h e r e i n s e t f o r t h (R. pp. 29 and 3 0 ) . The Court, of
h i s own motion, continued the h e a r i n g oil s a i d motion to the
November Term, 1930, Craven Superior Court (R. p . 2 8 ) .
At the November Term, 1930, Craven Superior Court, His Honor,
Small, Judge, announced t h a t he had fiot been a b l e to c a r e f u l l y r e view the p l e a d i n g s and consider the l e g a l questions involved and,
of h i s own motion and by consent, continued the h e a r i n g on s a i d
motion, s t a t i n g he would render h i s d e c i s i o n a t the e a r l i e s t
possible date.
At s a i d November Term, 1930, Craven Superior Court, and
while the motion of p l a i n t i f f to s t r i k e was pending b e f o r e and
being considered by the Court, and on few minutes n o t i c e to t h e
p l a i n t i f f , His Honor, Small, Judge, signed an order p r e s e n t e d by
defendant, making R. 2 . Schumacher, Receiver of t h e F i r s t National
Bank of New Bern, a p a r t y to said a c t i o n , and g r a n t i n g defendant
leave to amend h i s answer. (R. -op. 28-29).
On January 27, 1931, h i s Honor, Small, Judge, signed order
s t r i k i n g d e f e n d a n t ' s answer (R. pp. 31, 32 , 33 and 3 4 ) . From
which order defendant excepted and appealed to the Supreme Court.
ARGUMENT
We submit: Paragraph one of the answer i s not a s p e c i f i c
or general d e n i a l of the corresponding a l l e g a t i o n of the complaint
a s r e q u i r e d by C. S. 519. In t h i s paragraph the defendant a p p a r e n t l y Concedes t h a t the p l a i n t i f f has organized under the a c t s of
Congress r e l a t i v e to Federal Reserve Banks, but denies t h a t Federal
r e s e r v e banks a r e "banking c o r p o r a t i o n s " . The powers of the
p l a i n t i f f a r e p r e s c r i b e d by law (see Section 4 of the Federal Reserve Act; U. S. Code, T i t l e 12, Section 341, e t s e q . )
This
paragraph, t h e r e f o r e , p r e s e n t s a question of law and not an i s s u e
of f a c t .
EELQATCK v . VINSON, 108 N.C., 147;
12 S. 3 . , 896.
The l a s t sentence i s p l a i n l y n e i t h e r "a s p e c i f i c or g e n e r a l
denial of the a l l e g a t i o n of the complaint" nor "a statement of new
matter i n o r d i n a r y concise language, without r e p e t i t i o n " a s r e quired by C. S. 519, Sec. 2, and can have been i n s e r t e d f o r no
purpose except t o attempt t o arouse p a s s i o n and p r e j u d i c e on the
p a r t of the j u r y .
We f u r t h e r submit: That paragraphs 5 and 8 a r e p l a i n l y not
p r o p e r p l e a d i n g . That p o r t i o n which demands the production of
documents i s n e i t h e r an admission or denial of m a t t e r s a l l e g e d i n
the complaint, nor a statement of new m a t t e r , f o r the defendant i s
d-25
X-6827-b
-3-
326
tx
a p p a r e n t l y u n w i l l i n g to conmit himself t o the a l l e g a t i o n t h a t
any such documents e x i s t , t u t leaves t h i s to i n f e r e n c e . C. S.
899, e t s e q . , p r o v i d e s means f o r compelling the production of
documents and f u r t h e r provides 'that t h e method t h e r e i n p r e s c r i b e d i s an e x c l u s i v e method. Doubtless one of the o b j e c t s
of such a p r o v i s i o n was to permit the Court to determine the
p r o p r i e t y of r e q u i r i n g the production of the documents and
the a d m i s s i b i l i t y of the if c o n t e n t s ; to determine on m a t t e r s
r e l a t i v e to the production of documents without p e r m i t t i n g the
j u r y to be m i s l e d or confused by the i r r e g u l a r p r e s e n t a t i o n
of m a t t e r s which are w i t h i n the province of the judge. The
defendant has not seen f i t to a v a i l himself of the remedy p r o vided by s t a t u t e and the i n c l u s i o n of a r e f e r e n c e to such a
remedy i n the answer i s obviously an e f f o r t t o employ the answer as a s u b s t i t u t e f o r a b i l l of discovery, which l a t t e r remedy
has been e x p r e s s l y abolished, and the reading to the j u r y of
t h i s s e c t i o n of the answer can serve no purpose except to convey
by suggestion the idea t h a t the p l a i n t i f f has i n i t s p o s s e s s i o n
s e c r e t documents which i t has wrongfully f a i l e d t o produce, when
the f a c t i s t h a t i f the production of the documents i s proper
the Court may, i n the manner p r e s c r i b e d by s t a t u t e , r e q u i r e the
production.
The defendant, i n h i s f a r t h e r p l e a (R. p . 6) a l l e g e s t h a t
Raymond E. Schumacher, Receiver of the F i r s t National Bank of ITev/
Bern, " i s a proper and necessary p a r t y and should be brought into
court and p e r m i t t e d to p l e a d to the a f f i r m a t i v e defense and c r o s s - .
p l e a s e t up by the defendant, and t h i s defendant now so moves".
P l a i n t i f f r e s p e c t f u l l y submits t h a t the Receiver of t h e F i r s t
National Bank of New Bern i s not a necessary or proper p a r t y i n
determining the r i g h t s and l i a b i l i t i e s of the p a r t i e s to t h i s a c t i o n .
That the s a i d Receiver i s not seeking to be made a p a r t y and we
r e s p e c t f u l l y faubmit t h a t the defendant i n t h i s a c t i o n has no r i g h t
to demand t h a t he be made a p a r t y . We f u r t h e r submit t h a t the
p l a i n t i f f i s e n t i t l e d to. maintain i t s a c t i o n without hindrance or del a y by the j o i n d e r of unnecessary and improper p a r t i e s . I t has
been h e l d i n t h i s j u r i s d i c t i o n "the p l a i n t i f f has the l e g a l r i g h t
to c o l l e c t the c o l l a t e r a l which i t has thus r e c e i v e d i n due course
i n i t s own name and can m a i n t a i n an a c t i o n thereon a g a i n s t the maker".
.
BAH v. HILL, 169 N.C., 237;
BANK v . OIL CO., 157 N.C., 302.
In paragraph one of the f u r t h e r defense defendant merely r e p e a t s and r e - s t a t e s the m a t t e r s and t h i n g s i n paragraph one of the
answer and as such i s open to the o b j e c t i o n s o f f e r e d to s a i d p a r a graph of the answer.
We f u r t h e r submit t h a t the matters contained, i n paragraph
two of the f u r t h e r defense are absolutely i r r e l e v a n t to the i s sues of the case, which ar& sir-ply - ( l ) I s the defendant l i a b l e
upon the notes sued on? (2) Were these notes t r a n s f e r r e d to
the p l a i n t i f f so t h a t i t became the holder of them? (3) Is the
a l l e g e d balance due by the F i r s t Rational Bank of New Bern to
the defendant a v a i l a b l e as defense i n a c t i o n by p l a i n t i f f ?
He r e s p e c t f u l l y submit t h a t the a l l e g a t i o n s contained i n
paragraph t h r e e of the f u r t h e r defense r e l a t e to m a t t e r s occurring
e i g h t years b e f o r e the execution of the notes i n the s u i t and a r e ,
t h e r e f o r e , wholly immaterial to any controversy between the p a r t i e s
to t h i s a c t i o n . In addition, the a l l e g a t i o n that "The Peoples
Bank became unable to f u n c t i o n because of the requirements of the
p l a i n t i f f " i s a mere conclusion of the p l e a d e r . He should s p e c i f i c a l l y a l l e g e t h e requirements to which he r e f e r s i n order t h a t the
court may be able to determine whether or not such requirements
were lawful or u n l a w f u l .
The a l l e g a t i o n t h a t the p l a i n t i f f caused the National Bank
of New Berne to absorb the said Peoples Bank i s a l s o a conclusion,
and furthermore, a conclusion impossible as a matter of law since
the proceedings i n the c o n s o l i d a t i o n of National banks are subject
to the control of the Comptroller of the Currency (see U. S. Code,
T i t l e 12, Sections 33 and 35) so t h a t the p l a i n t i f f could have no
power to r e q u i r e or compel a National bank to consolidate with a
s t a t e bank.
We submit t h a t the a l l e g a t i o n contained i n paragraph f o u r of
the f u r t h e r defense i s i r r e l e v a n t to the controversy between the
p a r t i e s , and i n a d d i t i o n i t appears to be h e l d i n North Carolina,
a s elsewhere, t h a t an a l l e g a t i o n t h a t an a c t was done f r a u d u l e n t l y
i s a mere conclusion. The pleader should a l l e g e the a c t i o n which
c o n s t i t u t e d the f r a u d in order t h a t the Court may draw i t s own
i n f e r e n c e from the a l l e g a t i o n .
NASH v. ELIZABETH CITY HOSPITAL, 180 N.C., 59;
104 3 . E . , 33;
COLT & CO. v . KEMBALL, 190 N.C., 169;
129 S. 3 . , 406;
EVANS v . DAVIS, 186 N.C., 41;
118 S. 3 . , 845;
LANIER v . LUMBER CO., 177 N.C., 200;
98 S . 3 . , 593;
MOTTO v . DAVIS, 151 N.C., 237; 65 S.E., 969;
WADDELL v. AYCOCK, 135 N.C., 268.
I t i s submitted t h a t paragraph f i v e of the f u r t h e r defense
i s i r r e l e v a n t a s the insolvency of the National Bank of New Berne,
i f i n s o l v e n t as a l l e g e d , would not debar i t from t r a n s f e r r i n g i t s
a s s e t s f o r value and a holder i n due course taking s e c u r i t i e s f o r
value would not be precluded from recovery thereon.
X-6827-b
-5We submit t h a t t h e . a l l e g a t i o n s c o n t a i n e d - i n paragraph s i x
of the f u r t h e r defense a r e i r r e l e v a n t , and i n a d d i t i o n the
a l l e g a t i o n a s to the amalgamation of the two banks i s a m a t t e r
of law impossible f o r the reasons s e t out above. The a l l e g a t i o n as to the use of the fluids of Craven County is. wholly i r r e l e v a n t , and i n a d d i t i o n i s a mere conclusion, a s t h e r e i s no
a l l e g a t i o n as to why or by what means the funds of Craven County
cane i n t o the hands of the National Bank of New Berne, and i n
any event the use or misuse of the funds of Craven County, by
the National Bark of New Berne, must be i r r e l e v a n t to any controversy between tha- Federal Reserve Bank 6f Richmond, and defenda n t , S . S . At t a o r e . The i n c l u s i o n of t h i s a l l e g a t i o n can have
been intended only to arouse p a s s i o n or p r e j u d i c e on the p a r t
of the j u r y by i n s i n u a t i n g that, i n m a t t e r s wholly unconnected
with the p r e s e n t case the p l a i n t i f f has connived a t i r r e g u l a r i t i e s on the p a r t of National Banks.
T.e f u r t h e r submit t h a t the a l l e g a t i o n s contained i n p a r a graph seven of the f u r t h e r defense appears t o be i r r e l e v a n t , as
the defendant does not a l l e g e t h a t h i s notes a r e h e l d a s c o l l a t e r a l by the Federal Reserve Bank of Richmond, and the t i t l e of the
Federal Reserve Bank of Richmond to notes of other persons t r a n s f e r r e d to i t by the F i r s t National Bank of New Berne cannot be m a t e r i a l i n a controversy concerning i t s t i t l e to the notes of the
d e f e n d a n t . The a l l e g a t i o n t h a t other notes were taken i n p u r s u ance of an u l t r a v i r e s c o n t r a c t i s a mere conclusion of the p l e a d e r
o r an a l l e g a t i o n of a n a t t e r of law. The p l a i n t i f f has general
power t o l e n d money and rediscount notes f o r member banks and to
make advances to them secured by the pledging of notes or b i l l s
nade by customers of member banks ( U . S . Code, T i t l e 12, Sections
343-7 ) and p l a i n t i f f i s l i k e w i s e a u t h o r i z e d to e x e r c i s e such i n c i d e n t a l powers as nay be necessary to carry on the b u s i n e s s of
b a n k i n g . w i t h i n the l i m i t a t i o n s of the a c t c r e a t i n g the p l a i n t i f f
(U. S. Code, T i t l e 12, Sections 3 4 - 7 ) .
'
There i s no d e f i n i t e l i m i t a t i o n upon the amount of the notes
which p l a i n t i f f nay discount f o r a member bank nor the amount of
advance which may be made to a member bank. The taking of s e c u r i t y
i s obviously i n c i d e n t a l to the lending of money. If the defendant
contends t h a t any p a r t i c u l a r a c t of the p l a i n t i f f i s u l t r a v i r e s ,
he should a l l e g e t h a t a c t with such p a r t i c u l a r i t y t h a t the court
may determine whether or not i t was a u t h o r i z e d or p r o h i b i t e d by
the Federal Reserve Act.
In a d d i t i o n i t has been decided t h a t t i t l e t o a s s e t s a c q u i r e d ,
f o r V a l u e b y banks o r g a n i z e d u n d e r the l a w of the United S t a t e s i n
u l t r a v i r e s t r a n s a c t i o n s i s v o i d a b l e o n l y , and the question of
u l t r a v i r e s nay be r a i s e d o n l y i n a d i r e c t proceeding b y the United
States.
5 2 8
X-6827-b
- 6 -
*
UNION NATIONAL v. MATTH2TJS, 98 U. S. 621;
NATIONAL BAM v . ^ O T O T , 103 U. S. 99%
SWOPS v. LEFFINGW5i,L, 105 U. S . , 3;
BEHOLDS v. FIRST NA*. BAM, 112 U. S., 405;
ksrfoot v. farmers & i a s . bam, 218 u . s . , a s i ;
SCHUYL3R NAT. BAM v. GABSEEN, 191 U.S., 451;
. THOMPSON v . ST. NICHOLAS HAT. BAM, 146 U.S.,
240;
FIRST NAT, BAM v. LANS, 202 Fed. 117;
120 C. C. A., 271;
CR0W3LL v. F3D. RES1RV3 BAM, 12 Fed. 2nd 259;
This r u l e i s a l s o e s t a b l i s h e d in t h i s S t a t e .
ESASLST v. A3SRB3EN & ROCKFISH RY., 145 N.C.,
272; 59 S. 3 . , 60.
This paragraph a l s o contains a prayer t h a t p l a i n t i f f "be
required to account to Craven County and W. W. G r i f f i n arid to
R. B. Schumacher, Receiver. None of these persons i s a p a r t y
to t h i s a c t i o n and consequently any a l l e g a t i o n as to t h e i r
r i g h t s i s immaterial.
That i n the eighth paragraph of d e f e n d a n t ' s f u r t h e r def e n s e he a l l e g e s t h a t the note f o r $5,000.00 was without cons i d e r a t i o n and was wholly an accommodation o b l i g a t i o n . I t
has been h e l d by t h i s Court t h a t t h e a l l e g a t i o n t h a t a note
was without c o n s i d e r a t i o n was a mere conclusion of the ^ l e a d e r .
13RCHANTS NATIONAL BAM v . ANDREWS, 179 N.C.,, 341;" 102 S. 3 . ,
500.
I t seems t h a t a good pleading should a l l e g e the conditions
and circumstances under which the note was executed i n order t h a t
the Court may determine whether or not i t was supported by good
consideration.
"One signing a negotiable instrument as an accomodation
p a r t y , having received no value, i s bound to the payment
thereof to a holder f o r value i n due course, though t a k i n g
with n o t i c e , C. S,, 3009; and a maker of the instrument
engages t h a t he w i l l -pay i t i n accordance with i t s tenor,
and h i s capacity to endorse. C. S., 3041."
TAFT v. COVING-TON, SUPRH3 COURT ABVANC2
SH33TS, SPRING T2RM, 1930, f i l e d June
16 - issued June 30, 199 N.C., 52;
MAY3RS v. BAM, 193 N.C., 542.
We, t h e r e f o r e , r e s p e c t f u l l y submit that the m a t t e r s and things
a l l e g e d in t h i s paragraph of d e f e n d a n t ' s f u r t h e r defense a r e imm a t e r i a l to the a c t i o n .
~e submit t h a t paragraph nine of the f u r t h e r defense i s nothing
more than a mere conclusion of the pleader and i s , t h e r e f o r e , imm a t e r i a l to t h i s a c t i o n .
X-6827-b
-7-
I t i s submitted t h a t the a l l e g a t i o n s i n paragraph 10 of the
f u r t h e r defense a r e open to t h e sane o b j e c t i o n s a s those made to
paragraph e i g h t of the f u r t h e r defense and the a u t h o r i t i e s
"thereunder a r e c o n t r o l l i n g .
• ^
That the a l l e g a t i o n s i n the 11th paragraph of the f u r t h e r
defense s t a t i n g 11 t h a t t h i s Defendant i s e n t i t l e d to apply the
s a i d d e p o s i t a s an o f f - s e t " i s a mere conclusion of law and, f u r thermore, an erroneous conclusion.
S0W3LL v. FEE. 23S2RV3 BAI7K, 286 U.S . , 449.
The statement t h a t the note i s i n the hands of B. 3.
Schumacher i s immaterial.
The a l l e g a t i o n s i n the 12th oaragraph of the f u r t h e r defense
a r e r e p e t i t i o n s of the p o r t i o n of the denial of paragraph e i g h t of
the answer, and a r e open to the o b j e c t i o n s nade to t h a t p o r t i o n
of paragraph e i g h t of the answer.
We submit t h a t the p o r t i o n of paragraph 13 of the f u r t h e r
defense t h a t demands the production of w r i t t e n instruments i s
open to the o b j e c t i o n s mentioned under discussion of paragraphs
f i v e and e i g h t of t h e answer. Furthermore, the Court may take
j u d i c i a l n o t i c e of the f a c t t h a t r e p o r t s of examinations of
National Banks a r e made by the 'Sxaminers to the Comptroller of the
Currency, who i s an o f f i c e r of the United S t a t e s a c t i n g under the
d i r e c t i o n of the S e c r e t a r y of the Treasury (U, S. Code, T i t l e 12,
S e c t i o n s 1, 9 and 481) so t h a t such r e p o r t s could not be e x h i b i t e d
by the p l a i n t i f f . The proper method to o b t a i n such papers, i f
r e l e v a n t , i s to apply to the Comptroller of the Currency f o r c o p i e s .
(U. S. C. T i t l e 28, Sec. 663). The Secretary of the Treasury has
promulgated r e g u l a t i o n s p r o v i d i n g f o r the method i n which such
a p p l i c a t i o n s s h a l l be made, these r e g u l a t i o n s a r e p r i n t e d as an
appendix to t h i s b r i e f .
We r e s p e c t f u l l y submit t h a t the a l l e g a t i o n s i n paragraph
f o u r t e e n of the f u r t h e r defense are not a l l e g a t i o n s of any f a c t ,
but an i r r e g u l a r p r a y e r f o r r e l i e f and should be s t r i c k e n , a s t h e
r e l i e f obviously cannot be g r a n t e d . The r e l i e f asked i n the f i r s t
paragraph i s f o r the b e n e f i t of persons not p a r t i e s t o the s u i t f o r
whose b e n e f i t he has no r i g h t to prosecute an a c t i o n , and i n a d d i t i o n
the appointment of a Receiver to take charge of the a s s e t s and actm i n i s t e r them f o r the b e n e f i t of c r e d i t o r s of National banks would
be i n c o n t r a v e n t i o n of the laws of the United S t a t e s which provide
t h a t the Receivers of National Banks s h a l l a c t under the d i r e c t i o n
of the Comptroller of the Currency.
We, t h e r e f o r e , r e s p e c t f u l l y submit t h a t t h e answer, as a whole,
i n t h i s case c l e a r l y comes w i t h i n the purview of the p r o v i s i o n s of
C. S. 537, and ought to be s t r i c k e n .
R e s p e c t f u l l y submitted,
W.
H.
133,
M. G. WALLACE,
X-6827-b
- 8 -
'
Attorneys for P l a i n t i f f ,
Appellee.
APPENDIX:
D3PAfiTM5NT RULE IX.
TREASURY DEPARTMENT,
Office of the Secretary,
1906
Washington, July 5, 1906.
Department Circular No. 69.
Chief Clerk.
TO HEADS 01 BUREAUS AND CHEFS OF DIVISIONS,
SECRETARY'S 0FFIC3, TR3ASURY DEPARTMS^TT: The following i s quoted from the Regulations of the Treasury
Department:
BULB IX. No account, document, or paper of any kind shall "be
withdrawn fron the f i l e s of the Department "by s t e n t s , attorneys,
or other persons; and copies of any accounts or papers shall not
"be furnished to any person except upon the written order of the
Secretary, one of the Assistant Secretaries, or head of Bureau,
and such copies shall be furnished only to such persons as nay
have a personal material Interest i n the subject-natter of the
papers. Any a f f i d a v i t s e t t i n g forth the i n t e r e s t of the applicant
and showing the purpose for which copies are desired must be submitted with each application.
In a l l cases where copies of documents or records are desired
by, or on behalf o f , p a r t i e s to a s u i t , whether in a court of the
United States or any other, such copies shall be furnished to the
court only, and on a rule of the court upon the Secretary of the
Treasury requesting the sane. Exceptions to t h i s rule w i l l be
made only on the written order of the Secretary or of an a s s i s t a n t
Secretary.
No information in regard to transactions of an o f f i c i a l
character in t h i s Department i s to be communicated to anyone not
authorized to receive the sane.
No information in regard to the claim of any person which has
ever been f i l e d i n the Department i s to be given to any other person unless proper authority i s shown by way of power of attorney,
or by l e t t e r s of administration, or otherwise in a manner s a t i s factory to the Secretary, or an Assistant Secretary, or to the head
of the proper Bureau in the Department, or chief of the proper
d i v i s i o n i n the Secretary's O f f i c e .
Department Circular No. 110 of 1900 i s hereby superseded.
LESLIE M, S W ,
Secretary.
S 3 i
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6828
February 27, 1931.
SUBJ3CT:
Change in I n t e r - D i s t r i c t Time Schedule.
Dear S i r :
Upon agreement "between the Federal Reserve
Banks of Richmond and Atlanta, the Federal Reserve
Board has approved a change in the i n t e r - d i s t r i c t
time schedule of a v a i l a b i l i t y items from Charlotte to
J a c k s o n v i l l e from two days to one day.
Very truly yours,
3. M. McClelland,
Assistant Secretary.
TO OOTSRHORS OF ALL FEDERAL R3SEBVE BASKS,
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
X-6830
T H E FEDERAL RESERVE BOARD
March 2 , 1931
SUBJECT:
Amended Regulation G, Series of 1931.
Dear S i r :
There i s enclosed for your information a
copy-of the Board's Regulation G, governing the r e discount of notes secured "by adjusted s e r v i c e c e r t i f i c a t e s , as amended today to conform to the Act of
February 27, 1931.
The Regulation i s "being printed
and a supply w i l l "be furnished t o you as soon as
possible.
Please advise how many copies of the printed
Regulation you d e s i r e .
By d i r e c t i o n of the Federal, Reserve Board.
Very t r u l y yours,
E. M. McClelland,
Assistant Secretary.
Enclosure.
TO GOVERNORS AND CHAIRMEN OF ALL F. R. BANKS.
COPY
X-6829
REGULATION G, SERIES OF 1931
(Superseding Regulation G of 1928)
REDISCOUNT OF NOTES SECURED BY ADJUSTED SERVICE
CERTIFICATES
SECTION I .
STATUTORY PROVISIONS
Under the terms of the World War adjusted compensation act
as amended, loans may lawfully "be made to veterans upon their
adjusted service c e r t i f i c a t e s only i n accordance with the prov i s i o n s of s e c t i o n 502 thereof.
Any national hank, or any bank or trust company incorporated under the laws of any State, Territory, possession* or the
D i s t r i c t of Columbia i s authorized, a f t e r the expiration of two
years a f t e r the date of the c e r t i f i c a t e , to loan to any veteran
upon his promissory note secured by h i s adjusted service cert i f i c a t e any amount not i n excess of the loan value of the
c e r t i f i c a t e , which i s (A) 50 PER CENT OF THE FACE VALUE OF THE
CERTIFICATE, OR (B) THE LOAN VALUE stated on the face of the
c e r t i f i c a t e , WHICHEVER IS THE GREATER AMOUNT. The law provides
that the rate of i n t e r e s t charged upon the loan by the lending
bank s h a l l not exceed by more than 2 per cent per annum the rate
charged at the date of the loan for the discount of 90-day commercial paper by the Federal reserve bank of the Federal reserve
d i s t r i c t i n which the lending bank i s located AND, AS TO LOANS
MADE ON OR AFTER FEBRUARY 27, 1931, SHALL IN NO EVENT EXCEED 4&
PER CENT PER ANNUM COMPOUNDED ANNUALLY.
Upon the indorsement of 'any bank, which shall be deemed a
waiver of demand, notice and protest by such bank as to i t s own
indorsement e x c l u s i v e l y , and subject to regulations to be prescribed by the Federal Reserve Board, any such note secured by
an adjusted service c e r t i f i c a t e and held by a bank i s made e l i gible for rediscount with the Federal reserve bank of the Federal
reserve d i s t r i c t Jn which such bank i s located, whether or not the
bank o f f e r i n g the note for rediscount i s a member of the Federal
reserve system and whether or not i t acquired the note i n the f i r s t
instance from the veteran or acquired i t by transfer upon the i n dorsement of any other bank; provided that at the time of r e d i s count such note has a maturity not i n excess of nine months, exclusive of days of grace, and complies i n a l l other respects with
the provisions of the law, the regulations of the United States
Veterans' Bureau, and the regulations of the Federal Reserve Board,
SECTION I I .
DEFINITIONS
Within the meaning of t h i s regulation (a) The term "the act" shall mean the World War adjusted
compensation act as amended;
X—6829
0
oof)
("b) The term "director' 1 s h a l l mean the ADMINISTRATOR
OF VETERANS1 AFFAIRS, WHO HAS BEEN VESTED BY LAW WITH THE
POWER AH) DUTIES FORMERLY VESTED IN THE Director of the
United States Veteran's 1 Bureau;
(c) The term " c e r t i f i c a t e " shall mean an adjusted service
c e r t i f i c a t e issued under the provisions of section 501 of the
World War adjusted compensation act as amended;
(d) The term "veteran" shall mean any person to whom an
adjusted service c e r t i f i c a t e has been issued "by the director
under the provisions of the World War adjusted compensation
act as amended;
( e ) The term "bank"shall mean any national "bank or any
"bank or trust company incorporated under the laws of any State,
Territory, possession, or the D i s t r i c t of Columbia;
( f ) The term "note" shall mean a promissory note secured
by an adjusted service c e r t i f i c a t e and evidencing a loan made
by a bank on the security of such c e r t i f i c a t e i n f u l l compliance
with the provisions of the World War adjusted compensation act
as amended and the regulations of th6 Administrator of Veterans 1
Affairs.
SECTION I I I . ELIGIBILITY
In order to be e l i g i b l e for rediscount at a Federal reserve
bank, any such note must (a) Arise out of a loan made by a bank t ° a veteran i n f u l l
compliance with the provisions of the act and of any regulation
which the director may prescribe;
(b) Be secured by the c e r t i f i c a t e issued to the maker, which
c e r t i f i c a t e mast accompany the note;
(c) Be held by the offering bank i n i t s own right a.t the time
i t i s offered for rediscount;
(d) Be i n the form approved by the director;
(e) Have a maturity at the time of rediscount not i n excess
of nine months, exclusive of days of grace; PROVIDED, HOWEVER,
THAT WHEN SUCH NOTE CONTAINS, IN THE FORM APPROVED BY THE
DIRECTOR, A PROVISION FOR THE EXTENSION OF THE MATURITY THEREOF
FROM YEAR TO YEAR, AT THE OPTION OF THE HOLDER EVIDENCED BY HIS
ENDORSEMENT THEREON, THE MATURITY OF SAID NOTE (AFTER THE FIRST
MATURITY STATED THEREON) SHALL, FOR THE PURPOSE OF DETERMINING
ITS ELIGIBILITY FOR REDISCOUNT, BE DEEMED TO BE THAT STATED IN
THE LAT3ST EXTENSION INDORSED THEREON BY THE HOLDER.
( f ) Evidence a loan the amount of which does not exceed (A)
50 PER CENT OF THE FACE VALUE OF THE CERTIFICATE OR (B) the loan
value STATED ON THE FAC1 of the c e r t i f i c a t e f o r the year i n which
such loan was made, WHICHEVER AMOUNT IS GREATER;
(g) Be payable with interest accruing a f t e r the date of the
note at a rate stated in the face of the note, which ratfe must
not exceed by more than 2 per cent per annum the rate charged at
the date of the loan f o r the discount of 90-day commercial paper
by the Federal reserve bank of the F e d e r a l / d i s t r i c t i n which the
reserve
,
k
X-6829
i 336
lending bank i s located; PROVIDED, HOWEVER. THAT, IF THE BOM
HAS MADE ON OR AFTER FEBRUARY 27, 1931, THE RATE MOST NOT IN
AMY EVENT EXCEED 4& EKR CENT PER ANNUM, COMPOUNDED ANNUALLY.
(h) Bear the indorsement of the "bank o f f e r i n g i t f o r r e discount , which indorsement shall "be deemed a waiver of demand,
n o t i c e , and protest by such bank as to i t s own indorsement
exclusively;
( i ) Be accompanied by the evidence of e l i g i b i l i t y required
by t h i s regulation and such other evidence of e l i g i b i l i t y as
may be required by the Federal reserve bank to which i t i s
offered f o r rediscount; and
( j ) Comply i n a l l other respects with the requirements of
the law and of t h i s regulation.
SECTION IV. EVIDENCE OF ELIGIBILITY
(a) General. - The Federal reserve bank to which a note i s
offered f o r rediscount must be s a t i s f i e d either by reference to
the note i t s e l f or otherwise that the loan evidenced by the note
or any s a l e , discount, or rediscount thereof complies i n a l l
respects with the provisions of section 502 of the act and that
the note i s e l i g i b l e f o r rediscount by a Federal reserve bank
under the terms of the law and the provisions of t h i s regulation.
(b) A f f i d a v i t of lending bank. - Any note offered to a Federal reserve bank f o r rediscount must be accompanied by* the a f f i davit required by section 502(h) of the act and the regulations
of the director, i n form approved by the director, made by an
o f f i c e r of the bank which made the loan, before a notary public
or other o f f i c e r designated for the purpose by regulation of the
director, s t a t i n g that (1) Such bank has not charged or c o l l e c t e d , or
attempted t o charge or c o l l e c t , d i r e c t l y or i n d i r e c t l y ,
any f e e or other compensation in respect of any loan,
made by such bank to any veteran under section 502 of
the a c t , except the interest authorized by such section;
(2) The person who obtained the loan evidenced by
such note i s known to be the veteran named i n the cert i f i c a t e securing such note;
(3) Such bank has n o t i f i e d the director that i t has
made a loan to the veteran named i n the c e r t i f i c a t e , as
required by the regulations of the director; and
(4) Such bank has n o t i f i e d the veteran by mail at h i s
l a s t known p o s t - o f f i c e address of any s a l e , discount, or
rediscount of such note by such bank, as required by
s e c t i o n 502(b) of the a c t .
(c) A f f i d a v i t of other banks. - If such note i s offered for
rediscount by a bank other than the bank which made the loan thereon, i t must a l s o be accompanied by an a f f i d a v i t of an o f f i c e r of
the o f f e r i n g bank and an a f f i d a v i t of an o f f i c e r of each other bank
which has sold, discounted, or rediscounted such note, which a f f i -
X-6829
-4davit s h a l l be i n form approved "by the director and s h a l l s t a t e
that the bank of which the a f f i a n t i s an o f f i c e r has promptly
n o t i f i e d the veteran by mail at h i s l a s t known p o s t - o f f i c e address of the s a l e , discount, or rediscount of such note by
such bank, as required by section 502(b) of the a c t .
SECTION V.
APPLICATION FOB REDISCOUNT
Every application for the rediscount of such notes shall
be made on a form approved by the Federal reserve bank to which
such note i s offered and shall contain a c e r t i f i c a t e of the
o f f e r i n g bank to the e f f e c t that, to the best of i t s knowledge
and b e l i e f , such note arose out of a loan made i n f u l l compliance with the provisions of the act and the regulations of the
director and i s e l i g i b l e for rediscount under the provisions
of s e c t i o n 502 of the act and of this regulation.
SECTION VI. PROPER BANK FOB REDISCOUNT
No such note s h a l l be rediscounted by any Federal reserve
bank f o r any bank not located i n i t s own Federal reserve d i s t r i c t , except that such notes may be redis counted by any Federal reserve bank for any other Federal reserve bank.
SECTION VII. RATE OF REDISCOUNT
The rate of i n t e r e s t charged by any Federal reserve bank
on any such note rediscounted by i t shall be the same as that
charged by i t f o r the rediscount of 90-day notes drawn for a
commercial purpose, except that when such notes are rediscounted
for another Federal reserve bank the rate shall be that f i x e d by
the Federal Reserve Board.
SECTION VIII. REDISCOUNTS FOR NONMEMBER BANKS
No Federal reserve bank shall rediscount such notes for any
nonnember bank u n t i l such bank has furnished to the Federal reserve bank such information as i t may request i n order to s a t i s f y i t s e l f as to the condition of such bank and the a d v i s a b i l i t y
of making the rediscount for i t .
1
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
-
X-SS32
Uarch 5, 1931.
SUBJECT:
Code words to cover telegraphic transactions
in new i s s u e s of Treasury C e r t i f i c a t e s of Indebtedness, Series TS2-1931 and TM-1932.
Dear Sir;
In connection with telegraphic transactions in
Government s e c u r i t i e s between Federal reserve banks,
the f o l l o w i n g code, words have been designated to cover
new i s s u e s of Treasury C e r t i f i c a t e s of Indebtedness, as
follows:
"ITOWKIKE", S e r i e s TS2-1931, dated March 16,
1931, due September 15, 1931.
"UOWHILL", Series TM-1932, dated March 16,
1931, due March 15, 193?.
These code words should be inserted in the Federal
reserve telegraph code book, following the supplemental
code word "NOWEIGH" , on page 172.
Very truly yours,
J . C. No e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F. H. BANKS.
3 3 9
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6833
March 5, 1931.
SUBJECT:
New Regulations of Veterans' Bureau Regarding loans
Secured "by Adjusted Service C e r t i f i c a t e s .
Dear S i r :
Pursuant to the Act of Congress approved February
27, 1931, amending Section 502 of the World War Adjusted
Compensation Act with reference t o loans upon adjusted s e r v i c e c e r t i f i c a t e s , the Administrator of Veterans' A f f a i r s
has amended h i s regulations on t h i s subject so as to conform
to the p r o v i s i o n s of the law as amended and there are enclosed
herewith copies of these regulations i n the amended form.
Copies of the Federal Reserve Board's Regulation G amended to
conform to the new law were forwarded to you i n my l e t t e r of
March 2nd.
By reference to the new regulations of the Administrator of Veterans' A f f a i r s and to the Board's new Regulation
Gr, i t w i l l he noted t h a t , as to a l l loans made on the s e c u r i t y
of adjusted s e r v i c e c e r t i f i c a t e s on and a f t e r February 27,
1931, the r a t e of i n t e r e s t must not exceed (a) simple i n t e r e s t
at a r a t e not exceeding by more than 2 per cent per annum the
rate charged at the date of the loan for the discount of 90
day commercial paper by the Federal reserve bank of the Federal reserve d i s t r i c t in which the lending bank i s l o c a t e d ,
or (b) 4& per cent per annum compounded annually, whichever
i s the lower.
I t w i l l a l s o be noted that the Administrator of
Veterans' A f f a i r s has prescribed i n h i s regulations a new form
of note which may be used by banks i n making loans on the
s e c u r i t y of adjusted s e r v i c e c e r t i f i c a t e s , containing a p r o v i s i o n that i f the p r i n c i p a l and i n t e r e s t are not paid at
maturity, the maker and a l l endorsers authorize the holder at
h i s option, evidenced by the h o l d e r ' s endorsement to that
e f f e c t on the n o t e , t o extend i t s maturity for a period of one
year and to repeat such extensions from year t o year.
The
Federal Reserve Board's new Regulation G contains a p r o v i s i o n
that where there i s such a provision f o r the extension of
maturity of a note from year to year at the option of the
holder evidenced by h i s endorsement thereon, the maturity of
X-6833
-2-
said note ( a f t e r the f i r s t maturity stated therein) s h a l l ,
f o r the purpose of determining i t s e l i g i b i l i t y f o r rediscount
"be deemed to "be that stated i n the l a t e s t extension endorsed
thereon "by the holder. The new form of note prescribed by
the Administrator of Veterans' A f f a i r s (U.S. Veterans' Bureau Form Ho. 6615-a) w i l l , therefore, be e l i g i b l e for r e discount at a Federal reserve bank whenever the maturity date
stated i n the l a t e s t extension endorsed on the note i s not
more than nine months a f t e r the date of rediscount provided,
of course, that the note complies i n a l l other respects with
the requirements of the law and of the regulations. Banks
making loans on notes secured by adjusted service c e r t i f i c a t e s ,
which do not desire to preserve the e l i g i b i l i t y of such notes
for rediscount a f t e r the f i r s t maturity may properly use the
same form (U. S. Veterans ' Bureau Form No. 6615) which has
been used heretofore for making loans on the security of adjusted service c e r t i f i c a t e s .
Copies of this l e t t e r and of the enclosures are being
sent to a l l the branches of the Federal reserve banks.
Very truly yours,
E. M. McClelland,
Assistant Secretary.
Enclosures.
TO GOVERNORS WD CfiA-IRMEN OF ALL F» R. BANKS.
3 4 0
COPY
X-6834
S.471
(Public Ho. 783, 71st Congress)
SEV2HTY-FIRST CONGRESS OF THE UNITED STATES OF AMERICA
At the Third Session,
Begun and held at the City of Washington
on Monday, the f i r s t day of December,
one thousand nine hundred and t h i r t y .
M ACT
Providing for Saturday half holidays for certain Government employees.
Be i t enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That on
and a f t e r the e f f e c t i v e date of t h i s Act four hoursj exclusive
of time for luncheon, shall constitute a day's work on Saturdays
throughout the year, with pay or earnings for the day the same
as on other days when f u l l time i s worked, for a l l c i v i l employees
of the Federal Government and the D i s t r i c t of Columbia, exclusive
of employees of the Postal Service, employees of the Panama Canal
on the Isthmus, and employees of the Interior Department i n the
f i e l d , whether on the hourly, per diem,' per annum, piecework, or
other b a s i s : Provided, That i n a l l cases where for special public
reasons, to be determined by the head of the department or establishment having supervision or control of such employees, the
services of such employees can not be spared, such employees shall
be e n t i t l e d to an equal shortening of the workday on some other
day: Provided further, That the provisions of this Act shall not
deprive employees of any leave or holidays with pay to which they
may now be e n t i t l e d under e x i s t i n g laws.
NICHOLAS LONGWORTH
Speaker of the House of Representatives
GEORGE H. MOSES
President of the Senate, Pro tempore
Approved
March 3, 1931
HERBERT HOOVER
X-6835
:
FEDERAL
R | S £ R V E
842
BOARD
STATEMENT FOR THE PRESS
For immediate r e l e a s e .
March 7, 1931.
The Federal Reserve Board has amended i t s Regulation G governing the rediscount Toy Federal reserve banks of notes secured "by adjusted
service c e r t i f i c a t e s so as to conform to the Act of February 27, 1931,
amending Section 502 of the World War Adjusted Condensation Act; and
copies of the amended regulation with the new portions indicated by
capital l e t t e r s are released herewith.
The amendments contained i n the Act of February 27, 1931, apply
to loans by banks as well as to loans by thp Veterans 1 Bureau. The
principal changes e f f e c t e d by the amendments are, (1) to increase the
loan value of each adjusted service c e r t i f i c a t e immediately to 50 per cent
of the face value of such c e r t i f i c a t e , and (2) to provide that the rate
of interest on any such loan shall i n no event exceed
per cent per annum, compounded annually. The original provision of Section 502 of the
World War Adjusted Compensation Act to the e f f e c t that the rate of i n t e r e s t
charged by banks on loans to veterans secured by their adjusted service
c e r t i f i c a t e s s h a l l i n no event exceed by more than 2 per cent per annum
the rate charged at the date of the loan f o r the rediscount of 90 day commercial paper by the Federal reserve bank of the Federal reserve d i s t r i c t
i n which the lending bank i s located, remains i n e f f e c t . Therefore, as
to a l l loans made on and a f t e r February 27, 1931, the rate of interest must
not exceed, (a) simple i n t e r e s t at a rate not exceeding by more than 2 per
cent per annum the rate charged at the date of the loan f o r the rediscount
of 90 day commercial paper by the Federal reserve bank of the d i s t r i c t in
which the lending bank i s located, or (b) 4jg per cent per annum compounded
annually, whichever i s the lower.
Subsection (e) of Section III of the Board's Regulation G contains a provision to the e f f e c t that, when a note given by a veteran for a
loan on his adjusted service c e r t i f i c a t e contains, i n the form approved
by the Director of the Veterans' Bureau, a provision for the extension of
the maturity thereof from year to year, at the option of the holder e v i denced by h i s endorsement thereon, the maturity of said note ( a f t e r the
f i r s t maturity stated thereon) s h a l l , f o r the purpose of determining i t s
e l i g i b i l i t y , be deemed to be that stated i n the l a t e s t extension endorsed
thereon by the holder. Notes i n this form need be used only .where the
lending bank desires to retain the e l i g i b i l i t y of such notes for rediscount
at Federal reserve banks subsequent to the f i r s t maturity. Banks not
desiring to preserve such e l i g i b i l i t y a f t e r the f i r s t maturity may continue
to use U.S. Veterans' Bureau Form No. 6615, which has been used heretofore.
I , 3 1 3
X-6836
STATEMENT OF BUREAU OF ENGRAVING AND PRINTING
Federal Reserve Notes, Series 1928
February 1 t o 28, 1931.
$5
Boston
New York
Philadelphia
Cleveland
Atlanta
Chicago
Minneapolis
Kansas City
Dallas
100,000
300,000
100,000
80,000
50,000
200,000
30,000
30,000
30,000
920,000
no
•
100,000
60,000
40,000
20,000
•-
#20
20,000
50,000
20,000
30,000
10,000
-
£50
-
-
10,000
-
-
-
10,000
10,000
3,000
240,006
150,000
3,000
10,000
-
•we. km * i
1,313,000 sheets
Total
Sheets
Amount
120,000 . i l l , 0 9 4 . 0 0
41,602.50
450,000
16,541.00
180,000
13,867.50
150,000
7,396.00
80,000
200,000
18,490.00
4,622.50
50,000
2,773.50
30,000
4,899.85
53,000
1,313,000
$121,386.85
# 2 . 4 5 M, . . .^121,386.85
X-6838
COPY
March 13, 1931.
Mr. M. G. Wallace, Counsel,
Federal Reserve Bank of Richmond,
Richmond, Virginia.
My dear Mr. Wallace:
Please accept my thanks for your l e t t e r of March
10th with further reference to the 6ase of Skinner and Company
v. Federal Reserve Bank of Richmond.
As I advised you during our conference on March
11th, the Comptroller's Office received a l e t t e r on that date
from the Receiver of the First National Bank of Greenville
wherein the Receiver said that the committee which i s obtaining
the signatures of depositors of the First National Bank of
Greenville to the agreement "freezing the deposits" of that bank
i s making good progress and confidently expects to have a l l of
the depositors signed up within a very short time. The Receiver,
therefore, hopes that a State bank w i l l soon be organized to
take over a l l of the a s s e t s and assume a l l of the l i a b i l i t i e s of
the F i r s t National Bank of Greenville; and, of course, i f t h i s
i s done the Skinner case w i l l be dismissed. The Receiver advises
further that they have encountered some d i f f i c u l t i e s with regard
to the amount at which the building and f i x t u r e s of the First
National Bank of Greenville are to be taken over by the new
State bank which i s . b e i n g organized to succeed i t ; but i t i s
hoped that t h i s may be worked out i n some way.
I b e l i e v e that we agreed during our conference on
March 11th that i t would be undesirable to f i l e further pleadings
i n t h i s case or to r e t a i n special counsel on a system b a s i s i n
connection with the case pending the outcome of the e f f o r t s
described above; and that, therefore, you w i l l communicate with
counsel for the p l a i n t i f f s and ascertain whether i t w i l l not be
p o s s i b l e to obtain an extension of time within which to f i l e your
answer or other pleadings since that would seem to be to the i n t e r e s t of a l l p a r t i e s .
I shall appreciate i t i f you w i l l k i n d l y
l e t me know as soon as possible the outcome of your negotiations
with counsel for the p l a i n t i f f .
With a l l best regards, I am
Cordially yours,
(•S.J
WW-ssui
Walter Wyatt,
General Counsel.
X-6838-i
COPY
fEDEEAt BBSEBVE BAH
OP RICHMOND
March 10, 1931
Federal Reserve Board,
Washington, D. C.
Attention: Mr. Walter ffyatt, General Counsel.
Dear Mr. Wyatt:
I have been informed "by ray associate that the s t a t e court has
entered an order removing the action of W. I. Skinner and Company v.
Federal Reserve Bank of Richmond, et a l s , to the United States D i s t r i c t
Court for the Eastern D i s t r i c t of North Carolina i n the Washington
Division.
I am not advised as to whether or not the p l a i n t i f f s w i l l
make a motion to remand or not.
I have asked my associate to docket
t h i s case on the chancery s i d e ot the federal court as i t has at l e a s t
one aspect of a suit i n dhancery, and the decisions of the federal court
seem to e s t a b l i s h that a case whith has some aspects of a suit i n chancery should be primarily treated as a suit i n chancery subject to the
right of any party to ask f o r a d i v i s i o n of the controversy and for a
t r i a l at law upon any controversy whiish i s i n substahtie ah action at law.
It occurs to me that i n so far as the action i s grounded upon
the negligence of t h i s bank i t ib an action of law, but i n so far as the
p l a i n t i f f seeks to e s t a b l i s h a l i e n upon the reserve balance or the
c o l l a t e r a l i n our hands i t i s a suit i n chancery.
You w i l l r e c a l l that I suggested to you that i t might be poss i b l e to deal with t h i s case on a demurrer or a motion to dismiss. After
considering the matter more c a r e f u l l y , I have come to the conclusion that
a demurrer or motion to dismiss could not be Sustained.
In so far as the
action i s one for negligence the p l a i n t i f f a l l e g e s that we surrendered
these checks to a bank knowing that i t Was insolvent.
I am afraid that
i t would be going a l i t t l e too far to expect a court to hold that the
surrender of checks to a bank known to be insolvent was not negligent. In
the other branch of the case i t i s alleged that we were directed to charge
the amount of these checks to the reserve balance of the f a i l e d bank and
that the balance was s u f f i c i e n t . While t h i s allegation" i s , I b e l i e v e , not
true, i t would, of course, be treated as true on any proceeding i n the
nature of a demurrer, and I doubt i f we could sustain the proposition that
a Federal reserve bank was not obliged to charge checks against a balance
i n i t s hands i f the balance was s u f f i c i e n t and the authority to charge was
received before notice of closing was received.
For the reasons stated above I am now inclined to think that i t
would be best to answer the complaint i n t h i s case and to try the matter
<f-v> <
' 4
,
• $ « •
X*~6838-a
Mr. Walter Wyatt,
Federal Reserve Board,
Washington, D • C ^
-»2**
March. 10, 1931
on evidence. As you know,! i t was agreed, I "believe, that Mr. Baker would
"be consulted i n t h i s case before any d e f i n i t e action was taken.
I am
therefore writing you my views i n order that yoti may either take the
matter up with Mr. Baker or l e t me know whether or not you wish me to do
so.
My a s s o c i a t e did not give the exact date upon which the removal
was ordered, "but stated that he was advised of i t on March 7th.
I assume
that the removal occurred one or two days "before that; consequently, our
answer should he f i l e d sometime "between now and the f i r s t of April.
I have no further news with respect to the probability of the
completion of the plans for the organization of a new "bank, i n Greenville.
Very truly yours,
(S)
MOW R
M. G. Wallace,
Counsel.
346
X-6838-1)
COPY
SAU FRANCISCO
FEB. 13
ffyatt
Washn.
In view of Wallace's past experience i n North Carolina and i n
view of prime importance of obtaining clear cut decision
upholding Regulation J , Series 1930, as well as i n view of the
a l l e g a t i o n contained i n the Skinner complaint charging reserve
bank with actual or constructive notice of insolvency of drawee
I "believe that t h i s l i t i g a t i o n should be handled as a system
matter.
Agnew
*'•*' /%
€i>L± 4
X-6838-c
:
COPY
FEDERAL HBdBHVS BAifiC
OF MIHMAPOLIS
February 18, 1931.
Mr. Walter Wyatt
General Counsel
Federal Beserve Board
Washington, D. C.
Skinner & Co. vs. Federal Reserve Bank*
of Richmond et a l .
My dear Mr. Wyatt:
I cannot see how i n t h i s case the Malloy case can
be s u c c e s s f u l l y invoked against Regulation J as- amended, and
therefore wired you as I did on the 13th. But now that I
have your l e t t e r s of the 13th and 16th with quotations of
what some counsel of other Federal reserve hanks say about
employing System Counsel, I l a i d the matter t h i s morning before Gov. Geery, Deputy Gov. Yaeger and Mr. Mitchell, the
Chairman of the Board, and they authorized me. to say t h a t ,
as far as t h i s Bank i s concerned, they are w i l l i n g to leave
i t to the Federal Reserve Board whether or not to r e t a i n
System Counsel, and that i f the Board decides to r e t a i n such
counsel and the other 11 Federal reserve banks agree to contribute to that expense pro rata on the basis of t h e i r respect i v e capital and surplus, this Bank w i l l also contribute
on that b a s i s .
Yours very t r u l y ,
(Signed) A. Ueland
Counsel.
AU/MG
3 4 8
X-6838-d
COPY
Law Offices
WILLIAMS, 3KJTTAIU & SINCLAIR
PHILADELPHIA
February 13, 1931.
Walter Wyatt, Esq., General Counsel,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Wyatt :
I write i n reply to your wire of the 12th and your l e t t e r
of the 7th, concerning the Skinner case.
As i s usual, we shall be very glad to accede to any suggestions made by a majority of the Counsel. Our usual statement i n
matters of t h i s kind must be repeated, namely, that our lack of
l i t i g a t i o n i n t h i s d i s t r i c t makes i t d i f f i c u l t for us to give
points of view other than those that are purely academic.
Certainly, i t i s evident from Mr. Wallace's l e t t e r , as
well as from the b i l l of complaint , that the v a l i d i t y of the amended
Regulation J w i l l be an i s s u e .
If p o s s i b l e , our view i s that i t
would be desirable to have such an issue presented i n a Federal
Court. However, Mr. Wallace and counsel for the receiver of the
closed bank would be i n a better p o s i t i o n to decide t h i s question
i n view of their knowledge of the practical s i t u a t i o n .
The opinion of Mr. Justice Holmes in the Early case appears
to us to be based primarily upon the contract between the parties as
evidenced by the provisions of Regulation J and the Check Collection
Circular issued by the Richmond Bank pursuant thereto.
It would seem,
to follow that i f the Regulations have been changed and the Circular
modified accordingly, the conclusion should be i n accord with the
changed Regulations and Circular, unless i t should be held that the
Federal Reserve Board has exceeded i t s power i n amending the Regulation
i n the manner recommended by the conference of Counsel.
If you and the other Counsel f e e l that the case should be
a System matter at i t s inception we shall be very glad to cooperate.
Yours sincerely,
(Sgd.) John S. Sinclair
for Williams, B r i t t a i n and Sinclair
GRL
X-6839
COPY
69
SUPREME COURT OF NORTH CAROLINA — Spring Term 1931.
federal Reserve Bank
of Bichmond, Va.,
vs.
Ho. 178 Graven.
dr. S. Atmore, trading as
Neuse Motor Company, and
Gr.S. Atmore, i M i v i d u a l l y .
Appeal "by defendant from order of Small, J . , at January Term, 1931, of the Superior Court of Ci'avien County.
Affirmed.
This i s an action on two promissory notes, negotiable
i n form, and executed by defendant, G.S. Atmore, trading as Neuse
Motor Company.
Both said notes
were endorsed by the defendant,
Gr.S. Atmore, individually, before their delivery t o the payees
named therein, respectively.
One of said notes, for the sum of $5,000.00, dated 28
September 1929, and due on 29 October 1929, was payable to the
order of the maker.
This note with the endorsement of the maker
was negotiated to the First National Bank of New Bern, N.C., and
by said Bank to the p l a i n t i f f , now the holder thereof.
The other note, for the sum of $2,000.00, dated 8 October
1929, and due t h i r t y days a f t e r date, was payable to the order of
the F i r s t National Bank of New Bern., N.C.
This note with the
endorsement of the payee was negotiated to the p l a i n t i f f , now tfoe
holder thereof.
In i t s complaint, p l a i n t i f f a l l e g e s , both s p e c i f i c a l l y
and generally, that i t i s the holder i n due course, and for value,
of each of said notes.
Defendant, i n h i s answer, denies both the
X-6839
T3-
s p e c i f i c and. general allegations of the complaint to the e f f e c t
that p l a i n t i f f i s the holder of said notes i n due course and for
value.
In addition to said denials, i n defence of p l a i n t i f f ' s
right to recover i n t h i s action, defendant a l l e g e s certain
matters, "both of law and of f a c t , a l l of which challenge the
right of p l a i n t i f f to recover i n t h i s action as a holder i n due
course, and for value, on the notes set out i n the complaint.
The action was heard on p l a i n t i f f ' s motion that certain
matters alleged i n the answer he stricken therefrom, on the
ground that said matters, s p e c i f i c a l l y pointed out i n the motion,
which was i n writing, are irrelevant and immaterial, impertinent
and f r i v o l o u s .
This motion was allowed.
From the order directing that certain matters alleged
i n the answer, ans s p e c i f i c a l l y pointed out i n the order, be
stricken from the answer, i n accordance with the motion of the
p l a i n t i f f , defendant appealed to the Supreme Court.
ff. H. Lee
Connor, J .
M. Gr. Wallace
for p l a i n t i f f .
Qui on & G-uion
for defendant.
The defendant admits i n h i s answer the execution and
endorsement by him of each of the notes sued on i n t h i s action
He a l l e g e s that he executed and endorsed the note for
$5,000.00, f o r the accomodation of the F i r s t . n a t i o n a l Bank of New
Bern, N.C. , and that he received no value for said note from said
Bank.
C.S. 3009.
It i s alleged i n the complaint that t h i s note
was negotiated by the First National Bank of New Bern, N.C. , to the
plaintiff,
X-6839
-3r
The defendant admits i n his answer, that he received
value for the note f o r $2,000.00, from the payee, the F i r s t
National Bank of Hew Bern, N.C.
He a l l e g e s , however, that he
has a s e t - o f f or counter-claim against the First National Bank
of New Bern, N.C. , with respect to said note.
It i s alleged i n
the complaint that t h i s note was negotiated "by the First National
Bank of New Bern, N.C. , to the p l a i n t i f f .
Neither of the defences alleged i n the answer w i l l a v a i l defendant i n t h i s action i f , as alleged i n the complaint,
the p l a i n t i f f i s the holder i n due course, and for value, of each
of said notes.
C.S. 3033, C.S. 3038.
I f , however, i t i s shown
at the t r i a l of the a c t i o n , that defendant executed and endorsed
the note for $5,000.00, f o r the accomodation of the F i r s t National
Bank of New Bern, N.C. , and received no value from said Bank for
said note; or i f i t i s shown at the t r i a l that defendant has a
v a l i d o f f - s e t or counter-claim again the First National Bank of
New Bern, N.C. , with respect to the note for $2,000.00, then, i n
either case, the burden w i l l be on p l a i n t i f f to prove, as alleged
i n the complaint, that p l a i n t i f f i s the holder i n due course, and
f o r valu# of said notes, or of either of them.
v s . York, 192 N.C. 87, 133 S.E. 427.
C.S. 3040.
Whitman
Otherwise, each of said notes,
although held "by the p l a i n t i f f at the commencement of t h i s action,
as the r e s u l t of i t s negotiation to p l a i n t i f f by the F i r s t
National Bank of New Bern, N.C. , i s subject »to the same defences as
are available to the defendant against said Bank.
Whitman v s . York, supra.
C.S. 3039.
'
'
-4-
3 5 3
X-6839
'
Defendants 1 answer, "after the matters alleged therein
have been stricken th&fefrom, as irrelevant and immaterial, i s
s u f f i c i e n t to r a i s e i s s u e s both of law and of f a c t , involving
the right of p l a i n t i f f to recover i n t h i s action, as the holder
i n due course of the notes sued on.
The matters stricken from
the answer are at l e a s t irrelevant and immaterial.
The order
striking said matters from the answer does not deprive defendant
of any substantial right or defence at the t r i a l of the action
founded upon h i s equities against the First National Bank of New
Bern, N.C.
P l a i n t i f f ' s motion was made i n apt time.
C.S. 537.
It
was not addressed to the discretion of the Court, but was made as
a matter of r i g h t .
Hosiery Mills v s . Hosiery Mills, 198 N.C.
596, 152 S.E. 794.
The order was therefore subject to review by
t h i s Court on defendants' appeal,
However, there was no error i n
the order, and i t i s therefore affirmed.
The v a l i d i t y of the order made i n t h i s action by Judge
Small, at November Term, 1930, of the Superior Court of Craven
County , directing that the Receiver of the First National Bank of
New Bern be made a party defendant to t h i s action, i s not involved
i n t h i s appeal by the defendant from the order made at January
Term, 1931.
P l a i n t i f f excepted to the order making the Receiver a
party, but has not appealed from said order.
We therefore do not
pass upon the question discussed i n the brief of p l a i n t i f f , as
appellee on t h i s appeal, as t o the e f f e c t of the order at January
Term, 1931, upon the order of November Term, 1930.
The ordef involved i n t h i s appeal i s
Affirmed.
• 354
1-6840
STATEMENT OF EWE® jffimt, GOVERNOR OF THE
FEDB&A$r RESERVE BOARD, B2U0B8 THE
WAR POLICIES COMMISSION,
SENATE OFFICE BUILDING, WASHINGTON, D.C.
MARCH 16, 1931. TEN A.M.
FINANCIAL CONTROL IK WAR
Control of f i n a n c i a l operations during war i s only one element i n
the broad general problem of financing the operations of war.
The broad
general problem involves the raising of funds for war-time expenditures by
the government involved, both for the expenditures of the government i t s e l f ,
and for advances to i t s a l l i e s , i f any, and i t also involves many c o l l a t e r a l
problems such as protection of the f i n a n c i a l markets for the government's
own operations, the e f f e c t of such operations on the banking system of the
country and, as a necessary corollary, some form of f i n a n c i a l assistance to
private enterprises necessary or contributory to the prosecution of the war,
or to the maximum p o s s i b l e maintenance of normal private l i f e on the part of
the non-combatant population.
Financial control and f i n a n c i a l assistance
must a l s o look forward to some extent to the problems of peace and reconstruction, though there i s danger here i n confusing the certain and known
needs of war with the uncertain and unknown requirements of the period
immediately following the war.
The method of financing a war, and the f i n a n c i a l controls and
corollary a s s i s t a n c e s required, of course, depend upon the type and s i z e
of the war operations, the number of nations involved, the extent and
character of t h e i r i n t e r - r e l a t i o n s , and the s o c i a l and economic conditions
e x i s t i n g i n the b e l l i g e r e n t nation at the time.
Therefore we can gen-
e r a l i z e very l i t t l e with regard to underlying p r i n c i p l e s , and my remarks
X-6840
3
w i l l "be devoted largely to a review of finances and f i n a n c i a l controls
during the participation of the United States i n the World War - April
6, 1917 to November 11, 1918 - with comments on the lessons that have
been learned and the inferences that may he drawn, i f any, with regard
to f i n a n c i a l control i n any other wars i n which t h i s nation might be
involved i n the future.
COST OF THE WORLD WAR.
The World War, commencing almost out of a clear sky i n August,
1914, f i n a l l y drew into the c o n f l i c t most of the nations of Europe, a l l the
Americas north of Mexico, nearly a l l of Africa and more than half of the
area and population of Asia.
It involved as b e l l i g e r e n t s probably nearly
three-quarters of the world's population, and a f f e c t e d to a profound degree
the foreign and domestic commerce and even the internal a f f a i r s and private
l i v e s of p r a c t i c a l l y a l l the peoples of the few neutral nations.
The cost of the World War i n money has been estimated at approximately 186 b i l l i o n d o l l a r s .
To get some measure of what t h i s c o l o s s a l sum
means, i t i s i n t e r e s t i n g to note that the entire value of a l l property i n
the United States, i . e . ,
the entire wealth of the United States, was e s t i -
mated by the Census Bureau at 186 b i l l i o n dollars i n 1912.
It i s also of
i n t e r e s t to note that just prior to the outbreak of the World War the t o t a l
public debts of a l l the nations of the world and their subdivisions were
estimated at approximately $42,900,000,000.
If the extent of the World
War c o s t s had been foreseen i n advance, and i f
the statement had been
made that the World War would cost a sum i n dollars equal to the then
estimated wealth of the United States, the richest nation i n the world, and
more than four times the t o t a l outstanding public debts of the nations of
5
5
.
• i#a:.
I
•3 5 ^
the world, the financing bf stich an oj36i*ation would have "been s e t down as
Incredible And impossible.
As a matter of f a c t , at the "beginning of the war many authorities
stated that i t s duration necessarily would be very brief because of the
impossibility of financing the immense military operations involved.
Com-
petent authorities Stated that within a comparatively few months the entire
f i n a n c i a l structures of the governments involved would break down under the
strain; y e t , i n the face of the apparent i m p o s s i b i l i t i e s , the World War continued for somewhat more than four years, bringing i n from time to time
additional nations and proceeding on an increasingly larger s c a l e .
The lesson to be learned from t h i s i s that the course of war depends upon resources i n manpower, supplies and morale, and that finance i s
only incidental to these; f o r , after a l l , : money i s only a medium of exchange and to the extent that men, material and morale are a v a i l a b l e , seme
medium of exchange w i l l be available or w i l l be developed so as to permit
their continued functioning to the maximum l i m i t , and t h i s l i m i t w i l l not
be imposed by any considerations of finance e x i s t i n g at the outbreak of the
war.
METHODS OF FimBGIBG THE WORLD WAR.
The f i n a n c i a l problems of the World War were met i n d i f f e r e n t ways
by the d i f f e r e n t nations involved, depending upon controlling conditions.
The principal European b e l l i g e r e n t s financed their operations largely through
currency i n f l a t i o n i n varying degrees.
The methods adopted by the Government of the United States necess a r i l y were based upon the s i t u a t i o n of the country as a whole at the time
of our entrance into the World War and i t i s important to review these
b r i e f l y , f o r the reason that they bear such an important r e l a t i o n to subse-
X-6840
;
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357
quent f i n a n c i a l developments.
I t was fortunate that the World. War found the United States in a
strong economic and f i n a n c i a l p o s i t i o n .
The Federal Reserve Act had. been
passed i n 1913, j u s t i n time to be of use in the period of f i n a n c i a l d i s turbance and readjustment following the outbreak of the war i n August 1914.
Also, the United States entered the World War nearly three years a f t e r the
War had commenced, and therefore had an adequate period within which to
readjust i t s a f f a i r s , i t s banking structure, and i t s finances to war-time
conditions.
Furthermore, the c i t i z e n s of the country, as neutrals, had had
extensive dealings with the b e l l i g e r e n t s .
By the time of our entry into
the World War Income and production were at the highest l e v e l s that had ever
been reached, the banking structure was sound, the condition of the Treasury
was good, and the gold supply was at the highest l e v e l i n h i s t o r y .
It i s
i n t e r e s t i n g to note, i n t h i s connection, that the stock of gold i n the
United States increased frctn $1,858,708,000 on July 31, 1914, to $3,156,264,000 on October 31, 1918, and was then somewhat over one-third of the
entire stock of gold i n the world.
It i s also i n t e r e s t i n g to note that
there had been an immense expansion i n our foreign trade, the favorable
balance of trade having increased from some $470,000,000 for the f i s d a l year
1914 to over $2,135,000,000 for the f i s c a l year 1916.
With the e s t a b l i s h -
ment of the Federal Reserve System, the country had been able to adjust
i t s e l f with surprising ease and rapidity to a l l these conditions.
COST OF OUR PARTICIPATION.
The t o t a l operating expenses of the United States Government i n creased from an average of $2,578,000 per day i n January, 1917, to a peak of
$55,168,000 i n November, 1918.
It has been estimated that the United States
Government spent i n round f i g u r e s $22,978,000,000 on i t s own account i n the
<
Lz' i_*.;
X-6840
-5World War, and in addition advanced, to July 1919, approximately $9,102,000,000 to i t s a l l i e s i n the war, making the t o t a l financing involved some
$32,080,000,000.
This figure does not include advances to the War Finance
Corporation and several smaller items.
With these items, the t o t a l c o s t ,
including advances to a l l i e s , i s said to have been approximately $32,427,-
000,000.
METHOD 01 FIMITCFiG U. S. EXPENDITURES.
The program of the Treasury at the commencement of our participat i o n i n the war was to finance approximately one-third of the t o t a l expenditures, including loans to foreign governments, out of taxation and other
current income, and the remainder through loans.
After the close of the war,
i t was estimated that 29$ of the t o t a l cost had teen paid from current
revenues and the balance from loans, which under the circumstances represented
a f a i r l y c l o s e r e a l i z a t i o n of the aims of the Treasury.
The amount raised "by loans therefore was approximately $23,000,000,000, of which approximately $21,433,000,000 came from the s a l e of Liberty
Bonds and Victory Notes, nearly $1,0(0,000,000 from the sale of War Savings
C e r t i f i c a t e s , and the balance from C e r t i f i c a t e s of Indebtedness and other
sources.
LIBERTY BONDS AMD VICTORY NOTES.
About 93$ of the money raised by the United States Government from
loans during i t s p a r t i c i p a t i o n i n the war was through the i s s u e of government obligations known as Liberty Bonds and Victory Notes.
In t h i s financ-
ing, i t had the b e n e f i t of European experience and i n addition was able to
operate under very favorable circumstances, for the reason that the
e x i s t i n g government debt was very small and government expenditure was normal.
On the other hand, the amounts required to be raised were far beyond any
X-6840
stuns which might have seemed provable a few years e a r l i e r , for the reason
that the United States entered i t s war finance program at a high l e v e l of
prices and i n r i s i n g labor and commodity markets.
These financing operations commenced i n 1917 with the First Liberty
Loan, and concluded a f t e r the Armistice with the Victory Loan.
The interest
rates carried by the various issues increased from 3^$ i n the case of the
First Liberty Loan to 4§$ for the Victory Loan,
The drives to place these loans involved propaganda of various
s o r t s , c h i e f l y , however, appeals to patriotism, stimulated by mass meetings,
and, i n general, a l l the well-known and widely used devices available for
the purpose of increasing public i n t e r e s t and encouraging public participation.
The First Liberty Loan was oversubscribed 52$ and the second 54$,
the l a t t e r representing the peak of oversubscription.
The Third Liberty
Loan was oversubscribed 39$, the Fourth Liberty Loan, which i n amount was
double that of any preceding i s s u e , 16%$, and the Victory Loan 16-2/3$.
The t o t a l subscriptions to Liberty Bonds.and Victory Motes aggre»
gated $24,072,000,000, of which $21,435,000,000 was a l l o t t e d , and $21,433,000,000 f i n a l l y paid i n .
The War Savings C e r t i f i c a t e s , aggregating s l i g h t l y l e s s than
$1,000,000,000, were an incidental part of the financing program, representing l e s s than 5$ of the amount raised through Liberty and Victory loans, and
were intended to broaden the participation of the public i n the program of
war finance by providing a means for the investment of comparatively small
sums.
The banking system of the country became a very e s s e n t i a l part of
t&e financing operations conducted through the s a l e of Liberty Bonds and
Victory Motes, f o r mapy purchases of these i s s u e s were made on borrowed money.
X-6840
°
-7->
In particular, the drive in connetsiibn with the placing of the Third Liberty
Loan i s s u e made use of a slogan "Borrow to Buy", which resulted i n a large
increase in hank loans on Liberty Bonds.
As an i l l u s t r a t i o n , the loans
i n the Federal Reserve Banks on war paper rose to $642,429,000 on April 26,
1918, which at that time represented 71.2$ of a l l paper discounted at the
Federal Reserve Banks; these loans increased to $1,467,000,000 by December,
1918.
Since the funds raised through the s a l e of the various government
issues came i n at varying intervals and the expenditures went on continuousl y and at a constantly accelerating rate, i t was necessary to resort to the
issue of temporary c e r t i f i c a t e s of indebtedness i n the periods between the
funding operations.
As an i l l u s t r a t i o n , $4,660,000,000 of c e r t i f i c a t e s of
indebtedness were issued in anticipation of the Fourth Liberty Loan, and
$6,157*000,000 i n anticipation of the Victory Loan.
The t o t a l i s s u e s of
c e r t i f i c a t e s of indebtedness during the war aggregated nearly $30,000,000,000.
The Treasury placed these c e r t i f i c a t e s of indebtedness through the
twelve Federal Reserve Banks as i t s f i s c a l agents.
FIlWCIAl CONTROL; CAPITAL ISSUES COMMITTEE.
The immense volume of the financing operations carried on by the
United States Government during i t s participation in the war almost preempted the security markets i n the United Statfes, since these i s s u e s
necessarily had p r i o r i t y over a l l others.
The people throughout the country,
having had the benefit of high wages and high prices for commodities, and
acquiring the habit of purchasing s e c u r i t i e s as a result of the various
Liberty Loan drives, began to develop an increasing interest i n the
$
purchase of s e c u r i t i e s of other types. Therefore, some measure of financial
control was deemed advisable, but i t i s interesting to note that the only
361
X-6840
*-Q-i
s p e c i f i c measure of capital control set up was the formation of the Capital
Issues Committee - I mean control i n the sense of Government direction.
The Capital Issues Committee was created under T i t l e II of the
War Finance Corporation Act of April 5, 1918.
The Committee consisted of
seven members appointed by the President of the United States, with the
advice and consent of the Senate.
The Act provided that "the Committee
may, under rules and regulations to he prescribed by i t from time to time,
i n v e s t i g a t e , pass upon, and determine whether i t i s compatible with the
national i n t e r e s t that there should be sold or offered for sale or for
subscription any i s s u e , or any part of any i s s u e , of s e c u r i t i e s hereafter
issued by any person, firm, corporation, or association, the t o t a l or
aggregate pax or face value of which issue and any other s e c u r i t i e s issued
by the same person, firm, corporation, or association since the passage of
t h i s act i s i n excess of $100,000.
Shares of stock of any corporation or
association without nominal or par value shall for the purpose of t h i s sect i o n be deemed to be of the par value of $100 each.
Any s e c u r i t i e s which
upon the date of the passage of t h i s act are i n the possession or control
of the corporation, a s s o c i a t i o n , or obligor issuing the same shall be deemed
to have been issued a f t e r the passage of t h i s act within the meaning hereof?.
The provision above quoted i s the sole d e f i n i t i o n of the Committee's
powers and i t i s of particular interest to note that the Act contained no
penalty clause and that therefore the regulations of the Committee were not
l e g a l l y enforceable.
The Act as o r i g i n a l l y drawn contained a suitable
penalty clause which would have conferred legal powers on the Committee, but
t h i s was eliminated i n Congress.
Therefore, the Committee found i t s e l f with
power to i n v e s t i g a t e any proposed s a l e of s e c u r i t i e s , but without means to
compel applicants to submit such new issues to the Committee.
However, the
882
X-6840
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Committee had behind i t the tremendous force of public opinion and p a t r i o t i c cooperation; the country &s a whole accepted i t s functions i n s p i r i t ,
and proposed i s s u e s were quite generally submitted for i t s consideration.
The Capital Issues Committee commenced to function on May 17,
1918 and continued the operations of an informal "body which had been cons t i t u t e d by the Federal Reserve Board e a r l i e r i n the year.
It ceased
active operations on December 31, 1918 and closed up i t s a f f a i r s , by
direction of the President, on August 30, 1919.
During the l i f e of the
Committee i t passed upon applications for new security i s s u e s aggregating
$3,777,313,000, of which tho t o t a l amount disapproved aggregated $917,133,000,
This, however, does not represent the f a l l measure of i t s a c t i v i t i e s ,
for the reason that numbers of applications were withdrawn voluntarily a f t e r
being presented to the Committee, and large numbers of prospective applicants yielded to informal suggestions made by the Committee and i t s D i s t r i c t
Committees that their enterprises or projects should be postponed u n t i l
a f t e r the war.
In addition, many other proposed i s s u e s of s e c u r i t i e s were
no doubt deferred or discouraged by the knowledge of the existence of the
Committee or as a r e s u l t of the Committee's public appeals for cooperation.
The function of the Capital Issues Committee was to determine
whether or not proposed i s s u e s were s u f f i c i e n t l y i n the public i n t e r e s t ,
s u f f i c i e n t l y necessary or contributory to the prosecution of the war, to
warrant their being offered i n a market so preempted by the financing
operations of the United States Government.
It also carried out a certain
measure of public service by discouraging unsound f l o t a t i o n s for which,
::
*!>
X-6840
-10-
as a result of the unusually prosperous economic conditions of the country as
a whole, there was so fertile a field.
The members of the Committee were
so impressed by the volume of doubtful security issues which were being
or might be offered to the public for sale that the f i r s t report of the
Committee urged the d e s i r a b i l i t y of continuing some form of federal superv i s i o n Of s e c u r i t i e s during peace-times.
This recommendation, however,
was never put into e f f e c t .
Thus i t appears that the only s p e c i f i c financial control exercised
during the war, using the words in their narrowest sense, was comparat i v e l y limited i n scope and without legal authority to enforce any
measure of control.
The real control was incidental to other operations;
such control resulted from the i n a b i l i t y of any new enterprise, or proposed expansion on the part of existing enterprises, to secure without
government approval the men and materials required for construction or
operation.
Obviously, the control of manpower was primarily i n the War
Department through the draft, and the control of material was largely
with the Wair Industries Board as far as domestic allocations were concerned, and with the War Trade Board as far as imported materials were
concerned.
In my judgment, the operations of these agencies, through
authorizing, l i c e n s i n g , giving priority to, or otherwise supporting,
essential a c t i v i t i e s , rather than prohibiting unessential a c t i v i t i e s ,
constituted the most important and extensive control of finances that
was exercised during the war.
X-6840
SPECIE COITTROL.
Due to the formation of the Federal Reserve System at the beginning
of the World War, the specie problems were by no means as important as they
would have been under our earlier banking system.
Neither did the United
States f i n d i t necessary to resort to the various methods for c o l l e c t i n g
coin, p a r t i c u l a r l y gold, used by the other b e l l i g e r e n t s .
The reason for
t h i s i s obvious, in that the United States had approximately one-third of
the monetary gold supply of the world in i t s treasury, and through i t s
immense volume of export balances in the years immediately preceding our
entry into the war, we had been accumulating currency whereas other nations
on the whole were being drained of currency or bullion to pay for outside
purchases.
However, the Treasury as far as practicable discouraged the
circulation of gold coin and also, under powers given to the President
by the Espionage Act and enforced under regulations administered by the
Secretary of the Treasury, took control of the export of coin, bullion or
currency from the United States.
These regulations were abolished by
proclamation of the President on June 26, 1919, except as to the export
of bullion, currency or coin to parts of Russia.
The Treasury appointed
a Gold Export Committee of three members to control the movement of gold.
Before the operations of t h i s Committee had proceeded very f a r , i t was
apparent that the control of gold movement was quite d e f i n i t e l y t i e d up
with problems of foreign exchange.
Consequently, the Treasury, acting
through the Federal Reserve Board as i t s Agent, set up a d i v i s i o n for
foreign exchange in New York.
X-6840
-12It became necessary to a s s i s t the currency exchanges of France,
Great Britain and I t a l y , and, as war r e s t r i c t i o n s prevented settlement of
trade balances by gold export, everything possible was done that war
l i m i t a t i o n s on tonnage would permit to s e t t l e balances by the export of
non-essential commodities.
The whole question of foreign exchange trans-
actions and settlements involved numerous ramifications, and the material
available i s too voluminous to permit more than passing mention here.
Certain s p e c i f i c problems were presented in connection with s i l v e r .
There was a large volume of trade with the Orient involving j u t e , hides
and many other e s s e n t i a l war materials.
In particular, there was a very
urgent demand f o r additional currency for India on account of the large
volume of necessary war supplies being purchased there, such as mica,
j u t e , s h e l l a c , and graphite.
The use of s i l v e r as currency was general
in the Orient, and i t was necessary to make payments there in s i l v e r .
The
amount of s i l v e r required was far in excess of the available stocks or
production outside of the monetary reserves of the United States.
Con-
sequently the Pitmann Act was passed, on April 23, 1918, which authorized
the retirement of s i l v e r c e r t i f i c a t e s , and the melting down of the s i l v e r
dollars held against them in amounts up to 350,000,000 ounces.
The Act
provided that any s i l v e r sold must be repurchased l a t e r in corresponding
amounts at $1 per ounce.
The United States Government, acting under these provisions, melted
down 200,000,000 ounces of s i l v e r dollars held under the s i l v e r c e r t i f i c a t e s
and sold t h i s amount to the Government of Great Britain, for the use of
the Government of India, at $1 per ounce.
The s i l v e r c e r t i f i c a t e s r e t i r e d
'
'
8 6 6
X-6840
-13were replaced by Federal Reserve notes secured by United States c e r t i f i c a t e s of indebtedness or United States two-year gold notes.
As the
s i l v e r was repurchased from time to time l a t e r , the Federal Beserve
•
notes were r e t i r e d .
OOaOLLAP.IES TO FINANCIAL C0ITT30L.
Because of the f a c t that the Government preempted the security
markets, and further because of the f a c t that i t exercised some measure
on control of private finance through the Capital Issues Committee, and
a very d e f i n i t e control of private operation through the control of men
and material, as previously mentioned, i t became necessary f o r the Government to set up various bodies which could aid d i r e c t l y or i n d i r e c t l y in
private, or combined public and private, financing of operations nec*
>
essary or contributory to the prosecution of the war.
cluded the War Credits Board and the
w
Such bodies in-
ax Finance Corporation.
The War
Trade Board, while functioning primarily for the purpose of regulating
import and export of commodities and preventing trade with the enemy,
had an incidental relation to financial control because of the bearing
of foreign trade on foreign exchange.
Various a u x i l i a r i e s of the Govern-
ment were also empowered to make advances of Government funds in the form
of loans for the purpose of a s s i s t i n g private enterprise in s p e c i f i c
cases, a s , for example, the Emergency Fleet Corporation.
W
CREDITS BOARD.
Previous to the war, the law provided that payments on government
contracts could not exceed the value of services rendered or goods
X-6840
-14delivered prior to such payment.
: 367
In the early Stages of the war, t h i s
situation was met temporarily by furnishing contractors raw materials
and f a c i l i t i e s .
However, i t became obvious that private finance could
not be depended upon for t h e : f a c i l i t i e s , supplies and working capital
required in so large a volume for the manufacture of munitions under
government contracts.
This was partly for the reason that the markets
for private i s s u e s were so largely preempted by the Government's own
operations, and partly for the reason that a considerable measure of
r i s k was n e c e s s a r i l y involved in financing the construction and operation of plants intended primarily, and often s o l e l y , for war purposes.
The situation was met by an Act passed October 6, 1917, which authorized the Secretary of War and the Secretary of the liavy to make advance payments to contractors in amounts not exceeding 30$ of the contract price of supplies purchased
emergency".
11
during the period of the e x i s t i n g
This authority in e f f e c t suspended for the period of the
war the provisions of e x i s t i n g law with respect to advances against
contracts by the ITavy or War Departments.
In order to make possible the necessary control of advances under
the authority thus conferred, the War Department organized the War
Credits Board, which, during the period of i t s active existence, approved
advances of approximately $2.48,000,000, and c o l l e c t e d a l l but about
$1,000,000.
As the amount advanced represented only about 1$ of the
t o t a l expenditures of the United States Government in i t s own operations
during the war, i t i s obvious that the resources of the contracting
firms, together with such assistance as they were able to obtain from
private sources, were s u f f i c i e n t to cover the greater part of their
868
X-6840
-15» requirements.
However, a large part of the money expended by the Govern-
ment was for operations under i t s own control and ownership, so that the
percentage i s not the f u l l measure of the importance of the transactions
of t h i s financing agency.
The War Credits Board found i t s e l f involved rather unexpectedly in
the ID road general problems of financial control on account of i n t e r e s t
r a t e s , in that in the beginning advances were made at 5$ i n t e r e s t , whereas in time the i n t e r e s t rates through ordinary banking channels became
much higher.
There was therefore a tendency for contractors to draw away
from well established banking credit channels and resort to loans from the
War Credits Board as a matter of monetary saving rather than war emergency.
As the Board was not seeking to attract business by low i n t e r e s t rates,
t h i s s i t u a t i o n l a t e r was met by monthly revision of i n t e r e s t rates in consultation with the Treasury.
Looking back over the history of our participation in the war, i t
would appear that the War Credits Board performed a necessary function
and that a similar organization i s perhaps fundamental to the successful
financing and f i n a n c i a l control of l a r g e - s c a l e war operations.
The ac-
t i v i t i e s of the War Credits Board, and the volume of advances handled by
i t , would have increased progressively with the further duration of the
war, and no doubt there would have arisen many new problems to face.
WAR FIUMCE CORPORATION.
With the operations of the Government i t s e l f financed by Government
funds, and with munitions contractors a s s i s t e d by the advances of the
War Credits Board, i t became necessary to consider some of the increasing
problems of finance encountered by private enterprise necessary or
* 809
X-6840
•-IB-
contributory to the prosecution of the war., whose capital requirements
were being met by sale of s e c u r i t i e s to the public, in a market becoming
increasingly narrower as a r e s u l t of the preemption of such markets for
Government i s s u e s .
It was thought that t h i s might be accomplished, by s e t -
t i n g up f a c i l i t i e s through which banks could, in e f f e c t , rediscount the
longer term i s s u e s of private enterprises through a Government-owned corporation, j u s t as the short-term obligations of commerce were rediscounted
through the Federal Reserve Banks.
It was also realized that in certain
cases direct assistance might have to be given to private enterprise.
Therefore, by act of April 5, 1918, the #ar Finance Corporation was
created.
I t was empowered and authorized (Section 7) to make advances for
periods not exceeding f i v e years to banks, bankers or trust companies in
the United States which a f t e r the entry of the United States into the war
had made, and had outstanding, loans to persons, firms, corporations or
associations conducting established and going businesses in the United States,
and whose operations were necessary or contributory to the prosecution of
the war, such advances to be limited to 75% of the face value of the loans
made by the bank.
Similar loans could also be made to banks, bankers, or
trust companies on bonds purchased from customers engaged in necessary or
contributory operations, algio limited to 75%.
There was, however, a pro-
v i s i o n authorizing loans to banks, bankers or trust companies up t o 100% of
the face value of loans made by them i f at l e a s t 33% additional security was
provided, the corporation to retain power to require additional security
at any time.
There was a further provision (Section 8) permitting advances to
savings banks and to building and loan associations, t h i s on the theory
X-6840
-17that savings "banks might otherwise find i t necessary to r e a l i z e on their
investments i n a depressed "bond market.
A further s e c t i o n (Section 9) provided that the corporation should
"be empowered in exceptional cases to make advances d i r e c t l y to any person, firm, corporation or association conducting an established and going business in the United States whose operations were necessary or
contributory to the prosecution of the war, for periods not exc eeding
f i v e years from the date of such advances, "but only for the purpose of
conducting such business i n the United States, and only when i n the
opinion of the Board of Directors of the Corporation, such person, firm,
corporation or a s s o c i a t i o n was unable to obtain funds upon reasonable
terms through banking channels or from the general public.
In considering the broad problems of war finance and f i n a n c i a l
control, i t i s i n t e r e s t i n g to note how clearly the operations of the War
Finance Corporation show the impossibility of foreseeing even for the
immediate future just what the needs of the country and i t s business w i l l
be, and just how they w i l l be distributed.
For example, the underlying
theory of the Act, as stated above, was that the Corporation would be
used primarily to serve as a rediscounting medium for the longer term
obligations of banks, presumably secondarily to protect savings banks,
and f i n a l l y , i n exceptional cases, to make direct advances.
However, the Corporation loaned under i t s war powers a t o t a l of $306,756,020, of which only $4,718,377 was to banks, bankers and trust companies
under Section 7, and only $550,000 to savings banks or building and
loan associations under Section 8.
The balance, $301,487,643, or about
98$ of the t o t a l , was loaned under the exceptional case clause, Section 9.
X-6840
-is-
'
371
It appears that developmentfe diffftfed ftfom the fundamental theory of the
Act, and that the exceptional case was the r u l e , and the basic case the
exception.
As to t h i s , however, i t should be noted that the operations
of the war ended comparatively soon a f t e r the establishment of the Corporation, and a continuance of war operations for several years might have
made a very d i f f e r e n t picture.
In planning for the future, therefore,
I think consideration should be given to the a d v i s a b i l i t y of making prov i s i o n for both c l a s s e s of cases in any similar l e g i s l a t i o n *
The advances made during the war, or in connection with commitments
made during the war, under the exceptional case clause, d i r e c t l y to persons, firms or corporations, included $39,797,400 to public u t i l i t i e s ,
$23,814,674 to industrial corporations, $25,211,500 on warehouse receipts,
and $7,827,278 in c a t t l e loans.
Advances under the exceptional case
, clause also included $204,794,520 to railroads under federal control a f t e r
the Armistice.
These figures i l l u s t r a t e the division of the Corporation's
a c t i v i t i e s under the war-time provisions.
The Corporation a l s o , during the war period and f o r more than a
year thereafter, acted as the agent for the Treasury in the purchase of
Government bonds for the sinking fund or for the purpose of steadying
Government bond markets.
At one time, the Corporation had need f o r more
funds than i t s e n t i r e capital stock issue of $500,000,000 subscribed by
the United States Government, and on April 1, 1919 issued $200,000,000 of
bonds, which were redeemed on maturity, April 1 s t , 1920.
The Corporation's
powers were extended a f t e r the war to enable i t to a s s i s t i n financing exports of American products and to render aid to agriculture.
The accomplishments of the War Finance Corporation, both during the
X-6840
-19-
?
372
war and i n the period of recohftruction immediately following, are not
to be measured alone "by the actual number of dollars advanced in loans.
The psychological value of i t s operations was even greater than the doll a r value involved; for the knowledge that funds were available in an
emergency from t h i s Government-owned corporation gave a greater confidence
to private finance and made p o s s i b l e the placing of loans through private
channels to an extent, and on terms, which would have been impossible
otherwise.
WAR TRADE BOARD.
The operations of the War Trade Board had a bearing on the subject
under consideration.
The e s s e n t i a l functions of t h i s Board were the
commercial i s o l a t i o n of the enemy by control of our exports to border
neutral nations, the f i n a n c i a l i s o l a t i o n of the enemy by control of
enemy goods or c r e d i t s in or with the United States or i t s c i t i z e n s , the
provision of e s s e n t i a l supplies by conservation of domestic resources
and maintenance of e s s e n t i a l imports and the conservation of ocean
tonnage through import and export r e s t r i c t i o n s and bunker control.
In addition, i t served i n d i r e c t l y as a price f i x i n g agency, in that
p r i c e agreements or Government options were o f t e n attached to import
licenses.
It i s obvious that the operations of the %r Trade Board had an important bearing on f i n a n c i a l control in that import and export movements
are d i r e c t l y involved in considerations of foreign exchange.
The i s o l a t i o n
of the enemy from a f i n a n c i a l standpoint also formed a p a r t of financial
control.
However, the problems involved in the import and export of coin,
bullion or currency, were handled by the Treasury and not by the War Trade
Board,
X-6840
-20-
' '873
OTHER AGMCI3S.
While many Government agencies other than the ?ar Department or the
Navy Department made large expenditures of Government flands, such as the
Shipping Board, Emergency Fleet Corporation, Housing Corporation and Grain
Corporation, a review of their operations goes too far a f i e l d for the
scope of t h i s discussion.
CONCLUSIONS.
The principal conclusions to be drawn from the experiences Of the
United States Government in the ^orid War, from the standpoint of f i n ance and f i n a n c i a l control, can be summarized very b r i e f l y :
To begin with, i t i s obvious that finance i s not the controlling
factor in war.
To the extent that men, material and morale are a v a i l -
able, the operations of war w i l l be financed to the utmost l i m i t of
these fundamental resources in one way or another and the l i m i t w i l l
not be imposed by any f i n a n c i a l considerations, except so far as
f i n a n c i a l considerations r e f l e c t the resources, or the lack of resources of men, material, and morale*.
The d e t a i l s of financing and financial control cannot be planned
in advance, f o r the reasoft that i t w i l l depend upon the kind and scope
of the war and the economic, social and p o l i t i c a l conditions of the
nation involved, and at the time.
Furthermore, f i n a n c i a l problems do
not function l i k e automatic machines under the hand of any operator,
but, even more than any other phase of the war problem, their successf u l solution i s dependent upon the men available to operate the financ i a l agencies.
Therefore, to a considerable measure, f i n a n c i a l agencies
X-6840
and controls inust be adjusted to the men who are available to operate
them.
By t h i s ,
I mean that the circumstances under which the country-
enters the war, the area Of the war, and the f a c t that men function
more e f f e c t i v e l y and e f f i c i e n t l y in carrying out plans, at l e a s t some
considerable part of which originate in their own minds, than they do
in executing r i g i d l y f i x e d plans prepared in advance.
Finally, one of the most important lessons of the l a s t war, from
the f i n a n c i a l aspect and from many other aspects, i s that the known
and certain needs of war should not be confused with the unknown and
uncertain problems of succeeding peace-times, for otherwise the
e f f i c i e n t prosecution of the war i s handicapped and the permanent problems of peace are complicated.
374.
COPY
X-6841
FEDERAL HESEBVE BAM
OF NEW YOBK
January 23, 1931.
Walter W!yatt, Esq., General Counsel,
Federal Reserve Board,
Washington, B.C.
Dear Mr. Wyatt:
I am enclosing a copy of the opinion of Judge Coleman i n
the case of Greenough v. Monroe, et a l . , i n the United States Dist r i c t Court for the Southern D i s t r i c t of New York, i n which I think
you w i l l he i n t e r e s t e d . The case involved acceptances of a private
banking firm which had f a i l e d . The court granted a motion, made by
the importer who had arranged a c r e d i t , for leave to pay the receiver of the accepting bankers the amount due such bankers under
the terms of trust r e c e i p t s , such payment to be made under a prov i s i e n that the money be impressed with a trust for the payment of
the acceptances. The decision i s based on the ground that while the
goods en which the acceptances were based remained i n s p e c i e , or
while their proceeds were held i n a separate fund, the accepting
bankers had r i g h t s i n such goods or proceeds s o l e l y as security for
their reimbursement, and that the importer, and the vendors (who
were also the drawers of the acceptances), became subrogated to the
acceptors' r i g h t s i n such security. By way of dicta the court expressed i t s opinion that the accepting bankers were not trustees of
an express trust f o r the importer or for the vendors or f o r the
holders of the acceptances, and that the importer would not be l i a b l e
to the vendors i n an action at law upon the contracts of s a l e .
correct.
It seems to me that both the decision and the d i c t a are
We understand that the decision w i l l be appealed.
Very truly yours,
(S) Walter S. Logan,
Deputy Governor and General Counsel.
Encl.
X-6841
COPY
UNITED STATES DISTRICT COURT
Southern D i s t r i c t of New York
CHARLES W. GR2EN0UGH,
Complainant
No. E56 - 230
-againstOpinion No. 6233
HENRY MUNROE, STEPHEN GALA.TTI,
LOUIS de KERMA.INGAKT and JULES
EMY, individually and as copartners doing business under the
firm name and s t y l e of
John Monroe & Company.
Defendants
In Equity, P e t i t i o n of Olivier Straw Goods
Corporation for a direction to the receiver of the defendants to make certain d i s p o s i t i o n of assets of the
e s t a t e ; Chartered Bank of India, Australia & China
intervening and joining i n the same prayer for r e l i e f .
Hunt, H i l l & B e t t s , (John W. Crandall)
For Petitioner
Duer, Strong & Whitehead (Seldon Bacon, of counsel)
For Intervener
Zalkin & Cohen, (Nathan Coplan, of counsel)
For Receiver
F. J . Coleman, J.
X-6841
2
MEMORANDUM
A receiver of the defendants having been appointed
i n t h i s c r e d i t o r ' s action, the Olivier Straw Goods Corporat i o n p e t i t i o n s for r e l i e f founded upon the following f a c t s ,
and the Chartered Bank of India, Australia & China, i n t e r vening, j o i n s i n the prayer:
The defendants were a firm of private bankers i n
New York and the p e t i t i o n e r was one of their customers
engaged i n importing.
In order to arrange for payment
of goods purchased i n the Far Bast, the p e t i t i o n e r caused
the defendants to i s s u e f i v e irrevocable l e t t e r s of credit
to the vendors i n the Orient.
The l a t t e r drew drafts upon
the defendants under the l e t t e r s of credit and discounted
them, accompanied by b i l l s of lading, e t c . , with certain
Oriental banks.
The drafts and b i l l s of lading, e t c . ,
were forwarded to New York by their holders and presented
to the defendants who accepted them retaining the b i l l s
of lading and other accompanying documents but returning
the d r a f t s to their holders i n New York.
Thereafter, i n
order to make the goods available to the purchaser, the
defendants turned over to the p e t i t i o n e r the b i l l s of
lading and other accompanying documents taking back trust
r e c e i p t s under which t i t l e to the goods or their proceeds
was retained by the defendants u n t i l certain payments
X-6841
3
were made by the p e t i t i o n e r .
Between the time when the
defendants delivered the "bills of lading to the p e t i t i o n e r
and. the date for payment "by the p e t i t i o n e r to the defendants
the present action was "brought and a receiver of the
defendants appointed.
Petitioner now asks for leave to pay the receiver
the amounts due to the defendants under the trust r e c e i p t s ,
but with a provision that the monies be held i n trust for
the payment of the drafts; or i n the alternative that the
p e t i t i o n e r be permitted to pay the drafts i n the hands of
their holders and to obtain the trust receipts from the
receiver.
The intervener, the Chartered Bank of India,
Australia & China, i s the holder of some of the drafts and
j o i n s i n the prayer.
If the r e l i e f i s granted the holders
of the drafts w i l l receive f u l l payment of the.r claims
against the defendants whereas other creditors w i l l
receive merely such dividend as may ultimately be declared
upon a d i s t r i b u t i o n of the e s t a t e .
The p e t i t i o n e r
contends that i f the application i s denied the p e t i t i o n e r
may be subjected to a double l i a b i l i t y , f i r s t to the receiver
upoi* the trust receipts and i n the second place to the
Oriental vendors upon the original contracts of purchase.
X-6841
4
It i s undisputed that a present l i a b i l i t y on
the part of the petitioner to either the vendors or to
the holders of the drafts would e n t i t l e the p e t i t i o n e r to
the r e l i e f asked.
The p e t i t i o n e r , however, i s not l i a b l e
to the holders because i t s name i s not on the d r a f t s : and
an extremely doubtful question is presented as to whether
i t i s l i a b l e to the vendors.
It i s further contended that
even i n the absence of such l i a b i l i t y the r e l i e f should be
granted on either of two grounds;
f i r s t , that the documents
made the defendants trustees of an express trust to hold the
goods or t h e i r proceeds for the payment of the d r a f t s :
or
second, that the equitable principals of subrogation e n t i t l e
the vendors or the holders of the drafts to have the goods,
or such proceeds as axe s t i l l held separate applied i n
payment of the d r a f t s .
Considering the transactions more i n d e t a i l ,
i t appears that the petitioner on making application f o r
the l e t t e r s of credit agreed with the defendants to pay
them
s u f f i c i e n t amount i n cash to cover a l l d r a f t s
drawn under said credits
All sight d r a f t s
to be paid on demand, a l l acceptances to be paid one day
prior to maturity or i n time to reach the place of payment
i n the regular course of the mails one day prior to maturity."
5
Petitioner further agreed " that the t i t l e ti> a l l property
pledged, purchased or shipped under each of said credits
and the proceeds thereof shall be and remain in
you (the defendants) u n t i l a l l drafts under said credits
and other Indebtedness to you shall be paid."
The l e t t e r s of credit sent to the vendors stated
that an irrevocable credit was opened by the defendants
"for account of Olivier Straw Goods Corporation, New York,
(petitioner)
available by your (the vendor's) drafts
on us at four months sight to be accompanied by b i l l s of
lading," etc.
The l e t t e r s of credit further provided that
the bankers "agree that the holders of Drafts drawn under
and in compliance with the terms of t h i s credit that the
name shall be duly honored on due presentation and delivery
of documents as s p e c i f i e d
."
When the defendants accepted the drafts and retained the accompanying b i l l s of lading they n o t i f i e d their
customer, the p e t i t i o n e r , and received from the l a t t e r an
acknowledgment reading:
"We (the petitioner) agree to re-
imburse you on or before maturity for the following
acceptances."
When the defendants delivered the b i l l s of
lading to tlje petitioner they received trust receipt providing that in consideration for the delivery of the b i l l s
X-6841
;
6
Of lading the p e t i t i o n e r
"agrees to hold said credits as the property of
John Munroe & Company and always capable of separation, i d e n t i f i c a t i o n and location as such u n t i l
the acceptance of (the draft) given or to be
given as the purchase money of said merchandise
shall have been paid John Monroe & Company
with l i b e r t y , however, to s e l l the same or a
portion thereof f o r the account of John Munroe & .
Company. We agree to pay over, endorse and del i v e r to John Munroe & Company a l l proceeds of s a l e s
of every account as soon as received to apply when
paid against the acceptance.
We further agree
that the said c r e d i t s and proceeds thereof s h a l l
be deemed security to John Munroe & Company f o r
any other indebtedness which may now or at any
time hereafter e x i s t . . . . . . .
The intention of t h i s
agreement i s to protect, and preserve unimpaired
the t i t l e of John Munroe & Company to said merchandise" .
The p e t i t i o n e r has sold some of the goods held
under the trust r e c e i p t s and s t i l l possesses the balance
in specie.
The goods and the proceeds which are s t i l l
held by the p e t i t i o n e r are ample to cover a l l the outstanding
drafts.
The s a l e s by the vendors in the Far East to the
p e t i t i o n e r were arranged by cable and l e t t e r and were in
most instances f i n a l l y confirmed in abbreviated memoranda
which b r i e f l y mention quantities, p r i c e s , payments, shipments, etc.
In some instances an item read:
draft at 4 m/3 under l e t t e r of credit".
the corresponding item read:
In other instances
"Terms; Irrevocable l e t t e r
of credit to be opened by cable immediately at
*
"Payment:
3 8 i
X-6841
120 days sight in favor of
of t h i s order";
(vendor)
for the f u l l amount
In s t i l l other instances the item read?
"Terms of payment"
Letter of Credit to be established in
favor of (vendor)".
In s t i l l other instances there was
no formal memorandum of confirmation, but a cablegram cons t i t u t i n g oart Of the contract of sale contained the
direction "open l e t t e r of credit by telegraph".
Some of the contracts of sales were made before
the issuance of the respective l e t t e r of credit and some
were made a f t e r .
In no case did the contract of s a l e
mention what banker was to issue the l e t t e r of credit nor
what terms i t was to have except the time of the d r a f t s .
In no case, however, did the vendor part with t i t l e to the
X
goods u n t i l he received the l e t t e r of credit and accepted
i t by drawing a dr.aft against i t .
I t thus appears that each entire complicated
transaction consisted of a sale by the merchant in the
Orient to the p e t i t i o n e r wherein the defendants were used
as a conduit for the transference of both the t i t l e and
the purchase iponey.
While t i t l e was given to the defendants
i t was done s o l e l y to secure their reimbursement.
I do not
think the defendants were trustees of an express trust
for the p e t i t i o n e r or for the vendors or for the holders
X-6841
8
of the drafts:
: 383
but on the other hand while the goods re-
mained in specie or their proceeds were held in a separate
fund, defendants' rights in them were limited to security
for reimbursement.
The transaction was not, as the re-
ceiver contends, in e f f e c t a sale by the vendors to the
defendants and a resale by the l a t t e r to the p e t i t i o n e r .
I do not think i t i s necessary to decide whether
in an action at law the p e t i t i o n e r would s t i l l be l i a b l e
to the vendors upon the contracts of s a l e , though I b e l i e v e
i t would not be.
The absence of such legal l i a b i l i t y ,
however, should not prevent a Court of equity from prot e c t i n g the r i g h t s of the vendors and the holders of the
drafts i f by subrogation they have any interest in the
goods or the separate fund a r i s i n g from the proceeds.
In Cat s k i l l National Bank v. Dumary 206 IT. Y.
550 the New York Court of Appeals l a i d down p r i n c i p l e s
of subrogation which I think are applicable to the present
case.
The defendants and the vendors are both l i a b l e on
the drafts \o the present holders, and the vendors acting
under an agreement with the p e t i t i o n e r gave the defendants
t i t l e to the goods merely for the purpose of securing their
reimbursement f o r that l i a b i l i t y .
default on their l i a b i l i t y ,
In view of the defendants'
I believe a Court of equity
X-6841
•
g
' : 384
should subrogate the vendors and the holders to the defendants' r i g h t s in such security as i s s t i l l i n t a c t ,
in-
cluding the goods in specie and the proceeds held in a
separate fund.
This rule was applied in a very similar
case in Ex Parte Dever, in re Suse, 13 Queens Bench Division 766, where a vendor (W. B. Sentance) the drawer of
the drafts and remitter of the goods was held e n t i t l e d
to such goods as were s t i l l in specie in the hands of -the
insolvent acceptor.
The rule would, of course, be d i f f e r e n t
i f the goods had been sold and the proceeds mingled with
defendants' general a s s e t s , (Taussig v. Carnegie Trust Co.
156 App. Div. 519)
I, accordingly, grant the motion to the extent
of permitting the p e t i t i o n e r to pay the receiver under a
provision that the money be impressed with a trust f o r a
payment of the drafts.
Frank J. Coleman
U.S.D.J.
January 5, 1931
31
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6842
March 18, 1931.
SUBJECT:
Holidays daring A p r i l , 1931.
Dear S i r :
The Federal reserve tanks and "branches l i s t e d "below
w i l l "be closed on the dates s p e c i f i e d , during A p r i l , 1931,
account h o l i d a y s :
Friday
April
3
Philadelphia
Pittsburgh
Baltimore
Hew Orleans
Nashville
Jacksonville
Havana Agency
Memphis
Minneapolis
Good Friday
Monday
April
6
Detroit
E l e c t i o n Day
Monday
April 13
Charlotte
Halifax Day
Monday
April 13
Birmingham
Birthday of Thomas
Jefferson
Wednesday
April 15
Salt Lake City
Arbor Day
Monday
April 20
Boston
P a t r i o t ' s Day
Tuesday
April 21
Dallas
El Paso
Houston
San Antonio
San Jacinto Day
Wednesday
April 22
Omaha
Arbor Day
Monday
April 27
Atlanta
Birmingham
Jacksonville
Southern Memorial Day
X-6842
On the dates indicated', the o f f i c e s a f f e c t e d w i l l not
p a r t i c i p a t e i n either the gold fund clearing or the Federal
reserve note clearing.
Please include^credits for the "banks a f f e c t e d on each
of the holidays with your credits for the following "business
day, and make no shipments of Federal reserve notes, f i t or
u n f i t , for account of the head o f f i c e s concerned on the
holidays mentioned.
Please n o t i f y "branches.
Very truly yours,
J. C. Jfoell,
Assistant Secretary.
TO GOVERNORS OF ALL F. B. BAEKS.
386
387
I
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6843
March 18, 1931.
SUBJECT;
Increase in Federal reserve note p r i n t i n g charge.
Dear Sir;
The Bureau of Engraving and P r i n t i n g advises that
on account of the Saturday h a l f - h o l i d a y Act of March 3, 1931,
increasing the non-productive time of employees of the Bureau
with f u l l pay by seventeen and one-half days a year, the cost
of producing Federal reserve notes has been increased $3.00
per 1,000 s h e e t s , and that i t w i l l ,
therefore, be necessary
to increase the charge f o r n o t e s , e f f e c t i v e March 1, 1931,
from $92.45 to $95.45 per 1,000 sheets.
Very t r u l y yours,
E. M. McClelland,
Assistant Secretary.
TO THE GOVERNORS OF ALL F. H. BANKS.
8 8 8
FEDERAL RESERVE BOARD
WASHINGTON
X-6845
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
March 19, 1931.
SUBJECT:
Continuation C e r t i f i c a t e s as to Bonds of Federal
Reserve Agents and A s s i s t a n t Federal Reserve Agents.
Dear S i r ;
I t has t e e n the p r a c t i c e i n some crises , when premiums are
paid upon "bonds of Federal reserve agents, or a s s i s t a n t Federal r e serve agents, for the surety company t o i s s u e what i s known as a
"continuation c e r t i f i c a t e " .
This continuation c e r t i f i c a t e s t a t e s
that i n consideration of the sum paid, the surety company "hereby
continues i n force" the bond i n question "for the extended term
"beginning" on a c e r t a i n day and ending one year t h e r e a f t e r . This
c e r t i f i c a t e i s signed by the corapary's attorneys i n f a c t and i n
some cases the signatures of such attorneys i n f a c t are.witnessed.
The acceptance of such a continuation c e r t i f i c a t e might be
regarded as an agreement or understanding that the e f f e c t i v e period
of the bond i t s e l f should terminate on the date of expiration stated
i n the c e r t i f i c a t e .
The standard form of bond heretofore approved
by the Federal Reserve Board does not contain any expiration date but
runs f o r an i n d e f i n i t e period, and i t i s important that there be no
confusion on t h i s p o i n t . A modification of the p r o v i s i o n s of the
standard bond through the acceptance of yearly continuation c e r t i f i c a t e s might have the e f f e c t of jeopardizing or complicating the
enforcement of the l i a b i l i t y of the surety company on the bond.
The Federal Reserve Board d e s i r e s that i n the f u t u r e such
continuation c e r t i f i c a t e s as to surety bonds should not be accepted
and that i n l i e u thereof simple r e c e i p t s f o r payment of premiums due
be taken.
If a continuation c e r t i f i c a t e of the kind described above
has been h e r e t o f o r e accepted with regard to any bond now outstanding
covering y o u r s e l f or any of your a s s i s t a n t s , i t i s requested that a
new bond be executed at t h i s time i n each such case.
This procedure
w i l l eliminate any p o s s i b l e confusion or uncertainty i n t h i s matter.
By order of the Federal Reserve Board.
TO ALL FEDERAL
Very t r u l y yours,
B. M. McClelland,
A s s i s t a n t Secretary.
RESERVE AGENTS EXCEPT HEW YORK.
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6846
March 20, 1931.
SUBJECT:
Expense, Main Line, Leased Wire System,
February, 1931.
Dear S i r :
.
Enclosed herewith you w i l l f i n d two mimeographed statements, X-6846-a and X-6846-b, covering
i n d e t a i l operations of the main l i n e , Leased Wire
System, during the month of .February, 1931.
Please credit the amount payable by your
bank i n the general account, Treasurer, U. S . , on
your books, and i s s u e C/D Form 1 , National Banks, f o r
account of "Salaries and Expenses, Federal Reserve
Board, Special Fund", Leased Wire System, sending
d u p l i c a t e C/D t o the Federal Reserve Board.
Very t r u l y yours,
F i s c a l Agent.
Enclosures.
TO GOVERNORS OF ALL F. R. BANKS EXCEPT CHICAGO.
r-6246-a
REPORT SHOWING CLASSIFICATION AND NUMBER OP WORDS TRANSMITTED OVER MAIN LINE
OF THE FEDERAL RESERVE LEASED WIRE SYSTEM FOR THE MONTH OF FEBRUARY, 1931.
Firom
Business
reported
by
banks
Boston
Sew York
"Philadelphia
Cleveland
Richmond
•Atlanta
Chicago
S t . Louis
.Minneapolis
Kansas City
Dallas
San Francisco
22,693
108,810
28,611
67,843
49,671
51,221
79,605
66,144
25,733
73,93%
58,685
81,497
2,073
1,113
2,225
1,235
6,349
2,367
2,066
2,745
2,060
8,822
3,542
24,766
108,810
29,724
70,068
50,906
57,570
81,972
68,210
28,478
75,994
67,507
85,039
3.31
14-53
3-97
9-35
6.80
7-69
10.94
9-H
3-80
10.l4
9-01
H•35
714,447
34,597
749,044
100.00
T o t a l
Words sent by
New York chargeable to otuer
F. R. Banks ( l )
F. R. Board business
Net Federal
Reserve
Bank
business
Percent of t o t a l
bank business (*)
.248,073
Treasury Department business Incoming and Outgoing
Total words transmitted over main l i n e s . . . . . . .
(*)
These percentages used in calculating the pro rata share of l e a s e d wire expense as shown
on the accompanying statement (X-6846-b)
(l)
Number of words sent by New York to other F. R. Banks f o r t h e i r sole b e n e f i t charged to
banks indicated in accordance with action taken at Governors' Conference
November 2 - 4 , 1925•
997,117
84,968
1,082,085
x-6s46-"b
REPORT OP EXPENSE MAIN LIME
FEDERAL RESERVE LEASED 71 EE SYSTEM, FEBRUARY, 1931.
Operators'
Salaries
Name of Dank
Boston
$
New York
•Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Fra-nd. sco
Federal Reserve Board
Total
$
Operators'
Overtime
260.00 $
1,134.14
225.OO
306.66
190.00
270.00
3.700.47(f)
195-00
200.00
287.50
251.00
380.00
7,399-77
$
$
Total
Exoenses
-
$
-
-
-
—
230.00(&)
-
-
6.00
-
-
—
-
-
-
—
—
—
Wire
Rental
6.00
—
$15,754.55
$ 15,984.55
260.00
1,134.14
225.00
306.66
420.00
270.00
3,706.47
I95.OO
200.00
287-50
251.00
350.00
15,754.55
!1
713,43
3,131.74
855-68
2,015.27
1,465.65
1,657.47
2,357.97
1,963.54
819.04
2,185-54
1,941.98
2,446.34
t
Payable to
Federal
Reserve
Board
Credits
$
-
$ 23,390.32
$ 21,553.65
l,S36.67(a)
$
(&)
(#)
(*)
(a)
(b)
Pro Rata
Share of
Total
Expenses
260.00 5fc
453.43
1,134.14
1,997.60
630.68
225.00
1,708.61
306.66
420.00
1,045.65
270.00
1,387-47
i_,348.50(*)
3,706.47
1 9 5 . <70
1,768.54
200.00
619.04
1,898.04
287-50
251.00
1,690.98
320.00
2,066.34
-
$
-
7,635.77 $
21,553.65
$
•
15,266.38
1,348.50(b)
13,917.88
Main Line rental, Richmond-Washington.
Includes s a l a r i e s of Washington operators.
•
Credit.
Received $ 1 , 8 3 6 . 6 7 from Treasury Department covering "business f o r the month of February, 1931.
Amount reimbursable to Chicago.
CO
CD
K
i u
X-6849
Copy of l e t t e r received from
COLQUITT, PARKER, TBOOTMLN & ARKWRIGHT
ATTORNEYS AT W
AT1MEA, GA.
March 26, 1931
Mr. Ward Albertson,
Asst. Federal Reserve Agent,
Federal Reserve Bank of Atlanta,
Atlanta, Georgia.
Dear Mr. Albertson:
You have advised that the original Charters of certain member "banks i n corporated, r e s p e c t i v e l y , under the laws of Alabama and Georgia were limited
"by t h e i r terms to expire at various dates since such hanks were admitted to
membership.
These "banks are s t i l l in business and are s t i l l members of the Federal
Reserve System.
The FederaltReserve Board has inquired whether upon the expiration of the
original Charters, the some were renewed or whether new Charters were obtained
and new corporations farmed t o take over the a f f a i r s of the old corporations.
You have furnished me with copies of the proceedings for the renewal of
the Charters of the following named banks:
Birmingham Trust & Savings C.
Bank of CommePG&*
Marion Central Ban&,
Peoples Bank 4TTrust Company,
Georgia Savings Bank & Tr. Co.
Citizens Banking Company,
LaGrange Banking & Trust Co.,
B$nk of Mi l i e n ,
S&vaonrvh Bank & Trust Co.
Marion County Banking Co.,
Birmingham, Ala.
«
Clayton,
it
Marion,
ft
Selma,
Atlanta,
Ga.
*t
Eastman,
it
LaGrange,
ft
IE l i e n ,
tt
Savannah#
Guin,
Ala.
I have examined the copies furnished and give i t a s my opinion that in
each instance the bank obtained a renewal of i t s e x i s t i n g Charter under a
statute providing for such renewal and preserved the corporate existence for
an additional term.
I am of the opinion that each of the banks mentioned above i s the same
corporation which o r i g i n a l l y applied f o r and obtained stock in the Federal
Reserve Bank.
In none of the cases mentioned has there been any break of
continuity of corporate existence.
Very t r u l y yours,
RSP/w.
P. S . i
(Signed) Robt S. Parker.
Your f i l e i s returned herewith.
(Original of above f i l e d under:
411. Charters, State Banks, Expiration o f , e t c . )
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6850
A p r i l 1, 1931,
SUBJECT}
Code words to cover t e l e g r a p h i c t r a n s a c t i o n s in Treasury B i l l s .
Dear S i r ;
In connection v i t h t e l e g r a p h i c t r a n s a c t i o n s i n
Government s e c u r i t i e s b e t r e e n Federal r e s e r v e banks,
the f o l l o w i n g code vords have been designated to
cover new i s s u e s of Treasury B i l l s :
"NOXBALERS"
S e r i e s dated April 2, 1231
and maturing J u l y 1, 1931.
"NOXBAND"
S e r i e s dated April 3, 1931
and maturing J u l y 2, 1931.
These words should be i n s e r t e d in the Federal r e serve t e l e g r a p h code book, following the supplemental
code word "NOXBADY", on page 172.
Very t r u l y yours.
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OP ALL F. H. BANKS.
:
COPY
394
X-6851
March 31,
1931.
Mr. Walter S. Lo^an,
Counsel and Deputy Governor,
Federal l e s e r v e Bank of New York,
New York City.
My dear " ' a l t e r •
I have r e c e i v e d your l e t t e r of March 26th r e q u e s t i n g my
views on the question whether Section 11 of the Uniform Bank C o l l e c t i o n
Code (Section 350j of the Hew York Negotiable Instruments Law), g i v i n g
the c o l l e c t i n g bank the option to t r e a t a check as dishonored when the
drawee's r e m i t t a n c e d r a f t t h e r e f o r drawn on another bank i s not p a i d in
due course, would be h e l d to be a p p l i c a b l e to n a t i o n a l as v e i l as S t a t e
banks.
As I t o l d you over the telephone y e s t e r d a y a f t e r n o o n , I am
i n c l i n e d to agree with your view t h a t t h i s s e c t i o n does not c o n f l i c t in
any way with any p r o v i s i o n s of the n a t i o n a l Bank Act and t h a t i t would
be a p p l i c a b l e to checks drawn on n a t i o n a l banks. I t seems to me t h a t
i t d e a l s only with the r e s p e c t i v e r i g h t s , d u t i e s and l i a b i l i t i e s of
the drawer, drawee, endorsers and h o l d e r s of such check and i s not i n tended to i n t e r f e r e with the r a t a b l e d i s t r i b u t i o n of t h e a s s e t s of an
i n s o l v e n t n a t i o n a l bank which i s r e q u i r e d by the p r o v i s i o n s of t h e Nat i o n a l Bank Act. I t i s t r u e t h a t i t contemplates t h a t , where such a
check has been charged to the drawer's account, the e n t r i e s w i l l be
r e v e r s e d thus i n c r e a s i n g the amount of the drawer's claim a g a i n s t the
i n s o l v e n t bank. This, however, merely has the e f f e c t of t r a n s f e r r i n g
t h e claim of t h e holder of t h e check back to the drawer, where i t belongs; i t does not diminish t h e a s s e t s of the bank nor i n c r e a s e i t s l i a b i l i t y ; and i t does not give any one a p r e f e r r e d claim a g a i n s t t h e bank.
Off hand, the only way in which I can see t h a t i t w i l l e f f e c t t h e l i quidation of the bank w i l l be by i n c r e a s i n g the o f f s e t of t h e drawer
of the check a g a i n s t any indebtedness he has to the bank.
I have discussed t h i s s u b j e c t b r i e f l y " i t h Mr. Await and
Mr. Barse; but t h i s question was e n t i r e l y new to them and they were
u n w i l l i n g to express any opinion on i t u n t i l they had had time to
g i v e i t c a r e f u l study. As soon as I hear from them, I s h a l l communic a t e with you.
-? 2 —
X-6851,
O
Mr. Walter S. Logan.
In t h e meantime, I am sending a cooy of your l e t t e r to
Counsel f o r each of the o t h e r Federal r e s e r v e "banks v i t h a r e q u e s t f o r
an expression df t h e i r views On the question which you have r a i s e d
and f o r a c i t a t i o n of any a u t h o r i t i e s they may know of vfhich may have
a h e a r i n g on t h i s question, t am asking them to w r i t e d i r e c t to you,
sending me copies of t h e i r l e t t e r s .
If I can be of any f u r t h e r a s s i s t a n c e to you, n l e a s e do
not h e s i t a t e to c a l l uoon me.
C o r d i a l l y yours,
Walter TTyatt
General Counsel
W 0:IC
COPY
X-6851-a
896
F~rr?JiL ?^STIV2 BANK
of :nrr york
March 25, 1931.
Walter T y a t t , E s q . , General Counsel,
Federal l e s e r v e Board,
Washington, D. C.
Dear ' " a l t e r ;
You w i l l r e c a l l t h a t a short time ago we exchanged l e t t e r s
on the question of whether the p r o v i s i o n s of the rank C o l l e c t i o n Code
g r a n t i n g p r e f e r e n c e s a g a i n s t closed banks were a p p l i c a b l e to n a t i o n a l
banks. The information you gave me a t t h a t time and our own examinat i o n of some of t h e a u t h o r i t i e s convinced me t h a t the p r o v i s i o n s k'ere
not a p p l i c a b l e to closed n a t i o n a l banks.
I t seems to me, however, t h a t the p r o v i s i o n s of Section 11 of
the Bank C o l l e c t i o n Code (which i s Section 350-j of t h e New York Negot i a b l e Instruments law), g i v i n g the c o l l e c t i n g bank t h e option to t r e a t
an item a s dishonored when the drawee's r e m i t t a n c e d r a f t t h e r e f o r drawn
on another bank i s got p a i d in due course, would be h e l d to be a p p l i c a b l e
to n a t i o n a l as well as | t a t e banks. For your convenience I quote below
a p a r t of the s e c t i o n in question:
"§11. E l e c t i o n to t r e a t as dishonored items p r e sented by mail. There an item i s duly p r e s e n t e d by
mail to t h e dravee or payor, whether or not the same
has been charged to the account of the maker or drawer thereof or r e t u r n e d to such maker or drawer, the
agent c o l l e c t i n g bank so p r e s e n t i n g may, a t i t s e l e c t i o n , e x e r c i s e r ' i t h reasonable d i l i g e n c e , t r e a t such
item as dishonored by non-payment and recourse may be
had upon p r i o r p a r t i e s t h e r e t o in any of t h e f o l l o w i n g
cases:
(1) 'There the check or d r a f t of the drawee or payor bank upon another bank r e c e i v e d in payment t h e r e f o r
s h a l l not be Paid in due course;
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
H
This s e c t i o n does not c o n f l i c t r i t h any p r o v i s i o n of the Nat i o n a l Bank Act so f a r as I know-; and the e x e r c i s e of the option would
not in any way harm t h e general c r e d i t o r s of a closed n a t i o n a l bank, b u t
would merely o p e r a t e to t r a n s f e r to the maker of the check t h e general
claim which the owner of the check r.ould otherwise have against' the c l o s ed bank. On the o t h e r hand, the e x e r c i s e of the option would prevent any
l o s s to the owner ( u n l e s s t h e d r a r e r of t h e check were a l s o i n s o l v e n t ) ,
and vould r e s u l t in the l o s s being t r a n s f e r r e d to the maker of the check
where i n f a i r n e s s i t belongs. Moreover, and t h i s i s of course the reason
^ hi' \ J?*.*
"
'
F~DELAL 2ESriVB 3AI-TK OF 1T3W Y03K .. 2...
»
'
.
Walter Wyatt, Esq.
:
3 9 7
X-5851-a
March 26, 1931.
t h a t the Federal l e serve Banks a r e p a r t i c u l a r l y i n t e r e s t e d in t h i s question,
by t h e e x e r c i s e of t h e option a c o l l e c t i n g bank could in most cases p r o t e c t i t s e l f a g a i n s t l i a b i l i t y to the owners of the items who might claim
t h a t the c o l l e c t i n g bank had been n e g l i g e n t in forwarding t h e items d i r e c t
to the drawee bank in view of the drawee b a n k ' s c o n d i t i o n .
I am s o r r y to bother you again, but I would g r e a t l y a p p r e c i a t e
any information or expression of opinion on t h i s p o i n t . I would have
telephoned to you about t h i s , i n s t e a d of w r i t i n g , except t h a t I thought
i t would be more s a t i s f a c t o r y from your standpoint to have a d e f i n i t e
statement of t h e question I have in mind. I s h a l l , of course, be delighted to t a l k to you about i t on the telephone, and so f a r as I am concerned
any information you can give me by telephone w i l l be j u s t as u s e f u l and
s a t i s f a c t o r y as i f conveyed by l e t t e r .
me, I am
With b e s t r e g a r d s and thanking you f o r any help you can give
Yours f a i t h f u l l y ,
(Signed)
Walter 5. Logan,
Walter S. Logan,
General Counsel.
i
COPY
X-6854
•
u ty
-
FEDERAL RESERVE BANK
OF
ST. LOUIS
-
April 1, 1931.
Mr. Walter Wyatt,
General Counsel,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Wyatt:
FEDERAL RESERVE SANK OF ST. LOUIS
vs.
RAY D. KEITH.
Benton County National Bank, B e n t o n v i l l e , Ark.
matter.
I was in t h e midst of the h e a r i n g on the pleadings in t h i s case
when Mr. Gilmore telephoned the contents of your telegram. Immediately
a f t e r i t s r e c e i p t , and, b e f o r e any hearing of testimony (and over our
o b j e c t i o n ) the case was by the Court continued u n t i l September.
The f a c t s out of which t h i s s u i t arose may be summed up as follows;
On November 14, 1630 the Federal Reserve Bank of S t . Louis h e l d the
Benton County National Sank of B e n t o n v i l l e , Ark. 15 day n o t e , dated November
6, 1930 f o r $39,550.90 secured by e l i g i b l e paper aggregating $44,580.90
On t h a t d a t e , the Benton County National Bank forwarded to the Fede r a l Reserve Bank $24,141.65 worth of a d d i t i o n a l c o l l a t e r a l and i t s ' 15 day
n o t e , of t h a t d a t e , executed in blank, and, r e q u e s t e d the Federal Reserve
Bank to f i l l in the amount i t would be w i l l i n g to loan on the combined secure
i t i e s , i . e . on t h e $63,722.56 worth, and, r e q u e s t e d i t to cancel and r e t u r n
the November 5, 1930 n o t e .
The Reserve Bank f i l l e d in t h e new n o t e f o r
$55,000., being the aggregate of the o l d note f o r $39,550.90 and the new advance of $25,449.10
The KEITH n o t e sued on was included in the new c o l l a t e r a l sent in
with the $55,000. n o t e , and, on t h e s t r e n g t h of which the $25,449.10 a d d i t i o n a l amount was advanced.
The $65,000. n o t e was taken up a t i t s due d a t e , fend, a new n o t e
taken f o r an a d d i t i o n a l amount and a d d i t i o n a l c o l l a t e r a l accompanied the new
note.
The Benton County National Bank closed i t s doors on the 5th of December, 1930, and, b e f o r e i t had p a i d o f f i t s 15 day n o t e .
At the time the Benton County National Bank closed, Mr. Keith had
with i t a deposit of $65. or $75; h i s mother a l i k e d e p o s i t ; and, the
399
X-6854
Mr. Wyatt
2
,
p a r t n e r s h i p grocery s t o r e - o f which Keith was a p a r t n e r - a l a r g e r amount.
Upon advice of h i s counsel ( a former p a r t n e r of the C i r c u i t Judge) Mr. Keith
r e f u s e d to nay the n o t e u n t i l he had received c r e d i t f o r t h e s e d e p o s i t s .
Suit was f i l e d by a l o c a l Attorney who i s also the Attorney f o r the
Receiver. The P e t i t i o n a l l e g i n g t h a t the n o t e had been endorsed, assigned
and d e l i v e r e d to the Federal Reserve Bank, f o r value and "before m a t u r i t y ,
and, t h a t the Federal Reserve Bank was a holder in due course.
The ANSWER a l l e g e d t h a t the Benton County n a t i o n a l Bank was i n s o l v e n t
a t t h e time t h e t r a n s f e r was made and t h a t t h e t r a n s f e r was VOID under Section
5242 of t h e NATIONAL BANK ACT. ,
A DEMURRER was f i l e d to the ANSWER and overruled; t h e Court expressing the view t h a t t h e Benton County National Bank was i n s o l v e n t when the note
was t r a n s f e r r e d , and, consequently,. the t r a n s f e r was void.
We endeavored to convince t h e Court t h a t the Reserve Bank had a c t u a l l y
advanced more to the Benton County National Bank on the day the KEITH n o t e was
taken as c o l l a t e r a l than the f a c e of the c o l l a t e r a l o f f e r e d on t h a t day, i n cluding the KEITH n o t e ; consequently, the t r a n s a c t i o n could not v i o l a t e the
p r o v i s i o n s of Section 5242 of t h e National Bank Act, even though the bank were
l a t e r found to have been i n s o l v e n t on the date of t r a n s f e r . He intimated t h a t
u n l e s s we amended t h e PETITION to show t h a t we h e l d i t as c o l l a t e r a l the PETITION
would be s t r i c k e n from the r e c o r d s . Being s a t i s f i e d t h a t we were a holder for
value even i f the n o t e had been taken as c o l l a t e r a l , we amended the P e t i t i o n
in accordance with h i s suggestions.
Mr. K e i t h ' s Attorney then procured a Court order d i r e c t i n g t h e Rec e i v e r of the Benton County National Bank to b r i n g the l e d g e r and Statement
of Condition of t h e bank to t h e Court. The Receiver t o l d t h e Court t h a t h i s
i n s t r u c t i o n s were not to allow such information to be given out without ,
a u t h o r i t y had been f i r s t obtained from the Comptroller and t h a t he would
t e l e g r a p h t h e Comptroller.
D e f e n d a n t ' s Attorney then asked f o r a continuance on t h e ground t h a t
he had been prevented from producing h i s evidence. At t h a t time, however, the
Court took the m a t t e r out of the defense A t t o r n e y ' s hands and suggested "you
do not want a continuance on t h i s ground but r a t h e r on the ground t h a t t h e r e
has been an amendment to the Complaint - so t h a t you a r e unable to proceed a t
t h i s time - " and, upon t h i s , continued the case to September.
Defense Counsel suggested in open Court t h a t he would f i l e a Counter
claim f o r the excess c o l l a t e r a l we h e l d .
I am s a t i s f i e d t h e r e i s no merit in e i t h e r defense; n e v e r t h e l e s s ,
when t h e case comes to t r i a l the Court w i l l do a l l he can a g a i n s t u s , and, I
am c o n f i d e n t the J u r y w i l l f i n d a g a i n s t us; I am equally c o n f i d e n t , however,
t h a t the evidence w i l l e n t i t l e us to an i n s t r u c t e d v e r d i c t , and, i f not given
by the T r i a l Court t h e Supreme Court %'ill give i t .
if
Mr Tyatt
^ 31Ok,
M
X-6854
3
I do not b e l i e v e t h e defense i s in good f a i t h , but only f o r the purpose of holding o f f t h e s e s u i t s with the hope t h a t the Reserve Bank w i l l be paid
o f f and some of t h e s e n o t e s r e t u r n e d to the Receiver so t h a t s e t - o f f s w i l l apply.
I do not b e l i e v e i t involves the ATTM03E and/or the LUCAS questions;
n e i t h e r do I b e l i e v e a t t h i s time i t has reached System importance. If t h e
t h r e a t e n e d c o u n t e r - c l a i m i s f i l e d , then i t may * - - - r a i s e a question of
System importance.
As soon a s I can get them w i l l send you copy of o r i g i n a l P e t i t i o n ,
Answer, and Amended P e t i t i o n , and, as soon as we r e c e i v e Answer to t h e Amended
P e t i t i o n w i l l send you a copy, and keep you poste d a s to t h e s e v e r a l s t e p s .
question.
How I would l i k e to be a b l e to get i n t o t h e Federal Court on t h i s
With k i n d e s t r e g a r d s .
Very t r u l y yours,
(Signed)
J a s G. Mc Conkey
J as G-. Mc Conkey,
Counsel
P l e a s e r e t u r n c l i p p i n g s when f i n i s h e d with them.
401
X-6854-a
From Record |3md Democrat, Bentonville, Ark.
:
— — : — - —
Thursday» March 19, 1931.
ECHO OF BANK FAILURE BROUGHT UP BY, SUIT
Depositors Of Local Bank ? i l l Watch Outcome
Of This Case With I n t e r e s t
One of the most important cases to he t r i e d at t h e p r e s e n t term of
c i r c u i t court i s t h e case of The Federal Bank of St. Louis versus Bay D. Keith;
t h i s i s a s u i t on a promissory note made by the defendant to t h e Benton County
National Bank a t B e n t o n v i l l e and which note was a l l e g e d to have "been sold and
t r a n s f e r r e d by the Benton County National Bank to t h e Federal Reserve Bank of
St. Louis on November 15, 1950.
Keith acknowledges the execution of the note in question and t h a t
i t i s now due and remains unpaid; and Keith by h i s a t t o r n e y , S a r i B l a n s e t t s e t s
up a special defense to the payment of the note in question; by a l l e g i n g in h i s
answer t h a t a t the time of the t r a n s f e r of the note by the Benton County Nationa l Bank to the Federal Reserve Bank at St. Louis, t h a t the Benton County National Bank was insolvent or in a f a i l i n g condition and was done with a view of
making a p r e f e r r e d c r e d i t o r out of the Federal Reserve Bank and thereby p r e venting a d i s t r i b u t i o n of the a s s e t s of the Benton County National Bank,
r a t e a b l y among i t s c r e d i t o r s .
Attorney Vol T. t i n d s e y f i l e d a demurrer to the answer and the court
heard the argument by the a t t o r n e y s on t h i s the 17th. Mr. B l a n s e t t defended
h i s answer and s t a t e d i f the demurrer was overruled by the court as i t should
be, then he, B l a n s e t t would undertake to prove to the j u r y t h a t the bank was
insolvent a t t h e time of the t r a n s f e r and t h a t the s a l e or attempted s a l e and
t r a n s f e r was void under the Federal s t a t u t e s . B l a n s e t t s t a t e s t h a t i f h i s
c l i e n t Keith p r e v a i l s in t h i s case t h a t i t w i l l f o r c e more than one hundred
thousand d o l l a r s back into the Benton County National Bank as i t s a s s e t s , to
be d i s t r i b u t e d among the d e p o s i t o r s of the Benton County National i n s t e a d of
remaining in the hands of the Federal Reserve Bank. The court overruled the
demurrer of the p l a i n t i f f —Federal Reserve Bank, and w i l l permit t h e defendant Keith, and h i s a t t o r n e y , Earl B l a n s e t t , to be heard by the j u r y .
No doubt t h i s case w i l l bo the c o n t r o l l i n g f a c t i o n in considerable
f u t u r e l i t i g a t i o n and i s looked forward to with much i n t e r e s t . The case i s
set f o r t r i a l on Wednesday,. &arch 25th a t 10 o ' c l o c k a. m. This i s a pioneer
case of i t s kind and but few lawyers are f a m i l i a r with t h e s p e c i a l procedure
t h a t w i l l be followed by the defense.
;
4 0 2
X-6854-a
- 2 Mr. Keith w i l l pay t M s n o t e "out h i s a t t o r n e y says t h a t he wants i t
paid to the proper p a r t i e s or the proper 'bank and. not to the wrong bank. He
s t a t e s f u r t h e r t h a t i t should "be p a i d to t h e r e c e i v e r of the Benton County
National Bank and not to the Federal 3 r s e r v e 3ank.
X-5854-b
From Th£ Rdgers (Ark.) Daily News.
Friday, March 20, 1931.
SUIT MAY HAVE WIDS EFFECT OH BAH SITUATION
Keith Contends S t . Louis Bank Was Made P r e f e r r e d Creditor
TO TRIAL MARCH 25
Favorable Verdict Would Mean Return of Large Block of Assets
A s u i t brought by the Federal Reserve bank of St. Louis a g a i n s t Hay
D. Keith and scheduled f o r t r i a l a t the present term of c i r c u i t court, i s being
watched with i n t e r e s t , f o r the outcome may have a widespread e f f e c t upon l i q u i d a t i o n of closed banks in the county.
In i t s s u i t the Federal Reserve bank seeks to c o l l e c t upon a promisory note made by Keith to the defunct Benton County National bank, which note
was a l l e g e d to have been sold and t r a n s f e r r e d to the St. Louis bank on Nov.
15, 1930, about 21 days before the Benton County National bank suspended business.
Keith acknowledges execution of the note in question and t h a t i t i s
now due and remains unpaid, and through h i s a t t o r n e y , Earl B l a n s e t t , he a l l e g e s
t h a t a t the time of the t r a n s f e r the Benton county bank was insolvent or in a
f a i l i n g condition and t h a t the t r a n s f e r was made with a view to making the
Federal Reserve bank a p r e f e r r e d c r e d i t o r and thereby preventing d i s t r i b u t i o n of
the a s s e t s of the Benton County National bank pro r a t a among i t s c r e d i t o r s .
Attorneys f o r the S$. Louis bank f i l e d a demurrer, which was overruled
by Judge Combs, and the case f i l l come up f o r a j u r y t r i a l .
A decision in favor of the defendant, Mr. Blansett s a i d , would mean
the r e t u r n of more than $100,000 in a s s e t s , now h e l d by other banks, to the
Benton County National bank f o r d i s t r i b u t i o n .
The case i s expected to be a deciding f a c t o r in other l i t i g a t i o n
growing out of l i q u i d a t i o n of the Bentonville bank, with a p o s s i b i l i t y of the
same s i t u a t i o n extending to the Rogers bank. The case has been scheduled f o r
t r i a l Tednesday, March 25, beginning at 10 a. m.
X-6855
COPY
IN THE DISTRICT COURT OF THE UNITED STATES
FOB THE EASTEHbT DISTRICT OF NORTH CAROLINA
W. I . Skinner & Company, Incorporated
vs
In Equity
No.
Federal Reserve Bank of Richmond,
V i r g i n i a , National Bank of G r e e n v i l l e ,
and
F. Wright, Receiver of National
Bank of G r e e n v i l l e .
ANSWER
Defendant Federal Reserve Bank of Richmond answering t h e b i l l of
complaint i n t h i s cause f i l e d or so much thereof as i t i s advised t h a t i t
i s m a t e r i a l t h a t i t should answer says:
1.
Defendant Federal Reserve Bank of Richmond admits t h e a l l e g a -
t i o n s of t h e f i r s t paragraph of t h e b i l l of complaint.
2.
Defendant Federal Reserve Bank of Richmond admits t h e a l l e g a -
t i o n s of t h e second paragraph of t h e b i l l of complaint.
3«
Defendant Federal Reserve Bank of Richmond admits the a l l e g a -
t i o n s of t h e t h i r d paragraph of the b i l l of complaint, except t h a t i t says
•i
t h a t the name of of the Receiver of the National Bank of G r e e n v i l l e i s not
W. P. Wright but V. P . f r i g h t .
4.
Defendant Federal Reserve Bank of Richmond i s without knowl-
edge or i n f o r m a t i o n s u f f i c i e n t t o form a b e l i e f concerning t h e a l l e g a t i o n s
of the f o u r t h paragraph of the b i l l of complaint, and t h e r e f o r e denies the
same*
5.
Defendant Federal Reserve Bank of Richmond admits t h a t on De-
cember 8, 1930, i t r e c e i v e d from t h e F i r s t and Merchants N a t i o n a l Bank of
Richmond c e r t a i n checks drawn on t h e National Bank of G r e e n v i l l e , North
X-6855
4
"3"
Carolina, as h e r e a f t e r s e t f o r t h } but defendant Federal Reserve Bank of
Richmond has no knowledge or information s u f f i c i e n t to form a "belief
concerning the o t h e r m a t t e r s and t h i n g s a l l e g e d i n the f i f t h paragraph
of the "bill of complaint, and t h e r e f o r e denies a l l a l l e g a t i o n s thereof
except i n so f a r as they a r e h e r e i n a f t e r admitted, and e s p e c i a l l y denies
t h a t i t has r e c e i v e d the check i n t h e b i l l of complaint mentioned as argent f o r t h e p l a i n t i f f , and says t h a t a l l checks which i t r e c e i v e d from
the F r i s t and Merchants National Bank of Richmond were r e c e i v e d "by i t as
agent f o r t h a t bank only.
6*
Defendant Federal Reserve Bank of Richmond admits t h a t on
December 8 , 1930, i t sent d i r e c t l y t o the National Bank of G r e e n v i l l e c e r t a i n checks as h e r e i n a f t e r s e t f o r t h upon the terms and c o n d i t i o n s h e r e i n a f t e r set f o r t h .
Inasmuch as p l a i n t i f f s have f a i l e d to f u l l y d e s c r i b e or
to s t a t e t h e amount of the check mentioned i n t h e b i l l of complaint, defendant Federal Reserve Bank of Richmond i s unable t o say whether or not
t h a t check was ever r e c e i v e d or handled by i t , and t h e r e f o r e denies t h a t i t
was received or handled by i t , and defendant e s p e c i a l l y denies t h a t any
check handled by i t was handled c a r e l e s s l y or n e g l i g e n t l y , and says t h a t i t
i s a general and u n i v e r s a l custom among banks i n the S t a t e s of V i r g i n i a and
North Carolina and elsewhere t o send checks which they have r e c e i v e d on
deposit or f o r c o l l e c t i o n d i r e c t l y t o the banks on which such checks a r e
drawn i f such banks have accounts with the c o l l e c t i n g banks, and t o allow
such banks t o remit or pay f o r such checks i n cash, bank d r a f t s , t r a n s f e r s
of f u n d s , bank c r e d i t s , or other forms of payment and r e m i t t a n c e a s t h e
banks making such payment or remittance may choose; and i n order t h a t the
banks on which such checks a r e drawn may have an o p p o r t u n i t y t o examine
X-6855
4
-3such checks "before paying or r e m i t t i n g t h e r e f o r , i t i s a g e n e r a l and u n i v e r s a l custom to send such checks by mail to t h e banks on which they a r e
drawn and t o surrender them t o t h e said bank6 "before payment or r e m i t tance i n t h e manner above s t a t e d i s r e c e i v e d .
Defendant Federal Reserve
Bank of Richmond says t h a t such custom was known t o the F i r s t and Merchants n a t i o n a l Bank of Richmond and t o t h e p l a i n t i f f ; and defendant
Federal Reserve Bank of Richmond says t h a t the F i r s t and Merchants National
Bank of Richmond knew t h a t the National Bank of G r e e n v i l l e was a member of
the Federal Reserve System and kept an account w i t h the defendant Federal
Reserve Bank of Richmond and knew t h a t a l l checks deposited by t h e F i r s t
and Merchants National Bank of Richmond w i t h the defendant Federal Reserve
Bank of Richmond would be handled i n t h e manner above s t a t e d .
Defendant
Federal Reserve Bank of Richmond denies a l l of the a l l e g a t i o n s of t h e
s i x t h paragraph of t h e b i l l of complaint, except i n so f a r as they a r e h e r e i n admitted.
7.
Defendant Federal Reserve Bank of Richmond has no knowledge
or i n f o r m a t i o n s u f f i c i e n t to form a b e l i e f as to whether or not t h e Nat i o n a l Bank of G r e e n v i l l e was i n s o l v e n t on December 8, 1930, or as t o when
?•'
.
.
i t became i n s o l v e n t , and t h e r e f o r e denies t h a t i t was i n s o l v e n t when the
Federal Reserve Bank of Richmond mailed t o i t t h e checks r e c e i v e d by the defendant Federal Reserve Bank of Richmond from the F i r s t and Merchants Nat i o n a l Bank of Richmond, and defendant Federal Reserve Bank cf Richmond
denies t h a t i t knew or should have known t h a t t h e s a i d National Bank of
Greenville was i n s o l v e n t a t t h a t time; and denies a l l a l l e g a t i o n s of t h e
seventh piaragraph of the b i l l of complaint except i n so f a r a s they a r e
herein admitted.
<
£-6855
-48.
Defendant F e d e r a l figtierve Bank of Richmond hae no knowledge
or i n f o r m a t i o n s u f f i c i e n t to form a b e l i e f concerning t h e a l l e g a t i o n s of
the e i g h t h paragraph of t h e b i l l of complaint and t h e r e f o r e denies t h e
same, except i n so f a r as they a r e h e r e i n a f t e r admitted.
9.
Defendant Federal Reserve Bank of Richmond has no knowledge
or i n f o r m a t i o n s u f f i c i e n t to form a b e l i e f concerning the a l l e g a t i o n s of
the n i n t h paragraph of the b i l l of complaint, and t h e r e f o r e d e n i e s the same,
except i n so f a r as they a r e h e r e i n a f t e r a d m i t t e d .
10.
Defendant Federal Reserve Bank of Richmond admits t h a t p r i o r
to December 10, 1930, i t had rediscounted f o r the National Bank of Greenv i l l e n o t e s , b i l l s of exchange, and other o b l i g a t i o n s , t h e aggregate amount
of which was one hundred twelve thousand two hundred eighteen d o l l a r s and
e i g h t y - s i x cents ($112,218.86), and t h e s a i d National Bank of G r e e n v i l l e had
endorsed the same and by i t s said endorsement waived p r e s e n t a t i o n , p r o t e s t ,
and n o t i c e of d i s h o n o r , and became a b s o l u t e l y and u n c o n d i t i o n a l l y l i a b l e
f o r the payment t h e r e o f , and the said n o t e s , b i l l s of exchange, and other
o b l i g a t i o n s were pot due but were unpaid on December 1 0 t h , a t t h e time when
the National Bank of G r e e n v i l l e suspended b u s i n e s s , and were then h e l d by
the Federal Reserve Bank of Richmond as t h e owner t h e r e o f , and a r e s t i l l so
h e l d by i t , except f o r a few which have been p a i d .
Defendant Federal Re-
serve Bask of Richmond denies a l l t h e a l l e g a t i o n s of t h e t e n t h paragraph of
t h e b i l l of complaint except i n so f a r as they a r e h e r e i n a d m i t t e d .
11.
Defendant Federal Reserve Bank of Richmond admits t h a t b e -
f o r e December 10, 1930, t h e National Bank of G r e e n v i l l e had t r a n s f e r r e d t o
i t c e r t a i n other n o t e s , b i l l s of exchange, and other o b l i g a t i o n s , having a
f a c e v a l u e of t h i r t y - e i g h t thousand nine hundred and f i f t y - f i v e d o l l a r s
X-6855
L
($38,955.00) t o be h e l d by t h e defendant f e d e r a l Reserve Bank of Richmond
as s e c u r i t y f o r the l i a b i l i t y of the National Bank of G r e e n v i l l e as end o r s e r on the n o t e s , b i l l s of exchange, and other o b l i g a t i o n s rediscounted
as above.
Defendant Federal Reserve Bank of Richmond has c o l l e c t e d c e r t a i n
of t h e n o t e s , b i l l s of exchange, and other o b l i g a t i o n s so t r a n s f e r r e d t o i t
as s e c u r i t y and t h e r e s i d u e a r e s t i l l held by i t ; but F e d e r a l Reserve Bank
of Richmond has not c o l l e c t e d upon s a i d n o t e s , b i l l s of exchange, and other
o b l i g a t i o n s h e l d by i t as s e c u r i t y , such sum as w i l l , with the amount of
the r e s e r v e balance of t h e National Bank of G r e e n v i l l e h e r e i n a f t e r mentioned
and a l l other c r e d i t s due from defendant Federal Reserve Bank of Richmond
to the National Bank of G r e e n v i l l e , be s u f f i c i e n t t o discharge and s a t i s f y
the l i a b i l i t y of t h e National Bank of Greenville to the defendant Federal
Reserve Bank of Richmond upon the n o t e s , b i l l s of exchange, and other
o b l i g a t i o n s discounted by the defendant Federal Reserve Bank of Richmond on
the endorsement of the National Bank of G r e e n v i l l e , and which a r e unpaid.
Defendant Federal Reserve Bank of Richmond denies a l l a l l e g a t i o n s of the
e l e v e n t h paragraph of the b i l l of complaint, except i n so f a r as they a r e
h e r e i n admitted*
Defendant Federal Reserve Bank of Richmond admits t h a t t h e Receiver
of the National Bank of G r e e n v i l l e , whose t r u e name, i s V.F. Wright and not
W.P. Wright, claims some i n t e r e s t i n the n o t e s , b i l l s of exchange, and other
o b l i g a t i o n s t r a n s f e r r e d by the National Bank of G r e e n v i l l e t o t h e Federal
Reserve Bank of Richmond as a f o r e s a i d , and defendant Federal Reserve Bank of
Richmond i s advised and t h e r e f o r e a l l e g e s t h a t the s a i d Receiver i s e n t i t l e d
t o r e c e i v e a l l of s a i d n o t e s , b i l l s of exchange, and other o b l i g a t i o n s whenever a l l l i a b i l i t i e s of t h e said National Bank of G r e e n v i l l e t o defendant
Federal Reserve Bank of Richmond a r e f u l l y p a i d and s a t i s f i e d .
X-6855
FtiMBft life A l t l m T I V E DEFENSE.
1.
Defendant Federal Reserve Bank of Richmond f u r t h e r answering
t h e "bill of complaint i n t h i s cause f i l e d s a y s :
That "by r e a s o n of the f a i l u r e of the p l a i n t i f f t o d e s c r i b e with
c e r t a i n t y t h e check drawn "by Person-Garrett Company t o the order of t h e
p l a i n t i f f or t o a l l e g e or s t a t e the amount f o r which such check was drawn,
defendant has "been unable to a s c e r t a i n whether or not i t ever r e c e i v e d or
handled such a check, and t h e r e f o r e denies t h a t i t ever r e c e i v e d or handled
t h e s a i d check,
2*
Defendant Federal Reserve Bank of Richmond says t h a t p r i o r t o
September 2, 1930, the Federal Reserve Board had duly adopted and promulgated
a c e r t a i n r e g u l a t i o n known as Regulation J , which became e f f e c t i v e September
2, 1930, d e f i n i n g the terms and c o n d i t i o n s on which a l l Federal r e s e r v e banks
were authorized t o accept checks on deposit or f o r c o l l e c t i o n , which r e g u l a t i o n was i n f u l l f o r c e and e f f e c t on December 8, 1930, and a t a l l times
h e r e a f t e r mentioned, and t h e terms and conditions of which were known t o
the F i r s t and Merchants National Bank and t o t h e National Bank of G r e e n v i l l e .
A copy of the s a i d r e g u l a t i o n
i s h e r e t o a t t a c h e d , marked E x h i b i t A# and made
a p a r t h e r e o f , as thougfc i t were h e r e s e t f o r t h i n f u l l .
3,
I n pursuance of said r e g u l a t i o n defendant Federal Reserve Bank
of Richmond had i s s u e d a c e r t a i n c i r c u l a r or c i r c u l a r l e t t e r s t a t i n g t h e
terms and c o n d i t i o n s on which i t was authorized to accept checks on deposit
or f o r c o l l e c t i o n and the manner i n which t h e said checks would be handled
and c o l l e c t e d or r e t u r n e d by i t .
A copy of the s a i d c i r c u l a r I s h e r e t o
a t t a c h e d , marked E x h i b i t B, and made a p a r t hereof as though i t were h e r e s e t
forth in f u l l .
X-6855
\
-74.
Defendant Federal Reserve Bank of Richmond had d e l i v e r e d
copies of the said c i r c u l a r t o a l l member "banks i n the F i f t h Federal Reserve D i s t r i c t , and e s p e c i a l l y to the F i r s t and Merchants National Bank
of Richmond and the National Bank of G r e e n v i l l e , and the r e c e i p t of said
c i r c u l a r had "been acknowledged and the terms thereof accepted by the two
member banks mentioned by w r i t t e n acknowledgements duly signed by the two
banks mentioned^ which were i n words and f i g u r e s as f o l l o w s , t o - w i t :
FEDERAL RESERVE BAH 01 RICHMOND,
RICHMOND, VA.
Gentlemen:
The undersigned member bank hereby acknowledges r e c e i p t
of C i r c u l a r No. 166, of the Federal Reserve Bank of Richmond,
regarding the " C o l l e c t i o n of Cash I t e m s , " e f f e c t i v e September 2,
1930, which c i r c u l a r supersedes C i r c u l a r No. 158 of February 1 ,
1929.
Yours very t r u l y ,
F i r s t & Merchants National Bank
Bank
Richmond V i r g i n i a
Location
S e p ' t . 6 - 1930
Date
By 0. C. White
Asst. Cashier.
FEDERAL RESERVE BANK OF RICHMOHD,
RICHMOND, VA.
Gentlemen:
The undersigned, member bank hereby acknowledges r e ceipt
of C i r c u l a r Ho. 166, of the Federal Reserve Bank of Rich-
mond, r e g a r d i n g the " C o l l e c t i o n of Cash I t e m s , " e f f e c t i v e September 2, 1930, which c i r c u l a r supersedes C i r c u l a r No. 158 of February
1, 1929.
Tours very t r u l y ,
HATIOmL BAH OF GREENVILLE
GREENVILLE. N.C.
SEP 6 - 1930
Date
5.
-
By James L. L i t t l e . P r e s t .
On December 8, 1930, def endant Federal Reserve Bank of Rich-
mond r e c e i v e d from v a r i o u s member banks or other Federal r e s e r v e banks on
deposit or f o r c o l l e c t i o n i n accordance with the terms of s a i d c i r c u l a r
checks drawn on t h e R a t i o n a l Bank of Greenville amounting t o twenty-seven
thousand two hundred e i g h t y - n i n e d o l l a r s and one cent ($27,289,01), which
said checks were on t h a t day sent by mail by defendant F e d e r a l Reserve Bank
of Richmond t o t h e National Bank of G r e e n v i l l e f o r payment or r e m i t t a n c e i n
the manner p r e s c r i b e d i n said c i r c u l a r ,
6,
Several of t h e said checks so sent t o the National Bank of
Greenville were r e c e i v e d by defendant Federal Reserve Bank of Richmond from
the F i r s t and Merchants National Bank of Richmond; but because of t h e reasons
t
s e t f o r t h above defendant Federal Reserve Bank of Richmond i s not a b l e t o determine whether or not t h e check of Person-Garrett Company t o t h e order of
•»9t h e p l a i n t i f f was among them, "Wit defendant f e d e r a l Reserve Baric of
Richmond a l l e g e s t h a t a l l of said checks r e c e i v e d frcm the F i r s t and
Merchants n a t i o n a l Bank of Richmond were sent t o i t f o r d e p o s i t or c o l l e c t i o n i n accordance w i t h the terms of t h e said c i r c u l a r , and t h a t the
F i r s t and Merchants R a t i o n a l Bank of Richmond knew and intended t h a t such
checks would he handled "by defendant Federal Reserve Bank of Richmond i n
the manner p r e s c r i b e d i n said circular- and i n accordance w i t h t h e terms
thereof.
In accordance w i t h the time schedules mentioned i n said c i r c u l a r
the amount of a l l checks on t h e National Bank of G r e e n v i l l e r e c e i v e d from
the F i r s t and Merchants National Bank of Richmond were c r e d i t e d to
the r e s e r v e account of the F i r s t and Merchants National Bank of Richmond
two days a f t e r r e c e i p t , h u t such c r e d i t was s u b j e c t t o f i n a l payment as
4
set f o r t h in the said c i r c u l a r .
Defendant Federal Reserve Bank of Richmond
did not know t h a t any of t h e said checks sent to i t "by the F i r s t and Merchants National Bank of Richmond were not owned by t h a t bank and accepted
a l l checks from i t a s agent f o r t h a t bank alone and not as agent f o r any
other p e r s o n .
7.
On December 10, 1930, defendant Federal Reserve Bank of Rich-
mond, r e c e i v e d from t h e National B#nk of G r e e n v i l l e c e r t a i n checks which had
been sent t o i t on December 8, 1930, amounting t o s i x t y - f o u r d o l l a r s and
s e v e n t y - t h r e e c e n t s ( $ 6 4 . 7 3 ) , which checks were r e t u r n e d by t h e National Bank
of G r e e n v i l l e unpaid; and a t the same time F e d e r a l Reserve Bank of Richmond
received from the National Bank of Greenville a r e m i t t a n c e l e t t e r and a
charge t i c k e t or order which were i n t h e f o l l o w i n g words and f i g u r e s :
X-6855
4 1 3
-10-
REMITTA2TCE LETTER
Use t h i s form i n r e m i t t i n g to Federal Reserve Bank of Richmond
f o r cash l e t t e r described below. (REMIT SEPARATELY FOR
COLLECTION ITEMS)
From
National Bank of G r e e n v ille ,
Greenville#
66-153
N.Ct
'
DEC. 8, 1930
(Date of Remittance)
To FEDERAL RESERVE BAKE OF RICHMOND*
RICHMOND, VA.
We a r e r e m i t t i n g as i n d i c a t e d "below f o r your cash l e t t e r of
date shown above
..$27,289<01
Less: Total amount of unpaid items and p r o t e s t f e e s
&
64.73
NET AMOUNT DUB.
. . . . . . . . . . . ...$27,224.28
REMITTANCE AS FOLLOWS:
D r a f t on
Currency shipment tgday a s per advice mailed under separa t e cover
.
.........................
FOR USE OF MEMBER. BANKS d e s i r i n g r e s e r v e account t o be charged.
Be sure t o i n s e r t net amount to be charged
CHARGE OUR RESERVE ACCOUNT.
i n settlement of cash l e t t e r of d a t e shown below.
National Bank of G r e e n v ille ,
Greenville,
N.C.
66-153
$27.224.28
(Net Amount)
DEC. 8, 1930
F. J . Forbes
Cashier
X-6855 ;
4 1 4
-11d*
the National Bank of Greenville was a member of t h e Federal
Reserve System and maintained a r e s e r v e account w i t h the defendant Federal
Reserve Sank of Richmond, and a t t h e opening of business on December 10,
1930, the a v a i l a b l e balance on deposit i n said r e s e r v e account t o t h e c r e d i t
of the National Bank of G r e e n v i l l e was the sum of seventeen thousand nine
hundred t h r e e d o l l a r s and n i n e t y - s i x cents ($17,903.96), and on t h e s a i d
day the defendant Federal Reserve Bank of Richmond r e c e i v e d f o r t h e c r e d i t
of the National Bank of G r e e n v i l l e other sums amounting i n t h e aggregate t o
eight thousand eight hundred twenty d o l l a r s and f o r t y - t h r e e c e n t s ($8,820.43)
and c r e d i t e d such sums t o the r e s e r v e account of t h e National Bank of
G r e e n v i l l e , and charged i t s account the sum of twenty-nine c e n t s ($0,29) due
and payable on t h a t day by the National Bank of G r e e n v i l l e to defendant
Federal Reserve Bank of Richmond, so t h a t a t the c l o s e of b u s i n e s s on December 10, 1930, defendant Federal Reserve Bank of Richmond had t o t h e c r e d i t
of the National Bank of Greenville the sum of t w e n t y - s i x thousand seven
hundred twenty-four d o l l a r s and t e n c e n t s ($26,724.10), and a t no time on
t h a t day did i t have t o the c r e d i t of the N a t i o n a l Bank of G r e e n v i l l e aa
amount equal t o t h e amount of the order s e t f o r t h above.
9.
*
•
'
At or* about 1:16 P.M. on December 10, 1930, t h e Federal Reserve
Bank of Richmond was n o t i f i e d t h a t the National Bank of G r e e n v i l l e had s u s pended or c l o s e d .
At t h a t time t h e Federal Reserve Bank of Richmond had not
p a i d , acted upon, or honored the order above s e t f o r t h i s s u e d by the National
Bank of G r e e n v i l l e , and defendant Federal Reserve Bank of Richmond t h e r e a f t e r
charged t h e amount of a l l checks which i t had r e c e i v e d a s above s t a t e d from
t h e F i r s t and Merchants National Bank of Richmond to t h e account of t h a t bank
and n o t i f i e d i t t h a t i t had not r e c e i v e d a c t u a l and f i n a l payment f o r s a i d
X-6855
4 1 5
-12-
checks.
And not having fTilly answered., defendant Federal Reserve Bank
of Richmond prays t h a t
p l a i n t i f f may take nothing by i t s b i l l , and t h a t
defendant Federal Reserve Bank of Richmond may he hence dismissed and r e cover judgment a g a i n s t the p l a i n t i f f f o r a l l c o s t s by defendant Federal
Reserve Bank of Richmond i n t h i s s u i t expended.
And defendant Federal Reserve Bank of Richmond w i l l ever pray, e t c .
S o l i c i t o r s f o r Defendant Fede r a l Reserve Bank of Richmond.
STATE OF VIRGINIA
CITY OF RICHMOND
)
)
)
to-wit.
George H< Keesee, being duly sworn, deposes and says t h a t the
Federal Reserve Bank of Richmond, a defendant i n t h i s s u i t , i s a corporat i o n , and t h a t he i s an o f f i c e r t h e r e o f , t o - w i t : i t s Cashier, and t h a t he
has read the foregoing answer and t h a t the matters and t h i n g s t h e r e i n a l leged a r e t r u e , except i n so f a r as they a r e t h e r e i n s t a t e d upon information
and b e l i e f , and i n so f a r as they a r e so s t a t e d he b e l i e v e s them to be t r u e .
Subscribed and sworn t o b e f o r e me\
this
day of
Notary P u b l i c .
t .
1930,
X-6856
STATEMENT OF BUREAU OF ENGRAVING AND PRINTING
Federal Reserve. Notes, S e r i e s 1928.
March 2 t o 31, 1931.
flO
$20
100,000
250,000
100,000
100,000
50,000
200,000
50-, 000
20,000
30,000
30,000
120,000
200,000
50,000
40,000
30,000
70,000
20,000
42,000
930,000
492,000
§5
Boston
New York
Philadelphia
Cleveland
Richmond
Chicago
Atlanta
Minneapolis
Kansas City
Dallas
-
20,000
12,000
—
-
10,000
-
.20,000
1,564,000 s h e e t s ,
-
142,000
Total
Sheets
Amount
220,000
520,000
170,000
182,000
80,000
200,000
80,000
32,000
30,000
50,000
#20,999.00
49,634.00
16,226.50
17,371.90
7,636.00
19,090.00
7,636.00
3,054.40
2,863.50
4,772.50
1,564,000
$149,283.80
@ | 9 5 , 4 5 M.,
$149,283.80
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6857
A p r i l 9, 1931.
SUBJECT:
Code Word t o Cover Telegraphic Transactions
i n New Issue of Treasury C e r t i f i c a t e s of
Indebtedness, S e r i e s TD2-1931.
Dear S i r :
In connection w i t h t e l e g r a p h i c t r a n s a c t i o n s i n
Government s e c u r i t i e s "between Federal r e s e r v e t a n k s , t h e
f o l l o w i n g code word has been designated t o cover a new
i s s u e of Treasury C e r t i f i c a t e s of Indebtedness:
"NOWHIM", S e r i e s TD2-1931, dated
A p r i l 15, 1931, due
December 15, 1931.
This code word should be i n s e r t e d i n t h e Federal
r e s e r v e t e l e g r a p h code book, following t h e supplemental
code word "NOWHILL" on page 172.
Very t r u l y y o u r s ,
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F. R. BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6859
A p r i l 13, 1931.
SUBJECT i
Topics f o r Governors' 1 Conference.
Dear Sirs
There a r e submitted, "below, f o r your advance i n f o r m a t i o n ,
two s u b j e c t s which the Board d e s i r e s to d i s c u s s w i t h t h e governors
during t h e conference which had been c a l l e d "beginning Monday, A p r i l
27th and on which t h e Board d e s i r e s t o r e c e i v e an expression of
opinion from t h e c o n f e r e n c e .
1. Change i n weekly Federal r e s e r v e "bank s t a t e m e n t . On
q u a r t e r l y t a x payment d a t e s , and f r e q u e n t l y f o r s e v e r a l days t h e r e a f t e r , t h e Treasury has a s u b s t a n t i a l o v e r d r a f t a t t h e F e d e r a l r e serve banks, t o cover which i t gives the Federal r e s e r v e "banks
s p e c i a l one-day Treasury c e r t i f i c a t e s of indebtedness. I t has been
the p r a c t i c e to r e f e r to these special c e r t i f i c a t e s i n the text
accompanying the weekly statement of condition of t h e Federal
r e s e r v e banks but not t o show them s e p a r a t e l y i n t h e body of t h e
s t a t e m e n t . The suggestion has bean .made t h a t inasmuch as i t i s the
c o n d i t i o n statement i t s e l f r a t h e r than t h e t e x t which i s used f o r
r e f e r e n c e p u r p o s e s , t h e f a i l u r e to show t h e s e s p e c i a l c e r t i f i c a t e s
s e p a r a t e l y i n t h e c o n d i t i o n statement has a t times l e a d t o some
misunderstanding of t h e s i g n i f i c a n c e of f i g u r e s p u b l i s h e d i n t h e
s t a t e m e n t . I t has been recommended t h a t h e r e a f t e r t h e s e s p e c i a l
one-day c e r t i f i c a t e s be shown s e p a r a t e l y i n the body of t h e weekly
Federal r e s e r v e bank statement a g a i n s t the caption "Special Treasury
Certificates".
2. Compensation f o r o f f i c e r s and employees of F e d e r a l r e serve banks a f t e r death and during p e r i o d s of i n c a p a c i t a t i o n and
extended i l l n e s s . On one or two occasions i n the p a s t , upon t h e
death of an o f f i c e r of a Federal r e s e r v e bank, t h e d i r e c t o r s have
voted t o make a payment t o the widow or e s t a t e of t h e deceased o f f i c e r equal t o s e v e r a l months s a l a r y . The Federal Reserve Board has
been advised by i t s Counsel t h a t i n h i s opinion such payments a r e
u l t r a v i r e s , but t h a t t h e question i s a close and d o u b t f u l one as
t h e r e i s no s p e c i f i c p r o v i s i o n of law covering t h e m a t t e r . A quest i o n of p o l i c y i s a l s o involved inasmuch as a l l of t h e Federal
r e s e r v e banks a r e c a r r y i n g l i f e insurance p o l i c i e s covering t h e i r
o f f i c e r s and employees. The Board considers i t important t h a t some
X-6859
*
#
d e f i n i t e understanding should be a r r i v e d at
and, i f p o s s i b l e , a l s o regarding the matter
o f f i c e r s and employees absent on account of
received i n t h e l i n e of o f f i c i a l d u t y .
By d i r e c t i o n of the Federal Reserve
concerning t h i s matter
of s a l a r y payments to
i l l n e s s or i n j u r y not
Board.
Very t r u l y y o u r s ,
E. M. McClelland,
Assistant Secretary.
10 GOVERNORS OF ALL F; R, BAtiKSV
419
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6860
A p r i l 14, 1931.
SUBJECT:
Daylight Saving Schedule, 1931.
Dear S i r :
Beginning Monday, A p r i l 27th, and ending Saturday,
September 26th, the following f e d e r a l r e s e r v e "banks and
"branches w i l l operate under d a y l i g h t saving schedule:
Boston
Philadelphia
Hew York
Buffalo
Pittsburgh
Chicago
The Federal r e s e r v e "branch "banks l i s t e d "below w i l l
observe s p e c i a l "banking hours:
Helena Branch from May 1st to August 3 1 s t , i n c l u s i v e ,
9:30 a.m. t o 2:00 p . m . , except Saturday, when t h e hours
w i l l "be 9:00 a.m. t o 12:00 noon, mountain time.
S a l t Lake City Branch from May 1st t o September 30th,
i n c l u s i v e , 9:00 a.m. to 2:00 p . m . , except Saturday, when
banking hours w i l l be 9:00 a.m. to 12:00 noon, mountain
time.
P l e a s e n o t i f y branches.
Very t r u l y yours,
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F. R. BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6861
A p r i l 15, 1931.
SUBJECT:
Revised Code Word Covering Treasury
C e r t i f i c a t e s of Indebtedness, S e r i e s
TD2-1931.
Dear S i r :
This l e t t e r w i l l confirm t h e telegram sent t o governors
of a l l Federal r e s e r v e "banks today, as f o l l o w s :
" R e f e r r i n g t o Board's C i r c u l a r l e t t e r X-685? of
A p r i l 9 t h , s u b j e c t "Code word covering Treasury
C e r t i f i c a t e s TD2-1931". In order t o avoid conf u s i o n with words p r e v i o u s l y i s s u e d , code word
"NOWHIM" i s cancelled and you a r e r e q u e s t e d t o
s u b s t i t u t e t h e r e f o r word "UOWEIHGB", r e p e a t ,
"NOWHINGrB", t o cover s e r i e s TD2-1931, dated A p r i l
15, due December 15, 1931. This s u b s t i t u t i o n to
- "be e f f e c t i v e noon, E a s t e r n standard time, today,
Kindly n o t i f y branches. L e t t e r of c o n f i r m a t i o n
follows."
This s u b s t i t u t i o n i s necessary because of t h e confusion
r e s u l t i n g from s i m i l a r i t y of t e l e g r a p h i c symbols between t h e
words "HOWHILL" and "HOWHIM", the f i r s t d a y ' s t r a n s a c t i o n s
having r e s u l t e d i n s e v e r a l e r r o r s .
Very t r u l y y o u r s ,
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F. R. BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
THE FEDERAL RESERVE BOARD
X-6862
April 15, 1931.
SUBJECT;
Expense, Main Line, Leased Wire System,
March, 1931.
Dear S i r ;
Enclosed herewith you w i l l find two mimeographed statements, X-6862-a and X-6862-b, covering
in d e t a i l operations of the main l i n e , Leased Wire
System, during the month of March, 1931•
P l e a s e c r e d i t the amount payable by your
bank in the general account, Treasurer, U. S . , on
your books, and i s s u e C/D Form 1, National Banks, f o r
account of " S a l a r i e s and Expenses, Federal Reserve
Board, Special Fund", Leased Wire System, sending
d u p l i c a t e c/D to the Federal Reserve Board.
Very t r u l y y s u r s ,
F i s c a l Agent.
Enclosures.
TO GOVERNORS OF ALL F. R. BANKS EXCEPT CHICAGO.
X—6862—s.
REPORT SHOWING CLASSIFICATION AND NUMBER OF WORDS TRANSMITTED OVER MAIN LINE
OF THE FEDERAL RESERVE LEASED WIRE SYSTEM FOR THE MONTH OF MARCH, 1931.
Business'
reported
by banks
From
Boston
New York
Philadelphia
Cleveland
"Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o
Total
Words sent by
New York c h a r g e a b l e to o t h e r
F. R. Banks ( l )
27,657
128,937
32,329
76,057
57,191
57,776
102,338
72,663
30,586
78,479
62,017
9b.885
822,915
F. R. Board b u s i n e s s . . . . . . . . .
3,147
~
1,391
2,703
1,851
8,801
3,491
2,648
3,370
2,323
11,696
4,12]
?5,5%
, , . .
Net F e d e r a l
reserve
bank
business
'
P e r c e n t of t o t a l
bank b u s i n e s s (*)
30,804
128,937
33,720
78,760
59,042
66,577
105,829
75,3H
33,95^
80,802
73,713
101.012
8 6 8 , 4 6 3 1 0 0 .
3.55
lU.85
3.88
9.07
6.80
7.67
12.18
8.b7
3*91
9-30
8.49
11.63
0 0
296,048
1,164,511
T r e a s u r y Department b u s i n e s s Incoming and Outgoing .
T o t a l words t r a n s m i t t e d over main l i n e s
177,632
— .
(*)
These p e r c e n t a g e s used i n c a l c u l a t i n g the pro r a t a share of l e a s e d wire expense as shown
on t h e accompanying statement (X-6862-b)*
(l)
Humber of words s e n t by New York t c o t h e r F. R* Banks f o r t h e i r s o l e b e n e f i t charged t o
banks i n d i c a t e d in accordance w i t h a c t i o n taken a t Governors 1 Conference
November 2 - 4 , 1925 •
1,342,143
X-6862-b
REPORT OF EXPENSE MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM, MARCH, 1931.
Name of bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t , Louis
Miim&apolis
Kansas C i t y
Dallas
San F r a n c i s c o
F e d e r a l Reserve Board
Total
(&)
(#)
(*)
(a)
(b)
Operators'
salaries
$260.00
1,134.15
225.00
306.66
190.00
270.00
3,668.93 (#)
195.00
202.25
287.50
251.CO
380.00
—
$7,370.49
Operators i1
overtime
$
3.00
-
-
4.00
1.00
-
.75
-
—
$8.75
Wire
Rental
$
Total
expenses
Pro r a t a
s h a r e of
total
expenses
$260.00
$721.18
3,016,74
1,137.15
—
788.21
225.00
1,842.55
306.6b
420.00
1,381.41
230.00 (&)
270.00
1,558.14
2,474.34
3,672.93
1,761.29
196.00
202.25
794.31
1,889.27
287.50
1,724.72
251.75
2,362.61
380.00
15.804.30
15,804.30
$16,034.30 ,
, $ 2 3 , 4 1 3 . 5 4 $20,314.77
3.098.77(a)
$20,31^.77
-
Credits
$260.00
1,137.15
225.00
306.66
420.00
270.00
3,672.93
196.00
202.25
287.50
251.75
380.00
Payable t c
Federal
Reserve
Board
$461.18
1.879.59
563.21
1,535.89
961.41
1,288.14
1,198.59 (*)
1,565.29
592.06
1,601.77
1,472.97
1,982.61
—
$7,609.24
$13,904.12
1.198.59 (b)
$12,705.53
Main Line r e n t a l , R ichmond-Washington.
I n c l u d e s s a l a r i e s of Washington o p e r a t o r s .
Credit.
Received $3,098.77 from Treasury Department covering b u s i n e s s f o r t h e month of March, 1931.
Amount r e i m b u r s a b l e to Chicago.
to
Co
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
T H E FEDERAL RESERVE BOARD
X-6864
A p r i l 16, 1931.
SUBJECT:
Holidays d u r i n g May, 1931.
Dear S i r ;
The F e d e r a l r e s e r v e banks and "branches l i s t e d below w i l l
be c l o s e d on account of h o l i d a y s on t h e d a t e s s p e c i f i e d , and
t h e r e f o r e w i l l n o t p a r t i c i p a t e in e i t h e r t h e gold s e t t l e m e n t
f u n d or t h e F e d e r a l r e s e r v e n o t e c l e a r i n g :
Monday
May 11
Charlotte
Confederate
Memorial Day
Wednesday
May 20
Charlotte
Mecklenburg
Independence Day
Wednesday
May 20
Havana Agency
Cuban Independence Day
On Saturday, May 3 0 t h , Memorial Day, t h e r e w i l l be n e i t h e r
gold s e t t l e m e n t f u n d nor F e d e r a l r e s e r v e n o t e c l e a r i n g and t h e
books of t h e Board w i l l be c l o s e d . The o f f i c e s of t h e Board
and a l l F e d e r a l r e s e r v e banks and b r a n c h e s , w i t h t h e e x c e p t i o n
of t h e f o l l o w i n g , w i l l be c l o s e d on t h a t day: C h a r l o t t e , A t l a n t a ,
New O r l e a n s , Birmingham, L i t t l e Hock and Havana Agency.
C r e d i t s of May 11th and 20th f o r t h e C h a r l o t t e Branch may
be included w i t h t h o s e of t h e f o l l o w i n g b u s i n e s s days in t h e
gold f u n d c l e a r i n g .
Please n o t i f y branches.
Very t r u l y yours,
J . C. N o e l l ,
Assistant Secretary.
t o governors of a l l f . r . baltics
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6865
A p r i l 17, 1931.
SUBJECTS
Code word to cover t e l e g r a p h i c t r a n s a c t i o n s
in 3 - 3 / 8 $ T r e a s u r y Bonds of 1941 - 1943.
Dear S i r :
In c o n n e c t i o n w i t h t e l e g r a p h i c t r a n s a c t i o n s i n
Government s e c u r i t i e s between F e d e r a l r e s e r v e b a n k s ,
t h e code word "UOWCABAL" has been d e s i g n a t e d to
cover t h e new i s s u e of 3 - 3 / 8 $ T r e a s u r y Bonds of 1941 1943.
T h i s code word s h o u l d be i n s e r t e d in t h e F e d e r a l
r e s e r v e t e l e g r a p h code book, f o l l o w i n g t h e code word
"NOWBEBBY" on page 172.
Very t r u l y y o u r s ,
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F. R. BANKS.
X-6866
FEDERAL
RE S E B VE
BOARD
STATEMENT BY EUGENE MEYER, GOVERNOR OF TUB FSD1R61 RESERVE BOARD.
For immediate r e l e a s e .
A p r i l 20, 1931.
ifor A t t e n t i o n has "been c a l l e d t o t h e continued d i s c u s s i o n of
Governor Norman's r e c e n t v i s i t t o Washington.
This d i s c u s s i o n has
c o n t a i n e d much c o n j e c t u r e and t h e i n t i m a t i o n , f r e q u e n t l y r e i t e r a t e d ,
of a s e c r e c y and mystery s u r r o u n d i n g h i s c o n f e r e n c e s h e r e .
Inas-
much a s I have had numerous i n q u i r i e s c o n c e r n i n g i t , l e t me r e p e a t
t h a t t h e r e i s no s e c r e t , t h e r e i s no m y s t e r y , connected w i t h h i s
conferences.
No u n d e r s t a n d i n g s r e s u l t e d from them, and t h e l a c k
of i n f o r m a t i o n i s due simply t o t h e f a c t t h f t t h e r e was n o t h i n g of
g e n e r a l i n t e r e s t or importance t o d i s c l o s e .
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
X-6869
A p r i l 22, 1931.
SUBJECT:
Code Word t o Cover T e l e g r a p h i c
Transactions i n Treasury B i l l s .
Dear S i c :
In connection with telegraphic t r a n s a c t i o n s i n
Government s e c u r i t i e s between F e d e r a l r e s e r v e "banks,
t h e code word "NOXBAYHEAP" h a s been d e s i g n a t e d t o
cover a new i s s u e of T r e a s u r y B i l l s , d a t e d .April 27,
1931, and m a t u r i n g J u l y 27, 1931.
This word should be i n s e r t e d i n t h e F e d e r a l r e s e r v e t e l e g r a p h code book, f o l l o w i n g t h e s u p p l e m e n t a l
code word "NOXBAED" on page 172.
Very t r u l y yours*
J . C. N o e l l ,
Assistant Secretary.
TO GOVERNORS OF ALL F . R. BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
X-6870
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
A p r i l 22, 1931.
SUBJECT:
A p p l i c a t i o n s f o r T r u s t Powers.
Dear S i r :
I n 1915 t h e F e d e r a l Reserve Board a d d r e s s e d a l e t t e r t o
t h e F e d e r a l r e s e r v e a g e n t s of t h e v a r i o u s F e d e r a l r e s e r v e "banlcs
s e t t i n g f o r t h c e r t a i n p r i n c i p l e s f o r t h e i r guidance i n making
recommendations t o t h e Board on a p p l i c a t i o n s of n a t i o n a l "banks
f o r a u t h o r i t y t o e x e r c i s e t r u s t powers. A t t e n t i o n i s a g a i n i n v i t e d t o t h i s l e t t e r , copy of which I s a t t a c h e d .
The p r o c e d u r e i n h a n d l i n g t h e s e a p p l i c a t i o n s h a s s i n c e
"been anended, i n t h a t t h e F e d e r a l r e s e r v e a g e n t s now t r a n s m i t them
w i t h a recommendation of t h e E x e c u t i v e Committee or Board of D i r e c t o r s of t h e i r r e s p e c t i v e "banks. I n most c a s e s , however, l i t t l e ,
i f a n y , i n f o r m a t i o n i s g i v e n t h e Board as t o t h e "basis of t h e
recommendation, o t h e r t h a n i s f u r n i s h e d i n t h e a n a l y s i s , which a c companies t h e a p p l i c a t i o n , of t h e r e p o r t of t h e l a s t e x a m i n a t i o n
of t h e a p p l y i n g hank. The Board f e e l s t h a t i t should have t h e
"benefit of more d e t a i l e d comment f r o m t h e F e d e r a l r e s e r v e a g e n t s
r e g a r d i n g t h e c o n d i t i o n of an a p p l i c a n t bank, t h e need of t h e community which i t s e r v e s f o r t r u s t powers, t h e c h a r a c t e r of i t s gene r a l management a n d , p a r t i c u l a r l y , w i t h r e f e r e n c e t o t h e t y p e of
s u p e r v i s i o n which w i l l "be g i v e n t o t r u s t a c t i v i t i e s i f and when
a u t h o r i z e d "by t h e Board. The Board r e q u e s t s , t h e r e f o r e , t h a t t h e
F e d e r a l r e s e r v e a g e n t s h e r e a f t e r supplement each such r e p o r t w i t h
a s t a t e m e n t a s t o t h e r e a s o n s f o r t h e recommendation made, and
s p e c i f i c i n f o r m a t i o n a s t o t h e q u a l i f i c a t i o n s and e x p e r i e n c e of
t h e p e r s o n or p e r s o n s s e l e c t e d t o d i s c h a r g e t h e d u t i e s of t r u s t
o f f i c e r i n t h e a p p l i c a n t "bynk.
Very t r u l y y o u r s ,
E. M. McClelland,
Assistant Secretary.
Enclosure.
TO ALL F . R. AGENTS.
439
350
COPY
September
, 1915.
F e d e r a l Reserve A g e n t ,
S i r :
By d i r e c t i o n of t h e Board t h i s l e t t e r i s s e n t f o r your
g u i d a n c e i n p a s s i n g upon t h e a p p l i c a t i o n s of N a t i o n a l hanks f o r
t h e p r i v i l e g e of e x e r c i s i n g t h e powers of t r u s t e e , r e g i s t r a r ,
e x e c u t o r and a d m i n i s t r a t o r .
A l l a p p l i c a t i o n s from a p p l y i n g banks must he t r a n s m i t t e d
f i r s t t o t h e F e d e r a l Reserve Agent of t h e d i s t r i c t i n which t h e
"bank i s l o c a t e d , who w i l l forward t h e a p p l i c a t i o n s w i t h h i s recomm e n d a t i o n s , t o t h e F e d e r a l Reserve Board.
The F e d e r a l Reserve
Agent i n making h i s recommendations i s expected t o t a k e i n t o cons i d e r a t i o n t h e g e n e r a l s t a n d i n g of t h e h a n k , c h a r a c t e r of i t s
management and i t s f i t n e s s t o e x e r c i s e t h e f i d u c i a r y powers a p p l i e d
f o r , a s w e l l a s t h e b e n e f i t s t h a t t h e community i n which t h e hank
i s l o c a t e d w i l l he a p t t o r e c e i v e from t h e e x e r c i s e of such powers
hy t h e h a n k .
S p e c i a l weight w i l l he g i v e n by t h e F e d e r a l Reserve
Board t o t h e a p p r o v a l or d i s a p p r o v a l of t h e F e d e r a l Reserve Agent.
A p p l i c a t i o n s t h a t a r e recommended by him f o r a p p r o v a l w i l l h e r e f e r r e d hy t h e Board t o a committee which, a f t e r a c a r e f u l examination
of t h e r e c o r d s on f i l e i n t h e o f f i c e of t h e Comptroller of t h e Currency r e l a t i n g t o t h e b u s i n e s s and t h e management of t h e bank, w i l l
r e p o r t t o t h e Board f a v o r a b l y or m&marsely, a s t h e c a s e may b e , upon
the application.
_3_
350
^ 8 0
I n a d d i t i o n t o t h e p o i n t s above o u t l i n e d , t h e B o a r d ' s comm i t t e e c o n s i d e r s t h e s t r e n g t h of t h e bank a s shown by i t s s t a t e m e n t s
and by t h e e x a m i n e r ' s r e p o r t s , and e s p e c i a l weight i s a t t a c h e d t o
t h e observance on t h e p a r t of t h e bank of t h e r e q u i r e m e n t s of law
and of t h e r e g u l a t i o n s and admonitions which a r e s e n t o u t ' f r o m time
t o time by t h e C o m p t r o l l e r ' s o f f i c e .
I t i s n o t , a s r u l e , deemed a d v i s a b l e t o g r a n t p e r m i t s
f o r t h e e x e r c i s e of f i d u c i a r y powers t o a N a t i o n a l bank,
(1)
Where i t s s u r p l u s does not amount t o a t l e a s t 20$ of
i t s capital stock;
(2)
Where r e p o r t s show t h a t i t i s c a r r y i n g an e x c e s s i v e
amount of p a s t due or d o u b t f u l p a p e r ;
(3)
Where i t i s c a r r y i n g r e a l e s t a t e l o a n s not a u t h o r i z e d
by law;
(4)
Where i t i s shown t h a t t h e bank i s i n t h e h a b i t of
granting excessive overdrafts continuously;
(5)
Where t h e l o a n s of t h e bank a r e not well d i s t r i b u t e d ,
by r e a s o n of an e x c e s s i v e p r o p o r t i o n of t h e
t o t a l l o a n s having been g r a n t e d t o a few i n t e r e s t s
or where l o a n s made t o o f f i c e r s and d i r e c t o r s a r e
t o o l a r g e i n p r o p o r t i o n t o t h e t o t a l amount of
l o a n s , or a r e not w e l l s e c u r e d .
(6)
Where t h e examiners have r e p o r t e d t h a t t h e d i r e c t o r s
do n o t d i r e c t or a r e l a x or n e g l i g e n t i n t h e i r
a t t e n d a n c e a t Board meetings or i n g i v i n g a t t e n t i o n t o t h e b a n k ' s management and d i r e c t i o n .
F e d e r a l Reserve a g e n t s , i n making t h e i r recommendations,
a r e e x p e c t e d t o pay p a r t i c u l a r a t t e n t i o n t o t h e s t r e n g t h of t h e
management of t h e bank from a moral s t a n d p o i n t , and s h o u l d d e c l i n e
t o recommend any a p p l i c a t i o n where t h e y f e e l t h a t t h e o f f i c e r s of
t h e bank a s i n d i v i d u a l s , would not be worthy of b e i n g e n t r u s t e d w i t h
t h e management of t r u s t f u n d s or t h e a d m i n i s t r a t i o n of e s t a t e s .
Respectfully,
Secretary.
\
FEDERAL RESERVE BOARD
WASHINGTON
X-B871
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE BOARD
A p r i l 22, 1931,
Dear S i r :
The F e d e r a l Reserve Board i s i n t e r e s t e d i n knowing t h e d e g r e e of
promptness w i t h which t h e F e d e r a l r e s e r v e t a n k s a r e now a b l e t o s e r v e
member "banks, and i n t h i s c o n n e c t i o n would l i k e t o have you f u r n i s h i t
with the following information:
1 . The name, l o c a t i o n , and l o a n s and i n v e s t m e n t s a s of
March 25, 1931, of each member hank i n your d i s t r i c t which
i s not w i t h i n o v e r n i g h t mail time from t h e F e d e r a l r e s e r v e
"bank or one of i t s "branches, i f any.
2 . A map showing "by c o l o r e d l i n e s t h e "boundary of t h e
t e r r i t o r y (banking p o i n t s ) i n your d i s t r i c t which i s w i t h i n
o v e r n i g h t m a i l time from ( a ) t h e F e d e r a l r e s e r v e "bank and
("b) each "branch, i f a n y .
By o v e r n i g h t m a i l time i s meant t h a t i t e m s p l a c e d i n t h e mail "by
member "banks a f t e r t h e c l o s e of "business r e a c h t h e F e d e r a l r e s e r v e "bank
or "branch i n time f o r c l e a r i n g t h e f o l l o w i n g morning.
I t i s s u g g e s t e d t h a t t h e map f u r n i s h e d t h e Board show t h e head
o f f i c e and "branch zones and t h e names of t h e p r i n c i p a l c i t i e s and towns
i n t h e d i s t r i c t and t h a t i t "be of r e l a t i v e l y small s i z e , say f r o m 18 t o
24 i n c h e s i n l e n g t h . A p h o t o s t a t i c copy of an e x i s t i n g map or any i n expensive map which i s a v a i l a b l e t o t h e bank w i l l be s a t i s f a c t o r y t o t h e
Board f o r t h i s p u r p o s e .
I t i s a p p r e c i a t e d , of c o u r s e , t h a t i n c e r t a i n d i s t r i c t s t h e c o l o r e d
l i n e s showing t h e a r e a s w i t h i n o v e r n i g h t mail time from t h e head o f f i c e
and each b r a n c h w i l l i n t e r s e c t , inasmuch a s some b a n k i n g p o i n t s a r e w i t h i n o v e r n i g h t m a i l time f r o m more t h a n one F e d e r a l r e s e r v e o f f i c e .
I t i s q u i t e p r o b a b l e t h a t i n ft few c a s e s member banks which a r e n o r mally w i t h i n o v e r n i g h t m a i l time w i l l not be w i t h i n o v e r n i g h t m a i l time
d u r i n g t h e d a y l i g h t saving p e r i o d . I f s o , such banks s h o u l d be l i s t e d
as not w i t h i n o v e r n i g h t m a i l time and d e s i g n a t e d by an a s t e r i s k .
Very t r u l y y o u r s ,
E. M. McClelland,
Assistant Secretary.
TO ALL F . R. AG-MTS.
X-6873
CQBlDEmriAL.
432
A p r i l 37, 1931.
C. S. MITCHELL
Review*
(By C. S. Hamlin).
-I-
Banking C o n d i t i o n s a t Time of S t a t e m e n t , March 36, 1939.
There was a n e a r approach to a p a n i c on t h e New York S t o c k Exchange
on Tuesday, March 36, 1939.
exchange h i s t o r y .
The b r e a k was one of t h e s h a r p e s t i n s t o c k
C a l l l o a n r a t e s r e a c h e d 30$, t h e h i g h e s t f i g u r e s i n c e
1930.
The s o - c a l l e d d i r e c t p r e s s u r e t o r e d u c e t o t a l b o r r o w i n g s of t h e banks
had been i n f o r c e s i n c e February 7, 1939, t h e d a t e of t h e B o a r d ' s warning.
There was a f e e l i n g abroad, t h a t t h e banks had f i n a l l y d e t e r m i n e d t o
adopt t h e most d r a s t i c methods, and would r e f u s e even to e x t e n d c r e d i t
f a c i l i t i e s which, under o r d i n a r y circumstances» t h e y would have g r a n t e d
a s a m a t t e r of c o u r s e , such a s to meet temporary withdrawal of f u n d s by
c o r p o r a t i o n s f o r q u a r t e r l y i n t e r e s t and d i v i d e n d payments, o r w i t h d r a w a l s
from New York to i n t e r i o r p a r t s of t h e c o u n t r y .
B r o k e r s l o a n s b o t h f o r t h e New York b a n k s ' own a c c o u n t , and " f o r
o t h e r s " had been d e c l i n i n g d u r i n g t h e week ending March 87, 1939.
The c a l l l o a n renewal r a t e s were a s f o l l o w s :
March 25
«
26
"
28
«
27
3
12$
15$
15$
Undoubtedly one cause of t h e c r i s i s which a r o s e on t h a t day, March 2 6 t h ,
X-6873
-
2 -
was t h e a c u t e c r e d i t s t r i n g e n c y ' i n Chicago, W i s i n g from t h e heavy l i q u i d a t i o n on t h e Chicago Stock Exchange "beginning on March 2 1 s t , which r e s u l t e d
i n l a r g e w i t h d r a w a l s of f u n d s from New York.
F r i g h t e n e d t r a d e r s a l l o v e r t h e c o u n t r y were s e l l i n g s t o c k s b l i n d l y
on t h a t day*
By 1 : 3 0 p.m. t h e volume of t r a d i n g on t h e New York Stock
Exchange had r e a c h e d over 5^ m i l l i o n s h a r e s , and t h e t i c k e r t a p e was
58 minutes b e h i n d t h e m a r k e t .
Under t h e s e c i r c u m s t a n c e s , Mr. M i t c h e l l , on Tuesday, March 2 6 t h ,
came to t h e r e l i e f of t h e money market, advancing s i x m i l l i o n s of d o l l a r s
on c a l l l o a n s .
-IIMr. M i t c h e l l ' s S t a t e m e n t .
In t h e a f t e r n o o n of Tuesday, March 2 6 t h , Mr. M i t c h e l l gave o u t t h e
f o l l o w i n g i n t e r v i e w , a s t a k e n from t h e New York H e r a l d - T r i b u n e of Wednesday, March 2 7 t h :
"So f a r a s t h i s i n s t i t u t i o n i s concerned, we f e e l
t h a t we have an o b l i g a t i o n which i s paramount t o any
F e d e r a l r e s e r v e warning, o r a n y t h i n g e l s e , t o a v e r t ,
so f a r a s l i e s w i t h i n our power, any dangerous c r i s i s
i n t h e money m a r k e t .
"While we a r e
f o r t h e p u r p o s e of
we c e r t a i n l y would
where money became
a v e r s e t o r e s o r t i n g to r e d i s c o u n t i n g
making a p r o f i t i n t h e c a l l m a r k e t ,
n o t s t a n d by and see a s i t u a t i o n a r i s e
i m p o s s i b l e to s e c u r e a t any - o r i c e . "
Mr. M i t c h e l l i s quoted by t h e New York Times of March 29, 1929,
F r i d a y , a s s a y i n g t h a t h i s Bank was p r e p a r e d t o make a v a i l a b l e 5 m i l l i o n s f o r t h e c a l l l o a n market a t 16$, and a l i k e amount f o r each g a i n
of 1$ up t o 20$.
434
X-6873
— 3 —
He a l s o made i t c l e a r t h a t hiA a c t i o n Was baaed not so much on
c o n c e r n over t h e movement of t h e r a t e s , h u t to k i l l t h e i d e a t h a t
money c o u l d n o t be had no m a t t e r what was o f f e r e d f o r i t .
From t h e
time t h e o f f e r was made, t h e c a l l money r a t e s d i d n o t go above t h e
minimum r a t e , b u t d i d go down, c l o s i n g a t 8%.
(190-1)
The New York World of March 30, 1929, quotes Mr. M i t c h e l l a s
follows;
"Should a n o t h e r c r i s i s develop, w i l l you s t a n d by
a g a i n ? " was t h e n e x t q u e s t i o n . Mr. M i t c h e l l answered,
" I t can b e s a f e l y assumed t h a t we w i l l endeavor a t a l l
times t o p r e v e n t a c r i t i c a l s i t u a t i o n going out of bounds.
We w o n ' t be a l o n e . Other banks w i l l s u b s c r i b e a s s t r o n g l y a s we t o t h a t d o c t r i n e . "
-IllS e n a t o r Glass on Mr. M i t c h e l l .
The Few York Times e d i t i o n of F r i d a y , March 2 9 , p u b l i s h e s an
a t t a c k on Mr. M i t c h e l l by S e n a t o r G l a s s , who was quoted a s f o l l o w s :
"The F e d e r a l 3 e s e r v e Board h a s adopted t h e a d m i n i s t r a t i v e p o l i c y of h a v i n g F e d e r a l r e s e r v e banks r e m o n s t r a t e
w i t h member banks a g a i n s t p e r m i t t i n g t h e f a c i l i t i e s of t h e
F e d e r a l R e s e r v e System to be u s e d f o r s t o c k s p e c u l a t i v e
purposes.
" T h i s should have been done l o n g ago, b e f o r e t h e
s i t u a t i o n got out of hand. Fow t h a t i t h a s been done,
a Class A d i r e c t o r of a F e d e r a l Reserve Bank, h i m s e l f
P r e s i d e n t of a g r e a t banking i n s t i t u t i o n , v i g o r o u s l y
s l a p s t h e Board, s q u a r e l y i n t h e f a c e and t r e a t s i t s
p o l i c y w i t h contempt and contumely. He avows h i s
s u p e r i o r o b l i g a t i o n to a f r a n t i c s t o c k market over a g a i n s t t h e o b l i g a t i o n of h i s o a t h a s a d i r e c t o r of t h e
New York F e d e r a l E e s e r v e Bank, under t h e s u p e r v i s o r y
a u t h o r i t y of t h e F e d e r a l Reserve Board.
"Mr, M i t c h e l l ' s p r o c l a m a t i o n i s a c h a l l e n g e t o t h e
a u t h o r i t y and t h e announced p o l i c y of t h e F e d e r a l R e s e r v e
X-6873
r 4 -
"Board. The c h a l l e n g e
l y dealt with.
M be promptly met and courageous-
"The Board should a s k f o r t h e i m m e d i a t e . r e s i g n a t i o n
of Mr. M i t c h e l l a s a Class A D i r e c t o r of t h e Hew York Fede r a l He s e r v e Bank.
" I f t h e N a t i o n a l C i t y Bank i n Few York, o r any o t h e r
member bank of t h e System anywhere, imagines i t i s g r e a t e r
t h a n t h e F e d e r a l Reserve System and may d e f y and r e j e c t
t h e c o n s i d e r e d p o l i c y of t h e f e d e r a l Reserve Board, i t
s h o u l d a t l e a s t be given t o u n d e r s t a n d t h a t t h e P r e s i d e n t
of such a bank w i l l n o t be p e r m i t t e d to have an o f f i c i a l
i p a r t i n t h e management of t h e F e d e r a l Reserve System.
" I do n o t know what t h e F e d e r a l "Reserve Board w i l l
do about i t , b u t I have a very d e c i d e d c o n v i c t i o n a s t o
what i t should do, and t h a t s w i f t l y .
"The whole c o u n t r y h a s been a g h a s t f o r months and
months a t t h e menacing s p e c t a c l e of e x c e s s i v e s t o c k gambli n g , and when t h e F e d e r a l Reserve Board m i l d l y s e e k s to
a b a t e t h e danger by an a d m i n i s t r a t i v e p o l i c y , f u l l y s a n c t i o n e d by law, r a t h e r than by a p r o h i b i t i v e advance i n
r e d i s c o u n t r a t e s , which might p e n a l i z e t h e l e g i t i m a t e
b u s i n e s s of t h e e n t i r e c o u n t r y , an o f f i c e r of t h e System
i s s u e s a d e f i a n c e and engages i n an a t t e m p t to v i t i a t e
t h e p o l i c y of t h e F e d e r a l Reserve Board.
"Whatever h i s a b i l i t i e s a s a banker may b e , o r howe v e r h i g h h i s c h a r a c t e r , the s p i r i t m a n i f e s t e d by Mr.
M i t c h e l l t o t a l l y u n f i t s him f o r t h e o o s i t i o n of d i r e c t o r
of a g r e a t F e d e r a l Reserve Bank. This i s not an age f o r
t h e m a n i f e s t a t i o n s of a N i c h o l a s B i d d l e . "
S e n a t o r G l a s s , i n t h e New York Times of A p r i l 2, 1929, i n replyt o t h e a t t a c k of Ex-Senator Owen who had defended Mr. M i t c h e l l , dec l a r e d t h a t t h e Reserve Board had t h e power t o remove Mr. M i t c h e l l
and to compel r e s e r v e banks to r e f u s e t h e r e d i s c o u n t p r i v i l e g e to
t h o s e engaged i n s p e c u l a t i o n .
Senator Glass f u r t h e r s t a t e d :
"Whether o r n o t t h e F e d e r a l Reserve Board should
have removed Charles E. M i t c h e l l f o r h i s open d e f i a n c e
of t h e B o a r d ' s a u t h o r i t y and h i s avowed a t t e m p t to
f r u s t r a t e i t s a d m i n i s t r a t i v e p o l i c y , i s , of c o u r s e , a
m a t t e r of o p i n i o n . I t was my c o n v i c t i o n , and s t i l l i s ,
X-6873 4 3 6
- 5 -
" that the Soaird should hat# taken exactly that d-btidtit
" T h i s should have been done p r o m p t l y , not so much,
p e r h a p s , f o r t h e o f f e r by Mr. M i t c h e l l ' s Bank of 25 m i l l i o n s t o a dangerously extended s p e c u l a t i v e s t o c k market
which t h e Board was c o n s e r v a t i v e l y t r y i n g to c u r b , a s
f o r h i s d r a m a t i c a s s e r t i o n of a s u p e r i o r o b l i g a t i o n to
t h e s t o c k s p e c u l a t o r s over a g a i n s t h i s o b l i g a t i o n t o
t h e F e d e r a l Reserve System, of which Mr. M i t c h e l l i s a
sworn d i r e c t o r .
'
"He was well aware of t h e p o l i c y b e i n g p u r s u e d by
t h e F e d e r a l Reserve Board; n e v e r t h e l e s s he s e t out w i t h
a p p a r e n t d e l i b e r a t i o n to t h w a r t i t and t o b r i n g t h e
a u t h o r i t y of t h e Board i n t o contempt. In t h i s he s u c c e e d ed.
"The a u t h o r i t y of t h e Board to suspend o r remove
Mr. M i t c h e l l or any o t h e r o f f i c e r or d i r e c t o r of t h e
Hew York F e d e r a l Reserve Bank i s n o t a m a t t e r of o p i n i o n . I t i s so p l a i n t h a t d e n i a l of i t "betrays i g n o r a n c e of t h e law.
"There i s no implied l i m i t a t i o n on t h e p r o c e d u r e
t h u s s a n c t i o n e d . I f t h e r e were any, i t i s i n c o n c e i v a b l e t h a t i t would r e l a t e t o an o f f e n s e i n v o l v i n g a
v i t i a t i o n of t h e B o a r d ' s v i t a l a d m i n i s t r a t i v e p o l i c i e s .
"V
j
" I n s c o r e s of ways t h e Act l o d g e s w i t h t h e c e n t r a l
Board a t Washington supremacy of c o n t r o l . I f t h e P r e s i dent of t h e N a t i o n a l C i t y Bank, who i s a l s o a Class A
D i r e c t o r of t h e Hew York F e d e r a l Reserve Bank, can be
p e r s u a d e d to b e l i e v e t h a t t h e F e d e r a l Reserve Act a u t h o r i z e s , r e s e r v e banks to r e d i s c o u n t p a p e r f o r s t o c k s p e c u l a t i v e p u r p o s e s he i s too simple to h o l d e i t h e r p o s i t i o n . Of c o u r s e , Mr. M i t c h e l l knows b e t t e r ; o t h e r w i s e
t h e r e Was no p o i n t i n h i s p u b l i c d e f i a n c e of t h e F e d e r a l Reserve Board. He would have thrown h i s B a n k ' s
$25,000,000 i n t h e s p e c u l a t i v e s w i r l a s a customary
transaction.
" T h i s s t o c k s p e c u l a t i n g w i t h f u n d s of F e d e r a l r e s e r v e banks i s by law p r e c l u d e d , a s i t was d i s t i n c t l y
i n t e n d e d to b e . To say F e d e r a l r e s e r v e banks a r e n o t
s u b j e c t to t h e a u t h o r i t y of t h e F e d e r a l Reserve Board
i n making l o a n s i s t o b e t r a y ignorance of t h e l a w . "
The Hew York Times of October 25, 1929, a l s o c o n t a i n s t h e f o l l o w i n g
i n t e r v i e w by S e n a t o r G l a s s :
"The p r e s e n t t r o u b l e i s due l a r g e l y to C h a r l e s Bi
M i t c h e l l ' s a c t i v i t i e s , t h a t man more than 40 o t h e r s i s
more r e s p o n s i b l e f o r t h e ^ r e s e n t s i t u a t i o n . Had t h e
F e d e r a l r e s e r v e a c t e d and d i s m i s s e d him, t h e t r o u b l e
might be l o s s . The c r a s h has shown t h a t s t o c k gambling has reached i t s l i m i t ; "
(196-151)
-IVComment, - E d i t o r i a l and O t h e r w i s e .
R e p r e s e n t a t i v e Hamilton F i s h i n t h e Hew York Times of A p r i l 2,
1929, a t t a c k e d Senator Glass and defended Mr. M i t c h e l l , s t a t i n g t h a t
he had a v e r t e d a p a n i c .
He a l s o endorsed t h e recommendation of Mr.
M i t c h e l l ' s Bank f o r an i n c r e a s e in r e d i s c o u n t r a t e s to 6$, e x p r e s s i n g
t h e b e l i e f t h a t such a s t e p would be s u f f i c i e n t to end e x c e s s e s i n
the stock market.
He f u r t h e r s t a t e d t h a t Mr. M i t c h e l l ' s q u i c k t h i n k -
i n g and a c t i n g s h o u l d have been commended i n s t e a d of condemned by
Senator Glass.
The New York J o u r n a l of Commerce, March 28, 1929, speaks of Mr.
M i t c h e l l ' s announcement:
"Reserve o f f i c i a l s c l a i m t h a t every a t t e m p t h a s been
made by t h e F e d e r a l Reserve Bank of Eew York, w i t h t h e
h e a r t y s u p p o r t of i t s d i r e c t o r s , to c u t down t h e p r a c t i c e
of r e s o r t i n g to r e s e r v e banks f o r r e d i s c o u n t s . "
I t p o i n t s out t h a t :
"At t h e end of 1928 l o c a l b a n k e r s r e d i s c o u n t e d h e a v i e r
i n o r d e r to ease the s t r a i n in t h e money market, and now
t h e y p r o p o s e to do so a g a i n . On t h e b a s i s of such f a c t s
a s t h e s e , t h e market and t h e p u b l i c a t l a r g e h a s g r a d u a l l y
come to t h e c o n c l u s i o n t h a t t h e a p p e a l s of r e s e r v e banks
and t h e i r d i r e c t o r s a r e n o t i n t e n d e d to be t a k e n v e r y
l i t e r a l l y , and t h a t t h e y a r e r e a l l y i n t h e n a t u r e of exh o r t a t i o n s r a t h e r t h a n i n t h e n a t u r e of f i n a n c i a l p r e c e p t
o r a d v i c e . There h a s been a g r e a t d e a l in t h e whole conduct of t h e Reserve System to s u s t a i n t h i s p o i n t of view,
" i n c l u d i n g , of dduTse, t h e W^lt«kriown s t a t e m e n t of
Governor Young to a d o n g r e s s i o n a l Committee to thd
e f f e c t t h a t a l l was w e l l , f o l l o w e d "by speeches of
"bankers to t h e same p u r p o r t , and then f i n a l l y by
h i s u r g e n t r e q u e s t of l a s t February n o t to l o a n f o r
s p e c u l a t i o n and not t o encourage s p e c u l a t i v e a c t i v i t i e s . "
I t a l s o speaks of t h e l a c k of c o n f i d e n c e which h a s
been g r a d u a l l y engendered through t h e b e l i e f t h a t l e a d e r s
of f i n a n c i a l o p i n i o n do n o t mean e x a c t l y what t h e y s a y .
S t a t e s t h a t i t would h e l p immensely i f we c o u l d g e t to
some d e f i n i t e a c c e p t e d b a s i s of u n d e r s t a n d i n g on t h e
whole q u e s t i o n which would b e j u s t a s sound and f o r c e f u l when one man's s t o c k s a r e going down a s when t h o s e
of a n o t h e r have been s u b j e c t e d t o p r e s s u r e .
Mr. David Lawrence in t h e Washington S t a r of F r i d a y , March 29,
1929, s t a t e s t h a t t h e Board h a s been d i s t u r b e d n o t so much b y t h e a c t i o n
t a k e n by Mr. M i t c h e l l a s by h i s s t a t e m e n t , which Mr. Lawrence q u o t e s .
Mr. Lawrence adds t h a t :
,
" H a t u r a l l y Mr. M i t c h e l l had t o borrow t h e 25
m i l l i o n d o l l a r s a t t h e F e d e r a l Heserve Bank of Few
York, and by a g r e e i n g to l o a n t h i s money t h e Few
York i n s t i t u t i o n , by i n f e r e n c e , a c q u i e s c e d i n h i s
a c t i o n , f o r t h e F e d e r a l Reserve Board was o n l y i n t e r e s t e d i n b r e a k i n g down s p e c u l a t i o n and n o t i n
f o r c i n g a s i t u a t i o n i n which money could n o t be had
by anybody a t any p r i c e . To t h e e x t e n t t h a t t h e
New York Board of d i r e c t o r s a r e presumed to have
been a c t i n g i n harmony w i t h t h e F e d e r a l "Reserve
Board, t h e s t a t e m e n t of Mr. M i t c h e l l i s r e c o r d e d a s
u n f o r t u n a t e , i n t h a t i t may be c o n s t r u e d by t h e b a n k i n g
world a s a c r i t i c i s m on h i s p a r t of t h e famous F e d e r a l
R e s e r v e Board warning of February 1 4 t h . "
" I t was not what Mr. M i t c h e l l d i d , b u t what he
s a i d , t h a t caused d i s c u s s i o n i n o f f i c i a l q u a r t e r s h e r e ,
and f o r t h a t r e a s o n t h e Board i t s e l f i s not l i k e l y to
r a i s e an i s s u e a t t h i s time; i n f a c t , Mr. M i t c h e l l ' s
p o i n t of view was o u t l i n e d a t T h u r s d a y ' s m e e t i n g of
t h e d i r e c t o r s of t h e F e d e r a l Reserve Bank of Hew York
which was a t t e n d e d by r e p r e s e n t a t i v e s o f t h e F e d e r a l "Res e r v e Board a t Washington."
,
"The F e d e r a l Reserve Board i s determined to go to
t h e l i m i t of i t s powers."
.
Ho f i n s t l l y added t h a t !
"The r a i s i n g of t h o r e d i s c o u n t r a t e i s t h e normal weapdn
u s e d , b u t i n a s i t u a t i o n l i k e t h e p r e s e n t , which i s abnormal,
something more d r a s t i c t h a n a mere r a i s i n g of t h e r e d i s c o u n t
r a t e i s t a l k e d a b o u t . I t i s , i n a n u t s h e l l , t h e o r d e r i n g of
t h e F e d e r a l r e s e r v e banks and b r a n c h e s to r e f u s e to r e d i s c o u n t
a t a l l t h e p a p e r of member banks when p r e s e n t e d to g e t f u n d s
t o a i d s p e c u l a t i o n * i t i s d i f f i c u l t to draw t h e l i n e between
a s p e c u l a t i v e and a commercial c r e d i t , b u t t h e b u r d e n of
p r o o f would b e on t h e b a n k i n g i n s t i t u t i o n , and t h e mere
announcement of t h e o r d e r or r e g u l a t i o n , i t i s f e l t h e r e ,
would b e s u f f i c i e n t to t e l l t h e s p e c u l a t i v e element t h a t
t h e F e d e r a l Reserve Board i s i n e a r n e s t , and w i l l n o t be
defied."
The Hew York Times, in an e d i t o r i a l in t h e e d i t i o n of March 30,
1929, s t a t e d i n p a r t a s f o l l o w s :
"Yet i t a p p e a r s t h a t t h e g r e a t emphasis and p o s i t i v e n e s s
w i t h which he ( S e n a t o r G l a s s ) h a s denounced t h e a c t i o n of t h e
N a t i o n a l C i t y Bank, and some o t h e r banks i n ITew York, i n
s t r i v i n g to a v e r t a money p a n i c t h i s p a s t week were some-'
what m i s p l a c e d .
" S e n a t o r Glass seems to have c o n f u s e d a temporary
emergency w i t h a permanent p o l i c y .
HThe banks d i d n o t come f o r w a r d w i t h f u n d s t o promote
s p e c u l a t i o n b u t t o p r e v e n t what t h r e a t e n e d t o b e a s e r i o u s
c r i s i s i n t h e money market
"The endeavor was t o surmount a t h r e a t e n i n g c r i s i s .
I t was o b v i o u s l y s u c c e s s f u l , and t h e p r e s u m p t i o n was t h a t
t h e s e p a r t i c u l a r bank f u n d s were t h e r e u p o n withdrawn from
t h e money m a r k e t .
"There h a s been some i d l e t a l k t h a t t h e r e was an a g r e e ment to "peg" t h e c a l l money r a t e a t 15$. The mere s t a t e ment of t h i s shows how r i d i c u l o u s i t i s to suppose t h a t t h e
movement was one to b o l s t e r w i l d s p e c u l a t i o n " P a y i n g 15$
f o r money to s p e c u l a t e w i t h c e a s e s to b e s p e c u l a t i o n and
becomes i n s a n i t y .
" S e n a t o r Glass does w e l l to h o l d up t h e hands of t h e
F e d e r a l R e s e r v e Board i n t h e e f f o r t s which i t h a s made to
keep t h e v.'hole c r e d i t system of t h e n a t i o n from b e i n g u p e e t .
X-6873
"In t h i s n o s i t i o n i t i s probable that the great majority
of c a u t i o u s and r e s p o n s i b l e bankers a g r e e w i t h him."
(190-2)
-Vffurther
Comment.
Approval of Mr, M i t c h e l l ' s c o u r s e .
Annalist
D. W. E l l s w o r t h .
Mar. 29, 1929. 190 - 17.
"Brooklyn D a i l y Eagle. 190 - 58.
B a l t i m o r e Sun
A p p a r e n t l y aooroves what he d i d b u t c r i t i c i s e s what h e s a i d .
190 - 58.
F i n a n c i a l News.
A p r i l 2, 1929.
190 - 145 (2)
F i s h , Hamilton, Gong.
A p r i l 3, 1929, 190 - 33.
Fisher, Prof. Irving.
A p r i l 1, 1929. 190 - 24.
H a r t f o r d Courant.
190 - 58.
New York Evening P o s t . 190 - 58.
Hew York H e r a l d - T r i b u n e .
March 29, 1929. 1 9 0 - 3.
How York Times.
March 30, 1929. 190 - 2
New York ^ o r l d .
Mar. 28, 1929. 1 8 9 - 1 4 2 .
Mar. 30, 1929. 190 - 16.
Owen, Ex-Senator
Mar. 31, 1929. 190 - 14.
Spokane Sookesman-Beview.
A p p a r e n t l y approves what ho d i d b u t c r i t i c i e o s what he s a i d .
190 - 58.
X-6873
-
:
10 -
S p r i n g f i e l d Sejmblicaiu
Approves what he d i d .
C r i t i c i s e s what he s a i d ,
441
190 - 58.
Approval of Senator g l a s s ' s c r i t i c i s m of Mr. M i t c h e l l .
San F r a n c i s c o C h r o n i c a l .
190 - 58.
Lawrence, David. 190 - 5,
R a l e i g h Hews and Observer. 190 - 58.
Neutral
Chicago D a i l y Brews. 190 - 58.
Kansas C i t y J o u r n a l - P o s t . 190 - 58.
Ambiguous
Hew York J o u r n a l of Commerce.
189 - 138.
He sumo
The above q u o t a t i o n s seem t o show t h a t a s a r u l e t h e p r e s s of t h e
c o u n t r y approved, o r a t l e a s t d i d n o t o b j e c t t o , what Mr. M i t c h e l l d i d
t o r e l i e v e t h e money market and to a v e r t a t h r e a t e n e d p a n i c .
Many of t h e p a p e r s , however, w h i l e a p p r o v i n g what he d i d , c r i t i c i s e d
him s e v e r e l y f o r what he s a i d .
—VI—
P r o c e e d i n g s i n t h e F e d e r a l Reserve Board.
March 28, 1929;
Dr. M i l l e r t e l e p h o n e d from New York t h a t t h e b a n k e r s a r e v e r y angry
b e c a u s e of Mr. M i t c h e l l 1 s i n t e r v i e w ; t h a t t h e y d i d n o t o b j e c t to h i s r e l i e v i n g t h e market to a v o i d p a n i c k y c o n d i t i o n s , b u t t h a t h i s i n t e r v i e w
o v e r t h r e w b a n k i n g c o n t r o l of t h e s i t u a t i o n and s t a r t e d up s p e c u l a t i v e
a c t i v i t y anew.
X-6873
,n.
442
Goverhdf touAg was asked by t h e Board t o c a l l up Mr. M i t c h e l l and
a s k him t o inform t h e Board i n w r i t i n g j u s t what he s a i d i n h i s i n t e r v i e w .
March 29, 1929s
Dr. M i l l e r s t a t e d t h a t he met Mr. M i t c h e l l a t a m e e t i n g of t h e
New York d i r e c t o r s ; t h a t Mr; M i t c h e l l was v e r y i r r i t a b l e and p e t u l a n t ;
t h a t he ( M i t c h e l l ) t o l d him he was i n a b e l l i g e r e n t mood, and t h a t t h e
F e d e r a l Reserve Act mast be changed to t a k e away t h e power of t h e Board,
Dr. M i l l e r s t a t e d t h a t t h e sentiment i n New York was a g a i n s t Mr.
M i t c h e l l a s h a v i n g g i v e n h i s i n t e r v i e w f o r t h e s e l f i s h p r e s t i g e of h i s
Bank a t t h e expense of h i s b a n k i n g c o m p e t i t o r s ; t h a t o t h e r New York banks
had done a s much a s , o r more t h a n , Mr. M i t c h e l l to r e l i e v e f i n a n c i a l
stress.
Dr. M i l l e r s a i d a l l was going well u n t i l Mr. M i t c h e l l gave out h i s
i n t e r v i e w ; t h a t we could not y e t say whether t h a t i n t e r v i e w had blocked
d i r e c t p r e s s u r e o r n o t ( p r e v i o u s l y h e had t o l d C. S. H. he f e a r e d i t h a d . )
The Board f i n a l l y a g r e e d on a l e t t e r to Mr. M i t c h e l l , and o r d e r e d
i t sent.
Governor Young a t f i r s t o b j e c t e d , s a y i n g t h a t Mr. M i t c h e l l
might p u t t h e .Board i n a h o l e ,
l a t e r , however, he d i c t a t e d a l e t t e r
couched more m o d e r a t e l y , and a l l a g r e e d to i t ,
Mr. James s a i d t h a t t h e Board should remove Mr. M i t c h e l l , a s demanded by S e n a t o r Glass in y e s t e r d a y ' s p a p e r s .
Most of t h e Board f e l t t h a t we should send the l e t t e r and l a t e r
d e c i d e what f u r t h e r to do.
There was l i t t l e ,
i f a n y , c r i t i c i s m made i n t h e Board a s to what
Mr. M i t c h e l l d i d , b u t s e v e r e c r i t i c i s m a s to what he s a i d .
#6873
.12.
; 443
Ho a c t i o n was taken by t h e Board and t h e m a t t e r s t i l l remains on
t h e docket as " u n f i n i s h e d "business"!
-VIICorrespondence Between Federal Reserve Board and Mr. M i t c h e l l ,
On March 29, 1929, Governor Young sent t h e f o l l o w i n g l e t t e r :
"The New York Herald-Tribune of Wednesday, March
27, p u b l i s h e d t h e f o l l o w i n g statement a t t r i b u t e d to you:
'So f a r as t h i s i n s t i t u t i o n i s concerned, we
f e e l t h a t we have an o b l i g a t i o n which i s paramount
to any F e d e r a l r e s e r v e warning, or a n y t h i n g e l s e ,
to a v e r t , so f a r a s l i e s w i t h i n our power, any
dangerous c r i s i s in t h e money market.
•While we a r e a v e r s e to r e s o r t i n g to r e d i s c o u n t i n g f o r t h e purpose of making a p r o f i t i n t h e
c a l l market, we c e r t a i n l y would not s t a n d by and
see a s i t u a t i o n a r i s e where money became impossible
to s e c u r e a t any p r i c e . '
"At t h e r e q u e s t of t h e Federal Reserve Board anf f o r i t s
i n f o r m a t i o n , I would a p p r e c i a t e i t v e r y much i f you would l e t
me know whether you were c o r r e c t l y quoted."
On A p r i l 1, 1929, Mr. M i t c h e l l r e p l i d d a s f o l l o w s ;
" I acknowledge r e c e i p t of your l e t t e r of March 2 9 t h a s k i n g
on t h e 7)art of t h e F e d e r a l Eeserve Board, i f , i n a s t a t e m e n t
a c c r e d i t e d to me in t h e Hew York Herald Tribune of Wednesday,
March 2 7 t h , I was c o r r e c t l y quoted. You w i l l r e a l i z e t h a t I
d i d n o t w r i t e or give out any s t a t e m e n t , but a s t h e r e s u l t of
t a l k i n g w i t h a r e p o r t e r f o r perhaps two or t h r e e minutes I was
quoted in t h e a r t i c l e in q u e s t i o n . G e n e r a l l y speaking, I
t h i n k t h e r e p o r t e r c o r r e c t l y expressed my view.
"That a c r e d i t c r i s i s was not only t h r e a t e n e d b u t . d i d
e x i s t on Tuesday, March 2 6 t h , i s a f a c t t h a t h a s g e n e r a l
acknowledgment.
" I f t h e r e can be o b j e c t i o n on t h e p a r t of your Board
to t h e s t a t e m e n t , I assume i t must have r e f e r e n c e to t h e
f o l l o w i n g words, ' s o f a r a s t h i s i n s t i t u t i o n i s concerned
we f e e l t h a t we have an o b l i g a t i o n which i s paramount to
any F e d e r a l r e s e r v e warning, or a n y t h i n g e l s e . 1
X-6873
4:
— 13 —
"One of t h e a c t u a t i n g r e a s o n s f o r t h e f o r m a t i o n of
t h e F e d e r a l Reserve System was to avoid c r e d i t and c u r r e n c y
c r i s e s and though in t h e f o r m a t i o n of t h e System t h a t "became a F e d e r a l r e s e r v e r e s p o n s i b i l i t y , n e v e r t h e l e s s I do
n o t b e l i e v e , and I do n o t conceive t h e p u b l i c a s b e l i e v i n g ,
t h a t such banks a s o u r s were t h e r e b y r e l i e v e d of a l i k e
r e s p o n s i b i l i t y , and I conclude t h a t t h e o b l i g a t i o n f o r t h e
f u l f i l l m e n t of t h a t i n s t i t u t i o n a l r e s p o n s i b i l i t y a t any
c r i t i c a l moment i s paramount to the maintenance of a Fede r a l R e s e r v e Board g e n e r a l p o l i c y . I t was our assumed
o b l i g a t i o n i n t h a t c r i t i c a l moment t h a t i s r e f e r r e d to
i n the a r t i c l e i n q u e s t i o n .
"Our p o s i t i o n r e g a r d i n g t h e n e c e s s i t y of c u r b i n g
s p e c u l a t i o n and of r e s t r a i n i n g t h e u n h e a l t h y growth of
t h e c r e d i t s t r u c t u r e h a s so o f t e n b e e n p u b l i c l y s t a t e d
and so w e l l known everywhere t h a t I assume t h e r e i s no
need f o r e l a b o r a t i o n t h e r e o n to your Board."
VIIIWhat Mr. M i t c h e l l Did, a s d i s t i n g u i s h e d from what h e S a i d .
The f o l l o w i n g t a b l e shows borrowings f r o n t h e F e d e r a l r e s e r v e
banks and c a l l l o a n s made (1) 3y t h e N a t i o n a l C i t y Bank, (2) By 22
banks i n Hew York C i t y , from F r i d a y , March 22nd, through S a t u r d a y ,
March 3 0 t h :
Date
F r i . Mar.22
S a t . * 23
Won. " 25
Tues. " 26
Wed. " 27
Thur s . " 28
F r i d . » 29
S a t . " 30
( I n m i l l i o n s of d o l l a r s )
22 banks in Few York City
: NATIONAL CITY BANK
Borrowings from
: Borrowings :
Call l o a n s
Federal
• from F e d e r a l : C a l l l o a n s
r e s e r v e banks
: r e s e r v e bank:
_____
14
0
25
24
35
-
137
138
144
150
141
135
135
135
114
157
191
177
190
154
137
154
812
833
842
809
802
785
826
848
(208 - 116.)
X-6873
I t i s i n t e r e s t i n g a l s o t o n o t e t h a t t h e N a t i o n a l City Bank i n t h e
f o l l o w i n g 12 weeks, borrowed o n l y on 11 days.
I t seems t o me t h a t t h e above f i g u r e s could h a r d l y s e r v e a s a conc l u s i v e d e m o n s t r a t i o n of borrowing from t h e F e d e r a l r e s e r v e bank i n o r d e r
to i n c r e a s e c a l l l o a n s .
Between F r i d a y , March 22nd, and S a t u r d a y , March 2 3 r d , b o r r o w i n g s
d e c r e a s e d to n o t h i n g , w h i l e c a l l l o a n s i n c r e a s e d s l i g h t l y .
From Monday, March 2 5 t h , to Tuesday, March 2 6 t h , borrowings decreased 1 m i l l i o n , while c a l l loans increased 6 m i l l i o n s .
From Tuesday, March 2 6 t h , to Wednesday, March 2 7 t h , b o r r o w i n g s
i n c r e a s e d 11 m i l l i o n s , w h i l e c a l l l o a n s d e c r e a s e d 9 m i l l i o n s .
From Wednesday, March 2 7 t h , through t h e r e s t of t h e week, t h e
borrowings were a l l p a i d o f f , w h i l e t h e c a l l l o a n s were r e d u c e d on
Thursday to 135 m i l l i o n s and remained a t t h a t f i g u r e through Thursday,
F r i d a y , and S a t u r d a y .
Such a r e c o r d would of i t s e l f h a r d l y have j u s t i f i e d t h e Board i n
removing Mr. M i t c h e l l on t h e ground of having borrowed s p e c i f i c a l l y i n
o r d e r t o o b t a i n F e d e r a l r e s e r v e c r e d i t f o r s p e c u l a t i v e u s e s , even though
such u s e s , i n u n r e a s o n a b l e amounts, would undoubtedly have been in
v i o l a t i o n of t h e F e d e r a l Reserve Act and of t h e p o l i c i e s of t h e Board
a s announced, by R e g u l a t i o n s or o t h e r w i s e , t h e r e u n d e r .
-IXD i s c u s s i o n a s to what Mr. M i t c h e l l a c t u a l l y s a i d i n h i s I n t e r v i e w s .
The q u e s t i o n l e f t f o r c o n s i d e r a t i o n would seem to be whether t h e
Board would have been j u s t i f i e d i n removing Mr. M i t c h e l l f r o m o f f i c e
- X-6873
-15 -
446
a s a Glass A D i r e c t o r , b e c a u s e of what he s a i d in t h e above quoted i n t e r views.
The p u r p o r t of what he s a i d was t h a t he c o n s i d e r e d t h a t h i s Bank
had an o b l i g a t i o n * paramount to any F e d e r a l r e s e r v e warning o r a n y t h i n g
e l s e , to a v e r t , a s f a r a s i t l a y in h i s power, any dangerous c r i s e s i n
t h e money m a r k e t , w i t h an i n t i m a t i o n , v e r y C l e a r l y e x p r e s s e d , t h a t he
would n o t h e s i t a t e to r e d i s c o u n t a t t h e F e d e r a l r e s e r v e bank f o r t h i s
purpose.
T h i s was c l e a r l y , and was i n t e n d e d to b e , a d e l i b e r a t e d e f i a n c e of
t h e a u t h o r i t y of t h e F e d e r a l Reserve Board, and an a t t a c k on i t s p o l i c i e s
a s he a p p a r e n t l y conceived them.
T h i s d e f i a n c e and a t t a c k was made by a Class A D i r e c t o r of t h e
F e d e r a l Reserve Bank of Few York who had t a k e n o a t h t h a t he would n o t
knowingly v i o l a t e , o r w i l l i n g l y p e r m i t to be v i o l a t e d , any of t h e
p r o v i s i o n s of t h e F e d e r a l Reserve Act.
This i n t e r v i e w , moreover, c o n s t i t u t e d a d i r e c t i n c e n t i v e to specul a t o r s to p r o c e e d i n t h e i r orgy under t h e b e l i e f t h a t t h e s p e c u l a t i v e
market would be s u p p o r t e d by t h e banks by t h e u s e of F e d e r a l r e s e r v e
credit.
In my o p i n i o n , t h i s s t a t e m e n t of Mr. M i t c h e l l would have j u s t i f i e d
t h e Board i n removing him, even on t h e assumption, a s to which I express
no o p i n i o n , t h a t h i s a c t i o n in r e l i e v i n g t h e money market may have been
j u s t i f i a b l e , and even though, i n f a c t , he d i d n o t s e c u r e any a d d i t i o n a l
r e d i s c o u n t s to p r o v i d e t h e f u n d s he p l a c e d , o r p r o p o s e d to p l a c e , on t h e
c a l l loan market.
X-6873
— 16 ~
447
-xF i n a l Conclusion.
Assuming a l l of t h e above to be t r u e , however, i t was n e c e s s a r y
f o r t h e Board to c o n s i d e r p o s s i b l e consequences which might a r i s e fro®
t h e e x e r c i s e of i t s power of removal i n t h i s c a s e .
I t s h o u l d be remembered t h a t t h e banking s i t u a t i o n a t t h a t time
was i n a s t a t e of h i g h t e n s i o n , and t h a t t h e b r e a k was one of t h e
s h a r p e s t i n Stock Exchange h i s t o r y .
I t should be f u r t h e r remembered, t h a t even a t t h e l o w e s t p r i c e s
of Tuesday, March 26, 1929, t h e i n d u s t r i a l a v e r a g e s were l e f t h i g h e r
t h a n a t t h e p e a k of t h e boom i n November, 1928, so t h a t t h e r e was
ample room f o r a f u r t h e r d i s a s t r o u s b r e a k should t h e tension c o n t i n u e ,
o r should some new s o u r c e of ap p reh en s i o n a r i s e .
Looking backward, I f e a r t h a t t h e removal o f Mr. M i t c h e l l a t
t h a t time might have brought about t h e v e r y c o l l a p s e which f i n a l l y
came i n October - s i x months l a t e r .
I f such had been t h e r e s u l t of
t h e B o a r d ' s a c t i o n , I am s u r e i t would have f e l t t h a t t h e p r i c e p a i d
was too h i g h f o r e x p e l l i n g Mr. M i t c h e l l .
The F e d e r a l Reserve Board, a s i t s t a t e d i n i t s warning of Febr u a r y 7 , 1929, n e i t h e r p l a n n e d nor d e s i r e d a c r a s h i n t h e New York
stock market.
On t h e c o n t r a r y , I b e l i e v e i t saved t h e c o u n t r y from
such a c r a s h by i t s r e f u s a l to adopt t h e a f f i r m a t i v e r a t e i n c r e a s e
p o l i c y of t h e F e d e r a l Reserve Bank of Hew York.
The Board, by i t s p o l i c y of d i r e c t p r e s s u r e under t h e 5$ r a t e ,
X-6873
- 1? -
"• 448
simply sought to p r o t e c t k ^ l d u l t u r e and commerce by g r a d u a l l y w i t h drawing F e d e r a l r e s e r v e c r e d i t from t h e s p e c u l a t i v e c h a n n e l s i n t o
which i t had seeped, and I f e l t a t t h e time t h e r e was a t l e a s t some
hope t h a t t h i s could "be done w i t h o u t b r i n g i n g on a c r i s i s in t h e s t o c k
market.
The f i n a l c r a s h of October, 1929, in my o p i n i o n , came n o t from
t h e withdrawal of F e d e r a l r e s e r v e c r e d i t from s p e c u l a t i v e c h a n n e l s ,
b u t from t h e i n c r e a s e of s p e c u l a t i v e c r e d i t i n t h o s e c h a n n e l s b r o u g h t
about by t h e a v a l a n c h e of " b o o t l e g g i n g " c r e d i t c o n s i s t i n g of l o a n s
11
f o r o t h e r s " over which t h e F e d e r a l Reserve System had no c o n t r o l , -
, which a v a l a n c h e made t h e s p e c u l a t i v e c r e d i t s t r u c t u r e so t o p - h e a v y t h a t
i t f i n a l l y b r o k e of i t s own w e i g h t .
I t would c e r t a i n l y have been most u n f o r t u n a t e i f t h e Board,
h a v i n g saved t h e c o u n t r y from a c o l l a p s e i n t h e s t o c k market by b l o c k i n g t h e p o l i c y of t h e F e d e r a l Heserve Bank of New York i n e n t e r i n g
upon i n c i s i v e , r e p e a t e d i n c r e a s e s i n d i s c o u n t r a t e s , had f o u n d t h a t
by t h e e x p u l s i o n of Mr. M i t c h e l l , under t h e t e n s e banking c o n d i t i o n s
a t t h e t i m e , i t had brought on t h e v e r y c r i s i s i t hoped i t c o u l d avoid
through t h e o p e r a t i o n of d i r e c t p r e s s u r e upon banks to r e d u c e t h e i r
b o r r o w i n g s , and I am of t h e o p i n i o n t h a t t h e Board showed good j u d g ment i n f a i l i n g t o v i s i t t h i s p e n a l t y upon him, however r i c h l y i t may
have been d e s e r v e d .
In t h i s c o n n e c t i o n , a t t e n t i o n should be c a l l e d t o Mr. M i t c h e l l ' s
g r o t e s q u e m i s i n t e r p r e t a t i o n of c r e d i t c o n d i t i o n s between t h e time of
t h e above i n t e r v i e w s and t h e f i n a l c r a s h i n October.
For example, on
X-6873
September 23, 1929, he s t a t e d i n an i n t e r v i e w t h a t t h e r e was no o c c a s i o n
f o r worrying about "brokera l o a n s or c r e d i t c o n d i t i o n s ; on October 22,
1929, r e t u r n i n g from Europe, he s t a t e d t h a t c o n d i t i o n s were sound,
and t h a t many s e c u r i t i e s were s e l l i n g a t p r i c e s below t h e i r r e a l v a l u e ;
on t h e same day, h e announced, w i t h almost s a r d o n i c humor, t h a t t h e
p u b l i c was s u f f e r i n g from b r o k e r s l o a n i t i s !
As above s t a t e d , t h i s m a t t e r i s now on t h e docket of t h e Board
a s u n f i n i s h e d b u s i n e s s , and can be brought up a t any time f o r f i n a l
d e t e r m i n a t i o n b y any member.
In my o p i n i o n , however, i t would be b e t t e r f o r t h e Board to l e a v e
Mr. M i t c h e l l i n t h e morass i n which he h a s p l a c e d h i m s e l f , and n o t
i n c u r t h e r i s k of making a m a r t y r of him by any f u r t h e r p r o c e e d i n g s .
X-6875
DIGEST OF STATE LAWS RELATING 10 MEMBERSHIP 07 STATE
BANKS AND TRUST COMPANIES IN FEDERAL RESERVE SYSTEM
ASP RESERVES REQUIRED OF SUCH EMBERS.
(Final draft)
The following digest was prepared in the o f f i c e of
the General Counsel to the Federal Reserve Board, with the
assistance of the Counsel f o r the various Federal reserve
banks, at the request of the Committee on Bank Reserves of the
Federal Reserve System. The digest shows the provisions of
the State laws permitting banks and trust companies to join
the Federal Reserve System and authorizing member banks and
trust companies to maintain the reserves required by the Federal Reserve Act in l i e u of those required by the State law;
and where the provisions on either of these j o i n t s have been
amended, the digest also shows the original provisions and
the dates of and changes effected by a l l amendments.
X-687
ALABAMA.
A
Banks and t r u s t coi-:oani<9B x W m i t t e d t o become metnbers bf F e d e r a l Reserve
System;
•»,
-
• •»
• - •
•'
•
•
An a c t of t h e L e g i s l a t u r e of Alabama approved on September 17,
1919, p r o v i d e s t h a t any S t a t e bank o r t r u s t company " s h a l l have t h e
power t o s u b s c r i b e to t h e c a p i t a l s t o c k and become a member of a Fede r a l r e s e r v e bank ***". (Laws of 1919, Act approved September 17, 1919,
s e c . 1; C i v i l Code, s e c . 6416; Banking Law Pamphlet, 1928, s e c . 6416,
p. 45.)
Conwliance w i t h F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s a c c e n t e d a s
compliance w i t h S t a t e law r e q u i r e m e n t s .
The Act of September 17, 1919, a l s o p r o v i d e s t h a t a member
bank or t r u s t company " s h a l l keep and m a i n t a i n a s a l a w f u l r e s e r v e t h e
same r e s e r v e s a s a r e r e q u i r e d by t h e F e d e r a l Reserve Act and t h e
amendments t h e r e t o of o t h e r banks members of t h e F e d e r a l Reserve System, and a compliance by such bank o r t r u s t company of t h i s S t a t e w i t h
t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l b e h e l d to
b e a f u l l compliance w i t h t h e p r o v i s i o n s of t h e laws of t h i s S t a t e
on t h e s u b j e c t of b*nk r e s e r v e s , and such bank o r t r u s t company s h a l l
n o t b e r e q u i r e d to c a r r y r e s e r v e s o t h e r than such a s a r e r e q u i r e d under
t h e terms of t h e F e d e r a l Reserve" Act and i t s amendments." (Laws of
1919, Act approved September 17, 1919, sec. 1; C i v i l Code, s e c . 5418;
Banking Law Pamphlet, 1928, s e c . 5418, p . 4 6 . )
ARIZONA.
Bank o r t r u s t company a u t h o r i z e d to "become member of F e d e r a l Reserve
System.
On March 18, 1919, an a c t of t h e L e g i s l a t u r e of t h i s S t a t e was
approved in which i t was p r o v i d e d "That any bank o r t r u s t company i n c o r p o r a t e d under t h e laws of t h i s S t a t e s h a l l have t h e oower to s u b s c r i b e
to t h e c a p i t a l s t o c k and become a member of a F e d e r a l Reserve Bank."
(Laws of 1919, Act approved March 18, 1919, ch. 99, s e c . 2 . )
In 1922, t h e L e g i s l a t u r e e n a c t e d a new Code of t h e b a n k i n g
laws of t h i s S t a t e and a p r o v i s i o n c o v e r i n g membership i n t h e F e d e r a l
Reserve System s u b s t a n t i a l l y t h e aame a s t h e 1919 p r o v i s i o n i s i n c l u d e d
i n t h e Code. The new Code p r o v i d e s "That any bank o r t r u s t company
i n c o r p o r a t e d u n d e r t h e laws of t h i s S t a t e s h a l l have t h e power t o subs c r i b e to t h e c a p i t a l s t o c k and become a member of t h e F e d e r a l R e s e r v e
System c r e a t e d and o r g a n i z e d under an Act of Congress of t h e U n i t e d
S t a t e s and known a s t h e F e d e r a l Reserve Act." ( S e s s i o n Laws of 1922,
ch. 31, s e c . 72; General Banking Laws, 1922, s e c . 72, p . 4 7 . )
X-6875 4 5 2
— 2 —
Comgliance w i t h F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s a c c e p t e d a s
compliance w i t h S t a t e law requirements*
•
The a c t approved March 18, 1919, a l s o provided t h a t a compliance
by a member bank o r t r u s t company "with the r e s e r v e r e q u i r e m e n t s of
t h e F e d e r a l Reserve Act, s h a l l be h e l d to be a f u l l compliance w i t h
those p r o v i s i o n s of t h e laws of t h i s S t a t e which r e q u i r e banks or
t r u s t companies to m a i n t a i n cash b a l a n c e s in t h e i r v a u l t s or with
o t h e r banks, and no such bank or t r u s t company s h a l l be r e q u i r e d to
c a r r y or m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d under t h e
terms of t h e F e d e r a l Reserve Act." (Laws of 1919, Act approved March
18, 1919, ch. 99, sec. 4 . )
The new 1922 Banking Code a l s o s u b s t a n t i a l l y i n c o r p o r a t es t h e 1919 p r o v i s i o n s p e r m i t t i n g a compliance w i t h t h e r e s e r v - r e quirements of t h e Federal Reserve Act in l i e u of t h e r e q u i r e m e n t s of
S t a t e law. In t h i s connection, the new Code p r o v i d e s t h a t "Any
such bank or t r u s t company s h a l l comply with t h e r e s e r v e reouiram n t s
of t h e F e d e r a l Reserve Act and i t s amendments, and t h e comnli u.ce r f
such bank or t r u s t company t h e r e w i t h s h a l l be in l i e u o f , and ;:,hall
r e l i e v o such bank or t r u s t company from compliance w i t h t h e o r o v i s i o n s
of t h e laws of t h i s S t a t e r e l a t i n g to t h e maintenance of r e s e r v e s . "
(Seaeion Laws of 1922, ch. 31, sec. 74; General Banking l a w s , 1922,
sec. 74, p . 4 7 . )
A r e v i s e d code of t h e laws of Arizona was p u b l i s h e d in 19?8,
and t h e membership and r e s e r v e p r o v i s i o n s s e t f o r t h above have been
i n c o r p o r a t e d i n t o one s e c t i o n of t h i s code. This s e c t i o n p r o v i d e s t h a t :
"Any bank may s u b s c r i b e to t h e c a p i t a l s t o c k and become a member of t h e
f e d e r a l r e s e r v e system c r e a t e d and organized under an a c t of congress of
t h e United S t a t e s and known a s the f e d e r a l r e s e r v e a c t . The compliance
of such bank w i t h the r e s e r v e requirements of s a i d a c t s h a l l be i n l i e u
o f • and s h a l l r e l i e v e such bank from compliance w i t h t h e p r o v i s i o n s of
t h e laws of t h i s s t a t e r e l a t i n g to t h e maintenance of r e s e r v e s . The
s u p e r i n t e n d e n t may * * *. (Sees. 72, 74-5, i . d . cons, a r e v . ) " (Revised Code of Arizona, 1928, sec. 268.)
The r e v i s e d code a l s o p r o v i d e s t h a t " t h e term bank s h a l l i n clude commercial banks, s a v i n g s bank and t r u s t companies * * *. " (Rev i s e d Code of Arizona, 1928, sec. 209.)
arkansas.
Banks and t r u s t companies may own stock in Federal Reserve Bank.
An a c t of March 22, 1919, of the L e g i s l a t u r e of t h i s S t a t e
p r o v i d e s t h a t S t a t e banks and t r u s t companies may "own such amount of
s t o c k i n a F e d e r a l Reserve Bank a s may b e r e q u i r e d by t h e F e d e r a l Res e r v e Act f o r a l l banks, t r u s t companies or savings banks becoming
members t h e r e o f . " (Acts of 1919, Act of March 22, 1919, Act 339, p .
X-6875
- 3 251, s e c , 3; Ci & M» D i g e s t , 1926, sec, 740$ Banking Law Pamphlet,
1929, s e c . 100, p . 75*)
Compliance w i t h F e d e r a l Reserve Act r e q u i r e m e n t s h e l d compliance
w i t h S t a t e law r e q u i r e m e n t s .
The Act of March 22, 1919, a l s o p r o v i d e s t h a t member banks
and t r u s t companies " s h a l l keep and m a i n t a i n a s a l a w f u l r e s e r v e ,
t h e same r e s e r v e s a s a r e r e q u i r e d of o t h e r bank members of t h e Fetter a l Reserve System" and such a compliance by member banks and t r u s t
companies " s h a l l b e h e l d t o be a f u l l compliance w i t h t h e p r o v i s i o n s
of t h e laws of t h i s S t a t e on t h e s u b j e c t of bank r e s e r v e s . " ( A c t s
of 1919, Act of March 22, 1919, Act 339, p . 251, s e c . 1; C. & M,
D i g e s t , 1926, s e c . 738; Banking law Pamphlet, 1929, s e c . 103, p . 7 7 . )
CALIFORNIA.
Banks e x p r e s s l y and t r u s t companies i m p l i e d l y a u t h o r i z e d to become
members of F e d e r a l Reserve System.
In 1913, t h e s o - c a l l e d Bank Act of C a l i f o r n i a was amended so
a s to p r o v i d e i n p a r t t h a t any bank " i s h e r e b y a u t h o r i z e d and emrpowered t o j o i n or a s s o c i a t e i t s e l f w i t h any ' n a t i o n a l r e s e r v e a s s o c i a t i o n of t h e U n i t e d S t a t e s ' o r branch t h e r e o f , o r any p l a n now o r
h e r e a f t e r c r e a t e d o r e s t a b l i s h e d by a c t of c o n g r e s s whether such banki n g o r c u r r e n c y a s s o c i a t i o n o r p l a n be c r e a t e d by c o n g r e s s under t h e
above o r any o t h e r name". ( C a l i f o r n i a Bank Act, a s amended i n 1913*,
s e c . 5 6 . ) The s e c t i o n of t h e laws c o n t a i n i n g t h e above p r o v i s i o n was
amended i n 1915, b u t t h e wording of t h e p r o v i s i o n i n q u e s t i o n was not
changed.
In 1919, t h e bank a c t was f u r t h e r amended so t h a t i t now p r o v i d e s i n p a r t t h a t "Any bank i s h e r e b y a u t h o r i z e d and empowered to b e come a member of a F e d e r a l r e s e r v e bank, n o t h i n g i n t h i s a c t s h a l l p r o h i b i t any such bank from becoming a member of a F e d e r a l r e s e r v e bank, i n
t h e manner p r o v i d e d i n t h e f e d e r a l r e s e r v e a c t , nor from i n v e s t i n g any
p a r t of i t s c a p i t a l o r s u r p l u s o r r e s e r v e f u n d i n t h e c a p i t a l s t o c k
of such f e d e r a l r e s e r v e bank, in accordance w i t h t h e terms and p r o v i s i o n s of such f e d e r a l r e s e r v e a c t ; * *
( C a l i f o r n i a Bank Act, a s
amended i n 1919, s e c . 5 6 . )
In 1919 l e g i s l a t i o n a l s o amended t h e laws c o v e r i n g t r u s t comp a n i e s so a s i m p l i e d l y to a u t h o r i z e such companies to become members of
t h e F e d e r a l Reserve System, t h e p r o v i s i o n i n q u e s t i o n p r o v i d i n g i n p a r t
t h a t "Any t r u s t company upon becoming a member of a f e d e r a l r e s e r v e bank
i s a u t h o r i z e d and empowered * * * " . ( C a l i f o r n i a Bank Act, a s amended
i n 1919, s e c . 9 0 . )
- 4 -
X.6875
The C a l i f o r n i a Bank Aqt p r o v i d e s t h a t t h e Word ''bank?1 a s Used
t h e r e i n s h a l l i n c l u d e any c o r p o r a t i o n 11 t r a n s a c t i n g a t r u s t b u s i n e s s " .
( C a l i f o r n i a Bank Act, s e c . 2 . )
Compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act a s r e l i e v i n g
compliance w i t h S t a t e law.
P r i o r t o 1919, member banks and t r u s t companies were n o t p e r m i t t e d t o m a i n t a i n t h e r e s e r v e s p r e s c r i b e d b y t h e F e d e r a l Reserve Act
i n l i e u of t h e r e s e r v e s p r e s c r i b e d by t h e S t a t e law, a s l e g i s l a t i o n
e n a c t e d i n 1915 o n l y p e r m i t t e d such banks and t r u s t companies t o maint a i n a s r e s e r v e s on d e p o s i t w i t h a F e d e r a l r e s e r v e bank s u c h p o r t i o n of
t h e i r t o t a l r e s e r v e s a s was r e q u i r e d by members of t h e F e d e r a l Reserve
System. ( C a l i f o r n i a Bank A c t , a s amended i n 1915, s e c . 2 0 . )
I n t h e Bank Act, a s amended i n 1919, t h e r e were two p r o v i s i o n s
r e l a t i n g to r e s e r v e r e q u i r e m e n t s which r e a d a s f o l l o w s :
" S e c . 20.
Every commercial bank s h a l l m a i n t a i n t o t a l r e s e r v e s * * *
" I f any bank s h a l l have become a member of a f e d e r a l
r e s e r v e bank, i t s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s
of t h e f e d e r a l r e s e r v e a c t and i t s amendments, and i t s comp l i a n c e t h e r e w i t h s h a l l b e i n l i e u o f , and s h a l l r e l i e v e such
bank from compliance w i t h , t h e p r o v i s i o n s of t h i s s o c t i o n .
*
*
*.»
" S e c . 68. Every s a v i n g s b a n k or s a v i n g s department of a bank s h a l l
a t a l l times maintain t o t a l reserves * * *
" I f any bank s h a l l have bccome a member of a f e d e r a l r e s e r v e bank, i t s h a l l a t a l l times m a i n t a i n t h e r e s e r v e s r e q u i r e d
by t h e f e d e r a l r e s e r v e a c t f o r time d e p o s i t s , and i n a d d i t i o n
t h e r e t o s h a l l b e r e q u i r e d to m a i n t a i n a r e s e r v e of a t l e a s t two
p e r centum of i t s a g g r e g a t e d e p o s i t s , e x c l u s i v e of U n i t e d S t a t e s ,
p o s t a l s a v i n g s , s t a t e , county and m u n i c i p a l , and o t h e r p u b l i c
money d e p o s i t s , which a r c secured a s i s r e q u i r e d by l a w , which
two p e r centum s h a l l c o n s i s t of g o l d b u l l i o n , o r any form of
money o r c u r r e n c y a u t h o r i z e d by t h e laws of t h e U n i t e d S t a t e s . "
That p a r t of S e c t i o n 20 above quoted h a s n o t b e e n amended s i n c e
i t s enactment im 1919, b u t t h a t p a r t quoted from S e c t i o n 68 was amended
i n 1921 t o r e a d a s f o l l o w s :
" I f any s a v i n g s b a n k s h a l l have become .a member of a
f e d e r a l r e s e r v e bank, i t s h a l l comply w i t h t h e r e s e r v e require-?
ments of t h e f e d e r a l r e s e r v e a c t and i t s amendments, and i t s
compliance t h e r e w i t h s h a l l be i n l i e u o f , and s h a l l r e l i e v e
such s a v i n g s bank o r s a v i n g s department of a d e p a r t m e n t a l bank
from compliance w i t h t h e p r o v i s i o n s of t h i s s e c t i o n . " ( L . 1921,
ch. 780, s e c . 28, p . 1400.)
X-6875^^^
I t w i l l b e n o t e d t h a t in t h e above quoted p r o v i s i o n s of s e c t i o n
SO t h e r e i s no s p e c i f i c r e f e r e n c e to t h e r e s e r v e r e q u i r e m e n t s of t r u s t
companies; and, a l t h o u g h t h e word "•bank?1 i s d e f i n e d by t h e Bank Act a s
i n c l u d i n g any c o r p o r a t i o n " t r a n s a c t i n g a t r u s t b u s i n e s s " ( C a l i f o r n i a
B6nk Act* s e c . 2 ) , i t would seem to b e a q u e s t i o n of c o n s t r u c t i o n a s to
whether o r n o t t r u s t companies c o u l d be i n c l u d e d w i t h i n t h e meaning of
t h e word " b a n k " , a s t h e word i s u s e d i n t h a t p a r t of s e c t i o n 20 r e l a t i n g to banks which have become members of t h e F e d e r a l R e s e r v e System,
inasmuch a s t h e opening s e n t e n c e of t h e s e c t i o n r e f e r s t o commercial
banks.
COLORADO.
Banks and t r u s t companies p e r m i t t e d to become members of F e d e r a l
R e s e r v e System.
Under t h e terms of an a c t approved A p r i l 4 , 1919, a S t a t e
bank o r t r u s t company i s g i v e n "power to s u b s c r i b e t o t h e c a p i t a l
s t o c k and become a member of a F e d e r a l Reserve Bankf. (Laws of 1919,
Act approved A p r i l 4 , 1919, p . 298, s e c . 2; C o u r t r i g h t ' s M i l l s Ann o t a t e d S t a t s . , 1930, s e c . 403 i - 403 j , p . 192 b; Banking Law Pamp h l e t , 1928, s e c . 167, p . 8 0 . )
Compliance w i t h F e d e r a l Reserve Act r e s e r v e s r e l i e v e s compliance w i t h
r e s e r v e r e q u i r e m e n t s pf S t a t e law.
In 1923, t h e l e g i s l a t u r e of t h i s S t a t e e n a c t e d l e g i s l a t i o n
p r e s c r i b i n g when member banks and t r u s t companies may b e r e l i e v e d from
complying w i t h S t a t e r e s e r v e laws, t h e p r o v i s i o n i n t h i s c o n n e c t i o n p r o v i d i n g t h a t " w i t h t h e a p p r o v a l of t h e S t a t e Bank Commissioner, any c o r p o r a t i o n now o r h e r e a f t e r o r g a n i z e d under the laws of t h i s s t a t e a s a
t r u s t company o r b a n k i n g t r u s t company, o r e n j o y i n g and e x e r c i s i n g t h e
r i g h t s , powers and p r i v i l e g e s of a bank and t r u s t company, under t h e
laws of t h e s t a t e , i f a member of a F e d e r a l r e s e r v e bank, may by a comp l i a n c e w i t h t h e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act and t h e regulact i o n s of t h e F e d e r a l Reserve Board a s to t h e maintenance of r e s e r v e s ,
b e r e l i e v e d to t h e r e q u i r e m e n t s of t h e laws of t h i s s t a t e r e l a t i n g t o
such r e s e r v e s . " (Laws of 1923, p . 191, s e c . 1; C o u r t r i g h t ' s M i l l s
Annotated S t a t s . , 1930, s e c . 341a, p . 146a; Banking Law Pamphlet, 1928,
s e c . 149, p . 7 3 . )
C0M3CTICUT.
Banks and t r u s t companies may p u r c h a s e s t o c k i n F e d e r a l R e s e r v e Bank.
P r i o r t o 1931 t h e laws of t h i s S t a t e d i d n o t c o n t a i n any
p r o v i s i o n s e x p r e s s l y a u t h o r i z i n g banks o r t r u s t companies to p u r c h a s e
•i 6 *
X4687456
s t o c k i n and becomc members. of f e d e r a l r e s o r v e banks. Under t h e terms
of an a c t approved June 8> l9<37, however, banks and t r u s t companies
"may p u r c h a s e and h o l d c o r p o r a t e s e c u r i t i e s o f any d e s c r i p t i o n , p r o vided t h e t o t a l amount a t t h e p u r c h a s e p r i c e i n v e s t e d i n c o r p o r a t e
s t o c k s s h a l l a t no time exceed t w e n t y - f i v e p e r centum of i t s combined
c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s and p r o v i d e d i t s investment i n
t h e s t o c k of any one c o r p o r a t i o n s h a l l n o t exceed t o n p e r centum of
t h e s t o c k of t h a t c o r p o r a t i o n o r exceed t e n p e r centum of t h e p e r c e n t a g e
p r e s c r i b e d h e r e i n , whichever may be t h e g r e a t e r , * * * 11
( P u b l i c Acts,
1927, Act approved June 8 , 1927, ch. 251.) The Act j u s t r e f e r r e d t o
was i n c l u d e d , w i t h o u t change in t h e language quoted above, i n t h e Gene r a l S t a t u t e s of Connecticut, Revision of 1930, Vol. I I , T i t l e 37, ch.
206, s e c . 3885.
S e c t i o n 3885 of t h e General S t a t u t e s was amended by ch. 162
of t h e P u b l i c Acts of 1931, e f f e c t i v e J u l y 1, 1931, and a s so amended
i t e x p r e s s l y r e c o g n i z e s t h e r i g h t of banks and t r u s t companies to h o l d
f e d e r a l r e s e r v e bank s t o c k . As amended i t p r o v i d e s i n p a r t , t h a t a
bank or t r u s t company "may p u r c h a s e and hold c o r p o r a t e s e c u r i t i e s of
any d e s c r i p t i o n , p r o v i d e d t h e t o t a l amount a t t h e p u r c h a s e p r i c e i n v e s t e d i n c o r p o r a t e s t o c k s s h a l l a t no time exceed t e n p e r centum of
i t s combined c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s , and p r o v i d e d i t s
investment i n t h e s t o c k of any one c o r p o r a t i o n s h a l l exceed n e i t h e r
f i v e p e r centum of t h e s t o c k of t h a t c o r p o r a t i o n nor t h r e e p e r centum
of such combined c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s , except t h a t
such c o r p o r a t e s t o c k s a s were owned on A p r i l 1 , 1931, may b e r e t a i n e d ,
b u t such l i m i t a t i o n s s h a l l n o t apply to t h e s t o c k of any f e d e r a l r e s e r v e bank, * * * . "
S t a t e r e s e r v e laws do not a p p l y to members of Federal Reserve System,
On May 29, 1925, an a c t of t h e General Assembly of t h i s
S t a t e was approved which p r o v i d e s t h a t "The p r o v i s i o n s of t h e gene r a l s t a t u t e s r e l a t i n g to r e s e r v e s and cash b a l a n c e s of s t a t e banks
and t r u s t companies s h a l l n o t apply to any bank or t r u s t company which
i s a s t o c k h o l d e r i n any f e d e r a l r e s e r v e . b a n k ? .
(Connecticut P u b l i c
A c t s , 1925, Act approved May 29, 1925, ch. 135.)
The p r o v i s i o n above
r e f e r r e d to i s now i n c o r p o r a t e d in t h e General S t a t u t e s of C o n n e c t i c u t ,
R e v i s i o n of 1930, Vol. I I , T i t l e 37, ch. 206, s e c . 3898, e x a c t l y a s
quoted w i t h t h e exception of t h e word " g e n e r a l " , which h a s been o m i t t e d .
delaware.
Banks and t r u s t companies a u t h o r i z e d t o become members of F e d e r a l Reserve
System.
In 1915, l e g i s l a t i o n was enacted i n t h i s S t a t e which makes
X-6875
i t l a w f u l f o r S t a t e banks and t r u s t companies t o become members
of t h e F e d e r a l Reserve System* (Act of March 8, 1915, Laws of
Delaware, ch. 10?, p . 322; Banking Law Pamphlet, 1929, s e c . 18*
p. 38,)
Member banks and t r u s t companies o n l y r e q u i r e d to m a i n t a i n r e s e r v e s r e q u i r e d by F e d e r a l Reserve Act.
An a c t e n a c t e d i n 1919, by t h e General Assembly of
t h i s S t a t e , p r o v i d e s i n p a r t t h a t t h e " S t a t e bank commissioner
i n d e t e r m i n i n g , i n t h e c o u r s e of h i s examination, t h e amount
of l a w f u l money r e s e r v e r e q u i r e d under any law of t h i s S t a t e
to b e m a i n t a i n e d , a t a l l t i m e s , by S t a t e Banks and T r u s t Comp a n i e s , s h a l l n o t r e q u i r e such S t a t e Banks and T r u s t Companies
a s may b e members of t h e F e d e r a l Reserve Bank i n t h e F e d e r a l
Reserve D i s t r i c t embracing t h e S t a t e of Delaware t o m a i n t a i n a
g r e a t e r r e s e r v e t h a n t h a t r e q u i r e d b y t h e F e d e r a l Reserve A c t " .
( S e s s i o n Laws of 1919, ch. I l l , p . 255, s e c . 9; Banking Law
Pamphlet, 1929, s e c . 9, p . 1 0 . )
FLORIDA.
Banks and t r u s t companies a u t h o r i z e d t o i n v e s t i n s t o c k of F e d e r a l
Reserve Banks.
The l e g i s l a t u r e of t h i s S t a t e , by an a c t of J u n e 4 , 1917,
p r o v i d e d "That i t s h a l l be u n l a w f u l f o r any bank o r t r u s t company'
X-6875
- 8 -
: 458
" o r g a n i z e d under t h e laws of t h i s S t a t e And doing "business i n t h i s
S t a t e , to d i r e c t l y o r i n d i r e c t l y i n v e s t any of t h e f u n d s of s a i d
bank o r t r u s t company in s t o c k of any i n c o r p o r a t e d connany i n t h i s
S t a t e o r e l s e w h e r e , exceot in t h e s t o c k of t h e F e d e r a l R e s e r v e Bank
of t h i s d i s t r i c t ; * * * »
(Acts of 1917, Act of JUne 4 , 1917, ch.
7629, s e c . 2 . )
The Act of June 4, 1917, was amended i n 1929, b u t t h e
wording above quoted w a s n o t changed. (Acts of 1929, ch. 13576,
s e c . 11; Banking Law Pamphlet, 1930, sec. 4152, p . 1 6 . )
No p r o v i s i o n s ' p e r m i t t i n g compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act.
The laws of t h i s S t a t e ' d o n o t appear to c o n t a i n any p r o v i s i o n s s p e c i f i c a l l y a u t h o r i z i n g a member "bank or t r u s t company to
m a i n t a i n r e s e r v e s i n accordance w i t h t h e p r o v i s i o n s of t h e F e d e r a l
Reserve Act i n l i e u of S t a t e law r e q u i r e m e n t s .
GEORGIA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
Reserve System.
~~~~~~
"•
In 1915, l e g i s l a t i o n was e n a c t e d in chis S t a t e which
e x p r e s s l y a u t h o r i z e d S t a t e banks and t r u s t companies " t o s u b s c r i b e
f o r s t o c k and become members of t h e F e d e r a l Reserve Bank of t h e
d i s t r i c t to which t h e y may nro-oerly b e a s s i g n e d by t h e F e d e r a l
Reserve Board * * *; p r o v i d e d t h e same i s approved by r e s o l u t i o n
of t h e Board of d i r e c t o r s of such bank and i n accordance w i t h
t h e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act".
(Acts of 1915,
p. 33.)
On August 16, 1919, an a c t was approved which r e p e a l s
t h e above p r o v i s i o n , but which c o n t a i n s a p r o v i s i o n a u t h o r i z i n g
banks to become members of t h e F e d e r a l Reserve System and which
i s i n many r e s p e c t s s i m i l a r t o t h e r e p e a l e d p r o v i s i o n . The 1919
a c t p r o v i d e s i n p a r t t h a t "Banks a r e a u t h o r i z e d and empowered
t o s u b s c r i b e f o r s t o c k and become members of t h e F e d e r a l Reserve
Bank of t h e d i s t r i c t t o which t h e y p r o p e r l y may be a s s i g n e d b y
t h e F e d e r a l R e s e r v e Board, i n accordance w i t h t h e Acts of Congress
r e g u l a t i n g F e d e r a l Reserve Banks, and any bank becoming such
member s h a l l b e a u t h o r i z e d t o conform to t h e r e q u i r e m e n t s and
r e g u l a t i o n s of such F e d e r
@FedFRASER