Full text of Mimeograph Letters and Statements of the Board : Letter From Asst. Secretary Bethea re Minutes of Meeting of Industrial Advisory Committee, Number X-8030, Volume 41, Page 165

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FEDERAL RESERVE BOARD
WASHINGTON
address official correspondence t o

X—8030

t h e federal reserve board

October 2, 1934.

Dear S i r :
In accordance with t h e understanding had a t t h e meeting of members
of the F e d e r a l Reserve Board w i t h t h e r e p r e s e n t a t i v e s of t h e I n d u s t r i a l Adv i s o r y Committees i n Washington on Septeinb*L 27,. 1934, t h e r e i s a t t a c h e d a
copy of a summary statement of t h a t meeting.

There i s a l s o a t t a c h e d a copy

of t h e signed minutes of the meeting of the members of the I n d u s t r i a l Adv i s o r y Committees held during the a f t e r n o o n of September 27, 1934.

Four

e x t r a copies of t h e s e documents a r e a l s o i n c l o s e d and i t w i l l be a p p r e c i a t e d
i f you w i l l hand t h e s e t o the o t h e r members of your committee.
The F e d e r a l Reserve Board has arranged t o send d i r e c t l y t o each member of the r e s p e c t i v e I n d u s t r i a l Advisory Committees in the twelve F e d e r a l
r e s e r v e d i s t r i c t s weekly, a summary statement of a p p l i c a t i o n s r e c e i v e d and
considered by t h e I n d u s t r i a l Advisory Committees and the F e d e r a l r e s e r v e
banks.

This i s i n conformity w i t h the a c t i o n t a k e n during t h e a f t e r n o o n

meeting.
In connection w i t h the q u e s t i o n of t h e u n w i l l i n g n e s s of banks t o
extend l o a n s which would reduce t h e l i q u i d i t y of t h e i r a s s e t s or which
might be s u b j e c t t o c r i t i c i s m by a d m i n i s t r a t i v e a u t h o r i t i e s , c o n s i d e r a t i o n
i s being given t o t h e p r e p a r a t i o n of a statement which may be s e n t t o a l l
banks i a accordance* with t h e recommendation made by the members wf the
I n d u s t r i a l Advisory Committees t h a t a d e f i n i t e announcement by p r o p e r



166
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2 -

X-8030

o f f i c i a l s on the standing of i n d u s t r i a l loans be made immediately. •
I t i s r e p o r t e d on page 6 of the minutes of the meeting of the members of the I n d u s t r i a l Advisory Committees t h a t the following r e s o l u t i o n was
unanimously adopted during t h e meeting:
"Although in our experience the a t t i t u d e of o f f i c i a l s of
Federal r e s e r v e banks has a t a l l times been a l i b e r a l one on
the c o n s t r u c t i o n and i n t e r p r e t a t i o n of the law and the making
of l o a n s , we have been impressed today in our meetings by the
very apparent d e s i r e of the Federal Reserve Board i n Washington and the Federal reserve banks to handle a l l m a t t e r s i n
connection with such loans in such a l i b e r a l manner t h a t the
maximum number of proper loans be made, with the l e a s t d e l a y
and expense t o the borrower.
"We t h e r e f o r e pledge ourselves t o use our b e s t e f f o r t s to
bring t h i s about i n our s e v e r a l d i s t r i c t s . "
The Federal Reserve Board a p p r e c i a t e s very much the s p i r i t of cooperation evidenced by the above r e s o l u t i o n and expresses t h e hope t h a t the
c l o s e r contact which has been c r e a t e d by the meeting i n Washington w i l l be
continued.
Very t r u l y y o u r s ,
'J?
/ 1 1 (• •
L. P . Bethea,
Assistant Secretary.
Inclosures.

TO ALL REPRESENTATIVES OF INDUSTRIAL ADVISORY C0i-1 ITTEES V.UO ATTENDED MEETING IN WASHINGTON ON SEPTEMBER 27, 1934, AND ALSO TO MR. STUART L. RAI7LINGS,
CHAIRMAN.




;
1G7
X-8030-a
At the meeting held i n Washington on September 27, 1934, a t
10:00 a . m. of members of the Federal Reserve Board and members of i t s
s t a f f with r e p r e s e n t a t i v e s of t h e I n d u s t r i a l Advisory Committees of the
twelve Federal r e s e r v e d i s t r i c t s , t h e following i n d i v i d u a l s were p r e s e n t :




Mr. Henry Morgenthau, Secretary of the Treasury
and Chairman of t h e Federal Reserve Board
Mr. George R. James, Member, Federal Reserve Board
Mr. M. S.. Szymczak, Member, Federal Reserve Board
Mr. J . F. T. O'Connor, Comptroller of the Currency
and ex o f f i c i o member of the Federal Reserve Board
Messrs. Albert M. Creighton, 17m. H. Pouch, J . Ebert
Butterworth, J , G. Holtzclaw, John Sanford, Max
E p s t e i n , Vto. K. N o r r i s , Sheldon V. Wood and
Clarence Ousley, Chairmen of the I n d u s t r i a l
Advisory Committees of the F i r s t , Second, Third
F i f t h , S i x t h , Seventh, Eighth, Minth and Eleventh
Federal Reserve D i s t r i c t s , r e s p e c t i v e l y , .
Messrs. Frank B. Bell and L. F. Rooney, members of
the I n d u s t r i a l Advisory Committees of the Fourth
and Tenth Federal Reserve D i s t r i c t s , r e s p e c t i v e l y . .
Mr. L. P. Bethea, A s s i s t a n t S e c r e t a r y , Federal Reserve
Board
Mr. 5 . R. Carpenter, A s s i s t a n t S e c r e t a r y , Federal
Reserve Board
Mr. E. L. Smead, Chief of the Division of Bank Operat i o n s , Federal Reserve Board
Mr, L. H. Paulger,. Chief of t h e Division of Examinat i o n s , Federal Reserve Board
Mr# George B. Vest, A s s i s t a n t Counsel, Federal Reserve
Board
Mr. H». Lee Boatwright, a s s i s t a n t Counsel, F e d e r a l
Reserve Board
Mr. E. M. Stevens, Federal Reserve Agent a t the Federal
Reserve Bank of Chicago
Mr. John U. Calkins, Governor of the Federal Reserve
Bank of San Francisco
Mr. 2 , G. H u l t , A s s i s t a n t Cashier of the Federal
Reserve Bank of Boston
Mr. Jacob Viner, _-_ssi.-itunt to thu Locretary of the
Treasury.

X-8030
—2—

Mr. Szymczak s t a t e d t h a t Hr. Thomas, Vice Governor of t h e Board,
and Mr. Hamlin, t h e o t h e r member of the Board who i s i n Washington, were
engaged i n a n o t h e r meeting and would be unable t o meet w i t h t h e r e p r e s e n t a t i v e s of the I n d u s t r i a l Advisory Committees t h i s morning, and t h a t
Mr, Thomas had r e q u e s t e d him t o take charge of t h e m e e t i n g .
Mr. Szymczak made a statement t h e substance of which was a s f o l lows:
He s t a t e d t h a t the purpose of the meeting was:
F i r s t , f o r the r e p r e s e n t a t i v e s and t h e Chairmen of t h e
I n d u s t r i a l Advisory Committees to hear from t h e Board on t h e
s u b j e c t of i n d u s t r i a l l o a n s ,
Second, t o give t h e r e p r e s e n t a t i v e s and Chairmen of tho
I n d u s t r i a l Advisory Committees an o p p o r t u n i t y t o e x p r e s s thems e l v e s f r e e l y upon t h i s s u b j e c t , and
T h i r d , f o r t h e conference t o make such s u g g e s t i o n s a s i t
saw f i t t o t h e F e d e r a l r e s e r v e banks and t o t h e F e d e r a l Reserve
Board.
He t h e n reviewed t h e l e g i s l a t i v e h i s t o r y of t h e I n d u s t r i a l
Loan Act and the circumstances under which i t was f i n a l l y p a s s e d .
He p a r t i c u l a r l y c a l l e d a t t e n t i o n t o t h e f a c t t h a t i t uas c l e a r l y
the i n t e n t i o n of Congress:
F i r s t , t h a t t h e l o a n s made under t h i s a u t h o r i t y would i n volve a g r e a t e r amount of r i s i c t h a n i s involved in an o r d i n a r y
bank l o a n ;
Second, t h a t t h e l o a n s would be f o r t e r n s l o n g e r than t h e
Ordinary b5Lk l o a n , not exceeding f i v e y e a r s ; and
T h i r d , t h a t t h e l o a n s would be made f o r t h e purpose of
f u r n i s h i n g working c a p i t a l r a t h e r than t o supply t h e s h o r t term c r e d i t needs of t h e commercial or i n d u s t r i a l borrower.
He f u r t h e r p o i n t e d out t h a t t h e purpose of the law was:
(a) t o a i d s n a i l i n d u s t r y , and
(b) t o c o n t i n u e , and, i f p o s s i b l e , t o i n c r e a s e
employment.
He s t r e s s e d the importance of the I n d u s t r i a l Advisory Comm i t t e e s by shov.int. t h a t i n t h e o r i g i n a l b i l l p r o v i s i o n '..as made



X-3030-a
-3f o r i n t e r m e d i a t e c r e d i t "banks, and t h a t i n the amended b i l l the sug^g e s t i o n of i n t e r m e d i a t e c r e d i t tanks was r e t a i n e d through the prov i s i o n f o r an I n d u s t r i a l Advisory Committee i n each d i s t r i c t . The
law provides f o r t h e appointment of members of an I n d u s t r i a l Advisory Committee "by each r e s e r v e t a n k with the approval and under t h e
r e g u l a t i o n s of t h e Federal Reserve Board. The committees have a
d e f i n i t e s t a t u s under the law and r e p r e s e n t the p u b l i c i n t e r e a t i n
connection with t h e o p e r a t i o n of the law i n the g r a n t i n g of i n d u s t r i a l l o a n s . The law i s s p e c i f i c t n i t s requirement. Each member
of the committee must "be an a c t i v e i n d u s t r i a l i s t . The committee
t h e r e f o r e i s independent ( t o the extent of i t s s t a t u t o r y e x i s t e n c e )
of the Federal r e s e r v e "bank a s such, and has a d e f i n i t e a u t h o r i t y
and r e s p o n s i b i l i t y which r e q u i r e t h a t t h e committee consider c a r e f u l l y each a p p l i c a t i o n and rinke i t s recommendations to t h e Federal
r e s e r v e bank as to t h e a c t i o n i t thinks the bank should take on t h e
a p p l i c a t i o n . Congress desired t o make c e r t a i n t h a t the -mblic
would be r e p r e s e n t e d i n the a d m i n i s t r a t i o n of t h i s law. The committee represents the public.
From t h e v e r y beginning t h e Federal Reserve Board has taken
the a t t i t u d e t h a t the' law should be administered l i b e r a l l y . The
r e g u l a t i o n s adopted by t h e Federal Reserve Board a r e s h o r t and
simple, g i v i n g every opportunity to t h e Federal r e s e r v e banks to
operate under t h e law without d i f f i c u l t y . I t should be remembered
t h a t i n a d d i t i o n to t h e $140 ,000,000 which r e p r e s e n t s t h e p r e s e n t
s u r p l u s of the F e d e r a l r e s e r v e banks, t h e r e i s a l s o a n o t h e r
$139,000,000 i n the Treasury of t h e United S t a t e s which t h e Secret a r y of t h e Treasury has agreed, pursuant to t h e a u t h o r i t y granted
Mm under the p r o v i s i o n s ef Section 13b (e) of the F e d e r a l Reserve
Act> to t r a n s f e r to the Federal r e s e r v e banks i f needed f o r t h e
purpose of making i n d u s t r i a l advances. F i f t y per cent ef t h e t o t a l
amount of i n d u s t r i a l loans made by t h e Federal r e s e r v e banks w i l l
be advanced from the banks * s u r p l u s , and t h e other 50 per cent from
funds to be f u r n i s h e d t h e banks by t h e Secretary of t h e Treasury.
There i s , t h e r e f o r e , a revolving fund of about $280,000,000 t o be
used f o r t h i s purpose.
Mi*. Szymczak r e f e r r e d to h i s r e c e n t v i s i t to n i n e F e d e r a l r e serve d i s t r i c t s , d u r i n g which he met w i t h o f f i c e r s and beards of
d i r e c t o r s of t h e F e d e r a l r e s e r v e banks, as well as w i t h members of
the I n d u s t r i a l Advisory Committees and r e p r e s e n t a t i v e s of the
commercial banks. He discussed h i s t r i p q u i t e i n f o r m a l l y and i n
some d e t a i l . He s t a t e d t h a t while he found t h a t a g r e a t deal has
a l r e a d y been done by t h e I n d u s t r i a l Advisory Committees and the
F e d e r a l r e s e r v e banks, as well as p r i v a t e f i n a n c i n g i n s t i t u t i o n s ,
to t h e end of p r o v i d i n g c r e d i t t o i n d u s t r y , a g r e a t d e a l remains
t o be done, p a r t i c u l a r l y on the s u b j e c t of informing f i n a n c i n g
i n s t i t u t i o n s of the p r o v i s i o n s of t h e law, t h e r e g u l a t i o n s of t h e
Board and t h e requirements of Federal r e s e r v e banks, t o t h e end
of o b t a i n i n g t h e i r cooperation under the law.



•: 1 7 0
'Z-8050-a
-4When t h e m a t t e r i s c a r e f u l l y e x p l a i n e d t o f i n a n c i n g i n s t i t u t i o n s they
g e n e r a l l y become i n t e r e s t e d , n o t only because of the p o s s i b i l i t y of
t h e i r being a b l e t o make a l o a n on which a cocjmit,ment from t h e i ' e d e r a l
r e s e r v e bank t o r e d i s c o u n t t h e l o a n can be o b t a i n e d , t h u s g i v i n g the
f i n a n c i n g i n s t i t u t i o n a d d i t i o n a l e a r n i n g a s s e t s and l i q u i d i t y , b u t
a l s o because of t h e g e n e r a l p u b l i c i n t e r e s t involved i n t h e s u b j e c t .
I t would seem important from t h e banker*s s t a n d p o i n t , p a r t i c u l a r l y
a t t h i s t i m e , t h a t he c o o p e r a t e i n t h e I n d u s t r i a l Loan a c t i v i t y , a t
l e a s t t o t h e e x t e n t of i n f o r m i n g himself f u l l y on t h i s s u b j e c t and
making e v e r y e f f o r t t o meet t h e purpose of t h e law c o n s i s t e n t w i t h
i t s p r o v i s i o n s , so t h a t the r e s u l t of h i s e f f o r t i n t h i s d i r e c t i o n
w i l l prove d e f i n i t e l y t h e t r u e c o n d i t i o n s and t n e r e a s o n s t h e r e f o r .
I t a p p e a r s , t h e r e f o r e , t h a t s t r e s s should be l a i d on t h e importance
of a c t i v e s t e p s being t a k e n by t h e F e d e r a l r e s e r v e banks and t h e
I n d u s t r i a l Advisory Committees, not only t o inform banks, and o t h e r
f i n a n c i n g i n s t i t u t i o n s on t h e law and the r e g u l a t i o n s , b u t a l s o on
the ourncseo ol the I n d u s t r i a l Loan A c t .
I t i s a l s o i m p o r t a n t t h a t sympathetic t r e a t m e n t be g i v e n the
a p p l i c a n t s when they come t o t h e F e d e r a l r e s e r v e bank f o r t h e p u r pose of d i s c u s s i n g an i n d u s t r i a l l o a n . Many of t h e p r o s p e c t i v e b o r rowers a e e n t i r e l y -ma ca ua int ed w i t h the F e d e r a l r e s e r v e bank, i t s
p e r s o n n e l , or with t h e I n d u s t r i a l Advisory Coranittee, and i t s members h i p , and a r e p e r h a p s small borrowers who have had l i t t l e o c c a s i o n
p r i o r t o t . i i s time t o v i s i t a F e d e r a l r e s e r v e bauk,' and a c c o r d i n g l y
might be overawed i n t h e i r f i r s t v i s i t t o the F e d e r a l r e s e r v e bank
or f r i g h t e n e d by t h e s i z e and d e t a i l of t h e form of a p p l i c a t i o n t h e y
a r e asked t o f i l l o u t . I t i s doubly i m p o r t a n t , t h e r e f o r e , t h a t every
e f i o r t be made t o have them u n d e r s t a n d t h a t t h e y a r e e n t i r e l y w i t h i n
t h e i r r i g h t s i n coming t o t h e bank, and t h a t t h e y a r e welcome aad
a r e to be out a t e a s e ana a d v i s e d t h a t t h e i r a p p l i c a t i o n , even i f f o r
a small amount, w i l l be given c a r e f u l and thorough c o n s i d e r a t i o n .
Courtesy and kind t r e a t m e n t w i l l prove a most v a l u a b l e i n v e s t m e n t .
One of the important a d v a n t a g e s of t h i s loan a c t i v i t y i s t h a t
i t a f f o r d s t h e F e d e r a l Heserve System an o p p o r t u n i t y t o come i n t o
d i r e c t c o n t a c t w i t h t h e p u b l i c i n a vay which e n a b l e s t h e System t o
l'-iid a sympathetic hand and t o b r i n g about a b e t t e r u n d e r s t a n d i n g on
t h e p o r t of t h e g e n e r a l p u b l i c of the f u n c t i o n s of the System, i t s
h i s t o r y and i t s p e r f o r m a n c e . T h i s i s an o p p o r t u n i t y t h a t we should
a v a i l o u r s e l v e s of a t t h i s time w i t h a t r e a t d e a l of e n t h u s i a s m .
I t t;eej;;5 v h s r e f o r e t h a t t h e r e ^ i e o o n t u t i v e s and chairmen
of tue JuVaUiitrial Advisory Committees should c o n s i d e r t h e f o l l o w i n g
points:




X-8030-a

1 7 1

-51. How b e s t to aid i n obtaining the cooperation of f i n a n c i n g
i n s t i t u t i o n s on loans to i n d u s t r y .
2. How t o give the f u l l e s t c o n s i d e r a t i o n to each a p p l i c a t i o n
on d i r e c t loans so t h a t nothing w i l l be overlooked which would make
p o s s i b l e t h e g r a n t i n g of a loan i n accordance w i t h t h e p r o v i s i o n s and
requirements of the law.
3. The a t t i t u d e to be shown toward an a p p l i c a n t on a d i r e c t
loan to i n d u s t r y , so t h a t i n case of delays he might a t once be i n formed of t h e reason f o r such d e l a y s , and i n case ef a r e f u s a l he
might be informed a t once of the reasons f o r the r e f u s a l i n a c o u r t e ous way, and i n case of t e c h n i c a l or l e g a l o b s t a c l e s , he might be
informed of t h e s e o b s t a c l e s and shown t h a t t h e matter i s wholly b e yond the a u t h o r i t y of the committee or the bank and t h e r e f o r e not
i t s r e s p o n s i b i l i t y , and i n case of need f o r advice the a p p l i c a n t
might obtain such advice from the bank.
4 . How b e s t t o review an a p p l i c a t i o n t h a t has been turned
down i n order to make c e r t a i n t h a t r e f u s a l was a b s o l u t e l y necessary
and t h a t t h e r e have been no new developments s i n c e t h e d a t e of the
r e f u s a l t h a t might change the a c t i o n ef the committee or t h e bank or
both.
' While t h e Federal Reserve Board does not expect t h e I n d u s t r i a l
Advisory Committees or t h e Federal r e s e r v e banks t o . a c t imprudently
or i l l o g i c a l l y or to v i o l a t e the p r o v i s i o n s of the I n d u s t r i a l Loan
Act, the Board does f e e l s t r o n g l y t h a t t h e circumstances under which
the a c t was passed r e q u i r e a l i b e r a l c o n s t r u c t i o n of the law; t h a t
the I n d u s t r i a l Advisory Committees and the Federal r e s e r v e banks
should do everything p o s s i b l e to make reasonably sound loans and be
prepared t o prove beyond a question of a doubt why i t was not p o s s i b l e
to make c e r t a i n loans a p p l i e d f o r i n accordance w i t h t h e powers and
the l i m i t a t i o n s of the law.
Apparently t h e Federal r e s e r v e banks and the I n d u s t r i a l Adv i s o r y Committees a r e making a very s i n c e r e e f f o r t under t h i s law,
and i t would be most u n f o r t u n a t e i f , be cause of t h e emission by the
committee or t h e bank of some d e t a i l small as i t may a p p e a r , someone
might be given reason to think t h a t such an e f f o r t i s not b e i n g made.
Mr, Szymczak then read excerpts frcm the law and r e f e r r e d t o
a comparative statement of i n d u s t r i a l loans made by t h e twelve
Federal r e s e r v e banks.
At t h e close of Mr. Szymczak's s t a t e m e n t , Mr. Henry Morgenthau,
S e c r e t a r y of t h e Treasury and Chairman of t h e Federal Reserve Board,




X-8030-a
-6-

joinod the m e e t i n g .

He s t a t e d t h a t , inasmuch a s h i s time was l i m i b e d , h<

would a p p r e c i a t e i t v e r y much i f each of the r e p r e s e n t a t i v e s of t h e I n d u s t r i a l Advisory Committees would make a s h o r t s t a t e m e n t w i t h r e g a r d t o
the i n d u s t r i a l l o a n a c t i v i t y i n h i s d i s t r i c t .
I n accordance w i t h the Chairman's r e q u e s t s t a t e m s n t s were made
by each of the r e p r e s e n t a t i v e s of the I n d u s t r i a l Advisory Committees
p r e s e n t and by Governor C a l k i n s r e p r e s e n t i n g the T w e l f t h F e d e r a l Reserve
District.

The s t a t e m e n t s i n d i c a t e d g e n e r a l l y t h a t , i n t h e o p i n i o n of

t h e r e p r e s e n t a t i v e s of t h e Advisory Committees, the F e d e r a l r e s e r v e
bunks a r e l e n d i n g e v e r y a s s i s t a n c e t o t h e I n d u s t r i a l Advisory Committees
tii-nt t h e r e i s c l o s e c o o p e r a t i o n between the i n d u s t r i a l loan a c t i v i t i e s
of the F e d e r a l r e e e r v e banks and the l o c a l a g e n c i e s of the R e c o n s t r u c t i o n Finance C o r p o r a t i o n and t h a t , i n most c a s e s, t h e F e d e r a l r e s e r v e
banks have adopted a more l i b e r a l a t t i t u d e toward the- g r a n t i n g of i n d u s t r i a l l o a n s than have the I n d u s t r i a l Advisory Committees.
I n connection with t h e c u e s t i o n of d e l a y s i n f i n a l a c t i o n on
a p p l i c a t i o n s , i t was s t a t e d by some of t h e r e p r e s e n t a t i v e s t h a t t h e y
a r e g i v i n g s p e c i a l a t t e n t i o n t o t h i s m a t t e r and t h a t t h e y f e e l t h a t
t h e d e l a y s a r c due t o t h e n e c e s s a r y i n v e s t i g a t i o n and c o n s i d e r a t i o n
which must be given t o t h e a p p l i c a t i o n s , t o t h e f a c t t h a t i t i s d i f f i c u l t i n many c a s e s t o >\et s a t i s f a c t o r y i n f o r m a t i o n , and t h a t i n some
i n s t a n c e s t h e f u n d s a r e t o t r e q u i r e d immediately.

The p o i n t was a l s o

made t h a t c a r e f u l c o n s i d e r a t i o n i s bein& 'siveu t o a l l a p p l i c a t i o n s ,
p a r t i c u l a r l y t h o s e of the s m a l l b o r r o w e r , f o r the r e a s o n t h a t t h e




X-8030-a

I n d u s t r i a l a d v i s o r y Committee d i d not v/isa t o w e the a u a l l b u s i n e s s
man put out of b u s i n e s s because of h i s i n a b i l i t y t o g e t t h e n e c e s s a r y
c r e d i t when h i s p o s i t i o n would j u s t i f y t h e e x t e n s i o n of such c r e d i t .
I t xa.3 i n d i c a t e d by most of the r e p r e s e n t a t i v e s p r e s e n t , however, t h a t
a l a r g e number of t h e i n q u i r i e s r e c e i v e d by t h e f e d e r a l r e s e r v e banks
were from persons who had no u n d e r s t a n d i n g of t h e r e q u i r e m e n t s of the
law and vvho.3e f i n a n c i a l p o s i t i o n was such t h a t t h e y were n o t e n t i t l e d
to c r e d i t .

I t v.as i n d i c a t e d a l s o

t h a t t h e I n d u s t r i a l a d v i s o r y Com-

m i t t e e s i n one or two d i s t r i c t s had approved l o a n s on t h e b a s i s of t h e
c h a r a c t e r and b u s i n e s s r e c o r d of the a p p l i c a n t w i t h n o t h i n g more t h a n
nominal s e c u r i t y f o r the l o a n .
I n c o n n e c t i o n w i t h the q u e s t i o n which was r a i s e d by some of
the r e p r e s e n t a t i v e s a s bo t h e p o s s i b l e c r i t i c i s m by examiners of i n d u s t r i a l l o a n s p a r t i c i p a t e d i n by b a n k s , i t was p o i n t e d out by the
C o m p t r o l l e r of the Currency t h a t he had i n s t r u c t e d examiners t o l i s t
i n d u s t r i a l l o a n s , and p a r t i c i p a t i o n s t h e r e i n , by n a t i o n a l banks under
a separate schedule.
On t h e q u e s t i o n of bank c o o p e r a t i o n , i t was s t a t e d t h a t some
of t h e commercial bank:, were c o o p e r a t i n g but t h a t o t h e r s were not
i n t e r e s t e d i n the c o n s i d e r a t i o n of i n d u s t r i a l l o a n s , and t h a t i t was
r e a l i s e d t h a t i t i s i m o r t a n t t h a t t h e a c t i v e c o o p e r a t i o n of the banks
be s o u g h t .
I n r e s p o n s e t o an i n q u i r y , soiae of t h e r e p r e s e n t a t i v e s i n d i cated that t h e I n d u s t r i a l Advisory Committees had t a k e n a much more
l i b e r a l a t t i t u d e than t h e y would have been a b l e t o t a k e nad t h e y been




X-oG30-a

'

1 7 4

—8—
a c t i n 0 us d i s c o u n t committees of commercial banking i n s t i t u t i o n s .
A l l of t h e r e p r e s e n t a t i v e s i n d i c a t e d ta&t t h e i r commietees were
t r y i n g t o f i n d ways t o make l o a n s and t h a t i n a number of c a s e s a p p l i c a t i o n s had been r e c o n s i d e r e d and s u g g e s t i o n s made a s t o s t e p s which
might be t a k e n i n o r d e r t o make i t p o s s i b l e f o r t h e a p p l i c a t i o n t o be
considered f a v o r a b l y .

One r e p r e s e n t a t i v e s t a t e d t h a t his committee i n -

v i t e s an appearance of t h e a p p l i c a n t i n b o r d e r - l i n e c a s e s , but i t was
i n d i c a t e d g e n e r a l l y t h a t t h e committees do n o t i n t e r v i e w a p p l i c a n t s a?,
such procedure vvoulc! bu p r o h i b i t i v e from t h e s t a n d p o i n t of t h e time
consumed.

The o p i n i o n was a l s o expressed t h a t the maicin^ of i n d u s t r i a l

l o a n s i s s e r v i n g a r e a l need and i s a worthwhile u n d e r t a k i n g .
The s t a t e m e n t was r:.; de by one r e p r e s e n t a t i v e t h a t h i s impress i o n was t h a t t h e m a j o r i t y of i n d u s t r i a l i s t s g e n e r a l l y a r e n o t r e q u e s t ing c r e d i t l o r the r e a s o n t h a t t.aey do not want t o i n c r e a s e t h e i r a c t i v i t i e s i n t h e f a c e of the u n c e r t a i n t y which t h e y f e e l as t o the
future.
Mr. S n s t e i n read a p r i n t e d pamphlet p r e p a r e d by aim, o u t l i n i n g
a s u g g e s t i o n a s t o t h e p r o c e d u r e f o r making small l o a n s , and t h e sugg e s t i o n was made t h a t i t be d i s c u s s e d by t h e r e p r e s e n t a t i v e s w h i l e
t h e y a r e i n Washington. .
Mr. N o r r i s s a i d , d u r i n g h i s s t a t e m e n t , t h a t he f e l t i f h i s
committee had g r a n t e d any of t h e l o a n s which had been r e f u s e d , i t
would have amounted t o a d o n a t i o n which n e v e r would have been r e p a i d .
Governor C a l k i n s s t r e s s e d the n e c e s s i t y of e x p l a i n i n g t o t h e
a p p l i c a n t , where t h e a p p l i c a t i o n i s i n e l i g i b l e under t h e law, t h e




X-8030-a

1 7 5

-9r e a s o n s which raake i t i n e l i g i b l e .
No mention i s made i n t h i s s t a t e m e n t of t h e s t a t i s t i c s given
by t h e r e p r e s e n t a t i v e s of the I n d u s t r i a l Advisory Conruitteos ar> t o t h e
number of a p p l i c a t i o n s r e c e i v e d and c o n s i d e r e d f o r the reason t h a t
such i n f o r m a t i o n was a v a i l a b l e i n t h e s t a t e m e n t p r e p a r e d i n t h e B o a r d ' s
o f f i c e s and d i s t r i b u t e d d u r i n g t h e m e e t i n g .
At t h e c o n c l u s i o n of t h e statements by t h e r e p r e s e n t a t i v e s of
t h e I n d u s t r i a l Advisory Committees and t h e q u e s t i o n s asked by members
of the Board i n c o n n e c t i o n t h e r e w i t h , Mr. Mo.genthau l e f t t h e meeting
and s h o r t l y t h e r e a f t e r Mr. Viner l e f t *
Mr. James r e f e r r e d t o t h e e x p e r i e n c e of t h e F e d e r a l r e s e r v e
banks under t h e a u t h o r i t y g r a n t e d by the t h i r d paragraph of s e c t i o n
13 of t h e F e d e r a l Reserve Act t o t h e F e d e r a l r e s e r v e banks t o make
d i r e c t l o a n s t o i n d i v i d u a l s , 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 i n unusual
and e x i g e n t c i r c u m s t a n c e s , and t o t h e f a c t t h a t v e r y few l o a n s were
made under t h a t a u t h o r i t y .

He expressed the o p i n i o n t h a t the banks

a r e i n f a c t meeting t h e l e g i t i m a t e c r e d i t n e e d s of the- c o u n t r y i n so
f a r a s commercial bank c r e d i t i s concerned and he s t a t e d he f e l t
t h a t t h e e x p e r i e n c e of t h e F e d e r a l r e s e r v e banks w i t h i n d u s t r i a l
l o a n s w i l l be somewhat s i m i l a r t o t h e i r e x p e r i e n c e under t h e earlier
a u t h o r i t y t o make d i r e c t l o a n s f o r t h e r e a s o n t h a t t h e number of
e s t a b l i s h e d i n d u s t r i a l and commercial concerns which a r e e n t i t l e d
t o C r e d i t , and wiii.cn a r e unable t o o b t a i n c r e d i t t o meet t h e i r
l e g i t i m a t e n e e d s , are c o m p a r a t i v e l y fevj, and t h a t t h i s would be




X-8030-a

XYO

—10—

demonstrated by t h e a c t i v i t i e s of the F e d e r a l r e s e r v e "banks i n t h e
i n d u s t r i a l loan f i e l d .
He a l s o c a l l e d a t t e n t i o n t o t h e f a c t t h a t t h e F e d e r a l Reserve Board lies d e c l i n e d t o d e f i n e d e f i n i t e l y t h e term "working c a p i t a l " a s used i n t h e i n d u s t r i a l loan a c t and t h e B o a r d ' s r e g u l a t i o n w i t h
regard t o i n d u s t r i a l loans.

He s t a t e d t h a t he was c e r t a i n t h e members

of the Board would be v e r y l i b e r a l i n interpreting t h e term and t l . a t ,
i n his o p i n i o n , t h e paranouni, c o n s i d e r a t i o n i s whether o r n o t t h e l o a n
i s a good one, r . - e . , r e a s o n a b l y s a f e . - He said t h a t he v a s i n t e r e s t e d
p r i m a r i l y i n t h e number of people who could be put t o work by t h e i n dustrial l o a n s made br trio 7ede_-al reserve banks and t h a t he would not
b e inclined t o criticize t h s I n d u s t r i a l Advisory C o m m i t t e e s o r t n e

F e d e r a l r e s e r v e banks f o r a l i b e r a l i n t e r p r e t a t i o n of the r e q u i r e m e n t s
of t h e ' law.
Mr. Szymczak made t h e f u r t h e r s u g g e s t i o n t h a t t h e I n d u s t r i a l
Advisory Committees g i v e c o n s i d e r a t i o n t o whether any changes should
be made i n the law with r e g a r d t o i n d u s t r i a l advances by F e d e r a l r e serve b a n k s .

I n t h i s connection t h e opinion was e x p r e s s e d by some

r e p r e s e n t a t i v e s t h a t t h e presence of t h e term :'workin,_> c a p i t a l " i n
t h e lav/ i s a r e a l l i m i t a t i o n on t h e f i e l d of a p p l i c a n t s who a r e
eligible for industrial loans.
Mr. J?u,'.e3 r a i s e d t h e q u e s t i o n a s t o reimbursement of t h e
members of t h e I n d u s t r i a l Advisory Committees f o r the t i u c s p e n t and
the expenses i n c u r r e d i n performing t h e i r d u t i e s , and he s t a t e d t h a t
i n h i s o p i n i o n t h i s i s an i m p o r t a n t q u e s t i o n because of t h e a p p a r e n t l y




X-8030-a

1 7 ?

-11-

permanent character of the committees.

In t h i s connection t h e r e p r e -

s e n t a t i v e s i n d i c a t e d t h a t they f e l t any suggestion i n regard t o reimbursement should cone from the Federal r e s e r v e b a n k s .

Governor Calkins

suggested t h a t the law be amended t o allow reimbursement f o r a c t u a l
expenses and in a d d i t i o n per diem payments f o r the time spe^t by the
members of the I n d u s t r i a l Advisory Committees i n committee a c t i v i t i e s .
F u r t h e r r e f e r e n c e was made t o the p o s s i b l e c r i t i c i s m by e x aminers of i n d u s t r i a l l o a n s and p a r t i c i p a t i o n s by banks and the s t a t e ment was made t h a t some bonks h e s i t a t e t o make such l o a n s or p a r t i c i p a t e
t h e r e i n f o r the reason t h a t t h e y do not want t o show i n d e b t e d n e s s t o
t h e F e d e r a l r e s e r v e bank.

Mr. .-xuad oointed out t h a t commitments by

F e d e r a l r e s e r v e banks t o r e d i s c o u n t i n d u s t r i a l l o a n s made by comm e r c i a l banks c r e a t e no indebtedness t o t h e r e s e r v e banks and t h a t i f
a commercial bank p a r t i c i p a t e s in a l o a n t o the e x t e n t of twenty p e r
cent or more and tho Federal r e s e r v e bank t a k e s t h e b a l a n c e , t h e p a r t i c i p a t i o n would be t r e a t e d us a loan by the commercial bank and c a r r i e d
i n i t s l o a n s a c c o u n t , and t h e r e would be no r e f e r e n c e i n i t s statement
t o t h e p a r t of the l o a n taken by the Federal r e s e r v e bank.

Some of

t h e r e p r e s e n t a t i v e s s t a t e d t h a t they f e l t t h e banks d i d n o t u n d e r stand t h e s e p o i n t s o r t h e f a c t t h a t the Comptroller of t h e Currency
has provided a s p e c i a l l i s t i n g f o r i n d u s t r i a l l o a n s by n a t i o n a l b a n k s ,
and t h e y e x p r e s s e d tho opinion t h a t i t was important t h a t thu i n f o r m a t i o n bo sent t o the b a n k s .

Accordingly, Mr. Szymczak s t a t e d the Board

would iiivo c o n s i d e r a t i o n t o t h e p r e p a r a t i o n of a s t a t e m e n t with r e g a r d
t o the p o i n t s r e f e r r e d t o , t o be s e n t to member b a n k s .




%-803&_a ^
-12-

Mr. Szymczak expressed the a p p r e c i a t i o n of tlie F e d e r a l Reserve Board of t h e w i l l i n g n e s s of the members of t h e I n d u s t r i a l Adv i s o r y Committees to g i v e t h e b e n e f i t of so nruch of t h e i r time and
experience to t h i s work, and thanked t h e r e p r e s e n t a t i v e s of t h e
committees f o r t h e i r v i s i t to Washington.

He then suggested t h a t

t h e r e p r e s e n t a t i v e s meet a g a i n a t two p . m. t h i s a f t e r n o o n t o d i s cuss the t o p i c s on a program which had "beon prepared f o r t h e i r cons i d e r a t i o n and any o t h e r phase of t h e i r i n d u s t r i a l l o a n a c t i v i t i e s ,
and to f o r m u l a t e any recommendations or suggestions they might
wish to make.




X-6050-b
A meeting of members of t h e I n d u s t r i a l Advisory Committees
was held i n Washington, D. C., on September 27, 1934, a t 2:00 p . m«
PRESENT $ Mr. A l b e r t M. Creighton, (Chairman, Boston)
D i r e c t o r , Boston Woven Hose and Rubber Co*,
Boston, M a s s a c h u s e t t s .
Mr. "ton. H. Pouch, (Chairman, New York)
P r e s i d e n t , Concrete S t e e l Company,
New York, Few York.
Mr. J . E b e r t B u t t e r w o r t h , (Chairman, P h i l a d e l p h i a )
V i c e - P r e s i d e n t , II. W. B u t t e r w o r t h and Sons Co.,
Philadelphia, Pennsylvania.
Mr. Frank B# B e l l , (Member, C l e v e l a n d )
P r e s i d e n t , Edgewater S t e e l Company,
Oakmont, P e n n s y l v a n i a .
Mr. Jolin S a n f o r d , (Chairman, A t l a n t a )
P r e s i d e n t , Armour F e r t i l i z e r Works,
A t l a n t a , Georgia.
Mr. Max E p s t e i n , (Chairman, Chicago)
Chairman, General'American Tank Car C o r p o r a t i o n ,
Chicago, I l l i n o i s .
Mr• Win. K. N o r r i s , (Chairman, S t . L o u i s )
P r e s i d e n t , McQuay-lIorris Manufacturing Co.,
S t . Loui s , Mi s s o u r i .
Mr,. Sheldon V. Wood, (Chairman, M i n n e a p o l i s )
P r e s i d e n t , Minneapolis E l e c t r i c S t e e l Casting Co.,
Minneapolis, Minnesota.
Mr. L. F. Rooney, (Member, Kansas C i t y )
V i c e - P r e s i d e n t , Manhattan C o n s t r u c t i o n Company,
Muskogee, Oklahoma.
Mr. Clarence Ousley, (Chairman, D a l l a s )
P r e s i d e n t , Globe L a b o r a t o r i e s ,
F o r t Worth, Texas.
ALSO PRESENT:




Mr.
Mr.
Mr.
Mr.

Thomas, Vice-Governor, F e d e r a l Reserve Board
Hamlin, Member, F e d e r a l Reserve Board
Szymczak, Member, F e d e r a l Reserve Board
J n o . U. C a l k i n s , Governor, F e d e r a l Reserve
Bank of San F r a n c i s c o , San F r a n c i s c o , C a l i f o r n i a .

X-8030-b
-2-

The meeting v/as a d d r e s s e d b r i e f l y by Vice Governor Thomas, Mr
Hamlin and Mr# Szymczak#

T h e r e a f t e r t h e meeting was t u r n e d over t o

Mr# E p s t e i n as t e m p o r a r y Chairman and Messrs* Thomas, Hamlin and
Szymczak l e f t t h e room#
I t was moved and seconded t h a t Mr#
C r e i g h t o n be made permanent Chairman of
t h e meeting#
Unanimously c a r r i e d .
The d i s c u s s i o n d u r i n g t h e meeting was based upon t h e f o l l o w i n
outlinei




"A*

P u b l i c i t y methods( a ) Bankers group m e e t i n g s
( b ) Radio a d d r e s s e s
( c ) Newspaper p u b l i c i t y
(d) Q u e s t i o n n a i r e s
( e ) V i s i t s by bank r e l a t i o n s men of t h e
F e d e r a l r e s e r v e bank
( f ) C i r c u l a r s of i n f o r m a t i o n t o b a n k s ,
business concerns, etc*

B.

What may be done by the Chairman and other
members of t h e I n d u s t r i a l Advisory Committees,
a p a r t from what t h e F e d e r a l r e s e r v e banks have
done or should do, t o a c q u a i n t t h e p u b l i c w i t h
t h e i n d u s t r i a l l o a n f a c i l i t i e s o f f e r e d by t h e
F e d e r a l r e s e r v e banks, and t o g e t f u n d s i n t o
t h e hands of i n d u s t r i a l and commercial c o n c e r n s
f o r working c a p i t a l p u r p o s e s where such f u n d s
cannot be o b t a i n e d t h r o u g h u s u a l b a n k i n g
channels#

C#

To what e x t e n t has t h e i n a b i l i t y of e s t a b l i s h e d
businesses t o obtain loans from usual sources
f o r working c a p i t a l p u r p o s e s been due t o :
( a ) Absence of l o c a l banking f a c i l i t i e s
as a r e s u l t of bank c l o s i n g s o r
otherwise#
( b ) U n w i l l i n g n e s s of banks t o e x t e n d l o a n s
which would r e d u c e t h e l i q u i d i t y of
t h e i r a s s e t s o r which might be s u b j e c t
t o c r i t i c i s m by a d m i n i s t r a t i v e a u t h o r i t i e s #

"D.

7/hat i n g e n e r a l i s the a t t i t u d e of a p p l i c a n t s
whose a p p l i c a t i o n s are d i s a p p r o v e d .

Be

I s t h e r e any i n d i c a t i o n t h a t t h e r e s e r v e "banks
a r e t o o s t r i c t i n p a s s i n g on a p p l i c a t i o n s f o r
i n d u s t r i a l advances.

F.

An i n d u s t r i a l concern t h a t o b t a i n e d a p p r o v a l of
a loan f r o m t h e R. F . C. r e c e n t l y sought t o
o b t a i n a d i r e c t l o a n from a r e s e r v e bank i n
a s u b s t a n t i a l l y l a r g e r amount, w i t h t h e i n t e n t i o n of n o t a c c e p t i n g t h e R. F« C. l o a n i f
t h e l a r g e r amount were o b t a i n e d f r o m t h e F e d e r a l
r e s e r v e bank. Have s i m i l a r i n s t a n c e s been
encountered i n your d i s t r i c t ,

G.

What volume of i n d u s t r i a l advances can be made
a c c o r d i n g t o t h e p r e s e n t o u t l o o k by t h e end
of 1934."

A show of hands was c a l l e d f o r t h e purpose of d e t e r mining t h e o p i n i o n of t h o s e p r e s e n t ' r e g a r d i n g t h e a d v i s a b i l i t y of employing r a d i o p u b l i c i t y , w i t h t h e f o l l o w i n g
resulti
Favorable
Doubtful
Against

3
5
3

The Chairman a p p o i n t e d t h e f o l l o w i n g committee t o f o r m u l a t e
recommendations r e g a r d i n g p u b l i c i t y :
Mr. Pouch, Chairman
Mr. S a n f o r d ,
Mr. N o r r i s .
D i s c u s s i o n of Topic B showed t h a t f i v e d i s t r i c t s had f i e l d
examiners r e p r e s e n t i n g t h e F e d e r a l r e s e r v e banks, and f i v e d i s t r i c t s
employed e x p e r t s whenever n e e d e d .




Mr. Ousley moved t h a t t h e Chairman
a p p o i n t a s p e c i a l committee t o f o r m u l a t e
an e x p r e s s i o n of t h e opinion of t h i s
meeting on Topic C.
Unanimously c a r r i e d

-4-

X-8030-b
'

1

The Chairman appointed t h e f o l l o w i n g committee i n accordance
•with t h e above motion:
Mr. B u t t e r w o r t h , Chairman,
Mr. B e l l ,
Mr • Wood•
At t h i s p o i n t Governor Calkins l e f t t h e m e e t i n g .
The Chairman a p p o i n t e d t h e f o l l o w i n g committee t o f o r m u l a t e
a s t a t e m e n t of t h e g e n e r a l consensus of t h e meeting as t o t h e a t t i t u d e
of a p p l i c a n t s f o r l o a n s t
.Mr. Rooney, Chairman,
Mr. Ousley.
The meeting was asked t o v o t e upon t h e q u e s t i o n -whether t h e r e
i s any i n d i c a t i o n t h a t t h e F e d e r a l r e s e r v e banks a r e t o o s t r i c t i n
p a s s i n g upon a p p l i c a t i o n s f o r i n d u s t r i a l advances, each v o t e t o r e p r e s e n t t h e member's o p i n i o n as t o h i s ovm d i s t r i c t o n l y .
Nine answered t h e q u e s t i o n negat i v e l y and one a f f i r m a t i v e l y .
Mr. E p s t e i n made t h e f o l l o w i n g
motions
" I t i s recommended t h a t a c l e a r i n g h o u s e
arrangement w i t h t h e R e c o n s t r u c t i o n
Finance C o r p o r a t i o n be made i n any
d i s t r i c t where n o t now i n f o r c e . "
Unanimously c a r r i e d .
The meeting t h e n r e c e s s e d f o r f i f t e e n minutes and reconvened
a t 3:45 p . m.
The Committee on P u b l i c i t y submitted t h e f o l l o w i n g r e s o l u t i o n *




" I t i s recommended, f i r s t , t h a t b a n k e t s ' group
meetings be held i n a l l d i s t r i c t s ; secondly, t h a t a t

-5-

X-8030-b
•

i:

" t h i s time no e f f o r t be made t o use t h e r a d i o ;
t h i r d , t h a t t r a d e p a p e r s , such as t h e c r e d i t a s s o c i a t i o n magazines, chamber of commerce w e e k l i e s and
m o n t h l i e s , and o t h e r t r a d e p u b l i c a t i o n s seem t o be
t h e b e s t v e h i c l e f o r p u b l i c i t y i n our work, and
t h a t t h e use of t h e s e v e h i c l e s be s t r e s s e d . The
committee a l s o recommends t h e use of newspaper
space, i f p r o p e r l y guarded, s t r e s s i n g t h a t l o a n s
be made on r e a s o n a b l e and sound b a s i s , as t h e banks
can n o t make unsound l o a n s ; f o u r t h , we do not r e c ommend q u e s t i o n n a i r e s , but b e l i e v e t h a t p e r s o n a l
c o n t a c t i s p r e f e r a b l e ; f i f t h , we recommend t h e
d i s t r i b u t i o n of c i r c u l a r s p u b l i s h e d by t h e F e d e r a l
r e s e r v e banks t o banks, b u s i n e s s c o n c e r n s , t r a d e
a s s o c i a t i o n s , and chambers of commerce.
"With r e f e r e n c e t o Topic B, t h i s s u b j e c t i s
covered by t h e p u b l i c i t y m a t t e r s r e f e r r e d t o above.
T h i s m a t t e r could be j u d i c i o u s l y handled by p e r s o n a l
c o n t a c t of members of t h e Committee w i t h i n d i v i d u a l
banks and i n d u s t r y . "
Mr. E p s t e i n moved t h a t t h e above
r e s o l u t i o n be adopted as t h e s e n s e of t h e
Conference.
Unanimously c a r r i e d .
The Committee appointed t o d r a f t an o p i n i o n on Topic C subm i t t e d t h e f o l l o w i n g s t a t e m e n t which was adopted as t h e s e n s e of t h e
Conference:
"(a)

This has been a v e r y small f a c t o r a l t h o u g h i t has been
g i v e n as a r e a s o n by a p p l i c a n t s whose c r e d i t s t a n d i n g
did n o t j u s t i f y a l o a n .

"(b)

Many banks a r e r e l u c t a n t t o p a r t i c i p a t e i n long term
l o a n s because t h e y are u n c e r t a i n of t h e a t t i t u d e
which may be t a k e n by v a r i o u s bank e x a m i n e r s . We
recommend t h a t a d e f i n i t e announcement by p r o p e r
o f f i c i a l s on t h e s t a n d i n g of such l o a n s be made
immediately t o r e l i e v e t h i s s i t u a t i o n . "

The Committee a p p o i n t e d t o f o r m u l a t e t h e concensus of t h e
meeting as t o t h e a t t i t u d e of a p p l i c a n t s f o r loans o f f e r e d t h e f o l lowing s t a t e m e n t which was unanimously adopted as t h e sense of t h e
Conference;




-6-

X-8030-b. ^
L
"The consensus i s t h a t t h e g e n e r a l a t t i t u d e of a p p l i c a n t s
whose a p p l i c a t i o n s have been disapproved i s a b o u t what would
be e x p e c t e d from any a p p l i c a n t f o r any bank l o a n - only two
or t h r e e c a s e s of h a r s h or unreasonable c r i t i c i s m have been
r e p o r t e d except i n one d i s t r i c t which r e p o r t s c o n s i d e r a b l e
d i s a p p o i n t m e n t and s h a r p c r i t i c i s m . "
Mr. Pouch moved t h a t a weekly c o m p i l a t i o n of a p p l i c a t i o n s , app r o v a l s , r e j e c t i o n s and commitments be s e n t by t h e F e d e r a l Reserve
Board t o each member of each of t h e I n d u s t r i a l Advisory Committees a t
his business address.
Unanimously c a r r i e d .
At t h i s p o i n t , Dr. Jacob Viner, A s s i s t a n t t o t h e S e c r e t a r y of
t h e T r e a s u r y , e n t e r e d t h e room and spoke i n f o r m a l l y t o t h e m e e t i n g ,
f o l l o w i n g which a f u l l d i s c u s s i o n was had on s p e c i a l c r e d i t c a s e s .
Mr* E p s t e i n a d d r e s s e d t h e meeting on t h e s u b j e c t of small
l o a n s , f o l l o w i n g which i t was suggested t h a t the p l a n which he b r i e f l y
o u t l i n e d be s u b m i t t e d by him i n w r i t i n g a t an e a r l y d a t e t o t h e C h a i r men of t h e I n d u s t r i a l Advisory Committees f o r t h e i r c o n s i d e r a t i o n and
suggestions.
Mr. B e l l o f f e r e d t h e f o l l o w i n g r e s o l u t i o n , which was unanimously carried:
"Although i n our e x p e r i e n c e t h e a t t i t u d e of o f f i c i a l s of
F e d e r a l r e s e r v e banks has a t a l l t i m e s been a l i b e r a l one on
t h e c o n s t r u c t i o n and i n t e r p r e t a t i o n of t h e law and t h e making
of l o a n s , we have been impressed t o d a y i n our meetings by t h e
v e r y a p p a r e n t d e s i r e of t h e F e d e r a l Reserve Board i n Washington
and t h e F e d e r a l r e s e r v e banks t o handle a l l m a t t e r s i n connect i o n w i t h such loans i n such a l i b e r a l manner t h a t t h e maximum
number of proper loans be made, w i t h t h e l e a s t d e l a y and expense
to the borrower.
"We t h e r e f o r e pledge o u r s e l v e s t o use our b e s t e f f o r t s t o
b r i n g t h i s about i n our s e v e r a l d i s t r i c t s




X-8030-b

-7-

Mr. Ousley submitted, the f o l l o w i n g r e s o l u t i o n , which tra.s
unanimously a d o p t e d :
"We wish t o r e c o r d our high a p p r e c i a t i o n of t h e i n s t r u c t i v e a d d r e s s e s and d i s c u s s i o n s i n i t i a t e d by members of t h e
F e d e r a l Reserve Board and o f f i c e r s of t h e Treasury and t o
express our t h a n k s f o r t h e g r a c i o u s c o u r t e s i e s extended*"




Thereupon t h e meeting a d j o u r n e d .

(Signed)

A. M« C r e i ^ h t o n .
Chairman,