Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, April 1, 1935, Volume 22, Part 2

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800

A meetinP: of the Federal Reserve Board was held in Washington
on
Monday, April 1, 1935, at 11:30 a. m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Governor
Thomas, Vice Governor
Hamlin
Miller
James
Szymczak

Mr. Morrill, Secretary
Mr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary
Mr,

lorril1 reported that on March 30, 1935, the Comptroller of
the currency is
sued a call on all national banks for reports of con—
as at the
close of business on March 4, 1935, and that, in accord—
ice v:ith the
usual practice, a call was made on behalf of the Federal
Reserve Board
on all State member banks for reports of condition as of
the sallv' date.
ratifal
e.call made on behalf of the Board was
The Board
then acted upon the following matters:
Memorandum dated March 28, 1935, from Mr. Goldenweiser, Director
Of the n,
--Lvision of Research
and Statistics, recommending the temporary
aPPoint.lent in the
divisLon, -ith salary at the rate of $25.00 per day
each day
vTorked, of Mr. William J. Carson, to aid with work
Pertaining to
pending legislation; it being understood that the
6"'egate number
or days of employment will not exceed thirty, and that
428.00 per
day
other xpensese will cover his compensation as well as his traveling and




Approved.

801
4/1/35

-2Memorandum dated March 291 19551 from Mr. Wyatt, General Counsel,

recommending, for reasons stated in the memorandum, that Mr. J. T. Owens,
84

as

counsel, be permitted to take twenty days annual leave of

absence beginning April 51 1955, which is five days in excess of the
111114ber Of

days permitted by the regulations of the Board to be taken

1311°r to -111Y
J
1 by permanent employees in the service of the Board at

the b
eginning of the year who have served six months or -more and less
thantwo years.
Approved.
Memorandum dated March 27, 1955, from Mr. Smead, Chief of the
bivisi
°II of Bank Operations, recommending that Miss Loretta M. Goheen,
414 eiml,

"
- °Yea in that division, be granted a further leave of absence
with Pay
on account of illness, for the period from March 17 to March
231
'35) inclusive.
Approved.
Telegram

to Mr. Case, Federal Reserve Agent at the Federal Reserve

Of New York,
reading as follows:
Ity0
of

letter March 28. Board approves temporary appointment
Joseph
W. Clifford as assistant examiner in Federal Re.Serve
Agent's department your bank."
Approved.
Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve

Bari

k of New
York, reading as follows:
tr4
6,

wro.

i

is made to the report of examination of the
Trust Company', Kingston, New York, as of October
1934 and
1934)
the supplementary information submitted in




802
4/1/35
-3'connection therewith.
The report of examination reflected estimated losses of
89
,
,600 in loans and depreciation of $704,200 in securities,
distributed
as follows:
Group 1
$ 36,900
Grow)
196,700
- 2
25,400
Defaulted bonds
445,200
Depreciation in stocks
.'704,200
"The bank advises that at the end of the year the followin
eliminations were made:
0.26,500
Loans and mortgages
Other real estate
7,200
Stocks
$242,900
209,900
Defaulted bonds
27,000
Other bonds
11 100
$414,700
"The call report of condition rendered by the bank as at
the close of business December 31, 1934, reflected the following capital accounts:
Capital debentures
$500,000
Common stock
250,000
Surplus
250,000
Undivided profits
14,300
appears,
bank
therefore)
has not made provision
the
that
for a
substantial amount of depreciation in stocks and lower
securities and it will be appreciated if you will advise
Steps the bank has taken or proposes to take to effect
'flZhr
more c eliminations in order that its statements may reflect
orrectly the true condition of the bank.
"It has been observed
that the bank has continued to pay
divideddns on its common stock
at the rate of 6 per cent per
Zurr
.ly although the condition of the bank would not appear to
stlfY such
payments,
a h "The report of examination as of October 6, 1934, reflects
to 7,avY investment in stocks, the total carrying value amounting
vi, 915,700 with a market value of $470,500. Under the proseq-°11s of Section 9
of the Federal Reserve Act as amended by
may. "mn 5 (c) of the Banking Act of 1933, State member banks
not leFally
purchase stock in other corporations except in
N.7,11mited classes of cases in which National banks may law;;-L
e LY do so
and, as indicated by a condition of membership
th:ribed by the Board for some time, the Board does not feel
re
stocks are
suitable investments for member banks. It is
coquested that
you advise the bank of the Board's views in this
the rtl-on and suggest that the management undertake to improve
opportunities are
-111a-LitY
afford
d. of its investment account as




803
-4"Among the criticisms reported by the examiner are the
nadequate credit data and the incomplete and unsatislactory records of the trust department. It is assumed that
You will endeavor to obtain corrections in these matters."
Approved.
Letter to Mr. Peyton, Federal Reserve Agent at the Federal ReServe Bank of
Ainnaoolis, reading as follows:
'Reference is made to the reports of examination of
'The Yellowstone Bank', Columbus, Flontana, a$ of February 4,
1935, and 'The Yellowstone Bank', Laurel, Montana-, as of
February "
0, 193
which institutions are5, e closely affiliated
through counon ownership and management. Reference is made
also to the supolemental information submitted in connection
with the reports of examination of the banks.
It has been noted from your letter of March 5, 1935,
that you
recently held a conference with Mr. B. M. Harris
who is
president and anparently the dominating factor in both
the banks, regarding the affairs of the Columbus institu,°11. It is assumed, however, that in the conference you
'0-Ecussed also the report of examination of the Laurel bank
,
,
a-nd made appropriate suggestions with regard to the matters
equiring attention.
b ,"The examiner who conducted the examination of both
0, :
111 s aPPears to have some reservations as to the integrity
management which is characterized as being 'capable
but-he
dangerous'
and the comments of the examiner in the con,.reritial sections of the reports infer that selfish motives
..fluence the acts of the president in the administration of
luties as the principal executive officer of the two
The Board would like to have a full expression
Of
Your
twoYour views regardLng the character of the management of the
Of .0anks and as to whether, in your opinion, the interests
t1.1 , depositors are receiving proper consideration.
ex
lh the report of examination of the Laurel bank the
ci,lamiher discussed at
some length the action in 1931 of the
tozsbe:tors in awarding to President Harris a bonus of :,30,000
and
paid pro rata by the two banks out of future earnings
a b
aPPears that after a recent payment of 4,500 there is
zt.t:i'ance due of 23,500 on the bonus. It will be appreciis . if You will advise whether, in your opinion, such a bonus
Thi3
,
ustified as being in the best interests of the bank.
of ,pears to be an unusual transaction and in view of all
exeZei circumstances, particularly the comments of your
er reardim- the character of the management, a frank




804
4/1/35
-5xPression of your views in the matter -All be appreciated.
"The report of examination of the Columbus institution
indicates that after allowing for estimated losses, doubtful
assets and depreciation in securities aggregating :4,300 the
bank has a net sound capital of 829,600 as compared with
total deposits of $381,800. It will be appreciated if you
Will advise whether consideration has been given by the
in
stitution to an increase in its caPital in an amount
sufficient to provide for a more adequate ratio to its
d
eposits.
"It has been noted that since the removal of the Park
'ltY State Bank to Columbus in October, 1934, (at which time
",),he name of the institution was chanced to The Yellowstone
,
,
p nk, Columbus, Montana) a branch has been operated at Park
Montana, for the benefit of both the Columbus and the
,
aurel institutions apparently in violation of the laws of
he State
of Montana and of Section 9 of the Federal Reserve
'rt. It appears that the branch has been operated with the
-Lull knowledre
of the State Superintendent of Banks and
ace°Pding to Mr. Harris' letter to you of March 18, 1935, its
°I,Derctions have now been entirely discontinued. In view of
aJ-1 of the circumstances, and in accordance with the
suggestion contained in your letter of March 5, 1955, no
"ti°11 in the matter 1-111 be taken by the Board.
Park "On the dates of the examinations of the two banks the
City Milling Company, a former affiliate of the instituTas indebted on an unsecured basis to the Columbus
iank in the amount of 2,668 and to the Laurel institution
fl the
amount of $1,400. The line has been under severe
iticism
by the State banking department for some time and
Z
in the
analysis of the report of examination of the Park City
,tate Bank
as of July 22, 1933, it was stated that the pro7am outlined by
the State banking authorities called for the
irplete elimination of the line by July 1, 1934. Thile the
c_,118 are not classified in either report the examiner
_uti3ments on the fact that the company is hopelessly insolvent
;r
e the inference
is gathered that an estimated loss classii,:
ltion would have been made but for certain circumstances
The examiner states that at the time the original
citances ITere made the company was largely owned by three
of the bank and that the funds advanced by the bank
Were
d
,r
- e used
Used in an attempt to save the investment of these
tt ectors in
the company, from which facts he concludes that
e oa
should not be removed by a charge to the earnings
pothe
bank but
b
ut rather by the three directors involved. It
s rrs) however, from the comments in your letter of March
' 935) that President Harris takes the position that the

4




4/1/35
-6“directors referred to, of vhich he is one, have neither a
moral nor legal responsibility for the repayment of the
loans in question and that the items should be handled by
the bank in the
same manner as any loss of a similar
c
haracter. In view of the expressed opinion of the bank's
President and the opinion of the examiner regarding the inof the Park City Milling Company to discharge its
obi
igations, it is requested that you advise what action
h” been
taken or is proposed with respect to the elimination of such loans from the assets of the banks.
"The e:-aminer criticized the practice of both of the
institutions in
setting up on the books of the banks at par
securities purchased at less than par. It was reported that
securities purchased at a premium were also carried at par
and it Was indicated
that the aggregate of debits and
credits to undi-Tided profits on account of such transactions
s approximately the same. The practice of writing up
L'crlds from cost
to per value, however, should not be followed
:
ia nd it will be
appreciated if you will advise the Board
diether the practice has been discontinued as recommended by
Your exaniner.
."In the report or examination of the Laurel bank the
xaminer questions the practice of crediting to undivided
b
its unearned discount on instalment notes, although the
is not arnLrently otherwise on an accrual basis. At the
0.
:
1 11e.°f examination the amount of such unearned discount
_z:edited to earnings amounted
to approximately -,31000. In
of the
examiner's comments regarding such credits to
ea'
,
rrlings and the Payment of dividends and a bonus to the
it3,0:stdent, it will be appreciated if you will advise the
PC' what action has
been taken to meet the criticisms of
tlle
examiner."

n

Approved.
Letter dated March 30,
1935, approved by five members of the
13(1ìl
'
cl, to
Mr. Sargent,
Assistant Federal Reserve Agent at the Federal
s
erve Bank
of San Francisco, reading as follows:
H ilteceiPt is ecknodedged of Mr. Sonnets letter dated
March
16
,., 1/ 1935, transmitting a copy of a letter dated March
from Mr. Anderson, cashier of the 'Bank of Southern
Utaht
Cedar City,
Utah.
r,
Anderson reports that the Cedar Finance Company has
been r'
-requested to move from the main banking room of the Bank




806
4/1/35
-7H

of Southern Utah into a small room in the front of the building.
He also states that the bank desires to comply with the regulations of the Federal Reserve Eoard and asks whether such an
arrangement you'd still be in violation of the policy of the
Board and if the company should be removed altogether from the
banking premises. The Board's position as set forth in its
letter dated November 26, 1934, X-9031, to which you refer,
IS that other
financial organizations, or organizations whose
activities might embarrass the bank or render the supervision
of the bank more difficult, should not share banking quarters
Of a member bank or occupy quarters so easily accessible from
the banking
quarters as to give the impression that there is
any relation betreen the bank and such other organizations
except that of
landlord and tenant. As you know,- however,
there is no Federal law governing this matter nor is the Bank
of Southern Utah subject to any condition of membership requiring the removal of the finance company, and the question
l'as raised in this particular instance because of the fact
i at in the
2
renort of examination of thr, bank as of March 10,
234) it was stated that the directors of the bank were of
the
opinion that the finance company should obtain quarters
else.here.
"The Board's letter X-9031 does not refer to tenants in
a be
building occupying space other than in the banking
Tlarters or in quarters so arranged as to give the impression
3T'i.t they are
not part of the banking quarters. From the
submitted it would appear that the removal of the
Cedar
Finance Company from the banking quarters into a
separate room
would be in accordance with the principles expressed in
the
Board's letter of November 26, 1934. nether
th_ lea
t
finance company or any other organization is a desirable
,4!ant for the bank
would appear to be a matter for the
''1,ermination of
the directors of the bank."

I

Approved.
Counsel

Memorandum dated March 25, 1935, from Mr. Vest, Assistant

, reading

as follows:

be
"In response to several inquiries as to whether it would
pa yermissible for member banks which issue savings deposit
th°13°0ks to their customers to retain such passbooks in
17;!lr custody in
certain exceptional types of cases, a letter
Bc) recently prepared
and circulated among the members of the
ard stating that
the subject had been studied but inasmuch




807
4/1/ts

-8--

as the pending banking bill contains certain amendments which
would have a material bearing upon questions of this kind
further consideration would be deferred until the fate of
these provisions was
determined.
"However, after further consideration of the matter, Mr.
!zymczak has suggested that it would be well for the staff at
thj time
to prepare such a ruling on this question as may be
feasible and possible under existing law and to send such
ruling to the Federal reserve banks for their criticisms and
comments, advising the persons who have inquired of the Board
°II this subject
that an effort is being made at this time to
work out a feasible solution which will comply with the law.
Accordingly, it is proposed that the staff, as soon as
Practicable,
will prepare a proposed ruling which -may be sent
to the
Federal reserve banks for their criticisms and comments;
;trld in the meantime it is suggested that the attached revised
-Letters
be sent to those who have inquired on the subject adwh!ing that an effort is being made to work out a plan under
,,lch it may be possible for banks to retain savings deposit
Pssbooks in exceptional cases and under certain definite
restrict,ons if it is found that this can be done under the
tu°visions of existing law and without, in effect, abrogating
"e
distinction between savings deposits and checking
accounts."
Approved, together with letters approved by
five members of the Board on March 29, 19352 to
Messrs. Frederic H. Curtiss, Federal Reserve
Agent at the Federal Reserve Bank of Boston, W.
H. Fletcher, Acting Federal Reserve Agent at the
Federal Reserve Bank of Cleveland, J. B. Anderson,
Assistant Federal Reserve Agent at Cleveland, H.
P. Stokes, Assistant Cashier of the National
Metropolitan Bank, Washington, D. C., and W. H.
Anderson, Cashier of The First National Bank and
Trust Company of Kearny, Kearny, New Jersey, all
advising that an effort is being made to work out
a plan under which it may be possible for banks
to retain savings deposit passbooks in exceptional
oases and under certain definite restrictions if
it is found that this can be done under the provisions of existing law and without, in effect,
abrogating the important distinction between
Savings deposits and checking accounts.
Telegram to the governors of all Federal reserve banks, reading
Eta f.
‘33-10ws:




808
4/1/35
-9"Referring Board's letter B-1061 of February 7, conference
tdo.review personnel classification plans will be held in
hicago on April 17, following meeting of Board of Trustees
of Retirement System of Federal Reserve banks. Letter follows.
Approved, together with the following
letter addressed to all governors:
"As you were advised in a telegram of this date the conference to review the personnel classification plans, referred
to in the Board's letter B-1061 of February 7, 1935, will be
held -n
i Chiczgo
on April 17, immediately following the meeting
iolf the Board of
Trustees of the Retirement System of the Federal
Reserve
Denks. As most of the officers designated to attend
,le
conference on personnel classification plans are members of
he Board of
Trustees of the Retirement System the holding of
the
personnel classification plan conference in Chicago
following the meeting of the trustees will save
Considerable time and
expense.
,,
"It is suggested that the following subjects be considered
the
conference in addition to any other questions relating
10 the
personnel plans that may be suggested by the banks or
embers of the
conference at the time of or before the conference is held:
1. Should the
group classifications be eliminated?
2. Should the grade classifications be eliminated?
3. Should the
plans call for both a maximum and
minimum salary for each position or for a
maximum salary only?
4. Is there
now any necessity for designating any
Positions as 'appraised'?
5. Should any charges be made in the conditions under
which employees may be hired, promoted or
demoted, etc., without the Federal Reserve Board's
advance approval, as set forth in the attached
memorandum B-315 relating to personnel classification plans of the Federal Reserve banks?
6. Is it
practicable to adopt a general rather than
Specific description of work of certain junior
employees in order to make the plans somewhat
more flexible?
7.
Should Form A be revised and, if so, what changes
are suggested?
8.
Should every person not an officer or director who is
regularly devoting all or Dart of his time to the
bank be covered by the personnel classification
plan?




809
4/1/35
-10n9.

10.

When it appears desirable to provide more than
one salary range for a position, to cover
'junior' and 'senior' employees performing
the came general type of Tork, hov, much detail
should be given for each separate salary range
under the columns 'Description of Torkl and
'Qualifications Required'?
Should the personnel classification plans be
revised so as to have some general uniformity
in the 'Description of Work' and 'Qualifications
required'? At the present time the description
of work and qualifications required are given
in considerable detail by some banks while at
others this information is quite general in
character."

Letter to Mr. H. E. Hams, Chapman-hems Company, Bethlehem,
PerinsYlvania, reL.ding as follows:
Receipt is acknovledged of your letter of March 16, to the
Governor of
the Federal Reserve Board, regarding the difficulty
YOU
have had in getting applications of your clients for
-"mustrial loans approved bythe Federal Reserve Bank of PhiladelPhia.

"In
Federal amending the Federal Reserve Act so as to authorize the
Reserve banks to make working capital loans to estab1shed
commercial and industrial enterprises, Congress pro
:
for the establishment of an Industrial Advisory Committee
i34ed
,
t: each Federal Reserve district, which Committee is required
'
ta review each
application submitted to the Federal Reserve
th2k
,
r(3r an industrial advance and to make recommendations to
-uederel Reserve bank as to the action to be taken thereon.
toe-1-11th°rity to make industrial loans is given specifically
ule Federal
Reserve banks, and Regulation 'S', with which
You
tare
familiar, was prepared by the Federal Reserve Board
b," the idea of leaving the Federal Reserve banks unhampered
t'llaanY restrictions in the making of industrial loans other
n -,lhose contained in the law itself.
bri The Federal
Reserve Board has made special efforts to
attn
eg the facilities provided in Section 13b of the Act to the
t
tl°n of both commerce and industry, and of financing
pos
..tutions, in order that the System may be as helpful as
indslble in furnishing additional working capital to those
re,ustries to
which such loans may be made on c sound and
'2°flabl0 basis as required by law but which are not able to




810
4/1/35

—11—

"obtain accommodations from the usual sources. Mile the
Board
is authorized to make regulations under which indus—
trial
advances may be granted, it does not have, as you
any authority to pass upon the applications from a
standpoint. Therefore, it does not appear to the
Board
Board that it
would be worth while for you to go to the ex—
pense of submitting to it briefs on each of the applications
nich You have filed with the Federal Reserve bank. The
'board has,
however, forwarded a copy of this letter, together
th a copy of
your letter of March 16, to the Federal Re—
serve Bank
of Philadelphia for its consideration."
Approved.
Letter dated March 30, 1935, approved by five members of the
1341.
'
11 to Mr.

Stevens, Chairman of the Federal Reserve Agents' Confer—

e1ce,reading as
follows:
"Some few months ago Mr. Peyton, Chairman of the Board
_n the
Federal Reserve Bank of Minneapolis, discussed with
Ic'he Board
problems connected with the destruction of old
records
at his Federal Reserve bank and suggested that it
might be well
to have a committee appointed to review the
Present
procedure with reference to the destruction of records
c all Federal Reserve banks and to submit a report thereon
recommendations as to the minimum period for which
record
-ord8 of the various kinds should be retained.
wrhis matter was referred to Governor Calkins, Chairman of
Pe
Governors' Conference, and he has appointed two general
raeeIating men and two counsel to serve on such committee. The
Gomuers designated
by Governor Calkins are Mr. Sailer, Deputy
atv
:
rnor and Mr. Logan, Deputy Governor and General Counsel
Assistant:he Federal Reserve Bank of New York, and Mr. McLarin,
tl,
Deputy Governor and Mr. Parker, General Counsel, at
Federal Reserve Bank of Atlanta. In order that questions
dennng to the destruction of old records in the Agents'
is--rments may be adeqoPtely considered by the committee it
c_ suggested that
you designate two members to serve on the
8nmittee. It will be appreciated if you will advise the
Zal'c.I and Governor Calkins of the names of the persons you
°Tpolnt
to serve on the
committee."

r




Approved.

.811
-12-Letter dated March 30, 1935, approved by five members of the Board,
to Mr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of
Dau.a
8) reading as follows:
"This refers to your letter of January 25, 1935, transmitting a letter dated January 24, 1935, from Mr. Heath,
'
ePartmental examiner of the Texas Banking Department, regarding the letter dated January 4, 1935, of the Comptroller
Of the
Currency with reference to the payment by national
banks of dividen
ds on preferred stock. Your letter and Mr.
Haeathls letter were referred to the Comptroller of the
Currency,
nd the followi
ng paragraphs are taken from his -reply dated
March 19, 1935:
'The ruling set forth in office letter of January
4, 1935, referred to in the above correspondence, is
neither a reversal of nor an exception to the established policy of this office that a national bank be
to charge off all of its losses. The ruling
Sanctions, under the circumstances stated
the payment of the dividend on preferred
stock out of so much of the net profits of the bank
for the six months' period under determination as
shall be necessary for such purpose before the impairment of the
common capital of the bank is restored.
'The ruling pertains only to the matter of the
Payment of dividends on preferred stock and applies
Only to those cases where there remains an impairment
of common
capital after the issuance of preferred
stock, whether such impairment is caused by losses
that have been
charged off or by losses that still
remain on the books
of the bank contrary to ins
tructions of this office.
'Your
of Report attention is invited to the current forms
of Condition (Forms 2130 and 2139,
mptroller or
the Currency). Such forms of Report
.f Conditio
n
require
the disclosure by the bank of
Its net
capital as well as its authorized capital.
'In the letter of January 4, 1935, it was
sip
elfically provided that in all cases the Board of
'..-:.1.rectors, in determining the net profits for any six
thst
pr te-doPeriod, shall make such charge-offs and
of assets as shall be appropriate to make
02vision for all items classified as "estimated losses"
report of examination of the bank next preceding
thethe
end of such six months' period and, in addition

required
11=1.

r

ye

'141




812

6
4/V35

-13-

"thereto, for all other items determined by the Board
of Directors to be losses during such period. However,
in respect only to the payment of the cumulative
dividends on preferred stock, it sanctioned the payment
Of dividends on preferred stock even though the common
of the bank be impaired by items classified as
"
e stimated losses" and by items determined by the Board
"estimated
of Directors to be losses, whether charged off or still
carried on the books of the bank, if net profits would
IT available for application to the payment of such
dividends for the six months' period, except for the
impairment of the common capital, and if such impairment as of the date of the declaration of any ,dividend
on preferred stock is not in excess of the impairment
as of the date of approval by this office of the issuance
Of the
preferred stock.'
'Toll will note that the Comptroller of the Currency states
':'t,tne position taken in his letter of January 4, 1935, is
a reversal of nor an exception to the established policy
Of
s office that a national bank be required to charge off all
Of lts
losses.
c_
"The Board has noted your comments regarding the excellent
srperation which has always been given you and the Federal ReeBank of Dallas by the State Banking Department in matters
mutual
interest and trusts that close cooperation may
Pl*evail in the future."

07

Approved.
to mr.

Letter dated March 30,
1935, approved by five members of the Board,

Of sari

Sargent, Assistant Federal Reserve Agent at the Federal Reserve Bank
F1'ancisco, reading as follows:

and "Reference
is made to your letter dated January 18, 1934,
!° the Board'
ar
y 29, 1934 In answerth
telegram dated January
regarding the question whether a corporation which
of 8
,
a number of
shares greater than 50 per cent of the number
bealiSruares voted at
the last election of directors of a member
afti:;.bIlt which
did not vote its shares, is a holding company
within the meaning of the portion of section 2(c)cl of
the
8111`ing Act of 1933 which defines a holding company affillate:
di
:
s 4 corporation which owns or controls, directly or
votesd%tlY, 'more than 50 per centum of the number of shares
the election of directors of any one bank at the
Pre
ceding
election.'




813
4/1/35
-14your letter it appeared that the corporation in
question owned 464 of a total of 1,000 shares of stock of a
national bank. You stated that the corporation voted its
Shares at the 1933 election of directors of the bank and cast
more than 50 per cent of the number of shares voted at such
?lection. You also stated that at the 1934 election of
directors the corpora
tion did not vote its shares, but no
statement was
made
as
to the number of shares which were voted
at such
election.
"You presented the following inquiry regarding the interPretation of the above quoted provision of section 2(c)(1)
of the Banking
Act of 1933:
'Query (1): In order to be a "holding company affiliate", must the corporation own fifty
per centum of the stock actually represented and
voted at the meeting, or (2), is it still a "holding company affiliate", even though its stock was
not represented and voted at the meeting but the
number of shares owned by the corporation equaled
more than fifty per centum of the number of shares
represented and voted at the meeting?'
In answer to such inquiry, the Board stated the following
in its telegra
m dated January 29, 1934:
'Referring your letter January 18 Board agrees
with opinion of your counsel that query numbered
(2) is to be answered in the affirmative inasmuch
as corpora
tion owning a number of shares of stock
of national bank which exceeds fifty per centum of
the number of shares voted
for the election of
bankis directors at preceding election is holding
company affiliate within statutory definition even
though it does not own more than fifty per centum
of the particular shares which were actually voted.
Statutory
reference not to shares but to number of
Shares is deemed controlling evidence of correctness of this
interpretation.'
nThe Board has recently considered this question in connect• "The
fro__ with another case and has expressed an opinion different
decTsthat stated in the above telegra
m. In the case recently
inem,
cled, the corporation owned 25,000 of the 60,000 shares of the
1'2" bankis
wer:ctors of outstanding stock. At the preceding election of
the bank 33,718 shares were voted, none of which
that °Ilrnsd or controlled by the corporation. The Board ruled
a hoVn the
basis of the above facts, the cornoration was not
%Li
ng company affiliate within the above quoted definition.

4;




814
4/1/35
-15-

"Since the Board was not furnished with all of the facts
involved in the case presented in your letter of January 18,
,
3-?34, it is impossible to determine at this time whether a
L.LtlIferent ruling should now be made in such case. However,
t,
.-che
Board's recent ruling is called to your attention in order
,hat you may
be advised that the Board has departed somewhat
111 the opinion expressed in its telegram to you. If a case
snould arise involving the interpretation of the above quoted
ParovIsion, it is suggested that the question, accompanied by
full statement of the facts, be submitted to the Board for
a rulings',
Approved.
Letter to '21r. Case, Federal Reserve Agent at the Federal Reserve
BEalk

of New
York, reading as follows:
r, "This refers to
Mr. Dillistin's letter of March 26, 1935,
5 ()rting a possible violation of the provisions of section
u9 of the
Revised Statutes of the United States by Dorothy
'dallette, a former employee of the Bank of the Manhattan
oci,m13'7.ny, New York, New York, in whichhe states that, in view
tne smell
amount involved, he did not deem it necessary to
r Port the
matter to the local United States Attorney.
th
"Since it appears that the amount involved is only $3.00,
12 Board concurs in the suggestion of Mr. Dillistin that no
Zort of the
matter to the United States Attorney need be
to!and, accordingly, the Board is not reporting the matter
Oae Attorney General of the United
States."
Approved.
Letter to - Ir. Hon, Federal Reserve Agent at the Federal Reserve

8
Of

Riohliond, inclosin7, the following amended Clayton Act permit

tilL4n1iLl'aion to the
applicant:

Off,

r

Kingry, to serve at the same time as a director and
Vir-?er °f The Lincoln National Bank of Hamlin, Hamlin, 1Nest
Gr,lnie, and as a
director of The Oil Field National Bank of
11(14_1thsvi1le, Griffithsville, West Virginia, for the period
-uig January
IA, 1936.




Approved.

for

815
4/IA5
-16-Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve

Bank of Chicago,
reading as follows:

"Reference is made to Assistant Federal Reserve Agent
Young's letter of March 20, 1935, with which was inclosed a
rpy of a letter dated March 18, 1935, from Mr. Charles W.
cTith, Lapeer, Michigan, requesting reconsideration of his
t::"ton Act application for permission to serve at the same
,J40 as director of The First National Bank of Lapeer and
Lapeer Savings
Bank, both of Lapeer, Michigan.
but "The Board has reconsidered the application of Mr. Smith
still feels that the issuance of the permit applied for
:
7 °1-11d be incompatible with the public interest, as indicated
:
4 11 its letter
of March 13, 1935, to you. Please inform the
ITPlicant accordingly and advise the Board promptly as to
steps mr. Smith proposes to take in order to comply with
1,Itt
e provisions
of the Clayton Act."

7

Approved.
Letter dated March 30, 1935, approved by five members of the Board,
to all aPPlicant for a
Clayton Act permit advising of the issuance of a
PelltLit by the
Board as follows:
Mr. p.

°. Huber, to serve at the same time as a director of
The 6eab
oard-Citizens National Bank of Norfolk, Norfolk,
salinia, and as a director and officer of the Norfolk
be ngs & Loan
'iod ending Corporation, Norfolk, Virginia, for the
January 14, 1936.
Approved.
Letters to applicants for Clayton Act permits advising respectiveOt the 4
issuance of
permits by the Board as follows:
or th''
.7 L. Porter, to serve
direc
:Lansing National Bank,
of the Central Trust
the
period ending January




at the same time as a director
Lansing, Michigan, and as a
Company, Lansing, Michigan,
14, 1936.

816
4/1/35
-17-

Mr. R. H.
Scott, to serve at the same time as a director
Officer of the Lansing National Bank, Lansing,
-lichigan, and as a director of the Central Trust Company,
Lansinq, Michigan, for the period ending January 14, 1936.
Mr
'G.
Smith, to serve at the same time as a director
of the Lansing National Bank, Lansing, Michigan, and as
director of the Central Trust Company, Lansing, Michigan,
for
the period ending January 14, 1936.
Mr. Hugh L. Clary, to serve at the same time as an officer
of.the Bank of America National Trust and Savinc:s Associ'
c - ',1°11, San Francisco, California, and as a director and
,
13-1-floer of the Bank of America, San Francisco, California,
tor the period ending January 14, 1936.
!Jill:* A. J. Gock, to serve at the same time as an officer of
o"e Bank of America National Trust and Savings Association,
fan Francisco, California,
and as a director of the Bank of
americal San Francisco, California, for the period ending
January 14,
1936.
:
;
1 4 G. J. Pen,
,irio, to serve at the same time as an officer
trie Bank of America National Trust and Savings AssociaBl'n, San Francisco, California, and as a director of the
• of America, San Francisco, California, for the period
endlng January 14,
1936.
%* A. E. Sbarboro, to serve at the same time as an officer
the Bank of America National Trust and Savings Association,
reirI
:rancisco, CalL'ornia, and as a director of the Bank of
ja,lea, San Francisco, California, for the period ending
•uuary 14, 1936,

4

Approved.
There Irere then presented the following applications for changes
st°ek of

Federal reserve banks:

1)iztrZt1O5
.f
2.
0r ADDITIONAL Stock:
Shares
k
Ba
ldwi4,1(4,4-11 National Bank and Trust Company,
New York.
284




284

4/1/3s
-13-

Lt

;
oar ADDITIOITAL Stock: (Cont'd)
111-1V.
The Fcrme17.Fational Bank of Minnesota Lake,
Minnesota Lake, Minnesota.
The American
National Bank of Bridger,
Bridger, Montana.
'"e First
T, .C5
,. Sault National Bank of Sault Ste. LI,r1-,
Ste, Marie, Michigan.
l'Irst
National Bank in Jackson, Jackson,
Il
innesote.
trict No. 12.
uofimen-Dobson Bank et Trust Company,
,.
Chehalis, Washington.
G* Young 9z Co. Bank,
Oakland, Oregon.
Lf'01iank of
Southern Utah, Cedar City, Utah.
,1:1m'ilercial Security Bank, Ogden,
Utah.
T n.7 Bank of
Hoquiam, Hoquiam, Washington.
n'ellia State
Bank, Kalama, Washington.
Valley Bank, Kelso, Washington.
cjtj
State Bank, Puyallup, Washington.
The
Ritzville State Bank, Ritzville,
kshington.
A 1
1,0..Lications for SURRENDER of Stock:
Strict
No. 2.
he
Viest H
empstead National Bank,
rest H
empstead, New York.
Z2
trict
"" First
National Bank of Middleburg,
41-(idleburr, Pennsylvania.
First
ITailonal Bank of Shippensburg,
Shipp
ensburg, Pennsylvania.
rlistrict
No. 7.
theRorneo
Savings Bank, Romeo, Michigan.
iltrict No.
O.
he
Pirst
National
Pine City,
TheP1110 City,
Minnesota.
Bankof
First
11, Cerson,National Bank of Carson,
'° First N North Dakota.
ational Bank of Brov,erville,
Brov,erville, Minnesota.




Shares

6
7
105
10

21
12
90
12
10
6
21
2
Total

15

30
9

87

18
18
50

818
44185
-194 Dlications
for SURRENDER of Stock: Contld)
contid
The First
National Bank of Lima, Lima,
Montana.

Towanda National Bank, Towanda, Kansas,
American National Bank of Wetumka,
Weturaka, Oklahoma.

The

,41)4talcALN2 _12
"
01 Pirst 4
National Bank of Hanford,
Hanford, California.




Shares

20

18
21

120
Total

Approved.

Thereupon the meeting adjourned.

Governor.

86

120
386