The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1008 A meeting of the Federal Reserve Board was held in ;Yashington ea T huraday, April 12, 1934, at 11:30 a. In. PRESENT: Er. Mr. Mr. Mr. Mr. Black, Governor. Hamlin Miller Thomas Szymczak Mr. Mt. Mr. Mr. Yr. Mr. Morrill, 3ecretary Carpenter, Assistant Secretary Bethea, Assistant Secretary Martin, Assistant to the Governor Wyatt, General Counsel Paulger, Chief of the Division of Examinations The Board considered and acted upon the following natters: Telegram dated April 12, 1934, from Ir. Hoxton, Chairman of the Federal Reserve Bank of Richmond, advising that, at a meeting of the board of directors today, no change was made in the bank's existing .ledtlle of rates of discount and purchase. Without objection, noted with approval. Ilemorandum dated April 9, 1934, from Mr. Smead, Chief of the 1)41i°11 of Bank Operations, reco,amending the appointment of Miss Laura 48 a stenographer and typist in the division, with salary at the A.,560 per annum, effective April 12, 1934. 8443?°Ved The recommendation by four members of the Board on April 11, 1934. Approved. Letter dated April 11, 1934, approved by five members of the 411'cl' to • Case, Chairman of the Federal Reserve Bank of New York, 111'g as follows: the "Your letter of March 29 in regard to salaries of officers of tle o Bederal Reserve Bank of New York has been brou,-7ht to the atten4 of the members of the Federal Reserve Board. It is noted that 'f) 4/12/34 -2- "the salaries listed at the top of page 2 of your letter which the directors of the Federal Reserve Bank of New York have fixed for t r,he Year 1934 are at the same rates as were in effect on December °1) 1933, except in the cases of Messrs. Sailer, Crane and Sproul, and that in these three cases the salaries fixed are at the rates which the Board stated in its letter of January 23 it would be l',1111ing to approve. Therefore, the Board approves, for the year -1934, the payment of salaries to the officers named below at the rates stated: Name W. R. Burgess J. E. Crane Gidney W. S. Logan L. R. Rounds L. F. Sailer Allan Sproul "U. L. W. T. M. B. L. Coe Knoke Rice Dodge Salary Title Deputy Governor Assistant to the Governor and Secretary Assistant Deputy Governor rt it TT it General Auditor TT -30,000 25,000 18,000 22,000 30,000 30,000 16,000 13,000 14,000 11,000 12,000 "With respect to Er. John H. Williams, whose salary has been fix ed by your board of directors at the rate of ;,;22,000 a year, it ?Pears that he will not in fact be an officer of the bank in the ,!nsa ordinarily implied by that term, but that it is contemplated c6ilat he will act as an economic adviser to the directors and offiel's of the bank on monetary and credit policies. Therefore, it 16. seem that he should have some designation which is indicative his true status in the bank and the Board suggests that he be 1.J.ven the designation 'economist'. On this basis his salary at the ate of ',:22,000 per annum for the year 1934 is approved by the Board. "With respect to 1,,r. Sailer's salary, if you will indicate when Your the directors, or a committee thereof, desire to come to Washington, Bor sd will arrange to meet with them for the purpose of discuss11 this h matter. or "It is noted that the directors of the Federal Reserve Bank ex Wew York welcome the suggestion that arrangements be made for an be2hange of views with respect to salaries of officers of the bank definitive action is taken as to future changes. The plan e lch the Board has in mind is that at some time before important allges in salaries are made, which ordinarily take place as of rrtlarY 1 each year, the directors of the bank should consider inwhat action they desire to take and arrange to have either tlie Chairman of the Board or a cammittee of the directors call upon e Board's committee for the New York district and go over the 1010 -3"matter with a view to arriving at an understanding, subject of course to the Board's formal action in the usual way when the regular schedule of salary rates for the succeeding year is submitted. Such a conference miv,ht well be arranged late in November 3° as to allow ample time for the further consideration of adjustments that might seem advisable as the result of such a conference." Approved. Letter dated April 11, 1934, approved by four members of the 13°a`rcit to 1,.r. Hoxton, Federal Reserve AEent at the Federal Reserve Bank °11 Richmond, reading as follows: . ."Reference is made to your letter of I.:arch 30, 1934, transmitt ing the request of the 'Planters Bank and Trust Company of Farmville, Virginia, for cancelation of condition numbered 17 prescribed by the Board in connection with the bank's application for membership. "In view of all the circumstances and the recommendation of Your Executive Committee, the Board cancels condition numbered 17 contained in its telegram to you of April 18, 1933, prescribed in connection with the application for membership of the Flanters 188tak and Trust Company of Farmville, and has prescribed in its Place the following condition: 17. Such bank shall maintain an amount of paid-up and unimpaired capital and unimpaired surplus which, in the judment of the Federal Reserve Board, will be adequate in relation to its total deposit liabilities, having due regard to the general Principle that a bank's capital and surplus ordinarily should not be less than one-tenth of the average amount of its aggregate deposit liabilities, and, in some circumstances, should be more than one-tenth of such amount. aa "In connection with the above condition and in the absence of e!, special action by the Board, if in any period of twelve months l?'i?Ig on the thirtieth day of November the averac.e amount of deposit baabllities of the bank during such period, as determined on the thsi3 of reports made by the bank to the Federal Reserve Bank for PurPose of computing its required reserve, exceeds ten times the iregate amount of the bank's paid-up and unimpaired capital stock as alaimpaired surplus, the Board will expect that the bank, as soon th Possible and within the next succeeding six months, will increase tra :IlL'regate amount of its paid-up and unimpaired capital and un' av alred surplus to an amount at least equal to ten per cent of the el'ags amount of its deposit liabilities during such twelve months. "It is understood, of course, that cancelation of condition Z 1 -1 -4"numbered 17 contained in the Board's telegram to you of April 18, 1933, prescribed in connection with the application for membership Of the Flanters Bank and Trust Company of Farmville, will not be efrective unless and until the board of directors of the bank adopt aX1 aPPropriate resolution accepting condition numbered 17 as revised, and has transmitted to the Board, through you, a copy of sUch resolution. "You are requested to advise the .-lanters Bank and Trust ComPanY of Farmville of the Board's action." Approved. Letter dated April 11, 1934, approved by four members of the )8111 ' (1) to the Reconstruction Finance Corporation, reading as follows: "Reference is made to Mr. Klossner's letter of April 3, 1934 ,dvisin,c: that the Davenport Bank & Trust company, Davenport, Iowa, Ilad requested the cancellation by the Reconstruction Finance Corration of its commitment to purchase :400,000 preferred stock in nt institution. I.;r. Klossner states that the bank apparently colltem,plates conversion into a national institution and in view of !110/1 contemplated action, inquires if there is any objection on 'he part of the Federal Reserve Board to the cancellation of the eonmitment referred to. "The Board feels that should the conversion of the subject bwal Into a national bank not be effected the increase in its capirl QS orig .inally planned would be advisable and for this reason nsiders that it would not be desirable for the Aeconstruction ance Corporation to cancel its commitment in advance of actual -°11version. r Approved. &kird Letter dated April 11, 1934, approved by four members of the ' to the"City i;ational Bank of Baton Rouge", Daton Rouge, Louisiana, Ndi 4e as follows: pod "Reference is made to the application filed by you through the De "al Reserve Agent at the Federal Reserve Bank of Atlanta, for sellaission to exercise fiduciary powers under the provisions of etlon 11(k) of the Federal Reserve Act. "The Federal Reserve Board has considered this application and lo'holsizes your bank to act, when not in contravention of State or ejul eal law, as trustee, executor, administrator, registrar of stocks ezit bonds, guardian of estates, assignee, receiver, committee of -ates of lunatics, or in any other fiduciary capacity in which 4112/34 -5- l :State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Louisiana, only in the specific trusts 14 which the Bank of Baton Rouge and the Union Bank 6, Trust (;amP,anY of Baton Rouge had been appointed and were acting on the (late the City National Bank of Baton Rouge was authorized by the Comptroller of the (;urrency to commence business, the exercise of such powers to be subject to the provisions of the .Federal Reserve -&ct and the regulations of the Federal Reserve Board. Action has b?o4 deferred upon your application for full fiduciary powers until another examination of your institution has been made and a rePort of such examination is available. "The Board feels that, if you are tendered any of the trusts now held by the Bank of Baton Rouge or the Union Bank & Trust CornPony of Baton Rouge, you should carefully scrutinize their condi" 104 and should not accept any of such trusts which, through their assumption may be detrimental to the interest of your institution." Approved. Letter dated April 11, 1934, approved by four members of the oltra t° Li'. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve rn,,approves a reduction in the common capital stock of 'The Snuare National Bank', Franklin Square, New York, from e'lo0 1000 to $50,000, pursuant to a plan which provides that the r - 0 capital shall be increased by the sale of $100,000 of pre:red stock to the Reconstruction Finance Corporation and/or orlirs, and that the released capital, together with the surplus ,000, shall be used to eliminate a corresponding amount of ' Ilb .standard assets, all as set forth in your memorandum of !larch 31, 1934 BOapA e . "In considering the plan under which Uhe reduction in common ti(1/31ta1 is to be effected it was noted that there will remain in tile bank's assets securities depreciation in the amount of .;;22,670 co the lower grades and 45,026 in the higher grades, which, if itlIsldered as a loss, would impair its capital approximately ::37,700. 1v4,s assumed, however, that you have this situation in mind and so.'t require further corrections as soon as it is feasible to do Approved. Letter dated April 11, 1934, approved by four members of the C4111C1) t --. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation the Federal Reserve fl 0 4/12/34 -6- I :Board approves a reduction in the common capital stock of 'The Iratertown National Bank', Watertown, New York, from IA00,000 to A%.„ q-r410,000, pursuant to a plan which provides that the bank's capital shall be increased by the sale of „-200,000 of preferred stock to the Reconstruction Finance Corporation, and that the released ?aPital shall be used to eliminate estimated losses, depreciation 11 ; securities in the lower grades and other unsatisfactory assets, all as set forth in your memorandum of Larch 31, 1934." Approved. Letter dated April 11, 1934, approved by four members of the /3(3ard, to k-r. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The 'irilliston National Bank of Williston Park', East Williston, New : 1_ ork, from 00,000 to ',:25,000, pursuant to a plan which provides Ghat the bank's capital shall be increased by ::25,000 of preferred stock to be sold to the iieconstruction Finance Corporation and/or Others, and that the released capital, together with a portion of the bank's surplus, shall be used to eliminate all doubtful loans alid securities depreciation, all as set forth in your memorandum or :,larch 31, 1934." Approved. Letter dated April 11, 1934, approved by four members of the 'oe,l,c1 ' to lir. O'Connor, Comptroller of the Currency, reading as follows: Re "In accordance with Lr. Awalt's recommendation, the Federal ,1, 3 ,erve Board approves a reduction in the common capital stock of r "e County National Bank at Clearfield', Clearfield, Pennsylvania, ; 225,000 to ::202,500 pursuant to a plan which provides that the c:*4.eased capital shall be used to augment the surplus account in a , A rresPending amount, all as set forth in la-. Awalt's letter of ?, 1934." Approved. Letter dated April 11, 1934, approved by four members of the to Mr. O'Connor, Comptroller of the Currency, reading as follows: 8014 "In accordance with your recommendation, the Federal Reserve approves a reduction in the common capital stock of 'The -Lct°n National Bank', Sheldon, Iowa, from :,:,50,000 to 425,000, ' 0 t 4/12/34 -7- “Pursuant to a plan which provides that the bank's capital shall be increased by the sale of -25,000 of preferred stock to the Reconstruction Finance Corporation, and that the released capital) tocrether with a voluntary cash contribution of :,,25,000 to be made by local interests, shall be used to eliminate unsatisfactory assets, all as set forth in your memorandum of April 4, 1931.” Approved. Letter dated April 11, 1934, approved by four members of the to kr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve ! )e.rd approves a reduction in the common capital stock of 'The 1:1rst National Bank of Elbow Lake', Elbow Lake, Minnesota, from ? ) 50,000 to ;25,000, pursuant to a plan which provides that the , ank's capital shall be increased by .25,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital, together with a portion of the bank's surplus, ! hall be used to eliminate unsatisfactory assets and securities depreciation in the amount of approximately 27,500, all as set 1°1th in your memorandum of April 3, 1934." Approved. Letter dated April 11, 1934, approved by four members of the 1141,1,a '"0 hr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve 80e.rd . a.„,proves a reduction in the common capital stock of 'The o lrQt National Bank of Cleveland', Cleveland, Oklahoma, from c;50,000 t„ 25)000, pursuant to a plan which provides that the bank's capi;7-4 shall be increased by ,25,000 of preferred stock to be sold to ,he l ieconstruction Finance Corporation, and that the released capiii6Lal shall be used to eliminate substandard assets, all as set forth Your memorandum of April 4, 1934." t Approved. Letter dated April 11, 1934, approved by four members of the to Mr. O'Connor, Comptroller of the Currency, reading as follows: toet "In accordance with your recommendation, the Federal Reserve I'd approves a reduction in the common capital stock of 'The -rat national Bank of Nevada Ilissourit, Nevada, Missouri, from _1015 4/12/34 -8- 'T)100,000 to 50,000, pursuant to a plan which provides that the hank's capital shall be increased by c":50,000 of preferred stock to be sold to the Reconstruction Finance Corporation and that the released capital shall be used to eliminate a corresponding amount or substandard assets, all as set forth in your memorandum of April 3, 1934. "In considering the plan under which the reduction in common capital is to be effected, it was noted that your examiner regards the bank's management as weak and unsafe. It is assumed, however, that You have this criticism in mind and that, whenever it is feasible to do so, you will require such changes as may be pract icable." Approved. Letter dated April 11, 1934, approved by four members of the totkrd 'to 1.1r. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The IlaWlins National Bank of Rawlins', Rawlins, ';yoming, from 0_50,000 .*, 100,000 pursuant to a plan which provides that the bank's capi4_41 shall be increased by :)50,000 of preferred stock to be sold 6° the Reconstruction Finance Corporation and that the released alAtal shall be used to eliminate substandard assets, all as set °I'th in your memorandum of April 3, 1934." Approved. Letter dated April 11, 1934, approved by four members of the to 1.p• O'Connor, Comptroller of the Currency, reading as follows: r_ "Receipt is acknowledged of your letter of April 4, 1934, with t:Ference to the proposed reduction in common capital stock of First National Bank of Santa Rosa', Santa Rosa, New 1„exico, was approved by the Board on December 22, 1933, in accordance 1 1 the terms and conditions as stated in your letter of December 1933. 444_ "In accordance with your recommendation, the Board hereby Ilds its previous approval to permit the elimination of the re(111i reZent that a separate corporation obtain a loan of -1;10,058.63 the purpose of eliminating undesirable assets, and approves the Posed reduction in common capital stock of ',)25,000 and the sale be '25,000 of preferred stock upon the condition that no money will wilreturned to the shareholders but that the amount of the reduction re 1 be used to eliminate or reduce undesirable assets which are to 14E 1n the property of the bank; and upon the further condition that "as the preferred stock is retired the common stock will be correspondingly increased, all as set forth in your letter of April 4, 1934." Approved. Letter to the Federal reserve agents at all Federal reserve barilre, reading us follows: "Inclosed are ten copies of a revised form of report of examination. This form has been prepared in order to provide for additional information required by the Banking Act of 1933 and to standardize, so far as possible, presentation of the information ) ideveloped in the examinations made by the various Federal reserve ,,anks. In preparing this form, the Board's Division of Examinations as had the cooperation of several of the examiners from the :Federal reserve banks who had been on temporary assignment with the Board. "When this revision was first considered, the various Federal ?serve Agents were advised that, when preliminary drafts were comvteted, copies would be sent to all Federal Reserve Agents for eonand suggestions. In view of the fact that examiners from le various Federal reserve banks participated in the preparation of 1fl . 11e form, reporting to their banks as the work progressed and offerSuggestions coming from their banks, and inasmuch as several the banks desire to print their supplies immediately, the form -Ls offered as a final form and not as a preliminary draft. In pre.ar4le its forms, a reserve bank may expand any schedule or alter a .1) s cehedule in any respect, provided that at least the information , alled for in the proposed form is developed. If additional in'Ormation is deemed advisable in any case, such information should ! j ,set forth on supplemental pages inserted in the proper places eiven the appropriate page numbers followed by the letters 'a', '1)1, t c,, etc. "The report is submitted with the idea that it is a flexible ro1131 which can readily be adapted to the requirements of all disiTets with varying State laws and banking regulations, and to any ,usual situations. Mile it is expected that the forms as prepared eL'Y the various Federal reserve banks may of necessity vary to some ellt from the proposed form, it is requested that no change be res`ie ia the order of the report or in the numbering of the pages, as, ' cler review purposes, it is highly desirable that the information be veloped in a uniform manner. "The original purpose of the revision was to prepare a standard4Zed J.orm of report for use by the twelve Federal reserve banks. ' :-tl c3nce the revision was begun the scope of the plan has been broadened fl include cooperation with the Federal Deposit Insurance Corporation the Comptroller of the Currency in order to obtain the advantages Ich miht be gained through the use of more or less uniform forms 4/12/34 -10— "of examination reports. "The Federal Deposit Insurance Corporation had been considering a revision of its examination forms, and a committee of examiners rrora that organization adopted the basic plan of the report which had been prepared for use by the reserve banks. A number of changes euEgested by the examiners for the Corporation have been incorporated in the final draft submitted herewith which has been adopted for use bY the Federal Deposit Insurance Corporation with such changes as are necessary to provide the special information needed by that Corporation. "A revision of the present form of national bank examination ' lePort is planned by the Office of the Comptroller of the Currency. rafts of the attached form have been reviewed with representatives his office, and it is understood that in a number of respects the revised form will be similar to the form submitted herewith. In particular, it is understood that the section covering the examinalon of the trust department will be substantially the same. "It will be noted that the pages relative to the trust departMent provide for few schedules. The activities and conditions of slIch departments are so varied that, while it has been considered advisable to endeavor to develop certain information, both general alld specific, through the use of a standard form of report, it has aeamed best to leave to the discretion of the examiners the number form of supporting schedules considered necessary to reflect the condition of the trust department. "If the form is submitted to any of the State banking authorities, it sLi 1, ould, of course, be mnde clear that the form is designed to be tleXible and not a complete report which may be used without change ,t,1 all States. Should any of the State banking departments revise 2eir reports in accordance with this form, it is suggested that you ' t.leiquest the departments to retain, so far as possible, the order of e sUggested report and the numbering of the pages." Approved. Letter dated April 11, 1934, approved by five members of the totlz,d 't° 11 tiLO4 H. F. Strater, Secretary of the Governors' Conference, re- t0 his letter of Larch 29, 1934, and suggesting for his consideralilimber of changes in the tentative draft inclosed with his letter Minutes of the Governors' Conference held in Washington on Larch 4.9 Approved. 4i/1.2k4 -11Letter dated April 11, 1934, approved by five members of the c)e'rd) t0 the Secretary of the Treasury, reading as follows: "In connection with the correction of a certain matter involving a State bank situated in 1,:assachusetts and having membership in the 1-?edaral Reserve System, the Federal Reserve Agent at the Federal Reserve Bank of Boston has received from Arthur Guy, Commissioner of Banks of the Commonwealth of Massachusetts, a letter dated February 14) 1934, concluding with the following paragraph: 'In connection with your question as to what steps have taken to correct this matter, may I point out to You that no information has reached me to the effect that the Secretary of the -Zreasury has as yet returned to the State Supervisors the supervision of state member banks, tae President's Proclamation of December 31, 1933, having been limited to a return to State Supervisors of control over state non-member banks.' "The Federal Reserve Agent has referred Mr. Guy's letter to the Fee -eral Reserve Board for information with respect to the doubt exPlbeesed by LT. Guy as to the present right of State authorities to e4ercise supervision over State member banks. As this question is 3re Properly within your jurisdiction it is referred to you in order You may advise Mr. Guy and it will be appreciated if you will .L_Ilraish the Board with a copy of your letter to Mr. Guy for transssion to the Federal Reserve Agent at Boston for his information : 111d advise whether there will be any objection to the Board's for41,4rding copies of your letter to the other Federal reserve agents for their information." t Approved. Draft of a letter to Senator Fletcher, Chairman of the Banking Committee of the Senate, prepared for the signature of the 4el'etarY of.the Treasury in accordance with a request received under or Llarch 29, 1934, from Mr. William H. McReynolds, Administrative Asa4tezt to the Secretary of the Treasury. The letter, which was ap- ileci bY five members of the Board on April 11, 1934, read as follows: "This refers to the letter dated March 26, 1934, from the , Acti 14, ug Clerk of your Committee, requesting a report on S. 3134 bl'oduced by Senator Vialsh on March 20 (calendar day, March 22), 1019 V12/34 —12— "1934, entitled 'A Bill To amend the Banking Act of 1933'. "Section 20 of the Banking Act of 1933 prohibits affiliations after June 16, 1934, between a member bank and any corporation, association, business trust, or other similar organization engaged Principally in the issue, flotation, underwriting, public sale, or distribution of securities. The bill S. 3134 would amend this section so as to provide that in any case in which it shall appear to the satisfaction of the Secretary of the Treasury that, having proceeded diligently, a member bank has been unable to consummate plans ill Process for the divestment of such affiliation before June 16, },9341 a further period of not exceeding one year shall be allowed zor such purpose. "No case has been brought to the attention of the Treasury DePartment the circumstances of which would warrant an extension the period permitted by existing law for the separation of a 1118'nlcer bank from an affiliated securities company and in the circumatances the Treasury Department knows of no sufficient reason why !II additional period of time should be allowed for this purpose. , however, the evidence presented to your Committee with reference 2 this subject is such that the Committee feels that it is advisable flat the period should be extended, it is the view of the Treasury L2aPartment that any member bank should be permitted to avail itself up the additional period pro-rided in order that all such banks may be Placed on a basis of equality in respect to this matter and that there lerZY be no discrimination among them. The Treasury Department suggests e efore, that if your Committee is favorably disposed toward the j actIlent of a bill for this purpose such bill merely provide that , 1 4n words 'one year' in the first paragraph of Dection 20 of the king Act of 1933 be changed to read 'two years'. "Section 20 also provides that for each violation of the section ' 31a member bank involved shall be subject to a penalty not er:ceeding 0 Per day for each day during which such violation continues, ' „... .that such penalty may be assessed by the Federal Reserve Board 'tits discretion. If the section is amended so as to authol.ize an b ?hsion in any proper case of the period within which a member 314 must divorce an affiliate engaged in the business of a securit es company, it would seem to be logical and proper that such discret; 011 should be vested in the same supervisory body which is empowered thc,aseess the penalty for a violation of the section, and, accordingly, preasury De.oartment does not favor the amendment proposed in S. 3134 ''lch would vest such discretion in the Secretary of the Treasury." J J Approved. to Letter dated April 11, 1934, approved by four members of the Board, 4r. " -Larence Lauphinot, New York, New Yorft, reading as follows: "The .tederal eserve Board has given consideration to your 1020 "aPPlication under Section 32 of the Banking Act of 1933 for a Permit to serve at the same time as director of the Colonial Trust ,(Y1.113anY, and as director and officer of the Frederic H. Hatch and `41raPanY, Inc., a dealer in securities, both of New York, New York. "The Federal Reserve Board has reached the conclusion that it waS the intent of the Congress in enacting Section 32 to terminate all relationships of certain types between member banks and dealers in securities, apparently because it felt that such relationships might tend to influence the banks' credit and investment policies and their advice to their correspondent banks and other customers re1pecting investments in a manner which the Congress deemed to be incompatible with the public interest. The Board accordingly feels that it may not properly grant permits authorizing relationships Which are actually of the kind referred to in that section and that itS authority to issue permits should be exercised only in exceptional cases; for example, those which are included within the literal terms of the statute but which are actually of a kind different from those at which its provisions were directed. "It appears that Frederic H. Hatch and Company, Inc. is prinal'ilY engaged in purchasing, selling, end distributing securities :111c1 that, therefore, the relationship covered by your application is lithin the class which that section was designed to terminate. Ac°rdinglY, the Board is unable to find that it would not be incomtible with the public interest as declared by the Congress to grant J011r application. "In the event that you desire to submit further facts or arguMent • support of your application, the Board is prepared to , 8 in give e111 careful consideration. However, any such additional facts or Zf;Clzments should be submitted as promptly as possible, in writing, r°11gh the Federal Reserve Agent." Approved. Governor Black stated that when Governor Schaller of the Federal 1) ,aerv e Bank of Chicago was in Washington on April 2, 1934, in connection e meeting of the executive committee of the Federal Open Market 1101 itt", he discussed with Governor Schaller the action taken by the er °r directo.s of the Chicago bank at its meeting on I:arch 23 in I4) ,11 bonds authority to allow the ,:6,100,000 of called 4 Fourth Liberty held in the bank's own portfolio to mature without reinvestment, he4 stated to him that it was felt that, in view of the authority t ° the executive committee of the Federal Open Market Committee to 1021 4/12/34 -14- /11Irchase additional securities and in view of the contemplated large 44aulei ng operations of the Treasury Department, such action would be Utdeeirable. Governor Black also said that Governor Schaller indicated 4€reeraent with that opinion and after returning to Chicago had addressed letter to the Board under date of April 6, 1934, stating that he had dvised the executive committee of the Chicago bank with regard to his dt8cussions While in Washington and that the committee had expressed "the reeline that the record should be completed by a reply from the tood to Governor Schaller's letter of March 24. All of the members present indicated agreement with the opinion expressed by Governor Black to Governor Schaller, and it was understood that Governor Black would address a letter to Governor Schaller confirming the opinion. There were then presented memoranda dated March 27 and April 2, .934 tr°111 Mr. Wyatt, General Counsel, referring to conversations which had with 11:r. W. E. Dunn of the Research and Planning Division of the Natio4al Recovery Administration, and Mr. John Rolph, Vice President the litazt lgamated Bank of New York, with regard to adopting in this °I1rxtry, a Plan provided for in Section 88 of the Canadian Banking Act, 11111)a theY thought would enable commercial banks to make loans to in- 4114tries through the device of giving the banks a prior lien on the proOeec ia °t their loans in the form of raw materials, goods in process of 4141, mIzt. Iletu the 0 re, or manufactured goods. The memorandum of April 2 expressed 1114ion that not many American banks would be willing to make loans c14 the b of the security proposed unless the credit of the borrower ao tollod that they would be willing to make an unsecured loan, that 1022 4/12/34 -15tile fundamental weakness of the plan is that the goods remain in the hands of the borrower and that the effectiveness of the lien depends upon his 11°Ze8ty, integrity and ability. Ur. Dunn had requested during the first conversation, LT. Wyatt 8tet6d, that he get the reaction of the Governor of the Board with regard to ' Le suggestion, but that Er. Dunn had called on him on Monday of this Niek and had apparently lost his enthusiasm for the suggestion, and that there would seem to be no reason why the Board should express an opinion the matter. At the conclusion of the discussion, Kr. Wyatt was requested to discuss the matter further with Mr. Dunn with a view to disposing of it finally Without action by the Board. There was also presented a draft of letter to Honorable Duncan U. 4etehor, Chairman of the Comittee on Banking and Currency of the Senate, 14 1,e PlY to a letter dated March 8, 1934, from the Acting Clerk of the es) requesting a report from the Board on S.2946, "A Bill to Provide to r the , Lstablishment of Aegional industrial Credit Corporations by the --c u.-Lon Finance Corporation and for Other i:urposes". After discussion, during which certain changes were suggested, the letter was approved in the following form: tait4. "This refers to the letter from the Acting, Clerk of your Cornse, dated .larch 8, 1934, inclosing a copy of S. 2946, entitled er zill Po provide for the establishment of regional industrial b:,clit corporations by the Reconstruction Finance Corporation, and °ther purposes', and requesting a report thereon. to ,"There is now pending before your Cormittee a bill (S. 3101) oth-"P°vide for the creation of credit banks for industry, and for er,r Purposes. This bill was prepared in the offices of the Fede0-4' ileserve Board. At every step it had the careTul and full 113ideration of the Board, and in the form in which it was presented 1023 4/12/34 -16- "t° Your Committee, it represents the mature conclusions of the Board. "In the judgment of the Board, there exists an undoubted need for credit facilities for industry and commerce beyond those that are now being surplied through the commercial banks or that can be supplied through the ordinary operations of the Federal Reserve SYstem acting within the limitations of the Federal Reserve ict. Ia brief, the need is for loans to provide working capital for ?0)14merce and industry, and such loans necessarily must have a longer maturity than those rediscountable by Federal reserve banks. phe Board believes that this type of credit requirement can best 1,e met through organizations associated with the Federal reserve nflka and operating under the general direction and supervision of Federal Reserve Board. "With that thought in mind, Bill S. 3101 was drafted and, in the opinion of the Board, would meet the requirements of the situaitpi°A. Since that bill was introduced, a substitute measure has een Proposed by Senator Glass which has had the consideration of J uur committee. The Board also believes that it would be desirae to have credit of the kind above referred to extended through IlY one financial agency of the Government. The Board, therefore, es not favor the enactment of S. 2946." T T Reference was made to the action taken at the meeting of the ti041,1 '4 °A 'arch 8, 1034, with regard to the applications of certain offidirectors of member banks in New York City for permission under 4t1c311 32 of the Banking Act of 1933 to serve at the same time as directors of the Discount Corporation of New York, and it was stated that subto the date of the Board's action a representative of the Dis)1111t C°11Doration had discussed the matter with some of the members of L'°Etrd, who had suggested that the matter be given further considerati°14 at a t() the meeting* of the Board, and that, therefore, the proposed letter Federal Reserve Agent at New York had not been prepared. Governor 44ek .1stated that he was giving some study to the question of dealings tll 'ederal reserve funds and would appreciate it if further considerat1414 Or the applications above referred to could be deferred until he 4/12/34 -1748 had an opportunity to complete the study. Consideration deferred in accordance with Governor Black's request. Governor Black stated that Mr. Morgenthau, Secretary of the l'retisurY, and Mr. Wm. H. McReynolds, Administrative Assistant to the Se cretn -rY, called on him yesterday and presented a plan for the removal (4 the Board's offices in the Treasury building, the majority of which (Ille 4°17 located on the second floor, to space on the first floor, 14elY at the south end of the buildin, as shown on a floor plan subInitted by Morgenthau. It was pointed out that the new space proQaeci is very much less desirable than the space now occupied and is c4liectionable for other reasons, and that it is very little more than the mount of space now occupied, whereas the Beard is in need of a eotisiderable amount of additional space for the employees in its offices /c)cated in the building at the present time. The suggested removal was discussed, and, upon motion by Mr. Miller, the Governor was requested to study the matter and submit a recommeadation to the 3oard thereon, together with his suggestions, in the light of his recommendation, as to what steps should be taken by the Board to provide adequate space in which to house its operations. tiotsai 4 There were then presented the following applications for addistock, or for the surrender of stock, of Federal reserve banks: 1e4tion3 for ADDITIONAL Stock: () ict No. 1. fl National Bank, 0.1 t°11, Connecticut vizerts National Bank of vutnam, x--.111, Connecticut Shares 18 30 73c Amwt., 4/12/34 -18- 'Plieations for ADDITIONAL Stock: (Continued) -111.al.t41t No. 1. ContinuedL St N ationalGranite Bank of Augusta, „ AUgUsta, Paine "Le Peolaes National Bank of Farmington, Parmillgton, Laine 410 Powow River National Bank of Amesbury, Tis Amesbury, Passachusetts 4e Richford National Bank, Riohford, Vermont Shares 300 30 15 21 414 .0.16•••Ilmax•Im•ma Pistrict No. 2. Th0 FirsL National Bank & Trust Co. of tin, Ridgefield, Ridgefield, Connecticut "40 Iceansburg National Bank, Th4ea11sburg, New Jersey eriiggs National Bank Trust Co. of Clyde, Th' 144/de) New York e:r aica National Bank of New York, Thplalaical New York, New York rort Leyden National Bank, s;Il t Leyden, New York -,,c)ga National Bank of Saratoga Springs, Theratoga Springs, New York Tioonderocm National Bank, Ticoad Perv, eloga, New York Amboy Trust Company / Th:elth Ilmboy, New Jersey Pitth ' 41:venue Bank of Nevi York, Yc)rIN:, New York ii 1"11.ot No. 3. koom urg Bank-Columbia Trust Co., Tg, Pennsylvania 3t National Bank of Barnesboro, The"41"nesboro, Pennsylvania 13 .,184.own. National Bank, The8town, Pennsylvania :!°Ples National Bank of Duneannon, Th m4loannon, Pennsylvania l'e°Ples NationalBank of Norristown, The Pennsylvania . 4.1r8t National Bank of Scranton, Ille'cl'anton, Pennsylvania National Birk of State College, The College, Pennsylvania sr8t liational Bank of Susquehanna, "aqllehanna, Pennsylvania 24 7 90 45 9 60 15 132 120 24 15 (30 900 45 30 502 4/12/34 -19- Plications for ADDITIJNAL Stock: (Continued) District No. 3. (Continued The Tremont National Bank, oat, Pennsylvania The Ihe F National Bank of Windsor, Windsor, Pennsylvania The First National Bank of Lakehurst, La kehurst, New Jersey LIstrict No. 4. bridge NationalBank, Ambridge, Pennsylvania ,btistrict No. he Buchanan 5' National Bank, Buchanan, Virginia istrict No. 6. First National Bank of Opp, °PP, Alabama --rict No. 7. 4.eliTe Haute First National Bank, 'r.P.e Haute, Indiana 1)18..*ict No. 8. '4 Trust Company of East St. Louis, Zast St. Louis, Illinois 'eellester Bank of St. Louis, &_st. Louis, Missouri Ia Bank & Trust Company, s.ecialia, jissouri t:;zL(11 10- Bank of Commerce or El Dorado, The-4- Dorado, Arkansas 1), rilel'ican National Bank of Rogers, Ilbalsra, Arkansas 'Ltizeas National Bank of Glasgow, 'kis 1,T c=s)vil Kentucky 6!! Farmers National Bank of Glasgow, T:'eft, Kentucky ee County National Bank of Harrodsburg, Ni71"odsburg, Kentucky i ele d; ) Yles National Bank of Paducah, Kentucky t-Ilthern Illinois National Bank of East :L°11i3, East St. Louis, Illinois 0ille National Bank, Illinois 111, 36 180 3 30 10 12 30 18 48 qt4 21 3,027 4/12/ 4 -20- 4131i-cations for ADDITIONAL Stock: (Continued) No. 8. (Continued) The City National Bank of Centralia, Centralia, Illinois "le First National Bank of Highland, , highland, Illinois Security National Bank of Witt, Witt, Illinois The Pirst National Bank of Bicknell, -50-ce1l, Indiana The at National Bank of Madison, , Madison, Indiana 41e First National Bank of Mitchell, „, Mi tchell, Indiana /tamers National Bank of Princeton, Th Princeton, Indiana The SeYiaour National Bank, pi2 7Illour, Indiana Columbus National Bank, T4 Co lumbus, Mississippi e :61rst National Bank of Cainesville, 0aillesville, Missouri ''qe Citizens National Bank of Maplewood, Missouri lge First National Bank of Salem, T11 841e1a, Missouri The Union National Bank of Springfield, Spri4gfie1d, Missouri kat rzt. rlet No. 9. "Iiastings national Bank, 116liestings, Minnesota l'irat national Bank of Sandstone, pitsand stone , Minnesota liational Bank in Two liarbors, Minnesota Harbos," N ational Bank, 1, 1kez, Montana irat National Bank & Trust Co. of Fargo, The ' .1‘g() North Dakota l ar i3les Iliver National Bank 8c, Trust Co. of eet°Ivn, Jamestown, North Dakota Shares 15 45 9 6 21 6 60 60 15 8 60 10 60 913 18 12 9 9 210 12 270 1.8triet , ao. 10. 4 National Bark, The eelle.) Oklahoma & Merchants National Bank of L'illl•easey, Hennessey, Oklahoma 7 12 .°0.78 1A2/34 A 4.44, -21- 112ns for ADDITIONAL, Stock: (Continued) e First National Bank of Laton, Laton, California lieations Shares 2 Total 2 3,352 for SURRENDER of Stock: NI ?bet National Bank of Indiana, Iadiana, Pennsylvania Pirst National Bank of Sharon, Sharon, Pennsylvania 450 bietriet No 5* Third National Bank of Chestertown, Ches tertown, Maryland Diet The Jet N0. 7 Pirst National Bank of Clay City, /1„,.e.?-eY City, Indiana -" eirst National Bank of Hull, 111111 1 Iowa 810 60 60 18 42 tie -et No 8. ,,!4raler8 National Bank of Cotton Plant, vetton Plant, Arkansas 360 21 Total Approved. Thereupon the meeting adjourned. ( 3 1,kaaro-' Governor. 60 21 951
@FedFRASER