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A. meeting of the Federal Reserve Board was held in Washington
O Monday,
April 23, 1934, at 10:45 a. 114
PRESENT:
Mr.
Mr.
TOr.
Mr.
Mr.
Mr.
Mr.
Black, Governor
Hamlin
Miller
James
Thomas
Szymczak
O'Connor
Mr.
MT.
Mr.
Mr.
Mr.
Merrill, Secretary
Carpenter, Assistant Secretary
Martin, Assistant to the Governor
Wyatt, General Counsel
Paulger, Chief of the Division
of Examinations
The minutes of the meetings of the Federal Reserve Board held
°A APril 5, 6, 9, and 12, 1934, were approved.
The minutes of the meetings of the Executive Committee of the
Pede,
.
1 'Reserve Board held on April 11, 16, 17, 1934, were approved
14(1 the
- actions recorded therein were ratified unanimously.
The
Board then considered and acted upon the following matters:
Letter dated April 19, 1934, from Mr. Sproul, Secretary of the
'
141 Reserve Bank of New York, advising that, at a meeting of the
toaz„.1
01' directors on that date, no change was made in the bank's
-g schedule of rates of discount and purchase.
Without objection, noted with approval.
Telegram dated April 20, 1934, approved by five members of the
°"(1) to Mr. Strater, Secretary of the Retirement System of the Federal
11°6el've Banks, reading as follows:
a
"Board approves amended sub-paragraph (c) of paragraph 1 of
rection 6 of rules and regulations of retirement system as set
?rth your letter April 11. Board suggests that consideration be
el*van at proper time to further amendment to sub-paragraph so that
4/23/34
-2-
"election procedure will make appropriate provision for partic1Pation by employees located at places other than the head
office of the employing bank."
Approved.
Letter dated April 13, 1934, from Mr. Newton, Chairman of the
l'1111 Reserve Bank of Atlanta, advising that the board of directors
°11 the bank, at its meeting on that date, appointed Mr. Frank M. Moody,
1)11"ident of the First National Bank, Tuscaloosa, Alabama, as a director
°t the Birmingham branch of the Federal Reserve Bank of Atlanta for the
illTired portion of the term ending December 31, 1935, to succeed la'.
W. w
Crawford, deceased.
Noted.
Letter to 1.1.. Preston, Deputy Governor of the Federal Reserve
tank
Of
Chicago, reading as follows:
"Referring to your letter of April 16, the Board will inter110 objection to your employing. carpenters and electricians
!
the11 necessary for a period not to exceed 30 days at the prevailChicago union scale which it is understood is in excess of the
salary range provided in the personnel classification plan for such
etPloYees.,,
Approved.
Letter dated April 20, 1934, approved by rive members of the
)411,1„1
to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank
or
411adelphia, reading as follows:
"Receipt is acknowledged of your letter of April 13, 1934,
tr 11
8- smitting the request of the Berks County Trust Company, Reading,
1)ellneYlvania, for the withdrawal of the bank's application for mem!
1'ship in the System. It is understood that the bank has been un.1
. 1e to rehabilitate its capital structure as contemplated, and that
flel condition of the bank does not warrant your favorable recommendation of the application.
V23/34
.00.1•••
"It has been noted that the bank's liability to the Reserve
Bank for money borrowed prior to the termination of membership
has been reduced to ,423,000 and that you presume that there will
be no objection to your continuing to treat this account as a
liquidating account. As stated in the Board's letters of August
5 and 11, 1933, while advancements of new money may not be made
to a nonmember State bank or trust company by way of discounts as
if it were a member bank, this fact does not prevent a Federal reserve bank, as a means of working out to the best advantage indebtedness existing at the time of termination of membership, from
renewing outstandin:,-, discounts, accepting substitutes therefor,
and otherwise dealing with the situation in such manner as best
to protect the interests of both the debtor bank and the Federal
reserve bank. The Board requests, however, that it be advised as
to the status of the liability on June 30, 1934, of the Berks
County Trust Comliany to the Reserve Bank for borrowed money, and
at the end of each ninety-day period thereafter, or until the
account has been liquidated in full.
"In accordance with the request of the Berks County Trust
°°mPany its application will be considered as having been withdrawn. The papers comprising the application for membership will
be retained as a part of the permanent official files of the Federal Reserve Board."
Approved.
Letter dated April 19, 1934, approved by five members of the
4) to Li.. Williams, Federal Reserve Agent at the Federal *Reserve
'
1341111-:
°r
Cleveland, reading as follows:
"Receipt is acknowledged of Mr. Fletcher's letter of April
') 1934, inclosing a report of examination of the Potter Title
and Trust Company, Pittsburgh, Pa., made by State examiners as
• December 20, 1933, and an analysis by your office of such rePc3rt. It is noted that the classification of assets is at wide
variance with the classification of assets as reflected in the
sPecial investigation made as of November 29, 1933, by your examiners and examiners for the Reconstruction Finance Corporation,
!id that your office does not believe that the report of examinai°n as of December 20, 1933, reflects the true condition of the
uank.
"The analysis states that the present situation is one which
tl
le officers of the member bank cannot comprehend and with which
they are unable to cope, and refers to the fact that in the report
°D special investigation as of Uovember 29, 1933, the examiners
state that if the bank is to continue functioning, an entirely
new official personnel should be installed.
4/23/34
-4-
"Mr. Fletcher reports that the bank has made application to the
Reconstruction Finance Corporation for the sale of „;7150,000 preferred stock. According to the information submitted, the State
Banking Department made no demands for correction during examination,
and it is assumed by your office that the necessary corrections will
be effected if, as and when preferred stock funds are disbursed. MT.
Fletcher reports that your Executive Committee concurred in the
recommendation that no steps be taken by the Federal deserve Board
to terminate membership provided the sale of preferred stock to the
Reconstruction Finance Corporation is effected.
"You have previously reported this bank as being one of the
worst problems in your district, and it will be appreciated if you
will keep the Board advised as to the progress made in effecting the
necessary corrections in the assets, operations, and management of
tne bank. It is assumed, of course, that a thorough and more recent
ezamination will be made in connection with certification to the Federal Deposit Insurance Corporation. It seems advisable in the cir?umstances that such examination be made as soon as practicable if
it has not already been instituted."
Approved.
Letter dated April 21, 1934, approved by five members of the
4
", to Er. LeClure, lederal Reserve Agent at the Federal Reserve Bank
or -(
City, reading as follows:
"Reference is made to your letter of April 4, 1934, advising
of the absorption of the Reserve State Bank, Reserve, Kansas, by
The Eorrill and Janes Bank, Hiawatha, Kansas, effective as of March
101 1934.
"The Board has reviewed the information submitted, from which
aPPears that the transaction has resulted in no material change
14 the general character of the assets of, or broadening in the
cope of the functions exercised by, the member institution within
be meaning of the general condition under which it was admitted
60 membership in the Federal Reserve Jystem. The Board will, thereOre, take no action affecting the membership of The I:Aorrill and
aaes Bank, Hiawatha, Kansas, in the Federal Reserve system by
f!ason of the transaction providing all agreements in connection
unerewith are approved and found to be legally effective by you
and Your counsel.
"The Board has also reviewed the condition of The Morrill and
es
Bank as reflected in the analysis of the report of examine,
111° as of March 6, 1934, and it is observed that the bank proposes
issue and sell :75,000 preferred stock to the Reconstruction
1.11ance Corporation and stockholders, simultaneously reducing its
0°141 cn capital stock 75,000 and using the released capital for the
1095
4/23/34
"Purpose of eliminating criticised assets and auonenting its surPlus account. In this connection, it will be appreciated if you
will advise the Board when the recapitalization plan has been
completed and the extent of the criticised assets eliminated. It
will also be appreciated if you will forward copies of any amendments of the bank's charter for the Board's files."
Approved.
Letter dated April 21, 1934, approved by five members of the
13°41‘cl• to Mi. Walsh, Federal Reserve Agent at the Federal Reserve Bank
°r "Callas,
reading as follows:
"Reference is made to your letter of April 12, 1934, inclosing
a copy of a letter dated April 9, 1934, from the cashier of the
State Bank & Trust Company, Beeville, Texas, requesting permission
Of the Board to invest
$350 in stock of the Beeville Building ComPaaY, a . concern being organized by the local business men for the
Purpose of constructing a suitable building for companies with
headquarters
now in Beeville, but whose offices, it is reported,
Will be removed therefrom unless satisfactory office Quarters are
PPovided. It is noted that the payrolls of the companies involved
"
8 by far the largest in the city, that the companies agree to
.12aY e reasonable rental if a suitable building is erected, and that
'he cashier of the bank states that the benefits derived by the
,
.131111k, either directly or indirectly, justify the investment and
41.t failure to cooperate would probably reflect unfavorably upon
that institution.
,"Section 5 (c) of the Banking Act of 1933, approved June 16,
,930I provides that State member banks are subject to the same
'
LImitations with respect to the purchase of stock as are applicable
the case of national banks. The stock of the company in which
the State Bank & Trust Company contemplates investing does not
e°.me within the limited classes of stock which national banks are
,
1111thorized to purchase, and the Federal .eserve Board has no authorItY to extend the provisions of law.
"In passing upon the request of the bank, no consideration has
be
ea given to the propriety of making a contribution for the pur1?ose indicated if such action is considered to be for the best
interests
of the bank."
Approved.
Letter dated April 21, 1934, approved by five members of the
4oEtz,c1
'to the '
,Claremont National Bank", Claremont, New Hampshire, reading
-11 99r,
4/23/34
48 follows:
.
"The Federal Reserve Board approves your application for perluission to act, when not in contravention of State or local law,
as trustee, executor, registrar of stocks and bonds, assignee, receiver, or in any other fiduciary capacity in which State banks,
trust companies or other corporations which come into competition
with national banks are permitted to act under the laws of the
.
-)tate of New Hampshire, the exercise of all such rights to be subject to the provisions of the Federal Reserve Act and the regulations
cf the Federal Reserve Board.
"This letter will be your authority to exercise the fiduciary
P°17ers as set forth above. A formal certificate coverinr: such authorization will be forwarded to you in due course."
Approved.
Letter dated April 19, 1934, ap;roved by three members of the
81341'cl) to Mr. Williams, Federal Reserve Agent at the Federal Reserve
11111z Of Cleveland, reading as follows:
"Reference is made to the application of the 'First National
• Greensburg', Greensburg, Pennsylvania, for full fiduciary
Beak in
Powers,
"It is observed that the applicant bank is under the same
anagement as the preceding institution and that the management of
old bank was subject to considerable criticism by the national
Dank examiner. It is also observed that the management of the apPlicant bank was not approved by the Chief National Bank Exnriner
at the time of its organization.
"In the last report of examination of the preceding bank it
is observed that the examiner criticized the management of the trust
cjlePartment, particularly with regard to the investment of trust funds
lt illegal investments and nonconforming mortgages. The examination
l'ePort shows also that the proposed trust officer was heavily indebtd to the predecessor bank and that a substantial portion of his
4°3:11 is classified as loss. The Board feels that any officer, direc"or cr employee whose affairs are so involved as to cause embarrassto his bank seriously impairs his usefulness to the institution
!l_ta serves, and that this condition is particularly criticizable in
he case of a trust officer.
"Consideration has been given to all of the circumstances sur:
1°Unding the organization and management of the applicant bank and,
41 view of the criticisms of the management and of the trust departOf the old bank, the Board is unwilling to act upon the application of the First National Bank in Greensburg for full fiduciary
Powers until an examination of that bank has been made and a report
T
I
4/23/34
-7-
"thereof is available in order to determine whether the institution
is being operated capably and conservatively.
"In this connection it is suggested that, if possible, you arI`ange to have an examiner for the Federal Reserve Bank of Cleveland
Make an investigation of the trust department of the old bank at or
Prior to the next examination of the new bank by the national bank
examiner, in order better to determine the qualifications of the proPosed trust officer, the extent of the trust business which could
safely be taken over by the applicant bank, and any other pertinent
information regarding the management and operation of that departIlleut which would be of value to the Board in passing upon the application for trust Dowers.
"Subsequent to such examination you are requested to transmit
to the Board an analysis of the national bank examiner's report and
a coPy of your examiner's report, together with the recommendation of
Your executive committee as to what action, if any, should be taken
at that time upon the bank's application for fiduciary powers."
Approved.
Letter dated April 21, 1934, approved by five members of the
to "The First National Bank at Orlando", Orlando, Florida, readas follows:
"The Federal Reserve Board approves your application for perto act, when not in contravention of State or local law, as
-Grustee, executor, administrator, registrar of stocks and bonds,
Mardian of estates, assignee, receiver, committee of estates of
l unatics, or in any other fiduciary capacity in which State banks,
i
l'ust companies or other corporations which come into competition
With national banks are permitted to act under the laws of the
Sate of Florida, the exercise of all such rights to be subject to
!Ile provisions of the Federal Reserve 1Lct and the regulations of
uhe Federal Reserve Board.
"This letter will be your authority to exercise fiduciary
13°Ivers as set forth above. A formal certificate covering such
authorization will be forwarded to you in due course.
"The Board feels that, if you are tenuered any of the trusts
1()vi held by the First National Bank and Trust Company in Orlando,
Joil should carefully scrutinize their condition and should take
(3ver only such trusts as are free from any anticipated controversies
litigation and are acceptable trusts for a national bank, and
should not accept any of such trusts which, through their assumption,
111.4aY be detrimental to the best interests of your institution."
Approved.
1098
4hW34
-8Letter dated April 21, 1934, approved by five members of the
13°4rd, to Mr. Stevens, Federal Reserve Agent at the Federal Reserve
13411I of Chicago, reading as follows:
"Receipt is acknowledged of iaa. Prugh's letter dated April
11) 1934, advising of the proposed reduction in the common capital
stock of the 'Commercial State Savings Bank', Greenville, Michigan,
from 50,000 to :25,000, pursuant to a plan which provides for the
sale of 50,000 of Glass 'A! preferred stock to the Reconstruction
Ylaanee Corporation and 25,000 of Class 'B' preferred stock to
local interests.
"Since it appears from the information submitted that the entire amount of the released capital is to be used to eliminate obJactionable assets from the bank and that concurrently with the
lcduction or immediately thereafter the capital of the bank will be
increased to 400,000, the Board offers no objection to the reduction
ln capital in the amount indicated, with the understanding, of course,
that your counsel is satisfied as to the legal aspects of the case,
that the reorganization of the bank will not result in any change
iii its corporate existence which will affect its membership in the
Federal zieserve System, and that the transaction has the approval
01 the State Banking Department of the State of Michigan.
"In considerinc, the plan under which the reduction in common
capital stock is to be effected, it has been noted that, on the
basis of the reappraisal of assets on February 23, 1934, there will
I:emain in the assets of the bank depreciation in securities amountto approximately 45,453, which is sufficient to impair the
haak's common capital stock in the amount of approximately 06,945.
It
assumed, however, that you have this condition in mind and
1at Whenever it becomes feasible to do so you will obtain such furtaer correction as may be practicable."
.9
Approved.
Letter dated April 20, 1934, approved by five members of the
toa,,
to Lr. 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
irst National Bank of Weeping Water', Weeping Water, Nebraska,
the
,1*()41 150,000 to !A5,0,..)0, pursuant to a plan which provides that
preferred
25,000
of
sale
the
'ank's capital shall be increased by
et0ek to the Reconstruction Finance Corporation, and that the rey 020,000
leased capital shall be used to eliminate approximatel
05,000,
account
surplus
the
Of unsatisfactory assets and to augment
1934."
11,
April
all as set forth in your memorandum of
Approved.
1099
41123/34
Letter dated April 20, 1934, approved by rive members of the
lioard
to Mr. 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
First National Bank of ,,:cT,regort, McGregor, Texas, from ,50,000
to :25,000, pursuant to a plan which provides that the bank's
capital shall be increased by ,25,000 of preferred stock to be
sold to the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate or reduce a corresponding
amount of unsatisfactory assets, all as set forth in your letter of
APril 11, 1934."
Approved.
Letter to Jr. 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
lirst National Bank of 'Alite Deer', White Deer, Texas, from :45,000
to -4;25,000, pursuant to a plan which provides that the bank's
capital shall be increased by „25,000 of preferred stock to be sold
to the Reconstruction Finance Corporation, and that the released
capital shall be used to eliminate a corresponding amount of unacceptable assets, all as set forth in your letter of April 11,
1934) and the accompanying plan of rehabilitation."
Approved.
Telegram dated April 19, 1934, approved by four members of the
) to
Newton, Federal Reserve Agent at the Federal Reserve Bank
t Sall Francisco, reading as follows:
"Betel :March 19, 1934 application 'California Bank', Los
iAngeles, California Board approves reduction in capital from c-5,000,000
10 52,500,000 in accordance with plan set forth in Sargent's letter
Ilarch 2, 1934 as revised to provide for the sale of :2,500,000 preferred stock, subject to approval of appropriate State authorities
amid providing none of the funds released by the reduction in capital
are returned to stockholders."
Approved.
Board,
Letter dated April 20, 1934, approved by five members of the
1100
4/23/34
-10--
to 1111'. 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
First Nati'Jnal Bank of Kent', lent, Washington, from 450,000 to
25,000, pursuant to a plan which provides that the entire amount
Of the released capital shall be used to eliminate or reduce
unsatisfactory assets, as set forth in your letter of March 13,
1934. It is noted that the bank recently increased its capital
by the issuance of 25,000 preferred stock to the Reconstruction
Finance Corporation."
Approved.
Letter to Mr. O'Connor, Comptroller of the Currency, reading
r°110WS:
"In accordance with Acting Comptroller Awalt's recommendation,
the Federal Reserve Board approves a reduction in the common capital of 'The Roseburg National Bank', Roseburg, Oregon, from :)50,000
to .,;25,000, pursuant to a plan which provides that the bank's capital shall be increased by ,25,000 of preferred stock to be sold to
the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate or reduce undesirable assets, all as
3et forth in Er. walt's letter of April 14, 1934.
"In considering the plan under which the proposed reduction in
ealpital is to be effected it has been noted that, after application
Of the released capital to the elimination of undesirable assets,
there will remain in the bank approximately cr:8,000 of loans classiried as losses, ,4,000 of loans classified as doubtful, and2,700
°I securities depreciation, as well as a large agregate of slow
assets. The Board feels that where, as in this in-stance, ample
12tulds in the form of surplus and undivided profits are available,
lt would be preferable if provision were made for the elimination
01' all estimated losses rather than to carry such unsatisfactory
assets in the bank, even though offset by ample surplus and profits.
It is assumed, however, that if the subject bank is unable to collect
Or obtain adequate security for its doubtful and loss items within
a reasonable time, you will reouire their elimination."
Approved.
Telegram dated April 20, 1934, approved by five members of the
tok„
g l to Er. Newton, Federal Reserve Agent at the Federal Reserve Bank
or
.
At a
1-11-11, stating that the Board has considered the application of the
1101
4/23/31
-11-
"Coerce Union Bank", Nashville, Tennessee, for a voting permit under
the authority of
section 5144 of the Revised Statutes of the United
States,
It owns
as amended, eniit1ing such organization to vote the stock which
or controls in the "Broadway National Bank of Nashville", Nash-
\Tilley Tennessee, and "The HarPeth National Bank of Franklin", Franklin,
aZessee, and has authorized the issuance of a limited permit to the
leant, subject to the following condition:
'
"
"Prior to the issuance of the limited voting permit hereby
authorized applicant shall agree that within such time as shall
be fixed by the Federal Reserve Agent at the Zederal Reserve Bank
°f Atlanta and in any event prior to July 1, 1934,
"(1)-a-It will rehabilitate its capital structure by means
of voluntary contributions and/or issuance of new common stock
and/or preferred stock or otherwise, in such mnnner and amount
as shall be approved by the appropriate supervisory authorities
and shall be satisfactory to the f
- ederal Reserve Agent at the
-b-It will charge off or otherAtlanta;
of
Bank
Federal Reserve
wise eliminate all estimated losses in loans and discounts, all
depreciation in stocks and defaulted securities, all depreciation in securities not in the four highest grades as classified
by an investment service organization regularly engaged in the
business of rating and grading securities, and all other estimated losses; depreciation in stocks owned of subsidiary banks
to be based on book values of such stocks after adjustments
have been effected on the books of the issuing subsidiary banks
in accordance with (2) and (3) below; other charge offs or
eliminations to be based on current market quotations and current examinations or credit investigations and to be of such
nature and extent as shall be satisfactory to the Federal Reserve
Agent at the federal Reserve Bank of Atlanta; -c-It will make
such corrections as shall be requested by the Federal Reserve
Agent at the Federal Reserve Bank of Atlanta and within such
Period or periods as he may prescribe, in order to remove the
cause of any criticism relating to any feature of its practices,
Policies, management, or financial condition which has been made
by the appropriate supervisory authorities;
"(2)-a-It will cause Broadway National Bank of Nashville,
Elashville, Tennessee, to rehabilitate its capital structure
by means of voluntary contributions and/or issuance of new common
stcck and/or preferred stock or otherwise, in such manner and
amount as shall be approved by the appropriate supervisory
Reserve Agent
authorities and shall be satisfactory to the Federal
4/23/34
-1 2"at the Federal Reserve Bank of Atlanta; -b-It will cause
Broadway National Bank of Nashville, Nashville, Tennessee, to
charge off or otherwise eliminate all estimated losses in loans and
discounts, all depreciation in stocks and defaulted securities,
all depreciation in securities not in the four highest grades as
Classified by an investment service organization regularly enaged
in the business of rating and grading securities, and all other
estimated losses; such charge offs or eliminations to be based
on current market quotations and current examinations or credit
investigations and to be of such nature and extent as shall be
satisfactory to the Federal Reserve Agent at the Federal Reserve
Bank of Atlanta; -c-It will cause Broadway National Bank of
Nashville, Tennessee, to make such corrections as shall be
requested by the Federal Reserve Agent at the Federal Reserve t.nk
of Atlanta and within such period or periods as he may prescribe,
in order to remove the cause of any criticism relating to any
feature of its practices, policies, management, or financial
condition which has been made by the appropriate supervisory
authorities;
"(3)-a-It will cause The llarreth National Bank of Franklin,
Franklin, Tennessee, to rehabilitate its capital structure in
accordance with the plan heretofore approved by the Comptroller
Of the Currency and the Federal Reserve Agent at the Federal
Reserve Bank of Atlanta, and to nabs the eliminations provided
by such plan; -b-It will cause The Harpeth National Bank of
Franklin, Frtinklin, Tennessee, to make such corrections as shall
be requested by the Federal Reserve Agent at the Federal Reserve
Bank of Atlanta and within such period or periods as he may prescribe, in order to remove the cause of any criticism relating
to any feature of its practices, policies, management, or financial
condition which has been made by the appropriate supervisory
authorities."
eald
for
the following purposes:
"1. To elect directors of such banks at any meeting of their
res
Pective shareholders, or at any adjournments thereof, at any time
iQr to ally 1, 1934, and to act thereat upon such matters of a
Theutine nature as are ordinarily acted upon at the respective annual
-eetinEs of such banks.
"2. At any time prior to July 1, 1934, to act upon a proposal
, Proposals to create and issue common and/or preferred stock and
(')° reduce common stock and to make such amendments to the articles
011:
. association and/or certificates of incorporation and/or by-laws
0 such banks as may be necessary for such purposes, such proposal
Proposals to be in accordance with a plan or plmis which shall
80 aPprovcd by the appropriate supervisory authorities and shall be
'
e t isfactory to the Federal Reserve Agent at the Federal Reserve Bank
(3t Atlanta."
r
1103
4/23/34
-13The tel
ecram also authorized the agent to have prepared by counsel for
the Federal reserve bank, and to issue to the Commerce Union hank, a
4141ted voting permit in accordance with the telegram when the condition
131'esoribed therein has been complied with.
Approved, together with a letter, also
dated April 20, 1934, and approved by five
members of the Board, to Mr. O'Connor, Comptroller of the Currency, reading as follows:
"The Federal Reserve Board approves a reduction in the comon
capital stock of 'The Harpeth National Bank of Franklin', Franklin,
Tennessee from „75,000 to „;37,500, pursuant to a plan which provides that the bank's capital shall be increased by ,,37,500 of preferred stock to be sold to the econstruction Finance Corporation,
and that the released capital, together with a portion of the bank's
aurPlus and/or undivided profits, shall be used to eliminate substandard assets in the amount of approximately c:,45,000, all as set
forth in your letter of February 17, 1934."
Telegram dated April 19, 1934, approved by four members of the
54r1(1) to Li.. Newton, Federal Reserve Agent at the Federal Reserve Bank
San
Francisco, stating that the Board has considered the application
or the "Sebastapol National 3ecurities Company", Sebastapol, California,
ror
4 v°tinG permit under the authority of section b144 of the Revised
Stlit
Iltes of the United States, as anended, entitling such organization
to
°te the stock which it owns or controls in "The Sebastapol National
) Sebastapol, California, and has authorized the issuance of a
ite(I
permit to the applicant for the following purpose:
"At any time prior to July 1, 1934 to act upon a proposal to
increase the capital stock of such bank by the issuance and sale to
the Reconstruction Finance Corporation at 25,000 par value preerred stock and to amend the articles of association of such bank
accordingly, provided that such proposal shall have been approved
bY the Comptroller of the Currency."
tele.:ram stated
also that the Board is not authorized to make a
1104
V23/34
-14-
l'roactivc alaondment to a limited permit.
the
The telegram also authorized
ac4ent to have prepared by counsel for the Federal reserve b=nk, and
to issUe to the Sebastapol National Securities Company, a limited voting
in accordance with the telegram.
Approved.
Letter dated April 21, 1934, approved by five members of the
8°11rdt to the governors of all Federal reserve banks, reading as follows:
"Upon agreement between the Federal reserve banks affected,
the i.ederal Reserve Board has approved the following changes in
the inter-district time schedules for cash items:
From
Dallas
El Paso
to
ft
ii
it
11
San Antonio
it
San Francisco
Portland
Richmond
Chicago
Salt Lake City
3 days
2 "
3 it
4 it
3 ii
4 ii
To
4 days
3 it
4 it
3 It
2 it
3 days"
Approved.
Telegram to 1:r. Williams, Federal Reserve ,"1. ent at the Federal
've Bank of Cleveland, reading as follows:
"Referring 1,1r. Pletcher's April 17 letter, Board revokes
)
1PProval application First National Bank in Charleroi, Charleroi,
elineylvania, for Federal Reserve bank stock granted April 7, 1934,
d approves new application for 72 shares made pursuant to resolu-on adopted at meeting of board of directors held on April 16,
effective if and when Comptroller of Currency authorizes bank
uo commence business."
1
n
V
Approved.
Telegram dated April 19, 1934, approved by three members of the
to .1r. Crane, Deputy klovernor of the Federal Reserve Bank of New
Ileading as follows:
"Your telegram 18.
4/23/34
-15-
“Board approves Federal Reserve Bank of New York advising
Banco de idexico that, in connection with its operations in foreign
exchange for purpose of stabilizing dollar-peso exchange rate,
Your bank is willing to earmark gold for account of Banco de
'-exioo in accordance with license granted to your bank by Secretary
Of Treasury. It is noted that if transaction results in request
from Banco de Liexico to open account for them on books of your
bank, matter will be submitted to Board for approval in regular
way.”
Approved.
Letter dated April 21, 1934, approved by five members of the
11Oed, to 1,:r. Butler 0. Bower, Jashier of The Nanticoke National Bank,
-°4e, Pennsylvania, reading as follows:
.
"Your letter of Larch 19, 1934, addressed to the Comptroller
of the Currency, regarding the payment of interest by your bank
on deposits made by your city school district, captioned Sinking
./fUnds, Teachers Salary eunds and General Funds, has been referred
to the Federal Reserve Board for reply.
"As you know, Section 19 of the Federal Reserve Act as amended
eZoepts from the prohibition therein contained against the payment
Of interest by member banks on deposits payable on demand deposits
°1. public funds made by or on behalf of any State, county, school
d istrict, or other subdivision or municipality, with respect to
17111 oh payment of interest is required under state law. It is unerstood that you request to be advised whether the payment of
interest is required under the law of the State of Pennsylvania
171-t1I reseect to the funds referred to in your letter. Inasmuch as
..he determination of this question depends upon the effect of local
taw, your letter has been referred to the Federal Reserve Bank of
lillladelphia for consideration and reply.
"It is noted, however, that you state that the funds here in
question are carried by your bank in its savings ledgers, and in
this connection your attention is called to the fact that the pro1?*lbit10n in the law against the payment of interest on deposits
Accord3 applicable only to deposits which are payable on demnnd.
for
bona
accumulated
funds
constitute
fact
in
if such funds
'lde thrift purposes and otherwise conform to the definition of
!avings deposits contained in Section V of the Board's Regulation
the prohibition against the payment of interest on deposits payable on demand would not apply and it would, therefore, be unnecessary
r determine whether the payment of interest is required under State
rW with respect to such funds. However, the question whether such
4ePosits may be regarded as savings deeosits is one upon which it is
'
riot
believed that any general rule can be prescribed and each case
t
1106
4123/34
-16-
"should be determined upon the basis of its own particular facts.
It would not be practicable for the Federal Reserve Board to undertake to determine such questions in individual cases and the Board
feels that these are ouestions upon which each member bank should
exercise its best judgment in the light of the provisions of the
law and the regulation. As indicated in the regulation, however,
if the circumstances with respect to any deposit are such as to
raise a question as to whether it is properly classified as a savings
deposit the bank must be prepared to show clearly that it is a dePosit consisting of funds accumulated for bona fide thrift purposes
and that it otherwise complies with the definition of savings deposits set forth in the regulation."
Approved, together with a letter, also
dated April 21, 1934, and approved by five
members of the Board, to hr. Austin, Federal
Reserve Agent at the Federal Reserve Bank of
Philadelphia, reading as foliows:
"There is inclosed herewith a copy of a letter from the cashier
Of The Nanticoke National .Bank, Nanticoke, Pennsylvania, dated March
19, 1934, regarding the right of that bank to pay interest on deNits made by a city school district, captioned Sinking Funds,
Teachers Salary Funds, and General Funds, together with a copy of
the Board's letter in reply thereto which is self-explanatory.
"In accordance with the procedure set forth in the Board's
1?tter of August 22, 1933 (X-7558), it is requested that you subit to counsel for your bank the question whether the payment of
?alterest is required under State law with respect to the funds here
14 question and that you advise The Nanticoke National Bank in accordance with counsel's opinion in this matter, unless there appears
to be doubt as to the proper interpretation to be placed upon the
State law and it is considered advisable to present the matter to
the Federal Reserve Board. If this question is submitted to the
13°4rd, it will be appreciated if you will furnish to the Board
copies of all pertinent provisions of the State law, a copy of an
°Pinion of counsel for the Federal Reserve Bank discussing all asPects of the question fully and in detail, and a copy of an opinion
4 tAo question rendered by the Attorney General or other State official having similar authority, together with any other information
Which may be relevant.
"The Board requests that you furnish it with a copy of any
°Pinion which counsel for the Federal Reserve Bank may render in
coanection with this matter, even though it is not considered neces''"Y to present the matter to the Federal Reserve Board for a ruling.
"Inasmuch as similar questions involving the same law may be
Presented to the Federal Reserve Bank of Cleveland, and in view of
the desirability of securing uniform rulings in this matter, it is
slIggested that you confer with the Federal Reserve Bank of Cleveland
11_07
4/23/34
-17"before advising The Nanticoke National Bank of your opinion in
the premises."
Letter dated April 21, 1934, approved by five members of the
iklard, to 2,11-.
E. D. Moody, President of The First National Bank of
131
8°n, Ohio, reading as follows:
"
"Your letter of l'arch 17, 1934, addressed to the Comptroller
Of the Currency, regarding the payment of interest by your bank on
savings accounts balances, has been referred to the Federal Reserve
Board for reply.
"You state that your bank was authorized to begin business
011 October 16, 1933 at which time it assumed payment of 70% of the
dePosits in the Dennison National Bank, and that the bylaws of the
new bank stipulate that interest shall be paid on amounts on deposit
for full six months. In these circumstances, it is understood that
YOU request to be advised whether your bank may lawfully pay interest
to April 1, 1934, on savings accounts which were received by your
"Ink on or after October 16, 1933, and which, therefore, have been
0/1 deposit for periods of less than six months.
"It is the view of the Federal Reserve Board that if the
accounts in question in fact consist of funds accumulated for bona
,
llde thrift purposes and otherwise conform to the definition of
savings deposits contained in Regulation Q, interest may lawfully be
Paid thereon under the provisions of the Federal Reserve Act at a
rate not in excess of that prescribed in the said regulation for a
Period ending March 31, 1934, or April 1, 1934, notwithstanding the
fact that such funds have actually been on deposit with the bank for
Periods of less than six months. However, as indicated in Section
V, subsection (c) of ReF;ulltion C, the amount of interest actually
Paid on any such deposit, accruing after uctober 31, 1933, may not
exceed 3,70 per annum, compounded semi-annually, for the period during
which the deposit actually represented a savings deposit as defined
in subsection (a) of that section."
Approved.
Letter dated April 21, 1934, approved by five members of the
13(),Etra,
to Er. V. W. Arpke, Assistant Cashier of the First National Bank
e°/"vallis, Oregon, reading as follows:
1934,
"Receipt is acknoledged of your letter of April 5,
that
state
You
l'elative to the withdrawal of savings deposits.
4/23/34
"Your bank requires notice prior to the withdrawal of savings
deposits, but that you would like to permit the withdrawal without
notice of deposits belonging to estates of deceased persons; and
it is understood that you wish to be advised whether you may law11y waive the requirement of notice with respect to such deposits
without waiving such requirement as to all other classes of savings
deposits
"Section 19 of the Federal Reserve Act as amended by the Bankina'.Act of 1.33 provides that no member bank shall waive any requirement of notice before payment of any savings deposit except as
to all savings deposits having the same requirement. Under the provisions of subsection (a) of Section VI of the Federal Reserve Board's
Regulation 0„ the payment by a member bank of any portion or percentage
?f the savings deposits of any depositor without requiring notice of
intended withdrawal can only be made on condition that, upon request
and without requiring notice, it shall pay the same portion or percentage of the savings deposits of every other depositor which are
?ubject to the same requirement. It is the opinion of the Board that
if a member bank pay any portion or percentage of a savings deposit
Of a depositor because of the circumstances stated in your letter or
for any other reason without requiring notice of intended withdrawal,
such bank would be required to pay the same portion or percentage
Of the savings deposits of every other depositor which are subject
to the same requirement regardless of the purpose for which the withclawals are made. The fact that circumstances exist which justify
tile withdrawal of the deposit cannot be regarded as a 'requirement'
to which such deposit is subject within the meaning of Regulation c'."
Approved.
Letter dated April 20, 1934, approved by five members of the
130Eovi
13411k
to Honorable Duncan U. Fletcher, Chairman of the Com:. ittee on
11
and Currency of the United States Senate, reading as follows:
"This refers to the letter from the acting Clerk of your Cam.
Tattee, dated February 23, 1934, inclosing a copy of S.2867, entitled
Bill Authorizing loans by the .econstruction Finance Corporation
ulrect to individuals, partnerships, associations, and corporations',
ejld requesting a report thereon. The bill would delegate to the
?construction Finance Corporation authority to make loans to inpartnerships, corporations, and unincorporated -assecialons engaged in cauuercial, manufacturing, or industrial enterprises.
"In its report of April 13, 1934, on S.2946, the Board advised
1You that it favors the enactment of a bill (5.3101) which is pending
etorc your Committee and which would provide for the creation of
credit banks for industry. As you know, since S.3101 was introduced,
Et substitute measure has been proposed by Senator Glass which has
1109
V23/34
-19-
"had the consideration of your Committee.
"It is believed that either the bill S.3101 or the substitute
measure proposed by Senator Glass will accomplish fully the purPoses of S.2867, and that, if either of such measures is enacted,
the legislation proposed in S.2867 will be unnecessary. Accordingly,
the Board does not favor the enactment of 3.2867.”
Approved.
Letter dated April 10, 1934, approved by five members of the
84trds to Mr. Wood, Federal Reserve Agent at the Federal Reserve Bank
°I' St. Louis, reading as follows:
"This refers to Mr. Stewart's letter of March 31, with the
inclosed application of the Cass Bank 8L Trust Company of St. Louis
for the cancelatiJn of 120 shares of Federal Reserve bank stock,
Made pursuant to a resolution adopted by the Board of Directors of
the bank on March 14, 1934, following a reduction of 0200,000 in
surplus.
"The records of the Board indicate that on April 2 the Reconstruction Finance Corporation purchased 300,000 of capital notes
°r the subject bank, which would more than offset the reduction in
s rPlus. In the circumstances the instant application is being filed
w?.thout action and it is suggested that if, on the basis of its revised capital structure, the bank does not hold the recluired amount
Of Federal Reserve bank stock a new application for adjustment in
the holdings of such stock be obtained from the bank and submitted
tO the
Board."
Approved.
Letter dated April 19, 1934, approved by five members of the
114111d, to Li'. Russell C. Flom, Credit Manager of The Menasha Products
11Y, Menasha, Wisconsin, reading as follows:
"
Cc4
"Receipt is acknowledged of your letter of April 9 in regard
t° the use of trade acceptances in the particular circumstances
outlined in your letter.
"While the Federal Reserve Board has had direct contact with
the
developments in the use of bankers, acceptances during the
Pest twenty years, it has not been so closely in touch with the
Pl'actices of particular industries with respect to trade acceptances
' the possible effect of individual codes upon trade acceptances
?I
14 the industries to which such codes apply.
1140
4/23/34
-20-
"The Federal Reserve Board, however, is in sympathy with sound
measures for encouraging the use of trade acceptances and it would
view with regret any proposal that would unnecessarily discriminate
against them.
"The American Acceptance Council, the offices of which are
located at 120 Broadway, New York, New York, is interested in furthering a sound acceptance business in this country and may be of
help to you in your present problem."
Approved.
Telegram dated April 19, 1931, approved by four members of the
13°EtIll°1, to 1r.1:cClure, 1Federal Reserve Agent at the Federal Reserve Bank
Of
'I13ae City, reading as follows:
"Your wire April 17 regarding revised form of report of
eZamination. The preparation of the printed forms has been left
!° the reserve banks in order that each bank may adapt the report
60 its olin needs and incorporate such changes and additions as cone
within the scope outlined in the Board's letter X-7857. The Board,
however, would look with favor upon any arrangement you might make
°I1 a mutually satisfactory basis with other reserve banks for a
?onsolidated printing order. It is understood that some of the
bSilks have already placed the forms in the hands of the printers."
Approved.
Letter dated April 21, 1934, approved by five members of the
804ra
to Mr. Albert V. Foster, Toledo, Ohio, reading as follows:
a
"The Federal Reserve Board has given consideration to your
JPlication under Section 32 of the Bankin: Act of 1933 for a perto serve at the same time as a Vice President and Director of
l'he Fayette State savings Bank, Fayette, Ohio, and as General Partner
Spitzer, Rorick & Company, Toledo, Ohio.
,..
"The Federal Reserve Board has reached the conclusion that it
ne the intent of Congress in enacting Section 32 to terminate all
:
elationships of certain types between member banks and dealers in
tecurities, apparently because it felt that such relationships might
,nd to influence the banks' credit and investment policies and their
Irice to their correspondent banks and other customers respecting
;t.l?vestments in a manner which the Congress deemed to be incompatible
Iwilth the public interest. The Board accordingly feels that it may
°t properly grant permits authorizing relationships which are
"tUally of the kind referred to in that section, and that its
"
4/23/34
-21-
"authority to issue permits should be exercised only in exceptional
eases; 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 Spitzer, Rorick & Company is primarily engaged
in the business of purchasing and selling securities as a dealer,
and that therefore the relationship covered by your application is
Within the class which that section was designed to terminate. Ace°rdingly, the Board is unable to find that it would not be incomPatible with the public interest as declared by the Congress to grant
Yclur application.
"In the event that you desire to submit further facts or argutents in support of your application, the Board is prepared to jive
them careful consideration. However, any such additional facts or
aFgumcnts should be submitted as promptly as possible, in writing,
tarough the Federal Reserve Agent."
Approved.
Letter dated April 21, 1934, approved by five members of the
toar,
to Ea% Marvin H. Rorick, Toledo, Ohio, reading as follows:
"The Federal Reserve Board has given consideration to your app_lication under Section 32 of the Banking Act of 1933 for a permit
U° serve at the same time as a director of The Fayette State Savings
Fayette, Ohio, and as general partner of Spitzer, Rorick
alulpally, Toledo, Ohio.
"The Federal Reserve Board has reached the conclusion that it
w
the intent of the Congress in enacting Section 32 to terminate
rm
"
a l
relationships of certain types between member banks and dealers
securities, apparently because it felt that such relationships
'
ulght tend to influence the banks' credit and investment policies
!Ild their advice to their correspondent banks and other customers
417aPe0ting investments in a manner which the Congress deemed to be
4.,
1 e0mPat1b1e with the public interest. The Board accordingly feels
Ic.iat it may not properly grant permits authorizing relationships
,311oh are actually of the kind referred to in that section, and
6hat its authority to issue permits should be exercised only in
cases; for example, those which are included within the
,
ltaral terms of the statute but which are actually of a kind diferent from those at which its provisions were directed.
"It appears that Spitzer, Rorick & Company is primarily engaged
1/1 the
business of purchasing and selling securities as a dealer,
that therefore the relationship covered by your application is
thin the class which that section was designed to terminate. Ac1,Q1'ding1y, the Board is unable to find that it would not be incom4'"ible with the public interest as declared by the Congress to grant
1112
4/23/34
-22-
"your application.
"In the event that you desire to submit further facts or arguments in support of your application, the Board is prepared to give
them careful consideration. However, any such additional facts or
arguments should be submitted as promptly as possible, in writing,
through the Federal Reserve Agent."
Approved.
Letter dated April 21, 1931, approved by five members of the
1344Lrd, to 1:r. Horton C. Rorick, Toledo, Ohio, reading as follows:
"The Federal Reserve Board has given consideration to your api?lication under Section 32 of the Banking Act of 1933 for a permit
to serve at the same time as a director and vice-president of The
FaYette State „)avings Bank, Fayette, Ohio, and as general partner
°r 4itzer, Rorick & Company, Toledo, Ohio.
"The Federal Reserve Board has reached the conclusion that it
Was the intent of the Congress in enacting Section 32 to terminate
!al relationships of certain types between member banks and dealers
la securities, apparently because it felt that such relationships
Inieht tend to influence the banks' credit and investment policies
aad their advice to their correspondent banks and other customers
_respecting investments in a manner which the Congress deemed to be
.licampatible with the public interest. The Board accordingly feels
that it may not properly grant permits authorizing relationships
nich are actually of the kind referred to in that section, and that
"s authority to issue permits should be exercised only in exceptional
ce
'ses; for example, those which are included within the literal terms
the statute but which are actually of a kind different from those
at which its provisions were directed.
"It appears that Spitzer, Rorick & Company is primarily engaged
ta the business of purchasing and selling securities as a dealer,
alga that therefore the relationship covered by your application is
within the class which that section was designed to terminate. Acthe Board is unnble to find that it would not be incomPatible with the public interest as declared by the Congress to grant
Your application.
"In the event that you desire to submit further facts or argunts in support of your application, the Board is prepared to give
'
Ll a careful consideration. However, any such additional facts or
ILI* unIents should be submitted as promptly as possible, in writing,
6hrough the Federal Reserve Agent."
T
Approved.
Letter dated April 21, 1934, approved by five members of the
to
Lir. William A. Pohl, Cincinnati, Ohio, reading as follows:
1113
'1123/34
"The Federal Reserve Board has given consideration to your
application under Section 32 of the Banking Act of 1933 for a permit to serve at the same time as a director of the Second National
Bank and as an officer and director of Crau and Company, both of
Cincinnati, Ohio.
"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
respecting 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
?xeePtional cases; for example, those which are included within the
literal terms of the statute but which are actually of a kind difterent from those at which its provisions were directed.
"It appears that Grau and Company is primarily engaged in the
unsiness of purchasing and selling securities as a dealer, and that
therefore the relationship covered by your application is within the
!lass which that section was designed to terminate. Accordingly,
l'he Board is unable to find that it would not be incompatible with
he Public interest as declared by the Congress to grant your apPlication.
"In the event that you desire to submit further facts or arguMents in support of your application, the Board is prepared to give
them careful consideration. 'However, any such additional facts or
!rguments should be submitted as promptly as possible, in writing,
rough the Federal Reserve Agent."
Approved.
Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve
Qf New York, reading as follows:
23
"Reference is made to the application of Mr. Edmund L. Clark,
,9ain Street, Hackensack, New jersey, for permission under the
'
4er°visions of the Clayton Act to serve at the same time as nn offi," of The City National Bank and Trust Company of Hackensack,
!
4, ekertsack, New Jersey, and as a director of the Rochelle Park Bank
,t Rochelle Park, N. J., Rochelle Park, New jersey. The applicant
/14.11 tes in his application that he represents the City National Canal-1°4Y) Hackensack, New jersey, the holding company affiliate of the
°ehelle Park Bank, on the board of directors of the subsidiary bank.
":Mr. Dillistin's letter of March 26, 1934, advises that the City
'-41onal Company, which has not filed an application for a permit
_1114
4/23/34
-24"to vote the shares owned of its subsidiary bank, did not vote
the
Shares owned at the shareholders' meeting of the Rochelle
Park Bank
on January 9, 1934, and that Er. Herbert V. Widman, Cashier of The
City -ational bank and Trust Company of H
- ackensack, which is affiliated with the City ational Company, hopes to avoid the necessity
Of making an application for a voting permit by bringing
about, as
faPidlY as practicable, a severance of the affiliation existing between the City national company and the Rochelle Park Bank.
. "The Board does not feel that it can consistently give consideration to the granting of a permit to the applicant under the provisions of the Clayton Act until a voting peemit has been granted to
tle city ilational company or the holding company affiliate relationsnip with the liochelle Park Bank has been discontinued.
lease
advise the board as to what steps
Clark proposes to take in this
matter in order to comply with the provision of the Clayton Act."
Approved.
Report dated April 19, 1934, from the Committee on District
4
re commending the appointment of LI.. Stuart B. Sutphin, President
°r the
T
V. Sutphin Company, Cincinnati, Ohio, as a director of the
tflati branch of the Federal Reserve Bank of Cleveland to succeed
kt.
ed A. Geier, deceased.
ha.. Sutphin was appointed a director of
the Cincinnati branch for the unexpired portion
of the term ending December 31, 1934.
Governor Black referred to the informal discussion on Friday,
1934, between the members of the Board and Governor Harrison
°r the- ,
ederal
C.
Reserve Bank of New York and Lessrs. G. W. Davison and
M. w
colley, members of the board of directs of the bank, at which
tIle
ecaMmendations made by the board of directors at the first of the
wit
regard to the salaries of Jr.:L
L. F. Sailer, Deputy Governor,
11(1.
44/..
A.',J-an Sproul, Assistant to the Governor and Secretary, were diset ae
flarther,
and the recommendation made by the committee of direct
the Board reconsider its action with regard to these salaries
1115
4/23/34
-.25-
and approve
salaries for Messrs. Sailer and Sproul for the year 1934
°the rates of
35,000 and $18,000 per annum, respectively.
Governor
8140k. stated that he was impressed by what the directors had said during
the conference, particularly with regard to Mr. Sailer's long service
elad lir. Sproul's outstanding ability.
At the conclusion of the ensuing discussion,
Mr. Hamlin moved that the Board reconsider its
previous action with regard to the salaries recommended for Messrs. Sailer and Sproul for the year
1934.
Carried.
Mr. Hamlin then moved that a salary at the
rate of 45,000 per annum for Mr. Sailer for the
year 1934 be approved.
Motion lost, Messrs. Miller, James
and Szymczak voting "no" and Mr. O'Connor
not voting.
Mr. Hamlin then moved that a salary at the
rate of 1.8,000 per annum for Mr. Sproul for the
year 1934 be approved.
Carried.
Reference was also made to the discussion with the committee
or f14
4.rectors of the Federal Reserve Bank of New York on April 20, 1934,
'
or tu
"446 applications filed by officers and directors of certain New York
bank
tor permission to serve at the same time as directors of the Dis-
elint c,
--rporation of New York, which were considered at the meetings of
the,
°card on March 2 and 8 and April 12, 1934. Governor Black stated
i
that, .oa
view of the very full explanation given by the committee with
te, Et
rd to the
functions performed and the operations being carried on
bYti.
40 Discount Corporation and the valuable service which it is rendering,
111
4/23/34
-26he would be in favor of reconsidering the Board's action on March 8,
1934,
and approving the recommendation of the legal division that the
843Plications be approved.
Certain points brought out during the in-
l'Orttal discussion with the committee of directors of the New York
banic were discussed further.
At the conclusion of the discussion, Er.
Miller moved that the Board reconsider its
action taken at the meeting on March 8, 1934,
and that Counsel be requested to prepare, for
the consideration of the Board, a draft of a
letter to the Federal Reserve Agent at New York
stating that the Board approves the applications
referred to and requesting that he obtain from
the member banks involved applications for permission to act as correspondent banks for the
Corporation and from the Corporation for permission to act as correspondent dealer for the
member banks.
Carried.
There was then presented a letter dated April 13, 1934, from
the
Chairman of the Federal Reserve Bank of Chicago, which read as fold copies of which had been furnished to the members of the Board
11Poil
- tae receipt:
,
"Your letter of March 16, 1934, in reply to my letter of
j"anuarY 26, 1934, with reference to the salaries for the ensuing
rear as fixed by the Board of Directors of this bank for Messrs.
C. R. McKay, H. P. Preston, J. H. Dillard, and A. L. Olson, was
Presented in full to the Board at its regular meeting on March 23,
1934.
"The salaries of these officers were recommended by the
of DirecalarY committee of our directors and fixed by the Board
your apto
subject
'Ors at its annual meeting on January 5, 1934,
your
withheld
Proval. In your letter of January 23, 1934, you
by
Thereupon,
/11313/'oval of the advances in these certain cases.
my
in
you
to
transmitted
re solution of our Board on January 26,
letter of that date, you were requested to reconsider your action
thereon and to approve the action of our Board.
7
1119
4/23/34
-27-
"Fo11owilz the presentation to our Board of your letter of
March 16, 1934, in which you stated your conclusion as unchanged,
a full discussion ensued and the Chairman was instructed to conVey to the Federal Reserve Board the views of our Board of Directors, as follows:
"The Board expressed its great disappointment that neither
its orLzinal recommendation nor its subsequent request for reconsideration had met with the approval of the Federal Reserve Board.
"It recalled the fact that in the early part of 1933 the
Federal Reserve Board requested a committee from this Board to
meet it in 77ashington to confer on the conduct of the operations
01 this bank; at which time such committee offered, on behalf of
the Board of Directors of this bank, to undertake the necessary
corrections in organization and procedure and to take full resPonsibility for carrying out the wishes of the Federal Reserve
Board in these respects; that the Federal Reserve Board expressly
accepted this offer and put the responsibility for achieving these
results directly on this Board; that this Board and its Executive
Committee, serving without compensation, have undertaken this task
with the result of a major reorganization of the staff and what it
?onsiders a marked improvement in efficiency of operation; that in
Particular activity, as well as in its normal contacts with
the organization and its operations, it has carefully informed itself as to the ability and the value to the bank of its individual
officers, and at a time when extraordinary conditions subjected
them to a severe test.
"the Board of Directors feels that it is directly charged,
both by the law and by its duty to the stockholders of the bank,
With the responsibility for the management of the bank, and further) that by reason of its more intimate knowledge of the affairs
Of the bank and its official personnel and their individual value to
its operation, the considered judgment of this Board should largely
r vern in matters pertaining to the operation of the bank. .
"It considers that if this is not the case, and to the extent
that its actions in these respects do not prevail, as approval is
Withheld, it is relieved of the corresponding responsibility for
such operation, which is thereupon assumed by the Federal Reserve
8°Eird.
"The Board did not make the recommendations for increases for
the men mentioned in the first paragraph of this letter without
carefully weighing the salaries that were paid by not only other
Federal Reserve Banks, but also commercial banks in our city and
elsewhere. The increases recommended were so meagre that it was
he Board's considered judgment that they would be and should have
een accepted by your Board without any question whatever, and it
i8 still of the opinion that they should be ap: roved by the Federal
l'eserve Board.
"The Board considers that if its actions in regard to re8Ponsibilities with which it is directly charged may not prevail,
4/23/ 4
-28-
“there is little purpose in its assuming such responsibilities
fld devoting its time and energy thereto; and that if this Board
le not competent to pass judgment on minor matters of this Character, the membership of the Doard of Directors itself should be
Changed.
"With reference to the suggestion of the Federal Reserve Board
that future salary changes be jointly considered inforri:ally before
1..r2nal action, our Board will welcome such action, and suggests that
wilatever representation the liederal eserve Board desires shall be
in Chicago at the time when our Salary Committee is considering the
question of salaries.
"As the Iederal Reserve Board seems to lack confidence in the
judgment of the 6oard of Directors of this bank, in respect to officers' salaries, it is suggested that they select a representative
or representatives in whose judgment they have thorough confidence,
0 that increases involving such moderate amounts as those now on
review will be accepted by the hoard in washington without further
question.
"itis letter has been prepared under the instructions of our
Board of Directors, and is being transmitted by the Chairman at its
1
:equest and after a copy has been submitted to each of the other
e'lrectors and approved by each of them as an expression of their
views.”
After discussion, the Secretary was requested
to prepare, for the consideration of the Board, a
reply to the above letter.
Governor Black reported that he and Senator Glass conferred with
the
'
resident of the United States on April 20, 1934, with regard to
the
'
l e7-ised bill agreed upon by Governor Black and Senator Glass which
1,10,4
34 1,
vrovide for the extension by federal reserve banks of credit for
the
1)11rPose of furnishing working capital to industrial and commercial
°Ills and that the President had stated that he was not advocating
the
Purchase by the Treasury Department of the stock held by the Federal
1"ve banks in the Federal Dep,psit Insurance Corporation, but that he
41)Prove the payment to the Federal reserve banks, out of the ineNta
in the Treasury resulting from the reduction of the weight of
the ci
°11ar, of an amount equal to the par value of such stock, to be
J:119
4/23/34
-29-
Used bY the Federal reserve banks in aonnection with loans to furnish
17c)rkillg capital, provided that such payment would not affect the budget.
G°7eraor i3lack stated that, accordingly, he called on the Director of
the BUdget on April 21, 1934, who stated while he felt that such a
131Yritent
would affect the budget, it would be fair to transfer the ap-
1)1'0zilaate1y .140,000,000 involved to the Federal resorve banks, and that
atlbeeqUently the Secretary of the 2reasury had advised him (Governor
131ack) that, while he would approve the purchase from the Federal ree banks of the Federal Deposit Insurance Corporation stock, he would
11°t be willing to approve the transfer of 440,000,000 from the gold
Iliel'ernent without such purchase, as it would undoubtedly result in ret4
q-ItestQl,
u etnc made from other sources for the use of the balance of the
ril)248 in that account.
Governor Black added that he had made arrange-
41elits With Senator Glass and Er. Douglas for a further conference on the
44t ter this afternoon.
The Governor then called attention to a draft of a letter to
the ,
eaairmen of all Federal reserve banks, which had been prepared by
the
Secretary at the suggestion of Mr. Miller, and which stated that,
' the
r°1
reasons referred to in the letter, the Board had reached the
1113Ion that it should have an opportunity, in advance of the delivery
r
elease of any speech or article by an officer or employee of a l'ederal
Nee
I've bank on currency or banking matters which my raise questions of
'Y) to examine such speech or article and to express its position in
11c1 to any feature that may seem to require correction or further conaid
consideration
erati°n, and that, in order to facilitate the Board's
-30or tilese matters, there should be submitted to it, at least three days
betOre the date of release or publication, two copies of such speech or
4111els.
The draft also stated that the Board does not desire that there
be 8114mitted to it for this purpose manuscripts of statements relating
to—
,Ilatters which are of interest merely locally or to a particular Federal
48erve district or which are designed solely for educational purposes
8'8 to
well-established features of the Federal Reserve System, but the
should be recognized that on many questions of public interest the
Serll has not taken or formulated a position, and therefore a statement
"1 respect to them, even though intended merely for local information,
b
held
e ---e a matter of System policy.
the letter for a discussion of the matter at a meeting of the Board
wae not in sympathy with the position taken therein and felt that
4
tile
Governor Black stated that he had
1
etter should be changed to limit at least to the junior officers
tQe
l equirement that speeches and articles be submitted to the Board in
'
tlace of delivery or publication and to express the hope that the senior
°I'l'icers will sena to the Board in advance of delivery or publication
)13iee of any speeches or articles prepared by them.
At the conclusion of a discussion, it
was decided that the draft of letter should be
circulated again among the members of the Board
for consideration in the light of the discussion
and for any comments that they may desire to make
With regard thereto.
There was then presented a draft of a letter to Senator Fletcher,
Of the Banking and Currency Committee of the Senate, with regard
tot.
111 S. 2955, which, among other thins, would amend Section 10(b) of
4_121_
4/23/34
the
-31-
Federal Reserve Act by striking out the provision which limits
the period within which the authority conferred by that section may be
'cised.
e4el
Thc proposed letter stated that the Board favors such an
814enlAment and has heretofore recommended that bection 10(b) be enacted
14 Permanent form.
In connection with the proposed letter, considera-
tionwas also given to a meorandum dated April 6, 1934, from Lr. Morrill
that MT. Miller suggests that the letter be amended to include
l'ecammendation of a further amendment to Section 10(b) by inserting
e rter the words "in exceptional and exigent circumstances" language to
'
the effect that advances may be made under section 10(b) only durinE7
Period of national emergency as determined by the Federal Reserve
13°eIrcl.
Mr. Miller stated that, since the memorandum above referred to
41a written, he had considered the matter further and felt the objective
he had in mind could be reached if the section were amended to
l'e8tOre the provision contained in the section as it was originally
1418ed requiring the approval of advances by Federal reserve banks by
liot
ess than five members of the Federal Reserve Board.
After discussion, the letter was ordered
returned to Counsel for revision in accordance with LI.. Eiller's latter suggestion.
The aovernor presented a letter dated April 13, 1934, from Er.
Lieht
enstein, Secretary of the Federal Advisory Council, reading as folIcts:
Morrill, asking
"I am writing the usual form letter to
are any topics
there
if
me
advise
to
enough
good
the Board to be
next re,ular
its
at
consider
council
the
have
to
which it desires
fleeting which takes place Tuesday, Day 15th.
'
y .011)
r'
•
4123/34
-32-
"This is, therefore, merely a personal letter to you and I
am certain that you will not take it amiss. At the recent meetings
of the Council same of the members have felt that it would be better
if the Board submitted such questions as they wished to put to the
Council in advance of the meeting. Lately what has actually happened has been that the problems have been placed before the Council
oA the day of the meeting itself, or just the day preceding, and the
zembers of the Council have felt that they were not given fair opPertunity to really consider the problem and were given no opportunity to consult people in their own district.
"The result has been that the Council has declined on several
of these occasions to make any recommendation. As for example at
the last meeting where it was suggested that the Council might make
s recommendation in regard to your proposed Intermediate Credit Banks
Euld also in respect to the problem of long term bond issues, you may
remember that the Council declined to make any recommendation in
respect to these matters.
"Naturally, I realize as you do too that something mi7ht came
1113 so unexpectedly that there is no opportunity to present it to
the members of the Council in advance, but I should suppose ordinarilY such would not be the case. As you may imacine, my only interest
ii the matter is, since in accordance with the by-laws of the Council
I am supposed to be a clearing house for the Board and the members
°f the Council in advance of the meeting, to bring about an orderly
pl'oCedure."
The Secretary was requested to confer with
the individual members of the i3oard with regard
to any suggestions that they may have as to
topics which the Joard should request the Council
to discuss at the forthcoming meeting.
The Secretary reported that after the discussion at the meeting
th, Board
on April 12, 1934 with regard to the request of the Secre-
tay,
the Treasury that the Board move its offices to the first floor
t'
4-
Treasury building, GoverLor Black had appointed a committee con-
aist;
48 of Lessrs. Szymczak, Hamlin and Miller, to study the matter and
'
"htait a
report thereon to the Board.
Szymczak stated that the committee had inspected the space
1:
150
8e4
by the Secretary of the 2reasury to be occupied by the Federal
'"1.0 Board and had found that, while three members of the Board would
4/23/34
-33-
114ve satisfactory space, it would be necessary to assign to the other
niellibere space that would not be satisfactory, and that the Board's
st4rr
Would be crowded into space which would be inadequate.
e°1naittee then discussed,
The
Szymczak said, the possibility of finding
4tiefactory space outside of the Treasury building, and in this con4etion visited the building now occupied by the Department of Justice
€1t V• ermont Avenue and K Street and the Washington Building at Fifteenth
Stl
'
set and Dew York Avenue; that the Department of Justice offices are
14• very unsatisfactory condition and infested with vermin; that space
°lithe eighth floor of the Washington Building which has been occupied
th,
Reorganization Division of the office of the Comptroller of the
014,1,
sticY and which will be available in May, in the opinion of the
tee, is readily adaptable to provide adequate and very satisfactory
space for the Board's offices; and that this space could be obtained
en annual rental of :2.00 per square foot.
In considering the
4.-ability of =wing out of the Treasury building, Yr. Szymczak said
the
eQtaMittee felt that such action would be the best possible assurance
that th
he Board would take reasonably prompt steps to provide a suitable
btuld.
111
in which to house its activities, whereas if the Board's offices
ecatinued in the Treasury building, it is possible that adequate
14411tel'e will not be provided for a long time in the future.
te:tea that he had a strong sentiment in favor of remaining in the
T14143147 building, but that he could not escape the feeling that the
crtless now occupied by the Board are inadequate, that the space proposed
°11 t• he first floor is more unsatisfactory, as well as inadequate, and that
4/23/34
-34he would favor moving to the Washington Building.
Mr. O'Connor stated that in 1933 when he was looking for space
illWhieh to house the activities of the Federal Deposit Insurance CorP°rEition, he had looked at a number of buildings, and that, while no
qace was
available in the V,ashington Building at that time, and,there-
the Federal Deposit Insurance Corporation had located elsewhere,
he telt that the building offers the space best adapted for the purposes
or the Board, and that he felt sure no mistake would be made by the
13°41
'
d in moving its offices to the space now occupied by the Reorganiza044
D1V181011.
With regard to the question of providing a building of
11;11 Own, la'. O'Connor stated that he felt such a project would aid in
the ,
'"ecovery program, that it would be a desirable step, and that im41ecli te steps should be taken by the Board to provide such a building.
Governor Black stated that he was inclined to the feeling that
the
lie
12
a very serious question as to how the prestige of the Board
1(141(1 be affected by it
moviw; out of the Treasury building.
:iyatt called attention to the fact that the provision conte,ixied or
ie.inally in Section 10 of the Federal Reserve Act that the
Sl
etary of
the Treasury may assign offices in the Department of the
14e(taul7 for the use of the Federal Reserve Board was eliminated by the
ilrtkille Act of 1935, and that, in his opinion, serious question could
be
l'a'lsed as to whether the Secretary of the Treasury now has authority
to
431. space to the Federal Reserve Board. He also stated that, with
4.41'cl to the erection of a building for the offices of the Federal :1-e4(4,,,is board,
there are three possibilities under the present law: (1) It
be contended that the Federal Reserve Board, as one of its incidental
n
4123/34
-35-
P"ers, has authority to construct a building in which to house its
activitie
s; (2) The .ederal reserve banks, instead of paying assesaments
t° the Board for the purpose of enabling the Board to pay rent, might
thclaselves construct a building in Washington for the use of the Federal
er31"Ire Board; and (3) A request might be made of the Public Works Adstration for funds with which to erect a building, the title of which
11/1dio,
".utedly would be taken in the United States.
Mr. Wyatt stated, as
to the first suggestion, that although one of the law clerks in his ofrice
had studied the matter carefully and had reached a favorable conOh: he felt there was considerable doubt that the Board has such
"uY; that he felt the second position could be sustained but might
Ile criticized, and that, in his opinion, the best thing to do under the
ei
c4M3tances, is to include a paragraph in the Stock Exchange Bill or in
the b.
u111 authorizing the Federal reserve banks to make loans for the
Dkirbo
Se
of furnishing working* capital to industrial and commercial con-
Which would authorize the Board to purchase or construct a build-
its use and to assess the cost against the Federal reserve banks.
suggested that, in considering the desirability of requesting
Istalative authority for the erection of a building, the Board should
Rive Careful
consideration to what its position would be if such authority
wel'e not granted.
Mr. O'Connor moved that the Board request authority from Congress to purchase or construct a building
in which to house its activities in the District of
Columbia, and that the aovernor be asked to take the
matter up with the Secretary of the Treasury and the
President of the United States and request their cooperation in securing such authority.
4/23/64
-36Mr. Szymczak moved, as a substitute for Mr.
O'Connor's motion, that the Governor be authorized
to take such action as may be suitable to obtain
a building in which to house the activities of the
Federal Reserve Board.
Mr. Szymczak's substitute motion was carried.
Governor Black stated that, in accordance with the above action,
heWoUld advise the Secretary of the Treasury that the space proposed
13115-111 for the Board's offices on the first floor of the Treasury buildis not adequate and is not adapted to the Board's needs, and that
the Board is unwilling to move into it, and that he would advise the
13°er'd
at
a meeting tomorrow of his discussion with the Secretary, when
cleei3ion could be reached as to arranging for space for the Board's
offices in
the Washington Building.
Mr. Hamlin called attention to the fact that the Division of
/tesearch and Statistics had submitted to the members of the Board a
ec011-cl draft of the annual report covering operations for the year 1934.
It was understood that the members would
read the report and submit any suggestions which
they may have to make with regard thereto not
later than Thursday, April 26.
Letters dated April 21, 1934, approved by five members of the
11°41'd, to applicants for permits under the Clayton Act, advising of
b()Val of their applications as follows:
14r- A. :J. Collier, for permission to serve at the same time as
a director of 'Jae First National Bank of Klamath Falls, Klamath
Falls, Oregon, and as a director and officer of The First National
lEitnk of Merrill, Merrill, Oregon.
'- Leslie Rogers, for permission to serve at the same time as
director and officer of The First National Bank of Klawith
Falls, Klamath Falls, Oregon, and as a director of The First
1127
4/23/34
-37-
National Bank of Merrill, Merrill, Oregon.
Approved.
There were then presented the following applications for origi441 or additional stock of Federal reserve banks:
A 4i2ations for ORIGINAL Stock:
Ll'fS1SLiraLjL
ttori Heights National Bank,
Clifton Heights, Pennsylvania
)
,!strict No. 7.
"me National Bank of Rochelle,
Rochelle, Illinois
Side National Bank in St. Louis,
St. Louis, Missouri
Shares
60
60
36
36
504
Total
501
600
15
15
60
60
6
6
A 14
Di J-Leations for ADDITIONAL Stock:
'me Pirst
National Bank of Georgetown,
4ecrgetown, .Kentucky
No. 5.
°4e National Bank of Madison,
Madison,
West Virginia
Zstrict No. 6
-4° Pirst National Bank at Orlando,
Orlando, Florida
iii)11;8trict No 9.
ePirst National Bank of Cass Lake,
1,6„e"s Lake, Minnesota
Ilza
Falls National Bank & Trust Co.,
111.,Irgua Falls, Minnesota
• rirst National Bank of Iordan,
111:211011, Minnesota
"irst National Bank of New Prague,
11421/0/ 1=rague, Minnesota
• Wo
Bank,
Th Worrthington National
thington, Minnesota
err,!irst National Bank of Twin Bridges,
111,:71-4 Bridges, Montana
-x
itchell National Bank,
Ilitchell, South Dakota
3
15
15
9
36
9
12
:1128
4/23/34
-38(Continued)
for ADDITIONAL
;
First National Bank of New Richmond,
Ilew Richmond, Wisconsin
"
ua Pirst National Bank of Ilwaco l
Ilwaco, aashington
Shares
15
•
7
Total
Approved.
Thereupon the meeting adjourned.
141443Ved:
114
7
202
@FedFRASER