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612 A meeting of the Board of Governors of the Federal Reserve SysWas held in Washington on Wednesday, April 28, 1937, at 11:30 a. mi. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Davis Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Considera tion was given to each of the matters hereinafter referred to Slid the action stated with respect thereto was taken by the BOard: The minutes of the meeting of the Board of Governors of the Federal zte serve System held on April 27, 1937, were approved unanimously. Telegram to Mr. Young, President of the Federal Reserve Bank °t °8ton, stating that the Board approves the establishment without ellallee by the bank today of the rates of discount and purchase in its eli8titg schedule . Approved unanimously. Letter to Mr. Sargent, Vice President of the Federal Reserve Of .- .rrancisco, reading as follows: is to advise you that the Board today approved the iltle bond which was executed on April 16, 1937, by The Fidelaj d and Casualty Company of New York, New York, New York, Ile Mr. Henry D. Swengel, covering Mr. Swengel as Federal eerve Agent's Representative. wa„."It is noted from your letter of April 17, 1937, force-4-ng this bond to the Board, that The Fidelity and is8441tY Company of New York has advised that April 13, 1937, 8._ the effective date of the bond, and it is, therefore, asat April 13, 1937, is the date upon which the change Mr. Swengel's title from Acting Assistant Federal Re- 613 4/28/37 -2- Agent to Federal Reserve Agent's Representative was made. Accordingly, unless prompt advice to the contrary is received from you, the Board will notify The Fidelity and Casualty Company of New York that it is under no obligation on the bond of March 6, 1937, covering Mr. Swengel as Acting Assistant Federal Reserve Agent, for any acts coamitted by him subsequent to April 13, 1937." Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank of Bc/et°11, reading as follows: "Reference is made to your letter of April 23, 1937, transmitting the request of the 'Depositors Trust Company', AUgusta, Maine, for permission, in accordance with the proof membership condition numbered 8, to purchase a Site and erect a one story bank building at a total cost of c 't more than 00,000 for its branch at Boothbay Harbor, ajne "In view of the information submitted and in accordance nth Your recouliendation, the Board interposes no objection to such investment in the amount indicated, and it is requested that you advise the trust company accordingly. 19 "It has been noted that in the letter dated April 21, -0,3 !t° Mr. Paddock, the trust company expressed the desire s.u the Board leave open the authority to purchase from the r eceivers of the Augusta Trust Company the other five , jadings occupied by offices of the Depositors Trust Com1, ZI1Y. The authority contained in the Board's letter of gUst 25, 1934 remains in force. It will be expected, howt er, that the aggregate investment in banking quarters in he Points covered by such letter, including the proposed i.!estment of 430,000 at Boothbay Harbor, will not exceed 945,000. Please advise the trust company accordingly." Z Approved unanimously. Letter to Mr. Sproul, First Vice President of the Federal Refaerve Bank of New York, prepared pursuant to the action taken at the 144114 of the Board on April 21, 1937, and reading as follows: tta . "Reference is made to your letter of April 12, 1937, c10.1,:laing of the purchase of 40_0,000,000 of United States itvernment securities for the account of the Bank of Canada accordance with the terms and conditions of the existing 614 4/28/37 -3"agreement covering the maintenance of the account for that bank. The Board has considered these transactions in the light of the circumstances outlined in your letter and, as an exercise of part of the authority granted in this letter, approves the same. "In this connection, the Board has noted your request that appropriate authority be given to your bank, in accordance With the terms and conditions of existing agreements c°vering accounts maintained with it by foreign central banks, to Purchase United States Government securities for the account of foreign central banks, including the Bank for Inte rnational Settlements, with the agreement of your bank, if requested at any time before maturity, to repurchase the seIrl ties, or, at your option, to sell them in the market. c' "For the reasons which you mention, as well as those ontained in the Board's letter of February 9th, 1937, re,"ing to the grant of similar authority as applied to bankers, acceptances, the Board, pending approval of the revision of the outstanding agreements covering the accounts maintained by the Federal Reserve Bank of New York Or foreign central banks, grants your request; provided, that the aggregate amount of the liability assumed by the banks in connection with such purchases for the e account of foreign central banks, including the Bank r International Settlements, shall not exceed at any one time the sum of 4;50,000,000 without further specific autnorz"lon which shall be obtained in advance from the Board. "Also, as pointed out in your letter, the authority here in_:n granted is necessarily subject to the condition that Le uUr bank will not exercise its option to purchase Governr," securities from foreign central banks under this arF:!!gement unless such Purchase has been authorized by the `'eral Open Market Committee by appropriate action in effect at the time of the purchase." l r 4 4 Approved unanimously. Letter 4.1.1re to Mr. Sawyer, :Division of Security Loans, :Federal Re- ank of Boston, reading as follows: "Reference is made to your letter of March 10, 1937, „Tding the inquiry received from A. L. Albee & Co., Inc., T. 0 whether or not the company is subject to Regulation It is understood that A. L. Albee & Co., Inc., is not mew', er a of national securities exchange that and the sole est 0 presented is whether it should be considered a 615 4/28/37 -4"'broker or dealer who transacts a business in securities throucth the medium of any such member' within the meaning of sectj0 7 of the Securities Exchange Act of 1934. Since this Question necessarily depends upon questions of fact it will be seen that, in general, each case must turn upon the facts involved in that particular situation and could not be determined without giving careful consideration to all such relevant facts. However the firm in question presents the specific inquiry of whether it would cease to be a 'broker or dealer who transacts a business in securities through the medium of any such member' if it ceased to handle fly business in registered securities. "In this connection it is to be noted that the language involved does not refer to transacting a business in registered securities but refers to transacting a business in ,steburities. Therefore, the Board feels that the mere failure .° handle any business in registered securities would not, in ltSelf, be sufficient to keep a oerson from being a broker or dealer who transacts a business in securities through the nedium of such a member. "The Board has not seen fit to specify any conditions nfactual situations which would prevent a person from being ;broker or dealer who transacts a business in securities i rough the medium of a member; and for your confidential '..li.lformation it may be stated that, in general, it seems advasable for all doubts to be resolved in favor of the pre• ifPtion that the broker or dealer does transact a business securities through the medium of a member. In this conii _ctic3n it is understood that a number of firms who express as to whether they actually 'transact a business in %urities through the medium of any such member' follow the : th vriu: sl t o .2f Regulation T and thus avoid any question in Approved unanimously. Letter to Mr. Vvalter Lichtenstein, Secretary of the Federal AdCouncil, reading as follows: 1937, "Further reference is made to your letter of April 16, in which you state that the Federal Advisory Council meet in Washington on May 17 and 18, 1937. "I have been reouested to advise you that at the present sra the Board does not have any topics to suggest for conincleration by the Council at the meeting. However, as stated letter of April 16, the Board will be pleased to meet " r -Ih the Council on May 18, and to take up any matters which 616 4/26/37 -5- "the Council may wish to present at that time." Approved unanimously. Letter to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, reading as follows: "I have your letter of April 16, in regard to the invitations which you have received to address the Michigan Be.tnkers Association and the South Dakota Bankers Association in JUne, and have brought it to the attention of the members of the Board. "The Board agrees with you that it is desirable to take advantage of opportunities such as these and it is felt here that you and your associates have been doing excellent work in the field of public and bank relations in Y°ur district. In fact, no one here has any suggestion 88 to materiel which you might use that you have not incorporated in the different talks that have been made by Yourself and your associates or that is not already available to you for this purpose. "In the circumstances, the Board does not feel that "would be of any special advantage for its staff to pre311re e talk for you to deliver and suggests that you folt°w the lines of thought that you think best in preparing .tor these addresses. Of course, if you should wish us to 'look over any manuscript, we will be glad to offer any suggestions that may occur to us." Approved unanimously. Letter to The George A. Fuller Company, Washington, D. C., readEls follows' , "In accordance with the provisions of Article 33 of the tl construction contract, you are hereby directed to cause it%work covered by Allowance 'K', General Lighting Fixtures, bv rction 1 of the Specifications, page S1-14, to be. done b" 8ITY Alexander, Inc., Investment Building, Washington, ' (0C*) for the SUM of Nine Thousand Two Hundred and No/100 200.00) Dollars. "You should, of course, make certain that all of the worl,' covered by this Allowance, as provided in the con!ct d ocuments, is covered by the contract which you enter 1;60 with Harry Alexander, Inc. "In view of the fact that said sum of 0,200.00 is less 617 4/28/37 -6"than ' 15,000.00, the amount named in the Specifications as the allowance for this work, the difference, namely, Five Thousand Eight Hundred• and No/100 (0,800.00) Dollars, will bs deducted in making the adjustment in the contract sum reUlting from the differences between the amounts of the allowances named in the Specifications and the amounts for which the Board may direct the work to be done, as provided in said Article 33 and in paragraph 80 of Section 1 of the Spec ifications, page 51-12. "The original bid submitted by Harry Alexander, Inc., dated April 9, 1937, is inclosed herewith. In this connection it will be noted that our acceptance is based upon their ProPosel to furnish for type 'G' fixtures, the Westinghouse Electric & Manufacturing Company's 'Magnalux' semi-indirect lighting units." Approved unanimously. Letter to Mr. Fry, Vice President of the Federal Reserve Bank Or Richmond reading as follows: "Reference is made to your letter of March 30, 1937 1 1;.7gerding the applicability of the Clayton Act to the sera:*cee of Messrs. F. Asbury Davis and Blanchard Randall as ectors of The First National Bank of Baltimore and the Deposit and Trust Company of Baltimore, both of Balti'°re, Maryland. "Ae was pointed out in the Board's letter of March 22, aPpears that the Act is applicable now to Mr. Davis, F"' will be applicable to Mr. Randall in any event after 3IllerY 1, 1939; but the question whether the Act is applica'-le now to Mr. Randall depends upon whether section 8A was Plicable to the trust company on August 23, 1935, the date „ the enactment of the Banking Act of 1935. That section ;:°17ided that after its effective date no director of a nar°11111 bank should serve as a director of any corporation &Lich shall make loans secured by stock or bond collateral'. to "With regard to this question you have furnished the tl , "4 quotation from a with e letter from the president of la'ciT trust company which states that the trust company did Alit Make any loans secured by stock or bond collateral 'on 1106!" 1, 81 23rd, 1935', and that it had few such loans on its 14: cn that date. However, as pointed out in the Board's er, information in the Board's files indicated that the rCompany had a number of such loans on its books at the"of 1933, and also in the first part of 1937, and e st atement which you quote from the letter of the president r X 4 4 618 "of he trust company does not indicate that at the time of he enactment of the Banking Act of 1935 the trust company had ceased making such loans, so as to make section 8A inapplicable. "Accordingly, it appears from the information before the Board that the Clayton Act is now applicable to the above services of both Mr. Davis and M[r. Randall " Approved unanimously. Thereupon the meeting adjourned. 41C'A 4 aI Sacra / (41/41 A Jir Chairman. 3r.
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