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961 A meeting of the Federal Reserve Board was held in Washington on aY April 6, 1934, at 10:00 a. in. PRESENT: Mr. Ur. Mr. Mr. Er. Mr. Black, Governor Hamlin Miller Tames Thames Szymczak Morrill, Secretary Carpenter, Assistant Secretary Bethea, Assistant Secretary P;artin, Assistant to the Governor Wyatt, General Counsel Goldenweiser, Lirector, Division of Research and Statistics Mr. Parry, Assistant Director, -ivision of Research and Statistics Mr. Woodlief Thomas Mr. Mr. Mr. Mr. Mr. Mr. Governor Black referred to the informal consideration by members 01' the' Board in his office yesterday of the April 3, 1934, House committee triciential print of the so-called stock exchange bill, and he stated tIlvt the discussion had developed the following major points for decision bY the Board: (1) whether, if margin requirements are placed in the bill, they 8hould be applied to banks as well as to brokers and dealers, and, (2\ 17ha„ —"Iner members of national security exchanges, and brokers and dealers 1711° hf:3111ta ---3act a business in securities through the medium of any such member, he allowed to borrow only from or through banks which are members °r the , zederal Reserve System or also from or through nonmember banks. hia -rotu At this point, Governor Black was called from the meeting and upon stated that he had just talked over the telephone with Congressman Chairman of the Committee on Interstate and Foreign Commerce of 43e Of :iepresentatives, who advised him that the committee was contc)daY the following questions in connection with the stock exchange 416/34 -2- bill: (1) whether the provisions of the bill with regard to margin Nuirements shall be applied to banks, (2) whether members of stock "anges and brokers and dealers shall be allowed to borrow from nonbarns, and, (3) the general question of margin requirements. G.Qvartor Black also stated that he had been requested to appear before he iiouse committee this afternoon to discuss the bill. Reference was made to the written statement read by Governor 1314a: before committees of the House and Senate on March 22, 1934, with l'ee;l1rd to the stock exchange bill, and Mr. Tames called attention to the tact that he had not approved that statement and stated that, in his °I)j11141°11, the bill in the form under consideration was extremely deflat101117 in effect, would affect adversely the releasing of credit to bllainesa and industry, and would retard the economic recovery of the %lantry. /*iiit was The other unmbers present indicated agreement that the committee a substantial improvement over the bill as originally intro- and that there was no reason for the Board to recede from the 13"104 taken in the statement. Section 6 of the committee print of the bill, prescribing margin Niair - ements, was discussed in detail, and consideration was also given to -"tual changes in the committee print of the bill, which had been 41eeated by members of the Board's staff. A. memorandum of the changes Nto4"nded by the staff will be found in the Board's files. It appeared to be the consensus that margin requirements should be applicable to loans by banks on securities as collateral, as well as to extensions of credit by brokers and dealers. It was also concluded that brokers and dealers should be permitted to borrow from nonmember as well as 963 k 4/6/34 -3member banks, with the understanding that nonmember banks will be subject to such applicable provisions of the law and regulations as are applied to member banks, and to provisions of the Federal Reserve Act and the Banking Act of 1933 with respect to loans by banks on securities, so as to insure against any advantage to nonmember banks over member banks in making such loans. It was also understood that the changes in the committee print, recommended by the Board's staff, as modified on the basis of the discussion, would be submitted by Governor Black tothe Committee on Interstate and Foreign Commerce of the House for its consideration. A memorandum of the changes as thus modified will also be found in the Board's files. 7:yatt referred to the recent action of the Board in approving the a llpointment of Messrs. Joseph T. Owens, Gray 'Williams, and Frederic solchlot as members of the staff of the legal division of the Board, and stated that he would like to have arrangements made as soon as possible r"he Physical examination of these employees so that they may assume /11eir duties. Morrill called attention to the telegrams which were prepared 4tter consultation with Kr. Wyatt and addressed yesterday to Deputy Gave Rounds at New York and Worthington at Kansas City, and he read G II -13"'Y just received from Mr. Worthington advising that Er. Owens was 6'll'Etlid:ag to leave Kansas City for Washington today and inquiring whether the, /3t)e•rd desired to have him remain in -A:ansas City and have the examine'(1e there before he leaves. 4„ ) 1,;:r. Morrill also stated that his office "4 working on the details of the procedure necessary to obtain Nktir tilEtt "t°rY physical examinations of new employees of the Board, and he had secured, for the consideration of the Board, the names of 4/6/34 -4- 814 examiniflp. physicians employed in ;.ashington by the five largest life 11181-trance companies to make physical examinations. The Secretary was authorized to select any one of the physicians referred to and to arrange with him for physical examinations of persons whose appointments have been approved by the Board subject to their passing a satisfactory physical examination, and also of Lr. Owens upon his arrival in .iashington. The Board fixed a fee of ,;;5.00 to be paid to the physician so selected for each examination, it being understood that this is the amount regularly charged in Washington by the chief examiners of the principal life insurance companies for physical examinations for ordinary life insurance. The Secretary was also authorized to make arrangements with the Federal reserve banks that have regularly employed physicians who conduct physical examinations of employees of such banks for similar examinations in the case of prospective employees of the Board who may be so situated that it would be more convenient to have their examinations made at such Federal reserve banks than at Washington. It was further understood that all examinations would be made on the basis of the requirements for ordinary life insurance at the normal rates of premium. The Board then considered and acted upon the following matters: Letter dated April 5, 1934, from r. Sproul, Secretary of the Pederal Reserve Bank of New York, and telegram dated April 6, 1934, from 141 Strater, Secretary of the Federal Reserve Bank of Cleveland, both 1111risiti that, at meetings of the boards of directors on the dates stated, 4° eha-es were made in the banks' existing schedules of rates of discount 13Urehase • Without objection, noted with approval. idlemorandum dated April 4, 1934, from Mr. l'aulger, chief of the 4q8, 14)4 of Examinations, recommending that, for the reasons stated in the the headquarters of Mr. Mortimer B. Daniels, assistant Federal )65 4:16/34 -5- l'eeerve examiner, be changed from Detroit, Michigan, to Washington, D. C., etrective as of April 1, 1934, with no change in salary. Approved. Telegram to Mr. Austin, Federal Reserve Agent at the Federal ReBank of Philadelphia, reading as follows: "Your letter April 2. With understanding that Mr. John K. Neeley will sever his official connection with building and loan association in accordance with Board's letter of January 16, 1934, Board approves his designation as special assistant to examiners in Federal Reserve Agent's department your bank at present salary rate of :4,800 per annum. Please advise effective date." Approved. Telegram to Mr. Newton, Federal Reserve Agent at the Federal Reeellre Bank of San Francisco, reading as follows: "Re Sargent's letter March 24, 1934, regarding application First Trust and Savings Bank of Pasadena. In view of recommendation of your office, Board will interpose no objection to acquisition of assets and assumption of liabilities, other than for capital stock, of The First National Bank of Pasadena by First Trust a'ad Savings Bank of Pasadena, provided all proceedings in the tl'ansaction are approved by you and counsel for the Federal Reserve , ,4111k of San Francisco, that only assets classified as acceptable uY an examiner for the Reserve Bank be taken into the assets of First Trust and Savings Bank of Pasadena, and that the remaining assets of the national bank be carried by the First Trust and Savilags Bank as nonledger assets to be liquidated for its own benefit. "It is observed that First Trust and Savings Bank exchanged certain bonds of Mortgage Guarantee Company for issues of higher ades and that the bonds so acquired are carried on the books of e bank at the same value at which the Mortgage Guarantee Company °11de were formerly carried. The conditions of membership require , 4hat all depreciation in the Mortgage Guarantee Company bonds be elirainated, and prior to issuing stock in the reserve bank to the nplicant, you are requested to satisfy yourself that this has been lae and that the securities purchased with the proceeds of these °Ilds are not carried on the books of the bank at a value in excess ° .r the cost price of the securities purchased. For your information, Attorney General of the United States has ruled that cases of uhis kind, where bonds are exchanged and the bonds acquired are set r r 966 4/6/34 -6- "uP on the books of a national bank at the same amount as those for which they were exchanged, should be reported to the Department Of Tustice for criminal prosecution." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading 48 f011OWS: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The irst National Bank of Kingston', Kingston, Pennsylvania, from 400,000 to .,50,000, pursuant to a plan which provides that the baak's capital shall be increased by i50,000 preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate approximately 03,234 Of unsatisfactory assets and to augment the bank's undivided Profits in the amount of approximately')6,766, all as set forth in Your letter of March 28, 1934." f Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as roliows "In accordance with your recommendation, the Federal Reserve ?°ard approves a reduction in the common capital stock of 'The ,tandmands National Bank of Kimballton', Kimballton, Iowa, from 0,000 to .25,000, pursuant to a plan which provides that the , ank's capital shall be increased by ,25,000 of preferred stock be sold to the Reconstruction Finance Corporation, and that 611e released capital, together with approximately ;0,400 made veilable by a contribution from local interests, shall be used ! ") eliminate unsatisfactory assets and to create a surplus fund :10,000, all as set forth in your memorandum of larch 20, 1934." e Approved. Telegram to Mr. McClure, Federal Reserve Agent at the Federal Bank of Kansas City, reading as follows: "Referring your wire, Board revokes approval application ' ( 1)Lei First National Bank of Riverton, Wyoming, for Federal Reserve arIC stock granted March 13 and approves new application for 32 e'ree made in connection with the filing of amended organization 969 4/6/34 -7- "Papers, effective if and when Comptroller of the Currency authorizes bank to commence business." Approved. Memorandum dated April 4, 1934, from Er. Smead, Chief of the Divi8411 °f Bank Operations, stating that the Comptroller of the Currency had 13P1'°ved, for transmission also to national banks, with certain changes 8et forth in the memorandum, the form of report and letter submitted with Q.— LAIlead's memorandum of February 27, 1934, in which he recommended that Steito member banks be required to submit confidential reports to the Board gitrin,„ 'b the market or appraised values, as well as book values, of loans and 11°'estlaents and real estate, and information regarding capital accounts. The memorandum of April 4 also stated that, inasmuch as the printing approPrillti°n of the office of the Comptroller of the Currency is such that he ates to incur any printin,_; costs except for the regular forms used in the Qffice and has asked whether the Board would be willing to pay for the 1111/t1141)1 of the forms for the reports to be made by national banks, it is 1:41114ended that the entire cost, not more than ,70.00, of printing the torra_ 4 to be used by national banks be assumed by the Board. The changes in the form of report and Er. Smead's recommendation were approved. There were then presented the following applications for original '''ditional stock of Federal reserve banks: A 1. for ORIGINAL Stock: strict National Bank of Chicago, Chleago, Illinois ISlet No. 9. ?-t National Bank n Gladstone, J•acistone, Michigani Shares 138 36 138 968 4/6/34 -8- A 14 ‘ . 4-cations for ORIGINAL Stock: Continued) District No. 9 Continued) Tlie Rapid City National Bank, Rapid City, South Dakota The Union National Bank of Superior, S uperior, A.sconsin 121,4 The 419,LESIIJ-P. First N6i1al Bank in Fort Collins, Fort Collins, Colorado Shares 72 144 252 75 Total 75 465 A Acation for ADDITIONAL Stock: 4orthwest-67-in Lational Bank and Trust Co. Of Minneapolis, Minneapolis, Minnesota 2,400 2,400 Approved. Thereupon the meeting adjourned. --) to Secretary. 41)Dr'oved: Itc C-- -,----_--_ Governor.
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