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851 A meeting of the Federal Reserve Board was held in Washington (311 Monday, April 3, 1935, at 11:30 a. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Governor Thomas, Vice Governor Hamlin Miller James Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Letter dated April 4, 1935, from Mr. Sproul, Secretary of the Feder , tu Reserve Bank of New York, and telegrams dated April 4 from Mr. MeAdnSecretary of the Federal Reserve Bank of Kansas City, and Mr. ') Acting Assistant Federal Reserve Agent at the Federal Reserve Of San Francisco, all advising that, at meetings of the boards of Ilrectors on that date, no changes were made in the banks' existing Ched ' 4.4-es of rates of discount and purchase. Without objection, noted with approval. Telegram to Mr. Austin, Chairman of the Federal Reserve Bank of Philadel Phial reading as follows: ita il Sa 4 t7 April 5. Board approves for your bank, effective 1 minimum rate of 1% and maximum rate of 2% per Z--'14on commitments to make industrial advances; actual rate 80 be charged to t, depend on length of commitment and circumallees.n Approved. the a orandum dated March 28, 1935, from Mr. Morrill, recommending PP°intment of Miss Helen Ramisch as a stenographer in the Secretary's "ee With ) Salary at the rate of $1,500 per annum, effective as of the 852 'OYU —2— date upon which she enters upon the performance of her duties after heirixig passed a satisfactory physical examination. Approved. Memorandum dated April 1, 1935, from the Committee on Salaries end FicPenditures, submitting a letter dated March 26 from Mr. 17"Lington, Deputy Governor of the Federal Reserve Bank of Kansas City, which requested approval of a revision of the bank's personnel classi— Iti°n plan to cover a change in the title of a position in the 411c11:ting Department from "General Clerk" to "Supervisor", and a change the de scriPtion of work shown for the Position of "Assistant Shipping l'elle in the Currency and Coin Department. The memorandum stated that " the above changes were made in accordance with the suggestions contained 14 the Board's letter of March 21, 1935, and that the Committee recom— Merld8 that they be approved. Approved. Letter to Mr. Stevens, Federal Reserve Agent at the Federal Re— a' rlTe' Bank of Chicago, reading as follows: "This refers to Mr. Young's letter of March 15, 1935, mitting the application of the 'First National Bank of it Niles, Michigan, for permission to act as trustee. $ 4aa been observed that this bank has a capital of 10 tha2 ,000 and a surplus of $10,578, and it is understood po u Niles, the place in which the bank is located, has a Pulation of approximately 11,300 people. the FA you know, under the provisions of section 11(k) of is Federal Reserve Act, the Board is not authorized to whfue a permit to exercise trust powers to a national bank et ch has a capital and surplus less than the capital and surin-ls required by State law of State institutions exercising co- Powers. In this connection, it has been noted that the " thlT2a1 for your bank has stated on the beck of Form 61(a) a lR State bank, trust company, or other corporation Z 853 s -3"'doing business in the city' in which the First National Bank of Niles is located is required under the State law to have a capital of 1$200,000 for full trust powers' but that he knows of no legal reason why the permit for which the First National Bank of Niles has applied may not be granted in view of the fact that the 'Commissioner of Banking may grant limited trust powers to State Banks with capital less than minimum amount required for granting full trust powers'. "It is understood from the latest laws of the State of Michigan which the Board has among its records (Act No. 66, P. A. 1929, sec. 1; Senate Bill No. 4, Fifty-Seventh Legislature, Extra Session of 1933) that the Commissioner of :lking of the State of Michigan may permit State banks 13.!a : the amount of capital and surplus required for 111 ! have 1 x 7ganization to act as executors and administrators of estate of deceased persons and as guardians of the persons and estates of minors and incompetent persons. It is understood also that Michigan trust companies, which compete to !?me extent with national banks, may act as trustee and in all of the other fiduciary capacities described in section h ‘k) of the Federal Reserve Act when such trust companies an amount of capital and surplus equal to that required for their " -...or organization (Act No. 67, P. A. 1929, sec. 1, and °ec. 22, as amended by Act No. 238, approved July 10, 1933). "In the circumstances, it appears that the Board is authorized to grant only the powers of executor, administrato r, guardian of estates and committee of estates of to a national bank located in Michigan which has thet capital and surplus required for the organization of a se!'e bank in the same place and to grant full trust powers, in 'uding the power to act as trustee, to such a national e bank which has the capital and surplus required for the a ganization of a trust company similarly located. It vr P _Pears from the laws referred to above that for the pur, ‘ t iVes of organization a State bank in a place the size of is required to have a capital of $50,000 and 'a truPlus equal to twenty per cent of its capital' and that a ea Tt company similarly located is required to have a tal of $130,000 and 'a surplus equal to twenty per cent its capital'. ealt,_ " Accordingly, it appears that the Board does not have Rilfl°ritY to grant permission to the First National Bank of exicles to act as trustee with its present amount of capital mat4surP1us and unless, upon a further consideration of the your Counsel feels that State institutions with a and surplus equal to that of the First National t 854 4 8 35 // -Li"Bank of Niles are authorized to act as trustee, you ale requested to advise the bank of the Board's position. Of Course, if the bank should increase its capital and surplus to the amount required for the organize-Lion of a trust °mPany in the same place, the Board will be glad to give .,urther consideration to the question whether it should be granted permission to act as trustee.n Approved. Letter dated April 6, 1935, approved by five members of the Board to the "Merchants National Bank", Hillsboro, Ohio, reading as follows: "This refers to the resolution adopted on May 3, 1933, by the board of directors of your bank signifying the bank's to surrender its right to exercise trust powers which ave been granted to it by the Federal Reserve Board. h0s"The Feder-1 Reserve Board understands that your bank been discharged or otherwise properly relieved in ;cordance with the law of all of its duties as fiducary.,ne Board, therefore, has issued a formal certificate to your 'ank csrtiryinp- that it is no longer authorized to exercise any of the fiduciary powers covered by the provisions of ection 11(k) of the Federal Reserve Act, as amended. This certificate is inclosed herewith. 'In this connection, your attention is called to the fact tht, under the provisions of section 11(k) of the Fed17:al Reserve Act, as amended, when such a certificate has srn issued by the Federal Reserve Board to a national bank, oph bank (1) shall no longer be subject to the provisions ti section 11(k) of the Federal Reserve Act or the regula(, ns of the Federal Reserve Board made pursuant thereto, 1;.1 shall be entitled to have returned to it any securities 4 11 it may have deposited with the State or similar ,1 ar-iflorities for the protection of private or court trusts, shall not exercise any of the powers covered by : p etlon 11k( 1 of the Federal Reserve Act except with the , rraission of the Federal Reserve Board." N Approved. 84414 Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve °f 14ew York, reading as follos: 855 -5“Reference is made to the report of examination of Fidelity Union Trust Company', Newark, New Jersey, as at December is, 1954, your analysis thereof and the copies of correspondPnce with the bank in connection therewith which You furnished. "While the condition of the bank appears to have been much improved through the comnlction of its program for rehabilitation, large loans to and investments in the obligations of affiliates and directors' interests, rge actual and potential holdings of other real estate and the danger of adverse decisions in connection with the legal etiens pending with reference to certain trusts, arising largely from self dealing in the past, remain a problem and 6nould receive the unremittin attention of the management. g assumed that you are continuing to keep in close touch , 71-ta the situation and will keep the Board advised as to Llevelopments. "Your corresnondence with reference to the payment of interest on deeosits in violation of the requirements of . 1t 1 gulation Q has been noted. Please advise the Board as to 1e 2 steps taken by the bank to conform to the statutory Provisions and the requirements of Regulation Q with respect the payment of interest on deposits. "Pleaoe advise, also, as to what action has been taken With re pect denre, , , to the elimination of the estimated losses and • -ciation in securities as shown in the report of examinatlon.” Approved. tomr. Yorir Letter dated April 5, 1955, approved by four members of the Board, Case, Federal Reserve Agent at the Federal Reserve Bank of New ' ding as follows: l ea re, "This refers to Mr. Dillistin's letter of March 27, 1955 aci llsdinc-r the Board's letter of March 21, 1955 (X-9157) which you of the amended authorization under Regulation Q by Which note11 member banks were permitted to pay interest at a rate . oni in excess of 7 per cent per annum on time deposits payable , r che at offices of ;member banks located in the Republic of -al and the British Crown Colony of Hong Kong. Qs t Dilli tinpoints out that there may be some question bal. 1 hether or not thecities of Harbin, Mukden, and " ' are loceted 'dthin the 'Republic of China', and he asks l en 856 4/8/35 —6— "whether this amended authorization permits the payment of interest at this higher rate upon time deposits which are Payable only at the offices of The National City Bank of New York Which are located in those cities. "It may be stated for your information that the letters Of February 21, 1935 and of March 5, 1955 by which The National City Bank of New York requested this change in the horization did not mention the question suggested by Mr. , 11istin, and merely requested permission to pay the higher 1; :'e on time deposits payable at offices in 'China and in 1 the British Crown Colony of Honp: "The Board understands that the terms 'China' and 'Republic of China' may be used interchangeably. While the Pestion whether the cities of Harbin and Mukden located in re territory known as Manchukuo, and the city of Dairen ?ated in the territory known as KwanE,rtunr, are situated in lna or the Republic of China may not be entirely free from „(3ubt, the Board feels that for the purposes of its amended 1Tthorization referred to in its letter of March 21, 1935, rre branches of The National City Bank in these three cities Y be regarded as located in China or the Republic of China :dy accordingly, that interest may be paid at a rate not in ateess °f 7 per cent per annum on time deposits payable only tr„„_811chbranches. It . is suggested that you so advise The °11 -°nal City Bank of New York." " r 2 r Approved. Teleram dated April 5, 1935, approved by five members of the 11°e ly `r.c t0 Louis "m. Wood, Federal Reserve Agent at the Federal Reserve Bank of y reading as follows: pr ase transmit following message to Mr. Walter W. Smith:, wilident, Federal Advisory Council: 'Mr. Lichtenstein left me on Tuesday report of Federal Advisory Council on 11) ing Act of 1935. In accordance with procedure agreed ,rl coT 8t meeting on November 20, 1934, Board feels that veil;: leil should meet i_th Board in Washington on date con— ; c lent to Council to discuss report before it is filed with th'zillittees or given any publicity. It was also suggested Coat such meetim: iht be in lieu of regular meeting of Of in May. Mr. Lichtenstein has been advised orally ,,oard's action.'" Approved. 857 4/8/35 —7— Letter to Mr. Peyton, Chairman of the Federal Reserve Bank of Minne aPolis, reading as follows: "Receipt is acknowledged of your letter of April 1 in regard to the decision of your board of directors that it vould be advisable to hold one meeting of the board of directors each year at the Helena Branch. While the Board .t 77 ” aware of the attitude of your board of directors in 1. regard, through the receipt of copies of the minutes 1s 2L the meetins at which this matter was discussed, the Board was not aware that it was expected to take any action Upon the Board hasmatter. However, inview of your letter, the requested me to advise you that it has no objection to the proposed plan." Approved. Letter dated April 5, 1935, approved by five members of the Board 'to the chairmen of all Federal reserve banks except Atlanta and reading as follows: "Under date of October Zl, 1934, the Federal Reserve Doc'rd addressed a letter to you (X-9004) with regard to the the operation of the Agency of the Federal Reserve ,"serve Bank of Atlanta at Havana, Cuba. In that letter it as Stated that the Board indorsed the suggestion of the 0 -aeral Reserve Bank of Atlanta that the Agency be hereafter rperated by that bank for the account of the twelve Federal ne: , 3erve banks and that the Board hed under consideration the t,cessary details for that purpose. Subsequently you advised Federal Reserve Board that your board of directors had efsapproved participation in the operation of the Havana Agency suP;gested in the Board's letter. the "There has now been prepared a form of agreement between re, Federal Reserve Bank of Atlanta and the other Federal ouZerve banks, copies of which are inclosed, which carries fe , he suggstion contained in the Board's letter above re— Suggestion to and agreed to by your board of directors. The er-eement in the form inclosed has been approved by the Fed— ifal Reserve Board and its counsel and it will be appreciated posYT1 will have the same executed by your bank as soon as if sible, after submittinc it again to your board of directors Y°1-1 feel that such resubmission is necessary. 4/8/35 -8"Please execute the agreement in triplicate, sending one of the executed agreements to the Federal Reserve Board for its records and the other to to the Federal Reserve Bank of Atlanta, which will execute one of them and return it to you. A "Effective as of the date upon which the operation of the 4gency at Havana, Cuba, may commence under the terms of the reemnnt hereinbefore mentioned, the Federal Reserve Board erebY gives its consent and approval for any Federal reserve _an", to carry on and conduct through such Havana Agency any , -ransaction authorized under the terms of the resolutions of ae Federal Reserve Board adopted January 271 19271 and n nuarY 3, 1929, relating to the scope of the functions of the 4 avana Agency, copies of which are also inclosed for your .Ln formation. "It is understood that the operation of the Agency at Havana, Cuba, under the terms of the agreement before mentioned Commence with the opening of business on the first day of the month following the month in which the agreement has been executed by all of the Federal reserve banks. The Fedorrl Reserve Board exoressly reserves the right to revoke at any time its approval of the continuance of the 110Y at Havana, Cuba, under the terms of the agreement hereefore mentioned and to require the discontinuance of such agency.n r p Approved, together with a letter also dated April 51 19351 and approved by five members of the Board, to Mr. Peyton, Chairmen of the Federal Reserve Bank of Minneapolis, reading as follows: ad "Und ,- date of October'01, 19Z4, the Federal Reserve Board ,r ,,,clressed a letter to you (X-9004) with regard to the continuee of the operation of the Agency of the Federal Reserve of Atlanta et Havana, Cuba. In that letter it was stated that Be the Board indorsed the suggestion of the Federal Reserve 10 11 : of Atlanta that the Agency be hereafter operated by that tbrif for the account of the twelve Federal reserve banks and the under consideration the necessary details for la 13=1:.5'd the "There has now been prepared a form of agreement between re Federal Reserve Bank of Atlanta and the other Federal theerve banks, copies of which are inclosed, which carries out The suggeotion contained in the Board's letter above mentioned. ped _agreement in the form inclosed has been approved by the 'Pa Reserve Board and its counsel and it will be appreci-‘4 n4.0d you will submit it to your board of directors as soon r 859 4 8 35 // -9" possible. as "If approved by the board of directors, please have the agreement executed by your bank in triplicate, sending one of the executed agreements to the Federal Reserve Board for its records and the other to to the Federal Reserve Bank of Atlanta, which will execute one of them and return it to you. "Effective as of the date upon 7,hich the operation of the Agency at Havana, Cuba, may commence under the terms of the agree, hereinbefore mentioned, the Federal Reserve Board hereby gives its consent and approval for any Federal reserve bank to carry on and conduct through such Havana Agency any transaction authorized under the terms of the ebsolutions of the Federal Reserve Board adopted January 271 1927, and January 31 19291 relating to the scope of the IlInctions of the Havana Agency, copies of which are also inclosed for your information. "It is Understood that the operation of the Agency at Havana, Cuba, under the terms of the agreement before mentioned vL11 commence with the opening of business on the first day of the month following the month in which the agreement may be executed by all of the Federal reserve banks. "The Federal Reserve Board expressly reserves the right to revoke at any time its approval of the continuance of the ! ll eney at Havana, Cuba, under the terms of the agreement A mentioned, and to require the discontinuance Of ui such Agency." Botird, of mi. Letter dated April 5, 19351 approved by four members of the to Mr. Peyton, Federal Reserve Agent at the Federal Reserve Bank rineapolis, readia7 as follows: "Receipt is acknowledged of your letters of March 13 16 1 19th,t 4. -651 in which you called attention to the fact en- ' legislature of the State of South Dakota recently he un!,cted a law authorizing State banks to establish offices cle 4-r certain circumstances for the purpose of receiving ' : issuing drafts and cashiers' checks, making change, al sits, con aYing checks. It appears that no such office may be j cor ed in any torn or city after an authorized banking silel °1 ti0n has received authority to commence business in ;4 St,t " or city. You requested advice as to v,hether )11111 iz de member banks may establish offices of the kind author; Sy,teln3iyanis statute and remain members of the Federal Reserve whether State banks which have established such and 860 -10- II "offices may be admitted to membership in the Federal Reserve SYstem assuming that all other conditions are favorable. You called attention to the fact that the provisions of the law of South Dakota in this connection are as follows: 'Any bank or trust company operating under the lams of this state is hereby authorized, subject to the approval of the Superintendent of Banks, to establish an office within the county of its domicile, or adjoining countie:', for the purpose of receiving deposits, issuing drafts and cashier's checks, making Change, and paying checks, and performing such other Clerical and routine duties not inconsistent with this act) -Provided, however, that no such office shall make loans or discounts, and that no such office shall be continued in any town or city after a regular authorized banking corporttion has received authority to commence business in such tovn or city, and provided, that no more than one office shall be established in any one tm,n or city, and, provided further, that nothinc- in this act shall be deemed as authority for the establishment of branch banks. Nothing in this Section shall prohibit national banks the privilege of this Section whenever they may be so authorized by Federal law.' te, "It appears that this law of the State of South Dakota con011-jates that the offices which are authorized must be located A Bide of the cities in which the parent banks are situated. , c'ey01.1 know, section 9 of the Federal Reserve Act contains brrtain restrictions on the establishment and operation of anehes by State member banks but also provides as follows: 'Provided, however, That nothing herein contained shall prevent any State member bank from establishing and onerr,tinr- branches in the United , States or any dependency or insular possession ithereof or in any foreign country, on the same u?rms and conditions and subject to the same limitations and restrictions as are applicable to the establishment of branches by national banks.' just You will note that, under the provisions of section 9 (11°ted, a State member bank may establish and operate brane1 i? sckme ; 5 on the same tams and conditions and subject to the estal±?-mitations and restrictions as are applicable to the Of jlishment of branches by a national bank. Section 5155 to e Revised Statutes of the United States which relates rthe establishment of branches by national banks defines a alich t of a national bank as follows: 861 —11— "The term "branch" as used in this section shall be held to include any branch bank, branch Office, branch agency, additional office, or any branch place of business * * *at rhich deposits are received, or checks paid, or poney lent.' "In view of the provisions of law referred to above, it ,pears that Congress intended that the definition of a branch! which is applicable to branch offices of national !!anks should also apply to branch offices of State member uanks. Accordingly, since deposits would be received at the roposed offices of State banks in South Dakota, it is clear hat such offices would be branches within the meaning of the Provisions of the Federal statutes even though such offices may not be in terms designa ted as 'branches' by the pro— visions of the State law. The Board, therefore, is of the °Pinion that State member banks may establi sh branch offices the kind contemplated by the law of the State of South uakota above quoted only if such State member banks comply Withthe requirements of law applicable to the establish— ent of branches by national banks. Similarly, a State ank with branches which had previously been established ?der the South Dakota law could be admitted to membership enlY upon compliance with the requirements applicable to the ils !:ablishment of branches by national banks. It has been :I:Jed that a similar conclusion was reached in the opinion eujour counsel you forwarded to the Board and that he called ,atitention to a ruling of the Board published on page 499 of : Federal Reserve t Ile Bulletin for August 1933 in which circum— ances similar to those to which you referred were involved. "Section 5155 of the Revised Statutes of the United State , :Ts as amended, among other things, authorizes the 1 a° ishment by a national bank of branches outside of the or''4! in which the parent bank is situated, with the approval arid4he Comptroller of the Currency, if such establishment s4_ 0Peration are at the time affirmatively authorized to ' banks by the statute se 'Ie law of the State in question. tion 5155 esteblfurther provides that no national bank shall ea ish such a branch unless it has a paid—in and unimpaired a. stock of not less than $500,0001 except that in States With cit4 a Population of less than 1,000,000 and which have no located therein with a population exceeding 100,000, the in sapital shall not be less than $250,000, and except that no ,,r9 ,es With a population of less than 500,000 which have the-14ies located therein with a population exceeding 50,000, k caPital shall not be less than $100,000. Section 5155 rther provides that the aggregate capital for every national Z 862 4/8A5 -12"bank and its branches shall not be less than the aggregate minimum canital required by law for the establishment of an equal number of national banks situated in the various Places rhere such bank and its branches are situated. "It is understood that the State of South Dakota has a Population of more than 500,000 but less than 1,000,000 and that there is no city located therein having a population exceeding 100,000 inhabitants. In the circumstances, a State Member bank in South Dakota with a capital of $250,000 could establish branch offices provided, of course, it complied with the aggregate capital requirements of section 5155 above referred to and obtained the approval of the Comptroller of the Currency. You have heretofore been advised of the procedure follov,ed by the Board in presenting applications of ?:tate member banks for permission to establish branches to the Comptroller of the Currency. "Section 202 of the bill, H.R. 5357, which has been in troduced in Congress, contains a proposed amendment to ection 9 of the Federal Reserve Act which would Ip t authorize Board, in order to facilitate the admission of State banks which have obtained the benefits of insurance to mem: r rshiP in the Federpl Reserve System, to waive the capital relating to admission to membership. When the Governor of the Federal Reserve Board recently appeared be',.ere the Committee on Banking and Currency of the House of Presentatives, he suggested that this provision of the i , H.R. 5357, be modified so as to authorize the Federal L11 ,!serve Board to waive any of the requirements of section 9 i34 the v Federal Reserve Act relating to the admission of such , anks to membership. If the Governor's suggested substitute Or section 202 of the bill, H.R. 5357, should be enacted 10 law, the Board could . admit State banks in South Dakota nr eh had previously established branch offices under the ' loeevisions of the law of South Dakota herein quoted to memd4 shiP in the Federal Reserve System even though such banks ! not have the capital required for the establishment of ' watches by national banks. The Board has also given consideration to the practical j.ioulties described in your letter of March 23, 1935. As C!oated above, amendments to the provisions of the Federal tin. rve Act and section 5155 of the Revised Statutes of the ttl ed States would be necessary in order to enable State oirr banks and national banks lawfully to establish branch heriees of the kind contemplated by the South Dakota law menZin quoted without regard to the minimum capital requires aPPlicable to the establishment of branches generally. 7 g 863 4/8/35 "The Board has given careful consideration to the possibility of obtaining amendments to the law which would enable member banks lawfully to establish such branch offices without ?ompliance Idth such requirements but it does not feel that lt is practicable at this time to obtain such amendments. . "I trust that the above will give you all of the informatlon you require in this connection but, if you desire sallY further advice in the matter, please advise." Approved. Letter to Mr. Case, Federal Reserv6 Agent at the Federal Reserve of New York, reading as follms: , "Receipt is acknowledged of your letter of March 26, . 9 )5 with inclosure, requesting that the Board permit you `, ,o furnish copies of the two memoranda inclosed with its -L-eter to you of March 1, 1935, to the counsel for the 111ton Trust Company, Newark, New Jersey, the Reconstruction ,14ance Corporation, and the Federal Deposit Insurance rrl oration, o in connection with the suit which has been ?uEht by the estate of Abraham Fischman against the s.tinton Trust Company involving the binding effect of the 'etute of New Jersey under which the Clinton Trust Company reorganized upon a depositor who did not consent to the t-11 of reorganization of that trust company. 193 "While, as indicated in the Board's letter of March 1, , di ' the memoranda are not in suitable form for general 23 cosuribution, the Board has no objection to :our furnishing a dies of the memoranda to such counsel for their information j for assistance. It has been noted that you and the counsel Y°1-1r bank are of the opinion that there is no necessity Your bank to participate formally in this suit and that ur counsel will follow the -latter closely and will give thell c csistance as he can anpropriately to the counsel for e cor Clinton Trust Company, the Reconstruction Finance It P°11'tion and the Federal Deposit Insurance Corporation. uld seem that the handling of the matter in this way at 7,0j" be adeouate in the circumstances, and it will be an deleciated if you will keep the Board advised of any further e-LoPments in the case. Stc t, " April 1, 19'6 1 the Supreme Court of the United , C3n 111311J- rendered an opinion in the case of Dotz v. Love . the , ding the validity of a bank reorganization statute of ° P4tate of Mississipoil which statute is comparable to the undor which the Clinton Trust Company was reorganized. g z 864 4/8/35 -14"The case decided by the Supreme Court was known as Dunn V. Love when it was in the 'Aississinpi courts and was referred to in the Board's letter to you of March 1, 1955. A coPy of the opinion of the Supreme Court is inclosed heretith in order that it may be called to the attention of the counsel for the Clinton Trust Company, the Reconstruction Finance Corporation and the Federal Deposit Insurance Corporation." Approved. Letter to :!Ir. E. S. Burns, Cashier of the NEtional Bank of 1)etr°3-t, Detroit, Michigan , reeding as follows: , "Reference is made•to your letter of February 5, 1935, addressed to the Comptrol ler of the Currency, which has been referred to the Federal Reserve Board for reply. In (our letter you ask to be advised vhether certain deposits by the Treasurer of the State of Michigan consisting of 1 funds advanced by the United States Deparent of Agriculture, t:l Bureau of Public Roads, should be classified as United States Government funds or as public funds of States in Y°ur bank's published statements, quarterly conditio n rePorts, and other reports. You also ask to be advised vdhether such deposits should be listed as United States ,overnment denosits (line 18 of Condition Report, Treasury "Ll°11:1 2130) or- as public funds ' c of States (line 17 of ConReport, Treasury Form 2130). "It is understood that the deposits in question were made under the follo-Ang circumstances. Section 204, Title -`) of the National Industrial Recovery Act authorizes P'ants by the President of the United States to the hightY departmen ts of the several States to be expended for t hwaY construction in accordance with the provisions of he Federal Highway Act of November 9, 1921. Ordinarily Federal Government does not pay to the State authori-e anY part of the money granted under such statutes ;1c:til all or a part of the construction has been completed. owever' where a State was without funds to begin t is f truction the Bureau arranged to make advances of funds bu the State treasurer or other custodian to be deposited ,, Y lit t111m in a special account entitled 'Trust Account "nal are to Industrial Recovery Highway Fund'. These funds be paid out on the order of the State highway sePa.1 tment for work performed under the provisions of : etIon 204 of the National Industrial Recovery Act. q Zr C 865 4/8/35 -15"The trust fund is established under the terms of an agreement between the Bureau of Public Roads and the State highway department, and, in connection with such agreement, the treasurer executes e certificate agreeing to handle the funds in the trust account in accordance with such agreement. The Bureau of Public Roads requires the treasurer to deposit such funds in a separate trust account which shall be secured by a bond or collateral of market value at least equal to the amount of the deposit. The treasurer is required to agree that the funds received h:z him will be held in trust for expenditures solely on orders from the State hrhway department, that interest received on such deposits 1111 be paid to the Federal Goverment, and that the records o his office pertaining to such trust fund shall at all t,-: imes he onen to examination by representatives of the rederal Government. "It is contemPlated that the trust fund shall constitute revolvirv- fund and that as soon as a portion of the work is completed and payment therefor made by the Bureau of . bile Roads the treasurer will use such payment to reimburse the trust fund. The State highway department is required to that all payments made by it from the trust fund shall be :°e subject to audit . . by the Federal Government and that if the .!c /sk for which any such payment is made does not receive the ) !PProval of the Bureau of Public Roads the highway departIneht shall reimburse the trust fund from its own funds. , "On the basis of the above facts the Federal Reserve n°!:-ra is of the opinion that the deposits in question should : 10° be classified es United States Government funds in the ' _ank's published statements, quarterly reports of condition, 'r other reports and that such deposits should be listed as 1Ilb1ic funds of States (line 17 of Condition Report, Treasury 1D , a rm 2 130) and not as United States Government funds (line of Condition Report, Treasury Form 2130)." Approved. Letter dated April 6, 193E, approved by five members of the 130e,rd 't° Mr. Curtiss, Federal Reserve Agent at the Federal Reserve 11 111k 0 f Boston, rending as follows: ,, 19 "Receipt is acknowledged of your letter of March 19, 14 ), recording the application of Mr. Arthur G. Shattuck :; br cler .'l'ection 32 of the Banking Act of 1933 for a permit to , at the same time a dealer in securities in his individual 866 4/8/3s -16"capacity and a director of the Indian Head National Bank, Nashua, New Hampshire. You point out that on April 25, 1934 the Board wrote you stating that it appeared that section 32 was not applicable to the relationships in question, and that 3:5)11 advised Mr. Shattuck accordingly. You now ask whether, 44 view of the Board's letter of March 16, 1935 (X-9148), in which the Board stated that it believed that section 32 is applicable to the service of individual dealers in securities as officers or directors of member banks, you should take the Matter up again with Mr. Shattuck. ...,,, "It is suggested that you advise Mr. Shattuck that, 'ter careful consideration, the Board has changed its has been opinion respecting the question, and also that it the policy of the Board to deny applications inv°1ving relationships which are actually within the intendment of section 32. In this connection, reference is made to the Board,; letter of March 7, 1934 (X-7811). However, the infor.nlon which has been submitted, particularly the applicant's e 'gwer to question No. 2 on F.R.B. Form 99a, does not make it irely Clear that he is 'primarily engaged in the business m; PI :Irchasing, selling, or negotiating securities' within the acial ling of section 32; and, therefore, you are requested to . covlse the applicant that before taking further action in „nnection with his application the Board will afford him an Irortunity of submitting additional information regarding wlis question." Approved. Letter to Mr. McAdams, Assistant Federal Reserve Agent at the Ilsserve Bank of Kansas City, reading as follows: ad " Reference is made to your letter of March 23, 1935, revIslng that Mr. Hugh C. Whiteford, Kansas City, Kansas, quests an . amendment to his Clayton Act permit. to -On June 7, 1934, Mr. Whiteford was granted permission serve at the same time as officer of The Commercial di icinal Bank of Kansas City, Kansas City, Kansas, and as txjaector of The First National Bank of Osawatomie, Kansas; orril't is noted that he is now serving as director as well as re --er of The Commercial National Bank of Kansas City and , sluests that his permit be amended accordingly. th" "The Board has approved the request of Mr. Whiteford and mit e are inclosed the original and copies of an amended percovering his present services as director and officer of 867 4 8 3s // -17- 7 h0 Comrlercial National Bank of Kansas City and as director of j First National Bank of Osaratomie, for the period ending he , anua 14, 1936, for transmittal by you to the applicant and the two? banks and a copy for your files. "In vier of the Board's letter of April 9, 193/1 (X-7856), no' is assumed that you are satisfied that Mr. Thiteford is not servin any organization other than those which he listed 1,,il l-tem 12 of F.P.B. Form 94 in his previous application; but it be appreciated if you viii advise the Board regarding this ,:tter in r order that its files may be complete. However, if Vthiteford is serving any organization other than those g 8ted in his previous application, please advise the Board re, drding the matter and hold the permit pending further advice from the Board. en the permit is sent to Mr. Whiteford and copies there zit to the banks involved, please advise them that the per193 ,Pas been issued so as to expire at the close of January 14, Ps there is now pending before the Congress proposed thL,elslation for the Duroose of clarifying and otllerdse amending Pr°visions of the Clayton Act relnting to interlockine, bank --ec torates." Approved. Let ter to an applicant for a Clayton Act permit advising of the 42 11 of a permit by the Board as follows: Mr. M. Scovell c)fficer of The Martin, to serve at the same time as an National City Bank of Nev? York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Approved. There were then presented the following applications for chances ill stock of Federal reserve banks: A T)14_ 14?atloris for N Islet No 7 ORIGINAL Stock: Shares -" aational Bank in Wyoming, 131ng, 36 36 868 48 //35 -18A l ications for ORIGINAL Stock: (Contid) e N ational Bank of Norfolk, Norfolk, Ne braska. A l ications for SURRENDER of Stock: The Peoples National Bank of Marlborough, , Marlborough, Massachusetts. 411eLWIlton National Bank, Wilton, m, New Hampshire. 'Ile Clement National Bank of Rutland, Rutland, Vermont, Shares 72 Total 72 108 5 21 32 6 Approved. Thereupon the meeting adjourned. atf Secretary. Governor.