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971 A meeting of the Federal Reserve Board was held in Washington olamotday, April 9, 1934, at 4:00 p. in. PRESENT: Er. Er. Mr. Er. Ur. Black, Governor Hamlin Miller Thomas Szymczak Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Bethea, Assistant Secretary The minutes of the meeting of the Executive Committee of the Pederal Reserve Board held on April 4, 1934, were approved and the Eletimne recorded therein were ratified unanimously. The Board then considered and acted upon the following matters: Telegrams dated April 7, 1934, from Mr. Walsh, Chairman of the l'iadel'al Reserve Bank of Dallas, and April 9, 1934, from Mr. Powell, S"ret417 of the Federal Reserve Bank of Minneapolis, both advising th", at meetings of the boards of directors on the dates stated, no 11'111,efis were made in the banks' existing schedules of rates of discount 114d Plirchase. Without objection, noted with approval. T lemorandum dated April 4, 1934, from /:r. Goldenweiser, Director or the 4Jivision of Research and Statistics, recommending that Miss Helen 4. by (31') an employee in the division, be granted an additional leave of , ' 1 with pay, on account of illness, for the period April 6 to 30, IN, • illelusive. The recommendation was approved by six members of the 413,, Noa °4 4111 7, 1934. Approved. 972 1 4/9/34 -2Letter dated April 7, 1934, approved by six members of the 13°a11cl, to Mr. Austin, Chairman of the Federal Peserve Bank of PhiladelPhia, reading as follows: "Section 12A of the Federal Reserve Act provides that each Federal reserve bank by its board of directors shall annually select one member of the Federal Open Market Committee. "In your letter of July 12, 1933, you advised of the selection of Governor Norris as a member of the committee representing the Third Federal Reserve District, and, while your letter did not SO state, it was assumed by the Board that Governor Norris' appointIlleut was for the remainder of the year 1933. It will be appreciated, therefore, if you will advise what, if any, action has been taken by Your directors during the current year with regard to the selection c)fa member of the committee. "For your information, a majority of the Federal reserve banks have selected members of the Federal Open Market Committee to serve for the calendar year and it is believed desirable for all Federal reserve banks to follow this procedure." Approved, together with similar letters dated April 7, 1934, also approved by six members of the Board, to the chairmen of the Federal Reserve Banks of Richmond, St. Louis, Minneapolis, Kansas City, and San Francisco. Letter dated April 7, 1934, approved by six members of the Board, to*. Austin, Federal Reserve Agent at the Federal Reserve Bank of ladelphia, reading as follows: "Receipt is acknowledged of your letter of March 31, 1934, tr anamitting the request of The Real Estate Trust Company of Philaelphia for the withdrawal of the bank's application for membership th the system. It is understood that the bank has no assurance as o when it will be able to dispose of its investment of approximate: : 19600,000 in stock of the Pennsylvania Sugar Company, and that !ithout such asaurance the bank does not desire to accept the condiof membership requiring that such stock be disposed of within " 1 Year from the date of the admission of the bank to membership _II the System. It is noted that you have assured the bank that the withdrawal of the application will be without prejudice to the consideration of an application made in the future. "In accordance with the request of The Real Estate Trust CornOf Philadelphia, its application will be considered as having I 97P, 4/9/34 -3- "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 7, 1934, approved by six members of the Board, to 14.r. Hoxton, Federal Reserve Agent at the Federal Reserve Bank of Richmond, reading as follows: . "Reference is made to your letter of April 2, 1934, transrreAting the request of the 'Farmers and Merchants Bank of LawrenceVille', Lawrenceville, Virginia, for permission to purchase at a cost of not to exceed cj7,500, the Brunswick Bank and Trust Company bUilding, to be used as banking quarters. "In view of the favorable recommendation of your Executive Committee and the fact that the investment of such an amount does not appear to be unduly large or improper or otherwise violate the spirit or purpose of condition numbered 8 prescribed in connection with the bank's application for membership, the Board interposes no objection to such purchase at a cost of not to exceed J7,500, and it is requested that you advise the bank accordingly. "It is suggested that you acquaint the bank with the Board's views, which are known to your office, with respect to making adequate prevision for depreciation in bankimg quarters owned." Approved. Letter dated April 7, 1934, approved by six members of the Board, to the "Norway National Bank", Norway, Maine, reading as follows: "The Federal Reserve Board approves your application for perission to act, when not in contravention of State or local law, as executor and administrator, the exercise of all such rights tr"tee' 0 be subject to the provisions of the Federal Reserve Act and the Ilegulations of the Federal Reserve Board. "This letter will be your authority to exercise the fiduciary 1)Qwers as set forth above. A formal certificate covering such 411thorization will be forwarded to you in due course." T Approved. Letter to L4r. Walsh, Federal Reserve Agent at the Federal Reserve krilt °r Dallas, reading as follows: 974 4/9/34 -4"This is to advise you that the Federal Reserve Board approves the application of the 'Citizens State Bank & Trust Company', Goose Creek, Texas, for permission to exercise all fiduciary powers authorized under its charter and the laws of the State of Texas, Provided that prior to the exercise of any of these powers the board Of directors of such bank shall adopt an appropriate resolution accepting the three conditions given below and shall transmit to the Board, through you, a copy of such resolution: 1. Such bank shall not invest trust funds held by it in obligations of the bank's directors, officers, employees or their affiliations or corporations affiliated with the bank. 2. Except with the permission of the Federal Reserve Board, such bank shall not invest the funds of various trusts held by the bank in participations in pools of mortgage bonds or other securities, and the funds or all such trusts shall be invested separately from each other; provided, however, that the Federal Reserve Board will not object to the collective investment of &mil amounts of trust funds where the cash balances to the credit of certain trust estates are too snail to be invested separately to advantage, if the bank owns no participation in the securities in which such collective investments are made and has no interest in them except as trustee or other fiduciary. 3. If trust funds held by such bank are deposited in its banking department or otherwise used in the conduct of its business, it shall deposit with its trust department security in the same manner and to the same extent as is required of national banks exercising fiduciary powers. "You are requested to advise the Citizens State Bank & Trust CQmPanY of the Board's action." Approved. Letter to 1.1r. O'Connor, Comptroller of the Currency, reading as toil° "In accordance with your recommendation the Federal Reserve 8 . 0arri - approves a reduction in the common capital stock of 'The ")rest Hills National Bank of New York', Forest Hills, New York, :17 1/9/34 -5- "from c200,000 to 4100,000, pursuant to a plan which provides that the bank's capital shall be increased by 0_00,000 of preferred stock to be sold to the Reconstruction Finance Corporation and that the released capital, together with part of the surplus and profits of the bank shall be used to eliminate estimated losses of approximately c;34,915, and all securities depreciation, all as set forth in Your memorandum of Larch 31, 1934." Approved. Telegram to Mr. Wood, Federal Reserve Agent at the Federal Re" .c) Bank of St. Louis, reading as follows: "Retel April 4, 1934 Board grants 'Neat, Condit and Grout, Winchester, Illinois, permission to reduce capital from ?J-L0,000 to 55,000 as part of plan of conversion into a national bank providing released capital is used to eliminate undesirable assets." Approved. Letter dated April 7, 1934, approved by six members of the Board, to ,Lx• )J,. 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 ! , Pael'ioan National Bank of St. Cloud', St. Cloud, Minnesota, from !J-00,000 to 40,000, pursuant to a plan which provides that the capital shall be increased by :60,000 of preferred stock to oe sold to the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate unsatisfactory assets, ell as set forth in your memorandum of March 29, 1934. "In considering the plan under which the proposed capital reduction is to be effected it has been noted that your examiner erelY criticizes the active management of the bank. It has been ""ed also that the bank's capital and surplus is inadequate to supits deposit liability. It is assumed, however, that you have 'hese conditions in mind and that whenever it is feasible to do so YOU will require such further corrections as may be practicable." n Approved. to kr. Letter dated April 7, 1934, approved by six members of the Board, O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve 976 4/9/34 -6- "Board approves a reduction in the common capital stock of the 'Altus National Bank', Altus, Oklahoma, from ?100,000 to :r350,000, Pursuant to a plan which provides that the released capital shall be used to eliminate a corresponding amount of substandard assets, all as set forth in your memorandum of March 31, 1934. "In this connection, it is understood that the sale of 50,000 Of preferred stock to the Reconstruction Finance Corporation, which was a part of the plan of recapitalization, has been consummated in advance of approval of the reduction in common capital, and that such preferred stock is now a part of the bank's capital accounts." Approved. Letter dated April 7, 1934, approved by six members of the Board, to TT , O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve °ard approves a reduction in the common capital stock of 'The Farmers National Bank of Oberlin', Oberlin, Kansas, from l'.0,000 o25,000, pursuant to a plan which provides that the bank's capi,.al shall be increased by c25,000 of preferred stock to be sold to Reconstruction Finance Corporation, and that the released capial shall be used to eliminate substandard assets, all as set forth la YoUr memorandum of March 27, 1934." t Approved. Letter dated April 7, 1934, approved by six members of the Board, to n, Connor, Comptroller of the Currency, reading as follows: In accordance with your recommendation, the Federal Reserve approves a reduction In the cammon capital stock of 'The First Etti°aal Bank in Stamford', Stamford, Texas, from $50,000 to .:..25,000, lursuant to a plan which provides that the bank's capital shall be 41 , 1-creased by :,:,35,000 preferred stock, to be sold to the Reconstruc; 4°n Finance Corporation and/or others, and that the released capi, ctl shall be used to eliminate a corresponding amount of unsatisfacY assets, all as set forth in your letter of March 30, 1934." BOarA T Approved. Telegram dated April 7, 1934, approved by six members of the tOarti, to Mr. Curtiss, Federal Reserve Agent at the Federal Reserve Bank '80atOti stating that the Board has considered the application of the 979 4/9/34 -7- "Iadustrial Trust Company", Providence, Rhode Island, for a voting permit Under the authority of section 5144 of the Revised Statutes of the United States, as amended, entitling such organization to vote the stock which it owns or controls in "The Mechanics National Bank of Providence", 4°vidence, Rhode Island, and has authorized the issuance of a limited 13ernlit to the applicant, subject to the following condition: "Prior to the issuance of the limited voting permit hereby authorized, applicant shall agree as follows: 1. In all of its published statements of condition the undersigned will show separately any extension of credit to, and investment in, its subsidiary, Industrial Holdings, Inc., as an extension of credit to, and investment in, an affiliated company holding bank building. 2. Within such time as shall be fixed by the Federal Reserve Agent at the Federal Reserve Bank of Boston and in no event later than June 30, 1934, the undersigned will charge off or otherwise eliminate, if it has not already done so, all (1) losses in loans and discounts as shown by the report of examination made by examiners for the Federal Reserve Bank of Boston as at the close of business, January 6, 1934, (2) depreciation in stock of The Mechanics National Bank of Providence which is owned by the undersigned to such an extent that the carrying figure of this stock on the books of the undersigned shall not be greater than the book value or such stock as shown by the books of The Mechanics National Bank of Providence after effect has been given to a proposed plan for the recapitalization of The Mechanics National Bank of Providence heretofore approved by the Comptroller of the Currency and the Federal Reserve Board, (3) depreciation in other stocks, in defaulted securities, and in securities other than those in the four highest grades as classified by a recognized investment service organization regularly engaged in the business of rating or grading securities, such 'depreciation to be based on a current appraisal acceptable to the Federal Reserve Agent at the Federal Reserve Bank of Boston, and (4) all other losses, as shown by the report of examination made by examiners for the Federal Reserve Bank of Boston as at the close of business, January 6, 1934, provided, however, that the foregoing provisions of this paragraph Second shall not apply to the stock of Industrial Holdings, Inc. 3. Prior to June 30, 1934, the undersigned will reduce the 4/9/34 _8"amount at which the stock of Industrial Holdings, Inc. is now carried on its books by at least c7 ,400,000. 4. If the next examination of the undersigned to be made by examiners for the Federal Reserve Bank of Boston shall disclose any loss in the undersigned's stock of Industrial Holdings, Inc., the undersigned will charge off or otherwise eliminate any such loss in accordance with requirements made by the Federal Reserve Board on the basis of the report of the said examination." and for the following purposes: "(1) To elect directors of such bank at any meeting of its shareholders, or at any adjournment thereof, at any time prior to Xuly 1, 1934, and to act thereat upon such matters of a routine nature as are ordinarily acted upon at the annual meetings of such bank "(2) At any time prior to Iuly 1, 1934, to act upon a proposal to rehabilitate the capital structure of such bank in accordance with the plan which has heretofore been approved by the Comptroller of the Currency and the Federal Reserve Board, which plan includes provisions for the reduction of the bank's common capital stock from ?500,000 to 250,000 and the issuance and sale to the Reconstruction Finance Corporation of ,250,000 par value preferred stock and to amend the bezk's articles of association and to do all other things necessary to effect such plan." The tel requested that the agent arrange for an examination of the 415Plioant by examiners for the Federal Reserve Bank of Boston as of a clate not later than November 15, 1934; that he notify the applicant that e°4sideration of the issuance of a general voting permit will be deferred t ,_ we Board has considered the classification in such examination of the stoc. 4 of Industrial Holdings, Inc.; and that he notify the applicant l'Ill'ther that, if it so desires, it may obtain an independent appraisal or ' -4 e real estate owned by Industrial Holdings, Inc. and submit the same tor :̀°nsideration by the examiners at the time of making such examination tihci b Y the Board. The telegram also authorized the agent to have prepared by eo 1143°1 for the Federal reserve bank, and to issue to the Industrial 4/9/34 -9- Trust Company, a limited voting permit in accordance with the telegram Wle the condition prescribed therein has been complied with. Approved, together with a letter dated April 7, 1934, approved by four members of the Board, 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 Mechanics National Bank of Providence', Providence, Rhode Island, from i1.500,000 to c:250,000, pursuant to a plan which provides that the bank's capital shall be increased by ,250,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital, together with a portion of the bank's surplus and undivided profits, shall be used to eliminate substandard assets and securities depreciation in the amount of approximntely r400,000, all as set forth in your memorandum of February 9, 1934. "The Board has granted the Industrial Trust Company, Provide"e, Rhode Island, a limited voting permit authorizing it to vote its stockholdings in The Mechanics National Bank of Providence for the Purpose of effecting the proposed capital reduction." Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve (3f New York, reading as follows: "The Board has considered the application of 'Gimbel Brothers, , , 14c0 9 New York, New York, for a permit under Section 5144 of the levised Statutes, as amended, entitling it to vote the stock which .t.owns or controls of 'Gimbel Brothers Bank and Trust Company', " - Illadelphia, Pennsylvania, and has approved the application as filed. There is inclosed a general voting permit which you are reto deliver to the applicant, together with a copy of the Permit for your files. The Board has today forwarded a copy of the ,P,ermit to the Federal Reserve Agent at the Federal Reserve Bank of : 111h1lade1phia and has requested the Federal Reserve Agent to give the 4eoessary notification to the appropriate State supervisory author4ties.t, Approved. Telegram dated April 7, 1934, approved by six members of the tolarfl or oh. to Mr. Stevens, Federal Reserve Agent at the Federal Reserve Bank lea60, reading as follows: 980 4/9/34 -10- "On facts set forth in Young's letter Larch 29 no extension or limited voting permit granted to American Holding Corporation December 30, 1933, appears necessary as limitation of time is confined to matters referred to in clause 1 of permit." Approved. Telegram dated April 7, 1934, approved by six members of the 13°Iird, to Mr. Newton, Federal Reserve Agent at the Federal Reserve Bank or fl Francisco, stating that the Board has considered the application or "The McCloud River Lumber Company", McCloud River, California, for a 70tillg permit under the authority of section 5144 of the Revised Statutes or the United States, as amended, entitling such organization to vote the tc)ek which it owns or controls in the "McCloud National Bank", McCloud, ) 041111(3rhia, and has authorized the issuance of a limited permit to the Etl)Plieant, subject to the following condition: "Prior to the issuance of the limited votilv, permit hereby authorized, applicant shall deliver to you in form satisfactory to counsel for the Federal Reserve Bank of San Francisco three original counterparts of the agreement on F.R.B. Form P-3 entitled Exhibit L Properly executed by McCloud River Railroad Company and by McCloud Transportation Company, and three original counterparts of the authoron F.H.B. Form P-4 entitled Exhibit N properly executed by The McCloud River Lumber Company and consented to by McCloud River Railroad Company and by McCloud Transportation Company, or in the case of each of these two companies evidence in writing satisfactory to counsel for the Federal Reserve Bank of San Francisco that such e!:hibits are not required by the Board's Regulation P and the directions on the printed forms referred to." Elm t cr the following purposes: z1 "To elect directors of such bank at any meeting of its share.1°Iders, or at any adjournment thereof, at any time prior to July 1, '934, and to act thereat upon such matters of a routine nature as 4re ordinarily acted upon at the animal meetings of such bank." e telegram stated also that duplicate copies of the exhibits called rot i 4 the condition referred to above or evidence as to the lack of riN 2 41tY for such exhibits should oe forwarded to the Board. The 981. 4/9/34 -11- telegram also authorized the agent to have prepared by counsel for the ederal reserve bank, and to issue to The McCloud River Lumber Company, 4 limited voting permit in accordance with the telegram when the condi- ticn prescribed therein has been complied with. Approved. Memorandum dated April 6, 1934, approved by six members of the c)s.rd, to MT. A. r. Smith, Chief, Division of Bookkeeping and 7:arrants, Tl'eaeurY Department, reading as follows: "In accordance with the request contained in your memorandum of March 29 the draft of a report for the signature of the Secretary of the Treasury which was prepared in the office of the Comptroller or the Currency in regard to S. 2949 entitled 'A Bill To promote resumption of industrial activity, increase employment, and restore confidence by fulfillment of the implied guaranty by the United States Government of deposit safety in national banks', has been considered. "As the letter was evidently drafted by counsel in the Comptroller's office, it is assumed that the matters of law are correctly stated and therefore they have not been reviewed. The Treasury may wish to give consideration to the question whether there should be included in the letter some eApression from the standpoint of the effect of such a measure upon the Government's financial policy. °therwise, the Board has no suggestion to offer." Approved. Telegram dated April 7, 1934, approved by six members of the 130(iersA, ' L4 to Acting Governor Johns of the Federal Reserve Bank of Atlanta, as follows: "Referring Martin's April 3 wire, cost of telegrams transmitted !nd received by branch operators over branch lines for Loan Agency ' 11 P. C. should be charged to Suspense account - General on Form 34 slid cost of such telegrams sent by benk as custodian for R. F. C. should be included in functional expense report, page 13, line 6-c, ' Iegardless of whether reimbursement is received. It is our understandine that all expenses incurred for R. F. C. Loan Agency and as custodian for R. F. C. are reimbursable." Approved. 982 4/9/34 -12Telegram dated April 7, 1934, approved by six members of the 13(341'd, to Governor Calkins of the Federal Reserve BAnk of San Francisco, l'ea4ing as follows: "Referring your April 4 wire advising that you have an urgent telegraphic appeal from the Acting Governor and the Superintendent Of Banks in Nevada to continue to allow unlicensed nonmember banks in Austin, iells and Yerington to maintain special trust accounts With reserve bank as Nevada law prohibits closed banks giving limited banking service from carrying accounts other than with reserve bank and that, according to Superintendent Seaborn, it would not be practicable for banks to remain open without having facilities for settling exchange and other transactions for themselves and on behalf of depositors. Inasmuch as Nevada law prohibits unlicensed banks from carrying accounts with banks other "than reserve bank, Board will offer no objection to your continulng to carry temporarily special trust accounts for banks in Nevada. Please advise Board names of banks for which you will continue to carry deposits and beginning April 14 include amount of any such deposits in 'other deposits' on daily balance sheet." Approved. Letter to an applicant for a permit under the Clayton Act, adViet 4g of approval of his application as follows: J. H. Smith, for permission to serve at the same time as a director of the City National Bank and Trust Company, Oklahoma city, Oklahoma City, Oklahoma, and as a director of The First National Bank of Loore, 1,:oore, Oklahoma. Approved. There were then presented the following applications for origixin, -4- stock, or for the surrender of stock, of Federal reserve banks: A , bl 4eations for ORIGINAL Stock: Shares eltizets National Bank in Pocomoke City, ocomoke City, 11ary1and 38 38 ! It trict No. 7. ?-at National Bank in Bellevue, tellevue, Iowa 36 V9/34 -13- lications for ORIGINAL Stock: (Continued uistrict No. 7. Continued) First National Bank of Woodstock, goodstock, Illinois 1-1411L11 .2.:-.21t "le National Bank of Caruthersville, Caruthersville, Missouri Shares 36 Total A 14 . -44oations for SURRENDER of Stock: lstrict No. 4. Me First National --Bank of Hoaversville, T iloovez. aville, Pennsylvania he 4oYstone National Bank of Pittsburgh, Pittsburgh, Pennsylvania 72 36 36 146 45 1,080 ' Varlaera Lbrchants National Bank of ,lensselaer, Rensselaer, Indiana e,irst National Bank of Whiting, ! blitine, Iowa Citizens National Bank or Winterset, WA tterset, Iowa 1,125 52 18 Istrict No. 11Pirst National Bank of Nevada, ilevada, Texas bis4. Th 4rict No. 12. "e Whitman County National Bank of Rosalia, liosalia, Washington 139 209 18 18 44 Total 44 1,396 Approved. Thereupon the meeting adjourned. e _0(442. -1-A Secr 4111,oved Governor. CT1)s-k-Q-P ery.
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