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209 A meeting of the Federal Reserve Board was held in Washington on TVesday, August 1, 1933, at 3:30 p.m. PRESENT: Black, Governor Hamlin Janes Thomas Szymczak Mr. O'Connor Mr. Mr. Er. Er. Er. Er. Er. Mr. Morrill, Secretary Carpenter, Assistant Secretary Wyatt, General Counsel Paulger, Chief, Division of Examinations. The Board considered and acted upon the following matters: Reply on July 29, 1933, approved by three members of the Board, to a letter dated July 27 from lar. Hbxton, Federal Reserve Agent at Richmond, re- Illestitg approval by the Board of the appointment of Mr. Clinton W. Calhoun Eta 44 examiner in the Federal reserve agent's department with salary at the 42,200 per amnum, effective August 1, 1933; and of an increase to 02150n Per annum, effective as of August 1, 1933, in the salary of Mr. R. T. '11c1II, a temporary examiner in the agent's department. The reply stated "the Board approves the appointment of Mr. Calhoun and the increase in til 841arY of Er. Short as requested. Approved. Reply on ally 31, 1933, approved by five members of the Board, to letters dated July 13 and 15 from Deputy Governor Attebery of the Federal "Bank of St. Louis, submitting revised personnel classification plans Ilea" 11 the head office and Little Rock branch and revised pages covering the :::it1(54 of acting assistant Federal reserve agent at the Louisville and -41418131'anches. changes as The reply stated that the Board approves the aM that in connection with the provision for the position of 210 8/1/33 -2- acting assistant Federal reserve agent at the branches, the personnel classification plans should first set forth the duties to be performed by the acting assistant Federal reserve agents, as such, followed by a MB/110raadtua to the effect that, when not engaged on these duties, they may be detailed by the agent to perform other duties, a general description of which 44ou1d then be stated, and that in order to mnke it clear that the employees 14 question are employees of and report direct to the Federal reserve agent, it le important that the above procedure be followed. Approved. Replies to letters dated July 19 and 20, 1933, from Deputy Governor liclm of the Federal Reserve Bar of Kansas City, requesting approval of eheagee in the personnel classification plans of the head office and Omaha I/111110h to provide for the discontinuance of the position of "Transit Claims 4134 Relief Transit Supervision" in the failed banks-transit department, for Ilange in the title of "Manager" in the check collection-non-cash collections department to "Manager of lion-Cash Collections and Transit -‘"41 Supervisor" at the head office, and for an increase from 0190142400 t° °2401-2900 per Fmrum in the salary range for the position "Clerk in clict'een in the fiscal agent-Reconstruction Finance Corporation Department "the Omaha branch. 4.3 z.commeuded. The reply stated that the Board approves the changes Approved. Reply on July 28, 1933, approved by five members of the Board, to 4 letter dated July 18 from Mr. Newton, Federal Reserve Agent at Atlanta, e.C1:kr itg that at the meting of the executive committee of the bank on the 4tter date it was voted, subject to the approval of the Federal Reserve 211 8/1/33 Board, to authorize payment of 1,650 to Nessrs. Lierrick, Schwarz, Guste, Barnett 8cRedmann for legal services rendered to the New Orleans branch tram January 1 to July 1, 1933. The reply stated that the Board approves the payment of the fee. Approved. Letters dated July 31, 1933, approved by five members of the Board, to the boards of directors of the Brooks Bank & Trust Company, Torrington, Connecticut, and the Dormont Savings & Trust Company, Dormant, Pennsylvania, stating that, subject to the conditions prescribed in the individual letters, the Board approves the banks' applications for membership in the Federal Reserve System and for the number of Shares of stock of the Federal Reserve Reaka of Boston and Cleveland, respectively, to which each of the applicants Wal be entitled upon the basis of its capital and surplus as of the date 4°11 Which its membership becomes effective. Approved. Letter to the board of directors of the Poplar Grave Bank, Poplar Ql‘cblrel Illinois, stating that, subject to the conditions prescribed in the letter, the Board approves the bank's application for membership in the ll'eci"al Reserve System and for the number of shares of stock of the Federal 116137e Bank of Chicago to which it will be entitled upon the basis of its °4111tal and surplus as of the date upon which its membership becomes erteotive. Approved. Telegraphic reply on July 29, 1933, approved by five members of the —4-u., to a letter dated July 20 from Lir. Newton, Federal Reserve Agent at 212 8/1/33 11/11.4•••• Saa Francisco, transmitting the applications of the Buhl State Bank, Caldwell State Bank, Nampa State Bank, Rupert State Bank and the Weiser State Bank, all in Idaho, for an extension of sixty days in the time within which they IllaY complete their membership in the Federal Reserve System pending the outCO3 of a plan to convert the five banks into branches of the First National 8alak of Idaho, Boise, Idaho. Of The reply stated that inasmuch as the reports examination upon which these applications were based were made in the ealblY part of April and are now more thAn three months old, the Board is un7111114g at this time to grant an extension of sixty days of the time within the banks may comDlete their membership; that the Board, however, *eats an extension to August 23, 1933, and that as soon as the reports of the eXamination of the banks, which the agent states are being made by a national bank examiner, are available, the Board, upon the agent's reamIcletdation, will consider, on the basis of the information contained in such rellorts, whether a further extension of time for completion of membership all°111d. be granted to the banks. Approved. Telegram dated July 29, 1933, to Mr. Stevens, Federal Reserve Agent "Chicao, approved by four menbers of the Board, referring to Assistant Reserve Agent Young's letter of July 24 with regard to the reorgani'141tin of the Traverse City State Bank, Traverse City, Michigan, involving °681.ble reduction in the capital of the bank from 0200,000 to 0156,000. NI te1-oCram stated that it appears from information submitted by Mr. Young tbAt oorrections to be made will eliminate all losses, depreciation and 4°11114N, or otherwise objectionable assets and place the bank in satisfactory 213 8/1/33 condition with no liability for borrowed money or for repayment to depositors of the amount of deposits waived by them; that on the basis of such information and in. view of the fact that the Board's consent to the proposed ecluction in capital is not required by law or conditions of membership aPPlicable to the Traverse City State Bank, the Board offers no objection to the reduction in capital to the minimum amount indicated, if this is found to be necessary, with the understanding that counsel for the Federal Reserve Bank of ahicago has considered the proposed plan and is satisfied 4e to its legal aspects and that such reorganization will not result in any Qh4tnee in. the corporate existence of the bank which will affect its memberin the Federal Reserve System, and with the further understanding that tile Ilan:ligament of the institution will be acceptable to the Federal Iteeerire agent. Approved. Reply on Tuly 29, 1933, approved by four members of the Board, to raeraorendum dated Ally 14 from the Comptroller of the Currency, recomrile//cli118 approval of the application of the First National Bank, Williams11°11, Pennsylvania, for permission to reduce its common capital stock from 4600 1000 to 0250,000 in accordance with a plan of reorganization which ricles for the surrender of the present capital stock of $600,000, the ' 131‘la 1'1444e of 0250,000 par value of such stock at a premium of $125,000, the 4414 Of200,000 par value preferred stock, a waiver by creditors of 50% ()r -0-r net unsecured claims, and the elimination of unacceptable assets 414 clePreciation aggregating 02,225,449.08. The reply stated that the aPProves the proposed reduction, subject to certain conditions set °Ilh in the reply. 21,4 8/1/33 -6Approved. Reply on Silly 28, 1933, approved by five members of the Board, to 4 memorandum dated Tune 28 from the Controller of the Currency, recommendapproval of the application of the First National Bank and Trust in Ccmr.Pany, Covington, Kentucky, for pernission to reduce its capital stock rl'am 0500,000 to :200,000, in accordance with the term of a proposed plan Ithich provides for the surrender of the present outstanding capital stock 14 the amount of 000,000; the resale of 0200,000 of such surrendered stock t°1 ' 375,000; the sale to the Reconstruction Finance Corporation of 0250,000 ) of Par value 6,70 cumulative preferred stock; the waiver by depositors of 30c;7 net unsecured deposits of the bank; and the elimination of approximately k163,177.15 of unacceptable assets and depreciation. the.t The reply stated the Board approves the proposed reduction, subject to certain conditions Ilet forth in the reply. Approved. Reply on July 31, 1933, approved by five members of the Board, to 4 letter addressed under date of ally 18 by Congressman George R. Durgan to the Comptroller of the Currency, and by him referred to the Federal Reserv. - Ye Board for reply, with regard to the capital stock required of a State Jal Indiana which becomes a member of the Federal Reserve System and --Iles to operate an out-of-town branch. The reply referred to section Ot the Federal Reserve Act, as amended by the Banking Act of 1933, with tfu,, —41 to the establishment of branches by State member banks, and to 4Ikt 1°4 5155 of the Revised Statutes, as amended by section 23 of the Act of 1933, with regard to the establishment of branches by -7- 8/1/33 national banks, and stated that under section 9 of the Federal Reserve Act, as amended by the Banking Act of 1933, a State bank located in the State cr Indiana, which has a population of more than one million inhabitants, 4alr not become a member of the Federal Reserve System and continue to Operate a branch established after February 25, 1927, beyond the limits of the city in which the parent bar": is situated, unless such bank hAs a paid-u-) ana Unimpaired capital stock of not less than 0500,000 and colJolies with the other recuirements applicable to the establishment and operation of ill'anches by a national bank beyond the limits of the city in which such belat is situated, but that the law does not Prevent a State bank, otherwise eligible for rnn,:bership, from becomilk., a member of the Federal Reserve SY8te:on and continuing the operation of an out-of-town branch which was lawestablished Prior to February 25, 1927. Approved. Telegram on July 20, 1935, to 111% Olson, 1:anaging Director of the bel"'er Branch of the Federal Reserve Bank of Kansas City, requesting that he edlTise the President of the United States National Bank of Denver, in te°11se to the incluiry contained in his telegram of July 27, that section 19 ^Of the Federal Reserve Act, as amended by section 11(b) of the Banking Act of 1933, does not forbid a member bank to pay interest on any deposit Or Dkiblic funds payable on demand made by or on behalf of any State, e°1111tY, school district, or other subdivision or municipality, with respect tO Vtlxich payment of interest at the time of accrual thereof is required 1111'clel" State regardles of whether the State law in question was in l'ree • on the date of approval of the Banking Act of 1933, or is enacted 216 -3bY the State legislature at a later date. Ap)roved. Telegraphic reply on July 29, 193:3, approved by five members of the Board, to telegrams addressed to the Board's General Counsel under date of klY 24 and 27 by Congressman Richard 11. Kleberg, with regard to the payOf certificates of deposit of the Karnes County National Bank, i:arnes CitY, Texas. The reply stated that if notice of repayment of any such certificate has been required by the bank or given by the depositor, such eertificate nay not be paid legally until the expiration of the period of /1°tice, but that, penqinr. the issuance of reL;ulations on this subject by the Federal Reserve Board, a certificate of the kind described in C°11E'ressnan Kleherg's telegram with respect to which notice has not been Ilegllired or given may be paid by the bank, together with interest thereon, ill accordance with the bank's usual practice or existing bona fide co ntract-. Approved. 1.1r. Morrill stated that 1:±. Austin, 2ederal Reserve Agent at 1111a(lelphia, had called him on the telephone and had advised that repre4ontat1v-- of the Barks County Trust Company, Reading, Pennsylvania, cle.81red to meet with the Board informally with regard to the status of the rqat co Impany, to which reference was made at the neeting of the Board on z% 23, 6.11,14,4,1 stated that he had taken the natter up with the inneMbers of the Board, following which he had advised 11:r. Austin t44t the eQ4,111)azi Board would be glad to meet with the representatives of the trust on Thursday, August 3, 1933, at eleven o'clock. 217, 8/1/33 -9Mr. norrill then stated that Deputy Governor Kenzel of the Federal Reserve Bank of New York, Chairman of the Pension Committee of the Governors' Conference, and Mr. Buck, Actuary for the Committee, had net with Mr. Tares Yesterday with regard to the retirament plan suggested in the report of the l'ension Committee dated Tune 23, 1933, as a result of which Mr. Tames had concluded that it would be advisable for the Pension Connittee, as reamMended by it, to obtain bids from the various insurance companies, on the /14818 of which it would be determined whether it would be advisable to 'I'c'eeed in accordance with the plan suggested in the Pension Committee 'eort I.Lr. Morrill advised the members of the Board that Governor Calkins, Clalitizrilan of the Governors' Conference, had stated over the telephone that it WcUld be agreeable to him if the Board were to address a letter to Ur. ICelizel) with a copy to Governor Calkins, authorizing the Pension Committee t° Proceed accordingly. After discussion, the Board authorized the transmission of a letter to Deputy Governor Kenzel in accordance with 11r. James' suggestion. la% Merrill then presented an application filed by the Mercantile telik and Trust Company of Texas, Dallas, Texas, on behalf of the organizing llel'eantile National Bank at Dallas for permission to exercise fiduciary ilc"ts. Ile also called attention to a memorandam prepared in the Board's 1)5.171'ion of Examinations under date of July 20, 1933, with regard to the 441ication, copies of which have been furnished to the members of the toetza. After discussion, the Secretary was requested to advise the Federal Reserve Agent at Dallas that, in view of all the circumstances, the 218 8/1/33 -10Board is not prepared to grant the application at this time and that, after an examination of the new national bank has been made, the Board will consider the matter again upon the agent's recommendation based upon information contained in a report of such examination. lIorrill then reported that Governor LicKinney of the Federal Reserve Bank of Dallas called him on the telephone on Saturday of last Ilsek and requested that he advise the Board that the Federal reserve bank received an application for rembership from a small State bank in that Ustrict; that the bank, which is in good condition, had requested that, 13eriding its admission to membership, the Federal reserve bank permit it to establish a nonmember clearing account; that the balance which the State hebtk would be required to maintain in such account is between „15,000 and °61000; but that the State bank desires to carry a considerably larger b(11411ce because of lack of confidence in its correspondent. 14(1XinrleY had advised, mr. Governor Eorrill stated, that the Federal reserve bank had be" verY conservative in the past about permitting the establishment of learing accounts by nonmember banks, and had adhered closely to its auth(4'itY Under the law and, while it was felt that the Federal reserve bank 17°41d be justified in granting the request in this case, and intended to do eo, some doubt had arisen because of the expressed desire of the State bEttliz to carry the larger balance. Upon discussion it was the sense of the 1111W4l1G that no objection should be expressed to the proposed action of the belles bank. 14r.Liorrill then referred to the report of the System Committee on 1 Group and Chain Banking and stated that Mr. J. H. Riddle, who was secretary of the Committee and who is now in the employ of the -11Reserve City Bankers' Association which is mAking an analysis of the BankinC Act of 1933 and the insurance of bank deposits under that act, had advised him that the association would like very much to see the renort of the System Committee published. Mr. Morrill also stated that Mr. Golden- weiser, Chairman of the Committee, feels that the report should be published, and that Mr. Riddle had intimated that if the Board did not wish to have the report printed at its own expense the Reserve City Bankers' Association would be glaA to defray the expense of its publication. Mr. Morrill also called attention to the fact that the committee of the Board's staff which 17113 appointed to review the report had not entirely completed its work lbecause of the interruption of the banking holiday and that the report had never been passed upon by the Board. He also stated that he had been In- that the copy of the report which was furnished to Senator Glass for the information of his sub-committee of the Senate Banking and Currency C°Mmittee is being made available to anyone who desires to see the report 14 Senator Glass' office. After discussion, the Secretary was requested to advise Mr. Riddle that the Board is not prepared to publish the report at this time. It was also agreed that if and when the report is published it should be at the expense of the Board as an official Board publication and not at the expense of any other organization. Governor Black reported that while in Uew York over the weekend he had A. 'lecussed with Deputy Governor Burgess the proposed reorganization of the Iv estchester Trust Company, Yonkers, New York, and other State barks arla t rlIst companies, and had advised Mr. Burgess that, in view of the newsicitv i: ha b iven to the reorganization and the pro- 13()13ed a polication of the reorganized bank for membership in the Federal 220 8/1/33 -12- Reserve System, the Federal Reserve Bank of New York should request the State banks and trust companies to file regular applications for membership which will be acted upon by the Federal Reserve Bank of New York and then by the Board when received. Governor Black also reported that he saw the Secretary of the Treasury while in New York and that, upon his return, he discussed further With Under Secretary of the Treasury Acheson the question of the allotment Of space in the Treasury Building to the Federal Reserve Board, and that Mr. Acheson had advised that there was no disposition to take from the Board any Of the space now assigned to it in the Treasury Building. Governor Black also stated that, on this basis, negotiations had been begun for the leasing space for the Division of Examinations in the Shoreham Building in ecoordance with the action taken at the meeting of the Board on July 28, 1933. Governor Black then reported that he had another meeting this ril°raing with Mr. Robert V. Fleming and Mr. 0. Howard Wolfe, representatives c f the American Bankers* Association, with regard to the adoption by banks ) or the blanket code issued by the National Recovery Administration. He stated that the code was reviewed carefully and was discussed later with l'epresentatives of the National Recovery Administration, and that the latter had agreed to consider the possibility of making certain changes in the code Which would enable the banks to operate under the code, and to report their decision in the matter this afternoon. He also stated that advice had been l'ecsived from the Federal Reserve Banks of Chicago and Atlanta that, subject tcs aPProval of the Federal Reserve Board, they had adopted the code, and th" the Federal Reserve Banks of Kansas City and Dallas had advised that ei1/33 —13- they are considering the matter but are awaiting advice of the attitude Of the Federal Reserve Board with regard thereto. Governor Black stated that in view of the action of the Federal reserve banks, it will be necessary for the Board to reach a decision regarding the matter and that, if agreeable to the other members of the Board, the question will be considered at 4 meeting following receipt of advice of the decision reached by the National Recovery Administration with regard to possible changes in the code to be adopted by banking institutions. Reports of Standing Committee dated Tuly 27, 28, 29 and August 1, 193'6, reconnending approval of the following changes in stock at Federal reserve banks: Azoli . for ORIGIIIAL Stock: 'Jiat1.1 t '.4-4dland National Bank, Headland, Alabama. Shares ii,°,tzzlianity National Bank, Pontiac, Ilichigan. 'Irst 1Tationa1 Bank of Niles, LTichigan. 270 66 Total 336 369 105 105 506 4,506 9 Total 9 4,620 33 33 A 1,14 to' Pb------tions for ADDITIOFAL Stock: 't 'National BfInk, Gardner, nassachusetts. (Increase in capital, preferred, partly offset by decrease in surplus) 1?-41 City Bank, Cleveland, Ohio. (Increase eaTAtal, common and preferred, and slirDlu.$) Illatrit c .°eZn, 4.40* A Lz 7ra Ilational Bank, Appomattox, Virginia. anerease in capital, preferred, partly offset by decrease in surplus) 8/1/33 -14-- ions for SURRENDER of Stock: aRtrict No. 1. Ilerrinack National Bank, Haverhill, Massachusetts. (Decrease in surplus) Shares ict Ilo. 4• Itirst National Bank, Sewickley, Permsylvania. (V.L. Sue. by First National Bank in Sewickley) Baltimore Connercial Bank, Baltimore, Maryland. (Decrease in capital and surplus) ' e.tional Loan and Exchange Bank, Columbia, S. C. rt_ (Insolvent) 444Vis National Bank, Piedmont, West Virginia. (V.L.Abs. by First National Bank) 6 120 120 360 420 75 855 District No. 6. Britton &Koontz National Bank, Natchez, Mississippi. 180 (Insolvent) 4J-r5t National Bank, Andalusia, Alabama. (V.L.Abs. by Andalusia National Bank) 120 300 111-,31)1.2.12: 7 ' 'Irat National Bank, Joliet, Illinois. (Being liquidated throuda conservator) 774 774 19 19 12 Total 12 2,086 11•rst National Bank, Dongola, Illinois. (V.L.Abs. by First State Bank, nonmember) .Z:trict 10 . . 10. rican Nationni Bank, Alamosa, Colorado. (Decrease in surplus) Approved. Thereupon the neeting adjourned. Secretary. 4 13X'Oyed: Governor.
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