The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1130 A meeting of the Federal Reserve Board was held in the office of the Pederal Reserve Board on Wednesday, August 12, 1931, at 1130 a PRESENT: ALSO PRESENT: m• Governor Meyer Mr. amilin Mr. Millet Er. Tames Mr. Magee Mr. McClelland, Assistant Secretary. Ifs. Wyatt, General Counsel. The Governor stated that Er. Roy A. Young, who is in Washington in "IkIlection with the meeting of the Open Market Policy Conference, desired to eclme into the meeting and outline to the Board his discussions, while Governor Of the Federal Reserve Board, with Mr. John G. Lonsdale, President of the Ilel ' oantile-Commerce Bank and Trust Company, and the Comptroller of the Currency, egard to the ownership by the Mercantile-Commerce Bank and Trust Company With Or St. Louis of the stock of the Mercantile-Commerce National Bank. Governor Young was thereupon invited into the meeting and stated that 144111, 1930, he discussed the proposed continuation of the charter of the °1(1 National Bank of Commerce, and the retention of the stook of the natiorel bel4k by the Mercantile-Commerce Bank and Trust Company with Mr. Lonsdale, and "not realizing that the conditions of membership of the state institution th 11615 involved, but believing that it was a matter which should be taken up with the Comptroller of the Currency, he had taken Mr. Lonsdale into the Comptroller's Orriee where the matter was further discussed, and that later the Comptroller's (31'1'1 "had written a letter to NU.. Lonsdale outlining the procedure to be roll owed in changing the Pcnre and location of the national bank. Governor Young also stated that when the request came to the Board from the p ()demi Reserve Agent at St. Louis that the Mercantile-Commerce Bank and 7'11.1st nn --Argany be permitted under its conditions of membership to retain the t° 1 ° of the Mercantile-Commerce National Bank, he was prepared, in view of the 8/12/31 -2- tact that the Board had previously permitted State banks to hold stock in other banks, and in view of the Missouri State law which permitted a State bank to °WA the stock of one other bank, to approve the request, but that when the rewas presented to the Board at the meeting on August 8, 1930, because of the absence of certain members of the Board, action on the matter was deferred. lie further stated that he believed that if the request had been voted on at a 1 '1111 meeting of the Board at that time it would have been approved. In response to an inquiry, Governor Young stated that he did not at any time make any pledge or commitment to Mr. Lonsdale on behalf of the Board, and that Mr. Lonsdale had stated to him that he had not understood that in their e°nversation Governor Young was speaking for the Board. Governor Young stated, however, that he could see how it would be possible for Mr. Lonsdale to have assUmed from their conversation, the conversation with the Comptroller of the and the letter of instructions subsequently received from the °°raPtroller's Office, that no further approval was required. Be also stated that he felt that Mr. Lonsdale had acted in entire good faith in the matter. Mr. Lonsdale, who was also in Washington, was then invited into the 111"t4 llg and stated to the Board that when the matter of the removal of the 4tiollal bank to Grand and Delmnr Avenues came up he discussed the matter /74h Governor Young and the Comptroller of the Currency, and that when the letter of April 30, 1930, was received from the Office of the Comptroller of the Currency, outlining the procedure to be followed in changing the name 11(1 location of the national bank, his bank had proceeded on the assumption t4t no further approval would be required. Mr. Lonsdale filed with the Board 4 e°13Y of an opinion rendered by his counsel under date of April 18th, advising th4t luldar the Missouri law the Mereant rnerce Bank and Trust Company could 132 8/12/31 -3- OWa the stock of one other bank and that the counsel could see no legal difficulties in establishing an outlying bank should it be deemed advisable to do so. Mrs Lonsdale also filed with the Board a copy of the letter received from the °trice of the Comptroller of the Currency under date of April 30, 1930, with l'egerd to changing the name and location of the national bank, and stated that Ills bank had been very careful to proceed in accordance with the law. It was explained to Er. Lansdale that the Board's objection to the retention by the Nercantile-Commerce Bank and Trust Company of the stock of the 14erca tile-Commerce National Bank is based on its being a violation of the conOf membership under which the state bank was admitted to membership in the Federal Reserve System, and that this point is not touched upon in the °Pinion rendered by the bank's counsel. Yr. Lonsdale replied that this point h4c1 evidently been overlooked by counsel in his opinion. Mr. Lonsdale then referred to the liquid condition of the Mercantile04311111erce Bank and Trust Company and stated that if his bank has been guilty of a an violation of the Regulations of the Board and the Mercantile- C°133111erce Nationsl Bark must be disestablished at its present location to meet leqUirement of the Board, he is not fearful of any unfavorable developments 4' 'aulting from a removal of the bank to its former location and the restriction ll r its operations to the liquidation of its trust business, although the matter Iaight be somewhat difficult to explain to the average citizen of St. Louis. Be l'eterred, however, to the unsettled banking conditions throughout the country 44C1 Particularly the situation as affecting the outlying banks in St. Louis Which caused him concern in connection with a requirement of the Board that the LaXaYette-South Side Bank and Trust Company should divest itself of its owner8111-P of the stock of the South Side National Bank. 8/12/31 The suggestion was then made that action might be deferred on the matter Until such a time as it could be taken without disturbance to the local situation part Lonsdale stated he was not asking for special consideration on the 414 °t his van institution as he feels that if the Board were to find it necessary itself of lequire the Mercantile-Commerce Bank and Trust Company to divest t0 ' the ownership of the stock of the Tlercantile-Commerce National Bank, as at Present operated, thereby necessitating the disestablishment of the national bank at its present location, it might be preferable for his institution to give °°nsideration as promptly as possible to the question of making the necessary change. Mr. Lonsdale then left the meeting and the matter was further briefly cliaeussed, but no action was taken. Ur. Hamlin then referred to a letter received under date of August 10th *°11 the Chairman of the Atlantic National Bank of Boston with regard to the 1111°Posed amendment to the trust indenture under which the stock of the Atlantic C°1'P0ration is now held, and stating that this amendment will in effect make the 131%°eeeds of the stock unavailable to the creditors and depositors of the bank 14 satisfaction of the obligations of the bank and will require that upon the terMlnation of the trust the proceeds be paid to the stockholders of the bank, 11"ees the present indenture states that the stock is held for the benefit (It the Atlantic National Bank. The letter further stated that it is believed the Proposed amendment is contrary to the best interests of the bank and that lt is hoped that the Board will decide that the trust indenture under which the 8t°°1 is now held is a satisfactory compliance with the order of the troller of the Currency that the stock be removed from the assets of the 4tlantic National Bank. 8/12/31 I -5Lir. Hamlin suggested that the bank's objection might be met by an enlendment which would provide that in the event of dissolution or insolvency Or the bank the trustees should hold the stock and all dividends thereon, or the proceeds of any sale thereof in trust for the protection of the depositors alld other creditors of the bank, and that the trustees should not distribute 411Y dividends or proceeds to the shareholders of the bank without first aPPlYing for and obtaining the permission of the Comptroller of the Currency. A discussion followed during which it was broughtout by the Board's Colnasel that the stock in question has already been taken out of the assets of the national bank and that there would seem to be no Particular hardship in rethat the stock be trusteed absolutely for the benefit of the stockholders of the Atlantic National Bank. At the conclusion of the discussion, Mr. Wyatt was instructed to discuss the matter with the Office of the Comptroller of the Currency and report to the Board. The meeting adjourned at 1:00 p. in. Assistant Secretary. 4PPrOved:
@FedFRASER