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306 A meeting of the Federal Reserve Board with the Federal reserve agents and representatives from their departments was held in Washington 04 Tuesday, August 15, 1933, at 10:45 a. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Tames Thomas Szymczak O'Connor Mr. Lorrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Paulger, Chief of the Division of Examinations General Counsel Wyatt, Mr. Mr. Smead, Chief of the Division of Bank Operations Mr. Parry, Assistant Director of the Division of Research and Statistics Ur. Leonard, Federal Reserve Examiner Mr. Vest, Assistant Counsel Mr. Wingfield, Assistant Counsel AT,0 PRESENT: Messrs. Curtiss, Case, Austin, Williams, Hoxton, Newton, Stevens, Wood, Peyton, McClure, and Walsh, Federal reserve agents; Messrs. Fletcher., Fry, Young, Stewart, McAdams, and Sargent, assistant Federal reserve agents; Mr. Rounds, Deputy Governor of the Federal Reserve Bank of New York; and M±. Gilson, Acting Chief Examiner of the Federal Reserve Bank of Boston. Governor Black welcomed the Federal reserve agents and reproetatives of their depar ments and expressed appreciation of the cooperat1°4 which the Federal reserve banks are giving the Board in the present situation. He also referred to the recent Treasury financing operations and t4ted that the Federal Reserve Board has kept in close touch with the CO of the Secretary of the Treasury in an effort to aid in that proa.l'ej311 alad that up to the present time there has been no suggestion on the D4/*t of the President, the Secretary of the Treasury, or other officials 307 8/15/33 -2- that any action be taken pursuant to the provisions of the Thomas amendment to the _zigricultural Relief Act. Governor Black also referred to the regulations recently promulgated by the Board with regard to open market operations of Federal reserve banks, relations of Federal reserve banks with foreign banks and bankers, and v°ting permits for holding company affiliates, and he stated that the regulation with regard to interest rates to be paid by member banks on time deposits, a tentative draft of which had been furnished to all Federal reserve banks, was now being considered in connection with the changes sugCested by the various Federal reserve banks, and that the regulation as tinally adopted will Prescribe a maximum rate of 3;0 for all Federal reserve districts on time and savings deposits. He also stated that there is peing prepared a revision of the Board's Regulation H, with regard to Illelalbership of State banking institutions, and Regulation L, with regard to interlockin,, directorates, and that tentative drafts of these regulaticIns will be submitted to the lederal reserve banks for their suggestions comments. Governor Black then stated that the Board has given close attenti°4 to the recent speculative movement on the stock exchanges, and has eQrefully considered what if an-„r, action should be taken by the Board 1311r8Uant to its enlarged powers under the provisions of the Banking Act Or 1933; that the Board has been unable to detect any undue use of bank ea ' el "for the purpose of aiding the speculative movement; and that up to the present time it has not appeared necessary to use any of the enlarged 3 of the Board. The Governor read various provisions of the Banking ' 1°Ivel. Act of. - 1933 enlarging the powers of the Federal Reserve System with regard 308 8/15/33 -3- to the control of speculative activities, and called attention particularly to section 3(a) of the Ilct which provides that each Federal reserve bark shall keep itself informed of the general character and amount of the 1°ans and investments of its member banks with a view to ascertaining Whether undue use is being made of bank credit for the speculative carry]-flg of or trading in securities or camlaodities, and stated that, in his °Pinion, the Federal reserve banks, as well as the Federal Reserve Board, 114vs a very definite responsibility to prevent the undue use of bank credit throUghout the United States for speculative purposes. He stated that the Federal Reserve Board has been in close contact with the Federal Reserve 11/ 11k of New York in connection with this matter; that the New York stock e4ehange has adopted recently certain rules having for their purpose the ellit'inc: of speculation on the exchange, and suggested that the other Fed"al reserve banks use their influence with the officials of stock exchanges thl"°1-1Chout the country toward the adoption of similar rules by such ex- Governor Black then reviewed the open market policy of the :Federal ilee s System since the meeting of the Executive Committee of the Open _ Policy Conference on May 23, 1933, and he expressed the opinion that the system should stand ready to make further purchases of Government se''446 1111-ties in the event such action should be considered necessary. At the request of Governor Black, Er. O'Connor, who as Comptroller r the currency will be one of the directors of the Federal Deposit Insurance ec)1'13°ration created by the Banking Act of 1933, stated that it is expected that the other two directors of the Corporation will be appointed by the dent in the very near future, and he reviewed, for the information of 8/15/33 _4 the conference, the steps which have been. taken by him to expedite the work of the Corporation. lib also presented copies of a chart prepared in his office setting forth a tentative plan of internal organization of the Corporation which he proposes to suggest to the other directors when alaPointed. Be stated that a letter had been addressed by the President of the United States to the governor of each State requesting that they confer with representative State bankers and the State banking departments of their respective States for the pulpose of ascertaining what changes are necessary in State laws to enable banks to take advantage of the protisions of the Banking Act of 1933 with regard to the insurance of balk dePcsits, and that certain States, in accordance with this suggestion, hate passed the necessary legislation. Mr. O'Connor also added that, in °Iscier to expedite the examination work of the Corporation, he had written to the banking commissioners of the various States requesting that they flIraish him with the names of from five to thirty men who will be available 48 eXperienced examiners, with the idea that, when the board of directors or the Corporation is organized, a large force of examiners can be placed the field to complete the necessary examination of nonmember State blIhks Within fram sixty to ninety days. he p Ls.r. O'Connor also stated that rcposes to suggest that experienced examiners from the Comptroller's trice be placed by the Federal Deposit Insurance Corporation in the offices r the State bnnk commissioners of the respective States to cooperate with theZ and to act as liaison officers betzeen the Corporation and the State beziki 11C departments, and that it is felt that if the proper cooperation ' 18 Obtained the matter of examining State institutions in connection with thej Walifying as members of the Temporary Federal Deposit Insurance 310 8/15/33 Fund will be greatly simplified. There then ensued a general discussion with regard to the procedure and policy of the Federal reserve banks and the Federal Reserve Board in connection with applications of State banks and trust companies for membership in the Federal Reserve System, particular reference being Made to the points which should be considered by the Federal reserve banks In submittinr, their recommendations to the Federal Reserve Board. The ques- tion was raised as to the possibility of a definite uniform basis for the consideration of applications for membership, but it was agreed that, aside the general principles which had been followed in recent months, each 4PPlication will have to be considered in the light of the special circumstances involved. .ct the conclusion of the discussion, the Governor stated that the Board would attempt to formulate certain cardinal principles as a slleral guide to the Federal reserve banks in connection with their considerati°4 cf membership applications and that these principles would be submitted to the Federal reserve agents for their consideration later. Governor Black called attention to the fact that it will be neces'rY for State bt-Inkinr1 institutions, in order to insure their continued 3e Ilecessful operation, to place themselves in such condition that they can gli4lifY as members of the Temporary Federal Deposit Insurance Fund, and to bee°11ae members of the Federal Reserve System before Tuly 1, 1936, so tbat the May continue as stockholders of the Federal Deposit Insurance Corpora- t1 ' und that it is necessary for the Federal reserve banks and the Federal 04 aeserve Board to be in a position to act on the applications submitted by State banking institutions as promptly as possible. lingfield called attention to the fact that the Federal Reserve 311 8/15/33 Board expects counsel for the various Federal reserve banks to satisfy thenselves with regard to all of the legal aspects involved in applications of State banking institutions for membership in the Federal Reserve System before the applications are forwarded to the Board for consideration and he stated that it will be very helpful if this procedure is followed in all cases. Thereupon the meeting adjourned. (9 100-2-4, overawe A dr Secretary.
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