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2498
A meeting of the Executive Committee of the Federal
Reserve
/3c/ctrd w-cis -eld
in Washington on Wednesday, August 15, 1934, at 4:15
ra,
PRESENT:
Mr.
Mr.
Mr.
Mr.
Black, Governor
Hamlin
James
Thomas
Mr. Martin, Assistant to the Governor
Governor Black submitted a letter dated Aucust 1E, 1934, adclreso
llazizet
uY him to Governor Harrison, as Chairman of the Federal Open
Ceziittee, in regard to the minutes of the meeting of the Federal
C:pert
arl:ot Committee held in Washington on June 26, 1934.
The letter was approved as follows:
ar
"On July 3 Dr. Burgess wrote me sending me a tentative
, aft of the minutes of the meeting of the Federal Open Marfet con-i!littee held at Wt,shington on June 26.
These minutes
Inelled a motion
authorizing the executive committee to sell
?..to
:
,500,000,000 worth of securities to the Treasury. Upon
rethis letter from Dr. Burgess I arlvised him that the
c3n Was not in line with my understanding from you of what
4 :as proposed that the system do. It had been my understand:11E, In the talk with you that the pro-oosition
would include
the shorter maturities of the system. To clear this
therefore awaited your return
from Europe before handling
1)-s matter with the Board as there seemed to be no
reason for
sPeedy action in the matter. Upon your return I had the
.- 61'
sas'u,
re of discussingit with you and you pointed out that if
7-f? longer maturities were sold the earning power of the system
be maintained by exchanging shorter maturities for longer
I have reviewed the minutes of the committee meetthis morning. Since the Treasury has taken no steps
discuss the purchase of any securities it appears to be unce
,
cessarY to have Board action on this at this time. Further
aeration will probably be desired to be given to the
tt..4t
!'r bY the conference and such action as is taken then subto the Board for its consideration. Please ad.vise if
15
satisfactery."
q
!it
2499
8/15/34
There was presented a letter dated August 9, 1934, from Mr. Case,
Peae
r—Reserve Agent at the Federal Reserve Bank of New York, making certaill
re"ramendations having for their Purpose principally the strengthening
or tile
earlilaing department of the Federal Reserve Bank of New York.
casellsn accordance with the recommendations contained in Mr.
letter, the following actions were taken:
Ithe appointment of Mr. Ray M. Gidney as assistant Federal
,„"vs agent was approved, effective as of September 1, 1934,
per all;Z,Lary in that position was fixed at the rate of $20,000
The appointment or Mr. W. F. Sheehan as chief examiner and
Of, the force of examiners in the field, with salary at the
13:02' °I 1.2,000 per annum, was approved, effective as of the date
.Q/11711-I ch
Mr. Sheehan enters upon the performance of his duties.
head
rata.
with The appointment or Mr. Gustav Osterhus as trust examiner,
alarY at the rate of $6,000 per annum, was apnroved, effectiv :
Q eptember 1,
1934.
The Prom
an examiners to the
of the following assistant
Desitio Promotion
bac)
, 11. of examiner, with salary at the annrnl rates stated
", was approved, effective August 16, 1934:
Name
Salary
James B. Cronin
IrellrY J. Hannen, Jr.
John J. Quinn
Charles D. Johnston
Prank B. Montmeat
Perris I. Palmer
Hugh P. Reed
t'p,700.00
2,700.00
2,700.00
3,000.00
3,000.00
3,000.00
3,000.00
Ileference was made to the portion of the memorandum dated June 23,
fru,
'
'
4 • Goldenweiser, Director of the Division of Research and
44tiatice
the
'relating to the desirability of having a System committee for
194,
1)1,0zrara
eOf„
la.tung a study of banking laws and preparing a legialative
Or co
nsideration by the Board next fall, an. to the Recovery
2500
8/15/3,1
_3Corosaittoe aointed by Governor Black as set forth in the minutes of
t4nieetinf the Board with the Governors and Federal Reserve Agents on
251 1934.
It was decided that Governor Black in his capacity
of Governor of the Federal Reserve Bank of Atlanta, Should
be added to the Committee, and that it should now be comPosed of the following members: Messrs. Harrison, Young,
Norris, Schaller, Fancher, Thomas and Black.
G°17ernol- Black then stated that he had conferred with the President
thiz aft
"noon ar,.-7 that the President had agreed to accept his resignation
as a
r'le:13er ana Governor of the Federal Reserve Board, effective today.
Secretary's note: The President's letter accepting .
resignation of Governor Black, which was received by
Governor Black subsequent to the meeting, reads as follows:
the
"I have
resignation
Goveror accepted, with great reluctance, your
of the Federal Reserve Board, effective today as reby you.
cille3ted
II A_
Ati
now that you are leaving Washington and returning to
pe*
dalita Where you will reassume the post of Governor of the.
A„e l Reserve Bank there, I am glad you are undertaking a new
--'1"ortant additional task.
the
You can do much good by presenting the recovery program to
itstcountryt s reserve banks, commercial banks and other financial
by 01;t11tions; by aoquninting them with the successive steps taken
eong Administration Which have resulted in the present prosperous
ete
of these institutions and which make possible their coll'efation with the Administration in its program of complete busiFecin,j am pleased to think that your position as Governor of the
tek,:r' Reserve Bank at Atlanta will give you opportunity to undersee'his work, and that that bank, together with the Federal Rewill'cooperate with you in its performance.
11 order that I may keep fully informed as your work proI wish you would send me reports from time to time.
rtt also to express to you. my deep personal appreciation
C3r t e
Blamed , -01e service you. have rendered at all times since you
reco,;'he Governorship of the Federal Reserve Board. The splendid
thes Y°11 have made entitles you to the gratitude, not only of
directly interested in Government and banking, but to the
‘se--coa Jo
UE aAaosaa- Teaopaa Om tO.t3 aouTuxo ue 's4qoa
Jo mum am 2uTanp so0TAaos ogg to; viomasanqu4oa 2uTao4o0
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Due
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uom aa41.p.moo om pue quTod, sTm. Te 2uTqaom am pauTor Irra.
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sasuadxa am toTtim aapun pozTaomme sua woria2uuaae try
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sT aq tioTTA ao4q.aT
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11 -Saq.1no0
41 °It;
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puu
saT4TITUsuodsaa
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om Jo a2aug0sTp om UT 4 aTcassod sT ttans JT s oAT401 ;
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:
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Jo uoTssoadxa s
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4
. 7
40u
1
1,4L4
TeoTg.T,a0
gaam
pasTaaaxa no./: q.uatu.274 asTm oqq. 30 OSTra3@ci -am (.:),
atim Saquno0 am tl.notpnoam saovcsodap alueq Jo suoTIITuZ
-TOZ
2502
845/34
whoze
teraporarY assignment to the Board's Division of Examinations by the
411as balL
was approved by the Board on May 24, 1934, and stating that the
liOucher
lists Mr. Betts' salary at the rate of S4,000 per annum, which
is
$400
" excess of the amount he was bein.g paid at the time
of the Board's
triaer
-vancling with the Federal Reserve Agent at Dallas, regarding Mr. Betts'
aasi,
bilrilent to
Washington. The memorandum stated also that, in the cirelrilstan
-cee, it is recommended that the Board pay the voucher as submitted
e
cnitirille to reimburse the Federal Reserve Bank of Dallas for Mr. Betts'
..selltices on' the basis of his nw salary which became effective on July 1,
1934.
Approved.
Telegram to Mr. Wood, Federal Reserve Agent at the Federal
(rp
- St, Lout _
reading as follows:
eserve
of A "Referring to Mr. Stewartts letter to Mr. Paulger under date
Gri'Llagust 11th
relating to temporary assignment of Examiner Leger
o 11(1°11 and Assistant Examiner Paul E. Schroeder to work with
an?
coor
ci Ezez'ainin.g Division in Washington, Board appreciates your
Orj.,%-ratien in matter and will be glad to have you send Messrs.
vritrn and Schroeder to ITashington at the earliest available
date,
tulderstancling that the Board will reimburse the bank for
4ralielin,7 expenses, salaries and six dollars per diem while
"a•shilicton.
4-oroved.
Letter to
Mr. Austin, Federal Reserve Agent at the Federal Reserve
}lattic Or
41i1ade1phia, reading as follows:
advi,iiilleceitst is acknowledged of your letter of August 9, 1934,
'
11
,
- 11g that you -plan to take your vacation beginning the 17th
t17;y1Ists unless such an arrangement would interfere with
some
B°ard i e plans.
Of
letter has been brought to the attention of members
tiot. 'oar(' and. they have no objection to your
leaving on vaca"the date stated, it being assumed that you can be reached
2503
'through the bank during your absence."
Approved.
Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve
of Chicago, rearling as follows:
The Federal Reserve Board notes with approval from your
letter of August 7, 1934, the temporary appointment at your
!!a114, at the suggestion of Mr. Parry of the Board's Division
vf Research and Statistics, of Mr. A. C. Hodge, with salary
at the
rate of $400 per month; the purpose of Mr. Hodge's embeing the collection of information in connection
wlth the
regulations to be issued by the Federal Reserve Board
Nrsuant to the Socurities Exchange Act of 1934."
Approved.
Ilemorandum dated August 8, 1934, from the Committee on Salaries
44(1 /bm.
"14-Ltllres, submitting a letter dated August 3 from Mr. Helm, Deputy
%)verner and
Cashier of the Federal Reserve Bank of Kansas City, which reed
to
aPloroval of changes in the personnel classification plan of the
Provide for three new positions in the fiscal agent-Reconstruc-
inallee Corporation department.
c°r littee
The memorandum stated that the
had reviewed the proposed changes and recommended that they be
4PPr"ed.
Approved.
Letter to Mr. Sargent, Assistant Federal Reserve Agent at the
FeA
‘4ern1 ttes
erve 73ank of San Francisco, reading as follows:
Reference is made to you:- letter of July 20, 1934, ad.that the State Bank Commissioner of Utah has approved
the
oi.et aPPlication of the Utah Savings e: Trust Company, Salt Lake
tljs Utah, for permission to retire $100,000 of capital debenat es sold to the Reconstruction Finance Corporation, such
-Proval being subject to the approval of the Federal Reserve
VI •
2504
845/31
-7-
"Board.
. "The conditions under which the subject bank was admitted to membership do not require the Board's approval of
VI:le proposed retirement of capital debentures. However, in
view of the
condition of the bank as shown in the report of
examination
as of May 7, 1934, the favorable capital structure
atter the retirement of the capital debentures, and
your recommendation, the Board will interoose no objection to the transaction ,,
Approved.
Letter to "The Citizens National Bank in Independence", Indepen(16lice
Kansas, reading as follows:
"The Federal Reserve Board has given consideration to
YOur application for permission to exercise fiduciary powers,
i-ants you authority to act, when not in contravention of
;z" or
local law, as trustee, executor, administrator,
2g1strar of stocks and bonds, guardian of estates, assignee,
'recelver, committee of estates of lunatics, or in any other
oitlticiarY capacity in which State banks, trust companies or
bOther corporations which come into competition with national
a*-'s are pe-r-mitted to act under the laws of the State of Kanonly in the specific trusts in which the First National
4.!'" in Independence had been appointed and. was acting at the
liüe The
Citizens National Bank in Independence was authorized
the Comptroller of the Currency to commence business, the
exercise
all such rights to be subject to the provisions
Orve="
t
Reserve Act and the regulations of the Federal
Rest
Approved.
Letter to Mr. O'Connor, Comptroller of the Currency, reading as
r°11017s,
u neceipt is acknowledged of Mr. Awalt's supplemental
'arlaum of July 26, 1934, with reference to the proposed
72111ction in common capital stock of The First National Bank
,
y'
;
z Nutle
Nutley, New Jersey, which was approved by the
on December 14, 1933, pursuant to a plan which provided
' 4
1°4g other things for the sale of $50,000 of Class 'A,' prestock to the Reconstruction Finance Corporation, and
the
e:
s le of $50,000 of Class 1B 1 preferred stock locally.
In accordance with Mr. Awalt's recommendation, the
Bo
ard- amends its previous approval to provide for the sale of
,2505
8/1-57
-8_
"05,-n00 of
Class 1.A:1 preferred stock to the Reconstruction Finance
..'dL(,)rporation and P,5,000 of Class UP preferred stock locally, with
.!Ile understanding
that the other provisions of the plan as origiir1-17 stibmitted remain unchanged except as to the eliminations to
be made, in Which connection it is understood that the amount to
.
0p. charged out of
the bank's assets ($100,000) will be allocated
7110111mt estimated losses and securities depreciation as shown by
he la
d testreport of examination instead of the amounts of losses
nathe
epr
be
acia
stion respectively which were originally contemplated
fl
basis of an earlier report of examination."
Approved.
Letter to Mr. O'Connor, Celptroller of the Currency, reading as
th.
1 accordance with Acting Comptroller Awalt's recommendation,
tai4ederal Reserve Board approves a real7ction in thr common caDiof the 'Crandon National Bank', Crandon, Wisconsin, from
ea "v0 to $15,000, pursuant to a plan which provides that the bank's
ital shall be increased by the sale of 45,000 Class 1 A) preferred
,
r°olt to the Reconstruction Finance Corporation and $10,000 Class 'B'
foeferred stock to local interests, and that the released capital,
b'egether with a portion of the bank's undivided profits account, shall
Used, to
eliminate substandard assets and securities depreciation
t)144-nC approximately $12,249, all as set forth in Mr. Awalt's
'Aemorand.am
of July 27, 1934."
W
Approvcd.
Leti-wer to
Mr. O'Connor, Comptroller of the Currency, reading as
:Ill accordance with Acting Comptroller Awalt's recommendation,
C
ital '
4 ederal Reserve Board approves a reduction in the common capstock of 'The Farmers National Bank of Sparta', Sparta, Wisconf
t. clra $'50,000 to25,000, pursuant to a plan which provides
e banki s capital shall be increased by $25,000 of preferred
tato
thee- "° be sold to the Reconstruction Finance Corporation and that
$25 released
capital, together with a voluntary contribution of
fac :
00 to be raised locally, shall be used to eliminate unsatiscren-17 assets in the amount of approximately $45,600 and to inAwp4;44.3 7 the bank's surplus to $10,000, all as set forth in Mr.
memorandum of July 27, 1934."
Approved.
2506
8/15/,
-9Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve
It,
: or
icago, reading as follows:
"This refers to Mr. Young's letter dated July 28, 1934, reire.!tiug advice from the Board upon the question whether Sears,
4"°1-1-az and Company is a holding company affiliate, as defined
1.t1 Section 2(c)
of the Banking Act of 1933, of the Sears-Community
Z,,a,eBanh., a member bank. The ouestion arises under Section
Of the Revised
Statutes, as amended, and Section 9 of the
oeael'al Reserve Act, as amended, which provide that a holding
:
:
198zY affiliate of a member bank shall obtain a voting permit
•
u Ircle the
stock of its subsidiary member bank.
zt
It is understood that 5,672 of the 8,000 shares of the
t c)ek of the "bank are held by J. M. Barker, trustee, under a
i;st agreement dated April 4, 1933, which provides that in conilluerat
ion of an advance to the bank of $165,588.48 by Sears,
Oebuck
and Company and others, the holders of the 0,672 shares
that all dividends upon their stock shall be paid to the
tx. 11Y and the other lenders until the advance is repaid. The
to p eCreement also contains an assignment of the 5,672 shares
M. Barker,
trustee, and provides that the trustee shall
Vote
tioe 81161 shares 'in accordance with the directions and instrucpro/tof" Sears, Roebuck and Company. Said trust agreement also
that in the event of the inability or failure of J. M.
rile er to act
as trustee, E. FL Powell, or such other person as
tru5. designated in writing by the company, shall be the successor
Bai
cwee under the agreement. It is also understood that J. M.
ef: is a
of Sears, Roebuck and Company.
aiia It hasvice-president
been noted that on March 23, 1934, Sears, Roebuck
e°mDaAY wrote a letter to Mr. Barker, informing him that the
'
hitar.ets held by him
under the trust agreement might be voted by
0 the
same effect as if said shares were recorded in 1-is
from '6U(aViduany, and without any directions or instructions
1934,ths company, and that by a letter to Mr. Young, dated July 3,
130ara "
11 Barker accepted such directions. In the opinion of the
colizti he above-mentioned letters, although they may possibly
a te,::11te a termination of 'direct control' do not constitute
illtnation of 'indirect control' of the 5,672 shares. AccordUnder the circumstances outlined above, the Board is of
the
o'
aff.4;
14flion that Sears, Roebuck and Company is a holding company
tiate
of the Sears-Community State Bank and that under the
;
III i
n. °11.s of Section 9 of the Federal Reserve Act, and Sections
to oi'
47 IV of the Boa's Regulation P, the company is required
rill a voting permit to vote the shares held by the trustee.
2It has
been noted that Mr. Young stated in his letter of
that 7!, 1934, that Sears, Roebuck and Company has indicated
""wolald prefer to alter the present arrangement, if
j
.pro;
2507
8/15/34
-10-
n
ecessary, rather than file an application for a voting permit.
connection with such an alteration of the present arrangement,
r. Young requested advice as to whether Mr. Barker's oosition
!_"s a vicc-president of the company would render him ineligible
o serve
as a trustee of the stock, and also as to whether the
Provision giving the company the right to appoint a successor
,rustee Should be eliminated from the trust agreement. The Board
l
es of the opinion that Mr. Barker's official position with the
heTI3a4Y is an indication that the company controls the stock
ce"d by him as trustee. The provision for appointment by the
a successor trustee is also an indication of such
contZof
But even if a trustee Who is not an officer of the company
were
appointed, and even if the provision for appointment by the
. a successor were eliminated., the Board believes that
aenlYv0711f
Would be a strongprobability that 'indirect control' by
t:47
1 company of the 5,672 shares would still exist, in view of
4 e very broad definition of holding company affiliates contained
'
11 Section 2 (c) of the Banking Act of 1933.
t
It is suggested that the most efficacious way for Sears,
:
ofebuok and Company to end its relationship as holetin company
a„,flliate of the bank is by a termination of the trust agreement,
,7- the creation of a pledge agreement under which the dividends
11 the stock will inure to Sears, Roebuck and Company, but the
Cille rights will remain in the original stockholders, who will
e the
pledgors."
ip
4
Approved.
liemorandum dated May 15, 1934, from Mr. Vest, Assistant Counsel,
ree°2e116-1.1
the publication in the next issue of the Federal Reserve
131111et n-o
I f a statement, in the form attadhed to the memorandum, with
to the
Board's revised ruling of May 14, 1934, as to the purchase
ale 1,
-Y a State member bank of corporate stocks solely upon the
Oreter
alla for the
account of customers.
Approved.
Lte
morandum dated August 14, 1934, from Mr. Smead, Chief of the
4
e
Of Bank Operations, stating that, acting as fiscal agent of
e- States Treasury, the Federal Reserve Bank of New York had
2508
8115/34
-11-
teled into an
agreement to sell :)1,000,000 of gold to the Graranty
Trust Oomparz
and $220,000 of gold to the Bankers Trust Company for
exl*It 'purposes; that the above named banks
paid the Federal Reserve
B
ailtof New York
for the gold on August 14; and that the Federal reserve
bank
17°111d purchase the gold from the Treasury on that date, but that the
wcmld not be turned over to the Guaranty Trust Company and the
Bat-,
ctus Trust
Company until August 15. The memorandum recommended, for
thereasons set forth therein, that the Federal Reserve Bank of New York
be
m"ructed to report
such gold in the miscellaneous assets block on
f° 34 and the liability to the baril-s in connection therewith in the
'1 480.1,
eous liabilities block; also that, if the Federal Reserve Bank
clw.ed
.Aork holds any such gold on a weekly statement date, it be in-
ln the
weekly statement in the item 4 All other assets". The
rtteraor,..,
*1441-111 aso recommended that any gold acquired by the Federal reserve
batc,er similar circumstances in the future be reported in the same
11101111er.
Approved.
Letter to the Federal reserve agents at all Federal reserve banks,
rea4ualc
as
follows:
0
Iplar
An amendment to existing law has been proposed for the
eal,413°se of excluding from the banking quarters of member banks
0:.other banks whose deposits are insured by the Federal De'
t Insurance Corporation any other organization whose
sli1117ities might embarrass such banks or might render the
1)
477irsion of the banks more difficult. As submitted, the
ed amendment would prohibit any bank, banking associae4,41 or trust company, and any other organization or person
CaCed in the barking, building and loan, brokerage, securities,
4
2509
8A5/34
-12—
R4-",uurance, indemnity or trust business, or in the business of
receiving deposits, or engaged in issuing or selling notes or
Other
evidences of indebtedness, from occupying any part of
the
quarters in which any of the business of a member bank or
whose deposits are insured under section 123 of the
"deral Reserve Act is conducted.
"The proposed prohibition would not include organizations
which,Z
as tenants, simply occupy space in other parts of the
budlding, and applies only to organizations which share
!Pace in the banking quarters or occupy adjoining space,
access
0.1411Ch is possible through the banking quarters.
tu
In order that the Board. may give proper consideration to
"e Proposed amendment, it will be appreciated if you will make
!
II investigation in your district of the extent to which other
iv3reanization5 maintain offices in the banking quarters of membarks and other banks whose deposits are insured by the
Leral Deposit Insurance Corporation, and what the effect on
rslizela organizations
and the banks might be if the proposed amendwere enacted into law. In making the requested investigast°111 it is not believed necessary or desirable to circularize
ate
member banks, as it is believed that, from your general
14formation and from information available to your examiners,
an
idea may be obtained as to the extent the State
member
,uer banks share their quarters with other organizations. It
raZI
also be possible in conversations with the Chief national
:examiners and the supervising examiners for the Federal
Dr
t0134°,!it Insurance Corporation to obtain further information as
ex 44ie extent of such practice in other banks, and it is not
exPected that
you should circularize the banks whose deposits
lared by the Federal Deposit Insurance Corporation, as
sil'" -1/1quiries might be misinterpreted.
The Boord also will appreciate your suggestions and comors, with special reference to the question whether the pureb e is desirable and. whether the proposed amendment as described
hap is sufficiently comprehensive, or whether, on the other
L
'It is too inclusive and would result in injustice to some
b anks.0
Approved.
01' A4.
Letter to Mr. Johns, Acting Governor of the Federal Reserve Bank
a,
readinc as follows:
eo, erence is made to your letter of July 31 inclosing
Of letters from Mr. H. C. Frazer, Manager of the Havana
cY) and Professor F. D. Graham in regard to certain figures
2510
8/1E/3,
1
-13,"7cring currency operations of the Agency requested by Protesscr Graham. There would seem to be no objection to furnish1C the figures requested by Professor Graham on condition
hat
information relating to the cash holdings of the Agenc7,
1;
1411.1diing unissued Federal Reserve notes, is not made public.
ls suggested that Professor Graham be requested in this
connection to
furnish the Agency with any figures he has cornor may co-mile, on the amount of money in circulation
Cilba. It will alsobe appreciated if the Board is furnished
a copy of any fi6ares on the currency operations of the
e1le,7 given to Professor Graham, and of any figures on money
-"I circulation in
Cuba which may be received from Professor
Gra:4am.fl
Approved.
Letter to Mr. Howard :E. Hansen, Supervisor of Banking, Olympia,
4Cton, readin2; as follows:
23, "Receipt is acknowledged of your letters of July 18 and
la 1934, addressed to the Federal Reserve Board and to Governor
tcaflc, respectively, with reference to the Board's views relating
per method of member banks showing in their reports
aZ published
statements capital debentures sold by such banks
co with particular reference to the Board's requirement, in
tio with the application of the Northwest Bancorporation
tollnecn
a permit to vote stock owned or controlled by it of the
;raze and Eastern Trust Company, Spokane, Washington, relating
co the method by which capital debentures sold by that trust
mganY should be reflected in its reports and published stateIt is believed that a review of the facts and. circumtrxicee involved in the Board's action on such apolication of
e'±lielTorthwest Bancorporation and. of certain matters which were
7.0utisidered in connection with that application will clarify to
44(1. the Board's views regarding the questions referred to above
tic, 171.11 form an appropriate basis for discussion of such ques, 113,111 this
letter.
"311r1ng discussions of a proposed general rehabilitation
tl_b'am of banks in the Northwest Bancorporation group during
.;
11 latter
part of November and. the early part of December, 1933,
prel*ePresentatives of the Federal Reserve Board with Mr. Thomson,
ofi,l'ident of the Northwest Bancorporation, and several other
ers of that corporation, consideration was given to a proPlan, which it was unilerstood had been approved by you,
-teh the Spokane and Eastern Trust Company was to eliminate
',j$7.
‘-- "'"*4 ef substandard assets, sell $750,000 of capital debentures
2511
"to the
Reconstruction Finance Corporation, and set up its caJital
accounts in substance as follows:
Capital
Surplus
Undivided. Profits
*
Total
$1,000,000
250,000
109,000
$1,409,000.
It
appeared that un'er such plan there would be no reduction in the
e coleate Par value of the $1,000,000 of capital stock of the trust
4;
'
4 1/47 issued and outstanding to provide in part for the elimina,
IC of losses
and gUbstandard assets, and that the published statethE
:
ti of the trust company were to contain a note at the bottom of
!
alance sheet as follows:
*
Includes proceeds of $750,000 debentures
sold to R.F.O., which debentures are subordinate to the rights of depositors and
other creditors.
(114 4It was
understood that Mr. Thomson and several of his associates
tra not feel that it would be proper to leave the par value of the
allas4te°mPaAY's capital stock at $1,000,000, since it was impaired,
1ames4017 it in reports and published statements in the manner and
sto,
,tha
r
circumstances described above, but preferred to reduce the
and. show the capital accounts of the trust company in its reports
rtotepublished statements as they actually existed, omitting the foots cePt Possibly that part stating that capital debentures are
Thora°rainate to the rights of depositors and other creditors'. Mr.
allthn2Ori
,"
17
advised informally that the Board would probably not
laax
:
1"."-ze the issuance of a voting permit in connection with a proposed
00
clar 7.11-ich the canital accounts of the Spokane and Eastern Trust
Tiv,210111d be set up in substance as described above.
0 huter careful
consideration of the application for a voting peraAlth f the Uorthwest Bancorporation, the Board, on December 27, 1933,
stociorrized the Issuance of a limited permit to that corporation to vote
ITarposcMned by it of the Spokane and Eastern Trust Company for certain
aa:Tro-es in accordance with a plan whereby the bank was to eliminate
trora'c-itilately
$720,000 of substandard assets, reduce its common stock
a
,
. l t°tal par value of $1,000,000 to $500,000 par value and sell
bsio (
Cortc:jy° Par value of capital debentures to the Reconstruction Finance
trii, ration.
Under such plan the trust company would. have had. remaineaPital account substantially as follows:
Capital stock
Capital debentures
Surplus and undivided
profits
$500,000
750,000
Total
$1,409,000.
109,000
2512
8/15/34
inDori
iii
•ortnwest
the first part
April, 1934, representatives of the
Bancorporation requested informally a modification of that
13
.
_ art of the agreement, executed by the Northwest Bancorporation in
'-!111e.otion with the issuance of the linited voting permit, under
willch the Northwest Bancorporation agreed, among other thin-,;s, to
.cause the Spokane
and Eastern Trust ConpaAy to reduce its capital
ircra *1,000,000 to *500,000. It was understood that you had not
traallY approvod the reduction of capital stock and the representaj
l e of the Northwest Bancorporation were requested to file a
t1,1Len application for the modification desired, setting forth
necessity for such modification of the original agreement.
1.
4. ?.:dinClY,
such an application was addressed to the Board on
'
16, 1934, in connection with Which it was again proposed
that capital ddbentures sold by the trust company be carried in
trust company's reports and published statements as 'capital'
0,"')
. a note at the bottom of such statements of the kind described
Pe 2 of this letter.
ti
Shortly thereafter, the Board received a new report of examina.
1711?11 of the Spokane and Eastern Trust Company as of March 12, 1934,
tolch indicated that the condition of the bank's assets had improved
t1at% such an extent that there was then no impairment of ca_pital and
reduction in capital stock was no longer necessary in order
t1;3.
eltminate such impairment.
Since the previous consideration of this matter indicateda
'
ti04erence of views as to the manner in which the plan of rehabi1itac(1,1:4 5 the Spokane and Eastern Trust Company might properly be acrileshod and in order that the Board would be certain that it had
witli Information concerning this case, it was discussed in detail
Hi.11-1„ the Federal
Reserve Agent at the Federal Reserve Bank of
tic;:eaPclis through whom the application of the Northwest Bancorporarela;: was filed. The Federal Reserve Agent was requested to havea
of.-:sentative of his office discuss the matter with you and officers
tad:41e Spokane and Eastern Trust Company and at the same time ascerdthe current condition of the trust company's surplus and unIles'ed. profits accounts. A copy of the report made by the Federal
077!, liZent's representative on this matter was furnished to the
Bo:
conti or its information, and it appeared therefrom that the
Ofl Of
the trust company as of May 31, 1934, was improved to
,all extent that there ;as no impairment of capital. In connectit)
a
With the
pending application for modification of the original
ithe Northwest Bancorporation, it was understor
t as executed b:
cor1,3- that
modification was desired which would permit the trust
:
,
1k1 61 1
(1V to sell
$750,000 of capital debentures, retain all of its
1)tliY°0 Par value of capital stock and. show in its reports and
statements the capital accounts in substantially the
.4ciwing manner:
V
2513
8/15N
-16"Capital
Surplus
Undivided profits
and reserves
1.,000,000
*750,000
318,000
with the following footnote at the bottom of the balance sheet:
Proceeds of $750,000 debentures sold to
R.P.C., which debentures are subordinate
to the rights of depositors and other
creditors.
s, "After careful consideration of all the facts and circuma'ances involved and in view of the application of the Northwest
_ ancorporation for modification of its agreement executed in
nnection with its application for a voting permit, the Board
J'12171 10, 1934, authorized the issuance of a limited voting
to the Northwest Bancorporation subject to certain condiwhich did not require a reduction of the capital stock of
Spokane and Eastern Trust Company, since it appeared that
reduction was not necessary to provide for elimination of
ac8sc5, but which did prescribe the manner in which the capital
a
,cYlInts of such trust company should be shown in its reports
'41 published statements as follows:
"'that so long as the capital debentures issued by
the Spokane and Eastern Trust Company, Spdkane,
Washington, pursuant to the plan for the recapitalization of such trust company, are outstanding, Northwest Bancorporation will do such things as may be
necessary to cause such debentures to be shown in the
published statements of condition of such trust company
in substantially the following manner: (a) the par
'value of such debentures shall be included in the amount
shown opposite the item QUOTE capital UNQUOTE, and under
such item there shall be inserted an explanation reading
as follows: QUOTE Includes BLANK dollars par value common stock and BLANK dollars par value capital debentures
sold to Reconstruction Finance Corporation UNQUOTE:
provided, however, that there may be added to such explanation, if the law of the State of Washington so requires, or the trust company so desires, the following:
QUOTE which debentures are subordinate to the rights of
depositors and other creditors UNQUOTE; (b) the amounts
of ca-oital stock and debentures shown in each such explanation shall represent and be equal to the aggregate
par value of such stock and debentures outstanding as of
the date of the statement.'
r
L
2514
8/13/34_
-17"In order to comply with such requirement the Spokane an0
'4.as.tern. Trust Company should show its capital accounts in the
qqAb
ilitiesisection of its reports and published statements in
sUb stantially
the following manner (assuming certain figures for
con
venience):
"Illustration #1
LI;7ILITITS
Capital
,750,000
Includes $1,000,000 par value
capital stock and $750,000 par
value cPappital debentures sold to
R.F.C., which debentures are subordinate to the rights of depositors and other creditors.
Surplus
250,000
Undivided profits and reserves
68,000
Acceptances, etc.
100,000
Deposits
17,000.000
Total
$19,168,000.
I, :To illustrate the applicability of this method in cases of
Of capital stock, assume that the trust company has
°'losses
of $400,000 which must be eliminated in order
that
itz statement may correctly reflect its condition. The set
wolad be substantially as follows:
"Illustration
#2
LIABILITIES
Capital
Includes $1,000,000 par value
capital stock and $750,000 par
value capital debentures sold
to R.F.C., Which debentures are
subordinate to the rights of depositors and other creditors.
Acceptances
Deposits
Total
$1,668,000
100,000
17,000,000
$18,7C5,000.
720aral'om your letters of July 18 and July 23, 1934, it is the
8 understanding that under the method you described the
set
2515
-18"D in this latter case would be substantially as follows:
"Illustration #.3
LIABILITIES
*Capital
Surplus
Undivided profits and reserves
Acceptances
Deposits
Total
*1,000,000
500,000
168,000
100,000
17,000,000
,318,768,000.
4
* Includes proceeds of $750,000 debentures sold to
Reconstruction Finance Corporation which debentures
are subordinate to rights of depositors and other
creditors.
"It appears that a bank's statement of conditien prepared in
tl
1)
1.e manner and under the circumstances shown in Illustration #3,
st°7e w°ule not reflect the true condition of the bank, and such a
zoatement
would not conform to the requirements prescribed by the
n afia with regard to the Spokane and Eastern Trust Company. A state'of the kind shown in Illustratien i3 involves an incorrect statenell
11t of the bankls conditien in the body of the statement and the
riotclIpt to explain the incorrectness of the statement in the foote tilloreto does not eliminate its misleading character.
via
It has been observed that you are under the impression that
12,:, °aral s action in the case of the application of the northwest ,
cZeorporation for a voting' permit represents its views as applicable
trier l to the Spokane and Eastern Trust Company rather than to all
tIl.t7,,bariks. This, however, is not the case and the Board feels
Tru f"ie principles involved in the case of the Spokane and Eastern
Merbs:,,Ctr'PaIlY and discussed above are equally applicable to other
uanks under similar circumstances. In this connection, your
is called to the following statement which was contained
at thelegram which the Board addressed to the Federal Reserve Agent
witb
Zederal Reserve Bank of San Francisco on February 13, 1934,
.7
regard to the Yakima Valley Bank and Trust Company at Yakima,
iashington:
',Refer Sargent's letter February 9, 1934 re reorganization
'Izama Valley Bank and Trust Company, Yakima, Washington.
bc)ard i s approval of proposed reorganization of such member
ball!: is not required by law or any conditions under which
aIL: was admitted to membership, but whether bank may be
reoPened as a member bank depends upon issuance of license
1
2516
8/1S/34
"by Secretary of Treasury upon recommendation of the
Federal Reserve Bank. It appears that under proposed
plan of reorganization bank's net worth will not equal
total amount of capital debentures and capital stock
outstanding, and Board feels that if reopening is accomplished under proposed plan bank's reports and. published statements Should correctly and fully reflect
condition of bank's capital liabilities. It does not
appear that this would be accomplished by the method
proposed in paragraph numbered (2) in pro forma statement forwarded with Sargent's letter.'
"The method referred to in the last sentence of the above
potation was substantially the same as that described on page
th°f this letter, and. you will observe that, while in this case
e Board was not authorized to prescribe a requirement, the
;°ard advised of its views in the matter. In connection with the
,!al'a l s position in cases involving circumstances of the kind
der discussion, your attention is also called to the following
A!!structions issued by the Board to all of its Federal Reserve
Ists on April 14, 1934, for their guidance in similar cases
ing in their respective districts:
"I Leference is made to Mr.
letter of March 6,
1934, with regard to the proposed elimination of losses in
the
Banking and Trust Company of
It appears that the trust comn.pany proposes to sell its
debentures in the amount of $250,000 to the Reconstruction
Finance Corporation and to use the proceeds of the sale of
such debentures to charge off annroximately $250,000 of
assets criticized by the examiner at the time of its last
examination. Mr.
inquired whether the trust company
rlaZir properly effect the eliminations in this manner and
in its reports and published_ statements show its obligation on the outstanding debentures only in a footnote to
such reports and statements containing a statement to the
effect that it has sold debentures to the Reconstruction
Pinance Corporation in the amount of $250,000.
"IA bank's reports and published statements should
ref'ect the true condition of its assets and liabilities
including all of its capital accounts. Inasmuch as capital
debentures represent a definite obligation of the bank to
the holders of such debentures, the amount of the bank's
liability on account of any such debentures outstanding
should be Shown as such in the bank's reports and )ublished
statements
rather than in a footnote thereto, and, in order
tO
avoid any deficiency in the capital accounts of the bank,
Its assets, of course, must be equal to the amount of its
cipligations to depositors and other creditors and the amount
of all of its capital accounts including capital debentures.
r
r
2517
'11E/34..
ill
Therefore, as indicated in Mr.
letter, it is apl)arent
that if the reports and published statements of
the
Banking and. Trust Company are to reflect correctly the condition of the assets and liabilities of the bank and not reflect
a deficiency in the bank's capital
accounts after the proposed
eliminations
it will be necessary, in the circumstances described
in this case, for the bank by appropriate
action to reduce its
2urplus or outstanding capital stock in an amount
sufficient to
provide for such eliminations.
"In this connection your attention is called to the fact
that the Board's
instructions for preparing the last call retort
0f State member banks contain the following provisions relating
to the method of reporting
capital accounts.
" "A State bank member should not show any
surplus or undivided profits in condition reports on Form 105 so long as the net book value
of capital notes and debentures and capital stock
is less than the aggregate of (1) the amount at
which capital notes and debentures or preferred
stock must be retired or to which the holders
thereof are entitled in case of liquidation and
(2) the par value of common stock."'
rne4e
Yo1lr further information in this connection, reference is
ao oft,0 the
method of reporting the capital accounts as shown in line
elo, the Board's condition report, Form 105, a copy of which is inherewith.
hoe It has
been observed from your letter of July 23, 1934, that you
the baet p the capital note program in the State of Washington on
Of permitting the proceeds of capital notes to be introduced
'Llaliriro„70 oaPital structure in sufficient amount to leave the capital
raati',',red, and the balance of the proceeds of the capital notes auto1I.ofit'-41Y reverts to other capital
accounts such as surplus, undivided
ilicre 2 or reserves'. You also stated that this 'does not call
for
Of th,!2.!d- carrying
figure of the ca:oital stock. The capital stock
- uall:k: remains the same but the proceeds of the capital notes
Derrait
171aere 4reP0irment of any impairment of the capital there may be, and
e
e
thCawliztial are any remaining proceeds they are a means of bringing up
accounts which can be used as a cushion for emergencies.1
oraitte7ile the sale of capital notes and debentures which are subto the
claims of depositors and other creditors of the bank
11:'s
a
the
dditional protection to such depositors and other creditors,
bo,,Ilk nrd does not
understand how an impairment in the capital of a
this 'fall be
eliminated by the sale of capital notes or debentures. In
Q°11neotion, it is apparent that any increase in the assets of a
:1entlir
r:
e 111
,tinE from the proceeds of the sale of capital
_
notes or de4ial)ii i.,7:48 offset by an increase in a corresponding amount of the
-'`il•es of the bank to the holders of such ea-pital notes or
2518
8/15/34
-21n,
uebentures.
Accordingly, any impairment in the capital stock
.
o4 f the b
which existed at the time of the sale of such capi'al ntor ddbentures will not be affected by suoh sale,
12hether the liability of the bank on such capital notes or dcis stated in its reports and published statements or is
"
61:.Y set out in a footnote thereto. However, if, as contemNated in the program you described, the liability of a bank on
caPital notes or debentures sold is not stated in its reports and
lished statements, such reports and published statements will
b e misleading and will not correctly reflect the condition of the
eI12,. In this connection, it should be observed that the surplus
c'Ild undivided
profits accounts shown in the reports of banks are
ir,e111:rally understood to represent funds belonging to the stock
ci'"ers of the bank after provision is made for payment of the
bpailms of depositors and other creditors. Therefore, it would
oi miisleadinz to represent in the reports and published statements
Dank that liabilities of the bank on account of capital notes
Q
ebentures sold are surplus or undivided profits of the institIltion.
r
f
will understand, of course, that the Board feels that
l"You
iability of a bank on account of capital notes or debentures
1,17°111(1 be most clearly reflected in the bank's reports and
a4shed statements if shown therein as a separate account with
,
iv a1713r0Priate title. However, in view of the Board's understandt hhe
Oft
l the requirements which your
office has made in connection
yo
showi
ng
banks in the State of Washingliability
of
of
the
r.
;
.
.,1
pr
actAcint of capital notes and. debentures sold, and in order
with your office as far as possible, the Board was
tient
-Ling to give its approval to the set up of the liability of a
rzia,,eii bank on account of capital notes or debentures sold in the
fler
described in the requirement applicable to the Spokane and
'
01'
1 uern Trust Company and as further described in Illustration
dege 7 of this letter. In view of the circumstances the Board
ri2 not feel that it could properly approve of the publication by
cx,graver bank of a statement of the Idnd contemplated in the pro'
described.
oe,r Before reachinz a conclusion in this matter, the Board gave
reiT11 consideration to all of the facts involved, including those
801744111C to the condition of member banks and to the fact that in
beyen!,1 States there are definitely defined minimum legal limits
to
which the capital stock of banks cannot be reduced iniorder
liminate
it:
capital impairment; but the Board feels that even thordi
fo;? be necessary in some circumstances and for a temporary period
1141, anks to operate with a caoital impairment the reports and pubCl "ed statements of member banks should, as nearly as possible,
arla correctly reflect the condition of such banks."
aJ
Ap-Toved.
2519
8/15/34
-22Zetter to Mr. Case, Federal Reserve Agent at the Federal Reserve Bank
"eV7 17 1
reading as follows:
19„ "The Federal Reserve Board has received your letter of August 3,
'
a 4, with inclosures, regarding the request of Mr. J. C. Maurer for
11inG as to the applicability of section 32 of the Banking Act of
192,
'
tif
to the services of various officers or directors of First Securi'Corporation of Syracuse, Syracuse, New York, who are serving
Laleously as officers or directors of certain member banks of the
"aeral Reserve System.
"It has been shown that, upon the organization of the First Securi? Corporation
of Syracuse, it issued 89,699 shares of its authorized
01741tal stock and that the purchasers thereof or their successors now
bthose shares and that, thereafter, it purchased shares of a number
easi,allice in the vicinity of Syracuse, paying for the same partly in
Of:4,ana Partly in its own shares. It has been stated that the remainder
capital was used for the purchase of other securities as invest"s which have been changed in a few instances and that the corpora:
2t7i
- ,has never
sold or offered securities to the public except its own
i.11 4 and the stock of the First Trust and Deposit Company, all trading
bt of
which was discontinued on or about January 1, 1932.
Also,
- it has been shown that the total purchases and sales of
z,:
er ,.les by the corporation during the years 1929 to 1933, inclusive,
Jal. percentages of its total assets as follows:
X
Year
1929
1930
1931
1932
1933
Average for five years
Purchases
Sales
82.0
23.0
.3
.6
2.0
.2
18.0.
1.7
.2
4.0
24.9
4.8
fit,:
Dllrine; the same period, the corporation derived total gross prot()ta
'
rcYm sales of securities in the amount of $15,207.54, while its
at
income from other sources amounted to $125,323.20. Furthermore,
elld of the year 1932, 99;; of the firm's portfolio had been held
984 -411°111Y for more than two years and, at the end of the year 1933,
(prii,,the portfolio had been held for the same period.
un the basis of the information submitted, the Board concurs
in
/lot 1°111
'opinion that the First Securities Corporation of Syracuse may
regarded as being 'engaged primarily in the business of purthe lig, selling, or negotiating securities' within the intendment of
servi
)
21/7sions of section 32. In the circumstances, a permit covering
11/11e2- to that cor-noration and to a member bank is not necessary, and,
attent
s.there are
other facts which you believe should be brought to the
1°11 of the Board, it is suggested that you advise Mr. Maurer
2520
8/15/34
-23-
accoraingl."
Approved.
Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve
atIzof hew
York, reading as follows:
"The Board has received your letter of August 7, 1934, with
"
--ures,
regarding the application of Mr. Charles F. Park for
a Permit under
section 32 of the BamLing Act of 1933 to serve as
:
;
a11 officer of The Marine Midland Trust Company of New York, and
vollimbia
Investing Corporation, both of New York, New York.
or "It has been noted that on June 28, 1934, the stockholders
the Columbia Investing Corporation voted to dissolve the
that the corporation has been dissolved and is in
lie
process of liquidation, and that a liquidating dividend at
.
°.6.:,90 per share was distributed to the stockholders on July 23,
On the basis of the information submitted, the Board conYour opinion that the relationship covered by the appli;lon mentioned above should not be regarded as subject to the
torisions 0-r. section 32 and that a permit under this section is
Ine .L11eoessary for the continuance of Mr. Park's service to the
'auer bank and to the
Columbia Investing Corporation.0
i
Approved.
Letter to Mr. Hoxton, Federal Reserve Agent at the Federal Reserve
reading as follows:
4ct "There are
inclosed the original and copies of a Clayton
:Permit granted to Mr. H. T. Mills, Greenville, South Caroto serve at the sarac, time as director of The First National
Greenville and director of The Peoples National Bank of
rene„
enville, both of Greenville, South Carolina, which you are
'Ted to transmit to the applicant and the banks involved.
pe
In considering Mr. Millslapplication for a Clayton Act
191
Zal't it was noted (item 12 - F.R.B. Form 94, dated March 26,
8117 that he
was serving as director of the Liberty Life InC°mPany and the Southeastern Life Insurance Company,
both
tion °f Greenville, South Carolina. In the report of examina°f The Peoples National Bank of Greenville, as of May 3,
tliej the examiner stated that these companies include among
tba7c assets loans secured by stock and bond collateral, and
1, 19while no loans of this nature had been made since January
cie11,34, the applicant and other directors likewise affected
e to know their status with respect to the Clayton Act
2521
8115/34
-24-
Shoil new
loans be made by such companies on the security of
stock or bond collateral.
"The Board requests that when transmitting the Clayton Act
!rat to the
applicant and. the copies thereof to the banks contrnca you advise in each case that in the event either of the
0.007,
,t
mentioned insurance companies makes new loans secured by
c4: or bond collateral, Mr. Mills' service at the same time as
tor of that company and as director of the national banks
vic"
wo,' be a violation of Section 8A of the Clayton Act, and. it
be necessary for him to sever his connection with either
tilC
insurance company or both of the national banks in oler to
Ilf°11u to the requirements of that section."
T
Approved.
1101.N.
Of
Letter to Mr.
Peyton, Federal Reserve Agent at the Federal Reserve
IT.
eapolis, readinc as follows:
"Reference is made to your letter of July 20, 1934, relazi's to the Clayton Act permit issued by the Board to Mr. A. L.
ITEgs Ribbinc, Minnesota, to serve as director of The First
'
(
1!llal Bare: of Buhl, Buhl, and as director and officer of
re'TI.nte and. Miners State Bank, Hibbing, both of Minnesota.
7 As it appears that Mr. Eggets statement is satisfactory
to ,
fietliev 'll, the Board is willing to accept it as sufficient evicatee
a that he
possesses the necessal-y shares of stock unhypotheto qualify as a director of The First National Bank of Buhl."
Approved.
-Letter
o Mr. McClure, Federal Reserve Agent at the Federal Reserve
n
1•4
,
reading as follows:
ti rm,
Act, ,
- Liere are inclosed the original and copies of a Clayton
'
to
s ermit granted to- Mr. R. R. Smith, Chickasha, Oklahoma,
,
rve at the same time as director and. officer of The Citizer4ze
aro. 4armers rational 3a/i1r of Chickasha, Chickasha, Oklahoma,
7,a,,,,
s airector of The First National Bank of Lindsay, Lind1)allizzwzial1oraa, for transmittal by you to Mr. Smith and the two
4 an(l a copy for your files.
that .,I/1 considering the application of Mr. Smith, it was noted
clire4e attended only one of the twelve meetincs held, by the
the et°1's of the Lindsay bank during the past year. In granting
;i
tt the Board took into consideration the fact that the
, and, his family are the largest stockholders in the Linda11-7., that the applicant, in the past, was reported to have
the undesirable domination of the Linf_say bank by Cashier
atIvi
2522
8/1
fl,
,•
qthi, Costello, and that there -:cro no unfavorable factors other
,j--uis poor attendance at directors' meetings. The Board feels
hat a
director should have a satisfactory record of discharging
__s duties and
responsibilities by participating in the management
4 d operations of a bank which he is serving through
2
attendance
1" directors, meetings, and
it is suggested that you advise Mr.
:ttlth that it
is with the expectation that he will improve his
at directors' meetings of the Lindsay bank that the
perm
''it has been granted. The Board requests that when you subx Your recommendations as a result of your annual review of this
t rrait1 you report fully as to Mr. Smith's attendance at direc°1*si II meetings.
It has been noted that the directors of the Citizens Loan
caVecvrities Company, Chickasha, Oklahoma, of which the applimee G.was reported to be president, passed a resolution at their
flIrl
held on December 18, 1933, prohibiting that company from
aettlier
n dealine; in securities and. investments of any kind. Such
aPparently removed the applicability of Section 32 of the
i4
:
11‘11C Act of 1933, insofar as the applicant is concerned, but
am,sralleh as the Citizens Loan and Securities Company was organized,
other things, for the purpose of lending money, the question
to
aPplicability of Section 8A of the Clayton Act would appear
letrse. In this connection, reference is made to the Board's
fr erS of November 10, 1933 (X-7677) and December 19, 1933 (X-7721),
it will be noted that if any non-banking organization
th
ic1i Mr. Smith is connected occasionally makes loans secured
by
Ilis
"
°54: or bona collateral, other than to its own subsidiaries,
at service at the same time as an officer of such organization and
by Virector, officer, or employee of a national bank is prohibited
1/1 ,
-c.,t_ion 8A, and the Board is without authority to issue a permit
the len. a case. Accordingly, it is requested that, before releasing
t„ Inclosed. permit, you ascertain definitely whether Mr. Smith's
13;!ioes with
any of the non-banking organizations listed in his
eV eation come within the prohibitions of Section 8A. If it is
0481
:mined that none of the non-banking organizations makes loans
zroll 'Da': or bond collateral within the contemplation of Section 8A,
Smith, at
tS.5 are
release
elease the inclosed permit to Mr. Sth,
40authorized
time forwarding conies thereof to the banks involved.
:
2
0
'
L ease inform the Board of your disposition of this matter
der that its
records may be complete.II
V
Approved.
Lotte
to Mr. McClure, Federal Reserve Agent at the Federal Reserve
City, reading as follows:
2523
-26,:There are inclosed the original and copies of a Clayton Act
'
ralt granted to L. C. E. Costello to serve at the
same time as
A4 rector and officer of The First National Bank of Lindsay, as
lector and
officer of The First National Ban:: of Alex, and as
recor of The First National Bank of Blanchard,
all of Oklahoma.
az, "It has
been noted from information furnished by your office
tia
'
ri also contained in the recent reports of examination of
the
vtij
:
e ban:rzs that the applicant had been criticized in connection
aria"
loans and those of members of his family in the banks,
lt,liat he also had been criticized by the national bank examiner
apparent participation in an arrangement to have the Manof''bank assume the loss involved in certain notes, the payment
ala watch had
been guaranteed by him and Mr. R. K. Wootten. In
, e°vinE; this application, consideration has been given to the
ea t4 that the
;
banks involved are in good condition, that the appliita„, la repOrted to be highly regarded in the communities, and that
etrerdent recently in his person.o.1 financial affairs has been
The Board has noted your opinion that Mr. Costello's
Ilis'ee with the three banks will not be harmful to them and that
f°reed withdrawal from any of them might be distinctly harmful.
C°11f1dential1y, however, it has been noted from the files
of
exar Co
mptroller of the Currency, in connection with the recent
Aot:
4 44tion of the Blanchard bank, that the charging off of the
sti4.,,
84.611aranteed by Directors Costello and Wootten may have contrati
'':"ed a violation of Section 5209, U. S. R. S., and that the
rtie jaction may be reported to the United States District Attorney.
via 4°.ard
that, in all cases where there have been alleged
frotaa;,
i°11s of the law, definite information should be obtained
Proper authorities regarding the disposition which was
Clayt,°f Such cases before permits under the provisions of the
tiae „
-:n Act are
issued. You are requested, therefore, to ascertain
evelct",
4tus of the charges against Mr. C. E. Costello, and in the
tioll 'he case has been duly considered and. closed without prosecuektt'Zu arc authorized to release the inclosed permit to the applisetae i7" to forward copies thereof to the banks involved, at the
the a4=rae furnishing the
Board complete information with regard to
co,kiLk„ sPosition o+- the matter in order that its records may be
4 ete.
iV
%
e YOU
'
411/1114
your
submit your recommendations as a result of report
review
Nay
of this permit, the Board requests that you,
Costeriaz to whether
there have been any further abuses by Mr.
'
3 of his official positions."
Approved.
14 Ate _
u to the Federal Tleserve Agent at the Federal Reserve Bank of
"
5-1
-c1
the following Clayton Act permits for transmission to the
2524
8/15/31
-27applicants, ana r (.,uesting that, when he submits his recommendations as a
resIllt of his annual
review of the permits, he report fully as to the applicellts 1
v‘ticeraance at directors' meetings.
lir, 10
410bert D. Barclay, for permission to serve at the same time
director and officer of the 'National Bank of Commerce of
sall
t 4,AxIt°11i0, San Antonio, Texas, and as a director of the First
a6s Bank, Poteet,
Texas.
1.4r, T
a "Iln
Bennett, for permission to serve at the same time
a director of the National Bar': of Commerce of San Antonio,
1Tall.Antonio, Texas, as a director and officer of The Yoakum
*6”10flal Bank, Yoakum, Texas, and as a director of the San
-41‘,01:40 br
andh of the Federal Reserve Bank of Dallas, San
6°Ili0, Texas.
Approved.
Letters to applicants for permits under the Clayton Act, advising
41)D1-'-"f7LI'l Of
}tr.
their applications as follows:
.1
0 J. Hamlin, for permission to serve at the same time as a
r and officer of the Hamlin Bank and. Trust Company, SmethOf ;.; Pennsylvania, and as a director of The First National Bank
'
clred, Eldred, Pennsylvania.
a
S• Zachry, for permission to serve at the same time as
Te4r,r
,,, ector of The First National Bank of Lenoir City, Lenoir City,
e —ssee, and as a director of The Bank of La.Fayette, Larayette,
G01I
'41a.
41, S.
Jo Graham, for permission to serve at the same time as
c.:,irector and officer of the First National Bank in Tuckerman,
Of el
'
rle-,11, Arkansas, and as a director of The First National Bank
Newport, Arkansas.
btr,
d,:11 7
"
4
ail', for permission to serve at the same time as.,
,
Criaal'
ei °r and officer of The First National Bank of :!inco,
l'oca,
°Taa's as, a director and officer of The First National_ Ban:,
Pocasset, Oklahoma, and as a director of The Oklahomaof1Tati.-se,
0113
'
1 2ank of Chickasha, Chickasha, Oklahoma.
;:
''irecf,• "411, for permission to serve at the same time as a
Nee, —r anel officer of The First National Bank of Pocasset,
set' Oklahoma, and as a director of The First National Bank
'
11°0, Mine°, Oklahoma.
Approved.
2525
-28-There was then presented the following application for a change
2
tclek of a
Federal reserve bank:
loka4r‘i •Leation
for SURRE1'TD7R of Stock:
1To. 7.
IlleWilmette State Bank,
W
ilmtette, Illihois
414ttriet
Shares
105
105
Approved.
Thereupon the meeting adjourned.
bg
cretary.
4D1proveci:
‘k,
Go ernor.
@FedFRASER