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2526 A meeting of the Executive Comnittee of the Federal Reserve " /3 was held in Washington on Thursday, August 16, 1934, at 3:30 P. m. PRILSENT: Mr. Thomas, Chairmar of the Executive Committee Mr. Hamlin Mr. James Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Committee considered and acted upon the following matters: Telegram dated August 16, 1934, from Mr. Sargent, Secretary of the., zederai °the Reserve Bank of San Francisco, advising that, at a meeting board of directors today, no change was made in the bank's exist- lbe "uedule of rates of discount and purchase. Without objection, noted with approval. Letter to Mr. Williams, Chairman of the Federal Reserve Bank of end, reading as follows: o4 "Referring to your letter of June 15 regarding salaries of 118.11.-°Yeea of your bank, it is noted that 1r. V. 0. Stramberg, a chf"-time employee, is performing special work in the Foreign ExCe FUnction and that it appears Impracticable to provide for a Position in the bank's personnel classification plan. the ,"If the position in question is to be made a permanent one, 1„.1, z•oard feels that provision should be made therefor in the ;7 . 1 8°11ael clasaLfication plan. If, however, it is a temporary 01:, it will not be necessary to provide therefor in the personnel w,ication plan but where people are taken on for temporary eZIL and no provision is made for the position in the personnel b4e4ssitication plan all the facts in connection therewith Should bl'allIght promptly to the attention of the 1- 2ederal Reserve Board." Approved. Ndieral Letter to Mr. Fry, Assistant 2edera1 Reserve Agent at the rle3erva Bank of Richmond, reading as follows: ihn, "Receipt is acknowledged of your letter of August 10, 1934, Col:1)8117-g a copy of a letter dated July 24, 1934, frcm hr. D. R. "er, tendering his resignation as a Class B director of the Fed- fl)ci)HY g_i g —2— -L-a4 Reserve Bank of Richmond, which you state was accepted at meeting of the board of directors of the bank on August 9. "In connection with the last paragraph of your letter, the Reserve Board interposes no objection to the election of a ' c?sec3r to LT Coker being deferred until the time of the annual tion of directors of your bank." the Fedsacelec- Approved. teloik of Letter to Kr. Walsh, Federal Reserve Agent at the Federal Reserve Dallas, reading as follows: el :Receipt is acknowledged of your latter of August 10, 1934, in: °sing supplementary statements with regard to indebtedness of offics; Fel s aad employees in the Federal reserve agent's deparLment of the : 4 eral Reserve Bank of Dallas, and reporting particularly on indebtedincurred by members of your staff since January 1, 1934. ,74. The Federal Reserve Board appreciates the careful manner in 1,1°4 this tnformation has been prepared, and it is assumed that, 1- accordance with the Board's letters of April 29, 1.936, and August r' e 1934) You have instituted a procedure under which there will be re, P ,frtad to you, when incurred, any new i: debtedness (other than cur14k, bills for ordinary personal and household expenses) of the memmn s Your department in order that statements with regard thereto -.qY be submitted promptly to the Federal Reserve Board." Approved. Letters to the followinc, State banks each letter stating that, stlbiect to the conditions prescribed in the letter, the Board approves tIze b 114°8 aPPlication for membership in the Federal Reserve System and *c* the 4Propriate anount of stock in the Federal reserve bank of the cliatt.i ct il which the applicant is located: .4 . 2 112.9111i Federal Reserve Dank "The First State Savings Bronson, Michigan. Bank"' "Security Bank of Rich Hill", Bich Hill, Missouri. Chicago Kansas City Approved. Letter to Ur. Case, Federal Reserve Agent at the Federal Reserve 411k or 1, York, reading as follows: 2528 8/16/34 -3- 'Reference is made to your letter of August 10, 1934, trans1°.1tting the request of the 'West Side Trust Company', Newark, New ' 'erseY, for an extension of time in which it may comply with the P trovisions of membership condition numbered 21, which provides that bank shall, as soon as practicable and in any event within six -,,enths from the date of its admission to membership, dispose of any ' 4 °61-as which may be secured in whole or in part by its own stock or Obtain the substitution of other adequate security for each such It has been noted that the president of the institution has advised that there was little market for bank stocks in Newark and /at it is felt that it would not Ix, to the best interests of the .snk's customers to sell the stock at this tine. 8 "In view of all the circumstances and your recommendation, the 2erd Craats an extension of time to January 6, 1935, within which idest Jide Trust Company may comply with the provisions of mem., sl ' ellaP condition numbered 21, and it is requested that you advise the L'alc accordingly." 2 Approved. Letter to Lr. Newton, Federal Reserve Agent at the Federal Reserve or Atlanta, reading as follows: acull, "It has been noted from the report of examination of the Parker 8-10-d Trust Company, Cullmn,n, Alabama, made as of February 6, 1934, " 911 the analysis of that report inclosed with your letter of March 31, t064 it, that, on December 23, 1933, the bank made an advance of $2,500 yo s vice president, Yr. R. E. Lee. It has been noted further that 01,11 have exchanged correspondence with dr. M. L. Robertson, President __ the , 'arker BFInk and Trust Company, with reference to this advance ;104 that 1.ir. Robert S. Parker, counsel for your bank, has advised that) after 6iving the matter careful consideration, he has reached ' of conclusion that there is no such clear violation of the provisions 1111 section 22(g) of the Federal Reserve Act as would made it incumbent You to present the facts to the Department of Justice. ."In the light of the circumstances involved in this case, it is cts ,s,ible that the Department of Justice may reach the same conclusion aet-r- .Parker; but, in view of the position of the Board that the lcinaLion of the question whether particular acts constitute violaj thij.°113 of the criminal provisions of the banking statutes of the reived States is a function of the Department of Justice, the matter theell'ed to above has today been reported to the Attorney General of 22(r,Ij Illited States as a possible violation of the provisions of section u °f the 'federal Reserve Act. A copy of the letter addressed to the" her simeiv1116” A, 01110Y General, together with inclosures thereto, is inclosed 11 for Your further information and you are requested to M812B a --ar report to the local United States District Attorney." 1 Approved. 2529 8/16/34 -4Letter to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank f Philadelp hia, reading as follows: "Reference was transmitted wood% Lakewood, "The Board as follows: is made to your letter of July 11, 1934, with which the application of the 'Peoples National Bank in LakeNew Jersey, for full fiduciary powers. has been advised by the Comptroller of the Currency "In view of the difficulties experienced in the reorganization of the old bank and in view of the fact that there does not appear to be any great necessity for the exercise of fiduciary powers in Lakewood, this office is unwilling to make any recommendation in regard to this aPPlication until after the receipt of a report of examination. The bank will be due for an examination within a few weeks. The District Chief Examiner will be requested to advise the examiner making the examination to consider !specially the auestion of trust powers. You will be notilied of the receipt of the report of examination by this °trice.? view of the foregoing, the Board will take no action on the application until such time as an examination of the bank has whell eampleted and the Comptroller's recommendation has been received. toe? , 4 report of examination is available the Board will be pleased "ave the benefit of any further recommendation you may wish to makc the Premises." i3ueadiag Approved. Letter to Mr. Hoxton, Federal Reserve Agent at the Federal Reserve MJ °r Ric hmend, reading as follows: cat. "The Federal Reserve Board has given consideration to the applir .11 °f 'The Citizens National Bank of Petersburg', Petersburg, V1 pl.,3 1.11111) for permission to exercise full fiduciary powers under the vlsions of Section 11(k) of the Federal Reserve Act. colici "In view of the information submitted with the application, the colij'tlonally favorable recommendation of yourself and your executive ci ttee and the adverse recommendation of the Comptroller of the the Board is unwilling to approve the bank's application to ' Citl idueiarY powers. You are requested, therefore, to advise The a Zens National Bank of Petersburg, that the Board has denied its 1)131J-cation. recom:!ar your information it may be stated that the Co, iptroller, in the -l uding that the application be not approved, advised that when -61:11k was chartered it was understood that at a later date the 2530 "board of directors would strengthen the management by the selection (If a well qualified executive, which does not appear to have been done as Yet. Special ccnsideration was given to this fact, as well Ile to the character of the trust business af the predecessor bank and ube,lack or experience in fiduciary matters of the proposed trust ;IfIleera, and to the statement by the president of the bank in his letter to Tai. Fry of January 20, 1934, that his committee 'is of the ° Jinion that they do not want trust powers at this time if that contitl°11 is imposed,' it being understood that the condition referred was similar to the one recommended by your executive canmittee to the effect that the bank shall agree not to take over from the ret ceiver of the First National Bank and Trust Company of Petersburg any arsts which own any securities, including mortgage notes, sold to :Lid trusts by any of the banks which by merger became the First Nauionzi Bank and Trust Company of Petersburg." Approved. aerve Letter to Lir. Stevens, Federal Reserve Agent at the Federal ReOf Chicac;o, reading as follows: al,,,."The Federal Reserve T- oard has given consideration to the 8114-L3-cation of the 'First National Bank in Council Bluffs', Council Ilan)Iowa, for permission to exercise fiduciary powers authorized er the provisions of Section 11(k) of the Federal Reserve Act. th "In view of' the information submitted with the application and itle2clverse recommendation of yourself and your executive canmittee, ich the Comptroller of the Currency concurs, the Board is unZ lialg to approve the bank's application for fiduciary powers. You Ba.,, requested, therefore, to advise the First National Bank in Council `'tts, that the Board has denied its application. the "The Board will be pleased to consider a new application from to sueJect bank at a later date, in the event that it should desire or ?agElge actively in the building up of a trust business as a part 1411,18 banking operations, and its condition and the other feacures Irea are such that you are willing to recommend favorable action t_ereolle" Approved. aetve Letter to Mr. Stevens, Federal Reserve Agent at the Federal Re- Chicago, reading as follows: tae "Reference is made to your latter ce July 27, 1934, inclosing tetj13plication of the 'Security National Bank of Battle Creek', 1e Creek, Eich13an, for full fiduciary powers. 2531 8/16/34 -6- "In accordance with the recommendation of your executive committee, in which the Comptroller of the Currency concurs, the Board !ill defer action on the pending application until an examination a national bank examiner has been canpleted and a report thereof 48 available, at which time it will be glad to have the benefit of !AY further recommendation you may wish to make in the premises. I'lease advise the applicant bank of the Board's action." Approved. Letter to "The United States National Bank of Eugene", Eugene, Oregoli reading as follows: "The Federal Reserve Board has given consideration to your ap13u-cation for permission to exercise fiduciary powers, and grants u authority to act, when not in contravention of State or local b w, as trustee, executor, administrator, registrar of stocks and 071(18, guardian of estates, assignee, receiver, committee of estates trhluflatics, or in any other fiduciary capacity in which State banks, companies or other corporations which came into competition 01,411 national banks are permitted to act under the laws of the State Dr °I1cgon, the exercise of all such riEhts to be subject to the peTrislons of the Federal Reserve Act and the regulations of the `'el'al Reserve iJoard. "This letter will be your authority to exercise the fiduciary Pawers set forth above. A formal certificate covering such authori24ti°4 will be forwarded to you in due course." r Approved. Letter to !;:r. O'Connor, Uomptroller of the Currency, reading as the :In accordance with Acting Comptroller walt's recommendation, ato - ederal Reserve Board appraTes a reduction in the common capital ' 'The First National Bank of Opp', Opp, Alabama, from c;200,000 to!, 1c °I tep°0,000, pursuant to a plan which provides that the released capiElse shall be used to eliminate approximately c64,700 of unsatisfactory Elgte. and to set up a reserve for contingencies in the amount of i0,-4:(”clmately :135,300, all as set forth in 1.1r. Awalt's letter of ust 2, 1934:, Approved. ?(E1 TelegrUM to Mr. ii11iams, ederal Reserve Agent at the Federal -g44 of Cleveland, stating that the Board has given consideration 2532 8116/34 to the application of the "Braddock Trust Company ", Braddock, Pennsylvania, fc)r a votinz permit under the authority of section 5144 of the Revised Statttes of the United States, as amended, entitling such organization to ITC)te the stock which it owns or controls in "The First National Bank of 8r4cid°a1 ", Braddock, Pennsylvania, and has authori zed the issuance of a lirQited Permit to the applicant for the following purpose: any time prior to November 1, 1934, to act upon a proposal to Pl ace e-Lace said bank in voluntary liquidation and to take such steps InaY be necessary to effect such liquidation." tel ara also authorized the agent to have prepared by counsel for led _ eral reserve bank, and to issue to the Braddock '.'rust Company, a -Ated vating permit in accordance with the telegram. Approved. Telegram to NI-. Sargent, Assistant Federal Reserve Agent at the Pecleral Reserve Bank of San Francisco, stating thal: the Board has given NIsideration to the applica tion of the "Yakima Holding Corporation", , Washirc ,ton, for a voting permit under the authority of section ':3144 of the Revised Statutes of the United States, as nended, entitling 41ch orga tization to vote the stock which it owns or controls in the 4Yakilala 1.Za First Nationa l Bank", Yakima, Washington, and has authorized the °r a limited permit to the applicant for the following purpose s: to 1,1; ±t any time prior to November 1, 1934, to act upon a proposal 1,rhilitate the capital structure of such bank in accordance with the ' Ourr -`an which has heretofore been approved by the Comptroller of the roz and the Federal Reserve Board, which plan includes provisions :300""e reduction of the bank's common capital stock from 500,000 to Corio' °°0, and the issuance and sale to the Reconstruction Finance bezi° 1" , 1‘ " 11 of 200,000 par value preferred stock, and to amend the to " articles 'of association and to do all other things necessary errect such plan." 2533 e/16/34 -8The tele, arain also authorized the agent to have prepared by counsel for the Pederal reserve bank, and to issue to the Yakima Holding Corporation, 4 litaited voting permit in accordance with the telegram. Approved, together with a letter to Yr. O'Connor, Comptroller of the Currency, reading as follows: r "In accordance with Acting Comptroller of the currency Awalt's 2commendation, the Federal Reserve Board approves a reduction in i'Qs common capital stock of the 'Yakima First National Bank', Yakima, ashington, from „)500,000 to „;300,000, pursuant to a plan which pro,Ides that the bank's capital shall be increased by ;200,000 of pre: Ired stock to be sold to the Reconstruction Finance Corporation, that the released capital shall be used to eliminate or reduce ;4alssirable assets, all as set forth in Lr. Awalt's letter of July 1934.” ; Z York Letter to Li'. Case, Chairman of the Federal Reserve Bank of New ' l ae.ding as follows: Res "The Board has reviewed the report of examination of the Federal 19; , !a Bank at New York made as at the close of business Llarch 10, copies of which were left with you and Governor Harrison. Doi; "°11 Page 30 of the report the examiner states that it is the witiicY of the Reserve Bank to participate at least once each year bellk the State banking authorities in examinations of State member Dat 8 whose condition is regarded as unsatisfactory and to particitie4 least once every two years in the examinations of other State pati:f .1?anks. It is further stated that the Reserve Bank's particiin the last examination of some of the large New York City b.111 consisted of the assignment of only one member of the Reserve 8 examini ng staff. The examiner am has recommended that the RenerVe 151,St4te rm Participate more frequently in the examinations of all ember banks and to a greater extent in the examination of the reco ar ar State member bnnks. The Board concurs in the examiner's tortendation, ani feels, also, that a definite program should be olleated whereby each State member bank would be examined at least tioll each Year either independently by your examiners or in coopersreT,with the State banking authorities. The Board would appreciate Welf°rt from you as to your plans in respect to these matters, as Or th ! a advice relative to the examiner's recommendation that the files acti; Bank Examination Department contain information as to what illeti44 has been taken on matters criticized in the reports of exam°11 of State member banks. 1343-1-c- ; 2534 8/16/34 -9"It is observed from page 9 of the report that the Foreign Department of the bank has handled transactions involving the purchase and sale abroad of gold for the United States Treasury ana .!1.1at it had not been definitely decided at the time of the examina' 10n whether reques t would be made for reimbursement of expenses in connection with the transactions, the management feeling at that iMe that no such request should be made. The Board would qppreciate advice as to the amount of expense incurred by the Reserve Bank in :°11/lection with such gold transactions and the reasons of the manageent for feeling that no request for reimbursement should be made. The Board would also appreciate advice as to the reasons for the j :)11_ Payment by the Treasury Depart ment of the expense incurred by e Reserve Bank in connection with the operation of the unit estabrl o shed in the Foreig n Department to examine and record reports on ,_reiga exchange transactions of all dealers in foreign exchange 4.10. the Second Federal Reserve District. th "On Page 32 of the report the examiner comments on the fact izat ring a large part of the time since the arrangement was effect ed r0 1931, a disproportionate amount of the investment through the Bank , at'' International Settlements has been in bills purchased by that bank Dhsa hiEh rate of discount, wherea the origin s al agreement cantem117ted that the investment would be maintained as nearly as po7,sible ,toecILIal proportion between high and low rate bills. It is underde,0 4(1 that this matter was to be discussed with Yr. Leon Fraser, Presith;4 of the Bank for Intern ational Settlements, on his next visit to 8111,Ua1ted States, and the Board will appreciate advice as to the rebils Or such discussion and as to the present distribution of the '4 • "It is also noted from 115 of the report that, on the date orOe e xamination, the amount of the Federal Reserve Bank with the pc far International Settlements consisted of 2,829, „131.92 on delet: t and ;A,390,814.68 invested in bills. As stated in the Board's al.e —r of Yarch 20, 1933 to Governor Harrison, Federa l reserve banks 04:1, 11thorized to establish and maintain accounts in foreign countries re-?ith the consent of the Federal Reserve Board and subject to such subch iQns as the Board may prescribe; and it is the Board's view that racil ccounts may be opened and maintained only for the purpose of cilad "t t"ing the purchase, sale and collection of bills of exchan ge . riea coaduct of other open market transactions of the kinds speciee,raz in section 14 of the Federal Reserve Act. L:oreover, in its teleclepo , e 3-111Y 30, 1931, the Board approved the proposal to make a demand 1 the Bank for Internationel '-.;ettlements with the understandthe funds were to be invested, as might be determined and bYti;ed from time to time, in prime commercial two-name paper guaran teed baletii- Bank for Internationa l Settlements. The maintenance of a deposit opell ,c ,„! in excess of the amount invested in bills of exchange or other Which7Fket Purchases is not consistent with the unders tanding upon the 8 fle Board approved the establishment of such account nor with cel'd's understanding of the purposes for which Federal reserve V 2535 8/16/34 -10are authorized to open and maintain such accounts under the 13rcvisions of section 14 of the Federal Reserve ,ct. Notwithstanding the views expressed in Governor Harrison's letter of 1:ay 15, 1933, therefore, it is the Board's view that the deposit balance with the , : 13allk for International Settlements should be reduced as soon as Practicable to the minimum amount which is actually needed for the PurPcse of facilitating the purchase, sale and collection of bills or exchange and. the conduct of other open market transactions of the kinds specified in section 14 of the Federal Reserve Act. In view °I. the fact that section 14 (g) of the Federal Reserve Act as nended l'ecluires the Federal Reserve Board to exercise special supervision Over all relationships and transactions of any kind entered into by allY :Federal reserve bank with any foreii bank or banker, it will be if' yau will advise the Boardpromptly of the action which ' 011'e Federal Reserve Bank of New York proposes to take in order to °111.°Thl with the Board's vi ews on thi s subject. "°11 Page artnershi89 of the report, under the schedule 'Loans to Individuals, ir : Th Ps, and Corporations', the examiner refers to an advance to 7C.11. Crouse, the purpose of which is not in conformity with the proe „ sl°11s of Section 13 of the Federal Reserve Act. The Board would ezTeciate receiving your views as to the eligibility of the advance se,e 'clvice as to whether the paper is pledged with you as Agent as ' 11111 tY for currency issued. the "It is noted (page 188) that the question of the sufficiency of tora certificate with reference to hypothecation agreements from cus1711.0ex ' s for whom. banks have made subscription to Treasury issues and eusse bonds are pledged as collateral to -,:ar Loan deposits, was distile8ed with officers and' counsel of the Reserve Bank who decided that LerxitRt_serve Bank would obtain specific instructions from the Treasury a2,,,' I L 4ellt as to how this matter should be ' handled. It will be Jek,i;eciated if you will inform the Board as to the instructions rer e Treasury Department and the procedure now followed °Y. tlL ci Reserve Bank in this respect. roe° "ii.t the time of the examination as of Nay 27, 1933, the examiner ed- that audits of the Fiscal Agency Department be enlarged rzeincr L'c Pl'ovide for a checking of all subscriptions received, aix1 a as to the suggested general procedure in this connection Wa,aleft With the Auditing Department. In Governor Harrison's letter licseraew eluber 7, 1033, forwarded with your letter of the same date, the kl]. sub-as advised that a complete audit woad be made periodically of iv:arch ,seriDtions. On page 189 of the report of examination as of the ti4.°) 1934, the examiner states that the procedure recommended at --ereasunie , l c)f the previous examination with respect to the audit of ackzilitti sub scriptions had not been followed, and that the Auditing ecdttc ee had instructed the Auditing Department to follow such proe oni It is„ ---Y in certain test issues to be selected by the Auditor. beix1„-'"eci, however, that as of the date of examination the Auditing "'rent had + no., completely audited any `2reasury issue, and it will be 2Pl'eciated. 2536 8/16/34 -11naPPreciated if you will advise the Board as to the number of such test issues to be audited during the year and also whether the Departrne Xlt has) since the date of examination, completely audited any issue. "Et has been reported that from January 1, 1934, to Earch 15, 1934, Be PntY Governor Sailer was paid a salary at the rate of :)35,000 per la,T111111, J) which rate is ..,;5,000 per annum in excess of the salary approved 2r, the Board, as you were advised in the Board's letter dated January 10:L1934. It is assumed, therefore, that refund has been made to the of the mount Paid 1,1r. Sailer in excess of the salary qoproved by 6 B°arCL It is requested, however, that you advise the Board definitely 14 this respcot. Ace "Attention has been called to certain items carried in Suspense °unt - General (debit) on date of examination representing cost of al and flowers in connection with the death of former Deputy 7rnor Gilbart. The Board's views with respect to expenditures for : a 4 Purposes are outlined in its letter of October 20, 1932, X-7276, is assumed that the items referred to above have now been propere.L iminated. "It has been reported that the manager of the Credit Department been iftiebted to a member bnnk at Bronxville, New York, since 1928, that the loan was classified as slow in recent reports of examinezt uici4f ict e:bank. The Board's views with respect to the indebtedness and employees of reserve banks are expressed in its letter tatr APril 29, 1933, The Board feels that this is a serious that "which should be brought to the attention of the directors if ! 3 not already been done, and the Board desires to be advised as to .0,h ,4e1a. views. of „ "After the report and this letter have received the consideration to ''..e.board of directors of the 2ederal Reserve Bank, you are reqlested 04 4.„ : °171se the Board as to what action has been taken or will be taken "le matters discussed." Z Approved. Ce4t1%1 Lette r to Ia.. Charles B. Campbell, Assistant Vice-President of the 4wa: Bank and Trust Company, New York, New York, reading as fol- nieht s refers to your letter of July 20, 1934, regarding the payinterest by the Central Hanover Bank and Trust Company (formerthe :'1nra,?e; Itral Union Trust Company) on trust funds deposited in its e';'ILL department. Nst"4-t is Understood that, on December 31, 1925, the Central Union 1 1' acting as trustee, entered into an agreement with one the custcraers whereby any moneys paid to or deposited with or to el'edit of the trustee pursuant to the provisions of the agreement 2537 41 8/16/34 -12- "miht be deposited by the trustee in its oommercial department Trithout liability for interest except such as might be agreed upon froill time to time in a supplemental memorandum. Under date of anuarY 4, 1926, the Central Union Trust Company addressed a letter 60 its customer stating that interest at the rate of *to per annum would be allowed on all such funds on deposit with it. While not so stated in your letter, it is assumed that the deposits in cuesare payable on demand. Since, under the trust agreement, the Co ,111PallY 'nay at any time resign its trusteeship, you request to be auvised whether the Company must take such action in order to cornPlY with the provisions of the Banking Act of 1933. "The Federal Reserve Board has hitherto ruled that section 19 °Ib the Federal Reserve Act as amended by the Banking Act of 1933 ohibits a member bank from paying interest on deposits of funds , eld in a fiduciary capacity which are deposited by the trust de' lartmeat in another department of the bank subject to payment on , al!lalld, except in accordance with a contract entered into in good !alth before June 16, 1933, and existing on that date, and such a 'c/.11tract must be modified or terminated by the bank as soon as possible consistently with its contractual obligation so as to eliminate a Y Provision for the payment of interest on deposits payable on iralld. It is assumed that the funds which are the subject of your eequirY are treated as deposits and are not segregated from the oz eral assets of the bank and otherwise subjected to the safeguards as1/444arily imposed upon the custody and use of trust funds. On this , esLunption, it is the view of the Federal Reserve Board that the 044tral Hanover Bank and Trust Company may not lawfully pay interest witslioh deposits which are payable on demand, except in accordance : rheli:EiZact entered into in good faith before Tune 16, 1933, on that date; and it became the duty of the Company 4,xs°°n as possible after June 16, 1933, to tenninate or modify its thee"21ant with its customer DO as to eliminate any provision for resjaYment of interest on deposits payable on demand, either by co,,,elling its trusteeship or by other action consistent with its m6ractual obligation. ccm. "In the circumstances, the Central Hanover Bank and Trust maY wish to consider the possibility of making such changes the v'e agreement with its customer as may be necessary to convert a,s d:L1Ts deposited in its commercial department into time deposits fled in Ref7ulation Q. In that event, of course, interest raiPht . lawfully be paid upon such deposits in accordance with the visions of the regulation." i V Approved. Ncliz Letter to Governor Schaller of the Federal Reserve Bank of Chicago, as follows: 2538 Vie"34 -13"The Federal Reserve Board has given consideration to the request made by you while at the Board's offices on August 8, 1934, for a ruling upon the question whether Coal, Incorporated is a business located in the Seventh Federal Reserve District within the teaning of 6ection 13b of the Federal Reserve Act authorizing a 4'sdera1 reserve bank to make loans, purchases and commitments to e working capital for an established industrial or commercial Ilsiness located in its district. It is understood that the question ellses under subsection (a) of section 13b. 0 , ."It is also understood that Coal, Incorporated is a resident c iachigan, and has its executive office, books and accounts reeivable in the City of Detroit, Michigan, and that it transacts ell of its general business, including banking and the sale of its e°a1) in that city. It is also understood that the corporation owns 6trld operates coal mining propertie s in Belmont County, Ohio. a ."Section III(c) of the Board's Regulation S provides that each aTleation by an established industrial or commercial business to t -ederal reserve bank for a loan, purchase or commitment 'must be tr'llsmitted to the Federal Reserve bank of the district in which the -rincipal place of business of the applicant is located'. 13r. It is believed that the question of where an applicant's 13 ne1loa1 place of business is located within the meaning of section utu ls essentially one of fact which depends for its determination : 1 0°11 e consideration of all the material circumstrances of the case. orrr ctiAgly, the Board feels that the l'ederal reserve banks are ari narilY in a better position to determine such questions as they emn particular cases than is the Federal Reserve Board. It "Hoever, inasmuch as the question as to the location of Coal, bvc°z'Porated has been considered by your bank and its counsel and c°1-Insel for the Federal Reserve Lank of aeveland, and in view tharl:Ir request for an opinion upon the question, the Board feels the lt maY properly state that it finds no reason to differ from a ,c ouclusion reached by such counsel that Coal, Incorporated is t,usiness located in the Seventh 2ederal Reserve District within zeaning of section 13b." r Approved. Letters to the following applicants for permits under section tthe Ban kiug Act of 1933, each letter stating that the relationship covereci bY the application appears to come within the class which the be lieves section 32 was desigied to terminate, and that the Board therero Nrcl kite re 13 Unable to find that it would not be incompatible with the lilterest, as declared by congress, to crant the application, 2539 -14alth°4gh in the eveiat the applicnnt desires to subNit further facts or 4liaalents in sup:fort of the application the Board is prepared to give them careful Consideration: Nr Charles P. Berdell, Jr., for permission to serve at the some tilne ae a director of the Bank of Suffolk County, Stony Brook, Ilew York, and as a partner of Berdell Brothers, New York, New York. ts Frederick W. Bacon, for permission to serve at the same time bts a director of the Tradesmen's National Bank and Trust Company ! lid as a director and member of the Executive Committee of the ecurities Corporation General, both of Philadelphia, Pennsylvania. Approved. Letters to Lir. Case, Federal Reserve Agent at the Federal Reserve 441C Of INew York, referring to the following applications for permits sectian 32 of the Banking Act of 1935, and stating, in each case, that '°11 the basis of tne information submitted in support of the application ) the Board concurs in the agent's opinion that the dealer in se°1111ti s e- IllaY not be regarded as "engaged primarily in the business of sellinc, or negotiatinc; securities" witlin the intendment ct ' 1'clvi5i0ns of section 32, and that, in the circumstances, a pertlit cot, . 'erl4E; the applicant's service to the organizations referred to 4PPlicatia1 is not necessary and, unless there are other facts t e 4gent believes should be brought to the attention of the Board, 34ZCested that the agent advise the applicant accordingly. aa 4 .Letcher L. Gill, for permission to serve at the same time , directorfieel of the Bank of The DInhattan Company and as a or of Tobacco and Allied Stocks, Inc., both of New York, "Yo' tx. 1.1r. jose PIA, S. Illaxwell, for permission to serve at the same time aa an -°1 iC0r of The New York Trust Company, New York, New York, 2540 a/16/34 -15and as a director of the Reliance International Corporation, New Y6lic, New York. 1;atthew S. Sloan, for permission to serve at the same time director of the Irving Trust Company, New York, New York, and as a director of the Reliance International Corporation, New Yc3rk) New York. "a Approved. Letter to ;:r. Stevens, Federal Reserve Agent at the Federal Re%.ve 8 ank of Chicago, reading as follows: z, "There are inclosed letters with copies thereof to Li-. B. C. leaer and to la% 0. P. laein regarding their applications for under Section 32 of the Banking Act of 1933 to serve the : )rst lIational Bank of West Bend and B. C. Ziegler and Company, both Bend, Indiana, notifying those gentlemen that the Board is ble to Vind that it would not be incompatible with the public -" e8t, as declared by Congress, to grant their applications. The Board has given serious consideration to the arguments have been advanced in support of the applications as well as titt"Young's remarks with reference to the same. However, its antion has not been called to any unusual facts or circumstances t:f!alaing to the banking situation in West Bend which indicate there would be any disastrous results to the First National oluk.ot West Bend by reason of the Board's refusal to grant the beiztai,lts applied for. In the circumstances, the Board does not 7-va that it may make an exccption as to 1. -r. Ziegler and Yr. aad issue permits covering their services to the First NaBank of West Bend and to B. C. Ziegler and Company, since the orlatter company appears to be engaged primarily in the business Chasing, selling or negotiating securities within the scope 1?lirchasing, • se 32. 84011 "Therefore, unless there are other facts which you believe tilrt11 , be directed to the attention of the Board before it takes action with reference to these applications, it will be • Dil eclated if you will transmit the inclosed letters to the apO1,,-ants and advise the Board as to the steps which each takes in Lier to comply with the provisions of the section." i Approved. Letter to :.1r. Hoxton, Federal Reserve Agent at the Federal Re- .ye tiezit to Of tlie 1,011 Richmond, stating that the Board has given consideration °Iviag applications for permits under the Clayton Let, and 2541 8/16/34 -16that) upon the basis of the information before it, concurs in the agent's ree01Mendation5 that the issuance of the permits applied for would be icera Datible with the public interest. The letter also requested the aEllt to cazmunicate to the applicants the Board's position in the matter ' and to advise the board promptly as to whether the applicants de31re t° sub:hit any additional data, and, if not, as to what steps they ae to take in order to comply with the provisions of the Clayton 4ct. , 15z : W. C. 7rvin, for permission to serve at the same time as Axector and officer of The First National Bank of Morganton, , rgallt°n, North Carolina, and as a director of the :_organton ustria' Bank, Morganton, North Carolina. T Cs A. Kistler, for permission to serve at the same time a director and officer of The First National bank af Morgan01,4'liorganton, North Carolina, and as a director and officer the Norganton Industrial Bank, Morganton, North Carolina. Approved. Letter to Mr. Hoxton, Federal Reserve Agent at the Federal Reserve Barik of Richmond, reading as follows: eltlits"There are inclosed the original and copies of Clayton Act P The , granted to the following directors and/or officers of Be41-"iret National Bank of Morganton and the Morganton Industrial both of Morganton, North Carolina: A. M. Ingold B. Bristol I. F. McGimsey T. H. Giles -tele "'You will be advised in a separate communication of the action 4401 bY the Board with reopect to the applications of W. C. Ervin E. Kistler to serve as directors and/or officers of these url, "Information C obtained from the files of the Comptroller of the indicated that Mr. C. E. Kistler had apparently committed ° f44tion of Section 22(g) of the Federal Reserve Act by borrowby-(1,1"°m the national bank on Tuly 22, 1U33, his loan being approved "4-rectors of the bank at a meeting held on Tuly 28, 1933 which 2542 -17"alleged violation was reported to the United States Attorney at 4211 " rille, North Carolina by the national bank examiner on Sanuary 13, 1934. "The Board feels that, in connection with applications in/T(311ring reported violations of law, definite information should be orbtained regarding the disposition which was made of such cases bepermits under the provisions of the Clayton Act are issued. 11°11 are requested therefore, to ascertain the status of the charges itgainst i. Kistler and the bank, if any; and in the event the cases .ay .e been duly considered and closed without prosecution, you are ; .6 11 hor1zed to release the inclosed permits to Messrs. A. M. Ingold, 1, F. McGimsey, B. Bristol and T. H. Giles, and to forward copies ' .ptereof to the banks involved, at the same time furnishing the : arc' camplete information with respect to the disposition of these ivatters in order that its records may be complete. ti "The Board also desires that when you submit your recommendaf\.°I ,Is as a result of your annual review of these permits you report Y as to whether the bank has further violated any provisions of e_e law by maki and its directors by approving, loans to its own Aecutive officers." I The ai aliton Act permits referred to above are as toiler's: B. Bristol, to serve at the same time as a director of I:ational Bank of Morganton, Morganton, North ihd line' , and as a director and officer of the i'organton "trial Bank, Morganton, North Carolina. The 7 H. ailes, to serve at the sem time as a director of The oa Flrst National Bank of Morganton, Morganton, North ij i°114a, and as a director and officer of the Morganton "trial Bank, 1:organton, North Carolina. 111% A. In-.old to serve at the same time as a director :Ialltofficer of The First National Bank of Morganton, Mar:Iorth Carolina, and as a director of the Morganton rial Bank, Morganton, North Carolina. 1.1r. T. of ToGimsey, to serve at the same time as a director zirst National Bank of laorganton, Lorganton, Lorth aalik lna, and as a director of the Morganton Industrial h:organton, North Carolina. Approved. Lett ar rve Bala: or tflt t t to Lr. Hoxton, Federal Reserve Agent at the Federal Re- Richmond, inclosing the followinL, Clayton Act permit, and it is requested that the agent ascertain whether charges 2543 8/16/34 -18- have been preferred against Lx'. Penn as a result of possible violations or section 22(g) of the Federal Reserve Act, and if so, the present Status of such charges; that in the event the cases have been duly consiclered azd closed without prosecution, the agent is authorized to rele Else the Permit to the applicant, at the same time furnishino. the Board ec'n1P1ete information with reward to the disposition of these matters in %%ler that its records may be complete, and that it is also requested that /.411sn he submits his recommendation as a result of his annual reof the permit, the agent report fully as to :jr. Penn's at-Gendance ctors, htt'Ve di meetings and ascertain and advise whether he and his family scontinued the practice of overdrawing their accounts: Lir , 1 a (;." S. Penn, for permission to serve at the same. time as R ) ,1-rector and officer of the ;irst I:ational Bank of Reidsville, 1orth Carolina, and as a director and officer of the 6Ystem Inclustrial Bank, Rc,idsville, North Carolina. Approved. Letter to -LT":;0°d, Federal Reserve Agent at the Federal Reserve 8alik of st. ouis, stating that the Board has given consideration to the r°11c)wille! application for a permit under the Clayton Act, and that, upon that b4s1s of the inforvetion before it, concurs in the agent's opinion the issuance of the permit applied for would be incompatible with Dublic interest. to the The letter also requested the agent to comunicate applicant the Board's position in the matter, and to advise the 441.`ci Protaply as to whether the applicant desires to submit any additi°441 data, and, if not, as to what steps he proposes to take in order to Ply with the orovisions of the Clayton Act. 2544 BA6/34 -19-- Lawrence V. Huber, for permission to serve at the sane time as a director of The First iTational sank of Perryville, Perryville) Ndssouri, and -s a director of The Home Trust Company, Pe rryville, Lissouri. Approved. Letter to Us. 1,:cClure, Federal 71eserve Agent at the Federal Bank of Kansas City, iaclosin- the following Clayton Act per- alts ' aad stating that if the agent finds to his satisfaction that the 1)rWi5ions of section 32 of the 13anking Act of 1933 are not applicable t° the a Pplicants, he 1.3 authori ed to transmit the Clayton Act permits to m: theMr C. Beaty, for permission to serve at the same time as r director of The First :Tational Bank af Ordway, Ordway, Cob0, a as a director and officer of 1. N. Beaty L Company/ *ells) naazanola, Colorado. 1Y.r.n ,,“. B . Beaty, for permission to serve at the same time as dl of The First National Bank of Ordway, Ordway, oc , ) ,!°rad°, and as a director and officer of T. N. Beaty --14aY, Bankers, i.:anzanola, Colorado. Iv'r. Sohn Beaty, for permission to serve at the same time ) icls a director and officer of The First :,:ational Bank of Ordway: I'd7laY, Colorado, and as a director of I. N. Beaty Company, BeZicA -r=3, :..anzanola, Colorado. Approved. Letter to 11r. McClure, Federal Reserve Agent at the Federal &Ink of Kansas City, inclosiag the followin Clayton Act perkit, an -d statin::; that it is requested that the agent ascertain the status or ch41. "saeainst Er. NOffet as a result of a possible violation of ,,Qtiola 22 (g) of the Federal Reserve Act, that in the event the case 4e.e bee Eqzthol,i. dulY considered and closed without prosecution, the agent i3 zecl to release the permit to the applicant, at the same time 2545 8/16/34 -20SlUng the 3oard complete information with regard to the disposition or +1, ' v le matter in order that its records may be complete; and that it is e'le° requested that, wten he submits his recommendations as a result of his review of the penult the agent report fully as to uhether et has further violated any provisions of the law. H. Moffet, for pennission to serve at director and officer of the First National tIraacl., Kansas, as a director of the Hanston Bealis, and as a director and officer of the e-4Pre, Kansas. the same time as Bank in Lamed, State Bank, Hanston, Belpre State Bank, Approved. Letter to Mr. McClure, Federal Reserve Agent at the Federal Re4175 Beilk of Kansas City, inclosing the following Clayton Act permit, licir(illesting that the agent withhold delivery of the permit until he Zat iS--"ed whi4 ch that The Mercantile Loan Corporation, Norfolk, Nebraska, Lir. Liontgomery is serving as director and member of the execu- 4vecullittee, does not make loans secured by stock or bond collateral, that Pr la)ntgomery is complying with the provisions of section 8A 't th elaYton Act, in which event the agent is authorized to transmit the 13"Mit to the applicant. The letter also requested that, when he a"Inits his recommendations, as a result of his annual review of the the Ev4ent reoort fully as to Mr. Montgomery's attendance at ors, Meetings during1934: 11 'L' Tontgomery, for permission to serve at the same time clirect-or 'and officer of The First National Bank and Trust i-1 ' 44Y of Chamberlain, Chamberlain, South Dakota, and as a t/ ebraska.andOfficer of The Security state Bank, 't-l'eet°1' Norfolk, Approved. 2546 8/1A'70,1/„, -21Letters to applicants for permits under the Clayton Act, advising Of eapp royal of their applications as follows: lir 'gran van Herwerden, for permission to serve at the same time a director and officer of' The Rahway National Bank, Rahway, ' aew 3-ersey, and as a director and officer of the Rahway Trust °121PanY, Rahway„ New Jersey. tlr.Fred C. Hyer, for permission to serve at the same time as ,aTe,ydi_rector and officer of The Rahway National Bank, Rahway, 6r3eY , and as a di rec tor of the Rahway Trust Company, culwaY, New Jersey. "enrY L. Tnmphea.r, for permission to serve at the same time ; es a director of The Rahway National Bank, Rahway, New Jersey, as a director and officer of the Rahway Trust Company, g4t311 1 New Jersey. for permission to serve at the same time as a-s'-"Lrector of The Rahway National Bank, Rahway, New Jersey, and all officer of the Dmpire Trust Company, New York, New York. 14.r. ro • ti ‘-'-anton L. Schmoyer, for permission to serve at the same p;nae as a director of The Fogelsville National Bank, Fogelsville, to-,, 11113Ylvatia, as a director of The Kutztown National Bank, Lutz,ret"4) Pennsylvania., and as a directsr of the Macungie Bank, Pennsylvania. clodetur ' ect 0. 0rBusick, for permission to serve at the same time as of the First National Bank of Reidsville, Reidsville, /Aia reith Carolina, as a director and officer of The Bank of Madison, Nr,„ 4-s°11, North Carolina, and as a director of The Bank of 1:ayodan, -`48'11 1 North Carolina. O'Farrell, for permission to serve at the same time as vi;:o. '"reetor of The Citizens National Bank of Covington, Covington, 11lia) and as a director of The Bath County National Bank of }Iott', .)Prings, Hot Springs, Virginia. VT S. Stuart, for permission to serve at the same time as eetor and officer of the West Union Bank, ;fest Union, dest CjZk itlia) and as a director of The Union National Bank of 3131-1-rL, Clarksburg, ;lest Virginia. Vi dire' }cony, for permission to serve at the same time as a Fik et°1% and officer of The First National Bank of Pikesville, e87.„ 1110) Tennessee, and as a director of the Sequatchie County te.tut Tennessee. 2547 8/16/34 -22- 3. G. iyam, for permission to serve at the same time as officer of the First National Bank and Trust Company of T1saPelis, Minneapolis, lannesota, and as a director and leer of the Mimehaha National Bank of lanneapolis, Einneep°1is, Linnesota. 1 S. J.-omeroy, for permission to serve at the sane time as uirector and officer af the First National Bank and Trust iDallY of Minneapolis, Minneapolis, Minnesota, and as a director ;41u1 officer of the Bloamington-L&kp National Bank of Ldnneapolis, eapolis,2..innesota. f te!f"• C. Hellickson, for permission to serve at the same time 147 a director of The First National Bank of Harmony, Harmony, ! a ls Ineseta, and as a director of the Caledonia State Bank, Calea, Ninnesota. 2,:migh, for permission to serve at the sage time as a alld ector of The First National Bank of Durango, Durango, Colorado as a director and officer of the Ignacio State Bank, Ignacio, r ' °1°rado. Mr• \ GuY Draper, for permission to serve at the same time as a Lie ector and officer of The First National Bank of McGregor, ilatfeg°r, Texas, and as a director and officer of The First °nal Bank of Oglesby, Oglesby, Texas. 141% 'e;arl -- Eagan, for permission to serve at the same time as a uctor aad officer of the Citizens National Bank in Viaxahachie, Italhaehie, Texas, as a director of The First National Bank of or -Y, Italy, , Texas, and as a director of The First National Bank Milford, Milford, Texas. Approved. There was then presented a memorandum dated Tune 28, 1934, from te Oolizittee 4111 3, on ELIaries and Expenditures, referring to a letter dated 19.3'1. from Mr. Newton, Chairman of the board of directors of the I ;eserve Bank of Atlanta, inclo ing copies of resolutions adopted 11'' the b eard of directors of the bank at its meeting on Xnne 8, 1934, apLab. t 4k'°val or 13cr gene R. Black as Governor of the bank, and, subject to the the Federal Reserve hoard, fixing his salary at the rate of annum, effecboth to be effective immediately following the 2548 8/16/34, -23- tive date of his resignation as Governor of the Federal Reserve Board. The inemorandum recommended approval by the Board of the salary as eixed. by the board of directors of the Atlanta bank. The memorandum signed by seven members of the Board indicating their approval of the reoorzkendation. Approved. There were presented the following applications for changes in stock of Federal reserve banks: A -4 0ations for CRIGINAL Stock: 4 xho N ationaank of Hamburg, lialthurg, Pennsylvania The Gehf--37"Cirational Bank of Bethesda, Bethesda, Ohio 4 1411111 rictno10. 1Y3iiiii-Fank, LEthlar, Colorado for ADDITIONAL Stock: --4s1;rict To; 5. Pirst Clark liorthfork, - National Bank of Northfork, aest Virginia it 141° ?irFt"-Talyjnal Bank of Dubuque, putuque, Iowa ...Z.2"_.A.st Nos he Piill- 9. R*7.11;nal Bank of Plainview, lannesota Shares 113 113 36 36 36 Total - 21 21 GO 60 4 Total 4 85 Appii W The I,. ettiros. 4f7 D.trst National Bank of Dillonvale, 813-1MENDERof tillf,-(7,4-1°111rale, Ohio Stock: vitizens Alexander,Bank of Vlest Alexander, National e"; Pennsylvania 36 135 42 45 2549 8/104 -24- A lioations for SURRENDER of Stocks (Continued) District No. 4. Continuedi Gibsonburg Banking Company, G ibsonburg, Ohio Pg:12.1210.. 6* rixeflTannal Bank of Millen, }alien, Georgia Approved. Thereupon the meeting adjourned. kipProvedi Executive Committee. Shares 48 135 18 Total 18 153
@FedFRASER