The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
223 A meeting of the Federal Reserve Board was held in Washington on Wednesday, August 2, 1933, at 2:30 p.m. PRESENT: Mr. Er. Yr. Er. Er. Mr. Black, Governor Hamlin Tames Thamas Szymozak O'Connor Er. Liorrill, Secretary Mr. Carpenter, Assistant Secretary The Board considered and acted on the following matters: Letter dated August 1, 1933, to Mr. Owen D. Young, Deputy ChairIlan of the Federal Reserve Bank of New York, prepared in accordance with ' the action taken at the meeting of the Board on Daly 27, 1933, and apProved by six members of the Board, stating that the members of the Board h4lie considered with care the information contained in Er. Young's letter or 3111Y 14 to Governor Black in regard to the senior officers of the Federal Reserve Rank of New York and in this connection have also given consideration to the proposed adjustments in salaries of other officers re- ipcIrted in Governor Harrison's letter of July 14; that after discussing the Matter at a meeting on July 27, the Board reached the conclusion that it is not favorably disposed to approve a salary at a rate in excess of t50 n„ per annum for an officer of a Federal reserve bank; that with res- 13eet to the salaries of the officers at the Federal Reserve Bank of New l'ork J tb\ Which are less than „;50,000 the Board will give consideration to the -"uwaldations of the board of directors of the New York bank at the and or thi, - Year when the schedules of salaries of all officers at Federal reEterve uallke are received in accordance with the customary procedure; that t4 thi 43 ' connection the Board noted with interest the appraisals set forth ofMunVe letter of the value of services of various individual 8; that in two cases the valuations are less than the salaries now 224 8/2/33 -2- being paid; that the Board was impressed by the suggestion of a reduction in these two salaries; and that if the board of directors of the New York bank will make a recommendation covering them, the Board is prepared to act. Approved, together with a letter dated 21.uzust 1, 1933, to Governor Harrison of the Federal Reserve Bank of New York, also approved by six members of the Board, advising that the letter to idr. Young also covers the subject matter of Governor Harrison's letter of July 14, 1933, to the Board, Letter dated August 1, 1933, approved by six members of the Board, to the board of directors of The Commercial Bank, Grand Island, Nebraska, 8t4ting that, subject to the conditions prescribed in the letter, the Board %roves the bank's application for mpribership in the Federal Reserve Systelll and for the number of shares of stock of the Federal Reserve Bank of 4448as City to which it will be entitled upon the basis of its capital and 8/4131112 as of the date upon which its membership becomes effective. Approved. Reply to a letter dated July 14, 1933, addressed by Ir. T. B. Lower, 468ident of the First National Bank of Washington, Kansas, to the Comptrolof the Currency and by the latter referred to the Board for reply. 1 " The 61314r stated that from the information containsd in TIr. Lower's letter the 13°411 Understands that he owns a majority of the outstanding stock of the st National Bank of Washington, Kansas, of the Exchange National Bank ' k elYde, Kansas, and of the Citizens State Bank of Haddam, Kansas; that he .-, his wife own 189:,j1 shares out of a total of 250 shares of stock of the, 4iret National Bnnk of 71ashington and a majority of the stock of the 8tEtte Illank of Narka, Krinsas; that each bank in the group is operated in-,,ently of each other bank in the group; and that la'. Lover desires to be 4dvised whether the national banks and the two State brinks, neither (I 225 8/2/33 -3- Of which is a member of the Federal Reserve System, are affiliates of each Other within the meaninz af section 2 of the Banking Act of 1933. The rePlY also stated that it is the opinion of the Board that, for the reasons stated, the Exchange National Bank of Clyde, the Citizens State Bank of Haddam, and the State Bank of Narka are affiliates of the First National Bank of Washington; that the First National Bank of Washington, the Citizetis State Bank of Haddam and the State Bank of Narka are affiliates of the Exchange Nationsl Bank of Clyde, but that neither national bank is an affiliate of either State bank, and neither State bank is an affiliate of the other, Approved. Governor Black stated that Mr. O'Connor had discussed with him rIll'ther the application made on behalf of the Mercantile National Bank at 1)e ' llas for permission to exercise trust powers, which was considered at the IlleetinC, of the Federal Reserve Board yesterday; that it has been represent- that the failure of the bank to obtain authority to take over the trust "counts of the old Mercantile Bank and Trust Company is endangerinG the f DI44 or the conversion of the State institution into a national bsnk which create a critical situation in the Dallas territory; that Deputy GovellIcr Gilbert of the Federal Reserve Bank of Dallas had called on the teleVao the and advised that the stockholders who are holding a meeting today for 1311rPose of approving the conversion of the bank are very anxious regard- the matter and that in his opinion the condition of the bank had been 141D cm- very greatly by the reorganization and the elimination of approxi- k4telY 01,120,000 of objectionable assets and the subscription by the Recon41:tun4. ' - 10a Finance Corporation for 01,000,000 of preferred stock; and that 44n P. Talley, former Governor of the Dallas bank, and now assistant 226 8/2/33 -4- to the directors of the Reconstruction Finance Corporation, who is in Dallas ot his vacation, had advised that he thought something should be done to relieve the situation today. Governor Black added that, in considering the latter at the meeting yesterday, he had assumed that it would be possible tor the old State institution to retain its charter and to continue to adilinister the trusts until such time as the new institution could obtain authority to exercise fiduciary powers, but that it now appears that with the conversion of the State institution into a national bank it will not be P°ssible to continue the old charter so that there will be no place in which the trusts administered by the State institution can be reposed. He also stated that, in view of the situation in Dallas, he is willing to make some e°11eession in this case and to permit the new institution to take over such tlillsts from the old State bank as are acceptable to the Federal reserve agent. Mr. O'Connor stated that while the condition of the new institution Will bah!, hot be satisfactory, and while the question of the chartering of the new was the subject of considerable discussion in his office and by him with the Chairman of the Reconstruction Finance Corporation, it was felt that if the conversion were not accomplished it might result in a collapse, and that 11'4 "considering all the circumstances, and in view of the conditions inby the Comptroller's office in connection with the granting of the ter, it was felt that the charter could be issued. He referred to the -Isms of the trust department of the old State institution contained e. rePort of a special examination of that department made as of Tune 16, 15) 3 hY a national bank examiner, and stated that the department is in fairly eM1A 4, "'sctory condition under the mensgement of the present trust officer who it le Proposed to continue in the new institution. He also called attention 227 -5_ 8/2/33 to the fact that the directors of the new institution have appointed five Members to serve on the trust committee who are men of proven ability, and Under whose direction it is believed the trust department will be properly Managed. Mr. O'Connor also stated that it now would not be possible for the bank to apply for a new charter and continue the existence of the old State institution for the reason that the contemplated conversion of the old bank into a national bank has proceeded too far to change the plan. Mr. Tames stated that, in view of the condition and record of the State bank, he is still unwilling to permit the bank to exercise fiduciary ewers for the reason that when powers are once granted by the Federal Reserve Board they cannot be revoked, and in his opinion a bank should not be granted trust powers until it has demonstrated its ability properly to exercise such authority. Attention was called to the fact that the old institution held stocks et other corporations in the amount of :::693,500 and that it is the general 13elieY of the Board to require a State bank applying for membership in the litederal Reserve System under similar circumstances to eliminate the stock °t anY corporation which the bank would not be authorized to purchase as a 41445er bank and the suggestion was made that the new national bank should 11°t be permitted to acquire any of the corporate stocks held by the tile Bank and Trust Company which a national bank is not authorized 11114r the law to purchase. After discussion, the Secretary was requested to advise the Federal Reserve Agent at Dallas that the Board grants the Mercantile National Bank at Dallas permission to exercise trust powers only in the specific trusts in which the Mercantile Bank and Trust date Company had been appointed and was acting on the which and bank national of its conversion into such Dallas are approved by the Federal Reserve Agent at 8/2/33 -6- 228 for the purpose of being taken over by the national bank, such grant by the Board to be effective only if and when the Lercantile National Bank is authorized by the Comptroller of the Currency to commence business without having acquired any stocks of any other corporation, either as charged-off assets or otherwise, which a national bank is not authorized under the law to purchase, and that action on the application for full trust powers is deferred pending receipt of a report of a new examination of the national bank; :T. Tames voting "no". The Governor then presented copies of the following amended emPloYment agreement proposed under date of Aligust 1, 1933, by the administrative canmittee of the American Bankers Association and approved by the N ational Recovery Administration on August 2, 1933: "CODE OF FAIR CMPETITION OF THE BANKERS OF THE UNITED STATES. "The declared purpose of this Code is to effectuate the policy of Title 1 of the National Industrial Recovery Act during the period of emergency. DEFINITION "The American Bankers Association affirms that it imposes no inequitEtble it , J:estrictions on its membership, and participation in its activities, and atats truly representative as a national association, consisting of national, es savings, mutual and stock banks, trust companies and investment bankers. 1, PROVISIONS eQ7ersr. "As required by Section 7(a) of Title 1 of the national Industrial Rethe following provisions are conditions of this Code: Employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers of labor, or their aerts, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; 2. No employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his own choosing; and 0 229 -7- 8/2/33 0. 2. Employers shall comply with the maximum hours of labor, minLawn rates of pay, and other conditions of employment, approved or prescribed by the President. CHILD LABOR "After August 31, 1933, no person under 16 years of age shall be employed, except that persons between 14 and 16 years of age may be employed, for not to exceed 3 hours per day and those hours between 7 A. L. and 7 P. 11., la sudh work as will not interfere with hours of day school. 3, HOURS OF .E.MLOYLT.LIT "(A.) No banking employee shall work in any bank for more than 40 hours ia any one week on an average of a 5 week period (such average being necessary rinE to the periodic settlements, payments or emergencies in serving the pubover all of which the bank has no control). The hours of any banking oprations shall not be reduced below the hours now obtaining in each individual bank. "(B) This provision for working hours shall not apply to guards and /7tItehmen employed to safeguard the assets of the bank who cannot be shifted o chanced during the night period. "(C) The maximum hours fixed in the foregoing paragraphs shall not €tPlaY to employees in banking establishments employing less than two persons owns of less than 2,500 population, which towns are not part of a larger ota-le area; nor to eruloyees in a managerial or executive capacity or in any tl,her. capacity of distinction or sole responsibility who now receive more 111 111 .35-.00 per week. Population for the purposes of this agreement shall determined by reference to the 1930 Federal Census. 4, WAGES "No employee shall be paid: W Less than !,)15.00 per week in any city of over 500,000 population, or in the immediate trade area of such city; (B) Less than 44.50 per week in any city between 250,000 and 500,000 population, or in the immediate trade area of such city; (C) Less than 44.00 per week in any city between 2,500 and 250,000 population or in the immediate trade area of such city, and shall be In towns of less than 2,500 population all wages this increased by not less than 20 percent, provided that week. shall not require wages in excess of 12.00 per 230 -8 8/2/33 54 .ADMINISTRATION. "Such of the provisions of this Code as are not required to be included therein by the National Industrial Recovery Act may, with the approval of the President, be modified or eliminated as changes in circumstances or experience may indicate. "This Code shall became effective when approved." Governor Black also presented the followine., bulletin addressed on A4aust 1, 1933, by the administrative committee of the American Bankers 11-80ciation to the members of the association: "Under the terms of the National Recovery Act, the President of the United States is urging every employer in the country to sign a voluntary li eement covering minimum wages and maximum hours as a part of his nationwide plan to raise wages and create employment. "This voluntary agreement has been made to include banking, specirically. "Your Administrative Comuittee believes that in view of the purpose 8°11Cht to be served by the Administration, the banks of the country should e )°Perate to the best of their ability to secure united action in this ef: °rt to restore confidence and prosperity. ' "Acting under the authority vested in your Administrative Committee, We have A submitted a Basic Code to the National Recovery Administration. Unqez th Paragraph 13 of the President's Re-employment Agreement, General Johnson, s ational Recovery Administrator, has approved the substitution of Sectie i erIcT 3 of this Basic Code for Sections (2) and (4) of the President's Re1)-L°Yment Agreement. "We are enclosing with this Bulletin a copy of the Basic Cole, as apDrovnA 1, 'q• A message to the Bankers of the United States from NRA will appear he press setting forth the consent of NRA to the above substitution. to all membersaf the Association that , 'Your Committee therefore recommends they take the following steps: 1. Sign and IJail the President's Re-employment Agreement which has been delivered to you through the Post Office Department. the 2. SiL;r1 your Certificate of Compliance adding thereto following clause: 'To the extent of NBA consent, as announced, we have complied with the President's Agreement by complying with the substituted provisions of the Code submitted for the Bankers of the United States.' 231 8/2/33 -9This certificate of compliance is then to be taken to your Postmaster who, upon receipt thereof, will deliver to you your emblem. "You will observe that under the terms of the Agreement, the American Bankers Association may file with the National Recovery Administration a modified Code which, upon approval by the President of the United States, will Supersede this amended Agreement. Liodifications, if any, of this Code will be submitted to the membership of our Association at its forthcoming Convention to be held in Chicago, September 4-7, 1933. "After signing the President's Re-employment Agreement you should imIllediately place in force the provisions thereof, as amended." Governor Black stated that he had been informed that the banks in W4ehington and possibly New York City will accept the amended code this afterand the question was raised as to the position to be taken by the Fedextel.Reserve Board with regard to the acceptance of the code by Federal reSee banks. After discussion, the Secretary was requested to advise the Chairmen of all Federal reserve banks that the Board will interpose no objection to the adoption of the amended employment agreement by any Federal reserve bank. Reports of Standing Committee dated August 2, 1933, recommending 413101/a1 of the following changes in stock at Federal reserve banks: A 14 oation3 for ORIGINAL STOCK: Shares ---asy National Bank, Norway, L'aine 38 38 36 36 74 74 66 66 360 360 426 426 ketrict I t " -"'"-•2• -40,1 Bank of Orrville, Ohio Total ioations for SURRENDER of Stock: • 5. 11c1 National Bank, Bel Air, Ed. (13eing liquidated through conservator) lOistrict No. 70 1\-lationa1 Bank, Freeport, Ill. (Being liquidated through conservator) Total
@FedFRASER