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172 A meeting of the Executive Committee of the Federal Reserve Board was held in the office of the Federal Reserve Board on Wednesday, August 26, 1931, at 11:30 a. m. PRESENT: Governor Meyer Mr. James Mr. Magee Mr. McClelland, Assistant Secretary. The Governor reported that while in New York over the weekend he incillired of Governor Harrison regarding the statement which appeared recently it the British Labor press that the Federal Reserve Bank of New York has interfered with the internal policies of England, and that Governor Harrison Elesured him that such was not the case and that the bank had in no way sought to bring the pressure of the Federal Reserve System on the political situation in England. The Governor also referred to the fact that the recent so-called l iggin Report seemed to identify the credit extended to the Reichsbank by the ' l'ederal Reserve banks, in association with certain central banks in Europe, with short-term commercial credits which have been extended in Germany by 4alerican banks and bankers. He reported that Governor Harrison addressed a cablegram to the Bank for International Settlements, which is handling the e'edit to the Reichsbank, making it clear that the Federal Reserve bank credit ahould not be identified with the commercial credit situation, that the 11111130ees, term and conditions of that credit were entirely independent of the commercial credits and that it was not subject to the general restrictions 41Posed by the German Government and the Reichsbank. At the sane time, he 4414) the cablegram made it clear that the Federal Reserve System did not 4ca1re to have the statement of its independent position construed to mean that it would apply any unduly harsh procedure or practice in connection with the credit to the Reichsbank. '4 fft_3 8/26/31 2The Assistant Secretary presented the fallowing communications and reports which were considered and acted upon by the Committee: Letter dated August 20th from the Secretary of the Federal Reserve Bank of New York and telegrams dated August 20th from the Chairmen of the Federal Reserve Banks of Kansas City and San Francisco, all advising that at meetings Of their Boards of Directors on that date, no changes were made in the banks' existing schedules of rates of discount and purchase. Without objection approval. noted with Memorandum dated August 20th from the Director of the Division of Research and Statistics recommending approval by the Board of a leave of ab" lice without pay from October 28th to November 13th for Miss Dorothy Fricke, °4 employee of the Division. Recommendation approved. Memorandum dated August 21st from the Chief of the Division of Bank 4erati0n8 submitting statements showing the expenditures of Federal Reserve b°4ks for educational and welfare work, etc., during the month of July and tlIr the seven months' period ending July 31, 1931. Ordered circulated. Memorandum dated August 21st from the Assistant Secretary with regard t° telegram dated August 19th from Deputy Governor Gilbert of the Federal lieserve Bank of Dallas, requesting approval by the Board of the following ellallgell A in the inter-district time schedule, which the Assistant Secretary liteetsd are agreeable to the other Federal Reserve banks concerned: From Dallas El Paso /4 to Jacksonville " Helena " San Francisco " New York " Buffalo " Baltimore " Omaha From 3 days to 2 days "4 " " 3 " 4 i, It 3 « It II 3 « " 4 " ft 3 II " 4 41 3 It tt 4 " It "2 " 3 " 8/26/31 1_74 -3- From El Paso " Houston fl n San Antonio " To San Francisco " Cincinnati Charlotte " San Francisco " Helena "Omaha From " " n " " 3 3 3 4 4 2 days to 2 days " "2 " , "2 " " "3 " " "5 " tt "3 " Upon motion, the proposed changes were approved. Memorandum from Counsel dated August 25th with regard to letter dated 41agust 17th from the Assistant Federal Reserve Agent at New York, advising that the Merchants and Manufacturers Trust Company of Union City, New Jersey, Ettd the Highland Trust Company were merged pursuant to provisions of an act Or the State legislature whereby all of the property, franchises and itterests of the constituent banks were transferred to the merged institution, Which continues under the charter of the Highland Trust Company; the Assistant 4dera1 Reserve Agent stating that it would appear that public interest has tot been affected by the merger and that a revocation of the permit heretofore issued by the Federal Reserve Board to Mr. C. F. Mindnish for permission to eellle as officer and director of the Hudson County National Bank of jersey CitY, New Jersey, and as officer and director of the Highland Trust Company °t Union City is not necessary. In his memorandum Counsel stated that in Itew of this advice and the fact that the banks which Mr. Mindnish is now 13"7ing are located in different cities, it seems clear that it is not baegssary at this time for the Board to take any action in the matter. Upon motion, draft of letter to the Assistant Federal Reserve Agent at New York, submitted with Counsel's memorandum and advising that the Board will not take any steps at this time looking toward the revocation of the permit granted to Mr. Mindnish, was approved and ordered transmitted. Draft of reply to letter dated August 22nd from the Assistant Federal 11"erve Agent at Chicago, advising of the consolidation on August 19th of the 75 8/26/31 -4- Lilley State Bank and the Tecumseh State Savings Bank, both member banks of Tecumseh, Michigan, and stating that as it is the opinion that the consolidated bank will still be in a rather unsatisfactory condition, the Federal Reserve bank intends to join in the next examination; the proposed reply requesting that following the examination of the consolidated bank a detailed report regarding its affairs be sent to the Board with a recommendation as to whether or not action should be taken by the Board relative to its membership in the Federal Reserve System. Upon motion, the proposed reply was approved. Letter dated August 24th from the Federal Reserve Agent at Chicago tranamitting voluntary notice of intention to withdraw from membership in the Federal Reserve System filed by the Gilbert Savings Bank, Gilbert, Iowa, with the request that it be permitted to withdraw from mmbership immediately; the Federal Reserve Agent stating that the bank is in a very unsatisfactory condition and recommending that the bank's request for immediate withdrawal be granted. Upon motion, it was voted to approve the immediate withdrawal of the Gilbert Savings Bank, Gilbert, Iowa, and to authorize the Federal Reserve bank to make refund upon surrender of the Federal Reserve bank stock held by the member bank. Letter dated July 6th from the Federal Reserve Agent at St. Louis, ' lesPonding to the inquiry contained in the Board's letter of July 2nd, regardthe action of the Montgomery County Loan and Trust Company, Hillsboro, Illinois, in taking over the Peoples National Bank of Hillsboro and the State 44k of Taylor Springs, the Federal Reserve Agent stating that according to a letter received from the Board under date of February 12, 1929, it is not 176 8/26/31 -5- necessary for a member bank to apply to the Board for permission to consolidate with another bank if, as in the present case, in the opinion of the management cf the member bank the consolidation will not result in a change in the general character of the member bank's assets or broadening of its functions such as might tend to affect materially the standard maintained at the time it was admitted to the System. In this connection, the Assistant Secretary presented draft of letter to the Federal Reserve Agent at St. Louis, advising that the attitude of the Board toward consolidations involving member banks, as set out in the letter to htm above referred to, was not promulgated as a formal ruling nor communicated tO all Federal Reserve banks; that the Board has more recently been of the °Pinion that such an interpretation of the "general" condition of membership 18 too broad; that it is now requesting from the Federal Reserve Agents as full information as possible with reference to each consolidation or merger in which 4 state member bank is involved and a recommendation from the Federal Reserve 48ent as to whether the Board should interpose any objection to the action of ths member bank by reason of the fact that the consolidation or merger constituted a violation of the "general" condition; and that it would be appreciated if in the future the Federal Reserve Agent at St. Louis would subnlit such a report to the Board in connection with any consolidation, merger or Ilurchase of assets of another institution by a state member bank in the Eighth l'edsral Reserve District. The proposed letter further stated that it seems elear from the information at hand regarding the consolidation involving the 11(31/t8°Inery County Loan and Trust Company, that the transaction did not result 111 61,nY material change in the character of the assets of the member bank within the meaning of its conditions of membership and the Board will, therefore, i11 tarP°8e no objection to the transaction. Upon motion, the proposed letter was approved. _4_77 8/26/31 -6Draft of reply to letter dated August 14th from the Secretary of the Federal Advisory Council requesting a list of topics which the Board desires the Council to discuss at its meeting to be held in Washington on September 15th; the proposed reply requesting that the members of the Council come to the meeting prepared to give detailed reports regarding the banking and credit conditions in their respective districts and stating that the Board would also like to consider with the Council the question of amendments to the Federal ReServe Act. Upon motion, the proposed letter was approved. Memorandm dated August 21st from the Director of the Division of Research and Statistics on letter dated August 20th from the Assistant Federal Reserve Agent at Philadelphia submitting an outline of the text and proposed charts to be used in connection with an exhibit which the bank is preparing tor the forthcoming convention of the American Bankers Association. In his tilenlorendum Dr. Goldenweiser suggested that charts dealing with the world dePression in 1930 and 1931, the distribution of gold, and credits extended to t°rsign central banks, be omitted from the exhibit, and that the text on the subjects of changes in Federal Reserve credit and Federal Reserve credit PeltcY be amended. Upon motion, the outline of the exhibit was approved, with the changes suggested by the Director of the Division of Research and Statistics. Memorandum from Counsel dated August 24th, advising that the demurrer tiled by the Federal Reserve Bank of Richmond in the case of Lucas vs. the '4.1ra1 Reserve Bank of Richmond has been sustained and while the decision of the trial court is a victory for the Federal Reserve bank in the case, it is c°11eidellad likely that an appeal from the decision will be taken. Noted. -7- 8/28/31 1_78 Memorandum from Counsel dated August 20th recommending that there be Atiblished in the next issue of the Federal Reserve Bulletin, the recent rulings of the Board (1) to the effect that reserves should be maintained against dePosits received in connection with certain so-called "personal loans" and, (2) with reference to the eligibility for rediscount at a Federal Reserve bank Of a veteran's note secured by his Adjusted Service Certificate and on which the veteran has waived the notice of transfer required to be given him under the provisions of Section 502 of the World War Adjusted Compensation Act. In hia memorandum Counsel suggested that before the second named ruling is published in the form proposed, the Board inquire whether the Veterans' Administration has any objection. Upon recommendation of the Law Committee, the publication of the two rulings referred to was approved, subject to approval of the form of the latter ruling by the Veterans' Administration. Memorandum from Counsel dated August 21st, advising that he knows of 4° legal reason why the Board should not issue to the First Sterling National 4111k of Sterling, Illinois, a certificate to the effect that the bank is no INer authorized to exercise fiduciary powers under the provisions of Section 114k) of the Federal Reserve Act. Upon motion, the form of certificate submitted with Counsel's memorandum was approved and the following resolution was adopted: WHEREAS, pursuant to the provisionsof Section 11(k) of the Federal Reserve Act, the Federal Reserve Board on September 23, 1927, issued to The Sterling National Bank of Sterling, Illinois, a special permit granting said bank the right to act as trustee, executor, administrator, registrar of stocks and bonds, guardian Of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which COMB into competition with national banks are permitted to act under the laws of the State Of Illinois; 179 8/26/31 (% WHEREAS, on March 8, 1930, The Sterling National Bank consolidated with The First Sterling National Bank of Sterling, Illinois, under the Act of Congress of November 7, 1918, the consolidated bank having the title of "First Sterling National Bank"• WHEREAS, such consolidated bank succeeded to the right to exercise the fiduciary powers previously granted to The Sterling National Bank by the Federal Reserve Board; WHEREAS, the Vice President of such consolidated bank has filed with the Federal Reserve Board a certified copy of a resolution adopted by the Board of Directors of said bank on January 13, 1931, signifying the desire of said bank to surrender its right to exercise the fiduciary powers granted to The Sterling National Bank; WHEREAS, the Vice President of such consolidated bank has surrendered to the Federal Reserve Board the certificate issued to The Sterling National Bank, certifying that it had been granted the right to exercise fiduciary powers described above; WHEREAS, it appears from an examination of the First Sterling National Bank completed Tune 10, 1931, made by a National bank examiner under the direction of the Comptroller of the Currency, that said bank has been discharged or otherwise Properly relieved in accordance with law of all its duties as fiduciary; and WHEREAS, the Federal Reserve Agent at Chicago has recommended that the Federal Reserve Board approve the surrender of the right of the First Sterling National Bank to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which came into competition with national banks are permitted to act under the laws of the State of Illinois; NOW, ThEREFORE, HE IT RESOLVED, that the Federal Reserve Board issue to the First Sterling National Bank of Sterling, Illinois, a certificate certifying that said bank is no longer authorized to exercise any of such fiduciary powers under the Provisions of Section 11(k) of the Federal Reserve Act. Letter dated August 25th from the Assistant Treasurer of the Federal Parra Board, advisinc that the Canal Bank and Trust Company of New Orleans, LOuis '"ua, is custodian for certain collateral in connection with loans by the Federal Farm Board to the American Cotton Cooperative Association, that ---quently occurs that cash is substituted in lieu of documents withdrawn, 4Id that the bank has agreed to lodge this account on its trust ledger and Pledge certain of its miscellaneous securities in sufficient amount to 180 8/26/31 protect the deposit; the letter inquiring whether the Canal Bank and Trust Company, which is a member of the Federal Reserve System, is being operated under the provisions of the Federal Reserve Act and is subject to Federal Reserve examinations and if the securities Which the trust company may own are limited to those investments mentioned in the Act. The Assistant Secretary Presented draft of a proposed reply to the above letter, advising (1) that While the member bank is subject to the restrictions and limitations imposed by the Federal Reserve Act, the type of investments which the trust company IllaY make is a matter regulated by State law, (2) that there is no provision or the Federal Reserve Act prescribing the classes of securities in which state member banks or trust companies may invest and (3) that in Louisiana, State examinations of member banks are customarily accepted in lieu of Fed- eral Reserve examinations under authority of the Act, although Federal Re"I've examiners sametimes participate in such examinations. Upon motion, the proposed letter was approved. 1 EPORTS OF STANDING COYErriEES: Dated, August 21st 24th 25th Dated, August 20th 26th Dated, Dated, AUgUst 20th August 21st Recommending changes in stock at Federal Reserve Banks, as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending approval of the application of Mr. W. B. Roberts, for permission to serve at the same time as director and officer of the Bank of Florence of Omaha, Nebraska, director of the First National Bank of Omaha, Nebraska, and as director of the Security National Bank. of Laurel, Nebraska. Approved. Recommending approval of the application of Mr. Carter Stewart, for permission to serve at the same time as director and officer of the Public National Bank & Trust Company of Houston, Texas, director and officer of the First National Bank of Harlingen, Texas, and as director and officer of the Citizens State Bank, Houston, Texas. Approved. 8/26/31 -10- ' l --.PORTS OF STANDING CODZIrri.K6S: (Conti d Dated, August 21st Dated, August 21st Dated, August 21st Recommending approval of the application of Mr. W. Curtis Bok, for permission to serve at the same time as director of the Camden National Bank of Camden, Maine, and as director of the Girard Trust Company of Philadelphia, Pa. Approved. Recommending approval of the application of Mr. Sohn P. Saul, Jr., for permission to serve at the same time as director of the Farmers National Bank of Salem, Virginia, and as director of the Colonial-American National Bank of Roanoke, Virginia. Approved. Recommending approval of the application of Mr. B. D. Foster, for permission to serve at the same time as director of The Third National Bank of Pittsburgh, Penna., and as director of the Brookline Savings and Trust Company of Pittsburgh, Pennsylvania. Approved. The meeting adjourned at 12:35 p. m. Assistant Secretary. 4pProved: (Executive Committee) ft AUXILIARY MINUTES (August 26, 1931) • Reports of Standing Committee dated August 21st, 24th and 25th, recommendlug changes in stock at Federal Reserve Banks, approved as follows: APPLIAIIIAnt_for ADDITIONAL Stock: District No. 7. First National Bank, Clinton, Ind. Detroit Savings Bank, Detroit, Mich. Shares 9 120 129 44 44 District No. 5. First National Bank, Pearisburg, Va. (V.L.Suc. by Giles County Bank and Trust Company) 105 105 District No. 7* Noel State Bank, Chicago, Ill. (Insolvent) weYne Savings Bank, Wayne, Mich. (Insolvent) 840 90 930 39 17 56 4411cations for SURRENDER of Stock: 2. First National Bank, Sea Bright, N. X. (V.L.Suc. by First National Bank in Sea Bright) District No. 9. First National Bank, La Moure, N. Dak. (V.L.Suc. by First State Bank) erchants National Bank, Willow City, N. Dak. (Insolvent) bistrict No. 11. First National Bank, Mineral Wells, Tex. (V.L.Abs. by State National Bank) 60 Total 60 1,195 0 , Reports of Standing Committee dated August 20th and 26th, recommending action 4 a PPlications for fiduciary powers by the following banks: " APP11 ---2E -P-L DISTRICT NO. 2. NEW YORK: First National Bank in Sidney. (3365) DISTRICT NO. 7. ILLINOIS: The Second National Bank of Belvidere. (Supplementary. Powers 5 to 9 inclusive.) Assistant Secretary. 41*oved:
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