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1604 A meeting of the Board of Governors of the Federal Reserve System was held in Washington on Friday, August 28, 1936, at 11:00 a. m. PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Broderick Szymczak Davis Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on August 27, 1936, were approved unanimously. Telegrams to Messrs. Kimball and Clark, Secretaries of the Federal Reserve Banks of New York and Atlanta, stating that the Board approves the establishment without change by the New York bank on August 27, 1936, and by the Atlanta bank today, of the rates of discount and purchase in their existing schedules. Approved unanimously. Memorandum dated August 27, 1936, from Mr. Thomas, Assistant Director of the Division of Research and Statistics, recommending the temporary appointment for a period of three months of Mrs. Catherine Marie Counts as a statistical clerk in the Division, with salary at the rate of M20 per month, effective as of the date upon which she enters 1605 -2- 8/28/36 upon the performance of her duties. Approved unanimously. Letter to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: "This refers to your letter of August 17 to Mr. Smead, with which you inclosed a copy of the official organization chart of your bank. "It is noted from the chart that the Division of Research and Statistics is placed under Assistant Vice President Olson. It is assumed that this arrangement is of a temporary character and that you will later take up with the Board the question of the designation of the person to assume charge of the Division. With reference to the placing of the Securities Exchange Unit under Assistant Cashier Dawes, you were advised in the Board's letter of July 29 that it is expected that a representative of the Board's Division of Security Loans will visit your bank in the near future and action upon the recommendation contained in your letter of July 22 will be deferred until after such visit. Otherwise the chart seems to be satisfactory and the Board has no changes to suggest therein." Approved unanimously. Letter to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: "Reference is made to your letter of August 21, stating that one of your employees, Mr. William Turner, who has been working on the W. P. A. closed bank study, will have been without a Form A classification for six months on September 1, and requesting the Board's approval of the transfer of this employee, without reduction in salary, to the Bank Relations Division until the end of the year. You also state that you expect to place Mr. Turner in a position warranting his present salary after December 31. "In view of the statements contained in your letter the Board approves the assignment of Mr. Turner to the Bank Relations Division at his present salary of $5,500 for the remainder of this year." Approved unanimously. 1606 8/28/36 Telegram to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: Mr. Young's letter August 25. Board approves appointment of Frank A. Ford as assistant examiner for Federal Reserve Bank of Chicago at salary rate of 3,000 per annum. Please advise effective date." Approved unanimously. Letter to Mr. Gettemy, Assistant Federal Reserve Agent at the Federal Reserve Bank of Boston, reading as follows: "This refers to your letter of August 19, 1936, and its inclosures, relating to the status of North Berwick Company, North Berwick, Maine, as a holding company affiliate under the provisions of section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935. "The Board has determined that North Berwick Company is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935, and, accordingly, that company is not a holding company affiliate for any purposes other than those of section 25A of the Federal Reserve Act. "Inclosed herewith is a letter to North Berwick Company advising it concerning the Board's action in this matter. Please transmit the letter to that company. A copy of the letter is also inclosed for your files. "As you will note, the Board expressly reserves the right to make a further determination of this matter at any time on the basis of the then existing facts. In this connection, it is requested that you advise the Board if, at any time, you believe this matter should again be considered by it." Approved unanimously, together with a letter to the North Berwick Company, North Berwick, Maine, reading as follows: "This refers to your company's request that the Board determine whether it is a holding company affiliate of The 1607 8/28/36 -4- "North Berwick National Bank, North Berwick, Maine. "The Board understands that The North Berwick National Bank has 500 shares of common stock and 1,250 shares of nonvoting preferred stock outstanding; that your company owns or controls 240 shares of the common stock and voted 231 shares of such stock at the preceding election of directors of the bank; that 456-2/3 shares of stock were voted at such election; that your company was organized and is operated for the purpose of manufacturing woolen goods; and that your company does not own or control any stock of, or manage or control, any bank other than The North Berwick National Bank. "Section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935, defines the term 'holding company affiliate' as follows: 1(c) The term "holding company affiliate" shall include any corporation, business trust, association, or other similar organization-(1) Which OMB or controls, directly or indirectly, either a majority of the shares of capital stock of a member bank or more than 50 per centum of the number of shares voted for the election of directors of any one bank at the preceding election, or controls in any manner the election of a majority of the directors of any one bank; or (2) For the benefit of whose shareholders or members all or substantially all the capital stock of a member bank is held by trustees. 'Notwithstanding the foregoing, the term "holding company affiliate" shall not include (except for the purposes of section 23A of the Federal Reserve Act, as amended) any corporation all of the stock of which is owned by the United States, or any organization which is determined by the Board of Governors of the Federal Reserve System not to be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies.' "Your company obviously comes within the broad definition of the term 'holding company affiliate' contained in the first paragraph quoted above, since it owns or controls more than 50 per centum of the number of shares voted for the election of directors of The North Berwick National Bank at the preceding election. However, on the basis of the facts 1608 -5- 8/28/36 "stated above, the Board has determined that your company is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of the last paragraph quoted above, and, accordingly, your company is not a holding company affiliate for any purposes other than those of section 23A of the Federal Reserve Act. Therefore, it is not necessary for your company to obtain a voting permit in order that the stock which it owns or controls of The North Berwick National Bank may be voted. "If, however, your company acquires control of any bank other than The North Berwick National Bank, or the facts should at any time otherwise differ from those stated above to an extent which would indicate that your company might be engaged as a business in holding the stock of, or managing or controlling, banks, this matter should again be submitted to the Board for its determination. The Board reserves the right to make a further determination of this matter at any time on the basis of the then existing facts." Letter to Mr. Day, President of the Federal Reserve Bank of San Francisco, reading as follows: "The Board is in receipt of Mr. Sonnets letter of August 5, 1936, inclosing revised copies of Schedule 0 (Form 105b) for the Farmers & Merchants Bank, Provo, Utah, showing as an affiliate the General Assets Company, for the four most recent call dates. His letter of August 10, 1936, with respect to this matter has also been received. "The correspondence between your bank and the member bank which was attached has been noted. It would appear that the bank has been in error in having reported on Schedule 0 the amount of its investment in the General Assets Company as $1.00 and in not submitting and publishing reports of this affiliate for past call dates. With the understanding that there has been no deliberate failure of the Farmers & Merchants Bank to report correctly on Schedule 0 its investment in the General Assets Company, publication of reports of the affiliate for the November 1, 1935, December 31, 1935, March 4, 1936, and June 30, 1936, calls will not be required at this time. "The member bank apparently understands that the transfer of its investment in the General Assets Company from its 1609 -6- 8/28/56 "investment account to /Real Estate Owned/ made as of July 27 brings this affiliate within the terms of the Board's general waiver and that submission and publication of reports covering the affiliate will not be required, therefore, in the future. The member bank should be informed that as long as an indebtedness of the affiliate to the member bank or an investment in the stock of the affiliate is carried on the books of the bank in an amount exceeding $5,000, submission of Form 220 for this affiliate and publication of the report is required." Approved unanimously. Letter to the presidents of all Federal reserve banks, transmitting forms and instructions in connection with the next call for condition reports of State member banks and their affiliates. Approved unanimously. Letter to Mr. Knoke, Assistant Vice President of the Federal Reserve Bank of New York, reading as follows: "Receipt is acknowledged of your letter of August 20, 1956, with which you inclosed a copy of a letter dated February 8, 1932, and a copy of a letter dated August 10, 1936, from the Danmarks Nationalbank, with respect to your correspondent relationships with that institution. "Prior to receipt of your letter of August 20, it appeared from the records of the Board, particularly from Governor Harrison's letter of August 11, 1953, listing the correspondent relationships of the New York bank with foreign banks, and your letter of August 1, 1936, that formal correspondent relationships had been established with the Danish central bank. "It is noted, however, from the copy of letter dated February 8, 1932, from the Danmarks Nationalbank that the bank did not accept the terms and conditions, contained in your letter of January 18, 1932, upon which the Federal Reserve Bank of New York would be willing to open an account for the Danish bank upon its books, and that the letter of August 10, 1956, does not constitute an acceptance of the terms and conditions set forth in your letter of August 1, 1936. 1610 -7- 8/28/36 "It is understood from our telephone conversation that the Danmarks Nationalbank, prior to 1932, made a small deposit with your bank which has been maintained up to the present time, and it is assumed that if the bank should wish to increase the amount now on deposit you will give consideration to the establishment of formal correspondent relationships and that you will advise the Board fully regarding the matter." Approved unanimously. Letter to Mr. Leach, President of the Federal Reserve Bank of Richmond, reading as follows: "This refers to your letter of August 18, 1936, advising that the Federal Reserve Agent's representative in the Discount Department at your bank has had single control over the paper pledged by the bank with the agent as collateral for Federal Reserve notes, for which proper receipts were issued to the bank. Since this procedure is in accordance with the provisions of the Federal Reserve Act, the Board will offer no objection to your continuing to have Mr. T. C. Gibson, Alternate Assistant Federal Reserve Agent, hold single control over the paper pledged by the Federal Reserve bank with the Federal Reserve Agent as collateral for Federal Reserve notes.“ Approved unanimously. Letter to Mr. Dillistin, Assistant Federal Reserve Agent at the Federal Reserve Bank of New York, reading as follows: "Reference is made to your letter of August 1, 1936 relating to the question whether Mr. John Milton may continue to serve as director of Hudson County National Bank, Jersey City, New Jersey and of United States Trust Company of Newark, Newark, New Jersey, in view of the provisions of the Clayton Act and of section 2(d)(5) of the Board's Regulation L. "The information previously submitted showed that Newark and Jersey City were not 'adjacent' within the meaning of section 2(d)(5) since they were not readily accessible to each other, and the only remaining question there- 1611 8/28/36 -8- "fore was whether they were 'contiguous'. The answer to this question depended upon whether the corporate limits of Newark extended to the middle of Newark Bay so as to touch the corporate limits of Jersey City at that point. The letter from Mr. Boettner, Corporation Counsel of the City of Newark, a copy of which you inclosed with your letter of August 1 states that in his opinion the corporate limits of the City of Newark extend only to the high water mark. "In the circumstances, it appears that Mr. Milton's services as director of the Hudson County National Bank and of United States Trust Company of Newark are not prohibited by the Clayton Act." Approved unanimously. Thereupon the meeting adjourned. Assistant Secretary.
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