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A meeting of the Federal Reserve Board was held in Washington on Thursday, August 3, 1933, at 11:15 a. in. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Tames Thomas Szymczak O'Connor Mr. Er. Mr. Mr. Mr. Mr. Mr. Merrill, Secretary Carpenter, Assistant Secretary Wyatt, General Counsel Paulgpr, Chief, Division of Examinations Wingfield, Assistant Counsel Leonard, Federal Reserve Examiner Chamberlin, Federal Reserve Examiner. Messrs. I. Turner Moore, E. S. Richardson and W. A. Rigg, President, Vice President and General Counsel, and Director, respectively, of the 13el'ke County Trust Company, Reading, Pennsylvania, were also present. Iloare Mr. reviewed the considerations which led up to the merger on Tune 30, 1933) of the old Berks County Trust Company with the Colonial Northeastern TI/lat Conpany of Reading, a nonmember, and said that when the proposed conof the banks was taken up with the Federal Reserve Bank of PhilacielPhia, it was stated to the officers of the Federal reserve bank that the C°1°134a1 Northeastern Trust Company would not consent to the consolidation ilttlesa it was to be understood that the new bank was to have membership in the 1, ederal Reserve System; that the officers of the Federal Reserve Bank of 1Phia apparently felt that the merger would considerably strengthen " -Q. the 4"ber trust company, and stated that while they could not commit the ' Nu_ Reserve Board on the matter of membership for the new institution, r th elt they could recommend the new institution for membership. Mr. kooz.„ qg also stated that the new institution had followed the general policy dete 1141ned by the Federal reserve bark, had done everything it could to 9 -2- 8/3/33 carrY out the wishes of the Federal reserve bank with regard to iiuprovement of the trust company's condition, and would make all other improvements aUggested as soon as possible; that the new trust company was licensed by the Secretary of the Treasury as a member bank after the bank holiday; that tha Federal reserve bank stock held by the old trust company was indorsed back to the Federal reserve bank when the application for new stock was tilecle, but that dividends thereon have been paid to the new institution; that since the merger, the new institution has carried at the Federal Reserve Bank of Philadelphia the reserves required of a member bank, and enjoyed the privileges of rediscounting as a member bank until last week when ite right to rediscount was questioned; and that when it was suggested by the Federal reserve bank that in lieu of rediscounting as a member bank the truzi.. e 4 company apply for loans as a nonmember, an attempt was made to secure the necessary approval from the State bank authorities of Pennsylvania, who 4qvised that they regarded the trust company as a member of the Federal ' d"e e- System, and declined to give such approval. Moore also reviewed the banking situation in Reading, calling 4tt ation to the fact that of the six banks in Reading, following the merger Of the two institutions forming the Barks County Trust Company, the trust ()rt1138.1:11r and a smaller State institution are the only banks open at the laseat time, and stating that if it becomes known that the trust company 18 1133t a member, confidence in the institution will be further shaken. He stated that it is felt, because of the efforts which are now being kaxie by the Farmers' National Bank and Trust Company and the Pennsylvania 11*tlat C°mPany, both of which are closed, to sell stock in order that they 8/3/33 -3- 4RY reopen, that if the Berks County Trust Company should attempt to sell additional capital stock in order to improve its condition and comply with the requirements of the Federal reserve bank, such action would be interPrsted as an attempt to defeat the efforts of the other two banks to reopen. Governor Black stated that while the Federal Reserve Board desired to be as helpful as possible in the matter and regretted the misunderstanding which has arisen with regard to the status of the Berks County Trust Company, it must be made clear that the Board has not approved the new bank's application for membership, and that the main obstacle to a favorable consideration t° such application is the unsatisfactory condition of the trust company. 111 this connection, Mr. Morrill referred to the Board's letter of May 4, 19331 to lir. Austin, Federal Reserve Agent at Philadelphia, and the repreaetitatives of the Berke County Trust Company stated that, so far as they °°111d recall, the trust company had not been advised of the attitude of the B as set forth in that letter. Mr. Moore stated that the purpose of this meeting with the Federal Re8erve Board was to renew the request that the Board give further consider1 to the trust company's application for membership, because it is felt that the successful refinancing of the institution by the sale of additional et001c at the proper time depends upon the trust company being a member of the Pederal Reserve System. There followed a discussion as to the improvements which have been bY the trust company in its condition since the consolidation of the Q°11atit -klent banks, including changes in management, and as to the steps which "teht be taken by the trust company to further improve its condition and to 236 Imeet the situation in which it finds itself as a nonmember bank. At the conclusion of the discussion it was suggested that the representatives of the trust company discuss further with Mr. Paulger, Chief of the Division of Examinations, the condition of the institution, following Which a report would be made by Mr. Paulger to the Board regarding the toatter. Thereupon, Messrs. O'Connor, Moore, Richardson, Eigg, Paulger, Leonard, Chamberlin and Wingfield left the meeting. Mr. Hamlin stated that Mr. Frederic H. Taber, one of the directors Or the Reconstruction Finance Corporation, had requested of him, for the confidential information of the Corporation, advice as to the amount of 1°ane made by the Federal reserve banks to individuals, partnerships and corporations. Mr. Hamlin stated that, while it was not the policy of the l'eclaral Reserve Board to give out this information, there would seem to be 31° objection to its being furnished to Mr. Taber for the confidential use of the Corporation, and suggested that he be authorized to furnish the informa- ti°11 in a personal letter to Mr. Taber with the understanding that it is for the confidential use of the Corporation. The other members of the Board Ilresent expressed the opinion that there would be no objection to Mr. Hamlin 1\11111ehing, the information to Ur. Taber in the manner suggested. Governor Black stated that he had discussed further with Mr. the Director of the Budget, the matter of Mr. Riefler, of the 130Eird a Division of Research and Statistics, assisting in the work of ejlesinbli ling and analyzing statistical information for use by the President's "Ive Council in carrying out the purposes of the National Industrial 237 11 8/3/33 -5- Recovery Act, and that in accordance with authority granted at the meeting O]1 Ally 25 he had advised Lir. Riefler that the Board had agreed to release him temporarily from his present duties in the Division of Research and Statistics, in so far as is necessary, in order that he may render the clesired services, it being understood that there would be no change in his present status on the payroll of the Federal Reserve Board, and that in the rendition of such services it would be definitely understood that he was in 110 way representing, or authorized to express views on behalf of, the Federal Reserve Board as to the matters covered by his services. There was then presented a copy of an executive order signed by the President on July 27, 1933, establishing, pursuant to the authority vested hirj by the National Industrial Recovery Act, a Central Statistical Board to tormulate standards for, and to effect coordination of, the statistical eervices of the Federal Government incident to the purposes of that Act; the b°erd to consist of representatives designated by the Secretaries of tenor, Agriculture, Commerce and Labor, by the Governor of the Federal Reserve Board, by the National Recovery Administrator, and by the Ca=mittee °11 U°7srament Statistics and Information Services, and such other members "the President may designate or the Board may invite from time to time tor 1\111 or limited membership. The order also stated that the Central te*tistical Board shall have the power to appraise and advise upon all "hedialles of all government agencies engaged in the primary collection of "atieties required in carrying out the purposes of the National Industrial Rserv, -"erY Act, to review plans for tabulation and classification of such 4t4tisti statis--es, and to promote the coordination and improvement of the 8/3/33 -6_ tical services involved. The Governor designated Mr. Goldenweiser, Director Of the Division of Research aad Statistics, as a representative on the Central Statistical Board. The designation of Mr. Goldenweiser was approved. The following matters were then considered and acted upon by the 130e.rd: Memorandum dated August 2, 1933, fromILIr. Goldenweiser, Director of the Division of Research and Statistics, transmitting and recommending "ceptance of the resignation of Mrs. Gladys C. Wilson, a stenographer in the Division, who is discontinuing her service with the Board in order that her husband may remain in the Department of Commerce. The namorandim also ' leconraended that, in accordance with the usual custom, the Board grant to 4118• Wilson a leave of absence with pay of fifteen days, making her resig44ticn effective as of August 22, 1933. Resignation accepted as of the close of business on August 22, 1933, in accordance with Mr. Goldenweiser's recommendation. Letter to Mr. Stevens, abairman of the Federal Reserve Bank of 'Ilicago, stating that in accordance with the action taken by the board of d4rectar8 of the Chicago bank at its meeting on Tuly 28, 1933, advice of 114/eh waa transmitted in Yr. Stevens' letter of July 29, the Board approves 6. a elarY at the rate of "i4,800 per annum for Mr. Arthur IL Vogt as 4131-etEuit Cashier at the Detroit branch. Approved. Letter to Mr. Stevens, Federal Reserve Agent at Chicago, stating ha. the Board notes from his letter of Tuly 28, 193'6, that, at the meeting 239 8/3/33 -7- of the board of directors of the Federal Reserve Bank of Chicago on that (late, Mr. C. R. McKay, Deputy Governor, was selected as a member of the Federal Open Market Committee representing the Seventh Federal Reserve District. Approved. Telegram dated August 2, 1933, to Mr. Curtiss, Federal Reserve Agent at Boston, approved by six members of the Board, referring to the 4PP1ication of the Waltham Trust Company of Waltham, Massachusetts, for PeZaission to withdraw immediately from membership in the Federal Reserve SYstent and stating that the Board waives the usual requirement of six 41°11ths notice of intention to withdraw, and that, accordingly, upon 411rrender of the Federal reserve bank stock issued to the Waltham Trust C(7.01Pany, the Federal Reserve Bank of Boston is authorized to cancel such latock and make a refund thereon. Approved. Letter to Mr. Stevens, Federal Reserve Agent at Chicago, in reply t° hie letter of Tuly 14 and telegram of July 21, 1933, transmitting ad4itional information in connection with the application of the National 8°Il4evard Bank of Chicago for permission to exercise fiduciary powers, and l'el"stinc reconsideration of the application by the Federal Reserve Board. The rePlY requested certain information with regard to the management of the Ilew national bank; referred to the assets classified as slow, doubtful, 44 1°es which were taken into the national bank from the old Boulevard 41443 Bank, which resulted in an impairment in the bank's surplus; and Ilt'llt°C1 that the Board does not feel that the subordination of a,100,000 240 8/3/33 Of deposits by the William Wrigley, Tr. Company, which does not reduce the aggregate liabilities of the bank but merely postpones the exercise of the rights of the subordinated depositor against the bank, accomplishes elimination of losses from the bank. The letter also stated that before a further report is submitted to the Board the agent may wish to consider this matter with the national bank examiner who made the examination of the Boulevard Bridge Bank as of Ilexch 25, 1933, and determine whether any inforation developed subsequent to such examination has affected, in any way, his views with regard to whether the national bank Should exercise trust POWers. Approved. Reply to a letter dated July 3, 1933, from Ur. Wood, Federal Re"I've Agent at St. Louis, with regard to the question whether a new State balik with a capital of 25,000 and situated in a place having a population 11°1 exceeding three thousand inhabitants is eligible for admission to rtibership in the Yederal Reserve System. °I' The reply referred to section the Federal Reserve Act, as amended by the Banking Act of 1933, and 4t4ted that, in view of the provisions of the law contained in that section, Board is of the opinion that a State bank organized on or after Awe 16 '1933, which is situated in a place haying a population not exceeding till'ee thousand inhabitants and is entitled to the benefits of insurance 411cler section 12B of the Federal Reserve Act, as amended by the Banking Act O1 1933, is eligible for admission to membership in the Federal Reserve Y.stera, if, , at the time of admission, it has a capital of not less than )000 6 Approved. 241 8/3/33 Reply to letter dated Tuly 26, 1933, from Mr. Geo. L. Browning, Los Angeles, California, protesting against the granting of a permit, and requesting a hearing before the Board before any permit is granted, to the Seaboard National Securities Corporation to vote the stock of the Seaboard National BRnk of Los Angeles, California, which it owns or controls. The tePly stated that the Board understands from Mr. Browning's letter that the tational bank is a subsidiary of the securities corporation and that he is the largest intnority stockholder in the national bark; that the Board has llot received an application from the Seaboard National Securities Corporafor a voting permit; and that, if and when such an application is riled, it will be agreeable to the Board to receive and consider any statewhich Mr. Browning may desire to make with reference to the desirability of granting a permit to the securities corporation. Approved. Report of Standing Committee dated August 2, 1933, recommending "oval of the following change in stock at a Federal reserve bank: A 14 -kJ-cation for SURRENDER of Stock: 1 ,strict No. 8. 4A-Laland Savings Bank, St. Louis County, Missouri. (Insolvent) Shares Approved. Thereupon the meeting adjourned. 41)15:11nred: K, c,/ Governor. 26 26
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