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1089 A meeting of the Board of Governors of the Federal Reserve Syst-t414" held in Washington on Tuesday, August 3, 1937, at 12:15 p. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter retellred t0 and the action stated with respect thereto was taken by the Board: The minutes of the meeting of the Board of Governors of •the Peder., -3- Reserve System held on Aupust 2, 1937, were approved unani1°11813, . Telegrams to Mr. Stewart, Secretary of the Federal Reserve ila'6( or St 'Louis, Mr. McKinney, President of the Federal Reserve IDalias, and Mr. Sargent, Secretary of the Federal Reserve °t San F rancisco, stating that the Board approves the establishwithout change by the respective banks today of the rates of disElnd purchase in their xisting schedules. Approved unanimously. Mem orandum dated July 30, 1937, from Mr. Parry, Chief of the vistori or 401/4q, Security Loans, recommendin the transfer of Mr. Bonnar Read Of the Department of Security Loan Regulation of the eserve Bank of San Francisco, to the Board's Division of 1090 813/37 See4r4Y Loans as Special Assistant, with salary at the rate of 3,200 Per'`mnumy effective as of September 7, 1937, or such later date as the transfer becomes effective. The memorandum stated that it was assum-, that inasmuch as Wir. Brown is at present a member of the Retiremerit s Ystea of the Federal Reserve Banks it would not be necessary for hira t take the usual physical examination. Approved unanimously. There vas submitted a recommendation from Messrs. Spurney and IC°P/Datig that the following persons, who had been selected in accordellee 'dth the authority granted by the Board on July 12, 1937, and who 11`1Dassed sa tisfactory physical examinations, be appointed as char341ell in the Board's new building, each with salary at the rate of 5C4 Per hour, a ffectiv as of August 3, 1937: Mrs. Ida :A. Beach Mrs. Elizabeth Rolando Mrs. Mamie L. Boltwood 13.4111t Approved unanimously. Tel egram to Mr. Sargent, Vice President of the Federal Reserve Or S.— ITancisco, reading as follows: thr veal ...Lour letter July 22, 1937 re application 'Cowlitz tirA Bank', Kelso, Tashington, for permission to reT ad,; 5,000 capital debentures. Purpose of the Boards re.14-ce.that authority of reserve banks to approve capital to uctlons under conditions of membership did not apply tior neductions below the amount required for the organiza- °f a national bank in that locality was to give the 8/3/37 -3- 7 Board opportunity to review cases which involve such reductions for which a bank's membership in the system might be t oral nat ed. "In view of the information submitted with your letter JulY 22, it does not appear that, if made, the amount of Lh? reduction of itself would be such as to warrant forfeiture of membership. The reserve bank, therefore, is hereby authorized to approve the proposed reduction if it fe ls1, that, as a practical matter, such reduction is justito be a close question in view of the c_leninuTedis growth of appears deposits. Board, however, has no inregarding the current status of bond account or ,solpt of appreciat ion or depreciation therein, which it elt would have a significant bearing on the application. a4 "Board interpose no objection to the retirement each sami-annual interest period of such small amounts will enable the bank to obtain the benefit of the rec',1sced interest rate offered by the Reconstruction Finance urPoration to banks complying with its requirements." Approved unanimously. Letter to Mr. Gidney, Vice President of the Federal Reserve Bank or New York, readin;4 as follows: 111 "Reference is made to your letter of July 27, 1937, reore:, . ting the opinion of the Board as to the applicability to provisions of section 8 of the Clayton Act as amended off ne services of certain individuals who are serving as . e,,,1?,are and directors of The Equitable Trust Company of " York and Manufacturers Trust Company, New York, New "It is understood that, in connection with the transwhereby Manufacturers Trust Company assumed the dei ilities and purchased substantially all of the assets bu of The Equitable Trust Company, as of the close of le88 June 5, 1937, certain directors and officers of th,..1! Tr- -Latter became directors and officers of Manufacturers bellt Co and that these interlocking relationships will spe,: - trina ed on or before August 5, 1937, except with rethe services of Messrs. Edward E. Steele and Spencer pann Ir., who are serving as officers of both trust cont -e8 and who are the only officers familiar with the de-Ls of certain very important trust accounts retained by act pc) 1:092 8/3/37 "The -4- Equitable Trust Company. Accordingly, the question is Presented whether these relationships come within the proof section 2(d)(6) and/or section 3(b) of the Board's Regulation L. "From the information submitted by the firm of Chadbon -rne, Wallace, Parke & Whiteside, counsel to both trust , , e° Pahies, in its letter of July 19, 1937, to you, it ap!,'ears that, although the corporate identity of The Equitable '-'rust Company still exists, Manufacturers Trust Company has :an / over all of its deposit liabilities, substantially . 4 1 Of its investment portfolio and loans and certain of ;6s trust accounts; that the assets of The Equitable Trust l omPahY now consist almost exclusively of cash and four ' 1as which were retained because of special relationships e° -, f2.sting between the respective borrowers and the estate the late Mr. Charles Hayden which holds all of the stock i the trust company except directors' oualifying shares; The Equitable Trust Company has no deposits and is not ace it rting any new business of any kind or character; that 1a substantial number of trust accounts which, however, it attempting to eliminate as rapidly as is consistent With sound fiduciary practice; and that it 'does no business at except such as may be necessary to wind up its prester effairs and such as may be necessary to protect the inof beneficiaries of presently existingtrust accounts, all of which are to be shifted as soon as conveniently proper.' Tr4st In View of these facts it appears that The Equitable Company is not at the present time engaged in the busiof banking as that term is ordinarily understood and bue sFef°re that it is 'not engaged in a class or classes of wii issa' in which Manufacturers Trust Company is engaged 2q111 the meaning of the exception set forth in section tici(6) of the Board's Regulation L, and that the prohibinotil e°htained in section 8 of the Clayton Act as amended is Or n°11 applicable to the services of directors, officers youerIP1°Yees thereof who are serving other banks. However, attention is directed to the fact that should The le Trust Company resume any regular banking activities in Ls° as to be 'engaged in a class or classes of business' Ilich other banks are regularly engaged a different conq would result. In this connection, it is noted that it s Possible that the trust company, instead of being ercTIdated and dissolved, will be sold by means of a sale iltlk"s stock, but that in such event, Messrs. Steele and t'' the only directors or officers who will be serving thaex trust companies after August 5, 1937, will cease to b e officers at or before the consummation of the sale. "Since the relationships involved appear to come within j 1093 8/3/37 -5- :the exception set forth in section 2(0(6) of the Board's L, it is unnecessary to determine the applicabil'AY of the provisions of section.3(b) of the regulation to sUch relationships." Approved unanimously. Ur. Morrill submitted a recommendation, which had been approved m ei per krtl— eonnel Committee, that the Board authorize the purchase of ro r the emergency room, soap, caster frames, chair casters, °LI) kIleeling pads, and perforated mats as listed in purchase orders 144* 1843, 1844, 1845, 1846, 1847, 1848 1849, 1851, 1852, 1854, 1866, 14 1868, 1869, 1870 and 1871, at a total cost of $515.92, and of orbent cotton and adhesive plaster from the Procurement Division tthe Treasury Department, as listed in purchase order No. 204, for tlee la the Board's new building. Approved unanimously. Thereupon the meeting adjourned. OAALalf S cretary. Chairman.
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