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I A meeting of the Executive Committee of the Federal Reserve Board waS held in Washington on Monday, August 5, 1935, at 11:30 a. m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Governor Thomas, Vice Governor Hamlin James Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Committee acted upon the following matters: Memorandum dated August 1, 19350 from Mr. Smead, Chief of the Division of Bank Operations, recommending that the temporary appointInent of Mrs. Ruth D. Jacquot as a comptometer operator in the Division, be extended for a further period until December 31, 19351 with no charge in her present salary at the rate of 41,440 per annum, and that, in Ilecordance with the Board's policy in such cases, she be required to fill out a special enrollment blank for admission to the retirement system and to submit to the required physical examination. The recommenda- tion was approved by three members of the Board on August 5. Approved. Memorandum dated August 2, 1935, from Mr. Smead, Chief of the Liv4-. -13-on of Bank Operations, recommending the appointment of Arthur -'ence Williams as a messenger in the Division, with salary at the r'ete4' 3 o ' L 4840 per annum, effective as of the date upon which he enters 111304 the performance of his duties after having passed a satisfactory PhY2ical examination. The recommendation was approved by three members Of the Board on August 3. Approved. ilS9 8/5/55 -2Letter dated August 5, 1935, approved by three members of the 8°41rd) to Mr. Young, Assistant Federal Reserve Agent at the Federal Re2erve Bank of Chicago, reading as follows: "Reference is made to your letter of July 25 making further inquiry as to the status of The City National Bank of Lansing, Michigan, which was absorbed by the Capital National Bank on December 26, 1931, but has not yet been placed in liquidation or receivership. "The office of the Comptroller of the Currency advises that there have been no new developments since those outlined in Deputy Comptroller Lyons' letter of February 6, 1935, a copy of which was sent to you with the Board's letter of February 26. Le are further informed that the litigation referred to in the previous correspondence has not yet been determined and that the case will probably be set for hearing at the fall term in the Circuit Court of Appeals." Approved. Letter dated August 2, 1935, approved by three members of the 13()al'd, to Mr. Wood, Federal Reserve Agent at the Federal Reserve Bank Or St. Louis, reading as follows: "Reference is made to your letter of July 17, 1935, in regard to acceptance by the 'Wood & Huston Bank', Marshall, Missouri, of certain trust accounts in violation of its general condition of membership. "It appears from the report of examination as of Vay 7, 1935, and the correspondence relative thereto, that the bank has had trust powers under State authority since 1927 but has not exercised such powers until recently; that since the previous examination the bank has opened a trust department and is now acting as trustee in three small accounts aggregating approximately $15,000; that the condition of the bank is such that you are unwilling to submit its aPplication for permission to exercise full trust powers to the Board until another examination of the institution has been made, but that you recommend that the bank be permitted to administer the three accounts in question until its application for trust powers can be acted upon. "In accordance with your recommendation, the Board will interPose no objection to the administration by the Wood & Huston Bank, larshall, Missouri, of the three trusteeships heretofore accepted by it, with the understanding that no additional fiduciary business Will be acquired prior to action by the Board on the bank's application for permission to exercise full trust powers, which it is 1690 8/5/35 -5- "understood will be submitted with your recommendation after the next examination of the bank if its condition at that time warrants such action." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of St. Johnsbury', St. Johnsbury, Vermont, from i-7200,000 to a50,000, pursuant to a plan which provides that approximately k!,44,000 of the released capital shall be used to eliminate a like amount of substandard assets, which are to remain the property of the bank; and that the remaining portion shall be credited to surPlus, all as set forth in your memorandum of July 27, 1955." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance tith Acting Comptroller Awalt's recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The Security National Bank of Huron', Huron, South Dakota, from 4,1,•2000000 to 0.25,000, in accordance with a plan which provides that the released capital shall be contributed to the Security National Corporation (an affiliate of subject bank which Owns the banking house) which will use the proceeds to retire its Indebtedness of approximately C75,000 to the Merchants Bank Building Company, all as set forth in Mr. Awalt's memorandum of July 20, 1935.1r Approved, together with a letter to Mr. Peyton, Federal Reserve Agent at the Federal Reserve Bank of Minneapolis, reading as follows: "Reference is made to the application of The Security National Bank of Huron, Huron, South Dakota, for permission to reduce its CO mmon capital from 4200,000 . to $125,000. In order that the First Bank Stock Corporation may vote the shares owned by it of the apPlicant bank, the Board authorizes you to issue a limited voting Permit to First Bank Stock Corporation, Minneapolis, Minnesota, under the provisions of Section 5144 of the Revised Statutes of the United States, as amended, to vote the stock owned or controlled of 1691 8/5/35 -4- "The Security National Bank of Huron, Huron, South Dakota, for the following purposes: 'At any time prior to October I, 1935, to authorize a reduction in capital stock, change in number of shares of stock and/Or change in par value of shares Of stock of such bank and to make such amendments to the articles of association and/or by-laws of such bank as shall be necessary for such purposes, provided that all action taken shall be in accordance with a plan which shall have been approved by the appropriate supervisory authorities.' "Please have the permit authorized herein prepared by counsel for the Federal Reserve Bank of Minneapolis in the usual form. It will be appreciated if you will mail to the Board for its records tWO executed copies of the permit issued by you under the authorization contained in this letter." Telegrams dated August 3, 1935, approved by three members of the 13°11rd) to 11;r. Sargent, Assistant Federal Reserve Agent at the Federal Re8el've Bank of San Francisco, authorizing him to issue limited voting Pellmits to the "Anglo National Corporation", San Francisco, California, 414 to the "Consolidated Securities Company", San Francisco, California, entitli__ lig such organizations, at any time prior to October 31, 1935, to vote the stock which they own or control in "The First National Bank (31 Longview'', Longview, Washington, to authorize an increase in the comIncla stock of such bank by the declpration of a stock dividend in the with 471(3unt of , i;'25,000, provided that such action shall be in accordance "approved by the Comptroller of the Currency. 4 PI Approved. Letter to Mr. Curtiss, Federal Reserve Agent at the Federal Re 8el've Bank of Boston, reading as follows: "The Board has reviewed the report of examination of the Federal Reserve Bank of Boston, made as at the close of business June 29, 1935, copies of which were left with you and Governor 1692 8/5/35 -5- "Young. "The two previous reports of examination of the Reserve Bank referred to certain criticisms in connection with the operations of the bank examination department, particularly with respect to the need for a closer follow-up of matters criticized in reports of examination of State member banks. The report of examination as of June 29, 1955, contains similar criticisms and the examiner again reports that assurances were given that the matters in the dePartment subject to criticism would be corrected and that the recommendations made to improve the operations of the department would be adopted. It is understood that in an effort to improve the operations of the department, the senior Assistant Federal Reserve Agent is to make a survey of the department and visit one or more of the other Federal Reserve banks for the purpose of studying the operations of their bank examination departments. "The Board would like to be advised as to the scope of the Proposed survey, the conclusions reached, and any changes which are made or contemplated in connection with the operations of the bank examination department." Approved. Letter to Mr. Kettig, Deputy Chairman of the Federal Reserve of Atlanta, reading as follows: "The Board has reviewed the report of examination of the Federal Reserve Bank of Atlanta made as at the close of business June 1, 1935, copies of which were left with you and Governor 'Iewton. "It has been noted (page 29) that consideration will be en to the examiner's recommendation that a periodical check ,e made to determine whether the properties owned by the Reserve ' Dank acquired in connection with advances to banks which failed, are rented and if proper remittances are being made by the field ; 1 ePresentatives for rents and collections. It will be appreciated 1 will advise of the results of the consideration of this ' r4nf la4:11,. r "The examiner has again commented (page 136) upon the numer( t1,118 discrepancies and errors found in connection with the examinaon of the Custodian Division - Reconstruction Finance Corpora'Ion at the Nashville Branch. A similar situation in the department existed at the time of the examination of the Nashville Branch as of November 12, 1932, in connection with which Mr. Newton advised under date of April 29, 1935, that the Assistant Cashier °f the Branch had been placed in charge of the Division and that it was believed that the examiner's criticisms had been largely 41Q') 8/5/35 -6- "eliminated. It will be appreciated if you will advise as to the steps which have been or will be taken to effect correction of the unsatisfactory situation in the department. "After the report and this letter have received the consideration of the Board of Directors of the Federal Reserve Bank the Board would appreciate advice from you as to what action has been taken or will be taken on the matters discussed." Approved. Letter dated August 3, 1935, approved by three members of the 13°8-rd, to Mr. Stevens, Federal Reserve Agent at the Federal Reserve Bank Of Chicago, reading as follows: "This refers to Mr. Young's letter of March 28, 1935, with regard to whether the directors of the Guardian Bank of Royal Oak, 110Yal Oak, Michigan, have been disqualified by reason of an agreement with the Guardian Detroit Union Group relating to the holding of the directors' qualifying shares in the Gunrdian Bank of Royal Oak. "It appears that, under such an agreement, each of the directors has deposited his qualifying shares with the Union Guardian Trust Company of Detroit, Michigan, as depositary, and the Guardian Detroit Union Group has deposited with the same depositary certain shares of the Guardian Detroit Union Group and that, upon the termination of the service as such of any director of the Guardian Bank of Royal Oak, the qun3ifying shares of the director in such bank become the property of the Guardian Detroit Union Group, and the shares which have been deposited by that Group become the Property of the director. The counsel for the Federal Reserve bank has expressed an opinion to the effect that in these circumtances the qualifying shares are not held by the directors of the la!lardian Bank of Royal Oak in compliance with the requirements of he laws of the State of Michigan applicable to the qualification Of directors of banks in that State, but feels that the question not entirely free from doubt. Mr. Young advised that the Banklng Department of the State of Michigan considers that no violation of law exists and that he is not entirely convinced as to the advisability of your office taking any action in the matter for the reason that it would have a far-reaching effect on the directorates Of other banks owned by the Guardian Detroit Union Group, and he requested the advice of the Board in the premises. "The question whether the directors of the Guardian Bank of R0Yal Oak are qualified under the laws of the State of Michigan 148 one primarily for determination by the State banking authoritles and, since the matter has been called to the attention of such 1 G94 8/5/35 -7- authorities for determination, the Board does not feel that it is necessary for your office to attempt to require any further action in the matter. However, if you have not already done so, it would 8eeM desirable, as a matter of cooperation with the State banking authorities, to call their attention to the questions raised by Your counsel for such consideration as the authorities of that State deem desirable. It has been noted that, in a memorandum addressed to Mr. Young by the counsel of your bank on December 17, 1964, reference was made to a possible ruling by a Federal Judge regarding an agreement covering qualifying shares of directors of banks similar to that described above but at that time your counsel 1?-134 not received a copy of such ruling. Of course, if such a rul'rig is now available, it would seem desirable to call it to the attention of the State banking authorities, and it would be appreciated if you would forward a copy of it to the Board for its information ." Approved. Letter to Mr. Clark, Assistant Federal Reserve Agent at the Ilederal Reserve Bank of Atlanta, reading as follows: "Reference is made to your letter of July 27 regarding the oancelation of a part of the Federal Reserve bank stock outstanding in the name of the First National Bank of Bainbridge, Bainbridge, •, ecrgia, in connection with the consolidation of that bank and the 16ainbridge State Bank, a nonmember bank, under the title 'First State National Bank of Bainbridge'. "The First State National Bank, under the provisions of the F?deral Reserve Act and the Board's Regulation I, and consistent with the opinion expressed by counsel for your bank, is entitled t.i0 retain Federal Reserve bank stock incident to the reduction of 5,000 in its surplus account, but is required to submit for cancelation 15 shares of Federal Reserve bank stock because of the reduction of 425,000 in its capital. The resolution of the Board of Directors of the First State National Bank prepared by counsel for your bank to be incorporated in the bank's application for cancelation of Federal Reserve bank stock appears to cover the facts in the case satisfactorily and to be in proper form. "In this connection, if Section 319 of the proposed Banking Act of 1935 (H. R. 7617) should become law, every member bank °lding Federal Reserve bank stock in an amount exceeding 6 percent of its aggregate capital and surplus will be required to surrender its excess holdings." Approved. I MI5 8/5/35 -3Telegram to Mr. Case, Federal Reserve Agent at the Federal Reserve Bank of New York, reading as follows: "Reference Dillistin's letter of July 26, 1955 and subsequent communications relating to question whether Northeastern Water and Electric Corporation and its subsidiaries are affiliates of Chemical Bank and Trust Company, New York, New York. Board understands that the trust company holds a majority of the common stock of Northeastern Water and Electric Corporation as collateral for a note; that such stock is registered in the name of the trust company; that, under the terms of the collateral note, the trust company may exercise all the rights and privileges of an absolute owner with reference to such stock; that in the contract of sale under which such stock was sold by the trust comPapy to the maker of the note the latter agreed to maintain in Office during the life of the note a management of Northeastern Water and Electric Corporation satisfactory to the trust company; and that the common stock as a class elects two-thirds of the corporation's directors. On the basis of these facts the Board IS of the opinion that Northeastern Water and Electric Corporation and its subsidiaries are affiliates of Chemical Bank and Trust Company. As you know, under the provisions of section 525 of the Banking Act of 1935 as it passed the Senate, the waiver of reports of affiliates of a State member bank by the Board would be authorized if in the Board's judgment such reports are not necessary to disclose fully the relations between an affiliate and the State member bank and the effect thereof upon the affairs of the bank. If this provision should be enacted into law, the Chemical Bank and Trust Company may wish then to take up further with the Board the question whether further reports by the Northeastern Water and Electric Corporation and its subsidiaries will be required." Approved. Letter dated August 3, 1935, approved by three members of the 13°eLrd, to Mr. Case, Federal Reserve Agent at the Federal Reserve Bank of New York, reading as follows: "Consideration has been given to the request for a ruling made by Mr. A. M. White, Jr., as to the applicability of section 32 of the Banking Act of 1953 to his service as trustee of Brooklyn Trust Company, Brooklyn, New York, and as general partner of White, Weld & Co., New York, New York. 1696 8/5/35 -9- "It appears from the information which you have submitted that although the firm was originally organized in 1895 primarily for the purpose of dealing in securities, that phase of its business has decreased in importance, and its brokerage business has increased in importance, with the result that for the three years 1932 to 19340 inclusive, the underwriting, flotation and distribution of securities constituted approximately 1.4 percent of the total volume of the business transacted and ,Droduced approximately 7.2 percent of its total profits, whereas its brokerage business represented approximately 95 percent of the total volume and produced approximately 78 percent of the total profits. "In view of the information submitted, the Board sees no reason to differ with the conclusion reached by you and by counsel for your bank that section 32 should not be regarded as applicable at this time to the relationships referred to in the first paragraph of this letter, and it will be appreciated if you will so advise Mr. White. "Since it appears that the firm of White, Weld & Co. has heretofore engaged to a considerable extent in the underwriting, flotation and distribution of securities, 47.7 percent of its total Profits having been derived from transactions of this kind in 1930, it is suggested that you call the particular attention of Mr. White to the fact that a change in the character of the business now being done by the firm might result in a different conclusion from that set out above." Approved. There were then presented the following applications for changes in stock of Federal reserve banks: 1 for ADDITIONAL Stock: ,§11.cations 4.J4Atr.121._a21_12. The Caldwell National Bank, Caldwell, New Jersey The First National Bank of High Bridge, High Bridge, New Jersey 'ae North Arlington National Bank, TheNorth Arlington, New Jersey First National Bank and Trust Company of Summit, Summit, New Jersey 'ae First National Bank of Canton, rm, Canton, New York 'ne Peninsula National Bank of Cedarhurst, Cedarhurst, New York Shares 15 3 2 2 2 2 1697 8/5/35 -10- for ADDITIONAL Stock: (Continued) District No. 2. _SContinuedi The Merchants National Bank of Ounkirk, Dunkirk, New York The First National Bank of Glen Cove, Glen Cove, New York The Long Island National Bank of Hicksville, Hicksville, New York The Wheeler National Bank of Interlaken, Interlaken, New York The Sullivan County National Bank of Liberty, Liberty, New York The National Bank of Newburgh, Newburgh, New York The First National Bank of Olean, Olean, New York The First National Bank of Perry, Perry, New York The First National Bank and Trust Company of Tuckahoe, Tuckahoe, New York Ridgefield Park Trust Company, 0 Ridgefield Park, New Jersey Qtate Bank, Chatham Village, N. Y., T Chatham, New York 'he Bank of Farmingdale, Farmingdale, New York ....Loral Park Bank, , Floral Park, New York 'lean Trust Company, Olean, New York Shares 3 1 24 52 2 2 12 1 5 27 15 6 45 5 Dia+ • e Abington National Bank of Clark's Summit, , Clark's Summit, Pennsylvania 'he Keswick National Bank of Glenside, T,Glenside, Pennsylvania "e Hershey National Bank, Th Hershey, Pennsylvania e Union National Bank of Jersey Shore, Jersey Shore, Pennsylvania • Farmers National Bank of Liberty, L T iberty, Pennsylvania ' 4e Central National Bank of Mount Union, Mount Union, Pennsylvania "e National Bank of Penbrook, Th Pe nbrook, Pennsylvania e Richland National Bank, Richland, Pennsylvania 29 24 60 1 1 1 222 1';98 8/5/35 -11-- iatiOns for ADDITIONAL District No. 3,, Continued The Peoples Savings and Trust Company, Hazleton, Pennsylvania Fe-rmers Bank and Trust Company of Lancaster, Lancaster, Pennsylvania Gimbel Brothers Bank and Trust Company, Philadelphia, Pennsylvania klatri t No 4 The Farmers Bank of Bellville, Bellville, Ohio The Fifth Avenue Savings Bank Company, Columbus, Ohio The Home Banking Company, Gibsonburg, Ohio The First-Mason Bank, Mason, Ohio The Home Banking Company, , St. Marys, Ohio -emonomy Bank of Ambridge, y, Ambridge, Pennsylvania uormont Savings & Trust Company, Dormont, Pennsylvania Homewood Bank at Pittsburgh, Pittsburgh, Pennsylvania The First National Bank of Falmouth, im Falmouth, Kentucky Ine Louisa National Bank, Louisa, Kentucky The First National Bank of 6omerset, Somerset, Kentucky '"e Lincoln County National Bank of Stanford, 8 Stanford, Kentucky ellefontaine National Bank, Bellefontainc, Ohio the Cleves National Bank, 1,, Cleves, Ohio 'Lle First National Bank of Convoy, rin, Convoy, Ohio '"e First National Bank of Girard, T Girard, Ohio he Peoples National Bank of Greenfield, G. Greenfield, Ohio l'eenville National Bank, Greenville Ohio e First National Bank of Greenwich, Greenwich, Ohio Shares 15 5 5 9 1 13 1 1 9 9 27 2 6 1 3 9 1 147 1 G99 815/35 —12- -11P-___ttions for ADDITIONAL Stock: CContinued) No. 4. tgotinued/ The First National Bank and Trust Company of Hal lton, Hamilton, Ohio The Peoples National Bank of New Lexington, New Lexington, Ohio The National Bank of Orrville, Orrville, Ohio The First National Bank of Racine, Racine, Ohio First National Bank in St. Clairsville, St. Clairsville, Ohio Iran liert National Bank, Van Wert, Ohio The First National Bank of Sipesville, • Sipesville„ Pennsylvania 'irst National Bank in Tarentum, Tarentum, Pennsylvania District No 5 The Second National Bank of Hagerstown, Hagerstown, Maryland Farmers and Merchants Bank of Lawrenceville, Lawrenceville, Virginia illAttiSLIO_ 7 First National"Bank and Trust Company rn, of Evanston, Evanston, Illinois ' Lie National Bank & Trust Company of Sycamore, • Sycamore, Illinois ▪ First National Bank in Burlington, Burlington, Iowa First National Bank of Hampton, Hampton, Iowa "le AmerLean National Bank of Kalamazoo, p Kalamazoo, Michigan '°mmunity National Bank of Pontiac, , Pontiac, Michigan '1°1stein State Bank, Holstein, Iowa "illiams Savings Bank, 1 Williams, Iowa he First State Savings Bank, ,, Bronson, Michigan 4tle Peoplets Savings Bank of Grand Haven, C!",and Haven, Michigan --e home State Bank of South Milwaukee, 8cuth Milwaukee, Wisconsin Shares 6 3 1 6 2 10 157 15 3 18 4 9 24 2 6 6 4 2 12 1 73 8/5/35 -13- APP.112.q4.2211_DrADDITIoNALL.qto_tasaatisa.til D istrict N 9.Jo The Iron River National Bank, Iron River, Michigan Farmers State Bank of Worden, Warden, Montana Shares 1 1 tank of Carthage, Carthage, Missouri The Colorado National Bank of Denver, Denver, Colorado National Bank in North Kansas City, North Kansas City, Missouri The Security National Bank of Duncan, Duncan Oklahoma First National Bank in Frederick, Frederick, Oklahoma The National Bank of McAlester, McAlester, Oklahoma The Citizens National Bank of Muskogee, Muskogee, Oklahoma The First National Bank of Kemmerer, Kemmerer, Wyoming 90 1 9 1 6 9 3 125 Total 7 751 45 45 Security National Bank of Everett, Everett, Washington ttions for SURRENDER of Stock: The Flatbush National Bank of Brooklyn in New York, New York, New York PlaWtaiLllt_AL The Scottsville National Bank, Scottsville, Virginia 60 Total 60 105 Approved. Thereupon the meeting adjourned. Secretary. Approved: Governor.
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