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A meeting of the Federal Reserve Board was held in Washington on Tuesday, August 9, 1932, at 3:10 p. PRESENT: Governor Meyer Mr. Miller Mr. Tames Mr. Magee Mr. Pole Mr. WieClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor Mr. Wyatt, General Counsel. The Board considered and acted upon the following matters: Telegram dated August 6, 1932, from the Governor of the Federal Reserve Bank of Richmond; letter dated August 8, 1932, from the Secretary Of the Federal Reserve Bank of New York; and telegrams dated August 8, 1932, from Deputy Governor Paddock of the Federal Reserve Bank of Boston, and the Secretaries of the Federal Reserve Banks of St. Louis and Minneapolis, adof the establishment by the Federal Reserve Bank of Boston of a rate °I. 5 1/2%, and by the Federal Reserve Banks of New York, Richmond, St. 1,0111.8 etd Minneapolis of a rate of fe% for all discounts for individuals, partner- ehiPs and corporations under the provisions of the third paragraph of section 13 or the Federal Reserve Act as amended by the Act of Tuly 21, 1932, effective the first business day following that on which the respective rates 41'e ePproved by the Federal Reserve Board. After a discussion, the rates of 6% established by the Federal Reserve Banks of New York, Richmond, St. Louis and Minneapolis were approved, effective August 10, 1932, but action on the 5 1/2% rate established by the Boston bank was deferred for further consideration. Telegram dated August 5, 1932, from the Chairman of the Federal Reserve 1411* of Cleveland stating that the board of directors of the bank, at its Illeetitg on that date, established a minimum rate of 5 1/2% for discounts for partnerships and corporations under the third paragraph of 126 8/9/32 section 13, as amended by the act of July 21, 1932. The Assistant Secretary reported that the Chairman of the Cleveland bank called on the telephone and stated that his telegram was being sent merely as a matter of record; that the Board's wire of August 5, 1932, with regard to a spread of rates for discounts Made in accordance with the amendment, had been received, and that the matter would again be taken up with the executive committee of the bank. Noted. Telegram dated August 5, from the Chairman of the Federal Reserve Bank of Chicago stating that the executive committee of the bank had aPproved a minimum rate of 5 1/2% and a maximum rate of 7% for discounts to itdividuals, partnerships and corporations, in accordance with the provisions ( If the third paragraph of section 13 of the Federal Reserve Act, as amended by the act of July 21, 1932, and that inasmuch as the Board's telegram of Atigu8t 5, 1932, had been received by the bank subsequent to the meeting of the executive committee, the matter of the rate would be considered further "a later meeting of the committee and his telegram was merely for the information of the Board. Noted. Telegraphic reply to a telegram dated August 8, 1932, from the Q"erlior of the Federal Reserve Bank of San Francisco requesting authority tc)r at advance, in accordance with the provisions of section 10(b) of the ederal Reserve Act, as amended, to the Old National Bank and Union Trust CoMPanY, Spokane, Washington, of not exceeding $2,000,000, for a period of thre °' months, at a rate of 5 1/2% per annum, and on the security of real es1 tate loans and other loans totaling $2,551,000; Governor Calkins stating that the t ational bank has lost approximately $4,300,000 of deposits since April, I27 8/9/32 -3-, and that a further shrinkage of deposits during August and September is expected. The reply stated that the Board authorizes the advance subject to the terms and conditions recommended, with the understanding that out of the proceeds of this advance the national bank will retire the amount of the "venoe now outstanding under the authority granted in the Board's telegram Of APril 13, 1932. The reply also noted the statement in Governor Calkins' telegram that the bank has no further assets eligible for obtaining credit under section 13 of the Federal Reserve Act and advised that the Board's approval of the new advance is conditioned upon the understanding that the 44tiona1 bank has no further eligible and acceptable assets to enable it to °I/tein adequate credit accommodations from the Federal reserve bank under 4117 other provisions of the Act except section 10(a). Unanimously approved. Letter dated August 8, 1932, from the Governor of the Federal Re" a , Bank of Philadelphia transmitting a letter of the same date from Mr. Allhur W. Sewall, Chairman of the Building Committ ee of the bank, requesting 411 °PPOrtlat ity thia We to appear before the Board, preferably on Friday morning of for a discussion in connection with the proposed enlargement of the bank's building. The Assistant Secretary was requested to advise Mr. Sewall that the Board will be glad to meet with him at 11:00 a. in. on Friday, August 12, 1932. Reports of the Committee on Salaries and Expenditures recomme nding 413P1' " el, in accordance with requests contain ed in Deputy Governor VI"thington'e letters of July 21, 1932, of changes in the personnel elas8iric"104 Plan of the Denver branch of the Federal Reserve Bank of Kansas City, to Provide for the creation of one new position, a change in the title and 110 _ 8 8/9/32 -4- salary range of one position, and changes in the salary ranges of four other positions. Approved. Letters to the Comptroller of the Currency, referring to letters Ileceived from Deputy Comptroller Await under date of Tuly 22, 1932, and advising (1) that the Federal Reserve Board notes the resignation, effective 3 '111Y 20, 1932, of Mrs. Ruthette M. Gray, Statistical Clerk in the Federal Reserve Issue & Redemption Division, with salary at the rate of $2,000 per all4um, and that the position of Statistical Clerk in the Division has been sbolished; (2) that the Board approves a salary at the rate of $1,750 per 1141111111 for Mrs. Maude Williams who is to be appointed as Bookkeeper-Stenographer 111 the Division, effective such date as she reports for duty; and (3) that the Board also approves an increase from $1,500 to $1,750 per annum, effective Se ptember 1, 1932, in the salary of Mrs. Ruth Whittaker, Bookkeeper in the sio_, a whose duties have been considerably increased as a result of the sbolition of the position of Statistical Clerk. Approved. Telegram addressed to the Governors of all Federal reserve banks on 4111€4et 6, 1932, with the approval of the Executive Committee, requesting that the include in their daily condition telegrams to the Board certain infOr14t1°11 with regard to discounts for individuals, partnerships and corporations 1111(let section 13 of the Federal Reserve Act, as amended by the act of July 21 '1932, and stating that the amount of paper discounted for individuals, 13"Ilership8 and corporations will not be published separately by the Board 4t the present time, and that it is assumed that a similar policy will be °111)/Isd by the Federal reserve banks with regard to any such paper dis- 129 ..5.. 8/9/32 counted by them. Telegram approved. The Assistant Secretary was requested to advise Mr. Smead, Chief of the Division of Bank Operations, that in accordance with the suggestion contained in his memorandum of August 5, 1932, all discounts reported by Federal reserve banks for individuals, partnerships and corporations should be included in the weekly press statement under the general head of "Bills Discounted" against the captions "Secured by U. S. Government Obligations" or "Other Bills Discounted". Telegraphic reply to a telegram dated August 8, 1932, from the Governor of the Federal Reserve Bank of Minneapolis inquiring whether the statement in the Board's circular of July 26, 1932, that in discounting Paper for individuals, partnerships or corporations a Federal reserve bank should not make any commitment to renew or extend such paper or to grant rurther or additional discounts, means that under no circumstances may a rederal reserve bank accept renewals of maturing paper; the reply stating that the Board's circular forbids the making of any commitment at time of discount to renew or extend paper or to grant further or additional discounts, but that it does not forbid the renewal or extension of such paper at 144tUritY if circumstances at that time warrant such action. Approved. Letter to the Eden State Bank, Eden, Texas, stating that the Federal Reserve Board has approved the bank's application for membership in the reders1 Reserve System and for thirty shares of the capital stock of the Pederal Reserve Bank of Dallas, subject to certain conditions set forth in the letter. Approved. Letter to the Federal Reserve Agent at Dallas, referring to 130 -6- 8/9/32 Assistant Federal Reserve Agent Evans' letter of July 5, 1932, with which he transmitted a notice of intention to withdraw from membership in the Federal Reserve System, filed under date of July 2, 1932, by the Citizens State Bank, Memphis, Texas, with the request that it be permitted to withdraw from m embership immediately; the reply stating that, in accordance with the recommendation of the Executive Committee of the Dallas bank, and in view cf the circumstances outlined in Mr. Evans' letter, the Board has voted to weive in this case the usual requirement of six months notice and to permit the member bank to withdraw from membership immediately. Approved. Letter to The Peoples National Bank of Warrensburg, Missouri, 4PProved by five members of the Board on August 8, 1932, stating that the l'ederal Reserve Board has approved the bank's application to act, when not 14 contravention of State or local law, as trustee, and registrar of stocks 414 bonds, the exercise of such rights being subject to the provisions of the 4:0.tieral Reserve Act and the regulations of the Federal Reserve Board. Approved. Letter to The American National Bank, St. Joseph, Missouri, approved by five members of the Board on August 6, 1932, stating that in addition to the authority previously granted to the bank to act as trustee, executor, adIllinistrator, and registrar of stocks and bonds, the Federal Reserve Board has approved the bAnkts application for permission to act, when not in ecIlitl'evention of State or local law, as guardian of estates, assignee, Eleeiver, committee of estates of lunatics or in any other fiduciary e4Paei tY in which State banks, trust companies or other corporations which ec3rfle int0 competition with national banks are permitted to act under the -7- 8/g/32 131 'awe of the State of Missouri, the exercise of all such rights being subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. Approved. Letter to The First National Bank of Savanna, Illinois, stating that in addition to the authority previously granted to the bank to act as trustee, executor, administrator, registrar of stocks and bonds, guardian Of estates, assignee, receiver, and committee of estates of lunatics, the Federal Reserve Board has approved the bank's application for permission to acts when not in contravention of State or local law, in any other fiduciary caPaoity in which State banks, trust companies or other corporations which efte into competition with national banks are permitted to act under the 14 "of the State of Illinois, the exercise of all such rights being subject the provisions of the Federal Reserve Act and the regulations of the Pederal Reserve Board. Approved. Letter to The Rawlins National Bank, Rawlins, Wyoming, stating that 14 addition to the authority previously granted to the bank to act as tIllatee, executor and administrator, the Federal Reserve Board has approved the bank's application for permission to act, when not in contravention of State or local law, as registrar of stocks and bonds, guardian of estates, "algflee, receiver, committee of estates of lunatics, or in any other ri40ierY capacity in which State banks, trust companies or other corporatl°118 which come into competition with national banks are permitted to act Under the laws of the State of Wyoming, the exercise of all such rights beb, "g subject to the provisions of the Federal Reserve Act and the regula-. 132 -8- 8/9/32 tions of the Federal Reserve Board. Approved. Letter to the United States National Bank, Eugene, Oregon, stating that in addition to the authority previously granted to the bank to exercise trust powers in the specific trusts which were acquired by it from the EUgene Loan and Savings Bank of Eugene, Oregon, the Federal Reserve Board has granted the bank permission to act, when not in contravention of State or local law, as trustee only in connection with loans made to the Eugene rruit Growers Association by the Federal Intermediate Credit Bank of Spokane, Washington, the exercise of such right being subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. A discussion ensued, during which the members present expressed the feeling that the Board should not in this case depart from its usual practice of refusing to grant authority to a national bank to act in a fiduciary capacity in a particular case when it is not willing to authorize the institution to exercise full powers. Accordingly, the bank was granted permission to act generally, when not in contravention of State or local law, as trustee in holding custody of warehouse receipts, shipping documents, any other securities, or cash, as security for loans made by other parties, the exercise of such right being subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. Letter to the Federal Reserve Agent at San Francisco, referring to the application of the First National Bank of Eugene, Oregon, for permission t° Illot as depositary for bondholders' committees under the provisions of "etion 11(k) of the Federal Reserve Act, and stating that before the Board 4ete on the application it desires detailed advice as to the functions Ithioll the bank will exercise as depositary for bondholders' committees, and 44 to whether or not the bank requires in connection therewith authority 14 addition to that previously granted to the bank to act as trustee. The 133 8/9/32 -9- letter also called attention to the Board's practice of granting permission to exercise trust powers in the terms used in section 11(k) of the Federal Reserve Act, rather than in terms which may be used in a State law or otherand stated that the right to act as depositary for bondholders' committees is not one of the fiduciary powers specifically enumerated in section 11(k) and that if the First National Bank requires additional authority to enable it to act as depositary, it should request the Board to grant it the general power authorized by section 11(k) to act in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act Under the laws of the State in which the national bank is located. The letter further suggested that if the national bank finds it necessary to submit an application for the general power, it is desirable, for record PurPoses and in order that there may be no misunderstanding as to the trust " P ers the bank would be authorized to exercise, that it include in its application all of the trust powers specifically enumerated in section 11(k) //410h have not heretofore been granted to the bank. Approved. Letter to the President of the First National Bank of Kenmore, New York, transmitting a certificate showing that the national bank has duly ellrrendered its right to act in fiduciary capacities and is no longer "*Lorized to exercise trust powers under the provisions of section 11(k) or the Federal Reserve Act; together with letters to the Federal Reserve -. at New York and the Comptroller of the Currency advising of the tea, 'te4Xlee of the certificate above referred to. The Assistant Secretary 1Ported for the record that the national bank has filed with the Board a 4111fied copy of a resolution of the board of directors of the bank 8/9/32 -10- eignifying its desire to surrender trust powers, that the Assistant Federal Reserve Agent at the Federal Reserve Bank of New York has recommended that the right of the bank to exercise trust powers be terminated; and that Pursuant to the request made by the Board on June 3, 1932, the Comptroller Of the Currency has advised that the bank was acting in only one trust account and has now on file a proper release from that trust* Certificate and letters approved. Letter to the Federal Reserve Agent at Philadelphia, approved by five members of the Board on August 6, 1932, referring to Assistant Federal Reserve Agent Hill's letters of July 8 and 23, 1932, transmitting information l'slative to the transaction by which the Schuylkill Haven Trust Company, Schuylkill Haven, Pennsylvania, jointly with the First National Bank and TIllst Company of Schuylkill Haven, assumed the deposit and borrowed money liabilities and acquired for liquidation the assets of the State Bank of 8chuYlki1l Haven, a nonmember, as of the close of business July 5, 1932; the Board's letter stating that in the absence of current information rethe condition of the Schuylkill Haven Trust Company, the Board, in 4ccordance with its usual policy, will defer until after another examination Or the trust company, its consideration of the question as to whether the 'kusaction has resulted in any material change in the character of the 4eflet3 of the trust company or in the scope of the functions exercised by 1/ vithin the meaning of the general condition under which it was admitted to membership in the Federal Reserve System. Approved. Reply, approved by five members of the Board on August 8, 1932, to It letter dated July 26, 1932, from the Chairman of the Federal Reserve 135 8/9/32 —11— Bank of Cleveland reporting the steps which have been taken to survey the situation in the Fourth Federal Reserve District with respect to credit demands which are not being met through regular banking channels and which maY properly be taken care of by the Federal reserve banks under the recent araendment to section 13 of the Federal Reserve Act; the Chairman referring to a specific instance in which it appears that the legitimate credit needs of the borrower are not being met; suggesting as one of the ways of meeting the situation, the rediscount at the Federal Reserve Bank of Cleveland, through a member bank, of the notes taken by nonmember banks for funds advanced to the borrower, and inquiring whether the Federal Reserve Board mould be disposed to look with favor upon a request from the Federal reserve bank for permission to accept for rediscount through a member bank of the I3aPer of such nonmember banks. The reply stated that it has been the 15°110Y of the Board to give favorable consideration, whenever conditions illatified and upon favorable recommendation of the Federal reserve bank, to al3Plications of particular member banks to rediscount good and eligible Per acquired from or bearing the signature or indorsement of nonmember bk4ks, but that the Board has taken the position generally that member banks aUthorized to rediscount such paper should only do so after having exhausted all other paper in their portfolio which is eligible and acceptable to the 4cleral reserve bank for rediscount. The reply also stated that while the ?1° ' is not prepared to grant blanket authority to the Federal reserve bank 10 rediscount such paper for member banks, it will be glad to entertain 4M4eationsfromindividual member banks if accompanied by the favorable l'14100mendation of the Federal reserve bank. Approved. 8/9/32 -12Letter to the Shoreham Investment Company, Inc., approved by six members of the Board on August 2, 1932, referring to the lease between the Board and the Shoreham Investment Company for certain space in the Shoreham Building and advising that the number of square feet of office ePace on the third and fourth floors which is occupied under the lease has been calculated and verified and it has been concluded that the aggregate areR is not less than 13,808 feet and that, accordingly, under the terms °I 'the lease, the Federal Reserve Board will pay to the Shoreham Investment C°114PanY, Inc„ at the end of each month during the term of the lease monthly rental at the rate of $1,726.00. Approved. Reference was then made to the fact that the leave of absence vithout pay previously granted to Mr. Leo H. Paulger, Chief of the Board's 47ision of Examinations expired on July 31, 1932. After a brief discussion, during which it was reported that it would cause some inconvenience to the Reconstruction Finance Corporation to recall Mr. Paulger from his work with the corporation at this time, it was decided to extend his leave of absence without pay to and including September 30, 1932, or until such earlier date as the corporation may be able to dispense with his services. Thereupon the meeting adjourned. Assistant Secretary. 41)1 ' 1'c-flied:
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