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2710 A meeting of the Board of Governors of the Federal Reserve Systeal liras held in Washington on Thursday, December 12, 1955, at 11:50 a. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Thomas, Vice Chairman Hamlin Miller James Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Letter to Mr. Curtiss, Chairman of the Federal Reserve Bank of 80Ston, stating that the Board approves the establishment without change bY the bank on December 112 1955, of the rates of discount and purchase it its existing schedule. Approved unanimously. Telegram to Mr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, stating that, subject to the conditions set forth ill the telegram, the Board of Governo rs of the Federal Reserve System aUthorizes the issuance of a general voting permit, under the provisi ons °t Section 5144 of the Revised Statutes of the United States, to the "tquitable Securities Company", Dallas, Texas, entitling such organize-. to vote the stock which it owns or controls of the following banks: : Farmers & Merchants State Bank", Carrollton, Texas, liThe First State Bank", Celina, Texas, Farmers & Merchants State Bank", Ladonia, Texas, "The Farmers & Merchan ts State Bank of Wylie", Wylie, Texas, 4t 411 meetings of shareholders of such banks. The conditions contained the telegram upon which the permit was authorized were as follows: 11(1) Prior to the issuanc e of the general voting permit authorized herein, applicant shall execute and deliver to 2711 12/12/35 -2- "you in duplicate an agreement in the form accompanying the Board's letter X-9385. "(2) Simultaneously with the issuance of the general voting permit authorized herein, there shall be issued to Mercantile National Bank at Dallas the general voting permit authorized in the Board's telegram to you bearing the same date as this telegram." The telegram also stated that the period within which such a permit may be issued pursuant to the authorization was limited to thirty days from the date of the telegram unless an extension of time was granted by the Board. Approved unanimously. Telegram to Mr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, stating that, subject to the conditions set forth in the telegram, the Board of Governors of the Federal Reserve System authorizes the issuance of a general voting permit, under the provisions Of Section 5144 of the Revised Statutes of the United States, to the "Msl'cantile National Bank at Dallas", Dallas, Texas, entitling such or/illization to vote the stock which it owns or controls of the following banks: "Farmers & Merchants State Bank", Carrollton, Texas, The First State Bank", Celina, Texas, ,,Farmers & Merchants State Bank", Ladonia, Texas, The Farmers & Merchants State Bank of Wylie", Wylie, Texas, at All meetings of shareholders of such banks. The conditions contained the telegram upon which the permit was authorized were as follows: (-1-) Prior to the issuance of the general voting permit authorized herein, applicant shall execute and deliver to You in duplicate an agreement in the form accompanying the Board's letter X-9385, except that paragraph numbered 2712 12/12/35 -3- "1 and paragraph lettered (C) shall be omitted and the remaining paragraphs appropriately renumbered and relettered, and except that paragraph numbered 4 prior to such renumbering shall be changed to read as follows: 'That the undersigned will comply, and will take such action within its power as may be necessary to cause each subsidiary national bank or affiliate of such subsidiary national bank or of the undersigned to comply, with the recommendations or suggestions of the Comptroller of the Currency based upon any report of examination made to him pursuant to authority conferred by law and with the regulations or requirements of the Board of Governors of the Federal Reserve System made pursuant to authority vested in it by law;'. "(2) Simultaneously with the issuance of the general voting permit authorized herein, there shall be issued to Equitable Securities Company the general voting permit authorized in the Board's telegram to you bearing the same date as this telegram." The telegram also stated that the period within which such a permit may be is84ed pursuant to the authorization was limited to thirty days from the date of the telegram, unless an extension of time was granted by the Board. The telegram further stated that the Board had received a letter dated (/ctober 10, 1935, from Ben F. Read, Vice President of the Mercantile Nati°1141 Bank at Dallas, and requested that the Federal reserve agent, in Illiswer to such letter, advise Mr. Read that the Board was of the opinion that It could not properly determine that the applicant and Equitable 'ties Company were not engaged, directly or indirectly, as a busiileas in holding the stock of, or manIging or controlling, banks, and that to . Pet was necessary to enable the Mercantile National Bank at Dallas 141 the Equitable Securities Company to vote the stock of their subsidiary 11°1-14)111)er banks. Approved unanimously. 2713 12/12/35 -4- Telegram to Mr. Wood, Federal Reserve Agent at the Federal Reserve Bank of St. Louis, reading as follows: "Retel December 11 from Stewart regarding ANCILDALE telegrams dated December 9 with reference to 'TRUSTEES UNDER AGREEMENT WITH REFERENCE TO STOCK OF THE FIRST NATIONAL BANK OF LOUISVILLE, KENTUCKY AND OTHER CORPORATIONS, DATED JULY 1, 1925', Louisville, Kentucky, and 'The First National Bank of Louisville', Louisville, Kentucky. Condition C(2) of each of such telegrams is amended to read as follows: That, prior to the issuance of the general voting permit authorized herein, applicant shall deliver to you in duplicate Exhibit L (F.R.B. Form P-5) executed by J. W. Zaring Grain & Mill Company and Exhibit N (F.R.B. Form P-4) executed by applicant and consented to by J. W. Zaring Grain & Mill Company, or evidence in writing satisfactory to counsel for the Federal Reserve Bank of St. Louis that such Exhibits are not required by the Board's regulation P and the directions on the printed forms referred to." Approved unanimously. Letter to Mr. Osgood, Assistant Federal Reserve Agent at the Federal Reserve Bank of Boston, reading as follows: "This will acknowledge receipt of your letter of November 7, 1955, addressed to Dr. Carl E. Parry, Chief of the Division Of Security Loans, submitting the following question: 'Is a member of the Boston Stock Exchange through its collateral loan department (Money broker department) permitted to arrange as agent loans in this country for Montreal Stock Exchange brokers for the purpose of carrying their customers, these loans to be secured by mixed collateral listed on the various Canadian exchanges?' "It is assumed, for the purpose of replying to the question, that it is in effect as follows: Is it permissible for a 'creditor' under Regulation T to arrange with a bank or other person to make a loan to a Canadian stock broker on unregistered securities for the purpose of carrying the customers of the Canadian stock broker. "If the Canadian stock broker has no account with the creditor and the creditor is not extending credit to, or maintaini ng credit for the Canadian stock broker it is permissible, so far as Regulation T is concerned, for the above transactions to be carried out. This follows from the definition of 'customer' 2714 1 12/12/35 -5- "in section 2(m) of Regulation T under which the Canadian broker would not be included within the meaning of that term, since an account is necessary and the extension or maintenance Of credit to that broker by the creditor. Since section 4(a) and 5(a) of Regulation T containing the only restrictions on arranging for the extension or maintenance of credit require the existence of a 'customer' to be effective, it is permissible sO far as Regulation T is concerned for the above transactions to be carried out. "Since the Board has undertaken to interpret and define the term 'customer' appearing in the Act for the purpose of its regulations, it is believed that in any interpretation of section 7 of the Act itself the definition in Regulation T would be considered to be controlling; and that the above transactions are therefore not contrary to the specific restrictions in the Act on arranging for the extension or maintenance of credit to a customer. "On the other hand if the Canadian stock broker is within the meaning of the definition of 'customer' the above transactions are not permissible under section 7(c)(2) of the Securities Exchange Act which specifically provides that it shall be unlawful for any member of a national securities exchange, directly or indirectly, to arrange for the extension or maintenance of credit to or for any customer without collateral or 011 any collateral other than exempted and/or registered securities except in accordance with such rules and regulationsas the Board may prescribe in certain instances. Since the Board la-s prescribed no rules or regulations permitting such arranglng in any instence, the above transactions are not permissible On behalf of a 'customer'." Approved unanimously. Telegram to Governor CR3kins of the Federal Reserve Bank of San 4411e1800, reading as follows: "Referring to my telegram of December 6, 1935, it is auggested that the following two subjects be placed on the Program for discussion at the forthcoming Governors' Confer"1. Should basis of depreciation reserves on bank builds be changed so as to write off book value in 40 years intead of 501 L8 at present? If so, should 2 percent annual ”Preciation charge be changed, or should a lump sum be added o Present reserve? "2. Should steps be taken to charge off immediately, or clver a 5 year period, prior liability under Retirement System 12/4/55 -6- "and, if so, should amount of prior liability to be charged off be on basis of present value or maturity value discounted at a given percent? If at a given percent, what should that percent be?" Approved unanimously. There were then presented the following applications for changes it stock of Federal reserve banks: -A-P-P-ions lfor SURRENDER of Stock: IULtiet No. 8. Natjop in Greenwood, Greenwood, Arkansas Shares 20 The First National Bank of Tillamook, Tillamook, Oregon 120 Total Approved unanimously. Thereupon the meeting adjourned. Ne Chtirman. 20 120 140
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