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2735 A meeting of the Board of Governors of the Federal Reserve System Was held in Washington on Tuesday, December 17, 1935, at 12:15 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. P. M• Eccles, ChPirman Thomas, Vice Chairman Hamlin Miller James Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Letters dated December 14, 1955, approved by three members of the B°4rds to Jr. Sproul, Secretary of the Federal Reserve Bank of New York, Mr. Strater, Secretary of the Federal Reserve Bank of Cleveland, Mr. Ste7ens, Chairman of the Federal Reserve Bank of Chicago, and to Mr. Walsh, hair'aari of the Federal Reserve Bank of Dallas, and December 17 to Mr. PeYto11, Chairman of the Federal Reserve Bank of Minneapolis, stating that the Board approves the establishment without change by the New York bank °4 °ecember 12, by the Cleveland, Chicago and Dallas banks on December 13, 'a bY the Llinneapolis bank on December 16, 1935, of the rates of discount 414 Purchase in their existing schedules. Approved unanimously. Letter to Mr. Max Lowenthal, Counsel, Senate Committee on Interstbte ommerce Investigating Railroads, Washington, D. C., reading as r°11ows: "I have your letter of December 12, 1935, referring to mY letter of August 23, 1935, and requesting in accordIln!loe therewith that the Board make available to your Cointee the services of Federal Reserve Examiner Charles T. 2736 12/17/35 -2- "Malone. In accordance with your request the Board will assign Mr. Malone to work with your Committee for a period up to six months, if necessary. It is understood that the salary of Mr. Aalone will be paid by the Board during the time he is engaged With the Committee but that any traveling or other expenses incurred by him will be paid from the funds available for the investigation. "At present Ir. Malone is assisting in the examination Of one of the Federal reserve banks and, since the examination will not be completed until toward the end of this month, he Will be instructed to report to your Committee Thursday, January 2, 1936. It is assumed that this arrangement will be satisfactory." Approved unanimously. Letter to the board of directors of the "I-C Bank and Trust ComPa4Y", Chicago, Illinois, which had been revised in accordance with the 'action taken at the meeting of the Board on December 11, 1935, and which stated that, subject to the conditions prescribed in the letter, the 13°61-'rd approves the bank's application for membership in the Federal Re8er "System and for the appropriate amount of stock in the Federal Reserve Bank of Chicago. The revised special condition of membership numbered was as follows: "18. Such bank shall stamp, as soon as practicable, in legible form on each certificate for stock of the bank outstanding, and, so long as the legend referred to below is applicable, shall stamp in legible form on each certificate issued upon transfer or in lieu of the certificates now outstanding a legend reading substantially as follows: Before any dividend or distribution of any kind or character is made to stockholders as such, the outstanding Certificates of Beneficial Interest issued by the bank to depositors who waived the payment of a part of their deposits at the time of the reorganization of the bank in 1933 pursuant to a Depositors Agreement, a copy of which is on file with 12/17/35 -3"the I-C Bank and Trust Company, must be paid. "(In the event that shareholders of the bank fail or refuse to surrender their stock certificates for the purpose of enabling the bank to place thereon the legend referred to in the foregoing condition numbered 18, this condition will be considered as having been complied with by the inclusion in each published statement of condition of the bank of appropriate information showing the relation of the rights of the holders of outstanding Certificates of Beneficial Interest to the rights of stockholders.)" Approved unanimously, together with a letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve Bank of Chicago, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of the 'I-C Bank and Trust Company', Chicago, Illinois, for membership in the Federal Reserve System, subject to the conditions prescribed in the inclosed letter which you are requested to forward to the board of directors Of the institution. Two copies of such letter are also inclosed, one of which is for your files and the other of which You are requested to forward to the Auditor of Public Accounts for the State of Illinois for his information. "It has been noted that the papers submitted with the apP?dcation of this bank for membership did not include a copy of tile articles of incorporation executed by it at the time of its organization in 1928, and, in order that the Board's records TaY be complete, it will be appreciated if you will forward to lt a copy of such articles of incorporation. "As you know, section 31 of the Banking Act of 1933, as amended, provides that a State member bank or trust company shall have not less than five nor more than twenty-five directors, and, in this connection, it has been noted from the report cf examination of the applicant bank, made as of August 7, 1935, that, while the charter and by-laws of the bank fix the nnmber ?f Its directors at six, the bank actually has only four direcIt3rs at the present time. In the circumstances, you should re(.1zest the bank to take prompt action to increase the number of .1,-ts directors to six or to take such action as may be necessary 4.? amend the charter and by-laws so as to authorize the reduc' 1?n in the number of its directors to five, and your counsel, Prior to the bank's admission to membership, should be satisfied that its application for admission to membership and the accep- 2738 12/17/35 -4- "tance of the conditions of membership prescribed for it are based upon validly adopted resolutions of its board of directors. Please furnish the Board with copies of any amendments Which may be made to the charter and by-laws in this connection." Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve Bank of New York, reading as follows: "Reference is made to Mr. Downs' letter dated November 22, 1935, regarding condition of membership numbered 21 accepted by the 'City Bank Farmers Trust Company', New York, New York, which provides in part that, prior to January 1, 1955, The National City Bank of New York, its holding company affillate, shall have obtained from the Federal Reserve Board a general voting permit. Subsequently the time for compliance With the condition was extended to December 1, 1935. "The Board having recently determined that The National City Bank of New York is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, that bank is not now a holding company affiliate for any purposes other than those of section 25A of the Federal Reserve Act and, in the circumstances, the Board cancels the above-mentioned condition of membership accepted by City Bank zarmers Trust Company." Approved unanimously. Letter to Mr. H. L. Cochran, Vice President, Banco de Puerto Rico 844 Juan, Puerto Rico, signed by Vice Chairman Thomas, and reading as follows: "I have noted with interest the contents of the advertisement of the statement of condition of the Banco de Puerto Rico as of November 12, 1935, which you sent me with your letter of November 30. Action upon the application of your bank for adllission to membership in the Federal reserve system has been delayed pending the consideration of the Board's general policy with respect to admission of banks from the territories. I am informed that in the meantime your bank has also filed an 4PPlication with the Federal Deposit Insurance Corporation. "At a recent meeting of the Board of Governors reference wax, made to your application and it was decided that, as it is the policy of the Board to require, before taking final action 2739 12/17/35 -5- "on the merits of particular applications for membership, reports of current examinations in which Federal reserve examiners have participated in accordance with the usual procedure, and as there has been no such examination of your bank for about two Years, a new examination should be made. Instructions to this end have been issued and arrangements have been made with the Federal Deposit Insurance Corporation so that the examination required for their purposes and that required for our purposes Will be made jointly. Upon receipt of the reports of these examinations the Board will give your application prompt consideration." Approved unanimously. Telegram to Mr. Clark, Assistant Federal Reserve Agent at the Federal Reserve Bank of Atlanta, 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 proof Section 5144 of the Revised Statutes of the United States, to "The Citizens and Southern National Bank", Savannah, Georgia, entitling such organization to vote the stock which it owns or controls of the tollowine banks: he LaGrange National Bank", LaGrange, Georgia, "Albany Exchange National Bank", Albany, Georgia, ail 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 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 2740 12/17/35 -6- "'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 Citizens and Southern Holding 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 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. Clark, Assistant Federal Reserve Agent at the ?sclera]. Reserve Bank of Atlanta, stating that, subject to the conaitions set forth in the telegram, the Board of Governors of the Federal Reserve 85retem authorizes the issuance of a general voting permit, under the proIleions of Section 5144 of the Revised Statutes of the United States, to the "Citizens and Southern Holding Company", Savannah, Georgia, entitling atich calanization to vote the stock which it owns or controls of the to llowing banks: :The LaGrange National Bank", LaGrange, Georgia, Albany Exchange National Bank", Albany, Georgia, at all meetings of shareholders of such banks. The conditions contained the telegram upon which the permit was authorized were as follows: 2741 12/17/35 -7-. "(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-9585. "(2) Simultaneously with the issuance of the general voting permit authorized herein, there shall be issued to The Citizens and Southern National Bank 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 13°e-rd. Approved unanimously. In connection with the above telegrams, the Board gave consideration to a memorandum dated November 120 1955, from Mr. Baumann, Assistant Counsel, which recommended that the Board determine that The Citizens and Southern National Bank and Citizens and Southern Holding Company were engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of section 501 of the Banking Act of 1935. Telegram to Mr. Sargent, Assistant Federal Reserve Agent at the Pederal Reserve Bank of San Francisco, stating that, subject to the conditio set forth in the telegram, the Board of Governors of the Federal Rees , "e System authorizes the issuance of a general voting permit, under the Plxwisions of Section 5144 of the Revised Statutes of the United &tat a , e-1 uo "Transamerica Corporation", San Francisco, California, entitl'Ilch organization to vote the stock which it OMB or controls of the tcalowing banks* 2742 12/17/35 -8- "Bank of America National Trust and Savings Association", San Francisco, California, "The First Nationnl Bank of Portland", Portland, Oregon, "First National Bank in Reno", Reno, Nevada, at all meetings of shDreholders of such banks. The conditions contained in 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 with the following additional paragraph inserted following paragraph numbered 7: '8. That all present or future obligations of Inter-America Corporation, the undersigned, and/or any organization affiliated with the undersigned or any of its subsidiaries, to Bank of America National Trust and Savings Association and/or any bank affiliated with the undersigned or with any of its subsidiaries, growing directly or indirectly out of contracts heretofore entered into by Corporation of America with Bank of America National Trust and Savings Association on June 26, 1931, December 61, 1951, and February 13, 1932, or on any other date, for the purpose of eliminating objectionable assets and/or losses from such bank, shall be paid in full on or before December 31, 1938, and that not less than one-third of the amount now owed on such obligations shall be paid on or before December 31, 1936, and not less than two-thirds of such amount shall be paid on or before December 31, 1937.' "(2) Simultaneously with the issuance of the general voting permit authorized herein, there shall be issued to InterAmerica Corporation 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 434-3 'u pursuant to the authorization was limited to thirty days from the dkte °I the telegram unless an extension of time was granted by the Board. The t elegram also stated that a letter explaining the meaning of certain °r th e -,,andard conditions incorporated in the aforementioned agreement 27ei 12/17/35 -9- was being mailed to Transamerica Corporation, and suggested that the assistant Federal reserve agent ascertain that such letter had been received before the permit authorized in the telegram was issued. Approved unanimously, together with a letter to Transamerica Corporation, San Francisco, California, reading as follows: "This refers to the letter of November 25, 1935, written to the Board on your behalf by Mr. Charles W. Collins, counsel for your corporation, with reference to the seven tentative standard conditions set out in the Board's letter of November 9, 1935, (X-9360), relating to the issuance of general voting permits. Certain comments contained in that letter will be discussed herein in order that there may be no misunderstanding concerning the meaning of the conditions as finally approved. "Referring to the opening clause of tentative conditions numbered 2, 5, 4, 5, and 6, to the effect 'that the undersigned Will take such action within its power as may be necessary to cause each of its subsidiary' corporations to perform certain actions, Mr. Collins states: 'These words therefore can mean nothing else legally except that under these tentative conditions Transamerica Corporation would agree to take such cor221:at action within its corporate power as may be necessary, etc. There is no other legal action which Transamerica Corporation can take, it being a body corporate. In other words under this phraseology it can take only such action as may be authorized by its own charter and by the charter, laws and regulations governing the corporate entity of its subsidiaries, for reasons well known to the Board. Transamerica Corporation could not take any corporate action to intervene into the operations of a natioml bank to direct its executive officers or its Board to take corporate action as a national bank. * * * * * * * * 'With this clarification of the applicability of this clause to us we see no objection to the language 111 question since we would take it to be a legal obligation in so far as legally applicable and legally possible. Our management would voluntarily assume a moral obligation to make the conditions effective as far as may be practicable.' "It is noted that, in referring to Transamerica Corporation, Mr. Collins states: 2744 12/17/35 -10- "'Its management is naturally in contact with the management of its subsidiaries and the management is thus in a position to use moral suasion and to have informal conferences and conversations with respect to the formulation and execution of policies. In this manner the Policies of Transamerica Corporation and those of its subsidiaries have been made harmonious.' "As suggested elsewhere in Mr. Collins' letter, there is an important element of good faith involved in compliance with the agreement containing the standard conditions, and the conditions in question contemplate that the holding company affiliate will uee, in good faith, every power, corporate or otherwise, at its disposal to cause its subsidiaries to comply with such conditions. The Board feels that in this connection the holding company affiliate cannot be properly distinguished from it management and that the officers and directors of the holding company affiliate would be required to use their powers of moral suasion and to make use of informal conferences to influence the action of the subsidiaries. "In connection with tentative condition numbered 5, Mr. Collins states that it is assumed that the Board intends that Your corporation should use its judgment as to what constitutes adequacy of capital. In connection with tentative condition nuMbered 7 he infers that your corporation should be the judge aS to whether a given policy is sound and whether its net capital and surplus is adequate. Such an interpretation would, course, virtually nullify the conditions and the Board 'eels that it is obviously contrary to their intent. The Board must make the final determination concerning these matters and !°ncerning all other questions relating to the compliance or ompliance with the agreement containing the conditions. Any t tling company affiliate will, of course, be given every opportY to present its views in any instance in which a question and, under the law, any holding company affiliate is enqtred t a hearing before its permit is revoked." r Telegram to Mr. Sargent, Assistant Federal Reserve Agent at the P Reserve Bank of San Francisco, stating that, subject to the condi- tiots set forth in the telegram, the Board of Governors of the Federal Reserv the SYstem authorizes the issuance of a general voting permit, under Pl'ovisions of Section 5144 of the Revised Statutes of the United States to "Inter-America Corporation", San Francisco, California, en- 12/17/55 -11- titling such organization to vote the stock which it owns or controls of the following banks: "Bank of America Natioral Trust and Savings Association", San Francisco, California, "The First National Bank of Portland", Portland, Oregon, "First NationAl Bank in Reno", Reno, Nevada, at all meetings of shareholders of such banks. The conditions contained in the telegram upon which the permit was authorized were as follows: 11(1) "(2) 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 with the following additional paragraph inserted following paragraph numbered 7: '8. That all present or future obligations of the undersigned, Transamerica Corporation, and/or any organization affiliated with Transamerica Corporation or any of its subsidiaries, to Bank of America National Trust and Savings Association and/or any bank affiliated with Transamerica Corporation or with any of its subsidiaries, growing directly or indirectly out of contracts heretofore entered into by Corporation of America with Bank of America National Trust and Savings Association on June 261 1931, December 31, 19312 and February 15, 1932, or on any other date, for the purpose of eliminating objectionable assets and/or losses from such bank, shall be paid in full on or before December 312 1938, and that not less than one-third of the amount now owed on such obligations shall be paid on or before December 31, 1956, and not less than two-thirds of such amount shall be paid on or before December 31, 1957.' Simultaneously with the issuance of the general voting permit authorized herein, there shall be issued to Transamerica Corporation the general voting permit authorized in the Board's telegram to you bearing the same date as this telegram." The 4 , velegram also stated that the period within which such a permit may be "u Pursuant to the authorization was limited to thirty days from the 2746 12/17/35 -12- date of the telegram unless an extension of time was granted by the Board. Approved unanimously. Letter to Mr. Chas. J. McPherson, Secretary, Stockholders Protective Committee, First National Corporation of Portland, Portland, Oregon, reading as follows: "Receipt is acknowledged of your letter of December 9, 1935, relating to the applications of Transamerica Corporation and Inter-America Corporation for permits entitling them to vote the stock which they own or control of The First National Bank of Portland, Portland, Oregon. "After giving careful consideration to your letter, the Board is of the opinion that the matters discussed therein are not pertinent to the financial condition of Transamerica Corporation or Inter-America Corporation, the general character of their management, or the probable effect of the granting of such permits upon the affairs of The First National Bank of Portland, the matters which the law requires the Board to consider in actupon such applications. Accordingly, the Board feels that action upon such applications should not be further delayed." Approved imenimously. Letter to Mr. Charles W. Collins, Attorney at Law, Washington, , reading as follows: "In its letter of December 7, 1935, the Board advised you concerning the contents of a telegram of November 29, 1955, which had been received from Mr. Chas. J. McPherson, Secretary, Stockholders Protective Committee of First National Corporation of !crtland, Oregon, relating to the granting of a voting permit to Transamerica Corporation. "You were also advised that Mr. McPherson had been afforded • Opportunity to present to the Board in writing any matters whlch should be considered by it as pertinent to the matters which the Board is required to consider in acting upon the apPlications of Transamerica Corporation and Inter-America Corporaon for voting permits. For your information and that of Mr. lannini, there is inclosed herewith a copy of a letter of December 9, 1935, which has been received from Mr. McPherson." e Approved unanimously. 2747 4) 12/17/35 -15- Letter to Mr. Sargent, Assistant Federal Reserve Agent at the Federal Reserve Bank of San Francisco, reading as follows: "This refers to the voting permit applications of 'Old National Corporation' and 'Investment and Securities Co.', both of Spokane, Washington. "For the reasons set forth in its letter to you dated September 17, 1955, the Board feels that consideration of these applications for general voting permits should be deferred until such time as the organization of the group has assumed a more permanent form. Accordingly, the Board authorizes You to issue limited voting permits to such applicants, subject to the condition stated below, entitling each of such applicants to vote the stock which it owns or controls of the following banks: 'The Old National Bank and Union Trust Company of Spokane', Spokane, Washington 'First National Bank in Spokane', Spokane, Washington 'Lewiston National Bank', Lewiston, Idaho 'The First National Bank of Moscow', Moscow, Idaho "The permits shall authorize the applicants to vote the stock of the above banks for the following purposes: To elect directors of such banks at the annual meetings of shareholders, or at any adjournments thereof, at any time prior to April 1, 1956, anu to act thereat upon such matters of a routine nature as are ordinarily acted Upon at the annual meetings of such banks. "The permits shall be issued only after you have received ,dvice from the applicants, or other information satisfactory to you, showing (a) that each of the holding company affiliates' subsidiary national banks has complied, insofar as in Your judgment is practicable, with the recommendations or suggestions of the Comptroller of the Currency based upon the reports of examination of such bank made to him pursuant to authority conferred by law; that each of the holding company affiliates' subsidiary State banking institutions has complied, insofar as in your judgment is practicable, with the r ecommendations or suggestions of the appropriate State supervisory authorities based upon the reports of examination of such bank made to them pursuant to authority conferred by law; and ( ke) that each of the holding company affiliates has substantially performed any agreement or agreements heretofore executed by it as a condition to the is- 2748 41 12/17/65 -14- "suance of a limited voting permit by the Board, or has used its best efforts to do so. "Please have the permits authorized herein prepared by counsel for your bank in accordance with the form heretofore used. Upon the issuance of such permits please forward to the Board a copy of each permit and a copy of any letters, telegrams or memoranda submitted by the applicants or their subsidiary banks, or received from any other source, in response to any request which You deem necessary in connection with the foregoing condition, and advise the Board as to the facts which satisfied such condition. "If the applicants desire to vote the stock which they OW n or control of their subsidiary member banks for any purpose Other than those set forth above, it will be necessary that the Board be furnished at the earliest date practicable with the necessary details of the plan or matters to be voted upon, together with your recommendations concerning any additional conditions which should be prescribed in connection with the issuance of special limited voting permits for any such purpose. A request for such special permits may be considered as a matter separate and distinct from the issuance of the limited voting permits herein authorized." Approved unanimously. Letter to Mr. Sargent, Assistant Federal Reserve Agent at the Federai Reserve Bank of San Francisco, reading as follows: "Tnis refers to the application of 'Vollmer Security ComPanYt, Lewiston, Idaho, for a permit, under the provisions Of Section 5144 of the Revised Statutes of the United States, Tatitling it to vote the stock which it owns or controls of The First Nationnl Bank of Lewiston', Lewiston, Idaho. "In view of the pending plans for the conversion of the 1Other banks of this group into branches of The First National of Lewiston and the sale of preferred stock by such bank to Reconstruction Finance Corporation, the Board deems it desirable to .., defer consideration of the granting of a general ' Ling permit to the applicant at this time. "It appears probable that such plans may not be consummated l?r to the January,l96, meeting of shareholders of the subtocl arY national bank. Accordingly, you are hereby authorized a limited voting permit to Vollmer Security Company, to the condition stated below, entitling it to vote the Stocktn, ich it owns or controls of The First National Bank of Lewiston, Idaho, for the following purposes: ro elect directors of such bank at the annual meeting of s hareholders, or at any adjournments thereof, at any q 2749 12/17/55 -15- "time prior to April 1, 1966, and to act thereat upon such matters of a routine nature as are ordinarily acted Upon, at the annual meetings of such bank. "The permit shall be issued only after you have received advice from the applicant, or other information satisfactory to you, showing: (a) That applicant's subsidiary national bank has complied, insofar as in your judgment is practicable, with the recommendations or suggestions of the Comptroller of the Currency based upon the reports of examinations of such bank made to him pursuant to authority conferred by law; (b) That each of applicant's subsidiary State banking institutions has complied, insofar as in your judgment is practicable, with the recommendations or suggestions of the appropriate supervisory authorities based upon the reports of examinations of such banks made to them pursuant to authority conferred by law. "Please have the permit authorized herein prepared by counsel for your bank in accordance with the form heretofore used. Upon the issuance of such permit, please forward to the Board one copy of the permit and a copy of any letters, telegrams or memoranda submitted by the applicant or its subsidiary banks, or received from any other source, in response to any request which YOU deem necessary in connection with the foregoing condition, and advise the Board as to the facts which satisfied such condition. "The Board has authorized the issuance of a limited voting permit on the basis of the facts contained in the memorandum dated D.lovember 25, 1935, prepared by your bank's Examination Department, the facts contained in its files, and in reports of examinations and files made available by the Comptroller of the Currency. If °11 are aware of any material facts or circumstances of which the aoard has not been advised heretofore, which raise any question the propriety of the issuance of a limited voting permit to thsto e applicant, or if you feel that additional requirements should ' 17 made as a condition precedent to the issuance of a limited 1,?ting. permit in this case, you are requested to furnish to the 17ard a full statement thereof and to withhold such voting permit itil you receive further instructions from the Board relative thet "If the applicant desires to vote the stock which it owns or controls of its subsidiary national bank for any purposes other i tllan those set forth above, it will be necessary that the Board be dufnished, at the earliest date practicable, with the necessary 11il5 of the plan or matters to be voted upon, together with your 137commendati0n8 concerning any additional requirements which should Prescribed as a condition to the issuance of a special limited t 2756 12/17/35 -16- "voting permit for any such purpose. A request for such special Permit may be considered as a matter separate and distinct from the issuance of the limited voting permit herein authorized. "Reference is made to Mr. Sonne's letter dated November 21, 1935, requesting advice from the Board in regard to assessing the cost of examination of the applicant and its subsidiaries for the purpose of making a recommendation for a general voting permit. Such examination apparently was made as a result of the Board's telegram to you dated September 26, 1935, which was in reply to your telegram of September 25, 1935, wherein you expressed the opinion that Vollmer Security Company should be determined not to be a holding company affiliate under the provisions of section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935, and requested the Board's opinion and advice. "For your information only, the new facts, relating to the sale of certain bank stock by the applicant and the pending rehabilitation and merger program, which were developed in the report of such examination, the report of examination of The First National Bank of Lewiston as of October 7, 1935, and Mr. Sonnets memorandum of November 25, 1935, to the Executive Committee of your bank, indicate that if the pending program is carried out, further consideration should be given to the question whether Vollmer Security Company is engaged as a business in holding the stock of, or managing or controlling, banks, unless the holding company affiliate relationship is otherwise terminated. "In the circumstances, it seems advisable not to request the company to pay the expenses incurred by your examiner in connection with the examination if the holding company affiliate status is terminated in the near future." Approved unanimously. Telegram to Mr. Knoke, Assistant Deputy Governor of the Federal Reser7e Bank of New York, reading as follows: "Your letter December 12. Board approves action your director5ln authorizing officers your bank to make loan up to $50,000, f _ or not to exceed 120 days, to National Bank of Nicaragua, interest such loan to be chRrged at discount rate in effect at your bank. It is understood that this authorization is in addition to two Previol's authorizations referred to in Board's telegrams of Navemer 5 and 11, 1935, totaling S,300,0001 under which t275,000 has 4,?en advanced, and that all loans made under the three authorizans will be secured by gold bars valued at 0499,000 now earmarked With Federal additionA3 Reserve Bank of New York. Participation in t 2751 12/17/35 -17- "loan by other reserve banks approved and they are being advised by letter accordingly." Approved unanimously, together with a letter to the chairmen of n11 Federal reserve banks except New York, advising of the Board's action in the matter. Telegram to The First National Bank at Orlando, Orlando, Florida, reading as follows: "Retel December 11th regarding question whether mortgages insured under Title II of Nationnl Housing Act may be deposited by a national bank in its trust department to secure trust funds deposited in its banking department. It is not practice of Board to pass upon use of specific securities for this purpose, but Section VIII of Board's Regulation F, regarding exercise of trust powers by national banks, contemplates that securities deposited as collateral for trust funds deposited in a nation/RI bank's banking department shall be 'readily marketable'. In opinion of Board, real estate mortgages are not readily marketable securities except when they comply with conditions of marketability prescribed by Comptroller of Currency in his regulation defining 'investment securities' under section 5136 of Revised Statutes, and usual real estate first mortgage does not comply with these requirements. It appears that a mortgage eligible for insurance under Title II of the National Housing Act would not comply with these requirements. Suggest you obtain ccPY of Board's Regulation F and copy of Comptroller's regulation defi ng 'investment securities' from Assistant Federal Reserve Agent at Federal Reserve Bank of Atlanta." Approved unanimously. Letter to Mr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, reading as follows: "Reference is made to your letter of December 2 stating battha the Banking Commissioner of Texas and the various State nk ,,,members in that State are anxious to work out some arrangewhereby the requirements of both State and Federal law can onesatisfied by the publication on the part of such banks of only form of report at each call. "It is noted that the State Barking Commissioner is considerincy the advisability of changing his present form of report in 2752 12/17/35 -18- "such manner as to make it identical with the form currently prescribed by the Board for State member banks and wishes to know whether in the event the State form of report is so revised the Board of Governors would be willing to accept one publication as covering both State and Federal requirements. "The Board is anxious to avoid the unnecessary preparation and publication of reports wherever possible and believes that one publication should be sufficient to satisfy both the State and Federal requirements if the form of the two reports is identical. You are authorized to advise the State Banking Commissioner of Texas, therefore, that if and when the form of condition report prescribed for State banks in Texas by the State Banking Department is identical with the corresponding form prescribed by the Board, the Board will be glad to accept a single Publication of reports of condition rendered to the State Banking Department pursuant to requirements of State law and to your bank pursuant to the requirements of the Federal Reserve Act provided the following words appear in the published report immediately above the caption 'Assets': 'Published in accordance with calls made by the State Banking Commissioner of Texas and the Federal Reserve bank of this district' "There are inclosed proof copies of Forms 105 and 105e, which are to be used by State bank members at the time of the next call for their condition reports. It will be appreciated if you will furnish these copies to the State Banking Commissioner of Texas f?r his information, in case he decides to have the face side of tae.report form used by State banks in submitting reports to his Office identical with that used by State bank members in submitting reports to your bank." Approved unanimously, together with a letter to the Federal reserve agents at all other Federal reserve banks inclosing a copy of the above letter for their information and guidance. Letter to Dr. Willford I. King, President, American Statistical As8(leition, New York, New York, reading as follows: "Dr. Goldenweiser has brought to the attention of the Board Your letter of November 30 in regard to a survey which you are rnducting under the auspices of the United States Public Health ,ervice and your desire to obtain certain information shown by 'he records of the Federal Reserve Bank of New York covering sickIG1.ess of their employees for a number of years. The Board of , r .ernors has requested me to advise you that it interposes no Jection to the furnishing by the Federal Reserve Bank of New °rk of such information as the bank feels that it can with 2753 12/17/35 -19- "propriety make available to you, with the understanding that if such information is to be included in any published report it will be combined with similar information from other sources and not shown separately." Approved unanimously. Letter dated December 16, 1935, approved by five members of the Board, to Ir. Paul P. Cret, Architect for the Board's new building, Philadelphia, Pennsylvania, reading as follows: "Reference is made to your letter of December 6 in regard to the period of time prescribed by your agreement with the Board for the completion of contract drawings and specifications. Your letter has been brought to the attention of the Board's building committee and the other members of the Board. "As you state, we are familiar with the situation which has brought about the delay to which you refer and appreciate the efforts which you are making to expedite the work. It has been, as you know, the Board's expectation that the actual construction of the building would be started at the beginning of February, and it is the intention of the Board that this should be done. With this purpose in mind arrangements are being made to start the destruction of the present temporary bililding not later than January 2, and to carry on this work in such manner ae not to delay the building contractor. Since it appears from Your letter that you are cognizant of and in sympathy with the Board's objective, and that the extension you request will put You in position to meet the Board's requirements, the Board extends until the morning of January 6, 1936, the time specified in Paragraph (c) of Article 1 of the Agreement with you of June 5, 1905, for the delivery to the Board of the contract drawings, specifications, etc., including the steel framing design and drawings." Approved unanimously. Thereupon the meeting adjourned. ' C Mi.h ' f1-C S cretary. 413Pr Chairman.
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