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2153 A meeting of the Board of Governors of the Federal Reserve 5Yetem was held in Washington on Wednesday, December 2, 1956, at 5:15 P.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Broderick Szymczak McKee Davis Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter re— ferred to and the action stated with respect thereto was taken by the BOarc i : The minutes of the meeting of the Board of Governors of the Fed— T-se ,a serve System held on December 1, 1956, were approved unanimously. Telegrams to Mr. Austin, Chairman of the Federal Reserve Bank 01 Philadelphia, and Mr. Dillard, Deputy Chairman of the Federal Reserve 8614k °I St. Louis, stating that the Board approves the establishment 'Irith°1-1t change by the respective banks today of the rates of discount 44d Plirchase in their existing schedules. Approved unanimously. Of Letter to Mr. McKinney, President of the Federal Reserve Bank T\ Leallas, reading as follows: 19 "Receipt is acknowledged of your letter of November 10, th36, and, in accordance with the recommendation contained the Board approves the appointment of Mr. C. L. Childers erein, as assistant examiner for the Federal Reserve Bank Of Dallas, such appointment to be effective January 1, 1937. 2154 12/2/56 -2- "As regards the salary adjustments of Examiners Hallman and Betts referred to in your letter, it will be appreciated if you will advise the Board's Division of Examination when a definite determination of the matter has been made." Approved unanimously. Letter to the Presidents of all Federal reserve banks, reading as follows: "As you know, paragraph (d) of section 5155 of the Revised Statutes of the United States provides, in the case of the establishment of branches by national banks, that: "(d) The aggregate capital of every national banking association and its branches shall at no time be less than the aggregate minimum capital required by law for the establishment of an equal number of national banking associations situated in the various places where such association and its branches are situated.' "Under the provisions of section 9 of the Federal Re-A- the Board is authorized to approve the establishAct serverauu ent and Operation by a State member bank of branches located Outside of the city in which the State member bank is situated the same terms and conditions and subject to the same limitations and restrictions as are applicable to the establishment branches by national banks. Section 9 also provides that e approval of the Board must be obtained before any State ;ank hereafter admitted to membership may retain any branch c?tablished after February 25, 1927, beyond the limits of the itY/ tor village in which the parent bank is situated. r_ ,."With regard to the computation of the aggregate capital tricialred for the establishment of branches by national banks, 4,e Comptroller of the Currency has heretofore taken the posi' la °n that only one unit of capital for the head office and all 17nches located in the same city as the head office is re°al lred under the provision of law quoted above, and in acting 01,1 , a:PPlications of State member banks for the establishment Feb°ranches or the retention of branches established after ag ruarY 25, 1927, the Board has taken the position that the grepte capital required may be computed in a like manner. ... 'The Board has recently been advised that the Comptroller or p_ruhe Currency, in acting on applications of national banks .4 permission to establish branches, requires only one unit capital for each place in which a branch of the applicant 2155 12/2/36 -3"bank is located other than the city of the head office, even though more than one branch is located in such other Place. A copy of a letter containing advice of the Co mptrollerts position in this connection is attached hereto. "In view of the provisions of section 9 of the Federal Reserve Act above referred to and, since it is the obvious intent of the law that State member banks and national banks shall be on a basis of substantial equality with regard to the establishment of branches, you are advised that in determining the aggregate amount of capital required for the establishment of out-of-town branches by State member banks or the retention by such banks of outbranches established after February 25, 1927, the (:)ard will apply the construction of the law which has been adopted by the Comptroller of the Currency and which is described in the attached letter." Approved unanimously. Letter to the Central National Bank and Trust Company of Battle Creek Battle Creek, Michigan, reading as follows: "This refers to the resolution adopted on June 22, 1936, by the board of directors of your bank signifying the bank's desire to surrender its right to exercise the trust. powers which have heretofore been granted to it by !the Federal Reserve Board, now known as the Board of Governors of the Federal Reserve System. "The Board understands that your bank has been discharged or otherwise properly relieved in accordance with thelaw of all of its duties as fiduciary. The Board, therefore, has issued a formal certificate to your bank Certifying that it is no longer authorized to exercise any f the fiduciary powers covered by the provisions of section 11(k) of the Federal Reserve Act, as amended. This certificate is inclosed herewith. "In this connection, your attention is called to the fact that, under the provisions of section 11(k) of the Federal Reserve Act, as amended, when such a certificate has been issued s by the Board of Governors of the Federal Reserve "tem to a national bank, such bank (1) shall no longer be ! ubjebt to the provisions of section 11(k) of the Federal ';;!serve Act or the regulations of the Board of Governors the Federal Reserve System made pursuant thereto, (2) snail be entitled to have returned to it any securities 2156 12/2/36 -4"which it may have deposited with the States or similar a uthorities for the protection of private or court trusts, and (3) shall not exercise any of the powers covered by section 11(k) of the Federal Reserve Act except with the permission of the Board of Governors of the Federal Reserve System." Approved unanimously, together with a letter to Mr. J. F. T. O'Connor, Comptroller of the Currency, reading as follows: "This refers to Mr. Lyons' letter of October 19, 1936, el°sing a special report received by your office from National Bank Examiner G. R. Wilson, under date of October !*(), 1936, in which it is indicated that the Central National Bank and Trust Company of Battle Creek, Battle Creek, Michigan, has been discharged or otherwise properly relieved, in accordance with law of all of its duties as fiduciary. "It is noted that, while the words 'and Trust Company' have not been eliminated from the title of the bank in question in accordance with the requirement contained in section L,‘13) of the Board's Regulation F, Mr. Lyons recommends in 1:1-5 letter that this requirement be waived by the Board in the Present case in view of the fact that the bank is in Process of liquidation. "In the circumstances and for the reasons stated in Mr. Lyon .11„ s letter, the Board will not require the elimination of e " words land Trust Company' from the title of the Central a6ional Bank and Trust Company of Battle Creek as a prereisite to the issuance of a certificate to that bank termnating its right to exercise trust powers. "Accordingly, the Board has today issued to the Central 11/4tiona1 Bank and Trust Company of Battle Creek a certificate to the effect that that bank is no longer authorized to exertrust powers; and a copy of this certificate, together of the Board's letter to the bank, is inclosed here1441T i r qr In connection with the above matter, the following letter to Vice President Young of the Federal Reserve Bank of Chicago was also approved unanimously: "This refers further to your letter of June 25, 1936, rd the Board's letter of July 3, 1936, with respect to the Besire of the Central National Bank and Trust Company of 2'ttle Creek, Battle Creek, Michigan, to surrender its right 60 exercise trust powers. 2157 12/2/36 -5'It is understood from advice received from the office Of the Comptroller of the Currency that the Central National Bank and Trust Company of Battle Creek has been discharged or otherwise properly relieved, in accordance with the law, Of all of its duties as fiduciary. However, it is understood also that the words 'and Trust Company' have not been eliminated from the title of that bank. As you know, the Board has adopted the policy of not issuing a certificate to a national bank t erminating its right to exercise trust powers until these words have been eliminated from its title, and this requirement is included in section 16(b) of the Board's Regulation F. "It has been recommended by the office of the Comptroller Of the Currency that this requirement be waived by the Board 1. r1 the present case in view of the fact that the bank in question is in the process of liquidation and is, therefore, restricted to the exercise of only such powers as are essential tc the winding up of its affairs. The office of the Comptroller has advised that any reorganization of the bank which Tight result in a resumption of operations would be subject to the approval of that office and that no such approval A01.11d be given to a national bank, the title of which contains the words 'and Trust Company' when, in fact, it has no 1permit to exercise trust powers. The Comptroller's office Pointed out also that any change in the title of a national bank, pursuant to the provisions of section 30 of title 12 of the United States Code would necessitate action by the stockholders and that such action would not only re!lilt in delay in completing the ultimate liquidation of the bank but would also be likely to produce some inconvenience and misunderstanding. "In the circumstances, the Board has waived the requirement of section 16(b) of its Regulation F that the words 'and :.rust Company' be eliminated from the title of the Central National Bank and Trust Company of Battle Creek. Accordingly, ,;he Board has today issued to the Central National Bank and Company of Battle Creek a certificate to the effect that That that bank is no longer authorized to exercise trust Powers; and a copy of this certificate, together with a copy Of the Board's letter to the bank, is inclosed herewith." Letter to Mr. Rounds, Vice President of the Federal Reserve 840, a. of New York, reading as follows: "This refers to your letter of November 7, 1936, with which you forwarded the agreement of Banca Commerciale 4""aliana, dated November 5, 1936 on F.H.B. Form T-2, and accompanying documents. 2158 12/2/36 -6-"The second paragraph of section 11(c) of Regulation T reads as follows: "Duplicate originals of F.R.B. Form T-2, when Properly executed, shall be delivered to the Federal Reserve agent at the Federal Reserve Bank of New York or the Federal Reserve agent at the Federal Reserve Bank of San Francisco and delivery to either such Federal Reserve agent shall constitute filing With the Board of Governors of the Federal Reserve System. The Federal Reserve agent to whom such delivery is made shall thereupon send a certificate evidencing such filing to the qualifying bank and to each branch or agency Of the qualifying bank which is listed in F.R.B. Form T-2 and shall at the same time send appropriate notice of such filing to the Federal Reserve agent at the Federal bank in each Federal Reserve district in which is situated one or more of such branches or agencies.' "In connection with these provisions your letter states: "In view of the provisions of this paragraph it ftuld seem that, notwithstanding the transfer to this bank effective October 30, 1956 of the nonstatutory duties of the Federal Reserve Agent at this bank, the duplicate originals of agreements on F.R.B. Form T-2 should be delivered to the Federal Reserve Agent (or Assistant Federal Reserve Agent when, as is now the case at this bank, the office of the Federal Reserve Agent is vacant) rather than delivered to the bank itself; and that the Federal Reserve Agent (or Assistant Federal Reserve Agent when the office of the Federal Reserve Agent is vacant) is the proper person to execute and send the certificates and notices of the filing of such agreements, in compliance with the terms of the above quoted paragraph. Mr. J. V. D. Stryker, Assistant Federal Reserve Agent at this bank, has accordingly executed a certificate on F.R.B. Form T-5 (revised by substitution of "Board of Governors of the Federal Reserve System" for "Federal Reserve Board") evidencing the filing with the Board of the agreement of Banca Commerciale Italiana, dated November 5, 1936, on F.R.B. Form T-2, and has today sent duplicate originals of such certificate to the principal place of business of Banca Commerciale Italiana in Milan, Italy, and to its agency in New York City. "Vie trust that the procedure followed as outlined above meets with the Board's approval.' "The Board agrees with your view that, notwithstanding the transfer of the nonstatutory duties of the Federal Reserve Agent to the Federal Reserve Bank, the present provisions of section 11(c) of Regulation T contemplate that the Federal Reserve Agent (or Assistant Federal Reserve Agent if the office 0f Federal Reserve Agent is vacant) will continue to execute 2159 12/2/36 -7"and send the certificates and notices of the filing of F.R.B. !°rm T-2 agreements; and, therefore, pending any change in these provisions, it approves this procedure as followed in connection with the agreement of Banca Commerciale Italiana." Approved unanimously. Letter to Mr. Peyton, President of the Federal Reserve Bank of Mirine aPclis, reading as follows: "Pursuant to the action taken at the meeting of the Board of Governors of the Federal Reserve System on November 25, 1936, at which you were present, this letter is addressed to you for the Purpose of advising that, in the light of the discussions at the Teeting of the Board with respect to the Helena Branch, the Board leels that a decision on the action taken at the joint meeting ID!' the boards of directors of the Federal Reserve Bank of Minneap?-1-is and its Helena Branch on October 17, 1936, in connection with the erection of a new branch building at Helena, should be def?rred for a period of not to exceed six months to allow suffiic3lent time for the completion of the study now being made by the °ard of the general question of the continuance of branches of , rederal reserve banks and their functions. As soon as the reis available and the Board has had an opportunity to conder it, the question of the erection of a new building to nouse the activities of the Helena Branch will be given further consideration. "However, as you were advised at the meeting, the Board suggests that steps be taken by the Federal Reserve Bank of Minne? 1 ?lis as promptly as possible to make such repairs to the present 14.41.1ding as are necessary for the safety of the employees of the -ranoh.ft Approved unanimously. Letter to Mc. Wood, Vice President of the Federal Reserve Bank ct u % Louis, reading as follows: . "This refers to your letter of November 23, 1936, submitting 741tional facts and comments in connection with the commission ;eceived by Mr. Alex Miltenberger, President of the Tower Grove ,e'lak and Trust Company, St. Louis, Missouri, which may possibly 4-nvolve a violation of section 22(c) of the Federal Reserve Act. "While it is realized that it is at least doubtful whether ,a's violation of the provisions of section 22(c) of the Federal neserve Act is involved, nevertheless, it is felt that there Isre questions both of fact and of law in the matter which should ualre the consideration of the Department of Justice and the 2160 -8“United States District Attorney and that the Board should aot undertake to make a determination of these questions in this case. As you know, this is in accordance with the usual policy of the Board in cases of this kind. AccordingY, it is requested that you report the matter to the local united States District Attorney and forward three copies of Your report to the Board for transmission to the Attorney General.” Approved unanimously. Letter to Mr. Logan, Vice President of the Federal Reserve Bank Of New ork, reading as follows: "In response to your letter of November 16, 1936, you advised that the Board approves payment by the Federal neserve Bank of New York to Pitney, Hardin & Skinner, Esqs., °f the sum of $1500. for legal services and 454.31 for expenses incurred in connection with the indebtedness of rassaio Print Works." Approved unanimously. Letter to Mr. Sinclair, President of the Federal Reserve Bank or adelphia, reading as follows: "Receipt is acknowledged of your letter of November 12, advising the Board of the fact that your bank has not ecflaplied with the Board's letters of February 15, 1926 (X-4531) nd April 15, 1936 (X-9548) in connection with the retention Judge Cole of Atlantic City as associate counsel in the . 111-t of the Federal Reserve Bank of Philadelphia against Ocean ltY, New Jersey, on a Tax Anticipation Note of $250,000. "You advise that to date the Federal Reserve Bank of 1/114 -Laadelphia has paid Judge Cole t',3625. on account of his ervices and that this amount is considered by your counsel and Y You as being entirely reasonable and that before any future 12,Yments are made to Judge Cole the matter will be referred to 'he Board for review and approval. the information in the Board's file with respect to th e litigation in question and from your statements it ' ,Ito Ilould appear that the payments already made are reasonable 641d the Board approves the action of your bank in payinb the 811111e with the understanding that future payments will be made in accordance with the letters of the Board to which you !" lc 'lave referred." 193n t Approved unanimously. Thereupon the meeting adjourned.
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