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A meeting of the Federal Reserve Board MRS held in Washington elaThursday, December 21, 1933, at 2:30 p. m. PRESENT: Mr. Mr. Er. Er. Mr. Mr. Black, Governor Hamlin Miller James Thomas Szymezak Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Bethea, Assistant Secretary The Board considered and acted upon the following matters: Telegram dated December 20, 1933, from Mr. Austin, Chairman of the pederal Reserve Bank of Philadelphia, and December 21, 1933, from 141's Vern Chairman of the Federal Reserve Bank of Kansas City, both Etdvisi log that, at meetings of the boards of directors on the dates Stated 'nc changes were made in the banks' existing schedules of rates dis count and purchase. Without objection, noted with approval. Telegraphic reply to a letter dated December 16, 1933, from ,""in, Federal Reserve Agent at Philadelphia; the reply reading 44 follew,: ::Your letter December 16. Board approves appointment Robert villson as Examiner in Federal Reserve Agent's department your cle, at salary rate of $4,512 per annum effective upon assuming ' u lee. Please advise effective date." lipproved. Letters to the boards of directors of the following State be 'each letter stating that, subject to the conditions prescribed 14 the etter, the Board approves the bank's application for membership 14 the p cdoral Reserve System and for the appropriate amount of stock 490 12/21/33 -2- 1 the Federal reserve bank of the district in which the applicant is Lxoted : :.iplicant Bank Federal Reserve Bank "Seaside Bank", Westhampt on Beach, New York. "The Iron and Glass Dollar Savings Bank of Birmingham", Pittsburgh, Pennsylvania. The Angleton State Bank", Angleton, Texas. New York Cleveland Dallas Approved. Letter to the organizers of the proposed "United Bank of Farm5-1311", Farmington, Missouri, stating that, subject to the conditions Pre3e1113ed in the letter, the Board approves the application made in behal„ 'of the bank for membership in the Federal Reserve System and for stook i 11 the Federal Reserve Bank of St. Louis, effective if and when 81ach b„o, ' receives its charter and is .authorized to commence business by the c -°111missioner of Finance of the State of Missouri. Approved. Reply to a letter dated December 5, 1933, from Mr. Newton, FedOral . 4"erve Agent at Atlanta; the reply reading as follows: fl, /lei-berme° is made to your letter of December 5, 1933, recomcling approval of an application of the 'Bank of Canton,' Canton, for an extension of time from January 1, 1934 to October en„034 within which to dispose of its holdings of stock of the i;7;°11 Cotton Mill carried in its investment account at $18,000. i1e the Board feels that corporate stock does not constitute a EA.11 : lilr ble investment for funds of a depositary banking institution curicrould be disposed of as soon as feasible, in view of the cirof 4_,anees outlined in your letter of December 5, 1933 and in view of re extension to October 1, 1934, granted by the Superintendent 1934at c of the State of Georgia, the Board extends to October 1, of it'ne period in iahich the Bank of Canton may, as required by one -8 Conditions of membership, dispose of its holdings of stock r 491 L/ 1 21/33 ar Om. of the Canton Cotton Lill. It is requested, therefore, that you advise the bank. of the Board's action in the matter." 1 Approved. Telegram to Er. Wood, Federal Reserve Agent at St. Louis, with l eM'd to ' conpliance by the Bankers Commercial Trust Company, Little Rock, Arkansas, with the condition prescribed by the Board at the time of the institution's admission to membership in the Federal Reserve 4'6te111 which provided that prior to December 15, 1933, all of the capitea CtOek of the bank should be sold to individual private investors. The telegram read as follow-s: H matter of sale of common capital stock of the 'Bankers Comlrust Company', Little Rock, Arkansas, the Board, in view Your telegraphic advice of December 16, 1933, that all of such 'ock has been sold to depositors or others, and in accordance th Your telegraphic recommendation of December 13, 1933, will not quire issuance of stock certificates evidencing onnership of liTh stock prior to nationalization, provided the matter is consuma'-ed within sixty days, and you are requested to advise the bank " cordin0-11d Re r: Approved. j kr Te legraphic reply to a telegram dated December 18, 1933, from p , vvon, Federal Reserve Agent at Minneapolis; the reply reading as tollowc "Refer your wire December 18, 1933 re application First State Barik time°f hushmore, Rushmore, hinnesota, Board grants extension of t° January 15, 1934 within which bank may comply with condi' 418 of membership." Approved. Letter to ha-. O'Connor, Comptroller of the Currency, reading as Boa d n accordance with your recommendation the Federal Reserve vel- oves a reduction in the common capital stock of 'The 492 12/21/33 -1- :'Second National Bank of New haven', New Haven, Connecticut, from ,2750,000 to ,:)370,000, pursuant to a plan which provides that the bank's capital shall be increased by the sale at par of c'e375,000 new corranon stock to the present shareholders or others and that the funds released by the reduction in the common capital stock shall be used to eliminate substandard assets or to increase the bank's surPlus, undivided profits or reserve for depreciation and losses, all as set forth in your memorandum of December 15, 1933." Approved. Letter to the Federal reserve agents at all Federal reserve cetting forth the procedure to be followed in connection with the ' - ee by the Board of limited voting permits to holding company af- trca 68 ln order to enable them to vote the stock which they own or con'n s ubsidiary member banks at the annual meetings of the stockhold- ern p such banks which ordinarily take place in January. Approved. T elograrr to Mr. Newton, Federal Reserve Agent at Atlanta, read- (18 folio 0: ni tlack n re application for voting permit The Atlantic Trust Company, y Florida. Please confirm Board's understanding that 4,:nd Executive Commdttee recoinmend approval of this application. ho-Cler because trustees hold stock of applicant in trust for share6 of The Atlantic National Bank (hereafter called bank) under thin agreement dated December 22, 1923 which provides among other calci'ligs that successors to original trustees, who were directors baxlcor officers of bank, must be approved by board of directors of appears that bank indirectly controls the election of a api;i:''Y of directors of member banks listed on Exhibit A of this talikleation and is therefore a holding company affiliate of such colit:' In previous case Board has ruled that where one corporation portfxj 18 majority of stock of member bank directly and another car0' controls such stock indirectly both are holding company afthaj t°6 and each must apply for and obtain voting permit in order Preve , 84t ."k maY validly be voted. Board's practice under this ruling Ati„„::'8 issuance of voting permit requested in application of The applic Trust Company until application has been filed by bank and 1,by board. This true even though bank is not registered °w/101.11!!, ' 4.1u will not itself vote stock of the banks listed in Exhibit A. 49:i 12/21/33 -5- "In filing application, bank at this time need furnish only application on Form P-1, accompanied by Exhibit A, Exhibit C, statement of financial condition of applicant as of date of application without supporting data ordinarily called for with Exhibit D, Exhibit G, 2xhib1ts L and N inasmuch as agreements and consents already on file will be effective only during life of any permit granted to The Atlantic Trust Company, and Exhibits P and Q if applicable. APPlication should also incorporate by reference information contained in application of The Atlantic Trust Company. Your recomlljendation and that of Executive Cormittee should be forwarded to Board with two copies of foregoing." Approved. Telegram to Hr. Wood, Federal Reserve Agent at St. Louis, reading as follows: f, "Re application First National Trustees, Louisvillc, Kentucky, 1 7 4 voting permit. Because terms of trust agreement dated July 1, ' 10 )25, under which applicant trustees hold stock of certain member anks, provide among other things for advisory committee, composed O Tr-embers of board of directors of First National Bank of Louislile (hereafter called bank), which committee has measure of con°1 over trustees and determines who successor trustees shall be, aPPearc that bank indirectly controls election of majority of 't'rectors of each member bank listed on Exhibit A of this applicapl°n.and is therefore holding company affiliate of such banks. In : 1 1110us case Board has ruled that where one corporation controls a 0(prity of stock of member bank directly and another corporation tr°1s such stock indirectly, both are holding company affiliates : 14 each must apply for and obtain voting permit in order that stock 41 validly be voted. Board's practice under this ruling prevents TIVITIce of voting permit requested in application of First National 130-8"lies until application has been filed by bank and approved by 110Zr.This true even though bank is not registered owner and will 4p ts°1f vote stock of member banks listed on Exhibit A of this oni,ication. In filing application at this time bark need furnish cation on Form P-1, accompanied by Exhibit A, Exhibit C, lant of financial condition of applicant as of date of applicatio," E-b1.11.thout supporting data ordinarily called for with Exhibit B, 41re G, Exhibits L and Y. inasmuch as agreements and consents gra.4. , 116Y on file will be effective only during life of any permit able ' ed to First National Trustees, and Exhibits P and Q if appliccorlts APplication should also incorporate by reference information appl illed in application of First National Trustees. In addition colltation discloses ownership by First Kentucky Company of 50 per Xelrt' 4 of common stock and 2.e per centum of preferred stock of lleky Title Trust Company, state member bank, and 50 per contwa Z j Z 494 12/21/33 -G- if of stock of First National Bank of Louisville. Since 9980 shares were voted for election of directors of First National Bank at preceding election, First Kentucky Company is owner of more than 50 Per centum of number of shares voted for election of directors of First National Bank at preceding election and is, therefore, holdCompany affiliate of First National Bank within meaning of Section 2(e) of Banking Act of 1933 and must apply for and obtain from Board permit to vote shares of First National Bank awned by it, before same validly may be voted. If shares owned by First Kentucky CoMpany in Kentucky Title Trust Company represent more than 50 per centum of number of shares voted for election of directors of Kentucky Title Trust Company at preceding election, First Kentucky Company is holding company affiliate of Kentucky Title Trust ComPanY within meaning of Section 2(c) of Banking Act of 1933 and zust apply for and obtain from Board permit to vote shares owned bY it in Kentucky Title Trust Company before same may validly be 7°ted. First Kentucky Company should file application for voting p,erzlit on Board's prescribed forms with respect to First National 7nk.and with respect to Kentucky Title Trust Company if it is _°11.111g company affiliate of latter on basis above outlined. Appliu!lion should incorporate by reference information contained in apication of First National Trustees, but may omit Exhibits li, I, alld 0. Your recorrendation and that of executive committee should ' 41 forwarded to Board with two copies of each application." V Approved. Reply to a letter dated September 5, 1933, from Er. E. C. Smith, or the of the Gap liational Bank and Trust Company, Gap, Pennsylvania; l'oply reading as follows: th "Thic refers to your letter of September 5, 1933 addressed to roller of the Currency and referred to the Federal Reserve BoardComptroller il for reply. You state that your bank has outstanding a large of certificates of deposit which are of indefinite maturity bulliatber viri,with respect to which your bank reserves the right to require vilitc tten notice of thirty days before payment; and you inquire Ivithher You may pay the above certificates that are now outstanding rlot ,interest without requiring notice. You also state that it has ie ,"(1/1 your practice to require notice before payment of a certif%e ef deposit. 1301.Y?11 will observe that under the provisions of footnote 4 of the den0(1. Regulation interest may not be paid on a certificate of to';s1t with respect to which the bank merely reserves the right R(turuire notice before payment. Under other provisions of the with nlon, however, a member bank may pay interest in accordance "le terms of any certificate of deposit which was lawfully 495 12/21/33 -7- "entered into in good faith prior to June 16, 1933, and in force on that date and which may not lawfully be terminated or modified by the bank at its option or without liability; but no such certificate of deposit may be renewed or extended unless it be modified to conform to the provisions of the regulation, and every member bank is required to take such action as may be necessary as soon as possible consistently with its contractual obligations to bring all such certificates of deposit into conformity with the Provisions of this Regulation. The certificate of deposit inclosed with your letter, which you state is an exact duplicate of the certificates of deposit outstanding, appears to be of indefinite maturity and it would seem to the Board that your bank might lawfully have terminated the contract contained in the certificate at anY time upon paying the amount due to the depositor after giving reasonable notice to him of your intention to terminate the arrangeTent; and that, accordingly, it was the duty of your brink to erminate or to modify such a certificate of deposit as soon as posible so as to bring it into conformity with the provisions of the egulation. The payment of interest accruing after such modification or Is nermi ation of the certificate on any deposit represented tiiereb3 prohibited, unless the certificate as modified conforms to tile requirements of the Regulation. "With respect to the certificates of deposit issued by your 'Ilk after June 16, 1933, on the form submitted with your letter, Y d°11 are advised that, inaamuch as such form does not conform to the _!finition of a time certificate of deposit contained in Section III ur L'he Regulation, no interest may be paid thereon under the law. Board'Upon Section 19 of the Federal Reserve Act, the Federal Reserve , is required from time to time to limit and is authorized to e”ribe the rate of interest which may be paid by member banks of time deposits and it is believed desirable that time certificates entuePosit and other time deposit contracts hereafter issued or theereed into by member banks should refer to this fact. It is icert-fore suggested that your bank print or stamp upon such certifst.s 'e? of deposit or contracts hereafter issued, a provision sub'fltlally in the following form: 'The rate of interest payable hereunder is subject to change by the bank to such extent as may be necessary to comply with requirements of the Federal Reserve Board made from time to time pursuant to the Federal Reserve Act.' 11 respect to your inquiry concerning the waiving of the re• ' of notice of intended withdrawal of a savings deposit, a yourerle vid,,,re advised that such requirement of notice may be waived, procolZthe merber bank complies, in all respects, with the provisions ' fled in Section VI of the board's Regulation q." Z Approved. Reply to a letter dated December 12, 1933, from Mr. E. 1.7 1+• 496 12/21/33 -6- 41/418end, Assistant Financial Advisor of the Federal Home Loan Bank 844'd; the reply reading as follows: "I assume that the inquiry in your letter of December 12 relates solely to bonds of the Home Owners' Loan Corporation. The conditions under which Federal reserve banks may accept such bonds as collateral for loans to member banks are prescribed by sections 10(a) and 10(b) of the Federal Reserve Act as amended, a copy of *Lich is inclosed for your convenient reference. Loans under those sections can only be made in certain unusual circumstances vhen the member banks receiving the proceeds of the loans are without sufficient amounts of eligible and acceptable assets to enable they to obtain adequate credit accommodations otherwise. 'The Federal reserve banks have no authority to buy such bonds. ;Llis memorandum quoted in your letter indicates that it may have been suggested that the Federal reserve banks would have such authority under section 43 of the Act approved May 12, 1933, but 'S the President has not taken action under the terms of that sec" -on the possibility of purchase of such bonds by the Federal reserve banks under that section has not been determined." Approved. Letter to the Federal Deposit Insurance Corporation, reading f°110170: here is inclosed for your consideration copy of a letter dated December 14, 1933, received from the Federal Reserve Agent at mi the Federal Reserve Bank of Richmond, together with a copy of 2,,letter of acknowledgment of this date, stating that it is his ?erstanding that the Federal Deposit Insurance Corporation will, r elor to the first of the year, publish a list of banks, not memti±s,of the Federal Reserve System, which have been admitted to '4.1tt iemporary Insurance Fund. atioin view of the fact that the Federal Deposit Insurance Corporf0 lovizt n issued a regulation under date of November 22, reading as t 'No bank shall hereafter advertise its prospective connection with the Temporary Fund of this Corporation, by any f°rm of announcement or publicity, nor shall any bank announce ( 13, _' 1 advertise that it is, in fact, a member of the Temporary uad of this Corporation or that its deposits are insured Within the limitations of the Banking Act of 1933 until an1°114oement of the name of such bank as a member of the fund boon it 141 this made under the authority of the Board of Directors Corporation.' d be appreciated if you will advise whether the Corporation 1 497 12/21/33 -0- centamplates announcing at the close of the current year the nemes of all banks admitted to the Temporary Insurance Fund effective January 1, 1934, including all banks, other than national banks, which are meMbers of the Federal Reserve System." Approved. Letter to Mr. Hoxton, Chairman of the Federal Reserve Bank of 11.10, -44nd, prepared in accordance with the action taken at the meeting °11 December 18, 1933, reading as follows: "Reference is made to the memorandum submitted at the meeting Of the Federal Reserve Board on September 26, 1933, by a committee °f your directors consisting of Messrs. Delano, Rieman and Reed, E/ques; approval by the Board of the purchase by the Federal Re.zer\Te Bank of Richmond of the lot which directly adjoins your annex ,uilding and has a 110 foot front on Eighth Street and 120 foot ,,..epth, and to the Board's letter of September 28, 1933, advising 'hat the Board had considered the request of the committee of directtors and did not approve the proposed purchase. t 'The Federal Reserve Board has now given further consideration 1.ihe request, and I have been asked to advise you that the Board interpose no objection to the purchase by your bank of the -' 87.t referred to at a cost of not to exceed 385,000, plus commis/30°118. In this connection it is noted that at the meeting of the thard on September 26, the committee of directors stated that while eh° option then held by your bank on this property specified a purabr) Price of c185,000, it was anticipated that the bank might be obtain the property for 375,000 or ';80,000. th_ It will be appreciated if you will advise the Board if and when PrePerty is acquired by your bank, and the price paid therefor." Approved. Reply l'°110w13. to s letter dated December 9 1933, from Mr. McKay, Deputy of the Federal Reserve Bank of Chicago; the reply reading as III I cop, lave Your letter of December 9 and read with interest the illelesed therewith of your letter to Dr. Burgess at New York iliait:rd to the proposed plan for providing for depreciation in close- States Government securities held for system account at the trom oc)f the year on December 31. I have also received a letter Of th"Bur ess dated December 12 inclosing a copy of his letter e 3rile date to the Governors of all Federal reserve banks on 49 1,2/21/33 -10- "this subject. Az I understand it, the procedure proposed by Dr. Burgess with respect to the Government securities held in system account on December 31 of this year is based upon the formula which was approved by the Federal Reserve Board for use at the end of 1931. It is the view of the Board that this formula is a sound °40 and that it should be applied both to the Government securities held in system account and to the Government securities held seParately by each Federal reserve bank." Approved. Letter to the Federal reserve agents at all Federal reserve bazik s, reading as follows: "The last paragraph of the Board's letter of Llay 1, 1933, 7:7426, on the subject of procedure with regard to violations of "le Clayton Act, reads as follows: 'The Board suggests that each Federal Reserve Agent adopt the practice of making a review during the course of each Year of the outstanding Clayton Act permits issued to applicants in his district; and of submitting to the Board his recommendation in each case in which in his opinion the Public interest requires the revocation of a permit effective either immediately or at the time of the next annual election of directors, together with his recommendation in each case in which he feels that there' is .,;round for doubt under the ”_Board's instructions as to the action which should be taken.' he,_ It will be appreciated if you will advice what procedure you tto7e ,adopted and at progress you have made in carrying out the -d's suggestion." Approved. Letter dated December 20, 1933, approved by six members of the to ezt applicant for a permit under the Clayton Act, advising of N431. ()val. of L. "18 application as follows: Lir 1, ti;errederick S. Chamberlain, for permission to serve at the same 14114 as director of the Federal Reserve Bank of Boston, Boston, ti:achusetts, and as director and officer of The New Britain Na‘111a1 Bank, New Britain, Connecticut. tooa..4, Approved. here wnre then presented the following applications for °rigor -‘4uitional stock, or for the surrender of stock, of Federal b,) 12/21/33 reserve -11- banks: lic ations for .121.142I, No. 2. ORIGINAL Stock: %evili7-TTaTICTnal Bank, Edgewater, New Jersey rirat National Bank of Spring Lake, Spring Lalces New Jersey 4 " Naffr-Bank of Barbourville, Barb° urville, Kentucky AZP.272:4'412ns for ADDITIONAL Stock: bistrict4_ National Bank, East Islip, New York \Increase in capital) _ 4. Q° Trust Corroany, Toledo: Ohio illerellee in capital, through sale of eaPital notes in the amount of $5,000,000 tc) the Re construction Finance Corporation, partly Offset by a decrease in surplus) Shares 45 75 36 Total 120 36 , 156 15 15 1,300 Total 1,300 1:315 I A 14 n4 ''J'eations for SURRENDER of Stock: T,tatrict No. 1 Irat ilational Bank of Pepperell, East l'ePPerell, mo Liassachusetts (Being 11-qUidated throuh conservator) 4tPelier N ational Bank, Y,ontpelier, (Be. O liquidated through 1irlZt vat ) •4.ticna1 Black River Bank, Proctorsvi Vex.lle, mont (Being liquidated through conservator) 48 150 51 249 1)itri Ilernt, et No. 2* 'i,;44ta ilational Bank, Dunkirk: New York Pir'"erease Set in capital and surplus)t Llerohants National Bank & ?111131sulY, laddletown, New York (Being 1l Trusqidate throu,rh conservator) I)ist • Ttz....n" ›burz 4* Lational Bank, Harveysburg, (In solvent) 240 300 18 540 500 12/214/33 -12- Plications for S EDER of Stock: (Continued) p_istrict 11.--47Jefferson County 717-,ont=ledTNational Bank, Brookville, p. Pennsylvania (Insolvent) lisct National Bank, Nen, Wilmington, Pennsylvania (Being liquidated through conservator) ural Valley National Bank, Rural Valley, F. Pennsylvania (Beini; liquidated through conservator) lret Rational Bank & Trust Company, Tarentum, Pe consel lc=: (Being liquidated through ) District No* 5. Pirat National 13anl:, Hancock, Maryland Pi-r,t (Beillg liquidated through conservator) National Bank, Roncoverte, West Virginia kVoluntary liquidation, succeeded by liational Bank in Ronceverte) Eltrict No. 7. 'Irst National Bank, Monticello, Illinois P eing liquidated through conservator) Lational Bank, Morrison, Illinois Ills rlret 0lvent National Bank, Valley Junction, .Iowa (Ncrease in surplus) 1)4trict No. 9. 41.nt N ational IT , Park Rapids, (In idinnes°ta solvent) 1;ational Bank, Marmarth, North Dakota NEkt 4-1141°1"vent) 1 oattn )of Anaconda, Anaconda, Montana rst National Bank, Hayti, South Dakota (Ila"lvent) bcriistr• let 11-0, 11. LationalBank, Clyde, Texas pi (Incolvent) B Meadow, Texas ansolvent) 6t 11 Approved. Shares 150 90 54 240 552 45 60 105 120 102 12 234 39 30 81 18 168 18 18 Total 36 1,884 Thereupon the meeting adjourned.
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