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611 A, neeting of the Federal Reserve Board was held in Washington on IhIlraday, December 28, 1933, at 3:30 p. m. PRES= Hr. Mr. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller James Thomas Szymezak O'Connor Morrill, Secretary Carpenter, Assistant Secretary Bethea, Assistant Secretary Paulger, Chief of the Division of Examinations Mr. Wingfield, Assistant Counclel. Mr. Mr. Mr. Mr. Governor Black advised Mr. Miller of the action taken by the Board t the meeting yesterday with regard to the application of "The Chase 4411°1141 Bank of the City of New York", for permission to reduce its 1 stock, and Mr. Miller stated that he desired to be recorded as It t 441g in favor of approval of the application. IT. Morrill stated that there were pending two applications for 41111), one from "The Farmers & Merchants Bank & Trust Company", " 4113 444141541, Missouri, and the other from the "Marquette Trust Company", 14114ea. Polls, Minnesota, which were ready for approval except for a question had arisen as to whether a departure from the policy of the Board a in 44°13t6other cases in the past would be warranted. He stated that the 1141Esti-on arose out of the fact that in the case of the Farmers and Merchants /'11413"t Comp, Hannibal, a building and loan association occupies rooms on 4 bikk -44anine floor of the bank, which are accessible from both within and Ilithotzt the bank and in the case of the Marquette Trust Company the banking 1-u are occupied on one side of the main lobby by the applicant State `3.. 114.1111. wa the other side by a national bank, and on a mezzanine floor by a 11414414g and loan association, access to all three institutions being 612 la/28/33 ' 11 31-Igh a single main entrance to the building from the street. Er. Verrill 8tIlted that in previous cases the Board has required that the occupancy of the "Ine banking quarters be terminated either before admission to member- hiP or within six months thereafter, according to circumstances, but that 14 the two pending cases the Federal reserve agents had not reconnended that such a condition be prescribed and that there were special circumlitances which made it desirable that the matter be given special considerat this time by the Board. Ile pointed out that if the usual con- cliqon were not prescribed it would amount substantially to a reversal of the OarUt3 policy in such matters as the grounds for distinction between these cases and similar cases considered in the past were not very t tjal A discussion ensued, at the conclusion of which Lx. Tames moved that the Board adhere to its policy in these cases and that the two applications be approved subject to appropriate conditions covering this matter, in addition to the other conditions recomnended by the division of examinations and the legal division. Carried. It was also understood that the respective Federal reserve agents would be advised that if The Farmers & Merchants Bank & Trust Company or the Marquette Trust Company raises any question with regard to the condition of membership, the Board will be glad to consider any additional information that they may desire to submit in connection with the matter. Morrill stated that the Board had received a number of Clayton Acrt Ziled by directors of Federal reserve banks or their hea l for permission to serve such banks or branches and certain other bola ktri . g Institutions, and that it was felt that the applications involve 613 12/28/33 -.3- nuestions which should be considered carefully by the Board. After discussion, the applications were referred to the Chairmen of the respective District Committees, with the understanding that the Committees would consider the applications and present their recommendations thereon to the Board at a meetinc to be held tomorrow afternoon at 3 p. m. Li'. Tames submitted a memorandum dated December 28, 1933, and 8iGned by him as Chairman of the Committee on Salaries and Expenditures, "evting that 11±. Smead, Chief of the Division of Bank Operations, had recIlleated that further adjustments in the salaries of Messrs. J. E. Horbett 44c1 L. S. Liyrick, members of the staff of the Division of Bank Operations, bebn4de from e5,400 to e6,000 and ,4,100 to ,4,500 per annum, respectively, "teetive January 1, 1934, and recomiending that, inasmuch as the two e4J43ttlents were overlooked in considering other adjustments when the sticIn of salaries for the year 1934 was discussed by the Board at the ' c1119 leeting on DeceMber 21, 1933, the adjustments be approved at this time. Approved. Governor Black referred to the number of applications for memberN.1) '411 the Federal Reserve System now on file with the Board, and he re 18°c1 the question as to whether they will all be acted upon by the Board ,+ 14 till — 40 permit the banks to qualify for membership before January 1, I9341. Paulger stated that he believed that all of the applications 11c4( bef. --(pre the Board on which the necessary information is available will be 4tecl upon not later than tomorrow, December 29, 1933, and that he has bee4 a 811red that, with the exception of one or two banks which had not a keqe PPlication to the Federal Deposit Insurance Corporation for admission buher..1,4 -4“.13 in the temporary insurance fund, applications from all of the I) 614 12/28/33 -4- ba/1114 in question for admission to the temporary insurance fund will have been considered by the Federal Deposit Insurance Corporation before 444ary 1, 1934. After a brief discussion, Mr. O'Connor stated that if the Federal Deposit Insurance Corporation is furnished with a list of the banks which have applications for membership in the System on file with the Board on which action has not yet been taken, the Corporation will advise the Board confidentially whether such banks will be admitted to membership in the temporary insurance fund on January 1, 1934. (Secretary's note: The list of 31 banks whose applications had not been approved by the Board was submitted to Er. Walter J. Cummings, Chairman of the Federal Deposit Insurance Corporation, and he advised that, with the exception of three banks whose applications apparently had not been received, all banks on the list would be admitted to membership in the temporary insurance fund as of January 1, 1934. With regard to the three banks referred to, the Division of Examinations advised that their applications had been considered by the Division and it was believed they could be acted on by the Board tomorrow, December 29, 1933.) There was then presented a letter dated December 15, 1933, from /11% 111,A With tor or ew Welch, San Francisco, California, referring to correspondence eGard to his eligibility under the Clayton Act to serve as a direca Federal reserve bank, and tendering his resignation as a class dire "°1 ' of the Federal Reserve Bank of San Francisco. After discussion, Er. Morrill was requested to address a letter to rx. Weloh similar to that sent to the Chairmen of all Federal reserve banks under date of December 19, 1933, and to call the Federal reserve agent's office at the Federal Reserve Bank Of San Francisco on the telephone and request that office to communicate with Mr. Welch and ask him to withhold his resignation pending receipt of the letter. 615 -5_ 12/28/33 The Board then considered and acted on the following matters: Telegram dated December 27, 1933, from Mr. Curtiss, Chairman of the "al Reserve Bank of Boston, advising that, at a meeting of the board t "directors on that date, no change was made in the bank's existing "Iledule of rates of discount and purchase. Without objection, noted with approval. Memorandum dated December 27, 1933, from Mr. Goldenweiser, Director °I the Division of Research and Statistics, transmitting and recom- 45/4411g acceptance by the Board as of the close of business on December 19331 of the resignation of Mrs. Margaret T. Howell, temporary Iteittaman in the division. Accepted. Telegram to Mr. Hoxton, Federal Reserve Agent at Richmond, stating 114t) subject to the conditions prescribed in the telegram, the Board Ires the application of "The Farmers Bank of Nansemond", Suffolk, -a, for membership in the Federal Reserve System and for the ItDPIPriate amount of stock in the Federal Reserve Bank of Richmond. Approved. Telegram to Mr, Stevens, Federal Reserve Agent at Chicago, reto the application of "The Mechanicsville Trust and Savings Bsilk", 11"114111081rille, Iowa, for permission to withdraw immediately from memberiiithe Federal Reserve System and stating that the Board waives the 11N1 re quirement of six months notice of intention to withdraw, and that, 11113t1/111e1Y, upon surrender of the Federal reserve bank stock issued to 114 144 haniesville Trust and Savings Bank, the Federal Reserve Bank of 616 12/28/ -6is authorized to cancel such stock and make a refund thereon. Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as t°110778 "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock °f 'The Citizens National Bank of Paris', Paris, Illinois, from -:100,000 to :)150,000, pursuant to a plan which provides that the bank's capital shall first be increased by the sale at Dar of .;)75,000 par value preferred stock to the Reconatruction Finance Corporation, and that the funds released by the reduction in common capital stock and a portion of the batk's surplus and undivided profits shall be used to !liminate substandard assets in the amount of approximately A05,000, all as set forth in your memorandum of December 16, 1933.t, Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as 1'011 "In accordance with your reconmndation, the Federal Reserve Board approves a reduction in the common capital ,”ock of 'The First National Bank of Kennewick', Kennewick, 4eehington, from .)50,000 to :37,500, pursuant to a plan nich Provides that the bank's capital shall be increased by sale at par of .12,500 par value preferred stock to the , iteconstruction Finance Corporation, and that the funds re-Leased by the reduction in common capital stock shall be lised to eliminate a corresponding amount of substandard "sets and securities depreciation, all as set forth in 'Y°11r letter of December 22, 1933." Approved. Telegram to rr,.. Case, Federal Reserve Agent at New York, stating 11/et the Board has considered the application of the "President and 1311'ElQt01..8 the Manhattan Company", New York, New York, for a voting it qtder authority of section 5144 of the Revised Statutes of the litlata states, as amended, entitling such organization to vote the stock 617 1V28/33 -7- 17111eh it owns or controls in "The County Trust Company", White Plains, 17e17 York) and has authorized the issuance of a limited permit to the l'1)13licant, for the following Purposes: "To elect directors of such bank at the next annual meeting of shareholders, or at any adjournment thereof, at any time prior to April 1, 1934, and to act at such meeting, or at any adjournment thereof, upon such matters of a routine nature as are ordinarily acted upon at the annual meeting of such bank." Approved. Tel-egram to Er. Curtiss, Federal Reserve Agent at Boston, stating tIlat the Board has considered the application of the "Shawmut Association", 13°3toy, the l assachusetts, for a voting permit under authority of section 5144 D . ,evised Statutes of the United States, as amended, entitling such ---zcttion to vote the stock which it owns or controls in "The Winchester 44tiopro :33nk", Winchester, 1,:assachusetts, "The Eerchants National Bank (441 " 1", Salem, Eassachusetts, and the "Needham National Bank", Yeedham, 14.4 .Eichusetts, and has authorized the issuance of a limited permit to the 4111311cant, subject to the following condition: "Simultaneously with the issuance of the limited voting permit authorized hereunder, there shall be issued to The National Shawmut Bank of Boston, Boston, Eassachusetts, the limited voting permit authorized in the Board's telegram of this date to the Federal Reserve Agent at the Federal Reserve Bank of Boston." / 1 44 to r the following purposes: "(1) To elect directors of such banks at the annual meetings of shareholders, or at any adjournments thereof, at any time prior to April 1, 1934, and to act at such meetings, or at any adjournments thereof, upon such matters of a routine nature as are ordinarily acted upon at the annual meet- 618 12/28/33 - "ings of such banks. (2) To authorize the issuance by The Merchants National Bank of Salem, Salem, Massachusetts, of preferred stock of one or more classes, in such amount and with such par value as shall be approved by the Comptroller of the Currency of the United States, and to make such amendments to its articles of association as may be necessary for this purpose, all in accordance with such plan for the rehabilitation of The Merchants National Bank of Salem aforesaid as shal be approved by the appropriate supervisory authorities and the Federal Reserve Agent at the Federal Reserve Bank of Boston." Approved. Telegram to Mr. Curtiss, Federal Reserve Agent at Boston, stating tLat the Board has considered the application of "The National Shawmut or Boston", Boston, Massachusetts, for a voting permit under author- ()f section 5144 of the Revised Statutes of the United States, as eu, klend, entitling such organization to vote the stock which it owns or NAr (Ls in "The Winchester National Bank", iinchester, Massachusetts, Lerehants i:ational Bank of Salem", Salem, r.assachusetts, and the 4110e I, IÜ National Bank", Needham, Massachusetts, and has authorized the ia 43-11Qe of a limited permit to the applicant, subject to the following "First. Prior to the issuance of such permit, (a) there Shall be delivered to the Federal Reserve Agent at the Federal Reserve Bank of Boston (i) an application on F.R.B. form P-1, including Exhibit C on F.R.B. Form P-2, executed by the duly authorized officers of the applicant, and (ii) opinion of counsel for the Federal Reserve Bank of Boston that such agreement is in form satisfactory to him and is the valid and binding Obligation of the applicant; (b) the Federal Reserve Agent at the 2ederal Reserve Bank of Boston and the 4xecutive Committee of such bank shall approve the application required hereunder and shun recommend the issuance of a limited voting permit to the applicant for the purposes hereinafter set forth after the letter 'D'. Second. Simultaneously with the issuance of the 619 1V28/33 -9- "limited voting permit authorized hereunder, there shall be issued to Shawmut Association, Boston, Massachusetts, the limited voting Permit authorized in the Board's telegram of this date to the Federal Reserve Agent at the Federal Reserve Bank of Boston." ELI1C1 - Or the following purposes: "(1) To elect directors of the subsidiary member banks at the annual meetings of shareholders, or any adjournments thereof, at any time prior to April 1, 1934, and to act at such meetings, or any adjournments thereof, upon such matters of a routine nature as are ordinarily acted upon at the annual meetings of such banks. (2) To authorize the issuance by The Merchants rational Bank of Salem, Salem, Massachusetts, of preferred stock of one or more classes, in such amount and with such par value as shall be approved by the Comptroller of the Currency of the United States, and to make such amendments to its articles of association as rny be necessary for this Purpose, all in accordance with such plan for the rehabilitation of The Merchants National Bank of Salem aforesaid as shall be approved by the appropriate supervisory authorities and the Federal Reserve Agent at the Federal Reserve Bank of Boston." Approved. Tele Gram to Mr. Stevens, ieederal Reserve Agent at Chicago, statin7, thact 4st 41 the Board has considered the application of the "Riley Corporation-, ahicago, Indiana, for a voting permit under authority of section Of the Revised Statutes of the United States, as amended, entitling °1'eanization to vote the stock which it owns or controls in "The 11"ionul Bank in East Chicagol',East Chicago, Indiana, and "The V410 4 national Bank of Indiana Harbor at -ast Chicago", East Chicago, 11lain, and has authorized the issuance of a limited permit to the Callt, for the following Purposes: "To elect directors of each of such banks at the annual neetings of their respective shareholders, or at any adjournments thereof, at any time prior to April 1, 620 12/28/33 —10-- "1934, and to act at such meetings, or at any adjournments thereof, upon such natters of a routine nature as are ordinarily acted upon at the annual meetings of such banks." Approved. Telegram to Er. Newton, Federal Reserve Agent at San Francisco, ting that the Board has considered the application of the "Tracy coll1 oration", Salt Lake City, Utah, for a voting permit under authority cr section 5144 of the Revised Statutes of the United States, as amended, ' "Itlifla' such organization to vote the stock which it owns or controls 111 the tralracy Loan and Trust Company", Salt Lake City, Utah, and has k1thorized the issuance of a limited permit to the applicant, for the 1°11°17ing purposes: "To elect directors of such bank at the annual meeting Of shareholders, or any adjournments thereof, at any time prior to April 1, 1934, and to act at such meeting, or any adjournments thereof, upon such natters of a routine nature as are ordinarily acted upon at the annual meeting of such bank." telegram stated also that action on the application for a permanent 1) 111it is deferred pending a complete examination by the Federal reserve " office of the Tracy Loan and Trust ComPany and the Tracy Corporati"°r the purpose of establishing an accurate valuation of the assets "both, Approved. TelegraPhic reply to a letter dated November 1, 1935, from Er. C\1rti 83) Federal Reserve Agent at Boston, the reply reading as follows: "Referring your inquiry November 1 as to whether tr,, qsteeship which holds stock of Old Colony Trust Company r°r benefit of stockholders of First National Bank of Boston 621 12/26/3,6 -11- "is holding company affiliate of Old Colony Trust Company, it does not appear that trusteeship has characteristic attributes Of corporation, business trust, association, or other such organization, and, although trustees have power to purchase and sell stock of Old Colony Trust Company it does not appear that they are actually engaged in such dealings. 2:oreover, It would seem that in general trustees have only such Powers as tre incidental to holding of stock for benefit of shareholders Of national bank aforesaid. In view of foregoing and on basis °f information submitted, it does not appear that trusteeship is business trust, association or other similar organization Within meaning of Act or subject to provisions of Act applicable to holding company affiliates of member banks." Approved. Telegram to the Federal reserve agents at all Federal reserve reading, as follows: "Referring Board's December 22 letter re7,arding payment !le dividends, etc., all reserves set aside by Federal Reserve u'lake at end of Year to cover losses on bills and securities 117111 be shown by Board, in published earnings, expense and P irofit and loss statements, against caption 'Reserves for 08ses's without segregation as to amount of reserve set ! elde on United States Government securities, discounts, and Ileign credits and it is suggested that the sane caption be sed in similar statements issued by your bank." r Approved. Telegraphic reply to a telegram dated December 26, 1933 from :Ir. /r1 Deputy Governor of the Federal Reserve Bank of Chicago; the reply l'eac14 as follows: "In accordance with recuest contained in your December 2 a. wire Board authorizes your bank to set aside out of net ec3 lailflings a self-insurance reserve of .)500,000 or such lesser of .:,;50,000, as net earnings remaining, after payOf expenses and accrued dividends and provision is made losses, will permit." Approved. Reply to a letter dated December 15, 1933, from Kr. Alfred Eahn, 414e4t of the Union Bank, Little Rock, Arkansas; the reply reading as 622 -12- "This refers to your letter of December 15, 1933, addressed to 1:r. James, in which you suggest that, in view Of the provisions of law relating to the insurance of bank deposits, after January 1, 194, the trust department of Your bank may properly return to the bank the portion of the Government bonds now pledged to secure denosits of trust funds in other departments of the bank for which insurance becomes effective on that date. "Section 11(k) of the Federal Reserve Act reriuires that funds deposited or held in trust by a national bunk waiting investment shall be carried in a separate account 41101 'shall not be used by the bank in the conduct of its blIsiness unless it shall first set aside in the trust dePartment United States bonds or other securities approved bY the Federal Reserve Board'. This :)rovision of Section "1(k) was not repealed or qualified by the provisions of the banking Act of 1933 relating to the insurance of bank dePosits and, accordingly, this requirement will still be effective after January 1, 1934, with respect to trust funds Of national banks which are used 132, the banks in the conduct 01 their business. "One of the conditions of membership to which your bank Ilereed at the time of its admission to membership in the Federal Reserve System is as follows: 'If trust funds held by such bank are deposited in its banking department or otherwise used in the conduct of its business, it shall deposit with its trust deDartment security in the same manner and to the same extent as is required of rational banks exercising 1 fiduciary powers.' "It was the intention of the Board in prescribing the conof membership above quoted in connection with the admission Your bank and other State banks to the Federal Reserve System (1:lat they should be subject to the same requirement in this 14::sPeot as are national banks which exercise fiduciary powers. by 1„ the requirement is not changed as to national banks Reserve 13'eon of the insurance of bank deposits the Federal Cl does not feel that it should be modified on that account 4. Or State member banks which are subject to the condition in your trust depart11!!tion. You are advised, therefore, that insurance of for provisions the Y not by reason of of the securities portion any bank deposits return to the under the condeparlAnent trust lred to be Pledged with the ci 61011 of membership in question." ' a . ,F Approved. 623 28 3 -13- Memorandum dated December 21, 1933, from Ia.. Smead, Chief of the 1)1/I1510:1 of Bank Operations, referring to the consideration given recently t° the question of reimbursement of Federal reserve banks by the Treasury )artment for fiscal agency expenses, and submitting a proposed letter % to tile governors of all Federal reserve banks requesting that they furnish the Board with complete information regarding the cost of all fiscal agency 411c/ depositary functions performed for the Treasury, and detailed figures "costs of handling each class of Treasury operations for the last half or 1933. The proposed letter was approved. Letters to applicants for permits under the Clayton Act, advising or in, 40 approval of their applications as follows: ' rir. Charles E. Rieman, for permission to serve at the same time as officer and director of The Western National Bank of Baltimore, Baltimore, liaryland, and as director of the Federal Reserve Bank of Richmond, Richmond, Virginia. R. Cobb, for permission to serve at the same time as °rricer of the Citizens Union National Bank, Louisville, ll'entucky, and as director of the Louisville branch, Federal Reserve Bank of St. Louis, Louisville, Kentucky. lanson F. Backus, for permission to serve at the sane time director and officer of The National Bank of Commerce of attle, Seattle, Washington, and as director of the Seattle 1,,I*41ncil, Federal Reserve Bank of San Francisco, Seattle, q ashington. r Approved. There were then presented the following applications for original °r aa,. `Iltional stock of Federal reserve banks: 12/28/3'6 -14- 441).cat1ons for ORIGINAL Stock: Shares pL..t11.2.-L119. 3' riton National Bank, Scranton, Pennsylvania. ard1eY National Bank, Yardley, Pennsylvania. 150 30 lietrict t No. 10. -wizens Natijnal Bank in Independence, N, Independence, Kansas. •'"Ir National Bank & Trust Company of Kansas City, Xansas City, Lissouri. 150 tj o 11. 4t8t National Bank, Alto, Texas. 189 420 570 32 Total 32 791 lication for AMITIONAL Stock: _ National Bank, DeFuniak Springs, Florida. (increase in capital through issue of Preferred stock, partly off-et by decrease in surplus.) 18 18 Approved. Thereul)on the meeting adjourned. Secretary. / Governor. 625 Secre t t s Memorandum for the Minutes * Decmbrf 284 _. 1933. There are attached hereto memoranda on two Sheets, one headed easier of Gold" and the other bearing no heading, but each having the bottom of the nage the initials "H. O." and the date "12-28-33", b.° h t of which are memoranda prepared by Mr. Oliphant, General Counsel. at "the Treasury, and given to Mr. Walter Wyatt, General Counsel of the hatt ral Reserve Board, in connection with the discussions regarding the 4040 v'r°4- questions involved in the possible transfer of gold from the delta reserve banks to the Treasury referred to heretofore in the 1.tes of the Board. 626 TRANSFER OF COLD (1) (a) (s) (4) (s) (s) All gold coin, bullion and certificates received from others by the Federal Reserve Banks or Branches since Earch 4, 1933 (except in settlement of foreign balances) shall be turned over to the Treasury immediately and unconditionally; and payment therefor will be made in any coin or currency dollar for dollar or at ‘;,20.67 per ounce as the case may be. The Federal Reserve Banks, Branches and Agents will forthwith transfer (subject to the condition subsequent mentioned in (4) below) to the Treasury, possession of, and title to, all other gold coin or bullion owned by them or on deposit with the United States, and will receive therefor gold certificates at the rate of ;;0.67 per ounce. All gold certificates by whomever held shall be deemed and treated by the Treasury as dollar obligations so that no profit or loss will accrue to any holder thereof as a result of any change in the gold content of the dollar; and they will be secured at all times by 100 Per cent deposit of gold pledged as collateral therefor. Should the forthcoming session of Congress adjourn without ratification of the transfers above mentioned, and of any change in the gold content of the dollar theretofore made, the absence of such ratification shall Operate as a condition subsequent to the transfer mentioned in (2) above, revesting title to the gold so transferred, except as to that Portion of such gold as is attributable to profits resulting from any such devaluation; and possession of such gold will be surrendered by the Treasury upon the surrender of the gold certificates received in Payment therefor. UPon devaluation so much of the gold as is not attributable to Profits therefrom will be returned to the Federal Reserve Banks but without agreement express or implied that such gold will not later be called into the Treasury. administrative acts and recommendations to the Congress as may oe necessary for carrying out the foregoing arrangements will be made at the appropriate time. 627 A statement of the things not covered therein may serve to sharpen the outlines of the tentative plans sketched on the accompanying sheet. This plan does not extend to any of the following matters: (1) The gold status of any gold certificates or the present or future redemption of any gold certificates. Any plan for having the gold representing the profit resulting from devaluation returned to the Federal reserve banks or agents in event of devaluation without Congressional ratification. Any plan for special treatment of any particular body of gold corresponding to any particular group of gold certificates. Any items in any program for legislation relative to the general monetary system, except, of course, the legislative ratification mentioned on the accompanying sheet.
@FedFRASER