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• A meeting of the Executive Committee of the Federal Reserve Board Was held in Washington on Friday, December 30, 1932, at 11:115 a. mi. 681MT: PR- Governor Meyer Mr. Hainl in Mr. Miller Mr. Magee Mr. Mr. Mr. Mr. Mr. Er. Morrill, Secretary McClelland, Assistant Secretary Harrison, Assistant to the Governor Paulger, Chief, Division of Examinations Wyatt, General Counsel Wingfield, Assistant Counsel. The Committee considered and acted upon the following natters: Telegram dated December 28, 1932, from the Chairman of the Federal Reserve Bank of Boston and letter dated December 29, 1932, from the Secretary the 17ederal Reserve Bank of New York, both advising that at meetings of the boards of directors on the dates stated no changes were made in the bejaks existing schedules of rates of discount and purchase. Without objection, noted with approval. Telegraphic reply, approved by five menbers of the Board on Decem- bel' 27, 1932, to a telegram of that date from Deputy Governor Rounds of the tieserve Bank of New York requesting authority for a renewal for a I/eriod of sixty days from December 28, 1932, with interest at the rate of 5 1/2 Per annum, of the advance in the amount of 50,000 made by the New 31"Ic bank in accordance with the Provisions of section lO(b) of the Federal Reserve Act to the Salt Springs National Bank, Syracuse, New York, under the 44thority granted in the Board's telegram of September 29, 1932; Deputy Gcrlfernor Rounds stating that the bank is still saffering a seepage of clePosits and is not in a position to repay the loan at maturity. 8.ted. " The reply that the Board authorizes the renewal of the advance subject to the 581-i 12/30/32 terms and conditions recommended. Approved. Telegraphic reply, approved by five members of the Board on December 28, to a telegram dated December 27, 1932, from Deputy Governor Hounds or the 2ederal Reserve Bank of New York requesting authority for an additional advance in accordance with the provisions of section 10(b) of the Ped eral Reserve Act to the Lincoln National Bank, Newark, New Jersey, in the ellmualt of a00,0001 for a period of sixty days, with interest at the rate of 5 1/2,; per annum, and on the security of building and loan association notes arid other ineligible unsecured paper with a margin of at least 25r1), Deputy G1).7 rnor Rounds advising that the bank desires the advance to meet with411avials of deposits. The reply stated that the Board authorizes the advance 84bject to the tenns and conditions recommended. Approved. Telegraphic reply, approved by five maApers of the Board on December 49 4.. tic) a telegram dated December 28, 1932, from Deputy Governor Rounds of the IT.ed eral Reserve Bank of New York requesting authority for an advance in " cordanee with the provisions of section 10(b) of the Federal Reserve Act tO the Haledon National Bank, Haledon, New Xersey, in the amount of :;25,000, tt)t a period of sixty days, with interest at the rate of 5 1/2(,, per annum, eIlcl on the security of miscellaneous domestic bonds with a margin of at least 25';' ) ; Deputy Governor Rounds stating that the bank is steadily losing (lel) its and desires this advance to meet the anticipated withdrawal of a deposit. The reply stated that the Board authorizes the advance allbjeet to the terms and conditions recommended. Approved. 588 12/30/32 Telegraphic reply to a telegram dated December 30, 1932, from Deputy 4cvernor Rounds of the 7edera1 Reserve Bank of New York requesting authority for an advance in accordance with the provisions of section 10(b) of the ?ecleral Reserve Act to the Citizens r.ational Bank, New Brunswick, New Xersey, irt the amount of .,;25,000, for a period of forty-five days, with interest at the rate of 5 1/2(-,L per annum, and collateraled by unsecured notes and custaners* collateral notes with a margin of at least 255; Deputy Governor Retulda stating that the bank desires the advance to meet the withdrawal of Large municipal deposit. The reply stated that the Board authorizes the 4(11Tel-ice subject to the terns and conditions recoudended. Approved. Reply to a letter dated December 22, 1932, from Deputy Governor %lbart of the Tederal Reserve Bank of New York stating that pending the selection of a successor to Dr. Harold R. Moon who left the employ of the be ' llk on November 30, 1932, Dr. 7Ialden E. nuns has consented, at the request e'r the bank, to be on duty at the bank three hours a day for six days a week, 11111ch is twice the number of hours of his regular attendance, and that, subject to the approval of the Board, it is proposed to pay Dr. 'Tuns from December 13, 1032, at the rate of .,:A,377.60 per annum,. The reply stated that the 13c'excl approves the payment of salary to Jr. I:uns at the rate stated, it beille understood that upon the appointLunt of another physician to succeed Loon, the compensation of Dr. Euns will again be fixed at the rate received by him prior to December 13. Approved. Reply to telegrams dated December 23 and 29, 1932, from the Chair- 589 le/301,2 In4101 of the Federal Reserve Bank of Dallas advising of the approval by the board of directors of the bank of a share-the-work plan which would Provide tor a reduction, during the six months Period beginning Tanuary 1, 1933, equivalent to one-half day per week, in the working time of each employee of the head office and branches; for a deduction of 5% from the salaries paid the Present officers and employees of the head office and branches during the six months period; and for the employment, on a temporary basis, of such Ilew employees as the officers may deem necessary to put the plan into effect alld to carry on the work of the bank without loss of efficiency in operation. reply stated that, on the assumntion that the proposed aggregate deductions from the salaries of the present officers and employees would be 811fricient to cover the salaries of the temporary employees and that the 840Ption of the plan would result in no increased cost to the bank, the 80ard interposes no objection to the plan as adopted, and approves the e4larY payments involved in the employment during the six months period of tIdditional people in accordance with the plan. The reply also noted that It is the opinion of the directors of the bank that no further reduction 8110111d be made in salaries of officers and employees at the present tine, it bel11C understood that prior to the expiration of the six months period Ileinning January 1, 1953, the directors will consider the extension of the the-work plan on the same or a different basis and will discuss 1'14-ther the natter of adjustment or reduction in salaries. Approved. Mr. Hamlin stated that while he approved the above letter as expressing properly the attitude of the Board, he is opposed, for reasons previously stated, to the adoption of the share-the-work plan as submitted by the Jederal Reserve Bank of Dallas. 590 -- 12/30/32 Letter to the Chairman of the Federal Reserve Bank of Kansas 7;ity, aPProved by five merbers of the Board on December 20, 1932, with regard to hie letter of December 23, 1032 reportinil that a resolution was adopted at a Illeetin,: of the board of directors of the bank on December 22 providing for the adjustment of all salaries on the basis of a minimum of 5",7, and a maximum (111 20,-; reduction, to be worked out in an equitable way by the salary committee Which was instructed to report at the next meeting of the board of directors. The Board's letter stated that upon receipt of a statement of the proposed 4(ljustments to be made in the salaries of individual officers and of employees °a°11PYing appraised positions, and advice as to the proposed method of adjusting the salaries of emPloyees coming under the salary classification Dian, the Federal Reserve Board will give careful consideration thereto. The letter also noted that at the sere meeting of the directors a resolution was adopted expressing sympathy with the purposes involved in the share-the-work Plan. but that the directors were not in favor of the adoption of oaCh a Plan by the bank at the present time beyond the retention of present worthy Approved. Telegraphic reply, approved by five members of the Board on December 27, t° a. letter dated December 24, 1932, from the Federal Reserve Agent at —40nd recommending, for the reasons stated in the letter, that the Board an extension of ten days in the time in Which the 1;'armers Bank of C1111ch Valley, Tazewell, Virginia, may be admitted to membership in the dhe aeserve System. The reply stated that the Board grants to the bank the extension requested. Approved. 591 12/30/32 -0- Reply to a letter dated December 19, 1932, frml the Federal Reserve Atl'ent at ,31eveland with regard to the continuously deficient reserves for 4 period of six months of the First National Bank, Indiana, Pennsylvania; the reply stating that, in view of the information submitted, the Board will take no action in the matter at this time other than to forward copies of the agent's letter and inclosure to the Acting Comptroller of the Currency tor the information of his office. Approved. Letter to the Federal Reserve Agent at Boston, approved by four Inellbers of the Board on December 27, 1932, suggesting that, in view of the C°11dit1on of the lanchester Trust Company, South lianchester, Connecticut, 43 disclosed by the analysis of report of examination as of August 22 1932, the afNnt discuss with the Bank Commissioner of the State of Connecticut the qtlestion whether the trust company is justified in paying further dividends, 441 that he advise the Board of the action taken with respect to the natter. Ile letter also requested advice as to the steps which are being taken to e°1'rect other criticized matters referred to in the analysis. Approved. Letter to the Federal iteserve Agent at Chicago, approved by four raer, ab ,, `•1" ,1 of the Board on December 27, 1932, referring to the indebtedness of the °facers and directors of the Bank of Kalamazoo, iichigan, to that illf3titution, which, at the time of the examination of the bank on rune 13, 1932 s eziounted to .J,133,000. The letter requested that the agent approach ttle a°1Traissioner of Banking of the State of Fichigan with a view to obtainIto a substantial reduction in this indebtedness, advising the Board what 592 12/30/32 -7- reau1t3 are accomplished. The letter also stated that in view of the con- dition of the bank further financial assistance from the directors or the Xalamazoo Bancshares, Incorporated, which institution owns the member bank, would be helpful, and that it is presurred the agent will give due consideration to the prospects of obtaininL; such assistance. The letter also re- quested that the agent continue to keep the Board currently advised of other developments in the condition of the bank and that he advise whether the 41amazoo Bancshares, Incorporated, which is in an unsatisfactory condition, ilas an interest in any other bank, and if so, the extent of its holdings and th econdition of the banks involved. Approved. Letter to the Federal Reserve Agent at Cleveland, approved by five IlleMbers Of the Board on December 29, replying to Assistant Federal Reserve lieent Fletcher's letter of November 23, and the agent's letter of December '1932, with regard to the service of Messrs. H. S. Reynolds, George R. 7 1"°11d, Gordon I]attler, G. P. Maciiichol, Jr., and Rathburn 7uller as directors oL' the first National Bank of Toledo and the Toledo Trust Company, Illider Permits previously granted by the Board to serve the national bank 4.44 the Summit Trust Company, which consolidated after the issuenee of the Dex!mits with the Toledo Savings and Trust Company to form the Toledo Trust " °° 11Y. 4• The reply stated that it would appear from the information Dreeeeted that the issuance to the directors referred to of new permits to erve the national bank and the Toledo Trust Company is not necessary. The also stuted that in view of the condition of the first National Bank, igenerally unsettled banking conditions in Toledo, and the agent's ec°111mendation, the Board will defer action for the present on the question 593 12/30/32 Whether the existing permits should be revoked, but that, in view of the oloportunity presented for a stifling of competition and a restriction of credit, the Board is disposed to require the severance of these interlocking relationships as soon as it can be done without peril to the institutions °r general conditions in Toledo, and that the agent is requested to eenmunicate the Board's position to the president of the trust company with the request that the matter be considered carefully with a vicw to raking such readjustment as can be safely made as soon as practicable without endangering the situation. The reply made the further request that the agent submit another recommendation to the Board as soon as there is any M aterial change in the situation. Approved. Letter to Senator Clarence C. Dill, approved by four nembers of the 13(3erd on December 27, 1932, concerning an inquiry addressed to him by Ir. aharles d. Greenough, prosecuting attorney of Spokane County, ',:ashington, With regard to the rediscount by Federal reserve banks of municipal warrants Which do not have a definite maturity date. The Board's letter stated that, "2ederal reserve banks are without authority under the law to rediscount 111111lieipal warrants, it is assumed Mr. Greenough has reference to the Purchasr Of aachwarrants by reserve banks; that the law authorizes 7ederal reserve 14141''s, under certain conditions, to purchase municipal warrants when they 11 /7e a maturity from date of purchase of not exceeding six months; and that italmIch as the warrants mentioned in 1:r. Greenough's letter have no definite 4 "arity date they do not meet the requirements of the law in this respect 114a. therefore, are not eligible for purchase by federal reserve banks. 594 12/30/32 The letter also stated that municipal warrants which are purchased by Federal reserve banks cannot be used as collateral for the issuance of Federal reserve notes, and the question whether, and to what extent, a Federal reserve bank should purchase eligible warrants, in view of its other responsibilities, is °Ile Primarily for the exercise of the discretion of the board of directors Of the bank. Approved. Reply, approved by five menbers of the Board on December 29, to a letter dated December 9, 1932, from Congressman Clay Stone Briggs requesting taz expression of the views of the federal Reserve Board regarding a proposal eddressed to him that the law be amended so that the paper of automobile 11Qanee companies may be eligible for rediscount at Federal reserve banks. The reply stated that the general principles involved in the deternination °f the eligibility of the paper of automobile finance companies are also 4PPlicsb1e to the notes of factors, comndssion merchants, warehousemen, and °thers similarly situated who make advances to their customers; that it Would Seem that, if the notes of finance and credit companies should be made elir:ible, similar treatment should be afforded to all paper of the sane elleral character; and that in view of these and other important aspects of the /matter, the federal Reserve Board does not feel prepared at this time to al3Prove the Proposal to amend the law in this respect. Approved. Letter to the Federal reserve agents at all federal reserve banks, Proved by three members of the Board on December 28, 1932, requesting that the ei.Cents send to the Board, as early in January as possible, lists of the plember banks in their respective districts which were not examined 12/30/32 -10- either by State authorities or Federal reserve examiners during 1932, and that the agents advise what arranganents are being rnde by them or the State authorities for early examination of the banks listed. Approved. Memorandum dated December 27, 1932, from Governor Meyer stating that, following the meeting on that date, he advised the Governor of the Federal Reserve Bank of Chicago over the telephone that while the Federal Tieserve Board is disposed to approve the salary at the rate of $18,000 per annum, Proposed by the board of directors of the Chicago bank for Mr. George. J. Schaller of Storm Lake, Iowa, whose apT)ointrent as deputy governor of the bezk is under consideration, the Question of Mr. Schaller's ownership of the stock of the Citizens ilrst rational Bank of Storm Lake is one which should be considered carefully by the Board and the Federal ,,Zeserve lank of Chicago; 11(1 that Governor IcDougal stated that he had assumed that matter would be taken care of, but that he would look into it nnd report to the Board later. Governor Meyer stated that in a subsequent telephone conversation with Governor McDougal, the latter advised that, if Er. Schaller is elected deputy governor, he will sever his connection with the national bank and cliapose of his stock holdings before entering upon his duties. Governor I:eyer then stated that /Ir. L. B. gilliams, Deputy Chairman Or the Federal Reserve Bank of Cleveland, was in Washington yesterday and 44 advised him that Mr. DeCamp, Chairman of the Federal Reserve Bank of Cleveland, had been informed of the approval of the procedure Proposed by 111% Williams at the meeting of the Executive Committee of the Board on ' December 20, and that Hr. DeCamp had agreed to do anything suggested by IS. 17i11iams in accordance with that Procedure, and to submit his resignation 596 12/30/32 -11- as class C director of the Cleveland bank and as Chairman and Federal reserve agent shortly after the first of the year, the resignation to take effect at the pleasure of the Board. Accordingly, Mr. DeCamp was reappointed as a class C director of the Federal Reserve Bank of Cleveland for a term of three years beginning January 1, 1933, and designated as Chairman of the board of directors and Federal reserve agent for the coming year. The reappointment of Messrs. H. Fletcher and J. B. Anderson as Assistant Federal Reserve Agents at the bank for 1933, and the temporary reappointment liolte and R. G. Johnson as Acting of Messrs. W. Assistant Federal Reserve Agents at the Pittsburgh and Cincinnati branches, respectively, Rlso were approved. There was then presented an application for membership in the Federal Reserve System filed by the Summit Trust Company, Summit, New Jersey, and forwarded to the Board under date of December 15, 1932 with a recom baendation of the board of directors of the Federal Reserve Bank of New York that the application be approved subject to the usual conditions of member, ship. In the discussion which followed, it was pointed out that the 4PP1icant, which appears to be in good condition, owns 1,117 out of 2,000 sh4res or approximately 60, of the stock of the Summit Title and Mortgage ranty Oompany, also apparently in good condition, the principal business c)f which is the issuance of bonds against the security of mort7a(7es purchased tItiril the trust company and deposited with the trust company, as trustee; and that it would appear that the trust company is thus indirectly engaged in tile lousiness of issuing mortgage participations. Therefore, the suggestion waa made that the trust company should be required, prior to admission to .11"lberhip, to dispose of the stock of the title commany and to agree that, 597 12/30/32 -12- except with the approval of the Federal Reserve Board, it would make no Alrther investment of its funds in the stock of any such affiliated or subsidiary company; or, as an alternative, to require it to agree to dispose Of the stock of the title company within a stated period and to make no further investments of its funds in the stock of any such affiliated or subsidiary company. Attention was also called to the fact that the applicant has an investment of approximately .;120,000 in various corporate stocks, and the gliestion was raised whether the usual condition of membership with respect tO the purchase without the permission of the Board of bank stocks should be broadened to cover the purchase of any stocks. The opinion was expressed and concurred in by a majority of the embers present that the Federal Reserve Board Should not admit to merber84113 a State bank or trust company which, either directly or indirectly, ellgages in the business of buying and selling mort-;age loans or of selling Ilarticipations therein or bonds secured thereby, commonly known as a mortgage loan business and that, therefore, if the application were approved the trust e°111PanY should be required to dispose of the stock of the title company or to admission to menbership, uhich, under the present procedure of the 8°ard 017 allowing thirty days in which to complete arrangements for menber411 ) , would have to be accomplished in that period unless an extension were eraated by the Board. The view was also expressed by sane of the menbers °I' the Board that the conditions of mentership prohibiting the acquisition °r bank stocks without the permission of the Board should be extended to iliclude all stocks. At the request of the Committee, the Secretary left the neetin7, and 598 12/30/32 -13- disaussed the matter over the telephone with the Federal Reserve Agent at NeW York. Upon his return he reoorted that Mr. Case had expressed agreement With the general policy of the Board's position and stated that he had Previously discussed the matter of the possible disposition of the stock of the Summit Title and Mortgage Guaranty Company with the president of the trust company, who had indicated that while it would not be practicable to do so immediately, it might be possible to effect such a disposition within a year. The Federal reserve agent also stated that he would discuss this Matter Lurther with the president of the trust comnany and advise the Board. was later called from the meeting for a further conversation With kr. Case and upon his return stated that the president of the trust company, in view of the attitude of the Board, had requested that the Board take no action on the application for membership and that the company be giVen an opportunity to withdraw the application without further action by the Board. Accordingly, no action was token upon the application. Reports of Standing Committee dated December 21 and 29, 1932, reconnlending approval of the following changes in stock at Federal reserve banks: : A Shares Zalsation for ADDITIONAL Stock: District ro. 12. 17al ker Bank & Trust Company,Salt Lake City, Utah. 9 (Increase in surplus) 0.21is3tions for SURRENDER of Stock: 170 3* Lelli-gh Valley National Bank, Bethlehem, Penna. Trust Co.) 480 (V.L.Abs. by First National Bank Di strict llo. 6. 4-wY National Bank, Birmingham, (Ensley) Ala. (V.L.Abs. by _;nsley Bank & Trust Company, nonmember) 150 9 480 12/30/32 -14- Applications for SURRENDE.-z of Stock: (Conttd) District T:o. 6. (Cont,d) First National Bank, Lincoln, Ala. (Insolvent) First National Bank, Bristol, Tenn. (V.L.Suc. by Jirst . National Bank in Bristol.) First rational Bank, Iiillen, Georgia. (Decrease in surplus) District 1.o. 11. Xunction State Bank, Junction, Texas. (Insolvent) Pirst State Bank, Rochester, Texas. (Insolvent) District No. 12. National Bank of Commerce, Los Angeles, California. (V.L,Terminal) 'len() National Bank, Reno, Nevada. (Insolvent) Shares 15 285 3 453 60 20 80 .........0.0., 333 516 Total 849 1,862 Approved. Report of Standing Committee dated December 23 1932, recomnending 4PProval of the following Clayton Act application: 1,:r. H. R. Wilkin, for permission to serve at the sane time as director of the City National Bank and Trust Company of Battle Greek, niChigan, and as director of the ?irst National Bank and Trust Company of Kalamazoo, Ylchigan. Approved. Thereupon the meeting adjourned.
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