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315 meeting of the Federal Reserve Board was held in Washington 011 Fridays December 8, 1933, at 12:30 p. in. PRESENT: Mr. Mr. Mr. Er. Mr. Er. Black, Governor Hamlin Miller James Thomas Szymczak Morrill, Secretary Carpenter, Assistant Secretary Bethea, Assistant Secretary Martin, Assistant to the Governor Faulger, Chief of the Division of Examinations Mr. Smad, Chief of the Division of Bank Operations Mr. Mr. Er. Mr. Er. ALSO PRESENT: Er. Norris, Governor of the Federal Reserve Bank of Philadelphia There was presented a letter dated December 6, 1933, from Er. kistills Chairman of the Federal Reserve Bank of Philadelphia, inclosillE a rePort of a special committee of directors, dated December 1, 1933 'Ilhich had been accepted and approved by the board of directors Of the bank, et ra::n g that Governor Norris would be in Washington -ts 011 P riday, Deco an: 1933, to give to the Board additional details 14 reference ter read as to the report. The report inclosed with Er. Austin's let- follows: The Cemmitte appointed by the Chairman in pursuance of a ' wilil utlen adopted at the meeting of November 15th, to cooperate the the officers in recommendations to be made on changes in °T.eial staff of this bank, respectfully reports as follows: at,Duri/IL; the last year the very great increase in the duties ' responsibilities resting on all the officers of the bank overtaxed them, and has convinced us that, in its official the bank is under-manned. Moreover, we have for some 'sre doubted whether it was good organization to have only two 0211 "executive officers on the operating side of the bank, 'le or the other of whom must necessarily be frequently absent 12/8/33 -2I? on account of sickness, vacation, or attendance at co2aLitte e or other meetings in Washington or elsewhere. We still have in this district 87 failed or restricted member banks, owing US nearly ;17,000,000. Against this indebted ness we hold, as part collateral, about :28,00,,000 of commercial paper. This involves numerous and protracted conferences, not only with the receivers or conservators of these banks, but with individual debtors, in reference to settlements and compromi ses. Decisions upon the questions raised in these settlements necessitate careful and laborious study of both business and legal considerations, and require the exercise of the best judcment. It will probably take several years to clear these matters up. "We have numerous questions arising in connection with the Deposit Insurance plan, and other features of the new Banking Act, We are likely to have numerous applications for membersnip. Both of these involve protracted conferences and extended .Correspondence . Other activities now under discussion are liable to be irdposed upon the Federal Reserve Bprars. "1,-e deem it imossible for any two men to devote to these neV and unusual problems the time and thought that they entail, Id, at the same time, to give the necessary supervision and oversight to the ordinary operations of this bank. th. , lie therefore recormend that there should be two additional -):sPuty Governors. One of these two places should be filled by e election of an outside man, qualified by legal and banking ,,,Terience to handle compromises and settlements, and to assume ch additional duties as may be delegated to him. We suggest onn ' as the appropriate salary. The other should be filled uy . t hu promotion of the present Cashier, in recognition of his is,?xteen years of faithful and efficient service in this bank. ith this promotion should come an increase in his salary from 2,000 to 013,200. He will retain also his present titles of Cashier and Secretary of the Board. , e 'We recommend further that two Assistan Deputy Governor t s 'J created, these position to filled (now s Davis be by W. J. D11 ! A sistpnt Cashier) and L. R. Donaldson, now head of the Bank Relations Department, and having the present nominal title of i 4cistant to the Governor '. With these promotions should cone Irlioses in Jr. Davis' salary from 9,000 to 310,000, and in tt. onaldson's from 04,200 to 05,000. e recommend further that G. K. Morris, now head of the Credit DePartment, be made an Assistant Cashier, with additional 6c eC assigned him, and an increase in salary from 0,780 to leu,000• ar:MB believe that these increases in the force of officers thu necessary to the efficient functioning of the bank, and at the increases in salaries are justified and reasonable. r Joseph Wayne, Jr. C. Frederick C. Stout G. W. Reily" 317 12/8/33 -3Governor 1:orris stated that the natter of the selection of a deputy Governor from outside the present official personnel of the ba4z had been under consideration by the officers and directors of the bank for several months; that the position had been offered to Lr. j el"I' S. Sinclair, who, as one of the members of the legal firm of Lrittain 6., Sinclair, had been doing the legal work of the ; that Ir. Sinclair had stated he mould accept the position and 17eu1 d be able to enter the employ of the Federal reserve bank not later than January 1, 1934; and that the legal work of the bank mould be halidled by another member of the same firm. stated that Governor Korris also he had cone to washington to present this particular nat- ter to the Board for the reason that Er. Sinclair is not accepting any eciditi°11al legal work uhich would require his personal attention, in order that he may be in a position to sever his connection with the tirtl$ and that it is felt at the Federal reserve bank that there should be (1. Prompt decision by the Board on the question mhether it will apPr°1rethe salary proposed for Er. Sinclair. Governor Norris stated, another reason for his belief that a decision in the matter should be r -"ehed as soon as possible, that Deputy Governor Hutt is faced 17ith necessity of undergoing a major operation in the near future entail an absence from the Federal reserve bank of betueen t7713 441 three months. He also said that it would be entirely satisfac- to the board of directors of the Philadelphia bank if the Board 1311°Ijild decide to defer action on the other salary changes reconmended -"e e ttee report until the general question of salaries of 318 12/8/33 -.4- offi cers of Federal reserve banks is considered after the first of the Year. Governor Norris then referred to the hearing to be held before the Board on Tuesday, December 12, 1933, with regard to the proposed reorganization of the Equitable Trust Company and the Guarantee Trust Com ,any, member banks in Atlantic City, New Jersey, and he suggested that th 6 Board give the report submitted by Mr. Austin with regard thsret very careful consideration before it reaches a final decision in the matter, for the reason that reorganization of the banks under any Other plan will net be possible and, if they are forced to liqui- date, hea— vy Loss to the depositors, the Reconstruction Finance Corporati °-' and the Federal reserve bank will result. After a brief discusof this matter, Governor Norris left the meeting. Mr. Miller moved that the report of the comittee of directors of the Federal Reserve Bank of Philadelphia be referred to the Committee on Salaries and Expenditures for recommendation to the Board. Carried. The Board then considered and acted upon the following matters: Letter dated December 8, 1933, (apparently intended to be dated December 7, 4Reis 1933), from Er. Sproul, Secretary of the Federal Re- Bailk of Lew York, and telegrams dated December 7, 1933, from Mr. -°)"b°11., Chairman of the Federal Reserve Bank of Richmond, Er. McClure, C1144/flan of the Federal Reserve Bank of Kansas City, and Yr. Newton, NLir)1144 of the Federal Reserve Bank of San Francisco, all advising that, et rietings of the boards of directors on December 7 no changes 319 12/8/33 were made in the banks' existing schedules of rates of discount and Purchase. Without objection, noted with approval. Telegraphic reply to a telegram dated December 7, 1933, from w alsh, Chairman of the Federal Reserve Bank of Dallas, the reply reading as followc.: "Your telegram. Federal Reserve Board approves for your bank ! ttee of 4 per annum on advances to member banks under sec10(b) of Federal Reserve Act, as amended by Act of March 9, J en, and 4 1/2% per annum on advances to nonmember banks and rust companies under section 404 of Act of March 9, 1933, as mended, effective December 9, 1933. Board also notes with apr°71El that board of directors your bank at its meeting on Decemr 7 made no change in the discount rate of your bank covering alsecunts for member banks and advances to member banks under ections 13 and 13(a) of Federal Reserve Act." f t Approved. Telegram dated December 6, 1933, to Yr. iilliams, Federal Re%ire it gellt at Cleveland, approved by six members of the Board, reading 4 11°11017s: ", , -Lour letter November 6 and telegramNovember 18. Board aperove G reappointment of V. i.. H. Fletcher, J. B. Anderson, and tsv 'btrd Evans as Assistant Federal Reserve Agents at your bank R.I. 1934, and the temporary reappointment of W. H. Nolte and pittsb" Johnson as Acting Assistant Federal Reserve Agents at your urgh and Cincinnati branches, respectively." Approved. Telegram dated December (3, 1933, to Mr. Stevens, Federal ReEt 4-Sent at Chicago, approved by four members of the Board, reading r011ows z Rptti n1 ;ir ° Young's letter December first. Board approves temporary —1ntment H. W. Sadler as Examiner in Federal ReserveAgent's 320 12/8/33 -6- U department your bank at salary rate of '3,200 per annum effective October 2, 1933." Approved. Reply on December 7, 1933, approved by six members of the }30ard, + -0 a letter dated November 20 from Er. Peyton, Federal Reserve 44't at Linneapolisi the reply reading as follows : "In reviewing the changes in the personnel classification P11 as shown on the revised pages of Form A inclosed with your letter of November 20, it is noted that a number of positions .84fe assigned a 'fixed' or 'present salary' grade. It has been 10 general practice to provide salary ranges for all positions /Pt a limited number where it was felt all changes in the salaries of the incumbents should be submitted to the Federal : serve Board for approval before they become effective the same s are changes in the salaries of officers of the Federal reserve It auth ority would seem that ranges within which you have the to adjust salaries prior to the approval of the Federal Reserve Board might well be provided for Examiners, Assistant Srei;;;' Assistant Statisticians, Field Men and the Private to the Federal Reserve Agent. the Board would appreciate your views on this subject after YO Ineu have had an opportunity of reviewing the matter and, in the „alltime, action will be deferred on the changes recommended in 41:Tlette1. of November 20. lium, he revised Form A pages inclosed with your letter were not piauered. In order to insure that the personnel classification riles, on file with the Board will at all times be in exact agree111. with that at the bank it has been found helpful to assign : pre z to each page of the plan and accordingly, it will be apeaccilted if you will advise us of the numbers to be assigned to -orra Page inclosed with your letter of November 20." LT Approved. Telegram to Er. Newton, Federal Reserve Agent at San Francisco, 131'ePe'recl by the Coraittee on District No. 12 in accordance with the aet1-(311 take at the meeting of the Board on December 6, 1933, reading as foliovre "Gov Boara ,ernor Black brought your wire December 4 to attention of Mile your wire does not expressly so state it is 321 12/8/33 ft. inferred that your request is due to condition of your health and therefore Board approves leave of absence for ninety days in accordance with your request STOP Board also approves appointment °f Wm. A. Day as acting assistant Federal reserve agent at head offlce during your absence upon condition, in accordance with policy of Board, that before temporary appointment becomes deputyeffective Mr. Day resign and his resignation be accepted aesc governor of bank and that he be transferred to pay roll Of Federal reserve agent STOP Before entering upon his new duties pay should execute usual form of oath of office and surety rna. in amount of $100,000, which before being sent to Board for approval should be examined by your counsel to determine whether !-eeution complies fully with rules printed on reverse side of Iorm of bond 182." 14 op. vnnection with the above, there was also presented the following telep, ' 1'811 to lir. Calkins, Governor of the Federal Reserve Bank of San Prarwisco: "Board has received telegram from Mr. Newton, Los Angeles, requesting leave of absence for ninety days and approval by Board : f aPPointment of Wm. A. Day as acting assistant Federal reserve agent during Er. Newton's absence in order that heavy pressure of liewt„ ties may be promptly handled. Board proposes to advise Mr. n that it is willing to approve temporary appointment of Mr. Dav ' courdae acting assistant Federal reserve agent on condition, in aca„ ?Ice with established policy of Board, that before temporary brintment becomes as effective, Mr. Day resign and his resignation to accePted deputy governor of bank and that he be transferred 311Pal .r roll of Federal reserve agent. It will be appreciated if mo 4.17111 advise by telegraph if proposed resignation of Mr. Day e's Your approval and approval of Mr. Day." Both telegrams were approved with the understanding that the telegram to Mr. Newton would not be sent until advice is received from Governor Calkins advising that the resignation of Er. Day Illeete the approval of Governor Calkins and Mr. Day. RePlY on December 6, 1933, approved by six members of the Board, to tl lett or dated December 2 from Er. "'orris, Governor of the Federal Recierire Ilnk of P hiladelphia; the reply reading as follows: "Yo rep ur letter of December 2 in reply to mine of December 1 in Qard t° the Beneficial Saving Fund Society has been brought to 322 12/6/33 "the attention of the Board and the additional information which Y°11 have given in regard to the character of the operations of the fund has been noted. However, it seems to the Board that '1:1s information does not afford a sufficient basis for altering lus previous opinion and it will appreciate being advised of the results of your further consideration of the matter." Approved. Letters dated December 6, 1933, approved by six members of the 13c)ard 'to the boards of directors of the following named State banking each letter stating that, subject to the conditions preaoribe,, . " ln the letter, the Board approves the institution's application tor meml, -ex — 'shiP in the Federal Reserve System and for the appropriate ti°1111:b °f stook in the Federal reserve bank of the district in which the 4Plioant is located: _i.pplicant Bank Federal Reserve Bank °Bank of Elizabethtown", Elizabethtown, North Carolina. 440 County Bank and Trust Co.", ti Elburn, Illinois. vlorrterey Bank", Monterey, California. Richmond Chicago San Francisco Approved. 4Th Letter dated December 7, 1933, to the board of directors of I-0 First-Lason Bank", Mason, Ohio, approved by five members of the °tting that, subject to the conditions prescribed in the lett}10 8°4rd approves the bank's application for membership in the d'sral Reserve System and for the appropriate amount of stock in the ?ecieral Reserve Bank of Cleveland. 'I Approved. totIrci, tilePlY on December 7, 1933, approved by six members of the a 1etter dated LrovenLor 28 from 1...r. Youiv, Assistant Federal 323 12 / 8/33 0 RCiZer'j'eA Abent at Chicago; the reply reading as follows: "Your letter of Novomber 23, 1933, in regard to the application ?f the Banco di Napoli Trust Company, Chicago, Illinois, for memshiP in the Federal reserve system has been brought to the at-1Dter .?ntion of the Federal Reserve Board. Your letter does not disclose any reason which in the opinion of the Federal Reserve Board would justify it in modifying the position previously tal:en with recTect to this application. .ho question whether it might be converted into a naaonal inution is one for consideration, as you have suggested, by the ' k omptroller of the Currency." Approved. Telegram dated December 6, 1933, to r. Curtiss, Federal Re- Serve Agent at Boston, approved by six members of the Board, referring to the aPPlication of the "Rhode Island Hospital Trust Company", T'rovia ence, Rhode Island, for permission to withdraw immediately from Inetfb r . 8u1P in the Federal Reserve System, and stating that the Board j\-18 the usual requirement of six months' notice of intention to Ilthdra w and that, accordingly, upon surrender of the Federal reserve bank • 1, Issued to the trust company, the Federal Reserve Bank of ,01.1 . 18 allthOriZed to cancel such stock and make a refund thereon. Approved. Letter da: _ Loa December 7, 1933, to the Federal reserve agents e't 1111 l'141dLlal Federal as reserve banks, approved by five members of the Board, follows: "1-41der +1, Peder„, --Le provisions of subsection (e) of Section 12B of the A eserve Act, every State member bank must become a class ber"--clolder of the Federal Deposit Insurance Corporation on or Synt-e JulY 1, 1934, or its membership in the Federal Reserve I481:11" must be terminated. Upon receipt by the Federal Deposit tor .a,-nce Corporation of an application by a State member bank A stock in the Corporation, the Federal Reserve Board l'equired under the law 'to certify upon the basis of a 324 12/8/33 -10"'thorough examination of such bank whether or not the assets of the aPPlying bank are adequate to enable it to meet all of its liabilities to depositors and other creditors as shown by the books of the bank.' "This is called to your attention at this time in order that You IllaY make arrangements to have current examinations made of al of the State member banks in your district on the basis of wfilch the Board may discharge the duties imposed by law. A copy the report of each such examination together with an analysis Lthereof and your recommendation as to the action to be taken should then be Porwarded to the Board as soon as possible in order that the Board may have adequate opportunity to consider each.case and to execute Prior to July 1, 1934, an appropriate eelificate With respect to each State member bank. i , 14 view of the importance of this matter and the limited time • wnlch the work must be accomplished, it will be appreciated " You will advise the Board as to your plans in this respect." Approved. Letter dated December 7, 1933, to lir. Stevens, Federal Reserve kent at Chicago, approved by six members of the Board, reading as follows t "Reference is made to the transaction which resulted from a agreement effective as of June 13, 1933, whereby the 'Fort o4 eL s°11 Savings Bank', Fort laldison, Iowa, acquired a portion of , yo,,t certificates described in such trust agreement. Board has reviewed the information submitted With 1,1r. tht : 11 , s letter dated September 27, 1933, from -which it appears the transaction has resulted in no material chnnge in the gener 41 character or the assets of, or broadening of the scope of of th °ns exercised by, the member institution within the meaning ° Ceneral condition under which it is admiLted to member002 , in the Federal Reserve System. It is noted, however, that thXel for the Federal Reserve Bank of Chicago has suggested kv. Your bank obtain certified statements from the Fort Nadison seXis Bank and the State Banking Department to the effect that item 4 of the trust agreement has been properly cornWith In order that the files of the Board may be complete, to c,Y21A advise if such statements have been received and found sio,:fl'ain the desired information. In the event that the provikeaZ °I the section in question have been carried out in proper ' r the Board mill take no action affecting the membership of the , reaef,t Lladison Savings Bank in the Federal Reserve System by un of the transaction." Approved. 325 12/8/33 -11Reply on December 7, 1933, approved by six members of the Board, to a letter dated September 27 from :a-. McClure, Federal Re- 4114 'Agent at Kansas City; the reply reading as follows: "Receipt is acknowledged of your letter of September 27, 1933, in which you requested advice as to whether the Colorado State ' 3° 111c, Denver, Colorado, may be considered as located in an 'out'Zing district' of the City of Denver and accordingly may be ?ligible for admission to membership in the Federal Reserve Systemuvrith a capital stock of $100,000. It is understood that the Colorado State Bank is located at the eastern edge of that section of the City of Denver which is Fe nerally considered the business center of the city and which is 1-113 solidly with business buildings, hotels, office build,t11Cs, etc., and that the bank is about six blocks from the nearest large down town bank. You have advised that the location of the Colorado State Bank is approximately three miles from the city mits on the west, four and one-half miles from such limits on north, five and one-half miles from such limits on the east itd five and one-half miles from such limits on the south. ifhile th 8 not definitely stated, it is understood from your letter at You and the counsel for the Federal Reserve Bank of Kansas ! el axe of the opinion that the Colorado State Bank may not be n 'ssified as located in an 'outlying district' of the City of Hy, • ae. under the provisions of Section 9 of the Federal Reserve Act, a State bank located in an 'outlying district' of a mitt :"11 a population exceeding 50,000 inhabitants may be adto membership in the Federal Reserve System with a capital of 0,000 provided the State law permits the organization Of sZ of ne a0banks OZ' in such location with a capital stock of $100,000 'out7;,:," and in its Regulation 11 the Board has defined the term eatee'n.g district' to mean 'that portion of a city which is lo,outsid of, and at a considerable distance from, the recogZed 11 , ' - 84ness and financial center of such city, and includes all ever,l-n subur1u districts within the corporate limits of such city'. Howthe 13 1/1 view of the circumstances involved in the present case Prop4trd is of the opinion that the Colorado State Bank may not the citY be considered as located in an 'outlying district' of pro • Y of Denver within the meaning of that term as used in the vlsions Triembe, 01 law applicable to the admission of State banks to P in the Federal Reserve System." j Approved. Letter °t 174,, dated December 7, 1933, to the "Miners National Bank 4.1.1ces-i3arre", W ilkes-Darre, Pennsylvania, approved by six members J 12/8/33 -12- he Board, reading as follows: . "The Federal Reserve Board approves your application for per' Illesion to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bends, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which -tate banks, trust companies, or other corporations which COMB Into competition with national banks are permitted to act under the laws of the State of Pennsylvania, the exercise of all such rights being subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. esj .10.1.1h:eillested to have your board of directors adopt a ratifying your application for permission to exercise trust powers, and it is requested that a certified copy of the fasolution so adopted be forwarded to the Federal Reserve Board °1* its records as soon as possible. Mien a copy of such resolu-on has been received by the Board, a formal certificate coverYour authority to exercise trust powers will be sent to you." f V Approved, together with a letter dated December 7, 1933, to Mr. O'Connor, Comptroller of the Currency, also approved by six members of the Board, reading as follows: there is inclosed for your information a copy of a letter to 'Miners National Bank of Wilkes-Barre', Wilkes-Barre, Pennadvising of approval by the Federal Reserve Board of 1113.6 tank's application for permission to exercise fiduciary powers, d?r the provisions of Section 11(k) of the Federal Reserve Act. reviewin the report of examination of the Liners Bank of it'kes-Barre, made by a national bank examiner as of June 3, 1933, ie has been noted that the examiner states the 'trust department the7Tak in executive ability'. Nhile the report of examination of -crust department indicates that the department has been well I4ged it would seem desirable, especially in view of the large te -Lurne of trust business handled, that a capable executive should othein131°Yed as chief trust officer. It is also noted that among o r8, Vice President Gamble, who it is understood has direct hare of the trust department, owes the bank 0.2,700, of which f;,n0 is classed as slow and 47,700 as doubtful, and that Trust 0 Ete Driesback owes the bank „:10,800, of which 6,600 is classed bell"' and N4,200 as a loss. The undesirability of any employee ity indebted to the bank in an amount apparently beyond his abilth° AaY is obvious, and is regarded as particularly criticizable howeve ease of those holding positions of trust. It is assumed, requi71 that you have these criticism in mind and that you will do e that corrections be effected as soon as it is feasible to 80.11 the Z 327 12/8/33 .3.. Letter dated December 7, 1933, to 1.1r. O'Connor, Comptroller of' the C urrency, approved by five members of the Board, reading as f°11ows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The y ' off3ene National Bank', Keene, New Hampshire, from 200,000 to .00,000, pursuant to a plan mhich provides that the bank's capial shall be increased by the sale at par of Q100,000 par value preferred stock to the Reconstruction Finance Corporation, and that the funds released by the reduction in common capital stock, together with at least 329,273 from the bank's surplus anUndivided Profits, shall be used to eliminate estimated losses as (classified in the report of examination as of October 2, 1933, a'l as set forth in your memorandum of December 2, 1933." V Approved. Letter dated December 6, 1933, to Mr. O'Connor, Comptroller of t"os Currency approved by four members of the Board, reading as fol- 1()vr8 "In accordance with your recommendation, the Federal Reserve aPproves a reduction in the common capital stock of 'The 4.--uonal Bank of America', Paterson, New Jersey, from 3500,000 ki:00 200,000, pursuant to a plan of rehabilitation mhich provides 21.00a surrender of the present capital stock, the resale of 050 ,;(1)00 par value of such surrendered stock at a premium of 411 a waiver by creditors of 30 per cent of their net ofsecured claims, and the elimination of approximately .1,180,000 unacceptable assets, all as set forth in your memorandum of July T13, 1933, and the plan of reorganization dated July 10, 1933. rea' ' 11 its letter of October 26, 1933, the Board discussed its ct03°Ils for disapproving at that time the reduction in the capital the °f the above named bank. Subsequent to that date, however, uank submitted a memorandum answering the criticisms set forth th° Board's letter of October 26, 1933, and the matter has been reco ered. The Board has also been informed of a proposal an,eed '' to by t representatives of the subject bank, and representater ' of the closed Labor National Bank of Paterson under the : Etc °f which the National Bank of America will purchase assets amo,:Pting aPproximately 31,500,000 and assume a corresponding po i-t7 of liabilities of the closed Labor National Bank. rihe deurider liability to be assumed by the National Lank of America 8uch proposal represents the secured deposits and 50 per B 12/8/33 -1411 cent of the unsecured deposits of the Labor National Bank and the subject bank will receive cash, U. S. bonds, and securities Of the higher grades at market value for the liabilities assumed. It would seem that the consummation of the plan would increase the liquid position of the subject bank and provide it with a s ubstantial increase in the deposits, the retention of which would materially increase its earning ability. It is also noted that the above proposal contemplates the sale at par of (200,000 Par value preferred stock to the Reconstruction Finance Corporatl(T, or such other amount as you may require. In this connection, it is understood that the selection of °fficers who will conduct the mnnngement of the bank will be subto your approval." Approved. Letter dated December 6, 1933, to Mr. O'Connor, Comptroller °f the C urrency, approvod by five members of the Board, reading as follows: accordance with the recommendation of Acting Comptroller zjalt, the Federal Reserve Board approves a reduction in the coracaPital stock of 'The East Tennessee National Bank of Knoxa llei, Knoxville, Tennessee, from 2,000,000 to ,:1,000,000, as waPart of a plan of reorganization which also provides for the by creditors of all claims against the bank, and for the tion of substantially all of the criticised assets, all setforth in your memorandum of November 6, 1933, hr. Await's ,,_ 11°randum of November 25, 1933, and the plan of reorganization "'t-ced ,Iarch 10, 1933, as amended." Tmlna Approved. Letter dated December 7, 1933, to hr. O'Connor, Comptroller th° CUrre fled, approved by five members of the Board, reading as a 41741,_" ccordance with the recommendation of Acting Comptroller com , the Federal Reserve Board approves a reduction in the Webb, 1caPital stock of 'The Citizens National Bank of Webb', Pro,r4 °v411, from .:50,000 to :,35,000, pursuant to a plan which at "'des that the bank's capital shall be increased by the sale °f 15,000 par value preferred sleek to the Reconstruction j c° CorPoration, and that the funds released by the reduction °M11°n capital stock shall be used to eliminate a corresponding 329 12/8/33 -15II amount of substandard assets and depreciation, all as set forth in the memorandum of Acting Comptroller Await of November 29, 1933,11 Approved. Letter dated December 7, 1933, to Mr. O'Connor, Comptroller Ot the Currency, approved by five members of the Board, reading as follow s: A "In accordance with the recommendation of Acting Comptroller Await, the Federal Reserve Board approves a reduction in the comcapital stock of 'The First 1,:ationa1 Bank of Watervliet', Lichio'an, from y50,000 to ,?25,000, pursuant to a plan Idieh provides that the bank's capital shall be increased by the s 8.Et' t Le at par of :25,000 par value preferred stock to the Reconth : uctien Finance Corporation, and that the funds released by surplus- reduction in common capital stock, together with the bank's and a portion of the undiladed profits, and funds in the licunt of 22,300 to be contributed by the present shareholders, be used to eliminate, if the bank has not already done so, 8"°ctandard assets in the amount of approximately $65,000, all as et forth in Mr. Awalt's memorandum of November 22, 1933." Approved. Letter dated December 7, 1933, to Mr. O'Connor, Comptroller eth° ClIrrency, approved by five members of the Beard, reading as "In Almit accordance with the recommendation of Acting Comptroller rno 'the Federal Reserve Beard approves a reduction in the con41.11 eaPital stock of the 'First National Bank in Mankato', Mankato, 'from 050,000 to 025,000, pursuant to a plan which provides thaZa8 bank'5 capital shall be increased by the sale at par of 25 the -a's cog00v ilionrcratiar va preferred stock to the Reconstruction Finance on, and that the funds released by the reduction in conatio4rPital stock shall be used to eliminate a corresponding 14 ti 0f substandard assets and depreciation, all as set forth 'le m emorandum of Mr. Await of November 23, 1933." Approved. Letter dated December 7, 1933, to Mr. O'Connor, Comptroller 110 cur rencY, approved by six members of the Board, reading as 12/8/33 -16- f°11ow8: accordance with Acting Comptroller Awalt's recommendation, "!'he Federal Reserve Board approves a reduction in the cohunon cap-tal stock of 'The Union Stock Yards 1;ational Bank', Viichita, 4rIsas, from ;100,000 to 50,000, pursuant to a plan which provides that the bank's capital shall be increased by the sale at of :',)50,000 par value preferred stock to the Reconstruction .1nanoe Corporation, and that the funds released by the reduction in common capital stock shall be used to eliminate unsatisfactory "sots in the amount of approximately 32,600, the balance of apP if°xlmately S17,400 to be credited to surplus and undivided prof„.'s accounts, all as set forth in Er. Analt's memorandum of li ovember 20, 1933.” r Approved. Letter dated December 7, 1933, to Lr. O'Connor, Comptroller f the c„ —PencY, approved by five members of the Board, reading as l'°1101:ts: l eceipt is acknowledged of Acting Comptroller Awalt's letter clated ' November 25, 1933, with reference to the Board's letter of ' c°7°1/1b Ex "3, 1933, approving a proposed reduction in the common Ajital stock of 'The Alamo National Bank of San Antonio', San flio, Texas. pr 14r. A:mitts letter quotes Section 7 of Article Fifth of the bvred axenaments to the Articles of Association as submitted t; 'le Reconstruction Finance Corporation and requests advice as meilltvhether the provisions of this section will meet the requireter e, °f the Board's condition numbered 3 as set forth in its letITovember 3, 1933. to che,Proposed amendment to the Articles of Association appears ciTP4Y substantially with the above mentioned condition in the Loar' letter and may be regarded as meeting its requirements, c01:111C, understood, of course, that any reduction in the ink's °11 caPital stock will require the approval of the Board." Approved. Lotter dated ot the cur December 7, 1933, to Lr. O'Connor, Comptroller toilovizit reney, approved by six members of the Board, reading as a ck;ordance with the recommendation of Acting Comptroller 1403/33 -17tt ,uvalt, the Federal Reserve Board approves a reduction in the c°ramon capital stock of 'The First T:ational Dank of Llountain Viem4, Lountain view, California, from ,100,000 to 25,000 pursuant to a plan which provides that the bank's capital shall be 1-ncreased by the sale at par of 25,000 par value preferred stock to the Reconstruction Finance Corporation, and that the 75,000 °f funds released by the reduction in common capital stock and 7'177•°...2 of funds from the undivided profits and surplus accounts na1l be used to eliminate substandard assets in the amount of 6 ",;82 ' 177.42 all as set forth in L. Amalt's memorandum of November ‘0, 1933.n Approved. Letter dated December 6, 1933, to "The hartford-connecticut C°11Pany", Hartford, Connecticut, aPProved by four members of the B°Rrd, reading as follows: 1,"The Board has considered your application, dated October 6, p2 1 f°r a voting permit under authority of Section 5144 of the : 1ii;ylsed Statutes, as amended, entitling you to vote the stock 3- 11 You own or control of the following banks: TThehe First National Bank, Meriden, Connecticut. First National Bank, Liddletown, Connecticut. ti,he First National Bank, Stafford Springs, Connecticut. Rockville National Bank, Rockville, Connecticut. 1°0 .rd understands that you agree that the permit may be ated to the sole purpose of entitling you to vote such stock in order to co. n-unnate a proposed plan of reorganization an involvthe aforesaid banks, The Hartford-Connecticut Trust Company (here?Lafter called the 'Trust Company') and your own corporation az re lnafter called the 'Company'), which planis substantially follows; The Company will purchase the 12,000 shares of its stock c; 10h are held by the Trust Company and which constitute all he o utstanding shares of the capital stock of the Company J-11-arily e ntitled to vote. ,11,a 2. The holders of at least two-thirds of the outstanding ; 114: "°f capital stock of The Rockville National Bank will 0 ,"°rize the liquidation of that bank, subject to the approval i.JL- ,,the -oraptroller of the Currency, and the bank will resume ,s.C.1_charter as a State bank under the la= of Connecticut (such Alia ' e bank being hereinafter referred to as 'The Rockville Bank'). theeTPlication requesting the approval of the Comptroller of n 3. rrency has been filed. third ?larsuant to the vote of the holders of at least twoOf the outstanding shares of its capital stock and at a 332 12/8/33 -18"time at which it will own all or substantially all of the outstanding shares of the capital stock of The Rockville Bank, the Company will voluntarily transfer to The Rockville Bank all of the assets of the Company except the stock of The Rockville Lank itself and the stock of The Wethersfield Bank and Trust Company. The Rockville Bank will thus acquire the shares of stock owned by the Company of its three remaining subsidiary national banks and the Company's holdings of miscellaneous securities. "4. The Rockville Bank and The Wethersfield Bank and Trust Company will merge with and into the Trust Company under the present name of the Trust Company. The Company will surrender its stock in The Rockville Bank and The Wethersfield Bank and Trust Company in exchange for stock of the Trust Company as thus constituted. The Rockville and i;ethersfield banks will thereafter be operated as branches of the Trust Company. 5. After the merger, the Trust Company will take over the national banks at ),eriden, Eiddletomn and Stafford Springs by the Purchase of assets and assumption of liabilities and will thereafter operate branches in or near the places where the national banks are now situated. The national banks will be Placed in voluntcry liquidation pursuant to the vote of their ref,,,pectivo stockholders. 6. The Company will distribute to its stockholders its Steel: of the Trust Company and, pursuant to the vote of the of at least three-fourths of the outstanding shares of i j ts capital stock, the Company will then be dissolved and its ecf:Porate existence terminated. 7. In effecting the plan of reorganization there will be no d istributicn of assets of any kind to the stockholders of coy °°mPany except the distribution to the stockholders of the of the stock of the Trust Company owned by the Company at %the time of dissolution. be 8. The price at which the voting stock of the Company will les rePurchased from the Trust Company by the Company, the ratio on thich stock is to be exchanged under the plan, and the ,7111e to be placed upon assets purchased under the plan are to t: determined by an audit by independent auditors which will putm?-d° at approximately the time at which the plan is to be ",lnto effect. ordi The holders of that class of stock of the Company -which to cnarily does not enjoy voting privileges will be entitled , !i '(°t cno vote on each share of such stock upon the question 11'ne plan. of the Company in the foregoing pl. he the -.sue i ve Board filed and application as authorizes aPproves your 4. You of a voting permit for the limited purpose aforeeatd, it tch limited permit is inclosed herewith. be understood that in granting this limited permit the 13oard Is not passing upon the application for membership 4 333 } 12/8/33 -19- 1111 eretofore submitted by the Trust Company and is not indicating that its approval of that application will be forthcoming if and *len the proposed reorganization is effected. In the event that the Trust Company desires to have its application considered after he consummation of the plan, it should supplement the application With such additional data as is necessary in order that the appli.?_ tion may correctly reflect the status of the Trust Company as idnen constituted." Approved, together with a similar letter dated December 6, 1933, to "The Hartford-Connecticut Trust Company", Hartford, Connecticut, also approved by four members of the Board, advising of approval of its apPlication for a voting permit entitling it to vote the stook which it owns or controls in The First National l&alk, Meriden, Connecticut, The First National Bank, la. ddletoun, Connecticut, The First National Bank, Stafford Springs, Connecticut, and The Rockville National Bank, Rockville, Connecticut. RePly on December 7, 1933, approved by six members of the Boe,r , cs to letters dated October 13 and 18 from 1:x. Charles V. Collins, (Itt°r11°Y, Washington, D. C.; the reply reading as follows: le "Reference is made to your letters of October 13 and October a ;1933, in which you inquire whether a national bank may adopt ' ei °1.111 of certificate of deposit which will mature at the end of rs ex or twelve months and which will give the holder the right to idl.loe the tern of the certificate to an earlier maturity upon % 1 ::7111g 30 days' notice, in which event the certificate would be Such earlier date but without interest. cat"T110 "le Board does not look with favor upon the use of certifith !_s of deposit of this character. However, since it appears 114'' under the terms of the certificate itself the deposit mild° be withdrawn until after thirty days from the date of the a 13 1:?sit, the Board is of the opinion that it must be regarded as th 111°certificate of deposit within the meaning of Section 19 of lvederal Reserve Act and within the meaning of Regulation Q. da it may be withdrawn at any time upon the expiration of thirty peY! va.itten notice actually given by the depositor, it would ap141 thIlt, if such notice is not given, the deposit could not be °i 4r"11 except upon the expiration of six months from the date the r e certificate or upon the expiration of twelve months from ac elte of the certificate; so that it must be regarded either a8 a rP°sit payable only after thirty days' written notice or ' °P°sit payable at the expiration of a certain specified 334 12A/33 -20-tame, which is not less than thirty days subsequent to the date of the certificate." Approved. Reply on December 7, 1933, approved by six members of the 4ard, to a letter dated September 22 from Mr. E. J. McAuley, Vice irer'ident Of the First liational Bank, Eobile, Alabama; the reply re4Ung as follows: "1 regret that, due to the urgency of other matters arising 1I1 connection with the Banking Act of 1933, it has not been possiblenfor , the Board to give earlier consideration to the question PreGe t in your letter of September 22, 1933, in which you inether the payment of the premium on a bond securing do19 oftin your bank is in violation of the provisions of Section he Federal Reserve Act which forbids a member bank to pay inter Jcilt;11,ere&t directly or indirectly by any device whatsoever on any 13°,sit payable on demand. c;30 You state that your bank pays the premium on a bond for °°°00 securin:3 deposits of the City of Mobile and that the Prom the i11171 s0 paid is a fixed amount per year and does not vary with azIount on deposit in the bank. The Board understands from Your s tatement that the premium paid provides security in the illum amount of 1,300,000 but is not fixed in relation to the yeal!ll.t t of the deposit; that the bond is ordinarily renewed from the 0 year at the same premium; that there is no adjustment of , Preillium Of 00r the at the end of the year or a change in the amount theredep4 next year because of any change in the amount of the lat : ; lit and that the amount of the premium is not otherwise rethe amount of the deposit. If this is a correct undertient"-LnG of the facts, it is the view of the Board that the payof i .(3 tf the premium by your bank does not constitute the payment Act %7 17:ee tltin the meaning of Section 19 of the Federal Reserve ngly, is not prohibited by that section." Z Approved. toea.(1, tR oePly cm. December 6, 1933, approved by five members of the ell 101,4.41 a let ter dated September 14 from Messrs. Jones, Johnston, 8Parks, attorneys, Macon, Georgia; the reply reading as fol- 335 12/8/33 -21- "This refers to your letter of September 14, 1933, inquiring as to the legality of the practice of the member banks of the Macon Clearing house in charging exchange on out of town checks in vlow of the provision of Section 19 of the Federal Reserve 'let that no member bank shall, directly or indirectly by any device whatsoever, pay any interest on any deposit which is payable on demand. A reply to your letter has been delayed pending consideration of certain related questions with regard to the absorption of exchange, collection and other charges by member banks; and in this connection you will find inclosed herewith a "AY of a letter dated November 24, 1933, addressed to the Federal Reserve Board by the Chairman of the Banking Code Committee of the American Bankers Association and a copy of the Board's reply thereto dated November 28, 1933, in regard to the question whether member banks may take into consideration the reasonable ' rill° of their customers' deposit balances in analyzing accounts : 11 accordance with a uniform plan to be approved by the Banking 1/4de?de Committee for the purpose of determining whether service na ges should be assessed against their customers. ci It appears from your letter that under a rule of the Macon che7ing House its member banks charge exchange on out of town e with certain exceptions, one of which is that out of town 1,104)torlers who carry an average daily balance of :7_,000 are not quired to pay such exchange charges. There is no limit on the • erber of items to be handled without charging exchange in such 111:110)s although you state that a situation might arise where the laripAZf ers could be so large that the account would be found ellt tiv in view of the fact that the Liacon Clearing House rule on b su ject is subject to certain exceptions not stated in your 1: ea; er and that the practice of absorbing exchange charges in "in which the balance maintained is at least 1.,000 would oaently not be followed if the account should be found unprofitable, the Board does not feel that it is sufficiently informed • dei,',1 respect to the actual practice of the banks to advise you ely whether the absorption of exchange charges in the cir• te ances does or does not constitute an indirect payment of Act.rest within the meaning of Section 19 of the Federal Reserve that ,Moreovor, in connection with your reference to the fact 8tatel.(egulation Q does not deal with this matter, it may be scrijod that the Board feels that it would not be possible to predefin? a Ceneral rule by reference to which it could be determined sor„ telY under the circumstances of every case whether the abt111:'10n of exchange charges by a member bank is lawful or unlaw4p &11. itho ut regard, however, to the technical question whether Y it 44rticular practice of member banks in this respect is legal, Paytle K, be observed that the prohibition of the statute upon the 1; of interest on deposits payable on demand affords member 4 12/8/33 "banks an opportunity to reduce one of their largest items of exPense, and it would appear to be in their own interests to take such action as may be necessary to comply with the spirit as well as the letter of the law on this subject. In this connection it !Jill be noted that the letter addressed to the Federal Reserve thpard by the Chairman of the Banking Code Committee of the American Bankers Association inquires as to whether the practice therementioned is legal provided 'That (1) the value of each account tc) the bank is computed in accordance with a uniform plan approved by the Banking Code Committee and (2) the banks require actual Iseimbursement (without deduction of interest or of the estimated 'value of the customers' balances to the banks) for exchange charges, collection charges, and other charges arising out of specific trailsfor specific customers and actually paid or credited by : 1 on behalf of such customers.' It would appear, therefore, bn'n4 t114t it is contemplated that a uniform plan is to be adopted with tf,? aPPrciral of the Banking Code Committee which will include cer_ln provisions with respect to the reimbursement of banks for ex'flange and collection charges." Approved. RePly on Decemler 7, 1933, approved by six members of the 44rd, to a letter dated October 10 from Mr. Peyton, Federal Reserve kert a t LI nneapolis; the reply reading as follows: r,"This refers to your letter of October 10, 1933, inclosing a cf certificate of deposit used by the Pierre National Bank, b-terre $ South Dakota, together with an opinion of counsel for your 011.the deposit is in e or1111tY question whether such certificate of with the Board's Regulation Q. It is observed that Certificate provides for the payment of interest at the rate ,„ ) per annum if left six or twelve months and that it may be ci;tu 'without interest '(before six months) on at least 30 days atten notice'. cet,,,12he Board does not look with favor upon the use of certificf deposit of this character. however, since it appears ' under the terms of the certificate itself the deposit canXlot depobe withdrawn until after thirty days from the date of the a the Board is of the opinion that it must be regarded as the;e certif icate of deposit within the meaning of Section 19 of e9eral Reserve Act and within the meaning of Regulation Q. it Illay be withdrawn at any time upon the expiration of thirty peetr ten notice actually given by the depositor, it would apviitha h4t, if such notice is not given, the deposit could not be of t, 7" 11 except upon the expiration of six months from the date "e ce rtificate or upon the expiration of twelve months from 4 n!,,, 337 12/8/33 -23"the date of the certificate; so that it must be regarded either ES a deposit payable only after thirty days written notice or !I? a deposit payable at the expiration of a certain specified : 1 1/11e, which is not less than thirty days subsequent to the date of the certificate." Approved. Tele graphic reply on December 6, 1933, approved by four members (3f ths Board, to a letter dated December 1 from Mr. Albert C. Agnew, counsel for the Federal Reserve Bank of San Francisco; the reply read111 Es follow's: t "Consideration has been given to correspondence between Oregon ankers' Association, rirst Security Corporation, Ogden, Utah, for United States National Bank, Portland, Oregon, and Other i , s, regarding payment of interest by member banks at a rate 1- ex.cess of 3 per cent per annum, which was inclosed with your etter of December first. Section 19 of Federal Reserve Act Was L:,11ed by Banking Act of 1033 so as specifically to require tO limit by regulation the rate of interest -which may be : o' - bY member banks on time deposits. Banking Act of 1933 was c;aeted June 16, 1933, and it follows as matter of law that rate underinterest which may be paid by a member bank on a time deposit the terms of any certificate or contract issued or entered tre after that date may not exceed rate as limited by Board from harrle1 ° time pursuant to the statute. Board in its Regulation Q rate which may be paid by a member bank on a time de01 any period subsequent to October 31, 1933, Co three per berVer annum comnounded semiannually and, accordingly, no menmaY Pay interest accruing after the latter date on a tinle d ePosit, at a rate in excess of that prescribed in Regular, " '?.0 under • entered into terms of any certificate or contrac,,' after j contract may or certificate 16, such though une 1033, even Prov., pexttlu.e for PaYment of interest at rate in excess of that stated. by ijaPh two of subsection (c) of Section III of Regulation Q ilato!terms applies only to certificates or contracts entered colln uefere June 16, 1933. Your attention is also invited in this adviecti on to x_76.76, dated November 10, 1933. If you deem it le, You may advise Secretary Oregon Bankers Association in Etecord Of , 'tnee with views expressed in this telegram or send him copy I Approved. Lottor dated December 7, 1033, to I. Ii.ewton, Federal Reserve 338 12/8/33 -24ellt at San Francisco, approved by six members of the Board, reading e.8 fOilows . "This refers to Yr. Sargent's letter of 1;ovember 6, 1933, with in respect to the question whether a member bank may lawfullI pay interest on deposits of public funds of the State 5 Oregon which are payable on demand, and whether the law of the °tate of Oregon requires the payment of interest on deposits of Publle funds made by or on behalf of the State or of any of the 811bdivisions eral Reserve thereof within the meaning of Section 19 of the FedAct. acluinTtil: opinion of the Attorney General of the State of Oregon Opinion of counsel for your bank on this subject have been 2asldered, and upon the basis of the information submitted and of statutes referred to in those opinions, the conclusions of your eclunsel on the questions presented appear to be proper. In the cir111Xt' Inces, it mill be appreciated if you will reply to the inquiry time bY T. P. Cramer, Jr., Secretary of the Oregon Bankers Associaball'ln accordance with the views expressed by counsel for your wit1;* It copy of Er. Cramer's letter to the Board is inclosed here' toCether with a copy of the Board's letter in reply thereto." ?..nclosures, Approved. 13 04rd leply on December 7, 1933, approved by six members of the at a letter dated Lovember 24 from Mr. Curtiss, Federal Reserve stoni_ the reply reading as follows: tlicnilleeeiPt is the riC vihether acknowledged of your letter of November 24, 1933, Er. Phillips Ketchum should obtain a permit from 2°ard, pursuant to the provisions of the Clayton Act, to serve 80t. director of the flew En-land Trust Company of Boston, 1,_assachu3 and as counsel to your bank. ilerri°;1 Point out that Mr. Ketchum is a member of the firm of Smith, Donald and Farley, which is engaged in the general "-ce of the law, that Lir. Ketchum is not paid a salary by your vict ; b?t is compensated through retainer and compensation for serI,Jit1,8 ln excess of the retainer, that he has no duties connected barl the bank except as counsel, that he renders service to the ; ?onsulted, and that his office is not in the bank. t r4 ecr" cJ.rcumstances, it appears that your conclusion1 is offieet and that Er. Ketchum should not be regarded as a 'director, the Icier, ' 1' 1 employee' of the Federal Reserve Bank of Boston, with tieln-114-t that no permit is required under the Clayton Act coverreferred to above." 4 barlc Approved. 12/8/33 Letter dated December 6, 1933, approved by five members of the Board, to L. F. E. Felt, Vice President of The First liational 411k, Jamestown, Eew York, reading as follows: "Further reference is made to your letter of hovember 2, 4933, regarding the service of Lir. Henry K. Smith as a director of the Bank of Jamestown and as a director of your bank. You whether a new permit would be required authorizing h to serve these banks. !tin view of the fact that Er. Smith has already received a paermit to serve at the same time as a director of your bank and .e a.director of the Farmers & Liechanics Bank of Jamestown, end -311 :view of the fact that the latter bank was merged with the 1111: cf Jamestown under a statute whereby all the rights, priv' () ;eCes, end franchises of the former were vested by operation th law in the latter, and in view of the other circumstances of d e case, no new permit will be required covering the services eseribed in your letter." 1 Approved. Reply on December 6, 1933, approved by five members of the kart ' t° a letter dated Lovember 17 from Lr. Case, Federal Reserve t Lew York; the reply reading as follows: "Iteforence is made to your letter of November 17, 1933, trans11Root a copy of a letter dated November 15, 1933, from Lessrs. Clark, Buckner and Ballartine asking whether their client, cf the Eanhattan Company, a member bank, is to be regarded 'correspondent bank' of a certain dealer in securities tkria lin the meaning of Section 32 of the Banking Act of 1963, Of the Board's Regulation R. tutThe letter from kessrs. Root, Clark, Buckner and Ballantine ag,_,GC that, among the other transactions which it has with the the Bank of the Lanhatton Company extends credit accom*oc ' tions to the dealer by purchasing high-grade municipal bonds hairri.l the under ordinary repurchase agreements, such bonds eith",] ' li eela acquired by the dealer with the approval of the bank, °Y purchase on the market or, in the case of new issues, the,'he municipality which issues them. The dealer is to keep thel b°11ds 'marked to the market' by making cash payments to the: 1 41k equal in amount to any decrease in the market value of serv,°11(18 so purchased. Az part of its compensation for these 'ees, the bank receives the interest on the bonds held under 340 12/8/33 "the repurchase agreement, and a percentage of the dealer's net Profit on a resale of the bonds by the dealer. The letter states that the bank is not liable for any losses in connection with such transactions and suggests that, under these circumstc-nees, the transactions may be regarded as the performance of ordinary banking functions. „ It would seem, however, that these transactions involve more arl the performance of ordinary banking functions on behalf of -11,e dealer, that the bank is 'regularly associated with' the de alor in connection with the purchase and sale of such bonds nd Possibly in connection with the underwriting and flotation wiereof, and that, therefore, the bank is a 'correspondent bank' wit in the definition of that term in the Board's Regulation R. , Of course, as you know, Section 32 has reference only to tiJ_usiness transacted after January 1, 1934, and no permit would roquil'ed if the bank should only perform ordinary banking funcLlcTs for the dealer after that date. to t.irn extra copy of this letter is inclosed in case you desire -ansmit it to 1..essrs. Root, Clark, Buckner and Ballantine." Approved. Relay on December 6, 1933, approved by five members of the t° a letter dated November 29 from 1,:r. Samuel A. lelldon, ViceYork; of The First 1,ational Bank of the City of New York, ilaw the reply reading as follows: 111 • w eoeipt is acknowledged of your letter of Nomber November 29, 1033, • hich you ask whether Section 32 of the Banking Act of 1933 71111 be . tor, applicable to tho service of certain officers and direccom ' °f your bank as officers and directors of The First Security P l9 iitZitf yfiliate of your bank, in view of the fact that The Company was placed in dissolution on November 28, nv bun,'°u state that, under the laws of the State of 1:6111 York, no the'," of any kind, except liquidation of the assets held at tr3b'tte of dissolution, payment of debts and e:Tenses, and disbe- u'ion of the remainder to the stockholders, may henceforth lonaucted by the company. As i • 1. cated by the footnote on page 1 of the Federal ttkl ive s Regulation R, Section 32 has reference only to Ilfiness presently transacted by the organization in question Eklid , the -" to the business which may have been transacted by it in wilatPa6t. Although it is not entirely clear from your letter Ilow } tr ansactions may be involved in a liquidation of the assets leld by the First Security Company, it would appear that, if 341 12/8/33 -27,,Alch liquidation involves merely the sale of these assets and a°88.not involve the participation in any new business in connoclaon with such liquidation, Section 32 would not be applicable to the service of the directors and officers referred to 111 your letter." Approved. Reply on December 7, 1933, approved by six members of the EctIrd 3 4_CO a letter dated November 29 from Eenry F. Freund, President of the Hudson -Harlem Valley Corporation, :,.ount Kisco, , i.rev( York; the reply reading as follows: "Receipt is acknowledged of your letter of November 29, 19333 '111,/lich you ask whether Section 32 of the Banking Act of 1903 ; 8 aPPliCable to a director of a member bank of the Federal RePlre tion. System mho is also servirr: as a director of your corporah 1"You state that the sole business of your corporation is the a° dlnr: for investment of the majority of the capital stock of L•ruz,•-t, company in Westchester County, the majority of the capSock of a title and mortgage company, and the majority of capital stock of an investment company, and that your corontl". is, therefore, only a holding company which holds the %rol of three operating companies. bu iIt does not appear that the phrase 'engaged primarily in the se:Jess of purchasing, selling, or negotiating securities' in th,Itlen 32 is applicable to a corporation whose sole business is 01.°f a holding company. Accordingly, Section 32 mould not be el0; e-i?able to the service of a director of a member bank under olrcumstanc es described above." p Approved. RePlY on Decenher 7, 1933, approved by six members of the t° a Pederea letter dated October 4 from nr. T. D. Webb, member of the 11(Yme Loan Eank Board; the reply reading as follows: is made to your letter of October 4, and my reply be c-c6bor 6, in regard to your inquiry as to whether it would thePeirraissible for the Home Owners' Loan Corporation to utilize for j ellities of the Federal Reserve banks end their branches tion:e deliver y of bonds issued by the Home Owners' Loan CorporaThe Board is in receipt of a letter from the Treasury Or 0renee 342 12/8/33 -28“DePartmeni, dated November 6, 1933, stating that it sees no objection from tho standpoint of the Treasury to the Federal Reserve Lanks acting as custodians for the bonds to be delivered to the state managers of the home Owners' Loan Corporation upon teletgraphie authority from the Federal Hem Loan Bank Board. i .he Federal Reserve Board has no objection to the Federal e.'serve Banks undertaking this service provided a satisfactory ,e_ustodianship agreement can be arranged and the Federal Reserveftnks are requested to perform this function as fiscal agents of j'-'fle United States by the Secretary of the Treasury pursuant to Lue Provisions of Section 15 of the Federal Reserve Act. It is assuMed that you will take this matter up with the Ireasury Detment vdth a view to having such a request made of the Federal vlerr bank ,s, and that a draft of a custodianship agreement 4, 1 , 1 -e prepared for submission to the Federal Reserve- banks for ,heir consideration. er "14 accordance with your request, the cities in which the Fed0114}, Reserve banks or branches are located have been indicated , "le statement inclosed with your letter and it is returned he rewith. 44_ "IyIth reference to the last paragraph of your letter, while 10 27111 be expected that the Federal Reserve banks will be rein.01;lsed for all expenses incurred by them on account of or arising it',of services rendered in connection with the custodianship, irzpracticable at this time to make any estimate of the exlar!” as the cost of such a custodianship arrangement depends be-LY on the activity of the account." r Approved. There vas then presented a telegram dated December 8, 1933, Governor of the Federal Reserve, Bank of :6oston, statthat the bank contemplated purchasing from the Federal Reserve o New York c 10,000,000 of bankers' accoptan6es .with maturities 41) to 45aletY days, at a rate of 1/2 of that this action was being .4tel1 because the reserves of the New York bank were law and earnings m '411(1 the reserves of the Boston bank high and earninns law; and thq it 14tUld be or appreciated theif the Board would advise promptly whether llot it would approve transaction. The Secretary was requested to advise Governor Y°1-1nC that the Board approves the proposed Purchase. 343 12/8/33 -29There were then presented the following applications for cTigtmal stock of Federal reserve banks: APPlicutions for OLIGINAL Stock: The New Pub1-77--ic Lational Bank of Rochester, Rochester, New Hampshire Ilred°111-ITTETT:roTial Beak at Fredonia, Pen nsylvania Plorence National Bank, liew Florence, Pennsylvania Shares 84 36 36 1),Iz_Lrict No. 5. Nrrirst IT ZTO"nal Bank in Parkton, Maryland ?iret ational Bank in Onancock, Onancock, vir la'Z'.§ict Ccqtra3i--e1Z--ink of Liberty, lassouri 72 36 35 4strict, iro. 7. Pirst Bank in hamarden, Haterden, , 1ova Iktional Rank City, Iowa of Rockwell City, Rockwell liational E xchange Bank of Fond du Lac, Fond (III e, Wiscons Lain 811- 72 36 36 285 357 72 Total 72 657 Approved. Ihereupon the meeting adjourned. Secretary. l'toyed:
@FedFRASER