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A meeting of the Board of Governors of the Federal Reserve 48t was held in Washington on Monday, February 13, 1939, at 2:45 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairnan Mr. Wyatt, General Counsel Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel Mr. Wingfield, Assistant General Counsel Mr. Ransom referred to the discussions of the Board last week With l'esPect to the Barkley trust indenture bill (S.477), and stated the ' t on February 9, 1939, Chairman Douglas, of the Securities and Exchltnge Commission, called on the telephone and advised that he agreed 14 pri • -nelple with the proposed amendment to the bill inclosed with the T4' 11rd e s letter of February 8, but that he hoped the Board would Withhold the presentation of the proposed amendment to the Senate Camrtlitte - on Bankinc, and Currency on February 9 as there were numerous D1, 01,1 Elons in the bill which he wanted members of the staff of the -eUrit*lea and Exchange Commission to check to determine whether ch "ge in the amendment Proposed by the Board was necessary. A 2/13/39 nieln°rendum containing a statement of Mr. Ransom's telephone conversation with Chairman Douglas had been circulated among the members of the Board before this meeting. Mr. Wyatt reported that following Mr. Ransom's conversation With Chairman Douglas, Messrs. Burke and McKellar of the Securities and Exchange Commission called on him and advised that, while they " II not discussed the amendment proposed by the Board with Chairman they did not see how the Commission could satisfactorily clischerge its duties under the bill if it were under necessity of getti-ng information from the bank supervisory authorities and keeping thIlt information secret, but that they would study the amendment and e°1caliunicate with Mr. Tyatt again prior to the closing of the record °li the bill by the Senate Committee on Banking and Currency on Thurs4Y of this week. Mr. Ransom stated that the question had been raised whether (31' 11°t the bill would have an undesirable effect on the securities 111"kets and that he would like to have the Board determine (1) whether 4°t it desired to take a position on this broad question, and (2) 1118.t action is to be taken in the event the Securities and Exchange eslon does not agree with the amendment inclosed with the Board's letter of February 8 and is unwilling to transmit it to the Senate ec/rGraittee on Banking and Currency. 199 2/13/39 During the discussion which followed of the testimony given hearings on the bill before the subcommittee of the Committee on Banking and Currency last week, Mr. Ransom referred to the report on the bill filed in May 1938 by the Committee on Corporate Financing of the Chamber of Commerce of the United States and there were read the eeeti0n8 from that report relating to the economic effects of the bill alid the alternative method suggested in the report that the field of allParvision contemplated in the bill be assigned to the Board of Go vernors. Mr. Wingfield also reviewed briefly the points covered in a rile14°raliduili prepared by him under date of February 13, 1939, on the subjeet of the possible additional costs which would result from, and the deflationary aspects of, the trust indenture bill. Mr. Ransom stated that he felt it was important for the Board t° ' l eeob a decision before the record of the hearings on the bill are 0105ed on Thursday of this week on the two questions presented by him 8114 that if it were decided to submit any further statement to the sub°*45411ttee of the Senate Committee on Banking and Currency the statement 1811°Uld first be submitted to Chairman Douglas with advice of the Board's ilitelltion to submit it to the Congressional committee. At the conclusion of the discussion, Mr. Ransom suggested that WYatt be requested to keep in touch with the representatives of the Securities and Exchange Commission who had called on him, for the 200 2/13/39 -4- PlirP°8e of ascertaining as promptly as possible whether the Commission 18 willing to submit the amendment, or a satisfactory revision thereof, to the Senate Committee. He also suggested that Mr. Wyatt be requested to Prepare, for consideration by the Board before Thursday, a draft of letter to Chairman Wagner, of the Senate Committee on Banking and Cur' stating in effect that, without expressing an opinion as to the erits of the bill, the Board desires to suggest consideration of the "tached amendment to the bill which is believed to be desirable for ".8 stated in the letter. This procedure was proposed, Mr. Ransom SO that, in the event the Securities and Exchange Commission is l wi to transmit the proposed amendment, or any revision thereof 4:rl'eeable to the Board's Counsel, to the Senate Committee on Banking 111c1 ClIrl'ancY the Board will be in a position to transmit the letter t° the Senate Committee early on the morning of Thursday, February 16. The procedure suggested by Mr. Ransom was agreed to unanimously. Chairman Eccles stated that he had raised a question as to the Possible deflationary effects of the bill and whether the Board, 111 *view of the changed circumstances under which the bill was now bej considered, should take a position on the broader question of the el'rects of the bill on the flotation of securities. As a result or €t dli scussion of this question it was agreed that, inasmuch as the 12(1"cl has not at any time been asked for a report on the bill, as 2/13/39 Chairman Douglas of the Securities and Exchange Commission had been cooperative in incorporating the suggestions of the members of the 13°.erd and its staff in revisions of the bill, and as a committee of tile American Bankers Association had taken the position that, while the legislation was unnecessary, the banks could function thereunder, the Board should not offer objection to the bill at this time. During the discussion, Mr. Paulger, Chief of the Division of 4atiiin1tion5, joined the meeting. Mr. McKee reported that Mr. Nichols, Chief Examiner for the Federi Deposit Insurance Corporation, called him on the telephone While this meeting was in session and had stated that he was going t0 New Jersey this afternoon to meet Chairman Crowley of the Federal De P°ait Insurance Corporation at Jersey City tomorrow morning. Mr. , Ni °1 s stated, Mr. McKee said, that the Federal Deposit Insurance -k"oration had been informed that The New Jersey Title Guarantee Trust Company would not open tomorrow morning, that the board cli rectors was arranging to meet at the hame of Walter P. Gardner, ill'esi(lent of the bank, tonight at 9:00 p.m. to decide whether they wow., assume responsibility for closing the bank and that if they /lot close it the State banking authorities would take it over to o rrow DIC)rni ng Mr. McKee added that Mr. Nichols had said that the l'ederal Deposit InsurEnce Corporation was prepared to make a tEl-tlient for publication in the morning papers of the decision 202 2/13/39 -6reached and that Mr. Crowley planned in an interview tomorrow to state that a program had been agreed upon which contemplated that the Federal /05 Del 1t Insurance Corporation would make contributions to banks in illidsOa County, New Jersey, through the medium of loans or otherwise to the extent of approximate ly 4,25,000,000 and that, while The New Jersey Title Guarantee and Trust Company was being allowed to close principally bee Illse of its contingent liability on mortgages, assistance would be ' l ehaered to other institution s in that county. At this point Messrs. Thurston, Wyatt, Goldenweiser, Dreibelbis, PlaulEer and Wingfield left the meeting and the action stated with rePect to each of the matters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Ped. , ' ' 181 Reserve System held on February 10, 1939, were approved unani111°1181Y. Letter to Mr. Kimball, Secretary of the Federal Reserve Bank Or tie W York, reading as follows: "In accordance with the request contained in your letter of February 9, 1939, the Board approves the salaries fixed by your Board of Directors at a meeting held °fl /ebruary 9, for the officers of the Bank for the Period February 1 to February 28, 1939, which salaries are at the rates in effect for such officers on December 1938." Approved unanimously. 203 2/13/39 -7Letter to Mr. Hill, Vice President of the Federal Reserve Bank of Philadelphia, reading as follows: "Reference is made to your letter of February 6, 1939, concerning the acquisition on that date by the 'Camden Trust Company', Camden, New Jersey, of assets amounting to $800,320.43 in consideration for assuming the deposit liabilities of 'The .American National Bank', Camden, New Jersey, in like amount. "It is understood that the transaction is in accordance with the general plan outlined when the merger of the Camden Trust Company and the West Jersey Trust ComPanY was under consideration last year; that the loans and investments included among the assets acquired were aPpraised and classed as acceptable by one of your examiners; that Camden Trust Company does not expect to Operate a. branch in the quarters occupied by the American National Bank; and that your counsel has advised you informally, after reviewing the agreement under which the transaction was effected, that, in his opinion, the transaction will result in no change in the general character of the assets of or broadening in the functions exercised 13Y the Camden Trust Company, such as will tend to affect materially the standard maintained by the member bank Prior to the consummation of the transaction. "In view of the nature of the transaction, the character of the assets acquired, and the comparatively small 81ount of the deposits assumed by the member bank, it does not appear that the transaction comes within the scope of elleral condition of membership numbered 3. The approval or the transaction by the Board, therefore, is not re- Approved unanimously. Thereupon the mectin adjourned.
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