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A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Tuesday, February 17, 1931, at 2:30 p. PRESENT: 1014 Governor Meyer Mr. Hamlin Mr. Miller Mr. Tames Mr. Pole Mr. McClelland, Assistant Secretary . The Assistant Secretary presented various connunications and reports which were considered and acted upon by the Board as follows: Telegram dated February 13th from the Secretary of the Federal ReBank of Atlanta, advising that at a meeting of the board of directors cn that date no change was made in the bank's existing schedule of rates Of discount and purchase. Without objection, noted with approval. Telegram dated February 14th from Deputy Governor Kenzel of the Federal Reserve Bank of New York, advising that because of firming tendencies in the money market, bill dealers on that date advanced their bid and asked rates 1/870 on bankers' acceptances of all maturities, the buying zatesin effect at the New York bank remaining unchanged. Noted. Report of Committee on Salaries and Expenditures on list submitted 1) the Federal Reserve Bank of San Francisco of employees for wham the directors approved leaves of absence with pay, on account of illness, the month of January, where the total of such absences since Tan118' 17 11 1931, has exceeded thirty days; the Board's Committee recommending aPproval of the salary payments involved. Approved. 2/17/31 Memorandum dated February 16th from the Assistant Secretary, subimitting and recommendin-g acceptance of the resignation of Miss Nelle Swan, a stenographer in his office effective as of the close of business March 141 1931, the memorandum also recommending that Miss Swan ite granted leave of absence with pay, from February 24th to March 14th inclusive. Approved. Memorandum dated February 13th from the Chief of the Division of 8ank Operations, submitting a statement of expenditures of the Federal aeserve banks during the month of January for educational and welfare work, etc. Ordered circulated. Renewal bond in the amount of $50,000, executed under date of ll'ebruarY 11, 1931, by Mr. Herbert S. Downs, Assistant Federal Reserve Agent at the Federal Reserve Bank of New 'York. Approved. Report of Committee on District No. 6 on letter dated February 14th I*110m1 the Secretary of the Federal Reserve Bank of Atlanta, submitting approval of the Board, an amendment made by the board of directors °f the Atlanta bank to the by-laws of the Nashville Branch so as to 14 ' 0vide for a regular meeting of the board of directors of the branch on the first Tuesday of each month at 11 o'clock; a. in., instead of on the 74"daY next preceding the first Friday of each month at 10 o'clock, a* la.; the Board's Committee recommending that the amendment be approved. Approved. 2/17/31 3Report of Committee on District ro, 8 on letter dated February 14th, from the chairman of the board of directors of the Federal Reserve Balik of St. Louis, submitting for approval by the Board, an amendment to the by-laws of the branches of the bank, which was unanimously approved bY the directors on February 4th, and which would add the following Paragraphs, as Section 7, to Article II of the branch by-laws: "The Board of Directors of the Branch may in its discretion elect a Credit Committee to consist of not more than three directors in addition to the Managing Director, which committee shall meet at the call of the Managing Director whenever any credit matter arises concerning which he would like its advice in making recommendations to the head office. "The Managing Director shall act as Chairman of this committee. The members of this committee should be so chosen as to be able to meet with the least delay. The members of the committee attending these meetings shall be paid the same fees and allowances paid for regular Board meetings." Upon recommendation of the Board's Committee, the proposed amendment was approved. Letter dated February 13th from the Federal Reserve Agent at the 4dera1 Reserve Bank of Kansas City, advising of the discovery of a shortage " 01in the cash account of Mr. G. Webb Burt, teller at the Denver branch of the Kansas City Bank, under circumstances pointing to a possible 1101ation of the criminal provisions of Section 5209 of the United States IleVised Statutes. Noted and ordered transmitted to the Attorney General of the United States in the usual way. Memorandum from Counsel dated February 12th submitting application * 114% John McHugh for permission to serve as an officer and/or director of the Chase National Bank of the City of New York, the X. Henry Schroder Bank- 41 fb 2/17/31 -.4- Corporation and the I. Henry Schroder Trust Company, all of New York City; Counsel calling attention to the fact that it appears from this !TPlication that lir. McHugh is also serving as a director of the Equitable Eastern Banking Corporation, a state foreign banking corporation the eaPital of which is owned by the Chase National Bank. °rand= Counsel also submitted draft of letter to Mr. With his MBMMcHugh calling his attention to this matter and advising that he should apply for the Board's Permission under Section 25 of the Federal Reserve Act, to serve at the same time the Chase National Bank of the City of New York and the Equitable Eastern Banking Corporation. Upon recommendation of the Law Committee, the application of Nis. McHugh for permission to serve the banks referred to, and the draft of letter submitted with Counsel's memorandum, were approved. Memorandum dated February 16th from the Board s Examiner in Charge, submitting an advertisement from a Dallas newspaper of the sale of stock Iii the Texas -Power and Light Company, in which the name of the Governor °f the Federal Reserve Bank of Dallas is displayed as one of the directors Of the Company; Lir. Drinnen stating that the advertisement appeared while he was in Dallas, but that he did not have an opportunity to discuss it With Governor Talley who was in Washington attending a meeting of the lien Market Policy Conference. After discussion, upon motion, the matter was referred to Er. Xames as member of the Committee on District No. 11. Memorandum from Counsel dated February 11th regarding letter dated 41111arY 24th from the Federal Reserve Agent at Dallas calling attention to the fact that the First State Bank of Wortham, Texas, holds 50 shares of its /57 2/17/31 1 1) -5- own stock belonging to customers under circumstances which indicate that the bank may rely to some extent upon the stock as security for loans made to those customers; Counsel suggesting that the Board advise the Federal Reserve Agent that whether or not the holding of this stock constitutes a technical violation of Section 5201 of the United States Revised Statutes, he Board is of the opinion that it is contrary to the spirit and purpose Of the law. After discussion, upon motion, the matter was referred to the Governor with power. Memorandum from Counsel dated February 10th with reference to an illquiry received from Mr. IL S. Yohe of the Departmentof Agriculture, as to whether, an the basis of the facts given, a warehouse established on premises leased from a borrower may be regarded as "independent" within the 1484ning of the Board's Regulation "A" regarding bankers' acceptances issued 4gainst warehouse receipts covering storage of readily marketable staples; the memorandum submitting draft of reply advising that from the facts III*esented, it is apparent that the warehouse will not in fact be "independent" (3f the borrower and it, therefore, cannot properly be so considered within the meaning of the provisions of the Board's Regulation "A". 'Upon recommendation of the Law Committee, the proposed letter was approved. It was also voted not to publish in the Federal Reserve Bulletin the form of ruling on this question submitted by Counsel. The Assistant Secretary then presented for the record the following teoommendations adopted by the Federal Advisory Council and presented at ite meeting with the Board this morning: -6- 2/17/31 "TOPIC NO. 1: BANK FAILURES AND BAIT_ EXAMINATIONS. "RECOLS7NDATION: The Federal Advisory Council believes that bank failures in recent times have been largely due to a change in economic and social conditions. "In many instances the minimum capitalization required of banks has not been a sufficient protection to the depositors. The difficulties which banks have encountered cannot be traced entirely to a deficiency in our banking and examination systems. The law now gives sufficient power and agthority for an adequate examination. Improvements in examinations undoubtedly can and should be made. "There should be imposed upon the Federal Reserve banks the requirement to keep themselves informed of the Quality of the investments and loans and the policy of the management of all member banks. "TOPIC NO. 2: OPEN MARKET OPERATIONS AND REDISCOUNT RATES. "RECONMENDATION: The Federal Advisory Council wishes to reiterate :the recommendation made at its last meeting that the situation will be oast served if the natural flow of credit is unhampered by open market operations or changes in the rediscount rates. "The Council believes that the manner in which open market operations have been conducted since the last meeting of the Council is satisfactory." Noted. Consideration was then given to a tentative draft of the Board's 44naal Report for the year 1930, Prepared by the Director of the Division of Research and Statistics, which had previously been read by the individual members of the Board. After some discussion, the Governor was requested to take up the matter of certain suggested changes in the report with the Director of the Division of Research and Statistics. 1E,119.DTS OF STANDING COMMITTEES: February 13th 16th 17th : 11e.te , February 14th 16th Recommending changes in stock at Federal Reserve Banks, as set forth in the Auxiliary Ninute Book of this date. Recommendations approved. Recommending action on applications for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Recommendations approved. The meeting adjourned at 3:30 p. in. APProved: ..n(a / 7 gi1 Governor 149 AUXILIARY MINUTES (February 17, 1931) Reports of Standing Committee dated February 13th, 16th and 17th, recommending changes in stock at Federal Reserve Banks, approved as follows: 44talliaations for ADDITIONAL Stock: D istrict No. 6. st National Bank in Decatur, Alabama. Rolston National Bank, Elizabethton, Tennessee. Brunswick Bank & Trust Co., Brunswick, Georgia. Shares 6 1 1 alt ttlatat24.42Lt Pirst National Bank, Paullina, Iowa. 4en8ton Trust & Savings Bank, Evanston, Ill. Commercial Savings Bank, Adrian, Michigan. Dearborn State Bank, Dearborn, Michigan. Rilledale Savings Bank, Hillsdale, Michigan. Pirst National Bank, Wauwatosa, Wisc. 9 30 3 15 3 9 69 Di strict No. 11. :?Relee National Bank, Nogales, Arizona. , 4ret National Bank, Carrizozo, New Mexico. airst National Bank, Lordsburg, New Mexico. ! tilerican National Bank, Tucumcari, New Mexico. 4„irst National Bank, Byers, Texas. 4nirst State Bank, Canyon, Texas. National Bank, Cleburne, Texas. 'etizens National Bank, Jasper, Texas. its National Bank, Marshall, Texas. Y National Bank, Mineral dells, Texas. i.rst National Bank, Panhandle, Texas. 4irat National Bank, White Deer, Texas. 3 7 3 1 1 3 1 2 1 3 1 1 27 p tlitizens National Trust & Savings Bank, Riveiside, Calif. 60 Iret National Bank, Lewiston, Idaho. 30 Total 90 194 N leations for SURRENDEA of Stock: /41'1;Y National Bank, Belfast, Me. (Decrease in surplus) ertY National Bank, Ellsworth, Me. (Decrease 114,,in surplus) 44- River National Bank Fall Aiver, Mass. (Decrease in surplus) litit3t National Bank, Reading, Mass. (Decrease in surplus) OXlal Bank of Orange County, Chelsea, Vermont. (Decrease in surplus) 90 30 60 30 15 225 2/17/31 -2- Aaolications for SUUENDER of Stock: (Cont'd) D istrict No. 3. ',Yearning Trust Co., Uilliamsport, Pa. (Cons. Susquehanna Trust Company with the above) r_17.0 Shares District No. 4. LYndora National Bank, Lyndora, Pa. (Decrease in surplus) First National Bank of Birmingham, Pittsburgh, Pa. (V.L. Abs. by Peoples-Pittsburgh Trust Co.) 1"elltucky National Bank, Catlettsburg, Ky. (V.L.Suc. by Rentucky-Farmer Bank) xasontown National Bank, Masontown, Pa. (V.L.Abs. by First National Bank of Masontown) uakland Savings & Trust Company, Pittsburgh, Pa. (V.L.Abs. by peoples-Pittsburgh Trust Company) D istrict No. 5. Pirst National Bank, National Bank of at National Bank, Uarchants & Planters Lenoir, N. C. (V.L.Suc. by Union Lenoir) Clinton, S. C. (Insolvent) National Bank, Dillwyn, Va. (Insolvent) Fl.istritc No. 6. 1x:chants & Farmers Bank, Roanoke, Ala. (Insolvent) 46ranga Banking & Trust Co., LaGrange, Ga. (Decrease in surplus) 7 bi strict No. 7. Seeurity National Bank, Downers Grove, Ill. (V.L.Abs p by First National Bank of Downers Grove) n411148/13 National Bank, Inwood, Iowa. (Insolvent) ‘'alitennial National Bank, Virginia, 111. (V.L.Abs. b Petefish Skiles & Company State Bank) ehanga National Bank, Polo, Ill. (V.L.Suc. by First National Bank of Polo, Ill.) bistrict No. 6. , at National Bank, Horse Cave, Ky. (Insolvent) 41a4ters National Bank, Clarksdale, Miss. (Insolvent 720 720 45 240 90 150 480 1,005 90 90 36 216 54 210 264 75 30 42 78 225 30 360 390 18 18 Dist -4rat National Bank, Genoa, Colo. (V.L.Abs. by Limon National Bank, Limon, Colo.) Diatri 'St National Bank, Garland, Texas. (Abs. by State 4 National Bank of Garland) rnlera National Bank, Forney, Texas. (Decrease in capital Pal„fland increase in surplus) -"era National Bank in Plano, Texas. (V.L.Suc. by City N st National Bank of Plano) ational Bank, Sweetwater, Texas. (Decrease in surplus) 36 24 60 12 132 2/17/31 -3- . .4 .PDlications for SURRENDER of Stock: (Cont'd) District No. 12. Citizens National Bank, Rialto, Calif. (V.L.Abs. by First National Bank of Rialto) Shares 25 25 Reports of Standing Committee dated February 14th and 16th, recommending action on applications for fiduciary powers by the following banks: APPROVED: DISTRICT NO. 1. MASSACHUSETTS: Boston-Continental National Bank of Boston. (Confirmatory. Approved as of December 26, 1930, date of the consolidation of the Boston National Bank and the Continental National Bank, both of Boston, Mass. under the above title) DISTRICT NO. 7. INDIANA: The Citizens National Bank of South Bend. (3339) Assistant Secretary. APproved: Gove
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