Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 21, 1935, Volume 22, Part 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

504

A meeting of the Federal Reserve Board was held in Washingtook on Thursday, February 21, 1935, at 11:45 a. m.
?RESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Governor
Thomas, Vice Governor
Hamlin
Miller
James

Mr. Morrill, Secretary
Mr. Betheal Assistant Secretary
Mr. Carpenter, Assistant Secretary
The minutes of the meetings of the Federal Reserve Board
41°1 on February 4, 5, 6, 7, 11, 13, 14 and 15, 1935, were approved.
The minutes of the meeting of the Federal Reserve Board with

the

Federal Open Market Committee held on February 5, 1935, were

a
pproved.
The minutes of the meeting of the Federal Reserve Board

nth the

Governors of Federal reserve banks held on February 6, 1935,

wer'a approved.
The minutes of the meeting of the Executive Committee of the
441
'
111 Reserve Board held on February 12, 1935, were approved and

the

actions recorded therein were ratified unanimously.
The Board then acted upon the following matters:
Telegram to Mr. Wood, Chairman of the Federal Reserve Bank

Or

St, Lou,s,

reading as follows:

"Federal Reserve Board today approved for your bank reulecount rate of 4% on advances to individuals, partnerships
°I' corporations on the promissory notes of such individuals,
Partnerships or corporations secured by direct obligations
(If the United States, under the last paragraph of section




505
2/21/
55

-2-

"13 of the Federal Reserve Act as amended, effective February
25.0
Approved.
Telegrams dated February 20, from Mr. Curtiss, Chairman of
the Federal Reserve Bank of Boston, and February 21, 1935, from Mr.
1°11ng, Secretary of the Federal Reserve Bank of Chicago, both advisthat, at meetings of the boards of directors on the dates stated,
11° changes were made in the banks' existing schedules of rates of
d
iscount and purchase.
Without objection, noted with approval.
Memorandum dated February 16, 1935, from Mr. Paulger, Chief
c)f the Division of Examinations, recommending the transfer of Mr.
Ge°rge Ringen, an Assistant Federal Reserve Examiner, from the road
to the office
force, and that his headquarters be changed from St.
Louts,
Missouri, to Washington, D. C., effective as of February 16,
195
with no change in his present salary of !4 4,500 per annum.
Annraved.
Letter to Mr. Fletcher, Acting Federal Reserve Agent at the
Peci"al Reserve Bank of Cleveland, reading as follows:
"The Federal Reserve Board has received your letter of
-ruary 14, 1935, and apnroves the designation, effective
hlarch 1, 1935, of Mr. Clyde Harrell, a clerk in the audit de1P-rtment of the Cincinnati branch of the Federal Reserve Bank
17! Cleveland, as Acting Assistant Federal Reserve Agent at the
ranch, to take the place of Mr. R. G. Johnson who has been apD°inted Assistant Cashier of your Cincinnati branch, effective
March 1.
"As previously stated, section 16 of the Federal Reserve
A e+
renuires that all Federal reserve notes and all gold cer°-ficates and lawful money issued to or deposited with any




506
2/21/35

-5-

"Federal reserve agent shall be held for such agent in the
joint custody of himself and the Federal reserve bank to which
he is accredited. In view of this provision of law, the Federal Reserve Board feels that a representative of a Federal
reserve agent participating in such joint custody should be
responsible to the Federal reserve agent and indeoendent of
the Federal reserve bank in so far as is consistent with the
practical situation, and, therefore, before the designation
referred to above becomes effective, Mr. Harrell should resign
his position as clerk in the audit department of your Cincinnati branch. However, during such periods as Mr. Harrell is
not engaged with his duties as Acting Assistant Federal Reserve
Agent, he may be detailed by the Federal reserve agent to perform such functions in the audit department of the branch as
the agent may consider advisable. It is understood from your
letter that this arrangement is to be followed in connection
With the designation of Mr. Harrell.
"Mr. Harrell should execute the usual form of oath of
office and a surety bond in the amount of 50,0001 and he
Should not enter upon the performance of his duties as Acting
Assistant Federal Reserve Agent until you have received advice
of the Board's approval of the bond. Before the bond is forwarded to the Board for approval, it should be examined by
Your counsel to determine whether its execution complies fully
With the rules printed on the reverse side of form of bond 182."
Ap7roved.
Letter to Mr. Curtiss, Chairman of the Federal Reserve Bank
°I' Boston, reading as follows:
"Receipt is acknowledged of your letter of February 16,
1955, advising that because of the illness of Mr. Thomas M.
Steele, member of the Federal Advisory Council representing
the First Federal Reserve District, the executive committee of
Your bank has selected Mr. Thomas P. Beal, President of the
Second National Bank of Boston, Massachusetts, as alternate to
represent the First District at the meeting of the Council to
be held on Febrwry 1D-20, 1935.
"In connection with the selection of Mr. Beal as alternate
for Mr. Steele, your attention is directed to the Board's circular letter of March 25, 1925 (X-4296), a copy of which is attached."
Approved.
Letter to Mr. Strater, Secretary of the Federal Reserve Bank




507
2/21/35

-4-

of Cleveland, reading as fo1lo7s:
"The Federal Reserve Board has received your telegram of
February 18, 1935, and apnraves the appointment of Mr. Hugh L.
Gaddis as the fifth member of the Industrial Advisory Committee
for the Fourth Federal Reserve District for a term of one year
from March 1, 1935."
Approved.
Letter to Mr. Clark, Assistant Federal Reserve Agent at the
4dere1 Reserve Bank of Atlanta, reading as follows:
"Reference is made to your letter of January 28, 1935,
inclosing the application of The First National Bnnk of Cookeville, Cookeville, Tennessee, for 24 additional shares of stock
of the Federal Reserve Rank of Atlanta.
"It is noted that, while the Board on October 9, 1934,
approved an application of the subject bank for 30 additional
Shares of Federal Reserve bank stock, the bank reduced its surplus by g10,000 before the additional shares were issued, and
that, on the basis of the bank's present capital and surplus, it
is entitled to 24 instead of 30 additional shares of Federal
Reserve bank stock. For this reason you have submitted a new
aPplication for 24 shares to take the place of the approved anplication for 30 shares.
"In the circumstances, you are authorized to issue 24
Shares of Federal Reserve bank stock under the application approved on October 9, 1934, instead of 30 shares as shown in that
application.
"In future instances of this kind, where a member bank reduces its capita' and surplus below that shown in its application
for Federal Reserve bank stock as approved by the Board, it is
suggested that you issue an appropriate number of shares of Federal Reserve bank stock based upon its reduced capital and
surnlus and advise the Board of the circumstances."
Approved.
Letter to Mr. Clark, Assistant Federal Reserve Agent at the
1."1 Reserve Bank of Atlanta, reading as follows:
"Receint is acknowledged of your letter of February 12
l'egarding the affiliates of the Columbus Bank & Trust Company,




T.+

508
2/21/F5

re'
0.•

-5_

"Columbus, Georgia. In view of the fact that the affiliate relationshins in nuestion have been terminated, the Board cencurs
in vour opinion that no further corrective action is reauired."
Approved.
Letter to Mr. Pone McAdams, Vice President and Cashier of
the First National Bank, Louisville, Kentucky, reading as follows:
"This refers to your letter dated January 18, 1935 regarding the euestion whether a loan of money by the First National
Bank, Louisville, Kentucky, to 8 holder of the bank's certificate
of deposit, unon the security of such certificate of deposit,
constitutes a violation of section 19 of the Federal Reserve
Act and of the Board's Regulation 0 nrohibiting the nayment of
time denosits before maturity.
"In a previous letter dated November 3, 1934, the bank requested advice concerning a proposed loan to a holder of a certificate of denosit who wished to borrow the amount of her time
deposit in order to nurchase an automobile, and who desired to
give the bank her note secured by the certificate of deposit and
Payable at the date the certificate of ele'losit was payable.
"In answer to such inquiry, the Board stated in its letter
dated November P, 1934 that the making of a loan to the owner of
a time deposit by a member bank for the purpose of evading the
Prohibition upon the payment of a time denosit before its maturity will, to the extent of such loan, be deemed to be a nayment
of such denosit in violation of the Board's Regulation Q. The
Board also stated that the nuestion whether a loan made by a
member bank to the owner of a time denosit constitutes a violation of the prohibition depends upon whether the loan was made
in good faith or for the purpose of evading such prohibition,
and that the Board feels that such a nuestion should be considered by a member bank at the time such transaction is
Dronosed and should be determined by such bank in the exercise
of its best judgment and in the light of the provisions of the
lew and the Board's regulation. With reference to the bank's
licuiry, the Board stated that the making of the nronesed loan
in the circunstances stated would probably involve an evasion
of th Prohibition upon the nayment of the time deposit before
its maturity.
"In your letter dated January 18, 1935, you state that in
the case covered by the nrevious innuirv, no agreement had been
entered into between the bank and the holder of the certificate
Of deposit at the time the certificate was purchased that the

I




gri

509
2/21/35

-6-

"bank would make a loan on the certificate, and that no previous understanding of any kind was had with the holder of the
certificate that the bank would make a loan upon such certificate. You also recuest a definite answer to the cuestion
Whether or not it is lawful for the bank to make loons to the
owners of its certificates of denosit.
"The Federal Reserve Board feels that it should not attemnt to furnish a definite answer to such cuestion in view of
the large number of circumstances which may affect the determination of the cuestion in any particular case. However, the
Board feels that it may properly state that a loan to the owner
Of a time deposit secured by a certificate of deposit may constitute an evasion of the prohibition of payment of a time
deposit before its maturity, even though no agreement, arrangement, or understanding was made between the bank and the holder
of the certificate of deposit at the time the certificate was
nurchased that the bank would make a loan upon the certificate.
The fact that a customer requests the payment of a time certificate of denosit before its maturity and, upon finding that such
Payment cannot be obtained, recuests that a loan be made on the
security of the certificate, is ordinarily a stronr indication
that the purpose of the borrowing or loan, if consummated,
would be to circumvent the prohibition against the payment of
a time deposit before its maturity. That such would be the
PlirPose is even more clearly indicated if the loan as thus pronosed is to mature on the date of the maturity of the certificate.
"Although circumstances may arise in which the making of
a loan by a bank unon the security of a certificate of deposit
would be in good faith and not for the purnose of evading the
Prohibition noon the Payment of time denosits before maturity,
it is the opinion of the Federal Reserve Board that such circumstances are rare. The Board feels that the ouestion whether
the making of a loan upon the security of a certificate of dePosit is for the purnose of evading the prohibition upon the
payment, of time deposits before maturity should be left to the
judgment of the member bank and also feels that, in cases where
there is any considerable doubt in the matter, the safest
course for the bank to follow in deciding this question is to
refrain from makino. such loans, in view of the fact that the
bank must be nrenared to show clearly that such transactions
"
are not in contravention of the applicable nravisions of laws.
Annroved.
Letter to Honorable William Lemke, House of Representatives,




510
2/21/F,5
reading as follows:
"Reference is made to your letter of February 5 regarding
the annlicat4 on of Mr. Fred Timmer, President of the Fargo
Jewelry Manufacturing Co., Fargo, North Dakota, for a loan from
the Federal Reserve Bank of Minnearolis under the terms of Section 1724) of the Federal Reserve Act.
"Tt annears from the corresnondence which you submitted to
us with your letter, and from information furnished by the Federal Reserve Bank of ninnearolis, that ?Jr. Timmer made annlicetion for a loan in the amount of 'Z,000, to be divided into two
parts, 1,500 to be secured by the company's machinery and
fixtures, and :1 1,500 to be secured by school contracts. The
comrany planned to repay the loan at the rate of 20 percent a
Year, which would give the loan five years to run.
"The machinery and fixtures, according to Mr. Wimmer's own
statement, are valued at, 1,460.60, which is somewhat less than
the amount for which they are offered as security, and their
sale value in case of foreclosure would presumably be still less
than their book value. The contracts which Mr. Wimmer offered
as further security appear to be orders signed by students and
their teechers. In the case of both the enuipment and the contracts, 1-ho value of the security would largely disannear if
business operations were discontinued. The hone of repayment
1"uld, therefore, have to depend almost wholly on the maintenance of nrofitablo operations.
"Mr. Wimmer's record, however, gives no assurance of his
ability to carry on the business successfully over a period of
Years, and to repay the loan from Profits. His past management
has not been successful, and his recent records show no profit.
Furthermore, it is to be noted from his letter of January 12
tnat he contemplated having to make further borrowings on the
same basis next fall. In View of these doubtful rrosnects, and
leaving aside the ouestion whether the Federal Reserve bank was
amPly orotected, it does not seem that Mr. Timmer would improve
his Position by the assumntion of an obligation which would more
Probably increase his burdens than lighten them.
"The fact that Mr. Wimmer's company is a comparatively
small one does not annear to have created any Prejudice against
his application. The Federal Reserve Bank of Minnearolis has
T"e a number of other loans of even smaller amount under the
-cerms of Section lFb of the Federal Reserve Act.
"In accordance with your renuest, we return herewith the
inclosures which accomnenied your letter of Februrry 5."




Annroved.

511
2/21/55

-8Letter to Mr. Fred T. Rombach, Vice President of the Watson-

Table & Furniture Company, Tatsontorn, Pennsylvania, reading as
follows:
"Reference is made to your letter of December 31, 1934, to
the Secretary of the Treasury, regarding the Policy of the Federal Reserve banks in respect to applications submitted for
loans under authority of Section MI of the Federal Reserve Act
and referring particularly to the industrial loan application
filed by your company.
"We are informed by the Federal Reserve Bank of Philadelphia, in resnonse to our reouest for information, that it did
not feel that the loan could be made without additional collateral, unless subordination of annroximately $9,300 of existing indebtedness could be procured. Efforts to effect this
subordination annear to have been unsuccessful. Apparently no
Other satisfactory collateral was available, and to nermit more
than one-third of the new lom to be used to licuidate existing
indebtedness seemed unjustifiable.
"We regret that unoualified approval could not be given to
Your application, but since it received careful and repeated
consideration by the Industrial Advisory Committee and the
Federal Reserve Bank of Philadelphia, and inasmuch as they
concurred in the conclusion that it could not be approved unless
the aforementioned condition was met, there appears to be no
basis for further action by the Federal Reserve Board in the
matter.
"It is noted that you speak of the unfavorable action on
Your application as tyPical of the acf ion taken by the Federal
Reserve banks in general toward loans applied for under the
terms of Section 13b of the Federal Reserve Act. It may be
Pointed out, however, that the law authorizes the Federal Reserve banks to make loans only on a reasonable and sound basis,
and that the Federal Reserve bank has no choice but to disanProve those loans which in its judgment fail to satisfy the
reruirements of the law."
Anproved.
Letter to Mr. Curtiss, Federal Reserve Agent at the Federal

Rese.p.-

"e Bank of Boston, prepared in accordance with the action taken

4't the meeting of the Board on February 13, 1935, and reading as
follows:




512
2/21/35

-9-

"Consideration has been given to the application of Mr.
Louis Curtis under the provisions of section 32 of the Banking
Act of 1933 for a permit to serve as director of The Merchants
National Bank of Boston and as trustee of Century Shares Trust,
both of Boston, Massachusetts.
"It appears from the information which has been submitted
that Century Shares Trust is a so-called 'investment trust',
organized March 1, 1928, that its assets are invested principally in the stock of banks and insurance companies, and
that it has never participated in any way in the underwriting,
issue, or distribution of securities other than its own. It
appears that purchases and sales of securities in its portfolio
represented the following percentages of its total assets for
each of the following years:
Year
Purchases
Sales
1929
121.00
52.76
1930
13.85
17.85
1931
4.44
4.55
1932
5.65
9.32
1933
9.67
5.36
"It appears further that the shares of the Trust are sold
and redeemed at the then liquidating value of the underlying securities when such Shares are offered or called for by the public.
However, it appears that the Trust does not sell its shares directly to the public but, prior to the organization of Brown
Harriman & Co., Incorporated, sold units consisting of one Participating Share and one Ordinary Share at their then liquidating
value to the firm of Brown Brothers Harriman & Co., which retained
ownership of the Ordinary Shares and offered the Participating
Shares to the public. The Board is without information as to
Whether the stock is now sold by Brown Brothers Harriman & Co.
or by the new corporation, Brown Harriman & Co., Incorporated.
"It annears from the Trustees' reports that the shares of
the Trust sold and redeemed, respectively, during the years 1931
to 1933, inclusive, constituted the following percentages of the
total shares outstanding:
Year
Sold
Redeemed
1931
7.68
3.26
1932
6.88
9.11
1933
2.99
9.94.
"Tn the light of the above information, the Board believes
that Century Shares Trust should not be deemed to be 'engaged
1)rimarily in the business of purchasing, selling, or negotiating
Becuritiest within the meaning of section 32, and that, therefore,
a Permit covering the relationships described in the first paragl'aph of this letter is unnecessary.




513
2/21/35

-10-

"It will be appreciated if you will advise Mr. Curtis
accordingI;y."
Approved.
Letter to Mr. Clark, Assistant Federal Reserve Agent at the
Federal Reserve Bank of Atlanta, reading as follows:
"Receipt is acknowledged of your letter of February 4,
1935, with reference to the possible applicability of section
32 of the Banking Act of 1935 and/or section SA of the Clayton
Act to Mr. John Allen Jones, a director of The National Bank
of Opelika, Opelika, Alabama.
"It appears from your letter that a Mr. Breedlove, of
ODelika l is a telegraph onerator who has access to a leased
wire controlled by Fenner & Beane, New Orleans, Louisiana.
Mr. Breedlove furnishes business men in Opelika with quotations obtained from this leased wire, and also places orders
for them with Fenner & Beane for commodities and securities.
In order to protect Fenner & Beane from loss resulting from
orders placed with them by Mr. Breedlove, Mr. Jones has entered
into an arrangement with Mr. Breedlove which is termed a
'nominal partnership', solely for the accommodation of Mr.
Breedlove. It appears that the profits received by this 'partnership? from the orders referred to above do not average more
than i2.5 per month. It further appears that any loans which
ma7 be made on stock or bond collateral as a result of such
orders are made by Fenner & Beane.
"On the basis of the above information, the Federal Reserve Board sees no reason to differ with the conclusion
reached by you and your counsel that neither section 32 of
the Banking Act of 1035 nor section SA of the Clayton Antitrust
Act are applicable to Yr. Jones. It will be anpreciated if
You will advise Mr. Jones accordingly."
Apnroved.
Letter to Mr. Case, Federal Reserve Agent at the Federal
Resere Bank of New York, reading as follows:
"On May 8, 1934 the Board granted to Mr. James H. Perkins
a permit under the provisions of section 32 of the Banking
Act of 1933 to serve at the same time as director and officer
of The National City Bank of New York, and as director of




514
2/21135

-11-

"Discount Corloration of New York, both of New York, New York.
Subseeuently, you recommended that the permit be amended so
as to cover also Mr. Perkins' service as officer and director
of City Bank Farmers Trust Company, New York, New York, in
view of the fact that that comnany had since become n member
of the Federal Reserve System, thus making section 32 applicable to Mr. Perkins' services to it.
"In view of the fact that on January 17, 1935 the Board
granted a permit to Mr. Perkins under the provisions of the
Clayton Antitrust Act to serve the national bank and the trust
company named above and International Banking Cornoration,
Bridgeport, Connecticut, it annears that the permit issued to
him under section 32 may properly be amended pursuant to your
recommendations, and there is therefore inclosed the original
of such amended nermit for transmittal to Mr. Perkins, and
conies thereof for transmittal to the institutions involved
and a cony for your files."
Anproved.
Letter to

r. Case, Federal Reserve Agent at the Federal

Reserve Bank of New York, reading as follows:
"On May 8, 1934 the Board granted to Mr. Gordon S.
Rentschler a nermit under the nrovisions of section 32 of the
Banking Act of 1935 to serve at the same time as director and
Officer of The National City Bank of New York and as director
of Discount Corporation of New York, both of New York, New
York. Subsemently, you recommended that the Permit be amended
so as to cover also Mr. Rentschler's service as director of
City Bank Farmers Trust Company, New York, New York, in View
of the fact that that comnany had since become a member of the
Federal Reserve System, thus making section 32 applicable to
Mr. Rentschler's services to it.
"In view of the fact that on January 17, 1935 the Board
granted a permit to Mr. Rentschler under the nrovisions of
the Clayton Antitrust Act to serve the national bank and the
trust company named above and International Banking Cornoratien, Bridgenort, Connecticut, it appears that the Permit issued
to him under section 32 may properly be amended pursuant to
Your recommendations, and there is therefore inclosed the
Original of such amended permit for transmittal to Mr. Rent,
?ehler,
and conies thereof for transmittal to the institutions
Involved and a cony for your files."




Anproved.

515
2/21/55

-12Letter to Mr. John F. Gouldman, Jr., The Planters National

Bank in Fredericksburg, Fredericksburg, Virginia, reading as follors:
"The Fderal Reserve Board understands that you are
serving as a director of The Planters National Bank in Fredericksburg, Fredericksburg, Virginia, as officer and director
of The Farmers and Merchants State Bank, Fredericksburg,
Virginia, and as president of the Bank of Lancaster, Kilmarnock, Virginia, apparently in violation of the nrovisions
of section 8A of the Clayton Antitrust Act.
”The Board has been advised that the Federal Reserve
Agent at the Federal Reserve Bank of Richmond has furnished
YOU with the necessary forms and information for the making
Of an application for a permit under the provisions of that
Act covering such services, but that such an application has
not been nronerly completed and filed with the Federal Reserve Agent as reouired by Regulation L of the Federal Reserve
Board, which deals with the provisions of that Act.
"It is assumed that you do not desire or intend to continue to serve in violation of law, and this letter is therefore being addressed to you in order to give you an opportunitY of taking such stens as are necessary in the premises.
Please advise the Federal Reserve Agent at. the Federal Reserve
Bank of Richmond promptly as to the stens which you will take
in order to comply with the provisions of the Clayton Act."
Approved.
Letter to Mr. Hoxton, Federal Reserve Agent at the Federal
ileserlre Bank of Richmond, prepared in accordance with the action
taken at the meeting of the Board on February 13, 1935, and reading as
follows:
"The Board has given consideration to the apnlications
°f Messrs. H. P. Jones and Carl A. Jones, Bristol, Virginia,
for Permission under the nrovisions of the Clayton Act to
.,?rve at the same time as directors and/or officers of The
!lrst National Bank in Bristol, Bristol, Tennessee, and Washington Trust and Savings Bank, Bristol, Virginia; and, uoon
the basis of the information before it, feels that the issuance
°f the permits annlied for would be incompatible with the




516
2/21/35

-13-

"public interest. You are reouested to advise the annlicants
of the Board's nosition in the matter, unless there are pertinent facts which were not sill-mated with the applications
and which you feel should be given consideration.
"Please inform the Messrs. Jones that the Board's action
Upon their applications was based upon the fact that the
banks apnear to he engaged in the same class or classes of
business and so located as to be in a position to compete substantially. It appears that it is the policy of the Congress,
as declared in the Clayton Act to terminate interlocking relationshins between banking institutions of certain classes
which are in substantial competition, annarently because the
Congress felt that such relationships might tend to result in
a substantial lessening of competition and a restriction of
credit. Therefore, the Board does not feel that it may grant
these applications since no other facts have been brought to
its attention which would make it compatible with the public
interest to issue the nermits. In this connection reference
is made to the Board's letter of Januar7 9, 1935 (X-9082).
"In communicating with the applicants, please advise
them that, in accordance with Section V (g) of Regulation L,
consideration will be given to any additional facts or arguments not appearing in their annlications and accompanying
forms which they feel should be brought to the Board's attention. In this connection, Please advise the Board nromptly
aS to whether the Messrs. Jones desire to submit any additional data and, if not, as to what steps they propose to
take in order to comply with the provisions of the Clayton
Act.
"A copy of this letter is being sent to the Assistant
Federal Reserve Agent at Atlanta for his information and
records."
Approved.
Letter to Mr. Hoxton, Federal Reserve Agent at the Federal
Reserve Flank of Richmond, prepared in accordance with the action
taken at the meeting of the Board on February 13, 195, and readas follows:
"The Board has given consideration to the application
of Mr. T. N. McAnge, Jr., Bristol, Tennessee, for permission
Under the provisions of the Clayton Act to serve at the same




517
2/21/35

-14-

"time as director of The First National Bank in Bristol,
Bristol, Tennessee, and as director of The Dominion National
Bank of Bristol, Bristol, Virginia; and, upon the basis of
the information before it, feels that the issuance of the
Permit applied for would be incompatible with the nublic interest. You are requested to advise the applicant of the
Board's position in the matter, unless there are nertinent
facts which were not adhmitted with the annlication and
Which you feel should be given consideration.
"Please inform Mr. McAnge that the Board's action upon
his application was based upon the fact that the banks appear
to be engaged in the same class or classes of business and
so located as to be in a position to compete substantially.
It appears that it is the policy of the Congress, as declared
in the Clayton Act to terminate interlocking relationshins
between banking institutions of certain classes which are in
substantial cornetition, apparently because the Congress felt
that such relationshins might tend to result in a substantial
lesseninq: of competition and restriction of credit. Therefore, the Board does not feel that it may grant this application since no other facts have been brought to its attention
Which would make it compatible with the public interest to
issue the permit. In this connection reference is made to
the Board's letter of January 9, 1935 (X-9182).
"In communicating with the aonlicant, nlease advise him
that, in accordance with Section V (g) of Regulation L, consideration rill be given to any additional facts or arguments
not annearing in hts annlication and accompanying forms which
he feels should be brought to the Board's attention. In this
connection, nlerlle advise the Board promptly as to whether
Mr. McAnge desires to submit any additional data and, if not,
as to what stens he nronoses to take in order to comply with
the Provisions of the Clayton Act.
"A cony of this letter is being sent to the Assistant
Federal Reserve Agent at Atlanta for his information and
records."
Anproved.
Letter to Mr. Stevens, Federal Reserve Agent at the FedReserve Bank of Chicago, prepared in accordance with the acti0r1 taken
at the meeting of the Board on February

1935, and

11"-aing as
follows:
"Reference is made to the Clayton Act application of Mr.




e.

o'

518
2/91/35

-15-

"Stenhen B. Monroe, Kalamazoo, Michigan, to serve at the
same time as director of American Nation--1 Bank of Kalamazoo
and Kalamazoo Industrial Bank, both of Kalamazoo, Michigan,
which was not approved 177. the Board as indicated in its letter of September 14, 1934, to you; and to the application of
Mr. Albert E. Kettle, also of Kalamazoo, Michigan, to serve
at the same time as director of The First National Bank and
Trust Company of Kalamazoo and Kalamazoo Industrial Bank,
Which was not approved by the Board as indicated in its letter of September 22, 1954, to you; and to subsequent correspondence with respect to these applications.
"The Board has reconsidered the applications of Messrs.
Monroe and Kettle and, in accordance with the policy set forth
in its letter of January 9, 1935, (X-908?), has granted permits covering their respective services to the above named
banks for the period ending January 14, 1936. There are inclosed the originals and conies of the permits for transmittal
by you to the applicants and the banks involved and conies for
Your files.
"When the permits are sent to the applicants and conies
thereof to the banks involved, please advise them that the
permits have been issued so as to expire at the close of Januarr 14, 1936, as there is now pending before the Congress
proposed legislation for the Purnose of clarifying and otherwise amending the nravisions of the Clayton Act relating to
interlocking bank directorates."
Approved.
Letter to Mr. Wood, Federal Reserve Aaent at the Federal
Re8erVe Bank of St. Louis, reading as follows:
"There are inclosed the original and copies of the Clayton Act nermit issued to Mr. G. W. Brichler, East St. Louis,
Illinois, covering his service as director of First National
Bank at East St. Louis, East St. Louis, Illinois, and director
and officer of The First National Bank of Lebanon, Lebanon,
Illjnoj
"In considering this application it was noted that the
?-Pnlicant is serving as President and director of State Savings and Loan Association which is described as a building
and loan association. In reply to ouestion 13 on F.R.B. Form
94) with respect to whether any organization served by the
aPPlicant makes loans secured by stock or bond collateral,
the applicant states:
'Yes. Roth banks listed do a commercial bankino,. business




519
2/21/35

-16-

"'and the State Savings and Loan Association does a
regular building and loan business'.
"It seems probable that State Savings and Loan Associetion does not make loans secured by stock or bond collateral
Within the meaning of section 8k of the Clayton Act, and as
You, of course, know loans made to its own shareholders on
the security of its own shares, as a part of the general plan
under which building and loan associations usually operate
are not the type of loans 'secured by stock or bond collateral'
referred to in section BA. In this connection reference is
made to the Board's letter of September 11, 1933 :X-7584).
"If you find that the provisions of section 8A are not
applicable to Mr. Brichler's service to State Savings and Loan
Association, please transmit the inclosed permit to him and
copies thereof to the banks involved, retaining a copy for
3.7our files, and advise the applicant that the permit has been
issued so as to expire at the close of January 14, 1936, as
there is now pending before the Congress pro:)osed legislation
for the purpose of clarifying and otherwise amending the
provisions of the Clayton Act relating to interlocking bank directorates.
However, if you find thLt section 8A is applicable
Brichler's service to State Savings and Loan Associa'
10n, please advise the Board fully and return the inclosed
permit to the Board."
Approved.
Letters to applicants for permits under the Clayton Act
4(4-1-4
"ng respectively of the issuance by the Board of permits as
rollows:
!I% George J. Bassett, to serve at the same time as a director of The
New Haven Bank, National Banking Association, New
en, Connecticut, and as a director of The Morris Plan
,ank, New Haven, Connecticut, for the period ending January
J.4, 1936.

r

Mr, A
."-'* O. Johnson, to serve at the same time as a director
and officer
of the First National Bank at East St. Louis,
St. Louis, Illinois, as a director and officer of The
National Bank of Lebanon, Lebanon, Illinois, and as a
rector and officer of the Illinois State Trust Company, East
at
Louis, Illinois, for the period ending January 14, 1956.




Approved.

520
2/21/35

-17-

There was then nresented the following annlicaton for a
Chan-e

in stock of a Federal reserve bank:

1122
,11211tion for ORIGINAL Stock:

Shares

The FirstTonnl Bank in Glidden,
Glidden, IoTa

36

Annroved.

Thereunon the meeting adjourned.

APProved:




36