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A meeting of the Executive Committee of the Federal Reserve Board wss held in Washington on Friday, February 24, 1933, at 12:40 p. m. PRESENT.: Mr. T111s, Chairman of the Board Mr. Hamlin, Chairman, Executive Canmittee Mr. Miller Tilr4 Xames Mr. Morrill, Secretary Mr. McClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor. The Chairman referred to the developments at the Federal Reserve Bank of Chicago, in connection with the issue, exchange and redemption of Government securities by reason of Which it was deemed necessary recently tohave an investigation made by Federal reserve and national bank examiners and to the results of that investigation which have been communicated orally to members of the Board pending completion of the report of investigation. He stated that in view of the facts reported he desired, as Secretary of the Treasury, that there be instituted a special inquiry with a view to determining whether a proper procedure is followed at each of the Other Federal reserve banks and their branches in connection with the issue, sZchange and redemption of Government securities and whether adequate safeells-lids have been set up to prevent irregularities in connection with G(1Ternment securities transactions. The Secretary of the Board stated that, as a result of the developIlisnts in the Chicago bank, the Chief of the Board's Division of Examinations 4as already given instructions that special attention be given to the Procedure in connection with such transactions, at the time of the reualar eZsMination of each Federal reserve bank; that such action was instituted 111 connection with the examination of the Federal Reserve Bank of St. Louis l'ecently completed; and that it is under way in the current examination of 2/24/33 -2- the Federal Reserve Bank of Dallas. After discussion, the Secretary was requested to advise the Chief of the Division of Examinations that the Board desires him to submit a special report to it in connection with each such examination, on the basis of which the Board in turn can inform the Secretary of the Treasury as to the procedure followed at each Federal reserve bank in connection with the issue, exchange and redemption of Government securities. The Committee then considered and acted upon the following matters: Letter dated February 23, 1933, from the Secretary of the Federal Reserve Bank of New York, and telegram dated February 23, 1933, from the Chairnan of the Federal Reserve Bank of Kansas City advising that the boards of directors, at their meetings on that date, made no changes in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Telegraphic reply on February 23, 1933, approved by five members of the Board, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority for an additional advance, in accordance with the provisions of section 10(b) of the Federal Reserve Act, to the National city Bank, New Rochelle, New York, in the amount of .,300,000, for a period of 90 days, with interest at the rate of Per annum, and on the security of miscellaneous mortgages with a loan 'value of „;;603,000; Deputy Governor Rounds stating that the advance is desired pending completion of arrangements for a loan from the Reconstruction Finance Corporation. The reply stated that the Board authorizes the advance subject to the terms and conditions recomnended. Approved. Telegraphic reply on February 23, 1933, approved by five members Of the Board, to a telegram of that date from Deputy Governor Rounds of the tc-4 2/24/33 Federal Reserve Bank of New York requesting authority for an advance, in accordance with the provisions of section 10(b) of the Federal Reserve Act, to the Crestwood National Bank, Tuchahoe, New York, in the amount of ,:50,000, tor a period of 90 days, with interest at the rate of 5',-) per annum, and on the security of miscellaneous customers' collateral notes and unsecured 11°te3 with a margin of at least 25%; Deputy Governor Rounds stating that the advance is desired to meet anticipated further withdrawals of deposits. The reply stated that the Board authorizes the advance subject to the terms and conditions recommended. Approved. Telegraphic reply on February 23, 1933, approved by five members i4 of the Board, to a telegram of that date from Deputy Governor Rolulds of the Federal Reserve Bank of New York requesting authority for the renewal, in the total reduced amount of :)577,000, for a period of 90 days from February 23, With interest at the rate of 5';; per annum, of the advances made by the NOW York bank, in accordance with the provisions of section 10(b) of the Federal Reserve Act, to the Peoples Bank and Trust Company, Passaic, New TbreY, under the authority of the Board's telegrams of 0-uly 12 and October 71 1932, and Xanuary 9 and 23, 1933; Deputy Governor Rounds stating that the bank continues to suffer heavy withdrawals of deposits. The reply "ated that the Board authorizes the renewal subject to the terms and conditions recommended. Approved. Telegraphic reply on February 23, 1933, approved by five members or the Board, to a telegram of that date from Governor Norris of the Fed- -4- 2/24/33 oral Reserve Bank of Philadelphia requesting authority for an advance, in accordance with the provisions of section 10(b) of the 2ederal Reserve Act, to the Lycoming Trust Company, Williamsport, Pennsylvania, in the amount Of .:125,000, for a period of 30 days, with interest at the rate of 5';; per annum, and on the security of secured notes in the face amount of 3296,000 and listed stocks with a market value of '55,000; Governor Norris stating that the bank desires the advance to meet a steady shrinkage of deposits aM pending completion of arrangements for a loan from the Reconstruction Finance Corporation. The reply stated that the Board authorizes the advance subject to the terms and conditions recommended. Approved. Telegraphic reply on February 23, 1933, approved by five members or the Board, to a letter dated February 21, from Governor Black of the Federal Reserve Bank of Atlanta requesting authority for a further renewal in the amount of 3120,000 now outstanding, of the advance made by the bank, in accordance with the provisions of section 10(b) of the Federal Reserve Aety to the 2irst National Bank and Trust Company in Orlando, Florida, under the Gov authority of the Board's telegrarn of June 28 and December 23, 1932; ernor Black advising that the same circumstances exist as when the advance Was °riginally made. The reply stated that the Board authorizes the renewal of the advance for a period of 90 days from March 1, 1933, with interest at the rate of k; per annum, it being understood from a previous telephone conversation that the hoard of directors of the bank is applying ° rate of on all advances under the provisions of section 10(b). Approved. -5- 2/24/33 Telegraphic reply on February 23, 1933, approved by four members Of the Board, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority to purchase from the First National Bank, Avon-by-the-Sea, New Jersey, tax notes of the Borough of Avon-by-the-Sea in the amount of 1..5 011.71. The reply stated that the Board authorizes the purchase with the understanding that the notes net all requirements of Regulation E except that the population of the issuing municipality is less than 10,000, that its net funded indebtedexceeds 1..(Y, of the valuation of its taxable property, and that the Qmount of the notes offered exceeds 25;; of the total outstanding warrants (3f the municipality. Approved. Telegraphic reply on February 23, 1933, approved by four members Of the Board, to a telegram of that date from Governor Young of the Federal Reserve Bank of Boston referring to his telegram of roveMber 23, 1952, and the Boards reply of the same date; stating that the Berlin National Bank, Hew Hampshire, is again offering a note of the Fidelity Savings Bank of Berlin in the amount of (11,000 secured by a like amount of G'°verament securities; that the Federal reserve bank is satisfied that this 18 a bona fide transaction, and that the bonds are owned by the State institution; and that the Federal reserve bank would prefer to have the note of the latter in lieu of other eligible paper of the Berlin National 13ank; and requesting permission to rediscount the note. The reply stated that the Board authorizes the Federal Reserve Bank of Boston, in its discretion, for a period of six months from February 23, 1933, to redise°111It for the Berlin National Bank good and eligible paper acquired from 2/24/33 -6- or bearing the signature or indorsement of the Fidelity Savings Bank, and that the Board interposes no objection to the rediscount for the national bank of the note referred to in Governor Young's telegran. Approved. Reply to a letter dated Tanuary 21, 1933, from Er. Thomas C. Lynch, President of the Carthage National Exchange Bank, Carthage, New York, requesting advice as to whether that institution may act as trustee Pursuant to the provisions of a will naming the Carthage National Bank in that capacity, under the permission granted to the Carthage National Exchange Bank by the Federal Reserve Board in its letter of ITarch 1, 1932, authorizing it to act as trustee and in certain other fiduciary capacities Only in the specific trusts in which the Carthage National Bank and the National Exchange Bank and Trust Company had been appointed and were acting on December 30, 1931. The reply stated that the Board understands that on December 30, 1931, the Carthage National Bank had qualified and was acting in the trusteeship described, and in these circumstances the Board considers the Carthage National Exchange Bank is authorized under the permission granted by the Board to act in that trusteeship, if appointed by the court of competent jurisdication to succeed the Carthage National Bank in that capacity. Approved. Letter to the Federal Reserve Agent at New York with regard to the Clayton Act applications of 7:11.1. F. W. I.:urray, Jr., for permission to serve at the same time as director and officer of the First-Eerchants ITationpo .uank and Trust Camoany of iliddletown, New York, as a director 2/24/33 Of the National Bank of Orange County, Goahen, New York, and as an officer and director of the Tuxedo National Bank of Tuxedo Park, New York; and Mr. Herbert Senger for permission to serve as an officer and director of the first two banks named and as director of the Goshen National Bank of Goshen. The letter stated that the Board has noted the general remarks Of the examiner in the confidential section of the report of examination Of the First-Merchants National Bank and Trust Company as of November 14, 1932, and before taking action on the applications would be interested in haVing the agent's further comments upon those remarks. Approved. Thereupon the meeting adjourned. Approved: Chairman, Executive Committee.
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