Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 25, 1933, Volume 20, Part 1

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A meeting of the Federal Reserve Board was held in \lashington on
Saturday, February 25, 1933, at 11:30 a. m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Mills, Chairman
Meyer, Governor
Hamlin
Miller
James

Mr.
Mr.
Mr.
Mr.

Morrill, Secretary
McClelland, Assistant Secretary
Harrison, Assistant to the Governor
Wyatt, General Counsel

General discussion was had with regard to the present banking
situation, consideration being given particularly to conditions in Detroit,
Michigan, and Cleveland, Ohio, and to the possible effects of the closing
Of banks in the .3tate of Maryland under a proclamation issued by the
Governor of the State yesterday.
/
1
4

During the discussion Governor Meyer

was called from the meeting, and upon his return stated that he had just
talked with Governor Seay of the Federal Reserve Bank of Richmond over the
telephone who advised that the situation is quiet in all parts of the
district.

The discussion also referred to the somewhat increased with-

drawals of gold from the Federal reserve banks and to steps which might
be taken to
deal with that situation in the event such withdrawals assumed
unduly large proportions.
The Governor then referred to the recent testimony of Mr. Charles
E. Mitchell, Chairman of the National City Bank, New York City, before
the Senate
Committee on Banking and Currency and in that connection rePorted to the Board that during the past summer he had communicated to
Governor Harrison of the Federal Reserve Bank of New York his min personal feeling that the elimination of the influence of Mr. Mitchell from
the banking
situation in New York City would be desirable, and that




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Governor Harrison had advised him recently that at one time although he
had believed this might be accomplished, it seemed that consideration of
the matter was subsequently dropped.
Reference was then made to the informal discussion at the meeting
of the Executive Committee yesterday with regard to the selection of a
chairman of the board of directors and Federal reserve agent at the Federal
Reserve Bank of Cleveland to succeed Mr. George DeCamp, whose resignation,
effective at the pleasure of the Board, was received some weeks ago.

Yr.

Miller, us Chairman of the Committee on District No. 4, the other member
Of which is Mr. Hamlin, stated that after careful consideration, and in
view of the existing banking situation in Cleveland, he was convinced that
the most satisfactory person in view for the position is Yr. L. B. Williams
Who is now deputy chairman of the board of directors of the bank, and who,
in informal discussions as to his availability for the position, has
indicated that he would accept the appointment if tendered, on the understanding that the basic salary for the position would be fixed at the same
rate as is now received by the Governor of the bank and that he vApuld be
chairman of the executive committee as well as chairman of the board of
directors.

Er. Miller explained that this change in the organization of

the executive committee of the bank has been discussed with the directors
Who are agreeable to a change in the by-laws in accordance therewith.

He

also stated that, should Mr. Williams be appointed to the position, he
would sever completely his present connection with Hayden, Miller & Company,
investment bankers of Cleveland.

He referred to a living trust created

b yMr, Williams in favor of his son in which




is

held stock of an invest-

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ment company underwritten by Hayden, Miller
Pro rata among the Partners of the firm.

Company and later distributed

He expressed the opinion that

the continuance of this trust does not effect Lir. Williams' eligibility
for appointment as Federal reserve agent and chairman of the board of
directors of the bank, and stated that Mr. Williams has no other holdings
or connections of any character which would affect his service in those
capacities.
After discussion, the Governor was authorized to tender the appointment to Li'. Williams
with salary at the basic rate of ")30,000 per annum,
subject during the period in which the present
share-the-work plan is in effect at the bank, to
deductions in accordance therewith, it being understood that the appointment will be made formally
by the Board when the resignation of Mr. DeCanp is
accepted by the Board in accordance with the procedure outlined and approved at the meeting of the
Executive Committee of the Board on December 20,
1932.
Reference was then made to the letter received from the President
of the United States under date of February 22, 1933, and presented at the
meeting of the Executive Comraittee of the Board on February 23, and the

following
reply thereto was presented and unanimously approved:
"The Board has requested me to acknowledge the
receipt of your letter of February 22, 1933 addressed to
the Governor and idembers of the Federal Reserve Board.
"The Board has been keeping in close touch with the
imPortant changes that are taking place in the situation
and the matters to which you refer have received, and are
receiving, its constant attention. ro definite information is available as to the amount of capital that has
been exported, but, so far as the Board is advised, it
appears to be a relatively small item so far. As you say,
howevei., withdrawals of currency have reached large proportions, and cold withdrawals have increased to some
extent.




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2/25/33

-4"While some of the recent developments are disturbing, and many proposals as to ways and means of dealing
with them are being made, the Board feels it is essential
in times like these that every suggestion be carefully
weighed and considered from the point of view of whether,
if adopted, it would accomplish the results sought, or
whether it would be likely to bring even greater disturbance and make worse the situation that it is designed to
correct.
"Recently the Board, after giving the matter careful
thought with these considerations in mind, approved the
joint resolution regarding the powers of the Comptroller
of the Currency introduced by Senator Couzens, which has
passed the Senate and which has been favorably reported
by the Committee on Banking and Currency of the House. It
felt that such a measure would be helpful in facilitating
the working out of existing situations in various
communities without creating undue disturbance. The Board
also, from time to time, has expressed its views regarding
other legislative proposals which would affect the exercise
of its functions or the operations of the Federal reserve
system, and is continually studying the, various problems
that are presented as the picture changes, with the view
of developing concrete suggestions for appropriate action
if and when the need should arise.
"At the moment the Board does not desire to make any
Specific proposals for additional measures or authority,
but it will continue to give all aspects of the situation
its most careful consideration."
The Board also considered and acted upon the following matters:
Letter dated February 23, 1933, from the Secretary of the Federal

lieserve Bank of Kansas City and telegram dated February 24, 1933, from the
Chairman of the Federal Reserve Bank of Atlanta both advising of the
est
ablishment at those banks as of February 20, and 23, respectively, of
an effective buying rate of 1/2% for purchases of bankers' acceptances

With maturities of from I to 90 days.
Without objection, noted with approval.
Telegram dated February 24, 1933, from the Chairman of the Federal
Reserve Bank of Chicago advising that at the meeting of the board of




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2/25/33

directors on that date no change was made in the bank's existing schedule
Of rates of discount and purchase.
Without objection, noted with approval.
Telegraphic replies to telegrams dated February 24, 1933, from
Deputy Governor Rounds of the Federal Reserve Bank of New York requesting
authority for renewals in the anounts of ‘;,,100,000,

50,000, :40,000, and

.A.0,000 now outstanding, each for a period of 90 days from February 27,
1933, at a rate of 5'73 per annum, of the advances made by the bank in
accordance with the provisions of section 10(b) of the Federal Reserve Act,
and under authority previously granted by the Board, to the Lincoln National
Bank, Newark

New Jersey, the Salt Springs National Bank, Syracuse, New

York, the First National Bank, Bolivar, New York, and the Atlanta National
Bank, Atlanta, New York, respectively; Deputy Governor Rounds stating that
the banks are not in a position to retire the advances at the present time.
The replies stated that the Board authorizes the renewal of the advances
subject to the terms and conditions recommended.
Unanimously approved.
Telegraphic reply to a telegram dated February 24, 1933, from
Deputy Governor Jounds of the Federal Reserve Bank of New York, requesting
authority for a renewal in the unount of ,)16,000 now outstanding, for a
Period of 26 days from February 27, 1933, at a rate of

per annum, of

the advance made by the bank in accordance with the provisions of section
10(b) of the Federal Reserve Act and under authority of the Board's
telegram of December 23, 1932, to the First National Bank in Avon-by-the311, New jersey; Deputy Governor Rounds stating that the bank is not in a




2/25/33.
position to retire the advance at the present time.

The reply stated that

the Board authorizes the renewal subject to the term and conditions
recommended.
Unanimously approved.
Telegraphic reply to a telegran dated 2ebruary 25, 1933, from
Deputy Governor Rounds of the Federal Reserve Bank of New 7ork requesting
authority for an advance, in accordance with the previsions of section
10(b) of the Federal Reserve Act, to the Perth Amboy Trust Company, Perth
Amboy, New Jersey, in the amount of ,150,000, for a period of 90 days, with
interest at the rate of 5() per annum, and on the security of assignments of
the bank's equities in collateral pledged for loans from the Reconstruction
Finance Corporation and the Federal Reserve Bank of New York; Deputy
Governor liounds stating that the bank has been under heavy pressure for
sone time and is urgently in need of additional funds.

The reply stated

that the Board authorizes the advance subject to the terms and conditions
reconnended.
Unanimously approved.
Telegraphic reply on February 24, 1933, approved by five members
°I* the Board, to a telegram of that date from Deputy Governor Johns of the
'Federal Reserve Bank of Atlanta requesting authority for an advance, in
"aordance with the provisions of section 10(b) of the Federal Reserve Act,
to the American
Bank and Trust Company, New Orleans, Louisiana, in the
:41:a°11nt ef.2citol,000, for a period of 90 days, with interest at the rate of
5'/10 Per annum,
and secured by collateral with an estinated value of
4;3751°°0; Deputy Governor johns stating that the 10(b) advance to the




2/25/33

-7_

national bank now outstanding under the authority of the Board's telegram
Of February 6, 1933, in the amount of $29,900 will be retired.

The reply

stated that the Board authorizes the continuance until May 25, 1933, in
the reduced amount now outstanding, with interest at the rate of 5% per
annum of the 10(b) advance previously made to the national bank, and that
it also authorizes an additional advance, in accordance with the provisions
Of section 10(b), to the national bank in the amount of 0250,100, for a
period of 90 days from. February 24, with interest at the rate of 54
7 per
411au1a.

The reply also stated that in taking this action it is assumed by

the Board that the bank has no further eligible and acceptable assets to
enable it to obtain adequate credit accommodations from the Federal
reserve bank Tird.er other provisions of the Federal Reserve Act except
section 10(a) and that the exigent circumstances referred to in Governor
Black's letter of December 8, 1932, still exist.
Unanimously approved.
Telegraphic reply to a telegram dated February 25, 1935, from
Governor Hamilton of the Federal Reserve Bank of Kansas City requesting
authority for the renewal in the total reduced amount of $812,720 now outfor a period of 15 days from this date, with interest at the
rate of

per annum, of the advances made by the bank, in accordance with

the provisions of section 10(b) of the Federal Reserve Act, to the Fidelity
National Bank and Trust Company, Kansas City, Missouri, under the authority
Of the Board's telegrams of February 11 and 14, 1933; Governor Hamilton
stating that the slow withdrawal of deposits fran the bank still continues.
The reply stated that the Board authorizes the renewal of the advances
subject to the terms and conditions recommanded.



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250
2/25/33
Unanimously approved.
Ebmorandam dated February 11, 1933, from Yr. Wyatt, General
Counsel, recommending that there be published in the next issue of the
Federal Reserve Bulletin, in the form attached to the memorandum, the substance of the memorandum inclosed in the Board's letter of 3-January 27,
1933, to the Acting Comptroller of the Currency with regard to the
collective investment of trust funds of national banks.
Approved.
Letter to the Federal Reserve Agent at Cleveland stating that in
reeponse to a request made of the Acting Comptroller of the Currency for a
recommendation as to the action to be taken by the Board on the application
of the Union National Bank, Donora, Pennsylvania, for permission to
exercise full fiduciary powers, the Acting Comptroller stated that the chief
national bank examiner of the Fourth Federal Reserve District has been requested to arrange for an examination of the bank as soon as possible, and,
UPon receipt of a report of such examination, a recommendation will be
submitted to the Board in connection with the application.

The letter

also stated that in view of this information, and the fact that the
national bank has not been examined previously, the Board will defer consideration of the application until after receipt of the report of examination referred to, and that the agent is requested, upon receipt of the
raimprt in his office, to review the findings of the examiner and advise

the Board whether he desires to amend the favorable recommendation contained

in Assistant Federal Reserve Agent Fletcher's letter of February

13, 1933.




Approved.

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2/25/33

-9Letter dated February 24, 1933, to the Federal Reserve Agent at

Philadelphia, approved by three members of the Board, requesting additional
information with regard to the absorption by the Princeton Bank and Trust
Company, Princeton, New Jersey, of its affiliate, the Princeton Securities
Company, and stating that while the Board, in view of the circumstances
involved, will take no action at this tine with regard to the holding by
the member institution of 34 shares of its own stock acquired from the
affiliate, the agent is reouested to advise the trust company that such
stock should be disposed of as soon as possible.

The letter also requested

the agent to furnish
the Board with information as to what extent and over
What period the trust company has sold mortgage participations, together
With definite advice as to the nature of its liability on the participation
certificates which it has sold, and an expression of his views as to any
action which can be taken appropriately at this time, either by the Board

or the agent's office, in connection with this particular activity of the
i
nstitution.
Approved.
Letter dated February 24, 1933, to the Federal Reserve Agent at
Cleveland, approved by three members
of the Board, referring to the unsatisfactory condition
of the Atwater Savings Bank, Atwater, Ohio, as disclosed by the re-)ort of examination of that institution as of October 20,
1932, and stating that, in view of the fact that the bank will be examined
illaediately after April 7, 1933, the Board will take no action at this
time

looking toward the discontinuance of its membership, it being assumed

that the agent will participate in the examination of the bank and advise




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2/25/33

-10-

the Board fully of any action which may have been taken to improve its
unsatisfactory condition.
Approved.
Reports of Standing Committee dated February 24, 1933, recomending
aPProval of the following changes in stock at Federal Reserve Banks:
Akaication for ORIGINAL Stock:
District No. 2. First rational Bank, Painted Post, New York.
alollsIELions for SURRENDER of Stock:
District
First Trust E,; Deposit Co., Syracuse, N. V.
(Decrease in surplus)
District No 5
-oirst National Bank, Ronceverte, W. Va.
(Decrease in surplus)
District No. 9.
First National Bank, Foley, 1,1innesota.
(Decrease in surplus)

Shares
45

45

600

600

21

21

6
Total

6
627

Approved.
Reports of Standing Committee dated February 23 and 24, 1933, recomMending approval of the following Clayton Act applications:
F. 11. Bass, for permission to serve at the same time
as director of the American National Bank of Nashville,
Tennessee, and as director of the First National Bank of Shelbyville, Tennessee.
E. E. lAirrey, for pennission to serve at the same
tine as director of the American National Bank of Nashville,
Tennessee, and as director of the First National Bank of Shelbyville, Tennessee.
flr. Frederic C. Dumaine, for pernission to serve at the
same time as director of the Union Trust Company of Boston,
Massachusetts, and as director of the First National Bank of
Boston, Liassachusetts.




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—11—

Mr. Philip Dexter, for permission to serve at the same
time as director of the Union Trust Company of Boston,
Massachusetts, and as director of the First National Bank of
Boston, Massachusetts.
Approved.

Thereupon the meeting adjourned.

1(1-11641111 -;4174:i1---A-

Approved:

64




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