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521 A meeting of the Executive Committee of the Federal Reserve B0ard was held in Washington on Monday, February 251 19551 at 11:30 a. m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Governor Hamlin James Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Committee acted upon the following matters: Telegram dated February 231 19351 approved by three members of the Board, to Mr. McAdams, Secretary of the Federal Reserve Bank of 411ses City, reading as follows: 'Your telegram. Board approves for your bank, effective immediately, rate of from 4% to 6% per annum, to be fixed by executive committee your bank in each individual case, on direct advances to established industrial or commercial businesses under section la of Federal Reserve Act." Approved. Memorandum dated February 20, 1955, from Mr. Goldenweiser, e, 'or of the Division of Research and Statistics, recommending the teta, 0 rary appointment of Miss Anita Dunlap as a comptometer operator in that a ivision, with salary at the rate of $120 per month, effective as or th e date upon which she enters upon the performance of her duties. Approved. Memorandum dated February 161 19551 from Mr. Smead, Chief of the ttsi of Bank Operations, recommending the temporary appointment for e' °d not exceeding six months of Mr. Edgar B. Barton, as a file clerk 111 the a -ivision, with salary at the rate of $11440 per annum, effective (Is or February 251 19351 subject to his passing a satisfactory physical 114i4,3.+; in connection with his admission to membership in the 522 2/25/35 -2- Retirement System. The recommendation was approved by five members of the Board on February 23, 1955. Approved. Letter to "The Union National Bank of New Albany", New Albany, irdieza, reading as follows: "The Federal Reserve Board has given consideration to your application for permission to exercise fiduciary Powers, and grants you authority to act, when not in contravention of State or local law, ES trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, conmittee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Indiana, the exercise of all such rights to be subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. "This letter will be your authority to exercise the fiduciary powers granted by the Board. A formal certificate covering such authorization will be forwarded to you in due course. "The Board feels that, if you are tendered any of the trusts now held by the New Albany Trust Company, you should carefully scrutinize their condition and should not accept anY of such trusts which, through their assumption, may be detrimental to the interests of your institution. In this Connection, particular reference is made to any such trusts the assets of which include investments purchased from, or through he agency of, the trust company, and in which there may be contingent liabilities or losses." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: Board's letter of July 5, l9AA "Reference is made to the addressed to the Federal Reserve Agent at Kansas City, L t eopy of which was sent to you, in regard to the application IT- the 'National Bank of Commerce of Lincoln', Lincoln, 2braska, for permission to exercise fiduciary powers, from "hich it will be noted that the Board deferred action on the 523 2/25/35 -3- application until advice had been received that the bank's capital structure had been increased to an amount which can be regarded as adequate as compared with the volume of deposits. "In this connection, there is transmitted herewith a letter from the Assistant Federal Reserve Agent at Kansas City, dated February 11, 1935, recommending that the application be reconsidered. The Board will, therefore, give consideration to the application for full fiduciary powers, and, in view of the information contained in the attached letter, would be pleased to receive your further recommendation in the premises. "Kindly return the attached papers with your reply." Approved. Telegram dated February 23, 1935, approved by four members of the Board, to the Federal reserve agents at all Federal reserve banks, l'eading as follows: "Ruling No. 41 interpreting Regulation T. Announcement has been made that the New York Produce Exchange, which is now a national securities exchange, will discontinue its Securities 1vision in the near future. At that time all securities, Including certain bank stocks, which are now 'registered securities' solely because of the fact that they are listed on that Exchange, or have unlisted trading privileges therewill cease to be tred.stered securities' as defined in negulation T. In these circumstances the Federal Reserve Board has been asked whether such of these securities as are at that time being carried for customers by brokers and dealers subject to Regulation T may continue to be so !,rried and what 'loan value', if any, such securities will "aye under the regulation. "In reply the Board points out that under section 5(c) °f Regulation T, the creditor is given express permission to tain, until July 12 1937, as collateral for any credit Initially extended prior to October 1, 1934, or extended in c eonformity with the regulation, any collateral whatsoever, in4. 11ding unregistered non-exempted securities, provided that 'ne collateral other than exempted or registered securities sil?all not be the basis of any additional extension of credit and ' 8 1111 be given no value in determining the maximum loan value °f the securities in the account. The Securities Exchange Act 1934 and the regulations issued thereunder do not require piquidation in consequence of the action of the New York l'°duce Exchange, inasmuch as they do not force a broker or 9 524 2/25/35 -4- "dealer to sell, or to compel his customers to sell, securities which cease to be 'registered securities'. It is to be noted, furthermore, that no provision of the Securities ExchEinge Act of 1954 or of any regulation issued thereunder has imposed any restrictions on the amount of credit that may be extended on such securities by any bank which is not a member of a national securities exchange. "The Board calls attention to the possibility that in the circumstances recited the securities in certain accounts may no longer have loan value equal to or greater than the adjusted debit balance of the account, so that such accounts rill become 'restricted accounts' and will accordingly become subject to the provisions of Regulation T relating to such accounts." Approved. Letter to Mr. Stevens, Federal Reserve Agent at the Federal Re13e1(7e Bank of Chicago, reading as follows: "Reference is made to Mr. Young's letter of January 18 with the inclosed application of The First Capital National Bank of Iowa City, Iowa, for 18 additional shares of stock of the Federal Reserve Bank of Chicago. "On July 21, 1934, the Board approved an application of ',!'he subject bank for 6 additional shares of Federal Reserve batik stock, on the basis of which its holdings of such stock ,ould have been increased from 84 shares to 90 shares. The Instant application, however, shows that the bank now holds °n1Y 87 shares of Federal Reserve bank stock, and in this connection it is noted that the exhibit attached to the ?ertificate of increase in the capital stock of your bank for the six months' period ended December 31, 1934, received with Your letter of January 17, shows that 3 shares of Federal xeserve bank stock were issued to The First Capital National Bank of Iowa City on July 25, 1934. In the circumstances, it appears that the remaining 3 shares covered by the Board's !PProval of July 21, 1934, were not issued to the bank, and Ott thi$ assumption, the Board approves the present application ( If The First Capital National Bank of Iowa City, Iowa City, °wa, for 18 additional shares of Federal Reserve bank stock. "In order that our records of Federal Reserve bank stock hola. lngs may be correct, it is requested that the Board be ad1, 4 ' ' c sed whenever, because of a reduction in a member bank's 1,4P1tal and surplus below that shorn in its application for ;ederal Reserve bank stock, the number of shares of additional ederal Reserve bank stock issued to a member bank is less 525 2/25/t5 "than the number approved by the Board." Approved. Letter to Mr. Austin, Federal Reserve Agent at the Federal Re"re Bank of Philadelphia, prepared in accordance with the action taken t the meeting of the Board on February 13, 1935, and reading as follows: "The Board has given consideration to the Clayton Act aPPlications of the following individuals to serve the banks named and in the capacities indicated in their respective applications: James E. Gowen C. Jared Ingersoll William W. Bodine W. N. Atterbury Arthur C. Dorrance George Stuart Patterson Albert A. Jackson ! lid) upon the basis of the information before it, the Board feels alat the issuance of the permits applied for would be incompatible with the public interest. You are requested to adSe the applicants of the Board's position in the matter un-Less there are pertinent facts which have not heretofore been submitted and which you feel should be given consideration. "Please inform the above-named applicants that the Baa rLtts action upon their applications was based upon the fact : .Llat the Philadelphia banks involved appear to be engaged in Seine class or classes of business and so located as to be a position to compete substantially. It appears that it is 4."e Policy of the Congress, as declared in the Clayton Act, to tee interlocking relationships between banking institutions certain classes which are in substantial competition, 2Parently because the Congress felt that such relationships nht tend to result in a substantial lessening of competition 7_1°1 a restriction of credit. Therefore, the Board does not el that it may grant these applications since no other crts have been brought to its attention which would make it thTPatible with the public interest to issue the permits. In j 8 connection, reference is made to the Board's letter of anuary 9, 1935, (X-9082). In communicating with these applicants, please advise crm that, in accordance with Section V (g) of Regulation L, naideration will be given to any additional facts or r 1 it 526 2/25/35 -6"arguments not heretofore submitted and not appearing in their applications and accompanying forms which they feel should be brought to the Board's attention. Please advise the Board Promptly as to whether these individuals 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. "You are authorized also to inform Mr. Dorrance that, if he so desires, he may by letter amend his application to exclude therefrom the Girard Trust Company of Philadelphia, and that upon receipt from him of such amendment, accompa nied by appropr iate evidence of the severance of his connection with Girard Trust Company of Philadelphia, the Board will give consideration to such amended application. The amendment and any additional information submitted by the applicant in connection therewith should be forwarded to the Board with your recommendation. It is suggested that you satisfy yourself that the applicant is not now connected with any corporation or partnership (other than a mutual savings bank) which makes loans on the security of stock or bond collateral and that he I! not connected with any firm the activit ies of which come within the provisions of Section 52 of the Banking Act of 1933, if so, that the applicant's relationships have been brought Into conformity with the requirements of that section, and that YOU advise the Board accordingly when submitting the request 1?r such amendment. If, however, Mr. Dorrance elects to sever 18 connection with The Philadelphia National Bank, further con" e s deration of his Clayton Act application will be unnecessary ,_lnce that Act will not apply to his relationship to the two Q•ust compani es. 11 "You are advised that the permit issued by the Board to Mr. W. Atterbu ry on April 24, 1928, covering his services to C; ;rinental National Bank and Trust Company, Chicago, Illinois, N:Philadelphia National Bank, Philadelphia, Pennsylvania, and : 8 bional Bank of Commerce in New York (which converted into a y'ate institution under the title of Bank of Commerce in New e ork, on April 5, 1929, and merged with the Guaranty Trust r21PanY of New York, on May 4, 1929) is apparently effective in pZ"ect to, his services to The Philadelphia National Bank of 8. 1,,'Lj-ladelPhia and Guaranty Trust Company of New York. It is ' coT:!ested that you advise Mr. Atterbury accordingly. In this th:Lection it is understood that Mr. Atterbury's service with s4 _8e two institutions or their success ors has been continuous ' Zee the issuance of the permit on April 24, 1928, although has resigned from the Chicago bank. As you are aware, Mr. George Stuart Patterson is at 1'1,4 ent serving Central-Penn National Bank of Philadelphia and k of the Manhattan Company, New York, under a permit issued 527 2/25/85 -7- "by the Board on October 13, 1930. While the Board has not approved Mr. Patterson's application, dated November 17, 1933, covering his services to Girard Trust Company, Philadelphia, Central-Penn National Bank of Philadelphia and Bank of the Manhattan Company, New York, because the two Philadelphia banks appear to be in competition, it will not give consideration to the revocation of the permit granted Mr. Patterson on October 13, 1950, and he is at liberty to serve Central-Penn National Bank of Philadelphia and Bank of the Manhattan Company, New York, under the authority of the existing permit. It is suggested that you advise Mr. Patterson accordingly. A copy of this letter is being sent to Federal Reserve Agent Case at the Federal Reserve Bank of New York for his information and files. "In reviewing Mr. Patterson's current application, it was noted also that he was serving as a director of the Ajax Investment Corporation, Philadelphia, Pennsylvania. While the Board does not have detailed information regarding the Character of the business of this corporation, it appears possible that the provisions of Section 32 of the Banking Act of 1933 may be applicable in connection with Mr. Patterson's service to such corporation and the member banks involved. If upon investigation you find that this relationship comes within the provisions of Section 32, you are requested to advise Mr. Patterson of the requirements of that section and to notify him that he may file an application for a permit ?overing such service. Of course, if upon consideration of the facts involved, with the advice of your counsel, you are unable to determine whether such service comes within the 3r°v1sions of Section 32, the Board, upon receipt of full filformation, will be glad to rule upon the matter. Please advlse the Board of your action in this connection. "As you are further aware, Mr. Albert A. Jackson was anted a permit September 15, 1916, to serve as director of enral National Bank of Philadelphia (now Central-Penn 41tlonal Bank of Philadelphia) and as officer of Girard Trust ; °mPanY. While the Board has not approved Mr. Jackson's IlyPlication dated August 7, 1934, it has not taken steps to tr°ke the permit heretofore issued to him. It is suggested "s-ti you advise Mr. Jackson accordingly." 1 Approved. Letter to Mr. Hoxton, Federal Reserve Agent at the Federal Reserve knk of Richmond, reading as follows: 528 2/25/35 -8- "Reference is made to your letter of February 12, 1935, With inclosures, submitting the request of Mr. Tasker G. Lowndes, Cumberland, Maryland, for further consideration of his Clayton Act permit to serve at the same time as director and officer of The Second National Bank of Cumberland, Cumberland Savings Bank, both of Cumberland, Maryland and The Lowndes Savings Bank and Trust Company, Clarksburg, West Virginia, which permit was granted October 10, 1934, for the Period ending at the close of December 31, 1934. "The Board has given further consideration to this case and, since control of the three banks involved appears to be owned by the Lowndes family, has granted a permit for the Period ending January 14, 1936, in accordance with the policy set forth in its letter of January 9, 1935, (X-9082). There are inclosed the original and copies of the permit granted to Mr. Lowndes for transmittal by you to the applicant and the banks involved and a copy for your files. "When the permit is sent to the applicant and copies thereof to the banks involved, please advise them that the permit has been issued so as to expire at the close of January 14, -936, as there is now pending before the Congress proposed J.egislati on for the purpose of clarifying and otherwise amending the provisions of the Clayton Act relating to interlocking bank directorates." Approved. Letter to Mr. Wood, Federal Reserve Agent at the Federal Reserve °f St. Louis, reading as follows: "Reference is made to your letter of February 7, 1935, : 11bmitting the reauest of Mr. Lawrence Taylor, Jackson, ' Tennessee, for an amendment to his Clayton Act application permission to serve at the same time as director of The First. National Bank of Jackson, as director and officer of he Jackson Bank & Trust Company, and as director of The Teecte. sL!ank of Commerce of Jackson, all of Jackson, "It is noted that, in accordance with the suggestion contained in the Board's letter of January 30, 1935, Mr. Ta c Y or has severed his connection with The National Bank of ornmerce of Jackson. "Accordi ngly, the Board has given consideration to Mr. Ta l°rt s amended application and there are inclosed the oj We'ginal and copies of a Clayton Act permit covering his aaar , 7ices as director of The First National Bank of Jackson as director and officer of Jackson Bank & Trust Company, 529 2/25/35 —9— "for transmittal by you to the applicant and the banks in— volved, and a copy for your files. "When the permit is sent to Mr. Taylor and copies thereof to the banks involved, please advise them that the permit has been issued so as to expire at the close of January 141 1936, as there is now pending before the Congress nroposed legislation for the purpose of clarifying and otherwise amending the provisions of the Clayton Act relating to interlocking bank directorates." Approved. Letters to applicants for permits under the Clayton Act advising res Pectively of the issuance by the Board of permits as follows: Mr. Benjamin W. Guernsey, to serve at the same time as a director of The Wellesley National Bank, Wellesley, Massa— chusetts, as a director of the Springfield National Bank, SPringfield, Massachusetts, and as a director of the Newton Trust Company, Newton, Massachusetts, for the Period ending January 14, 1936. Mr, Otto S. Martin, to serve at the same time as a director of The First National Bank of Belleville, Belleville, New erseY, and as a director and officer of The Montclair National Bank, Montclair, New Jersey, for the period ending January 141 1936. Mr.Chester C. Slaybaugh, to serve at the same time as an ricer of the Central National Bank of Yonkers, Yonkers, L'Alell York, and as a director of The First National Bank of ardeley, Ardsley, New York, for the period ending January 14, 1936. 's R. H. Dickenhorst, to serve at the same time as a director and officer of The First State Bank, Morrilton, , 1Isae, and as a director of the Union National Bank of Little Rock Little Rock, Arkansas, for the period ending ualluary 141 ' 1936. 1 Mr„,. Moorhead Wright, to serve at the same time as a director 7 ; 1 the Union National Bank of Little Rock, Little Rock, e , kansas, as a director of the Little Rock Branch of the Fed0?-1 Reserve Bank of St. Louis, and as a director and officer r the Southwest Joint Stock Land Bank, Little Rock, Arkansas, °r the period ending January 14, 1956. 530 2/25/55 -10- Mr. E. A. Wiggenhorn, to serve at the same time as a director and officer of the Farmers and Merchants National Bank, AshNebraska, as a director and officer of the Frenchman Valley Bank, Palisade, Nebraska, and as a director and Officer of The First National Bank of Hayes Center, Hayes Center, Nebraska, for the period ending January 140 1956. Mr, C. A. Martin, to serve at the same time as a director of The Menard National Bank, Menard, Texas, and as a partner of the Commercial Bank (Unincorporated), Mason, Texas, for the period ending January 14, 1956. Mr. Vern Wisdom, to serve at the same time as an officer of The First National Bank of Panhandle, Panhandle, Texas, and as an officer of the Panhandle Bank, Panhandle, Texas, for the Period ending January 14, 1956. Approved. There were then presented the following applications for changes stock of Federal reserve banks: A lication for ist ADDITIONAL Stock: ra.ct No. 7. -8"ella County State Bank, Mount Pleasant, Michigan. tiAL14.1cations for SURRENDER of Stock: ict N TheD, " 3 '4,rst National Bank of Williamsport, Will iamsport, Pennsylvania. Shares 56 56 60 60 180 180 50 Total 50 270 trict NO. 6. "te National Bank of Athens, Athens, eOrgj bt he rict No. 11. T st National Bank of Artesia, Artesia, New Mexico. Approved. 531. ; , 5 Thereupon the meeting adjourned. Governor.
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