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22'7 A meeting of the Board of Governors of the Federal Reserve System vas held in Washington on Thursday, February 41 19371 at 11:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Parry, Chief of the Division of Security Loans Mr. Dreibelbis, Assistant General Counsel .There was a general discussion of questions related to the proposal the New York Stock Exchange that the amendment of Regulation T, 4tenslon • and Maintenance of Credit by Brokers, Dealers and Members of Nation -ELL Securities Exchanges, be deferred to afford the Exchange an clIPP°IltunitY to eliminate, by an amendment to its rules, the practice of thee,aY riding" on the Exchange. It was the consensus of the members present that a final decision on the matter should not be reached at this time and Mr. Parry was reto advise Mr. Dean K. Worcester, Executive Vice President of the New York Stock Exchange, by telephone that the Board had not acted on the matter and very likely would defer action for at least a week. Board Mr. Morrill referred to the action taken at the meeting of the On January 9, 19371 in approving the payment of the total estimated value of the Work completed during December on the Board's ne% building (478 ' 00°) less $14,700, bringing the amount retained by the Board since he beginning of the construction work up to $175,000, or approximately 228 2/V37 514 of -2— the total contract price, and recommended, with the concurrence of Kramer, the Board's Superintendent of Construction, that in accordence with the terms of the contract covering the construction of the 1311-ticling, the Board approve the payment of the entire estimated value of the work completed during January ($2431300). Mr. Morrill's recommendation was approved unanimously. Mr. Ransom referred to the understanding reached at the meeting the Board on February 21 1937, with respect to topics to be suggested tOr rl ' 4-scuss10n by the Federal Advisory Council at its meeting on February 15_16 , 'J-967, and stated that, if agreeable to the Board, he would like to h4ve 'e question which he had in mind for submission to the Council 14'esented at the meeting of the Council with the request that the members give con sideration thereto during the period prior to the May meeting of the c auncil and advise the Board of their conclusions with respect thereto at the time of the later meeting. Mr. Ransom's suggestion was approved unanimously. Reference was then made to other topics that might be submitted to the Council for discussion, and Mr. Morrill was requested to address a letter to the Secretary of the Federal Advisory Council suggesting that the Council consider at its forthcoming meeting the two questions set forth below: 1. Are customers of commercial banks carrying large cash deposits and in a position to finance their requirements Without borrowing during the remainder of this year or are there indications that there will be an increased demand for loans to meet obligations of customers during that Period? 2, If there is a demand for loans, does it originate with large corporations or with small business enterprises and what are the purposes for which there is the greatest demand for loans? 229 -3At this point Messrs. Thurston, Parry and Dreibelbis left the meeting and consideration was then given to each of the matters hereinafter referred to and the action stated with respect thereto was taken bY the Board: The minutes of the meeting of the Board of Governors of the FederalReserve System held on February 2, 1937, were approved unanimously. Telegrams dated February 3 to Mr. Young, President of the Federal Reserve Bank of Boston, Mr. Austin, Chairman of the Federal Reserve Bank OirPhiladelphia, and Mr. Helm, Vice President of the Federal Reserve Bank "ansas City, and February 4, 1937, to Mr. Helm, Vice President of the ?ede,r a-L Reserve Bank of Kansas City and Mr. Sargent, Secretary of the Federal R eserve Bank of San Francisco, stating that the Board approves the e8'41b1ishment without change by the Federal Reserve Banks of Boston, Philadelphia and Kansas City on February Z, and by the Federal Reserve 13a114 of Kansas City and San Francisco on February 4, of the rates of diee°11nt and purchase in their existing schedules. Approved unanimously. Memorandum dated January 231 1937, from Mr. Goldenweiser, Director of the Di vision of Research and Statistics, recommending the appointment " 1". Arthur D. Gayer on a temporary basis for a period of five months as a °enior Economist in the Divisions with salary at the rate of t5,600 Per atrium, effective as of the date upon which he enters upon the performance or hie duties. The memorandum called attention to the fact that Mr. Q'Etel' was a British subject and stated that he had been advised that the 13O4rd would require that he declare his intention of becoming an American 230 2M7 -4- *tlzen before it would consider approving his appointment, and that Mr. GaYer had advised that he would comply with this requirement. Approved unanimously. Letter to the board of directors of "The Emmet County State Bank", liarbor P -Prings, Michigan, stating that, subject to the conditions of rship numbered 1 to 6 contained in the Board's Regulation HI the °1 approves the bank's application for membership in the Federal Re81"e 8Yetem and for the appropriate amount of stock of the Federal ReBank of Chicago. Approved unanimously, together with a letter to Mr. Schaller, President of the Federal Reserve Bank of Chicago, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of 'The Emmet County State Bank', Harbor Springs, Michigan, for membership in the Federal Reserve lystem, subject to the conditions prescribed in the inclosed which you are requested to forward to the board of director ','.treotors of the institution. Two copies of such letter are a180 inclosed, one of which is for your files and the other 1_. which you are requested to forward to the Commissioner of the Department for the State of Michigan for his information. "It has been noted that, while the bank has been granted ith°rity to exercise cerin trust powers, it has availed ta ;:self thereof only to a limited extent and that at the time aLexamination in connection with the application for memberthe only fiduciary capacities in which it was acting were :3 guardian and executor in eight small trusts, all of the otiets of which consisted of cash and were subject to court According to the report of examination, proper records the fiduciary accounts were maintained but the bank had not established a trust department nor designated a trust officer. tru, "It is understood that the bank makes no effort to obtain ..)t business. Trust business, however, no matter how small, should not be accepted unless a bank is organized and equipped to handle it properly. .It is suggested, therefore, that you equest the bank to designate a trust officer to be responsible i; t 231 2/4/37 -5"for the handling of the fiduciary business. Should the bank any time in the future desire to exercise fiduciary powers ln addition to those of administrator, executor, and guardian, i it is now authorized to exercise, permission to do so, whch of course, should be obtained from the Board in accordance with the provisions of condition of membership numbered 1." Letter to Mr. Sinclair, President of the Federal Reserve Bank of Philadelphia, reading as follows: "Reference is made to your letter of January 18, 1937, 'transmitting with favorable recommendation a request of the Provident Trust Company of Philadelphia, Pennsylvania, for the oardts approval, under the provisions of Section 24A of the Federal Reserve Act, of a proposed investment of a sum not to exceed $250,000 in a four-story building and lot adjoining the 11.?stitutioni s main office property. The acquisition of the !aditional property is said to be for the purpose of providing Ior future expansion of the banking quarters. "While the bank's capital stock amounts to only $3,200,000, net capital account of $19,274,000 is reflected in the last report of examination, as of April 1, 1936, and you state that t , ere is every reLson to believe that a current appraisal of the tfletitution's position would reveal a net worth equal to or r excess of that shown on the date of the examination. The 1. 11k. is reported to be under capable management and in a strong uid position, and the proposed investment, which is relatively small in amount, does not appear to be in violation , the spirit and purpose of the applicable provisions of the r ederal Reserve Act. "In view of the circumstances and your recommendation, therefore, the Board approves the investment of a sum not to exceed ''50,000 in the property described, and you are requested to advise advise the bank accordingly. In approving the bank's request, e'l'ever, the Board has made no attempt to determine any technical questions which may be involved as to the applicability Of ' 4- Section 24A to the proposed investment." r Approved unanimously. Thereupon the meeting adjourned. 41)provea: Chairman.
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