The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
445 A meeting- of the Executive Committee of the Federal Reserve l ard was held in Washington on Monday, February 5, 1934, at 3:45 p.m. PRESENT: Mr. Mr. Mr. Mr. Black, Governor Hamlin Thames Szymczak Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Bethea, Assistant Secretary The Committee considered and acted upon the following matters: Memorandum dated February 2, 1934, from Mr. Paulger, Chief of the Division of Examinations, referring to the authority granted at the testin, ' f on December 19, 1933, under which Mr. T. F. Furbershaw was eraPloYed temporarily as a stenographer in the division, and recommending that in view of the continued amount of work in the division, the temno , ' arY appointment of Mr. Furbershaw be extended for an additional daysthix on the same terms as the previous appointment. Approved. Telegram to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank of Philadelphia, reading as follows: Ine "Your letter m_nt LYnn McManus "Your bank at seuming duties. 7 Tanuary 30. Board approves temporary appointas Examiner in Federal Reserve Agent's departsalary rate of $4,008 per annum effective upon Please advise effective date." Approved. Letter to Mr. NbIlhenny, Cashier of the Federal Reserve Bank ot Philadelphia, stating that, in accordance with the recommendation %tabled in his letter of Tanuary 29, 1934, the Board approves changes 14 the personnel classification plan of the bank to provide for four Ilevi pos itions in various departments of the bank, and for increases in tilt' salary ranges of two positions. The letter stated also that, in 416 2/5/34 -2- slIbmit+4in future requests for changes in the personnel classification 13344, it Will be appreciated if the bank will indicate the necessity for each of the changes recommended. I,Lpproved. Telegram dated February 3, 1934, approved by five members of the Board 4. " 0 Stevens, Federal eserve Agent at the Federal ileserve Bank Or 01)4 -4.oago, referring to the application of the "lacomb County savings BatIctt ' Lenox, Michigan, for permission to withdraw immediately from members1„4 "4.1) in. the Federal Reserve System, and stating that the Board waives the „ lull requirement of six months' notice of intention to withdraw and that, uoeordingly, upon surrender of the Federal reserve bank stock issued to the lacamb County Javinrs Bank, the Federal 7eserve Bank of Chicago is uti1°11-zed to cancel such stock and make a refund thereon. _t.pproved. Letter dated February 3, 1934, approved by five members of the te O'Connor, Comptroller of the Currency, reading as follows: toa "In accordance with your recommendation, the Federal iieserve Fi I'd approves a reduction in the common capital stock of 'The al ,,st National Bank of Bloomington', Bloomington, Indiana, from ba'?,000 to :50,000, pursuant to a plan which provides that the 34. 4's capital shall be increased by J23,000 Class 'A' preferred to be sold to the P,econstruction l'inaace Corporation and :.?1000 Class 'B' preferred stock to be sold locally, and that the s released by the reduction in common capital stock shall be aliu to eliminate a corresponding amount of unsatisfactory assets, as set forth in your meliorandum of .Tanuary 24, 1934. In reviewing the information submitted in connection with the capital reduction, it has been noted that it is apparently 1.sed c,,,asended to eliminate unsatisfactory assets totaling approximately , 00 by the application of approximately :96,000 from the bank's sur6 ‘1•18 and undivided profits in addition to the released capital A.144wills amounting to 90,000. If these eliminations are made there remain in the bank securities depreciation, as appraised by the or Rec onstruction Finance Corporation examiner on December 16, 1933, I3P1'oximately 111,000, an amount which, if considered as a loss, is! eza-ufficient to eliminate the remaining surplus, undivided profits e°m°11 capital stock and to impair the Class 'B' preferred Z 447 2/5/34 -3- .tock to the extent of approximately 2:31,000. There will also rein the bank a large volume of slow loins and a heavy investment in banking house and furniture and fixtures. It is assumed, however, that you have these conditions in mind and that whenever it is feasible to do 30 you will obtain such further corrections as may be practicable." Approved. Letter to Tr. L:'Connor, Comptroller of the Currency, reading as "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The Farmers lational _Sank of Winfield; ilinfield, Iowa, from '50,000 to 25,000, Pursuant to a plan which provides that the bank's capital shall be ?-nereased by the sale at par of 25,000 par value preferred stock o the Reconstruction Finance Corporation, and that the funds reeased by the reduction in common capital shall be used to eliminate substandard assets and securities depreciation in the amount of 296.82 and to establish a surplus fund in the mount of 4,703.18, 'LL-L as set forth in your memorandum of January 31, 1934." I Approved. .Letter dated February 3, 1934, approved by five members of the 8°aret, t ° O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve BOarA ' 4 approves a reduction in the common capital stock of 'The st National Bank of Waverly', Waverly, Iowa, from :100,000 to ,, 31 pursuant to a plan which provides that the bank's capital : I 48,11 be increased by the sale at par of 50,000 par value pre4,e_rred stock to the neconstruction Finance Corporation, and that I_Ie funds released by the reduction in common capital shall be used 2) eliminate unsatisfactory assets, all as set forth in your memol'andum of January 24, 1934." T Z Approved. Letter dated February 3, 1934, approved by five members of the to -- O'Connor, Comptroller of the Currency, readinF, as follows: to "In accordance with your recommendation the Federal Reserve approves a reduction in the common capital stock of 'The i25Y0National Bank of Crete', Crete, Nebraska, from c50,000 to 00 Pursuant to a plan which provides that the bank's capital ° " 448 2/5/34 -4"shall be increased by the sale at par of 25,000 par value prostock to the econstruction Anance Corporation raid that the funds released by the reduction in common capital shall be used to eliminate substandard assets and securities depreciation, all as set forth in your memorandum of January 26, 1934." .Lpproved. Letter dated February 3, 1934, approved by five members of the ue Mr. O'Connor, ,;amptroller of the Currency, readin as follows: "Receipt is acknowledged of your memorandum of January 29, 1934 With reference to the Board's letter of November 10, 1933, JProving a reduction in the common capital of The Security Na1°,ael Bank of ..a.kansas ,Jity, Arkansas City, Kansas, and to the peardts letter of December 27, 1933 amending its letter of lovemIper 10, 1933 by eliminating condition numbered three. "In accordance with your recommendation the Board now amends Its letter of November 10th by chalv.ing the wording of condition numbered four to read as follows: 4. That none of the funds released by the capital reduction shall be returned to the shareholders, but that such funds in the amount of 50,000 together with funds in the amount of approximately :10,661.81 to be made available by voluntary contribution shall be credited to undivided profits and immediately thereafter substandard assets in a like amount shall be charged off; and that the party or parties who shall contribute to the bank l0,661.81 or approximately this amount may receive eliminated assets in return therefor, such assets to be determined by the agency manager of the reconstruction Finance Corporation." Approved. Telegram dated February 3, 1934, approved by five members of the 13°4rd, to Mr. Case, Federal Reserve Agent at the Federal Reserve 411k (pf ilew York, stating that the Board has considered the applicatio4 or nhe tor "Associates of Lorris County, Inc.", 1,1orristown, New jersey, a 7°tin.C.:: permit under authority of section 5144 of the Revised Zta,t4tes of the United States, as amended, entitling such organization to irate the stock which it owns or controls in the "First National Bank 111 11°ckaviziy,,, Rockaway, New Jersey, and has authorized the issuance 2/5/34 -5- °r a limited permit to the applicant, subject to the following condi- "Prior to the issuance of the limited voting permit hereby authorized applicant shall agree "(1) That within such time as shall be fixed by the Federal reserve Agent at the Federal Reserve Bank of New York the undersirmed will cause First National Bank in Rockaway to rehabilitate its capital structure by voluntary contributions, issuance of common stock and/or preferred stock, or otherwise, in such amount and in accordance with such plan or plans as shall be approved by the Comptroller of the Currency and shall be satisfactory to tho7edera1 eserve Agent at the Federal Reserve Bank of New York and to cause such bank to charge off or otherwise eliminate (a) estimated losses in loans and discounts, (b) depreciation in stocks and defaulted securities, (c) depreciation in securities not of the four highest grades as classified by an invesLment service organization regularly engaged in the business of rating or grading securities, and (d) all other losses, such charge-offs or eliminations to be based on current examinations or credit investigations and to be of such nature and extent, and in accordance with such plan or plans for the rehabilitation of such bank, as shall be satisfactory to the Camptroller of the Currency and to the Federal eserve Agent at the Federal Reserve Bank of New York, "(2) That all assets of such bank which may be charged off or otherwise eliminated pursuant to the foregoing clause numbered (1) of this agreement will remain the property of such bank and will not be distributed to the shareholders of the undersigned or of such bank or otherwise released in any manner whatsoever; "(3) That the undersigned will cause its subsidiary bank to make such corrections as shall be requested by the Federal Resee ;gent at the Federal Reserve Bank of New York in order to remove the cause of any criticism relating to any feature of its practices, policies, management, or financial condition Which has been made by the appropriate supervisory authorities." ror the following purposes: ad. At any meeting of shareholders of such bank, or at any a, J°11111mont thereof, at any time prior to :Lay 1, 1934, to elect E;eu directors as may be satisfactory to the Chief National Bank 1,eriner for the L,econd 'Federal Reserve District and to the Federal t _elvve 4ent at the Federal Reserve Bank of 1:ew York, and to act 111':'1'eat upon such matters as are ordinarily acted upon at the annual , et-LnCs of such bank. "2* At any time prior to :.:ay 1, 1934, to act upon a proposal or ProPosals to authorize and effect an increase in the capital 450 2/5/34 "fUnds of such bank and to do all thins necessary for such purpose, Provided that such proposal or proposals shall be in accordance with a. Plan which shall be approved by the appropriate supervisory authorand shall be satisfactory to the Federal Pteserve At_:ent at the Iederal ileserve Bank of New York." The teleram also authorized the agent to have prepared by counsel for the Federal reserve bank, and to issue to the Associates of Norris County, IAc., a limited voting permit in accordance with the telegram when the corldition prescribed therein has been complied with. Approved. Telegram dated February 3, 1934, approved by five members of the Board, to Er. Newton, Federal Reserve Agent at the Federal Reserve Bank Of 'Francisco, statin: that the Board has considered the application °r the "Old National Corporation", Spokane, 1ashington, for a votini permit under authority of section A./A- of the :evised :Statutes of the Ulaited zAates, as amended, entitling such organization to vote the stock Villeh it owns or controls in "The First National Trust and Savings Bank or spol,, Spokane, Washington, and has authorized the issuance of a Permit to the applicant, subject to the following condition: m, "Simultaneously with the issuance of the limited voting per-Lt hereby authorized there shall be issued to Investment and ')ecurities Co., Spokane, Washington, the limited voting permit euthorizeu in the i3oard's telegram to you of this date." '111(1 fol. the followin purposes: To act upon a proposal or proposals to reduce the common piPltal stock of such bnnk from ;000,000 to $250,000 pursuant to a vhich shall be approved by the Comptroller of the Currency and byleh shall provide, among other things, that the funds released 0,Uchi reduction in comon capital stock, together with a portion 4hthe bank's undivided profits, shall be used to charge of-1' or azde"iso eliminate approximately ::277,000 of undesirable assets °f depreciation in securities. I) 2/5/34 -7.- "2. To act upon a proposal or proposals to authorize the creation and issuance of common and/or preferred stock of such bank in such amount and in accordance with such plan or plans as shall be approved by the Comptroller of the Currency and shall be satisfactory to the :Federal Reserve .gent at the Federal eserve Bank of San Francisco." The teleram also authorized the taient to have prepared by counsel for the Federal reserve bank, and to issue to the Old National Corporation liraited voting permit in accordance with the telegram. Approved. In connection with the above there was presented a second tele- gr dated February 3, 1934, approved by five members of the Board, to Reviton, '1*114cisco, Federal Reserve Agent at the Federal Reserve Bank of San Stati5 that the Board has considered the application of the 11 " v tment and Securities Co.", Spokane, Washington, for a voting perUnder authority of section 5144 of the Revised Statutes of the ',kited States, as amended, entitling such organization to vote the atock which t i owns or controls in "Me First 1:ationa1 Trust an Savinrs 13'81.1k or SPokane", Spokane, ,ashington, and has authorized the issuance a talited permit to the applicant, subject to the following condition: 4u " ber Simultaneously with the issuance of the limited votinf2 permit .Y authorized there shall be issued to Old National Corporation, Qk Po to,2 .1 : 1e, Washington, the limited voting permit authorized in the (111aTs telegram to you of this date." ror the following purposes: To act upon a proposal or proposals to reduce the common al stock of such bank from 0500,000 to ;;250,000 pursuant to a which shall be approved by the Comptroller of the Currency and WhiCh 3hall provide, among other things, that the funds released by th-- :reduction in common capital stock, toether with a portion of IA: bank's undivided profits, shall be used to charge off or othereliminate approximately ,T277,000 of undesirable assets and of "I'reciation in securities. 1.-.7C") 2/5/34 "2. To act upon a proposal or proposals to authorize the creation and issuance of common and/or preferred stock of such bank in such amount and in accordance with such plan or plans as shall be aPproved by the Comptroller of the Currency and shall be satisfactory to the Federal Reserve Agent at the Federal Reserve Bank of San Francisco." The telegram also authorized the agent to have Tirenared by counsel for the Pederal reserve bank, and to issue to the Investment and Securities Co. liraited votinc permit in accordaace with the telegram. Approved, together with a letter dated February 3, 1034, approved by five members of the Board, to Lr. .'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve B?ard approves a reduction in the common capital stock of 'The -2,t1rst National Trust and 3avinL;s Bank of 3pokanet, L;pokane, ':;ashingfrora , 500,000 to .250,000, pursuant to a plan which provides ?ilat the bank's capital shall be increased by the sale at par of 25 0 0,000 par value preferred stock to the Reconstruction Finance rporation, and tht the funds released by the reduction in common ?aPital stock, together with a portion of the bank's undivided profshall be used to eliminate approximately 7.;277,000 of substandard ussets and securities depreciation, all as set forth in your letter of January 20, 1934." Letter to the President of the United States reading as follows: "As you are aware, Section 10(b) of the Federal Reserve Act authorizes any Federal reserve bank in exceptional and exigent c stances to make advances to its member banks on time or demand rtes secured to the satisfaction of such Federal reserve bank when !II , ch member banks are without sufficient eligible and acceptable :;?ets to enable them to obtain adequate credit accomodations throwh fl," methods provided in the Federal Reserve Act. This section was ' aZed to the Federal Reserve Act by the Act of February 27, 1932, 3, las originally enacted authorized such advances only until March 3, The section was amended, however, by the Act of February 933, so as to extend such time until March 3, 1934; and by the ' Act. tai,of March 9, 1933, Congress again amended this section in certaa ":44 respects and included a provision that 'no advance shall be orc'e uader this section after March 3, 1934, or after the expiration year as the 1-'resident lana,reuch additional neriod not exceeding Prescribe'. "The existence of the authority conferred by Section 10(b) of -e Federal deserve Act has made it possible for the Federal reserve firum 2/5/34 -9- "banks to extend to a considerable number of member banks credit which was urgently needed to tide them over a difficult period and in some instances to prevent suspension. Up to December 31, 1932, "ances aggregating :',!,28,965,000 had been made under the authority .r this section and during the year 1933 advances aggregating ' 3265,463,000 were made under this authority. These advances have ?een. Made to member banks located in all rederal reserve districts. ua Lecamber 31, 1933, advances of this kind in the amount of ,18,824,000 were outstanding. "In this connection it may be stated that the Governors of the Federal reserve banks considered this subject at a conference din October, 1933, and recommended that the provisions of deotion 10(b) of the Federal Iieserve Act be extended for one year Under the discretionary powers granted to the ?resident by the law. ..S.Thould the authority contained in this section be not extended, the -,sderal reserve banks will be unable after I..arch 3, 1934, to grant credit accommodations to individual member banks which may have exhausted their assets that are eligible and acceptable to obtain adequate credit accommodations from the reserve banks by the customary methods. "In the circumstances the Federal 1-.-leserve Board feels that lt is important that the authority of the Federal reserve banks 60 Make advances to their member banks under the provisions of this section of the law should be continued and, accordingly, respectfullY recommends that, pursuant to the authority conferred upon Y°u bY ‘ection 10(b) of the Federal 1.eserve Act, you prescribe an !dditional period of one year after Larch 3, 1934, during which Fed raesle.jiecre banks may make advances under the provisions of "For consideration in the event that you should determine to ks such action, a draft of a proclamation extending the authority cr the Federal reserve banks in this respect for the period recomaded has been prepared and transmitted to the Director of the 151areau of the Budget, accompanied by this letter, in accordance with the terms of the Executive Order of August 10, 1933." Approved, together with a letter to Honorable Lewis W. Douglas, Director of the Bureau of the Budget, reading as follows: "There is inclosed herewith a letter addressed to the President hi u recommendirv; that, pursuant to the authority conferred upon bY Section 10(b) of the Federal Reserve Act, he prescribe an : 1 e4uitlonal period of one year after Earch 3, 1934, during which a]. reserve banks may make advzInces under the provisions of that ' til at section, together with a draft of a proclamation extending authority of the Federal rese2ve banks in this respect for he period recomended. k 2/5/34 -10-- "The draft of this proclamation is transmitted to you in accordance with the terms of the Executive Order of August 10, 1933, and it will be appreciated if you will expedite its consideration and transmission with he accompanying letter, through the channels prescribed in the Executive Order, to the President for his consideration.' Letter dated February 3, 1934, approved by five members of the 3111"cl, to Mr. F. Grady Huddleston, Secretary of the Tennessee Bankers Usociation, Nashville, Tennessee, reading as follows: "This refers to your letter of ainuary 12, 1934, in which you to be advised whether a member bank of the Federal .;,eserve System )Irstem may lawfully issue a time certificate of deposit payable ': La ninety days and bearing interest at the rate of 3 per cent per 611111u:la. You suggest that if the interest so paid on such a certifi?ate be added to the renewal of the certificate, the amount of Interest ultimately paid would appear to exceed the maximum rate 11°w allowed under the Federal deserve Board's Regulation "Inasmuch, however, as an original certificate of deposit .a renewal certificate must be regarded as separate contracts, it is the view of the Federal Reserve Board that the payment of interest at the rate of 3 per cent Per annum on a time certificate Payable at the expiration of ninety days or at the expiration of EaY other period (not less than thirty days), whether such interest ls paid in cash at maturity or added to the renewal certificate, fes not constitute a violation of section III(c) of Regulation will-eh provides that no member bank shall pay interest, accruing after October 31, 1933, on any time deposit or any :art thereof at 11 rate in excess of 3 per cent per annum, compounded semiannually. this connection, it should be noted that if such a certificate is r eissued, no interest may lawfully be paid for the period between :f? ':ate of maturity of the original certificate and the date on "lch the renewal certificate is actually issued." Approved. Letter to hr. Curtiss, Federal Reserve :,.:;ent at the Federal Re8e rire _ 1)6J1k of Boston, reading as follows: "Receipt is a&noviledged of your letter of January 13, 193'l, ta wh. you refer to the fact that in 7uly, 1931, a permit was ellted under the provisions of the Clayton .,ct to 1:r. Roger .Amory aildserve as a director of the Rational Rockland Bank of Boston as a director of The Kidder Peabody Trust Company of Boston. wYou state that in October, 1932, the name of The Kidder Z 455 2/5/34 -11- "Peabody Trust Company was changed, and that the institution is now known as the Union Trust Company. However, you state that you are informed by one of the officers of the Trust Company that the succession was simply a chance of name as permitted under I:assachusetts laws and that no new corporation was formed. "You also state that on December 1, 1933, the Union Trust ComPahY assumed the deposit liabilities of nnother trust company and Purchased some of its assets, but that the transaction did not involve nY chance in the corporate existence of the Union Trust Company other an the acquisition of the additional assets and liabilities. "Under the circumstances, you ask whether a new permit is necesarY for Lr. ,mory. In accordance with the Board's letter of June 25, t93O (X-6041), you state that in your opinion there has been no change in the situation which would render it in the public interest to revoke the permit issued to Er. Amory in 1931. "In the event that you and the counsel for your bank are satisled that there has been no chance in the corporate existence of The Udder Peabody Trust Company since the permit was granted to Ur. :Inory, it appears that the permit heretofore isaued to Ur. .Lmory would now Illthorize his service as a director of the Union Trust Company, for the reasons stated in your letter, since, in that event, it would s ceera that ir. Amory would be serving the same institutions as were clvered by his permit, although the name of one of them has been c hanced." Approved. Letter to an applicant for a permit under the Clayton :et, advisillg al of his application as follows: 11T. Ce°rge Ohse, for permission to serve at the same time as a a cllreotor of the Yorkville i;ational Bank, Yorkville, Illinois, as a director of the Farmers L;tate Bank of Yorkville, Yorkville, Illinojs. Approved, together with a letter to ‘3tevens, Federal Deserve Agent at the Federal eserve Bank of Chicago, reading as follows: co "There is being transmitted to you under separate cover a 01,1317, 0f the permit issued to 1.r. George Ohse under the provisions Clayton -ct covering his service as director of the YorkITational Bank and of the Farmers Lltate Bank, both of Yorkville Illinois. ', The permit is being issued because of the statement contained cor4our report that while the banks involved are in substantial 43ctition, you feel that the influence of the applicant, who is ?7MT 2/5/34 -12- "the only officer or director serving both banks, 7,111 be helpful in effectin2; a consolidation of the two institutions, which is much needed since the mall villase in which they are located can support only one bank. "In the event the proposed consolidation has not been effected Y truly 1, 1934, you should review the matter and submit a report to the Board with your recammendation as to whether or not the Perait should be revoked." Letters to applicants for permits under the Clayton Act, ad1314g of approval of their applications as follows: n. W. Stanton, for permission to serve at the some time as a director and officer of The Citizens National Bank (1, Trust Company 5! Oneonta, Oneonta, New York, and as a director of the First liational Bank in Sidney, Sidney, New York. " 14 .Robl1n H. l'avis, for permission to serve at the same time as .. director of the Denver branch, Federal Reserve Bank of Kansas , ieltY, Denver, Colorado, and as a director and officer of The Lenver Lational Bank, Denver, Colorado. Approved, There were then presented the following applications for ori, zinal Or additional stock, or for the surrender of stock, of Federal reserve bath: A 1 4.1cations for ORIGINAL Stock: tistrict No- 3' The First Nationvl Bank in Frackville, lera Pennsylvania -4e County rational Bank at Clearfield, Clearfield, Pennsylvania 1,3,istrict 8. ' irat Bank in latamont, Alt amont, Illinois iatrict No. 10. First ITational Bank in urora, 1-1-11aral Nebraska Shares 87 324 411 36 36 36 Total 36 483 12 12 A 14 for ADDITIONAL Stock: T-1;,7urict no. 1. ""4•011 Trust OompanY, alswort ih, Lain° 457 V5/34 -13A 1; 4.1cations for 3DDREITD.i71 of Stock: District No. 7. Flrst National Bank, Atwood, Illinois ,First National Bank, Fairfield, Iowa,. . 41sconsin National Bank, Watertown, Vasconsin Shares 18 96 90 204 24 24 93 Total 93 321 1.441L1112L251:_qPlrat Nat ioni-hank, Huttig, Arkansas aMb Bank &Trust Company: Luling, Texas Approved. Thereupon the meeting adjourned. kaie CAA-cR Secretary.
@FedFRASER