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153 A meeting of the Federal Reserve Board was held in Washington on Thursday, January 17, 1935, at 11:30 a. m. PRESENT: Er. LI*. Mr. Mr. Mr. Mr. Eccles, Governor Thomas, Vice Governor Hamlin Liner James Szymozak Yr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Telegrams dated January 16, 1935, from Mr. Wood, Chairman of the Federal Reserve Bank of St. Louis, and January 17, 1935, from 14r s Sargent, Secretary of the Federal Reserve Bank of San Francisco, both advising that, at meetings of the boards of directors on the dates stated, no changes mere made in the banks' existing schedules f rates of discount and purchase. Without objection, noted with approval. Telegram to Mr. Case, Federal Reserve Agent,at the Federal 1168"ve Bank of New York, reading as follows: "Your letter fourteenth. Board approves temporary apP°intment as assistant examiners of the two men borrowed from National City &Irk." Approved. Letter to Er. Sailer, Deputy Governor of the Federal Reserve Bkhl, o York, reading as follows: "The Federal Reserve Board approves the recommendation ontaIned in your letter of January 11 that your bank be authorized to continue, for an additional period of not to exceed six 154 1/17/35 -2- "months, the temporary assignment of Liss iLae Murray, Reconciling Clerk, G5, $1600-2100, in the Accounting Department, to the Maintenance Division, Building Operating Department, at her present salary of ,1860 per annum which is c60 in excess of the maximum salary provided for the position of Junior Clerk to which she is temporarily assigned." Approved. Memorandum dated January 16, 1935, from Mr. Morrill, Secreta-rY, stating that advice has been received of the appointment by the boards of directors of the various Federal reserve banks of the following directors at the respective branches, each for a term of three years beginning January 1, 1935, unless otherwise shown: Name illward B. Vreeland *W. H. Courtney *Arthur E. Braun *L. B. Phillips H. Wood J. G. Farley G. G. 'Ware *F. J. Earle *R. S. Hecht - James Inglis *Jo Nichol *A. H. Eckles *J. IL Alderson R. McDermott *A. H. Marble *H. Farr *Ned Holman *C. N. Bassett *J. A. "Wilkins !W. P. Napier -rictor H. Rossetti W4R. S. Smith O. Howard W*M. F. Backus Ti*R. M. Hardy Address Salamanca, N. Y. Lexington, Kentucky Pittsburgh, Pennsylvania Cambridge, Maryland Charlotte, North Carolina Birmingham, Alabama Leesburg, Florida Cleveland, Tennessee New Orleans, Louisiana Detroit, Michigan Pine Bluff, Arkansas Hopkinsville, Kentucky Forrest City, Arkansas Billings, Montana Cheyenne, Wyoming Greeley, Colorado Oklahoma City, Oklahoma El Paso, Texas Houston, Texas San Antonio, Texas Los Angeles, California Eugene, Oregon Salt Lake City, Utah Seattle, Washington YRIri ma, 'Washington *Reappointment Viwo-year term Noted. Branch Buffalo Cincinnati Pittsburgh Baltimore Charlotte Birmingham Jacksonville Nashville New Orleans Detroit Little Rock Louisville Memphis Helena Omaha Denver Oklahoma City El Paso Houston San Antonio Los Angeles Portland Salt Lake City Seattle Spokane . 1.55 1/17/35 Telegram to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank of Philadelphia, reading as follows: "Refer your letter JanuLry 12, 1935. Board extends to February 13, 1935 the time within which 'First Trust Company of Philadelphia', Pennsylvania, may accomplish its membership and within which 'The First National Bank of Philadelphia', Pennsylvania, its holding company affiliate, may obtain a voting Permit. Please advise banks accordingly." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading Rs follows; "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The Merchants National Bank of Salem!, Salem, Massachusetts, from $200,000 to f100,000, pursuant to a plan which provides that the released capital shall be used in eliminating or reducing the least desirable assets in the bank, including all Of the net depreciation in group II bonds, all as set forth in your memorandum of January 3, 1935." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading " f011OWS: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock Of the 'Glen Rock National Bank', Glen Rock, New Jersey, from 0.00,000 to $10,000, pursuant to a plan which provides that the bank's capital shall be increased by A5,000 of preferred stock to be sold to the Reconstruction Finance Corporation and/Or others, and that the released capital shall be used to eliminate a corresponding amount of the least desirable assets in the bank, all as set forth in your memorandum of January 8, 1935. "In considering the plan under which the reduction in common capital is to be effected it has been noted that your examiner severely criticises the bank's management, which he regards as unsafe and incapable. It is understood, however, that this matter is receiving the attention of your office." Approved. 156 tl) ViV35 Telegram to 1,:r. Curtiss, Federal Reserve Agent at the F doral Reserve Bank of Boston, reading as follows: "ANCIGAR telegrams of December 22, 1934, authorizing the issuance of limited voting permits to 4Shammut Association' and 'The National Shammut Bank of Boston! are both amended by eliminating the following words from the conditions specified by the code word ANCILBAT: '(c) all depreciation in securities not of the four highest grades as classified by a recognized investment service organization regularly engaged in the business of rating or grading securities'. The telegram authorizing the issuance of a limited voting permit to The National Shammut Bank of Boston is further amended by eliminating the above quoted words from condition numbered (1) following the letter (c) in said telegram. In view of the circumstances involved YOU are authorized to except 'The Merchants National Bsnk of Salem', Salem, Massachusetts, and Hingham Trust Company, Hingham, Massachusetts, from the conditions regarding charge-offs and eliminations specified by the code word kECILBAT in said ANCIGAR telegrsms, provided that prior to the issuance of the lirited voting permits authorized therein the applicants shall cause each of such banks to take such steps as shall be requested by you in order to effect the maximum amount of corrections and/Or eliminations of losses and/Or depreciation in assets -which in your judgment shall be practicable in vievrof the total available capital structure of each such subsidiary bank, and provided that each of the applicants shall agree as follows: That the undersigned will use its best efforts to cause The Merchants National Bank of Salem, Salem, Lassachu”tt8, and Bingham Trust Company, Hingham, Massachusetts, at the earliest date mhich shall be deemed practicable in the udGment of the Federal Reserve Agent at the Federal Reserve jar& of Boston and, in any event, not later than June 30, 1935, -co charge off or otherwise eliminate, (a) all losses in loans 844 discounts, (b) all depreciation in stocks and defaulted ecurities, and (c) all other losses; as shown by the latest jailable reports of examinations by the appropriate supervisory _ uthorities. The Board understands from representatives of The lisatdional Shawmut Bank of Boston that such bank and the subiary banks of Shawmut Association will charge off or otherelininate all depreciation in securities not of the four 1,t1 hest grades 'within a period of approximately six months. °Ilch ANCIGAR telegrams are further amended by substituting for the cod _ e word ANCILCO following the letter (D) in each telegram the r olloring: '(1) ANCILCO. (2) At any time prior to April 4. 1935, to authorize reduction in capital stock, change in i : 157 1/17/35 -5- "lumber of shares and/or change in par value of shares of stock of The Merchants National Bank of Salem, and to make such amendments to the articles of association and/or by-laws of such bank as shall be necessary for such purposes, provided that such action shall have been approved by the Comptroller of the Currency and the Federal Reserve Board, and shall be in substantial accordance with the plan set forth in the bank's letter to the Comptroller of the Currency dated December 28, 1934." Approved. Telegram to Er. Peyton, Federal Reserve Agent at the Federal Reserve Bank of Minneapolis, authorizing him to issue a limited 11°ting permit to "Northwest Bancorporation", Minneapolis, Minnesota, e htitling such organization to vote the stock mhich it owns or conin "The First National Bank of Carson", Carson, North Dakota, tor the purposes set forth in the telegram. Approved. Letter to the chairmen of the Industrial Advisory Committees, reading as follows: "At the meeting of the Industrial Advisory Committee chairmen, held in Washington on December 18, 1934, reference Ilas made to the pamphlet on industrial loans prepared by Er. Creighton and distributed in the First Federal Reserve district, and you were advised that material for a pamphlet as being prepared by the Board -which would be sent to you in the course of a few weeks. "Vihile it is felt that the pamphlet distributed in the PIrst Federal Reserve district is admirable and has been of material help, it is thought that perhaps it might be desirable to lay somewhat more stress in the future on advances through member banks and other financing institutions. The material inclosed herewith has been drafted with that idea in rict nd. If you should decide to use the material in connection a Pamphlet or otherwise, it is assumed, of course, that 1,°11 11111 obtain the approval of the Federal Reserve bank be"guns releasing it for publication." 158 1/17/35 -6Approved, together with a letter to the governors and chairmen of all Federal reserve banks inclosing a copy of the letter to the chairmen of the Industrial Advisory committees. Letter to the First of Boston International Corporation of 80ston, Boston, Lassachusetts, reading as follows: c "You are advised that the cost of the examination of your Corporation, made by examiners of the Federal Reserve Board as of the close of business December 11, 1934, was 4 311.31. s "You are requested to deposit this amount in the Federal Reserve Bank of Boston, with instructions to that bank to credit it to the Federal Reserve Bank of Richmond for the aacount of the Federal Reserve Board." Approved, together with a letter to Li-. Curtiss, Federal Reserve Agent at the Federal Reserve Bank of Boston, reading as folloms "The Federal Reserve Board is today advising the First of Boston International Corporation of Boston, that the cost Of the examination of the Corporation, made by examiners of the Federal Reserve Board as of the close of business December 11, 1934, was $311.31, and is requesting that the bank deposit this amount in the Federal Reserve Bank of Boston, vath instructions to you to credit it to the Federal Reserve 13sai1C of Richmond for the account of the Federal Reserve Board. "You are accordingly requested, upon receipt of this a:mount from the First of Boston International Corporation, to credit the Federal Reserve Bank of Richmond in your daily statement of credits through the Gold Settlement Fund for the !cocunt of the Federal Reserve Board, and advise the Federal 4eserve Bank of Richmond by mire the amount and purpose of the credit." Letter to Li.. S. W. Jensch, St. Paul, Minnesota, reading as roliovre 3 "This refers to your letters of December 11 and 24, 1934, kad -anuary a 4. 12, 1935, making certain inquiries regarding na:10nal banks which are exercising trust powers. You have also 'equested a copy of the Board's form of application which was 159 V1V35 -7- "used in 1919 and 1920 by national banks applying for trust powers, a certified copy of the Board's regulations which were in effect at that time covering the exercise of such powers, and a certified copy of the application for trust powers which was made by the Goodhue County National Bank of Red Wing, Red Yang, Minnesota. "You have stated that you understand from the letter from this office dated October 15, 1034, that, in the absence of State legislation vesting a discretion in fiduciaries to invest trust funds held by them, all investments of the funds of assigned court trusts being administered by a national bank which is authorized to exercise fiduciary powers must be made under an order of court. In this connection, however, as indicated in that letter, a national bank acting in a court trust within the meaning of section a(b) of the Board's Regulation F, is not, in the absence of a provision of State law on the subject, required by that section to make investments under an order of the court appointing it in that capacity, if the court itself by general order vests a discretion in the bank to invest trust funds. "It appears that you desire to be advised as to the rights of a beneficiary of a trust being administered by a national bank which has authority to exercise fiduciary Powers in the event of a violation by such bank of the Board's Regulation F covering the exercise of such powers. In a situation of this kind it is true that the Board's regulations would be involved but the question you have presented is one which mould necessitate an expression of opinion as to the legal rights of private parties, that is, the beneficiary and the national bank you have in mind. In the circumstances, 'While the Board performs certain duties of a supervisory Character with respect to member banks of the Federal Reserve 'Y'stems it is not within the scope of its lawful functions I0 undertake to determine the rights of the parties in such a 5.tuation. Accordingly, it would not be possible for the Board to advise you as to the rights of the beneficiary in tLie premises. "You have advised that you have been unable to find any exPross authority in section 11(k) of the Federal Reserve Act, .." ,13 it is incorporated in section 248(k) of Title 12 of the J,rlited States Code Annotated, under which the Federal Reserve .t?ard is empowered to prescribe regulations with respect to e exorcise of trust powers by national banks. In this conyou aro advised that a provision authorizing the !7'ard to promulgate such regulations as it may deem necessary 0 nforce compliance with the provisions of section 11(k) n%the proper exercise of the powers granted therein is conin. section 248(k) of the 1934 Cumulative Annual Pocket g Z 160 -8- I/17/35 "Part Supplement to Title 12 of the United States Code Annotated. This provision is also incorporated as the last sentence of section I in the copy of the Board's Regulation F which was sent to you with the letter from this office dated October 15, 1934. Loreover, you will note from the inclosed form of permit, which the Board issues to national banks in cases where they have been granted permission to exercise trust powers, that the exercise of the rights thus granted 'shall be subject to regulations prescribed by the Federal Reserve Board.' "There is also inclosed, in accordance with your request, a photostat copy of the Board's form of application which was used by national banks in 1919 and 1920 in making application for permission to exercise trust powers, together with a certified photostat copy of the Board's regulations -which were in effect during that time, covering the exercise of such powers. There will be no charge for these papers and photostat copies have been furnished for the reason that the Board's supply of original copies of such documents has become exhausted. "Az stated above, you have also requested a certified copy of the application for trust powers Which was made by the GoodCounty National Bank of Red Wing, Red Wing, Minnesota. The Board regards the information contained in applications of this kind as being largely confidential in its character and it is not the Board's usual practice to furnish copies of such documents except to the applicants involved or to representatives thereof. In this connection, it is understood that you do not represent the Goodhue County National Bank of Red wing, and, accordingly, a certified copy of the application for trust Powers which was made by that bank is not being furnished." Approved. Letters to applicants for permits under the Clayton Act to serve as directors and/or officers of The National City Bank of v • ,Lorlt, New York, New York, and various other banks, advising of 413Pls°val of their applications as follows: Gordon S. Rentschler, for permission to serve at the same ILilme as a director and officer of The National City Bank of e17 York, New York, New York, as a director of the City Bank 4-a1mers Trust Company, New York, New York, and as a director Eind officer of the International Banking Corporation,BridgePort, Connecticut, for the period ending January 14, 1036. Lr. T "-mos LicLean, for permission to serve at the same time as 161 1/17/35 -9- an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Li.. Richard W. Foote, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. Lr. John T. Creighton, for permission.to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1C36. lir. Daniel C. Borden, for permission to serve at the same time as an officer of The National City Bank of New York, New York, lIew York, and as a director and officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. Liz. Bascom ii. Torrance, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Xrust Company, New York, New York, for the period ending January 14, 1936. Liz. henry A. Koelsch, Jr., for permission to serve at the same time as an officer of The National City Bsnk of New York, New York, New York, and as an officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. Lr. J. T. Cosby, for permission to serve at the same time as an officer of The National City Bank of Now York, New York, Lew York, as a director and officer of the International Banking Corporation, Bridgeport, Connecticut, and as a director of The National City bank of New York, (France) S. A., Paris, Prance, for the period ending January 14, 1936. C. V. Sheehan, for permission to serve at the same time ts an officer of The National City Bank of New York, New York, York, as an officer of the International Banking Corpora1.0n, Bridgeport, Connecticut, and as a director of The TItional City Bank of New York (France) S. A., Paris, France, ror the period ending January 14, 1936. 162 1/17/35 -10- lur. Howard C. Sheperd, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, as a director and officer of the International Banking Corporation, Bridgeport, Connecticut, and as a director of The National City Bank of New York (France) S. A., Paris, France, for the period ending January 14, 1936. r. Stewart C. Pratt, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Lr. Harold Bottenus, for permission to serve at the sane time as an officer of The National City Bank of New York, .New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. 1.:r• Rowland H. Hughes, for permission to serve at the same time as an officer of The National City Bank, New York, New York, and as an officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. 1,:r• George J. Kenny, for permission to serve at the same time as an officer of The National City Bank of New York, New York, Lew York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Lir• William L. *Marsh, for permission to serve at the same time as an officer of The National City Bank of New York, New York, yew York, and as an officer of the City Bank Farmers Trust e°111Pany, New York, New York, for the period ending January 14, 1936 ' • J• H. Durrell, for permission to serve at the same time ,e;s an officer of The National City Bank of New York, New York, Aely York, as a director and officer of the International Banking Corporation, Bridgeport, Connecticut, and as a director !lid officer of the Banque Nationale de la Republique d'Haiti, eort au Prince, Haiti, for the period ending January 14, 1936. 4 .1". Charles F. Uheaton, for permission to serve at the same as an officer of The National City Bank of New York, New fYenk, New York, and as an officer of the City Bank Farmers Trust New York, New York, for the period ending JamCompany,rY 19 14, 163 1/17/35 -11- L.r. William A. Simonson, for permission to serve at the same time as a director and officer of The National City Bank of New York, New York, New York, and as a director of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. Lir. C. C. Jordan, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Mr. Louis Naetzker, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as a director and officer of the Banque Nationale de la Republique d'Haiti, Port au Prince, Haiti, for the Period ending January 14, 1936. Mr. Nelson Stuart, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Mr. Allen G. Hoyt, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Llr• Harry W. Jones, for permission tO serve at the same time as an officer of The National City Bank of New York, New York, Lew York, and as an officer of the City Bank Farmers Trust Company, New York, New York, f or the period ending January 14, 1936. 1•Ir• P. A. Miller, for permission to serve at the sane time a.s an officer of The National City Bank of New York, New York, liew York., and as an officer of the City Bank Farmers Trust C 1936Onipany, 1iew York, New York, for the period ending January 14, Lir• James H. Perkins, for permission to serve at the same time as a director and officer of The National City Bank of New Yo.rk, New York, New York, as a director and officer of the Cl .ty Bank Farmers Trust Company, New York, New York, and as a director and officer of the International Banking Corporation, Brldgeport, Connecticut, for the period ending January 14, 1936. 1 1.64 1117/35 -12- Er. Robert Weed Doye, for permission to serve at the sane time as an officer of The National City Bank of New York, New York, New York, and as an officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. LI'. Noel Erskine Hanf, for permission to serve at the sane time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Ir• Stanley D. Pearce, for permission to serve at the sane time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. La'. Harry E. Henneman, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, as a director and officer of the Banque Nationale de la Republique d'Haiti, Port au Prince, Haiti, for the period ending January 14, 1936. Lt. YIillien W. Wilson, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. • George D. Buckley, for permission to serve at the same ta-me as an officer of The National City Bank of New York, New New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Ix. Ralph E. Lorton, for permission to serve at the same time , 11 ,8 an. officer of The National City Bank of New York, New York, tew York, and as an officer of the City Bank Farmers Trust 1936uompany, New York, New York, for the period ending January 14, /41*- Samuel Sloan, for permission to serve at the same time as !IT director of The National City Bank of New York, New York, ic 'ew York, and as a director of the City Bank Farmers Trust °111PanY, New York, New York, for the period ending January 14, 1936. 165 4 1/17/35 -13- Lr. Beverley Keator, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Hr. Arthur C. Chadbourne, for permission to serve at the same time as an officer of The National City Bank of New York, New York, New York, and as an officer of the International Banking Corporation, Bridgeport, Connecticut, for the period ending January 14, 1936. LI'. Kenneth A. Hackler, for permission to serve at the same time as an officer of The National City Bank of New York, hew York, New York, and as an officer of the City Bank Farmers Trust Company, New York, New York, for the period ending January 14, 1936. Approved in accordance with the action taken at the meeting on December 29, 1934. Letter to an applicant for a permit under the Clayton Act dllising of approval of his application as follows: Lr. David A. Crawford, for permission to serve at the same tame as a director of the Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as a director of the Harris Trust and Savings Bank, Chicago, Illinois, and as a director of the Pullman Trust and Savings Bank, Chicago, Illinois, for the period from January 10, 1935 to January 14, 1936. Approved in accordance with the action taken at the meeting on December 29, 1934. Letter to Hr. Stevens, Federal Reserve Agent at the Federal Re8erlm Bank of Chicago, prepared in accordance with the action .411=611 at the meeting of the Board on December 29, 1934, transmitting the following Clayton Act permit and stating that the delivery of the Permit should not be made until it has been determined that the. -PPlicant's service with the First-Chicago Corporation and The 166 1/17/35 -14- First National Bank of Chicago, the Harris Trust and Savings Bank, both of Chicago, Illinois, and the United States Trust Company of New York, New York, New York, does not come within the provisions of Section 32, or that his service with such institutions has been brow ht into conformity with the requirements of that section: Ir. John P. Valson, for permission to serve at the same time as a director of The First National Bank of Chicago, Chicago, Illinois, as a director of the Ferris Trust and Savings Bank, Chicago, Illinois, and as a trustee of the United States Trust Company of New York, New York, New York, for the period ending January 14, 1936. Approved. Thereupon the meeting adjourned. CrtAiQfi SecrJtary. oved t tai Governor.
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