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()C.3 A meeting of the Federal Reserve Board was held in the office of the Federal Reserve Board on Thursday, January 29, 1931, at 3:15 p. PRESENT: Governor Eeyer Mr. Hamlin Er. Miller Mr. Tames Mr. Pole EtcClelland, Assistant Secretary. The minutes of the meetings of the Federal Reserve Board held on January 19th and 28th and the minutes of the meetinr;s of the Executive Committee Of the Federal 'Reserve Board held on 'January 21st and 26th, having been Previously read by the individual members of the Board, were approved, and the actions taken by the Executive Committee were, upon motion, ratified. The minutes of the meeting of the Executive Committee of the Federal Reserve Board with the Open Market Policy Conference held on January 21st Were also presented for approval, but certain amendments having been sugzested by the Governor, action thereon was deferred. The Assistant Secretary then presented communications and reports Which were considered and acted ulion by the Board as follows: Matter approved on initials of the Executive Committee today, namely, cIPPlication of the Liners Trust Company, Nanticoke, Pennsylvania, made on behalf of the Miners National Bank of Nanticoke, for permission to exercise Dial fiduciary powers, approval to be effective if and when the Miners Trust CaluDany is converted into a national banking association under the above title, and is authorized by the Comptroller of the Currency to commence bt isiness. Formally approved. Telegram dated January 29th from Deputy Governor Menzel of the Federal nes erve Bank of New York, advising that bill dealers today advanced their bid and asked rates 1/8% for all maturities as a result of changed market --t; 04 -2- 1/29/31 111 conditions in short term Governments, and apprehension of possible future reactions in security prices, including Government low!, and short term obligations,, on account of the proposal to cash veterans' certificates, as well as from the expected usual end-of-the-month demands; the telegram further stating that the schedule of effective buying rates on acceptances at the liew York bank remains unchanged. Noted. Telegram dated January 28th from the Chairman of the Federal Reserve Bank of Boston, advising that at the meeting of the board of 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. Report of Committee on Salaries and 711xpenditures on list submitted by the Federal Reserve Bank of Chicago, of employees of that bank who, as of 3anuary 22, 1931, had been granted leave of absence with pay, on account of illness, for more than thirty consecutive days; the Board's Cormittee ' leccmmending approval of the salary payments involved. Approved. • Memorandum from Counsel dated January 28, approved by the Law Committee., aUbmitting draft of reply to letter dated January 22nd from the President of the Iirst National Bank of Spring Valley, Minnesota, inquiring whether l'eal estate mortgages, in which trust funds held by-state institutions may be invested under the Lays of the State of Minnesota, may be deposited in the trust department of a National bank to secure trust funds deposited 14 the commercial department of the bank; the proposed reply advising that th° securities delivered to the trust department must in every instance be " 1* di1Y marketable securities if they are to qualify under the Board's 1/29/31 regulations; that real estate mortgages are not readily marketable securities except when they comply with the conditions of marketability prescribed by the Comptroller of the Currency in his regulation defining the term "investment securities"; that the ordinary real estate first mortgage loan does not comply with these requirements; and accordihc;ly, such loans may not ordinarily be used in the manner suggested, even though the mortgages may be eligible for the investment of trust funds under the provisions of a state law. Upon motion, the letter submitted with Counsel's memorandum was approved and ordered transmitted. Memorandum from Counsel dated January 28th with regard to advice received from the Assistant Federal Reserve Agent at Philadelphia that on DeceMber 31, 1930 the Lycomin2 Trust Company and the Susquehanna Trust eomPany, of 7al1iamsport, Pennsylvania, both member banks and subject to the Ceneral condition" of membership in the Federal Reserve System, consolidated 4nder the title of the Lycoming Trust Company; the memorandum calling attention to the possible violation of the condition of membership when the consolidation 1748 effected without prior approval of the federal Reserve Board, and sub- Mitti-nC draft of a letter to the Federal Reserve Agent at Philadelphia ' leqUesting that he advise the Board whether, in his opinion, there has been a cheage in the character of the assets or of the functions of the banks within the meaning of the "general condition" of membership, and that he submit a l'ecoDIMendation as to what action, if any, the 3oard should take in this case. Upon recommendation of the Law Committee, the proposed letter was approved. The Governor then presented for consideration the report submitted on 0-4b, -`Lk7 21st by the Open Market Policy Conference, reading as follows: 1/29/31 -4"The Conference has considered the preliminary memorandum submitted by the Chairman and has reviewed business and credit conditions as they now appear. It is the sense of the Conference that in view of these conditions it should be the policy of the System to continue an easy money policy in the best interests of trade and commerce. It is the belief of the Conference, however, that the seasonal return flow of money and credit and other factors have tended during recent weeks to make for an undue excess of funds in the Principal money centers. It is, therefore, the opinion of the Conference that in these circumstances it would be desirable to dispose of some of the System's holdings of Government securities as and when opportunity affords itself to do so without disturbance or any undue tightening of the money position. "It is understood that there shall be another meeting of the Conference as soon as or whenever conditions in the opinion of the Conference or the Federal Reserve Board justify a reconsideration of this policy." He stated that while the report was submitted subject to verbal or rainor correction advice has been received from the Chairman of the Conference that the only change to be made in it is the elimination of the word "undue". WIderscored above. Consideration was then given to the report and to the statements ride during the discussion of it at the meeting on January 21st, following which, upon motion, it was voted to advise the Chairman of the Open Larket Policy Conference that in the light of the discussion which followed the presentation of the report at the joint meeting of the Conference and the Federal Reserve Board on January 21st, the Federal Reserve Board has voted to approve the report as submitted, with the amendment referred to above. The Assistant Secretary was instructed to prepare and submit to the Board draft of a letter to Governor Harrison in accordance with the above action. The Governor then resubmitted to the Board the matter referred to him with. power at the meeting on January 28th, namely, the request received from , ' 111- E. Bailey, Prosecuting Attorney at Little Rock, Arkansas, that the cooperate with him in an investigation of the events leading up to the 1'41111re of the American Exchange Trust Company of Little Rock, and other 154111t3 in Arkansas. -!‘)1•"9 dr. 1/29/31 He stated that although Mr. James had suggested at the meeting on Xenuary 28th that any participation by the Board in the investigation should be handled by detailing of one of its own examiners and the Law Committee had Prepared letters to the various interested parties in line with this suggestion, Mt. Hamlin, Chairman of the Law Committee, feels very strongly that from the standpoint of administration, it would be advisable that the Board's participation in the investigation should be handled through the Federal Reserve Agent at St. Louis, its local representative, as originally recommended by the Law Committee. After some discussion, it was voted to request the Federal Reserve Agent at St. Louis to confer regarding the matter with Fr. Frank X. Drinnen, the Board's Examiner in aharge, who is now at the Federal Reserve Bank of St. Louis, proceeding with him to Little Rock, if it is deemed advisable to do so, to confer with the State Prosecuting Attorney, the United States Attorney, and officials of the branch Federal Reserve bank there; and to advise Ia.. Wood further that in the event he and La, . Drinnen deem it advisable that assistance be given to the State Prosecuting Attorney in the conduct of his proposed investigation, the Board stands ready to detail one of its own examiners to Ls.. ;iood for the purpose. The Assistant Secretary was instructed, in communicating with Mr. Drinnen, to authorize him to assign one of the members of his Examining Force to the Federal Reserve Agent in case this course is decided upon. He was also instructed to request the Federal Reserve Agent at St. Louis and the Board's Examiner in Charge to submit to the Board reports along the lines recommended in the memorandum from Counsel, dated January 26th, submitted at the meeting on January 28th. I RPORTS OF STANDING CUNITTEM: Dated, January 28th Recommending action on an application for fiduciary powers as set forth in the Auxiliary Minute Book of this date. Reconnuendation approved. 1/29/31 -6- REPORTS 02 3T:INDING COM/IITTTTSJContinued) Reconnending approval of the application of Yr. Fletcher Goodwill, for permission to serve at the same time as a director and officer of The National Chautauqua County Bank of Jamestown, New York, and as a director of the Farmers ik Mechanics Bank of Jamestown, New York. Approved. Dated, January 2jth Recommending approval of the application of Mr. Karl Peterson, for permission to serve at the same time as a director of The National Chautauqua County Bank of Jamestown, N. Y., and as a director of the Farmers & Mechanics Bank of Jamestown, N. Y. Approved. Dated, January 26th Recommending approval of the application of Mr. Harry P. Sheldon, for permission to serve at the same tine as a director and officer of the First National Bank of Jamestown, N. Y., and as a director of the Farmers & Mechanics Bank of Jamestown, N. Y. Approved. Dated, January 28th Recommending approval of the application of Mr. Henry K. Smith, for Permission to serve at the same time as a director of the First National Bank of Jamestown, N. Y., and as a director of the Farmers & Mechanics Bank of Jamestown, N. Y. Approved. bated, January 28th Reconnending approval of the application of Mr. Charles A. Okerlind, for permission to serve at the same time as a director and officer of the American National Dank of Jamestown, N. Y., and as a director of the Farmers & Mechanics Bank of Jamestown, Approved. Dated, January 26th ft) The meeting adjourned at 4:30 p. in. Assistant Secretary 109 L.7-1 AUXILIARY MINUTES (January 29, 1931.) Report of Standing Committee dated January 28th, recommending action °I application for fiduciary powers by the following bank: . DISTRICT NO. 12. CALIFORNIA: First National Bank in Bakersfield. (3334) Assistant Secretary APProved: •
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