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A meeting of the Federal Reserve Board was held in Washington on Wednesday, January 4, 1933, at 4:25 p. The Chairman Governor Meyer Mr. Hamlin Mr. Miller Mr. James Er. Magee Mr. Uorrill, Secretary Mr. McClelland, Assistant Secretary Er. Harrison, Assistant to the Governor. The rob:lutes of the meetings of the Federal Reserve Board held on December 8, 9 14 and 15, 1932, were approved. The minutes of the meetings of the Executive Committee of the Federal Reserve Board held on December 12 and 19, 1932, were approved and the actions recorded therein were ratified munlimously. The Assistant Secretary called attention to the fact that in accordance with the regular order of rotation, Messrs. Hamlin and Miller Will serve with Governor Meyer as members of the executive committee of the Board during the first quarter of 1953. The Assistant Secretary also reported that the Comptroller of the Currency on January 4, 1933, issued a call on all national banks for reports of condition as at the close of business on Decetber 31, 1932, and that, in accordance with the usual practice, a call was issued by the Secretary on behalf of the Federal Reserve Board on all State member banks for reports Of condition as of the same date. The call made on behalf of the Board was ratified. The Board then considered and acted upon the following matters: Telegrams dated January 4, 1933, from the chairmen of the Federal .1/4/33 -2- h J -;. Louis advising that at meetings of Reserve Banks of Philadelphia and the boards of directors today no Changes were made in the banks' existing schedules of rates of discount and purchase. 'dithout Objection, noted with approval. Report of the Committee on Salaries and Expenditures on a letter dated December 22, 1932, from Deputy Governor Gilbart of the Federal Reserve 3ank of New York requesting authority for changes in the personnel classification Plan of the bank to Provide far the new 'rnsitions of "statistical draftsman" in the Foreign Department and "page and office boy" in the Reconstruction Finance Corporation section of the Government bond and safekeepin„; department; the Board's committee recomnending approval. fr" Approved. Telegraphic reply to a letter dated December 30, 1932, from the Federal Reserve Agent at Dallas with which he inclosed a letter dated December 29, 1932, from the Governor of the bank referring to the difficulty frequently experienced in the recent past in providing collateral to cover the 2edera1 reserve notes issued by the bank, and to the expense involved in special trips of assistant Federal reserve agents to the branches to retire notes in excess of operating needs and in the shipment of notes to the head office for retirement; rr. Walsh requesting, that in order to meet this situation, the Board approve the appointment of Eessrs. G. IT. Allen, D. S. Lawhon, and C. P. Gowland, Who at the present time are serving as branch auditors at the El Paso, Houston and San Antonio branches, respective- ii \: as acting assistant Federal reserve agents at those branches. The reply stated that, in view of the requirement of section 16 of the Federal Reserve -3- 1/4/33 Act that Federal reserve notes, gold, cold certificates, and lawful money, issued to or deposited with the Federal reserve agent be held for such agent in the joint custody of himself and the Federal reserve bank, the Board feels that the representative of the Federal reserve agent participating in such joint custody should be responsible to the agent and should be independent of the bank in so far as consistent with the practical situation; and that, therefore, the Board approves the temporary appointment of ressrs. Allen, Lawhon and Gowland as actin, ; assistant Federal reserve agents at the El Paso, Houston and San Antonio branches, respectively, upon condition, hawevever, that, before the temporary appointments become effective, they resign their respective Positions as branch auditors with the understanding that, during such periods as they are not engaged with their duties as acting, assistant Federal reserve agents, they nay be detailed by the agent to Perform such functions in the auditing department of the bank as the agent nay consider advisable. Approved. Thereupon a discussion ensued at the conclusion of which the Secretary was directed to reouest Lir. Paulger, the Chief of the Division of Examinations, to H.62003 a study of the functions of assistant Federal reserve agents at branches of the Federal reserve banks, including the procedure followed in connection with the issuance and retirement of Federal reserve notes, the handling of collateral therefor, and any other duties performed by them, and to submit a report to the 3oard together with any recommendations that he nay deem appropriate. Telegraphic reply, approved by five members of the Board on December 30, 1932, to a telegram of that date from Deputy Governor Rounds of the 1/4/33 -4- Federal Reserve Bank of New York requesting authority for an advance in accordance with the provisions of section 10(b) of the Federal Reserve Act as amended, to the National Bank of Newport, New York, in the amount of ,a5,000, for a Period of 45 days, with interest at the rate of 5 1 per annum, and on the security of miscellaneous bonds and. unsecured notes with a margin of at least 25;(. 0; Deputy Governer Rounds stating that the bank, which is located in a farming and dairying community, has been under pressure for a considerable period, and will have to close unless further assistance is given at once, also that it is proposed to make this advance in cooperation With neighboring banks which will make a loan to the member bank of25,000. The reply stated that the Board authorizes the advance subject to the terms and conditions recomnended. Unanimously epproved. Telegraphic reply, approved by five members of the Board on Xanuary 3 193, to a telegram of that date from Deputy Governor Rounds of the Federal Reserve Bank of New York requesting authority for an advance in accordance with the Provisions of section 10(b) of the Federal Reserve Act as amended, to the Larchmont National Bank and Trust Company, Larchmont, New York, in the amount of .100,000, for a period of 45 days, with interest at the rate of 5 : 4) 1 per arnum, and on the security of customers' collateral notes with a margin of at least 2554 Deputy Governor Rounds stating that the bank has been subject to a steady loss of deposits and requests this lean to meet a large withdrawal of municipal funds. The reply stated that the Board authorizes the advance subject to the teiRpo and conditions recomnended. Unanimously approved. 1/4/33 OM! 0.111 Telegraphic reply to a telegram dated January 4, 1933, from Deputy Governor sounds of the Federal Reserve Bank of New York requesting authority for a further advance in accordance with the provisions of section 10(b) of the Federal Reserve Act an amended, to the First rational Bank in Mamaroneck, New York, in the amount of J6,000, for a period of 45 days, with interest at the rate of 5Y0 per annum, and on the security of miscellaneous unsecured ineligible notes with a margin of at least 2; Deputy Governor ilounds stating that the bank has been subject to a further loss of deposits and needs this additional advance to net withdrawals. The reply stated that the Board authorizes the advance subject to the terns and conditions recomtended. Unanimously aproved. Telegraphic reply to a telegram dated January 4, 1933, from Deputy Governor 2ounds of the Federal Reserve Bank of New York requesting authority for an additional advance in accordance with the provisions of section 10(b) Of the Federal Reserve Act as amended, to the First rational Bank in Avonbr-the-Sea, New Jersey, in the amount of 12,000, for a period of 45 days, With interest at the rate of 5,19 per annum, and on the security of customers' collateral notes secured by miscellaneous securities, building and loan Shares, and mort ages with a margin of at least 25; Deputy Governor Rounds stating that the loan is desired to meet the withdrawal of a large municipal deposit. The reply stated that the Board authorizes the advance subject to tho terms and conditions recomrended. Unanimously approved. Telegram to the Governor of the Federal Reserve Bank of Atlanta, approved by five members of the Board on January 3, 1933, referring to a Ii IL -6- 1/4/33 telephone conversation with the Secretary of the Board and stating that the Board authorizes the Atlanta bank to ma}n an additional advance to the Georgia Savings Bank and Trust Company, Atlanta, Georgia, in accordance with the provisions of section 10(b) of the :?ederal Reserve Act as amended, in the amount of ,50,000, with interest at the rate of 57 per annum, and payable on demand with interest nayable monthly. The telegram also stated that in the event the advance is not repaid nor demand for payment rude by February 10, 1933, the matter should again be brought to the Board's attention with a statement of the circumstances which, in the opinion of the Atlanta bank, justify the bank in continuing the advance without demand for payment. Llorrill stated that Governor Black had advised that the exigent circumstances referred to in his letter of Tune 13, 132, still exist, and that it is proPosed to require of the bank additional collateral for the new advance in Proportion to the collateral now held for the 10(b) advances made under the authority of the Board's telegrams of Tune 15, 1932, and December 20, 1932. Unanimously approved. Reply, approved by three members of the Board on Xanuary 3, 1933, to e letter dated December 19, 1932, from the Federal Reserve Agent at Boston inquiring as to the policy of the Board in the matter of admitting newly organized State banks to membership in the Federal reserve system and advising that the newly organized Pilgrim Trust Company of Boston intends to make application for morbership. The reply stated that the Board has established no general policy with reference to the admission of newly organized State banking institutions to membership but considers each case on its merits, based on the information submitted with the application which ehould be as comprehensive as possible. The reply also outlined the infor- 10 -7_ 1/4/33 Mation which the Board desires to have submitted with the application of the newly organized bank, in ad(iition to the recomnendation of the Board of directors of the Federal reserve bank as to the action to be taken by the Board on the application. Approved. Reply, approved by three members of the Board on December 30, to a letter dated December 19, 1932, from the Federal Reserve Agent at Atlanta advising that the American Trust and Banking Company of Chattanooga, Tennessee, has under consideration an application for membership in the Federal Reserve System, and requesting information as to whether the bank's practice of issuing certificates representing the ownership or a participation in the ownership of loans secured by mortgages on real estate, under circumstances outlined in the agent's letter, will interfere in any way with the approval Of the bank's application for membership. The reply stated that the Board does not look with favor upon commercial banking institutions engaging in the business of selling certificates or other evidences of title representing the ownership or a participation in the ownership of mortgage loans, whether or not such certificates or other evidences of title are sold by the bank Without recourse; that the fact that a bank has engaged in such business, however, does not necessarily mean that it may not be aamitted to membership, as it is possible that, upon considering the application of the American Trust and Banking Company, the Board would prescribe a condition of member- ship to the effect that after it becomes a member it shall not, except with the permission of the Board, engage in the business of selling additional mortgage loans or participations therein. The reply also suggested that when the application is submitted the agent furnish the Board with definite in- -8- 1/4/33 formation regardins the amount of mortgage loans and participations therein sold by the bank which are now outstanding, together with full information regarding the experience of the company with reference to any losses which may have been incurred by it in the transaction of this kind of business. The reply further stated that the Board cannot undertake to determine definitely at this time whether or not it will approve an application by the American Trust and Banking Company, but that it will be glad to give careful consideration to the application which should be accompanied by full infornation regarding the company's condition and the recomendation of the Atlanta bank with regard to the action which should be taken on its application; also, that it is the practice of the Board when it appears that a State banking institution may not properly be admitted to membership, to afford the institution an opportunity to withdraw its application rather than to deny it. Approved. Letter dated Decenber 28, 1932, from the ahairman of the Federal Reserve Bank of New York reporting, for the in2ormation of the Board, that, in accordance with the usual practice at this period of the year, the board Of directors of the bank, at its neeting on December 22, 1932, considered the sal.iry policy of the bank and recomlendations of the committee of directors on the welfare of the staff, which recommendations were adopted in the following resolution: "WHEREAS the directors of this bank on July 21, 1932, voted a furlough plan involving a flat reduction of 10 per cent in the salaries of officers and of 8 1/3 per cent in the salaries of employes; and "WHEREAS this action of the directors was disapproved by the Federal Reserve Board; and -9- 1/4/33 mam .711,11s the directors thereafter on rovember 3, 1932, adopted a Share-the-Work program involving, as an incident thereto, a reduction of 4 per cent in the salaries of officers and employes; and littIREAS that plan was approved by the Federal Reserve 3oard and announced to the officers and employes on November 16, 1932, to be effective for a period of six months from that date; and "-JEERIAS a review of the official and the clerical salaries of the bank indicates that both classes of salaries are well below the present market for comparable services in the principal member banks in New York City; "110,/, THEREFORE, IT IS RESOLVED "(1) that, other than any necessary adjustnent of individual salaries, the question of a general adjustment in salaries which was made a special order for consideration today be laid on the table; "(2) that the officers of the bank continue to devote their energies to a curtailment of expenses and to economies in the operation of the bank to the full limit of efficiency; and "(3) that the officers report from time to tire to the directors any economies or curtailments of expenses in operation which they may have found to be possible without impairment of the effic iency of the bank's operations." Noted. Letters dated December 21 and 23, 1932, from the Federal Reserve agent at Chicago advising that, in connection with the investigation of the recent defalcations at the Detroit branch, it vras discovered that /Ir. George T. Jarvis, Assistant Cashier of the branch, over a period of eight years beginning in October 1924, and ending in 'larch 1932, had been cashing Personal checks at the branch which were returned to the branch on account of insufficient funds but all of which were paid on subsequent presentations. The letter stated that a complete investigation has established that the 3 -10- 1/4/33 branch has suffered no loss by reason of these transactions; that the transactions have not resulted from any wilful intent to defraud the bank in any way, but are evidence of Ir. Jarvis' carelessness in the handling of his Personal affairs; that the matter was thoroughly reviewed at the meetinj.; of the board of directors of the bank on December 23, when, upon recommendation of the Detroit board, in which the Governor and Federal reserve agent concurred, it was unanimously decided that no action be taken with respect to removing L. Jarvis; and that the question of his reelection will COMB up at the organization meeting of the bank on January 6, at which time, unless somethinG else develops, the board of directors will doubtless reelect Mr. Jarvis to his present position. After a brief discussion, the agent's letters were referred to Mr. Magee as Chairman of the Committee on District To. 7, with the request that he discuss the subject thereof with the Governor of the Federal Reserve Bank of Chicago who is in ',/ashington in connection with a meeting of the Open rarket Policy Conference and advise him that the Board does not look with favor upon the reappointment of Mr. Jarvis as an employee of the bank. Reports of Standing Committee dated January 3, 1933, reconnendin approval of the followine, changes in stock at Federal reserve banks: Applications for ORIGINAL Stock: DistrIct Yo. 6. Chattanooga National Bank,Chattanooga, Tenn. Pistrict No. 11. First National Bank of Kerens, Kerens, Texas. Ouachita National Bank in Monroe, Monroe, La. Shares 1,500 1,500 60 . 360 Total 420 1,920 Application for SURRENDER of Stock: District No. 10. Hartshorne National Bank, Hartshorne, Oklahoma. .(V.L.Suc. by Bank of Hartshorne, Okla. nonmember) 35 35 141 -11- 1/4/33 Approved. Reports of Standing Committee dated December 30, 1932, and january 4, 1933, recommending approval of the following Clayton Act applications: Mr. J. Bennett Rowley, for permission to serve at the same time as director of the First National Bank and Trust Company of Pompton Lakes, New Jersey, and as director of the First Merchants National Bank and Trust Company of Middletown, New York. Mr. John H. Cownie, for permission to serve at the same time as director of the Valley National Dank of Des Moines, Iowa, and as director of the Iowa-Des Moines National Bank and Trust Company of Des Moines, Iowa. Approved. Report of Standing Committee dated January 3, 1933, recommending approval of the following Clayton Act application; the recommendation having been approved by four members of the Board on January 3, 1933: Mr. Frank Novak, for permission to serve at the same time as director of the National Central Bank of Baltimore, Maryland, as director of the Maryland Trust Company of Baltimore, Maryland, and as director of the Morris Plan Bank of Baltimore, Maryland. Approved. Thereupon the meeting adjourned. Sec etary. Approved:
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