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33 A meeting of the Federal Reserve Board was held in Washington on Friday, January 4, 1935, at 3:00 p. m. PRESENT: Er. Mr. Mr. Mr. Mr. Ur. Eccles, Governor Thomas, Vice Governor Hamlin Miller James Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary The Board acted upon the following matters: Letter dated January 3, 1935, from Mr. Sproul, secretary of the Federal Reserve Bank of New York, and telegrAms dated January 3, 1935, from Mr. Sargent, Secretary of the Federal Reserve Bank of San Francisco, and January 4 1935, from Mr. Strater, Secretary of tbe Federal Reserve Bank of Cleveland, all advising that, at meetings of the boards of directors on the dates stated, no changes were made in the banks, existing schedules of rates of discount and purchase. Without objection, noted with approval. Letter dated December 31, 1934, from Mr. Ernest E. Huyett tendering his resignation as a tanporary stenographer in the Division of Examinations, effective at the close of business on December 31, 1934, Accepted. Memorandum dated January 2, 1935, from Mr. Paulger, Chief of the Division of Examinations, recommending that Mr. E. R. 'Massey, stenographer and clerk in the division, be transferred from the office 34 1/4/35 -2- to the road force with the title of Assistant Federal Reserve ExAminer, With headquarters in Washington, D. C., and no change in his present salary of 2,100 per aunum, effective January 4, 1935. Mr. Massey was appointed an examiner for all purposes of the Federal Reserve Act, as amended, and of all other acts of Congress pertaining to examinations made by, for, or under the direction of the Federal Reserve Board, and was designated as an Assistant Federal Reserve effective Tanuary 4, 1935, and his Examiner, transfer to the road force was approved. Memorandum dated January 2, 1935, from Mr. Parry, chief of the Division of Security Loans, recommending the appointment of Miss Catherine A. Hall as secretary to the Assistant Chief of the division, With salary at the rate of ',1,800 per annum, effective as of the date upon which she enters upon the performance of her duties after having Passed a satisfactory physical examination. Approved. Letter to Mr. E. F. Abell, New York, New York, reading as rollows: of "It is our understanding that the temporary period Board the assist to employed two months for which you were in working out requirements as to the amount of space and and equipother matters relating to the physical arrangement Reserve Federal the of ment of the proposed new building indicated Board will expire on January 5. Mr. Meeks has of selectpurpose the for n competitio that the program for a for ready be should Wilding ing an architect for the new and 15 Tanuary by Board Reserve announcement by the Federal three about of period a nt that following such announceme successful months may elapse before the selection of the you have been that us advised architect. Mr. Meeks has also of the phases certain of considerable assistance to him in in conare you that formulation of the proposed program and 35 1/4/35 -3- "stant touch with him on the details of these matters. In the circumstances, the Board approves the continuance of your employment in the same capacity as heretofore and at the same rate of compensation, i.e., $350 per month, together with your traveling expenses in this connection, until the Board announces the program of the competition. In this connection, it will be understood that the data which you have assembled will be made available to the Board at any time upon its request and that action upon the question of your re-employment at a later date upon the selection of the architect will be deferred until that time." Approved. Telegram to Er. Newton, Federal Reserve Agent at the Federal Reserve Bank of Atlanta, reading as follows: "Your letter December thirty-first. Board approves appointment as examinersof T. R. McCravey, Tr. and A. A. McCurry whose appointments as assistant examiners have been previously approved by Board. Since status of chief examiner and other examiners listed in your letter remains unchanged and their aopointments have already been approved by Board not necessary to submit their names for reapprovel each year even though such has been practice in past. Board feels it desirable, however, that all commission cards be canceled and new cards issued your examiners each Year. Board approves also designation of the six officers listed in your letter as special examiners." Approved. Telegram to Mr. Fletcher, Acting Federal Reserve Agent at the Federal Reserve Bank of Cleveland, reading as follows: "The Dank of Marysville Company', Marysville, Ohio, 'The Fifth Avenue Savings Bank Company,' Columbus, Ohio, 'The Licking County Bank', Newark, Ohio, 'The Perry County Bank', New Lexington, Ohio, subsidiary banks of the 13ancOhio Corporation, were all admitted to membership in the System in Tanuary, 1934, subject to a condition, among others, that within six months fram date of admission the holding company affiliate obtain from the Board a general voting permit. The time within which compliance with such condition might be effected was extended to December 1, 1934 in accordance with the provisions of the Board's letter of 36 35 -4- "Tune 22, 1934, 4C-7928. Board now has under consideration application of BancOhio Corporation for general voting permit and in view of fact that, through no fault of holding company affiliate or subsidiary banks involved, Permit applied for has not been obtained in time allotted, extends to July 1, 1935 the time within which the condition of membership referred to above pertaining to the voting permit may be complied with. Please advise the four banks accordingly." Approved. Letter tonhe First National Bank of Amboy,"Amboy, Illinois, reading as follows: "This refers to the resolution adopted on December 12, 1933, by the board or directors of your bank signifying the bank's desire to surrender its right to exercise trust powers which have been granted to it by the Federal Reserve Board. "The Federal Reserve Board understands that your bank has been discharged or otherwise properly relieved in accordance with the law of all of its duties as fiduciary. The Board, therefore, has issued a formal certificate to your bank certifying that it is no longer authorized to exercise any of the fiduciary powers covered by the provisions of section 11(k) of the Federal Reserve Act, as amended. This certificate is inclosed herewith. "In this connection, your attention is called to the fact that, under the provisions of section 11(k) of the Federal Reserve Act, as amended, when such a certificate has been issued by the Federal Reserve Board to a national bank, such bank (1) shall no longer be subject to the provisions Of section 11(k) of the Federal Reserve Act or the regulations of the Federal Reserve Board made pursuant thereto, (2) shall be entitled to have returned to it any securities which it may have deposited with the State or similar authorities for the protection of private or court trusts, and (3) shall not exercise any of the powers covered by section 11(k) Of the Federal Reserve Act except with the permission of the Federal Reserve Board." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: 1/4/35 _5_ "Receipt is acknowledged of your supplemental memorandum of December 27, 1934, with reference to the proposed reduction in common capital stock of 'The First National Bank of Kenmore,' Kenmore, New York, from $400,000 to :200,000, and sale of 1:100,000 of preferred stock to the Reconstruction Finance Corporation, which was approved by the Board on December 15, 1934. "You advise that the Reconstruction Finance Corporation has agreed to purchase only ;50,000 of preferred stock, and recommend that the bank be permitted to reduce its common capital stock from ,1400,000 to 300,000 ana increase its capital by ;50,000, instead of the larger reduction and increase originally contemplated. "In accordance with your recommendation, the Board amends its previous approval to provide for a reduction in common capital of 0_00,000, and the sale of .50,000 of preferred stock to the Reconstruction Finance Corporation, with the understanding that the other provisions of the proposed plan rennin unchanged." Approved. Letter to Mr. O'Connor, Comptroller of the Curi.ency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock Of 'The Jefferson County National Bank of Watertown', Watertown, New York, from .500,000 to100,000, pursuant to a plan Which provides that the bank's capital shall be increased by the sale of 000,000 of preferred stock to the Reconstruction Finance Corporation and/or others, and that the released capital, together with a portion of the bank's surplus and undivided profits accounts, shall be used to eliminate the estimated losses as classified by your examiner in the report of examination as of ugust 22, 1934, all as set forth in your supplemental memorandum of December 27, 1934. "In considering the plan under which the reduction in common capital stock is to be effected it has been noted that the remaining depreciation in investment securities, if considered as a loss, would seriously impair the bank's capital, and that in addition the bank will be burdened with a large voluryl of slow and doubtful assets 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 so you will require such further corrections as may be practicable. "This approval supersedes the Board's approval of a previous plan as amended on December 9, 1933." Approved. 38 1/4/35 -6Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of Westwood', Westwood, New jersey, from;200,000 to 3100,000, pursunnt to a plan which provides that the released capital shall be used as a credit to reduce the book value of lower grade securities investments, all as set forth in your memorandum of December 27, 1934." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "It accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of 2ark Falls', Park Falls, Jisconsin, from 50,000 to c25,000, pursuant to a plan which provides that the released capital shall be used in eliminating or reducing unsatisfactory assets, all us set forth in your memorandum of December 28, 1034. "It is understood that the bank's capital has recently been increased through the sale of :25,000 of preferred stock to the Reconstruction Finance Corporation, and that the plan of capital reduction does not provide for the sale of any additional preferred stock." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of Fayetteville', Fayetteville, 2atansa3, from cA50,000 to 350,000, pursuant to a plan which provides that the bank's capital shall be increased by T75,000 of preferred stock to be sold to the Reconstruction Finance Corporation; that i,k25,000 or the proposed common capital reduction shall be effected by canceling that amount of common stock now held by a trustee ror the Arkansas National Bank and used in reducing, in a corresponding amount, tle deficiency note given by the 39 -7- 1/4/35 1 "Arkansas National Bank to the subject bank, and that $75,000 of the released capital shall be used in eliminating losses and other unsatisfactory assets, all as set forth in your memorandum of December 20, 1934. "It is understood, however, that with respect to that part of the plan under which it is proposed to cancel ?25,000 Of common stock now held by the trustee for the Arkansas National Bank, the unanimous consent of the stockholders of The First National Bank of :bayetteville will be obtained. "In this connection, it is understood that your office will require the elimination, at least, of all estimated losses as classified by your examiner in the report of examination of june 4, 1934. "In considering the plan under which the reduction in common capital is to be effected it has been noted that your examiner severely criticizes the bank's management, which he regards as unsafe and lacking in ability and force to cope With the bank's problems. It is assumed, however, that this condition is receiving the attention of your office. "This approval supersedes the Board's approval dated January 25, 1954, of a previous plan of capital reduction." Approved. Telegram to Mr. Case, Federal Reserve Agent at the 2edera1 Reserve Bank of New York, authorizing him, subject to the conditions Prescribed in the telegram, to issue a limited voting permit to "Financial Institutions, Inc.", Warsaw, New York, entitling such °rganization to vote the stock which it owns or controls in "The ViYaming County National Bank of Warsaw", Warsaw, New York, for the Purposes set forth in the telegram. Approved. Telegram to Mr. Fletcher, Acting Federal Reserve Agent at the l'ederal Reserve Bank of Cleveland, reading as follows: "Relet December 19 regarding voting permit applications 'Central United Company' and 'Central United National Bank of Cleveland'. In view unsatisfactory management and financial condition of Cleveland bank as indicated by examination on 40 1/4/35 -8- "September 4, Board feels no modification should be made at this time in authorization contained in ANCIGAR telegrams dated February 8, 1934, as amended by Board's letter of September 20." Approved. Telegram to Mr. Fletcher, Acting Federal Reserve 2,gent at the Federal Reserve Bank of Cleveland, amending the Board's letter of December 31, 1934, authorizing the issuance to the BancOhio CorporaColumbus, Ohio, of a limited voting permit for the purposes and upon the conditions stated in the letter, by striking from such letter the name of The Mid-State Realty Company in both places where it appears. Approved. Telegram to Mr. Stevens, Federal Reserve Agent at the Federal Reserve Bank of Chicago, authorizing him, subject to the conditions Prescribed in the telegram, to issue a limited voting permit to the entitling "Clearing Industrial District, Inc.", Chicago, Illinois, such organization to vote the stock which it owns or controls in the "State Bank of Clearing", Chicago, Illinois, for the purposes set forth Iii the telegram. Approved. Telegram to Mr. Peyton, Yederal Reserve Agent at the Federal Reserve Bank of Minneapolis, amending the Board's letter of December 291 1934, authorizing the issuance to the Northwest Bancorporation, Minneapolis, Minnesota, of a limited voting permit for the purposes and upon the conditions set forth in the letter, by adding to the list 01 thirty-one banks beginning on page 4 and ending on page 5 of such 41 1/4/35 letter, the name of the State Bank of Northfield, Northfield, Minnesota, and by changing thirty-one to thirty-two where such figure aPpears on page 4 of the letter. Approved. Letter to idr. Dillard, Deputy Governor of the Eederal Reserve Dank of Chicago, reading as follows: "Receipt is acknowledged of your letter of December 26, 1934, inclosing a letter received from the American Telephone and Telegraph company, to which was attached a copy of an order of the .tederal Communications commission in connection With a hearing to be held before the Commission on March 4, 1935. your letter states that the Leased Wire Committee feels that any action taken on the matter should be on a System basis. "It does not appear that the order calls for any action at this time by the Federal Reserve Board or the Federal Reserve System, but if the Leased Wire Committee feels that action should be taken, the Federal Reserve Board will be clad to give consideration to the Coulaitteets recommendation." Approved. Letter to Governor Martin of the Federal Reserve Bank of St. Louis, reading as follows: "Receipt is acknowledged of your letter of December 24, 1934, inclosing a letter addressed to you by Mr. X. H. Puelicher, Chairman of the Public Education Commission of the American Bankers Association, inviting you to become a member of the Board of Regents of the Graduate School of Banking of the American Institute of Banking. It is noted that Puelicherts letter gives the assurance that the office will require but a small part of your time and that your acceptance will add prestige to the new educational undertaking of the Institute. Accordingly, the Federal Reserve Board Will interpose no objection to your acceptance of the appointment. "It is also noted from Mr. Puelicherts letter that it is bnnks contemplated that representatives of the Federal reserve Graduate the at Will be asked to give a course in banking law School, and it is assumed that any arrangement proposed to be made in this connection with officers or employees of the 42 1/4/35 -10- "Federal reserve banks will be carefully considered by the board of directors of the Federal reserve bank before being approved." Approved. Letter to Mr. Case, Federal Reserve Agent at the Federal Reserve Bank of New York, reading as follows: "The application of Yr. X. S. Rippel under section 32 Of the Banking Act of 1933 for a permit to serve at the same time as Chairman of the Board and director of the Merchants and Newark Trust Company and as Chairman of the Board and director of X.S. Rippel ex. Co., both of Newark, New Xersey, shows that X. S. Rippel & Co. is engaged primarily in the business of purchasing, selling and negotiating securities Within the meaning of section 32. Accordingly, on Nay 5, 1934, the Board advised Er. Rippel that it was unable to find that it would not be incompatible with the public interest to grant his application. "Subsequently, the Board has received your ietter containing your further views regarding Mr. Rippel's application. You also inclosed a letter from Mr. Rippel submitting further facts and arguments in connection with hi:3 application. "However, after giving careful and sympathetic consideration to the additional facts and arguments which have been submitted, the Board has reached the conclusion that it may not properly grant this application. "As you know, the position taken by the Board in its letter of May 5, 1934, to Mr. Rippel was the same as that taken with respect to other applications in which similar circumstances were present, and was adopted in order to give effect to the purposes which the Board believes Congress had in mind In enacting section 32. It appears that it was the purpose of Congress in enacting that section to terminate relationships of the types described therein between member banks anel dealers in securities, apparently because it was thought that such relationships might have a tendency to influence the credit and investment policies of mkomber banks in a manner which Congress did not consider compatible with the public interest. The Board therefore feels that it may not Properly grant pernits covering relationships which are actually or a kind referred to in that section, but that its authority to issue permits should be exercised only in exceptional cases, for example, those which fall within the literal terms of the statute but which are actually not Within its intendment. "Of course, the denial of an application under these 43 1/4/35 -11- "circumstances cannot be taken as implying that the particular relationship has actually been Characterized by any of the undesirable practices which led the Congress to enact section 32, but signifies only that the Board is of the opinion that the particular relationship is of a kind to which the Congress referred in section 32 and which the Board believes the Congress desired to terminate in order to avoid the dangers which it had in mind in enacting that section. "Accordingly, unless there are additional considerationa Which you feel should be called to the attention of the Board, Please advise Mx. Rippel of the Boardts action." Approved. There were then presented the following applications for changes in stock of Federal reserve banks: lialication for ADDITIONAL Stock: Iliptrict NO. 12 Tille-liz —TrtraTronal Bank of Gardiner, Gardiner, Oregon Shares 6 6 45 45 District No. 5 11-11-1.--F 17'3•Naonal Bank of Frostburg, Frostburg, Maryland 60 60 District No. 10 The First National Bank of Blackwell, Blackwell, Oklahoma 72 72 A2plications District No The Narberth Narberth, for $U Di IIER of Stock: 3 National Bank, Pennsylvania District No. 11 The First National Bank of Seymour, Seymour, Texas 15 Total 15 192 Approved. Thereupon the meeting adjourned. a76.;Te6t( APprOVed: Cruit01242 SecretarY.
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