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A meeting of the Federal Reserve Board was held in Washington on
Friday, January 6, 1933, at 10:30 a. in.
PRESl':
Governor Meyer
Mr. Hamlin
Lir. Miller
Mr. Tames
Mr. Magee
Mr. Morrill, Secretary
Mr. Harrison, Assistant to the Governor.
The Board considered and acted upon the following, matters:
Memorandum dated january 3, 1933, from Er. Paulger, Chief of the
Division of Examinations, recommending the appointment of Mr. Eric Uurfel
LILId his designation as a Federal reserve examiner with salary at the rate
:,;6,000 per annum.
Mr. Viurfel 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
a Federal reserve examiner, with salary at the rate
of ,;6,000 per annum, all effective as of January 16,
1933, on which date he will take the oath of office.
Letter dated January 5, 1933, from the Secretary of the Federal deserve Bank of New York and telegrams dated January 5, 1933, from the Chairman
(It the Federal Reserve Bank of San Jirancisco and Sanuary 6, 1933, from the
secretary of the 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.
Telegraphic reply, approved by five rrembers of the Board on January
'1933,
5
to
a telegram of that date from Deputy Governor Rounds of the Ted-
el'al Reserve Bank of New York requesting authority for the renewal in the
l'edUced amount of :;)35,725, for a period of forty-five days, and
with interest
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at the rate of
5/, per
annum, of the advance made by the New York bank in
accordance with the provisions of section 10(b) of the Federal Reserve Act
as amended, to the Cornwall National Bank, Cornwall, New York, under the
authority granted in the Board's telegram of October 6, 1932; Deputy Governor
Rounds stating that the bank's position has not improved sufficiently to
enable it to liquidate the advance at this time.
The reply stated that the
Board authorizes the renewal of the advance subject to the terms and conditions recommended.
Unanimously approved.
Reply, approved by four members of the Board on Tanuary 4, 1933
to
a inemorandtun dated December 15, 1932, from the Acting Comptroller of the
OUrrency recommending approval of the application of the Farmers and
Merchants National Bank of Matawan, New Tersey, for permission to reduce
its capital stock from „;75,000 to 037,500, through a change in the par value
of such stock from $50 per share to )25 per share, it being the plan
immediately thereafter to increase the capital stock to y75,000 by the sale
of 1,500 shares of the new stock; the funds released by the capital reduction
and $75,000 of premium on the sale of the new stock to be credited to the
Undivided profits account. The reply stated that the Board approves the
reduction in capital under the plan submitted subject to certain conditions
set forth in the reply.
Approved.
Replies, approved by four members of the Board on Xanuary 4, 1933,
to letters from the Federal Reserve Agents at Cleveland and Yansas City with
regard to continuous deficiencies for a period of six months in the required
reserves of the Tefferson County National Bank, Brookville, Pennsylvania, the
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Citizens Natiomi Bank, Hooversville, Pennsylvania, and the First National
Bank, Vlymore, Nebraska.
The replies stated in each case that in view of the
information submitted the Board will take no action with regard to the
deficiencies at the present time other than to forward copies of the agents'
letters to the Acting Comptroller of the Currency for the information of his
Office,
Approved.
Replies to letters from the offices of the Federal Reserve Agents at
Cleveland, Richmond and Minneapolis, with regard to continuous deficiencies
for six months or more in the required reserves of the First National Bank,
St. Paris, Ohio, the National Bank of Herndon, Virginia, the Elkins National
Bank of Elkins, West Virginia, and the First National Bank of Conrad,
Montana.
The replies stated in each case that in vim of the information
submitted, the Board will take no action with regard to the deficiencies at
this time other than to forward copies of the correspondence to the Acting
Comptroller of the Currency for the information of his office.
Approved.
Letter to the Federal Reserve Agent at New York suggesting that, in
view of the condition of the First Citizens Bank and Trust Company, Utica,
liew York, as disclosed by the analysis of the report of an exanination as
°t Visy 4, 1932, the agent discuss with the Superintendent of Banks of the
State of New York the question as to whether the bank is justified in paying
krther
dividends, and that the agent advise the Board what action is taken
bY the Superintendent in the promises.
The letter requested the agent to
advise the member bank that it will be necessary for it to dispose of, as
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Promptly as possible, the shares of its own stock held as security for loans
and carried in its investment account, and to advise the Board what progress
Is made in this connection.
The letter also asked for additional informa-
tion with regard to certain institutions affiliated with the nember bank,
and with regard to any corrections or improvenents effected by the bank in
Other features of its condition which were criticized in the report of
exmnination above referred to.
Approved.
Letter to the Federal Reserve Agent at New York, suggesting that,
in view of the condition of the Bank of Montclair, New jersey, as disclosed
by the analysis of report of examination as of September 10, 1932, the agent
discuss with the Commissioner of Banking and Insurance of the State of New
Xersey the question whether the bank is justified in paying further dividends,
aad that the agent advise the Board what action is taken in the matter.
The
letter also requested advice as to the condition of the'Town Trust Company
°t Lontclair, 640';L of the stock of Which is owned by the menber bank, also,
that the agent advise as to any correction or improvement effected in the
Other features of the bank's condition Whidh, were criticized in the report
Of exanination above referred to.
Approved.
Letter to the Federal Reserve Agent at Cleveland, approved by four
members of the Board on January 4, 1933, replying to Assistant Federal Reserve Agent Fletcher's letter of December 9, 1932, with Which he inclosed
001)3r of a letter dated December 8, 1932, from the Allegheny Trust Company
°t Pittsburgh, Pennsylvania, relative to the holding by that institution of
23
-5shares of its own stock as side collateral to loans.
The reply stated that
the Board cannot undertake to give specific directions as to the manner in
which the stock should be disposed of, nor to determine what would be a
fair minimum price; that, if the action already taken by the trust conpany
has not resulted in the elimination of the stock, the Board will expect the
company to give the matter constant attention, and to dispose of the stock
as soon as it is reasonably practicable to do so; and that, if the stock has
hot been disposed of at the time of the next examination, the Board desires
to be advised fully regarding the natter, and to receive a definite recomMendation from the agent as to the action to be taken.
The renly also
requested advice as to whether the company has been successful in obtaining
the services of a competent individual to assist in the reorganization or its
1-rfairs and if any improvement has been effected in the company's condition
subsequent to July 14, 1932.
Approved.
Letter to the federal Reserve Agent at Cleveland stating that while
it is felt that the condition of the Union Bank and Savings Company, Bellevue,
Ohio, as revealed by the report of its examination as of Tune 4, 1932, is
Such as to warrant the immediate adoution of the corrective measures
e4ggested in the Board's letter of ITovember 28, 1932, in view of the letter
dated Novomber 30, 1932, from the Superintendent of Banks of the State of
°1110, a copy of which was forwarded with Assistant Federal Reserve Agent
2letcher's letter of December 2, 1932, the Board will not insist upon the
agent pursuing the natter further at this time.
The letter requested, how-
ever, that the agent arrange to participate in the next examination of the
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1/6/33
Company witha view to determining what steps have been or will be taken to
Provide for the heavy depreciation in the bank's investment account and to
correct other unsatisfactory features of its condition, and that the agent
advise the Board of the information developed and his reconnendation in the
Premises.
Approved.
Letter to the Federal Reserve Agent at New York advising that upon
the basis of the information now before it, and in view of the agent's
recomnendation, the Board does not feel justified in approving the Clayton
Act application of 11r. H. Edmund Machold for permission to serve at the sane
time as director of the Marine Midland Trust Company, New York City; The
abase National Beak of the City of New York; and the Northern New York
Trust Company, Watertown, New York; especially since it appears that the
first two institutions naned are natural competitors and that the applicant
Participates actively in a number of institutions affiliated with the Marine
Midland Group.
The letter requested that the agent advise Mr. Machold that
ir he desires to submit any additional facts or arguments in support of his
application, they should be submitted as soon as possible, and that if he
does not desire to do so, or if he fails to notify the agent of
his desire
Within thirty days the agent should advise the Board accordingly, in order
that it may take final action on the application.
Approved.
Letter to Assistant Federal Reserve Agent Sargent at the Federal
Reserve Bank of San Francisco, referring to his letter of October 31, 1932,
anj stating that the Board feels that on the basis of the information sub-
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miffed, the San Francisco Bank of Sam Francisco, California, cannot be considered properly as coming within the meaning of the exception of the
Clayton Act applicable to banking institutions which do no commercial
banking business, and that the assistant Federal reserve agent is requested
to obtain and forward to the Board Clayton Act applications covering the
service of directors of this bank who are serving other banks within the
Prohibited classes specified in the Clayton Act.
Approved.
2,eply to a letter dated December 31, 1932, from Deputy Governor
Burgess of the Federal Reserve Bank of New York, transmitting a resolution
adopted by the board of directors of the Buffalo branch at its meeting on
December 9, 1932, establishing, subject to the approval of the Federal Reserve Board with respect to the provisions affecting salaries, a share-theWork plan nroviding for a reduction equivalent to one-half day per week in
the working time of each employee of the branch during the period beginning
January 1, 1933, and ending nay 15, 1933; for a reduction during that period
Of 4,; in the salaries of the present officers and employees of the branch;
and for the employment on a temporary basis of such new employees as may be
Practicable and advisable and consistent with efficient operation during the
Period.
The resolution also provided that the compensation of the additional
People shall not exceed in the aggregate an amount equal to the 4'7) reduction
Of salaries of the present officers and employees, and that the salaries of
euch temporary employees will confonn with the present salary classification
Plan, reduced by 411;; to correspond with the compensations of present employees
engaged in similar work.
The reply stated that the Board offers no objection
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to the plan as adopted and approves the salary payments involved in the
eraployment of additional people in accordance with the plan.
Approved.
Hr. Hamlin stated that While he approved the
letter as expressing properly the attitude of the
Board, he is opposed, for reasons previously stated,
to the adoption of the share-the-work plan as proposed by the Buffalo branch.
Reply to a letter dated December la, 1932, from the Secretary of the
Ziederal Home Loan Bank Board inclosing a copy of a letter dated December 8,
1932, from the 7xecutive Vice ?resident of the Federal Home Loan Bank of
Arkansas, suggesting that as the United States Government owns a major
Portion of the capital stock of Federal Moue Loan Banks, the Federal Home
Loan "Rank Board request the Treasury Department to issue instructions to
all Federal reserve barks authorizing them to instruct non-par banks to
remit at face value for all checks being collected for the account of the
home loan banks.
The reply stated that for the purpose of reaching a con-
clusion as to the practice which should be followed in the collection of
Checks received by the hone loan banks, it appears proper to regard them as
occupying a position substantially similar to that of the Federal Ilind banks,
the stock of which is owned partly by the United States Government and
Partly by individual borrowers and associations of borrowers, rather than
the Reconstruction 7,1inance Corporation which is Wholly owned by, and is
exclusively an agency of, the Federal Government, that the Federal land
banks carry accounts with local banks Which are members of the Federal.Re-
1\
Serve System, all checks received by the former being deposited in the local
banks for collection, Where the checks drawn on non-par banks are separated
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1/6/33
and collected through channels other than the Federal reserve banks; and
that it would seem that the practice followed by the Federal land banks
would be equally practical and proper for the Federal home loan banks.
Approved.
The proposed individual budgets for all of the divisions of the
BOardts organization and the combined budget for the Federal Reserve Board
and its staff, covering salaries and expenses for the calendar year 1933,
made up of the follooin
items aggregating ?835,098.13, were considered and
approved:
Personal Services
.)666,284.25
Non-Personal Services:
Supplies ("LL"aterials
Subsistence Expenses
Transportation Expenses
Communication Service
Ptg., Engr., Bindg., etc.
Heat and Light
Rent - Building
Rent - Equipment
Repairs - Equipment
Equipment
Special & lAscellaneous
Non-Personal Services Total
Complete Total
5,900.00
51,500.00
22,750.00
18,425.00
40,000.00
900.00
20,714.88
54.00
710.00
5,850.00
_2_2010.00
1.648,813.88
?835,098.13
Consideration was then given to a memorandum dated January 6, 1933,
from La.. 7Toell, Fiscal Agent, reconmendinc; that, on the basis of the combined
budget of the Board for the year 1933 of approximately ::g335,100, the Board
levy an assessment on the Federal reserve banks of nine hundred fifty-one ten
thousandths of one per cent (.i00951) of their total paid-in capital and
8111'-,aus as at the close of business December 31, 1932, to cover the expenses
or the Federal deserve Board for the first six months of 1033.
The following
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1/6/33
resolution was adopted:
HEREAS, under Section 10 of the act approved December 23,
1213, and known as the _federal ,Wserve Act, the Federal Reserve
Board is empauered to levy semi-annually upon the Federal reserve banks, in proportion to their capital stock and surplus,
an assessment sufficient to Pay its estimated expenses, including
the salaries of its members, assistants, attorneys, experts and
employees, for the half year succeeding the levying of such
assessment, together with any deficit carried forward from the
preceding half year; and
"WHEREAS, it appears from estinates submitted to and considered by the Federal Reserve Board that it is necessary that
a fund equal to nine hundred fifty-one ten thousandths of one
per cent (.000951) of the total paid-in capital stock and surplus
Of the Federal reserve banks be created for the purpose hereinbefore described, exclusive of the cost of engraving and printinr7.
of Federal reserve notes;
"NOW, THEREFORE, BE IT RESOLVED BY THE FEDERAL RESERVE BOARD, That:
"(1) There is hereby levied upon the several federal reserve
banks an assessment in an amount equal to nine hundred fifty-one
ten thousandths of one per. dent (.000951) of the total paid-in
capital and surplus of each such bank at the close of business on
December 31, 1932;
"(2) Such assessment shall be paid by each Federal reserve
bank in two equal installments on January '7, 1933, and I.:arch 1,
1933, respectively; by crediting the amount thereof on the books
of the Federal reserve bank in the General Account of the Treasurer
of the United States, for credit to the Federal Reserve Board in
an account designated and known as 'Salaries and Expenses, Federal
Reserve Board, Special Fund;'
"(3) For each such installment of ouch assessment, each
Federal reserve bank shall issue and send to the Treasurer of the
United States a certificate of deposit evidencing said deposit and
the fact that it is in payment of the assessment levied by the
Federal Reserve Board for its general expenses and is to be
credited to the Federal Reserve Board in an account designated and
knaan as 'Salaries and Expenses, Federal Reserve Board, Special
Fund;' and
"(4) A duplicate copy of each such certificate of deposit,
together with a statement showing the amount of the capital and
surplus of the Federal reserve bank at the close of business on
December 31, 1932, shall be sent to the Federal Reserve Board on
the date of the payment of each installment."
Reports of Standing Committee dated January 5, 1933, recommending
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approval of the following changes in stock at Federal reserve banks:
Applications for ADDITIONAL Stock:
District No. 9.
Ada National Bank, Ada, Minnesota.
(Increase in surplus)
The National Bank in Wahpeton North Dakota.
(Increase in surplus)
First State Bank, Buffalo, South Dakota.
(Increase in surplus)
New First National Bank in Dell Rapids, S. Dak.
(Increase in surplus)
Shares
2
3
3
3
11
Applications for SURRENDER of Stock:
District No. 3.
Farmers National Bank, Canton, Penna. (V.L.Abs.
by First National Bank)
57
57
District No. 4.
Paulding National Bank, Paulding, Ohio.
(Decrease in surplus)
28
28
District No. 10.
120
National Bank, Shawnee, Okla. (Insolvent)
Tecumseh National Bank, Tecumseh, Okla. (Insolvent) 18
138
District No. 11.
Citizens National Bank, Navasota, Texas. (IT.L.
Abs. by First National Bank)
First National Bank, Yacksboro, Texas.
(Decrease in capital and surplus)
135
"gEannee
District No. 12.
First National Bank, Springfield, Oregon.
(Insolvent)
First National Bank, Ephrata, Wash. (Insolvent)
90
45
18
17
Total
35
393
Approved.
Thereupon the meeting adjourned.
Secretary.
Approved:
@FedFRASER