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2095 A meeting of the Federal Reserve Board was held in Washington Thursday, July 12, 1934, at 3:15 p. in. PRESENT: Er. Lr. Mr. Ir. Mr. Black, Governor Hamlin taller James Thomas Er. Morrill, Secretary hr. Bethea, Assistant Secretary Mr. Martin, Assistant to the Governor The Board considered and acted upon the following natters: Telegram to Er. Curtiss, Chairman of the Federal Reserve Bank Or Boston, reading as follows: "Your telegram July 11. Federal Reserve Board approves for your bank the following rates on industrial advances under proviglens of Section 13b of the Federal Reserve Act, as amended, effective immediately: On direct advances to established industrial or commercial businesses 45 to 6% per annum; on portions of rediscounts and advances to banks and other financing institutions for 'Which the financing institutions retain the risk, 3% per annum; 8-nd on portions of advances on -which the financing institutions are relieved of risk, *;1 ; to 5% per annum. Board also approves for your bank, effective immediately, commitment charge on industrial advances of k% per annum with a minimum of for commitments of less than one year. Board notes with approval from your telegram that board of directors of your bank, at its meeting on July 11, made no changes in your existing schedule of rates of purchase other than establishment of rates referred -ciLl o s:1=111d Approved. Telegram dated July 10, 1934, approved by four members of the oard, to Yr. Peyton, Chairnan of the Federal Reserve Bank of 'aline41313-8, reading as follows: "Your telegram July 9. Federal Reserve Board approves for Your bank following rates on industrial advances under provisions of Section 13b of Federal Reserve Act, as amended, effective imm ediately: 6% per annum on direct advances to established V12/34 industrial or commorcial businesses; 41% per annum on advances to member banks; 5% per annum on advances to non member banks; and 5% per annum on advances to financing institutions other than banking institutions. Board also approves for your bank commitment rate on industrial advances of 1% flat." Approved. Telegram dated July 10, 1934, approved by four members of the Board, to Er. Ne-wton, Chairman of the Federal Reserve Bank of Atlanta, reading as follows: "Your letter July 7. Board approves appointment by your bank of follovving members of Industrial Advisory Committee of Sixth District: Wm. A. Parker, Morgan EcNeel, John Sanford, A. R. Forsyth, and Ernest T. George, it being understood on basis of infornation submitted that each of the above-named persons is actively engaged in some industrial pursuit mithin the Slxth District. Please confirm acceptance of appointments." Approved, together vaith a telegram to Mr. Newton, Chairman of the Federal Reserve Bank of Atlanta, reading as follows: "Your telegram July 11. Board approves appointment of Norman E. Elsas as a member of Industrial Advisory Committee of your bank vice Morgan EcNeel, who was unable to accept appointment. Please confirm acceptance of appointment." Telegram dated July 10, 1934, approved by four members of the Board, to Lr. Wood, Chairman of the Federal Reserve Bank of St. Louis, reildillg as follows: "Your telegram. Board approves appointment by your bank of felloving members of Industrial Advisory Committee of Eighth District: William K. Norris, Jacob Vandyke, Maurice Well, Henry S: Gray and E. E. Finch, it being understood on basis of informatlon submitted that each of the above-named persons is actively !flgaged in some industrial pursuit -within the Eighth District. rlease confirm acceptance of appointments." Approved. Telegram dated July 10, 1934, approved by four members of the 13°4rds t0 Lr. Peyton, Chairman of the Federal Reserve Bprle of 2097 7/12/31 -3- 14inneepolis, reading as follows: uRetel ninth. Board approves appointment of Messrs. Sheldon Wood, John Bush and F. R. Angell as members of the Industrial Advisory Committee for Ninth District, with understanding that only two of these men will be selected to fill vacancies created by reason of refusal of Eessrs. Hiram Elliott and S. L. Sewall to serve on committee. Please mire names of members of Advisory Committee as finally constituted." Approved. Telegram to Yr. Walsh, Chairman of the Federal Reserve Bank of Dallas, reading as follows: "Your telegram. Board approves appointment by your bank of following members of Industrial Advisory Committee of Eleventh Listrict: Clarence Ousley, all B. Marsh, Charles R. Moore, Lewis R. Ferguson and W. B. Wise, it being understood on basis of information submitted that each of the above-named persons is actively engaged in some industrial pursuit within the Eleventh District." Approved. Telegram dated July 10, 1934, approved by four members of the card, to Governor Calkins of the Federal Reserve Bank of San Francisco, readinc as follows: . "Hotel ninth. Board approves appointment by your bank of followzng members of Industrial Advisory Committee of Twelfth DieRalph Burnside, Sharron Crandall, Henry D. Nichol, Stuart 14! Rawlings and H. L. Terwilliger, it being understood on basis or Information submitted that each of the above-named persons is etively engaged in some industrial pursuit within the Twelfth Disriet. Please confirm acceptance of appointments." z Approved. Telegram to Ix. Burgess, Deputy Governor of the Federal Reserve 841* of Lew. York, reading as follows: "Hotel. Board approves temporary employment by your bank of Seldon O. Martin to assist in organizing and carrying on the work 1.3: 1 connection with loans to industry under Section 13b , of the Federal Reserve Act, with compensation at the rate of ;2,000 per 2098 7/12/34 -4- " month, effective as of date he assumes his duties. date duties assumed." Please advise Approved. Telegram dated July 10, 1934, approved by four members of the Board, to Lr. Strater, Secretary of the Federal Reserve Bank of Cleveland, reading as follows: "Referring your letter July 7 Board approves appointment Reuben B. Hays as Executive Secretary of the Industrial Advisory Committee for Fourth district, with salary at the rate of 0,200 per annum, effective as of date he assumes his duties. Please advise date duties assumed." Approved. Letter dated July 11, 1934, approved by four members of the Beard, to Lr. Williams, Federal Reserve Agent at the Federal Reserve Bazic of Cleveland, reading as follows: "Reference is made to Er. Fletcher's letter of June 21, 1934? !'eeammending approval of the application of The Southern Ohio Say,Inge Bank and Trust Company, Cincinnati, Ohio, for permission to absorb its affiliate, the Southern Ohio Loan Company, Cincinnati. "The Board has reviewed the information submitted, from which t aPpears that the transaction will result in no material change in the general character of the assets of, or broadening in the 8e0Pe of functions exercised by, The Southern Ohio Savings Bank azd Trust Company, within the meaning of the general condition lTder Which the bank was admitted to membership. The Board, ttlerefore, will interpose no objection to the transaction, provided that none of the assets of the Southern Ohio Loan Company which mere classified as doubtful, estimated losses, and unac?eptable by your examiner in his report as of May 23, 1934, are eken into the assets of The Southern Ohio Savings Bank and Trust MPany; that the transaction is approved by the appropriate State authorities; and that prior to the absorption, such bank, if it has not already done so, has charged off or otherwise eliminated estirated losses of :0,874, as shown in the report of examination of such bank as of Larch 19, 1934, made by one of your examiners, and has effected the adjustment in its other real estate account Prescribed in condition of meribership numbered 21. "Upon prompt consummation of the transaction as above o utlined, the Board will consider that conditions numbered 20 and r 2099 7/12/34 "21 prescribed in connection with the bank's application for membership have been complied with. Please advise the Board when the absorption has been completed. "It is understood that the absorption will not result in any change in the corporate existence of The Southern Ohio Savings Bank and Trust Company which will affect its status as a member bank. However, if you have not already done so, it is suggested that you obtain the advice of your counsel on this point. Please also furnish the Board with a copy of any opinion of your counsel in this connection, together with a copy of any amendments to the charter of the bank as a result of the transaction. "In the Loard's letter to you under date of December 15, 1933, advising of its action in connection with the bank's application for membership, attention was called to the bank's practice, as reflected in the report of examination of the institution as of October 16, 1933, made by one of your examiners, of permitting the drawing of checks against savings deposit s, which practice, after admission to membership, would be in violation of Section 19 of the Federal Reserve Act and of the Board's Regulation q. The report of examination as of Larch 19, 1934, shows that the bank has continued to permit checking on savings deposits in :violation of the law and of the regulation above referred to. LAr. Pletcher's letter of April 7, 1934, indicates that your office has called the bank's attention to the violations, and it will be appreciated if you will advise the Board whether the practice has since been discontinued." Approved. Letter dated July 10, 1934, approved by four members of the 1313ard, to Er. Walsh, Federal Reserve Agent at the Federal Reserve Bank Dallas, reading as follows: "Receipt is acknowledged of your letter of June 18, 1934, !Ilth reference to the report of examina tion of the Southern 4r1zona Bank and Trust Company, Tucson, Arizona, as of April 18, 1934, which report and supplemental informa tion in connection therewith had been received by the Board. "You advise that the bank has charged off the estimated losses in loans and discounts, as classified by your examiner, together with the losses in other real estate reclassified on tL0 basis of information received subsequent to the examination, amid ha requested that it be permitted to defer charging off se?urities depreciation of $10,622, which is also classified as t?s8 in the report of examination and which consists of depreciauion, less net appreciation in defaulted bonds, in ;40,000 par Imlue of Salt River Valley Water Users Associa tion bonds which 7/12/34 -6- 11 are rated as lower grade securities by the examiner and constitute the bank's only investment in bonds included in this group. "At least one recognized investment service organization, Pitch Bond Record, gives the bonds in question a current rating Of BBB. The bank advises you that the State Banking (,omnissioner has given it permission to continue to carry the bonds at book value until later in the year, and it is noted that the bank has a non-lcdg - r asset, in the form of cash surrender value of a life insurance policy on the life of the President, the amount cf which is in excess of the estimated depreciation in Lalt hivor Valley water Users Association bonds. "In the circumstances, the Board concurs in your opinion that it will not Be necesLary to require the bank to charge off the depreciation in question at this time. Approved. Letter to hr. O'Connor, Comptroller of the Currency, reading 4s follows: "In accordance with your recommendation, the Federal Reserve '.01-:rd approves a reduction in the corpron capital stock of the fliOfl Old Lowell National Bank', Lowell, Llassachusetts, from 1,000,000 to :500,000, pursuant to a plan which provides that 1-he bank's capital shall be increased by 500,C00 of new common tock to be sold to certain directors and shareholders who have in the bank subordinated deposits in that amount and who will use such funds for this purpose, and that no part of the released capital shall be returned to shareholders but, with such part of surplus and undivided profits accounts as may be necessary, shall bS used to eliminate the least desirable assets in the bank inall the depreciation in lover grade securities, in accornce with the plan set forth in your memorandum of July 5, 1934. l c is assumed th:,t the contemplated elimination of undesirable asWill include all estimated losses together with all depreciatIon in lower grade securities." Approved. Letter to 1..r. O'Connor, Comptroller of the Currency, reading 8` folic:17z: "In accordance with your recommendation, the Federal Reserve Boa , rd aliproves a reduction in the common capital stock of 'The -,entral National Bank of Idneola', hineola, New York, from 100,000 to 75,000, pursuant to a plan which provides that the bank's capital shall be increased by 25,000 of preferred stock 2101 7/12/34 -7- "to be sold to the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate a corresponding amount of unsatisfactory assets, all as set forth in your memorandum of July 2, 1934." Approved. Letter dated July 10, 1934, approved by four members of the Lcard, to hr. O'Connor, Comptroller of the Currency, reading as follows: "Receipt is acknowledged of your supplemental memorandum of July 3, 1934, with reference to the proposed reduction in the common capital of 'The First National Bank of harathon', harathon, New York, which was approved by the Board on April 17, 1934, pursuant to a plan which provided for the sale of 25,000 of Class 'A' preferred stock to the Reconstruction Finance Corporation and 25,000 of Class 'B' preferred stock locally. "It is understood from your supplemental memorandum that the foregoing plan of recapitalization has been amended and that the bank now proposes to sell only c)25,000 of preferred stock Which the Reconstruction Finance Corporation has agreed to purchase, "In accordance with your recommendation, the Board approves the amended plan providing for the sale of 25,000 of preferred stock as set forth in your supplemental memorandum of July 3, 1934, with the understanding that the other provisions of the Plan remain unchanged." Approved. Letter to 1.1r. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve B,?ard approves a reduction in the common capital stock of 'The D„irst National Bank of Tully', Tully, New York, from 50,000 to A-5,000, pursuant to a plan -which provides that the bank's capital shall be increased by 45,000 of preferred stock to be sold tc the Reconstruction Finance Corporation and others, and that !Ic part of the released capital shall be returned to shareholders out, with such part of undivided profits account as may be fecesshall be used to eliminate depreciation in securities and estimated losses in other assets, in accordance with the plan &Jet forth in your memorandum of June 29, 1934." Approved. Letter to hr. O'Connor, Comptroller of the Currency, reading 2102 7/12/34 -8- follovrs: "In accordance with your request the Federal Reserve Board approves a reduction in the common capital stock of 'The Farmers 6:.Uechanics National Bank of ifilliamstown i, Mlliamstown, irest Virginia, from .10,000 to 25,000, pursuant to an amended plan which provides that the bank's capital shall be increased by the sale of , 25,000 of preferred stock to the Reconstruction Finance Corporation and provides also that approximately i172,700 of unacceptable assets will be eliminated from the bank through the uso of the released capital, part of the bank's surplus and undivided profits and the sale at par to directors and other interested parties of approximately ,150,000 of such unacceptable assets, all as set forth in your letter of June 27, 1934 and accompanying memorandum dated June 21, 1934 outlining the plan of reorganization. "In considering the plan under which the proposed reduction in capital is to be effected it is observed that certain of the unacceptable assets of the bank are to be sold to directors and other interested parties at par and it is assumed that the bal!rico of the unacceptable assets which are to be eliminated under thc3 proposed plan will remain the property of the bank, and accordingly none of the released capital funds will be returned to s tockholders." Approved. Letter to Li-. O'Connor, Comptroller of the Currency, reading 48 follows "In accordance with your recommendation, the Federal Reserve Poard approves a reduction in the common capital stock of 'The First National Bank of Kissimmee', Kissimmee, Florida, from 50,000 to :,35,000 pursuant to a plan which provides that the released capital shall be credited to the surplus account from which unsatisfactory assets may be charged off, as set forth in Your letter of June 27, 1934." Approved. Letter dated July 10, 1934, to Lr. O'Connor, Comptroller of the Currenc y, reading as follows: "Receipt is acknowledged of your memorandum of June 29, 1934, with reference to the proposed reduction in the common ,,aPital stock of 'The First National Bank of Crown Point', Crown reint, Indiana, which was approved by the Board on Lay 12, 1934, 2103 7/12/34 -9- "pursuant to a plan mhich provided among other things for a voluntary contribution of approximately .13,000 to be raised locally. "You advise that due to appreciation in the bank's investment securities, it is now necessary to raise locally only 6,753.39, instead of approximately ,13,000 as originally contemPlated, in order to effect the desired eliminations as set forth in your memorandum of hay 4, 1934. "In view of the improvement reported and the consequent reduction in the amount of criticized assets to be removed, and in accordance with your recommendation, the Board amends its previ°us approval by eliminating the requirement for a local contribution of approximately :;13,000 with the understanding that aPproximately .6,750 of unsatisfactory assets mill be purchased outriht by local interests for a like amount of cash, and that the other provisions of the original plan mill remain unchanged." iipproved. Letter to ix,. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve ,,• -I d approves a reduction in the common capital stock of '.he virst National Bank of Normal', :ormal, Illino is, from 1,65,000 to v26,000, pursuant to a plan mhich provides that the bank's capital shall be increased by ;74,000 of preferred stock to be sold to the ,econstruction Finance Corporation, and that the released capital, together with approximately ,?41,000 to be raised locally and such portion of the bank's surplus and undivided Profits as may be necessary, shall be used to eliminate unsatisf"tory assets in the amount of approximately,?99,858, all as set forth in your memorandum of June 23, 1934." 13(:), ;• Approved. Letter to ]_r. O'Connor, Comptroller of the Currency, reading f03.1.0WS; "In accordance with your recompiendation, the Federal 2er.v-e Board approves a reduction in the common capital stock of 10 Security National Bank of Sheboygan', Sheboygan, ';ascon sin, C.500,0n0 to ,100,000, nursuant to a plan which provides t ,hat the bank's capital shall be increased by w400,000 of proerred stock to be sold to the Reconstruction Finance Corporation a.nd that the released capital, together with approximately , ?424,000 from the bank's surnlu s and undivided profits and ''100,000 to be raised locally, shall be used to eliminate 2104 7/12/34 -10- unsatisfactory assets in the amount of approximately 024,000, all as set forth in your memorandum of June 22, 1934. "In considering the plan under which the proposed reduction in common capital stock is to be effec ted, it was noted that your examiner severely criticized certain individual conne s cted vath the bank's management, indicating that in his opini on the bank would benefit by their removal. It is assumed that you have this condition in mind and mill take appropriat e steps toWard effecting necessary corrections in connection there with." Approved. Letter to Lr. O'Connor, Comptroller of the Currency, reading ae follows; "In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock of the _iraders Gate City National Bank of Kansas City', Kansas City, lulssouri, from c400,000 to '250,000, pursuant to a plan which Provides that the bank's capital shall be increased by the sale of c;300,000 of preferred stock to the Reconstruc tion Finance Corporation and the use of the released capit al in eliminating a corresponding amoun t of substandard assets, all as set forth in Your memorandum of June 26, 1934." Approved. Telegram dated July 10, 1934, approved by four members of the Board, to La-. Peyton, Federal Reserve Agent at the Federal Reserve Ea4k of Linneapolis, stating that the Board has given consi deration to t he Xinile application of the "Northwest Bancorporation", Unneapolis, 4_ for a voting permit under the authority of section 5144 of the Revised Statutes of the United States, as amended, entitling such °q11mLization to vote the stock which it owns or controls in the If s Pc3kane and Eastern Trust Company", Spokane, Washington, and has illItil°rized the issua nce of a limited permit to the applicant, subject t0 the following condition: "Prior to issuance of such limited voting permit Northwest 21165 7/12/34 -11- "Bancomoration shall represent, undertake, and agree '(1) that so long as the capital debentures issued by the Spokane and Eastern Trust Company, Spokane, Washington, pursuant to the plan for the recapitalization of such trust company, are outstanding, Northwest Bancorporation will do such things as may be necessary to cause such debentures to be shown in the published statements of condition of such trust company in substantially the following manner: (a) the par value of such debentures shall be included in the amount shown oPposite the item 'capital', and under such item there shall be inserted an explanation reading as follows: 'Includes BULK dollars par value common stock and BLANK dollars par value capital debentures sold to Reconstruction Finance Corporation': provided, however, that there may be added to such explanation, if the law of the State of Washington so requires, or the trust company so desires, the following: 'which debentures are subordinate to the rights of depositors and other creditors'; (b) the amounts of capital stock and debentures shown in each such explanation shall represent and be equal to the aggregate par value of such stock and debentures outstanding as of the date of the statement. "(2) That it will do such things as may be necessary to cause the said Spokane and Eastern Trust Company to eliminate from its assets as soon as practicable, and in any event Prior to September 1, 1934, estimated losses in the aggregate amount of 0245,321.11, as shown in the report of credit investigation of such bank made as of Larch 12, 1934, by an examiner for the Federal Reserve Bank of San Francisco, and at least %a32,240 of other substandard assets to be selected under the direction of the Supervisor of Banking for the State of Washington in agreement with the Federal Reserve Agent at the Federal Reserve Bank of San Francisco." the following purpose: "To authorize the issuance and sale to the Reconstruction xsinance Corporation by the Spokane and Eastern Trust Company, Pokane, Washington, of its capital debentures in an aggregate lunount of not less than 050,000." The telegram also authorized the agent to have prepared by counsel for the Federal reserve bank, and to issue to the Northwest Bancorporation, ' 13 litited voting permit in accordance with the telegram when the conditicrt, pr escribed therein has been complied with. The telegram stated t118° that, subject to the Northwest Bancorporation's entering into the 1 It 7/4/34 -12- agreements required under the condition referred to above, the Board agrees to cancel, and to release such corporation from its obligation to satisfy, the particular agreements entered into pursuant to subdivi'ions (b), (o), and (d) of subparagraph (2) of the conditions of the Eoard's telegram of December 27, 1933, authorizing the issuance of a limited voting permit to such corporation entitling it to vote its et°ek in the Spokane and Eastern Trust Company, Spokane, Washington, aad The Security Uational Bank of Cheney, Cheney, Washington; that, however, it is understood that all other agreements entered into pursuaat to said subparagraph (2) of said telegram of December 27, 1933/ 41.e ax d shall continue in full force and effect and that the plan for the a . daustment of the capital structure of the said Spokane and Eastern Trust Company referred to in such agreements shall be deemed to refer to the plan for the recapitalization of the said trust corns modified by the telegram of July 10; that it is requested that the a eat secure from the Northwest Lancorporation a written confirmation ()f 81 ch understanding prior to the issuance of the permit authorized I. uy the telegram; that the Board feels that the principles exPresced in its letter dated April 14, 1934 (K-7068-a), relating to the laaaner of shov.ing capital debentures in the reports and published stateraen , t's of a bank, should be followed substantially in all similar that, 'based upon current figures available, it does not appear that the capital of the Spokane and Eastern Trust Company is now 1-1111)aired; and that, if the laws of the State of Washington are such that . ‘-'aratal debentures sold to the Reconstruction Finance 2107 7/12/34 -13- Corporation cannot be regarded as a part of the capital structure of the bank unless included with the item "capital" or "surplus" and acccraPanied by an explanation in the reports and published statements that such debentures are subordinate to the rights of depositors and Other creditors and the bnnk desires to include the capital debentures iu a total of "capital", covered by such explanation, the Board raises 40 objection to such method, provided the explanation is complete and correct in its description as to the total amount of the par value of 811eh capital debentures and capital stock outstanding; but that it l'eels that the proposed method of showing such debentures as "surplus" is ob jectionable. 44 The telegram stated further that, in any case mhere irTairment of capital stock exists, the issuance of capital deben- tur°8 *Itch are obligations of the bank does not repair or cure the illVairment, but merely supplements the diminished capital structure for the further protection of depositors and other creditors and in 11 such cases an existing impairment of capital stock can be removed Or cured only through contributions and/Or capital stock reductions. Th° telegram added that the Board feels that the principles expressed (1)(a) and (D) of the condition of the telegram are applicable in 411 cases 'where capital notes or debentures have been sold to the Rec°118truction Finance Corporation and under State law cannot be regarded 44 Part of the capital structure if shown as a separate item in of condition; and that in any case where the aggregate 414°112at of the net capital structure, or net morth accounts, including such e . 4Pltal notes or debentures, is less than the total par value of 2108 7/4/34 the capital stock and capital notes or debentures outstanding, no alnounts of surplus or undivided profits should be shown separately in rePorts and published statements. Approved. Telegram dated July 11, 1934, approved by four members of the Board, to Lir. Peyton, Federal Reserve Agent at the Federal Reserve Bank of flinneapolis, stating that the Board has given consideration to the aPplication of the "Northwest Bancorporation", Minneapolis, IT;- e -441a sota, for a voting permit under the authority of section 5144 of the Revised Statutes of the United States, as emended, entitling such °rganization to vote the stock which it owns or controls in the "Daly Ilkak and Trust Company of Anaconda", Anaconda, Montana, and has authorized the issuance of a limited permit to the applicant for the followPurposes: "At any time prior to September 30, 1934 to act upon a proposal to fix the number of directors of such bank and to amend the bank's articles of association accordingly, to act upon a roposal to amend the bank's by-laws or to adopt a new set of Y-laws, provided that the by-laws as so amended or adopted shall conform to applicable provisions of law, and also to elect directors and to conduct such business of a routine nature as is ordinarily conducted at the annual meetings of the bank." t The telegram also authorized the agent to have prepared by counsel for the pe deral reserve bank, and to issue to the Northwest Bancorporation, lilnited voting permit in accordance with. the telegram. Approved. In connection with the above, there was presented a second te letrcan to L. Peyton, Federal Reserve Agent at the Federal Reserve 21_09 V1V34 -15- of Linneapolis, also dated July 11, 1934, and approved by four Irlembers of the Board, stating that the Board has given consideration to the applioation of the "Northwest Bancorporation", Einneapolis, 144eeota, for a voting permit under the authority of section 5144 of the Revised Statutes of the United States, as amended, entitling such °rganization to vote the stock which it awns or controls in the "Union kak and Trust Company", Helena, Lontana, and has authorized the issu440e of a limited permit to the applicant for the following purposes: "At any time prior to September 30, 1934 to act upon a proposal to fix the number of directors 'within the scope permitted by the amended articlos of association of the bank, to act upon a proposal to amend the bank's by-laws or to adopt a new set of bY-laws, provided that the by-laws as so amended or adopted shall conform to applicable provisions of law, and also to elect directors and to conduct such business of a routine nature as is ordinarily conducted at the annual meetings of the bank." The t 1 eJ.egram also authorized the agent to have prepared by counsel for the Pederal reserve bank, and to issue to the Northwest Bancorporation, klillated voting permit in accordance with the telegram. The telegram 4180 referred to a letter dated June 29, 1934, from Lr. Gardner B. l'arry, vice President of the Northwest Bancorporation with respect to The Pirst 'rational Bank of Dillon, Dillon, liontana, which letter was to with the agent's letter of June 30, 1034, and stated that the ()w ee 1 of the Comptroller of the Currency has informally advised that the amendment of the bank's by-laws for the purposes indicated 411°41d be by directorate action and a permit for the stockholders vote theref_ appearsunnecessary; and that it is requested that the agent (brie() the applicant accordingly and notify the Board if, for any 2110 7/12/34 -16reason, the permit is still desired, Approved. Letter dated July 11, 1934, approved by four members of the Board, to J. Raymond Dyer, Legal Advisor, Finance Section, National Recovery istration, reading as follows: "I have that Article yourletter of June 28, 1934, in uhich you state VIII, Section 3, of the Code of Fair Competition f°r Piankers is the subject of present discussions aimed touard its Possible deletion from the Code and substitution therefor f a Prevision under which the approval by the Administrator or i:atienal Industrial Recovery of uniform service charges bir banks mill not be required; and you request my views with TPect to the natter. It is understood that the only change 'v4-nich is under consideration in the provision of Section 3 ( ;I' Article VIII in question would be the deletion of the words 1.11),ivt to the approval of the Administrator'. s Lember banks of the Federal Reserve System are, of course, , 11s'3ect to the provisions of the Federal Reserve Act and of the ard s regulations made pursuant thereto and, accordingly, raust comply with the provisions of Section 19 of the Act ef Regulation relating to the payment of deposits and orerect thereon, even though the requirement for the approval sert!le Administrator for National Industrial Recovery of 0_ II-Lce charges should be eliminated from the Code of 7air trPetition for hankers. The deletion of the clause in quest:, therefore. mill not have any effect upon the necessity witl,e°Thraiance by member banks of the Federal Reserve System to " the requirements of the lay and of the Federal Reserve etrtIl: l d which relate to the payment of interest on deposits "er directly or by some indirect method such as the absorpT424 of charges in connection with the collection of checks. RTever, Section 19 of the rederal Reserve Act and the Board's ba/tictti°n Q on this subject are not applicable to non-member thajof the Federal Reserve System and, in view of the fact Uoh faragraph 2 of Article VIII of the Code does not subject iz ti:414ks to all of the requirements applicable to member banks ide lls connection, it may be that you will wish to give conthe r cnion to the advisability of includinL., a provision in ther 'LL'a substantially to the effect that all banks subject Reserve shall comply with the requirements of the Federal reLtr j e Jlet and of the Federal Reserve Board's regulations me* lng to the pavrent of deposits and interest thereon by er banks of the Federal Reserve System. j 2111 7/12/34. "You also suggest the possibility that, as the Code sanctions the concerted action of banks in fixing uniform service 211arges, a violation of the anti-trust laws may be involved. Ihe ,., question whether banks are corporations engaged in cormerce hin the meanin: of the anti-trust laws is one -which 1 believe ! ).8 not been settled by the courts but it is my understanding t e-1, as a practical matter the provisions of those laws, with h"e exceptions of the sections which in terms relate to banks, Et7e lir)t customarily been applied to banks. 1 appreciate your courtesy in writing re with regard to the proposed chance in the Code." Z Approved. Letter dated July 9, 1934, approved by three members of the hoard, to 6°1 aPPlicant for a permit under the Clayton Act, advising of approval of hj a PPlIcation as follows: " 1 .S. L. llen, for permission to serve_at the same time as director and officer of the Aberdeen National Bank & Trust ,?ThPanY, Aberdeen, South Dakota, and as a director of The rlrst Lational Bank of Leola, Leola, South Dakota. Anproved. to ctri Letter dated July 9, 1934, approved by three members of the Board, ' 41 131-leant for a permit under the Clayton Act, advising of approval aPplication as follows: am time 11:1's"J. hompson, for permission to serve at the se a director of the First Kational Bank of Barron. Barron, ' :lscensin, and as a director of the Dank of Barron, Barron, Approved, together with a letter, also dated JulY 9, 1934, and approved by three members of the board, to kr. Peyton, Federal Reserve Agent at the - oderal Reserve Bank of ILinneapolis, reading as follows: Act "There is inclosed for your files a copy of the Clayton Perinit issued by the Board to Lr. T. J. Thompson, Barron, seensin, to serve as director of the First Kational Eank of 23 V) 7/1.2/z,i -16It Barron and the Bank of Barron, both of Barron, .isconsin. "In considering 1:r. Thompson's application, it was noted that the two banks which he is ser-ving are engaged in active competition for all classes of business; that there are three banks in Barren, which, in the opinion of the national bank examiner, is too small to support that number of banking in”itutions, and while he has recommended the merger of the nnks in Barron no results have been accomplished; that 1,r. hoTapson's financial affairs are involved and his obligations 0 the institutions which he is servin( ; have been criticized cY the examiner; and that the Bank of Barron, particularly, . 1118 in poor condition. In grantin the permit, the Board took I tlito consideration that the applicant has been a director of t ie national bank for seven years and of the State bank for wo years; that his services are said to have resulted in no restriction of credit or substantial lessening of competition; ld that he has been a resident of Barron for thirty years and said to have a good knowledge of the financ ial condition of e b!i :nks' borrowers. be ,"In all the circumstance s, the Board feels that it would 1,referable to grant the permit in order to avoid any misnderstanding by the community which might prove detrimental ,? the best interests of the banks. Aowever, the Board deres that when you submit your recormendati on as a result of ' '1) 1 111. annual review of this permit , you report fully as to the TiTrovement made in the condition of the banks served by Lr. 1°1:Tcen and his indebtedness to those institutions ." t T 4 Letter dated July 10, 1934, approved by four members of the Board, to Ot (1PPlicant for a 2ormit under the Clayton Act, advisi ng of approval aPPlication as follows: , . Alexander, for permission to serve at the same time : , 8 a director of the 'Second .tational Bank and Trust Company l'.ijortland, Cortland, Lew York, as a director of The homer 04, -1011B-1 Bank, Homer, levi York, and as a director and officer The Cortland Trust Company, Cortland, Hew York. Approved. 111 St001 '410re were then presen ted the following applications for changes cf Federal reserve banks: c)-11 Ar-J 7/12/31 -19- .1-1:17.2,1L9ations for ORIGINAL Stock: 1. ne Oultoy National Bank, Poultney, Vermont Shares .121!.t .S.Lat 14)* he P . ix .riri-1,-.,17t )nal Bank in Amboy, Amboy, Illinois No. 12. Irank in Condon, Condon, Oregon rj2lie for SUP,RENDLIZ of Stock: 2. Salt SP rings National Bank of S?,rracuse, Now York Seneca National Bank of West Seneca, West Seneca, New 'York National Bank and Trust Company of Ridgewood, Ridgewood, New Jersey liewlettVlood.mere National Bank of 17oodmere, 'Croodmere, New York SYrae 'le rm. a 36 36 36 36 36 Total 36 108 USe rri,Li&trict no. 7. 411°21rst-Thrational Bank of Lime Springs, Lime SprinGs, Iowa Parmers National Dank of Crystal Lake, cr y Stal Lake, Iowa , 1,rlet 1;o. 11. 140 Pirsc 'atjona1 Bank of lihite Deer, The lihite Deer, Texas First National Bank of Canyon, piCanyon, Texas the Ancleton State Bank, Anzloton, Texas bia4.1, • ..,,,,....„.. / let 410. xh4 1,--,, - 12. -- •Itl-lblil; Na-fional tank, Zh Auburn,"viashington 11-rst National Bank of Uhelton, Shelton, Washington Approved. 660 42 480 39 1221 24 22 46 36 30 34 100 36 60 96 Total 1,463 q11 -14 -20- Thereupon the meeting adjourned. • it ) i Pr011ed
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