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0'1 ldW A meeting of the Federal Reserve Board was held in Washington en TUesday, Tuly 17, 19341 at 12:15 p. m. PRESENT: Mr. Mr. Mr. Yr. Mr. Black, Governor Hamlin Tames Thomas Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant ::Acretary Mr. Martin, Assistant to the Governor Governo- Black referred to the Board's discussion in executive se31(311 at a meeting held on July 12, 1934, of the question of a site r" the Proposed new building of the Federal Reserve Board in Washingtot__ 'and reported that he had obtained and had had distributed to the 14etabers of the Board copies of wireless messages exchanged between the Beret of the Interior and the President on July 13 regarding the natter, Whict he assumed had been received and read by the members of the Board. (SeelietarY's note: 1Jelow.) .Lue The wireless messages referred to above are quoted President. al1c3 ara sending you this wireless at the suggestion of, after a conference with, Mr. Frederic Delano. Jnder a recent aorizAet of Congress the Federal Reserve Board was atvclit as ed to construct a building of its own. Furthermore, Dret :Li!— TreasurY has asked for Immediate possession of the toa,716 quarters of the Board for its necessary use, the tem'lls i vacating the Treasury offices and has rented hae'Z'arY quarters elsewhere. For these reasons the Board buileen endeavoring to secure a suitable site for its new Ratisn'in9 ' . and has canvassed the situation fully with the or Capital Park and 2 - 1anning Cormnission. ,',E; a result t1 the Reserve Board has come to a basis of raiesi'11.L, with the National Capital Park and :i- lanning CornSubject to your approval, as follows: 2137 -2"1. That the Government allow the Reserve Board to build on squares E. 8? and 88, owned by the Government, facing Constitution Avenue, between Twentieth and Twenty-first Streets. This plan does not interfere with the proposed layout of Interior, War or Navy Department buildings, and is recommended for approval by Chairman Delano for the National Capital Park and Planning Commission. "2. The Reserve Board proposes to reimburse the Government for this property. "I recommend your approval and believe you can safely take the proposed action which appears to be supported by _tct of Con•,1b_ess of May 25, 1926, and in any case rely upon ratification by nJagress. The matter is urgent, and I hope you can see your way e"-?ar to make a quick decision. The Reserve Board estimates full le olm bursament for land taken and construction of building costing t less than one million and probably considerably more. f HAROLD L. ICKES." For Secretary Ickes: "Entirely approve location of Federal Reserve Board Build- Roosevelt." (IcIrer'llor Black then referred to the following opinion prepared by Yx. Vest, Assistaat 31 Counsel, under date of July 13, in regard to the proposed acqui- 4 by the Federal Reserve Board of property now owned by the Government: pos -L understand that the Board has under consideration the lotsibility of acquiring from the United States Government a Bo„,,,Illecl by the Government to be used as a site for the new building. It is understood that this lot situated a:Coastitution Avenue was acquired by the GoTernment some years jr z (Prior to 1926) and that it has on it at this time a build,of a temporary character which is used by the War Department. It the48S° understood that the lot in question, while ample for lax. Federal Reserve Board's reciuirements, is not sufficiently 'a building of the type usual for other Government aif°1 buir The 7 ,4gs such as those now being constructed in Washington. Of tr8tiOla arises whether there is any authority for the sale 13 lot to the Federal Reserve Board. 21.38 7/17,34 -3- "Sections 341 and 345 of Title 40 of the U. S. Code (enacted 14ily 25, 1926 and later amended) read in part as follows: "'Section 341. Secretary of Treasury authorized to acquire sites for and construct public buildings. - To enable the Secretary of the Treasury to provide suitable accommodations in the District of Columbia for the executive departments, and independent establishments of the Government not under any executive department, *** he is hereby authorized and directed to acquire, by purchase, condemnation, or otherwise, such sites and additions to sites as he may deem necessary, and to cause to be constructed thereon, and upon lands belonging to the Government conveniently located and available for the purpose (but exclusive of military or naval reservations), adequate and suitable buildins for any of the foregoing purposes, giving preference, where he considers conditions justify such action, to eases where sites Air public buildings have heretofore been acquired or autho-r.ized to be acquired. '**' "345. Approoritions and expenditures; method of acquisition and disposition of sites and buildings. *** In carrYing into effect the provisions of this chapter, if the Secretary of the Treasury deems it to be to the best interests Of the Government to construct Federal buildings to take the Place of existing Federal buildings, he is hereby authorized to Cause the present buildings to be demolished, in order that the sites may be utilized in whole or in part for such .bLuildins, or where in his judgment it is more advantageous construct a Federal building on a different site in the sa?me city, to sell any such building or buildings and the -te or sites thereof, at such time and on such terms as he ' eams proper, and to convey the same to the respective purchasers thereof by the usual quitclaim deed, and to deposit 411° proceeds of the sales thereof in the Treasury as miscellaneous receipts, * *troz., :Inasmuch as the lot in*question which is under consideration opirlie quisition by the Board has on it a Federal building, it is my that the Secretary of the Treasury is authorized by the : statl buila. above (meted to sell the lot in question together with the coll, tin'e thereon if 'in his judgment it is more advantageous to The rtlet a Federal building on a different site in the same city'. silryT tetion whether in the judgment of the Secretary of the Tree0/1 a d. will be more advantageous to construct a Federal building Seere,lfferent site is one, of course, for determination by the : ata4 1rY of the Treasury, but it would seem that in the circumit wol,,,c/f this case he could properly reach the conclusion that -4-u. be more advantageous to do so and, accordingly, it is be' red that the statute gives the requisite authority. T 21_39 1 7/17/34 -4"The executive order of the President issued June 10, 1933, transferring the function s of certain Government departments to Other departments pursuant to authority of Congress provides in Dart that tall functions of administration of public buildings, re servations, national parks, national monuments, and national cameterie s, are consolidated in an office of National Parks, Buildings, and Reservations in the Department of the Interior, St the head of which shall be a Director of National Parks, Buildins, and Reservations * *t. While in my judgment the Provisions of this executive order do not affect the authority °f the Secretar y of the Treasury to sell this property, some 1?bss1ble cuestion might be raised with regard to the matter and may be advisable to obtain a quitclaim deed not only from the Secretary of the Treasury, but also, as a matter of precaut°11, from the Director of National Parks, Buildings, and Reserva,1°Ils (who I understand is the Secretary of the Interior). aa,1 "I have discussed this matter in a preliminary way with Yr. Legal Assistant to the Secretary of the Treasury, and he !Ticated that before expressing an opinion on the question he ' 13, ucl have to know the purposes for which the land was acquired Ile ,Government. He said, however, that if it should develop it the land was acouired as a site for a building and that it been decided to erect such building elsewhere that the , 4a,now auZ,'er.would come clearly within the provisions of the statute 111, 11,°r"ing sale of the property by the Secretary of the Treasury. , 4.1-iarlan is having the matter looked into and I expect to hear -L5 111 from the Treasury Department on the subject very shortly." Gerver, 4°11 31ack stated that he had taken up with Yr. Coolidge, ActinG Secre- Z tary °r the Treasury, the question of acquiring title to the property now Q'ilascl by the Government in which the.Board is interested as a possible site re'r its 4eW building and that the matter had been turned over to Lir. J. G. . . zesistant General Counsel, Treasury Department, for consideration. lie said that as a result, LI.. C. T. Ellis, an attorney for the Department, 1.1c1 Prepared a memorandum on the matter under date of July 16. He then eZcorpts from la'. Ellis, memorandum, which is quoted below in full: 731„, "BY Section 4 of the Act of June 19, 1934 (Public No. 417, (111i; °0agre33), the Federal Reserve Board is authorized to acalliteb site or buildinn in the District of Columbia to provide le,and adequate quarters for the performance of its funcrho Board is interested in acquiring Lot E.87 and/or 2140 7/17/34 _5"Lot E.88, and informal inquiry has been made as to whether the lots in question may be sold to the 3oard by the Secretary of the Treasury. "In the Act of June 12, 1922(42 Stat. 646), it is provided that: "The commission in charge of the State, War and Navy Department Buildings, * * is hereby authorized and directed to acquire by purchase,' or '13Y condemnation * * the following squares of land for public purposes, to wit, the whole of squares known as numbers east of eighty-seven; east of eighty-eight; * Provided further, ' That the sauares authorized to be acquired herein shall be under the control of the Superintendent of the State :iar, and Navy Departments Buildings. (Underscoring supplied) "Ly the Act of February 26, 1925 (43 Stat. 033), the office of , ' 0 11ulic Buildings and ,ublic Grounds and the. office of Superintendent the state, 'air and Navy Department Buildings were consolidated and°,a office designated as the office of Public Buildings dir 1)11blic Parks of the National Capital, under the directm of a taiector of _ ublic Buildings and Public Farks of the National Capistat BY 6ection 2 of the said "ct the commission in charge of the e, "ar and Navy Department Buildings was abolished, and the sectio, iposlelarrther provided that the powers and duties conferred and Lmstat °Y law upon such commission and the Superintendent of the ezere! "ar and Navy Department buildings should thereafter be elsed and performed by such director. 71,_ "Section 2 of Executive Order No. 6166 of June 10, 196,) - , proor the establishme nt of an "Office of National _arks, Buildings, and Reservations in the Department of the Interior, at the head or which shall be a Director of National Parks, Buildand Reservations.' The paragraph of said section 2 provides: "'The functions of the following agencies are transferred to the Office of the ',ational larks, Buildings, and Reservations of the DeparUment of the Interior, and the agencies are abolished: Public Buildings and :ublic I-arks of the National Capital.' From the above it would appear that the lots in question are /1017 itlesuncler the jurisdiction or the Director of National Parks, Build2eservations, it following that the Secretary of the .areaJ 18 without authority to deal therewith." " 2141 7/3.7/34 Gove rIlor Black said that he had subsequently discussed the matter aain G'J.e Acting Secretary of the Treasury, Mr. C. V. Opper, Assistant Gelieal Counsel, Treasury 1)epartment, and Air. Ellis and also with Mr. Vest op Board's Counsel. He said further that he thowl,ht Mr. Ellis Ilad "ell-ooked the Lrovi:Aon2 of the Act of May 25, 1926, and that, in his ()Pinion, the Secretary of the Treasury has the authority to sell the 13rePerty 14 question to the Federal Reserve Board. In this connection, G°'-oznor 'lint be Of tile Black stated that Opper had suggested that the problem solved by having the Secretary of the Treasury and the Secretary Interior join in executing a deed to the property. He said that he had L;iven considerable thought to the matter and felt that, since Mr. Ino, C hairman of the National Capital .LJark and Planning Commission, Nis absent from the city, it would be advisable to hold the entire matter absYance pendin(; his return, but that, in the meantille, it, might be clesirable for Mr. Vest to study the matter further, and if, after rehis opinion, he found no reason to chance the views expressed that the Board mint urge the acceptance of his conclusions. 116. '-LZYraczalc called attention to the inference contained in Secretary 1°43' Message to the President that ratification by the Congress might be IleceasarY and said that he felt no action should be taken by the ()a-rdwhich in the the would Governor Black thought view Of the fact the President, the Secretary of the Treasury, ecre.41ry Of the Interior and ljr. Delano were favorable to selling deaired that tate such a contingency. Precipi tropertY to the Federal Reserve Board, and the further fact ceurlsel for the Board is of the orinion there is authority under 2142 -78114ttag. law to accomplish that purpose, there was only a remote possibilitY that legislative action would be necessary. After discussion, the Board decided to hold the Matter in abeyance until Mr. Delano returns to the City, and, upon motion by Mr. Hamlin, the Board delegated authority to the executive committee to take such action as night be necessary in developing the matter wlth Mr. Delano. Governor Black reported that all of the Federal reserve banks, eleePt Boston, and New York, have signed the agreements with the Secretary °r tile Tr°asury setting forth the terms and conditions under which the lE1411811ts co ntemplated by Section 13b (e) of the Federal Reserve Act, as 614414ed, will be made to the Federal reserve banks by the Treasury Departkeirt, ' 46 said that the Boston bank had indicated a willingness to sign the "ftlent, but that the New York bank desired that certain provisions et the agreement be modified, and that Boston as well as Kansas City /14ci -&43Eld certain questions. The Governor stated that the matter haL beet. 114cler active consideration by htn and Mr. Coolidge, Acting Secretary °r the Ti. —eeeuxY, for the past three days, and that Mr. Coolidge had co°I3er4tea wholeheartedly with him in endeavoring to work out the desired ehEttees in a Manner which would be consistent with the provisions of the LAW arid the P°11cY of the Treasury Department. He said that Mr. Coolidge 1:tad erior a willingness to modify the agreement and that a revised ' I'Ettt ha the 1)1, d been practically completed which would be an improvement over elri°1-18 one, particularly in two respects: sider ' T) It allows commitments of Reserve Banks to be conas advances by Reserve Banks in the matter of the proaid, °11 Of loans which the Reserve Banks should neke. This will 'erY largely in the commitment end of this undertaking. F.*/ • _L.) Vi?/3/L. "(2) It leaves the interpretation of the law to the future relative to partial dividends received on partial liquidation of the Deposit Insurance Company stock, whereas the first agreement interpreted the law. The interpretation of the agreement was not satisfactory and Mr. Coolidge consented to a chane in it by putting the law on this cuestion witn the !,-)-reement rather than an interpretation of it now." At this point, Mr. Leonard, Examiner in Charge, Division of Examinations, entered the meeting. Consideration was given to a memorandum dated July 13, 1934, from the DIvisi°n of Examinations, submitting a memorandum prepared in the c)rrice of the Federal /'-eserve Agent at New York, in regard to the application for membership in the Federal Reserve System of the Savings Banks any, comp New York, New York, which institution was organized for IDurpoze of the acting a a central banking institution for mutual savings bealits in the State of New York, the stock of the trust company being °7115ILed by such mutual savings banks. Illetiozandtun Consideration was also given to a dated July 14, 1934, from Mr. Wingfield, Assistant Counsel, '"el.zilig to the membership application of the Savings Banks Trust Corqrly, and stating that the trust company was arganized under the bankof the State of New York and has banking and trust powers; that, his opinion, it is technically eligible for membership in the ?eciel'al Reserve Sy tem, the trust company does not deal with the public 'ellerallY but only with its stockholding mutual savings banks; that, if application should be approved, the Board may be urged also to ad-it other institutions of a comparable nature formed for the purpose 0r tillheing groups of other financial in titutions which are not members °r the Federal Reserve System, such as mortgage companies, Lorris Flan 2144 7/31,7/34 -9- barlite and various kinds of financing companies; that, if all of the pautlea savings banks which have subscribed for stock in the Savings 5144 Trust Company should became members of the System, the contributi°118whiCh they would make to the financial strength of the Federal eael'irs System through subscription to Federal reserve bank stock and the maintenance of reserves would be much greater than would be the contribution of the trust company as a central bank for such mutual 8111111" ballks; that on this basis it is estimated that contributions t0tha Federal Reserve System through capital stock subscriptions and ' lesarvee by the mutual savings banks involved would be approximately ' 4 1a ann )--v$000 greater than the capital stock subscription and reserves of the trust company upon admission to the System; that, while the numerous 4111tilel savings banks which have purchased stock in the trust company will 15rSSUIflbly desire accanmodation at the Federal reserve bank from tittle to time, through the trust company, the Board would have no supervls°rY powers over transactions of the mutual savings banks but only the tr ansactions of the Savings Banks Trust Company; that subatelltit/lly all of the mutual savings banks in New York State have with41'44 from the Federal Deposit Insurance Corporation; and that the Savings 81411c5 Trust Company is administering a deposit insurance fund, which may Possibly' be considered in competition with the Federal Deposit Insurance C°rPeratio4. 'lamas stated that he was of the opinion that, in view of the Mr 1140t that the trust company does not do any general banking business, but 4 114 "fact a central bank for the mutual savings banks which are its 2145 M-7/34 -10- Stockholders it is not the type of institution which should be admitted to m embership in the Federal Reserve System; that mutual savings banks 4re 40w eligible under the law for membership in the System, that if the truat" 1111Pany were admitted to membership other similar financing instituflons, including clearing houses, might feel that they were entitled to Me mbership; and that the admission of such Institutions would lessen the SYstan's control over the credit of the country because of the fact that the SYstem would have no control over the reserves of the mutual eeldales banks. LT. Thomas referred to Yr. L'ingfieldts opinion that the 4111118e Banks Trust Company is technically eligible for membership in tliell 'ed 'eral Reserve System, and said that he felt the Board should take 41111°84 view of the matter and admit the trust company to membership because, in his opinion, such action would strengthen the economic etrueture of the country. Mr. James said that, if the tru3t company 17"e admitted to membership, the mutual savings banks which are its atockhelders would thereby participate indirectly in the benefits of the l'ederal Reserve System without being subject to periodic examination allwithout having to comply with the usual conditions of membership U"eed by the Board. Governor Black stated that he thought the Savings 41*:s Trust Company desired membership in the Federal Reserve System 14 c"er to obviate the necessity of mutual savings banks in New York Joining the System in order to obtain its benefits and that he was of the oPlalioz that, if the Board should approve the pending application, 811Q11 action would be equivalent to barring mutual savings banks from 441tie/'shiP in the System since, by reason of being stockholders in the 21,46 V17/34 -11tx*Ilat company, there would be no incentive for them to became members Or the system. :,ssistant Counsel, entered the meeting during tlie above discussion. After further discussion, upon motion of jr. Iamos, the secretary was requested to prepare, for the Board's consideration, a letter to the Federal Reserve .Agent at the Federal Reserve Bank of New stating that the Dpard had decided not to approve the application of the Savings Barks Trust Company for membership in the Federal Reserve oystem. Carried, 1:iessrs. Hamlin and Thomas voting "no". 1:1'• Llorrill presented a memorandum dated July 14, 1934, from I: 0°11V, Chief melerrarh 0-erator, stating that 11±. T. H. Heiler, tele alai operator in the Board's telegraph office, who has been ill LtIce 1?; 193,-, and who has been granted fifteen days sick leave in c1,01. n HI °rals'loYeez to the thirty days usually allomd by the Baird to its • 13 still unable to return to work and is at present away al,+. -' 103 04 Nen annual leave which ends on July 17, and that it is that Ur. Heher be granted an additional thirty days leave or account of illness. Approved. --- was presented for consideration the following proposed 60 , a. L. Hemingway, President of the Mercantile-Commerce 111 arid. — 11-113t Company, St. Louis, Lissouri: 44 " refers to the letter which the Federal to you on December 12, 1933, whichdesrvau contained 2147 7/17/34 -12- "the following advice with regard to the disposition of the stock of the Lercantile-Commerce National Bank and Trust Company: 'The Federal Reserve Board has given careful consideration to this recuest, and, in view of all the circumstances involved, has requested me to advise you that it has granted the MercantileCommerce Bank and Trust Company a period of six months from December 15, 1933, within which to dispose of all of the stock of Mercantile-Conmerce National Bank now held by it, in such a manner that it will retain no interest therein, with the distinct understanding that such stock will definitely and finally be disposed of by the trust company within that period and that there Will be no further extension by the Board of the time in which such stock is to be disposed of., "The Federal Reserve Agent at the Federal Reserve Bank Of4. ". Louis has forwarded to the Board a copy of the letter JJ11 addressed to the .Agent on Tune 11, 1934, and it appears at the stock of the Mercantile-Commerce National Bank has 1ben; transferred to trustees and that certificates of belleficial interest in the trusteed stock of the national cank have been issued to the shareholders of the Mercantilea°zallerce Bank and Trust, Company. The Board has also received c ec3PY of the trust agreement entered into between the Mer! r iltlla-Commerce Bank and Trust Company and the trustees with to this mntter, and it has been observed that an irnvevocable option to repurchase the stock of the MercantileNational Bank at any time during the period covered t?e trust agreement, which is for twenty years, has been 3t the Mercantile-Commerce Bank and Trust Company. hes also been observed that during the twenty year period Covered by the trust agreement the full voting rights in the ea• lc4 of the national bank have been vested in the trustees, Trun2f whom are directors of the Mercantile-Commerce Bank and Of 1] - : C°thlianY, rather than in the holders of the certificates -4eficial interest in the stock of the national bank. to "In view of the provisions of the trust agreement referred Lezr°17e the Board does not feel that the Mercantile-Commerce pose tInd Trust Company can properly be considered to have dis14 ,c1 of the stock of the Mercantile-Commerce National Bank theQUeh a manner that it retains no interest therein. However, is Prepared to raise no objection to the disposition Na• ts7g has been made of the stock of the Mercantile-Commerce till°11a1 Bank provided that the option retained by the nercanor Z:C°121111erce Bank and Trust Company to repurchase the stock the "e national bank is eliminated and full voting rights in st"k of the national brink are vested in the holders of IsLter 2148 7/17/34 -13-"the certificates of beneficial interest in the stock of that , benk rather than in the trustees as described above. Your adVice of the action taken in this matter will be appreciated." C°113 ideration was also given to a memorandum dated Silly 3, 1934, from Mr. W1n°-'1A1,1 --33istant Counsel, referring to the suggested letter set out Elhclire'and outlining briefly the principal features involved in the plan tClr the d isposition br the Liercantile-Commerce Bank and Trust C°x4P411Y of the stock held by it of the Lercantile-Commerce 1,.ational Bank. After brief discussion, L.r. James moved that the letter quoted above be approved. Carried, L.essrs. Black and Thomas voting "no". There also was presented for consideration the following proposed letter to ir O'Connor, Comptroller of the Currency: aead "There is inclosed a letter which the Board proposes to to the 'Federal Reserve Agent at the Federal Reserve Bank ° c' /o Cleveland in answer to a request made by the ':iindber Trust rel4anY, Windber, 2ennsylvania, a State member bank, for a °Ilsideration of the Board's ruling that its proposed acPisiti .LEItioa-c)n of stock of an affiliated company would be in vio3ect. of section 9 of the Federal Reserve !set as amended by 1°n 5(c) of the Banking Act of 1933. baseds is set forth in the letter, the Board's rulinE, is rlat. in Part upon the premise that the corporate powers of illisl?nal banks are not enlarged by reason of any implied perell ,!1°11 in section 23A of the Federal Reserve Act which would th7w national banks to invest in stock of affiliates up to rj.liMits prescribed in that section. Although the Board's b -111 in this case is made with respect to a State member e Board desires to have the benefit of any comments Which Of .7°0 or your counsel care to make as to the propriety co nstruction which the Board has placed upon the aboveplovisions of law relating to national banks." t(32etile.1, With the proT)osed latter to Mr. Williams, Federal Reserve Agent ederel Reserve Bank of Cleveland, referred to therein, which reads 7/17/34. "It is understood that the Windber Trust Company, 'Andber, Pennsylvania, has requested the Board to reconsider its ruling that the exercise by the Trust Company of its preemptive right to acquire its pro rata share of the newly authorized capital stock of its affiliate, the Yierchants' and Idners' Bank, Scalp Level, Pennsylvania, would be in violation of Section 9 of the Federal Reserve Act, as amended by Section 5(c) of the Banking Aet Of 1933. Before making such ruling the Board gave careful e°nsideration to the effect of Section 23A of the Federal Reserve Act, as enacted by Section 13 of the Banking Act of 1933, but, as requested by the Trust Company, the entire subject has now been reviewed with particular attention to that Section. After such reconsideration the Board is of the opinion that its Prior ruling was correct. "The Board has heretofore ruled that inasmuch as Section 9 r the Federal Reserve Act, as amended by section 5(c) of the Ilking Act of 1933, subjects State member banks to the sem ,1 ! timitations and conditions with respect to the purchase of stock Of other corporations as are applicable to national banks under r4Eraph Seventh of Section 5136 of the Revised Statutes, State as tmber banks are not permitted to invest in stocks except in the Of the limited types of corporations in which national b 4Ilk5 are allowed to invest. Such ruling was mnde with respect to the stock of a corporation which was not an affiliate of the arbor bank in ouestion and before giving to the ',:indber '2rust ileiliPanY the ruling now under reconsideration it was therefore lacessarY for the Board to determine whether any .rovision of ia! permitted a member bank to invest in the stock of an affilao6ed corporation although it would not have been allowed to do bel lid the corporation not been an affiliate. It is urged on Of the jihdber Trust Company that Section 23A, by fixing sto"ations beyond which a member bank may not invest in the of an affiliate, tmpliedly authorizes such investment up to tie imits prescribed and the Board recognizes that rules of 411a6UtorY construction would justify this interpretation in the Ileo of evidence indicating legislative intention to the cont 11417. lat "Viith respect to the provisions of Section 23A which reto investments in stocks, however, the above mentioned proOf Section 9 of the Federal Reserve Act which subjects of member banks to the same limitations as are applicable to I,,r,24a1 banks is an important additional factor to be considered. r to , Banking Act of 1933 the Comptroller of the Currency iliveru-Led that national banks did not have the corporate power to riaecs it in stocks of any corporations except in a few clearly deases and the amendment made to Paragraph Seventh of sectioa 36 of the Revised Statutes by the banking Act of 1933 was ' Jai-to recognition by the legislature of the non-existence of Z r licZ 2150 -15"such power. It seems extremely unlikely that Congress intended hY another provision of the same ::ct to increase the corporate P°wers of all national banks in so indefinite a manner as by the gPlied permission which may be inferred from the language of Qeetion 23A. .11rthermore, there is no apparent reason why Congress should have prohibited State member banks from investing in the stock of non-affiliated corporations but should have pernitted them to invest up to the prescribed limits in the stock °17 "rPorations which were already affiliates. The fact that in 2!rtain cases an affiliation arises from circumstances such as 6he existence of common directors suggests no reason why the law should have permitted investmen member an the bank in the by t reek Of its affiliated company and in other cases, such as a iroldin company affiliate, an investment would appear to be objectionable than an investment in the stock of a nonaltiliated cam-Deny. oth "Accordingly the Board is of the opinion that in view of v.--er provisions of law Section 23A is not to be construed in ,7raanner sugested by the 'Jindber Trust Company and the Board '.011therefore unwilling to reverse or modify its previous ruling. requested to notify the Windber Trust Company according- After discussion, Mr. Tomes moved that the letters referred to above be approved. Carried, Messrs. Hamlin and Thomas voting "no". Governor Black then read a letter dated Tune 26, 1954, from Yr. Secretary of the Federal Reserve Agents' Conference, stating that, ter the adjournment of the joint conference of Federal reserve agents -.;overnors with the Federal Reserve Beard on that date, a conference or the Federal reserve agents was held at which all were present except the Pederal serve Agents at Cleveland and San Francisco; that at this °Ill'ei'ence a rei:ort of the Committee on Uniform Examination Charges was b40Dted, the provisions thereof to become effective on September 1, 19,i4, Ilbiect to the aPProval of the Federal Reserve Board; and that the Federal 1°serve Agents at Philadel-lihia, Richmond, Atlanta and 1, :ansas City voted c151 7/17/34, -16- on the adoption of the report. The report referred to in Yr. Stewart's letter, aa which was read by Governor Black to the members of the Board, reads follows: , "Your Committee appointed to explore the natter of uniform enlarges, desires to submit the following report. "Correspondence has been conducted with each Federal reserve :Cent to .;et his viewpoint relative to the matter, and to obtain atistical data covering the operations of each examinexaminingdivis . "Two members of the Committee held a conference in Boston June 4, at which time the matter was discussed at length. ltle matter was also informally discussed with members of the art of the Federal .Reserve Board. "After considering the matter fully, the Committee has arriveA u at, the following conclusions: "1. • least one regular examination of each ',-,state member bank, including its trust department, shall be made during each calendar year by examiners for Federal reserve banks either independently or jointly with State banking authoritios. Under certain circumstances more one such examination annually may be desirable, in which event the Federal reserve agents should be empowered to have an additional examination made. j copy Of each re-:;ort of examination shall be furnished to each State member bank examined. "2. Uniform charges covering costs of examinations of State member banks shall be made against each bank examined. "3. The costs shall include salaries, transportation and su6tenance from the time examiners and assistants leave headquarters, or the last post of duty, until they return to headquarters or arrive at the next post of duty. The costs shall also cover salaries of examiners, assistants and other employees in preparing and typing rei,orts of examination of State member banks. t. "4. NO charge should be made at this time for examinein connection with applications for membership in the Federal 'Reserve System. serve"In view of the new responsibilities placed on the Federal reit is aCents by the Banking Act of 1933, the Committee feels that 4iChlY desirable that the foregoing procedure be adopted. on I COTalriTLE ON UNIFORT.I EXAMINATION CH.ARGES: Tohn S. Wood, Chairman, Frederic H. Curtiss, T. Herbert Case." 2152 -17In this connection, reference was made to a memorandum dated j'IlkY 14, 1964, from the Division of Examinations containing comments and l'elaendations with respect to the report of the Federal Reserve Agents' C(Illittee on Uniform Examination Charges adopted at the conference in 3.1111e 140 7 A ' and, at the recuest of Governor Black, Mr. Leonard, Examiner Charge) Division of Examinations, outlined briefly for the information the raembers present the comments made by the Division of Examinations With r aspect to the revort as set forth in the memorandum of July 1.11, and tlited that the followinr,. suggestions are offere d: "(1) To work out plans if possible in cooperation with various State authorities whereby two regular examina-. tions of State member banks will be made each year, conducted alternately by the State authorities and the Reserve Bank with the Reserve Bank charging for its "(2) To examination; work out plans if possible in cooperation with various State authorities whereby joint examination3 might be made in such a way that thorough examinations would be insured and both the Reserve Banks and the State authorities satisfied as to the thoroughness of the examination and yet the duplicaLion of work would be minimized and the cost of the examination lessened." 141' 'Leonard stated that, in his opinion, the recommendation of the Cornl'11ttee 04 Uniform Examination Charges with regard to the assessment of ec)-t4 Of examinations would in many cases result in a duplication of eEte or 4gainst State member banks which would be called upon in the a Joint 6•LW, pecierai examination to pay the expenses of both State examiners reserve bank examiners, and would also result in inequitable es in connecti on with traveling expenses of examiners; that it is /114 s llgestion that action by the Board on the question of uniform 2153 '111 ! 7/34 -18- e4eraillation charges be deferred for the present so that further study k4at h -e given ehargeS to the question in an effort to work out a plan so that miht be mininized; and that the question be discussed at the meeting of the assistant Federal reserve agents in charge of examinatlets or chief examiners, and trust examiners for the various Federal reserv'e bsnl -43, which meeting is pronosed to be held in September, after which the D, ' 4 llislon of Examinations will submit to the Board a further report there- Upon motion by Mr. Szymczak, action on the Report of the Committee on Uniform Examination Charges was deferred in order that further study might be given to the question of uniform examination charges, with the understanding that the Division of Examinations will submit its report not later than October 1. Whi There were presented for special consideration by the Board letters h had been held in abeyance at the request of individual members of the to the following applicants for permits under the Clayton Act, advise PPz°val of their applications as follows: MI'. 'al a ' 8°n H. Lee, for permission to serve at the same time as r of The First National 3ank and Trust Company of New 1 liav;„ec plaj' 14a17 Haven, Connecticut, and as a director of The I,:orris /3ank of New Haven, New Haven, Connecticut. Mr. .7.0 as a 2.1n D. Cosgrove, for permission to serve at the same time cov `ureetor and officer of The Yirst National Bank of Glen °r Glen Cove, New York, and as a director of The State Bank ea Cliff, ..iea Cliff, New York. irown, for permission to serve at the same time as a Ohio °I. of The -Pirst National Bank of !Janesville, L'anesville, 4Ettis '' a4'd as a director of The First Trust and Savings Bank, .711.1o) Ohio. T. a d1nk Luby, for permission to serve at the same time as or of The First National Bank of Zanesville, Zanesville, 2154 7/17/34 -19and as a director of The First Trust and Savings Bank, Zanesville, Ohio. 111"' F. M. Ransbottom, for permission to serve at the same time as 4 director of The Federal Home Loan Bank of Cincinnati, Cincinnati, to, as a director of The First National Bank of Zanesville, Zanesville, Ohio, and as a director and officer of The First Trust and Savings Bank, Zanesville, Ohio. Hal H. Bacon, for permission to serve at the same time as a u-Lrector and officer of The Liberty National Bank & Trust Company Savannah, Savsnnah, Georgia, and as a director and officer of e Georgia State Savings Association, Savannah, Georgia. 14r. Xno. L. Mixon, for permission to serve at the same time as officer of the First National Bank of Hattiesburg, Hattiesburg, ! In ssiesiPpi, and as a director of the Lamar County Bank, Purvis, 14-Leeissippi, a di% R. Nalone, for permission to serve at the same time as and officer of The American National Bnnk of Pensacola, elsec°1a, 4 Florida, as a director and officer of The First Bank to,,Illet Company of Pensacola, zensacola, Florida, and as a direc' of The First National Bank of Dothan, Dothan, Alabama. xe di_ Lalone, for permission to serve at the same time as a .i4ector and officer of The American National Bank of Pensacola, Florida, as a director and officer of The First Bank Tsac°1a rust Company of Pensacola, Pensacola, Florida, and as a director rrt_ orlue lue American National Bank of Union Springs, Union Springs, klebaraae 111% Samuel direc, Pasco, for permission to serve at the same time as a uor plor4, of The American National Bank of Pensacola, Pensacola, pe,was and as a director of The First Bank & Trust Company of '80.001a, iensacola, Florida. 111'. Xos 4 dir Yoerg, for permission to serve at the same time as Ilasoeetor aad officer of The First National Bank of Hudson, 6tatell/ Wiscon3in, and as a director and officer of The Security Bank, Baldwin, Wisconsin. Approved. to The Board also considered the following proposed letter to Mr. Newz.,ea "al Reserve Agent at the Federal Reserve Bank of Atlanta, read- "follow.: 2155 7/17/ -20- "There are inclosed Clayton Act permits issued to Messrs. F. W. ?ote and George T. Hauenstein of Hattiesburg, Mississippi, together 4th copies thereof for your files and for each of the banks involved. 1, "Information available indicates that, in addition to the banks in their respective permits, Mr. Foote was serving as a direcand vice president of the Bank of Wiggins and as a director of the Sumrall Bank and Mr. Hauenstein was serving as director of the L8441. C°11ntY Bank. "After you have ascertained that each of the above named applicants has severed his connections with the banks not included in his P 2111t, please forward the permits to the respective applicants, sendcopies to the banks concerned. In order that the Board's files sj_ be complete, please advise the dates on which each applicant ,:c'red his connections with the bmiks listed in his application but ilkit covered in his permit." ; trted tor Te n ,layten .ict Permits referred to authorize Mr. Foote to serve 4 the same '414° as a director and officer of the First National Bank of Nattiesburg, liettiezturg, us a director and officer of the Lamar County Bank, -111qr3, LassissiT)pi, and as a director of the New Orleans branch of the Federal Ze1 , 7e f at tae tlanta, New Orleans, Louisiana, and 1,:r. Hauenstein to serve time as a director and officer ilattiesb ureg, Lississilipi - the ,i_rst National Bank of as a director and officer of the bank ississi:PPit and as a director of the Sumrall Bank, Sum1'411) Llissi5sivoi. Approved. C onside4-ition was also given to the following proposed letter to Mr. 114t04, Fed :E41 Reserve Agent at the Federal Reserve Bank of Atlanta, readinL; e: ' Elz Nu.ows: 3-04 , s"There is inclosed the Clayton Act permit issued to Mr. W. P. o4f I:attiesburz, Mississippi, covering his service as director 1:tiszis eer of First National Bank of Hattiesburg, Hattiesburg, 31PP13 director of Bank of Wiggins, Wiggins, Mississippi, and (1*eQ, vlith officer of Sunman Bank, Sumrall, Mississippi, together -°Pies theroof for your files arid for each of the banks involved. lic,stelli'ormation available indicates that in addition to the banks Q011.4t„ the Permit Lir. Tones was serving as director of the Lamar zank, Purvis, Mississippi. Ao rt r 4ection You have ascertained that Mr. Tones has severed his ccT. s h the Lamar County Bank, please forward the permit to '-oPies thereof to the banks concerned. In order that the 21.56 7/17/34 -21:Board's files may be complete, please advise the date on which Mr. 404es severed his connection with the bank not covered in his permit. did"In considering Mr. Tones' application it was noted that he nab attend any of the eight directors' meetings of the Bank of ggins held during the past two years, but that he stated that he , e13 fullY informed as to what was transpiring and was fully convernz with what actions were taken at the directors' meetings of that :mak and that it would be his purpose to attend directors' meetings little more regularly during the ensuing year. to"In the circumstances the Board has granted the permit in order avoid anY unnecessary misunderstanding by the community, which Prove detrimental to the best intereJts of the banks. The Board a feels, however, that a director should have a satisfactory b cord of discharging the duties and responsibilities of his office tPartioipating in the management and operations of the bank through his " 4a4oe at directors' meetings and, in transmitting to La.. Tones 4.1,!ermit, it is desired that you inform him of the Board's views 1,02".le naatter. The Board also desires that, when you submit your Iror!Illiendation as a result of your annual review of this permit, Port fully as to 1.1r. Tones' attendance at directors' meetings d14111g l934.' , 4 Approved. rhe B°ard then considered and acted upon the following matters: Telss.‘-ac.m — dated July 14, 1934, approved by five members of the Board, to 11r. Hoxtm ---n, Chairman of the Federal Reserve Bank of Richmond, reading as 1'040173: advall : Retels Board approves for your bank rates of 4 per annum on aa e3 to amendedmember banks under Section 10 (b) of Federal Reserve Act,, exd and 5-;; per aanum on advances to individuals, partnerships, -Act,.L-Porations under third paragraph of Section 13 of Federal Reserve as amended, effective July 13, 1034." Approved. gram to 114114 ) 4°114CL aa low Hoxton, Chairman of the :ederal Reserve Bank of Rich- follows: y ' our telecram. Federal Reserve Board approves for your bank foltion If2 , eliange_in rates on industrial advances under provisions of SecOn i4a-cl. °I' the Federal Reserve Act, as amended, effective immediately .: les8 .j13t ial advances to bouldn institutions from 5); per annum to flan +1, 14 no ".le rate charged to the industrial or commercial borrower, but ' 'e L less than 4i; per annum." Approved. 2157 -22Telegram dated July 14, 1934, approved by five members of the Board, to „ gswton, Chairman of the Federal Reserve Bank of Atlanta, reading as follows: "Re Clark's telegram July 12. Federal Reserve Board aPProves for your bank following rates on industrial adUnder provisions of Section 13b of Federal Reserve ,as amended, effective immediately: On direct loans or advances te established industrial or commercial busisscs, 6% per annum; and on advances to member banks, non' 11113er banks, and other financing institutions, 5,0 per annum. fcard also approves for your bank, effective immediately, o°11°wing flat rates on commitanents for industrial advances 4Puted on percentages of commitment, and varying with dura: n °I' commitment: .4L 11D to ninety days; l ninety-one to hUndred eighty days; l% one hundred eighty-one to two ,'"u-ndred seventy days; and 2 two hundred seventy-one to three nUhdred sixty-five days." r j 1„pproved. Memoranda dated ally 13, 1934, from Mr. Leonard, Examiner in Charge, 1:11111ai°t1 ofE xaminations, recommending that the services of lass Elizabeth 1344ritfin, Miss Beverly Mathews, Miss Anna F. Scott and la.. James F. Furbellelle37) as ste nographers in the division, be extended for an additional Deriod of thirty days on the same basis as their previous employment. The l'ec°1115aelidations were approved by five members of the Board on July 16, 1934. Approved. Letter dated July 16, 1934, approved by four members of the Board, '40 *. 1, Etcicl°ck, Deputy Governor of the Federal Reserve Bank of Boston, as rollows: colita"iThe Federal Reserve Board approves the recommendation Merlt 01 .eled in your letter of Tilly 6 that the temporary assignPartaile dwin A. Rich as Utility Clerk, Check Collection Deezeossat an annual salary of .1,920, which is ,120 in be cont; the maximum of the salary provided for the position, 1, 1934, ,, --Ilea. for an additional period of six months from July Approved. 2158 7/17/34 -23Memorandum dated july 10, 1934, from the Committee on Salaries alld Expenditures, submitting a letter dated Tune 26 from Mr. Attebery, Derv. r vIr Governor of the Federal Reserve Bank of St. Louis, which reested aPproval of changes in the personnel classification plan of the 1544k t e Provide for one new position in the audit department and six new 1)°31ti°118 in the Federal 2arm Mortgage Corporation division of the fiscal agezie , gepartment of the head office,and an increase in the salary range Of 0 , ' 4e Position, and a change in the title and an increase in the salary rezee Me position in the fiscal agent and custodian division of the liee°11strup+4 Finance Corporation department of Little Rock branch. The lzeni°randum stated that the committee had reviewed the proposed changes a'aci eoramended that they be approved. The recommendation was approved by five nlembers of the Board on Tilly 16, 1934. Approved. to 14. Letter dated July 16, 1934, approved by five members of the Board, eirt°n, Chairman of the Federal Reserve Bank of Linneapolis, reading Eta follows: 1934 "Receipt is acknowledged of your lettrir of July 10, Eldvising of the action taken by the board of direc°f Your bank at its meeting on July 9, in voting to 1,410-13* Mies Jennie Crockett, Secretary to the Governor, on the bank's payroll at full pay until Novembe 73 tir -' 1934, in order that she may became eligible for reii_ellaeat under the provisions of the Retirement System. "LI state that Miss Crockett's illness will prevent her returta , 1934. '16 to her position at the bank before November 1, It aPPears that the leave granted Miss Crockett is Le:" -Leave within the meaning of the Board's letter of quin 5, 1932 (x-.7303), and, therefore, does not re- vile approval of the Federal Reserve Board." Approved. 2159 747/34 -24Memorandum dated Tuly 12, 1934, from the Committee on Salaries 414I1xTenditures, submitting a letter dated Ally 7 from Mr. Helm, DePlity - Governor and Cashier of the Federal Reserve Bank of Kansas City, 17h14th l'equested approval of a change in the personnel classification plan ot the bank to provide for a decrease in the salary range of the position or "assistant to paymaster and assistant manager of disbursements" in the 1)r°visi011 Of personnel-paymPster department. The memorandum stated that tile coMaittee had reviewed the proposed change and recommended that it be 415131%°ved• The ree annendation was approved by five members of the Board O Jilly 16, 1934 ,. Approved. laMorandum dated 'Tilly 12, 1934, from the Committee on Salaries 13xPeaditures, submitting a letter dated July 9 from Mr. Helm, 336141tr Governor and Cashier of the Federal Reserve Bank of Kansas City, whiehrequested approval of a change in the personnel classification 1)184.0r the Onlaha branch to provide for an increase in the salary range (It the . pcsitioA of ' ,statistician and general utility clerk" in the "ecA14tillg department. The memorandum stated that the committee had zev ed th0 . 13143P°sed change and recommended that it be approved. 1 ,0oieWe The -4uLladatlan. was approved by five members of the Board on Tuly 16, 1934. Approved. andum. dated Ally 12, 1934, from the Committee on Salaries ttires) submitting a letter dated July 9 from Mr. Helm, I)et 1311. y Gov__ 0 r and Cashier of the Federal Reserve Bank of Kansas City) 2160 V17/34 -25- hich requested approval of changes in the personnel classification plan the Omaha branch to provide for five new positions in the fiscal agent- Recoastruction Finance Corporation department. The memorandum stated that the comMittee had reviewed the proposed changes and recommended that they be 4Proved. The recommendation was approved by five members of the Board °A auly 16, 1934, Approved. Tele gram dated July 14, 1934, prepared in accordance with the ac- t1en at the meeting of the Board on July 13 and approved by five kslabers of the Board, to the Federal reserve agents at all Federal reserve readik; as follows: th:At meeting of Board yesterday consideration was given to Part of subsection (d) of Section 13b of Federal Reserve Act, as amended, which provides that each member of 4.1clustrial Advisory Committee shall serve without compensa"'".011 but shall be entitled to receive from Federal Reserve : F. Lk his necessary expenses while engaged in business of the nIzattee 'or per diem allowance in lieu thereof to be fixed Lthe Federal Reserve Board. Board feels that it is with; 1j6 sufficient information at this time to enable it to fix alar°Per per diem allowance in lieu of necessary expenses Inerabauggests that for the present your bank pay to each er of necessary Industrial Advisory dommittee for your district the expenses incurred while engaged in the business of Bo_ eQuImittee. After a period of two months has elapsed Ae::d desires that you furnish it with information as to all ber seal7 expenses incurred during that period by each memAdZieorY" Committee for your district,the number of by le ueld by the committee, the amount of time spent rortt j meMber of committee in this work, and any other in". Which You feel might be helpful to Board in fixing ,eu of necessary expenses, together wlthin . C Approved. Te1e ,ram dated July 16, 1934, approved by five members of the Board lioxt04, Chaim of the Federal Reserve Bank of Richmond, reading 2161 7/17/34 -26- aa follows: b "Your letter Tuly 14. Board a-yoroves appointment by your of following members of Industrial Advisory Committee of ;lfth District: Walker D. Stuart, T. G. Holtzclaw, Overton D. Dennis, Harvey W. Moore and George E. Probest, Jr., it being u nderstood on basis of information submitted that each of the 1°°ve-named persons is actively engaged in some industrial Pursuit within the Fifth Distric t. PIaase confirm acceptance or appointments." Approved. to La,. Letter dated Tuly 16, 1934, approved by five members of the Board, 411liams, Federal Reserve Agent at the Federal Reserve Bank of Cleve4 ' 4d, r eaulng as follows: stat "Reference is made to the report of examination of the 304,,,e Bank & Trust Company, Richmond, Kentucky, as of March 27, 13-'*, and the informa tion submitted in connection therewith; in iartioular, 2 to the information furnished with Mr. Fletcher's ettor of Tune 15, 1934. "It has been noted that on May 31, 1934, a conference was held thn with a committee of the directors of the member bank and we : -") Promises were given that the recommendations of the examiner 1i. 11d be followed, also that satisfactory corrections would be to l. e !ted hY the time of the next regular examination. According batr letter of Vice-president Turley, dated July 13, 1934, the ta is reluctant to publish a statement reflecting a reduction s and wishes to eliminate losses classified in the report ell ; If6 of examination through application of earnings for the for Year, and if not earnings for the period are insufficient of th;(3 Purposes, requests a further extension to March 1, 1935, od in the eliminations may be effected. Boara;1/132:.1t. in its letter of April 6, 1934, (X-7848) the shoulA reela that a bank's published statements of condition ita _" reflect as nearly as possible the true condition of he :sets and that losses as classified by an examiner should etlse r teed i off or otherwise eliminated. Accordingly, in this thou4; -s believed that the losses should be charged off even -"'„,it necessitates a reduction of surplus. to "Incidentally, while the bank refers to losses amountine, 35:6113,f7°,30, the total amount shown in the report is '20,778.as undivided profits amounte to ;.20,027.62, the el1al1 d tnpaix,,1°11 or losses on the date of examination would have -' the surplus by only .:750.73. The report of examination 4 2162 -27"indicates net earnings amounting to f12,027.62 for the period rrom xanuary 1, 1934, to March 27, 1934, however, and, after allowiri6 for the accrual of interest on deposits, it would apPear that undivided profits should now be sufficient to cover ! .°8ses, Particularly in view of the progress reported in col-LeCtion of interest on past due paper. "It is assumed that prompt steps will be taken either by the Commissioner of Banks or your office to see that the unsatisfactory conditions in the trust department are promptly corrected; that proper records are installed and maintained; that approved procedure is followed in the operations of the trust department. "The report of examination states that the law of Kentucky Provides that guardians, curators and committees shall be charged with interest at the rate of 5'"L where the amount received and held in trust does not exceed 5,000, and at the , ate of 4'70 where the amount received and held in trust ex;?eas C?5,000; and it is noted that the bank feels that, in 01 "or this provision of the law, it must produce interest 4.,1 all balances held by it in any of the capacities named in e'lc statute. However, it has been noted that the examiner viZested that the bank take the matter into the local courts i2 f "h a view to obtaining the elimination of this requirement h„2.(3ssible. In this connection, it is suggested that if you 13::7 not already done so, you should call the attention of the to the provisions of Section 19 of the Federal Reserve r°r consideration in connection with the disposition of the problem involved. the "It has been noted that the unsatisfactory condition of thatbank has been the subject of discussion for Some time and ?°ur Executive Committee is of the opinion that unless corrections are effected by the time of the next r egular e pecdtar xamination, a recommendation should be made to the be tral.eeerve Board that the bank's membership in the System Boazdentanated. It will be appreciated if you will advise the the Boaas to the action taken with respect to losses and keep rd advised as to the progress made by the bank in effe -ulng improvement in its condition." Approved. Letter dated July 16, 19--:34, approved by five members of the Board, ot° 1 411' ''`elielancl) Federal Reserve ,‘ent at the Federal Reserve Bank of reading as follows: 2163 "Receipt is acknowledged of Nr. Fletcher's letter of Tune 27; 1934, inclosinc a copy of the report of examination of the urust department of The Firestone Park Trust and Savings Lank, Alcl'°11, Ohio, as of Tune 22, 1934. "It has been noted that although a trust committee has been designated, the couraittee does not function, and that the !4flagement considers that there is no reason for the committee to function inasmuch as the only investments made by the trust usllartzent are in securities which are legal for the investment or trust funds. It has been noted also that proper control is riot o=cercised over the securities in the custody of the trust de partment. , "!he weizht of trust authority is that all investments of trus , 'lands should be made, retained or sold only upon authority 11 investment committee composed of capable and experienced 13,41c0r3 or directors of the instituion, and, as pointed out the examiner, the loose method referred to of handling ennrities in the custody of the trust department is universally trdsmted. It will be appreciated, therefore, if you will take th:ss 'natters up with the managament of the bank, emphasizing to Mportance of maintaining adequate safeguards with respect or l'fls investment of trust funds and control over the assets raacine individual trusts, and request that such corrections be co u. as will remove all cause for future criticism in this lanection.” Approved. to the Letter dated July 16, 1951, approved by five members of the Board, ”Gloucester ITational Bank of Gloucester", Gloucester, Eassachusetts, aS follows: "The Federal Reserve Board has given consideration to your .°4)1311eat. lon ror permission to exercise fiduciary powers, and or 148 You authority to act, when not in contravention of State atoci al law) as trustee, executor, administrator, registrar of and bonds, guardian of estates, assignee, receiver, cSe or in any other fiduciary capacity ,trust companies or other corporations which 14;a-it° with national banks are permitted to act the sUoh , ti"? la Of the State of Nassachusetts, the exercise of all Act r,:-Cats to be subject to the provisions of the Federal Reserve the r egulations of the Federal Reserve Board. 11113 : Dower letter will be your authority to exercise the fiduciary aUthori rantsd by the Board. A formal certificate covering such -zat"n Will be forwarded to you in due course." Approved. 2164 14 7/17/34 -29Letter dated July 16, 1934, approved by five members of the (13 to Mr. O'Connor, Comptroller of the Currency, reading as follows: "Receipt is acknowledged of your letter of July 7, 193, with reference to the proposed reduction in the common capital stoe,c of the "First National Bank in Meridian", Meridian, Nissis8 4. 131, from c400,000 to ,T;200,000, which reduction was approved by u40 Board on June 2, 1934, pursuant to a plan which provided Z111 11°.0 other things for the sale of .;300,000 of preferred stock the Reconstruction Finance Corporation. 'You advise that the Reconstruction Finance Corporation has : L reed to purchase only ;,;200,000 of preferred stock of this bank, ' ' etd.reeammend that the bank be permitted to reduce its common ,:Pltal as originally proposed but that the plan as approved be ' tc eltIded to permit that the amount of preferred stock to be sold he Reconstruction Finance Corporation be reduced from 9000,000 to 400,000. "In accordance with your recommendation, the Board approves the ended plan providing for the sale of .A00,000 of preferred to st:L: .L.s set forth in your letter of July 7, 1934, with the underthat the other provisions of the plan remain unchanged." Approved. Telt, --gram dated July 16, 1934, approved by five members of the Board, t°*. '11.I1ial°3.2) Federal Reserve Agent at the Federal Reserve Bank of Cleve34) st"ih,1* that the Board has given consideration to the application of 4Tile Diversified Holding Company", Galion, Ohio, for a voting permit under the e'llth°11tY of section 5144 of the Revised Statutes of the United States, 118 1111°11Cled) eatitlin3 such organization to vote the stock which it owns or cotitrols in the "First National Bank in Crestline", Crestline, Ohio, and 44a atzthorized the issuance of a limited permit to the ap)licant subject to the f°110wing condition: to the issuance of the limited voting permit hereby applicant shall agree as follows: 1j1, , i1 6 " :4 1 ;, The undersigned will cause First National Bank Crestline, Ohio, to charge off or otherwise from its as..lets, as soon as shall be practicable the judgment of the Federal Reserve Agent at the Federal P ized alltho : 21.65 -30"Reserve Bank of Cleveland, but in any event not later than September 1, 1934, in such manner and to such extent as shall be satisfactory to such Federal Reserve Agent, all estimated losses as set forth in the re'oort of examination by a national bank examiner as of L:ay 31, 1934. "Second. As soon as shall be practicable in the judgment of said Federal Reserve Agent but in any event not later than November 30, 1934, the undersigned will cause First National Bank in Crestline to make such corrections as shall be requested by said Federal Reserve Agent in order to remove the cause of any criticism relating to anY feature of its practices, policies, management or financial condition which has heretofore been made by the appropriate supervisory authorities." Euia tor the following purposes: :At any time prior to August 31, 1934, to act upon a pro) ,,-sa..1. to create, issue and sell to the Reconstruction Finance ‘j°11Poration or others preferred stock of such bank having an gate par value of Twenty-five Thousand Dollars (y25,000) make such amendments to the bank's Articles of Associan;:4 and to take such other action as shall be necessary to et such proposal, such proposal to be in accordance with -11131an which shall have been approved by the appropriate Isi,e-s(Pi!r71s°rY authorities and which shall be satisfactory to the ' -- ra-L Reserve Agent at the Federal Reserve Bank of Cleveland." The tele Zram also authorized the agent to have prepared by counsel for the pet , eral reserve bank, and to issue to The Diversified Holding Company, 11Mited votinc permit in accordance with the telegram. The telegram State nn 4130 that, subject to the agent's recommendation and in the abseticeclor 14 the circumstances making the granting of a general peemit inadvisable Public intere3_ , t the Board will issue to the applicant a general as toe 300n as the provisions of the agreement referred to in the arm complied with to the agent's satisfaction and that it is ea that th e agent advise the applicant accordingly and, upon such ---ce by th e aPPlicant, notify the Board of that fact and of the r ec°11zendat1oa with respect to the issuance of a general permit. Approved. 2166 7/17/34 -31Memorandum dated July 13, 1934, from Lai. Parry, Assistant Director (It the Division of Research and Statistics, referring to the recent recamrati°1i of the Securities 7'7:change Act Committee, appointed by Governor )31ack at the meetinz of Federal reserve agents and governors held in dashingtoa 0 a 3-une 25, 1934, of which Governor Norris is chairman, to the effect thet t he Board issue promptly some statement clarifying the meaning of Secti°11 7(e) of the Securities Exchange Act, which recommendation, after beiarb r°116ht to the attention of the Board, was referred to the Division c3t Res arch 8--ch and Statistics for consideration; and stating that, for the v4e set forth in the memorandum, it is the recommendation of the Board's statp v/hich has considered the matter that the Board issue at this time 4°t 8-:l'e'zent interpre ting Section 7(e), but that instead every effort be 1114de to is 3u.u. as promptly as possible the whole set of regulations called r0/' by Section 7; and that it is believed that nothing short of some such 1 3ZI OCeaure cts this would be satisfactory from the point of view of the oard or 211bieet likely to dispel an appreciable amount of the confusion on the that is said to prevail in the securities market. The memorandum stated, i also that specific inquiries are received by the board from time to tiaze, of which one recently came from a brokerage firm in Chicago, ille; or whether this or that particular operation would have the effect deetoying any exemption to which the account in which it is made Wollid be entitled, and that, with respect to such inquiries, it is l'ee°01ended lacl that, Pending the development of the comprehensive rules i'egulations, each acknowledged and the correspondent inauirY be illroximed that the answor to his query will depend upon the rules and 21_67 -32481114tions, and that these will be forwarded to him as soon as they have bee„ 18sue d Recommendations approved. Letter dated Tilly 16, 1934, approved by five members of the Board, to tile -governors of all Federal reserve banks, reading as follows: "The agreement recently entered into with the Secretary of T Treasury, in accordance with the provisions of subsection (s) of Section 13b of the Federal Reserve Act, provides that Your bank shall pay to the United States all dividends, all PaYlaents on liquidation, and all other proceeds of its stock 14 the Federal Deposit Insurance Corporation, for which diviads, payments, and other proceeds the United States shall be e "J Ured by such stock itself up to the total amount paid to the.L bank by t the Secretary of the Treasury under Section 131), in the event such dividends, payments, and other proceeds 4 any calendar year do not aggregate 2 per centum of the total PaYMent made by the Secretary of the Treasury under L'ection 13b, Ir tl° 111r bank will pay to the United States in such year such fura el' aaount, if any, up to 2 per centum of said total payment ,r8 shall be covered by the net earnings of the bank for that 40!ar derived frora the use of the sum so paid by the Secretary the Treasury; and that your bnnk will continue such payments until the final liquidation of said stock. bank"The agreement also provides that all funds paid to your 10 by the Secretary of the Treasury and not invested in .0_,,113, discounts, advances or purchases under Section 13b of v::,Federal Reserve Act will, insofar as practicable, be inated in any other income producing investments lawful for a. F Reserve bank. Ratie„ "In order to carry out the provisions of the Federal Tra : rve Act and the agreement with the Secretary of the lacer147, it will be necessary for your bank to keep such earaull i ting records as will enable it to determine the net to thbiZs of the bank derived from the use of the funds paid ! l ank by the Secretary of the Treasury under Section 1Th. emi t4 th " Le net earnings from such funds should be determined -e following manner: ruild8"Fram the total earnings derived from the use of the de*, ,zeeeived fram the Secretary of the Treasury shall be the t It - exioette k4-/ uutside expenses (i.e., expenses other than office in co es and expenses of the advisory committee) incurred Anection with the making or collecting of specific loans 21GS "discounts, advances and purchases out of such funds, except such expenses as are paid by the borrowers. "(2) Such Percentage of expenses of the advisory committee, er outside expenses not provided for in item 1, and of total cf:Ciee expenses of the unit handling loans, discounts, advances, , )11. : 1 ehases, and commitments under Section 13b as the average daily "°-Ldins of such loans, discounts, advances and purchases made °Ilt of funds received from the Secretary of the Treasury bear to the total average daily holdings of loans, discounts, advances, Purchases and conaditments made by such unit under Section 13b. °trice expenses should comprise all expenses (other than expenses Of the advisory committee and outside expenses) in connection With the making of loans, discounts, advances, purchases and c°111mitments under Section 13b, including salaries of employees d Of officers in direct charge of the unit making such loans, discounts, advances, purchases, and commitments and a fair charge 4er rent, light, heat, power, water, janitor service, elevator !hd cleaning service, repairs and alterations, and rental of I-Urniture and equipment. "(3) Actual expense of making the income producing investthe:referred to at the end of paragraph 3 of the agreement with ecretary of the Treasury. out "(4) Losses on loans, discounts, advances and purchases made Of the funds paid to your bank by the Secretary of the Trea; 11rY under Section 13b, charged off with the approval of the tcaderal Reserve Board. If expenses and losses charged off exceed tl,ccx e the excess thereof over income should be deducted from 0;;° amount received from the Secretary of the Treasury as reported the bank's daily balance sheet, item 'Surplus (Section 13b)'. Recoveries on losses previously charged off should be credited to Trr at net earnings on funds received from the Secretary of the el,caeurY if the losses to which the recoveries relate were to current net earnings. If the losses to which the recover ies relate were charged to 'Surplus (Section 13b), the re ceveries should be credited to that account. us_ "There is inclosed herewith a supply of Form B-20 for your zee in submitting an annual statement relating to the employfunds paid to your bank by the Secretary of the Treasury er Section 13b of the Federal Reserve Act. This statement be transmitted in duplicate to the Federal Reserve Board 1,111::Ilia 10 days from the end of the calendar year, one copy of when approved by the Federal Reserve Board, will be deered to the Secretary of the Treasury. eoll "The Board understands that the Treasury Department has in pedr8e of preparation regulations governing payments to the Aetel l Reserve banks under Section la of the Federal Reserve 'ehd pendinc. completion of such regulations the Treasury Z 2169 -34"Department has not passed upon the instructions contained herein or the accompanying form B-20." Approved. Letter dated July 16, 1934, approved by five members of the Board, tO +1, ."46 governors of all Federal reserve banks, reading as follows: "With reference to the Board's letter of this date in regard to the method of determining net earnings on funds paid to Your bank by the Secretary of the Treasury under Section 33b of the Federal Reserve Act and the annual statement on 4°rm B-20 to be submitted in connection therewith, you are Ellso requested to submit monthly to the Federal Reserve Board zepc)rts on forms B-18 and B-19, a supply of which is inclosed. "It will be noted that forms B-18 and B-19, which cover Income, expenses, and losses, call for separate figures in re_!Ird to net earnings on loans, discounts, advances and pur;faSes fram funds received from the Secretary of the Treasury l'!4er Section 13b and from the bank's own funds invested under .)at Section and that outside expenses chargeable to a specific 1,411, discount, advance or purchase are to be shown separately am other expenses. , r "Reports on forms B-18 and 8-19 should be submitted ;:e ! IIIPtlY after the end of each month and should include ex48e3 incurred at the branches, if any, as well as at the ,lead office." Approved. B104 or ljeMorandum dated Ally 11, 1934, fram Mr. Smead, Chief of the DiviBank Operations, referring to special weekly reports of brokers' 'now 44d Los 14 1926 submitted by member banks in Chicago, Philadelphia, San Francisco 44e1ess and stating that these special reports were inaugurated 1.. e cetlrea 1928, at a time when no figures of brokers' loans were being thtlt sit *Qm waY weekly reporting member banks except those in New York; b,e4 re ee XalquarY, 1929, however, all weekly reporting member banks have gilired to report theit re brokers' loans for their own account as a part of (Illar weekly condition statements; and that it is recommended that he Boazd aUthorize the discontinuance of the special weekly reports of 2170 M3/34 —35— brok I ers loans now submitted by member banks in the cities referred to. The Ille°10111endation was approved by five members of the Board on Tuly 16, 1934. Approved. Letter dated Tuly 16, 1934, approved by five members of the Board, to Mr° Case' Federal Reserve Agent at the Federal Reserve Bank of New York, ' lectcling as follows: "This refers to your letter of May 31, 1934, requesting all:vice, among other things, as to whether the following proof section 20 of the Banking Act of 1933 are applicable to the Irving Investors Fund C, Inc., an affiliate of the Irving Trust Company of New York City, a member bank. "Sec. 20. After one year from the date of the enactment of this Act, no member bank shall be affiliated in any manner described in section 2(h) hereof with any corporation, association, business trust, or other similar organization engaged rinci all in the issue, flotation, underwriting, P.112.11a_sale, or distribution at wholesale or retail_ cr through syndicate articination of stocks, bonds, _______,.debentluiesnotes or other securities.' Thaeret follo2 TIRI -Tatands that the principal facts in this inatte: The Irving Trust Company owns all of the stock of the v1-ng Investors Management Co. Inc., and the latter corpora14.1.0/1 T °wns all of the voting stock of Irving Investors Fund C, Ir ties ving Investors Fund C, Inc. purchases and holds securiits'Principally stocks and issues and sells to investors votini stock 'described as Investors Shares, which has no rights, The Irving Investors Fund C, Inc. has outeteia issu lng 100 shares with voting rights and is authorized to shar :199)900 Investors Shares. The number of authorized -8 of either class may be increased at any time by the 8.111.gmative vote of the holders of the majority of the outing votinL, shares ares and all of the shares shall particip44(1 ruallY share for share in the earnings and assets of gaged ir,Ine. Irving Investors Management Co. Inc., is enInc. ,:elmanaCing and advising as to investments of Fund C, : 7 --, for such management service, the Management Company ree4 111)04' s s 1% Of the subscription price paid by subscribers 1.113S CriPtion to Investors Shares, 1-/; annually (in quarteror th: ! Ilments) of the aggregate amount of the gross value velue '_ssets of l'und C, Inc., and 1% of the liquidating ur Investors Shares upon the redemption of such shares. ;ate 7/17/34 -36"FUnd C, Inc. in engaged in the issue and sale of its Investors Shares; and such shares are available for purchase on any day cla which the New York Stock :cchange is open for business. It iS stated that no salesmen are employed or advertising placed ??Ileerain0 Fund C, Inc. and no general mailing list of prospec.1-ve investors is maintained, but that the facts concerning FUnd CI Inc. are presented to customers of the Irving Trust `lomPanY when they request advice on common stock investments ez evidence interest in investments in common stocks and printed !liformation concerning Fund C, Inc. is sent to anyone requestSuch information. The Investors Shares of Fund C, Inc. new outstanding amount of 19,613 shares and of this amount . 1948 shares were sold during 1933. The certificates represent-44a. these shares are in a form substantially similar to the Usual stock certificates and Investors ._;hares are transferable ealY after they have been offered to Fund C, Inc. for purchase and such purchase has been declined. The right to redeem such "ares may be transferred. "After careful consideration all of the facts involved in tl* 1.11s raatter, the Federal Reserve Board is of the opinion that -,;.1"41fle: Investors Fund C, Inc., is an affiliate of the Irving : 1st Company engaged principally in the issue and sale of theurairoties within the .manins of provisions of section 20 of 11,e , is--4dng Act of 1 933, and that, accordingly, it will be t;"TesarY for the member bank, if it has not already done so, 3 ,'aim appropriate steps in connection with the business of 0 ; e11 affiliate to comply with the requirements of section 20 the Bankin Act of 1933. You are requested to advise the '''111C Trust Company accordingly. have also referred to the relations of Irving In004ers L:anagement Co. Inc., an affiliate of the Irving Trust 174 ) -1 allY, to Fund. A and to Fund B and requested advice as to co. her in view of such relations Irving Investors Eanagement the In", is an affiliate of the Irving Trust Company within Pr°visions of section 20 of the Banking Act of 1933. , "The Federal Reserve Board understands that Fund. A and ittlaB s lH'eP - sent pools of stocks and other securities and that tio, -eretofcme been the practice to issue and sell participath4 : 8 in these pools of securities. However, it is understood in ; ,11° such participations are now bein-, issued and sold, and, tio,Itew Of this fact, the Board is of the opinion that the relapia ; Of Irving Investors Lanagement Co. Inc. with Fund 2!„ or the BB do not bring it within the provisions of section 20 of 1,er,, , anking Act of 1033 which, as you will observe, have buZ neace to organizations 'engaged'principally in the securities feel !!'" Of course, if the IrvingTrust Company Should later i4 1,1116In ciat it would be desirable to issue and sell participations A Or in Fund B further consideration should be given 21.72 7/17/34 37 "to whether, in the light of all the circumstances existing at ti2e, the relations of Irving Investors lianagement Co. Inc. with such Fund .L1 or Fund B bring it within the provisions of section 20 of the Banking Act of 1933. "-As you know, Section 21(a) of the Banking Act of 1933 Provides that after Tune 16, 1934, it shall be unlawful for any "rPoration engaged in the business of issuing, underwriting, 8ellin3, or distributing at wholesale or retail, or through eY4dioate participation, stocks, bonds, debentures, notes or Other securities, to engage at the some time to any extent whatever in the business of receiving deposits. This section 143fc)vides a penalty of fine or imprisonment for violation of Provisions and the interpretation of the provisions of Such section is a matter within the jurisdiction of the DepartOf Justice. Accordingly, the Board does not attempt to „le on questions arising under this statute or other statutes 'l±e v iolation of which is subject to criminal prosecution. It suggested however, that you call the Provisions of section t(a) to the attention of the Irving Trust Company merely for 13;::,information in connection with the working out of the ulems involved with reference to its securities affiliate." i I Approved. Letter dated July 16, 1934, approved by five members of the Board, to -" Christopher X. Lane, Pearl River, New York, reading as follows: or "Governor Black has asked me to reply to your letter it 111Y 6) 1934, in regard to certain transactions which )Pears from the inclosures transmitted with your letter Yo ar-e- -aye had with the National City Company. These inclosures herewith, as it is assumed that you desire to retaTiiihr. eott"It is noted that you have consulted counsel but have vie,„?4 n° assurance that you would be sustained. After rening these inclosures it appears that there is no action ezic e .could be taken by the Federal Reserve Board under its ulflg authority to assist you in this matter." Approved. to the Letter dated July 16, 1934, approved by five members of the Board, Secretary Of the Navy, reading as follows: reoei:Iliel°sed io a copy of a letter, dated Tune 23, 1934, ed bY the Federal Reserve Board from Kr. 71. E. Hale, 2173 7/17/34 -38- "Cashier of the Federal Reserve Bank of San Francisco in connection with the proper safeguarding of currency transported from the Los Angeles Branch of the Federal Reserve Bank of San Francisco, to the Battle Fleet and the Scouting Ileet stationed off San Pedro. The Board will appreciate advice of any action which your Department may take in tnis connection." Approved. Telegram dated July 16, 1934, approved by five members of the Boal,A 11"eX to 111.. Sargent, Assistant Federal Reserve Agent at the Federal 0EBankulc of San Francisco, reading as follows: , "Retel July 13. Neither Comptroller nor Board has any °Diection to your furnishing copies of Comptroller's ruling to Persons making inquiries with respect to right of national banks to purchase and sell stocks solely upon the order and fo_r. the account of customers but Comptroller . efers that copies of such ruling be not given out except ln r esponse to inquiry." Approved. Letter dated July 16, 1934, approved by five members of the .Board, tO Ca8e, Federal Reserve Agent at the Federal Reserve Bank of New York_ . '4:eadlng as follows: re, "Reference is made to your letter of Tune 7, 1934, in f6ard to the letter to you from E. C. Johnston, President he First National Bank, Kenmore, New York, dated latrch 29, ce, in which Ylr. Johnston requested an opinion conorrilthe aPplicability of the provisions of Section 32 Banking 21.ct of 1933 to the service of Edward H. Nae tiL,, I-11T'r and Ray H. Heiss as directors of the First of 4 -, 1.Ba e, tn101 0 „Lth e Kenlo Finance Corporation, both ache,anclosed with your letter were various letters, the 1]"‘I'e3 and financial statements showing the nature of o;Aniusiaess of the Kenlo Finance Corporation, and an T. Davis, Assistant Counsel to the Bank of Now York, that Section 32 of the direi enC; :Let of 1933 has no application to the interlocking that t°rate relationships in cuestion. It has ben noted Y°11 agree with the opinion of Er. Davis. „ 111. t t 1; 2174 7/17/34 -39"From the information submitted it appears that the Kenlo Fillanee Corporation was organized to buy and sell mortgages on ilea1 estate, and that it has also invested some of its funds in 88eurities. It further appears that the company is now in the Process of liquidation, and that during the period of liquidation its avilable funds are being used to purchase securities tor its own account in the open market. The information subIllitted also shows that during the four years ending December 31, 2 1. 33, the total purchase price of securities purchased annually . the corporation averaged approximately 16.2 per centum of its .1JY. " ) tal assets; that the total sale price of securities sold aually by the corporation during the three year period ending i!eember 31, 1933, averaged approximately 14.2 per centum of : ( 3 total assets; and that as of December 31, 1933, 66.44 per Of the securities held by the corporation had been held "r e period of twenty-four months or over. The statement is ' ade on Schedule F that the corporation has not participated 1):4 -, rarlsactions involving the issue, underwriting and distri,11tion of securities, other than its own. The financial stateOf the corporation shows an authorized capital stock of An ; 00 ahares of common stock having .A00 par value, of which '0400 are issued and outstanding. is . "In view of the fact that the Kenlo Finance Corporation Process of liquidation, and in view of the other ine4.4410/1 submitted, it appears that the corporation is not Ile4ged primarily in the business of purchasing, selling or elirtieting securities within the intendment of Section 32, thateeeerdingly the Board agrees with your conclusion and °11 Your counsel that the provisions of Section 32 are tio ePPlioable to the relationships in question. If the corporashoillasheuld again resume active business, further consideration tioa,.be Given to whether the interlocking directorate rolathile"113 would then come within the provisions of Section 32. to 4,8 there are other facts which you believe should be called will e ettention of the Board, it will be appreciated if you -4 advise /0x. Johnston accordingly." r T Approved. to mzt Letter dated 3-uly 16, 1934, approved by five members of the Board, L. Dennis, Newark, New Jersey, reading as follows: your "The Federal Reserve Board has given consideration to 1113Plioation for a permit under Section 32 of the Bank°t 1933 to serve as director and chairman of the d. 1Tew ot the Mt. Prospect National Bank of Newark, 14ewark, -Post el'8eY s and as resident partner of the Newark branch of 111(i lirlaCT), New York, New York. 2195 -40"It appears that the firm of :Cost and Flagg may not be regarded as 'engaged primarily in the business of purchasing, ! elling, or negotiating securities' within the scope of Section 32. However, in your letter of July 6, 1934, to Mr. W. -us Dillistin, Assistant Federal Reserve Agent at New York, coPY of which has been referred to the Board, you state that the firm of Post and Flagg carries stocks, which are not fully Paid for, on margin and that it is not engaged in the banking bu siness. "Your attention is invited to the fact that Section 8A the Clayton Antitrust Act prohibits a director or officer °r a national bank from serving as a member of a partnership Which shall make loans secured by stock or bond collateral Other than to its own subsidiaries. The Board has expressed , !te , opinion that the carrying of margin accounts involves the ;711cing of loans secured by stock or bond collateral within 0 e Illeanine of Section 8A; and accordingly, even though an sreanization is not of a kind to which the provisions of 32 of the Banking Act of 1933 are applicable, it falls Within the prohibitions of Section 8A of the Clayton Act if such organization carries margin accounts. "While the Federal Reserve Board is authorized by Section % 1! 0 4 the Clayton Act to issue permits covering relationships more than three banking institutions which are ;i7rwise prohibited by the terms of Section 8A, if such relah„llahiPs are not calc?lo authority incompatible with the public interest, it to issue such permits covering service to a trg institution and an an which is not engaged Post 2 411kine business. Accordingly, since the firm of Ilag is not engaged in the banking business, the author"ue no authority under Section 8 to issue a permit °tile izirle service as a partner of that firm and as an or director of a national bank. 3ever In the circumstances, it will be necessary for you -to 1344k orur connection with either the Mount Prospect National conform Newark or with the firm of Post and Flagg in order to xt will h the provisions of Section 8A of the Clayton Act. lige4t attnaPPreciated if you will advise the Federal Reserve You have uue Federal Reserve Bank of New York of the action taken in order to comply with the law." Approved. Letter dated to ttle r July 16, 1934, approved by five members of the Board, (311°71133e applicant for a permit under section 32 of the Banking ket Or 1933; the letter stating that it appears that the relationship 2176 -41d• by the application is within the class which section 32 was deto terminate, and that, accordingly, the Board is unable to find tli" It would not be incompatible with the public interest as declared "Ile Congress to grant the application, although in the event the ap134eant desires to submit further facts or arguments in support of the 44licati011 the Board is prepared to give them careful consideration: T .• T. Bowman, for permission to serve at the same ""44e as a director of the American National Bank, and as esident and director of the Southwest Investment Company, °th of Austin, Texas. r Approved. In ootnection with the above application, which raised the questi 04 as to whether the Board should issue a permit under section 32 of the )3enkin8 Act of 1933 covering an interlocking directorate relation841) b etIleela a member bank and a dealer in securities which handles only 14 ae ties ezcepted from the restrictions upon underwriting and dealing °Ill'ities contained in paragraph "Seventh' , of section 5136 of the tau, St atutes as amended by section 16 of the Banking Act of 1933, the tiord deted considered and approved the opinion contained in a memorandum /14e 7, 1934, from Mr. Owens, Assistant Counsel, that the prohibiot sectio4 32 apply to directors, officers and managers of dealers 4414101 Pal bottds as fully as to dealers in other securities. Letter dated Xuly 14, 1931, approved by five members of the Board, 4 °?C°r111°r: Comptroller of the Currency, reading as follows: Goilei:Thie refers to the memorandum of Deputy Comptroller 141118 ! , 1111e 18, 1934, in which he states that: and Milford who are directors of e Peoples ---Bank of Greenville, Greenville, South Carolina, 2177 -42are also directors -of insurance companies which have included in their assets loans secured by stock or bond collateral. He states that no loans of this nature have been made by such comPaniee since January 1, 1964, and inquires on behalf of the above directors as to their status should new loans secured by stock alld bond collateral be made by such companies in the future. "Section 8A applies to any corporation (other than a mutual savings bank) which shall make loans secured by stock or bond collateral to any individual, association, partnership, or e°rPoration other than its subsidiaries. Under the provisions (n Section 8 of the Clayton Act, the Federal Reserve Board is uthorized, under certain circumstances, to issue permits coverc) lg services of the kinds referred to in Sections 8 and 8A. .,,I7ever, the provisions of Section 8 which authorize the Board issue permits refers only to banking institutions of certain i)easses, and the Board is accordingly without authority to issue t5 3aorirlilli , involving the relationships between national banks and -ankinG organizations which come within the provisions of Section illak CA. Accordingly, if the insurance companies should !,1-1 11s ie olcil ed l, by stock or bond collateral within the meanwhile the above named gentlemen are serving airectors of sich companies and the national bank, such serv7Zw°uld be prohibited by Section 8A and the individuals have to sever their connections with either the corporaor the national bank." Z • Approved. to t, ,• Letter dated July 16, 1934, approved by five members of the Board, Roxton, Federal Reserve Agent at the Federal Reserve Bank of iiich1(311c1, reading as follows: ?Ilrther consideration has been given to your letter of the ,;' 1934, regarding the applicability of Section SA of `i-LaYton Act ,e8erve Bank oc11:01 . (1: R. Coker, a director of the Federal li. :)r1 Of or a ayou know Section SA makes it unlawful for a director Stau,-r orGanized and operating under the laws of the United tiO4--1,'° be at the same time a director or officer of a corporastockwch shall make loans after Tanuary 1, 1934 secured by ahil) Or bond collateral to any individual, association, partnerstoodue°rPoration other than its own subsidiaries. It is underthat make Coker is a director of several corporations which (3;a4s secured by stock or bond collateral. The Board is ized to issue permits covering such relationships unUnkind jloliml .ved are banking institutions of the r4e°rZIntrt 218 -43"The Board felt that the broad language of the statute 1314de it applicable to situations which were not within the Pilrpose and intent of the Congress in enacting the section alul therefore suggested an amendment designed to take care 'Of Such situations. However, the so-called Omnibus bill, willch contained the proposed amendment, failed of enactment the statutory provisions therefore remain the same as those -chose which were the subject of the early correspondence reMr. Coker at the beginning of this year. "Under the circumstances, the Board has no power to. make 4 exception in Mr. Coker's case. The language of the statute i s so plain as to permit no other construction than that previous"..? given it, and the Board has no authority to issue a permit U°Verinc the relationships here involved. "Under the circumstances, it is, of course, needless to that the Board's position in the matter cannot be regarded any sense as implying that Mr. Coker is thought to be in aflJ vialr an undesirable director of your bank or that the fact that he must resign either fram the bank or the corporations rmy-lestion is in any way a reflection upon him personally. statute renders the relationship unlawful, and the Board :4? discretion in the matter. It will be appreciated if Will advise Er. Coker of the Board's views." 1 r Approved. $041,41 Letter dated Xuly 16, 1934, approved by five members of the 1 to ah aPPlicant for a permit under 44roval Or his application as follows: 14.11, Alvin 7 as a — u° Timmons, for permission direct or of the Baltimore Trust Ilaa.1as: 17ca T ertor of The First the Clayton Act, advising of to serve at the same U Company, Selbyville, BelaNational Bank of Dagsboro, Approved, together with a letter, also dated July 16, 1934, and approved by five members of the Board, to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank of Philadelphia, reading as follows: Act p:Illere is inclosed for your files a copy of the Clayton pelaw:tit issued by the Board to Mr. Alvin 1. Timmons, Dagsboro, selblrv:e, to serve as director of the Baltimore Trust Company, 41-1e, D elaware, and as director of The First National Bank 21'79 -44"Of Dagsboro, Dagsboro, Delaware. "In considering Mr. Timmons' application it was noted that he did not attend any of the 26 directors' meetings of the State bank held during the past year and attended only 3 of the 38 meetings held during the previous year. In granting the permit the Board took into consideration the fact that the applicant has signified his intention to attend a majority of the directors' meetings of both banks. A satisfactory attendance at directors' meetings is necesarY for the proper discharge of directors' duties and it is with the that Mr. Timmons will improve his S:ttendance expectation that the Board has granted the permit. The Board sires that, when you submit your recommendation as a result rf the annual review of this permit, you report fully as to 4r. Timmons' attendance at directors' meetings." r Letter dated July 16, 1934, approved by five members of the Board, to an aPPlicant for a permit under the Clayton Act, advising of approval Of hie aPplication as follows: le.,.!!;sePla E. Healy, for permission to serve at the same time ck, uirector and officer of The Citizens National Bank of 11, Hampton, Virginia, and as a director of the Farmers or Mathews, Mathews, Virginia. Approved, together with a letter, also dated July 16, 1934, and approved by five members of the Board, to Er. Hoxton, Federal Reserve Agent at the Federal Reserve Bank of Richmond, reading as follows: o04.,47 )4 MaY 7, 1934 the Board advised you that it had given Raill'-"Leration to the application of Mr. Joseph E. Healy, Cl'Virginia, for permission under the provisions of the 600.;4 Antitrust Act to serve at the same time as a director °rficer of The Citizens National Bank of Hampton, Hampton, rietia, and as a director of the Farmers Bank of Mathews, rorA 74 , Virginia, and, upon the basis of the information bebe ' i 4) felt that the issuance of the permit applied for would 1.11,„40mpatible with the public interest. The Board's action the n , 4 -13P-Lioation was based largely upon the unsatisfactory of the Bank of Hampton and of the First National Bank t°11, both of which institutions failed in 1933, and for the eondition the applicant appeared to be responsible, upon Of IZs!tisfactory condition of the Farmers Bank of Mathews ditio, c" the applicant is a director and upon the involved conhi,3 financial affairs. Whien 2180 "Subsequently, in accordance with Section V (g) of Regulati°11 L, additional facts and arguments not appearing in his aPPlication and accompanying forms were submitted for the consideration of the Board. From the additional information submitted by the applicant it appears that Mr. Healy is not solely cwargeable with the responsibility for the unsatisfactory conOf the Bank of Hampton and The First National Bank of lierapton inasmuch as the facts presented indicate that a subportion of the difficalties of these two institutions ilt ilInted prior to the applicant's connection with the banks. 1;„,"Irther appears that the major portion of the estimated 1 O8 fl the Farmers Bank of Mathews as shown in the Federal ''ePesit Insurance Corporation examiner's report of that bank as Of December 2, 1933 were not in the assets of the former Farmers and Merchants Bank with which the applicant had been connected rior to its consolidation with the Bank of Mathews to form the ' °armers Bank of Mathews. "It also appears that, although Er. Healy is still financially invol ,4"veal he is making an effort to retire his obligations as " - IlY as possible, having stated that he should, within a period ' -01 the next thirty days (from May 24, 1934) by personal sacrifice ullch effort, complete payment in full or to the extent of v-(3 to Of his entire indebtedness to the Bank of Hampton, the' Of of which loans he intended to immediately 'begin to work 1 al on --rk on the payment of those in the First Dational Bank'. It pin„aPPears that one of the two notes which Er. Healy owes the nso.s t; National Bank represents a note given to that bank in conwith the elimination in 1930 and 1931 of certain doubtful vot ws 'none of which it is claimed had been purchased by any Of his as a director. troli"It appears further that Mr. Healy was appointed by the Compor }ter of the Currency as Conservator of the First National Bank c0,2'mpt°n, that upon the request of the directors and depositors' iRattees of the Bank of Hampton and The First 'National Bank of ZilocUT he undertook the task of organizing The Citizens National Hampton, of which institution he was subsequently elected Ilreaident. l n view of the foregoing and in accordance with your recomMatIdaj and t 11, the Board has approved the application of Er. Healy as di: ! r ere is inclosed a copy of the permit covering his service r 1,iQIIPtOeeto and officer of The Citizens National Bank of Hampton, jiathewrs ' l Ifirginia, r and as director of the Farmers Bank of Lathews, this virginia. The Board suggests, however, that you review ialatio1 70 Prior to December 1, 19:,-A in the light of current examalpPlies4,Of the banks involved and current information as to the financial affairs and report fully thereon, submittine.; at Zh:t time your recommendation as to the desirability of collsideration to the revocation of the permit." 21Si -46- ,r Letter dated Tuly 16, 19'..)4, approved by five members of the Board, to m, 8PPl1cant for a permit under the Clayton Act, advising of approval Or his application as follows: Mr. Arthur G. Cummer, for permission to serve at the same time 8.s a director and officer of The Barnett National Bank of YacksonXacksonville, Florida, and as a director and officer of 6 Mcalris Plan Company of Jacksonville, Jacksonville, Florida. Approved, together with a letter, also dated July 16, 1934, and approved by five members of the Board, to Mr. Newton, Federal Reserve agent at the Federal Reserve Bank of Atlanta, reading as follows: "There is inclosed for your files a copy of the Clayton Act 1,1 ?rait issued by the Board to Mr. Arthur G. Cummer, Jacksonville, 'ci")rida, to serve as director and officer of The Barnett National Jacksonville and as director and officer of The Morris aLlia C°mPanY of Jacksonville, both of Jacksonville, Florida. "In considering Mr. Cummer's application it was noted that did not attend any of the twenty-three meetings of the board Of ye directors of The Morris Plan Company held during the past two -0,,,8* In granting the permit the Board took into consideration fact that the applicant had been a director of both banks for ri Years, that he was formerly active in the affairs of The l'lan Company, that he has agreed to attend the directors' thaValgs and to show a more active interest in the affairs of thall b,ank, and also that there were no unfavorable factors other •, s nonattendance at directors' meetings of the State bank. necessary tile Proper attendance at directors' meetings is the discharge of directors' duties and it is with the that Mr. Cummer will improve his attendance that Board has granted the permit. The Board desires that when or trbtait Your recommendation as a result of your annual review di,_ 18 Permit you retort fully as to Er. Cummer's attendance at -vetors' meetings."' Letter dated Tuly 16, 1934, approved by five members of the Board, t 14 . x. • re 7t0A) Pederal Reserve Agent at the Federal Reserve Bank of Atlanta, eadi 11 0.3 14. 111k Of ITa f011OWS: Clart : There are inclosed original and duplicate copies of the vice -A itct Permit issued to Er. E. G. Swartz covering his director of The Atlantic Eational Bank of Tacksonville, t. 2182 "Florida, and the Whitney National Bank of New Orleans, Louisiana, tor transmittal by you to la.. Swartz and the two banks, together with a copy for your files. "In considering the application of Er. Swartz it ras noted that he attended only seven of the fourteen directors' meetings ' et the Jacksonville bank and only six of the fifteen directors' laeetings at the New Orleans bank last year. 'In the circumstances, the Board has granted the permit in era er to avoid any unnecessary misunderstanding by the community might prove detrimental to the best interests of the banks. fe Board feels, however, that a director should have a satisfac0 17 1 record of discharging the duties and responsibilities of his bj'ee by participating in the management and operations of the through attendance at directors' meetings, and when transmitting Swartz his copy of the permit, it is desired that you inform the Board's views in this matter. The Board also desires lZke when you submit your recommendation as a result of your annual s_view of this permit you report fully as to the attendance of Yr. "artz at directors' meetings during 1934." Approved. to*, Letter dated July 16, 1934, approved by six members of the Board, PeYt°11, Federal Reserve Agent at the Federal Reserve Bank of Einne4011s, reading a3 follows: to /r "Mere are inclosed the Clayton Act permit issued by the Board A' L. Egge, Hibbing, Minnesota, and copies thereof. For Llbr',confidential information the report of examination of the 193rants and Miners State Bank, Hibbing, Minnesota, as of April 23, 14r. Oade by the Federal Deposit Insurance Corporation shows that 8001:6gets indebtedness of a3,825 to this bank was partially En,nt.red by ten shares of the capital stock of The First National Of T*.„ the a , Minnesota, nnesota, stock apparently would constitute 1934-142J-icant i s qualifying shares. Er. Egge's letter of Y.arch 2, h Iranamitted with your report on his application, indicates that ' acti_ had not qualified as a director of the Buhl bank, pending on his application. Berore releasing Er. Egge's permit, you are requested to : eatie Of Til."'Y YoUrself that he will have sufficient unhypothecated stock The that l'irat National Bank of B11111 to qualify as a director of author , tk. When mr. Egge's permit is released to him, you are .i,1 aartle t-Zed to forward the copies to the banks involved, at the 1 ordielze advising the Board of your disposition of these matters r that its records may be complete." The Clayton Act permit referred to authorizes L. Eoce to serve the 46°1-e timk. - as a director of The First National Bank of Buhl, Buhl, ‘4; 2183 -43... as a director and officer of the Merchants and Miners State Hibbing, Minnesota. Approved. Letters dated July 14, 1934, approved by five members of the Board, to apPlieants for permits under the Clayton Act, advising of approval of their applications as follows: lir rh, iful. L. Butler, for permission to serve at the same time as a director and officer of the Beach Haven National Bank and Trust CompanY, Beach Haven, New Jersey, and as a director of The Tuckerton Bank, Tuckerton, New Tersey. Mr. Charles N. Conrad, for permission to serve at the same time a director of the Beach Haven National Bank and Trust Company, BeachHaven, New Jersey, and as a director of The Tuckerton Tuckerton, Iew Tersey. Approved. Letters dated July 16, 1934, approved by five members of the Board, to a , 44/'Licants for permits under the Clayton Act, advising of approval of their uP Plications as follows: Mr. n Adams, for permission to serve at the same time as 0. „-• i241rector and officer of The First National Bank of Carroll1X711! C arrolltown, Pennsylvania, and as a director of The 8tings Bank, Hastings, Pennsylvania. 14. 1 A • J:5. Clark, for permission to serve at the same time as ,,,2'4.rector and officer of The First Eational Bank of Carrolltown, Cjiltown, Pennsylvania, and as a director and officer of The 114' s Bank) Ilastinzs, Pennsylvania. sAm time 711°1 D. Bennett, for permission to serve at the same prn , : 1 8 a director of The First -National Bank of 2rankford, 0ot fc3rd, Delaware, and as a director of the Baltimore Trust PanY, Selbyville, Delaware. R. , a air -0. Wilgus, for permission to serve at the same :time as Frawcr "tor and officer of The First National Bank of Iramcford, °I3MPani ' Delaware, and as a director of the Baltimore Trust J, Selbrrille, Delaware. 1,1 2184 7/17/34 -49If 141*• X. S. Tones, for permission to serve at the same time as a director of the Pittsburgh branch of the Federal Reserve Bank of Cleveland, Pittsburgh, Pennsylvania, and aS a director of the Security Trust Company, Wheeling, West Virginia. " 11 W. I. Coleman, for permission to serve at the same time as a director and officer of The Atlantic National Bank of Xac ksonville, Tacksonville, Florida, and as a director and fricer of the Springfield Atlantic Bank, Tacksonville, Florida. Mx. Frank S. Gray, for permission to serve at the same time a director of The Atlantic National Bank of Tacksonville, ' Jacksonville, Florida, and as a director of the Springfield Atlaatic Bank, Jacksonville, Florida. !* X. L. Ingley, for permission to serve at the sane time 443 a director and officer of The Sanford Atlantic National F!allk) Sanford, Florida, and as an officer of The Atlantic Nat' nal Bank of Jacksonville, Tacksonville, Florida. X°hn H. Pace, for permission to serve at the same time director of The Atlantic National Bsnk of Jacksonville, T4eks(Inville, Florida, and as a director of the Title & rust Com pany - of Florida, Tacksonville, Florida. Ur. Walter Ray, for permission to serve at the same time as aE. k director of The Atlantic National Bank of Jacksonville, nville, Florida, and as a director of The Commercial & Trust Company, Ocala, Florida. Mx. G.], Therry, for permission to serve at the same time 11:ta director and officer of the West Palm Beach Atlantic of im tIlal Bank, West Palm Beach, Florida, and as an officer "ve Atlantic National Bank of Tacksonville, Q.Lorida. jacksonville, Ur. Geo •H. Baldwin, for permission to serve at the same as a director of The Barnett National Bank of 3'acksonallW4e) Zaoksonville, Florida, and as a director of the Title - Trust Company of Florida, Jacksonville, Florida. 111". Pr„1, D. Bisbee, for permission to serve at the same Ira, as a director of The Barnett National Bank of Tacksonatta''s, Xa cksonville, Florida, and as a director of the Title TxtIst Company of Florida, Tacksonville, Florida. . x Eta„ /14'. Chase, for permission to serve at the same time xeo ;uirsctor of The Barnett National Bank of Tacksonville, at Zville, Florida, and as a director of the Florida Bank 1c, Winter Park, Florida. --sr' 1-111 ' .71i7 2185 7/17/34 -50P. Fleming, for permission to serve at the same time "a director of The Barnett National Bank of Jacksonville, Taoksonville, Florida, and as a director of The Morris Plan C°rJaPany of Jacksonville, Jacksonville, Florida. FX311k Vi. Norris, for permission to serve at the same '414e as a director and officer of The Barnett National Bank of J acksonville, Jacksonville, Florida, and as a director and officer of The Barnett National Bank of De Land, De Land, Florida. lilts* Leo Freese, for permission to serve at the same time as director and officer of The First National Bank of Ogden, ygden) Illinois, and as a director and officer of the Farmers 6tate Bank, Fithian, Illinois. 4. Charles W. Hamer, for permission to serve at the same 14e as a director of The First National Bank at Swayzee, tlITee) Indiana, as a director of the State Bank of GreenGreentown, Indiana, and as a director of the Union Bank .. Trust Company) Kokomo, Indiana. Llr. A. x a A. • Hanna, for permission to serve at the same time as .-17-irector and officer of the Iowa State Savings Bank, Knox4-1-e) Iowa, and as a director of The Community National Bank Tru„ '' 41 Company of Knoxville, Knoxville, Iowa. *, time alter M. Heymann, for permission to serve at the same 0111 as an officer of The First National Bank of Chicago, comflgo) Illinois, as a director and officer of the Searsan unitY State Bank, Chicago, Illinois, and as a director 13frioer of The Liberty Bank of Chicago, Chicago, Illinois. tir• s Eta Blacklock, for permission to serve at the same time 001 : - uirector and officer of The First National Bank of Nateiraille) Coleraine, Minnesota, and as a director of The First c33: k of Hibbing, Hibbing, Minnesota. Ittr. a-es Xing, for permission to serve at the same time as a 118.131. "'or and officer of The First National Bank of Grand Grand Rapids, Minnesota, as a director and officer of and "-rat National Bank of Coleraine, Coleraine, Minnesota, director of The Minnesota National Bank of Duluth) *. G. aa a ai itchell, for permission to serve at the same ,,arbl rector and officer of The First National Bank of Marble, e, Of Gx:"flnesota, and as an officer of The First National Bank all(1 IlaPide) Grand Ilapids, Minnesota. 2186 7/17/34 -51• C. M. Murphy, for permission to serve at the same time director of The First National Bank of Coleraine, C°1eraine, Minnesota, and as a director of The First National Beak of Marble, larble, Minnesota. "a Mx. M. D. Adams, for permission to serve at the smme time as aa officer of The First National Bank of St. Joseph, St. 3-2501)11, Missouri, and as an officer of the First Trust Company, • Joseph, Missouri. Mx. Uax Andriano, for permission to serve at the same time as Est director and officer of The First National Bank of St. Joseph, et 'Joseph, Missouri, and as a director of the First Trust 01411. anY, St. Joseph, Missouri. t e P1 H. Hoffmeister, for permission to servo at the same time 3.; 44 amployee of The First National Bank of St. Joseph, St. st8ePh, Missouri, and as an officer of the First Trust Company, Joseph, Missouri. Approved. to Letter dated July 16, 1934, approved by six members of the Board, al3Plicant for a permit under the Clayton Act, advising of approval aPPlication as follows: Mr. di --- a. Barber, for permission to serve at the same time as l',14, - etor and officer of The First National Bank of Marble, , mell,u-Le, Minnesota, and as a director and officer of the ejlants and Miners State Bank, Hibbing, Minnesota. Approved. There were then presented the following applications for changes 14 ' bock of Federal reserve banks: A lications for ORIGITIAL Stock: The First National Bank in Fort Kent, .1()Xt Xent, Liable Iti).istrict NO. 1-41(111a1 Bank4' of Paulding, 1'6'111(1141g, Ohio, Shares 36 36 45 Total 45 81 2187 11 7/17/34 l ications for ADDITIONAL Stock: District no. 9. Shares The First National Bank of Dillon, Montana. District lit,. 10. The First National Bank of Arcadia, Arcadia, Nebraska. District No. 12. The First National Bank of Antioch, tTUAntioch, California. 411e Sebastopol National Bank, Sebastopol, California. 114 114 4 4 4 A 14 .18tr 4.4c iatiti 0 for on. SURRENDER of Stock: 1. Iklichester Truit Company, Solith Manchester, Connecticut. 15 Total 19 137 180 180 Approved. Thereupon the meeting adjourned. -e,rezA 4PprOyed: 0-1A} 0 / 1 4 Secretary.
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