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A meeting of the Federal Reserve Board was held in Washington on F1144Y, July 29, 1932, at 12:00 o'clock noon. PRESENT: Governor Meyer Mr. Hamlin Mr. Miller Mr. Xames Mr. Magee Hr. Morrill, Secretary Mr. McClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor Mr. Wyatt, General Counsel. The minutes of the meeting of the Federal Reserve Board held on 3'41Y 12, 1932, were amended and approved. The minutes of the meeting of the Federal Reserve Board held on ui 13, 1932, and the minutes of the meeting of the Executive Committee of the Federal Reserve Board held on the same date, were approved. The minutes of the meeting of the Federal Reserve Board with the °Pen Market Policy Conference on July 14, 1932, were approved. The Board then considered and acted upon the following matters: Telegram dated July 27, 1932, from the Chairman of the Federal Re"I've Bank of Boston, and letter dated July 28, 1932, from the Secretary °lb the Federal Reserve Bank of New York, both advising that at meetings of the boards of directors on the dates stated, no changes were made in the //44ke t existing schedules of rates of discount and purchase. Without objection, noted with approval. Memorandum dated July 26, 1932, from Mr. Frank I. Drinnen, Examiner 14 Charge, transmitting a letter dated July 26, 1932, from Mr. E. A. Farrell, tellelering his resignation as Assistant Federal Reserve Examiner as of July 41 1932. F611 The memorandum from Mr. Drinnen recommended acceptance of Mr. 11's resignation, tendered because of his acceptance of a position with 7/29/32 the Reconstruction Finance Corporation. Resignation accepted. Memorandum dated July 26, 1932, from the Director of the Division Of Research and Statistics recommending approval by the Board of a leave Of absence without pay from July 26 to 30, 1932, inclusive, for Miss Helen DYer, an employee in that division. Recommendation approved. Memoranda dated July 26, 1932, from the Assistant Chief of the Division of Bank Operations and July 27, 1932, from the Chief of that Division, recommending approval of leaves of absence without pay for emPloyees of the division as follows: K. R. Iverson Mary C. Williams July 23 to 25, 1932, inclusive. August 1, 1932. Recommendations approved. Reference was made to the fact that with the reduction of the annual leave of employees of the Board to fifteen days during the calendar year, requests for short leaves of absence without pay by employees are apt to be more or less frequent, and the Secretary of the Board, or an Assistant Secretary, was authorized to approve leaves of absence without pay, with the understanding that any extended or unusual cases will be brought to the attention of the Board. Report of the Committee on Salaries and Expenditures on a letter 4ted July 21, 1932, from Deputy Governor Gilbart of the Federal Reserve /34141t of New York requesting approval by the Board of a change in the bank's 15ersonnel classification plan to provide for the creation of three new sitions of "Typist", one in the Foreign Accounts Division of the Foreign elzktirtment, and two in the Delivery Section of the Safekeeping Division of t4e Government Bond and Safekeeping Department; the Board's committee l'ecornmending approval. 7/29/32 90 -3Approved. Letter dated July 28, 1932, from the Chairman of the Federal Reserve Bank of New York stating that the board of directors of the bank, at its meeting on that date, voted to employ Mr. Norman P. Davis, on a temporary basis, as a special investigator of the credit needs and requireMents of applicants to the Federal Reserve Bank of New York under the provisions of section 13 of the Federal Reserve Act, as amended by the Act of 341Y 21, 1932, and, subject to the approval of the Federal Reserve Board, to fix his salary at the rate of'$5,000 per annum. It was pointed out that Case's letter contains no information as to the qualifications of Mr. T3svie for the position referred to. After a brief discussion, the Governor, who expects to be in New York over the week end, was authorized, in his discretion, to approve for and on behalf of the Board the salary fixed by the Board of Directors of the New York bank for Mr. Davis. The Governor was also requested to ask the Chairman of the New York bank to furnish the Board, for its records, with a letter outlining the experience and qualifications of Mr. Davis. Telegraphic replies, approved by five members of the Board on July aa, 1932, to telegrams of that date from the Governor of the Federal Reserve 84t1 of Boston requesting an extension to August 12, 1932, of the authorPreviously granted by the Board to the Federal Reserve Bank of Boston to advance, in accordance with the provisions of section 10(b) of the Fed"el Reserve Act, as amended, to the Quincy Trust Company, Quincy, 14"eachusetts, the Worcester Bank and Trust Company, Worcester, Massachu- Iletts, and the Peoples National Bank, Southbridge, Massachusetts, not to e eeed 0250,000, 'il,000,000, and $75,000, respectively, at a rate of 5 1/2% 7/29/32 -4- Per annum and payable on demand; the replies stating that the Federal Reserve Board extends the authorities to August 12, 1932, as requested by the bank. Replies unanimously approved. Telegraphic reply, approved by five members of the Board on July 27: 1932, to a telegram of that date from Deputy Governor Rounds of the Pedsral Reserve Bank of New York requesting authority for an advance, in accordance with the provisions of section 10(b) of the Federal Reserve Act, as amended, to the Southside National Bank and Trust Company, Newark, New 3"erse,Y, in the amount of 0100,000, for a period of ninety days, at a rate °I* 5 1/2 per annum, and secured by building and loan notes with a margin cr at least 25; Deputy Governor Rounds stating that one of the smaller 11°11111ember banks in Newark was experiencing a small run as a result of which tlie Southside National Bank and Trust Company anticipated unusual withd rawals. The reply stated that the Board authorizes the advance subject to the terms and conditions recommended. Reply unanimously approved. Telegraphic reply, approved by five members of the Board on Tuly 27) 1932, to a telegram of that date from Deputy Governor Rounds of the l'edera1 Reserve Bank of New York requesting authority to make an advance, 141 accordance with the provisions of section 10(b) of the Federal Reserve as amended, to the Peoples National Bank, Newark, New Jersey, in the 1341011nt of c)100,000, for a period of ninety days, at a rate of 5 1/2% per 4111111ra, and secured by building and loan notes with a margin of at least Z*70* Deputy Governor Rounds statin7, that one of the smaller nonmember banks 92 7/29/32 -5- in Newark was experiencing a run as a result of which the Peoples National Bank anticipated unusual withdrawals. The reply stated that the Board authorizes the advance subject to the terns and conditions recommended. Reply unanimously approved. Telegraphic reply, approved by six members of the Board on July 28, 1932, to a telegram of that date from Deputy Governor Rounds of the Federal Ileserve Bank of New York requesting authority for an advance, in accordance With the provisions of section 10(b) of the Federal Reserve Act, as amended, to the Labor National Bank, Paterson, New Tersey, in the amount of tor a period of ninety days, at a rate of 5 1/2% per annum, and secured by ctletomers' collateral notes and unsecured notes with a margin of at least Wo; the advance being desired to meet the withdrawal by the City of Paterson on July 29, of :,50,000 for payroll purposes. The reply stated that the Board authorizes the advance subject to the terms and conditions recommended. Reply unanimously approved. Telegraphic reply, approved by five members of the Board on Ally 28, to a telegram dated July 27, 1932, from Deputy Governor Rounds of the ?eclerel Reserve Bank of New York requesting authority to purchase from the 844k of Depew, New York, a tax anticipation note of the Union Free School katrict No. 7, Town of Cheektowaga, in the amount of 5,000; the reply stating that the Board authorizes the purchase with the understanding that the note meets all requirements of regulation E except that the population °t the issuing municipality is less than 10,000 and the amount of the note °ttered exceeds 25;; of the total outstanding warrants of the municipality. Reply approved. k 7/29/32 -6Memorandum dated ally 9, 1932, from Assistant Secretary Noell, recommending approval by the Board of a change, requested by the Federal Reserve Bank of Minneapolis, in the interdistrict time schedule from Helena to Spokane from one day to two days; the change being agreeable to the Federal Reserve Bank of San Francisco. The change, having been approved by five members of the Board on July 28, 1932, was approved. Memorandum dated July 7, 1932, from Mr. Smead, Chairman of the Canzittee on Bank Reserves, referring to a letter dated March 28, 1932, from C°ngressman George H. Tin:khan, and correspondence with the Governors of the l'Cderal Reserve Banks of Boston and San Francisco with regard to the question Whether nenter banks located in states having laws requiring banks to cegregate the assets of their commercial departments from the assets of their callings departments should be permitted to carry two separate reserve cecounts with the Federal reserve bank; La.. Smead stating that this matter 48 previously been discussed by his comnittee but was deferred for later e°Lsideration, and suggesting that the question be held for discussion by the committee at the time of its meeting in the Fall of this year. Reference of the matter to was approved, with the request, tion of the matter be expedited ation submitted to the Board at practicable. the Committee on Reserves however, that consideraand a definite reconn:endthe earliest date Letter to the Federal Reserve Agent at New York, approved by five tnelzb ers of the Board on July 28, 1932, stating that the Board has carefully eensidered the recommendation of the board of directors of the New York that the application of the Carthage National Exchange Bank, Carthage, 11°W York, for permission to exercise full fiduciary powers be given favor- 7/29/32 -7- able consideration, but that the Board is not inclined to grant authority for full trust powers to an institution whose condition is as unsatisfactory aS that of the Carthage National Exchange Bank. The letter also requested the agent to advise the applicant bank that the Board has deferred action on its application until another examinntion of the institution has been made, and that if, before the next examination, the bank should effect a material irlProvement in its condition through the introduction of new funds as suggested by the Comptroller of the Currency, the Board will be pleased to give further consideration to the application. Letter approved. Reply, approved by five members of the Board on July 27, to a letter dated July 20, 1932, from the Federal Reserve Agent at Richmond reporting that the Putnam County Bank of Hurricane, West Virginia, was continuously deficient in its required reserves during the last six months; the reply stating that in view of the information submitted and the fact that the Federal reserve bank and the banking department of the State of West Virginia are doing everything possible to place the member bank on a sound 1148189 the 2ederal Reserve Board, in accordance with the agent's recommendation, will take no action in the matter at this time. The letter also Ilequested the agent to advise, within a reasonable time, as to whether the bP1 rt has restored and is maintaining its required reserves. Reply approved. Reply, approved by five members of the Board on July 27, to a letter dated July 13, 1932, from the Federal Reserve Agent at Atlanta calling attention to the fact that the Savannah Bank and Trust Company, Savannah, 95 7/29/32 -8- Georgia, is holding 295 shares of its own stock, acauired from the estate of a former President of the bank for debts previously contracted; the reply stating that in view of the fact that the stock appears to have been held for a period of almost three years, the Board feels that some definite steps should be taken by the bank to dispose of the stock without further delay, that in view of the assurance of the Vice-President that the directors have the matter in hand and feel confident of making disposition of the stock before the end of the year, the Board is not disposed to take action at this time, but that it will expect the elimination of the stock fram the assets Of the bank by December 31, 1932. The reply also requested advice from the agent as soon as any or all of the stock referred to has been disposed of by the member bank. Reply approved. Reply, approved by five members of the Board on July 27, to a letter dated June 29, 1932, from the Federal Reserve Agent at San 2rancisco transraitting information in connection with the acquisition of the assets and the 4eaumption of certain liabilities of the First National Bank of Woodburn, egon, by the Bank of Woodburn, on January 31, 1932; the reply stating that ' °1 the information submitted would indicate that the transaction has resulted IA no material change in the general character of the assets of the Bank of 1700dburn or broadening in the scope of the functions exercised by it within the meaning of the general condition under which it was admitted to memberin the Federal iteserve System and, in accordance with the agent's lecommendation, the Board will interpose no abjection to the transaction. ' TIle reply also requested that in view of the unsatisfactory condition of the Member bank, the agent keep the Board advised as to what steps are being 7/29/32 -9- taken by the management to impro7e the bank's condition. Reply approved. Letter to the Secretary of the Open Yarket Policy Conference 8uggesting certain changes in the tentative draft of the minutes of the meetOf the Federal Reserve Board with the Open Market Policy Conference and With the Governors of the Federal reserve banks on July 14 and 15, 1932, tl'axismitted with his letter of July 19, 1932. Letter approved. At this point the Chairman joined the meeting. Letter dated July 22, 1932, from the Chairman of the Federal Reserve 136/41k of New York stating that at the meeting of the board of directors of the bank on July 21, on recommendation of the committee of directors on lielfare of the staff of the bank, which recommendation was formulated in the light of present employment and salary conditions throughout the country, it was voted, subject to the approval of the Federal Reserve Board, to adopt, "of August 15, 1932, a program which would include (1) the abolition of the Present vacation periods of officers and employees with pay, (2) a furPlan providing for the absence, during the course of the year, of each 6111131°Yee for twenty-four working days without pay, and of each officer for thirty working days without pay, and (3) the deduction from the salary of - of the salary, and from " 6 11 employee each month of an amount equal to 8 1/3,; the salary of each officer an amount equal to 10;) of the salary; such clecikletion to be made regardless of whether the officer or employee can take the work 1(1/P4ntage of the furlough, for the arrangement of which, so that °t the bank shall proceed without any check on its efficiency, the officers or the bank will be responsible. 7/29/32 -10During the discussion which followed, reference was made to a draft Of reply to the above letter, prepared by Mr. Hamlin and circulated among 4 the nembers of the Board. At the conclusion of the discussion, the action of the directors of the New York bank was disapproved (Mr. Miller voting "no"), and the secretary was requested to advise the Chairman of the bank accordingly. Reference was then made to the action taken by the board of directors Of the Federal Reserve BR* of Richmond on Tune 9, 1932, and communicated to the Board in the chairman's letter of that date, in voting it to be the sense Or the board of directors of the bank (1) that in harmony with the readjustMent of the economic structure now in progress the salary schedules of the ecleral Reserve Bank of Richmond should be reduced by approximately 10%, (2) "it is the opinion of the board of directors that any salary readjustment th ell°uld be a uniform procedure for the Federal Reserve System as a whole and (3) that prompt action is vital in view of the seriousness of the general aituation; the board of directors also recommending that the Federal Reserve 13°e'rd formulate a policy for application to all Federal reserve banks. The Secretary was requested to advise the Chairman of the Richmond bank that the Federal Reserve Board disapproves the action of the directors of the bank as set out in his letter. Telegraphic reply to a letter dated July 28, 1932, from the Secretary Of the Federal Reserve Bank of New York stating that at the meeting of the 11°111*cl of directors on July 21, 1932, it was "voted, subject to review and 4etermination of the Federal Reserve Board, to establish a minimum rate of '1 1/2% and a maximum rate of 6% for all discounts under the provisions of the Emendmont to section 13 of the Federal Reserve Act, contained in section 7/29/32 -11- "210 of the Emergency Relief and Construction Act of 1932, if and when said amendment becomes law and such discounts are authorized by the gederal Reserve Board", and that this amendment now having become law and the Board having authorized such discounts for a period of six months beginning August 11 1932, the bank would appreciate receiving the Board's approval of the rates of discount established by the board of directors of the New York bank; the reply stating that questions have been raised as to whether a l'ange of rates instead of specific rates based upon classifications of Paper can be established and also as to the advisability of discounting Paper for individuals, partnerships and corporations under any circumstances at lower rates than those charged member banks on. loansunder section 10(b), arid that before acting on the matter the Board desires a full statement of the reasons for the rates proposed by the New York bank and the considerations which it is contemplated will govern the determination of the 8Pecifi0 rates which will actually be charged on particular discounts. Reply approved. Reports of Standing Committee dated July 26, 27 and 28, 1932, acommending approval of the following changes in stock at Federal reserve bejaks: A 14.1 cations for SURRENDER of Stock: uistrict No. 2. National Bank, Granville, N. Y. (Insolvent) 'Irst National Bank, Cassandra, Pa. (V.L.Abs. by The First National Bank of Lilly, Pa.) 1) 60 -1ZLILEIL 4t United National Bank, Cleveland, Ohio. (Decrease in surplus) Shares 126 126 36 36 600 600 7/29/32 ,App2. .1 .ications for 1 904 MLR of Stock: (Cont'd) District No. 10. Exeter NationalBank, Exeter, Nebraska. (V.L.Abs. by The Wallace National Bank of Exeter) Shares 18 780 18 Total Approved. Thereupon the meeting adjourned. -,Axizit OC Secret .
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