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1080 A meeting of the Board of Governors of the Federal Reserve SysWas held in Washington on Saturday, July 31, 1937, at 11:30 a. m. PRESENT: Mr. Eccles, Chairman Mr. Szymczak Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter referrad to and the action stated with respect thereto was taken by the B08 .rd: Letter to Mr. Young, President of the Federal Reserve Bank of 130 tott ' reading as follows: "The Board of Governors of the Federal Reserve System "es the application of 'The Carroll County Trust ComConway, New Hampshire, for permission, under the proer::*°118 of its condition of membership numbered 1, to exhe fiduciary powers authorized under its charter a the laws of the State of New Hampshire. The Board's olproval is given subject to acceptance by the trust company ti _t_he following standard conditions prescribed in connec-°11 with the admission to membership of banks having trust Powers: appr 10 1. 2. Such bank shall not invest funds held by it as fiduciary in obligations of or property acquired from the bank or its directors, officers, employees, members of their families, or their interests, or in obligations of or property acquired from affiliates of the bank. Such bank shall not invest funds held by the bank as fiduciary in participations in pools of mortgage bonds or other securities, and the securities and investments of each trust shall be kept separate from those of all other trusts and separate also from the properties of the bank itself; provided, however, that the Board of Governors of the Federal Reserve System will not object to the collective invesLment of trust funds where the cash balances to the credit of certain trust estates are 1081 v31/37 "too small to be invested separately to advantage, if the bank owns no participation in the securities in which such collective investments are made and has no interest in them except as trustee or other fiduciary, and if such collective investment is not prohibited by State law or the instrument creating the trust. 3, If funds held by such bank as fiduciary are deposited in its commercial or savings department or otherwise used in the conduct of its business, it shall deposit with its trust department security in the same manner and to the same extent as is required Of national banks exercising fiduciary powers. pa "You are requested to advise The Carroll County Trust CornConway, New Hampshire, of the Board's action, and to obth,. .-,kan appropriate resolution of the board of directors of „_- 'auk accepting these conditions and forward a certified '-uPY thereof to the Board." Approved unanimously. Letter to Mr. Rill, Vice President of the Federal Reserve Bank Of philn, ctelPhial reading as follows: 19,7 "Receipt is acknowledged of your letter of July 24, NEIZ with regard to the proposed retirement by 'The Hanover of -;;'nal Bank of Wilkes-Barre', Wilkes-Barre, Pennsylvania, lie, ,250 of its outstanding preferred stock held by the 011”ruction Finance Corporation. with 'In view of all the circumstances, and in accordance to -il?(Alr recommendation, the Board interposes no objection tliElt-e Proposed retirement of preferred stock, provided corresponding amount will be placed in the bank's rese viith ' 4'or dividends payable in common stock, in compliance ple„uhe requirements of the Comptroller of the Currency. advise the bank accordingly. oeen ,Inasmuch as it is possible that the bank will have 0-8 °n to make further small retirements of preferred stock ber-' dep . it is able to complete the liquidation of its trust tir ulalent, and the Comptroller's office may make such reFedp—ents contingent upon approval thereof by the Board, the : appi, 1 11 Reserve Bank of Philadelphia is hereby authorized to exid -ve such retirements on behalf of the Board upon terms Dree°11dit10ns ant case.,similar to those which are applicable to the pprovedunanimous1y. 1082 "." Letter to Mr. Louis Schreck, Cashier, Templeton Savings Bank, Templeton, Iowa, reading as follows: "Receipt is acknowledged of your letter of Tuly 10, 1937, in which you refer to certain features of membership of the l'ederal Reserve System which you feel are unfair. "Under the law as applicable in your State, no bank ich is e member of the System may establish a branch or Ittoflal office outside the city in which it is situated 141-Less it has a paid in and unimpaired capital stock of not ess than 500,000. This requirement can be altered only i y an araenthment to the law. Accordingly, in the instance J'U mention, under the existing law there is no authority v%Permit you, with your present capital, to accept the inion you received from the people of a neighboring comt3 --411 to establish and maintain an office therein. The recent increase in the amount of legal reserves re quired to be maintained by member banks was a measure Zcoicled by the Board of Governors under authority delegated by Congress. As you may have noticed by reading the 193 : 1111 Reserve Bulletin particularly the issues of August af,' and February 1937, the Board's action was taken only s4er the probable effects upon individual banks as well . classes of banks had been carefully studied and cons1dered. n or ;This is brought out more fully in the inclosed copy ' 1 e Board's Annual Report for the year 1936, on pages 14 to ' 2 with ' °f which is a discussion of the Board's recent action it l'ssPect to reserve requirements. On pages 14 and 15 thePlIrticular is a statement of the reasons for increasing 1*,e,quirements and a description of the effects. 31, 104ecording to your statement of condition as of March of 01,;'"7) You had on deposit with the Federal Reserve Bank potcC'eaE0 at that time over 08,000, and with your correszElliciT banks about $55,000. On the basis of your net dekezt,'LePosits and time deposits subject to reserve requirel eae at that date, your balance of 08,000 with the Federal !Bank of Chicago was creased approximately equal to the inIt is requirements which subsequently went into effect. triere assumed, therefore, that you were able to meet the the ,e-sed requirements without substantial reduction of an Ices you maintained with your correspondents. rilaittarlIr statement that the reserve which you have to Pile,. 44 vdth the Federal Reserve bank is not available imleari "You do not make as much use as you might of the lag and collection privileges open to you at the Federal .V 1_083 7/31/37 -4"Reserve Bank of Chicago. In this connection it may be Pointed out that some member banks effect all or nearly all of their collections through their Federal Reserve banks. The Federal Reserve banks also offer other services to their ber banks, and the Federal Reserve bank will be glad to in" ) rm you of them if you are not aware of what they are. Ion this connection the Federal Reserve Bank of Chicago is eing furnished a copy of your letter and of this reply. The Board is concerned with the problems of the small bank, h Land is glad to have your views. You may be sure that !7! 'Qerd and the Federal Reserve banks give careful con,1.(3 eration to such expressions of views as well as to the r eobatie effects upon member banks of any action that may taken) when discretion may be exercised under the law." n t Approved unanimously. Thereupon the meeting adjourned. ApProyea: Chairman.
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