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18 A meeting of the Federal Reserve Board was held on Friday, July 6, 1932, at 11:20 a. m. pi3RgENT: Governor Meyer Mr. Hamlin Mr. Miller Mr. James Mr. Pole NI*. Morrill, Secretary Mr. Harrison, Assistant to the Governor. The following matters were presented for the consideration and 42tion of the Board: Letter dated July 7, 1932, from the Secretary of the Federal Reserve 8ellk of New York, and telegrams dated July 7, 1932 froA the Secretary of the Federal Reserve Bank of Kansas City and the Chairman of the Federal Reeve Bank of San Francisco, all advising that, at meetings of the boards Of directors on the date stated, no changes were made in the banks' exist- Schedules of rates of discount and purchase. Without objection, noted with approval. Reply, approved by five members of the Board on July 7, to a letter ciEtted June 28, 1932, from the Federal Reserve Agent at Dallas reporting that tile Piret National Bank of Meadow, Texas, was continuously deficient in its l'equired reserves for a period of six consecutive months ending May 31, 1932; the 4. 1?-1Y stating that, in view of the information that the bank intends to 11e8tol'e its reserves to the required amount through a loan obtained from the Reconstruction Finance Corporation, and the fact that the directors have 1114 icated their intention to maintain proper reserve balances, the Federal eae l'Ire Board will take no action in the matter at this time other than to to a copy of the agent's letter to the Comptroller of the Currency. The ' leplY also requested that the agent advise the Board within a reasonable 19 7/8/32 time as -2to whether the bank has restored and is maintaining its required reserves. Reply approved. Letter to the Peoples National Bank, Parkersburg, West Virginia, reto the application filed by the bank for permission to exercise riduciarY Powers and stating that the Board has authorized the bank to act, When not in contravention of state or local law, as trustee, executor, aclatnistrator, registrar of stocks and bonds, guardian of estates, assignee, l'eceiver, committee of estates of lunatics, or in any other fiduciary eeP"itY in which State banks, trust companies or other corporations which Into competition with national banks are permitted to act under the " 1 8 of the State of West Virginia, only in the specific trusts in which the litiret National Bank of Parkersburg had been appointed and was acting on June 281 1932, the date the Comptroller of the Currency issued a charter to the l'ec les National Bank authorizing it to commence business, the exercise of eUch Powers to be subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. The letter also stated that "tion has been deferred on the bank's application for full trust powers after a report of examination of the bank has been received. Letter approved. Letter to the Federal Reserve Agent at Cleveland, approved by five ,se"4° of the Board on Ally 7, 1932, referring to the analysis of the re13Qrt of examination of the Allegheny Trust Company, Pittsburgh, Pennsylvania, 4. '1 11 or /larch 14, 1932, in which it is indicated that the trust company holds log ellares of its own stock as side collateral to loans made by it, and tearta..„. gsting that, if the agent has not already done 50, he take the matter up 20 7/8/32 -3- with the trust comnany, requesting it to eliminate the stock within a ile4eonab1e time, and that the agent advise the Board of the action taken by the company in that connection. The letter also referred to the action of the Allegheny Trust Company in paying dividends equal to 10 during the year 19311 and requested that, if the trust company has since made no reduction in its dividend rate, the agent consider the advisability of suggesting that the institution reduce, if not entirely eliminate, dividend payments in (31 ' cler further to conserve earnings to provide for present and potential 1°8883. The letter further requested that the Board be advised as to what "81381 if any, have been or will be taken by the trust company toward the " rrection of the unsatisfactory condition revealed by the report of elaMination of Earch 14, 1932. Letter approved. Reply, approved by five members of the Board on July 7, to a letter d4t8a XUne 25, 1932, from the Federal Reserve Agent at Atlanta with regard t0 Previous correspondence in connection with 654 shares of stock of the Citizens Bank and Trust Company, Savannah, Georgia, held by that institution 48 collateral to the liquidation account of the flercantile Bank of Savannah; the 4gent stating that the member bank has been able to dispose of a portion or the stock and that it desires, in view of the general economic conditions Whieh have affected the sale of bank stock, that it be given a further Itelleion of time in which to dispose of the remainder of the stock. The l'ePlY stated that, in view of the circumstances involved and the agent's l'ee°111mendation, the Board will not insist upon immediate disposal of the l'el4414dar of the shares held by the bank, but that it is expected that the 7/8/32 -4- bank will dispose of such collateral as soon as practicable, and that the 4eant will keep in close touch with the situation and report to the Board tot later than January 1, 1933, the progress made in the matter. Reply approved. Reply, approved by five members of the Board on July 6, to a letter dated June Henry T. Rainey, inclosing a letter 27, 1932, from Congressman addressed to him under date of June 22, 1932, by Yr. Francis R. Rantz, aaa4ier of the Elliott State Bank of Jacksonville, Illinois, with reference to the refusal of the Federal reserve bank to permit the State bank to deduct two cents to cover the tax on its remittance drafts sent to the Federal reserve bank in payment of checks drawn on the Elliott State Bank and sett to it for collection by the Federal reserve bank; the reply referring to the services rendered by the Federal reserve banks in connection with the c ollection of checks and stating that, since the enactment of the Revenue Act of 1932, numerous banks which remit to the Federal reserve banks for their checks at par have suggested that the reserve banks should absorb the two cent tax on remittance drafts, which position apparently has been adopted bY the Elliott State Bank; that, in view of the fact that under the proOf the Revenue Act the tax on checks and drafts is levied on the (1/'417ere thereof, and the further fact that the Federal reserve banks are l'Ql'bidden by law to permit the deduction of exchange charges by the drawee helve 8 on checks which they forward for collection, it would seem that the ' ed reserve banks would not be justified in absorbing the tax on such l'elittance drafts any more than they would be justified in absorbing any °thal 'taxes levied on their member banks or on other banks which remit to • f4-.4 7/6/32 -5- the Federal reserve bank at par for their checks. The reply also called attention to the fact that each bank which remits to the Federal reserve ba4k for checks drawn on itself, needs to nail not more than one remittance cil*art on each business day and that the total tax would amount to only ePProximately .A.00 per year for each remitting bank, whereas the expense to the Federal reserve banks would be substantial if they should undertake to PuLY the tax for every bank which remits to them at par for their checks. The letter also referred to the position taken by Mr. Rantz that in refiltting to the Federal reserve bank his bank renders a service to the x'e3erve bank, and stated that actually the expense of paying checks in this "is less than that incident to the payment of checks in cash over the n141111 e°11nter, and that in collecting such checks the Federal reserve banks, at a eat expense to themselves, render a very valuable free service to their nleMber banks and nonmember clearing banks and indirectly to the general Reply approved. The Governor then stated that in a telephone conversation with Mr. 1-80n, Governor of the Federal Reserve Bank of New York and Chairman of ' 411.1 tile °Pen Market Policy Conference, the suggestion was made that it wild be desirable to hold another meeting of the Open Market Policy Conference 14 Washington. After a brief discussion during which the members present concurred in the suggestion, it was decided to request the Governors of all Federal reserve banks to meet in Washington on Thursday, Tilly 14, 1932, at 10:00 a. m. for the purpose of considering the systemts open market policy, and to suggest that they make arrangements to spend two days in Washington so that there may be time also for the consideration of other matters. Report of Standing Committee dated Ally 7, 1932, recommending 4P1ova1 of the following change in. stock at a Federal reserve bank: AZgeation for ORIGINAL Stock: IAtii3301 No. 7. National Bank, Altona, Illinois. Shares 18 Approved. Thereupon the meeting adjourned. 18
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