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A meeting of the Executive Committee of the Federal Reserve was held in Washington on Thursday, Tune 15, 1933, at 11:45 a. m. PRESENT: Mr. Black, Governor Mr. Hamlin Mr. Tames Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. McClelland, Assistant to the Governor Governor Black reported the developments in the banking situation at Battle Creek, Michigan, following the closing on June 13, 1933, of tile °Id-Merchants National Bank and Trust Company, as well as the steps Which have been taken to assist the two remaining banks to meet withcitallale resulting from such closing and in an effort to make available to dePositors a portion of the deposits in the closed bank. He stated that the Federal Reserve Bank of Chicago had done everything it possibly °°111d to help in the situation, that he had been in constant communicat441 ".th Chairman Jones of the Reconstruction Finance Corporation and 1.13111%sentative8 of the Federal Reserve Bank of Chicago, and that he feels that the Federal Reserve System had been of all possible assistance in tteraPtiug to find a solution of the difficult banking problem in Battle Cteek, Governor Black also stated that on Tuesday, Tune 13, 1933, Governor 0411a of the Federal Reserve Bank of San Francisco called him on the 1. P4ohe With regard to the Anglo California National Bank of San Francisco, 04lit (4111a, which has 0,000,000 in rediscounts and 414,000,000 of 10(b) 118 tele With the Federal Reserve Bank of San Francisco, and a $14 000,000 10Eua With the Reconstruction Finance Corporation; Governor Calkins stating tItat th -E1 national bank feels that if it is required to show a large amount ot bo tl'"ings in its condition report at the time of the expected Tune 30 439 6/15/33 -2- call, it may result in the closing of the bank. The Governor stated that he had been in communication with the Reconstruction Finance Corporation 114"8rtling the matter and that, in addition to a loan, to be negotiated /1"t°11gh a mortgage company, which has now been approved by the Reconstruction 11'1118-tee Corporation in an amount up to $35,000,000, the question of issuing rerred stock is under consideration as a further step in meeting the 8ituatio_. al Governor Calkins had advised, Governor Black stated, that in t111114 the matter up he was not prompted by any concern as to the advances r141cle to the national bank by the Federal reserve bank, but rather by the Position of the member bank. Governor Black then advised that he had received a letter dated J.1418 1933, from Mr. George S. Harris tendering his resignation as a 4488 C director of the Federal Reserve Bank of Atlanta and giving as l'eeson for such action the fact that after July 1 he will no longer be resident of the district. Governor Black stated that he has re- c11'58ted Mr. Newton, Chairman and Federal Reserve Agent at Atlanta to Was to Come to discuss certain matters, and that, if it is agreeable, havolad like to have action deferred on Mr. Harris' letter until after 41'1 Newton's visit. Action was deferred accordingly. Mr. James advised that Mr. Marion Wasson, Commissioner of the 14Lte 14. , —allicing Department of Arkansas, is in Washington and would like to (11 011,_ 8 with the Board the question of admission to membership of the 11411144-8 4' Commercial Trust Company, the Union Bank, and the Peoples Bank, °t Little Rock, Arkansas, whose applications for membership were con41(lel'ecl recently by the Board. Mr. Tames stated that he had informed Mr. 440 6/15/33 -3- '118sola that, because of the absence of certain members of the Board, cill°rum was not available at the present time, and he suggested that, lf agreeable to the members present, he would advise Mr. Wasson that the 13°eIrd will be glad to meet with him on Tuesday, Tune 20, 1933, at 10:30 ., when it is anticipated that a quorum of the Board will be present. Pile °tiler members concurred in this suggestion. Mr. Morrill stated that Deputy Governor Rounds of the Federal ReBank of New York had called him on the telephone in connection 1.-th the 'Port that the Reconstruction Finance Corporation proposed to reduce the tatere st rate charged on loans made by the corporation; Er. Rounds 'tia 8te Or the that he thought consideration should be given to the desirability Federal Reserve Bank of New York making a like reduction in its 011. 10(„ b) loans. 1.1) Mr. Morrill stated that he had discussed the matter the Secretary of the Reconstruction Finance Corporation who advised that the proposed reduction had not yet been made effective and that there Were 411der consideration certain conditions that might be imposed in connectt°4 With the reduction. Ma-. Morrill added that upon receipt of this ilir°1711ation Mr. Rounds stated that consideration of the matter at the New 1.(11'k baak would be deferred. 1-Ir. Morrill then referred to Senate Resolution 75, approved on ti:Ety 29 '1933, which requests the Board to prepare and transmit to the et ) as soon as practicable, a report showing the salary schedule of the e4ectitive officers and directors of each Federal reserve bank and t4elliber bank of the Federal Reserve System- Mr. Morrill stated that, while the l'equest hus not yet been transmitted formally to the Board, it involves 11"bei, of questions which are being considered so that when the request 6/15/33 18 -4- received the matter can be presented promptly to the Board for considera- tion, Mr. James then referred to the memorandum received by the Board under (18te or May 29, 1933, from the Under Secretary of the Treasury, advising that 4° additional space is available at this time in the Treasury Building which °°111411 be assigned to the Federal Reserve Board. Mr. Tames stated that, in '1819 of the provisions of the Glass Bill, he feels that the Treasury Departnielit 18 now under no obligation to furnish space to the Board; that, if 441118te apace in the Treasury Building is not available, arrangements should be ma de immediately by the Board to obtain space elsewhere which will be cleUate to house its activities; and that, with that thought in view, he had l'elllested Mr. Morrill to prepare a memorandum to the Secretary of the Treasury, In "-uP-LY to Under Secretary Acheson's memorandum, for consideration by the Bolard. The Committee then considered and acted upon the following matters: Telegraphic reply on June 9, 1933, approved by five members of the Nira to a telegram of that date from Mr. Williams, Chairman of the Federal Rese 1"/11 Bank of Cleveland, stating that the board of directors, at its meeting 04 th date, voted to establish a rediscount rate of 3%, effective the first 88 day following that on which approved by the Federal Reserve Board. The r 8PlY stated that the Board approves for the Federal Reserve Bank of Qicarea. and. a rediscount rate of 3%, effective June 10, 1933. It was underatooci the 13. that the new rate is to apply to all rediscounts for member banks under r"isions of sections 13 and 13(a) of the Federal Reserve Act and to ad-.tees 13, to member banks under the provisions of the eighth paragraph of section Approved. 442 6/15/33 -5Letter dated June 8, 1933, from the Secretary of the Federal Reserve Batk Of New York, and telegrams dated June 8, 1933, from the Secretary of the hclera1 Reserve Bank of Kansas City, June 9, 1933, from the Chairman of the hderea Reserve Bank of Atlanta, Tune 12, 1933, from the Secretary of the 4:m4 Reserve Bank of Minneapolis, and June 14, 1933, from the Chairman or the Federal Reserve Bank of Boston, all advising that their boards of d4rect°r8, at meetings on the dates stated, made no changes in the banks, "Iseting schedule of rates of discount and purchase. Without objection, noted with approval. Memorandum dated June 12, 1933, from Mr. Goldenweiser, Director "the Division of Research and Statistics, recommending that, because or 1,"r '" continued illness, Miss Nora V. Elder, an employee in the division, be nted leave without pay for an additional period of two months, from 411Y 1 to August 31, 1933, inclusive. Approved. Memorandum dated June 12, 1933, from Mr. Smead, Chief of the Dtvi sion of Bank Operations, recommending the acceptance, as of the close or b "inese on June 15, 1933, of the resignation of Miss Edith Brooks, a vary employee in the division. Approved. Reply on June 12, 1933, approved by five members of the Board, to il 1 etter dated June 5 from Mr. Stevens, Federal Reserve Agent at Chicago, %trig that the services of Mr. C. L. Pitman, an examiner in the agent's Nlartrrient, have been so satisfactory that he has been placed in charge 'r t -ank's reorganization work in Michigan and that, in order to bring 841arY in line with his advanced work, it is recommended that the salary 6/15/33 -6- be i ncreased from 3,800 to 44,300 per annum, effective June 15, 1933. The reP-LY stated that the Federal Reserve Board approves the increased 661417 as recommended. Approved. Telegraphic reply to a telegram dated June 14, 1933, from MT. " 41 Federal Reserve Agent at Chicago, recommending the temporary 4" al)Pointment of Messrs. T. C. Smith and C. P. Vanzante as examiners in the Paderal reserve agent's department of the Federal Reserve Bank of ellIcag°, with salary at the rates of $5,000 and $4,000 per annum, I'lleljactively. The reply stated that the Board approves the appointments "recommended and at the salaries named. Approved. Letter dated June 13, 1933, to Mr. McClure, Federal Reserve Agent a"as City, approved by four members of the Board, stating that, in EtteorA `tance with the recommendation contained in his letter of Tune 6, the Nier al Reserve Board approves changes in the personnel classification 1)1114 ( If the Federal Reserve Bank of Kansas City to provide for the estab-4ualit of the new positions of acting assistant Federal reserve agent at the Denver, Oklahoma City, and Omaha branches. Approved. Nal./ on Tune 9, 1933, approved by five members of the Board, to 4 tele €rath dated Tune 6 from Mr. Newton, Federal Reserve Agent at San PrezotR,„ stating that, subject to the approval of the Federal Reserve toeirti, Mr. Charles P. Weigand has been reappointed temporarily as an eziarat 14 in the agent's department, with salary at the rate of $300 per 14°Ilth 6 The reply stated that it is assumed that the appraisal of the assets 444 6/15/33 -7- cit the Wingfield banks, for which purpose Mr. Weigand was released, 44enow been completed, and that, as stated in its telegram of May 10, 19331 the Board approves the reappointment of Mr. Weigand for a further ta1 l/c3rerY period. Approved. Reply to a letter dated June 13, 1933, from Mr. Williams, ChairOf the Federal Reserve Bank of Cleveland, advising that, at the meeting board of directors of the bank on June 9, it was voted to continue t the 111 °Peration for the period from June 15 to December 31, 1933, the sharetile ks15°rk plan which has been in effect at the bank since December 16, 1932, " ' lequesting that the Board approve such extension of time. The reply "eled that the Board is giving consideration to the general policy in7011re, q in the continuance of the share-the-work plans now in effect at atriNr 41 of the Federal reserve banks, and for that reason is not prepared at ' 44.8 time to approve for the remainder of the current year the payment or a1 -11-Leries under the plan adopted by the Federal Reserve Bank of Cleveland, bt hat, Pending determination of the matter, the Board offers no objectjQfl to the continuance of the plan at the head office and branches for an 1 --IL period, .ending July 31, 1933, and approves the payment during th at Period of salaries in accordance with the plan. Approved. Reply on June 14, 1933, approved by three members of the Board, to a -Letter dated June 8 from Mr. Walsh, Chairman of the Federal Reserve tablat t Dallas, advising that, at the meeting of the board of directors 't the bank on June 7, it was voted, subject to the approval of the Nier al Reserve Board, that the share-the-work plan now in effect at the e/15/33 bank be -8continued for an additional six months period ending December '1933, and that the present salaries of officers and employees be 31 e°14.tinUed for the remainder of the current year subject to deductions 11114er the share-the-work plan. The reply stated that the Federal Reserve is giving consideration to the general policy involved in the con" 13 tinUeince of the share-the-work plans in effect at several of the Federal re8e1ve banks and for that reason is not prepared at this time to approve 84417 payments under the plan adopted at the bank for the remainder of the current year, but that, pending determination of the matter, the Board otter 8 no objection to the continuance of the plan at the Federal Reserve f Dallas and its branches during the month of July and approves PIIYment of salaries during that period in accordance with the plan. Approved. Reply on June 12, 1933, approved by four members of the Board, tO ."14-Gters dated June 2 and 6 from the Chairman of the Federal eserve Bank or to et°11, with regard to the action taken by the board of directors of thehallk, at its meeting on May 31, 1933 tha B°ardt s letter of April 29, 1933 on the suggestion contained in X-7425, with regard to indebtedness errieers and employees of Federal reserve banks. The reply noted that the ' 11Port of the committee of directors, which was accepted by the board or ' l6ctors, provides for the submission to the chairman of a statement by ell cfricer and employee of the bank that his total indebtedness as of not '1933, other than for ordinary personal and household expenses, is excess of ten per cent of his annual salary, and an agreement that he Promptly report any indebtedness incurred by him in the future which b ring his total indebtedness at any one time to an amount exceeding 6/15/33 -9- Per cent of his annual salary, or, in cases where the indebtedness q the officer or employee on July 1, 1933 is in excess of ten per cent "hie annual salary, for the submission of a statement as to the nature kid total amount of the debt, and an agreement to report promptly any "gations incurred in the future which will bring his total indebtedness to at amount exceeding ten per cent of his Rimual salary, and all new obligat10t8 contracted with any member bank. The reply also stated that, inasmuch "the directors have approved the principle that officers and employees ' 44141. not incur any indebtedness to a member bank, either directly or --ectlY, it would seem to be desirable that reports be made promptly illr°tficlers and employees in responsible positions covering all indebted1111/ incurred by them to member banks, or to the subsidiaries or affiliates Of au eh banks, regardless of whether such indebtedness is in excess of ten cellt of the annual salary; that it does not appear that the form of state rnextt to be submitted by officers and employees whose indebtedness on 4'114 11 1933, does not exceed ten per cent of the annual salary calls for 1311c11 rePorta; and that the agent may wish to give further consideration to tilts Pcint, Approved. to 4 RaPlY on June 14, 1933, approved by three members of the Board, atter dated June 6 from Mr. Wood, Federal Reserve Agent at St. Louis, 4tati„ g that the City of Texarkana, Arkansas, has appointed Mr. Stuart laot ' a director of the Little Rock branch, as a member of the joint ttre co nlhassion of Texarkana, Arkansas, and Texarkana, Texas, and recom8 that Mr. Wilson be permitted to serve in that capacity while acting 44 4 4-cector of the branch. The reply noted that the purpose of the commission 417 6/15/33 -10- 18 to select and recommend the appointment of a fire chief and to make other /168(1zrae11dations to the city councils for the proper administration of the fire rieloartment of the two cities, and that the appointment is not considered to be Pcaitical in any way, and stated that it is assumed that the position does not carrY any compensation. The reply also stated that, in view of these cir- cizletancee, it is felt that the appointment does not come within the scope or the resolution adopted by the Board on December 23, 1915, with regard to Mitical affiliations of directors of Federal reserve banks and their btenchee, and that, accordingly, the Board will interpose no objection to w4, "4-Leon retaining the position while serving as a director of the Little 11(381c branch, Approved. Telegrams dated Tune 14, 1933, to the respective Federal reserve eltezta -* aPproved by three members of the Board, stating that, subject to the _ onditions contained in the individual telegrams, the Board approves the a PPlications of the following State banking institutions for membership 14 thA Federal Reserve System and for the number of shares of Federal reserve "Oak to which each of the applicants will be entitled upon the basis -aPital and surplus as of the date upon which its membership becomes "recti7e: Name of Bank Federal Reserve Bank Bank of Russellville, Ohio. The Bank of St. Albans, West Virginia. Farmers and Mechanics Bank, West Point, Virginia. The Peoples Savings Bank, Clanton, Alabama. Citizens State Bank of Walnut, Illinois. bavenport Bank and Trust Company, Davenport, Iowa. Metamora State Bank, Metamora, Illinois. Cleveland Richmond Richmond Atlanta Chicago Chicago Chicago 6/15/33 -11— Federal Reserve Bank Name of Bank State Bank of Niantic, Illinois. Bank of Carthage, Missouri. State Security Bank, Brigham City, Utah. Chicago Kansas City San Francisco Approved. Telegrams to the respective Federal reserve agents stating that, 84biect to the conditions prescribed in the individual telegrams, the 8eard approves the applications of the following State banking institutions Membership in the Federal Reserve System and for the number of shares or i'ederal reserve bank stock to which each of the applicants will be d upon the basis of its capital and surplus as of the date upon Ilhich its membership becomes effective: Name of Bank Federal Reserve Bank Bank of Adairsville, Georgia. Danforth Banking Company, Washington, Atlanta Chicago Cashmere Valley Bank, Cashmere, Washington. San Francisco Approved. Telegraphic reply on June 9, 1933, approved by three members of the 13°"d, to a letter dated June 7 from Mr. Hoxton, Federal Reserve Agent e4Mond, recommending that the Bank of Glade Spring, Virginia, be l'alited an extension of time in which to dispose of its holdings of stock the Farmers Exchange Bank of Abingdon, Virginia, as required by one of he c3riditions under which it was admitted to membership in the Federal 1141e1'37e System. The reply noted that the bank has made arrangements to 44Do„ of ,„ w per cent of its holdings of such stock, in accordance with t141 °Ildition of membership, and stated that the Board grants the bank an 1141itt°11a1 sixty days from June 10, 1933, in which to dispose of the remain- 449 6/15/33 eo -12- per cent. Approved. Reply on June 14, 1933, approved by three members of the Board, to letter dated June 5 from Mr. Boxton, Federal Reserve Agent at Richmond, 14al°81-ng a copy of a letter dated June 3 from the Lynchburg Trust and Savings 411k 0f Lynchburg, Virginia, requesting that it be permitted to set up reea in the amounts of $61,821.29, covering doubtful and loss items, and 4$276.20, covering depreciation on securities below the four highest 111(168 aa a compliance with the condition of membership imposed by the Board 4111111ng that these items be charged off. The reply stated that the Board accept as a compliance with its condition the establishment of valuat1,04 l'eserves, which, for all statement purposes, should be used as deduct 1°44 frocm the assets accounts to which they are applicable, provided, how'that such reserves shall not, except with the permission of the Federal R eser7e Board, be used for any other purpose. The reply also requested that the agent advise the Board regarding the action taken by the Lynchburg '4'48t arla Itahea Savings Bank in this connection and the amount of reserves estab- it lieu of specific charge-offs. Approved. RaPly on June 12, 1933, approved by five members of the Board, to e. _ letter 4 dated May 8 from Mr. Walsh, Federal Reserve Agent at Dallas, "kitt 1-g a recommendation of the board of directors of the Federal Reserve te,tat °t Dallas that the First State Bank of Leakey, Texas, be cited to appear to attoil cause why its membership in the Federal Reserve System should not be kll'444at d htier on account of a violation of the general condition of membership hich it was admitted to membership; the bank having permitted its 6/15/33 -13- "sets to get into a generally unsatisfactory condition. The reply re- terred to the Board's letter of December 29, 1930, requesting that, if s3ssible, In cases of this kind, the agent base his recommendation on 11°1ations of the Federal Reserve Act rather than solely upon a violation or the general condition of membership, and stated that, before action is t411:1311 by the Board, it will be appreciated if the agent will advise whether themamber bank has been guilty of violations of any of the provisions of the Federal Reserve Act as distinguished from conditions of membership. The r. '14Y also requested that the agent communicate with the First State Bel* of Leakey with a view of ascertaining whether the bank would be willing to " -- Ildrsw voluntarily from the Federal Reserve System and, if so, whether it 17111 request the Board to waive the six months notice usually required, 14 0rder that its withdrawal will be expedited. Approved. Letter dated June 14, 1933, to Mr. Nalsh, Federal Reserve Agent tit Dal lee, approved by three members of the Board, referring to the analysis "the report of examination of the Forney State Bank, Forney, Texas, as of /44roh „ ‘Q, 1933, on which the agent had indicated that in his opinion no "tioh , eaPuld be taken by the Board on account of the bank's condition. The 1 etter also referred to the proceedings instituted by the Federal Reserve 804ra to determine whether the membership of the State bank should be tezitai 44ted, and to the Board's letter of November 1, 1932, requesting that the a 1"1.1t submit with his analysis of the next report of examination of the 144tit Iltion a recommendation of the board of directors of the Federal Reserve liEttik 0 t Dallas regarding the action to be taken by the Board in the matter, 0/15/33 -14- stated that it is assumed that the directors concur in the agent's "Lion that no action is necessary under the proceedings which have been instituted. BOA1•A The letter also requested that the agent submit to the a more detailed report as to corrections effected in the bank's c°11dition since the examination of March 28, 1933, including any adjustWhich were made incident to its reopening after the national 111°ratoritun, together with advice as to whether there has been any change ill the management of the bank and, if not, whether the institution, in the E4°"I8 °Pinion, will be a satisfactory member of the Federal Reserve System 114cler its present management. Approved. Telegram dated June 10, 1933, to Mr. Stevens, Federal Reserve 440:1"t at Chicago, approved by three members of the Board, referring to 4881stant tO th G Federal Reserve Agent Young's telegram of that date with regard Proposed reorganization of the Old State Bank, Frimont, Michigan, 'Lug (in the event the bank is unsuccessful in collecting the remainder Of 4 , 40% stock assessment, $52,500 of which had been paid in) a reduction 14 the 1, ' anes capital from $75,000 to 450,000, and stating that it appears 141'. Young's telegram and from telephone conversations with him that the re °rganized bank will be under capable management and its condition 11111 , satisfactory, all losses, depreciation and doubtful assets having beet eliminated. The telegram also stated that, in view of such informatioll, the Board will offer no objection to a reduction in the bank's capital tha, cunount indicated if this is found to be necessary, upon the under14 that, in the agent's opinion, the reduced capital will be adequate the 0 Peration of the bank. Approved, 6/15/33 -15Telegram dated June 14, 1933, to the Federal reserve agents a• ll Federal reserve banks, approved by three members of the Board, ring to inquiries received by the Board from banks whose applica- l'Est t1048 for membership have been approved subject to acceptance of a conditiOrl requiring the charge-off or elimination of depreciation on securities bel °17 the four highest grades as shown by the last report of examination °r t• he respective institutions, as to whether appreciation in such securities after such examination and before admission to membership constitutes Liaallation within the meaning of the Board's condition. The telegram ibilted that if, in any such case, the agent finds that the bank's request 14 illstifled, - after having made a reappraisal on the basis of a detailed ellrrent list of its investments, he is authorized to require the charge-off or t• he remaining depreciation in lower grades after due allowance for Elptitec iation shown by such reappraisal, including net appreciation, if any, 14 -B, four higher grades, and that, in such case, the appreciation will be r e8a1'ded by the Board as an elimination in accordance with the terms Ot thA - condition and it will not be necessary to obtain the Board's perr41 " 41 Unless 8. epeelAI it is felt that there are exceptional circumstances requiring consideration by the Board, in which case all the facts should be %Alt ea t-- with the agent's recommendation. The reply also stated that, in eVer case where depreciation upon which the Board's condition is based is elitra liated by subsequent appreciation, a report should be forwarded to the tokr, ' 4 Setting forth the basis upon which the reduced charge-off has been kkie Approved. 453 6/15/33 -16Letter dated June 10, 1933, to the Comptroller of the Currency, "oved by four members of the Board, replying to his memorandum of June elloommending approval of the application of the First National Bank, 11°ITistown, New Jersey, for permission to reduce its capital stock from 42°0,000 to 4100,000, to change the par value of its present stock from 434° to $25 a share, and to immediately increase its capital from 4100,000 to 4250,000 by the sale of 6,000 shares of new stock of the par 174111111 of 425 each at 475 a share, the released capital of $100,000 and the Premium on the new stock to be credited to undivided profits and used (1), 4 —arging off 4400,000 of estimated losses and bond depreciation. The l'el°4 stated that the Federal Reserve Board approves the proposed reduction 1111 the plan submitted, subject to the conditions set forth in the reply. Approved. Letter dated June 13, 1933, to the Comptroller of the Currency, ved by three members of the Board, replying to his memorandum of Eti .TAIrLe 5 recommending approval of the application of the Liberty National 'Oklahoma City, Oklahoma, for permission to reduce its capital stock "ra 41,2oo,000 to 600,000, and to immediately increase the capital from IC/(3,000 to 41,700,000 by the sale of preferred stock at par for cash to the Reconstruction Finance Corporation and to holders of common stock, the l'eleeaed capital of $600,000 to be credited to surplus or undivided profits t°gether with 4180,000 from the present surplus, and 420,000 from the 1118ent reserve for losses and depreciation, used to charge off losses and (lottht41 assets amounting to 4800,000. The reply stated that the Federal 7e Board approves the proposed reduction under the plan submitted, ' Ileeel 411bJect to the conditions set forth in the reply. The reply also stated 6/15/33 -17- ) vC that, although the corrections to be effected will materially improve the condition of the bank, and are therefore desirable in view of the fact that the bank has already been licensed to reopen, it appears that the condition of the institution will still be unsatisfactory after the °IlteMPlated adjustments and eliminations have been made, inasmuch as baba depreciation, not provided for in the proposed eliminations, is suf- ficient to slightly impair capital, and there will be a large aggregate or 810W and doubtful assets and a substantial investment in banking house 411(1 furniture and fixtures remaining in the institution; and that it is 488umed that this feature of the case is receiving the consideration of the n `lomptroller's office and that all possible steps will be taken to relt-4 the unsatisfactory conditions. Approved. Letter dated June 12, 1933, to Mr. Hoxton, Federal Reserve Agent "Richmond, approved by five members of the Board, vdith regard to the cchdi4. 4on of the Bank of Commerce & Trusts, Richmond, Virginia, as disclo8eA g bY an analysis of report of examination of the bank as of January ZO, In ' 443. The letter referred to, and requested further information re111411.11g, the institution's ownership of the entire capital stock of the sage a ell i Investment Company, a subsidiary engaged in the business of mortgage notes; the bank's ownership of 100 shares of stock in the -Be State Investment Corporation; the generally frozen condition or the 1. uank's assets; the question of further dividend payments, the steady iherea 8e during recent years of the bank's other real estate account; and Othe 11 Matters in connection with the bank's condition. The letter also °teited - that the Board will be interested to know whether the agent has 6/15/33 -18- 48°1-lased with the Commissioner of Insurance and Banking, or the institution ectlY, the features of the bank's condition which were subjected to ' cill °Iitioism, and to receive advice of any improvement in the condition of the bank which may have been effected as the result of any such discussion °r otherwise. Approved. Letter dated June 12, 1933, to Mr. G. S. Nichols, Conservator w' the First National Bank and Trust Company of Highland Falls, New York, %roved by five members of the Board, referring to the resolution adopted b/r the board of directors of the bank signifying the bank's desire to sur1'1"er its right to exercise the trust powers previously granted by the 11 ". The letter stated that it is understood that the institution has teep, discharged or otherwise relieved in accordance with law of all of its d„. -"les as fiduciary, and that the Board, therefore, has issued a , -"el certificate to the national bank certifying that it is no longer "Lorized to exercise any of the fiduciary powers granted under the proOf section 11(k) of the Federal Reserve Act, which certificate illclosed with the letter. The letter also called attention to the "that, under the provisions of section 11(k) of the Federal Reserve 4 4t) when such a certificate has been issued by the Federal Reserve Board to 4 4€ttional bank, it is no longer subject to the provisions of section 11(k) or the Federal Reserve Act or the regulations of the Federal Reserve 13(1111t(1 Irlade pursuant thereto, is entitled to have returned to it any 411111ties which it may have deposited with the State or similar authorities the (/t the protection of private or court trusts, and may not exercise any Powers granted by section 11(k) of the Federal Reserve Act except 6/15/33 -19- "the permission of the Federal Reserve Board. Approved. Reply to a letter dated June 8, 1933, from Mr. Walsh, Chairman °t the Federal Reserve Bank of Dallas, advising that, in accordance with ths s uggestion contained in the Board's telegram of May 11, 1933, the if"le198 of the Houston branch have been amended so as to make the appoint14e4t of an assistant cashier at the branch optional with the directors or the Federal Reserve Bank of Dallas. The reply stated that the Board "oves the amendment referred to. Approved. Letter dated June 10, 1933, to Mr. Curtiss, Federal Reserve Agent t o ston, approved by four members of the Board, stating that the Federal lieeerve Board approves the application of the Methuen National Bank of ten, Massachusetts, for 47 additional Shares of stock of the Federal Nen— e Bank of Boston. AQsistant The letter also referred to the question raised Federal Reserve Agent Gettemy's letter of May 18, 1933, and 8(1171— '4.c1 that, while any impairment in the capital stock or surplus of a 4Alkk Should be corrected as soon as possible, the Board feels that, for 111415°80s of determining the amount of Federal reserve bank stock for which kb, ' 444 should subscribe, its application should be based on the amount of ite 884ed and paid-in capital stock together with the amount at which its sUI'Plus is carried on its books, rather than on the basis of the bank's 41134ired capital stock and surplus. Approved. Reply on June 12, 1933, approved by five members of the Board, 437 6/15/33 to Ili -20- letters dated April 26 and 27, 1933, from Mr. Fry, Assistant Federal rve Agent at Richmond, transmitting applications of the National Loan 4144 Exchange Bank of Columbia, South Carolina, and of the Farmers and MereL liants National Bank of Onley, Virginia, for the cancellation of 90 shares hd 60 shares, respectively, of stock of the Federal Reserve Bank of Richand raising a question as to the disposition which should be made or the Proceeds of this stock when canceled. The reply referred to the t"t that each of the banks is in the hands of a conservator appointed by th4Comptroller of the Currency under the provisions of the Bank Conserva11011 Act, and stated that it is the Board's view that an application for the °411cellation of Federal reserve bank stock in these circumstances should be 441 by the conservator rather than by an officer of the bank under authority re8011itiOn of its board of directors, and suggested that there be rellIrted to each of the banks named the application submitted, with the adthat the application should be made by the conservator. at te4 The reply also that the office of the Comptroller of the Currency advises that it is 4:able that a conservator of a national bank obtain the permission of the roller before making an application for the purpose in question and allepe stad that the conservator in each case be so advised. In connection tha question raised by counsel for the Richmond bank as to the proper tlI8D0 i+i '---on of the proceeds of the Federal reserve bank stock in these Nilse the reply stated that, in view of the provisions of the Bank Con40111a.,, qon Act and sections 5 and 6 of the Federal Reserve Act, it is the 01441 011 of the Board that the Federal Reserve Bank of Richmond may properly 441 /r the amount due to the member bank by reason of the cancellation of 6/15/33 -21-- hders1 reserve bank stock to the amount of the member bank's indebtedness to the reserve bank. Approved. Telegram dated Tune 9, 1933, to the Federal reserve agents at all l'f*511s1 reserve banks, approved by four members of the Board, stating that, trective immediately, the printed lists of member and nonmember banks that 11"43 resumed banking operations, and weekly supplements thereto, which have been furnished to the Board in accordance with its telegram of March 14, 'IllsY be discontinued by the Federal reserve banks; that, in view of 3433 t4 discontinuance of these lists, the Board desires that the data now being rePorted weekly in response to its telegram of April 13, 1933, be expanded to Over national banks; and that, accordingly, the agents are requested to 441 to the Board, for each week ending Wednesday, beginning with the week e June 7, to reach Washington not later than the following Monday, a statement showing changes affecting the following lists, which have been 4144rtained by the Board on the basis of data received either in response to 1• t8 telegrams of March 14 or April 13: (A) national banks (1) licensed to 1, -esume full banking operations and (2) not licensed, (B) State bank ' Is (1) licensed to resume full banking operations, (2) operating under 48trift+4 and (3) not in actual operation but not formally placed in (14tion or receivership, and (C) nonmember banks (1) licensed to resume T\111 b"king operations, (2) operating under restrictions, and (3) not in "t1141 operation but not formally placed in liquidation or receivership. This telegram also stated that the statement should show the effective date "e• 4Oh change, and that the agents should continue to report by telegraph, 14 "• ccrdance with the Board's telegram of April 13, the name and location 6/1.5/33 -22- °re5ch bank which (1) suspended or went into liquidation after resuming Na banking operations, (2) suspended or went into liquidation after re81111114g operations on a restricted basis or without having resumed any bankOperations, and (3) was placed on a restricted basis after having resumed Na banking operations. Approved. Governor Black then stated that, in accordance with the suggestion Previously made, he had addressed letters on June 13, 1933, to the governors "all Federal reserve banks, including Deputy Governor Burgess of the FedReserve Bank of New York, advising that Dr. 0. M. a. Sprague of the Trea.. 'urY Department and Governor George L. Harrison of the Federal Reserve tank Of New York were requested by the President to proceed to London to --Pate in conferences on the question of exchanges and are in London at th, is time for that purpose; and that in the government conference Dr. 4r4.0, represents the United States and in the central bank conference qelrei.,40 Harrison represents the Federal Reserve Bank of New York. The letter.. , el.so stated that if, as a result of the conference of the governkerlt re presentatives, any „Lovernmental policy on this question is formulated would contemplate action by the central banks, Governor Harrison will N41.8 e the Board promptly of the action proposed, and that he will also Et(hri_ "e the Board of the proceedings of the central bank conference, and, it the event any plan agreed upon at such conference provides for participatio4 0 t Federal reserve banks, the Board will give the question careful Qr[114. ' •I geration and advise the Federal reserve banks fully. z.t)41. The Governor then presented for the record the following cablegram vad this morning by the Federal Reserve Bank of New York from Governor 460 6/15/33 -23- II411"1son and telephoned to Governor Black by Deputy Governor Burgess: "(1) Recent fluctuations in exchange rate seem to us disturbing and undesirable, particularly at this time. ae believe, therefore, that steps should be taken promptly to check any further advance in the foreign exchange rates against the dollar. Although we do not know the cause, it is probable that transfers of capital fram United States and speculative operations against the dollar have increased in the past week or two. On a very thin market these transactions naturally result in unduly wide movements of the rate. "(2) We suggest that if you and the Treasury agree the control of foreign exchange in New York should be tightened by having Kent and Knoke telephone to banks and bankers who are principal dealers, inquiring of them the cause of recent rise in sterling and franc, asking whether they have seen any evidence of capital flights or speculation and reminding them of the President's order which, after all, prohibits such transfers of capital as appear to represent flights from the dollar, and also to speculative operations against the dollar. It is particularly important we believe to telephone such private bankers as Lazard Freres. "(3) We think it desirable to tighten the control in this manner without publicity and without issuing any new written instructions. "(4) This message is agreed to by Harrison and cheson before 3Prague, but presume you will discuss it with be should control that strongly feels action. Sprague ti3htened, as suggested." In connection with above cablegram, Governor Black suggested that he t11:1 Treasury take the matter up with the Under Secretary of the express the view that, before any action is taken by the Federal ae3orve Board or the Federal reserve banks, the Federal Reserve Board %ld be advised as to what the desires of the Government are as to the action to be taken in the premises. The other members of the 4eelltive Committee expressed agreement with Governor Black's suggestiO4. At this point Mr. Thomas joined the meeting. called him on the The Governor stated that Er. Richard F. Roper tale of representatives of the Ph°40 yesterday, stating that a meeting dirt nt will be held on Friday el'eat executive departments of the Governme 61 G/15/33 -24- 4tter11°0n, June 16, 1933, and 'inquiring if the Federal Reserve Board 71°111d arrange to have a representative present at that meeting. Governor lal"It stated that he had advised Ylr. Roper that he thought the Board would 111104ge to be represented, but that, after giving some thought to the tter, he is of the opinion that the meeting will be political in nature aild that if the other members agreed, he would call Mr. Roper on the telePhone and advise him that, because of the character of the meeting, the feels it should not be represented. All of the members present agreed that the action proposed by the Governor was desirable. 15, Reports of Standing Committee dated Tune 6, 9, 13, 14, and 192) recommending approval of the following changes in stock at Federal l'eaerve banks: 1)4, -4ulons for ORIGINAL Stock: Bank of aaterloo, Iowa. pl'au National Bank of Galena, Illinois. IPt National Bank in Joliet, Illinois. -1714in€ham National Bank, Birmingham, Michigan. Exchange National Bank in St. Louis, Mo. -'tst National Bank in Cannon Falls, lannesota. ie tions for ADDITIONAL Stock: m 3triot n ( Pita! State Bank, Iowa City, Iowa. ancrease in surplus. Converted on June 2, .t„ 1933, to First Capital National Bank) (Increase in " National Bank, Batesville, Lnd. in surplus) decrease caPital, partly offset by Shares 150 120 210 66 546 140 140 44 Total 44 730 6 2 8 GA5/33 —25— 1icat*ions for ,IDITIONAL Stock: (Contrd) t National Tinnk, Harrisburg, Ill. (Increase in capital, preferred, partly offset by decrease in surplus) 'Lrst National Bark, Woodlawn, Ill. (Increase in capital, preferred, and surplus) Shares 9 6 Total 15 23 111 111 t, lication for SURRENDER of Stock: --ciDers National Bank, Brenham, Tex. (V. L. Suc. bY Farmers National Bank in Brenham, Tex.) Approved. Reports of Standing Committee dated Tune 6 and 7, 1933, recommending 4111, , ' Ital of the following Clayton Act applications: J. C. Ainsworth, for permission to serve at the same LI:Ine as a director and officer of the United States National Vlk of Portland, Oregon, and as a director and officer of the ark County National Bank of Vancouver, Washington. Lr. Robert W. Stewart, for pa mission to serve at the same .:t-me as a director of the National Boulevard Bank of Chicago, 1-1linois, and as a director of the Continental Illinois National and Trust Company of Chicago, Illinois. Approved. Thereupon the meeting adjourned. (hC;;;CLU-A- svAtioveci Governor. erk„A_A_P__f:a tary. Se
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