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A meeting of the Federal Reserve Board was held in the office of the
l'ecleraa Reserve Board on Tuesday, Tune 16, 1931, at 10:35 a. m.
PRE6ENT:
Governor Meyer
Yr. Hamlin
Mr. Miller
mr. Magee
Er. Pole
Mr. McClelland, Assistant Secretary.
The Governor presented the following telegram dated Tune 15th from
the
GWernor of the Federal Reserve Bank of Lew York, which was received in
the
Boardts offices late yesterday afternoon:
"Referring to the Board's letter of May 15 approving the action
or the directors of this bank in authorizing the officms to enter
into an arrangement for a period not to exceed one year to purchase up to the equivalent of not more than .3,000,000 of prime
commercial bills bearing at least two names endorsed or guaranteed
bY the Austrian National Bank we have advised the Board that our
Participation in this arrangement was finally effected for the
equivalent of 7,700,000 schillings and that we have recently PurChased bills up to the equivalent of that amount from the Austrian
National Bank. 'We have today received an urgent cable from the
lank for International Settlements stating that that institution
ana the other central banks participating in this credit to the
AUstrian National Bank have been asked and have agreed to arrange
rurther credit to the Austrian 1:ational Bank of an additional
L_ 00,000,000 schillings provided the Austrian Government is able to
!l*row externally by means of the sale of its Treasury bonds
2°,000,000 schillings to provide funds for the rehabilitation of
Oesterreichische Credit Anstalt and other purposes. Unless
uhe sale of
these Austrian Treasury bonds is accomplished this
Alrther credit to the Austrian rational Bank would not become
effective. Vie have been asked by the Bank for International
6ettleme11t3 to participate in this new credit in dollars for the
.?uivalent of not to exceed 10,000,000 schillings. The Bank for
„4t7ternational Settlements will participate in this second credit
40 the extent of 40,000,000 schillings, the same amount which they
4°0k in the first credit.
"fter considering this matter today the Executive Committee of
t̀41r board of directors voted to authorize the officers to participate
the extent of the dollar equivalent of not to exceed 10,000,000
hillings and requested the officers to take such steps as are
eceasary to make our participation effective.
,,"The Bank for International Settlements contemplates opening
et
tlgla credit to the Austrian National Bank today and have therefore
,
1 1ceci us to telegraph them today as to whether we desire to
li41'ticipate. It should be noted that our directors and the Federal
!
t 8erve Board authorized our participation in the first credit to
"e Austrian National Bank to the extent of .::,3,000,000. Our actual
6/16/31
-2-
"participation in that credit was about a,083,000 and in this second
credit would be for a maximum amount of 01,400,000. In view of the
fact, however, that this new arrangement is in the form of a new
undertaking I am anxious to report the matter to the Board at once
for such further consideration as they may feel to be necessary in
the circumstances. Because of the expressed need for haste we should
aPpreciate your advising us promptly of any comments you may feel to
be necessary."
The Governor advised the members present that he understands there is
"eel
that if the Austrian situation can be settled, the present unsatis-
4e
t°rY conditions in Germany, which have developed subsequent to the Austrian
4ultance, might improve somewhat.
Conditions in Germany, particularly
Cletr,s1
'-Lopments during the last few days, were discussed in detail.
During the
euasion, the Governor was called from the meeting and upon his return rethat he had just been advised over the telephone by Governor Harrison
the
Federal Reserve Bank of New York that because of the acute situation
11).r.
'.4anna and the lack of time in which other arrangements could be made for
the
'
4terna1 loan of 150,000,000 schillings to the Austrian Government, the
4*
1
°f England, at a special meeting today, agreed to advance the entire
41°11/1t) relying on the cooperation of others to relieve the Bank of England
to
lazItever extent they may be able.
At the conclusion of the discussion,
it was voted to approve participation by
the New York bank in the credit to the
Austrian liational Bank as proposed in the
Liner not
telegram auoted above,
voting.
The Governor then presented the following telegram received in the
lik10)
'
4 a offices this morning from the Governor of the Federal Reserve Bank of
IT
under date of June 15:
s "We have just received a cable from the Bank for International
%?ttlements advising us that they are arranging today a credit of
';',:14),000,000 in favor of the National Bank of Hungary and inquiring
"aether we could care to join with other large central banks in de110 iting with the Bank for International Settlenents immediately
6/16/31
_3-
"2,000,000 each on a special syndicated account to be employed in
assisting the National Bank of Hungary or other central banks in
need of emergency relief. The Bank for International Settlements
adds that this arrangement is suggested as a natter of first importance in assisting in every way possible in maintaining the gold
standard in those countries where it has been adopted. The Bank
for International Settlements are inviting other large central banks
Which participated in Austrian credit to make deposits in this
'account to Provide a means of quick action in cases of need that
may arise, for reinforcing confidence and meeting special circumstances.
"At the meeting of our Executive Committee today it was voted,
subject to the approval of the Federal Reserve Board, to authorize
the officers of this bank to make a special deposit with the Bank
for International Settlements in the amount of 2,000,000, it being
understood that this sum would be employed until further notice
only for the purpose of purchasing for our account prime corxaercial
bills endorsed by the National Bank of Hungary or of making a secured
deposit with the National Bank of Hungary. In either case the amount
eo used would be pro rata with other participants in the arrangement.
It was further understood that the use of these funds to assist in
the case of any central bank other than the National Bank of Hungary
would be subject to our express approval in advance.
"When we opened an account on our books for the Bank for International Settlements the Board in giving its approval stated that
before any reciprocal account is opened with the Bank for International
Settlements, the matter shall be taken up with the Federal Reserve
Board for approval or disapproval.
"'What we are now proposing is in effect a special deposit only
for emergency relief. The Bank for International Settlements feels
that such concerted action on the part of the large banks of issue
through the Bark for International Settlements is the only effective
way to handle the acute situation which has now arisen in central
8-nd eastern Europe. Isolated credits to specific central banks are
too cumbersom to operate and might possibly take too long to arrange
to meet an emergency. We should like the Board to consider the
°Pening of this special account with the Bank for International
Settlements from that angle and for this particular purpose only.
are anxious to cable the Bank for International Settlements
Ett the earliest possible moment and should therefore appreciate
4dvice of the Board's action as promptly as possible."
At the conclusion of the discussion
which ensued, the following telegram to
the Governor of the Federal Reserve Bank
of New York was approved and ordered
transmitted, Mr. Taller voting "no".
"Your telegram 15th. Board authorizes participation by
&r bank in credit to the National Bank of Hungary through
44e purchase of the equivalent of c:2,000,000 of prime
icl°111111ercial bills endorsed and guaranteed by the National
allk of Hungary and will not object to your making use of
c).
"the Bank for International Settlements to act as your special
agent in this transaction."
Mr. Pole then referred to the fact that several states have recently
ellemted legislation Providing for increased taxation on the capital stock of
stIl te and national banks which has resulted in his office receiving several
441ications from national banks for permission to reduce their capital. He
ateted that inasmuch as the approval of the Federal Reserve Board, as well as
is required before national banks can reduce their capital, he would
like to discuss with the Board the matter of the policy to be pursued in
"ag upon such applications.
la..
Pole also stated that unless the applica-
ticMe received by his office are granted, a number of the applicants may give
415 their national charters and seek to effect a reduction under a state
41arter.
During the discussion which followed, it was developed as the conof opinion of the members present that the Board should not approve
l'ecluction in any case where such action would amount to a waiver of the
1513er safeguards of sound banking.
The Assistant Secretary then presented various matters which were
ciered by the Board and acted upon as follows:
Memorandum from Counsel dated Tune 12th, submitting, in accordance
the action taken at the meeting on Tune 11th, drafts of letters to the
keze
alitile-Commerce Bank and Trust Company of St. Louis and to the Lafayette-
akth
Side Bank and Trust Company of St. Louis with regard to the ownership
tja
°se banks of the stock of the Mercantile-Commerce National Bank and the
,Artit
Side national Bank, respectively. The Assistant Secretary stated
t4EItti:n
Tames, who is confined to his home by illness, has in mind a plan
thp,
- %deposition of this question as regards the Mercantile-Commerce Bank
Ek4,
Company, which he would like to discuss with the Board upon his
6/160/31
-5-
return to the office.
Accordingly, action on the matter was
deferred.
Telegram dated June 12th from the Secretary of the Federal Reserve
1381* of Atlanta, advising that the Board of Directors,. at its meeting on that
kte,
made no change in the bank's existing schedule of rates of discount and
PIllthase,
Without objection, noted with
approval.
Letter dated June 12th from the Assistant Federal Reserve Agent at
14111 Tork, advising that the Merchants and Newark Trust Company, Newark,
iew
:ersey, has purchased from the receiver the assets, aggregating C621,813.14,
t the Port Newark National Bank of Newark, which was closed by the Comptroller
or
Currency in August 1930; the letter stating that the New York bank is
01% th
-141) ()Pinion that the purchase is not in conflict with the conditions of
454141'84P under which the Merchants and Newark Trust Company was admitted to
ellihiP in the Federal Reserve System.
Upon motion, it was voted to interpose no objection to the action of the
member bank.
Letter dated June 13th from the Vice President of the First Federal
114aiell Banking Corporation, New 'fork City, New "York, advising that at the
bleetillig of the directors on JUne 9th a special committee was appointed to
%rticaia
'
Ler and propose, at the next meeting of the directors to be held in
to w
et58, a plan for the restitution of the capital of the corporation.
Noted.
Memorandum from Counsel dated Tune 13th with regard to the matter
elbl'eci to the Governor with power on May 28th, namely, the disposition
t44tlantic National Bank of Boston of the stock owned by it in the
6/16/31
-6-
Atlantic
Corporation, Counsel's memorandum reporting a telephone conversation
With the counsel of the national bank in -which the latter advised that a
1344 for the disposition of the stock, amended to meet the Board's requireWilt be submitted within the next week.
Noted.
Mr. Hamlin stated that after further consideration he had decided
to
'1J-1-Y Personally to the letter addressed to Ain under date of Tune 10th
Senator Glass.
He, therefore, withdrew the letter which on June 12th he
81abmitted for consideration by the Board.
COE-MITTEjicL
Dated,
kted
„June 12th
15th
June 13th
bateri$
" LIay
23rd
rkte
3-une 12th
ktQ
Xtme lath
1)4te.
Tune 16th
Recomending changes in stock at Federal Reserve Banks,
as set forth in the Auxiliary Tanute Book of this date.
Recommendations approved.
Recomending action on application for fiduciary powers
as set forth in the Auxiliary Minute Book of this date.
Recommendation approved.
Recommending approval of the application of Mr. John V.
Hinchliffe, for Permission to serve at the same time as
director of the National Bank of America in Paterson,
Paterson, New Jersey, and as director of the Citizens
Trust Company of Paterson, New jersey.
Approved.
Recommending approval of the application of Mr. Frank H.
Negley, for permission to serve at the same time as
director of the Citizens National Bank of South Bend,
Indiana, and as director of the Citizens Trust and
Savings Bank of South Bend, Indiana.
Approved.
Recomending approval of the application of Mr. K. H.
Galloway, for permission to serve at the same time as
director and officer of the Public Nationnl Bank and
Trust Company of Houston, Texas, and as director of
the First National Bank of Harlingen, Texas.
Approved.
ecommending approval of the application of /a.. John
C. Dewey, Jr., for permission to serve at the same time
as director of the Housatonic National Bank of Stockbridge,
Mass., and as director of the Pittsfield-Third National
Bank and Trust Comonpy of Pittsfield, Mass.
Approved.
6/16/31
-7-
The meeting adjourned at 1:00 p. nu
d•WW)
Assistant Secretary.
%roved:
AUXILIARY =WES
(June 16, 1931)
Reports of Standing Camittee dated June 12 and 15, recommending
ges in stock at Federal Reserve Banks, approved as follows:
!.Dlications for SURREND.ER of Stock:
gLItzi.„..ct No. 4,
eirst National Bank, Pitsburg, Ohio. (Vol.
Lig. Abs. by First Farmers National Bank,
Arcanum, Ohio.)
Pirst National Bank, Fairdhance, Pa. (Insolvent)
7.
4113anY Park National Bank 8t. Trust Company,
Chicago, Ill. (Insolvent)
Shares:
23
68
216
216
ti
s
&2LJI1L_Pb's National Bank Michigan City, No. Dak.
(Vol. Lig. Suc. by Lamb's Bank, Michigan
04 C ity)
4tizens National Bank, Northwood, N. D. (Vol.
Lig. Sue, by Northwood State Bank.)
18
45
27
molipl••••••••.110■MMAN
01.:2114L224_11.
*Itt National Bank, Bennington, Okla. (Vol.
0.1.4. Lig. Terminal)
'Y National Bank, Temple, Texas. (Vol. Lig.
Abs. by Farmers State Bank)
18
14.4
162
36
Total
36
527
S
tet No. 12.
rlal Bank of Lynwood, Calif. (Insolvent)
art
emReport
of Standing Committee dated June 13 recommendin
...D.Lidation for fiduciary powers by the following bank:
41N0 .
action an
DISTRICT NO. 2.
g71
Merchants National Bank in Plattsburg, New York..
(3354. Approved subject to condition that the
bank agree to increase its capital to such an
amount within one year that the aggregate of
its capital, surplus and undivided profits,
shall be at least 10 of its then deposits.)
q("Weeff
)
,4W
I
Assistant Secretary.
-4,4-01,red.1
_
Governor
@FedFRASER