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A meeting of the Pxecutive Committee of the Federal Reserve Board was 1/(1 in - 41, office of the Federal Reserve Board on Tuesday, June 2, 1931, at 11:30 ra. PRESENT: Governor Meyer Mr. Hamlin Mr. Miller Mr. Magee Mr. McClelland, Assistant Secretary. The Assistant Secretary presented various matters which were considered the co Mmittee and acted upon as follows: Draft of letter to the Governors and Federal Reserve Agents of all Ner al Reserve Banks stating that the Federal Reserve Board, having been "Ilaed b-Y M. Walter L. Eddy that because of the condition of his health he b teei e llnable to resume his official duties, has reluctantly accepted his -on as Secretary of the Federal Reserve Board, effective May 31, 1931. Approved. aorte t Letter dated Tune 1st from Deputy Governor Gilbart of the Federal Re- of New York, submitting a list of employees who were granted leaves 0, '41)A -eric• 410 e with pay on account of illness during the month of May, where the tot such absences since January 1, 1931 has exceeded thirty days. Because of the absence of Mr. Tames, Chairman of the Committee on Salaries and Expenditures, the report was ordered circulated for the information of the members before taking action. Letter dated May 27th from the Governor of the Federal Reserve Bank ktklatat d 15ttaaive a-visinc that he has had a study made of the question of assessing penalties on deficient reserves and has cone to the conclusion that t11(5 101‘clerens.ve 1 penalty could properly be abolished altogether, being of the (3441°11 that „_ IL is of no avail in its present application. Referred to the Committee on Bank Reserves. e/2/31 -2Telegram dated June 1st from the Governor of the Federal Reserve Bank ()t Uew -vJmrk, advising that the credit arrangement with the Austrian National 4rk, Participation in which by the New York bank was approved by the Board on 1141? 15+1, became effective on May 30th, and on Tune 1st was used to the extent 4840-0,000 text c'r for account of all parties; the telegram also advising that the the arrangement will be forwarded to the Board as soon as available. Noted. Letter dated May 29th from the Assistant Federal Reserve Agent at , 144ticie, 413hia, advising that in accordance with the suggestion contained in the s letter of Lay 15th, the Lycoming Trust Company of Williamsport, Ylv4nia, has reduced the carrying value on its books of the common stocks LYeMing Securities Corporation and Susquehanna Securities Corporation to the -(3111-inal figure of :,%'1.00 each, and has eliminated the reserves main- ' 4 against the carrying values of the securities. Noted. to4 Ileraorandum dated June 2nd from the Examiner in Charge, submitting a report of examination of the First Federal Foreign Banking Corporation, 114, xorit `41Y, New York, as at the close of business on April 28, 1931; the 14E111(1..1:111 4Itter calling attention to an impairment of capital and other criticized llabr l :hich have been taken up with the Chairman of the corporation, who 11` the matters before his Board of Directors and advise the Federal sellte B °ard immediately as to their action. Ordered circulated. &31., -e further discussion was then had with regard to the character of -8s Proposed to be conducted by the Fiduciary Trust Company of New eit 4htlt141 Y) 41nd the position and responsibility of the Federal Reserve Board It decide to approve the company's application for membership in the V2/31 ?cider-di —3— ReserVe System. No action, however, was taken on the matter. Consideration was then given by the Committee to the following kilers rePorted in the formal minutes of the Spring Conference of Governors: (1) Suggestion that hereafter the special one-day certifi,24tes issued by the Treasury Department to Federal Reserve 4°411k8 to cover overdrafts on tax payment dates, be shown 86Parately in the body of the weekly Federal Reserve bank s tatement against the caption "Special Treasury Certificates"; tILO Governors Conference having approved the recommendation. After discussion, during which the suggestion was made that before action is taken the proposed change should be discussed with the Treasury Department, the Governor stated he would take the matter up with Undersecretary lulls and report to the Board. (2) Suggestion that the Board adopt the policy of requiring :4st at the time of admission of a state bank or trust company Membership in the Federal Reserve System, it shall be free rar°:al all known losses and depreciation so that on the date its ae4bership becomes effective its statement will reflect as nearly Possible the value of its assets; it having been voted to be 1348 sense of the Governors' Conference that the policy Proposed Y the Board is sound in principle. After discussion, upon motion, it was voted to adopt the proposed policy, and the Assistant Secretary was instructed to prepare a letter to all Federal Reserve agents advising of the Board's action and requesting that the policy be brought to the attention of their committees of directors which pass upon membership applications. orr(3) Salary payments to the widows or estates of deceased it leers and employees of Federal Reserve banks; regarding which was voted to be the sense of the Governors' Conference: e_71. That in the event of the death of an officer or illloyee of a Federal reserve bank, his salary should be %cl Up to the next succeeding pay day; . That the question whether any further increase in e insurance for officers and employees of a Federal reve bank is desirable is a matter for the determination to the Board of Directors of that bank subject, if necessary, the approval of the Federal Reserve Board. 1 6/2/31 -4- "3 . That this whole question inevitably raises the propriety Of further consideration of a pension plan, and that because of the difficulties and delays attached to the consummation of a gl'°1-11) Pension plan, the Federal Reserve Board should be asked Whether it would approve of a reasonable retirement annuity or insurance plan for individual reserve banks along lines that are 11°w considered appropriate and proper for large corporations in "us country employing large numbers of workers." 1 After discussion, upon motion, it was voted, in accordance with the recommendation in the first paragraph above quoted, to rule that in the event of the death of an officer or employee of a Federal Reserve bank, the salary of such officer or employee should be paid up to the next succeeding pay day. Upon motion, it was also voted to approve the recommendation that the question whether any further increase in life insurance for officers or employees of a Federal Reserve bank is desirable, is a matter for the determination of the board of directors of that bank, subject to the approval of the Federal Reserve Board, but to advise the Federal Reserve banks that the Board will not approve a group life insurance plan for any Federal Reserve bank insuring its officers and employees in excess of an amount equal to one year's salary of each such officer and employee, with a maxim= limit of 40,000. It was also voted to defer action on the matter of a retirement annuity or insurance plan for individual Federal Reserve banks but to request Counsel to submit for the information of the Board, a review of the past record with regard to a pension plan for employees of Federal Reserve banks. (4) Compensation for officers and employees of Federal Reserve ue4ka during periods of incapacitation and extended illness, on which 445 ' Governors' Conference voted: "That the payment of salary in whole or in part to incapaci'!ated officers or employees should be determined by each 4'ederal Reserve bank in the light of the circumItances Z"ounding each individual case. Where the absence exceeds ci"e.regular vacation period by thirty days, payment of salary further leave of absence should be subject to approval RY the Board of Directors and reported monthly to the Federal ,escrve Board, in accordance with the Board's letter of Tune 14, ' 4928 After discussion, upon motion, the above action of the Conference was noted with approval. 6/2/31 -5- (5) Question of the possible desirability of amending the Federal Reserve Act so as to permit a Federal Reserve bank in emergencies, to make advances to member bsi*s on the security of assets other than Presently eligible paper, on which it was voted to be the sense of the Governors' Conference: "That it would be desirable to amend Section 13 of the Federal Reserve Act so as to make it possible for Federal Reserve banks to make advances to their member banks on their promissory notes when secured either by collateral now defined as eligible collateral under the terms of Section 13, or when secured by the deposit or pledge of debentures of Federal Intermediate Credit Banks which have a maturity of not more than six months, or in the case of an emergency when secured by other assets subject to the discretion of the Board of Directors of the Federal Reserve bank and subject to such restrictions, limitations, and regulations as may be imposed by the Federal Reserve Board. It was the understanding of the conference that when such notes of Member ,banks are secured by notes, drafts, bills of exchange, or bankers' acceptances, such as are now eligible for rediscount 01 'Purchase by Federal Reserve banks, such promissory notes should have a maturity of not more than 90 days sight, exclusive Of days of grace, and that when secured in whole or in part by 410.3r other collateral, they should have a maturity of not more than 15 days sight, exclusive of days of grace. It is the sense °I' the conference that if the Federal Reserve Board approves the Principles involved in this resolution, it should be asked to consider what would be an appropriate time to request the necessary legislation." After some discussion, action on this matter was deferred for 30 days. (6) Desirability of flexibility of interest rates paid on deposits e441 of bank dividends. The Governors' Conference commended the tncral tendency on the part of banks in some communities to reduce rate of interest paid on deposits as good banking policy at this 0;:w*e, and it was the sense of the Conference that where the advice : a ?fficers of the Federal Reserve System was solicited, it would be s11'able and helpful to point out to inquiring member banks specific 1 ; heats'nces where the reduction of interest rates on deposits has proved i2leficial. The Conference also felt that the matter of a reduction Zthe rates of dividends paid by member banks, while helpful in ;;4Y instances is a matter which should be left with the directors - the member banks. Noted with approval. eo (7) Approval or indorsement by Federal Reserve banks of a aerl?oration organized for the purpose of advertising the benefits jved from membership in the System; the Conference agreeing, vil vit4c'ut formal action, that the Federal Reserve banks could not h Propriety, give approval or support to any such organization. Noted with approval. 6/2/31 -6- 11131:ZITS bated, STANDING COM IITTEES: Xitne 1st Recommending changes in stock at Federal Reserve Banks, 2nd Nted, 29th bated,, °lane 1st kited, Tune 1st kted, kne 1$t e "Ine 2nd as set forth in the Auxiliary Minute Book of this date. Recommendations approved. Recommending approval of the application of la.. Henry Belin, III, for permission to serve at the same time as director of the First National Bank of Scranton, Pa., and as director of the Abington National Bank of Clarks Summit, Pa. Approved. Recommending approval of the application of Mr. Marshall Sheppey, for permission to serve at the same time as director and officer of the Harriman National Bank and Trust Company of New York, N. Y., and as director of the Toledo Trust Company of Toledo, Ohio. Approved. Recommending approval of the application of Mr. C. M. Preston, for permission to serve at the same time as director and officer of the Hamilton National Bank of Knoxville, Tenn., as director and officer of the Hamilton National Bank of Chattanooga, Tenn., and as director of the Unaka and City National Bank of Johnson City, Tenn. Approved. Recommending approval of the application of Mr. George E. Becker, for permission to serve at the sore time as director of the Niagara County National Bank and Trust Company of Lockport, New York, and as director of the Union Trust Company of Rochester, New York. Approved. Recommending approval of the application of Mr. Sohn C. Traphagen, for permission to serve at the same time as director and officer of the Bank of New York and Trust Company, New York City, N. Y., as director and officer of the Nyack NationAl Bank of Nyack, N. Y., and as director of the Citizens National Bank and Trust Company of Englewood, N. T. Approved. The meeting adjourned at 1:00 p. m. ,4111)1,0Ire eiu ( Assis ant Secretary. Utze outive -Co mmittee) i 114 AUXILIA2,i MINUTES (June 2, 1931.) Reports of Standing Committee dated June 1 and 2, recommending changes stook at Federal Reserve Banks, approved as follows: ica'.14 tiQufor Di IGINAL Stock: 11%It National Bank in Ayden, Ayden, N. C. 4 4 1ica ions f icr ADDIT ONAL Stock: District 144eral National Bank, Boston, Mass. Shares: 30 30 55 55 30 30 60 Total 60 145 triet No. 2. Meal 41110.8 National Bank and Trust Company, N. J. i iet No. 7 '4114ad City State Bank, Holland, Mich. leations for SURBENDER of Stock: Piret N ational Bank and Trust Company, East Chicago, Ind. (Vol. Lig. Sue. by First /141)14tional Bank in East Chicago, Ind.) States National Bank of Indiana Harbor Ett Zast Chicago, Ind. (Vol. Lig. Sue. by laian National Bank of Indiana Harbor at 4ast Chicago, Inds) 1 r t /To, 9. N ational Bank, Elk Point, South Dakota. II4801vent) 150 ! 150 300 30 30 36 36 75 75 30 Total 30 471 k01xt ct No. 10. 17 : , ( )3er1 County National Bank, Cherryvale, —41848, (Insolvent) is r ot 11. 114tional Bank, Hereford, Tex. (Vol. Lig. bY first StateBank, Hereford.) if"Y National Bank, Bowie, Texas. (Decrease sizrPlus) ti Assistant Secretary.
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