Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, June 22, 1934, Volume 21, Part 3

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1851
o

A meeting of the Federal Reser
ve Board was held in Washington
Pridv, June 22,
1934, at 4:00 p. m.
PRESENT:

Mr.
LTAr.
Yr.
Mr.
Mr.

Black, Governor
Hamlin
James
Thomas
Szymczak

Mr. Morrill, Secretary
Mr. Bethea, Assistant Secretary
Mr. Carpenter, Assistant Secretary
Mr. Martin, Assistant to the Governor
The Board consi
dered and acted upon the following matters:
Letter dated June 21,

1934, from
Sproul, Secretary of the
Nlera
1 Reserve Bank of New York
, and telegrans dated June 21, 1934,
1'1,
04
141". McClure, Chairman
of the Federal Reserve Bank of Kansas City,

44 141,.

44 44

Sargent, Secretary of the Federal Reser
ve Bank of San Francisco,

e 22, 1934, from Mr. Stevens, Chairman
of the Federal Reserve
114.11k t
tozt oll
'
uloago, all advising that, at meeti
ngs of the boards of directile dates stated, no chang
es were made in the banks, existing
k:hocillies or
rates of discount and purchase.
Without objection, noted with approval.
blviato bleniorandum dated June 20,
1934, from Mr. Paulger, Chief of the
t),

ktit,

tol,
Ettl

4 Of E
xamin

ations, recommending that the temporary appointment

tulles F. Furbershaw as a stenographer in
the division be extended
itional thirty days on the same terms
as the previous employ-

Approved.
0ralada dated June 19, 1951, from Er. Paulg
er, Chief of the
r EZaminations, recommending the
temporary appointment for a




1852

6/22/34

-2-

Pellod of thirty days of Elizabeth
B. Griffin and Anna F. Scott as
atell°graPhers in the division, with compensation at the rate of g4.50
(111Y for each working day, effective as of the respective dates upon
theY enter upon the performance of their duties.

The recommenda-

t414317ere approved by six members of the Board on Tune 21, 1934.
Approved.
liemorandum dated Tune 18, 1934, from the Committee on Salaries
411d
eaditures, submitting a letter dated June 12 from Mr. Wood, Chair1444 c't the
Federal Reserve Bank of St. Louis, which requested approval
°r/1 ebange
in the personnel classification plan of the Memphis Branch

t°151xlvide for a
change in the title of the position of "assistant branch
411filt°
"in the audit department to "clerk", and a change in the per3°114e1

classification plan of the Louisville Branch to provide for the

Dositions of "branch auditor" and "clerk" in the audit department.
41
ezioraadLun stated that the committee had reviewed the proposed changes
4k'
l'ecotamended that they be approved.

The recommendation was approved

1*44taember3 of the Board on June
21, 1934.
Approved.
1:4140randum dated Tune 18, 1934, from the Committee on Salaries
cnditures, submittins a letter dated June 13, from Mr. Helm,

4AlltyGoIrernor and Cashier of the Federal Reserve Bank of Kansas City,
z111°)lrequested approval of a change in the personnel classification
444 °r the bank
to provide for the new position of "general clerk" in
r4cal
agency department
The memorandum stated that the committee
1Nriewed the
proposed change and recommended that it be approved.




6/22/34

-3-

recoMendation
was approved by six members of the Board on Tune 20,
1934,

Approved.
Liamorandum dated Tune
19, 193, from the Committee on Salaries
all(11113811ditures, submitting a letter from
la'. Helm, Deputy Governor and
Caellier of the Federal
Reserve Bank of Kansas City, which requested ap1111°1'41 Of a change in the personnel
classification plan of the Denver
1144Q11 to
provid e for an increase In the salary range of the position of
listant to
clerk in charge" in the check collection - country checks
t111(101ear1ng house department.

)144

Viewed

The memorandmm stated that the committee

the proposed change and recommended that it be approved.

•‘Geommeadation was approved by six members of the Board on Tune 21,
1934,

Approved.
Memorandum dated Tune 18, 1934, from the Committee on Salaries
*d4Pellditures, submitting a letter dated Tune 12 from La% ;ialsh,
Ch irtazt4
Of the Federal Reserve Bank of Dallas, which requested approval of
titige •
La
Itieteaae

The

the personnel classification plan of the bank to
provide for

8 in the
salary ranges of five positions in the service department.
stated that the committee had reviewed the proposed changes
,ee014z
eladed that
they be approved. The recommendation was approved
alz
bera of the
Board on Tune 21, 1934.
Approved.
Me1110

cladum dated
Tune 18, 1934, fram the Committee on Salaries




‘Pr-7./I7

6722/34
-444 410sAditures, submitting the resolutions
adopted by the boards of
cli l'ectors

of all Federal reserve banks which provided for the payment

(1111rLe 30, 1934, of dividends to stockholding member banks at the rate
ot 64_
1° Per annum for the first six months of 1934, and calling
attention
to

"4° fact that the
estimated dividend requirements of the Federal reserve Is
uenks of Richmond and 1:ansas City are in excess of estimnted current iiet
earnings for the six-months period. The oemorandum also stated
that th,
-- committee had reviewed the dividend resolutions and recouuended
t
he Payment of a semi-annual dividend by each Federal reserve bsnk
be. A
'44horized by the Board. The recommendation of the committee was
4151111°17ed by six members of the Board on June 21, 1934.
Approved.
Telegram dated Tune 20, 1934, approved by six members of the
t()

olty, r

r

Lx. liamilton, Governor of the Federal Reserve Bank of Kansas

"
'cling as follows:
Yolir "Referring your Tune 19 wire, Loard will be glad to have
be 1_ rePresentative, whom you stated in your (Tune 6 wire would
terf• ;iorthington, attend committee meeting on accounting matu, to be
tlittee.,
held in Cnicago on June 27, as a member of the Cam-

Approved.
Tel
-gram dated June 21, 1934, approved by six members of the
to the

rederal reserve agents at all Federal reserve banks ex-

-ell") reading as follows:
let
:
°11e of the Federal eserve Asents (St. Louis) has received
2acti0
:
'
1 from J. Douglas Brown, Director, Industrial Relations
fjrinceton University, requesting him to fill out a ques--e °a personnel matters in his bank. Please advise whether




1355
6/22/34

_5-

"Your bank has received a similar request. If so,
and you propose
to answer
questionnaire, please furnish Board a copy of your proPosed reply in advance of its being
mailed to Er. Brown as Board
Prefers that replies to such questionnaires be treated as a system
Za
tter."
Approved, together with a telegram to Mr. Wood,
Federal Reserve Agent at the Federal Reserve Bank
Of 5t. Louis, quoting the above telegram and stating
that the copy of the questionnaire which he received
from Mr. Brown, and which he had forwarded to the
Board, was being returned.
Letter dated June 21, 1934, approved by six members of the Board,

to th_

ellairraen and governors of all Lederal reserve banks, reading as
toilows:

1,

"The authority granted by the Federal Reserve Board to all
reserve banks in its circular of July 26, 1932 (X-7215a), as
el?liaed by its letter of January 10, 1934 (X-7746), to discount
notes, drafts and bills of exchange for individuals, partPS and corporations, subject to the prwvioions
of the law, the
reulations, and that circular, will expire at the close of
41:'llees on July 31, 1934. The Board has decided to extend
such
exacization for an additional six months, and, accordingly, has
re.,cled section II of its circular of July 26, 1932 (X-7215a), to
,
ILL as
follows:
'AUTHORIZATION BY THE FEDERAL RESERVE BOARD.
The Federal Reserve Board, pursuant to the paver conferred
it by the amendment hereinbeforo
quoted, hereby authorizes
t i l'edsral reserve banks, for a period ending at the close of
ness on January 31, 1935, to discount eligible notes, drafts
'
7
t
bills of exchange for individuals, partnerships and corporati!ns, subject to the provisions of the law, the Board's regula'
41s, and this circular.'"
Ilpon

Unanimously approved, together with a statement,
also approved by six members of the Board on June 21
for inclusion in the
next issue of the Federal Reserve
Bulletin with respect to the further extension of the
authority of Federal reserve banks to discount eligible
PaPer for individuals, partnerships and corporations.
tetter to Er. Williams,
Federal Reserve Agent at the Federal




1856

6122/34

-6-

Reeerve Bank of Cleveland, reading as follows:
"Reference is made to 1,1r. Fletcher's letter of Lay 29, 1934,

with which was transmitted a report by your trust examiner in reto the application of 'The Braddock National Bank', Braddock,
venllsYlvania, for full fiduciary powers.
"In view of the fact that the surplus of the applicant bank
is
now less than that required for the organization of a State bank
with trust powers under the laws of Pennsylvania, and in accordance
with Assistant
Federal Reserve Agent Fletcher's recommendation, the
4°°ard will tdce no action on the pending application.
"Whenever the subject bank increases its surplus to an amount
".°ich will meet the requirements of
the State law, the Board will be
t:aecd to consider a new application by it. It is assumed, however,
t such new application would not be submitted in any event until
another examination of the bank by the Comptroller's office,
would reflect the eliminations effected since the previous
a4araination and enable a determination of its general condition on
current basis.
"Please advise the applicant bank accordingly."
Approved.
to %Ile

Letter dated June 21, 1934, approved by six members of the Board,
Citizens National Bank of Boone", Boone, Iowa, reading as follows:

1311 "The Federal Reserve Board
has given consideration to your apyoucation for permission to exercise fiduciary powers, and graits
P"Inission to act, when not in contravention of State or local
or i as trustee, executor, administrator and committee of estates
prov Ilatics, the exercise of all such rights to be subject to the
.6'ed;,'sions of the Federal Reserve Act and the regulations of the
-ral Reserve Board.
Dower"This letter will be your authority to exercise the fiduciary
titli$2.graated by the Board. A formal certificate covering such
-'Jrization will be forwarded to you in due course."
Approved.

kt,

Letter
dated June 21, 1934, approved by six members of the Board,
oic
(31111°r, Comptroller of the Currency, reading as follows:

the p:r1
,11 accordance with Acting Comptroller Awalt's recommendation,
8toek-`'erel1 Reserve Board approves a reduction in the common capital
Vila °I
''The Citizens National Bank of Crawfordsville', Crawfordse) illdiena, from :,100,000 to .75,000, pursuant to a plan which




1_857
6/22/31
-7"Provides that the bank's capital shall be increased by ”25,000 of
Preferred stock to be sold to the Reconstruction Finance Corporation,
elad that the released capital, together with a portion of the bank's
eUrplus, shall be used in eliminating unsatisfactory assets aggregattag approximntely .36,800, all as set forth in Yr. Awalt's memorandum
of June 8,
1934."
Approved.
Letter, dated Tune 21, 1934, approved by six members of the Board,
to

O'Connor, Comptroller of the Currency, reading as follows:
19
"Receipt is acknowledged of 1.7.r. Awalt's memorandum of Tune 12,
1,1
in regard to the proposed reduction in capital of 'The Sheldon
:
4 461onal Bank', Sheldon, Iowa, which was approved by the Board on
4Pril 11, 1934.
Await advises that only „22,500 of the :i)25,000 local contrit tlon originally contemplated can be raised. In view of the fact
IV the eliminations previously agreed upon can be
effected by the
ore of the released capital, a contribution of c22,500 and a portion
the undivided profits, and in accordance with :.:r. Awalt's request,
the
B
amends its previous approval to provide for a local contrior rn of „;22,500, with the understanding that the other provisions
'
he original plan remain unchanged."
Approved.
1'0)1
--kOws

Letter to Er.
O'Connor, Comptroller of the Currency, reading as

1934 'Receipt is acknowledged of Lr. Await's memoraldum of Tune 9,
regard to the proposed reduction in capital of 'The Dowagiac
04„°11a1 Bank', Dowagiac, Eichigan, which was approved by the Board
'akY 10, 1934.
,
911.1%• Await advises that the eliminations desired (originally
proir
"
20) now aggregate approximately v33,540. In view of this imtlecole,
ille
a llt in the amount of criticized assets to be removed, and in
%)1;:444ce with Er. Awalt's request, the Board mends its previous
WithT!1 by eliminating the requirement for a local contribution
plela '4e understanding that the other provisions of the original
Unchanged."
Approved.
Lettn,,
to Mr. O'Connor, Comptroller of the Currency, reading as
.kowa:




1858
6/22/34

-8-

"In accordance with the recommendation of Acting Comptroller
of the Currency Await, the Federal Reserve Board approves
a reducion in the common capital stock of 'The First National Bank of
'!,isoonsin Rapids', Wisconsin Rapids, Wisconsin, from :,200,000 to
v100,000, pursuant to a plan which provides that the bank's capial shall be increased by c100,000 of preferred stock to
be sold
the Reconstruction Finance Corporation, and that the released
calatal, together with ,;30,000 of the bank's surplus,
shall be
Used to eliminate a correspondi
ng amount of unsatisfactory assets,
411 as set forth in Mr. Awalt's memorandum of Tune 8, 1934."

t

Approved.
Telegram to La% Fletcher, Assistant Federal Reserve Agent at
the
4ecleral Reserve Bnnk of Cleveland, reading as
follows:
4

"Re tel Tune 19. On basis of facts submitted, Board finds
reason to disagree with conclusion of your counsel that neither
0 teburgh Title and Eortgage Guaranty Company
nor Lawyers Title
etPalaY is within purview of Section 20 of Banking Act of 1933.
)
,!rd's position is based on understanding that Pittsburgh Title
;
11 4 Mortgage Guaranty Company will not hereafter guarantee any
eallds secured by mortgages or issue new certificates except oconally in renewal of and in exchange for maturing certificates
soito the holders thereof, and that no such certificates will be
u to the public
for the purpose of meeting maturing obligations.”
Approved.
11(
-°111

Telegram
UO

dated Tune 20, 1934, approved by six members of the

•

hx. Young, Assistant Federal Reserve Agent at the Federal Reattv
e Bart
,
4 °II Chicago, reading as follows:
tion "Your wire June 15. Without undertaking on basis of inform°11 hand to pass upon necessity under law for obtaining pera Aw!'th respect to relationships between member banks and dealers
4441,;
Your telegram, Board grants to said member banl-zs permits
be lir Section 32 of Banking Act of 1933 to extent that same may
deEliZessarY under law to have correspondent relationships with
U,06ns named in your telegram solely in connection with issue of
Yolo ,000 of highway bonds of State of Missouri referred to in
em;10,:elegram. Please obtain and forward for Board's files appliethe
7 by each member bank covering relationships referred to torae4t-!:
lith usual accompanying forms, except that only one state'L each dealer and of each member bank need be submitted to




-1331-9

6/22/34

-9-

7,13clard. Formal permits being prepared and will be mailed shortly.
elease advise member banks. Since one of member banks involved is
located in St. Louis District you are requested to advise Federal
reserve agent of that District of Board's action and request that
application of member bank in his Distric
t be submitted to Board
through his office."
Approved.
Telegram to lir. i:_cClure, Federal Reserve Agent at the Federal
Ileeerv.
Bank of Kansas City, stating that the Board has given consideration to tile
application of "The A. V. Hunter Investment Company", Denver,
Colortia_,
° for a voting permit under the authority of section 5144 of the
417ised
Statutes of the United States, as amended, entitling such organization to vote
the stock which it owns or controls in "The Carbonate Ameri4"Itional
Bank of Leadville", Leadville, Colorado, and has authorized
th
1411E111c° or a
limited permit to the applicant, subject to the follow-

e°114it1ons:
"Prior to issuance of permit authorized hereunder (1) The A. V.
ti;'er Investment Company, Denver, Colorado, shall file an applicatcr.4 °a F.R.B. Form P-1, with exhibits A, C, and 0 attached thereto,
trojermit entitling applicaat to vote stock which it owns or con(2)''s in The Carbonate American National Bank of Leadville, Colorado;
tillIhere shall be furnished statement of counsel for Federal Reserve
sati
'
4an8as City that such application and exhibits are in form
peaci3lactory to such counsel and are legally effective; and (3)
zze ral Reserve Agent at Federal Reserve Bank of Kansas City and
1?o cni-ye Committee of such bank shall approve isslisnce of limited
t1
rack76 Permit to The A. V. Hunter Investment Company, Denver, Colo) fOr
purpose set forth after letter D hereof."
he following purpose:
to

110 take such action as may be necessary or desirable in order
Ilatio,,e
,,” the dissolution and liquidation of The Carbonate American
-°°-L Bank of Leadville, Colorado."

tel
egram

- also authorized the agent to have prepared by counsel for

'e(ierct,

reserve bank, and to issue to The A. V. Hunter Investment




6/22/34
-10e°14Pa4Y, a limited voting permit in accordance with the telegram.
Approved.
Letter dated June 21, 1934, approved by six members of the Board,
to

Curtiss, Federal Reserve Agent at the Federal Reserve Bank of Bostoll, reading as
follows:
"Reference is made to Lir. McRae's letter dated May 29, 1934,
14 atswer to the Board's letter of May 15, 1934, regarding the

aPPlicability of Section 32 of the Banking Act of 1933 to the
service of Mr. F. Winchester Denio as vice president and director
!
I* the Everett Bank and Trust Company, Everett, Massachusetts, and
qs trustee
and secretary of the Old Colony Investment Trust, Boston,
Massachusetts.
a
"Inclosed with Mr. McRae's letter was a copy of a letter
in" May 28, 1931, from Mr. Denio containing information concernthe business of the Old Colony Investment Trust. Among other
:
14g3 it is noted that 99.15% of the securities in its portfolio
4 February 1, 1934, had been held for over two years.
From the
s.Inaation submitted it seems probable that the provisions of
;
t e4ion 32 are not applicable to an interlocking relationship be}3,:s4 a member bank and the Old Colony Investment Trust; but the
rr7ra is unable to make a definite ruling on that question without
"ale complete information.
th., "The purpose of the Board's letter of Lay 15, 1934, regarding
Old Colony Investment Trust was not to request you to submit
;
04 facts to the Board for a formal ruling, but was merely to invite
the attention to the question whether Section 32 is applicable to
ve eervice of Mr. Denio to the member bank and the Old Colony InTrust, It was contemplated that you would consider this
1°A with the assistance of your counsel and take whatever action,
Or ,Y,/r) You deemed necessary to bring about compliance with the law.
or 711r3e, the Board will be glad to pass upon the question if you
toct'!„°11r counsel deem it advisable to submit the question to the
the
'
';
14 fc)r a ruling. However, if a ruling of the Board is desired,
ract:°4rd would like to have a full and definite statement of the
01, 1,;) together with an expression of your views on the question
""ether Section 32 is applicable to the relationship."

1

Approved.

k

Lettar
dated Tune 20, 1934, approved by six members of the
t0

lt)wa

"" George W. Baron, Wheeling, West Virginia, reading as fol-




6/22/34
-11"Reference is made to your letter dated Tune 11, 1934, adto lat. W. H. Fletcher, Assistant Federal Reserve Agent at
the Federal Reserve Bank of Cleveland, in regard to your applicati
on
utder Section 32 of the Banking Act of 1933 for a permit
to serve
!
,t
t the same time as a director of the Security Trust Company, as a
uirector of the Citizens Mutual Trust Company, and as a
partner in
Ge°
'W. Baron & Company, all of Wheeling, West Virginia.
"The Federal Reserve Board has carefully considered your stateZent that your
son-in-law, YAr. William H. Wheeler, is the active
11'ther in thie firm of Geo. W. Baron & Company and is responsible
the management thereof. The Board has also considered your statethat because of your substantial investment in the business and
because
of the family relationship involved, you do not want to be
1111der the necessity of dissolving the partnership nor of taking
any
:
tePe which might have the effect of embarrassing Mr. Wheeler
in the
ILIIIInistration of the business on account of an impression that you
1,c1 withdrawn either your personal or financial interest from the
1.111°1. From the above information it appears that although Mr. Wheeler
e1814.eagaged in the active management of the partnersh
ip, you have the
14.6hority of a partner and may at any time participate in
the managee11
4.t of the firm, and also that the business of the firm is transj
largely upon your individual financial standing. The Board
EZefore feels that the fact that you do not customarily take an
laj
7e Part in the management of the firm does not cause your recohr4ship to be actually different from the relationships which the
-6res3 intended to terminate by the enactment of Section 32.
yo,. "The Board has also given attention to your statement that
614 have not
drawn any part of the profits from the firm since 1931
thltt You are willing to enter into al agreement not to withdraw
wb4„„of the profits of the firm in the future,
and has noted your
11:'4eallent that you are willing to enter into an agreement that the
01.114 °f Geo. W. Baron & Company will not sell to either of the banks
The7111
,inteh you are a director, any securities underwritten by the firm.
yoll'
°°4rd feels, however, that even if such agreements were made by
witi
'
lithe relationship covered by your application would still fall
teT.„44 the class of relationships which Section 32 was designed to
;While the Federal Reserve Board is not unsympathetic with
Ettid 4.7"ire to continue to be a partner of Geo. W. Baron & Company,
serve as a director of the above named banks, it believes that
;
etter
Eill e
states no facts that would justify the Board in making
Dli
eption in your case, and the Board therefore denies your ap8e;:l°a. It will be appreciated if you will notify the Federal
Wialei''
l 8 Agent at the Federal Reserve Bank of Cleveland of the steps
You take
in order to comply with the provisions of Section 32."




Approved.

6/22/34
-12Letter dated June 20, 1934, approved by six members of the
13°4Nis to Mr. Newton, Federal
Reserve Agent at the Federal Reserve Bank
Of
Atlanta, reading as follows:
"Reference is made to Mr. Clark's letter dated June 1, 1934,
14 anSWer to the Board's letter of May 19, 1934, regarding the
aPPlicability of Section 32 of the Banking Act of 1933 to the
service of Mess-rs. I. L. Bedsole and Milton L. Brown as directors
°f the First National Bank of Mobile, and as officers and/or directors of the Mobile Bond & Mortgage Company, both of Mobile,

Alabama,
a "Inclosed with
bned May 30, 1934,

Lib. Clark's letter was a copy of a letter
from Mr. J. L. Bedsole which described the
"tailless of the Mobile Bond & Mortgage Company as follows:
'The Charter of said company is very broad and does
Provide that the company may issue certiiicates of
Participation in real estate loans, but this privilege has never been used nor is there any thought
Ola the part of the directors or officers that it
will ever be used. The operations of the company
have been restricted to making loans on real estate,
but for
the last year and a half it has made very few
loans -- its principal operation being the working
out of
loans previously made.'
32 "In view of this statement, it seems probable that Section
isllot applicable to an interlocking relationship between the
Bond & Mortgage Company and a member bank; but the Board is
cozy-Le to make a definite ruling on that question without more
to
information, and especially without definite information
lar"
Is effect that the company does not issue bonds or other simi10azsecurities against the mortgages which it acquires in making
°4.
12 ns011
real estate. adle the letter indicates that the company
iasuing participation certificates, it does not state definiteor not the company is issuing bonds or other securities.
"
The
t4„
Purpose of the -oard's letter of May 19, 1934, regarding
the 1:°b1le Bond a Mortgage Company was not to request you to submit
Yollr aCtS to the Board for a formal ruling, but was merely to invite
the sEtttantion to the Question whether Section 32 is applicable to
Bedsole and Er. Brown to the member bank and the
n Ile
ervice
14)b•
'
-'°11(1 ,ofa'*
k Mortgage Company. It was contemplated that you would
1711acte
,
er this question with the assistance of your counsel and take
Dliall'sr action, :f any, you deemed necessary to bring about conItpola ,
e c with the law. Of course, the Board will be glad to pass
the
question if you or your counsel deem it advisable to submit
130a1,111?stiou to the Board for a ruling. However, if a ruling of the
la desired, the Board would like to have a full and definite




1863
6/22/34
-13"statement of the facts, together with an expression of your views
04 the question of whether Section 32 is
applicable to the relation-

shipo

Approved.

There were then presented the following applications for changes
of Federal reserve banks:
4_
41Pations for ADDITIONAL Stock:
/:
t4 trict Nts.
,
El itional Bank &.Trust Company of Erie,
Paan8Y1Vania
4

A

1)1E1t 1. 4.
u

Shares

270

270

36

36

No. los

l

iliational Bank in Eads,
-"41) Colorado

1%
Striet No. u.
11.-11,
4.1!
,14tional Bank at Farmersville,
pii?--ersville,
- utebh—
Texas
it1/44:.% National
Bank,
11-Teg), Texas
11140-,4.o
National Bank,
110, Texas
kat/4
N*1..:31t No. 12.
-q4ce
National Banks
-44eet California




32
33
330

395

72
Total

72
773

Approved.

Thereupon the meeting adjourned.

4)0Q0.6.1::u.t. hor)nousi
s