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514 A meeting of the Federal Reserve Board was held in Washington On- Wednesday, Tune 28, 1933, at 3:00 p. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller Tames Szymczak O'Connor Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. McClelland, Assistant to the Governor The Board considered and acted upon the following matters: Telegram dated Tune 28, 1933, from Mr. Curtiss, Chairman of the El/clel'al Reserve Bank of Boston, advising that the board of directors, "its meeting today, made no change in the bank's existing schedule or rates of discount and purchase. Without objection, noted with approval. Letter dated Tune 24, 1933, from Mr. Austin, Chairman of the FedReserve Bank of Philadelphia, referring to a telephone conversation °4 3-11ne 23 with Mr. Morrill with regard to the action of the board of l ectors of the bank on Tune 21 in establishing a rate of 4 1/2'2; on adto member banks under the provisions of section 10(b) of the Fede1 Reserve Act, as amended, and on advances to nonmember banks and trust )171Pellies under section 404 of the Act of March 9, 1933, as amended, and Iting that, while the directors were influenced in their action by the l'elport that the Reconstruction Finance Corporation was about to reduce to on loans to Wo the rate of interest charged by the Corporation they were also influenced by the condition of the money market 41'cl the the bank's recent action in lowering its discount rate to 3;10, it being r was only fair to make a "ling that, if such action was justified, it atm N J-Lar reduction on section 10(b) loans. The letter also stated that the 51 5 6/28/33 -2- tletter has been discussed with other officers of the bank; that it is r ecoCnized that the ' rate on 10(b) loans was made to harmonize with that riXed by the Jeconstruction Finance Corporation; that, if the Corporation e etuallY has not reduced its rate, the fixing of alower rate by the bank ' 4*t this time might appear as lacking in courtesy to the Corporation and e1̀•11se some embarrassment; and that it is entirely agreeable to have action (34 the rate deferred, pending further consideration of the matter at the 481ct meeting of the board of directors of the Philadelphia bank. Letter dated Tune 26, 1933, addressed to Mr. Paulger, Chief of the 47ision of Examinations, by Mr. W. X. Snow, Tr., tendering his resignation as an assistant Federal reserve examiner, to take effect as of July 4) 1933. "-Lccepted, Memoranda dated Tune 20, 22, and 23, 1933, from Er. Paulger, Chief (5r the Division of Examinations, recommending the appointment of Lessrs. 1)711Cht L. Crays, B. Pollard, and Glenn N. Goodman and their desig- 44tion as assistant Federal reserve examiners, with salaries at the rates or ,A,250, and .3,300 per annum, respectively; the recommendations hEtiri Ile been approved by five members of the Board on Tune 27, 1933. Messrs. Crays, Pollard, and Goodman were appointed examiners for all purposes of the Federal Reserve Act, as amended, and of all other acts of Congress pertaindirection ing to examinations made by, for, or under the as designated were and Board, of the Federal Reserve at salaries with examiners, reserve assistant Federal annum, per :. and ;3,300 .4,250, the rates of :'.;4,500, respectively, all effective as of the dates upon which they assume their duties. replying Letter to Mr. Case, Federal leserve Agent at New York, 6/28/33 -3- to Assistant Federal Reserve Agent Dillistin's letter of June 23 recom41e4ding approval of the temporary designation as assistant Federal reserve examiners in the Federal reserve agent's department of the Federal ieserve Bejlk of New York of Messrs. Henry J. Hannan, Jr., Hugh P. Reed, and Robert Roseraczan se. The reply stated that inasmuch as the personnel classifica- tion plan in effect at the Federal Reserve Bank of New York provides for the position of "assistant examiner" rather than "assistant Federal reserve e4aminer" the Board approves the temporary designation of the three employees laaMed as assistant examiners. Approved. Memorandum dated Tune 21, 1933, from the Committee on Salaries and 4Pe1ditures, with regard to a letter dated I.:ay 26 from Mr. Strater, Secretary (It the Federal Reserve Bank of Cleveland, recommending approval of changes 14 the Personnel classification plan of the bank to provide for (1) the eEttion of anbustodian for the Ieconstruction Finance Corporation" depart' cl at the head office and for fifteen positions in that department, (2) the liew position of "assistant manager" in the accounting department of the office, (3) the position of "acting assistant Federal reserve agent" t the Cincinnati and Pittsburgh branches, (4) the new position of "stenographerclerk" in the auditing department of the Pittsburgh branch and for e ..._ Rge in the title of the position of "stenographer-clerk" in the "stenographer-audit clerk", 411(liting department of the Cincinnati branch to in the audit44(1 (5) a change in the title of the position of "audit clerk" and an increase in department of the two branches to "exilminer clerk" the committee recomImaZimum salary for each of those positions; the Board's 4164(linC approval. Approved. 517 6/28/33 Memorandum dated June 23, 1933, from the Committee on Salaries 44(1 Expenditures, with regard to a letter dated Tune 12 from Mr. Newton, Chairman of the Federal Reserve Bank of Atlanta, recommending approval Of a change in the personnel classification plan of the bank to provide fO' the new position of "acting assistant Federal reserve agent" at the head office, with a salary range of from ;2,400 to ;3,000 per annum; the 8°Etridt3 committee recommending approval. Approved. Letter dated Tune 27, 1933, to Lir. Walsh, Chairman of the Federal Reserve Bank of Dallas, approved by six members of the Board, stating that, 1:4 accordance with the recommendation contained in his letter of Tune 12, the Board approves a change in the personnel classification plan of the 13411k to provide for the new position of "assistant manager" in the Recon8trlIction Finnnce Corporation department with a salary range of from to („:3,600 per annum. Approved. Reply to a letter dated Tune 22, 1933, from the Comptroller of the Currency, inquiring whether the acceptance by Mr. F. Guy Hitt of an 4Pointment as conservator of the First National Bank of East St. Louis, of the Illinois, would disqualify him to serve as a Class Adirector l'ederea Reserve Bank of St. Louis. The reply stated that, inasmuch as 1414. Hitt at the time of his nomination and election as a Class A director "the Federal Reserve Bank of St. Louis was an officer of the First group three, 114ti°nal Bank of Zeigler, Illinois, a member bank in electoral arla he was not an officer or director of a member bank in any other group, was lawfully nominated and elected as a Class A director, and, as he r-, 6/28/33 -5- continue to serve as President of the First 1:ational Bank of the Federal Reserve Board, in the circumstances, will not object to his e etik; as conservator of the First ilational Bank of East St. Louis while ' c°11tinuing to serve as a Class A director of the Federal leserve Tank of St. Louis for the remainder of his present term. Approved. Telegraphic reply to a telegram dated Tune 27 from Deputy Governor noands of the Federal Reserve Bank of New York, requesting authority to PUrehase from the First National Bank of Elmsford, New York, „)17,000 of .kx notes of the Village of Elmsford. The reply stated that the Board authorizes the purchase with the understanding that the notes meet all reW irements of Regulation E except that the population of the issuing 11144iciPa1ity is less than 10,000 and the amount of the notes offered exceeds 25,,; of the total outstanding warrants of the municipality. Approved. Reply on Tune 23, 1933, approved by six members of the Board, 'a lettel-. dated June 13 from Mr. Newton, Federal Reserve Agent at Atlanta, tc '41\r13 -1- 11L' of the consideration L;iven by the board of directors of the bank, t its meeting on Tune 9, to the Board's letters of April 29 and I:ay 31, 1933, with regard to indebtedness of officers and employees of Federal l'e4erve banks, and stating that the directors of the Federal Reserve Bank or Atlanta approve in principle the suggestions contained in the Board's letter of April 29, and that Acting Governor Johns has been directed to IDI'eDare, for submission to the directors, a report showing as of July 1, 'anY indebtedness of officers, heads of depar aents, and other 1933 °141)1°Yeos of the bank, its branches and agencies occupying responsible 1°31ti°ns. The reply stated, in response to an inquiry contained in 519 6/28/33 -6- NeWton's letter, that the Board's letter of April 29 contemplates that the report referred to therein covering outside business interests of (3fficers and employees of the Federal Reserve Bank of Atlanta, both in the Federal reserve agent's department and the operating departments of the 11411k, as well as the report being prepared by the agent with regard to ilidebtedness of officers and employees in the Federal reserve agent's deshould be forwarded to the Federal Reserve Board, and the report beine prepared by Acting Governor Tohns covering any indebtedness of °frieers and employees in other departments of the bank should be submitted to the directors for their consideration. Approved. Reply on Tune 23, 1933, approved by six members of the Board, to a letter dated Tune 13 from Mr. Walsh, Federal Reserve Agent at Dallas, with l'ererring again to the Board's letter of April 29, 1933, (K-7425), leeard to indebtedness and outside business affiliations of employees of ' the Board's ederal reserve banks, and requesting advice particularly as to Peattitude toward the service of 11.. Charles C. Ball, Assistant Federal e Acent, as Secretary and Treasurer of the Dallas Country Club. The April 29 to outl'elplY stated that the reference in the Board's letter of de activities was not intended to refer to affiliations other than with service in the etInnlercial enterprises, and that, as long as Mr. Ball's the proper performance of e4134eitY referred to does not interfere with will be no objection duties at the Federal Reserve Bank of Dallas, there to his retaining the position. Approved. of the Board, to - eply on Tune 23, 1933, approved by six members R G/28/33 -7- a letter dated Tune 16 from Mr. Newton, Federal Reserve Agent at San l'I'Etacisco, advising of the action taken by the board of directors of the batik on Tune 15, in connection with the Board's letter of April 29, 1033, (-4-7425). The reply noted that the Governor of the Federal Reserve Bank San Francisco has been requested to obtain from all officers, and such °tiler employees as he sees fit, information with regard to any indebtedIles which they may have, excluding current bills for ordinary personal 441 household expenses, and to refer to the directors the case of sry c3fricer or employee which, in the opinion of the governor, should have the attention of the directors, the L;overnor's report to include also illrormaUion as to any indebtedness which he may have. The reply also stated that it is assumed that the agent is arraw;ing to forward to the E°4-Isd, in accordance with the request contained in its letter of April 29 ) reports with regard to any indebtedness as of July 1, 1933, of erricers and employees in his department and with regard to any affiliats ti°11s with outside business interests of officers, heads of departmen 44d ether employees of the bank occupying responsible positions. Approved. Federal reserve Telegrams dated June 27, 1933, to the respective Board, respectively, 4e4ta, approved by six and five members of the prescribed in the individunl ti--11g that, subject to the conditions the following State telegrams, the Board approves the applications of the Federal Reserve System and bejlking institutions for membership in bank stock to which each 'the number of shares of Federal reserve r01 basis of its capital and ot the applicants will be entitled upon the 52_1 6/28/33 -8- 814Tlus as of the date upon which its membership becomes effective: Federal Reserve Bank Name of Bank Peoples Bank of Bloomington, Illinois. State Brink of Terry, lAntana. Chicago Minneapolis Approved. Telegraphic reply on Tune 27, 1933, approved by five members of the Board, to letters dated June 15 and 19 from Mr. Curtiss, Federal ReAgent at Boston, recommending, in connection with the application • "the Union and New Haven Trust Company, New Haven, Connecticut, for menin the Federal Reserve System, the modification of condition numbered nineteen contained in the Board's telegram of May 18, 1933, and that the Board grant an extension of thirty days of the time within which the laY may Qualify for membership. e The telegram stated that the Board the applicant an extension of time to July 18, 1933, in which to e aete its membership; that condition numbered nineteen is modifed to 13r0tide that the bnnk, prior to admission to membership, shall eliminate *(1131 its trust department participations of :).6,500 in the Mendel and Harris 11"eaCe and :A00 in the Julius and Samuel 77inick mortgage which are held tuardian accounts and which were criticized by the examiner, and any other Participations in mortgages held in violation of the laws of the State "J- Connecticut; and that the Board's action in this instance does lac)t affect in any way the requirements of condition numbered sixteen, which t4et liould be called to the attention of the bank. Approved. Telegram dated June 27, 1933, to Mr. Stevens, Federal Reserve '4111t at Chicago, approved by six members of the Board, replying to a -9- 6/28/33 to-egram dated Tune 21 from Assistant Federal Reserve Agent Young recamtending, in connection with the application of the Euscatine Bank and bust Company, laiscatine, Iowa, for membership in the Federal Reserve SYstem, that condition number eighteen contained in the Board's telegram Qt Tune 16 be amended so as to provide that the bank, prior to December 31, 1933, shall increase its surplus to 450,000. The reply stated that the condition referred to is amended to provide that the bank, prior to beeember 31, 1933, shall increase its unimpaired surplus to 0.50,000 without cl asing its present capital of 0_25,000. The telegram also noted from Young's telegram that the bank is willing to increase its surplus to 125,000 immediately and requested that the agent suggest to the bank that CIi increase in surplus be effected as soon as possible. Approved. Reply on Tune 23, 1933, approved by five members of the Board, to a letter dated Tune 15 from 1.1r. Stevens, Federal Reserve Agent at Chicago, tererring to the consideration which was given by the Board earlier in the Year to the question of the eligibility of the Personal Loan and Savings aatic ) Chicago, Illinois, for membership in the Federal Reserve System, and IINUesting advice as to what steps may be necessary in the event the institution desires to renew its application. The reply stated that, while the 4.4411,0, 'k in the circumstances, will not require that the institution execute is resubmitted, that application, it will require, if the application 4 " it b.,. or credit investigation accompanied by a current report of examination required in connec(It the institution; that in addition to the usual data tio„ " with the application, it will be api)reciated if the agent will submit col) required by the bank of its bories of Lhe form of any loan agreements /title under which loans are granted, the information as to the conditions 523 6/28/33 -10- ale rage maturity of such loans and the character of the collateral obtM.tLed; that information is also desired as to the nature of the bank's clelits, 1. e., whether such deposits are subject to the usual requirefor withdrawals of savings funds or whether they are on some other 1143is; and that the same information would also be desired in connection 11.th the applications for membership of any other similar institutions which nlaY be received from time to time. The reply also requested detailed in- rcilloation as to the present status of the Personal Home 1%lortgage Company, 4tr11iated with the Personal Loan and Savings Bank, and previously reported 4a being in liquidation. Approved. Reply on Tune 23, 1933, approved by five members of the Board, t° a letter dated Tune 14 fram Ir. !alsh, Federal Reserve Agent at Dallas, 4d/ri3ing that the depositors of the First State Bank of Leakey, Texas, have allrrehdered a sufficient amount of their funds to eliminate the losses 1441cated in the report of examination of the institution as of April 8, 19331 that an effort is being made to obtain a further contribution of (Xxdmate1y :)5,000 with which to create a surplus account for the bank, 441" if 44d that the directors of the Federal Reserve Bank of Dallas feel that, in recommendell4 when this contribution is obtained, they will be justified 14L, and normal that the institution be granted a license to resume its usual bEttoe4 functions. ces and in accordance The reply stated that, in the circumstan this time in lith the agent's suggestion, the Board will take no action at (111.4ecti0n with the recommendation contained in his letter of Lay 8, 1933, thIlt to show cause why its membership the First State Bank be cited to appear terminated, but requested that 114 the Federal Reserve System should not be 524 6/as/33 -11- the Board be kept advised of any developments in the condition of the bank. Approved. Telegraphic reply on Tune 24, 1933, apProved by five members of the 8°611'd, to a telegram dated June 22 from Mr. Stevens, Federal Reserve lIgent "Chicago, with regard to the proposed reorganization of the Finney State 411k, Cass City, Eichigan, including, in the event the bank is unsuccessful collecting the remainder of a 100% stock assessment, :,;39,000 of which had been Paid-in or provided for, a reduction in the bank's capital from ç50,000 to crl39,ooo The reply stated that it appears that the management of the in- stitution is entirely satisfactory to the State banking department and that ec*rections to be made will eliminate all losses, depreciation and doubtful 488et3, and place the bank in a satisfactory condition, with no liability tc* borrowed money or for the repayment to depositors of the amount of dein kl4ite waived by them, and that, on the basis of such information, and, riE317 er the fact that the Board's consent to the proposed reduction in ip applicable c4ipittll is not required by law or the conditions of membersh to the bank, the Board offers no objection to the reduction in capital in tile Emount indicated, if this is found to be necessary, it being understood thavt counsel for the Federal reserve bank has considered the proposed plan 4n4 18 such reorganization satisfied as to its legal aspects, and that i_11 11°t l'esult in any change in the corporate existence of the bank which will 4ttect its membership in the Federal Reserve System. The reply also stated reorganization approved by the lt is understood that, under the plan of /41Q]ai Can State Banking Department, thirty days notice is given to stockholcl which the reorganiza3 and creditors of the bank as to the plan under ' 81 tio4 ng future to be effected, that it will be appreciated if, in submitti 525 6/28/33 ceses of this kind, the agent will forward to the Board a copy of the proplan and advise definitely whether counsel for the Federal reserve b4.111C has considered the plan and is satisfied as to its legal aspects and tht such reorganization will not result in any change in the corporate e7cistence of the bank which will affect its membership in the Federal Re"e System, which information should be submitted at as early a date as 11"sible in order that the Board may have an opportunity to consider the 18Ltter carefully, and that, if detailed information as to the amount of the stock assessment which will be collected and the amount of deposits !dliell will be waived, etc., is not available at the time the plan is forwardsuch additional information cnn be forwarded to the Board as soon as eAr ailable. Approved. of Telegraphic reply on June 24, 1933, approved by five members the Board, to a telegram dated June 22 from Mr. Stevens, Federal Reserve kellt at Chicago, with regard to the proposed reorganization of the Lenawee C°411tY Savings Bank, Adrian, LAchigan, including, in the event the bank is stock assessment, ,97,000 1144411ecessful in collecting the remainder of a 10g,S from a50,000 or 17111-0h had been paid-in, a reduction in the bank's capital to all Undetermined amount of not less than :;100,000. The reply stated tbnt y to the z-Pears that the management of the institution is satisfactor Fede will eliminate all reserve agent and that corrections to be made 10sse, the bank in a satisfactory depreciation and doubtful assets and place depositors of the amount of 104 with no liability for repayment to information, and, --.3 waived by them, and that, on the basis of such tieDOSi in Of the fact that the Board's consent to the proposed reduction 6/28/33 —13— capital is not required by law or the conditions of membership applicable to the bank, the Board offers no objection to the reduction in capital, if thi8 is found necessary, provided such capital is not reduced below )1.00,000, It beinE; understood that counsel for the Federal reserve bank has considered the Proposed plan and is satisfied as to its legal aspects, and that such ' ecatanization will not result in any change in the corporate existence °D the bank which will affect its membership in the Federal Reserve System. Approved. Letter dated Tune 24, 1933, to the Comptroller of the Currency, 4PProved by five members of the Board, replying to his memorandum of June 1 re commending approval of the application of the First National Bank, /filliamson, ":est Virginia, for permission to reduce its cammon capital 8tc)ek from 200,000 to ,,50,000, in accordance with the terms of a proposed 14.11. under which the present stockholders will surrender all their holdings, *- '°00 Of such surrendered stock will be resold at par, and . 200,000 par of preferred stock retirable at par will also ue sold; the released a.Pital amounting to'.200,000 to be credited to undivided profits and, to ether with other undivided profits and the bank's present surplus of 6 .4°1000 s Used to charge off assets mounting to ,253,100.65 which were '13sed as doubtful or loss in the report of examination of the national beaik as of Larch 28, 1933, such charged off assets to remain the property to be credited to or the bank and the proceeds of collections therefrom the bank's surplus account. The reply stated that the Board approves the 11'°11(3sed reduction under the plan submitted, subject to the conditions set r°1th tn. the reply. Approved. 527 6/28/33 -14Letter dated Tune 23, 1933, to the Comptroller of the Currency, 413PrOved by five members of the Board, replying to Acting Comptroller 417alt Is memorandum of June 17 recommending approval of the application or the First National Pnnk, BirminL;ham, 2,1nbama, for permission to reduce itS common capital stock from 0,000,000 to :;42,500,000, the released capital to be credited to the bank's surplus account, and the bank's present reserve contingencies in the amount of approximately 05,000,000 to be used to eharge off estimated losses and doubtful items as shawn by the report of e:"Olination of the institution as of April 21, 1933. the The reply stated thnt looard approves the proposed reduction under the plan submitted, subject tO the conditions set forth in the reply. Approved. Letter dated June 26, 1933, to the Comptroller of the Currency, 41)I)rcved by six members of the Board, replying to his memorandum of Tune 6 l'eccomending approval of the application of the Earlin-Citizens National 84-11k, Llarlin, Texas, for permission to reduce its common capital stock from 420n -1000 to ,J00,000 in accordance with the terms of a proposed plan under )100,000 hich the present stockholders will surrender all their holdings; , or the ::;120,000, the premium of 020,000 surrendered stock will be resold for t° Lc used as surplus; 0100,000 in preferred stock will be sold to the °11struction Finance Corporation for cash; and the released capital funds to be obtained through a .111°1111till,1: to :,;210,900, together with the funds credited to surplus or un1741ver of deposits totaling 0161,300, will be , bank has not already done profits, and used to charge off, if the 'all estimated losses and securities depreciation aggregating 0372,700. The ,‘ reduction under the 'ePlY stated that the Board approves the proposed 6/28/33 -15- Pa submitted, subject to the conditions set forth in the letter, and With the understanding that the bank will be placed under new management Ilhieh will be satisfactory to the office of the Comptroller of the Currency alld to the Federal Ileserve Bank of Dallas. Approved. Letter dated June 23, 1933, to the Louisinna National Bank, Baton 111°11ge, Louisiana, approved by five members of the Board, stating that the l'ederal 2eserve Board has considered the bank's application for permission to exercise fiduciary powers under the provisions of section 11(k) of the 2eserve Act and authorizes the bank to act, when not in contravention or State or local law, as trustee, guardian of estates, or in any other fidUciary capacity in which State banks, trust companies or other corporati0118 which come into competition with national banks are permitted to act 11114er the laws of the State of Louisiana, only in the specific trusts in 1/111eh the Louisiana Trust and Savings Bank, Baton Rouge, Louisiana, had been 41301nted and was acting when taken over by the national bank on April 17, 19331 the exercise of such rights to be subject to the provisions of the ' edere-1- ileserve Act and the regulations of the Federal - eserve Board. The letter also stated that action on the application of the national bank for fiduciary powers has been deferred pending receipt by the Board of a 11°r)°rt of the next examination of the institution. Approved. Orange, Letter dated June 26, 1933, to the First i:ational Bank in Itexn, -", approved by six members of the Board, stating that the Federal Lee board approves the bank's application for permission to act, when not L4 c 04travention of State or local law, as trustee, executor, administrator, 529 6/28/33 -16- egistrar of stocks and bonds, guardian of estates, assignee, receiver, cairaittee of estates of lunatics, or in any other fiduciary capacity in Which State banks, trust companies or other corporations which cone into ectiPetition with national banks are permitted to act under the laws of the State of Texas, the exercise of all such rights being subject to the prosions of the Federal Reserve 2ct and the regulations of the Federal Reserve _pproved. Report of the Connittee on Salaries and Expenditures, dated ,Tune 20, 1933 submitting the resolutions adopted by the boards of directors of all l'ecleral reserve banks providing for the payment on Tune 30, 1933, of divi41148 at the rate of 6,; per annum for the first six months of 1933, the reD°rt stating: "It will be noted * * * * * that estimated current net earnings for the six-month period, :J0,822,000, are over Lwice the amount of estimated dividend requirements of :14,518,000. It will also oe noted that estimated dividend requirements Of the Federal Reserve Banks of Boston, Richmond, St. Louis, Kansas City and Dallas are in excess of estimated current net earnings for the six-month period. "Your Committee has reviewed the dividend resolutions suUmitted by the Federal reserve banks and recommends that the payment of a semi-annual dividend by each Federal reserve bank be authorized by the Board." The recommendation of the committee having been approved by five members of the Board on Tune 23, 1933, the payment of the serli-annual dividend by the various Federal reserve banks as of ,Tune 30, 1933, was approved. Letter dated Tune 26, 1933, to Honorable A. W. Hall, Director of the members of the lireau of Engraving and Printing, approved by five ) stating that, in accordance with the practice of the Federal Reserve tO of furnish the Bureau of Engraving and Printing with an estimate 530 6/28/33 -17- Federal reserve note printing requirements at least one year in advance, the Board, after communication with the Federal reserve banks, was sub_ an estimate for the fiscal year ending June 30, 19350 of 6,000 000 Sheets. The letter also stated that it is understood that, although no 40W4ward revision of this estimate should be made, the Bureau will be able t° arrange, upon due notice, for some increase in deliveries during the fiscal year 1935, should changing conditions de:nand. The letter further 4dvised that the Board was on that date placing with the Comptroller of the Currency a formal order for the printing, during the fiscal year ending 3.44e 30, 1934, of 5,618,400 sheets of Federal reserve notes of the various l'eaeral reserve banks; that, while that order calls for the printing of 5 Gip sheets of Federal reserve notes, the Board may wish,.during the c°11r20 of the year, to ask the Bureau to print, in lieu of a part thereof, 4 sUbstantial number of sheets of Federal reserve bank notes; and that the 80ard Is placing its order, therefore, with the understanding that it will 1141re the right to cancel the order for the printing of Federal reserve notes to the extent that orders are placed for the printing of Federal reserve 1144k notes. Approved, together with a letter dated 1933, to the Comptroller of the 26, Tune Currency, also approved by five members of the Board, and in accordance with the letter to Mr. Hall. Reply on Tune 23, 1933, approved by six members of the Board, to 4 letter dated June 1 from Vir. Stevens, Federal ieserve Algent at Chicago, 4tati 11,g that he concurs in the printing program for Federal reserve currency ' thefiscal years 1934 and 1935, cs suggested in the Boardrs letter of !VIA --sy Dr, but feels that, pending a definite decision on a System policy as 531 6/28/33 -18- t0 the issuance of Federal reserve notes or Federal reserve bank notes, the order for :438,780,000 of Federal reserve notes to be printed during the fiscal year 1934 for the Chicago bank should consist of Federal reserve bank notes. The reply referred to the discussion during the Conference of (Ilrernors with the Federal Reserve Board on April 19, 1933, of the policy °f i33Uing Federal reserve bnnk notes, and stated that the policy as determined Qt that time will presumably be reviewed at the next Governors, Conference, bathe light of conditions as they then exist, but that, pending a decision °a thiS question, it would seem that the order to be placed with the Bureau °f Elagraving and Printing for printing Federal reserve currency during the flacal year 1934 should call for the printing of Federal reserve notes rather thall Federal reserve bank notes, with the distinct understanding and agreement lth the Treasury Department and the Bureau of Engraving and Printing that, 44°111d any Federal reserve bank desire to place an order for printing Federal l'eae Ma bank notes during the fiscal year 1934, the order for printing an eq441 number of sheets of Federal reserve notes may be canceled. Approved. Reply on Tune 26, 1933, approved by six members of the Board, to let tells dated Tune 20 and 21 from Governor Young of the Federal Reserve Bank or 10 A4ston inquiring as to (1) whether section 32 of the Banking Act of 1933 Woto Prohibit a member bank from accepting a deposit from an investment hou, 'e after Jnnuary 1, 1934, (2) whether the same section would prohibit a taellTher bank, after January 1, 1934, from handling drafts with stock attached, l'eetved from a broker or dealer in investment securities, and (3) whether the sarae section would prohibit a director, officer or manager of an investttlerlt t rjj137 from being a director or officer of a member bank after January 1, 532 6/28/33 -19- The reply stated that inasmuch as section 32 will not become effective tij January 1, 1934, it would seem that, unless there is SOMB reason which 41eke3 it importrint to decide these auestions at the present time, it would be 44visable to defer a decision thereon until questions arising under provisions °t the act which became effective immediately have been disposed of. The rielpilr also stated that the questions which Governor Young has raised have bees referred to the Board's Counsel, that answers will be prepared as soon "the pressure of more urgent matters permits, and that it would be helpful it Governor Young would ask counsel for the Federal reserve bank to consider the questions referred to and furnish the Board with his opinion regarding thEm4 Approved. Telegrams dated Tune 27, 1933, to Governor Young of the Federal ReBank of Boston, and to the Federal reserve agents at all other Federal l'"erve banks, approved by four members of the Board, referring to an incuiry e°1c4ined in a telegram dated Tune 20 from Governor Young as to whether under ecti°n 9 of the Banking Act of 1933 a member bank may make a new loan 4eellIsed by stocks and bonds if it is borrowing from its Federal reserve bank whether it mist have an official warning from the Federal reserve bank ' he ()1 Federal Reserve Board before it is required to stop making such loans. The telegrams stated that the eighth paragraph of section 13 of the Federal 'ye Act, as amended by section 9 of the Banking Act of 1933, does not a Federal reserve re a member bank which has obtained advances from ' Ikhle to refrain from making further loans secured by collateral or to dealers , Federal reserve bank -e curiuies until an official warning is given,given,by the the provided in the statute, district or by the Federal Reserve Board as 53 191 t.) 6/28/33 -20- 844 that an increase by a member bank in the amount of such collateral loans or loans to securities dealers during the life or continuance of an advance 1111(ler the provisions of the said paragraph does not subject the bank to the Perlalties prescribed therein unless occurring after the issuance of such an °tricial warning. In connection with this subject, the telegrams also called tIttention to section 11(m) of the Federal Reserve Act, as amended by section 7 Of the Banking Act of 1933, with regard to loans made by member banks on the security of stock or bond collateral. Approved. Telegraphic reply on Tune 27, 1933, approved by five members of the Board, to a telegram dated Tune 26 from Deputy Governor Conniff of the Federal Reserve Bank of Atlanta, stating that under the Banking Act of 1933 no Federal reserve banks may engage in open-market operations except 111 accordance with regulations of the Federal Reserve Board, and requesting oe as to whether the Atlanta bank may purchase bankers' acceptances 1fl.ating in the Atlanta district if offered by a member bank. The reply 1;:tecl that, inasmuch as the Board's Regulation B governs open market pur14aes of bills of exchange, trade acceptances and bankers' acceptances under 4e"ion 14 of the Federal Reserve Act, Federal reserve banks may continue to "chase bankers' acceptances in accordance with that regulation. Approved. Agent Letter dated June 26, 1933, to Er. Walsh, Federal Reserve to a letter dated --"-as, approved by six members of the Board, replying Reserve Bank of Dallas, 12 from Mr. Harris, Cashier of the Federal of securities 143 as to whether there is any objection to the holding 14 a "'ekeeping by the Federal Reserve Bank of Dallas for conservators of 534 6/28/33 -21- ttleraber hanks. The reply stated that the Federal Reserve Board offers no Objection to a Federal reserve bank holding in safekeeping, for a con861"rator in charge of a national bank or for a conservator or other State °tticial having similar authority in charge of a State member bank, securities of a kind which may properly be held in safekeeping for member banks 13.(1 subject to the conditions regarding the safekeeping of securities for 1er°13(ar banks, and called attention to the Board's letter of Eay 19, 1933, in the action of the Governors' Conference regarding the safekeeping of eeurities for member banks was reviewed. The reply also stated that, in other than Govern"connection, however, the question whether securities, til IlleIrt obligations, should be held in safekeeping for member banks located in bank is eities in which the head office or a branch of a Federal reserve located, has arisen at several Federal reserve banks; that the Board is e°4eidering submitting the matter to the Chairman of the Governors' Cone for study and rewith the request that he refer it to a committe at an early meeting of the Conference; and that, in the circumstances, is suggested that the Federal 1)e4cline the determination of this question, it safekeeping securities, l'"erve bank should not make it a practice to hold in ()tiler than Government obligations, for conservators or State officials having sito, a city in which is r authority in charge of member banks located in att44ted a Federal reserve bank or branch. Approved. Newton, Chairman of the Federal Letter dated June 23, 1933, to Yr. of the Board, stating that, 've Bank of Atlanta, approved by six members of directors of the bank, -'cordance with the action taken by the board 535 6/28/33 -22- at its meeting an Tune 9, advice of which was transmitted in the chairman's letter of Tune 12, the Federal Reserve Board approves an amendment to the kr-laws of the I;ew Orleans branch to provide for a change in the date of the l'eCUlar monthly meeting of the board of directors of the branch from the leanesday following the first Friday to the first Thursday following the firSt Friday of each month. Approved. lemorandum dated Tune 14, 1933, from hr. Wyatt, General Counsel, ePProved by three members of the Board, stating that his office is preDaritiC a new edition of the Federal Reserve Act, as amended to date, inelluling the amendments contained in the Banking Act of 1933, together with 411 appendix containing related acts of interest to the Federal Reserve the Federal reserve banks, and the member banks, and recommending that the Board authorize the printing of 20,000 copies thereof, 300 conies t0 be bound in cloth. LT. Carpenter stated that, in accordance with this t Printing Office for 411th°rity, an order had been placed with the Governmen the printing of the amended Act. Approved. of the Board, Reply on Tune 23, 1933, approved by five members to a letter dated Tune 15 from Mr. Stevens, Federal Reserve Agent at by the Federal Reserve ehleaCTo, transmitting a copy of a pamphlet issued Of Chicago entitled "Membership in the Federal Reserve System" and which might be used eating that a new pamphlet containing material prepared for issuance by iorray by all of the Federal reserve banks be e4eh bank in its own name. The reply stated that the agent's idea appeals out, but suggested that to the Board as one which it is desirable to carry 6/28/33 -23- the preparation of such a pamphlet might be carried on in a more advantageous l'aY if the Chairman of the Federal Reserve Agents' Conference were to 4PPoint a small committee of Federal reserve agents or their assistants to draft the manuscript and submit it in preliminary form to all Federal reserve agents and the Board for approval. Approved. Memorandum dated June 27, 1933, from the Secretary of the Board, 4Pproved by six members of the Board, outlininL; and recommending approval or the procedure proposed to be followed in connection with the accounts tc/ be opened for the Board on the books of the Federal Reserve Dank of ale:h.:mond as of July 1, 1933. The memorandum also recommended that, in °Ilder that the new procedure will conform to the by-laws of the Board, 4'llticle VIII of the by-laws be amended to read as follows: "ARTICLE VIII. "The Fiscal Agent and Deputy Fiscal Agent. "Sec. 1. The Board shall appoint a Fiscal Agent and a Denuty Fiscal Agent. The duty of the Fiscal Agent shall be to collect and deposit all moneys and funds receivable by the Board With a Federal Reserve Bank designated by the Board for the purpose, to be placed in a special fund established on the books Of such Federal reserve bank for the Federal Reserve Board. The Deputy Fiscal Agent shall perform the duties of the Fiscal Agent during his absence or disability. "Sec. 2. The Fiscal Agent and Deputy Fiscal Agent shall each execute a separate bond with surety satisfactory to the Board. ts "Sec. 3. :Payments of expenses and other disbursemen proper vouchers upon Agent Fiscal the by made Of the Board shall be out of moneys advanced to him by requisition out of the special Article, fund above mentioned, as provided in section 6 of this Bank Reserve Federal the with credit and placed to his official the absence In Article. this of 1 section designated pursuant to of the Fiscal Agent, payment of expenses and other disbursements vouchers shall be made by the Deputy Fiscal Agent upon proper out requisition by Agent Fiscal the out of moneys advanced to official his to placed and above mentioned Of the special fund credit with such Federal Reserve Bank, as provided in sections 6 and 7 of this Article. 537 6/28/33 -24"Sec. 4. The accounts of the Fiscal Agent shall be audited quarterly and at such other times as the Federal Reserve Board may direct, by or under the direction of an auditor of a Federal Reserve Bank designated for the purpose by the Federal Reserve Board. "Sec. 5. The Fiscal Agent shall prepare a quarterly account in such form as shall be approved by the Governor of the Federal Reserve Board, which account shall be submitted quarterly to the auditor designated by the Federal Reserve Board, as provided in section 4 of this Article, to audit the accounts of the Fiscal Agent. Such accounts shall cover payiiient of expenses and other disbursements made by both the Fiscal Agent and the Deputy Fiscal Agent. "Sec. 6. The Governor of the Federal Reserve Board, from time to time, shall make requisition on the Federal Reserve Bank, on the books of which the Federal Reserve Board's special fund above mentioned has been established, for the advance to the Fiscal Agent from such special funds of such sums as may be necessary. Sums so advanced shall be placed to the official credit of the Fiscal Agent on the books of the Federal Reserve Bank designated pursuant to the provisions of section 1 of this Article. "Sec. 7. The Deputy Fiscal Agent, in making disbursements for the Board upon proper vouchers out of moneys advanced to the Fiscal Agent, shall sign the necessary checks and other orders in the name of the Fiscal Agent by himself as Deputy Fiscal Agent." Approved. Telegram dated June 28, 1933, to Acting Governor Tohns of the l'ecleral Reserve Bank of Atlanta, approved by five members of the Board, l'ePlYing to his telegrams of June 26 and 27, 1933, regarding a request leeeived from the Cuban Government that the Federal Reserve Bank of Atlanta, ' t euCh its agency in Havana, Cuba, purchase from the Cuban Governmen ' thl IkIted States silver coin in the amount of 270,000 and gold coin of the payment therefor in Ile"blic of Cuba in the amount of a,200,000, making agreement by the tibtited States currency or credit in New York, with an the rate Cilban Government that it will repurchase the Cuban gold coin at Or to be entered into ,e100,000 a month on dates agreed to in a contract between the parties. stated that the The later telegram from Mr. Tohns 538 6/20/33 t) -25- Cuban ;;overnment has amended its request and asked that he be advised as to whether a proposed purchase of Cuban gold coin in the amount of H1,000,000, Which has been approved by the Executive Committee of the Federal Reserve Bank of Atlanta, meets with the approval of the Federal Reserve Board and, to the extent that it involves repayment of the Cuban gold coin, meets with the approval of the Secretary of the Treasury. The reply stated that the l oard will interpose no objection to the proposed purchase of ,l,000,000 auban -;old coin from the Cuban government under a contract substantially the same as that entered into on November 30, 1932, covering a similar tl'ansaction; that a complete written report regarding the transaction 4201-11d be filed with the Board promptly, together with a copy of the conas executed; and that the Treasury Department had advised that "so 1°4C as the [old coin in question is Cuban ';old held in Cuba, and unless the present law is changed, the Treasury Department will have no objection to the Cuban Agency of the Federal reserve bank making redelivery of the allban gold coin delivered to such agency under the agreement." The reply zilso stated that the Treasury Department had advised informally that arrangecan be made for the shipment of silver coin to the 7:hiladelphia mint 81.3111-lar to those which have governed Previous shipment made from Havana; that necessary instructions to the Treasurer of the United States cnnnot be issued until the Treasury is advised as to the exact amounts of coin to be „. 'LaPped, by denominations, how the coin will be shipped, the name of the 8teallIshiP and date of shipment, and whether representatives of the Cuban Tre,4 -surY will accompany shipment; and that it is noted from acting Governor "a' later telegram that the proposed purchase of silver coin will be doUntil necessary information can be furnished to the Treasury. The 539 6/28/33 -26- 1'eply also requested that the Board be advised when the executive committee of the bank approves this latter transaction and that the Board be furnished with information as to the terms and conditions under which the exchange will made. be ' Approved. The Assistant Secretary then presented a letter dated June 26, 1933, tl'ora Mr. Young, Secretary of the Federal Reserve Bank of Chicago, in which he quoted a resolution adopted by the board of directors of the baril: at its Meeting on Tune 23, expressing the opinion that the leave of absence granted to Governor McDougal on April 14, 1933, is not sufficient to insure full leoovery of his health, and extending such leave for another ninety days ' tl'ala the date of the exr)iration of the present leave of absence, with salary t4 full. After discussion, the Secretary was requested to advise Er. Young that the Board approves the salary payment involved in the action taken by the directors of the Chicago bank. lir. 1:0=111 reported that the secretary to Senator Vandenberg had eaaled upon him yesterday and stated that he had received a telegram from ellator Vandenberg requesting advice as to the extent to which section 10(b) of the Federal Reserve Act had been used by each of the Federal l'eaerve banks since the passage of the Emergency Banking Act of Larch 9, 1933. 11:r. Morrill stated that, in response to the inquiry, he had advised t44t information with regard to the amount of 10(b) loans made by Federal l'eserve banks during 1932, which would appear in the Board's annual report tQr the year, would be available; but that the question of furnishing later illl'oration in the form requested by Senator Vandenberg would have to be Iltlicaitted to the Federal Reserve Board. Senator Vandenberg's secretary 6/28/33 -27- asked, Er. 1.:orrial stated, that the request be presented to the Board. After discussion, Lir. Morrill was requested to advise Senator Vandenberg's office that, in view of the fact that it has not been published, it would not be in accord with the policy of the Board to supply the information in the fom requested. Governor Black stated that it is proposed to have a meeting of the executive committee of the Open Market Policy Conference in New York tomorrow which he had been requested to attend, and he requested an exfrom the members of the Board as to their views in connection with the continuance of the present program of purchases of Government securities t(Ir system account. All of the members present indicated that they felt that the program of purchases of not to exceed '5,000,000 of securities per week should be continued at least during the statement week ending Tuly 5, 1933. Governor Black then stated that he had discussed with Messrs. and Wyatt the procedure to be followed in connection with the preParation of regulations to be issued by the Federal Reserve Board pursuant to the provisions of section 12A(b) of the Federal Reserve Act, as Illended by the Banking Act of 1933, covering open market operations of -isderal reserve banks, and section 14(g) of the Federal Reserve Act, as Sllended by section 10 of the Rnnking Act of 1933, covering relations of l'ederal reserve banks with foreign banks and bankers, and that he believed 4 desirable procedure would be to have members of the Board's staff prePe tentative drafts of such regulations, with authority, in connection With the preparation of the tentative regulations, to consult with officers whose advice or °r e.hY of the Federal reserve banks or any other persons °°111Ments may be thought to be desirable, and that, after the tentative 541 6/28/33 -28- regulations have been prepared, to submit them to the Federal reserve bellks for their suggestions, and, if necessary, to request representatives Of the Federal reserve banks to come to Washington for a discussion of the proposed regulations with the Federal Reserve Board. After a brief discussion, the suggestion Governor Black was approved. by made Reports of Standing Committee dated Tune 23 and 26, 1933, recomMending approval of the following changes in stock at Federal reserve balks: 42211R9.tions for ORIGInAL Stock District St Lational Bank at 2ortland, Lame. Shares 300 300 District No. 4. Peoples National Bank, Lakewood, Ohio. 144 144 District Ho. 5. First National Bank of Columbia, South Carolina. 135 135 D istrict No. 6. First National Bank in Gadsden, Alabama. The Geo. D. ; - larthen National Bank of Sandersville, Georgia. 150 District ro. 7. First national Bank in i,:arion, Indiana. District No. 12. Pirst national Bank of 3helton, '.Iashington. 40_40ation for SUlti31,7:ffili of Stock: uistrict No, 4. GlIardian Trust Company, Cleveland, Ohio. (Insolvent) Governor. 72 72 7,800 Thereupon the meeting adjourned. 210 60 Total Approved. %roved: 60 60 921 7,800
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