The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
9
A. meeting of the Federal Reserve Board
ton
MRS
held in Washing-
on Thursday, June 28, 1934, at 12:50 p.
PRESENT:
Er.
Er.
Er.
lir.
Er.
Black, Governor
Hamlin
Miller
acmes
Thomas
Szymczak
Ir. Morrill, Secretary
The Board considered and acted upon the following matters:
Telegram dated June 28, 1954, from Governor Harrison of the
Pederal Reserve Bank of New York, referring to his informal discusElioa With Governor Black of the request received by the bank from
the Department of State that the banic lend Er. John H. 'Williams,
80onomist, to the State Department for the purpose of making a trip
citIlling July and August to Brazil, Argentina and Chile as the special
°presentative of the Department to study arid report on foreign excontrols in those countries and their effect on the trade of
the United States.
The telegram also stated that, while the Depart-
Inellt had agreed to pay Er. Williams' traveling expenses, his salary
Ilr°111d be continued by the Federal reserve bank; that, while the DePaatment mould send one of its junior non with Mr. Williams, the bank
14 anxious to send with him also, on its own account and at its own
ecperise
Er. Eric Lamb of the foreign department, who has lived in
44th America and who has been specializing for several years on
144.*la American relations; that the trip will afford Mr. Lamb an op15°Itilnity to visit, in conjunction with Mr. Williams, the Bank of
1950
6/28/34
-2-
Brazil, the Bs)* of the Argentine Nation and the Bank of Chile,
Yhich will be helpful to him in his regular work and in any relationships which may develop with the countries in the future; and that
it will be appreciated if the Board will advise whether it approves
the sending of Messrs. Williams and Lamb to South America on the
basis outlined.
In connection with Governor Harrison's telegram,
there was presented a press statement given out by the State Depart/Dent with regard to Ir. Williams' proposed trip.
After a discussion, the Governor was
authorized to advise Governor Harrison that
the Board gives its approval of the proposed
trips by Messrs. Williams and Lamb.
Telegram dated June 28, 1934, from Governor Harrison, referring to the Board's letter of May 22, 1934, and confirming his previ°us oral advice to Governor Black, that he proposes to sail for Europe
June 30, 1934, going direct to Basle, Switzerland, to be there
ch4ring the July meeting of the board of directors of the Bank for
Iaternational Settlements; that thereafter he plans to stop in Paris
44d London; that upon his return to the United States he will report
to the Board upon matters of interest to the Federal Reserve System;
Eta('
that, if it meets the Board's approval, he would like to take
With him on the trip Mr. Allan Sproul, Assistant to the Governor.
Governor Black was authorized to advise Governor Harrison that the Board will
be pleased to have Mr. Sproul accompany
him on the proposed trip.
Memorandum dated June 22, 1934, from Er. Paulger, Chief of
the Division of Examinations, recommending the temporary appointment,
1951
6/28/34
34.0
for a period of three months, of Lr. George S. Sloar, and his designation as a Federal reserve examiner, with salary at the rate of
4
500
month, effective as of the date upon which he enters upon the per-
formance of his duties.
Li-. Sloan was appointed, for a period of three
months, as an examiner for all purposes of the Federal Reserve Act, as amended, and of all other acts
of Congress pertaining to examinations made by, for,
or under the direction of the Federal Reserve Board,
and was designated as a Federal reserve examiner,
with salary at the rate of 500 a month, all effective as of the date upon which he enters upon the
performance of his duties.
Memorandum dated June 20, 1934, from the Committee on Salaries
and Lxpenditures, submitting a letter dated June 15 from Mr. Strater,
Secretary of the
Federal Reserve Bank of Cleveland, which requested
approval of changes in the personnel classification plan of the bank
to provide for increases in the maximum salaries of the positions of
In'flar,ern and "asst. librarian" in the accounting and library departrespectively.
The memorandum stated that the committee had re-
viewed the proposed changes and recommended that they be approved,
Approved.
Letter to Er. Williams, Federal Reserve Agent at the Federal
R"erve Bank of Cleveland, reading as follows:
"The Federal Reserve Board has received Mr. Fletcher's letter of June 22, 1934, and, in accordance with the recommendation
contained therein, approves the appointment of Elmer Charles
l eilender as assistant examiner in the Federal Reserve Agent's
department of your bank at salary rate of 2,500 per annum.
rlease advise the date upon which the appointment becomes effective. It is assumed, of course, that Id.. Reilender will have
no official connection with other business concerns or any other
1952
6/28/34
-4..
"relationship which may have an undesirable effect upon his service as an employ-)e of the Federal reserve bank, and it will be
appreciated if you will advise the Board definitely in this respect."
Approved.
Telegram to Mr. Curtiss, Federal Reserve Agent at the Federal
Reserve
Bank of Boston, reading as follows:
"Your letter June 20, 1934 and ,- ,,r. Gilson's subsequent conversation re applications The Union Trust Company of Boston and
Consolidated Investment Trust, of Boston. Voting permit to Consolidated Investment Trust has been issued today and you are
accordingly authorized to accept payment for and issue stock in
the Federal Reserve Bank to The Union Trust Company of Boston.
Time within which The Union Trust Company may accomplish membership is extended to July 5, 1934."
Approved.
Letter to Mr. Case, Federal Reserve Agent at the Federal Re"rye Bank of New York, reading
as follows:
.
"Reference is made to your letter of June 15, 1934, transmitting the request of 'The Summit Trust Company', Summit, New
J"sey, for an extension of time to July 1, 1935, within which
it may comxpily with the provisions of condition of membership
numbered 18, which provides that:
'llot later than July 1, 1934, such bank shall dispose of any
stock it holds in the Summit Title and Kortgago Guaranty
Company and shall not thereafter hold any stock in such company directly or indirectly through any device whatever.'
The Summit Trust Company
has also requested that it be permitted
to continue to act as trustee in connection with bonds or other
Obligations issued by the Summit Title and Mortgage Guaranty
Company oven though the exercise of such function is prohibited
under the provisions of membership condition numbered 19 which
Ilus accepted by the bank at the time of its admission to the
.rstem. It is noted that the bank interpreted membership condition numbered 19 as applying only to any new obligations which
Y be issued by the title company subsequent to the date the
ualik was admitted to membership.
"In view of all the circumstances and your recommendation,
Board extends to July 1, 1935, the time within which The
6ummit Trust Company may comply with the provisions of membership
1353
6/28/31
-5-
condition numbered 18, and extends also to July 1, 1935, the
time within which The Summit Trust Company may continue to act
as trustee in connection with outstanding bonds or other obligations issued by the Summit Title and Mortgage Guaranty Company,
with the understanding, of course, that the bank continue to
act as trustee for the Summit Title and Mortgage Guaranty Company only in connection with obligations which had been issued
by the title company prior to the date of the bank's admission
to membership. It is requested that you advise the bank of the
Board's action.
"At the time of the credit investigation as of December 5,
1932, made in connection with the bank's application for membership, the institution held 1,117 shares of the stock of the
Summit Title and Mortgage Guaranty Company, whereas the report
of examination as of Larch 23, 1934, shows that the bank on
that date held 1,122 of the shares of such company. The Board
would appreciate advice as to whether the additional shares were
acquired in violation of membership condition numbered 7.
"Condition numbered 3 prescribed by the Board in connection with the bank's application for membership provides that
all loans shall be maintained within the limits prescribed by
the laws of the State of New Jersey. The report of examination
as of March 28, 1934, indicates that the bank is carrying five
loans which are apparently in violation of such condition, and
it will be appreciated if you will advise the Board relative to
the present status of such loans."
Approved.
Letter to Mr. Stevens, Federal Reserve Agent at the Federal
Reserve Bank of Chicago, reading as follows:
"Reference is made to the consolidation on February 28,
1934, of the 'Kempf Commercial & Savings Bank' and the 'Farmers
and Merchants Bank', both of Chelsea, Michigan, under the charter
of the Kempf Commercial Cc Savings Bank and the title of Chelsea
State Bank.
"The Board has reviewed the condition of the Chelsea State
Bank as reflected in the analysis of the report of examination
as of April 9, 1934, and the information submitted by your of'1-oc), from which it appears that the transaction has resulted
ln no material change in the general character of the assets of,
or broa3ening in
the scope of the functions exercised by, the
c°11tinuing institution within the meaninF, of the general condition under which it MIS admitted to membership in the Federal
Reserve System. The Board will, therefore, take no action affecting the membership of the Chelsea State Bank in the Federal
6/28/34
-6-
"Reserve System by reason of the transaction.
"The condition of the Chelsea State Lank as shown in the report of examination as of April 9, 1934, is not satisfactory and
it is requested that you keep the Board advised as to the progress
mode by it in eliminating criticized assets and effecting the corrections reauested by the State authorities, and as to the results
of the conference which was to be held with the Commissioner of
Banking and representative directors of the bank regarding its
management and a program of capital rehabilitation."
Approved.
Letter to hr. EcClure, Federal Reserve Agent at the Federal
Reserve Bank of Kansas City, reading as follows:
"ieceipt is acknowledged of your latter of June 15, 1934,
advising that plans are under consideration whereby the First
State Bank, St. Joseph, Lissouri, a nonmember bank, will assume
the deposit liabilities and acquire an equal amount of acceptable
assets of the St. Joseph Stockyards Bank, St. Joseph, nssouri,
a member institution, and that the First State Bank is desirous
of becominr; a member of the Federal Reserve System but before
making application desires advice as to the adequacy of the proposed capital structure.
of May 16, 1934, the First State Bank was reported to
have "A4
had the following capital accounts:
Capital stock
3100,000
Surplus
25,000
Undivided profits and reserves
3,000
"It is understood that the bank proposes to increase its
capital through the sale of .)150,000 capital notes to the Reconstruction Finance corporation. You state that after taking over
the business of the St. Joseph Stockyards Bank, the First State
Bank will have deposits of slightly over $3,000,000, but that
he manaement anticipates that within a short time after the
ransaction deposits will decline to an amount not more than
Y ,750,000 and probably to as low as 2,500,000. In the circumscances, the First State Bank has asked you to ascertain whether
4 capital and surplus of
275,000 will be considered by the Federal Reserve Board as adequate for admission to membership.
"In the absence of current information as to the condition
of the First State Bank,
a definite commitment cannot be made
fl this
connection. It is understood, however, that you regard
the' management of the First State Lank as able and conservative,
bhat the consolidated bank would have no investment in bank
Di llding, and that in your opinion its assets would bo unusually
ly
llquid and free from criticism. If an application is filed, the
6/28/34
-7-
"Board will give consideration to all of the circumstances, and
if an exception to its general policy is justified by the condition of the bank's assets and the reasonable expectancy of a reduction in the bank's deposits, will waive its usual requirement
that at the time of admission to membership a bank have an unimpaired capital and surplus at least equal to 10 per cent of
its deposits. The Board feels, nevertheless, that in the case
of any capital adjustment a bank should make provision for an
amount of capital which mould be altogether adequate in the circumstances. If an application for membership is filed and approved, the usual condition numbered 15 will be prescribed with
respect to the maintenance of an adequate amount of unimpaired
capital and unimpaired surplus. In this connection it is noted
that after the proposed adjustments, the bank will have 250,000
capital stock and capital notes, and surplus of 25,000, and if
an application is approved, the usual modification of condition
numbered 10 will be prescribed requiring that until the surplus
account shall equal at least 20 per cent of the bank's capital
stock and/or capital notes, such bank shall carry to the surplus
account annually 50 per cent of its not earnings.
"It is noted that all shares of the First State Bank, except directors' qualifying shares, are omned by the First Trust
Company of St. Joseph, and that the shares of the First Trust
Company, except directors' qualifying shares, are trusteed for
the benefit of the shareholders of the First National Bank of St.
Joseph. If these relationships still exist and the First St'tte
Bank is admitted to membership in the Federal Reserve System,
the First Trust Company will become, and the First National Bank
may become a holding company affiliate of the First State Bank.
In accordance with its usual policy, the Board will desire to
consider the application of the First State Bank for membership
simultaneously with the applications of any holding companies
for voting permits. It is assumed that you are familiar with
the Board's usual policy in this respect, and that if the First
State Bank contemplates filing application for membership you
17111 request that the applications for voting permits be filed
by any holding company affiliates at the same time, or as soon
thereafter as possible."
Approved.
Telegram to Ir. Sargent, Assistant Federal Reserve Agent at
the
Feder al Reserve hank of San Francisco, referring to the a2plica-
ti0ri Of
the "Pomeroy State Bank", Pomeroy, Washington, for permission
1:c) withdraw
immediately from membership in the Federal Reserve System,
411d
.b11-ting that the Board waives the usual requirement of six months'
1956
-8-
6/23/3E.1.-
notice of intention to withdraw and that, accordingly, upon surrender
of the Federal reserve bank stock issued to the Pomeroy State Bank,
the Federal Reserve Bank of San Francisco is authorized to cancel such
Stook and make a refund thereon.
Approved.
Letter to .L.r. 1,ewton, Federal Reserve Agent at the Federal Reserve Lank of Atlanta, reading as follows:
"Receipt is acknowledged of 1‘".r. Clark's letter of June 15,
1934, regarding a possible violation of the provisions of Section
22(s) of the Federal Reserve Act by Lr. E. G. Thomas, President
of the Planters 1;an1c and Trust Company, Thomaston, Alabama. It
has been noted that the cashier of the bank has advised your office in detail as to the entire transaction and stated that a
contract was made in April, 1933, regarding the loan, and thet
your office is of the opinion that no effort has been made to
violate Section 22(g) of the Federal Reserve Act. In the circumstances, the Board is not takiir any action to report the matter
to the Attorney General but it will be appreciated if you will
advise the Board of the detailed information which formed the
basis for the conclusion of your office that no violation of
Section 22(g) is involved."
Approved.
Letter to i:Ar. Walsh, Federal Reserve Agent at the Federal Reel-17o t
- ank of DalLas, reading as follows:
"lhis refers to your letter of Lay 25, 1934, with regard
to possible violations of the provisions of Section 22(g) of the
rederal Reserve Act, by 0. 71. Reagin, active vice president and
cashier of the Forney State Bank, Forney, Texas, and by its president, .ur. J. C. Reagin, as disclosed by an examination made of
that bank as of i..ay 21, 1934. It is noted that you have not rePorted these possible violations to the local United States District Attorney because of the small amounts involved, and for
the same reason the Board is not reporting this matter to the
Attorney General of the United States.
"however, it will be appreciated if you will advise the
;
orney State Bank of the provisions of Section 22(g) of the Federal Reserve Act, if you have not already done so."
Approved.
1957
6/28/34
-9Letter to la-. G. V. Fromme, Vice President of "The Champaign
National Bank of Urbana", Urbana, Ohio, reading as follows:
"This refers to the resolution adopted on February 14, 1933
by the board of directors of The Champaign National Bank of Urbana, Urbana, Ohio, signifying the bank's desire to surrender
its right to exercise trust powers which have been granted to it
by the Federal Reserve Board.
"The Board understands that The Champaign National Bank of
Urbana, Urbana, Ohio, has been discharged or otherwise properly
relieved in accordance with the: law of all of its duties as fiduciary. The Board, therefore, has issued a formal certificate to
The Champaign National Bank of Urbana certifying that it is no
longer authorized to exercise any of the fiduciary powers covered
by the provisions of Section 11 (k) of the Federal Reserve Act,
as amended. This certificate is inclosed herewith.
"In this connection, your attention is called to the fact
that, under the provisions of Section 11(k) of the Federal Reserve Act, as amended, when such a certificate has been issued
by the Federal Reserve Board to a national bank, such bank (1)
shall no longer be subject to the provisions of Section 11(k) of
the Federal Reserve Act or the regulations of the Federal Reserve
Board made pursuant thereto, (2) shall be entitled to have returned to it any securities which it may have deposited with the
State or similar authorities for the protection of private or
court trusts, and (3) shall not exercise any of the powers covered by Section 11(k) of the Federal Reserve Act except with the
permission of the Federal Reserve Board."
Approved.
Letter to Ir. Case, Federal Reserve Agent at the Federal Re"I've Bank of New York, reading as follows:
"The Federal Reserve Board has under consideration an apPlication for reduction in capital stock of 'The Mechanics'
National Bank of Bayonne', New Jersey. It is noted from the
report of examination of such bank as of April 28, 1934, that
1011 of the 2000 outstanding shares of capital stock of the
subject bank are awned by the Mechanics' Trust Company, Bayonne,
14ew Jersey. Information available to the Board indicates that
the lechanics' Trust Company of Bayonne is now operating under
the Altman Act (Chapter 27, Public Law New Jersey, 1933, as
szended by Chapter 66 Public Law 1933).
"It is essential in connection with the approval of the
aPPlication for a reduction of capital stock of the national
bank to determine whether or not the Mechanics' Trust Company
1958
6 6/28/"34
_10-
is a holding company affiliate of the national bank. You are
therefore requested to advise the Board promptly whether the
Liechanics' Trust Company is engaged in the banking business at
the present time and if so the extent of its operations; whether
the institution is in the hands of a State official for the purpose of liquidation or otherwise and, if so, the nature and extent of the supervision and control exercised by such official;
whether such official exercises supervision and control subject
to the order and direction of a court or other duly constituted
public authority; and whether or not title to or control of the
assets of the Nechanics' Trust Company is vested in such official."
Approved.
Letter to Er. O'Connor, Comptroller of the Currency, reading
as follows:
"In accordance with Acting Comptroller Amalt's recommendation, the Federal Reserve Board approves a reduction in the
common capital stock of 'The First & Citizens Eational Bank of
Elizabeth City', Elizabeth City, North Carolina, from 200,000
to 0.00,000, pursuant to a plan which provides that the released
capital, together with a portion of the bank's undivided profits
and reserves, shall be used to eliminate unsatisfactory assets
in the amount of approximately 0.60,812, all as set forth in Mr.
M'alt's letter of June 14, 1934.
"In considering the plan under which the reduction in common capital is to be effected, it has been noted that President
Gaither and his interests have borrowed a substantial amount of
the bank's funds and that the proposed eliminations will include
approximately ,r15,600 of such loans.
".he Board feels that, whenever the financial affairs of
any bank official become so involved as to be the source of embarrassment and loss to the institution he serves, he has seriously impaired his usefulness and value to such institu-Lion. It
has been noted also that your examiner severely criticized the
Operations of the subject bank's trust department, particularly
as regards trust investments purchased from the commercial dePartment of the bank. It is assumed, however, that you have
these conditions in mind and that whenever it becomes feasible to
dO so you will require such corrections as nay be practicable."
Approved.
Letter to Lr. O'Connor, Comptroller of the Currency, reading
f011OWB:
1959
6/28/34
-11-
"In accordance with Acting Comptroller Amalt's recommendation, the Federal Reserve Board approves a reduction in the
common capital stock of 'The Casey National Bank', Casey, Illinois, from $25,000 to ;10,000, pursuant to a plan which provides
that the bank's capital shall be increased by .;40,000 of preferred stock to be sold to the Reconstruction Finance Corporation and/Or others and that the released capital, together with
a portion of the bank's surplus and undivided profits, shall be
used to eliminate unsatisfactory assets in the amount of approximately $35,000, all as set forth in hr. Amalt's memorandum of
June 15, 1934."
Approved.
Letter to Mr. O'Connor, Comptroller of the Currency, reading
as follows:
"Receipt is acknowledged of Mr. Awalt's memorandum of June
15, 1934, in regard to the proposed reduction in capital of 'The
City National Bank of Auburn', Auburn, Indiana, which was approved by the Board on February 16, 1934.
"Mr. Await advises that there was a misunderstanding in
connection with the funds amounting to approximately 4,600 to
be raised locally and that the amount in question is not
voluntary cash contribution but, under an agreement with the
Parties who advanced the money, is reimbursable, together with
six per cent interest, from the proceeds of liquidation of the
eliminated assets.
"In accordance with iLr. Awalt's recommendation, the Board
amends its previous approval to permit the reimbursement of the
funds in question, together with interest at six per cent per
annum, from the proceeds of liquidation of the eliminated assets, with the understanding that the other provisions of the
plan as originally submitted remain unchanged."
Approved.
Letter to la.. O'Connor, Comptroller of the Currency, reading
44 follows!
?
.
"In accordance with Acting Comptroller Awalt's recommends.tlon. the Federal Reserve Board approves a reduction in the common capital stock of 'Tho Dyersville National Bank', Dyersville,
Iova, from 25,000 to ;;12,500, pursuant to a plan which provides
that the bank's capital shall be increased by 47,500 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital shall be used to eliminate a
6/28/34
-12-
n corresponding
amount of unsatisfactory assets, all as set forth
in Er. Await's memorandum of June 13, 1934."
Approved.
Letter to Er. O'Connor, Comptroller of the Currency, reading
as follows:
"In accordance with Acting Comptroller Amult's recommendation, the Federal Reserve Board approves a reduction in the
common capital stock of 'The Lumbernan's National Bank of
Chippewa Falls', Chippewa Falls, Wisconsin, from 100,000 to
50,000, pursuant to a plan which provides that the bank's capital shall be increased by 45,000 of Class 'A' preferred stock
to be sold to the Reconstruction Finance Corporation and 05,000
of Class 'B' preferred stock to be sold to certain stockholders
of the bank, and that the released capital, together with a portion of the brirlr's surplus and undivided profits, shall be used
to eliminate securities depreciation in the amount of approximately 09,000, all as set forth in Ir. Amalt's memorandum of June
12, 1934."
Approved.
Letter to Mr. O'Connor, Comptroller of the Currency, reading
as follows:
"In accordance with the recommendation of Acting Comptroller of the Currency ;malt, the Federal Reserve Board approves a
reduction in the common capital stock of 'The First National Bank
of Miami', Miami, Oklahoma from 250,000 to ,,,100,000, pursuant
to a plan which provides that the bank's capital shall be increased by 0.50,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital
shall be used to eliminate a corresponding amount of substandard
assets, all as set forth in Mr. Aralt's memorandum of June 12,
1934.
"In considering the plan under which the proposed reduction
iii capital is to be effected, it has been noted that the examiner
criticizes the active management of the bank as unsatisfactory
at.ld unsafe. It is assumed that your office is aware of this conend will require such corrections as are necessary."
Approved.
Letter to Mr. O'Connor, Comptroller of the Currency, reading
Eta
fOilaus:
1961
6/28/34
-13-
"In accordance with Acting Comptroller Amult's recommendation, the Federal Reserve Board approves a reduction in the
common capital stock of 'The First bational Bank of Toppenish',
Toppenish, Washington, from 40,000 to $20,000, pursuant to an
amended plan which provides that the bank's capital shall be increased by $30,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital
shall be used to eliminate estirpted losses aggregating approximately $26,135, to establish a surplus of $2,000 and to augment
the undivided profits account, all as set forth in Jr.l
Amult's
letter of June 16, 1934.
"It is understood that the plan of reduction of common capital hereby approved, supersedes the one approved by the Board
on December 29, 1933."
Approved.
Telegram to Lir. Case, Federal Reserve Agent at the Federal
heserve Bank of New York, stating that the Board has given
considersto the application of the "First National
of Elmira Corporation",
1rIliras New York, for a voting permit under the authority of sectio
n
6144 of the
Revised Statutes of the United States, as amended, entitling
such organization to vote the stock which it
owns or controls in
rim
Ihe First
National Bank of Horseheads", Horseheads, New York, and
1148 authorized the issuan
ce of a limited permit to the applicant for
the folloming purpose:
"At any time prior to September 1, 1934, to act upon a proPosal to increase the capital stock of such bank in the amount
of
aPproximately ,25,000 by the issuance of common stock
and to
amend the articles of association of such bank accordingly,
provided that such proposal shall be approved by the Comptr
oller of
the Currency."
telegram also authorized the agent to have prepared by
counsel for
the Federal
reserve bank, and to issue to the First National of Elmira
Corn
'
°ration, a limited voting permit in accordance with the telegram.
Approved.
1_962
6/28/34
-14Telegram to liIr. Sargent, Assistant Federal Reserve Agent at
the Federal Reserve Bank of San Francisco, reading as follows:
"Fram facts stated in your telegram June 16 it does not appear that either Capital Company or California Lands, Inc. is
affiliate of Bank of America National Trust & Savings Association or that advances by bank to companies mould be within provisions of Section 23A of Federal Reserve Act. However, if majority
of directors, trustees, or other persons exercising similar
functions of either company are directors of bar*, or if their
election is controlled in any manner by the bank, such company
is affiliate of bank and advances by bank to such company would
be within provisions of said Section 23A."
Approved.
Letter to the Federal reserve agents at all Federal reserve
banks. transmitting copies of the call condition report forms to be
Used by State member banks in submitting reports as of the next call
'late, and stating that there have also been forwarded a supply of Federal Deposit Insurance Corporation Form No. 64-c, and that it will be
aPPreciated if the agents will advise State member banks that the
Federal Deposit Insurance Corporation has requested the Board to obt in for it the information regarding deposits and other supplemental
information called for on the form and ask the bnnks if they will
kltdly fill out the form and mail two copies to the Federal reserve
Approved.
Letter to the Attorney General of the United States, reading
Els
follows:
"This refers to your letter of May 9, 1934 (JBK-EBR-29-2467) in which you advised that in a large number of cases which
have been reported to the Department of Justice by the Federal
Reserve Board and the Comptroller of the Currency as possible
violations of the provisions of Section 22(g) of the Federal
1963
6/28/34
-15-
"Reserve Act, it has been represented that the offending officers
were not aware of such provisions or thought they were not to
take effect until January 1, 1934. You suggested for the
Board's
consideration the advisability of transmitting to all member
banks, including national banks, a circular advising of these
provisions and the date upon which they became effective.
"The Board has already brought the provisions of Section 22
(6) to the attention of all banks and trust companies which are
members of the Federal Reserve System through the publication in
the Federal Reserve Bulletins for August and September, 1933,
copies of which wore mailed to all such institutions, of its
ruling regarding the interpretation of the term 'executive officer' as used in that section and of your opinion of August 18,
1933, on the save subject; but pursuant to your suggestion, the
Board has requested the Federal Reserve Agents, the Board's local
representatives at the Federal Reserve Banks, to advise all member banks in their respective districts of the provisions of
the
section in question and the effective date thereof. There are
inclosed for your further inform. tion copies of the Bulletins
for August and September, 1933, on pages 501 and 569, respect
ively, of which you will find the ruling and opinion referred to
above.
You have requested that the Board furnish you with 100
copies of any circular issued in this connection for transnisSion to the United States Attorneys. Since the proposed circulars will be issued by the Federal Reserve Agents at the various Federal reserve banks rather than by the Federal reserve
Board, the Board has requested each of the Federal Reserve Agents
to furnish copies of the circulars to each of the United
States
District Attorneys in his district for their information."
Approved, together with a letter to
the lbderal reserve agents at all Federal reserve banks in accordance therewith.
Telegram to Lr. Walsh, Federal Reserve Agent at the Federal
ile erve Bank of Dallas, reading
as follows:
"Referring your June 23 wire, the application of The First
rational Bank of *sail's, allis, Texas, approved by Board March
?-6, 1934, will be retained as part of Board's file in the case.
before payment on 32 shares of Federal Reserve bank stock is
returned to organizers suggest you obtain approval of counsel
for your bank."
Approved.
Letter to 1,:r. R. F. Momsen, of iorcop & Monsen, El Paso,
Texas,
1964
6/28/3/1
-16-
readi0. as follows:
"Receipt is acknovded7ed of your letter of June 4, 1934, in
regard to the question whether the Hachita Mercantile Company,
Hachita, New Mexico, is engaged in receiving deposits within the
meaning of Section 21(a) (2) of the Banking Act of 1933, which
makes it unlawful, after June 16, 1934, for any person or organization other than a financial institution or private banker subject to examination and regulation under State or Federal law to
engage to any extent whatever in the business of receiving deposits subject to check or to repayment upon presentation of a
pass book, certificate of deposit or other evidence of debt, or
Upon request of the depositor, unless such person or organization
shall submit to periodic examination by the Comptroller of the
Currency or by the Federal reserve bank of the district and
shall publish periodic reports of condition.
"It will be noted that the section does not give to the Federal Reserve Board any jurisdiction or discretion regarding the
matters with which it deals. The provision excepting corporations
Which shall submit to periodic examination by the Comptroller or
vederal reserve bank of the district relates to corporations
Which 'shall submit' to such examination, and does not give to
the Comptroller, the Federal reserve bank, or the Federal Reserve
Board any discretion or power to require a corporation to submit
to examination or to determine what corporations should submit
to examination. On the other hand, the section provides a penalty of fine or imprisonment for any violation of its provisions
and the determination of the question whether a person should be
Prosecuted for such violation is a matter entirely within the
jurisdiction of the Department of Justice.
"In view of these circumstances, an expression of opinion
by the Federal Reserve Board on the question whether the section
is violated would not afford protection from prosecution if the
Department of Justice upon consideration of the matter should
take the position that a corporation had violated the statute
and should feel it necessary to prosecute for such violation.
Accordingly, the Federal Reserve Board does not feel that it
Muld be appropriate for it to undertake to express an opinion
Whether the Hachita Mercantile Company is receiving deposits
uithin the moaning of this section.
. "You state that the Hachita Mercantile Company does not
object to examination by the Federal reserve bank of its district but it is your opinion that the corporation is not subject
to examination by such bank. However, you also state that if
the corporation is subject to examination it is ready and willing to submit thereto. You request advice as to the probable
cost of such examinations and how often they are to be made.
"In view of the fact that the hachita Mercantile Company of
1965
6/28/34
-17-
"Hachita, New Mexico, is located in the eleventh Federal Reserve
District, your inquiry is being referred to the Federal Reserve
Bank of Dallas which will communicate with you in regard to the
matter."
Approved.
Memorandum dated June 13, 1934, from the Division of Examinations, commenting on the report of an examination of the Mexico City
branch of The Chase Bank, NOW York, New York, made for the Federal
Reserve Board as at the close of business on Larch 14, 1934, by Er.
"
I E. Prickett, national bank examiner.
The memorandum was accompan-
ied by a proposed letter to Er. Winthrop W. Aldrich, Chairman of the
Board of Directors of The Chase Bank, inclosing two copies of the rePort of examination.
The letter to Er. Aldrich was approved.
Lettor to Er. Curtiss, Federal Reserve Agent at the Federal
Reserve Bank of Boston, reading as follows:
"The Federal Reserve Board has received your letter of April
13, 1934, with inclosures, regarding the request of Er. Frederic
Ayer for a ruling on the question whether the General Capital
Corporation is an organization 'engaged primarily in the business
of purchasing, selling, or negotiating securities' within the
meaning of Section 32 of the Banking Act of 1933.
"It appears that the General Capital Corporation was incorporated under the laws of the State of Delaware in August, 1929
and is engaged in the businoss of holding for income and for
capital appreciation the securities of other corporations; that
it is not a dealer in securities and does not participate in the
distribution or sale of securities to the public. It is stated
that the company has not been a party to any agreement involving
the distribution or sale of securities through underwriting
sYndicates of dealers in securities and is not now a party to
such an agreement. Also, it appears that, except in connection
with the original issue of its own stock in 1929, the company
has not engaged in the distribution or sale of its own securities
oald is not now engaging in the distribution or sale of its awn
1.9C6
6/26/3.4
-18-
"securities to the public, although there is always the possibility that it may offer for sale its own treasury stock or stock
not yet issued; and that at no tire has the General Capital Corporation taken a short position in any securities or engaged in
any other operation of a purely speculative nature.
"It is shown in connection with and incidental to its business of investing and reinvesting its assets during the past five
years that the total sales prices of securities sold by it bear
the following ratio to its total assets:
1929 Proportion of securities sold to total assets 12%
It
It
It
It
It
It
8
32.V
1930
8
8
8
8
8
8
8
19%
1931
8
8
8
8
8
8
8
10.7%
1932
8
it
It
It
It
8
8
18.2;''
1933
"During the same period the proportion of the value of securities purchased by it to its total assets is shown to be as
follows:
1929 Proportion of securities purchased to total assets 85.21,
It
It
It
It
It
8
8
53.9%
1930
8
It
it
It
It
8
8
22.570
1931
It
740f
11
II
It
If
u
u
*
1932
8
8
8
8
8
8
8
28.V0
1933
"The proportions of the compsny's portfolio with respect to
the periods during which the same had been held at the end of
each of the last four years is shown as follows:
1933
1932
1931
1930
-.
7.4%
3.8%
Held 1 - 6 nos.
Ei;
11.7;
8 6 - 12 "
14.8%
4.5%
10.9%
40.1%
8 12 - 18 8
14%
8.8%
6.3;;
43.2
H
-76.6%
74.8% 82.9%
over 18 8
Since the company was formed in August, 1929, figures showing its
holdings at the end of that year have no significance.
'On the basis of the foregoing the Board believes that the
General Capital Corporation should not be regarded as being 'engaged primarily in the business of purchasing, selling, or negotiating securities' within the intendment of the provisions of
Section 32, either by reason of transactions in connection with
'he original issue of its oval stock or in securities comprising
its portfolio. In the circumstances a permit covering the relationships described in Er. Ayer's letter to you, dated April 9,
1934, is not necessary, and unless there are other facts which
YOU believe should be called to the attention of the Board, it
is suggested that you advise I:ir. Ayer accordingly."
Approved.
6/204
-19Telegram to Lir. Case, Federal Reserve Agent at the Federal Re-
serve Bank of New York, reading as follaus:
"In a number of instances recently Board advised you by telegram that it had granted permits for correspondent relationships
under Section 32 of Banking Act of 1933 in connection with issues
of municipal and other securities of kinds exempted from restriction of Section 5136 Revised Statutes. Several such telegrams
have required filinp; of for-oal applications together with usual
accompanying forms and have stated that formal permits would be
prepared and forwarded. In view of Trans. 2015 Board waives requirement that formal applications be filed in those cases, and
formal permits will not be forwarded. Please advise applicants."
Approved.
Letter to 1.1r. Case, Federal Reserve Agent at the Federal Reserve lank of Lew York, reading as follows:
"Receipt is acknowledged of your letter of June 19, 1934,
and inclosures regarding the a.plication of :r. Louis J. Horowitz
under the provisions of Section 32 of the Banking Act of 1933 for
!I. permit authorizing his service as a director of The Commercial
ilational Bank and Trust Company, 'New York, New York, and as officer and director of Locust Valley Investment Company, Limited,
Lontreal, Canada.
"It appears from the letter of Mr. Horowitz dated May 3,
1934, a copy of 'which you inclosed, that Locust Valley Investment
Company, Limited, is a privately owned company which buys and
sells securities solely for its own account and investment; that
lt has no dealings whatever with the public; that it does not
Participate in transactions involving the issue, underwriting,
or distribution of securities, either its own or others; and that
changes in its portfolio of investments are made only when deemed
Prudent for the purpose of keeping its assets invested to good
advantage.
"The applicant has not submitted the detailed information
itascribed in the Board's letter of March 12, 1934 (X-7820) regardlug the volume of purchases and sales made by the company and
Other matters, but the statements made by the applicant in his
letter of May 3, 1934, indicate that the company is engaged primarily in keeping its assets invested to the best advantage and
that it is not engaged 'primarily in the business of' purchasing,
s?lling Y or negotiating securities within the intendment of Sectlon 32 of the Banking Act of 1933. It will be appreciated if
you will advise the applicant accordingly."
Approved.
19(38
6/28/34
-20Letter to Mr. Case, Federal Reserve Agent at the Federal Re-
serve Bank of New York, reading as follows:
"Reference is made to your letter of April 10, 1934, in regard to the application of Lr. William C. Langley under Section 32
of the Banking Apt of 1933 for a permit to serve at the same time
as a director of the Chemical Bank & Trust Company and as a partner
in the firm of W. C. Langley & Company, both of New York, New
York, and in regard to the Board's letter of Larch 24, 1934, mhich
notified Mr. Langley that the Board was unable to find that it
would not be incompatible with the public interest to grant his
application.
"Inclosed with your letter of April 10, 1934, was a copy of a
letter to you dated April 6, 1934, from Ir. Percy H. Johnston,
President of the Chemical Bank & Trust Company, which stated that
Er. Langley MRS a very valuable director of the bank because of
his knowledge of utility investments. The Board, however, believes
that Mr. Johnston's letter contains no facts which mould justify
an exception in Er. Langley's case, and that unless la.. Langley
wishes to submit additional facts or arguments, his application
Should be denied.
"Some weeks ago Er. Guy Mason, of the law firm of Mason,
Spalding & EcAtee, Washington, D. C., called at the offices of the
Board and discussed this application. At the conclusion of the
discussion Mr. Mason stated that he mould commnicate with the applicant and explain the situation to him. Since the date of
Aason's visit, no further letter has been received concerning this
application. However, Mr. Frank Houston has recently discussed
the application with members of the Board's staff and has explained
that the Chemical Bank and Trust Company desires very much to have
Ix. Langley camolete the review in mhich he is now engaged of the
Public utility investments held by the estates in which the bank
acts as trustee. The Board is of the opinion, however, that these
facts do not justify an exception in Mr. Langley's case. Accordingly, it will be appreciated if you will advise 11r. Langley and
Ur. Johnston that unless there are other facts to be submitted,
the Board believes that Lr. Langley's application should be denied."
Approved.
Letter to Mr. Case, Federal Reserve Agent at the Federal Ree Bank of New York, reading as follows:
"Receipt is acknowledged of your letter of June 19, 1934,
referring to the Board's telegram of June 14, 1934, which stated
that the Board granted a permit under Section 32 of the Banking
Act of 1933 to the Manufacturers and Traders Trust Company,
1969
6/28/34
-21-
"Buffalo, New York, to act as correspondent bank for Adams, McEntee & Co., Inc., New York, New York, and George D. N. Bonbri7ht
CY; Co., Rochester, New York, in connection with the issue of
0.90,000 City of Binghamton bonds. You state that you have been
advised that the bid submitted by this group was not successful
in purchasing the bonds, and you therefore recommend that the
Board do not require the filing of a formal application, although
such a requirement was contained in the Board's telegram.
"In grantini, its permission and in requiring the filing of
an application, the Board was acting without having before it
sufficient information to determine whether the relationships in
question were 'correspondent' relationships within the meaning of
Section 32 and the Board's Regulation R, and the Board was therefore merely granting a permit to the extent tint the some might
be necessary under the law in order to remove any obstacles which
Section 32 might place in the may of flotation of the issue. Although the formation of a croup and the submission of an unsuccessful bid might be evidence, when considered in connection with
other facts, that a correspondent relationship existed in a
Particular case, it does not appear from the facts which have
been brought to the Board's attention in the present case whether
the provisions of Section 32 are applicable to the relationship
in question, and, in view of the fact that the bid submitted by
this group WRS not successful, the Board will not require the
filing of the formal application referred to in its telegram in
connection with the issue of ;190,000 City of Binghamton bonds."
Approved.
Letter to /Jr. Stevens, Federal Reserve Agent at the Federal
reserve Bank of Chicago, reading as follows:
"The Federal Reserve Board has received 1r. Young's letter
of June 14, 1934, with inclosures, regarding the application of
r. Frank R. Elliott for a permit under Section 32 of the Banking
Act of 1933 to serve at the some time as director and officer of
Rarris Trust and Savings Bank, Chicago, Illinois, as director of
the Elliott State Bank, Jacksonville, Illinois, and as director
and officer of The N. iI. Harris Company, Chicago, Illinois.
"In its telegram of June 12, 1934, to you in which the Board
stated that no action had been taken on ',Ir. Elliott's application
because of the lack of sufficient information, the Board did not
contemplate that further information would be submitted by him
subsequent to June 16, 1034. The Board granted the temporary
Permits mentioned in that telegram on the basis of information
then before it that beginning with June 16, 1934, The N. W. Harris
Cenpany would be in liquidation which would not involve any new
6/28/34
-22-
"business and that after that date the company would confine its
activities to the sale of its assets. The hoard pointed out in
its letters transmitting temporary permits to other directors of
The N. . Harris Company to whom such permits were :L.ranted,
conies of which letters were sent to you, that permits under Section 32 to serve The N. J. Harris Company and the member banks
named in the various applications mould not be necessary after
the company ceased to engage in the investment business and commenced liquidation on June 16, 1934. Since that date has now
passed, it is assumed that The N.V1. Harris Company is complying
with the provisions of the Banking Act of 1933, and the Board believes it would serve no useful purpose at this time to grant
retroactively a permit covering a period prior to June 1G, 1934.
It will be appreciated if you will notify Lr. hlliott accordingly."
Approved.
Letter to Lr. Stevens, Federal Reserve Agent at the Federal
Reserve hank of Chicago, reading as follows:
"Reference is /wide to your letter of June 21, 1934, in regard to the application of I]r. Calvin Fentress under Section 32 of
the Banking Act of 1933 for a permit to serve at the same time
as a director of the Barnett National bank of Jacksonville, Jacksonville, Florida, as a director of the Personal Loan & Savings
Bank, Chicago, Illinois, and as an officer and director of Baker,
i'entress 41 Company, Chicago, Illinois. Inclosed in your letter
was a copy of a letter to you dated June 16, 1934, from 2,.r. Calvin
lentress containing additional facts concerning his application.
"The Federal Reserve Board has noted the statements in the
letter from Lr. Fentress to the effect that Baker, Fentress
ComPany made its last public offering of securities on or about June
2, 1030, and that since that date the company has devoted practically all of its time to the supervision and management of various
companies in the forest industries, and to the reorganization of
such companies. The Board has also noted the statement that
Baker, Fentress 0: L'ompany has no present plans for reengaging in
the public offering of securities, and that if at a later time
the company decides to reenter the business of underwriting and
rilakiT public offerings of securities, such decision will be
called to your attention.
"It appears from the above statements that Baker, Fentress
Company is no loner engaged in the business of purchasing,
se1lin!2 or negotiating securities and that the relationship
covered by the application of Lir. Fentress is not within the provisions of Section 32 of the i:,anking Act of 1933. Unless there
are other facts which you believe should be called to the attention
1.971
6/28/34
-23-
of the Board, it will be appreciated if you will advise the applicant accordingly."
Approved.
Letter to Ir. wood, Federal Reserve Agent at the Federal Reserve Bank of St. Louis, reading as follows:
"Reference is made to your letter dated June 16, 1-334, in
regard to the application of Mr. Louis R. Myers under Section 32
of the Banking Act of 1933 for a permit to serve at the same
time as a director of the Bankers Commercial Trust Company and
as president of the Southern Securities Company, both of Little
Rock, Arkansas. It has been noted that you state in your letter
that the Bankers Commercial Trust Company was converted into The
Commercial National Bank of Little Rock on February 12, 1934,
and that Mr. Myers' application which was submitted in December
of 1933 should be changed accordingly.
"Inclosed with your letter of June 16, 1934, was a letter
dated June 14, 1934, to Yr. C. L. Stewart, Assistant Federal Reserve Agent at the Federal Reserve Lank of St. Louis, from Mr.
C. E. Crossland, vice president and cashier of The Commercial
National Bank of Little Rock, stating that Li'. Myers has informed
Mr. Crossland that the Southern Securities Company is at present
engaged exclusively in a brokerage business and that Jr. Myers
has no intention of conducting other than a strictly brokerage
business in the future.
"The Federal Reserve hoard is of the opinion that the provisions of Section 32 are not a7plicable to a company which is engaged exclusively in a brokerage business consisting of the
Purchase and sale of securities on behalf of others in the open
market. Accordingly, it will be appreciated if you will advise
1-r• Lyers that in view of the statement contained in Li.. Crossland's letter to the effect that the Southern Securities Company
415 engaged exclusively in
a brokerage business, no permit under
oectien 32 is deemed to be necessary in connection with the relationship covered by his application."
Approved.
Letter to ir. Sargent, Assistant Federal Reserve Agent at the
l'ederal :oserve
Bank of San Francisco, reading as follows:
"Reference is made to the applications of Laidlaw
Company,
iievi York, New
York, under Section 32 of the Banking Act of 1933
for permits to servo
as 'correspondent dealer' for The Bank of
Lational Association, San Francisco, california, rid
19'72
6/23/34
-24-
"to The First Rational Bank of Lewiston, Lewiston, Idaho.
"It appears from the information contained in its applications that Laidlaw & Company conducts a banking business and a
brokerage business involving the purchase and sale of securities
on behalf of others in the open market, and that the company is
not engaged in the issue, flotation, or distribution of securities, or in purchasing and selling securities as a principal.
It is also noted that Laidlaw& Company holds funds on deposit
for the above-mentioned national banks.
"The Board believes that the provisions of Section 32 are
not applicable to a company engaged in such business, and has
therefore decided that no permits are required in connection with
the relationships between Laidlaw & Company and the above-mentioned
banks. Unless there are other facts which you believe should be
called to the Board's attention, please advise the applicant accordingly.
"The above statements should not be construed as an expression of opinion by the Board concerning the applicability of Section 21 of the Banking Act of 1933 to the business of Laidlaw&
Company. Section 21 makes it unlawful for a dealer in securities
to engage in the business of receiving deposits after June 16,
1934, but as that section provides a penalty of fine or imprisonment or both for violation of its provisions, the interpretation
of that section is a natter entirely within the jurisdiction of
the Department of Justice. Since an expression of opinion by the
Federal Reserve Board as to what would constitute a violation of
that section would not afford protection from criminal prosecution if the Department of Justice should take a contrary position,
and determine to prosecute for a violation thereof, the Federal
Reserve Board believes that it would not be appropriate to express
an.opinion upon the question of whether or not the business of
Laidlaw & Company constitutes a violation of Section 21."
Approved.
Letter to Er. Peyton, Federal Reserve Agent at the Federal Re111131*ve Bank of hinneapolis, reading as follows:
"This refers to your letter of May 25, 1934, transmitting
the application of Er. Albert L. Liner for permission under the
„9.ayton Act to
serve at the same time as director of the Batavian
gational Bank and the Citizens Loan and Investment Company, both
°f La Crosse, Wis.
"It is noted that the Citizens Loan and Investment Company
is an
,
independent loan company operating on its own capital and
1•
by the State of 'Wisconsin to make loans. It appears,
-cherefore,
that this company operates under and is subject to the
Provisions of Chapter 214 of the Laws of aisconsin of 1933
1.973
6/28/34
-25-
"relating to snail loans. Under this chapter, a corporation may
be licensed by the State Banking Department to make small loans
of the amount or value of si,300 or less, upon the compliance of
the corporation with the requirements of that chapter. A licensee
under this chapter is not authorized to receive deposits in any
form or to engage in any other typical banking functions. In
this connection it is noted that the statement of condition of
the Citizens Loan and Investment Company does not show any deposits listed among the liabilities of that company.
"After careful consideration of the application and the
Opinion of 'Losers. Geo. H. Gordon, Law & Gordon, counselors at
law, submitted therewith, the Board is of the opinion that the
Citizens Loan and Investment Company is not a bank within the
meaning of Section 6 of the Clayton Act, so as to authorize the
Federal Reserve Board to issue a permit covering the service of
Lr. Miller as director of such company and as director of the
Batavian National Bank.
"It appears, however, that the principal business of the
Citizens Loan and Investment Company consists of making character loans and engaging in automobile financin7, and that only at
rare intervals such company makes loans secured by stocks or
bonds. In this connection, you are authorized to advise Lir.
ller that if the company makes no more loans secured by
stocks or bonds within the meaning of Section 8A of the Clayton
Act his relationship described above will not be subject to such
provision of law.
"Please advise the Board promptly as to whether Lr. Miller
desires to submit any additional data and if not as to what
°ter's he proposes to take in order to comply with the provisions
of the Clayton Act."
Approved.
Letters to applicants for permits under the Clayton Act, adof approval of their applications as follows:
141"• August H. Ludwig, for permission to serve at the same time
46 a director of the West New Brighton Bank, West New Brighton,
S• I., New York, and as a director of the Federal Home Loan Lnnk
bf Newark,
Newark, New Jersey.
11r. li. H. Bright, for permission to serve at the same time as
a. director and officer of the First National Bank in Miles City,
Liles City, Montana, and as a director and officer of the Forsyth
State Bank, Forsyth, Montana.
Approved.
There were then presented the following applications for
6/204
-26-
changes in stock of Federal reserve banks:
A2211.cations for ORIGINAL Stock;
District No. 3.
Bank in Newfield, Nevfield,
New Jersey
District No. 8.
Ioonvine-Tational Bank, Boonville,
Indiana
Shares
36
36
45
Yotal
45
81
Approved.
Thereupon the meeting adjourned.
‘(6)
)6.41a2A.
koProveds
au-. cL(7
Secretary.
@FedFRASER