Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, June 8, 1934, Volume 21, Part 3

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1686
A meeting of
the Executive Committee of the Federal Reserve
13°srd was
held in Washington on Friday, June 8, 1934, at 5:30 p. m.
PRESENTS

Mr. Black, Governor
Mr. Hamlin
Mi. Szymozak
Mi.
Mr.
Mr.
Mr.

The

Morrill, Secretary
Bethea, Assistant Secretary
Carpenter, Assistant Secretary
Martin, Assistant to the Governor

Committee considered and acted upon the following matters:

Letter dated June 7, 1934, from Mr. Sproul, Secretary of the
Pederea
Reserve Banic of New York, and telegrams dated June 7, 1934,
*cm

Sargent,

Secretary of the Federal Reserve Bank of San Fran-

ci8"1 44d June 8, 1934, from Mr. Strater, Secretary of the Federal
14"e Bank of
Cleveland, and Mr. Clark, Secretary of the Federal
Rellerlre Bank of
Atlanta, all advising that, at meetings of the boards
Of dir
e--°rs on the dates stated, no changes were made in
the banks'
g schedules
of rates of discount and purchase.
Without objections noted with approval.
Memorandum dated Juno 5, 1934, from Mr. Smead, Chief of the
bilrision of
Bank Operations, recommending the appointment of Mr.
klliem
n•
Wallace as a file clerk in the division, with salary at
the
rate
of $1,500 per
annum, effective June 8, 1934, subject to his
Psasing a
satisfactory Physical examination, the recommendation was
al)Proved by
five members of the Board on
June 7, 1934.
Approved.
the

lismoorandum dated June 7, 1934, from Mr. Paulger, Chief of
Divisi
o
Of Examinations, recommending the appointment, for a




16E37

f!

6/8/34

period of thirty
days, of Miss Beverly Mathews as a stenographer in
the D
ivision of Examinations, with salary at the rate of $4.50 a day
fer each
working day, effective as of the date upon which she enters
11P°21tbe performance
of her duties.
Approved.
Memorandum dated June 7, 1904, from Mr. Paulger, Chief of the
1111444°4 of Examinations, recommending that the headquarters of Mr.
G. Re „
'
Ilrff, an assistant Federal
reserve examiner, be changed from
D41148, Texas,
to El Paso, Texas, effective June 7, 1904.
Approved.
14morandum dated May 28, 1934, from the Committee an Salaries
4"
kPelldittIreas

or

stating that, in accordance with the Board's letter

December 2, 1933
(13-934), the Federal reserve banks had submitted
at'xtements
showing the name and annual salary of each employee on
Jan
y 1,
1934, together with the salary on January 1 of last year
Or the
ial salary if
hired after January 1, 1933; that these
eitateatents

have been
checked against the personnel classification

11448 °4 file
with the Board; and that it is recommended that all Federal
reserve bani,
except Minneapolis, be advised that the salaries
"exPllyees on
January 1, 1934, as sham in the lists furnished the
13 4 d,
have been
noted with approval, and that the Federal Reserve
Or
kinneapolis be advised that the salaries of employees of the
bank
04
January 1,
ave eon noted with approval with the excep- or the
salaries of four employees,




-"ri
ik

1i

6/8/34
3alary ran
(Form A

Salary on Jan. 1
1933
1934

John

At

Carlander
Lysen
Perrian
Olstad

Examiner, Bank Dam. Dept.
Manager, Accounting Dept.
Eanager, Auditing Dept.
Equipment Mechanic,
General Service Dept.

3600-%'?4500 $2400
3300- 3600
3500
3300- 3600
3500
Special3000 appvd. 3000
by Board

34200
4000
3800
3100

action on
which is being deferred pending the receipt of additional
infor
mation. The
memorandum also stated that in checking the salary
14t3 s ubmitted
by the banks against the personnel classification plans
°little with
the Board, a number of differences were noted of a more
Or less
technical nature, and that the banks are being asked for exP14114tiens of these
differences in the proposed letters attached to
the inemorandunis
Letters to the chairmen of the various Federal reserve
banics, su
bmitted by the Comnittee on
Salaries and Expenditures with
it3Insmorandum, were approved by five
members of the Board on June 7,
1934.

Approved.
Letter

to
4rd, to,

dated Juno 7, 1934, approved by four members of the

r4r. LoClure,
Federal Reserve Agent at the Federal Reserve

134
nk Of Ralun

-Ioz

ty, readily; as follows:

ecelPt is acknowled-ed of your letter of May 29,
t°c'eth
1934,
th;
;. t er with
its inclosures, stating that you do not find that
e
°8`rd has ever been requested to
approve the appoinLment as
azii71-"er of 11i'1. C. W.
Trost, whose appointment as assistant exhe honr 1,7" aPProved by
the :board on Novamber 22, 1022, but that
,
1 01304:lad the
status of an examiner and has signed examination
thie. t? 43 such for a
number of years. You ask the approval at
tt4o a-me
itirof the
appointment
of Liz. Trost as an examiner, and
reTaest the
approval of the appointment as assistant examIL?
t
L- Donovan, an employee of the bank who had preen approved
by the Board to assist in e7Aminations of




G/8/34

-4-

"member banks
. "The Federal Reserve Board approves the appointment of Lr.
Trost as examiner and Li.. H. E. Donovan as assistant examiner in the Federal reserve agent's department of your
bank,
salary rates of ;
,
respectively.
e3,096
and
annum,
02,556
per
It ls
requested, however, that in the future, proposed promoOns to examiner
of any assistant examiner or appointments as
e_xaminer or
assistant examiner on a permanent basis of any perL6on.who had previously been designated as such on a
temporary
aslE
be
submitted
to
the
Federal
Reserve
Board
before
becoming
effective."
Approved.
Letter to the board of directors of "The Citizens Bank of

1,:adicoe
ladison, Chic, stating that, subject to the conditions preaeribe. •
cl 14 the
letter, the Loard approves the bank's application for
flOcri

Lip ln the Federal Reserve System
and for the appropriate amount
se steel_ .
111 the Federal
Reserve Bank of Cleveland.
Approved.
Lettes.
,
A Gazed
June 6, 1934, approved by five meirbers of the
to ijr
"ood, Federal Reserve Agent at the Federal Reserve Bank
St. Le,.
'
418 1

reading as follows:

The Ln Y?u have
inquired whether the report of examination of _
her la ouisville Trust Company, Louisville, Kentucky, as of c o
(11ce`j, 1933, made by an examiner for the Federal Deposit
Insurion ,t1t
t:
a
L;nd on the basis of which the bank's applies.-ebruo
in the Federal Reserve System was approved
peder -rY 19,
1934, can serve as a basis for certification to the
- Deposit
Insurance Corporation.
cont .in view of the
circumstances in this case and the comments
th
lnie(..1 in your letter of January 12, 1934, regarding the
thro_,
er°11"ecs
1
of the examination, the Board is of the opinion
ly-;4110
1
report of exmmination as of October 6, 1933 may properIlicur Ve at3 the basis
for certification to the Federal Deposit
to 14:Ise
Corporation prior to July 1, 1934, in case you desire
s Your r
ecomxtendation on the basis of such report."

t

V




Approved.

)

(1

6/8/34

-5Telegram dated June 7, 1934, approved by five members of the

Board., to
Mr. ewton, Federal Reserve Agent at the Federal Reserve
Balik
of San
Francisco, reading as follows:
"Re Sargent's wire June 1, 1934 advising that State SecuritY bank, Brigham,
Utah, has not reduced the par value of its
stock from
a00,000 to .,:,50,000, board's letter of May 28, 1934
,1vas based upon
the certified statement of the cashier of the
lTnk
I
that its books showed a reduction of
.;;50,000 in capital
'
.st ock in connection with the issuance of a like
amount of capi,E1.t1
debentures. Board confirms Sargent's views that the quesl.u 0n of
removing common capital impairment by reduction or
'sessment is a separate one from that of
correctly reporting
:EIrtpital
accounts in statements of condition. Board feels, how'
r that even when correctly reported capital
inpairments
1.1(3111d be adjusted as soon as
practicable."
Approved.
Letter to
"The National aster County Bank of Kingston",
New York,
readinw as follows:
i"The
Federal Reserve Board approvos your application for
I llssion to act,
when not in contravention of State or local
as trustee,
executor, administrator, registrar of stocks
!
nd4, guardian of estaOf At
tes, assignee, receiver, committee
wh.-s idates of
lunatics,
or
in
Lily other fiduciary capacity in
colch State
bk5, trust companies or other corporations which
14: int° competition
with national banks are permitted to act
r the
laws of the State of New York, the
exercise of all
right1
.
7
1
0
11gect
to
the
provisions
of
the Federal ReAct :lartl:
r„
lations
of
the
Federal
Reserve Loard.
powe inis letter
will be your authority to exercise fiduciary
aut,
rs RS set forth
above. A formal certificate covering such
"Tizatien
will be forwarded to you in due course.
4
,
3t,t131°
ITI
ci feels that, if you are tendered any
of the
the National Ulster County Bank and
Trust
8crutj;°f
ston, Kingston, New York, you should carefully
- 26 their
'
condition and should not accept any of such
,!,17hich, through
their assumption, may be detrimental to
theat
4.erents of your
institution."

'0“r;)

LO•teti s

Approved.
Letter to
the "South Side
National Bank in St. Louis", St.
Ltissouri,
reading as follows:




1691
6/8/34
-6"The Federal Reserve Board approves your application for
Permission to act, when not in contravention of State or local
/, as trustee, executor, administrator, registrar of stocks
and bonds,
guardian of estates, assignee, receiver, committee
of estates of
lunatics, or in any other fiduciary capacity in
which State banks,
trust companies or other corporations which
come into
competition with national banks are permitted to act
under the laws
of the State of Lissouri, the exercise of all
uch rights to
be subject to the provisions of the Federal Reserve Act and
the regulations of the Federal Reserve Board.
"ihis letter will be your authority to exercise the fiduciary Powers
as set forth above. A formal certificate covering
such a
uthorization will be forwarded to you in due course."
Approved.
Letter to idr. John Luft, Cashier of The
luxedo National Bank,
111xede, Lew York,
reading as follows:
,.

is refers to the
resolution adopted by the Board of_i
rectors of The
Tuxedo
National
Bank, signifying the bank's
desire ,0
A
wnioh havesurrender its right to exercise the trust powers
been granted to it by the Federal Reserve Board.
"The, Board
Tuxed,
understands that The Tx
uedo liational Bank:
i,,,7:' l'ew York, has been discharged or otherwise properly rel
e - v eu in accordance
with the lm of all of its duties as fidut-111:Y. The
Board, therefore, has issued a formal certificate
alc3a.
;
1,
1 he luxedo
National Bank certifying that it is no longer
the .orized to exercise any of the fiduciary powers covered by
Thi Prosions of
Section 11(k) of the Federal Reserve Act.
st e
rtificate is inclosed herewith.
n thic c
your attention Leaned to the fact
hat,
under the
provisions of ,Section 11(k) of the Federal Reser e Ar.4.
bY
Z1'e-', as amended, when such a certificate has been issued
tlhall
Pederal Reserve Board to a national bank, such bank (1)
fe,s,(hen%Icl:Igbe subject to the provisions of Section 11(k)
Reserve .Act or the regulations of the Federal
haver've,Beard made pursuant thereto, (2) shall be entitled to
th.[e-curned to it
any securities which it may have deposited
Private LtDte or similar authorities for the protection of
Power? or court
cept
trusts, and (3) shall not exorcise any of the
covered by
Section 11(k) of the Federal Reserve Act exwith the
Permission of the Federal Reserve Board."
IJ

Approved.
l'etter to Lr.




alliams, Federal Reserve Agent at the Federal

1602
6/8/34
-7Reserve Bank
of Cleveland, rending as folloIrs:
"This refers to your letter of October 19, 1933, requesting
advice whether a national bank in the State of
Pennsylvania,
which had
received permission from the Federal Reserve Board to
exercise
in that trust powers prior to the passage of new legislation
State requiring an increased capital and surplus for a
competing State institution, is compelled to meet the require'
s of the State law in order that it
may continue to exercise
such powers.
In this connection, it is understood that Sections
'
101 and
413 of the Pennsylvania Bnrking and Building Loan Code
of 1033, which bee
effective as of July 1, 1033, provide for
Z;tisl111111-1111capital and surplus for organizing State banks and
companies in excess of previous requirements and that Secticns 402 and 414
require State banks and trust companies incorporated prior to
July
1, 1933, to increase their capital and
surplets
by one of several methods described therein.
8 lexnatril
Or to
September 26, 1918, the effective date of an
ii to
Section 11(k) of the Federal Reserve Act, the Federe- Reserve
Loard was authorized
To grant by
special permit to national banks applying therefor, when
not in contravention of State or local law, the
r
o
t
eolyet as trustee, executor, administrator, or registrar
dand bonds under such rules and regulations as the
sa S0
id
may prescribe'.
add ,n()
enftt
:
cy T17p26, 1918, Section 11(k) was amended so as to
rovision:
no permit shall be issued to any national banking assoon having a
capital and surplus less than the capital
:nu surplus
required by State law of State Banks, trust comv Tes, and
corporatiolis exercising such powers'.
The Board has
heretofore taken the position that the reZtement
contained in the amendment of September 26, 1918, and
0110,
per
is applicable only at the time of the granting of
not r-"to a national bank to exercise trust powers and does
a aa4guire a subsequent increase in the capital and surplus of
u,
powetr
t °nal
bank which has been granted permission to exercise
/latiela
"
r
'the Board, therefore, has consistently ruled that
1916 h-:
,
- uanks which
prior to the amendment of September 26,
lest; t'
a
tt 4 been granted trust powers with a capital and
surplus
.ell
a i ctt'13su:zpital and surplus required of State institutions
powers are not required to increase their capiirinti j_tlrplus to
the amount required by the State law of State
BoEl.rd°:11'ns exercisinc
trust powers. For the same reasons, the
°Pin'on
that
a national bank which has been
Cratted8:11
the
p
s- powers under the
provisions of Section 11(k) of
ederal Re
grEttti,
serve Act as amended, and which at the time of the
th4t 4'6 of the
Permit had the capital and surplus required by
et,
not required to increase its capital and surplus

4T




6/8/34
-8"because of a chane in the State law which requires
State inexercising trust powers to increase their capital
and surplus.
Accordingly, the Board is of the opinion that the
chalage in the law of the State of Pennsylvania referred to above
does not affect the validity of
the continued exercise of trust
P°v'ers by a national bank in that State which previously had received apermit
from the Board, and that such a national bank is
-1c)t required to increase its capital and surplus to comply with
, Provisions of the State law. In this connection, however,
understood that the Attorney General of the State of
taken the position that a national bank in that
StLate
at
exercising fiduciary powers must increase its capital and
urPlus to the same extent and in the
same manner as is required
case of State institutions exercising similar powers and
" possible,
therefore, that any national banks involved may
Ifr,fer,
to comply with the
requirements of the State authorities
her than to
stand
upon
what
the Board believes to be their
gal rights
and
to
run
the
risk
of possible court action brought
0Y the
State authorities."

l

T

approved.
Letter to Lr.
O'Connor, Comptroller of the Currency, reading
4 follows:
111-

aer '
11 accordance with yur recommendation, the
FederalReB°ard approves a reduction in the common capital stock of
leo Laconia
Lational
Lcconia,
hampshire, from
C
tarik:,)00
to
v50,000, pursuant to a plan which provides that the
to:
13. caPital
cha,7 sold to shall be increased by •50,000 of preferred stock
local interests, and that the released capital
be used to
eliminate a corresponding amount of the least,
desirable
of june2,amt4s."in the bank, all as set forth in your
meroranoum

.pproved.
Lotq.
,er to
hir. O'Connor, Comptroller of the Currency, reading

f(alows:

n, a
tioll, .."'n ccordance
with Acting Comptroller Await's recoTendacorm, 110 Feral
-04
Reserve Board aproves a reduction in the
Ltliacet -u-Pltal Stock
044
of 'The Citizens National Bank of Lancaster',
ster
TI
1,4 2 -..aw
York, from AC)0,000 to A50,000, pursuant to a
by
h Provides
the sal
that the bank's capital shall be increased
Sale o p fi
-- '*420,000 of preferred stock to the Reconstruction
'Lee C
orporation and/or others, and that the released capital,
•ed

Ile,




6/8/3,1
"tosether rith the bank's surplus, undivided profits and apPlicable reserves, shall be used to eliminate substandard assets, and to reduce the book value of lower
Grade investment
securities, all
as
set
forth
in
Lr.
Awalt's
memorandum of .1:.ay
25 1934.
Ihis action supersedes that previously taken in
this matter
as set forth in the hoard's letters dated January
16, 1933,
and January 9, 1934.
'In considering the plan under which the reduction in comfl(311 capital is to be effected it has
been noted that no provision
n1Rde for the elimination of securities
depreciation amountin:;
aPproximately
65,700, which, if considered as a loss,
oates a
material capital impairment. It is also noted that
r e examiner severely criticizes the
bank's management and dietorate.
It is assumed, however, that you have these condi;
)ns in mind and that -whenever it is feasible to do so you
vall obtain
such further corrections as may be practicable."

j
j

Approved.
Letter to Lr.
O'Connor, Comptroller of the Currency, reading
4
'8 f
01101MS:

1_
"In
accordance with the recommendation of Acting Comptrolaer of the
Currency Await, the Federal Reserve Board approves
tired uction in the
common capital stock of 'The Peoples Naa1 Bank of Brooklyn in Lew York', 1,-ew York, New York, from
,.2.50,000, pursuant to a plan which provides that
theoa,ctiitIsp:c:Pold
tal shall be increased by c';300,000 of preferred
to the Reconstruction Finance Corporation and
soota:-,Lc released
capital shall be used to eliminate a corretio _E amount of
,1 all
substandard assets and securities depreciaof may 291a79::t
.uforth in Acting Comptroller Awalt's memorancum

4

Approved.
Letter to L.
O'Connor, Comptroller of the Currency, reading

"f01301,1

11 1.

tion, .Je6111
ccordance with Actinf; Comptroller Aralt's r?commendacornmo
,
Federal Reserve Board approves a reduction in the
caPital stock of
a pi lerl'Ir "PD
'The First National Bank of Weatherly',
an
'
enniVivania, from ,;125,000 to
S31,250, pursuant to
by ;4-ii"-Lch provides
that the bank's capital shall be increased
of
a Premi
Drere--Ilm of Preferred stock to be sold to local interests at
46,875, and that the released capital, premium on
rred
'cck and a
portion of the bank's surplus and/or




1695
6/8/34

-10-

undivided profits accounts shall be used to eliminate estimated
1"ses, doubtful assets and securities depreciation, all as set
forth in Ia.. Awalt's letter of
1.]ay 26, 1934.
t
In this connection, it is understood that the common capial stock will not be reduced until the authorized issue of proerred stock is actually paid in and that the preferred stock
° be sold at a premium is to be retirable at its par
value
ather than at the
price at which sold."
Approved.
Letter dated June 7, 1934, approved by five members of the
130ard
'to 1./‘..
O'Connor, uomptroller of the Currency, reading as fol1011,rz

"In
accordance with your recommendation, the Federal heLear d approves a reduction in the
common capital stock of
he First
National Bank of Greenville', Greenville, PennsylTnia, from
.125,000 to .31,250, pursuant to a plan which proies that the
bank's capital shall be increased by the sale of
i62'500 preferred stock to the
Reconstruction Finance Corporaa °II and/or others,
and that the released capital, tor,ether with
„T°2cimately a80,000 from the bank's surplus, undivided profits
assetsreserves, shall be used to eliminate or reduce substandard
and securities
depreciation, all as set forth in your
4)randum of Lay 2, 1934.
"In consider 4
hlAOfl
the plan
der which the reduction in conp
under
ltal Is to bo
effected, it has been noted that your
ass
,ricIr recards the manaL;ement as weak and incompetent. It is
uhe'x'llned, however,
that you have this condition in mind :.,nd that
a& ever it is feasible to do so, you will require such changes
Illay be
practicable."
c
nnection with the above letter the Board gave eonsiderato a
memorandum dated
June 4, 1954, from , r. Cherry, Assistant
C1511nsel,
callinP
attention to the fact that the bank has been authorizod to
exercise trust
powers but stating that it is believed the
'oard
would be
justified in approving the reduction, notwithstanding
1;4 t4ct
that the
adjusted capital will be below the amount required
l'or the
oranization of a
State institution with trust powers, and
.Trie

:

ZT

the bealk

7,111 have
no surplus




316S6
6/8/34
-11Letter approved.
Letter to IZr. O'Connor, Comptroller of the Currency, reading
f011ows 3
"In accordance with
Acting Comptroller Analt's recommendation, the Federal
Reserve Board approves a reduction in the
.?0M1an capital
stock of 'The Conumnity National Bank of Flush4-17-g1, Flushing,
Ohio, from U0,000 to tie'35,000, pursuant to a
lita Which provides that
at the bank's capital shall be increased
4 n5,000 of preferred stock
to be sold to the Reconstruction
xe.nanee Corporation
and/Or
others,
and that the released capital
_heal be used
to
eliminate
a
corresponding
mount of the least
easirable
assets
in
the
bank,
all
as
set
forth
in Mr. Anult's
nlemorsziduz
of May 24, 1934.H

t

Approved.
Letter dated June 7,
1934, approved by five members of the
813"'cl, t^
- 4r. O'Connor,
Comptroller of the Currency, reading as follefts

accordance with Acting Comptroller of the Currency
,
1 71alt s rec
ommendation, the Federal Reserve Board approves a
0
;
auctl". in the Common capital stock of 'The Home National
Bank
au utton',
Sutton, Nest Virginia, from '0,000 to $30,000, puri aSt
!
l te a
Uplan
which provides that the bank's
capital shall be
00
liel- eased bY 0.00,000 of preferred stock to be sold to the Rererlistruction Finance Corporation and/Or
others, and that the
64sed capital shall be used
to
eliminate
a corresponding
,
E000011111t of un
satisfactorw
assets,
all
as
set
forth
in 1.1r. Await s
letter of
May 24, 1934.
Approved.
Letter to Mr.
O'Connor, Comptroller of the Currency, reading
ke fellowt:
tiots 4.n.
e0112„, theaccordance with Acting Comptroller Awalt's recomnendaFederal Reserve Board approves a reduction in the
eapital stock of
'The First National Bank of Milledge,
Milledgeville, Georgia, from 05,000 to 37,500, puriller„to a Plan
which provides that the bank's capital shall be
—"ed by the
sale of 37,500 of preferred stock to the

8144




6M4

-12-

Hu

.Reconstruction
Finance Corporation and that the released capital, together
with a portion of the bank's surplus and/or
undivided profits accounts shall be used to eliminate unsatisfactory assets in the amount of
approximately 46,300, all as
set forth
in Mr. Awalt's letter of May 29, 1934."
Approved.
Letter to Ir. O'Connor, Comptroller of the
Currency, reading
618 f°1101its

"In accordance
with Acting Comptroller Await's recomrlenda'
10n, the
Federal Reserve Board approves a reduction in the
,0211mon capital
stock of the 'First National Bank of Pelham',
Georgia, from $40,000 to $25,000, pursuant to a plan
1:111ch
provides that the bank's capital shall be increased by
0 of preferred
stock to be sold to the Reconstruction
C
Corporation,
orporation
and
that the released capital shall be
a
used to
eliminate approximately $10,000 of substandard assets
?stablish a reserve of 5,000 for losses and other
contineles, all as set
forth
in
Mr.
Amalt's
letter
of
I:ay 26,
4-a04."

Approved.
Letter to Er.
O'Connor, Comptroller of the Currency, reading
c).
fellows:
a
with the recomnendation of Acting Gomptro
' 1th
10_" Await,ccordance
the
Federal Reserve Board approves a reduction in
Trent° ”rnmen capital
stock of 'The Trenton National Bank',
.issouri,
whi
from
c
. 100,000 to $50,000, pursuant to a plan
h
b
oprovides that the bank's
shall be increased by
or preferred stock to becapital
that°
sold
to local interests, and
he released
capital shall be used
charge off or reduce
aa i—
Illin;;Jsfacto
set fortn
, . assets and/or establish a contingent fun, all
in Lir. Awalt's
memorandum of Lay 24, 1934.'
Approved.
Letter to 14:r.
O'Connor, Comptroller of the Currency, reading

%
1 1
ti0..4,
accordance with Acting Comptroller Awalt's rem
lenda'
16 Federal
Reserve Board approves a reduction in the




S8
6/8/3,1
common capital stock of 'The First National Bank of Buhl',
Buhl,
a from A5,000 to :;.20,000, pursuant to a plan
which ninrwsa"
provides that the bank's capital shall be increased by
1 0,000 of
3
preferred stock to be sold to the Reconstruction
-0.1nance Corporation and/or others, and that the released
capital shall be
used to eliminate unsatisfactory assets, as set
fertn in Li.
Awalt's memorandum of hay 25, 1934."
Approved.
Letter to :„r. O'Connor, Comptroller of the Currency, reading
as

followE:
.
"Receiot is acknowledged of your letter of June
1, 1934,
11. regard to the
proposed reduction in capital of 'The First A.a-cienal Bank of
LOME! Linda', Lora Linda, California, which was
4PPrord by the Board January 23, 1934.
'You advise that the bank now desires to
reduce its capital
.4.5'°00 and sell a like amount of preferred stock to the Reconruction Finance Corporation instead of effecting a
reduction
increase in capital af 25,000 each, as originally contem13 !.ted. It is
noted that the plan now proposed will permit the
:.,-L2.ndnation of all items classed as worse than slow by your ex.
'`w4a-111er in the
laLest report of examination, and all depreciation
133.
securities.
it
In accordance
with your recommendation, the Board amends
e,s,Previeus approval to provide for a reduction in the common
att?Ital of the
applicant bank from 50,000 to 335,000 and the
cole
A5,000 of preferred stock to the Reconstruction Finance
thrPeratten, with
the understanding that the other provisions of
c)riinal plan remain unchanged."
Approved.
Two

erea

telegrams to jr. Case, Federal Reserve Agent at the Fed-

Reserve Bank of
New York, stating that the Board has given con-

Ilideration to
the applications of the "Atlas Corporation", Jersey City,
:r
°- uereY,
and the
"Pacific Eastern Corporation", New York, 1,011/ York,
t°r
'v-otit{);
permits under the authority of section 5144 of the Revised
tiAtes of
the
United States, as amended, entitling such organizatt,
'
114 to
vote the
stock which they (win or control in the "American
C Pany",
San Francisco, California, and has authorized the




16(20
6/8/34
-14issuance of limited
permits to the applicants for the following purPoses/
"At any time prior to August 1, 1934, to act upon a proPosal or
proposals to create, issue and sell to the Reconstruction Finance Corporation preferred stock of
such trust company
having a par value of seven million, five hundred thousand
d°11Ars (S7,500,000), to reduce the common stock of such trust
company from ten million
dollars (0.0,000,000) to seven million,
five hundred
thousand dollars ($7,500,000) and to make such
Amendments to the certificate of incorporation or articles of
association and/Or by-laws of said trust company and to take
such other
action as shall be necessary to effect such purposes,
!"(Ivided that such
proposal or proposals shall be in accordance
Iiflth a plan
or plans which shnll be satisfactory to the Federal
le?erve Agent
at the Federal Reserve Bank of San Francisco and
auich shall
have been approved by the appropriate supervisory
including, with respect to the reduction of common
th F
C:
=3
y
. Reserve Board; also to elect directors of
and to conduct such other matters of a routine
_ ture as are
ordinarily
acted upon at the annual meetings of
110.11 trust company.”
The,
'
L elegrAlas authorized the agent to have
prepared by counsel for the
Federal
reserve bank, and to
issue to the Atlas Corporation and the
Pacific
Eastern Corp
oration, limited voting permits in accordance
17itil the
telegneLMS, The telegrams also requested that, upon the issulco to
—o a
pplicants of the limited voting permits above authorized,
tha elent
wire the
Federal Reserve Agent at the Federal Reserve Bank
°I' 44
Francisco to that
effect.
Approved.
tXl

CO
:
nection with the above there NUS presented a telegram
t°
evIton
4z1 ,irealcisc
o. Federal
Reserve AJ;ent at the Federal Reserve Bank of
EIPPlioation of

stating that the Board has 7,iven consideration to the
the "
American Company", San Francisco, California,

()Is

4

Ir°til

Permit unaer the
authority of section 5144 of the Revised




17(10
6/8/34
-15S
tErtutes of Idle
United States: as amended, entitling such organization to
vote tho stock which it owns or controls in the "American
Trust
CompanY", San Francisco: California, and has autnorized the
'811ance of a limited permit to the applicant, subject to the following
condition:
hereb:iihatprior to the issuance of the limited voting permit
authorized, you shall be advised by the Federal Reserve
AGent
u
a- -ew
York that pursuant to Board's AliCIGAR telegrams of
;
701? date
herewith he has issued to Atlas Corporation and
_ aelfle Eastern Corporation limited voting
permits respectively
authorIzed by such
telegrams."
and for
the
following purposes:

hn

t?sailt any time prior to August 1, 1934, to act upon a proproposals to create, issue and sell to the ReconstruchlOn Fance
in
Corporation preferred stock of such trust company
41711.11:67 a Par value of seven million, five hundred thousand
cf-,:ars (Q7,500,000), to reduce the
common stock of such trust
,r"PanY from ten
million
dollars
(10,000,000)
to seven million,
'Ive hundred
thousand dollars (7,500,000) and to make such
a_elldments to the
certificate of incorporation or articles of
8142!°ciation and/or
by-law% of said trust company and to take
,en other
vrovided thaction as shall be necessary to effect such purposes,
at such proposal or
dth a
proposals shall be in accordance
Plan or plans
which shall be satisfactory to the Federal
14:111svel ent at the Federal Reserve Bank of San Francisco and
attl, - suall have
been approved by the appropriate supervisory
the?rities, includinP-, with
respect to the reduction of common
ellol
atoeiK:
Federal
Reserve
Board; also to elect directors of
routitruz;t
c°mPany and to conduct such other matters of a
n.7, nature
as are ordinarily acted upon at ,he annual meet-6 0- such
trust company."
c "Cram
autfIOrized the agent to have prepared by counsel for the

?ed"al re8er
"bank- and to issue to the American Company, a limited
lic)till{)' Permit
in a
ccordance with the telegram• The telegram also regitle8ted
that, upon
the issuance of the limited
voting permit above
a41th°rited, the agent,
addition
vdser
to the usual notification to the
111kIrd) 4dViSe
the
Feder::
Agent at the Federal Reserve Bank




a

0/34

-16-

nem York or such issuance in order that his records may be camPlete.
Approved, together with a letter to Mr.
Newton, Federal Reserve Agent at the Federal
Reserve Bank of San Francisco, reading as
follows:
Reference is made to Assistant Federal Reserve Agent Sart;ent's letter of February 9, 1934, recommending favorably the
Proposed reduction in common capital stock of the 'American
7USt Companyt, San
Francisco, California, from :)10,000,000 to
Z11
7 52°,000, Pursuant
'
pursuant to a plan which provides for the sale to
Finance Corporation of ,;.7,500,000 pax value
preferred stock and provides also that the released capital
, 2,4500,000, to ether
with c6,000,000 of the surplus fund, be
"sed for the
elimination of substandard assets and establishing
reserves.
In accordance with your recomrendation, the Board approves
tcheowritediuonetsion in common capital stock subject to the following
1, That
prior to the time when such reduction in capital is
effected the bank's capital shall be increased by the sale
at par of 0,500,000 par value preferred stock to the Roc
onstruction Finttlice Corporation, and, without reducing
the aggregate
amount of its capital stock and surplus below 419
,000,000, such banir shall charge off or otherwise
eliminate, if it has not already done so, losses of
7$216,555 on loans and other assets as shown in the rePort of an examination made by an examiner for the Federal Reserve Bank of an Francisco as of
October 24, 1933,
and all other
depreciation on stocks, defaulted bonds and
°II securities other than those in the four highest grades
as classified by a recognized investment service organization
n gradingregularly engaged in the business of rating or
securities.
exte
)
012 are requested to
advise the Board as to the nature and
"
1 or the
eliminations made by the bank."
1 lsgram dated June 7, 1934, approved by five members of the
13(3ard, to
mr.
Peyton, Federal Reserve Agent at the Federal Reserve
ilk
of
Linneapolis, stating that the Board has given consideration
to th
6

aPPlication of the "First Bank Stock Corporation",
lanneapolis,
nota, for
a votino.
permit under the authority of section 5144 of




.1..
0

6/8/34
Reiriried

-17Statutes of the United States, as amended, entitling such

c)rgallization to vpte the stock which it owns or controls in "The Nati0
rial Bank of
Jamestown", Jamestown, North Dakota, and has authorized
the issuance of
a limited permit to the applicant for the following
Pul'Posesz
"At any time prior to August 1, 1934, to act upon a proor proposals to create, issue and sell to the
Reconstruction
Fillance Corporation preferred stock of such bank having a par
7
balue
, of
fifty thousand dollars (50,000) and to reduce the
tan-h- s common stock from one hundred thousand dollars (0100,000)
fifty thousand dollars (50,000) and to make such amendments
o the
bank i s articles of association and to take such other acOr°n as shall be necessary to effect such purposes; such
proposal
ProPosals to be in accordance with a plan or plans which shall
r been approved by the appropriate supervisory authorities and
vjhtch sha.11 be
satisfactory to the Federal Reserve Agent at the
Fe°O
Feder
Reserve Bank of idinneapolis."
The
cslegram
also authorized the agent to have prepared by counsel for
the ,
rederal

reserve bank, and to issue to the First Bank Stock Corporaticri, a .
12-Thited voting permit in accordance with the telegram.
Approved, together with a letter, also
dated June 7, 19:34, and approved by five members
or the Board, to L. O'Connor, Comptroller of
the Currency, reading as follows:
Res8"In

accordance with Lir. Await's recommendation, the Federal
reduction in the common capital stock
Jamestown', Jamestovn, North Dakota,
50,0u0, pursuant to a planwhich provides that
stoci,a1.41
.k s eaPital shall be increased by '4,50,000 of preferred
the 'e be sold to the 1,:econstruction Finance Corpora-bion, that
orSe`
'-otuit
'relea
A4 capital shall be used to eliminate a corresponding
&lad
uns'atisfactory assets or to set up reserves therefor,
that
05,00o the Pirst Bank Stock Corporation shall contribute
t° atlePrient the undivided profits account, all as set
forth
11111
• Awalt's memora.ndum of May 22, 1934.
3./12-La 11
connection, the Board feels that where, as in this
funds are a.vo.ilable, it would be preferable if
losae--°11 were made
for the elimination of at least all estimated
8 ttncl cle
preciaidon in securities in the lower grades, rather
of ,1:n ve BOar
d approves a
,
r0
National Bank of
tlernb
$1 ',
00000 to




r)
c
4

6/8/34
-18"than to carry such unsatisfactory assets in the
bank, even thou7h
offset by reserves, unless such
rc.servcs are specifically allo?,ted to and
deducted from the respective accounts in all published statemonts of condition. It is assumed, however, that
Your office
will require such charge-offs as may be found desirable and
practicable when the adjustments are consummated."
Letter to Er. Williams, Federal Reserve Agent at the Federal
48erve Bank of
Cleveland, readinir, as follows:
"rihis is in reply to Lir. Fletcher's letter of Lay 15, 1934,
tal
t FraTraph of which he asks whether the Board agrees
his
(
1)
11/cixythat the Puritan aater Company of Pittsburgh,
be an affiliate of Peoples-Pittsburgh Trust
p°111PanYs a member bank, also situated in Pittsburgh. It appears
om letters,
copies of which were forwarded by hr. Fletcher,
(7
.;
(1110
) per cent of the stock of the Puritan Water Company is
the First National Bank at Pittsburgh and that 27,247
l
ò'u"es of stock
of the First National Bank at Pittsburgh are
n" by the Peoples
-Pittsbh
-Pittsburgh Trust Company
an 'in its own right'
71 1 2236 shares are held by
it
in
a
fiduciary
capacity. It is
ttso
understood that the last election of directors of the Naeral Bank was
held in January, 1934, et which election a total
'5,,970 shares were
voted.
Ilhe Board is
entirely in accord with the opinion expressed
Pletcher's letters that the fact that certain shares which
are
orl,held
in a
fiduciary capacity are not registered in the name
earirPlesPittsburgh Trust Company, as trustee, does not neces'Y mean that they are
not controlled by that company. It
ttha° aP,Tees that
the only way in which to determine whether such
41
aro controlled by the 'rust Company is to obtain additionoth'
e °1Mation as to the terms of
the deeds of trust, wills, or
which they are held, with particular
mMti
:
a
to the
Of
in which it is determined how the shares
fa,
I°ok are to be
voted
and to the manner in which they are in
VOted.

j

tt

?IIr
4elao
rte
r tyavoid
misunderstanding in other cases and to
in which the Board interprets the statutory
tiollTion of an
affiliate it is advisable to discuss an addiis cal minor point even at the risk of explaining a natter Witich
Ititte'
aeadY
, clear to you.
It seems from the correspondence subMr- Fletcher's letter that both he and the Trust
:trust .Z...21ssume that
the affiliation in question exists if the
sharn
144..Ni controls more than 50 per centum of the number ef
dire4
- ,
f the Hat
ional Bank voted at the preceding election of
to doZc °f tho Bank. In the particLlar case there is no reason
su„trc that
this is so, but under the definition the important
'°11 is whether the
Trust Company controls, directly or
rraj




1_704

6/8/34
-19-

it •
4„
1
,"
11 rectlY, more than 50 per centum of the number of shares of
Viater Company which were voted for the election of directors
of the Water ,
ompany at the preceding election, end to decide
thi8 it is necessarv to determine not whether the Trust Company
(311trol5 more than 50 per centum of the number of shares of the
'
etoted for the election of its directors at the preceding
on, but whether the Trust Company controls the Bank. The
distinction is
of significance in very few cases but it would be
itiportant if we
were to imagine That the ?coples-Pittsburgh
Trust ComPany controls 28,000 shares of the Bank which mould be
111°re than
.an 50 per centum of the number of shares voted at the
4st
of the Bank's directors but loss than 50 per centum
of the total
number of shares outstanding and that a competing
.- 11-12t company owns 31,000 shares of the stock of the Bank -which
per cent, of the total number of shares outstanding.
f;v-aese facts the
Trust Company would be a holding company af,;,'-iate of the Lank because it would fall within one of the
"i':!),?ific categories of the definition of a holding company afn
ate in section 2(c) of the Banking Act of 1933. It is
;-,-?eable, however, that control .34
'the Bank would be in the com'
e iaZ tTust company and not in the Peoples-Pittsburgh Trust ComIf Peoples-Pittsburgh Trust Company did not control the
1707
. ' it 'would not indirectly control any of the stock of the
aff% C°mPanY with the result taat the -liater Company would be an
Of ?"-iate of the Bank and of the competing trust company but not:
-che, Pe°Ples-Pittsbur,;h Trust Company.
the l it is not clear to the Board that die statement made in
7, 1c
to the last paragraph of Lr. Fletcheri s
letter of Yay
hater, in correct. It is there suggested that the
Puritan
pan
Company is an affiliate of Peoples-Pittsburgh Trust ComburYBecause
„
it
1,Z1.1 which is is a subsidiary of First National Bank nt 2ittsan affiliate of Peoples-Pittsburgh Trust Company
i:;;I
t':ln the
statutory definition by reason of the procence of
00171,ric'eking directors on the boards of the Bank and the Trust
thelnY' Under
•the
definition
of an affiliate in section 2(b)
Company
if thur ..a
is
an
affiliate of the Trust Company
''atr
°
major?. tilL Company controls in any manner the election of a
that '
t
3t
i Y of the directors of the Y.ater Company. It is cle
clear,
of eer,,pre
le
sence on the board of directors of the 1;ationa1 Bank
rnay
directors of the Trust
Company is an element whch
be
doen
411113°rtant in decidin,whether or not the Trust Company
seerize)
tcercise such
control but the statement made by Lir. Pletcher
becau,2 indicate that
the affiliation necessarily results solely
the Boardof the community
of directors and it is the opinion of
that no such interpretetion is justified in the light
°f the
Pcscibl,P!elfic language of the statutory definition. It is
uhnt the
Board has misconstrued Kr. Fletcher's statelettoll-st,is
recognized, of course,hr.
Fletcher closes
that
co
LY stating that he expresses no final opinion upon

En.




1705
6/8/34

-20-

"the point but
Trust company. merely calls the latter to the attention of the
"Prom information available to the Board it appears that
!he Dormont
Savins and Trust Company, Dormont, i'ennsylvania, a
r,tate member bank, is a subsidiary of the
Peoples-Pittsburgh
Just Compan y.
If the Puritan nater Company is indirectly conro
.11ed by the
Peoples-Pittsburgh Trust Company, which awns a
D.lajority of the stock of the Dormont Savings and Trust Company,
2
1. aa affiliate of the latter under the terms of section
and should be so reported by Dormont Savings and Trust
mPany in response to future calls."
Approved.
Telegram
to Lr. Williams, Federal Reserve Agent at the Federal
Reser__ vt$ ballk of
Cleveland, reading as follows:
F. "Referring hr.
Fletcher's wire June 4 iNARRATEDLY The
alr2t LLtional Bank
of Stockport, Chio, 18 shares, June 6',
on telegram was deferred pending receipt of formal
appliCation
i;
as number of shares of Federal Reserve stock applied for
ttuicated insufficient capital
for organization of a new national
riloll1 and as
Oranization
Divis4
on of Comptroller's office had no
tice
of proposed organization of such bank. It now appears
or-c this is not a newly organized bank but proposed
reopening
be
:
1111/1k whose Federal Reserve bank stock was
canceled
Septem
wn
;29, 1933, on
application of receiver and that subject bank
lleensed by
Secretary of Treasury to resume business on June
bi ut l're understand
Comptroller's office has not been notified
1.11er that
bank has been returned to board of directors.
Pircit ;3Tc)ard approves issue of 16 shares of stock in name of The
Aatiohal Bank of Stockport, Stockport, Ohio, effective if
the bank is
,!
he
%01( 1r
authorized by Comptroller of Currenc', to
ut for
business."

t

Approved.
14erils:Tandum dated June 5, 1934, from
glaite

Smead, Chief of the

1°11 °f l''arlk Operations, stating that, in view of the fact that
111111211. °f

t1Pit6-1

notes slid

elltIk
'
ee ill the
Cr

State member banks have issued preferred stock or
debentures, it is necessary to make a number of

501W1flual report of earnings and dividends, form 107,

thIlt it may reflect
the amount of such capital funds




17CP:
6/8/34

-21-

(314ctandins, the anount set aside for the retirement thereof, and the
elaelalt or dividends end/or interest paid thereon, and recommending
that the form
be revised as indicated on the copy attached to the
MB/noreaTiqM.

The memorandum stated also that it is understood that

the office of the
Comptroller of the Currency has made similar changes
Info
rm 2129 used
by national banks in reporting earnings and dividends.
Thn
-recommendation was approved by five members of the Board on June 7,
1934,

Approved.
Letter dated June 6, 1934, approved by five members
of the
4t)r
('
t 14r. Crane, Deputy Governor
'
of the Federal Reserve Bank of
4°17 York
readans as follows:
-Ln accordance
with the request contained in your letter of
-ixY 31, 1934,
the Federal Reserve Board approves the action of
Ys°11.r d
irectors in authorizing the officers of the Federal Re8.11k of Now York to open and maintain
an account on the
ee°4 of the bank
in the name of the Banco de Eexico and to carry
operations
in this market for that bank along substantially
tee same general lines and
subject to substantially the same
Eterras and oaaditions as for other foreign central
banks having
°01-Ints. with
you.
relat
:
/t,
is noted that the action of your directors restricts the
4-0n.0 to be
established with the Banco de Lexie° to the opena ono-way account and it will be appreciated if you will
0 the
the
Board for its records a copy of your letter to
de Lexie°, setting forth the terms and conditions upon
WhICh
n , account with that institution will be opened and maintamed
d.tionso
t.
co
t,ether with a copy of the bank's acceptance of the
n I
Your
letter states that, if the opening of the account is
z- oved
41)1,,r,
, Your bank will offer a participation in the account
the
0ther
to
pro,7e
Federal reserve banks. The Federal Reserve Board apzerve%the
Participation in the account by any of the Federal redreor,e-anks which may desire to do
so, and letters are being adt°daY to the chairmen of the banks advising them
accord-

fel%n




Approved.

17C7
6/8/34

-22Letter to Ea.. Stevens, Federal Reserve Agent at the Federal

Reserve Bank of
Chicago, reading as follows:
"Receipt is acknouledged of your letter of L'ay 22, 1934,
..11ggesting a conference of the trust examiners for the various
rederal reserve bsnks and asking whether the Board would appr°ve of your calling such a conference. It is noted that the
other Federal
Reserve Agents concur in the opinion that such a
conference would be desirable.
"The Board believes that such a conference mould be helpin coordinating
the work of the trust e:mminers and in
de
,eveloping
satisfactory procedure for the examination of trust
uePartments, but suggests that the conference be held sometime
t!le first part of 6eptember in order that the newly appointed
trt
examiners may have an opportunity of obtaining a somewhat
'!roader background
of actual experience as a basis for the dis:ns. It is suggested, also, that consideration be given
advisability of having the conference attended by the
u:.stant Federal Reserve Agents in charge of examinirr; work, as
1 as by the trust
examiners. It is believed that in the cirlv
ances it would be desirable to hold the conference in
a
shlngton.
tel,_"In order that the conference may be most. helpful, it is
pet-Leved that
careful consideraion should be given to the prevara.tion of the
program, which should then be submitted to the
thulsozan: and the Board well in advance of the meetin7,
,those attending the conference to come fully prepared for
the discussions."

F4

Lpproved.
Letter
1301a,
to

the

dated June 6, 1934, approved by five members of the

Covernors of all Federal reserve banks, reading as fol-

"The report
of the comnittee on the function of custodies
ceireder hi
Reserve banlo dated March 11, 1927, which Was retajed and approved by the May 1927 Governors' Conference conthe f-ol -awing
question and recommendation:
zeeuri 4. Should Federal
reserve banks receive for safekeeping
show,
,ties wIlich are
the property of member banks, and, if so,
941Y distinction be made as to the location of the member
bek*
cit ; that is, should the same service be rendered to both
cI
country banks
The
Federal reserve banks are all rendering a safekeeping
service to their member banks and it is doubtful if the




1708
6/8/34
-23"banks could avoid the rendering of this service to at
least a limited e:Ktent, even if they desired to do so.
For instance, the banks necessarily hold large amounts
of securities as collateral to loans. The loans are
paid off and the securities generally are permitted to
remain with the reserve bank as a matter of convenience
and in anticipation of the need for further borrowing.
Securities so held, even though originally pledged as
collaberal, are held in safekeeping and it would be
very difficult, if not quite impossible, to avoid the
holding of securities in such cases. In addition, a
large number of bank have lodged with their Federal reserve banks for safekeeping all or a substantial part of
their security holdings. In some districts the reserve
banks are already holding a majority of all of the securities owned by the country member banks within the
districts. This represents a service of very great value
to the country menber bank and, incidentally
, to the
public interest generally, for the reason that the majority of country banks do not have vaults of proper
strength for the safeguarding of their property. Your
committee believes that the value of this service to the
member banks is far beyond its comparatively small cost
to the Federal
Reserve System and that it is a service
vhich is incident to the maintenance of the reserve actit Itcount.
recommends, therefore, that the Federvl reserve banks
receive for safekeeping securities which are the property of their
country member banks. As to whether or
not this servic
e should be rendered to both city and
country banks, it is the view of the committee that in
general the policy should be to limit the safekeeping
of securities to member
banks outside of reserve and
branch cities, but that the reserv banks should
e
e;:ercise discretion in
the case of banks which do not have
ade quate
vault protection of their awn, regardless of
uR
location'.
jes to the Board's letter B-905 o July 12, 1933, rehe
Pi
gardilic,et
Reserve
extent and cost of the service rendered by Federal
zeeurit4banks to member banks and others in the safekeeping
of
the `-, 'el3 indicate that
Reserv
banks
severa
are
e
follow
not
l
ing
for soarlirmi
ttee's recamnendation
as quoted above but are accepting
4re th ?k°ePing all securities tendered by member banks, which
cated rr Property
, without regard to thether the banks are lotReserve bank
or branch city or outside such cities.
"The
1 Reserve hoard is in accord with the abovequoted g0
Of ti "ttee recommendation to the Governors' Conference and
there), le °Pinion that the
Federal Reserve banks should be guided
'Ys Th0 board
recognizes, however, that at times it may be




6/8/34
-24"to the
interest of the Federal Reserve banks to hold in safekeeping (or in 'collateral account' although not actually
Pledged as security for borrowings or deposits), for member
banks located in Federal Reserve bank and branch cities, United
States Government securities which are the exclusive property
of such member
banks, particularly when the securities are being
used from time
to
time as collateral to borrowings from the Federal
Reserve banks, and interposes no objections to Federal Reserve banks
rendering member banks this service. It feels, howr,ex-, that this
service should not be rendered by the Federal
.Leserve banks for local member banks with adequate vault facilisu?es except for
limited periods and to the extent that it contributes to the
efficient and economical operation of the Reserve
banks.

r

It is noted from the replies to the Board's letter of July
1933, that some of the Reserve banks are holding in custody
member banks securities pledged by such banks as collateral
.0 loans
?s of theobtained by them from their correspondents. The Board
opinion that this service should not be rendered except
inemergency cases. It is also noted that at some of the Re:
erve banks
securities are being hold in safekeeping for the
c°unt of various receivers of closed banks. In this connecthe Board feels that, while there is no objection to retain4g the
securities held in safekeepin,; at the time of suspension
member bank until the receiver has had an opportunity to
'
7 other
11e
arrangements, nedeposits
w
of securities should not
e
accepted.
roe. "The Board
recognizes that there may be valid and persuasive
ke 8?lic why the Reserve banks should wish to receive for safe,071nr securities
pledged by a member bank to secure public de',.ente and that
an anendment of the Federal Reserve Act is
desirable in order that the Reserve banks may be
pa
Bot;!-,fleally authorized to do so.
Please, therefore, advise the
the
of Your views as to the desirability of an amendment of
colua
'
aw in this respect
and furnish any suggestions vinich you or
or cc!!! for Your bank desire to make with respect to the scope
..Lent of such
amendment.
1etter1 84mrrAry statement (B-916) of the replies to the 3card's
°f July 12, is inclosed for your information."

j

4proved.
Letter
dated June 6, 1934, approved by five members of the
130a-rd,
to 14r.
C
urtiss, Chairman of the Federal Reserve Bank of Boston,
re4dilql as
follows:
"he Board
has reviewed the report of examination of the




1710
6/8/34
-25"Federal Reserve Bank of Boston as of April 14, 1931, copies of
which were left
with you end Governor Young.
it has been reported that because of the inadequate number
°f employees in the Auditing
Department and the volume of work
handled in the Gollection and Transit Departments,
it has not
been possible, mitilout seriously
interfering with the operations
of the
departments, to carry out the recommendation made at the
time of the
previous examination (October 7, 1933) that audits
eh departments be enlarged in scope so as
to include a con-c!roluon
incoming nail for a period of time subsequent to the
date or the
audits. The Board feels that if possible audits of
the Collection and
Transit Departments should be made periodically
.,long the lines
recommended
by the examiner. Since, however,
for the
reasons stated, you do not feel that audits of the Colion and Transit
Departments of your bank can be made in such
111811110r, alternative plans
should be worked out which would rein equally thoroush audits of the
departments. It has been
repoted
that some such plans were under consideration, and the
11rd would be
interested in learning what plans have been
adopted.
It h as been
observed (pa;e 47) that securities are being
el
in safekeeping for the account of receivers
of various
130
:
87;(1 l'anks, and it will be appreciated if you will advise the
u as to the nature of
such safekeeping accounts. In this
COnn,s-a.
to
't-vzlon, the Board feels that,
-4hile there is no objection
a_retaining the securities held in safekeeping at the time
of
of a member bank until the receiver has had an opaho ---,Ay to make other arrangements,
new deposits of securities
uld not Le accepted.
,
Joard notes that the question of effecting corrections
c)f matters
criticized in connection with the examinations of
0 member
banks was discussed with you by its examiner and is
'
.3arl.lb ed to learn that
definite action will be taken by your clothe merit Promptly to effect
corrictions of matters criticized in
tioj
eEc)rts of examination of State member banks if such correc'
n"ave not been obtained by the
State supervisory authorities.
ertiti After the report and
this letter have received the considthe 211 of the Board of
Directors of the Federal Reserve Bank,
beela °ttrd would
appreciate
advice from you as to villat action has
or will
be taken on the matters discussed."
Approved.
Letter
131.rd, to

dated June 6, 1934, approved by
five members of the
ood, Federal Reserve Agent at the Federal Reserve
Bank

or

readin{; as foliows:




J1_711
6/8/3.1
-26"This refers to a letter dated April 4, 1934,
to the Federal Rese
rve Board from Lr. James H. Grover, President of St.
Louis Union Trust Company, it. Loui
s, Missouri, a copy of which
Ms forwarded
to the Board with a letter dated May 4, 1934, from
' • C. M. Stewart, Assistant Fede
ral Reserve Agent at St. Louis.
Grover states in his letter that it
has now been determined
that St.
Louis Union Trust Company is not a 'holding company
affiliate' of the Firs
t National Bank in A. Louis within the
meaning of the defi
nition in Section 2(c) of the Banking Act of
1933, since at
the last election of directors of the First ilational Bank, the
St. Louis -union Trust Company 'did not vote 50,:,
of the
shares of stock voted at that election, even includin
allcf
g
its own stock and stock that
was voted in various capacisuch as trustee, or agent,
or attorney-in-fact, * * * •
"The Board does not have at hand sufficie
nt information to
enable it to
determine whether or not St. Louis Union Trust Corn"Y is ncoa a
holdinL, company affiliate of the First National
'
:
t
- and it is clear that the facts set fort
h in Mr. Grover's lotter are
not sufficiently comp
lete to permit a determination. In
ic/cidinG whether a
corporation is a holding company affiliate it
,
3
, necessary to
ascertain the extent of its ownership cr control
0' the stock of
a subsidiary member bank and the existence of
such
ownership or control is to be determin
ed from facts as they
exist at
the time of the determinatio
n,
not
from the facts which
existed at the
c
time of the last election of directors. As Lir.
vot
°17
,..r does not state whe-Li
er St. Louis Union Trust Company
all of the
stoc
k
whic
at the time of the election it
h
'ed or
or
controlled and also fails to disclose any changes
of
i:
4T'shiP or control
which have taken place since such time, it
J-Er
ssible to determine whet
•
her his conclusion is correct.
.
1:1t
la inco hout mcaninr to indicate that Mr. Grover's conclusi
on
_, 0 _ rrect,
the Board is of the opinion that the foregoin
1 ul
17a_
lo d be
g
brought to Mr. Grover's attention in orde that
r
there
f? no /rdsunde
rstanding as to the possibility that the Board
filip.tnd 'that the Trus
t Company is still a holding company afof
and that a voting
permit may be necessary if the stock
vot9,1° national bank whic
h it awns or controls is to be validly
fy
In this conn
ection it is deemed advisable that you satisYourself
conci
on the question and
forward to the Board your awn
stocklTsi°48 and the reasons therefor
. In determinin; whether
oontr rld by the
Trust Gompany in a fiduciary relationship is
Yclxr
by it within the moaning of the statutor defi
y
nition,
19z4, ..%:ention
is called to the Board's letter date
Apri
d
l
17,
4-7871\
serve ‘
Bank
ar,,
ell c
oat
s1:
. Federal Reserve Agent at the Federal Rent,
terminille Board
has no objection to deferring the requeste dod
if in your
opinion either the advisability of utilE
future exam
ination of the Trust Company or any other




6/8/34
-27It
reason justifies the delay."
Approved.
Letter dated June 6, 1954, approved by five members of the
Board, to
Senator Fletcher, Chairman of the Committee on Banking and
Currency of the
United States Senate, reading as follows:
c
"Receipt is acknowledged of the letter from the Acting
lerk of your
Committee, dated May 24, 1934, requesting a rePort on S.
3666,
entitled 'A Bill to amend section 61 (relating
to
deposits of bnrkrupt estates) of the Act entitled "An Act
establish
a uniform system of bankruptcy throughout the
United States",
approved July 1, 1898'. The bill mould amend
s!otion 61 of the Bankruptcy Act so as to
authorize depositaries
(
t1
3 funds of
bankrupt estates to secure the repayment of such
almcia bY a pledge of assets, in lieu of a surety bond, and so
me to
eliminate the requirement in respect to security 'for so
,
uch ef
said deposits as are insured by the Federal Deposit
Illeurace Corporation'.
'It does not appear that
the matter is one that comes within the
the B jurisdiction of the Federal Reserve Board and, acordingly,
does not feel that it mould be proper for it to express
oPinion in respect to the desirability of such an amendment."
Approved.
Letter dated June 6, 1934, approved by five members of the
Bottrd, to
Senator Fletcher, Chairman of the Committee on Banking and
Cull'ettey or
the United States
Senate, reading as follows:
:Recsipt is
acknowledged of your letter of June 1, 1934, in
poec
" You state that you have introduced as S. 3700 the bill
proof
by the Board to
amend the last two paragraphs of section 19
be ins Federal
Reserve Act, and that the 'whole of such bill will
Bulkil.corporated in a new bnrk bill to be reintroduced by Senator
eY,
of Ohio.
ft
1408t xte Board
appreciates your prompt consideration of its reYour assistance in this matter."
Approved.
Lotter dated J

6, 1934, approved by five members of the

to Lir* R. H. Sparkman, Acting Clerk of the Committee on Banking




171_3
6/8/34
-28and C
urrency of the United States Sena
te, reading as follows:
"Ihis refers to the request containe
d in your letter of
May 31, 1934,
on behalf of the Committee on Banking and Currency of the
United States Senate, for a report on S. 3700, entitled 'A Bill
To amend section 19 of the Federal Reserve Act,
as amended,
and for other purposes'.
"Under date of May 29, 1934, the Federal Rese
rve Board addressed a letter
to the Honorable Luncan U. Fletcher, Chairman
of the
Committee on Bankinf; and Currency, transmitting a draf
t
of a Proposed bill
to amend the last two paragraphs of said
section 19 and reco
mmending its enactment; and on May 30
Sena
e tor Fletcher intr
oduced S. 3700, which is identical with
,he draft
of the bill recommended by the Board. The
Board
favors the
enactment of 6. 3700 for the reasons stated in its
tiett
he er of May 29, and in the circumstances no further report by
Board on the bill woul
d appear to be necessary."
Approved.
Bwc

Letter to
Lx. C. 0. Getter, Cashier of The First National
of Lewville,
Pennsylvania, reading as follows:
"ReeeiPt is acknowled-ed of your letter of May
8, 1934,
regard to the
payment of certain certificates of deposit
%jell You state
represent bona fide thrift accounts.
he matre 48 been the subject of previous correspondence, and you
quest the
Board to review its letter of i'ay 7, 1934,
(il the
in view
fact that the form
of certificate used by your bank contt.ns
that 'if not withdrawn for 6 or more months,
i, ?rest at the
rate of 3;; per annum will be paid'. Apparently
thel Mir impression that
the inclusion of such a provision in
,w_. e
ertificate is sufficient to constitu
te the certificate an
oftner form
of receipt', as that term is used in the defi
nition
Boa4,,savings deposit' which is containe
d in section V(a) of the
ru,s
Regulation Q.
stated in its letter of May 7, it
Board
is the view of the
that the
phra
se
'oth
er
form
rece
of
ipt'
, within the meanInustef the
requ
irem
ent
Regu
of
lati
on
'sav
that
Q
ings
depo
sits
be
is
not evidenced by a 'pass book or other form of receipt',
tte be interpreted as incl
uding a certificate of deposit
°Y its term
s contemplates that only one deposit will be
11130;7floed
thereby and that the entire amou
nt will be repaid
surrendersurrender of the certificate. The intentio of
ton
n
Regulaof a q is that
receipts for savings deposits shall be contracts
vhiche"tinuing characte
r evidencing deposits the amount of
nlaY be increased
or decreased from time to time without




1714
6/V34

-29-

"the nocessity of surren
dering the receipt or issuing another
such receipt. The provision which
you state is incorporated in
each certificate
of deposit used by your bank does not indicate
that the contra
ct set out in the certificate is one of a continuinP; character coverins deposits made from time to time, and
the fact that the certificate
may have no definite maturity is
not
determinative of the question whether the certificate is one
of the kind contem
plated by the Board in the use of the term
'Other form of
receiote 'The Board has noted your statement that you do not desire
t° issue savings pass books as your customers are familiar with
Tid
accustomed to using certificates of deposit and because you
feel that your
customers will be 'dissatisfied in not receiving
interest until from the first of the succeeding month on depsits made,
say after the 5th of the month in which deposited.'
There is no
provision in the Federal Reserve Act or in any
fegulation prescribed by the Board which requires a member bank
'
(;(1 Pay interest on
savin,-s deposits received after the 5th day
f any
month as of a period beginning on or after the first day
of the
succeeding month, but interest may lawfully be paid on
,_y_dePosit which complies with the definition of a savings de:1-t contained
in the Board's Regulation Q at a rate not in
4_,_"8 of that prescribed in such regulation commencin;; with the
ate of
receipt.
self-addressed stamped envelope inclosed with your
letter
r ls
returned herewith."
Approved.
Letter dated June
i, 1934, approved by three members of the
Boc,rd.3 t
°Li
Joseph J. Thorndike, Boston, Massachusetts, readinr, as

rou.0,,,ra

a
.urihe Federal
Reserve Board has given consideration to your
4P1?.cation under
Section 32 of the Banking Act of 1933 for a
r1?-t to serve
at the same time as vice president and director
fi _tne t‘arren
National Bank, Peabody, Massachusetts, and as of-,;ertIof
Thorndike & Allen, Boston, Massachusetts.
tio
It
pu;h thatappears from the information contained in your applicathe business of Thoradike 6: Allen is confined to the
011
ase and sale of
securities in the open market as brokers
ei,_,"e order
and for the account of others. The Board has coned that the
provisions of Section 32 are not applicable to
bri,„11 buniness, and for that reason no permit is necessary to
Your service to
the two institutions named in your applicaInt° "nformity with the provisions of Section 32.
flowever, Section BA of the Clayton Act makes it unlawful

W

4




0/34

-30-

"for any director, offjeer, or
employee of any bank, banking ass
ociation, or trust company, organized or operating under the
laws of the United States
to serve at the same time as a director, officer,
or employee of any corporation (other than a
mutual savings bank) or as a
member of a partnership which makes
leans secured by stock
or
bond
collateral, other than to its own
sub
sidiaries. The Loard is of the opinion that the carrying
of
raargin accounts involves the making of
such loans within the
Theaninz of this section; and it
appears that the carrying of
Illsr gin accounts
constitutes
a
substantial
portion of the business
of T
horndike
Allen.
t
The Federal Reserve Board is
authorized by Section 8 of
h? Clayton Act
to issue permits covering relationships between
1)
.t more than
three banking institutions which are otherwise proi hited by Section 8 or
Section 8A, if such relationships are not
reomPatible with the public interest. However,
it is not the
s practice to issue permits
authorizing
relationships
beZen national
banks and institutions carrying margin accounts
8AcalLl e it appears that one of the principal purposes of
Section
,e was to
terminate such relationships and that the issuance of
;111-ts authorizing such
relationships mould be incompatible
;Ile public interest as
declared by the Congress.
,141_
In the
circumstances, irrespective of whether or not Thorn&:
len is a banking
institution of a kind referred to in
„i _'1°/1 8, it will be necessary
for you to discontinue your ser(;;'
.rs with
one or the other of the institutions named
Acter to
above in
conform with the provisions of Section 8A of the Clayton
serl„ I:lease
advise the Federal Reserve Agent at the Federal Recom '
D ank of Boston of the
action which you take in order to
P-1.Y with
tho law."
pp roved.
terve

Letter to hr.
Case, Federal Reserve Agent at the Federal ReBank
of New
York, reading as follows:

appl."The Federal
Reserve Board has given consideration to the
1341.1kl'e tion of 1.",r.
Lewis G. harriman under Section 32 of the
Pr
Act of 1933 for a permit to serve
at the same time as
"Ident and •
tuff,
director of hanufacturers & Traders Trust Company,
0' ilew York,
D'
and as president and director of the
I.
(3,1,111t
It Corporation, Buffalo, Lew York.
Poret.
aPPears that the business of the
M.
T. Discount Corth4t 1SUch°11 is Purchasinp
and selling bankers' acceptances and
constitutes its sole business activity.
he board
tyPO
believes that bankers' acceptances are not the
Secti°: securities
which the Congress had in mind in enacting
-11 32
'and,
accordingly, that the LI.& T. Discount




171G
6/8/34

-31-

II

Corporation should not be regarded as
engaged primarily in the
business of purchasing, selling, or negotiating securities within the scope
of that section. Therefore, a permit covering the
re
lationships described in the above application is not necessary.
"Accordingly, unless there are other facts which you believe
,hould be called to the attention of the Board, it is suggested
"that you so advise the applicant."
Approved.
Telegram dated June 6, 1934, approved by three members of the
hoaPd, to Lir. Case,
Federal Reserve Agent at the Federal Reserve Bank
Of

lkry Yok,
reading as follows:
2 ollowing 141-;re received from Calkins, San Francisco:
.f
erring our wire May 28 Board's reply thirty first.
According
nevmPaper reports a group of hew York and Los An;:eles National
1111ks together with
group of security dealers have successfully
ld for eight million
state of California bonds. It would apPear that
reference in New York Times May 16 to ruli
ruling of Board
has b
een construed to mean that
permit to engage in such transi°ns is
lch are unnecessary. Unless situation is clarified banks
permitted to disregard regulations have advantage over
flanks observing
them.' Please advise if possible what banks and
'0'°!Ilers
comprised successful biddinc; group and whether in your
llen relationships were such as to reouire
permits under Sec32, giving details. It is suggested that, if you have not
sul
'
aeu.dY done so, you advise member banks in your district of
t,,ne° cf Board's ruling contained in X-7001, calling attenrei-,'° necessity for obtaining permits covering correspondent
114a4Lionships with dealers oven in connection with dealing in or
siderwl'iting types of securities described in X-7901, and cond" a
dvisability of obtaining correction by newspapers of any
the ca•tion given by their reports of the Board's ruling, such as
'
contained in
the Lew York Times for May 18, that a permit
1144 necessary
in cases of this kind."

P
o

e

Approved, together with a telegram, also
dated Juno 8, 1934, and approved by throe members of the Board, to Governor Calkins quoting
the above telegram to :.r. Case and stating the
Board will be glad to receive any further information Governor Calkins may have regarding
the matter.
Letter
dated June 60 1934, approved by five members of the




-32to Mr. Case,
Federal Reserve Agent at the Federal Reserve
88.1*Of l'ew York,
referring to the application of Yr. Emil C. Miller
Under
section 32 of the Banking Act of 1933 for a permit to serve at
the same time as
a director of the Bank of Nutley, Nutley, New JerIseY, ma as
a member of Fahnestock & Company, New York, New York, and
8tEtti31g. that, in view of the principles stated in the Board's letter
Of April 13,
1934 (X-7660), it appears that the firm of Fahnestock
411113"7 should not
be regarded as engaged primarily in the business
Of
Purchasing, selling, or negotiating securities within the meaning
crsection 32; that,
therefore, a permit covering the relationship
deeoribed in the
application is not necessary; and that, accordingly,
11111"8 there

to

are other
facts which the agent believes should be called

the at
tention of the Board, it is suggested that he so advise the
414340a/it.
Approved.
Boerd,

Letter dated June 6,
1934, approved by six members of the
-0

Case, Federal Reserve Agent at the Federal Reserve Bank

lork, reading
as follows:
-,, "The Federal
a
Reserve Board has under consideration the apvcati
on of Mr.
Romell S. Nichols under Section 32 of the
8.411k
ciiing Act of
1933 for a permit to serve at the same time as
tre
c rector of Peoples hank 6: Trust Company of Tiestfield, and as
asurer and
director of Bankers Title & Mortgage Guaranty
°111118137*/ both of
Westfield, New Jersey.
,In a letter dated January 8, 1934, from the applicant to
it Lillistin, a copy of which is annexed to the application,
lit:131)081*s that
Bankers Title et; Mortgage Guaranty Company is
fiorjer4itted to sell either guaranteed mortgages or guaranteed
e ege1Par
ticipations, but is engaged at the present time in
-7cr ng to reduce its assets to cash in order to pay
off its




171E3
6/8/34

-33-

"liabilities; that it is not seekinv; any new business nor likely
to Sell
anything but title insurance; that in the future the
company may lend money on mortgages which, in turn, will be sold,
ti10
company retaining a percentage of the mortgage interest as a
ervice charge, but that there is no immediate prospect of such
uusiness. Also, the dealer has submitted a statement which is
annexed to the
application and which stetes that the business of
said Bankers Title
Mortgage Guaranty Company does not customarilY include the underwriting, flotation and
distribution of
saourities or participations in such transactions.
"In view' of the above
information, the Board believes that
the
bankers Title
Lortgage Guaranty Company is not 'engaged
Primarily in the
business of purchasing, selling or negotiating
securities' within the scope of Section 32. Therefore, a permit
coverinE the
relationship described in this application is not
8 ;
2
di=1 1,e appreciated if you will advise the applic
"If, in the
future, the Bankers Title & Mortgage Guaranty
.c.T.Pany resuPias the
making of loans on mortgages, in accordance
rith the
"'by thjr. plan outlined by the applicant the relationship covered
application may come within the scope of Section 32, defluin on whether
the Bankers aitle & Mortgage Guaranty Company
2-110s securities
as
a part of the plan. In this connection refer'
lice is made
to the Board's letter of April 13, 1934 (X-7859).
also rotod that the appll.cart is director and president
,
otandard Securities Corporation of T.estfield, New Jerse'y,
h:Tield
-eirr Jersey, the business of which is described as a
the 1
0"
mPanY. It appears that said corporation was formed by
licant and his wife to hold their respective property;
that
the stock
aPis aimed in equal shares by the applicant, his
dol
e and the
:
aPplicant's three children; that the corporation
oval not buy or sell
securities or other property except for its
zerrba.ccount, and
then, only for the purpose of chanr;ing an investOther ZIld that since 1929 the corporation has sold no securitdes
share Ilan 87 shares of
stock in one corporation and twenty-odd
tiof
another, both of which were sold in open market.
lette„, 4 ViM of the foregoing
and in the liptht of the Board's
&floss
'°f becember
22, 1933 (X-7739) it is apparent that the busts notof.`'tandard
within the Securities Corporation of Westfield, New Jersey,
necessary
purview of Secticn 32. Therefore, it is not
for 14r. Nichols to file
coveri
an application under Section 32
,"&,. his services
with
the
last named corporation and Peoples
xrust C
ompany of .estfield.

I

3

Lpproved.
Letter dated
June 6, 1934, approved by five members of the
to r
4.1's Stevens,
Federal Reserve Agent at the Federal Reserve




17
6/8/34

-34-

Bealkof Chicago,
readins as follows:
, "Receipt is acknowledged of Mr. Young's letter dated Yay
2us 1934, regarding the application of Kr. Christian J. Golee
under Section 32 of
the Banking Act of 1933 for a permit to
”
I've at the same time as an officer and director of the Evans1
2n Trust and -javinss Bank, Evanston, Illinois, and as an of-Lleoriond diroctor of Smart C: Golee, Inc., Evanston, Illinois.
from the information contained in Mr. Young's
a PPeal's
lette'rl,t:d
from the copies of the notes and the trust deed intherein, that the notes handled by Smart & Golee, Inc.,
ere not 'securities' within the meaning of Section 32. In this
nneotion reference is made to the Board's letter of April 16,
1934 (X-7866).
_
Accordinc.,1y, the
Board has decided that no permit is re71:tlred under
Section 32 in connection with the applicant's seree to the above-rentioned institutions. It will be appreciated
You mill so advice Lr. Golee."
Approved.
Letter to Ur.
Stevens, Federal Reserve Agent at the Federal
Ite erve Ba
nkof Chicago,
reading as follows:
1034, Iteceipt is acknowledged of Ir. Young's letter of May 22,
regarding
the application of Robert F. Garrettson for a
rillit nder
Section 32 of the Banking Act of 1953 to serve as
an Officer and
director of The Lerchants National Bank and as
1:1
1 °fficer and
director of R. F. Garrettson & Company, both of
eitY, Indiann. Receipt is also acknowledged of the
cztostatic copies of a letter dated May
16, 1934, from Mr.
ci litt8on to 111r. Young, a form of mortgage and a form of prinlia
llote and interest coupon, all of which were inclosed in
lunz's letter.
Es 6,21.:°111 an e:(amination of the photostatic copies submitted
Cori
,
-4
'" of the instruments issued by Robert F. Garrettson
cip4
;111Y, in the
course of its business, the mortgase and prin.and
aPPear to be the usual type of real estate mortgage
retllamortization note used in connection with a direct
coupon'
loan on
in thestate- The document rhich is termed 'interest
is
inter:
I_ ern' o a negotiable promissory note for the payment of
f:
the
s on the
1
loan and apparently is customarily attached to
riots for
the
of the
corresponding amortization payment. The back
thee
bears a form of assignment, without recourse,
and the notes which are secured thereby.
cepari
'resi
lY,
a realY to place ait is the practice of Robert F. Garrettson!
loan and as security therefor to take back
estate mortrare
,
the
e debt being evidenced by notes for

r




1_720
6/8/34
"the payment of instalments of principal and
interest, executed
bY the mortgagor to The
Ierchants National Bank of Lichian City,
Indiana, as trustee. Subsequently, the mortgage and
notes are
assignadt a purchaser.
s letter to you the applicant makes the falloving
'The mortgage
notes or bonds that Robert F. Garrettson & Conr
Pany dealt in were secured by first
mortgages on individual
Properties and were not in any sense certificates of particix:..issued in series against pools of mortgages held in

tt

phe
T

aPPlicant also states in his answer to question 1:o. 8 on
CP-6 E. Form 99a that the dealer is
not engaged primarily in the
usilIcs of purchasinr, selling, or
negotiating securities.
,
In the light of the
foregoing, the board is of the opinion
v4.uet
he bond and
mortgae notes submitl,ed by Mr. Garrettsen are
'41°se arisinr; out of
the ordinary type of direct loan on real
'
ntate
and are not 'securities'
within the intendment of Section
Ecnd should
not
be
classified
as 'securities' in determining
who_ether an
organization engared in dealing in such obligations
°Illes,:ilithin the scope of that section.
Shouldherefores unless ',here are other facts which you believe
be
that YOU brought to the attenticn of the Board, it is suggested
notify the applicant that the relationships referred to
:
s 0141e first
paragraph of this letter do not come within the
Pe of Section 32 of
the Banking Act of 1933."
Approved.
Letter dated June 6, 1934, approved by five members of the
1-$011rd, to
're Stevens,
Federal Reserve Agent at the Federal Reserve
tkm,
Of
Chicago, reading as
follows:
nn,, e m
dtate,
Federal Reserve Board has received 14r. Young's
,
letter
C,
laY 25, 1934, regarding the
C D. Knight,
applications of C.
nr;, and L. S. Stephens under Section 32 of the
Actxig Il
Bank1933 for permits authorizing
them
to
serve
at
the
as
officers and/Or directors of the Lerchants National
idllar=:s of the Lerchants National Investment ComIllinois. It is noted that Er. Knight
his
d
thttt Zvere
connection as trust officer of the bank, and
on', h6 aPPlications
of Er. Manning and Er. Stephens are the
4 3111,‘eIS
to be
"Fro
considered.
deed i
the letters and copies of
the notes and the trust
haild141,10sed in
Lr. Young's letter, it appears that the notes
!zee , :Y the
Merchants National Investment Company are not
Ilrltles, within
the meaninf, of Section 32. In this




1721
1

6/6/34
-36ft
connection, reference is made to the Beard's letter of April 16,
1934 (X-7866).
"The Board therefore agrees with Mr.
Young's suggestion
that no
permits are reouired covering the relationships in clues1o• It
1 be appreciated if you will advise the applicants
000r dixigly."
Approved.
Letter to hir. Stevens, Federal Reserve Agent at
the Federal
,ve Bank
of Chicago, reading as follows:
11
The Board has given consideration to 1.1r. Young's letter
°f Lay 14, 1934,
replying to the Board's letter to you dated
,Pril 25,
1934 regardin the applications under Section 32 of
the
1,
Banking Act of 1933 of C. Roy
cCanna, G. A. Uebele, S. I.
PnardY, Fred .1. New, James li.
lairphy, George A. Harper, E. C.
Oann on
117
.1t,%‘:. L. LcCarthy to serve at the same time the Bank
of
Burl;
Burlin-ton
—
gage
iscon-ir and the Burliirton Loft—
dt—
Investment Company, Burlington, lisconsin. The Board has
.80 examined
the photostatic copy of Lisconsin First Mortgage
uollateral Irust Bond
issued by the Burlington Mortgage Invest4
11 11t Company and
the photostatic copies of financial statements
comPany for the years 1931, 1932 and 1933 which were
el()the
incod in
Young's letter.
W5 "It aPpears that the Burlington Mortgage Investment Company
Curedincorrated for the purpose of furnishing investments seci,
by first
mortgages on local real estate; that the bonds
bee issued by the
company in denominations of y100 and ,500 each,
bn7,?°uPens for the
payment of interest semi-annually, and are
i,11 °40 to
c'Zt they bearer at the and of a period not exceeding six years;
are issued in
series not exceeding $50,000 and are sebY first
mortgages on real estate totaling at least the
to tile111(3unt. It further
appears that the mortgages are allotted
Particular series of bonds which they secure and are as1341,u, pr
esumably by the mortgage company, to the Bank of
trti
ton and to lir.
Harper, as co trustees,under a deed of
executed
for that purpose. It appears that the company
ele
al
business other than has been here described.
It is
are no,_that the
bonds are issued principally for sale locally,
trRded'ireistered or listed on any exchange and are not actively

!9

ste,Z

Copiparli "td L c)nd.
issued by ,he Burliton
ng
Mortgage Investment
type
sTPear to be
obligations of that company and are not the
-1- bond or
t
note
y a usually riven by a borrower as evidence of
bn
acaLebtsecured
martrage on real property.
the mortPaytie„Ilken by the
company
are
held
in
trust
as
security
for the
of the
series of bands to which they have been allotted,




1_922

Particular bonds are not directly identified with particular
n
Tnnlocrrttggaar;gees,ore.d
in this respect differ from the usual real estate
,
"On the basis of the foregoing, the Board bel'eves that the
°ends which the Burlington Mortgage Investment Company issues
c.ro 'securities' within the purview of Secticn 32, and that the
company is 'engaged primarily in the business of
purchasing,
?lling, or negotiating' such securities. Therefore it appears
,?at the
relationships covered by these applications are of the
43-rldNivihich Section 32 was designed to terminate.
Accordingly, it
is suggested that you notify the applicants that the
Board is unable to find that it would be not inCO mPat
With the public interest to issue permits under Sec32 to serve the Bank of Burlington, and the Burlington
:pgage Investment Company. It will be appreciated if you mill
the Board what steps the applicants intend to take in
Or
bring the relationships referred to in the first paraPh of this letter into conformiti, with the requirements of
that
section."

Z

rerto

Approved.
Letter dated June
6, 1934, approved by five members of the
board,
t°

Curtiss, Federal Reserve Agent at the Federal Reserve

LEtht.

cf

Boston, reading as
follows:

"'this refers
to your letter of May 4, 1934, and previous
endence relative to the application of Mr. Julius G. Day
2r,
a Permit under tie Clayton Act covering his services as dic t'cr of the
National Bank, Derby, Connecticut, and
the Lew Haven
Bank,
N.B.A.,
New Haven, connecticut, and as
of the Birmnghalouste
1)erby, Connecticut. It is
Your 7
:e
nl.e
ttcl
ei
x
:t
a
n
a
lch
20, 1934, Mrs. Frances
.102:b;nfer
was appointed to fill the vacancy caused by Mr.
s
failure to qualify
as a director of the Birmingham Eaof
41nk, and that
therefore
Mr. Day is no longer a director
isireh bank. C
onsequently,
the
permit issued to him on Lay 2,
the ,Tfor
Permission
to
serve
at
the sane time as a director of
Natirw "Haven
Bank, N.E.A., and as director of the Birmingham
Bank is no
longer necessary.
4 diro
iS also
noted that you state that Mr. Day was elected
held -c'cr of the pew
Haven Bank, N.B.A. at its annual meeting
that he has never taken the oath of ofYb9ank1934;
advised you that they do not intend to have
str_ 1Lke the
oath of office but hope to appoint two or three
directors in
connection with a program of rehabilitation;
411,11 1111
his vacancy within
the next few months. In this

ei

T




t

M/
1
44
IIc

onnection, your attention is invited to Section 5145 of the
Revised Statutes, relating to the tenure of office of
directors
Of national
banks, which provides in part that 'The directors
shall hold office
for one year, and until their successors are
elected ard have qualified'. In construing this
provision the
TruPreme Court of the United States in the case of Bowerman v.
uamner, 250 Ti. S. 504, 515, held that in the
absence of evidence
that a
director resigned or refused to qualify when reelected he
continued
to be a director notwithstanding the fact that he did
qualify or take the oath of office. It is observed that Li-.
-413-Y was a
director of the bank for 18 years immediately precedhis election in January, 1934,
and in view of the foregoing
is clear that he
must
be
regarded
as a director of the New
tlaven Bank,
N.E.A. until he takes some affirmative action either
0J r(T.ning
or refusing to qualify.
deficin these
circumstances you are requested to ascertain
titely whether L.r. Day has resigned or
refused to qualify as
: dir.ector
and if not advise the Board of your reasons for recon,r;u1ng that his
Clayton Act application covering his service as
Illloriector of the
New Haven Bank, N.B.A., and as trustee of the
rust Company
should not be granted."
Approved.
Letter dated
June 7, 1934, approved by five members of the
13( eL, t
an aPPlicant for a
permit under the Clayton Act, advising
ot
aPProval of his
application as follows:
DeC.
Kessler, for permission to serve at the sam time as
a direct
or of The
Alabama National Bank of Montgomery, Montgomery,
lalama, and as
a director of The Citizens and Peoples
'
t41.1-ik of
National
Pensacola, Pensacola, Florida.
lipproved, together with a letter, also
dated June 7, 1934, and approved 137 five mem,
1Ders of the
Board, to Mr. Newton, Federal
leserve Agent at the Federal Reserve Bank of
Atlanta, reading as follow:
h
I nere is
rellnit .

inclosed for your files a copy of the Clayton Act
3-sued by the
10...,
Board to 1Jr. .:i. DeC. Kessler, of Lontgomery,
;Z
1,10:Aaa, to
serve as director of The Alabama National
Bank of
aald rierYA
Liontgomery, Alabama, and as director of The Citizens
es National
Bank of Pensacola, Pensacola, Florida.
Iisca1411 considering
this application it was noted thattr;1
bokrd 0
,
attended only
two of the twen4ve
-sen meetings o the
1 directors
of The Citizens and Peoples l';atienal Bank of




1_72A
6/8/3
-39"Pensacola held during the past two years. In granting
the permit the
Board took into consideration the fact that the applicant
had been a
director of both banks for many years, and also that
there were no
unfavorable factors other than his poor attendance
at the
directors' meetings of the Pensacola bank. A satisfactory
a
ttendanc e at directors'
meetings is necessary for the proper disharge of
directors' duties, and it is with the expectation that
Kessler will improve his attendance that the
Board has
gmnted the permit.
In this connection it is suggested that you
e4deavor, in cooperation with the
Chief National Bank Examiner
your district,
to bring about the desired result.
"The Board also
desires that when you submit your reconmendaas a result of
your
annual review of this permit, you report
1111Y as to the
applicant's attendance at directors' aleetings."
Letter dated June
7, 1934, approved by five members of the
130arci, to
vLIcClure, Federal Reserve Agent at the Federal Reserve
14inic
Ko
4sas City,
readily' as follows:
"There are
to Lir.
inclosed copies of the Clayton Act permit issued
co
ugh C -:ih
iteford coveri
covering his service as officer of The
of
Thmm?rcial National
Bank of Kansas City, Kansas, and director
G First
by
National Bank of Osawatomie, Kansas, for
transmittal
2
t
°
lArs
%iteford and the two banks, together with a copy
-u, your
files.
to
lin aPproving
this application consideration has been given
fajour
statement
that
the applicant keeps in touch with the afille,r8 of The Fir
st i:ational
ate with
Ba
Bank of Osawatomie by frequent meethis brother
who is the activeoffice ,although he has
/30,ne
d,
d only one
directors' meeting in the past two years. The
re'o'0-2eels, har/ever,
that a director should have a satisfactory
ficel. of di
scharging the duties and responsibilities of his ofb
:I_PcIrticipatinp- in
the management and operations of the
ugh attendance at
directors' meetins; and when transt0
that
b
Boe,rdYou inform hiteford his copy of this permit, it is desired
him of the Board's views in
this matter. The
al
reoultso
desires that when you
submit
your
recommendation as a
to
°f Your
annual review of this permit you report
194.4
fully as
1,"hiteford's attendance at
directors' meetings during

.3e.r\re
0"

Letter to
tank

Approved.
L:oClure, Federal Reserve Agent at the Federal

of

Kansas City,
reading as follows:
”„
'here n,
---"e inclosed copies
of the Clayton Act permit issued




6/8/34

-40_
to Lr. W.
E. Hooker covering his service as director and ofof The Farmers National Bank of .ak City, Oklahoma, and The
First State Bank of Camar,,o
Oklahoma, for transmittal by you to
4r. Hecker and the two banks, together with a copy for your files.
In considering lir. Hooker's application it vs noted that
,
1 attended one of the twenty-one directors' meetings of The
ilrst State
Bank held during the past two years and that you
ated that he was irregular in
attendance of meetings or The
flirst State
Bank but confers weekly with his brother, P. S.
locker, the managing director.
in the circumstances, the Board has granted the permit in
order to
avoid any unnecessary misunderstanding by the coLnamity
,1ich might prove detrimental to the best interests of the banks.
1,'
,Le Board feels,
however, that a director should have a satis,I;Ictory record of discharging the duties and responsibilities of
°ffioe by participating in the management and operations of
bank through attendance at
tank
directors' meetings, and, when
tlia2smting to hr. Hocker his copy of this permit, it is desired
a 'aL, you inform
him of the Beard's views in this matter. The
_°ard also desires
that when you submit your recommendation as
a
bt _reault of
your annual review of this permit you report fully
to nr
:locker's attendance at directors' moetin;s during
1934'
.11

1

71

J.1.:)proved.
Letters to applicants for
permits under the Clayton Act, adof approval of
their applications as follows:
ii°mor L. Skeels,
for permission to serve at the same time
;
0 a
director of The Peoples Lational Lank of Barre, Barre, VerL;0
:
11.t aS a director and officer
of tae 1.1ontpe11er 1.ational Bank,
80,11.'43°11er, Vermont, and as a director and officer of the Ludlow
71/k;s Bank
and Trust Company, Ludlow, Vermont.
14r. 2d
ari a ,Car L. Anderson, for permission to serve at the same time
cori uirecter
and officer of the Coahona County Bank
Trust
thePTIY, Clarksdale,
Mississippi, as a director and officer of
re
ank °f Lula, Lula, Lississippi, and as a director of the
r;ellnecsoemPhis bran
ch of the Federal ReserveBank of St. Louis,
Memphis,
Lr. R. j
' Mann, for permission 1.o serve at the same time as a
cia
director
and officer
of The Clark County :ational Bank of Clark,
ta.t
ls. ',6°1.1th Dakota, and as a director and officer of The First
,Jank of
Brewnton, Brown-Lon, lannosota.
vire
"
for permission to serve at the same time as




1726
6/8/34

-41-

!n, officer of The
Commercial National Bank of Kansas City, Kansas
itY, Kansas, and as a director of The State Bank of Bern,
Born,
4ansas.
Approved.
There were then presented the following applications for
1144
'08 in stock
of Federal reserve banks:
A l
ications fo ORIGINAL
Stook:
L EItrict la
1,400 04o
irst
„ Forest and Parmors National Banic of
City, Forest City, Pennsylvania
rirst
National Bank of Williamsburg,
Ifilliamsburg, Pennsylvania
District
0• 10.
e CltY National
Bank in David City,
D471(1 City,
Nebraska

Shares

69
36

105

36
Total

36
141

lioation for
ADDITIONAL Stock:
e First
National Bank and Trust Company
of
Aberdeen, Aberdeen, South Dakota

129

129

Approved.
Thereupon the meeting adjourned.

fa°111:)11-12
4
-ecretary.

vecit