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665 A. meeting of the Executive Committee of the Federal Reserve Board was held in Washington on Thursday, March 1, 1934, at 3:00 p. PRESENT: Mr. Er. Er. Er. Black, ,xavernor Harlin Thomas Szymczak Mr. Morrill, Secretary Yr. Carpenter, Assistant Secretary Mr. Bethea, Assistant Secretary The Committee considered and acted upon the followin matters: Telegram dated March 1, 1934, from Mr. Sargent, Secretary of the Federal Reserve Bank of San Francisco, advising that, at a meeting of the board of directors today, no changes were made in the bank's existing schedule of rates of discount and purchase. Without objection, noted with approval. Memorandum dated February 27, 1934, from Sir. Paulger, Chief of the Division of Examinations, recommending that, in view of the amount of 'fork in the division, the temporary appointment of Er. James F. Furbershaw be extended for an additional thirty days on the same terms as the previous employment. Approved. — Letter dated February 28, 1934, approved by five members of the Board, to Mr. Sailer, Deputy Governor of the Federal Reserve Bank of New York, reading as follows: "Receipt is acknowledged of your letter of February 23, 1934, advising that, subject to the approval of the Federal Reserve Board, your directors had granted to Mr. R. B. Wiltse, Assistant Manager of the Buffalo branch, a leave of absence with pay of approximately one month beginning March 1, 1934. According to the Board's records, the annual vacation period for officers of the Federal Reserve Bank of New York is one month, and it does not appear, therefore, that approval by the Board of the leave of absence grunted Yr. Wiltse is required. Should his leave of absence be extended beyond March 31, the Board's advance approval should be obtained in accordance with 666 3/1/34 -2- "its letter of Tune 14, 1928 (K-6069)." Approved. Letter to Curtiss, Federal Reserve Aent at the Federal Re- serve Bank of Boston, reading as follows: "This is to advise you that after careful review of all of the data submitted in connection with the request of the Hyannis Trust Company, Hyannis, Lassachusetts, for a reconsideration of condition numbered 22 prescribed in the Eoard's letter of :ovember 14, 1933, the Board has reached the conclusion that the area in which the Head Office and 12,ranch of the Hyannis Trust Company are located is in fact a single unincorporated village within the meaning and intent of Section 9 of the Federal 1-.eserve ,ct. In such circumstances, condition numbered 22 as prescribed in the Board's letter dated November 14, 1933, to the Hyannis ?rust Company is not applicable, and, therefore, is withdrawn. "Please advise the Hyannis Trust Company and the Commissioner of Banks for the Commonwealth of :assachusetts accordingly." Approved. Telegram to Yr. Case, Federal reserve Agent at the .,,'edera ''eserve Batik of New York, reading as follows: "Refer Dillistin's telegram February 27, 1934, re application 'The i2.ank of _2mira ...eights', Elmira Heights, Pow York. Board grants an extension of time to larch 29, 1934, within which the bank may accomplish its admission to membership. The application for membership was approved December 29, 1933, and in view of the lapse of time since the date of examination on which the charge-off or elimination of assets was originally prescribed, an additional condition of Membership has been prescribed as follows: "19. Prior to admission to membership, such bank, without reducing its present capital stock of 60,000 or its surplus below i6,000, shall, in addition to the items listed in condition numbered 17 contained in the .:oard's letter of December 29, 1933, based on the report of examination of the bank as of October 7, 1933, charge off or otherwise eliminate all other known losses and all depreciation in stocks, defaulted securities, and securities other than those in the four highest grades as classified by a recognized investment service organization regularly engaged in the business of rating or grading securities. the bank accordingly." advise Please Approved. 6G7 3/1/34 -3Telegram to Fir. Case, Federal Reserve Agent at the Federal Reserve Dank of Few York, reading as follows: "Refer Dillistin's telegram February 27, 1934, re application 'Watkins State Bank', Watkins Glen, Few York. Board grants an extension of time to larch 29, 1934, within which the bank may accomplish its admission to membership. The application for membership was approved on December 29, 1933, a a in view of the lapse of time since the date of examination on which the charge-off or elimination Of assets was originally prescribed, an additional condition of membership has been prescribed as follows: "19. Prior to admission to membership, such bank shall, in addition to the items listed in condition numbered 17 contained in the Board's letter of December 29, 1933, based on the report of examination of the bank as of September 26, 1933, charge off or otherwise eliminate all other known losses and all depreciction in stocks, defaulted securities, and securities other than those in the four highest grades as classified by a recognized investment service organization regularly engaged in the business of rating or grading securities. Please advise the bank accordingly." Approved. Telegram to Mr. Austin, Federal Reserve Agent at the Federal Reserve Bank of Philadelphia, reading as follows: "Refer your telegram February 28, 1934, re application 'The Real Estate Trust Company', Philadelphia, Penna. Board grants an extension of time to March 29, 1934, within which the bank may accomplish its admission to membership." Approved. Letter to Mr. Peyton, Federal Reserve Agent at the Federal Reserve Bank of Minneapolis, reading as follows: "Receipt is acknowledged of LT. Swanson's letter of February 5, 1934, advising that the First National Bank, Centerville, South Dakota, had been deficient in its required reserve for practically every period since July, 1932. It is noted that the bank has promised that this situation will be corrected by the proceeds of loans refinanced through the Reconstruction Finance Corporation, and that it is expected that the bank's reserves will shortly be built up to legal requirements. In this connection, however, it is observed that on August 19, 1933, the President of the bank stated that every effort would be made to 3/1/34 -4- "maintain a satisfactory reserve durin„, the remaining days in _August, and that relief was expected through the refinancing of loans through the Federal Land Bank. The record, however, shows that while the required reserve was maintained during AlkLust, 1933, in September the reserve again became deficient and has been deficient since that time. in view of the circumstances, the Board will take no action in the :natter at this time other than to forward copies of Er. Swanson's letter to the Comptroller of the Currency for his information. It will be appreciated, however, if you will keep the Board advised as to the reserve record of this bank. "In the future, it will be appreciated if you will send all letters regarding deficiencies in reserve requirements as to national banks, together with any accompanying correspondence, in quadruplicate." Approved. Letter dated February 28, 1934, approved by four members of the Board, to the "L'arion National Bank of 1:arion", Larion, Indiana, reading as follows: "The Federal Reserve Board alTroves your application for perLission to act, when not in contravention of State or local law, 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 Indiana, the exercise of all such rights to be subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. "This letter will be your authority to exercise fiduciary powers as set forth above. A formal certificate covering such authorization will be forwarded bo you in due course." Approved. Letter to "The Greeley i:ational Bank", Greeley, Colorado, reading as follows: "The Federal Reserve Board approves your application for permission to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, cornittee of estates of lunatics, or in any other fiduciary caTacity in which State banks, trust companies or other corporations which come into competition with national banks are perditted to act under the laws of the State of Colorado, the exercise of all such rights to be subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board. 669 3/1/34 -5-- "This letter will be your authority to exercise the fiduciary powers as set forth above. formal certificate covering s'Lich authorization will be forwarded to you in due course." Approved. Letter to Honorable Leo T. Crowley, Chairman of the Federal Deposit Insurance Corporation, reading as follows: "It appears from letters received by the Federal Reserve Board that a number of banks and bankers are in some uncertainty as to the requirements relating to the payment of deposits and interest thereon in view of the differing provisions of the regulations of the Federal Deposit Insurance Corporation and the Federal Reserve Board on this subject. In this connection there is inclosed herewith a copy of a letter received by the Board from the Assistant Deputy Governor of the Federal Reserve Bank of Chicago together with copies of its inclosures, which mention certain differences between the regulations of the Board and your Corporation and point out the resultin competitive advantage to nonmember banks of the Federal Reserve System. 'The Board has also received letters with reference particularly to the period for which interest on time deposits at a rate of 3;4; per annum May be compounded. The Board understands that Regulation B issued by your Corporation effective January 2, 1934, provided that no banking institution whose deposit liabilities are insured by your Corporation shall pay or contract to pay interest accruing after that date on any deposit at a rate in excess of '3% per annum compounded semi-annually' with certain stated exceptions but that on January 17, 1934, this provision was amended so as to add after the words 'compounded semi-annually' the words 'or quarterly at the option of the bank.' The Federal Reserve Board's Re.7,ulation q prohibits the payment of interest by a member bank on time deposits at a rate in excess of 3.;: per annum compounded semi-annually. "It has been understood by the Federal Reserve Board that one of purposes of the regulations of the Federal Deposit Insurance primary the Corporation with respect to interest on deposits was to place banks whose deposits are insured but which are not members of the Federal Reserve system on an equal competitive basis in this respect with member banks of the Federal Reserve System. The adoption of less restrictive provisions applicable to nonmember banks, however, than those with which member banks of the Federal Reserve ystem are required to °amply places the latter at a disadvantage in competing with nonmember institutions. The Federal Reserve Board feels that such a result is undesirable. "In order that member banks of the Federal Reserve System may not be at a disadvantage in competition with nonmember banks and also in order to avoid uncertainty and confusion on the part of banks as to the requirements under which they must operate, it is believed to be tmpor- -6"taut that the regulations of the Federal Deposit Insurance Corporation should not be in conflict or out of harmony with those prescribed by the Federal -L4,eserve Board pursuant to the power expressly conferred Upon it by the provisions of Section 19 of the Federal 'eserve Act, as amended by the Banking Act of 1033. In the circumstances, it has occurred to the Board that your Corporation might be willing to give consideration to the advisability of the adoption of such amendments to its regulations on this subject as to make the requirements applicable to nonember banks in this connection the same as those applicable to member banks or at least to eliminate the more substantial differences between such requirements. If your Corporation should look with favor upon this suggestion, the Board will be glad to have such members of its staff as my be reauired available for co.,:sultation and assistance to the members of your organization in an endeavor to reach a solution of this problem which will place member and nonmember banks on a substantially equal basis." Approved. Letter to the Federal Deposit Insurance Corporation reading as follows: "There is inclosed herewith a letter addressed to the Federal Reserve Board by the Terryville Trust company, Terryville, Connecticut, with regard to the period for which interest on time deposits at a rate of 3,3 per annum may be compounded. The Terryville Trust Company is not a member of the Federal '1.eserve System and, accordingly, the letter is referred to your corporation for reply. The writer has not been advised by the Federal Reserve 3oard of this reference." Approved. Letter dated February 28, 1934, approved by five members of the Board, to Lir. :_cClure, Chairman of the Federal Reserve Bard: of Kansas City, reading as follows: "There is inclosed herewith a copy of a memorandum dated Tanuary 17, 1034, addressed to the Board by the Comptroller of the Currency involving the question of the maintenance by a Federal reserve bank of the general account of a conservator after the redemption of the Federal reserve bank stock held by the bank with respect to which he is acting as conservator. Inasmuch as your bank has already expressed an opinion upon this question the Board wishes to benefit by any comments which you may care to make before sending a reply to the Comptroller; and in this connection there is inclosed a draft of a proposed reply which is under consideration by the -Board." Approved. 071 3/1/34 There were then presented the following applications for original stock, or for the surrender of stock, of Federal reserve banks: h2plications for ORIGINAL Stock: District No 7 Cltizens National Bank at Belle Plains, Belle Plains, Iowa District Nb. 8 Lational Bank of Commerce, Pine Bluff, Arkansas District No• 9• The Iron River National Bank, Iron aver, Michigan AUlications for SURRENDER of Stock: District No. 2. Cliffside Park National Bank, Cliffside Park, New Jersey District No. 3. First National Bank & Trust Company, Bedford, Pennsylvania • District No. 50 The Farmers & Yierchants National Bank, Onley, Virginia District No. 8. The Farmers National Bank, Madisonville, Kentucky District No 10 The First National BArtic of Douglas County, Castle Rock, Colorado The First National Bank, Luray, Kansas District No. 12. The National Bank of Pico, Pico, California Approved. Shares 36 36 66 66 42 Total 42 144 120 120 204 204 150 150 30 30 42 •24 66 33 Total 33 603 311/34 Thereupon the meeting adjourned. Approved:
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