The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
354 A meeting of the Board of Governors of the Federal Reserve Syste141"Is held in Washington on Monday, March 1, 1937, at 11:30 a. m. PRESENT: Mr. Eccles, Chairman Mr. Szymczak Mr. Davis Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter reteed to and the action stated with respect thereto was taken by the toard: Letter to Mr. Max Lowenthal, Counsel, Senate Railroad Investigat14) C'Imittee on Interstate Commerce, prepared for the signature of the CheirIlLen, and reading as follows: "I have your letter of February 6, 1937, requesting that :the Board make available to the Committee, for a still 40IfIrther period, the services of Mr. George H. Folsom, one 4, the Board's exnminers, who has been working with you for "'le Pest sixteen months. "The Board has given the matter careful consideration Euid . i in view of the circumstances outlined in your letter, j1-11ing to grant Mr. Folsom additional leave for the pure es You state, provided, however, that the Committee will : 141me the payment of his salary. As you have been previously tt4 )30 :4 ed, Mr. Folsom is needed in the regular work of the e "I'd's staff and the leave of absence is granted with the Peetation that he will be released by the Committee to re81344e his duties with the Board at the earliest possible date. If the foregoing arrangements are satisfactory to the 0, ,rnmittee, the Board will be glad to have a letter confirmhe matter, with advice as to the effective dates." g Approved unanimously. Telegram to Mr. Sargent, Vice President of the Federal Reserve or °Etn Francisco, reading as follows: 355 3/1/37 -2- "Re proposed retirement of capital debentures by 'First Security Bank', Beaverton, Oregon, In view of all the circumstances, Board interposes no objection to retirement of $1,000 Of such debentures." Approved unanimously. Letter dated February 27, 1937, to the Presidents of all Federal 4se , 've Banks, reading as follows: "In the Board's letter of August 26, 1936, (B-1169), you were requested to obtain from member banks in your district rePorts on Form F.P. 249 of rates of interest paid on deposits and charged on loans and to submit tabulations of such reports to the Board. "There is inclosed for your information a copy of a mem°r!ndum prepared for the Board of Governors from the reports ilornitted by the Reserve banks. Inasmuch as the memorandum not been made public by the Board, no reference to it as j auch should be made in public statements. There is no obxection, however, to your using information contained in the ellic)randum in answering inquiries or for other purposes." Approved unanimously. Letter dated February 27, 1937, to Mr. A. G. Hartnagel, Cashier, 1.141t m -ati0nal Bank, Nashville, Illinois, reading as follows: . 0 "This refers to your recent letter to President Martin the Federal Reserve Bank of St. Louis, which he referred 0 the Board for further consideration. President Martin correctly stated in reply to your letter that Government bonds cannot be counted as a part a member bank's required reserves under the existing laws. 4 ,InaY be added that the law does not confer any authority ' .4337i the Board to make any exception in this respect. wo Adoption of the suggestion contained in your letter 11 :a nullify the effectiveness of reserve requirements in ext tillg the amount of credit that the banking system could re end- To permit the inclusion of Government securities as al4erlree would release funds now held as required reserves, or hence would provide the basis for a multiple expansion 1,.2redit of unprecedented magnitude with the possibility of ' ulationary consequences. iq 356 3/1/37 -3"It was the potential danger that such an injurious credit expansion might develop on the basis of present excess reserves that led to the decision of the Board to ab' Orb a portion of the excess by increasing reserve requirecuts of member banks. Unless Federal Reserve policies can Influence the volume of reserves, the amount of member bank c_redit is likely to fluctuate violently with disturbing efrects on the country's business and the national income." Approved unanimously. Letter dated February 27, 1937, to Mr. Clark, Secretary of the 4der el Reserve Bank of Atlanta, reading as follows: "This refers to your letter of February 16, 1937, with &no r -Losures, regarding the amendments to the by-laws of the ; ederal Reserve Bank of Atlanta which were adopted at the eeting of the directors on February 12, 1937. "Section 1 of Article II of the by-laws was amended so as t0 provide that when there is a vacancy in the office of :418 chairman of the board of directors two members of the 'ecutive committee, instead of three, shall constitute a rc,11 1 °rum for the transaction of business. Sections 7 and 8 Article rv were amended to provide that the secretary, cad of the cashier, shall have custody of the seal of the and that the cashier shall have custody thereof he absence or disability of the secretary. Section 1 of ; -11 4_1cle III was amended so as to eliminate the provision atAlte the assistant Federal Reserve agent a member of the scount committee. tea "In response to your request, you are advised that the to ra of Governors has no objection to the above amendments Y°11r by-laws. rour It will be appreciated if you will forward to the Board complete sets of the by-laws as thus amended." Approved unanimously. Letter to Mr. Gidney, Vice President of the Federal Reserve Bank "liew York, reading as follows: elld "Reference is made to your letter of February 11, 1937 the .5:,nclosures regarding the applicability of section 32 of or the --Lng Act of 1933 to Mr. J. S. Rippe' who is chairman board of directors of both J. S. Rippel & Co., Newark, 35'7 3/1/37 -4"New Jersey, and Merchants and Newark Trust Company of Newark, New Jersey, As you indicate in your letter, a considerable amount of difficulty has been experienced in making Mr. Rippel Understand exactly what sort of information is necessary in order to enable the Board to determine the applicability of section 32, and although the information which you have now O btained is not entirely clear it is to the effect that the v°111me of 'purchases, for distribution, of new issues of secUrities' made by the firm constituted 9.4 per cent of total Purchases for the period January 1, 1933 to November 30, 1936 itarnd that the gross income of the firm from transactions in'the issue, flotation, underwriting, public sale, or ' 41stribution, at wholesale or retail, or through syndicate rticipation, of stocks, bonds, or other similar securities' Ucting from section 32) amounted to 11.5 per cent of the qtotal gross income of the firm during 1933, 11.3 per cent durIle 1934, 20.4 per cent during 1935 and 12.6 percent during the first eleven months of 1936, the higher percentage during i,5 being due in your opinion to exceptional circumstances _-7°17ing an exceptional amount of municipal financing which was done during that year. "On the basis of this information, the Board sees no reas a 1 on to differ with the conclusion reached by you and couni:4-4for Your bank that the firm is not 'primarily engaged' se :he type of business described in section 32 and that the ei°11 is therefore not applicable to the relationships described in the first paragraph of this letter." r Approved unanimously. Thereupon the meeting adjourned.
@FedFRASER