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A meeting of the Executive Committee of the Federal Reserve Board was t held .n Washington on Tuesday, March 14, 1933, at 11:30 a. m. PEhSENT: Mr. Mr. Mr. Mr. Meyer, Governor Hamlin Miller James Mr. Mr. Mr. Mr. Morrill, Secretary McClelland, Assistant Secretary Harrison, Assistant to the Governor Wyatt, General Counsel. There was presented a telegram dated March 13, 1933, from Mr. George DeC6111113 requestins. that the Board accept immediately the resignation filed by hi his letter of January 3, 1933. Governor Meyer stated that, in accordEtnce with the action taken at the meeting yesterday, he had discussed with MI% L. B. Williams his appointment as Chairman and Federal Reserve Agent at the Cleveland bank and that Mr. Williams had stated that he would like to have Lir. DeCamp remain in the agent's department as an assistant to the Chairman until May 31, 1933. Mr. Williams also recommended, Governor Meyer Stated, that VAT. E. S. Burke, Jr., be appointed as a class C director of the bank to the unexpired portion of the term ending December 31, 1935. After discussion, the resignation of Mr. DeCamp was accepted effective at the close of business today; MT. Williams was designated as Chairman of the board of directors and Federal Reserve Agent at Cleveland, effective March 15, 1933, with salary at the basic rate of :00,000 per annum; and Mr. E. S. Burke, Jr., was appointed a class C director of the bank for the unexpired portion of the term ending December 31, 1935, effective upon his qualifying for the office. . The Secretary was also requested to advise Mr. Williams that the Board has no objection to the employment of la% Decamp as assistant to the Chairman from March 15 to May 31, inclusive, and that the Board approves for Mr. DeCamp a salary at the basic rate of i12,000 per annum. bY Assistant Secretary McClelland was instructed to advise Mr. Williams telaPhone that the question of the time and method of announcing the changes 41_7 3/14/33 -2-- at the Cleveland bank would be left entirely to the discretion of Mr. Williams, with the 'suggestion, however, that when arrangements have been made to announce Idr. Williams' appointment at Cleveland he advise the Board SO that appropriate announcement may be made here at the same time. Governor Eeyer reported to the Board the information received by him in telephone conversations with senior officers of the Federal reserve banks, regarding conditions in the respective Federal reserve districts incident to the reopening of banking institutions. There was then presented a tentative draft of a proposed amendment to title II of the Emergency Banking Act of Larch 9, 1933, prepared by the Treasury, which would authorize Federal reserve banks to make advances to conservators of national banks to aid them in administering the affairs of the banks for which they are appointed. It was pointed out that such conservators have the same authority under the law to borrow from the Rec onstruction Finance Corporation as receivers of national banks, and the members present expressed the opinion tl,at the legislation is not only unnecessary but would be undesirable from the standpoint of public interest I°P the reason that the public would be quite likely to regard with suspiei011 Loans by the Federal reserve banks against the assets of closed inatitutions and that the maintenance of confidence in the Federal reserve banks and in the currency they issue is essential to the success of a sound iIig program. It was the consensus of the members present that the power vihicu is now vested in conservators of national banks to borrow from the Recon struction FinPnce Corporation should be availed of to the extent that 4sed5 develop for advances to such conservators. Telegram dated 1,:arch 14, 1933, from the Liecretary of the Federal 418 3/14/33 Reserve Bank of Minneapolis advising of the establishment at the bank today of the following schedule of effective buying rates on bankers' acceptances: 1 to 90 days 91 to 120 days 121 to 180 days Repurchase 3 1/2% 3 5/8% 4% 3 1/2% Without objection, noted with approval. Telegrams dated March 14, 1933, from the Chairmen of the Federal Reserve Banks of Cleveland and Chicago advising of the establishment at hose banks, subject to the approval of the Federal Reserve Board, of a r"e of 4 1/2% on advances to individnpls, partnerships or corporations °11 the promissory notes of such individuals, partnerships or corporations 8ecured bY direct obligations of the United States under the provisions 0t50 —"ion 13 of the Federal Reserve Act as amended by section 403 of the Act (1-P l'aktrch 9 193. The rates so established by the Federal Reserve Banks of Cleveland and Chicago were approved, effective today. Llemoranda dated March 9, 1933, from Mr. Paulger, Chief of the Divi.4 Qlon of Examinations, recommending that Mr. H. 0. KOppang and Mr. . B uhamberlin, Assistant Federal Reserve Examiners, be designated as Psderal Reserve Examiners with no increase in the salaries they are now rsceivine. Approved, effective March 15, 1933. Telegram dated March 14, 1933, from the Federal Reserve Agent at St. ,0 requesting approval of the appointment, as of March 15, 1933, of Mr. A. Homb s ascn examiner at the bank with salary at the rate of $3,000 Der anirum. The reply stated that the Board approves the appointment as reelter gileated. Approved. 3/14/33 4-19 -4- Telegram dated March 14, 1933, from the Federal Reserve Agent at Richmond requesting approval of the temporary appointment of Messrs. P. H. Eubank, Charles E. Register and J. Madison Macon as examiners at the bank with compensation at rates of ,;125, $150 and $175 per month, respectively, and requesting approval of the authorization of Mr. R. H. Smart to assist in the examination of State banks. the The reply stated that the Board approves appointments and authorization as requested, it being understood that Mr* Smart is being temporarily loaned to the Federal reserve bank by the Re construction Finance Corporation without salary. The reply also re- quested advice as to the dates upon which he and the other appointees assume their duties and that there be forwarded to the Board for its rec"ds statements of their previous experience and qualifications. Approved. Telegraphic reply to a telegram dated March 14, 1933, from Deputy Governor tO Rounds of the Federal Reserve Bank of New York requesting authority Purchase from the Cranford Trust Company, Cranford, New Jersey, $50,000 tax notes of the Town of Cranford. The reply stated that the Board au- thorizes the purchase with the understanding that the warrants meet all re quirements of Regulation E except that the amount offered, together with $100,000 of such notes already held by the New York bank, exceeds 25% of the total warrants of the municipality outstanding. Approved. Telegra Phic reply on March 13, 1933, approved by three members of the B O rd, to a telegram of that date from the Federal Reserve Agent at ball ' 48 inquiring whether in determining the amount of depreciation on 1304A. Of the Dallas Joint Stock Land Bank the examiners should be governed 4';'0 3/14/33 -5- .r4 by the average price at which local sales of these bonds are known to have been made in recent months and whether the Board would require such de preciation to be charged off prior to admission to membership of a bank holding such bonds. The reply stated that in determining the depreciation existing in this class of bonds the examiners should be governed as in Other eases by the current market value based on the best available quotations and that the Board feels that it cannot waive the requirement as to the charge off of depreciation on securities classified below the four hi-nest grades, defaulted bonds, and stocks and securities not rated. Approved. Telegraphic reply to a telegram dated March 14, 1933, from the Governor of the Federal Reserve Bank of Kansas City, stating that the bank d°es not understand that it is required to make advances to individuals, Partnerships or corporations on their promissory notes secured by direct bligations of the United States under the provisions of the last paragraph or section 13 of the Federal Reserve Act as amended by the Act of March 9, 1933, and inquiring if there is any objection to the bank obtaining a of approximately 10-71 on such advances. The reply stated that there is n, requirement that the amount of an advance under the last paragraph ' Of - section 13 of the Federal Reserve Act as amended be equivalent to the Par value of Government obligations securing it and that the matter is °Ile for determination by the Kansas City bank. Approved. Tel°graphic reply on March 13, 1933, approved by three members of the Bo ard, to a telegram dated March 12, 1933, from the Governor of Virginia 42/ 3/14/33 -6- Urging that the same facilities be made available as far as possible to n°11member banks as are msde available to member banks, and particularly that member banks be permitted to rediscount at the Federal reserve bank Paper pledged with them by, and paper which they may take from, nonmember banks. The reply stated that the Board has authorized Federal reserve banks until further notice to rediscount for member banks, with their indorsement, eligible and acceptable paper acquired from nonmember banks, when such action is advisable in the judgment of the Federal reserve bank and not in conflict with the President's proclamations or executive orders and regulations thereunder. The reply also stated that under the provisions of section 10(b) of the Federal Reserve Act as amended by the Act of March 9, 1933, Federal re8"Ve banks msy make advances in special circumstances to member banks upon the security of assets not eligible for rediscount by Federal reserve banks under other provisions of the law, when such member banks have no further eligible and acceptable assets available to enable them to obtain adequate credit accommodations through other methods provided by the Federal Reserve Ant) and that the Federal Reserve Board is advising the Federal reserve bank_ that they may accept paper acquired from or indorsed by nonmember banks as security for such advances whether or not such paper is of the kinds eligible for rediscount by Federal reserve banks, provided such seC ritV i satisfactory and such action is advisable in the judgment of the Fed oral reserve banks and not in conflict with the President's proclamations or executive orders and regulations thereunder. The reply also called atteb+. -"-on to the fact that under section 13 of the Federal Reserve Act as 8111ended 11, -J thee Act of March 9, 1933, any Federal reserve bank may make 3/14/33 -7- advances to nonmember banks on the promissory notes of such nonmember banks secured by direct obligations of the United States for periods not exceeding 90 days. Approved. Telegrams to the Federal reserve agents stating that the Federal Reserve Board has approved applications filed by the following State instituti0 n8 for membership in the Federal Reserve System and for stock in the Fedoral reserve bank of their respective districts subject to certain conditions set forth in the telegrams: Name of Bank ' 6 Number of Shares Federal Reserve Bank StImmit Trust Company, Summit, New Jersey. 480 New York CellImerce Guardian Bank, Toledo, Ohio. 450 Cleveland &11141gamated Trust and Savings Bank, Chicago, Illinois. 180 Chicago California Bank, Los Angeles, Calif. 4,020 San Francisco Approved. Telegram to the Federal Reserve Agent at Chicago stating that since the State Bank of Clearing, Chicago, Illinois, which has submitted an applieati°/1 for membership in the Federal Reserve System, has capital amounting to °41Y $100,000 while located in a city with population in excess of 50,000 ultants and counsel for the Federal Reserve Bank of Chicago advises that Under Illinois law a State bank may not now be organized in Chicago, regard- less Of whether it is located in an outlying district thereof, with capital or Ie 88 than 200,000, the applicant does not have sufficient capital to make e ligible for membership under the provisions of section 9 of the Federal 3/14/33 -8- Reserve Act as construed in connection with requirements of the national bank act regarding capital required for organization of national banks. Approved. Telegraphic reply to a telegram dated March 14, 1933, from Assistant Federal Reserve Agent Bailey at Minneapolis stating that the Belp;rade State Be, Belgrade, Montana, and the Ravalli County Bank, Hamilton, Montana, reqUest permission to withdraw from membership in the Federal reserve system ira ediately and that the executive committee of the Federal reserve bank requests that the immediate withdrawal of the banks be approved. The reply l'eNested advice as to whether the banks have complied fully with all reclu emsnts of section 3 of Regulation H, whether the Federal reserve bank's 01113.sel has passed upon the resolutions of the directors, the banks' reasons r°11desj1i=4; to withdraw, and a full statement of the reasons for the 44sistant Federal Reserve Agent's recommendations. Approved. Telegram to the Governors and Chairmen of all Federal reserve banks, "-sing that the Board feels that every reasonable purpose would be served 44(1 4 great deal of work and expense avoided if the Federal reserve banks -,6inued wiring other Federal reserve banks the nares of member and non1O1111)er banks in their respective districts which have been licensed to l'e°13e4 and discontinued wiring the Board the names of nonmember banks reopened 144, instead, each Federal reserve bank would print and mail not later than Thursday, March 16th, a list, arranged alphabetically by States and -) of all member banks in its district licensed to reopen on Monday, Tttead, lr, and Wednesday and of all nonnerber banking institutions licensed to ' le°13en °n such days so far as information with regard to them has been received /14/33 -9- tram the respective state banking departments. The telegram suggested that each such list be prepared on paper of approximately the same size and in th° same general form as the Board's par list, indicating the head office or branch zone, and that it contain a statement that it is a list of all banks which) according to advices received, have reopened but that it does not *take the place of the par list; that State bank members be designated by an asterisk. , that the Federal Reserve Board be furnished one hundred copies of Such list and each other Federal reserve bank with a sufficient number of copies to mail a copy to each of its member banks; that such lists be forto the Board and other reserve banks by air mail if this will expedite /4 cieli7erY; and that in order that the lists may be kept substantially up to date, for the tine being supplements thereto be prepared as of each Wednesday beginn, g 1.11 Wednesday, Rarch 22, and mailed on Thursday, covering banks licensed to re oPen during the week ending Wednesday, including also any changes in Previous lists. The telegram also stated that the Board is advised that a 1/4121ber of the Federal reserve banks will forward to other Federal reserve banks all checks drawn on par banks in other districts received by them; also that 13°148 reserve banks have temporarily discontinued all direct sending privileges. Approved. The Assistant Secretary submitted a memorandum dated March 14, 1933, rrora the Board's chief telegraph operator stating that in order to take care of the increased volume of business going throusia the telegraph office it was 11"es rY to employ today, two telegraph operators, S. B. Roberts and E. F. " 14:eCaz„ 4111r, with compensation at the rate of':).85 per hour and that their 3/14/33 -10will apparently be required tomorrow. Upon recornendation of the .;',ssis tant Secretary, the temporary employment of the two additional operators in accordance with the memorandum was approved. Thereupon the raeeting adjourned and reconvened at 2:30 p.m. Er. I.iorriil reported that a few minutes after 1:00 o'clock this af ternoon he was in the office of Under Secretary Ballantine and heard the latter portion of Er. Ballantine's remarim in a telephone conversation Which he was carryin,7 on with the Director of the Budget, Mr. Lew Douglas, 0111 Itich it appeared that there had been introduced by Senator 2,ebinson, -4rIcanzas, a bill, No. S. 320, thich had something to do with loans by the 2ederel reserve banks; that Er. Ballantine knew nothing about the bill; that!-1". Ibrrill had not heard of it; that Er. Ballantine told Er. Douglas thrat he felt that when impending legislation having an important effect 413°4 Policies of the Treasury zmad the Federal Reserve loa.rd was under cerm ideration the Departr.,ent and the Board ought to be consulted. Er. reported that he immediately made inquiry of Er. -ityatt regarding the b und found that the legal departrent had no information concerning it Etad efforts were instituted at once to get a copy, which was finally (3btillea shortly after 2:00 o'clock throujl an e:amination of the Cercr e2210nal ,Aecord. It was found that the bill was one which had been ' ed by Senator ltobinson, of Arkansas, on March 13 as 'Jo. S. 320, ' lea(13 as follows: "A Bill to provide far direct loans by Federal reserve banks to State banks and trust companies in certain cases. 426 • 3/14/33 -11"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title IV of the Act entitled 'An Act to provide relief in the existing national emergency in banking, and for other purposes*, approved March 9, 1933, is amended by adding at the end thereof the following new section: "Sec. 404. During, the existing emergency in banking or until this section shall be declared no longer operative by proclamation of the President, but in no event beyond the period of one year from the date this section takes effect, any State bank or trust company not a member of the Federal reserve system my apply to the Federal reserve bank in the district in which it is located and obtain from said Federal reserve bank direct loans under the terms provided in section 10(b) of the Federal Reserve Act, as amended by section 402 of this Act, Provided, That all applicutions for such loans shall be accompanied by the written approval of the State banking department or commission of the State from which the State bank or trust company has received its charter and a statement from the said State banking department or conndssion that in its judgment said State bank or trust company is in a sound condition." t* It aPPeared that none of the Board members present had heard anything about the 'bill and there ensued immediately a discussion of its effect, if enacted, 413°)a the 2ederal reserve system. The view was expressed that such leeialation is _ unnecessary because the Reconstruction Finance Corporation 114a amPie authority to make advances to all kinds of banking institutions n nonmember State banks as well as State member banks and national 1344ka; that it would be undesirable for the Federal reserve banks to enter illto the field already occupied by the Reconstruction Finance Corporation 41 t° nonmember State banks, that it would be unfair to the member banks °r the 2ederal Reserve ystem, Who were the sole owners of the Federal 3/14/33 6 427 -12- reserve banks and had contributed not only the entire capital but the bulk Of the resources of the System, to use the resources of the Federal reserve banks for loans to nonmember State banks which had contributed nothing to the maintenance of the system but, in fact, had competed with it; that the Federal-L reserve banks possessed little or no information as to particular n°11member State banks and as a rule were completely out of touch with the financial condition of the individual banks; that report s of examinations °f n°nmember State banks by State banking authorities were not available to the Federal reserve banks; and that even if made available in many instances such reports would be out of date for periods up to a year or more, and often entirely inadequate in the amount of information provided. While the bill was under discussion Governor Meyer, in the presence of the other members, talked over the telephone with Senato Glass at about 3:45 p. m. and Senator r Glass advised him that the bill had already passed the Senate. Secretary Woodin was then requested to attend the meeting, which he After further discussion, it was -Treed that Governor Meyer and Mr. Miller should accompany Secretary Woodin to the White House for the purpose °f cant rr e--lng with the President and advising him of the views of the members Qf the Board regarding the undesirability of the enactment of the Robinson Thereupon the meeting was adjourned. Beginning at 9:30 p. In. Governor Meyer, Mr. Hamlin, M±. Miller and Mr. aam es, together with Messrs. Harrison, Wyatt and Morrill, met pursuant to reallest sent out by Governor Meyer to all Board members earlier in the eVerlirie. Governor Meyer advised the other members that he had endeavored 3/14/33 -13- to arrange for the presence of Secretary Woodin but had been informed that on account of numerous telephone calls Secretary Woodin felt that he should rer4414 in his office. Governor Meyer added that an invitation had been extended to .--inator Glass to come to the meeting if he desired but Senator Glass had sent word that he was too tired to leave his hotel room and that he could be /*c"hed on the telephone or would be available for conference at the hotel, it desired. Governor Meyer reported that in accordance with the understanding With the other members of the Board at their meeting in the Governor's office this afternoon, Dr. Miller and he had participated in a conference at the White House regarding the Robinson bill, S. 320, and that among the others eeent were also Secretary Woodin, Senator Glass and Mr. Morrill, The membera "the Board were informed that during the discussion at the White House 88114tor Glass indicated that by unanimous consent, although the bill had 134seed the Senate, its transmission to the House had been withheld, pending the 4_ .Lat roduction of a motion to reconsider. It was also stated that the President ‘11, --a informed as to objections which had been expressed by members of the 8card tn -- such legislation from the standpoint of the welfare of the Federal l'ea"vs eYsteme Governor Meyer said that during the discussion the President offered Et 411Mb r „. 6suggestions as to safeguards which might be introduced into the bill elld interlined some of these suggestions in a typewritten copy of the bill Which he handed to Mr. Morrill just before the conference ended. Mr. Morrill then Showed the members of the Board a copy of the bill with the changes interby the President and added that attention had been called to the fact that the bill did not provide for making notes acquired by Federal reserve banks 114cler the p -obinson bill eligible for security for Federal reserve notes or the Pcdsre1 reserve bank notes, and that as a result of the discussions Mr. 429 3/14/33 -14- 1:orri1l had been requested during the conference to take the copy of the bill Which had been handed him by the President and draw up amendments which would incorporate substantially the interlined suggestions of the President, together with a provision for eligibility of the notes acquired from the applicant banks as security for Federal reserve bank notes. Mr. Morrill reported that the President had stated that he desired that it be made clear that the making of loans should be discretionary with the Federal reserve banks and that the conditions under which the loans might be made should be safeguarded. Mr. added that upon his return from the conference he had gone over the matter with Mr. Wyatt and that Mr. Wyatt had drawn up a memorandum of changes Which would carry out the suggestions discussed at the conference at the i.thite • 11°118e and also a revised copy of the bill incorporating these changes. L:re IlYatt then distributed among the members of the board present copies of the bill showing the changes, and the memorandum setting out each individual change, the bill and the memorandum reading as follows: "73d Congress S 320 IN THE SENATE OF THE UNITED STATES March 13, 1933. Mr. Robinson of 4.,rkansas introduced the following bill, which was read twice and referred to the Committee on Banking and Currency. A BILL To provide for direct loans by Federal reserve banks to state banks and trust companies in certain cases. BE IT ENACTED BY TEE SENATE AND HOUSE OF REPRESENTATIVES OF THE 131IITED STATES OF AMERICA IN CONGRESS ASSE123LED, That title IV of the Act entitled An Act to provide relief in the existing national emergency in 1:7,-ring, and for other purposes', approved March 9, 1933, is amended by °(°11ng at the end thereof the following new section: 'See. 404. During the existing emergency in banking, or until this section shall be declared no longer operative by proclamation of the 4:)0 3/14/33 -15- "'President, but in no event beyond the period of one year from the date this section takes effect, any State bank or trust company not a member Of the Federal reserve system may apply to the Federal reserve bank in the district in which it is located and ela464H-fpam said Federal reserve banks in its discretion and after inspection and approval of the ,collateral and a thorough examination of the applying bank or trust com an ma make direct loans to such State bank or trust compan 4aleet-leaas under the terms provided in section 10(b) of the Federal reserve act, as amended by section 402 of this Act:. Fill-e144,9414-9ka4-ali All applications for such loans shall be accompanied by the written approval of the State banking department or commission of the State from Which the State bank or trust company has received its charter and a statenent from the said State banking department or commission that in its judgment said State bank or trust company is in a sound condition. The notes representing such loans s'aall be eligible as security for circulatin notes issued under the provisions of the sixth paragraph Of section 18 of the Federal Reserve Act, as amended bi section 401 of this Act to the same extent as notes drafts bills of exchange or :bankers' acceptances acquired under the provisions of the Federal Peserve Act," 'AMENDMENT "Intended to be proposed by Mr. Glass of Virginia to the bill (S. 320). to provide for direct loans by Federal reserve banks to State banks and trust companies in certain cases, viz: On page 2, line 3 strike out the words 'obtain from.' On page 2, line 4, after the word 'bank', strike out the words 'direct loans' and insert a comma and the words 'in its discretion and after inspection and approval of the collateral and a thorough examination of the applying bank or trust company, may make direct loans to such State bank or trust company.' On page 2, line 6, change the colon to a period, strike out the words 'Provided, That all' and substitute the word 'All'. On page 2, line 12, after the period and before the ouotation marks, insert the following new sentence: 'The notes representing such loans shall be eligible as security for circulating notes issued under the provisions of the sixth paragraph of Section 18 of the Federal Reserve Act, as amended by Section 401 of this Act, to the same extent as notes, drafts, bills of exchange, or bankers' acceptances acquired under the provisions of the Federal Reserve Act.'" During the course of the discusEAon some of the members of the Board P°inted out that probably the Federal reserve banks were not aware of the pencielleY of the Robinson bill and expressed the opinion that, in view of its great 1111Porta-nee to the system, they should be informed at once regarding its con- 3/14/33 tents -16Thereupon the Secretary was requested to send to the Chairmen and Governors of all Federal reserve banks and to all members of the Federal Advisory Council immediately a telegram with the following introduction: "The following bill, S. 320, passed the Senate today but transmittal to the House Of Representatives has been withheld by unanimous consent pending a motion to reconsider", followed by a verbatim copy of the bill. After considering the bill with the amendments suggested at the White Rouse conference, various ideas as to the contents of a letter that might be written to Senator Glass or the President or both expressing the views of the Board were discussed by the Board member6 and Dr. Miller dictated the following as his suggestion as to the basic thought which should be incorporated in such a letter: "Such a law would be inadvisable and prejudicial to the best interests of the Federal reserve system and to the financial structure of the "untry on which the Federal reserve system has its foundation. We are of °Pinion that it should not be exposed to any further hazards." This idea met with the approval of the other Board members. Er. James stated that he felt that the Board occupied a position of special responsibility as.a trustee for the interests of the member banks who were the sole stockholders of the Federal reserve banks and that a protest should be made to the President and should be published. Governor Meyer stated that he felt that the Objections to the bill had been made clear to the President by Senator a1488, lax. Miller, and himself at the afternoon conference. Later during the discussion Secretary Morrill was called from the r°0111 to answer a telephone call from 3enator Glass. Upon Mr. Morrill's l‘etlIxn to the room he informed the members of the Board that Senator Glass hed referred to endeavors on the part of Senator Long, of Louisiana, to 4.'z2 3/14/33 bring -17- about action by Congress which would result in all State banks being admitted automatically to the Federal reserve system and Senator Glass' vigorous objection to such attempts, and that Senator Glass also referred to the Robinson bill and to the need for quick determination of the Board members, attitude toward it. Yr. Lorrill reported that he advised Senator Glass that the appointive members of the Board were then meeting for the purpose of discussing it and that the suggestion had been made that a letter might be written to Senator Glass expressing their views regarding the Robinson bill and that Senator Glass said that he thought that such a letter would be very desirable and that he would be glad to receive it. In this connection Ir. Eorrill said that Senator Glass stated that what he 179.8 afraid of was that the bill as passed by the Senate and to which he " 8 oPposed might be sent over to the House and that it might pass in its Present form, that he would like to have in the morning a draft of the bill modified in accordance with the suggestions which had been made at the 'ahite House, and that he would also like to have copies of the modifieati"ss so that he could 4ve them to Congressman Steagall. Ylorrill's report of his conversation with Senator Cl"e there was further discussion of the suggested changos in the Robinson bill p rd of the desirability of substituting for the Robinson bill a plan for e'lng obliations of the Reconstruction Finance Corporation eligible rcll 'Purchase by Federal reserve banks or as security for member bank notes ' 1 11 the 0— "•"e Idanner as bonds and notes of the United States Government under the , ''geral Reserve Act, and, in addition, the desirability of an amendment t the citzeed Rec onstruction Finance Corporation Act along the lines of a bill introby Senator Robinson, of .A.rkansas, for the purpose of eliminating the 433 3/14/33 -18- present requirement of the law as to publicity for loans made by the Reconstruction Finance Corr)oration, which has been a serious embarrassment to bankinstitutions which have found it necessary to apply to the corporation for loans. In addition, there was discussed the idea of a further alternative, under which any State bank which desired to obtain a loan from a Federal reserve bank should first apply for membership in the Federal Reserve System, and that pending consideration of its application the Federal reserve bank might be permitted to rediscount paper for, or make loans to, such applicant under the same terms and conditions as for member banks, and the matter 17as discussed by Dr. :Aller with Secretary 'Aodin in the latter's office. It was suggested that Li'. Wyatt draft Substitute bills covering these alternatives. This was done and the alternatives,which are quoted below,were carefully considered : "AIENDIENT It Intended to be proposed by Ur. Glass of Virginia to the bill (S. 320) to plovide for direct loans by Federal reserve banks to State banks and trust companies in certain cases, viz: On page 1, line 7, strike out everything after the words 'Sec. 404', through and including the word 'condition' at the end of line 12, page 2, and insert in lieu thereof the following: 'The Federal Reserve Banks shall have the same powers (1) to discount notes, drafts, and bills of exchange secured by obligations issued by the Reconstruction Finance Corporation, (2) to make advances to member banks on their notes secured by such obligations, (3) to use all paper and obligations so acquired, and (4) to purchase and sell such obligations, as they have with respect to bonds and/or notes of the United States.' Add a new section to the bill to read as follows: 'Sec. 2. Subsection (b) of Section 201 of the Emergency Relief and Construction Act of 1932 is amended to read as follows: 1(b) The Reconstruction Finance Corporation shall submit monthly to the President and to the Senate and the House of Representatives, (or the Secretary of the Senate and the Clerk of the House of Representatives, if those bodies are not in session) a report of its activities and expenditures under this section and under the Reconstruction Finance Corporation Act.'" 3/14/33 -19"AMENDMENT Intended to be proposed by Er. Glass of Virginia to the bill (S.320) to provide for direct loans by Federal reserve banks to State banks and trust companies in certain cases, viz: On page 1, line 7, strike out everything after the words 'Sec. 404', through and including the word 'condition' at the end of line 12, on page 2 and insert in lieu thereof the following: 'Any State bank or trust company which is not a member bank of the Federal Reserve System but desires to obtain loans from a Federal reserve bank, shall apply for membership in the Federal Reserve System in the manner prescribed by Sec. 9 of the Federal Reserve Act and, immediately upon filing such application shall be entitled to all of the privileges of member banks and shall be subject to all the provisions of the Federal Reserve Act applicable to member banks: Provided, however, That, if such bank is not admitted to membership in the Federal Reserve System within six months from the date of the filing of such application, it shall no longer be entitled to any of the privileges of a member bank and shall no longer be subject to the provisions of the Federal Reserve Act regarding member banks: Provided, further, That this section shall become inoperative when the President by proclamation shall declare the termination of the present emergency and in no event later than one year from the date this section takes effect.'" The view was expressed by some members of the Board that, if the Federal ' l eserve banks are to make loans to nonmember banks, not only should the 1°ane be made on the same terms and conditions as loans to member banks, bIlt, in fairness to the latter, the nonmember banks should be required to corrIplY with all the provisions of the Federal Reserve Act and the regulations °f the Board, to maintain the reserves required of members by section 19 of the act, and to deposit with the Federal reserve banks suns equal to amounts they would have to pay on account of capital stpck subscriptions if they were Inerabers. Lir. Wyatt stated that he had drafted a provision along this line Which) if desired, could be added at the end of the Robinson bill. iris; 4-011 read as follows: The pro- 3/14/33 "During the time that such bank or trust company is indebted in any way to a Federal reserve bank it shall be required to comply in all respects with the provisions of the Federal Reserve Act applicable to member State banks and the regulations of the Federal Reserve Board issued thereunder, Provided, That in lieu of subscribing to stock in the Federal Reserve Bank, it shall, in addition to maintaining the reserve balance required by Section 19 of the Federal Reserve Act, maintain on deposit with the Federal Reserve Bank an amount equal to that which it would be required to pay on account of its subscription to such stock if it became a member bank." Following these discussions, Dr. Miller left the meeting, and aubsequently Governor Meyerwas requested to bring to the attention of the Secretary the substitute relating to the Reconstruction Finance Corporation and the provision which would require nonmember banks receiving loans from the Federal reserve banks, as contemplated by the Robinson bill or any other similar measure, to comply with all the provisions of the Federal Reserve Act and regulations, including the maintenance Of reserves, etc. the A letter to Senator Glass was then drafted and approved by relaaining members, incorporating the idea which had been suggested by Dr. and was signed by Governor 'Leyer, with the understanding that he would deltver it to Senator Glass, The letter read as follows: "Following the discussion this afternoon, the Bill S. 320 Introduced by Senator Robinson of Arkansas, entitled 'A Bill to Provide for direct loans by Federal reserve banks to State banks and trust companies in certain cases', was considered by the apPointive members of the Federal Reserve Board, and we are unanimous1Y of the opinion that such a law, even with the changes suggested during the discussion, would be highly inadvisable and prejudicial to the best interests of the Federal Reserve System and to the financial structure of the nation. We feel strongly that the System and the country should not be subjected to the hazards involved in the passage of the proposed legislation." RePorts of Standing Committee dated March 8, 10, 13 and 14, 1933, 3/14/33 —21— recommending, approval of the following changes in stock at 2ederal reserve banks: APplications for ORIGINAL Stock: District No. 5. Baltimore National Bank, Baltimore, Maryland District No. 7. First National Bank, Stockton, Illinois. 42lications for ADDITIONAL Stock: District No. 1. First National Bank, Brunswick, Maine. (Increase in capital) District 0. 4. Peoples National Bank, New Lexington, Ohio. (Increase in surplus) Farmers Bank & Savings Company, Pomeroy, Ohio. (Increase in surplus) Shares 2,400 2,400 18 Total 18 2,418 15 15 4 1 5 Total 21 District No. 19. Northern California National Bank, Bedding, Calif. (Increase in surplus) A cations for JURRaDER of Stock: District No. 1. Lierchants National Bank, New Bedford, Mass. (Decrease in surplus) oorcester Bank & Trust Company, Worcester, nass. (Decrease in surplus) Citizens National Bank, Tilton, New Hampshire. (Decrease in surplus) state National Bank, Windsor, Vermont. (Decrease in surplus) 1,050 1,980 10 15 3,055 13 30 43 Diatriet No. 6. !'irat National Bank, Opp, Ala. ) 11le gzet ill: in surplus) 30 -Lollisiana National Bank, Baton RO (Decrease in surplus) 60 irst National Bank, Elton, La. (Decrease in surplus) 1 ilibernia Bank & Trust Company, New Orleans, La, (Decrease in surplus) 600 lqrst National Bank, Oberlin, La. (Decrease in surplus) 3 Pirat National Bank & Trust Co., Vicksburg, lass. (Decrease in surplus) First 180 National Bank, Longville, La. (V.L.Abs. by eirstCalcasieu National Bank in Lake Charles, La.) 17 National Bank, Columbus, Ga. (Decrease in surplus) 30 921 District No. 4. National Bank, Lynch, Ky. (Decrease in surplus) -n-rst National Bank, Natrona, Pa. (Decrease in surplus) 3/14/33 -22- A lications for SURRENDER of Stock: (Cant'd) Shares 11 / 1.11_Pb- 7 . Ridgely-475" State Bank, Springfield, Ill. 450 (Insolvent) Citizens National Bank, Winchester, Indiana. (IT.L.Abs. by Peoples Loan &Trust Company, nonmember) 34 .111.1.1"t No 8 111113t RE1 1.Bank, Oran, Mo. 484 18 18 11.icNo.9 1 Citi-,,,ens &Security National Bank, St. James, Minn. (Insolvent) 60 60 District No. 10. st National Bank, Craig, Nebraska. (Insolvent) l'irat National Bsnk, Madison, Nebraska. (Insolvent) rirst National Bank, Leigh, Nebraska. (Insolvent) 21 105 42 168 (IT.L. terminal) ifirSt National Bank, Post, Texas. (Cons. of First National Bank of Post City and Citizens National , Bank of Post, Texas) 4-1-ret National Bank, Thorndale, Texas. (V.L.Abs. by Thorndale State Bank, Thorndale, Texas, nonmember) ilerens National Bank, Kerens, Texas. (V.L.Suc. by First National Bank of Kerens) 33 36 60 129 !IT 72 ual National Bank, Oceanside, Calif. (Insolvent) ornia National Bank, Sacramento, Calif. (Insolvent) Pirst.. —rican National Bank, Port Townsend, Viash. kpecrease in surplus) 1,500 12 Total 1,584 6,462 Approved. Thereupon the meeting adjourned. e 5ga2 ;7;4ftl' Secretary.
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