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4'6 A meeting of the Federal Reserve Board was held in Washington on Thursday, March 16, 1933, at 5:30 P. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Woodin, Chairman Meyer, Governor Hamlin Miller James Mr. Mr. Mr. Mr. Morrill, Secretary McClelland, Assistant Secretary Harrison, Assistant to the Governor Wyatt, General Counsel The Governor explained that the meeting had been called at the request of Mr. James to consider the following telegram received earlier in the afternoon from the Chairman of the Board of Directors of the Federal Reserve Bank of Dallas: "Your confidential telegram trans 1672 was read to our board in session this morning. It is the unanimous thought Of our Board that the passage of the Robinson Bill would be injurious to the Federal Reserve System and the country as a whole, and the members of the Board, collectively and individually, have a desire to protest against the passage of the bill if the Federal Reserve Board has no objection. TheY have in mind the adoption of a resolution urging defeat of the bill to be transmitted to you for such use as you might want to make, and in addition to that the several members of the Board would like to have the privilege of wiring their Senators and congressmen over the individual signatures exPressing their opposition to the measure. However, no action Npatever in this connection will be taken unless and until the ederal Reserve Board signifies it has no objection." The Secretary of the Treasury stated that S. 320 in an amended f°1111 is now before the House of Representatives and in all probability 'will be acted on tonight. He said that amendments were under consideration in the House, all of which had previously been discussed by the members of the Boar _, and suggested that a reply be made to the telegram received from the Dallas bank that any action along the lines proposed by the directors should be deferred until tomorrow. Governor Meyer pointed out that the board of directors of the Federal 3/16/33 -2- Reserve Bank of Dallas has been in session all day, that some of them are not residents of Dallas, and that apparently they are remaining in session awaiting a reply to the chairman's telegram to the Board. Mr. Tames then moved that the Federal Reserve Board interpose no °Nsction to the directors of the Federal Reserve Bank of Dallas taking such action in the matter as they deem appropriate in the circumstances. During the discussion of the motion, Mr. Hamlin suggested that the Power of general supervision over the Federal reserve banks vested in the Federal Reserve Board has never been construed to interfere with the right Of directors of Federal reserve banks to express their opinions as to the effect of any proposed legislation upon their respective institutions. Ur. Miller then moved, as a substitute for the motion by Mr. Tames, that the di rectors of the Federal Reserve Bank of Dallas be informed that the Federal Reserve Board advises against the course they have in contemplation. A general discussion followed, during which the Secretary of the Treasury left the meeting to confer with Congressman Steagall, Chairman of the Committee on Banking and Currency of the House of Representatives who had Previously sent word that he would like to see him. Shortly thereafter the 0_ oecretary of the Treasury sent word that he would like to have Mr. Morrill Secretary of the Board, COMB to his office. Ur. Hamlin then suggested that the Board address the following telegrfti to the Chairman of the Federal Reserve Bank of Dallas: "While there is no authority in the Board to interfere with individual expressions of opinion on proposed legislation, the Board in response to your direct question feels that the action you propose to take is not advisable." 3/16/33 -0- Tunes stated that he did not feel that he could vote in favor of the tele7raq -Proposed by Ib. Hamlin, but that he would be willin7 to be recorded as not vothk.; inlarder that it maid be transmitted as repreentinG the view of the majority of the renbers of the Board. La% Hamlin then left the neetin -] to consult with the Secretary of the TreasurY regarding the form of telegram Proposed by him with the inclusion therein o- a statement showing that it was action taken by a rflajor'÷ 1-Y vote, and upon his return reported that the Secretary Of the l'Ibeas1-117 asked to be recorded as favoring the proposed telegram as amended. La. . Hamlin thennoved as an anendment to Lir. :Tiller's substitute 4°tion that the following telegran be sent to the ahaiman of the board of cliroctors of the Aderal Reserve Barilz of Dallas: there is no authority in the Board to interfere with individual expressions of opinion on proposed leZislation, the Board, by majority vote, in response to your direct question feels that the action you propose to take is not advisable." Mr. Hamlin's motion was then carried, la.. James not voting. returned and, said that he had been asked by Secretary to reoort to the Board That had occurred. Mr. Morrill said that CO11r illan 3tea7,all VIaLi in tile Secretary's office with a draft of the bill c°11taillinG changes along the lines vzhich have been discut sed; tita t I Ir. 2tetiaall aaid that he had made a public statemert that this proposed legis14ti°1117°11101 Cive to a nonmember bank exactly the SS= privile„;es of obtain1544118 filla Federal reserve banks as any member bank would have ard that (11fle °Ile had raised the question whether he understood the bill clearly as it "Matt seem to be taut broad; that LIT. Stearmll's attention had been (lirected t0 the reference in the bill to section 10(b) of the Federal 4.,I9 3/16/33 -4- 1 Reserve Act and that it had been pointed out to him that under section 10(b) a member bank must have exhausted its eligible paper; and that it had been suggested that a nonmember bank to come in under the new bill would have to first exhaust its eligible paper and that no means were Provided by which it could come in with eligible paper. Mr. Morrill said he called Mr. Steagall's attention to the language of the bill and pointed out that in that respect it was the same as the Robinson bill as originally introduced and that since under the Robinson bill a nonmember would come to the Federal reserve bank under the terms of section 10(b), it meant that it could do so under that bill only when it had exhausted its eligible Paper. Mr. Morrill said that he pointed out, however, that under other proViSions of the Federal Reserve Act a nonmember bank could come to a Federal reaerVe bank through a member bank with eligible paper under permission granted by the Federal Reserve Board or could borrow on such paper from a correspondent bank. Unde Mr. Morrill added that Mr. Steagall said that upon the rstanding of the bill which he had gotten from Senator Glass he believed it gave e nonmember bank all the privileges of a member bank, but Mr. Steagall vas told by Mr. Morrill that so far as he had discussed the bill with Senator Glass, the latter seemed to be perfectly aware of the facts with reference t0 section 10(b). However, Mr. Morrill said that Secretary Woodin stated that he was not aware of that interpretation of the Robinson bill and as a result C ongressman Steagall and Secretary iioodin decided to ask to see the Ilreeident tomorrow morning to ascertain what his intention was and what he de8ired; that Mr. Steagall said that he wanted to do whatever the President desired; that Secretary Woodin also said that he had before him an additional ParagraPh which the President had approved, with SOMB changes, which the e 0 3/16/33 _5- President had asked to be added to the bill; and that Mr. Woodin had spoken to Senator Glass and had intended to speak to Congressman Steagall about it, but, realizing how extremely rushed the latter was, had not done so. Mr. L:orrill said that, apparently, it was the paragraph which had been sug- Eested as a desirable addition to require the applicant banks to comply with the conditions of the law with respect to member banks, and that the President had written on the side some changes. Li*. Morrill understood Secretary Woodin to say that the President wanted this paragraph added to the bill. Governor Meyer stated that late yesterday afternoon Secretary ::oodin had requested the assistance of Mr. Morrill and Er. Wyatt, acting in the % capacity of draftsmen, in rewriting the Robinson bill with proper safeEllards and incorporating therein a provision which would Eive the obligations of the Reconstruction Finance Corporation the same status as Governtient o bligations so far as the Federal reserve banks are concerned and a Provision which would repeal the requirement with respect to publicity of the loans of the Corporation. He added that last night Mr. Morrill and Wyatt had drafted a bill, in the form of an amendment to the Robinson bill) and that copies of the bill had been furnished to the members of the /3°nrd. The bill is as follows: "AlyaliLLIENT "Intended to be proposed by Er. Glasz 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 6, strike out the word 'section' and insert in lieu thereof the word 'sections'. 3/16/33 -6"On pace 1, line 7, strike out everything commencing with 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: "'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 which desires to discount with or obtain advances from a Federal reserve bank but which is not a member of the Federal Reserve System, shall apply for membership in the Federal Reserve System in the manner prescribed by Section 9 of the Federal Reserve Act, as amended, and pending final action upon such application, the Federal reserve bank, subject to regulations prescribed by the Federal Reserve Board, may discount paper for and make advances to such bank or trust company on the same terms and conditions as it is authorized to discount paper for and make advances to member banks. Before any such discount or advance is made, the applying bank or trust company shall deposit with the Federal reserve bank in a special account the amount which it would be required to pay on account of its subscription to the capital stock thereof upon admission to membership in the Federal Reserve System; and, during the time that such bank is indebted in any way to the Federal reserve bank, it shall be subject to the provisions of the Federal Reserve Act and the regulations thereunder applicable to manber banks. If the application of such State bank or trust company for membership be approved and it shall fail to complete its membership within the time prescribed therefor by the Federal Reserve Board, or if such application be disapproved, such bank or trust company shall not thereafter be entitled to any further privileges under this section; but, in either event, when all its indebtedness to the Federal reserve bank shall have been paid or provided for, such bank or trust company shall be entitled to the return of the amount deposited on account of its subscription to capital stock and to the return of all other moneys, securities and other property due to it or held for it by the Federal reserve bank. Under such regulations as the Federal Reserve Board may prescribe, the privileges afforded under this section to State banks and trust companies applying for membership in the Federal Reserve System may be made available to State banks and trust companies applying for conversion into national banking associations. Notes, drafts, bills of exchange and bankers' acceptances acquired by a Federal reserve bank under the provisions of this section 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 'rovisions of the Federal Reserve Act. A52 3/16/33 "'Sec. 405. With the view of facilitating the operations of the Reconstruction Finance Corporation, including the making of loans to State banks and trust companies which are not melthers of the Federal Reserve System, by increasing the marketability of the notes, debentures, bonds, Find other such obligations of that corporation, which are unconditionally guaranteed by the United States, the Federal reserve banks shall have the same powers (1) to discount notes, drafts, and bills of exchange secured by such obligations, (2) to make advances to member banks on their notes secured by such obligations, (3) to purchase and sell such obligations, and (4) to use all paper and obligations so acquired, as they have with respect to bonds and notes of the United States. "'Sec. 406. Subsection (b) of Section 201 of the Emergency Relief and Construction Act of 1932 is amended by adding at the end thereof a new sentence reading as follows: flt 'The statement showing the names of borrowers shall be made available to the Committees on Banking and Currency of the Senate and House of Representatives, respectively, for their confidential information, and shall not be made public."" Governor Meyer stated that Senator Glass has a copy of the bill and that the ideas embodied in it, other than the provision relating to the Reconstruction Finance Corporation, seemed to appeal to him; that he (Gov- ernor L.eyer) was inclined to feel that the bill was one that the Board wpuld be justified in approving; and that he had discussed the matter fully with B allantine, who had indicated that he would discuss it with Secretary Woodin. Telegram dated March 16, 1933, from the Chairman of the Federal Reserve Bank of Atlanta advising of the establishment at the bank on that date Of the f°110wing 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';L 4% 3 1/2/0 Without objection, noted with approval. Batik Letter dated March 14, 1033, from the Secretary of the Federal Reserve iansas City advising of the establishment at the bank on March 13, .Z 47i 3/16/33 -8- 1933, of the following schedule of effective buying rates on bankers' acceptances: 1 to 90 days 91 to 120 days 121 to 180 days 3 1/2% 3 4% Without objection, noted with approval. Telegrams dated March 16, 1933, from the Chairmen of the Federal Reserve Banks of Richmond, Dallas and San Francisco, advising of the establishment at those banks, subject to the approval of the Federal Reserve Board, of e rate of 4 1/2',% on advances to individuals, partnerships or corporations on the promissory notes of such individuals, partnerships or corporations secured by direct obligations of the United States under the provisions of section 13 of the Federal Reserve Act as amended by section 403 of the Act of March 9, 1933. The ratesestablished by the Federal Reserve Banks of Richmond, Dallas and San Francisco,were approved, effective March 16, 1933. The above telegrams also advised of the establishment at the Federal Reserve Banks of Dallas and San Francisco of the following schedule of 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. Telegram dated lArch 16, 1933, from the Chairman of the Federal Reserve 41* of Richmond advising that the board of directors of that bank had voted to establish a rate of 5%, subject to the approval of the Federal Reserve 13°ara, on advances made under section 10(b) of the Federal Reserve Act as 6Wlended by section 402 of the Act of March 9, 1933. The rate established by the Federal Reserve Bank of Richmond was approved, effective March 16, 1933. 4154 3/16/33 Telegram dated /larch 16, 1933, approved by four members of the Board, to the Federal reserve agents at all Federal reserve banks advising that the Acting Comptroller of the Currency has brought to the attention of the Board his telegram to the Federal reserve agents quoting instructions sent today to ell Chief National Bank Examiners with regard to the handling of inquiries being received in connection with the proposed reorganization of national benks. The telegram stated that while the responsibility for the direction of re organizations of national banks rests with the chief national bank e)Mminers, and with the State banking authorities in the case of State bRnks, the Board feels it would be desirable for the Federal reserve agents to °°13erate with the supervising authorities in such matters. Approved. • Reply to a letter dated Larch 14, 1933, from the Secretary of the 'Federal , aeserve Bank of Cleveland requesting approval of the salary of .1)5,500 Per linnum fixed by the board of directors of the Cleveland bank, effective 1441'ah 150 1933, for ar. E. A. Carter who was appointed Assistant Cashier of the bank as of that date. The reply stated that the Board approves the salarY fixed by the board of directors of the Cleveland bank, and advised that it is understood that Er. Carter's salary will be subject to deductions in "e°rdance with and during the period of the share-the-work plan established bY the board of directors of the bank. Approved. Letter dated Earch 15, 1933, from Deputy Governor Crane of the Federal Reser7e Bank of New York, inclosing a copy of a telegram which was sent by New York bank on that date to the Governors of the other Federal reserve barks reerding steps which were taken to carry out the control of foreign eZchall ge transactions in the Second Federal Reserve District as contemplated bY the Executive Order of Earch 10, 1933. Noted. Z4 107,1"-„, 3/16/33 -10- Reply to a letter dated March 3, 1933, from the Acting Comptroller of the Currency requesting approval by the Board of a salary of 14,3,600 per annum for National Bank Examiner Clifton A. Poole, assigned to the Fifth Federal Reserve District; the reply advising that the Federal Reserve Board approves the salary recommended. Approved. Telegraphic reply, approved by four meMbers of the Board, to a telegralu of March 15, 1933, from the Federal Reserve Agent at New York request iC aPproval of the appointment of Messrs. S. G. H. Turner and Barton P. Turnbull as special advisers in the Federal reserve agent's department of the bank in connection with the reorganization of member banks, with salary at the rate of ::;1,000 per month. The reply stated that the Board approves the salaries at the rate stated above and requested that the agent advise the Board When Messrs. Turner and Turnbull assume their new duties in the ?sderal reserve agent's department. Approved. Telegraphic reply to a telegram dated March 16, 1933, from the Federal Reserve Agent at Boston request ing approval by the Board of the appointment to the agent's examining staff for one month of Messrs. A. P. Noble, A. I. "ilateviell,H. E. Brown, H. S. Lamprey, R. W. Nam, F. H. Shute, M. L. Hopkins 4" I's B. Hamel, with salary at the rate of t400, ;;;400, i180, 4180, $180, 4135: 0202, and ;1127 per month, respectively; the reply stating that the Board approves the appointments and salaries recommended, and requesting adlee or the dates on which the several men assume their new duties and whether the, are designated as examiners or assistant examiners. Approved. Telegrap hic reply to a telegram dated March 16, 1933, from the Fedsl'al Re erv s -.0 Agent at Chicago requesting approval by the Board of the _ 3/16/33 -11- tetporary apDointraent as examiners of Messrs. B. K. Patterson, A. L. Wt.le6n, E. R. Mauss, E. M. Toseph and Boyd Brown, with salaries within Et l'alaCe of from 33,000 to 36,000 per annUM; the reply stating that the }3°a.rd aPproves the appointments and salary range recommended, and requesting advice of the dates on which the respective appointees assume their new duties and at what salaries appointed. Approved. Telegraphic reply to a telegram dated March 16, 1933, from the PeCleral Reserve Agent at Kansas City requesting approval by the Board of aPPointrrent of Mr. L. F. Mills as an examiner at the KFmsas City bank; l'eP17 stating that the Board apprares the appointment recommended, with at the rate of 32,700 Per annum. Approved. Telegram on March. 15, beaks, 193i to the Governors of all Federal reserve Proved by four mmbers of the Board, advising that the Federal Reael ' Ire Board feels that an advance to an individual, partnership or corpora- tioa tulder the provisions of the last paragraph of section 15 of the Federal ileeerg.e Act, as amended by section. 403 of the Act of March 9, 1W3, &mild be 1324e °n1Y by the Federal reserve bank of the district in. which the 13i1:1c4-Pal place of business of such individual, partmrship or corporation le located. Apilr awed. Telegram. to the Assistant Irederal Reserve Agent at Minneapolis, teleellIng to the applications for permission to withdraw immediately from tilenab"elliF in the Federal Reserve System filed by the Belgrade State Bank, eleade Montana, the Bavalli County Bank, Hamilton, Montana, and the 457 3/16/33 -12- Miners Savings Bank and Trust Company, Butte, Montana, the telegram advising that the Board waives the usual requirement of six months notice and that, accordingly, upon surrender of the Federal reserve bank stock issued to these banks, the Federal Reserve Bank of Minneapolis is authorized to cancel such stock and make refund thereon. Approved. Telegrams to the Federal Reserve Agent at Chicago advising that the Federal Reserve Board has approved applications filed by the following state banks for membership in the Federal Reserve System and for stock in the Federal Reserve Bank of Chicago, subject to conditions set forth in the individual telegrams: Number of Shares Name of Bank Scars-Community State Bank of Chicago, Illinois. Boulevard Bridge Bank, Chicago, Illinois. 32 450 Approved. Telegrams to the Federal Reserve Agent at Kansas City and to all other Federal reserve agents, advising that in view of the second sentence est section 303 of the Act of March 9, 1933, when read in connection with the first sentence of the tenth paragraph of section 9 of the Federal Reserve At) unimpaired preferred stock of a State bank lawfully issued and outstandIlleY be included as capital of such bank in determining whether it has cient capital to entitle it legally to become a member of the Federal Reserve System. The telegrams also stated that even though the capital of the blInk is legally sufficient, the Federal Reserve Board, in acting upon its „ -t4/4-1cation for membership, would take into consideration, among other thin get whether the kinds and amount of its capital appeared to meet the 458 3/16/33 -13- needs of the bank under all the circumstances of the case. Approved. Telegram on March 15, 1933, to the Governors of all Federal reserve banks, approved by four members of the Board, referring to the Board's Previous telegram of that date, trans. 1669, and advising that the Board reels it would be desirable to have the alphabetical list referred to therein prepared in three sections: (1) member banks licensed to resume banking °Perations; (2) nonmember banks licensed to resume banking operations without alaY restrictions other than those applicable to all banking institutions under the Executive Order of March 10, 1933; (3) nonmember banks licensed to resume banking operations under restrictions in addition to those applicable to all banking institutions. The telegram also suggested that the captions relating to nonmember banks should clearly indicate that the lists are based upon the best information obtainable by the Federal reserve bank to date. Approved. Telegram to the Governors of all Federal reserve banks stating that the office of the Comptroller of the Currency advises that, notwithStellding the appointment of a conservator for a national bank under the Ballk Co nservation Act, deposits received by such bank prior to the appointIllant of a conservator, in special trust accounts created under the provisions or Reg 'uletion No. 7 of the Secretary of the Treasury issued March 6, 1933, tilaY be w ithdrawn upon demand without restriction or limitation to the full aZtent or the amount of cash, Federal reserve bank balances and proceeds or United States obligations in which such deposits have been kept separate or "vested in accordance with the provisions of said Regulation No. 7. Approved. 459 3/16/33 -14Telegram to the Governors of all Federal reserve banks advising that in the Board's consolidated press statement of condition of the 11, ' elLeral reserve banks to be issued today the items "Special deposits-menber bank" and "Special deposits-nonmember bank" will be inserted immediately PrecadinC the item "Other deposits." The telecTam also advised that in the B°ard te CIMTD wire "Special deposits-member bank" will be designated by the code word CCM and "Special deposits-nonmenber bank" by the code word CANE. Approved. Telegram to the Governors of all Federal reserve banks advising that in the Board's consolidated statement of condition of Federal reserve 111144 the ..em "Redemmtion fund - F. R. Bank notes" will be inserted followthe item "Non-reserve cash," and that the item "F. R. bank notes in actual c ircuLation" will be inserted follaving item "F. R. notes in actual ell'etilatiOn. The telegram also advised that in the Board's COND wire, the c°d° word BIRD will be used to designate "Redemption Fund - F. R. bnnk notes" alld the code word TINT to designate "F. R. bank notes in actual circulation." Approved. Telegram to the Federal reserve agents at all Federal reserve banks aq\rising that no statements of condition of reporting member banks or of barlk debits will be issued for the week ending Larch 15, 1933, but that l'ittres should be collected if practicable as was done last week and rill'aished to the Board. Approved. Letter to the President of the First Federal Foreign Banking Corpora- 3/16/33 -a15- tion, New York, New York, replying to his letter to the Board of March 11, 1933, advising that if a license to reopen for the performance of its usual banking functions should be granted to the corporation, steps would be taken promptly to call a special meeting of the stockholders of the corPoration in order to take action to provide new funds for the corporation in an amount sufficient to restore its capital to $2,000,000 and to provide a reserve for losses of at least 4200,000, or, in the alternative, to liquidate the corporation; the Board's reply stating that in the light of the above statements the Board has brought the matter to the attention of the to Secretary of the Treasury, who has amended his regulation No. 22 so as authorize corporations organized under the provisions of section 25(a) Of the Federal Reserve Act to open and perform their usual banking functions, aUbject to certain restrictions stated therein. The letter requested that the Board be advised promptly of the date set for the special meeting of the stockholder s of the corporation at which action is to be taken upon the questions stated above. Approved. Letter to Honorable Harold Ickes, Secretary of the Interior, IlePlYing to a letter addressed to the Board under date of March 3, 1933, tr.°31 the then Secretary of the Interior, requesting the Board's views with liesPeet to a bill that Senator Gore of Oklahoma proposes to introduce, which, it enacted into law, would exempt from the reserve requirements imposed by "eti°n 19 of the Federal Reserve Act, as amended, deposits of Indian funds ille'de with member banks of the Federal Reserve System in all cases where such clePosi te were secured by a pledge of United States bonds. The letter to Secret erY Ickes Quoted certain views contained in the report of the committee 461 3/16/33 -15-- )on bank reserves of the Federal Reserve System with regard to reserves O) -L;nited States Government deposits, and stated that, for the same reasons, the Board is of the opinion that Indian funds secured by the pledge of United States bonds should not be exempt from reserve requirements. Approved. Memorandum dated March 14, 1933, from the Board's General Counsel recommending that the Board's subscription to the congressional service reg"ding banking and currency matters furnished by the Corporation Trust C°111PanY at the rate of 4100 per session of Congress, be renewed for the "esent session of Congress which commenced on March 9, 1933. Approved. f% Reports of Standing Committee dated March 15 and 16, 1933, recommending approval of the following changes in stock at Federal reserve banks: A li cations for ORIGINAL Stock: Shares District CitY National Bank in Wichita Falls, Texas. PciirtrzeNnastional Bank in Mt. Calm, Texas. National Bank in Ennis, Texas. 240 18 30 288 Approved. Thereupon the meeting adjourned. Secretary. 4P1'07ed:
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