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844 A. meeting of the Federal Reserve Board was held in 7Tashington Ort Monday, March 26, 1934, at 4:15 p. m. PRESENT: Mr. Mr. Mr. Mr. Mr. Black, Governor Hamlin Miller James Szymczak Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Bethea, Assistant Secretary The Board considered and acted upon the following matters: Letter dated March 23, 1934, from Mr. Stevens, Chairman of the Pederal Reserve Bank of Chicago, advising that the board of directors or the bank, at its meeting on that date, selected Yr. Solomon A. Smith, 're sident of the Northern Trust Company of Chicago, Illinois, as a keraber of the Federal Advisory Council representing the Seventh Federal IINIerve District, for the unexpired portion of the term ending December 31, 193.1, to succeed Mr. Melvin A. Traylor, deceased, and that Mr. 114ard W. Fenton, President of the Harris Trust and Savings Bonk of eilleago3 Illinois, was selected as alternate to Mr. Smith. Noted. Letter dated March 24, 1934, approved by five members of the keal, t ° Ur. Peyton, Federal Reserve Agent at the Federal Reserve Bank —44,41113011s, reading as follows: "This refers to Mr. Bailey's letter of February 7, 1934, with A ggard to the release of the bond covering Mr. Curtis L. Mosher as 4taai /41 stant Federal Reserve Agent at the Federal Reserve Bank of 11110(113011s. 40 "It has been noted that Mr. Bailey has advised that there is 1 _ °Ipiection to releasing this bond and has suggested that the rese be made effective as of March 1, 1934. In this connection, 11 Were advised under date of August 29, 1933, that the Board had 845 3/26/34 -2- "no objection to granting lir. Mosher leave with pay during the period from September 1 to December 31, 1933, inclusive, on the understanding that his services would terminate effective as of the close of business December 31, 1933. It is assumed, therefore, that his retention on the rolls of your bank after December 31, 1933, was in pursuance of the authority contained in the Board's letter of December 22, 1933 (X-7737) wherein it was stated that the Board would offer no objection to the continuance on the rolls of a Federal reserve bank of officers or employees no longer actively in its service for a reasonable period Of time without payment of salary or other compensation of any kind Pending adoption of a pension or retirement plan and with a view to the settlement, after the adoption of the retirement plan, of questions as to whether they should be permitted to obtain, or were ellgiule to receive, the benefits of the plan. "As you know, the retirement system of the Federal reserve banks Was established Larch 1, 1934, and, since Mr. Bailey's letter is not clear on this point, it will be appreciated if you will furnish defirate advice whether Lx. Y.osher was continued on the rolls of your 1?ank as Assistant Federal Reserve Agent after larch 1, 1934, and, lf so, whether in view of all of the circumstances involved, the bond covering him in that capacity should be released as of the date suggested by Lr. Bailey." Approved. Letter to the board of directors of the "McFarland Brothers' Balk", New Mexico, stating that, subject to the conditions prescribed in the letter, the Board approves the bank's application for membership in the l'ederal Reserve System and for the appropriate amount of stock in the Neral Reserve Bank of Dallas. Approved. Letter dated Larch 24, 1934, approved by five members of the Board, to -VaIliams, Federal Reserve Agent at the Federal Reserve Bank of ' 41.4d, reading as follows: "I regret that pressure of other matters has prevented an "Irlier reply to Mr. Fletcher's letter of November 8, 1933, re/e8ting advice as to whether it would be advisable to write to i'veral of the State member banks in your district which have been 1 :11 the hands of conservators since the Bank Holiday and which have "tie hope of reorganizing, requesting their withdrawal from L 846 3/26/34 -3- "membership in the Federal Reserve System. "Since it is understood that the action to be taken in any Of these cases would be determined upon the basis of all the facts involved in the particular case, there would be no objection to your office discussing with State member banks which are Still in the hands of conservators and which have little hope of reorganizing the advisability of withdrawing from membership and effecting a cancelation of their Federal reserve bank stock. However, in any case in which the question of withdrawal from member?hlIP is initiated by your office rather than by the member bank, it ls suggested that you consider the advisability, in order to avoid an possible misunderstanding, of having a representative of your ?ffice discuss the matter with representatives of the member bank involved rather than to make the request by writing to the bank." Approved. Letter to Wood, Federal Ileserve Agent at the Federal lleserve tia* Of St. Louis, reading as follows: "The Federal eserve Board approves the application of the ! Vhnufacturers Bank k Trust Company of St. Louis', St. Louis, lqissouri, for permission to act as trustee under mortgages, as 1)aYing agent for corporations in the payment of their bonds and c°uPons, and as registrar and transfer agent and as custodian for securities that may be left on deposit for safe keeping, provided that prior to the exercise of any of such powers the board of d irectors of such bank shall adopt an appropriate resolution acthe condition given below and shall transmit to the Board, "IroUgh you, a copy of such resolution: 1. If trust funds held by such bank are deposited in its banking department or otherwise used in the conduct of its business, it shall deposit with its trust department security in the same manner and to the same extent as is required of national banks exercising fiduciary powers. "You are requested to advise the L:anufacturers Bank & Trust COmn , - arlY of St. Louis of the Board's action. "In this connection, while it is assumed that the bank will tablish a trust department separate and distinct fram comtercial departments, that in addition to its trust officer the '2erations of the deartment will be supervised by the board of `,,l'ectors or by a committee thereof, and that the bank has availle the services of competent legal counsel experienced in trust w tters, the Boa-rd, in order that its records may be complete, i°111d like to receive definite ad-:ice from you or from the baak 4 l'ee;ard to these matters." Z Approved. 3/26/34 -4- Letter to Jr. O'Connor, Comptroller of the Currency, reading as fellows: "In accordance with your recouidendation, the Federal Reserve Board approves a reduction in the cammon capital stock of 'The aynesville National Bank', -Jaynesville, Ohio, from „A00,000 to .62,500, pursuant to a plan which provides that the bank's capital shall be increased by ,;37,500 of preferred stock to be sold to the Reconstruction F - inance Corporation and/or others, and that the released capital shall be used to eliminate a corresponding a]mount of estimated losses, doubtful or depreciated values in its assets, all as sot forth in your memorandum of Larch 14, 1934." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as fellows: "In accordance with your recomendation, the Federal Reserve Board approves a reduction in the common capital stock of 'The First National Bank of Biloxi', Biloxi, Mississippi, from -,;125,000 t° ci,50,000, pursuant to a pinr which provides that the bank's ca7ial Shall be increased by y75,000 of Class 'A' preferred stock to ee sold to the Reconstruction Finance Corporation and c,25,000 of Class tB, preferred stock to be sold locally, and that the released capital, together with a portion of the bank's surplus and undivided 1?rofits, shall be used to eliminate unsatisfactory assets and securities depreciation in the amount of approximately A14,278, all as set forth in your letter of Larch 19, 1934." 2,.nproved. Letter to Fr. rojacms: Comptroller of the Currency, reading as "In accordance with your recommendation, the Federal Reserve .?El'rd approves a reduction in the common capital stock of 'The "rst National Bank of Gilman', Gilman, Illinois, from :A0,000 to 2 , 1 ,000, pursuant to a plan which provides that the bank's capital be increased by :T5 v4 ,000 of preferred stock to be sold to the ptocoilstruction Finance Corporation and that the released capital, ,ether with a voluntary contribution of p12 000 to be raised ' J-OcallY, shall be used to eliminate substandard assets and securitie, depreciation and to increase the bank's surplus by .:6,000, 1 as set forth in your memorandum of Larch 16, 1934." Approved. 848 3/26/34 -5- Letter o Li-. O'Connor, Comptroller of the Currency, reading as ,. "Receipt is acknowledged of your memorandum of Larch 19, 1934, Ilth reference to the proposed capital reduction of 'The First NaSandoval, Illinois, from •:40,000 to 325,000 tl°nal Bank of :)andaval', -. Which was approved by the Board December 26, 1933. You advise that the Reconstruction Finance Corooration commitment calls for the purchase of but 15,000 of preferred stock instead of the .25,000 apPiled for and that your office has requested the bank to forward an amended application on the basis of a ..10,000 reduction in comon capital and the sale of ::20,000 of preferred stock to the Re?onstruction Finance Corporation, instead of a reduction of .15,000 ln.corznon capital and the sale of .25,000 of Preferred stock as originally planned. "Inasmuch as the released capital under the proposed amended Plant together with the bank's surplus, will be more than sufficient to Provide for all estimated losses, doubtful assets and securities dcPreciation as shown in the report of examination as of Auc-ust 28, 19°3, and the proposed adjustments will place the bank in a liquid arid generally satisfactory condition, the Boar] approves the plan as set forth in your memorandum of Larch 10, 1934 which provides Iccr a reduction of ,;10,000 in the common capital stock, the sale of r20 Onn Of preferred stock to the Reconstruction Finance Corporation and the use of the released capital in eliminating a corresponding azount of substandard assets." Approved. Letter to hr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve n :?ard approves a reduction in the common capital stock of 'The ilational Bank and Trust Company of Oklahoma City', Oklahoma w Yt Oklahoma, from ',)5,000,000 to ,;2,500,000, pursuant to a plan "lch provides that the bank's capital shall be increased by ,;2,500,000 Of ,. Preferred stock to be sold to the Reconstruction Finance Corporaion and flu that the released capital, together with a portion of the na4's surplus nC/or undivided profits, shall be used to eliminate 7,PProximately .r/6,101,084 of substandard assets and securities deciation, all as set forth in your memorandum of Larch 10, 1934." Approved. irlelliorandum dated Larch 21, 1934, from Lir. Vest, Assistant Counsel, N%trIti 'elldIRT that there be published in the next issue of the -'ederal OUT pTpd sSauom pamTpToun jo 4sTs1oo ,spunj ;snaI pup 4anoo, a_ qoTqm uowerma0A; Pqq- Poo;saopun ST qT 'Bosses:3.0d aou paPog ot i sal; maz -o;eaoq; ;oodsoa TI;Ta uoTuTdo uv sseadxo o; 03iporaopij pTnoqs paPoq eq; oaojaq pauTP;qo OCt pinoqs pe;uasead suoTq.earib aq; OuTuaeouoo uoT;PmaojuT e;aTdmoo plq; ;Tej sPa 4-T '226T ‘21 aectpeoec jo noS o; ae;;eT s,papog et. UT po;uoTpuT spa sVi, .popuouP sP 'q.ov GAJOSGH TDJOppg et. JO 61 uoT4.0ec OuTiream eq; umTa 4 ATTUCITOTUTIM JO uoTsTATpqns aerflo ao Toollos 'Aunoo 'e;u;s Sum jo jtollaq uo ao Sq oppm spunj : o v s;Teodop paaapTsuoo eqSVM a;P;s ;utl; UT ste;Tdsoq o;t;c ureq.a ,spunj ,s;uoT;rid, jo s;Tsodep pum 31.10.X. 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JO JOITOUPJ aouao400 on + aq4 jo saaqmoia anoj Sq paAoaddo 'T7261 ,i7aoJg Pa pep mma2o10I •peAoaddy .P°P7Tdum;//00 41puT2Tao poTaad aq; puoSaq paaaejap uaeq sn tloTqa jo ;uataitod Jo ot s;Tsodap o; q.00dso tp papog aq;iq apum Sflueooa 2uTTua Jo et; O. peqop;;p waoj Ot4 UT ';ueule;13;s P UT4OTTng e4aoes4 -9- 6t8 3/26/34 "court, of moneys held in court for the benefit of minors and incompetents, and of moneys held in court awaiting the outcome or litigation or claims of the rightful owners, and that the 'patients' funds' consist of funds of private individuals held bY the Commissioner of Mental Hygiene or by State hospitals in rJew York for the benefit of such private individuals. It is also understood that no State, county, school district, or other subdivision or municipality has any beneficial interest in any of the funds in Question. pro"As you know, Footnote 2 of the Board's Regulation . vides that deposits of moneys paid into State courts by private Parties pending the outcome of litigation are not deposits of the kind referred to in Section II (b) (3) of the regulation, which excepts frau the prohibition upon the payment of interest on dePosits payable on demand any deposit of public funds made by or 04 behalf of any State, county, school district, or other subdivision or municipality, with respect to which payment of interest is required under State law. Likewise, the Board is of the °Pinion that deposits of funds of the kind here in Question do not constitute deposits of 'public funds made by or on behalf of anY State, county, school district, or other subdivision or municipality' and, therefore, it is the view of the Board that such deposits are not within the exception aforesaid." Approved. Letter dated parch 24, 1934, approved by five members of the 130ax.d ' to 'a's O'Connor, Comptroller of the Currency, reading as follows: "This refers to Mr. Awalt's memorandum addressed to the Fed! ral Reserve Board under date of Kovember 18, 1933, with respect .,1(3 the harmonizing of certain rulings made by the Federal eserve °ard in regard to the payment of interest by member banks. "A ruling of the Board dated September 26, 1933 (X-7619), contains the following statement: 'If the amount of interest paid by a member bank upon anY deposit exceeds three per cent per annum, compounded semi-annually, for the period during which the deposit is actually in the bank, whether by reason of inclusion in the interest period of days prior to the date on which the deposit was made or days after it was withdrawn, the payment is at a rate in excess of that prescribed by the Regulation and in violation thereof. However, interest at a rate less than the maximum prescribed in the regulation may be paid from the first day of the month on a eavings deposit which is actually received thereafter, Provided that the amount of interest paid does not exceed three per cent per annum, compounded semi-annually, for 851 3/26/34 -8"the period from the date on which the deposit was actually received by the bank until actually withdrawn'. "In a ruling of the Board dated October 24, 1933 (X-7656), it was stated: 'The Federal Reserve Board is of the opinion that a member bank may not lawfully pay interest for the period intervening between the maturity date of a certificate of deposit and the date on which a renewal certificate of deposit is actually issued, even though such renewal certificate is dated back to the date of maturity of the original certificate'. "In this connection, it is noted that your office has taken the position that no objection will be raised to the antedating of certificates of deposit, provided that the amount of interest paid on any such certificate for the Period for which it is drawn does not exceed the maximum rate of 3;L for the period during which it represents a time deposit, i.e., the period between the date the certificate is actually issued and the date of maturity. "The Board's ruling of September 26, 1933 dealt with the question whether days prior to the date of actual receipt of a savings deposit could be included in the period as of which interest was computed, and the Board ruled that such days might be included in the interest period, provided that the amount of interest 1.24id did not exceed 3 per cent per annum, compounded semiannually, . lor the period from the date on which the deposit was actually reby the bank until actually withdrawn. In other words, the ; 6°41rd's ruling was based on the promise that if the interest actual? Paid on the deposit during the period it represented a savings Posit as defined in the Board's Regulation Q, did not exceed the Illte prescribed therein, the method of computing interest on such ' u elp°81t was immaterial. "On the other hand, the ruling of October 24th did not relate to the method of computing interest, but involved the single cluesa t oll whether a member bank could pay interest on a time deposit 0:',ter maturity for the period intervening between the maturity date 44' the original certificate of deposit and the date on which a rea l certificate of deposit was actually issued. The Board ruled tr beets since the deposit represented by the original certificate eMe a deposit payable on demand after the maturity of such cercate, the payment of interest thereon for the period intervenbetween the date of maturity of the original certificate and aae date of issuance of the renewal certificate would constitute .447101ation of the prohibition of the Federal Reserve Act against t4e Payment of interest on a deposit payable on demand. The clueswhether the intervening period during which the deposit was ! d Y4b1e on demand could be included in computing interest on such Posit, provided the rate of interest payable during the time that P52 3/26/04 -9- "the deposit actually conformed to the requirements of a time deposit within the meanin:=2, of the Board's Regulation 0 did not e):ceed 3 per cent per annum, compounded semi-annually, was not submL - tted to the Beard and the Board expressed no opinion thereon. "In view of the foregoing, the Board does rot feel that its ruli4-s to which reference has been made present any inconsistency of position." Approved. Letter to 1,1r. ,Tames S. Rogan, President of the American National Balm --cat Indianapolis, Indiana, reading as follows: "Receipt is acknowledged of your letter of February 20, 1934, requesting an interpretation of the iederal i;eserve Board's Regula"n q. You state that it has been customary for certain banks to ?-ssue certificates of deposit payable upon 30 days' notice in writ111C Given by the depositor and that an instance has arisen wherein the. holder of such a certificate of deposit, after having given such notice, has regaested that the notice be withdrawn and the certificate continued in effect. It is understood that you desire to be advised whether, in such case, the notice of intended withdrawal rnaY he waived and the deposit continued on a 30 days' basis or Whether a new certificate of deposit should be issued. "Section TII(e) of 1;egulation , provides that after the exPiration of the period of notice given with respect to the repayrIlent of any time deposit, such deposit is a deposit payable on de!land and no interest may be paid thereon for any period subsequent the expiration of the period of such notice. However, if notice 15.given with respect to the intended withdrawal of a time deposit eYldenced by a certificate or other written instrument which provides that the deposit may be withdrawn only after actual written notice of not less than 30 days before the date of repayment and subseauently the owner of such deposit advises the bank in writ11g Prior to the expiration of the period of such notice that the ciposit will not be withdrawn pursuant to such notice and that the eposit will thereafter continue subject to the provisions of the r ritten instrument evideneinr the deposit, and the bank duly asthereto, it is believed that such advice would constitute a l jvecation of the written notice of intended withdrawal and that u? deposit would continue subject to the provisions of the law 0 8-11c1 of the regulation applicable to time deposits. The position the Board is based on the assumption that advice of the revocai1°4 Of notice of intended withdrawal will be given by the depositor t4 W'jtjg and that the bank will assent thereto and that the ' l 8Ln8action will be carried out in good faith. "It would appear to be desirable, however, in order to avoid .4Y. uncertainty as to the ri hts of the parties, for the bank to 3/26/34 -10- "require the surrender of the original instrument evidencinF, the deposit and to issue a new certificate or other written instrument as of the date on which the original certificate would have matured in accordance with the terms of the notice of withdrawal previously €;iven." Aoproved. Letter dated Larch 24, 1934, approved by five members of the 11°Ikrd, to Mr. Howard J. Rhodus, Continental Bank-Supply Company, Lexie°, 141550 , reading as follows: "This refers to your letters of Larch 5, and Liarch 13, 1934, in which you innuire as to the rules of the Federal Reserve Board and of the Federal Deposit Insurance Corporation regarding the question whether interest may be compounded quarterly or semia nnually. "For your information there is inclosed herewith a copy of the Federal Reserve Board's Regulation which is applicable to raember banks of the Federal Reserve System and which in Section III(c) thereof provides that 'no member bank shall pay interest, ,ccruinC; after October 31, 1953, on any time deposit or any part hereof at a rate in excess of 3 percent per annum, compounded sezlannually ***I, and in this connection your attention is also invited to the footnote numbered 6, on this subject. 4. "There are also inclosed copies of Regulations B and C of he Federal Deposit Insurance Corporation and your attention is invited to Section 3 of Regulation B and Section 4(e) of Regulation C. "With reference to your request for a ruling as to whether the wording of the regulations contained in the bank books iCh You manufacture meets with the requirements of the Federal eserve Board, you are advised that the Board cannot undertake to ; 141,1° on a natter of that kind inasmuch as it is the responsibility each member bank to camply with the rules and regulations proraulc,ated by the Board." . Approved. Telegram dated :arch 24, 1934, approved by five members of the , to Governor Geery of the Federal Reserve Bank of lanneapolis, g as follows: "Re your wire to ':;yatt of 17arch 9 Board is of the opinion tb c;at the application by a member bank of the amount of a time l'tiricate of deposit held by a borrower from the bank on the fi54. 3/26/34 -11- "note of such borrower to the bank before the maturity of such certificate would constitute a payment of a time deposit before maturity in violation of the law and the Board's Regulation .,IpProved. Draft of a letter to Senator Fletcher, Chairman of the Banking and CurreneY Committee of the Senate, prepared for the signature of the Seer,ntarv of the Treasury in accordance with a reouest received 411der date of March 1, 1934, from i . William M. McReynolds, .,dministl'ative Assistant to the Secretary. The letter, which was approved by tbIe Idembers of the Board on 1,:arch 24, 1034, read as follows: "This refers to the letter from the Acting Clerk of your Columittee, dated March 13, 1934, inclosing a copy of S.3043, entitled 'A Bill To amend Section 25(b) of the Federal Reserve act, as amended (relating to jurisdiction of Federal courts over Suits involving Federal reserve banks)', and reouesting a report hereon. The bill would repeal the provision of said Section 25(b) which confers upon the Federal courts jurisdiction over suits t which Federal reserve banks are parties. "At one time the Federal courts had jurisdiction of suits bY or against Federal reserve banks because of the fact that Iederal reserve banks are incorporated under an Act of Congress. BY Section 12 of the Act of February 13, 1925, which provides tat no district court of the United States shall have jurisdiction of any action or suit by or against any corporation upon the ground that it was incorporated by or under an Act of Congress, ?xeePt corporations in which the (A-overnment of the United States the owner of more than one-half of the capital stock, United ,b)tates district courts were deprived of jurisdiction of all suits .Y or against Federal reserve banks in the absence of a Question ! ,- nvolving the interpretation of the Constitution of the United ,A,ates or of some Federal statute raised by the original pleading °I the plaintiff. however, Congress recognized the desirability returning to the Federal courts jurisdiction of suits to which Federal reserve banks are Parties, and by the Banking Act of ,33, approved Tune 10, 1933, it restored to the district courts ,1 the United States jurisdiction of such suits by inserting in 'ection 25(b) the provision which it is now proposed to repeal less than one year after its enactment. "If the proposed amendment should became law, the Federal 1 eserve banks would be forced to defend in the State courts suits : ihleh turn upon essentially Federal questions and which result in 2 855 3/26/34 -12- "nationally important interpretations of the Federal Reserve Act. The provisions of the Federal Reserve Act or the regulations of the Federal Reserve Board are frequently the grounds upon which Federal reserve banks defend suits brought against them; but the fact that such questions are raised in the defendant's pleading is not a ground 01' jurisdiction in the United States district courts. la)reover, Unlike national banks, the Federal reserve banks would not be able to remove suits brought against them by persons located in other States to the United States district courts on the ground of diversity Of citizenship, because the Supreme Court of the United States has held that a Federal corporation is not a citizen of any State and there is no provision in the Federal Reserve Act similar to that in the National Bank Act providing that they shall be deemed citizens of the States in which they are located. In the circumstances it appears that the proposed amendment to deprive United States district courts of jurisdiction of suits by or against Federal reserve banks would be prejudicial to the interests, of such banks, and it is the opinion of the Treasury Department that its enactment is not desirable. "It should be noted that the aforesaid Act of February 13, 1925, makes an exception in the case of corporations in which the G overnment of the United States is the owner of more than one-half of the capital stock; and it is believed that a similar exception in the case of Federal reserve banks is both logical and proper, since they act as fiscal agents of the United States and perform l , eertain functions of sub-treasuries as well as many other important unctions of the Government. "In view of the foregoing, the Treasury Department does not i' vor the enactment of the bill, S.3043." Approved. Letter dated L:arch 24, 1934, approved by five members of the Board, Ur. " 4 A. Carroll, Vice President of The National Shawmut Bank of Bos- tot., Ilassachusetts, reading as follows: "Reference is made to your letter of December 7, 1033, regard140 the applicability of Section 32 of the Banking Act of 1933 to the service of Mr. Paul C. Cabot as a director of your institution sIld as treasurer of State Street Investment Corporation. "It appears from the information contained in your letter and inrormation available to the Board that State Street InvestCorporation is an organization of the type commonly known as 'investment trust'. After careful consideration of the question Federal Reserve Board has reached the conclusion that because "14'34vestment trusts vary so widely in character no general ruling can es Made as to the applicability of Section 32 to them, but that " 11 ease must be decided on its own particular facts. 85C 3/26/34 "From the information submitted, the Board is unable to detemine whether State Street Investment Corporation is 'engaged Primarily in the business of purchasing, selling, or negotiating securities' within the meaning of Section 32. It is accordinly suggested that you confer with the Federal 2Leserve Agent at the iederal :.-eserve Bank of Boston who will be in a position to advise You regarding the matter." Approved. Letter dated arch 24, 1934, approved by five members of the Board, to 1:x. Sohn C. Say, hew York, hew York, reading as follows: "The 2ederal Reserve Board has Given consideration to your application under Section 32 of the Banking Act of 1033 for a permit to serve at the same time as a director of The Fifth Avenue Bank of New York and as a partner in the firm of I. Seligman S Company, a dealer in securities, both of New York City, New York. "The Federal Reserve Board has reached the conclusion that it was the intent of the Congress in enacting Section 32 to terminate all relationships of certain types between member banks and dealers in securities, apparently because it felt that such relationships 'night tend to influence the banks' credit and investment policies and their advice to their correspondent banks and other customers respectinr, investments in a manner which the Congress deemed to be incompatible with the public interest. The Beard accordingly feels thut it may not properly grant permits authorizing relationships which are actually of the kind referred to in that section, and that its authority to issue permits should be exercised only in exceptional cases; for example, those which are included within the literal berms of the statute but which are actually of a kind different from those at which its provisions were directed. "It appears that 3.,J. Seligman &, Company is primarily onaged in the security business and that Lherefore the relationship covered by your application is within the class which that section deigned to terminate. Accordingly, the Board is unable to 1,1nd that it would not be incompatible with the public interest as cLeclared by the Congress to grant your application, even though ,rthing has been called to its attention which would reflect in any I ,?gree upon your desirability as a director of the bank, except that 1.1e relationship covered by your application is within the prohibi1°40 of :Action 32. "In the event that you desire to submit further facts or arguerits in support of your application, the Board is prepared to give .11ena careful consideration. However, any such additional facts or , C"Uments should be submitted as promptly as possible, in writing, ' II-lough the Federal Reserve Agent." T Z Approved. 859 V4/34 -14- Letter dated rarch 24, 1934, approved by five members of the Board, to Uz. William C. Langley, New York, New York, reading as follows: "The Federal Reserve Board has given consideration to your aPPlication under Section 32 of the Banking Act of 1933 for a permit to serve at the same time as a director of the Chemical Bank & Trust Company and as a partner in the firm of W. C. Langley & Co., a dealer in securities, both of New York City, New York. "The Federal Reserve Board has reached the conclusion that it was the intent of the Congress in enactin; Section 32 to terminate all relationships of certain types between member banks and dealers in securities, apparently because it felt that such relationships Might tend to influence the banks' credit and investment policies and their advice to their correspondent banks and other customers respecting investments in a manner which the Congress deemed to be Incompatible with the public interest. The Board accordingly feels that it may not properly grant permits authorizing relationships Which are actually of the kind referred to in that section, and that its authority to issue permits should be exercised only in exceptional cases; for example, those which are included within the literal terms of the statute but which are actually of a kind differant from those at which its provisions were directed. "It appears that W. C. Langley Co. is primarily engaged in the underwriting, purchasing and selling of securities and that therefore the relationship covered by your application is within the class which that section was designed to terminate. According1Y, the Board is unable to find that it would not be incompatible With the public interest as declared by the Congress to grant your 4PPlication, even though nothing. has been called to its attention ich would reflect in any degree upon your desirability as a uireetor of the bank, except that the relationship covered by your application is within the prohibitions of Section 32. "In the event that you desire to submit further facts or arguTeats in support of Your application, the Board is prepared to give 5hem careful consideration. However, any such additional facts or !rgUments should be submitted as promptly as possible, in writing, 4hrough the federal Reserve Agent." n Approved. Letter dated Larch 24, 1934, approved by five members of the Board, to ld, 411 '?red Y. Presley, President of the National Investors Corporation, 41r ellc, New York, reading as follows: "Further reference is made to your letter of August 25, 1933, rep. ing the application of Section 32 of the Banking Act of 1933 the service of officers and directors of member banks of the ttl_eral Reserve System as officers and directors of the investment 'usts which comprise the National Investors Group. "It appears from the information contained in your letter 858 3/26/34 -15- "that the corporations comprising the National Investors Group are organizations of the type commonly known as 'investment trusts.' After careful consideration of the question the Federal Reserve Board has reached the conclusion that because investment trusts varY so widely in character no general ruling can be made as to the applicability of Section 32 to them, but that each case must be decided on its own particular facts. "From the information submitted, the Board is unable to determine whether the investment trusts which comprise the National rivestors Group are 'engaged primarily in the business of purchas!ag) selling, or negotiating securities' within the meaning of ,Qeotion 32. It is accordingly suggested that you confer with the "deral Reserve Agent at the Federal Reserve Bank of New York who will be in a position to advise you regardilv the matter." Approved. Letters dated Narch 24, 1934, approved by five members of the 8°4rd, to applicants for permits under the Clayton Act, advising of ap1311°Iral of their applications as follows: G. L. Lyerly, for permission to serve at the same time as a ollrector of The First National Bank of Hickory, Hickory, North ar01ina) and as a director and officer of the Hickory Industrial Batik) Hickory, North Carolina. L. C. Thiele, for permission to serve at the same time as a rector and officer of The Ramsey National Bank, Ramsey, Illinois, 44 as a director of The First National Bank of Vandalia, Vandalia, Illinois. V Approved. Letters to applicants for permits under the Clayton Act, advis- or aPProval of their applications as follows: 1)1.r. 0.. • Hambleton Ober, for permission to serve at the same time Ele weal officer of the Baltimore National Bank, Baltimore, :,aryland, 1- u as a director of the Norris Plan Bank of Baltimore, Baltimore, '4171and. 14r. /, d, 11-0Ean Jackson, for permission to serve at the same time as a ector and officer of The Albertville National Bank, Albertville, Aate4a) as a director and officer of The National Bank of Boaz, arria) and as a director and officer of the Bank of Arab, Arab, ab Approved. 859 3/26/34 -16- There were then presented the following applications for original Or additional stock of Federal reserve banks: :41-']4?2,...Lcations for ORIGIN:AL Stock: No. 1. rhe Lincoln :laCionai Bank of Glielsea, Chelsea, L:assachusetts lict '1 4 ".• 'Irst ImtioLal Bank in Cecil, Cecil, Pennsylvania Shares 72 72 36 36 36 36 36 36 tr1O 6. 1717Fa-77-7176na1 Bank in :Rockwood Rockwood, lehnessee 1i 2 strict st I;ational Bank in :,:anon, Marion, '.'iisconsin E1.1%ictrict :o. 11. Pirst Wallis, Texas Bank of _anis, 32 Total 32 212 At i, /TIONAL Stock: 3. f 2. - or a) ----'^- °many of New York, 1"Teili York, 'Jew York 4-TRTy-C-d 5. 4. 17,;ers Le- chunts National Bank & '11-13t Company of Viinchester, Virginia ts io. 10. -'4,araerce Trust Company, ic-arisas City, Missouri 12,000 12,000 GO 60 1,800 1,800 1 500 Total 1,500 15,360 i-61.1et 7,To. 11. Ll ational Bank in 11°118t°11, Texas Approved. upon the meeting adjourned.
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