The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
208 A, fleeting of the Executive Committee of the Federal Reserve Board 17413 held in Washington on Monday, Ilfly 1, 1933, at 11:30 a.m. PRES14IT: LIr. Mr. Mr. Mr. Me ye r, Governor Hamlin Miller Xamea Er. Merrill, Secretary Mr. McClelland, Assistant Secretary Er. Harrison, Assistant to the Governor. The Comnittee considered and acted upon the following natters: Letter dated April 27, 1933, from the Secretary of the Federal ReElexlre .13 eak of New York, and telegram dated April 28, 1933, from the Chair11184 Cr the Federal Reserve Bank of Chicago, stating that,at meetings of the or directors on the dates stated, no changes were made in the banks' eZiat irtr, schedules of rates of discount and purchase. Without objection, noted with approval. LTenorandum dated April 26, 1933, from Lir. Goldenweiser, Director r the Dlvision of Research and Statistics, recommending an extension for ohe Ilt4 from May 1, 1933, of the temporary appointments, as employees in thErt clivialc11) of Mrs. Mildred Corder and Mrs. Ruth Jones, with basic salary t rate of ;)1,560 and 31,500 per annum, respectively; the reconnendation 114Thle b e-11 aPproved by four members of the Board on. April 28. Approved. lletiorandum dated April 29, 1933, from the Board's Chief Telegraph 464rEttor, recommending the discontinuance, as of April 50, 1933, of the °x1117 aPPointment of Mr. S. B. Roberts as telegraph operator. Approved. Letter dated April 29, 1933, to Deputy Governor Attebery of the Re "rim Bank of St. Louis, approved by three members of the Board, ed- 209 -2l'ing to his reply on April 17 to the Board's letter of April 13 request" r 14roZnation with regard to the duties of, and conditions surrounding, the PcIaltiOrt of "clerk" in the credit-discount department of the bank provided In 4 Proposed change in the bank's personnel classification plan; Deputy 51relllor Attebery stating that the person employed for this position has had "°i* Years of experience with local bond houses and is considered 11141113 hitebt • exPerienced in appraising securities, and that due to the general 11143 ana class of securities offered to the bank in connection with loans 144der the provisions of section I0(b) of the Federal Reserve Act and section 101 • .1ae Act of Larch 9, 1933, as amended, it was felt that the services of 4 1414 ' 1.r this Character were desirable. The Board's letter stated that it 4PProve 4 the change in the bank's personnel classification plan as recom oarideci. Approved. Letter to Ur. Case, Federal Reserve Agent at New York, stating that, "ec)delloe with the request contained in a letter addressed to the Federal reserv e agent under date of April 21, 1933, by the Vice President of the Town 14%et orVallY, Ilontclair, New Jersey, transmitted to the Federal Reserve lioara , Tlith the agent's letter of April 25, 1933, the bank's application for rile/zberah 11/ in the Federal Reserve System will be considered by the Board as 44/1Ag be -ea withdrawn, but that,since the papers comprising the application 41%e e°4eidered a part of the permanent official files of the Federal Reserve ie not possible to damply with the agent's suggestion that they be et411:18(1, to hiru Approved. 5/1/33 -3Reply to a letter dated April 25, 1933, from Er. 1:ewton, Federal "u' .ligent at Atlanta, trannitting a request of the Central Farmers' c °111Pa.ny, 'blest Palm Beach, Florida, for an extension of tir,n in which to "eePt the conditions of membership prescribed in the Board's letter of April ' 3 1933, in connection with the bank's application for membership in the Fed"'Ileserve System. The reply stated that the Board grants an extension to 2 '1933, and that the agent is requested to advise the institution "e(Vairkay. Approved. T-ele[;raphic reply on April 29, 1933, approved by three members of the B clo to a telegram dated April 27 fm 1±. Jalsh, Federal Reserve Ett Dallas, stating that the Atoka State Bank, Atoka, Oklahoma, has 1'11°11 7lith illto the Comptroller of the Currency an application for conversion ional bank and, nendin', action thereon, desires a thirty-day "elLsion of the t.me within which it may accent the conditions prescribed bankte I3°ard in its letter of I arch 29, 1933, in connection with the aDDlicatien for reply stated membership in the Federal Reserve System. The that the leal-d will extend to I:ay 28, 1933, the time in which the State h(111 accept the conditions referred to. Approved. TelegTam to the Federal Reserve Agent at St. Louis, referring to hie abpi lee.tion of the ,iest 1._:nd Bank, University City, i:issouri, for per1111elen t L'Yater ' kelltha withdravt immediately from membership in the Federal :Reserve statin.c that the Board waives the usual requirement of six -() of intention to withdraw, and that, accordincly, upon surrender 211 4) 5/1/33 or -4- tile Federal Reserve bank stock issued to the bank, the Federal Reserve 1144I or St. Louis is authorized to cancel such stock and make refund thereon. That also suggested that before the stock is canceled, the agent 13t414 a new application from the president or cashier of the bank in accordWith the resolution of the board of directors of the bank authorizing aDialication for cancellation of Federal reserve bank stock. Approved. 1,elegraphic reply on April 28, 1933, approved by three members of tlie ncerd, to a telegram dated April 21 front Assistant Federal Reserve 111/6" Younc at Chicago, recomending approval of the application of the tri)tc411 State Bank, Chicago, Illinois, for permission to reduce its capital 111°ck from 6'500,000 to :)200,000. The reply stated that the Board approves te l'eduction on condition that no money be returned to the shareholders, bIlt that the released capital be credited to undivided profits; that the " ° tal or the bank be immediately increased to 300,000 by the sale of new tcek ' ct a Par value of 0_00 for ::,;300 a share; that such new stock be sold kl'Y to Persons having a knowledge of the affairs of the bank and the pur- 138 for which the proceeds of the sale of such stock are to be used; that the ' 1)16Z-tura on such new stock be credited to undivided profits; that the l'electsed capital and the premium on the new stock be used to create such l'eeerves and provide for such charge offs as may be advisable; and that 141ealately after such reduction the bank, if it has not already done so, E1114-11 charge off losses in the anount of ;:1186,002. Approved. 212 5N33 -5Letter to Lx. ...rood, federal Reserve Agent at St. Louis, replying to hi4a 1A+, -.er of April 11, 193'6, inclosing a copy of the rt-Tort of examination , t he]alljtt State Bank, Jacksonville, Illinois, as of Larch 2, 1933, made in con nection with the application of the bank for methhership in the federal iio6Ystera, 1.95* approval of which was granted by the iloard on 1:arch 13, The reply stated that the report of examination discloses the fact • th44:t the Present carrying value of the banking house is too hich; that it 4311ad be depreciated annually; that as this information was not included III the telegraphic advice, on the basis of which action was taken by the ' n° condition covering the matter was prescribed by the Board; and 13°14'4 that I• t is requested that the agent confer with the bank and suggest that at 3.41t ,726.67, which represents the excess of the carrying value over the estimated valuation, be charged off and that thereafter a policy ania u8.11Y depreciating not only its banking house but its furniture and " be instituted by the bank, such depreciation to be at a rate of not than .3 1" t• han f the present carrying value of its banking house and not 10,Lof the present carrying value of its furniture and fixtures. ' lePlY also noted that the report of examination shows the amount of qeDreeiatien on securities below the four highest grades as „;35,911, whereas, the 1711%° received from the federal reserve agent transmitting the application 3,ve the waoUnt as „.39,411, but that, as the bank has charged off the depre411°11 classified by the examiner as a loss in an amount slightly in excess belt Qalount c;tated in the condition of membership numbered 18, it is not evea necessary or desirable to reopen the question with the bank at this Approved. 213 6/1/33 -6Letter to 1:51% Austin, Federal Reserve Agent at Philadelphia, stating tlIelt it will be appreciated if he will advise the Board as to the present "Ilt118 of the stockholdings of the Pennsylvania Company for Insurances on L1.7ea 414 Granting Annuities, Philadelphia, Pennsylvania, in the Main Line ZNst c0 of Ardmore, Pennsylvania, with particular reference as to Inlet steps, if any, have been taken by the Pennsylvania Company to comply " 4 the views expressed by the Board in its letter of January 25, 1933. 1.110 'ter also stated that the Board desires to be advised whether the 1 Nailsr-4 / vania Company has taken any action in regard to reducing its dividend --44. as to any progress made by the company in eliminating a large amount ' ' 1 its °ma stock held as collateral for loans. Approved. Letter dated April 29, 1933, to las. Case, Federal Reserve Agent at 111 1 aPproved by three members of the Board, inclosing a copy of a letter dated April 10, 1933, received by the Board from the Vice President Ot the French American Banking Corporation, New York City, New York, reI'llelatbt advice as to whether or not the corporation is eligible for umb"811113 14 the Federal Reserve System and, if so, what the formalities for Obtaiiirc memberahiP are. The letter requested the Federal reserve agent t° ()133111111/1.cate with the corporation regarding the matter, and stated that it 14148411143d he will give careful consideration, in view of all the facts IIN'lle(11 to whether or not it is desirable for an institution of this kind to tutmitted to membership, and that, if an application for membership is 414Irdtted, his recommendation thereon will be accompanied by detailed infor1116434 as to the reasons upon which such reconvendation is based. The 1"ter reterred to the fact that under the provisions of section 25(a) of 214 ML/33 -7- '4/8 l'l ederal Reserve Act, foreign banking corporations organized under that "iOn are specifically prohibited from becoming nembers of the Federal 76 System, and suggested that when the agent communicates with the 111411111 ' ellchAmerican Banking Corporation it would seem advisable to call the Elttettion of the corporation to the fact that the limitations contained in 138"10 11 13 of the Federal Reserve Act, on the aggregate amount of acceptances " rember bank, are more restrictive than the limitations on the aggregate kourt of acceptances which may be made by the French _American Banking e(*Poration contained in the agreement Which that corporation entered into "it'll the Board in order that its stock may be eligible for purchase by kit/0114a banks. Approved. Reply on April 29, 1933, approved by four members of the Board, to 4ttEq.13 dated April 21 and 26, 1933, from the First Federal Foreign Banking C15111cl' " 1°11, New York City, New York, transmitting certified copies of l'e8(111rti°ne of the stockholders, adopted at their meeting on April 21, '4141/)C the articles of association of the corporation so as to provide thevt the board of directors shall consist of eight members, and placing the (411143r4tion in volumtaxy liquidation and providing for the winding up of its etrairs, The reply stated that the Board understands that the corporation has disco ntinued its operations and is now in process of liquidation, and l*ectlested that the 3oard be kept fully informed with respect to the liquidation Of the corporation and that a detailed report showing the progress of the liqjziaation be submitted to the Board on October 1, 1933, and every six )2104the thereafter until the liquidation of the corporation is finally corn- 215 -0 , Pleted. The reply also noted that the resolution of liquidation provides theA the directors shall be trustees for the purpose of liquidating the cr 'cl)°r•&Itioli and that they may appoint a liquidating committee consisting of Or more members, and requested that the Board be advised as to the persons aesiim ' 44.8"edas merrbers of the counittee and the amount of the bonds required c)r tIj Approved. Letter dated April 20, 1933, to the Acting Comptroller of the ClIrrQzei j) Prepared in accordance with the action taken at the meeting of the -4eollt (1 1110 uommittee of the Board on April 27, 1933, and approved by three illeillber3 of the Board, referring to meraoranda received from the Acting Cot4toliel , of the '-.)urrency under date of April 15 and 24,-, 1933 relative to ap plication of the Liontgomory County /iational Dank, ilockville, 1,7aryland, PerraiS S 1011 to reduce its capital stock from :)100,000 to .)50,000. The lett, stated that, while the Board is aware of the constructive efforts of cleDositors and stockholders of the bank to develop a plan which would be orY to the parties concerned for the reopening of the bank, and eel-.8 that such efforts should be encouraged, it also feels that, in the Illtaz.e3t or .he t depositors and the future successful operation of the bank, consideration should be given to the aspects- of the matter referred to i4 the letter; that it it is important, both for the welfare of the bank and wilich tIle cotraullity 01' serves, that any plan which may be adopted shall be tIch a character as to give assurance that the bank, when reopened, will 40t ailly be a sound institution with assets sufficient to meet the demands of it 4e13°.aitors, and to provide it with an adequate amount of unimpaired 2r A 5/1/33 -0- eaPital stock, but such that ,he welfare of the bank as a goin institution 17111 not be endangered by the possibility o2 controversy and litigation exi.8 out of raterial defects in the plan; and that for this reason it is 11/ertunt -Ghat any modification of the legal rir;hts and liabilities of the clepc)eitQrs and stockholders with respect to each other shall be clearly -u With the view of making controversy and litigation unnecessary. The lettep - also st-ted that it is understood that the parties concerned have berw. - 'CleaV°ring to work out a practical solution of the difficulties which -ye benr, -"2115 apparent in the consideration of the Plan, and;when these ulties have been satisfactorily cleared up, the Board is willing to 111).Dralr e tne Proposed reduction, upon reconmndation of the Acting Comptroller or the CUrrency. Approved. Reply to a letter dated April 13, 1933, from Assistant 7ederal ReAgent Young at Chicago, inquiring whether a nonmember State bank or tl'118t corivany applying for a loan under section 404 of the Act of 1:arch 9, 19 361 as amended, should be assessed the expense of an examination made by l'ePl'esentativo of the li'ederal reserve bank in connection with the e4)1)lieation. The reply stated that it is the view of the Board that the 11)1)licent bank should reimburse the irederal reserve bank for the actual e)q)erlses of an examination made by its representatives for the purpose of ell%)litc it to pass upon such an application, unless the cost to the 7edere`l N)I-Y ezerve bank of such an examination be relatively insignificant. The also stated that it is understood that the Reconstruction Finance °°1"Dollation has adopted the policy of requirin that applicants reimburse the earPoration for the actual expenses of examinations necessitated by 217 3/1/33 -10- their ap plications for loans. Approved. Letter dated April 29, 1933, to the: Federal reserve agents at all 'Acierea reserve banks, apProved by four members of the Board, stating that, be ails e of the special reMtionship that exists with member banks and the 4101 I'"Donsibility resting upon the Federal reserve banks in connection "lth, the Board feels that it is especially important that the Federal resemp ' e aGents and their assistants, includinc, the members of their staffs ellee.ged in audits and examinations, should refrain from incurring any iladebtech, directly or indirectly, to member banks, their subsidiaries l'filiates, or otherwise placing themselves in any position which may or in affections beint; raised as to the independence of their judgment their dis interestedness in the discharge of their responsibilities with t° such banks under the Federal Reserve .1ct; that,in order to avoid the poscibility of embarrassrent in connection with the performance of their Official duties, it is the view of the Board that they should refrain from iliellx.zine any indebtedness to others except for legitimate and necessary 1X11'11°8es) and that, whenever any indebtedness is incurred by them (excluding, • c°4118e, current bills for ordinary personal and household expenses, but • excluai fl indebtedness incurred to others to obtain funds for payment of • bills) the, should be )rompt disclosure of all the facts to the Federal z.v. 'e nc)ard; that the Board desires that each Federal reserve agent pre- trarLsildt to it as Ixorvtly as possible after July 1, 1933, a report 81104ifie.), as of that date, any indebtednessof the agent and members of his (0)zeludinc, current bills for ordinary personal and household expenses, 218 5/1/33 —11— but liot el,:cludinz indebtedness incurred to others to obtain funds for pay- liaelit or tO such bills); and that, in addition, there should be a prompt report th e hoard of any indebtedness of the kind referred to, incurred by the et or any member of his staff after July 1, 1933. belief tliat The letter expressed the 01 the Board that the directors of the federal reserve banks will feel 6110 same general principles should be applied to the members of the staffs (31'0 -e,A,eral reserve banks, particularly the officers, the headsof departlaellt3 ' and other employees occupying responsible positions, except that the ▪ rlentioned would be made to the boards of directors instead of to the ▪ deserve "ioard, and that it requests, therefore, that the letter be br -(311nt to the attention of the board of directors of each bank with the IqZstion that they consider the advise:unity of adopting these principles, th'Y obtaila have not already been established, of taking appropriate steps to from such officers and employees information similar to that called for /lith e8Pect to the federal reserve agents and the merbers of their staffs, klq 01' r pronDtly to report to the equirInc all such officers and employees hotIrd, directors any indebtedness of the kind referred to that may thereafter the inctIrred. The letter also referred to the Board's circular letter of May 7$ 1-'924 tleir 0C-4043), with regard to officers of Federal reserve banks giving entire time and attention to the affairs of the banks and not being 1(le/rttci a j'eel with any outside business interests, and stating that the Board confident that the directors of the Federal reserve banks will recog- 41Z0 tie imPortance of a strict confornity with the principles set forth 111 th4t 1etter and refers particularly to the officers of that, while it lecler&il reserve banks, equally applicable to heads of departments and it is 219 V1/33 -12- Naoyees occupying responsible positions in the banks, as well as to the Pecleral reserve agents and the mambers of their staffs, and that if any of thelll " 4 anY connection with a business concern of any kind, the Board rethat it be promptly advised with respect thereto. Approred. Letter to the Federal reserve agents at all Federal reserve banks l'et " ring to the Board's circular letter of May 28, 1931 (X-6901), with '''eard to the procedure to be followed in cases where apparent violations "the Clayton Anti-Trust Act were shown by reports of examination of IlekOnA- l and stating that on further consideration it has been 4eold6d to alter this procedure so that the Federal reserve agent will ect44 ' c the correspondence with the director, officer or employee in all 134c11 048 "in accordance with the procedure outlined in the letter. The letter - a-Luo set out the procedure to be followed in connection with the 8 4/b11 Elton of new applications under the provisions of the Clayton Act, and liteAv q that, unless other facts appear, which, in the judgment of the Board, rellaer it incompatible to the public interest, the Board ordinarily will t44 t47°rable action on such applications if it appears to the satisfaction °r on the basis of the facts presented by the applicant, the 1441141 involved, and the Federal reserve agent (a) that the banks are not irt a4 etantial competition, or (b) that the applicant's service as a 411'ect r O-1 officer or employee of such banks is not likely to result in a 1N154trin.U.s .ulon of credit or a substantial lessening of competition, or (c) th " 4-13 aerViCes will add needed strength to the management of such banks, Will 13 beteficial to the community or the patrons of such banks, or will 220 6 5/1/33 -13- be otherwise in the public interest. The letter further stated that, in View or the fact that section 8 of the Clayton Act forbids interlocking relftt 1°a8hiP8 between banks of certain classes, except in cases where the Reserve Board finds specific interlocking relationships not income With the public interest, and grants permits therefor, the burden 1st rest upon each applicant for such a permit, and upon the banks in- I'elirecis to show to the satisfaction of the Board that it would not be 1110m 4'm, 4. ible with the public interest to permit him to serve the banks -" 1 i lvo4ed• The letter also suggested that each Federal reserve agent adopt the Practice of making a review during the course of each year of the out4g Clayton Act permits issued to applicants in his district, and of ellbraltting to the Board his recomnendation in each case in which, in his the public interest requires the revocation of a permit, effective el.ther hAmediately or at the tire of the next annual election of directors, totet. Iler with his recommendation in each case in which he feels that there le " Q) Jurld for doubt under the Board's instructions as to the action which 411°1114 be taken. Approved. Telegram dated April 29, 1933, to the Governors and Federal reserve 4ftate 44 all Federal reserve banks, approved by four nembers of the Board, reter4:14g to the Board's telegram of Larch 2, 1933, which stated that the 4treit, 14tted in its letter of Ley 2, 1932, relating to the pledge of QovertlIzen teaerit tiEty t securities with Federal reserve agents as collateral for Federal e 11.°tee had been increased from .:A00,000,000 to ,600,000,000 until '1933, and the margin for the respective Federal reserve banks had 221 V1/33 -14- been correspondingly increased by 5O,, and advising that the margin fixed Board's telegram of Larch 2 will remain in effect until further 40tiese Approved. Copy of a telegram dated April 29, 1933, addressed to the Governors 14411 Pederal reserve banks by Under Secretary of the Treasury Ballantine, istat4 4.4g that until further notice the Secretary of the Treasury will grant 4° licenses for the acquisition of gold, gold coin or bullion by persons tiaki4e aPplication for the sane under the executive order of April 5, 1933, the Purpose of noting maturing obligations calling for payment in gold e°1140• 1s bullion,withinthe United States or elsewhere, except where such NPlain„ , —4"us have surrendered gold coin, gold bullion or gold certificates in °13editr, —Ce to the executive order of April 5. /Toted. Memorandum dated April 12, 1933, from the Division of Bank Examinations With regard to an application for nembership in the Federal Reserve IrErtem -4 r11ed by the Banco di rapoli Trust Company of Chicago, Illinois. r4e The b 14°/ 'eziciluti stated that 2,589 of the 3,000 shares of capital stock of the 441(4• 1'e owned by the Banco di Napoli, Naples, Italy, that, for all 151'4etlettl Purposes, the applicant institution is a branch of the foreign : Ilk 4• 4d that While, from the standpoint of solvency and capable management, W°44l aPPear that the bank could qualify for nnmbership, its business qosei 11°t aPPear to be of a type that would bring it much paper which would be tali or 41:ble for rediscount. The memorandum also referred to other cases 4151/11eations for membership in the Federal Reserve System by banks in 2,-, -15a controlling interest was owned by foreign interests, and recommended that ne Federal :Reserve Agent at Chicago be requested to suggest to the , "aPoli Trust Company that its application for membership be withdrawn. After discussion, the Executive Committee requested that there be prepared, for its consideration, a letter to the Federal reserve agent stating that, after careful consideration of the matter, the Board cannot see its way clear to approve the application and requests that the agent suggest to the bank that the application be withdrawn. Governor Meyer then called to the attention of the other members the changes which are being effected in the maturities of System holdings or Gn, -vartment securities, and there was further discussion of the resolution (1c11)tad by the Open Market Policy Conference at its meeting on April 22, 1933, Pls°7iding for the shifting of maturities. The discussion brought out view that it is desirable that the System account be maintained in such 1)°3it l°/1 with respect to maturities that a change in System policy could be 1/Lade without too great difficulty, and that such a difficulty might be cl'eated by having in the account a large proportion of securities of relativalY long maturities. Governor Meyer suggested that the Board might sc4ai(lar a policy of distributing the maturities so that securities with J4Itttrities not in excess of eighteen months would amount to at least 50% or the total, maturities between eighteen months and two years would not exQeed 25% of the total, and maturities between two and three years would not t°tal II:lore than 25;.. At the conclusion of the discussion, the suggestion kade that, as the Chairman of the Board, who is still confined to his Oe by illness but is much improved, may be at the office within the next (14Y or two, the matter be deferred until he can be present. 6/1/33 223 -16Accordingly, action was deferred pending consideration of the matter at a meeting at which the ahairman of the Board is in attendance. Governor I:.eyer stated that on Saturday and Sunday he had talked °ver the telephone with La.. I7ederal Reserve Agent at Cleveland, Who , advised that the banking situation in Cleveland was very quiet. He 4 ' 4 0 n1,4-1 --ku-Lined briefly the infonaation given to him by Er. Williams regarding the e-r, '-'-orta being made to reorganize closed banks in Cleveland or to have thott. assets taken over by other institutions. 111'• ì4ller stated that, as Cha irman of the Dsmittee on District 11°6 9, he has made further investigation and given further consideration to the se lection of a successor to Hr. John 2. liitchell, as Chairman of the h°41scl or directors and federal Reserve Agent at the federal Reserve Bank of 14/1iieapolis; that he has in mind recomending to the Board the appointment Ziohn1. Pay-ton, Cormdssioner of Banking in the State of Linnesota, btlt that l'e(1,1.1est before maki a decision he would like to have authority to Peyton to cone to 'Jashington for an interview. The authority requested by La.. "liner was granted. He was also authorized, in the event Lr. Peyton comes to ;:ashington, to advise him that he will be reimbursed by the Board for his expenses in connection with the trip. ' ,eports of jtanding Committee dated April 25, 27, 20, 29 and Hay 1, 1933) recomrlendinC approval of the following changes in stock at federal ec5rve baaks: 42.1.1ations for ORIGINAL Stock: 1•11,Tt.1.420-7z---.1ank of Belairs Llaryland. Shares 60 60 5/1/33 li cations for 01-ZIGINAL stock: (Cont'd) District lib. G. 17e, tional Bank -omr rce in New Orleans, La. of (1 1'4" Bank in Toledo, Illinois. 174tiona1 Security Bank of Chicago, Chicago, lOflA1Bekkatriat lio. 8. —73f Commerce, liemphis, Tennessee. A 1,050 Total 1,050 3,003 iication for SURIMIDER of Stock: 411411?-1/00c1 Bank Ci„.. Trust Company, Greenwood, (Ira olvent) Approved. Thereupon the meting adjourned. Cry, Secre arY. Chat AZZ an, Executive Committee.