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1418 A meeting of the Federal Reserve Board was held in WasninLton on Vkarissd4Y, May 16, 1934, at 11:30 a. m. PRESENT: The Mr. Mr. Mr. Mr. Mr. Secretary of the Treasury Black, Governor Hamlin James Thomas Szymezak Mr. Morrill, Secretary Mr. Await, Deputy Comptroller. The Governor stated that tne meeting had been called at the request of Mr. Morgenthau and that he would_ be glad if Mr. Morgenthau would tlIce P a/V subject that he desired to discuss. Mr. Morgenthau said that illview of the fact that as Secretary of the Treasury he was interested in Ila.tters affectinp national banks which came under the jurisdiction of the ' tr°11er of tne Currency and at the same time as a member of the Federal eserve Board he was also interested in matters affecting State me-her balalcs O 10 Federal reserve system, he would like to discuss with the 130arcl Aol7er th rIlling which he understood had been made with respect to the Of member banks to handle orders for tde purchase and sale of stock °11 tile Order or for the account of tLeir customers and wished to be inIned- as to tne Boardls viewpoint. Governor Black then reviewed briefly tlisllistory of v4enieetinc. of tne consideration of the matter, stating tat, prior to the Board at which the matter was acted upon, he had disel4les(1 it with the Comptroller of the Currency and Mr. Await, and that hcItIlere Dresent and participated in the Board meeting but tnat the C°t1113t1'°11e11 ilad not concurred with the other members of the Board on 1417 546/34 -2- thismatter, and, therefore, the Board had confined its ruling to State member banks. Mr. Morgenthau said that in the circumstances he wished to "48111t his General Counsel, Mr. Oliphant, regarding the legal question 147°17ed and Governor Black said that he would be very glad if Mr. Oli)1484.4 would discuss it with him, to which Mr. Morgenthau agreed. The Gov. ,.rnor added that the Board would be very glad if tne Secretary would atte4d aAY or all Board meetings and participate in the discussions. The Secretary said that he also wished to ascertain what the 'QJ-slattve situation might be as to the industrial credit bill. Governor ...- told hi_ m that the bill had passed the Senate but that he had been 114111) ,4e to the ascertain what the situation was in the House, notwithstanding 4act that after each meeting rilittee he had inquired as to the 8ktd that he had talked with the dallt h.a -44. said that he would take of the House Banking and Currency Comaction of the committee. The Governor President yesterday and that the Presithe matter up with Mr. Steagall. There t°14176(1 "me discussion as to the provisions of the bill and Mr. Morg°11theAl said that he would give it further study. Morgenthau then left the meeting and the Board considered acterl -upon the following matters: Mr. Morrill referred to approval by the Board of the appointment otldise R'elen R. Grunwell as a draftsman in the Division of Research and Statistics, effective June 1, 1934, subject to her passing a satisfactory 1)1\1q/leal szamination, and advised that the physician's report of the ( Itiriltilation stated that, while she is in fairly good physical condition, 1418 SA6/34 _3she 4 4s tremendously underweight, and that, although it was felt her health is 24tisfact0ry, according to insurance standards she would be rated up 155 ' Re also submitted a memorandum dated May 10, 1934, from Mr. GoldenIleisert Director of the Division of Research and Statistics, stating that lae had inquired at the Federal Reserve Bank of New York as to the policy f°11°17ea at that bank with regard to applicants for positions who are 1144117eiCht and that it had been learned that the bank does not consider this co ndition a handicap, unless it is accompanied or caused by some more 4110us trouble. The memorandum also stated that inquiry regarding Miss ell's past record in the matter of health and attendance had been taaclealid found to be entirely satisfactory, and that in view of these e°1141iti°718 it was recommended that Miss Grunwell's appointment be apiltceds Mr. Morrill said that Mr. Miller, who could not be present at this Meeting because of illness, had stated that he felt the question of 13c3licY involved in Mr. Goldenweiser's recommendation should be considered bY the Board, as this is the first case in which the physician's report 114 alkIr waY qualified. After discussion, during which it was pointed out that no unsatisfactory condition was disclosed by the examination other than the fact that Miss Grunwell was underweight, and that her health and attendance record appear to have been satisfactory in her present employment, the appointment was a-mroved unanimously. Tele-, dated May 16, 1934, from Mr. Curtiss, Chairman of the vs" Ilese ' I ve Bank of Boston, Mr. Austin, Chairman of the Federal Res )3alik of Philadelphia, and Mr. Wood, Chairman of the Federal Reserve 1419 5/16/3 4 -4-- Bahlt of St. Louis, all advising that, at meetings of the boards of direc- tors tOdaY, no changes were made in the banks' existing schedules of rates of discount and purchase. Without objection, noted with approval. Memorandum dated May 12, 1934, from Mr. Smead, Chief of the Diviqor, °I Bank Operations, transmitting and recommending acceptance of the re2ierlations of Mr. J. E. Tanner and Mr. P. J. Ryan as clerks on the night 4ree Of the gold settlement section of the division, effective April 10 441'RV 8, 1934, respectively. Approved. Memorandum dated May 14, 1934, from Mr. Wyatt, General Counsel, transmit. ti and recommending acceptance of the resignation of Mrs. 144aCaret Raynor as a stenographer in the legal division, effective at the close of business on May 15, 1934. Approved. Ilemorandum dated May 14, 1934, from Mr. Goldenweiser, Director of the D. , 11/1 10171 of Research and Statistics, transmitting the resignation of S. , 411lilt CaSkey as a stenographer in the division and recommending 11 t()r abse accordance with the usual practice where employees have worked ee Years or longer, Mrs. Caskey be granted thirty days leave of or: 11 esi e with NV, and that her resignation be accepted as of the close Ile "on July 10, 1934. Approved. Ro Letter to M. Iletix,ement s, Chairman of the Retirement Committee of the SYstem of the Federal Reserve Banks, reading as follows: 1420 -5"The Board has had under consideration the subject of your letter of April 28 in regard to em-Qloyees who are members of the retirement system and are sixty-five or more years of age. These employees are listed below, together with the age and occupation of each, and a brief statement of the reasons for continuanoe in service. Name 1k21 Occupation L. G. Copeland (married) 65 Chief, Division of Issue & Redemption Still active. Addie K. Burchard (widow) 71 Money Counter Still active. In calendar year 1933 averaged 4th out of 17 in average daily speed. C aroline B. quesenberry 67 Money Counter Still very active. In calendar year 1933 averaged 2nd out of 17 in average daily speed. Susan I.T. Snead 65 Money Counter Regarded as an efficient counter and while not so high in average speed ranks almost the highest in detecting errors. 76 Money Counter Regarded as an efficient counter and still active. 66 Messenger assigned to the Division of Examinations. Still active; steady, and very dependable. Remarks Dtar„ 4. SOUle NWidow) R. simms • (tl arried) reticle, " view of the aoDarent quality of the services now being retir :ed bY these emplOirees the Board does not now contemplate Iletir3:,1,E these employees and therefore it is requested that the Perioi-T Committee approve their continuance in service for a 1)arap., °Ile Year in accordance with section 3, subsection (1), 'a'1311 (a) of the Rules and Regulations." Approved. 1421 5/16/34. -6Telegram dated May 15, 1934, approved by four members of the Board, to 11,1'. Stevens, Federal Reserve Agent at the Federal Reserve Bank of Chicago, readiag as follows: "Mr. Young's telegram May fourteenth. Board approves designatIon of Emory K. Hill as assistant examiner in Federal Reserve gent's department your bank at salary rate of $3,240 per annum. 'lease advise effective date and furnish usual information." t Approved. Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve of Chicago, reading as follows: "The Board has reviewed the information submitted with the llPlication of the 'Villa Grove State Bank', Villa Grove, for membership in the Federal Reserve System. In subr/1111 "illg the application you state: 'Based on careful investigation in two field examinations and reports the bank's future success is questioned and it appears advisable to request the subject (bank) to Withdraw its apnlication for the present, and. I recommend o4 accordingly.' ve v ol- the special committee appointed by the Board of Directors of 'leserve Bank to pass upon applications of State banks for memQrsnip states: 'Although reports indicate bank to be solvent, it is °111 ' opinion that the Institution should not be admitted to membership at this time.' X..7583.As stated in the Board's letter of September 11, 1933, a, it has been the consistent policy of the Board not to admit rttballirto embership unless the Federal Reserve Bank and the Agent have recommended such admission. In accordIts expressed policy, therefore, the Board does not apDror% e apTaication of the Villa Grove State Bank for membership le time. bank It is suggested, therefore, that you communicate with the , suggest the withdrawal of its application, in which event, alviZI the application itself and the accompanying papers will Part be ten Part of the Board's files, no adverse action thereon will -" °Y the Board, If, at a later time, you feel that the be justified in again considering the matter, the 2 17 111d.oe Y a liew glad to do so upon your recommendation accompanied application and a current report of examination." i Approved. 1422 5/13/34 -7Telegram dated May 15, 1934, approved by three members of the 13°8•rd, to Mr. McClure, Federal Reserve Agent at the Federal Reserve Bank Zansas City, reading as follows: "Retel May 11, 1934 regarding proposed purchase by 'The Colorado Savings and Trust Company', La Junta, Colorado of certain assets of the First National Bank, La Junta. In view (I. Your recommendation Board interposes no objection to purchase provide& transaction is carried out in accordance with t, he plan approved by the Comptroller of the Currency Febroary 2f t 1934 and the contract of sale is approved by the Comptroller of the Currency, the State Bank Commissioner and a Court of competent jurisdiction." Approved. Letter to Mr. Stevens, Federal Reserve Agent at the Federal Reserve 13ank: of Chicago, reading as follows: "The Federal Reserve Board has again considered the applioatin f, -n of 'The National Bank of Washington', Washington, Iowa, Permission to exercise full fiduciary powers under the r°vi:ione of Section 11(k) of the Federal Reserve Act. ex,, In view of the information contained in the report of unation of April 11, 1934, and that previously submitted tioc"nection with this application, and the adverse recommenda, 0_4 of yourself and your executive committee, in which the ZiaPtroller of the Currency concurs, the Board is unwilling to : 7131'ove the bank's application for fiduciary powers. You are to advise The National Bank of Washington at tile ;21.11a Board has denied its application. frora Jae Board will be glad to consider another application lieed subject bank whenever its condition, management and commiltor trust powers are such that you and your executive tioll.otee would be willing to submit it with a favorable recommenda- Approved. Letter to toiaows. LI" O'Connor, Comptroller of the Currency, reading as _ se,ve a- accordance with your recommendation, the Federal Reapproves a reduction in the common capital stock 1423 546/34 -8- "of 'The First National Bank and Trust Company of Northport', Northport, New York, from 000,000 to $50,000, pursuant to a Plan which provides that the bank's capital shall be increased bY $50,000 of preferred stock to be sold to the Reconstruction Finance Corporation, and that the released capital, together with a portion of the bank's surplus and undivided profits accounts, shall be used to eliminate unsatisfactory assets and to reduce investment securities to marketvalues, all as set forth in your memorandum of May 4, 1934.0 Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows, " Receipt is acknowledged of your memorandum of April 25, 1931, with reference to the proposed reduction in the common capital of 'The Hamlin National Bank of Holcomb', Holcomb, New v , 'orz, from $100,000 to $50,000 and sale of $100,000 of Preferred stock to the Reconstruction Finance Corporation, which was approved by the Board on December 14, 1933. "You advise that a change in the elan is contemplated whereby only $60,000 preferred stock will be sold to the nstruction Finance Corporation and/or others, and that c° the released capital shall be used to eliminate estimated "se! and reduce the book:value of lower grade bonds. "In accordance with your recommendation, the Board ap; or'es the amendment to the original plan as set forth in Illemorandum of April 25, 1934. tio la considering the plan an under which the proposed reducexttitt capital is to be effected, it has been noted that of application of the released capital to the elimination wartimated losses and lower grade bond depreciation, there hi rpain in the bank approximately $8,300 of depreciation seciar er grade and $55,400 of depreciation in lower grade baziktltie8 which, if considered as a loss, will impair the assIlms common capital by approximately $39,700. It is that however, that you have this condition in mind and stioh ;'enever it becomes feasible to do so you will require urther corrections as may be practicable." Approved. Letter t, - r. O'Connor, Comptroller of the Currency, reading as 1424 -9"In accordance with your recommendation, the Federal Reserve Board approves a reduction in the common capital stock Of 'The Farmers National Bank of Lincoln', Lincoln, Kansas, from $35,000 to $20,000, pursuant to a plan which provides tnat the bank's capital shall be increased by the sale of $00,000 of preferred stock to the Reconstruction Finance Corporation and that the released capital shall be used to sllminate approximately $10,000 of unsatisfactory assets and to establish a surplus account of $5,000, all as set forth in Your memorandum of May 8, 1934." Approved. Letter dated May 15, 1934, approved by four members of the Board, to G elleral Hugh S. Johnson, Administrator of the National Recovery Adnistration, reading as follows: "Section 6 of Article VII of the proposed code of fair competition for the telegraph communications industry provides that no member of the industry shall enter into any lease of a Wire, 0,% or provide any leased wire service under existing lease, c- o therwise, which permits the use of such wire in telegraphic tiTmunication by any person or corporation other than the lessee sesZeof, The second paragraph of this section provides that the shall not apply * * * to wires, circuits or services to the United States, or to any of its agencies * * *. Tel "Under a contract of lease with the American Telephone and t4eCraph Company, signed by the Federal Reserve Board as patron, elegraph company furnishes leased telegraph wires between the! 1)0ard's offices in Washington and the twelve Federal reserve R5 2 located in ; Boston, New York, Philadelphia, Cleveland, (3ncl-, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, -44.a: and San Francisco. rese Under separate contracts executed by each of nine Federal tlar11/ 17,? hanks which have branches, leased telegraph wires are 'led between the Federal reserve bank and its branch or are,"' ' - 14e the telegraph wires covered by all of these contracts rese.:sed primarily by the Federal Reserve Board and the Federal 64'etje banks for the conduct of tneir official business, they rese--"„Yasd for the transmission by the Board and the Federal Depart::anks of 40.1er -Olt, the certain official telegrams for tne Treasury Corporation, and other raonmerxt est Reconstruction Finance ablishments andagencies. This practice results traWe efficient use of the facilities provided under the con"d s in the opinion of the Board, is definitely in the 1425 6/16/34 -10-- public interest. "Mile it would appear that it is the intention of Section 6 of Article VII of the proposed code to exempt the facilities referred to above from the operation of the section, it is not entirely clear that such would be the case. Accordingly, it is recommended that consideration be given to the desirability of changing the second paragraph of Section 6 to provide that the section shall not apply to wires, circuits or services furnished to the United States or to or through any of its agencies, and shell not affect, limit, or restrict the use by or for the benefit of the United States or establishments or agencies thereof anY wires, circuits or services. This would remove all doubt that the section would not apnly to, and would have no effect lgon the continuation of, the facilities referred to above or e manner in which they are being used at the present time. "The Federal Reserve Board feels that this matter is one importance to the Government establishments and agencies ; 11°se messages are transmitted over the leased telegraph wires 111,1rnished under the contracts above referred to and earnestly tnpes, therefore, that favorable consideration will be given to '112 SUggeStiOn." Approved. Letter to Honorable Duncan U. Fletcher, Chairman of the Committee °11 "G and Currency of the United States Senate, reading as follows: Conr,44111s refers to the letter from the Acting Clerk of your %R.-li teel dated May 4, 1934, requesting a report on S. 3530, cle.n";:leet 'ABM Relating to Philippine currency reserves on ' in the United States'. The bill is apparently designed s to " deccompensate the Government of the Philippine Islands for the of Zase in the convertible value (resulting from the reduction balik e weight of the gold dollar) of the balances maintained in Izi!,°f the United States by the Government of the Philippine fial r2 for its gold standard fund and its Treasury certificate vIlic.L It is believed that the bill raises a question of policy zervil does not come within the jurisdiction of the Federal Re and in the circumstances the Federal Reserve Board Prefe r ' 48 not to express any opinion in regard thereto." Approved. 141sgrem dated May 15, 1934, approved by five members of the 1.426 5/1644 -11to Mr. Wood, Federal Reserve Agent at the Federal Reserve Bank of St. r Qouis, reading as follows: In view of circumstances stated in your wire of May 11, Board authorizes your bank to continue to carry deposits for State Street Bank and Trust Company, quincy, Illinois, for an additional period of sixty days." Approved. Letter to Mr. Curtiss, Federal Reserve Agent at the' Federal Reeve Bof Boston, reading as follows: "Receipt is acknowledged of your letter of April 7, 1934 ntli regard to the transfer by the Gloucester Safe Deposit and Trust Company, Gloucester, Massachusetts, from the commercial epartment to the savings department of deposits held in the interest department. d "From the information submitted, it is apparent that the nelp"its transferred July 20, 1933, from the interest departfe int to the savings department remain demand deposits as de11i Regulation D until the depositors accept the savings 13; 1"tment pass books in lieu of the interest department pass and that, therefore, these deposits have been incorrectly ed as savings deposits and the bank has been improperly rting reserves thereon. In view of your conviction, however, peT the bank has not wilfully disregarded the provisions of the maierea Reserve Act and the Board's regulation regarding the ti ll'enanoe of reserves, the Board will take no action at this e04. raet.with respect to the bank's membership on account of such alit: hied violations in the past. The Board, however, has no glaesl:ritY to waive the provisions of the law; and you are rel,tify the bank that de:?osits which are still no 14::Dziesceintted -Y interest department pass books must be classed Ilmna deposits for the I pose of computing reserves on si nis 31.eloosits. 04 4 lt is also apparent that the bank has been paringinterest , ts iflterni PaYable on demand. It is understood, however, that tracc" AaS been paid on such deposits in accordance with conferees entered into in good faith before June 16, 19Z3., and in serve ?1_,. that date. As you know, section 19 of the Federal Rethe ,_'e excepts deposits represented by such contracts from "rohlblt. 'rabYabl, a on -lon against the payment of interest on deposits : demand; but requires that a member bank shall take ti°4 as may be necessary, as soon as possible consistently th: 1427 -12-'with its contractuP1 obligations, to eliminate from any sudh contract any provision for the payment of interest on deposits payable on demand. Accordingly, you are further requested to advise the bank that, in order to comply with the requirements of the law and of the Board's Regulation Q, it will be expected to discontinue the payment of interest O1. the demand deposits subject to such contracts as soon as possible by completing the exchange of interest department Pass books for savings department pass books or by any other method which it may deem advisable in the circumstances. "It is noted that the bank's savings department pass 1300.1c provides that the deposits indicated by such book are subject to notice to the full extent nrovided by law prior ,:to withdrawal, but that shorter notice may be required or may "waived entirely at the discretion of the bank. It is unaerstood that the law of the State of Massachusetts proIrides that the treasurer of a trust company may at any time require a depositor in the company's savings department to 5vo written notice not exceeding ninety days of his intention :0 i w thdraw the whole or any part of his deposits; and it is : n sumed, therefore, that a depositor in the savings departof the bank here involved may be required by the bank to Ilotice in writing of an intended withdrawal not less than 1,_ rtY days before a withdrawal is made. However, it is becred that this point should be given consideration by your hernil sel; and, in any eveLt, it is suggested that the provision op e in Question should be revised by the bank when a favorable fol ZtullitY presents itself so as to make such provision donor; more closely to the language employed in the definition ti avings deposits set forth in Section V of the Board's Regula, 04 q.11 Approved. tollowaz Letter to Mr. Robert S. Parker, Atlanta, Georgia, reading as "This refers to your letter of FebrrnTy 21, 1934, regardaJ.L.tLile question whether a member bank may lawfully pay interest .13_,v. Lie rat , of ' 3,:) per mur n a time certificate of deposit ' in 90 days. Ii :a its letter of February 3, 1934 (x-7793), the Federal Ileser a.th —e B°ard expressed. the o-oinion that the payment of interest :ptvala rate f '41 °- 4" per annum on a time certificate of deposit ateat the expiration of 90 days or at the expiration of it 13m , h ,er period (not less than 30 days), whether such interest in cash at maturity or added to the renewal certificate, 1428 5/16/3 -13- "does not constitute a violation of Section III(c) of Regulaticn Q, which provides that no member bank shall pay interest accruing after October 31, 1933, on any time deposit or any part thereof at a rate in excess of 3;0 per annum, compounde d semiamminlly. You state that prior to the receipt of the Board's letter, you had expressed substantially the same opinion with respect to this question in letters to the Secretary of the Tennessee Bankers Associati on and to a national bank in Ilashville, Tennessee; but that in each case you qualified your °Pinion by a statement to the effect that such opinion presuPposed the absence of any understanding entered into for the Purpose of evading any prohibition of law, and that the question in the last ann1ysis is whether the certificates :ere ! issued in good faith with no understanding or agreement that they would be renewed at maturity and with the full right on the part of the depositors to withdraw the amount of the cer tificates at maturity. "While the Board's letter of Febrpary 3, 1934, did not g s qualifications mentioned in your letter as there in the inquiry received by the Board in this connecth°11,,which suggested a purpose to evade or contravene the law, the B08 1.11,, finds no reason to differ with the qunlifying stateavnts contained in your letters on this subject and agrees that thrinber bank should be prepared to show that transactions of kcind here in question were not entered into for the purpose Of or evading any of the provisions of the Federal Reserve Act Of tio the Board's Regulations. It is believed that the qualificall.P suggested by you should be borne in mind in determining be6ner a member bank in a particular case is paying interest " excess of that prescribed in Regulation Q." iFthn n Approved. Letter dated May 15, 1934, approved by five members of the Board, DillsY, Cashier of The First National Bank of Northfield, 1-411esota. re ading as follows: the v"Mr- Martin has drawn to the attention of the members of Coiattederal Reserve Board the resolution adopted by the Rice You h2a4Icers Association on April 11, 1934, copy of which set Csd to him, requesting 'the Federal Reserve Board to at 2 1-ximum rate of interest to be paid on time deposits per annum'. visiortA ? You may know, the Board, acting pursuant to thepro; ea ' of Section 19 of the Federal Reserve Act as amend-ed. y 1429 5/16/34 -14- "Section 11(b) of the Banking Act of 1933 and after making a careful survey of 'oan'cing practices throughout the country, fixed a limit of 3,; for the country as a whole upon the interest that may be paid by member banks of the Federal reserve system on time and. savings deposits. However, there is nothing in the Board's regulations or in the considerations that led to its action that would prevent any bank or group of banks in a ?articular section from fixing lower rates. On the contrary, lt Was contemplated by the Board in fixing only a maximum rate that banks would be free to take such action in their own discretion, and many banks throughout the country have done so as _a matter of sound. banking practice. In the circumstances the Board does not feel that it would be justified. in lowering the mouuraum in order to meet the situation you have in mind.." Approved.. Letter dated. May 15, 1934, approved by four members of the Board, t° ' 14 Vleash: Federal Reserve Agent at the Federal Reserve Bank of Dallas, —4nE as follows: ,uThis refers to your letters of December 7, 193, and vf!fl 51 1934, with inclosures, in regard to the question hether it w would be necessary under the provisions of the 1h71.1tkine 1 Act of 1933 to separate or divorce the Central i( Corrn Inal Bank San Angelo, Texas, and. the Central Loan L-,earklr, an affiliate of that bank. "Frora the information submitted with your letter it lpi. ears that the Central Loan Company has, with a few exis e13"1°1131 confined its loans to real estate loan and has d t ebentures to its customers secured by such loans; sec at such company- has outstanding only three or four loans ciatur eaed bY stocks and. bonds; that such loans are being liquiIt and no new loans of that character are to be made. deazi,'ears further that the Company does not contemplate ties in stocks, bonds debentures, notes, or other securieoli i.excePt that it may sell stocks or bonds held by it as zecti;"%leral security upon a default in payment of the loans tnaltiZ‘j" therebY; and, that the Company does not contemplate asbeil" t new or additional loans until its outstanding to trot—es are retired., except loans which may be necessary eav tvici?ct -ts collateral, and does not contemplate issuing iiti"icnal debentures. will bp PrinciPal question raised is whether the Company 1.1Caged in business of a kind which will bring it j 1430 5/16/34 -15- "within the ni-ovisions of Section 20 of the Banking Act of 1933 SO as to require its divorcement from the national bank on or before June 16, 1934. Since the information submitted indicates that the Company does not propose to issue or sell any securities of the kind referred to in that section until its outstanding d ebentures are retired, there would appear to be no reason to dlffer from the conclusion of your counsel to the effect that during such period, at least, Section 20 would not require the di vorcement of this affiliate. However, it is noted that the Proposed resolution of the Board of Directors of the Company, Copy of which you inclose, states that the Company may sell 'notes' owned by it for the purpose of paying off and retiring outstanding debentures. It seems probable that these notes are Ilet notes of the kind referred to in Section 20, but in this connection, reference is made to the Board's letters of April 13, 19361 (X-7859) and April 16, 1934 (X-7866). It is hoped that these two letters, and the above discussion, n11 enable you to answer satisfactorily the inquiries in connec' 10n with this matter. However, if you should still desire a , 11, 1111ng of the Board, it is requested that you furnish it with Pertinent information together with your recommendation and. e opinion of counsel for your bank. It is noted that counsel for your bank have called attenZ°11 to the fact that Section 5139 of the Revised Statutes, as bY Section 18 of the Banking Act of 1933 apparently liv :ue violated, after June 16, 1934, if there exists a proa, s -°21 against the transfer of the stock of the bank without 131t3 .o transfer of the stock of the Company. However, it tlie! l believed that this question is one which is properly within 130a Jurisdiction of the Comptroller of the Currency; and the 013.11, t herefore, does not feel that it should express an -41104 with respect thereto." Approved. to 141., Letter dated May 15, 1934, approved by four members of the Board, tkzaz Heellxre, Federal Reserve Agent at the Federal Reserve Bank of Cltr, reading as follows: ti0ri nl.011r letter of December 28, 1933, asks whether organizaage :e Ced in the negotiation and sale of real estate mortneac it ror ri ora ate the saledebentures zati beti sale of notes or debentes secured by real be regarded as engaged primarily in the selling, or negotiating securities of Section 32 of the Banking Act of 1933. 1, Withie8:of PUrChaSirig, meaninC 1431 8/16/ -16- "In this connection, you inclose a memorandum prepared by the First Trust Company of Lincoln, Nebraska, which describes the various activities of that company. "Since the date of your letter, the Board has written its letter of April 16, 1934, (X-7866) relating to this question, ,ncl it is hoped that it will be of assistance to you in reply111 to inquiries of the kind to which you refer. "It has been noted that the First Trust Company of Lincoln apParently deals in securities, although the memorandum states that the 'transaction(s) in bonds are very largely on customer s' order. As you know, a person who merely executes in the open market, as broker, orders for the purchase and sale of securitles belonging to others is not regarded as coming within the °visions of Section 32. See the Board's letter of April 13, 934 (X-7860). However, the memorandum does not show to what extent purchases and sales of securities are made by the company !a dealer on its awn account, and the Board is not in a position 6.0 determine definitely on the basis of the facts presented Whether the company comes within the provisions of Section 32. It 18 believed, however, that, in the light of the discussion 2ntained in the letters of the Board referred to above and 111301.1 obtaining more detailed information as to its securities slness, you will be in a position to advise the company regardthe matter." r Approved. to Letter dated May 15, 1934, approved by five members of the Board, Mr. William G. Baker, Jr., Baltimore, Maryland, stating that it ap- etkrs that the relationship covered by his application under section 32 the Baniving Act of 1933 for a permit to serve at the same time as a director of the First National Bank of Baltimore and as a partner of //alters Watts & Companyt both of Baltimore, Maryland, is within the class Ithical section 32 was designed to terminate, and that, accordingly, the Ileard is 'unable to find that it would not be incompatible with the publte interest as declared by the Congress to grant the application, alit. the event the applicant desires to submit further facts or 4rttnents in support of the application the Board is prepared to give 1432 5/16/34 -17them careful consideration. The letter stated also that, in view of the above, it would serve no useful purpose to pass upon Mr. Baker's apDlication under the Clayton Act, since a permit issued under the provisiella of that act would not have the effect of rendering lawful a rela, ti " .1113 prohibited by section 32 of the Banking Act of 1933; and that, flirth ermore, in view of the fact that section 8A of the Clayton Act was a:91trentlY directed at interlocking relationships between national banks a.kl• °reandzations either in 4411i4 kiter which me loans secured by stock or bond collateral, connection with the carrying of margin accounts or otherwise, Viell of the fact that a substantial portion of the business of Watts 84 Company apparently consists in the carrying of such accounts, te haal would not, in any event, be disposed to issue to Mr. Baker a Derrait under the Clayton Act covering the relationship described above. Approved. to vae Act. of Letter dated May 15, 1934, approved by five members of the Board, 1°1_1 7 1142; applicant for a permit under section 32 of the Banking '50, stating that it appears that the relationship covered by the 411115-eat' - 4.8 witiiin the class which section 32 was designed to terminate, ' 4(1 that 'accordingly, the Board is unable to find that it would not be trarittcOaatible with the public interest as declared by the Congress to .10„.1 altnough in the event the applicant desires to eihtkit Illther facts or arguments in support of the application the Board ed to give them careful consideration: Ur. 4 11611stlis Xnight, for permission to serve at the same time 1433 5/16/ -18- as a director of the State Bank and Trust Company, of Evanston, Illinois, and as president of Bartlett, Knight & Company, of enicago, Illinois. Approved. Letters to the following applicants for permits under section 32 or tile Banking Act of 1933; each letter stating that it appears that the relationship covered by the application is within the class which section 32 VI„ a "Signed to terminate, and that, accordingly, the Board is unable to J.lid that it would not be incompatible with the public interest as aeciare bY the Congress to grant the application, although in the event the aPPlioant desires to sUbmit further facts or arguments in support of e'PPlioation, the Board is prepared to give them careful consideration: 1.r ,* Edwin R. Marshall, for permission to serve at the same time BZ an officer and director of the Boulevard Trust Company of .4.°°kline, Brookline, Massachusetts, and as an officer and 1'e ector of the First of Boston Corporation of Massachusetts, ston, Massadinisetts. axmg :ene B. Fevre, for permission to serve at the same time :! ector of the Spokane and Eastern Trust Company and as lj'esIdent of Murphey, Fevre & Co., both of Spokane, Vlasnington. Approved. Zettere Or their dated May 15, 1934, approved oy four members of the Board, 411ts for permits under the Clayton Act, advising of approval a Pplications as follows: au a Lawther, for permission to serve at tne same time rector and officer of The First National B.?.nk of The Pe 'DilblIque, Iowa, and as a director and officer of lrst State Bank, Brisbane, North Dakota. lir. A. ttrae I. Engehretson, sa for permission to serve at theBsame or /Z a director and officer of The First National Bank orfin.ftad, Halst, ad Minnesota, and as a director and I. of the Norman County State Bank, Hendrum, Minnesota. 1434 5/16N Mr. J. I. Hegge, for permission to serve at the same time as a director and officer of the First National Bank of Hillsboro, Hillsboro, North Dakota, and as a director and °fficer of the Farmers State Bank of Maddock, Maddock, or Dakota. Approved. Letter to Mr. Hbxton, Federal Reserve Agent at the Federal ReBank of Richmond, stating that the Board has given consideration tO th e following application for a permit under the Clayton Act, and that $ u.,?on the basis of the information before it, the Board feels that the . isslaance of the permit applied for would be incompatible with the Mite interest. The letter also requested the agent to communicate to the 1,31-ioant the Board's position in the matter, and to advise the Pr°mPtlY as to whether the applicant desires to submit any additional (Iota, ales if not, as to what steps he proposes to take in order to comply With the Drovisions of the Clayton Act. Ur.J.ames M. Easter, for permission to serve at the same time ; a$ a director of the Maryland Trust Company, Baltimore, Maryand, as a director of The First National Bank of Baltimore .aaltimore $ maryland. Approved. at Letters to applicants for permits under the Clayton Act, advising ovni '44. of their applications as follows: Mr. ac%lai 4:110; 1 Dillon, for permissi on to serve at the same time The First National Bank of Hartford, Hartford, foraectiallt$ and as a director of The Morris Plan Bank of HartRartford7Connecticut. Mr 'Th az a A°r(las W. Russell, for permission to serve at the same time co41actor of The First National Bank of Hartford, Hartford, Tom etiellt$ and. as a director of The Morris Plan Bank of Hart, Rartf °/*(1$ Connecticut. 1(135 5/16/34 -20Mr. James Lee Loomis, for Permission to serve at the same time as a director of The First National Bank of Hartford, Hartford, oC cI nnecticut, and as a director of The Simsbury Bank 8: Trust °711PanY, Simsbury, Connecticut. G. Dawson Coleman, for permission to serve at the same time a director and officer of The First National Bank of Lebanon, ! m banon, Pennsylvania, and as a director of The Lebanon County J-rust Company, Lebanon, Pennsylvania. , 11r.V1llia C. Freeman, for Permission to serve at the same time a director of The First National Bank of Lebanon, Lebanon, flertlIsYlvania, and as a director and officer of The Lebamon County 4.rust Company, Lebanon, Pennsylvania. Mr. . 4arlic Johnson, for permission to serve at the same time as director and officer of The First National Bank of Bovey, rc'veY, Minnesota, as a director of The First National Bank of ;sewatin, Keewatin, Minnesota, and as a director and officer of ' le American National Bank of Nashwauk, Nashwauk, Minnesota. Ur, a A4 W. Leach, for permission to serve at the same time as ice'eL'rector and officer of The First National Bank of Keewatin, of vjt111, lannesota, and as a director of The First National Bank Y, Bovey, Minnesota. Mr, a a.xred Holroyd, for permission to serve at the same time as wlrector of First National Bank of Sedan, Sedan, Kansas, 'as a director of the Peru State Bank, Peru, Kansas. Ur. D. Severns, for permission to serve at the same time as Or 0-L The First National Bank of Sedan, Sedan, Kansas, 4,4sas a director and officer of the Peru State Bank, Peru, Approved. There or e4diti oriej. 444tst were then presented the following applications for original st°c1c, or for the surrender of stock, of Federal reserve iztrietti011 for T4e ORIGETAL Stock: b' ustow4 "cAst 'rational Bank, Tezas Shares 33 33 ti* 5/16/6, A li eations for ADDITION...AL Stock: District No. 1. 330111evard Trust Coripany, , Brookline, Mass. 'lle Slis.ron National Bank, rin. Sharon, 'le Pirst Connecticut National Bank 0.4'L Farmington, rm.. Parrain.gton, Maine "e Park National Bank of Holyoke, (:)).yoice, Massachusetts 'e National Bank of Salem, s lierchants alera, Massachusetts -11"11-lefield Bank, ta Sprillgfie'lNational d,, .lassacnusetts em...Creeker National Bank of Turners Falls, zad,. '`41", Ilex's Palls, Massachusetts ' c aechanics National Bank of Worcester, ester, Massachusetts Lakeport National Bank of Laconia, L . (ace-alas New Hara-osnire 711, ‘P• O. Lakeport Station) -,e_Pirst National Bank o.. f Bennington, tzlie?.1121ington, Vermont 33.8.1edellia National Bank of Danville, allville, Vermont 30 triet 11.0. 2. Ile 1Tational Bank of New Jersey, Irk llew Brunswick, New Jersey 120 1lidgefield National Bank, Riacefield, New 33 Jersey ,.eity ta tk 'Tatiana' Bank a Trust Co. of riaensack, Hackensack, New bl Jersey ecearabridge Valley National Bank, •e, New Z11113ridge, e 1r York 12 National Bank t e on, New '.'2 Trust York " r,' 21 & OM 05C Co:P.7f, Second National i., Bank. a Trust C , Oswego, New York 60 ill National 1 Bank, 17°11d-11, New York 30 ,1:1nistrict lic. . 44e Ilic Cerzaercia‘..1..BanIc C07113 ' emlirla, Ohio 15 -4elltral r Trust Company, Ile-,4ci-an, l'ittil ati Ohio 60 rnird. Union Trust Company, Cilietnnati, 1,200 °h-i° —224.1) li eations for ADDITIONAL Stock: (Continued) Shares ketrict No. 4. Continued The _ Citizens Banking & Savings Company of Conneaut, Ohio 5 TheConneaut, Rome ni.. Gib Banking Company, 3 'ule sonburg, Ohio Cozraerce Guardian Bank, Its Toiedo, Ohio e1 600 "4e..„, illg Dollar Savings & Trust Company, luleeling, West Virginia 1,200 rktistriet No. 9. *ge m, American National Bank of Nashwauk, Nashwauk, Minnesota 11 ';lae Pirst It. Circle,National Bank of Circle, Montana 11 e Seelzrity Bank & Trust Company of National B /I, 81°11x Palls Sioux Falls, South 30 eourt Dakota 'e ?irst Natio 'nal Bank of AlbS Lea, Arie z . Lea, Minnesota 60 ,ralare , National Bank St. & ot, of Trust Co. Paul, p ( Th ... au .,.., . 30 e •virst -L., Mlnnesota ti National Bank of Winona, Th /111101aa, -e l'i Iiinnesota 30 "rst National Bank of Hardin, 11111011in, 1 ev.Pirst HMontana ational Bank of , 11,4, Kalispell, 4' 4 . "`e 8130.1, Montana 12 National Bank of lit Hillsboro, Iiillsboro, North 45 Dakota (5t 1Tational Bank of Mandan, ‘,elldeal, North Dakota 57 ‘;,„r1rst N ational Bank of h,..'ead, Lead, South Dakota t ll 108 ''''1Iedfield 111 - "'field, National Bank, e or South Dakota 17 thwes Li Ntern National Bank of Litchfield, 4totchfield, 21 sk l'ards Minnesota Tile .21-Itil National Bank of South St. Paul, St. 15 .,;Lialcota pala, Minnesota TheTIC0, National Bank of Fargo, North Dakota 3 lit,leti°11Q- Bank of Huron, 75 .iiSon°11altil ? 4:1kkee, South Bpankakolt.lia li_er8 ec 12 Dakota Merchants `4'°11, South Bank, M°briciCe' Dakota 1 1439 3,083 539 1438 646/34 -23- ications for ADDITIO17,AL Stock: (lontinuedi Shares kstrict No. 10Pirst National Bank of Tekamah, Telzamah, Nebraska 3 kstrict No. 12. SeoUrity-First National Bank of Los Angeles, ,T4, Us Angeles, California .htte Pirst National Trust & Savings Bank of San Diego, San Diego, California 3 600 120 Total 720 5,602 A Ilistlieations rict No for SURRENDER of Stock: The Metuclien National Bank, ly Met uchen, New Jersey chafer National Bank, Webster, New York South Side National Bank & Trust C°11) 1 any of Newark, Newark, New Jersey kafrict No. 7. Cilelsea State Bank, TheChelsea, Michigan Pirst National Bank of De Kalb, II, 1/e Zalb, Illinois —e La Rose National Bank, Rose, Illinois /1rst National Bank of Marseilles, 14e.rsei11es, Illinois &strict No. 8. Tile 08.1'1.011ton National Bank, Carrollton, Itentuck7 t ro• 9. e National Citizens Bank of Canby, nesota strict 110. 10. 90 33 300 423 24 120 21 60 225 60 60 9 Pirst National Bank of Lucas, Xansas e ventral In, David Nebraska National Bank of City, David '44e City, Nebraska Wynnew°oci. Southern National Bank of nli IlYew°0c1, Oklahoma 21 60 45 126 /16/34 1439 -24- 4 lication for S Imo= of Stock: (Contintited), or„ irst National Bank of Orange, California '41crican National Bank of Klamath Falls, ZianaUl Falls, Oregon Shares 30 60 Total Approved. Thereupon the meeting adjourned. kpr07tted,. 90 933
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