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1440 A meeting of the Executive Committee of the Federal Reserve Board wsit held in Washington on Thursday, May 17, 1934, at 2330 13* m. PRESENT: Mr. Er. Mr. Er. Black, Governor Hamlin Thomas Szymczak Mr. Morrill, Secretary Er. Carpenter, Assistant Secretary Er. Martin, Assistant to the Governor There was presented a letter dated May 15, 1934, from Mr. 4114 J• Jackson, General Attorney for the Westinghouse Electric 1(laralfacturing Company, East Pittsburgh, Pennsylvania, requesting that the Board authorize hr. Woodlief Thomas of the Division of Re"arch and Statistics to identify certain papers and to explain, if 4"8"117 , any questions concerning the development of the Board's index industrial production. Mr. Carpenter stated that a reprosettati Of ve of the Westinghouse Company had explained to him that the e°1111344Y desires the appearance of Mr. Thomas in a suit being brought 44inst the company in Philadelphia by the Atlantic Elevator Company of ?hiladelphia, and that his appearance would be solely for the pur13°4e of identifying certified copies of the Federal Reserve Bulletins k401 the statement issued by the Board in July, 1933, entitled "Fed-' er41 Reserve Board's Index of Industrial Production", which were tltrni Lleci to the representative of the Westinghouse Company on May 14, 3.9,z and to answer questions which may be asked him as a witness 4.t the trial With regard to the Board's index of industrial production. 1441 5/17/34 -2, lae letter from Lir. Jackson also stated that it would be necessary for Thomas to be away from ; - iashington only one or two days and that the ';iestin(ghouse Company would pay his salary during his ab"floe and the travel and subsistence expenses incurr ed by him in niaki P the trip to Philadelphia. It was pointed out that the question involved in the reques t is whether the Board should permit its own employees to be absent froz their duties for the purpose of serving as witnes ses in private litiSation. I \ It was expressed as the opinion of the members present that, inasmuc h as this appears to be the first request of this kind that has come to the Board and as the Board should be prepared to ofany necessary explanation of its published statistical data, the r quest of the iIestinghouso Compan y should be approved. At the conclusion of the discussion the SecretRry Was requested to advise r. Jackson that, while the board would have preferred to have the matter handled by the taking of a deposition, it approves 14r. Thomas' appearance at the trial for the purpose referred to, upon his being subpoenaed as a witness, with the undersbandin- that the Board will be reimbursed for his salary during his absence and for the expenses incurred by him in making the trip. ae Committee then considered and acted upon the following latter, olegram dated Lay 17, 1934, from Mr. Sargen t, Secretary of the m "deral Reserve tank of ','Lan Francisco, advisinF, that, because of the 4hence 01 a quorum, the regular meeting of the board of directors Of -Lhe b arik was not held today, and that, accordingly, no change was 14.4_2 5/17/34 -3- made in the bank's existinc schedule of rates of discount and purchase. Noted. Letter to Mr. Peyton, Chairman of the Federal Reserve Bank of lanteapolis, reading as follows: "Receipt is acknawledced of your letter of April 28, 1934, requesting approval of an expenditure by your bank covering the cost of preparing a testimonial for Yr. Paul J. Leeman, Class A director of the Federal Reserve Bank of Minneapolis who died on January 11, 1934. "Your letter does not state the cost of preparing the testirelonial but, on the assumption that it will not be in excess of ,100.00, the Board interposes no objection to the proposed exPenditure by your bank." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading "follows: "There is transmitted herewith for your consideration an apPlication of The Valley Bank and Trust Company, Phoenix, Arizona, a menber bank, for permission to establish and operate branches ILt C°°lidge, Kingman and Superior, Arizona. "At the present time The Valley Bank and Trust Company is 0Perating the following branches, all located in the State of 4rizonal Clifton Globe Glendale IlaYden Prescott Safford Ceolid__ 1411:tmar 1,1Perior Date Established July 1, 1915 June 24, 1922 June 24, 1922 Feb. 1, 1924 June 24, 1922 Feb. 25, 1926 June 24, 1922 June 19, 1926 June 24, 1922 Proposed Proposed Proposed Population (1930) 4,571 2,305 7,157 3,665 (Depository only) 2,364 3,711 7,693 (Depository only) 5,517 1,706 894 2,257 4,292 The alartlicant is now operating currency exchanges at Cooli : ge, Kin,r;man and Casa Grande for the purpose of cashing 1143 5/17/34 it -4- checks, handling collections and accepting deposits which arc forwarded to the main office. It is stated that an application will be made at a later date for permission to establish a branch at Casa Grande. "The Superintendent of Banks of the State of Arizona has approved the establishment of the branches and the Federal Reserve Agent at San Francisco recommends approval of the application. "In view of the reasonably satisfactory condition of the aPplicant bank and the reconmendmtion of the Federal Reserve Agent, the Federal Reserve Board reconmends that you approve the establishment and operation of branches at Coolidge, Kinsnnn and Superior, Arizona, on condition that: 1. Prior to establishment of the branches, such bank, if it has not already done so, without decreasing its capital stock or surplus, shall charge off or otherwise eliminate all losses shown in the report of credit investigation as of January 31, 1934, made by an examiner for the Federal Reserve Bank of San Francisco. "U "Tinder the provisions of law applicable to the establis establishment ent of branches by State member banks and national banks, as you know, the bank and its branches must have the aggregate minimmi capital required by law for the establishment of an equal number of national banking associations situated in the various places where ?uoh bank and its branches are situated. You will observe that IL the present case The Valley Bank and Trust Company has a coml',14)n capital stock of $210,000 and capital debentures sold to the 41?oonstruction Finance Corporation amounting to c;840,000. In Of the number of the branches of The Valley Bank and Trust erPanY, such bank must have a capital of 3800,000 in order to with the aggregate capital requirements of the law just deterred to, and the question is presented as to whether capital be" tures sold to the Reconstruction Finance Corporation may r, considered as capital in determining whether the bank has the ; r I eEate capital required by law for the establishment of the idia ranches. The Federal Reserve Board has heretofore capital debentures sold to the Reconstruction Finance Flset ratio by a State bank may be included in determining whether the hi the capital required in order that it may be eligible f The tc'r admission to membership in the Federal Reserve System. rd feels that capital debentures sold to the Reconstrucbn_ inanee Corporation by a State member bank may also properly Slci red as capital in determinin; mhether the bank has the batZt-c i required for the establishment of branches and on this 'Is it has @stab, recommended, as stated above, that you approve the 11e 13 4--en and operation of the proposed branches by The Lank and Trust Company. ilave,,Ine attached file includes a copy of the report of credit ' cigation as of January 31, 1934, and a copy of the memorandum 1444 5/17/34 -5- "prepared by the Board's Division of Examinations. It will be appreciated if you will return this file when it has served your Purpose and mhen you advise the Board of your action on the application described above." Approved. Letter to Lr. Walsh, Federal Reserve Agent at the Federal Reserve Bank of Dallas, reading as follows; "Reference is made to your letter of April 3, 1934, in regard to the pending application of the 'Lercantile National Bank at Dallas', Dallas, Texas, for permission to exercise full fiduciary powers. "The Board has considered this application in the light of the information coniained in the report of examination of the bank made by the national bank examiners as of February 14, 1934, and the report of examination of the trust department made by Your trust examiner as of the same date, together with the infer2 :ati0n heretofore made available in connection with the applica;40n, and, in view of all of the facts and circumstances involved, ' 8 unwilling at this time to grant the applicant bank any fiduciary Powers in addition to those already authorized in the "oardts letter to the bank under date of September 21, 1933. , "'the action of the Board in this matter has been influenced t!rgely by the unsatisfactory condition of the applicant as reected in the recent report of examination, the apparent ina1it .;. Y of the management to make satisfactory progress in ;4-4111-3-zating the large amount of unsatisfactory and nonconforming te e!ets, the undesirability of a number of the corporate trusts administered by the bank, and the apparently unsatisfactory SuverTision given the trust department by the trust committee. exe 'Consideration has been given to the recomnendation of your to eutive committee that the applicant bank be given pernipsion utoIrtceept and administer court and testamentary-trusts as execof ,, ad ministrator, guardian of estates, committee of estates grEtli ties, or trustee, subject to certain conditions. The barik of such authority would no doubt be of value to the 48c__ 111 the Conduct of its general banking business and, it is iteZed, would enable the bank to handle most of the trust busnet ,271^'ichInicht be offered to it. The Board, however, does pov j ' rs ce a practice of imposinr. conditions when granting trust feels that the bank should correct, to the fullest 13°Baibl"id the e extent, its unsatisfactory features as set forth in itc 1,r paragraph and demonstrate its ability to administer tvidvent trust business in a satisfactory manner before any -4°11 11,11a1 _ powers are granted. e board will, therefore, defer action on the pending V45 5/17/34 "application of the 1:.ercantile i\;ational Bank at Dallas, Dallas, Texas, for full fiduciary powers, until after an examination has been made subsequent to the expiration of a six months' period from the date of the last examination, during which period it is hoped the bank may adopt the suggested chances contained in the conditions recommended by your executive committee, and may also be able to make a more satisfactory showing in regard to the natters of criticism now existing in this institution. Please advise the applicant bank accordingly." Approved. Letter to Mr. O'Connor, Comptroller of the Currency, reading as follows: "In accordance with your recommendation, the Federal Reserve toard approves a reduction in the common capital stock of 'The National .Exchange Bank and Trust Company of Steubenville', Steubenille, Ohio, from :,500,000 to 9200,0001, pursuant to a plan which Provides that the bank's capital shall be increased by .,;300,000 °f preferred stock to be sold to the Reconstruction Finance CorPoration and that the released capital shall be used to eliminate a,11ke amount of substandard assets and securities depreciation, all as set forth in your memorandum of May 3, 1954." Approved. Telegram to Mr. Newton, Federal Reserve agent at the Federal Reer-17111 Bank of San Francisco, stating that the Board has considered the aPPlic ation of the "Transamerica Corporation", axi Francisco, Calitortia, for a voting permit miner the authority of section 5141 P 4''110 Revised Statutes of the United States, as amended, authorizing ElUolt or g a nization to vote the stock which it arms or controls in "The Pirat liational Bank of Portland", Portland, Oregon, and has authorized the iacutuace of a limited permit to the applicant, subject to the conditi " 11 de by . t• That applicant has fully carried out the agreeTent Permit ' as a condition of the issuance of the limited voting a uthorized in the Board's ANCIGAR telegram to you of ii j; 5/17/34 -7- "January 8 as amended by Board's telegrams of January 29, February 10 and March 9. Second. That simultaneously with the issuance of the limited voting permit hereby authorized there shall be issued to Transamerica Bank Holdins Company, San Franci3c0, California, and to The First National Corporation of Portland, Portland, Oregon, the limited voting permits authorized Ii the Board's telegram to you of even date herewith." Et.nd for the following purpose: "At any time prior to July 1, 1934, to act upon a proposal or proposals to approve or ratify an agreement of consolidation bet?Men The First National Bank of Portland, Portland, Oregon, and the Security Savings and Trust Company, Portland, Oregon, under the charter of the former, and to take such other action as 13 necessary to effect such consolidation, provided that such c°nsolidation is in accordance with a plan which shall have been approved by the Comptroller of the Currency and the supervisory ! t tilorities of the State or Oregon and shall be satisfactory to the Federal Reserve Agent at the Federal Reserve Bank of San Fr ancisco." The t elegram also authorized the agent to have prepared by counsel for the p ederal reserve bank, and to issue to the Transamerica Corporation, a li4ited voting permit in accordance with the telegram Tthen the conPrescribed therein has been complied with. Approved. In connection with the above there was presented a second telezrA--a, -co Newton, Federal Reserve Agent at the Federal Reserve L4nk np San Francisco, stating that the Board has considered the aplOri Of the " Transamerica Bank Belding Company", San Francisco, Califor for a voting permit under the authority of section 5144 Or the R ellth elii8ed Statutes of the United States, as amended, authorizing Pireturmnization to vote the stock which it awns or eontrols in "The the i 4ti°11(11 Bank i'ortland", Portland, Oregon, and has authorized 8GIlart °I a limited permit to the applicant, subject to the 1447 5/17/34 -8- followin g conditions: "First. That applicant has fully carried out the agreement made by it as a condition of the issuance of the limited voting Permit authorized in the Board's 1%NCIGAR telegram to you of January 8 as amended by Board's telegrams of January 29, Februar y 10 and Larch 9. Second. That simultaneously with the issuanc e of the limited voting permit hereby authorized there shall be issued to Transamerica Corporation, San Francisco, Califor nia, and to The First National Corporation of Portland, Portlan d, Oregon, the limited votinr, permits authorized in the Board's telegrams to you of even date herewith." 8-nd for the following purpose: "At any time prior to July 1, 1934, to act upon a proposal or proposals to approve or ratify an agreement of consolidation between The First National Bank of Portland, Portland, Oregon, and the Security Savings and Trust Company, Portland, Oregon, under the charter of the former, and to take such other action as is necessary to effect such consolidation, provided that such consolidation is in accordance with a plan which shall have been aPproved by the Comptroller of the Currency and the supervi sory _!l athorities of the State of Oregon and shall be satisfactory to -clie Federal Reserve Agent at the Federal Reserve Bank of San Francisco." The telegram also authorized the agent to have prepared by counsel l'or the Federal reserve bank, and to issue to the Transamerica Bank 41dillE Company, a limited voting permit in accordance with the tele- *Iela the condition prescribed therein has been complied with. Approved. 0 1 There mns presented also a third telegram to Yr. Newton, Fed- Re"rlre Agent at the Federal Reserve Bank of San Francisco, stetthat the Board has considered the application of "The First Naticnal Corporation of Portland", Portland, Oregon, for a voting permit 1111cler the authority of section 5144 of the Revised Statutes of the '111.ted Statee, as amendod, authorizing such organization to vote the ztoek which it omns or controls in "The First National Bank of 1448 5/17/34 -9- "Portland", Portland, Oregon, and has authorized the issuance of a 4111ited permit to the applicant, subject to the following condition: "That simultaneously with the issuance of the limited voting permit hereby authorized there shall be issued to Transamerica Corporation, San Francisco, California, and to Transamerica Bank Holding Company, San Francisco, California, the limited voting Permits authorized in the Board's telegrams to you of even date herewith." 4nd for the following purpose: "At any time prior to July 1, 1934, to act upon a proposal or Proposals to approve or ratify an agreement of consolidation between The First National Bank of Portland, Portland, Oregon, and the Security Savings and Trust Company, Portland, Oregon, under the charter of the former, and to take such other action as is necessary to effect such consolidation, provided that such consolidation is in accordance with a plan which shall have been approved by the Comptrollor of the Currency and the supervisory ! I thorities of the State of Oregon and shall be satisfactory to 110 Federal Reserve Agent at tho Federal Reserve Bank of San .c rancisco." The t.„,, --Legram also authorized the agent to have prepared by counsel rcIr the Federal reserve bank, and to issue to The First National Cor13°r4ti°11 ef Portland, a limited voting permit in accordance with the telecrsLms Approved. the Telegram to Li-. Sargent, Assistant Federal Reserve Agent at Federal Reserve Bank of San Francisco, reading as follo=: "P to recommendation your telegram 1:ay twelfth Board 4nncisursuant to May 25 time within which V. C. Bristol, Attorney for ;: 10 California NationalNational Bank of San Francisco may file evidence "L erred 4. op Board's telegram hay 3." Approved. Idemorandum dated May 11, 1934, from °11 Smead, Chief of the Bank Operations, transmitting annual reviews submitted 5/17/34 by the Federal reserve agents as of December 31, 1933, in compliance 'with the Board's letters of December 4, 1926 (K-4739), and October 5, 1933 (X-7629), covering each member bfIrk located in outlying sections Of central reserve and reserve cities, except New York City, -which a been authorized by the Federal Reserve Board to carry reduced rec ervea, and stating that all of the Federal reserve agents recom14end that present reserve requirements in the case of these banks be continued, except that the Federal Reserve Agent at the Federal Reserve 8atlk of Cleveland, in submitting his report, stated that the proposed eatabi ishment of a downtown branch by the Forbes liational Bank, Pittsburgh, Pennsylv 'a, might make a substantial change in the character (4 the bank's business, in which event consideration would be given to the matter of recommendin a revocation of the permission to carry redlIced reserves previously granted to that bank; that such a branch /vas auth rized by the Comptroller of the Currency on January 29, 1934; alld that, according to a report received from the Federal Reserve Bank or clelieland, it was established on the same date. t4ted The memorandum also that it is believed that, with the exception of the Forbes 4ti°1141 Lank of Pittsburgh, Pennsylvania, all of the member banks tIlat h„, .tici a uthority at the end of 1933 to carry reduced reserves should '311tilille to have such permission, inasmuch as they appear to be located olltlying d istricts and the character of their business is typical be'llks located in and servin,, primarily outlying communities in the .1.4.°4 in whieh they are located; that, since the Forbes Eational Bank 1143 "tlIblished a branch in the downtown district, it is believed that 1450 5/17/34 -11- it should be required to maintain a 10 per cent reserve on demand dePosits, the same as downtown banks in Pittsburgh; and that, theref°re, it is recommended that the Federal reserve agents be advised that no changes will be made at this time in the list of banks authorized to carry reduced reserves with the exception of the Forbes Natio, Bank of Pittsburgh, in which case it is recommended that such Perinission be rescinded effective at the beginning of the next semi/4011th).y reserve computation period. The recommendations were approved by five tembers of the Board on flay 16, 1934. Approved. There were then presented the following applications for orii1.or additional stock, or for the surrender of stock, of Federal r er 'banks: z lications for ORIGINAL Stock: atrict ktional sank of Commerce in ylAnkatO, Liankato, Minnesota A 4 4.eations for ADDITIONAL Stock: / '4e , lrestone Park Trust a Savings Banks Akron, Ohio 'he Peoples State Bank Company, Archbold, Ohio 4. 6. irst lo rtional Bank of Tuskaloosa, Tuscaloosa, Alabama bAatri t Le, 7. .44aigalaated Trust Savins Bank, Chicago, Illinois b4?trict 8. 1pDsvila TruS7€— Company, St. Louis, I:44340141 Shares 72 72 450 14 464 105 105 150 150 150 150 he 51 5/17/34 -12- lioations for ADDITIONAL Stooks (Continued) 4 , 9. 41eFirst M ttimal Bank of Napoleon: Napoleon, North Dakota The First National Bank of Rapid City, Rapid City, South Dakota 1.1.IEIEfUoi lioations for SURRENOR of Stooks vg.414t-_°1, 6• -" eCitizeruirank & Trust Company, Bainbridge, Georgia Approved. Thereupon the meeting adjourned. Shares 10 39 Total 49 918 22 22
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